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HomeMy WebLinkAbout2009-2010.AuditReportCITY OF CAPE GIRARDEAU, MISSOURI Cape Girardeau, Missouri For the Year Ended June 30, 2010 ANNUAL FINANCIAL REPORT BEUSSINK, HEY, ROE, SEABAUGH & STRODER, L.L.C. Certified Public Accountants CITY OF CAPE GIRARDEAU, MISSOURI TABLE OF CONTENTS FINANCIAL SECTION Page No• INDEPENDENT AUDITORS' REPORT 1-2 REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS 3-18 BASIC FINANCIAL STATEMENTS GOVERNMENT -WIDE FINANCIAL STATEMENTS STATEMENT OF NET ASSETS 19-20 STATEMENT OF ACTIVITIES 21-22 FUND FINANCIAL STATEMENTS GOVERNMENTAL FUNDS FINANCIAL STATEMENTS BALANCE SHEET 23-24 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS 25 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 26 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 27 PROPRIETORY FUNDS FINANCIAL STATEMENTS STATEMENT OF NET ASSETS 28-29 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS 30 STATEMENT OF CASH FLOWS 31-32 FIDUCIARY FUNDS FINANCIAL STATEMENTS STATEMENT OF NET ASSETS 33 NOTES TO BASIC FINANCIAL STATEMENTS 34-76 REQUIRED SUPPLEMENTAL INFORMATION STATEMENT.OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL 77 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - AIRPORT 78 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - PARK & RECREATION 79 NOTES TO BUDGETARY COMPARISON SCHEDULES 80-83 SCHEDULE OF FUNDING PROGRESS 84 SUPPLEMENTAL INFORMATION STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - VISION 2000 85 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CONVENTION AND TOURISM 86 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - DOWNTOWN BUSINESS DISTRICT 87 STATEMENT OF REVENUES, EXPENDITURES, AND . CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - HEALTH STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - MOTOR FUEL TAX 89 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CAPITAL IMPROVEMENT SALES TAX - FLOOD CONTROL 90 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CAPITAL IMPROVEMENT SALES TAX - WATER SYSTEM IMPROVEMENTS 91 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - TRANSPORTATION SALES TAX TRUST FUND m STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - CAPITAL IMPROVEMENT SALES TAX - SEWER SYSTEM IMPROVEMENTS 93 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - TRANSPORTATION SALES TAX TRUST FUND II 94 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - FIRE SALES TAX 95 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - PUBLIC SAFETY TRUST 96 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - DEBT SERVICE 97 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL CAPITAL IMPROVEMENTS 98 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - STREET IMPROVEMENTS 99 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - PARK IMPROVEMENTS 100 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - COMMUNITY DEVELOPMENT BLOCK GRANT PROJECTS 101 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES — BUDGET AND ACTUAL — TRANSPORTATION SALES TAX TRUST FUND III 102 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL — PARK STORM WATER SALES TAX 103 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL — PARK STORM WATER SALES TAX — CAPITAL 104 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL — HOUSING DEVELOPMENT GRANTS 105 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL — SEWER STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - WATER 107 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - SOLID WASTE [toy.] STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL — GOLF COURSE 109 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL — SOFTBALL COMPLEX 110 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES— BUDGET AND ACTUAL — MANAGEMENT INFORMATION SYSTEMS 111 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES — BUDGET AND ACTUAL — FLEET MANAGEMENT 112 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL — FRINGE BENEFITS 113 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - RISK MANAGEMENT 114 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - EQUIPMENT REPLACEMENT 115 ANNUAL FEDERAL FINANCIAL COMPLIANCE SECTION REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 116-117 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS 118-119 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 120-122 NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS 123 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 124-126 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 127 BEUSSINK, HEY, ROE, SEABAUGH & STRODER, L.L.C. Certified Public Accountants 4018 Sycamore 16 So. Silver Springs Road 105 So. Hope Cairo, Illinois 62914 Cape Girardeau, Missouri 63703 Jackson, Missouri 63755 Telephone (618) 734-3300 Telephone (573) 334-7971 Telephone (573) 243-3991 Facsimile (618) 734-3303 Facsimile (573) 334-8875 Facsimile (573) 243-3186 INDEPENDENT AUDITORS' REPORT Honorable Mayor and Members of the City Council City of Cape Girardeau, Missouri We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Cape Girardeau, Missouri (the City), as of and for the year ended June 30, 2010, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Cape Girardeau, Missouri as of June 30, 2010, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 28, 2010, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not.to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 1 Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on pages 3 through 18 and 77 through 84 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Cape Girardeau, Missouri's financial statements as a whole. The combining and individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, and is also not a required part of the financial statements. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. BEUSSINK, HEY, ROE, SEABAUGH & STRODER, L.L.C. 40, Cape Girardeau, Missouri December 28, 2010 2 REQUIRED SUPPLEMENTARY INFORMATION CITY OF CAPE GIRARDEAU, MISSOURI Management's Discussion and Analysis The discussion and analysis of the City of Cape Girardeau's financial performance provides an overall review of the City's financial activities for the fiscal year ended June 30, 2010. The intent of this discussion and analysis is to look at the City's financial performance as a whole. Readers should also review the basic financial statements and related notes to those statements to enhance their understanding of the City's financial performance. Financial Highlights o The assets of the City of Cape Girardeau exceeded its liabilities at the close of the most recent fiscal year by $231,392,223 (net assets). Of this amount, $27,076,606 (unrestricted net assets) may be used to meet the City's ongoing obligations to citizens and creditors. o As of the close of the current fiscal year, the City of Cape Girardeau's governmental funds reported combined ending fund balances of $27,452,356. Approximately 44.7 percent of this total amount, $12,283,807 is available for spending at the government's discretion (unreserved fund balance). o At the end of the current fiscal year, the unreserved fund balance for the general fund was $944,751 or 4.1 percent of total general fund expenditures and transfers. o At the end of the current fiscal year, general fund balance reserved for emergencies was $3,331,396 or 14.3 percent of total general fund expenditures and transfers. This fund balance had been reduced by $386,630 in previous years pursuant to an emergency declared as a result of a severe ice storm. The city charter requires that reductions of the fund balance reserved for emergencies as a result of a declared emergency should be replenished at least 10% annually. o The City of Cape Girardeau's fixed assets increased $20,417,215 during the year. Net fixed asset additions of $30,807,817 were made during the year. Depreciation for the current fiscal year reduced fixed assets by $10,390,602. 3 o The City of Cape Girardeau's total long-term debt decreased by $5,497,402 (7.1 percent) during the current fiscal year. During the year the City issued special obligation bonds totaling $1,290,031 (net of premium) to purchase six trash trucks that allowed the City to convert to an automated trash pickup system and received a $1,000,000 allocation of revenue bonds through the state revolving loan program to complete construction of a water transmission main to it water plant from a new well field. Only $577,294 of the $1,000,000 allocation was used during the year. As a result, only $577,294 was reflected as outstanding debt at the end of the year. Regularly scheduled principal payments and amortization of bond premiums / discounts resulted in outstanding long-term debt being reduced by $7,364,727. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the City of Cape Girardeau's basic financial statements. The City of Cape Girardeau's basic financial statements are comprised of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the City of Cape Girardeau's finances, in a manner similar to a private -sector business. The statement of net assets presents information on all the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the City's net assets changed during the most recent fiscal year. All changes in the net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of the related CITY OF CAPE GIRARDEAU, MISSOURI cash flows. Thus, revenues and expenses are Both the governmental fund balance sheet and reported in the statement for some items that will the governmental fund statement of revenues, only result in cash flows in future fiscal periods expenditures, and changes in fund balances (e.g., uncollected taxes and earned but unused provide a reconciliation to facilitate this vacation leave). comparison between governmental funds and governmental activities. Both of the government -wide financial statements distinguish functions of the City of Cape Girardeau that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City of Cape Girardeau include administrative services, development services, parks and recreation, public safety, and public works. The business - type activities of the City include sewer, water, and solid waste utilities and golf course and softball complex operations. The government - wide financial statements can be found on pages 19 to 22 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Cape Girardeau, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statement, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of the governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near term financing decisions. M The City of Cape Girardeau maintains 29 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general, airport, parks and recreation, transportation trust III, and parks projects from parks sales tax funds, which are considered, or have been designated, to be major funds of the City. Data from the other governmental funds are combined into a single, aggregated presentation. The City of Cape Girardeau adopts annual appropriated budgets for all its governmental funds, excluding the following capital project funds which have project length budgets: water system improvements, storm water improvements from parks / storm water sales tax and park improvements from parks / storm water sales tax. Budgetary comparison statements have been provided for all major governmental funds as part of the financial statements to demonstrate compliance with this budget. Budgetary comparison statements for the remaining governmental funds are present as supplemental information. The basic governmental fund financial statements can be found on pages 23 to 27 of this report. Proprietary funds. The City of Cape Girardeau maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City used enterprise funds to account for its sewer, water, and solid waste utilities and its golf course and softball complex operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for operation of its management information systems, fleet management, self-insured employee benefits and workmen's compensation programs, and its internal equipment leasing program. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary CITY OF CAPE GIRARDEAU, MISSOURI fund financial statements provide separate information for the sewer, water, and solid waste utilities and golf course and softball complex operations. All of these are considered, or have been designated, to be major funds of the City. The internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. The basic proprietary fund financial statements can be found on pages 28 to 32 of this report. Budgetary comparison statements for all the proprietary funds are present as supplemental information. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found beginning on page 34 of this report. Government -wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The City of Cape Girardeau, assets exceeded liabilities by $231,392,223, an increase of $8,920,730 (4.0%). The City's $195,266,351 net investment in capital assets (land, buildings, machinery, and equipment less related outstanding debt used to acquire those assets) makes up 84.4% of the City's net assets. This net investment increased $12,421,280 (6.8%) during the current fiscal year. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net assets (3.9 percent) represent resources that are subject to external restrictions on how they may be used. The portion of the City's net assets subject to external restrictions was $128,209 (1.4%) more than the previous year. The remaining balance of net assets ($27,076,606) is unrestricted and may be used to meet the City's ongoing obligations to citizens and creditors. This reflects a $3,628,759 (11.8%) decrease over the previous year. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business -type activities. The same situation was true of the prior year. City of Cape Girardeau's Net Assets 5 Governmental Business -type Activity Activities Total 2010 2009 2010 2009 2010 2009 Current and other assets 36,770,324 51,979,663 13,906,388 14,556,300 50,676,712 . 66,535,963 Capital assets 163,523,667 149,105,969 98,463,847 92,464,329 261,987,514 241,570,298 Total assets 200,293,991 201,085,632 112,370,235 107,020,629 312,664,226 308,106,261 Long-term liabilities outstanding 40,981,943 44,169,722 24,916,665 25,970,177 65,898,608 70,139,899 Other liabilities 9,924,574 9,474,965 5,448,821 6,019,904 15,373,395 15,494,869 Total liabilities 50,906,517 53,644,687 30,365,486 31,990,081 81,272,003 85,634,768 Net assets: Invested in capital assets, Net of related debt 124,536,400 119,771,644 70,729,951 63,073,427 195,266,351 182,845,071 Restricted 4,683,514 4,622,706 4,365,752 4,298,351 9,049,266 8,921,057 Unrestricted 20,167,560 23,046,595 6,909,046 7,658,770 27,076,606 30,705,365 Total net assets 149,387,474 147,440,945 82,004,749 75,030,548 231,392,223 222,471,493 5 CITY OF CAPE GIRARDEAU, MISSOURI Governmental activities. Governmental activities increased the City of Cape Girardeau's net assets by $2,872,043 (compared to $4,078,269 in the previous fiscal year). This amount combined with the use of $2,879,035 (12.5%) of the previous year's unrestricted net assets funded all of the $4,764,756 (4.0%) increase in net investments in capital assets during the fiscal year. Activity in the following revenue and expense items should be noted for the current fiscal year: 0 City of Cape Girardeau's Change in Net Assets Governmental Business -type activities activities Total 2010 2009 2010 2009 2010 2009 Revenues: Program revenue: Charges for service 4,811,586 3,809,396 12,666,105 12,690,661 17,477,691 16,500,057 Operating grants and contributions 1,141,534 .1,611,839 15,451 149,306 1,156,985 1,761,145 Capital grants and contributions 3,983,379 1,667,933 536,030 519,341 4,519,409 2,187,274 General revenues: Property taxes 1,954,791 1,944,680 - - 1,954,791 1,944,680 Sales taxes 23,776,186 21;981,847 - - 23,776,186. 21,981,847 Other taxes 8,224,566 7,990,413 - - 8,224,566 7,990,413 Other 1,225,489 1,666,740 559,385 743,332 1,784,874 2,410,072 Total revenues 45,117,531 40,672,848 13,776,971 14,102,640 58,894,502 54,775,488 Expenses: Administrative 6,049,429 5,559,436 - - 6,049,429 5,559,436 Capital Improvements 225,344 632,998 - - 225,344 632,998 Development Services 2,395,163 2,580,985 - - 2,395,163 2,580,985 Interest and other costs 1,861,055 1,388,445 - - 1,861,055 1,388,445 Parks and Recreation 4,002,531 3,908,389 - - 4,002,531 3,908,389 Public Safety 12,583,410 12,512,216 - - 12,583,410 12,512,216 Public Works 6,731,851 6,181,277 - - 6,731,851 6,181,277 Sewer - - 5,858,412 5,495,680 5,858,412 5,495,680 Water - - 5,979,806 5,759,009 5,979,806 5,759,009 Solid Waste - - 3,202,022 3,146,307 3,202,022 3,146,307 Golf Course - - 508,639 522,990 508,639 522,990 Softball Complex - - 616,020 507,154 616,020 507,154 Total expenses 33,848,783 32,763,746 16,164,899 15,431,140 50,013,682 48,194,956 Increase in net assets before transfers 11,268,748 7,909,102 (2,387,928) (1,328,500) 8,880,820 6,580,602 Transfers (8,396,705) (3,830,833) 8,396,705 3,830,833 - - Increase in net assets 2,872,043 4,078,269 6,008,777 2,502,333 8,880,820 6,580,602 Net assets -beginning of year 147,440,945 143,378,443 75,030,549 72,528,216 222,471,494 215,906,659 Prior period adjustments (925,514) (15,767) 965,423 - 39,909 (15,767) Net assets -end of year 149,387,474 147,440,945 82,004,749. 75,030,549 231,392,223 222,471,494 0 CITY OF CAPE GIRARDEAU, MISSOURI Revenues from governmental activities Charges for service increased $1,002,190 (26.3%) over the previous year. During the year internal charges, court fines, airport special event revenues, and net margin on fuel sales increased $180,657 (18.6%), $49,906 (6.3%), $432,097 (1298.5%) and 102,929 (51.7%), respectively, from revenues earned in the previous year. Also included in this year's service charges was revenue from Cape Splash which began operations at end of May 1020. Significant decreases from the previous year were: (1) development related user fees were down $92,400 (36.0%) and (2) Osage Centre rentals were down $21,400 (23.4%). Internal staff expense charged to capital projects increased significantly this year reflecting progress made on projects funded by the transportation and parks / stormwater sales taxes during the year. The increase in court fines reflect a 2.9% increases in traffic cases handled during the year. During the current year the City hosted the "Blue Angels" at its air show which was supported by significant ticket sales and sponsorship revenue. In the previous year the City had a scaled down air show at the City's Fourth of July celebration that was supported only by sponsorship revenue. The net revenue from this year's air show was $10,436 compared to a net loss of $19,722 in the previous year. The increase in the net margin in fuel sales at the airport reflected a 49.9% increase in the number of gallons of fuel sold at the airport during the past year. During the previous year, building permit and plan review fees associated with two large hospital expansion projects and one elderly apartment complex and inspection fees associated with a large residential subdivision caused significant increases in development related users fees. Similar activity did not reoccur during the current year. Rentals of rooms at the Osage Centre declined this year. Part of this decline could have resulted from the remodeling project that took place during the year. Operating grants and contributions were $470,305 (29.2%) less than the previous year. During the previous year the City received $365,082 in payments from FEMA and SEMA for the reimbursement of costs associated -with various natural disaster events and intergovernmental revenue from the County totaling $84,558 to upgrade the HVAC system at the Common Pleas Courthouse. No revenues were received from these grants in the current year. This year the City received $76,064 from a Department of the Interior Preserve America Grant to market the City's Downtown Historic District. No revenues were received from this grant in the previous year. During the current year the City received $353,451 in payments from various neighborhood improvement grants, $414,959 from various police operating grants and $97,795 from a SAFER grant to cover the portion of the personnel costs of three additional firefighters. During the previous year payments from these sources were $473,121, 375,536 and $116,638, respectively. Capital grants and contributions increased $2,315,446 (138.8%) over the previous year. In the current year $992,889 of donated assets and infrastructure were recorded. This was $226,207 (32.5%) more than the previous year. Benefiting property owners were charged $35,541 for a portion of this year's infrastructure costs. This was $2,210 (31.1%0) more than the previous year. This year grants totaling $1,395,260, $577,294, and $261,964 were received respectively for airport capital projects, water system improvements, and public safety equipment. In the previous year grant totaling $90,075, $0, and $3,212 were received for these projects