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Comprehensive Annual Financial Report - June 30, 2009Ý·¬§ ±º ÓÑÒÎÑÛ Ò±®¬¸ Ý¿®±´·²¿ ¿ ¸»®·¬¿¹» ±º °®±¹®»­­ ݱ³°®»¸»²­·ª» ß²²«¿´ Ú·²¿²½·¿´ λ°±®¬ Ú±® ¬¸» º·­½¿´ §»¿® »²¼»¼ Ö«²» íðô îððç City of Monroe, North Carolina Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2009 Prepared By Department of Finance and Administration Assistant Director of Finance Lisa Strickland Budget Analyst Mary Lou Clark CITY OF ci heritage qfprocrress e"') c"I'll CITY OF MONROE, NORTH CAROLINA TABLE OF CONTENTS June 30, 2009 INTRODUCTORY SECTION: Page Letter of Transmittal vii xiii GFOA Certificate of AcInevement for Excellence in Financial Reporting xiv List of Principal Officials xv OrganizationalChart xvi FINANCIAL SECTION: Independent Auditors' Report 1-2 Management's Discussion and Analysis 3 -12 Exhibit Page Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 1 15 Statement of Activities 2 16-17 Fund Financial Statements: Balance Sheet Governmental Funds 3 18 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets 4 19 Statement of Revenues, Expenditures, and Changes In Fund Balances Governmental Funds 5 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 21 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General Fund 7 23 Statement of Net Assets Proprietary Funds 8 24-25 Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds 9 26-27 Statement of Cash Flows Proprietary Funds 10 28-31 Notes to the Financial Statements 32-62 Required Supplemental Financial Data: Law Enforcement Officers' Special Separation Allowance Schedule of Funding Progress 64 Law Enforcement Officers' Special Separation Allowance Schedule of Employer Contributions 65 I CITY OF MONROE, NORTH CAROLINA TABLE OF CONTENTS June 30, 2009 Page The Health Care Plan Schedule of Funding Progress 66 The Health Care Plan Schedule of Employer Contribution 67 Other Supplemental Information: Combining and Individual Fund Statements and Schedules: Nonmajor Governmental Funds Combining Balance Sheet 70-71 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 72-73 Internal Service Funds: Combining Statement of Net Assets 74 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets 75 Combining Statement of Cash Flows 76 Governmental Funds Budgetary Schedules: Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual General Fund 77-80 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Special Revenue Funds 81-85 Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Capital Projects Funds 86 Enterprise Funds Budgetary Schedules: Schedule of Revenues and Expenditures Budget and Actual (NON- GAAP): Waterand Sewer Fund 87-89 Water and Sewer Capital Projects Funds 90-91 ElectricFund 92-94 Electric Capital Projects Funds 95 NaturalGas Fund 96-98 Natural Gas Capital Projects Funds 99 Aquatics and Fitness Center Fund 100-102 11 CITY OF MONROE, NORTH CAROLINA TABLE OF CONTENTS June 30, 2009 Page Aquatics and Fitness Center Capital Projects Funds 103 AirportFund 104-106 Airport Capital Projects Funds 107-108 Storm Water Fund 109-111 Solid Waste Fund 112-114 Internal Service Funds Budgetary Schedules: Schedule of Revenues and Expenditures Budget and Actual (NON- GAAP): Health and Dental Fund 115 Workers' Compensation Fund 116 Property and Casualty Fund 117 Other Schedules Schedule of Ad Valorem Taxes Receivable 118 Analysis of Current Tax Levy Citywide Levy 119 STATISTICAL SECTION: Table Page Financial Trends NetAssets by Component 1 123 Changes in Net Assets 2 124- 125 Fund Balances, Governmental Funds 3 126 Changes in Fund Balances, Governmental Funds 4 127 Revenue Capacity Assessed Value and Actual Value of Taxable Property 5 128 Direct and Overlapping Property Tax Rates 6 129 Principal Property Taxpayers 7 130 Property Tax Levies and Collections 8 131 Debt Capacity Ratios of Outstanding Debt by Type 9 132 Ratios of General Bonded Debt Outstanding 10 133 Direct and Overlapping Governmental Activities Debt 11 134 Legal Debt Margin Information 12 135 Pledged- Revenue Coverage 13 136 Demographic and Economic Information: Demographic and Economic Statistics 14 137 PrincipalEmployers 15 138 iii CITY OF MONROE, NORTH CAROLINA TABLE OF CONTENTS June 30, 2009 Page Operation Information: Full-Time Equivalent City Governmental Employees by Function 16 139 Operating Indicators by Function 17 140 Capital Asset Statistics by Function 18 141 COMPLIANCE SECTION: 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 143 -144 Report on Compliance with Requirements Applicable to Each Major Federal Program and Internal Control Over Compliance In Accordance with OMB Circular A -133 and the State Single Audit Implementation Act 145-146 Report on Compliance with Requirements Applicable to Each Major State Program and Internal Control Over Compliance In Accordance with Applicable Sections of OMB Circular A -133 and the State Single Audit Implementation Act 147-148 Schedule of Findings and Questioned Costs 149- 150 Summary Schedule of Prior Year Audit Findings 151 Schedule of Expenditures of Federal and State Awards 152- 153 1V Introductory Section Letter of Transmittal Certificate of Achievement for Excellence in Financial Planning List of Principal Officials Organizational Chart CITY OF ci heritage qfprocrress e"') c"I'll CITY OF MONROE P.O. BOX 69 MONROE, NC 28111 -0069 PHONE 704 282 -4500 FAX 704 283 -9098 October 26, 2009 To the Honorable Mayor Bobby Kilgore, Members of the City Council, and Citizens of the City of Monroe: We are pleased to present to you the Comprehensive Annual Financial Report CAFR of the City of Monroe for the fiscal year ended June 30, 2009. North Carolina law requires that all general- purpose local governments publish within four months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles "GAAP and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. The independent certified public accounting firm of Potter Company, P.A., has audited the financial statements and supplemental schedules contained herein, and issued an unqualified "clean") opinion on the City of Monroe's financial statements for the year ended June 30, 2009. The independent auditor's report is presented as the first component of the Financial Section of this report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed information is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The goal of the annual independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year are free from material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluation of the overall financial statement presentation. The independent audit of the financial statements of the City was part of a broader, federally mandated "Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Monroe's CAFR. Generally accepted accounting principles require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis "MD &A This letter of transmittal is designed to complement the MD &A and should be read in conjunction with it. The City's MD &A can be found immediately following the Report of the Independent Auditors. vii The Reporting Entity and Services Provided For financial reporting purposes, in accordance with the criteria in Governmental Accounting Standards Board "GASB Statement No. 14, the City of Monroe includes all funds, agencies, boards, commissions and authorities that are controlled by or are financially dependent upon the City. Control by or financial dependence was determined on the basis of obligation of the City to finance deficits, guarantee debt, select the governing authority, approve the budget, have authority to make a public levy, and to have ownership of assets. As a result of implementing GASB Statement No. 14, the City of Monroe has included the City of Monroe ABC Board and the Monroe Tourism Development Authority as discretely presented component units. Additional information on these legally separate reporting entities can be found in the Notes to the Financial Statements. The City provides numerous services for its citizens including airport operations, cultural and recreational activities, general administration, planning, zoning, economic development, building inspections, code enforcement, police, fire, sanitation, cemetery management, tourism, public works, stormwater, and street maintenance. The City also provides and maintains electric, natural gas, water, and sanitary sewer utilities for the benefit of its citizens and businesses. This report includes the fiscal activities of the City in the provision of these services. The City also provides financial support to certain boards, agencies and commissions to assist their efforts in serving our citizens. Organizations that receive support from the City include the American Red Cross, HealthQuest, Monroe High School Athletic Foundation, Community Health Services of Union County, Union County Crisis Assistance Ministry, Union County Habitat for Humanity, Union County Community Arts Council, Council on Aging in Union County, the Monroe -Union County Community Development Corporation, the Union County Historic Preservation Commission, Turning Point, Union County Community Action, Inc., the Literacy Council of Union County, the Union County Community Shelter, Union Smart Start, the Union County Chamber of Commerce, and the Union County JobReady Partnership Council, Inc. Organization of Government The City of Monroe was established in 1844, and is located near the center of Union County in the southern Piedmont region of North Carolina. The City is a diverse community of just over 37,000 residents, and has an incorporated area of over 29 square miles. Monroe serves as the County seat for Union County, and is the County's largest municipality. Monroe's corporate limits are approximately seven miles southeast of Charlotte, and the City has experienced tremendous growth due to its proximity to the fastest growing region of Charlotte and Mecklenburg County. The City has the statutory authority to extend its corporate limits through voluntary and involuntary annexation when deemed appropriate by the City Council. The City is organized under a Council- Manager form of government, with a six member City Council and Mayor serving as the governing body, and who are responsible for policy making and establishing legislative authority. Council members are elected on a non partisan basis to staggered four -year terms. The Mayor is elected to serve a two -year term, and is a full voting member on the City Council. The City Council is responsible for passing ordinances, adopting the annual budget, appointing committees, and hiring the City Manager, City Attorney, and City Clerk. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the daily operations of the government, and for selecting the department heads to manage the various City departments. The City takes pride in the services offered to our citizens, and the mission of City staff is to provide reliable, responsive, quality service to our customers at the lowest reasonable cost. We accomplish this through professional and courteous service consistent with making Monroe a vibrant and progressive community. City staff strives to be proactive in addressing the various needs of the community, and adheres to the guiding principles of Teamwork, Customer Service, Respect, and Accountability. viii Economic Condition and Outlook The City has continued to experience a favorable economic climate over the last fiscal year, in spite of the national recession. New and existing industry have announced investments in manufacturing equipment and facility expansions totaling more than $52 million. Monroe's workforce is diversified, consisting of industrial, construction, agricultural, and retail employment. The City's economic base includes major employers involved in aerospace, plastics, food processing, professional services, and education. While serving as a regional employment and commercial center for surrounding communities, the City maintains a small town atmosphere and enjoys the benefits of being part of the Charlotte metropolitan region. Monroe's industrial citizens continue to grow and prosper giving Monroe and Union County national recognition. This fiscal year, Monroe was named in the Top 5 in the United States for Excellence in Aerospace Recruitment by Expansion Solutions magazine and Union County was 10 in the nation in job creation from 2000 to 2008. Because of our recruitment and retention efforts, Monroe has maintained the lowest unemployment in the Charlotte Region for 10 consecutive years. Monroe has evolved into a premier location for precision manufacturing. Nearly 14% of the industrial base and 26% of the manufacturing employment is deep rooted in aerospace, resulting in the highest geographic concentration of aerospace companies in North Carolina (NC Department of Commerce Sept 2008). Also, Monroe's industrial base is international with 9 countries represented among 13 companies. With recent investments from ATI Allvac, Goodrich Corporation, and Turbomeca Manufacturing, Monroe will sustain employment and utility customers during the current economic trough and is well positioned to prosper as the economy rebounds. Major Initiatives The City of Monroe has been involved in many significant initiatives during the past fiscal year. The City Council has identified and addressed key issues that are of importance to the future of the City, including utility planning for water, wastewater, electric, and natural gas demands brought on by system growth. The City has developed a fifteen year rate model for projecting water and wastewater rates to address the impact of future capital improvement projects on the City's rate structure. The goal is to achieve single digit rate increases rather than large rate increases in the year infrastructure is financed. City Council is committed to support the City's growth, and has issued Certificates of Participation Notes to fund construction of approximately 43 miles of natural gas pipeline to connect the City's system directly to the transcontinental pipeline. The pipeline, currently 72% complete, will provide the City with capacity to significantly grow and expand the natural gas system and provide significant opportunities for economic development. When complete, the City will be able to provide natural gas to our industries and citizens without having to pay costly transportation costs to a third party provider. The City continued work associated with $30.9 million in Combined Enterprise Fund Revenue Bonds in the past fiscal year to fund projects as follows: Natural Gas System Land acquisition and construction of an 8" natural gas line loop around the City. (Project completed) Electric System Construction of an electric substation, the installation of new transformers, the replacement of existing transformers, the construction of approximately 12.8 miles of transmission loop around the City and the installation of circuit breakers at an existing substation. Substation construction is essentially complete with approximately 2/3 of the transmission line work completed. Water System Construction of a one million gallon elevated water storage tank, 17,000 feet of water transmission mains in the City's western pressure zone, and 15,000 feet of raw water transmission main. In January 2009, the City implemented a stormwater utility program to address the EPA's National Pollutant Discharge Elimination System, Phase II (NPDES) requirements and to provide for a ix comprehensive stormwater program to enhance the existing stormwater system. As part of the NPDES requirements, the Engineering Department has developed several stormwater public education and involvement programs. These programs include classroom presentations using Enviroscape (watershed model), Adopt -a- Stream, storm drain marker and establishment of a permanent citizen Stormwater Management Advisory Committee (SMAC). As part of the NPDES Illicit Discharge Detection and Elimination requirement, the Engineering Department will update the stormwater infrastructure system maps scheduled for completion in 2010. As part of the program to enhance the existing stormwater system, the City established a 4- person stormwater maintenance crew, whose responsibilities include repair, new construction and routine system maintenance on the stormwater infrastructure system. The stormwater maintenance crew has completed over 80 work orders in addition to completing two capital improvement projects. In the upcoming year, two capital improvement projects are proposed for the stormwater maintenance crew. The Engineering Department has also retained an engineering firm to complete a stormwater master plan for the Stewart Creek Tributary 4 watershed. Stormwater master planning for the entire city to identify and prioritize future stormwater capital improvements needs will be completed over the next several years. Due to the economic downturn the Water Resources Department has deferred several large capital project initiatives, including the Reclaimed Water System project, Bearskin Sewer Outfall, and WWTP expansion. Current initiatives are to enhance asset management programs focusing on renewal and replacement of aging water and wastewater infrastructure. Utility coordination/realignments for two large roadway projects, the MLK extension and the Turnpike Authority Monroe Parkway are a priority. The City continues to invest in its future. The Charlotte- Monroe Executive Airport is undergoing a $30+ million renovation and expansion, financed partially through a Combined Enterprise Revenue Bond. This project includes hangar acquisition and construction, terminal expansion, ramp area expansion, taxiway widening, and runway lengthening and strengthening. The long -range master plan for the airport facility projects nearly $800 million of new aircraft and hangar investment over the next 40 years. The community is poised to open its second industrial park, known as AeroPointe Industrial Centre, located adjacent to the airport. AeroPointe will compliment the established 500 -acre Monroe Corporate Center, offering housing to smaller companies that will support the local large manufacturing base. Finally, City Council has approved the investigation of a third industrial park that would continue to diversify Monroe economic base. The City continues to make significant investments in its police and fire operations. The fire department developed and implemented a five -year community driven strategic plan. Approximately 100 members of the community along with over 30 members of the fire department came together to develop the strategic plan, which will guide the fire department over the next five years. The fire department implemented the use of all new self contained breathing apparatus for the entire department. Funding for this project was provided by a $210,000 federal grant award. The department also placed a new digital fire extinguisher training unit in service utilizing grand funding as well. The department has implemented the use of mobile data terminals in all fire apparatus. These mobile computers allow information to be sent electronically between the emergency dispatch center and the fire apparatus. This allows firefighters to view valuable data when responding to emergencies, including caller information, mapping, fire hydrant locations and other important information. As part of this system, the apparatuses are also equipped with automatic vehicle location systems, which enable dispatchers and other firefighters to see where fire apparatus are located and from which direction they are responding. Much of the funding for these mobile data systems was provided by various grant awards. A fire stations needs and location study was conducted for the fire department by the Urban Institute with the University of North Carolina at Charlotte. This study indentifies current and projects future fire station needs within the city. A firefighter memorial was constructed and dedicated on the site of the Historic Union County Courthouse. This memorial stands to memorialize firefighters who have died in the line of duty and honors those x serving Monroe and Union County today. The memorial was provided through a partnership between the City of Monroe and Union County Fire Departments with funding for the project provided by the Monroe Rotary Club, the City of Monroe and Union County. The City's fire department currently holds a Class 3 insurance rating from the Insurance Services Office (ISO), which reflects well on the City's professional fire operations and our water system infrastructure. This rating also allows the City's businesses and homes to enjoy lower fire insurance premiums. In 2008 -2009 fiscal year, the police department created the Violent Crimes Task Force. This unique team is comprised of one Sergeant and two officers who work on cases that involve violent criminals. This team will identify and target the repeat habitual offenders, and will eventually work up cases against the worst offenders. The police department expanded the Community Intervention Team by adding another team. These two teams will work opposite shifts of each other and will work on solving problems within the communities that they are working. The police department replaced all the laptop computers for officers this past year. The department also completed the transition of installing digital cameras in all the police vehicles. The department has plans in the next year to replace our older analog radios with the newer 800 MHz radios. All of Union county is transitioning to the 800 MHz system. The City of Monroe is aggressively seeking funding for roadway improvements, and has been active in its support for the development and construction of the Monroe Parkway as well as M. L. King Boulevard, which is currently underway. In conjunction with the Downtown Master Plan prepared by Land Design, the City contracted with a