2016 Annual Financial ReportANNUAL FINANCIAL REPORT
of the
City of Sanger, Texas
For the Year Ended
September 30, 2016
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City of Sanger, Texas
TABLE OF CONTENTS
September 30, 2016
FINANCIAL SECTION
Independent Auditor’s Report 1
Management’s Discussion and Analysis 7
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position 16
Statement of Activities 18
Fund Financial Statements
Governmental Funds:
Balance Sheet 20
Reconciliation of the Balance Sheet to the Statement of Net Position-
Governmental Funds 23
Statement of Revenues, Expenditures, and Changes in Fund Balance-
Governmental Funds 24
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the Statement
of Activities 27
Proprietary Funds:
Statement of Net Position 28
Statement of Revenues, Expenses, and Changes in Fund Net Position 29
Statement of Cash Flows 30
Notes to Financial Statements 33
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures, and Changes in Fund Balances-
Budget and Actual -General Fund 70
Schedule of Changes in Net Pension Liability and Related Ratios 73
Schedule of Employer Contributions to Plan 75
COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS
Combining Schedule of Revenues, Expenses, and Changes
in Fund Net Position -Proprietary Funds –by Department 78
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Bro oksCardiel,PLLC
Certified Public Accountants
1095 Evergreen Circle | Suite 200 | The Woodlands, TX 77380 |Tel: 281.907.8788 | Fax: 888.875.0587 | www.BrooksCardiel.com
`
INDEPENDENT AUDITOR’S REPORT
To the Honorable Mayor and
Members of the City Council
City of Sanger, Texas:
Report on the Financial Statements
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, 2016, 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
The City’s 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
2
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, 2016,
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.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, schedule of changes in net pension liability and related
ratios, schedule of employee contributions to pension plan, and budgetary comparison
information 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. In our opinion, the information is fairly stated in all material respects in
relation to the financial statements as a whole.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise City of Sanger, Texas’s basic financial statements. The combining schedule
by department for the proprietary fund are presented for purposes of additional analysis and
are not a required part of the basic financial statements.
3
The combining schedule by department for the proprietary fund is the responsibility of
management and were derived from and relate directly to the underlying accounting and other
records used to prepare the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the ba sic financial statements and certain
additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the
basic financial statements the mselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the
combining financial statements are fairly stated, in all material respects, in relation to the basic
financial statements as a whole.
BrooksCardiel, PLLC
Certified Public Accountants
The Woodlands, Texas
January 27, 2017
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MANAGEMENT'S DISCUSSION
AND ANALYSIS
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City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
September 30, 2016
7
As management of the City of Sanger, Texas (the “City”), we offer readers of the City’s financial
statements this narrative overview and analysis of the financial activities of the City for the fiscal year
ended September 30, 2016.
Financial Highlights
The City's total combined net position is $31,097,598 at September 30,2016.Of this, $10,903,640
(unrestricted net position) may be used to meet the City’s ongoing obligations to its citizens and
creditors.
At the close of the current fiscal year, the City’s governmental funds reported combined fund
balances of $6,609,647, an increase of $1,036,833.
As of the end of the year, the unassigned fund balance of the general fund was $2,397,437 or
47%of total general fund expenditures.
The City had an overall increase in net position of $2,149,474, which is primarily due to strong
general and utility revenues.
Overview of the Financial Statements
The discussion and analysis provided here are intended to serve as an introduction to the City’s basic
financial statements. The City’s basic financial statements consist of three components: 1)government-
wide financial statements, 2) fund financial statements, and 3) the notes to financial statements. This
report also includes supplementary information intended to furnish additional detail to support 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 a private-sector business.
The statement of net position presents information on all of the City’s assets, liabilities, and deferred
inflows/outflows with the difference reported as net position. Over time, increases or decreases in net
position may serve as a useful indicator of whether the financial position of the City is improving or
deteriorating. Other non-financial factors, such as the City’s property tax base and the condition of the
City’s infrastructure, need to be considered in order to assess the overall health of the City.
The statement of activities presents information showing how the City’s net position changed during the
most recent fiscal year. All changes in net position are reported as soon as the underlying event giving
rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2016
8
are reported for some items that will only result in cash flows in future fiscal periods (e.g., uncollected
taxes and earned but unused vacation leave).
Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from other functions that
are intended to recover all or a significant portion of their costs through user fees and charges (business-
type activities). The governmental activities of the City include general government, public safety, public
works, and culture and recreation. The business-type activities of the City include water, sewer and
electric operations.
The government-wide financial statements include not only the City itself (known as the primary
government), but also the legally separate Sanger Industrial De velopment Corporation (“4A fund”) and
the Sanger Te xas De velopment Corporation (“4B fund”), for which the City is financially accountable.
Both corporations, although legally separate, function for all practical purposes as a department of the
City and therefore have been included as an integral part of the primary government.
FUND FINANCIAL STATEMENTS
Funds may be considered as operating companies of the parent corporation,which is the City of
Sanger. They are usually segregated for specific activities or objectives. The City of Sanger uses fund
accounting to ensure and demonstrate compliance with finance-related legal reporting requirements.
The two categories of City funds are governmental and proprietary.
Governmental Funds
Governmental funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements. However, unlike the government-wide
financial statements, governmental fund financial statements focus on near-term inflows and outflows of
spendable resources,as well as on balances of spendable resources available at the end of the year. Such
information may be useful in evaluating the City’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By
doing so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of
revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
The City of Sanger maintains five individual governmental funds. Information is presented separately
in the governmental fund balance sheet and in the governmental fund statement of revenues,
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2016
9
expenditures, and changes in fund balances for the general,debt service, 4A, 4B, and capital projects
funds which are considered to be major funds.
The City of Sanger adopts an annual appropriated budget for all funds. A budgetary comparison
schedule has been provided to demonstrate compliance with the general fund budget.
Proprietary Funds
The City maintains two different types of proprietary funds. Proprietary funds are used to report the
same functions presented as business-type activities in the government-wide financial statements. The
City uses a proprietary fund to account for its public utilities. All activities associated with providing
such services are accounted for in these funds, including administration, operation, maintenance, debt
service, capital improvements, meter maintenance, billing and collection. The City's intent is that costs
of providing the services to the general public on a continuing basis is financed through user charges in
a manner similar to a private enterprise. Internal service funds are an accounting device used to
accumulate and allocate costs internally among the City’s various functions. The City uses internal
service funds to account for the maintenance and purchase of equipment.
Notes to Financial Statements
The notes to the financial statements provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes
are the last section of the basic financial statements.
Other Information
In addition to the basic financial statements, MD&A, and accompanying notes, this report also presents
certain Required Supplementary Information (RSI). The RSI that GASB Statement No. 34 requires is a
budgetary comparison schedule for the general fund and schedules for the City’s Defined Pension
Plan. RSI can be found after the basic financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted previously, net position may serve over time as a useful indicator of the City’s financial
position. For the City of Sanger, assets exceeded liabilities by $31,097,598 as of September 30, 2016,in
the primary government.
The largest portion of the City’s net position, $16,012,082,reflects its investments in capital assets (e.g.,
land, city hall, police station, streets, and drainage systems, as well as the public works facilities),less
any de bt used to acquire those assets that are 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
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2016
10
resources needed to repay this debt must be provided from other sources, since the assets themselves
cannot be used to liquidate these liabilities.
An additional portion of the City’s net position, $4,181,876, represents resources that are subject to
external restrictions on how they may be used. The remaining balance of $10,903,640 is unrestricted
and may be used to meet the government’s ongoing obligations to its citizens and creditors.
Current and other assets of business-type activities as of September 30, 2016 and September 30, 2015
were $16,009,888 and $12,028,084, respectively. The increase of $3,981,804 was primarily attributable to
unspent bond proceeds from a new bond issuance during the year.
Long term liabilities of business-type activities as of September 30, 2016 and September 30, 2015 were
$12,579,894 and $7,892,587, respectively. The increase of $4,687,307 was due to the aforementioned
bond issuance during the year.
Statement of Net Position:
The following table reflects the condensed Statement of Net Position:
Current and
other assets $7,117,640 $16,009,888 $23,127,528 $6,134,675 $12,028,084 $18,162,759
Capital assets, net 14,773,440 15,045,344 29,818,784 15,107,078 12,923,737 28,030,815
Total Assets 21,891,080 31,055,232 52,946,312 21,241,753 24,951,821 46,193,574
of Resources 489,156 196,393 685,549 228,086 111,646 339,732
Other liabilities 1,295,696 2,364,581 3,660,277 490,649 1,483,627 1,974,276
Long-term liabilities 6,294,092 12,579,894 18,873,986 7,718,319 7,892,587 15,610,906
Total Liabilities 7,589,788 14,944,475 22,534,263 8,208,968 9,376,214 17,585,182
Net Position:
Net investment
net of related debtin capital assets 8,615,983 7,396,099 16,012,082 8,122,596 7,831,965 15,954,561
Restricted 4,181,876 - 4,181,876 3,713,890 - 3,713,890
Unrestricted 1,992,589 8,911,051 10,903,640 1,424,385 7,855,288 9,279,673
Total Net Position $14,790,448 $16,307,150 $31,097,598 $13,260,871 $15,687,253 $28,948,124
2016 2015
Governmental Business-Type
Activities Activities
Governmental Business-Type
ActivitiesActivities Total
Deferred Outflows
Total
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2016
11
Statement of Activities:
The following table provides a summary of the City’s changes in net position:
Revenues
Program revenues:
Charges for services $1,663,963 $11,236,562 $12,900,525 $1,570,157 $11,569,275 $13,139,432
Grants and contributions 185,385 - 185,385 271,386 - 271,386
General revenues:
Property taxes 3,329,733 - 3,329,733 2,981,429 - 2,981,429
Sales taxes 1,605,187 - 1,605,187 1,600,961 - 1,600,961
Franchise and local taxes 240,206 - 240,206 231,380 - 231,380
Investment income 9,206 21,429 30,635 4,429 15,128 19,557
Other revenues 212,026 - 212,026 250,444 39,738 290,182
Total Revenues 7,245,706 11,257,991 18,503,697 6,910,186 11,624,141 18,534,327
Expenses
General government 2,753,293 - 2,753,293 2,632,058 - 2,632,058
Public safety 2,506,460 - 2,506,460 2,187,268 - 2,187,268
Public works 998,940 - 998,940 1,073,312 - 1,073,312
Culture and recreation 751,747 - 751,747 712,298 - 712,298
Interest and fiscal charges 277,536 395,154 672,690 272,652 289,691 562,343
Water, sewer, & electric - 8,541,016 8,541,016 - 8,251,045 8,251,045
Total Expenses 7,287,976 8,936,170 16,224,146 6,877,588 8,540,736 15,418,324
Change in Net Position
Before Transfers (42,270)2,321,821 2,279,551 32,598 3,083,405 3,116,003
Transfers 1,701,924 (1,701,924) - 1,720,428 (1,720,428)-
Total 1,701,924 (1,701,924) - 1,720,428 (1,720,428)-
Change in Net Position 1,659,654 619,897 2,279,551 1,753,026 1,362,977 3,116,003
Beginning Net Position 13,260,871 15,687,253 28,948,124 11,507,845 14,324,276 25,832,121
Ending Net Position $14,920,525 $16,307,150 $31,227,675 $13,260,871 $15,687,253 $28,948,124
Primary
Total
Primary Governmental
ActivitiesGovernment
For the Year Ended September 30, 2016
Business-Type
Government
For the Year Ended September 30, 2015
Total
Activities
Business-TypeGovernmental
Activities Activities
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2016
12
Graphic presentations of selected data from the summary tables are displayed below to assist in the
analysis of the City’s activities.
For the year ended September 30, 2016, revenues from governmental activities totaled $7,245,706.
Property tax, sales tax and charges for services are the City’s largest revenue sources. Property tax
increased by $348,304 or 12%due to higher property values and new growth.Charges for services
increased $93,806 or 6%primarily due to increases in EMS service collections and sanitation fees.
