2021 Annual Financial ReportANNUAL FINANCIAL REPORT
of the
City of Sanger, Texas
For the Year Ended
September 30, 2021
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City of Sanger, Texas
TABLE OF CONTENTS
September 30, 2021
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 34
Statement of Cash Flows 35
Notes to Financial Statements 37
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures, and Changes in Fund Balances-
Budget and Actual -General Fund 76
Schedule of Changes in Net Pension Liability and Related Ratios 78
Schedule of Employer Contributions to Pension Plan 80
Schedule of Changes in OPEB Liability and Related Ratios 82
COMBINING AND INDIVIDUAL FUND FINANCIAL SCHEDULES
Combining Schedule of Revenues, Expenses, and Changes
in Fund Net Position -Proprietary Funds –by Department 84
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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, 2021 , 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 internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedu res to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the entity’s preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of sig nificant 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 activities, 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, 2021, and the respective changes in financial position
and, where applicable, cash flows thereof for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis, schedule of changes in net pension liability and related
ratios, schedule of employer contributions to pension plan, schedule of changes in other
postemployment benefits liability and related ratios, and general fund budgetary comparison
information be presented to supplement the basic financial statements. Such information,
although not a part of the basic financial statements, is required by the Governmental Accounting
Standards Board, who considers it to be an essential part of financial reporting for placing the
basic financial statements in an appropriate operational, economic, or historical context. We have
applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of
inquiries of management about the methods of preparing the information and comparing the
information for consistency with management’s responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the infor mation because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise 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
3
auditing procedures applied in the audit of the basi c 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 thems elves, 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 financ ial
statements as a whole.
BrooksWatson & Co.
Certified Public Accountants, PLLC
Houston, Texas
January 11, 2022
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MANAGEMENT'S DISCUSSION
AND ANALYSIS
5
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6
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)
September 30, 2021
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, 2021.
Financial Highlights
The City's total combined net position is $54,742,635 at September 30,2021.Of this, $24,857,794
(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 $15,679,318, an increase of $4,673,116.
As of the end of the year, the unassigned fund balance of the general fund was $10,388,357 or
159%of total general fund expenditures.
The City had an overall increase in net position of $6,094,764, which is due to revenues
exceeding expenses for both governmental and business-type activities.
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 30,2021
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 revenues,
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30,2021
9
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 services 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 $54,742,635 as of September 30, 2021,in
the primary government.
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30,2021
10
The largest portion of the City’s net position,$26,883,452,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, $3,001,389, represents resources that are subject to
external restrictions on how they may be used. The remaining balance of $24,857,794 is unrestricted
and may be used to meet the government’s ongoing obligations to its citizens and creditors.
Current assets of governmental activities as of September 30, 2021 and September 30, 2020 were
$16,744,494 and $12,106,859, respectively. The increase of $4,637,635 was primarily due to an increase in
cash on hand as a result of revenues exceeding expenses in the current year.
Current assets of business-type activities as of September 30, 2021 and September 30, 2020 were
$34,474,502 and $13,167,174, respectively. The increase of $21,307,328 was primarily attributable to
unspent bond proceeds received during the current year.
Total long-term liabilities as of September 30, 2021 and September 30, 2020 were $41,376,358 and
$21,862,434, respectively. The increase of $19,513,924 was primarily due to new bond issuances in the
current year.
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30,2021
11
Statement of Net Position:
The following table reflects the condensed Statement of Net Position:
Current and
other assets $16,744,494 $34,474,502 $51,218,996 $12,106,859 $13,167,174 $25,274,033
Long-term assets 18,080,240 30,574,110 48,654,350 19,063,124 30,466,678 49,529,802
Total Assets 34,824,734 65,048,612 99,873,346 31,169,983 43,633,852 74,803,835
of Resources 403,316 197,052 600,368 373,255 118,518 491,773
Other liabilities 1,311,570 2,739,080 4,050,650 1,745,717 2,715,443 4,461,160
Long-term liabilities 2,626,370 38,749,988 41,376,358 2,956,102 18,906,332 21,862,434
Total Liabilities 3,937,940 41,489,068 45,427,008 4,701,819 21,621,775 26,323,594
of Resources 237,175 66,896 304,071 249,483 74,660 324,143
Net Position:
Net investment
in capital assets 15,856,494 11,026,958 26,883,452 16,338,660 10,230,683 26,569,343
Restricted 3,001,389 - 3,001,389 1,626,646 - 1,626,646
Unrestricted 12,195,052 12,662,742 24,857,794 8,626,630 11,825,252 20,451,882
Total Net Position $31,052,935 $23,689,700 $54,742,635 $26,591,936 $22,055,935 $48,647,871
Activities TotalTotal
2021
Governmental Business-Type
ActivitiesActivities
Deferred Outflows
Deferred Inflows
2020
Governmental Business-Type
Activities
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30,2021
12
Statement of Activities:
The following table provides a summary of the City’s changes in net position:
Revenues
Program revenues:
Charges for services $2,360,472 $13,022,244 $15,382,716 $2,180,918 $12,400,421 $14,581,339
Grants and contributions 1,488,548 30,000 1,518,548 703,800 - 703,800
General revenues:
Property taxes 5,242,753 - 5,242,753 4,784,777 - 4,784,777
Sales taxes 1,292,326 - 1,292,326 1,104,525 - 1,104,525
Franchise and local taxes 323,503 - 323,503 291,554 - 291,554
Investment income 17,249 468,643 485,892 20,786 389,530 410,316
Other revenues 409,542 - 409,542 543,453 - 543,453
Total Revenues 11,134,393 13,520,887 24,655,280 9,629,813 12,789,951 22,419,764
Expenses
General government 2,430,570 - 2,430,570 2,404,017 - 2,404,017
Public safety 2,930,532 - 2,930,532 2,764,359 - 2,764,359
Public works 1,530,906 - 1,530,906 1,549,551 - 1,549,551
Culture and recreation 747,976 - 747,976 746,573 - 746,573
Interest and fiscal charges 74,009 1,149,964 1,223,973 80,876 642,843 723,719
Water, sewer, & electric - 9,696,559 9,696,559 - 9,972,461 9,972,461
Total Expenses 7,713,993 10,846,523 18,560,516 7,545,376 10,615,304 18,160,680
Change in Net Position
Before Transfers 3,420,400 2,674,364 6,094,764 2,084,437 2,174,647 4,259,084
Transfers 1,040,599 (1,040,599) - 1,133,804 (1,133,804)-
Total 1,040,599 (1,040,599) - 1,133,804 (1,133,804)-
Change in Net Position 4,460,999 1,633,765 6,094,764 3,218,241 1,040,843 4,259,084
Beginning Net Position 26,591,936 22,055,935 48,647,871 23,373,695 21,015,092 44,388,787
Ending Net Position $31,052,935 $23,689,700 $54,742,635 $26,591,936 $22,055,935 $48,647,871
Governmental
For the Year Ended September 30, 2021
Business-Type
Government
For the Year Ended September 30, 2020
Total
Activities
Business-Type Primary
Total
Primary Governmental
ActivitiesGovernmentActivitiesActivities
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30,2021
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, 2021, revenues from governmental activities totaled $11,134,393.
Property tax, charges for services, and grants/contributions are the City’s largest revenue sources.
Property tax increased by $457,976 or 10%due to rising property values. Sales taxes increased by
$187,801 or 17%due to economic growth fueled by local purchases.Charges for services increased
$179,554 or 8%primarily due to greater garbage service revenue and engineering inspection fees.
Grants and contributions increased by $784,748 due to nonrecurring COVID-19 relief funds received in
the current year.Other revenues decreased by $133,911 primarily due to nonrecurring parkland
dedication fees received in the prior year and a reduction in roadway impact fees.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, 2021, expenses for governmental activities totaled $7,713,993. This
represents an increase of $168,617 from the prior year. The City’s largest functional expense is public
safety of $2,930,532,which primarily includes costs for the police department, animal control, fire
department, and EMS services.Public safety expenses increased by $166,173 or 6%primarily due to
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30,2021
14
greater personnel costs, professional services expenses, and fuel costs.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, 2021, charges for services by business-type activities totaled
$13,022,244.This represents an increase of $621,823 or 5%from the previous year, which is primarily
due to increased utility consumption by the City’s growing customer base.