respectively. The remaining grant and contribution revenue received was $790,431 which was $54,202 (6.4%) less than the previous year. • Property tax revenue was $10,111 (0.5%) more than the previous year. Final adjusted assessed value of real estate increased $10,120,678 (2.4%) over the previous year. New construction and annexed property accounted for $5,797,290 and $206,470 of this increase, respectively. Final adjusted assessed value of personal property decreased $5,321,727 (5.2%) over the previous year. State law required the City to decrease its levy rate by .9% during the current year. 7 CITY OF CAPE GIRARDEAU, MISSOURI Revenues from governmental activities (continued) Sales tax revenue was 52.7% of the total revenue during the current year vs. 53.9% in the previous year. This year's revenue, which included the first full year of a new parks / storm water sales tax that went into effect October 1, 2008, was $1,794,339 (8.2%) more than the previous year. Excluding the effects of the new tax, sales tax. revenue would have increased $304,224 (1.6%) over the previous year. From fiscal year ending June 30, 2007 through fiscal year ending June 30, 2009 sale tax revenue had annual growth rates of 2.8%,.6%, and (1.6%), respectively • Other taxes increased $234,153 (2.9%) from the previous year. Franchise taxes, motor fuel taxes, liquor license grew $274,159 (7.7%),$13,693 (1.0%), and $3,612 (5.6%) respectively. Convention and tourism taxes, business licenses, and other taxes decreased $43,292 (2.5%), $7,248 (.6%), and $6,771 (4.2%) respectively. Ameren paid 72.4% of the total franchise tax collected during the year based on its electricity and natural gas revenues. During the current year Ameren paid $62,925 (2.2%) less than the previous year. Payments received on natural gas sales declined $140,709 (14.7%) from the previous year as a result of natural gas rates being approximately 17.5% lower during the current year. Payments received on electricity sales only. increased $77,784 (4.2%) despite rates that were approximately 10% higher than the previous year. It appeared that mild summer temperatures accounted for a majority of the less than expected revenue growth. During the current year the City received payments in lieu of franchise taxes from its water and sewer funds totaling $447,304. This was $304,356 (212.9%) greater than the previous year. In the current year the water and sewer funds paid 5% of their gross receipts. In the previous year water paid 2.5% of its gross receipts. No payment was made by the sewer fund in the previous year. Franchise tax paid during the current year by the City's telecommunication and cable TV service providers increased $30,656 (14.1%) and $2,072 (.6%), respectively, from the previous year. The decrease in the convention and tourism taxes was comprised of a $28,110 (2.5%) increase in restaurant taxes from the previous year which was more than offset by a significant $71,402 (12.0%) decrease in hotel / motel taxes from the previous year. • Other revenue decreased $441,251 (26.59%) over the previous year. Investment earnings, which account for 91.4% of other revenue, decreased $447,679 (28.5%). Expenses from governmental activities Administrative expenses totaled $6,049,429 this year which was $489,993 (8.8%) more than the previous year. Excluding personnel costs, the most significant cost item included in this category is the City's support of the "River Campus Project". This is a joint City/University project. The City agreed to make payments from its convention and tourism taxes to pay principal and interest on bonds issued by the University to fund $8.9 million of construction costs related to a campus, performance center, and museum on property that oversees the Mississippi River. The campus began operating in the fall of 2007. The total cost of the project exceeded $60 million. The city's payments to Southeast Missouri State University decreased $68,342 (5.7%) to . $1,131,426 this year. CITY OF CAPE GIRARDEAU, MISSOURI Expenses from governmental activities (continued) Current revenues collected from the hotel, motel, and restaurant taxes not used for the operation of the Convention Visitors Bureau are committed to payoff the "River Campus" bonds. Unspent hotel, motel, and restaurant taxes collected before November 2004 are used to fund various tourism related projects. During the current year the City spent $184,706 on such projects, an increase of $95,382 (106.8%0) from the previous year. At the end of the current year there was still $400,343 available for expenditure on future tourism related projects. The current year includes the following significant changes in administrative costs: (1) amounts spent on declared natural disaster weather events declined $172,891 to $130,176 (2) amount spent on the annual air show increased $401,940 to $457,249 (3) amount spent on Preserve America Grant related expenditures increased $89,434 to $90,086. • Capital improvements expenses totaled $225,344 this year which was $407,654 (64.4%) less than the previous year. These costs represent street and other capital projects that did not meet the City's $5,000 capitalization threshold (the amount at which the expenditure would be recorded as a capital asset). • Development services expenses totaled $2,395,163 this year which was $185,822 (7.2%) less than the previous year. During the current fiscal year the City made economic development payments totaling $165,169 as reimbursements on development agreements entered into in previous fiscal years. These payments were $21,322 (14.8%) more than were made in the previous year. During the previous year the City recognized $250,000 in costs associated with a grant that was passed through to a local developer. The developer used the money to purchase an old school building in the City from the public school system. No similar costs were included in the current year. Other significant changes in the current year's development service costs were personnel costs decreased $67,739 (4.1%) and neighborhood improvement projects costs increased $130,766 (54.5%). Interest and other costs totaled $1,861,055 this year which was $472,610 (34.0%) more than the previous year. In March 2009 the City issued $19,885,000 of bonds to finance various park and storm water projects. Interest and other costs incurred on these bonds increased $650,174 from the previous year to $836,500. In June 2009 the City entered into a $125,000 note payable to finance a portion of the cost of land for a new downtown parking lot. Interest and other costs incurred on these bonds increased $5,853 from the previous year to $5,868. Scheduled principal and interest payments were made on all remaining debt during the year. • Parks and recreation expenses totaled $4,002,531 this year which was $94,142 (2.4%) more than the previous year. This year's expenditures include $38,622 in equipment and vehicle purchases that did not meet the City's $5,000 capitalization threshold. In the previous year this amount was $253,008. All of these expenditures were funded by a new sales tax that went into effect October 1, 2008. This year's expenditures include $143,282 in operating expenses from Cape Splash. This new family aquatic park opened Memorial Day weekend and was constructed using the parks / storm water sales tax. This year's expenditures also include additional depreciation and personnel costs. Depreciation expense increased $107,812 (27.60%) over the previous year. This mainly resulted from equipment purchases and facility construction funded by the parks / storm water sales tax. Personnel costs, excluding Cape Splash, included in this years expenses totaled $2,386,779 which was $75,121 (3.2%) greater than the previous year. 6 CITY OF CAPE GIRARDEAU, MISSOURI Expenses from governmental activities (continued) Public safety expenses totaled $12,583,410 this year which was $71,194 (0.6%) more than the previous year. Personnel costs totaled $10,220,156 during the current year. This was $59,439 (.6%) less than the previous year. Personnel costs include 3 fire fighter positions that were partially funded by a grant. Associated grant revenue totaling $97,796 is included in the City's operating grant and contribution revenue for the current year. Public safety expenses include $252,578 for communication, rescue, and other equipment. These costs were totally funded by three grants whose revenue is reflected in the City's capital grant and contribution revenue for the current year. During the previous year public safety expenses included $68,168 for putting flashing beacons at school sites throughout the City. The costs were funded through a "Safe Routes to School" grant. Associated grant revenue totaling $70,462 wad included in the City's capital grant and contribution revenue for that year. Public works expenses totaled $6,731,851 this year which was $550,574 (8.9%) more than the previous year. Included in this year's expenses is depreciation expense totaling $4,475,895 which was $532,538 (13.5%) more than the previous year and personnel costs totaling $1,064,708 which was $59,850 (5.3%) less than the previous year. The current year includes the following significant changes in public works expenditures: (1) amounts spent on fleet maintenance declined $53,128 (22.3%) to $184,969 (2) internal lease charges for equipment increased $42,146 (26.4%) to $202,026 (3) amount spent on street maintenance and snow removal supplies increased $71,599 (59.6%) to $191,730. The illustration above makes it clear that all the governmental activities and business -type activities of the City with the exception of water and solid waste required a subsidy by taxpayers. General revenues in these activities, which include transfers from special revenue sales taxes, were sufficient to provide adequate subsidies for both the governmental and business -type activities. 10 CITY OF CAPE GIRARDEAU, MISSOURI Revenues by Source — Governmental Activities Revenues for governmental activities Operating Charge for grants Capital grants Service 2.51/6 8.8% 10 6% Property taxes Other �' 4.4% 2.8% ertaxes 18.2 Sales taxes_ 52.7% The above chart summarizes the sources of revenue from government activities. The three main sources of revenue and their share of total governmental revenues are sales tax (52.7%), other taxes (18.2%) and charges for services (10.6%). The City's general sales tax represents 36.7 percent of the total sales tax revenue and,45.0 percent of the total general fund revenues. The remaining sales taxes are for parks, storm water, transportation, sewer, water, and public safety projects. The general fund accounts for 63.4% and 56.4% of the other tax and service charge revenue respectively. This represents 26.9% and 14.0% of the total general fund revenues respectively. Business -type activities. Business -type activities increased the City of Cape Girardeau's net assets by $6,008,777 (compared to $2,502,333 in the previous fiscal year). Excluding transfers from government activities, business -type net assets decreased $2,387,928 and $1,328,500, respectively, during the last two years. These decreases were offset by transfers from governmental activities totaling $8,396,705 and $3,830,833, respectively, during the past two years. Transfers of sales tax revenue for bond payments totaling $1,750,307 and operating subsidy transfers from the general and parks / storm water sales tax funds totaling $879,323 make up 20.8% and 10.5% of this year's total transfers, respectively. Last year these transfers totaled $2,210,261 and $670,851, respectively and represented 57.7% and 17.5% of 11 that year's transfers. Transfers of water system improvements to the water fund increased $1,861,702 from the previous year to $2,696,528 this year. Park and stormwater system improvements totaling $2,552,677 and $273,158 were transferred to the sewer, golf, and softball complex funds this year. The net change in assets before transfers and general revenues in the sewer, water, solid waste, golf, and softball operations totaled $(2,424,206), $107,013, 208,590, $(401,639), and $(437,070), respectively, this year. This compares to $(2,155,036), $402,981, 233,186, $(203,158), and $(349,806), respectively, in the previous year. Financial Analysis of the City's Funds As noted earlier, the City of Cape Girardeau uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unreserved fund balance may serve as a useful measure of the City's net resources available for spending at the end of a fiscal year. As of June 30, 2010, the City's governmental funds reported combined ending fund balances of $27,452,356, a decrease of $15,412,423 (36.0%) from the prior year. Unreserved fund balances, which are available for spending at the City's discretion, account for $12,283,807 (44.7%) of the total fund balances. CITY OF CAPE GIRARDEAU, MISSOURI The remainder of the fund balances are reserved to indicate that they are not available for new spending because they have already been committed 1) to meet the City's Charter required emergency reserves ($4,163,333), 2) to fund purchase orders open at the end of the year ($9,365,628), 3) to set aside fund balance not currently available for expenditure equal to long- term loans due from other City funds ($996,954), 4) to pay debt service ($243,939), and 5) restricted to a specific use ($398,696). The general fund is the chief operating fund of the City. At the end of fiscal year ending June 30, 2010, unreserved fund balance of the general fund was $944,751 while total fund balance was $5,520,348. As a measure of the general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents only 4.1 percent of total general fund expenditures including transfers. However, included in the reserved fund balance is $3,331,396, which had been reserved to meet the City Charter's emergency reserve requirement. This amount represents 14.3 percent of total general fund expenditures including transfers and could be used if an emergency was declared by the City Council. The Governmental Funds Statement of Revenue, Expenditures, and Changes in Fund Balance shows that the total fund balance of the City of Cape Girardeau's general fund increased by $575,278 during the current fiscal year. However, the General Fund Statement of Revenues, Expenditures, and Changes of Fund Balance prepared on a budget basis shows a current fiscal year increase of $617,724. Differences between the amounts reflected in the two statements can be found in the Notes to Budgetary Comparison Schedules found on pages 78 - 81. The original adopted general fund budget for the fiscal year ending June 30, 2010 had a surplus of revenues over expenditures of $336,436. The actual general fund results increased fund balances by $617,724. Significant deviations from this budget are detailed below: o Sales tax revenue was $84,776 (1.55°/x) more than the previous year, which was $84,776 (.98%) more than projected for the adopted budget. The adopted budget projected revenues that were I% below actual fiscal year ending June 30, 2008 revenues. Actual revenue 12 for fiscal year ending June 30, 2009 declined 1.56% from than the previous year. o Franchise tax revenue was $274,159 (7.7%) more than the previous year. The main factor leading to this increase was a $304,356 (212.9%) increase in revenues collected from the water and sewer funds for payments in lieu of taxes. During the current year both funds' payments were based on 5% of their gross receipts. In the previous year the water fund paid the payment in lieu of taxes based on 2.5% of its gross receipts. No payment was made by the sewer fund in the previous year. During the current year Ameren, the City's provider of natural gas and electricity, paid $62,925 (2.2%) less franchise tax than the previous year. Payments received on natural gas sales declined $140,709 (14.7%) from the previous year as a result of natural gas rates being approximately 17.5% lower during the current year. Payments received on electricity sales only increased $77,784 (4.2%) despite rates that were approximately 10% higher than the previous year. Mild summer temperatures accounted for a majority of the less than expected revenue growth from electricity sales. Franchise tax paid during the current year by the City's telecommunication and cable TV service providers increased $30,656 (14.1%) and $2,072 (.6%), respectively, from the previous year. Franchise tax revenue was $7,538 (.2%) more than projected for the adopted budget. Franchise taxes from telecommunications and City's water and sewer exceeded their budgets by $68,128 (38.0%) and $12,629 (2.9%). Franchise taxes from electric and natural gas utilities and cable TV fell short of meeting their by $61,974 (2.2%) and $11,245 (3.0%). o Real estate and personal property tax revenue increased $9,111 (.6%) over the previous year and was $17,813 (1.1 %) less projected for the budget. The final assessed values for real estate grew 2.4% while the final assessed values for ,personal property declined 5.2% from the previous year. The adopted budget for the fiscal year ending June 30, 2010 had assumed 1.0% and 0.0% assessed value growth respectively. CITY OF CAPE GIRARDEAU, MISSOURI o Business license revenue declined ending June 30, 2010 had assumed revenue $7,248 (.6%) over the previous year but levels equal to calendar year 2008. still exceeded the projected budget by $31,243 (2.8%). The adopted budget for o During the current fiscal year expenditures fiscal year ending June 30, 2010 had were $39,751 (.2%) more than original budget. projected revenue that was 3.6% less than. Debt service and capital expenditures were less fiscal year ending June 30, 2008 actual. than their original budgets by $12,025 (6.4%) and $5,747 (5.0%). Current operating o Other license and permit revenue was expenditures were $57,523 (.3%) more than the $19,252 (8.1 %) lower this year than the original budget. previous year which was $7,919 (3.8%) more than projected for the budget. Permit o Transfers to other funds for operating revenue associated with the local hospitals' subsidies were $23,890 (.6%) less than original expansion projects that occurred in the budget while transfers for capital expenditures previous year caused that year's results to exceeded their original budgets by $262,323 be better than the current year. (3279.0%). Additional transfers for park projects, neighborhood redevelopment, and a o Intergovernmental revenue exceeded downtown parking lot accounted for $242,014 revenue projected for the budget by of the additional transfers. $360,943 (61.2%). This year's intergovernmental revenue included Proprietary funds. The City of Cape Girardeau's $263,702 in revenues from various public enterprise funds are all presented as major funds for safety capital grants and $89,064 in disaster purposes of this report. As a result, all statements relief payments from state and federal related to the enterprise funds are presented at the agencies to make repairs to streets and government -wide level. The City does have Internal other items damaged during the previous Service funds, which are reported in total on the year's natural disasters. Proprietary Fund Statement and consolidated with other governmental activities on the government - o Service charges were $73,371 (22.4%) wide statements. less than the previous year and were $41,966 (14.1%) less than projected in the General Fund Budgetary Highlights budget. During the previous year the City received significant development and plan Total expenditures and transfers on the final amended review fees from one residential budget were $827,638 (3.6%) more than the original development and three commercial adopted budget. The changes that were appropriated developments and as result that year's by the City Council can be summarized as follows: results were significantly better than the o $134,500 to cover costs associated with flash current year. flooding, river flooding and winter storm events o Internal charges were $186,682 that occurred during the previous year which (17.1 %) greater than the previous year are included in the current year's contingent which was $128,778 (11.2%) more than expenses. These costs were funded by disaster projected in the budget. During the year the relief payments from state and federal agencies. City made better than anticipated progress on completion of its major capital projects. o $46,000 to cover additional personnel costs This resulted in more internal salaries and various other operating costs included the being charged to these projects than had current year's parks and recreation expenses. been anticipated by the budget. o $38,650 to cover additional election costs and o Fines and forfeits revenue was $49,906 various other operating costs included the (6.3%) greater than the previous year current year's administrative expenses. which was $43,110 (5.4%) more than projected in the budget. There was a 2.9% o $15,000 to cover an economic development increase in traffic violation cases during the payment that inadvertently left