transportation consultant to evaluate and prepare conceptual designs of several transportation solutions that will enhance the development of the Downtown area. One of the primary projects identified by the consultant includes extending Jefferson Street to connect with Franklin Street west of Charlotte Avenue. The City is currently moving ahead with this project which will address congestion on Charlotte Avenue between the Franklin and Jefferson Street intersections. The City has obtained the design and construction drawings for the re- alignment of Concord Avenue with Charlotte Avenue to address congestion as vehicles move out of the Downtown Area. Once funding is obtained, the City will be in position to bid and construct this much needed improvement. The City of Monroe, Mayor and Council and concerned citizens would like to give Downtown its own market niche. City Council has approved a Master Plan for the downtown area. Opening new businesses Downtown, thereby improving the business mix, attracting shoppers and residents, raising property values and sales tax revenues are all elements of the plan. Restored buildings, attractive storefronts and pedestrian friendly walks and streets will gradually change and reinforce the public's perception that Downtown is the `heart and soul' of Union County. Monroe which is designated a National Trust Main Street Community, uses the Main Street approach to Downtown revitalization, a comprehensive, incremental four -point approach. The revitalization effort will focus on the areas of design, organization, promotion, and economic restructuring: a practical Downtown management strategy, in combination with the Downtown Master Plan, will produce fundamental changes in the Downtown's economic base. Currently Downtown Wi -Fi and the sound system projects are underway. The City is working with developers on two of the catalyst sites per the Master Plan. The Monroe Hardware Warehouse and the Joffre Hotel Site are in the planning stages for mixed -use development. The Downtown Transportation Study has been completed and the draft submitted for review. Future plans for downtown will be prioritized according to the Master Plan and the City's Strategic Plan developed with City Council. The IT department is in the process of updating the City's server hardware and software. They have also been reconfiguring the network to accommodate growth and streamline IT operations. The City has updated the majority of it users to Office 2007 and will update the mail server to Exchange 2007. The IT department has also been evaluating Windows 7 as the operating system to use for new computer systems. The City of Monroe pursues grant funding to provide resources for the completion of various projects. The City has recently received funding for a second phase of the restoration of the Historic Armory facility, a grant from the American Recovery and Reinvestment Act of 2009 for police equipment, a Community Oriented Policing grant for two officers and an airport reimbursement grant for runway strengthening. xi The City is also a regular recipient of Local Law Enforcement Block Grants, Community Development Block Grants, Federal Assistance to Firefighters' Grants, and Homeland Security funds. Long -Term Financial Planning The city seeks to maintain a strong financial position. This objective requires regular long -term planning of operating and capital requirements for its major general government and enterprise programs. In doing so, the City relies on key financial policies and procedures for dealing with future events in financially responsible ways. Annually, the City adopts a 5 -year Capital Improvement Program (CIP) that looks ahead to project and plan for capital needs. The program outlines each capital project, the estimated cost, description and funding source. This city takes into consideration and monitors CIP needs that require additional operating costs and personnel. Monroe City Council and management are committed to budgeting and managing all resources in the most cost effective manner. Relevant Financial Policies The City regularly reviews revenues and expenditures throughout the fiscal year. During the course of the year, if actual revenues are expected to fall short of the budgeted amount, expenditures are reduced to ensure that a shortage of funds or a significant use of fund balance does not occur. City financial policy dictates that our current operating revenues be sufficient to support current operating expenditures. The City administers a cash management and investment program that seeks to maximize, in order of priority, the preservation of funds, liquidity and interest earnings over its cash and investments. Cash resources of the individual funds are combined to form a pool of cash and investments. The average cash and investment pool balance during the year was $96,209,237 and the average investment earnings rate was 3.2 Investment income includes the change in the fair value of investments. During the year monies were invested and secured in accordance with state law. A key financial goal of the City for many years has been the maintenance of a 25% undesignated fund balance level in the General Fund. In addition, the City has desired to appropriate a consistent level of fund balance each year resulting from positive budget variances. These goals are met in the fiscal year 2009 results that are built into the 2009 -10 operating budgets. Other practices followed are designed to avoid the meeting of recurring expense needs with one -time revenue resources and to ensure an ongoing mix of pay as- you -go funding of capital needs with long -term debt. Response to Current Economic Conditions The declining economy and national fiscal credit problems have impacted Monroe, as they have all local governments. In response to this condition, the City has taken actions to offset possible budget shortfalls. In fiscal year 2009, these actions included a freeze on hiring, restricting travel to training conferences necessary for professional certifications and a three percent reduction in expenditures in all departments. In fiscal year 2010, operating expenses are being monitored and many capital projects have been delayed. The city is also monitoring adding of additional personnel that will require multi -year funding commitments. Revenues and expenses will be tracked closely throughout the fiscal year. City Council, management and staff are committed to providing the citizens of Monroe the highest quality of essential services throughout the economic decline and maintain the financial integrity our community expects. Awards and Acknowledgements Awards. The Government Finance Officers Association of the United States and Canada "GFOA awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Monroe for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2008. This was the 16 consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized CAFR. This report must satisfy both GAAP and applicable legal requirements. xii A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgements. The preparation of this report is a very intensive project, and could not have been accomplished without the assistance and dedication of the Finance Department staff and other personnel from various departments who assisted in its preparation. A particular thank you goes to Budget Analyst Mary Lou Clark who has provided valuable assistance with her financial and accounting expertise this past year. The Mayor and City Council continue to be very supportive of our efforts to produce the best financial reports possible for our citizens, and they provide leadership and support in maintaining the highest standards of professionalism in the fiscal management of the City. We appreciate their support in granting us the time and funding to generate this document, and allowing us to submit it to the GFOA for consideration. Lastly, we would like to express our appreciation to our independent auditing firm, Potter Company, P.A., for their cooperation and assistance in these efforts. Respectfully submitted, WO Wayne Herron City Manager Boa Lisa Strickland Strickland Assistant Director of Finance x111 Certificate of Achievement for Excellence in Financial Reporting Presented to City of Monroe North Carolina For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2008 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. z Erg E President Executive Director AV CITY OF MONROE, NORTH CAROLINA LIST OF PRINCIPAL OFFICIALS June 30, 2009 Elected Officials Bobby G. Kilgore Mayor P. E. Bazemore Mayor Pro Tem John B. Ashcraft, Jr. Lynn A. Keziah Terry M. Sholar City Attorney Brian J. Borne Downtown Monroe Director R. Christopher Plate Director of Economic Development and Aviation Debra C. Reed Director of Human Resources Don D. Mitchell Director of Energy Services Ronald D. Fowler Fire Chief C. Michael Courtney Director of Parks Recreation Lisa W. Stiwinter Interim Director of Planning Dottie M. Nash City Administration H. Wayne Herron, Jr. City Manager Billy A. Jordan Robert J. Smith Vacant Assistant City Manager Bridgette H. Robinson City Clerk Lisa A. Strickland Interim Director of Finance and Administration James N. Loyd, Jr. Director of Engineering Debra C. Duncan Police Chief Bruce Bounds Director of Information Technology Russell G. Colbath Director of Water Resources Thomas A. Brown Interim Director of Building Standards xv Q 3 7 c Q xv! Q o pit ƒ t 5 xv! INDEPENDENT AUDITORS' REPORT The Honorable Mayor and The City Council City of Monroe North Carolina We have audited the accompanying financial statements of the governmental activities, the business -type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Monroe, North Carolina, as of and for the year ended June 30, 2009, which collectively comprise the City of Monroe's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Monroe's management. Our responsibility is to express an opinion 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 basic financial statements are free of material misstatement. The financial statements of City of Monroe ABC Board and Monroe Tourism Development Authority were not audited in accordance with Government Auditing Standards. 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 opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business -type activities, the discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Monroe, North Carolina, as of June 30, 2009, and the respective changes in financial position and cash flows, where appropriate, thereof and the respective budgetary comparison for the General Fund 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 October 26,2009 on our consideration of the City of Monroe's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Management's Discussion and Analysis, the Law Enforcement Officers' Special Separation Allowance Schedule and Other Postemployment Benefits (OPEB) Schedules of Funding Progress and Employer Contributions are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit this information and express no opinion on it. Our audit was performed for the purpose of forming an opinion on the financial statements that collectively comprise the basic financial statements of the City of Monroe, North Carolina. The introductory section, the other supplementary information section, and the statistical section as listed in the accompanying table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal and State 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 the State Single Audit Implementation Act, and are not a required part of the basic financial statements of the City of Monroe. The other supplementary information and the schedule of expenditures of federal and State awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The introductory section and the statistical section have not been subjected to the auditing procedures applied by us in the audit of basic financial statements and, accordingly, we express no opinion on them. October 26, 2009 Monroe, North Carolina 10 197967 2 Management's Discussion and Analysis As management of the City of Monroe (the City), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2009. We encourage readers to read the information presented here in conjunction with additional information that we have furnished in the City's financial statements, which follow this narrative. Financial Highlights The assets of the City of Monroe exceeded its liabilities at the close of the fiscal year by $313,877,758 (net assets). Of this amount, $112,333,833 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. The government's total net assets increased by $7,613,734 of this increase $949,849 was from governmental activities and $6,663,885 was for business -type activities. As of the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $22,887,250, a decrease of $320,936 in comparison with the prior year. Approximately 82 percent of this total amount or $18,735,931 is available for spending at the government's discretion (unreserved fund balance). At the end of the current fiscal year, unreserved fund balance for the General Fund was $13,646,662 or 49 percent of total general fund expenditures for the fiscal year. The City's total debt not including compensated absences and other postemployment benefits payable, net of retirements, increased $30,705,650 (42 during the current fiscal year. The primary elements of the increase were the issuance of Certificates of Participation totaling $32,665,000 to finance the construction of a natural gas pipeline and two installment financing issuances totaling $4,266,420 for equipment purchases and facility construction offset by $6,225,770 in debt retirement. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to City of Monroe's basic financial statements. The City's basic financial statements consist of three components: 1) government -wide financial statements, 2) fund financial statements, and, 3) notes to the financial statements (see Figure 1). The basic financial statements present two different views of the City through the use of government wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader's understanding of the financial condition of the City of Monroe. Required Components of Annual Financial Report Figure 1 Management's Discussion and Analysis Government -wide Financial Statements Basic Financial Statements Fund Financial Notes to the Statements I Financial Statements Summary 10 Detail Basic Financial Statements The first two statements (Exhibits 1 and 2) in the basic financial statements are the Government -wide Financial Statements. They provide both short and long -term information about the City's financial status. The next statements (Exhibits 3 through 10) are Fund Financial Statements. These statements focus on the activities of the individual parts of the City's government. These statements provide more detail than the government -wide statements. There are three parts to the Fund Financial Statements: 1) the governmental funds statements; 2) the budgetary comparison statements; and, 3) the proprietary fund statements. The next section of the basic financial statements is the notes. The notes to the financial statements explain in detail some of the data contained in those statements. After the notes, supplemental information is provided to show details about the City's individual funds. Budgetary information required by the General Statutes also can be found in this part of the statements. Government -Wide Financial Statements The government -wide financial statements are designed to provide the reader with a broad overview of the City's finances, similar in format to a financial statement of a private- sector business. The government -wide statements provide short and long -term information about the City's financial status as a whole. The two government -wide statements report the City's net assets and how they have changed. Net assets are the difference between the City's total assets and total liabilities. Measuring net assets is one way to gage the City's financial condition. The government -wide statements are divided into three categories: 1) governmental activities; 2) business -type activities; and, 3) component units. The governmental activities include most of the City's basic services such as public safety, parks and recreation, and general administration. Property taxes and state and federal grant funds finance most of these activities. The business -type activities are those that the City charges customers to provide. These include the water and sewer, electric, natural gas, aquatics and fitness, and airport services offered by the City of Monroe. The final category is the component units. Although legally separate from the City, the ABC Board and the Tourism Development Authority are important to the City because the City exercises control over both Boards by appointing their members. The component units are also required to distribute a portion of their profits to the City. The government -wide financial statements are on Exhibits 1 and 2 of this report. Fund Financial Statements The fund financial statements (see Figure 1) provide a more detailed look at the City's most significant activities. 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 Monroe, like all other governmental entities in North Carolina, uses fund accounting to ensure and reflect compliance (or non- compliance) with finance- related legal requirements, such as North Carolina General Statutes or the City's budget ordinance. All of the funds of City of Monroe can be divided into two categories: Governmental Funds and Proprietary Funds. Governmental Funds Governmental funds are used to account for those functions reported as governmental activities in the government -wide financial statements. Most of the City's basic services are accounted for in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out, and what monies are left at year -end that will be available for spending in the next year. Governmental funds are reported using an accounting method called modified accrual accounting 4 which provides a short-term spending focus. As a result, the governmental fund financial statements give the reader a detailed short-term view that helps him or her determine if there are more or less financial resources available to finance the City's programs. The relationship between government activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds is described in a reconciliation that is a part of the fund financial statements. The City of Monroe maintains seven 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 Fund which is considered to be a major fund. Data from the other six governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. These other six governmental funds are made up of one capital projects fund and five special revenue funds including Community Development, Downtown Monroe, Occupancy Tax, City Grant Programs and State Grant Programs. The City of Monroe adopts an annual budget for its General Fund, as required by North Carolina General Statutes. The budget is a legally adopted document that incorporates input from the citizens of the City, the management of the City, and the decisions of the Council about which services to provide and how to pay for them. It also authorizes the City to obtain funds from identified sources to finance these current period activities. The budgetary statement provided for the General Fund demonstrates how well the City complied with the budget ordinance and whether or not the City succeeded in providing the services as planned when the budget was adopted. The budgetary comparison statement uses the budgetary basis of accounting and is presented using the same format, language, and classifications as the legal budget document. The statement shows four columns: 1) the original budget as adopted by the Council; 2) the final budget as amended by the Council; 3) the actual resources, charges to appropriations, and ending balances in the General Fund; and, 4) the difference or variance between the final budget and the actual resources and charges. To account for the difference between the budgetary basis of accounting and the modified accrual basis, a reconciliation showing the differences in the reported activities is shown at the end of the budgetary statement. Proprietary Funds The City of Monroe maintains two types of proprietary funds: enterprise and internal service. Enterprise Funds are used to report the same functions presented as business -type activities in the government -wide financial statements. The City uses enterprise funds to account for its water and sewer, electric, natural gas, aquatics and fitness center, stormwater, sanitation and airport operations. These funds are the same as those functions shown in the business -type activities in the Statement of Activities. Internal service funds are an accounting tool used to accumulate and allocate costs internally among various functions. The City utilizes an internal service fund for its health, worker's compensation and property and casualty insurance. Because services accounted for in the internal service fund predominately benefit governmental rather than business -type functions, it has been included within the governmental activities in the government -wide financial statements. 