Grants and contributions decreased by $86,001 due to a land donation in prior year that was a one time
donation.All other revenues remained relatively stable when compared to the previous year.
This graph shows the governmental function expenses of the City:
For the year ended September 30, 2016, expenses for governmental activities totaled $7,287,976. This
represents an increase of $410,388 or 8% from the prior year. The City’s largest functional expense is
general government of $2,753,293 which primarily includes contractual costs for garbage removal,
salaries for finance and city administration,plus depreciation of related capital assets.General
government expenditures increased by $121,235 or 15%primarily due to increases in salaries and legal
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2016
13
fees. Public safety expenditures increased by $319,192 or 5%primarily due to increases in depreciation
on capital asset equipment purchased and increases in salaries expense for EMS and fire for additional
personnel. All other expenditures remained relatively consistent with the previous year.
Business-type activities are shown comparing operating costs to revenues generated by related
services.
For the year ended September 30, 2016, charges for services by business-type activities totaled
$11,236,562. This is a decrease of $332,713, or 3%, from the previous year.The decrease was due to a
decrease in consumption compared to prior year.
Total expenses increased $395,434 primarily due to increases in bond issuance and interest fees, and
increases in repairs and maintenance expense.
FINANCIAL ANALYSIS OF THE CITY’S FUNDS
As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related
legal requirements.
Governmental Funds -The focus of the City’s governmental funds is to provide information of near-
term inflows, outflows and balances of spendable resources. Such information is useful in assessing
the City’s financing requirements. In particular, unreserved fund balance may serve as a useful
measure of the City’s net resources available for spending at the end of the year.
As of the end of the year the general fund reflected a total fund balance of $2,548,000. Of this, $7,971 is
restricted for municipal court, $9,480 is restricted for tourism, $79,393 is restricted for library
improvements, and $23,385 for public safety. Unassigned fund balance totaled $2,397,437 as of year
end.
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2016
14
There was an increase in governmental fund balance of $1,036,833 over the prior year. The increase was
primarily due to revenues exceeding budgeted expectations.
Proprietary Funds -The City’s proprietary funds provide the same type of information found in the
government-wide financial statements, but in more detail.
GENERAL FUND BUDGETARY HIGHLIGHTS
There was a total positive budget variance of $562,082 in the general fund. This is a combination of a
positive revenue variance of $443,056, a positive expenditure variance of $209,627,and a negative
variance of $90,601 in other financing sources and uses. The most significant variances were for
property taxes, sales taxes, charges for services, and the police department, which all had positive
variances for the City.
CAPITAL ASSETS
As of the end of the year, the City’s governmental activities funds had invested $14,773,440 in a variety
of capital assets and infrastructure, net of accumulated depreciation. Depreciation is included with the
governmental capital assets as required by GASB Statement No. 34. The City’s business-type activities
funds had invested $15,045,344 in a variety of capital assets and infrastructure, net of accumulated
depreciation.
Major capital asset events during the current year include the following:
Renovation work on a church building for $416,681
McReynolds road construction in the amount of $69,900
Purchase of police department vehicles and radio system totaling $193,057
Street improvements to Smith, Sims, Kirkland, Jones & Lois for $75,126
New water well for $1,604,235
Sewer plant expansion for $224,687
Water and sewer line relocations, expansions, and a new lift station totaling $590,021
Acquisition of land for water department for $173,693
Purchase of vehicles for water department for $122,709
More detailed information about the City’s capital assets is presented in note IV. C to the financial
statements.
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2016
15
LONG-TERM DEBT
At the end of the current year, the City had total bonds outstanding of $17,230,000, notes payable of
$396,451 and capital leases of $777,536. During the year, the City had principal payments on bonds,
notes payable and capital leases of $1,665,229. During the year, the City refunded a bond with a
principal balance outstanding of $2,615,000 for a refunding bond with a principal balance of $2,535,000.
During the year, the City had a $5,870,000 bond issuance for the water, sewer, and electric fund. More
detailed information about the City’s long-term liabilities is presented in note IV. D to the financial
statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET
The Mayor and City Council are committed to maintaining and improving the overall wellbeing of the
City of Sanger and improving services provided to their public citizens. The City is budgeting for
growth in the upcoming year.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is de signed to provide a general overview of the City of Sanger’s finances for all
those with an interest in the City’s finances. Questions concerning this report or requests for additional
financial information should be directed to the City Manager at the City of Sanger City Hall at 502 Elm
Street, Sanger, Texas 76266.
Current assets:
Cash and cash equivalents $5,528,666 $7,430,681 $12,959,347
Investments 900,618 415,330 1,315,948
Receivables, net 688,356 1,716,811 2,405,167
Inventory - 494,626 494,626
7,117,640 10,057,448 17,175,088
Restricted cash - 5,652,440 5,652,440
Restricted investments - 300,000 300,000
Capital assets:
Non-depreciable 2,017,458 3,946,813 5,964,271
Net depreciable capital assets 12,755,982 11,098,531 23,854,513
14,773,440 20,997,784 35,771,224
21,891,080 31,055,232 52,946,312
Deferred Outflows of Resources
Deferred charge on refunding 33,787 59,153 92,940
Pension contributions 139,479 42,036 181,515
Pension investment earnings 299,661 90,312 389,973
Pension (gains) losses 16,229 4,892 21,121
Total Deferred Outflows of Resources 489,156 196,393 685,549
See Notes to Financial Statements.
Primary Government
City of Sanger, Texas
STATEMENT OF NET POSITION (Page 1 of 2)
September 30, 2016
Activities Activities
Assets
Governmental Business-Type
Total Assets
Total Current Assets
Total
16
Liabilities
Current liabilities:
Accounts payable and
accrued liabilities $300,948 $975,928 $1,276,876
Accrued interest payable 43,267 117,591 160,858
Customer deposits - 397,567 397,567
Long term debt due within one year 951,481 873,495 1,824,976
1,295,696 2,364,581 3,660,277
Noncurrent liabilities:
Debt due in more than one year 5,404,265 12,311,717 17,715,982
Net pension liability 889,827 268,177 1,158,004
6,294,092 12,579,894 18,873,986
7,589,788 14,944,475 22,534,263
Net investment in capital assets 8,615,983 7,396,099 16,012,082
Restricted for:
Debt service 404,096 - 404,096
Capital projects 1,030,871 - 1,030,871
Economic development 2,626,680 - 2,626,680
Other purposes 120,229 - 120,229
Unrestricted 1,992,589 8,911,051 10,903,640
$14,790,448 $16,307,150 $31,097,598
See Notes to Financial Statements.
Total Current Liabilities
Net Position
Total Net Position
Total Liabilities
September 30, 2016
Activities Total
Business-Type
STATEMENT OF NET POSITION (Page 2 of 2)
Governmental
Activities
Primary Government
City of Sanger, Texas
17
Capital
Grants and
Contributions
Primary Government
Governmental Activities
General government $2,753,293 $940,697 $107,541 $-
Economic development 130,077 - - -
Public safety 2,506,460 723,266 77,844 -
Public works 998,940 - - -
Culture and recreation 751,747 - - -
Interest and fiscal charges 277,536 - - -
7,418,053 1,663,963 185,385 -
Business-Type Activities
Water 1,101,705 1,641,413 - -
Sewer 684,295 1,642,998 - -
Electric 6,527,241 7,893,277 - -
Fleet services 1,562 - - -
Utility administration 621,367 58,874 - -
Total Business-Type Activities 8,936,170 11,236,562 - -
Total Primary Government $16,354,223 $12,900,525 $185,385 -
General Revenues:
Taxes
Property taxes
Sales taxes
Franchise and local taxes
Investment income
Other revenues
Gain on sale of assets
Insurance recoveries
Transfers
Change in Net Position
Beginning Net Position
Ending Net Position
See Notes to Financial Statements.
Expenses Contributions
Total Governmental Activities
Functions/Programs Services
Total General Revenues and Transfers
City of Sanger, Texas
STATEMENT OF ACTIVITIES
Operating
For the Year Ended September 30, 2016
Program Revenues
Charges for Grants and
18
$(1,705,055) $- $(1,705,055)
(130,077) - (130,077)
(1,705,350) - (1,705,350)
(998,940) - (998,940)
(751,747) - (751,747)
(277,536) - (277,536)
(5,568,705) - (5,568,705)
- 539,708 539,708
- 958,703 958,703
- 1,366,036 1,366,036
- (1,562) (1,562)
- (562,493) (562,493)
- 2,300,392 2,300,392
(5,568,705) 2,300,392 (3,268,313)
3,329,733 - 3,329,733
1,605,187 - 1,605,187
240,206 - 240,206
9,206 21,429 30,635
179,476 - 179,476
30,618 - 30,618
1,932 - 1,932
1,701,924 (1,701,924) -
7,098,282 (1,680,495)5,417,787
1,529,577 619,897 2,149,474
13,260,871 15,687,253 28,948,124
$14,790,448 $16,307,150 $31,097,598
Activities
Net (Expense) Revenue and Changes in Net Position
Primary Government
Governmental
Total
Business-Type
Activities
19
Cash and cash equivalents $1,937,682 $403,823 $1,579,165
Investments 529,524 - 94,266
Receivables, net 517,072 20,202 88,652
$2,984,278 $424,025 $1,762,083
Liabilities
Accounts payable and
accrued liabilities $212,561 $- $5,864
212,561 - 5,864
Deferred Inflows of Resources
Unavailable revenue
Property taxes 43,237 19,929 -
EMS revenue 180,480 - -
Total Deferred Inflows of Resources 223,717 19,929 -
Restricted for:
Municipal court 7,971 - -
Tourism 9,480 - -
Library 79,393 - -
Public safety 23,385 - -
Debt service - 404,096 -
Capital projects - - -
Economic development - - 1,756,219
Committed for:
Employee benefits 30,334 - -
Unassigned reported in:
General fund 2,397,437 - -
2,548,000 404,096 1,756,219
$2,984,278 $424,025 $1,762,083
See Notes to Financial Statements.
City of Sanger, Texas
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2016
4A FundGeneral
Total Liabilities
Debt
Service
Total Liabilities and Fund Balances
Total Fund Balances
Total Assets
Fund Balances
Assets
20
$531,203 $1,076,793 $5,528,666
276,828 - 900,618
62,430 - 688,356
$870,461 $1,076,793 $7,117,640
$- $45,922 $264,347
- 45,922 264,347
- - 63,166
- - 180,480
- - 243,646
- - 7,971
- - 9,480
- - 79,393
- - 23,385
- - 404,096
- 1,030,871 1,030,871
870,461 - 2,626,680
- - 30,334
- - 2,397,437
870,461 1,030,871 6,609,647
$870,461 $1,076,793 $7,117,640
Funds
Total
GovernmentalCapital
Projects Fund4B Fund
21
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22
Fund Balances - Total Governmental Funds $6,609,647
Adjustments for the Statement of Net Position:
Capital assets used in governmental activities are not current financial
resources and, therefore, not reported in the governmental funds.
Capital assets - non-depreciable 2,017,458
Capital assets - net depreciable 12,722,179
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are deferred in the governmental funds.
Property tax receivable 63,166
EMS receivable 180,480
Deferred outflows of resources, represent a consumption of net position that
applies to a future period(s) and is not recognized as an outflow of resources
(expense/ expenditure) until then.
Deferred charge on refunding 33,787
Pension contributions 104,035
Pension investment earnings 223,512
Pension gains (losses)12,105
Internal service funds are used by management to charge the cost of internal services
to individual funds. The assets and liabilities of the internal service funds
are included in governmental activities in the statement of net position.
Capital assets 33,803
Deferred outflows - pension contributions 35,444
Deferred outflows - investment earnings 76,149
Deferred outflows - pension gains (losses)4,124
Accounts payable and accrued liabilities (36,601)
Non-current liabilities due in one year (24,243)
Non-current liabilities due in more than one year (2,694)
Net pension liability (226,120)
Net position - governmental activities (140,138)
Some liabilities, including bonds payable and deferred charges, are not reported as
liabilities in the governmental funds.
