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05 Audit for FY01-02 COMPREHENSIVE ANNUAL FINANCIAL REPORT - FOR - CITY OF PARIS, TEXAS - For the Fiscal Year Ended September 30, 2002 Prepared By Finance Department W.E. Anderson, Director City of Paris, Texas Comprehensive A~nual Financial Report September 30, 2002 TABLE OF CONTENTS Page Exhibit INTRODUCTORY SECTION Principal Officials ..................... I-1 Organization Chart ...................... I-2 Letter of Transmittal .................... I-3 GFOA Certificate of Achievement ............... 1-13 FINANCIAL SECTION Unqualified opinion on General-Purpose Financial Statements Submitted Together with Combining and Individual Fund and Account Group Financial Statements, Supplementary Schedule of Expenditures of Federal Awards and Supporting Schedules as Supplementary Data ....... 1 General-Purpose Financial Statements: Combined Balance Sheet - All Fund Types and Account Groups ..................... 3 1 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Funds .............. 7 2 combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (GAAp Basis) and Actual - General, Special Revenue and Debt Service Funds . . 9 3 Combined Statement of Revenues, Expenses and Changes in Retained Earnings/Fund Balance - Ail Proprietary Fund Types and Similar Trust Funds ....... 11 4 Combined Statement of Cash Flows - All Proprietary Fund Types and Similar Trust Funds ............. 13 5 Notes to Financial Statements ................ 15 COMBINING AND INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS AND SCHEDULES Pave Schedule GOVERNMENTAL FUND TYPES: General Fund: Balance Sheet ........................ 41 1 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual ...... 42 2 Combined Summary of Expenditures ............... 44 3 Schedule of Delinquent Taxes Receivable - All Funds ..... 46 4 Special Revenue Funds: Combining Balance Sheet ................... 48 5 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................ 49 6 City of Paris, Texas Comprehensive Annual Financial Report September 30, 2002 TABLE OF CONTENTS (Continued) Page Schedule COMBINING AND INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS AND SCHEDULES (Continued) Criminal Justice Division Grant Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAp Basis) and Actual .... 50 7 Community Development Block Grant Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAp Basis) and Actual .... 51 8 Schedules of Revenues and Expenditures - Community Development Block Grants ........... 52 8A-SD Special Revenue Fund: Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget (GAAP Basis) and Actual .... 56 9 Health Department Fund: Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual .... 57 10 Capital Projects Funds: Combining Balance Sheet ................... 59 11 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................ 60 12 Debt Service Funds: Combining Balance Sheet ................... 62 13 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................ 63 14 PROPRIETARy FUND TYPES: Enterprise Fund: Water and Sewer Fund: Combining Balance Sheet ................... 66 15 Combining Schedule of Revenues, Expenses and Changes in Retained Earnings .......... 68 16 Combined Schedule of Revenues and Expenses - Budget and Actual ................ 70 17 Combined Schedule of Changes in Retained Earnings and Contributions .... ............. 71 18 Schedule of Fixed Assets and Depreciation .......... 72 19 Schedule of Expenditures - Budget and Actual ......... 76 20 Internal Service Fund: Employees' Insurance Internal Service Fund: Balance Sheet ........................ 79 21 Statement of Revenues, Expenses and Changes in Retained Earnings ................ 80 22 City of Paris, Texas Comprehensive A~nual Fihancial Report September 30, 2002 TABLE OF CONTENTS (Continued) Page Schedule COMBINING AND INDIVIDUAL FUND ~ ACCOUi~T GROUP FINANCIAL STATEMENTS AND SCHEDULES (Continued) FIDUCIARY FUND TYPES: Trust and Agency Funds: Combining Balance Sheet .................. 82 23 Library Expendable Trust Funds: Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................ 84 24 Library Non-Expendable Trust Funds: combining Statement of Revenues, Expenses and Changes in Fund Balances .................. 85 25 Combining Statement of Cash Flows .............. 86 26 Economic Development Agency Fund: Statement of Changes in Assets and Liabilities ........ 87 27 ACCOUNT GROUPS: General Fixed Assets Account Group: Statement of General Fixed Assets ............. 89 28 Schedule of General Fixed Assets by Department and Division ................... 90 29 Schedule of Changes in General Fixed Assets ......... 91 30 General Long-Term Debt Account Group: Balance Sheet ........................ 96 31 Certificates of Obligation and Note Payable Schedule of Maturities ................... 97 32 Supplemental Data: Combined Schedule of Investments - All Funds ......... 99 33 Ten Year Summary of Revenues and Receipts by Source ..................... 101 34 Ten Year Summary of Expenditures by Function ......... 103 35 Schedule of State Financial Assistance ............ 105 36 STATISTICAL SECTION (Unaudited) Page Table General Governmental Expenditures by Function ........ 106 1 General Governmental Revenues and Other Sources ....... 108 2 General Fund Tax Revenue by Source .............. 110 3 Property Tax Levies and Collections ............. 111 4 Assessed and Estimated Actual Value of Taxable Property ..................... 113 5 Property Tax Rates - All Direct and Overlapping Governments ................. 115 6 City of Paris, Texas Comprehensive Annual Financial Report Septe~Der 30, 2002 TABLE OF CONTENTS (Continued) Page Table STATISTICAL SECTION (Continued) (Unaudited) Ratio of Net General Bonded Debt to Assessed Value and Bonded Debt Per Capita .......... 115 7 Computation of Legal Debt Margin ............... 116 8 Computation of Direct and Overlapping Debt Payable from Ad Valorem Taxes ................ 117 9 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures ...... 118 10 Revenue Bond Coverage - Water and Sewer Revenue Bonds ................... 119 11 Property Values and Building Permits ............. 120 12 Top Ten Taxpayers ...................... 121 13 Schedule of Insurance in Force ................ 122 14 City Sales Tax Received ................... 123 15 Demographic Statistics .................... 126 16 Statistical Data - Utility Connections ............ 127 17 Miscellaneous Statistical Data ................ 128 18 CONTINUING DISCLOSURE INFORMATION (Unaudited) Continuing Disclosure Information .............. 129 OVER3kLL COMPLI~LNCE, INTERNAL CONTROLS AND FEDEP~AL A/qD STATE AWAP~DS SECTION Federal: Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of General- Purpose Financial Statements Performed in Accordance with Government Auditing Standards ............. 138 Summary Schedule of Prior Audit Findings ........... 140 Schedule of Findings and Questioned Costs .......... 141 Corrective Action Plan .................... 144 Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 ............. 145 Schedule of Expenditures of Federal Awards .......... 147 Notes on Accounting Policies for Federal Awards ....... 149 State: Report on Compliance with Requirements Applicable to each Major Program and on Internal Control over Compliance in Accordance with State of Texas Single Audit Circular. 150 Summary Schedule of Prior Audit Findings ........... 152 Schedule of Findings and Questioned Costs .......... 153 Corrective Action Plan .................... 154 Schedule of Expenditures of State Awards ........... 155 Notes on Accounting Policies for State Awards ........ 156 INTRODUCTORY SECTION City of Paris, Texas Principal Officials City Council Michael J. Pfiester - Mayor Richard Manning - Mayor Pro-Tem John F. Bell Benny Plata Joe McCarthy Francine Neeley Willie Weekly, Sr. Administration Michael E. Malone - city Manager Larry Schenk - City Attorney W. E. Anderson - Finance Director Stacy S. Napier - City Engineer Terry Townsend - Public Works Director Herb Campbell - Utilities Director Karl Louis - Police Chief Ronnie Grooms - Fire Chief Mattie Cunningham - City Clerk Betty B. Landon - Library Director Tom Hunt - Municipal Court Judge City of Paris Organizational Chart CITY OF PARIS ORGANIZATIONAL CHART CITIZENS OF PARIS 1 I I CITY MANAGER I MUNICIPAL COURT ~ I [EMS] [AIRPORT] I I I PUBLIC WORKS I I I I I-2 December 31, 2002 _ Honorable Mayor Michael J. Pfiester and Members of the City Council City of Paris, Texas Dear Mayor and Council Members: I am pleased to submit the Comprehensive Annual Financial Report of the City of -- Paris, Texas, for the fiscal year ended September 30, 2002. The City of Paris is a financial reporting entity as defined by the Government Accounting Standards Board codification section 2100. As such, it has a separately elected governing body chosen by its citizens in a general, popular election, is a legally separate primary government, and is fiscally independent of other state and local governments. The financial reporting entity includes all the funds and -- account groups of the primary government. 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. In addition, this report provides assurance that the City presents fairly its financial position as verified by independent auditors. THE COMPREHENSIVE ANNUAL FINA/~CiAL REPORT -- The Comprehensive Annual Financial Report of the City of Paris, Texas, for the fiscal year ended September 30, 2002, which follows, was prepared by the Finance Department. The general-purpose financial statements have been audited by McClanahan and Holmes, PLLC, CPAs, whose report is included herein. This audit satisfies Article III, Section 35 of the City Charter which requires that an annual audit of all accounts of the City be made by an independent certified public accountant. Additionally, the compliance features of the City's federal and state grant programs for the year ended September 30, 2002, were audited by the firm of McClanahan and Holmes, PLLC, CPAs. Its compliance reports are available under the Overall Compliance, Internal Controls, and Federal Awards Section of this report. The City Finance Department is responsible for both the accuracy of the presented data and the completeness and fairness of the presentations, including all disclo- sures. 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-3 P.O. BOX 9037 ', PARIS, TEXAS 75461-9037 · (903) 785-7511 · FAX (903) 785-8519 The financial statements have been prepared in accordance with generally accepted accounting principles as prescribed by the Governmental Accounting Standards Board (GASB) . This Comprehensive Annual Financial Report consists of five parts: 1. The Introductory Section includes an organizational chart and this transmittal letter, which highlights significant aspects of the financial operations during the year and particular issues faced by the City. 2. The Financial Section includes the independent auditors' report, combined financial statements and related notes, federal and state financial assistance, and supplemental financial data. 3. The Statistical Section includes several tables of unaudited data depicting the financial history of the City, as well as demographic information of other governmental units overlapping the City and other miscellaneous statistics. 4. The Continuing Disclosure Information Section contains nineteen tables of financial information required by the United States Securities and Exchange Commission Rule 15c2-12. These tables provide investors with updated information on all municipal bond issues sold after July 3, 1995. 5. The Overall Compliance, Internal Controls, and Federal Awards Section contains a Schedule of Expenditures of Federal Awards, as well as auditors' reports and other information. 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 Lamer 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 8 banks. The City's 2000 census is 25,898 an increase of 4.85% from the 1990 census of 24,699. 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 2000 census is 48,499, an increase of 7.77% over the 1990 census of 45,000. The City is a regional medical center serving patients in Northeast Texas and Southeast Oklahoma. Founded in 1911, Christus St. Joseph is a 405 bed medical center. Both the north and south campuses operate fitness centers that offer a wide range of exercise programs and equipment. It compliments the City's 155 doctors and 21 dentists that provide a wide range of general and special medical services. 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. Distribution voltage in the City is 12,500 volts. The supply of electric power is adequate to meet the requirements of any commercial or industrial demand. TXU Gas provides natural gas for residential, commercial, and industrial users. There are 3 transmission lines serving the City with a line pressure of 300 pounds per square inch. Telephone service is provided by Southwestern Bell Telephone Company. Educational facilities of the County are provided by 5 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 in the City. Total enrollment of these entities is 12,794. 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 Flying Tigers Air Museum, the A.M. Aikin Archives, Red River Valley Exposition, and an antique automobile rally. Also, the City has 3 18-hole golf courses, 1 private and 1 public swimming pool, 26 tennis courts, and 24 public parks. Government Organization The city was incorporated in 1836 with the current charter adopted in November of 1948. 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 serve 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 Current taxable values for fiscal year 2002-2003 reflect a 3.16% increase over the 2001-2002 values. Building permits for new residential and commercial construction totaled $25,087,943 for fiscal year 2001-2002. This activity should be reflected in next year's taxable values. Sales taxes for 2001-2002 increased from the prior year by .83%. Current rebates are 13.8% above the 2000-2001 rebates through January 2003 due to last year's state audit adjustment. Without this adjustment, rebates would be up 6.8% over the previous year. Hotel occupancy taxes were down 11.81% compared to 2000-2001 taxes. This decline of activity is expected to parallel general economic conditions. Hotel taxes through January 2003 were down 16.2% over the previous year. Franchise fees are expected to remain at their current levels during 2002-2003. This area is a major source of revenue to the City and is aggressively guarded by city officials. I-5 The Paris economy has slowed, but it is believed that the down turn has bottomed out. The Paris Economic Development Corporation is working hand in hand with the Lamar County Chamber of Commerce to recruit new business to the area as well as supporting already existing businesses. General Fund receipts equaled 103.83% of budget. As required by charter~ expenses did not exceed budget appropriations. General Fund expenditures were only 96.25% of budget. For the 2002-2003 fiscal year~ the City Council adopted a tax rate of 61 cents per $100 of value. This rate allows maintaining all services at their current levels or above and funds the interest and sinking fund for the certificates of obligation issued in 1993, 2000, and 2002. At the end of September 2002~ Paris' unemployment rate was 6.7% compared to 5.9% at the same time last year. Major Initiatives The City of Paris continues to work in environmentally related areas. Since 1984 over $37 million has been spent on water and wastewater improvements. Mother $7~ million will be spent in the next 2 years according to the City's long range plan. The City also continues to expand its effort in law enforcement related areas. Specifically, the City has targeted prevention efforts with local youth. Programs in this effort include the Police Athletic League, juvenile gang officers, and the DARE program. Other continuing law enforcement programs include a regional drug task force, auto theft task force, participation in the federally funded "Cops Fast" program, violent crimes against women program, and other similar programs. Other areas of significant efforts made this past year include plans for a new police and courts building, a new street overlay program, and completing the renovation of the old Santa Fe Depot. Recreationally, the City funded additional improvements at Depot Park, Oak Park Park, Bywaters Park, MLK Park, the Aquatic Center, and PJC Tennis Courts. From a development standpoint the City has taken several steps. Reentry into the State of Texas Main Street Program should channel additional funds for revitaliza- tion of existing structures and businesses. In December of 1998, the City Council formally annexed over 4,638 acres of property in order to control development of this area and to control entry ways to the City. 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 new civic center to attract people and business to Paris. City officials are also closely working with Keep Paris Beautiful, Inc. to promote and improve the City. Financial Inforr~ation The financial statements of the City of Paris, Texas, have been prepared in conformity with generally accepted accounting principles as applied to govern- mental units. The Governmental Accounting Standards Board is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate aCcou~tin9 entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures, or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are grouped, in the finan- cial statements in this report, into 7 generic fund types and 4 broad fund categories as follows: Governmental Funds General Fund - the General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Capital Projects Funds - Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facili- ties, other than those financed by proprietary funds. Debt Service Funds - Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest, and related costs. Proprietary Fund Types and Fiduciary Funds Enterprise Funds - the Enterprise Fund is used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. Internal Service Funds - Internal Service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis. Fiduciary Funds - Trust Funds are used to account for assets held by the City in a trustee capacity and are accounted for in essentially the same manner as propri- etary funds since capital maintenance is critical. Fixed Assets and Long-Term Debt Account Groups Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group, rather than in governmen- tal funds. Public domain general fixed assets consisting of certain improvements including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems are not capitalized as general fixed assets. No depreciation is provided on general fixed assets. I-7 Ail fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated fixed assets are valued at their estimated fair value on the date donated~ Depreciation of all exhaustible fixed assets used by proprietary funds is charged as an expense against their operations. Accumulated depreciation is reported on proprietary fund balance sheets. Depreciation has been provided over the estimated useful lives using the straight-line method. General long-term debt is accounted for in the General Long-Term Debt Account Group. All governmental funds are accounted for using the modified accrual basis of accounting. Their revenues are recognized when they become measurable and avail- able as net current assets~ Expenditures are generally recognized when the related fund liability is incurred. Exceptions to this general rule include principal and interest on general long-term debt which is recognized when due. Proprietary and fiduciary funds are accounted for on the accrual basis of account- ing. Their revenues are recognized when they are earned and their expenses are recognized when they are incurred. Cash Management/Investments The City has a written investment policy that conforms to staUe 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. Risk Management 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. Budgetary Control Between 30 days and 90 days prior to the beginning of each fiscal year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget, which represents the financial plan for the ensuing fiscal year, includes proposed expenditures and the means of financing them. Public hearings are conducted at which all interested persons' comments concerning the budget for the next fiscal year are heard. The budget is legally enacted by the City Council through passage of an ordinance not later than the 27th day of the last month prior to the beginning of the fiscal year. Generally, appropriations are legally adopted at the department level. Budgetary controls are maintained at the major category of expenditure level within each operating division. Ail anticipated expenditures are budgeted for control purposes. Capital project funds are appropriated on a project by project basis. Expenditures and/or expenses are directly monitored by the City Council. Internal Controls Internal accounting controls are designed to provide reasonable, but not absolute, assurance of the safeguarding of assets against loss from unauthorized use or disposition and reliable financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits likely to be derived. All internal control evaluations occur within this framework. The Finance Depart- ment'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 9-30w02: Moody's -- Tax Revenue Final Investors Issue Supported Supported Maturity Rating. -- 1993 Certificates of Obligation $ 3,685,000 $ 12-15-13 A 1994 Certificates of Obligation 4,210,000 06-15-15 A 1997 W & S Rev. Bonds 4,260,000 06-15-16 Aaa 1998 Tax & Rev. Refunding Bonds 5,810,000 12-15-11 Aaa 1998 W & S Rev. Refunding Bonds 6,905,000 12-15-11 Aaa _ 2000 Tax & Rev. C. O. 5,740,000 12-15-09 Aaa 2000 W & S Rev. Bonds 9,290,000 6-15-20 Aaa 2001 Tax & Rev. Refunding Bonds 5,130,000 6-15-12 A2 2002 Tax & Rev. Bonds 6,060,000 6-15-22 Aaa Total $15,485,000 $35,605,000 __ The City has various lease/purchase agreements outstanding for the purpose of acquiring certain equipment items in the amount of $798,041. The last of these leases ends in the year 2007. -- A $120,600 note payable for the construction of aircraft hangars and associated appurtenances at the City's Cox Field was obtained February 27, 1991. The note bears an interest rate of 5% with principal and interest payments made in annual -- installments. Interest and sinking fund balances on the existing City bond debt equal $2,551,348 _ Therefore, the net bond debt per capita is $1,860. I-9 Sun~ary of Revenues, Expenses, Expenditures, and Other Sources and Uses of Funds The table which follows summarizes revenues and expenses for all City funds. The following items changed in significant dollar amounts: Revenues/Financing Sources: General Property Taxes were up due to growth in the value of taxable property and an increase in the collection percentage of current taxes. EMS and Health Fees were up due to an increase in ambulance calls and an aggressive collection policy with insurance companies and Medicare. Interqovernmental Receipts were up due to increased grant activity. Interest Earned on Investments was down due to much lower interest rates. Miscellaneous Revenues were down due to a reduction in capital leases and contri bution income. Sewer Charges were up due to increased water sales and annual adjustment to the winter average sewer charge cap. Expenses/Expenditures/Uses: General Government was up with fluctuation of various accounts. The largest change being expenditures on the depot renovation. Public Safety was up due to increased grant expenditures and final expenditures on the fire substations. Public Works were down due to decreased personnel costs, equipment purchases, and electrical expenses. Emergency Medical Service was up primarily due to increased personnel costs. Capital Outlay was down due to budget restrictions imposed by City Council. Water and Sewer Operating Expenses were up due to increased sales volume. Non-Operating Expense was down due to reduced interest and amortization expenses. Special Revenue Expense was down due to decreased community block grant expenses. Capital Projects were down as bond projects were completed. Employees' Insurance was up due to increased medical claims. Increase % Increase (Decrease) (Decrease) % of From From REVENUES/FINANCING SOURCES: Total 2001-2002 2000-2001 00-01 00-01 General Property Taxes 16.96 $ 6,102,854 $ 5,852,510 $ 250,344 4.28 Penalties and Interest on Property Tax .37 132,942 128,993 3,949 3.06 Municipal Sales Tax 12.71 4,574,994 4,537,136 37,858 .83 Hotel Occupancy Tax .87 314,170 356,259 42,089) 11.81) Franchise and Gross Receipts Tax 7.29 2,623,697 2,559,474 64,223 2.51 Licenses and Permits .32 114,720 84,660 30,060 35.51 Fines and Fees 1.51 545,236 535,496 9,740 1.82 Emergency Medical Service and Health 5.41 1,945,602 1,655,980 289,622 17.49 Leases and Rentals .20 70,322 72,844 2,522) 3.46) Sanitation 3.84 1,382,796 1,380,109 2,687 .20 Intergovernmental Receipts 11.30 4,066,932 3,019,803 1,047,129 34.68 Interest Earned on Investments 1.78 639,383 1,596,617 ( 957,234) 59.95) Miscellaneous Revenues 1.95 701,904 1,076,393 ( 374,489) 34.79) Utility Fund Contributions 3.06 1,100,000 1,095,536 4,465 .41 1-10 Increase % Increase Decrease) (Decrease) % of From From REVENUES/FINDJqCING SOURCES: Total 2001-2002 2000-2001 00-01 00-01 (Continued) Water Sales 16.57 5,957,489 5,911,751 45,738 .77 Water Taps ~06 21,750 19,834 1,916 9.66 Sewer Charges 11.23 4,039,196 3,922,189 117,007 2~98 Sewer Taps .04 15,400 13,990 1,410 10.08 Sanitation Billing Fees .20 70,816 75,286 4,470) ( 5.94) Miscellaneous W & S .95 343,144 382,817 39,673) ( 10.38) Quasi-External Inter- Fund Transactions 3.38 1,216,674 1,094,176 122,498 11.20 Total Revenues/ Financing Sources 100.00 $35,980,021 $35,371,852 $ 608,169 1.72 Increase % Increase (Decrease) (Decrease) EXPENSES/ % of From From EXPENDITURES/USES: Total 2001-2002 2000-2001 00-01 00-01 General Fund General Government 4.59 $ 1,667,889 $ 1,570,936 $ 96,953 6.17 Finance 1.21 440,285 435,799 4,486 1.03 Public Safety 21.83 7,939,715 7,612,222 327,493 4.30 Public Works 14.66 5,331,870 6,305,081 ( 973,211) 15.44) Emergency Medical Service 4.68 1,700,675 1,511,370 189,305 12.53 Library Service 1.61 583,395 586,704 ( 3,309) .56) Cox Field .36 130,929 171,216 ( 40,287) 23.53) Miscellaneous .05 18,460 19,501 ( 1,041) 5.34) Capital Outlay 4.48 1,629,381 3,016,272 (1,386,891) 45.98) Principal Retirement 58 211,570 162,987 48,583 29.81 Interest and Fiscal Charges 13 47,090 37,712 9,378 24.87 Transfers 00 65,607 ( 65,607) 100.00) Water and Sewer Operating Expenses 23.08 8,393,911 8,488,400 ( 94,489) 1.11) Transfers 3.02 1,100,000 1,095,535 4,465 .41 Non-Operating Expense 4.20 1,527,647 2,211,446 ( 683,799) 30.92 Special Revenue (Includes Health) 4.75 1,727,305 1,947,252 ( 219,947) 11.30 Capital Projects 1.99 723,937 1,878,728 (1,154,791) 61.47 Debt Service 2.53 921,561 930,983 ( 9,422) 1.01 Library Expendable .00 1,141 34,122 ( 32,981) 96.66 Library Nonexpendable .00 119 ( 119) 100.00 Employees' Insurance 6.25 2,273,150 1,642,437 630,713 38.40 Total Expenses/ Expenditures/Uses 100.00 $36,369,911 $39,724,429 $(3,354,518) 8.44) Independent Audit 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 certi- fied public accountant selected by the City Council. The requirement has been complied with, and the Independent Auditors' Report has been included in this report. 