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 begin on page 32 of this report. Other Information In addition to the basic financial statements and accompanying notes, this report includes certain required supplementary information concerning the City of Monroe's progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found beginning on page 64 of this report. Government -Wide Financial Analysis The following is a summary of the City's net assets for governmental and business -type activities for the current year as compared to the prior year. For more detail see the Statement of Net Assets on page 15. City of Monroe's Net Assets Figure 2 Governmental Activities Business -type Activities 2009 2008 Total 2009 2008 2009 2008 Current and other assets $27,034,812 $25,222,942 $120,245,086 $124,887,117 $147,279,898 $150,110,059 Capital assets 81,636,681 81,287,999 204,894,111 162,558,136 286,530,792 243,846,135 Total assets 108,671,493 106,510,941 325,139,197 287,445,253 433,810,690 393,956,194 Long -term liabilities outstanding 9,047,818 6,564,177 91,293,944 62,085,983 100,341,762 68,650,160 Other liabilities 4,444,383 5,717,321 15,146,787 13,324,689 19,591,170 19,042,010 Total liabilities 13,492,201 12,281,498 106,440,731 75,410,672 119,932,932 87,692,170 Net assets: Invested capital assets, net of related debt 74,438,325 73,466,565 127,103,540 127,957,064 201,541,865 201,423,629 Restricted 2,060 45,296 2,060 45,296 Unrestricted 20,738,907 20,717,582 91,594,926 84,077,517 112,333,833 104,795,099 Total net assets $95,179,292 $94,229,443 $218,698,466 $212,034,581 $313,877,758 $306,264,024 The total net assets of the City of Monroe were $313,877,758 as of June 30, 2009. Of the City's total net assets $201,541,865 (64 reflects its investment in capital assets (e.g. land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of the outstanding related debt, the resources needed to repay that debt must be provided by other sources, since the capital assets cannot be used to liquidate these liabilities. An additional portion of the City's net assets ($2,060) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $112,333,833 (36 is unrestricted. These assets may be used at the City's discretion in meeting its ongoing obligations to citizens and creditors. The City's net assets have increased by $7,613,734 during the current fiscal year. The biggest part of this increase was due to the construction in progress of the various bond related utility improvements in the City's electric, natural gas, water and airport operations. Restricted reserves represent the accumulation of funds from the state street aid allocation to be used for street maintenance. Unrestricted reserves represent increases due to savings in anticipated expenses and actual revenue exceeding anticipated revenue. The following is a summary of the City's governmental and business -type activities for fiscal year 2009, including revenues and expenses, with a comparison to the prior year. For more detail see the Statement of Activities on page 16 -17. City of Monroe's Changes in Net Assets Figure 3 Transfers (Decrease) Increase in net assets Net assets beginning Net assets ending (907,609) (441,548) 907,609 441,548 949,849 3,087,095 6,663,885 14,848,116 7,613,734 17,935,211 94,229,443 91,142,348 212,034,581 197,186,465 306,264,024 288,328,813 $95,179,292 $94,229,443 $218,698,466 $212,034,581 $313,877,758 $306,264,024 Governmental activities Governmental activities increased the City of Monroe's net assets by $949,849. Key elements of this net increase are as follows: An increase in property taxes of 6.4% ($982,413), due primarily to property revaluation. An increase in capital grants and contributions of $1,024,675 was due to the acceptance of infrastructure which includes streets, curbs, sidewalks and stormwater for several subdivisions and the receipt of a $400,000 grant from the North Carolina Department of Transportation. A decrease of $800,736 or 11% was reported in other taxes due primarily to decreased collection for local option sales tax. A decrease in other revenues of $938,786 due primarily to decreased investment interest earnings. An increase in expenses for all functions is primarily due to allocation of internal service fund premiums and the accrual of OPEB that was not accrued in the prior year. Environmental protection is no longer reflected in the governmental activities. A separate Solid Waste Fund has been established as a business -type activity in fiscal year 2009. Business -type activities Business -type activities increased the City of Monroe's net assets by $6,663,885 accounting for 88% of the total net growth in the government's net assets. Key elements of this increase are as follows: Charges for services decreased in water and electric but increased in natural gas due to fluctuations in demand. A decrease in capital grants and contributions was due to less donated assets which is because of less infrastructure construction by developers. 7 Governmental Activities Business -type Activities Total 2009 2008 2009 2008 2009 2008 Revenues: Program revenues: Charges for services $5,620,750 $4,825,229 $82,446,884 $80,650,655 $88,067,634 $85,475,884 Operating grants and contributions 2,218,413 2,404,050 2,218,413 2,404,050 Capital grants and contributions 3,459,873 2,435,198 789,584 2,918,184 4,249,457 5,353,382 General revenues: Property taxes 16,285,937 15,303,524 16,285,937 15,303,524 Othertaxes 7,391,328 8,192,064 7,391,328 8,192,064 Grants and contributions not restricted to specific grant programs 225,478 251,476 225,478 251,476 Other 995,167 1,933,953 3,008,423 4,914,580 4,003,590 6,848,533 Total revenues 36,196,946 35,345,494 86,244,891 88,483,419 122,441,837 123,828,913 Expenses: General government $4,724,842 $4,944,989 $4,724,842 $4,944,989 Transportation 5,441,377 4,965,651 5,441,377 4,965,651 Public safety 18,088,959 14,246,734 18,088,959 14,246,734 Environmental protection 2,551,419 2,551,419 Culture and recreation 4,914,395 3,922,352 4,914,395 3,922,352 Economic and physical development 858,485 948,065 858,486 948,065 Interest in long -term debt 311,430 237,641 311,430 237,641 Water and sewer 11,543,398 11,380,664 11,543,398 11,380,664 Electrical 41,629,010 39,702,549 41,629,010 39,702,549 Natural Gas 16,866,784 16,941,568 16,866,784 16,941,568 Aquatics and Fitness Center 3,725,357 3,187,412 3,725,357 3,187,412 Stormwater 794,566 794,566 Solid waste 2,697,447 2,697,447 Airport 3,232,053 2,864,658 3,232,053 2,864,658 Total expenses 34,339,488 31,816,851 80,488,615 74,076,851 114,828,103 105,893,702 (Decrease) Increase in net assets before transfers 1,857,458 3,528,643 5,756,276 14,406,568 7,613,734 17,935,211 Transfers (Decrease) Increase in net assets Net assets beginning Net assets ending (907,609) (441,548) 907,609 441,548 949,849 3,087,095 6,663,885 14,848,116 7,613,734 17,935,211 94,229,443 91,142,348 212,034,581 197,186,465 306,264,024 288,328,813 $95,179,292 $94,229,443 $218,698,466 $212,034,581 $313,877,758 $306,264,024 Governmental activities Governmental activities increased the City of Monroe's net assets by $949,849. Key elements of this net increase are as follows: An increase in property taxes of 6.4% ($982,413), due primarily to property revaluation. An increase in capital grants and contributions of $1,024,675 was due to the acceptance of infrastructure which includes streets, curbs, sidewalks and stormwater for several subdivisions and the receipt of a $400,000 grant from the North Carolina Department of Transportation. A decrease of $800,736 or 11% was reported in other taxes due primarily to decreased collection for local option sales tax. A decrease in other revenues of $938,786 due primarily to decreased investment interest earnings. An increase in expenses for all functions is primarily due to allocation of internal service fund premiums and the accrual of OPEB that was not accrued in the prior year. Environmental protection is no longer reflected in the governmental activities. A separate Solid Waste Fund has been established as a business -type activity in fiscal year 2009. Business -type activities Business -type activities increased the City of Monroe's net assets by $6,663,885 accounting for 88% of the total net growth in the government's net assets. Key elements of this increase are as follows: Charges for services decreased in water and electric but increased in natural gas due to fluctuations in demand. A decrease in capital grants and contributions was due to less donated assets which is because of less infrastructure construction by developers. 7 A decrease in other revenues of $1,906,157 due primarily to decreased investment interest earnings. The addition of a new state mandated storm water utility increased expenses. The addition of a separate Solid Waste Fund increased expenses. Previously, this fund was accounted for in the General Fund. Financial Analysis of the City's Funds As noted earlier, the City of Monroe uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds The focus of the City of Monroe's governmental funds is to provide information on near -term inflows, outflows, and balances of usable resources. Such information is useful in assessing the City's financing requirements. Specifically, unreserved fund balance can be a useful measure of a government's net resources available for spending at the end of the fiscal year. At June 30, 2009, the governmental funds of City of Monroe reported a combined fund balance of $22,887,250, which is a decrease of $320,936 from last year's total of $23,208,182. Of the governmental funds combined ending fund balances, $18,735,931 represents unreserved fund balance, which is available for spending at the City's discretion. The remainder of fund balance is reserved to indicate that it is not available for spending, as it has already been committed for encumbrances, street maintenance or it must be reserved in order to comply with North Carolina state statutes. The general fund is the chief operating fund of the City of Monroe. As of June 30, 2009, the fund balance in the General Fund was $17,866,057, a decrease of $2,741,493 in comparison with the prior year. Of the total fund balance in the General Fund, $13,646,662 (76 was unreserved fund balance. 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 49% of total general fund expenditures, while total fund balance represents 64% of that same amount. This decrease to fund balance is primarily due to the creation of separate internal service funds to account for the city's health, workers compensation and property and casualty insurance. The amount designated for self insurance expenditures was transferred to the respective self insurance funds. The Other Government Funds which consist of the Capital Projects Fund and special revenue funds for Community Development, Downtown Monroe, Occupancy Tax, City Grant Programs and State Grant Programs also impact the total fund balance for governmental funds. The reason for the increase of $2,420,557 in this category is primarily the issuance of an installment financing loan to fund the construction of the Winchester Children's Center and the addition of a gymnasium at J Ray Shute Recreation Center. Proprietary Funds The City of Monroe's proprietary funds provide the same type of information found in the government -wide statements but in more detail. The table below presents the unrestricted net assets and the total growth in net assets for all proprietary funds. Unrestricted Net Assets 2009 2008 Water and Sewer $21,184,478 Electric 48,924,656 Natural Gas 19,064,633 Airport 522,031 Aquatics and Fitness Center 1,562,001 Stormwater 130,316 Solid Waste 216,057 Growth/(Decrease) in Net Assets 2009 2008 $20,974,365 $1,997,668 $5,636,701 47,367,775 (1,735,811) 6,034,711 11,611,959 6,426,097 2,556,349 1,191,706 (555,973) (424,509) 2,931,712 194,777 1,044,864 130,316 216,057 Proprietary Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and /or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The City's major proprietary funds are water and sewer, electric, natural gas and airport. The Stormwater and Solid Waste Funds are new funds for fiscal year 2009. The Water and Sewer Fund accounts for the provision of potable water and sewer service to City and non -City residents. All activities necessary to the provision of these services are accounted for in this fund, including, but not limited to administration, plant and line maintenance. As of June 30, 2009, the City of Monroe's water fund reported total net assets of $71,187,139, an increase of $1,997,668 in comparison with the prior year. This increase is primarily due to an increase in capital assets. Approximately 51% of the increase in net assets was operating income. The Electric Fund accounts for the provision of electric service to City and non -City residents. All activities necessary to the provision of these services are accounted for in this fund, including, but not limited to administration, plant and line maintenance. As of June 30, 2009, the City of Monroe's electric fund reported total net assets of $92,822,073, a decrease of $1,735,811 in comparison with the prior year. This decrease is primarily due to a transfer out to the natural gas fund to pay for the installation of fiber optic infrastructure along the natural gas transmission line. The Natural Gas Fund accounts for the provision of natural gas service to City and non -City residents. All activities necessary to the provision of these services are accounted for in this fund, including, but not limited to administration, plant and line maintenance. As of June 30, 2009, the City of Monroe's natural gas fund reported total net assets of $31,492,549, an increase of $6,426,097 in comparison with the prior year. This increase is due to a transfer from to the electric fund to pay for the installation of fiber optic infrastructure along the natural gas transmission line and operating income. The Airport Fund accounts for the operation of the Charlotte- Monroe Executive Airport. As of June 30, 2009, the City of Monroe's airport fund reported total net assets of $14,776,826, a decrease of $555,973 in comparison with the prior year. This decrease is because of an operating loss resulting from reduced user fees due to the current economic downturn. The airport is currently undergoing a major renovation and expansion. General Fund Budgetary Highlights During the fiscal year, the City of Monroe revised the budget on several occasions. Generally, budget amendments fall into one of three categories: 1) amendments made to adjust the estimates that are used to prepare the original budget ordinance once exact information is available; 2) amendments made to recognize new funding amounts from external sources, such as federal and State grants; and, 3) increases in appropriations that become necessary to maintain services. Total amendments to the General Fund increased expenditures by $295,917 or .93 The key differences between the original budget and the final amended budget can be briefly summarized as follows: Funds were appropriated for prior year encumbrances in the amount of $569,988. Funds were appropriated for grants and donations received in the amount of $175,435. Appropriations from fund balance were offset by an amendment to reduce expenditure budgets by 3 This reduction was to account for slow collections in local option sales tax revenue. This amendment totaled $453,295. Revenues exceeded final budget by $175,885. Expenditures decreased from the prior year. This is due to the creation of separate internal service funds and the creation of the solid waste utility fund. Expenditures were 87% of the final amended expenditure budget. Expenditures were held $4.0 million below final budget amounts. Some of the key differences are as follows: A continued emphasis on cost control and prudent financial management by City department directors. $1,223,237 savings in operating expenses was realized due to a reduction in travel and deferring professional and technical services. Salary and employee benefits expenditures across all General Fund functions were $798,564 below the final budget primarily due to a hiring freeze. Fire Department realized savings of $1.9 million due to the delay in the construction of a new fire station. Capital Assets The following is a summary of the City of Monroe's capital assets, net of depreciation for governmental and business -type activities for the current year with a comparison to the prior year. Additional information on the City of Monroe's capital assets can be found in Note IV.A.5 on pages 42 45 of this report. City of Monroe's Capital Assets (Net of Depreciation) Figure 4 Land Buildings and improvements Equipment Vehicles and motorized equipment Infrastructure Construction in progress Total Governmental Activities 2009 2008 $4,374,393 $4,171,465 10,420,493 9,901,190 1,644,409 1,528,553 4,587,790 4,949,026 58,212,884 57,220,620 2,396,712 3,517,145 $81,636,681 $81,287,999 Business -type Activities 2009 2008 $13,730,862 $13,147,940 29,649,000 28,762,699 4,135,490 4,479,272 1,907,535 1,606,812 93,043,385 90,351,391 62,427,839 24,210,021 $204,894,111 $162,558,135 Total 2009 2008 $18,105,255 $17,319,405 40,069,493 38,663,889 5,779,899 6,007,825 6,495,325 6,555,838 151, 256,269 147, 572,011 64, 824,551 27,727,166 $286,530,792 $243,846,134 The City of Monroe's investment in capital assets for its governmental and business —type activities as of June 30, 2009, totals $286,530,792 (net of accumulated depreciation). These assets include buildings, roads and bridges, land, enterprise systems infrastructure, machinery and equipment, park facilities, and vehicles. The total increase in the City's investment in capital assets for the current fiscal year was $42,684,658 (17.5 Major capital asset events during the year included the following: Renovation of the Old Armory Construction of a T -hangar at Charlotte- Monroe Executive Airport Purchase of hangar at Charlotte- Monroe Executive Airport Electric substation Land acquisition for airport expansion General Fund infrastructure including streets, curbs, sidewalks and stormwater Construction in progress totaling $64,824,551 makes up a significant portion of the City's capital assets and accounts for the largest part of the increase from last year. Funding for various projects was received in fiscal year 2008 and 2009 which are still under construction. These projects include the following: Water construction of elevated water storage tank and installation of water transmission mains Electric construction of a substation, installation of new transformers, replacement of existing transformers and construction of approximately 12.8 miles of transmission loop around the City 10 Natural Gas land acquisition and construction of an 8" natural gas line loop around the City, and construction of approximately 43 miles of natural gas pipeline to connect the City's system directly to the transcontinental pipeline. As of June 30, $25.6 million had been spent on this pipeline project. Airport construction of Goldmine Road, extension of runway 5. Debt Administration The following is a summary of the City's long -term debt for governmental and business -type activity for the current year with a comparison to the prior year. Additional information on long -term debt can be found in note IV.13.7 beginning on page 54 of this report. City of Monroe's Outstanding Debt General Obligation and Revenue Bonds Figure 5 Install purchase obligations General obligation bonds Revenue bonds State revolving loans Certificates of participation Total Governmental Activities 2009 2008 $9,656,258 $7,821,435 $9,656,258 $7,821,435 Business -type Activities 2009 2008 $3,345,606 $5,060,545 140,000 790,000 53,185,000 53,810,000 5,104,832 5,931,909 32,665,000 $94,440,438 $65,592,454 2009 2008 $13,001,864 $12,881,980 140,000 790,000 53,185,000 53,810,000 5,104,832 5,931,909 32,665,000 $104,096,696 $73,413,889 Total As of June 30, 2009, the City of Monroe had total debt outstanding of $104,096,696. Of this, $140,000 is general obligation debt backed by the full faith, credit and taxing power of the City. The remainder of the City's bonded debt, $53,185,000, represents bonds secured by the combined revenues of the major business -type funds which include water and sewer, electric, natural gas and airport. The City's total debt, net of retirements, increased $30,682,807 during the fiscal year. The primary elements of the increase were the issuance of Certificates of Participation totaling $32,665,000 to fund the construction of the natural gas pipeline and two new installment financing issuances totaling $4,266,420 for equipment purchases and facility construction and $6,248,613 in debt retirements. The City of Monroe has an A2 bond rating from Moody's Investor Service and AA- rating from Standard and Poor's Corporation. These bond ratings are indications of the sound financial condition and stable outlook of the City of Monroe. North Carolina General Statutes limit the amount of general obligation debt that a unit of government can issue to eight percent of the total assessed value of taxable property located within that government's boundaries. The legal debt margin for the City of Monroe is $248,095,900. Economic Factors and Next Year's Budgets and Rates The following key economic indicators reflect the growth and prosperity of the City. The annual unemployment rate for City of Monroe has risen to 9.4 which is an increase of 3.1% over last year. This compares favorably to Union County's rate of 10.2% and the State's average rate of 10.8 The taxable value of commercial and residential property increased 19% from fiscal year 2008 to fiscal year 2009. Population increased 3.7% from 35,966 in 2008 to 37,280 in 2009. 