2017 Annual Financial Report(This page intentionally left blank.)
ANNUAL FINANCIAL REPORT
of the
City of Sanger, Texas
For the Year Ended
September 30, 2017
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City of Sanger, Texas
TABLE OF CONTENTS
September 30, 2017
FINANCIAL SECTION
Independent Auditor’s Report 1
Management’s Discussion and Analysis 7
Basic Financial Statements
Government-Wide Financial Statements
Statement of Net Position 18
Statement of Activities 22
Fund Financial Statements
Governmental Funds:
Balance Sheet 24
Reconciliation of the Balance Sheet to the Statement of Net Position-
Governmental Funds 27
Statement of Revenues, Expenditures, and Changes in Fund Balance-
Governmental Funds 28
Reconciliation of the Statement of Revenues, Expenditures, and
Changes in Fund Balances of Governmental Funds to the Statement
of Activities 31
Proprietary Funds:
Statement of Net Position 32
Statement of Revenues, Expenses, and Changes in Fund Net Position 33
Statement of Cash Flows 34
Notes to Financial Statements 37
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures, and Changes in Fund Balances-
Budget and Actual -General Fund 74
Schedule of Changes in Net Pension Liability and Related Ratios 76
Schedule of Employer Contributions to Plan 77
COMBINING AND INDIVIDUAL FUND FINANCIAL SCHEDULES
Combining Schedule of Revenues, Expenses, and Changes
in Fund Net Position -Proprietary Funds –by Department 80
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14950 Heathrow Forest Pkwy | Suite 530 | Houston, TX 77032 |Tel: 281.907.8788 |Fax: 888.875.0587 | www.BrooksWatsonCo.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,the discretely presented component units,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, 2017 , and the related notes to the financial statement s, 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 int ernal 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 state ments 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 asses sment 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 e valuating 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.
2
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 activit ies, the business-type activities,the
discretely presented component units,each major fund, and the aggregate remaining fund
information of the City as of September 30, 2017, 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.
Emphasis of Matter
As discussed in Note V.G. to the financial statements, the City restated the beginning net position
of governmental activities and business -type activities, and the beginning fund balance of the
general fund due to accounting error s occurring in the prior year and the change in the
presentation of the City’s component units .Our opinion is not modified with respect to this
matter.
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 budgeta ry comparison
information for the general fund 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 wit h 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.
3
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 is presented for purposes of additional analysis and is
not a required part of the basic financial statements.
The combining schedule by department for the proprietary fund is the responsibility of
management and was derived from and relate directly to the underlying accounting and other
records used to prepare the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic
financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the combining
financial statements are fairly stated, in all material respects, in relation to the basic financial
statements as a whole.
BrooksWatson & Co.
Certified Public Accountants
Houston, Texas
February 13, 2018
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4
MANAGEMENT'S DISCUSSION
AND ANALYSIS
5
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6
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
September 30, 2017
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, 2017.
Financial Highlights
The City's total combined net position is $32,788,027 at September 30,2017.Of this, $16,701,249
(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 $4,077,155, an increase of $138,149.
As of the end of the year, the unassigned fund balance of the general fund was $3,190,939 or
57%of total general fund expenditures.
The City had an overall increase in net position of $4,654,389, which is primarily due to strong
general and utility revenues and increased investment in capital assets compared to the prior
year.
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, 2017
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 Development Corporation (“4A”) and the
Sanger Texas Development Corporation (“4B”), for which the City is financially accountable. Financial
information for these component units is reported separately from the financial information presented
for the primary government itself.
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 three individual governmental funds. Information is presented
separately in the governmental fund balance sheet and in the governmental fund statement of
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2017
9
revenues, expenditures, and changes in fund balances for the general,debt service, and capital projects
funds. The general and capital projects funds 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 an internal
service fund to account for administrative support servies to other funds of the City.
Component Units
The City maintains the accounting and financial statements for two component units. The 4A and the
4B are both discretely presented component units displayed on the government-wide financial
statements.
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 $32,788,027 as of September 30, 2017,in
the primary government.
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2017
10
The largest portion of the City’s net position,$15,230,983,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 debt 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
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,$855,795, represents resources that are subject to
external restrictions on how they may be used. The remaining balance of $16,701,249 is unrestricted
and may be used to meet the government’s ongoing obligations to its citizens and creditors.
Current assets of business-type activities as of September 30, 2017 and September 30, 2016 were
$23,313,512 and $16,093,043, respectively. The increase of $7,220,469 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, 2017 and September 30, 2016 were
$21,767,087 and $12,739,769, respectively. The increase of $9,027,318 was due to the aforementioned
bond issuance during the year.
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2017
11
Statement of Net Position:
The following table reflects the condensed Statement of Net Position:
Current and
other assets $5,153,316 $23,313,512 $28,466,828 $4,401,941 $16,093,043 $20,494,984
Capital assets, net 16,264,468 18,881,652 35,146,120 14,036,819 15,045,344 29,082,163
Total Assets 21,417,784 42,195,164 63,612,948 18,438,760 31,138,387 49,577,147
of Resources 465,724 178,790 644,514 489,156 196,393 685,549
Other liabilities 1,716,929 2,788,037 4,504,966 1,288,848 2,365,563 3,654,411
Long-term liabilities 5,069,886 21,767,087 26,836,973 5,734,878 12,739,769 18,474,647
Total Liabilities 6,786,815 24,555,124 31,341,939 7,023,726 15,105,332 22,129,058
of Resources 97,970 29,526 127,496 - - -
Net Position:
Net investment
net of related debtin capital assets 10,968,978 4,262,005 15,230,983 8,436,670 7,235,242 15,671,912
Restricted 855,795 - 855,795 1,555,196 - 1,555,196
Unrestricted 3,173,950 13,527,299 16,701,249 1,912,324 8,994,206 10,906,530
Total Net Position $14,998,723 $17,789,304 $32,788,027 $11,904,190 $16,229,448 $28,133,638
Deferred Outflows
Deferred Inflows
2017 2016
Governmental Business-Type
Activities
Governmental Business-Type
ActivitiesActivities TotalTotalActivities
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2017
12
Statement of Activities:
The following table provides a summary of the City’s changes in net position:
Revenues
Program revenues:
Charges for services $1,810,697 $12,180,291 $13,990,988 $1,663,963 $11,236,562 $12,900,525
Grants and contributions 1,718,787 725,000 2,443,787 185,385 472,500 657,885
General revenues:
Property taxes 3,584,390 - 3,584,390 3,329,733 - 3,329,733
Sales taxes 883,562 - 883,562 815,547 - 815,547
Franchise and local taxes 236,082 - 236,082 240,206 - 240,206
Investment income 4,372 21,875 26,247 6,410 21,429 27,839
Other revenues 210,949 - 210,949 133,359 - 133,359
Total Revenues 8,448,839 12,927,166 21,376,005 6,374,603 11,730,491 18,105,094
Expenses
General government 1,797,001 - 1,797,001 1,797,824 - 1,797,824
Public safety 2,369,510 - 2,369,510 2,421,517 - 2,421,517
Public works 1,074,157 - 1,074,157 998,940 - 998,940
Culture and recreation 792,090 - 792,090 731,562 - 731,562
Interest and fiscal charges 186,772 741,243 928,015 253,181 401,239 654,420
Water, sewer, & electric - 9,760,843 9,760,843 - 9,458,017 9,458,017
Total Expenses 6,219,530 10,502,086 16,721,616 6,203,024 9,859,256 16,062,280
Change in Net Position
Before Transfers 2,229,309 2,425,080 4,654,389 171,579 1,871,235 2,042,814
Transfers 865,224 (865,224) - 1,257,423 (1,257,423)-
Total 865,224 (865,224) - 1,257,423 (1,257,423)-
Change in Net Position 3,094,533 1,559,856 4,654,389 1,429,002 613,812 2,042,814
Beginning Net Position 11,904,190 16,229,448 28,133,638 10,475,188 15,615,636 26,090,824
Ending Net Position $14,998,723 $17,789,304 $32,788,027 $11,904,190 $16,229,448 $28,133,638
Activities Activities
Business-Type Primary
Total
Primary Governmental
ActivitiesGovernment
Governmental
For the Year Ended September 30, 2017
Business-Type
Government
For the Year Ended September 30, 2016
Total
Activities
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2017
13
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, 2017, revenues from governmental activities totaled $8,448,839.