Accrued interest (43,267)
Compensated absences (137,565)
Bond premium (147,108)
Net pension liability (663,707)
Non-current liabilities due in one year (803,429)
Non-current liabilities due in more than one year (5,240,707)
$14,790,448
See Notes to Financial Statements.
Net Position of Governmental Activities
RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION
City of Sanger, Texas
September 30, 2016
GOVERNMENTAL FUNDS
23
Revenues
Property tax $2,447,998 $793,038 $-
Sales tax 815,547 - 394,820
Franchise and local taxes 240,206 - -
License and permits 111,189 - -
Charges for services 829,508 - -
Fire and rescue 586,833 - -
Contributions and donations 325 - -
Intergovernmental 77,844 -
Fines and forfeitures 136,433 - -
Investment income 6,296 114 1,457
Other revenue 96,817 3,992 78,667
5,348,996 797,144 474,944
Expenditures
Current:
General government 951,828 1,110 -
Economic development - - 130,077
Police department 1,262,092 - -
Municipal court 195,182 - -
Fire and EMS 940,549 - -
Parks and recreation 463,483 - -
Public works 616,616 - -
Debt service:
Principal 194,056 620,300 42,997
Interest 28,835 207,646 18,270
Bond issuance costs 37,964 - -
Capital outlay 365,269 - -
5,055,874 829,056 191,344
Excess of Revenues Over (Under) Expenditures 293,122 (31,912) 283,600
Other Financing Sources (Uses)
Transfers in 1,152,539 217,358 50,000
Transfers (out)(942,492) (166,536) (175,000)
Bond issuance 1,166,100 - -
Premium 98,406 - -
Payment to refunding bond escrow agent (1,226,542) - -
Proceeds from sale of capital assets 30,618 - -
Insurance recoveries 1,932 - -
280,561 50,822 (125,000)
573,683 18,910 158,600
Beginning fund balances 1,974,317 385,186 1,597,619
$2,548,000 $404,096 $1,756,219
See Notes to Financial Statements.
City of Sanger, Texas
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2016
4A FundService
Ending Fund Balances
Total Other Financing Sources (Uses)
Total Expenditures
Net Change in Fund Balances
General
Total Revenues
Debt
24
$- $- $3,241,036
394,820 1,605,187
- - 240,206
- - 111,189
- - 829,508
- - 586,833
- 107,216 107,541
- 77,844
- - 136,433
1,339 - 9,206
- - 179,476
396,159 107,216 7,124,459
- - 952,938
- - 130,077
- - 1,262,092
- - 195,182
- - 940,549
20,185 - 483,668
- - 616,616
- - 857,353
- - 254,751
- - 37,964
- 525,050 890,319
20,185 525,050 6,621,509
375,974 (417,834) 502,950
- 675,000 2,094,897
(347,500) - (1,631,528)
- - 1,166,100
- - 98,406
- - (1,226,542)
- - 30,618
- - 1,932
(347,500)675,000 533,883
28,474 257,166 1,036,833
841,987 773,705 5,572,814
$870,461 $1,030,871 $6,609,647
Projects Fund4B Fund Funds
GovernmentalCapital
Total
25
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26
Amounts reported for governmental activities in the statement of activities are
different because:
Net changes in fund balances - total governmental funds $1,036,833
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.
Capital outlay 886,579
Capital assets transferred to business-type activies (210,245)
Depreciation expense (1,043,775)
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds.
EMS receivable 88,697
Some expenses reported in the statement of activities do not require the use of
current financial resources and, therefore, are not reported as expenditures
in governmental funds.
Compensated absences (19,325)
Accrued interest 7,543
Pension expense (54,570)
The issuance of long-term debt (e.g., bonds, leases, certificates of obligation)
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
premiums, discounts, and similar items when they are first issued; whereas,
these amounts are deferred and amortized in the statement of activities.
This amount is the net effect of these differences in the treatment of long-term
debt and related items.
Deferred charges on refunding 11,781
Premium on debt (78,909)
Debt issued 43,752
Principal payments 850,401
Internal service funds are used by management to charge the cost of internal services
to individual funds. The City reports the net gain (loss) of internal
service funds within governmental activities.10,815
$1,529,577
See Notes to Financial Statements.
Change in Net Position of Governmental Activities
For the Year Ended September 30, 2016
City of Sanger, Texas
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF ACTIVITIES
27
Current Assets
Cash and cash equivalents $7,430,681 $
Investments 415,330 -
Receivables, net 1,716,811 -
Inventory 494,626 -
10,057,448 -
Noncurrent Assets
Restricted cash 5,652,440 -
Restricted investments 300,000 -
Capital assets:
Non-depreciable 3,946,813 -
Net depreciable capital assets 11,098,531 33,803
20,997,784 33,803
31,055,232 33,803
Pension contributions 42,036 35,444
Pension investment earnings 90,312 76,149
Pension gains (losses)4,892 4,124
Deferred charge on refunding 59,153 -
Total Deferred Outflows of Resources 196,393 115,717
Current Liabilities
Accounts payable and accrued liabilities 975,928 36,601
Accrued interest 117,591 -
Customer deposits 397,567 -
Compensated absences-current 74,043 24,243
Bonds and capital leases payable-current 799,452 -
2,364,581 60,844
Noncurrent Liabilities
Compensated absences 8,226 2,694
Net pension liability 268,177 226,120
Bonds and capital leases payable 12,303,491 -
14,944,475 289,658
Net investment in capital assets 7,396,099 -
Unrestricted 8,911,051 (140,138)
$16,307,150 $(140,138)
See Notes to Financial Statements.
& Electric
Total Current Assets
City of Sanger, Texas
STATEMENT OF NET POSITION
PROPRIETARY FUND
September 30, 2016
Activities
Assets
Water, Sewer
Service
Internal
Governmental
Total Net Position
Net Position
Total Noncurrent Assets
Total Assets
Liabilities
Total Liabilities
Total Current Liabilities
Deferred Outflows of Resources
28
Operating Revenues
Charges for services $10,829,058 $-
Connection fees 61,130 -
Tap fees 287,500 -
Other revenue 58,874 -
11,236,562 -
Operating Expenses
Salaries and wages 1,069,751 1,032,753
Contracted services 49,896 254,902
Utilities 308,370 32,822
Materials and supplies 81,437 73,809
Water and electric purchases 5,504,359 -
Repairs and maintenance 507,210 42,200
Depreciation 811,063 1,499
8,332,086 1,437,985
2,904,476 (1,437,985)
Nonoperating Revenues (Expenses)
Investment income 21,429 -
Bond issuance costs (208,930)
Interest expense (395,154) -
(582,655)-
2,321,821 (1,437,985)
Transfers in 230,937 1,448,800
Transfers (out)(1,932,861)-
619,897 10,815
15,687,253 (150,953)
$16,307,150 $(140,138)
See Notes to Financial Statements.
Ending Net Position
Total Operating Revenues
Total Operating Expenses
Change in Net Position
Operating Income (Loss)
Total Nonoperating Revenues (Expenses)
Income (Loss) Before Transfers
Beginning net position
Internal
Service
Governmental
Activities
City of Sanger, Texas
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
PROPRIETARY FUND
For the Year Ended September 30, 2016
Water, Sewer
& Electric
29
Cash Flows from Operating Activities
Receipts from customers $11,120,907 $-
Payments to suppliers (6,532,993) (430,832)
Payments to employees (1,044,926) (1,013,439)
3,542,988 (1,444,271)
Cash Flows from Noncapital Financing Activities
Operating transfers in 20,692 1,448,800
Operating transfers out (1,932,861) -
(1,912,169) 1,448,800
Cash Flows from Capital and Related Financing Activities
Capital asset purchases (2,722,425) (35,302)
Proceeds from bond issuance 6,084,857 -
Principal paid on debt (807,874) -
Interest paid on debt (366,280) -
2,188,278 (35,302)
Cash Flows from Investing Activities
Purchases of investments, net (2,974) -
Interest on investments 21,429 -
18,455 -
3,837,552 (30,773)
9,245,569 30,773
$13,083,121 $-
See Notes to Financial Statements.
Net Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Operating Activities
& Electric
Water, Sewer
Net Cash Provided by Noncapital Financing Activities
Net Cash (Used) by Capital and Related Financing Activities
Ending Cash and Cash Equivalents
Net Cash Provided by Investing Activities
Beginning cash and cash equivalents
City of Sanger, Texas
STATEMENT OF CASH FLOWS
PROPRIETARY FUND (Page 1 of 2)
For the Year Ended September 30, 2016
Internal
Service
Governmental
Activities
30
Reconciliation of Operating Income
to Net Cash Provided by Operating Activities
Operating Income $2,904,476 $(1,437,985)
Adjustments to reconcile operating
income to net cash provided:
Depreciation 811,063 1,499
Changes in Operating Assets and Liabilities:
(Increase) Decrease in:
Accounts receivable (120,986) -
Inventory (20,292) -
Deferred outflows of resources - pension contributions (3,783) (3,190)
Deferred outflows of resources - pension investment
earnings (80,952) (68,257)
Deferred outflows of resources - pension (gains) losses 9,604 8,098
Increase (Decrease) in:
Accounts payable and accrued liabilities (61,429) (27,099)
Compensated absences 2,776 723
Customer deposits 5,331 -
Net pension liability 97,180 81,940
$3,542,988 $(1,444,271)
Capital assets transferred from governmental activities $210,245 $-
Debt refunding $1,484,420 $-
See Notes to Financial Statements.
Schedule of Non-Cash Capital and Related Financing Activities
& Electric
Water, Sewer
Net Cash Provided by Operating Activities
Internal
Service
Governmental
Activities
PROPRIETARY FUND (Page 2 of 2)
For the Year Ended September 30, 2016
City of Sanger, Texas
STATEMENT OF CASH FLOWS
31
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32
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS
September 30, 2016
33
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description of Government‐Wide Financial Statements
The government‐wide financial statements (i.e., the statement of net position and
the statement of activities) report information on all of the nonfiduciary activities of
the primary government and its component units. Governmental activities, which
normally are supported by taxes, intergovernmental revenues, and other
nonexchange transactions, are reported separately from business‐type activities,
which rely to a significant extent on fees and charges to external customers for
support. Likewise, the primary government is reported separately from certain legally
separate component units for which the primary government is financially
accountable.
B. Reporting Entity
The City of Sanger, Texas (the “City”) was incorporated in 1886 and operates under
a Council‐Manager form of government. The City provides: general government,
public safety, public works, culture and recreation, water, sewer, and electricity
operations.
The City is an independent political subdivision of the State of Texas governed by
an elected council and a mayor and is considered a primary government. As
required by generally accepted accounting principles, these basic financial
statements have been prepared based on considerations regarding the potential for
inclusion of other entities, organizations, or functions as part of the Cityʹs financial
reporting entity. The Sanger Industrial Development Corporation (“4A fund”) and
the Sanger Texas Development Corporation (“4B fund”), although legally separate,
are considered part of the reporting entity. No other entities have been included in
the Cityʹs reporting entity. Additionally, as the City is considered a primary
government for financial reporting purposes, its activities are not considered a part
of any other governmental or other type of reporting entity.
Considerations regarding the potential for inclusion of other entities, organizations
or functions in the Cityʹs financial reporting entity are based on criteria prescribed
by generally accepted accounting principles. These same criteria are evaluated in
considering whether the City is a part of any other governmental or other type of
reporting entity. The overriding elements associated with prescribed criteria
considered in determining that the Cityʹs financial reporting entity status is that of a
primary government are that it has a separately elected governing body; it is legally
separate; and is fiscally independent of other state and local governments.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
34
Additionally prescribed criteria under generally accepted accounting principles
include considerations pertaining to organizations for which the primary
government is financially accountable, and considerations pertaining to
organizations for which the nature and significance of their relationship with the
primary government are such that exclusion would cause the reporting entityʹs
financial statements to be misleading or incomplete.
