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25.1 - ACFR 9-30-2022 with Continuing Disclosure TablesCITY OF PARIS, TEXAS ANNUAL COMPREHENSIVE FINANCIAL REPORT Fiscal Year Ended September 30, 2022 ANNUAL COMPREHENSIVE FINANCIAL REPORT CITY OF PARIS, TEXAS Fiscal Year Ended September 30, 2022 Imre Texans Reach I ligher Prepared By Finance Department W.E. Anderson, Director CITY OF PARIS, TEXAS Table of Contents Year Ended September 30, 2022 INTRODUCTORY SECTION Page Statement Letter of Transmittal............................................................................... I-1 City of Paris Organizational Chart ................................................................... I-7 List of Elected and Appointed Officials................................................................ I-8 FINANCIAL SECTION Independent Auditors'Report ........................................................................ Management's Discussion and Analysis............................................................... . Basic Financial Statements 82 Combining Balance Sheet - Nonmajor Governmental Funds ............................................. Government -Wide Financial Statements Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Statement of Net Position ..................................................... .................. 13 1 Statement of Activities.......................................................................... 15 2 Fund Financial Statements 86 10 Capital Projects Fund........................................................................... Balance Sheet - Governmental Funds............................................................... 16 3 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds .................. 18 4 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ......................................... 20 5 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual- General Fund................................................................ 21 6 Statement of Net Position - Proprietary Funds ....................................................... 23 7 Statement of Revenues, Expenses, and Changes in Fund Net Position - Proprietary Funds .................... 25 8 Statement of Cash Flows - Proprietary Funds ........................................................ 26 9 Statement of Fiduciary Net Position - Fiduciary Fund .................................................. 28 10 Statement of Changes in Fiduciary Net Position - Fiduciary Fund ........................................ 29 11 Notes to Financial Statements...................................................................... 30 Required Supplementary Information Schedule Texas Municipal Retirement System - Schedule of Changes in Net Pension Liability and Related Ratios............ 76 1 Texas Municipal Retirement System - Schedule of City Pension Contributions ................................ 77 2 Paris Firefighters' Relief and Retirement Fund - Schedule of Changes in Net Pension Liability and Related Ratios.... 78 3 Paris Firefighters' Relief and Retirement Fund - Schedule of City Contributions ............................... 79 4 Texas Municipal Retirement System - Schedule of Changes in Total OPEB Liability and Related Ratios........... 80 5 City of Paris Retiree Health Care Plan - Schedule of Changes in Total OPEB Liability and Related Ratios.......... 81 6 Combining and Individual Nonmajor Fund Statements and Schedules Nonmajor Governmental Funds ...................................... .................. 82 Combining Balance Sheet - Nonmajor Governmental Funds ............................................. 83 7 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds.................................................................... 84 8 Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Special Revenue Fund.......................................................................... 85 9 Debt Service Fund............................................................................. 86 10 Capital Projects Fund........................................................................... 87 11 Capital Assets Used in the Operation of Governmental Funds - Comparative Schedules by Source................................................................. 88 12 CITY OF PARIS, TEXAS Table of Contents (Continued) Year Ended September 30, 2022 Page Table STATISTICAL SECTION........................................................ .................. 89 Financial Trends Net Position by Component....................................................................... 90 1 Changes in Position.............................................................................. 92 2 Fund Balances of Governmental Funds.............................................................. 96 3 Changes in Fund Balances of Governmental Funds ..................................................... 98 4 Revenue Capacity Property Tax Levies and Collections................................................................. 100 5 Property Tax Rates - All Direct and Overlapping Governments ........................................... 102 6 Assessed and Estimated Actual Value of Property ...................................................... 103 7 Principal Property Taxpayers...................................................................... 105 8 Debt Capacity Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt Per Capita ..................................................... 107 9 Ratio of Outstanding Debt by Type................................................................. 108 10 Direct and Overlapping Governmental Activities Debt .................................................. 110 11 Legal Debt Margin Information.................................................................... 111 12 Revenue Pledged Coverage - Water and Sewer Revenue Bonds ........................................... 112 13 Demographic and Economic Information Demographic and Economic Statistics............................................................... 113 14 Principal Employers............................................................................. 114 15 Operating Information Operating Indicators by Function.................................................................... 115 16 Capital Asset Statistics by Function ............................................... .................. 117 17 Building Permits at Market Value................................................................... 119 18 Full -Time Equivalent City Government Employees by Function ........................................... 120 19 CONTINUING DISCLOSURE INFORMATION Continuing Disclosure Information................................................................... 122 OVERALL COMPLIANCE, INTERNAL CONTROLS, AND FEDERAL AWARDS SECTION ............................................. .................. 129 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 .................................................. 130 Summary Schedule of Prior Audit Findings........................................................... 132 Schedule of Findings and Questioned Costs.......................................................... 133 Corrective Action Plan........................................................................... 135 Independent Auditors' Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance ..................................... 136 Notes on Accounting Policies for Federal and State Awards ........................... .................. 139 Schedule of Expenditures of Federal Awards.......................................................... 140 State: Schedule of Expenditures of State of Texas Awards .................................................... 141 G�9 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Paris Texas For its Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2021 Executive Director/CEO INTRODUCTORY SECTION October 16, 2023 Mayor Reginald B. Hughes and Members of the City Council City of Paris, Texas Dear Mayor and Council Members: I am pleased to submit the Annual Comprehensive Financial Report (ACFR) of the City of Paris, Texas, for the fiscal year ended September 30, 2022. 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 fiends of the primary government and its component unit, the Paris Economic Development Corporation (PEDC). 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 ANNUAL COMPREHENSIVE FINANCIAL REPORT The Annual Comprehensive Financial Report of the City of Paris, Texas, for the fiscal year ended September 30, 2022, 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 33 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. I-1 The financial statements have been prepared in accordance with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB). 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 6 banks. The City's 2020 census is 24,476, a decrease of 2.76% from the 2010 census of 25,171. 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 2020 census is 50,088, an increase of 0.59% over the 2010 census of 49,793. 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 11,800. 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 (some of which are also striped for pickle ball), 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 2022. 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 I-2 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 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 2022-23 reflect an 8.77% increase over the 2021-22 values. Building permits for new residential and commercial construction were valued at $50,632,430 for fiscal year 2021-22. Most of this activity will be reflected in next year's taxable values. However, it should be noted that $25,000,000 of the permit value was school related and will not be taxable. Sales taxes for 2021-22 increased from the prior year by 4.94%. Current rebates on a cash basis are 10.74% above the 2021-22 cash rebates through September 2023. Hotel occupancy taxes were down 3.71% compared to 2020-21, but appear to have recouped that decrease in 2022-23. Franchise fees for 2021-22 were up 13.51% compared to the previous year. The biggest portion of the increase came from Atmos Energy. 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. There are currently incentives totaling $2,226,526 involving Huhtamaki, Metro Gate, Lions Head, Universal Fabricating, and Ametsa. Two new businesses joined the community in the 2021-22 fiscal year. They were Trison Tarps and Lions Head Tire & Wheel. General Fund receipts equaled 121.37% of budget. This surplus of revenues was caused primarily by Emergency Medical Service revenue (increased call volume), Federal funding related to COVID-19 & economic stimulus, and sales taxes. General Fund expenditures were 136.49% of budget. This variance is due in large part to COVID-19 related expenditures for various departments. However, by far the largest cause for exceeding budget was the over $12,000,000 payment of pension bond proceeds to fully fund the Paris Firefighters Retirement & Relief Fund. For the 2022-23 fiscal year, the City Council adopted a tax rate of .44278 cents per $100 of value. This rate is $0.01095 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 6.83%. Long-term Financial Planning and Relevant Financial Policies The City continues to exercise 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 debt issued from 2016 through 2022. I-3 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. At the same time a small low interest $2,900,000 Certificates of Obligation issue was made through the Texas Water Development Board. Both 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 this new debt. Likewise a $9,750,000 bond election for 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 and tax revenue. It is expected that additional bonds will be issued in 2024 for Phase Two of the new wastewater treatment plant project. Also, the City used the Federal American Rescue Plan funding to install water transmission lines around Loop 286 to aid in industrial recruitment as well as providing a second water line connection to certain areas of town. 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 Grants 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. A major renovation of the civic center was recently competed. 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. The City also implemented a new incentive program to encourage residential housing construction. The City, PEDC, and the Chamber of Commerce recently worked together to develop a common branding strategy to emphasize our unity in economic development and other areas. 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 Annual Comprehensive 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 I-4 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 27'x' 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 through financial reports provided to them. 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. 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 09-30-22: Moody's Revenue Investors Issue Tax Supported Supported Fund Maturity Rating Insured 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. (Civic Center) 2020 G.O. Refunding Bonds 2020 Tax Notes 2021 Tax and Rev. C.O. 2022 GO Pension Bonds Financed Purchases-Firetrucks SuRRMA Loan Total Independent Audit - 1,560,000 12-15-32 N/A - 25,335,000 12-15-32 Aa3 - 6,560,000 12-15-36 Aa3 7,795,000 - 06-15-37 Aa3 - 775,000 06-15-38 Aa3 1,225,000 - 06-15-30 N/A 1,585,000 - 12-15-29 Aa3 770,000 - 06-15-26 N/A - 43,855,000 12-15-50 Aa3 - 12,355,000 06-15-42 Aa3 629,538 - 01-28-26 N/A 192,906 - 06-29-25 N/A $ 12,197,444 $ 90,440,000 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. I-5 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-6 CITY OF PARIS ORGANIZATIONAL CHART I.7 List of Elected and Appointed Officials Elected Officials Reginald Hughes — Mayor Mihir Pankaj — Mayor Pro Tem Shatara Moore Gary Savage Rebecca Norment Clayton Pilgrim Rudy Kessel Appointed Officials Grayson Path — City Manager Robert Vine — Assistant 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 Richard Salter—Police Chief Connie Lawman — Library Director Sandy Collard — Human Resources Jason Dyess — Emergency Medical Services Andrew Mack — Planning and Development Doug Harris —Utilities Director Thomas McMonigle—Fire Chief I-8 FINANCIAL SECTION McClanahan and Holmes, LLP CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT Honorable Mayor and City Council City of Paris, Texas Opinions We have audited the accompanying financial statements of the governmental activities, the business -type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Paris, Texas (the City), as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Paris, Texas, as of September 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof and respective budgetary comparison schedule for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Change in Accounting Principle As discussed in Note I to the financial statements, in 2022 the City adopted new accounting guidance, GASBS No. 84, Fiduciary Activities and GASBS No. 87, Leases. Our opinions are not modified with respect to this matter. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. 228 SIXTH STREET S.E. PARIS, TEXAS 75460 GEORGE H. STRUVE, CPA 903-784-4316 DEBRA J. WILDER, CPA FAX 903-784-4310 TEFFANY A. KAVANAUGH, CPA ---------- APRIL J. HATFIELD, CPA 304 WEST CHESTNUT BRITTANY L. MARTIN, CPA DENISON, TEXAS 75020 ---------- 903-465-6070 STEVEN W. MOHUNDRO, CPA, FAX 903-465-6093 OF COUNSEL ---------- 1400 WEST RUSSELL BONHAM, TEXAS 75418 903-5835574 FAX 903-583-9453 INDEPENDENT AUDITORS' REPORT Honorable Mayor and City Council City of Paris, Texas Opinions We have audited the accompanying financial statements of the governmental activities, the business -type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Paris, Texas (the City), as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Paris, Texas, as of September 30, 2022, and the respective changes in financial position and, where applicable, cash flows thereof and respective budgetary comparison schedule for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Change in Accounting Principle As discussed in Note I to the financial statements, in 2022 the City adopted new accounting guidance, GASBS No. 84, Fiduciary Activities and GASBS No. 87, Leases. Our opinions are not modified with respect to this matter. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error. Honorable Mayor and City Council City of Paris, Texas In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risk of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 City's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the audit. 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 and related ratios, the schedules of changes in total OPEB liability and related ratios, and the schedules of City contributions be presented to supplement the basic financial statements. Such information is the responsibility of management and, 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 inquires 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. Honorable Mayor and City Council City of Paris, Texas Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual nonmajor fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory section, statistical section, and the continuing disclosure information but does not include the basic financial statements and our auditors' report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected misstatement of the other information exists, we are required to describe it in our report. McL'&twhan dndXOCmeS, LLQ' Certified Public Accountants Paris, Texas October 16, 2023 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, 2022. 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 0.48078 to 0.45373 per $100 of valuation for fiscal year 2021-22. • For the upcoming 2022-23 fiscal year, the City lowered its tax rate to 0.44278 per $100 of valuation. • City-wide revenues this year exceeded City-wide expenses by $6,900,085 whereas in the previous year revenues exceeded expenses by $5,144,346. The underlying causes of the higher surplus was an increase in every type of revenue: charges for services, operating and capital grants, general revenues, interest, and gain on disposal of assets. These increases more than offset the increase in expenses. • At the end of the fiscal year, unassigned fund balance for the general fund was $23,926,645 or 77.27%, of total general fund expenditures. The prior year unassigned fund balance was $20,596,761 or 58.60%, of general fund expenditures. • At the end of the fiscal year, the net position of the proprietary funds was $36,177,466 compared to $45,212,203 the prior year. Increased debt related to the construction of a new wastewater plant was the primary cause of the decrease in net position. 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 three categories: governmental funds, proprietary funds, and fiduciary 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 Nomnajor 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. Fiduciary Funds The City of Paris is the trustee, or fiduciary, for certain amounts held on behalf of other entities. All of the City's fiduciary activities are reported in a separate Statement of Fiduciary Net Position. The activity of this fund is excluded from the City's other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in this fund are used for their intended purpose. The basic fiduciary fund financial statements can be found on Statements 10 and 11 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 Changes in Net Position — Fiduciary 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 $93,067,810 at the close of the most recent fiscal year. This compares to $85,879,855 for the previous year. This was an 8.37% increase in net position. By far, the largest portion of the City of Paris' net position ($48,987,874 or 52.64%) 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 Asset Retirement Related to Pension Related to OPEB Total Deferred Outflows Long -Tenn Liabilities City of Paris Net Position Governmental Activities Business -Type Activities Total Total 2022 2021 2022 2021 2022 2021 $ 35,493,063 $ 30,225,091 $ 67,030,765 $ 67,149,358 $ 102,523,828 $ 97,374,449 40,589,238 40,391,518 70,544,343 67,853,908 111,133,581 108,245,426 Related to Pensions 76,082,301 70,616,609 137,575,108 135,003,266 213,657,409 205,619,875 Related to OPEB 361,020 215,485 11,897 13,602 372,917 - - 2,707,600 2,804,300 2,707,600 2,804,300 13,873,084 1,651,067 178,764 163,384 14,051,848 1,814,451 485,320 456,770 38,529 47,281 523,849 504,051 14,358,404 2,107,837 2,924,893 3,014,965 17,283,297 5,122,802 Outstanding 24,336,260 27,898,649 96,587,781 86,894,194 120,924,041 114,792,843 Other Liabilities 1,849,162 1,291,784 6,851,388 5,519,745 8,700,550 6,811,529 Total Liabilities 26,185,422 29,190,433 103,439,169 92,413,939 129,624,591 121,604,372 Deferred Inflows Related to Pensions 5,168,101 2,650,876 871,469 378,487 6,039,570 3,029,363 Related to OPEB 361,020 215,485 11,897 13,602 372,917 229,087 Related to Leases 1,835,818 - - - 1,835,818 - Total Deferred Inflows 7,364,939 2,866,361 883,366 392,089 8,248,305 3,258,450 6 Net Position Net Investment in Capital Assets 28,267,799 26,703,929 20,720,075 33,410,030 48,987,874 60,113,959 Restricted 6,528,631 7,357,621 - - 6,528,631 7,357,621 Unrestricted 22,093,914 6,606,102 15,457,391 11,802,173 37,551,305 18,408,275 Total Net Position $ 56,890,344 $ 40,667,652 $ 36,177,466 $ 45,212,203 $ 93,067,810 $ 85,879,855 An additional portion of the City of Paris' net position ($6,528,631 or 7.01%) represents resources that are subject to external restrictions on how they may be used. The balance of unrestricted net position ($37,551,305 or 40.35%) 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 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 as well as certain asset retirement obligations. Governmental Activities Governmental activities increased the City of Paris' net position by $15,934,822 or 39.18% during the current fiscal year. The bulk of this increase was caused by a transfer in of the firefighter pension bond proceeds used to fully fund that pension fund. Total general and program revenues were up $5,383,135 (16.38%). This increase was due to significant increases in program revenues and miscellaneous revenues with property, sales, and franchise taxes also contributing to the increase. Property Taxes Sales Taxes Franchise Taxes Hotel Occupancy Tax Unrestricted Investment Earnings Miscellaneous Gain (Loss) on Sale of Capital Asset Program Revenues General Revenues & Proeram Revenues 2022 $ 9,863,420 9,650,605 4,827,601 1,151,124 279,262 1,548,315 111,727 10,808,246 Increase 2021 (Decrease) $ 9,561,394 9,196,157 4,253,182 1,192,873 41,704 546,391 125,176 7,940,288 $ 302,026 454,448 574,419 (41,749) 237,558 1,001,924 (13,449) 2,867,958 $ 38,240,300 $ 32,857,165 $ 5,383,135 The following table provides a summary of the City's operations for the years ending 2022 and 2021 for both governmental and business -type activities. City of Paris Changes in Net Position Expenses General Government Governmental Activities Business -Type Activities Total 7,891,210 5,481,353 2022 2021 2022 2021 2022 2021 Revenues Public Works 8,186,910 6,452,355 - - 8,186,910 Program Revenues Health 3,781,493 3,962,596 - - 3,781,493 Charges for Services $ 9,189,299 $ 7,331,549 $18,397,839 $16,567,528 $27,587,138 $23,899,077 Operating Grants and Other - - - - - Contributions 522,574 369,289 1,371,533 - 1,894,107 369,289 Capital Grants and Interest on Long -Term Contributions 1,096,373 239,450 - - 1,096,373 239,450 General Revenues Water and Sewer - - 15,747,874 15,241,543 15,747,874 Property Taxes 9,863,420 9,561,394 - - 9,863,420 9,561,394 Sales Taxes 9,650,605 9,196,157 - - 9,650,605 9,196,157 Franchise Taxes 4,827,601 4,253,182 - - 4,827,601 4,253,182 Hotel Occupancy Transfers 4,188,619 3,850,603 2,711,466 1,293,743 6,900,085 Tax 1,151,124 1,192,873 - - 1,151,124 1,192,873 Unrestricted Investment Earnings 279,262 41,704 (1,376,170) (51,563) (1,096,908) (9,859) Other 1,660,042 671,567 66,138 19,321 1,726,180 690,888 Total Revenues 38,240,300 32,857,165 18,459,340 16,535,286 56,699,640 49,392,451 Expenses General Government 7,891,210 5,481,353 - - 7,891,210 5,481,353 Public Safety 12,265,360 11,874,360 - - 12,265,360 11,874,360 Public Works 8,186,910 6,452,355 - - 8,186,910 6,452,355 Health 3,781,493 3,962,596 - - 3,781,493 3,962,596 Culture and Recreation 774,910 762,080 - - 774,910 762,080 Other - - - - - - Cox Field 1,099,517 374,649 - - 1,099,517 374,649 Interest on Long -Term Debt 52,281 99,169 - - 52,281 99,169 Water and Sewer - - 15,747,874 15,241,543 15,747,874 15,241,543 Total Expenses 34,051,681 29,006,562 15,747,874 15,241,543 49,799,555 44,248,105 Increase (Decrease) in Net Position Before Transfers 4,188,619 3,850,603 2,711,466 1,293,743 6,900,085 5,144,346 Transfers/Special Items 11,746,203 (177,451) (11,746,203) 177,451 - - Increase (Decrease) in Net Position 15,934,822 3,673,152 (9,034,737) 1,471,194 6,900,085 5,144,346 Net Position, Beginning 40,667,652 37,046,560 45,212,203 43,803,809 85,879,855 80,850,369 Prior Period Adjustment 287,870 (52,060) - (62,800) 287,870 (114,860) Net Position, Ending $ 56,890,344 $40,667,652 $36,177,466 $45,212,203 $93,087,810 $85,879,855 Business -Type Activities Business -type activities decreased the City of Paris' net position by $9,034,737. This decrease was caused by a transfer out of bond proceeds to fully fund the firefighter pension plan. s 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. 