1-11 Independent Audit (Continued) In addition, an audit was performed in accordance with the standards applicable to financial audits contained in Government Auditin~ Standards, issued by the Comptroller General of the United States, and the provisions of Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non Profit Organizations. The Report and Auditors' opinion may be found under the Overall Compliance, Internal Control, and Federal Awards Section of this report. The City was found to have administered each of its major federal awards programs in compliance in all material respects. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Paris for its comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 2001. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. The CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA. Acknowled~ents 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, PLLC, 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 - Certificate of Achieuement for Excellence - in Financial - Reportin~ Presented to City' of Paris, Texas For its Comprehensive Annual Financial Report - for the Fiscal Year Ended September 30, 2001 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement ~ systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting -- and financial reporting. -- President -- ~ Executive Dilector 1-13 FINANCIAL SECTION MCCLANAHAN AND HOLMES, PLLC STEVENW. MOHUNDRO, CPA 903-784-4316 FAX903-784-4310 GEORGE H. STRUVe, CPA ANDREW B. REICH, CPA 304 WEST CHESTNUT DENISON, TEXAS 75020 903-465-6070 [400 WESTRUSSELL BONHAM, TEXAS 75418 903-583-5574 FAX 903-583-9453 Unqualified opinion on General-Purpose Financial Statements Submitted Together with Combining and Individual Fund and Account Group Financial Statements, Supplementary Schedule of Expenditures of Federal Awards and Supporting Schedules as Supplementary Data Independent Auditors' Report Honorable Mayor and City Council City of Paris, Texas We have audited the accompanying general-purpose financial statements of the City of Paris, Texas, as of and for the year ended September 30, 2002, as listed in the table of contents. These general-purpose financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these general- purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general-purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general-purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general-purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general-purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Paris, Texas, as of September 30, 2002, and the results of its operations and the cash flows of its proprietary fund types and nonexpendable trust funds for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated November 15, 2002, on our consideration of the city of Paris, Texas', internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. 1 AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Honorable Mayor and City Council City of Paris, Texas Page 2 Our audit was performed for the purpose of forming an opinion on the general-purpose financial statements taken as a whole. The accompanying schedule of expenditures of federal awards required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Orqanizations and the combining and individual fund and account group financial statements and schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general-purpose financial statements of the City of Paris, Texas. Such information, except fo~ that portion marked "unaudited" on which we express no opinion, has been subjected to the auditing procedures applied in the audit of the general-purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general-purpose financial statements taken as a whole. ~ertlfied ~u~li~ ~¢~ounta~ts Paris, Texas November 15, 2002 2 MCCLANAHAN AND HOLMES, PLLC GENERAL-PURPOSE FINANCIAL STATEMENTS City of Paris, Texas Combined Balance Sheet - Ail Fund Types and Account Groups September 30, 2002 Governmental Fund Types Special Capital Debt General Revenue Projects Service ASSETS AND OTHER DEBITS Assets Cash and Cash Equivalents $ 1,048,419 $ 300,290 $ 9,358,101 $ 621,813 Cash and Cash Equivalents - Non- expendable Trust Certificates of Deposit and Other Investments 432,575 670,330 Receivables (Net of Allowances for Uncollectibles): Taxes 599,088 89,654 Fines 66.099 Assessments 26,473 Emergency Medical Services 474,302 Sales Tax 812,500 Notes 70,224 Accounts 132,513 Accrued Interest Receivable 2,099 3,245 Real Estate Deposit 25,000 Due from Other Funds 3,559,203 129,203 Due from Other Governments 155,263 500,554 Inventories, at Cost 171,248 Prepaid Items 242 Restricted Assets: Cash and Cash Equivalents Certificates of Deposit and Other Investments Accrued Interest Receivable Due From General Fund Water Rights, Net of Accumulated Amortization - Property, Plant and Equipment, Net of Accumulated Depreciation Unamortized Bond Expense Other Debits Amount Available in Debt Service Fund Amount to be Provided for Retirement of General Long-Term Debt Total Assets and Other Debits $ 7,480,024 $1,000,271 $10,056,676 $ 711,467 This financial presentation on facing pages 3 and 4 should be read in connection with facing pages 5 and 6. The accompanying notes to financial statements are an integral part of this statement. 3 Exhibit 1 Fiduciary Totals Proprietary Fund Types Fund T~pe Account Groups (Memorandum Only) General Internal Trust General Long-Term September 30, September 30, Enterprise Se~ice and Agency Fixed Assets Debt 2002 2001 __ $ 1,100 $ $ 1,348,465 $ $ $ 12,678,188 $ 4,060,030 40,703 40,703 12,847 576 652,120 1,755,601 4,406,571 688,742 605,695 66,099 91,039 26,473 26,473 474,302 435,751 162,500 975,000 900,000 3,499,422 3,569,646 3,721,713 1,559,188 399,807 2,091,508 1,988,681 12,925 18,269 36,958 25,000 36,456 3,724,862 2,903,375 655,817 1,637,542 208,816 380,064 481,256 6,825 7,067 2,346 9,471,723 9,471,723 6,553,255 5,603,444 5,603,444 10,587,365 28,288 28,288 51,941 60,882 60,882 888,115 888,115 901,778 51,007,446 12,631 40,911,999 91,932,076 89,955,078 1,197,508 1,197,508 1,320,878 624,713 624,713 616,704 15,952,138 15,952,138 10,226,611 70,062,966 $ 400,383 $ 5,735,591 $ 40,911,999 $ 16,576,851 $ 152,936,228 $ 141,523,887 City of Paris, Texas Combined Balance Sheet - Ail Fund Types and Account Groups September 30, 2002 Governmental Fund Types Special Capital Debt General Revenue Projects Service LI~3BILITIES, EQUITY AND OTHER CREDITS Liabilities Accounts Payable $ 85,635 $ 64,172 $ 71,557 $ Due to Other Entities Claims Payable Payable to U.S.A. for Water Rights Current Portion Interest Payable Capital Leases Payable - Current Payable from Restricted Assets: Accounts Payable Revenue Bonds - Current Portion Interest Payable - Revenue Bonds Customer Deposits - Due to Other Funds 226,541 234,972 16,693 Deferred Revenues 910,654 86,754 Accrued Compensated Absences Revenue Bonds Payable - Long- Term Portion Certificates of Obligation Payable Payable to U.S.A. for Water Rights Long-Term Portion General Obligation Notes Payable Capital Leases Payable Bonds and Notes Payable Total Liabilities 1,222,830 299,144 88,250 86,754 Equity and Other Credits Contributed Capital Investment in General Fixed Assets Fund Balances: Resez-ved for Construction 9,968,426 Reserved for Debt Service 624,713 Reserved for Notes Receivable 70,224 Reserved for Inventories 171,248 Reserved for Confiscated Funds Unreserved 6,085,946 630,903 Retained Earnings: Reserved for Revenue Bonds Unreserved (Deficit) Total Equity and Other Credits 6,257,194 701,127 9,968,426 624,713 Total Liabilities, Equity and Other Credits $ 7,480,024 $ 1,000,271 $10,056,676 $ 711,467 Thi~ financial presentation on facing pages 5 and 6 should be read in connection with facing pages 3 and 4. The accompanying notes to financial statements are an integral part of this statement. 5 Exhibit 1 -- (Continued) Fiduciary Proprietary Fund Ty~es Fund Type Account Groups Totals General (Memorandum Only) Internal Trust General Long-Term September 30, September 30, Enterprise Service and Agency Fixed Assets Debt 2002 2001 $ 225,627 $ $ $ $ $ 446,991 $ 238,968 1,693,264 1,693,264 1,623,416 301,623 301,623 259,149 27,134 27,134 26,309 35,276 21,161 56,437 33,020 14,020 14,020 18,295 110,987 110,987 65,186 2,060,000 2,060,000 1,025,000 525,603 525,603 499,283 416,309 416,309 392,676 2,123,251 1,161,626 22,661 3,785,744 2,903,375 997,408 2,008,007 96,067 260,376 356,443 343,875 33,545,000 33,545,000 35,605,000 15,485,000 15,485,000 9,815,000 696,236 696,236 723,370 68,784 68,784 74,725 21,329 762,691 784,020 743,804 3,778,681 3,778,681 3,964,515 39,896,839 1,463,249 5,515,767 16,576,851 65,I49,684 60,362,973 19,294,256 1,716,701 21,010,957 21,010,957 40,911,999 40,911,999 39,939,052 9,968,426 4,540,614 624,713 616,704 70,224 88,350 171,248 190,273 29,861 219,824 6,936,673 5,429,016 1,926,635 1,926,635 2,913,004 8,945,236 (2,779,567) 6,165,669 6,403,083 30,166,127 (1,062,866) 219,824 40,911,999 87,786,544 81,160,914 $70,062,966 $ 400,383 $5,735,591 $ 40,911,999 $16,576,851 $ 152,936,228 $ 141,523,887 City of Paris, Texas Confined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Funds For the Fiscal Year Ended September 30, 2002 Governmental Fund Types Special Capital General Revenue Projects Revenues: Ad Valorem Taxes $ 5,311,776 $ $ Municipal Sales Tax 4,574,994 Hotel Occupancy Tax 314,170 Franchise and Gross Receipts Tax 2,623,697 Licenses and Permits 114,720 Fines and Fees 545,236 Use of Money and Property 199,296 2,812 90,200 General Government 21,332 Public Safety 1,800 Streets and Highways Sanitation 1,382,796 Health 1,945,602 Intergovernmental Revenue 2,197,149 1,869,783 Miscellaneous Revenues 377,709 Total Revenues 19,610,277 1,872,595 90,200 Expenditures: Current General Government 1,667,889 7,999 48,157 Finance 440,285 Public Safety 7,939,715 566,468 44,746 Public Works 4,884,609 4,688 409,845 Health 1,700,675 747,528 Library Service 583,395 7,344 Cox Field 130,929 213,835 Community Development 447,261 400,622 Miscellaneous 18,460 Capital Outlay 1,629,381 Debt Service Principal Retirement 211,570 Interest and Fiscal Charges 47,090 10 Total Ek~penditures 19,701,259 1,727,305 . 723,937 Excess of Revenues Over (Under) Expenditures ( 90,982) 145,290 ( 633,737) Other Financing Sources and (Uses): Operating Transfer In 1,100,000 Operating Transfer Out Capital Lease Proceeds 265,807 Tax and Revenue Bond Proceeds 6,061,549 Total Other Financing Sources and (Uses) 1,365,807 6,061,549 Excess of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) 1,274,825 145,290 5,427,812 Increase (Decrease) in Inventory ( 19,026) Fund Balances, September 30, 2001 5,001,395 555,837 4,540,614 Adjustment Due to Change in Accounting Principle Fund Balances, September 30, 2002 $ 6,257,194 $ 701,127 $ 9,968,426 The accompanying notes to financial statements are an integral part of this statement. 7 Exhibit 2 Fiduciary Totals Fund Type (Memorandum Only) Debt Expendable September 30, September 30, Service Trust 2002 2001 924,020 $ $ 6,235,796 $ 5,981,503 4,574,994 4,537,136 314,170 356,259 2,623,697 2,559,474 114,720 84,660 545,236 535,496 5,550 4,296 302,154 637,410 21,332 15,901 1,800 1,800 31,582 1,382,796 1,380,109 1,945,602 1,655,980 4,066,932 3,019,803 7,656 385,365 318,599 929,570 11,952 22,514,594 21,115,712 1,724,045 1,570,936 440,285 435,799 8,550,929 8,181,185 5,299,142 8,105,174 2,448,203 2,202,877 1,141 591,880 620,826 344,764 232,310 847,883 704,323 18,460 19,501 1,629,381 3,016,272 390,000 601,570 452,987 531,561 578,661 678,695 921,561 1,141 23,075,203 26,220,885 8,009 10,811 ( 560,609) 5,105,173) 1,100,000 1,161,142 65,607) 265,807 642,904 6,061,549 7,427,356 1,738,439 8,009 10,811 6,866,747 3,366,734) 19,026) 23,394) 616,704 132,752 10,847,302 13,487,430 750,000 624,713 $ 143,563 $ 17,695,023 $ 10,847,302 8 City of Paris, Texas Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget (GAAP Basis) and Actual - General, Special Revenue and Debt Service Funds For the Fiscal Year Ended September 30, 2002 General Fund Variance Favorable Budget Actual (Unfavorable) Revenues: Ad Valorem Taxes $ 5,207,866 $ 5,311,776 $ 103,910 Municipal Sales Tax 5,000,000 4,574,994 ( 425,006) Hotel Occupancy Tax 350,000 314,170 ( 35,830) Franchise and Gross Receipts Tax 2,604,538 2,623,697 19,159 Licenses and Permits 62,350 114,720 52,370 Fines and Fees 498,550 545,236 46,686 Use of Money and Property 477,450 199,296 ( 278,154) General Government 15,609 21,332 5~723 Public Safety 1,800 1,800 Streets and Highways 65,000 ( 65,000) Sanitation 1,412,800 1,382,796 ( 30,004) Health 1,599,206 1,945,602 346,396 Intergovernmental Revenue 1,341,135 2,197,149 856,014 Miscellaneous Revenues 251,315 377,709 126,394 Total Revenues 18,887,619 19,610,277 722,658 Expenditures: Current General Government 1,580,706 1,667,889 ( 87,183) Finance 481,021 440,285 40,736 Public Safety 8,136,757 7,939,715 197,042 Public Works 5,290,520 4,884,609 405,911 Health 1,761,264 1,700,675 60,589 Library Service 618,654 583,395 35,259 Cox Field 163,939 130,929 33,010 Community Development 574,543 447,261 127,282 Miscellaneous 20,670 18,460 2,210 Capital Outlay 1,583,117 1,629,381 46,264) Debt Se~ice Principal Retirements 211,600 211,570 30 Interest and Fiscal Charges 47,100 47,090 10 Total Expenditures 20,469,891 19,701,259 768,632 Excess of Revenues Over (Under) Expenditures ( 1,582,272) ( 90,982) 1,491,290 Other Financing Sources and (Uses): Capital Lease Proceeds 265,807 265,807 Operating Transfer In 1,095,535 1,100,000 4,465 Total Other Financing Sources and (Uses) 1~095,535 1,365,807 270,272 Excess of Revenues and Other Sources Over (Under) Expenditures and Other (Uses) ( 486,737) 1,274,825 1,761,562 Increase (Decrease) in Reserve for Inventory - ( 19,026) 19,026) Fund Balances, September 30, 2001 5,001,395 5,001,395 Fund Balances, September 30, 2002 $ 4,514,658 $ 6,257,194 $ 1,742,536 The accompanying notes to financial statements are an integral part of this statement. 9 Exhibit 3 Special Revenue Funds Debt Service Funds Variance Variance Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) $ $ $ 921,260 $ 924,020 $ 2,760 2,812 2,812 5,550 5,550 1,702,308 1,869,783 167,475 1,702,308 1,872,595 170,287 921,260 929,570 8,310 29,390 7,999 21,391 521,961 566,468 ( 44,507) 5,000 4,688 312 735,167 747,528 ( 12,361) 540,000 400,622 139,378 -- 390,000 390,000 531,260 531,561 ( 301) 1,831,518 1,727,305 104,213 921,260 921,561 ( 301) ( 129,210) 145,290 274,500 8,009 8,009 129,210) 145,290 274,500 8,009 8,009 555,837 555,837 616,704 616,704 - 426,627 $ 701,12~77 $ 274,500 $ 616,704 $ 624,713 $ 8,00~9 City of Paris, Texas Combined Statement of Revenues, Expenses and Changes in Retained Earnings/Fund Balance - All Proprietary Fund Types and Similar Trust Funds For the Fiscal Year Ended September 30, 2002 Fiduciary Proprietary Fund T]rpes Fund Type Internal Libra~ Water and Service Nonexpendable Sewer Fund Fund Trust Funds Operating Revenues: Water Sales and Taps $ 5,979,239 $ $ Sewer Charges and Taps 3,909,737 Sanitation Billing Fees 70,816 Service Charges 73,967 Industrial Surcharges 144,859 Miscellaneous 50,015 Quasi-External Operating Receipts 1,216,674 Memorial Donations 27,600 Total Operating Revenues 10,228,633 1,216,674 27,600 Operating Expenses: Personnel 2,877,531 Supplies 696 862 Contractual 1,485 848 2,273,150 Maintenance 899 021 Sundry Charges 32 393 Other 183 972 Depreciation 2,218 284 Total Operating Expenses 8,393 911 2,273,150 Operating Income (Loss) 1,834,722 (1,056,476) 27,600 Non-Operating Income (Expense): Investment Earnings 406,074 382 1,145 Interest Expense - Revenue Bonds 1,388,521) Amortization of Bond Issue Expense 123,368) Bank Charges 2,095) Amortization of Water Rights 13,663) Contribution Income 219,162 Net Non-Operating Income (Expense) 902,411) 382 1,145 Income (Loss) Before Operating Transfers 932,311 (1,056,094) 28,745 Transfers from (to) Other Funds General Fund 1,100,000) Net Income (Loss) 167,689) (1,056,094) 28,745 Retained Earnings (Deficit)/Fund Balance, September 30, 2001 11,039,560 (1,723,473) 47,516 Retained Earnings (Deficit)/Fund Balance, Septer~ber 30, 2002 $ 10,871,871 $(2,779,567) $ 76,261 The accompanying notes to financial statements are an integral part of this statement. 11 Exhibit 4 Totals (Memorandum Only) September 30, September 30, 2002 2001 $ 5,979,239 $ 5,931,585 3,909,737 3,936,179 70,816 75,286 73,967 76,492 144,859 239,211 50,015 67,114 1,216,674 1,094,176 27,600 11,472,907 11,420,043 2,877,531 2,846,857 696,862 667,548 3,758,998 3,063,813 899,021 1,266,249 32,393 26,032 183,972 35,725 2,218,284 2,224,732 10,667,061 10,130,956 805,846 1,289,087 407,551 1,032,051 1,388,521) 2,036,657) 123,368) 157,947) 2,095) 3,179) 13,663) 13,663) 219,162 900,884) 1,179,395} 95,038) 109,692 1,100,000) 1,095,535) 1,195,038) 985,843) 9,363,603 10,349,446 $ 8,168,565 $ 9,363,603 City of Paris, Texas Exhibit 5 Combined Statement of Cash Flows - Ail Proprietary Fund Types and Similar Trust Funds For the Fiscal Year Ended September 30, 2002 Totals Fiduciary (Memorandum Proprietary Fund Types Fund Type Only) Internal Library Water and Service Nonexpendable September 30, Sewer Fund Fund Trust Fund 2002 Cash Flows from Operating Activities: Operating Income (Loss) $ 1,834,722 $(1,056,476) $ 27,600 $ 805,846 Adjustments to Reconcile Operating Income to Net Cash Provided by (Used In) Operating Activities: Depreciation 2,218,284 2,218,284 Decrease (Increase) in Accounts Receivable 205,601) 104,729 ( 100,872) Increase in Claims Liability 42,474 42,474 Decrease in Inventory 82,167 82,167 Increase in Customers' Deposits 23,633 23,633 Increase (Decrease) in Due to Other Funds 179,900) 875,604 - 695,704 Decrease in Due from Other Funds 24,426 - 24,426 Decrease in Accrued Compensated ~kbsences 2,672) ( 2,672) Increase in Accounts Payable 249,144 249,144 2,209,481 1,022,807 - 3,232,288 Net Cash Provided by (Used in) Operating Activities 4,044,203 ( 33,669) 27,600 4,014,617 Cash Flows from Non-capital Financing Activities: Operating Transfer-Out Net (1,100,000) ( 1,100,000) Cash Used in Non-capital Financing Activities (1,100,000) ( 1,100,000) Cash Flows from Capital and Related Financing Activities: Purchase of Fixed Assets (2,479,534) ( 2,479,534) Principal Paid on Revenue Bonds (1,025,000) ( 1,025,000) Principal Paid on Water Rights ( 26,309) ( 26,309) Principal Paid on Capital Leases ( 18,296) ( 18,296) Interest Paid on Revenue Bonds (I,790,135) ( 1,790,135) Agent Fees Paid on Revenue Bonds ( 2,095) ( 2,095) Net Cash Used by Capital and Related Financing Activities (5,341,369) ( 5,341,369) The accompanying notes to financial statements are an integral part of this statement. 13 City of Paris, Texas Exhibit 5 Combined Statement of Cash Flows - All Proprietary (Continued) Fund Types and Similar Trust Funds For the Fiscal Year Ended September 30, 2002 Totals Fiduciary (Memorandum Proprietary Fund Types Fund Type Only) Internal Library Water and Sea-vice Nonexpendable September 30, Sewer Fund Fund Trust Fund 2002 Cash Flows from Investing Activities: Interest on Investments 633,567 850 256 634,673 Purchases of Investment Securities (7,631,016) ( 7,631,016) Maturities of Investments 12,313,083 32,819 12,345,902 Net Cash Provided by Investing Activities 5,315,634 33,669 256 5,349,559 Net Increase in Cash 2,918,468 27,856 2,946,324 Cash and Cash Equivalents at September 30, 2001 6,554,355 12,847 6,567,202 Cash and Cash Equivalents at September 30, 2002 $ 9,472,823 $ $ 40,703 $ 9,513,526 Noncash Investing, Capital and Financing Activities Contributions of Fixed Assets from Local Developers and Industry $ 219,162 $ $ - Borrowing Under Capital Lease $ $ $ Increase (Decrease) in Market Value of Investments $( 82,491) $ $( 218) The accompanying notes to financial statements are an integral part of this statement, 14 City of Paris, Texas -- Notes to Financial Statements September 30, 2002 I. .Summary of Significant Accounting Policies A. Reporting Entity The City of Paris, Texas (the City) operates under a council-manager form of government. AS required by accounting principles, generally -- accepted in the United State of America, these general-purpose financial statements present all the funds of the City. The City has no component units (entities for which the government is considered to be financially accountable). B. Measurement Focus, Basis of Accounting and Basis of Presentation -- The accounts of the City are organized on the basis of funds and account groups. 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. Account groups are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those -- funds. The City has the following fund types and account groups: Governmental Funds are used to account for the City's general government activities. Governmental fund types use the flow of current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting revenues are recognized when susceptible to accrual (i.e. when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers all revenues available if they are collected within 60 _ days after year-end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. 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~ 15 City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 I. Summary of Significant Accounting Policies (Continued) B. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Governmental Funds (Continued) Governmental Funds include the following fund types: The General Fund is the primary operating fund of the City. It accounts for all financial resources of the general government except those required to be accounted for in another fund. The Special Revenue Funds account for revenue sources that are legally restricted to expenditures for specific purposes (not including expendable trusts or major capital projects). The Capital Projects Funds account for the acquisition or construction of major capital projects, other than those financed by proprietary or non- expendable trust funds. The Debt Service Funds account for the servicing of general long-term debt not being financed by proprietary or non-expendable trust funds. Proprietary Funds are accounted for on the flow of 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 City applies all applicable Financial Accounting Standards Board pronouncements issued after November 30, 1989, in accounting and reporting for its proprietary operations. Proprietary funds include the following: The Enterprise Funds are 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. The Internal Service Fund accounts for operations that provide services to other departments or agencies of the City on a cost-reimbursement basis. The City expects to make needed adjustments within a reasonable amount of time to eliminate the current deficit. Deficit retained earnings historically have been offset by contributed capital. Fiduciary Funds account for assets held by the City in a trustee capacity or as an agent on behalf of others. Fiduciary funds include the following: The Expendable Trust Fund is accounted for in essentially the same manner as the governmental fund types, using the same measurement focus and basis of accounting. Expendable trust funds account for assets where both the principal and interest may be spent. 16 City of Paris, Texas -- Notes to Financial Statements (Continued) September 30, 2002 I. Summary of Significant Accounting Policies (Continued) B. Measurement Focus, Basis of Accounting and Basis of Presentation -- (Continued) Fiduciary Funds (Continued) The Nonexpendable Trust Funds are accounted for in essentially the same manner as the proprietary funds, using the same measurement focus and basis of accounting. Nonexpendable trust funds account for assets of which the principal may not be spent. The Agency Fund is custodial in nature and does not present results of -- operations or have a measurement focus. Agency funds are accounted for using the modified accrual basis of accounting. This fund is used to account for assets that the City holds for others in an agency capacity. Account Groups consist of general fixed assets and general long-term debt. The general fixed assets account group is used to account for fixed assets not accounted for in proprietary or nonexpendable trust funds. The general long-term debt account group is used to account for general long-term debt and certain other liabilities that are not specific liabilities of proprietary or nonexpendable trust funds. C. Assets, Liabilities and Equity _ 1. Deposits and Investments 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. Statutes authorize the City 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. -- Investments are reported in the accompanying balance sheet at fair value with changes in fair value being reported as part of investment income. 