out of the years. The adopted budget for fiscal year 13 CITY OF CAPE GIRARDEAU, MISSOURI original budget. This payment is included in the current year's development services expenses. $253,788 to cover additional grant and donation funded operating expenses included in current public safety expenses. The additional operating expenses were funded by previous years' unspent donation revenue and unexpected grants received during the current year. o $6,000 to cover interfund interest costs included in the current years interest expense. o $100,000 to cover costs of grant funded communication equipment included in public safety capital expenses. The additional costs were funded by unexpected grants received during the current year. o $13,000 to cover cost of the roof replacement of the Lorimier Cemetery Mausoleum. This cost is included in parks and recreation capital expenses o $80,000 general fund transfers to the airport and parks and recreation fund to cover the costs of projected operating deficits. Only $18,547 of this appropriation was actually used. o $54,000 general fund transfer to the community development block grant fund to cover a portion of the local cost of a new downtown parking lot. o $32,000 general fund transfer to the housing development grant fund to cover additional local match portion of various neighborhood improvement grants. o $44,000 general fund transfer to the equipment replacement fund to transfer estimated proceeds of assets sales: 14 o $10,000 general fund transfer to the public safety trust fund to cover the cost of the increased estimated amount that could be available to be transferred based on projected sales tax revenue. Unused appropriations of development services ($113,000) were transferred to administrative in current operating expenses. Excess general fund revenues and unrestricted fund balances were used to fund all appropriations that did not have an identified funding source. During the year departments may transfer budget appropriations between various expense types within their department. Capital Assets and Debt Administration Capital Assets. The City of Cape Girardeau's investment in capital assets for its governmental and business -type activities as of June 30, 2010, amounts to $261,987,514 (net of accumulated depreciation). This investment in capital assets includes all land, buildings and system improvements, machinery and equipment, and infrastructure owned by the City. City Capital Assets CITY OF CAPE GIRARDEAU, MISSOURI o $33,290 in costs was also incurred during the year on street projects not included on the transportation sales tax list of projects. o Construction costs totaling $3,022,646 on water system projects were incurred this year. Major water system improvements included the installation of a new raw water line, the addition of water main extensions and continuation of the two- inch water main replacement program. o Construction costs totaling $805,826 were incurred for other improvements. These projects included, traffic signal upgrades; parking lot improvements in the downtown area, and trail construction. Major capital asset events during the current fiscal year included the following: o Construction costs totaling $7,321,719 on approved transportation sales tax projects were incurred this year. This tax was originally approved to complete a specific list of street projects, which also included amounts for street repair and overlay, sidewalk construction and repair, and street light installation and upgrades. $33,290 in costs was also incurred during the year on street projects not included on the transportation sales tax list of projects. 15 o Major improvements to the Airport's Airfield, South Ramp and Taxiway amounted to $1,419,857 in construction costs. These were primarily funded by an American Reinvestment and Recovery Act grant and State Entitlement money. o Police and fire station improvements in the amount of $149,857 were made possible by the passage of a Fire Sales Tax. o In April 2008 voters approved a %2 cent sales tax to pay for storm water and park improvement projects. $270,362 and $12,675,297 were spent respectively during the current year on these projects. Additional information about the City's capital assets can be found in note D to the financial statements. City of Cape Girardeau's Capital Assets (net of depreciation) Governmental Business -type Activity Activities Total 2010 2009 2010 2009 2010 2009 Land 5,375,506 5,370,111 161,990 161,990 5,537,496 5,532,101 Buildings and system improvements 18,493,406 12,253,179 2,089,527 2,204,432 20,582,933 14,457,611 Improvements other than buildings 11,666,628 9,890,277 86,516,462 85,769,063 98,183,090 95,659,340 Equipment 6,082,188 5,902,960 5,049,330 3,058,396 11,131,518 8,961,356 Infrastructure 115,973,947 107,513,636 - - 115,973,947 107,513,636 Construction in progress 5,931,992 8,175,806 4,646,538 1,270,448 10,578,530 9,446,254 Total 163.523.667 149.105.969 98.463.847 92.464.329 261.987.514 241.570.298 o $33,290 in costs was also incurred during the year on street projects not included on the transportation sales tax list of projects. o Construction costs totaling $3,022,646 on water system projects were incurred this year. Major water system improvements included the installation of a new raw water line, the addition of water main extensions and continuation of the two- inch water main replacement program. o Construction costs totaling $805,826 were incurred for other improvements. These projects included, traffic signal upgrades; parking lot improvements in the downtown area, and trail construction. Major capital asset events during the current fiscal year included the following: o Construction costs totaling $7,321,719 on approved transportation sales tax projects were incurred this year. This tax was originally approved to complete a specific list of street projects, which also included amounts for street repair and overlay, sidewalk construction and repair, and street light installation and upgrades. $33,290 in costs was also incurred during the year on street projects not included on the transportation sales tax list of projects. 15 o Major improvements to the Airport's Airfield, South Ramp and Taxiway amounted to $1,419,857 in construction costs. These were primarily funded by an American Reinvestment and Recovery Act grant and State Entitlement money. o Police and fire station improvements in the amount of $149,857 were made possible by the passage of a Fire Sales Tax. o In April 2008 voters approved a %2 cent sales tax to pay for storm water and park improvement projects. $270,362 and $12,675,297 were spent respectively during the current year on these projects. Additional information about the City's capital assets can be found in note D to the financial statements. CITY OF CAPE GIRARDEAU, MISSOURI City of Cape Girardeau's Outstanding Debt Year ended 2010 Long-term debt. At the end of the fiscal year, the City of Cape Girardeau had total debt outstanding of $71,454,932. Bonded debt outstanding totaling $42,133,838 is secured by revenues of the sewer and water funds and capital improvement sales taxes. The repayment of the remaining debt is subject to annual appropriations. The City's total debt decreased by $5,497,403 (-7.1%) during the year. During the year the City received a $1,000,000 ARRA direct loan commitment from the State of Missouri to be used to complete the new raw water transmission main. At the end of the current year the City had used $577,294 of the $1,000,000 commitment. Regularly scheduled principal payments and amortization of bond premiums / discounts resulted in outstanding long-term debt being reduced by $6,074,697. More information about the City's outstanding debt can be found in note E to the financial statements. Economic Factors and the Next Year's Budget Commercial and residential development reflects the national economy. Values of commercial and residential permits issued during the year were 44.3% and 34.7%, respectively, below the previous year's values and were 19.2% and 70.2 16 respectively below, fiscal year ending June 30, 2007 values. Commercial and residential permits valued at $26.7 million and $8.1 million were issued this year. Commercial and residential permits valued at $47.9 million and $12.4 million were issued in the previous year. Only 34 single family residence building permits totaling $5,222,898 were issued during the current year compared to 33 totaling $6,892,992 in the previous year. Commercial permits during the previous year included major projects at the two City hospitals and the construction of a senior citizen's apartment complex. No similar commercial projects were constructed this year. Local employment continues to be stronger that state and national employment. The Cape Girardeau County unadjusted unemployment rate was only 7.3% in October 2010.This compares favorably with the statewide and national unadjusted unemployment rates which were of 9.4% and 9.6% respectively. The unemployment rates were 6.5%, 8.9% and 9.6% for the county, state, and nation, respectively, for the previous October. City construction projects related to its transportation sales tax and parks and stormwater sales provide significant support to local construction employment. During the previous year Thortigate Ltd., a high-end men's clothing manufacturer, ceased operations at its Cape Girardeau plant. As a result 310 jobs were lost. Governmental Business -type Activity Activities Total 2010 2009 2010 2009 2010 2009 Notes payable 737,605 1,317,125 930,125 457,875 1,667,730 1,775,000 Special obligation bonds 5,661,524 6,471,913 1,289,046 184,577 6,950,570 6,656,490 Revenue bonds 16,362,923 17,455,594 25,770,915 29,107,986 42,133,838 46,563,580 Certificates of participation 2,100,173 2,235,209 - - 2,100,173 2,235,209 General obligation bonds - - - - - - Leasehold revenue bonds 18,602,621 19,722,056 - - 18,602,621 19,722,056 43,464,846 47,201,897 27,990,086 29,750,438 71,454,932 76,952,335 Long-term debt. At the end of the fiscal year, the City of Cape Girardeau had total debt outstanding of $71,454,932. Bonded debt outstanding totaling $42,133,838 is secured by revenues of the sewer and water funds and capital improvement sales taxes. The repayment of the remaining debt is subject to annual appropriations. The City's total debt decreased by $5,497,403 (-7.1%) during the year. During the year the City received a $1,000,000 ARRA direct loan commitment from the State of Missouri to be used to complete the new raw water transmission main. At the end of the current year the City had used $577,294 of the $1,000,000 commitment. Regularly scheduled principal payments and amortization of bond premiums / discounts resulted in outstanding long-term debt being reduced by $6,074,697. More information about the City's outstanding debt can be found in note E to the financial statements. Economic Factors and the Next Year's Budget Commercial and residential development reflects the national economy. Values of commercial and residential permits issued during the year were 44.3% and 34.7%, respectively, below the previous year's values and were 19.2% and 70.2 16 respectively below, fiscal year ending June 30, 2007 values. Commercial and residential permits valued at $26.7 million and $8.1 million were issued this year. Commercial and residential permits valued at $47.9 million and $12.4 million were issued in the previous year. Only 34 single family residence building permits totaling $5,222,898 were issued during the current year compared to 33 totaling $6,892,992 in the previous year. Commercial permits during the previous year included major projects at the two City hospitals and the construction of a senior citizen's apartment complex. No similar commercial projects were constructed this year. Local employment continues to be stronger that state and national employment. The Cape Girardeau County unadjusted unemployment rate was only 7.3% in October 2010.This compares favorably with the statewide and national unadjusted unemployment rates which were of 9.4% and 9.6% respectively. The unemployment rates were 6.5%, 8.9% and 9.6% for the county, state, and nation, respectively, for the previous October. City construction projects related to its transportation sales tax and parks and stormwater sales provide significant support to local construction employment. During the previous year Thortigate Ltd., a high-end men's clothing manufacturer, ceased operations at its Cape Girardeau plant. As a result 310 jobs were lost. CITY OF CAPE GIRARDEAU, MISSOURI Within in the past 2 months developments have been announced that will eventually replace these jobs. In October 2010 TJ Maxx opened a store in the former Goody's store that had closed more 1.5 years ago. This store may produce an additional 30 jobs. In December 2010 the Isle of Capri announced plans for a $125 million casino development in the downtown area. Construction on the project should begin this spring and should be completed and operational by December 2012. The development should employ approximately 450 people and produce an estimated $3 million of additional annual tax revenue for the City after its opening. Taxable sales subject to the City's general sales tax increased 1.55% during the current year. Since the City is heavily dependent on sales tax revenue for support of its general fund services, any growth of local retail sales can have a positive impact on the City's ability to fund services in the future. The state Hancock Amendment requires the City obtain simple majority voter approval to increase any permit or license fee that is not based on actual costs to the user and strictly limits the City's ability to increase its real estate and personal property tax levies to support its general services such as police and fire protection. The City Charter requires voter approval to increase sewer, water, and solid waste fees by more than 5% in any year. All other user fees can be adjusted to cover actual costs. Stagnant retail economy. Sales tax is a significant revenue source of the City and is a barometer of the local economy. In the current year sales tax revenue from the general sales tax increased 1.6% while inflation grew at .8%. In. the previous year sales tax revenue from the general sales tax decreased 1.6% while inflation grew at 1.9 %. Although there has been some sales tax revenue increase during the past 3 years, there has been almost no cumulative growth during those years. Sales tax revenue for the fiscal year ending June 30, 2010 was only .5% more than it was for the fiscal year ending June 30, 2007. During that timeframe inflation averaged increasing 2.1% per year. The City's restaurant gross receipt tax increased 2.5% while the hotel/motel gross receipt tax decreased 12.0% during the current year. In the previous year they increased 3.2% and 2.0%, respectively. Regional retail center. Through most of the 1990's Cape Girardeau continued to be a regional retail center for much of Southeast Missouri and Southern Illinois. During the latter part of the 1990's Cape Girardeau began to lose its share of the retail market to other cities in the region as these cities added additional retail outlets in their communities. 17 The previous table, which includes the City of Cape Girardeau and significant retail centers within a 50 mile radius, shows the percentage of estimated sales made by each City to the total estimated sales of the five cities. During the current year is appears City's share of the local market has increased significantly compared to the other years. Local Economic Development. Since 2004 the City has entered into 3 long-term development agreements to reimburse companies for the public improvements associated with 3 retail development projects from the additional sales tax generated from those projects. The agreements have resulted in the addition of one major new retailer, the relocation and expansion of another major retailer, and in the conversion of a former Sears's facility into a call center for National Asset Recover Services (MARS). Payment made by the City pursuant to these agreements totaled $165,169 during the current year. Payments totaling $806,999 have been made since the beginning of these agreements. During the year the City spent $62,968 in support of Cape Girardeau Area Magnet, as a result of their membership in that organization. This organization actively solicits business, industry and commerce for the greater Cape Girardeau area which includes neighboring cities Jackson and Scott City and all of Cape Girardeau County. SALES TAX COMPARISON FY07 FY08 FY09 FY10 Cape Girardeau 40.9% 41.2% 41.1% 41.7% Carbondale 28.4% 28.6% 27.7% 27.9% Jackson 10.2% 9.9% 9.9% 9.5% Perryville 7.1% 7.1% 7.4% 7.4% Sikeston 13.4% 13.2% 13.9% 13.5% 100.0% 100.0% 100.0% 100.0% 17 The previous table, which includes the City of Cape Girardeau and significant retail centers within a 50 mile radius, shows the percentage of estimated sales made by each City to the total estimated sales of the five cities. During the current year is appears City's share of the local market has increased significantly compared to the other years. Local Economic Development. Since 2004 the City has entered into 3 long-term development agreements to reimburse companies for the public improvements associated with 3 retail development projects from the additional sales tax generated from those projects. The agreements have resulted in the addition of one major new retailer, the relocation and expansion of another major retailer, and in the conversion of a former Sears's facility into a call center for National Asset Recover Services (MARS). Payment made by the City pursuant to these agreements totaled $165,169 during the current year. Payments totaling $806,999 have been made since the beginning of these agreements. During the year the City spent $62,968 in support of Cape Girardeau Area Magnet, as a result of their membership in that organization. This organization actively solicits business, industry and commerce for the greater Cape Girardeau area which includes neighboring cities Jackson and Scott City and all of Cape Girardeau County. CITY OF CAPE GIRARDEAU, MISSOURI Budget for fiscal year ending June 30, 2011 and financial condition The adopted general fund budget for the fiscal year ending June 30, 2011, was projected to produce a $36,791 surplus to help increase the City's unrestricted general fund balance and provide a cushion against a further economic slow down. The adopted general fund budget included a I% wage increase effective July 1, 2010 and included projected revenue based on conservative revenue assumptions. The approved general fund budget projected adequate revenue to cover its projected personnel and operating costs and $20,450 in capital costs. The current budget's health costs appear to have stabilized as a result of a change to a more consumer based health coverage beginning January 1, 2008. Charges required to fund maximum estimated claims only increased 7.1% January 1, 2010 and will not increase on January 1, 2011. The City's current financial position had improved during the past year and is good in that it has more than adequate fund balance to cover existing claims and potential emergencies. However, its financial condition or its ability to provide enough reoccurring revenues to meet its reoccurring needs is still less than desirable. Funding of equipment for the general and airport funds, excluding police, fire, and various park divisions is still inadequate. Requests for Information This financial report is designed to provide a general overview of the City of Cape Girardeau's finances for all those with an interest in the City's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Finance Director, City of Cape Girardeau, PO Box 617, Cape Girardeau, MO 63702-0617. 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ICE c O d N H c � a d d c Cc, - CD �@ c c o Z� d a. •- d w Oa� N n .p rn > 'y Qc cp m E C 9 0 0 E a a °) 2S c'S d y $m a (D n a Q8 O U QQ)U0a c� a� z n d `r N G9 d C: 0 d d C N W d C C W 2 LD d '^ d 0 o a o. ICE c O d N H c � a d d c Cc, - CD �@ c c o Z� d a. •- d w Oa� N n .p rn > 'y Qc cp m E C 9 0 0 E a a °) 2S c'S d y $m a (D n a Q8 O U QQ)U0a c� a� z 33 CD k 7 § 7.§ $ � § K k k§/ \ k K co Cl) \ ° @ k G 2 co F&/ S f) 04 o @ R w n W n o Q $ k 2 § $ 2 @ . . § § :3 � E 0 Co , v I \ L . U. k . 3 k f � . . . .A $ w 2 U) CL . > . cr . & 2 o ° ■ £ . » M k ca CL � �w k k �. f 0. \ # e a 2 t.a i.fw § k kƒ�wIL§/ co 0 33 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Cape Girardeau, Missouri (the City) operates under a charter, which went into effect April 12, 1982. The City operates under a Council -Manager form of government and provides the following services as authorized by its charter: public safety (police and fire), highways and streets, water, sanitation, health and social services, culture -recreation, public improvement, planning and zoning, and general administrative services. The financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP), as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the City are described below. 