Blended Component Units
Sanger Industrial Development Corporation (4A)
The Sanger Texas Industrial Development Corporation (“4A fund”) 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 4A fund 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 4A fund is to promote economic development within the
City of Sanger.
Sanger Texas Development Corporation (4B)
The Sanger Texas Development Corporation (“4B fund”) is governed by a board of
seven directors, all of whom are appointed by the City Council at its will. The 4B
fund was incorporated in the state of Texas as a nonprofit industrial development
corporation under Section 4B of the Development Corporation Act of 1979. The
purpose of the 4B fund is to promote economic and community development
within the City of Sanger.
C. Basis of Presentation Government‐Wide and Fund Financial Statements
While separate government‐wide and fund financial statements are presented, they
are interrelated. The governmental activities column incorporates data from
governmental funds while business‐type activities incorporate data from the
government’s enterprise funds. Separate financial statements are provided for
governmental funds and the proprietary funds.
As a general rule, the effect of interfund activity has been eliminated from the
government‐wide financial statements. Exceptions to this general rule are payments
in lieu of taxes where the amounts are reasonably equivalent in value to the
interfund services provided and other charges between the government’s water and
transit functions and various other functions of the government. Elimination of
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
35
these charges would distort the direct costs and program revenues reported for the
various functions concerned.
The fund financial statements provide information about the government’s funds,
including its blended component units. Separate statements for each fund
category—governmental and proprietary are presented. The emphasis of fund
financial statements is on major governmental and enterprise funds, each displayed
in a separate column. All remaining governmental and enterprise funds are
aggregated and reported as nonmajor funds. Major individual governmental and
enterprise funds are reported as separate columns in the fund financial statements.
The government reports the following major governmental funds:
Governmental Funds
Governmental funds are those funds through which most governmental functions
are typically financed.
General Fund
The general fund is used to account for all financial transactions not properly
includable in other funds. The principal sources of revenues include local
property taxes, sales and franchise taxes, licenses and permits, fines and
forfeitures, and charges for services. Expenditures include general government,
public safety, parks and recreation and public works.
Debt Service Fund
The debt service fund is used to account for debt service activities for
governmental fund types.
4A Fund
The purpose of the 4A fund is to promote economic development within the
City of Sanger.
4B Fund
The purpose of the 4B fund is to promote economic and community
development within the City of Sanger.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
36
Capital Projects Fund
The capital projects fund is used to account for capital asset activities for
governmental fund types.
Proprietary Fund Types
Proprietary funds are used to account for activities that are similar to those often
found in the private sector. All assets, liabilities, equities, revenues, expenses, and
transfers relating to the government’s business activities are accounted for through
proprietary funds. The measurement focus is on determination of net income,
financial position, and cash flows. Proprietary funds distinguish operating
revenues and expenses from non‐operating items. Operating revenues include
charges for services. Operating expenses include costs of materials, contracts,
personnel, and depreciation. All revenues and expenses not meeting this definition
are reported as non‐operating revenues and expenses. Proprietary fund types
follow GAAP prescribed by the Governmental Accounting Standards Board (GASB)
and all financial Accounting Standards Board’s standards issued prior to November
30, 1989. Subsequent to this date, the City accounts for its enterprise funds as
presented by GASB. The proprietary fund types used by the City include enterprise
funds.
The government reports the following major enterprise fund:
Water, Sewer, & Electric Fund
This fund is used to account for the provision of water, sewer and electric
services to the residents of the City. Activities of the fund include administration,
operations and maintenance of the water production and distribution system,
water collection and treatment systems, and electric services. The fund also
accounts for the accumulation of resources for and the payment of long‐term
debt. All costs are financed through charges to utility customers.
Additionally, the government reports the following fund type:
Internal Service Fund
Revenues and expenses related to services provided to organizations inside the
City on a cost reimbursement basis are accounted for in an internal service fund.
The Cityʹs internal service fund was set up to provide administrative support
services to other funds of the City.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
37
During the course of operations the government has activity between funds for
various purposes. Any residual balances outstanding at year end are reported as
due from/to other funds and advances to/from other funds. While these balances
are reported in fund financial statements, certain eliminations are made in the
preparation of the government‐wide financial statements. Balances between the
funds included in governmental activities (i.e., the governmental and internal
service funds) are eliminated so that only the net amount is included as internal
balances in the governmental activities column. Similarly, balances between the
funds included in business‐type activities (i.e., the enterprise funds) are eliminated
so that only the net amount is included as internal balances in the business‐type
activities column.
Further, certain activity occurs during the year involving transfers of resources
between funds. In fund financial statements these amounts are reported at gross
amounts as transfers in/out. While reported in fund financial statements, certain
eliminations are made in the preparation of the government‐wide financial
statements. Transfers between the funds included in governmental activities are
eliminated so that only the net amount is included as transfers in the governmental
activities column. Similarly, balances between the funds included in business‐type
activities are eliminated so that only the net amount is included as transfers in the
business‐type activities column.
D. Measurement Focus and Basis of Accounting
The accounting and financial reporting treatment is determined by the applicable
measurement focus and basis of accounting. Measurement focus indicates the type
of resources being measured such as current financial resources or economic resources.
The basis of accounting indicates the timing of transactions or events for recognition
in the financial statements.
The government‐wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the
timing of related cash flows. Property taxes are recognized as revenues in the year
for which they are levied. Grants and similar items are recognized as revenue as
soon as all eligibility requirements imposed by the provider have been met.
The governmental fund financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Revenues are
recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
38
soon enough thereafter to pay liabilities of the current period. For this purpose, the
government considers revenues to be available if they are collected within 60 days
of the end of the current fiscal period. Expenditures generally are recorded when a
liability is incurred, as under accrual accounting. However, debt service
expenditures, as well as expenditures related to compensated absences, and claims
and judgments, are recorded only when payment is due. General capital asset
acquisitions are reported as expenditures in governmental funds. Issuance of long‐
term debt and acquisitions under capital leases are reported as other financing
sources.
Property taxes, sales taxes, franchise taxes, licenses, and interest associated with the
current fiscal period are all considered to be susceptible to accrual and so have been
recognized as revenues of the current fiscal period. Entitlements are recorded as
revenues when all eligibility requirements are met, including any time
requirements, and the amount is received during the period or within the
availability period for this revenue source (within 60 days of year end).
Expenditure‐driven grants are recognized as revenue when the qualifying
expenditures have been incurred and all other eligibility requirements have been
met, and the amount is received during the period or within the availability period
for this revenue source (within 60 days of year end). All other revenue items are
considered to be measurable and available only when cash is received by the
government.
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Net
Position/Fund Balance
1. Deposits and Investments
The City’s cash and cash equivalents are considered to be cash on hand, demand
deposits and short term investments with original maturities of three months or less
from the date of acquisition. For the purpose of the statement of cash flows, the
proprietary fund types consider temporary investments with maturity of three
months or less when purchased to be cash equivalents.
In accordance with GASB Statement No. 31, Accounting and Reporting for Certain
Investments and External Investment Pools, the City reports all investments at fair
value, except for “money market investments” and “2a7‐like pools.” Money market
investments, which are short‐term highly liquid debt instruments that may include
U.S. Treasury and agency obligations, are reported at amortized costs. Investment
positions in external investment pools that are operated in a manner consistent with
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
39
the SEC’s Rule 2a7 of the Investment Company Act of 1940, such as TexPool, are
reported using the pools’ share price.
The City has adopted a written investment policy regarding the investment of its
funds as defined in the Public Funds Investment Act, Chapter 2256, of the Texas
Governmental Code. In summary, the City is authorized to invest in the following:
Direct obligations of the U.S. Government
Fully collateralized certificates of deposit and money market accounts
Statewide investment pools
2. Fair Value
As of September 30, 2016, the City has applied Governmental Accounting
Standards Board (“GASB”) Statement No. 72, Fair Value Measurement and
Application. GASB Statement No. 72 provides guidance for determining a fair value
measurement for reporting purposes and applying fair value to certain investments
and disclosures related to all fair value measurements.
3. Receivables and Interfund Transactions
Transactions between funds that are representative of lending/borrowing
arrangements outstanding at the end of the year are referred to as either “interfund
receivables/payables” (i.e., the current portion of interfund loans) or “advances
to/from other funds” (i.e., the non‐current portion of interfund loans). All other
outstanding balances between funds are reported as “due to/from other funds” in
the fund financial statements. If the transactions are between the primary
government and its component unit, these receivables and payables are classified as
“due to/from component unit/primary government.” Any residual balances
outstanding between the governmental activities and business‐type activities are
reported in the government‐wide financial statements as “internal balances.”
Advances between funds are offset by a fund balance reserve account in the
applicable governmental fund to indicate they are not available for appropriation
and are not expendable available financial resources.
All trade receivables are shown net of any allowance for uncollectible amounts.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
40
4. 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.
Penalties are calculated after February 1 up to the date collected by the government
at the rate of 6% for the first month and increased 1% per month up to a total of
12%. Interest is calculated after February 1 at the rate of 1% per month up to the
date collected by the government. Under state law, property taxes levied on real
property constitute a lien on the real property which cannot be forgiven without
specific approval of the State Legislature. The lien expires at the end of twenty
years. Taxes levied on personal property can be deemed uncollectible by the City.
5. Inventories and Prepaid Items
The costs of governmental fund type inventories are recorded as expenditures when
the related liability is incurred, (i.e., the purchase method). The inventories are
valued at the lower of cost or market using the first‐in/first‐out method. Certain
payments to vendors reflect costs applicable to future accounting periods (prepaid
expenditures) are recognized as expenditures when utilized.
6. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets
(e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable
governmental or business‐type activities columns in the government‐wide financial
statements. Capital assets are defined by the government, as assets with an initial
individual cost of more than $5,000 and an estimated useful life in excess of one
year. Such assets are recorded at historical cost or estimated historical cost if
purchased or constructed. Donated capital assets are recorded at estimated fair
market value at the date of donation. Major outlays for capital assets and
improvements are capitalized as projects are constructed.
Interest costs incurred in connection with construction of enterprise fund capital
assets are capitalized when the effects of capitalization materially impact the
financial statements.
The costs of normal maintenance and repairs that do not add to the value of the
asset or materially extend assets’ lives are not capitalized.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
41
Property, plant, and equipment of the primary government, as well as the
component units, are depreciated using the straight‐line method over the following
estimated useful years.
Asset Description
Estimated
Useful Life
Vehicles 5‐10 years
Furniture and equipment 5 to 10 years
Infrastructure 10‐30 years
Water and sewer system 10‐30 years
Buildings and improvements 5‐40 years
7. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a
separate section for deferred outflows of resources. This separate financial
statement element, deferred outflows of resources, represents a consumption of net
position that applies to a future period(s) and so will not be recognized as an
outflow of resources (expense/ expenditure) until then. An example is a deferred
charge on refunding reported in the government‐wide statement of net position. A
deferred charge on refunding results from the difference in the carrying value of
refunded debt and its reacquisition price. This amount is deferred and amortized
over the shorter of the life of the refunded or refunding debt.
In addition to liabilities, the statement of financial position will sometimes report a
separate section for deferred inflows of resources. This separate financial statement
element, deferred inflows of resources, represents an acquisition of net position that
applies to a future period(s) and so will not be recognized as an inflow of resources
(revenue) until that time. The government has only one type of item, which arises
only under a modified accrual basis of accounting, which qualifies for reporting in
this category. Accordingly, the item, unavailable revenue, is reported only in the
governmental funds balance sheet. The governmental funds report unavailable
revenues from two sources: property taxes and EMS revenues. These amounts are
deferred and recognized as an inflow of resources in the period that the amounts
become available.