17 City of Paris, Texas Notes to Financial Statements (Continued) Septenlber 30~ 2002 Summary of Significant Accounting Policies (Continued) C. Assets, Liabilities and Equity (Continued) 2. Receivables and Payables Transactions between funds that would be treated as revenues, expenditures, or expenses if the involved organizations were external to the governmental unit (quasi-external transactions) are accounted for as revenues, expenditures, or expenses in the funds involved. Transactions which constitute reimbursements to a fund for expendi- tures or expenses initially made from that fund which were properly applicable to another fund are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditure or expense in the fund that is reimbursed. The City's ad valorem 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 pay~nent of all taxes, penalties, and interest ultimately imposed on the property. The lien is effective until all such amounts are paid. Property tax revenues are recognized in the accounting period in which they become both measurable and available. Property tax revenues are considered measurable at the time of levy and are recognized as deferred revenue and taxes receivable, net of an allowance for estimated uncollectible taxes, at that time. Property tax revenues are considered available if collected within 60 days subsequent to year-end. 3. Inventories Inventories are stated at cost in the General Fund and at the lower of cost or market in the Water and Sewer Fund. Cost is determined on a first-in, first-out basis. In the General Fund, inventories are recorded as expenditures on acquisition and are fully reserved in the equity section. 4. Restricted Assets Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The Water Revenue Construc- tion Fund is used to report those proceeds of revenue bond issuances that are restricted for use in construction. The Revenue Bond 18 City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 I. Summary of Significant Accountin~ Policies (Continued) C. Assets, Liabilities and Equity (Continued) 4. Restricted Assets (Continued) -- Sinking Funds are used to segregate resources accumulated for debt service payments over the next twelve months. The Revenue Bond Reserve and Contingency Accounts are used to report resources set _ aside to make up potential future deficiencies in the Revenue Bond Sinking Funds and to meet unexpected contingencies or to fund asset renewals and replacements. The Pat Mayse Reserve Fund is being accumulated to assist in funding future water storage rights. 5. Fixed Assets -- Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group, rather than in governmental funds. Public domain general fixed assets consisting of certain improvements including roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems are not capitalized as general fixed assets. No depreciation is provided on general fixed assets. All fixed assets are valued at historical cost or estimated histori- cal cost if actual historical cost is not available. Donated fixed -- assets are valued at their estimated fair value on the date donated. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not included in the general fixed assets account group or capitalized in the proprietary funds. -- Depreciation of all exhaustible fixed assets used by proprietary funds is charged as an expense against their operations. Accu- mulated depreciation is reported on the proprietary fund balance -- sheet. Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows: Utility Plant in Service 10-100 years Furniture, Fixtures and Equipment 5-50 years Vehicles 5 years For proprietary fund fixed assets, interest is capitalized on construction costs incurred during the year at an average interest _ rate on borrowed funds (water and sewer revenue bonds) in accordance with accounting principles generally accepted in the United States of America. During the year ended September 30, 2002, total interest costs incurred were $1,826,635 and $438,114 interest cost was capitalized. -- 19 City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 Summary of Significant Accounting Policies (Continued) C. Assets, Liabilities and Equity (Continued) 6. Compensated Absences Vacation and sick leave benefits are accrued by City employees in accordance with guidelines suggested in the City's personnel policy. For governmental funds, the estimated current portion of accrued vacation and sick pay liability is considered immaterial and is not recorded as an expenditure or liability of the General Fund. The non-current portion of the liability is recorded in the General Long- Term Debt Account Group. Actual vacation and sick leave benefits paid during the year are recorded as expenditures in the governmental funds. For proprietary funds, vacation and sick pay are recorded as an expense and related liability in the year earned. 7. Long-Term Obligations The City reports long-term debt of governmental funds at face value in the General Long-Term Debt Account Group. Certain other govern- mental fund obligations not expected to be financed with current available financial resources are also reported in the General Long- Term Debt Account Group. Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds. For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as an other financing source net of the applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. For proprietary fund types, bond premiums and dis- counts, as well as issuance costs, 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. Issuance costs are reported as deferred charges. 8. Fund Equity Reservations of fund balance represent amounts that are not appro- priable or are legally segregated for a specific purpose. Reserva- tions of retained earnings are limited to outside third-party restrictions. Designations of fund balance represent tentative management plans that are subject to change. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers, or other funds. 2O City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 I. Summary of Significant Accounting Policies {Continued) D. Other -- 1. Memorandum Only - Total Columns The general-purpose financial statements show the basic financial statements of the City by providing a combined overview of financial position, results of operations, and cash flows of the City. The total "Memorandum Only" columns in these statements are presented for overview _ information purposes only and are not meant to fairly present financial position, results of operations, or cash flows for the City as a whole in conformity with accounting principles generally accepted in the United States of America. During the year ended September 30, 2001, a pronouncement by the Govern- mental Accounting Standards Board became effective which requires the -- recognition of sales tax revenue when imposed. As a result, retained earnings at the beginning of the year have been adjusted to recognize this estimated receivable from the prior year. 2. Comparative Data Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the City's financial position and operations. 3. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures or expenses during the reporting period. Actual results could differ from those estimates. _ II. Stewardship, Compliance and Accountability Budgetary Information The City Council adheres to the following procedures in establishing the budgets reflected in the financial statements: -- 1. 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. -- 2. Public hearings are conducted at which all interested persons' comments concerning the budget are heard. City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 II. Stewardship, Compliance and Accountability (Continued) Budgetary Information {Continued) 3. 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. 4. 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 appro- priation balances from one expenditure account to another within a department or agency of thD City. The City Council, however, must approve any transfer or unencumbered appropriation balances or portions thereof from one department or agency to another. The reported budgetary data has been revised for amendments legally authorized during the year. No supplemental budgetary appropriations were necessary during the year. 5. Annual budgets are legally adopted for the General Fund, Special Revenue Funds, and Debt Service Funds. Budgets for these funds are adopted on a basis consistent with accounting principles generally accepted in the United States of America. The budget for the Capital Projects Funds 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. Although no legal requirement exists, a budget to actual comparison is presented in the Supplementary Schedules. The expendable trust funds include non-budgeted financial activities, which are not subject to an appropriated budget and the appropriation process nor to any legally authorized non- appropriated budget review and approval process. 6. 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. III. Detailed Notes on All Funds and Account Groups A. Deposits and Investments At year-end, the City of Paris' carrying amount of deposits (cash and non-negotiable certificates of deposit) was $22,849,538 and the banks' balances were $22,175,230 which are shown below by degree of risk. 22 City of Paris, Texas Notes to Financial statements (Continued) September 30, 2002 III. Detailed Notes on Ail Funds and Account Groups (Continued) A. Deposits and Investments (Continued) The cash deposits held at financial institutions can be categorized according to three levels of risk. These three levels of risk are: Category 1 - Deposits which are insured or collateralized with securities held by the entity or by its agent in the entity's name. Category 2 - Deposits which are collateralized with securities held by the pledging financial institution's trust department or agent in the entity's name. Category 3 - Deposits which are not collateralized or insured. Based on these three levels of risk, the City's cash deposits are classified as follows: Category 1 - $ 200,000 Category 2 - $16,971,418 Category 3 - $ 5,003,812 Investments are categorized into three categories of credit risk: Category 1 - Insured or registered, or securities held by the entity or by its agent in the entity's name. Category 2 - Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the entity's name. Category 3 - Uninsured and unregistered, with securities held by the counterparty or by its trust department or agent but not in the entity's name. At year-end, the City's investment balances, excluding $658,924 of certificates of deposit included in deposits above, were as follows: Category Carrying Fair No. 1 No. 2 NO. 3 Amount Value Federal National Mortgage Association $ 2,337,089 $ $ $ 2,337,089 $ 2,337,089 Federal Home Loan Mortgage Corporation 2,377,480 2,377,480 2,377,480 Government National Mortgage Association 1,641,341 1,641,341 1,641,341 Federal National Discount Notes 293,711 293,711 293,711 Federal Home Loan Bank 50,500 50,500 50,500 $ 6,700,121 $ $ $ 6,700,121 $ 6,700,121 23 City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 III. Detailed Notes on Ail Funds and Account Groups (Continued) B. Receivables and Transfers Receivables as of year-end, including the applicable allowances for uncollectible accounts, are as follows: Trust Special Capital Debt Internal and General Revenue Projects Service Enterprise Service A~ency Receivables: Interest $ 2,099 $ $ 3,245 $ $ 28,288 $ $ 12,925 Property Taxes 998,480 119,538 Sales Tax 812,500 162,500 Accounts 132,513 - 1,559,188 399,807 Other Govern- ments 155,263 500,554 Street Assessments 26,473 Fines 126,099 EMS 1,264,302 Notes Re- ceivable 70,224 3,499,422 Gross Re- ceivables 3,517,729 570,778 3,245 119,538 1,587,476 399,807 3,674,847 Less: Allowance for Uncollecti- bles 1,249,392 29,884 Net Total Receivables$2,268,337 $570,778 $ 3,245 $ 89,654 $1,587,476 $399,807 $3,674,847 Interfund balances at year-end consisted of the following individual fund receivables and payables: Fund Receivable Payable General Fund $ 3,559,203 $ 226,541 Special Revenue Fund - Criminal Justice Division Grant (Payable is overdraft in Pooled Cash Account) - 183,040 Capital Projects (Payable is overdraft in Pooled Cash Account) 16,693 Water and Sewer Fund (Payable is overdraft in Pooled Cash Account) 97,338 2,123,251 Health Department Fund (Payable is overdraft in Pooled Cash Account) 129,203 51,932 Employee Insurance Fund (Payable is overdraft in Pooled Cash Account) 1,161,626 J.P. Poteet Trust (Payable is overdraft in Pooled Cash Account) 22,661 $ 3,785,744 $ 3,785,744 24 City of Paris, Texas Notes to Financial Statements (Continued) Septeraber 30, 2002 III. Detailed Notes on Ail Funds and Account Groups (Continued) B. Receivables and Transfers (Continued) Interfund operating transfers during the year consist of the following: Fund From To Amount Purpose Water and Sewer General $ 350,000 In Leiu of Franchise Tax Water and Sewer General 750,000 Administrative Fee C. Fixed Assets A summary of changes in General Fixed Assets follows: Balance Balance Septem~Der 30, September 30, 2001 Additions Deletions 2002 Real Property $ 25,236,758 $ 1,088,568 $ 49,179 $ 26,276,147 Furniture and Fixtures 1,649,596 1,649,596 Automobiles, Trucks and Equipment 13,052,698 297,579 364,021 12,986,256 Total General Fixed Assets $ 39,939,052 $ 1,386,147 $ 413,200 $ 40,911,999 A summary of proprietary fund type property, plant, and equipment at September 30, 2002, follows: Water and Sewer Fund Land, Plant, Pumps and Motors $ 30,421,763 Distribution and Collection Systems 44,245,342 Furniture, Equipment, and Vehicles 2,633,438 Construction in Progress 3,826,863 81,127,406 Less Accumulated Depreciation 30,119,960 Total Net Fixed Assets $ 51,007,446 D. Capital Leases The City has lease agreements as lessee for financing the acquisition of equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of the future minimum lease payments as of the date of their inception. The following is a schedule of the future minimum lease payments under these capital leases and the present value of the net minimum lease payments at September 30, 2002: City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 III. Detailed Notes on Ail Funds and Account Groups (Continued) D. Capital Leases (Continued) Fiscal Year Ended General Water and September 30 Obligation Sewer 2003 $ 250,757 $ 15,731 2004 231,045 15,731 2005 224,890 6,555 2006 110,636 2007 37,013 Total Minimum Lease Payments 854,341 38,017 Amount Representing Interest ( 91,650) ( 2,668) present Value of Future Minimum Lease Payments $ 762,691 $ 35,349 E. Long-Term Liabilities A summary of long-term liability transactions for the year ended September 30, 2002, follows: Balance Balance September 30, Retire- September 30, 2001 Additions ments 2002 General Obligation Certificates of Obligation $ 9,815,000 $ 6,060,000 $ 390,000 $ 15,485,000 Note 74,725 5,941 68,784 Capital Leases 708,454 265,807 211,570 762,691 Compensated ~bsences 245,136 94,219 78,979 260,376 Total General Obligation 10,843,315 6,420,026 686,490 16,576,851 Water and Sewer Revenue Bonds and Certificates of Obligation 36,630,000 1,025,000 35,605,000 Water Rights Debt 749,679 26,309 723,370 Capital Leases 53,645 18,296 35,349 Compensated Absences 98,739 36,451 39,123 96,067 Total Water and Sewer 37,532,063 36,451 1,108,728 36,459,786 Total $ 48,375,378 $ 6,456,477 $ 1,795,218 $ 53,036,637 26 City of Paris, Texas __ Notes to Financial Statements (Continued) September 30, 2002 III. Detailed Notes on Ail Funds and Account Groups (Continued) E. Long-Term Liabilities (Continued) General Obligation Certificates of Obligation and Note: $120,600 note payable for the construction of aircraft hangars and associated appurtenances at the City's Cox Field was obtained February 27, 1991. The note bears interest at 5% with principal and interest payments of $9,677 made in annual installments through March 2011. $5,000,000 Certificates of Obligation, Series 1993, due in annual installments varying from $225,000 to $405,000 with final payment due in 2013. Interest is payable semi-annually at rates ranging from 4.5% to 6.0%. On December 15, 2003, or any date thereafter, unpaid principal installments may be prepaid or redeemed prior to their scheduled due dates at the City's option. $6,000,000 Combination Tax and Revenue Certificates of Obligation, Series 2000, due in annual installments varying from $185,000 to $495,000 with final payment due in 2020. Interest is payable semi- annually at rates ranging from 5.30% to 6.75%. On Deceraber 15, 2009, or any date thereafter, unpaid principal installments may be prepaid or redeemed prior to their scheduled due dates at the City's option. $6,060,000 Combination Tax and Revenue Certificates of Obligation, Series 2002, due in annual installments varying from $190,000 to $460,000 with final payment due in 2021. Interest is payable semi- annually at rates ranging from 3.25% to 4.70%. On December 15, 2012 or any date thereafter, unpaid principal installments may be prepaid or redeemed prior to their scheduled due dates at the City's option. The ordinances require that ad valorem 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, 2002, the balances in the Interest and Sinking Funds are $624,713. Revenues from the Waterworks and Sewer System are also pledged to secure the Certificates of Obligation. Water and Sewer Revenue Bonds and Certificates of Obligation: $5,500,000 Certificates of Obligation, Series 1994, due in annual installments varying from $230,000 to $445,000 with final payment due in 2014. Interest is payable semi-annually at rates ranging from 5.4% to 7.4%. $5,000,000 Waterworks and Sewer System Revenue Bonds, Series 1997, due in annual installments varying from $210,000 to $420,000 with final payment due in 2016. Interest is payable semi-annually at rates ranging from 4.5% to 6.5%. City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 Detailed Notes on Ail Funds and Account Groups (Continued) E. Long-Term Liabilities (Continued) Water and Sewer Revenue Bonds and Certificates of Obligation (Continued): $6,905,000 Waterworks and Sewer System Revenue Refunding Bonds, Series 1998, due in annual installments varying from $545,000 to $850,000 with final payment due in 2011. Interest is payable semi- annually at rates ranging from 4.05% to 4.95%. $5,810,000 Tax and Revenue Refunding Bonds, Series 1998, due in annual installments varying from $460,000 to $715,000 with final payment due in 2011. Interest is payable semi-annually at rates ranging from 4~05% to 4.95%. $9,500,000 Waterworks and Sewer System Revenue Bonds, Series 2000, due in annual installments varying from $185,000 to $835,000 with final payment due in 2020. Interest is payable semi-annually at rates ranging from 5.375% to 6.875%. $5,130,000 Tax and Revenue Refunding Bonds, Series 2001, due in annual installments varying from $430,000 to $605,000 with final payment due in 2011. Interest is payable semi-annually at rates ranging from 3.5% to 4.125%. On Decem~Der 15, 2004, for Series 1994; on June 15, 2007, for series 1997; on December 15, 2008, for both 1998 series; on June 15, 2010, for Series 2000, and on December 15, 2009, for Series 2001, or any date thereafter, the unpaid installments of principal may be prepaid or redeemed prior to their scheduled due dates at the option of the City. The revenues of the Waterworks and Sewer System, after deducting the expenses of operation and maintenance, are pledged for payment of bonds and interest. The ordinances authorizing the issuance of the bonds require that monthly deposits be made to Interest and Sinking Funds in amounts sufficient to pay the next maturing bonds and interest. A Reserve Fund is required to be accumulated with a required reserve amount of at least $1,677,519, the average annual principal and interest requirements of the 1997, 1998, and 2000 Series bonds. The ordinances also call for the creation of a Contingency Fund into which equal monthly deposits are made until the balance is $500,000. At September 30, 2002, the balances in the Interest and Sinking Funds, Reserve Fund, and Contingency Fund are $2,079,514, $1,709,358, and $723,366, respectively. In addition, Series 1994, and Series 1998 Tax and Revenue Refunding Bonds ordinances require that ad valorem taxes be levied and collected at a rate sufficient to pay bonds and interest as they come due. 28 City of Paris, Texas Notes to Financial Statements (Continued) SeptengDer 30, 2002 III. Detailed Notes on Ail Funds and Account Groups (Continued) E. Long-Term Liabilities (Continued) Water and Sewer Revenue Bonds and Certificates of Obligation (Continued): During the year ended Septe~Lber 30, 1998, the City defeased certain revenue bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Amounts considered defeased are bonds which mature 2002 through 2011 and aggregate $11,785,000 at Septenlber 30, 2002. The advance refunding resulted in a difference between the reacquisition price and the new carrying amount of the old debts. This difference, reported in the accompanying financial statements as an other asset, is being charged to operations through the fiscal year 2012, using the effective interest method. On September 15, 2001, the City issued $5,130,000 Tax and Revenue Refunding Bonds, Series 2001 with an average interest rate of 3.84 percent to advance refund outstanding $5,030,000 Tax and Refunding Bonds, Series 1991 with an average interest rate of 6.45 percent. The net proceeds of $5,034,342 (after pa~nent of $95,658 plus $903,237 transferred from the Interest and Sinking Fund in underwriting fees, insurance, and other issuance costs), were used to purchase U. S. Government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded bonds. As a result, the refunded bonds are considered to be defeased and the liability for those bonds has been removed from the balance sheet. Amounts considered defeased are bonds which mature December 15, 2002 through 2011 and aggregate $5,030,000 at September 30, 2002. The advance refunding resulted in a difference between the reacquisition price and the new carrying amount of the old debt of $302,030. This difference, reported in the accompanying financial statements as an other asset, is being charged to operations through the fiscal year 2012, using the effective interest method. The City completed the advance refunding to reduce its total debt service payments over the next ten years by $665,596 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $533,761. Water Rights Debt: The City has rights to water storage at Pay Mayse Lake. Payments for these rights are $49,826 due annually, including principal and interest at 3.137% through 2017 and $25,211 for ten years after that. Long-term debt service requirements for the next five years and after in five year increments are as follows: City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 III. Detailed Notes on Ail Funds and Account Groups (Continued) E. Long-Term Liabilities (Continued) Year ending General Obligation Water and Sewer September 30, Principal Interest Principal Interest Totals 2003 $ 656,238 $ 703,893 $ 2,087,134 $ 1,774,340 $ 5,221,605 2004 636 550 725,123 2,212,985 1,671,568 5,246,226 2009 661 878 692,946 2,313,863 1,564,128 5,232,815 2006 702 221 658,402 2,579,768 1,453,489 5,393,880 2007 742 582 621,472 2,700,702 1,326,181 5,390,937 2008-2012 4,349 315 2,478,943 15,673,578 4,445,541 26,947,377 2013-2017 4,295 000 1,359,514 6,176,737 1,560,837 13,392,088 2018-2022 3,510,000 371,518 2,468,544 290,849 6,640,911 2023 2027 115,057 11,054 126,111 $ 15,553,784 $ 7,611,811 $ 36,328,368 $ 14,097,98__7 $73,591,950 F. Reserved Retained Earnings and Restricted Asset Accounts The City's bond covenants require certain reservations of retained earnings. The reserved portions are as follows: Reserved for Revenue Bond Operations and Maintenance $ 1,203,269 Reserved for Contingency 723,366 Total Reserved Retained Earnings $--1,926,635 The balances of the City's restricted asset accounts are as follows: Certificates Accrued Cash and of Deposit Interest Cash Equi- and Other and Other valents Investments Receivables Customer Deposits $ 172,317 $ 325,551 $ 2,050 Revenue Bond Contingency 337,634 385,732 2,442 Revenue Bond Construction Account 5,377,550 2,540,848 73,686 Revenue Bond Current Debt Service Account 2,079,514 Revenue Bond Future Debt Service Account 712,284 992,375 4,699 Funding Future Water Storage Rights 792,424 1,358,938 6,293 Total Restricted Assets $9,471,723 $ 5,603,444 $ 89,170 G. Deficit Fund Equity The Employees' Insurance Internal Service Fund has a deficit retained earning of $2,779,567 at September 30, 2002. The current contributions rate for employees has remained the same since April 1, 2000. 