1. Reporting Entity In evaluating how to define the City, for financial reporting purposes, management has considered all potential component units. Generally, component units are legally separate organizations for which the elected officials of the City are financially accountable. The Cape Girardeau (Missouri) Public Facilities Authority (CGPFA) is a blended component unit of the City. The financial statements of the CGPFA are included in the accompanying financial statements of the City. The CGPFA is a not-for-profit corporation organized and existing under Chapter 355 of the Revised Statutes of Missouri. The CGPFA board of directors consists of City officials and City Council members. Due to the significant City influence and financial accountability, the activities of the CGPFA are blended with the financial presentation of the City. The CGPFA executed a bond indenture for the purpose of issuing and securing the Series 2009 Bonds. These bonds will be used for the construction of various storm water control improvements, Cape Splash Family Aquatic Center, Shawnee Park Community Center, and various other park related improvements. The CGPFA has entered into a Lease Purchase Agreement with the City from which the lease payments will be used solely'to retire the debt. Although not a component unit of the City, the City handles the funds of and provides accounting and other services for several entities. Since these funds are held by the City, these entities are shown as Agency Funds in the financial statements. 2. Government -Wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. The effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business - type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or 34 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary- funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 3. Measurement Focus, Basis of Accountina, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. With the economic resources measurement focus, all assets and liabilities associated with operations are reflected in the statement of net assets. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis, revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 30 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Those revenues susceptible to accrual are property taxes, franchise taxes, special assessments, licenses, interest revenue, and charges for services. Sales taxes collected and held by the state at year-end on behalf of the City, also are recognized as revenue. Fines and permit revenues are not susceptible to accrual because, generally, they are not measurable until received in cash. With the current financial resources measurement focus, only current assets and current liabilities are generally included on the balance sheet. The City reports the following major governmental funds: The general fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be. accounted for in another fund. The airport fund accounts for the resources used in the operation and maintenance of municipal airport facilities. The parks and recreation fund accounts for the resources used in the operation of park and recreational activities. The transportation sales tax trust fund III accounts for the receipt and expenditure of a capital improvement sales tax that was approved by voters for street construction and improvements. 35 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCI_AL STATEMENTS June 30, 2010 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued The park improvement projects from parks sales tax fund accounts for the expenditure of a capital improvement sales tax that was approved by voters for park construction and improvements. 3. Measurement Focus, Basis of Accounting, and Financial Statement Presentation - Continued The City reports the following major proprietary funds: The sewer fund accounts for the operation of the City's sewage treatment plant, sewage pumping stations, and collection systems. The water fund accounts for the operation of the City's water treatment plants and distribution systems. The solid waste fund accounts for the operation of the City's residential solid waste and recycling programs. The golf fund accounts for the operation of the municipal golf course. The softball complex fund accounts for the operation of the City's softball complex, and maintenance of the City's soccer, baseball, and softball fields. Additionally, the City reports the following fund types: Internal service funds account for management information systems, fleet management, employee benefits, workers' compensation, and equipment leasing provided to other departments or agencies of the City, on a cost reimbursement basis. Agency funds account for the operations of the library, arena improvement committee, and parks development foundation. Private -sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board.. Governments also have the option of following subsequent private -sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private -sector guidance. As a general rule the effect of-interfund activity has been eliminated from the government -wide financial statements. Exceptions to this general rule are payments -in -lieu of taxes and other charges between the City's enterprise function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. It is the City's policy to first use restricted net assets prior to the use of unrestricted net assets when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. 36 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued 3. Measurement Focus, Basis of Accounting, and Financial Statement Presentation - Continued Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds and of the City's internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meet- ing this definition are reported as nonoperating revenues and expenses. 4. Capital Assets All capital assets with an original cost exceeding $5,000 are recorded at historical cost or estimated historical cost if actual historical cost is not available. Additions are recorded at cost or, if contributed property, at their estimated fair value at time of contribution. Repairs and maintenance are recorded as expenses; renewals and betterments are capitalized. The sale or disposal of capital assets is recorded by removing cost and accumulated depreciation and charging the resulting gain or loss to income. Depreciation of all exhaustible capital assets is charged as an expense against operations in proprietary funds and a program cost of governmental activities in the statement of activities. Assets are reported net of depreciation on proprietary fund and government -wide statement of net assets. Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows: Buildings 25-50 years Improvements 10-40 years Equipment 3-10 years When applicable, interest costs are capitalized on self -constructed capital assets. 5. Encumbrances Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting is utilized in all funds. Encumbrances outstanding at the end of the year in the governmental funds are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be carried forward and honored during the subsequent year. Encumbrances outstanding in the proprietary funds do not constitute expenses but will be honored in the subsequent year. No reservations of net assets are made for encumbrances outstanding at the end of the year on the proprietary fund and government -wide statement of net assets. 37 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued 6. Inventories Inventories consist primarily of supplies, valued at cost. The cost of inventories is recorded as expenditures or expenses when consumed rather than when purchased. 7. Compensated Absences Vested or accumulated vacation pay for proprietary funds is recorded as an expense and liability of those funds as the benefits accrue to employees. Amounts of vested or accumulated vacation leave of governmental funds are reported in the Statement of Net Assets. Employees may accumulate up to 30 days vacation, for which they are compensated upon termination or retirement. Employees are not compensated for accumulated sick leave upon termination, but are compensated one hour for each eight hours of unused sick leave upon retirement. 8. Bond Premiums, Discounts, and Issuance Costs In governmental fund types, bond discounts and issuance costs are recognized in the current period. Bond discounts and issuance costs for proprietary fund types are deferred and amortized over the term of the bonds. Bond premiums and discounts are presented as either increases or reductions of the face amount of bonds payable whereas issuance costs are recorded as deferred charges. The accounting treatment of bond premiums, discounts, and issuance costs used for governmental activities in the government -wide statements is the same as that used for proprietary funds. 9. Cash and Investments The City maintains an internal investment pool for the majority of its non -restricted cash and investments and a small portion of its restricted cash and investments. Investment revenue is allocated to each fund based on its average equity balance in the pool. Cash includes amounts in repurchase agreements and other short-term investments with a maturity date within three months of the date of purchase. Investments, with a maturity date of one year or more at the time of purchase, are recorded at fair value. All other cash and investments are recorded at cost or amortized cost. 10. Prepaid Items Payments made to vendors for services that will benefit periods beyond June 30, 2010 are recorded as prepaid items. City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued 11. Restricted Assets Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for the repayment of such bonds, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The "revenue bond construction" account is used to report those proceeds of revenue bond issuances that are restricted for use in construction. The "revenue bond current debt service" account is used to report resources set aside to make up potential future deficiencies in the revenue bond current debt service account. 12. Long -Term Obligations Only that portion of long-term obligations expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. Lonb term liabilities expected to be financed from proprietary fund operations are accounted for in the appropriate proprietary fund. Long-term liabilities expected to be financed from governmental activities are accounted for in the government -wide statement of net assets. 13. Interfund Transactions Quasi -external transactions are accounted for as revenues, expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions, except quasi -external transactions and reimbursements, are reported as transfers. Only net transfers between governmental and business -type activities are reflected on the government -wide statement of activities. 14. Short -Term Interfund Receivables/Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as "interfund receivables/payables" on the governmental balance sheet and proprietary statement of net assets. Only net receivables between governmental and business -type activities are reflected as internal balances on the government -wide statement of net assets. 15. Advances to Other Funds Noncurrent portions of long-term interfund loan receivables and payables are reported as advances in the governmental balance sheet and proprietary statement of net assets. Fund balances are reserved on the governmental balance sheet for interfund loan receivables to indicate that they do not constitute expendable available financial resources and therefore are not available for appropriation. Only net long-term interfund loans between governmental and business -type activities are reflected as internal balances on the government -wide statement of net assets. Net assets are not reserved for interfund loan receivables on proprietary and government -wide statements of net assets. 39 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued 16. Post -Employment Health Care Benefits In addition to the pension benefits described in Note G, it is the City's policy to provide postretirement health care benefits to employees who retire from the City with five or more years of service and who are eligible for LAGERS retirement (Note G). Currently, fifty-six employees meet those eligibility requirements. The City provides health care coverage for them until age 65. The costs of retirees' health care benefits are recognized as expenditures as premiums are paid. For the year ending June 30, 2010, those costs totaled $485,525. COBRA Benefits - Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), the City provides health care benefits to eligible former employees and eligible dependents. Certain requirements are outlined by the federal government for this coverage. The premium is paid in full by the insured on or before the tenth (10th) day of the month for the actual month covered. This program is offered for a duration of 18 months after the termination date for employees and 36. months for surviving spouses. There is no associated cost to the City under this program. There was one surviving spouses participating in the health insurance program and three surviving spouses participating in the dental insurance program as of June 30, 2010. 17. Infrastructure The City defines infrastructure as the basic physical assets that allow the City to function. The assets include the street system, water system, sewer system, parks and recreation lands and improvement system, storm water system, and buildings combined with the site amenities such as parking and landscaped areas used by the City in the conduct of its business. Infrastructure of the water and sewer systems were routinely capitalized in the water and sewer funds of the City and are reflected as other improvements in the business -type activities section on the statement of activities. During the year ended June 30, 2010 all infrastructures completed during the fiscal year, including projects started in a previous year, were recorded at their historical costs. 18. Subsequent Events In preparing these financial statements, the City has evaluated events and transactions for potential recognition or disclosure through December 28, 2010, the date the financial statements were available. to be issued. 40 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE B - DEPOSITS AND INVESTMENTS The City maintains a cash and temporary cash investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the combined statement of assets, liabilities, and fund balances arising from cash transactions as "Cash and Cash Equivalents" under each fund's caption. The deposits and investments held at June 30, 2010, and reported at fair value, are as follows: Deposits: Demand Deposits $ 700,555 Interest Bearing Deposit Accounts 5,535,403 Total Deposits $ 6,235,958 Investments: Negotiable Instruments $ 32,235,841 Federal Home Loan Bank 1,970,171 Federal National Mortgage Association 3,534,195 US Treasury Note 343,742 Total Investments $ 38,083,949 Total Deposits and Investments $ 44.319.907 Reconciliation to Statement of Net Assets: Cash and Cash Equivalents $ 3,217,491 Investments 31,832,233 Restricted Cash and Cash Equivalents 2,809,075 Restricted Investments 3,249,064 Fiduciary Cash and Cash Equivalents 209,392 Fiduciary Investments 3,002,652 Deposits and Investments, Statement of Net Assets $ 44,319.907 As of June 30, 2010, the City had the following investments: Investment Negotiable Instruments Federal Home Loan Bank Federal National Mortgage Assoc. US Treasury Note Total Custodial Credit Risk: Maturities Fair Value 07/06/2010 — 01/06/2015 $32,235,841 12/10/2010 —12/30/2013 1,970,171 08/13/2014 — 02/10/2016 3,534,195 11/15/2012 343,742 $38,083,949 Deposits in financial institutions, reported as components of cash, cash equivalents, and investments, had a bank balance of $44,709,784 at June 30, 2010, that was fully insured by depository insurance or secured with collateral held by the City's agents in its name. All investments, evidenced by individual securities, are registered in the name of the City. 41 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE B - DEPOSITS AND INVESTMENTS - Continued Investment Interest Rate Risk The City's investment policy states that "Market price volatility shall be controlled by matching the City's investments with anticipated cash flow requirements. The City will not directly invest in securities maturing more than seven years." The maturities of investments held at June 30, 2010 are provided above. Investment Credit Risk The City has an investment policy that limits its investment choices as follows: a. Direct obligations of the U.S. Government, its agencies and instrumentalities to which the full faith and credit of the U.S. Government is pledged, or obligations to the payment of which the full faith and credit of the State is pledged; b. Certificates of deposit or savings accounts that are either insured or secured with acceptable collateral with in-state financial institutions, and fully insured certificates of deposit or savings accounts in out-of-state financial institutions; c. Repurchase agreements collateralized by securities listed in (a.) above, documented by a written agreement, fully collateralized by delivery to an independent third parry custodian, and are marked -to -market; d. Money market mutual funds whose portfolio consists of the foregoing instruments; and, e. Other prudent investment instruments approved prior to purchase by a two-thirds majority of the City Council.. Bond proceeds may be invested as allowed in the bond indenture. Concentration of Investment Credit Risk The City places no limit on the amount it may invest in any one issuer. At June 30, 2010, the City had no concentration of credit risk. 42 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE C - PROPERTY TAXES Property taxes attach as an enforceable lien on property as of January 1. Taxes were levied on August 17, 2009, for collection during this fiscal year and were due on or before December 31. Most of the taxes are collected in November and December. The tax rates assessed at the time were as follows: General Revenue $ .3004/100.00 assessed valuation Public Health .0562/100.00 assessed valuation Special Business District .6708/100.00 assessed valuation #2 (Ad Valorem) Property tax receivable balances as of June 30, 2010 are as follows: NOTE D - CHANGES IN CAPITAL ASSETS A summary of the capital assets for governmental activities included on the government -wide statement of net assets for the year ended June 30, 2010 is as follows: Balance Special Current Year Balance General Business Public Debt June 30, 2010** Land Revenue District Health Service Total Current property tax $52,811 $6,751 $ 9,880 $ - $69,442 Delinquent property tax 20,257 3,033 3,791 44 27,125 Reserve for doubtful 9,890,277 2,399,393 - 623,042 11,666,628 Property taxes (7,709) - 1443) (44) —(9,196) Net property tax receivable 107,513,636 12,702,079 $12,228 $ 87 371 NOTE D - CHANGES IN CAPITAL ASSETS A summary of the capital assets for governmental activities included on the government -wide statement of net assets for the year ended June 30, 2010 is as follows: * Includes depreciation expenses from the internal service funds' assets which are included in the expenses of the governmental activities and business activities on the government — wide Statement of Activities as internal charges. **Includes the internal service funds' assets which are included as part of the governmental activities assets included on the government -wide Statement of Net Assets. 43 Balance Current Year Balance July 1, 2009 Additions Deductions Depreciation* June 30, 2010** Land $ 5,370,111 $ 5,395 $ - $ - $ 5,375,506 Buildings 12,253,179 6,916,378 - 676,151 18,493,406 Improvements other than buildings 9,890,277 2,399,393 - 623,042 11,666,628 Equipment 5,902,960 .1,335,871 21,832 1,134,8.11 6,082,188 Infrastructure 107,513,636 12,702,079 179,375 4,062,393 115,973,947 Construction in progress 8,175,807 4,019,549 6,263.364 - 5,931,992 Total capital assets 149.105.970 27.378.66566 4$6471 $ 6.496.397 $ 163,523,6b7 * Includes depreciation expenses from the internal service funds' assets which are included in the expenses of the governmental activities and business activities on the government — wide Statement of Activities as internal charges. **Includes the internal service funds' assets which are included as part of the governmental activities assets included on the government -wide Statement of Net Assets. 