Total expenses increased slightly by $231,219 or 2%compared to the prior year, which is considered
relatively consistent with the prior year.Interest and fiscal charges increased by $507,121 or 79%due to
bond issuances in the current year.
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,unassigned 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 $12,939,232. Of this, $14,065
is restricted for municipal court, $99,290 is restricted for tourism, $105,346 is restricted for library
improvements,$79,137 for public safety, $11,837 is restricted for parks, $1,081,833 is restricted for
public safety due to the A.R.P COVID grant,and $1,146,079 is restricted for roadway impact fees.In
addition, $13,288 is committed for employee benefits.Unassigned fund balance totaled $10,388,357 as
City of Sanger, Texas
MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued
September 30,2021
15
of yearend.The general fund increased by $4,406,384 primarily as a result of greater than anticipated
revenues and other financing sources and fewer than anticipated expenditures.
The capital projects fund reflected an ending balance of $2,276,284, an increase of $279,216.This
increase is attributed to greater transfers in compared to capital outlay expenditures in the current year.
There was an increase in governmental fund balance of $4,673,116 over the prior year. The increase was
primarily due to revenues and other financing sources exceeding current year expenditures.
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 $4,406,384 in the general fund. This is a combination of a
positive revenue variance of $2,449,588,a positive expenditure variance of $1,671,006,and a positive
variance of $285,790 in other financing sources and uses.The most significant revenue variances were
for intergovernmental revenue, sales tax, and other revenue.
CAPITAL ASSETS
As of the end of the year, the City’s governmental activities funds had invested $18,080,240 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 $30,574,110 in a variety of capital assets and infrastructure, net of accumulated
depreciation.
Major capital asset events during the current year include the following:
Investments in the 2020-2021 street rehabilitation program for $241,509.
Community sidewalk improvements for $31,969.
New carpet and furniture for the library totaling $51,377.
FM 455 utility relocation for $622,112.
Acker and Cowling GST rehabilitation projects totaling $586,864.
Sewer plant expansion for $184,249.
Elm street sewer repairs for $85,950.
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 30,2021
16
LONG-TERM DEBT
At the end of the current year, the City had total bonds (including premiums)and capital leases
outstanding of $41,169,428. The City refunded $2,505,000 worth of certificates of obligation (including
premiums) during the year. The issued new bonds worth $23,420,341 (including premiums) during the
course of the year.The City made principal payments on bonds and capital leases of $1,580,185. 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 considering
budgeting conservatively for the upcoming year and planning to maintain similar services.
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.
FINANCIAL STATEMENTS
17
Current assets:
Cash and cash equivalents $15,410,348 $29,084,560 $44,494,908
Restricted cash - 2,540,582 2,540,582
Investments 548,098 726,824 1,274,922
Receivables, net 622,246 1,589,197 2,211,443
Prepaids 62,180 - 62,180
Inventory - 500,145 500,145
Due from component unit 134,816 - 134,816
Internal balances (33,194) 33,194 -
16,744,494 34,474,502 51,218,996
Capital assets:
Non-depreciable 1,044,933 15,662,538 16,707,471
Net depreciable capital assets 17,035,307 14,911,572 31,946,879
18,080,240 30,574,110 48,654,350
34,824,734 65,048,612 99,873,346
Deferred Outflows of Resources
Deferred charge on refunding 11,420 86,517 97,937
Pension outflows 363,038 102,396 465,434
OPEB outflows 28,858 8,139 36,997
Total Deferred Outflows of Resources 403,316 197,052 600,368
See Notes to Financial Statements.
Business-Type
City of Sanger, Texas
STATEMENT OF NET POSITION (Page 1 of 2)
September 30, 2021
Activities Activities
Primary Government
Assets
Governmental
Total Assets
Total Current Assets
Total
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$1,989,272 $1,607,657
- -
95,755 284,190
101,508 101,508
- -
- -
- -
- -
2,186,535 1,993,355
- -
647,059 -
647,059 -
2,833,594 1,993,355
- -
- -
- -
- -
Component Units
Sanger Industrial
Dev. Corp. (4A)Dev. Corp. (4B)
Sanger Texas
19
Liabilities
Current liabilities:
Accounts payable and
accrued liabilities $845,145 $987,412 $1,832,557
Accrued interest payable 14,845 455,707 470,552
Customer deposits - 502,814 502,814
Due to primary government - - -
Compensated absences - current 129,790 73,247 203,037
Long term debt due within one year 321,790 719,900 1,041,690
1,311,570 2,739,080 4,050,650
Noncurrent liabilities:
Debt due in more than one year 1,655,623 38,472,115 40,127,738
Compensated absences - noncurrent 14,421 8,139 22,560
OPEB liability 133,756 37,727 171,483
Net pension liability 822,570 232,007 1,054,577
2,626,370 38,749,988 41,376,358
3,937,940 41,489,068 45,427,008
Deferred Inflows of Resources
OPEB inflows 6,845 1,931 8,776
Pension inflows 230,330 64,965 295,295
237,175 66,896 304,071
Net investment in capital assets 15,856,494 11,026,958 26,883,452
Restricted for:
Debt service 463,802 - 463,802
A.R.P. grant - public safety 1,081,833 - 1,081,833
Parks 11,837 - 11,837
Economic development - - -
Roadway impact fees 1,146,079 - 1,146,079
Other purposes 297,838 - 297,838
Unrestricted 12,195,052 12,662,742 24,857,794
$31,052,935 $23,689,700 $54,742,635
See Notes to Financial Statements.
City of Sanger, Texas
Total Current Liabilities
Governmental
Activities
Primary Government
Net Position
Total Net Position
Total Liabilities
Total
Total Deferred Inflows of Resources
September 30, 2021
Activities
Business-Type
STATEMENT OF NET POSITION (Page 2 of 2)
20
$8,338 $5,070
- -
- -
67,408 67,408
- -
- -
75,746 72,478
- -
- -
- -
- -
- -
75,746 72,478
- -
- -
- -
647,059 -
- -
- -
- -
2,110,789 1,920,877
- -
- -
- -
$2,757,848 $1,920,877
Sanger Texas
Component Units
Dev. Corp. (4A)Dev. Corp. (4B)
Sanger Industrial
21
Capital
Grants and
Contributions
Primary Government
Governmental Activities
General government $2,430,570 $1,582,234 $- $-
Public safety 2,930,532 778,238 1,274,738 -
Public works 1,530,906 - - -
Culture and recreation 747,976 - 1,310 -
Interest and fiscal charges 74,009 - 212,500 -
7,713,993 2,360,472 1,488,548 -
Business-Type Activities
Water 1,643,246 2,505,981 - 30,000
Sewer 1,226,943 2,570,960 - -
Electric 6,812,107 7,842,681 - -
Utility administration 1,164,227 102,622 - -
Total Business-Type Activities 10,846,523 13,022,244 - 30,000
Total Primary Government $18,560,516 $15,382,716 $1,488,548 30,000
Component Units
Sanger Ind. Dev. Corp. (4A)252,415 - - -
Sanger Texas Dev. Corp. (4B)296,396 - - -
$548,811 $- $- $-
General Revenues:
Taxes
Property taxes
Sales taxes
Franchise and local taxes
Investment income
Other revenues
Insurance recoveries
Transfers
Change in Net Position
Beginning Net Position
Ending Net Position
See Notes to Financial Statements.