11 Monroe is experiencing the same downturn in the economy as our industrial, commercial and residential sectors. Revenues have declined and yet operating expenses have continued to rise as the costs of goods and services to the City have increased. Governmental Activities The City did not raise the property tax rate for fiscal year 2010. General Fund revenues are expected to be less in fiscal year 2010 than fiscal year 2009. To offset this decrease, expenditures were budgeted to remain at fiscal year 2009 levels. Projects and capital purchases were deferred or cut in many areas. Business -type Activities Water and sewer rates were increased by 4.5% to plan for the significant anticipated cost of future capital projects and necessary system improvements. Electric rates were also increased by 6% to cover the increased cost of wholesale power. A solid waste rate increase of $1.25 per month for residential customers was included in the budget to cover a 6% increase in refuse collection expense. Natural gas and stormwater rates remained the same. Requests for Information This report is designed to provide an overview of the City's finances for those with an interest in this area. Questions concerning any of the information found in this report or requests for additional information should be directed to the City of Monroe Department of Finance at 300 West Crowell Street, Monroe, North Carolina, 28112, or visit the City's website at www.monroenc.org 12 Basic Financial Statements The Basic Financial Statements provide a summary overview of the financial position of the governmental activities, the business -type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information at June 30, and the respective changes in financial position and cash flows, where appropriate for the year then ended. Government -Wide Financial Statements Fund Financial Statements Governmental Fund Financial Statements Proprietary Fund Financial Statements Notes to Financial Statements Required Supplemental Information CITY OF ci heritage qfprocrress e"') c"I'll EXHIBIT I CITY OF MONROE, NORTH CAROLINA STATEMENT OF NET ASSETS June 30, 2009 Primary Government Component Units Monroe Tourism Governmental Business -type City of Monroe Development Activities Activities Total ABC Board Authority ASSETS Current assets: Cash and cash equivalents 19,546,316 82,876,718 102,423,034 463,343 188,111 Taxes receivable 1,028,418 1,028,418 Accounts receivable 1,657,780 5,706,913 7,364,693 26,922 Note receivable 420,534 420,534 Internal balances 9,246 (9,246) Due from other governments 3,136,046 3,136,046 Due from component units 69,448 69,448 Inventories 313,684 4,253,939 4,567,623 251,618 Prepaid expenses 545 545 18,024 Loans receivable (net) 20,296 20,296 Total current assets 25,781,234 93,249,403 119,030,637 732,985 215,033 Restricted assets: Cash and cash equivalents 2,459,963 23,193,569 25,653,532 Noncurrent assets: Note receivable 738,368 738,368 Due from (to) other funds (1,338,508) 1,338,508 Deferred charges 1,725,238 1,725,238 Prepaid pension obligation 132,123 132,123 Capital assets Land, non depreciable improvements, and construction in progress 6,771,105 76,158,701 82,929,806 317,013 Other capital assets, net of depreciation 74,865,576 128,735,410 203,600,986 766,470 Total capital assets 81,636,681 204,894,111 286,530,792 1,083,483 Total noncurrent assets 80,430,296 208,696,225 289,126,521 1,083,483 Total assets 108,671,493 325,139,197 433,810,690 1,816,468 215,033 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 657,165 10,401,107 11,058,272 377,323 41 Unearned revenue 311,960 311,960 Due to primary government 51,500 17,948 Current portion of long -term liabilities 2,926,317 4,063,425 6,989,742 Payable from restricted assets 682,255 682,255 Property claims liability 57,747 57,747 Workers compensation claims 15,646 15,646 Health care benefits claims 475,548 475,548 Long -term liabilities: OPEB liability 818,335 335,665 1,154,000 Due in more than one year 8,229,483 90,958,279 99,187,762 Total liabilities 13,492,201 106,440,731 119,932,932 428,823 17,989 NET ASSETS Invested in capital assets, net of related debt 74,438,325 127,103,540 201,541,865 1,083,483 Restricted for: Streets 2,060 2,060 Other purposes 149,774 Unrestricted 20,738,907 91,594,926 112,333,833 154,388 197,044 Total net assets 95,179,292 218,698,466 313,877,758 1,387,645 197,044 The notes to the financial statements are an integral part of this statement. 15 CITY OF MONROE, NORTH CAROLINA STATEMENT OF ACTIVITIES For the Year Ended June 30, 2009 Program Revenues Functions /Programs Expenses Charges for Services Operating Grants and Contributions Primary government: 11,543,398 Governmental activities: 527,420 41,629,010 General government 4,724,842 2,028,567 Transportation 5,441,377 243,394 1,081,750 Public safety 18,088,959 2,065,091 718,818 Environmental protection 43,126 910 Culture and recreation 4,914,395 1,238,851 222,506 Economic and physical development 858,485 1,721 194,429 Interest on long -term debt 311,430 Total governmental activities Business -type activities: Water and sewer Electric Natural gas Aquatics and Fitness Center Stormwater Solid waste Airport Total business -type activities Total primary government Component units: ABC Board Tourism Development Authority Total component units Capital Grants and Contributions 3,459,873 34,339,488 5,620,750 2,218,413 3,459,873 11,543,398 12,206,766 527,420 41,629,010 40,925,590 16,866,784 20,116,140 3,725,357 4,069,109 794,566 822,384 108,664 2,697,447 2,747,905 3,232,053 1,558,990 153,500 80,488,615 82,446,884 789,584 114,828,103 88,067,634 2,218,413 4,249,457 4,863,239 4,906,405 302,484 326,063 5,165,723 4,906,405 326,063 General revenues: Taxes: Property taxes, levied for general purpose Local option sales tax Utility taxes Other taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Miscellaneous Gain on sale of capital assets Transfers Total general revenues and transfers Change in net assets Net assets, beginning Net assets, ending The notes to the financial statements are an integral part of this statement. 16 EXHIBIT 2 Net (EXDense) Revenue and Chances in Net Assets Primary Government Component Units Monroe Tourism Governmental Business -type City of Monroe Development Activities Activities Total ABC Board Authority (2,696,275) (2,696,275) (656,360) (656,360) (15,305,050) (15,305,050) 44,036 44,036 (3,453,038) (3,453,038) (662,335) (662,335) (311,430) (311,430) (23,040,452) (23,040,452) 1,190,788 1,190,788 (703,420) (703,420) 3,249,356 3,249,356 343,752 343,752 136,482 136,482 50,458 50,458 (1,519,563) (1,519,563) 2,747,853 2,747,853 (23,040,452) 2,747,853 (20,292,599) 43,166 23,579 43,166 23,579 16,285,937 16,285,937 4,096,167 4,096,167 1,363,810 1,363,810 1,931,351 1,931,351 225,478 225,478 494,935 2,992,433 3,487,368 133 1,169 519,521 62,894 582,415 (19,289) (46,904) (66,193) (907,609) 907,609 23,990,301 3,916,032 27,906,333 133 1,169 949,849 6,663,885 7,613,734 43,299 24,748 94,229,443 212,034,581 306,264,024 1,344,346 172,296 95,179,292 218,698,466 313,877,758 1,387,645 197,044 17 CITY OF MONROE, NORTH CAROLINA BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2009 ASSETS Cash and cash equivalents Receivables: Taxes Accounts Due from other governments Due from component unit Inventories Loans receivable (net) Cash and cash equivalents restricted Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities Deferred revenue Unearned revenue Total liabilities Fund balances: Reserved for: Encumbrances State statute Streets Powell bill Unreserved for General Fund: Designated for subsequent year's expenditures Undesignated Unreserved for reported in: Special Revenue Funds Capital Projects Funds Total fund balances Total liabilities and fund balances General 14,863,346 EXHIBIT 3 Total Governmental Funds 2,596,248 17,459,594 997,889 30,529 1,028,418 547,713 1,755 549,468 3,136,046 3,136,046 69,448 69,448 313,684 313,684 20,296 20,296 2,060 2,457,903 2,459,963 19,930,186 5,106,731 25,036,917 594,697 1,157,473 311,959 62,468 657,165 23,070 1,180,543 311,959 2,064,129 85,538 2,149,667 623,712 91,464 715,176 3,593,623 1,755 3,595,378 2,060 2,060 2,288,092 2,288,092 11,358,570 11,358,570 1,600,363 1,600,363 3,327,611 3,327,611 17,866,057 5,021,193 22,887,250 19,930,186 5,106,731 25,036,917 The notes to the financial statements are an integral part of this statement. Other Governmental Funds 18 CITY OF MONROE, NORTH CAROLINA RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS June 30, 2009 Amounts reported for governmental activities in the statement of net assets are different because: EXHIBIT 4 Fund balances total governmental funds (Exhibit 3) 22,887,250 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Gross capital assets at historical cost 127,038,604 Accumulated depreciation (45,401,923 81,636,681 Other long -term assets are not available to pay for current period expenditures and therefore are deferred in the funds. Prepaid pension obligation 132,123 Internal service funds are used by management to charge the costs of health and dental insurance to individual funds. The current assets and liabilities of the internal service fund are included in governmental activities in the statement of net assets. 494,338 Internal service funds are used by management to charge the costs of workers' compensation to individual funds. The current assets and liabilities of the internal service fund are included in governmental activities in the statement of net assets. 1,894,447 Internal service funds are used by management to charge the costs of property and liabiltiy insurance to individual funds. The current assets and liabilities of the internal service fund are included in governmental activities in the statement of net assets. 257,308 Internal balance due from Business Type Activities to Governmental Activities. 9,246 Liabilities for earned but deferred revenues in fund statements. 1,180,543 Note payable to electric fund (1,338,509) Long -term liabilities are not due and payable in the current period and therefore are not reported in the funds (Note III.A.). (11,974,135) Net assets of governmental activities (Exhibit 1) 95,179,292 The notes to the financial statements are an integral part of this statement. 19 CITY OF MONROE, NORTH CAROLINA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30, 2009 EXHIBIT S Other Total Governmental Governmental General Funds Funds REVENUES Ad valorem taxes Other taxes and licenses Unrestricted intergovernmental Restricted intergovernmental Program income Sales and services Investment earnings Miscellaneous Total revenues EXPENDITURES Current: General government Transportation Public safety Culture and recreation Economic and physical development Capital outlay Debt service: Principal retirement Interest and other charges Total expenditures Deficiency of revenues under expenditures OTHER FINANCING SOURCES (USES) Transfers from other funds Transfers to other funds Loan payment to general fund Installment purchase obligations issued Total other financing sources (uses) Net change in fund balances Fund balance, beginning Fund balances, ending 16,090,376 44,103 16,134,479 884,040 336,148 1,220,188 6,360,071 6,360,071 1,984,504 841,929 2,826,433 1,755 1,755 1,960,926 1,960,926 488,511 6,495 495,006 605,823 4,905 610,728 28,374,251 1,235,335 29,609,586 4,081,391 4,081,391 3,041,373 3,041,373 14,757,427 14,757,427 4,069,890 4,069,890 985,786 985,786 1,088,484 1,088,484 1,827,814 1,827,814 309,512 309,512 28,087,407 2,074,270 30,161,677 286,844 (838,935 (552,091 10,084 885,856 895,940 (4,228,256) (18,084) (4,246,340) (79,165) (79,165) 1,269,000 2,391,720 3,660,720 (3,028,337 3,259,492 231,155 (2,741,493) 2,420,557 (320,936) 20,607,550 2,600,636 23,208,186 17,866,057 5,021,193 22,887,250 The notes to the financial statements are an integral part of this statement. 20 CITY OF MONROE, NORTH CAROLINA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2009 Amounts reported for governmental activities in the statement of activities are different because: EXHIBIT 6 Net change in fund balances total governmental funds (Exhibit 5) (320,936) Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period (Note II.B.). 462,990 Governmental funds report the proceeds from the sale of capital assets as an increase in financial resources. In the statement of activities, only the gain (loss) on the sale of capital assets is reported. Thus, the change in net assets differs from the change in fund balance by the net book value of the capital assets sold. (114,310) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Change in deferred revenue 210,464 The issuance of long -term debt provides current financial resources to governmental funds, while the repayment of the principal of long -term debt consumes the current financial resources of governmental funds. Neither transaction has any effect on net assets in the government -wide statements. Also, governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long -term debt and related items (Note II.B.). (1,834,824) Principal repayment of loan from Electric Fund 79,165 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences (58,942) Net pension obligation 2,792 Self insurance claims payable 686,443 OPEB liability (818,335) (188,042) The internal service fund, determined to be governmental fund type, is used by management to charge the costs, net of investment earnings, of health and dental insurance program. 424,771 The internal service fund, determined to be governmental fund type, is used by management to charge the costs, net of investment earnings, of workers' compensation program. 1,862,722 The internal service fund, determined to be governmental fund type, is used by management to charge the costs, net of investment earnings, of property and liability insurance program. 367,849 Change in net assets of governmental activities (Exhibit 2) 949,849 The notes to the financial statements are an integral part of this statement. 21 CITY OF ci heritage qfprocrress e"') c"I'll CITY OF MONROE, NORTH CAROLINA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL GENERAL FUND For the Year Ended June 30, 2009 EXHIBIT 7 EXPENDITURES Current: General government Transportation Public safety Culture and recreation Debt service: Principal retirement Interest and other charges Total expenditures Revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers from other funds Transfers to other funds Loan payment to general fund Installment purchase obligations issued Total other financing sources (uses) FUND BALANCE APPROPRIATED Net change in fund balance Fund balance, beginning Fund balance, ending The notes to the financial statements are an integral part of this statement. 4,102,980 4,571,723 4,081,391 490,332 Variance with 3,257,695 Budgeted Amounts 216,322 Final Budget 17,571,790 14,757,427 2,814,363 Actual Positive 4,069,890 Original Final Amounts (Negative) REVENUES 309,512 309,512 309,512 Ad valorem taxes 15,181,000 15,670,590 16,090,376 419,786 Other taxes and licenses 559,000 779,000 884,040 105,040 Unrestricted intergovernmental 7,143,500 6,470,205 6,360,071 (110,134) Restricted intergovernmental 1,626,950 1,790,703 1,984,504 193,801 Sales and services 2,224,620 2,224,620 1,960,926 (263,694) Investment earnings 718,500 718,500 488,511 (229,989) Miscellaneous 521,900 544,748 605,823 61,075 Total revenues 27,975,470 28,198,366 28,374,251 175,885 EXPENDITURES Current: General government Transportation Public safety Culture and recreation Debt service: Principal retirement Interest and other charges Total expenditures Revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers from other funds Transfers to other funds Loan payment to general fund Installment purchase obligations issued Total other financing sources (uses) FUND BALANCE APPROPRIATED Net change in fund balance Fund balance, beginning Fund balance, ending The notes to the financial statements are an integral part of this statement. 4,102,980 4,571,723 4,081,391 490,332 3,071,569 3,257,695 3,041,373 216,322 17,385,033 17,571,790 14,757,427 2,814,363 4,993,587 4,527,043 4,069,890 457,153 1,948,133 1,868,968 1,827,814 41,154 309,512 309,512 309,512 31,810,814 32,106,731 28,087,407 4,019,324 (3,835,344 (3,908,365 286,844 4,195,209 50,000 52,000 10,084 (41,916) (3,636,986) (4,609,506) (4,228,256) 381,250 (79,165) (79,165) (79,165) 3,950,890 3,350,890 1,269,000 (2,081,890 284,739 (1,285,781 (3,028,337 (1,742,556 3,550,605 5,194,146 (5,194,146 (2,741,493) (2,741,493 20,607,550 17,866,057 23 CITY OF MONROE, NORTH CAROLINA STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2009 Major Enterprise Water and Sewer Electric Natural Gas ASSETS Current assets: Cash and cash equivalents 19,904,871 30,296,127 23,762,883 Accounts receivable 916,868 3,374,301 1,074,572 Note receivable 420,534 Prepaid expenses 147 398 Inventories 303,264 3,675,604 196,325 Total current assets 21,125,003 37,766,713 25,034,178 Noncurrent assets: Restricted assets: Cash and cash equivalents: Unspent bond proceeds 1,465,333 744,815 11,535,241 Customer deposits 88,937 408,458 184,860 Bond issuance costs 95,645 402,334 1,086,153 Due from other funds 13,995,279 Long -term note receivable 738,368 Capital assets: Land and other non depreciable assets 7,317,672 27,584,796 29,739,694 Other capital assets, net of depreciation 58,999,225 40,466,511 12,825,044 Capital assets (net) 66,316,897 68,051,307 42,564,738 Total noncurrent assets 67,966,812 84,340,561 55,370,992 Total assets 89,091,815 122,107,274 80,405,170 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 901,664 3,502,825 4,976,826 Compensated absences 147,442 81,772 21,041 Installment purchase obligations 176,937 198,897 73,985 General obligation bonds payable 138,584 Revenue bonds payable 483,723 750,703 180,574 State revolving loans payable 827,077 Total current liabilities 2,675,427 4,534,197 5,252,426 Liabilities payable from restricted assets: Customer deposits 88,937 408,458 184,860 Noncurrent liabilities: Due to other funds 6,000,000 Compensated absences 72,621 40,275 10,364 Installment purchase obligations 298,338 340,279 189,981 Certificates of participation 32,665,000 Revenue bonds payable 10,342,141 23,903,189 4,578,139 State revolving loans payable 4,277,755 Other postemployment benefits payable 149,457 58,803 31,851 Total noncurrent liabilities 15,229,249 24,751,004 43,660,195 Total liabilities 17,904,676 29,285,201 48,912,621 NET ASSETS Invested in capital assets, net of related debt 50,002,661 43,897,417 12,427,916 Unrestricted 21,184,478 48,924,656 19,064,633 Total net assets 71,187,139 92,822,073 31,492,549 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net assets of business -type activities The notes to the financial statements are an integral part of this statement. 24 EXHIBIT 8 Funds Nonmajor Enterprise Funds Governmental Activities Internal Service Funds Aquatics and Airport Fitness Center Stormwater Solid Waste Total 6,728,305 1,735,128 215,674 233,730 82,876,718 $2,086,722 41,907 109,631 189,634 5,706,913 1,108,312 420,534 545 68,814 9,932 4,253,939 6,839,026 1,745,060 325,305 423,364 93,258,649 3,195,034 8,765,925 22,511,314 682,255 141,106 1,725,238 13,995,279 738,368 10,590,945 925,594 76,158,701 8,856,772 7,340,810 247,048 128,735,410 19,447,717 8,266,404 247,048 204,894,111 28,354,748 8,266,404 247,048 244,546,565 35,193,774 10,011,464 572,353 423,364 337,805,214 3,195,034 693,089 99,000 20,396 207,307 10,401,107 548,941 23,489 17,179 290,923 46,667 407,885 37,470 941,841 138,584 450,000 1,865,000 827,077 1,189,756 530,374 75,045 207,307 14,464,532 548,941 682,255 6,476,771 180,000 12,656,771 11,569 8,461 143,290 78,470 1,337,767 158,930 2,403,765 32,665,000 12,645,000 51,468,469 4,277,755 26,951 49,002 19,601 335,665 19,227,192 1,398,338 366,992 104,632,970 20,416,948 1,928,712 442,037 207,307 119,097,502 548,941 14,254,795 6,520,751 127,103,540 522,031 1,562,001 130,316 216,057 91,604,172 2,646,093 14,776,826 8,082,752 130,316 216,057 218,707,712 $2,646,093 (9,246 218,698,466 25 CITY OF MONROE, NORTH CAROLINA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For the Year Ended June 30, 2009 OPERATING REVENUES Charges for services Interfund charges and employee contributions Other operating revenues Total operating revenues OPERATING EXPENSES Distribution systems Water filter plant Waste treatment plant Electric power purchases Natural gas purchases Aquatics and Fitness Center operations Airport operations Stormwater operations Solidwaste operations Operating expenses Health benefit claims and premiums Property and liability claims and premiums Depreciation and amortization Total operating expenses Operating income (loss) NONOPERATING REVENUES (EXPENSES) Rate stabilization funds Power agency funding Gain (loss) on sale of capital assets Availability fees Other nonoperating revenues Investment earnings Interest and other charges Total nonoperating revenues (expenses) Income (loss) before contributions and transfers CAPITAL CONTRIBUTIONS CAPITAL GRANTS TRANSFERS FROM OTHER FUNDS TRANSFERS TO OTHER FUNDS Change in net assets Total net assets, beginning Total net assets, ending Major Enterprise Water and Sewer Electric Natural Gas 11,981,361 40,835,772 20,098,966 225,405 89,818 17,174 12,206,766 40,925,590 20,116,140 4,418,454 3,867,178 2,429,173 2,652,687 2,227,830 35,142,149 13,728,374 149,457 58,803 31,851 1,740,238 2,071,887 460,027 11,188,666 41,140,017 16,649,425 1,018,100 (214,427 3,466,715 120,708 511,704 (46,904) 468,520 8,084 39,099 15,711 798,671 1,567,376 300,233 (776,223 (1,130,272 (229,909 452,148 1,108,615 86,035 1,470,248 894,188 3,552,750 527,420 700,000 3,573,347 (3,329,999 (700,000 1,997,668 (1,735,811) 6,426,097 69,189,471 94,557,884 25,066,452 71.187.139 S 92.822.073 S 31.492.549 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net assets of business -type activities The notes to the financial statements are an integral part of this statement. 