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C.A.F.R., FY 2019-20 with continuing disclosure tablesCITY OF PARIS, TEXAS COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended September 30, 2020 COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR CITY OF PARIS, TEXAS Fiscal Year Ended September 30, 2020 Prepared By Finance Department W.E. Anderson, Director CITY OF PARIS, TEXAS Table of Contents Year Ended September 30, 2020 Page Statement INTRODUCTORY SECTION Letter of Transmittal..................................................................... I-1 City of Paris Organizational Chart......................................................... I-6 List of Elected and Appointed Officials...................................................... I-7 FINANCIAL SECTION Independent Auditors'Report .............................................................. 1 Management's Discussion and Analysis...................................................... 4 Basic Financial Statements Government -Wide Financial Statements Statement of Net Position.............................................................. 13 l Statement of Activities................................................................ 15 2 Fund Financial Statements Balance Sheet - Governmental Funds ..................................................... 16 3 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds........ 17 4 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................... 19 5 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund ...................................................... 20 6 Statement of Net Position - Proprietary Funds .............................................. 22 7 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds ........... 24 8 Statement of Cash Flows - Proprietary Funds ............................................... 25 9 Notes to Financial Statements............................................................ 27 Required Supplementary Information Schedule Texas Municipal Retirement System - Schedule of Changes in Net Pension Liability ................. 66 1 Texas Municipal Retirement System - Schedule of City Pension Contributions ...................... 67 2 Paris Firefighters' Relief and Retirement Fund - Schedule of Changes in Net Pension Liability.......... 68 3 Paris Firefighters' Relief and Retirement Fund - Schedule of City Contributions ...................... 69 4 Texas Municipal Retirement System - Schedule of Changes in Total OPEB Liability and Related Ratios.. 70 5 Texas Municipal Retirement System - Schedule of City OPEB Contributions ....................... 71 6 City of Paris Retiree Health Care Plan - Schedule of Changes in Total OPEB Liability and Related Ratios. 72 7 City of Paris Retiree Health Care Plan - Schedule of City Contributions ............................ 73 8 Combining and Individual Nonmajor Fund Statements and Schedules Nonmajor Governmental Funds ...................................... ................... 74 Combining Balance Sheet - Nonmajor Governmental Funds .................................... 75 9 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds.......................................................... 76 10 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Special Revenue Fund................................................................ 77 11 Debt Service Fund................................................................... 78 12 Capital Projects Fund................................................................. 79 13 Capital Assets Used in the Operation of Governmental Funds - Comparative Schedules by Source ....................................................... 80 14 CITY OF PARIS, TEXAS Table of Contents (Continued) Year Ended September 30, 2020 Page Table STATISTICAL SECTION ............................................. ................... 81 Financial Trends Net Assets/Position by Component........................................................ 82 1 Changes in Net Assets/Position....................................... ................... 84 2 Fund Balances of Governmental Funds .................................................... 88 3 Changes in Fund Balances of Governmental Funds ........................................... 90 4 Revenue Capacity Property Tax Levies and Collections....................................................... 92 5 Property Tax Rates - All Direct and Overlapping Governments ................................. 94 6 Assessed and Estimated Actual Value of Property ............................................ 95 7 Principal Property Taxpayers............................................................ 97 8 Debt Capacity Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt Per Capita ........................................... 99 9 Ratio of Outstanding Debt by Type .................................... ................... 100 10 Direct and Overlapping Governmental Activities Debt ........................................ 102 11 Legal Debt Margin Information.......................................................... 103 12 Revenue Pledged Coverage - Water and Sewer Revenue Bonds ................................. 104 13 Demographic and Economic Information Demographic and Economic Statistics..................................................... 105 14 Principal Employers................................................................... 106 15 Operating Information Operating Indicators by Function.......................................................... 107 16 Capital Asset Statistics by Function........................................................ 109 17 Building Permits at Market Value......................................................... 111 18 Full -Time Equivalent City Government Employees by Function .................................. 112 19 CONTINUING DISCLOSURE INFORMATION Continuing Disclosure Information......................................................... 114 OVERALL COMPLIANCE, INTERNAL CONTROLS, AND FEDERAL AWARDS SECTION ...................................................... 121 Federal: Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed In Accordance with Government Auditing Standards ......................................... 122 Summary Schedule of Prior Audit Findings ................................................. 124 Schedule of Findings and Questioned Costs ................................................. 125 Corrective Action Plan................................................................. 127 Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance ........................... 128 Notes on Accounting Policies for Federal and State Awards .................................... 130 Schedule of Expenditures of Federal Awards ................................................ 131 State: Schedule of Expenditures of State of Texas Awards ........................................... 132 INTRODUCTORY SECTION rl ({I i 61, August 30, 2021 Mayor Paula Portugal and Members of the City Council City of Paris, Texas Dear Mayor and Council Members: I am pleased to submit the Comprehensive Annual Financial Report of the City of Paris, Texas, for the fiscal year ended September 30, 2020. The City of Paris is a financial reporting entity as defined by the Government Accounting Standards Board codification section 2100. As such, it has a separately elected governing body chosen by its citizens in a general, popular election, is a legally separate primary government, and is fiscally independent of other state and local governments. The financial reporting entity includes all the funds of the primary government and its component unit,'the Paris Economic Development Corporation. More information about PEDC can be found in footnote I.B. which deals with reporting entity topics. There are no other potential component units. The primary purpose of this report is to provide the City Council, citizens, financial community, and others with detailed information concerning the financial condition and performance of the City of Paris. It is strongly recommended that any user of this report read the Management's Discussion and Analysis included in the financial section of the report. In addition, this report provides assurance that the City presents fairly its financial position as verified by independent auditors. THE COMPREHENSIVE ANNUAL FINANCIAL REPORT The Comprehensive Annual Financial Report of the City of Paris, Texas, for the fiscal year ended September 30, 2020, which follows, was prepared by the Finance Department. The financial statements have been audited by McClanahan and Holmes, LLP, CPAs, whose report is included herein. This audit satisfies Article III, Section 35 of the City Charter which requires that an annual audit of all accounts of the City be made by an independent certified public accountant. The City Finance Department is responsible for both the accuracy of the presented data and the completeness and fairness of the presentations, including all disclosures. I believe the data presented is accurate in all material aspects and is presented in a manner which fairly sets forth the financial position and results of operations of the City. Furthermore, I believe that all disclosures necessary to enable the reader to gain maximum understanding of the City's financial activity have been included. The financial statements have been prepared in accordance with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB). 1-1 P.O. BOX 9037 • PARIS, TEXAS 75461-9037 • (903) 785-7511 • FAX (903) 785-8519 The Notes to the Financial Statements are provided in the Financial Section and are considered essential to fair presentation and adequate disclosure for this financial report. The notes include the Summary of Significant Accounting Policies for the City and other necessary disclosures of important matters relating to the financial position of the City. The notes are treated as an integral part of the financial statements and should be read in conjunction with them. General Information Regarding the City and Surrounding County The City of Paris is the county seat and principal commercial center of Lamar County and is located at the intersection of United States Highways 271 and 82, approximately 100 miles northeast of Dallas near the Red River. The City is served by 5 banks. The City's 2010 census is 25,171, a decrease of 2.80% from the 2000 census of 25,898. Lamar County (the County) is located in northeast Texas and borders the State of Oklahoma. The County, which is situated between the Red River and the Sulphur River, is traversed by United States Highways 271 and 82, State Highways 19 and 24, and 32 farm -to -market roads. The County's 2010 census is 49,793, an increase of 2.66% over the 2000 census of 48,499. The City is a regional medical center serving patients in Northeast Texas and Southeast Oklahoma. Founded in 1911 as St. Joseph's Hospital, Paris Regional Medical Center is a 154 bed general acute-care hospital. The City provides utilities through its 36 MGD water plant and 7.25 MGD wastewater plant. Electric power is supplied to Paris by TXU Electric's interconnected transmission system. It has a generating capacity of 22,808,000 KW. The supply of electric power is adequate to meet the requirements of any commercial or industrial demand. Atmos Energy provides natural gas for residential, commercial, and industrial users. Atmos Energy is the largest provider of pure natural gas in America. It provides service to over three million customers in 12 states. There are 3 transmission lines serving the City with a line pressure of 300 pounds per square inch. Telephone service is provided by AT &T. Educational facilities of the City are provided by 3 independent school districts. Each of the districts is accredited by the Texas Education Agency. Higher education needs in the County are provided at Paris Junior College located in the City. Total enrollment of these entities is 11,482. Tourists are attracted to the area by activities on Lake Crook and Pat Mayse Reservoir. Pat Mayse Reservoir is located 15 minutes from the City and provides 6,000 acres for boating, fishing, and camping. The Gambill Goose Refuge and numerous hunting and fishing areas are also located in the County. Other points of interest and activities include the Sam Bell Maxey House, the A.M. Aikin Archives, Veterans Memorial, and the Lamar County Historical Society Museum. Also, the City has one 18 -hole golf course, one public swimming pool, 26 tennis courts, 3 walk/jog tracks, a sports complex, and 24 public park areas. Government Organization The City was founded in 1839 with the current charter adopted in November of 1948 and last revised in 2011. The City operates under the Council/Manager form of government with 7 council members elected from single member districts. The Mayor is elected by the Council itself to serve as moderator of the group. The Council members can serve a maximum of three consecutive 2 year staggered terms. The Mayor and Council appoint the City Manager, the City Attorney, and the Municipal Judge. The City is a Home Rule City with all powers granted to home rule cities by the constitution and laws of the I-2 State of Texas. The Council enacts legislation, adopts budgets, and determines policies of the City of Paris. The City Manager executes the laws and administers the government of the City. Economic Condition and Outlook Taxable values, as originally certified by the Lamar County Appraisal District, for fiscal year 2020-21 reflect a 7.23% increase over the 2019-20 values. Building permits for new residential and commercial construction were valued at $21,002,680 for fiscal year 2019-20. This activity should be reflected in next year's taxable values. Sales taxes for 2019-20 increased from the prior year by 11.90%. Current rebates are 20.13% above the 2019-20 rebates through July 2021. Hotel occupancy taxes were down 4.70% compared to 2018-19 taxes as COVID-19 hindered travelers. First quarter 2020-21 collections were an amazing 51.98% above the same period in 2019-20. Franchise fees for 2019-20 were up 9.48% compared to the previous year. The City of Paris, Paris Economic Development Corporation, and the Lamar County Chamber of Commerce have been actively recruiting new business to the area as well as supporting already existing businesses. PEDC has several active incentive commitments in regard to its recruitment of new industry and support of existing industry. American Spiral Weld is the latest recruitment success which will start up next year with an $113,042,600 market value and a $22,500,643 taxable value. General Fund receipts equaled 117.64% of budget. This surplus of revenues was caused primarily by Emergency Medical Service revenue and sales taxes. General Fund expenditures were 117.44% of budget. This variance is mainly due to expenditures for Public Safety and Public Health. For the 2020-21 fiscal year, the City Council adopted a tax rate of .48078 cents per $100 of value. This rate is $0.0353 cents lower than the previous year but does allow maintaining all services at their current levels and funds all required interest and sinking funds. Taxable property value increased 18.75%. Long-term Financial Planning and Relevant Financial Policies The City continues to update its long-range financial plan. The City formalized a key financial policy in 2010 that had been informally followed previously: a utility rate maintenance policy. The utility rate maintenance policy will help assure the financial integrity of the enterprise fund along with its related interest and sinking funds. Another policy was formalized in 2013 in the form of a reserve level guideline for both the general fund and utility fund. Adequate reserve levels provide the City with the ability to deal with extraordinary events and maintain its credit worthiness. This credit worthiness, as reflected in the current financial statements, allowed the City to obtain very favorable interest rates on the general obligation bonds issued in 2016, 2017, 2018 and 2020. Major Initiatives The City continues to work on its long-range plan to maintain its infrastructure. The City called for a general obligation bond election in May 2013 in the amount of $45,000,000 which passed overwhelmingly. Proceeds from these bonds were used for water and sewer infrastructure improvements. These bonds will be paid for out of utility system revenues. With the payoff of earlier debt issues, it was not necessary to raise utility rates to fund the new debt. Likewise a $9,750,000 bond election for I-3 street construction and repair was approved in 2017 and those projects have been completed. In May of 2021, the City issued $43,855,000 in Combination Tax and Surplus Revenue Certificates of Obligation to fund Phase One construction of a new wastewater treatment plant. These bonds will be paid for out of utility system revenue. The City also continues to expand its effort in law enforcement related area. Programs in this effort include the Auto Theft Task Force and Justice Assistance Grant for needed equipment. From a development standpoint, the City has taken several steps. Reentry into the State of Texas Main Street Program has channeled additional funds for revitalization of existing structures and businesses. The City continues to work closely with the Paris Economic Development Corporation to attract new business to Paris and to support existing businesses as well. Working with the Chamber of Commerce, the City is effectively using the civic center to attract people and business to Paris. City officials are also closely working with Keep Paris Beautiful, Inc. to promote and improve the City. The Historic Preservation Committee is working with local property owners to maintain the historical character of the City. Other Financial Information The financial statements of the City of Paris, Texas, have been prepared in conformity with generally accepted accounting principles as applied to governmental units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Using the GASB 34 reporting model, the City's Comprehensive Annual Financial Report provides for a management's discussion and analysis, government -wide financial statements, major fund financial statements, notes to the financial statements, and other required supplementary information. The City has a written investment policy that conforms to state statutes, which outlines permissible investments. The City pools its cash balances for investment purposes from the various funds maintained in its consolidated cash account. Interest earnings of the pool are allocated to the various funds of the City based upon a fund's equity position in the pool. The City of Paris' primary risk exposures are in the areas of workers' compensation and tort liability. Provision for these risks is made through participation in the Texas Municipal League's risk pool. Between 30 days and 90 days prior to the beginning of each fiscal year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget, which represents the financial plan for the ensuing fiscal year, includes proposed expenditures and the means of financing them. Public hearings are conducted at which all interested persons' comments concerning the budget for the next fiscal year are heard. The budget is legally enacted by the City Council through passage of an ordinance not later than the 27th day of the last month prior to the beginning of the fiscal year. Generally, appropriations are legally adopted at the department level. Budgetary controls are maintained at the major category of expenditure level within each operating division. All anticipated expenditures are budgeted for control purposes. Capital project funds are appropriated on a project by project basis. Expenditures and/or expenses are directly monitored by the City Council. Internal Controls Internal accounting controls are designed to provide reasonable, but not absolute, assurance of the safeguarding of assets against loss from unauthorized use or disposition and reliable financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived. I-4 All internal control evaluations occur within this framework. The Finance Department's staff believes the City's internal control structure adequately ensures compliance with laws and regulations and reasonable assurance for safeguarding of assets. Debt The following schedule outlines the outstanding City debt as of 09-30-20: Issue 2010 Tax and Rev. C.O. 2012 G.O. Refunding Bonds 2013 C.O. (TWDB) 2013 G.O. Bonds 2016 G.O. Bonds 2017 G.O. Bonds 2018 G.O. Bonds 2020 Tax and Rev. C.O. Capital Lease — Firetrucks SuRRMA Loan TOTAL Independent Audit Tax Supported Revenue Supported Fund Moody's Investors Maturity Rating Insured $ 1,895,000 $ - 12-15-29 Aa3 800,000 - 12-15-21 Aa3 - 1,860,000 12-15-32 N/A - 28,565,000 12-15-32 Aa3 - 7,450,000 12-15-36 Aa3 8,590,000 - 06-15-37 Aa3 190,000 1,000,000 06-15-38 Aa3 1,500,000 - 06-15-30 N/A 950,526 - 01-28-26 N/A 370,500 - 06-29-25 N/A $ 14,296,026 $ 38,875,000 The City Charter requires an annual audit to be made of the accounts, financial records, and transactions of all administrative departments of the City by a certified public accountant selected by the City Council. The requirement has been complied with, and the Independent Auditors' Report has been included in this report. Acknowledgments The preparation of this report could not have been accomplished without the full support and efficient and dedicated efforts of the entire staff of the Finance Department and the competent services of the independent auditors, McClanahan and Holmes, LLP, CPAs. I express my appreciation to all members of the Finance Department who assisted and contributed to the completion of this report and to all City departments involved in the preparation of information for this report. In addition, I express my appreciation to the Mayor, City Council, and City Manager for their continuing interest and support in planning and conducting the financial affairs of the City in a responsible and progressive manner. Respectfully submitted, W. E. Anderson Director of Finance I-5 CITY OF PARIS ORGANIZATIONAL CHART FIRE UTILITIES CITY ATTORNEY HR POLICE CITIZENS OF PARIS CIN COUNCIL Z CITY MANAGER MUNICIPAL JUDGE MUNICIPAL COURT CIN CLERK LIBRARY AIRPORT ) ( EVVELOPMI NT TY ) ( ENGINEERING FINANCE WATER TREATMENT VTREATMENT ASTEWATER LIFT STATIONS ACq DITI NIGG/ UCOITLLECTIONG/ PURCHASING PUBLIC WORKS WATER WASTEWATER PARKS/ DISTRIBUTION COLLECTION RECREATION/R.O.W. SANITATION STREETS'HIGHWAYS GARAGE 1-G TRAFFIC/ PUBLIC LIGHTING List of Elected and Appointed Officials Elected Officials Paula Portugal — Mayor Reginald Hughes — Mayor Pro -Tem Renae Stone Gary Savage Mihir Pankaj Linda Knox Clayton Pilgrim Appointed Officials Grayson Path — City Manager Gene Anderson, CPA — Finance Director Janice Ellis — City Clerk Stephanie Harris — City Attorney Tom E. Hunt, III — Presiding Municipal Court Judge Michael Smith — Public Works Director Randy Tuttle — Interim Police Chief Priscilla McAnally — Library Director Sandy Collard — Human Resources Kent Klinkerman — Emergency Medical Services Carla Easton, PE — Engineering, Planning, and Development Doug Harris — Utilities Director Thomas McMonagle— Interim Fire Chief I-7 McClanahan and Holmes, LLP CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT Honorable Mayor and City Council City of Paris, Texas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information including the budgetary comparison of the City of Paris, Texas, as of and for the year ended September 30, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 228 SIXTH STREET S.E. PARIS, TEXAS 75460 STEVEN W. MOHUNDRO, CPA 903-7844316 GEORGE H. STRUVE, CPA FAX 903-784-4310 RUSSELL P. WOOD, CPA ---------- DEBRA J. WILDER, CPA 304 WEST CHESTNUT TEFFANY A. KAVANAUGH, CPA DENISON, TEXAS 75020 APRIL J. HATFIELD, CPA 903465-6070 FAX 903-465-6093 1400 WEST RUSSELL BONHAM, TEXAS 75418 903-583-5574 FAX 903-583-9453 INDEPENDENT AUDITORS' REPORT Honorable Mayor and City Council City of Paris, Texas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information including the budgetary comparison of the City of Paris, Texas, as of and for the year ended September 30, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Honorable Mayor and City Council City of Paris, Texas Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Paris, Texas, as of September 30, 2020, and the respective changes in financial position and, where applicable, cash flows thereof, and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, the schedules of changes in net pension liability, the schedules of changes in total OPEB liability, and the schedules of City contributions be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Paris, Texas' basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, statistical section, and continuing disclosure information are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section, statistical section, and continuing disclosure information 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. 2 Honorable Mayor and City Council City of Paris, Texas Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated August 30, 2021, on our consideration of the City of Paris, Texas' 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 solely 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 the effectiveness of the City of Paris, Texas' internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Paris, Texas' internal control over financial reporting and compliance. 9WcCfanahan andYfo[mes, LLQ' Certified Public Accountants Paris, Texas August 30, 2021 MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Paris (the City), we offer readers of the City of Paris, Texas' financial statements this narrative overview and analysis of the financial activities of the City of Paris for the fiscal year ended September 30, 2020. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal as well as the City's financial statements. Financial Highlights of the Primary Government • The City dropped its tax rate from 0.55195 to 0.51608 per $100 of valuation for fiscal year 2019-20. • For the upcoming 2020-21 fiscal year, the City lowered its tax rate to 0.48078 per $100 of valuation. • City-wide revenues this year exceeded City-wide expenses by $5,978,761 whereas in the previous year expenses exceeded revenues by $480,786. The unusually large revenue surplus was the result of increases in operating grants and general revenues plus City-wide expenditures were also down significantly. • At the end of the fiscal year, unassigned fund balance for the general fund was $15,990,260 or 58.60%, of total general fund expenditures. The prior year unassigned fund balance was $12,390,089 or 47.54%, of general fund expenditures. • At the end of the fiscal year, the net position of the proprietary funds was $43,803,809 compared to $42,211,693 the prior year. Overview of the Financial Statements This management's discussion and analysis is intended to serve as an introduction to the City of Paris' basic financial statements. The City of Paris' basic financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government -Wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the City of Paris' finances, in a manner similar to a private -sector business. The statement of net position presents information on all of the City of Paris' assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Paris is improving or deteriorating. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses 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 unused vacation leave). Both of the government -wide financial statements distinguish functions of the City of Paris that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Paris include general government, public safety, public works, culture and recreation, health, and airport. The business -type activities of the City of Paris include water production and distribution as well as wastewater collection and treatment. The government -wide financial statements include not only the City of Paris itself (known as the primary government), but also a legally separate economic development corporation (known as the component unit) over which the City of Paris is able to exercise significant control. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. The government -wide financial statements can be found at Statement 1 and 2. 4 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 Paris, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City of Paris can be divided into two categories: governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for government activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Paris classifies its governmental funds as either Nonmajor or Major. Nonmajor governmental funds include all special revenue funds and permanent funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, capital projects fund, and the debt service fund, all of which are considered to be Major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these Nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The basic governmental fund financial statements can be found beginning with Statement 3 and continuing through Statement 6 of this report. Proprietary Funds The City of Paris maintains only one type of proprietary fund. An enterprise fund (the type used by the City of Paris) is used to report the same functions presented as business -type activities in the government -wide financial statements. The City of Paris uses an enterprise fund to account for its water and sewer related activities. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund used by the City of Paris is considered a major fund. The basic proprietary fund financial statements can be found beginning with Statement 7 and continuing through Statement 9 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 immediately after the Statement of Cash Flows -Proprietary Funds in this report. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Paris' progress in funding its obligation to provide pension and other post -employment benefits to its employees. Required supplementary information can be found immediately following the Notes to the Financial Statements. Combining and individual fund statements and schedules can be found immediately after the required supplementary information in this report. Government -Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the City of Paris, assets exceeded liabilities by $80,850,369 at the close of the most recent fiscal year. This compares to $73,931,053 for the previous year. This was a 9.36% increase in net position. By far, the largest portion of the City of Paris' net position ($50,788,111 or 62.82%) reflects its net investment in capital assets (e.g., land, buildings, machinery, and equipment). The City of Paris uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Paris' 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. Assets: Current and Other Assets Capital Assets Total Assets Deferred Outflows Related to Pension Related to OPEB Total Deferred Outflows Long -Term Liabilities: Outstanding Other Liabilities Total Liabilities Deferred Inflows Related to Pensions Related to OPEB Total Deferred Inflows Net Position: Net Investment in Capital Assets Restricted Unrestricted Governmental Activities 2019 2020 City of Paris Net Position Business -Type Activities Total Total 2019 2020 2019 2020 $ 24,359,869 $ 27,049,806 $ 23,447,942 $ 18,991,923 $ 47,807,811 $ 46,041,729 38,455,486 41,127,102 65,069,071 66,921,032 103,524,557 108,048,134 62,815,355 68,176,908 88,517,013 85,912,955 151,332,368 154,089,863 3,886,306 1,634,296 698,480 171,157 4,584,786 1,805,453 237,246 334,164 11,307 31,764 248,553 365,928 4,123,552 1,968,460 709,787 202,921 4,833,339 2,171,381 33,578,787 28,838,821 43,255,401 40,079,561 76,834,188 68,918,382 1,628,308 1,355,509 3,678,616 1,828,907 5,306,924 3,184,416 35,207,095 30, 194,330 46,934,017 41,908,468 82,141,112 72,102,798 53,950 2,661,329 29,000 390,412 82,950 3,051,741 243,149 10,592 13,187 10,592 256,336 53,950 2,904,478 39,592 403,599 93,542 3,308,077 18,064,569 21,907,532 25,779,748 28,880,579 43,844,317 50,788,111 8,782,171 8,272,920 - - 8,782,171 8,272,920 4,831,122 6,866,108 16,473,443 14,923,230 21,304,565 21,789,338 Total Net Position $ 31,677,862 $ 37,046,560 $ 42,253,191 $ 43,803,809 $ 73,931,053 $ 80,850,369 An additional portion of the City of Paris' net assets ($8,272,920 or 10.23%) represents resources that are subject to external restrictions on how they may be used. The balance of unrestricted net assets ($21,789,338 or 26.95%) may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Paris is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business -type activities 6 net investment in capital assets, restricted net position, and unrestricted net position. This was also true for the prior fiscal year. Statement 1 reflects the relevant deferred outflows and inflows for the fiscal year. Outflows are intended to account for the anticipated future liabilities for pension payments as well as contributions toward the cost of retiree health care and other post -employment benefits. Inflows anticipate future contributions to the pension plan and retiree health care and other post -employment benefits. Governmental Activities Governmental activities increased the City of Paris' net position by $4,386,645 or 13.43% (includes prior period adjustment and transfers) during the current fiscal year. Total general revenues (ignoring transfers) were up $4,614,468 (15.76%) with general revenues being up $1,494,949 (6.61%) and program revenues being up $3,142,149 (47.16%). The unusually large increase in program revenues were due to COVID-19 related EMS charges and a COVID-19 related grant. Property Taxes Sales Taxes Franchise Taxes Hotel Occupancy Tax Unrestricted Investment Earnings Miscellaneous Gain (Loss) on Sale of Capital Asset Program Revenues General Revenues & Program Revenues Increase 2019 2020 (Decrease) $ 9,358,943 7,369,079 4,305,851 675,158 581,115 272,338 49,951 6,661,913 $ 9,338,087 8,245,939 4,714,021 872,418 197,203 714,470 25,246 9,804,062 $ (20,856) 876,860 408,170 197,260 (383,912) 442,132 (24,705) 3,142,149 $ 29,274,348 $ 33,911,446 $ 4,637,098 7 The following table provides a summary of the City's operations for the years ending 2019 and 2020 for both governmental and business -type activities. Revenues Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenues: Property Taxes Sales Taxes Franchise Taxes Hotel Occupancy Tax Unrestricted Investment Earnings Other Total Revenues Expenses General Government Public Safety Public Works Health Culture and Recreation Other Cox Field Interest on Long -Term Debt Water and Sewer Total Expenses Increase (Decrease) in Net Position Before Transfers Transfers/Special Items Increase (Decrease) in Net Position Net Position, Beginning Prior Period Adjustment Net Position, Ending Business -Type Activities City of Paris Changes in Net Position Governmental Activities Business -Type Activities Total 2019 2020 2019 2020 2019 2020 $ 5,336,247 $ 7,327,433 $ 14,452,703 $ 15,043,788 $ 19,788,950 $ 22,371,221 165,064 2,151,740 - - 165,064 2,151,740 1,160,602 324,889 - - 1,160,602 324,889 9,358,943 9,338,087 - - 9,358,943 9,338,087 7,369,079 8,245,939 - - 7,369,079 8,245,939 4,305,851 4,714,021 - - 4,305,851 4,714,021 675,158 872,418 - - 675,158 872,418 581,115 197,203 577,621 427,723 1,158,736 624,926 322,289 739,716 - - 322,289 739,716 29,274,348 33,911,446 15,030,324 15,471,511 44,304,672 49,382,957 6,748,601 4,409,428 - - 6,748,601 4,409,428 12,501,860 12,727,703 - - 12,501,860 12,727,703 6,706,520 6,699,707 - - 6,706,520 6,699,707 3,058,445 4,267,819 - - 3,058,445 4,267,819 794,776 846,669 - - 794,776 846,669 212,557 311,796 - - 212,557 311,796 194,004 115,000 - - 194,004 115,000 - - 14,568,695 14,026,074 14,568,695 14,026,074 30,216,763 29,378,122 14,568,695 14,026,074 44,785,458 43,404,196 (942,415) 4,533,324 461,629 1,445,437 (480,786) 5,978,761 (523,031) (146,679) 523,031 146,679 - - (1,465,446) 4,386,645 984,660 1,592,116 (480,786) 5,978,761 33,315,517 31,677,862 41,268,531 42,253,191 74,584,048 73,931,053 (172,209) 982,053 - (41,498) (172,209) 940,555 $ 31,677,862 $ 37,046,560 $ 42,253,191 $ 43,803,809 $ 73,931,053 $ 80,850,369 Business -type activities increased the City of Paris' net position by $1,592,116. This increase was caused by a rate increase and reduced expenses. Financial Analysis of the Government's Funds As noted earlier, the City of Paris uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. 8 Governmental Funds The focus of the City of Paris' 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 Paris' financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. Total Assets Total Liabilities Deferred Inflows of Resources Fund Balances Nonspendable: Inventory Permanent Fund Principal Restricted For: Debt Service Capital Projects Notes Law Enforcement Public Education Community Development Assigned: Library Community Development Unassigned: General Fund Total Fund Balances Total Liabilities, Deferred Inflows, and Fund Balances Governmental Funds 2019 2020 $ 24,360,133 $ 2720497807 1,278,769 1,228,455 1,132,958 764,853 483,575 500,495 96,007 98,400 1,727,065 1,766,863 6,182,754 3,839,984 2021297 11493,902 574,048 655,520 - 415,120 74,469 75,801 218,102 220,154 12,390,089 15,990,260 21,948,406 25,056,499 $ 24,360,133 $ 27,049,807 As of the end of the current fiscal year, the City of Paris' governmental funds reported combined ending fund balances of $25,056,499. Approximately 63.81% of this total amount ($15,990,260) constitutes unassigned fund balance, which is available for spending at the government's discretion. The remainder of fund balance is reserved to indicate that it is not available for new spending because it is non -spendable, restricted, or assigned to 1) Permanent Fund Principal ($98,400), 2) pay debt service ($1,766,863), 3) inventories ($500,495), 4) law enforcement ($1,493,902), 5) library ($75,801), 6), Public Education ($655,520), 7) capital projects ($3,839,984) and 8) Community Development ($635,274). 9 Governmental Funds Revenues, Expenditures, and Changes in Fund Balances 2019 2020 Revenues $ 29,142,435 Expenditures 30,611,074 Revenues Under/(Over) Expenditures (1,468,639) Total Other Financing Sources (Uses) (465,195) Net Change in Fund Balances (1,933,834) Fund Balances — Beginning 24,054,449 Prior Period Adjustment (172,209) Fund Balances — Ending $ 21,948,406 General Fund $ 34,259,642 33.410.864 848,778 1,319,321 2,168,099 21,948,406 939,994 $ 25,056,499 The General Fund is the chief operating fund of the City of Paris. At the end of the current fiscal year, unassigned fund balance of the general fund was $15,990,260 ($12,390,089 the previous year), while total fund balance reached $17,150,077 ($13,451,478 the previous year). The increase in the fund balance of the general fund was primarily due to increased cash/investments and receivables. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 47.86% of total general fund expenditures, while total fund balance represents 51.33% of that same amount. During the year, the City also made budgeted transfers from the Water and Sewer Fund to the General Fund for administrative support and payment of franchise fees. Transfers were made from the Water and Sewer Fund to the Debt Service Fund to make debt service payments. Other governmental funds (nonmajor) include the Permanent and Expendable Library Funds, Special Revenue Fund, Grant Fund, and the Community Development Fund. Only the General Fund had unassigned fund balance at the end of the year. Budget Analysis The City of Paris adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided as Statement 6 in this report to demonstrate compliance with this budget. The final appropriation of the general fund was overspent by $4,055,949 ($1,035,895 overspent the previous year). This 17.32% variance is mainly due to bad debt charge offs in the EMS and Police (Municipal Court) Departments. General Fund revenues were over budget by 17.64% or $4,491,429 ($1,663,881 last year). Higher than expected sales tax collections and increased billings by EMS and Municipal Court account for most of the increase. Capital Projects Fund The Capital Projects Fund is funded by the General Fund and/or the Proprietary Fund on an as needed basis or by debt issue authorized by the City Council. As Proprietary Fund projects are completed in the Capital Projects Fund, they are transferred back to the Proprietary Fund. The fund balance in the Capital Projects Fund was $3,836,182 ($6,178,988 last year). This reduction was due to the significant expenditure of existing cash on hand for various projects with the only offsetting revenue being interest income. Variances from year to year are common in this fund as projects are approved on a year to year basis by the City Council. 10 Debt Service Fund The Debt Service Fund has a total fund balance of $1,766,863 ($1,727,065 the previous year), all of which is reserved for the payment of debt service. The net increase in fund balance during the current year in the debt service fund was $39,798 ($109,097 decrease the previous year). The government enacted a dedicated property tax for debt service at the beginning of the current fiscal year. This tax produced revenues of $1,892,804 in the current fiscal year ($1,769,743 the previous year). Proprietary Fund The City of Paris' Proprietary Fund provides the same type of information found in the government -wide financial statements, but in more detail. Unrestricted net position of the Water and Sewer Fund at the end of the year amounted to $14,923,230 ($16,431,945 the previous year). Factors concerning the finances of this fund have already been addressed in the discussion of the City of Paris' business -type activities. Capital Asset and Debt Administration Capital Assets The City of Paris' investment in capital assets for its governmental and business -type activities as of September 30, 2020 amounts to $108,048,134 ($103,524,557 the previous year). Both of these amounts are net of accumulated depreciation. This investment in capital assets includes land, buildings, improvements, machinery and equipment, park facilities, roads, highways, and bridges. Net Capital Assets Additional information on the City of Paris' capital assets can be found in note IV. D. of the Notes to the Financial Statements. Governmental Activities Business -Type Activities Total 2019 2020 2019 2020 2019 2020 Land $ 5,927,478 $ 5,950,108 $ 339,620 $ 339,620 $ 6,267,098 $ 6,289,728 Buildings and System 10,848,848 10,496,986 30,339,960 28,270,660 41,188,808 38,767,646 Improvements Other than Buildings 2,931,843 2,664,467 - - 2,931,843 2,664,467 Machinery, Furniture, and Equipment 3,630,227 3,784,517 1,247,080 1,114,401 4,877,307 4,898,918 Infrastructure 11,863,329 11,566,617 - - 11,863,329 11,566,617 Construction in Progress 3,253,761 6,664,407 29,864,225 33,953,797 33,117,986 40,618,204 Water Rights -Net - - 3,278,186 3,242,554 3,278,186 3,242,554 Total $ 38,455,486 $ 41,127,102 $ 65,069,071 $ 66,921,032 $ 103,524,557 $ 108,048,134 Additional information on the City of Paris' capital assets can be found in note IV. D. of the Notes to the Financial Statements. Long -Term Debt The City has two capital leases with $950,526 in principal outstanding at year end. The City of Paris also has total bonded debt outstanding in the amount of $52,800,526 (includes the two capital leases). Of this amount, $13,925,526 comprises debt being paid for by property tax or hotel tax revenues, and $38,875,000 represents bonds being paid for by water and sewer revenues. Issue 2010 Tax and Rev C.O.s 2012 G.O. Refunding Bonds 2013 C.O.s (TWDV) 2013 G.O. Bonds 2016 G.O. Bonds 2017 G.O. Bonds 2018 G.O. Bonds 2020 Tax and Rev C.O.s SuRRMA Loan Capital Leases — Firetrucks Paris' bond debt had a net decrease of $2,065,000 (3.83%) during the fiscal year. The City's underlying bond rating from Moody's is Aa3. The maximum tax rate permitted by Article XI, Section 5 of the State of Texas constitution is $2.50 per $100 of assessed valuation. Consequently, no legal debt margin can be calculated. The state attorney general has traditionally allowed up to $1.50 per $100 valuation to be applied to debt service. The City levied a tax rate of $0.51608 per $100 valuation for the 2019-20 fiscal year. This rate was broken down into $0.40868 per $100 valuation for operations and $0.10740 per $100 valuation for debt service. Using the traditional allowance of the state attorney general as a guide, the City of Paris is utilizing only 7.16% of its debt capacity. Additional information on the City of Paris' long-term debt can be found in note IV. K. of the Notes to the Financial Statements. Economic Factors and Next Year's Budgets and Rates • Sales tax revenues are projected to grow 5% in the coming year. • New construction amounted to 25 residential units and 15 commercial units. • Local population growth is expected to be minimal. • The tax rate is expected to drop below $0.50 per $100 of value as property values continue to grow. • Franchise fees are expected to remain stable. All of these factors were considered in preparing the City of Paris' budget for 2020-21. Requests for Information This financial report is designed to provide a general overview of the City of Paris' finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Office of the Finance Director, 135 S.E. First Street, City of Paris, Texas 75460. 12 Moody's Revenue Final Investors Tax Supported Supported Maturity Rating $ 1,895,000 $ - 12-15-2029 Aa3 800,000 - 12-15-2021 Aa3 - 12860,000 6-15-2032 N/A - 28,5652000 12-15-2032 Aa3 - 7,450,000 12-15-2036 Aa3 8,590,000 - 6-15-2037 Aa3 190,000 1,000,000 9-30-2028 Aa3 1,5001000 - 6-15-2030 N/A 370,500 - 6-29-2025 N/A 950,526 - 1-28-2026 N/A $ 14,296,026 $ 38,875,000 Paris' bond debt had a net decrease of $2,065,000 (3.83%) during the fiscal year. The City's underlying bond rating from Moody's is Aa3. The maximum tax rate permitted by Article XI, Section 5 of the State of Texas constitution is $2.50 per $100 of assessed valuation. Consequently, no legal debt margin can be calculated. The state attorney general has traditionally allowed up to $1.50 per $100 valuation to be applied to debt service. The City levied a tax rate of $0.51608 per $100 valuation for the 2019-20 fiscal year. This rate was broken down into $0.40868 per $100 valuation for operations and $0.10740 per $100 valuation for debt service. Using the traditional allowance of the state attorney general as a guide, the City of Paris is utilizing only 7.16% of its debt capacity. Additional information on the City of Paris' long-term debt can be found in note IV. K. of the Notes to the Financial Statements. Economic Factors and Next Year's Budgets and Rates • Sales tax revenues are projected to grow 5% in the coming year. • New construction amounted to 25 residential units and 15 commercial units. • Local population growth is expected to be minimal. • The tax rate is expected to drop below $0.50 per $100 of value as property values continue to grow. • Franchise fees are expected to remain stable. All of these factors were considered in preparing the City of Paris' budget for 2020-21. Requests for Information This financial report is designed to provide a general overview of the City of Paris' finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Office of the Finance Director, 135 S.E. First Street, City of Paris, Texas 75460. 12 Assets Cash and Cash Equivalents Investments Receivables (Net of Allowance for Uncollectibles) Inventories Prepaid Assets Restricted Assets Cash and Cash Equivalents Investments Due from Other Governments Land Development Costs Water Rights (Net of Accumulated Amortization) Capital Assets Not Being Depreciated Land Construction in Progress Capital Assets (Net of Accumulated Depreciation) Buildings and System Improvements Other Than Buildings Machinery and Equipment Infrastructure Total Assets Deferred Outflows of Resources Deferred Outflows Related to Pensions Deferred Outflows Related to OPEB Total Deferred Outflows of Resources CITY OF PARIS, TEXAS Statement of Net Position September 30, 2020 Statement 1 The accompanying notes to the financial statements are an integral part of this statement. 13 Component Primary Government Unit Governmental Business -Type Economic Activities Activities Total Development $ 13,409,243 $ 2,961,149 $ 16,370,392 $ 1,710,816 6,316,983 292,178 6,609,161 2,112,151 4,490,413 2,463,373 6,953,786 330,223 500,495 257,187 757,682 - 53,625 - 53,625 - 117,301 7,775,174 7,892,475 - 341,420 5,242,862 5,584,282 - 1,820,326 - 1,820,326 - - - - 2,210,002 - 3,242,554 3,242,554 - 5,950,108 339,620 6,289,728 - 6,664,407 33,953,797 40,618,204 - 10,496,986 28,270,660 38,767,646 - 2,664,467 - 2,664,467 - 3,784,517 1,114,401 4,898,918 4,022 11,566,617 - 11,566,617 - 68,176,908 85,912,955 154,089,863 6,367,214 1,634,296 171,157 1,805,453 - 334,164 31,764 365,928 - 1,968,460 202,921 2,171,381 - The accompanying notes to the financial statements are an integral part of this statement. 13 CITY OF PARIS, TEXAS Statement of Net Position September 30, 2020 Statement 1 (Continued) The accompanying notes to the financial statements are an integral part of this statement. 14 Component Primary Government Unit Governmental Business -Type Economic Activities Activities Total Development Liabilities Accounts Payable and Other Current Liabilities 1,228,455 333,766 1,562,221 - Accrued Interest Payable 127,054 464,255 591,309 7,784 Customers' Deposits - 1,030,886 1,030,886 - Noncurrent Liabilities Due Within One Year 1,452,642 2,434,888 3,887,530 91,196 Due in More Than One Year 13,864,244 37,446,983 51,311,227 1,466,198 Net Pension Liability 10,915,075 4,054 10,919,129 - Net OPEB Liability 2,606,860 193,636 2,800,496 - Total Liabilities 30,194,330 41,908,468 72,102,798 1,565,178 Deferred Inflows of Resources Deferred Inflows Related to Pensions 2,661,329 390,412 3,051,741 - Deferred Inflows Related to OPEB 243,149 13,187 256,336 - Total Deferred Inflows of Resources 2,904,478 403,599 3,308,077 - Net Position Net Investment in Capital Assets 21,907,532 28,880,579 50,788,111 4,022 Restricted for Construction 3,843,115 - 3,843,115 - Debt Service 1,766,863 - 1,766,863 1,557,394 Law Enforcement 1,493,902 - 1,493,902 - Education 655,520 - 655,520 - Community Development 415,120 - 415,120 - Industrial Incentives - - - 1,981,095 Land Development Costs - - - 2,210,002 Permanent Library Funds Nonexpendable 98,400 - 98,400 - Unrestricted 6,866,108 14,923,230 21,789,338 (950,477) Total Net Position $ 37,046,560 $ 43,803,809 $ 80,850,369 $ 4,802,036 The accompanying notes to the financial statements are an integral part of this statement. 14 CITY OF PARIS, TEXAS Statement of Activities Year Ended September 30, 2020 Statement 2 Component Unit Economic Development $ 2,343,633 General Revenues Property Taxes Sales Taxes Franchise Taxes Hotel Occupancy Taxes Unrestricted Investment Earnings Miscellaneous Gain on Disposal of Assets Transfers Total General Revenues and Transfers Changes in Net Position Net Position - Beginning Prior Period Adjustment Net Position - Ending The accompanying notes to the financial statements are an integral part of this statement. 15 9,338,087 - 8,245,939 Program Revenues 4,714,021 Net (Expense) Revenue and Changes in Net Position 872,418 - 197,203 Operating Capital - Primary Government Component Unit (146,679) 146,679 Charges for Grants and Grants and Governmental Business -Type Economic Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Development Primary Government Governmental Activities General Government $ 4,409,428 $ 277,689 $ 1,796,809 $ - $ (2,334,930) $ - $ (2,334,930) $ - Public Safety 12,727,703 562,859 232,947 39,493 (11,892,404) - (11,892,404) - Public Works 6,699,707 1,473,803 - 257,096 (4,968,808) - (4,968,808) - Health 4,267,819 4,790,535 117,527 - 640,243 - 640,243 - Culture and Recreation 846,669 60,928 4,457 - (781,284) - (781,284) - Cox Field Airport 311,796 161,619 - 28,300 (121,877) - (121,877) - Interest on Long -Term Debt 115,000 - - - (115,000) - (115,000) - Total Governmental Activities 29,378,122 7,327,433 2,151,740 324,889 (19,574,060) - (19,574,060) - Business -Type Activities Water and Sewer 14,026,074 15,043,788 - - - 1,017,714 1,017,714 - Total Business -Type Activities 14,026,074 15,043,788 - - - 1,017,714 1,017,714 - Total Primary Government $ 43,404,196 $ 22,371,221 $ 2,151,740 $ 324,889 (19,574,060) 1,017,714 (18,556,346) - Component Unit Economic Development $ 2,343,633 General Revenues Property Taxes Sales Taxes Franchise Taxes Hotel Occupancy Taxes Unrestricted Investment Earnings Miscellaneous Gain on Disposal of Assets Transfers Total General Revenues and Transfers Changes in Net Position Net Position - Beginning Prior Period Adjustment Net Position - Ending The accompanying notes to the financial statements are an integral part of this statement. 15 9,338,087 - 8,245,939 - 4,714,021 - 872,418 - 197,203 427,723 714,470 - 25,246 - (146,679) 146,679 23,960,705 574,402 4,386,645 1,592,116 9,338,087 8,245,939 4,714,021 872,418 624,926 714,470 25,246 /7 2A2 422\ 1,649,206 28,262 5,056 LY,JJJ, 1 V Jr I,VVL,JL-T 5,978,761 (661,109) 31,677,862 42,253,191 73,931,053 5,463,145 982,053 (41,498) 940,555 - $ 37,046,560 $ 43,803,809 $ 80,850,369 $ 4,802,036 Assets Cash and Cash Equivalents Investments Receivables (Net of Allowance for Uncollectibles) Inventories Prepaid Items Due from Other Governments Total Assets CITY OF PARIS, TEXAS Balance Sheet - Governmental Funds September 30, 2020 Statement 3 Total Nonmajor Total Debt Capital Governmental Governmental General Service Projects Funds Funds $ 7,293,878 $ 1,762,852 $ 3,863,798 $ 606,016 $ 13,526,544 6,360,683 - - 297,721 6,658,404 4,407,449 82,964 - 4,490,413 500,495 - - 500,495 53,625 - - - 53,625 408,983 - - 1,411,343 1,820,326 $ 19,025,113 $ 1,845,816 $ 3,863,798 $ 2,315,080 $ 27,049,807 Liabilities, Deferred Inflows, and Fund Balances Liabilities Accounts Payable and Accrued Liabilities $ 1,189,136 $ - $ 27,616 $ 11,703 $ 1,228,455 Total Liabilities 1,189,136 - 27,616 11,703 1,228,455 Deferred Inflows of Resources Unavailable Revenue - Property Taxes 659,428 78,953 - Unavailable Revenue - Other 26,472 - - Total Deferred Inflows of Resources 685,900 78,953 - Fund Balances Nonspendable Inventory Permanent Library Funds Restricted for Debt Service Capital Projects Notes Law Enforcement Public Education Community Development Assigned Library Community Development Unassigned: General Fund Total Fund Balances Total Liabilities, Deferred Inflows and Fund Balances 500,495 - - - 1,766,863 - 3,802 - 3,836,182 655,520 - - 738,381 26,472 764,853 - 500,495 98,400 98,400 1,766,863 3,839,984 1,493,902 1,493,902 655,520 415,120 415,120 75,801 75,801 - - 220,154 220,154 15,990,260 - - - 15,990,260 17,150,077 1,766,863 3,836,182 2,303,377 25,056,499 $ 19,025,113 $ 1,845,816 $ 3,863,798 $ 2,315,080 $ 27,049,807 Fund Balances - Total Governmental Funds (above) Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. (Net of Accumulated Depreciation) Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred or not reflected in the funds. Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. Included in noncurrent liabilities is the recognition of the City's proportionate share of the net pension liability required by GASB 68 in the amount of $10,915,075, a Deferred Outflow of Resources in the amount of $1,634,296, and a Deferred Inflow of Resources in the amount of $2,661,329. This amounted to a decrease in Net Position of $11,942,108. Included in noncurrent liabilities is the recognition of the City's proportionate share of the net OPEB liability required by GASB 75 in the amount of $2,606,860, a Deferred Outflow of Resources in the amount of $334,164, and a Deferred Inflow of Resources in the amount of $243,149. This amounted to a decrease in Net Position of $2,515,845. Net Position of Governmental Activities The accompanying notes to the financial statements are an integral part of this statement. 16 $ 25,056,499 41,127,102 764,853 (15,443,941) (11,942,108) (2,515,845) $ 37,046,560 CITY OF PARIS, TEXAS Statement 4 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended September 30, 2020 The accompanying notes to the financial statements are an integral part of this statement. 17 Total Nonmajor Total Debt Capital Governmental Governmental General Service Projects Funds Funds Revenues Taxes Property $ 7,380,958 $ 1,892,804 $ - $ - $ 9,273,762 Sales 8,245,939 - - - 8,245,939 Franchise 4,714,021 - - - 4,714,021 Hotel Occupancy 643,417 193,505 - 35,497 872,419 Licenses and Permits 259,117 - - - 259,117 Fines and Fees 724,259 - - 18,893 743,152 Use of Money and Property 304,755 17,768 45,496 7,055 375,074 Sanitation 1,462,452 - - - 1,462,452 Health 5,117,649 - - - 5,117,649 Intergovernmental 713,570 - - 1,789,823 2,503,393 Other 381,355 - 245,248 66,061 692,664 Total Revenues 29,947,492 2,104,077 290,744 1,917,329 34,259,642 Expenditures Current General Government 1,779,229 - - 73,458 1,852,687 Public Safety 12,005,945 - - 26,170 12,032,115 Public Works 5,065,867 - - - 5,065,867 Health 4,022,732 - - 36,258 4,058,990 Culture and Recreation 723,046 - - 696 723,742 Cox Field 179,631 - - - 179,631 Other 1,922,363 - - - 1,922,363 Debt Service Principal 186,690 1,449,098 - - 1,635,788 Interest - 398,844 - - 398,844 Capital Outlay General Government 109,280 - 285,361 - 394,641 Public Safety 403,654 - - 42,356 446,010 Public Works 626,741 - 3,786,189 - 4,412,930 Health 287,256 - - - 287,256 Total Expenditures 27,312,434 1,847,942 4,071,550 178,938 33,410,864 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,635,058 256,135 (3,780,806) 1,738,391 848,778 The accompanying notes to the financial statements are an integral part of this statement. 17 CITY OF PARIS, TEXAS Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Year Ended September 30, 2020 Other Financing Sources (Uses) Certificates of Obligation Issued Certificates of Obligation Issue Costs Proceeds from Sale of Capital Assets Transfers In Transfers Out Total Other Financing Sources (Uses) Net Changes in Fund Balances Fund Balances - Beginning Statement 4 (Continued) 538,667 (216,337) 1,438,000 (441,009) 1,319,321 3,173,725 39,798 (2,342,806) 1,297,382 2,168,099 13,451,478 1,727,065 6,178,988 590,875 21,948,406 Prior Period Adjustment 524,874 - Total 939,994 Fund Balances - Ending $ 17,150,077 $ 1,766,863 Nonmajor Total Debt Capital Governmental Governmental General Service Projects Funds Funds - 1,500,000 - - 1,500,000 - (62,000) - - (62,000) 28,000 - - - 28,000 539,986 563,321 1,438,000 29,319 2,570,626 (29,319) (2,217,658) - (470,328) (2,717,305) 538,667 (216,337) 1,438,000 (441,009) 1,319,321 3,173,725 39,798 (2,342,806) 1,297,382 2,168,099 13,451,478 1,727,065 6,178,988 590,875 21,948,406 Prior Period Adjustment 524,874 - - 415,120 939,994 Fund Balances - Ending $ 17,150,077 $ 1,766,863 $ 3,836,182 $ 2,303,377 $ 25,056,499 The accompanying notes to the financial statements are an integral part of this statement. 18 CITY OF PARIS, TEXAS Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended September 30, 2020 Amounts reported for governmental activities in the statement of activities (Statement 2) are different because: Net Change in Fund Balances - Total Governmental Funds (Statement 4) Governmental funds reported 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. The net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to decrease net assets. Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in governmental funds. Accrued interest expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences 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 net change in inventory is a direct adjustment to fund balance in the funds. Pension expenses are not reported as expenditures in governmental funds and contributions after the measurement date are deferred. OPEB expenses are not reported as expenditures in governmental funds and contributions after the measurement date are deferred. 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 position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. Change in net position of governmental activities (Statement 2). 19 Statement 5 $ 2,168,099 2,663,451 8,164 (368,104) 10,203 309 77,190 (206,046) 33,379 $ 4,386,645 The accompanying notes to the financial statements are an integral part of this statement. 20 CITY OF PARIS, TEXAS Statement 6 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund Year Ended September 30, 2020 Budgeted Amounts Variance with Original Final Actual Final Budget REVENUES Property Taxes $ 7,125,174 $ 7,125,174 $ 7,380,958 $ 255,784 Sales Taxes 7,312,500 7,312,500 8,245,939 933,439 Franchise Taxes 4,349,100 4,349,100 4,714,021 364,921 Hotel Occupancy Taxes 650,000 650,000 643,417 (6,583) Licenses and Permits 165,700 165,700 259,117 93,417 Fines and Fees 455,970 455,970 724,259 268,289 Investment Earnings 312,558 312,558 304,755 (7,803) Sanitation 1,527,526 1,527,526 1,462,452 (65,074) Health 2,716,642 2,716,642 5,117,649 2,401,007 Intergovernmental Revenues 526,193 526,193 713,570 187,377 Other 314,700 314,700 381,355 66,655 Total Revenues 25,456,063 25,456,063 29,947,492 4,491,429 EXPENDITURES General Government Council 80,650 130,650 251,670 (121,020) Manager 395,522 395,522 398,116 (2,594) Attorney 359,035 359,035 326,031 33,004 Municipal Court 234,389 234,389 215,290 19,099 Clerk 144,847 144,847 146,576 (1,729) Finance 451,611 451,611 550,826 (99,215) Total General Government 1,666,054 1,716,054 1,888,509 (172,455) Public Safety Police 5,135,886 4,885,886 7,652,235 (2,766,349) Fire 4,949,196 4,699,196 4,944,054 (244,858) Total Public Safety 10,085,082 9,585,082 12,596,289 (3,011,207) Public Works Community Development 573,737 373,737 676,108 (302,371) Engineering 443,757 443,757 428,590 15,167 Public Works 244,912 244,912 191,762 53,150 Parks and Recreation 1,146,646 1,146,646 989,857 156,789 Sanitation 1,175,188 1,225,188 1,283,883 (58,695) Streets and Highways 1,678,200 1,578,200 1,356,548 221,652 Traffic and Public Lighting 516,682 516,682 446,091 70,591 Garage 357,199 357,199 319,769 37,430 Total Public Works 6,136,321 5,886,321 5,692,608 193,713 The accompanying notes to the financial statements are an integral part of this statement. 