Expenses Contributions
Total Governmental Activities
Functions/Programs Services
Total General Revenues and Transfers
City of Sanger, Texas
STATEMENT OF ACTIVITIES
Operating
For the Year Ended September 30, 2021
Program Revenues
Charges for Grants and
22
$(848,336) $- $(848,336) $- $-
(877,556) - (877,556) - -
(1,530,906) - (1,530,906) - -
(746,666) - (746,666) - -
138,491 - 138,491 - -
(3,864,973) - (3,864,973) - -
- 892,735 892,735 - -
- 1,344,017 1,344,017 - -
- 1,030,574 1,030,574 - -
- (1,061,605) (1,061,605) - -
- 2,205,721 2,205,721 - -
(3,864,973) 2,205,721 (1,659,252) - -
(252,415)-
- (296,396)
(252,415) (296,396)
5,242,753 - 5,242,753 - -
1,292,326 - 1,292,326 641,438 641,438
323,503 - 323,503 - -
17,249 468,643 485,892 881 3,917
380,798 - 380,798 30,000 36,786
28,744 - 28,744 - -
1,040,599 (1,040,599) - - -
8,325,972 (571,956)7,754,016 672,319 682,141
4,460,999 1,633,765 6,094,764 419,904 385,745
26,591,936 22,055,935 48,647,871 2,337,944 1,535,132
$31,052,935 $23,689,700 $54,742,635 $2,757,848 $1,920,877
Component Units
Net (Expense) Revenue and Changes in Net Position
Activities
Primary Government
Governmental
Dev. Corp. (4A)Dev. Corp. (4B)Total
Business-Type
Activities
Sanger Industrial Sanger Texas
23
Cash and cash equivalents $12,290,969 $2,517,793 $462,810
Investments 548,098 - -
Receivables, net 606,508 - 15,738
Prepaid insurance 62,180 - -
Due from component unit 134,816 - -
$13,642,571 $2,517,793 $478,548
Liabilities
Accounts payable and
accrued liabilities $505,974 $241,509 $-
Due to other funds 33,194 - -
539,168 241,509 -
Deferred Inflows of Resources
Unavailable revenue
Property taxes 73,714 - 14,746
EMS revenue 90,457 - -
Total Deferred Inflows of Resources 164,171 - 14,746
Restricted for:
Municipal court 14,065 - -
Tourism 99,290 - -
Library 105,346 - -
Public safety 79,137 - -
Debt service - - 463,802
A.R.P. grant - public safety 1,081,833 - -
Parks 11,837 - -
Roadway impact fees 1,146,079 - -
Committed for:
Capital projects - 2,276,284 -
Employee benefits 13,288 - -
Unassigned reported in:
General fund 10,388,357 - -
12,939,232 2,276,284 463,802
$13,642,571 $2,517,793 $478,548
See Notes to Financial Statements.
General
Nonmajor
Debt
Projects Fund
Total Fund Balances
Total Assets
Fund Balances
City of Sanger, Texas
BALANCE SHEET
GOVERNMENTAL FUNDS
September 30, 2021
Total Liabilities, Deferred Inflows, and Fund Balances
Assets
Service
Total Liabilities
Capital
24
$15,271,572
548,098
622,246
62,180
134,816
$16,638,912
$747,483
33,194
780,677
88,460
90,457
178,917
14,065
99,290
105,346
79,137
463,802
1,081,833
11,837
1,146,079
2,276,284
13,288
10,388,357
15,679,318
$16,638,912
Funds
Total
Governmental
25
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26
Fund Balances - Total Governmental Funds $15,679,318
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 1,044,933
Capital assets - net depreciable 16,930,526
Other long-term assets are not available to pay for current-period
expenditures and, therefore, are deferred in the governmental funds.
Property tax receivable 88,460
EMS receivable 90,457
Deferred outflows (inflows) of resources, represent a consumption (acquisition) of net position that
applies to a future period(s) and is not recognized as an outflow (inflow) of resources
(expense/ expenditure) (revenue) until then.
Deferred charge on refunding 11,420
Pension contributions 160,801
OPEB contributions 369
Pension outflows 104,496
Pension inflows (168,318)
OPEB outflows 20,720
OPEB inflows (5,002)
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 (106,661)
Some liabilities, including bonds payable and deferred charges, are not reported as
liabilities in the governmental funds.
Accrued interest (14,845)
Compensated absences (107,472)
Bond premium (75,647)
Net pension liability (601,109)
OPEB liability (97,745)
Non-current liabilities due in one year (321,790)
Non-current liabilities due in more than one year (1,579,976)
$31,052,935
See Notes to Financial Statements.
City of Sanger, Texas
RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET POSITION
GOVERNMENTAL FUNDS
September 30, 2021
Net Position of Governmental Activities
27
Revenues
Property tax $4,669,778 $- $573,987
Sales tax 1,292,326 - -
Franchise and local taxes 323,503 - -
License and permits 413,621 - -
Charges for services 1,168,613 - -
Fire and rescue 622,422 - -
Contributions and donations 1,935 - -
Intergovernmental 1,274,113 - 212,500
Fines and forfeitures 155,816 - -
Investment income 16,247 - 1,002
Other revenue 380,798 - -
10,319,172 - 787,489
Expenditures
Current:
General government 2,097,030 - 1,250
Police department 1,616,631 - -
Municipal court 214,207 - -
Fire and EMS 1,157,429 - -
Parks and recreation 550,524 - -
Public works 797,082 - -
Debt service:
Principal 45,185 - 649,800
Interest 6,350 - 88,535
Bond issuance costs - - 8,045
Capital outlay 37,356 241,509 -
6,521,794 241,509 747,630
Excess of Revenues Over (Under) Expenditures 3,797,378 (241,509) 39,859
Other Financing Sources (Uses)
Transfers in 1,100,987 520,725 -
Transfers (out)(520,725) - (60,388)
Bond issuance - - 339,600
Premium on bond issuance - - 3,803
Payment to escrow agent for refunding - - (335,358)
Insurance recoveries 28,744 - -
609,006 520,725 (52,343)
4,406,384 279,216 (12,484)
Beginning fund balances 8,532,848 1,997,068 476,286
$12,939,232 $2,276,284 $463,802
See Notes to Financial Statements.
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, 2021
Capital
Ending Fund Balances
Total Other Financing Sources (Uses)
Total Expenditures
Net Change in Fund Balances
28
$5,243,765
1,292,326
323,503
413,621
1,168,613
622,422
1,935
1,486,613
155,816
17,249
380,798
11,106,661
2,098,280
1,616,631
214,207
1,157,429
550,524
797,082
694,985
94,885
8,045
278,865
7,510,933
3,595,728
1,621,712
(581,113)
339,600
3,803
(335,358)
28,744
1,077,388
4,673,116
11,006,202
$15,679,318
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 $4,673,116
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 363,823
Depreciation expense (1,333,871)
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds.
EMS receivable (26,511)
Property tax receivable 25,499
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 67,316
Accrued interest 818
Pension expense 22,285
OPEB expense (14,112)
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 current year refunding 11,798
Premium on debt issued (3,803)
Principal payments 694,985
Debt and premium refunding 323,560
Debt issuance (339,600)
Amortization of deferred charges (5,165)
Amortization of bond premium 33,268
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.(32,407)
$4,460,999
See Notes to Financial Statements.
Change in Net Position of Governmental Activities
For the Year Ended September 30, 2021
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 $29,084,560 $138,776
Restricted cash 2,540,582 -
Investments 726,824 -
Receivables, net 1,589,197 -
Inventory 500,145 -
Due from other funds 33,194 -
34,474,502 138,776
Noncurrent Assets
Capital assets:
Non-depreciable 15,662,538 -
Net depreciable capital assets 14,911,572 104,781
30,574,110 104,781
65,048,612 243,557
Deferred charge on refunding 86,517 -
Pension outflows 102,396 97,741
OPEB outflows 8,139 7,769
Total Deferred Outflows of Resources 197,052 105,510
City of Sanger, Texas
STATEMENT OF NET POSITION (Page 1 of 2)
PROPRIETARY FUND
September 30, 2021
Activities
Governmental
Water, Sewer
Assets
Service
Deferred Outflows of Resources
Internal
& Electric
Total Current Assets
Total Noncurrent Assets
Total Assets
32
Current Liabilities
Accounts payable and accrued liabilities 987,412 97,662
Accrued interest 455,707 -
Customer deposits 502,814 -
Compensated absences - current 73,247 33,065
Bonds and capital leases payable - current 719,900 -
2,739,080 130,727
Noncurrent Liabilities
Compensated absences - noncurrent 8,139 3,674
Net pension liability 232,007 221,461
OPEB liability 37,727 36,011
Bonds and capital leases payable - noncurrent 38,472,115 -
41,489,068 391,873
OPEB inflows 1,931 1,843
Pension inflows 64,965 62,012
66,896 63,855
Net investment in capital assets 11,026,958 104,781
Unrestricted 12,662,742 (211,442)
$23,689,700 $(106,661)
See Notes to Financial Statements.