8. Net Position Flow Assumption
Sometimes the government will fund outlays for a particular purpose from both
restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In
order to calculate the amounts to report as restricted – net position and unrestricted
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
42
– net position in the government‐wide and proprietary fund financial statements, a
flow assumption must be made about the order in which the resources are
considered to be applied.
9. Fund Balance Flow Assumptions
Sometimes the government will fund outlays for a particular purpose from both
restricted and unrestricted resources (the total of committed, assigned, and
unassigned fund balance). In order to calculate the amounts to report as restricted,
committed, assigned, and unassigned fund balance in the governmental fund
financial statements a flow assumption must be made about the order in which the
resources are considered to be applied. It is the government’s policy to consider
restricted fund balance to have been depleted before using any of the components
of unrestricted fund balance. Further, when the components of unrestricted fund
balance can be used for the same purpose, committed fund balance is depleted first,
followed by assigned fund balance. Unassigned fund balance is applied last.
10. Fund Balance Policies
Fund balance of governmental funds is reported in various categories based on the
nature of any limitations requiring the use of resources for specific purposes. The
government itself can establish limitations on the use of resources through either a
commitment (committed fund balance) or an assignment (assigned fund balance).
The committed fund balance classification includes amounts that can be used only
for the specific purposes determined by a formal action of the government’s highest
level of decision‐making authority. The governing council is the highest level of
decision‐making authority for the government that can, by adoption of an
ordinance prior to the end of the fiscal year, commit fund balance. Once adopted,
the limitation imposed by the ordinance remains in place until a similar action is
taken (the adoption of another ordinance) to remove or revise the limitation.
Amounts in the assigned fund balance classification are intended to be used by the
government for specific purposes but do not meet the criteria to be classified as
committed. The governing body (council) has by resolution authorized the City
Manager to assign fund balance. The Council may also assign fund balance as it
does when appropriating fund balance to cover a gap between estimated revenue
and appropriations in the subseq uent year’s appropriated budget. Unlike
commitments, assignments generally only exist temporarily. In other words, an
additional action does not normally have to be taken for the removal of an
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
43
assignment. Conversely, as discussed above, an additional action is essential to
either remove or revise a commitment.
11. Compensated Absences
The liability for compensated absences reported in the government‐wide and
proprietary fund statements consist of unpaid, accumulated vacation balances. The
liability has been calculated using the vesting method, in which leave amounts for
both employees who currently are eligible to receive termination payments and
other employees who are expected to become eligible in the future to receive such
payments upon termination are included. Vested or accumulated vacation leave
and compensated leave of government‐wide and proprietary funds are recognized
as an expense and liability of those funds as the benefits accrue to employees.
It is the Cityʹs policy to liquidate compensated absences with future revenues rather
than with currently available expendable resources. Accordingly, the Cityʹs
governmental funds recognize accrued compensated absences when it is paid.
12. Long‐Term Obligations
In the government‐wide financial statements, long‐term debt and other long‐term
obligations are reported as liabilities in the applicable governmental activities
statement of net position. The long‐term debt consists primarily of bonds payable
and accrued compensated absences.
Long‐term debt for governmental funds is not reported as liabilities in the fund
financial statements until due. The debt proceeds are reported as other financing
sources, net of the applicable premium or discount and payments of principal and
interest reported as expenditures. In the governmental fund types, issuance costs,
even if withheld from the actual net proceeds received, are reported as debt service
expenditures. However, claims and judgments paid from governmental funds are
reported as a liability in the fund financial statements only for the portion expected
to be financed from expendable available financial resources.
Long‐term debt and other obligations, financed by proprietary funds, are reported
as liabilities in the appropriate funds. For proprietary fund types, bond premiums,
and discounts are deferred and amortized over the life of the bonds using the
effective interest method, if material. Bonds payable are reported net of the
applicable bond premium or discount. Issuance costs are expensed as incurred in
accordance with GASB statement no. 65.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
44
Assets acquired under the terms of capital leases are recorded as liabilities and
capitalized in the government‐wide financial statements at the present value of net
minimum lease payments at inception of the lease. In the year of acquisition, capital
lease transactions are recorded as other financing sources and as capital outlay
expenditures in the general fund. Lease payments representing both principal and
interest are recorded as expenditures in the general fund upon payment with an
appropriate reduction of principal recorded in the government‐wide financial
statements.
13. Estimates
The preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenditures/expenses during the reporting period.
Actual results could differ from those estimates.
14. Pensions
For purposes of measuring the net pension liability, deferred outflows of resources
and deferred inflows of resources related to pensions, and pension expense,
information about the Fiduciary Net Position of the Texas Municipal Retirement
System (TMRS) and additions to/deductions from TMRS’s Fiduciary Net Position
have been determined on the same basis as they are reported by TMRS. For this
purpose, plan contributions are recognized in the period that compensation is
reported for the employee, which is when contributions are legally due. Benefit
payments and refunds are recognized when due and payable in accordance with
the benefit terms. Investments are reported at fair value.
II. RECONCILIATION OF GOVERNMENT‐WIDE AND FUND FINANCIAL
STATEMENTS
A. Explanation of certain differences between the governmental fund balance sheet
and the government‐wide statement of net position.
The governmental fund balance sheet includes reconciliation between fund balance‐
total governmental funds and net position‐governmental activities as reported in the
government‐wide statement of net position. One element of that reconciliation
explains that long‐term liabilities, including bonds, are not due and payable in the
current period and, therefore, are not reported in the funds.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
45
B. Explanation of certain differences between the governmental fund statement of
revenues, expenditures, and changes in fund balances and the government‐wide
statement of activities.
The governmental fund statement of revenues, expenditures, and changes in fund
balances includes a reconciliation between net changes in fund balances – total
governmental funds and changes in net position of governmental states that, “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. Also,
governmental funds report the effect of premiums, discounts, and similar items
when debt is first issued, whereas these amounts are deferred and amortized in the
statement of activities.”
III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
Annual budgets are adopted on a basis consistent with generally accepted
accounting principles for all governmental and enterprise funds.
The appropriated budget is prepared by fund, function, and department. The legal
level of control is the fund level. No funds can be transferred or added to a
budgeted item without Council approval. Appropriations lapse at the end of the
year. Budget amendments were only re‐classes at the function level and below and
there was no increase in budgeted revenues or expenses by function from
amendments.
A. Deficit Fund Equity
The internal service fund had a deficit balance of $140,138 as of September 30, 2016
due to the net pension liability balance exceeding total assets.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
46
IV. DETAILED NOTES ON ALL FUNDS
A. Deposits and Investments
As of September 30, 2016, the primary government had the following investments:
Investment Type
Certificates of deposit $ 1,615,948 0.48
Total fair value $ 1,615,948
Portfolio weighted average maturity 0.48
Average Maturity
Fair Value (Years)
Interest rate risk – In accordance with its investment policy, the City manages its
exposure to declines in fair values by limiting the weighted average of maturity not
to exceed five years; structuring the investment portfolio so that securities mature to
meet cash requirements for ongoing operations; monitoring credit ratings of
portfolio position to assure compliance with rating requirements imposed by the
Public Funds Investment Act; and invest operating funds primarily in short‐term
securities or similar government investment pools.
Credit risk – The City’s investment policy limits investments to obligations of the
United States, State of Texas, or their agencies and instrumentalities with an
investment quality rating of not less than “A” or its equivalent, by a nationally
recognized investment rating firm. Other obligations must be unconditionally
guaranteed (either express or implied) by the full faith and credit of the United
States Government or the issuing U.S. agency and investment pools with an
investment quality not less than AAA or AAA‐m, or equivalent, by at least one
nationally recognized rating service.
Custodial credit risk – deposits In the case of deposits, this is the risk that in the event
of a bank failure, the City’s deposits may not be returned to it. State statutes require
that all deposits in financial institutions be insured or fully collateralized by U.S.
government obligations or its agencies and instrumentalities or direct obligations of
Texas or its agencies and instrumentalities that have a market value of not less than
the principal amount of the deposits. As of September 30, 2016, the market values of
pledged securities and FDIC exceeded bank balances.
Custodial credit risk – investments For an investment, this is the risk that, in the event
of the failure of the counterparty, the City will not be able to recover the value of its
investments or collateral securities that are in the possession of an outside party.
The City’s investment policy requires that it will seek to safekeeping securities at
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
47
financial institutions, avoiding physical possession. Further, all trades, where
applicable, are executed by delivery versus payment to ensure that securities are
deposited in the City’s safekeeping account prior to the release of funds.
B. Receivables
The following comprise receivable balances of the primary government at year end:
Property taxes $ 75,799 $ 31,347 $‐ $‐ $‐ $ 107,146
Sales tax 145,729 ‐ 62,430 62,430 ‐ 270,589
Franchise & local taxes 33,799 ‐ ‐ ‐ ‐ 33,799
EMS 449,032 ‐ ‐ ‐ ‐ 449,032
Accounts 123,705 ‐ 26,222 ‐ 1,906,200 2,056,127
Other 62 ‐ ‐ ‐ ‐ 62
Allowance (311,054) (11,145) ‐ ‐ (189,389) (511,588)
$ 517,072 $ 20,202 $ 88,652 $ 62,430 $ 1,716,811 $ 2,405,167
4A Fund 4B Fund Total
Water, Sewer
& ElectricService
Debt
General
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
48
C. Capital Assets
A summary of changes in governmental activities capital assets for the year end
was as follows:
Capital assets, not being depreciated:
Land $ 1,044,933 $‐ $‐ $ 1,044,933
Construction in progress 567,694 486,581 (81,750) 972,525
1,612,627 486,581 (81,750) 2,017,458
Capital assets, being depreciated:
Infrastructure 11,853,211 103,314 1,863 11,958,388
Buildings and improvements 7,086,986 30,837 ‐ 7,117,823
Machinery and equipment 3,486,768 301,149 (130,358) 3,657,559
22,426,965 435,300 (128,495) 22,733,770
Less accumulated depreciation
Infrastructure 5,485,959 330,942 ‐ 5,816,901
Buildings and improvements 1,617,823 318,109 ‐ 1,935,932
Machinery and equipment 1,828,732 396,223 ‐ 2,224,955
Total accumulated depreciation 8,932,514 1,045,274 ‐ 9,977,788
Net capital assets being depreciated 13,494,451 (609,974) (128,495) 12,755,982
$ 15,107,078 $ (123,393) $ (210,245) $ 14,773,440
Beginning Ending
Balances Increases
Total Capital Assets
Total capital assets not being depreciated
Total capital assets being depreciated
BalancesReclassifications
Depreciation was charged to governmental functions as follows:
General government $ 91,479
Public safety 301,930
Public works 370,115
Culture and recreation 280,251
Internal service fund 1,499
$ 1,045,274 Total Governmental Activities Depreciation Expense
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
49
A summary of changes in business‐type activities capital assets for the year end
was as follows:
Capital assets, not being depreciated:
Land $ 323,164 $ 173,693 $‐ $ 496,857
Construction in progress 1,980,103 2,418,943 (949,090) 3,449,956
Total capital assets not being depreciated 2,303,267 2,592,636 (949,090) 3,946,813
Capital assets, being depreciated:
Infrastructure 22,617,455 ‐ 949,090 23,566,545
Buildings and improvements 865,245 ‐ ‐ 865,245
Machinery and equipment 1,742,577 129,789 210,245 2,082,611
Total capital assets being depreciated 25,225,277 129,789 1,159,335 26,514,401
Less accumulated depreciation
Infrastructure 12,965,356 651,802 ‐ 13,617,158
Buildings and improvements 367,713 51,855 ‐ 419,568
Machinery and equipment 1,271,738 107,406 ‐ 1,379,144
Total accumulated depreciation 14,604,807 811,063 ‐ 15,415,870
Net capital assets being depreciated 10,620,470 (681,274) 1,159,335 11,098,531
$ 12,923,737 $ 1,911,362 $ 210,245 $ 15,045,344 Total Capital Assets
Beginning Ending
Balances Increases Reclassifications Balances
Depreciation was charged to business‐type activities as follows:
Water $ 282,736
Sewer 232,995
Electric 276,487
Other 18,845
$ 811,063 Total Business‐type Activities Depreciation Expense
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
50
D. Long‐term Debt
The following is a summary of changes in the City’s total governmental long‐term
liabilities for the year ended. The City uses the debt service fund to liquidate
governmental activities debts.
