City of San Marcos Comprehensive Financial Report FY 2010-11

THE CITY OF SAN MARCOS, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED SEPTEMBER 30, 2011
Issued by the City of San Marcos Finance Department
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF SAN MARCOS, TEXAS

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INTRODUCTORY SECTION Principal Public Officials .............................................................................................. Certificate of Achievement ........................................................................................... Letter of Transmittal ..................................................................................................... Organization Chart ........................................................................................................ i ii iii ix x
FINANCIAL SECTION Independent Auditors Report....................................................................................... Managements Discussion and Analysis ...................................................................... Basic Financial Statements Government-wide Financial Statements Statement of Net Assets .......................................................................................... Statement of Activities ............................................................................................ Fund Financial Statements Balance Sheet Governmental Funds .................................................................... Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets ............................................................................. Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds ................................................................ (continued) 16 13 14 15 12 3 12
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COMPREHENSIVE ANNUAL FINANCIAL REPORT (Continued) YEAR ENDED SEPTEMBER 30, 2011
Page Number FINANCIAL SECTION (Continued) Fund Financial Statements (Continued) Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ......................................................................................... Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund............................................ Statement of Net Assets Proprietary Funds ......................................................... Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds .................................................................. Statement of Cash Flows Proprietary Funds ........................................................ Notes to Financial Statements .................................................................................... Combining and Individual Fund Statements and Schedules General Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual ..................................................................... Nonmajor Governmental Funds Combining Balance Sheet ....................................................................................... Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................................................................................... Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Debt Service ............................................. 58 61 62 65 66 54 57
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Page Number FINANCIAL SECTION (Continued) Nonmajor Governmental Funds (Continued) Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Community Development Block Grant ................................................................................... Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Police Grant ............................................ Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual WIC Project ............................................ Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Hotel Occupancy .................................... Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Municipal Court Technology ................................................................................................ Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Seized Assets .......................................... Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Municipal Court Security Fee ............................................................................................... Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Juvenile Case Manager Fee......................................................................................................... Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual TIRZ #2 ..................................................
67 68 69 70
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74 75
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Page Number FINANCIAL SECTION (Continued) Nonmajor Governmental Funds (Continued) Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual TIRZ #3 .................................................. Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Miscellaneous Grants ............................. Nonmajor Enterprise Funds Combining Statement of Net Assets ....................................................................... Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ................................................................................ Combining Statement of Cash Flows ..................................................................... Internal Service Funds Statement of Net Assets .......................................................................................... Statement of Revenues, Expenditures and Changes in Fund Net Assets ................................................................................ Statement of Cash Flows ........................................................................................ 81 82 83 78 79 80 76
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Table STATISTICAL SECTION (Unaudited) Net Assets by Component .............................................................................. Changes in Net Assets ................................................................................... Fund Balances Governmental Funds .......................................................... Changes in Fund Balances Governmental Funds ....................................... Assessed Value and Estimated Actual Value of Taxable Property ............... Electric Utility Rate Comparison ................................................................... Total Average kWh Per Month Comparison ................................................. Total kWh Per Year Comparison ................................................................... Ten Largest Electric Customers ..................................................................... Direct and Overlapping Property Tax Rates .................................................. Principal Property Taxpayers ......................................................................... Property Tax Levies and Collections ............................................................. Ratios of Outstanding Debt by Type ............................................................. Ratios of General Bonded Debt Outstanding................................................. Direct and Overlapping Governmental Activities Debt................................. Legal Debt Margin Information ..................................................................... 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
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84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102
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Table STATISTICAL SECTION (Unaudited) Pledged Revenue Coverage ........................................................................... Demographic and Economic Statistics .......................................................... Principal Employers ....................................................................................... Fulltime Equivalent City Government Employees ........................................ Operating Indicators by Function/Program ................................................... Capital Asset Statistics by Function/Program................................................ 17 18 19 20 21 22
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103 104 105 106 107 108
INTRODUCTORY SECTION
THE CITY OF SAN MARCOS, TEXAS

CITY COUNCIL
Daniel Guerrero - Mayor Kim Porterfield Place 1 Deputy Mayor Pro Tem Fred Terry Place 3 Ryan Thomason Place 5 Mayor Pro Tem Jude Prather Place 2
Chris Jones Place 4 Shane Scott Place 6
ADMINISTRATION
Jim Nuse City Manager Collette Jamison Assistant City Manager Laurie Moyer Assistant City Manager
Steve Parker Director of Finance
Presented by The Finance Department
Certificate of Achievement for Excellence in Financial Reporting

Presented to
City of San Marcos Texas

For its Comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2010
A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting.
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February 28, 2012
To the Honorable Mayor, Members of the City Council, And Citizens of the City of San Marcos, Texas:
Transmittal Letter
For the Fiscal Year Ended September 30, 2011
The Finance Department and City Managers office are pleased to submit the Comprehensive Annual Financial Report (the CAFR) of the City of San Marcos, Texas (the City) for the fiscal year ended September 30, 2011. This report is submitted in accordance with Section 3.16 of the City Charter. The financial statements are presented in conformity with generally accepted accounting principles (GAAP) as set forth by the Governmental Accounting Standards Board (GASB) and have been audited by independent auditors in accordance with generally accepted auditing standards. Pattillo, Brown and Hill, L.L.P., have issued an unqualified (clean) opinion on the Citys financial statements for the year ended September 30, 2011. The independent auditors report is located at the front of the financial section of this report. Managements discussion and analysis (MD&A) immediately follows the independent auditors report and provides a narrative introduction, overview and analysis of the basic financial statements. MD&A complements this transmittal letter and should be read in conjunction with it. The CAFR includes all funds of the City. The City provides a full range of services, which include police and fire protection; construction and maintenance of streets and other infrastructure; recreational activities and cultural events. In addition to general government activities, the City also provides electric, water, wastewater, storm water drainage, solid waste, WIC, and airport services which are included in the reporting entity. Management assumes full responsibility for the completeness and reliability of all information presented in this report, based upon a comprehensive framework of internal control that it established for this purpose. Because the cost of internal controls should not outweigh their anticipated benefits, the objective is to provide reasonable rather than absolute assurance that the financial statements are free of any material misstatements. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. The disclosures included in this report are intended to provide the reader a good understanding of the Citys financial activities. The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984, the Single Audit Act Amendments of 1996 and U. S. Office of Management and Budget (OMB) Circular A-133. Information related to this single audit, including the Schedule of Expenditures of Federal Awards, findings and recommendations, and auditors reports on the internal control structure and compliance with applicable laws and regulations are included in the single audit report.
City of San Marcos San Marcos, Texas
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City of San Marcos Profile

San Marcos is located on the IH-35 corridor 15 miles south of Austin and 30 miles north of San Antonio. The greater San Marcos region is situated between two of the fastest growing MSAs (Metropolitan Statistical Area) in the United States. The City has a 2010 census population of 44,894 with a daytime service population of 66,116. The City covers a total of 32.21 square miles within its city limits. The City operates under a council-manager form of government as provided by its Charter. The Mayor and six City Council members are elected at large on a non-partisan ballot. All members of the City Council, except the Mayor, are elected to staggered three-year terms. The Mayor is elected for a twoyear term. The City Council appoints the City Manager, City Clerk, City Attorney, and Municipal Court Judge. The City Council also appoints members to certain boards, committees and commissions, as it deems necessary for the operation of the City. The City Manager is the chief executive officer for the City and has full responsibility for carrying out Council policies and administering City operations, including hiring department Directors and all other City employees. City service departments provide a full range of services including police and fire protection, health and social services, sanitation services, construction and maintenance of highways, streets and infrastructure, planning and zoning, recreational activities and cultural events, and general administrative services.
Economic Outlook and Financial Condition

The City has remained stable and has not felt the impact of the recession and credit crisis to the extent of other parts of Texas and the nation. The Federal Reserve of Dallas in their Regional Economic Update for January 2012 reported: The Texas economy continues to expand at a moderate pace. Texas employment grew at a 2 percent rate in 2011. Government employment rose in November and December following four months of sharp declines. Housing indicators suggest that the sector continues to heal, and energy activity remains strong. However, a general slowing of exports has recently led to weakness in manufacturing activity, although exports rebounded somewhat in November. Jobs are projected to grow at about a 2 percent pace in 2012. Additionally, their Southwest Economy for the Fourth Quarter 2011 reported: As a majority of state economies entered recession in late 2007, Texas continued growing. And as most state economies emerged from recession in 2009-11, Texas outperformed the reminder of the country in employment growth by a full percentage point-about equal to Texas historical advantage over the past few decades. Texas favorable performance stems from a number of factors, including its oil and gas industry, a low cost of living, favorable demography, restrictive home-lending laws, and attractive business climate, and a housing sector that held up better than it did elsewhere. Tourism, retail and construction activities have continued to show sign of growth and prosperity. The City continues to benefit from other favorable conditions associated with San Marcos, including a stable, diversified economic base and a desirable location for work, destination, and living. In fact, the City of San Marcos was chosen in 2010 Business Week as one of the top 10 places to raise kids in the United States. Current low mortgage interest rates and new residential developments within San Marcos continue to bring in residential growth and commercial development. This continuing growth contributed to the City adding over $64 million in new valuations to the tax roll in 2011 and enjoying an overall increase of 4.1% in total valuations. The City expects this trend to continue as a result of the Citys commitment to targeted economic development efforts that focus on industry segments that complement the existing business mix.
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Retail Sales The Citys largest General Fund revenue source is sales tax generated from a well-balanced variety of business categories including automotive, construction, food stores, hotels/motels, department stores, retail stores, restaurants, utilities and rentals. The City of San Marcos recognized a 7.9% increase in sales tax collections in FY 2011. This increase is better that some cities in the region and in line with others. The City has seen a steady growth in sales tax revenues in recent years with the only decrease experienced in 2009, during the worst of the economic crisis. The City is perhaps best known for its Outlet Malls Premium and Tanger which have made San Marcos a popular tourist destination in Texas. The Outlet Malls provide access to hundreds of stores in the 1.2 million square feet complex and attracts shoppers from all over the United States and internationally. Employment San Marcos enjoyed a relatively low unemployment rate in 2011 of 5.0%. This rate was substantially lower than the Hays County rate of 6.3%, the state rate of 7.8% and the national rate of 8.9%. As a result of this low rate, San Marcos residents have greater job opportunities locally. Tourism Tourism is one of San Marcos largest industries and contributes significantly to the Citys economy. The City offers numerous tourist attractions, including the beautiful San Marcos River, and the City of San Marcos Conference Center that hosts over 20,000 out of town guests per year. The Citys has more actively promoted Sports Tourism since the completion of the 5 Mile Dam Soccer Complex in 2010, which has drawn many soccer tournaments to the complex along with attracting baseball and softball tournaments to the area fields. Hotels and motels in the area provide over 1,690 guest rooms which will increase to 1,770 by the end of 2012 with the opening of Candlewood Suites. More than 1,200 retail shops and boutiques are located throughout the City and a selection of over 165 restaurants is available. These services and facilities, complemented by the mild winter, have made San Marcos a popular vacation spot for tourists and winter visitors. Hotel/motel occupancy tax receipts increased 4.43% in FY 2010/11 over the previous year reflecting consistent growth trend after anemic post 9/11 levels. The current forecast is that tourism will continue to experience positive gains, reflected by continued increases in occupancy, available rooms and room rates.
Major Initiatives
In January 2011, the San Marcos City Council held a Visioning Workshop to explore important policy issues facing the City. At that meeting, five primary strategic initiatives were developed that will guide staff during the upcoming years. These initiatives include: Sound Finances Customer Friendly Processes Big Picture Infrastructure San Marcos River Protection, Recreation and Maintenance Community Wellness/Encourage the Middle Class
Sound Finances Sound Finances is the number one priority focus for FY2011 and FY2012. In FY2011, the Citys planned capital projects were reprioritized and this reprioritization resulted in the deferral of bond issuance in FY 2011 and FY 2012 thus creating more capacity in General Fund Operations. Several other Sound Finance initiatives include:
Creation of Self-Financed Capital Funds through various funding sources to provide a cash funding source for improvements to streets, parks, city facilities, and technology infrastructure. Reduction in the General Funds reliance on the Enterprise Funds franchise fee revenue by lowering the fee from 9% of gross revenues to 7% over a period of four years. Transition of Engineering/Capital Improvements Departmental operating expenses from bond proceeds to General Fund appropriations over a five year period.
Water/Wastewater Rates The City of San Marcos has recently completed a Water\Wastewater Rate Study. The results of the study showed that a 3% increase in Water was needed over the next 2 years as well as a 2.5% increase in Wastewater. The rate increase is primarily driven by standard operating cost increases and annual contract obligations. The City is continuing to explore future water supplies through the Hays County Public Utility Agency (HCPUA). This is a joint venture between San Marcos, Kyle, Buda, and some regional water corporations to firm up future water supplies through the year 2060. The City of San Marcos share of the total construction cost related to Phase 1 of the project is $41.3 Million and is anticipated for the year 2015. The City is still exploring water supply alternatives in hopes that this future expense can be reduced as much as possible.
Long-Term Strategic Financial Planning

Financial policies approved by the City Council guide the Citys financial management in planning for the future. Sufficient resources and adequate reserve levels will protect the City in the event of revenue shortfalls or increased expenditure needs. Fiscal integrity is the cornerstone upon which the City plans, monitors, and reports its financial activities. Particular emphasis is placed on maintaining the financial stability of the City. Each fiscal year, the budget is developed with this objective. Goals for financial stability enable the City to manage revenue shortfalls and cash flows to ensure continued operations, and to provide for unforeseen contingencies without impairing the level of quality service needed to respond to the community. Internal Controls The Finance Department is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles for local governments as prescribed by GASB and the American Institute of Certified Public Accountants (AICPA). The internal controls structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the evaluation of costs and benefits requires estimates and judgments by management.
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Financial Rating The City of San Marcos had its underlying credit rating confirmed from Standard & Poors in October 2011. The Citys bond rating for Moodys Investor Service and Standard & Poors is as follows: Moodys Investor Service A1 Standard & Poors AA-
General Obligation Bonds and Certificates of Obligation Revenue Bonds
A1
AA-
Financial Reporting The City utilizes a computerized financial accounting system to capture all financial transactions and provide data for the preparation of this CAFR, including the audited financial statements. These statements present information on the financial position of the City and whether resources were adequate to cover the costs of providing services during the reporting period. The Citys award-winning CAFR is distributed to the City Council, executive management, federal and state agencies, bond rating agencies, and financial institutions, as well as others throughout the general public. Budgeting Process The annual budget serves as the foundation for the Citys financial planning and control. The City Council formally adopts the budget and legally allocates, or appropriates, available monies for the Citys various funds. Therefore, these funds have appropriated budgets, and budget to actual information is presented. The City Manager submits to the City Council a proposed budget for the fiscal year commencing the following October 1st. The budget includes proposed expenditures and the means of financing them. A public hearing is held prior to the budgets final adoption in order to obtain taxpayer comments. The budget is legally enacted through passage of an ordinance. The ordinance sets the limit for expenditures during the fiscal year. The expenditure appropriations in the adopted budget are by department. The maximum legal expenditure permitted for the fiscal year is the total budget as adopted. Expenditure appropriations may be amended during the year. Upon the recommendation of the City Manager, and with the approval of the City Council: (1) transfers may be made from the appropriations for contingencies to departments; (2) transfers from fund balance accounts to departments or capital improvement program accounts; and (3) transfers from capital improvement program accounts to departments. Management control of budgets is further maintained through the use of an encumbrance accounting system. Encumbered amounts lapse at year-end. However, encumbrances generally are re-appropriated as part of the following years budget. As demonstrated by the statements and schedules included in the financial section of this report, the City continues meeting its responsibility for sound financial management. Single Audit As a recipient of federal, state and county financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management and the internal audit staff of the City.
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As a part of the Citys single audit, described earlier, tests are made to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs, as well as to determine that the City has complied with applicable laws and regulations. The results of the Citys single audit for the fiscal year ended September 30, 2010, provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws and regulations. Cash Management Cash temporarily idle during the year was invested in U. S. Agency securities, Certificates of Deposit, Local Government Pools, Commercial Paper and Money Market Mutual Funds. At year-end, the carrying amount of the Citys deposits was $154.1 million. The U. S. government agency securities had a market value of $102,882,278 as of September 30, 2011, and a book value of $102,996,453. These investments are carried at book value. The Citys investment policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. Accordingly, deposits were either insured by federal depository insurance or collateralized. All collateral on deposits were held by the Citys agent in the Citys name. All investments are in compliance with the Public Funds Investment Act. Risk Management The City of San Marcos maintains a risk management program to prevent and mitigate financial loss. Components of the program include the identification of exposure to loss and the selection, implementation and monitoring of risk management techniques. Prevention measures include activities such as training, annual review of assets and exposures, driving and drug testing programs, safety awareness events and the Safety Coach Safety Leadership Development Program. Post incident measures designed to mitigate losses include incident investigation and management of all claims through final disposition. A cornerstone of our commitment to managing workers compensation claims is a return to work program. In rating a workers compensation program, an underwriter begins at 100% which represents premium modifier of an average employer. This is modified based on a specific employers claims history. During this reporting period the City has achieved a 22% premium modifier. Collectively, risk management programs have resulted in direct savings of over one million dollars while improving the health, safety, and well-being of City Employees. The Citys Safety Program has been recognized by awards from the Public Risk Management Association (PRIMA) and the National Safety Council (NSC). The City participates in the National Safety Council Annual Awards Program which presents awards for occupational safety and health, safe worker and safe drivers. Seventeen departments were recognized for maintaining a perfect record or a reduction in frequency of lost time injuries with an Award for Excellence. Individual employees who serve in positions that are exposed to hazardous conditions and have a long work history without an accident are recognized at two levels by the National Safety Council: safe worker and safe driver. Three employees were recognized in each category for safe worker and safe driving this year. Each October the City holds an Annual Employee Benefit, Safety and Wellness Expo. The event includes over 55 Health and Safety vendors including safety demonstrations. Over 300 employees participated in the Expo this year.
Other Information
Independent Audit The City Charter requires an annual audit of the books, accounts, financial records and transactions of all administrative departments of the City by independent certified public accountants selected by the City Council. This requirement has been complied with, and the independent auditors report by Pattillo, Brown & Hill, L.L.P., Certified Public Accountants, has been included in this report.
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Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for the Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended September 30, 2010. The Certificate of Achievement is a prestigious national award-recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized comprehensive annual financial report whose contents conform to program standards. That report satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Programs requirements. This report will once again be submitted to the GFOA for this annual reward. We are also proud to report that the GFOA has presented the Distinguished Budget Presentation Award to the City of San Marcos for each of the past 27 years. Acknowledgements The preparation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Department. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report. We would also like to thank the members of the City Council and the citizens of the City of San Marcos for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. In conclusion, we would like to thank the Citys auditing firm, Pattillo, Brown & Hill, L.L.P., for their ongoing efforts, not only in the performance of the Citys annual audit, but for their close working relationship in advising the City when questions arise throughout the year. They have been an excellent source of information for preparation of the report.
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FINANCIAL SECTION
INDEPENDENT AUDITORS REPORT
The Honorable Mayor and Members of City Council City of San Marcos, Texas We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of San Marcos, Texas (the City), as of and for the year ended September 30, 2011, which collectively comprise the Citys basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Citys management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, and the respective budgetary comparison for the General Fund of the City, as of September 30, 2011, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated February 28, 2012, on our consideration of the Citys internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.
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401 WEST HIGHWAY 6 P. O. BOX 20725 WACO, TX 76702-0725 (254) 772-4901 FAX: (254) 772-4920 www.pbhcpa.com AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583 TEMPLE, TX (254) 791-3460 ALBUQUERQUE, NM (505) 266-5904
Accounting principles generally accepted in the United States of America require that the Managements Discussion and Analysis and analysis on pages 3 through 12 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 managements responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Citys financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and budgetary schedules, and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements and budgetary schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.
February 28, 2012
MANAGEMENTS DISCUSSION AND ANALYSIS
MANAGEMENTS DISCUSSION AND ANALYSIS