26 EXHIBIT 9 Nonmajor Enterprise Funds Funds Aquatics and Airport Fitness Center Stormwater Solid Waste Total 1,529,647 3,925,719 822,351 2,747,905 81,941,721 29,343 143,390 33 505,163 1,558,990 4,069,109 822,384 2,747,905 82,446,884 10,714,805 2,652,687 2,227,830 35,142,149 13,728,374 3,301,342 3,301,342 1,994,005 1,994,005 722,651 722,651 2,697,447 2,697,447 26,951 49,002 19,601 335,665 614,428 258,071 58,480 5,203,131 2,635,384 3,608,415 800,732 2,697,447 78,720,086 (1,076,394 460,694 21,652 50,458 3,726,798 120,708 511,704 (46,904) 468,520 62,894 217,474 102,742 5,937 2,992,433 (598,499 (125,312 (2,860,215 (381,025 (22,570 5,937 1,249,140 (1,457,419) 438,124 21,652 56,395 4,975,938 108,664 636,084 153,500 153,500 747,946 159,662 5,180,955 (243,347 (4,273,346 (555,973) 194,777 130,316 216,057 6,673,131 15,332,799 7,887,975 212,034,581 14.776.826 S 8.082.752 S 130,316 S 216.057 218,707,712 (9,246) 218.698.466 Governmental Activities Internal Service Funds 5,138,907 2,782 5,141,689 225,119 4,446,767 313,123 T,I UJ,VVI 156,680 46,624 V,V 203,304 2,442,789 2,646,093 2.646.093 27 CITY OF MONROE, NORTH CAROLINA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30, 2009 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers Cash paid for goods and services Cash paid to or on behalf of employees for services Customer deposits received Customer deposits returned Transfers from General fund Other operating revenues Water and Sewer Major Enterprise Electric Natural Gas Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Advances from (to) other funds Transfers from other funds Transfers to other funds Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from issuance of long -term debt Acquisition and construction of capital assets Note receivable collected Due from other funds received Capital contributions Federal Grants Principal paid on bond maturities and equipment obligations Interest paid on bond maturities and equipment obligations Rate stabilization funds Power agency funds Availability fees Bond issuance costs Net cash used by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Earnings on investments Net increase (decrease) in cash and cash equivalents Balances, beginning 11,954,182 41,645,481 20,467,605 (5,135,890) (40,125,762) (12,198,335) (3,656,138) (1,339,187) (614,283) 50,809 244,498 91,045 (82,769) (447,554) (158,700) 233,489 128,917 32,885 120,708 3,363,683 106,393 7,620,217 468,520 (12,656,771) 6,000,000 700,000 3,573,347 (3,329,999 (700,000 (15,286,770 8,873,347 97,500 161,100 32,420,247 (6,068,128) (11,245,226) (25,492,180) 420,534 79,165 (2,057,005) (364,821) (142,397) (761,809) (1,127,689) (224,060) 120,708 511,704 468,520 (689,555 (8,320,922 (11,444,525 5,872,055 798,671 1,567,376 300,233 (4,158,568) (25,057,526) 22,665,852 25,617,709 56,506,926 12,817,132 Balances, ending 21,459,141 31,449,400 35,482,984 Noncash investing, capital and financing activities: The City received noncash capital contributions in the Water and Sewer Fund in the amount of $527,420 and $108,664 in the Stormwater Fund representing donated capital assets. The net book value of assets disposed in the Water and Sewer Fund amounted to $46,904, with no proceeds received. The notes to the financial statements are an integral part of this statement. 28 Funds Aquatics and Airport Fitness Center Nonmajor Enterprise Funds Stormwater Solid Waste Total EXHIBIT 10, Continued Governmental Activities Internal Service Funds 1,542,923 3,964,866 712,720 2,558,272 82,846,049 4,031,434 (945,046) (1,727,786) (358,725) (2,490,140) (62,981,684) (4,436,068) (503,735) (1,623,578) (317,890) (8,054,811) 386,352 (689,023) 2,442,789 29,343 143,390 33 568,057 1,943 123,485 756,892 36,138 68,132 12,074,940 4( 02,691 6,476,771 180,000 747,946 159,662 5,180,955 (243,347) (4,273,346) 7,224,717 (243,347) 180,000 159,662 907,609 49,000 196,400 32,924,247 (3,893,267) (196,864) (46,895,665) 420,534 79,165 153,500 153,500 (35,936) (1,822,560) (4,422,719) (598,499) (125,308) (2,837,365) 120,708 511,704 468,520 (689,555 (4,325,202 (1,947,868 (464 (20,166,926 217,474 102,742 5,936 2,992,432 46,624 3,240,474 (1,331,581) 215,674 233,730 (4,191,945) 2,086,722 12,253,756 3,066,709 110,262,232 15,494,230 1,735,128 215,674 233,730 106,070,287 2,086,722 29 CITY OF MONROE, NORTH CAROLINA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30, 2009 Major Enterprise Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization Other revenues Changes in assets and liabilities: (Increase) decrease in accounts receivable (Increase) decrease in inventories (Increase) decrease in prepaid expenses Increase (decrease) in accounts payable and accrued liabilities Increase in customer deposits Increase (decrease) in net OPEB liability Increase (decrease) in compensated absences Total adjustments Net cash provided (used) by operating activities The notes to the financial statements are an integral part of this statement. Water and Sewer Electric Natural Gas 1,018,100 (214,427 3,466,715 1,740,238 2,071,887 460,027 8,084 39,099 15,711 (27,179) 809,709 368,635 46,360 (50,872) (16,874) (147) (398) 454,820 (2,422,037) 3,358,221 (31,960) (203,056) (67,651) 149,457 58,803 31,851 5,763 17,434 3,980 2,345,583 320,820 4,153,502 3,363,683 106,393 7,620,217 30 EXHIBIT 10 Airport Funds Aquatics and Fitness Center Stormwater Solid Waste Total Governmental Activities Internal Service Funds (1,076,394 460,694 21,652 50,459 3,726,799 156,680 614,428 258,071 58,480 5,203,131 62,894 13,276 39,147 (109,631) (189,634) 904,323 (1,108,312) 42,199 (1,711) 19,102 (545) 503,025 (47,631) 46,036 207,307 2,099,741 548,941 (302,667) 26,951 49,002 19,601 335,665 (680 26,497 1,199,879 296,198 14,486 17,673 8,348,141 559,371) 123,485 756,892 36,138 68,132 12,074,940 (402,691 31 CITY OF MONROE, NORTH CAROLINA NOTES TO THE FINANCIAL STATEMENTS June 30, 2009 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Monroe and its discretely presented component units conform to generally accepted accounting principles as applicable to governments. The following is a summary of the more significant accounting policies: A. Reporting Entity The City of Monroe is a municipal corporation that is governed by an elected mayor and a six member council. As required by generally accepted accounting principles, these financial statements present the City and its component units, legally separate entities for which the City is financially accountable. The discretely presented component units presented below are reported in a separate column in the City's financial statements in order to emphasize that they are legally separate from the City. City of Monroe ABC Board The members of the City of Monroe ABC Board's governing board are appointed by the City. In addition, the ABC Board is required by State statute to distribute a portion of its surpluses to the General Fund of the City. The ABC Board, which has a June 30 year end, is presented as if it were a proprietary fund (discrete presentation). Complete financial statements for the ABC Board may be obtained from the entity's administrative offices at City of Monroe ABC Board, 1771 Dickerson Boulevard, Monroe, North Carolina 28110. City of Monroe Tourism Development Authority The members of the City of Monroe Tourism Development Authority's governing board are appointed by the City. In addition, the Authority is required by its charter to distribute 67% of its net tax revenues to the General Fund of the City for the purpose of tourism development. The Tourism Development Authority, which has a June 30 year end, is presented as if it were a general government fund (discrete presentation). Complete financial statements for the Authority may be obtained from the entity's administrative offices at City of Monroe Tourism Development Authority, 300 West Crowell Street, Monroe, North Carolina 28112. B. Basis of Presentation Government -wide Statements: The statement of net assets and the statement of activities display information about the primary government and its component units. These statements include the financial activities of the overall government. Eliminations have been made to minimize the double counting of internal activities. The statements distinguish between the governmental and business -type activities of the City. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non exchange transactions. Business -type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for the different business -type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the City's funds. Separate statements for each fund category governmental and proprietary are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate 32 column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies result from non- exchange transactions. Other nonoperating revenues are ancillary activities such as investment earnings. The City reports the following major governmental fund: General Fund. The General Fund is the general operating fund of the City. The General Fund accounts for all financial resources except those that are required to be accounted for in another fund. The primary revenue sources are ad valorem taxes, federal and State grants, and various other taxes and licenses. The primary expenditures are for public safety, street maintenance and construction, sanitation services, culture and recreation activities, and general government services. The City reports the following major enterprise funds: Water and Sewer Fund. This fund is used to account for the activities associated with the production, distribution and transmission of potable water and the activities associated with operating and maintaining the City's sewer and surface drainage systems. Electric Fund. This fund is used to account for the activities associated with the distribution and transmission of electricity by the City to its users. Natural Gas Fund. This fund is used to account for the activities associated with the distribution of natural gas by the City to its users. Airport Fund. This fund is used to account for the activities associated with the operation of the City's Airport. C. Measurement Focus and Basis of Accounting In accordance with North Carolina General Statutes, all funds of the City are maintained during the year using the modified accrual basis of accounting. Government -wide and Proprietary Fund Financial Statements. The government -wide and proprietary financial statements are reported using the economic resources measurement focus. The government -wide and proprietary fund financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. 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. 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 enterprise funds are charges to customers for sales and services. The City also recognizes as operating revenue the portion of fees intended to recover the cost of connecting new or reconnecting current customers to the water and sewer system. 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 meeting this definition are reported as nonoperating revenues and expenses. 33 Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long -term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long- term debt and acquisitions under capital leases are reported as other financing sources. The City considers all revenues available if they are collected within 90 days after year -end, except for property taxes. Ad valorem taxes receivable are not accrued as a revenue because the amount is not susceptible to accrual. At June 30, taxes receivable are materially past due and are not considered to be an available resource to finance the operations of the current year. Also, as of January 1, 1993, State law altered the procedures for the assessment and collection of property taxes on registered motor vehicles in North Carolina. Effective with this change in the law, Union County is responsible for billing and collecting the property taxes on registered motor vehicles on behalf of all municipalities and special tax districts in the County, including the City of Monroe. For these motor vehicles registered under the staggered system, property taxes are due the first day of the fourth month after the vehicles are registered. The billed taxes are applicable to the fiscal year in which they become due. Therefore, the City's vehicle taxes for vehicles registered in Union County from March 2008 through February 2009 apply to the fiscal year ended June 30, 2009. Uncollected taxes that were billed during this period are shown as a receivable in these financial statements and are offset by deferred revenues. Sales taxes and certain intergovernmental revenues, such as the utilities franchise tax, collected and held by the State at year -end on behalf of the City are recognized as revenue. Intergovernmental revenues and sales and services are not susceptible to accrual because generally they are not measurable until received in cash. Grant revenues which are unearned at year -end are recorded as unearned revenues. Under the terms of grant agreements, the City funds certain programs by a combination of specific cost reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the City's policy to first apply cost reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues. As permitted by generally accepted accounting principles, the City, the City of Monroe ABC Board, and the Monroe Tourism Authority have elected to apply only applicable FASB Statements and Interpretations issued on or before November 30, 1989 that do not contradict GASB pronouncements in its accounting and reporting practices for its proprietary operations. D. Budgetary Data The City's budgets are adopted as required by the North Carolina General Statutes. An annual budget is adopted for all funds except those which operate under project ordinances. All annual appropriations lapse at fiscal year -end. Project ordinances are adopted for the Capital Projects Funds, two Special Revenue Project Funds, (the City Grant Programs Fund and the State Grant Programs Fund), and the Enterprise Capital Projects Funds which are consolidated with their respective operating funds for reporting purposes. All budgets are prepared using the modified accrual basis of accounting. Expenditures may not legally exceed appropriations at the functional level for all annually budgeted funds and at the object level for the multi -year funds. The City's department heads may make transfers of appropriations within a department. Transfers of appropriations between departments require the approval of the City Manager. The legal level of budgetary control is at the functional level for all annually budgeted funds, and any transfers of appropriations between functions require the approval of the City Council. The legal level of budgetary control is at the object level for the funds budgeted by project ordinance, and any transfers of appropriations between objects require the approval of the City Council. The budget ordinance must be adopted by July 1 of the fiscal year or the governing board must adopt an interim budget that covers that time until the annual ordinance can be adopted. 34 E. Assets, Liabilities, and Fund Equity Deposits and Investments All deposits of the City, the ABC Board, and the Tourism Development Authority are made in board designated official depositories and are secured as required by State law [G.S. 159 -31]. The City, ABC Board, and the Tourism Development Authority may designate, as an official depository, any bank or savings association whose principal office is located in North Carolina. Also, the City, the ABC Board, and the Tourism Development Authority may establish time deposit accounts such as NOW and SuperNOW accounts, money market accounts, and certificates of deposit. State law [G.S. 159- 30(c)] authorizes the City, the ABC Board, and the Tourism Development Authority to invest in obligations of the United States or obligations fully guaranteed both as to principal and interest by the United States; obligations of the State of North Carolina; bonds and notes of any North Carolina local government or public authority; obligations of certain non guaranteed federal agencies; certain high quality issues of commercial paper and bankers' acceptances and the North Carolina Capital Management Trust NCCMT). The City's investments are reported at fair value as determined by quoted market prices. The securities of the NCCMT Cash Portfolio, a SEC registered (2a -7) money market mutual fund, are valued at fair values, which is the NCCMT's share price. The NCCMT Term Portfolio's securities are valued at fair value. The City, the ABC Board, and the Tourism Development Authority's investments with a maturity of more than one year at acquisition and non -money market investments are reported at fair value as determined by quoted market prices. The securities of the NCCMT Cash Portfolio, a SEC registered (2a -7) money market mutual fund, are valued at fair value, which is the NCCMT's share price. The NCCMT Term Portfolio's securities are valued at fair value. Money market investments that have a remaining maturity at the time of purchase of one year or less are reported at amortized cost. Non participating interest earning investment contracts are reported at cost. In accordance with State law, the City has invested in securities which are callable and which provide for periodic interest rate increases in specific increments until maturity. These investments are reported at fair value as determined by quoted market prices. 2. Cash and Cash Equivalents The City pools money from several funds to facilitate disbursement and investment and to maximize investment income. Therefore, all cash and investments are essentially demand deposits and are considered cash and cash equivalents. The ABC Board and the Tourism Development Authority consider all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash and cash equivalents. Restricted Assets The unexpended bond proceeds of various enterprise fund serial bonds and unexpended installment financing obligations received by the City are classified as restricted for the enterprise fund and the general fund because their use is completely restricted to the purpose for which the bonds and installment obligations were issued. Customer deposits held by the City before any services are supplied are restricted to the service for which the deposit was collected. 4. Ad Valorem Taxes Receivable In accordance with State Law [G.S. 105 -347 and G.S. 159- 13(a)], the City levies ad valorem taxes on property other than motor vehicles on July 1st, the beginning of the fiscal year. The taxes are due on September 1st (lien date); however, interest does not accrue until the following January 6th. These taxes are based on the assessed values as of January 1, 2008. As allowed by State law, the City has established a schedule of discounts that apply to taxes that are paid prior to the due date. In the City's General Fund ad valorem tax revenues are reported net of such discounts. 35 Allowance for Doubtful Accounts Virtually all ad valorem taxes and accounts receivable are collected, and accordingly, an allowance for uncollectible receivables is not considered material or necessary. An allowance for doubtful accounts has been established for certain loans receivable that historically experience uncollectible accounts. The allowance is estimated by analyzing the percentage of receivables that were written off in prior years. 6. Inventories The inventories of the City and the ABC Board are valued at cost (first -in, first -out), which approximates market. The inventories of the City's general fund and enterprise funds and those of the ABC Board consist of materials and supplies held for subsequent use. The cost of these inventories is expensed when consumed rather than when purchased. 7. Capital Assets Capital assets are defined by the government as assets with an initial, individual cost of more than a certain cost and an estimated useful life in excess of two years. Minimum capitalization costs are as follows: land, $5,000; buildings, improvements, substations, lines, and other plant and distribution systems, $5,000; infrastructure, $100,000; furniture and equipment, $5,000; and vehicles, $5,000. Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated capital assets are recorded at their estimated fair value at the date of donation. General infrastructure assets acquired prior to July 1, 2003 consist of the road network assets that were acquired or that received substantial improvements subsequent to July 1, 1980, and are reported at estimated historical cost using deflated replacement cost. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Capital assets are depreciated using the straight -line method over the following estimated useful lives: Asset Class Estimated Useful Lives Infrastructure 30-50 Buildings and Improvements 20-45 Dams and Reservoirs 45 Plants and Distributions Systems 30-60 Vehicles and Motorized Equipment 6 -12 Other Equipment 5 -15 Capital assets of the ABC Board are depreciated over their useful lives on a straight -line basis as follows: Asset Class Estimated Useful Lives Buildings 40 Office Equipment 5-7 Vehicles 5 Store and Warehouse Equipment 5-7 The Tourism Development Authority had no capital assets at June 30, 2009. 8. Deferred /Unearned Revenues Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources received but not yet earned. 36 9. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight line method that approximates the effective interest method. Bonds payable are reported net of the applicable bond premiums or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 10. Compensated Absences The vacation policy of the City provides for the accumulation of earned vacation leave with such leave being fully vested when earned as follows: Employees hired before July 1, 1992 Vacation leave may be accumulated without any applicable maximum until June 30 each year. However, if the employee separates from service, payment for accumulated vacation leave shall not exceed sixty (60) days. On June 30 of each year, any employee with more than (60) days of accumulated leave shall have the excess accumulation removed so that only sixty (60) days are carried forward to July 1 of the next fiscal year. The remaining excess amount will be converted to sick leave and added to the employee's sick leave balance. Employees hired after July 1, 1992 Vacation leave may be accumulated without any applicable maximum until June 30 of each year. However, if the employee separates from service, payment for accumulated vacation leave shall not exceed two times the employee's annual accrual rate (i.e. if the accrual rate is 15 days per year, the employee may only be paid for 30 days). On June 30 of each year, each employee may only carry over into the new fiscal year two times the employee's annual accrual rate. The remaining excess amount will be converted to sick leave and added to the employee's sick leave balance. Employees of the City of Monroe ABC Board earn two weeks paid vacation each year. Employees must take vacation leave in the year earned and are not allowed to carry forward any vacation time to subsequent years. The Tourism Development Authority had one employee during the year ended June 30, 2009. For the City's government -wide and proprietary funds, an expense and a liability for compensated absences and the salary- related payments are recorded as the leave is earned. The City has assumed a first -in, first out method of using accumulated compensated time. The portion of that time that is estimated to be used in the next fiscal year has been designated as a current liability in the government -wide financial statements. The City and the ABC Board's sick leave policies provide for an unlimited accumulation of earned sick leave. Sick leave does not vest, but any unused sick leave accumulated at the time of retirement may be used in the determination of length of service for retirement benefit purposes. Since neither the City nor the ABC Board has any obligation for the accumulated sick leave until it is actually taken, no accrual for sick leave has been made. 37 11. Net Assets /Fund Balances Net assets in government -wide and proprietary fund financial statements are classified as invested in capital assets, net of related debt; restricted; and unrestricted. Restricted net assets represent constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through state statute. In the governmental fund financial statements, reservations of fund balance represent amounts that cannot be appropriated or are legally segregated for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. State law [G.S. 159- 13(b)(16)] restricts appropriation of fund balance for the subsequent year's budget to an amount not to exceed the sum of cash and investments minus the sum of liabilities, encumbrances, and deferred revenues arising from cash receipts as those amounts stand at the close of the fiscal year preceding the budget year. The governmental fund types classify fund balances as follows: Reserved: Reserved for encumbrances portion of fund balance available to pay for commitments related to purchase orders or contracts which remain unperformed at year end. Reserved by State statute portion of fund balance, in addition to reserves for encumbrances, which is not available for appropriation under State law [G.S. 159- 8(a)]. This amount is usually comprised of accounts receivable and interfund receivables which have not been offset by deferred revenues. Reserved for streets Powell Bill portion of fund balance that is available for appropriation but legally segregated for street construction and maintenance expenditures. This amount represents the balance of the total unexpended Powell Bill funds. Unreserved: Designated portion of total fund balance available for appropriation that has been designated for special purposes, such as: Subsequent year's expenditures designated for the adopted 2009 -2010 budget ordinance. Undesignated portion of total fund balance available for appropriation that is uncommitted at year -end. 12. Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures /expenses during the reporting period. Actual results could differ from those estimates. 13. Other Resources The General Fund provides the basis of local resources for other governmental funds. These transactions are recorded as "Transfers to other funds" in the General Fund and "Transfers from other funds" in the receiving fund. 38 II. RECONCILIATION OF GOVERNMENT -WIDE AND FUND FINANCIAL STATEMENTS A. Explanation of certain differences between the governmental fund balance sheet and the government -wide statement of net assets The governmental fund balance sheet includes reconciliation between fund balance total governmental funds and net assets governmental activities as reported in government -wide statement of net assets. One element of that reconciliation explains that "long -term liabilities, including installment purchase obligations, are not due and payable in the current period and therefore are not reported in the funds." The details of this $11,974,135 difference are as follows: Installment purchase obligations 9,656,258 Compensated absences 1,499,542 Net OPEB liability 818,335 Net adjustment to reduce fund balance total governmental funds to arrive at net assets governmental activities 11,974,135 III. B. Explanation of certain differences between the governmental fund statement of revenues, expenditures, and changes in fund balances and the government -wide statement of activities The government fund statement of revenues, expenditures, and changes in fund balances includes reconciliation between net change in fund balances total governmental funds and change in net assets of governmental activities as reported in the government -wide statement of activities. One element of that reconciliation explains that "Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense." The details of this $462,990 difference are as follows: Capital outlay Contributed capital non -cash additions Depreciation expense 2,618,983 1,951,708 (4,107,701) Net adjustment to increase net change in fund balances total governmental funds to arrive at change in net assets ofgovernmental activities 462,990 Another element of that reconciliation states that "the issuance of long -term debt provides current financial resources to governmental funds, while the repayment of the principal of long -term debt consumes the current financial resources of governmental funds. Neither transaction has any effect on net assets." The details of this $(1,834,824) are as follows: Debt issued or incurred: Installment purchase obligations Principal payments: Installment purchase obligations (3,660,720) 1,825,896 Net adjustment to decrease net change in fund balances total governmental funds to arrive at change in net assets ofgovernmental activities 1,834,824) DETAIL NOTES ON ALL FUNDS A. Assets Deposits All of the deposits of the City, the ABC Board, and the Tourism Development Authority are either insured 39 or collateralized by using one of two methods. Under the Dedicated Method, all deposits that exceed the federal depository insurance coverage level are collateralized with securities held by the City's, the ABC Board's, or the Tourism Development Authority's agents in these units' names. Under the Pooling Method, which is a collateral pool, all uninsured deposits are collateralized with securities held by the State Treasurer's agent in the name of the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity for the City, the ABC Board, and the Tourism Development Authority, these deposits are considered to be held by the City's, the ABC Board's, and the Tourism Development Authority's agents in their names. The amount of the pledged collateral is based on an approved averaging method for non- interest bearing deposits and the actual current balance for interest bearing deposits. Depositories using the Pooling Method report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits. The State Treasurer does not confirm this information with the City, the ABC Board, the Tourism Development Authority, or the escrow agent. Because of the inability to measure the exact amount of collateral pledged for the City, the ABC Board, and the Tourism Development Authority under the Pooling Method, the potential exists for under- collateralization, and this risk may increase in periods of high cash flows. However, the State Treasurer of North Carolina enforces strict standards of financial stability for each depository that collateralizes public deposits under the Pooling Method. The City, the ABC Board and the Tourism Development Authority do not have formal policies regarding custodial credit risk for deposits, but rely on the State Treasurer to enforce standards of minimum capitalization for all pooling method financial institutions and to monitor them for compliance. The City, the ABC Board and the Tourism Development Authority comply with the provisions of G.S. 159 -31 when designating official depositories and verifying that deposits are properly secured. At June 30, 2009 the City's deposits had a carrying amount of $5,184,255 and a bank balance of $5,463,781. In addition, there was $24,969,217 in an escrow account with a trustee of unspent bond proceeds. Of the bank balance, $565,988 was covered by federal depository insurance and the remainder was covered by collateral held under the Pooling Method. The City's petty cash fund totaled $4,885. At June 30, 2009 the ABC Board's deposits had a carrying amount of $459,446 and a bank balance of $459,507. Of the bank balance, $250,000 was covered by federal depository insurance, and $209,507 was covered by collateral held under the Pooling Method. The ABC Board's petty cash fund totaled $3,900. At June 30, 2009, the Tourism Development Authority's deposits had a carrying amount of $188,111 and a bank balance of $188,111. The entire balance was covered by federal depository insurance. 2. Investments As of June 30, 2009, the City had the following investments and maturities: Investment Type U.S. Government Agencies NC Capital Management Trust Cash Portfolio NC Capital Management Trust Term Portfolio Total Fair Value 58,956,818 38,638,249 323,142 97,918,209 1 -3 3 -5 1 Year Years Years 38,029,299 20,927,519 N/A N/A N/A 323,142 Interest Rate Risk. The City does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. The City has no formal policy regarding credit risk, but has internal management procedures that limits the City's investments to the provisions of G.S. 159 -30 and restricts the purchase of securities to the highest possible ratings whenever particular types of securities are rated. The investment in U.S. Government Agencies (Federal Home Loan Bank) is rated AAA by Standard and Poor's and Aaa by 40 Moody's Investors Service. The City's investment in the NC Capital Management Trust Cash Portfolio carried a credit rating of AAAm by Standard and Poor's as of June 30, 2009. The City's investment in the NC Capital Management Trust Term Portfolio is unrated. The Term Portfolio is authorized to invest in obligations of the U.S. government and agencies, and in high grade money market instruments as permitted under North Carolina General Statutes 159 -30 as amended. Custodial Credit Risk. For an investment, the custodial risk is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City has no policy on custodial credit risk. Concentration of Credit Risk. The City's Board places no limit on the amount that the City may invest in any one issuer. More than 5 percent of the City's investments are in Federal Home Loan Bank securities. This investment is 16.1% of the City's total investments. In addition, the City had 39.5% of its investment portfolio in the NCCMT cash portfolio at June 30, 2009. Note Receivable The City granted a promissory note in the amount of $404,921 to an electric customer to reimburse the cost and installation of equipment during the fiscal year 2006. The remaining balance of the promissory note is payable in quarterly installments of $20,963 through August 2010. The note calls for interest to be paid quarterly at the applicable prime rate. Principal collections on the note receivable for the fiscal year ended totaled $83,853. The note is secured by equipment. 2009 Total Receivable 104,816 Less Current Portion 83,853 Total Note Receivable Noncurrent 20,963 Scheduled future maturities of the note receivable are as follows: 2010 83,853 2011 20,963 104,816 The City granted a promissory note in the amount of $1,730,070 to an electric customer to reimburse the cost and installation of equipment during the fiscal year 2007. The remaining balance of the promissory note is payable in monthly installments. Due to the nature of the terms agreed upon the payment amounts will vary and are unpredictable. The monthly payment amount is determined as follows: Each month electric charges will be calculated based on the LICPNC rate (LICPNC Bill) and electric charges will be calculated based on the LICPNC rate assuming peak generation had not been used (LICPNC Bill No Generation). The difference in these rate calculations (i.e. LICPNC Bill No Generation LICPNC Bill) will be used to fund the City's recovery of one half of the installed cost of the generation. The customer's monthly bill will equal the LICPNC Bill plus one half of the difference in the LICPNC Bill No Generation and the LICPNC Bill. At the current rate of payment it is estimated that the note will be repaid in full during fiscal year 2013. The agreement is non interest bearing and is secured by equipment. 2009 Total receivable 1,054,086 Current portion 336,681 Total Note Receivable Noncurrent 717,405 Future payments of the note receivable can vary based on the customers electricity usage. The current portion has been calculated based on payments received during the year ended June 30, 2009. 41 4. Receivables Allowance for Doubtful Accounts The amounts presented in the Balance Sheet and the Statement of Net Assets are net of the following allowances for doubtful accounts: Special Revenue Fund Loans Receivable 24,615 5. Capital Assets Primary Government Capital asset activity for the primary government for the year ended June 30, 2009, was as follows: Beginning Ending Balances Increases Decreases Balances Governmental activities: Capital assets not being depreciated: Land and land improvements 4,171,465 202,928 4,374,393 Construction in progress 3,517,145 1,088,486 2,208,919 2,396,712 Total capital assets not being depreciated 7,688,610 1,291,414 2,208,919 6,771,105 Capital assets being depreciated: Buildings and improvements 16,102,301 948,040 39,700 17,010,641 Equipment 3,650,231 391,944 57,710 3,984,465 Vehicles and motorized equipment 12,729,789 1,408,621 812,787 13,325,623 Infrastructure 82,886,892 3,059,878 85,946,770 Total capital assets being depreciated 115,369,213 5,808,483 910,197 120,267,499 Less accumulated depreciation for: Buildings and improvements Equipment Vehicles and motorized equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net 6,201,111 428,737 39,700 6,590,148 2,121,678 270,445 52,067 2,340,056 7,780,763 1,340,905 383,835 8,737,833 25,666,272 2,067,614 27,733,886 41,769,824 4,107,701 475,602 45,401,923 73,599,389 74,865,576 81,287,999 81,636,681 Depreciation expense was charged to functions /programs of the primary government as follows: General government Transportation Public safety Culture and recreation Economic and physical development Total depreciation expense 232,963 2,356,631 1,113,557 399,976 4,574 4,107,701 E Beginning Ending Business -type activities: Water and Sewer Fund Capital assets not being depreciated: Land and land improvements 662,216 662,216 Construction in progress 1,351,377 5,955,009 650,930 6,655,456 Total capital assets not being depreciated 2,013,593 5,955,009 650,930 7,317,672 Capital assets being depreciated: Buildings and improvements Equipment Vehicles and motorized equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation for: Buildings and improvements Equipment Vehicles and motorized equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net 59,490,830 22,879,384 22,879,384 2,529,413 191,236 2,720,649 2,863,633 97,583 74,882 2,886,334 53,121,985 1,002,648 54,124,633 81,394,415 1,291,467 74,882 82,611,000 Construction in progress 16,378,972 9,642,224 8,918,925 486,380 9,405,305 1,327,186 159,842 1,487,028 2,110,054 161,220 27,978 2,243,296 9,547,420 928,726 10,476,146 21,903,585 1,736,168 27,978 23,611,775 58,999,225 Water and Sewer Fund capital assets, net 61,504,423 66,316,897 Electric Fund Capital assets not being depreciated: Land and land improvements 4,408,506 4,408,506 Construction in progress 16,378,972 9,642,224 2,844,906 23,176,290 Total capital assets not being depreciated 20,787,478 9,642,224 2,844,906 27,584,796 Capital assets being depreciated: Buildings and improvements 122,489 122,489 Equipment 4,431,972 64,895 4,496,867 Vehicles and motorized equipment 1,682,695 270,941 22,716 1,930,920 Infrastructure 55,525,766 4,112,070 59,637,836 Total capital assets being depreciated 61,762,922 4,447,906 22,716 66,188,112 Less accumulated depreciation for: Buildings and improvements 63,550 2,628 66,178 Equipment 1,677,911 386,759 2,064,670 Vehicles and motorized equipment 1,206,614 172,566 22,716 1,356,464 Infrastructure 20,745,945 1,488,344 22,234,289 Total accumulated depreciation 23,694,020 2,050,297 22,716 25,721,601 Total capital assets being depreciated, net 38,068,902 40,466,511 Electric Fund capital assets, net 58,856,380 68,051,307 Natural Gas Fund Capital assets not being depreciated: Land and land improvements 69,580 69,580 Construction in progress 4,656,160 25,793,366 779,412 29,670,114 Total capital assets not being depreciated 4,725,740 25,793,366 779,412 29,739,694 43 Less accumulated depreciation for: Buildings and improvements Beginning 252,138 2,081,389 Ending 28,447 Balances Increases Decreases Balances 1,873 7,666 Total accumulated depreciation Capital assets being depreciated: 258,070 2,121,561 Total capital assets being depreciated, net 7,598,880 Buildings and improvements 543,152 543,152 Equipment 236,432 15,990 252,422 Vehicles and motorized equipment 614,288 102,164 15,402 701,050 Infrastructure 15,478,183 360,074 15,838,257 Total capital assets being depreciated 16,872,055 478,228 15,402 17,334,881 Less accumulated depreciation for: Total capital assets not being depreciated 8,905,557 4,427,105 2,741,717 10,590,945 Buildings and improvements 102,333 11,939 114,272 Equipment 125,566 15,201 140,767 Vehicles and motorized equipment 376,270 47,024 15,402 407,892 Infrastructure 3,481,178 365,728 3,846,906 Total accumulated depreciation 4,085,347 439,892 15,402 4,509,837 Total capital assets being depreciated, net 12,786,708 12,825,044 Natural Gas Fund capital assets, net 17,512,448 42,564,738 Aquatics and Fitness Center Fund Capital assets not being depreciated: Land and land improvements 925,594 925,594 Construction in progress 398,269 398,269 Total capital assets not being depreciated 925,594 398,269 398,269 925,594 Capital assets being depreciated: Buildings and improvements 9,386,103 9,386,103 Equipment 63,988 63,988 Vehicles and motorized equipment 12,280 12,280 Total capital assets being depreciated 9,462,371 9,462,371 Less accumulated depreciation for: Buildings and improvements 1,829,251 252,138 2,081,389 Equipment 28,447 4,059 32,506 Vehicles and motorized equipment 5,793 1,873 7,666 Total accumulated depreciation 1,863,491 258,070 2,121,561 Total capital assets being depreciated, net 7,598,880 7,340,810 Aquatics and Fitness Center Fund capital assets, net 8,524,474 8,266,404 Airport Fund Capital assets not being depreciated: Land and land improvements 7,082,044 582,922 7,664,966 Construction in progress 1,823,513 3,844,183 2,741,717 2,925,979 Total capital assets not being depreciated 8,905,557 4,427,105 2,741,717 10,590,945 Capital assets being depreciated: Buildings and improvements 11,928,034 2,158,794 14,086,828 Equipment 456,339 456,339 Vehicles and motorized equipment 212,756 49,085 261,841 Total capital assets being depreciated 12,597,129 2,207,879 14,805,008 44 Beginning Less accumulated depreciation for: Buildings and improvements Equipment Vehicles and motorized equipment Total accumulated depreciation Total capital assets being depreciated, net Airport Fund capital assets, net Stormwater Fund Capital assets being depreciated: Equipment Vehicles and motorized equipment Total capital assets being depreciated Less accumulated depreciation for: Equipment Vehicles and motorized equipment Total accumulated depreciation Total capital assets being depreciated, net Stormwater Fund capital assets, net Ending Decreases Balances 5,182,404 519,408 79,762 55,209 80,109 31,344 5,342,275 605,961 7,254,854 7,744,204 16,160,411 64,824,551 5,546 517,495 523,059 5,701,812 134,971 111,453 5,948,236 8,856,772 19,447,717 5,564 517,495 523,059 397 397 275,614 275,614 276,011 276,011 247,048 247,048 Business -type activities capital assets, net 162,558,136 204,894,111 Construction commitments The government has active construction projects as of June 30, 2009. At year end, the government's commitments with contractors are as follows: Spent -to- Remaining Projects Date Commitment Governmental Capital Projects Enterprise Water and Sewer Electric Natural Gas Airport Total 2,396,712 2,193,097 6,655,456 2,347,792 23,176,289 2,510,300 29,670,117 12,009,3 86 2,925,977 7,744,204 64,824,551 26,804,779 Discretely presented component units Capital asset activity for the ABC Board for the year ended June 30, 2009, was as follows: Beginning Ending Balances Increases Decreases Balances Capital assets not being depreciated: Land and land improvements 317,013 317,013 45 Capital assets being depreciated: Buildings and improvements Equipment Vehicles and motorized equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and improvements Equipment Vehicles and motorized equipment Total accumulated depreciation Total capital assets being depreciated, net Discretely Presented Component Unit capital assets, net 1,020,104 3,260 1,023,364 105,991 8,239 114,230 15,830 15,830 1,141,925 11,499 1,153,424 255,714 25,458 281,172 82,529 7,423 89,952 15,830 15,830 354,073 32,881 386,954 787,852 (21,382) 766,470 1,104,865 (21,382) 1,083,483 