20 CITY OF PARIS, TEXAS Statement 6 Statement of Revenues, Expenditures, and Changes in Fund Balance (Continued) Budget and Actual General Fund Year Ended September 30, 2020 Budgeted Amounts Variance with Original Final Actual Final Budget EXPENDITURES (Continued) Health 2,610,947 3,260,947 4,309,988 (1,049,041) Culture and Recreation Paris Band 23,050 23,050 12,597 10,453 Library Services 713,539 713,539 710,449 3,090 Total Culture and Recreation 736,589 736,589 723,046 13,543 Other Cox Field Airport 148,850 188,850 179,631 9,219 Other 1,772,642 1,882,642 1,922,363 (39,721) Total Other 1,921,492 2,071,492 2,101,994 (30,502) Total Expenditures 23,156,485 23,256,485 27,312,434 (4,055,949) Excess (Deficiency) of Revenues Over Expenditures 2,299,578 2,199,578 2,635,058 435,480 Other Financing Sources (Uses) Transfers In - - 539,986 539,986 Transfers Out - - (29,319) (29,319) Proceeds from Sale of Assets - - 28,000 28,000 Total Other Financing Sources (Uses) - - 538,667 538,667 Net Changes in Fund Balance 2,299,578 2,199,578 3,173,725 974,147 Fund Balance - Beginning 13,451,478 13,451,478 13,451,478 - Prior Period Adjustment - - 524,874 524,874 Fund Balance - Ending $ 15,751,056 $ 15,651,056 $ 17,150,077 $ 1,499,021 The accompanying notes to the financial statements are an integral part of this statement. 21 CITY OF PARIS, TEXAS Statement of Net Position Proprietary Funds September 30, 2020 ASSETS Current Assets Cash and Cash Equivalents Restricted Cash and Cash Equivalents Total Cash and Cash Equivalents Accounts Receivable, Net Accrued Interest Receivable Inventories Total Current Assets Noncurrent Assets Investments Construction Reserve and Contingency Unrestricted Total Investments Water Rights (Net of Accumulated Amortization) Capital Assets Land Construction in Progress Plant, Pumps, and Motors Distribution System Collection System Maintenance Equipment and Vehicles Furniture and Equipment Less Accumulated Depreciation Total Capital Assets (Net of Accumulated Depreciation) Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows Related to Pensions Deferred Outflows Related to OPEB Total Deferred Outflows The accompanying notes to the financial statements are an integral part of this statement. 22 Statement 7 Water and Sewer Enterprise Fund $ 2,961,149 7,775,174 10,736,323 2,459,407 3,966 257,187 13,456,883 2,430,987 2,811,875 292,178 5,535,040 3,242,554 339,620 33,953,797 32,127,793 47,011,375 28,300,115 4,421,499 2,054,372 84,530,093 63,678,478 72,456,072 85,912,955 171,157 31,764 202,921 CITY OF PARIS, TEXAS Statement 7 Statement of Net Position (Continued) Proprietary Funds September 30, 2020 Noncurrent Liabilities Bonds Payable - Noncurrent Portion 37,257,044 Accrued Compensated Absences - Noncurrent Portion 189,939 Net Pension Liabilities 4,054 Net OPEB Liabilities 193,636 Total Noncurrent Liabilities 37,644,673 Total Liabilities 41,908,468 DEFERRED INFLOWS OF RESOURCES Deferred Inflows Related to Pensions 390,412 Deferred Inflows Related to OPEB 13,187 Total Deferred Inflows 403,599 NET POSITION Net Investment in Capital Assets 28,880,579 Unrestricted 14,923,230 Total Net Position $ 43,803,809 23 Water and Sewer Enterprise Fund LIABILITIES Current Liabilities Accounts Payable and Accrued Liabilities 333,766 Accrued Interest Payable 464,255 Customers' Deposits 1,030,886 Bonds Payable - Current Portion 2,413,784 Accrued Compensated Absences - Current Portion 21,104 Total Current Liabilities 4,263,795 Noncurrent Liabilities Bonds Payable - Noncurrent Portion 37,257,044 Accrued Compensated Absences - Noncurrent Portion 189,939 Net Pension Liabilities 4,054 Net OPEB Liabilities 193,636 Total Noncurrent Liabilities 37,644,673 Total Liabilities 41,908,468 DEFERRED INFLOWS OF RESOURCES Deferred Inflows Related to Pensions 390,412 Deferred Inflows Related to OPEB 13,187 Total Deferred Inflows 403,599 NET POSITION Net Investment in Capital Assets 28,880,579 Unrestricted 14,923,230 Total Net Position $ 43,803,809 23 CITY OF PARIS, TEXAS Statement 8 Statement of Revenues, Expenses, and Changes in Fund Net Position 1,165,720 Proprietary Funds 3,465,964 Years Ended September 30, 2020 989,694 Sundry Charges Water and Sewer Bad Debt Expense Enterprise Fund Operating Revenues 142,356 Charges for Sales and Services 2,899,619 Water Sales and Taps $ 8,109,330 Sewer Charges and Taps 6,405,367 Sanitation Billing Fees 82,458 Service Charges 140,581 Industrial Surcharges 371737 Miscellaneous 268,315 Total Operating Revenues 15,043,788 Operating Expenses Personnel 3,178,783 Supplies 1,165,720 Contractual 3,465,964 Maintenance 989,694 Sundry Charges 588,234 Bad Debt Expense 71,871 Other 142,356 Depreciation 2,899,619 Total Operating Expenses 12,502,241 Operating Income 2,541,547 Nonoperating Revenues (Expenses) Investment Earnings 427,723 Interest Expense - Revenue and General Obligation Bonds (1,606,442) Amortization of Water Rights (35,632) Amortization of Bond Premium 118,241 Net Nonoperating Revenues (Expenses) (1,096,110) Income Before Contributions, Other Revenue, and Transfers 1,445,437 Capital Contributions, Other Revenue, and Transfers Transfers In 730,000 Transfers Out (583,321) Total Capital Contributions, Other Revenue, and Transfers 146,679 Changes in Net Position 1,592,116 Total Net Position - Beginning 42,253,191 Prior Period Adjustment (41,498) Total Net Position - Beginning, as Restated 42,211,693 Total Net Position - Ending $ 43,803,809 The accompanying notes to the financial statements are an integral part of this statement. 24 CITY OF PARIS, TEXAS Statement of Cash Flows Proprietary Funds Years Ended September 30, 2020 Cash Flows from Operating Activities Receipts from Customers and Users Payments to Suppliers, Contractors, and Service Providers Payments to Employees for Salaries and Benefits Net Cash Provided by Operating Activities Cash Flows from Noncapital Financing Activities Transfers In Transfers Out Net Cash Provided (Used) by Noncapital Financing Activities Cash Flows from Capital and Related Financing Activities Purchases of Capital Assets Principal Paid on Bonds Interest Paid on Long -Term Debt Net Cash (Used) by Capital and Related Financing Activities Cash Flows from Investing Activities Interest on Investments Purchases of Investment Securities Maturities of Investments Net Cash (Used) by Investing Activities Net Increase in Cash and Cash Equivalents Cash and Cash Equivalents - Beginning Cash and Cash Equivalents - Ending The accompanying notes to the financial statements are an integral part of this statement. 25 Statement 9 Water and Sewer Enterprise Fund $ 14,972,497 (8,336,976) (3,157,213) 3,478,308 730,000 (583,321) 146,679 (4,787,212) (2,200,000) (1,629,097) (8,616,309) 427,723 (5,420,656) 14,317,251 9,324,318 4,332,996 6,403,327 $ 10,736,323 CITY OF PARIS, TEXAS Statement 9 Statement of Cash Flows (Continued) Proprietary Funds Year Ended September 30, 2020 Total Adjustments Net Cash Provided by Operating Activities Noncash Investing, Capital, and Financing Activities Increase (Decrease) in Fair Value of Investments 936,761 $ 3,478,308 $ 199,938 The accompanying notes to the financial statements are an integral part of this statement. 26 Water and Sewer Enterprise Fund Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating Income $ 2,541,547 Adjustments to Reconcile Operating Income to Net Cash Provided by (Used in) Operating Activities Depreciation 2,899,619 Decrease (Increase) in Accounts Receivable (112,697) Decrease (Increase) in Inventory 5,117 Decrease (Increase) in Deferred Outflows of Resources 506,866 Increase (Decrease) in Accounts Payable and Accrued Liabilities (1,909,957) Increase (Decrease) in Customers' Deposits 41,406 Increase (Decrease) in Net Pension Liabilities (888,822) Increase (Decrease) in Net OPEB Liabilities 31,222 Increase (Decrease) in Deferred Inflows of Resources 364,007 Total Adjustments Net Cash Provided by Operating Activities Noncash Investing, Capital, and Financing Activities Increase (Decrease) in Fair Value of Investments 936,761 $ 3,478,308 $ 199,938 The accompanying notes to the financial statements are an integral part of this statement. 26 CITY OF PARIS, TEXAS Notes to Financial Statements September 30, 2020 I. Summga of Significant Accounting Policies A. Description of Government -Wide Financial Statements The government -wide financial statements (e.g., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and it's component unit. 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 revenues, are reported separately from business - type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from the legally separate component unit for which the primary government is financially accountable. B. Reporting Entity The City of Paris, Texas (the City), operates under a council-manager form of government with the mayor and six council members being elected. The accompanying financial statements present the government and its component unit. The discretely presented component unit is reported in a separate column in the government - wide financial statements (see note below for a description) to emphasize that it is legally separate from the government. Discretely Presented Component Unit: The Paris Economic Development Corporation (PEDC) is a governmental nonprofit corporation established July 19, 1993, funded by a quarter percent sales tax. PEDC was organized exclusively for the purpose of benefiting and accomplishing public purposes of the City by promoting, assisting, and enhancing economic development activities for the City as provided by the Development Corporation Act of 1979. The business and affairs are managed by a five -member board of directors appointed by the governing body of the City. PEDC is fiscally dependent upon the City as the City Council approves their budgets and must approve any debt issuance. However, the component unit does not qualify for blending because the component services directly benefit the community rather than the City itself. Complete financial statements for PEDC may be obtained at its administrative office at 1125 Bonham Street, Paris, Texas 75460. C. Basis of Presentation - Government -Wide Financial Statements While separate government -wide and fund financial statements are presented, they are interrelated. The governmental column incorporates data from governmental funds while business -type activities incorporate data from the government's enterprise funds. Separate financial statements are provided for governmental funds and proprietary funds. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. As discussed earlier, the government has one discretely presented component unit, PEDC. PEDC is shown in a separate column in the government -wide financial statements. D. Basis of Presentation — Fund Financial Statements The fund financial statements provide information about the government's funds, including its discretely presented component unit. Separate statements for each fund category — governmental and proprietary — are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. 27 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 I. Summary of Significant Accounting Policies (Continued) D. Basis of Presentation — Fund Financial Statements (Continued) The City reports the following major governmental funds: The General Fund is the primary operating fund of the City. It accounts for and reports all financial resources not accounted for in another fund. The Debt Service Fund accounts for and reports financial resources that are restricted, committed, or assigned to expenditures for principal and interest. The Capital Projects Fund accounts for and reports financial resources that are restricted, committed, or assigned to expenditures for capital outlay. The City reports nonmajor funds as Other Governmental Funds which include Special Revenue Funds and a Permanent Fund as follows: The Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specific purposes other than for debt service or capital projects. The Permanent Fund is used to account for and report resources that are restricted to the extent that only earnings and not principal may be used. The City reports the following enterprise funds as one major fund: The Water Fund accounts for the water distribution system as well as the billings and collections for that service. The Sewer Fund accounts for the sewer system as well as the collection activities for that service. During the course of operations, the City has activity between funds for various purposes. Any residual balances outstanding at year end are reported as due from/to other funds and advances to/from other funds. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government -wide financial statements. Balances between the funds included in governmental activities (e.g., the governmental and internal service funds) are eliminated so that only the net amount is included as internal balances in the governmental activities column. Similarly, balances between the funds included in business -type activities (e.g., the enterprise fund) are eliminated so that only the net amount is included as internal balances in the business -type activities column. Interfund services provided and used are not eliminated in the process of consolidation Further, certain activity occurs during the year involving transfers of resources between funds. In the fund financial statements, these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the preparation of the government -wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in business -type activities are eliminated so that only the net amount is included as transfers in the business -type activities column. 28 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 I. Summgg of Significant Accounting Policies (Continued) E. Measurement Focus and Basis of Accounting The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The accounts of the City are organized on the basis of funds. A fund is an independent fiscal and accounting entity with a self -balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance -related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources. Property taxes, franchise taxes, licenses, interest, and special assessments are susceptible to accrual. Sales taxes are recognized as revenue in the period when the exchange transaction on which the tax is imposed occurs. Other receipts and taxes become measurable and available when cash is received by the City and are recognized as revenue at that time. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure -driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. The proprietary funds are accounted for using the economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. The proprietary fund is used to account for operations that are financed and operated in a manner similar to private business enterprises, where the governing body has decided that the determination of revenues earned, costs incurred, and/or net income is necessary for management accountability. F. Budgetary Information 1. Budgetary Basis of Accounting Annual budgets are legally adopted on a basis consistent with generally accepted accounting principles for all governmental funds except the capital projects fund, proprietary funds, and library trust fund. The budget for the capital projects fund is legally adopted for specific projects and may exceed one year. Formal budgetary integration is not employed for the proprietary funds. The City adopts an annual, informal budget as a financial plan for all proprietary funds. The library trust fund includes nonbudgeted 29 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 I. Summary of Significant Accounting Policies (Continued) F. Budgetary Information (Continued) 1. Budgetary Basis of Accounting (Continued) financial activities, which are not subject to an appropriated budget and the appropriation process or to any legally authorized nonappropriated budget review and approval process. The community development block grant fund is not annually appropriated. The City has no special revenue funds which are reported as major funds. At the close of each fiscal year, any unencumbered appropriation balance (appropriations including prior year encumbrances less current year expenditures and encumbrances) lapse or revert to the undesignated fund balance. At least thirty days prior to the beginning of each fiscal year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget, which represents the financial plan for the ensuing fiscal year, includes proposed expenditures and the means of financing them. Public hearings are conducted at which all interested persons' comments concerning the budget are heard. The budget for the next fiscal year is legally enacted by the City Council through passage of an ordinance not later than the twenty-seventh day of the last month of the fiscal year. If the City Council does not enact the budget within this time period, then the budget as submitted by the City Manager becomes the legally authorized budget. 2. Excess of Expenditures Over Appropriations For the year ended September 30, 2020, expenditures may not legally exceed appropriations at the department level for each legally adopted annual operating budget. The City Manager may, without Council approval, transfer appropriation balances from one expenditure account to another within a department or agency of the City. The City Council, however, must approve any transfer or unencumbered appropriation balances or portions thereof from one department or agency to another. During the year ended September 30, 2020, the City Council approved a transfer of $1,000,000 from various departments to other departmental line items. Expenditures exceeded appropriations in the following departments: Council $121,020, Manager $2,594, Clerk $1,729, Finance $99,215, Police $2,766,349, Fire $244,858, Community Development $302,371, Sanitation $58,695, Health $1,049,041, and Other $39,721. G. Assets, Liabilities, and Equity 1. Cash and Cash Equivalents For purposes of the statement of cash flows, cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from date of acquisition. 2. Investments Investments are reported in the accompanying balance sheet at fair value with changes in fair value being reported as part of investment income. The City also holds investments in an external investment pool, Texas Local Government Investment Cooperative (LOGIC), managed by Southwest Securities Group, Inc. PEDC holds investments in two external investment pools, Texas Class and Lone Star Investments. Both investment pools carry investments at amortized cost, which approximates fair value. Investments are 30 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 I. Summary of Significant Accounting Policies (Continued) G. Assets, Liabilities, and Equity (Continued) 2. Investments (Continued) priced daily and compared to the carrying value. If the ratio of the fair value of the portfolio of investments to the carrying value of investments is less than .995 or greater than 1.005, the investment pools will sell investment securities, as required, to maintain the ratio at a point between .995 and 1.005. Participation in external investment pools was voluntary. Statutes authorize the City and PEDC to invest in obligations of the U. S. Treasury, direct obligations of the State of Texas, other obligations guaranteed or insured by the State of Texas or the United States, obligations of states and political subdivisions of any state meeting certain rating requirements, certificates of deposit, and fully collateralized direct repurchase agreements having a defined termination date. The City did not engage in repurchase or reverse repurchase agreement transactions during the current year. In accordance with generally accepted accounting principles, inputs to valuation techniques used to measure fair value are prioritized according to a fair value hierarchy, as follows: Level I — Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities. Level II — Fair values are based on generally indirect information such as quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets or liabilities in markets that are not active. Level III — Fair values are based on inputs other than quoted prices included within Level I that are unobservable and include the City's own assumptions about pricing. This fair value hierarchy gives the highest priority to Level I inputs and the lowest priority to Level III inputs. The City's investments are classified in Level II of the hierarchy. 3. Inventories Inventories are valued at cost using the first -in, first -out method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased. An equivalent amount is reported as nonspendable fund balance in the governmental funds. 4. Restricted Assets Prior to the issuance of General Obligation Refunding Bonds, Series 2010, the City's Water and Sewer Revenue Bonds and Certificates of Obligation covenants required certain restrictions of net assets. After the refunding occurred, these legal restrictions no longer existed. In order to safeguard the financial integrity of the water and sewer system, the City Council approved a resolution establishing and maintaining funds comparable to those required by the refunded bonds. 5. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $10,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. 31 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 I. Summary of Significant Accounting. Policies (Continued) G. Assets, Liabilities, and Equity (Continued) 5. Capital Assets (Continued) Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value at the date of donation. Infrastructure acquired prior to the implementation of GASB 34 are included in the financial statements. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as an expense during the period incurred. Property, plant, and equipment of the primary government, as well as the component unit, is depreciated using the straight-line method over the following estimated useful lives: Buildings and Improvements 20-40 years Furniture, Fixtures, and Equipment 5-10 years Vehicles 5 years Works of Art 50 years Public Domain Infrastructure 25-45 years System Infrastructure 25-30 years 6. Capital Leases Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the useful lives of the assets and is included in depreciation expense. 7. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City reports a deferred outflow of resources related to pensions and OPEB. See footnote IV. F. for further information. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The government has a deferred inflow of resources related to pensions and OPEB. See IVY. for further information. In addition, the government has one type of item, which arises only under a modified accrual basis of accounting, that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from the following sources: property taxes, EMS, municipal court, and street assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amount becomes available. 32 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 I. Summary of Significant Accounting Policies (Continued) G. Assets, Liabilities, and Equity (Continued) 8. Net Position Flow Assumption Sometimes the government will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted — net position and unrestricted — net position in the government -wide and proprietary funds financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government's policy to consider restricted — net position to have been depleted before unrestricted — net position is applied. 9. Fund Balance Flow Assumption Sometimes the government will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government's policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. 10. Fund Balance Policies Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The government itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the government's highest level of decision-making authority. The governing council is the highest level of decision-making authority for the government that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. The City does not have any restricted fund balances by enabling legislation. Amounts in the assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as committed. The council allows the finance director to assign the fund balance, and may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year's appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. 33 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 I. Summary of Significant Accounting Policies (Continued) H. Revenues and Expenditures/ Expenses 1. Program Revenues Amounts reported as program revenues include 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 revenues are reported instead as general revenues. 2. Property Taxes The City's property taxes are levied on October 1 and are due no later than January 31 of the following year. Taxes become delinquent February 1, after which time penalties and interest and, if not paid by July, attorney's collection fees are added. A tax lien attaches to property (real and personal) on January 1 of each year to secure the payment of all taxes, penalties, and interest ultimately imposed on the property. The lien is effective until all such amounts are paid. 3. Compensated Absences Vacation and sick leave benefits are accumulated by City employees in accordance with guidelines suggested in the City's personnel policies. 4. Proprietary Funds Operating and Nonoperating Revenues and Expenses 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 fund's principal ongoing operations. The principal operating revenues of the water and sewer enterprise fund are charges to customers for sales and services. The water and sewer fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds include the cost of sales and service, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. I. Future Adoption of Accounting Pronouncements The GASB has issued the following potentially significant statements which the City has not yet adopted, and which require adoption subsequent to September 30, 2020. Statement No. Adoption Required 84 Fiduciary Activities September 30, 2021 87 Leases September 30, 2022 91 Conduit Debt Obligations September 30, 2023 34 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 II. Reconciliation of Government -Wide and Fund Financial Statements A. Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government - Wide Statement of Net Position The governmental fund balance sheet includes a reconciliation between fund balance — total governmental funds and net position — governmental activities as reported in the government -wide statement of net position. One element of that reconciliation explains that "capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds." The details of this $41,127,102 are as follows: Land Construction in Progress Buildings Less: Accumulated Depreciation — Buildings Improvements Other Than Buildings Less: Accumulated Depreciation — Improvements Other Than Buildings Machinery and Equipment Less: Accumulated Depreciation — Machinery and Equipment Infrastructure Less: Accumulated Depreciation — Infrastructure Net Adjustment to Increase Fund Balance — Total Governmental Funds to Arrive at Net Position — Governmental Activities $ 5,950,108 6,664,407 20,525,627 (10,028,641) 6,601,672 (3,937,205) 22,317,003 (18,532,486) 46,013,892 (34,447,275) Another element of that reconciliation explains that "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 $15,443,940 difference are as follows: Bonds Payable $ 12,975,000 Plus: Premiums on Bonds Payable (to be Amortized Over the Life of the Debt) 122,856 Capital Lease 950,526 Accrued Interest 127,054 Compensated Absences 1,118,504 Landfill Post -Closure Care Costs 150,000 Net Adjustment to Reduce Fund Balance — Total Governmental Funds to Arrive at Net Position — Governmental Activities S 15.443.940 B. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government -Wide Statement of Activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances — total governmental funds and changes in net position of governmental activities as reported in the government -wide statement of activities. One element of that reconciliation explains that "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 $2,663,451 difference are as follows: 35 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 Il. Reconciliation of Government -Wide and Fund Financial Statements (Continued) B. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances and the Government -Wide Statement of Activities (Continued) Capital Outlay $ 5,456,682 Depreciation Expense (2,793,231) Net Adjustment to Increase Net Changes in Fund Balances - Total Governmental Funds to Arrive at Changes in Net Position Of Governmental Activities $ 2.663.451 Another element of that reconciliation states that "the net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to increase net position." The details of this $8,164 difference are as follows: In the statement of activites, only the gain on the sale of assets is reported. However, in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net position differs from the change in fund balance by the cost of the capital assets sold. $ (14,467) Donations of capital assets increase net position in the statement of activities, but do not appear in the governmental fund because they are not financial resources. 22,631 Total Governmental Funds to Arrive at Changes in Net Position of Governmental Activities $ 8,164 Another element of that reconciliation states that "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 position. Also, governmental funds report the premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities." The details of this $33,379 difference are as follows: Issuance of Debt $ (1,500,000) Amortization of Premium 14,815 Principal Repayments 1,518,564 Net Adjustment to Increase Net Changes in Fund Balances - Total Governmental Funds to Arrive at Changes in Net Position of Governmental Activities $ 33,379 III. Stewardship, Compliance, and Accountability Violations of Legal or Contractual Provisions Note I.F.2, on the Excess of Expenditures Over Appropriations, describes budgetary violations that occurred for the year ended September 30, 2020. 