Property tax, sales tax and charges for services are the City’s largest revenue sources. Property tax
increased by $254,657 or 8%due to higher property values.Sales taxes increased $68,015 or 8%due to
economic growth within the city limits. Charges for services increased $146,734 or 9%primarily due to
increases in EMS services and building permit revenue.Grants and contributions increased by
$1,533,402 funds received from an interlocal agreement with Denton County for street construction.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, 2017, expenses for governmental activities totaled $6,219,530. This
represents an increase of $16,506 or < 1%from the prior year. The City’s largest functional expense is
general government of $1,797,001,which primarily includes contractual costs for garbage removal,
salaries for finance and city administration,plus depreciation of related capital assets.Interest and
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2017
14
fiscal charges decreased $66,409 or 26%due to the recognition of bond issuance costs in the prior year.
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, 2017, charges for services by business-type activities totaled
$12,180,291. This is an increase of $943,729, or 8%,from the previous year.The increase was due to the
increase in water and sewer billing rates and consumption in the current year.
Total expenses increased $642,830 primarily due to increases in interest and amortization expenses, 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 $3,376,924. Of this, $8,131 is
restricted for municipal court, $21,744 is restricted for tourism, $88,436 is restricted for library
improvements,$29,191 for public safety, and $8,062 is restricted for parks.In addition, $30,421 is
committed for employee benefits.Unassigned fund balance totaled $3,190,939 as of yearend.
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2017
15
The capital projects fund reflected an ending balance of $240,936, a decrease of $789,935.This decrease
is attributed to greater capital outlay expenditures compared to intergovernmental funds received.
There was an increase in governmental fund balance of $138,149 over the prior year. The increase was
primarily due to transfers received from the proprietary fund.
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 $812,045 in the general fund. This is a combination of a
positive revenue variance of $421,097, a positive expenditure variance of $453,992,and a negative
variance of $63,044 in other financing sources and uses. The most significant variances were for
property taxes, sales taxes, licenses and permits, charges for services, capital outlay, 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 $16,264,468 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 $18,881,652 in a variety of capital assets and infrastructure, net of accumulated
depreciation.
Major capital asset events during the current year include the following:
McReynolds road construction in the amount of $2,789,579
Waste water line improvements to Smith, Sims, Kirkland, Jones & Lois for $1,828,315
New water well for $381,307
Sewer plant expansion for $1,816,933
Waste water treatment plant pipeline and a new lift station totaling $384,619
Acquisition of machinery and equipment for water department for $140,074
Purchase of public safety vehicles for $153,905
More detailed information about the City’s capital assets is presented in note IV. D to the financial
statements.
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30, 2017
16
LONG-TERM DEBT
At the end of the current year, the City had total bonds outstanding of $25,115,000 and capital leases of
$573,438. During the year, the City had principal payments on bonds and capital leases of $1,559,098.
During the year, the City had a $9,240,000 bond issuance for the water, sewer, and electric fund. More
detailed information about the City’s long-term liabilities is presented in note IV. E 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 designed 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.
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17
Current assets:
Cash and cash equivalents $3,609,746 $12,227,941 $15,837,687
Restricted cash - 8,255,967 8,255,967
Investments 532,221 417,201 949,422
Restricted investments - 300,000 300,000
Receivables, net 1,114,924 1,622,297 2,737,221
Inventory - 386,531 386,531
Internal balances (103,575) 103,575 -
5,153,316 23,313,512 28,466,828
Capital assets:
Non-depreciable 4,378,857 8,391,661 12,770,518
Net depreciable capital assets 11,885,611 10,489,991 22,375,602
16,264,468 18,881,652 35,146,120
21,417,784 42,195,164 63,612,948
Deferred Outflows of Resources
Deferred charge on refunding 26,537 46,428 72,965
Pension contributions 160,147 48,265 208,412
Pension investment earnings 234,017 70,528 304,545
Pension assumption changes 45,023 13,569 58,592
Total Deferred Outflows of Resources 465,724 178,790 644,514
See Notes to Financial Statements.
Assets
Governmental
Total Assets
Total Current Assets
Total
City of Sanger, Texas
STATEMENT OF NET POSITION (Page 1 of 2)
September 30, 2017
Activities Activities
Primary Government
Business-Type
18
$1,154,579 $724,225
94,483 278,079
- -
71,503 71,503
- -
- -
1,320,565 1,073,807
- -
817,307 -
817,307 -
2,137,872 1,073,807
- -
- -
- -
- -
- -
Component Units
Sanger Industrial
Dev. Corp. (4A)Dev. Corp. (4B)
Sanger Texas
19
Liabilities
Current liabilities:
Accounts payable and
accrued liabilities $793,485 $1,185,534 $1,979,019
Accrued interest payable 37,433 233,321 270,754
Customer deposits - 438,426 438,426
Long term debt due within one year 886,011 930,756 1,816,767
1,716,929 2,788,037 4,504,966
Noncurrent liabilities:
Debt due in more than one year 4,197,725 21,504,235 25,701,960
Net pension liability 872,161 262,852 1,135,013
5,069,886 21,767,087 26,836,973
6,786,815 24,555,124 31,341,939
Deferred Inflows of Resources
Pension (gains) losses 97,970 29,526 127,496
Net investment in capital assets 10,968,978 4,262,005 15,230,983
Restricted for:
Debt service 459,295 - 459,295
Capital projects 240,936 - 240,936
Parks 8,062 - 8,062
Economic development - - -
Other purposes 147,502 - 147,502
Unrestricted 3,173,950 13,527,299 16,701,249
$14,998,723 $17,789,304 $32,788,027
See Notes to Financial Statements.