SEPTEMBER 30, 2011
As management of the City of San Marcos, we offer readers of the City of San Marcos financial statements this narrative overview and analysis of the financial activities for the City of San Marcos for the fiscal year ended September 30, 2011. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages iii viii of this report.
FINANCIAL HIGHLIGHTS The assets of the City of San Marcos exceeded its liabilities at the close of the fiscal year ending September 30, 2011, by $226 million (net assets). Of this amount, $65.3 million (unrestricted net assets) may be used to meet the governments ongoing obligations to citizens and creditors. As of September 30, 2011, the City of San Marcos governmental funds reported combined ending fund balances of $65.9 million, a decrease of $(14.7) million in comparison with the prior fiscal year. At the end of the current fiscal year, unassigned fund balance for the General Fund was $14 million, or 33% of total General Fund expenditures. The Citys total debt decreased by $(11.9) million during the current fiscal year. The City issued $17.2 million in General Obligation Refunding Bonds.
OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis serves as an introduction to the City of San Marcos basic financial statements. The City of San Marcos basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The comprehensive annual financial report (CAFR) also contains other supplementary information in addition to the basic statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of San Marcos finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City of San Marcos assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of San Marcos is improving or deteriorating.
The statement of activities presents information showing how the Citys net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but not used vacation leave). The statement of net assets and the statement of activities are prepared utilizing the accrual basis of accounting. In the statement of net assets and the statement of activities, the Citys operations are divided into two kinds of activities: Governmental Activities Most of the Citys basic services are reported here, including the police, fire, libraries, planning and development, transportation, parks and recreation, and general administration. Property tax, sales tax and franchise fee revenues finance most of these activities. Business-type Activities The City charges a fee to customers to help cover all or most of the cost of certain services it provides. The Citys Electric, Water and Wastewater, Airport, Drainage and Waste Collection Funds are reported here.
The government-wide financial statements can be found on pages 13 15 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of San Marcos, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The fund financial statements provide detailed information about the most significant funds not the City as a whole. Some funds are required to be established by state law and by bond covenants. However, the City establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other money. The Citys two kinds of funds governmental and proprietary utilize different accounting approaches. 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 balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a governments near-term financing requirements. Because the focus of governmental funds are more narrow 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 governments near-term financing decisions. The relationships or differences between governmental activities (reported in the statement of net assets and the statement of activities) and governmental funds is detailed in a reconciliation following the fund financial statements.
The City of San Marcos maintains 19 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Capital Projects Fund, and Debt Service Fund, all of which are considered to be major funds. Data from the other 16 governmental funds are combined into a single, aggregated nonmajor fund presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in the CAFR The basic governmental fund financial statements can be found on pages 16 20 of this report. Proprietary funds. The City charges customers for certain services it provides. These services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net assets and the statement of activities. The City of San Marcos maintains five individual enterprise funds: Electric, Water and Wastewater, Airport, Drainage, and Waste Collection. The fund financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Electric, Water and Wastewater, and Stormwater Drainage Funds, all of which are considered to be major funds of the City. Data from the other two enterprise funds are combined into a single, aggregated nonmajor fund presentation. Individual fund data for each of these nonmajor enterprise funds is provided in the form of combining statements elsewhere in the CAFR. The basic proprietary funds financial statements can be found on pages 21 24 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 25 53 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report presents the combining statements referred to earlier in connection with nonmajor governmental and enterprise funds, comparative information for the General Fund and budgetary information to demonstrate the Citys budgetary compliance. Combining and individual fund statements and schedules can be found on pages 54 83 of this report.
GOVERNMENT-WIDE FINANCIAL ANALYSIS The Citys combined net assets were $226.3 million as of September 30, 2011. Analyzing the net assets and net expenses of governmental and business-type activities separately, the business-type activities net assets are $123.2 million. This analysis focuses on the net assets (Table 1) and changes in net assets of the Citys governmental and business-type activities (Table 2).
By far, the largest portion of the Citys net assets (67%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Citys investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The remaining balance of unrestricted net assets ($65.3 million) may be used to meet the governments ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of San Marcos is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year
TABLE 1 CITY OF SAN MARCOS NET ASSETS
Governmental Activities 2011 Current and other assets Capital assets Total assets Long-term liabilities outstanding Other liabilities Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ 74,247,634 9,972,700 18,807,912 103,028,246 $ 66,361,134 11,086,463 22,795,807 100,243,404 $ 143,129,795 12,556,695 155,686,490 147,884,495 10,724,169 158,608,664 $ 82,605,912 176,108,824 258,714,736 $ 2010 96,191,952 162,660,116 258,852,068 $
Business-type Activities 2011 98,007,233 164,989,010 262,996,243 $ 2010 105,673,439 161,484,746 267,158,185 $ 2011
Totals 2010 $ 201,865,391 324,144,862 526,010,253
180,613,145 341,097,834 521,710,979
129,152,626 10,621,478 139,774,104
135,332,293 11,023,158 146,355,451
272,282,421 23,178,173 295,460,594
283,216,788 21,747,327 304,964,115
76,737,408 46,484,731 123,222,139 $
84,316,321 36,486,413 120,802,734 $
150,985,042 9,972,700 65,292,643 226,250,385 $
150,677,455 11,086,463 59,282,220 221,046,138
Governmental activities. The Citys governmental revenues decreased when compared to the prior year by(2.7%) or $(1,451,463) This decrease is primarily due to the TxDot grand funds received in 2010 for the construction of the Wonder World Drive Pass Through Toll project. Property tax revenue remained stable but the City saw a slight decrease in existing property valuations along with the addition of new property throughout the City. The assessed value of the property in the City decreased by $30.7 million or 1.2% as compared to the prior year while the City property tax rate of $0.5302 per per $100 assessed valuation remained the same as in the prior year. This decrease in property taxes was offset by an increase in sales tax of $1.45 million and a total collection of $19.9 million for the year.
The most significant governmental expense for the City was in providing for public safety, which incurred expenses of $18.0 million. The public safety expense increase was primarily due to the funding of the second year of the meet and confirm contract entered into in 2010 and routine step increases. Business-type activities. Revenues of the Citys business-type activities were $83.2 million for the fiscal year ending September 30, 2011. Expenses for the Citys business-type activities were $74.5 million for the year, resulting in a net increase in net assets of $8.7 million. The net revenues are the result of several factors, including the following: The Citys Water and Wastewater System recorded charges for services of $27.0 million, which exceeded operating expenses of $21.7 million. The most significant expenses of the Water and Wastewater Fund $7.1 million for contracted services for the operation of the surface water treatment plant, and $3.3 million in salaries and benefits. The Citys Electric distribution system recorded charges for services of $48.5 million, which exceeded operating expenses $42.9 million. The most significant expense of the Electric Fund was $34.8 million for the purchase of power. The increase in net assets from business-type activities was primarily due to increased revenue from water, sewer, and electric sales due to the unseasonably hot and dry spring and summer weather. Capital contributions of water and sewer infrastructure as new construction activity continues in the City.
Governmental and business-type activities decreased the City's net assets (Table 2) by $(5.2) million.
TABLE 2 CITY OF SAN MARCOS CHANGES IN NET ASSETS

Governmental Activities 2011 Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes, levied for general purposes Property taxes, levied for debt service Sales taxes Franchise taxes Hotel/motel taxes Investment earnings Other Total revenues Expenses: General government Public safety Community service Interest and fiscal charges Electric Water and sewer Airport Drainage Waste collection Total expenses Increases in net assets before transfers Transfers Increase in net assets Net assets, beginning Net assets, ending $ ( 3,506,023) 6,290,865 2,784,842 100,243,404 103,028,246 $ ( ( 6,245,652) 6,119,618 126,034) 100,369,438 100,243,404 $ ( 8,710,270 6,290,865) 2,419,405 120,802,734 123,222,139 $ ( ( 4,279,011 6,119,618) 1,840,607) 122,643,341 120,802,734 $ 5,204,247 5,204,247 221,046,138 226,250,385 $ ( ( 1,966,641) 1,966,641) 223,012,779 221,046,138 15,419,706 18,040,389 10,092,399 6,412,611 49,965,105 14,811,677 22,337,053 10,463,722 6,525,172 54,137,624 43,413,456 26,701,908 710,558 1,897,978 1,773,160 74,497,060 45,746,937 25,878,300 694,070 1,959,180 1,463,780 75,742,267 15,419,706 18,040,389 10,092,399 6,412,611 43,413,456 26,701,908 710,558 1,897,978 1,773,160 124,462,165 14,811,677 22,337,053 10,463,722 6,525,172 45,746,937 25,878,300 694,070 1,959,180 1,463,780 129,879,891 8,396,878 19,854,399 1,447,569 2,296,276 319,091 959,702 46,459,082 8,457,874 18,398,707 1,477,463 2,198,965 587,646 1,986,767 47,891,972 376,915 2,029,511 83,207,330 569,393 1,337,440 80,021,278 8,396,878 19,854,399 1,447,569 2,296,276 696,006 2,989,213 129,666,412 8,457,874 18,398,707 1,477,463 2,198,965 1,157,039 3,324,207 127,913,250 5,839,764 5,874,129 5,839,764 5,874,129 1,149,409 2,373,110 1,085,830 852,403 2,235,239 3,225,513 2,619,600 3,145,119 2,619,600 3,145,119 $ 3,576,394 $ 3,392,192 $ 79,715,074 $ 77,262,042 $ 83,291,468 $ 80,654,234 2010 Business-type Activities 2011 2010 2011 Totals 2010
FINANCIAL ANALYSIS OF THE GOVERNMENTS FUNDS As noted earlier, the City of San Marcos uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City of San Marcos governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of San Marcoss financing requirements. In particular, unassigned fund balance may serve as a useful measure of a governments net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of San Marcos governmental funds reported combined fund balances of $65.9 million, a decrease of $(14.7) million in comparison with the prior year. Approximately 20.4% of this total amount constitutes unassigned fund balance, which is available for use within the Citys fund designation and fiscal policies. The remainder of fund balance is restricted to indicate that it is not available for new spending because it has already been committed 1) to liquidate contracts and purchase prepaid expenses of the prior period, 2) to pay debt service, 3) for capital projects, 4) to generate income to pay for the perpetual care of the municipal cemetery, 5) to be used for general government, or 6) to be used for community services. The General Fund is the main operating fund of the City of San Marcos. At the end of the current fiscal year, unassigned fund balance of the General Fund was $13.6 million, while total fund balance reached $13.8 million. As a measure of the General Funds liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 33.4% of total General Fund expenditures. In the General Fund, the City budgeted for a fund balance decrease in the current year of $(1,267,663). It is one of the Citys financial policies to maintain fund balance in the General Fund equal to 90 days expenditures and when those balances exceed the 90-day target to transfer the excess to Capital Project Funds to fund pay-as-you-go capital expenditures. Even though use of fund balance was budgeted, $424,141 was added to fund balance at year-end. This is primarily attributable to actual expenditures being less than originally budgeted. The variance between the budgeted use and the actual addition to fund balance amounted to a $1,691,804 million increase to fund balance as compared to budget. The Debt Service Fund Balance decreased by $(1,743,639) from 2010 to 2011. This fund balance reduction was primarily due to the timing of the TxDot Pass Though Toll revenue and the advance payments from the refunding transaction. Progress on construction in the Capital Projects Funds contributed to the net change in fund balances of $(13,182,442).
TABLE 3 GOVERNMENTAL TAX REVENUES

2011 Property Sales Franchise Hotel/motel Mixed drink $ $ 14,260,359 19,854,399 1,184,223 2,296,276 263,346 37,858,603 $ $ 2010 14,325,877 18,398,707 1,210,874 2,198,965 266,589 36,401,012 $ ( ( $( Increase (Decrease) 65,518) 1,455,692 26,651) 97,311 3,243) 1,457,591
Other factors concerning the finances of governmental funds have already been addressed in the discussion of the Citys governmental activities in the government-wide financial statements. Proprietary funds. The City of San Marcos proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of Water and Wastewater Fund at the end of the year amounted to $32.5 million, and those for the Electric Fund amounted to $10.8 million. Other factors concerning the finances of these two funds have already been discussed in the discussion of the City of San Marcos business-type activities in the government-wide financial statements. GENERAL FUND BUDGETARY HIGHLIGHTS For FY 2011, actual expenditures on a budgetary basis were $40.6 million compared to the budget amount of $41.4 million. The $0.8 million positive variance was due to savings achieved through salary vacancy savings and conservative spending. For FY 2011, actual revenues on a budgetary basis were $35.4 million as compared to the budget amount of $34.5 million. The majority of the $910.921 variance was due to sales tax revenue collections above budgeted amounts. The City of San Marcos has a General Fund balance of $13.8 million as of the fiscal year-end, compared to the budgeted fund balance of $12.1 million. The variance in fund balance is primarily due to cost containment measures implemented by management and conservative budgetary practices.
CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. At the end of the fiscal year 2011, the City had $471.2 million invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, bridges, and water and wastewater lines. (See Table 4 below.) For more detailed information on capital assets, please refer to the accompanying notes 38 39.
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TABLE 4 CITY OF SAN MARCOS CAPITAL ASSETS AT YEAR-END (Net of Accumulated Depreciation)
Governmental Activities 2011 Land Buildings Improvements other than buildings Equipment Construction in progress Infrastructure Total capital assets $ 86,332,855 25,361,436 227,650,127 $ 86,204,170 21,086,436 208,896,016 $ 62,287,907 243,541,492 $ 65,938,055 231,868,662 $ 148,620,762 25,361,436 471,191,619 $ 152,142,225 21,086,436 440,764,678 49,931,357 22,255,300 41,028,850 21,447,965 165,019,670 8,418,119 150,240,907 7,873,904 214,951,027 30,673,419 191,269,757 29,321,869 $ 7,224,964 36,544,215 $ 2010 7,224,964 31,903,631 $ Business-type Activities 2011 1,446,029 6,369,767 $ 2010 1,446,029 6,369,767 $ 2011 8,670,993 42,913,982 $ Totals 2010 8,670,993 38,273,398
Long-term debt. At year-end, the City had $264.7 million in General Obligation Bonds, Combination Tax and Revenue Certificates of Obligations and Revenue Bonds outstanding as compared to $276.6 million at the end of the prior fiscal year, a decrease of (4.3%). For more detailed information on long term debt, please refer to the accompanying notes on pages 41 44. TABLE 5 CITY OF SAN MARCOS OUTSTANDING DEBT AT YEAR-END
Governmental Activities 2011 General obligation bonds Certificates of obligation Revenue bonds $ $ 26,980,000 109,235,000 136,215,000 $ $ 2010 17,480,000 124,305,000 141,785,000 $ $ Business-type Activities 2011 128,450,000 128,450,000 $ $ 2010 134,825,000 134,825,000 $ $ 2011 26,980,000 109,235,000 128,450,000 264,665,000 $ $ Totals 2010 17,480,000 124,305,000 134,825,000 276,610,000
During this fiscal year, General Obligation Refunding totaling $17.2 were issued to refund some previous debt issues. The City has maintained its AA- rating from Standard & Poors Corporation, and its A1 rating from Moodys Investor Services on its tax supported debt. The City is permitted by Article XI, Section 5, of the State of Texas Constitution to levy taxes up to $2.50 per $100 assessed valuation for general governmental services including the payment of principal and interest on general obligation long-term debt. The current ratio of net tax-supported debt to assessed value of all taxable property is 2.85%. The City sponsors an employee benefit plan that provides partially self-insured medical and self-insured dental coverage to employees and voluntary coverage to their participating dependents. The plan is designed to provide a specified level of coverage, with excess insurance coverage provided by specific and aggregate reinsurance. The Citys maximum medical claim exposure is limited to $100,000 in claims per covered person and a dental benefit of $1,250 per covered person per year. Aggregate coverage based on a monthly enrollment limits the medical claims exposure. Claim liability was $897,277 at September 30, 2011, compared to $862,055 at September 30, 2010. 11
ECONOMIC FACTORS AND NEXT YEARS BUDGETS AND RATES The Citys elected and appointed officials considered many factors when setting the fiscal year 2012 budget, tax rates, and fees that will be charged. In January 2011, the San Marcos City Council held a Visioning Workshop to explore important policy issues facing the City. At that meeting, five primary strategic initiatives were developed that will guide staff during the upcoming years. These initiatives include: Sound Finances Customer Friendly Processes Big Picture Infrastructure San Marcos River Protection, Recreation and Maintenance Community Wellness/Encourage the Middle Class
These strategic initiatives were used as the basis for setting and adopting the operating budget for fiscal year 2012. The total FY 2012 combined budget appropriation is $149.6 million. This represents an increase of $1.9 million or 1.0% over the FY 2011 budget. The increase in the annual budget is largely attributed to the cost of purchase power in the Electric Utility Fund. The General Funds largest single revenue source is sales taxes. The City collects a 1.5-cent sales tax on all taxable goods in the City. Sales tax revenue for FY 2012 is budgeted at $19.5 million. The property tax rate for FY 2012 is $0.5302 per $100 valuation. Of this tax rate, 44.0% or $0.2332 is used for operations and maintenance activities. The remaining 64.0% or $0.2970 is used for debt service. The operations and maintenance portion of property tax revenue for FY 2012 is estimated to be $6.3 million. The largest revenue source for the Water and Wastewater Fund is water sales, at $13.69 million. The base rate for FY 2012 is $19.55 for the first 2,000 gallons for a 5/8 3/4 meter in the city limits. This rate increases as the meter size increases and/or if the meter is located outside of the city limits. This rate was increased 3.0% for FY2012. The second largest revenue source for the Water and Wastewater Fund is wastewater charges, at $12.6 million. The base rate for FY 2012 is $22.98 for the first 2,000 gallons. This rate was increased 2.5% for FY2012.
CONTACTING THE CITYS FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Citys finances and to show the Citys accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Finance Department, at the City of San Marcos, 630 E. Hopkins, San Marcos, TX 78666.
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BASIC FINANCIAL STATEMENTS

STATEMENT OF NET ASSETS SEPTEMBER 30, 2011
Governmental Activities ASSETS Cash and equivalents Investments Receivables (net of allowance for uncollectible): Accounts Taxes Other Due from other governments Internal balances Inventories Prepaid items Deferred charges Capital assets: Land Construction in progress Buildings Improvements other than buildings Equipment Infrastructure Less: accumulated depreciation Total capital assets Total assets LIABILITIES Accounts payable Accrued liabilities Unearned revenues Customer deposits Accrued interest payable Noncurrent liabilities: Due within one year Due in more than one year Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Grant requirements Public safety Debt service Future convention center Park and cemetery trust: Nonexpendable Unrestricted Total net assets $ $ 8,235,200 62,965,940 4,897,316 3,809,972 46,875 1,082,045 789,844) 106,989 121,453 2,129,966 7,224,964 86,332,855 36,544,215 49,931,357 22,255,300 25,361,436 51,541,303) 176,108,824 258,714,736 2,952,514 2,199,238 6,634,649 7,408 762,886 6,185,255 136,944,540 155,686,490 74,247,634 220,576 271,389 7,135,423 1,320,918 1,024,394 18,807,912 103,028,246 $ $
Business-type Activities 5,148,307 77,985,695 10,882,848 3,519 789,844 958,320 20,722 2,217,978 1,446,029 62,287,907 6,369,767 165,019,670 8,418,119 78,552,482) 164,989,010 262,996,243 6,571,468 339,389 21,921 2,875,072 813,628 7,349,520 121,803,106 139,774,104 76,737,408 46,484,731 123,222,139 $ $
Total 13,383,507 140,951,635 15,780,164 3,809,972 46,875 1,085,564 1,065,309 142,175 4,347,944 8,670,993 148,620,762 42,913,982 214,951,027 30,673,419 25,361,436 130,093,785) 341,097,834 521,710,979 9,523,982 2,538,627 6,656,570 2,882,480 1,576,514 13,534,775 258,747,646 295,460,594 150,985,042 220,576 271,389 7,135,423 1,320,918 1,024,394 65,292,643 226,250,385
The accompanying notes are an integral part of these financial statements. 13

STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2011
Functions/Programs Primary government Governmental activities: General government Public safety Community service Interest on long-term debt Total governmental activities Business-type activities: Electric Water and wastewater Airport Drainage Waste collection Total business-type activities Total primary government $
Expenses
Charges for Services
Program Revenue Operating Grants and Contributions
Capital Grants and Contributions
15,419,706 18,040,389 10,092,399 6,412,611 49,965,105
1,283,941 1,653,099 639,354 3,576,394
481,073 505,547 1,632,980 2,619,600
303,869 845,540 1,149,409
43,413,456 26,701,908 710,558 1,897,978 1,773,160 74,497,060 124,462,165 $
48,453,727 26,986,572 256,710 2,108,913 1,909,152 79,715,074 83,291,468 $
2,619,600 $
1,085,830 1,085,830 2,235,239
General revenues: Taxes: Property taxes, levied for general purposes Property taxes, levied for debt service Sales Franchise taxes Hotel/motel Other Investment earnings Miscellaneous Gain on sale of capital assets Transfers Total general revenues and transfers Change in net assets Net assets - beginning Net assets - ending
Net (Expense) Revenue and Changes in Net Assets Primary Government Governmental Business-type Activities Activities Total
$( ( ( ( (
13,350,823) 15,881,743) 6,974,525) 6,412,611) 42,619,702)
$( ( ( ( (
13,350,823) 15,881,743) 6,974,525) 6,412,611) 42,619,702)
( 42,619,702)
5,040,271 1,370,494 453,848) 210,935 135,992 6,303,844 6,303,844
5,040,271 1,370,494 453,848) 210,935 135,992 6,303,844 36,315,858)
5,839,764 8,396,878 19,854,399 1,447,569 2,296,276 85,207 319,091 753,366 121,129 6,290,865 45,404,544 2,784,842 100,243,404 $ 103,028,246 $
( ( (
376,915 2,036,755 7,244) 6,290,865) 3,884,439) 2,419,405 120,802,734 123,222,139 $
5,839,764 8,396,878 19,854,399 1,447,569 2,296,276 85,207 696,006 2,790,121 113,885 41,520,105 5,204,247 221,046,138 226,250,385
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BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2011
General ASSETS Cash and cash equivalents Investments Receivables (net of allowance for uncollectibles): Accounts Taxes Loans Due from other funds Due from other governments Inventories Prepaid items Total assets $ 13,840,793 $
Capital Projects 5,245,712 34,117,985 $
Debt Service 7,999,598
Other Governmental $ 1,585,765 3,911,579 $
Total 6,831,477 59,869,955
1,642,868 2,609,574 1,816,076 106,989 107,926 $ 20,124,226 $
5,973 3,790,301 1,000 43,160,971 $
3,030,000 554,059 11,583,657 $
150,578 646,339 46,875 203,740 1,082,045 12,527 7,639,448 $
4,829,419 3,809,972 46,875 5,810,117 1,082,045 106,989 121,453 82,508,302
LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ Accrued liabilities Deferred revenue Customer deposits Due to other funds Total liabilities Fund balances: Nonspendable for: Inventories Prepaid items Restricted for: General government Public safety Community services Cemetery memorial Capital projects Debt service Unassigned Total fund balances Total liabilities and fund balances
1,185,711 1,491,633 762,988 7,408 2,872,662 6,320,402
583,342 149,635 184,253 917,230
233 3,554,876 893,125 4,448,234
273,513 46,502 3,464,806 1,125,731 4,910,552
2,042,799 1,687,770 7,782,670 7,408 5,075,771 16,596,418
106,989 107,926 13,588,909 13,803,824
42,243,741 42,243,741
7,135,423 7,135,423
12,527 96,119 274,666 1,442,098 1,024,394 ( 120,908) 2,728,896
106,989 120,453 96,119 274,666 1,442,098 1,024,394 42,243,741 7,135,423 13,468,001 65,911,884
$ 20,124,226
43,160,971
11,583,657
7,639,448
82,508,302