Governmental
Activities
Water, Sewer Internal
& Electric Service
Deferred Inflows of Resources
City of Sanger, Texas
STATEMENT OF NET POSITION (Page 2 of 2)
Total Net Position
Net Position
Liabilities
Total Liabilities
Total Current Liabilities
Total Deferred Inflows of Resources
PROPRIETARY FUND
September 30, 2021
33
Operating Revenues
Charges for services $12,100,202 $2,179,235
Connection fees 71,070 -
Tap fees 748,350 -
Other revenue 102,622 -
13,022,244 2,179,235
Operating Expenses
Salaries and wages 2,034,146 1,337,384
Contracted services 477,523 533,803
Utilities 345,244 107,534
Materials and supplies 145,783 91,313
Water and electric purchases 5,060,330 -
Repairs and maintenance 578,123 119,045
Depreciation 1,055,410 18,488
9,696,559 2,207,567
3,325,685 (28,332)
Nonoperating Revenues (Expenses)
Investment income 468,643 -
Intergovernmental 30,000 -
Interest expense (1,149,964) (4,075)
(651,321)(4,075)
2,674,364 (32,407)
Transfers (out)(1,040,599)-
1,633,765 (32,407)
22,055,935 (74,254)
$23,689,700 $(106,661)
See Notes to Financial Statements.
Ending Net Position
Total Operating Revenues
Total Operating Expenses
Change in Net Position
Operating Income (Loss)
Total Nonoperating Revenues (Expenses)
Income (Loss) Before Transfers
Beginning net position
Internal
Service
Governmental
Activities
City of Sanger, Texas
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION
PROPRIETARY FUND
For the Year Ended September 30, 2021
Water, Sewer
& Electric
34
Cash Flows from Operating Activities
Receipts from customers $12,750,310 $-
Receipts from interfund charges for administrative services - 2,179,235
Payments to suppliers (6,638,328) (874,818)
Payments to employees (2,079,459) (1,349,249)
Receipts from other funds 39,444 -
4,071,967 (44,832)
Cash Flows from Noncapital Financing Activities
Operating transfers in - -
Operating transfers (out)(1,040,599) -
(1,040,599) -
Cash Flows from Capital and Related Financing Activities
Capital purchases (1,626,906) (5,652)
Deposit payment for capital assets purchase 464,064 -
Capital grant 30,000 -
Proceeds from bond issuance 23,076,938 -
Current year debt refundning (2,372,777) -
Principal paid on debt (885,200) -
Interest paid on debt (1,132,768) (4,075)
17,553,351 (9,727)
Cash Flows from Investing Activities
Purchases of investments, net (1,439) -
Interest on investments 468,643 -
467,204 -
21,051,923 (54,559)
10,573,219 193,335
$31,625,142 $138,776
See Notes to Financial Statements.
City of Sanger, Texas
STATEMENT OF CASH FLOWS
PROPRIETARY FUND (Page 1 of 2)
For the Year Ended September 30, 2021
Net Cash Provided (Used) by Operating Activities
& Electric
Water, Sewer
Net Cash Provided by Investing Activities
Net Cash Provided (Used) by Noncapital Financing Activities
Net Cash Provided (Used) by Capital and Related Financing
Activities
Ending Cash and Cash Equivalents
Net Increase (Decrease) in Cash and Cash Equivalents
Governmental
Activities
Internal
Service
Beginning cash and cash equivalents
35
Reconciliation of Operating Income
to Net Cash Provided by Operating Activities
Operating Income / (Loss)$3,325,685 $(28,332)
Adjustments to reconcile operating
income / (loss) to net cash provided / (used):
Depreciation 1,055,410 18,488
Changes in Operating Assets and Liabilities:
(Increase) Decrease in:
Accounts receivable (266,415) -
Inventory (26,995) -
Due from/to other funds 39,444 -
Other deferred outflows of resources - pensions 3,376 1,151
Deferred inflows of resources - pensions (7,359) (5,608)
Other deferred outflows of resources - OPEB (3,645) (3,470)
Deferred inflows of resources - OPEB (405) (392)
Increase (Decrease) in:
Accounts payable and accrued liabilities (4,330) (23,123)
Compensated absences (24,405) 3,864
Customer deposits (5,519) -
Net pension liability (20,196) (14,338)
OPEB liability 7,321 6,928
$4,071,967 $(44,832)
See Notes to Financial Statements.
Internal
City of Sanger, Texas
STATEMENT OF CASH FLOWS
PROPRIETARY FUND (Page 2 of 2)
For the Year Ended September 30, 2021
Net Cash Provided (Used) by Operating Activities
Service& Electric
Water, Sewer
Governmental
Activities
36
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS
September 30, 2021
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, 2021
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, 2021
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, 2021
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, 2021
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, 2021
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, 2021
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, 2021
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, 2021
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, 2021
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, 2021
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, 2021
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.
15. Other Postemployment Benefits (“OPEB”)
The City has implemented GASB Statement No. 75, Accounting and Financial
Reporting for Postemployment Benefits Other Than Pensions. This statement
applies to the individual employers (TMRS cities) in the TMRS Supplemental Death
Benefits (SDB) plan, with retiree coverage. The TMRS SDBF covers both active and
retiree benefits with no segregation of assets, and therefore doesn’t meet the
definition of a trust under GASB No. 75 (i.e., no assets are accumulated for OPEB)
and as such the SDBF is considered to be an unfunded OPEB plan. For purposes of
reporting under GASB 75, the retiree portion of the SDBF is not considered a cost
sharing plan and is instead considered a single employer, defined benefit OPEB
plan. 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 on which TMRS deposits are made, for the 12‐month
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
49
period preceding the month of death. The death benefit amount for retirees is
$7,500. GASB No. 75 requires the liability of employers and nonemployer
contributing entities to employees for defined benefit OPEB (net OPEB liability) to
be measured as the portion of the present value of projected benefit payments to be
provided to current active and inactive employees that is attributed to those
employees’ past periods of service (total OPEB liability), less the amount of the
OPEB plan’s fiduciary net position.
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.
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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
50
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, 2021, the primary government had the following investments:
Investment Type
Certificates of deposit $ 1,274,922 0.48
Total fair value $ 1,274,922
Portfolio weighted average maturity 0.48
Average Maturity
Carrying Value (Years)
As of September 30, 2021, the 4A Component Unit had the following investments:
Investment Type
Certificates of deposit $ 95,755 0.50
Total fair value $ 95,755
Portfolio weighted average maturity 0.50
Average Maturity
Carrying Value (Years)
As of September 30, 2021, the 4B Component Unit had the following investments:
Investment Type
Certificates of deposit $ 284,190 0.54
Total fair value $ 284,190
Portfolio weighted average maturity 0.54
Average Maturity
Carrying 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.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
51
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, 2021, the market values of
pledged securities and FDIC exceeded bank balances.
Custodial credit risk – investments For an investment, this is the risk that, in the event
of the failure of the counterparty, the City will not be able to recover the value of its
investments or collateral securities that are in the possession of an outside party.