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 Prepaid Items 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 2022 2021 $ 35,565,019 $ 30,225,090 1,833,188 1,190,557 2,579,793 813,024 248,423 181,620 145,724 98,883 98,543 1,799,656 1,928,672 2,436,202 3,631,092 1,316,348 672,627 746,789 707,090 130,753 107,574 79,148 76,935 223,467 220,595 23,926,645 20,596,761 31,152,038 28,221,509 $ 35,565,019 $ 30,225,090 As of the end of the current fiscal year, the City of Paris' governmental funds reported combined ending fund balances of $31,152,038. Approximately 77.27% of this total amount ($23,926,645) 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 ($98,883), 2) pay debt service ($1,799,656), 3) inventories ($248,423), 4) law enforcement ($1,316,348), 5) library ($79,148), 6), Public Education ($746,789), 7) capital projects ($2,436,202); 8) Community Development ($354,220), and 9) Prepaid Items ($145,724). Revenues Expenditures Deficiency of Revenues Under Expenditures Total Other Financing Sources (Uses) Net Change in Fund Balances Increase (Decrease) in Inventory Fund Balances - Beginning Prior Period Adjustment Fund Balances - Ending General Fund Governmental Funds Revenues, Expenditures, and Changes in Fund Balances 2022 2021 38,100,335 $ 32,751,652 47,638,067 32,306,405 (9,537,732) 445,247 12,180,391 2,771,823 2,642,659 28,221,509 287,870 $ 31,152,038 3,217,070 25,056,499 (52,060) $ 28,221,509 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 $23,926,645 ($20,596,761 the previous year), while total fund balance reached $25,071,442 ($28,221,509 the previous year). The decrease in the fund balance of the general fund was primarily due to increased liabilities and deferred inflows. 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 55.31% of total general fund expenditures, while total fund balance represents 57.61% 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 and general fund types. Statement 6 combines these funds and provides a budget to actual comparison. The final appropriation of the general fund types in total was overspent by $11,635,719 ($1,729,835 overspent the previous year). This 36.49% variance was primarily due to the issuance of $12,355,000 in GO Bonds to fully fund the fire fighter pension fund. General fund type revenues were over budget by 21.36% or $6,065,087 ($4,014,955 last year). Higher than expected sales tax collections and increased billings by EMS 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 $2,432,341 ($3,627,281 last year). This reduction was due mainly to expenditures in the remodeling of the civic center. 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 $1,799,656 ($1,928,372 the previous year), all of which is reserved for the payment of debt service. The net decrease in fund balance during the current year in the debt service fund was $192,987 ($161,809 increase the previous year). There was a prior period adjustment that offset the decrease in fund balance by $63,971. The government enacted a dedicated property tax for debt service at the beginning of the current fiscal year. This tax produced revenues of $1,644,776 in the current fiscal year ($1,541,384 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 $15,457,391 ($11,802,173 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, 2022 amounts to $110,906,788 ($108,245,426 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. 11 Governmental Activities Business -Type Activities Total 2022 2021 2022 2021 2022 2021 Land $ 6,101,909 $ 5,950,108 $ 339,620 $ 339,620 $ 6,441,529 $ 6,289,728 Buildings and System 9,652,918 10,048,032 23,609,694 25,794,430 33,262,612 35,842,462 Improvements Other than Buildings 2,130,906 2,363,745 - - 2,130,906 2,363,745 Machinery, Furniture, and Equipment 4,819,859 4,608,507 1,771,306 1,324,682 6,591,165 5,933,189 Infrastructure 16,172,728 17,157,762 - - 16,172,728 17,157,762 Construction in Progress 1,484,125 263,364 41,652,434 37,188,254 43,136,559 37,451,618 Water Rights -Net - - 3,171,289 3,206,922 3,171,289 3,206,922 Total $ 40,362,445 $ 40,391,518 $ 70,544,343 $ 67,853,908 $ 110,906,788 $ 108,245,426 Additional information on the City of Paris' capital assets can be found in note IV. D. of the Notes to the Financial Statements. 11 Long -Term Debt The City of Paris has total debt outstanding in the amount of $102,637,545 (includes two financed purchases). Of this amount, $12,197,545 comprises debt being paid for by property tax or hotel tax revenues, and $90,440,000 represents bonds being paid for by water and sewer revenues. Paris' bond debt increased by $8,346,785 during the fiscal year. This was due to the $12,355,000 GO Pension Bonds issued for the purpose of fully funding the fire fighters pension fund. This new debt was offset somewhat by principal payments made on the previously issued debt. 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 $0.45373 per $100 valuation for the 2021-22 fiscal year. This rate was broken down into $0.37357 per $100 valuation for operations and $0.08016 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 5.34% 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 35 residential units and 17 commercial units. • Local population growth is expected to be minimal. • The tax rate is expected to increase $0.035 per $100 of value for debt services. • Franchise fees are expected to remain stable. All of these factors were considered in preparing the City of Paris' budget for 2022-23. 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 Issue Tax Supported Supported Maturity Rating 2013 C.O.s (TWDV) $ - $ 1,560,000 06-15-2032 N/A 2013 G.O. Bonds - 25,335,000 12-15-2032 Aa3 2016 G.O. Bonds - 6,560,000 12-15-2036 Aa3 2017 G.O. Bonds 7,795,000 - 06-15-2037 Aa3 2018 G.O. Bonds - 775,000 09-30-2028 Aa3 2020 Tax and Rev C.O.s 1,225,000 - 06-15-2030 N/A 2020 G.O. Refunding Bonds 1,585,000 - 12-15-2029 Aa3 2020 Tax Notes 770,000 - 06-15-2026 N/A 2021 Tax & Rev. C.O.s - 43,855,000 12-15-2050 Aa3 2022 GO Pension Bonds - 12,355,000 06-15-2042 Aa3 SuRRMA Loan 192,906 - 06-29-2025 N/A Financed Purchases— Firetrucks 629,639 - 01-28-2026 N/A $ 12,197,545 $ 90,440,000 Paris' bond debt increased by $8,346,785 during the fiscal year. This was due to the $12,355,000 GO Pension Bonds issued for the purpose of fully funding the fire fighters pension fund. This new debt was offset somewhat by principal payments made on the previously issued debt. 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 $0.45373 per $100 valuation for the 2021-22 fiscal year. This rate was broken down into $0.37357 per $100 valuation for operations and $0.08016 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 5.34% 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 35 residential units and 17 commercial units. • Local population growth is expected to be minimal. • The tax rate is expected to increase $0.035 per $100 of value for debt services. • Franchise fees are expected to remain stable. All of these factors were considered in preparing the City of Paris' budget for 2022-23. 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) Leases Receivable Inventories Prepaid Assets Net Pension Asset 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 Right -to -Use Assets, Net of Amortization Total Assets Deferred Outflows of Resources Deferred Outflows Related to Asset Retirement Obligation 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, 2022 Primary Government Governmental Business -Type Activities Activities Total Statement I Component Unit Economic Development $ 13,692,416 $ 14,655,205 $ 28,347,621 $ 2,981,322 8,043,206 745,065 8,788,271 2,131,500 8,465,494 2,732,269 11,197,763 353,246 1,865,100 - 1,865,100 - 248,423 499,623 748,046 - 145,724 - 145,724 5,950 - 1,021,114 1,021,114 - 1,175,869 7,106,204 8,282,073 1,140,288 40,271,285 41,411,573 716,543 - 716,543 - - - - 3,858,276 - 3,171,289 3,171,289 - 6,101,909 339,619 6,441,528 1,484,125 41,652,435 43,136,560 9,652,918 23,609,694 33,262,612 2,130,906 - 2,130,906 - 4,819,859 1,771,306 6,591,165 1,264 16,172,728 - 16,172,728 - 226,793 - 226,793 - 76,082,301 137,575,108 213,657,409 9,331,558 - 2,707,600 2,707,600 - 13,873,084 178,764 14,051,848 485,320 38,529 523,849 14,358,404 2,924,893 17,283,297 The accompanying notes to the financial statements are an integral part of this statement. 13 Liabilities Accounts Payable and Other Current Liabilities Accrued Interest Payable Unearned Revenue Customers' Deposits Intergovernmental Payable Noncurrent Liabilities Due Within One Year Compensated Absences Bonds and Notes Payable Right -to -Use Lease Liability Due in More Than One Year Compensated Absences Bonds and Notes Payable Right -to -Use Lease Liability Asset Retirement Obligation Net Pension Liability Net OPEB Liability Total Liabilities Deferred Inflows of Resources Deferred Inflows Related to Pensions Deferred Inflows Related to OPEB Deferred Inflows Related to Leases Total Deferred Inflows of Resources Net Position Net Investment in Capital Assets Restricted for Construction Debt Service Law Enforcement Education Community Development Industrial Incentives Land Development Costs Permanent Library Funds Nonexpendable Unrestricted Total Net Position CITY OF PARIS, TEXAS Statement 1 Statement of Net Position (Continued) September 30, 2022 Component Primary Government Unit Governmental Business -Type Economic Activities Activities Total Development 1,761,232 474,785 2,236,017 119,582 87,930 921,969 1,009,899 15,155 - 4,387,022 4,387,022 - 1,067,612 1,067,612 - - - - 16,835 125,086 22,277 147,363 - 1,114,280 4,230,000 5,344,280 145,199 52,306 - 52,306 - 1,125,772 200,496 1,326,268 - 11,138,290 88,993,920 100,132,210 2,247,922 166,564 - 166,564 - - 2,901,000 2,901,000 5,896,434 - 5,896,434 4,717,528 240,088 4,957,616 - 26,185,422 103,439,169 129,624,591 2,544,693 5,168,101 871,469 6,039,570 - 361,020 11,897 372,917 1,835,818 - 1,835,818 7,364,939 883,366 8,248,305 - 28,267,799 20,720,075 48,987,874 1,264 2,436,202 - 2,436,202 - 1,799,656 1,799,656 2,393,121 1,316,348 1,316,348 - 746,789 746,789 130,753 130,753 - - - 2,226,526 - - 3,858,276 98,883 - 98,883 - 22,093,914 15,457,391 37,551,305 (1,692,322) $ 56,890,344 $ 36,177,466 $ 93,067,810 $ 6,786,865 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, 2022 Statement 2 The accompanying notes to the financial statements are an integral part of this statement 15 Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Capital Primary Government Component Unit 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 $ 7,891,210 $ 567,805 $ 418,243 $ - $ (6,905,162) $ $ (6,905,162) $ Public Safety 12,265,360 346,023 103,441 202,054 (11,613,842) (11,613,842) Public Works 8,186,910 1,488,587 - 846,707 (5,851,616) (5,851,616) Health 3,781,493 5,946,071 - - 2,164,578 2,164,578 Culture and Recreation 774,910 65,827 890 - (708,193) (708,193) Cox Field Airport 1,099,517 774,986 - 47,612 (276,919) (276,919) Interest on Long -Term Debt 52,281 (52,281) (52,281) Total Governmental Activities 34,051,681 9,189,299 522,574 -(23,243,435) (23,243,435) Business -Type Activities Water and Sewer 15,747,874 18,397,839 1,371,533 4,021,498 4,021,498 Total Business -Type Activities 15,747,874 18,397,839 1,371,533 4,021,498 4,021,498 Total Primary Government $ 49,799,555 $ 27,587,138 $ 1,894,107 $ 1,096,373 (23,243,435) 4,021,498 (19,221,937) Component Unit Economic Development $ 589,734 $ $ $ - - (589,734) General Revenues Property Taxes 9,863,420 9,863,420 - Sales Taxes 9,650,605 9,650,605 1,930,132 Franchise Taxes 4,827,601 4,827,601 - Hotel Occupancy Taxes 1,151,124 1,151,124 - Unrestricted Investment Earnings 279,262 (1,376,170) (1,096,908) 29,308 Miscellaneous 1,548,315 - 1,548,315 - Gain onDisposal ofAssets 111,727 66,138 177,865 Transfers 11,746,203 (11,746,203) Total General Revenues and Transfers 39,178,257 (13,056,235) 26,122,022 1,959,440 Changes in Net Position 15,934,822 (9,034,737) 6,900,085 1,369,706 NetPosition- Beginning 40,667,652 45,212,203 85,879,855 5,417,159 Prior Period Adjustment 287,870 287,870 NetPosition- Ending $ 56,890,344 $ 36,177,466 $ 93,067,810 $ 6,786,865 The accompanying notes to the financial statements are an integral part of this statement 15 CITY OF PARIS, TEXAS Balance Sheet - Governmental Funds September 30, 2022 Debt General Service Total Nonmaj or Capital Governmental Projects Funds Statement 3 Total Governmental Funds Assets Cash and Cash Equivalents $ 9,757,078 $ 1,698,400 $ 1,692,859 $ 1,719,948 $ 14,868,285 Investments 8,081,449 - 1,003,664 98,381 9,183,494 Receivables (Net) Accounts 3,239,425 93,307 - 23,079 3,355,811 Taxes 2,716,541 - - 2,716,541 Leases 903,671 961,429 1,865,100 Notes 2,393,142 - 2,393,142 Inventories 248,423 248,423 Prepaid Items 145,724 - 145,724 Due from Other Funds - 71,956 71,956 Due from Other Governments 716,543 - - 716,543 Total Assets S 28,201,996 $ 1,863,663 S 2,696,523 $ 2,802,837 S 35,565,019 Liabilities, Deferred Inflows, and Fund Balances Liabilities Accounts Payable and Accrued Liabilities $ 1,492,438 $ $ 264,182 $ 4,612 $ 1,761,232 Due to Other Funds 71,956 - - 71,956 Total Liabilities 1,564,394 264,182 4,612 1,833,188 Deferred Inflows of Resources Unavailable Revenue - Property Taxes 653,495 64,007 - - 717,502 Unavailable Revenue - Other 26,473 - - 26,473 Unavailable Revenue - Leases 886,192 - 949,626 1,835,818 Total Deferred Inflows of Resources 1,566,160 64,007 949,626 2,579,793 Fund Balances Nonspendable Inventory 248,423 - - 248,423 Permanent Library Funds - - 98,883 98,883 Restricted for Debt Service - 1,799,656 - - 1,799,656 Capital Projects 3,861 - 2,432,341 - 2,436,202 Law Enforcement - - 1,316,348 1,316,348 Public Education 746,789 - 746,789 Community Development - 130,753 130,753 Assigned Library 79,148 79,148 Community Development - 223,467 223,467 Unassigned: General Fund 24,072,369 - - - 24,072,369 Total Fund Balances 25,071,442 1,799,656 2,432,341 1,848,599 31,152,038 Total Liabilities, Deferred Inflows and Fund Balances $ 28,201,996 $ 1,863,663 $ 2,696,523 $ 2,802,837 $ 35,565,019 The accompanying notes to the financial statements are an integral part of this statement. 16 CITY OF PARIS, TEXAS Balance Sheet - Governmental Funds September 30, 2022 Amounts reported for governmental activities in the statement of net position are different because: Fund Balances - Total Governmental Funds Amounts reported for governmental activities in the statement of net position are different because: Capital and right -to -use assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. (Net of Accumulated Depreciation/Amortization) 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 $5,896,434, a Deferred Outflow of Resources in the amount of $14,069,300, and a Deferred Inflow of Resources in the amount of $5,228,704. This amounted to an increase in Net Position of $2,944,162. 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 $4,717,528, a Deferred Outflow of Resources in the amount of $289,104, and a Deferred Inflow of Resources in the amount of $300,417. This amounted to a decrease in Net Position of $4,728,841. Net Position of Governmental Activities The accompanying notes to the financial statements are an integral part of this statement. 17 Statement 3 (Continued) $ 31,152,038 40,589,238 743,975 (13, 810,228) 2,808,549 (4,593,228) $ 56,890,344 CITY OF PARIS, TEXAS Statement 4 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended September 30, 2022 The accompanying notes to the financial statements are an integral part of this statement. 18 Total Nonmajor Total Debt Capital Governmental Governmental General Service Projects Funds Funds Revenues Taxes Property $ 8,287,694 $ 1,644,776 $ - $ - $ 9,932,470 Sales 9,650,605 - - - 9,650,605 Franchise 4,827,601 - - - 4,827,601 Hotel Occupancy 848,508 256,125 - 46,491 1,151,124 Licenses and Permits 532,557 - - - 532,557 Fines and Fees 432,115 - - 40,628 472,743 Leases 65,617 - - 101,720 167,337 Charges for Services - - - 774,986 774,986 Use of Money and Property 201,997 21,586 33,178 26,166 282,927 Sanitation 1,462,220 - - - 1,462,220 Health 5,933,986 - - - 5,933,986 Intergovernmental 1,574,428 - - 129,612 1,704,040 Other 629,747 - 4,558 573,434 1,207,739 Total Revenues 34,447,075 1,922,487 37,736 1,693,037 38,100,335 Expenditures Current General Government 1,917,259 - - 39,666 1,956,925 Public Safety 23,917,194 - - 7,602 23,924,796 Public Works 6,050,354 - - - 6,050,354 Health 5,595,417 - - - 5,595,417 Culture and Recreation 715,243 - - 1,401 716,644 Cox Field 1,224 - - 971,531 972,755 Other 1,829,866 - - - 1,829,866 Debt Service Principal 162,914 1,500,401 - - 1,663,315 Interest 24,756 306,901 - - 331,657 Capital Outlay General Government 561,165 - 1,232,676 - 1,793,841 Public Safety 1,060,330 - - 56,363 1,116,693 Public Works 1,199,200 - - - 1,199,200 Health 486,604 - - - 486,604 Total Expenditures 43,521,526 1,807,302 1,232,676 1,076,563 47,638,067 Excess (Deficiency) of Revenues Over (Under) Expenditures (9,074,451) 115,185 (1,194,940) 616,474 (9,537,732) The accompanying notes to the financial statements are an integral part of this statement. 18 CITY OF PARIS, TEXAS Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year Ended September 30, 2022 Other Financing Sources (Uses) Inception of Lease Proceeds from Sale of Capital Assets Transfers In Transfers Out Total Other Financing Sources (Uses) Net Changes in Fund Balances Fund Balances - Beginning Prior Period Adjustment Fund Balances - Ending Statement 4 (Continued) The accompanying notes to the financial statements are an integral part of this statement. 19 Total Nonmajor Total Debt Capital Governmental Governmental General Service Projects Funds Funds 278,821 - - - 278,821 155,367 - - - 155,367 12,682,538 152,461 - - 12,834,999 (603,609) (460,633) - (24,554) (1,088,796) 12,513,117 (308,172) — (24,554) 12,180,391 3,438,666 (192,987) (1,194,940) 591,920 2,642,659 21,420,072 1,928,672 3,627,281 1,245,484 28,221,509 212,704 63,971 - 11,195 287,870 $ 25,071,442 $ 1,799,656 $ 2,432,341 $ 1,848,599 $ 31,152,038 The accompanying notes to the financial statements are an integral part of this statement. 19 CITY OF PARIS, TEXAS Statement 5 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended September 30, 2022 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) S 2,642,659 Governmental fiends report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. (55,056) The net effect of various miscellaneous transactions involving capital assets (i.e., sales and donations) is to decrease net position. 25,354 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in governmental fiends. 157,744 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 fiends. 13,926 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 fiends. (87,994) Pension expenses are not reported as expenditures in governmental fiends and contributions after the measurement date are deferred. 13,836,711 OPEB expenses are not reported as expenditures in governmental funds and contributions after the measurement date are deferred. (1,964,670) The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental fiends, 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 fiends 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. 1,366,148 Change in net position of governmental activities (Statement 2). $ 15,934,822 The accompanying notes to the financial statements are an integral part of this statement. 20 CITY OF PARIS, TEXAS Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual General Fund Year Ended September 30, 2022 REVENUES Property Taxes Sales Taxes Franchise Taxes Hotel Occupancy Taxes Licenses and Permits Fines and Fees Leases Investment Earnings Sanitation Health Intergovernmental Revenues Other Total Revenues EXPENDITURES General Government Council Manager Attorney Municipal Court Clerk Finance Total General Government Public Safety Police Fire Total Public Safety Public Works Community Development Engineering Public Works Parks and Recreation Sanitation Streets and Highways Traffic and Public Lighting Garage Total Public Works Budgeted Amounts Original Final $ 8,269,000 8,200,000 4,483,157 750,000 167,950 387,000 154,800 1,474,250 2,990,000 1,191,281 314,550 28,381,988 $ 8,269,000 8,200,000 4,483,157 750,000 167,950 387,000 154,800 1,474,250 2,990,000 1,191,281 314,550 28,381,988 Actual $ 8,287,694 9,650,605 4,827,601 848,508 532,557 432,115 65,617 201,997 1,462,220 5,933,986 1,574,428 629,747 34,447,075 Statement 6 Variance with Final Budget $ 18,694 1,450,605 344,444 98,508 364,607 45,115 65,617 47,197 (12,030) 2,943,986 383,147 315,197 6,065,087 97,700 154,700 590,815 (436,115) 576,809 551,809 560,610 (8,801) 376,198 374,698 385,885 (11,187) 242,787 229,087 264,170 (35,083) 161,654 158,654 156,964 1,690 460,463 550,463 519,980 30,483 1,915,611 2,019,411 2,478,424 (459,013) 7,485,659 5,516,560 13,002,219 7,463,759 5,644,560 13,108,319 7,408,596 17,756,598 25,165,194 55,163 (12,112,038) (12,056,875) 2,461,499 2,224,499 2,354,291 (129,792) 318,068 320,068 315,780 4,288 249,681 251,681 247,541 4,140 1,353,319 1,256,619 1,257,277 (658) 1,252,213 1,330,713 1,159,973 170,740 1,613,559 1,219,559 1,107,858 111,701 495,576 448,576 475,730 (27,154) 405,948 334,048 331,104 2,944 8,149,863 7,385,763 7,249,554 136,209 The accompanying notes to the financial statements are an integral part of this statement. 21 Total Other Financing Sources (Uses) Net Changes in Fund Balance Fund Balance - Beginning Prior Period Adjustment Fund Balance - Ending (353,030) (353,030) (1,034,049) (3,856,849) 12,513,117 12,866,147 3,438,666 7,295,515 21,420,072 21,420,072 21,420,072 - - 212,704 212,704 $ 20,386,023 $ 17,563,223 $ 25,071,442 $ 7,508,219 The accompanying notes to the financial statements are an integral part of this statement. 22 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, 2022 Budgeted Amounts Variance with Original Final Actual Final Budget EXPENDITURES (Continued) Health 3,527,899 4,361,899 6,082,021 (1,720,122) Culture and Recreation Paris Band 23,050 23,050 22,268 782 Library Services 734,128 699,128 692,975 6,153 Total Culture and Recreation 757,178 722,178 715,243 6,935 Other Cox Field Airport - - 1,224 (1,224) Other 1,710,237 4,288,237 1,829,866 2,458,371 Total Other 1,710,237 4,288,237 1,831,090 2,457,147 Total Expenditures 29,063,007 31,885,807 43,521,526 (11,635,719) Excess (Deficiency) of Revenues Over Expenditures (681,019) (3,503,819) (9,074,451) (5,570,632) Other Financing Sources (Uses) Inception of Lease - - 278,821 278,821 Transfers In - - 12,682,538 12,682,538 Transfers Out (353,030) (353,030) (603,609) (250,579) Proceeds from Sale of Assets - - 155,367 155,367 Total Other Financing Sources (Uses) Net Changes in Fund Balance Fund Balance - Beginning Prior Period Adjustment Fund Balance - Ending (353,030) (353,030) (1,034,049) (3,856,849) 12,513,117 12,866,147 3,438,666 7,295,515 21,420,072 21,420,072 21,420,072 - - 212,704 212,704 $ 20,386,023 $ 17,563,223 $ 25,071,442 $ 7,508,219 The accompanying notes to the financial statements are an integral part of this statement. 