43 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE D - CHANGES IN CAPITAL ASSETS — Continued Following is a summary of the capital assets for business -type activities on the government -wide statement of net assets for the year ended June 30, 2010: Depreciation expense was charged to functions as follows in the statement of activities: Governmental Activities: Administrative $ 436,770 Development Services 4,844 Parks and Recreation 498,991 Public Safety 771,720 Public Works 4,475,895 Total 6 188 220 Business -Tv -De Activities: Golf Course Balance Sewer 2,151,418 Current Year Balance Solid Waste July 1, 2009 Additions Deductions Depreciation June 30, 2010 Land $ 161,990 $ - $ - $ - $ 161,990 Buildings 2,204,432 100,380 - 215,285 2,089,527 Improvements other than buildings 85,769,063 3,806,163 3,336 3,055,428 86,516,462 Equipment 3,058,396 2,709,928 95,501 623,493 5,049,330 Construction in progress 1,270,448 4,532,390 1,156,300 - 4,646,538 Total capital assets $ 92,464,329 $ 11,148,861 S 1,255,137 $ 3,894,206 $ 98,463,847 Depreciation expense was charged to functions as follows in the statement of activities: Governmental Activities: Administrative $ 436,770 Development Services 4,844 Parks and Recreation 498,991 Public Safety 771,720 Public Works 4,475,895 Total 6 188 220 Business -Tv -De Activities: Golf Course $ 81,059 Sewer 2,151,418 Softball Complex 12,800 Solid Waste 219,373 Water 1,429,556 Total 3 894 206 44 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS The following is a summary of changes in the long-term debt. included on the City's statement of net assets for the year ended June 30, 2010. Governmental Activities Debt payable July 1, 2009 Premium amortization Retired Additions Debt payable June 30, 2010 Other Revenue Debt* Bonds $ 29,746,303 $ 17,455,594 82,846 (12,671) (3,304,520) (1,080,000) 577.294 26� 10.217 Unused Due to Paid Other Leave Governments Total $ 773,677 $ 10,285 $47,985,859 - - 70,175 - (10,285) (4,394,805) 27,099 - 604,393 $ 800,776 *Other Debt includes Notes Payable, Special Obligation Bonds, Leasehold Revenue.Bonds, and Certificates of Participation. Business -Type Activities Bonds payable at July 1, 2009 Discount Premium Amortization Accumulated Interest Bonds Retired Bonds Issued Bonds payable at June 30, 2010 Other Revenue Debt* Bonds Total $ 642,452 $29,107,985 $29,750,437 (562) (17,182) (17,744) - 375,112 375,112 (212,750) (3,695,000) (3,907,750) 1,790,031 - 1,790,031 $ 2.219.171 $25,770,915 $27.990,086 *Other Debt includes Notes Payable and Special Obligation Bonds W City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG TERM OBLIGATIONS - Continued Bonds payable for governmental and business -type activities at June 30, 2010 are comprised of the following individual issues: $ 465,000 Special Obligation Refundingand nd Improvement Bonds Series 2002: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 4.00% $ 155,000 $ 15,655 $ 170,655 2012 4.10 155,000 9,455 164,455 2013 4.10 155,000 3,177 158,177 465,000 28,287 $ 493,287 Principal payments are made annually on October 1, and interest payments are made semi-annually on October 1 and April 1. On October 22, 2002 the City of Cape Girardeau issued $3,125,000 of Special Obligation Refunding and Improvement Bonds Series 2002 with interest rates varying from 3.00% to 4.50%. The bonds are special obligations of the City payable solely from the income. and revenues provided for the year plus any unencumbered balances from prior years. The bonds were issued by the City for the purpose of providing funds to (a) pay the costs of refunding the Building and Equipment Leasehold Refunding and Improvement Revenue Bonds, Series 1993, issued on behalf of the City by the Cape Girardeau Public Facilities Authority and outstanding in the principal amount of $1,085,000, (b) pay the costs of refunding the Certificates of Participation (Capital Improvements Projects), Series 1994A, issued on behalf of the City by the Cape Girardeau Public Facilities Authority and outstanding in the principal amount of $1,255,000 and prepaying the leasehold interest represented thereby, (c) pay the costs of constructing certain street improvements within the City, and (d) pay the costs of issuing the Bonds, under the authority of and in full compliance with the City's Charter and the Constitution and laws of the State of Missouri, and pursuant to an ordinance duly passed (the "Ordinance") and proceedings duly and legally had by the governing body of the City. The outstanding bond liability for the Special Obligation Refunding and Improvement Bonds Series 2002 is allocated as follows: $465,000 for Governmental activities. City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $3,595,000 Waterworks System Refunding Revenue Bonds Series 2006A due as follows: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 4.00% $ 925,000 $ 143,800 $1,068,800 2012 4.00 965,000 106,800 1,071,800 2013 4.00 1,705,000 68,200 1,773.200 3 595 000 318,800 3,913,800 Principal payments are made annually on March 1, and interest payments are made semi-annually on March 1 and September 1. On January 3, 2006 the City issued $7,160,000 of Waterworks System Refunding Revenue Bonds Series 2006A with interest rates varying from 3.5% to 4.0%. The bonds are special limited obligations of the City payable solely from the net income and revenues derived by the City from the operation of the Waterworks System after payment of costs of operation and maintenance. The bonds were issued to provide the City with remaining funds needed to retire $8,170,000 principal amount of Waterworks System Refunding Revenue Bonds, Series 1995. 47 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $ 785,000 Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1991 due as follows: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 6.875% $ 175,000 $ 53,969 $ 228,969 2012 6.875 190,000 41,937 231,937 2013 6.875 205,000 28,875 233,875 2014 6.875 215,000 14,781 229,781 $785,000 $924,562 These bonds are dated December 1,1991. The proceeds of the bond issue were used to extend and improve the existing sewerage facilities serving the City. Principal payments are made annually on June 1, and interest payments are made semi-annually on June 1 and December 1. The interest due on the Series 1991 Sewer System Revenue Bonds is subsidized by interest earnings on a reserve fund held by the bond issue's trustee. As the City is reimbursed for sewer project expenditures from the construction funds held by the trustee, the State of Missouri Department of Natural Resources deposits an amount equal to approximately 51.907% of the reimbursement into the reserve fund. The maximum amount of funds that will be advanced to the reserve fund will be $1,250,000. As bonds are retired 50% of the amount of.bonds retired will be repaid to the State of Missouri Department of Natural Resources out of the reserve fund. The balance of the reserve fund at June 30, 2010 was $392,500. The reserve fund yields 6.71%. During the fiscal year-end June 30, 2001, certain bonds originally issued by the State Environmental Improvement and Energy Resources Authority as part of the State Revolving Fund Program were refunded. Annual debt service savings resulting from this transaction are to be used to offset City debt service payments due on Series 1991 Bonds. During the fiscal year ended June 30, 2010, City interest expense was reduced by $18,107 as a result of this transaction. Over the remaining life of these bonds, the City will receive net present value benefits of approximately $49,460 from this transaction. City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $ 175,000 Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1993 due as follows: Year Ending interest Principal Interest June 30, Rate Due Due Total 2011 5.400% $ 31,000 $ 8,613 $ 39,613 2012 5.400 33,000 6,885 39,885 2013 5.400 35,000 5,049 40,049 2014 5.400 37,000 3,106 40,106 2015 5.400 39,000 1,053 40,053 175 000 2� 199 706 These bonds are dated August 1, 1993. The proceeds of the bond issue were used to extend and improve the existing sewerage facilities serving the City. Principal payments are made annually on March 1, and interest payments are made semi-annually on March 1 and September 1. The interest due on the Series 1993 Sewer System Revenue Bonds is subsidized by interest earnings on a reserve fund held by the bond issue's trustee. As the City is reimbursed for sewer project expenditures from the construction funds held by the trustee, the State of Missouri Department of Natural Resources deposits an amount equal to approximately 70% of the reimbursement into the reserve fund. The maximum amount of funds that will be advanced to the reserve fund will be $350,000. As bonds are retired, 70% of the amount of bonds retired will be repaid to the State of Missouri Department of Natural Resources out of the reserve fund. The balance of the reserve fund at June 30, 2010 was $122,500. The reserve fund yields 5.15%. EV City of Cape Girardeau, Missouri NOTES TO BASIC FUNTANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $ 2,317,960 Water Pollution Control Revenue Bonds (State Revolving Fund Program) Series 1995D due as follows: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 6.100% $ 413,574 $ 636,426 $ 1,050,000 2012 6.150 380,828 654,172 1,035,000 2013 6.150 354,978 670,022 1,025,000 2014 6.200 326,281 683,719 1,010,000 2015 6.200 303,920 696,080 1,000,000 2016 6.250 278,844 706,156 985,000 2017 6.250 259,535 715,465 975,000 $2,317,960 $ 4.762,040 $7,080,000 These bonds are dated June 1, 1995. The proceeds of the bond issue were used for the extension and improvement of the existing sewerage system serving the City. Principal and interest payments are made annually on January 1 beginning in 1998. The interest due on the Series 1995D Water Pollution Control Revenue Bonds is subsidized by interest earnings on a reserve fund held by the bond issue's trustee. As the City is reimbursed for sewer project expenditures from the construction funds, the State of Missouri Department of Natural Resources deposits an amount equal to 70% of the disbursement into the reserve fund. The maximum amount of funds that will be advanced to the reserve fund will be 70% of the principal amount less the original issue discount. As bonds are retired 70% of the amount of bonds retired will be repaid to the State of Missouri Department of Natural Resources out of the reserve fund. The balance of the reserve fund at June 30, 2010.was $1,622,572. The reserve fund yields 5.83%. 50 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $ 7,690,000 Sewerage System Revenue Bonds (State Revolving Fund Program) Series 1996 due as follows: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 5.875% $ 745,000 $ 452,719 $ 1,197,719 2012 5.875 765,000 408,950 1,173,950' 2013 5.875 780,000 364,006 1,144,006 2014 5.875 800,000 318,181 1,118,181 2015 5.875 875,000 271,181 1,146,181 2016 5.900 895,000 219,775 1,114,775 2017 5.900 920,000 166,970 1,086,970 2018 5.900 945,000 112,690 1,057,690 2019 5.900 965,000 56,935 1,021,935 $7.690.000 $2.371,407 $10,061,407 These bonds are dated June 1, 1996. The proceeds of the bond issue were used for the extension and improvement of the existing sewerage system serving the City. Principal payments are made annually on January 1. Interest is paid semi-annually on January 1 and July 1 beginning in 1997. The interest due on the Series 1996 Sewerage System Revenue Bonds is subsidized by interest earnings on a reserve fund held by the bond issue's trustee. As the City is reimbursed for sewer project expenditures from the construction funds, the State of Missouri Department of Natural Resources deposits an amount equal to 70% of the disbursement into the reserve fund. The maximum amount of funds that will be advanced to the reserve will be $9,474,500. As bonds are retired, 70% of the amount of bonds retired will be repaid to the Department of Natural Resources out of the reserve fund. The balance of the reserve fund at June 30, 2010 was $5,383,000. The reserve fund yields 5.70%. 51 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued During the fiscal year ended June 30, 2001, certain bonds originally issued by the State Environmental Improvement and Energy Resources Authority as part of the State Revolving Fund Program were refunded. Annual debt service savings resulting from this transaction are to be used to offset City debt service payments due on Series 1996 Bonds. During the fiscal year ended June 30, 2010, City interest expense was reduced by $15,570 as a result of this transaction. Over the remaining life of these bonds, the City will receive net present value benefits of approximately $131,386 from this transaction. $ 7,640,000 Sewerage System Revenue Bonds (State Revolving Fund Program) Series 2000 due as follows: Year Ending 7 640 000 Interest Principal Interest June 30, Rate Due Due Total 2011 4.700% $ 185,000 $ 411,156 $ 596,156 2012 5.500 215,000 400,896 615,896 2013 5.500 230,000 388,659 618,659 2014 5.000 250,000 376,084 626,084 2015 5.625 275,000 362,099 637,099 2016 5.625 475,000 341,006 816,006 2017 5.625 555,000 312,037 867,037 2018 5.300 590,000 280,793 870,793 2019 5.400 1,590,000 222,228 1,812,228 2020 5.450 1,655,000 134,199 1,789,199 2021 5.500 1,620,000 44,550 1,664,550 la,Z73 707 $10,913,707 These bonds are dated November 1, 2000. The proceeds of the bond issue will be used to extend and improve the existing sewerage facilities serving the City. Principal payments are made annually on July 1, and interest payments are made semi-annually on July 1 and January 1 52 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued The interest due on the Series 2000, Sewer System Revenue Bonds is subsidized by interest earnings on a reserve fund held by the bond issue's trustee. As the City is reimbursed for sewer project expenditures from the construction funds held by the trustee, the State of Missouri Department of Natural Resources deposits an amount equal to approximately 70% of the reimbursement into the reserve fund. The maximum amount of funds that will be advanced to the reserve fund will be $5,848,500. As bonds are retired 70% of the amount of bonds retired will be repaid to the State of Missouri Department of Natural Resources out of the reserve fund. The balance of the reserve fund at June 30, 2010 was $5,374,844. The reserve fund yields 5.16%. $16,375,000 Waterworks System Revenue Bonds (State Revolving Fund Program) Series 1998 due as follows: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 5.250% $ 1,110,000 $ 819,150 $ 1,929,150 2012 5.250 1,215,000 760,875 1,975,875 2013 5.250 1,300,000 697,087 1,997,087 2014 5.250 2,350,000 628,838 2,978,838 2015 5.250 2,445,000 505,462 2,950,462 2016 5.250 2,550,000 377,100 2,927,100 2017 4.500 2,655,000 243,225 2,898,225 2018 4.500 2,750,000 123,750 2,873,750 16.375.0004 155 487 $20.530.487 These bonds are dated December 1, 1998. The proceeds of the bond issue will be used for the extension and improvements to the waterworks system. Principal payments are made annually on January 1. Interest is paid semi-annually on January 1 and July 1 beginning on July 1, 1999. 53 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued The interest due on the Series 1998 Waterworks System Revenue Bonds is subsidized by interest earnings on a reserve fund held by the bond issues trustee. As the City is reimbursed for waterworks system expenditures from the construction funds, the Department of Natural Resources deposits an amount equal to 33.41% of the disbursement into the reserve fund. The maximum amount of funds that will be advanced to the reserve will be $8,517,235. As bonds are paid off, 33.41% of the amount of bonds retired will be repaid to the Department of Natural Resources out of the reserve fund. The balance of the reserve fund at June 30, 2010 was $5,135,447. The reserve fund yields 4.71%. $18,095,000 Leasehold Revenue Bonds, Series 2009 due as follows: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 3.600% $ 1,835,000 $ 652,756 $2,487,756 2012 3.600 1,895,000 593,118 2,488,118 2013 3.700 1,955,000 531,532 2,486,532 2014 3.800 2,015,000 472,882 2,487,882 2015 3.900 2,080,000 407,394 2,487,394 2016 4.000 2,150,000 334,594 2,484,594 2017 4.000 2,240,000 248,594 2,488,594 2018 4.000 2,330,000 158,994 2,488,994 2019 4.100 1,595,000 65,794 1,660,794 18.095.000$3,465,658 $21,560,658 The bonds are obligations of the Cape Girardeau (Missouri) Public Facilities Authority (CGPFA). The CGPFA has entered into a Lease Purchase Agreement with the City. Principal and interest will be paid by CGPFA from rental and other receipts from the City. Proceeds of the bonds will be used for the construction of various storm water control. improvements, Cape Splash Family Aquatic Center, Shawnee Park Community Center, and various other park related improvements. Principal payments are made annually on April 1, and interest payments are made semi-annually on April 1 and October 1. 54 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $2,100,000 Certificates of Participation Series 2001: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 5.000% $ 140,000 $ 122,760 $ 262,760 2012 5.800 150,000 115,760 265,760 2013 5.800 160,000 106,760 266,760 2014 5.800 165,000 97,160 262,160 2015 5.800 175,000 87,260 262,260 2016 5.800 190,000 76,760 266,760 2017 5.800 200,000 65,360 265,360 2018 6.000 210,000 53,360 263,360 2019 6.000 225,000 41,180 266,180 2020 6.000 235,000 28,130 263,130 2021 6.000 250,000 14,500 264.500 $2,100,000 80 990 $2,908,99-0 The certificates are obligations of the City under a Lease Purchase Agreement between the City and UMB Bank, NA. The Corporation also acts as the trustee who receives the rental payments for the benefit of the certificate holders. The purpose of the 2001 Series certificates was to construct and equip an airport manufacturing facility. Principal payments are made annually on April 1, and interest payments are made semi-annually on April 1 and October 1. 55 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $5,090,000 Special Obligation Bonds, Series 2005: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 3.500% $ 655,000 $ 209,436 $ 864,436 2012 3.500 680,000 186,511 866,511 2013 3.625 700,000 162,711 862,711 2014 4.000 690,000 137,336 827,336 2015 5.000 1,245,000 109,736 1,354,736 2016 4.000 80,000 47,486 127,486 2017 4.000 85,000 44,286 129,286 2018 4.100 90,000 40,886 130,886 2019 4.125 90,000 37,196 127,196 2020 4.200 95,000 33,484 128,484 2021 4.250 100,000 29,494 129,494 2022 4.250 105,000 25,244 130,244 2023 4.375 110,000 20,781 130,781 2024 4.375 115,000 15,969 130,969 2025 4.375 250,000 10,940 260,940 5,090.000 $ 1,111.496 66 21_ Principal payments are made annually on June 1, and interest payments are made semi-annually, on June 1 and December 1. In May 2005, the City of Cape Girardeau issued $8,190,000 of Special Obligation Bonds Series 2005 with interest rates varying from 3% to 5%. The bonds are special obligations of the City payable solely from the revenues derived from annual appropriations by the City Council. The bonds were issued by the City for the purpose of providing funds to (a) construct, furnish, and equip a new fire station, renovate and improve existing fire and police stations, reimburse the City for the purchase of a new public works facility, and acquire vehicles for the police and fire departments, (b) refinance various outstanding obligations of the City, (c) fund a debt service reserve fund for the Bonds, and (d) pay the costs of issuing the Bonds, under the authority of and in full compliance with the City's Charter and the Constitution and laws of the State of Missouri, and pursuant to an ordinance duly passed and proceedings duly and legally had by the governing body of the City. 56 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $1,550,000 Bank of America 2006 Promissory Note: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 0.141% $ 100,000 $ 2,150 $ 102,150 2012 0.141 100,000 2,010 102,010 2013 0.141 100,000 1,868 101,868 2014 0.141 100,000 1,728 101,728 2015 0.141 100,000 1,586 101,586 2016 0.141 100,000 1,446 101,446 2017 0.141 100,000 1,304 101,304 2018 0.141 100,000 1,164 101,164 2019 0.141 100,000 1,022 101,022 2020 0.141 100,000 881 100,881 2021 0.141 100,000 740 100,740 2022 0.141 100,000 599 100,599 2023 0.141 100,000 458 100,458 2024 0.141 100,000 317 100,317 2025 0.141 100,000 176 100,176 2026 0.141 50,000 35 50,035 $1,550,000 $ 17,484 $1,567,484 On February 9, 2006, the City of Cape Girardeau entered into a promissory note with the Bank of America for $2,000,000. The purpose of the note was to finance additional costs on constructing fire station #3, purchase of a site for. a future fire station, equipment for the sewer and solid waste funds, and site improvements at the new public works headquarter. The outstanding liability for the note is allocated as follows: $619,875 for governmental activities and $930,125 for business -type activities. Principal payments of $50,000 are made semi-annually on January 1 and July 1. The principal payments are amortized over 20 years. The City may prepay the note at any time with no additional charges. Interest accrues at a variable rate equal to the sum of the 30 -day LIBOR multiplied by 60.938%, plus 0.813%. The rate at June 30, 2010 was 0.141%. 