Governmental Activities:
Bonds, notes and other
payables:
General Obligation Bonds $ 972,400 $ 1,166,100 $ (191,700) $‐ $ 1,946,800 $ 372,500
Certificates of Obligation 4,596,100 ‐ (428,600) (1,202,900) 2,964,600 224,300
Less deferred amounts:
For issuance premiums 68,199 98,406 (12,545) (6,952) 147,108 ‐
5,636,699 1,264,506 (632,845) (1,209,852) 5,058,508 596,800
Other liabilities:
Notes payable 439,448 ‐ (42,997) ‐ 396,451 43,949
Capital leases payable 930,341 ‐ (194,056) ‐ 736,285 162,680
Compensated absences 144,454 135,950 (115,902) ‐ 164,502 148,052
$ 7,150,942 $ 1,400,456 $ (985,800) $ (1,209,852) $ 6,355,746 $ 951,481
Long‐term liabilities due in more than one year $ 5,404,265
Business‐Type Activities:
General Obligation Bonds $ 1,237,600 $ 1,368,900 $ (243,300) $‐ $ 2,363,200 $ 452,500
Certificates of Obligation 5,943,900 5,870,000 (446,400) (1,412,100) 9,955,400 305,700
Less deferred amounts:
For issuance premiums 301,170 494,741 (44,659) (8,161) 743,091 ‐
7,482,670 7,733,641 (734,359) (1,420,261) 13,061,691 758,200
Other liabilities:
Capital leases payable 159,427 ‐ (118,176) ‐ 41,251 41,251
Compensated absences 79,493 67,990 (65,213) 82,270 74,044
$ 7,721,590 $ 7,801,631 $ (917,748) $$ 13,185,212 $ 873,495
Long‐term liabilities due in more than one year $ 12,311,717
Amounts
Beginning Amortization/Ending Due within
Balance Additions Payments Balance
Total Business‐Type
Activities
One Year
Total Governmental
Activities
Refunded
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
51
Long‐term liabilities applicable to the City’s governmental activities are not due
and payable in the current period and accordingly, are not reported as fund
liabilities in the governmental funds. Interest on long‐term debt is not accrued in
governmental funds, but rather is recognized as an expenditure when due.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
52
Long‐term debt at year end was comprised of the following debt issues:
General Obligation Bonds:
$3,495,000 General Obligation Refunding Bond, Series 2012, due in
installments through 2021, interest at 2% to 3% $ 787,600 $ 1,002,400 $1,790,000
$2,535,000 General Obligation Refunding Bond, Series 2016, due in
installments through 2021, interest at 2% to 4% 1,159,200 1,360,800 2,520,000
$ 1,946,800 $ 2,363,200 $4,310,000
Certificates of Obligation:
$1,750,000 Certificates of Obligation, Series 2007,
due in annual installments through 2027, interest at 4.4%$ 391,000 $759,000 $1,150,000
$3,200,000 Certificates of Obligation, Series 2009,
due in annual installments through 2026, interest at 3% to 4.75%2,120,000 ‐ 2,120,000
$4,260,000 Certificates of Obligation, Series 2013,
due in annual installments through 2033, interest at 2% to 3.7%453,600 3,326,400 3,780,000
$5,870,000 Certificates of Obligation, Series 2015,
due in annual installments through 2035, interest at 3.4% to 5.5%‐ 5,870,000 5,870,000
$ 2,964,600 $ 9,955,400 $ 12,920,000
Less deferred amounts:
Issuance premium $ 147,108 $743,091 $890,199
$ 147,108 $743,091 $890,199
Notes Payable:
$660,000 Notes payable to a financial institution, due in monthly
installments of $5,106 through June 2024, including interest at 4.6% $ 396,451 $‐ $396,451
$ 396,451 $‐ $396,451
Capital Leases Payable:
$190,309 Capital lease payable to financial institution, due in annual
installments of $50,235 through 2017, interest at 2.89%$‐ $41,251 $41,251
$435,000 Capital lease payable to financial institution, due in annual
installments of $51,535 through 2024, interest at 3.346%356,075 ‐ 356,075
$500,000 Capital lease payable to financial institution, due in annual
installments of $134,279 through 2019, interest at 2.947%380,210 ‐ 380,210
$ 736,285 $41,251 $777,536
Compensated Absences 164,502 82,270 246,772
$ 6,355,746 $ 13,185,212 $ 19,540,958 Total Long‐term Liabilities
Total
Business ‐
Total General Obligation Bonds
Total Certificates of Obligation
Governmental Type
Activities Activities
Total Deferred Amounts
Total Notes Payable
Total Capital Leases Payable
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
53
The annual requirements to amortize governmental and business‐type activities
debt issues outstanding at year ending were as follows:
General Obligation Bonds
Year ending
September 30,
2017 $ 372,500 $ 64,416 $ 452,500 $ 77,834
2018 377,000 55,426 458,000 66,824
2019 392,800 41,908 477,200 50,492
2020 410,900 27,824 499,100 33,476
2021 393,600 13,929 476,400 16,746
$ 1,946,800 $ 203,503 $ 2,363,200 $ 245,372
Principal Interest Principal Interest
Governmental Activities Business‐Type Activities
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
54
Combination Tax and Revenue Certificates of Obligations
Year ending
September 30,
2017 $ 224,300 $ 128,067 $ 305,700 $ 365,408
2018 229,900 119,387 325,100 357,798
2019 241,600 110,391 328,400 349,179
2020 248,900 100,919 331,100 339,916
2021 261,200 91,050 408,800 328,055
2022 273,500 79,919 531,500 313,142
2023 286,400 68,258 533,600 296,377
2024 297,000 55,768 543,000 279,277
2025 309,300 42,686 560,700 260,919
2026 323,900 28,194 586,100 240,113
2027 71,800 13,024 608,200 217,921
2028 28,800 9,768 541,200 193,557
2029 30,600 8,400 564,400 171,800
2030 31,800 6,870 588,200 147,974
2031 33,600 5,280 616,400 122,720
2032 35,400 3,600 639,600 96,338
2033 36,600 1,830 663,400 68,826
2034 ‐ ‐ 410,000 40,313
2035 ‐ ‐ 425,000 24,656
2036 ‐ ‐ 445,000 8,344
$ 2,964,600 $ 873,412 $ 9,955,400 $ 4,222,631
Governmental Activities Business‐Type Activities
Principal Interest Principal Interest
General obligation bonds are direct obligations of the City for which its full faith
and credit are pledged. Repayment of general obligation bonds are from taxes
levied on all taxable property located within the City. The City is not obligated in
any manner for special assessment debt.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
55
Capital Leases
Year ending
September 30,
2017 $ 162,680 $ 23,135 $ 41,251 $ 1,411
2018 167,632 18,182 ‐ ‐
2019 172,736 13,079 ‐ ‐
2020 43,716 7,819 ‐ ‐
2021 45,179 6,357 ‐ ‐
2022 46,690 4,845 ‐ ‐
2023 48,252 3,283 ‐ ‐
2024 49,400 1,668 ‐ ‐
$ 736,285 $ 78,368 $ 41,251 $ 1,411
Business‐Type Activities
Principal Interest
Governmental Activities
Principal Interest
The City has entered into capital lease agreements. The leased property under
capital leases is classified as machinery and equipment with a total carrying value
net of depreciation of approximately $956,406 as of year end.
Note Payable
Year ending
September 30,
2017 $ 43,949 $ 17,318
2018 46,014 15,253
2019 48,176 13,091
2020 50,439 10,828
2021 52,809 8,458
2022 55,290 5,977
2023 57,887 3,380
2024 41,887 4,063
$ 396,451 $ 78,368
Governmental Activities
Principal Interest
E. Conduit Debt
From time to time, the City has issued notes payable for the purpose of assisting
with financing needed by not‐for‐profit organizations to promote their cause. The
notes are secured by the property financed and are payable solely from payments
received on the underlying loans. Upon repayment of the notes, ownership of the
acquired facilities transfers to the not‐for‐profit entity served by the note issuance.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
56
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.
F. Deferred Charge on Refunding
Deferred charges resulting from the issuance of the 2012 and 2016 general
obligation refunding bonds have been recorded as a deferred outflow of resources
and are being amortized to interest expense over the terms of the respective
refunded debts. Current year balances for governmental and business‐type
activities totaled $33,787 and $59,153, respectively. Current year amortization
expense for governmental and business‐type activities totaled $4,909 and $9,977,
respectively.
G. Advance Refunding
On June 13, 2016, the City issued $2,535,000 in general obligation refunding bonds
with an interest rate of 2 ‐ 4%. The proceeds were used to advance refund $2,615,000
of outstanding 2006 combination tax and revenue certificates of obligation which
had an interest rate ranging from 4% to 5%. The net proceeds of $2,666,396 (after
payment of $82,530 in underwriting fees and other issuance costs) were deposited
in an irrevocable trust with an escrow agent to provide funds for the future debt
service payment on the refunded bonds. As a result, the obligations are considered
defeased and the liability for those bonds has been removed from the statement of
net position.
The reacquisition price exceeded the net carrying amount of the old debt by $36,283.
This amount is being amortized over the remaining life of the refunding debt. This
advance refunding reduced its total debt service payments by $140,422 and resulted
in an economic gain (difference between the present values of the debt service
payments on the old and new debt) of $135,810.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
57
H. Interfund Transactions
Amounts transferred between funds relate to amounts collected, various capital
expenditures, annual funding, and debt payments.
Transfer out:
General $‐ $‐ $‐ $390,000 $ 230,937 1 $ 531,800 $ 1,152,737
4A ‐ ‐ ‐ 175,000 ‐ ‐ 175,000
4B ‐ 212,500 25,000 110,000 ‐ ‐ 347,500
Debt Service 166,536 ‐ ‐ ‐ ‐ ‐ 166,536
Enterprise 986,003 4,858 25,000 ‐ ‐ 917,000 1,932,861
$ 1,152,539 $ 217,358 $ 50,000 $675,000 $ 230,937 $ 1,448,800 $ 3,774,634
1 ‐ This value is after full conversion to the accrual method. For the general fund, this balance is greater than the amount reported within the
governmental funds statement of revenues, expenditures, and changes in fund balance by $210,245. This amount is only recognized at the
government wide level for the general fund, and is due to the amount of capital assets transferred from the general fund to the water, sewer, and
electric fund.
General Debt Service 4A Total
Transfer In
Internal
Service Enterprise
Capital
Projects
I. Fund Equity
The City records fund balance restrictions on the fund level to indicate that a
portion of the fund balance is legally restricted for a specific future use or to
indicate that a portion of the fund balance is not available for expenditures.
The following is a list of fund balances restricted/committed by the City:
Municipal court $ 7,971 $‐
Tourism 9,480 ‐
Library 79,393 ‐
Public safety 23,385 ‐
Debt service 404,096 ‐
Capital projects 1,030,871 ‐
Economic development 2,626,680 ‐
Employee benefits ‐ 30,334
$ 4,181,876 $ 30,334
Restricted Committed
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
58
V. OTHER INFORMATION
A. 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; and natural disasters for which the City
participates along with 2,800 other entities in the Texas Municipal League’s
Intergovernmental Risk Pools. The Pool purchases commercial insurance at group
rates for participants in the Pool. The City has no additional risk or responsibility to
the Pool outside of the payment of insurance premiums. The City has not
significantly reduced insurance coverage or had settlements which exceeded
coverage amounts for the past three years.
B. Contingent Liabilities
Amounts received or receivable from granting agencies are subject to audit and
adjustment by grantor agencies, principally the federal government. Any
disallowed claims, including amounts already collected, may constitute a liability of
the applicable funds. The amounts of expenditures which may be disallowed by the
grantor cannot be determined at this time although the City expects such amounts,
if any, to be immaterial.