22 CITY OF PARIS, TEXAS Statement of Net Position Proprietary Fiends September 30, 2022 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 Constriction Reserve and Contingency Unrestricted Total Investments Water Rights (Net of Accumulated Amortization) Capital Assets Land Constriction in Progress Plant, Pumps, and Motors Distribution System Collection System Maintenance Equipment and Vehicles Furniture and Equipment Less Accumulated Depreciation/Amortization Total Capital Assets (Net of Accumulated Depreciation/Amortization) Net Pension Asset Total Noncurrent Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows of Resources - Asset Retirement Obligation Deferred Outflows of Resources - Pensions Deferred Outflows of Resources - OPEB Total Deferred Outflows The accompanying notes to the financial statements are an integral part of this statement. 23 Statement 7 Water and Sewer Enterprise Fiend $ 14,655,205 7,106,204 21,761,409 2,699,560 32,709 499,623 24,993,301 34,296,718 5,974,567 745,065 41,016,350 3,171,289 339,620 41,652,434 32,502,752 46,963,935 28,300,115 5,111,936 2,092,872 (89,590,610) 67,373,054 1,021,114 112,581,807 137,575,108 2,707,600 178,764 38,529 2,924,893 CITY OF PARIS, TEXAS Statement 7 Statement of Net Position (Continued) Proprietary Funds September 30, 2022 Noncurrent Liabilities Bonds Payable - Noncurrent Portion 46,348,920 Notes Payable - Noncurrent Portion 42,645,000 Accred Compensated Absences - Noncurrent Portion 200,496 Asset Retirement Obligation 2,901,000 Net OPEB Liabilities 240,088 Total Noncurrent Liabilities 92,335,504 Total Liabilities 103,439,169 DEFERRED INFLOWS OF RESOURCES Deferred Inflows Related to Pensions 871,469 Deferred Inflows Related to OPEB 11,897 Total Deferred Inflows 883,366 NET POSITION Net Investment in Capital Assets 20,720,075 Unrestricted 15,457,391 Total Net Position $ 36,177,466 The accompanying notes to the financial statements are an integral part of this statement. 24 Water and Sewer Enterprise Fund LIABILITIES Current Liabilities Accounts Payable and Accred Liabilities 474,785 Accred Interest Payable 921,969 Customers' Deposits 1,067,612 Notes Payable - Current Portion 1,210,000 Bonds Payable - Current Portion 3,020,000 Accred Compensated Absences - Current Portion 22,277 Unearned Revenue 4,387,022 Total Current Liabilities 11,103,665 Noncurrent Liabilities Bonds Payable - Noncurrent Portion 46,348,920 Notes Payable - Noncurrent Portion 42,645,000 Accred Compensated Absences - Noncurrent Portion 200,496 Asset Retirement Obligation 2,901,000 Net OPEB Liabilities 240,088 Total Noncurrent Liabilities 92,335,504 Total Liabilities 103,439,169 DEFERRED INFLOWS OF RESOURCES Deferred Inflows Related to Pensions 871,469 Deferred Inflows Related to OPEB 11,897 Total Deferred Inflows 883,366 NET POSITION Net Investment in Capital Assets 20,720,075 Unrestricted 15,457,391 Total Net Position $ 36,177,466 The accompanying notes to the financial statements are an integral part of this statement. 24 CITY OF PARIS, TEXAS Statement 8 Statement of Revenues, Expenses, and Changes in Fiend Net Position 1,323,753 Proprietary Funds 3,681,479 Year Ended September 30, 2022 1,033,566 Sundry Charges Water and Sewer Bad Debt Expense Enterprise Fund Operating Revenues 48,609 Charges for Sales and Services 2,674,834 Water Sales and Taps $ 9,042,125 Sewer Charges and Taps 8,558,316 Sanitation Billing Fees 76,653 Service Charges 203,776 Industrial Surcharges 80,135 Miscellaneous 436,834 Total Operating Revenues 18,397,839 Operating Expenses Personnel 3,218,532 Supplies 1,323,753 Contractual 3,681,479 Maintenance 1,033,566 Sundry Charges 752,906 Bad Debt Expense 63,046 Other 48,609 Depreciation 2,674,834 Amortization of Water Rights 35,633 Amortization of Asset Retirement Obligation 96,700 Total Operating Expenses 12,929,058 Operating Income 5,468,781 Nonoperating Revenues (Expenses) Investment Earnings 363,000 Net Increase (Decrease) in the Fair Value of Investments (1,739,170) Intergovernmental 1,371,533 Gain/(Loss) on Sale of Capital Assets 66,138 Interest Expense (2,657,916) Bond Issue Costs (160,900) Net Nonoperating Revenues (Expenses) (2,757,315) Income Before Contributions, Other Revenue, and Transfers 2,711,466 Capital Contributions, Other Revenue, and Transfers Transfers In 1,064,242 Transfers Out (12,810,445) Total Capital Contributions, Other Revenue, and Transfers (11,746,203) Changes in Net Position (9,034,737) Total Net Position - Beginning 45,212,203 Total Net Position - Ending $ 36,177,466 The accompanying notes to the financial statements are an integral part of this statement. 25 CITY OF PARIS, TEXAS Statement of Cash Flows Proprietary Funds Year Ended September 30, 2022 Cash Flows from Operating Activities Receipts from Customers and Users Other Receipts Payments to Suppliers, Contractors, and Service Providers Payments to Employees for Salaries and Benefits Statement 9 Water and Sewer Enterprise Fund $ 18,399,949 1,308,653 (7,003,325) (3,511,331) Net Cash Provided by Operating Activities 9,193,946 Cash Flows from Noncapital Financing Activities Transfers In 1,064,242 Transfers Out (12,810,445) Net Cash Provided (Used) by Noncapital Financing Activities (11,746,203) Cash Flows from Capital and Related Financing Activities Proceeds Received from Sale of Capital Assets 80,353 Acquisition and Construction of Capital Assets (5,415,119) Proceeds from Long -Term Debt 12,150,020 Principal Paid on Capital Debt (2,345,000) Interest Paid on Capital Debt (2,943,696) Net Cash (Used) by Capital and Related Financing Activities 1,526,558 Cash Flows from Investing Activities Interest on Investments 363,000 Purchases of Investment Securities (7,261,131) Maturities of Investments 11,420,975 Net Cash (Used) by Investing Activities 4,522,844 Net Increase in Cash and Cash Equivalents 3,497,145 Cash and Cash Equivalents - Beginning 18,264,264 Cash and Cash Equivalents - Ending $ 21,761,409 The accompanying notes to the financial statements are an integral part of this statement. 26 CITY OF PARIS, TEXAS Statement 9 Statement of Cash Flows (Continued) Proprietary Funds Year Ended September 30, 2022 The accompanying notes to the financial statements are an integral part of this statement. 27 Water and Sewer Enterprise Fund Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating Income $ 5,468,781 Adjustments to Reconcile Operating Income to Net Cash Provided by (Used in) Operating Activities Depreciation 2,674,834 Amortization of Water Rights 35,633 Amortization of Asset Retirement Obligation 96,700 Decrease (Increase) in Accounts Receivable 43,903 Decrease (Increase) in Inventory (143,353) Decrease (Increase) in Net Pension Asset (812,291) Decrease (Increase) in Deferred Outflows of Resources (6,628) Increase (Decrease) in Accounts Payable and Accrued Liabilities 2,511 Increase (Decrease) in Customers' Deposits 21,253 Increase (Decrease) in Unearned Revenue 1,308,653 Increase (Decrease) in Accrued Compensated Absences - Increase (Decrease) in Asset Retirement Obligation - Increase (Decrease) in Net Pension Liabilities - Increase (Decrease) in Net OPEB Liabilities 12,673 Increase (Decrease) in Deferred Inflows of Resources 491,277 Total Adjustments 3,725,165 Net Cash Provided by Operating Activities $ 9,193,946 The accompanying notes to the financial statements are an integral part of this statement. 27 CITY OF PARIS, TEXAS Statement 10 Statement of Net Position Fiduciary Fiends September 30, 2022 Custodial Fund Court Costs and Fees ASSETS Cash and Cash Equivalents Total Assets LIABILITIES Accounts Payable to State Total Liabilities NET POSITION Total Net Position S 24,883 S The accompanying notes to the financial statements are an integral part of this statement. 28 24,883 24,883 24,883 CITY OF PARIS, TEXAS Statement 11 Statement of Changes in Net Position Fiduciary Fiends Year Ended September 30, 2022 Custodial Fund Court Costs and Fees ADDITIONS Contributions State Court Fees Collected $ 103,007 Total Additions 103,007 DEDUCTIONS Payments of Court Fees to State 103,007 Total Deductions 103,007 Change in Net Position Net Position - Beginning Net Position - Ending The accompanying notes to the financial statements are an integral part of this statement. 29 CITY OF PARIS, TEXAS Notes to Financial Statements September 30, 2022 L Summary 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 seven -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, proprietary, and fiduciary — 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. 30 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L Summa ,rr5 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. The City reports the following fiduciary fund as one major fund: The Court Cost and Fees Custodial Fund includes court costs collected by the City on behalf of the State of Texas, which are remitted to the State quarterly. These assets are excluded from the government -wide financial statements as they cannot be used to support the government's own programs. 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. 31 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L Summa ,rr5 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 financing through 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 and fiduciary 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 32 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L 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. An annual budget is not legally adopted for the Library Memorial Fund, a nonmajor special revenue fund. 2. Excess of Expenditures Over Appropriations For the year ended September 30, 2022, 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, 2022, the City Council approved a transfer of $3,751,000 from various departments to other departmental line items. Expenditures exceeded appropriations in the following departments: Council $436,115, Manager $8,801, Attorney $11,187, Municipal Court $35,083, Fire $12,112,038, Community Development $129,792, Parks and Recreation $658, Traffic and Public Lighting $27,154, Health $1,720,122, Cox Field Airport $1,224. 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. PEDC holds investments in two external investment pools, Texas Class and Lone Star Investments. Both investment pools carry investments at amortized cost, which 33 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L Summary of Significant Accounting Policies (Continued) G. Assets, Liabilities, and Equity (Continued) 2. Investments (Continued) approximates fair value. Investments are 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. Other restricted assets include funds restricted from revenue bond proceeds, contractual obligation debt service funds, unspent grant proceeds, and customer deposits. Assets restricted for a specific purpose are utilized before the use of unrestricted assets to pay related obligations when authorized to do so. 34 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L Summary of Significant Accounting Policies (Continued) G. Assets, Liabilities, and Equity (Continued) 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. 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. Right -to -use leased assets are discussed in Leases footnote below. 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. Leases The Government Accounting Standards Board defines a lease as a contract that conveys control of the right to use another entity's nonfinancial asset as specified in the contract for a period of time in an exchange or exchange -like transaction. City as Lessor The City is a lessor for noncancellable leases of property and equipment. The City recognizes a lease receivable and deferred inflow of resources at the beginning of the lease term. In general, the lease receivable and deferred inflows of resources are measured at the present value of the lease payments expected to be received during the lease term. The City remeasures the lease receivables at subsequent financial reporting dates if one or more of the following changes have occurred at or before the financial reporting date: change in lease term; change in the interest rate the lessor charges the lessee; and/or change in future contingency lease payments to fixed payments for the remainder of the lease. 35 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L Summary of Significant Accounting Policies (Continued) G. Assets, Liabilities, and Equity (Continued) 6. Leases (Continued) City as Lessor (Continued) The key estimates and judgments related to leases include how the City determines the discount rate it uses to discount the expected lease payments to present value, lease term, and lease payments. The City uses its estimated incremental borrowing rate as the discount rate for leases, unless the rate is stated in the lease agreement. The lease term includes the noncancellable period of the lease. Lease payments include the measurement of the lease receivable are composed of fixed payments from the lessee. Leases with periodic percentage rent increases or flat rate increases that are specified in the lease terms are included in the measurement of the lease receivable. The City calculates the amortization of the discount on the lease receivable on a straight-line basis over the term of the lease and reports that amount as an inflow of resources for the period. Any payments received are allocated first to the accrued interest receivable and then to the lease receivable. This recognition does not apply to short-term leases, contracts that transfer ownership, leases of assets that are investments, or certain regulated leases. The City accounts for the partial or full lease termination by reducing the carrying values of the lease receivable and related deferred inflow of resources, and recognizing a gain or loss for the difference. However, if the lease is terminated as a result of the lessee purchasing an underlying asset from the City, the carrying value of the underlying asset should be derecognized and included in the calculation of any resulting gain or loss. Leases that are considered a short-term lease (12 months or less) are not included in the measurement of the lease receivable. The City recognizes short-term lease payments as revenues based on the payment provisions of the lease contract. Liabilities are only recognized if payments are received in advance, and receivables are only recognized if payments are received subsequent to the reporting period. Citv as Lessee The City is a lessee for noncancellable leases of property and equipment. The City recognizes a lease liability and an intangible right -to -use lease asset at the beginning of a lease. In general, the lease liability and the right -to -use assets are measured based on the present value of the expected payments during the term of the lease. Remeasurement of a lease liability and right -to -use lease asset occurs when there is a change in the lease term and/or other changes that are likely to have a significant impact on the lease liability. The key estimates and judgments related to leases include how the City determines the discount rate it uses to discount the expected lease payments to present value, lease term, and lease payments. The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate. The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and any purchase option price that the City is reasonably certain to exercise. In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options or periods after terminations options are only included in the lease term is the lease is reasonably certain to be extended. Leases with payments that depend on an index or rate, such as the Consumer Price Index or market rate, are initially measured using the index or rate as of the commencement of the lease term. Leases with periodic percentage rent increases or flat rate increases that are specified in the lease terms are included in the measurement of the lease liability. 36 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L Summary of Significant Accounting Policies (Continued) G. Assets, Liabilities, and Equity (Continued) 6. Leases (Continued) City as Lessee (Continued) The City calculates the amortization of the discount on the lease liability and reports that amount as outflows of resources or interest expense for the period. Payments are allocated first to accrued interest liability and then to the lease liability. The City amortizes the right -to -use lease asset on a straight-line basis over the shorter of the lease term or the useful life of the underlying asset. However, if a lease contains a purchase option that the City has determined is reasonably certain of being exercised, the lease asset is amortized over the useful life of the underlying asset. If the underlying asset is non -depreciable, such as land, the lease asset is not amortized. The City reports the amortization of the lease asset as an outflow of resources, amortization expense, which is combined with depreciation expense related to other capital assets for financial reporting purposes. The City accounts for the partial or full lease termination by reducing the carrying values of the lease asset and lease liability, and recognizing a gain or loss for the difference. However, if the lease is terminated as a result of the City purchasing an underlying asset from the lessor, the lease asset will be reclassified to the appropriate class of owned asset. Leases that are considered a short-term lease (12 months or less), transfers ownership of the underlying asset, assets held as investments, or contain variable payments based on future performance of the City or usage of the underlying assets are not included in the measurement of the lease liability. The City recognizes payments for short-term leases and variable payments as expense in the period in which the City incurs the obligation for those payments. 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 assets 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. The City also reports a deferred outflow of resources related to an asset retirement obligation. See footnote IV. P. 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 assets 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 IV.F. 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 and street assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amount becomes available. In addition, there are deferred amounts related to leases, that is initially an offset to lease receivable recorded at lease commencement, and is subsequently recognized as revenue over the life of the lease term. See footnote IV.L. for further information. 37 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L 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. 38 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L 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. L Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. J. Recent Accounting Pronouncements Adopted During fiscal year 2021, the City adopted and implemented GASB Statement No. 84, Fiduciary Activities, with no material effects to the financial statements. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria is generally on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. An activity meeting the criteria should be reported in a fiduciary fund in the basic financial statements. Governments with activities meeting the criteria should present a statement of fiduciary net position and a statement of changes in fiduciary net position. An exception to that requirement is provided for a business -type activity that normally expects to hold custodial assets for three months or less. This Statement describes four fiduciary funds that should be reported, if 39 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 L Summary of Significant Accounting Policies (Continued) J. Recent Accounting Pronouncements Adopted (Continued) applicable: (1) pension (and other employee benefit) trust funds, (2) investment trust funds, (3) private - purpose trust funds, and (4) custodial funds. In the current year, this resulted in the addition of a custodial fund for the quarterly municipal court fees due to the State of Texas. In the prior year, the quarterly municipal court fees due to the State of Texas were reported as assets and liabilities in the General Fund. As assets equaled liabilities, the requirement to report as custodial fund had no impact on beginning net position. Additionally, the adoption of this statement resulted in a reclassification of certain fund types from fiduciary to governmental. The reclassification of funds resulted in $24,883 of net position being reclassified to fiduciary funds from governmental funds. During fiscal year 2022, the City adopted the following Governmental Accounting Standards Board (GASB) Statements: In June 2017, the GASB issued Statement No. 87 Leases. The objective of this statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This statement increases the usefulness of government's financial statements by requiring recognition of certain leases assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provision of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. Under this statement, a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about government's leasing activities. The requirements of this statement are effective for reporting periods beginning after December 15, 2019. GASB 95 postponed the effective date 18 months. The City implemented this Statement in fiscal year 2022. There was no effect on net position as a result of this implementation. K. 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, 2022. Statement No. 91 Conduit Debt Obligations 94 Public -Private and Public -Public Partnerships and Availability Payment Arrangements 96 Subscription -Based Information Technology Arrangements 99 Omnibus 2022 100 Accounting Changes and Error Corrections an Amendment of GASB Statement No. 62 101 Compensated Absences 40 Adoption Required September 30, 2023 September 30, 2023 September 30, 2023 September 30, 2023 September 30, 2024 September 30, 2025 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IL 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 and right -to -use assets used in governmental activities are not financial resources and, therefore, are not reported in the funds." The details of this $40,589,238 are as follows: Land $ 10,605,000 Construction in Progress Buildings 98,031 Less: Accumulated Depreciation — Buildings Improvements Other Than Buildings 629,539 Less: Accumulated Depreciation — Improvements Other Than Buildings Machinery and Equipment 87,930 Less: Accumulated Depreciation — Machinery and Equipment Infrastructure 150,000 Less: Accumulated Depreciation — Infrastructure Right -To -Use Assets S 13,810,228 Less: Accumulated Amortization — Right -To -Use Assets Net Adjustment to Increase Fund Balance — Total Governmental Funds to Arrive at Net Position — Governmental Activities $ 6,101,909 1,484,125 20,640,470 (10,987,552) 6,664,963 (4,534,057) 23,985,850 (19,165,991) 52,733,342 (36,560,614) 278,821 (52,028) L 40,589,238 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 $13,810,228 difference are as follows: Bonds Payable $ 10,605,000 Plus: Premiums on Bonds Payable (to be Amortized Over the Life of the Debt) 98,031 Tax Notes Payable 770,000 Financed Purchases 629,539 Leases 218,870 Accrued Interest 87,930 Compensated Absences 1,250,858 Landfill Post -Closure Care Costs 150,000 Net Adjustment to Reduce Fund Balance — Total Governmental Funds to Arrive at Net Position — Governmental Activities S 13,810,228 41 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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) 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 $55,056 difference are as follows: Capital Outlay $ 2,780,098 Depreciation Expense (2,835,154) Net Adjustment to Increase Net Changes in Fund Balances - Total Governmental Funds to Arrive at Changes in Net Position Of Governmental Activities (55.0561 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 $25,354 difference are as follows: In the statement of activities, 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. $ (43,640) 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. 