57 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $1,000,000 Waterworks Revenue Bonds, Series 2010 due as follows: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 1.4900% $ 20,600 $ 8,598 $ 29,198 2012 1.4900 41,800 14,438 56,238 2013 1.4900 42,800 13,812 56,612 2014 1.4900 43,800 13,170 56,970 2015 1.4900 44,700 12,515 57,215 2016 1.4900 45,700 11,845 57,545 2017 1.4900 46,800 11,159 57,959 2018 1.4900 47,900 10,458 58,358 2019 1.4900 48,900 9,741 58;641 2020 1.4900 50,100 9,008 59,108 2021 1.4900 51,100 8,258 59,358 2022 1.4900 52,300 7,492 59,792 2023 1.4900 53,500 6,708 60,208 2024 1.4900 54,700 5,906 60,606 2025 1.4900 55,900 5,087 60,987 2026 1.4900 57,200 4,249 61,449 2027 1.4900 585500 3,392 61,892 2028 1.4900 59,900 2,515 62,415 2029 1.4900 61,200 1,618 62,818 2030 1.4900 62,600 701 63,301 1.000.000 $ 160.670 $ 1.160.670 These bonds are dated January 1, 2010. The proceeds of the bond issue will be used to construct a transmission main from new well fields to Water Plant #1. Principal and interest payments are made semi-annually on January 1 and July 1. 58 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued $1,275,000 Special Obligation Bonds Series 2010A due as follows: Year Ending Interest Principal Interest June 30, Rate Due Due Total 2011 3.2200% $ 135,000 $ 29,717 $ 164,717 2012 3.2200 130,000 34,294 164,294 2013 3.2200 140,000 30,394 170,394 2014 3.2200 150,000 26,194 176,194 2015 3.2200 160,000 21,694 181,694 2016 3.2200 175,000 16,894 191,894 2017 3.2200 185,000 12,300 197,300 2018 3.2200 200,000 6,750 206.750 1.275.000 178.237 $ 1.453.237 On March 1, 2010, the City issued $1,275,000 of Special Obligation Bonds Series 2010A with interest rates varying from 2.2625% to 3.3375%. Principal and interest will be paid by the City from the revenues derived from annual appropriations by the City Council. The proceeds of the bond issue were used to acquire new automated trash collection/recycling trucks for the public works department and to pay the costs of issuing the bonds. Principal payments are made annually on January 1. Interest payments are made semi-annually on January 1 and July L 59 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued The annual requirements to amortize all debt outstanding as of June 30, 2010 including total interest payments of $20,816,531 are as follows: 8 148 02054.784.339 $21,560,65S $2,908,990 1 56 484 $ 88.969.491 The cash and investments available to service revenue bonds are $1,015,607 and $4,566,887 for the governmental and business -type activities, respectively. The cash and investments available to service the special obligation bonds and certificates of participation in governmental activities are $720,963 and $266,596, respectively. Z1 Special Leasehold Certificates Year Ending Obligation Revenue Revenue of Promissory June 30, Bonds Bonds Bonds Participation Note Total 2011 $ 1,199,808 $ 6,139,605 $ 2,487,756 $ 262,760 $ 102,150 $ 10,192,079 2012 1,195,260 6,200,581 2,488,118 265,760 102,010 10,251,729 2013 1,191,282 6,888,488 2,486,532 266,760 101,868 10,934,930 2014 1,003,530 6,059,960 2,487,882 262,160 101,728 9,915,260 2015 1,536,430 5,831,010 2,487,394 262,260 101,586 10,218,680 2016 319,380 5,900,426 2,484,594 266,760 101,446 9,072,606 2017 326,586 5,885,191 2,488,594 265,360 101,304 9,067,035 2018 337,636 4,860,591 2,488,994 263,360 101,164 8,051,745 2019 127,196 2,892,804 1,660,794 266,180 101,022 5,047,996 2020 128,484 1,848,307 - 263,130 100,881 2,340,802 2021 129,494 1,723,908 - 264,500 100,740 2,218,642 2022 130,244 59,792 - - 100,599 290,635 2023 130,781 60,208 - - 100,458 291,447 2024 130,969 60,606 - - 100,317 291,892 2025 260,940 60,987 - - 100,176 422,103 2026 - 61,449 - - 50,035 111,484 2027 - 61,892 - - - 61,892 2028 - 62,415 2029 - 62,818 - - - 62,818 2030 - 63,301 - - - 63,301 8 148 02054.784.339 $21,560,65S $2,908,990 1 56 484 $ 88.969.491 The cash and investments available to service revenue bonds are $1,015,607 and $4,566,887 for the governmental and business -type activities, respectively. The cash and investments available to service the special obligation bonds and certificates of participation in governmental activities are $720,963 and $266,596, respectively. Z1 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE E - LONG-TERM OBLIGATIONS - Continued Interest expense was charged to functions as follows in the statement of activities: Governmental Activities: Interest and Other Costs $1,861,055 Total $1,861,055 Business -Tv -De Activities: Golf Course $ 12,163 Sewer 642,922 Softball Complex 8,811 Solid Waste 36,978 Water 206,682 Total 907,556 Missouri statutes limit the amount of general obligation debt that a city can issue to 5.00% of the total assessed value of taxable property located within that city's boundaries. The legal debt margin for the City of Cape Girardeau is $26,944,080. NOTE F - DEFICIT FUND BALANCES/RETAINED EARNINGS The Park Improvements Fund's total liabilities exceeded their total assets by $6,496. 61 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE G - PENSION PLAN 1. Plan Description The City of Cape Girardeau participates in the Missouri Local Government Employees Retirement System (LAGERS), an agent multiple -employer public employee retirement system that acts as a common investment and administrative agent for local government entities in Missouri. LAGERS is a defined benefit pension plan which provides retirement, disability, and death benefits to plan members and beneficiaries. LAGERS was created and governed by statute Section RSMo. 70.600 - 70.755. As such, it is the system's responsibility to administer the law in accordance with the expressed intent of the General Assembly. The plan is qualified under the Internal Revenue Code Section 401(a) and it is tax exempt. The Missouri Local Government Employees Retirement System issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to LAGERS, PO Box 1665, Jefferson City, MO 65102 or by calling 1-800-447-4334. 2. Funding Status Full-time employees of the City of Cape Girardeau do not contribute to the pension plan. The June 30th statutorily required contribution rates are 6.1% (General), 6.9% (Police) and 11.3% (Fire) of annual covered payroll. The contribution requirements of plan members are determined by the governing body of the political subdivision. The contribution provisions of the political subdivision are established by state statute. 3. Annual Pension Cost (APC) and Net Pension Obligation (NPO) The subdivision's annual pension cost and net pension obligation for the current year were as follows: Annual required contribution $1,033,703 Interest on net pension obligation 0 Adjustment to annual required contribution 0 Annual pension cost 1,033,703 Actual contributions 1,033,703 Increase (decrease) in NPO 0 NPO beginning of year 0 NPO end of year $ 0 The annual required contribution (ARC) was determined as, part of the February 29, 2008 annual actuarial valuation using the entry age actuarial cost method. The actuarial assumptions included: (a) a rate of return on the investment of present and future assets of 7.5% per year, compounded annually, (b) projected salary increases of 4.0% per year, compounded annually, attributable to inflation, (c) additional projected salary increases ranging from 0.0% to 6.0% per year, depending on age and division, attributable to seniority/merit, (d) pre -retirement mortality based on the RP -2000 Combined Healthy Table set back 0 62 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE G - PENSION PLAN - Continued years for men and 0 years for women, and (e) post-retirement mortality based on the 1971 Group Annuity Mortality table for males projected to 2000 set back 1 year for men and 7 years for women. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a five-year period. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The amortization period at February 29, 2008 was 15 years for the General division, 15 years for the Police division and 15 years for the Fire division. Three -Year Trend Information Year Annual Percentage Net Ended Pension of APC Pension June 30 Cost APC Contributed Obligation 2008 $1,140,078 100% $ 0 2009 $1,006,174 100% $ 0 2010 $1,033,703 100% $ 0 Note: The above assets and actuarial accrued liability do not include the assets and present value of benefits associated with the Benefit Reserve Fund and the Casualty Reserve Fund. The actuarial assumptions were changed in conjunction with the February 28, 2006 annual actuarial valuations. For a complete description of the actuarial assumptions used in the annual valuations, please contact the' LAGERS office in Jefferson City. 63 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS ,June 30, 2010 NOTE H - POSTRETIREMENT HEALTHCARE BENEFITS 1. Description The City follows the provisions of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. In addition to the relevant disclosures within this note related to GASB Statement No. 45, the financial statements reflect a long-term liability and related expenses of $1,680,198 and $1,355,157, respectively, in the governmental and business -type activities combined. The City, through its substantive commitment to provide other post -employment benefits (OPEB), maintains a single -employer defined benefit plan to provide certain postretirement healthcare benefits to all former full-time employees until the retiree is eligible for Medicare (age 65). Such benefits are not available to members' spouses or dependents; rather, only to former employees as previously described. Specific details of the Plan include the provision of certain medical and dental insurance coverage. These benefits are provided through insurance companies. The City is under no statutory or contractual obligation to provide these postretirement healthcare benefits. Because the Plan consists solely of the City's firm commitment to provide OPEB through the payment of premiums to insurance companies on behalf of its eligible retirees, no stand-alone financial report is either available or generated. 2. Funding Policy Premiums under the Plan for post -employment healthcare benefits are funded in accordance with rates established by the City from appropriate governmental and business -type funds. For the year ended June 30, 2010, the City paid the full premium cost for retired employees who were hired prior to January 1, 2007. For employees hired on/after January 1, 2007, the City paid a percentage of the full premium cost for retired employees with single coverage according to years of service at retirement. For employees with 10 to 14 years of service at retirement the City's subsidy was 50%. The subsidy for employees with 15 to 19 years of service was 60%; 20 to 24 years was 70%, and employees with more than 24 years of service at retirement received 100% subsidy. The retiree is responsible for the full cost of dependent coverage. The plan is financed on a pay-as-you-go basis. 3. Annual OPEB Cost and Net OPEB Obligation The City's annual OPEB cost is calculated based on the annual required contribution (ARC) of the City, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period of 30 years. The following table illustrates the components of the City's annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the City's net OPEB obligation: MR City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE H - POSTRETIREMENT HEALTHCARE BENEFITS - Continued Annual required contribution Interest on net OPEB obligation Adjustment to annual required contribution Annual OPEB cost Contributions made Increase in net OPEB obligation Net OPEB obligation, July 1 Net OPEB obligation, June 30 2009 2010 $ 1,487,797 $1,355,157 -0- 41,823 -0- (57,057) $ 1,487,797 $1,339,923 (558,405) 589117 $ 929,392 $ 750,806 -0- 929,392 $ 929.392 $1,680,199 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for 2010 were as follows: 4. Funding Status and Funding Progress As of July 1, 2009, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits equaled $11,680,944, resulting in an unfunded actuarial accrued liability (UAAL) of $11,680,944. The covered payroll (annual payroll of active employees covered by the Plan) equaled $13,382,053, and the ratio of the UAAL to the covered payroll equaled.87.3%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend.. Amounts determined regarding the funded status of the Plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress is to present multiyear trend information about whether the actuarial value of the Plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. However, because the City maintains no Plan assets, information relative to Plan asset required disclosures is not applicable. 39 Percentage of Net OPEB Fiscal Year Annual Annual OPEB Obligation - Ended OPEB Cost Cost Contributed End of Year 6/30/10 $1,339,923 44.0% $1,680,198 6/30/09 $1,487,797 37.5% $ 929,392 4. Funding Status and Funding Progress As of July 1, 2009, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits equaled $11,680,944, resulting in an unfunded actuarial accrued liability (UAAL) of $11,680,944. The covered payroll (annual payroll of active employees covered by the Plan) equaled $13,382,053, and the ratio of the UAAL to the covered payroll equaled.87.3%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend.. Amounts determined regarding the funded status of the Plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress is to present multiyear trend information about whether the actuarial value of the Plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. However, because the City maintains no Plan assets, information relative to Plan asset required disclosures is not applicable. 39 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE H - POSTRETIREMENT HEALTHCARE BENEFITS - Continued 5. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive Plan (the Plan as understood by the City and Plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the City and Plan members to that point. There are no legal or contractual funding limitations that would potentially affect the projection of benefits for financial accounting purposes. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations. In the actuarial valuation dated July 1, 2009, the projected unit credit cost actuarial method was used. Because the City funds its OPEB on a pay-as-you-go basis, the plan has no assets (investments) used specifically for paying the post-retirement medical benefits; therefore, the actuarial assumptions included a 4.5% discount rate, which approximates the expected rate of return on non -pension investments held by the City. Actuarial assumptions also included annual healthcare trend rates of 9.0% , initially, reduced by decrements to an ultimate rate of 4.5% for healthcare costs after ten years. The UAAL is being amortized as a level dollar amount over thirty years based on an open group. NOTE I - INTEREST EXPENSE Interest and handling charges, totaling $1,834,050, excluding $16,589 of interfund interest, was incurred by governmental funds during the year ended June 30, 2010. Interest and handling charges, totaling $868,945 excluding $45,592 of interfund interest, was incurred by proprietary funds during the year ended June 30, 2010. No interest cost was capitalized as part of the cost of assets constructed during the period. NOTE J - INTERFUND ACTIVITY A. The following is a summary of interfund balances as of June 30, 2010: Advance to/from other funds: Advances from Advances to General Fund $ 996,954 $ - Solid Waste Fund - 620,000 Golf Course Fund - 217,840 Softball Complex Fund - 159.114 $ 996,954 The interfund balances are a result of advances to purchase capital assets and to pay for operating expenses. Repayments are made as cash flows permit. If cash flows are not sufficient, repayments are deferred to subsequent years. M City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE J - INTERFUND ACTIVITY - Continued The City makes transfers between various funds for routine and normal operating expenses and for capital asset requisitions. B. The following is a summary of interfund transfers for the year ended June 30, 2010: Fund General Fund Airport Fund Park and Recreation Fund Convention and Tourism Housing Development Fund Motor Fuel Tax Fund Capital Improvement Sales Tax - Water System Improvements Transportation Sales Tax Trust Capital Improvement Sales Tax - Sewer System Improvements Transportation Sales Tax Trust II Fire Sales Tax Fund Public Safety Trust Fund Transportation Sales Tax Trust III Park/Storm Water Sales Tax Park/Storm Water Sales Tax -Capital Debt Service Fund Community Development Block Grant Project Fund Water System Improvement Projects Fund Storm Water Projects from Storm Water Tax Park Improvement Projects from Park Sales Tax Sewer Fund Golf Course Fund Softball Complex Fund Fleet Management. Fund Equipment Replacement Fund Transfer From Transfer To $ 4,154,293 $ 4,431,821 261,782 676,928 1,946 913,460 43,500 - - 19,637 1,325,000 - 42,726 30,000 1,750,307 598,000 - 2,089,485 - 1,097,521 2,089,485 - 923,000 934,900 - 953,390 435,126 - 261,782 2,585 124,378 42,726 - 203,013 435,126 647,478 2,008,384 418,266 - 451,909 15,141 - - 28.309 $ 13.705.702 1702 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE K - SEGMENT INFORMATION FOR ENTERPRISE FUNDS The City maintains five enterprise funds which provide sewer, water, solid waste, golf, and softball complex services. Segment information for the year ended June 30, 2010 was as follows: Softball Sewer Water Solid Waste Golf Course Complex Total Fund Fund Fund Fund Fund Enterprise Operating revenues $ 3,128,717 $5,935,017 $3,245,615 $ 99,537 $ 178,950 $12,587,836 Depreciation 2,151,418 1,429,556 219,373 81,059 12,800 3,894,206 Operating Income (Loss) (2,108,599) 173,801 100,577 (403,863) (435,651) (2,673,735) Operating transfers in 2,008,384 - - 418,266 451,909 2,878,559 Net Income (Loss) 30,442 3,038,948 251,196 .1,088,523 1,491,650 5,900,759 Current Capital Contributions 567,506 2,847,906 - 1,077,826 1,482,314 5,975,552 Property, Plant and Equipment Additions 880,229 4,538,344 2,374,926 1,645,376 1,709,986 11,148,861 Deletions 11,024 1,157,697 83,080 3,336 - 1,255,137 Net Working Capital (820,433) 2,646,360 1,340,580 15,729 11,707 3,193,943 Total Assets 56,202,478 48,322,768 4,835,104 1,859,267 1,896,134 113,115,751 Bonds and Other Long-term Liabilities Payable from Operating Revenues 22,453,824 3,634,995 2,749,630 235,494 164,680 29,238,623 Total Net Assets $32,818,833 $43,956,454 $1,811,637 $1,535,672 $1,630,715 $81,753,311 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE L - RESERVATION OF FUND EQUITY At June 30, 2010, the City had reserved its fund equity as follows: General Fund Reserved for emergency fund $3,331,396 Reserved for prepaid items 71,888 Reserved for advance 996,954 Reserved for mausoleum maintenance 108,631 Reserved for local access channel 6,578 Reserved for encumbrances 60,150 $4,575,597 Airport Fund Reserved for prepaid items $ 17,847 Reserved for encumbrances 6,266 24,113 Parks and Recreation Fund Reserved for prepaid items $ 4,149 Reserved for operations and maintenance 10,686 Reserved for encumbrances 4,903 19 73 Transportation Sales Tax Trust Fund III Reserved for encumbrances $4,471,862 Park Projects from Parks Sales Tax Reserved for encumbrances 2 853 324 Other Governmental Funds Reserved for encumbrances $15969,123 Reserved for emergencies 831,937 Reserved for prepaid items 28,571 Reserved for debt service 245,670 Reserved for river campus 148,615 $3,223,916 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE M - RESERVED RETAINED EARNINGS AND RESTRICTED ASSET ACCOUNTS At June 30, 2010, the City has restricted assets in its*Proprietary Funds as follows: Depreciation Revenue Bond and Bond Sinking and Replacement Construction Reserve Fund Total Sewer Fund $ 127,000 $ - $2,654,277 $ 2,781,277 Water Fund 1,300,000 4,389 1,967,569 3,271,958 Solid Waste Fund - 4,083 820 4.903 1 42 0 8 472$4,622,666 OS 1 NOTE N - LANDFILL CLOSURE AND POSTCLOSURE CARE COST State and federal laws and regulations require the City to place a final cover on its landfill when closed and perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. The City closed its landfill in the fiscal year ending June 30, 1994, and an expense provision and related liability were recognized at that time based on the future closure and postclosure care costs that were estimated to be incurred near or after the date the landfill no longer accepted waste. The entire amount of the estimated total costs for landfill closure and postclosure care costs was recognized in prior years since the recognition is based on landfill capacity used to date and the landfill was ,filled to capacity in prior years. The estimated total future liability for landfill postclosure care costs is $49,000 as of June 30, 2010, which is based on the amount that would be paid if all equipment, facilities, and services required to close, monitor,.and maintain the landfill were acquired as of June 30, 2010. However, the actual cost of closure and postclosure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The City has used the option of a Contract of Obligation as the financial assurance instrument for the landfill. The City issued bonds in October 1994 from which the proceeds were used to pay the closure costs. 