September 30, 2017
Activities
Business-Type
STATEMENT OF NET POSITION (Page 2 of 2)
Net Position
Total Net Position
Total Liabilities
Total
City of Sanger, Texas
Total Current Liabilities
Governmental
Activities
Primary Government
20
$3,216 $-
- -
- -
50,699 -
53,915 -
307,321 -
- -
307,321 -
361,236 -
-
464,493 -
- -
- -
- -
1,312,143 1,073,807
- -
- -
$1,776,636 $1,073,807
Dev. Corp. (4A)Dev. Corp. (4B)
Sanger Industrial Sanger Texas
Component Units
21
Capital
Grants and
Contributions
Primary Government
Governmental Activities
General government $1,797,001 $1,119,153 $300 $-
Public safety 2,369,510 691,544 53,743 -
Public works 1,074,157 - - 1,452,244
Culture and recreation 792,090 - - -
Interest and fiscal charges 186,772 - 212,500 -
6,219,530 1,810,697 266,543 1,452,244
Business-Type Activities
Water 1,474,412 2,133,938 - 725,000
Sewer 1,015,563 2,204,011 - -
Electric 7,256,080 7,788,610 - -
Fleet services 525 - - -
Utility administration 755,506 53,732 - -
Total Business-Type Activities 10,502,086 12,180,291 - 725,000
Total Primary Government $16,721,616 $13,990,988 $266,543 2,177,244
Component Units
4A 918,183 - - 30,000
4B 237,500 - - -
$1,155,683 $- $- $30,000
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.
Grants and
Total General Revenues and Transfers
City of Sanger, Texas
STATEMENT OF ACTIVITIES
Operating
For the Year Ended September 30, 2017
Program Revenues
Charges for
Expenses Contributions
Total Governmental Activities
Functions/Programs Services
22
$(677,548) $- $(677,548) $- $-
(1,624,223) - (1,624,223) - -
378,087 - 378,087 - -
(792,090) - (792,090) - -
25,728 - 25,728 - -
(2,690,046) - (2,690,046) - -
- 1,384,526 1,384,526 - -
- 1,188,448 1,188,448 - -
- 532,530 532,530 - -
- (525) (525) - -
- (701,774) (701,774) - -
- 2,403,205 2,403,205 - -
(2,690,046) 2,403,205 (286,841) - -
(888,183)-
- (237,500)
(888,183) (237,500)
3,584,390 - 3,584,390 - -
883,562 - 883,562 439,500 439,500
236,082 - 236,082 - -
4,372 21,875 26,247 - 1,346
85,990 - 85,990 8,409 -
10,834 - 10,834 - -
114,125 - 114,125 - -
865,224 (865,224) - - -
5,784,579 (843,349)4,941,230 447,909 440,846
3,094,533 1,559,856 4,654,389 (440,274)203,346
11,904,190 16,229,448 28,133,638 2,216,910 870,461
$14,998,723 $17,789,304 $32,788,027 $1,776,636 $1,073,807
Dev. Corp. (4A)Dev. Corp. (4B)Total
Business-Type
Activities
Sanger Industrial Sanger Texas
Primary Government
Governmental
Component Units
Net (Expense) Revenue and Changes in Net Position
Activities
23
Cash and cash equivalents $2,916,475 $60,156 $459,191
Investments 532,221 - -
Receivables, net 485,660 609,231 20,033
$3,934,356 $669,387 $479,224
Liabilities
Accounts payable and
accrued liabilities $320,093 $428,451 $-
Due to other funds 103,575 - -
423,668 428,451 -
Deferred Inflows of Resources
Unavailable revenue
Property taxes 43,237 - 19,929
EMS revenue 90,527 - -
Total Deferred Inflows of Resources 133,764 - 19,929
Restricted for:
Municipal court 8,131 - -
Tourism 21,744 - -
Library 88,436 - -
Public safety 29,191 - -
Debt service - - 459,295
Capital projects - 240,936 -
Parks 8,062 - -
Committed for:
Employee benefits 30,421 - -
Unassigned reported in:
General fund 3,190,939 - -
3,376,924 240,936 459,295
$3,934,356 $669,387 $479,224
See Notes to Financial Statements.
City of Sanger, Texas
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2017
Total Liabilities, Deferred Inflows, and Fund Balances
Total Fund Balances
Total Assets
Fund Balances
Assets
Service
Total Liabilities
Capital
Projects FundGeneral
Nonmajor
Debt
24
$3,435,822
532,221
1,114,924
$5,082,967
$748,544
103,575
852,119
63,166
90,527
153,693
8,131
21,744
88,436
29,191
459,295
240,936
8,062
30,421
3,190,939
4,077,155
$5,082,967
Funds
Total
Governmental
25
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26
Fund Balances - Total Governmental Funds $4,077,155
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 4,378,857
Capital assets - net depreciable 11,845,875
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 90,527
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 26,537
Pension contributions 119,451
Pension investment earnings 174,549
Pension gains (losses)(73,074)
Pension assumption changes 33,582
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.
Net position - governmental activities (4,913)
Some liabilities, including bonds payable and deferred charges, are not reported as
liabilities in the governmental funds.
Accrued interest (37,433)
Compensated absences (144,352)
Bond premium (120,759)
Net pension liability (650,530)
Non-current liabilities due in one year (721,255)
Non-current liabilities due in more than one year (4,058,660)
$14,998,723
See Notes to Financial Statements.
City of Sanger, Texas
RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION
GOVERNMENTAL FUNDS
September 30, 2017
27
Revenues
Property tax $2,950,887 $- $684,262
Sales tax 883,562 - -
Franchise and local taxes 236,082 - -
License and permits 289,775 - -
Charges for services 829,378 - -
Fire and rescue 588,124 - -
Contributions and donations 300 - -
Intergovernmental 53,743 1,452,244 212,500
Fines and forfeitures 103,420 - -
Investment income 4,258 - 114
Other revenue 85,990 - -
6,025,519 1,452,244 896,876
Expenditures
Current:
General government 1,502,906 - 875
Police department 1,339,076 - -
Municipal court 184,528 - -
Fire and EMS 991,227 - -
Parks and recreation 597,346 - -
Public works 730,096 - -
Debt service:
Principal 111,095 - 596,800
Interest 18,257 - 192,466
Capital outlay 169,822 2,792,179 -
5,644,353 2,792,179 790,141
Excess of Revenues Over (Under) Expenditures 381,166 (1,339,935) 106,735
Other Financing Sources (Uses)
Transfers in 916,760 550,000 -
Transfers (out)(550,000) - (51,536)
Proceeds from sale of capital assets 10,834 - -
Insurance recoveries 114,125 - -
491,719 550,000 (51,536)
872,885 (789,935) 55,199
Beginning fund balances 2,504,039 1,030,871 404,096
$3,376,924 $240,936 $459,295
See Notes to Financial Statements.