68,994 Total Governmental Funds to Arrive at Changes in Net Position of Governmental Activities $ 25,354 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 $1,366,148 difference are as follows: Initiation of Leases $ (278,821) Amortization of Premium 12,105 Principal Repayments 1,572,915 Lease Payments 59,949 Net Adjustment to Increase Net Changes in Fund Balances - Total Governmental Funds to Arrive at Changes in Net Position of Governmental Activities $ 1,366,148 42 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 III. Stewardship, Compliance. and Accountability Violations of Legal or Contractual Provisions Note LF.2, on the Excess of Expenditures Over Appropriations, describes budgetary violations that occurred for the year ended September 30, 2022. 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, 2022, the City maintained deposits at a bank with a carrying amount of $36,652,797, and the bank's balances were $36,135,571. As of September 30, 2022, $348,295 was insured by FDIC and $36,304,502 was collateralized with securities held by the pledging financial institution's agent in the name of the City. B. Investments As of September 30, 2022, 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 U.S. Treasury Notes 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, 2022. 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. The City had a zero balance at year end. 43 Weighted Weighted Average Average Credit Maturity Maturity Fair Value Rating (Years) (Days) $ 3,569,624 AA+ 9.30 3,288,098 AA+ 7.25 98,295 Not Rated 0.58 8,946,785 0.25 34,297,042 0.92 2,131,500 AAAm 82 $ 52,331,344 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, 2022. 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. The City had a zero balance at year end. 43 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) B. Investments (Continued) 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 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, 2022, 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: 44 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) C. Accounts Receivable and Payable (Continued) Net receivable balances not expected to be collected within one year are Property Taxes - $640,976, Fines - $61,793, EMS - $604,303, Street Assessments - $26,473, and Leases - $1,718,776. Governmental funds report deferred inflows of resources in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. At September 30, 2022, the deferred inflows of resources were $2,579,793. At year end, PEDC had a receivable for sales tax of $353,246. The balance is expected to be collected within one year. Accounts payable at September 30, 2022, were as follows: Accounts Governmental Activities Wages Totals General Fund $ 813,957 Nonmajor 678,481 $ 1,492,438 Capital Projects Governmental 264,182 General Debt Service Funds Enterprise Receivables: 4,612 - Accrued Interest $ 427 $ - $ - $ 32,709 Property Taxes 1,089,159 124,409 - 5,565 Sales Tax 1,765,807 - - - Hotel Occupancy Tax 297,238 - - - Franchise 613,899 - - - Accounts 153,852 - 23,079 2,852,898 Street Assessments 26,473 - - - Fines 2,421,531 - - - EMS 4,077,946 - - - Leases 903,671 - 961,429 - Notes 2,393,142 - - - Gross Receivables 13,743,145 124,409 984,508 2,891,172 Less: Allowance for Uncollectibles (4,490,366) (31,102) - (158,903) Net Total Receivables $ 9,252,779 $ 93,307 $ 984,508 $ 2,732,269 Net receivable balances not expected to be collected within one year are Property Taxes - $640,976, Fines - $61,793, EMS - $604,303, Street Assessments - $26,473, and Leases - $1,718,776. Governmental funds report deferred inflows of resources in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. At September 30, 2022, the deferred inflows of resources were $2,579,793. At year end, PEDC had a receivable for sales tax of $353,246. The balance is expected to be collected within one year. Accounts payable at September 30, 2022, were as follows: Accounts Governmental Activities Wages Totals General Fund $ 813,957 $ 678,481 $ 1,492,438 Capital Projects 264,182 - 264,182 Special Revenues 4,612 - 4,612 Total - Governmental Activities $ 1,082,751 $ 678,481 $ 1,761,232 Business -Type Activities Water and Sewer Fund $ 345,570 $ 129,215 $ 474,785 Total - Business Type Activities $ 345,570 $ 129,215 $ 474,785 Fiduciary Activities Custodial Fund $ 24,883 $ - $ 24,883 Total - Fiduciary Activities $ 24,883 $ - $ 24,883 45 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) D. Capital Assets Capital assets activity for the year ended September 30, 2022, follows: Balance Balance Governmental Activities Capital Assets, Not Being Depreciated Land $ 5,950,108 $ 151,801 $ - $ 6,101,909 Construction in Progress 263,364 1,220,761 - 1,484,125 Total Capital Assets, Not Being Depreciated 6,213,472 1,372,562 - 7,586,034 Capital Assets, Being Depreciated Buildings 20,556,584 83,886 - 20,640,470 Improvements Other Than Buildings 6,601,672 63,291 - 6,664,963 Machinery and Equipment 23,102,816 1,329,982 446,948 23,985,850 Infastructure 52,733,342 - - 52,733,342 Total Capital Assets, Being Depreciated 102,994,414 1,477,159 446,948 104,024,625 Less Accumulated Depreciation for Buildings 10,508,552 479,000 - 10,987,552 Improvements Other Than Buildings 4,237,927 296,130 - 4,534,057 Machinery and Equipment 18,494,309 1,074,990 403,308 19,165,991 Infrastructure 35,575,580 985,034 - 36,560,614 Total Accumulated Depreciation 68,816,368 2,835,154 403,308 71,248,214 Total Capital Assets, Being Depreciated, Net 34,178,046 (1,357,995) 43,640 32,776,411 Right -To -Use Assets Equipment 67,640 211,181 - 278,821 Total Right -To -Use Assets 67,640 211,181 - 278,821 Less Accumulated Amortization for Equipment - 52,028 - 52,028 Total Accumulated Amortization - 52,028 - 52,028 Total Right -To -Use Assets, Net 67,640 159,153 - 226,793 Governmental Activities, Capital Assets, Net $40,459,158 $ 173,720 $ 43,640 $40,589,238 46 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) D. Capital Assets (Continued) 47 Balance Balance 9/30/21 Additions Retirements 9/30/22 Business -Type Activities Capital Assets, Not Being Depreciated Land $ 339,620 $ - $ - $ 339,620 Construction in Progress 37,188,254 4,464,180 - 41,652,434 Total Capital Assets, Not Being Depreciated 37,527,874 4,464,180 - 41,992,054 Capital Assets, Being Depreciated Plant, Pumps, and Motors 32,280,368 222,384 - 32,502,752 Distribution System 47,011,375 - 47,440 46,963,935 Collection System 28,300,115 - - 28,300,115 Maintenance Equipment and Vehicles 4,560,328 690,053 138,445 5,111,936 Furniture and Equipment 2,054,372 38,500 - 2,092,872 Total Capital Assets, Being Depreciated 114,206,558 950,937 185,885 114,971,610 Less Accumulated Depreciation for Plant, Pumps, and Motors 27,036,398 656,237 - 27,692,635 Distribution System 33,013,912 1,201,496 33,225 34,182,183 Collection System 21,747,118 535,172 - 22,282,290 Maintenance Equipment and Vehicles 3,610,593 231,746 138,445 3,703,894 Furniture and Equipment 1,679,425 50,183 - 1,729,608 Total Accumulated Depreciation 87,087,446 2,674,834 171,670 89,590,610 Total Capital Assets, Being Depreciated, Net 27,119,112 (1,723,897) 14,215 25,381,000 Business -Type Activities, Capital Assets, Net 64,646,986 2,740,283 14,215 67,373,054 Intangible Asset— Water Rights 4,113,119 - - 4,113,119 Less Accumulated Amortization 906,197 35,633 - 941,830 Total Intangible Asset - Water Rights, Net 3,206,922 (35,633) - 3,171,289 Business -Type Activities, Capital and Intangible Assets, Net $67,853,908 $ 2,704,650 $ 14,215 $70,544,343 47 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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 $ 117,084 Public Safety 735,571 Public Works, Including Depreciation of General Infrastructure Assets 1,514,340 Health 203,790 Culture and Recreation 119,858 Cox Field Airport 144,511 Total Depreciation Expense — Governmental Activities S 2.835154 Business -Type Activities Water and Sewer $ 2,674,834 Total Depreciation Expense — Business -Type Activities 2,674,834 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 and a single - employer, defined benefit plan for firefighters. 1. Texas Municipal Retirement System Plan Description The City of Paris participates as one of 901 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 annual comprehensive financial report (ACFR) that can be obtained at www. tmrs. com. All eligible employees of the city are required to participate in TMRS. 48 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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 member's benefits are calculated based on the sum of the member's contributions with interest, and the City -financed monetary credits with interest, and their age at retirement and other actuarial factors. Members may choose to receive their retirement benefit in one of seven payment options. Members may also choose to receive a portion of their benefit as a lump sum distribution in an amount equal to 12, 24, or 36 monthly payments, however this lump sum cannot exceed 75% of the total member contributions and interest. Prior service credit is a monetary credit that a city may grant to eligible employees when the City joins TMRS. The credit is used in calculating the employee's retirement benefit and is based on compensation they earned while working for the city before the city joined TMRS. Current service credit is a monetary credit for service performed by a member after a city joins TMRS and is based on a city's matching ratio (100%, 150%, or 200%) of the member's total contributions and interest. A change in a city's matching ratio is applied prospectively. Update service credit (USC) is a monetary credit a city may grant to active members. The USC calculation is performed annually on a member's account and may grant supplemental financial credits. The USC calculation considers a member's salary history and the city's plan changes and may increase the value of a member's benefit at retirement. 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: Employees Covered by Benefit Terms. At the December 31, 2021, valuation and measurement date, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits 244 Inactive Employees Entitled to but not yet Receiving Benefits 167 Active employees 233 Total 644 49 Plan Year 2021 Employee Deposits Rate 6% Matching Ratio (City to Employee) 2 to 1 Years required for vesting 5 Years Retirement Eligibility (Age/Service) 60/5,0/20 Updated Service Credit 0% Annuity Increase (to retirees) 0% of CPI Employees Covered by Benefit Terms. At the December 31, 2021, valuation and measurement date, the following employees were covered by the benefit terms: Inactive Employees or Beneficiaries Currently Receiving Benefits 244 Inactive Employees Entitled to but not yet Receiving Benefits 167 Active employees 233 Total 644 49 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) 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 7% of their annual gross earnings during the fiscal year. The contribution rates for the City were 6.78% and 6.45% in calendar years 2021 and 2022, respectively. The City's contributions to TMRS for the year ended September 30, 2022, were $972,171 and were equal to the required contributions. Net Pension Liability The City's Net Pension Liability was measured as of December 31, 2021, 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, 2021, 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% Salary increases were based on a service -related table. For calculating the actuarial liability and the retirement contribution rates, the gender -distinct 2019 Municipal Retirees of Texas mortality tables are used. The rates are projected on a fully generational basis by scale UMP to account for future mortality improvements. Based on the size of the city, rates are multiplied by an additional factor of 100%. 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 first used in the December 31, 2019 valuation. 50 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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) 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 weighting 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 Public Equity Core Fixed Income Non -Core Fixed Income Other Public and Private Markets Real Estate Hedge Funds Private Equity Total Discount Rate Target Allocation Long -Term Expected Real Rate of Return (Arithmetic) 35.0% 7.55% 6.0 2.00 20.0 5.68 12.0 7.22 12.0 6.85 5.0 5.35 10.0 10.00 100.0% A single discount rate of 6.75% was used to measure the Total Pension Liability as of December 31, 2021. This single discount rate was based on the expected rate of return on pension plan investments of 6.75%. Based on the stated assumptions and the projection of cash flows the city's fiduciary net position and future contributions were sufficient to finance the future benefit payments of current plan members for all projection years. 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. The projection of cash flows used to determine the single discount rate for the city assumed that the funding policy adopted by the TMRS Board will remain in effect for all future years. Under this funding policy, the city will finance the unfunded actuarial accrued liability over the years remaining for the closed period existing for each base in addition to the employer portion of all future benefit accruals. 51 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) Net Pension Liability and Changes in the Pension Liability Balance at 12/31/2020 Changes for the year: Service Cost Interest 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 12/31/2021 Increase (Decrease) 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: 1% Decrease in Plan Net Pension Total Pension Fiduciary Liability Liability Net Position (Asset) (a) (b) (a) — (b) $ 67,105,668 $68,377,769 $ (1,272,101) 1,443,089 - 1,443,089 4,487,312 - 4,487,312 390,679 - 390,679 (749,803) - (749,803) - 878,482 (878,482) - 783,806 (783,806) - 8,898,242 (8,898,242) (3,748,402) (3,748,402) - - (41,245) 41,245 - 282 (282) 1,822,875 6,771,165 (4,948,290) $ 68,928,543 $75,148,934 $ (6,220,391) 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: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate 5.75% 6.75% 7.75% City's Net Pension Liability (Asset) $2,014,870 $(6,220,391) $(13,116,858) 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. 52 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2022, the City recognized pension expense of $(1,066,678). At September 30, 2022, 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 of Resources 693,908 Deferred Inflows of Resources $ 682,671 17,194 4,574,605 $ 693,908 $ 5,274,470 $693,908 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, 2022. 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, 2023 $ (1,168,232) 2024 (2,257,737) 2025 (991,954) 2026 (856,547) 2027 - Thereafter - $ (5,274,470) 53 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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. Eligibilijy 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 plan 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 make contributions to the plan. The fund was established August 28, 1941, and was most recently amended effective August 31, 2019. As of September 30, 2022, the plan was closed to new entrants. Contributions The City's annual required contribution to the plan for fiscal year 2022 was based on a payroll of $3,582,668 and amounted to $501,574. Covered employees made contributions of $573,227. Employees Covered by Benefit Terms At the December 31, 2021, valuation date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 40 Inactive employees entitled to but not yet receiving benefits 8 Active employees 48 Total 96 54 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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 completion of 20 years of service and attainment of age 55 or (b) the date as of which the sum of the member's age and service equals 80 provided the member has completed 20 years of service. A member who retires under the service retirement provisions of the fund will 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. In lieu of the normal form of benefit, a member may elect at the time of his/her retirement to receive a modified monthly amount payable under one of several optional forms of payment. An active member will qualify for a disability benefit if he/she becomes disabled for either physical or mental reasons. If a member dies while in active service, his/her widow(er) 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, 2022, and the most current available information required for disclosure under GASB Statement No. 67 is based on an actuarial valuation as of December 31, 2021. The actuarial cost method used in the December 31, 2021, 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. 55 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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 12/31/2020 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 12/31/2021 Increase (Decrease) 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 $12,828,016 $11,095,711 $9,641,418 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, 2022, the City recognized pension expense of $515,613. 56 Plan Net Pension Total Pension Fiduciary Liability Liability Net Position (Asset) (a) (b) (a) — (b) $ 15,862,735 $ 4,771,104 $ 11,091,631 273,163 - 273,163 1,128,647 - 1,128,647 - 457,000 (457,000) - 522,286 (522,286) - 471,438 (471,438) (1,136,694) (1,136,694) - - (52,994) 52,994 261,036 4,080 265,116 $ 16,127,851 $ 5,032,140 $ 11,095,711 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 $12,828,016 $11,095,711 $9,641,418 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, 2022, the City recognized pension expense of $515,613. 56 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) F. Employee Retirement Systems and Plans (Continued) 2. Firefighters' Relief and Retirement Fund (Continued) The aggregate pension expense for Texas Municipal Retirement System and Firefighters' Relief and Retirement Fund for the year ended September 30, 2022 was $(551,065). Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) At September 30, 2022, 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 Changes in Actuarial Assumptions Difference Between Projected and Actual Investment Earnings Contributions Subsequent to the Measurement Date Total Deferred Outflows Deferred Inflows of Resources of Resources 91,299 744,689 12,521,952 $ 13,357,940 500,896 264,204 $ 765,100 $12,521,952 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, 2022. 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, 2023 $ 21,473 2024 (108,392) 2025 (45,348) 2026 31,947 2027 164,599 Thereafter 6,609 Total $ 70,888 G. Other Post Employment Benefit (OPEB) Obligations 1. Supplemental Death Benefits Fund Plan Description The City also participates in the single -employer defined benefit program, which operates like a group -term life insurance plan, operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefits Fund (SDBF). SDBF covers both active and retiree participants 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 participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. 57 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) G. Other Post Employment Benefit (OPEB) Obligations (Continued) 1. Supplemental Death Benefits Fund (Continued) Benefits 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. As the SDBF covers both active and retiree participants with no segregation of assets, the SDBF is considered to be an unfunded OPEB plan (i.e., no assets are accumulated). Employees Covered by Benefit Terms At the December 31, 2021 valuation and measurement date, the following employees were covered by benefit terms: Inactive employees or beneficiaries currently receiving benefits 180 Inactive employees entitled to but not yet receiving benefits 49 Active employees 233 Total 462 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 0.36% and 0.37% of gross earnings in calendar year 2021 and 2022. The City's contributions to TMRS SDBF for the year ended September 30, 2022 were $47,924 and were equal to the required contributions. 58 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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 12/31/20 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 12/31/21 Increase (Decrease) Total OPEB Liability $ 1,385,480 64,802 28,046 (28,573) 44,084 77,204 $ 1,462,684 The following presents the total SDBF OPEB liability of the City, calculated using the discount rate of 1.84%, 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 (0.84%) or 1 -percentage -point higher (2.84%) than the current rate: 1% Decrease in Discount Rate 0.84% Net Pension Liability $1,785,403 Supplemental Death Benefits Fund Net Position 1% Increase in Discount Rate Discount Rate 1.84% 2.84% $1,462,684 $1,215,109 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.imrs.com. 59 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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, 2022, the City recognized OPEB expense in the amount of $154,350. At September 30, 2022, 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 Differences Between Projected and Actual Investment Earnings (Net of Current Year Amortization) Contributions Subsequent to the Measurement Date Total Deferred Outflows of Resources 199,812 34 Deferred Inflows of Resources 59,277 13,223 $ 234,745 $ 72,500 $34,933 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, 2023. Other amounts reported as deferred outflows and inflows of resources related to OPEB, will be recognized in pension expense as follows: Fiscal Year Ended September 30, 2023 $ 46,968 2024 55,807 2025 23,590 2026 947 2027 - Thereafter - Total $ 127,312 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. 60 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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 benefits 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, 2021 valuation and measurement date, the following employees were covered by benefit terms: Inactive Retirees or Beneficiaries Currently Receiving Benefits 10 Inactive, Nonretired Members - Active employees 62 Total 72 Contributions The City's contributions are financed on a pay-as-you-go basis. For the year ended September 30, 2022, the contributions were approximately $19,875. 61 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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 12/31/2020 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 12/31/2021 Increase (Decrease) Total OPEB Liability $ 1,711,750 46,370 34,083 1,923,344 (250,340) 91,261 (61,564) 1,783,154 $ 3,494,904 The following presents the total Plan OPEB liability of the City, calculated using the discount rate of 1.84%, as well as what the City's total Plan OPEB liability (asset) would be if it were calculated using a discount rate that is 1 -percentage -point lower (0.84%) or 1 -percentage -point higher (2.84%) than the current rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate 0.84% 1.84% 2.84% Net OPEB Liability $3,687,281 $3,494,904 $3,307,252 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 $3,251,140 62 Current Healthcare Cost Trend Rate Assumption $3,494,904 1% Increase $3,761,770 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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, 2022, the City recognized OPEB expense in the amount of $1,916,654. The aggregate OPEB expense for the Supplemental Death Benefits Fund and the City of Paris Retiree Health Care Plan for the year ended September 30, 2022 was $2,071,004. At September 30, 2022, 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 180,827 108,277 287,455 12,962 $ 289,104 $ 300,417 $108,277 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, 2022. Other amounts reported as deferred outflows and inflows of resources related to OPEB, will be recognized in pension expense as follows: Fiscal Year Ended September 30, 2023 $ (33,379) 2024 (39,715) 2025 (32,689) 2026 (13,807) 2027 - Thereafter - Total $ (119,590) 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, 2022, were approximately $3,002,193. 