The City’s investment policy requires that it will seek to safekeeping securities at
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 $ 109,517 $ 20,017 $‐ $ 129,534
Sales tax 203,015 ‐ ‐ 203,015
Franchise & local taxes 39,852 ‐ ‐ 39,852
Hotel occupancy 34,600 ‐ ‐ 34,600
EMS 322,442 ‐ ‐ 322,442
Accounts 117,449 ‐ 1,649,049 1,766,498
Other 5,901 ‐ ‐ 5,901
Allowance (226,268) (4,279) (59,852) (290,399)
$ 606,508 $ 15,738 $ 1,589,197 $ 2,211,443
Debt
Total& Electric
Water, Sewer
General Service
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
52
The following comprise receivable balances of the component units at year end:
Sales tax $ 101,508 $ 101,508 $ 203,016
$ 101,508 $ 101,508 $ 203,016
Total4A 4B
C. Inventory
The following comprise the inventory balances of the primary government at year
end:
Inventory type
Electric Department $ 460,874
Water Department 39,271
Total $ 500,145
Cost
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
53
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
1,044,933 ‐ ‐ 1,044,933
Capital assets, being depreciated:
Infrastructure 20,044,381 307,850 ‐ 20,352,231
Buildings and improvements 6,859,980 18,805 ‐ 6,878,785
Machinery and equipment 4,656,099 42,820 ‐ 4,698,919
31,560,460 369,475 ‐ 31,929,935
Less accumulated depreciation
Infrastructure 7,452,914 746,973 ‐ 8,199,887
Buildings and improvements 2,862,076 289,184 ‐ 3,151,260
Machinery and equipment 3,227,279 316,202 ‐ 3,543,481
Total accumulated depreciation 13,542,269 1,352,359 ‐ 14,894,628
Net capital assets being depreciated 18,018,191 (982,884) ‐ 17,035,307
$ 19,063,124 $ (982,884) $‐ $ 18,080,240
Beginning Disposals / Ending
Balances Increases
Total Capital Assets
Total capital assets not being depreciated
Total capital assets being depreciated
BalancesReclassifications
Depreciation was charged to governmental functions as follows:
General government $ 77,591
Public safety 86,111
Public works 785,855
Culture and recreation 270,187
Fire and rescue 114,127
Internal service 18,488
$ 1,352,359 Total Governmental Activities Depreciation Expense
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
54
A summary of changes in business‐type activities capital assets for the year end
was as follows:
Capital assets, not being depreciated:
Land $ 496,867 $‐ $‐ $ 496,867
Construction in progress 14,178,734 1,573,801 (586,864) 15,165,671
Total capital assets not being depreciated 14,675,601 1,573,801 (586,864) 15,662,538
Capital assets, being depreciated:
Infrastructure 31,226,672 26,860 586,864 31,840,396
Buildings and improvements 865,245 ‐ ‐ 865,245
Machinery and equipment 2,238,876 26,245 (18,508) 2,246,613
Total capital assets being depreciated 34,330,793 53,105 568,356 34,952,254
Less accumulated depreciation
Infrastructure 16,665,567 918,696 ‐ 17,584,263
Buildings and improvements 626,870 21,731 ‐ 648,601
Machinery and equipment 1,711,343 114,983 (18,508) 1,807,818
Total accumulated depreciation 19,003,780 1,055,410 (18,508) 20,040,682
Net capital assets being depreciated 15,327,013 (1,002,305) 586,864 14,911,572
$ 30,002,614 $571,496 $‐ $ 30,574,110 Total Capital Assets
Beginning Disposals /Ending
Balances Increases Reclassifications Balances
Depreciation was charged to business‐type activities as follows:
Water $ 391,910
Sewer 414,312
Electric 234,925
Other 14,263
$ 1,055,410 Total Business‐type Activities Depreciation Expense
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
55
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 406,069 38,360 ‐ 444,429
Furniture and fixtures 26,024 4,235 ‐ 30,259
Total accumulated depreciation 432,093 42,595 ‐ 474,688
Net capital assets being depreciated 689,654 (42,595) ‐ 647,059
$ 689,654 $ (42,595) $‐ $ 647,059 Total Capital Assets
Beginning Retirements/Ending
Balances Additions Reclassifications Balances
The 4A Component Unit recognized depreciation expense of $42,595 during the
year ended September 30, 2021.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
56
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 $ 393,600 $ 339,600 $ (393,600) $‐ $ 339,600 $ 6,600
Certificates of Obligation 1,974,900 ‐ (256,200) (300,600) 1,418,100 268,500
Less deferred amounts:
For issuance premiums 128,072 3,803 (33,268) (22,960) 75,647 ‐
2,496,572 343,403 (683,068) (323,560) 1,833,347 275,100
Other liabilities:
Capital leases payable 189,251 ‐ (45,185) ‐ 144,066 46,690
$ 2,685,823 $ 343,403 $ (728,253) $ (323,560) $ 1,977,413 $ 321,790
Long‐term liabilities due in more than one year $ 1,655,623
Business‐Type Activities:
General Obligation Bonds $ 476,400 $ 2,490,400 $ (476,400) $‐ $ 2,490,400 $ 48,400
Certificates of Obligation 17,905,100 18,615,000 (408,800) (2,204,400) 33,906,900 671,500
Less deferred amounts:
For issuance premiums 1,116,844 1,971,538 (125,290) (168,377) 2,794,715 ‐
19,498,344 23,076,938 (1,010,490) (2,372,777) 39,192,015 719,900
$ 19,498,344 $ 23,076,938 $ (1,010,490) $ (2,372,777) $ 39,192,015 $ 719,900
Long‐term liabilities due in more than one year $ 38,472,115
Amounts
Beginning Amortization/ Ending Due within
Balance Additions Payments Balance
Total Business‐Type
Activities
Refunding One Year
Total Governmental
Activities
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
57
Long‐term debt at year end was comprised of the following debt issues:
General Obligation Bonds:
$2,830,000 General Obligation Refunding Bond, Series 2021B, due in
installments through 2033, interest at 0.25% to 2.13% $ 339,600 $ 2,490,400 $ 2,830,000
$ 339,600 $ 2,490,400 $ 2,830,000
Certificates of Obligation:
$1,750,000 Certificates of Obligation, Series 2007,
due in annual installments through 2027, interest at 4.4% $ 236,300 $ 458,700 $ 695,000
$4,260,000 Certificates of Obligation, Series 2013,
due in annual installments through 2033, interest at 2% to 3.7% 46,800 343,200 390,000
$5,870,000 Certificates of Obligation, Series 2015,
due in annual installments through 2035, interest at 3.4% to 5.5%‐ 5,250,000 5,250,000
$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
$1,535,000 Certificates of Obligation, Series 2019,
due in annual installments through 2026, interest at 3% to 4.75% 1,135,000 ‐ 1,135,000
$18,615,000 Certificates of Obligation, Series 2021A,
due in annual installments through 2046, interest at 2% to 4%‐ 18,615,000 18,615,000
$ 1,418,100 $ 33,906,900 $ 35,325,000
Plus deferred amounts:
Issuance premium $ 75,647 $ 2,794,715 $ 2,870,362
$ 75,647 $ 2,794,715 $ 2,870,362
Capital Leases Payable:
$435,000 Capital lease payable to financial institution, due in annual
installments of $51,535 through 2024, interest at 3.346% $ 144,066 $‐ $ 144,066
$ 144,066 $‐ $ 144,066
$ 1,977,413 $ 39,192,015 $ 41,169,428 Total Long‐term Liabilities
Total
Business ‐
Total General Obligation Bonds
Total Certificates of Obligation
Governmental Type
Activities Activities
Total Deferred Amounts
Total Capital Leases Payable
Long‐term liabilities applicable to the City’s governmental activities are not due
and payable in the current period and accordingly, are not reported as fund
liabilities in the governmental funds. Interest on long‐term debt is not accrued in
governmental funds, but rather is recognized as an expenditure when due.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
58
The annual requirements to amortize governmental and business‐type activities
debt issues outstanding at year ending were as follows:
General Obligation Bonds
General Obligation Bonds
Year ending
September 30,
2022 $ 6,600 $ 5,174 $ 48,400 $ 37,942
2023 6,600 5,157 48,400 37,821
2024 31,200 5,134 228,800 37,652
2025 30,600 4,956 224,400 36,348
2026 31,200 4,690 228,800 34,395
Thereafter 233,400 18,769 1,711,600 137,637
$ 339,600 $ 43,880 $ 2,490,400 $ 321,795
Principal Interest Principal Interest
Governmental Activities Business‐Type Activities
Combination Tax and Revenue Certificates of Obligations
Year ending
September 30,
2022 268,500 107,063 671,500 1,231,638
2023 281,400 88,008 928,600 1,220,027
2024 262,400 53,781 797,600 1,086,489
2025 274,100 34,135 835,900 1,061,395
2026 287,500 13,615 902,500 1,037,405
2027 44,200 1,945 935,800 1,011,425
Thereafter ‐ ‐ 28,835,000 9,739,875
$ 1,418,100 $ 298,547 $ 33,906,900 $ 16,388,254
Principal Interest Principal Interest
Governmental Activities Business‐Type Activities
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, 2021
59
Capital Leases
Year ending
September 30,
2022 46,690 4,845
2023 48,252 3,283
2024 49,124 1,668
$ 144,066 $ 9,796
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 of $252,632. This property serves as
collateral for the leases. In the event the City were to default on the agreements the
lessor has the right to take possession of the property.