Capital
Ending Fund Balances
Total Other Financing Sources (Uses)
Total Expenditures
Net Change in Fund Balances
General
Total Revenues
ServiceProjects Fund
City of Sanger, Texas
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
Nonmajor
Debt
GOVERNMENTAL FUNDS
For the Year Ended September 30, 2017
28
$3,635,149
883,562
236,082
289,775
829,378
588,124
300
1,718,487
103,420
4,372
85,990
8,374,639
1,503,781
1,339,076
184,528
991,227
597,346
730,096
707,895
210,723
2,962,001
9,226,673
(852,034)
1,466,760
(601,536)
10,834
114,125
990,183
138,149
3,939,006
$4,077,155
Total
Funds
Governmental
29
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30
Amounts reported for governmental activities in the statement of activities are
different because:
Net changes in fund balances - total governmental funds $138,149
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 3,163,870
Depreciation expense (942,156)
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds.
EMS receivable (50,759)
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 (9,675)
Accrued interest 4,852
Pension expense (71,967)
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 issuance
costs, 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 (7,250)
Premium on debt 26,349
Principal payments 707,895
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.135,225
$3,094,533
See Notes to Financial Statements.
Change in Net Position of Governmental Activities
For the Year Ended September 30, 2017
City of Sanger, Texas
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF ACTIVITIES
31
Current Assets
Cash and cash equivalents $12,227,941 $173,924
Restricted cash 8,255,967 -
Investments 417,201 -
Restricted investments 300,000 -
Receivables, net 1,622,297 -
Inventory 386,531 -
Due from other funds 103,575 -
23,313,512 173,924
Noncurrent Assets
Capital assets:
Non-depreciable 8,391,661 -
Net depreciable capital assets 10,489,991 39,736
18,881,652 39,736
42,195,164 213,660
Pension contributions 48,265 40,696
Pension investment earnings 70,528 59,468
Pension assumption changes 13,569 11,441
Deferred charge on refunding 46,428 -
Total Deferred Outflows of Resources 178,790 111,605
Current Liabilities
Accounts payable and accrued liabilities 1,185,534 44,941
Accrued interest 233,321 -
Customer deposits 438,426 -
Compensated absences - current 94,379 34,839
Bonds and capital leases payable-current 836,377 -
2,788,037 79,780
Noncurrent Liabilities
Compensated absences 10,487 3,871
Net pension liability 262,852 221,631
Bonds and capital leases payable 21,493,748 -
24,555,124 305,282
Pension (gains) losses 29,526 24,896
Net investment in capital assets 4,370,129 39,736
Unrestricted 13,419,175 (44,649)
$17,789,304 $(4,913)
See Notes to Financial Statements.
Total Net Position
Net Position
Total Noncurrent Assets
Total Assets
Liabilities
Total Liabilities
Total Current Liabilities
Water, Sewer
Assets
Service
Deferred Outflows of Resources
Deferred Inflows of Resources
Internal
& Electric
Total Current Assets
City of Sanger, Texas
STATEMENT OF NET POSITION
PROPRIETARY FUND
September 30, 2017
Activities
Governmental
32
Operating Revenues
Charges for services $11,144,839 $1,676,148
Connection fees 57,720 -
Tap fees 924,000 -
Other revenue 53,732 -
12,180,291 1,676,148
Operating Expenses
Salaries and wages 1,935,540 1,057,951
Contracted services 324,471 293,394
Utilities 315,524 34,476
Materials and supplies 200,241 129,942
Water and electric purchases 5,483,292 -
Repairs and maintenance 685,346 17,801
Depreciation 816,429 7,359
9,760,843 1,540,923
2,419,448 135,225
Nonoperating Revenues (Expenses)
Investment income 21,875 -
Intergovernmental 725,000 -
Interest expense (741,243) -
5,632 -
2,425,080 135,225
Transfers (out)(865,224)-
1,559,856 135,225
16,229,448 (140,138)
$17,789,304 $(4,913)
See Notes to Financial Statements.
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, 2017
Water, Sewer
& Electric
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
33
Cash Flows from Operating Activities
Receipts from customers $12,315,664 $1,676,148
Payments to suppliers (6,691,173) (467,273)
Payments to employees (1,883,865) (1,021,659)
Payments/receipts for other (20,420) -
3,720,206 187,216
Cash Flows from Noncapital Financing Activities
Operating transfers out (865,224) -
(865,224) -
Cash Flows from Capital and Related Financing Activities
Capital purchases (4,652,737) (13,292)
Capital contributions 725,000 -
Proceeds from bond issuance 9,997,697 -
Principal paid on debt (851,203) -
Interest paid on debt (692,956) -
4,525,801 (13,292)
Cash Flows from Investing Activities
Purchases of investments, net (1,871) -
Interest on investments 21,875 -
20,004 -
7,400,787 173,924
13,083,121 -
$20,483,908 $173,924
See Notes to Financial Statements.
Governmental
Activities
Internal
Service
Beginning cash and cash equivalents
Net Cash Provided by Noncapital Financing Activities
Net Cash (Used) by Capital and Related Financing Activities
Ending Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Net Cash Provided by Investing Activities
City of Sanger, Texas
STATEMENT OF CASH FLOWS
PROPRIETARY FUND (Page 1 of 2)
For the Year Ended September 30, 2017
Net Cash Provided by Operating Activities
& Electric
Water, Sewer
34
Reconciliation of Operating Income
to Net Cash Provided by Operating Activities
Operating Income $2,419,448 $135,225
Adjustments to reconcile operating
income to net cash provided:
Depreciation 816,429 7,359
Changes in Operating Assets and Liabilities:
(Increase) Decrease in:
Accounts receivable 94,514 -
Inventory 108,095 -
Due from/to other funds (20,420) -
Deferred outflows of resources - pension contributions (6,229) (5,252)
Deferred outflows of resources - pension investment earnings 24,920 16,681
Deferred inflows of resources - pension (gains) losses 12,050 24,896
Deferred outflows of resources - pension assumption changes 3,663 (7,317)
Increase (Decrease) in:
Accounts payable and accrued liabilities 209,606 8,340
Compensated absences 22,596 11,773
Customer deposits 40,859 -
Net pension liability (5,325) (4,489)
$3,720,206 $187,216
See Notes to Financial Statements.
Service& Electric
Water, Sewer
Governmental
Activities
Net Cash Provided by Operating Activities
Internal
City of Sanger, Texas
STATEMENT OF CASH FLOWS
PROPRIETARY FUND (Page 2 of 2)
For the Year Ended September 30, 2017
35
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36
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS
September 30, 2017
37
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, 2017
38
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.
Discretely Presented Component Units
Sanger Industrial Development Corporation (4A)
The Sanger Texas Industrial Development Corporation (“4A”) 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. Discrete presentation is appropriate because the District’s Board is
not substantially the same as the City.