63 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) H. Water Sales and Commitments (Continued) 2. Construction Commitments The City has active construction projects as of September 30, 2022. 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 $ 27,955,785 $ 4,548,836 Total $ 27,955,785 $ 4,548,836 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, 2022, 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, 2022 is $192,906. 64 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) H. Water Sales and Commitments (Continued) 6. Other Commitments - PEDC 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 $1,000,000. Metro Gate — On January 22, 2021, the Board of Directors reached a performance agreement with Metro Gate and Manufacturing Company, Inc. PEDC will provide $120,000 for the creation of 40 full-time employees paid out in installments over 5 years and $40,000 for expected capital expenditures for a total of $160,000. The remaining balance is estimated to be $69,000. Blossom Aerospace — On March 1, 2022, the Board of Directors reached an incentive agreement with Blossom Aerospace Texas, LLC. PEDC will invest up to $350,000 for the creation of 70 new positions at its Lamar County facility paid out in installments over 5 years. The remaining balance is estimated to be $350,000. Lionshead Specialty Tire and Wheel — On June 21, 2022, the Board of Directors reached a performance agreement with Lionshead Paris, LLC. PEDC will invest up to $807,526 in cash, land, and improvements in connection with a new assembly and warehousing plant, job creation, and employment retention. The remaining balance is estimated to be $807,526. L 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, 2022. There have been no settlements in excess of insurance coverage in any of the prior three fiscal years. J. Financed Purchases In September 2015, the City began leasing equipment under an agreement classified as a financing purchase due to a bargain purchase option. Equipment purchased through the agreement are pledged as security for repayment of the lease liability. The present value and accumulated amortization are as follows: Financed Purchase — Equipment, at Cost Less: Accumulated Amortization Financed Purchase — Equipment, Net 65 $ 617,114 412,526 $ 204,588 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) J. Financed Purchases (Continued) The future minimum payments required under the financing purchase and the present value of the net minimum payments as of September 30, 2022, are as follows: Year Ending September 30, Amount 2023 $ 72,353 2024 72,353 2025 72,352 Total Minimum Payments 217,058 Less: Amount Representing Interest (12,470) Present Value of Net Minimum Payments 204,588 Less: Current Maturities of Financing Purchase Obligation (66,213) Long -Term Portion of Financing Purchase Obligation $ 138,375 In January 2016, the City began leasing equipment under an agreement classified as a financing purchase due to a bargain purchase option. Equipment purchased through the agreement are pledged as security for repayment of the lease liability. The present value and accumulated amortization are as follows: Financed Purchase — Equipment, at Cost $ 975,185 Less: Accumulated Amortization 550,317 Financed Purchase — Equipment, Net $ 424,868 The future minimum payments required under the financing purchase and the present value of the net minimum payments as of September 30, 2022, are as follows: Year Ending September 30, Amount 2023 $ 114,337 2024 114,337 2025 114,337 2026 114,337 Total Minimum Payments 457,348 Less: Amount Representing Interest (32,480) Present Value of Net Minimum Payments 424,868 Less: Current Maturities of Financing Purchase Obligation (101,587) Long -Term Portion of Financing Purchase Obligation $ 323,281 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. 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 66 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) K. Long -Term Liabilities (Continued) 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 $9,750,000 General Obligation Bonds, Series 2017, due in annual installments varying from $430,000 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 $150,000 to $165,000 with final payment due June 15, 2032. Interest is payable semi- annually at rates ranging from 0.75% 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 $1,910,000 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. $8,780,000 General Obligation Bonds, Series 2016, due in annual installments varying from $365,000 to $535,000 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 $125,000 to $130,000 with final payment due June 15, 2028. Interest is payable semi-annually at 2.59%. The principal installments of this bond are not subject to redemption prior to maturity. 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, landscaping, sidewalks, traffic safety and operational improvements, the purchase of any necessary right -of - 67 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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) 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 $145,000 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. $1,115,000 Tax Notes, Series 2020, due in annual installments varying from $190,000 to $195,000 with final payment due June 15, 2026. Interest is payable semi-annually at 1.05%. The principal installments of this note are not subject to redemption prior to maturity. The note was issued November 1, 2020 for the purpose of paying contractual obligations incurred or to be incurred for the construction of any public work, for the purchase of materials, supplies, equipment, machinery, buildings, lands and right-of-way for the City's authorized needs and purposes, and to pay costs of professional services. The note is reported as General Obligation debt. $1,765,000 General Obligation Refunding Bonds, Series 2020, due in annual installments varying from $190,000 to $210,000 with final payment due December 15, 2029. Interest is payable semi-annually at 1.24%. On December 15, 2020, the City issued this series to refund Outstanding Combination Tax and Revenue Certificates of Obligation, Series 2010 ($3,005,000) bearing interest ranging from 3.0% to 4.2%. The net proceeds of $1,772,711 (after payment of various fees, outstanding principal balance, and accrued interest) were deposited in the Old Paying Agent account to refund the Refunding Bonds on the Redemption Date in accordance with the Deposit Agreement. The issuance of the bonds produced a present value debt service savings of $188,730 and an actual debt service savings of $201,195. The bonds are reported as General Obligation Debt. $43,855,000 Combination Tax and Surplus Revenue Certification of Obligation, Series 2021, due in annual installments varying from $620,000 to $2,160,000 with final payment due on December 15, 2050. Interest is payable semi-annually at rates ranging from 2.0% to 5.0%. On December 15, 2030, or any date thereafter, the certificate may be redeemed prior to their scheduled maturities at the City's option. The bonds were issued on May 12, 2021, at a premium for the purpose of refurbishment of portions of the existing waste water treatment plant as needed in connection with the construction of a new waste water treatment plant. Voters approved the issuance of $46,065,000 in tax bonds. The bonds are reported as obligations of the Enterprise Fund. $12,355,000 General Obligation Pension Bonds, Taxable Series 2022, due in annual installments varying from $270,000 to $855,000 with final payment due on June 15, 2042. Interest is payable semi-annually at rates ranging from 4.0% to 5.0%. On June 15, 2031, or on any date thereafter, the bonds may be redeemed prior to their scheduled maturities at the City's option. The bonds were issued August 31, 2022 at a discount for the purpose of fund all or any part of an unfunded, accrued liability of the City to a public pension fund as determined by actuarial analysis. The bonds are reported as obligations of the Enterprise Fund. 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, 2022, the fund balances in the Interest and Sinking Funds are $1,799,656. 68 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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) 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. A summary of long-term liability transactions for the year ended September 30, 2022, follows: Governmental Activities Debt Payable Bonds Payable Tax Notes Payable Premium Financed Purchases Total Debt Payable Compensated Absences Right -to -use Lease Liability Landfill Post -Closure Care Costs Governmental Activities Long -Term Liabilities Business -Type Activities Debt Payable Bonds Payable Tax Notes Payable Premium Discount Total Debt Payable Compensated Absences Business -Type Activities Long -Term Liabilities Balance Balance September 30, September 30, Due Within 2021 Additions Reductions 2022 One Year $ 11,830,000 $ - 955,000 - 110,137 - 792,453 - 13,687,590 - 1,162,864 833,242 67,640 211,181 $ 1,225,000 $ 10,605,000 $ 745,000 185,000 770,000 190,000 12,105 98,032 - 162,915 629,538 167,811 1,585,020 12,102,570 1,102,811 745,248 1,250,858 125,086 59,949 218,870 52,306 150,000 - - 150,000 - $ 15,068,094 $ 1,044,423 $ 2,399,217 $ 13,722,298 $ 1,280,203 $ 36,575,000 43,855,000 3,113,006 83,543,006 $ 12,355,000 $ 2,345,000 $ 46,585,000 $ 3,020,000 - - 43,855,000 1,210,000 285,006 2,828,000 - (44,080) - (44,080) - 12,310,920 2,630,006 93,223,920 4,230,000 222,773 185,308 185,308 222,773 22,277 $ 83,765,779 $ 12,496,228 $ 2,815,314 $ 93,446,693 $ 4,252,277 69 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 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) Balance Balance September 30, September 30, Due Within IMI AAA4;..r,o D1f;_ IMI nr, Vv Component Unit Note Payables $ 1,221,754 $ 2,500,000 $ 1,328,633 $ 2,393,121 $ 145,199 Component Unit Long -Term Liabilities $ 1,221,754 $ 2,500,000 $ 1,328,633 $ 2,393,121 $ 145,199 For governmental activities, pension -related debt and compensated absences are liquidated by the general fund. 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 2023 $ 935,000 $ 269,466 $ 4,230,000 $ 3,154,961 $ 145,199 $ 49,794 2024 955,000 249,868 5,040,000 3,013,978 148,337 46,656 2025 980,000 229,759 5,440,000 2,773,726 151,542 43,451 2026 995,000 208,568 3,800,000 2,557,414 154,817 40,176 2027 825,000 188,097 3,960,000 2,256,288 158,163 36,830 2028-2032 3,685,000 674,416 21,790,000 9,365,402 1,635,063 117,490 2033-2037 3,000,000 261,346 16,025,000 5,181,182 - - 2038-2042 - - 12,390,000 3,031,302 - - 2043-2047 - - 9,420,000 1,516,688 - - 2048-2051 - - 8,345,000 400,887 - - Totals $11,375,000 $2,081,520 $90,440,000 $33,251,828 $2,393,121 $334,397 PEDC has an outstanding $2,500,000 Note Payable to the City issued December 27, 2021, due in monthly installments of $16,249 through November 27, 2031 and a final payment of $940,083 on December 27, 2031, bearing an interest rate of 3.14%. At September 30, 2022, the balance of the Note Payable was $2,393,121. 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. 70 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) L. Leases Lease Receivable The City, as a lessor, leases City -owned properties such as land, tower space, and airport hangars. The related receivables are presented in the Statement of Net Position for the amounts equal to the present value of lease payments expected to be received during the lease term. Revenue recognized under GASB 87 lease contracts during the year ended September 30, 2022 was $190,436, which includes both lease revenue and interest. As of September 30, 2022, the City's Governmental Activities lease receivable balance of $1,865,100 was comprised of the following amounts: Land leases with interest rates ranging from 0.95% to 1.28% $ 114,287 Building leases with interest rates ranging from 1.08% to 1.88% 896,456 Infrastructure leases with interest rates at 1.55% 854,357 Total lease receivable for Governmental Activities LI -K65,100 The City expects to receive the following lease receivable amounts for Governmental Activities in subsequent years as follows: Year Ending General Activities September 30, Principal Interest 2023 $ 138,135 $ 25,694 2024 142,559 23,896 2025 148,118 22,025 2026 153,916 20,076 2027 159,857 18,049 2028-2032 609,633 60,733 2033-2037 377,832 27,991 2038-2042 41,246 10,024 2043-2047 17,626 8,174 2048-2052 17,701 6,499 2053-2057 18,999 4,801 2058-2062 20,855 2,945 2063-2067 16,864 955 2068-2070 1,759 40 Totals $ 1,865,100 $ 231,902 71 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) L. Leases (Continued) Lease Liability The City, as a lessee, has entered into lease agreements involving equipment. The related obligations are presented in the amounts equal to the present value of lease payments, payable during the remaining lease term. As the lessee, a lease liability and the associated lease asset is recognized on the government -wide Statement of Net Position. The City did not incur expenses related to its leasing activities related to residual value guarantees, lease termination penalties or losses due to impairment. As a lessee, there are currently no agreements that include sale-leaseback and lease -leaseback transactions. As of September 30, 2022, the City's governmental activities lease liability balance of $218,870 was comprised of the following: Equipment leases with interest rates ranging from 0.25% to 4.89% $ 218,870 Total lease liability for Governmental Activities $ 218,870 As of September 30, 2022, the City had a minimum principal and interest payment requirements for its leasing activities, with a remaining term more than one year, as follows: Year Ending General Activities September 30, Principal Interest 2023 $ 52,306 $ 8,352 2024 38,235 7,048 2025 34,115 5,742 2026 32,586 4,383 2027 30,419 2,980 2028 31,209 1,525 Totals $ 218,870 $ 30,030 M. Interfund Transfers During the year ended September 30, 2022, the City made transfers from the Water and Sewer fund to the Debt Service fund of $152,461 to make debt service payments and to the General Fund of $12,150,000 for pension funding. Other minor transfers were made between funds making up transfers of: General Debt Service Other Governmental Water and Sewer Transfers In 72 Debt Water and Transfers General Service Sewer Out 603,609 $ 603,609 - - 460,633 460,633 24,554 - - 24,554 12,657,984 152,461 - 12,810,445 $ 12,682,538 $ 152,461 $ 1,064,242 $13,899,241 72 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) N. 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, 2022, these accounts, shown as cash and investments on the Statement of Net Position — Proprietary Funds, are as follows: Reserve Fund Contingency Fund $ 9,646,661 925,405 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 3,861 Contingency 716,214 Loan 33,745 Bond Reserves and Sinking Funds 3,881,284 Construction 3,040,507 Other 606,462 Total Restricted Assets $ 8,282,073 O. Related Party Certificates of Deposit and Other Investments 209,191 5,765,376 34,437,006 Other Receivables $ 716,543 $ 40,411,573 $ 716,543 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. P. 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. The City has incurred certain asset retirement obligations related to the operation of its wastewater utility system. The U.S. Environmental Protection Agency and the Texas Commission on Environmental Quality regulates wastewater utility system closure and post closure requirements. Environmental engineers calculated the asset retirement obligation based on the estimated current cost of remediation and removal of the contamination and contaminated sludge and dirt in the wastewater treatment facilities. The estimated liability of 73 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) P. Contingent Liabilities (Continued) the legally required closure costs for the waste water utility system was estimated as of September 30, 2022 to be $2,901,000. The estimated remaining wastewater utility system life is 30 years. The actual cost of closure and post closure may be higher due to inflation, changes in technology, or changes in waste water utility system laws and regulations. At September 30, 2022, there were no assets restricted to pay this liability. Q. Tax Abatements As of September 30, 2022, the City provides tax abatements through two programs -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 Amount of Taxes Abated 2021-22 Industrial Incentives $ 1,289,467 R. Prior Period Adjustment During fiscal year 2022, the City determined that an adjustment was necessary to the adjust revenue and expenses that should have been recorded in the prior fiscal year. The prior period adjustment totaled $287,870 for governmental funds. The restated beginning fund balance for governmental funds is $40,955,522. The restated net position for governmental activities is $28,509,379. S. Subsequent Events Subsequent events have been evaluated through October 16, 2023, the date the financial statements were available to be issued. In October 2022, the City approved a construction contract in the amount of $88,490, for the southern boat ramp construction project at Lake Crook. In addition, the City approved a construction contract in the amount of $62,852,642, for the Phase I of the Wastewater Treatment Plant Project. In November 2022, the City issued $26,795,000 Waterworks and Sewer System Revenue Bonds, Series 2022 for the purpose of acquiring, constructing, installing and equipping additions, improvements and extensions to the City's waterworks and sewer system. The interest rate is payable semi-annually at rates ranging from 4.00% to 5.25%, with the final payment due on June 15, 2051. 74 CITY OF PARIS, TEXAS Notes to Financial Statements (Continued) September 30, 2022 IV. Detailed Notes on All Activities and Funds (Continued) S. Subsequent Events (Continued) In April 2023, the City approved the performance agreement between the PEDC and Amesta Packaging, LLC. In August 2023, the City approved a tax abatement agreement with Huhtamaki, Inc. The agreement is de- escalating and for a ten-year period. See Note IV.Q. for information on the City's tax abatement policy. In August 2023, the City approved a contract with a private company to provide residential and commercial trash services to the City. In September 2023, the City approved an ordinance to refund and restructure the 2013 GO Bond. 75 REQUIRED SUPPLEMENTARY INFORMATION CITY OF PARIS, TEXAS Required Supplementary Information Texas Municipal Retirement System - Schedule of Changes in Net Pension Liability and Related Ratios Year Ended September 30, 2022 Schedule 1 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. 76 Plan Year Ended December 31, 2021 2020 2019 2018 2017 2016 2015 2014 Total Pension Liability Service Cost $ 1,443,089 $ 1,184,350 $ 1,233,792 $ 1,198,978 $ 1,192,255 $ 1,190,613 $ 1,084,666 $ 1,084,779 Interest 4,487,312 4,344,087 4,233,112 4,092,798 3,952,930 3,826,176 3,718,773 3,592,818 Changes in Benefit Terms 390,679 - - - - - 1,615,467 - Differences Between Expected and Actual Experience (749,803) (321,817) (260,390) (118,708) 19,208 (211,467) (159,282) (191,294) Changes in Assumptions - - (110,977) - - - - Benefit Payments, Including Refunds ofEmployee Contributions (3,748,402) (3,731,229) (3,122,282) (3,101,195) (3,090,075) (2,766,533) (2,741,148) (2,632,638) Net Change in Total Pension Liability 1,822,875 1,475,391 1,973,255 2,071,873 2,074,318 2,038,789 3,518,476 1,853,665 Total Pension Liability - Begimring 67,105,668 65,630,277 63,657,022 61,585,149 59,510,831 57,472,042 53,953,566 52,099,901 Total Pension Liability - Ending $ 68,928,543 $ 67,105,668 $ 65,630,277 $ 63,657,022 $ 61,585,149 $ 59,510,831 $ 57,472,042 $53,953,566 Plan Fiduciary Net Position Contributions - Employer $ 878,482 $ 852,067 $ 845,646 $ 825,989 $ 817,914 $ 669,501 $ 700,159 $ 721,733 Contributions - Employee 783,806 712,034 730,054 705,973 704,087 701,189 676,545 667,048 Net Investment Income 8,898,242 4,972,797 8,988,070 (1,845,475) 7,698,497 3,607,913 80,774 3,031,103 Benefit Payments, Including Refunds ofEmployee Contributions (3,748,402) (3,731,229) (3,122,282) (3,101,195) (3,090,075) (2,766,533) (2,741,148) (2,632,638) Administrative Expense (41,245) (32,223) (50,855) (35,702) (39,921) (40,766) (49,204) (31,651) Other 282 (1,257) (1,527) (1,865) (2,023) (2,196) (2,430) (2,602) Net Change in Plan Fiduciary Net Position 6,771,165 2,772,189 7,389,106 (3,452,275) 6,088,479 2,169,108 (1,335,304) 1,752,993 Plan Fiduciary Net Position - Begimring 68,377,769 65,605,580 58,216,474 61,668,749 55,580,270 53,411,162 54,746,466 52,993,473 Plan Fiduciary Net Position - Ending $ 75,148,934 $ 68,377,769 $ 65,605,580 $ 58,216,474 $ 61,668,749 $ 55,580,270 $ 53,411,162 $54,746,466 Citys Net Pension Liability(Asset)-Ending $ (6,220,391) $ (1,272,101) $ 24,697 $ 5,440,548 $ (83,600) $ 3,930,561 $ 4,060,880 $ (792,900) Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 109.02% 101.90% 99.96% 91.45% 100.14% 93.40% 92.93% 101.47% Covered Payroll $ 12,461,905 $ 11,867,235 $ 12,167,574 $ 11,766,222 $ 11,734,791 $ 11,684,128 $ 11,203,172 $ 11,177,790 Citys Net Pension Liability as a Percentage of Covered Payroll -49.92% -10.72% 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. 