30 City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 IV. Other Information A. Water Storage Commitments A contract with the United States of America for water storage space in Pat Mayse Lake entitles the City to utilize one hundred percent of the storage space between elevations 451.0 and 415.0 feet above sea level. Forty percent (43,800 acre-feet) is for present storage and the remaining sixty percent (65,800 acre-feet) is for future water storage. The City is to repay the government the entire amount of construction costs allocated to the water storage right acquired by the City. The City is obligated to pay 9.46% of the ordinary operation and maintenance cost of the project annually and 4.22% of major capital replacements when incurred. Allocated cost for future water storage (60%) is $1,925,722 and the amount to be paid including accumulated interest mentioned below is to be on a pro rata basis as more storage is acquired by the City. Interest at 3.137% has been accumulating on this allocated cost since September 30, 1977, and amounts to $2,249,782 at September 30, 2002. The City may, at its option, pay the interest as it becomes due or allow the interest to continue to accumulate until the storage is used. B. Construction and Acquisition Commitments The City has active construction projects as of September 30, 2002. At year end the government's commitments with contractors are as follows: Spent Remaining Project To Date Commitment Elevated Water Storage $ 130,815 $ 92,130 Lost Water Study 100,280 20,758 Sewer Lines 366,831 137,272 Animal Shelter 23,178 7,727 $ 621,104 $ 257,887 The commitments for water storage, water study, and sewer lines are being financed by revenue bonds. The animal shelter is being financed by certificates of obligation. The City has entered a real estate purchase agreement for purchase of an existing building and land for $1,275,000 to be improved for a law enforcement center. The total expected project cost is $6,000,000 which is to be financed from the proceeds of the Combination Tax and Revenue Certificates of Obligation, Series 2002 in the amount of $6,060,000. City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 Other Information (Continued) C. Water Sales The City has contracts extending for several years to sell treated and untreated water to five entities. Total water sales under these contracts to these entities during the year ended September 30, 2002, were approxi- mately $2,355,000. D. civic Center Contract The City is a party to a contract with the Chan~ber 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 Septen~ber 30, 2005. E. Postemploy~nent Benefits Other Than Pensions The City has in effect a plan adopted by City Council resolution in 1990 whereby persons who retire before age sixty-five will be provided health care coverage until they become sixty-five. The City's contributions are financed on a pay-as-you-go basis and for the year ended September 30, 2002, the cost was $57,000 for nineteen retired employees. An additional thirty-six employees were eligible for this benefit. F. 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 Septer~ber 30, 2002. There have been no settlements in excess of insurance coverage in any of the prior three fiscal years. The City has established the Employee Insurance Internal Service Fund to account for a partially self-funded group comprehensive health care program for all employees and approximately 386 employees are covered. Under the program, the City has contracted with insurance companies to process employee claims and provide reinsurance for annual individual coverage exceeding $50,000. Should the program be terminated, the amount payable for unreported claims is estimated at $187,000. All funds of the city participate in the program and make payments to the Employee Insurance Internal Service Fund based on 32 City of Paris, Texas -- Notes to Financial St&te~ents (Continued) September 30, 2002 IV. Other Information (Continued) F. Risk Management (Continued) estimated historical cost information of the amounts needed to pay prior and current-year claims and to establish a reserve for catastrophe losses. The claims liability is based on the requirements of Governmental Accounting Standards Board Statement NO. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. For the fiscal years ended September 30, 2002 and 2001, changes on unpaid claims liability are as follows: 2002 2001 Balance at Beginning of Year $ 259,149 $ 307,718 Claims Incurred During the Year 2,273,150 1,638,262 Payments on Claims (2,230,676) (1,686,831) Balance at End of Year $ 301,623 $ 259,149 G. Employee Retirement Systems and Plans The City maintains a non-traditional defined benefit retirement plan for all full-time employees except for firefighters and a single-employer, defined benefit plan for firefighters. 1. Texas Municipal Retirement System Plan Description Provisions The City provides pension benefits for all of its full-time employees (except firefighters) through a non-traditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), one of 758 administered by TMRS, an agent multiple-employer public employee retirement system. Benefits depend upon the sum of the employee's contributions to the plan, with interest, and the City-financed monetary credits, with interest. At the date the plan began, the City granted monetary credits for service rendered before the plan began of theoretical amount equal to two times what would have been contributed by the employee, with interest, prior to establishment of the plan. Monetary credits for service since the plan began are 150% of the employee's accumulated contributions. In addition, the City can grant, as often as annually, another type of monetary credit referred to as an updated service credit which is a theoretical amount which, when added to the employee's accumulated contributions and the monetary credits for service since the plan began, would be the total monetary credits and employee contributions accumulated, with interest, if the current employee contribution rate and City matching percent had always been in existence and if the employee's salary had always City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 IV. Other Information (Continued) G. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) Plan Description Provisions (Continued) been the average of his salary in the last three years that are one year before the effective date. At retirement, the benefit is calculated as if the sum of the employee's accumulated contributions, with interest, and the employer-financed monetary credits, with interest, were used to purchase an annuity. Members can retire at age 60 and above with 5 or more years of service or with 20 years of service regardless of age. A member is vested after 5 years. The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. The contribution rate for the employees is 5%, and the City matching percent is currently 2 to 1, both as adopted by the governing body of the City. Under the state law governing TMRS, the actuary, the City, annually determines contribution rate. This rate consists of the normal cost contribution rate and the prior service contribution rate, both of which are calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the currently accruing monetary credits due to the City matching percent, which are the obligation of the City as of an employee's retirement date, not at the time the employee's contributions are made. The normal cost contribution rate is the actuarially determined percent of payroll necessary to satisfy the obligation of the City to each employee at the time his/her retirement becomes effective. The prior service contribution rate amortizes the unfunded actuarial liability over the remainder of the plan's 25-year amortization period. When the City periodically adopts updated service credits and increases its annuities in effect, the increased unfunded actuarial liability to be amortized over a new 25-year period. Currently, the unfunded actuarial liability is being amortized over the 25-year closed period which began January 2001. The unit credit actuarial cost method is used for determining the City contribution rate. Contributions are made monthly by both the employees and the City. Since the City needs to know its contribution rate in advance to budget for it, there is a one-year delay between the actuarial valuation that is the basis for the rate and the calendar year when the rate goes into effect. For actuarial valuation, the market 34 City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 IV. Other Information (Continued) G. Employee Retirement Systems and Plans (Continued) 1. Texas Municipal Retirement System (Continued) Plan Description Provisions (Continued) related method is used for assets. Other assumptions include no projected salary increases, inflation, or cost-of-living adjustments and the investment rate of return is eight percent. The level percent of payroll is the amortization method used. During the past three plan years, the City has contributed 100% of its annual pension cost as follows: 2001 - $916,968, 2000 - $846,620, and 1999 - $797,758. At September 30, 2000, 2001, and 2002, the net pension obligation is zero. SCHEDULE OF FUNDING PROGRESS Unfunded Actuarial Liability Actuarial as a Valuation Actuarial Actuarial Unfunded Percentage December Value of Accrued Actuarial Funded Covered of Covered 31, Assets Liability Liability Ratio Payroll Payroll 1999 $14,767,311 $19,079,199 $4,311,888 77.40% $ 8,904,790 48.42% 2000 16,215,613 20,893,137 4,677,524 77.61 9,083,584 51.49 2001 18,032,727 22,899,234 4,866,507 78.75 10,149,296 47.95 The Texas Municipal Retirement System issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Texas Municipal Retirement System. 2. Firefighter's Relief and Retirement Fund Plan Description The Paris Firefighter's Relief and Retirement Fund, a single-employer defined benefit pension plan, is established under the authority of the Texas Local Firefighter's 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- 35 City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 Other Information (Continued) G. Employee Retirement Systems and Plans (Continued) 2. Firefighter's Relief and Retirement Fund (Continued) Plan Description (Continued) alone financial statement. A copy of the financial statement may be obtained from the Board of Trustees. 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. Eligibility All active firefighters of the City of Paris, Texas, are covered by the fund. The City of Paris contributes ten percent of each member's total pay (including regular, longevity, and overtime pay but excluding lump sum distributions for unused sick leave or vacation). Fund members contribute to the fund at a rate of nine percent of pay. Employee contributions are not "picked up" under Section 414(h) (2) of the Internal Revenue Code. Fund members receive credit for service for the period during which they pay into and keep on deposit in the fund, the contributions required by the fund. The fund was amended effective September 1, 1999. The City's annual required contribution to the plan for fiscal year 2002 was based on a payroll of $2,234,663 and amounted to $223,467. Covered employees made contributions of $201,120. The Plan covers 26 retirees and beneficiaries, 10 fully vested active employees, and 45 nonvested active employees. Service Retirement Disability and Death Benefits A member is eligible for service retirement on either (a) the date that the member has both attained age 55 and completed 20 years of service or (b) the date as of which the sum of the member's age and years of service first equals 82, 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 $80 multiplied by his/her years of service at retirement. Service retirement benefits are payable for the member's lifetime. In the event the member's death precedes that of his/her spouse, two-thirds of the member's pension will be continued to the spouse for his/her lifetime. An active member who becomes disabled will receive a monthly disability benefit. If a member dies while in active service, his/her widow(er) will receive an immediate monthly benefit, payable for his/her lifetime. 36 City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 Other Information (Continued) G. Employee Retirement Systems and Plans (Continued) 2. Firefighter's Relief and Retirement Fund (Continued) Annual Pension Cost The actuarial valuation date used to determine the Annual Required Contribution for the year ended September 30, 2002, and the most current available information required for disclosure under Paragraph 22 of GASB Statement NO. 27 is January 1, 2001. The actuarial cost method used in the January 1, 1999, valuation is the aggregate entry age normal 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. The valuation measures the actuarial balance between the present value of future benefits and the sum of (i) the present value of future contributions and (ii) the actuarial value of assets. The plan is not subject to the minimum funding requirements of Internal Revenue Code Section 412. There has been no change in the actuarial cost method since the last actuarial valuation. The actuarial assumptions used in the actuarial valuation performed as of January 1, 2001, include a rate of return on the investment of present and future assets of 8.00 percent per year compounded annually; UP 1994 Mortality Table; termination rates from the Actuary's Pension Handbook; disability rates from 1985 Society of Actuaries Disability Table Study; and assumed retirement age of 55. Compensation increases for individual members and total payroll is 4.5 percent compounded annually. Projected Post retirement benefit increases are zero. The amortization of the unfunded actuarial accrued liability was determined as a level percentage of payroll. The amortization period is an open amortization period over 19.3 years. The actuarial value of assets is smoothed market value. Calculation of the actuarial value of assets begins with an "initial asset value." The initial asset value is the market value of assets five years prior to the valuation date. Ail receipts from contributions, interest, dividends, and miscellaneous income over the last five years are added to the initial asset value. Likewise, all benefit payments, contri- bution refunds, and expenses are subtracted from the initial asset value. In this manner, all such receipts and disbursements are recognized immediately. The rate of return on present and future assets assumes that inflation and real interest rates will produce a combined rate of return of 6.00 percent per annum. 37 City of Paris, Texas Notes to Financial Statements (Continued) September 30, 2002 IV. Other Information (Continued) G. Employee Retirement Systems and Plans (Continued) 2. Firefighter's Relief and Retirement Fund (Continued) Schedule of Funding Progress January 1, 1997 1999 2001 Actuarial Value of Assets $ 3,847,050 $ 4,584,245 $ 5,661,952 Actuarial Accrued Liability (AAL) 6,172,604 7,043,476 8,379,236 Unfunded AAL (UAAL) $ 2,325,554 $ 2,459,231 ~ 2,717,284 Funded Ratio 62.3% 65.1% 67.6% Covered Payroll $ 1,424,967 $ 1,665,462 $ 1,938,970 UAAL as a Percentage of Covered Payroll 163.2% 147.7% 140.1% Development of the Actuarial Value of Assets December 31, 1999 2000 2001 Market Value as of January 1 $ 5,193,419 $ 5,598,120 $ 5,796,875 Contributions, Interest and Dividends Contributions by the City 179,611 194,783 194,175 Contributions by members 161,648 175,305 187,598 Dividends and interest 219,571 241,932 252,534 Other 151 1,905 2,231 560,981 613,925 636,538 Disbursements Benefits paid monthly 318,642 334,488 379,199 Refund of contributions Administrative expenses 40,686 35,480 41,271 359,328 369,968 420,470 Net Realized and Unrealized Gains and Losses Realized gains (losses) 295,705 163,307 17,747 Unrealized gains (losses) ( 92,657) ( 208,509) ( 210,866) 203,048 ( 45,202) ( 193,119) Market Value as of December 31 $ 5,598,120 $ 5,796,875 $ 5,819,824 38 City of Paris, Texas -- Notes to Financial Statements (Continued) September 30, 2002 IV. Other Information (Continued) G. Employee Retirement Systems and Plans (Continued) 2. Firefighter's Relief and Retirement Fund (Continued) -- Other Information December 31, 1999 2000 2001 Annual Pension Cost $ 179,611 $ 194,783 $ 194,175 Percentage of Annual -- Pension Cost Contributed 100% 100% 100% Net Pension Obligation - H. Deferred Compensation Plan __ The City offers its employees two deferred compensation plans created in accordance with Internal Revenue Code Section 457. I. 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. _ J. Related Parties The City Council appoints the governing boards of two entities which are legally separate from the City. The City is not able to impose its will on these two entities, and a financial benefit/burden relationship is not present; therefore, they are considered related organizations. COMBINING AND INDIVIDUAL FUND AND ACCOUNT GROUP FINANCIAL STATEMENTS AND SCHEDULES GENERAL FUND The General Fund is the principal operating fund of the City. It is used to account for all financial resources and expenditures except those (1) legally required to be accounted for elsewhere and those (2) accounted for separately for internal management purposes. City of Paris, Texas Schedule 1 General Fund Balance Sheet September 30, 2002 ASSETS Cash $ 1,048,419 Certificates of Deposit and Other Investments 432,575 Postage Deposit 242 Receivables: Accrued Interest Receivable 2,099 Accounts Receivable 132,513 Street Assessments Receivable 26,473 Fines Receivable $ 126,099 Less: Allowance for Uncollectible Accounts 60,000 66,099 Taxes Receivable 998,480 Less: Allowance for Uncollectible Accounts 399,392 599,088 Emergency Medical Service Receivables 1,264,302 Less: Allowance for Uncollectible Accounts 790,000 474,302 Sales Tax 812,500 Intergovernmental: Federal 86,581 State 68,682 Due from Other Funds: Health 51,932 Criminal Justice 183,040 Employees Insurance 1,161,626 J.P. Poteet Trust 22,661 Water and Sewer 2,123,251 Capital Projects 16,693 Inventories, at Cost: Warehouse Stores 118,708 Materials and Supplies 52,540 Total Inventories, at Cost 171,248 Total Assets ~ LIABILITIES ~ FUND BALANCE Liabilities: Accounts Payable $ 85,635 Due to Other Funds: Water and Sewer 97,338 Health 129,203 Deferred Revenues 910,654 Total Liabilities 1,222,830 Fund Balance: Reserved for Inventories 171,248 Unreserved 6,085,946 Total Fund Balance 6,257,194 Total Liabilities and Fund Balance ~ 41 City of Paris, Texas Schedule 2 General Fund Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual For the Fiscal Year Ended Septen~ber 30, 2002 General Fund Variance Favorable Budqet Actual (Unfavorable) Revenues: Ad Valorem Taxes $ 5,207,866 $ 5,311,776 $ 103,910 Municipal Sales Tax 5,000,000 4,574,994 { 425,006) Hotel Occupancy Tax 350,000 314,170 ( 35,830) Franchise and Gross Receipts Tax 2,604,538 2,623,697 19,159 Licenses and Permits 62,350 114,720 52,370 Fines and Fees 498,550 545,236 46,686 Use of Money and Property 477,450 199,296 ( 278,154) General Government 15,609 21,332 5,723 Public Safety 1,800 1,800 Streets and Highways 65,000 ( 85,000) Sanitation 1,412,800 1,382,796 { 30,004) Health 1,599,206 1,945,602 346,396 Intergovernmental Revenues 1,341,135 2,197,149 856,014 Miscellaneous Revenues 251,315 377,709 126,394 Total Revenues 18,887,619 19,610,277 722,658 Expenditures: General Government: Council 1,438,538 1,406,313 32,225 Manager 236,722 235,967 755 Attorney 369,878 361,540 8,338 Municipal Court 221,691 218,524 3,167 Clerk 120,577 118,458 2,119 Total General Government 2,387,406 2,340,802 46,604 Finance: Accounting and Auditing 481,021 439,535 41,486 Public Safety: Police 5,066,327 4,974,195 92,132 Fire 3,318,880 3,248,166 70,714 Total Public Safety 8,385,207 8,222,361 162,846 Public Works: Community Development 594,543 469,475 125,068 Engineering 497,183 434,012 63,171 Public Works 212,875 210,347 2,528 Parks and Recreation 1,226,253 1,368,810 ( 142,557) Solid Waste 1,397,189 1,306,515 90,674 Streets and Highways 1,628,384 1,572,014 56,370 Traffic and Public Lighting 385,748 348,061 37,687 Garage 421,388 295,525 125,863 Total Public Works 6,363,563 6,004,759 358,804 42 City of Paris, Texas Schedule 2 General Fund (Continued) Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual For the Fiscal Year Ended September 30, 2002 General Fund Variance Favorable Budget Actual (Unfavorable) Expenditures: (Continued) Emergency Medical Service 1,898,064 1,824,006 74,058 Library Services 768,354 720,407 47,947 Cox Field Airport 165,606 130,929 34,677 Paris Band 20,670 18,460 2,210 Total Expenditures 20,469,891 19,701,259 768,632 Excess of Revenues Over (Under) Expenditures (1,582,272) ( 90,982) 1,491,290 Other Financing Sources and (Uses): Capital Lease Proceeds 265,807 265,807 Operating Transfer In 1,095,535 1,100,000 4,465 Total Other Financing Sources and (Uses) 1,095,535 1,365,807 270,272 Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other (Uses) $( 486,737) 1,274,825 $ 1,761,562 Decrease in Inventory ( 19,026) Fund Balance, September 30, 2001 5,001,395 Fund Balance, September 30, 2002 $ 6,257,194 City of Paris, Texas General Fund Combined Summary of Expenditures For the Fiscal Year Ended September 30, 2002 Operating Expenditures Total Personnel Expenditures Costs Supplies Contractual city Council $ 1,406,313 $( 2,115) $ 14,666 $ 562,343 City Manager 235,967 209,444 4,748 16,457 City Attorney 361,540 303,047 5,640 27,969 Municipal Court 218,524 150,003 10,382 52,710 City Clerk 118,458 98,191 4,754 6,287 Accounting and Auditing 439,535 258,731 13,125 135,773 Police 4,974,195 4,137,741 203,138 313,027 Fire 3,248,166 2,754,307 101,180 103,219 Community Development 469,475 320,238 44,385 77,806 Engineering 434,012 367,873 16,446 30,752 Public Works 210,347 173,649 4,425 18,382 Parks and Recreation 1,368,810 629,528 54,309 211,262 Solid Waste 1,306,515 586,449 59,331 380,371 Streets and Highways 1,572,014 781,342 57,795 90,097 Traffic and Public Lighting 348,061 60,182 4,217 263,484 Garage 295,525 238,971 11,270 21,649 Emergency Medical Service 1,824,006 1,452,545 131,961 53,491 Library 720,407 499,389 18,024 33,318 Cox Field Airport 130,929 61,024 4,681 27,961 Paris Band 18,460 3 1,169 15,737 Total Expenditures 19,701,259 13,080,542 765,646 2,442,095 Budget Appropriations 20,469,891 13,586,005 821,425 2,559,183 Expenditures (Over) Under Budget $ 768,632 $ 505,463 $ 55,779 $ 117,088 44 Schedule 3 Capital Outlay Maintenance Maintenance Sundry Building Eqllipment Charges Buildinqs Equipment $ 2,806 $ 3,978 $ 167,870 $ 636,311 $ 20,454 1,995 2,953 30 340 3,781 6,023 60 15,020 304 4,522 10 593 713 8,308 10 195 3,457 27,274 1,925 ( 750) 25,191 180,941 11,208 102,949 19,253 81,612 8,898 118,804 60,893 836 3,376 620 22,214 3,214 12,892 1,020 1,815 6,538 6,853 500 106,769 91,543 6,478 85,324 183,597 1,674 272,790 5,900 379,284 142,272 2,464 22,911 95,849 6,956 12,722 500 - 3,324 17,562 230 2,519 2,397 42,439 17,842 123,331 10,648 21,069 947 1,401 135,611 20,171 6,415 10,677 - 599,311 947,095 237,189 864,751 764,630 669,400 977,275 273,486 976,667 606,450 $ 70,089 $ 30,180 $ 36,297 $ 111,916 $( 158,180) City of Paris, Texas Schedule 4 Schedule of Delinquent Taxes Receivable - Ail Funds September 30, 2002 Delinquent Taxes by Year: 1990 and Prior $ 145,102 1991 24,007 1992 28,192 1993 25,897 1994 32,049 1995 34,192 1996 36,300 1997 50,965 1998 162,376 1999 151,194 2000 150,564 2001 277,181 Total Delinquent Taxes 1,118,019 Less: Estimated Uncollectible Delinquent Taxes 429,277 Net Delinquent Taxes Receivable $ 688,742 46 SPECIAL REVEAUJE FUNDS The Special Revenue Funds account for the proceeds of specific revenue sources (other than special assessments, expendable trusts, or major capital projects) that are legally restricted to expenditure for specified purposes. Special Revenue Funds include: Criminal Justice Division Grant Fund This fund accounts for funds received and expended in connection with the City's multi-agency narcotics task force. Community Development Block Grant Fund 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 which 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. Health Department Fund This fund accounts for funds received primarily from federal, state, another local entity, and from local fees. Employees of the fund are responsible for protecting the public health through immunization programs, operation of a health clinic, health inspections, restaurant inspections, food handlers training, mosquito control, well baby clinics, and family planning programs. City of Paris, Texas Schedule 5 Special Revenue Funds Combining Balance Sheet September 30, 2002 Criminal Community Justice Development Division Block Special Health ASSETS Grant Grant Revenue Department Total Cash $ 56,002 $ 116,348 $ 127,940 $ $ 300,290 Notes Receivable 70,224 70,224 Due from Other Governments 159,034 108,560 232,960 500,554 Due from General Fund 129,203 129,203 Total Assets $ 215,036 $ 295,132 $ 127,940 $ 362,163 $ 1,000,271 LIABILITIES AND FUND BALANCES Liabilities Accounts Payable $ 31,996 $ 32,170 $ $ 6 $ 64,172 Due to General Fund 183,040 51,932 234,972 Total Liabilities 215,036 32,170 51,938 299,144 Fund Balances Reserved for Notes 70,224 70,224 Unreserved - Undesignated 192,738 127,940 310,225 630,903 Total Fund Balances 262,962 127,940 310,225 701,127 Total Liabilities and Fund Balances $ 215,036 $ 295,132 $ 127,940 $ 362,163 $ 1,000,271 48 City of Paris, Texas Schedule 6 Special Revenue Funds combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended September 30, 2002 Criminal Community Justice Development Division Block Special Health Grant Grant Revenue Department Total Revenues: Interest Earned $ 78 $ 2,064 $ 670 $ $ 2~812 Program Revenue 534,711 400,557 35,190 899,325 1,869,783 Total Revenues 534,789 402,621 35,860 899,325 1,872,595 Expenditures: Municipal Court 7,999 7,999 Community Development 400,622 400,622 Parks 4,688 4,688 Public Safety 564,650 1,818 566,468 Health 747,528 747,528 Total Expenditures 564,650 400,622 14,505 747,528 1,727,305 Excess Revenues Over (Under) Expenditures (29,861) 1,999 21,355 151,797 145,290 Fund Balances, September 30, 2001 29,861 260,963 106,585 158,428 555,837 Fund Balances, September 30, 2002 $ $ 262,962 $ 127,940 $ 310,225 $ 701,127 City of Paris, Texas Schedule 7 Criminal Justice Division Grant Fund Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual For the Fiscal Year Ended September 30, 