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2011
Total fund balance, governmental funds Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported in this fund financial statement, but are reported in the governmental activities of the Statement of Net Assets. Certain other long-term assets are not available to pay current period expenditures and therefore are not reported in this fund financial statement, but are reported in the governmental activities of the Statement of Net Assets. The assets and liabilities of certain internal service funds are not included in the fund financial statement, but are included in the governmental activities of the Statement of Net Assets. Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Net Assets of Governmental Activities in the Statement of Net Assets
65,911,884
176,035,624
1,215,918
2,065,803
( 142,200,983) $ 103,028,246

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011
General REVENUES Taxes Licenses and permits Fees and penalties Charges for services Intergovernmental Interest on investments Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community service Capital outlay Debt service: Principal Interest and fiscal charges Bond issuance costs Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Insurance recoveries Sale of capital assets Capital related debt issued Payment to refunded bond escrow agent Premium on debt issued Total other financing sources and uses NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING FUND BALANCES, ENDING $ ( 5,204,029) (
Capital Projects
Debt Service
Other Governmental
Total
26,808,963 994,123 1,537,951 5,021,489 182,525 48,096 844,032 35,437,179
243,001 231,552 474,553
8,360,709 19,547 198,946 8,579,202
2,688,931 182,718 3,171,681 8,449 17,328 6,069,107
37,858,603 994,123 1,720,669 5,021,489 3,354,206 319,093 1,291,858 50,560,041
14,890,128 19,758,262 5,975,860 16,958 40,641,208
460,051 14,703,002 15,163,053
5,870,000 6,351,363 152,734 12,374,097
400,530 532,794 3,477,986 539,348 4,950,658
15,750,709 20,291,056 9,453,846 15,259,308 5,870,000 6,351,363 152,734 73,129,016
14,688,500)
3,794,895)
1,118,449
22,568,975)
7,628,731 2,021,352) 20,791 5,628,170 424,141 13,379,683 13,803,824 $
1,583,142 177,422) 100,338 1,506,058
1,896,370 11,245,000 11,680,362) 590,248 2,051,256
41,282 ( 1,347,339) ( 1,306,057) ( 187,608) 2,916,504 $ 2,728,896 $
11,149,525 3,546,113) 100,338 20,791 11,245,000 11,680,362) 590,248 7,879,427
13,182,442) 55,426,183 42,243,741 $
1,743,639) 8,879,062 7,135,423
14,689,548) 80,601,432 65,911,884

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2011
Net change in fund balances - total governmental funds: Amounts reported for Governmental Activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. The issuance of long-term debt (e.g., bonds, leases) 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 assets. 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. Internal service funds are used by management to charge the costs of certain activities, such as fleet maintenance and information technology, to individual funds. The net revenue (expense) of certain internal service funds is reported with governmental activities. Change in net assets of governmental activities
$( 14,689,548)
13,375,508
64,471
4,824,898
49,051
( $
839,538) 2,784,842

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Taxes Licenses and permits Fines and penalties Charges for services Intergovernmental Interest on investments Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community service Debt service: Principal Capital outlay: Public safety Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Sale of capital assets Total other financing sources and uses NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING FUND BALANCES, ENDING
Actual Amounts
Variance with Final Budget Positive (Negative)
$ 25,436,217 801,742 1,955,124 5,031,126 203,304 110,000 973,745 34,511,258
$ 25,436,217 801,742 1,955,124 5,046,126 203,304 110,000 973,745 34,526,258
$ 26,808,963 994,123 1,537,951 5,021,489 182,525 48,096 844,032 35,437,179
$ ( ( ( ( (
1,372,746 192,381 417,173) 24,637) 20,779) 61,904) 129,713) 910,921
15,680,316 18,785,522 5,995,680 29,160 38,500 40,529,178
16,503,880 18,763,252 6,022,360 29,160 73,242 41,391,894
14,890,128 19,758,262 5,975,860 16,958 40,641,208
1,613,752 995,010) 46,500 29,160 56,284 750,686
6,017,920)
6,865,636)
5,204,029)
1,661,607
6,105,691 1,818,071) 48,000 4,335,620 1,682,300) 13,379,683
7,544,902 1,994,929) 48,000 5,597,973 1,267,663) 13,379,683
7,628,731 2,021,352) 20,791 5,628,170 424,141 13,379,683
( (
83,829 26,423) 27,209) 30,197 1,691,804 -
$ 11,697,383
$ 12,112,020
$ 13,803,824
1,691,804

STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2011
Business-type Activities - Enterprise Funds Water and Stormwater Other Wastewater Drainage Enterprise Governmental ActivitiesInternal Service
Electric ASSETS Current assets: Cash and cash equivalents Investments Accounts receivable, ne Due from other funds Due from other governments Inventories Prepaid items Total current assets Non-current assets Deferred charges Capital assets: Land Buildings Improvements other than buildings Furnishings and equipments Construction in progress Less accumulated depreciation Total capital assets Total non-current assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued liabilities Due to other funds Deferred revenue Claims payable Customer deposits Accrued interest payable Compensated absences Current maturities of long-term debt Total current liabilities Non-current liabilities Compensated absences Long-term debt Total non-current liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets $ $
Total
2,199,548 8,601,447 6,763,324 611,047 561,428 18,722 18,755,516 173,235 31,695 472,092 15,311,656 2,773,964 19,210,304 13,716,377) 24,083,334 24,256,569 43,012,085
59,282,801 3,516,443 785,315 396,892 2,000 63,983,451 1,784,210 1,313,997 1,557,930 133,921,582 5,240,684 37,038,399 ( 54,509,384) 124,563,208 126,347,418
2,196,693 10,101,447 280,203 31,422 12,609,765 260,533 7,570,165 382,334 4,963,162 ( 1,303,958) 11,611,703 11,872,236
752,066 322,878 54,331 3,519 1,132,794 100,337 4,339,745 8,216,267 21,137 1,076,042 9,022,763) 4,730,765 4,730,765
5,148,307 77,985,695 10,882,848 1,482,115 3,519 958,320 20,722 96,481,526 2,217,978 1,446,029 6,369,767 165,019,670 8,418,119 62,287,907 78,552,482) 164,989,010 167,206,988
1,403,723 3,095,985 344,007 4,843,715 -
190,330,869
$ 24,482,001
5,863,559
263,688,514
4,843,715
4,333,980 192,532 108,431 2,097,719 129,416 115,433 1,035,000 8,012,511 30,828 7,561,718 7,592,546 15,605,057 16,559,723 10,847,305 27,407,028 $
1,601,347 133,791 731,931 653,725 581,424 92,308 5,325,000 9,119,526 24,631 96,515,574 96,540,205 105,659,731 52,148,347 32,522,791 84,671,138 $
435,947 4,884 7,023 924 102,788 6,779 775,000 1,333,345 1,796 17,658,944 17,660,740 18,994,085 3,308,188 2,179,728 5,487,916 $
200,194 8,182 74,794 21,921 122,704 427,795 9,615 9,615 437,410 4,721,150 704,999 5,426,149
6,571,468 339,389 922,179 21,921 2,875,072 813,628 214,520 7,135,000 18,893,177 57,255 121,745,851 121,803,106 140,696,283 76,737,408 46,254,823 122,992,231 $
12,438 1,638,289 897,277 2,548,004 2,548,004 2,295,711 2,295,711
The assets and liabilities of certain internal service funds are not included in the fund financial statement, but are included in the business-type activities of the statement of net assets. Total net assets per government-wide financial statements $
229,908 123,222,139

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011
Governmental Activities Internal Service $ 2,974,397 922,727 166,093 5,307 352,462 4,420,986
Electric OPERATING REVENUES Charges for services Intergovernmental Employer contributions Employee contributions Retiree contributions Pharmacy rebates Other refunds Total operating revenues OPERATING EXPENSES Purchased power Personnel services Contracted services Materials and supplies Indirect costs Claims Other charges Depreciation Total operating expenses OPERATING INCOME NON-OPERATING REVENUES (EXPENSES) Investment earnings Interest and fiscal charges Gain of sale of assets Other Total non-operating revenue (expenses) INCOME BEFORE TRANSFERS Capital contributions Transfers in Transfers out CHANGE IN NET ASSETS TOTAL NET ASSETS, BEGINNING TOTAL NET ASSETS, ENDING Change in net assets, per above $ $ 48,453,727 48,453,727 $
Business-type Activities - Enterprise Funds Water and Stormwater Other Wastewater Drainage Enterprise 26,986,572 26,986,572 $ 2,108,913 2,108,913 $ 2,118,877 46,985 2,165,862 $
Total 79,668,089 46,985 79,715,074
34,828,016 3,323,155 1,159,210 344,350 1,009,144 1,480,680 772,242 42,916,797 5,536,930
3,280,062 7,106,738 825,192 3,082,019 580,566 6,800,458 21,675,035 5,311,537
249,604 466,348 17,504 38,381 274,138 1,045,975 1,062,938 (
3,263 2,058,381 9,765 4,455 407,854 2,483,718 317,856)
34,828,016 6,856,084 10,790,677 1,196,811 4,091,163 2,104,082 8,254,692 68,121,525 11,593,549
3,466,360 586,176 4,052,536 368,450
49,465 450,032) 7,087 553,940 160,460 5,697,390 65,101 3,905,542) 1,856,949 25,550,079 27,407,028 $
( ( (
267,167 4,980,245) 14,331) 1,377,882 3,349,527) 1,962,010 1,085,830 2,469,452) 578,388 84,092,750 84,671,138 $
55,783 852,003) 67,886 728,334) 334,604 129,627) 204,977 5,282,939 5,487,916 $ (
4,500 37,047 41,547 276,309) 185,319 36,664) 127,654) 5,553,803 5,426,149
( ( (
376,915 6,282,280) 7,244) 2,036,755 3,875,854) 7,717,695 1,085,830 250,420 6,541,285) 2,512,660 120,479,571 122,992,231 2,512,660 $
11,304 11,304 379,754 1,312,547) 932,793) 3,228,504 2,295,711
( (
( (
Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue (expense) of certain internal service funds is reported with Business Activities. Change in business-type activities in net assets per government-wide financial statements $
93,255) 2,419,405

STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED SEPTEMBER 30, 2011
Governmental Activities Internal Service Fund
Business-type Activities - Enterprise Funds Water and Wastewater Stormwater Drainage Other Funds
Electric CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 48,480,405 Cash paid to suppliers for goods and services ( 39,269,959) Cash paid to employees ( 3,169,479) for services Net cash provided by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Net cash used by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from capital debt Proceeds from capital lease Capital contributions Principal paid on debt Interest and fiscal charges paid on debt Acquisition of capital assets Disposal of capital assets Net cash used by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities Interest received Net cash provided (used) by investing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING $ 2,199,548 $ 11,648,920 ( 8,551,982) ( ( 3,097,916) ( ( 3,840,441) ( ( 6,040,967
Totals
$ ( (
28,273,458 11,954,540) 3,148,246) 13,170,672
$ ( (
2,118,259 745,430) 245,498) 1,127,331
$ (
2,166,423 2,049,850) 1,509 118,082
$ ( (
81,038,545 54,019,779) 6,561,714) 20,457,052
$ (
4,420,986 2,766,624) 1,654,362
65,101 3,905,542)
2,469,452) 2,469,452)
( (
129,627) 129,627)
185,319 36,664) 148,655
( (
250,420 6,541,285) 6,290,865)
1,312,547) 1,312,547)
( ( (
980,000) 512,255) 1,612,748) 7,087
( ( ( (
1,330,245) 66,690 1,085,830 8,405,000) 466,535) 7,274,717) 14,331) 16,338,308)
2,315,000 ( 2,955,000) ( 1,009,088) ( 2,700,294) ( 4,349,382)
171,197) 171,197)
( ( ( ( (
984,755 66,690 1,085,830 12,340,000) 1,987,878) 11,758,956) 7,244) 23,956,803)
8,601,447) 49,465
36,779,271) 267,167 36,512,104)
( 2,600,754) 55,783 ( 2,544,971)
9,000 9,000
47,981,472) 381,415 47,600,057)
1,595,635) 11,304 1,584,331)
9,449,372)
42,149,192)
( 5,896,649)
104,540
57,390,673)
1,242,516)
42,149,192
8,093,342
647,526
62,538,980
2,646,239
2,196,693
752,066
5,148,307
1,403,723
(continued) 23

STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) YEAR ENDED SEPTEMBER 30, 2011
Governmental Activities Internal Service Fund
Business-type Activities - Enterprise Funds Water and Wastewater Stormwater Drainage Other Funds
Electric Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation Amortization expense Other nonoperating revenues Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Due from other funds Due from other governments Inventories Prepaid items Increase (decrease) in liabilities: Accounts payable Accrued liabilities Due to other funds Deferred revenue Claims payable Compensated absences Customer deposits Long-term debt Net cash provided by operations $ 6,040,967 $ $ 5,536,930 $
Totals
5,311,537
1,062,938
$(
317,856)
11,593,549
368,450
772,242 73,392 553,940
6,800,458 280,017 1,377,882
274,138 33,332 67,886
407,854 32,547
8,254,692 386,741 2,032,255
( (
190,719) 557,813) 70,133 44,096 124,544) 40,515 336,543) 3,301 46,177 109,860
104,398 678,231) 46,201 4,549 63,355) 25,734 195,394) 9,885 50,794 96,197
58,590) 43,508 124,624) 215 175,413) 312 50 3,579
( (
88,923) 54,299) 34,298 13 62,173 1,509 3,974 18,697 14,832 3,263
( (
233,834) 1,246,835) 34,298 116,334 48,658 250,350) 67,973 703,376) 18,697 13,498 111,853 212,899
234,698) 21,478) 1,638,289 96,201) -
( (
( (
( (
( (
13,170,672
1,127,331
118,082
20,457,052
1,654,362

NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2011
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of San Marcos, Texas (the City) was incorporated July 11, 1877, while the Citys Home Rule Charter was adopted by election in 1967. The City operates under a CouncilManager form of government and provides the following services as authorized by its charter: public safety (police and fire), highways and streets, sanitation, health and social services, culture-recreation, public improvements, planning and zoning, general and administrative, electric, water and wastewater services. The accompanying financial statements comply with the provisions of the GASB Statement No. 14 and 39, The Financial Reporting Entity, in that the financial statements include all organizations, activities, functions and component units for which the City (the primary government) is financially accountable. Financial accountability is defined as the appointment of a voting majority of a legally separate organizations governing body and either (1) the Citys ability to impose its will over the organization, or (2) the potential that the organization will provide a financial benefit to or impose a financial burden on the City. There are no component units which satisfy requirements for blending within the Citys financial statements or for discrete presentation. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenue, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenue includes 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenue are reported instead as general revenue. Separate financial statements are provided for governmental and proprietary funds. Major individual governmental funds and major individual Enterprise Funds are reported as separate columns in the fund financial statements. (continued) 25
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenue is 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 revenue 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. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenue is recognized as soon as it is both measurable and available. Revenue is considered to be available when it is collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenue to be available if collected within 30 days of the end of the current fiscal period. Property taxes availability period is considered to be 60 days. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: The General Fund is the Citys primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Capital Projects Fund accounts for the acquisition of fixed assets or construction of major capital projects not being financed by other funds. The Debt Service Fund accounts for the accumulation of resources for the payment of general long-term principal, interest, and related costs.
(continued) 26
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) The City reports the following major proprietary funds: The Electric Fund accounts for the activities necessary for the provision of electric services. The Water and Wastewater Fund accounts for the activities necessary for the provision of water and sewer services. The Stormwater Drainage Fund was created to address the need for improvements in drainage channels throughout the City. The fund obtains revenue through the assessment of a monthly drainage utility fee to both residential and commercial customers. Additionally, the City reports the following fund type: Internal Service Fund accounts for benefits provided to other departments or agencies of the City on a cost-reimbursement basis. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and Enterprise Funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. As a general rule, the effect of interfund activity has been eliminated from the governmentwide financial statements. Exceptions to this general rule are charges between the Citys water and wastewater function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenue reported for the various functions concerned. Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenue. Likewise, general revenue includes all taxes.
(continued) 27
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary funds principal ongoing operations. The principal operating revenues of the Citys Enterprise Funds are charges to customers for sales and services. Operating expenses for Enterprise Funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expenses. When both restricted and unrestricted resources are available for use, it is the Citys policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, Liabilities and Net Assets or Equity Deposits and Investments The Citys cash and cash equivalents are considered to be cash on hand, certificates of deposit, investment securities with a maturity of three months or less from the date of purchase. Statutes authorize the City to invest in obligations of U. S. Treasury or its agencies and instrumentalities, obligations of the state or its agencies, other investments guaranteed by the U. S. Treasury or the State of Texas, or investments rated by a national rating company at A or better. The City is also authorized to invest in fully collateralized repurchase agreements, local government investment pools, and in certificates of deposit issued by banks domiciled in Texas that are FDIC insured or have securities (of aforementioned quality) pledged to secure these deposits. The investment of idle funds has been restricted to U. S. Government Treasury and agency securities and time deposits with the Citys depository banks. Investments for the City are reported at fair value. The State Treasurers Investment Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as due to/from other funds (i.e., the current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade accounts receivable in excess of 180 days comprise the trade accounts receivable allowance for uncollectibles. The property tax receivable allowance is equal to 15 percent of outstanding property taxes at September 30, 2011. (continued) 28
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Net Assets or Equity (Continued) Receivables and Payables (Continued) Property taxes are levied on October 1 and attach as an enforceable lien on property as of January 1. Statements are mailed on October 1, or as soon thereafter as possible, and are due upon receipt. All unpaid taxes become delinquent if not paid before February 1 of the following year. Inventories and Prepaid Items Inventory is valued at cost using the average cost method of accounting. Inventory in the General Fund consists of expendable supplies held for consumption. The cost of inventory is recorded as an expenditure at the time individual inventory items are consumed (consumption method). Inventory reported in the General Fund is offset by a fund balance reserve which indicates that it does not represent available spendable resources even though it is a component of net current assets. Inventory in the Water and Wastewater and Electric Funds consists of parts and maintenance items. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 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. The City defines capital assets 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. 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. Property, plant and equipment is depreciated using the straight-line method over the following useful lives:
Assets Buildings Improvements Equipment Infrastructure (streets and drainage) Years 20-50 10-40 5-10 35-125
(continued) 29
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Net Assets or Equity (Continued) Compensated Absences It is the Citys policy to permit employees to accumulate earned but unused vacation and sick pay benefits. A liability for these amounts is reported in the applicable governmental funds and business-type funds as it is due to the employees at the time of resignation and retirement. The liability is recorded as follows: All employees are entitled to be paid up to 30 days (90 days with 20 years of continuous service) of accumulated vacation; in addition Civil ServicePolice are entitled to be paid up to 90 days of sick and Civil Service-Fire is entitled to 90 days of sick at 1,080 hours for 12-hour days. Long-term Obligations In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Balance Classification The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows: Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. Nonspendable items are not expected to be converted to cash or are not expected to be converted to cash within the next year.
(continued) 30
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Net Assets or Equity (Continued) Fund Balance Classification (Continued) Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by court resolution of the City Council, the Citys highest level of decision making authority. These amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements. Assigned: This classification includes amounts that are constrained by the Citys intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the City Council. Unassigned: This classification includes the residual fund balance for the General Fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of assigned fund balance amounts.
When expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted funds to have been spent first. When expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.
(continued) 31
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Net Assets or Equity (Continued) 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 disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. Comparative Data/Reclassifications Comparative total data for the prior year have been presented in order to provide an understanding of the changes in the financial position and operations. Also, certain amounts presented in the prior year have been reclassified in order to be consistent with the current years presentation.
2.
RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-wide Statement of Net Assets The governmental fund balance sheet includes a reconciliation between fund balance total governmental funds and net assets governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains, Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. The details of this $(142,200,983) difference are as follows:
General obligation bonds Discounts on bonds Premiums on bonds Accrued interest payable Compensated absences Deferred charge for bond issuance costs Deferred loss on refunding Retainage payable TMRS Net pension obligation OPEB Net pension obligation Net adjustment to reduce fund balance - total governmental funds to arrive at net assets governmental activities $( ( ( ( 136,215,000) 689,969 1,005,347) 762,886) 4,618,358) 2,129,966 972,876 438,268) 2,447,927) 506,008)
( ( (
$(
142,200,983)
(continued) 32
2.
RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (Continued) Explanation of Certain Differences Between the Governmental Fund Statement of Revenue, Expenditures and Changes in Fund Balances and the Government-wide Statement of Activities The governmental fund statement of revenue, expenditures and changes in fund balances includes a reconciliation between net changes in fund balances total governmental fund and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains, 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. The details of this $13,375,508 difference are as follows:
Capital outlay Depreciation expense Net adjustment to increase net changes in fund balances total governmental funds to arrive at changes in net assets of governmental activities $ ( 18,946,000 5,570,492)
13,375,508
Another element of that reconciliation states, Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. The details of this $64,471 difference are as follows:
Property taxes Court fines Net adjustment to increase net changes in fund balances total governmental funds to arrive at changes in net assets of governmental activities $ 61,490 2,981
64,471
Another element of that reconciliation states, The issuance of long-term debt (e.g., bonds, leases) 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 assets. The details of this $4,824,898 difference are as follows:
(continued) 33
2.
RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (Continued) Explanation of Certain Differences Between the Governmental Fund Statement of Revenue, Expenditures and Changes in Fund Balances and the Government-wide Statement of Activities (Continued)
Debt issued or incurred: Issuance of general obligation bonds Deferred charge for bond issuance costs Premium on bond issuance TMRS Net pension obligation OPEB Net pension obligation General obligation bonds refunded Deferred loss on refunding Principal repayments: General obligation debt Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of governmental activities $( 11,245,000) 152,734 ( 590,248) ( 898,246) ( 144,704) 10,945,000 735,362 5,870,000
4,824,898
Another element of that reconciliation states, 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. The details of this $49,051 difference are as follows:
Compensated absences Accrued interest Amortization of deferred charge on refunding Amortization of issuance costs Amortization of bond discounts Amortization of bond premiums Net adjustment to decrease net changes in fund balances total governmental funds to arrive at changes in net assets of governmental activities $ ( ( ( 110,299 197,428 26,391) 230,913) 37,372) 36,000
49,051
3.
STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Budgetary Information The City Charter prescribes certain requirements for adoption of an annual operating budget by the City Council. The Council must have a public hearing on the budget and may not adopt the budget until after 14 days after the hearing. The budget is to be adopted at least 15 days before the beginning of the fiscal year to which it applies. The amounts of proposed expenditures become appropriated to the objects and purposes named in the budget upon the effective date after adoption. The total estimated expenditures of the General Fund shall not exceed the total estimated resources of the fund (prospective income plus cash on hand). (continued) 34
3.
STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) Budgetary Information (Continued) The City budget may be amended and appropriations may be altered in cases of public necessity, as declared by the City Council. The City Manager has the ability to reallocate funds from one line item to another within the various budget categories within departments in the same fund (i.e., personnel services, other charges, contracted services, etc.), but City Council approval is required for budget adjustments between funds. The budget ordinance states that expenditures should not exceed the budget in the various departments (administration, personnel, finance, etc.) within an individual fund. The Citys appropriation ordinance approves items as detailed in the approved budget. Budgeted amounts reported are based on the budget ordinance originally adopted and as amended by the City Council throughout the year. Formal budgetary accounting is employed for all funds of the City, excluding Grants and Special Entitlements, Karnack, Emergency Relief, Library Memorial, Parks and Recreation, Capital Projects and the Cemetery Perpetual Permanent Fund. Annual operating budgets are prepared and presented for the General Fund, Debt Service Fund, and all other Special Revenue Funds. All annual appropriations lapse at fiscal year-end. Budgets for the Governmental Fund Types are prepared and adopted on the GAAP basis. Budgets for expenses used for managerial control have been prepared for the Enterprise Funds on a nonGAAP basis, which excludes depreciation, but includes capital outlay and total debt service. The City Council made several supplemental budgetary appropriations throughout the year. The supplemental budgetary appropriations were not considered material.
4.
DETAILED NOTES ON ALL FUNDS Deposits and Investments The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports, and establishment of appropriate policies. Among other things, it requires the City to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable investments, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. Statutes authorize the City to invest in (1) obligations of the U. S. Treasury, certain U. S. agencies, and the State of Texas, (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) bankers acceptances, (7) Mutual Funds, (8) investment pools, (9) guaranteed investment contracts, and (10) common trust funds. The Act also requires the City to have independent auditors perform test procedures related to investment practices as provided by the Act. The City is in substantial compliance with the requirements of the Act and with local parties. (continued) 35
4.
DETAILED NOTES ON ALL FUNDS (Continued) Deposits and Investments (Continued) In compliance with the Public Funds Investment Act, the City has adopted a deposit and investment policy. That policy does address the following risks: 1. Custodial Credit Risk Deposits: In the case of deposits, this is the risk that, in the event of a bank failure, the governments deposits may not be returned to it. State statutes require that all deposits in financial institutions be 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 fair value of not less than the principal amount of deposits. As of September 30, 2011, the Citys bank balance was fully collateralized with securities held by independent third party financial institutions. 2. Credit Risk: It is the Citys policy to limit investments to investment types with an investment quality rating no lower than AAA or AAA-m or an equivalent rating by at least one nationally recognized rating service or no lower than investment grade by at least one nationally recognized rating service with a weighted average maturity no greater than 90 days. The Citys investment pool was rated AAAm by Standard and Poors Investors Services. 3. Interest Rate Risk: In accordance with the Citys investment policy, the City manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio to 270 days or less, dependent on market conditions. 4. Concentration of Credit Risk: The governments investment policy states the maximum percentage allowed for each different investment instrument that can be used to make up the portfolio. The Citys investments at September 30, 2011, are shown below:
Fair Value TexStar TexPool TexasTERM FNMA FHLB Freddie Mac Total Fair Value $ 429,179 505,956 4,409,637 6,253,906 16,979,632 79,943,771 108,522,081 Rating AAAm AAA AAAf AAA AAA AAA Rating Agency Standard & Poor's Standard & Poor's Standard & Poor's Standard & Poor's Standard & Poor's Standard & Poor's Weighted Average Maturity (Days) 46 48 54 543 624 651
(continued) 36
4.
DETAILED NOTES ON ALL FUNDS (Continued) Deposits and Investments (Continued) Texas Short-term Asset Reserve Program (TexStar) has been organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. These two acts provide for the creation of public fund investment pools and permit eligible governmental entities to jointly invest their funds in authorized investments. All investments are stated at amortized cost, which in most cases approximates the fair value of the securities. The objective is to maintain a stable $1.00 net asset value; however, the $1.00 net asset value is not guaranteed or insured. All securities will be marked-to-market daily. If the ratio of the market value of the portfolio divided by the book value of the portfolio is less than $0.995 or greater than $1.005, the pool will sell portfolio holdings, as required, to maintain the ratio between $0.995 and $1.005. All gains or losses from the sale of securities will be distributed among participants over a period of up to thirty (30) days from the date of which the gain or loss is realized. Receivables Receivables as of year-end for the Citys individual major funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows:
General Other Governmental Capital Projects Debt Service Electric Water/ Wastewater Stormwater Drainage Nonmajor Enterprise Total
Receivables: Taxes $ 2,655,199 $ 646,339 Accounts 1,642,868 150,578 Due from governments 1,082,045 46,875 Loans Gross receivables 4,298,067 1,925,837 Less: allowance for ( 45,625) uncollectibles Net total receivables $ 4,252,442 $ 1,925,837
5,973 5,973 -
603,505 3,030,000 3,633,505 ( 49,446)
7,201,120 7,201,120 ( 437,796) 6,763,324
3,820,139 3,820,139
233,231 233,231 ( 25,028) 208,203
357,595 3,519 361,114 ( 34,717) 326,397
3,905,043 13,411,504 4,115,564 46,875 21,478,986 ( 896,308) 20,582,678
303,696) $
5,973
$ 3,584,059
$ 3,516,443
Governmental funds report deferred revenue in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows:
(continued) 37
4.
DETAILED NOTES ON ALL FUNDS (Continued) Receivables (Continued)

Unavailable Delinquent property taxes receivable (General fund) Activity Center (General fund) Delinquent property taxes receivable (Debt service) Grant drawdown (Debt service) Hotel occupancy (Nonmajor governmental) Grant drawdowns (Nonmajor governmental) Airport revenues (Nonmajor enterprise) Total Deferred/Unearned Revenue for Governmental Funds $ 623,145 139,843 524,876 1,287,864 $ Unearned 3,030,000 32 3,464,774 21,921 6,516,727
Capital Assets Capital asset activity for the year ended September 30, 2011, was as follows:
Beginning Balance Government activities: Capital assets, not being depreciated: Land Construction in progress Total assets not being depreciated Capital assets, being depreciated: Buildings Machinery and equipment Improvements other than buildings Infrastructure Total capital assets being depreciated Less accumulated depreciation: Buildings Machinery and equipment Improvements other than buildings Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net $ Increases Decreases Ending Balance
7,224,964 86,204,170 93,429,134
13,428,921 13,428,921
$ ( (
13,300,236) 13,300,236)
7,224,964 86,332,855 93,557,819
31,903,631 21,447,965 41,028,850 21,086,436 115,466,882
4,640,584 1,072,424 8,902,507 4,275,000 18,890,515
265,089) 265,089)
36,544,215 22,255,300 49,931,357 25,361,436 134,092,308
( ( ( ( (
5,418,329) 15,858,034) 17,738,577) 7,220,960) 46,235,900) 69,230,982 162,660,116 $
( ( ( ( (
667,764) 1,305,193) 2,676,368) 921,167) 5,570,492) 13,320,023 26,748,944 $(
265,089 265,089 13,300,236) $
( ( ( ( (
6,086,093) 16,898,138) 20,414,945) 8,142,127) 51,541,303) 82,551,005 176,108,824
(continued) 38
4.
DETAILED NOTES ON ALL FUNDS (Continued) Capital Assets (Continued)

Beginning Balance Business-type activities: Capital assets, not being depreciated: Land Construction in progress Total assets not being depreciated Capital assets, being depreciated: Buildings Machinery and equipment Improvements other than buildings Total capital assets being depreciated Less accumulated depreciation: Buildings Machinery and equipment Improvements other than buildings Total accumulated depreciation Total capital assets being depreciated, net Business-type activities capital assets, net $ Increases Decreases Ending Balance
1,446,029 65,938,055 67,384,084 6,369,767 7,873,904 150,240,907 164,484,578
11,160,237 11,160,237 598,717 14,810,387 15,409,104
$ ( (
14,810,385) 14,810,385) 54,502) 31,624) 86,126)
1,446,029 62,287,907 63,733,936 6,369,767 8,418,119 165,019,670 179,807,556
( ( (
( ( ( (
3,246,078) 5,341,355) 61,796,483) 70,383,916) 94,100,662 161,484,746
( ( ( (
120,721) 468,461) 7,665,510) 8,254,692) 7,154,412
39,023 47,103 86,126 $( 14,810,385) $
( ( ( (
3,366,799) 5,770,793) 69,414,890) 78,552,482) 101,255,074 164,989,010
18,314,649
Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities: General government Public safety Community services Total depreciation expense - governmental activities Business-type activities: Electric Water and wastewater Airport Stormwater drainage Total depreciation expense - business-type activities $ 4,171,375 969,866 429,251 5,570,492
772,242 6,800,458 407,854 274,138 8,254,692
(continued) 39
4.
DETAILED NOTES ON ALL FUNDS (Continued) Interfund Receivables, Payables and Transfers The composition of interfund balances as of September 30, 2011, is as follows: Due to/from other funds:
Receivable Fund General Payable Fund Capital projects Nonmajor governmental Internal service Water and wastewater Electric Stormwater drainage Nonmajor enterprise General Debt service Nonmajor governmental Water and wastewater Stormwater drainage General Debt service Water and wastewater General Debt service Water and wastewater Stormwater drainage Nonmajor enterprise General Debt service Nonmajor governmental Electric Internal service General Debt service General Capital projects General Internal service $ Amount 142,664 76,469 1,312,547 200,389 83,431 544 32 2,092,232 640,634 1,038,546 12,785 6,104 88,264 112,221 3,255 7,270 13,138 515,502 375 74,762 518,847 95,752 10,716 25,000 135,000 42 31,380 12,742 41,589 153,265 190,742
Capital projects
Nonmajor governmental
Electric
Water and wastewater
Stormwater drainage
Nonmajor enterprise
Internal service - insurance Internal service - equipment
(continued) 40
4.
DETAILED NOTES ON ALL FUNDS (Continued) Interfund Receivables, Payables and Transfers (Continued) Due to/from other funds (Continued) Balances resulted from the time lag between the dates that 1) interfund goods and services are provided or reimbursable expenditures occur, 2) transactions are recorded in the accounting system, and 3) payments between funds are made. Interfund transfers
Capital Projects Transfers In Debt Nonmajor Service Governmental Nonmajor Enterprise
General Transfers Out: General Capital projects Nonmajor governmental Internal service Electric Stormwater drainage Water and wastewater Nonmajor enterprise Total
Electric
Total
90,000 1,312,547 3,805,542 64,526 2,319,452 36,664 7,628,731
1,333,142 100,000 150,000 1,583,142
549,031 1,347,339 1,896,370
41,282 41,282
65,101 65,101
97,897 87,422 185,319
2,021,352 177,422 1,347,339 1,312,547 3,905,542 129,627 2,469,452 36,664 11,399,945
Transfers are used to 1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, 2) move receipts restricted to debt service from the funds collecting the receipts to the Debt Service Fund as debt service payments become due, and 3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Long-term Debt General Obligation Bonds and Combination Tax and Revenue Bonds The government issues general obligation bonds and combination tax and revenue bonds to provide funds for the acquisition and construction of major capital facilities. These debt issues have been issued for both governmental and business-type activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenue. The original amount of general obligation and combination tax and revenue bonds issued in prior years was $276,610,000. During the year, general obligation and combination tax and revenue bonds totaling $17,210,000 were issued to fund both general obligation and revenue projects.
(continued) 41
4.
DETAILED NOTES ON ALL FUNDS (Continued) Long-term Debt (Continued) General Obligation Bonds and Combination Tax and Revenue Bonds (Continued) General obligation bonds are direct obligations and pledge the full faith and credit of the government. Combination Tax and Revenue bonds constitute direct obligations of the City and are payable from a combination of the levy of ad valorem taxes and a limited pledge of surplus revenues of the Citys water and wastewater system. Both bonds generally are issued as 20-year serial bonds with equal amounts of principal maturing each year. Bonds currently outstanding are as follows:
Purpose Governmental activities Governmental activities - refunding Business-type activities Interest Rates 3.50 - 4.61% 3.50 - 5.375% 3.50 - 5.00% $ Amount 117,665,000 18,550,000 128,450,000 264,665,000
Annual debt service requirements to maturity for general obligation bonds are as follows:
Year Ending September 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2034 Total $ Governmental Activities Principal Interest 6,620,000 6,795,000 7,000,000 6,775,000 7,000,000 36,255,000 36,530,000 27,625,000 1,615,000 $ 5,957,750 5,728,319 5,492,649 5,234,543 4,974,716 20,581,608 12,353,814 4,035,577 39,681 64,398,657
$ 136,215,000
(continued) 42
4.
DETAILED NOTES ON ALL FUNDS (Continued) Long-term Debt (Continued) Revenue Bonds Annual debt service requirements to maturity for revenue bonds are as follows:
Year Ending September 30, 2012 2013 2014 2015 2016 2017-2021 2022-2026 2027-2031 2032-2036 Total $ Business-type Activities Principal Interest 7,135,000 7,410,000 7,665,000 7,945,000 8,265,000 38,550,000 32,270,000 16,130,000 3,080,000 $ 5,594,423 5,317,293 5,054,692 4,761,379 4,429,119 16,874,084 9,188,797 2,389,268 495,500 54,104,555
$ 128,450,000
Defeasance of Bonds In prior years, the City defeased certain bonds by placing the proceeds of refunding bonds in irrevocable trusts to provide for all future debt service payments on the defeased bonds. Accordingly, the trusts assets and liabilities for the defeased bonds are not included in the Citys financial statements. At September 30, 2011, the outstanding balance of the defeased bonds is $43,655,000.
(continued) 43
4.
DETAILED NOTES ON ALL FUNDS (Continued) Long-term Debt (Continued) Changes in Long-term Liabilities Long-term liability activity for the year ended September 30, 2011, was as follows:
Beginning Balance Governmental activities General obligation bonds Discount on bonds Premium on bonds Deferred amount on refundings Compensated absences TMRS Net pension obligation OPEB Net pension obligation Governmental activity Long-term liabilities Business-type activities Bonds payable: Revenue bonds Premium on bonds Deferred amount on refundings Discount on bonds Capital leases TMRS Net pension obligation OPEB Net pension obligation Total bonds payable Compensated absences Business-type activity Long-term liabilities Additions Reductions Ending Balance Due Within One Year
$ 141,785,000 ( 727,341) 451,099 ( 263,905) 4,728,657 1,549,681 361,304 $ 147,884,495
$ 11,245,000 590,248 ( 735,362) 1,742,908 4,700,743 276,583 $ 17,820,120
$( 16,815,000) 37,372 ( 36,000) 26,391 ( 1,853,207) ( 3,802,497) ( 131,879) $( 22,574,820)
$ 136,215,000 ( 689,969) 1,005,347 ( 972,876) 4,618,358 2,447,927 506,008 $ 143,129,795
$ 5,205,000 37,372 ( 85,187) 87,671 1,020,111 $ 6,264,967
$ 134,825,000 1,635,823 ( ( 1,483,413) 298,042) 319,498 75,150 135,074,016 258,277 $ 135,332,293
5,965,000 313,103 ( 460,918) 100,944 969,152 52,958 6,940,239 389,224
$( 12,340,000) ( 123,062) 157,217 15,907 34,254) 783,961) 25,251) 13,133,404) 375,726)
$ 128,450,000 1,825,864 ( ( 1,787,114) 282,135) 66,690 504,689 102,857 128,880,851 271,775 $ 129,152,626
$ 7,135,000 7,135,000 214,520 $ 7,349,520
( ( ( ( (
7,329,463
$( 13,509,130)
The compensated absences liability attributable to the governmental activities will be liquidated primarily by the General Fund. Other Information Benefits Management The City sponsors an employee benefit plan that provides partially self-insured medical and selfinsured dental coverage to employees and voluntary coverage to their participating dependents. The plan is designed to provide a specified level of coverage, with excess insurance coverage provided in both specific and aggregate reinsurance. The Citys maximum medical claim exposure for a specific covered person is limited to $100,000 in claims. Each covered person is subject to a maximum lifetime benefit reimbursement of $1,000,000 for medical and a maximum annual benefit on dental of $1,250. Aggregate coverage is purchased for the plan in order to limit the total medical claims exposure. (continued) 44
4.
DETAILED NOTES ON ALL FUNDS (Continued) Other Information (Continued) Benefits Management (Continued) The plan includes a pre-existing clause to deter adverse selection into the plan subject to the provisions of the Health Insurance Portability and Accountability Act of 1996. Features of the medical plan include a preferred provider network, specialty networks and a pharmacy benefit which includes a tiered co-pay structure and various techniques to provide incentives to utilize lower cost drugs, over the counter alternatives and to manage utilization based on therapeutic equivalencies. An annual benefit and wellness fair is hosted to increase employee awareness. The City continues to identify and implement features to contain costs and provide a sustainable benefit program. Examples include specialty networks for lab services and specialized provider networks including pharmacy benefits. The plan is funded by contributions from the City and participating employees based on recommendations of maximum plan exposure as calculated by an employee benefits specialty firm. Projected claim costs are based on claims experience, lag studies, industry trends, census and aggregate factors. A liability for claims is established based on estimated incurred but not recorded claims outstanding and anticipated associated insurance and administrative costs. The stop-loss contract establishes the aggregate attachment point based on census and aggregate factors defined in the contract. A reconciliation of changes in the aggregate liabilities of the prior and current year is presented below:
Current Year Claims and Changes in Estimate $ 2,962,518 3,741,640 3,455,750 $
Year Ended September 30, 2009 2010 2011 $
Beginning Liability 862,545 842,520 993,478
Claim Payments 2,982,543 3,590,682 3,551,951 $
Ending Liability 842,520 993,478 897,277
Risk and Safety Management The City of San Marcos maintains a risk management program to prevent and mitigate financial loss. Components of the program include the identification of exposure to loss and the selection, implementation and monitoring of risk management techniques. Prevention measures include activities such as training, annual review of assets and exposures, driving and drug testing programs, safety awareness events and the Safety Coach Safety Leadership Development Program. Post incident measures designed to mitigate losses include incident investigation and management of all claims through final disposition. A cornerstone of our commitment to managing workers compensation claims is a return to work program. In rating a workers compensation program, an underwriter begins at 100% which represents an average employer. This is modified based on a specific employers claims history. During this reporting period the City has achieved a 22% premium modifier. Collectively, risk management programs have resulted in direct savings in excess of a million dollars while improving the health, safety, and well-being of City Employees. (continued) 45
4.
DETAILED NOTES ON ALL FUNDS (Continued) Other Information (Continued) Risk and Safety Management (Continued) The Citys Safety Program has been recognized by awards from the Public Risk Management Association (PRIMA) and the National Safety Council (NSC). The City participates in the National Safety Council Annual Awards Program which presents awards for occupational safety and health, safe worker and safe drivers. Twenty-two departments were recognized for maintaining a perfect record or a reduction in frequency of lost time injuries. Individual employees who serve in positions that are exposed to hazardous conditions and have a long work history without an accident are recognized at two levels by the National Safety Council: safe worker and safe driver. Two employees were recognized in each category for safe worker and safe driving this year. In October the City held the Annual Benefits and Safety Expo. The event includes over 55 Health and Safety vendors including safety demonstrations. Over 300 employees participate in the Expo. Contingent Liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the government expects such amounts, if any, to be immaterial. There are currently several claims and lawsuits pending against the City. It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that, if decided against the City, would have a material adverse effect upon the operations of the City or that would exceed the contingency amounts set aside for such purpose. Commitments The City purchases electric power at wholesale rates from The Lower Colorado River Authority for its own use to resell to customers of its electric distribution system. The initial term of the purchased-power agreement ends in 2016, with successive renewal periods of 10 years.
(continued) 46
4.
DETAILED NOTES ON ALL FUNDS (Continued) Other Information (Continued) Estimated costs to complete construction in progress at year-end totals approximately $34,207,780 for governmental capital assets, $29,425,713 for Water and Wastewater, $1,073,107 for Electric, and $10,130,429 for Drainage. Pension Plans Primary Government Defined Benefit Plan Texas Municipal Retirement System (TMRS) Plan Description. The City provides pension benefits for all employees working a thousand hours or more annually through a nontraditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple-employer public employee retirement system. The plan provisions that have been adopted by the City are within the options available in the governing state statutes of TMRS. TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS; the report also provides detailed explanations of the contributions, benefits and actuarial methods and assumptions used by the System. This report may be obtained by writing to TMRS, P.O. Box 149153, Austin, TX 78714-9153 or by calling 800-924-8677; in addition, the report is available on TMRS website at www.TMRS.com. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Plan provisions for the City were as follows:
Plan Year 2010 Deposit rate Matching ratio (city to employee) A member is vested after Service retirement eligibility (expressed as age/years of service) Updated service credit Annuity increases (to retirees) 7% 2 to 1 5 years 60/5; 0/20 100% repeating, transfers 70% of CPI. repeating Plan Year 2011 7% 2 to 1 5 years 60/5; 0/20 100% repeating, transfers 70% of CPI. repeating
Contributions Under the state law governing TMRS, the contribution rate for each City is determined annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active members projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits and Annuity Increases. (continued) 47
4.
DETAILED NOTES ON ALL FUNDS (Continued) Pension Plans Primary Government (Continued) Contributions (Continued) The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. The annual pension cost and net pension obligation/(asset) are as follows:
Annual Required Contribution (ARC) Interest on Net Pension Obligation Adjustment to the ARC Annual Pension Cost Contributions Made Increase (Decrease) in Net Pension Obligation Net Pension Obligation/(Asset), beginning of year Net Pension Obligation/(Asset), ending of year $ ( ( 5,643,841 140,188 114,134) 5,669,895 4,586,458) 1,083,437 1,869,179 2,952,616
Three-Year Trend Information