76 Note: The pension schedules in the required supplementary irfforrnafion are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 77 CITY OF PARIS, TEXAS Schedule 2 Required Supplementary h forrnation Texas Municipal Retirement System - Schedule of City Pension Contributions Year Ended September 30, 2022 Fiscal Year Ended September 30, 2022 2021 2020 2019 2018 2017 2016 2015 Contractually Required Fiscal Year Contribution $ 972,171 $ 809,036 $ 852,884 $ 834,605 $ 825,691 $ 801,727 $ 733,564 $ 704,441 Contribution in Relation to the Contractually Required Fiscal Year Contribution (972,171) (809,036) (852,884) (834,605) (825,691) (801,727) (733,564) (704,441) Contribution Deficiency (Excess) $ $ $ $ $ $ $ $ Covered Payroll $ 13,050,044 $ 11,761,104 $ 11,975,225 $ 11,980,216 $ 11,846,360 $ 11,615,574 $ 12,058,579 $ 11,203,172 Contributions as a Percentage of Covered Payroll 7.45% 6.88% 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 Amortizafion Method Level Percentage of Payroll, Closed Remaining Amortization Period 24 years Asset Valuation Method 10 year smoothed fair value; 12% 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 updated for the 2019 valuation pursuant to an experience study of the period 2014-2018. Mortality Post Retirement: 2019 Municipal Retirees of Texas Mortality Tables. The rates are projected on a fully generational basis with scale UMP. Pre -retirement PUB(I0) mortality tables, with the Public Safety table used for males and the General Employee table used for females. The rates are projected on a fully generational basis with scale UMP. Other hrforrnation There were no benefit changes during the year. Note: The pension schedules in the required supplementary irfforrnafion are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 77 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. W CITY OF PARIS, TEXAS Schedule 3 Required Supplementary Information Paris Firefighters' Relief and Retirement FAmd - Scluedide of Changes in Net Pension Liability and Related Ratios Year Ended September 30, 2022 Plan Year Ended December 31, 2021 2020 2019 2018 2017 2016 2015 2014 Total Pension Liability Service Cost $ 273,163 $ 263,769 $ 244,258 $ 263,477 $ 254,567 $ 258,484 $ 247,353 $ 236,701 Interest 1,128,647 1,098,206 1,081,834 1,109,567 1,094,074 1,109,262 1,092,874 1,087,700 Changes in Benefit Terms - - - - - - - - Differences Between Expected and Actual Experience - 125,175 - (650,764) - (65,973) - (238,406) Changes in Assumrptions - - - 562,256 - 616,266 - 134,458 Benefit Payments, Including Refimds of Employee Contributions (1,136,694) (1,016,641) (1,222,906) (1,052,502) (1,249,430) (1,136,379) (1,156,654) (1,200,964) Net Change in Total Pension Liability 265,116 470,509 103,186 232,034 99,211 781,660 183,573 19,489 Total Pension Liability - Beginning 15,862,735 15,392,226 15,289,040 15,057,006 14,957,795 14,175,471 13,991,898 13,972,409 Total Pension Liability - Ending $ 16,127,851 $ 15,862,735 $ 15,392,226 $ 15,289,040 $ 15,057,006 $ 14,957,131 $ 14,175,471 $ 13,991,898 Plan Fiduciary Net Position Contributions -Employer $ 457,000 $ 388,839 $ 393,136 $ 336,951 $ 326,396 $ 317,902 $ 310,483 $ 281,896 Contributions -Employee 522,286 444,388 449,298 411,944 407,996 397,475 388,212 352,370 Net Investment Income 471,438 482,463 758,981 (302,649) 578,324 377,387 (121,104) 245,555 Benefit Payments, Including Refimds of Employee Contributions (1,136,694) (1,016,641) (1,222,906) (1,052,502) (1,249,430) (1,136,379) (1,156,654) (1,200,964) Administrative Expense (52,994) (25,739) (33,025) (31,444) (37,553) (70,404) (6,500) (84,445) Other 5 2,121 51315 Net Change in Plan Fiduciary Net Position 261,036 273,310 345,484 (637,700) 25,738 (111,898) (585,563) (400,273) Plan Fiduciary Net Position - Beginning 4,771,104 4,497,794 4,152,310 4,790,010 4,764,272 4,876,170 5,461,733 5,862,006 Plan Fiduciary Net Position - Ending $ 5,032,140 $ 4,771,104 $ 4,497,794 $ 4,152,310 $ 4,790,010 $ 4,764,272 $ 4,876,170 $ 5,461,733 City's Net Pension Liability (Asset) - Ending $ 11,095,711 $ 11,091,631 $ 10,894,432 $ 11,136,730 $ 10,266,996 $ 10,192,859 $ 9,299,301 $ 8,530,165 Plan Fiduciary Net Position as a Percentage ofthe Total Pension Liability 31.20% 30.10% 29.20% 27.16% 31.81% 31.85% 34.40% 39.03% Covered Payroll $ 3,264,288 $ 2,777,425 $ 2,808,113 $ 2,712,961 $ 2,717,229 $ 2,785,912 $ 2,511,047 $ 2,368,370 City's Net Pension Liability as a Percentage of Covered Payroll 339.91% 399.30% 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. W CITY OF PARIS, TEXAS Required Supplementary Information Paris Firefighters' Relief and Retirement Fimd Schedide of City Contributions Year Ended September 30, 2022 Schedule 4 Fiscal Year Ended September 30, 2022 2021 2020 2019 2018 2017 2016 2015 Contrachially Required Fiscal Year Contribution $ 457,000 $ 388,839 $ 393,157 $ 336,951 $ 326,067 $ 320,851 $ 332,665 $ 301,329 Contribution in Relation to the Contrachially Required Fiscal Year Contribution (457,000) (388,839) (393,157) (336,951) (326,067) (320,851) (332,665) (301,329) Contribution Deficiency (Excess) $ $ $ $ $ $ $ $ Covered Payroll $ 3,582,668 $ 2,777,425 $ 2,817,872 $ 2,713,093 $ 2,717,229 $ 2,795,465 $ 2,772,967 $ 2,511,047 Contributions as a Percentage of Covered Payroll 12.76% 14.00% 13.95% 12.42% 12.00% 11.48% 12.00% 12.00% Notes to Schedule Valuation Date December 31, 2020, rolled forward to 2021 Methods and Assimlptions ilsed to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage ofPayroll Remaining Arnortization Period 33.6 years Asset Valuation Method MarketVahue of Assets Salary Increases 3.50% Investment Rate ofReti— 7.25% Retirement Age Active members are assimred to retire 2 years after they have either (a) both attained the age of 55 and completed at least 20 years of service or (b) satisfied the nile of 80. Active members who have already met the regiuireiments for service retirement are assimred to retire one year after the valivation date. Benefits for vested terminated members are assimred to start on the same date as normal retirement benefits. Mortality Employee and healthy arm itant rates from the Pub -2010 Public Safety Below Median Mortality Table, generationally projected itsiiig the ultumate rates ofthe MP -2018 i mproveiment scales. Other Information There were no benefit changes dining the year. Note: The pension scliedides in the required supplementary information are intended to show information for ten years. Additional years' information will be displayed as it becomes available. 79 CITY OF PARIS, TEXAS Required Supplementary Information Texas Municipal Retirement System - Schedule of Changes in Total OPEB Liability and Related Ratios Year Ended September 30, 2022 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 Notes to Schedule Valuation Date Methods and Assumptions used to Determine Contribution Rates: Inflation Salary Increases Mortality Other Information Schedule Plan Year Ended December 31, 2021 2020 2019 2018 2017 $ 64,802 $ 42,722 $ 26,769 $ 30,592 $ 26,990 28,046 32,883 37,003 33,951 33,850 (28,573) (34,781) (40,603) (13,049) - 44,084 175,630 178,024 (67,751) 76,984 (31,155) (10,681) (10,951) (9,413) (9,388) 77,204 205,773 190,242 (25,670) 128,436 1,385,480 1,179,707 989,465 1,015,135 886,699 $ 1,462,684 $ 1,385,480 $ 1,179,707 $ 989,465 $ 1,015,135 $ 12,461,905 $ 11,867,235 $ 12,167,574 $ 11,766,222 $ 11,734,791 11.74% 11.67% 9.70% 8.41% 8.65% Actuarially determined contribution rates are calculated as of December 31, and become effective in January_ 13 months later. 2.50% 3.50% to 11.50%, including inflation. Service retirees: 2019 Municipal Retirees of Texas Mortality Tables. The rates are projected on a fully generational basis with scale UMP. Disabled retirees: 2019 Municipal Retirees of Texas Mortality Tables with 4 year set -forward for males and a 3 year set -forward for females. In addition, a 3.5% and 3% minimum mortality rate will be 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. 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. 80 CITY OF PARIS, TEXAS Schedule 6 Required Supplementary Information City of Paris Retiree Health Care Plan - Schedule of Changes in Total OPEB Liability and Related Ratios Year Ended September 30, 2022 Plan Year Ended December 31, 2021 2020 2019 2018 2017 Total OPEB Liability Service Cost Interest Changes in Benefit Teams 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 Notes to Schedule $ 46,370 $ 45,329 $ 34,501 $ 36,808 $ 36,410 Salary Increases 34,083 Demographic Assumptions 44,410 60,652 55,250 61,432 Retirement Fund pension valuation report as of December 31, 2020. 1,923,344 TMRS: For healthy retirees, the gender distinct 2019 Municipal Retirees of Texas mortality tables are used. The rates are - - - 2019 to account for future mortality improvements. Firefighters: For healthy retirees, the Pub -2010 Public Safety Below - (250,340) (10,649) (174,952) (10,869) - 91,261 95% of eligible TMRS employees and Firefighters 68,964 120,032 (36,122) 51,925 (61,564) (57,093) (74,044) (82,466) (103,929) benefits for the OPEB plan. 1,783,154 90,961 (33,811) (37,399) 45,838 1,711,750 1,620,789 1,654,600 1,691,999 1,646,161 $ 3,494,904 $ 1,711,750 $ 1,620,789 $ 1,654,600 $ 1,691,999 $ 3,826,545 $ 3,522,249 $ 3,799,135 $ 4,814,704 $ 5,284,495 91.33% 48.60% 42.66% 34.37% 32.02% Valuation Date December 31, 2021 Methods and Assumptions used to Determine Contribution Rates: Actuarial Cost Method Individual Entry -Age Normal Discount Rate 1.84% Inflation 2.50% Salary Increases 3.50% to 11.50% for TMRS and 4.10% to 6.00% for Firefighters, including inflation Demographic Assumptions TMRS: Based on the experience study covering the four-year period ending December 31, 2018 as conducted for the Texas Municipal Retirement System (TMRS). Firefighters: Based on those disclosures in the Paris Firefighters' Relief and Retirement Fund pension valuation report as of December 31, 2020. Mortality TMRS: For healthy retirees, the gender distinct 2019 Municipal Retirees of Texas mortality tables are used. The rates are projected on a fully generational basis using the ultimate mortality improvement rates in the MP tables published through 2019 to account for future mortality improvements. Firefighters: For healthy retirees, the Pub -2010 Public Safety Below Median Healthy Retiree mortality tables are used. The rates are projected on a fully generational basis using the ultimate mortality improvement rates in the MP -2018 tables to account for future mortality improvements. Health Care Trend Rates Initial rate of 7.00% declining to an ultimate rate of 4.15% after 13 years; the City's subsidy is assumed to increase by 3.00% per year. Participation Rates 95% of eligible TMRS employees and Firefighters Other Information The discount rate changed from 2.00% as of December 31, 2020 to 1.84% as of December 31, 2021. Additionally, the retirement rates for TMRS employees were updated to match those used in the December 31, 2021 TMRS pension valuation for the City of Paris, and the methodology for determining service cost was changed such that the attribution period for the accumulation of service costs is now based only on employment with the City of Paris. There are no assets accumulated in a bust that meets the criteria of GASB Codification P22.101 or P52.1010 to pay related benefits for the OPEB plan. 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. 91 COMBINING AND INDIVIDUAL NONMAJOR FUND STATEMENTS AND SCHEDULES CITY OF PARIS, TEXAS Nonmajor Governmental Funds September 30, 2022 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. 82 CITY OF PARIS, TEXAS Combining Balance Sheet - Nonmajor Governmental Funds September 30, 2022 ASSETS Cash and Cash Equivalents Investments Receivables Accounts (Net) Leases Total Assets LIABILITIES Accounts Payable Total Liabilities DEFERRED INFLOWS OF RESOURCES Unavailable Revenue Related to Leases Total Deferred Inflows of Resources FUND BALANCES Nonspendable Permanent Library Funds Restricted for: Law Enforcement Community Development Assigned: Library Community Development Total Fund Balances Total Liabilities, Deferred Inflows of Resources, and Fund Balances Schedule 7 $ $ 4,612 $ $ 4,612 $ $ 4,612 4,612 4,612 4,612 949,626 949,626 949,626 949,626 949,626 949,626 - - Special Revenue 1,316,348 1,316,348 Permanent 130,753 - 130,753 Community - - 79,148 79,148 79,148 223,467 - 223,467 223,467 Total Development Special Library Library Nonmajor Block Revenue Memorial Trust Governmental Grant Fund Funds Total Funds Funds $ 223,381 $ 1,416,831 $ 79,148 $ 1,719,360 $ 588 $ 1,719,948 86 - - 86 98,295 98,381 - 23,079 23,079 23,079 - 961,429 961,429 961,429 $ 223,467 $ 2,401,339 $ 79,148 $ 2,703,954 $ 98,883 $ 2,802,837 $ $ 4,612 $ $ 4,612 $ $ 4,612 4,612 4,612 4,612 949,626 949,626 949,626 949,626 949,626 949,626 - - 98,883 98,883 1,316,348 1,316,348 - 1,316,348 130,753 - 130,753 130,753 - - 79,148 79,148 79,148 223,467 - 223,467 223,467 223,467 1,447,101 79,148 1,749,716 98,883 1,848,599 $ 223,467 $ 2,401,339 $ 79,148 $ 2,703,954 $ 98,883 $ 2,802,837 83 CITY OF PARIS, TEXAS Schedule 8 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended September 30, 2022 84 Special Revenue Permanent Community Total Development Library Library Nonmajor Block Special Memorial Trust Governmental Grant Revenue Funds Total Funds Funds REVENUES Fees and Fines $ - $ 40,628 $ - $ 40,628 $ - $ 40,628 Hotel Occupancy Taxes - 46,491 - 46,491 - 46,491 Intergovernmental - 129,612 - 129,612 - 129,612 Leases - 101,720 - 101,720 - 101,720 Charges for Services - 774,986 - 774,986 - 774,986 Use of Money and Property 2,872 21,939 1,015 25,826 340 26,166 Miscellaneous - 570,835 2,599 573,434 - 573,434 Total Revenues 2,872 1,686,211 3,614 1,692,697 340 1,693,037 EXPENDITURES Current General Government - 39,666 - 39,666 - 39,666 Public Safety - 7,602 - 7,602 - 7,602 Cox Field - 971,531 - 971,531 - 971,531 Culture and Recreation - - 1,401 1,401 - 1,401 Debt Service Principal - - - - - - Interest & Other Charges - - - - - - Capital Outlay General Government - - - - - - Public Safety - 56,363 - 56,363 - 56,363 Total Expenditures - 1,075,162 1,401 1,076,563 - 1,076,563 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,872 611,049 2,213 616,134 340 616,474 Other Financing Sources (Uses) Transfers In - - - - - - Transfers Out - (24,554) - (24,554) - (24,554) Total Other Financing Sources (Uses) - (24,554) - (24,554) - (24,554) Net Changes in Fund Balances 2,872 586,495 2,213 591,580 340 591,920 Fund Balances - Beginning 220,595 849,411 76,935 1,146,941 98,543 1,245,484 Prior Period Adjustment - 11,195 - 11,195 - 11,195 Fund Balances - Ending $ 223,467 $ 1,447,101 $ 79,148 $ 1,749,716 $ 98,883 $ 1,848,599 84 85 CITY OF PARIS, TEXAS Schedule 9 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Special Revenue Fund Year Ended September 30, 2022 Budgeted Amounts Variance with Original Final Actual Final Budget REVENUES Fees and Fines $ 30,350 $ 30,350 $ 40,628 $ 10,278 Hotel Occupancy Taxes - - 46,491 46,491 Intergovernmental - - 129,612 129,612 Leases - - 101,720 101,720 Charges for Services - - 774,986 774,986 Interest Earned 200 200 21,939 21,739 Miscellaneous 23,560 23,560 570,835 547,275 Total Revenues 54,110 54,110 1,686,211 1,632,101 EXPENDITURES Municipal Court 43,250 43,250 39,666 3,584 Police 101,000 101,000 63,965 37,035 Health 5,300 5,300 - 5,300 Cox Field 656,872 984,722 971,531 13,191 Total Expenditures 806,422 1,134,272 1,075,162 59,110 Excess (Deficiency) of Revenues Over (Under) Expenditures (752,312) (1,080,162) 611,049 1,691,211 Other Financing Sources (Uses) Transfers In - - - - Transfers Out - - (24,554) (24,554) Total Other Financing Sources (Uses) - - (24,554) (24,554) Net Changes in Fund Balance (752,312) (1,080,162) 586,495 1,666,657 Fund Balance - Beginning 849,411 849,411 849,411 - Prior Period Adjustment - - 11,195 11,195 Fund Balance - Ending $ 97,099 $ (230,751) $ 1,447,101 $ 1,677,852 85 Other Financing Sources (Uses) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Changes in Fund Balance Fund Balance - Beginning 152,461 152,461 (460,633) (460,633) (308,172) (308,172) 34,924 34,924 (192,987) (227,911) 1,928,672 1,928,672 1,928,672 - Prior Period Adjustment - - 63,971 (63,971) Fund Balance - Ending $ 1,963,596 $ 1,963,596 $ 1,799,656 $ (291,882) 86 CITY OF PARIS, TEXAS Schedule 10 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Debt Service Fund Year Ended September 30, 2022 Budgeted Amounts Variance with Original Final Actual Final Budget REVENUES Property Taxes $ 1,545,298 $ 1,545,298 $ 1,644,776 $ 99,478 Hotel Occupancy Taxes 200,000 200,000 256,125 56,125 Interest Earned 1,300 1,300 21,586 20,286 Total Revenues 1,746,598 1,746,598 1,922,487 175,889 EXPENDITURES Bond Principal Retirement 1,405,402 1,405,402 1,500,401 (94,999) Interest and Fiscal Charges 306,272 306,272 306,901 (629) Total Expenditures 1,711,674 1,711,674 1,807,302 (95,628) Excess of Revenues Over Expenditures 34,924 34,924 115,185 80,261 Other Financing Sources (Uses) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Changes in Fund Balance Fund Balance - Beginning 152,461 152,461 (460,633) (460,633) (308,172) (308,172) 34,924 34,924 (192,987) (227,911) 1,928,672 1,928,672 1,928,672 - Prior Period Adjustment - - 63,971 (63,971) Fund Balance - Ending $ 1,963,596 $ 1,963,596 $ 1,799,656 $ (291,882) 86 CITY OF PARIS, TEXAS Schedule 11 Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Capital Projects Fund From Inception and Year Ended September 30, 2022 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 (16,606,018) 9,604,042 (2,549,549) 12,918,399 90,100 $ 3,456,974 (1,194,940) (17,800,958) (13,043,751) - 9,604,042 - - (2,549,549) - - 12,918,399 - - 90,100 - (1,194,940) $ 2,262,034 $ (13,043,751) Fund Balance - Beginning 3,627,281 Fund Balance - Ending $ 2,432,341 87 Project Prior Current Total Authorization Years Year to Date (Budget) $ 535,102 $ 33,178 $ 568,280 $ - 263,248 4,558 267,806 - 798,350 37,736 836,086 - 708,144 1,232,676 1,940,820 314,109 285,630 - 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 13,339,696 - 13,339,696 8,095,265 144,232 - 144,232 228,000 7,100 - 7,100 35,000 110,667 - 110,667 159,100 17,404,368 1,232,676 18,637,044 13,043,751 (16,606,018) 9,604,042 (2,549,549) 12,918,399 90,100 $ 3,456,974 (1,194,940) (17,800,958) (13,043,751) - 9,604,042 - - (2,549,549) - - 12,918,399 - - 90,100 - (1,194,940) $ 2,262,034 $ (13,043,751) Fund Balance - Beginning 3,627,281 Fund Balance - Ending $ 2,432,341 87 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, 2022 and 2021 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 88 2022 $ 6,101,909 20,640,470 6,664,963 23,985,850 52,733,342 1,484,125 Schedule 12 2021 $ 5,950,108 20,556,584 6,601,672 23,102,816 52,733,342 263,364 $ 111,610,659 $ 109,207,886 $ 70,607,685 $ 69,562,588 33,211,640 31,978,964 7,791,334 7,666,334 $ 111,610,659 $ 109,207,886 STATISTICAL SECTION CITY OF PARIS, TEXAS Statistical Section September 30, 2022 This part of the City of Paris' annual comprehensive 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. 89 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 $ 33,003,801 $ 33,041,432 $ 33,331,038 $ 33,466,855 Restricted - - - - Unrestricted 10,075,150 12,172,944 13,508, 734 14,460, 833 Total Business -Type Activities, Net Position $ 43,078,951 $ 45,214,376 $ 46,839,772 $ 47,927,688 Primary Government Net Investment in Capital Assets $ 61,736,602 Fiscal Year $ 61,374,948 $ 63,972,639 2013 2014 2015 2016 Governmental Activities: Unrestricted 22,376,979 22,196,878 19,203,505 Net Investment in Capital Assets $ 28,732,801 $ 28,427,758 $ 28,043,910 $ 30,505,784 Restricted 4,949,039 4,949,039 3,393,033 3,003,799 Unrestricted 12,301,829 10,023,934 5,694,771 1,890,470 Total Governmental Activities, Net Position $ 45,983,669 $ 43,400,731 $ 37,131,714 $ 35,400,053 Business -Type Activities: Net Investment in Capital Assets $ 33,003,801 $ 33,041,432 $ 33,331,038 $ 33,466,855 Restricted - - - - Unrestricted 10,075,150 12,172,944 13,508, 734 14,460, 833 Total Business -Type Activities, Net Position $ 43,078,951 $ 45,214,376 $ 46,839,772 $ 47,927,688 Primary Government Net Investment in Capital Assets $ 61,736,602 $ 61,469,190 $ 61,374,948 $ 63,972,639 Restricted 4,949,039 4,949,039 3,393,033 3,003,799 Unrestricted 22,376,979 22,196,878 19,203,505 16,351,303 Total Primary Government, Net Assets/Position $ 89,062,620 $ 88,615,107 $ 83,971,486 $ 83,327,741 vie Table 1 (Continued) Fiscal Year 2017 2018 2019 2020 2021 2022 $ 21,971,338 $ 20,713,428 $ 18,064,569 $ 21,907,532 $ 26,703,929 $ 28,267,799 3,004,564 12,548,372 8,782,171 8,272,920 7,357,621 6,528,631 11,159,128 53,717 4,831,122 6,866,108 6,606,102 22,093,914 $ 36,135,030 $ 33,315,517 $ 31,677,862 $ 37,046,560 $ 40,667,652 $ 56,890,344 $ 24,198,822 $ 18,322,809 $ 25,779,748 $ 28,880,579 $ 31,236,956 $ 20,720,075 22,900,345 22,945,722 16,473,443 14,923,230 13,975,247 15,457,391 $ 47,099,167 $ 41,268,531 $ 42,253,191 $ 43,803,809 $ 45,212,203 $ 36,177,466 $ 46,170,160 $ 39,036,237 $ 43,844,317 $ 50,788,111 $ 57,940,885 $ 48,987,874 3,004,564 12,548,372 8,782,171 8,272,920 7,357,621 6,528,631 34,059,473 22,999,439 21,304,565 21,789,338 20,581,349 37,551,305 $ 83,234,197 $ 74,584,048 $ 73,931,053 $ 80,850,369 $ 85,879,855 $ 93,067,810 91 CITY OF PARIS, TEXAS Changes in Net Assets/Position Last Ten Fiscal Years (Accrual Basis of Accounting) Unaudited Fiscal Year Table 2 92 2013 2014 2015 2016 EXPENSES Governmental Activities: General Government $ 2,905,871 $ 2,997,393 $ 2,909,807 $ 3,463,908 Finance 393,526 407,463 404,567 400,665 Public Safety 9,982,926 10,449,953 11,037,966 12,595,127 Public Works 8,396,001 7,909,651 7,508,978 7,020,333 Health 3,348,281 3,228,513 2,404,782 2,633,051 Library Services 787,242 816,376 790,339 799,187 Cox Field Airport 259,938 158,632 152,063 217,995 Interest on Long -Term Debt 436,690 287,256 276,197 237,313 Bond Issue Costs 314,765 - - - Total Governmental Activities Expenses 26,825,240 26,255,237 25,484,699 27,367,579 Business -Type Activities: Water and Sewer Services 11,504,538 11,940,791 11,929,499 12,100,940 Total Primary Government Expenses 38,329,778 38,196,028 37,414,198 39,468,519 PROGRAM REVENUES Governmental Activities: Charges for Services: General Government 2,447 3,310 17,634 6,572 Public Safety 412,150 433,828 370,308 361,100 Public Works 1,860,656 1,799,918 1,862,606 1,780,836 Health 2,463,907 2,371,757 2,391,817 2,519,387 Library Services 27,824 19,400 19,433 16,874 Cox Field 78,234 67,037 76,689 91,810 Operating Grants and Contributions 1,959,427 926,506 1,396,711 672,298 Capital Grants and Contributions 117,080 690,176 271,961 424,332 Total Governmental Activities Program Revenues 6,921,725 6,311,932 6,407,159 5,873,209 Business -Type Activities: Charges for Services: Water and Sewer Service 14,005,748 13,881,328 14,281,964 14,617,218 Operating Grants and Contributions - - - - Total Business -Type Activities 14,005,748 13,881,328 14,281,964 14,617,218 Total Primary Government Program Revenues 20,927,473 20,193,260 20,689,123 20,490,427 92 Fiscal Year Table 2 (Continued) 2017 2018 2019 2020 2021 2022 $ 3,748,965 $ 3,421,223 $ 3,651,888 $ 3,927,783 $ 5,000,473 $ 7,371,230 398,262 404,443 402,943 481,645 480,880 519,980 12,456,655 12,061,033 13,228,151 12,727,703 11,874,360 12,265,360 7,126,349 6,882,186 8,274,343 6,699,707 6,452,355 8,186,910 2,836,429 2,884,339 3,205,596 4,267,819 3,962,596 3,781,493 781,092 866,435 914,874 846,669 762,080 774,910 235,546 243,666 344,964 311,796 374,649 1,099,517 185,852 399,291 194,004 115,000 99,169 52,281 27,769,150 27,162,616 30,216,763 29,378,122 29,006,562 34,051,681 14,095,860 14,594,309 14,568,695 14,026,074 15,241,543 15,747,874 41,865,010 41,756,925 44,785,458 43,404,196 44,248,105 49,799,555 181,197 214,000 304,818 277,689 237,376 567,805 342,083 376,322 353,571 562,859 530,151 346,023 1,463,576 1,470,248 1,437,157 1,473,803 1,493,826 1,488,587 2,609,811 2,732,908 2,979,160 4,790,535 4,818,960 5,946,071 127,997 120,942 100,014 60,928 80,657 65,827 98,382 134,716 161,527 161,619 170,579 774,986 338,718 154,497 165,064 2,151,740 369,289 522,574 2,147,065 522,574 1,160,602 324,889 239,450 1,096,373 7,308,829 5,726,207 6,661,913 9,804,062 7,940,288 10,808,246 13,781,748 14,168,934 14,452,703 15,043,788 16,567,528 18,397,839 - - - - - 1,371,533 13,781,748 14,168,934 14,452,703 15,043,788 16,567,528 19,769,372 21,090,577 19,895,141 21,114,616 24,847,850 24,507,816 30,577,618 93 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 Gain/Loss on Sale of Capital Assets Transfers Total Business -Type Activities Total Primary Government Changes in Net Assets/Position Governmental Activities Business -Type Activities Total Primary Government (42,124) 83,206 77,787 291,131 550,978 101,000 - - (2,527,979) 10,682 (1,087,474) (1,579,100) (2,019,125) 194,888 (1,009,687) (1,287,969) 18,212,976 17,555,255 19,070,365 19,215,959 328,586 (2,582,938) 1,002,512 (990,442) 482,085 2,135,425 1,342,778 1,228,309 S 810,671 S (447,513) S 2,345,290 S 237,867 D1! Fiscal Year 2013 2014 2015 2016 Net (Expense)/Revenue Governmental Activities (19,903,515) (19,943,305) (19,077,540) (21,494,370) Business -Type Activities 2,501,210 1,940,537 2,352,465 2,516,278 Total Primary Government, Net Expense (17,402,305) (18,002,768) (16,725,075) (18,978,092) General Revenues and Other Changes in Net Assets/Position Governmental Activities: Taxes Property 7,597,667 7,575,840 7,651,005 7,748,872 Sales 6,304,250 6,416,749 7,684,113 7,051,858 Franchise 2,550,447 2,662,604 2,641,537 2,502,614 Hotel Occupancy 572,150 547,354 594,493 630,545 Investment Earnings 64,386 45,799 51,741 80,129 Grants, Donations, and Miscellaneous 615,222 122,703 369,689 315,989 Capital Contributions 2,527,979 (10,682) 1,087,474 651,847 Gain/Loss on Sale of Capital Assets - - - (57,026) Transfers - - - 1,579,100 Total Governmental Activities 20,232,101 17,360,367 20,080,052 20,503,928 Business -Type Activities: Taxes Investment Earnings Contribution Gain/Loss on Sale of Capital Assets Transfers Total Business -Type Activities Total Primary Government Changes in Net Assets/Position Governmental Activities Business -Type Activities Total Primary Government (42,124) 83,206 77,787 291,131 550,978 101,000 - - (2,527,979) 10,682 (1,087,474) (1,579,100) (2,019,125) 194,888 (1,009,687) (1,287,969) 18,212,976 17,555,255 19,070,365 19,215,959 328,586 (2,582,938) 1,002,512 (990,442) 482,085 2,135,425 1,342,778 1,228,309 S 810,671 S (447,513) S 2,345,290 S 237,867 D1! Fiscal Year Table 2 (Continued) 2017 2018 2019 2020 2021 2022 (20,460,321) (21,436,409) (23,554,850) (19,574,060) (21,066,274) (23,243,435) (314,112) (425,375) (115,992) 1,017,714 1,325,985 