F. Current Year Advance Refunding
On April 19, 2021, the City issued $2,830,000 in general obligation refunding bonds
with an approximate interest rate of 0.25% ‐ 2.13%. Bond proceeds received of
$2,830,000 and a city contribution of $31,693 to advance refund $2,505,000 of
outstanding 2013 combination tax and revenue certificates of obligation, which had
an average interest rate of 2% ‐ 5%. The net proceeds of the refunding portion of
$2,794,651 after payment of $67,042 in underwriting fees and other issuance costs
were deposited into an irrevocable trust with an escrow agent to provide funds for
the future debt service payment on the refunded certificates of obligation. As a
result, the obligations are considered defeased and the liability for those certificates
has been removed from the statement of net position.
The net carrying amount of the reacquisition price exceeded the refunded debt
principal ($2,505,000) and debt premium ($191,337) by $98,314. This amount is
being amortized over the remaining life of the refunding debt. This advance
refunding reduced the city’s total debt service payments by $291,988 and resulted
in an economic gain (difference between the present values of the debt service
payments on the old and new debt) of $263,316. The refunding did not
significantly change the payment term of the related debt.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
60
G. Other Long‐term Liabilities
The following is a summary of changes in the City’s other long‐term liabilities for
the year ended. In general, the City uses the general fund to liquidate
governmental activities compensated absences.
Governmental Activities:
Compensated Absences $ 174,788 $‐ $ (67,316) $ 107,472 $ 96,725
Compensated Absences in internal
service fund 32,875 3,864 ‐ 36,739 33,065
Total Governmental Activities $ 207,663 $3,864 $ (67,316) $ 144,211 $ 129,790
Long‐term Liabilities Due in More than One Year $ 14,421
Business‐Type Activities:
Compensated Absences $ 105,791 $‐ $ (24,405) $ 81,386 $ 73,247
Total Business‐Type Activities $ 105,791 $‐ $ (24,405) $ 81,386 $ 73,247
Long‐term Liabilities Due in More than One Year $ 8,139
Amounts
Due Within
One Year
Beginning
Balance Additions Reductions
Ending
Balance
H. 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 2019
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.
I. Deferred Charge on Refunding
Deferred charges resulting from the issuance of 2021B 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 $11,420
and $86,517, respectively. Current year amortization expense for governmental and
business‐type activities totaled $5,165 and $11,025, respectively.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
61
J. Interfund Transactions
Amounts transferred between funds relate to amounts collected, various capital
expenditures, annual funding, and debt payments.
Transfer out:
General $‐ $ 520,725 $ 520,725
Debt Service 60,388 ‐ 60,388
Water, sewer, & electric 1,040,599 ‐ 1,040,599
$ 1,100,987 $ 520,725 $ 1,621,712
General Total
Capital
Projects
Transfer In
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, 2021:
Paid by:
General $ 871,694
Enterprise 1,307,541
$ 2,179,235
Internal Service
Received by:
The compositions of interfund due to/from balances as of the year ended September
30, 2021 were as follows:
Payable fund:
General $ 33,194
$ 33,194
Enterprise
Receivable fund:
As of September 30, 2021, the 4A and 4B component unit had a payable balance of
$67,408, respectively, totaling $134,816, due to the primary government.
Interfund balances resulted from the timing difference between the dates that (1)
interfund goods and services are provided or reimbursable expenditures occur, (2)
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
62
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.
K. 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 $ 14,065 *$‐
Tourism 99,290 *‐
Library 105,346 **‐
Public safety 79,137 *‐
Debt service 463,802 ‐
Capital projects ‐ 2,276,284
Parks 11,837 ‐
Streets 1,146,079 ‐
A.R.P grant ‐ public safety 1,081,833 ‐
Employee benefits ‐ 13,288
$ 3,001,389 $ 2,289,572
* Restricted by enabling legislation
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
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.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
63
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.
C. Construction commitments
The government has active construction projects as of September 30, 2021. The
projects include street construction and improvements, sewer plant and the
construction of additional water lines and repairs.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
64
At year end the government’s commitments with contractors are as follows:
Project
Water Well #6 Maguire Iron $ 31,265
31,265
WWTP Phase 2Alan Plummer Associates 7,246
2019‐2020 Street Rehabilitation Martinez Brothers 21,917
21,917
FM 455 Relocation of Utilities Dannenbaum Engineering 191,632
FM 455 Relocation of Utilities Power D Utility Services 24,485
FM 455 Relocation of Utilities Techline, Inc. 4,708
220,825
Contracted maintenance Primoris T&D 178,277
System maintenance Patterson Services 5,000
WWTP Pipeline Green Tree Farm 81,250
WWTP Bar screen replacement Taknek, LLC 158,025
New Sewer Plant Alan Plummer Associates 23,995
New Sewer Plant Felix Construction 338,840
New Sewer Plant Anixter Inc. 6,873
369,708
Railroad Lift Station Alan Plummer Associates 132,979
132,979
$ 1,206,492
Project Total
Remaining
CommitmentVendor
Total
Project Total
Project Total
Project Total
Project Total
D. 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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
65
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.
E. Defined Benefit Pension Plans
1. Plan Description
The City of Sanger, Texas participates as one of 895 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
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
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
66
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 2020 Plan Year 2019
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
Employees covered by benefit terms
At the December 31, 2020 valuation and measurement date, the following
employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 25
Inactive employees entitled to but not yet receiving benefits 28
Active employees 70
Total 123
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.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
67
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 8.16% and 8.56% in calendar years 2020 and 2021, respectively. The City’s
contributions to TMRS for the year ended September 30, 2021, were $377,301, and
were equal to the required contributions.
4. Net Pension Liability
The City’s Net Pension Liability (NPL) was measured as of December 31, 2020, and
the Total Pension Liability (TPL) used to calculate the Net Pension Liability was
determined by an actuarial valuation as of that date.
Actuarial assumptions:
The Total Pension Liability in the December 31, 2020 actuarial valuation was
determined using the following actuarial assumptions:
Inflation 2.5% per year
Overall payroll growth 2.75% per year
Investment Rate of Return 6.75%, net of pension plan investment expense,
including inflation
Salary increases are based on a service‐related table. Mortality rates for active
members are based on the PUB(10) mortality tables with the Public Safety table
used for males and the General Employee table used for females. Mortality rates for
healthy retirees and beneficiaries are based on the Gender‐distinct 2019 Municipal
Retirees of Texas mortality tables. The rates for actives, healthy retirees and
beneficiaries are projected on a fully generational basis by Scale UMP to account for
future mortality improvements. For disabled annuitants, the same mortality tables
for healthy retirees is used with a 4‐year set‐forward for males and a 3‐year set‐
forward for females. In addition, a 3.5% and 3.0% minimum mortality rate is
applied, for males and females respectively, to reflect the impairment for younger
members who become disabled. The rates are projected on a fully generational basis
by Scale UMP to account for future mortality improvements subject to the floor.
The actuarial assumptions were developed primarily from the actuarial
investigation of the experience of TMRS over the four‐year period from December
31, 2014 to December 31, 2018. They were adopted in 2019 and first used in the
December 31, 2019 actuarial valuation. The post‐retirement mortality assumption
for Annuity Purchase Rates (APRs) is based on the Mortality Experience
Investigation Study covering 2009 through 2011 and dated December 31, 2013. Plan
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
68
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. Plan assets are managed on a total return
basis with an emphasis on both capital appreciation as well as the production of
income in order to satisfy the short‐term and long‐term funding needs of TMRS.