Sanger Texas Development Corporation (4B)
The Sanger Texas Development Corporation (“4B”) 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. Discrete presentation is appropriate because the District’s Board is not
substantially the same as the City.
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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
39
interfund services provided and other charges between the government’s water and
transit functions and various other functions of the government. Elimination of
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.
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.
Capital Projects Fund
The capital projects fund is used to account for capital asset activities for
governmental fund types.
The government reports the following nonmajor governmental fund:
Debt Service Fund
The debt service fund is used to account for debt service activities for
governmental fund types.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
40
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.
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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
41
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
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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
42
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
the SEC’s Rule 2a7 of the Investment Company Act of 1940, such as TexPool, are
reported using the pools’ share price.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
43
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
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.
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.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
44
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 average cost 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, 2017
45
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
– net position in the government‐wide and proprietary fund financial statements, a
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
46
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 subsequent 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
assignment. Conversely, as discussed above, an additional action is essential to
either remove or revise a commitment.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
47
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.
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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
48
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, 2017
49
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.
IV. DETAILED NOTES ON ALL FUNDS
A. Deposits and Investments
As of September 30, 2017, the primary government had the following investments:
Investment Type
Certificates of deposit $ 1,249,422 0.51
Total fair value $ 1,249,422
Portfolio weighted average maturity 0.51
Average Maturity
Fair Value (Years)
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
50
As of September 30, 2017, the 4A Component Unit had the following investments:
Investment Type
Certificates of deposit $ 94,483 0.01
Total fair value $ 94,483
Portfolio weighted average maturity 0.01
Average Maturity
Fair Value (Years)
As of September 30, 2017, the 4B Component Unit had the following investments:
Investment Type
Certificates of deposit $ 278,079 0.46
Total fair value $ 278,079
Portfolio weighted average maturity 0.46
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, 2017, the market values of
pledged securities and FDIC exceeded bank balances.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
51
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
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 $ 75,400 $ 31,177 $‐ $‐ $ 106,577
Sales tax 143,005 ‐ ‐ ‐ 143,005
Franchise & local taxes 35,236 ‐ ‐ ‐ 35,236
Intergovernmental ‐ ‐ 609,231 ‐ 609,231
EMS 292,017 ‐ ‐ ‐ 292,017
Accounts 118,785 ‐ ‐ 1,738,586 1,857,371
Other 38,930 ‐ ‐ ‐ 38,930
Allowance (217,713) (11,144) ‐ (116,289) (345,146)
$ 485,660 $ 20,033 $ 609,231 $ 1,622,297 $ 2,737,221
Water, Sewer
General Service
Capital
Projects
Debt
Total& Electric
The following comprise receivable balances of the component units at year end:
Sales tax $ 71,503 $ 71,503 $ 143,006
$ 71,503 $ 71,503 $ 143,006
Total4A 4B
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
52
C. Inventory
The following comprise the inventory balances of the primary government at year
end:
Inventory type
Electric Department $ 334,969
Water Department 51,562
Total $ 386,531
Cost
D. 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 1,010,993 2,798,410 (475,479) 3,333,924
2,055,926 2,798,410 (475,479) 4,378,857
Capital assets, being depreciated:
Infrastructure 11,958,388 17,800 11,500 11,987,688
Buildings and improvements 6,037,026 67,904 463,979 6,568,909
Machinery and equipment 3,616,608 293,049 (69,322) 3,840,335
21,612,022 378,753 406,157 22,396,932
Less accumulated depreciation
Infrastructure 5,816,900 320,717 ‐ 6,137,617
Buildings and improvements 1,682,788 295,941 ‐ 1,978,729
Machinery and equipment 2,131,440 332,857 (69,322) 2,394,975
Total accumulated depreciation 9,631,128 949,515 (69,322) 10,511,321
Net capital assets being depreciated 11,980,894 (570,762) 475,479 11,885,611
$ 14,036,820 $ 2,227,648 $‐ $ 16,264,468
Beginning Disposals / Ending
Balances Increases
Total Capital Assets
Total capital assets not being depreciated
Total capital assets being depreciated
BalancesReclassifications
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
53
Depreciation was charged to governmental functions as follows:
General government $ 106,752
Public safety 117,555
Public works 359,369
Culture and recreation 240,696
Fire and rescue 117,784
Internal service 7,359
$ 949,515 Total Governmental Activities Depreciation Expense
A summary of changes in business‐type activities capital assets for the year end
was as follows:
Capital assets, not being depreciated:
Land $ 496,857 $‐ $‐ $ 496,857
Construction in progress 3,449,956 4,444,848 ‐ 7,894,804
Total capital assets not being depreciated 3,946,813 4,444,848 ‐ 8,391,661
Capital assets, being depreciated:
Infrastructure 23,566,545 89,185 ‐ 23,655,730
Buildings and improvements 865,245 ‐ ‐ 865,245
Machinery and equipment 2,082,611 118,704 (24,700) 2,176,615
Total capital assets being depreciated 26,514,401 207,889 (24,700) 26,697,590
Less accumulated depreciation
Infrastructure 13,617,158 634,126 ‐ 14,251,284
Buildings and improvements 419,568 51,855 ‐ 471,423
Machinery and equipment 1,379,144 130,448 (24,700) 1,484,892
Total accumulated depreciation 15,415,870 816,429 (24,700) 16,207,599
Net capital assets being depreciated 11,098,531 (608,540) ‐ 10,489,991
$ 15,045,344 $ 3,836,308 $‐ $ 18,881,652 Total Capital Assets
Beginning Disposals /Ending
Balances Increases Reclassifications Balances
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
54
Depreciation was charged to business‐type activities as follows:
Water $ 292,183
Sewer 272,292
Electric 237,166
Other 14,788
$ 816,429 Total Business‐type Activities Depreciation Expense
A summary of changes in component unit (4A Component Unit) capital assets for
the year end was as follows:
Capital assets, being depreciated:
Buildings and improvements $ 1,080,797 $‐ $‐ $ 1,080,797
Furniture and fixtures 40,950 ‐ ‐ 40,950
Total capital assets being depreciated 1,121,747 ‐ ‐ 1,121,747
Less accumulated depreciation
Buildings and improvements 253,145 38,360 ‐ 291,505
Furniture and fixtures 8,572 4,363 ‐ 12,935
Total accumulated depreciation 261,717 42,723 ‐ 304,440
Net capital assets being depreciated 860,030 (42,723) ‐ 817,307
$ 860,030 $ (42,723) $‐ $ 817,307
Beginning Retirements/ Ending
Balances Additions Reclassifications Balances
Total Capital Assets
The 4A Component Unit recognized depreciation expense of $42,723 during the year ended
September 30, 2017.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
55
E. 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 $ 1,946,800 $‐ $ (372,500) $ 1,574,300 $ 377,000
Certificates of Obligation 2,964,600 ‐ (224,300) 2,740,300 229,900
Less deferred amounts:
For issuance premiums 147,108 ‐ (26,349) 120,759 ‐
5,058,508 ‐ (623,149) 4,435,359 606,900
Other liabilities:
Capital leases payable 576,410 ‐ (111,095) 465,315 114,355
Compensated absences 161,614 135,798 (114,350) 183,062 164,756
$ 5,796,532 $ 135,798 $ (848,594) $ 5,083,736 $ 886,011
Long‐term liabilities due in more than one year $ 4,197,725
Business‐Type Activities:
General Obligation Bonds $ 2,363,200 $‐ $ (452,500) $ 1,910,700 $ 458,000
Certificates of Obligation 9,955,400 9,240,000 (305,700) 18,889,700 325,100
Less deferred amounts:
For issuance premiums 743,091 757,697 (79,186) 1,421,602 ‐
13,061,691 9,997,697 (837,386) 22,222,002 783,100
Other liabilities:
Capital leases payable 201,126 ‐ (93,003) 108,123 53,277
Compensated absences 79,493 78,226 (52,853) 104,866 94,379
$ 13,342,310 $ 10,075,923 $ (983,242) $ 22,434,991 $ 930,756
Long‐term liabilities due in more than one year $ 21,504,235
Component Units (4A Fund)
Notes payable $ 396,451 $‐ $ (43,637) $ 352,814 $ 46,014
Compensated absences 2,888 3,860 (1,542) 5,206 4,685
$ 399,339 $ 3,860 $ (45,179) $ 358,020 $ 50,699
Long‐term liabilities due in more than one year $ 307,321
One Year
Total Governmental
Activities
Beginning Amortization/ Ending Due within
Balance Additions Payments Balance
Total Business‐Type
Activities
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
56
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% $ 633,600 $ 806,400 $‐ $ 1,440,000
$2,535,000 General Obligation Refunding Bond, Series 2016, due in
installments through 2021, interest at 2% to 4% 940,700 1,104,300 ‐ 2,045,000
$ 1,574,300 $ 1,910,700 $‐ $ 3,485,000
Certificates of Obligation:
$1,750,000 Certificates of Obligation, Series 2007,
due in annual installments through 2027, interest at 4.4% $ 362,100 $ 702,900 $‐ $ 1,065,000
$3,200,000 Certificates of Obligation, Series 2009,
due in annual installments through 2026, interest at 3% to 4.75% 1,945,000 ‐ ‐ 1,945,000
$4,260,000 Certificates of Obligation, Series 2013,
due in annual installments through 2033, interest at 2% to 3.7% 433,200 3,176,800 ‐ 3,610,000
$5,870,000 Certificates of Obligation, Series 2015,
due in annual installments through 2035, interest at 3.4% to 5.5%‐ 5,770,000 ‐ 5,770,000
$9,240,000 Certificates of Obligation, Series 2017,
due in annual installments through 2035, interest at 3% to 4%‐ 9,240,000 ‐ 9,240,000
$ 2,740,300 $ 18,889,700 $‐ $ 21,630,000
Less deferred amounts:
Issuance premium $ 120,759 $ 1,421,602 $‐ $ 1,542,361
$ 120,759 $ 1,421,602 $‐ $ 1,542,361
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% $‐ $‐ $ 352,814 $352,814
$‐ $‐ $ 352,814 $352,814
Capital Leases Payable:
$435,000 Capital lease payable to financial institution, due in annual
installments of $51,535 through 2024, interest at 3.346% $ 316,303 $‐ $‐ $316,303
$500,000 Capital lease payable to financial institution, due in annual
installments of $134,279 through 2019, interest at 2.947% 149,012 108,123 ‐ 257,135
$ 465,315 $ 108,123 $‐ $573,438
Compensated Absences 183,062 104,866 5,206 293,134
$ 5,083,736 $ 22,434,991 $ 358,020 $ 27,876,747
4A Fund
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
Component
Unit
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
57
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.
The City issued $9,240,000 of Series 2017 Certificates of Obligation in the current
year. The City received proceeds of $9,997,697 from this issuance resulting in
premium recorded of $757,697. The City also recognized debt issuance costs to
interest expense of $242,289 from this issuance. Principal payments are due
annually in May, beginning May 2022. The bonds bear an interest rate ranging
from 3% to 4%. Interest payments are due semi‐annually on November 15th and
May 15th through 2037.
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,
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
$ 1,574,300 $ 139,087 $ 1,910,700 $ 167,538
Principal Interest Principal Interest
Governmental Activities Business‐Type Activities
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
58
Combination Tax and Revenue Certificates of Obligations
Year ending
September 30,
2018 $ 229,900 $ 119,387 $ 325,100 $ 721,343
2019 241,600 110,391 328,400 715,779
2020 248,900 100,919 331,100 706,516
2021 261,200 91,050 408,800 694,655
2022 273,500 79,919 616,500 679,742
2023 286,400 68,258 633,600 660,427
2024 297,000 55,768 658,000 640,327
2025 309,300 42,686 675,700 618,519
2026 323,900 28,194 701,100 593,113
2027 71,800 13,024 998,200 566,321
2028 28,800 9,768 1,086,200 526,357
2029 30,600 8,400 1,124,400 482,800
2030 31,800 6,870 1,173,200 436,574
2031 33,600 5,280 1,221,400 387,920
2032 35,400 3,600 1,269,600 337,338
2033 36,600 1,830 1,323,400 284,626
2034 ‐ ‐ 1,420,000 229,713
2035 ‐ ‐ 1,475,000 173,656
2036 ‐ ‐ 1,535,000 115,344
2037 ‐ ‐ 1,585,000 63,400
$ 2,740,300 $ 745,345 $ 18,889,700 $ 9,634,468
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, 2017
59
Capital Leases
Year ending
September 30,
2018 $ 114,355 $ 14,995 $ 53,277 $ 3,186
2019 117,889 11,463 54,846 1,616
2020 43,716 7,819 ‐ ‐
2021 45,179 6,357 ‐ ‐
2022 46,690 4,845 ‐ ‐
2023 48,252 3,283 ‐ ‐
2024 49,234 1,668 ‐ ‐
$ 465,315 $ 50,430 $ 108,123 $ 4,802
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
as of yearend for governmental activities and business type activities of $506,762
and $178,737, respectively.
Note Payable for Component Unit – 4A
Year ending
September 30,
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 42,199 3,063
$ 352,814 $ 60,050
Principal Interest
Component Unit ‐ 4A Fund
F. Conduit Debt
Before the current year, the City issued notes payable totaling $230,461,407 for the
purpose of assisting with financing needed by not‐for‐profit organizations to
promote their cause. The final maturities on notes payable range from March 2017
through December 2041. The notes are secured by various assets of the borrower.
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.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
60
G. 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 $26,537 and $46,428, respectively. Current year amortization
expense for governmental and business‐type activities totaled $7,250 and $12,725,
respectively.
H. Interfund Transactions
Amounts transferred between funds relate to amounts collected, various capital
expenditures, annual funding, and debt payments.