2002 Variance Favorable Budget Actual {Unfavorable) Revenues: Intergovernmental Revenue State of Texas $ 388,471 $ 422,833 $ 34,362 Program Income 129,490 111,878 I 17,612) Interest Earned 78 78 Total Revenues 517,961 534,789 { 16,828} Expenditures: Personnel Cost 375,534 401,807 ( 26,273) Supplies and Other Operating Expenditures 142,427 162,843 ( 20,416) Total Expenditures 517,961 564,650 ( 46,689) Excess Revenues Over (Under) Expenditures ( 29,861) ( 29,861) Fund Balance, September 30, 2001 29,861 29,861 Fund Balance, September 30, 2002 $ 29,861 $ $( 29,861} 50 City of Paris, Texas Schedule 8 Community Developmenf Block Grant Fund Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual For the Fiscal Year Ended September 30, 2002 Variance Favorable Budget Actual (Unfavorable) Revenues: Interest Earned on Notes Receivable $ $ 2,064 $ 2,064 Grant Revenue 415,000 400,557 ( 14,443) Total Revenues 415,000 402,621 ( 12,379) Expenditures: Community Development 540,000 400,622 139,378 Total Expenditures 540,000 400,622 139,378 Excess Revenues Over (Under) Expenditures (125,000) 1,999 126,999 Fund Balance, September 30, 2001 260,963 260,963 Fund Balance, September 30, 2002 $ 135,963 $ 262,962 $ 126,999 City of Paris, Texas Schedule 8A Booker T. Washington Community Center Project Schedule of Revenues and Expenditures For the Fiscal Year Ended September 30, 2002 Federal Financial Assistance Federal Grantor: United States Department of Housing and Urban Development Pass Through Grantor: Texas Department of Housing and Community Affairs CFDA Number 14.239 Project Nur~ber 721596 Contract Period 02/28/02 - 02/25/04 Federal State Variance Award Prior Current Prior Current Favorable Budget Year Year Year Year Total (Unfavorable) Revenues: Federal $ 200,000 $ $ 9,500 $ $ $ 9,500 $ 190,500) State 38,000 38,000) Total Revenues 238,000 9,500 9,500 228,000) Expenditures: Federal Community Center 155,500 155,500 Acquisition 24,500 3,500 3,500 21,000 Administration 20,000 6,000 6,000 14,000 State 38,000 38,000 Total Expenditures 238,000 9,500 9,500 228,500 Excess Revenues Over Expenditures $ $ $ $ $ $ $ 52 City of Paris, Texas Schedule 8B Home Program-Owner Occupied Housing Assistance Schedule of Revenues and Expenditures For the Fiscal Year Ended September 30, 2002 Federal Financial Assistance Federal Grantor: United States Department of Housing and Urban Development Pass Through Grantor: Texas Department of Mousing and Community Affairs CFDA Number 14.239 Project Number 530395 Contract Period 08/01/2001 - 10/31/2002 Federal Local Variance Award Prior Current Prior Current Favorable Budget Year Year Year Year Total (Unfavorable) Revenues: Federal $390,000 $284,325 $100,226 $ $ $ 384,551 $( 5,449) Local 48,360 79,112 79,112 30,752 Total Revenues 438,360 284,325 100,226 79,112 463,663 25,303 Expenditures: Federal Owner Occupied Housing Assistance 375,000 284,325 85,395 - 369,720 5,280 Administration 15,000 14,831 - 14,831 169 Local 48,360 79,112 79,112 ( 30,752) Total Expenditures 438,360 284,325 100,226 79,112 463,663 ( 25,303) Excess Revenues Over Expenditures $ $ $ $ $ $~ ~ City of Paris, Texas Schedule 8C Home Program-Owner Occupied Housing Assistance Schedule of Revenues and Expenditures For the Fiscal Year Ended September 30, 2002 Federal Financial Assistance Federal Grantor: United Stat~s Department of Housing and Urban Development Pass Through Grantor: Texas Department of Housing and Community Affairs CFDA Number 14.239 Project Number 721048 Contract Period 05/08/01 - 05/07/03 Federal Local Variance Award Prior Current Prior Current Favorable Budget Year Year Year Year Total (Unfavorable) Revenues: Federal $250,000 $ $250,000 $ $ $ 250,000 $ Local 54,00q 22,992 22,992 ( 31,008) Total Revenues 304,000 250,000 22,992 272,992 ( 31,008) Expenditures: Federal Owner Occupied Housing Assistance 250,000 250,000 250,000 Local 54,000 22,992 22,992 31,008 Total Expenditures 304,000 250,000 22,992 272,992 31,008 Excess Revenues Over Expenditures $ $ $ $ $ $ $ 54 City of Paris, Texas Schedule 8D 1999 Housing Infrastructure Fund Program Schedule of Revenues and Expenditures For the Fiscal Year Ended September 30, 2002 Federal Financial Assistance Federal Grantor: United States Department of Housing and Urban Development Pass Through Grantor: Texas Department of Housing and Community Affairs CFDA Number 14.228 Project Nun~ber 719068715246 Contract Period 09/10/99 - 09/09/02 Federal Variance Award Prior Current Favorable Budget Year Year Total (Unfavorable Revenues: Federal $399,500 $370,850 $ $370,850 .$( 28,650) Total Revenues 399,500 370,850 370,850 ( 28,650) Expenditures: Water Improvements 33,000 33,000 33,000 Sewer Improvements 85,000 85,000 85,000 Street Improvements 154,525 154,525 154,525 Flood and Drainage 33,238 33,238 33,238 Clearance/Demolition 23,737 23,737 23,737 Engineering 30,000 25,850 25,850 4,150 Administration 40,000 15,500 15,500 24,500 Total Expenditures 399,500 370,850 370,850 28,650 Excess Revenues Over Expenditures $~ ~ $ - $ - $ __ City of Paris, Texas Schedule 9 Special Revenue Fund Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual For the Fiscal Year Ended September 30, 2002 Variance Favorable Budget Actual (Unfavorable) Revenues: Interest Earned $ $ 670 $ 670 Revenues 34,180 35,190 1,010 Total Revenues 34,180 35,860 1,680 Expenditures: Municipal Court 29,390 7,999 21,391 Police Department 4,000 1,818 2,182 Parks 5,000 4,688 312 Total Expenditures 38,390 14,505 23,885 Excess (Deficit) Revenues Over Expenditures ( 4,210) 21,355 25,565 Fund Balance, September 30, 2001 106,585 106,585 Fund Balance, September 30, 2002 $ 102,375 $ 127,940 $ 25,565 56 City of Paris, Texas Schedule 10 Health Department Fund Statement of Revenues, Expenditures and Changes in Fund Balance - Budget (GAAP Basis) and Actual For the Fiscal Year Ended September 30, 2002 Variance Favorable Budget Actual (Unfavorable) Revenues: Intergovernmental Revenue State of Texas $ 557,213 $ 571,733 $ 14,520 Lamar County 46,477 129,203 82,726 Local Fees 131,477 198,389 66,912 Total Revenues 735,167 899,325 164,158 Expenditures: Personnel Cost 543,549 563,556 ( 20,007) Supplies and Other Operating Expenditures 186,618 179,505 7,113 Capital Outlay 5,000 4,467 533 Total Expenditures 735,167 747,528 ( 12,361) Excess Revenues Over Expenditures 151,797 151,797 Fund Balance, September 30, 2001 158,428 158,428 Fund Balance, September 30, 2002 $ 158,428 $ 310,225 $ 151,797 CAPITAL PROJECTS FLrNDS Library Construction Fund This fund accounts for proceeds from the 1985 General Obligation Bond issue. The purpose of the issue was to renovate and expand the existing City library. This fund also accounted for a $100,000 state grant used in expansion, as well as $5,000 willed to the library building fund. Certificates of Obligation Construction Fund, Series 1993 This fund accounts for proceeds from the 1993 Certificates of Obligation issue. The purpose of this issue was for equipment, improvement, and expansion in various areas including police, solid waste, fire, parks, streets, airport, and various fees related to these projects. Tax and Revenue Certificates of Obligation Construction Fund, Series 2000 This fund accounts for proceeds from the 2000 Certificates of Obligation issue. The purpose of this issue was for constructing, improving, repairing, or purchasing various projects such as streets, drainage, sidewalks, lighting, buildings in various departments, parks, and fees related to these projects. Tax and Revenue Certificates of Obligation Construction Fund, Series 2002 This fund accounts for proceeds from the 2002 Certificates of Obligation issue. The purpose of this issue was for acquiring an 83,000 square foot building -- situated on 23 acres which will be converted to a law enforcement center for police, courts and jail and other improvements related thereto and for paying legal, fiscal, architectural, and engineering fees in connection with these _ projects. City of Paris, Texas Schedule 11 Capital Projects Funds Combining Balance Sheet September 30, 2002 Certificates of Obligation Library Series Series Series ASSETS Construction 1993 2000 2002 Total Cash $ $ $ 3,389,192 $ 5,968,909 $ 9,358,101 Investments 670,330 670,330 Accrued Interest 3,245 3,245 Real Estate Deposit - 25,000 25,000 Total Assets $ $ - $ 4,062,767 $ 5,993,909 $10,056,676 LIABILITI$S AND FUND BALANCES Liabilities Accounts Payable $ $ $ 71,557 $ $ 71,557 Due to General Fund 16,693 16,693 Fund Balances Reserved for Construction 3,974,517 5,993,909 9,968,426 Total Liabilities and Fund Balances $ $ $ 4,062,767 $ 5,993,909 ~ City of Paris, Texas Schedule 12 Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended September 30, 2002 Certificates of ©bliqation Library Series Series Series Construction 1993 2000 2002 Total Revenues: Investment Income $ 81 $ 381 $ 88,743 $ 995 $ 90,200 Total Revenues 81 381 88,743 995 90,200 Expenditures: City Council 1,100 47,057 48,157 Police 23,178 21,568 44,746 Parks 53,136 53,136 Cox Field 213,835 213,835 Streets and ~ighways 356,709 356,709 Library 7,344 7,344 Debt Service 10 10 Total Expenditures 7,344 213,835 434,123 68,635 723,937 Excess of Revenues Over (Under) Expenditures 7,263) ( 213,454) 345,380) ( 67,640) ( 633,737) Other Financing Sources (Uses): Tax and Revenue Bond Proceeds 6,061,549 6,061,549 Transfer In (Out) 10) 46,961 46,951) Excess of Revenues and Other Sources Over (Under) Expenditures 7,263) ( 166,504) 392,331) 5,993,909 5,427,812 Fund Balances, September 30, 2001 7,273 166,493 4,366,848 4,540,614 Fund Balances, September 30, 2002 $ - $ $ 3,974,517 $ 5,993,909 $ 9,968,426 6O DEBT SERVICE FUNDS The Debt Service Funds account for the accumulation of resources and the payment of general obligation principal and interest. The City is required by ordinance to levy ad valorem taxes sufficient to pay each installment of principal and interest of general obligation debt as it becomes due. The Debt Service Funds existing during the year were: Certificates of Obligation, Series 1993 Certificates of Obligation, Series 2000 Certificates of Obligation, Series 2002 City of Paris, Texas Schedule 13 Debt Service Funds Combining Balance Sheet September 30, 2002 Series Series Series ASSETS 1993 2000 2002 Total Cash $ 298,090 $ 317,957 $ 5,766 $ 621,813 Taxes Receivable 94,285 25,253 119,538 Less: Estimated Uncollectible Taxes (23,571) ( 6,313) (29,884) Total Assets $ 368,804 $ 336,897 $ 5,766 $ 711,467 LIABILITIES AND FUI~D BALANCE Deferred Revenues $ 68,214 $ 18,540 $ $ 86,754 Fund Balance Reserved for Debt Service 300,590 318,357 5,766 624,713 Total Liabilities and Fund Balance $ 368,804 $ 336,897 $ 5,766 $ 711,467 City of Paris, Texas Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balance For the Fiscal Year Ended September 30, 2002 Series 1993 Variance Favorable Budget Actual {Unfavorable) Revenues: Ad Valorem Taxes $ 402,665 $ 401,949 $( 716) Interest Earned ( 753) { 753) Total Revenues 402,665 401,196 ( 1,469) Expenditures: Bond Principal Retirement 215,000 215,000 Interest and Fiscal Charges 187,665 187,563 102 Total Expenditures 402,665 402,563 102 Excess of Revenues Over (Under) Expenditures { 1,367) 1,367) Fund Balance, September 30, 2001 301,957 301,957 Fund Balance, September 30, 2002 $ 301,957 $ 300,590 $( 1,367) 63 Schedule 14 Series 2000 Series 2002 Variance Variance Favorable Favorable Total Budset Actual (Unfavorable) Budset Actual (Unfavorable) Actual. 518,595 $ 522,071 $ 3,476 $ $ $ $ 924,020 13) ( 13) 6,316 6,316 5,550 518,595 522,058 3,463 6,316 6,316 929,570 175,000 175,000 390,000 343,595 343,448 147 550 ( 550) 531,561 518,595 518,448 147 550 ( 550) 921,561 3,610 3,610 5,766 5,766 8,009 314,747 314,747 616,704 314,747 $ 318,357 $ 3,610 $ $ 5,766 $ 5,766 $ 624,713 PROPRIETARY FLrND TYPES ENTERPRISE FDI~D The Enterprise Fund accounts for operations that are financed and operated in a manner similar to private business enterprises. The intent of the City is that costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Currently, the City's only enterprise activity is its water and sewer utility system. The activities of the Enterprise Fund are reported in the following sub-funds: Water and Sewer Sub-Fund This fund accounts for all revenues and expenditures related to water and sewer services, except those legally required to be accounted for elsewhere, and those accounted for separately for internal management purposes. It is the primary operating fund for the utility. Included in this fund are a water and sewer contingency and a voluntary reserve to pay the cost of future water rights. Water Revenue Construction Sub-Fund This fund accounts for the receipt and distribution of proceeds from the 1997 Waterworks and Sewer System Revenue Bonds of $5,000,000, the 1998 Waterworks and Sewer System Revenue Refunding Bonds of $6,905,000, the 1998 Tax and Revenue Refunding Bonds of $5,810,000, and the 2000 Waterworks and Sewer System Revenue Bonds of $9,500,000. The 1998 issues represent $930,000 of new money and a partial refunding of the 1991 and 1992 issues. The 2001 issue was to refund the remaining bonds of Series 1991. Revenue Bond Sinking Sub-Fund This fund accounts for all water and sewer related interest and sinking funds. It also accounts for certain water and sewer reserves. Each interest and sinking fund collects and expends funds necessary to pay all principal, interest, and related costs on their corresponding debt issue. Some debt ordinances require the establishment of a reserve fund to further guarantee the timely payment of debt obligations. Those interest and sinking funds and reserve funds which currently exist are: Water and Sewer Revenue Bonds Reserve Water and Sewer Revenue I & S 1992 Series Certificates of Obligation I & S 1994 Series Water and Sewer Revenue I & S 1997 Series Water and Sewer Revenue Refunding I & S 1998 Series Tax and Revenue Refunding I & S 1998 Series Water and Sewer Revenue Bonds I & S 2000 Series Tax and Revenue Refunding Bonds I & S 2001 Series City of Paris, Texas Water and Sewer Fund Combining Balance Sheet Septe~ber 30, 2002 Water Revenue Bond ASSETS and Sewer Construction Sinking Total Cash and Cash Equivalents $ 1,100 $ $ $ 1,100 Accounts Receivable 706,204 706,204 unbilled Accounts Receivable 852,984 852,984 Due From General Fund 36,456 36,456 Inventory of Materials and Supplies, at Cost 208,816 208,816 Total Current Assets 1,805,560 1,805,560 Restricted Assets: Cash and Cash Equivalents and Investments (at fair value) Accrued Interest 10,784 12,805 4,699 28,288 Bonds and Additional Bond Reserve Fund Cash and Cash Equivalents 712,284 712,284 Investments 992,375 992,375 Water and Sewer Bond Interest and Sinking Funds Cash and Cash Equivalents 2,079,514 2,079,514 Bond Construction Fund Cash and Cash Equivalents 5,377,550 5,377,550 Investments 2,540,848 2,540,848 Due From General Fund 60,882 60,882 Customers' Deposits Cash and Cash Equivalents 172,317 172,317 Investments 325,551 325,551 Pat Mayse Reserve Cash and Cash Equivalents 792,424 792,424 Investments 1,358,938 1,358,938 Contingency Fund Cash and Cash Equivalents 337,634 337,634 Investments 385,732 385,732 Total Restricted Assets 3,383,380 7,992,085 3,788,872 15,164,337 Water Rights, Net of Accumulated ~ortization 888,115 888,115 Net Fixed Assets 47,180,583 3,826,863 51,007,446 Other Assets - Unamortized Bond Expense 1,197,508 1,197,508 Total Assets $53,257,638 $ 11,818,948 $ 4,986,380 $ 70,062,966 66 Schedule 15 Water Revenue LIABILITIES, RESERVES, RETAINED Water Revenue Bond EA~91qINGS AND CONTRIBUTED CAPITAL and Sewer Construction Sinking Total Current Liabilities Payable from Current Assets: Payable to U.S.A. for Water Rights, Current Portion $ 27,134 $ $ $ 27,134 Interest Payable - Water Rights 35,276 35,276 Capital Leases Payable - Current 14,020 14,020 Due to Other Funds 2,123,251 - 2,123,251 Accounts Payable 225,627 225,627 2,425,308 2,425,308 Current Liabilities Payable from Restricted Assets: Contract Liabilities 110,987 110,987 Current portion of Revenue Bonds Payable 2,060,000 2,060,000 Interest Payable - Revenue Bonds 525,603 525,603 Customers' Deposits 416,309 416,309 416,309 110,987 2,585,603 3,112,899 Total Current Liabilities 2,841,617 110,987 2,585,603 5,538,207 Long-term Liabilities: Bonds Payable, Net of Current Portion 33,545,000 33,545,000 Payable to U.S.A. for Water Rights, Net of Current Portion 696,236 696,236 Capital Leases Payable, Net of Current Portion 21,329 21,329 Accrued Compensated Absences 96,067 96,067 Total Long-term Liabilities 813,632 33,545,000 34,358,632 Total Liabilities 3,655,249 110,987 36,130,603 39,896,839 Retained Earnings: Reserved for Revenue Bonds 1,926,635 1,926,635 Unreserved (Deficit) 28,381,498 11,707,961 (31,144,223) 8,945,236 Total Retained Earnings 30,308,133 11,707,961 (31,144,223) 10,871,871 Contributed Capital 19,294,256 19,294,256 Total Equity 49,602,389 11,707,961 (31,144,223) 30,166,127 Total Liabilities, Reserves, Retained Earnings and Contributed Capital ~ $ 11,818,948 $ 4,986,380 ~ City of Paris, Texas Water and Sewer Fund Combining Schedule of Revenues, Expenses and Changes in Retained Earnings For the Fiscal Year Ended September 30, 2002 Water Water Revenue and Sewer Construction Operating Revenues: Water Sales $ 5,957,489 $ Water Taps 21,750 Sewer Charges 3,894,337 Industrial Surcharges 144,859 Sewer Taps 15,400 Sanitation Billing Fees 70,816 Service Charges 73,967 Miscellaneous 50,015 Total Operating Revenues 10,228,633 Operating Expenses: Warehouse 102,394 Water and Sewer Billing and Collecting 536,042 Water Production 1,738,076 Water Distribution 994,060 Sewer Maintenance 482,872 Waste Water Treatment 1,779,440 Lift Stations 542,743 Depreciation 2,218,284 Total Operating Expenses 8,393,911 Operating Income 1,834,722 Non-Operating Revenues (Expenses): Investment Earnings 85,103 205,457 Interest Expense - Revenue Bonds Amortization 13,663) Bank Charges and Agent Fees Contribution Income 219,162 Net Non-Operating Revenues (Expenses) 290,602 205,457 Income (Loss) Before Operating Transfers 2,125,324 205,457 Transfers: Operating Transfers In 1,342,056 438,112 Operating Transfers Out 3,872,000) 1,342,056) Total Transfers 2,529,944) 903,944) Net Income (Loss) 404,620) 698,487) Retained Earnings (Deficit), Septe~lber 30, 2001 30,712,753 12,406,448 Retained Earnings (Deficit), September 30, 2002 $ 30,308,133 $ 11,707,961 68 Schedule 16 Revenue Bond Sinking Total $ $ 5,957,489 21,750 3,894,337 144,859 15,400 70,816 73,967 50,015 10,228,633 102,394 - 536,042 - 1,738,076 - 994,060 - 482,872 1,779,440 542,743 2,218,284 8,393,911 1,834,722 115,514 406,074 1,388,521) 1,388,521) 123,368) 137,031) 2,095) 2,095) 219,162 1,398,470) 902,411) 1,398,470) 932,311 2,772,000 4,552,168 438,112) 5,652,168) 2,333,888 1,100,000) 935,418 167,689) (32,079,641) 11,039,560 $(31,144,223) $ 10,8_71,871 City of Paris, Texas Schedule 17 Water and Sewer Fund Combined Schedule of Revenues and Expenses - Budget and Actual For the Fiscal Year Ended September 30, 2002 Variance Favorable Budget Actual (Unfavorable) Operating Revenues: Water Sales $ 6,208,250 $ 5,957,489 $( 250,761) Water Taps 20,000 21,750 1,750 Sewer Charges 4~060,000 3,894,337 ( 165,663) Industrial Surcharges 225,000 144,859 ( 80,141) Sewer Taps 14,500 15,400 900 Sanitation Billing Fees 74,385 70,816 ( 3,569) Service Charges 70,000 73,967 3,967 Miscellaneous Sales 71,985 50,015 ( 21,970) Total Operating Revenues 10,744,120 10,228,633 ( 515,487) Operating Expenses: Warehouse 111,554 102,394 9,160 Water and Sewer Billing D~nd Collecting 572,421 536,042 36,379 Water Production 2,293,561 1,738,076 555,485 Water Distribution 811,562 994,060 ( 182,498) Sewer Maintenance 518,138 482,872 35,266 Waste Water Treatment 1,682,839 1,779,440 96,601) Lift Stations 328,682 542,743 214,061) Depreciation 2,218,284 2,218,284) Total Operating Expenses 6,318,757 8,393,911 2,075,154) Operating Income 4,425,363 1,834,722 2,590,641) Non-Operating Revenues (Expenses): Investment Earnings 160,000 406,074 246,074 Interest Expense - Revenue Bonds 1,796,410) 1,388,521) 407,889 Amortization 137,031) 137,031) Bank Charges and Agent Fees 3,600) 2,095) 1,505 Contribution Income 219,162 219,162 Net Non-Operating Revenues (Expenses) 1,640,010) 902,411) 737,599 Income Before Operating Transfers 2,785,353 932,311 1,853,042) Transfers: Operating Transfers Out 1,100,000) 1,100,00q) Net Income (Loss) $ 1,685,353 167,689) $( 1,853,042) Retained Earnings, September 30, 2001 11,039,560 Retained Earnings, September 30, 2002 $ 10,871,871 70 City of Paris, Texas Schedule 18 Water and Sewer Fund combined Schedule of Changes in Retained Earnings and Contributions For the Fiscal Year Ended September 30, 2002 Contributions Retained From From Earnings Total Municipality Developers Other Balance, Septer~er 30, 2001 $11,039,560 $19,294,256 $ 5,998,079 $ 8,865,925 $ 4,430,252 Net Income (Loss) for the Year ( 167,689) Balance, Septen~ber 30, 2002 $10,871,871 $19,294,256 $ 5,998,079 $ 8,865,925 $ 4,430,252 City of Paris, Texas Water and Sewer Fund Schedule of Fixed Assets and Depreciation For the Fiscal Year Ended September 30, 2002 Fixed Assets Balance Balance 9-30-01 Additions Retirements 9-30-02 Water Department: Land, Plant, Pumps, and Motors: Balance, September 30, 2001 $ 18,938,021 $ $ $ 18,938,021 18,938,021 18,938,021 Distribution System: Balance, September 30, 2001 26,859,506 26,859,506 Water Mains 41,203 41,203 Meters and Boxes 47~440 47,440 MLK Water line 35,409 35,409 Cox Field 8" water main 262 262 6" and 8" PVC - Hills Phase 3 31,400 31,400 6" PVC - Amherst 12,200 12,200 6" PVC - Stoneridge 34,200 34,200 8" - 19th N.W. 11,895 11,895 1" - 6" LF 44,229) ( 44,229) 26,859,506 214,009 44,229) 27,029,286 Maintenance Equipment and Vehicles: Balance, September 30, 2001 785,078 785,078 Chevy 1500 Pickup 9,011) ( 9,011) Case 580C Backhoe 23,300) ( 23,300) Ford Crown Victoria 8,250 8,250 785,078 8,250 32,311) 761,017 Furniture and Equipment: Balance, September 30, 2001 534,461 534,461 534,461 534,461 Total Water Department 47,117,066 222,259 ( 76,540) 47,262,785 This financial presentation on facing pages 72 and 73 should be read in connection with facing pages 74 and 75. 72 Schedule 19 Depreciation Estimated Balance Balance Net Book Life 9-30-01 Additions Retirements 9-30-02 Value 10-100 years $ 8,650,973 $ 604,629 $ $ 9,255,602 $ 9,682,419 8,650,973 604,629 9,255,602 9,682,419 5-30 years 7,285,699 659,338 7,945,037 18,914,469 30 years 687 687 40,516 30 years 791 791 46,649 30 years 590 590 34,819 5 years 26 26 236 30 years 523 523 30,877 30 years 203 203 11,997 30 years 570 570 33,630 30 years 198 198 11,697 44,229) 44,229) 7,285,699 662,926 44,229) 7,904,396 19,124,890 5-30 years 703,068 75,956 779,024 6,054 9,011) 9,011) 23,300) 23,300) 5 years 825 825 7,425 703,068 76,781 32,311) 747,538 13,479 5-30 years 500,994 20,329 521,323 13,138 500,994 20,329 521,323 13,138 17,140,734 1,364,665 76,540) 18,428,859 28,833,926 City of Paris, Texas Wa~er and Sewer Fund Schedule of Fixed Assets and Depreciation For the Fiscal Year Ended Septenzber 30, 2002 Fixed Assets Balance Balance 9-30-01 Additions Retirements 9-30-02 Sewer Department: Land, Plant, Pumps, and Motors: Balance, September 30, 2001 11,483,742 11,483,742 11,483,742 11,483,742 Collection System: Balance, September 30, 2001 15,782,813 15,782,813 Sewer Lines 5,936 5,936 MLK Sewer line 41,195 41,195 NW 19th Sewer Rehab 1,317 1,317 outfall Line 1,257,937 1,257,937 6" and 8'~ PVC - Hills Phase 3 48,605 48,605 8" PVC - Amherst 27,300 27,300 6" and 8" PVC - Stoneridge 44,695 44,695 8" - 19th N.W. 8,867 8,867 6" and 15" LF 2,609) ( 2,609) 15,782,813 1,435,852 2,609) 17,216,056 Furniture, Equipment, and Vehicles: Balance, September 30, 2001 1,266,981 1,266,981 480 Case Backhoe 17,573) ( 17,573) Backhoe 64,989 64,989 Backhoe Hammer 11,715 11,715 Ford Crown Victoria 11,848 11,848 1,266,981 88,552 17,573) 1,337,960 Total Sewer Department 28,533,536 1,524,404 20,182) 30,037,758 Total Water & Sewer Department $ 75,650,602 $ 1,746,663 $( 96,722) $ 77,300,543 This financial presentation on facing pages 74 and 75 should be read in connection with facing pages 72 and 73. 