Liabilities are reported when it is probable that a loss has occurred and the amount
of the loss can be reasonably estimated. Liabilities include an amount for claims
that have been incurred but not reported. Claim liabilities are calculated
considering the effects of inflation, recent claim settlement trends, including
frequency and amount of payouts, and other economic and social factors.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
59
C. Construction commitments
The government has active construction projects as of September 30, 2016. The
projects include street construction and improvements, sewer plant and the
construction of additional water lines and repairs. At year end the government’s
commitments with contractors are as follows:
Project
McReynolds Road Reconstruction Pacheco Koch, LLC $ 17,473
McReynolds Road Reconstruction HRM Land Acquisition 397
17,870
Server Consolidation Austin Lane Technology 20,166
20,166
Church building restoration Eikon Consultant 10,159
Cima 7,996
Mabak Directional 10,000
28,155
Capital improvement plan Perkins Engineering 30,633
12ʺ Water Line Chapman to Belz Pacheco Koch, LLC 3,092
12ʺ Water Line Chapman to Belz Card Services 255
Water Line Lois to View Pacheco Koch, LLC 7,390
Water Well and Ground Storage Cory Miller Drilling 39,729
Water Well and Ground Storage Perkins Engineering 64,830
Water Well and Ground Storage Vessels Construction 622,714
15ʺ Line Chapman to Belz Pacheco Koch, LLC 3,715
15ʺ Line Chapman to Belz Card Services 255
WWL FM455 to Lois Pacheco Koch LLC 91,097
WWL FM455 to Lois HRM Land Acquisition 14,858
12ʺ Line Lois to View Pacheco Koch LLC 25,709
New Sewer Plant Alan Plummer Associates 8,067
912,344
$ 978,535
Remaining
CommitmentVendor
Total
Project Total
Project Total
Project Total
Project Total
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
60
D. Related Party Activity
On March 1, 2012, the City entered into a non‐cancelable lease agreement with a
corporation of which a former 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 $253,145 as of September 30, 2016. The
lease provides for a base rent and an adjustment each year related to excess
operating expenses (if any) incurred annually. The lease was continued on a month
to month basis beginning in July 2015. On January 6, 2017, the City terminated the
lease agreement.
During the year ended September 30, 2016, the City recognized $78,667 in rental
revenue from this lease. As of September 30, 2016 the City had a receivable from
this company for $26,222.
E. Arbitrage
The Tax Reform Act of 1986 instituted certain arbitrage consisting of complex
regulations with respect to issuance of tax‐exempt bonds after August 31, 1986.
Arbitrage regulations deal with the investment of tax‐exempt bond proceeds at an
interest yield greater than the interest yield paid to bondholders. Generally, all
interest paid to bondholders can be retroactively rendered taxable if applicable
rebates are not reported and paid to the Internal Revenue Service at least every five
years for applicable bond issues. Accordingly, there is the risk that if such
calculations are not performed correctly, a substantial liability to the City could
result. The City does anticipate that it will have an arbitrage liability and performs
annual calculations to estimate this potential liability. The City will also engage an
arbitrage consultant to perform the calculations in accordance with Internal
Revenue Service’s rules and regulations if indicated.
F. Defined Benefit Pension Plans
1. Plan Description
The City of Sanger, Texas participates as one of 866 plans in the nontraditional, joint
contributory, hybrid defined benefit pension plan administered by the Texas
Municipal Retirement System (TMRS). TMRS is an agency created by the State of
Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas
Government Code (the TMRS Act) as an agent multiple‐employer retirement
system for municipal employees in the State of Texas. The TMRS Act places the
general administration and management of the System with a six‐member Board of
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
61
Trustees. Although the Governor, with the advice and consent of the Senate,
appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS’s
defined benefit pension plan is a tax‐qualified plan under Section 401 (a) of the
Internal Revenue Code. TMRS issues a publicly available comprehensive annual
financial report (CAFR) that can be obtained at www.tmrs.com.
All eligible employees of the city are required to participate in TMRS.
2. Benefits Provided
TMRS provides retirement, disability, and death benefits. Benefit provisions are
adopted by the governing body of the city, within the options available in the state
statutes governing TMRS.
At retirement, the benefit is calculated as if the sum of the employee’s contributions,
with interest, and the city‐financed monetary credits with interest were used to
purchase an annuity. Members may choose to receive their retirement benefit in one
of seven payments options. Members may also choose to receive a portion of their
benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36
monthly payments, which cannot exceed 75% of the member’s deposits and
interest.
The plan provisions are adopted by the governing body of the City, within the
options available in the state statutes governing TMRS. Plan provisions for the City
were as follows:
Plan Year 2015 Plan Year 2016
Employee deposit rate 6.0% 6.0%
Matching ratio (city to
employee)
2 to 1 2 to 1
Years required for vesting 5 5
Service retirement eligibility
(expressed as age / years of
service)
60/5, 0/25 60/5, 0/25
Updated service credit 100% Repeating Transfers 100% Repeating Transfers
Annuity increase (to retirees) 0% of CPI 0% of CPI
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
62
Employees covered by benefit terms
At the December 31, 2015 valuation and measurement date, the following
employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 12
Inactive employees entitled to but not yet receiving benefits 22
Active employees 65
Total 99
3. Contributions
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee
gross earnings, and the city matching percentages are either 100%, 150%, or 200%,
both as adopted by the governing body of the City. Under the state law governing
TMRS, the contribution rate for each city is determined annually by the actuary,
using the Entry Age Normal (EAN) actuarial cost method. The actuarially
determined rate is the estimated amount necessary to finance the cost of benefits
earned by employees during the year, with an additional amount to finance any
unfunded accrued liability.
Employees for the City of Sanger were required to contribute 6% of their annual
gross earnings during the fiscal year. The contribution rates for the City of Sanger
were 7.09% and 7.13% in calendar years 2015 and 2016, respectively. The City’s
contributions to TMRS for the year ended September 30, 2016, were $247,432, and
were equal to the required contributions.
4. Net Pension Liability
The City’s Net Pension Liability (NPL) was measured as of December 31, 2015, and
the Total Pension Liability (TPL) used to calculate the Net Pension Liability was
determined by an actuarial valuation as of that date.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
63
Actuarial assumptions:
The Total Pension Liability in the December 31, 2015 actuarial valuation was
determined using the following actuarial assumptions:
Inflation 2.5% per year
Overall payroll growth 3.0% per year
Investment Rate of Return 6.75%, net of pension plan investment expense,
including inflation
Salary increases were based on a service‐related table. Mortality rates for active
members, retirees, and beneficiaries were based on the gender‐distinct RP2000
Combined Healthy Mortality Table, with male rates multiplied by 109% and female
rates multiplied by 103%. The actuarial assumptions were developed primarily
from the actuarial investigation of the experience of TMRS over the four year period
from December 31, 2010 to December 31, 2014. They were adopted in 2015 and first
used in the December 31, 2015 actuarial valuation. The post‐retirement mortality
assumption for healthy annuitants and Annuity Purchase Rate (APRs) are based on
the Mortality Experience Investigation Study covering 2009 through 2011 and dated
December 31, 2013. In conjunction with these changes first used in the December 31,
2013 valuation, the System adopted the Entry Age Normal actuarial cost method
and a one‐time change to the amortization policy. The rates are projected on a fully
generational basis by scale BB to account for future mortality improvements. For
disabled annuitants, the gender‐distinct RP2000 Disabled Retiree Mortality Table
with Blue Collar Adjustment are used with males rates multiplied by 109% and
female rates multiplied by 103% with a 3‐year set‐forward for both males and
females. In addition, a 3% minimum mortality 16 rate is applied to reflect the
impairment for younger members who become disabled. The rates are projected on
a fully generational basis by scale BB to account for future mortality improvements
subject to the 3% floor.
Actuarial assumptions used in the December 31, 2015, valuation were based on the
results of actuarial experience studies. The experience study in TMRS was for the
period December 31, 2010 through December 31, 2014. Healthy post‐retirement
mortality rates and annuity purchase rates were updated based on a Mortality
Experience Investigation Study covering 2009 through 2011, and dated December
31, 2013. These assumptions were first used in the December 31, 2013 valuation,
along with a change to the Entry Age Normal (EAN) actuarial cost method.
Assumptions are reviewed annually. No additional changes were made for the 2014
valuation. After the Asset Allocation Study analysis and experience investigation
study, the Board amended the long‐term expected rate of return on pension plan
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
64
investments from 7% to 6.75%. Plan assets are managed on a total return basis with
an emphasis on both capital appreciation as well as the production of income, in
order to satisfy the short‐term and long‐term funding needs of TMRS.
The long‐term expected rate of return on pension plan investments was determined
using a building‐block method in which best estimate ranges of expected future real
rates of return (expected returns, net of pension plan investment expense and
inflation) are developed for each major asset class. These ranges are combined to
produce the long‐term expected rate of return by weighting the expected future real
rates of return by the target asset allocation percentage and by adding expected
inflation. In determining their best estimate of a recommended investment return
assumption under the various alternative asset allocation portfolios, GRS focused
on the area between (1) arithmetic mean (aggressive) without an adjustment for
time (conservative) and (2) the geometric mean (conservative) with an adjustment
for time (aggressive). At its meeting on July 30, 2015, the TMRS Board approved a
new portfolio target allocation. The target allocation and best estimates of real rates
of return for each major asset class are summarized in the following table:
Asset Class Target Allocation Long‐Term Expected Real
Rate of Return
(Arithmetic)
Domestic Equity 17.5% 4.55%
International Equity 17.5% 6.10%
Core Fixed Income 10.0% 1.00%
Non‐Core Fixed Income 20.0% 3.65%
Real Return 10.0% 4.03%
Real Estate 10.0% 5.00%
Absolute Return 10.0% 4.00%
Private Equity 5.0% 8.00%
Total 100.0%
Discount Rate:
The discount rate used to measure the Total Pension Liability was 6.75%. The
projection of cash flows used to determine the discount rate assumed that employee
and employer contributions will be made at the rates specified in statute. Based on
that assumption, the pension plan’s Fiduciary Net Position was projected to be
available to make all projected future benefit payments of current active and
inactive employees. Therefore, the long‐term expected rate of return on pension
plan investments was applied to all periods of projected benefit payments to
determine the Total Pension Liability.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
65
Changes in the Net Pension Liability:
Total Pension
Liability (a)
Plan Fiduciary
Net Position (b)
Net Pension
Liability (a) – (b)
Balance at 12/31/14 $ 7,400,331 $ 6,661,957 $ 738,374
Changes for the year:
Service Cost 369,950 ‐ 369,950
Interest (on the Total Pension Liab.) 521,853 ‐ 521,853
Difference between expected and
actual experience (89,808) ‐ (89,808)
Contributions – employer ‐ 231,097 (231,097)
Contributions – employee ‐ 195,568 (195,568)
Net investment income ‐ 9,831 (9,831)
Benefit payments, including
refunds of emp. contributions (260,514) (260,514) ‐
Administrative expense ‐ (5,988) 5,988
Other changes 47,847 (296) 48,143
Net changes 589,328 169,698 419,630
Balance at 12/31/15 $ 7,989,659 $ 6,831,655 $ 1,158,004
Sensitivity of the net pension liability to changes in the discount rate
The following presents the net pension liability of the City, calculated using the
discount rate of 6.75%, as well as what the City’s net pension liability would be if it
were calculated using a discount rate that is 1‐percentage‐point lower (5.75%) or 1‐
percentage‐point higher (7.75%) than the current rate:
1% Decrease Current Single Rate 1% Increase
5.75% Assumption 6.75% 7.75%
$2,491,376 $1,158,004 $73,544
Pension Plan Fiduciary Net Position:
Detailed information about the pension plan’s Fiduciary Net Position is available in
a separately‐issued TMRS financial report. That report may be obtained on the
internet at www.tmrs.com.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
66
5. Pension Expense and Deferred Outflows of Resources Related to Pensions
At September 30, 2016, the City reported deferred outflows of resources related to
pensions from the following sources:
Difference between projected and
investment earnings $389,973
Differences between expected and
actual economic experience 21,121
Contributions subsequent to the
measurement date 181,515
Total $592,609
Deferred
Outflows of Resources
The City reported $181,515 as deferred outflows of resources related to pensions
resulting from contributions subsequent to the measurement date that will be
recognized as a reduction of the net pension liability for the year ending September
30, 2016. Other amounts reported as deferred outflows of resources related to
pensions will be recognized in pension expense as follows:
Year ended December 31:
2016 $ 107,439
2017 107,439
2018 103,937
2019 92,279
2020 ‐
Thereafter ‐
$ 411,094
Supplemental Death Benefits Plan
The City also participates in the cost sharing multiple‐employer defined benefit
group‐term life insurance plan operated by the Texas Municipal Retirement System
(TMRS) known as the Supplemental Death Benefits Fund (SDBF). The City elected,
by ordinance, to provide group‐term life insurance coverage to both current and
retired employees. The City may terminate coverage under and discontinue
participation in the SDBF by adopting an ordinance before November 1 of any year
to be effective the following January 1.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
67
The death benefit for active employees provides a lump‐sum payment
approximately equal to the employee’s annual salary (calculated based on the
employee’s actual earnings, for the 12‐month period preceding the month of death);
retired employees are insured for $7,500; this coverage is an “other
postemployment benefit,” or OPEB.