4,021,498 (20,774,433) (21,861,784) (23,670,842) (18,556,346) (19,740,289) (19,221,937) 8,175,530 9,170,951 9,358,943 9,338,087 9,561,394 9,863,420 7,233,526 7,317,162 7,369,079 8,245,939 9,196,157 9,650,605 4,211,397 4,315,694 4,305,851 4,714,021 4,253,182 4,827,601 657,270 662,263 675,158 872,418 1,192,873 1,151,124 173,656 426,518 581,115 197,203 41,704 279,262 361,125 387,306 272,338 714,470 546,391 1,548,315 - (57,940) 49,951 25,246 125,176 111,727 382,794 610,955 (523,031) (146,679) (177,451) 11,746,203 21,195,298 22,832,909 22,089,404 23,960,705 24,739,426 39,178,257 315,872 380,393 577,621 427,723 (51,563) (1,376,170) - - - - 19,321 66,138 (382,794) (610,955) 523,031 146,679 177,451 (11,746,203) (66,922) (230,562) 1,100,652 574,402 145,209 (13,056,235) 21,128,376 22,602,347 23,190,056 24,535,107 24,884,635 26,122,022 734,977 1,396,500 (1,465,446) 4,386,645 3,673,152 15,934,822 (381,034) (655,937) 984,660 1,592,116 1,471,194 (9,034,737) $ 353,943 $ 740,563 $ (480,786) $ 5,978,761 $ 5,144,346 $ 6,900,085 01 CITY OF PARIS, TEXAS Table 3 Fiend Balances of Governmental Fiends Last Ten Fiscal Years (Modified Accrual Basis of Accounting) Unaudited Fiscal Year 2013 2014 2015 2016 General Fund Nonspendable $ 271,292 $ 233,127 $ 294,776 $ 223,911 Restricted - 271,269 331,086 387,950 Unassigned 11,969,203 11,194,101 12,969,124 10,227,839_ Total General Fund $ 12,240,495 $ 11,698,497 $ 13,594,986 $ 10,839,700 All Other Governmental Funds Nonspendable $ 90,062 $ 90,572 $ 90,800 $ 91,565 Restricted 4,858,977 3,031,192 2,726,900 2,525,049 Assigned 457,471 389,511 267,440 188,569 Unassigned Total All Other Governmental Funds $ 5,406,510 $ 3,511,275 $ 3,085,140 $ 2,805,183 DIE Fiscal Year Table 3 (Continued) 2017 2018 2019 2020 2021 2022 $ 326,985 $ 418,995 $ 483,575 $ 500,495 $ 181,620 $ 394,147 446,493 498,359 577,814 659,322 710,901 750,650 10,849,390 11,753,392 12,390,089 15,990,260 20,596,761 23,926,645 $ 11,622,868 $ 12,670,746 $ 13,451,478 $ 17,150,077 $ 21,489,282 $ 25,071,442 $ 92,347 $ 93,689 $ 96,007 $ 98,400 $ 98,543 $ (46,841) 12,009,532 10,991,000 8,108,350 7,512,067 6,633,684 5,679,098 82,042 299,013 292,571 295,955 - 302,615 57,705 - - - - 145,724 $ 12,241,626 $ 11,383,702 $ 8,496,928 $ 7,906,422 $ 6,732,227 $ 6,080,596 97 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 Leases Charges for Services Use of Money and Property 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 Tax Notes Issued Issue Costs Insurance Recoveries Inception of Lease 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 Debt Service as a Percentage of Noncapital Expenditures Table 4 Fiscal Year 2013 2014 2015 $ 17,020,156 $ 17,194,419 $ 18,457,686 154,923 386,775 220,696 624,609 586,429 573,953 142,620 138,629 137,030 1,463,210 1,472,278 1,462,810 2,453,270 2,111,439 2,383,355 2,069,494 1,603,165 1,662, 824 317,981 169,261 224,463 24,246,263 23,662,395 25,122,817 1,197,486 1,153,686 1,076,798 393,526 407,443 404,567 9,462,148 9,712,876 10,206,584 6,646,804 6,507,603 5,861,079 1,043,502 916,260 8,672 2,132,692 2,127,225 2,240,853 632,040 707,716 692,290 153,182 97,778 102,539 1,560,051 1,548,753 1,641,714 379,241 311,919 280,733 1,185,622 1,226,543 1,077,610 2,407,415 1,332,959 1,920,359 27,193,709 26,050,761 25,513,798 (2,947,446) (2,388,366) (390,981) - - 617,114 3,938,899 1,782,291 1,504,281 (1,410,920) (1,792,973) (416,807) 4,505,000 - - (4,424,955) - - 72,108 - 95,098 2,680,132 (10,682) 1,799,686 53,175 (38,165) 61,649 $ (214,139) $ (2,437,213) $ 1,470,354 6.74% 5.38% 5.76% 98 Table 4 (Continued) Fiscal Year 2016 2017 2018 2019 2020 2021 2022 $17,976,072 $20,280,057 $21,447,857 $21,672,347 $ 23,106,141 $ 24,155,434 $ 25,561,800 152,016 155,363 197,920 277,507 259,117 211,668 532,557 515,147 491,880 495,708 480,618 743,152 663,873 472,743 - - - - - - 167,337 - - - - - - 774,986 173,004 272,039 561,234 742,644 375,074 212,284 282,927 1,474,874 1,463,576 1,470,248 1,437,157 1,462,452 1,470,237 1,462,220 2,519,387 2,609,811 2,614,504 2,991,995 5,117,649 4,806,996 5,933,986 1,096,630 1,463,514 677,072 1,325,665 2,503,393 706,574 1,704,040 386,853 258,051 346,789 214,502 692,664 524,586 1,207,739 24,293,983 26,994,291 27,811,332 29,142,435 34,259,642 32,751,652 38,100,335 1,301,401 1,288,458 1,180,280 1,230,366 1,371,042 1,178,384 1,436,945 400,665 398,262 404,443 402,943 481,645 480,880 519,980 11,125,560 11,026,655 10,850,538 11,253,953 12,032,115 11,374,139 23,924,796 5,556,359 5,549,270 5,356,374 5,644,019 5,065,867 4,991,668 6,050,354 2,366,673 2,535,135 2,670,131 2,845,874 4,058,990 5,200,828 5,595,417 717,395 697,503 736,513 756,566 723,742 679,491 716,644 110,330 129,269 112,562 210,851 179,631 242,809 972,755 1,771,889 1,738,115 1,716,365 1,845,609 1,922,363 1,838,073 1,829,866 254,304 196,358 447,294 443,205 398,844 389,169 331,657 991,899 1,161,513 1,580,682 1,577,803 1,635,788 3,315,266 1,663,315 - 103,399 4,410 - - - - 4,474,952 2,350,010 3,564,942 4,399,885 5,540,837 2,615,698 4,596,338 29,071,427 27,173,947 28,624,534 30,611,074 33,410,864 32,306,405 47,638,067 (4,777,444) (179,656) (813,202) (1,468,639) 848,778 445,247 (9,537,732) 975,185 - - - - - - - 9,913,399 190,000 - - 1,765,000 - - - - - 1,500,000 - - - - - - - 1,115,000 - - - - - (62,000) (81,992) - - - - 57,835 - - - - - - - - - 278,821 3,437,300 466,536 994,335 27,678 2,570,626 3,358,332 12,424,649 (1,858,200) (83,742) (383,374) (550,708) (2,717,305) (3,535,783) (678,446) - - - - 28,000 151,266 155,367 2,554,285 10,296,193 800,961 (465,195) 1,319,321 2,771,823 12,180,391 (70,865) 103,074 40,517 - - - - $ (2,294,024) $10,219,611 $ 28,276 $ (1,933,834) $ 2,168,099 $ 3,217,070 $ 2,642,659 5.07% 5.47% 8.09% 7.71% 7.30% 12.48% 4.45% 99 Roll 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Fiscal Year 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 CITY OF PARIS, TEXAS Property Tax Levies and Collections (1) Last Ten Fiscal Years Unaudited Total Tax Levy $ 7,544,315 7,498,327 7,626,530 7,627,731 8,093,094 9,145,965 9,381,829 9,332,621 9,592,756 9,888,259 Source: Lamar County Appraisal District Collection of Current Year's Taxes During $ 7,368,232 7,309,230 7,348,250 7,406, 830 7,940,087 8,973,214 9,208,248 9,047,982 9,321,264 9,673,449 Note: (1) Taxes stated are for General Fund and Debt Service Funds. (2) Penalty, interest, and attorney fees not included. 100 Percent of Current Levy Collected During Fiscal Year 97.67% 97.48 96.35 97.10 98.11 98.11 98.15 96.95 97.17 97.83 Delinquent Tax Collections $ 110,036 119,430 111,210 215,544 116,317 62,442 137,647 109,970 134,553 141,826 Table 5 Total Collections $ 7,478,268 7,428,660 7,459,460 7,622,374 8,056,404 9,035,656 9,345,895 9,157,952 9,455, 817 9,815,275 Ratio Ratio of of Total Delinquent Collections Outstanding Taxes To Total Delinquent To Total Tax Levy Taxes Tax Levy 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 98.57 271,491 2.83 99.26 215,835 2.18 101 Table 5 (Continued) Paris Junior College M & O $ 0.18700 $ 0.18660 $ 0.18660 $ 0.18750 $ 0.17730 $ 0.08500 $ 0.08500 $ 0.08400 $ 0.08900 $ 0.08150 I&S - - - - - - - - - - Total 0.18700 0.18660 0.18660 0.18750 0.17730 0.08500 0.08500 0.08400 0.08900 0.08150 Source: Lamar County Appraisal District 102 CITY OF PARIS, TEXAS Table 6 Property Tax Rates -All Direct and Overlapping Governments (Per $100 of Assessed Value) Last Ten Fiscal Years Unaudited 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 City of Paris M & O $ 0.41487 $ 0.39129 $ 0.40635 $ 0.42547 $ 0.42443 $ 0.44248 $ 0.43831 $ 0.40868 $ 0.39788 $ 0.37357 I & S 0.09620 0.11066 0.09560 0.07648 0.07752 0.10947 0.11364 0.10740 0.08290 0.08016 Total 0.51107 0.50195 0.50195 0.50195 0.50195 0.55195 0.55195 0.51608 0.48078 0.45373 Lamar County M & O $ 0.41850 $ 0.40580 $ 0.42640 $ 0.40920 $ 0.40660 $ 0.37550 $ 0.36740 $ 0.37630 $ 0.38180 $ 0.34250 I & S 0.02020 0.01930 0.01900 0.01830 0.01730 0.01880 0.01910 0.01770 0.00210 0.01830 Total 0.43870 0.42510 0.44540 0.42750 0.42390 0.39430 0.38650 0.39400 0.38390 0.36080 Paris ISD M & O $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.17000 $ 1.06840 $ 1.05190 $ 0.99200 I & S 0.28500 0.28500 0.28500 0.28500 0.28500 0.28500 0.28500 0.28500 0.25970 0.25970 Total 1.45500 1.45500 1.45500 1.45500 1.45500 1.45500 1.45500 1.35340 1.31160 1.25170 Chisum ISD M & O $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 0.96640 $ 0.96640 $ 0.96340 I & S 0.16000 0.14500 0.14678 0.14678 0.20650 0.19500 0.19000 0.18000 0.18000 0.18000 Total 1.20000 1.18500 1.18678 1.18678 1.24650 1.23500 1.23000 1.14640 1.14640 1.14340 North Lamar ISD M & O $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 1.04000 $ 0.96640 $ 0.96640 $ 0.89600 I & S 0.08150 0.07110 0.06750 0.06750 - - - - - 0.25000 Total 1.12150 1.11110 1.10750 1.10750 1.04000 1.04000 1.04000 0.96640 0.96640 1.14600 Paris Junior College M & O $ 0.18700 $ 0.18660 $ 0.18660 $ 0.18750 $ 0.17730 $ 0.08500 $ 0.08500 $ 0.08400 $ 0.08900 $ 0.08150 I&S - - - - - - - - - - Total 0.18700 0.18660 0.18660 0.18750 0.17730 0.08500 0.08500 0.08400 0.08900 0.08150 Source: Lamar County Appraisal District 102 CITY OF PARIS, TEXAS Table 7 Assessed and Estimated Actual Value of Property Last Ten Fiscal Years Unaudited Sources: Lamar County Appraisal District 103 Real Property Personal Property Estimated Estimated Assessed Actual Assessed Actual Roll Year Value Value Value Value 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 1,236,252,824 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 2020 2020-21 1,391,511,659 1,933,860,434 532,519,786 740,100,180 2021 2021-22 1,667,126,345 2,305,669,290 560,875,228 775,657,080 Sources: Lamar County Appraisal District 103 Table 7 (Continued) 104 Total Assessed Estimated Value as a Assessed Actual Percentage of Total Direct Exemptions Value Value Actual Value Tax Rate $ 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 749,929,169 1,924,031,445 2,673,960,614 71.95 0.48078 853,324,797 2,228,001,573 3,081,326,370 72.31 0.45373 104 CITY OF PARIS, TEXAS Principal Property Taxpayers September 30, 2022 and 2013 Unaudited Table 8 Totals Source: Lamar County Appraisal District 105 S 792,866,864 32.71% 2022 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 $ 355,252,180 1 14.66% Campbell Soup Company - A Food Manufacturer 185,566,399 2 7.66% Kimberly-Clark Corporation - A Disposable Diapers 96,347,051 3 3.98% Essent PRMC, LP A Hospital 48,940,090 4 2.02% Oncor Electric Delivery Electric Utility 34,884,770 5 1.44% Huhtamaki Inc Packaging Mfg. 17,308,991 6 0.49% Potter Industries Glass Manufacturer 15,114,881 7 0.62% Atmos Energy Gas Utility 14,798,840 8 0.71% Alpha Lake Limited Shopping Center 12,716,310 9 0.52% American Spiral Weld III Inc. Pipe Manufacturer 11,937,352 10 0.61% Lamar Power Partners Electric Utility - 0.00% Paris Regional Medical Center Warehouse - 0.00% Paris Generation, LP Electric Utility - 0.00% Silgan Can Company Can Manufacturer - 0.00% Walmart Retail Store - 0.00% Turner Industries Pipe Manufacturer - 0.00% Totals Source: Lamar County Appraisal District 105 S 792,866,864 32.71% 2013 $ 562,146,415 38.70% 106 Table 8 (Continued) Percentage Taxable of Total Assessed Taxable Value Rank Assessed Value $ - 0.00% 89,955,430 3 5.98% 132,648,056 2 8.82% - 0.00% 20,053,960 7 1.33% - 0.00% - 0.00% - 0.00% 10,596,530 9 0.70% - 0.00% 210,303,060 1 13.99% 36,471,510 4 2.43% 21,511,700 5 2.43% 17,116,130 6 1.43% 16,777,080 8 1.14% 6,712,959 10 0.45% $ 562,146,415 38.70% 106 Table 8 (Continued) Sources: Lamar County Appraisal District City of Paris 107 CITY OF PARIS, TEXAS Table 9 Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt Per Capita Last Ten Fiscal Years Unaudited Ratio of Net Net General General Bonded Bonded Taxable Gross Less Debt Debt To Debt Fiscal Estimated Assessed General Service Net General Assessed Per Year Population Value Bonded Debt Funds Bonded Debt Value Capita 2012-13 25,082 $ 1,491,371,238 $ 9,485,800 $ 2,318,294 $ 7,167,506 0.48 $ 285.76 2013-14 25,171 1,503,258,892 8,310,000 1,432,199 6,877,801 0.46 273.24 2014-15 25,200 1,519,380,526 7,285,000 1,117,793 6,167,207 0.41 244.73 2015-16 25,400 1,627,397,467 6,442,624 1,087,664 5,354,960 0.33 210.83 2016-17 25,425 1,681,747,299 15,461,503 898,022 14,563,481 0.87 572.80 2017-18 25,450 1,732,236,641 14,306,032 1,073,917 13,232,115 0.76 519.93 2018-19 25,450 1,794,161,289 12,977,671 1,103,061 11,874,610 0.67 466.59 2019-20 25,450 1,876,141,460 11,818,173 1,196,122 10,622,051 0.56 417.37 2020-21 24,476 2,228,001,573 11,420,000 1,272,171 10,147,829 0.46 414.60 2021-22 24,476 2,423,466,605 9,380,000 544,537 8,835,463 0.36 360.98 Sources: Lamar County Appraisal District City of Paris 107 Fiscal Year General Obligation Bonds 2013 $9,485,800 2014 8,310,000 2015 7,285,000 2016 6,442,624 2017 15,461,503 2018 14,306,032 2019 12,840,000 2020 12,975,000 2021 11,830,000 2022 9,380,000 CITY OF PARIS, TEXAS Ratio of Outstanding Debt by Type Last Ten Fiscal Years Unaudited Governmental Activities Financed Purchases Leases $ - $ - 617,114 1,538,459 1,397,929 1,253,181 1,104, 090 950,526 792,453 629,538 Sources: City Finance Office Samco Capital Markets, Inc. Bureau of Economic Analysis 218,870 Other 108 955,000 770,000 Table 10 Business -Type Activities Utility Rate Financed Supported Debt Purchases Leases $ 43,239,200 40,795,000 - - 38,545,000 - - 37,997,715 - - 45,175,173 - - 44,264,589 - - 41,075,000 - - 38,875,000 - - 80,430,000 - - 90,440,000 - - Table 10 (Continued) Business -Type Activities Total Percentage Primary of Personal Per Other Government Income Capita $ - $ 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 - 94,007,453 4.03 3,841 - 101,438,408 3.99 4,135 109 CITY OF PARIS, TEXAS Table 11 Direct and Overlapping Governmental Activities Debt September 30, 2022 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. 110 General Percent Amount Obligation Applicable Applicable Bonded Debt to to Taxing Jurisdiction Outstanding Government Government Lamar County $ 6,934,868 62.75% $ 4,351,629 Paris Independent School District 40,760,000 49.30 20,094,680 Chisum Independent School District 26,950,000 47.75 12,868,625 North Lamar Independent School District 44,005,000 58.23 25,624,112 Subtotal Overlapping Debt 118,649,868 62,939,046 City of Paris (Includes General Obligation Debt and Capital Leases) 10,009,639 100.00 10,009,639 Total Direct and Overlapping Debt S 128,659,507 $ 72,948,685 Per Capita Direct and Overlapping Funded Debt S 5,257 $ 2,980 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. 110 CITY OF PARIS, TEXAS Table 12 Legal Debt Margin Information September 30, 2022 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 $.45373 per $100 valuation for the fiscal year ended September 30, 2022. 111 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 112 Net Revenue Average Remaining Available Debt Service Requirements Fiscal Gross Operating For Debt Percent Year Revenues* Expenses** Service Principal Interest Total*** Coverage 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 4,194,815 - - - 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 2020-21 16,768,090 10,440,367 6,327,723 - - - N/A 2021-22 20,198,510 10,254,224 9,944,286 - - - 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 112 Calendar Year 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Paris, TX Micropolitan Service Area Population 49,811 49,426 49,523 49,440 49,791 49,587 49,728 49,859 50,088 50,484 CITY OF PARIS, TEXAS Demographic and Economic Statistics Last Ten Calendar Years Unaudited Paris, TX Micropolitan Service Area Personal Income $ 1,750,363,000 1,804,479,000 1, 859, 083,000 1,857,879,000 1,917, 848,000 2,013,704,000 2,027,062,464 2,147,064,000 2,330,995,344 2,539,934,000 Paris, TX Micropolitan Service Area Per Capita Personal $ 35,140 36,509 37,540 37,578 38,518 40,610 40,763 43,063 46,538 50,311 Paris, TX Micropolitan Service Area Median School Age Enrollments (1) 39.0 12,671 37.1 12,377 40.4 12,414 40.5 12,121 40.6 12,180 40.6 12,758 41.0 12,307 37.8 11,482 40.7 11,461 39.4 11,800 (1) Includes Paris Independent School District, North Lamar Independent School District, Chisum Independent School District, and Paris Junior College Sources: Paris Independent School District - 3,808 North Lamar Independent School District - 2,416 Chisum Independent School District - 1,149 Paris Junior College - 4,427 Bureau of Economic Analysis US Census Bureau 113 Table 14 Percent Unemployment 7.9 7.6 6.1 5.4 4.9 3.5 3.3 6.8 6.5 4.3 CITY OF PARIS, TEXAS Principal Employers Fiscal Years End 2022 and 2013 Unaudited Table 15 Totals Source: U.S. Department of Labor PEDC Bureau of Labor Statistics Additional Information: September 30, 2022 September 30, 2013 Paris ISD 618 Percentage 469 City of Paris Percentage Paris Junior College 367 Chisum ISD of Total Lamar County 196 of Total 2,140 City City Taxpayer Employees Rank Employment Employees Rank Employment Paris Regional Medical Center 900 1 5.08% 700 3 3.95% Campbell Soup Company 750 2 4.23% 840 1 4.74% Kimberly-Clark Corporation 750 3 4.23% 730 2 4.12% We Pack Logistics, Inc. 522 4 2.95% 150 7 0.85% The Results Company* 419 5 2.37% - 0.00% Huhtamaki** 200 6 1.13% 180 6 1.02% RK Hall Constriction LTD 200 7 1.13% 430 5 2.43% Delco Trailers 200 8 1.13% - 0.00% Paris Print Works 100 9 0.56% - 0.00% Silgan Can Company 90 10 0.51% 87 9 0.49% Turner Industries - 0.00% 600 4 3.39% HWH - We Build - 0.00% 75 10 0.42% Sara Lee - 0.00% 130 8 0.73% Totals Source: U.S. Department of Labor PEDC Bureau of Labor Statistics Additional Information: Public Employers: Paris ISD 618 North Lamar ISD 469 City of Paris 314 Paris Junior College 367 Chisum ISD 176 Lamar County 196 Total 2,140 Notes: (*) TCIM in 2013 (**) Paris Packaging in 2013 4,131 23.32% 3,922 22.14% 114 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 Annul 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 2013 2014 2015 2016 1 1 1 1 3 3 3 3 1,240 1,262 1,299 1,313 51 51 51 51 2.01 2.03 2.02 2.01 1 1 1 1 82,878 82,832 81,893 84,162 127,053 127,002 127,824 119,265 5.01 5.06 5.07 4.69 14,896 16,519 15,507 13,551 1 1 1 1 62 60 60 60 2.44 2.39 2.38 2.36 87 87 87 87 221 221 221 221 24 24 24 24 160 160 160 171 3 3 3 3 11,400,000 11,472,271 11,006,721 10,701,294 20,764,000 17,201,000 20,662,000 17,983,000 4,177,171,000 4,187,379,000 4,017,453,000 3,977,369,000 183 183 185 185 9,816 9,819 10,024 9,995 188 189 209 209 39.18 39.18 39.18 38.02 325 326.5 327 328 115 Table 16 (Continued) Fiscal Year 2017 2018 2019 2020 2021 2022 1 1 1 1 1 1 3 3 3 3 3 3 1,333 1,357 1,367 1,408 1,399 1,510 51 51 51 51 51 52 2.00 2.00 2.00 2.00 2.08 2.12 1 1 1 1 1 1 85,630 72,288 81,185 79,821 81,739 82,409 114,611 103,389 99,239 81,249 86,120 103,731 4.50 4.06 3.90 3.19 3.51 4.24 14,312 10,441 8,734 8,424 9,337 10,345 1 1 1 1 1 1 60 57 57 57 57 57 2.35 2.24 2.24 2.24 2.32 2.12 87 87 87 87 87 87 221 221 221 221 221 221 24 24 24 24 24 24 171 171 174 174 174 174 3 3 3 3 3 3 13,241,942 10,759,444 10,775,920 11,138,000 11,740,173 13,715,333 18,493,000 18,137,000 19,202,000 17,747,000 19,386,000 29,661,000 4,833,309,000 3,927,197,000 3,937,831,000 4,078,053,000 4,285,163,000 5,015,467,000 185 185 185 185 185 185 9,766 9,698 9,679 9,810 9,754 9,776 209 209 209 209 209 209 38.02 38.02 38.02 38.02 38.02 38.02 330 331.5 333 322 314 314 116 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. 117 Fiscal Year 2013 2014 2015 2016 Function: Public Safety Police Stations 1 1 1 1 Patrol Units 10 10 10 10 Fire Stations 3 3 3 3 Sanitation Collection Tricks 6 6 6 6 Highways and Streets Streets (miles) 163 163 174 174 Streetlights 2,223 2,225 2,228 2,228 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) 183 183 185 185 Fire Hydrants 1,240 1,262 1,299 1,313 Maximum Daily Capacity 36,000 36,000 36,000 36,000 (thousands of gallons) Sewer Sanitary Sewers (miles) 189 189 209 209 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. 117 Table 17 (Continued) Fiscal Year 2017 2018 2019 2020 2021 2022 1 1 1 1 1 1 10 10 10 10 10 10 3 3 3 3 3 3 6 6 6 6 6 6 174 174 174 174 174 174 2,230 2,231 2,235 2,235 2,235 2,235 286 286 308 308 308 308 1 1 1 1 1 1 14 14 14 14 14 14 1 1 1 1 1 1 185 185 185 185 185 185 1,333 1,357 1,367 1,408 1,399 1,510 36,000 36,000 36,000 36,000 36,000 36,000 209 209 209 209 209 209 7,250 7,250 7,250 7,250 7,250 7,250 118 CITY OF PARIS, TEXAS Table 18 Building Permits at Market Value Last Ten Fiscal Years Unaudited Sources: City of Paris Community Development Department 119 Commercial Residential Total Property Value Commercial Constriction Residential Constriction Constriction Fiscal Year Units Value Units Value Value 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 2021 8 7,995,151 17 1,908,787 9,903,938 2022 17 43,395,000 35 7,237,430 50,632,430 Sources: City of Paris Community Development Department 119 CITY OF PARIS, TEXAS Table 19 Frill -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 2013 2014 2015 2016 3.0 3.0 3.0 3.