74 Schedule 19 (Continued) Depreciation Estimated Balance Balance Net Book Life 9-30-01 Additions Retirements 9-30-02 Value 10-50 years 4,321,706 329,028 4,650,734 6,833,008 4,321,706 329,028 4,650,734 6,833,008 5-30 years 5,490,101 436,712 5,926,813 9,856,000 30 years 99 99 5,837 30 years 687 687 40,508 30 years 22 22 1,295 30 years 20,966 20,966 1,236,971 30 years 810 810 47,795 30 years 455 455 26,845 30 years 745 745 43,950 30 years 148 148 8,719 2,609) ( 2,609) 5,490,101 460,644 2,609) 5,948,136 11,267,920 5-30 years 1,045,857 55,091 1,100,948 166,033 17,573) ( 17,573) 5 years 6,499 6,499 58,490 5 years 1,172 - 1,172 10,543 5 years 1,185 1,185 10,663 1,045,857 63,947 17,573) 1,092,231 245,729 10,857,664 853,619 20,182) 11,691,101 18,346,657 $ 27,998,398 $ 2,218,284 $( 96,722) $ 30,119,969 ~ City of Paris, Texas Water and Sewer Fund Schedule of Expenditures - Budget and Actual For the Fiscal Year Ended September 30, 2002 Operatinq Expenses Personnel Mainte- Sundry Cost Supplies Contractual nance Charges Water Warehouse $ 95,148 $ 1,106 $ 5,412 $ 498 $ 230 Billing and Collecting 363,953 87,857 49,534 32,212 2,486 Water Production 610,469 355,951 579,087 87,909 9,898 Water Distribution 465,904 30,074 195,011 285,879 3,314 Total Water 1,535,474 474,988 829,044 406,498 15,928 Sewer Sewer Maintenance 261,157 26,814 10,656 178,848 3,763 Waste Water Treatment 907,333 180,605 352,353 264,081 10,692 Lift Stations 173,567 14,455 293,795 49,594 2,010 Total Sewer 1,342,05~ 221,874 656,804 492,523 16,465 Depreciation Revenue Bond Requirements Operating Transfers Capital Outlay Non-Operating Expenditures Grand Total 2,877,531 696,862 1,485,848 899,021 32,393 Budget 3,051,742 726,080 1,504,410 1,007,775 28,750 Variance - Favorable (Unfavorable) $ 174,211 $ 29,218 $ 18,562 $ 108,754 $(3,643) 76 Schedule 20 Variance Grand Favorable Other Total Budget (Unfavorable) $ $ 102,394 $ 111,554 $ 9,160 536,042 572,421 36,379 23,517 1,738,076 2,293,561 555,485 994,060 811,562 182,498) 23,517 3,370,572 3,789,098 418,526 482,872 518,138 35,266 1,779,440 1,682,839 96,601) 542,743 328,682 214,061) 2,805,055 2,529,659 275,396) 2,218,284 2,218,284 2,218,284) 1,388,521 1,388,521 2,825,010 1,436,489 1,100,000 1,100,000 1,100,000 160,455 160,455 597,550 437,095 139,126 139,126 139,126) 5,029,903 11,182,013 $ 10,841,317 $( 340,696) 4,522,560 10,841,317 $( 507,343) $( 340,696) INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis. Employees' Insurance Internal Service Fund This fund accounts for the City's partially self-funded employee insurance program. Both employer and employee contributions are collected in this fund and payments are made for medical claims. City of Paris, Texas Schedule 21 Employees' Insurance Internal Service Fund Balance Sheet September 30, 2002 ASSETS Investments $ 576 Stop Loss Receivable 399,807 Total Assets $ 400,383 LIABILITIES AND EQUITY Liabilities Due to General Fund $ 1,161,626 Claims Liabilities 301,623 Total Liabilities 1,463,249 Equity Contributed Capital - Government 1,716,701 Retained Earnings (Deficit) (2,779,567) Total Equity (Deficit) (1,062,866) Total Liabilities and Equity $ 400,383 79 City of Paris, Texas Schedule 22 Employees' Insurance Internal Service Fund Statement of Revenues, Expenses and Changes in Retained Earnings For the Fiscal Year Ended September 30, 2002 Operating Revenues: Quasi-External Interfund Transactions Contributed by City $ t,009,447 Contributed by Employees 207,227 Total Revenues 1,216,674 Operating Expenses: Insurance Claims Net of Claim Payment Refunds 2,273,150 Total Expenses 2,273,150 Operating Income {Loss) (1,056,476) Non-Operating Revenue: Investment Income 382 Net Income (Loss) (1,056,094) Retained Earnings {Deficit), September 30, 2001 (1,723,473} Retained Earnings (Deficit), September 30, 2002 $(2,779,567) FIDUCIARY FUNDS Fiduciary Funds account for assets held by the City for the benefit of others. These trust funds may be further classified as expendable or non-expendable. Currently existing trust funds are Expendable Trust Funds: Library Memorial Fund This fund accounts for donations given for books in memory or honor of citizens. J. p. Poteet Trust Fund This fund is an expendable trust for library related purposes as specified in the associated will. Wilbor-Deshong Trust Fund This fund is an expendable trust for library related purposes as specified in the associated will. w. B. and Kathryn Vaughn Memorial Fund This fund accounts for donations given for major acquisitions in memory of the Vaughns. Non-Expendable Trust Funds: J. A. Love Trust Fund This fund accounts for a non-expendable trust established by bequest for library related activities. Gibbs Library Fund This fund accounts for a non-expendable trust established by contributions from individuals for history related materials. Malone H. Love Memorial Fund This fund accounts for a non-expendable trust established by bequest for library related activities. Agency Fund: Economic Development Fund This fund accounts for the activity of the Paris Economic Development Corporation, a non-profit organization organized to promote, assist, and enhance economic development activities for the City of Paris. City of Paris, Texas Trust and Agency Funds Combining Balance Sheet September 30, 2002 Expendable Trust Funds Wilbor- J.p. Deshong Library Poteet Vaughn ASSETS Trust Memorial Trust Memorial Cash $ 5,773 $ 25,041 $ $ 522 Investments 53,338 23,706 57,844 Notes Receivable Accounts Receivable - Sales Tax Accrued Interest Receivable Prepaid Expenses Land Total Assets $ 59,11~1 $ 25,041 $ 23,706 $ 58,366 LIABILITIES Due to General Fund $ $ $ 22,661 $ Bonds Payable Note Payable Interest Payable Due to Paris Economic Development Corporation Total Liabilities 22,661 FUND BALANCES Unreserved 59,111 25,041 1,045 58,366 Total Fund Balances 59,111 25,041 1,045 58,366 Total Liabilities and Fund Balances $ 59,111 $ 25,041 $ 23,706 $ 58,366 82 Schedule 23 Non-Expendable Agency Trust Funds Funds J.A. Love Gibbs M.H. Love Economic Trust Library Memorial Development Total $ 8,908 $ 4,145 $ 27,650 $ 1,317,129 $ 1,389,168 35,558 481,674 652,120 - 3,499,422 3,499,422 - 162,500 162,500 12,925 12,925 6,825 6,825 12,631 12,631 $__ 44,466 $ 4,145 $ 27,650 $ 5,493,106 $ 5,735,591 $ 22,661 3,730,000 3,730,000 48,681 48,681 1,693,264 1,693,264 5,493,106 5,515,767 44,466 4,145 27,650 219,824 44,466 4,145 27,650 219,824 $ 44,466 $ 4,145 2~ $ 5,493,106 5 73~ City of Paris, Texas Schedule 24 Library Expendable Trust Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Fiscal Year Ended September 30, 2002 Wilbor- J.p. Deshong Library Poteet Vaughn Trust Memorial Trust Memorial Total Revenues: Memorial Donations $ $ 7,656 $ $ $ 7,656 Interest Earned 1,426 344 594 1,932 4,296 Total Revenues 1,426 8,000 594 1,932 11,952 Expenditures: Books 1,141 1,141 Total Expenditures 1,141 1,141 Excess of Revenues Over (Under) Expenditures 1,426 6,859 594 1,932 10,811 Transfers in (out) (55,920) 55,920 Net Change in Fund Balances 1,426 (49,061) 594 57,852 10,811 Fund Balance, September 30, 2001 57,685 74,102 451 514 132,752 Fund Balance, Septenfoer 30, 2002 $ 59,111 $ 25,041 $ 1,045 $ 58,366 $ 143,563 84 city of Paris, Texas Schedule 25 Library Non-Expendable Trust Funds Combining Statement of Revenues, Expenses and Changes in Fund Balances For the Fiscal Year Ended September 30, 2002 J.A. Love Gibbs M.H. Love Trust Library Memorial Total Operating Revenues Memorial Donations $ $ $ 27,600 $ 27,600 Total Operating Revenue 27,600 27,600 Non-Operating Income Interest Earned 1,030 65 50 1,145 Net Income 1,030 65 27,650 28,745 Fund Balance, September 30, 2001 43,436 4,080 47,516 Fund Balance, September 30, 2002 $ 44,466 $ 4,145 $ 27,650 $ 76,261 City of Paris, Texas Schedule 26 Library Non-Expendable Trust Funds Combining Statement of Cash Flows For the Fiscal Year Ended September 30, 2002 J.A. Love Gibbs M.H. Love Trust Library Memorial Total Cash Flows from Operating Activities: Operating Income $ $ $ 27,600 $ 27,600 Cash Flows from Investing Activities: Interest on Investments 141 65 50 256 Net Cash Provided by Investing Activities 141 65 50 256 Net Increase in Cash 141 65 27,650 27,856 Cash and Cash Equivalents at September 30, 2001 8,767 4,080 12,847 Cash and Cash Equivalents at Septeraber 30, 2002 $ 8,908 $ 4,145 $ 27,650 $ 40,703 86 City of Paris, Texas Schedule 27 Economic Development Agency Fund Statement of Changes in Assets and Liabilities For the Fiscal Year Ended September 30, 2002 Balance Balance September 30, September 30, ASSETS 2001 Additions Deletions 2002 Cash $ 1,318,594 $ 1,326,186 $ 1,327,651 $ 1,317,129 Investments 478,910 2,764 481,674 Loan Receivable 3,633,363 133,941 3,499,422 Accounts Receivable Sales Tax 150,000 12,500 162,500 Accrued Interest Receivable 15,864 2,939 12,925 Prepaid Expenses 570 6,255 6,825 Land 12,631 12,631 Total Assets $ 5,609,932 $ 1,347,705 $ 1,464,531 $ 5,493,106 LIABILITIES Bonds Payable $ 3,860,000 $ $ 130,000 $ 3,730,000 Note Payable 104,515 55,834 48,681 Interest Payable 22,001 840 21,161 Due to Paris Economic Development Corporation 1,623,416 1,347,705 1,277,857 1,693,264 Total Liabilities $ 5,609,932 $ 1,347,705 $ 1,464,531 $ 5,493,106 GENEP~AL FIXED ASSETS ACCOUNT GROUP The General Fixed Assets Account Group is a self-balancing set of accounts established to provide accounting control over the fixed assets not used in proprietary fund operations. These general fixed assets are accounted for in this group of accounts rather than in the respective governmental funds. All fixed assets are recorded at historical cost, if purchased. Donated fixed assets are valued at their estimated fair market value on the date of donation. No depreciation has been provided on general fixed assets. City of Paris, Texas Schedule 28 General Fixed Assets Account Group Statement of General Fixed Assets September 30, 2002 ASSETS General Fixed Assets Real Property $ 26,276,147 Furniture and Fixtures 1,649,596 Automobiles, Trucks and Equipment 12,986,256 Total General Fixed Assets $ 40,911,999 OTHER CREDITS Investment in General Fixed Assets Current Revenues - Current Year $ 1,115,410 Current Revenues - Prior Years 29,847,587 Capital Projects 6,182,933 Contributions 3,766,069 Total Investment in General Fixed Assets $ 40,911,999 89 City of Paris, Texas Schedule 29 General Fixed Assets Account Group Schedule of General Fixed Assets by Department and Division September 30, 2002 Furniture Automobiles Real and Trucks and Department and Division Total Property Fixtures Equipment General Government $ 2,348,045 $ 1,787,407 $ 106,740 $ 453,898 Finance 171,684 14,737 23,176 133,771 Public Safety: Police Department 2,725,746 353,791 164,333 2,207,622 Fire Department 5,343,381 2,516,787 180,463 2,646,131 Ambulance Department/EMS 1,157,007 23,805 50,551 1,082,651 Public Works: Engineering 303,238 2,026 44,074 257,138 Parks and Recreation 2,356,702 1,291,793 263,508 801,401 Solid Waste 2,468,063 859,459 18,233 1,590,371 Streets and Highways 12,182,250 10,784,925 79,101 1,318,224 Warehouse 44,847 8,400 15,587 20,860 Traffic and Pt~blic Lighting 322,181 81,965 64,601 175,615 Garage 199,346 87,378 19,797 92,171 Paris-Lamar County Health Department 94,384 7,694 7,192 79,998 Community Development 3,495,921 3,432,610 12,616 50,695 Paris Band 13,496 8,963 4,533 -- King's Daughters 60 60 Library 3,368,319 1,015,075 579,488 1,773,756 Cox Field 4,317,329 4,008,295 11,113 297,921 Total General Fixed Assets $40,911,999 $26,276,147 $1,649,596 $12,986,256 City of Paris, Texas General Fixed Assets Account Group Schedule of Changes in General Fixed Assets For the Fiscal Year Ended September 30, 2002 Public Safety Emergency General Medical Additions (Deletions) Total Government Police Fire Service Real Property Cox Field Airport Improvements $( 49,179) $ $ $ $ Gibbons Park Addition Donation 6,340 6,340 Depot Rehab Project 596,335 596,335 Fire Stations 2 and 4 118,804 118,804 Oak Park Walking Track Improvements 15,000 Bywaters Park Electrical 8,500 City Pool Shade Structure 15,000 Lake Crook Trails 5,850 Streetscape Enhancement 22,911 Library Automatic Door 15,000 Cox Field Airport Hangar 213,836 A~imal Shelter 23,178 23,178 Sport Complex 21,083 Indoor Natatorium 5,163 Law Enforcement Center 21,568 21,568 Total Real Property 1,039,389 602,675 44,746 118,804 Autos, Trucks and Equipment Vermeer 1250 Chipper 17,200) Distributor Truck 8,729) Food 3600 Tractor 5,220) Ford Ranger Pickup 10,232) Crown Victoria Police Car 14,257) (14,257) Lieberer Excavator 96,892) 1986 Ford Dump Truck 7,100) 1990 Chev~ Caprice 13,202) (13,202) 1992 Che~; Caprice 14,950) (14,950) 1997 Crown Victoria 19,708) (19,708) 1986 Ford Dump Truck 7,100) John Deere Loader 46,970) 1980 Rubber Tire Roller 28,427) 1997 Ford Antbulance 74,034) (74,034) Voice Mail System 11,045 8,795 2,250 2002 Ford Modular Ambulance 87,724 15,503 72,221 2002 Chevrolet Impala 17,344 17,344 2 Crown Victoria Police Cars 48,250 48,250 Defibulator 5,924 5,924 Projector 5,032 5,032 Solar Powered Warning System 7,956 7,956 Camera System 31,170 31,170 2 2002 Ford Ranger Trucks 22,214 Playground Equipment 8,491 Zero Turn Mower 6,450 This financial presentation on facing pages 91 and 92 should be read in connection with facing pages 93 and 94. 91 Schedule 30 Cox Parks & Streets & Library Field Engineering Recreation Highways Other $ $(49,179) - 15,000 - 8,500 - 15,000 5,850 22,911 15,000 213,836 21,083 5,163 15,000 164,657 70,596 22,911 17,200) 8,729) 5,220) 10,232) 96,892) 7,100) - 7,100) - 46,970) - 28,427) 22,214 - 8,491 6,450 City of Paris, Texas General Fixed Assets Account Group Schedule of Changes in General Fixed Assets For the Fiscal Year Ended September 30, 2002 Public Safety Emergency General Medical Additions (Deletions) Total Government Police Fire Service Autos, Trucks and Equipment (Continued) Mower 6,550 Panasonic Notebook 6,803 6,803 Dodge Dakota Club Cab 16,313 16,313 Dodge Dakota Club Cab 16,313 16,313 Total Autos, Trucks and Equipment ( 66,442) 24,298 36,103 52,332 4,990 Totals $ 972,947 $ 626,973 $ 80,849 $171,136 $ 4,990 This financial presentation on facing pages 93 and 94 should be read in connection with facing pages 91 and 92. 93 Schedule 30 (Continued) Cox Parks & Streets & Library Field Enqineering Recreation Highways Other 6,550 -- ( 85,633) (120,746) 22,2!4 -- $~15,000 $ 164,657 $ $( 15,037) $(97,835) $ 22,214 GENER3~L LONG-TERM DEBT ACCOUNT GROUP The General Long-Term Debt Account Group is a self-balancing set of accounts established to provide accounting control over unmatured general obligation bonds and other long-term liabilities such as accrued compensated absences, general obligation note payable, and capital lease payable. The resources necessary to retire general obligation bond principal and interest due within one year are accumulated in the Debt Service Funds. Currently outstanding bonds and note are: Certificates of Obligation, Series 1993 Certificates of Obligation, Series 2000 Certificates of Obligation, Series 2002 General Obligation Note Payable 95 City of Paris, Texas Schedule 31 -- General Long~Term Debt Account Group Balance Sheet September 30, 2002 ASSETS AND OTHER DEBITS Amounts Available in Debt Service Fund $ 624,713 Amount to be Provided for Retirement of General Long-Term Debt 15,952,138 Total Assets and Other Debits $ 16,576,851 LIABILITIES Accrued Compensated Absences $ 260,376 Certificates of Obligation Payable, Series 1993 3,685,000 Certificates of Obligation Payable, Series 2000 5,740,000 Certificates of Obligation Payable, Series 2002 6,060,000 General Obligation Note Payable 88,784 Capital Leases Payable 762,691 Total Liabilities $ 16,576,851 96 City of Paris, Texas General Long-Term Debt Account Group Certificates of Obligation and Note Payable Schedule of Maturities September 30, 2002 Certificates of Obligation Year Ending Series 1993 Series 2000 Series 2002 September 30 Principal Interest Principal Interest Principal Interest 2003 $ 225,000 $ 174,200 $ 185,000 $ 330,843 $ 240,000 $ 195,411 2004 240,000 162,388 200,000 317,849 190,000 241 758 2005 250,000 151,363 210,000 304,011 195,000 234 773 2006 265,000 139,775 220,000 289,499 210,000 226 672 2007 280,000 127,162 235,000 274,142 220,000 218 073 2008-2012 1,640,000 409,631 1,405,000 1,118,555 1,270,000 946 363 2013-2017 785,000 39,875 1,875,000 664,215 1,635,000 655 424 2018-2022 1,410,000 119,353 2,100,000 252 165 Totals $3,685,000 ~1,204,394 $5,740,000 $3,418,467 $6,060,000 $2,970,639 97 Schedule 32 General Obligation Note Principal Interest Total $ 6,238 $ 3,439 $ 1,360,131 6,551 3,127 1,361,673 6,877 2,800 1,354,824 7,221 2,456 1,360,623 7,582 2,095 1,364,054 34,315 4,394 6,828,258 5,654,514 3,881,518 $ 68,784 $ 18,311 $ 23,165,595 SUPPLEMENTAL DATA City of Paris, Texas Schedule 33 Combined Schedule of Investments - Ail Funds September 30, 2002 Maturity Interest Date Rate Amount General Fund: Certificate of Deposit - Liberty National Bank 01-13-03 2.07% $ 6,804 Federal National Mortgage Association 12-01-02 6.0 97 Federal National Mortgage Association 10-25-04 6.0 425,674 Total General Fund $ 432,575 Fiduciary Funds: Certificates of Deposit - Deshong - Liberty National Bank 11-18-02 1.96% $ 53,338 Liberty National Bank 12-24-02 2.47 29,783 Liberty National Bank 10-07-02 1.19 28,061 Poteet - Liberty National Bank 11-18-02 1.96 23,706 LOVe - Liberty National Bank 11-18-02 1.96 35,558 PEDC - Peoples National Bank 11-14-02 2.6 95,000 PEDC - Lamar National Bank 11-09-02 2.2 101,674 PEDC - Hibernia National Bank 11-07-02 2.45 95,000 PEDC - First Federal Community Bank 11-11-02 2.48 95,000 PEDC - Liberty National Bank 10-25-02 2.26 95,000 Total Fiduciary Funds $ 652,120 Water and Sewer Fund: Federal National Mortgage Association 10-25-04 6.0 % $ 93,598 Federal Home Loan Mortgage Corporation 02-15-09 5.5 262,188 Federal Home Loan Mortgage Corporation 04-01-07 6.0 283,766 Federal Home Loan Mortgage Corporation 11-01-02 6.0 18,693 Federal National Mortgage Association 06-01-03 6.5 58,242 Federal Home Loan Mortgage Corporation 07-15-03 5.85 287,349 Federal Home Loan Mortgage Corporation 02-15-07 5.75 229,615 Federal Home Loan Mortgage Corporation 12-05-07 5.5 154,192 Federal National Mortgage Association 08-01-03 6.5 58,242 Federal National Mortgage Association 02-01-03 6.5 67,909 Federal Home Loan Mortgage Corporation 11-25-03 6.5 100 092 Government National Mortgage Association 11-15-06 8.0 327 490 Federal Home Loan Mortgage Corporation 10-15-07 5.0 108 491 Federal National Mortgage Association 08-25-07 5.5 330 377 Federal Home Loan Mortgage Corporation 02-15-09 5.5 262 188 Government National Mortgage Association 11-15-06 8.0 267 308 Government National Mortgage Association 06-15-09 6.0 577 502 Government National Mortgage Association 11-16-06 8.0 70 972 Government National Mortgage Association 09-20-04 9.5 4 194 Government National Mortgage Association 06-15-09 6.0 393 875 Federal National Mortgage Association 12-15-02 7.0 51,790 Federal National Mortgage Association 07-25-03 7.0 430,380 Federal National Mortgage Association 10-15-07 6.0 71,801 Federal National Mortgage Association 06-01-03 6.5 334,135 Federal National Mortgage Association 04-01-03 6.0 408,130 99 City of Paris, Texas Schedule 33 Combined Schedule of Investments - All Funds (Continued) Septen~ber 30, 2002 Maturity Interest Date Rate Amount Water and Sewer Fund (Continued): Federal National Discount Note 04-01-03 6.8 141,885 Federal Home Loan Bank 12-30-02 6.2 50,500 Federal National Discount Note 04-01-03 8.0 151,826 Federal National Mortgage Association 10-01-02 7.0 984 Federal National Mortgage Association 05-28-03 7.0 5,730 Total Water and Sewer Fund $ 5,603,444 Capital Projects Funds: Federal Home Loan Mortgage Corporation 01-15-03 6.5 % $ 73,372 Federal National Mortgage Association 08-25-07 5.5 198,226 Federal National Mortgage Association 05-01-03 6.0 106,270 Federal Home Loan Mortgage Corporation 02-15-07 5.75 138,270 Federal Home Loan Mortgage Corporation 12-15-07 5.5 154,192 Total Capital Projects Funds $ 670,330 Employees' Insurance Internal Service Fund: Federal Home Loan Mortgage Corporation 08-15-23 5.75% $ 576 100 City of Paris, Texas Ten Year Summary of Revenues and Receipts by Source For the Fiscal Years Ended September 30 2002 2001 2000 1999 General Property Taxes $ 6,102,854 $ 5,852,510 $ 5,325,886 $ 4,770,465 Penalties and Interest on Property Tax 132,942 128,993 102,152 95,829 Municipal Sales Tax 4,574,994 4,537,136 4,996,289 4,460,650 Hotel Occupancy Tax 314,170 356,259 357,438 295,252 Franchise and Gross Receipts Tax 2,623,697 2,559,474 2,093,284 2,057,459 Licenses and Permits 114,720 84,660 53,451 68,658 Fines and Fees 545,236 535,496 350,548 350,129 Emergency Medical Service and Health 1,945,602 1,655,980 1,567,331 1,622,654 Leases and Rentals 70,322 72,844 57,221 53,227 Sanitation 1,382,796 1,380,109 1,547,223 1,482,995 Intergovernmental Receipts 4,066,932 3,019,803 2,085,801 1,977,433 Interest Earned on Investments 639,383 1,596,617 1,164,570 515,382 Miscellaneous Revenues 701,904 1,076,393 469,763 494,875 Utility Fund Contributions 1,100,000 1,095,535 1,036,825 1,036,825 Water Sales 5,957,489 5,911,751 6,115,764 5,821,150 Water Taps 21,750 19,834 19,705 28,028 Sewer Charges 4,039,196 3,922,189 3,979,871 3,442,145 Sewer Taps 15,400 13,990 6,330 3,848 Sanitation Billing Fees 70,816 75,286 81,412 77,935 Miscellaneous W & S 343,144 382,817 302,176 195,326 Quasi-External Inter- fund Transactions 1,216,674 1,094,176 1,086,756 1,111,303 Total - All Funds $35,980,021 $35,371,852 $32,799,796 $29,961,568 101 Schedule 34 1998 1997 1996 1995 1994 1993 $ 4,576,907 $ 3,829,705 $ 3,751,246 $ 3,634,018 $ 2,939,341 $ 3,370,953 95,796 93,607 86,245 80,776 48,488 83,817 4,174,891 4,023,734 3,909,119 3,920,124 4,183,605 2,675,946 264,998 241,822 233,587 217,422 206,019 206,812 2,012,816 2,038,208 1,942,610 1,990,632 2,020,618 1,538,548 47,147 44,869 52,063 49,670 60,938 46,134 466,837 301,063 267,423 292,342 208,509 208,016 1,853,508 1,942,037 1,836,184 1,690,672 1,562,279 1,273,418 152,662 67,311 41,724 47,991 40,617 44,042 1,354,255 1,424,201 1,369,074 1,363,486 1,384,404 1,267,352 2,026,053 1,338,236 979,485 562,127 408,690 551,132 641,749 885,585 725,235 350,527 395,507 548,835 396,455 399,303 307,009 711,225 6,129,921 1,763,084 1,026,780 276,780 1,006,000 1,018,000 750,000 750,000 5,828,980 5,290,732 5,471,255 5,325,930 5,004,791 4,924,188 17,556 23,080 27,096 33,908 32,253 25,651 3,152,727 3,265,796 3,440,260 3,243,520 2,781,842 2,448,246 20,189 7,220 9,480 10,965 11,834 13,506 72,571 72,214 72,057 83,886 72,538 66,362 195,395 168,721 108,531 176,670 55,735 110,295 986,058 867,178 873,075 830,124 $29,364,330 $26,601,402 $26,508,758 $25,634,015 $28,297,929 $21,916,337 102 City of Paris, Texas Ten Year Summary of Expenditures by Function For the Fiscal Years Ended September 30 Fund 2002 2001 2000 1999 General General Government $ 2,340,802 $ 1,751,664 $ 1,521,641 $ 1,441,212 Finance 439,535 440,423 505,245 383,940 Public Safety 8,222,361 8,795,690 7,928,491 7,637,819 Community Development Public Works 6,004,759 7,730,857 5,388,191 5,050,915 Health Department (1) 693,691 740,734 Emergency Medical Service 1,824,006 1,790,374 1,371,075 1,269,897 Library Service 720,407 729,600 682,798 706,498 Cox Field 130,929 171,691 160,870 108,274 Miscellaneous 18,460 19,501 15,459 14,088 Total General 19,701,259 21,429,800 18,267,461 17,353,377 Water and Sewer Operating 8,393,911 8,488,400 7,579,637 7,262,888 Capital Outlay 160,455 371,618 480,339 220,152 Debt Service 1,390,616 2,039,836 1,811,881 1,690,483 Total Water and Sewer 9,944,982 10,899,854 9,871,857 9,173,523 Special Revenue 1,727,305 1,947,252 1,016,720 756,897 Capital Projects 723,937 1,878,728 629,522 16,747 Debt Service 921,561 930,983 407,109 408,633 Firemen's Relief and Retirement Library Expendable 1,141 34,122 8,142 16,598 Library Nonexpendable 119 33 254 Employees' Insurance 2,273,15q 1,642,437 1,515,594 1,444,749 Total - All Funds $ 35,293,335 $ 38,763,295 $ 31,716,438 $ 29,170,778 (1) Effective October 1, 2000, the operations of the health department were transferred to a special revenue fund. 103 Schedule 35 1998 1997 1996 1995 1994 1993 1,394,551 $ 1,053,653 $ 1,053,820 $ 1,054,269 $ 1,705,374 $ 882,458 379,179 358,470 437,455 331,359 345,852 328,042 6,513,684 6,298,096 5,772,241 5,254,760 4,985,288 4,525,663 39,728 133,048 144,497 4,830,986 4,352,042 3,882,594 3,342,624 3,283,442 3,207,974 825,403 788,690 782,812 778,535 621,201 684,409 1,309,932 1,139,519 1,128,494 984,998 1,059,831 873,100 620,041 573,062 558,092 483,564 486,423 390,245 722,545 368,114 131,611 179,695 118,769 372,281 14,703 13,535 13,854 11,626 11,402 9,937 16,611,024 14,945,181 13,760,973 12,461,158 12,750,630 11,418,606 7,270,648 6,751,345 6,461,698 5,925,157 4,543,313 4,310,989 404,125 320,011 342,376 232,370 246,952 209,798 1,734,136 1,861,821 1,797,765 919,997 734,677 762,417 9,408,909 8,933,177 8,601,839 7,077,524 5,524,942 5,283,204 754,689 582,292 625,526 541,174 476,447 626,402 447,460 2,895,062 849,165 1,017,788 408,837 98,609 409,306 430,040 439,974 707,306 309,765 278,355 225,837 12,622 22,919 14,394 24,177 10,400 6,885 8,184 3,128 239 19,787 348 894 885,083 1,395,616 1,010,493 896,558 973,999 1,104,043 28,537,277 $ 29,207,415 $ 25,30~,603 $ 22,745,472 $ 20,455,368 $ 19,042,835 104 STATISTICAL SECTION (Unaudited) City of Paris, Texas General Governmental Expenditures by Function Last Ten Fiscal Years Unaudited Fiscal General Public Community Public Health Year Government Finance Safety Development Works Department 1992-93 $ 882,458 $ 328,042 $ 4,525,663 $ 144,497 $ 3~207,974 $ 684,409 1993-94 1,705,374 345 852 4,985,288 133,048 3,283,442 621 201 1994-95 1,054,269 331 359 5,254,760 39,728 3,342,624 778 535 1995-96 1,053,820 437 455 5,779,810 (2) 3,882,594 782 812 1996-97 1,053,653 358 470 6,298,096 4,352,042 788 690 1997-98 1,394,551 379 179 6,513,684 4,830,986 825 403 1998-99 1,441,212 383 940 7,637,819 5,050,915 740 734 1999-00 1,521,641 505 245 7,928,492 5,388,190 693 691 2000-01 1,751,664 440 423 8,795,690 7,730,857 (3) 2001-02 2,340,802 439 535 8,222,361 6,004,759 City of Paris Notes: (1) Includes General and Debt Service Funds. (2) Community Development was incorporated into Public Works. (3) Health Department began operating as a Special Revenue Fund October 1, 2000. 