The long‐term expected rate of return on pension plan investments was determined
using a building‐block method in which best estimate ranges of expected future real
rates of return (expected returns, net of pension plan investment expense and
inflation) are developed for each major asset class. These ranges are combined to
produce the long‐term expected rate of return by weighting the expected future real
rates of return by the target asset allocation percentage and by adding expected
inflation. In determining their best estimate of a recommended investment return
assumption under the various alternative asset allocation portfolios, GRS focused
on the area between (1) arithmetic mean (aggressive) without an adjustment for
time (conservative) and (2) the geometric mean (conservative) with an adjustment
for time (aggressive). The target allocation and best estimates of real rates of return
for each major asset class in fiscal year 2020 are summarized in the following table:
Asset Class Target Allocation Long‐Term Expected Real
Rate of Return (Arithmetic)
Global Equity 30.0% 5.30%
Core Fixed Income 10.0% 1.25%
Non‐Core Fixed Income 20.0% 4.14%
Real Return 10.0% 3.85%
Real Estate 10.0% 4.00%
Absolute Return 10.0% 3.48%
Private Equity 10.0% 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, 2021
69
Changes in the Net Pension Liability:
Total Pension
Liability (a)
Plan Fiduciary Net
Position (b)
Net Pension
Liability (a) – (b)
Balance at 12/31/19 $ 11,464,180 $ 10,369,275 $ 1,094,905
Changes for the year:
Service Cost 547,534 ‐ 547,534
Interest (on the Total Pension Liab.) 780,457 ‐ 780,457
Difference between expected and
actual experience 38,473 ‐ 38,473
Changes of assumptions ‐ ‐ ‐
Contributions – employer ‐ 359,731 (359,731)
Contributions – employee ‐ 264,509 (264,509)
Net investment income ‐ 787,844 (787,844)
Benefit payments, including
refunds of emp. contributions (351,235) (351,235) ‐
Administrative expense ‐ (5,093) 5,093
Other changes ‐ (199) 199
Net changes 1,015,229 1,055,557 (40,328)
Balance at 12/31/20 $ 12,479,409 $ 11,424,832 $ 1,054,577
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%
$ 2,946,895 $ 1,054,577 $ (495,467)
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, 2021
70
5. Pension Expense and Deferred Outflows and Inflows of Resources Related to
Pensions
For the year ended September 30, 2021, the City recognized pension expense of
$311,478.
At September 30, 2021, the City reported deferred outflows and deferred inflows of
resources related to pensions from the following sources:
Difference between projected and
investment earnings $‐ $ (295,295)
Changes in actuarial assumptions 61,087 ‐
Differences between expected and actual
economic experience 122,239 ‐
Contributions subsequent to the
measurement date 282,108 ‐
Total $ 465,434 $ (295,295)
Deferred Outflows
of Resources
Deferred
(Inflows) of Resources
The City reported $282,108 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, 2022.
Other amounts reported as deferred outflows and inflows of resources related to
pensions will be recognized in pension expense as follows:
Year ended December 31:
2021 $ (56,705)
2022 57,664
2023 (121,806)
2024 7,184
2025 1,694
Thereafter ‐
$ (111,969)
F. Postemployment Benefits Other Than Pensions
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,
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
71
by ordinance, to provide group‐term life insurance coverage to both current and
retired employees. The City may terminate coverage under and discontinue
participation in the SDBF by adopting an ordinance before November 1 of any year
to be effective the following January 1.
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.
Employees covered by benefit terms
At the December 31, 2020 valuation and measurement date, the following
employees were covered by the benefit terms:
Inactive employees or beneficiaries currently receiving benefits 15
Inactive employees entitled to but not yet receiving benefits 7
Active employees 70
Total 92
The City’s retiree contribution rates to the TMRS SDBF for the years ended 2021,
2020 and 2019 are as follows:
Plan/
Calendar Year
Annual
Required
Contribution
(Rate)
Actual
Contribution
Made
(Rate)
Percentage of
ARC
Contributed
2019 0.02% 0.02% 100.0%
2020 0.02% 0.02% 100.0%
2021 0.05% 0.05% 100.0%
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
72
The City’s contributions to the TMRS SDBF for the years ended 2021, 2020, and 2019
were $1,764, $746 and $406, respectively, which equaled the required contributions
each year.
Total OPEB Liability
The City’s Postemployment Benefits Other Than Pensions Liability (OPEB) was
measured as of December 31, 2020, and the Total OPEB Liability was determined by
an actuarial valuation as of that date.
Actuarial assumptions:
The Total OPEB Liability in the December 31, 2020 actuarial valuation was
determined using the following actuarial assumptions:
Inflation 2.5% per year
Overall payroll growth 3.5% to 11.5%, including inflation per year
Discount rate 2.00%
Retirees’ share of benefit‐related costs $0
Administrative expenses All administrative expenses are paid
through the Pension Trust and accounted
for under reporting requirements under
GASB Statement No. 68
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.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
73
Discount Rate:
The discount rate used to measure the Total OPEB Liability was 2.00%. The
discount rate was based on the Fidelity Index’s “20‐Year Municipal GO AA Index”
rate as of December 31, 2020.
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate
The following presents the total OPEB liability of the City, calculated using the
discount rate of 2.00%, as well as what the City’s total OPEB liability (asset) would
be if it were calculated using a discount rate that is 1‐percentage‐point lower
(1.00%) or 1‐percentage‐point higher (3.00%) than the current rate:
$211,361 $ 171,483 $ 140,310
1% Decrease
(1.00%)
Current Single Rate
Assumption 2.00%
1% Increase
(3.00%)
Changes in the Total OPEB Liability:
Total OPEB
Liability
Balance at 12/31/19 $ 132,196
Changes for the year:
Service Cost 12,785
Interest 3,799
Change in benefit terms ‐
Difference between expected and
actual experience (468)
Changes of assumptions 24,053
Benefit payments (882)
Net changes 39,287
Balance at 12/31/20 $ 171,483
OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to OPEB
For the year ended September 30, 2021, the City recognized OPEB expense of
$21,329.
City of Sanger, Texas
NOTES TO FINANCIAL STATEMENTS, Continued
September 30, 2021
74
At September 30, 2021, the City reported deferred outflows of resources and
deferred inflows of resources related to the OPEB liability from the following
sources:
Differences between expected and
actual economic experience $ ‐ (8,776)
Changes in assumptions 36,350 ‐
Contributions subsequent to
measurement date 647 ‐
Total $ 36,997 $ (8,776)
Deferred Outflows
of Resources
Deferred (Inflows)
of Resources
The City reported $647 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 OPEB liability for the year ending September 30,
2022.
Other amounts reported as deferred outflows and inflows of resources related to
OPEB will be recognized in pension expense as follows:
Year ended December 31:
2021 $ 4,745
2022 4,745
2023 4,745
2024 3,959
2025 4,930
Thereafter 4,450
$ 27,574
G. Subsequent Events
There were no material subsequent events through January 11, 2022, the date the
financial statements were available to be issued.
REQUIRED SUPPLEMENTARY INFORMATION
75
Revenues
Property tax $4,450,618 $4,450,618 $4,669,778 $219,160
Sales tax 925,000 925,000 1,292,326 367,326
Franchise and local taxes 300,000 300,000 323,503 23,503
License and permits 344,500 344,500 413,621 69,121
Charges for services 1,087,500 1,087,500 1,168,613 81,113
Fire and rescue 585,000 585,000 622,422 37,422
Contributions and donations - - 1,935 1,935
Intergovernmental - - 1,274,113 1,274,113
Fines and forfeitures 74,466 74,466 155,816 81,350
Investment income 18,000 18,000 16,247 (1,753)
Other revenue 84,500 84,500 380,798 296,298
7,869,584 7,869,584 10,319,172 2,449,588
Expenditures
Current:
General government 2,625,292 2,625,292 2,097,030 528,262
Police department 1,817,964 1,792,964 1,616,631 176,333
Municipal court 190,849 190,849 214,207 (23,358)
Fire and EMS 1,358,363 1,383,363 1,157,429 225,934
Parks and recreation 711,592 711,592 550,524 161,068
Public works 1,058,204 1,058,204 797,082 261,122
Debt service:
Principal 43,716 43,716 45,185 (1,469)
Interest 7,820 7,820 6,350 1,470
Capital outlay 379,000 379,000 37,356 341,644
8,192,800 8,192,800 6,521,794 1,671,006
Revenues Over (Under) Expenditures $(323,216) $(323,216) $3,797,378 $4,120,594
For the Year Ended September 30, 2021
Total Revenues
Variance withOriginal
Budget Final Budget
City of Sanger, Texas
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL- GENERAL FUND (Page 1 of 2)
Final Budget
Total Expenditures
Actual
76
Transfers in $775,987 $775,987 $1,100,987 $325,000
Transfers (out)(452,771) (452,771) (520,725) (67,954)