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 3.0 2.0 2.0 2.0 5.0 5.0 5.0 5.0 85.5 83.0 83.0 83.0 52.0 57.0 57.0 57.0 7.5 5.5 4.5 4.5 6.5 7.5 7.5 7.5 3.0 3.0 2.0 2.0 10.0 10.0 11.0 11.0 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 16.5 10.5 11.0 11.0 11.0 7.5 7.5 8.5 8.5 22.5 22.5 22.5 22.5 3.0 3.0 3.0 3.0 2.0 2.0 2.5 2.5 325.5 326.5 327.0 328.0 120 Table 19 (Continued) Fiscal Year 2017 2018 2019 2020 2021 2022 3.0 3.0 3.0 3.0 4.0 4.0 4.0 2.0 2.0 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 83.5 84.0 83.0 77.5 77.5 58.0 58.0 58.0 59.0 52.0 52.0 4.5 4.0 4.0 5.5 15.0 15.0 7.5 6.0 6.0 4.5 3.0 3.0 2.0 3.0 3.0 3.0 3.0 3.0 12.0 12.0 12.0 11.0 10.0 10.0 12.0 11.0 12.0 8.0 6.0 6.0 15.0 17.0 17.0 11.0 12.0 12.0 2.0 2.0 2.0 1.0 1.0 1.0 5.5 6.0 6.0 5.5 6.0 6.0 26.0 26.0 27.0 27.0 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 16.5 16.5 17.5 18.0 18.0 18.0 11.0 12.5 12.5 9.0 11.0 11.0 8.5 8.5 8.0 8.0 8.0 8.0 22.5 22.5 21.5 26.0 21.0 21.0 3.0 3.0 3.0 3.0 3.0 3.0 2.5 3.5 3.0 3.0 3.0 3.0 330.0 331.5 333.0 322.0 314.0 314.0 121 CONTINUING DISCLOSURE INFORMATION CONTINUING DISCLOSURE INFORMATION FOR CITY OF PARIS, TEXAS UNAUDITED ASSESSED VALUATION TABLE 2 TABLE 1 2022-2023 Actual Market Value of Taxable Property (100% of Actual) Combination Tax and Revenue Certificates of Obligation, Series 2013 (TWDB) $ 3,533,549,070 Less Exemptions: 25,335,000 General Obligation Bonds, Series 2016 Local, Optional Over -65 and/or Disabled Homestead Exemptions $ 40,935,341 7,795,000 Disabled and Deceased Veterans' Exemptions 18,533,812 General Obligation Refunding Bonds, Series 2020 Productivity Loss 19,856,605 1,225,000 Personal Use of Business Vehicle 319,140 Tax and Revenue Certificates of Obligation, Series 2021 Freeport 111,908,964 12,355,000 Pollution Control / Solar 62,479,174 10,150,000 Abatement Loss 281,560,424 2,990,410 Cap Loss (10%) 150,758,853 4.56% Historical / Other 27,546,091 0.45% Totally Exempt Property 396,184,061 2,233,314,729 Total Exemptions 1,110,082,465 2022-2023 Net Taxable Assessed Valuation $ 2,423,466,605 Frozen Taxable Value and Transfer Adjustment $ (190,151,876) Freeze Adjusted Net Taxable Assessed Valuation $ $ 2,233,314,729 Source: Lamar County Appraisal District and the Issuer GENERAL OBLIGATION BONDED DEBT PRINCIPAL TABLE 2 General Obligation Debt Principal Outstanding: (As of September 30, 2022) General Obligation Bonds, Series 2013 (100% WS) Combination Tax and Revenue Certificates of Obligation, Series 2013 (TWDB) $ 1,560,000 General Obligation Bonds, Series 2013 25,335,000 General Obligation Bonds, Series 2016 6,560,000 General Obligation Bonds, Series 2017 7,795,000 General Obligation Bonds, Series 2018 775,000 General Obligation Refunding Bonds, Series 2020 1,585,000 Combination Tax and Surplus Revenue Certificates of Obligation, Series 2020 1,225,000 Tax Notes, Series 2020 770,000 Tax and Revenue Certificates of Obligation, Series 2021 43,855,000 General Obligation Pension Bonds, Series 2022 12,355,000 Total Gross General Obligation Debt Principal Outstanding: 101,815,000 Less: Self -Supporting General Obligation Debt Principal Combination Tax and Revenue Certificates of Obligation, Series 2013 (TWDB) (100% WS) 1,560,000 General Obligation Bonds, Series 2013 (100% WS) 25,335,000 General Obligation Bonds, Series 2016 (100% WS) 6,560,000 General Obligation Bonds, Series 2018 (86% WS) 775,000 Tax and Revenue Certificates of Obligation, Series 2021 43,855,000 Combination Tax and Surplus Revenue Certificates of Obligation, Series 2020 1,225,000 GO Pension Bonds, Series 2022 12,355,000 Total Self -Supporting General Obligation Debt Outstanding Following the Issuance of the Bonds: 91,665,000 Total Net General Obligation Debt Principal Outstanding Following the Issuance of the Bonds: $ 10,150,000 General Obligation Interest and Sinking Fund Balance as of September 30, 2022 $ 2,990,410 Ratio of Gross General Obligation Debt Principal to 2021-22 Freeze Adjusted Net Taxable Assessed Valuation 4.56% Ratio of Net General Obligation Debt Principal to 2021-22 Freeze Adjusted Net Taxable Assessed Valuation 0.45% 2021-22 Freeze Adjusted Net Taxable Assessed Valuation $ 2,233,314,729 Population: 1980 - 25,498; 1990 - 24,699; 2000 - 25,898; 2010 - 25,171 Current (Estimate) 24,476 Per Capita 2021-2022 Freeze Adjusted Net Taxable Assessed Valuation $ 91,245 Per Capita Gross General Obligation Debt Principal $ 4,160 Per Capita Net General Obligation Debt Principal $ 415 122 CLASSIFICATION OF ASSESSED VALUATION(�) TABLE 3 UNAUDITED % of % of % of % of % of Cate¢ory 2021-22 Total 2020-21 Total 2019-2020 Total 2018-2019 Total 2017-2018 Total Real, Residential, Single -Family $ 943,179,877 26.69% $ 758,658,443 23.85% $ Real, Residential, Multi -Family 121,204,107 3.43% 112,201,519 3.53% Real, VacantLots/Tracts 31,534,732 0.89% 31,470,634 0.99% Real, Acreage (Land Only) 20,958,160 0.59% 20,972,380 0.66% Farm& Ranch Improvements 30,038,194 0.85% 25,293,068 0.80% Real, Commercial 431,656,699 12.22% 409,844,864 12.89% Real Industrial 667,764,200 18.90% 687,876,550 21.63% Real & Tangible, Personal Utilities 60,626,630 1.72% 57,691,980 1.81% Tangible Personal, Commercial 164,277,840 4.65% 151,679,870 4.77% Tangible Personal, Industrial 611,674,330 17.31% 519,985,340 16.35% Tangible Personal, Mobile Homes 11823,340 0.04% 890,630 0.04% Residential/ Special, Inventory 25,135,220 0.71% 20,948,400 0.66% Totally Exempt Property 423,675,741 11.99% 382,866,616 12.04% Total Market Value 3,533,549,070 100.00% 3,180,380,294 100.00% 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 ofBusiness Vehicle Other / Historical Total Exemptions Net Taxable Assessed Valuation Freeze Taxable & Transfer Adjustment Freeze Adjusted Net Taxable Assessed Valuation 713,569,554 25.47% $ 78,929,430 2.82% 30,827,095 1.10% 20,517,420 0.73% 23,098,838 0.82% 267,504,955 9.55% 594,799,020 21.23% 55,391,760 1.98% 145,136,550 5.18% 494,875,900 17.67% 769,900 0.04% 19,937,470 0.71% 355,713,491 12.70% 2,801,071,383 100.00% 555,725,094 20.28% $ 60,643,497 2.27 33,015,060 1.17 21,611,670 0.79 20,902,638 0.74 290,129,663 11.24 588,443,970 23.26 49,300,600 1.68 137,319,910 5.43 490,224,670 19.54 796,370 0.03 18,093,300 0.72 352,476,683 12.86 2,618,683,125 100.00% 513,053,546 20.51% 55,673,247 2.22 29,663,525 1.19 20,285,840 0.81 18,316,868 0.73 288,609,812 11.53 594,247,570 23.74 42,243,760 1.69 138,468,717 5.53 475,659,420 19.01 768,990 0.03 18,382,080 0.73 307,256,120 12.28 2,502,629,495 100.00% 19,856,605 19,992,060 19,523,280 20,576,410 19,378,050 150,758,853 79,061,864 107,587,489 7,090,415 6,410,256 40,935,341 45,303,916 40,632,898 39,196,208 45,466,649 18,533,812 12,132,564 10,827,192 14,497,851 7,810,386 396,184,061 361,607,606 338,281,483 340,140,213 295,991,820 111,908,964 91,612,816 85,531,645 98,468,752 89,590,207 62,479,174 62,080,048 65,128,932 67,790,322 67,165,339 281,560,424 259,158,157 187,457,093 224,131,835 271,984,849 319,140 303,980 382,630 282,460 378,570 27,546,091 21,125,710 17,220,053 12,347,370 11,363,360 1,110,082,465 952,378,721 872,572,695 824,521,836 815,539,486 2,423,466,605 2,228,001,573 1,928,498,688 1,794,161,289 1,687,090,009 (190,151,876) (178,970,749) (155,792,063) (139,607,850) (125,125,367) $ 2,233,314,729 $ 2,049,030,824 $ 1,772,706,625 $ 1,654,553,439 $ 1,561,964,642 Values shown in this table are Certified Values as of7itly. Values may change during the tos year due to various supplements and protests. Valuations reported on a different date may not match those shoran on this table. Source: Lamar County Appraisal District and the Issuer. 123 PRINCIPAL TAXPAYERS 2021-22 (UNAUDITED) TABLE 4 Name La Frontera Holdings LLC Campbell Soup Kimberly Clark Corporation Essent PRMC LP Oncor Electric Delivery Company Huhtamaki Inc. Potter Industries LLC Atmost Energy Alpha Lake LTD American Spiral Weld III, Inc Total Based on a 2022 Freeze Adjusted Net Taxable Assessed Valuation of $ 2,233,314,729 Source: Lamar County Appraisal District PROPERTY TAX RATES AND COLLECTIONS (UNAUDITED) TABLE 5 Tax Net Taxable % of Tax % Collections Total 2020 Year 2020 Net Taxable Assessed Tvpe of Propel-tv Assessed Valuation Valuation Electric Utility $ 355,252,180 15.91% Food Manufacturing 185,566,399 8.31% Disposable Diaper Mfg. 96,347,051 4.31% Health Care Services/Hospital 48,940,090 2.19% Utility 34,884,770 1.56% Packaging Manufacturing 17,308,991 0.78% Manufacturing 15,114,881 0.68% Gas Utility 14,798,840 0.66% Shopping Center 12,716,310 0.57% Pipe Manufacturer 11,937,352 0.53% 2016 $792,866,864 35.50% Based on a 2022 Freeze Adjusted Net Taxable Assessed Valuation of $ 2,233,314,729 Source: Lamar County Appraisal District PROPERTY TAX RATES AND COLLECTIONS (UNAUDITED) TABLE 5 Tax Net Taxable Tax Tax % Collections $ 0.37357 Year Year Assessed Valuation (a) Rate Levy Current Total Ended 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 (N) 99.52 (N) 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 2020 1,924,031,445 0.48078 9,592,756 97.17 98.57 9-30-21 2021 2,049,030,824 0.45373 9,888,259 97.83 99.49 9-30-22 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 2012-2021 represent Freeze Adjusted Net Taxable Valuations. m� Current Fiscal Year collections are as of September 30, 2022 (Unaudited). Source: The Lamar County Appraisal District, the City's 2021 Comprehensive Annual Financial Report and additional information from the City. TAX RATE DISTRIBUTION (UNAUDITED) TABLE 6 2022-23 General Fund $ 0.34377 I & S Fund 0.09901 TOTAL $ 0.44278 2021-22 2020-21 2019-20 2018-19 2017-18 $ 0.37357 $ 0.39788 $ 0.40868 $ 0.43831 $ 0.44248 0.08016 0.08290 0.10740 0.11364 0.10947 $ 0.45373 $ 0.48078 $ 0.51608 $ 0.55195 $ 0.55195 Sources: Texas Municipal Report published by the Municipal Advisory Council of Texas and the Lamar County Appraisal District. 124 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 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 11,048,083 7,365,389 1,841,347 95.81 0.47 1,841,347 2022 11,715,522 7,810,348 1,952,587 97.83 0.48 1,952,587 * 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. 125 GENERAL FUND COMPARATIVE STATEMENT OF REVENUES AND EXPENDITURES AND ANALYSIS OF CHANGES IN FUND BALANCES UNAUDITED Revenues: Ad Valorem Taxes Sales Taxes Franchise Tax Hotel Occupancy Taxes Licenses and Permits Fines and Fees Investment Earnings Sanitation Health Intergovernmental Revenue Other Revenues Total Revenues Expenditures: Current General Government Public Safety Public Works Health Culture and Recreation Cox Field Airport Other Capital Outlay General Government Public Safety Public Works Health Cox Field Airport Debt Service Other Total Expenditures Excess (Deficit) of Revenues Over Expenditures Other Financing Sources (Uses): Leases Operating Transfers In Operating Transfers Out Sale of Capital Assets Insurance Recoveries Total Other Financing Sources (Uses): Excess of Revenues and Other Sources Over Expenditures and Other Uses Fund Balance - Beginning of Year Increase (Decrease) in Reserve for Inventory Prior Period Adjustment Fund Balance - End of Year Fiscal Year Ended September 30 TABLE 8 $ 8,287,694 $ 7,971,838 $ 7,380,958 $ 7,552,516 $ 7,357,425 9,650,605 9,196,157 8,245,939 7,369,079 7,317,162 4,827,601 4,253,182 4,714,021 4,305,851 4,315,694 848,508 881,259 643,417 675,158 662,263 532,557 211,668 259,117 277,507 197,920 432,115 615,721 724,259 434,016 446,670 201,997 198,965 304,755 483,876 329,365 1,462,220 1,470,237 1,462,452 1,437,157 1,470,248 5,933,986 4,806,996 5,117,649 2,991,995 2,614,504 1,574,428 706,574 713,570 1,325,665 677,072 695,364 442,020 381,355 210,946 341,330 34,447,075 30,754,617 29,947,492 27,063,766 25,729,653 1,917,259 1,613,946 1,779,229 1,616,363 1,541,274 23,917,194 11,367,228 12,005,945 11,218,944 10,884,241 6,050,354 4,991,668 5,065,867 5,644,019 5,356,374 5,595,417 5,199,358 4,022,732 2,845,874 2,668,477 715,243 677,612 723,046 740,350 734,826 1,224 242,809 179,631 210,851 112,562 1,829,866 1,838,073 1,922,363 1,845,609 1,716,365 561,165 252,387 109,280 16,995 10,100 1,060,330 870,874 403,654 413,250 168,163 1,199,200 941,371 626,741 1,016,738 612,947 486,604 216,631 287,256 303,946 554,083 - 65,000 - - 37,275 187,670 186,690 186,690 186,690 186,690 - - - - 42,187 43,521,526 28,463,647 27,312,434 26,059,629 24,625,564 (9,074,451) 2,290,970 2,635,058 1,004,137 1,104,089 278,821 - - - - 12,682,538 2,751,240 539,986 18,513 124,968 (603,609) (802,211) (29,319) (127,545) (383,374) 155,367 151,266 28,000 - - - - - 57,835 - 12,513,117 2,100,295 538,667 (51,197) (258,406) 3,438,666 4,391,265 21,420,072 17,150,077 3,173,725 952,940 13,451,478 12,670,747 845,683 11,622,868 40,518 212,704 (52,060) 524,874 (172,209) 161,678 $ 25,071,442 $ 21,489,282 $ 17,150,077 $ 13,451,478 $ 12,670,747 Source: The Issuer's Comprehensive Annual Financial Reports. 126 CONDENSED WATERWORKS AND SEWER SYSTEM OPERATING STATEMENT (UNAUDITED) TABLE 9 Fiscal Year Ended September 30 2022 2021 2020 2019 2018 Operating Revenues (a) Total Revenues Expenses <e> Net Revenue Available for Debt Service Annual Revenue Bond Debt Service Requirements Coverage of Annual Revenue Bond Requirements Annual Requirements on all Bonds Paid from System Revenues Coverage of Annual Requirements on all Bonds Paid from System Revenues Customer Count: Water Sewer $ 18,397,839 $ 16,567,528 $ 15,043,788 $ 14,452,703 $ 14,168,934 10,151,891 10,308,035 9,602,622 10,147,099 9,886,456 $ 8,245,948 $ 6,259,493 $ 5,441,166 $ 4,305,604 $ 4,282,478 N/A $ 5,289,797 1.56 x 9,786 9,198 N/A $ 3,842,897 1.63 x 9,762 9,175 N/A $ 3,845,397 1.41 x 9,810 9,221 N/A $ 3,848,957 1.11 x 9,679 9,189 (°) Revenues include operating revenues, interest income and other revenues of the Waterworks and Sewer System. hl 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. N/A $ 3,714,257 1.15 x 9,698 9,208 WATER RATES (UNAUDITED) TABLE 10 Current Rates (Rates Effective July 1, 2022) Residential Class Commercial Industrial Class Service in Excess of Base Meter Size Base Cost (For Each Additional (Inches) (Per Cubic Foot) 100 Cubic Feet) 5/8" - 3/4" $13.69 for first 200 Cubic Feet $5.04 / 100 Cubic Feet 1" and Larger $66.81 for first 1,000 Cubic Feet $5.04 / 100 Cubic Feet Commercial Industrial Class 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" $4,034.82 for first 100,000 Cubic Feet $4.03 / 100 Cubic Feet 6" $6,052.22 for first 150,000 Cubic Feet $4.03 / 100 Cubic Feet 8" and Larger $8,069.63 for first 200,000 Cubic Feet $4.03 / 100 Cubic Feet Source: Information from the Issuer 127 Service in Excess of Base Meter Size Base Cost (For Each Additional (Inches) (Per Cubic Foot) 100 Cubic Feet) 5/8" - 3/4" $16.36 for first 200 Cubic Feet $4.94 / 100 Cubic Feet 1" - 2" $65.54 for first 1,000 Cubic Feet $4.03 / 100 Cubic Feet Larger than 2" $235.24 for first 2,000 Cubic Feet $4.03 / 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" $4,034.82 for first 100,000 Cubic Feet $4.03 / 100 Cubic Feet 6" $6,052.22 for first 150,000 Cubic Feet $4.03 / 100 Cubic Feet 8" and Larger $8,069.63 for first 200,000 Cubic Feet $4.03 / 100 Cubic Feet Source: Information from the Issuer 127 PRINCIPAL WATER CUSTOMERS 2021-2022 (UNAUDITED) TABLE 11 (October 1, 2021 to September 30, 2022) Total Water Sales as of September 30, 2022 (unaudited) $ 9,042,125 Principal Water Customers represent approximately 40.25% of total annual water sales. Includes raw water sales. Average Monthlv Bill $ 27,089 97,184 15,568 23,942 72,843 33,867 10,834 9,527 7,226 5,195 $ 303,275 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 1" - 2" Larger than 2" (Residential Rates Effective October 1, 2022) Base Cost Service in Excess of Base (For Each Additional (Per Cubic Foot) 100 Cubic Feet) $18.54 for first 200 Cubic Feet $9.16 / 100 Cubic Feet $91.56 for first 1,000 Cubic Feet $9.16 / 100 Cubic Feet (Commercial Rates Effective October 1, 2022) Average Monthly Name of Customer Consumption (Gals.) Lamar Power Partners* 19,685,539 Campbell Soup Company 15,185,949 Daisy Farms* 2,304,151 Paris Generation 2,023,092 Lamar County Water Supply 1,342,300 Kimberly Clark 864,846 The James Skinner Baking Co. 271,167 Paris Housing Authority 235,815 Paris Regional Medical Center 144,271 Paris Junior College 118,465 Paris Regional Medical Center Total 42,175,595 Total Water Sales as of September 30, 2022 (unaudited) $ 9,042,125 Principal Water Customers represent approximately 40.25% of total annual water sales. Includes raw water sales. Average Monthlv Bill $ 27,089 97,184 15,568 23,942 72,843 33,867 10,834 9,527 7,226 5,195 $ 303,275 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 1" - 2" Larger than 2" (Residential Rates Effective October 1, 2022) Base Cost Service in Excess of Base (For Each Additional (Per Cubic Foot) 100 Cubic Feet) $18.54 for first 200 Cubic Feet $9.16 / 100 Cubic Feet $91.56 for first 1,000 Cubic Feet $9.16 / 100 Cubic Feet (Commercial Rates Effective October 1, 2022) PRINCIPAL SEWER CUSTOMERS - 2020-2021 (UNAUDITED) TABLE 13 (October 1, 2021 to September 30, 2022) Service in Excess of Base Base Cost (For Each Additional (Per Cubic Foot) 100 Cubic Feet) $24.67 for first 200 Cubic Feet $9.50 / 100 Cubic Feet $95.00 for first 1,000 Cubic Feet $9.50 / 100 Cubic Feet $190.04 for first 2,000 Cubic Feet $9.50 / 100 Cubic Feet PRINCIPAL SEWER CUSTOMERS - 2020-2021 (UNAUDITED) TABLE 13 (October 1, 2021 to September 30, 2022) Total Sewer Charges as of September 30, 2022 (unaudited) $ 8,558,316 (a) Principal Sewer Customers represent approximately 22.93% of total annual sewer charges. 128 Average Monthly Average Name of Customer Consumption (Gals.) Monthlv Bill Kimberly Clark 732,549 $ 60,738 The James Skinner Baking Co 271,167 23,608 Paris Housing Authority 238,263 20,775 Campbell Soup Supply 150,469 12,454 City of Toco 121,118 9,509 Lamar County Human Resources 98,724 8,600 Paris Regional Medical Center 88,670 8,002 Paris Junior College 88,568 8,026 Spanish Oaks 68,406 5,932 Grassland Healthcare 67,144 5,879 Total 1,925,078 $ 163,523 Total Sewer Charges as of September 30, 2022 (unaudited) $ 8,558,316 (a) Principal Sewer Customers represent approximately 22.93% of total annual sewer charges. 128 OVERALL COMPLIANCE, INTERNAL CONTROLS AND FEDERAL AWARDS SECTION CITY OF PARIS, TEXAS Overall Compliance, Internal Controls, And Federal Awards Section September 30, 2022 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). 129 McClanahan and Holmes, LLP CERTIFIED PUBLIC ACCOUNTANTS GEORGE H. STRUVE, CPA DEBRA J. WILDER, CPA TEFFANY A. KAVANAUGH, CPA APRIL J. HATFIELD, CPA BRITTANY L. MARTIN, CPA STEVEN W. MOHUNDRO, CPA, OF COUNSEL 228 SIXTH STREET S.E. PARIS, TEXAS 75460 903-784-4316 FAX 903-784-4310 304 WEST CHESTNUT DENISON, TEXAS 75020 903-465-6070 FAX 903-465-6093 1400 WEST RUSSELL BONHAM, TEXAS 75418 903-5835574 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, 2022, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated October 16, 2023. Report on 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 were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We identified certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as items 2022-01 and 2022-02 that we consider to be significant deficiencies. Report on 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. 130 Honorable Mayor and City Council City of Paris, Texas City of Paris, Texas' Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on the City's response to the findings identified in our audit and 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 the response. 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 October 16, 2023 131 ,VcC&nahan andMo[ es,� LLP Certified Public Accountants Finding: None CITY OF PARIS, TEXAS Summary Schedule of Prior Audit Findings Year Ended September 30, 2022 132 CITY OF PARIS, TEXAS Schedule of Findings and Questioned Costs Year Ended September 30, 2022 Summary of Auditors' Results 1. The auditors' report expresses an unmodified opinion on the financial statements of the City of Paris, Texas. 2. Two 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 programs tested as major programs were: 21.027 Coronavirus State and Local Fiscal Recovery Funds 14.239 Home Investment Partnership Program 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. 133 CITY OF PARIS, TEXAS Schedule of Findings and Questioned Costs (Continued) Year Ended September 30, 2022 Financial Statement Findings Significant Deficiency Finding 2022-01— Internal Controls Related to Bank Reconciliations and Revenue 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, recording of revenue, and were not properly reviewed by management to ensure accuracy. Effect: As a result of this condition, cash reconciliations misrepresented cash balance resulting in misstatement of revenue. 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 2022-02 — 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. 134 Corrective Action Plan Year Ended September 30, 2022 FINDING/RECOMMENDATION 2022-01 Internal Controls Related to Bank Reconciliations and Revenue 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, 2023 FINDING/RECOMMENDATION 2022-02 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, 2023 135 McClanahan and Holmes, LLP CERTIFIED PUBLIC ACCOUNTANTS 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 Opinion on Each Major Federal Program 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, 2022. The City's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. 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, 2022. Basis for Opinion on Each Major Program 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). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City's compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City's federal programs. 136 228 SIXTH STREET S.E. PARIS, TEXAS 75460 GEORGE H. STRUVE, CPA 903-784-4316 DEBRA J. WILDER, CPA FAX 903-784-4310 TEFFANY A. KAVANAUGH, CPA ---------- APRIL J. HATFIELD, CPA 304 WEST CHESTNUT BRITTANY L. MARTIN, CPA DENISON, TEXAS 75020 ---------- 903-465-6070 STEVEN W. MOHUNDRO, CPA, FAX 903-465-6093 OF COUNSEL ---------- 1400 WEST RUSSELL BONHAM, TEXAS 75418 903-5835574 FAX 903-583-9453 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 Opinion on Each Major Federal Program 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, 2022. The City's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. 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, 2022. Basis for Opinion on Each Major Program 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). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City's compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to the City's federal programs. 136 Honorable Mayor and City Council City of Paris, Texas Auditors' Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. Reasonable assurance is a high level of assurance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgement made by a reasonable user of the report on compliance about the City's compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we: • Exercise professional judgement and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the City's compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the City's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing and opinion on the effectiveness of the City's internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on 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 Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. 137 Honorable Mayor and City Council City of Paris, Texas 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 October 16, 2023 138 McClanahan andMolines, LLP Certified Public Accountants CITY OF PARIS, TEXAS Notes on Accounting Policies for Federal and State Awards Year Ended September 30, 2022 Note l: 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, 2022. 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: Disaster Grants — Public Assistance (Presidentially Declared Disasters) After a presidentially declared disaster, the Texas Severe Winter Storm of 2021, Texas Department of Emergency Management (IDEM) reimbursed eligible costs associated with repair, replacement or restoration of disaster - damaged facilities. In the current year, TDEM approved $17,355 of eligible expenditures that were incurred in the prior fiscal year but included in the current year SEFA. 139 CITY OF PARIS, TEXAS Schedule of Expenditures of Federal Awards Year Ended September 30, 2022 Federal Federal Number Assistance Subrecipients Listing Federal Grantor/Pass-Through Grantor/Program Title Number $ 552,560 U.S. Department of Housing and Urban Development 1002888 Passed through Texas Department of Housing & Community Affairs: Home Investment Partnership Program 14.239 Home Investment Partnership Program 14.239 Total U.S. Department of Housing and Urban Development 11,475 U.S. Department of Justice 1123-0011 Direct Programs: Edward Byrne Justice Assistance Grant Program 16.738 Federal Seizures - Equitable Sharing 16.922 Total U.S. Department of Justice U.S. Department of Transportation Passed Through Texas Department of Transportation: Airport Improvement Program 20.106 COVID-19 - Airport Improvement Program - Airport Coronavirus Relief 20.106 COVID-19 - Airport Improvement Program - Airport Rescue Plan 20.106 Total U.S. Department of Transportation U.S. Department of Treasury Passed Through Texas Division of Emergency Management: COVID-19 - Coronavirus State and Local Recovery Funds 21.027 Total U.S. Department of Treasury National Endowmnet for the Humanities Passed Through Texas State Library and Archives Commission FY2022 ILL Lending Reimbursement Program Total National Endowment for the Humanities U.S. Department of Homeland Security Passed Through Texas Water Development Board: Flood Mitigation Assistance Passed Through Texas Division of Emergency Management: Disaster Grant - Public Assistance Passed Through Lamar County: Homeland Security Grant Program Total U.S. Department of Homeland Security Total Expenditures of Federal Awards M2201PARI 47,611 21CRPARIS 23,000 22CVPARIS 59,000 129,611 1505-0271 1,781,883 1,781,883 45.310 LS -250239 -OLS -21 97.029 2000012422 97.036 4586PATXP000OOOI 5,000 5,000 127,804 17,355 97.067 4314501 24,990 170,149 $ 2,936,692 $ The accompanying notes are an integral part of this schedule. See Notes on Accounting Policies for Federal and State Awards. 140 Expenditures Project Federal to Number Expenditures Subrecipients 1002887 $ 552,560 $ 1002888 285,647 838,207 DJ -4268001 11,475 1123-0011 367 11,842 M2201PARI 47,611 21CRPARIS 23,000 22CVPARIS 59,000 129,611 1505-0271 1,781,883 1,781,883 45.310 LS -250239 -OLS -21 97.029 2000012422 97.036 4586PATXP000OOOI 5,000 5,000 127,804 17,355 97.067 4314501 24,990 170,149 $ 2,936,692 $ The accompanying notes are an integral part of this schedule. See Notes on Accounting Policies for Federal and State Awards. 140 CITY OF PARIS, TEXAS Schedule of Expenditures of State of Texas Awards Year Ended September 30, 2022 State Grantor/Program Title Automobile Burglary and Theft Prevention Authority Northeast Texas Auto Theft Task Force Total Automobile Burglary and Theft Prevention Authority Texas Historical Commission Certified Local Government Subgrant Total Texas Historical Commission Texas Division of Emergencv Management Fire Deployment Grant Total Texas Division of Emergency Management Total Expenditures of State of Texas Awards Project Number 608-22-1390200 The accompanying notes are an integral part of this schedule. See Notes on Accounting Policies for Federal and State Awards. 141 Exnenditures $ 105,688 105,688 3,983 3,983 100,447 100,447 $ 210,118