105 Table 1 Emergency Total Medical Cox General Service Library Field Other Debt Expenditures 873,100 $ 390,245 $ 372,281 $ 9,937 $ 278,355 $ 11,696,961 1,059,831 486,423 118 769 11,402 309 765 13,060,395 984,998 483,564 179 695 11,626 707 306 13,168,464 1,128,494 558,092 131 611 13,854 439 974 14,208,516 1,139,519 573,062 368 114 13,535 430 040 15,375,221 1,309,932 620~041 722 545 14,703 409 306 17,020,330 1,269,897 706,498 108 274 14,088 408 633 17,762,010 1,376,163 682,798 160 870 15,459 407 109 18,679,658 1,790,374 729~600 171 691 19,501 930 983 22,360,783 1,824,006 720,407 130 929 18,460 921 561 20,622,820 106 City of Paris, Texas General Governmental Revenues and Other Sources (1) Last Ten Fiscal Years Unaudited Property Licenses Use of Fiscal Taxes and Sales Hotel Franchise and Fines Money and Year Related Tax Tax Tax (2) Permits and Fees Property 1992-93 $ 3,454,770 $ 2,675,946 $ 206,812 $ 1,538,548 $ 46,134 $ 208,016 $ 430,339 1993-94 2,939,341 4,183,605 206 019 1,787,618 60 938 256 997 98,521 1994-95 3,714,794 3,920,124 217 422 1,990,632 49 670 292 342 394 513 1995-96 3,751,246 3,909,119 233 587 1,942,610 52 063 353 668 572 717 1996-97 3,829,708 4,023,734 241 822 2,038,208 44 869 394 670 316 819 1997-98 4,672,703 4,174,891 264 998 2,012,816 47 147 466 837 270 970 1998-99 4,770,465 4,460,650 295 252 2,057,459 68 658 445 958 254 347 1999-00 5,325,886 4,996,289 357 438 2,093,284 53 451 452 700 348 828 2000-01 5,981,503 4,537,136 356 259 2,559,474 84 660 535 496 305 362 2001-02 6,235,796 4,574,994 314 170 2,623,697 114 720 545 236 204 846 Source: City of Paris Notes: (1) Includes General and Debt Service Funds. (2) In years prior to September 30, 1994, franchise fee paid by Water and Sewer Fund was included in franchise fees. 107 Table 2 General Operating Govern- Public Street Sanitation Intergov- Transfers ment Safety Repairs Fees Health ernmental Other (2) Total $ 13,380 $1,080 $ 63,730 $ 1,267,352 $1,273,418 $ 29,165 $ 65,363 $ 750,000 $12,024,053 14,269 1,080 60,747 1,384,404 1,562,279 30,207 88,438 933,000 13,607,463 9,523 1,080 62,047 1,363,486 1,690,672 27,755 119 809 1,018,000 14,871,869 13,798 2,012 73,271 1,369,074 1,836,184 34,077 196 439 1,006,000 15,345,865 18,010 1,080 68,776 1,424,201 1,942,037 489,451 297 825 276,780 15,407,990 13,625 720 70,678 1,354,255 1,853,508 1,289,185 294 390 1,126,625 17,913,348 14,144 1,080 56,958 1,482,995 1,622,654 1,228,946 376 831 1,036,825 18,173,222 13,916 1,800 73,577 1,547,223 1,567,331 1,026,441 339 209 1,036,825 19,234,198 15,901 1,800 31,582 1,380,109 1,655,980 1,088,493 951 097 1,095,535 20,580,387 21,332 1,800 1,382,796 1,945,602 2,197,149 643 516 1,100,000 21,905,654 108 City of Paris, Texas Table 3 General Fund Tax Revenue by Source Last Ten Fiscal Years Unaudited General Fiscal Total Property Sales Hotel Franchise Year Taxes Taxes Tax Tax Tax 1992-93 $ 7,876,076 $ 3,454,770 $ 2,675,946 $ 206 812 $ 1,538,548 1993-94 8,854,303 2,677,061 4,183,605 206 019 1,787,618 1994-95 9,206,095 3,077,917 3,920,124 217 422 1,990,632 1995-96 9,429,632 3,344,316 3,909,119 233 587 1,942,610 1996-97 9,728,174 3,424,410 4,023,734 241 822 2,038,208 1997-98 10,720,381 4,267,676 4,174,891 264 998 2,012,816 1998-99 11,177,096 4,363,735 4,460,650 295 252 2,057,459 1999-00 12,360,976 4,913,965 4,996,289 357 438 2,093,284 2000-01 12,534,293 5,081,424 4,537,136 356259 2,559,474 2001-02 12,824,637 5,311,776 4,574,994 314170 2,623,697 Source: City of Paris 109 City of Paris, Texas Property Tax Levies and Collections (1) Last Ten Fiscal Years Unaudited Percent Collection of Current of Current Levy Year's Collected Delinquent Fiscal Total Taxes During During Tax Total Roll Year Tax Levy Fiscal Year Fiscal Year Collections Collections 1992 1992-93 $ 3,327,757 $ 3,181,945 95.62% $ 240,575 $ 3,422,519 1993 1993-94 2,975,593 2,848,770 95.74 165,163 3,013,933 1994 1994-95 3,754,165 3,620,126 96.43 222,747 3,842,873 1995 1995-96 3,803,981 3,649,533 95.94 140,594 3,790,127 1996 1996-97 3,873,454 3,722,188 96.09 215,776 3,937,964 1997 1997-98 4,724,497 4,548,919 96.28 491,104 5,040,122 1998 1998-99 4,948,368(2) 4,687,960 94.74 151,310 4,839,270 1999 1999-00 5,332,833 5,159,009 96.74 72,043 5,231,052 2000 2000-01 6,132,621 5,854,458 95.46 63,370 5,917,828 2001 2001-02 6,216,227 6,099,899 98~13 6,099,899 Source: City of Paris Note: (1) Taxes stated are for General Fund and Debt Service Funds. (2) Includes $440,386 for annexed property not certified on original roll. 110 Table 4 Outstanding Percentage Delinquent of Total Outstanding Taxes as Collections Delinquent Percent of of Tax Levy Taxes Total Levy 102.85% $ 28,192 .85% 101.29 25,897 .87 102.36 32,049 .85 99.63 34,192 .90 101.66 36,300 .94 106.68 50,965 1.08 97.80 162,376 3.28 98.09 151,194 2.84 96.50 150,564 2.46 98.13 277,181 4.46 111 City of Paris, Texas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Unaudited One Hundred Percent Fiscal Percent Percent Assessed Assessed Real to Roll Year Valuation Assessed Valuation Real Assessed 1992 1992-93 $ 614,341,130 100% $ 614,341,130 $ 442,151,482 71.97% 1993 1993-94 628,102,971 100 628,102,971 443,315,077 70.58 1994 1994-95 726,920,016 100 726,920,016 567,350,032 78.05 1995 1995-96 734,784,581 100 734,784,581 493,134,531 67.11 1996 1996-97 748,660,556 100 748,660,556 462,252,974 61.74 1997 1997-98 853,722,050 100 853,722,050 552,306,260 64.69 1998 1998-99 814,591,998 100 814,591,998 498,685,880 61.22 1999 1999-00 910,083,681 100 910,083,681 545,290,533 59.92 2000 2000-01 1,005,333,943 100 1,005,333,943 576,146,428 57.31 2001 2001-02 1,019,036,665 100 1,019,036,665 583,199,505 57.23 Sources: City of Paris Lamar County Appraisal District 112 Table 5 Percent Personal Assessed to Personal Assessed 172,189,648 28.03% 184,787,894 29.42 159,569,984 21.95 241,650,050 32.89 286,407,582 38.26 301,415,790 35.31 315,906,118 38.78 364,793,148 40.08 429,187,515 42.69 435,837,160 42.77 113 City of Paris, Texas Table 6 Property Tax Rates - Ail Direct and Overlapping Governments (Per $100 of Assessed Value) Last Ten Fiscal Years Unaudited North Paris County Fiscal city of Lamar Paris Chisum Lamar Junior Education Year Paris County ISD ISD ISD College District 1992-93 $ 0.54105 $ 0.3335 $ 0.4100 $ 0.2282 $ 0.3150 $ 0.1383 $ 0.9250 1993-94 0.46893 0.3456 1.3750 1.1832 1.2400 0.1429 1994-95 0.51770 0.3456 1.4650 1.3000 1.3760 0.1530 1995-96 0.51770 0.3528 1.5250 1.3400 1.3760 0.1603 1996-97 0.51770 0.3593 1.5140 1.3400 1.4160 0.1645 1997-98 0.55342 0.3593 1.5140 1.3400 1.4310 0.1701 1998-99 0.55342 0.3593 1.5140 1~3400 1.4310 0.1701 1999-00 0.58598 0.3593 1.5140 1.3200 1.3328 0.1664 2000-01 0.61000 0.3536 1.5340 1.2700 1.4555 0.1637 2001-02 0.61000 0.3706 1.5800 1.2750 1.5555 0.1758 Source: Lamar County Appraisal District 114 City of Paris, Texas Table 7 Ratio of Net General Bonded Debt to Assessed Value and Bonded Debt Per Capita Last Ten Fiscal Years Unaudited Ratio of Net Net General General Bonded Bonded Taxable Gross Less Deb~ Debt to Debt Fiscal Estimated Assessed General Service Net General Assessed Per Year Population Value Bonded Debt Funds Bonded Debt Value Capita 1992-93 25,195 $ 614 341,130 $ 705,000 $ 245,414 $ 459,586 0.07% $ 18.24 1993-94 25,446 628 102,971 5,250,000 352,276 4,897,724 0.78 192.48 1994-95 25,700 726 920,016 4,980,000 296 934 4,683,066 0.64 182.22 1995-96 25,955 734 784,581 4,825,000 279,248 4,545,752 0.62 175.14 1996-97 26,212 748 660,556 4,660,000 261 356 4,398,644 0.59 167.81 1997-98 26,474 853 722,050 4,485,000 263.080 4,221,920 0.49 159.47 1998-99 26,738 814 591,998 4,300,000 293.934 4,006,066 0.49 149.83 1999-00 26,978 910 083,681 10,105,000 319.913 9,785,087 1.08 362.71 2000-01 26,017 1,005 333,943 9,815,000 616~704 9,198,296 0.92 353.55 2001-02 26,136 1,019,036,665 15,485,000 624 713 14,860,287 1.46 568.58 Source: City of Paris 115 City of Paris, Texas Table 8 Computation of Legal Debt Margin September 30, 2002 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 $0.61 per $100 valuation for the fiscal year ended September 30, 2002. Source: City of Paris 116 City of Paris, Texas Table 9 -- Computation of Direct and Overlapping Debt Payable from Ad Valorem Taxes September 30, 2002 Unaudited Estimated 2002 Total Net Estimated Taxable Total Percent Overlapping Taxing Jurisdiction Valuation Funded Debt Applicable Funded Debt City of Paris $ 1,051,426,978 $15,485,000 100.00% $15,485,000 Lamar County 1,675,609,285 3,267,796 62.75 2,050,542 Paris Independent School District 518,374,738 11,438,529 49.30 5,639,195 Chisum Independent School District 502,053,697 8,500,000 47.75 4,058,750 North Lamar Independent School District 613,276,246 12,060,000 58.33 7,034,598 Paris Junior College 1,080,489,364 25,000 100.00 25,000 50,776,325 Total Direct and Overlapping Funded Debt $34,293,085 Per Capita Direct and Overlapping Funded Debt $ 1,942.77 Per Capita Direct Debt $ 1,312.10 Scource: Texas Municipal Reports Lamar County Appraisal District Lamar County Paris Independent School District Chisum Independent School District North Lamar Independent School District Paris Junior College 117 City of Paris, Texas Table 10 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures Last Ten Fiscal Years Unaudited Ratio of Total (1) Total Debt Service Fiscal Bank Debt General to General Year Principal Interest Charges Service Expenditures Expenditures 1992-93 $ 220 000 $ 54,390 $ 1,540 $ 275 930 $ 11,696,961 2.36% 1993-94 235 000 34,975 1,541 271 516 13,060,395 2.08 1994-95 270 000 402,569 1,216 673 785 13,168,464 5.12 1995-96 184 000 255 563 411 439 974 14,208,516 3.10 1996-97 185 000 244 620 420 430 040 15,375,221 2.80 1997-98 175 000 233 863 444 409 307 17,020,330 2.41 1998-99 185 000 223 062 571 408 633 17,762,010 2.30 1999-00 198 000 211 663 446 407 109 18,679,658 2.18 2000-01 290 000 640 089 894 930 983 22,360,783 4.16 2001-02 390 000 530 055 1,508 921 561 22,360,783 4.12 Source: City of Paris Note: (1) Includes General and Debt Service Funds. 118 City of Paris, Texas Table 11 Revenue Bond Coverage - Water and Sewer Revenue Bonds Last Ten Fiscal Years Unaudited Net Revenue Average Remaining Available Debt Service Requirements Fiscal Gross Net For Debt Percent Year Revenues* Expenses** Service Principal Interest Total*** Coverage 1992-93 $ 7,758,228 $4,310,989 $3,447,239 $ 685,000 $1,621,510 $2,306,510 1.50 1993-94 8,084,045 4,543,313 3,540,732 725,000 1,581,077 2,306,077 1.53 1994-95 9,094,409 4,480,240 4,614,169 1,390,294 918 830 2,309,124 2.00 1995-96 9,506,918 4,857,118 4,649,800 1,426,562 854 741 2,281,303 2.04 1996-97 9,344,634 5,006,067 4,338,567 1,691,842 974 105 2,665,947 1.63 1997-98 9,671,524 5,257,572 4,413,952 1,777,222 812 200 2,589,422 1.70 1998-99 9,833,441 5,163,027 4,670,414 1,804,411 766 440 2,570,851 1.82 1999-00 11,127,992 5,472,876 5,655,116 1,938,750 939 660 2,878,410 1.96 2000-01 11,342,029 6,263,668 5,078,361 1,927,895 821 680 2,749,575 1.85 2001-02 10,853,869 6,175,627 4,678,242 1,978,056 767 877 2,745,933 1.70 Compiled using accounting principles customarily employed in the determination of net revenues available for debt service and in all instances excludes depreciation, transfers to other funds, debt service payments, and expenditures. Notes: (1) * Gross Revenues = Operating and Non-Operating Revenue of the Water and Sewer Fund. (2) ** Net Expenses = Operating Expenses excluding depreciation. (3) *** Agent fees not included. Sources: Southwest Securities Official Statement Rauscher Pierce Refsnes official Statement City of Paris CAFR 119 City of Paris, Texas Table 12 Property Values and Building Permits Last Ten Fiscal Years Unaudited Property Building Fiscal Year Values Permits 1992-93 $ 614,341,130 $ 11,393,264 1993-94 628,102,971 25,021,866 1994-95 726,920,016 17,482,484 1995-96 734,784,581 14,019,273 1996-97 748,660,556 13,730,729 1997-98 853,722,050 14,396,200 1998-99 814,591,998 20,636,790 1999-00 910,083,681 18,883,711 2000-01 1,005,333,943 14,353,861 2001-02 1,019,160,711 25,087,943 Source: City of Paris 120 City of Paris, Texas Table 13 -- Top Ten Taxpayers September 30, 2002 Unaudited Percentage 2002 of Total -- Taxable Taxable Taxpayer Type of Business Value Valuation 1. Kimberly-Clark Corp. Disposable Diaper Mfg. $ 123,621,910 12.13 % 2. Campbell Soup Food Manufacturing 64,596,460 6.34 3 Tenaska III Utility 46,613,400 4.57 4. Silgan Can Company Can Manufacturing 28,438,740 2.79 5. Oncor Electric Delivery Co. Electric Utility 18,190,550 1.78 6. Wal-Mart Stores, Inc. Discount Retail Sales 15,072,490 1.48 -- 7. Earthgrains Baking Company, Inc. Food Manufacturing 13,168,680 1.29 8. Southwestern Bell -- Telephone Telephone Utility 10,708,500 1.05 9. Paris Packaging, Inc. Paper Carton Mfg. 9,237,000 .91 10 Turner International Piping Pipe Manufacturing 5,186,530 .51 TOTALS $ 334,832,260 32.85 % Source: Lamar County Appraisal District 121 City of Paris, Texas Schedule of Insurance in Force September 30, 2002 Unaudited Type of Coverage Policy Period and Policy Name of Company Number From To Coveraqe Texas Municipal League Intergovernmental Risk Pool 5823-00 10-1-01 10-1-02 Real and Personal Property Limit Transit Limit Boiler and Machinery Mobile Equipment Limit General Liability Each Occurrence Annual Aggregate Sudden Events Involving Pollution Law Enforcement Liability Each Occurrence knnual Aggregate Errors and Omissions Each Claim A~nual Aggregate Automobile Liability Each Occurrence Medical Payments Auto Physical Damage Limits Aviation Liability General Aggregate Personal Injury Hangar-keepers' Each Loss and Each Aircraft Computer Fraud 3 Crime Coverage Public Employee Dishonesty Theft, Disappearance and Destruction Workers' Compensation Joint Insurance Fund 10-1-01 10-1-02'Workers' Compensation Limits Group Benefits Risk Pool 5-1-01 5-1-02 Group Medical Plan Employees Source: City of Paris 122 Table 14 Annual Amount Premium or of Line Contribution $ 49,0~6 $57,415,392 1,000,000 725,000 4,505 1,155,173 47,636 5,000,000 10,000,000 2,000,000 34,945 5,000,000 10,000,000 61,886 5,000,000 10,000,000 30,283 5,000,000 Schedule 34,498 Schedule 5,331 5,000,000 5,000,000 1,000,000 300,000 267 300,000 2,051 330,000 595 Statutory 251,067 Scheduled Benefits 1,523,888 123 City of Paris, Texas City Sales Tax Received Last Ten Fiscal Years Unaudited 92-93 93-94 94-95* 95-96 96-97 October $ 185 840 $ 211,878 $ 370,594 $ 322,356 $ 355,469 November 264 765 323 650 494 374 477416 464 474 December 190 515 290 882 332 047 324400 355 477 January 171 286 320 598 339 926 324132 304.903 February 367 273 548 366 599 403 553002 583.176 March 176 453 263 759 299 693 322804 330,014 April 163 388 282 464 292 270 304615 300.550 May 294 629 488 915 445 451 480225 492.357 June 139 193 306 394 338 634 358704 357 404 July 163 864 311 363 322 066 313339 327.186 August 308 612 493 663 480 498 487,608 504 873 September 250 109 341 673 389 192 422,340 452.599 Total $ 2,675,927 $ 4,183,605 $ 4,704,148 $ 4,690,941 $ 4,828,482 Equivalent Ad Valorem Tax Rate 0.4356 0.6661 0.6471 0.6384 0.6449 Source: City of Paris * Beginning in January 1994, the city began collecting an additional 1/4 cent sales tax designated to reduce local property taxes and a second 1/4 cent sales tax designated for the local economic development corporation. 124 Table 15 97-98 98-99 99-00 00-01 01-02 381 501 $ 351,423 $ 347,736 $ 398 986 $ 270 934 500 287 515531 532 321 598 610 559 182 358 833 334844 487 693 365 654 428 694 325 927 427314 382 179 384 457 364 667 646 486 689374 653 524 622 697 739 435 288 581 417117 413 297 342 826 339 725 308 521 377168 375 228 385 521 371 041 471 066 462920 790 809 568 579 530 356 420 072 410555 399 277 389 389 415 871 338 572 370128 430 359 410 896 413 216 547 339 592.185 658 295 553 490 542 460 422 685 404.221 524 829 423 458 439 412 5,009,870 $ 5,352,780 $ 5,995,547 $ 5,444,563 $ 5,414,993 0.5868 0.6571 0.6588 0.5416 0.5314 125 City of Paris, Texas Table 16 Demographic Statistics Last Ten Fiscal Years Unaudited Estimated School Unemployment Fiscal Year Population Enrollments Rate 1992-93 24,937 6,613 (1) 7.3% 1993~94 25,056 6,683 (1) 7.2 1994-95 25,175 10,518 (2) 7.2 1995-96 25,294 10,682 (2) 5.5 1996-97 25,413 10,728 (2) 5.7 1997-98 25,532 10,937 (2) 9.1 1998-99 25,651 10,602 (2) 6.2 1999-00 25,898 11,956 (2) 5.3 2000-01 26,017 11,986 (2) 5.9 2001-02 26,136 12,794 (2) 6.7 (1) Includes Paris and North Lamar Independent School Districts only. (2) Includes Paris Independent School District, North Lamar Independent School District, Chisum Independent School District, and Paris Junior College. Source: City of Paris Paris Independent School District North Lamar Independent School District Chisum Independent School District Paris Junior College Chamber of Commerce 126 City of Paris, Texas Table 17 _ Statistical Data - Utility Connections Last Ten Fiscal Years Unaudited Certain Utility Connections * Fiscal Year Water Electric 1992-93 9,706 12,161 1993-94 9,608 12,314 _ 1994-95 9,998 12,326 1995-96 9,827 12,418 1996-97 9,859 12,482 1997-98 9,741 12,402 1998-99 9,932 12,863 1999-00 10,007 12,974 2000-01 10,137 13,946 -- 2001-02 10,183 14,151 * Source: Oncor Electric Delivery Company City of Paris 127 City of Paris, Texas Table 18 Miscellaneous Statistical Data Unaudited GOVERNMENT: Date of Incorporation 1836 Current Charter - adopted November 2 1948 FACILITIES: Airports: Number of airports 1 Fire Protection: Number of stations 4 Number of fire hydrants 1,039 Number of employees (certified) 56 Employees per 1,000 population 2.14 Library: Number of libraries 1 Number of volumes (items) 121,732 Circulation of materials 347,290 Circulation per capita 13.29 Library cards in force 26,644 Police Protection: Number of stations 1 Number of employees (certified) 62 Employees per 1,000 population 2.37 Parks and Recreation: Parks' acres developed 87 Parks' acres undeveloped 221 City parks 24 Streets: Paved lane - miles 199 Unpaved streets - miles 10 WATER AND SEWER UTILITY: Average daily water consumption - gallons 11,405,367 Maximum day's water consumption - gallons 20,271,851 Annual water consumption - gallons 4,162,959,000 Water mains - miles 190 Water connections - metered 10,183 Sewer mains - miles 205 Area miles 42.89 Number of full-time employees 369 Source: City of Paris 128 CONTINUING DISCLOSURE INFORMATION (Unaudited) City of Paris, Texas Continuing Disclosure Information For the Fiscal Year Ended September 30, 2002 (Unaudited) Assessed Valuation Table CD-1 2002 Actual Market Value of Taxable Property $ 1,755,391,450 Less Exemptions: Local, Optional Over-65 and/or Disabled Homestead Exemptions $ 36,814,736 Disabled and Deceased Veterans' Exemptions 2,854,530 Productivity Loss 16,299,760 House Bill 366 15,460 Freeport 70,169,440 Pollution Control 23,240,910 Abatement Loss 304,389,420 EX 249,349,626 Homestead Cap 830,590 703,964,472 2002 Net Taxable Assessed Valuation (100% of Actual) $ 1,051,42~,978 Source: Lamar County Appraisal District General Obligation Bonded Debt Table CD-2 (As of September 30, 2002) General Obligation Debt Outstanding: Certificates of Obligation, Series 1993 $ 3,685,000 Certificates of Obligation, Series 1994 4,210,000 Tax and Revenue Refunding Bonds, Series 1998 5,810,000 Tax and Revenue Certificates of Obligation, Series 2000 5,740,000 Tax and Revenue Refunding Bonds, Series 2001 5,130,000 Combination Tax and Revenue Certificates of Obligation, Series 2002 6,060,000 Total Gross General Obligation Debt Outstanding 30,635,000 Less: Self-Supporting General Obligation Debt Certificates of Obligation, Series 1994 (100%) 4,210,000 Tax and Revenue Refunding Bonds, Series 1998 (100%} 5,810,000 Tax and Revenue Refunding Bonds, Series 2001 (100%) 5,130,000 Total Self-Supporting General Obligation Debt 15,150,000 Total Net General Obligation Debt Outstanding $ 15,485,000 General Obligation Interest and Sinking Fund Balance, September 30, 2002 $ 624,713 Ratio of Net General Obligation Debt to 2002 Net Assessed Valuation 1% 2002 Net Assessed Valuation $ 1,051,426,978 Population: 1980 - 25,498; 1990 - 24,699; 2000 - 25,898; Current (Estimate) 26,136 Per Capita 2002 Net Assessed Valuation $ 40,229 Per Capita Gross General Obligation Debt $ 1,172 Per Capita Net General Obligation Debt $ 592 129 City of Paris, Texas Continuing Disclosure Information (Continued) For the Fiscal Year Ended September 30, 2002 (Unaudited) Principal Tax-payers 2002 Table CD-3 Net % of Taxable Total 2002 Assessed Assessed Name T~/pe of Property Valuation Valuation Kimberly-Clark Corporation Disposable Diapers $ 123,621,910 12.13% Campbell Soup Food Manufacturing 64,596,460 6.34 Tenaska Utility 46,613,400 4.57 Silgan Can Company Can Manufacturing 28,438,740 2.79 Oncor Electric Delivery Co. Electric Utility 18,190,550 1.78 Wal-Mart Stores, Inc. Discount Retail Sales 15,072,490 1.48 Earthgrains Baking Co., Inc~ Food Manufacturing 13,166,680 1.29 Southwestern Bell Telephone Telephone Utility 10,708,500 1.05 Paris Packaging, Inc. Paper Carton Mfg. 9,237,000 0.91 Turner International Piping Pipe Manufacturing 5,186,530 0.51 Total $ 334,832,260 32.85% Based on a 2002 Net Taxable Assessed Valuation of $1,019,160,711 Property Tax Rates and Collections Table CD-4 Net Taxable Tax Assessed Tax Tax % Collections Year Year Valuation Rate Lev~ Current Total Ended 1992-93 $ 614,341,130 $ 0.54105 $ 3,327,757 95.62 102.39 9-30-93 1993-94 628,102,971 0.46893 2,975,593 95.74 100.83 9-30-94 1994-95 726,920,016 0.51770 3,754,165 96.43 101.87 9-30-95 1995-96 734,784,581 0.51770 3,803,981 95.94 98.98 9-30-96 1996-97 748,660,556 0.51770 3,873,454 96.09 100.56 9-30-97 1997-98 853,722,050 0.55342 4,724,497 96.28 103.71 9-30-98 1998-99 814,591,998 0.55342 4,498,368 94.74 97.44 9-30-99 1999-00 910,083,681 0.58598 5,332,833 96.74 97.56 9-30-00 2000-01 1,005,333,943 0.61000 6,132,621 95.46 95.46 9-30-01 2001-02 1,019,160,711 0.61000 6,216,227 98.13 98.13 9-30-02 Tax Rate Distribution Table CD-5 2002 2001 2000 1999 1998 1997 1996 General Fund $0.56104 $0.51962 $0.51738 $0.54132 $0.50543 $0.50543 $0.46290 I & S Fund 0.13396 0.09038 0.09262 0~04466 0.04799 0.04799 0.05480 Total $0.69500 $0.61000 $0.61000 $0.58598 $0.55342 $0.55342 $0.51770 130 City of Paris, Texas Continuing Disclosure Information (Continued) For the Fiscal Year Ended September 30, 20021 (Unaudited) Municipal Sales Tax Table CD-6 The issuer has adopted the provision 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. Le~%/ of the additional sales taxes began on October 1, 1993, and the City received its first payment in December 1993. Collections on calendar year basis are as follows: (Dollar) Equivalent % of Ad of Ad Calendar Total 1.00% 0.25% 0.25% Valorem Valorem Year Collected City Prop. Tax Red EDC Tax Levy** Tax Rate** 1993 $2,861,216 $ 2,764,256 $ 48,480' $ 48,480 84.52% 0.48 1994 4,554,211 3,036,141 759 035 759 035 127.54 0.60 1995 4,631,307 3,087,537 771 885 771 885 102.80 0.53 1996 4,742,190 3,161,460 790 365 790 365 103.89 0.54 1997 4,893,682 3,262,454 815 614 815 614 105.28 0.55 1998 4,971,047 3,314,031 828 508 828 508 87.68 0.49 1999 5,518,743 3,679,161 919 791 919 791 92.94 0.51 2000 5,991,044 3,994,030 998 507 998 507 93.62 0.55 2001 5,340,121 3,560,081 890 020 890 020 72.58 0.44 2002 5,414,993 3,609,995 902 499 902 499 70.71 0.43 Source: State Comptroller's office of the State of Texas and information for the Issuer. * Percentage of December receipts only ** Based on 1% City portion plus .25% Property Tax Reduction portion. Revenue Bond Debt Data Table CD-7 Revenue Bond Debt Outstanding: Waterworks and Sewer System Revenue Bonds, Series 1997 $ 4,260,000 Waterworks and Sewer System Revenue Refunding Bonds, Series 1998 6,905,000 Waterworks and Sewer System Revenue Bonds, Series 2000 9,290,000 Total Gross Revenue Debt $ 20,455,000 Note: Does not include general obligation self-supporting debt. 131 City of Paris, Texas Continuing Disclosure Information (Continued) For the Fiscal Year Ended September 30, 2002 (Unaudited) Revenue Bond Debt Data Table CD-8 Outstanding Tofal Fiscal Year Revenue The Series 2000 Bonds Debt Ending 9/30 Debt Service Princi0al Interest Total Service 2002 $ 1,945,280 $ $ $ $ 1,945,280 2003 2,022,357 240 000 195 411 435 411 2,457,768 2004 2,032,813 190 000 241 760 431 760 2,464,573 2005 2,029,243 195 000 234 773 429 773 2,459,016 2006 2,182,497 210 000 226 672 436 672 2,619,169 2007 2,182,054 220 000 218 073 438 073 2,620,127 2008 2,177,164 230 000 209 072 439 072 2,616,236 2009 2,174,545 240 000 199 673 439 673 2,614,218 2010 2,174,629 255 000 189 772 444 772 2,619,401 2011 2,169,027 265 000 179 373 444 373 2,613,400 2012 2,170,203 280 000 168 472 448 472 2,618,675 2013 1,303,015 295 000 156 973 451 973 1,754,988 2014 1,314,215 310 000 144 872 454 872 1,769,087 2015 1,313,365 325 000 132 010 457 010 1,770,375 2016 1,314,140 345 000 118 189 463 189 1,777,329 2017 877,003 360 000 103 380 463 380 1,340,383 2018 876,113 380 000 87,465 467 465 1,343,578 2019 877,344 400 000 70,300 470 300 1,347,644 2020 879,881 420 000 51,740 471 740 1,351,621 2021 440 000 31,850 471 850 471,850 2022 460 000 10,809 470 809 470,809 $ 32,014,888 $ 6,060,000 $ 2,970,639 $ 9,030,639 $ 41,045,527 City has historically paid debt service requirements on ifs General Obligation System debt from Surplus Revenues of the System and intends to continue to do so in future. However, in the event the Surplus Revenues are not on deposit or budgeted for deposit in the Interest and Sinking Fund in advance of the time when ad valorem taxes are scheduled to be levied, then the City is obligated to levy and collect an ad valorem tax sufficient to pay principal of and interest on such System debt and the outstanding general obligation bonds. Coverage Factor (Excludes General Obligation System Debt) Table CD-9 Average Annual Debt Service Requirement Net Revenue available for Debt Service for fiscal year ended September 30, 2002 $ 3,982,190 Estimated average annual Debt Service following the issuance of the Bonds (2002-2020) $ 1,684,994 Coverage Factor 2.36 x Maximum Annual Debt Service Requirement Net Revenue available for Debt Service for fiscal year ended September 30, 2002 $ 3,982,190 Estimated maximum annual Debt Service following the issuance of the Bonds (2006) $ 2,620,127 Coverage Factor 1.52 x 132 City of Paris, Texas Continuing Disclosure Information (Continued) For the Fiscal Year Ended September 30, 2002 (Unaudited} Factor (Includes General Obligation System Debt) Table CD-10 Annual Debt Service Requirement available for Debt Service for year ended September 30, 2002 $ 3,982,190 average annual Debt Service following the of the Bonds (2002-2020) $ 2,749,575 Factor 1.45 x Annual Debt Service Requirement available for Debt Service for year ended September 30, 2002 $ 3,982,190 maximum annual Debt Service following the of the Bonds (2006) $ 4,051,255 Factor 0.98 x Waterworks and Sewer System Coverage Factor General Obligation System Debt and $9,500,000 Series 2000 Revenue Bonds) increased Water and Sewer Rates effective January 1, 2000. This increase a comprehensive rate study and is anticipated to generate the revenues in excess of future debt service payments on the Series 2000 Bonds. Bonds Principal Repayment Schedule Table CD-11 Fiscal Year Bonds Series 2000 Endin~ 9/30 Outstanding Revenue Bonds Total 2002 $ 635,000 $ 175 000 $ 810,000 2003 755,000 185 000 940,000 2004 805,000 195 000 1,000,000 2005 845,000 205 000 1,050,000 2006 880,000 380 000 1,260,000 2007 930,000 400 000 1,330,000 2008 975,000 425 000 1,400,000 2009 1,020,000 455 000 1,475,000 2010 1,075,000 480 000 1,555,000 2011 1,130,000 505 000 1,635,000 2012 1,190,000 530 000 1,720,000 2013 360,000 560 000 920,000 2014 380,000 600 000 980,000 2015 