Accounting Year Ending 09/30/09 09/30/10 09/30/11 $ Annual Pension Cost (APC) 3,669,260 5,277,774 5,669,895 $ Actual Contribution Made 2,947,745 4,130,110 4,586,458 Percentage of APC Contributed 80.34 % 79.00% 80.89% $ Net Pension Obligation 721,515 1,147,664 2,952,616
Contributions The required contribution rates for fiscal year 2011 were determined as part of the December 31, 2008 and 2009 actuarial valuations. Additional information as of the latest actuarial valuation, December 31, 2010, also follows:
Actuarial Valuation Date Actuarial cost method Amortization method GASB 25 equivalent single amortization period Amortization period for new gains/losses Asset valuation method Actuarial Assumptions: Investment rate of return* Projected salary increases* *Includes Inflation at Cost-of-living adjustments 12/31/08 Projected Unit Credit Level percent of payroll 29.0 years; closed period 30 years Amortized cost 12/31/09 Projected Unit Credit Level percent of payroll 28.2 years; closed period 30 years 10-year smoothed market 7.5% varies by age and service 3.0% 2.1% 12/31/10 - prior to restructuring Projected Unit Credit Level percent of payroll 27.2 years; closed period 30 years 10-year smoothed market 7.5% varies by age and service 3.0% 2.1% 12/31/10 restructured Projected Unit Credit Level percent of payroll 27.2 years; closed period 30 years 10-year smoothed market 7.0% varies by age and service 3.0% 2.1%
7.5% varies by age and service 3.0% 2.1%
(continued) 48
4.
DETAILED NOTES ON ALL FUNDS (Continued) Pension Plans Primary Government (Continued) Contributions (Continued) Funded Status and Funding Progress In June 2011, SB 350 was enacted by the Texas Legislature, resulting in a restructure of the TMRS funds. This legislation provided for the actuarial valuation to be completed, as if restructuring had occurred on December 31, 2010. In addition, the actuarial assumptions were updated for the new fund structure, based on an actuarial experience study that was adopted by the TMRS Board at their May 2011 meeting (the review compared actual to expected experience for the four-year period of January 1, 2006 through December 31, 2009). For a complete description of the combined impact of the legislation and new actuarial assumptions, including the effects on TMRS city rates and funding ratios, please see the December 31, 2010 TMRS Comprehensive Annual Financial Report (CAFR). The funded status as of December 31, 2010, the most recent actuarial valuation date, is as follows:
Actuarial Valuation Date 12/31/2008 12/31/2009 (1) 12/31/2010 (2) 12/31/2010
(1) (2)
Actuarial Value of Assets $ 53,410,196 60,086,015 65,424,815 88,314,595 $
Actuarial Accrued Liability 86,818,868 97,579,121 103,321,042 122,500,837
Percentage Funded 61.5% 61.6% 63.3% 72.1% $
Unfunded Actuarial Accrued Liability 33,408,672 37,493,106 37,896,227 34,186,242 $
Annual Covered Payroll 23,968,024 26,691,575 27,415,320 27,415,320
Unfunded Actuarial Accrued Liability as a Percentage of Covered Payroll 139.4% 140.5% 138.2% 124.7%
Actuarial valuation performed under the original fund structure. Actuarial valuation performed under the new fund structure.
Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Actuarial calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of each valuation, and reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.
(continued) 49
4.
DETAILED NOTES ON ALL FUNDS (Continued) Other Postemployment Benefits Post-retirement Health Care Benefits The City provides certain health care and life insurance benefits through a single employer defined benefit OPEB plan, under City ordinance, for all full time and part-time employees in an eligible class. Retired employees who have satisfied the requirement as defined by the Texas Municipal Retirement System and their dependents who were covered prior to retirement. The requirement as defined by the Texas Municipal Retirement System is any age with 20 years of service or 5 years of service for age 60 and above. Currently, the City has 521 active employees and 36 retirees and beneficiaries eligible to participate in the plan. Retirees pay premiums for coverage in the OPEB programs. The is not a maximum employer paid premium amount (capped benefit). Active employees do not contribute to the retiree health care plan. Retirees are eligible for medical, dental, prescription and life insurance benefits until death of employee in service. Once death of employee in service, spouse is eligible for dependents through COBRA only. Retirees are eligible for benefits immediately upon retirement. If retiree opts out of coverage, retiree is not eligible for re-enrollment. Annual OPEB Cost and Net OPEB Obligation The Citys annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The City does not issue separate financial statements for the plan and the City has not established a trust fund to fund the plan. The Citys annual OPEB cost for the current year and the related information is listed below:
Annual Required Contribution (ARC) Interest on Net Pension Obligation Adjustment to the ARC Annual Pension Cost Contributions Made Increase (Decrease) in Net Pension Obligation Net Pension Obligation/(Asset), beginning of year Net Pension Obligation/(Asset), ending of year $ ( ( 328,504 19,640 18,604) 329,540 157,129) 172,411 436,454 608,865
Expenses for post-retirement health care benefits are recognized on a pay-as-you-go basis.
(continued) 50
4.
DETAILED NOTES ON ALL FUNDS (Continued) Other Postemployment Benefits (Continued) Annual OPEB Cost and Net OPEB Obligation (Continued) The Citys annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the prior three years (4.5% discount rate, and level percent of pay amortization).
Fiscal Year Ended 09/30/09 09/30/10 09/30/11 $ Annual OPEB Cost 314,419 315,034 329,540 $ Employer Contribution 55,509 137,490 157,129 Percentage Contributed 22.8% 43.7% 43.7% $ Net OPEB Obligation 258,910 436,454 608,865
Funding Status and Funding Progress

Actuarial Valuation Date 12/31/09 12/31/10 Actuarial Value of Assets $ Actuarial Accrued Liability (AAL) $ 3,373,453 3,420,429 Unfunded (AAL) (UAAL) $ 3,373,453 3,420,429 UAAL as a Percentage of Covered Payroll 14.1% 12.8%
Funded Ratio 0% 0%
Covered Payroll $ 23,968,024 26,691,575
This is the second year of implementation of GASB 45. Accordingly, only one year of funding progress is available. The projection of future payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the heath care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Actuarial Methods and Assumptions The Projected Unit Credit actuarial cost method is used to calculate the GASB 45 ARC for the Citys retiree health care plan. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future payments are projected. The projected unit credit method then provides for a systematic recognition of the cost of these anticipated payments. The yearly ARC is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the unfunded accrued liability.
(continued) 51
4.
DETAILED NOTES ON ALL FUNDS (Continued) Other Postemployment Benefits (Continued) Actuarial Methods and Assumptions (Continued) Projections of health benefits are based on the plan as understood by the City and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the City and the Citys employees to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows: Actuarial Methods and Assumptions
Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Payroll Growth Rate General Inflation Rate Health care trend 12/31/2010 Projected Unit Credit Level as a percentage of payroll 27 years; open Market Value 4.5% 3.0% 3.0% 9% in 2011, declining by 0.5% per year to an ultimate rate of 4.5% in 2020 thereafter
Supplemental Death Benefits Plan (SDBF) Supplemental Death Benefits Fund The City also participates in the cost sharing multiple-employer defined benefit group term life insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance to provide group term life insurance coverage to both current and retired employees. The City may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. The death benefit for active employees provides a lump sum payment approximately equal to the employees annual salary (calculated based on the employees 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. Contributions 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. (continued) 52
4.
DETAILED NOTES ON ALL FUNDS (Continued) Supplemental Death Benefits Plan (SDBF) (Continued) Supplemental Death Benefits Fund (Continued) Contributions (Continued) The Citys contributions to the TMRS SDBF for the years ended 2011, 2010 and 2009, were $54,726, $49,237, and $37,731, respectively, which equaled the required contributions each year. Schedule of Contribution Rates (Retiree-only portion of the rate)
Plan/ Calendar Year 2008 2009 2010 2011 2012 Annual Required Contribution (Rate) 0.04% 0.02% 0.02% 0.02% 0.02% Actual Contribution Made (Rate) 0.04% 0.02% 0.02% 0.02% 0.02% Percentage of ARC Contributed 100.00% 100.00% 100.00% 0.02% 0.02%
Change in Accounting Principles For fiscal year 2011, the City has implemented Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. GASB Statement No. 54 enhances the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. This statement establishes fund balance classifications that compromise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. The implementation of this statement resulted in the City reclassifying fund balances of its governmental funds.
53
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
GENERAL FUND

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Taxes Property taxes: Current ad valorem taxes Delinquent ad valorem taxes Penalty and interest on delinquent taxes Franchise Sales Mixed drink Total taxes Licenses and permits Professional and occupational Building Development Plumbing Food Cemetery Other Total licenses and permits Fines and penalties Parking meter Traffic Complaints Library Other Total fines and penalties Charges for services Vital statistics Pound charges Charges to other funds Building rental Recreation program Other services Total charges for services
Actual Amounts
2010 Actual
5,340,662 70,846 38,148 1,096,858 18,632,663 257,040 25,436,217
5,340,662 70,846 38,148 1,096,858 18,632,663 257,040 25,436,217
5,412,372 56,831 37,792 1,184,223 19,854,399 263,346 26,808,963
$ ( (
71,710 14,015) 356) 87,365 1,221,736 6,306 1,372,746
5,446,352 50,412 37,943 1,210,874 18,398,707 266,589 25,410,877
49,219 315,000 57,633 39,349 92,676 247,865 801,742
49,219 315,000 57,633 39,349 92,676 247,865 801,742
44,680 424,184 53,423 40,272 120,260 53,671 257,633 994,123
( (
4,539) 109,184 4,210) 923 27,584 53,671 9,768 192,381
46,906 356,162 24,790 41,446 128,468 25,129 224,081 846,982
106,236 652,447 421,577 66,978 707,886 1,955,124
106,236 652,447 421,577 66,978 707,886 1,955,124
131,477 491,980 287,373 63,065 564,056 1,537,951
( ( ( ( (
25,241 160,467) 134,204) 3,913) 143,830) 417,173)
100,845 529,851 340,285 60,901 689,699 1,721,581
38,510 37,310 4,243,002 120,036 473,684 118,584 5,031,126
38,510 37,310 4,243,002 120,036 488,684 118,584 5,046,126
42,126 41,232 4,286,559 106,387 469,902 75,283 5,021,489
( ( ( (
3,616 3,922 43,557 13,649) 18,782) 43,301) 24,637)
39,870 36,991 4,258,331 66,009 447,627 101,511 4,950,339
(continued) 54

SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL GENERAL FUND (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES (Continued) Intergovernmental Investment earnings Other Donations Miscellaneous Total other Total revenues EXPENDITURES Current: General government Personnel services Contracted services Materials and supplies Other charges Total general government Personnel: Personnel services Contracted services Materials and supplies Other charges Total personnel Finance: Personnel services Contracted services Materials and supplies Other charges Total finance $ 203,304 110,000 $ 203,304 110,000 $
Actual Amounts
2010 Actual
182,525 48,096
$( (
20,779) 61,904)
182,825 83,606
79,798 893,947 973,745 34,511,258
79,798 893,947 973,745 34,526,258
80,000 764,032 844,032 35,437,179
( (
202 129,915) 129,713) 910,921
80,000 1,820,866 1,900,866 35,097,076
1,955,938 303,889 133,900 548,396 2,942,123
1,955,938 295,189 121,900 328,396 2,701,423
1,902,564 173,131 110,825 258,833 2,445,353
53,374 122,058 11,075 69,563 256,070
1,873,065 152,933 107,723 269,242 2,402,963
738,506 181,297 20,000 24,557 964,360
738,506 181,297 20,000 24,557 964,360
646,725 96,288 39,760 13,150 795,923
91,781 85,009 19,760) 11,407 168,437
665,207 173,878 19,919 16,037 875,041
1,673,385 118,680 54,523 42,730 1,889,318
1,673,385 114,180 55,223 46,930 1,889,718
1,681,214 81,128 46,451 28,257 1,837,050
7,829) 33,052 8,772 18,673 52,668
1,672,411 78,517 65,674 32,760 1,849,362
(continued) 55

Budgeted Amounts Original Final EXPENDITURES (Continued) Planning: Personnel services Contracted services Materials and supplies Other charges Total planning Public works: Personnel services Contracted services Materials and supplies Other charges Total public works General services: Personnel services Contracted services Materials and supplies Other charges Total general services Cemetery: Contracted services Materials and supplies Total cemetery Total general government Public safety: Fire: Personnel services Contracted services Materials and supplies Other charges Total fire
Actual Amounts
2010 Actual
1,189,761 55,749 30,812 43,928 1,320,250
1,145,431 98,820 32,371 43,628 1,320,250
1,124,033 94,305 36,490 29,990 1,284,818
$ (
21,398 4,515 4,119) 13,638 35,432
1,153,690 33,966 31,277 40,324 1,259,257
2,008,137 181,429 627,053 35,795 2,852,414
2,008,137 181,429 635,603 35,795 2,860,964
1,901,968 131,066 599,680 24,946 2,657,660
106,169 50,363 35,923 10,849 203,304
1,970,233 216,251 617,230 30,274 2,833,988
1,632,378 2,377,832 46,619 1,498,813 5,555,642
1,732,378 2,414,196 46,539 2,417,843 6,610,956
931,467 2,428,219 48,030 2,307,064 5,714,780
( (
800,911 14,023) 1,491) 110,779 896,176
957,847 1,905,976 37,210 1,350,060 4,251,093
154,169 2,040 156,209 15,680,316
154,169 2,040 156,209 16,503,880
152,035 2,509 154,544 14,890,128
2,134 469) 1,665 1,613,752
125,752 6,456 132,208 13,603,912
5,317,953 87,400 267,409 37,700 5,710,462
5,317,953 67,400 299,809 37,700 5,722,862
5,629,110 64,418 301,087 34,647 6,029,262
( ( (
311,157) 2,982 1,278) 3,053 306,400)
4,780,957 82,828 280,823 37,503 5,182,111
(continued) 56

Budgeted Amounts Original Final EXPENDITURES (Continued) Public safety (Continued) Police: Personnel services Contracted services Materials and supplies Other charges Total police Total public safety Community service Personnel services Contracted services Materials and supplies Other charges Total community service Debt service: Principal Total debt service Capital outlay Public safety Total capital outlay Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Sale of capital assets Total other financing sources and uses NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ ( ( 6,017,920) ( 6,865,636) ( 38,500 38,500 40,529,178 73,242 73,242 41,391,894 29,160 29,160 29,160 29,160
Actual Amounts
2010 Actual
11,599,358 562,501 806,165 107,036 13,075,060 18,785,522
11,593,358 574,901 768,278 103,853 13,040,390 18,763,252
12,426,829 477,364 726,123 98,684 13,729,000 19,758,262
$(
833,471) 97,537 42,155 5,169 688,610) 995,010)
11,899,084 403,176 775,415 102,051 13,179,726 18,361,837
( (
4,003,174 1,187,647 681,075 123,784 5,995,680
4,003,174 1,137,647 726,647 154,892 6,022,360
4,190,414 927,712 725,574 132,160 5,975,860
187,240) 209,935 1,073 22,732 46,500
3,822,886 947,065 670,753 96,672 5,537,376
29,160 29,160
16,958 16,958 40,641,208
56,284 56,284 750,686
37,503,125
5,204,029)
1,661,607
2,406,049)
6,105,691 1,818,071) 48,000 4,335,620 1,682,300) 13,379,683 11,697,383 $
7,544,902 1,994,929) 48,000 5,597,973
7,628,731 2,021,352) 20,791 5,628,170 424,141 13,379,683
( (
83,829 26,423) 27,209) 30,197 1,691,804 -
5,628,618 2,677,867) 36,394 2,987,145 581,096 12,902,270
1,267,663) 13,379,683 12,112,020 $
13,803,824
1,691,804
13,483,366
57
NONMAJOR SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts, special assessments, or major capital projects) that are legally restricted to expenditures for specific purposes. Grants and Special Entitlements Community Development Block Grant Public Education Police Grant WIC Project Hotel Occupancy Municipal Court Technology Seized Assets Library Memorial Municipal Court Security Fee Juvenile Case Manager Fee Parks and Recreation TIRZ #2 TIRZ #3 Miscellaneous Grants
NONMAJOR PERMANENT FUNDS Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the Citys programs. Cemetery Perpetual

COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2011
Special Revenue Grant and Special Entitlements ASSETS Cash and cash equivalents Investments Receivables (net of allowance for uncollectibles): Accounts Taxes Loans Due from other funds Due from other governments Prepaid items Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued liabilities Deferred revenue Due to other funds Total liabilities Fund balances: Nonspendable for prepaid items Restricted for: General government Public safety Community services Endowment Unassigned Total fund balances Total liabilities and fund balances $ Community Development Block Grant
Public Education
322,819 -
119,392 -
46,875 $ 369,694 $
59 342,209 150 342,418 $
21,911 11,330 152,633
20,003 228,455 248,458
60,203 10,977 271,238 342,418
121,236 121,236 369,694 $ ( -
150
152,633 152,633 $ 152,633
150)
342,418
58
Special Revenue Municipal Court Technology
Police Grant
WIC Project
Hotel Occupancy
Seized Assets
Library Memorial
2,267 -
550,789 -
104,708 -
113,381 -
33,336 -
2,499 55,562 $ 60,328 $
8 327,781 12,377 340,166 $
646,339 1,197,128 $
104,708 $
113,381 $
33,336
5,359 51,692 57,051
44,876 40,623 254,667 340,166
61,892 4,137 32 10 66,071
62,206 62,206
3,277 3,277 $ 60,328 $
12,377 12,377) 340,166 $
1,131,057 1,131,057 1,197,128 $
104,708 104,708 104,708 $
51,175 51,175 113,381 $
33,336 33,336 33,336
(continued) 59

COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (Continued) SEPTEMBER 30, 2011
Special Revenue Municipal Court Security Fee ASSETS Cash and cash equivalents Investments Receivables (net of allowance for uncollectibles): Accounts Taxes Loans Due from other funds Due from other governments Prepaid items Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued liabilities Deferred revenue Due to other funds Total liabilities Fund balances: Nonspendable Restricted for: General government Public safety Community services Endowment Unassigned Total fund balances Total liabilities and fund balances $ Juvenile Case Manager Fee
Parks and Recreation
90,804 -
26,369 -
3,836 -
146 $ 90,950 $
239 26,608 $
3,836
310 310
1,742 1,742
90,640 90,640 90,950 $
24,866 24,866 26,608 $
3,836 3,836 3,836
60
Special Revenue
Permanent
TIRZ #2
TIRZ #3
Miscellaneous Grants
Cemetery Perpetual
Totals
203,259 2,908,608
14,805 1,002,971
1,585,765 3,911,579
37,577 81,150 $ 118,727 $
83,947 104,775 188,722 $
3,534 356,493 3,471,894
7,143 $ 1,024,919 $
150,578 646,339 46,875 203,740 1,082,045 12,527 7,639,448
118,671 118,671
297,103 297,103
23,808 3,219,983 132,040 3,375,831
$ -
525
525
273,513 46,502 3,464,806 1,125,731 4,910,552
56 56 $ 118,727 $
( 108,381) ( 108,381) 188,722 $
96,063 96,063 3,471,894
1,024,394 1,024,394 $ 1,024,919 $
12,527 96,119 274,666 1,442,098 1,024,394 ( 120,908) 2,728,896 7,639,448
61

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011
Special Revenue Grant and Special Entitlements REVENUES Taxes Fines and penalties Intergovernmental Investment earnings Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community service Capital outlay Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources and uses NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING FUND BALANCES, ENDING $ $ 20,111 20,111 Community Development Block Grant $ 648,467 648,467 $ Public Education 85,207 85,207
20,111 20,111 -
436,964 211,503 648,467 -
85,207
121,236 121,236 $
85,207 67,426 152,633
62
Special Revenue Police Grant $ 447,788 447,788 $ WIC Project 1,634,688 1,634,688 $ Hotel Occupancy 2,296,276 1,424 30 2,297,730 $ Municipal Court Technology 33,886 33,886 $ Seized Assets 82,303 2 82,305 $ Library Memorial 566 566
473,525 473,525 ( 25,737)
1,634,688 1,634,688 -
1,386,223 1,386,223 911,507 (
2,655 125,780 128,435 94,549)
1,500 62,206 63,706 18,599
566
( 25,737) 29,014 $ 3,277 $
41,282 ( 1,025,703) ( 984,421) ( 72,914) 1,203,971 1,131,057 $ (
94,549) 199,257 104,708 $
18,599 32,576 51,175 $
566 32,770 33,336
(continued) 63

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS (Continued) FOR THE YEAR ENDED SEPTEMBER 30, 2011
Special Revenue Municipal Court Security Fee REVENUES Taxes Fines and penalties Intergovernmental Investment earnings Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Community service Capital outlay Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources and uses NET CHANGE IN FUND BALANCES FUND BALANCES, BEGINNING FUND BALANCES, ENDING $ $ 25,695 25,695 Juvenile Case Manager Fee $ 40,834 40,834 $ Parks and Recreation 642 642
8,358 8,358 17,337 (
46,756 46,756 5,922)
642
17,337 73,303 90,640 $ (
5,922) 30,788 24,866 $
642 3,194 3,836
64
Special Revenue Miscellaneous Grants $ 420,627 420,627 $
Permanent Cemetery Perpetual 7,023 16,090 23,113 $
TIRZ #2 $ 118,727 118,727 $
TIRZ #3 188,721 188,721
Totals 2,688,931 182,718 3,171,681 8,449 17,328 6,069,107
119,762 119,762 ( 1,035)
188,721
280,768 139,859 420,627 -
23,113
400,530 532,794 3,477,986 539,348 4,950,658 1,118,449
( 1,035) 1,091 $ 56
( 321,636) ( 321,636) ( 132,915) 24,534 $( 108,381) $
96,063 96,063
23,113 1,001,281 $ 1,024,394
( ( (
41,282 1,347,339) 1,306,057) 187,608) 2,916,504
2,728,896
65

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL DEBT SERVICE FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Taxes Intergovernmental Interest on investments Miscellaneous Total revenues EXPENDITURES Debt service: Principal Interest and fiscal charges Bond issuance cost Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Payment to refunded bond escrow agent Premium on debt issued Capital related debt issued Total other financing sources and uses NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ 8,394,768 3,030,000 55,000 177,565 11,657,333 $ 8,394,768 3,030,000 55,000 177,565 11,657,333 $
Actual Amounts 8,360,709 19,547 198,946 8,579,202
Variance with Final Budget Positive (Negative) $( ( ( ( 34,059) 3,030,000) 35,453) 21,381 3,078,131)
5,630,000 6,600,568 12,230,568
5,630,000 6,600,568 12,230,568
5,870,000 6,351,363 152,734 12,374,097
( ( (
240,000) 249,205 152,734) 143,529)
573,235)
573,235)
( 3,794,895)
3,221,660)
1,896,370 1,896,370 1,323,135 8,879,062 $ 10,202,197
1,896,370 1,896,370 1,323,135 8,879,062 $ 10,202,197 $
1,896,370 ( 11,680,362) 590,248 11,245,000 2,051,256 ( 1,743,639) 8,879,062 7,135,423
( 11,680,362) 590,248 11,245,000 154,886 ( 3,066,774) $( 3,066,774)
66

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Intergovernmental Total revenues EXPENDITURES Current: Community service Capital outlay Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $
Actual Amounts
$ 1,376,270 1,376,270
$ 1,216,972 1,216,972
648,467 648,467
$( (
568,505) 568,505)
828,184 548,086 1,376,270 $
644,754 572,218 1,216,972 $
436,964 211,503 648,467 $
207,790 360,715 568,505 -
67

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL POLICE GRANT FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Intergovernmental Total revenues EXPENDITURES Current: Public safety Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ ( $ 484,365 484,365 $ 484,365 484,365 $
Actual Amounts 447,788 447,788
Variance with Final Budget Positive (Negative) $( ( 36,577) 36,577)
511,444 511,444 27,079) 29,014 1,935 $ (
511,444 511,444 27,079) 29,014 1,935 $ (
473,525 473,525 25,737) 29,014 3,277 $
37,919 37,919 1,342 1,342
68

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL WIC PROJECT FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Intergovernmental Total revenues EXPENDITURES Current: Community service Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ $ 1,776,298 1,776,298 $ 1,776,298 1,776,298
Actual Amounts $ 1,634,688 1,634,688
1,754,498 1,754,498 21,800 21,800 $
1,757,998 1,757,998 18,300 18,300 $
1,634,688 1,634,688 $( (
123,310 123,310 18,300) 18,300)
69

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HOTEL OCCUPANCY FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Taxes Interest on investments Other Total revenues EXPENDITURES Current: Community service Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources and uses NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ $ 2,158,983 6,500 2,165,483 $ 2,158,983 6,500 2,165,483
Actual Amounts $ 2,296,276 1,424 30 2,297,730
Variance with Final Budget Positive (Negative) $ ( 137,293 5,076) 30 132,247
1,720,034 1,720,034
1,927,034 1,927,034
1,386,223 1,386,223
540,811 540,811
445,449
238,449
911,507
673,058
41,282 ( 1,025,703) ( 984,421) ( 538,972) 1,203,971 664,999
41,282 ( 1,025,703) ( 984,421) ( 745,972) 1,203,971 $ 457,999
41,282 ( 1,025,703) ( 984,421) ( 72,914) 1,203,971 $ 1,131,057 $
673,058 673,058
70

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL MUNICIPAL COURT TECHNOLOGY FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Fines and penalties Investment earnings Total revenues EXPENDITURES Current: Public safety Capital outlay Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ ( $ 40,000 500 40,500 $ 40,000 500 40,500 $
Variance with Final Budget Positive (Negative) $( ( ( 6,114) 500) 6,614)
5,000 125,000 130,000 89,500) 199,257 109,757 $ (
4,000 126,000 130,000 89,500) 199,257 109,757 $ (
2,655 125,780 128,435 94,549) 199,257 104,708 $( (
1,345 220 1,565 5,049) 5,049)
71

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL SEIZED ASSETS FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Fines and penalties Investment earnings Total revenues EXPENDITURES Current: Public safety Capital outlay Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ $ 5,000 100 5,100 $ 5,000 100 5,100 $
Actual Amounts 82,303 2 82,305 $
Variance with Final Budget Positive (Negative) 77,303 98) 77,205
1,500 1,500 3,600 32,576 36,176 $( (
1,500 98,800 100,300 95,200) 32,576 62,624) $
1,500 62,206 63,706 18,599 32,576 51,175 $
36,594 36,594 113,799 113,799
72

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL MUNICIPAL COURT SECURITY FEE FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Fines and penalties Investment earnings Total revenues EXPENDITURES Current: Public safety Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ $ 30,000 120 30,120 $ 30,000 120 30,120 $
Variance with Final Budget Positive (Negative) $( ( ( 4,305) 120) 4,425)
10,448 10,448 19,672 73,303 92,975 $
10,448 10,448 19,672 73,303 92,975 $
8,358 8,358 17,337 73,303 90,640 $( (
2,090 2,090 2,335) 2,335)
73

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL JUVENILE CASE MANAGER FEE FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Fines and penalties Total revenues EXPENDITURES Current: Public safety Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ ( $ 29,000 29,000 $ 29,000 29,000 $
Variance with Final Budget Positive (Negative) $ 11,834 11,834
45,508 45,508 16,508) 30,788 14,280 $ (
45,508 45,508 16,508) 30,788 14,280 $ (
46,756 46,756 5,922) 30,788 24,866 $
( (
1,248) 1,248) 10,586 10,586
74

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL TIRZ #2 FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Taxes Total revenues EXPENDITURES Current: General government Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ $ 183,446 183,446 $ 183,446 183,446 $
183,445 183,445 1 1,091 1,092 $
183,445 183,445 1 1,091 1,092 $ (
119,762 119,762 1,035) 1,091 56 $( (
63,683 63,683 1,036) 1,036)
75

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL TIRZ #3 FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Taxes Total revenues EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources and uses NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ $ 321,636 321,636 $ 321,636 321,636 $
Actual Amounts 188,721 188,721 -
Variance with Final Budget Positive (Negative) $( ( 132,915) 132,915) -
321,636
321,636
188,721
132,915)
( 318,452) ( 318,452) 3,184 24,534 27,718 $
( 318,452) ( 318,452) 3,184 24,534 27,718
( 321,636) ( 321,636) ( 132,915) 24,534 $( 108,381)
( ( (
3,184) 3,184) 136,099) -
$(
136,099)
76

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL MISCELLANEOUS GRANTS FOR THE YEAR ENDED SEPTEMBER 30, 2011
Budgeted Amounts Original Final REVENUES Intergovernmental Total revenues EXPENDITURES Current: General government Capital outlay Total expenditures NET CHANGE IN FUND BALANCE FUND BALANCE, BEGINNING FUND BALANCE, ENDING $ $ 5,232,301 5,232,301 $ 5,085,517 5,085,517 $
Variance with Final Budget Positive (Negative) $( 4,664,890) ( 4,664,890)
563,765 4,668,536 5,232,301 96,063 96,063 $
378,863 4,706,654 5,085,517 96,063 96,063 $
280,768 139,859 420,627 96,063 96,063 $
98,095 4,566,795 4,664,890 -
77
NONMAJOR ENTERPRISE FUNDS Enterprise Funds are used to account for the acquisition, operations and maintenance of a Citys facilities and services which are entirely or predominantly supported by user charges or those for which the City has decided that periodic determination of the revenue earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. All activities necessary to provide services are accounted for in these funds, including, but not limited to, administration, operations and maintenance. Debt service is also included.
Airport Fund This fund was established to account for all revenue and expenses of every nature derived by the City from its ownership and operation of the airport. Waste Collection Fund This fund was created to account for waste collection and disposal services provided to residents of the City.

COMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS SEPTEMBER 30, 2011
Enterprise Waste Collection
Airport ASSETS Current assets: Cash and cash equivalents Accounts receivable, net Due from other funds Due from other governments Total current assets Non-current assets: Capital assets: Land Buildings Improvements other than buildings Furnishings and equipments Construction in progress Less accumulated depreciation Total capital assets Total non-current assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued liabilities Due to other funds Deferred revenue Customer deposits Total current liabilities Non-current liabilities: Long-term debt Total non-current liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets $ $
Total
9,839 54,331 3,519 67,689
752,066 313,039 1,065,105
752,066 322,878 54,331 3,519 1,132,794
100,337 4,339,745 8,216,267 21,137 1,076,042 9,022,763) 4,730,765 4,730,765 4,798,454 $
1,065,105
100,337 4,339,745 8,216,267 21,137 1,076,042 9,022,763) 4,730,765 4,730,765
5,863,559
25,011 74,762 21,921 3,549 125,243
175,183 8,182 32 119,155 302,552
200,194 8,182 74,794 21,921 122,704 427,795
9,615 9,615 134,858
302,552
9,615 9,615 437,410
4,721,150 57,554) 4,663,596 $
762,553 762,553 $
4,721,150 704,999 5,426,149
78

COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011
Enterprise Airport OPERATING REVENUES Charges for services Intergovernmental Total operating revenues OPERATING EXPENSES Personnel services Contracted services Materials and supplies Other charges Depreciation Total operating expenses OPERATING INCOME (LOSS) NON-OPERATING REVENUES (EXPENSES) Transfer in Transfer out Loss on sale of asset Other Total non-operating revenue (expenses) CHANGE IN NET ASSETS TOTAL NET ASSETS, BEGINNING TOTAL NET ASSETS, ENDING ( ( Waste Collection Total
209,725 46,985 256,710
$ 1,909,152 1,909,152
2,118,877 46,985 2,165,862
3,263 285,221 9,765 4,455 407,854 710,558 453,848)
1,773,160 1,773,160 135,992 (
3,263 2,058,381 9,765 4,455 407,854 2,483,718 317,856)
185,319 4,500 4,500 194,319 259,529) 4,923,125 $ 4,663,596 $
36,664) 32,547 4,117) 131,875 630,678 762,553
185,319 36,664) 4,500 37,047 190,202 127,654) 5,553,803
5,426,149
79

COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011
Enterprise Airport CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash paid to suppliers for goods and services Cash paid to employees for services Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Transfers to other funds Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets Net cash used by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Net cash provided by investing activities NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating loss to net cash provided (used) by operating activities: Depreciation Other nonoperating income Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable Due from other funds Due from other governments Prepaid items Increase (decrease) in liabilities: Accounts payable Accrued liabilities Due to other funds Customer deposits Deferred revenue Long-term debt Net cash provided by operating activities $( $ $ ( ( 312,975 336,097) 23,122) 185,319 185,319 $ ( Waste Collection 1,853,448 1,713,753) 1,509 141,204 36,664) 36,664) $ ( Totals 2,166,423 2,049,850) 1,509 118,082 185,319 36,664) 148,655
( (
( (
171,197) 171,197)
( (
171,197) 171,197)
9,000 9,000
9,000 9,000
104,540 647,526 752,066 $
104,540 647,526 752,066
$(
453,848)
135,992
$(
317,856)
407,854 -
32,547
407,854 32,547
( (
672) 54,331) 34,298 13 17,662 3,942 18,697 3,263 23,122)
88,251) 32 44,511 1,509 32 14,832 -
( (
88,923) 54,299) 34,298 13 62,173 1,509 3,974 14,832 18,697 3,263
141,204
118,082
80

STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30, 2011
Health Insurance ASSETS Current assets: Cash and cash equivalents Investments Due from other funds Total current assets Total assets LIABILITIES Current liabilities: Accounts payable Due to other funds Claims payable Total current liabilities Total liabilities NET ASSETS Unrestricted Total net assets $
Internal Service Asset Replacement
Insurance
Total
3,095,985 153,265 3,249,250 3,249,250
1,256,805 190,742 1,447,547 1,447,547
146,918 146,918 146,918
1,403,723 3,095,985 344,007 4,843,715 4,843,715
12,438 190,742 897,277 1,100,457 1,100,457
1,447,547 1,447,547 1,447,547
12,438 1,638,289 897,277 2,548,004 2,548,004
2,148,793 2,148,793 $
146,918 146,918 $
2,295,711 2,295,711
81

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2011
Health Insurance OPERATING REVENUES Employer contributions Employee contributions Retiree contributions Pharmacy rebates Other refunds Total operating revenues OPERATING EXPENSES Claims Other charges Total operating expenses OPERATING INCOME NON-OPERATING REVENUES (EXPENSES) Interest on investment Total non-operating revenue (expenses) INCOME BEFORE TRANSFERS Transfers out CHANGE IN NET ASSETS TOTAL NET ASSETS, BEGINNING TOTAL NET ASSETS, ENDING $ 2,974,397 922,727 166,093 5,307 305,544 4,374,068
Internal Service Asset Replacement $ -
Insurance $ 46,918 46,918 $
Total 2,974,397 922,727 166,093 5,307 352,462 4,420,986
3,466,360 586,176 4,052,536 321,532
46,918
3,466,360 586,176 4,052,536 368,450
10,057 10,057 331,589 331,589 1,817,204 $ 2,148,793 $
1,247 1,247 1,247 ( 1,312,547) ( 1,311,300) 1,311,300 -
46,918 46,918 100,000 $ 146,918 $ ( (
11,304 11,304 379,754 1,312,547) 932,793) 3,228,504 2,295,711
82

STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS YEAR ENDED SEPTEMBER 30, 2011
Health Insurance CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 4,374,068 ( 4,110,853) Cash paid to suppliers for goods and services 263,215 Net cash provided by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds Net cash used by noncapital financing activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities Interest received Net cash provided (used) by investing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS, BEGINNING CASH AND CASH EQUIVALENTS, ENDING Reconciliation of operating income to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided by operating activities: Changes in assets and liabilities: Decrease (increase) in assets: Due from other funds Increase (decrease) in liabilities: Accounts payable Due to other funds Claims payable Net cash provided (used) by operations $ 321,532 $
Internal Service Asset Replacement
Insurance
Total
1,344,229 1,344,229
46,918 46,918
$ 4,420,986 ( 2,766,624) 1,654,362
( 1,312,547) ( 1,312,547)
( 1,312,547) ( 1,312,547)
( 1,595,635) 10,057 ( 1,585,578)
1,247 1,247
( 1,595,635) 11,304 ( 1,584,331)
( 1,322,363) 1,322,363 $
32,929 1,223,876 1,256,805
46,918 100,000 $ 146,918
( 1,242,516) 2,646,239 $ 1,403,723
46,918
368,450
( ( ( $
131,380) 21,478) 190,742 96,201) 263,215
103,318) 1,447,547 -
$ 46,918
( (
234,698)
21,478) 1,638,289 ( 96,201) $ 1,654,362
1,344,229
83
STATISTICAL SECTION
STATISTICAL SECTION (Unaudited)

This part of City of San Marcos, Texas comprehensive annual financial report presents multiple years of data to provide a historical perspective for understanding the information available in the financial statements, note disclosures, and required supplementary information and for assessing the Citys overall financial health.
Contents Financial Trends These schedules contain trend information to help the reader understand how the Citys financial performance and well-being have changed over time. Revenue Capacity These schedules contain trend information to help the reader assess the Citys most significant local revenue resources. Although Electric charges are the Citys most significant local revenue source, information about revenue payers is confidential under Texas statutes. Trend information about electric charges is provided in Table 2. Additionally, information about property tax revenue is provided. Debt Capacity These schedules contain trend information to help the reader assess the affordability of the Citys current levels of outstanding debt and the Citys ability to issue additional debt in the future. Economic and Demographic Indicators These schedules contain economic and demographic information to help the reader understand the environment within which the Citys financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the Citys financial report relates to the services and activities performed by the City.
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90
98
103
106
Sources:
Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.
TABLE 1