Transfer out:
General $‐ $ 550,000 $ 550,000
Debt Service 51,536 ‐ 51,536
Enterprise 865,224 ‐ 865,224
$ 916,760 $ 550,000 $ 1,466,760
General Total
Transfer In
Capital
Projects
The internal service fund provides administrative services to the general and water,
sewer, & electric funds. Below is a summary of the amounts paid from these funds
to the internal service fund for the year ended September 30, 2017:
Paid by:
General $ 502,845
Enterprise 1,173,303
$ 1,676,148
Internal Service
Received by:
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
61
The compositions of interfund due to/from balances as of the year ended September
30, 2017 were as follows:
Payable Fund
General $ 103,575 $ 103,575
Total $ 103,575 $ 103,575
Total
Water, Sewer, &
Electric
Receivable Fund
Interfund balances resulted from the timing difference between the dates that (1)
interfund goods and services are provided or reimbursable expenditures occur, (2)
transactions are recorded in the accounting system, and (3) payments between
funds are made. All balances are expected to be paid in the subsequent year.
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 $ 8,131 $‐
Tourism 21,744 ‐
Library 88,436 ‐
Public safety 29,191 ‐
Debt service 459,295 ‐
Capital projects 240,936 ‐
Parks 8,062 ‐
Employee benefits ‐ 30,421
$ 855,795 $ 30,421
Restricted Committed
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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
62
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, 2017
63
C. Construction commitments
The government has active construction projects as of September 30, 2017. 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 $ 9,027
McReynolds Road Reconstruction HRM Land Acquisition 397
McReynolds Road Reconstruction Pavecon 3,889,379
McReynolds Road Reconstruction D&S Engineering 38,141
3,936,944
Server Consolidation Austin Lane Technology 20,166
15ʺ Water Line Chapman to Belz Pacheco Koch 3,833
Water Line Lois to View Pacheco Koch 19,542
Water Well and Ground Storage Perkins Engineering 54,327
Water Well and Ground Storage Cory Miller Drilling 32,052
86,379
12ʺ Line Chapman to Belz Pacheco Koch 18,794
E35 WWL to Lois Pacheco Koch LLC 35,490
E35 WWL to Lois Dickerson Construction 202,498
E35 WWL to Lois HRM Land Acquisition 5,835
243,823
12ʺ Line Lois to View Pacheco Koch 21,333
New Sewer Line Alan Plummer Associates 82,550
New Sewer Plant Perkins Engineering 9,749,495
9,832,045
$ 14,182,859
Remaining
CommitmentVendor
Total
Project Total
Project Total
Project Total
Project Total
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
64
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 Component Unit and has a
cost of $1,080,797 with accumulated depreciation of $291,505 as of September 30,
2017. 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, 2017, the City recognized $6,556 in rental
revenue and collected $32,777 from this lease. As of September 30, 2017, the City
had no receivables from this lease.
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 872 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, 2017
65
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 2016 Plan Year 2015
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, 0/20 60/5, 0/20
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, 2017
66
Employees covered by benefit terms
At the December 31, 2016 valuation and measurement date, the following
employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 13
Inactive employees entitled to but not yet receiving benefits 26
Active employees 64
Total 103
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 7.13% and 7.63% in calendar years 2016 and 2017, respectively. The City’s
contributions to TMRS for the year ended September 30, 2017, were $266,753, and
were equal to the required contributions.
4. Net Pension Liability
The City’s Net Pension Liability (NPL) was measured as of December 31, 2016, 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, 2017
67
Actuarial assumptions:
The Total Pension Liability in the December 31, 2016 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 Tables with Blue Collar Adjustment, with male rates
multiplied by 109% and female rates multiplied by 103%.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 Combined Healthy Mortality
Tables 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 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, 2016, 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. 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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
68
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).
The target allocation and best estimates of real rates of return for each major asset
class in fiscal year 2017 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% 6.35%
Core Fixed Income 10.0% 1.00%
Non‐Core Fixed Income 20.0% 4.15%
Real Return 10.0% 4.15%
Real Estate 10.0% 4.75%
Absolute Return 10.0% 4.00%
Private Equity 5.0% 7.75%
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, 2017
69
Changes in the Net Pension Liability:
Total Pension
Liability (a)
Plan Fiduciary Net
Position (b)
Net Pension
Liability (a) – (b)
Balance at 12/31/15 $ 7,989,659 $ 6,831,656 $ 1,158,003
Changes for the year:
Service Cost 408,943 ‐ 408,943
Interest (on the Total Pension Liab.) 545,333 ‐ 545,333
Difference between expected and
actual experience (78,516) ‐ (78,516)
Contributions – employer ‐ 240,177 (240,177)
Contributions – employee ‐ 202,113 (202,113)
Net investment income ‐ 461,955 (461,955)
Benefit payments, including
refunds of emp. contributions (230,245) (230,245) ‐
Administrative expense ‐ (5,214) 5,214
Other changes ‐ (281) 281
Net changes 645,515 668,505 (22,990)
Balance at 12/31/16 $ 8,635,174 $ 7,500,161 $ 1,135,013
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%
$ 2,559,316 $ 1,135,013 $ (23,988)
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, 2017
70
5. Pension Expense and Deferred Outflows of Resources Related to Pensions
For the year ended September 30, 2017, the City recognized pension expense of
$391,339.
At September 30, 2017, the City reported deferred outflows of resources related to
pensions from the following sources:
Difference between projected and
investment earnings $ 304,545
Changes in actuarial assumptions 58,592
Differences between expected and actual
economic experience (127,496)
Contributions subsequent to the
measurement date 208,412
Total $ 444,053
Deferred Outflows
(Inflows) of Resources
The City reported $208,412 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, 2018. Other amounts reported as deferred outflows of resources related to
pensions will be recognized in pension expense as follows:
Year ended December 31:
2017 $ 95,140
2018 95,140
2019 79,491
2020 (14,547)
2021 (13,878)
Thereafter (5,705)
$ 235,641
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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
71
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.