The Tourism Development Authority had no capital assets. B. Liabilities 1. Accounts Payable and Accrued Liabilities Payables at the government -wide level at June 30, 2009, were as follows: Governmental activities: General Fund Nonmajor Funds Total governmental activities Business -type activities: Enterprise Funds Salaries and Vendors Benefits Other Total 576,039 18,658 594,697 62,468 62,468 638,507 18,658 657,165 10,401,107 10,401,107 Component units' payables at June 30, 2009, were as follows: Salaries and Vendors Benefits ABC Board 377,323 Tourism Development Authority 41 2. Pension Plan Obligations a. Local Governmental Employees' Retirement System Other Total 377,323 41 Plan Description. The City of Monroe and the ABC Board contribute to the statewide Local Governmental Employees' Retirement System LGERS), a cost sharing multiple employer defined benefit pension plan administered by the State of North Carolina. LGERS provides retirement and disability benefits to plan members and beneficiaries. Article 3 of G.S. Chapter 128 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. The Local Governmental Employees' Retirement System is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. The State's CAFR includes financial statements and required supplementary information for LGERS. That report may be obtained by writing to the Office of the State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699 -1410, or by calling (919) 981 -5454. Funding Policy. Plan members are required to contribute six percent of their annual covered salary. The City and the ABC Board are required to contribute at an actuarially determined rate. For the City, the Ero current rate for employees not engaged in law enforcement and for law enforcement officers is 4.89% and 4.86 respectively, of annual covered payroll. For the ABC Board, the current rate for employees not engaged in law enforcement is 5.02% of annual covered payroll. The contribution requirements of members and of the City of Monroe and the ABC Board are established and may be amended by the North Carolina General Assembly. The City's contributions to LGERS for the years ended June 30, 2009, 2008, and 2007, were $1,058,105, $990,287, and $929,488, respectively. The ABC Board's contributions to LGERS for the years ended June 30, 2009, 2008, and 2007 were $13,394, $15,096, and $14,892, respectively. The contributions made by the City and the ABC Board equaled the required contributions for each year. b. Law Enforcement Officers' Special Separation Allowance 1. Plan Description. The City of Monroe administers a public employee retirement system (the "Separation Allowance a single employer defined benefit pension plan that provides retirement benefits to the City's qualified sworn law enforcement officers. The Separation Allowance is equal to .85 percent of the annual equivalent of the base rate of compensation most recently applicable to the officer for each year of creditable service. The retirement benefits are not subject to any increases in salary or retirement allowances that may be authorized by the General Assembly. Article 12D of G.S. Chapter 143 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. All full time law enforcement officers of the City are covered by the Separation Allowance. At December 31, 2007, the Separation Allowance's membership consisted of: Retirees receiving benefits 12 Terminated plan members entitled to but not yet receiving benefits Active plan members 82 Total 94 A separate report was not issued for the plan. 2. Summary of Significant Accounting Policies: Basis of Accounting. The City has chosen to fund the Separation Allowance on a pay as you go basis. Pension expenditures are made from the General Fund, which is maintained on the modified accrual basis of accounting. Method Used to Value Investments. No funds are set aside to pay benefits and administration costs. These expenditures are paid as they come due. 3. Contributions. The City is required by Article 12D of G. S. Chapter 143 to provide these retirement benefits and has chosen to fund the benefit payments on a pay as you go basis through appropriations made in the General Fund operating budget. The City's obligation to contribute to this plan is established and may be amended by the North Carolina General Assembly. There were no contributions made by employees. The annual required contribution for the current year was determined as part of the December 31, 2007 actuarial valuation using the projected unit credit actuarial cost method. The actuarial assumptions included (a) 7.25% investment rate of return (net of administrative expenses) and (b) projected salary increases of 4.5% to 12.3% per year. Both (a) and (b) included an inflation component of 3.75 The assumptions did not include post employment benefit increases. The unfunded actuarial accrued liability is being amortized as a level percentage of pay on a closed basis. The remaining amortization period at December 31, 2007 was 23 years. EWl Annual Pension Cost and Net Pension Obligation. The City's annual pension cost and net pension obligation (prepayment) to the Separation Allowance for the current year were as follows: Annual required contribution 164,695 Interest on net pension obligation (9,377) Adjustment to annual required contribution 7,907 Annual pension cost 163,225 Contributions made 166,017 Decrease in net pension obligation (2,792) Net pension obligation, beginning of year (129,331) Net prepaid pension obligation, end of year (132,123) 3 Year Trend Information For Year Annual Pension Percentage of Net Pension Ended Cost APC Obligation June 30 (APC) Contributed (Prepayment) 2007 134,652 138.88% (117,604) 2008 142,457 108.23% (129,331) 2009 163,225 101.71% (132,123) 4. Funded Status and Funding Progress As of December 31, 2008, the most recent actuarial valuation date, the plan was not funded. The actuarial accrued liability for benefits and the unfunded actuarial accrued liability (UAAL) was $1,703,401. The covered payroll (annual payroll of active employees covered by the plan) was $3,933,354, and the ratio of the UAAL to the covered payroll was 43.31 The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Supplemental Retirement Income Plan Law Enforcement Officers Plan Description. The City contributes to the Supplemental Retirement Income Plan (Plan), a defined contribution pension plan administered by the Department of State Treasurer and a Board of Trustees. The Plan provides retirement benefits to law enforcement officers employed by the City. Article 5 of G.S. Chapter 135 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. Funding Policy. Article 12E of G. S. Chapter 143 requires the City to contribute each month an amount equal to five percent of each officer's salary, and all amounts contributed are vested immediately. Also, the law enforcement officers may make voluntary contributions to the plan. Contributions for the year ended June 30, 2009, were $264,893 which consisted of $204,392 from the City and $60,501 from the law enforcement officers. General Employees The City has elected to contribute to the Supplemental Retirement Income Plan for general employees as well as for law enforcement officers. Participation begins after six months of employment. The City has elected to contribute each month an amount equal to five percent of each employee's salary, and all amounts contributed are vested immediately. Also, the employees may make voluntary contributions to the plan. Contributions for the year ended June 30, 2009, were $1,184,830, which consisted of $849,703 from the City and $335,127 from the employees. Ell d. Firemen's and Rescue Squad Workers' Pension Fund Plan Description. The State of North Carolina contributes, on behalf of the City of Monroe, to the Firemen's and Rescue Squad Workers' Pension Fund (Fund), a cost sharing multiple- employer defined benefit pension plan with a special funding situation administered by the State of North Carolina. The Fund provides pension benefits for eligible fire and rescue squad workers that have elected to become members of the fund. Article 86 of G.S. Chapter 58 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. The Firemen's and Rescue Squad Workers' Pension Fund is included in the Comprehensive Annual Financial Report (CAFR) for the State of North Carolina. The State's CAFR includes financial statements and required supplementary information for the Fund. That report may be obtained by writing to the Office of the State Controller, 1410 Mail Seivice Center, Raleigh, North Carolina 27699 -1410, or by calling (919) 981 -5454. Funding Policy. Plan members are required to contribute $10 per month to the Fund. The State, a non- employer contributor, funds the plan through appropriations. The City does not contribute to the Fund. Contribution requirements of plan members and the State of North Carolina are established and may be amended by the North Carolina General Assembly. On- Behalf Payments. For the fiscal year ended June 30, 2009, the City of Monroe has recognized on- behalf payments for pension contributions made by the state as a revenue and an expenditure of $12,787 for the 47 employed firemen who perform firefighting duties for the City's fire department. The employees elected to be members of the Firemen and Rescue Squad Worker's Pension Fund. C. Other Post employment Benefits Healthcare Benefits 1. Plan Description Under the terms of a City resolution, the City administers a single employer Health and Dental Care Plan. This plan provides postemployment healthcare and dental benefits to retirees of the City provided they participate in the North Carolina Local Government Employees' Retirement System and have twenty (20) years of creditable service with the City. The amount the City pays towards these benefits is based on years of service with the City. The City pays the full cost of coverage for these benefits through private insurers. 2. Funding Policy Employees with 20 to 25 years of service the City pays 50% and 75% of the cost of health and dental insurance, respectively. Employees with 30 years of service the City pays 100% of the cost of health and dental insurance. In addition, retirees with 30 years of service receive $5,500 of life insurance coverage. When a retiree reaches age 65, they are transferred to the Medicare Supplement Group Plan and Part D Group Plan at the above referenced percentage of cost based on years of service. At that time, any dependents covered are offered COBRA coverage. E91 Membership of the Health Care Plan consisted of the following at July 1, 2007: Retirees and dependents receiving benefits Terminated plan members entitled to but not yet receiving benefits All Employees 78 Active plan members 425 Total 503 The current ARC rate is 8.03% of annual covered payroll. For the current year, the City contributed $348,000 or 1.86% of annual covered payroll. For the year ended June 30, 2009, the City made payments for postretirement health benefit premiums of $302,410. The City's obligation to contribute to Health Care Plan is established and may be amended by the City Council. Summary of Significant Accounting Policies Postemployment expenditures are made from the Health and Dental Self- Insurance Fund. No funds are set aside to pay benefits and administration costs. These expenditures are paid as they come due. 4. Annual OPEB Cost and Net OPEB Obligation The City's annual OPEB cost (expense) is calculated on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows 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 for the healthcare benefits: Annual required contribution 1,502,000 Interest on net obligation Adjustment to annual required contribution Annual OPEB cost (expense) 1,502,000 Contributions made (348,000) Increase (decrease) in net OPEB obligation 1,154,000 Net OPEB obligation, beginning of year Net OPEB obligation, end of year 1,154,000 The City's annual OPEB costs, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 were as follows: For Year Annual Percentage of Annual Ended June 30 OPEB Cost OPEB Cost Contributed 2009 1,502,000 23.2% Funded Status and Funding Progress Net OPEB Obligation 1,154,000 As of July 1, 2007, the plan was not funded. The actuarial accrued liability for benefits, and, thus the unfunded actuarial accrued liability (UAAL) was $15,877,000. The covered payroll (annual payroll of active employees covered by the plan) was $18,700,000, and the ratio of the UAAL to the covered payroll was 84.9 Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts 50 and assumptions about the probability of occurrence of events far into the future. Examples include factors such as changes in economic or demographic assumptions, increases or decreases expected as part of the natural operation of the methodology used for these measurements (such as the end of an amortization period or additional cost or contribution requirements based on the plan's funded status) and changes in the plan provisions or applicable law. 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 experiences and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 6. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and included the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members at that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value assets, consistent with the long -term perspective of the calculations. In the July 1, 2007 actuarial valuation, the projected until credit cost method was used. The actuarial assumptions included a 4.00 percent investment rate of return, which is the expected long -term investment returns on the employer's own investments calculated based on the funded level of the plan at the valuation date, and an annual medical cost trend increase of 11.00 to 5.00 percent annually. Both rates included a 3.75 percent inflation assumption. The actuarial value of assets, if any, was determined using market value of investments. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at July 1, 2007 was 32 years. 3. Other Employment Benefits The City elected to provide death benefits to employees through the Death Benefit Plan for members of the Local Governmental Employees' Retirement System (Death Benefit Plan), a multiple employer, State administered, cost sharing plan funded on a one -year term cost basis. The beneficiaries of those employees who die in active service after one year of contributing membership in the System, or who die within 180 days after retirement or termination of service and have at least one year of contributing membership service in the System at the time of death are eligible for death benefits. Lump sum death benefit payments to beneficiaries are equal to the employee's 12 highest months salary in a row during the 24 months prior to the employee's death, but the benefit may not exceed $50,000 or be less than $25,000. All death benefit payments are made from the Death Benefit Plan. The City has no liability beyond the payment of monthly contributions. Contributions are determined as a percentage of monthly payroll, based upon rates established annually by the State. Separate rates are set for employees not engaged in law enforcement and for law enforcement officers. Because the benefit payments are made by the Death Benefit Plan and not by the City, the City does not determine the number of eligible participants. For the fiscal year ended June 30, 2009, the City made contributions to the State for death benefits of $21,507. The City's required contributions for employees not engaged in law enforcement and for law enforcement officers represented .09% and .14% of covered payroll, respectively. The contributions to the Death Benefit Plan cannot be separated between the post employment benefit amount and the other benefit amount. The City considers these contributions to be immaterial. 51 4. Deferred /Unearned Revenues The balance in deferred or unearned revenue on the fund statements and unearned revenues on the government -wide statements at year end is composed of the following elements: Deferred Unearned Revenue Revenue Property taxes receivable General 997,889 Nonmajor governmental 2,774 Privilege license receivable: General 47,146 Loans receivable: Nonmajor governmental 20,296 Special vehicle tax receivable: General 32,378 Code enforcement liens receivable: General 80,060 Prepaid taxes and licenses: General 311,959 Total 1,180,543 311,959 Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City is self funded with regard to group health and workers' compensation insurance coverages. There have been no significant reductions in insurance coverage from the prior year, and settled claims have not exceeded coverage in any of the past three fiscal years. A liability for a claim is established if information indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss is reasonably estimable. Liabilities include an amount for claims that have been incurred but not reported (IBNRs). The result of the process to estimate the claims liability is not an exact amount as it depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated periodically to consider the effects of inflation, recent claim settlement trends (including frequency and amount of pay outs), and other economic and social factors. The estimate of the claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of whether allocated to specific claims. Flood Insurance The City carries flood insurance for properties located in Flood Zones B, C and X through participation in the North Carolina League of Municipalities Interlocal Risk Financing Fund of North Carolina. The City does not have properties of significant value in these Flood Zones. Self- Funded Insurance The City has established three Internal Service Funds to account for self insured risk financing. Funding of the Health Benefit Fund is based upon an analysis of historical and projected medical and dental claims paid by the third party administrator and the availability of unrestricted net assets to fund projected claims. Funding of the Workers' Compensation Fund is based upon payroll rates established by the State of North Carolina and the availability of unrestricted net assets to fund projected claims. Funding of the Property and Casualty Fund is based upon experience and exposure risks associated with County operations and the availability of unrestricted net assets to fund projected claims. 52 Group Health Insurance Effective July 1, 2002, the City established an employee medical benefit plan to self- insure claims up to $70,000 per year for each individual covered; claims above $70,000 and aggregate claims exceeding 125% of expected incurred and paid claims are covered by a stop loss insurance policy. Workers' Compensation Insurance The City has a self funded workers' compensation insurance plan. Through this plan the City has workers' compensation coverage of up to the statutory limits. The self- insurance plan has a $350,000 retained risk per occurrence with a $1,000,000 aggregate limit. The City also carries employer's liability coverage with similar retention and limit amounts. Changes in the balance of claims liabilities during the year ended June 30, 2009 are as follows: Health Benefit Workers' Property Fund Compensation Fund Casualty Fund Year Ended Year Ended Year Ended June 30, 2009 June 30, 2009 June 30, 2009 Unpaid claims beginning of fiscal year Incurred claims and premiums 3,971,219 203,657 255,376 Claims and premiums paid (4,446,767) (219,303) (313,123) Unpaid claims end of fiscal year (475,548) (15,646) (57,747) Prior to the year ended June 30, 2009, all health and benefit, workers compensation, and property and casualty claims were paid out of the General Fund. The balance of claims outstanding at June 30, 2008 in the General Fund was $686,443. The City protects itself from potential loss through participation in the North Carolina League of Municipalities Interlocal Risk Financing Fund of North Carolina for general liability, automobile liability, public officials and law enforcement liability. The City maintains coverage of $5,000,000 for comprehensive general liability, automobile liability, public officials and law enforcement liability. The City's potential loss for liability coverage is limited to the deductible amount of $50,000 per claim for all coverage except for real and personal property which has a deductible of $25,000 per claim. In accordance with G.S. 159 -29, the City's employees that have access to $100 or more at any given time of the City's funds are performance bonded through a commercial surety bond. The finance officer and tax collector are each individually bonded for $250,000 each. The remaining employees that have access to funds are bonded under a blanket bond for $250,000. The City of Monroe ABC Board is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The ABC Board has property, general liability, automobile liability, workers compensation, and employee health coverage. The ABC Board also has liquor legal liability coverage. There have been no significant reductions in insurance coverage from the prior year, and settled claims have not exceeded coverage in any of the past three fiscal years. The Tourism Development Authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The Authority does not carry commercial insurance to cover these risks of loss. All risk management activities are reported in the Authority's General Fund. Claims expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. Based on available information, the Authority had no liability claims at June 30, 2009. 6. Claims, Judgements, and Contingent Liabilities At June 30, 2009, the City was a defendant to various lawsuits. In the opinion of the City's management and the City attorney, the ultimate effect of these legal matters will not have a material adverse effect on the City's financial position. 