NET ASSETS BY COMPONENT LAST EIGHT FISCAL YEARS
Fiscal Year 2004 Governmental activities: Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net assets Business-type activities: Invested in capital assets, net of related debt Restricted Unrestricted Total business-type activities net assets Primary government: Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets $ 127,031,238 $ 145,390,239 $ 166,430,699 $ 189,184,109 $ 206,685,491 $ 223,012,779 $ 221,046,138 $ 226,250,385 $ 76,425,642 $ 87,549,394 $ 97,005,361 $ 109,085,469 $ 119,147,838 $ 122,643,341 $ 120,802,734 $ 123,222,139 $ 50,605,596 $ 57,840,845 $ 69,425,338 $ 80,098,640 $ 87,537,653 $ 100,369,438 $ 100,243,404 $ 103,028,246 2005 2006 2007 2008 2009 2010 2011
39,032,075 2,607,077 8,966,444
44,394,312 3,295,738 10,150,795
50,982,992 4,096,953 14,345,393
34,026,741 7,178,953 38,892,946
52,331,211 13,656,718 21,549,724
69,504,636 11,771,448 19,093,354
66,361,134 11,086,463 22,795,807
74,247,634 9,972,700 18,807,912
53,318,804 23,106,838
27,837,167 1,776,852 57,935,375
31,937,728 65,067,633
37,167,271 71,918,198
63,950,063 55,197,775
76,798,160 45,845,181
84,316,321 36,486,413
76,737,408 46,484,731
92,350,879 2,607,077 32,073,282
72,231,479 5,072,590 68,086,170
82,920,720 4,096,953 79,413,026
71,194,012 7,178,953 110,811,144
116,281,274 13,656,718 76,747,499
146,302,796 11,771,448 64,938,535
150,677,455 11,086,463 59,282,220
150,985,042 9,972,700 65,292,643
Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
84
TABLE 2

CHANGES IN NET ASSETS LAST EIGHT FISCAL YEARS
Fiscal Year 2004 EXPENSES Governmental activities: General government Public safety Community service Interest and fiscal charges Total governmental activities expenses Business-type activities: Water/wastewater Electric Airport Drainage Waste collection Total business-type activities expenses Total primary government program expenses PROGRAM REVENUES Governmental activities: Charges for services: General government Public safety Community service Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business-type activities: Charges for services: Electric Water and wastewater Airport Drainage Waste collection Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues $ $ 2005 2006 2007 2008 2009 2010 2011
7,827,799 12,022,559 7,339,792 1,678,563 28,868,713 16,185,156 32,609,906 687,208 556,759 996,341 51,035,370 79,904,083
11,113,362 11,873,017 7,448,224 1,816,987 32,251,590 17,239,651 36,201,717 689,330 615,424 1,049,390 55,795,512
9,416,555 12,896,427 8,032,845 1,887,770 32,233,597 19,702,909 44,786,544 689,406 374,013 1,410,264 66,963,136
13,769,853 13,537,545 9,077,477 2,769,146 39,154,021 21,657,804 40,539,638 739,316 577,461 1,503,213 65,017,432
12,565,540 16,406,242 9,114,632 4,784,896 42,871,310 23,872,986 49,224,186 768,419 811,057 1,703,744 76,380,392
11,789,804 18,223,349 9,120,980 7,008,392 46,142,525 24,443,838 46,068,424 733,621 1,482,765 1,228,122 73,956,770
14,811,677 22,337,053 10,463,722 6,525,172 54,137,624 25,878,300 45,746,937 694,070 1,959,180 1,463,780 75,742,267
15,419,706 18,040,389 10,092,399 6,412,611 49,965,105 26,701,908 43,413,456 710,558 1,897,978 1,773,160 74,497,060
88,047,102
99,196,733
104,171,453
119,251,702
120,099,295
129,879,891
124,462,165
1,194,224 1,110,509 646,099 1,338,188 1,974,736 6,263,756
1,191,152 1,295,340 787,342 2,248,473 488,227 6,010,534
1,299,438 1,339,698 721,441 2,149,913 638,048 6,148,538
901,028 1,401,176 575,622 6,128,665 3,921,368 12,927,859
1,252,334 1,455,835 626,210 3,452,451 836,384 7,623,214
1,076,738 1,716,212 653,368 9,981,272 2,104,303 15,531,893
1,010,309 1,807,346 574,537 3,145,119 2,373,110 8,910,421
1,283,941 1,653,099 639,354 2,619,600 1,149,409 7,345,403
32,700,974 19,112,445 165,010 1,019,030 959,405 29,731 312,941 54,299,536 60,563,292 $
39,412,677 21,415,438 185,508 878,012 1,102,707 21,496 551,553 63,567,391 69,577,925 $
45,564,818 26,318,349 209,512 1,068,407 1,180,485 1,122,112 75,463,683 81,612,221 $
45,038,579 24,138,588 210,224 1,424,761 1,272,014 309,307 72,393,473 85,321,332 $
49,787,885 28,352,029 203,780 1,379,198 1,307,481 1,649,020 82,679,393 90,302,607 $
49,461,030 26,279,549 273,788 1,390,465 1,392,717 1,214,327 80,011,876 95,543,769 $
48,768,174 25,241,695 178,432 1,478,191 1,595,550 852,403 78,114,445 87,024,866 $
48,453,727 26,986,572 256,710 2,108,913 1,909,152 1,085,830 80,800,904 88,146,307
(continued) 85
TABLE 2

CHANGES IN NET ASSETS (Continued) LAST EIGHT FISCAL YEARS
Fiscal Year 2004 NET (EXPENSE) REVENUES Governmental activities Business-type activities Total primary government net expense ( $( 22,604,957) 3,264,166 19,340,791) $( ( 2005 26,241,056) 7,771,879 18,469,177) $( ( 2006 26,085,059) 8,500,547 17,584,512) $( ( 2007 26,226,162) 7,376,041 18,850,121) $( ( 2008 35,248,096) 6,299,001 28,949,095) $( ( 2009 30,610,632) 6,055,106 24,555,526) $( ( 2010 45,227,203) 2,372,178 42,855,025) $( ( 2011 42,619,702) 6,303,844 36,315,858)
GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental activities: Taxes Property 8,428,032 Franchise 5,519,858 Sales 13,491,105 Other 1,076,824 Investment earnings 474,313 Miscellaneous 81,401 Gain on sale of capital assets 212,798 Transfers Total governmental activities Business-type activities: Investment earnings Other Transfers Total business-type activities Total primary government CHANGE IN NET ASSETS Governmental activities Business-type activities Total primary government $ ( 29,284,331
8,668,066 6,242,627 14,062,454 1,206,769 828,558 1,021,738 831,723 32,861,935
8,912,647 6,999,442 16,377,390 1,358,869 1,603,021 163,646 2,479,810 37,894,825
9,558,703 6,927,867 16,018,106 1,519,896 2,745,676 508,716 379,500) 36,899,464
11,696,800 7,695,811 18,347,135 1,698,905 2,590,329 572,276 85,853 42,687,109
12,401,892 1,281,674 17,989,392 2,030,247 3,571,867 1,963,080 5,759,854 44,998,006
14,332,003 1,477,463 18,398,707 2,266,391 587,646 1,854,367 64,974 6,119,618 45,101,169
14,236,642 1,447,569 19,854,399 2,381,483 319,091 753,366 121,129 6,290,865 45,404,544
609,697 16,038 212,798) 412,937 29,697,268
1,856,552 15,551 831,723) 1,040,380 33,902,315
3,182,034 27,620 2,479,810) 729,844 38,624,669
4,063,644 260,923 379,500 4,704,067 41,603,531
2,801,982 618,072 85,853) 3,334,201 46,021,310
( (
2,098,305 1,101,946 5,759,854) 2,559,603) 42,438,403
( (
569,393 1,337,440 6,119,618) 4,212,785) 40,888,384
( (
376,915 2,029,511 6,290,865) 3,884,439) 41,520,105
6,679,374 3,677,103 10,356,477 $
6,620,879 8,812,259 15,433,138 $
11,809,766 9,230,391 21,040,157 $
10,673,302 12,080,108 22,753,410 $
7,439,013 9,633,202 17,072,215 $
14,387,374 3,495,503 17,882,877
( ( $(
126,034) 1,840,607) 1,966,641) $
2,784,842 2,419,405 5,204,247
Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.
86
TABLE 3

FUND BALANCES GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS
Fiscal Year 2002 General fund Reserved Unreserved Nonspendable Unassigned Total general fund $ 2003 2004 2005 2006 2007 2008 2009 2010 2011
105,734 6,387,766 6,493,500
427,053 7,050,045 7,477,098
185,893 9,965,481 10,151,374
174,017 9,952,272 10,126,289
153,597 14,011,908 14,165,505
134,113 14,593,062 14,727,175
129,929 13,476,666 13,606,595
97,494 12,804,776 12,902,270
228,870 13,148,100 13,376,970
214,915 13,588,909 13,803,824
All other governmental funds Reserved $ Unreserved, reported in: Special revenue funds Capital projects funds Debt service funds Nonspendable Restricted Unassigned Total all other governmental funds $
844,999 284,664 13,873,571 1,394,621 -
800,095 514,932 11,023,880 961,232 -
845,475 502,826 14,784,996 1,206,412 -
930,722 760,917 13,108,298 1,531,736 -
1,155,404 844,368 18,428,409 2,232,229 -
1,303,282 1,087,186 40,897,216 5,764,165 -
1,315,807 1,879,330 76,612,241 10,494,115 -
2,365,271 1,111,235 74,318,614 8,544,491 -
1,744,662 1,174,555 55,426,183 8,879,062 -
12,527 52,216,441 ( 120,908)
16,397,855
13,300,139
17,339,709
16,331,673
22,660,410
49,051,849
90,301,493
86,339,611
67,224,462
52,108,060
Notes: (1) The City implemented GASB 54 in 2011, which changed the fund balance classifications reported in governmental funds. See the Fund Balance Classification note in the Summary of Significant Accounting Policies in the notes to the financial statements for descriptive information on the new classifications.
87
TABLE 4

CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS
Fiscal Year 2002 REVENUES $ Taxes Licenses and permits Fees and penalties Charges for services From use of money/property Intergovernmental Investment earnings Contributions Other revenues Total revenues EXPENDITURES General government Public safety Community service Capital outlay Debt service Interest Principal Total expenditures 2003 2004 2005 2006 2007 2008 2009 2010 2011
24,628,583 786,000 874,677 4,712,696 980,139 2,794,428 475,702 35,252,225
26,195,549 566,245 1,043,706 4,999,001 960,750 2,774,548 28,436 511,766 37,080,001
28,380,291 716,219 1,099,498 3,922,202 2,728,440 474,353 917,512 38,238,515
30,109,095 854,818 1,331,391 4,413,393 1,989,677 2,109,693 40,808,067
33,532,369 930,496 1,404,734 4,539,296 2,942,569 1,603,021 355,039 45,307,524
35,610,380 688,943 1,450,558 4,673,630 10,050,033 2,745,676 508,716 55,727,936
39,303,487 813,976 1,504,429 4,941,970 4,168,351 2,590,329 955,223 54,277,765
33,617,042 847,678 1,722,705 4,978,075 10,925,601 2,431,751 918,930 1,579,752 57,021,534
36,401,012 821,853 1,851,308 4,954,980 5,254,713 587,645 2,139,993 52,011,504
37,858,603 994,123 1,720,669 5,021,489 3,354,206 319,093 1,291,858 50,560,041
11,029,407 11,169,316 6,989,365 7,616,569 2,249,507 2,431,310 41,485,474
11,565,441 11,507,242 6,712,736 5,922,994 1,720,522 3,359,634 40,788,569
10,564,127 11,224,740 6,923,328 5,293,105 1,741,277 3,061,337 38,807,914
12,971,819 12,057,544 6,876,302 8,588,886 1,813,982 2,954,906 45,263,439
11,095,617 12,558,996 7,410,044 7,394,546 2,061,346 3,123,832 43,644,381
17,011,106 13,355,986 8,362,801 17,832,454 3,273,903 2,749,077 62,585,327
15,663,181 15,833,503 8,542,826 26,710,357 4,907,332 4,749,496 76,406,695
14,983,807 16,962,418 8,071,623 27,655,480 7,414,683 4,594,059 79,682,070
14,548,005 18,997,394 9,549,374 30,093,216 6,450,663 4,780,000 84,418,652
15,750,709 20,291,056 9,453,846 15,259,308 6,504,097 5,870,000 73,129,016
(continued) 88
TABLE 4

CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS (Continued) LAST TEN FISCAL YEARS
Fiscal Year 2002 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Bond issuance costs Bond sales Proceeds from capital leases Discount on debt issued Premium on debt issued Other Payment to refunded bond escrow agent Transfers in Transfers out Total other financing sources (uses) NET CHANGE IN FUND BALANCES DEBT SERVICE AS A PERCENTAGE OF NONCAPITAL EXPENDITURES ( 2003 2004 2005 2006 2007 2008 2009 2010 2011
$(
6,233,249)
$(
3,708,568)
$(
569,399)
$(
4,455,372)
1,663,143
$(
6,857,391)
$(
22,128,930)
$(
22,660,536)
$(
32,407,148)
$(
22,568,975)
2,304,018 2,033,440) 270,578
1,928,823 1,006,335 951,894) 1,983,264
7,140,604 1,529,879 1,317,081) 7,353,402
60,102) 2,650,000 2,381,096 1,549,373) 3,421,621
6,225,000 7,021,831 4,542,021) 8,704,810
34,190,000 5,875,970 6,255,470) 33,810,500
62,695,000 522,859) 4,375,113 4,289,260) 62,257,994
22,895,000 63,173) 487,099 708,611 9,875,296) 9,084,781 3,687,104) 19,549,918
8,625,000 71,163 9,434,616 4,364,080) 13,766,699 ( (
11,245,000 590,248 121,129 11,680,362) 11,149,525 3,546,113) 7,879,427
( (
$(
5,962,671)
$(
1,725,304)
6,784,003
$(
1,033,751)
10,367,953
26,953,109
40,129,064
$(
3,110,618)
$(
18,640,449)
$(
14,689,548)
13.8%
14.6%
14.3%
13.0%
14.3%
13.5%
18.4%
23.7%
20.2%
22.8%
89
TABLE 5

ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS
Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Real Property Assessed Value $ 1,316,552,218 1,620,712,252 1,662,822,489 1,388,279,224 1,939,132,089 1,989,713,898 2,179,929,050 2,508,719,271 2,401,078,222 2,452,170,753
Real Property Estimated Actual Value $ 1,316,552,218 1,620,712,252 1,662,822,489 1,388,279,224 1,939,132,089 1,989,713,898 2,179,929,050 2,508,719,271 2,401,078,222 2,452,170,753
Personal Property Assessed Value $ 325,940,581 381,541,166 390,220,742 418,678,715 441,477,940 440,441,736 477,501,560 499,821,131 538,901,712 548,200,983
Personal Property Estimated Actual Value $ 325,940,581 381,541,166 390,220,742 418,678,715 441,477,940 440,441,736 477,501,560 499,821,131 538,901,712 548,200,983
Less: Tax-exempt Property $ 476,986,559 429,285,702 372,839,529 340,976,008 263,175,949 380,495,763 385,175,216 435,944,478 367,414,019
Total Taxable Assessed Value $ 1,165,506,240 1,572,967,716 2,053,043,231 1,434,118,410 2,039,634,021 2,166,979,685 2,276,934,847 2,623,365,186 2,504,035,456 2,452,170,753
Total Direct Tax Rate $ 0.4710 0.4710 0.4710 0.4702 0.4702 0.5302 0.5302 0.5302 0.5302 0.5302
Estimated Actual Taxable Value $ 1,642,492,799 2,002,253,418 2,053,043,231 1,806,957,939 2,380,610,029 2,430,155,634 2,657,430,610 3,008,540,402 2,504,035,456 2,452,170,753
Source: Hays County Appraisal District Note: Property in Hays County is reassessed once every three years on average. The County assesses property at approximately 100 percent of actual value for commercial and industrial property and 100 percent for residential property. Estimated actual taxable value is calculated by dividing taxable assessed value by those percentages. Tax rates are per $100 of assessed value.
90
TABLE 6

ELECTRIC UTILITY RATE COMPARISON LAST TEN FISCAL YEARS
Fiscal Year
Residential
h pe rk w
Small Gen Serv

h pe rk w
Medium Gen Serv

h pe rk w
Large Gen Serv - Secondary

h pe rk w
Large Gen Serv -Primary

pe rk w h ha rg e
ha rg e
ha rg e
ha rg e
ha rg e
kw
kw
ha rg e
ha rg e
ha rg e
ha rg e
ha rg e
pe r
pe r
er C
er C
er C
er C
er C
em an d
em an d
us to m
us to m
us to m
us to m
us to m
En er gy
En er gy
En er gy
En er gy
En er gy
2011 2010 2009 2008 2007 2006 2005 2004 2003 2002
8.93 8.50 8.50 8.50 8.50 8.50 8.50 6.50 6.50 6.50
0.0200 $ 0.0190 0.0190 0.0190 0.0190 0.0190 0.0190 0.0582 0.0582 0.0582
10.50 $ 10.00 10.00 10.00 10.00 10.00 10.00 8.75 8.75 8.75
0.0200 $ 0.0190 0.0190 0.0190 0.0190 0.0190 0.0190 0.0556 0.0556 0.0556
47.25 45.00 45.00 45.00 45.00 45.00 45.00 45.00 45.00 45.00
0.0098 $ 0.0093 0.0093 0.0093 0.0093 0.0093 0.0093 0.0303 0.0303 0.0303
3.47 $ 3.30 3.30 3.30 3.30 3.30 3.30 8.90 8.90 8.90
210.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00
0.0098 $ 0.0093 0.0093 0.0093 0.0093 0.0093 0.0093 0.0292 0.0292 0.0292
3.31 $ 3.15 3.15 3.15 3.15 3.15 3.15 8.60 8.60 8.60
735.00 700.00 700.00 700.00 700.00 700.00 700.00 700.00 700.00 700.00
0.0078 $ 0.0074 0.0074 0.0074 0.0074 0.0074 0.0074 0.0286 0.0286 0.0286
91
3.05 2.90 2.90 2.90 2.90 2.90 2.90 8.50 8.50 8.50
em an d
pe r
kw
TABLE 7

TOTAL AVERAGE kWh PER MONTH COMPARISON
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $
Commercial 21,609,816 17,929,096 23,718,467 24,023,825 25,993,916 26,358,702 28,517,068 28,942,450 29,518,678 30,148,212 $
Residential 12,930,494 14,820,678 14,243,456 14,849,650 15,420,114 15,889,148 15,836,725 15,648,779 16,420,286 17,354,788 $
Total Usage 34,540,310 32,749,774 37,961,923 38,873,475 41,414,030 42,247,850 44,353,793 44,591,229 45,938,964 47,503,000
92
TABLE 8

TOTAL kWh PER YEAR COMPARISON
Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Commercial N/A N/A N/A 297,082,190 311,926,699 316,304,431 342,204,187 347,308,566 354,224,141 361,778,549
Residential N/A N/A N/A 178,405,368 185,040,610 190,669,778 190,040,702 187,785,353 197,043,431 208,257,452
Total Usage N/A N/A N/A 475,487,558 496,967,309 506,974,209 532,244,889 535,093,919 551,267,572 570,036,001
Total Purchased N/A N/A N/A N/A 524,152,775 522,933,027 565,300,166 568,397,378 583,284,525 603,401,092
Loss% N/A N/A N/A N/A 5.19% 3.05% 5.85% 5.86% 5.49% 5.53%
Note: Information prior to 2005 is not available.
93
TABLE 9

TEN LARGEST ELECTRIC CUSTOMERS SEPTEMBER 30, 2011
Customer TEXAS STATE UNIV, COGEN H E BUTT GROCERY CITY OF SAN MARCOS TEXAS STATE UNIVERSITY SMCISD CTMC EMBASSY SUITES HOTEL & CONF. CENTER WALMART-SUPER STORE HAYS COUNTY JUVENILE CENTER WALMART STORES TEXAS #4958 $
Consumption (kWh) 102,232,011 21,823,399 10,449,041 10,274,902 9,596,562 8,422,390 7,198,563 6,539,458 4,740,028 3,887,691
Amount Billed $ 7,480,449 1,782,183 914,647 882,770 829,096 657,602 606,306 543,033 393,781 324,905
% of Total kWh 17.93% 3.83% 1.83% 1.80% 1.68% 1.48% 1.26% 1.15% 0.83% 0.68%
Note: % of total consumption based on total kWh of: 570,036,001
94
TABLE 10

DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS
City Direct Rates Other Special Road 0.0759% 0.0710% 0.0710% 0.0710% 0.0710% 0.0860% 0.0801% 0.0511% 0.0444% 0.0444% Total Direct Rate 2.3467% 2.5171% 2.5171% 2.6640% 2.6202% 2.3576% 2.3517% 2.3694% 2.3494% 2.3494%
Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Basic Rate 0.4710% 0.4710% 0.4710% 0.4710% 0.4702% 0.5302% 0.5302% 0.5302% 0.5302% 0.5302%
School District 1.4296% 1.6000% 1.6000% 1.7300% 1.7000% 1.3700% 1.3700% 1.3700% 1.3500% 1.3500%
County 0.3702% 0.3751% 0.3751% 0.3920% 0.3790% 0.3714% 0.3714% 0.4181% 0.4248% 0.4248%
Information provided by Hays County Tax Office/393-5545
95
TABLE 11

PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO
2011 Percentage of Total City Taxable Assessed Value 7.84% 4.56% 1.75% 1.74% 1.41% 0.92% 0.89% 0.86% 0.78% 0.77% 21.52%
Taxpayer Hays Energy Ltd Partnership HEB Warehouse Tanger Properties San Marcos Factory Stores Prime Outlets Vista Del Blanco, Ltd. Goodrich Corp. JQH-San Marcos Development Cabana Beach Apts Stone Creek Crossing LP Total $
Taxable Assessed Value 192,160,630 111,762,920 42,921,511 42,615,260 34,654,530 22,450,581 21,749,095 21,068,160 19,230,351 18,903,929 527,516,967
2002 Percentage of Total City Taxable Assessed Value 7.06% 2.40% 1.83% 1.58% 1.42% 1.26% 1.07% 1.05% 0.80% 0.75% 19.22%
Taxpayer Hays Energy Ltd Partnership HEB Warehouse San Marcos Factory Shops Tanger Properties Century Telephone CFAN HEB Grocery Co. Grande Communications Lowes Home Centers, Inc. Butler Mfg. Total $
Taxable Assessed Value 224,353,520 34,358,320 26,194,370 22,612,876 20,366,570 18,065,800 15,296,581 15,096,380 11,502,439 10,718,850 398,565,706
*Information provided by Hays County Tax office.
96
TABLE 12

PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS
Fiscal Year Ended 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Taxes Levied for the Fiscal Year $ 7,457,502 7,662,979 8,198,030 8,503,149 8,796,101 9,590,359 11,451,045 12,147,748 14,099,916 13,970,763 $
Collected With the Fiscal Year of the Levy Percentage Amount of Levy 7,206,875 7,315,055 7,904,217 8,363,474 8,620,179 9,455,292 11,291,991 11,964,114 13,907,121 13,809,687 96.64% 95.46% 96.42% 98.36% 98.00% 98.59% 98.61% 98.49% 98.63% 98.85%
Collections in Subsequent Years $ 149,150 334,962 260,642 124,293 159,371 116,648 131,392 141,004 106,575 $
Total Collections to Date Percentage Amount of Levy 7,356,025 7,650,017 8,164,859 8,487,767 8,779,550 9,571,940 11,423,383 12,105,118 14,013,696 13,809,687 98.6% 99.83% 99.60% 99.82% 99.81% 99.81% 99.76% 99.65% 99.39% 98.85%
Subsequent years includes penalties
97
TABLE 13

RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS
Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 $
General Obligation Bonds
Governmental Activities Certificates of Obligation $ 13,095,000 14,250,000 20,555,000 22,385,000 28,115,000 58,485,000 114,210,000 58,145,000 64,325,000 60,865,000 $
Capital Leases 1,014,522 2,295,348 1,569,622 464,427 140,044 393,426 14,059 $
Water Revenue Bonds 48,870,000 56,425,000 67,150,000 78,595,000 78,595,000 86,125,000 96,420,000 102,010,000 106,265,000 102,590,000 $
Business-type Activities Electric Drainage Revenue Certificate of Bonds Obligation 6,131,283 58,570,000 71,435,000 10,500,000 10,500,000 10,430,000 9,605,000 8,740,000 9,480,000 16,590,000 $ 6,670,000 6,500,000 8,025,000 12,315,000 16,900,000 19,080,000 18,440,000 $
Capital Leases 54,636 92,907 92,907 38,490 75,804 $
Total Primary Government 89,785,441 150,290,348 177,627,529 133,542,334 136,188,534 176,459,230 247,764,059 205,610,000 216,630,000 214,460,000
Percentage of Personal Income 4.88% 6.83% 5.93% 4.53% 4.36% 5.32% 5.93% 5.70% 0.00% 5.10% $
Per Capita 2,216 3,564 3,968 3,035 2,893 3,672 3,890 3,814 4,018 3,800
20,620,000 18,750,000 16,825,000 14,835,000 12,300,000 12,925,000 15,200,000 19,815,000 17,480,000 15,975,000
98
TABLE 14

RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS
Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Gross Bonded Debt
General Bonded Debt Outstanding Debt Service Fund Total $ 1,167,908 941,463 1,109,256 1,531,736 1,557,638 5,764,165 6,003,239 7,199,004 6,428,387 7,913,022 $ 32,547,092 32,058,537 36,270,744 38,498,264 38,857,362 43,165,835 71,006,761 70,760,996 75,376,613 68,926,978
Percentage of Actual Taxable Value of Property 1.98% 1.60% 1.77% 2.13% 2.06% 2.00% 3.12% 3.11% 2.87% 2.55% $
Per Capita 803 760 810 875 776 862 1,411 1,313 1,480 1,149
$ 33,715,000 33,000,000 37,380,000 40,030,000 40,415,000 48,930,000 77,010,000 77,960,000 81,805,000 76,840,000
99
TABLE 15

DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF SEPTEMBER 30, 2011
Government Unit Debt repaid with property taxes City of San Marcos - City direct debt San Marcos Independent School District Caldwell county Hays County Subtotal overlapping debt Total direct and overlapping debt
Debt Outstanding
Estimated Percentage Applicable
Estimated Share of Direct and Overlapping Debt
76,840,000 125,696,849 8,800,000 273,269,998
100.000% 78.150% 2.390% 7.000%
76,840,000 98,232,087 210,320 19,128,900 117,571,307
$ 194,411,307
Sources: Information for Hays County provided by Hays County Auditor's office Information for Caldwell County provided by Caldwell Auditor's office Information for SMCISD provided by School District, Debbie White Note: Overlapping rates are those of local and county governments that apply to property owners within the City of San Marcos. Not all overlapping rates apply to all City of San Marcos property owners (i.e. the rates for counties apply only to the proportion of the City's property owners whose property is located within the geographic boundaries of that county.)
100

LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS
Fiscal Year 2002 Debt limit Total net debt applicable to limit Legal debt margin Total net debt applicable to the limit as a percentage of debt limit. $ $ 164,249,280 32,547,092 131,702,188 $ $ 2003 200,225,342 31,844,133 168,381,209 $ $ 2004 205,304,323 36,270,744 169,033,579 $ $ 2005 180,695,794 38,498,264 142,197,530
1.98%
1.60%
1.77%
2.13%
101
TABLE 16
Legal Debt Margin Calculation for Fiscal Year 2011 Assessed value Debt limit (10% of assessed value) Debt applicable to limit: General obligation bonds Less: Amount set aside for repayment of general obligation debt Total net debt applicable to limit Legal debt margin $ $ 2,699,820,281 269,982,028 76,840,000
7,913,022 68,926,978 201,055,050
Fiscal Year 2006 $ 203,963,402 35,688,262 $ 168,275,140 $ $ 2007 215,975,954 43,165,835 172,810,119 $ $ 2008 227,693,485 71,006,761 156,686,724 $ $ 2009 227,693,485 70,760,996 156,932,489 $ $ 2010 259,260,471 73,240,069 186,020,402 $ $ 2011 269,982,028 76,840,000 193,142,028
1.75%
2.00%
3.12%
3.11%
2.82%
2.85%
102
TABLE 17

PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS
Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Gross Revenue $ 15,983,823 17,595,675 19,502,026 21,415,438 26,318,349 24,138,588 28,352,029 26,279,549 25,241,695 26,986,572
Less: Operating Expenses $ 10,679,779 11,339,435 11,076,196 11,677,318 12,782,882 17,796,700 19,568,829 19,637,393 14,630,182 14,874,577 $
Water Revenue Bonds Net Debt Service Available Revenue Principal Interest 5,304,044 6,256,240 8,425,830 9,738,120 13,535,467 6,341,888 8,783,200 6,642,156 10,611,513 12,111,995 $ 2,638,056 2,690,556 2,808,810 3,507,750 3,140,000 3,195,000 3,620,000 4,065,000 4,585,000 4,895,000 $ 1,344,697 1,322,620 1,364,756 1,578,546 3,045,435 3,633,942 3,383,614 4,531,610 4,626,338 5,034,288
Coverage $ 1.33 1.56 2.02 1.91 2.19 0.93 1.25 0.77 1.15 1.22
Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Gross Revenue $ 26,779,981 29,551,713 33,070,143 39,412,677 45,564,818 45,038,579 49,787,885 49,461,030 48,768,174 48,453,727
Less: Operating Expenses $ 25,562,838 28,725,521 31,418,256 35,068,455 43,679,087 40,134,868 48,713,986 45,689,134 44,500,751 42,144,555 $
Electric Net Available Revenue 1,217,143 826,192 1,651,887 4,344,222 1,885,731 4,903,711 1,073,899 3,771,896 4,267,423 6,309,172 $
Debt Service Principal Interest 906,000 906,000 910,714 924,231 770,000 790,000 825,000 865,000 900,000 980,000 $ 297,298 297,298 292,778 279,315 437,183 414,457 451,891 394,994 364,006 438,706
Coverage $ 1.01 0.69 1.37 3.61 1.56 4.70 0.84 2.99 3.38 4.45
Fiscal Year 2005 2006 2007 2008 2009 2010 2011 $
Gross Revenue 878,012 1,068,207 1,424,761 1,373,094 1,390,465 1,478,191 2,108,913 $
Less: Operating Expenses 313,785 338,748 577,461 811,057 866,427 871,308 771,837 $
Drainage Net Available Revenue 564,227 729,459 847,300 562,037 524,038 606,883 1,337,076 $
Debt Service Principal Interest 70,000 170,000 175,000 315,000 350,000 595,000 730,000 $ 267,658 274,973 266,998 349,000 957,806 786,466 892,251
Coverage $ 1.67 1.64 1.92 0.85 0.40 0.44 0.82
103
TABLE 18

DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS
Calendar Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Population 40,514 42,165 44,769 43,994 47,069 50,049 50,317 50,913 53,913 47,505 $
Personal Income 638,266,712 655,629,845 708,173,860 697,326,193 747,576,687 779,770,400 802,392,217 861,466,554 718,793,973 762,122,715 $
Per Capita Personal Income 23,375 23,418 24,259 32,604 42,095 41,960 44,317 45,646 45,259 16,043
Unemployment Rate 5.1% 5.4% 4.7% 4.0% 4.2% 3.4% 3.4% 4.7% 5.4% 6.0%
The City of San Marcos estimates a higher population than was documented by the 2010 Census. For reporting purposes, we are using 2010 Census numbers.
104
TABLE 19

PRINCIPAL EMPLOYERS CURRENT AND NINE YEARS AGO
2011 Percentage of Total City Employment 4.04% 2.79% 2.05% 1.60% 1.08% 0.86% 1.06% 0.86% 0.74% 0.73% 15.82%
Employer Texas State University Prime Outlets San Marcos Tanger Factory Outlet Center San Marcos CISD Hays County Hunter Industries Cental Texas Medical Center H.E.B. Distribution Center Gary Job Corps City of San Marcos Total Total City Employees
Employees 3,036 2,100 1,540 1,200 813 650 800 650 560 550 11,899 75,200
2002 Percentage of Total City Employment * * * * * * * * * *
Employer Hunter Industry Marshall Gas Controls Thermon Manufacturing Trico Industries CFAN HEB Distribution Center Butler Manufacturing Chatleff Controls Palm Harbor Rohr- San Marcos Total
Employees 500 292 275 275 270 250 225 200 200 200 2,687
Source: Chamber of Commerce website (sanmarcostexas.com/Area Demographics/Business Resources * Information not available
105
TABLE 20

FULLTIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS
Fulltime Equivalent Employees as of September 30, 2006 2007 2008 19.00 9.00 31.64 9.50 6.00 4.00 37.90 75.00 48.00 1.48 32.50 11.98 46.98 14.65 17.93 46.00 50.00 2.00 22.00 485.56 19.00 9.00 32.64 10.00 9.50 6.00 40.90 81.00 52.00 1.48 32.50 12.98 48.08 17.16 18.77 50.50 51.00 2.00 23.00 517.51 19.00 10.00 32.64 10.00 9.50 6.00 40.90 86.00 55.00 1.48 32.50 12.98 49.62 17.67 18.77 54.00 50.50 2.00 23.00 531.56
Function/Program General government Administration Human resources Finance Municipal court Technology services Planning Building Code enforcemen t Police Administration Operations Fire Firefighters and officers Main Street Public works Engineering Parks and recreation Health Library Water/wastewater Electric Airport Drainage WIC Total
2002 22.00 10.00 30.10 9.00 6.00 34.28 74.00 47.00 1.48 33.00 13.00 53.11 11.90 18.41 60.00 50.00 1.00 27.00 501.28
2003 18.00 9.00 27.58 9.50 6.00 34.19 74.00 47.00 1.48 32.00 12.48 46.99 10.90 17.19 58.50 50.00 1.00 20.00 475.81
2004 19.00 9.00 28.60 9.50 6.00 4.00 35.19 75.00 45.00 1.48 32.00 12.48 46.98 11.90 17.19 58.50 50.00 1.00 20.00 482.82
2005
2009 19.00 9.00 15.54 9.60 10.00 10.50 5.50 13.00 40.52 88.00 60.50 1.48 35.00 9.48 53.14 18.67 18.80 51.50 49.00 1.00 2.00 24.00 545.23
2010 19.50 9.00 15.54 9.98 10.00 10.50 5.50 13.00 43.52 85.00 64.00 1.48 35.00 9.48 51.64 18.67 18.80 51.50 49.00 1.00 2.00 26.00 550.11
2011 20.38 10.00 15.54 10.48 10.00 9.50 10.50 6.48 43.52 85.00 65.00 1.48 35.00 12.48 52.57 18.67 18.80 51.50 49.00 2.00 28.00 555.90
19.00 9.00 31.64 9.50 6.00 4.00 38.19 75.00 48.00 1.48 32.00 12.48 45.98 11.90 17.93 41.50 50.00 1.00 20.00 474.60
Source: City Budget Office
106
TABLE 21

OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS
Fiscal Year Function/Program General government Building permits issued Police Physical arrests Parking violations Traffic violations Fire Emergency responses Fires extinguished Prevention/safety education Other public works Street resurfacing (miles) Potholes repaired Parks and recreation Facility Rental Bookings Community center admissions Library Volumes in collection Total volumes borrowed Water New connections Water main breaks Average daily consumption (thousands of gallons) Peak daily consumption (thousands of gallons) Wastewater Average daily sewage treatment (thousands of gallons) 2002 2,348 2003 2,100 2004 2,100 2005 2,220 2006 3,426 2007 2,326 2008 2,205 2009 2,200 2010 2,200 2011 2,400
1,704 3,749 7,287
2,200 5,128 5,000
2,700 6,000 6,000
1,450 5,022 9,587
1,480 2,500 9,500
1,500 3,100 9,950
2,126 5,260 9,683
2,698 4,484 12,486
2,602 6,185 10,135
2,647 5,799 10,325
1,176 169 7,000
1,193 160 7,500
1,596 158 11,321
2,158 142 10,396
2,468 175 10,820
3,700 190 12,000
3,550 201 10,000
3,125 145 15,000
3,000 122 15,000
3,100 210 10,000
495 826
550 875
14 475
8 486
8 530
8 230
8 220
8 175
8 300
6 350
580 40,505
605 55,000
1,337 62,214
2,956 1,980
2,900 2,300
1,452 2,900
1,400 2,600
5,500 2,450
5,500 2,500
5,500 150,000
124,237 326,515
128,000 349,000
128,908 359,000
132,435 390,567
136,000 398,000
142,000 384,200
143,000 404,300
148,900 449,000
149,500 471,800
154,500 481,000
100 260 5,717 6,633
120 280 6,284 7,687
216 208 5,571 6,933
110 7 6,236 9,387
150 10 6,141 10,061
110 10 5,810 8,916
100 10 6,447 10,153
100 300 6,667 10,652
224 100 7,091 11,383
200 200 7,221 10,268
250
250
579
4,960
5,070
5,600
5,600
5,700
5,700
5,750
Source: Various City departments
107
TABLE 22

CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS
Fiscal Year Function/Program Police Stations Zone offices Patrol units Fire Stations Other public works Streets (miles) Streetlights Traffic signals Parks and recreation Acreage Playgrounds Baseball/softball diamonds Soccer/football fields Community centers Water Fire hydrants Wastewater Sanitary sewers (miles) Storm sewers (miles) Treatment capacity (thousands of gallons) 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
1 1 N/A N/A
1 1
1 1 55
1 1 63
1 1 63
1 1 66
1 1 84
1 1 118
1 1 117
1 1 118
224 1,516 5
250 1,529 5
250 1,535 5
263 1,540 5
277 1,546 5
282 3,500 5
292 3,591 49
309 3,517 52
309 3,518 54
302 3,559 48
120 15 9 3 2
120 15 9 3 2
120 15 9 3 2
120 30 9 3 2
120 36 9 3 2
120 36 9 3 2
1,154 39 9 9 2
1,178 39 9 9 2
1,699 50 9 10 2
1,699 59 9 10 2
N/A
983
1,066
1,133
1,324
1,565
1,484
1,727
1,775
1,551
N/A N/A 9 MGD*
N/A N/A 9 MGD*
N/A N/A 9 MGD*
N/A N/A 9 MGD*
N/A N/A 9 MGD*
N/A N/A 9 MGD*
196 41 9 MGD* 9 MGD*
198 43 9 MGD*
205 52 9 MGD*
206 55
*MGD - Million Gallons per day Source: Various City departments
108

City of San Marcos Comprehensive Financial Report FY 2010-11

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City of San Marcos Comprehensive Financial Report FY 2010-11

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THE CITY OF SAN MARCOS, TEXAS

COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED SEPTEMBER 30, 2011

Issued by the City of San Marcos Finance Department

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CITY OF SAN MARCOS, TEXAS

CITY OF SAN MARCOS, TEXAS

CITY OF SAN MARCOS, TEXAS

CITY OF SAN MARCOS, TEXAS

CITY OF SAN MARCOS, TEXAS

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102

CITY OF SAN MARCOS, TEXAS

103 104 105 106 107 108

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THE CITY OF SAN MARCOS, TEXAS

Chris Jones Place 4 Shane Scott Place 6

Steve Parker Director of Finance

Presented by The Finance Department

Certificate of Achievement for Excellence in Financial Reporting

City of San Marcos Texas

February 28, 2012

For the Fiscal Year Ended September 30, 2011

City of San Marcos San Marcos, Texas

City of San Marcos Profile

Economic Outlook and Financial Condition

Long-Term Strategic Financial Planning

General Obligation Bonds and Certificates of Obligation Revenue Bonds

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INDEPENDENT AUDITORS REPORT

February 28, 2012

MANAGEMENTS DISCUSSION AND ANALYSIS

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MANAGEMENTS DISCUSSION AND ANALYSIS

TABLE 1 CITY OF SAN MARCOS NET ASSETS

Totals 2010 $ 201,865,391 324,144,862 526,010,253

180,613,145 341,097,834 521,710,979

129,152,626 10,621,478 139,774,104

135,332,293 11,023,158 146,355,451

272,282,421 23,178,173 295,460,594

283,216,788 21,747,327 304,964,115

76,737,408 46,484,731 123,222,139 $

84,316,321 36,486,413 120,802,734 $

150,985,042 9,972,700 65,292,643 226,250,385 $

150,677,455 11,086,463 59,282,220 221,046,138

TABLE 2 CITY OF SAN MARCOS CHANGES IN NET ASSETS

TABLE 3 GOVERNMENTAL TAX REVENUES

BASIC FINANCIAL STATEMENTS

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CITY OF SAN MARCOS, TEXAS

The accompanying notes are an integral part of these financial statements. 13

CITY OF SAN MARCOS, TEXAS

Charges for Services

Program Revenue Operating Grants and Contributions

Capital Grants and Contributions

15,419,706 18,040,389 10,092,399 6,412,611 49,965,105

1,283,941 1,653,099 639,354 3,576,394

481,073 505,547 1,632,980 2,619,600

303,869 845,540 1,149,409

43,413,456 26,701,908 710,558 1,897,978 1,773,160 74,497,060 124,462,165 $

48,453,727 26,986,572 256,710 2,108,913 1,909,152 79,715,074 83,291,468 $

1,085,830 1,085,830 2,235,239

The accompanying notes are an integral part of these financial statements. 14

13,350,823) 15,881,743) 6,974,525) 6,412,611) 42,619,702)

13,350,823) 15,881,743) 6,974,525) 6,412,611) 42,619,702)

5,040,271 1,370,494 453,848) 210,935 135,992 6,303,844 6,303,844