36 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds A. Cash and Cash Equivalents Custodial Credit Risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. The City's policy requires deposits to be secured by collateral valued at market or par, whichever is lower, less the amount of the Federal Deposit Insurance Corporation (FDIC) insurance. Collateral agreements must be approved prior to deposit of funds as provided by law. At September 30, 2020, the City had deposits with a carrying amount of $24,261,087, and the bank's balances were $25,702,624. The City was not exposed to custodial credit risk since deposits are insured or collateralized with securities held by the pledging financial institution's agent in the name of the City. B. Investments As of September 30, 2020, the City had the following investments: Type of Security Primary Government Federal Home Loan Mortgage Corporation Federal National Mortgage Association Certificates of Deposit U.S. Treasury Bills OID Paris Economic Development Corporation Texas Class Investment Pool Totals The City invested in the Texas Local Government Investment Cooperative (LOGIC) Liquid Asset Portfolio. LOGIC is a public funds investment pool managed by Southwest Securities Group, Inc. LOGIC uses amortized cost rather than market value to report net position to compute share prices. Accordingly, fair value of the position of LOGIC is the same as the net asset value of LOGIC shares. LOGIC issues an annual report that can be obtained upon request. The accounts remain open at September 30, 2020. However, the City had a zero balance at year end. The City invested in Texas Cooperative Liquid Assets Security System (Texas CLASS) Trust. Texas CLASS was created as an investment pool for its participants pursuant to Section 2256.016 of the Public Funds Investment Act, Texas Government Code, or other laws of the State of Texas governing the investment of funds of a participant or funds under its control. Texas CLASS is administered by Cutwater Investor Services Corp. with Wells Fargo Bank Texas, NA as the Custodian. Texas CLASS is supervised by a Board of Trustees who are elected by the participants. Texas CLASS uses amortized cost rather than market value to report net position to compute share prices. Accordingly, the fair value of the position in Texas CLASS is the same as the net asset value of Texas CLASS shares. Texas CLASS issues a publicly available annual report that can be obtained at www.texasclass.com. Interest rate risk is the policy of the City to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the entity and conforming to all state and local statutes governing the investment of public funds. The City's investment portfolio is designed with the objective of attaining an acceptable rate of return throughout budgetary and economic cycles and commensurate with the City's investment risk constraints and the cash flow characteristics of the portfolio. The City's investment strategy is active. Given this strategy, the basis used by the Finance Director to determine whether market yields are being achieved shall be the Average Fed Funds rate. No other 37 Weighted Weighted Average Average Credit Maturity Maturity Fair Value Rating (Years) (Days) $ 94,811 AA+ 7.92 5,802,349 AA+ 6.76 97,821 Not Rated .58 6,198,462 .27 2,112,151 AAAm 84 $ 14,305,594 The City invested in the Texas Local Government Investment Cooperative (LOGIC) Liquid Asset Portfolio. LOGIC is a public funds investment pool managed by Southwest Securities Group, Inc. LOGIC uses amortized cost rather than market value to report net position to compute share prices. Accordingly, fair value of the position of LOGIC is the same as the net asset value of LOGIC shares. LOGIC issues an annual report that can be obtained upon request. The accounts remain open at September 30, 2020. However, the City had a zero balance at year end. The City invested in Texas Cooperative Liquid Assets Security System (Texas CLASS) Trust. Texas CLASS was created as an investment pool for its participants pursuant to Section 2256.016 of the Public Funds Investment Act, Texas Government Code, or other laws of the State of Texas governing the investment of funds of a participant or funds under its control. Texas CLASS is administered by Cutwater Investor Services Corp. with Wells Fargo Bank Texas, NA as the Custodian. Texas CLASS is supervised by a Board of Trustees who are elected by the participants. Texas CLASS uses amortized cost rather than market value to report net position to compute share prices. Accordingly, the fair value of the position in Texas CLASS is the same as the net asset value of Texas CLASS shares. Texas CLASS issues a publicly available annual report that can be obtained at www.texasclass.com. Interest rate risk is the policy of the City to invest public funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the entity and conforming to all state and local statutes governing the investment of public funds. The City's investment portfolio is designed with the objective of attaining an acceptable rate of return throughout budgetary and economic cycles and commensurate with the City's investment risk constraints and the cash flow characteristics of the portfolio. The City's investment strategy is active. Given this strategy, the basis used by the Finance Director to determine whether market yields are being achieved shall be the Average Fed Funds rate. No other 37 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) B. Investments (Continued) formal policy related to interest rate risk is included in the City's adopted investment policy. Credit risk is the risk that an issuer of an investment will not fulfill its obligations to the holder of the investment. This type of risk is typically expressed in terms of the credit ratings issued by a nationally recognized statistical rating organization. The City and PEDC reduce the risk of issuer default by limiting investments to those instruments allowed by the Public Funds Investment Act, Chapter 2256, Texas Government Code. Concentration credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. With the exception of obligations of the United States or its agencies and authorized pools, no more than 50% of the City's total investment portfolio will be invested in a single financial institution with the exception of its local depository. PEDC's investment balance consists of only externally pooled accounts. The custodial credit risk for investments is the risk that, in the event of failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. In accordance with the City's deposit and investment policy, all deposits placed at a financial institution shall be insured or collateralized with applicable State law. Foreign currency risk is the risk that an investment denominated in the currency of a foreign country could reduce in value as a result of changes in currency exchange rates. At September 30, 2020, the City was not exposed to foreign currency risk. C. Accounts Receivable and Payable Amounts are aggregated into a single accounts receivable (net of allowance for uncollectibles) line for certain funds and aggregated columns. Below is the detail of receivables in the aggregate, including the applicable allowances for uncollectible accounts: Net receivable balances not expected to be collected within one year are Property Taxes - $686,595, Fines - $20,903, EMS - $349,737, and Street Assessments - $26,473. At year end, PEDC had a receivable for sales tax of $330,223. The balance is expected to be collected within one year. 38 General Debt Service Enterprise Receivables: Interest $ 55 S - $ 3,966 Property Taxes 1,133,569 110,619 - Sales Tax 1,650,717 - - Franchise 509,974 - - Accounts 172,765 - 2,554,206 Street Assessments 26,473 - - Fines 137,555 - - EMS 2,246,282 - - Gross Receivables 5,877,390 110,619 2,558,172 Less: Allowance for Uncollectibles (1,469,941) (27,655) (94,799) Net Total Receivables $ 42407,449 S 82,964 $ 2,463,373 Net receivable balances not expected to be collected within one year are Property Taxes - $686,595, Fines - $20,903, EMS - $349,737, and Street Assessments - $26,473. At year end, PEDC had a receivable for sales tax of $330,223. The balance is expected to be collected within one year. 38 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) C. Accounts Receivable and Payable (Continued) Accounts payable at September 30, 2020, were as follows: Accounts Governmental Activities Wages Totals General Fund $ 703,403 $ 485,733 $ 1,189,136 Capital Projects Fund 27,616 - 27,616 Other Governmental Funds 11,703 - 11,703 Total — Governmental Activities $ 742,722 $ 485,733 $ 1,228,455 Business -Type Activities Water and Sewer Fund $ 242,468 $ 91,298 $ 333,766 Total — Business Type Activities $ 242,468 $ 91,298 $ 333,766 D. Capital Assets Capital assets activity for the year ended September 30, 2020, follows: Balance Balance 9/30/19 Additions Retirements 9/30/20 Governmental Activities Capital Assets, Not Being Depreciated Land $ 5,927,478 $ 22,630 $ - $ 5,950,108 Construction in Progress 3,253,761 4,202,995 792,349 6,664,407 Total Capital Assets, Not Being Depreciated 9,181,239 4,225,625 792,349 12,614,515 Capital Assets, Being Depreciated Buildings Improvements Other Than Buildings Machinery and Equipment Infastructure Total Capital Assets, Being Depreciated Less Accumulated Depreciation for Buildings Improvements Other Than Buildings Machinery and Equipment Infrastructure Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Governmental Activities, Capital Assets, Net 20,400,413 125,214 - 20,525,627 6,571,317 30,355 - 6,601,672 21,410,630 1,085,618 179,245 22,317,003 45,209,042 804,850 - 46,013,892 93,591,402 2,046,037 179,245 95,458,194 9,551,565 477,076 - 10,028,641 3,639,474 297,731 - 3,937,205 17,780,403 916,862 164,779 18,532,486 33,345,713 1,1011562 - 34,447,275 64,317,155 2,793,231 164,779 66,945,607 29,274,247 (747,194) 14,466 28,512,587 $ 38,455,486 $ 3,478,431 $ 806,815 $4121 102 39 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) D. Capital Assets (Continued) Balance Balance A /A n I. A I . 7 ' . ' _ _ _ T _ a _ _ _ _ _ _ _ a _ A 11% A 11% A Business -Type Activities Capital Assets, Not Being Depreciated Land $ 339,620 $ - $ - $ 339,620 Construction in Progress 29,864,225 4,214,528 124,956 33,953,797 Total Capital Assets, Not Being Depreciated 30,203,845 4,214,528 124,956 34,293,417 Capital Assets, Being Depreciated Plant, Pumps, and Motors Distribution System Collection System Maintenance Equipment and Vehicles Furniture and Equipment Total Capital Assets, Being Depreciated Less Accumulated Depreciation for Plant, Pumps, and Motors Distribution System Collection System Maintenance Equipment and Vehicles Furniture and Equipment Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Business -Type Activities, Capital Assets, Net 31,720,324 407,469 - 32,127,793 46,869,832 141,543 - 47,011,375 28,300,115 - - 28,300,115 4,272,871 148,628 - 4,4212499 2,054,372 - - 2,054,372 113,217,514 697,640 - 113,915,154 25,747,818 637,703 - 26,385,521 30,176,394 1,419,747 - 31,596,141 20,626,099 560,862 - 212186,961 3,520,583 221,304 - 3,741,887 1,559,580 60,003 - 1,619,583 81,630,474 2,899,619 - 84,530,093 31,587,040 (2,201,979) - 29,385,061 61,790,885 2,012,549 124,956 63,678,478 Intangible Asset — Water Rights 4,113,119 - - 4,113,119 Less Accumulated Amortization 834,933 35,632 - 870,565 Total Intangible Asset - Water Rights, Net 3,278,186 (35,632) - 3,242,554 Business -Type Activities, Capital and Intangible Assets, Net $65,069,071 $ 1,976,917 $ 124,956 $66,921,032 40 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) D. Capital Assets (Continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities General Government $ 100,711 Public Safety 686,183 Public Works, Including Depreciation of General Infrastructure Assets 1,571,605 Health 182,214 Culture and Recreation 120,352 Cox Field Airport 132,166 Total Depreciation Expense — Governmental Activities 2.793,231 Business -Type Activities Water and Sewer $ 2,899,619 Total Depreciation Expense — Business -Type Activities $ 2.899.619 E. Deferred Compensation Plan The City offers its employees two deferred compensation plans created in accordance with Internal Revenue Code Section 457. F. Employee Retirement Systems and Plans The City maintains a nontraditional defined benefit retirement plan for all full-time employees except for firefighters and a single -employer, defined benefit plan for firefighters. 1. Texas Municipal Retirement System Plan Description The City of Paris participates as one of 888 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple -employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management of the System with a six -member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS's defined benefit pension plan is a tax -qualified plan under Section 401 (a) of the Internal Revenue Code. The plan financial statements are prepared using the accrual basis of accounting. TMRS issues a publicly available comprehensive annual financial report (CAFR) that can be obtained at www.tmrs.com. All eligible employees of the city are required to participate in TMRS. 41 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) Benefits Provided TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the city -financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payments options. Members may also choose to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75% of the member's deposits and interest. Upon retirement, benefits depend on the sum of the employee's contributions, with interest, and the City - financed monetary credits, with interest. City -financed monetary credits are composed of three sources: prior service credits, current service credits, and updated service credits. At the inception of the plan, the City granted monetary credits for service rendered before the plan began (or prior service credits) of a theoretical amount at least equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began (or current service credits) are 150% of the employee's accumulated contributions. In addition, the City can grant, either annually or on an annually repeating basis, another type of monetary credit referred to as Updated Service Credit. This monetary credit is determined by hypothetically recomputing the member's account balance by assuming that the current member deposit rate of the City has always been in effect. The computation also assumes that the member's salary has always been the member's average salary — using a salary calculation based on the 36 -month period ending a year before the effective date of calculation. This hypothetical account balance is increased by 3% each year, not the actual interest credited to member accounts in previous years, and increased by the City match currently in effect. The resulting sum is then compared to the member's actual account balance increased by the actual City match and actual interest credited. If the hypothetical calculation exceeds the actual calculation, the member is granted a monetary credit (or Updated Service Credit) equal to the difference between the hypothetical calculation and the actual calculation times the percentage adopted. At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the City -financed monetary credits, with interest, were used to purchase an annuity. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS. Plan provisions for the City were as follows: Plan Year 2020 Employee Deposits Rate 6% Matching Ratio (City to Employee) 2 to 1 A Member is Vested After 5 Years Service Retirement Eligibility (Expressed As Age/Years of Service) 60/5,0/20 Updated Service Credit 0% Annuity Increase to (Retirees) 0% of CPI 42 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) Employees Covered by Benefit Terms. At the December 31, 2019, valuation and measurement date, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits 227 Inactive Employees Entitled to but not yet Receiving Benefits 144 Active employees 246 Total 617 Contributions The contribution rates for employees in TMRS are either 5%, 6%, or 7% of an employee's gross earnings, and the City matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the City. Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. Employees for the City were required to contribute 6% of their annual gross earnings during the fiscal year. The contribution rates for the City were 6.95% and 7.18% in calendar years 2019 and 2020, respectively. The City's contributions to TMRS for the year ended September 30, 2020, were $852,884 and were equal to the required contributions. Net Pension Liability The City's Net Pension Liability was measured as of December 31, 2019, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. Actuarial Assumptions The Total Pension Liability in the December 31, 2019, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.5% per year Overall payroll growth 3.5% to 11.5%, including inflation Investment Rate of Return 6.75% 43 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) Actuarial Assumptions (Continued) Salary increases were based on a service -related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender -distinct 2019 Municipal Retirees of Texas Mortality Table. The rates are projected on a fully generational basis by scale UMP to account for future mortality improvements. For disabled annuitants, the mortality tables for healthy retirees are used with a 4 -year set - forward for males and a 3 -year set -forward for females. In addition, a 3.5% and 3% minimum mortality rate is applied to reflect the impairment for younger members who become disabled for males and females, respectively. The rates are projected on a fully generational basis by scale UMP to account for future mortality improvements subject to the floor. The actuarial assumptions were developed from the actuarial investigation of the experience of TMRS over the four year period from December 31, 2014 to December 31, 2018. They were adopted in 2019 and used in the current valuation. The post-retirement mortality assumption for healthy annuitants and Annuity Purchase Rate (APRs) were updated based on the mortality experience investigation study dated December 31, 2013, but as part of the most recent experience study, the valuation assumes the mortality used for the ARPs and for valuation purposes will be equivalent over the longer term. The long-term expected rate of return on pension plan investments is 6.75%. The pension plan's policy in regard to the allocation of invested assets is established and may be amended by the TMRS Board of Trustees. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income, in order to satisfy the short-term and long-term funding needs of TMRS. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Global Equity Core Fixed Income Non -Core Fixed Income Real Return Real Estate Absolute Return Private Equity Total Target Allocation 44 30.0% 10.0 20.0 10.0 10.0 10.0 10.0 100.0% Long -Term Expected Real Rate of Return (Arithmetic) 5.30% 1.25 4.14 3.85 4.00 3.48 7.75 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) Discount Rate The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the Total Pension Liability. Net Pension Liability and Changes in the Pension Liability Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City, calculated using the discount rate of 6.75%, as well as what the City's net pension liability (asset) would have been if it were calculated using a discount rate that is 1 -percentage -point lower (5.75%) or 1 -percentage -point higher (7.75%) than the current rate: 45 Increase (Decrease) Plan Net Pension Total Pension Fiduciary Liability Liability Net Position (Asset) (a) (b) (a) — (b) Balance at 12/31/2018 $ 63,657,022 $58,216,474 $ 5,440,548 Changes for the year: Service Cost 1,233,792 - 1,233,792 Interest 4,233,112 - 4,233,112 Change of Benefit Terms - - - Difference Between Expected and Actual Experience (260,390) - (260,390) Changes of Assumptions (110,977) - (110,977) Contributions — Employer - 845,646 (845,646) Contributions — Employee - 730,054 (730,054) Net Investment Income - 8,988,070 (8,988,070) Benefit Payments, Including Refunds of Employee Contributions (3,122,282) (3,122,282) - Administrative Expense - (50,855) 50,855 Other Changes - (1,527) 1,527 Net Changes 1,973,255 7,389,106 (5,415,851) Balance at 12/31/2019 $ 65,630,277 $65,605,580 $ 24,697 Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City, calculated using the discount rate of 6.75%, as well as what the City's net pension liability (asset) would have been if it were calculated using a discount rate that is 1 -percentage -point lower (5.75%) or 1 -percentage -point higher (7.75%) than the current rate: 45 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate 5.75% 6.75% 7.75% City's Net Pension Liability (Asset) $8,063,931 $24,697 $(6,703,230) Pension Plan Fiduciary Net Position Detailed information about the pension plan's Fiduciary Net Position is available in a separately -issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.com. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2020, the City recognized pension expense of $852,884. At September 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Difference Between Expected and Actual Economic Experience (Net of Current Year Amortization) Changes in Actuarial Assumptions Differences Between Projected and Actual Investment Earnings (Net of Current Year Amortization) Contributions Subsequent to the Measurement Date Total Deferred Outflows Deferred Inflows of Resources of Resources $ 4,319 643,250 $ 243,107 79,716 2,021,160 $ 647,569 $ 2,343,983 $643,250 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2021. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Fiscal Year Ended September 30, 2021 $ (731,579) 2022 (728,789) 2023 132,394 2024 (1,011,690) Thereafter - $ (2,339,664) 46 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 2. Firefighters' Relief and Retirement Fund Plan Description The Paris Firefighters' Relief and Retirement Fund, a single -employer defined benefit pension plan, is established under the authority of the Texas Local Firefighters' Retirement Act and is administered by a Board of Trustees made up of three members elected from and by the fund's members, two representatives of the City of Paris, Texas, and two citizen members. Specified plan provisions are governed by a plan document and a trust agreement executed by the Board of Trustees. The plan is an independent entity for financial reporting purposes and issues a stand-alone financial statement. A copy of the audited financial statement may be obtained from the Board of Trustees, Paris Firefighters' Relief and Retirement Fund, P.O. Box 9037, Paris, Texas 75461. Governing state law requires public retirement systems to hire an actuary to make a valuation at least once every three years of the assets and liabilities of the system and to determine if the assumptions and methods are reasonable. The plan financial statements are prepared using the accrual basis of accounting. All plan investments are reported at fair value. Eli ibili The plan covers current and former firefighters of the City of Paris, Texas, as well as certain beneficiaries. The City of Paris contributes 14% of each member's total pay (including regular, longevity, and overtime pay but excluding lump sum distributions for unused sick leave or vacation). Fund members contribute to the fund at a rate of 16% of pay. Employee contributions are "picked up" by the City of Paris, Texas, as permitted under Section 414(h)(2) of the Internal Revenue Code. Fund members receive credit for service for the period during which they pay into and keep on deposit in the fund, the contributions required by the fund. The fund was established August 28, 1941, and was most recently amended effective August 31, 2019. Contributions The City's annual required contribution to the plan for fiscal year 2020 was based on a payroll of $2,817,872 and amounted to $393,157. Covered employees made contributions of $450,860. Employees Covered by Benefit Terms At the December 31, 2019, valuation date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 42 Inactive employees entitled to but not yet receiving benefits 6 Active employees 50 Total 98 47 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 2. Firefighters' Relief and Retirement Fund (Continued) Service Retirement Disability and Death Benefits A member is eligible for service retirement upon the earlier of (a) the date that the member has both attained age 55 and completed 20 years of service or (b) the date as of which the sum of the member's age and years of service first equals 80 provided the member has completed 20 years of service. A member who retires under the service retirement provisions of the fund will normally receive a monthly benefit equal to $94 multiplied by his/her years of service at retirement. The minimum service retirement benefit is $500 per month. Service retirement benefits are payable for the member's lifetime. In the event the member's death precedes that of his/her spouse, two-thirds of the member's pension will be continued to the spouse for his/her lifetime. An active member who becomes disabled will receive a monthly disability benefit. If a member dies while in active service, his/her widower) will receive an immediate monthly benefit, payable for his/her lifetime. Actuarial Methods and Assumptions The actuarial valuation date used to determine the total pension liability for the year ended September 30, 2020, and the most current available information required for disclosure under GASB Statement No. 67 is based on an actuarial valuation as of December 31, 2018, rolled forward to December 31, 2019. The actuarial cost method used in the December 31, 2018, valuation is the entry age service actuarial cost method. This method is also referred to as the entry age actuarial cost method under the terminology developed by the Joint Committee on Pension Terminology. There has been no change in the actuarial cost method since the last actuarial valuation. The assumed rate of return was developed using both the plan's historical rates of return and expected future rates of return. Rate of return experience studies have been performed in connection with the plan's valuations. The demographic assumptions were chosen based on expected future rates of retirement, mortality, disability, and termination. Mortality was taken from published studies and was updated to reflect expected future improvement. Retirement and salary increase rates were developed based on the plan's own experience. Disability and termination rates were based on published rates, adjusted as necessary, to conform to the plan's own experience. Both economic and demographic assumptions were further tested through the calculation of the plan's aggregate experience with respect to both demographic decrements and economic assumptions. 48 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 2. Firefighters' Relief and Retirement Fund (Continued) Net Pension Liability and Changes in the Pension Liability Balance at 12/31/2018 Changes for the year: Service Cost Interest Experience Change of Benefit Terms Difference Between Expected and Actual Experience Changes of Assumptions Contributions — Employer Contributions — Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Other Changes Net Changes Balance at 12/31/2019 Increase (Decrease) Plan Net Pension Total Pension Fiduciary Liability Liability Net Position (Asset) (a) (b) (a) — (b) $ 15,289,040 $ 4,152,310 $ 11,136,730 2441258 - 244,258 1,081,834 - 1,081,834 - 393,136 (393,136) - 449,298 (449,298) - 758,981 (758,981) (1,222,906) (1,222,906) - - (33,025) 33,025 103,186 345,484 (242,298) $ 15,392,226 $ 4,497,794 $ 10,894,432 The following presents the net pension liability of the Paris Firefighters' Relief and Retirement Fund, calculated using the discount rate of 7.25%, as well as what the City's net pension liability (asset) would be if it were calculated using a discount rate that is 1 -percentage -point lower (6.25%) or 1 -percentage -point higher (8.25%) than the current rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate 6.25% 7.25% 8.25% Net Pension Liability $12,486,219 $10,894,432 $9,554,198 Pension Plan Fiduciary Net Position Detailed information about the pension plan's Fiduciary Net Position is available in a separately -issued financial report. That report may be obtained at 1444 N. Main Street, Paris, Texas 75460. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2020, the City recognized pension expense of $325,069. 49 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 2. Firefighters' Relief and Retirement Fund (Continued) At September 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Difference Between Expected and Actual Economic Experience $ - $ 620,952 Changes in Actuarial Assumptions 862,651 - Difference Between Projected and Actual Investment Earnings - 86,806 Contributions Subsequent to the Measurement Date 295,233 - Total $ 1,157,884 $ 707,758 $295,233 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2020. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Fiscal Year Ended September 30, 2021 $ 14,241 2022 15,612 2023 63,958 2024 (65,909) 2025 38,513 Thereafter 88,478 Total $ 1542893 G. Other Post Employment Benefit (OPEB) Obligations 1. Supplemental Death Benefits Fund Plan Description The City also participates in the single -employer defined benefit group -term life insurance plan operated by the Texas Municipal Retirment System (TMRS) known as the Supplemental Death Benefits Fund (SDBF). SDBF covers both active and retiree benefits with no segregation of assets, and therefore doesn't meet the definition of a trust under GASB No. 75 (i.e., no assets are accumulated for OPEB). 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 particiapation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. 50 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) G. Other Post Employment Benefit (OPEB) Obligations (Continued) 1. Supplemental Death Benefits Fund (Continued) Benefits Payments from this fund are similar to group -term life insurance benefits, and are paid to the designated beneficiaries upon the receipt of an approved application for payment. The death benefit for active employees provides a lump -sum payment approximately equal to the employee's annual salary (calculated based on the employee's actual earnings, for the 12 -month period preceding the month of death). The death benefit for retirees is considered an "other post -employment benefit" (OPEB) and is a fixed amount of $7,500. The obligations of this plan are payable from the SDBF and are not an obligation of, or a claim against, the Pension Trust Fund. Employees Covered by Benefit Terms At the December 31, 2019 valuation and measurement date, the following employees were covered by benefit terms: Inactive employees or beneficiaries currently receiving benefits 173 Inactive employees entitled to but not yet receiving benefits 34 Active employees 246 Total 453 Contributions Contributions are made monthly based on the covered payroll of employee members of the participating member city. The contractually required contribution rate is determined annually for each city. The rate is based on mortality and service experience of all employees covered by the SDBF and the demographics specific to the workforce of the City. There is a one-year delay between the actuarial valuation that serves as the basis for the employer contribution rate and the calendar year when the rate goes into effect. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to pre -fund retiree term life insurance during employees' entire careers. Employees of the City were not required to contribute to the OPEB plan during the fiscal year. The contribution rates for the City were 0.25% of gross earnings in calendar year 2019 and 2020. The City's TMRS SDBF for the year ended September 30, 2020 were $29,938 and were equal to the required contributions. 51 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) G. Other Post Employment Benefit (OPEB) Obligations (Continued) 1. Supplemental Death Benefits Fund (Continued) Changes in the OPEB Liability Balance at 12/31/2018 Changes for the year: Service Cost Interest Change of Benefit Terms Difference Between Expected and Actual Experience Changes of Assumptions Contributions — Employer Contributions — Employees Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Other Changes Net Changes Balance at 12/31/19 Increase (Decrease) Total OPEB Liability $ 989,465 26,769 37,003 (40,603) 178,024 (10,951) 190,242 $ 1,179,707 The following presents the total SDBF OPEB liability of the City, calculated using the discount rate of 2.75%, as well as what the City's total SDBF OPEB liability (asset) would be if it were calculated using a discount rate that is 1 -percentage -point lower (1.75%) or 1 -percentage -point higher (3.75%) than the current rate: 1% Decrease in Discount Rate 1.75% 1% Increase in Discount Rate Discount Rate 2.75% 3.75% Net Pension Liability $19411,896 $1,179,707 $996,199 Supplemental Death Benefits Fund Net Position Detailed information about the plan's net position is available in a separately -issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.com. 52 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) G. Other Post Employment Benefit (OPEB) Obligations (Continued) 1. Supplemental Death Benefits Fund (Continued) OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBs For the year ended September 30, 2020, the City recognized OPEB expense in the amount of $91,874. At September 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to OPEBs from the following sources: Deferred Outflows of Resources Difference Between Expected and Actual Economic Experience (Net of Current Year Amortization) $ - Changes in Actuarial Assumptions 171,138 Differences Between Projected and Actual Investment Earnings (Net of Current Year Amortization) - Contributions Subsequent to the Measurement Date 22,397 Total Deferred Inflows of Resources $ 39,870 40,487 $ 193,535 $ 80,357 $22,397 reported as deferred outflows of resources related to SDBF OPEB resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2021. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Fiscal Year Ended September 30, 2021 $ 28,102 2022 27,636 2023 13,102 2024 21,941 2025 - Thereafter - Total $ 90,781 2. City of Paris Retiree Health Care Plan Plan Description The City has in effect a single employer plan (the Plan) adopted by City Council resolution whereby persons who retire before age sixty-five will be provided health care coverage until they become sixty-five. The contribution requirements of the government are established and may be amended by the governing council. The Plan covers retiree benefits with no segregation of assets, and therefore doesn't meet the definition of a trust under GASB No. 75 (i.e., no assets are accumulated for OPEB). The Plan issues a stand-alone financial report. 53 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) G. Other Post Employment Benefit (OPEB) Obligations (Continued) 2. City of Paris Retiree Health Care Plan (Continued) Benefits Retiree health benefits are available to all retirees who meet the definition of a retiree as set for by City ordinance. Retirees are responsible for the full cost of their retiree health benefits. Retirees who meet certain conditions are eligible for a monthly subsidy from the City toward the purchase of health care coverage until the retiree becomes age 65. Retirees are able to remain on the City group health insurance plan until the retiree reaches age 65 or becomes eligible for Medicare coverage. Retiree premiums are 1.95 times the rates for active employees. Retiree health beneifts are available to spouses and eligible dependents of retirees. All costs for dependents are paid by the retiree if they have them. The City will provide a monthly subsidy to eligible retirees who purchase medical coverage either through the City group insurance plan or from an alternate provider. The cost of coverage for the retiree will be reimbursed up to a maximum amount set by the City with the balance paid by the retiree. Effective January 1, 2020, the maximum amount of the monthly subsidy is $565. Employees Covered by Benefit Terms At the December 31, 2019 valuation and measurement date, the following employees were covered by benefit terms: Inactive Retirees or Beneficiaries Currently Receiving Benefits 11 Inactive, Nonretired Members - Active employees 79 Total 90 Contributions The City's contributions are financed on a pay-as-you-go basis. For the year ended September 30, 2020, the contributions were approximately $30,476. 54 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) G. Other Post Employment Benefit (OPEB) Obligations (Continued) 2. City of Paris Retiree Health Care Plan (Continued) Changes in the OPEB Liability Balance at 12/31/2018 Changes for the year: Service Cost Interest Change of Benefit Terms Difference Between Expected and Actual Experience Changes of Assumptions Contributions — Employer Contributions — Employees Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Other Changes Net Changes Balance at 12/31/19 Increase (Decrease) Total OPEB Liability $ 1,654,600 34,501 60,652 (174,952) 120,032 (74,044) (33,811) $ 1,620,789 The following presents the total Plan OPEB liability of the City, calculated using the discount rate of 2.75%, as well as what the City's total Plan OPEB liability (asset) would be if it were calculated using a discount rate that is I -percentage -point lower (1.75%) or 1 -percentage -point higher (3.75%) than the current rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate 1.75% 2.75% 3.75% Net OPEB Liability $1,717,067 $1,620,789 $1,527,526 The following presents the Plan's total OPEB liability, calculated using the assumed trend rates as well as what the Plan's total OPEB liability would be if it were calculated using a trend rate that is one percent lower or one percent higher: 1% Decrease Net OPEB Liability $1,497,702 Mi Current Healthcare Cost Trend Rate Assumption $1,620,789 1% Increase $1,757,028 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) G. Other Post Employment Benefit (OPEB) Obligations (Continued) 2. City of Paris Retiree Health Care Plan (Continued) OPEB Plan Net Position Detailed information about the plan's net position is available in a separately -issued TMRS financial report. That report may be obtained at 1444 N. Main Street, Paris, Texas 75460. OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBs For the year ended September 30, 2020, the City recognized OPEB expense in the amount of $59,971. At September 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to OPEBs from the following sources: Difference Between Expected and Actual Economic Experience (Net of Current Year Amortization) Changes in Actuarial Assumptions Contributions Subsequent to the Measurement Date Total Deferred Outflows Deferred Inflows of Resources of Resources 125,790 46,603 151,437 24,542 $ 172,393 $ 175,979 $46,603 reported as deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date will be recognized as a reduction of the OPEB liability for the year ending September 30, 2020. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Fiscal Year Ended September 30, 2021 $ (8,909) 2022 (8,909) 2023 (8,909) 2024 (15,245) 2025 (8,217) Thereafter - Total $ (50,189) 56 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) H. Water Sales and Commitments 1. Water Sales The City has contracts extending for several years to sell treated and untreated water to six entities. Total water sales under these contracts to these entities during the year ended September 30, 2020, were approximately $3,116,481. 2. Construction Commitments The City has active construction projects as of September 30, 2020. At year-end, the City's commitments with contractors are as follows: Project To Date Commitment Sewer and Water System Replacement and Related Street Reconstruction $ 21,339,491 $ 2,441,364 Street Construction and Improvement and Other Costs Relating to Such Improvements 2,240,338 275,919 Total $ 23,579,829 $ 2,717,283 3. Water Storage Commitment The City has the right to utilize an undivided 100% of the usable conservation storage space in Pat Mayse Lake between elevations 451 feet and 415 feet above sea level which is estimated at 109,600 acre feet. The Government reserves the right to control and use all storage in accordance with project purposes, to take such measures to preserve life and or property including the right not to make downstream releases and to inspect, maintain, or repair the project. The City will be required to pay 10.526% of the cost of joint -use repair, rehabilitation, and replacement and 26.659% of the annual experienced joint -use operation and maintenance of the project. 4. Civic Center Contract Commitment The City is a party to a contract with the Chamber of Commerce of Lamar County, Inc. whereby three - sevenths of the hotel/motel tax is to be dedicated to a fund to be used for improving, enlarging, equipping, repairing, operating, or maintaining a civic center. The contract provides that the Chamber of Commerce of Lamar County, Inc. will operate the civic center through September 30, 2020, and may be reviewed for four additional one year terms upon written agreement of the parties. Either party may terminate this contract at the end of the current term by giving thirty days notice. 5. Interlocal Cooperative Agreement During the year, the City participated in an interlocal cooperative agreement with the Sulphur River Regional Mobility Authority. The City's payments are to assist in funding completion of approximately 10.4 miles of four -lane divided highway in Delta County, Texas. The City considers this a cost sharing arrangement, accordingly, debt payments are not included in long-term liabilities. Annual payments of $100,827 include principal and interest at 3.68% beginning March 29, 2013, through March 29, 2024. The City is required to establish a sinking fund and to levy and collect property tax. The balance outstanding at September 30, 2020 is $370,500. 57 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) H. Water Sales and Commitments (Continued) 6. Other Commitments - PEDC Daisy Dairy — In 2009, the Board of Directors reached an incentive agreement with Daisy Dairy providing that upon the creation and retention of jobs, PEDC will reimburse Daisy Dairy for the difference between Daisy Dairy's annual potable water bill from the City and Daisy Dairy's fixed annual water bill (calculated at a rate of $1.20/1,000 gallons) multiplied by the actual usage for the year. The remaining balance is estimated to be $171,550. American SpiralWeld - On October 1, 2018, the Board of Directors reached an incentive agreement with American SpiralWeld Pipe Company, LLC. PEDC will invest up to $4,700,000 in cash, land, and improvements in connection with a new manufacturing facility, job creation, and employment retention. The remaining balance is estimated to be $1,207,545. Huhtamaki — On September 17, 2019, the Board of Directors reached a performance agreement with Huhtamaki providing that upon the retention of jobs, PEDC will provide funds to help establish the rail spur from the north/south rail to the Huhtamaki plant. The remaining balance is estimated to be $102,000. J. Skinner — On May 7, 2020, the Board of Directors reached an incentive and performance agreement with J. Skinner providing that upon the retention of jobs, PEDC will provide funds in support of the rail project. The remaining balance is estimated to be $300,000. Turner Industries Group, LLC — On June 1, 2020, the Board of Directors reached a performance agreement with Turner Industries providing that upon retention of jobs, PEDC will provide $400,000 in two equivalent installments. The remaining balance is estimated to be $200,000. I. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City purchases insurance coverage from commercial insurers and participates in risk pools to limit risk of loss in these areas. The risk pools maintain adequate protection from catastrophic losses to protect their financial integrity. Aggregate protection is also maintained to ensure that the City shall at no time be assessed. The City's contributions are limited to the rates calculated under the agreement. There has been no significant reduction in insurance coverage during the year ended September 30, 2020. There have been no settlements in excess of insurance coverage in any of the prior three fiscal years. J. Capital Leases In September 2015, the City began leasing equipment under an agreement classified as a capital lease due to a bargain purchase option. The capital lease and accumulated amortization are as follows: Capital Lease Equipment, at Cost Less: Accumulated Amortization Capital Lease Equipment, Net $ 617,114 285,828 $ 331,286 58 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) J. Capital Leases (Continued) The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of September 30, 2020, are as follows: Year Ending September 30, Amount 2021 $ 72,353 2022 72,353 2023 72,353 2024 72,353 2025 72,353 Total Minimum Lease Payments 361,765 Less: Amount Representing Interest (30,479) Present Value of Net Minimum Lease Payments 331,286 Less: Current Maturities of Capital Lease Obligation (62,412) Long -Term Portion of Capital Lease Obligation $ 268,874 In January 2016, the City began leasing equipment under an agreement classified as a capital lease due to a bargain purchase option. The capital lease and accumulated amortization are as follows: Capital Lease Equipment, at Cost $ 975,185 Less: Accumulated Amortization 355,945 Capital Lease Equipment, Net $ 619,240 The future minimum lease payments required under the capital leases and the present value of the net minimum lease payments as of September 30, 2020, are as follows: Year Ending September 30, Amount 2021 $ 114,337 2022 114,337 2023 114,337 2024 114,337 2025 114,337 2026 114,337 Total Minimum Lease Payments 686,022 Less: Amount Representing Interest (66,782) Present Value of Net Minimum Lease Payments 619,240 Less: Current Maturities of Capital Lease Obligation (95,661) Long -Term Portion of Capital Lease Obligation $ 523,579 K. Long -Term Liabilities In the government -wide financial statements and proprietary funds 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 funds statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as expenses in the year of issuance. 59 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) K. Long -Term Liabilities (Continued) In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as 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, even if withheld from the actual net proceeds received, are reported as debt service expenditures. General Obligation Certificates of Obligation and Other Long -Term Obligations: $3,005,000 Combination Tax and Revenue Certificates of Obligation, Series 2010, due in annual installments varying from $145,000 to $230,000 with final payment due December 15, 2029. Interest is payable semi- annually at rates ranging from 3.0% to 4.200%. On December 15, 2020, or any date thereafter, unpaid principal installments may be prepaid or redeemed prior to their scheduled due dates at the City's option. The certificates are additionally secured by and payable from a limited pledge (not to exceed $1,000) of the surplus revenues of the waterworks and sewer systems. These bonds were issued to provide funds for improvements and expansion to South Collegiate Drive. $4,505,000 General Obligation Refunding Bonds, Series 2012, due in annual installments varying from $390,000 to $405,000 with final payment due December 14, 2021. On December 18, 2012, the City issued this series bearing interest of 2.5% to refund Outstanding Combination Tax and Revenue Certificates of Obligation, Series 2002 ($3,440,000) bearing interest ranging from 4.0% to 4.7% and General Obligation Refunding Bonds, Series 2003 ($1,210,000) bearing interest ranging from 3.75% to 3.9%. The net proceeds of $4,652,190 (after payment of various fees and including premium and accrued interest) were deposited in an escrow fund to prepay the refunded bonds. The issuance of the bonds produced a gross debt service savings of $612,058 and a net present value savings of $584,806. $9,750,000 General Obligation Bonds, Series 2017, due in annual installments varying from $380,000 to $635,000 with final payment due June 15, 2037. On July 17, 2017, the City issued this series bearing interest ranging from 2.125% to 3.0%. On December 15, 2027, or any date thereafter, the outstanding bonds may be redeemed prior to their scheduled maturities at the City's option. The bonds were issued at a premium to provide funds to pay the costs of construction, improving, extending, expanding, upgrading and developing streets and roads, bridges and intersections including, utility relocation, landscapting, sidewalks, traffic safety and operational improvements, the purchase of any necessary right-of-way, drainage, and other related costs, and improving and equipping parks, trails and recreational facilities. $2,900,000 Combination Tax and Surplus Revenue Certificates of Obligation, Series 2013, due in annual installments varying from $145,000 to $165,000 with final payment due June 15, 2032. Interest is payable semi- annually at rates ranging from 0.12% to 1.45%. On June 15, 2023, or any date thereafter, the outstanding bonds may be redeemed prior to their scheduled maturities at the City's option. These bonds were issued to provide funds to pay the costs of improving the potable water distribution system and related costs. The certificates are also secured by a pledge of net revenues of the water works and sewer system. In addition to the purchase of these bonds by the Texas Water Development Board, the City received $500,778 in connection with a loan forgiveness program. The bonds are reported as obligations of the Enterprise Fund. $33,925,000 General Obligation Bonds, Series 2013, due in annual installments varying from $750,000 to $2,850,000 with final payment due December 15, 2032. Interest is payable semi-annually at rates ranging from 4.0% to 5.0%. On December 15, 2023, or any date thereafter, the outstanding bonds may be redeemed prior to their scheduled maturities at the City's option. These bonds were issued August 15, 2014, at a premium for the purpose of replacing and extending water distribution lines and sewer collection lines and making repairs necessitated by the replacement. Voters of the issuer approved the issuance of $45,000,000 in tax bonds. The bonds are reported as obligations of the Enterprise Fund. 60 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) K. Long -Term Liabilities (Continued) General Obligation Certificates of Obligation and Other Long -Term Obligations (Continued): $8,780,000 General Obligation Bonds, Series 2016, due in annual installments varying from $340,000 to $550,000 with final payment due December 15, 2036. Interest is payable semi-annually at rates ranging from 3.0% to 4.0%. On December 15, 2026, or any date thereafter, the outstanding bonds may be redeemed prior to their scheduled maturities at the City's option. These bonds were issued December 1, 2016, at a premium for the purpose of constructing and acquiring improvements and equipping the City's waterworks and sewer system and for replacing and extending water distribution lines and sewer collection lines and construction repairs to streets and drainage infrastructure necessitated by such water and sewer line construction. Voters approved the issuance of $45,000,000 in tax bonds. The bonds are reported as obligations of the Enterprise Fund. $1,390,000 General Obligation Bonds, Series 2018, due in annual installments varying from $100,000 to $220,000 with final payment due June 15, 2028. Interest is payable semi-annually at 2.59%. On December 15, 2026, or any date thereafter, the outstanding bonds may be redeemed prior to their scheduled maturities at the City's option. These bonds were issued May 1, 2018, in the amount of $1,200,000 for the purpose of constructing and acquiring improvements and equipping the City's waterworks and sewer system and for replacing and extending water distribution lines and sewer collection lines and construction repairs to streets and drainage infrastructure necessitated by such water and sewer line construction and in the amount of $190,000 to pay the costs of construction, improving, extending, expanding, upgrading and developing streets and roads, bridges and intersections including, utility relocation, landscapting, sidewalks, traffic safety and operational improvements, the purchase of any necessary right-of-way, drainage and other related costs. The bonds are reported as Enterprise Fund debt and General Obligation debt. $1,500,000 Combination Tax and Surplus Revenue Certificates of Obligation, Series 2020, due in annual installments varying from $135,000 to $165,000 with final payment due June 15, 2030. Interest is payable semi- annually at 1.95%. The certificates of this series are not subject to redemption prior to maturity. These bonds were issued February 1, 2020 for the purpose of paying all or a portion of the City's contractual obligations incurred in connection with the renovation, repair and other improvement of the City's Love Civic Center and paying legal, fiscal and engineering fees in connection with such projects. The bonds are reported as General Obligation debt. The ordinances require that property taxes be levied and collected at a rate sufficient to pay principal and interest as they come due. They also require that these funds be placed in special interest and sinking funds created solely for the benefit of the obligations. At September 30, 2020, the fund balances in the Interest and Sinking Funds are $1,766,863. The State of Texas is requiring additional monitoring of a landfill owned by the City that has been closed for several years. The City and its' consultants estimate that, based on known requirements, future costs may be $150,000. These costs are subject to change resulting from inflation, deflation, technology, or changes in applicable laws or regulations. 61 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) K. Long -Term Liabilities (Continued) General Obligation Certificates of Obligation and Other Long -Term Obligations (Continued): A summary of long-term liability transactions for the year ended September 30, 2020, follows: 62 Balance Balance September 30, September 30, Due Within 2019 Additions Reductions 2020 One Year Governmental Activities Debt Payable Bonds Payable $ 12,840,000 $ 1,500,000 $ 1,365,000 $ 12,975,000 $ 1,170,000 Premium 137,671 - 14,815 122,856 12,719 Capital Leases 1,104,090 - 153,564 950,526 158,073 Total Debt Payable 14,081,761 1,500,000 1,533,379 14,048,382 1,340,792 Compensated Absences 1,118,813 712,310 712,619 1,118,504 111,850 Landfill Post -Closure Care Costs 150,000 - - 150,000 - Governmental Activities Long -Term Liabilities $ 15,350,574 $ 2,212,310 $ 2,245,998 $ 15,316,886 $ 1,4522642 Business -Type Activities Debt Payable Bonds Payable $ 41,075,000 $ - $ 2,200,000 $ 38,875,000 $ 2,300,000 Premium 914,068 - 118,240 795,828 113,784 Total Debt Payable 41,989,068 - 2,318,240 39,670,828 2,413,784 Compensated Absences 211,043 148,764 148,764 211,043 21,104 Business -Type Activities Long -Term Liabilities $ 42,200,111 $ 148,764 $ 2,467,004 $ 39,881,871 $ 2,434,888 Component Unit Note Payables $ 1,6451193 $ - $ 87,799 $ 1,557,394 $ 91,196 Component Unit Long -Term Liabilities $ 1,645,193 $ - $ 87,799 $ 1,557,394 $ 91,196 For the governmental activities, compensated absences are liquidated by the general fund. 62 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) K. Long -Term Liabilities (Continued) General Obligation Certificates of Obligation and Other Long -Term Obligations: (Continued) Long-term debt service requirements for the next five years and after, in five year increments, are as follows: Year Ending General Obligation Water and Sewer PEDC September 30, Principal Interest Principal Interest Principal Interest 2021 $ 1,170,000 $1,452,739 $ 2,300,000 $ 1,538,633 $ 91,196 $ 57,628 2022 1,205,000 328,141 2,345,000 1,445,168 94,725 54,100 2023 730,000 300,309 2,445,000 1,342,040 98,389 50,434 2024 750,000 279,100 2,555,000 1,233,861 101,803 47,547 2025 775,000 256,957 2,665,000 1,119,951 105,474 44,403 2026-2030 4,260,000 930,594 14,640,000 3,940,502 594,532 154,850 2031-2035 2,835,000 425,221 10,870,000 950,873 471,275 32,948 2036-2037 1,250,000 53,723 1,055,000 32,938 - - Totals $12,975,000 $4,026,784 $38,875,000 $11,603,966 $1,557,394 $441,910 PEDC has an outstanding $697,000, Note Payable, issued November 27, 2018, due in monthly installments of $5,086 through November 27, 2033, bearing an interest rate of 3.75%. At September 30, 2020, the balance of the Note Payable was $631,512. PEDC has an outstanding $1,000,000, Note Payable, issued March 5, 2019, due in monthly installments of $7,316 through March 27, 2034, bearing an interest rate of 3.75%. At September 30, 2020, the balance of the Note Payable was $925,882. Sales and Use Taxes (one-quarter of one percent) levied by the City of Paris, Texas, within its boundaries under the Development Corporation Act of 1979, are pledged for payment of bonds and interest of PEDC. The resolution authorizing the issuance of the bonds requires that monthly deposits be made to the Debt Service Fund in an amount sufficient to pay the next maturing bonds and interest. L. Interfund Transfers During the year ended September 30, 2020, the City made transfers from the Water and Sewer fund to the Debt Service fund of $563,321 to make debt service payments. The City also made a transfer of bond proceeds from the Debt Service fund to the Capital Projects fund of $1,438,000. The City made transfers due to reclassification of special revenue funds from General fund to Other Governmental funds of $470,328. Other minor transfers were made between funds making up transfers of Water Debt Other Capital and Transfers General Service Governmental Projects Sewer Out General $ - $ - $ 29,319 $ - $ - $ 29,319 Debt Service 49,658 - - 1,438,000 730,000 2,217,658 Other Governmental 470,328 - - - - 470,328 Water and Sewer 20,000 563,321 - - - 583,321 Transfers In $539,986 $563,321 $ 29,319 $1,438,000 $ 730,000 $3,300,626 63 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) M. Restricted Net Position and Restricted Asset Accounts In order to safeguard the financial integrity of the water and sewer system, the City Council approved a resolution establishing and maintaining funds comparable to those required by the revenue bonds refunded in 2010. At September 30, 2020, these accounts, shown as cash and investments on the Statement of Net Position — Proprietary Funds, are as follows: Reserve Fund Contingency Fund $ 6,200,074 1,928,479 Collections of notes receivable are restricted by grant agreements to be used for building rehabilitation. The balances of the City's restricted asset accounts are as follows: Cash and Cash Equivalents Grants Receivable $ - Lake Crook 3,802 Contingency 969,661 Loan 35,250 Bond Reserves and Sinking Funds 2,728,089 Construction 4,042,174 Other 113,499 Total Restricted Assets $ 7,892,475 N. Related Party Certificates of Deposit and Other Other Investments Receivables $ - $ 1,820,326 577,745 - 2,234,130 - 2,772,407 - $ 5,584,282 $ 1,820,326 The City Council appoints the governing board of an entity which is legally separate from the City. The City is not able to impose its will on this entity, and a financial benefit/burden relationship is not present; therefore, it is considered a related organization. O. 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 which may be disallowed by the grantor cannot be determined at this time although the City expects such amounts, if any, to be immaterial. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. 64 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2020 IV. Detailed Notes on All Activities and Funds (Continued) O. Contingent Liabilities (Continued) The City has incurred certain asset retirement obligations related to the operation of its wastewater utility system. The estimated liability of the legally required closure costs for the wastewater utility system cannot be reasonable estimated as of September 30, 2020, since the specific legally required costs of retirement have not yet been identified. The City anticipates identifying those specific legally required costs and obtaining an estimate of those costs in a subsequent fiscal year. P. Tax Abatements As of September 30, 2020, the City provides tax abatements through two progams-Industrial and Residential: 1. Industrial abatements are possible for manufacturing, research, regional distribution, regional services, regional tourist entertainment, basic industry, and any primary jobs creating industry. The property involved must be newly created or improvements to an existing facility. Abatements may be extended to the value of buildings, structures, fixed machinery and equipment, site improvements, tangible personal property, and office space and improvements necessary to the operation and administration of the facility. Inventory and supplies are not eligible for abatement. The City Council grants abatements on a case by case basis. The abatement is stated as a percentage of the eligible property under consideration and for a specified period of time up to ten years. The City has a written industrial tax abatement policy. Provisions for recapturing abated taxes, if any, are included in this policy. 