70 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE O - 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; natural disasters; and employee health benefits. These risks, with the exception of those discussed in the following paragraphs, are covered by commercial insurance. Settled claims have not exceeded this commercial coverage in any of the past ten fiscal years. The City is a member of the Missouri Public Entity Risk Management Fund, a not-for-profit public entity insurance pool established by the state legislature. Through this pool, the City receives coverage for general liability, law enforcement liability, errors and omissions, and employment practice liability. Risks for these coverages are spread across members of the fund. Currently the fund is comprised of 887 Missouri counties, municipalities, and special districts. Premiums for these coverages are actuarially determined based on actual claims of the pool and individual claims of the City. Each year, portions of premiums not required because of below expected claims are returned to the members. The City has received refunds of premiums in each of the last eleven years and has used them to offset the cost of the succeeding year's premiums. Vehicle loss and accident liability is carried by Savers Property and Casualty Insurance. It is rated "A-" by A.M. Best. Airport liability is carried by Catlin Insurance Company. It is rated "A" by A.M. Best. Property insurance is carried by Chubb Group of Insurance Companies. It is rated "A++" by A.M. Best The City has established self-insurance plans for employees' health insurance and workers' compensation. Both of these are accounted for using internal service funds. Under each plan, the City is substantially self- insured and uses an administrator to handle claims management. The City provided health coverage to its employees through a minimum premium plan administered by Anthem Blue Cross Blue Shield of Missouri, which had an "A" rating by A.M. Best. Under this plan, the City paid the administrator a monthly premium for claims administration, cost management, and specific and aggregate stop loss coverage. The City reimbursed the administrator for claims paid up to the specific stop loss amount of $125,000 and $125,000 annually per employee and up to the aggregate stop loss amount of approximately $2,600,000 and $2,750,000 annually beginning January 1, 2009 and 2010, respectively, for all employees. These limits apply only to claims made during the respective calendar years. Rates were charged by the internal service fund to the other City funds to cover the monthly premium to the administrator and claims up to the aggregate stop loss amount. Corporate Claims Management, Inc. administers the City's workers' compensation plan. Under this plan, the City pays the administrator a per claim fee to administer its claims. All claims are paid directly by the City. The City has purchased insurance coverage from Safety National Casualty Corp. that limits the City's maximum individual claims liability to $450,000 for police and firefighters and $400,000 for other regular employees and per occurrence claims liability to $1,000,000. Additionally, $5,000,000 in coverage is provided for annual claims in excess of $1,330,123. Rates are charged by the internal service fund to the other City funds based on rates and experience factors established by the National Council on Compensation Insurance. Safety National is rated "A" by A. M. Best. 71 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE O - RISK MANAGEMENT - Continued Claims liability is estimated using data supplied by the administrator. The claims activity during the last five years is summarized as follows: CLAIMS LIABILITIES RECONCILIATION Balance June 30, 2005 Provision for Incurred Claims Payment of Claims Balance June 30, 2006 Provision for Incurred Claims Payment of Claims Balance June 30, 2007 Provision for Incurred Claims Payment of Claims Balance June 30, 2008 Provision for Incurred Claims Payment of Claims Balance June 30, 2009 Provision for Incurred Claims Payment of Claims Balance June 30, 2010 Health Insurance $ 175,000 2,400,142 (2,065,642 $ 509,500 2,520,411 _(2,384,161) $ 645,750 1,812,199 _(2,346,449) $ 111,500 1,860,053 (1,773,053) $ 198,500 1,843,651 (1,911,151) 131,000 Workers' Compensation $ 535,000 548,809 (378,809) $ 705,000 517,676 (552,676) $ 670,000 6,009 (406,009) $ 270,000 523,905 (363,905) $ 430,000 583,662 (493,662) 520.000 Total $ 710,000 2,948,951 (2,444,451) $ 1,214,500 3,038,087 (2,936,837) $ 1,315,750 1,818,208 (2,752,458) $ 381,500 2,383,958 (2,136,958) $ 628,500 2,427,313 (2,404,813) $ 651,000 NOTE P - CONCENTRATION OF CREDIT RISKIBAD DEBT ALLOWANCE The City has uncollateralized utility accounts receivable generated within a limited geographical region primarily consisting of its City limits. The City also has taxes, special assessments, and user fees receivable which are concentrated among its citizens. Some of these items attach as liens against real and personal property. The maximum accounting loss is the amount shown as utility charges receivable on the statement of net assets. At June 30, 2010, utility receivables totaled $1,832,794. On the financial statements, the utility receivables are shown net of the allowance for doubtful accounts of $129,293. This results in net utility receivable of $1,703,501. During the year ended June 30, 2010, the allowance was increased by $90,205 or approximately .76% of the current year's utility charges and accounts totaling $85,131 were written off. 72 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE Q - COMMITMENTS AND CONTINGENCIES 1. Litigation Various claims and lawsuits are pending against the City. In the opinion of City management, the potential loss on all claims and lawsuits will not be significant to the City's financial statements. 2. Grant Audit The City receives Federal and State Grants for specific purposes that are subject to review and audit by various Federal and State agencies. Such audits could result in a request for reimbursement by any of the Federal and State agencies for expenditures disallowed under the terms and conditions of the appropriate agency. In the opinion of City management, such disallowances, if any, will not be significant. 3. Construction Commitments As of June 30, 2010, the City had construction commitments outstanding of $8,513,924. The construction commitments represent incomplete portions of contracts entered into to construct the following: various street projects, various rehab projects at the airport, new trail construction, new water supply wells, improvements to existing park structures, new family aquatic center, new community. center in Shawnee Park, and housing rehabilitation. These contracts are expected to be completed within the next fiscal year. 4. Encumbrances As of June 30, 2010, the City had encumbrances outstanding of $11,608,532. NOTE R — PRIOR PERIOD ADJUSTMENTS On the Governmental Fund Statement. of Revenues, Expenditures, and Changes in Fund Balance, there are prior period adjustments that total ($11,106.85). The two funds affected are General and Transportation Sales Tax Trust III. The adjustments to General Fund consist of prior year retiree's insurance premiums in the amount of ($7,483.13) being transferred to the Fringe Benefits fund and the reversal of prior year internal salary charges in the amount of ($11,023.72) originally charged to the Sewer Fund for what was thought to be a sewer project that turned out to be a street project. The $7,400.00 prior period adjustment in the Transportation Sales Tax Trust III fund adjusts prior year grant revenue for the Fountain Street 2 project. In a prior period, the Park/Storm Water Sales Tax Project funds paid for various projects that were originally set up as General Fixed Assets instead of Enterprise assets. Reclassification of these items resulted in prior period adjustments on the Proprietary Funds Statement of Revenues, Expenses, and Changes in Fund Net Assets in Sewer, Golf and Softball Complex funds in the amounts of $247,825.55, $433,663.39 and $219,329.75, respectively. In addition, Sewer fund wrote off prior year depreciation for the above assets in the amount of ($824.66). Also, employees in the Golf fund worked previously on various park projects that are being funded by the Park Sales Tax. Their salaries in the amount of $65,428.49 were transferred to the project fund. The Internal Service Fund prior period adjustment was the receipt of retiree's insurance premiums of $7,483.13 in the Fringe Benefits fund. 73 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE R — PRIOR PERIOD ADJUSTMENTS — Continued All the above entries are included on the City -Wide Statement of Activities. However, the adjustment made to the Internal Service Fund will now show up under the Governmental column. Additionally, the Governmental column is also affected by the reclassification of assets that was discussed earlier in the amount of ($896,200.51). Also, Construction in Progress cost which had been set up in a prior period for ($25,689.99) was determined not to be a capital improvement. NOTE S - CONTINGENCY 1. In June 2004, the City of Cape Girardeau and Cape Girardeau County entered into a development agreement with a local business. Under the agreement, the local business agreed to pay for certain public improvements incurred in conjunction with the construction of a new retail facility and the City and County agreed to reimburse the local business for the cost of these improvements up to a maximum of $4,000,000 over an estimated 15 years. The local business has completed these improvements with a total cost of $2,668,646. The City is required by the development agreement to reimburse the local business for $2,134,917 of these costs through scheduled quarterly payments over the next fifteen years from available revenues. Available revenues are defined in the development agreement as 75% of the City's quarterly net revenues from specific sales taxes generated by the business operations of the new retail facility which exceed $64,000. The rates of the specified sales taxes currently equal 2%. Sales taxes with rates currently equal to 1% will expire during the term of this agreement. The City will be required to substitute revenues for sales taxes with equivalent rates, if available, when the specific sales taxes expire. Required quarterly payments increase annually per the repayment schedule included in the development agreement. To the extent that the available revenues for any quarter are less than the required quarterly payment due, the unpaid amount will be added to the next scheduled quarterly amount due without penalties. Any amounts unpaid at the end of 15 years will be payable. quarterly from available revenues for the remainder of the agreement. Any amounts unpaid at the end of the agreement will not be required to be paid. The term of the developer agreement is 20 years from the execution of the agreement. During the fiscal year ended June 30, 2010, the City paid $12,104 under the development agreement. This amount is included in the Development Services expenses on the Statement of Activities. 2. In.June 2004, the City of Cape Girardeau and Cape Girardeau County entered into a development agreement with a local real estate developer. Under the agreement, the local developer agreed to pay for certain public improvements incurred in conjunction with the development of a 60 acre retail development and the City and County agreed to reimburse the local business for the cost of these improvements from available net sales tax revenue generated from any businesses operations located in the development. The local developer has completed these improvements with a total cost of $2,998,434. The City and County are required by the development agreement to reimburse the developer for these costs 74 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE S - CONTINGENCY - Continued plus 4% interest with quarterly payments from available revenue. Available revenue is defined by the agreement as all the net sales tax revenue generated by two .25% City capital improvement sales taxes and the .50% City transportation sales tax and 50% of the net sales tax revenue generated by a.50% County sales tax. All City sales taxes have expiration date that could occur before the total costs of the improvements are reimbursed to the developer. The County sales tax has no expiration date. No provision is made to replace revenues from the City sales taxes that expire if they are not extended. The development agreement remains in effect until the total cost of the public improvements is reimbursed to the developer. The City and the County are obligated only to make quarterly payments as may lawfully be made from funds budgeted and appropriated for that purpose by the City and County. During the fiscal year ended June 30, 2010, the City incurred payments of $130,701 under the development agreement. This amount is included in the Development Services expenses on the statement of activities. 3. During previous fiscal year the City entered into a development agreement with Greater Missouri Builders, Inc. (GMB) to reimburse them for costs associated with the Town Plaza Redevelopment Project. In conjunction with this agreement the City established the Town Plaza Community Improvement District (CID) and determined the project area to be blighted pursuant to Chapter 353 of the Missouri Revised Statutes. This project involves the conversion of the former Sears facility into a call center for National Asset Recover Services (NARS) and other various improvements, such as facade improvements, parking facilities, roof reconstruction, and HVAC enhancements. Total reimbursements to GMB for redevelopment costs were limited to $3.6 million plus 7.5% interest. These reimbursements will be made from incremental County and City sales tax revenues, an additional CID sales tax, and real estate tax abatements. Reimbursements from incremental County and City sales tax revenue will be limited to $1.2 of the. $3.6 million total. Incremental County and City sales tax revenue is defined as the difference in future tax revenues from the City's 1% general sales tax and .5% capital improvement sales tax and half the County's .5% general sales tax and the revenues from these taxes from the project area in calendar year 2006. It's anticipated that the CID will implement a 1% sales tax. Improvements to the redevelopment project will receive 100% real estate tax abatement for the first 10 years and 50% real estate tax abatement for the next 15 years. The current Sears facility will receive 50% real estate tax abatement for 25 years. Based on 2006 assessed values the abatement of City taxes on the unimproved Sears facility would be $627.53. Beginning in year six of the agreement, 50% of the gross rentals from the NARS site will be used to supplement the incremental sales tax revenues. Reimbursements from incremental sales tax revenues expire with repayment of the amount to be paid by incremental sales tax or 20 years whichever comes first. 75 City of Cape Girardeau, Missouri NOTES TO BASIC FINANCIAL STATEMENTS June 30, 2010 NOTE S - CONTINGENCY - Continued This project was completed during the year at a cost of $3,203,308. Reimbursement from incremental County and City sales tax revenue will be limited to $1,164,839. The City and the County are obligated to make quarterly payments as may lawfully be made from funds budgeted and appropriated for that purpose by the City and County. During the fiscal year ended June 30, 2010, the City incurred payments of $22,363 under the development agreement. This amount is included in the Development Services expenses on the Statement of Activities. NOTE T — SUBSEQUENT EVENTS On November 15, 2010 the City approved Abatement Order on Consent #1003 issued by the Missouri Department of Natural Resources. This was an administrative action taken by the Missouri Department of Natural Resources as result of their belief that the City was in violation of the Missouri Clean Water Law. As a result of the Order, the City has agreed to pay a $15,000 civil fine, .commit at least $111,000 to a supplemental environmental project, and construct anew wastewater treatment plant that is in compliance with current Missouri Clean Water Law. 76 REQUIRED SUPPLEMENTAL INFORMATION R w a V r_ w d s m N d V c d c6 m O 'O O C N LL O d C M d = C9 ad C O W a c = V �jC7vW o es d L �,, d } = _ ++ w v c o O. LL 6 N d _ C > w O w C E M N c _ 0 E Q .4 m N N m N CO M O N O N M M cO CO O V• V' N M M CO O O N N LO m CO M V' (D(D CD (O N r h r Ch r CO h r N CD M CO m CO Cn (O CO N O (O h C V; O N N O r M m r cM r r 0 cD r m W N N O M O CO M m M M CO CO 0) O M O O O_ -n V O M m N O N m of-- h 00 O CO m N O CO m co �'' h M V- Cl) (O N (D N (O V• CO h r M 0) (p r m m h r i0 c0 h ao CO V' M CO (D (/ n V_ M O h m CO h 00 �' ti h N 0 O - M O N ao t_ N M m V: V: M M CO 0) O co Cl) co 0) 0) O O m N CD O v co r oo M co S W� O N v M M �. 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V' V' �. c0 w O. M M @ CO 7 O '_" m Z d> N O c"c0 d +� Z .. 0 f6 E c> o a a2i E d c ..c 'O c E> .p d co 7 7 m c� W y y w O W c d 0 fL @ V O d c4 == a' y C d w = 0) V co N C F- '0 =Qvoao w U H w0 69 m �¢oaaa F- Cv.w m = C = 01-t1)¢¢F LLIL U- w M �U GE2 S 0 U C. 0 0 0 0 0 0 0 0 C. 0 0 0 0 0 0 O O O 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O 0 0 0 0 OO 0 0 0 0 0 0 0(n 0 rn OD cO O 0 0 0q 0 0 0 0 0 O o 0 0 0 0 o O O C o m O O CO N6 N N CO O O N O N (O h co� h R O fD m CO O O N. CO CO N O O N V' C0 N CO O M CO 0 h N O h w M m t0 of to CO m y OO O m N CO CO O V' (O m M c0 O m N ( '? OD N O CO O CO O CO N CO cO OD 11 m 1- Cn O O 1 CO m V: �t CC') O N 00 c0 V: r Cn O : N V' 01 o N to M (0 M O 0O M V- M ao M N O M u) r h h CO r V• O m 1-- 0 0 (() r V' C('1 c0 M aD O O M c0 m CO m V' O N w V w m o O m 00 co O aD r r r N Cdj d N C 'O ,c C C COO m N r h CMO cOD- v r M M CO N r h vr r r c0 M N CO r N N N ao CO FO > y z F V E c0 C 7 d N N d d y> c O. E N >> ` d w-6 c d a0) m f0 W. V d 0�O y N O. V' M �. c0 w O. -M V• @ CO 7 O '_" m Z d> N O c"c0 d +� Z .. 0 f6 E c> o a a2i E d c ..c 'O c E> .p d co 7 7 m c� W y y w O W c d 0 fL @ V O d c4 == a' y C d w = 0) V co N C F- '0 =Qvoao w U H w0 EA �¢ �¢oaaa F- Cv.w m = C = 01-t1)¢¢F LLIL U- w M �U GE2 S 0 U 77 77 FCN G J d Q _ V � W IL CL 7 U) M da C C Qt6 _ _ y 0 N y �., W NN C C v T y N x y d d U co d N CD y W d N O 's = C •y LM ) O Cdj d N C 'O ,c C C y y r (o U Z m (D d > _ w (6 O :� C C c d c •� +6 V (n C N to > c 0) y FROO W a CO FO > y z F V E c0 C 7 d N N d d y> c O. E N >> ` d w-6 c d a0) d f0 W. V d 0�O y N O. Z y N }? N 9 OOOyfff N N. Z m n O N'C C �. c0 w O. 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M O r M O 01 M (D ao N V It M Cl) N 00 O (h W M 0 r r c v � I` N N N N Y) M N t` O h N O) O. M O N d q O O co (D N (O t0 ((1 co w I- V' O1 M 0 O cit It co O M M 'd_ cO (f1 M 06' o "t CD M W T v OM1 N M N U3. O. O O (ND co ' J co N r cit r r M M N (f1 (n M Cl) U3. (si C) O (NDclli . (ND 1 J co Q 6i n v r r 01 01 N N M Cl) (si y ! E J Q 6i U 'v W N CL n (n y D C Z (� Q � W y W c 0 y y (D V � O C l6 O) O rn c rn W c .O c Z 0 w .0 N Z 0 y y .N 3t Z C O O O C L c U c ccc O F- Q !- (i ti City of Cape Girardeau, Missouri NOTES TO BUDGETARY COMPARISON SCHEDULES June 30, 2010 BUDGETS. AND BUDGETARY ACCOUNTING The City adopts annual operating budgets for all funds except Storm Water Projects from Storm Water Sales Tax Fund, Park Improvement Projects from Park / Storm Water Sales Tax Fund and Water System Improvement Project Fund which have project length budgets. The City follows these procedures in establishing the budgetary data reflected in the financial statements. 1. The City Manager submits to the City Council a proposed operating budget for the fiscal year ending the following June 30th at the first meeting of June each year. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. Prior to July 1, the budget is legally enacted through passage of an ordinance. 4. The City Manager is authorized to transfer budgeted amounts between programs within any department; however, any revisions that alter the total appropriations of any department must be approved by the City Council. Departments may not legally exceed their appropriations without approval from the City Council. Appropriations expire at the end of the year; however, outstanding encumbrances at the end of the year are honored by the City. 5. Formal budgetary integration is employed as a management control device during the year for all funds. 6. Budgets for all funds are adopted on a budgetary basis. 