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 2017,
2016 and 2015 are as follows:
Plan/
Calendar Year
Annual
Required
Contribution
(Rate)
Actual
Contribution
Made
(Rate)
Percentage of
ARC
Contributed
2015 0.01% 0.01% 100.0%
2016 0.01% 0.01% 100.0%
2017 0.01% 0.01% 100.0%
The City’s contributions to the TMRS SDBF for the years ended 2017, 2016, and 2015
were $355, $348, and $322, respectively, which equaled the required contributions
each year.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2017
72
G. Restatement
The City restated the beginning net position of governmental activities and
business‐type activities, and the beginning fund balance of the general fund due to
accounting errors related to capital assets, interfund borrowings, reallocation of
debt between governmental and business‐type activities, and the change in the
presentation of the City’s component units (4A & 4B) to be discretely presented
rather than blended with governmental activities. The City has restated net
position and fund balance as follows:
Proprietary Fund
Prior year ending net position/
fund balance as reported $ 16,307,150 $ 2,548,000 $ 1,756,219 $ 870,461
Correction for interfund borrowing 83,155 (83,155) ‐ ‐
Correction to prior year EMS deferred inflow ‐ 39,194 ‐ ‐
Reallocation of debt to business‐type activities (160,857) ‐ ‐ ‐
Discrete presentation of component units ‐ ‐ (1,756,219) (870,461)
$ 16,229,448 $ 2,504,039 $‐ $‐
Governmental Funds
4B
Restated beginning net position/fund balance
Water, Sewer
& Electric
General
Fund 4A
Prior year ending net position $ 16,307,150 $ 14,790,448 $‐ $‐
Correction for interfund borrowing 83,155 (83,155) ‐ ‐
Correction to capital assets ‐ 123,411 ‐ ‐
Reallocation of debt to business‐type activities (160,857) 160,857 ‐ ‐
Discrete presentation of component units ‐ (3,087,371) 2,216,910 870,461
$ 16,229,448 $ 11,904,190 $ 2,216,910 $ 870,461
4B
Component Units
Restated beginning net position
Business‐Type
Activities
Governmental
Activities 4A
H. Subsequent Events
There were no material subsequent events through February 13, 2018, the date the
financial statements were available to be issued.
REQUIRED SUPPLEMENTARY INFORMATION
73
Revenues
Property tax $2,844,518 $2,950,887 $106,369
Sales tax 805,000 883,562 78,562
Franchise and local taxes 218,600 236,082 17,482
License and permits 130,100 289,775 159,675
Charges for services 748,500 829,378 80,878
Fire and rescue 585,000 588,124 3,124
Contributions and donations - 300 300
Intergovernmental - 53,743 53,743
Fines and forfeitures 140,000 103,420 (36,580)
Investment income 4,000 4,258 258
Other revenue 128,704 85,990 (42,714)
5,604,422 6,025,519 421,097
Expenditures
Current:
General government 1,475,294 1,502,906 (27,612)
Police department 1,506,743 1,339,076 167,667
Municipal court 241,728 184,528 57,200
Fire and EMS 1,064,065 991,227 72,838
Parks and recreation 608,376 597,346 11,030
Public works 759,018 730,096 28,922
Debt service:
Principal 91,358 111,095 (19,737)
Interest 16,642 18,257 (1,615)
Capital outlay 335,121 169,822 165,299
6,098,345 5,644,353 453,992
Revenues Over (Under) Expenditures $(493,923) $381,166 $875,089
Original &
Final Budget
Total Expenditures
Actual Final Budget
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, 2017
74
Transfers in $1,025,964 $916,760 $(109,204)
Transfers (out)(509,201) (550,000) (40,799)
Sale of capital assets 25,000 10,834 (14,166)
Insurance recoveries 13,000 114,125 101,125
554,763 491,719 (63,044)
Net Change in Fund Balance $60,840 872,885 $812,045
Beginning fund balance 2,504,039
$3,376,924
Notes to Required Supplementary Information
1. Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).
Ending Fund Balance
Total Other Financing Sources (Uses)
Other Financing Sources (Uses)
City of Sanger, Texas
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
Variance with
Actual Final Budget
IN FUND BALANCE - BUDGET AND ACTUAL- GENERAL FUND (Page 2 of 2)
For the Year Ended September 30, 2017
Original &
Final Budget
75
1
Total pension liability
Service cost $408,943 $369,950 $340,004
Interest (on the Total Pension Liability)545,333 521,853 476,571
Changes in benefit terms - - -
Differences between expected and actual
experience (78,516) (89,808) 47,610
Changes of assumptions - 47,847 -
Benefit payments, including refunds of
participant contributions (230,245) (260,514) (204,026)
Net change in total pension liability 645,515 589,328 660,159
Total pension liability - beginning 7,989,659 7,400,331 6,740,172
Total pension liability - ending (a)$8,635,174 $7,989,659 $7,400,331
Plan fiduciary net position
Contributions - employer $240,177 $231,097 $211,283
Contributions - members 202,113 195,568 187,821
Net investment income 461,955 9,831 350,203
Benefit payments, including refunds of
participant contributions (230,245) (260,514) (204,026)
Administrative expenses (5,214) (5,988) (3,656)
Other (281) (296) (301)
Net change in plan fiduciary net position 668,505 169,698 541,324
Plan fiduciary net position - beginning 6,831,656 6,661,957 6,120,633
Plan fiduciary net position - ending (b)$7,500,161 $6,831,655 $6,661,957
Fund's net pension liability - ending (a) - (b)$1,135,013 $1,158,004 $738,374
86.86%85.51%90.02%
Covered employee payroll $3,368,554 $3,259,471 $3,130,346
33.69%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 liability
City of Sanger, Texas
Years ended December 31,
Fund's net position as a percentage of covered
employee payroll
20142016
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
76
9/30/2017 9/30/2016 9/30/2015 1
Actuarially determined employer contributions $266,753 $247,432 $225,111
$266,753 $247,432 $225,111
Contribution deficiency (excess)$- $- $-
Annual covered employee payroll $3,549,724 $3,475,512 $3,130,346
7.51%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 27 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
Years Ended:
Contributions in relation to the actuarially
determined contribution
Employer contributions as a percentage of
covered employee payroll
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.
77
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78
OTHER SUPPLEMENTARY INFORMATION
79
Operating Revenues
Charges for services $1,737,938 $1,676,011 $7,730,890 $-
Connection fees - - 57,720 -
Tap fees 396,000 528,000 - -
Other revenue - - -
2,133,938 2,204,011 7,788,610 -
Operating Expenses
Salaries and wages 626,294 283,104 1,026,142 -
Contracted services 44,203 36,240 244,028 -
Utilities 120,226 185,720 9,578 -
Materials and supplies 29,860 78,676 91,705 -
Water and electric purchases 87,128 - 5,396,164 -
Repairs and maintenance 274,518 159,531 251,297 -
Depreciation 292,183 272,292 237,166 525
1,474,412 1,015,563 7,256,080 525
659,526 1,188,448 532,530 (525)
Nonoperating Revenues (Expenses)
Investment income - - - -
Intergovernmental 725,000 - - -
Interest expense - - - -
725,000 - - -
Income Before Transfers 1,384,526 1,188,448 532,530 (525)
Transfers (out)- - (76,074) -
$1,384,526 $1,188,448 $456,456 $(525)
Water
Total Operating Revenues
Total Operating Expenses
Operating Income (loss)
Total Nonoperating Revenues (Expenses)
Change in Net Position
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, 2017
Sewer Electric Fleet Services
80
$- $11,144,839
- 57,720
- 924,000
53,732 53,732
53,732 12,180,291
- 1,935,540
- 324,471
- 315,524
- 200,241
- 5,483,292
- 685,346
14,263 816,429
14,263 9,760,843
39,469 2,419,448
21,875 21,875
- 725,000
(741,243) (741,243)
(719,368) 5,632
(679,899) 2,425,080
(789,150) (865,224)
$(1,469,049) $1,559,856
Administration Total
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82