2. Residential abatements are granted for five year periods. The property involved must be new residential structures or improvements to existing structures that will be at least a 20% increase in the previous appraised value of the property. The abatements are stated as a percentage of the increased value using the following schedule: Year 1-100%, Year 2-100%, Year 3-80%, Year 4-60%, and Year 5-40%. The City has a standard written residential tax abatement agreement. Provisions for recapturing abated taxes, if any, are included in this policy. Tax Abatement Program Industrial Incentives Residential Incentives Q. Prior Period Adjustment Amount of Taxes Abated 2019-20 $ 1,195,642 437 During fiscal year 2020, the City determined that an adjustment of $210,096 was necessary to the beginning balance of the Firefighters' Relief and Retirement Fund pension liability. During fiscal year 2020, the City also determined that adjustments were necessary to reclassify funds held in General Fund to Special Revenue funds. The prior period adjustment for this purpose totaled $415,120. Cash, grant receivable, various payable and deferred revenue accounts were also adjusted for a total of $356,837 and $41,498 for governmental and business -type activities, respectively. The prior period adjustment totaled $982,053 for governmental activities and $41,498 for business type activities. The restated beginning net position for governmental activities and business type activities is $32,659,915 and $42,211,693, respectively. R. Subsequent Event In November 2020, the City issued $1,765,000 General Obligation Refunding Bonds, Series 2020. The interest rate is 1.24% paid semi-annually with the final maturity date due on September 30, 2030. In May 2021, the City issued $43,855,000 Combination Tax and Surplus Revenue Certificates of Obligation, Series 2021, to fund purchases of equipment and vehicles. The interest rate is payable semi-annually at rates ranging from 2.0% to 5.0%, with the final maturity date due on September 30, 2051. 65 REQUIRED SUPPLEMENTARY INFORMATION CITY OF PARIS, TEXAS Required Supplementary Information Texas Municipal Retirement System - Schedule of Changes in Net Pension Liability Year Ended September 30, 2020 Total Pension Liability Service Cost Interest Changes in Benefit Terms Differences Between Expected and Actual Experience Changes in Assumptions Benefit Payments, Including Refunds of Employee Contributions Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending Plan Fiduciary Net Position Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Other Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending City's Net Pension Liability (Asset) - Ending Plan Fiduciary Net Position as a Percentage of the Total Pension Liability Covered Payroll City's Net Pension Liability as a Percentage of Covered Payroll Schedule I Note: The pension schedules in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 66 Plan Year Ended December 31, 2019 2018 2017 2016 2015 2014 $ 1,233,792 $ 1,198,978 $ 1,192,255 $ 1,190,613 $ 1,084,666 $ 1,084,779 4,233,112 4,092,798 3,952,930 3,826,176 3,718,773 3,592,818 - - - - 1,615,467 - (260,390) (118,708) 19,208 (211,467) (159,282) (191,294) (110,977) - - - - - (3,122,282) (3,101,195) (3,090,075) (2,766,533) (2,741,148) (2,632,638) 1,973,255 2,071,873 2,074,318 2,038,789 3,518,476 1,853,665 63,657,022 61,585,149 59,510,831 57,472,042 53,953,566 52,099,901 $6 $ 63,657,022 $ 61,585,149 $ 59,510,831 $ 57,472,042 $ 53,953,566 $ 845,646 $ 825,989 $ 817,914 $ 669,501 $ 700,159 $ 721,733 730,054 705,973 704,087 701,189 676,545 667,048 8,988,070 (1,845,475) 7,698,497 3,607,913 80,774 3,031,103 (3,122,282) (3,101,195) (3,090,075) (2,766,533) (2,741,148) (2,632,638) (50,855) (35,702) (39,921) (40,766) (49,204) (31,651) (1,527) (1,865) (2,023) (2,196) (2,430) (2,602) 7,389,106 (3,452,275) 6,088,479 2,169,108 (1,335,304) 1,752,993 58,216,474 61,668,749 55,580,270 53,411,162 54,746,466 52,993,473 $ 6505,580 $ 58,216,474 $ 61,668,749 $ 55,580,270 $ 53,411,162 $ 54,746,466 $ 24,697 $ 5,440,548 $ (83,600) $ 3,930,561 $ 4,060,880 $ (792,900) 99.96% 91.45% 100.14% 93.40% 92.93% 101.47% $ 12,167,574 $ 11,766,222 $ 11,734,791 $ 11,684,128 $ 11,203,172 $ 11,177,790 0.20% 46.24% -0.71% 33.64% 36.25% -7.09% Note: The pension schedules in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 66 CITY OF PARIS, TEXAS Required Supplementary Information Texas Municipal Retirement System - Schedule of City Pension Contributions Year Ended September 30, 2020 Schedule 2 Notes to Schedule Valuation Date Actuarially determined contribution rates are calculated as of December 31 and become effective January, 13 months later. Methods and Assumptions used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Fiscal Year Ended September 30, Remaining Amortization Period 24 years Asset Valuation Method 2020 2019 2018 2017 2016 2015 Contractually Required Fiscal Year Contribution S 852,884 S 834,605 S 825,691 S 801,727 S 733,564 S 704,441 Contribution in Relation to the Contractually Required Fiscal Year Contribution (852,884) (834,605) (825,691) (841,727) (733,564) (704,441) Contribution Deficiency (Excess) $ - S - S - S - S - S _ Covered Payroll S 11,975,225 S 11,980,216 S 11,846,360 S 11,615,574 $ 12,058,579 S 11,203,172 Contributions as a Percentage of Covered Payroll 7.12% 6.97% 6.97% 6.90% 6.08% 6.29% Notes to Schedule Valuation Date Actuarially determined contribution rates are calculated as of December 31 and become effective January, 13 months later. Methods and Assumptions used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 24 years Asset Valuation Method 10 year smoothed market; 12% soft corridor Inflation 2.50% Salary Increases 3.50% to 11.50%, including inflation Investment Rate of Return 6.75% Retirement Ace Experience -based table based on rates that are specific to the Citv's plan of benefits. Last updated for the 2019 valuation pursuant to an experience studv of the period 2010-2014. Mortality Post Retirement: PUB(10) mortality tables, with the Public Safety table used for males and the General Employee tables used for females. The rates are proiected on a fully generational basis with scale BB. Other Information There were no benefit changes during the year. Note: The pension schedules in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 67 CITY OF PARIS, TEXAS Required Supplementary Information Paris Firefighters' Relief and Retirement Fund - Schedule of Changes in Net Pension Liability Year Ended September 30, 2020 Total Pension Liability Service Cost Interest Changes in Benefit Terms Differences Between Expected and Actual Experience Changes in Assumptions Benefit Payments, Including Refunds of Employee Contributions Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending Plan Fiduciary Net Position Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expense Other Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending City's Net Pension Liability (Asset) - Ending Plan Fiduciary Net Position as a Percentage of the Total Pension Liability Covered Payroll City's Net Pension Liability as a Percentage of Covered Payroll Schedule 3 Plan Year Ended December 31, 2019 2018 2017 2016 2015 2014 S 244,258 $ 263,477 $ 254,567 $ 258,484 $ 247,353 $ 236,701 1,081,834 1,109,567 1,094,074 1,109,262 1,092,874 1,087,700 (650,764) - (65,973) - (238,406) 562,256 - 616,266 - 134,458 (1,222,906) (1,052,502) (1,249,430) (1,136,379) (1,156,654) (1,200,964) 103,186 232,034 99,211 781,660 183,573 19,489 15,289,040 15,057,006 14,957,795 14,175.471 13,991,898 13,972,409 $ 15,392,226 $ 15,289,040 $ 15,057,006 S 14,957,131 S 14,175,471 S 13,991,898 $ 393,136 $ 336,951 $ 326,396 $ 317,902 $ 310,483 $ 281,896 449,298 411,944 407,996 397,475 388,212 352,370 758,981 (302,649) 578,324 377,387 (121,104) 245,555 (1,222,906) (1,052,502) (1,249,430) (1,136,379) (1,156,654) (1,200,964) (33,025) (31,444) (37,553) (70,404) (6,500) (84,445) 5 2,121 - 5,315 345,484 (637,700) 25,738 (111,898) (585,563) (400,273) 4,152,310 4,790,010 4,764,272 4,876,170 5,461,733 5,862,006 $ 4,497,794 $ 4,152,310 $ 4,790,010 $ 4,764,272 $ 4,876,170 $ 5,461,733 $ 10,894,432 $ 11,136,730 $ 10,266,996 $ 10,192,859 $ 9,299,301 $ 8,530,165 29.20% 27.16% 31.81% 31.85% 34.40% 39.03% $ 2,808,113 $ 2,712,961 $ 2,717,229 $ 2,785,912 $ 2,511,047 $ 2,368,370 388.00% 410.50% 377.85% 365.87% 370.34% 360.17% Note: The pension schedules in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 68 CITY OF PARIS, TEXAS Required Supplementary Information Paris Firefighters' Relief and Retirement Fund Schedule of City Contributions Year Ended September 30, 2020 Schedule 4 Fiscal Year Ended September 30, 2020 2019 2018 2017 2016 2015 Contractually Required Fiscal Year Contribution $ 393,157 S 336,951 $ 326,067 S 320,851 S 332,665 S 301,329 Contribution in Relation to the Contractually Required Fiscal Year Contribution (393,157) (336,951) (326,067) (320,851) (332,665) (301,329) Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - Covered Payroll $ 2,817,872 $ 2,713,093 S 2,717,229 S 2,795,465 S 2,772,967 S 2,511,047 Contributions as a Percentage of Covered Payroll 13.95% 12.42% 12.00% 11.48% 12.00% 12.00% Notes to Schedule Valuation Date Actuarially determined contribution rates are calculated as of December 31, 2018, revised valuation, with results forward to December 31, 2019. Methods and Assumptions used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll Remaining Amortization Period 32 years Asset Valuation Method The fair value of assets plus 20% of the unrecognized (gainsylosses from each of the past four years. The resulting value is further limited to be no less than 80% and no greater than 120% of the fair value of assets. Salary Increases 3.50%, including inflation Investment Rate of Return 7.25% Retirement Atte Active members are assumed to retire once thev have either (a) both attained the age of 55 and completed at least 20 veers of service or (b) satisfied the rule of 80. Active members who have alreadv met the requirements for service retirement are assumed to retire one veer after the valuation date. Mortality Employee and healthy annuitant rates from the Pub -2010 Public Safety Below Median Mortality Table, generationally proiected using the ultimate rates of the MP improvement scale. Other Information There were no benefit changes during the year. Note: The pension schedules in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 69 CITY OF PARIS, TEXAS Schedule 5 Required Supplementary Information Texas Municipal Retirement System - Schedule of Changes in Total OPEB Liability and Related Ratios Year Ended September 30, 2020 Plan Year Ended December 31, 2019 2018 2017 Total OPEB Liability Service Cost Interest Changes in Benefit Terms Differences Between Expected and Actual Experience Changes in Assumptions Benefit Payments, Including Refunds of Employee Contributions Net Change in Total OPEB Liability Total OPEB Liability - Beginning Total OPEB Liability - Ending Covered Payroll City's Total OPEB Liability as a Percentage of Covered Payroll $ 26,769 $ 30,592 $ 26,990 37,003 33,951 33,850 (40,603) (13,049) - 178,024 (67,751) 76,984 (10,951) (9,413) (9,388) 190,242 (25,670) 128,436 989,465 1,015,135 886,699 $ 1,179,707 $ 989,465 $ 1,015,135 $ 12,167,574 $ 11,766,222 $ 11,734,791 9.70% 8.41% 8.65% Note: The pension schedules in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 70 CITY OF PARIS, TEXAS Required Supplementary Information Texas Municipal Retirement System - Schedule of City OPEB Contributions Year Ended September 30, 2020 Fiscal Year Ended September 30, 2020 2019 2018 Actuarially Determined Contribution $ 29,938 $ 29,385 $ 27,247 Contributions in Relation to Actuarially Determined Contribution (29,938) (29,385) (27,247) Contribution Deficiency (Excess) $ - $ $ Covered Payroll $ 11,975,225 $ 11,980,216 $ 11,846,360 Contributions as a Percentage of Covered Payroll 0.25% 0.25% 0.23% Notes to Schedule Valuation Date Actuarially determined contribution rates are calculated as of December 31 and become effective January, 13 months later. Methods and Assumptions used to Determine Contribution Rates: Schedule 6 Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll, Closed Remaining Amortization Period 17 years Asset Valuation Method 10 year smoothed market; 15% soft corridor Inflation 2.50% Salary Increases 3.50% to 11.50%, including inflation Investment Rate of Return 6.75% Retirement Age Experience -based table based on rates that are specific to the City's plan of benefits. Last undated for the 2015 valuation pursuant to an experience studv of the period 2010-2014. Mortalitv Service Retirees: 2019 Municipal Retirees of Texas Mortality tables. The rates are projected on a fullv generational basis with scale UMP. Disabled Retirees: 2019 Municioal Retirees of Texas Mortality Tables with a 4 vear set -forward for males and a 3 vear set -forward for females. In addition, a 3.5% and 3% minimum mortality rate will be aonlied to reflect the imuairment for vouneer members who become disabled for males and females. respectively. The rates are uroiected on a fully generational basis by Scale UMP to account for future mortality imarovements subiect to the floor. Other Information There were no benefit changes during the year. Note: The pension schedules in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 71 CITY OF PARIS, TEXAS Required Supplementary Information City of Paris Retiree Health Care Plan - Schedule of Changes in Total OPEB Liability and Related Ratios Year Ended September 30, 2020 Total OPEB Liability Service Cost Interest Changes in Benefit Terms Differences Between Expected and Actual Experience Changes in Assumptions Benefit Payments, Including Refunds of Employee Contributions Net Change in Total OPEB Liability Total OPEB Liability - Beginning Total OPEB Liability - Ending Covered Payroll City's Total OPEB Liability as a Percentage of Covered Payroll Plan Year Ended December 31, 2019 2018 Schedule 7 2017 $ 34,501 $ 36,808 $ 36,410 60,652 55,250 61,432 (174,952) (10,869) - 120,032 (36,122) 51,925 (74,044) (82,466) (103,929) (33,811) (37,399) 45,838 1,654,600 1,691,999 1,646,161 $ 1,620,789 $ 1,654,600 $ 1,691,999 $ 3,799,135 $ 4,814,704 $ 5,284,495 42.66% 34.37% 32.02% Note: The pension schedules in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 72 CITY OF PARIS, TEXAS Schedule 8 Required Supplementary Information City of Paris Retiree Health Care Plan - Schedule of City Contributions Year Ended September 30, 2020 Fiscal Year Ended September 30, 2020 2019 2018 Actuarially Determined Contribution Contributions in Relation to Actuarially Determined Contribution Contribution Deficiency (Excess) Covered Payroll Contributions as a Percentage of Covered Payroll $ 30,476 $ 30,854 $ 33,407 (30,476) (30,854) (33,407) Entry Age Normal Inflation 2.50% Salary Increases 3.50% to 11.50% for TMRS and 4.10% to 6.00% for firefighters, including $ 3,517,400 $ 4,814,704 $ 5,284,495 0.87% 0.64% 0.63% Notes to Schedule Valuation Date December 31, 2019 Methods and Assumptions used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Inflation 2.50% Salary Increases 3.50% to 11.50% for TMRS and 4.10% to 6.00% for firefighters, including inflation. Mortality TMRS: For healthy retirees, the gender -distinct 2019 Municipal Retirees of Texas Mortality Tables are used. Firefighters: For healthy retirees, the Pub - 2010 Public Safety Below Median mortality tables are used. The rates are projected on a fully generational basis using the ultimate mortality improvement rates in the MP tables to account for future mortality improvements. Other Information There were no benefit changes during the year. Note: The pension schedules in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 73 COMBINING AND INDIVIDUAL NONMAJOR FUND STATEMENTS AND SCHEDULES CITY OF PARIS, TEXAS Nonmajor Governmental Funds September 30, 2020 Special Revenue Special revenue funds are used to account for specific revenues that are legally restricted to expenditures for particular purposes. Community Development Block Grant - This fund accounts for funds received from various federal grant programs and expended for community development purposes. Special Revenue Fund - This fund accounts for funds received from various sources and can be expended for improving efficiency of the administration of justice; enhancing child safety, health, and nutrition; security devices and technological enhancements for municipal court; and other improvement activity. Library Memorial Funds — These funds account for resources given for book and library related purposes in memory of individuals. Permanent Funds Library Trust Funds — These funds account for resources of a permanent nature whereby only earnings and not principal may be used for books and library -related purposes. Other Major Governmental Funds Debt Service Fund — This fund accounts for the accumulation of resources and the payment of general obligation principal and interest. Capital Projects Fund — This fund accounts for proceeds from bond issues and transfers. 74 CITY OF PARIS, TEXAS Schedule 9 Combining Balance Sheet - Nonmajor Governmental Funds September 30, 2020 LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable $ - $ 11,703 $ - $ 11,703 $ - $ 11,703 Total Liabilities - 11,703 - 11,703 - 11,703 Fund Balances: Nonspendable Permanent Library Funds Restricted for: Notes Law Enforcement Community Development Assigned: Library Community Development Total Fund Balances Total Liabilities and Fund Balances 98,400 98,400 1,493,902 - 1,493,902 - 1,493,902 415,120 - 415,120 - 415,120 - - 75,801 75,801 - 75,801 220,154 - - 220,154 - 220,154 220,154 1,909,022 75,801 2,204,977 98,400 2,303,377 $ 220,154 $1,920,725 $ 75,801 $2,216,680 $ 98,400 $ 2,315,080 75 Special Revenue Permanent Community Total Development Special Library Library Nonmajor Block Revenue Memorial Trust Governmental Grant Fund Funds Total Funds Funds ASSETS Cash and Cash Equivalents $ 20,254 $ 509,382 $ 75,801 $ 605,437 $ 579 $ 606,016 Investments 199,900 - - 199,900 97,821 297,721 Receivables (Net) - 1,411,343 - 1,411,343 - 1,411,343 Total Assets $ 220,154 $1,920,725 $ 75,801 $2,216,680 $ 98,400 $ 2,315,080 LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable $ - $ 11,703 $ - $ 11,703 $ - $ 11,703 Total Liabilities - 11,703 - 11,703 - 11,703 Fund Balances: Nonspendable Permanent Library Funds Restricted for: Notes Law Enforcement Community Development Assigned: Library Community Development Total Fund Balances Total Liabilities and Fund Balances 98,400 98,400 1,493,902 - 1,493,902 - 1,493,902 415,120 - 415,120 - 415,120 - - 75,801 75,801 - 75,801 220,154 - - 220,154 - 220,154 220,154 1,909,022 75,801 2,204,977 98,400 2,303,377 $ 220,154 $1,920,725 $ 75,801 $2,216,680 $ 98,400 $ 2,315,080 75 CITY OF PARIS, TEXAS Schedule 10 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended September 30, 2020 Net Changes in Fund Balances 2,052 1,291,605 1,332 1,294,989 2,393 1,297,382 Fund Balances - Beginning 218,102 2022297 74,469 Special Revenue 96,007 590,875 Permanent - 415,120 - 415,120 Community Fund Balances - Ending $ 220,154 $ 1,9092022 $ 75,801 $21)204,977 $ 98,400 $ 223032377 Total Development Library Library Nonmajor Block Special Memorial Trust Governmental Grant Revenue Funds Total Funds Funds REVENUES Fees and Fines $ - $ 18,893 $ - $ 18,893 $ - $ 18,893 Hotel Occupancy Taxes - 35,497 - 35,497 - 35,497 Intergovernmental - 1,789,823 - 1,789,823 - 1,789,823 Use of Money and Property 2,052 1,903 707 4,662 2,393 7,055 Miscellaneous - 64,740 1,321 66,061 - 66,061 Total Revenues 2,052 1,910,856 2,028 1,914,936 2,393 1,917,329 EXPENDITURES Current General Government - 73,458 - 73,458 - 73,458 Public Safety - 26,170 - 26,170 - 26,170 Community Development - - - - - - Health - 36,258 - 36,258 - 36,258 Culture and Recreation - - 696 696 - 696 Debt Service Principal - - - - - - Interest & Other Charges - - - - - - Capital Outlay General Government - - - - - - Public Safety - 42,356 - 42,356 - 42,356 Total Expenditures - 178,242 696 178,938 - 178,938 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,052 1,732,614 1,332 1,735,998 2,393 1,738,391 Other Financing Sources (Uses) Transfers In - 29,319 - 29,319 - 29,319 Transfers Out - (470,328) - (470,328) - (470,328) Total Other Financing Sources (Uses) - (441,009) - (441,009) - (441,009) Net Changes in Fund Balances 2,052 1,291,605 1,332 1,294,989 2,393 1,297,382 Fund Balances - Beginning 218,102 2022297 74,469 494,868 96,007 590,875 Prior Period Adjustment - 415,120 - 415,120 - 415,120 Fund Balances - Ending $ 220,154 $ 1,9092022 $ 75,801 $21)204,977 $ 98,400 $ 223032377 76 CITY OF PARIS, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Special Revenue Fund Year Ended September 30, 2020 REVENUES Fees and Fines Hotel Occupancy Taxes Intergovernmental Interest Earned Miscellaneous Total Revenues EXPENDITURES Municipal Court Police Health Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Changes in Fund Balance Fund Balance - Beginning Prior Period Adjustment Fund Balance - Ending Schedule 1 I Budgeted Amounts Variance with Original Final Actual Final Budget $ 33,500 $ 33,500 $ 18,893 $ (14,607) - - 35,497 35,497 - - 1,789,823 1,789,823 - - 1,903 1,903 - - 64,740 64,740 33,500 33,500 1,910,856 1,877,356 102,250 102,250 73,458 28,792 74,000 74,000 68,526 5,474 3,500 3,500 36,258 (32,758) 179,750 179,750 178,242 1,508 (146,250) (146,250) 1,732,614 1,878,864 - - 29,319 29,319 - - (470,328) (470,328) - - (441,009) (441,009) (146,250) (146,250) 1,291,605 1,437,855 202,297 202,297 202,297 - - - 4151,120 415,120 $ 56,047 $ 56,047 $ 1,909,022 $ 1,852,975 77 CITY OF PARIS, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Debt Service Fund Year Ended September 30, 2020 REVENUES Property Taxes Hotel Occupancy Taxes Interest Earned Total Revenues EXPENDITURES Bond Principal Retirement Interest and Fiscal Charges Total Expenditures Excess of Revenues Over Expenditures Other Financing Sources (Uses): Certificates of Obligation Issued Certificates of Obligation Issue Costs Transfers In Transfers Out Total Other Financing Sources (Uses) Net Changes in Fund Balance Fund Balance - Beginning Budgeted Amounts Original Final Actual Schedule 12 Variance with Final Budget $ 1,817,287 $ 1,817,287 $ 1,892,804 $ 75,517 - - 193,505 193,505 - - 17,768 17,768 1,817,287 1,817,287 2,104,077 286,790 2,159,098 2,159,098 1,449,098 710,000 403,388 403,388 398,844 4,544 2,562,486 2,562,486 1,847,942 714,544 (745,199) (745,199) 256,135 1,001,334 745,199 745,199 1,500,000 1,500,000 (62,000) (62,000) 563,321 (181,878) (2,217,658) (2,217,658) 745,199 745,199 (216,337) (961,536) 39,798 39,798 1,727,065 1,727,065 1,727,065 Fund Balance - Ending $ 1,727,065 $ 1,727,065 $ 1,766,863 $ 39,798 78 CITY OF PARIS, TEXAS Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Capital Projects Fund From Inception and Year Ended September 30, 2020 REVENUES Interest Earned Other Total Revenues EXPENDITURES City Council Police Fire Community Development Engineering Parks and Recreation Solid Waste Streets and Highways Health Library Cox Field Airport Total Expenditures Deficiency of Revenues Over Expenditures Other Financing Sources (Uses): Transfers In Transfers Out Certificates of Obligation Issued SPECIAL ITEM Proceeds from Sale of Assets Net Changes in Fund Balance Prior Current Total Years Year to Date Schedule 13 Project Authorization (Budget) $ 4827462 $ 45,496 $ 527,958 $ - - 245,248 245,248 - 482,462 290,744 773,206 - 361,243 285,361 646,604 314,109 285,630 - 285,630 285,630 915,942 - 915,942 915,942 725,207 - 725,207 870,350 35,555 - 35,555 35,555 563,384 - 563,384 923,781 568,811 - 568,811 1,181,019 9,381,002 3,786,189 13,167,191 8,095,265 144,232 - 144,232 228,000 7,100 - 7,100 35,000 110,667 - 110,667 90,100 13,098,773 4,071,550 17,170,323 12,974,751 (12,616,311) (3,780,806) (16,397,117) (12,974,751) 8,166,042 (2,549,549) 12,918,399 90,100 $ 6,008,681 12438,000 9,604,042 - - (2,549,549) - 12,918,399 - 90,100 - (2,342,806) $ 3,665,875 $ (12,974,751) Fund Balance - Beginning 6,178,988 Fund Balance - Ending $ 3,836,182 79 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS CITY OF PARIS, TEXAS Capital Assets Used in the Operation of Governmental Funds Comparative Schedules by Source September 30, 2020 and 2019 Governmental Funds Capital Assets: Land Buildings Improvements Other Than Buildings Machinery and Equipment Infrastructure Construction in Progress Total Governmental Funds Capital Assets Investments in Governmental Funds Capital Assets by Source: General Fund Capital Projects Funds Donations Total Investments in Governmental Funds Capital Assets by Source 80 2020 $ 5,950,108 20,525,627 6,601,672 22,317,003 46,013,892 6,664,407 Schedule 14 2019 $ 5,927,478 20,400,413 6,571,317 21,410,630 45,209,042 3,253,761 $ 108,072,709 $ 102,772,641 $ 68,693,870 31,747,955 7,630,884 $ 108,072,709 $ 67,252,092 27,912,295 7,608,254 $ 102,772,641 STATISTICAL SECTION CITY OF PARIS, TEXAS Statistical Section September 30, 2020 This part of the City of Paris' comprehensive annual financial report contains detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the government's overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the government's most significant local revenue source, the ad valorem tax. Debt Capacity These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader under- stand how the information in the government's financial report relates to the services the government provides and the activities it performs. 81 Tables 1-4 Tables 5 - 8 Tables 9-13 Tables 14-15 Tables 16-19 CITY OF PARIS, TEXAS Table 1 Net Assets/Position by Component Last Ten Fiscal Years (Accrual Basis of Accounting) Unaudited Business -Type Activities: Net Investment in Capital Assets $ 31,855,910 $ 34,499,646 $ 33,003,801 $ 33,041,432 Restricted - - - - Unrestricted 11,416,134 8,496,996 10,075,150 122172,944 Total Business -Type Activities, Net Position $ 43,272,044 $ 42,996,642 $ 43,078,951 $ 45,214,376 Primary Government: Net Investment in Capital Assets $ 57,167,044 Fiscal Year $ 61,736,602 $ 61,469,190 2011 2012 2013 2014 Governmental Activities: Unrestricted 24,217,521 21,197,755 22,376,979 Net Investment in Capital Assets $ 25,311,134 $ 27,532,353 $ 28,732,801 $ 28,427,758 Restricted 3,958,563 5,421,971 4,949,039 4,949,039 Unrestricted 12,801,387 12,700,759 12,301,829 10,023,934 Total Governmental Activities, Net Position $ 42,071,084 $ 45,655,083 $ 45,983,669 $ 43,400,731 Business -Type Activities: Net Investment in Capital Assets $ 31,855,910 $ 34,499,646 $ 33,003,801 $ 33,041,432 Restricted - - - - Unrestricted 11,416,134 8,496,996 10,075,150 122172,944 Total Business -Type Activities, Net Position $ 43,272,044 $ 42,996,642 $ 43,078,951 $ 45,214,376 Primary Government: Net Investment in Capital Assets $ 57,167,044 $ 62,031,999 $ 61,736,602 $ 61,469,190 Restricted 3,958,563 5,421,971 4,949,039 4,949,039 Unrestricted 24,217,521 21,197,755 22,376,979 22,196,878 Total Primary Government, Net Assets/Position $ 85,343,128 $ 88,651,725 $ 89,062,620 $ 88,615,107 82 Table I (Continued) Fiscal Year 2015 2016 2017 2018 2019 2020 $ 28,043,910 $ 30,505,784 $ 21,971,338 $ 20,713,428 $ 18,064,569 $ 21,907,532 3,393,033 3,003,799 3,004,564 12,548,372 8,782,171 8,272,920 5,694,771 1,890,470 11,159,128 53,717 4,831,122 6,866,108 $ 37,131,714 $ 35,400,053 $ 36,135,030 $ 33,315,517 $ 31,677,862 $ 37,046,560 $ 33,331,038 $ 33,466,855 $ 24,198,822 $ 18,322,809 $ 25,779,748 $ 28,880,579 13,508,734 14,460,833 22,900,345 22,945,722 16,473,443 14,923,230 $ 46,839,772 $ 47,927,688 $ 47,099,167 $ 41,268,531 $ 42,253,191 $ 43,803,809 $ 61,374,948 $ 63,972,639 3,393,033 3,003,799 19,203,505 16,3 51,3 03 $ 46,170,160 $ 39,036,237 $ 43,844,317 $ 50,788,111 3,004,564 12,548,372 8,782,171 8,272,920 34,059,473 22,999,439 21,304,565 21,789,338 $ 83,971,486 $ 83,327,741 $ 83,234,197 $ 74,584,048 $ 73,931,053 $ 80,850,369 83 CITY OF PARIS, TEXAS Table 2 Changes in Net Assets/Position Last Ten Fiscal Years (Accrual Basis of Accounting) Unaudited Business -Type Activities: Charges for Services: Water and Sewer Service 13,798,137 13,852,441 14,005,748 13,881,328 Total Primary Government Program Revenues 20,968,042 21,055,120 20,927,473 20,193,260 84 Fiscal Year 2011 2012 2013 2014 EXPENSES Governmental Activities: General Government $ 2,890,290 $ 2,094,110 $ 2,905,871 $ 2,997,393 Finance 437,320 480,144 393,526 407,463 Public Safety 9,880,712 10,771,351 9,982,926 10,449,953 Public Works 71667,367 7,568,269 8,396,001 7,909,651 Health 3,202,551 3,416,360 3,348,281 3,228,513 Library Services 719,240 712,033 787,242 816,376 Cox Field Airport 220,027 261,463 259,938 158,632 Interest on Long -Term Debt 438,460 342,554 436,690 287,256 Bond Issue Costs - - 314,765 - Total Governmental Activities Expenses 25,455,967 25,646,284 26,825,240 26,255,237 Business -Type Activities: Water and Sewer Services 10,694,363 11,008,967 11,504,538 11,940,791 Total Primary Government Expenses 36,150,330 36,655,251 38,329,778 38,196,028 PROGRAM REVENUES Governmental Activities: Charges for Services: General Government - - 2,447 3,310 Public Safety 606,792 729,267 412,150 433,828 Public Works 1,775,841 1,788,753 1,860,656 1,799,918 Health 2,608,306 2,721,421 2,463,907 2,371,757 Library Services 19,707 20,877 27,824 19,400 Cox Field - - 78,234 67,037 Operating Grants and Contributions 1,953,631 1,305,387 1,959,427 926,506 Capital Grants and Contributions 205,628 636,974 117,080 690,176 Total Governmental Activities Program Revenues 7,169,905 7,202,679 6,921,725 6,311,932 Business -Type Activities: Charges for Services: Water and Sewer Service 13,798,137 13,852,441 14,005,748 13,881,328 Total Primary Government Program Revenues 20,968,042 21,055,120 20,927,473 20,193,260 84 Fiscal Year 2015 2016 2017 2018 2019 2020 Table 2 (Continued) $ 2,909,807 $ 3,463,908 $ 3,748,965 $ 3,421,223 $ 3,651,888 $ 3,927,783 404,567 400,665 398,262 404,443 402,943 481,645 1111037,966 12,595,127 12,456,655 12,061,033 13,228,151 12,727,703 7,508,978 7,020,333 7,126,349 6,882,186 8,274,343 6,699,707 2,404,782 2,633,051 2,836,429 2,884,339 3,205,596 4,267,819 790,339 799,187 781,092 866,435 914,874 846,669 152,063 217,995 235,546 243,666 344,964 311,796 276,197 237,313 185,852 399,291 194,004 115,000 25,484,699 27,367,579 27,769,150 27,162,616 30,216,763 29,378,122 11,929,499 12,100,940 14,095,860 14,594,309 14,568,695 14,026,074 37,414,198 39,468,519 41,865,010 41,756,925 44,785,458 43,404,196 17,634 6,572 181,197 214,000 304,818 277,689 370,308 361,100 342,083 376,322 353,571 562,859 1,862,606 1,780,836 1,463,576 1,470,248 1,437,157 1,473,803 2,391,817 2,519,387 2,609,811 2,732,908 2,979,160 4,790,535 19,433 16,874 127,997 120,942 100,014 60,928 76,689 91,810 98,382 134,716 161,527 161,619 1,396,711 672,298 338,718 154,497 165,064 2,151,740 271,961 424,332 2,147,065 522,574 1,160,602 324,889 6,407,159 5,873,209 7,308,829 5,726,207 6,661,913 9,804,062 14,281,964 14,617,218 13,781,748 14,168,934 14,452,703 15,043,788 20,689,123 20,490,427 21,090,577 19,895,141 21,114,616 24,847,850 85 CITY OF PARIS, TEXAS Table 2 Changes in Net Assets/Position (Continued) Last Ten Fiscal Years (Accrual Basis of Accounting) Unaudited Business -Type Activities: Taxes Investment Earnings Contribution Transfers Total Business -Type Activities Total Primary Government Changes in Net Assets/Position Governmental Activities Business -Type Activities Total Primary Government 162,374 63,722 Fiscal Year 83,206 434,500 2011 2012 2013 2014 Net (Expense)/Revenue (2,527,979) 10,682 (168,006) (3,118,876) Governmental Activities (18,286,062) (18,443,605) (19,903,515) (19,943,305) Business -Type