7. If, during the fiscal year, the City Manager certifies there are additional revenues to appropriate, unencumbered appropriation balances within a department, or there is an emergency situation, the City Council may amend the initial budget by ordinance. The initial budget was adopted by the City Council on June 15, 2009 and amended on August 17, 2009, November 16, 2009, December 21, 2009 and July 6, 2010. The initial budget and final amended budget are both reflected in the financial statements. For the year ended June 30, 2010, the fund expenditures for Airport, Downtown Business District, Park/Storm Water Sales Tax -Capital, Street Improvements and Risk Management funds exceeded their approved budgets by $139,001, $513, $106,495, $143 and $59,832, respectively. City of Cape Girardeau, Missouri NOTES TO BUDGETARY COMPARISON SCHEDULES June 30, 2010 BUDGETS AND BUDGETARY ACCOUNTING - Continued The Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds reports revenues and expenditures on the modified accrual basis of accounting in accordance with GAAP. The Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Budget Basis) for all governmental fund types is prepared on a budgetary basis which includes encumbrances as expenditures. The following reconciliation adjusts GAAP basis to budget basis: Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses The individual proprietary fund schedules of comparing budget to actual is reported on a budgetary basis that uses the modified accrual basis of accounting with the exception of encumbrances. Encumbrances are reported as expenses in the year of encumbrance. Park Projects Parks and Transportation From Park Non -major General Airport Recreation Trust III Sales Tax Funds GAAP Basis $ 575,278 $ 10 $ 192,524 $ (1,045,878) $ (12,338,055) $ ( 2,785,195) Increase due to: Year-end encumbrances Administrative services 494 6,997 - - Development services 11,633 - - 25,040 Parks and recreation 12,814 - 17,047 - 94,703 Public Safety 19,318 - - - 97,707 Public Works 5,705 - - - Capital outlay - - - 5,365,779 2,508,819 Contingency 2,000 - - - - Funds not budgeted annually - - - 12,338,055 1,573,409 Advance from other funds 41,242 - - - Adjust investments to market 170 - 668 Encumbrance revenue 15.760 894.126 230.268 109,136 6.997 17,047 6,259.905 12,338.055 4,530.614 Decrease due to: Year-end encumbrances Administrative services 1,555 6,266 - 24,632 Development services 5,809 - - - 160,483 Parks and recreation 14,834 - 4,903 - - Public safety 24,022 - - - 208 Public works 13,931 - - - Capital outlay - - - 4,471,862 632,124 Encumbrance revenue- 254 - - 1,564,622 Adjust invest to market 6.539 487. 332 13,050 21,663 66.690 7.007 5.235 4,484,912 2.403.732 Budget Basis $ 617,724 $ $ 204,336 $ 729.1 I S $ (6 The individual proprietary fund schedules of comparing budget to actual is reported on a budgetary basis that uses the modified accrual basis of accounting with the exception of encumbrances. Encumbrances are reported as expenses in the year of encumbrance. City of Cape Girardeau, Missouri NOTES TO BUDGETARY COMPARISON SCHEDULES June 30, 2010 BUDGETS AND BUDGETARY ACCOUNTING - Continued GAAP Basis Increase due to Prior year encumbrances .Operating expenses Capital Outlays Depreciation Special assessments Bond proceeds Interest cost amortized Cost of bond refunding amortization Issuance cost amortization Amortized bond premium/discount Amounts deferred to be used for future debt service on capital appreciation bonds Construction fund earnings Interest subsidy received Net OPEB obligation Asset dispositions Decrease due to: Year-end encumbrances Operating expenses Capital outlays Landfill closure and maintenance costs Cost of bond refunding amortization Issuance cost amortization Interest paid more than accrual Bond principal paid Amortized Bond premium/discount Capital outlays Adjust investments to market Asset Dispositions Deferred revenues Adjustment to liability for future landfill postclosure maintenance costs Contributed capital Budget Basis Net Income (Loss) - - 1,968 - - 489,037 2,847,906 - 1,077,825 1,482,314 5,713,881 4,478,160 2,497,750 1,175,098 1,515,066 5(2.241.6051 $5 (121.8781$ 6,350 2 2 4 Solid Golf Softball Sewer Water Waste Course Complex $ 30,442 $ 3,038,948 $ 251,196 $ 1,088,523 $1,491,649 18,140 7,196 455 99 5,695 1,514 68,229 - - - 2,151,419 1,429,554 219,373 81,059 12,800 35,176 11,425 - - - - - 1,790,031 - - 372,347 - - - - - 52,518 - - 23,416 18,717 174 - - - 235,060 - - - 565,308 39,280 7,306 31,737 8,431 2,638 29,421 83,080 3,336 - 3,441,834 1,624,366 2,124,676 92,925 21,133 83,026 6,573 10,698 3,341 8,499 2,042,450 16,470 - - - - - 1,532 - - 36 - 64 - - - 26,252 23,774 12,399 366 - - 2,907,683 946,753 53,313 25,417 15,824 - 14,371 784 - 144,190 562,161 2,374,926 68,460 8,341 4,185 15,923 4,602 55 88 19,500 55,604 23,245 - - - - 1,968 - - 489,037 2,847,906 - 1,077,825 1,482,314 5,713,881 4,478,160 2,497,750 1,175,098 1,515,066 5(2.241.6051 $5 (121.8781$ 6,350 2 2 4 City of Cape Girardeau, Missouri NOTES TO BUDGETARY COMPARISON SCHEDULES June 30, 2010 BUDGETS AND BUDGETARY ACCOUNTING - Continued Net Income (Loss) 83 Data Fleet Employee Risk Equipment Processing Management Frin a Management Replacement GAAP Basis $ 7,012 $ (13,271) $ 705,721 $ (83,239) $ 87,450 Increase due to: Prior year encumbrances Operating expenses - 4,258 - - - Capital Outlays - - - - 29,611 Depreciation 41,728 15,819 - - 250,630 Deferred revenues - 14,557 - - - Issuance cost amortization - 995 - - 546 Difference between proceeds from sale of fixed assets and gain or loss 6,823 - - - 14,058 Net OPEB Obligation 4,744 29,840 - - - Adjust investments to market - - - - - 53,295 65,469 - 294,845 Decrease due to: Year-end encumbrances Operating expenses - 7,058 - - - Capital outlays 51,361 6,935 - - 6,494 Interest paid more than accrued - - - - 131 Adjust investments to market 334 348 3,582 12,998 3,428 Amortized Bond premium/discount - - - - 284 Principal paid - 160,875 - - 45,000 Capital outlays 51,532 31,922 - - 535,051 103,227 207,138 3,582 12,998 590,388 Budget Basis 4 20 54 40 2 1 6 2 20 0 83 (4-4 0 cd b co N a 01 0 0 C*4) rn O 00 M N a bi O W bi O cd"d = N O �' ¢a��MM w U o 0 � U y o rn 0� O v'to� ami � ' • cf) � oo "o � O O - —Cd [ � N O �En O Cd 0000 O o M N N 64 _ 00 ON O_ O 4 O N O N O N O� 00 00 Q N N N SUPPLEMENTAL INFORMATION � k \ / m § Eo \N , LL C 2Ck Gomco E§§2 J 2w 0 # AA ° �f �LL LU \ § .�� 0 E k� m . a k E < R ■ LO / \ R # 4 ' _ LO � � k \ § f f . f _ > LO p _ � 2 ! § S [ c � § § i k k t , tm f o k c : cc2 .0 e i G ` I , ® 2 a R : a ° 2£ / k U U - 85 R5 � � k > § .o a 0 X . k � ƒ q�) . . 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Hope Cairo, Illinois 62914 Cape Girardeau, Missouri 63703 Jackson, Missouri 63755 Telephone (618) 734-3300 Telephone (573) 334-7971 Telephone (573) 243-3991 Facsimile (618) 734-3303 Facsimile (573) 334-8875 Facsimile (573) 243-3186 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Honorable Mayor and Members of the City Council City of Cape Girardeau, Missouri Compliance We have audited the City of Cape Girardeau, Missouri's compliance, with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City of Cape Girardeau, Missouri's major federal programs for the year ended June 30, 2010. The City of Cape Girardeau, Missouri'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 of Cape Girardeau, Missouri's management. Our responsibility is to express an opinion on the City of Cape Girardeau, Missouri'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.. 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 of Cape Girardeau, Missouri'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 of the City of Cape Girardeau, Missouri's compliance with those requirements. In our opinion, City of Cape Girardeau, Missouri complied, in all material respects, with the requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010. 116 Internal Control Over Combliance Management of the City of Cape Girardeau, Missouri 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 of Cape Girardeau, Missouri's internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Cape Girardeau, Missouri's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the Honorable Mayor, Members of the City Council, 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. BEUSSINK, HEY, ROE, SEABAUGH & STRODER, L.L.C. v Cape Girardeau, Missouri December 28, 2010 117 BEUSSINK, HEY, ROE, SEABAUGH & STRODER, L.L.C. Certified Public Accountants 16 So. Silver Springs Road 4018 Sycamore 105 So. Hope Cairo, Illinois 62914 Cape Girardeau, Missouri 63703 Jackson, Missouri 63755 Telephone (618) 734-3300 Telephone (573) 334-7971 Telephone (573) 243-3991 Facsimile (618) 734-3303 Facsimile (573) 334-8875 Facsimile (573) 243-3186 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and Members of the City Council City of Cape Girardeau, Missouri We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City. of Cape Girardeau, Missouri as of and for the year ended June 30, 2010, which collectively comprise City of Cape Girardeau, Missouri's basic financial statements and have issued our report thereon dated December 28, 2010. 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Cape Girardeau, Missouri's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Cape Girardeau, Missouri's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Cape Girardeau, Missouri's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 118 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Cape Girardeau, Missouri's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the 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 an instance of noncompliance or other matters that is required to be reported under Government Auditing Standards and which is described in the accompanying Schedule of Findings and Questioned Costs as item 10-1. The City of Cape Girardeau, Missouri's response to the finding identified in our audit is described in the accompanying Schedule of Findings and Questioned Costs. We did not audit the City of Cape Girardeau, Missouri's response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the Honorable Mayor, Members of the City Council, 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. BEUSSINK, HEY, ROE, SEABAUGH & STRODER, L.L.C. C. Cape Girardeau, Missouri / December 28, 2010 119 City of Cape Girardeau, Missouri SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2010 Federal CFDA Program Federal Grantor/Pass-Through Grantor Program Title Number Number Disbursements U.S. DEPARTMENT OF DEFENSE: Loan of DOD Property (non-cash) 12. N/A $ 100,000 U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT: Passed Through Missouri Department of Economic Development - Community Development Block Grants/ State's Program and Non -Entitlement 14.228 2004 -ND -05 $ 109,639 Grants in Hawaii (1) 2007 -DT -803 295,800 2008 -DN -02 155,986 $ 561,425 Passed Through Missouri Department of Social Services - Emergency Shelter Grants Program Passed Through Missouri Housing Development Commission - Home Investment Partnerships Program TOTAL U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT U.S. DEPARTMENT OF THE INTERIOR: Passed Through Department of Natural Resources - Historic Preservation Fund Grants -In Aid Save America's Treasurers TOTAL U.S. DEPARTMENT OF THE INTERIOR 14.231 ER01640905 28,784 14.239 M -08 -SG -29-0100 $ 26,643 M -09 -SG -29-0100 63,507 $ 90,150 $ 680,359 15.904 29-09-21831-004 15.929 N/A The Accompanying Notes to Schedule of Expenditures of Federal Awards Are an Integral Part of This Report. 120 $ 4,000 74,768 $ 78,768 City of Cape Girardeau, Missouri SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2010 Federal CFDA Program Federal Grantor/Pass-Through Grantor Program Title Number Number Disbursements U.S. DEPARTMENT OF JUSTICE: Passed Through the City of Poplar Bluff, Missouri - Passed through the Southeast Missouri Drug Task Force - Public Safety Partnership and Community Policing Grants 16.710 N/A $ 15,035 Passed Through Missouri Department of Public Safety - Violence Against Women Formula Grant 16.588 2008-VAWA-0008 $ 17,179 Bulletproof Vest Partnership Program Edward Byrne Memorial Justice Assistance Grant Recovery Act -Edward Byrne Memorial Justice Assistance Grant Program/Grants to Units of Local Governments TOTAL U.S. DEPARTMENT OF JUSTICE U.S. DEPARTMENT OF TRANSPORTATION Passed Through Missouri Department of Transportation - Airport Improvement Program (1) Highway Planning and Construction (1) Highway Safety Cluster: State and Community Highway Safety Alcohol Impaired Driving Countermeasures Incentive Grants 1 2009-VAWA-0002 15,924 R20 I O-VAWA-002 1,597 $ 34,700 16.607 N/A 5,111 16.738 2009 -DJ -BX -1247 37,838 16.804 2009 -SB -B9-2229 41,139 $ 133,824 20.106 08 -077A -I $ 1,907 08-077A-1 63,125 08-077A-1 1,330,231 $ 1,395,263 20.205 ER -M008(002) $ 68,107 DP -1503(002) 23,800 STP -1500(014) 26,426 STP -1500(015) 258,169 JOI0767A DP -1503(003) 25,308 STP -1500(001) (1,523) SRTS-INF-H280(501) 1,795 500 SRTS-INF-H110(002) 2,478 $ 405,059 20.600 09 -SA -09-01 $ 28,879 10 -SA -09-1 63,596 09 -SA -09-02 93,111 1 OSA-09-03 32,803 10 -154 -AL -I 11 16,562 09 -PT -02-29 6,842 10 -PT -02-112 2,107 $ 243,899 20.601 09-K8-03-18 $ 3,484 10-K8-03-56 7,606 09-K8.03-19 1,216 10-K8-03-57 1,478 LKK073 1,657 LKK075 1,284 LKK076 124 $ 16,849 Alcohol Open Container Requirements 20.607 Child Safety and Child Booster Seats Incentive Grants 20.613 TOTAL U.S. DEPARTMENT OF TRANSPORTATION The Accompanying Notes to Schedule of Expenditures of Federal Awards Are an Integral Part of This Report. LKK040 1,458 LKK063 955 $ 2,063,485 121 City of Cape Girardeau, Missouri SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2010 Federal Grantor/Pass-Through Grantor Program Title ENVIRONMENTAL PROTECTION AGENCY: Passed Through Missouri Department of Natural Resources - State Clean Diesel Grant Program Capitalization Grants for Clean Water State Revolving Funds Capitalization Grants for Drinking Water State Revolving Funds (1) Federal CFDA Program Number Number Disbursements 66.040 DERA-7 66.458 C295229 66.468 DW291010 DW291010-03G TOTAL ENVIRONMENTAL PROTECTION AGENCY U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES: Passed Through the Community Caring Counsel - Substance Abuse and Mental Health Services - Projects of Regional and National Significance 93.243 SDA42070104 U.S. DEPARTMENT OF HOMELAND SECURITY: Passed Through Missouri State Emergency Management Agency - $ 150,000 10,518 $ 466,811 1,000,438 1,467,250 $ 1,627,767 $ 1,506 Non -Profit Security Program 97.008 2008 -GE -T8-0014 $ Disaster Grants - Public Assistance (Presidentially Declared Disasters) 97.036 #FEMA -1748 -DR -MO $ 1,501 Law Enforcement Officer Reimbursement Program Assistance to Firefighters Grant Citizen Corps Passed Through Missouri Department of Homeland Security - Grant Program TOTAL U.S. DEPARTMENT OF HOMELAND SECURITY TOTAL FEDERAL AWARDS (1) Identified major program. #FEMA -1749 -DR -MO 8,527 #FEMA -1773 -DR -MO 19,975 $ 97.090 HSTS0208HSLRO50 $ 97.044 EMW-2007-FF-00176 $ 98,068 EMW-2008-FO-09141 43,741 $ 97.053 2009 -SS -T9-0062 97.067 2008 -GE -T8-0014 The Accompanying Notes to Schedule of Expenditures of Federal Awards Are an Integral Part of This Report. 122 139,995 30,004 35,629 141,810 3,134 21,000 $ 371,571 R SASZ280 City of Cape Girardeau, Missouri NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Year Ended June 30, 2010 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Purpose of Schedule and ReportingEntity: The accompanying Schedule of Expenditures of Federal Awards has been prepared to comply with OMB Circular A-133. This circular requires a Schedule of Expenditures of Federal Awards showing total expenditures for each federal financial assistance program as identified in the Catalog of Federal Domestic Assistance (CFDA) and identification of programs that have not been assigned a CFDA number as "Other Federal Assistance". The schedule includes all expenditures of federal awards administered by the City. B. Basis of Presentation: The Schedule is presented in accordance with OMB Circular A-133, which defines federal financial assistance "...assistance that non-federal entities receive or administer in the form of grants, loans, loan guarantees, property (including donated surplus property), cooperative agreements, interest subsidies, insurance, food commodities, direct appropriations, and other assistance, but does not include amounts received as reimbursement for services rendered to individuals." C. Basis of Accounting: The Schedule is presented on the modified accrual basis of accounting, which recognizes expenditures when liabilities for goods and services are incurred. This is the same basis of accounting presented in the financial statements. 123 City of Cape Girardeau, Missouri SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended June 30, 2010 1. SUMMARY OF AUDITORS' RESULTS: Financial Statements Type of Auditors' report issued: Unqualified Internal control over financial reporting: • Material weaknesses identified? • Significant deficiencies identified that are not considered to be material weaknesses? Noncompliance material to financial statements noted? Federal Awards Internal control over major programs: • Material weaknesses identified? • Significant deficiencies identified that are not considered to be material weaknesses? yes X no yes X none reported X yes no yes X no yes X none reported Type of Auditors' 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-133? yes X no Identification of major programs. CFDA Number Name of Federal Program 14.228 Community Development Block Grants/State's Program and Non -Entitlement Grants in Hawaii 20.106 Airport Improvement Fund 20.205 Highway Planning and Construction 66.468 Capitalization Grants for Drinking Water State Revolving Funds 124 Dollar threshold used to distinguish between type A and type B programs Auditee qualified as low-risk auditee: 2. FINANCIAL STATEMENT FINDINGS: 09-1 Budgetary Limits $300,000 X yes no Criteria: According to Section 67.080, RSMo, no expenditure of public monies should be made unless it is authorized in the budget. Condition: Actual expenditures and other financing uses of the Airport Fund, Park Storm Water Sales Tax — Capital Fund, and the Risk Management Fund exceeded budgetary limits by $139,001, $106,495 and $59,832, respectively. Context: Actual expenditures and other financing uses of the Airport Fund, Park Storm Water Sales Tax — Capital Fund, and the Risk Management Fund totaled $1,885,133, $3,857,170, and $665,831, respectively. Effect: The City did not comply with the state budget law. Cause: Management oversight. Recommendation: The Administration should refrain from authorizing expenditures that exceed budgetary limits. If additional sources of funds become available, the budget should be amended in accordance with statutory requirements prior to the expenditure of those additional moneys. Views of Responsible Officials and Planned Corrective Action: Management routinely seeks additional appropriations for items not included in the original adopted budget and never intentionally expends funds that have not been appropriated. Air show costs, inter -fund transfers, and estimated workmen's compensation claims at the end of the year accounted for all of the over -budget amounts. Cost of the air show exceeded its amended budget by $187,249. However, there were no additional net costs from the original adopted budget. The original adopted budgeted had not projected any revenues or appropriated 125 any expenditures for an air show. Total air show revenues exceeded total air show expenses by $10,436. Net costs of the air show did not exceed those included in the original adopted budget. Transfers to the Park Improvement Projects - Parks/Stormwater Sales Tax Fund from the Parks/Stormwater Sales Tax — Capital Fund exceeded the amended budget by $108,902. However, the Park Improvement Projects - Parks/Stormwater Sales Tax Fund returned a portion of the $501,448 originally transferred to it by transferring $435,126 to the Parks/Stormwater Sales Tax — Capital Fund. If the amount returned would have been offset against the original transfer, there would have no over -budget amount. Costs of workmen's compensation claims included in the Risk Management Fund budget exceeded its amended budget by $76,162. These costs include estimated claims due but not paid at the end of each year. City staff had estimated that estimated claims would not increase over the previous year. However, the estimated claims at the end of this year increased $90,000 over the previous year. If there had been no change in the estimated claims the cost of workmen's compensation claims would not have exceeded its amended budget. 3. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS: No findings or questioned costs were noted that are required to be reported. 126 City of Cape Girardeau, Missouri SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS For the Year Ended June 30, 2010 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 09-1 Internal controls were not in place to. ensure contractors and subcontractors with whom a procurement contract exceeded $25,000 in federal funds were checked to the federal government's excluded parties list. Status: Implemented. 127