The City contributes to the SDBF at a contractually required rate as determined by
an annual actuarial valuation. The rate is equal to the cost of providing one‐year
term life insurance. The funding policy for the SDBF program is to assure that
adequate resources are available to meet all death benefit payments for the
upcoming year; the intent is not to pre‐fund retiree term life insurance during
employees’ entire careers.
The City’s retiree contribution rates to the TMRS SDBF for the years ended 2016,
2015 and 2014 are as follows:
Plan/
Calendar Year
Annual
Required
Contribution
(Rate)
Actual
Contribution
Made
(Rate)
Percentage of
ARC
Contributed
2014 0.01% 0.01% 100.0%
2015 0.01% 0.01% 100.0%
2016 0.01% 0.01% 100.0%
The City’s contributions to the TMRS SDBF for the years ended 2016, 2015, and 2014
were $348, $322, and $306, respectively, which equaled the required contributions
each year.
G. Subsequent Events
In November of 2016, the City was awarded a purchase contract on land to be
acquired for expansion of the City’s wastewater treatment plant. The $273,000
contract was the result of an eminent domain claim made by the City to purchase
the land.
On January 6, 2017, the City terminated their lease agreement for a building owned
by the 4A fund. The lease generated $78,667 in rental income on an annual basis.
The City plans to sell the related building, which had a carrying value of $830,652 as
of September 30, 2016.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2016
68
Subsequent events were evaluated through January 27, 2017, the date the financial
statements were available to be issued.
H. New Accounting Pronouncements
The GASB issued Statement No. 72, entitled Fair Value Measurement and Application;
The provisions of GASB Statement No. 72 are effective for reporting periods
beginning after June 15, 2015. GASB Statement No. 72 provides guidance for
applying fair value to certain investments and disclosures related to all fair value
measurements. The statement generally requires state and local governments to
measure investments at fair value. The statement defines an investment as a security
or other asset that (a) a government holds primarily for the purpose of income or
profit and (b) has a present service capacity based solely on its ability to generate
cash or to be sold to generate cash. Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction
between participants at the measurement date. The City has adopted this statement
during the current fiscal year, but it had no material effect on these accompanying
financial statements.
The GASB issued Statement No. 74 titled, Financial Reporting for Postemployment
Benefit Plans Other Than Pension Plans; GASB Statement No. 75, titled, Accounting and
Financial Reporting for Postemployment Benefits Other Than Pensions; GASB Statement
No. 77; titled, Tax Abatement Disclosures; GASB Statement No. 78, titled, Pensions
Provided through Certain Multiple‐Employer Defined Benefit Pension Plans, which will
require adoption in the future, if applicable. These statements may or will have a
material effect on the City’s financial statements once implemented. The City will
be analyzing the effects of these pronouncements and plans to adopt them as
applicable by their effective date.
REQUIRED SUPPLEMENTARY INFORMATION
69
Revenues
Property tax $2,340,000 $2,447,998 $107,998
Sales tax 730,000 815,547 85,547
Franchise and local taxes 212,700 240,206 27,506
License and permits 125,750 111,189 (14,561)
Charges for services 735,000 829,508 94,508
Fire and rescue 495,000 586,833 91,833
Contributions and donations - 325 325
Intergovernmental - 77,844 77,844
Fines and forfeitures 140,000 136,433 (3,567)
Investment income 2,500 6,296 3,796
Other revenue 124,990 96,817 (28,173)
4,905,940 5,348,996 443,056
Expenditures
Current:
General government 972,240 951,828 20,412
Police department 1,445,739 1,262,092 183,647
Municipal court 240,718 195,182 45,536
Fire and EMS 928,550 940,549 (11,999)
Parks and recreation 513,090 463,483 49,607
Public works 657,928 616,616 41,312
Debt service:
Principal 153,324 194,056 (40,732)
Interest 13,212 28,835 (15,623)
Bond issuance costs - 37,964 (37,964)
Capital outlay 340,700 365,269 (24,569)
5,265,501 5,055,874 209,627
Revenues Over (Under) Expenditures $(359,561) $293,122 $652,683
Total Revenues
Variance with
City of Sanger, Texas
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL- GENERAL FUND (Page 1 of 2)
For the Year Ended September 30, 2016
Original &
Final Budget
Total Expenditures
Actual Final Budget
70
Transfers in $1,140,031 $1,152,539 $12,508
Transfers (out)(806,869) (942,492) (135,623)
Bond issuance - 1,166,100 1,166,100
Premium - 98,406 98,406
Payment to refunding bond escrow agent - (1,226,542) (1,226,542)
Sale of capital assets 25,000 30,618 5,618
Insurance recoveries 13,000 1,932 (11,068)
371,162 280,561 (90,601)
Net Change in Fund Balance $11,601 573,683 $562,082
Beginning fund balance 1,974,317
$2,548,000
Notes to Required Supplementary Information
1. Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).
Variance with
Actual Final Budget
IN FUND BALANCE - BUDGET AND ACTUAL- GENERAL FUND (Page 2 of 2)
For the Year Ended September 30, 2016
Original &
Final Budget
Ending Fund Balance
Total Other Financing Sources
Other Financing Sources (Uses)
City of Sanger, Texas
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
71
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72
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
1
Total pension liability
Service cost $369,950 $340,004
Interest (on the Total Pension Liability)521,853 476,571
Changes in benefit terms - -
Differences between expected and actual experience (89,808) 47,610
Changes of assumptions 47,847 -
Benefit payments, including refunds of participant
contributions (260,514) (204,026)
Net change in total pension liability 589,328 660,159
Total pension liability - beginning 7,400,331 6,740,172
Total pension liability - ending (a)$7,989,659 $7,400,331
Plan fiduciary net position
Contributions - employer $231,097 $211,283
Contributions - members 195,568 187,821
Net investment income 9,831 350,203
Benefit payments, including refunds of participant
contributions (260,514) (204,026)
Administrative expenses (5,988) (3,656)
Other (296) (301)
Net change in plan fiduciary net position 169,698 541,324
Plan fiduciary net position - beginning 6,661,957 6,120,633
Plan fiduciary net position - ending (b)$6,831,655 $6,661,957
Fund's net pension liability - ending (a) - (b)$1,158,004 $738,374
85.51%90.02%
Covered employee payroll $3,259,471 $3,130,346
35.53% 23.59%
Notes to schedule:
1) This schedule is presented to illustrate the requirement to show information
for ten years. However, until a full ten-year trend is compiled, only available
information is shown.
2015
Plan fiduciary net position as a percentage of the total pension
City of Sanger, Texas
For The Years Ended December 31, 2015 and 2014
Fund's net position as a percentage of covered employee
payroll
2014
73
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74
2016 2015 1
Actuarially determined employer contributions $247,432 $225,111
$ 247,432 $ 225,111
Contribution deficiency (excess)$- $-
Annual covered employee payroll $3,475,512 $3,130,346
7.12%7.19%
Valuation Date:
Notes Actuarially determined contribution rates are
calculated as of December 31 and become
effective in January 13 months later.
Methods and Assumptions Used to Determine Contribution Rates:
Actuarial Cost Method Entry Age Normal
Amortization Method Level Percentage of Payroll, Closed
Remaining Amortization Period 25 years
Asset Valuation Method 10 Year smoothed market; 15% soft corridor
Inflation 2.5%
Salary Increases 3.0% to 10.5% including inflation
Investment Rate of Return 6.75%
Retirement Age Experience-based table of rates that are specific to
the City's plan of benefits. Last updated for the
2015 valuation pursuant to an experience study
of the period 2010 - 2014
Mortality RP2000 Combined Mortality Table with Blue Collar
Adjustment with male rates multiplied by 109%
and female rates multiplied by 103% and projected
on a fully generational basis with scale BB
Other Information:
Notes There were no benefit changes during the year.
NOTES TO SCHEDULE OF EMPLOYER CONTRIBUTIONS TO PENSION PLAN
City of Sanger, Texas
SCHEDULE OF EMPLOYER CONTRIBUTIONS TO PENSION PLAN
For The Years Ended September 30, 2016 and 2015
1) This schedule is presented to illustrate the requirement to show information
for ten years. However, until a full ten-year trend is compiled, only available
information is shown.
Contributions in relation to the actuarially determined
contribution
Employer contributions as a percentage of covered employee
payroll
75
(This page intentionally left blank.)
76
OTHER SUPPLEMENTARY INFORMATION
77
Operating Revenues
Charges for services $1,519,913 $1,476,998 $7,832,147 $-
Connection fees - - 61,130 -
Tap fees 121,500 166,000 - -
Other revenue - - - -
1,641,413 1,642,998 7,893,277 -
Operating Expenses
Salaries and wages 334,757 160,690 574,304 -
Contracted services 5,306 147 44,443 -
Utilities 150,319 149,671 8,380 -
Materials and supplies 37,923 7,307 36,207 -
Water and electric purchases 64,044 - 5,440,315 -
Repairs and maintenance 226,620 133,485 147,105 -
Depreciation 282,736 232,995 276,487 1,562
1,101,705 684,295 6,527,241 1,562
539,708 958,703 1,366,036 (1,562)
Nonoperating Revenues (Expenses)
Investment income - - - -
Bond issuance costs - - - -
Interest expense - - - -
- - - -
Income Before Transfers 539,708 958,703 1,366,036 (1,562)
Transfers in - 230,937 - -
Transfers (out)- - (678,495) -
$539,708 $1,189,640 $687,541 $(1,562)
Sewer Electric Fleet Services
City of Sanger, Texas
COMBINING SCHEDULE OF REVENUES, EXPENSES, AND CHANGES IN FUND NET
POSITION
PROPRIETARY FUNDS - BY DEPARTMENT
For the Year Ended September 30, 2016
Water
Total Operating Revenues
Total Operating Expenses
Operating Income (loss)
Total Nonoperating Revenues (Expenses)
Change in Net Position
78
$- $10,829,058
- 61,130
- 287,500
58,874 58,874
58,874 11,236,562
- 1,069,751
- 49,896
- 308,370
- 81,437
- 5,504,359
- 507,210
17,283 811,063
17,283 8,332,086
41,591 2,904,476
21,429 21,429
(208,930) (208,930)
(395,154) (395,154)
(582,655) (582,655)
(541,064) 2,321,821
- 230,937
(1,254,366) (1,932,861)
$(1,795,430) $619,897
Administration Total
79