Activities 3,103,774 2,843,474 2,501,210 1,940,537 Total Primary Government, 328,586 (2,582,938) 2,935,768 (275,402) Net Expense (15,182,288) (15,600,131) (17,402,305) (18,002,768) General Revenues and Other Changes in Net Assets/Position Governmental Activities: Taxes Property 7,620,281 7,619,472 7,597,667 7,575,840 Sales 6,033,469 5,993,859 6,304,250 6,416,749 Franchise 2,719,496 2,731,097 2,550,447 2,662,604 Hotel Occupancy 449,213 498,667 572,150 547,354 Investment Earnings 84,327 55,875 64,386 45,799 Grants, Donations, and Miscellaneous - 1,642,126 615,222 122,703 Capital Contributions, 764,880 3,486,508 2,527,979 (10,682) Gain/Loss on Sale of Capital Assets - - - - Transfers - - - - Total Governmental Activities 17,671,666 22,0279604 20,232,101 17,360,367 Business -Type Activities: Taxes Investment Earnings Contribution Transfers Total Business -Type Activities Total Primary Government Changes in Net Assets/Position Governmental Activities Business -Type Activities Total Primary Government 162,374 63,722 (42,124) 83,206 434,500 303,910 550,978 101,000 (764,880) (3,486,508) (2,527,979) 10,682 (168,006) (3,118,876) (2,019,125) 194,888 17,503,660 18,908,728 18,212,976 17,555,255 (614,396) 3,583,999 328,586 (2,582,938) 2,935,768 (275,402) 482,085 2,135,425 $ 2,321,372 $ 3,308,597 $ 810,671 $ (447,513) 86 Table 2 (Continued) Fiscal Year 2015 2016 2017 2018 2019 2020 (19,077,540) (21,494,370) (20,460,321) (21,436,409) (23,554,850) (19,574,060) 2,352,465 2,516,278 (314,112) (425,375) (115,992) 1,017,714 (16,725,075) (18,978,092) (20,774,433) (21,861,784) (23,670,842) (18,556,346) 7,651,005 7,748,872 8,175,530 9,170,951 9,358,943 9,338,087 7,684,113 7,051,858 7,233,526 7,317,162 7,369,079 8,245,939 2,641,537 2,502,614 4,211,397 4,315,694 4,305,851 4,714,021 594,493 630,545 657,270 662,263 675,158 872,418 51,741 80,129 1731656 426,518 581,115 197,203 369,689 315,989 361,125 387,306 272,338 714,470 1,087,474 651,847 - - - - - (57,026) - (57,940) 49,951 25,246 - 1,579,100 382,794 610,955 (523,031) (146,679) 20,080,052 20,503,928 21,195,298 22,832,909 22,089,404 23,960,705 77,787 291,131 315,872 380,393 577,621 427,723 (1,087,474) (1,579,100) (382,794) (610,955) 523,031 146,679 (1,009,687) (1,287,969) (66,922) (230,562) 1,100,652 574,402 19,070,365 19,215,959 21,128,376 22,602,347 23,190,056 24,535,107 1,002,512 (990,442) 734,977 1,396,500 (1,465,446) 4,386,645 1,342,778 1,228,309 (381,034) (655,937) 984,660 1,592,116 $ 2,345,290 $ 237,867 $ 353,943 $ 740,563 $ (480,786) $ 5,978,761 87 General Fund Nonspendable Restricted Unassigned Total General Fund All Other Governmental Funds Reserved Unreserved, Reported in: Special Revenue Funds Permanent Funds Nonspendable Restricted Assigned Unassigned Total All Other Governmental Funds CITY OF PARIS, TEXAS Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Unaudited Fiscal Year Table 3 2011 2012 2013 2014 $ 199,519 $ 218,117 $ 271,292 $ 233,127 - - - 271,269 12,156,169 11,764,593 11,969,203 11,194,101 $ 12,355,688 $ 11,982,710 $ 12,240,495 $ 11,698,497 88,520 89,632 90,062 90,572 3,870,043 5,332,339 4,858,977 3,031,192 532,263 456,463 457,471 389,511 $ 4,490,826 $ 5,878,434 $ 5,406,510 $ 3,511,275 88 Fiscal Year Table 3 (Continued) 2015 2016 2017 2018 2019 2020 $ 294,776 $ 223,911 $ 326,985 $ 418,995 $ 483,575 $ 500,495 331,086 387,950 446,493 498,359 577,814 659,322 12,969,124 10,227,839 10,849,390 11,753,392 12,390,089 15,990,260 $ 13,594,986 $ 10,839,700 $ 11,622,868 $ 12,670,746 $ 13,451,478 $ 17,150,077 90,800 91,565 92,347 93,689 96,007 98,400 2,726,900 2,525,049 12,009,532 10,991,000 8,108,350 7,512,067 267,440 188,569 82,042 299,013 292,571 295,955 - - 57,705 - - - $ 3,085,140 $ 2,805,183 $ 12,241,626 $ 11,383,702 $ 8,496,928 $ 7,906,422 89 CITY OF PARIS, TEXAS Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Unaudited REVENUES Taxes Licenses and Permits Fines and Fees Use of Money and Property Public Safety Sanitation Health Intergovernmental Other Total Revenues EXPENDITURES Current: General Government Finance Public Safety Public Works Health Department Emergency Medical Service Library Cox Field Airport Other Debt Service: Interest Principal Bond Issuance Costs Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources (Uses): Proceeds of Capital Leases General Obligation Bonds Issued Certificates of Obligation Issued Issue Costs Insurance Recoveries Transfers In Transfers Out Long -Term Debt Issued Payment to Escrow Agent and Premium Sale of General Capital Assets Total Other Financing Sources (Uses) Increase (Decrease) in Reserve for Inventory Net Changes in Fund Balances Table 4 Fiscal Year 2011 2012 2013 $ 16,824,545 $ 16,822,577 $ 17,020,156 1121)142 145,792 154,923 501,601 550,496 624,609 313,948 210,476 142,620 40,297 - - 1,461,736 1,468,917 1,463,210 2,578,496 2,818,196 2,453,270 1,768,322 1,858,092 2,069,494 247,354 271,709 317,981 23,848,441 24,146,255 24,246,263 1,219,607 1,029,702 1,197,486 425,455 473,719 393,526 9,154,646 9,659,131 9,462,148 7,459,432 5,757,456 6,646,804 908,339 955,930 1,043,502 2,146,210 2,302,247 2,132,692 630,977 632,515 632,040 107,276 150,848 153,182 1,545,147 1,434,177 1,560,051 945,016 1,080,200 379,241 480,448 424,730 1,185,622 815,623 2,649,513 2,407,415 25,838,176 26,550,168 27,193,709 (1,989,735) (2,403,913) (2,947,446) 1,176,462 5,100,935 3,938,899 (411,581) (1,614,427) (1,410,920) 4,505,000 (4,424,955) - - 72,108 764,881 3,486,508 2,680,132 (15,414) 18,599 53,175 $ (1,240,268) $ 1,101,194 $ (214,139) Debt Service as a Percentage of Noncapital Expenditures 6.11% 6.44% 6.74% 90 Table 4 (Continued) Fiscal Year 2014 2015 2016 2017 2018 2019 2020 $17,194,419 $18,457,686 $17,976,072 $20,280,057 $ 21,447,857 $ 21,672,347 $ 23,106,141 386,775 220,696 152,016 155,363 197,920 277,507 259,117 586,429 573,953 515,147 491,880 495,708 480,618 743,152 138,629 137,030 173,004 272,039 561,234 742,644 375,074 1,472,278 1,462,810 1,474,874 1,463,576 1,470,248 1,437,157 1,462,452 2,111,439 2,383,355 2,519,387 2,609,811 2,614,504 2,991,995 5,117,649 1,603,165 1,662,824 1,096,630 1,463,514 677,072 1,325,665 2,503,393 169,261 224,463 386,853 258,051 346,789 214,502 692,664 23,662,395 25,122,817 24,293,983 26,994,291 27,811,332 29,142,435 34,259,642 1,153,686 1,076,798 1,301,401 11288,458 1,180,280 1,230,366 1,371,042 407,443 404,567 400,665 398,262 404,443 402,943 481,645 9,712,876 10,206,584 11,125,560 11,026,655 10,850,538 11,253,953 12,032,115 6,507,603 5,861,079 5,556,359 5,549,270 5,356,374 5,644,019 5,065,867 916,260 8,672 - - - - - 2,127,225 2,240,853 2,366,673 2,535,135 2,670,131 2,845,874 4,058,990 707,716 692,290 717,395 697,503 736,513 756,566 723,742 97,778 102,539 110,330 129,269 112,562 210,851 179,631 1,548,753 1,641,714 1,771,889 11738,115 1,716,365 1,845,609 1,922,363 311,919 280,733 254,304 196,358 447,294 443,205 398,844 1,226,543 1,077,610 991,899 1,161,513 1,580,682 1,577,803 1,635,788 - - - 103,399 41)410 - - 1,332,959 1,920,359 4,474,952 2,350,010 3,564,942 4,399,885 5,540,837 26,050,761 25,513,798 29,071,427 27,173,947 28,624,534 30,611,074 33,410,864 (2,388,366) (390,981) (4,777,444) (179,656) (813,202) (1,468,639) 848,778 - 617,114 975,185 - - - - - - - 9,913,399 190,000 - - - - - - - - 1,500,000 - - - - - - (62,000) - - - - - 57,835 - 1,782,291 1,504,281 3,437,300 466,536 994,335 27,678 2,570,626 (1,792,973) (416,807) (1,858,200) (83,742) (383,374) (550,708) (2,717,305) - 95,098 - - - - 28,000 (10,682) 1,799,686 2,554,285 10,296,193 800,961 (465,195) 1,319,321 (38,165) 61,649 (70,865) 103,074 40,517 - - $ (2,437,213) $ 1,470,354 $ (2,294,024) $10,219,611 $ 28,276 $ (1,933,834) $ 2,168,099 5.38% 5.76% 5.07% 5.47% 8.09% 7.71% 7.30% 91 CITY OF PARIS, TEXAS Table 5 Property Tax Levies and Collections (1) Last Ten Fiscal Years Unaudited Source: Lamar County Appraisal District Note: (1) Taxes stated are for General Fund and Debt Service Funds. (2) Penalty, interest, and attorney fees not included. 92 Percent Collection of Current of Current Levy Year's Collected Delinquent Fiscal Total Taxes During During Tax Total Roll Year Tax Levy Fiscal Year Fiscal Year Collections Collections 2010 2010-11 $ 7,651,941 $ 7,418,544 96.95% $ 57,409 $ 7,475,953 2011 2011-12 7,543,165 7,387,161 97.93 - 7,387,161 2012 2012-13 7,544,315 7,368,232 97.67 110,036 7,478,268 2013 2013-14 7,498,327 7,309,230 97.48 119,430 7,428,660 2014 2014-15 7,626,530 7,348,250 96.35 111,210 7,459,460 2015 2015-16 7,627,731 7,406,830 97.10 215,544 7,622,374 2016 2016-17 8,093,094 7,940,087 98.11 116,317 8,056,404 2017 2017-18 9,145,965 8,973,214 98.11 62,442 9,035,656 2018 2018-19 9,381,829 9,208,248 98.15 137,647 9,345,895 2019 2019-20 9,332,621 9,047,982 96.95 109,970 9,157,952 Source: Lamar County Appraisal District Note: (1) Taxes stated are for General Fund and Debt Service Funds. (2) Penalty, interest, and attorney fees not included. 92 Ratio Ratio of of Total Delinquent Collections Outstanding Taxes To Total Delinquent To Total Tax Levy Taxes Tax Levy 97.70 $ 110,655 1.45 97.93 156,004 2.07 99.14 190,166 2.52 99.07 186,382 2.48 97.81 279,144 3.66 99.93 221,880 2.91 99.54 153,007 1.89 98.79 172,751 1.89 99.61 173,582 1.85 98.13 284,639 3.05 93 Table 5 (Continued) CITY OF PARIS, TEXAS Property Tax Rates -All Direct and Overlapping Governments (Per $100 of Assessed Value) Last Ten Fiscal Years Unaudited Table 6 Source: Lamar County Appraisal District 94 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 City of Paris M & O $ 0.41713 $ 0.41000 $ 0.41487 $ 0.39129 $ 0.40635 $ 0.42547 $ 0.42443 $ 0.44248 $ 0.43831 $ 0.40868 I & S 0.10287 0.11000 0.09620 0.11066 0.09560 0.07648 0.07752 0.10947 0.11364 0.10740 Total 0.52000 0.52000 0.51107 0.50195 0.50195 0.50195 0.50195 0.55195 0.55195 S 0.51608 Lamar County M & O $ 0.39420 $ 0.39990 $ 0.41850 $ 0.40580 $ 0.42640 $ 0.40920 $ 0.40660 $ 0.37550 $ 0.36740 $ 0.37630 I & S 0.01890 0.01930 0.02020 0.01930 0.01900 0.01830 0.01730 0.01880 0.01910 0.01770 Total 0.41310 0.41920 0.43870 0.42510 0.44540 0.42750 $ 0.42390 0.39430 0.38650 0.39400 Paris ISD M & O $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.06840 I & S 0.25500 0.25500 0.28500 0.28500 0.28500 0.28500 0.28500 0.28500 0.28500 0.28500 Total 1.42500 1.42500 1.45500 $ 1.45500 1.45500 1.45500 1.45500 ' 1.45500 1.45500 S 1.35340 Chisum ISD M & O $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 0.96640 I & S 0.16000 0.16000 0.16000 0.14500 0.14678 0.14678 0.20650 0.19500 0.19000 0.18000 Total 1.20000 1.20000 1.20000 1.18500 1.18678 1.18678 $ 1.24650 1.23500 1.23000 1.14640 North Lamar ISD M & O $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 0.96640 I & S 0.09650 0.08650 0.08150 0.07110 0.06750 0.06750 - - - - Total 1.13650 $ 1.12650 1.12150 $ 1.11110 1.10750 1.10750 1.04000 1.04000 1.04000 0.96640 Paris Junior College M & O $ 0.18974 $ 0.19000 $ 0.18700 $ 0.18660 $ 0.18660 $ 0.18750 $ 0.17730 $ 0.08500 $ 0.08500 $ 0.08400 I&S - - - - - - - - - - Total 0.18974 0.19000 0.18700 0.18660 0.18660 0.18750 0.17730 0.08500 0.08500 0.08400 Source: Lamar County Appraisal District 94 CITY OF PARIS, TEXAS Table 7 Assessed and Estimated Actual Value of Property Last Ten Fiscal Years Unaudited Sources: Lamar County Appraisal District 95 Real Property Personal Property Estimated Estimated Assessed Actual Assessed Actual Roll Year Value Value Value Value 2010 2010-11 $ 927,464,815 $1,420,238,161 $ 551,247,563 $ 622,482,077 2011 2011-12 918,495,080 1,402,956,164 543,332,657 623,174,818 2012 2012-13 931,939,433 1,424,800,859 559,431,805 628,115,774 2013 2013-14 1,033,357,277 1,438,785,698 469,901,615 654,358,864 2014 2014-15 1,007,593,690 1,472,220,698 522,773,397 763,567,027 2015 2015-16 1,006,810,741 1,490,882,796 526,923,827 780,316,817 2016 2016-17 1,148,246,077 1,725,298,577 479,151,390 720,199,051 2017 2017-18 1,206,992,530 1,773,796,952 474,754,769 697,701,527 2018 2018-19 12236,252,824 1,807,476,750 495,983,817 725,129,690 2019 2019-20 1,295,418,472 1,870,747,790 498,742,817 720,268,510 Sources: Lamar County Appraisal District 95 Table 7 (Continued) 96 Total Assessed Estimated Value as a Assessed Actual Percentage of Total Direct Exemptions Value Value Actual Value Tax Rate $ 564,007,862 $1,478,712,378 $2,042,720,238 72.39% $ 0.52000 564,303,245 1,461,827,737 2,026,130,982 72.15 0.52000 561,543,395 1,491,371,238 2,052,916,633 72.65 0.52000 589,885,670 1,503,258,892 2,093,144,562 71.82 0.50195 705,420,637 1,530,367,087 2,235,787,725 68.45 0.50195 737,465,045 1,533,734,568 2,271,199,613 67.53 0.50195 818,100,161 1,627,397,467 2,445,497,628 66.55 0.50195 789,751,180 1,681,747,299 2,471,498,479 68.04 0.55195 800,369,799 1,732,236,641 2,532,606,440 68.40 0.55195 796,855,011 1,794,161,289 2,591,016,300 69.25 0.51608 96 CITY OF PARIS, TEXAS Principal Property Taxpayers September 30, 2020 and 2011 Unaudited Table 8 Totals Source: Lamar County Appraisal District 97 $ 738,402,786 39.34% 2020 Percentage of Total Taxable Freeze Adjusted Assessed Taxable Taxpayer Type of Business Value Rank Assessed Value La Frontera Holdings LLC (Lamar Power Partners) Electric Utility $ 357,997,200 1 19.08% Campbell Soup Company - A Food Manufacturer 124,842,568 2 6.65% Kimberly-Clark Corporation - A Disposable Diapers 98,257,169 3 5.24% Essent PRMC, LP A Hospital 50,053,340 4 2.67% Oncor Electric Delivery Electric Utility 33,864,230 5 1.80% Alpha Lake Limited Shopping Center 18,207,860 6 0.97% Potter Industries Glass Manufacturer 141242,022 7 0.76% Atmos Energy Gas Utility 11,339,620 8 0.60% Huhtamaki Inc Packaging Mfg. 11,319,977 9 0.60% Paris Generation, LP Electric Utility 18,278,800 10 0.97% Campbell Soup Company - B Food Manufacturer - 0.00% Silgan Can Company Can Manufacturer - 0.00% Kimberly-Clark Corporation - B Disposable Diapers - 0.00% Essent PRMC, LP B Hospital - 0.00% Totals Source: Lamar County Appraisal District 97 $ 738,402,786 39.34% 2011 Percentage Taxable of Total Assessed Taxable Value Rank Assessed Value $ 199,223,960 37,797,291 104,568,245 30,955,371 19,316,640 9,543,080 9,112,979 11,623,623 23,702,000 35,315,400 15,213,190 12,100,240 13,245,390 $ 521,717,409 13.63% 3 2.59% 2 7.15% 5 2.12% 7 1.32% - 0.65% - 0.00% - 0.62% - 0.80% 6 1.62% 4 2.42% 8 1.04% 10 0.83% 9 0.91% 35.70% 98 Table 8 (Continued) CITY OF PARIS, TEXAS Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt Per Capita Last Ten Fiscal Years Unaudited Sources: Lamar County Appraisal District City of Paris Table 9 Taxable Fiscal Estimated Assessed Year Population Value Net 2010-11 25,337 $ 1,478,712,378 2011-12 25,337 1,461,827,737 2012-13 25,082 1,491,371,238 2013-14 25,171 1,503,258,892 2014-15 25,200 1,519,380,526 2015-16 25,400 1,627,397,467 2016-17 25,425 1,681,747,299 2017-18 25,450 1,732,236,641 2018-19 25,450 1,794,161,289 2019-20 25,450 1,876,141,460 Sources: Lamar County Appraisal District City of Paris Table 9 99 Ratio of Net Net General General Bonded Bonded Gross Less Debt Debt To Debt General Service Net General Assessed Per Bonded Debt Funds Bonded Debt Value Capita $ 11,830,800 $ 2,706,272 $ 9,124,528 0.62 $ 360.13 10,750,600 2,797,611 7,952,989 0.54 313.89 9,485,800 2,318,294 7,167,506 0.48 285.76 8,310,000 1,432,199 6,877,801 0.46 273.24 7,285,000 1,117,793 6,167,207 0.41 244.73 6,442,624 1,087,664 5,354,960 0.33 210.83 15,461,503 898,022 14,563,481 0.87 572.80 14,306,032 1,073,917 13,232,115 0.76 519.93 12,977,671 1,103,061 11,874,610 0.67 466.59 11,818,173 17196,122 10,622,051 0.56 417.37 99 CITY OF PARIS, TEXAS Ratio of Outstanding Debt by Type Last Ten Fiscal Years Unaudited Table 10 Note: (1) See Table 14 for personal income and population data Sources: City Finance Office Samco Capital Markets, Inc. 100 Governmental Activities Business -Type Activities General Fiscal Obligation Capital Utility Rate Capital Year Bonds Leases Other Supported Debt Leases Other 2011 $ 11,830,800 $ - $ - $ 11,254,200- 2012 10,750,600 - - 7,764,400 - - 2013 9,485,800 - - 43,239,200 - - 2014 8,310,000 - - 40,795,000 - - 2015 7,285,000 617,114 - 38,545,000 - - 2016 6,442,624 1,538,459 - 37,997,715 - - 2017 15,461,503 1,397,929 - 45,175,173 - - 2018 14,306,032 1,253,181 - 441264,589 - - 2019 12,840,000 1,104,090 - 41,075,000 - - 2020 12,975,000 950,526 - 38,875,000 - - Note: (1) See Table 14 for personal income and population data Sources: City Finance Office Samco Capital Markets, Inc. 100 Total Percentage Primary of Personal Per Government Income (2) Capita $ 23,085,000 1.39 $ 911 18,515,000 1.06 733 52,725,000 2.92 2,081 49,105,000 2.64 1,951 46,447,114 2.49 1,843 45,978,798 2.47 1,810 62,034,605 3.23 2,440 59,823,802 2.91 2,304 55,019,090 2.73 2,180 52,800,526 2.47 2,085 101 Table 10 (Continued) CITY OF PARIS, TEXAS Table 11 Direct and Overlapping Governmental Activities Debt September 30, 2020 Unaudited Sources: Outstanding debt and applicable percentages provided by each governmental unit. Note: Overlapping governments are those that coincide, at least in part, with geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the property taxpayers of the City of Paris. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the property taxpayers should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 102 General Percent Amount Obligation Applicable Applicable Bonded Debt to to Taxing Jurisdiction Outstanding Government Government Lamar County $ 2,771,000 62.75% $ 1,738,802 Paris Independent School District 43,905,000 49.30 21,645,165 Chisum Independent School District 26,950,000 47.75 12,868,625 North Lamar Independent School District 390,902 58.23 227,622 Subtotal Overlapping Debt 74,016,902 36,480,214 City of Paris (Includes General Obligation Debt and Capital Leases) 13,925,526 100.00 13,925,526 Total Direct and Overlapping Debt $ 87,9421428 $ 50,405,740 Per Capita Direct and Overlapping Funded Debt $ 3,455 $ 1,981 Sources: Outstanding debt and applicable percentages provided by each governmental unit. Note: Overlapping governments are those that coincide, at least in part, with geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the property taxpayers of the City of Paris. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the property taxpayers should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 102 CITY OF PARIS, TEXAS Table 12 Legal Debt Margin Information September 30, 2020 Unaudited The maximum tax rate permitted by Article XI, Section 5 of the State of Texas constitution is $2.50 per $100 of assessed valuation. Consequently, no legal debt margin can be calculated. The state attorney general has traditionally allowed up to $1.50 per $100 valuation to be applied to debt service. The City levied a tax rate of $.51608 per $100 valuation for the fiscal year ended September 30, 2020. 103 CITY OF PARIS, TEXAS Table 13 Revenue Pledged Coverage - Water and Sewer Revenue Bonds Last Ten Fiscal Years Unaudited Notes: (1)* Gross Revenues = Operating and Nonoperating Revenue of the Water and Sewer Fund Excluding Contribution Revenue and Premium Amortization (2)** Operating Expenses Excluding Depreciation (3)*** Agent Fees Not Included (4) As of 2010-11, the City no longer had revenue bonds outstanding; however, water and sewer general obligation debt are expected to be paid out of system revenues and not ad valorem taxes. 104 Net Revenue Average Remaining Available Debt Service Requirements Fiscal Gross Operating For Debt Percent Year Revenues* Expenses** Service Principal Interest Total*** Coverage 2010-11 $ 13,960,511 $7,201,866 $6,758,645 $ - $ - $ - N/A 2011-12 13,916,163 7,445,178 6,470,985 - - - N/A 2012-13 13,963,624 7,578,446 6,385,178 - - - N/A 2013-14 13,964,534 7,342,744 6,621,790 - - - N/A 2014-15 14,359,751 7,248,302 7,111,449 - - - N/A 2015-16 14,894,489 7,834,768 7,059,721 - - - N/A 2016-17 14,097,620 9,902,805 41194,815 - - - N/A 2017-18 14,549,327 9,922,088 4,627,239 - - - N/A 2018-19 15,030,324 10,182,731 4,847,593 - - - N/A 2019-20 15,043,788 9,602,622 5,441,166 - - - N/A Notes: (1)* Gross Revenues = Operating and Nonoperating Revenue of the Water and Sewer Fund Excluding Contribution Revenue and Premium Amortization (2)** Operating Expenses Excluding Depreciation (3)*** Agent Fees Not Included (4) As of 2010-11, the City no longer had revenue bonds outstanding; however, water and sewer general obligation debt are expected to be paid out of system revenues and not ad valorem taxes. 104 CITY OF PARIS, TEXAS Table 14 Demographic and Economic Statistics Last Ten Calendar Years Unaudited Paris, TX (1) Includes Paris Independent School District, North Lamar Independent School District, Chisum Independent School District, and Paris Junior College Sources: Paris Independent School District - 3,750 North Lamar Independent School District - 2,237 Chisum Independent School District - 1,074 Paris Junior College - 4,421 Chamber of Commerce Bureau of Economic Analysis 105 Paris, TX Micropolitan Paris, TX Paris, TX Micropolitan Service Area Micropolitan Micropolitan Service Area Per Capita Service Area Percent Calendar Service Area Personal Personal Median School Unemployment Year Population Income Income Age Enrollments (1) Rate 2010 49,793 $ 1,585,028,000 $ 31,780 39.7 13,428 9.7 2011 50,074 1,657,062,000 33,092 39.9 12,865 8.5 2012 49,811 1,750,363,000 35,140 39.0 12,671 7.9 2013 49,426 1,804,479,000 36,509 37.1 12,377 7.6 2014 49,523 1,859,083,000 37,540 40.4 12,414 6.1 2015 49,440 1,857,879,000 37,578 40.5 12,121 5.4 2016 49,791 1,917,848,000 38,518 40.6 12,180 4.9 2017 49,587 2,013,704,000 40,610 40.6 12,758 3.5 2018 49,728 2,027,062,464 40,763 41.0 12,307 3.3 2019 49,859 2,147,064,000 43,063 37.8 11,482 6.8 (1) Includes Paris Independent School District, North Lamar Independent School District, Chisum Independent School District, and Paris Junior College Sources: Paris Independent School District - 3,750 North Lamar Independent School District - 2,237 Chisum Independent School District - 1,074 Paris Junior College - 4,421 Chamber of Commerce Bureau of Economic Analysis 105 CITY OF PARIS, TEXAS Principal Employers Fiscal Years End 2020 and 2011 Unaudited Table 15 Source: U.S. Department of Labor PEDC Additional Information: September 30, 2020 September 30, 2011 Paris ISD 618 Percentage 444 City of Paris Percentage Paris Junior College 205 Chisum ISD of Total Lamar County 196 of Total 1,951 City City Taxpayer Employees Rank Employment Employees Rank Employment Paris Regional Medical Center 900 1 8.56% 1,000 1 9.83% Campbell Soup Company 700 2 6.66% 900 2 8.84% Kimberly-Clark Corporation 678 3 6.45% 800 3 7.86% Turner Industries 500 4 4.76% 700 4 6.88% The Results Company* 450 5 4.28% 480 5 4.72% We Pack Logistics, Inc. 382 6 3.63% 300 6 2.95% J. Skinner Baking Company** 236 7 2.25% 150 9 1.47% Huhtamaki*** 225 8 2.14% 176 8 1.73% RK Hall Construction LTD 190 9 1.81% 250 7 2.46% Sanitation Solutions 138 10 1.31% - - 0.00% Silgan Can Company - - 0.00% 90 10 0.88% Totals 4,399 41.85% 41846 47.62% Source: U.S. Department of Labor PEDC Additional Information: Public Employers: Paris ISD 618 North Lamar ISD 444 City of Paris 322 Paris Junior College 205 Chisum ISD 166 Lamar County 196 Total 1,951 Notes: (*) TCIM in 2011 (**) Sara Lee in 2011 (* * *) Paris Packaging in 2011 106 CITY OF PARIS, TEXAS Operating Indicators by Function Last Ten Fiscal Years Unaudited GOVERNMENT: Date of Incorporation - 1836 Current Charter - Adopted November 2, 1948 FACILITIES: Airports: Number of Airports Fire Protection: Number of Stations Number of Fire Hydrants Number of Employees (certified) Employees Per 1,000 Population Libraries: Number of Libraries Number of Volumes Circularization of Materials Circulation Per Capita Library Cards in Force Police Protection: Number of Stations Number of Employees (certified) Employees Per 1,000 Population Parks and Recreation: Park Acres Developed Park Acres Undeveloped City Parks Streets: Paved Lanes - Miles Unpaved Streets - Miles WATER AND SEWER UTILITY: Average Daily Water Consumption - Gallons Maximum Day's Water Consumption - Gallons Annual Water Consumption - Gallons Water Mains - Miles Water Connections - Metered Sewer Mains - Miles Area Miles Number of Full -Time Employees Sources: Various City of Paris Departments Table 16 Fiscal Year 2011 2012 2013 2014 1 1 1 1 3 3 3 3 1,222 1,217 1,240 1,262 51 51 51 51 2.01 2.01 2.01 2.03 1 90,524 1 85,357 1 82,878 1 82,832 144,830 136,286 127,053 127,002 5.71 5.37 5.01 5.06 13,461 14,563 14,896 16,519 1 1 1 1 62 62 62 60 2.44 2.44 2.44 2.39 87 87 87 87 221 221 221 221 24 24 24 24 160 160 160 160 3 3 3 3 11,687,000 21,900,000 4,611,321,000 183 9,834 188 39.18 324 107 11,560,000 21,010,000 4,234,583,000 183 9,966 188 39.18 325 11,400,000 20,764,000 4,177,171,000 183 9,816 188 39.18 325 11,472,271 17,201,000 41,187,379,000 183 9,819 189 39.18 326.5 2015 2016 2017 Fiscal Year 2018 2019 Table 16 (Continued) 2020 1 1 1 I 1 1 3 3 3 3 3 3 1,299 1,313 1,333 1,357 1,367 1,408 51 51 51 51 51 51 2.02 2.01 2.00 2.00 2.00 2.00 1 1 1 1 1 1 81,893 84,162 85,630 72,288 81,185 79,821 127,824 119,265 114,611 103,389 99,239 81,249 5.07 4.69 4.50 4.06 3.90 3.19 15,507 13,551 14,312 10,441 8,734 8,424 1 1 1 1 1 1 60 60 60 57 57 57 2.38 2.36 2.35 2.24 2.24 2.24 87 87 87 87 87 87 221 221 221 221 221 221 24 24 24 24 24 24 160 171 171 171 174 174 3 3 3 3 3 3 11,006,721 10,701,294 13,241,942 101759,444 10,775,920 11,138,000 20,662,000 17,983,000 18,493,000 18,137,000 19,202,000 17,747,000 4,017,453,000 3,977,369,000 4,833,309,000 3,927,197,000 3,937,831,000 4,078,053,000 185 185 185 185 185 185 10,024 9,995 9,766 9,698 9,679 9,810 209 209 209 209 209 209 39.18 38.02 38.02 38.02 38.02 38.02 327 328 330 331.5 333 322 108 CITY OF PARIS, TEXAS Capital Asset Statistics by Function Last Ten Fiscal Years Unaudited Table 17 Source: Various City Departments * City has none. All inside the City limits belong to the State of Texas. 109 Fiscal Year 2011 2012 2013 2014 Function: Public Safety Police Stations I 1 1 1 Patrol Units 10 10 10 10 Fire Stations 3 3 3 3 Sanitation Collection Trucks 8 7 6 6 Highways and Streets Streets (miles) 174 163 163 163 Streetlights 2,220 2,220 22223 2,225 Traffic Signals* - - - - Culture and Recreation Park Acreage 286 286 286 286 Swimming Pools - Municipal 1 1 1 1 Tennis Courts 14 14 14 14 Community Centers 1 1 1 1 Water Water Mains (miles) 183 183 183 183 Fire Hydrants 1,222 1,217 1,240 1,262 Maximum Daily Capacity 36,000 36,000 36,000 36,000 (thousands of gallons) Sewer Sanitary Sewers (miles) 189 189 189 189 Maximum Daily Treatment Capacity 7,250 7,250 7,250 7,250 (thousands of gallons) Source: Various City Departments * City has none. All inside the City limits belong to the State of Texas. 109 2015 2016 1 1 1 10 1 10 3 3 6 6 174 174 2,228 21228 286 286 1 1 14 1 14 1 185 185 1,299 1,313 36,000 36,000 209 209 7,250 7,250 Fiscal Year 2017 2018 2019 2020 1 1 1 1 10 10 10 10 3 3 3 3 6 6 6 6 174 174 174 174 2,230 2,231 2,235 2,235 286 286 308 1 308 1 1 14 1 1 14 1 14 1 14 1 185 185 185 185 1,333 1,357 1,367 1,408 36,000 36,000 36,000 36,000 209 209 209 209 7,250 71250 7,250 7,250 110 Table 17 (Continued) CITY OF PARIS, TEXAS Table 18 Building Permits at Market Value Last Ten Fiscal Years Unaudited Sources: City of Paris Community Development Department 111 Commercial Residential Total Property Value Commercial Construction Residential Construction Construction Fiscal Year Units Value Units Value Value 2011 9 $ 10,025,486 7 $ 569,500 $ 10,594,986 2012 13 7,836,610 10 760,000 8,596,610 2013 15 9,653,725 24 2,171,613 11,825,338 2014 10 5,336,150 16 1,924,218 7,260,368 2015 14 61,243,705 10 823,430 62,067,135 2016 59 7,838,210 44 3,252,018 11,090,228 2017 18 12,653,657 21 3,914,081 16,567,738 2018 33 39,273,020 31 4,101,770 43,374,790 2019 15 64,446,766 25 3,744,359 68,191,125 2020 21 15,636,180 36 5,366,500 21,002,680 Sources: City of Paris Community Development Department 111 CITY OF PARIS, TEXAS Table 19 Full -Time Equivalent City Government Employees by Function Last Ten Fiscal Years Unaudited Function: Manager Attorney Court Clerk City Clerk Finance Police* Fire Community Development Engineering Public Works Parks & ROW Sanitation Streets Traffic & Lighting Garage EMS Library Warehouse Water Billing Water Treatment Plant Water Distribution Waste Water Collection Waste Water Treatment Plant Lift Stations Information Technology Totals * Includes related grant employees. Seasonal employees not included. Source: City of Paris Finance Department Fiscal Year 2011 2012 2013 2014 2.0 3.0 3.0 3.