400,000 630 000 1,030,000 2016 420,000 665 000 1,085,000 2017 705 000 705,000 2018 745 000 745,000 2019 790 000 790,000 2020 835 000 835,000 $ 11,800,000 $ 9,465,000 $ 21,265,000 133 City of Paris, Texas Continuing Disclosure Information (Continued) For the Fiscal Year Ended September 30, 2002 (Unaudited) Enterprise Fund Balances (Cash and Investments) Table CD-12 (As of September 30, 2002) Water and Sewer Sub-Fund (Overdrawn) $ (2,122,151) Water and Sewer Rev. Bd. Construction 2000 Sub-Fund 7,918,398 Water and Sewer Rev. Bond Sinking Sub4Funds 2,079,514 Water Contract Fund 497,868 Pat Mayse Reserve Fund 2,151,352 Contingency Fund 723,366 Revenue Bond Reserve Fund 1,704,659 Total Enterprise Fund Balances $ 12,953,006 Utility Plant in Service Table CD-13 (As of September 30, 2002) Water & Sewer Land, Plant, Pumps and Motors $ 30,421,753 Distribution and Collection Systems 44,245,342 Furniture, Equipment and vehicles 2,633,438 Construction in Progress 3,826,863 Total 81,127,406 Less: Accumulated Depreciation 30,119,960 Net Utility Plant in Service $ 51,007,446 Revenue Bonds Authorized but Unissued Table CD-14 Date of Amount Issued Authorization Purpose Authorized To Date Unissued 8-14-56 WW & SS $ 2,300,000 $ 2,100,000 $ 200,000 9-21-65 Sewer System 200,000 100,000 100,000 Totals $ 2,500,000 $ 2,200,000 $ 300,000 Waterworks and Sewer System Operating Statement Table CD-15 Fiscal Year Ended September 30 Operating Revenues* 2002 2001 2000 1999 1998 Water Sales and Taps $ 5,979,239 $ 5,931,585 $ 6,135,469 $ 5,849,178 $ 5,846,536 Sewer Charges and Taps 3,909,737 3,936,179 3,986,201 3,445,993 3,172,916 Industrial Charges 144,859 239,211 157,235 79,741 113,934 Other 123,982 451,221 325,368 185,335 231,691 Total Revenues 10,157,817 10,558,196 10,604,273 9,560,247 9,365,077 Expenses 6,175,627 6,263,668 5,472,876 5,163,027 5,257,572 Net Revenue Available for Debt Service $ 3,982,190 $ 4,294,528 $ 5,131,397 $ 4,397,220 $ 4,107,505 134 City of Paris, Texas Continuing Disclosure Information (Continued) For the Fiscal Year Ended September 30, 2002 (Unaudited) Waterworks and Sewer System Operating Statement Table CD-15 (Continued) Fiscal Year Ended September 30 Operating Revenues* 2002 2001 2000 1999 1998 (Continued) _~anual Revenue Bond Requirements $ 1,945,280 $ 1,954,859 $ 1,215,615 $ 1,i54,340 $ 1,245,887 Coverage of Annual Revenue Bond Requirements 2.05 x 2.20 x 4.22 x 3.81 x 3.30 x Annual Requirements on all Bonds Paid from System Revenues $ 2,815,135 $ 3,757,223 $ 3,021,520 $ 2,905,122 $ 3,141,450 Coverage of Annual Requirements on all Bonds Paid from System Revenues 1.41 x 1.14 x 1.70 x 1.51 x 1.31 x Customer Count: Water 10,121 10,079 9,987 9,905 9,902 Sewer 9,619 9,616 9,504 9,444 9,423 * Does not include Sanitation billing Fee of: $ 70,816 $ 75,286 $ 81,412 $ 77,935 $ 72,571 Water Rates Table CD-16 Residential Class Base Cost and Additional Service in Excess of Base Meter Size Cubic Foot Charge (For Each Additional (Inches) (Per Cubic Foot) 100 Cubic Feet) 5/8" - 3/4" $ 5.91 for first 200 Cubic Feet $ 2.15 / 100 Cubic Feet 1" & larger $29.57 for first 1,000 Cubic Feet $ 2.15 / 100 Cubic Feet Commercial/Industrial Class Base Cost and Additional Service in Excess of Base Meter Size Cubic Foot Charge (For Each Additional (Inches) (Per Cubic Foot) 100 Cubic Feet) 5/8" - 3/4" $ 6.99 for first 200 Cubic Feet $ 2.15 / 100 cubic Feet 1" - 2" $ 29.57 for first 1,000 Cubic Feet $ 1.70 / 100 cubic Feet Larger than 2" $106.91 for first 3,000 Cubic Feet $ 1.70 / 100 cubic Feet 135 City of Paris, Texas Continuing Disclosure Information (Continued) For the Fiscal Year Ended September 30, 2002 (Unaudited) Principal Water Customers - 2002 Table CD-17 2002 2002 Average Monthly Average Name of Customer Product Consumption (Cu. Ft~) Monthly Bill Campbell Soup Soups, Juices, Sauces 11,244,800 $ 79,841 Lamar County Water Supply Water 8,385,601 48,832 Tenaska III Electricity 4,592,982 39,081 Kimberly Clark Disposable Diapers 1,368,291 23,129 Sara Lee Bakery Snack Cakes & Breads 539,200 9,154 Christus St. Joseph Medical Care 534,405 9,874 MJC Water Corporation Water 264,411 4,482 Paris Housing Authority Low Income Housing 208,315 3,721 North American Phillips Lamp Bases 195,750 3,383 Paris Independent School District Education 167,179 3,233 Totals 27,500,934 $ 224,73q Sewer Rates (Effective January 1, 2000) Table CD-18 Residential Class Service in Excess of Base Meter Size Base Cost {For Each Additional (Inches) (Per Cubic Foot) 100 Cubic Feet 5/8" - 3/4" $ 6.31 for first 200 Cubic Feet $3.10 100 Cubic Feet 1" and Larger $34.98 for first 1,000 Cubic Feet $3.10 100 Cubic Feet Commercial Industrial Class Service in Excess of Base Meter Size Base Cost (For Each Additional (Inches) (Per Cubic Foot) 100 Cubic Feet 5/8" - 3/4" $ 9.39 for first 200 Cubic Feet $3.27 / 100 Cubic Feet 1" - 2" $29.07 for first 1,000 Cubic Feet $3.27 / 100 Cubic Feet Larger than 2" $54.74 for first 2,000 Cubic Feet $3.27 / 100 Cubic Feet Principal Sewer Customers - 2002 Table CD-19 2002 2002 Average Monthly Average Name of Customer Product Consumption (Cu. Ft.) Monthly Bill Sara Lee Bakery Snack Cakes & Breads 539,200 $ 17,641 Kimberly Clark Disposable Diapers 449,181 14,677 Christus St. Joseph Medical Care 439,698 14,611 Paris Housing Authority Low Income Housing 208,315 6,801 North American Phillips Lamp Bases 191,558 6,253 Paris Independent School District Education 148,553 4,473 Paris Junior College Education 133,220 4,379 Paris Nursing Home Long Term Care 109,004 3,563 Westgate Apartments Housing 100,216 3,240 Campbell Soup Soups, Juices, Sauces 81,825 2,665 Totals 2,400,770 $ 78,303 136 OVEP~LL COMPLID. NCE, INTERND~L CONTROLS AND FEDERAL AWARDS SECTION OVER3~LL COMPLIDd~CE, INTER-NAL CONTROLS AND FEDERAL AWARDS SECTION This section includes elements required by Government Auditing Standards, issued by the Comptroller General of the United States and by U.S. office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non- Profit Organizations. 137 MCCLANAHAN AND HOLMES, PLLC CERTIFIED PUBLIC ACCOUNTANTS R. FRANK RAY, CPA 228 SIXTH STREET, S.E. R. E, BOSTWlCK, CPA PARIS, TEXAS 75460 STEVENW. MOHUNDRO, CPA 903-784-4316 GEORGEH. STRUVE, CPA FAX ~3-784-4310 ANDREW B. REICH, CPA 3~ WESTCHESTNUT DENISON, TEXAS 75020 ~3-465-6070 MX 903-465-6093 BONHAM, TEXAS 754t8 903-593-5574 FAX 903-§83-9453 Report on Compliance and on Internal Control over, Financial Reporting Based on an Audit of General-Purpose Financial Statements Performed in Accordance with Government Auditing Standards Honorable Mayor and City Council City of Paris, Texas We have audited the general-purpose financial statements of the city of Paris, Texas, as of and for the year ended September 30, 2002, and have issued our report thereon dated November 15, 2002. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the City of Paris, Texas' general-purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. 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 that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general-purpose financial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could adversely affect the City's ability to record, process, summarize, and report financial data consistent with the assertions of management in the financial statements. Reportable conditions are described in the accompanying schedule of findings and questioned cost as schedule reference number 2002-1. 138 AMERICAN INSTITUTE Of CERTIFIED PUBLIC ACCOUNTANTS Honorable Mayor and City Council City of Paris, Texas Page 2 A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level tke risk that misstatements in amounts that would be material in relation to the general-purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, we believe that the reportable condition described above is a material weakness. This report is intended solely for the information and use of the City Council, management, others within the organization, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Certified Public Accountants Paris, Texas November 15, 2002 139 MCCLANAHAN AND HOLMES, PLLC City of Paris, Texas Summary Schedule of Prior Audit Findings For the Fiscal Year Ended September 30, 2002 Finding/Recommendation Current Status Schedule Reference Number: 2002-1 No corrective action taken. Condition Found: In the Emergency Medical Service Department, several procedures related to revenues and accounts receivable are vested in one individual who can access and change billings, prepare receipts for collections, post collections, and make write-off and adjustments to accounts receivable. In addition, accounts receivable generated by the department was not in balance with the general ledger at year end. Recommendation: We recommended that duties be segregated or other responsible persons be involved in the procedures. In addition, a general ledger balancing procedure should be made part of each monthly closing procedure. 140 City of Paris, Texas Schedule of Findings and Questioned Costs For the Fiscal Year Ended September 30, 2002 Section I - Summary of Auditor's Result~ Financial Statements Type of auditor's report issued: Unqualified Internal control over financial reporting: Material Weakness(es) identified? X yes __ no Reportable condition(s) identified that are not considered to be material weakness(es)? yes X none reported Noncompliance material to financial statements noted? X yes no Federal Awards Internal control over major programs: Material weakness(es) identified? yes X no Reportable conditions(s) identified that are not considered to be material weakness(es)? yes X none reported Type of auditor's report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-1337 X yes -- no Identification of major programs: CFDA Number(s) Name of Federal Program or Cluster 10.557 Special Supplemental Food Program for Women, Infants, and Children 20.500 Santa Fe-Frisco Depot Rehabilitation 16.710 Cops in School Dollar threshold used to distinguish between type A and type B programs: $ 300,000 Auditee qualified as low-risk auditee? X yes __ no 141 City of Paris, Texas Schedule of Findings and QueStioned Costs (Continued) For the Fiscal Year Ended September 30, 2002 Section II - Financial Statement Findings Schedule Reference Number: 2002-1 Program: General Fund Criteria: Maintenance of System of Internal Control Condition: At present in the Emergency Medical Service Department, several procedures related to revenues and accounts receivable are vested in one individual who can access and change billings, prepare receipts for collections, post collections, and make write-off and adjustments to accounts receivable. In addition, accounts receivable generated by the department was not in balance with the general ledger at year end. Context: Examined receipt book noting the initials of the individual with multiple duties. Effect: One individual has the capability to access and change billings, prepare receipts for collections, post collections, and make write-off and adjustments to accounts receivable. Cause: Non segregation of duties. Recommendation: We recommended that duties be segregated or other responsible persons be involved in the procedures. In addition, a general ledger balancing procedure should be made part of each monthly closing procedure. Management's Response: The City of Paris acknowledges the reportable condition involving the maintenance of its internal control system as it relates to the Emergency Medical Service Department. This situation will be reviewed and studied in order to determine what corrective action should be taken to correct the existing problems. Section III - Federal Award Findings and Questioned Costs Schedule Reference Number: 2002-2 CFDA: 20.500 - Santa Fe-Frisco Depot Rehabilitation; U.S. Department of Transportation Project Number: CSJ:0901-29-012; Passed Through: Texas Department of Transportation Criteria: Sample construction contracts to verify that prevailing wage rates were included and that the contractor submitted weekly certified payrolls. Condition: The City did not maintain these records and had not acquired these documents from the various contractors. Questioned Costs: None 142 City of Paris, Texas Schedule of Findings and Questioned Costs (Continued) For the Fiscal Year Ended September 30, 2002 Section III - Federal Award Findings and Questioned Costs (Continued) Schedule Reference Number: 2002-2 (Continued) Context: Auditor requested these documents and was advised that the City did not have any such records. Effect: This compliance requirement could not be tested. Cause: Records not maintained. Recommendation: Acquire documentation for City's records. Management's Response: This requirement will be satisfied at the state level. The City will be required to submit to the state one week's certified payroll from each contractor upon completion of the project. Schedule Reference Number: 2002-3 CFDA: 20.500 - Santa Fe-Frisco Depot Rehabilitation; U.S. Department of Transportation Project Number: CSJ: 0901-29-012; Passed Through: Texas Department of Transportation Criteria: Suspension and Debarment certifications must be obtained from each contractor. Condition: The City did not maintain these records and had not received these certifications from each contractor. Questioned Costs: None Context: Auditor requested these documents and was presented with an award document from the Texas Department of Transportation. The City felt that this was done at the state level and no further action should be taken. Contacted Texas Department of Transportation to verify process. The state requires contractors to fill out information packets and one document pertains to suspension and debarment. Per the document, the contractor states that they are not restricted from working on jobs related to state and federal awards. At any time the contractor becomes suspended or debarred, they must contact the state. Effect: This requirement was not satisfied by the City. Cause: Proper documentation was not maintained. Recommendation: Acquire information for City's records. Management's Response: The City felt that this requirement was satisfied with the award document from the Texas Department of Transportation. 143 City of Paris, Texas Corrective Adtion Plan For the Fiscal Year Ended September 30, 2002 Schedule Reference Number: 2002-1 Program: General Fund Corrective Action Plan: Pursuant to the City's earlier Management's Response, a committee consisting of City Manager, Finance Director, City Attorney, and EMS Deputy Chief met to discuss the internal control issue referenced above. After review, City management will take the following steps: 1. The EMS accounts receivable will be reconciled to the general ledger promptly at the close of each month. Staff from the EMS and Finance office will accomplish this task. Work has already begun to resolve the discrepancy from the previous year, and current months are balanced on an on going basis. 2. Segregation of duties will be accomplished by having one EMS clerk primarily responsible for collection activities and the other clerk primarily responsible for billing procedures. The EMS Deputy Chief will only write receipts when the office is short staffed. This should occur on an irregular basis. 3. All adjustments made to billings, collections, postings, and write-offs will be provided to and reviewed by Finance office staff. Contact Person: Michael E. Malone, City Manager ~nticipated Completion Date: October 2002 Schedule Reference Number: 2002-2 Program: Santa Fe-Frisco Depot Rehabilitation Corrective Action Plan: Requests have been made to contractors to provide the City with one week's certified payroll so as to determine if prevailing wage rates were paid. Such payroll data has been obtained from two of the three contractors. The third contractor made payments only to exempt salaried employees. Request has been made through this third contractor for certified payrolls from its subcontractors. Contact Person: Tommy Haynes Anticipated Completion Date: By completion date of grant Schedule Reference Number: 2002-3 Program: Santa Fe-Frisco Depot Rehabilitation Corrective Action Plan: Requests for suspension and debarment certifications have been requested from the contractors involved through the Texas Department of Transportation and directly from the contractors themselves. Contact Person: Tommy Haynes Amticipated Completion Date: By completion date of grant 144 McCLan^HAn and Holmes, PLLC CERTifIED PUBLIC ACCOUNTANTS R. FRANK RAY, CPA 228 SIXTH STREET. S.E. R. E. BOSTWICK, CPA PARIS, TEXAS 75460 STEVEN W. MOHUNDRO. CPA 903-784-4316 GEORGE H. STRUVE, CPA FAX 903-784-4310 ANDREW B. REICH, CPA 304 WEST CHESTNUT DENISON, TEXAS 75020 903-465-6070 FAX 903-465-6093 1400 WEST RUSSELL Report on Compliance with Requirements Applicable BONHAM, TeXAS75418 903'583-5574 to Each Major Program and on Internal Control over FAX g03-583-9453 Compliance in Accordance with OMB Circular A-133 Honorable Mayor and City Council City of Paris, Texas Compliance We have audited the compliance of the City of Paris, Texas, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended September 30, 2002. The City's major federal programs are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City of Paris, Texas, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended Septet%her 30, 2002. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying Schedule of Findings and Questioned Costs as items 2002-2 and 2002-3. 145 AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Honorable Mayor and City Council City of Paris~ Texas Page 2 Internal Control Over Compliance The management of the City of Paris, Texas, is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expgessing our opinion on compliance and to test and report on the internal control over compliance in accordance with OMB Circular A-133. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the City Council, management, others within the organization, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Certified Public Accountants Paris, Texas November 15, 2002 146 McCLANAHAN AND HOLMES, PLLC City of Paris, Texas Schedule of Expenditures of Federal Awards For the Fiscal Year Ended September 30, 2002 Federal Grantor/ Federal Pass-Through Grantor/ CFDA Project Program Title Number Number Expenditures U. S. Department of Agriculture/ U. S. Department of Health and Human Services Passed Through Texas Department of Health: Special Supplemental Food Program for Women, Infants and Children 10.557 7560022067-99-05 $ 199,956 U. S. Department of Housin~ and Urban Development Passed Through Texas Department of Housing and Community Affairs: HOME Program - Homebuyer Assistance 14.239 721048 250,000 HOME Program - Owner Occupied Housing Assistance 14.239 530395 100,226 Booker T. Washington Community Center Project 14.239 721596 9,500 Total CFDA Number 14.239 and Total Passed Through Texas Department of Housing and Community Affairs 359,726 U. S. Department of Justice Direct Program: Local Law Enforcement Grants Program 16.592 2001-LB-BX-13197 40,005 COPS in School 16.710 2000-SH-WX-0616 133,370 COPS Fast 16.711 95-CF-WX-2504 18,958 Sub-Total Direct Programs 192,333 Passed Through Texas Criminal Justice Division: Regional Controlled Substance Apprehension Program 6-1-02 to 5-31-03 16.579 DB-00-A10-13854-02 169,819 6-1-01 to 5-31-02 16.579 DB-01-A10-13854-03 394,832 Total CFDA Number 16.579 564,651 violent Crimes Against Women 16.588 WF-98-V30-13420-03 50,978 Violent Crimes Against Women 16.588 WF-99-V30-13420-04 19,281 Total CFDA Number 16.588 70,259 Total Passed Through Texas Criminal Justice Division 634,910 Total U. S. Department of Justice 827,243 147 City of Paris, Texas Schedule of Expenditures of Federal Awards (Continued) For the Fiscal Year Ended September 30, 2002 Federal Grantor/ Federal Pass-Through Grantor/ CFDA Project Program Title Number Number Expenditures U. S. Department of Labor Passed Through National Farm Union: Senior Community Service Employ~nent Program 17.235 937 U. S. Department of Transportation Passed Through Texas Department of Transportation: Santa Fe-Frisco Depot Rehabilitation 20.500 CSJ:0901-29-012 610,236 U. S. Department of the Treasury Passed Through Bureau of Alcohol, Tobacco and Firearms: Gang Resistance Education and Training 21.100 ATCO20223 48,900 Total Expenditures of Federal Awards $ 2,046,998 148 city of Paris, Texas Notes On Accounting Policies For Federal Awards For the Fiscal Year Ended September 30, 2002 Note 1: Basis of Presentation The accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Paris, Texas. and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the general-purpose financial statements. 149 HCCLANANAN AND HOLMES, PLLC CERTIFIED PUBLIC ACCOUNTANTS R, FRANK RAY, CPA :'28 SIXTH STREET. S.E. R. E. BOSTWICK, CPA PARIS, TEXAS 75460 STEVEN W. MOHUNDRO, CPA 903-784-4316 GEORGE H. STRUVE, CPA FAX 903-784-4310 ANDREW B. REICH. CPA 304 WEST CHESTNUT DENISON. TEXAS 75020 ~03-465-6070 FAX 903-465-6093 1400 WEST RUSSELL Independent Auditors' Report 80NHAM. TEXAS 75418 903-583-5574 FAX 903-583-9453 Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance in Accordance with State of Texas Single Audit Circular Honorable Mayor and City Council City of Paris, Texas Compliance We have audited the compliance of the city of Paris, Texas, with the types of compliance requirements that are applicable to its major state program for the year ended September 30, 2002. The City's major state program is identified -- in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to its major state program is -- the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. 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 Auditinq Standards, issued by the Comptroller General of the United States and the State of Texas Single Audit -- Circular. Those standards and the State of Texas Single Audit Circular require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred -- to above that could have a direct and material effect on a major state program occurred. ~n audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City of Paris, Texas, complied, in all material respects, with the requirements referred to above that are applicable to its major state program for the year ended Septentber 30, 2002 Internal Control Over Compliance The management of the City of Paris, Texas, is responsible for establishing and maintaining effective internal control over compliance with requirements 150 AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS Honorable Mayor and City Council Clty of Paris, Texas Page 2 of laws, regulations, contracts, and grants applicable to state programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major state program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the internal control over compliance in accordance with the State of Texas Single Audit Circular. Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be materlal weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively iow level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants that would be material in relation to a major state program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the city Council, management, stale awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these · specified parties. Certified Public Accountants Paris, Texas November 15, 2002 151 MCCLANAHAN AND HOLMES, PLLC City of Paris, Texas Summary Schedule of Prior Audit Findings For the Fiscal Year Ended September 30, 2002 Finding/Recommendation Current Status None 152 City of Paris, Texas Schedule of Findings and Questioned Costs For the Fiscal Year Ended September 30, 2002 Section I - Summary of Auditor's Results Financial Statements TylDe of auditor's report issued: Unqualified Internal control over financial reporting: Material Weakness(es) identified? X yes no Reportable condition(s) identified that are not considered to be material weakness(es)? yes X none reported Noncompliance material to financial statements noted? X yes no Federal Awards Internal control over major programs: Material weakness(es) identified? yes X no Reportable conditions(s) identified that are not considered to be material weakness(es)? __ yes X none reported Type of auditor's report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with the Texas Single Audit Circular ? __ yes X no Identification of major programs: Grantor's Number(s) Name of State Program or Cluster 75-60022067-2002 Texas Department of Health CODH/Primary and BRLHO/Survey Dollar threshold used to distinguish between type A and type B programs: $ 300,000 Auditee qualified as low-risk auditee? __ yes X no Section II - Financial Statement Findings None Section III - State Award Findings and Questioned Costs None 153 City of Paris, Texas Corrective ActioA Plan For the Fiscal Year Ended September 30, 2002 Not Applicable 154 City of Paris, Texas Schedule of Expenditures of State Awards For ~he Fiscal Year Ended September 30, 2002 Grantor's Program Title Number Expenditures Texas Department of Health 75-60022067~2002 COPH/PRIMARy - Attachment 1 $ 180,000 BRLHO/SURVEY - Attachment 2 121,404 IMM/LOCALS - Attachment 4 53,523 Total Texas Department of Health 354,927 Texas Automobile Theft Prevention Authority Northeast Texas Automobile Theft Task Force SA-T01-10062-03 8,093 SA-T01-10062-02 83,024 Total Texas Automobile Theft Prevention Authority 91,117 Total Expenditures of State Awards $ 446,044 155 City of Paris, Texas Notes On Accounting Policies For State Awards For the Fiscal Year Ended September 30, 2002 Note 1: Basis of Presentation The accompanying schedule of expenditures of state awards includes the state grant activity of the City of Paris, Texas, and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of the Comptroller General of the United States and the State of Texas Single Audit Circular. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the prepara- tion of, the general-purpose financial statements. 156