Insurance recoveries - - 28,744 28,744
323,216 323,216 609,006 285,790
Net Change in Fund Balance $- $- 4,406,384 $4,406,384
Beginning fund balance 8,532,848
$12,939,232
Notes to Required Supplementary Information
1. Annual budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).
City of Sanger, Texas
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL- GENERAL FUND (Page 2 of 2)
For the Year Ended September 30, 2021
Variance with
Actual Final BudgetFinal Budget
Original
Budget
Ending Fund Balance
Total Other Financing Sources (Uses)
Other Financing Sources (Uses)
77
Total pension liability
Service cost $547,534 $498,768 $462,521 $438,324
Interest (on the Total Pension Liability)780,457 709,455 648,013 590,632
Changes in benefit terms - - - -
Differences between expected and
actual experience 38,473 89,057 93,857 38,794
Changes of assumptions - 92,583 - -
Benefit payments, including refunds
of participant contributions (351,235) (373,476) (251,071) (208,451)
Net change in total pension liability 1,015,229 1,016,387 953,320 859,299
Total pension liability - beginning 11,464,180 10,447,793 9,494,473 8,635,174
Total pension liability - ending (a)$12,479,409 $11,464,180 $10,447,793 $9,494,473
Plan fiduciary net position
Contributions - employer $359,731 $321,275 $294,606 $276,169
Contributions - members 264,509 243,698 226,912 217,171
Net investment income 787,844 1,365,511 (264,466) 1,040,205
Benefit payments, including refunds
of participant contributions (351,235) (373,476) (251,071) (208,451)
Administrative expenses (5,093) (7,705) (5,106) (5,387)
Other (199) (231) (267) (273)
Net change in plan fiduciary net position 1,055,557 1,549,072 608 1,319,434
Plan fiduciary net position - beginning 10,369,275 8,820,203 8,819,595 7,500,161
Plan fiduciary net position - ending (b)$11,424,832 $10,369,275 $8,820,203 $8,819,595
$1,054,577 $1,094,905 $1,627,590 $674,878
91.55%90.45%84.42%92.89%
Covered payroll $4,408,488 $4,061,633 $3,781,589 $3,619,524
23.92%26.96%43.04%18.65%
Notes to schedule:
Fund's net position as a percentage of
covered payroll
20182020
Fund's net pension liability - ending (a) -
(b)
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.
Years ended December 31,
Plan fiduciary net position as a
percentage of the total pension liability
City of Sanger, Texas
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
20172019
78
1
$408,943 $369,950 $340,004
545,333 521,853 476,571
- - -
(78,516) (89,808) 47,610
- 47,847 -
(230,245) (260,514) (204,026)
645,515 589,328 660,159
7,989,659 7,400,331 6,740,172
$8,635,174 $7,989,659 $7,400,331
$240,177 $231,097 $211,283
202,113 195,568 187,821
461,955 9,831 350,203
(230,245) (260,514) (204,026)
(5,214) (5,988) (3,656)
(281) (296) (301)
668,505 169,698 541,324
6,831,656 6,661,957 6,120,633
$7,500,161 $6,831,655 $6,661,957
$1,135,013 $1,158,004 $738,374
86.86%85.51%90.02%
$3,368,554 $3,259,471 $3,130,346
33.69%35.53%23.59%
201420162015
79
9/30/2021 9/30/2020 9/30/2019 9/30/2018
$377,301 $341,109 $320,019 $287,348
$377,301 $341,109 $320,019 $287,348
Contribution deficiency (excess)$- $- $- $-
Annual covered payroll $4,462,235 $4,209,793 $4,060,365 $3,706,912
8.46%8.10%7.88%7.75%
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 24 years
Asset Valuation Method 10 Year smoothed market; 12% soft corridor
Inflation 2.5%
Salary Increases 3.5% to 11.5% 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
2019 valuation pursuant to an experience study
of the period 2014 - 2018
Mortality
Other Information:
Notes There were no benefit changes during the year.
NOTES TO SCHEDULE OF EMPLOYER CONTRIBUTIONS TO PENSION PLAN
Post-retirement: 2019 Municipal Retirees of Texas Mortality Tables. The
rates are projected on a fully generational basis with scale UMP. Pre-
retirement: PUB(10) mortality tables, with the Public Safety table used for
males and the General Employee table used for females. The rates are
projected on a fully generational basis with scale UMP.
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 payroll
Actuarially determined employer
contributions
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.
80
9/30/2017 9/30/2016 9/30/2015 1
$266,753 $247,432 $225,111
$266,753 $247,432 $225,111
$- $- $-
$3,549,724 $3,475,512 $3,130,346
7.51%7.12%7.19%
81
1
Total OPEB liability
Service cost $12,785 $8,529 $9,076 $7,601
Interest (on the Total OPEB Liability)3,799 3,938 3,691 3,432
Changes in benefit terms - - - -
Differences between expected and
actual experience (468) (3,932) (9,264) -
Changes of assumptions 24,053 22,174 (7,993) 9,310
Benefit payments, including refunds of
participant contributions (882) (812) (377) (363)
Net changes 39,287 29,897 (4,867) 19,980
Total OPEB liability - beginning 132,196 102,299 107,166 87,186
Total OPEB liability - ending $171,483 $132,196 $102,299 $107,166 2
Covered payroll $4,408,488 $4,061,633 $3,781,859 $3,619,524
3.89%3.25%2.70%2.96%
Notes to schedule:
1
2
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.
Total OPEB Liability as a percentage of
covered payroll
Years ended December 31,
No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB statement No. 75 to pay
related benefits.
20192020
PENSION (OPEB) LIABILITY AND RELATED RATIOS
TEXAS MUNICIPAL RETIREMENT SYSTEM
20172018
City of Sanger, Texas
SCHEDULE OF CHANGES IN POSTEMPLOYMENT BENEFITS OTHER THAN
82
OTHER SUPPLEMENTARY INFORMATION
83
Operating Revenues
Charges for services $2,185,631 $2,142,960 $7,771,611
Connection fees - - 71,070
Tap fees 320,350 428,000 -
Other revenue - - -
2,505,981 2,570,960 7,842,681
Operating Expenses
Salaries and wages 575,686 335,777 1,122,683
Contracted services 114,933 45,545 317,045
Utilities 156,024 186,049 3,171
Materials and supplies 30,700 49,577 65,506
Water and electric purchases 89,715 - 4,970,615
Repairs and maintenance 284,278 195,683 98,162
Depreciation 391,910 414,312 234,925
1,643,246 1,226,943 6,812,107
862,735 1,344,017 1,030,574
Nonoperating Revenues (Expenses)
Investment income - - -
Intergovernmental 30,000 - -
Interest expense - - -
30,000 - -
Income (Loss) Before Transfers 892,735 1,344,017 1,030,574
Transfers (out)- - 232,242
$892,735 $1,344,017 $1,262,816
Sewer Electric
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, 2021
Water
Total Operating Revenues
Total Operating Expenses
Operating Income (Loss)
Total Nonoperating Revenues (Expenses)
Change in Net Position
84
$- $12,100,202
- 71,070
- 748,350
102,622 102,622
102,622 13,022,244
- 2,034,146
- 477,523
- 345,244
- 145,783
- 5,060,330
- 578,123
14,263 1,055,410
14,263 9,696,559
88,359 3,325,685
468,643 468,643
- 30,000
(1,149,964) (1,149,964)
(681,321) (651,321)
(592,962) 2,674,364
(1,272,841) (1,040,599)
$(1,865,803) $1,633,765
Administration Total
85
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86