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 3.0 3.0 3.0 2.0 6.0 5.0 5.0 5.0 84.5 85.5 85.5 83.0 52.0 52.0 52.0 57.0 7.0 7.5 7.5 5.5 6.5 6.5 6.5 7.5 3.0 3.0 3.0 3.0 9.0 10.0 10.0 10.0 12.0 12.0 12.0 12.0 15.0 15.0 15.0 15.0 2.0 2.0 2.0 2.0 5.5 5.5 5.5 5.5 26.0 26.0 26.0 26.0 10.5 10.5 10.5 10.5 2.0 2.0 2.0 2.0 8.0 8.0 8.0 8.0 15.5 15.5 15.5 15.5 11.5 10.5 10.5 11.0 7.5 7.5 7.5 7.5 22.5 22.5 22.5 22.5 3.0 3.0 3.0 3.0 2.0 2.0 2.0 2.0 324.0 325.5 112 325.5 326.5 Table 19 (Continued) Fiscal Year 2015 2016 2017 2018 2019 2020 3.0 3.0 3.0 3.0 3.0 3.0 4.0 4.0 4.0 2.0 2.0 2.0 4.0 4.0 4.0 4.0 4.0 4.0 2.0 2.0 2.0 2.0 2.0 2.0 5.0 5.0 5.0 5.0 5.0 5.0 83.0 83.0 83.0 83.5 84.0 83.0 57.0 57.0 58.0 58.0 58.0 59.0 4.5 4.5 4.5 4.0 4.0 5.5 7.5 7.5 7.5 6.0 6.0 4.5 2.0 2.0 2.0 3.0 3.0 3.0 11.0 11.0 12.0 12.0 12.0 11.0 12.0 12.0 12.0 11.0 12.0 8.0 15.0 15.0 15.0 17.0 17.0 11.0 2.0 2.0 2.0 2.0 2.0 1.0 5.5 5.5 5.5 6.0 6.0 5.5 26.0 26.0 26.0 26.0 27.0 27.0 10.5 10.5 10.5 10.5 10.5 10.5 2.0 2.0 2.0 2.0 2.0 2.0 8.0 8.0 8.0 8.0 8.0 8.0 15.5 16.5 16.5 16.5 17.5 18.0 11.0 11.0 11.0 12.5 12.5 9.0 8.5 8.5 8.5 8.5 8.0 8.0 22.5 22.5 22.5 22.5 21.5 26.0 113 CONTINUING DISCLOSURE INFORMATION CONTINUING DISCLOSURE INFORMATION FOR CITY OF PARIS, TEXAS UNAUDITED ASSESSED VALUATION TABLE 1 2020-2021 Actual Market Value of Taxable Property (100% of Actual) $ 2,801,071,383 Less Exemptions: 7,450,000 Local, Optional Over -65 and/or Disabled Homestead Exemptions $ 40,632,893 1,000,000 Disabled and Deceased Veterans' Exemptions 10,827,192 38,875,000 Productivity Loss 19,523,280 12,975,000 Personal Use of Business Vehicle 382,630 1,705,284 Freeport 85,531,645 2.93% Pollution Control / Solar 65,128,932 0.73% Abatement Loss 187,457,093 1,768,239,382 Cap Loss (10%) 107,587,489 25,450 Historical / Other 17,220,058 69,654 Totally Exempt Property 338,281,483 2,037 Total Exemptions $ 872,572,695 2018-2019 Net Taxable Assessed Valuation 1,928,498,688 Frozen Taxable Value and Transfer Adjustment (155,792,063) Freeze Adjusted Net Taxable Assessed Valuation $ 1,772,706,625 Source: Lamar County Appraisal District and the Issuer. GENERAL OBLIGATION BONDED DEBT PRINCIPAL TABLE 2 General Obligation Debt Principal Outstanding: (As of September 30, 2020) Combination Tax and Revenue Certificates of Obligation, Series 2010 $ 1,895,000 General Obligation Refunding Bonds, Series 2012 800,000 Combination Tax and Revenue Certificates of Obligation, Series 2013 (TWDB) 1,860,000 General Obligation Bonds, Series 2013 28,565,000 General Obligation Bonds, Series 2016 7,450,000 General Obligation Bonds, Series 2017 8,590,000 General Obligation Bonds, Series 2018 1,190,000 Combination Tax and Surplus Revenue Certificates of Obligation, Series 2020 1,500,000 Total Gross General Obligation Debt Principal Outstanding: 51,850,000 Less: Self -Supporting General Obligation Debt Principal Combination Tax and Revenue Certificates of Obligation, Series 2013 (TWDB) (100% WS) 1,860,000 General Obligation Bonds, Series 2013 (100% WS) 28,565,000 General Obligation Bonds, Series 2016 (100% WS) 7,450,000 General Obligation Bonds, Series 2018 (86% WS) 1,000,000 Total Self -Supporting General Obligation Debt Outstanding Following the Issuance of the Bonds: 38,875,000 Total Net General Obligation Debt Principal Outstanding Following the Issuance of the Bonds: $ 12,975,000 General Obligation Interest and Sinking Fund Balance as of September 30, 2020 $ 1,705,284 Ratio of Gross General Obligation Debt Principal to 2019-20 Freeze Adjusted Net Taxable Assessed Valuation 2.93% Ratio of Net General Obligation Debt Principal to 2019-20 Freeze Adjusted Net Taxable Assessed Valuation 0.73% 2019-20 Freeze Adjusted Net Taxable Assessed Valuation $ 1,768,239,382 Population: 1980 - 25,498; 1990 - 24,699; 2000 - 25,898; 2010 - 25,171 Current (Estimate) 25,450 Per Capita 2019-2020 Freeze Adjusted Net Taxable Assessed Valuation $ 69,654 Per Capita Gross General Obligation Debt Principal $ 2,037 Per Capita Net General Obligation Debt Principal $ 510 114 CLASSIFICATION OF ASSESSED VALUATION("' TABLE 3 UNAUDITED Category Real, Residential, Single -Family Real, Residential, Multi -Family Real, Vacant Lots/Tracts Real, Acreage (Land Only) Farm & Ranch improvements Real, Commercial Real Industrial Real & Tangible, Personal Utilities Tangible Personal, Commercial. Tangible Personal, industrial Tangible Personal, Mobile Homes Residential / Special, Inventory Totally Exempt Property Total Market Value Less Exemptions: Productivity Loss Cap Loss (10%) Local, Optional Over-65/Disabled Disabled and Deceased Veterans' Exempt Property Freeport Pollution Control / Solar Tax Abatement Loss Personal Use of Business Vehicle Other/ Historical Total Exemptions Net Taxable Assessed Valuation Freeze Taxable & Transfer Adjustment Freeze Adjusted Net Taxable Assessed Valuation 19,523,280 107,587,489 40,632,898 10,827,192 338,281,483 85,531,645 65,128,932 187,457,093 382,630 17 220 053 872,572,695 1,928,498,688 (155,792,063) $ 1,772,706,625 20,576,410 7,090,415 39,196,208 14,497,851 340,140,213 98,468,752 67,790,322 224,131,835 282,460 12,347,370 824.521.836 1,794,161,289 (139,607,850) $ 1,654,553,439_ 19,378,050 6,410,256 45,466,649 7,810,386 295,991,820 89,590,207 67,165,339 271,984,849 378,570 11 363 360 815,539,486 1,687,090,009 (125,125,367) $ 1,561,964,642 Values shown in this table are Certified Values as of July. Values may change during the tax year due to various supplements and protests. Valuations reported on a different date may not match those shown on this table. Source: Lamar County Appraisal District and the Issuer. 115 19,896,755 6,598,959 46,662,768 7,395,996 310,950,536 109,717,826 61,792,647 280,503,879 376,770 699.739 844,595,875 1,627,397,467 (117,126,272) $ 1,510,271,195 21,114,465 4,097,312 45,146,544 6,570,475 306,021,687 112,530,666 46,002,535 219,967,287 653,520 572.331 761,676,822 1,533,734,568 (114,701,909) $ 1,419,032,659 %of %of %of %of %of 2019-2020 Total 2018-2019 Total 2017-2018 Total 2016-2017 Total 2015-2016 Total $ 713,569,554 25.47% $ 555,725,094 20.28% $ 513,053,546 20.51% $ 492,321,832 19.93% $ 480,226,542 20.93% 78,929,430 2.82% 60,643,497 2.27 55,673,247 2.22 53,990,547 2.18 53,843,387 2.34 30,827,095 1.10% 33,015,060 1.17 29,663,525 1.19 30,536,814 1.24 28,523,324 1.24 20,517,420 0.73% 21,611,670 0.79 20,285,840 0.81 38,531,048 1.56 39,756,598 1.73 23,098,838 0.82% 20,902,638 0.74 18,316,868 0.73 337,570 0.01 423,770 0.02 267,504,955 9.55% 290,129,663 11.24 288,609,812 11.53 281,898,938 11.40 279,980,115 12.19 594,799,020 21.23% 588,443,970 23.26 594,247,570 23.74 566,417,810 22.91 466,395,690 20.31 55,391,760 1.98% 49,300,600 1.68 42,243,760 1.69 39,254,700 1.59 40,297,180 1.75 145,136,550 5.18% 137,319,910 5.43 138,468,717 5.53 139,533,387 5.64 131,778,067 5.74 494,875,900 17.67% 490,224,670 19.54 475,659,420 19.01 498,480,500 20.17 450,783,530 19.63 769,900 0.04% 796,370 0.03 768,990 0.03 786,850 0.03 751,440 0.03 19,937,470 0.71% 18,093,300 0.72 18,382,080 0.73 18,576,040 0.75 16,976,540 0.74 355,713,491 12.70% 352,476,683 12.86 307,256,120 12.28 311,327,306 12.59 306,675,207 13.35 2,801,071,383 100.00% 2,618,683,125 100.00% 2,502,629,495 100.00% 2,471,993,342 100.00% 2,296,411,390 100.00% 19,523,280 107,587,489 40,632,898 10,827,192 338,281,483 85,531,645 65,128,932 187,457,093 382,630 17 220 053 872,572,695 1,928,498,688 (155,792,063) $ 1,772,706,625 20,576,410 7,090,415 39,196,208 14,497,851 340,140,213 98,468,752 67,790,322 224,131,835 282,460 12,347,370 824.521.836 1,794,161,289 (139,607,850) $ 1,654,553,439_ 19,378,050 6,410,256 45,466,649 7,810,386 295,991,820 89,590,207 67,165,339 271,984,849 378,570 11 363 360 815,539,486 1,687,090,009 (125,125,367) $ 1,561,964,642 Values shown in this table are Certified Values as of July. Values may change during the tax year due to various supplements and protests. Valuations reported on a different date may not match those shown on this table. Source: Lamar County Appraisal District and the Issuer. 115 19,896,755 6,598,959 46,662,768 7,395,996 310,950,536 109,717,826 61,792,647 280,503,879 376,770 699.739 844,595,875 1,627,397,467 (117,126,272) $ 1,510,271,195 21,114,465 4,097,312 45,146,544 6,570,475 306,021,687 112,530,666 46,002,535 219,967,287 653,520 572.331 761,676,822 1,533,734,568 (114,701,909) $ 1,419,032,659 PRINCIPAL TAXPAYERS 2019-20 (UNAUDITED) TABLE 4 Name La Frontera Holdings LLC Campbell Soup Kimberly Clark Corporation Essent PRMC LP Oncor Electric Delivery Company Alpha Lake LTD Potter Industries LLC Atmost Energy Huhtamaki Inc. Paris Generation, LP Total Based on a 2020 Freeze Adjusted Net Taxable Assessed Valuation of $ 1,772,706,625 Source: Lamar County Appraisal District PROPERTY TAX RATES AND COLLECTIONS (UNAUDITED) TABLES Tax Net Taxable % of Tax % Collections Total 2020 Year 2020 Net Taxable Assessed Type of Property Assessed Valuation Valuation Electric Utility $ 357,997,200 20.19% Food Manufacturing 124,842,568 7.04% Disposable Diaper Mfg. 98,257,169 5.54% Health Care Services/Hospital 50,053,340 2.82% Utility 33,864,230 1.91% Shopping Center 18,207,860 1.03% Manufacturing 14,242,022 0.80% Gas Utility 11,339,620 0.64% Packaging Manufacturing 11,319,977 0.64% Utility 10,883,410 0.61% 97.48 $ 731,007,396 41.22% Based on a 2020 Freeze Adjusted Net Taxable Assessed Valuation of $ 1,772,706,625 Source: Lamar County Appraisal District PROPERTY TAX RATES AND COLLECTIONS (UNAUDITED) TABLES Tax Net Taxable Tax Tax % Collections 0.07752 Year Year Assessed Valuation Rate Levy Current Total Ended 2010 $ 1,380,460,473 0.52000 $ 7,651,941 96.95 98.38 9-30-11 2011 1,359,521,473 0.52000 7,543,165 97.93 99.41 9-30-12 2012 1,385,188,151 0.51107 7,544,315 97.67 99.22 9-30-13 2013 1,493,839,431 0.50195 7,498,327 97.48 100.03 9-30-14 2014 1,519,380,525 0.50195 7,626,530 96.35 99.17 9-30-15 2015 1,607,003,070 0.50195 7,627,731 97.10 99.90 9-30-16 2016 1,510,271,195 0.50195 8,093,094 98.11 (b) 99.52 (b) 9-30-17 2017 1,556,621,932 0.55195 9,145,965 98.11 99.51 9-30-18 2018 1,607,003,070 0.55195 9,381,829 98.15 100.71 9-30-19 2019 1,654,553,439 0.51608 9,332,621 96.95 98.95 9-30-20 Note: Although "Total" tax collection percentages in this table include delinquent tax collections, they are allocated to the year they were originally levied instead of the year in which they were collected. Certified Values may change during the tax year due to various supplements and protests, and valuations reported on a different date may not match those shown on this table. Financial Report. Valuations for tax years 2010-2019 represent Freeze Adjusted Net Taxable Valuations. �DJ Current Fiscal Year collections are as of September 30, 2020(Unaudited). Source: The Lamar County Appraisal District, the City's 2020 Comprehensive Annual Financial Report and additional information from the City. TAX RATE DISTRIBUTION (UNAUDITED) TABLE 6 General Fund I & S Fund TOTAL 2020-21 2019-20 $ 0.39788 $ 0.40868 0.08290 0.10740 $ 0.48078 $ 0.51608 2018-19 $ 0.43831 0.11364 $ 0.55195 2017-18 2016-17 0.44248 $ 0.42440 0.10947 0.07752 0.55195 $ 0.50192 Sources: Texas Municipal Report published by the Municipal Advisory Council of Texas and the Lamar County Appraisal District. 116 MUNICIPAL SALES TAX UNAUDITED TABLE 7 The Issuer has adopted the provisions of Chapter 321, as amended, Texas Tax Code. In addition, some issuers are subject to a property tax relief and/or an economic and industrial development tax. The voters of the City approved the imposition of a 1/4 cent additional sales tax to be used for property tax reduction and a 1/4 cent sales tax for economic development purposes. Levy of the additional sales taxes began on October 1, 1993, and the City received its first payment in December, 1993. Collections on a calendar year basis are as follows: City Collections as ($) Equivalent of Calendar Total 1.00% 0.25% % of Ad Valorem Ad Valorem 0.25% Year Collected City Prop Tax Red Tax Levy Tax Rate EDC 2007 $ 6,628,611 $ 4,419,074 $ 1,104,769 69.61 0.41 $ 1,104,769 2008 7,051,372 4,700,915 1,175,229 73.89 0.41 1,175,229 2009 7,591,224 5,060,816 1,265,204 80.72 0.42 1,265,204 2010 7,029,392 4,686,262 1,171,565 75.12 0.39 1,171,565 2011 7,202,519 4,801,679 1,200,420 78.44 0.41 1,200,420 2012 7,268,103 4,845,402 1,211,351 80.29 0.42 1,211,351 2013 7,624,480 5,082,987 1,270,747 84.22 0.43 1,270,747 2014 8,786,209 * 5,857,473 1,464,368 97.65 0.49 1,464,368 2015 8,173,696 5,449,131 1,362,283 89.30 0.45 1,362,283 2016 8,472,647 5,648,431 1,412,108 92.56 0.46 1,412,108 2017 8,689,014 5,792,676 1,448,169 89.47 0.45 1,448,169 2018 8,827,668 5,885,112 1,471,278 90.74 0.50 1,471,278 2019 8,921,837 5,947,891 1,486,973 79.25 0.43 1,486,973 2020 9,950,289 6,633,526 1,658,381 87.90 0.45 1,658,381 2021 2,682,577 (a) 1,788,385 447,096 23.26 0.11 447,096 (") Current year collections are for January 2021 through March 2021. * Sales taxes increased from the prior year due to a one time collection of an amount due from a prior period. This collection alone would have provided the City a 13.50% increase in sales taxes. The remaining increase is consistent with the expected sales tax revenues due to the recovering local economy. Source: State Comptroller of Public Accounts Website. 117 GENERAL FUND COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES AND ANALYSIS OF CHANGES IN FUND BALANCES UNAUDITED 1,779,229 1,616,363 1,541,274 TABLE 8 1,687,660 Public Safety Fiscal Year Ended September 30 11,218,944 10,884,241 2020 2019 2018 2017 2016 Revenues: 6,415,221 5,199,269 Health 4,022,732 2,845,874 Ad Valorem Taxes $ 7,380,958 $ 7,552,516 $ 7,357,425 $ 6,933,981 $ 6,622,742 Sales Taxes 8,245,939 7,369,079 7,317,162 7,233,526 7,051,858 Franchise Tax 4,714,021 4,305,851 4,315,694 4,211,397 2,502,614 Hotel Occupancy Taxes 643,417 675,158 662,263 657,270 630,545 Licenses and Permits 259,117 277,507 197,920 155,363 152,016 Fines and Fees 724,259 434,016 446,670 449,008 498,164 Investment Earnings 304,755 483,876 329,365 206,551 141,134 Sanitation 1,462,452 1,437,157 1,470,248 1,463,576 1,474,874 Health 5,117,649 2,991,995 2,614,504 2,609,811 2,519,387 Intergovernmental Revenue 713,570 1,325,665 677,072 1,463,514 705,786 Other Revenues 381,355 210,946 341,330 253,679 377,469 Total Revenues 29,947,492 27,063,766 25,729,653 25,6372676 22,676,589 Expenditures: Current General Government 1,779,229 1,616,363 1,541,274 1,666,051 1,687,660 Public Safety 12,005,945 11,218,944 10,884,241 10,963,989 11,037,399 Public Works 5,065,867 5,644,019 5,356,374 6,415,221 5,199,269 Health 4,022,732 2,845,874 2,668,477 2,532,665 2,351,220 Culture and Recreation 723,046 740,350 734,826 693,078 688,258 Cox Field Airport 179,631 210,851 112,562 134,705 110,330 Other 1,922,363 1,845,609 1,716,365 1,743,614 1,771,889 Capital Outlay General Government 109,280 16,995 10,100 - 268,397 Public Safety 403,654 413,250 168,163 178,453 1,096,587 Public Works 626,741 1,016,738 612,947 248,452 952,651 Health 287,256 303,946 554,083 149,850 176,386 Cox Field Airport - - 37,275 - - Debt Service 186,690 186,690 186,690 186,690 72,353 Other - - 42,187 - 9,680 Total Expenditures 27,312,434 26,059,629 24,625,564 24,9125,768 25,422,079 Excess (Deficit) of Revenues Over Expenditures 2,635,058 1,004,137 1,104,089 724,908 (2,745,490) Other Financing Sources (Uses): Capital Lease - - - - 975,185 Operating Transfers In 539,986 18,513 124,968 - 1,633,000 Operating Transfers Out (29,319) (127,545) (383,374) (44,814) (1,806,200) Sale of Capital Assets 28,000 - - - - Insurance Recoveries - 57,835 - - - Total Other Financing Sources (Uses): 538,667 (51,197) (258,406) (44,814) 801,985 Excess of Revenues and Other Sources Over Expenditures and Other Uses 3,173,725 952,940 845,683 680,094 (1,943,505) Fund Balance - Beginning of Year 13,451,478 12,670,747 11,622,868 10,839,700 13,594,986 Increase (Decrease) in Reserve for Inventory - - 40,518 103,074 (70,865) Prior Period Adjustment 524,874 (172,209) 161,678 - (740,916) Fund Balance - End of Year $ 17,150,077 $ 13,451,478 $ 12.670,747 $ 11,622,868 $ 10,839,700 (°l Restated. Source: The Issuer's Comprehensive Annual Financial Reports. 118 CONDENSED WATERWORKS AND SEWER SYSTEM OPERATING STATEMENT (UNAUDITED) TABLE 9 Meter Size Base Cost (For Each Additional Inches Fiscal Year Ended September 30 100 Cubic Feet) 5/811- 3/4" $12.47 for first 200 Cubic Feet 2020 1" and Larger 2019 2018 2017 2016 Operating Revenues tai Commercial Industrial Class (Meters Greater Than Three Inches) 119 Total Revenues $ 15,043,788 $ 14,452,703 $ 14,168,934 $ 14,236,117 $ 15,053,698 Expenses (b) 9,602,622 10,147,099 9,886,456 9,867,173 7,799,136 Net Revenue Available for Debt Service $ 5,441,166 $ 4,305,604 $ 4,282,478 $ 4,368,944 $ 7,254,562 Annual Revenue Bond Debt Service Requirements $ - $ - $ - $ - $ - Coverage of Annual Revenue Bond Requirements N/A N/A N/A N/A N/A Annual Requirements on all Bonds Paid from $ 3,845,397 $ 3,848,957 $ 3,714,257 $ 3,244,870 $ 3,338,021 System Revenues Coverage of Annual Requirements on all 1.41 x 1.11 x 1.15 x 2.17 x 2.17 x Bonds Paid from System Revenues Customer Count: Water 9,810 9,679 9,698 9,766 9,995 Sewer 9,221 9,189 9,208 9,180 9,276 (a) Revenues include operating revenues, interest income and other revenues of the Waterworks and Sewer System. (b) Expenses include total expenses less depreciation and amortization of the Waterworks and Sewer System. Sources: Information from the Issuer and the Issuer's Annual Audited Financial Reports. WATER RATES (UNAUDITED) TABLE 10 Residential Class Current Rates (Rates Effective July 1, 2020) Commercial Industrial Class Service in Excess of Base Meter Size Base Cost (For Each Additional Inches (Per Cubic Foot) 100 Cubic Feet) 5/811- 3/4" $12.47 for first 200 Cubic Feet $4.59/ 100 Cubic Feet 1" and Larger $60.85 for first 1,000 Cubic Feet $4.59 / 100 Cubic Feet Commercial Industrial Class Service in Excess of Base Meter Size Base Cost (For Each Additional (Inches) (Per Cubic Foot) 100 Cubic Feet) 5/811- 3/4" $14.90 for first 200 Cubic Feet $4.50 / 100 Cubic Feet 111-21' $59.69 for first 1,000 Cubic Feet $3.67 / 100 Cubic Feet Larger than 2" $214.25 for first 2,000 Cubic Feet $3.67 / 100 Cubic Feet Commercial Industrial Class (Meters Greater Than Three Inches) Service in Excess of Base Meter Size Base Cost (For Each Additional Inches (Per Cubic Foot) 100 Cubic Feet) 4" $3,674.83 for first 100,000 Cubic Feet $3.67 / 100 Cubic Feet 6" $5,512.24 for first 150,000 Cubic Feet $3.67 / 100 Cubic Feet 8" and Larger $7,349.65 for first 200,000 Cubic Feet $3.67 / 100 Cubic Feet Source: Information from the Issuer 119 PRINCIPAL WATER CUSTOMERS 2019-2020 (UNAUDITED) TABLE 11 (October 1, 2019 to September 30, 2020) Name of Customer Lamar Power Partners* Campbell Soup Company Lamar County Water Supply Daisy Farms* Paris Generation Kimberly Clark Paris Regional Medical Center The James Skinner Baking Co. Texas Highway Department Paris Housing Authority Total Total Water Sales as of September 30, 2020 (unaudited) Average Monthly Average Consumntion (Gals.) Monthly Bill 19,234,381 $ 25,902 13,880,185 114,314 11,577,006 78,585 3,600,619 20,646 1,140,623 20,587 858,207 29,102 259,346 9,381 177,917 6,270 148,398 4,948 153,334 5,487 51,030,016 $ 315,222 $ 8,067,204 t"1 Principal Water Customers represent approximately 46.89% of total annual water sales. Includes raw water sales. SEWER RATES (UNAUDITED) TABLE 12 Current Rates Residential Class Meter Size (Inches) 3/4" or Less 1" and Larger Commercial Industrial Class Meter Size (Inches) 3/4" or Less 111-211 Larger than 2" (Residential Rates Effective June 1, 2020) Base Cost (Per Cubic Foot) $13.99 for first 200 Cubic Feet $69.10 for first 1,000 Cubic Feet (Commercial Rates Effective June 1, 2020) Base Cost (Per Cubic Foot) $18.62 for first 200 Cubic Feet $71.70 for first 1,000 Cubic Feet $143.40 for first 2,000 Cubic Feet Service in Excess of Base (For Each Additional 100 Cubic Feet) $6.91/ 100 Cubic Feet $6.91 / 100 Cubic Feet Service in Excess of Base (For Each Additional 100 Cubic Feet) $7.17/ 100 Cubic Feet $7.17/ 100 Cubic Feet $7.17 / 100 Cubic Feet PRINCIPAL SEWER CUSTOMERS - 2019-2020 (UNAUDITED) TABLE 13 (October 1, 2019 to September 30, 2020) Total Sewer Charges as of September 30, 2020 (unaudited) $ 6,351,476 1Qt Principal Seiver Customers represent approximately 20.10% of total annual server charges. 120 Average Monthly Average Name of Customer Consumntion (Gals.) Monthly Bill Kimberly Clark 504,260 $ 33,765 The James Skinner Baking Co 177,917 12,205 Paris Regional Medical Center 210,780 14,351 Paris Housing Authority 159,281 10,744 Texas State Highway Department 148,398 9,831 Paris Junior College 93,135 6,485 Lamar County Human Resources 85,182 5,691 Spanish Oaks 82,638 5,530 Paris Independent School District 53,274 3,684 Lamar County 61,250 4,123 Total 1,576,115 $ 106,409 ce> Total Sewer Charges as of September 30, 2020 (unaudited) $ 6,351,476 1Qt Principal Seiver Customers represent approximately 20.10% of total annual server charges. 120 OVERALL COMPLIANCE, INTERNAL CONTROLS AND FEDERAL AWARDS SECTION CITY OF PARIS, TEXAS Overall Compliance, Internal Controls, And Federal Awards Section September 30, 2020 This section includes elements required by Government Auditing Standards, issued by the Comptroller General of the United States and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). 121 McClanahan and Holmes, LLP CERTIFIED PUBLIC ACCOUNTANTS STEVEN W. MOHUNDRO, CPA GEORGE H. STRUVE, CPA RUSSELL P. WOOD, CPA DEBRA J. WILDER, CPA TEFFANY A. KAVANAUGH. CPA APRIL J. HATFIELD, CPA 228 SIXTH STREET S.E. PARIS, TEXAS 75460 903-784-4316 FAX 903-784-4310 304 WEST CHESTNUT DENISON, TEXAS 75020 903465-6070 FAX 903465-6093 1400 WEST RUSSELL BONHAM, TEXAS 75418 903-583-5574 FAX 903-583-9453 Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Honorable Mayor and City Council City of Paris, Texas We have audited, in accordance with the 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, the financial statements of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Paris, Texas (the City), as of and for the year ended September 30, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated August 30, 2021. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as items 2020-01, 2020-02, and 2020-03 that we consider to be significant deficiencies. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 122 Honorable Mayor and City Council City of Paris, Texas City of Paris, Texas' Response to Findings The City's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The City's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Paris, Texas August 30, 2021 123 9W cClanahan and Molmes, LGA' Certified Public Accountants Honorable Mayor and City Council City of Paris, Texas City of Paris, Texas' Response to Findings The City's response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. The City's response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Paris, Texas June 26, 2020 123 WcCknahan and9folmes, LLQ' Certified Public Accountants Finding: None CITY OF PARIS, TEXAS Summary Schedule of Prior Audit Findings Year Ended September 30, 2020 124 CITY OF PARIS, TEXAS Schedule of Findings and Questioned Costs Year Ended September 30, 2020 Summary of Auditors' Results 1. The auditors' report expresses an unmodified opinion on the financial statements of the City of Paris, Texas. 2. Three significant deficiencies disclosed during the audit of the financial statements are reported in the Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. No material weaknesses are reported. 3. No instances of noncompliance material to the financial statements of the City of Paris, Texas, which would be required to be reported in accordance with Government Auditing Standards, were disclosed during the audit. 4. No significant deficiencies in internal control over major federal award programs disclosed during the audit are reported in the Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance. No material weaknesses were identified. 5. The auditors' report on compliance for the major federal awards programs for the City of Paris, Texas expresses an unmodified opinion on all major federal programs. 6. There were no audit findings that are required to be reported in accordance with 2 CFR 200.516(a). 7. The program tested as a major program was: 21.019 Coronavirus Relief Fund 8. The threshold used for distinguishing between Type A and B programs was $750,000. 9. City of Paris, Texas, was determined to be a high-risk auditee. 125 CITY OF PARIS, TEXAS Schedule of Findings and Questioned Costs (Continued) Year Ended September 30, 2020 Financial Statement Findings Significant Deficiency Finding 2020-01— Internal Controls Related to Bank Reconciliations Criteria: Accurate bank reconciliations should be performed and reviewed by management monthly. Condition: Internal controls were not properly implemented to reconcile items that should have been investigated and corrected in a timely manner on monthly cash reconciliations. Management did not review bank reconciliations prepared by finance department staff. Cause: Account reconciliations were not accurate in the clearing of outstanding items and were not properly reviewed by management to ensure accuracy. Effect: As a result of this condition, cash reconciliations misrepresented cash balance at year end. Recommendation: We recommend the City of Paris, Texas perform bank reconciliations addressing all outstanding items and that management review and approve reconciliations monthly. Any reconciling items should be investigated and corrected in a timely manner. Finding 2020-02 — Internal Controls Related to Calculation of Employee Insurance Criteria: Information updated in client spreadsheet should be verified for accuracy by management. Condition: Internal controls were not properly implemented to ensure accuracy of amounts used in spreadsheet to calculate employee portion of insurance expense. Cause: Spreadsheet values were not updated to reflect current rates. Effect: As a result of this condition, amounts withheld from employee checks were incorrect, leaving the City responsible for the expense. Recommendation: We recommend the City of Paris, Texas designate spreadsheet preparers and separate reviewers to ensure the accuracy of the amounts used in calculations. Finding 2020-03 — Financial Accounting and Reporting Criteria: The City's management should be responsible for preparing period -end financials including recording recurring and non-recurring adjustments to the financial statements. Condition: The City does not control the period -end financial reporting process including controls over procedures used to analyze transactions compromising general ledger activity and controls over recording recurring and non-recurring adjustment to the financial statements. Cause: Journal entries to adjust accounts to proper balance are not consistently recorded. Effect: As a result of this condition, the City lacks internal controls over the period -end financial reporting. Recommendation: We recommend the management of the City of Paris, Texas maintain close oversight of the accounting and period -end financial reporting process. Federal Award Findings and Questioned Costs The audit disclosed no findings required to be reported. 126 -t � � HYlrAfu�. -...---- Corrective Action Plan Year Ended September 30, 2020 FINDING/RECOMMENDATION 2020-01 Internal Controls Related to Bank Reconciliations Recommendation: We recommend the City of Paris perform bank reconciliations addressing all outstanding items and that management review and approve reconciliations monthly. Any reconciling items should be investigated and corrected in a timely manner. Response: The City will investigate any reconciling items during the monthly reconciliation process. Monthly reconciliations will be reviewed and approved by management. Contact Person: Gene Anderson, Finance Director Estimated Completion Date: September 30, 2021 FINDING/RECOMMENDATION 2020-02 Internal Controls Related to Calculation of Employee Insurance Recommendation: We recommend the City of Paris designate spreadsheet preparers and separate reviewers to ensure the accuracy of the amounts used in calculations. Response: The City will designate an individual to review data contained in spreadsheet. Contact Person: Gene Anderson, Finance Director Estimated Completion Date: September 30, 2021 2020-03 Financial Accounting and Reporting Recommendation: We recommend the management of the City of Paris, Texas maintain close oversight of the accounting and period -end financial reporting process. Response: The City's management agrees to maintain close oversight of the accounting and period -end financial reporting process. Contact Person: Gene Anderson, Finance Director Estimated Completion Date: September 30, 2021 127 P.O. BOX 9037 • PARIS, TEXAS 75461-9037 r (903) 785-7511 r FAX (903) 785-8519 McClanahan and Holmes, LLP CERTIFIED PUBLIC ACCOUNTANTS STEVEN W. MOHUNDRO, CPA GEORGE H. STRUVE, CPA RUSSELL P. WOOD, CPA DEBRA J. WILDER, CPA TEFFANY A. KAVANAUGH, CPA APRIL J. HATFIELD, CPA Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance Honorable Mayor and City Council City of Paris, Texas Report on Compliance for Each Major Federal Program 228 SIXTH STREET S.E. PARIS, TEXAS 75460 903-784-4316 FAX 903-784-4310 304 WEST CHESTNUT DENISON, TEXAS 75020 903465-6070 FAX 903465-6093 1400 WEST RUSSELL BONHAM, TEXAS 75418 903-583-5574 FAX 903-583-9453 We have audited the City of Paris, Texas' (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the City's major federal programs for the year ended September 30, 2020. The City's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for each of the City's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City's compliance. Opinion on Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2020. 128 Honorable Mayor and City Council City of Paris, Texas Report on Internal Control Over Compliance Management of the City of Paris, Texas, is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Paris, Texas August 30, 2021 129 W cC&nahan and 9lofines, LGA' Certified Public Accountants CITY OF PARIS, TEXAS Notes on Accounting Policies for Federal and State Awards Year Ended September 30, 2020 Note 1: Basis of Presentation The accompanying schedule of expenditures of federal and state awards (the Schedule) includes the federal and state award activity of the City of Paris, Texas (the City) under programs of the federal and state governments for the fiscal year ended September 30, 2020. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and the State of Texas Uniform Grant Management Standards. Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net assets, or cash flows of the City. Note 2: Summary of Significant Accounting Policies Expenditures reported on the Schedule are reported on the modified accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Pass-through entity identifying numbers are presented where available. Note 3: Indirect Cost Rate The City has elected not to use the 10 -percent de minimis indirect cost rate allowed under the Uniform Guidance. Note 4: Program Costs/ Matching Contributions The amounts shown as current year expenses represent only the federal grant portion of the program costs. Entire program costs, including the City's portion, may be more than shown. Note 5: Subrecipients Of the federal expenditures presented in the schedule, the City of Paris, Texas, provided federal awards to subrecipients as follows: Federal CFDA Amount Provided Program Title Number to Subrecipients Edward Byrne Memorial Justice Assistance Grant 16.738 130 CITY OF PARIS, TEXAS Schedule of Expenditures of Federal Awards Year Ended September 30, 2020 The accompanying notes are an integral part of this schedule. See Notes on Accounting Policies for Federal and State Awards. 131 Federal Expenditures CFDA Project Federal to Federal Grantor/Pass-Through Grantor/Program Title Number Number Expenditures Subrecipients U.S. Department of Housing and Urban Development Passed Through Texas Department of Agriculture: Texas Community Block Grant Program 14.228 7218152 $ 185,495 $ - Total U.S. Department of Housing and Urban Development 185,495 - U.S. Department of Treasury Passed Through Texas Division of Emergency Management: COVID-19 - Coronavirus Relief Fund 21.019 445 1,689,973 - Total U.S. Department of Treasury 1,689,973 - U.S. Department of Justice Direct Programs: Edward Byrne Memorial Justice Assistance Grant Program 16.738 2019 -DJ -BX -0181 12,210 6,105 Federal Seizures - Equitable Sharing 16.922 1123-0011 61,306 - Project Safe Neighborhoods 16.609 OT -01-0107-31-00 81,074 - Total U.S. Department of Justice 154,590 6,105 National Endowment for the Humanities Passed Through Texas State Library and Archives Commission FY2020 ILL Lending Reimbursement Program 45.310 901722 4,122 - Total National Endowment for the Humanities 4,122 - Total Expenditures of Federal Awards $ 2,034,180 $ 6,105 The accompanying notes are an integral part of this schedule. See Notes on Accounting Policies for Federal and State Awards. 131 CITY OF PARIS, TEXAS Schedule of Expenditures of State of Texas Awards Year Ended September 30, 2020 State Grantor/Program Title Automobile Burglary and Theft Prevention Authority Northeast Texas Auto Theft Task Force Total Automobile Burglary and Theft Prevention Authority Texas Department of Transportation Routine Airport Maintenance Program Total Texas Department of Transportation Office of the Governor National Incident -Based Reporting System (NIBERS) Total Office of the Governor Total Expenditures of State of Texas Awards Project Number 608-19-1390200 M2001 PARI The accompanying notes are an integral part of this schedule. See Notes on Accounting Policies for Federal and State Awards. 132 Expenditures $ 55,561 55,561 48,373 48,373 21,600 21,600 $ 125,534