53 7. Long -Term Obligations a. Installment Purchase Obligations The City has entered into various installment purchase obligations to acquire certain equipment and to finance building improvements: Executed April 23, 1999, to finance construction of an addition to the aquatics and fitness center, requiring 26 semi annual installments of $54,180 including interest at 4.48 Executed September 22, 1999, and refinanced on May 19, 2004, to finance acquisition, renovation, and furnishing of a police headquarters, requiring 21 semi annual installments of $73,429 plus interest at 2.80 Executed December 22, 2003, to finance construction of an addition to the aquatics and fitness center, requiring 20 semi annual installments of $182,145 including interest at 3.85 Executed August 12, 2004, to finance construction of a street maintenance building, requiring 30 semi annual installments of $34,533 plus interest at 3.89 Executed June 24, 2005, to finance equipment, requiring 10 semi annual installments of $229,883 including interest at 3.07 Executed June 15, 2006, to finance equipment, requiring 10 semi annual installments of $245,203 including interest at 3.81 Executed June 15, 2007, to finance equipment, requiring 10 semi annual installments of $132,518 including interest at 3.8333 Executed February 8, 2008, to finance facility improvements, requiring 20 semi annual installments of $95,000 plus interest at 3.827 Executed June 20, 2008, to finance equipment, requiring 10 semi annual installments of $216,651 including interest at 3.19 Executed June 15, 2009 to finance equipment, 10 semi annual installments of $201,937 including interest at 2.8378 Executed January 30, 2009 to finance construction of a recreation center, requiring 30 semi annual installments of $79,724 plus interest at 4.570 Governmental Enterprise Funds Funds Total 253,607 253,607 807,714 807,714 1,492,046 1,492,046 725,200 725,200 309,570 140,386 449,956 691,417 245,082 936,499 588,361 156,400 744,761 1,710,000 1,710,000 1,163,276 452,385 1,615,661 1,269,000 605,700 1,874,700 2,391,720 2,391,720 9,656,258 3,345,606 13,001,864 54 Annual debt service payments of the installment purchase obligations as of June 30, 2009, are as follows: b. General Obligation Indebtedness The City's general obligation bonds issued to finance the construction of facilities utilized in the operations of the water and sewer system and which are being retired by its resources are reported as long -term debt in the Water and Sewer Fund. All general obligation bonds are collateralized by the full faith, credit, and taxing power of the City. Principal and interest requirements are appropriated when due. Bonds payable at June 30, 2009, are comprised of the following issue: Serviced by the Water and Sewer Fund: $6,330,000 1998 Water and Sewer Refunding Bonds due annually in amounts ranging from $140,000 to $750,000 through March 1, 2010; interest rate varying between 3.3% and 5.0 The amount shown is net of the unamortized deferred loss on the defeasance of $1,416. 138,584 Annual debt service requirements to maturity for general obligation bonds are as follows: Business -Type Activities Year Ending June 30 Principal Interest 2010 140,000 5,740 The debt service requirements as presented above, have not been reduced by $1,416, the unamortized deferred loss incurred as a result of the advance refundings. At June 30, 2009, the City had a legal debt margin of $248,095,900. 55 Governmental Activities Business -Type Activities Year Ending June 30 Principal Interest Principal Interest 2010 1,921,625 337,106 941,841 110,067 2011 1,645,750 275,305 830,019 78,441 2012 1,317,371 220,260 677,075 48,867 2013 1,130,690 176,206 590,203 25,900 2014 833,047 140,514 306,468 6,166 2015 -2019 1,976,002 392,491 2020 -2024 831,773 100,865 Total 9,656,258 3,345,606 Total interest payments 1,642,747 269,441 b. General Obligation Indebtedness The City's general obligation bonds issued to finance the construction of facilities utilized in the operations of the water and sewer system and which are being retired by its resources are reported as long -term debt in the Water and Sewer Fund. All general obligation bonds are collateralized by the full faith, credit, and taxing power of the City. Principal and interest requirements are appropriated when due. Bonds payable at June 30, 2009, are comprised of the following issue: Serviced by the Water and Sewer Fund: $6,330,000 1998 Water and Sewer Refunding Bonds due annually in amounts ranging from $140,000 to $750,000 through March 1, 2010; interest rate varying between 3.3% and 5.0 The amount shown is net of the unamortized deferred loss on the defeasance of $1,416. 138,584 Annual debt service requirements to maturity for general obligation bonds are as follows: Business -Type Activities Year Ending June 30 Principal Interest 2010 140,000 5,740 The debt service requirements as presented above, have not been reduced by $1,416, the unamortized deferred loss incurred as a result of the advance refundings. At June 30, 2009, the City had a legal debt margin of $248,095,900. 55 C. Revenue Bonds The City also issues bonds where it pledges income derived from the acquired or constructed assets to pay debt service. Revenue bonds outstanding at year end are as follows: Serviced by the Water and Sewer Fund, Electric Fund, Airport Fund and Natural Gas Fund: $5,195,000 Combined Enterprise System Revenue Bonds, Series 1998, due annually in amounts ranging from $45,000 to $335,000 through March 1, 2023, interest rate varying between 3.3% and 4.6 The amount shown is net of the unamortized deferred loss on the defeasance of $91,321. 3,493,679 $6,525,000 Combined Enterprise System Refunding Revenue Bonds, Series 1998, due annually in amounts ranging from $40,000 to $675,000 through March 1, 2019, interest rate varying between 3.3% and 4.6 The amount shown is net of the unamortized deferred loss on the defeasance of $114,681. 5,470,319 $30,920,000 Combined Enterprise System Revenue Bonds, Series 2008A, due annually in amounts ranging from $765,000 to $2,055,000 through March 1, 2033, interest rate varying between 4.0% and 5.0 The amount shown includes $354,471 in unamoritized bond premiums associated with the bonds. 31,274,471 $13,095,000 Combined Enterprise System Revenue Bonds, Series 2008B, due annually in amounts ranging from $450,000 to $1,005,000 through March 1, 2028, interest rate of 4.5404 13,095,000 53,333,469 The future payments of the revenue bonds for the years ending June 30, are as follows: Total 53,185,000 30,272,639 The future payments as presented above, have not been reduced by $206,002, the unamortized deferred loss incurred as a result of the advance refundings or the $354,471 in unamoritized bond premiums. The City has been in compliance with the covenants as to rates, fees, rentals, and charges in Section 704 of the Bond Order Authorizing the Issuance of Combined Enterprise System Revenue Bonds (Bond Order) 56 Business -Type Activities Year Ending June 30 Principal Interest 2010 1,865,000 2,392,767 2011 1,945,000 2,315,085 2012 2,015,000 2,233,385 2013 2,100,000 2,148,037 2014 2,190,000 2,058,361 2015-2019 12,490,000 8,775,769 2020 —2024 11,350,000 6,031,926 2025 —2029 11,555,000 3,383,734 2030 -2033 7,675,000 933,575 Total 53,185,000 30,272,639 The future payments as presented above, have not been reduced by $206,002, the unamortized deferred loss incurred as a result of the advance refundings or the $354,471 in unamoritized bond premiums. The City has been in compliance with the covenants as to rates, fees, rentals, and charges in Section 704 of the Bond Order Authorizing the Issuance of Combined Enterprise System Revenue Bonds (Bond Order) 56 since its adoption on May 3, 1994. Section 704(a) of the Bond Order requires the debt service coverage ratio to be no less than 125 The debt service coverage ratio calculation for the year ended June 30, 2009, is as follows: Operating revenues 74,807,486 Operating expenses (1) 66,726,912 Operating income 8,080,574 Nonoperating revenues (2) 2,883,754 Income available for debt service 10,964,328 Debt service (3) 5,312,216 Debt service coverage ratio 206% (1) Per rate covenants, this does not include the depreciation expense of $4,886,580. (2) Per rate covenants, this includes investment earnings only. (3) Per rate covenants, this does not include amortization of the deferred loss incurred as a result of advance refundings. The City has pledged future water and sewer, electric, airport, and natural gas customer revenues, net of specified operating expenses, to repay $55.7 million in revenue bonds issued in 1998 and 2008. Proceeds from the bonds provided financing for various capital projects. The bonds are payable solely from the revenue sources of the enterprise funds noted above and are payable through 2033. Annual principal and interest payments on the bonds are expected to require less than 6% of net revenues. The total principal and interest remaining to be paid on the bonds is $83,457,639. Principal and interest paid for the current year and total customer net revenues were $3,042,767 and $74.4 million, respectively. d. Advance Refundings On October 27, 1998, the City issued $6,330,000 in General Obligation Refunding Bonds with interest rates ranging from 3.3% to 5.0% to advance refund $5,925,000 of outstanding 1991 Water and Sewer general obligation bonds with interest rates ranging from 6.10% to 6.25 On October 27, 1998, the City also issued $6,525,000 in Combined Enterprise System Refunding Revenue Bonds with interest rates ranging from 3.3% to 4.6% to advance refund $5,715,000 of outstanding 1994 Combined Enterprise System Revenue Bonds with interest rates ranging from 4.2% to 6.0 The net proceeds of $12,662,391 were used to purchase U.S. Government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1991 Water and Sewer Serial Bonds and the portion of the 1994 Combined Enterprise System Revenue Bonds which were refunded. As a result, these bonds are considered to be defeased, and the liability for all the 1991 Water and Sewer serial bonds and the 1994 Combined Enterprise System Revenue Bonds which were refunded have been removed from the Enterprise Funds. At June 30, 2008 none of the 1991 bonds were outstanding. The 1994 Combined Enterprise System Revenue Bonds were fully retired in fiscal year 2008. The advance refundings resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $1,022,391. This difference, net of the accumulated amortization of $768,377, is reported in the accompanying financial statements as a deduction from bonds payable and is being charged to operations through the year 2019 using the effective interest method over the life of the new debt which is shorter than the life of the refunded debt. The bond issuance costs associated with the advance refunding were expensed during the period incurred because they were not considered to be material. The City completed the advance refundings to reduce its total debt service payments over the next 21 years by $841,061 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $615,185. 57 State Revolving Loans The City has entered into six State Revolving Loans to finance water and sewer improvements. All State Revolving Loans are being serviced by revenues from the Water and Sewer Fund: Loan payable to the State of North Carolina Water Business -Type Pollution Control Revolving Loan Fund with a maximum Year Ending limit of $7,382,765 payable over 20 years with interest at 3.385 2,214,830 Loan payable to the State of North Carolina Water 2010 Pollution Control Revolving Loan Fund with a maximum 174,243 limit of $3,735,210 payable over 20 years with interest at 827,077 2.89 933,803 Loan payable to the State of North Carolina Water Bond 117,508 Loan Fund with a maximum limit of $1,515,662 payable 827,077 over 20 years with interest at 5.85 530,482 Loan payable to the State of North Carolina Water Bond 60,441 Loan Fund with a maximum limit of $1,484,338 payable 969,447 over 20 years with a revised interest rate of 3.43% Total effective May 1, 2003 (previous rate was 5.30 519,518 Loan payable to the State of North Carolina Water Pollution Control Revolving Loan Fund with a maximum limit of $1,159,030 payable over 20 years with interest at 3.035 463,612 Loan payable to the State of North Carolina Water Pollution Control Revolving Loan Fund with a maximum limit of $1,270,105 payable over 20 years with interest at 2.89 442,587 5,104,832 Annual debt service requirements to maturity for the State Revolving Loans are as follows: f. Certificates of Participation The City has entered into a Certification of Participation agreement to finance natural gas improvements. All Certificates of Participation are being serviced by revenues from the Natural Gas Fund. On March 1, 2009 the City issued $32,665,000 in Certificates of Participation (COPS) Installment Contracts to finance the construction of natural gas improvements. These 30 year COPS have interest rates of 3.00 Annual payments of principal and interest range from approximately $1,900,000 to $1,744,429. Total principal and interest over a 30 -year period will be $65,490,748. 32,665,000 58 Business -Type Activities Year Ending June 30 Principal Interest 2010 827,077 174,243 2011 827,077 145,855 2012 827,077 117,508 2013 827,077 88,861 2014 827,077 60,441 2015-2017 969,447 42,741 Total 5,104,832 832,439 f. Certificates of Participation The City has entered into a Certification of Participation agreement to finance natural gas improvements. All Certificates of Participation are being serviced by revenues from the Natural Gas Fund. On March 1, 2009 the City issued $32,665,000 in Certificates of Participation (COPS) Installment Contracts to finance the construction of natural gas improvements. These 30 year COPS have interest rates of 3.00 Annual payments of principal and interest range from approximately $1,900,000 to $1,744,429. Total principal and interest over a 30 -year period will be $65,490,748. 32,665,000 58 Annual debt service requirements for Certificates of Participation are as follows: Governmental activities: Installment purchase obligations Compensated absences Self insurance fund claims payable OPEB liability Governmental activities long -term liabilities Business -type activities: Compensated absences 7,821,435 3,660,720 1,825,897 9,656,258 1,921,625 1,440,599 1,064,674 1,005,731 1,499,542 1,004,692 686,443 686,443 818,335 818,335 9,948,477 5,543,729 3,518,071 11,974,135 2,926,317 382,080 369,084 316,948 434,213 290,923 OPEB Liability Business -Type Activities Year Ending Installment purchase obligations June 30 Principal Interest 2010 1,744,429 2011 600,000 1,597,950 2012 620,000 1,579,950 2013 635,000 1,561,350 2014 655,000 1,542,300 2015-2019 3,620,000 7,368,527 2020 -2024 4,410,000 6,582,490 2025 -2029 5,560,000 5,436,758 2030-2034 7,180,000 3,807,925 2035 -2039 9,385,000 1,604,069 Total 32,665,000 32,825,748 g. Changes in Long -term Liabilities 23,753 354,471 Current 53,945,058 Balance Balance Portion of 1,865,000 July 1, 2008 Increases Decreases June 30, 2009 Balance Governmental activities: Installment purchase obligations Compensated absences Self insurance fund claims payable OPEB liability Governmental activities long -term liabilities Business -type activities: Compensated absences 7,821,435 3,660,720 1,825,897 9,656,258 1,921,625 1,440,599 1,064,674 1,005,731 1,499,542 1,004,692 686,443 686,443 818,335 818,335 9,948,477 5,543,729 3,518,071 11,974,135 2,926,317 382,080 369,084 316,948 434,213 290,923 OPEB Liability 335,665 335,665 Installment purchase obligations 5,060,545 605,700 2,320,639 3,345,606 941,841 Certificates of participation 32,665,000 32,665,000 General obligation bonds 790,000 650,000 140,000 140,000 Less deferred amount for loss on defeasance (10,848) 9,432 (1,416) (1,416) Total general obligation bonds 779,152 640,568 138,584 138,584 Revenue bonds 53,810,000 625,000 53,185,000 1,865,000 Less deferred amount for loss on defeasance (243,166) 37,164 (206,002) Plus bond premium 378,224 23,753 354,471 Total revenue bonds 53,945,058 611,589 53,333,469 1,865,000 State revolving loans 5,931,909 827,077 5,104,832 827,077 Business -type activities long -term liabilities 65,720,520 33,975,449 4,693,068 95,357,369 4,063,425 For governmental activities, compensated absences are liquidated by the General Fund. For business -type activities, compensated absences are liquidated by the respective business -type fund. Starting in July 1, 2008 self insurance claims are liquidated out of the respective internal service fund and shown as a liability in the applicable internal service fund. 59 h. ABC Board The ABC Board had a note payable with a balance of $262,500 at June 30, 2008. The note was secured by land, buildings, and equipment. The note was set to mature in 2013, however, the Board paid off the note in December 2008. C. Interfund Balances and Activity Balances due to /from other funds at June 30, 2009, consist of the following: Due to the Electric Fund for the purchase of land to be used for incentive grants for industries: General Fund 1,338,508 Due to the Electric Fund for improvements: Airport Fund 6,476,771 Due to the Electric Fund to be used for capital improvements: Natural Gas Fund 6,000,000 Due to the Electric Fund for establishment of Stormwater Utility Fund 180,000 Balances due to /from component units at June 30, 2009, consist of the following: Due to the Primary Government for profit distributions from: Monroe ABC Board 51,500 Due to the Primary Government for occupancy tax project: Monroe Tourism Development Authority 17,948 69,448 Transfers to /from other funds at June 30, 2009, consist of the following From the General Fund to the City Grant Programs Special Revenue Fund for incentive grants to industries 317,387 From the General Fund to Capital Projects Funds for construction projects 191,986 From the General Fund to the Solid Waste Fund for establishment of the fund 159,662 From the General Fund to the Downtown Monroe Special Revenue Fund for development and beginning implementation of the downtown master plan 368,484 From the General Fund to the Self- Insured Workers Compensation Internal Service Fund for establishment of the fund 1,782,709 From the General Fund to the Property Casualty Internal Service Fund for establishment of the fund 415,905 From the General Fund to the Health Dental Internal Service Fund for establishment of the fund 244,175 From the General Fund to the Airport Fund for current operating needs and construction projects 747,948 60 From the Natural Gas Fund to the Electric Fund to share in the purchase of a building for relocation of energy services 700,000 From the Electric Fund to the Natural Gas Fund for the installation of fiber optic infrastructure along the natural gas transmission line 3,330,000 From the Occupancy Tax Special Revenue Fund to the General Fund for administrative fees 10,084 From Aquatics Fitness Center Fund to the Natural Gas Fund for the optional return of donated assets as funds are available 243,347 From State Grant Program Special Revenue Fund to the City Grant Program Special Revenue Fund to close out the project 7,999 8,519,686 D. Revenues, Expenditures, and Expenses On- Behalf Payments for Fringe Benefits and Salaries For the fiscal year ended June 30, 2009, the City of Monroe has recognized on- behalf payments for pension contributions made by the state as a revenue and an expenditure of $12,787 for the 47 employed firemen who perform firefighting duties for the City's fire department. The employees elected to be members of the Firemen and Rescue Squad Worker's Pension Fund, a cost sharing, multiple employer public employee retirement system established and administered by the State of North Carolina. The Plan is funded by a $10 monthly contribution paid by each member, investment income, and a State appropriation. Also, the City has recognized as a revenue and an expenditure on- behalf of payments for fringe benefits and salaries of $44,519 for the salary supplement and stipend benefits paid to eligible firemen by the local board of trustees of the Firemen's Relief Fund during the fiscal year ended June 30, 2009. Under State law the local board of trustees for the Fund receives an amount each year, which the board may use at its own discretion for eligible firemen or their departments. IV. JOINTLY GOVERNED ORGANIZATIONS The City, in conjunction with eighteen other local governments, is a member of the North Carolina Municipal Power Agency Number 1 (Agency). The Agency was formed to enable municipalities that own electric distribution systems to finance, construct, own, operate, and maintain generation and transmission facilities. Each participating government appoints one commissioner to the Agency's governing board. The nineteen members, which receive power from the Agency, have signed power sales agreements to purchase a specified share of the power generated by the Agency. Except for the power sales purchase requirements, no local government participant has any obligation, entitlement, or residual interest. The City's purchases of power for the fiscal year ended June 30, 2009 were $35,142,149. Also, the City, in conjunction with eight Central North Carolina counties and fifty other municipalities established the Centralina Council of Governments (Council). The participating governments established the Council to coordinate various funding received from federal and State agencies. Each participating government appoints one member to the Council's governing board. The City paid membership fees of $9,494 to the Council during the fiscal year ended June 30, 2009. V. JOINT VENTURE The City and the members of the City's fire department each appoint two members to the five member local board of trustees for the Firemen's Relief Fund. The State Insurance Commissioner appoints one additional member to the local board of trustees. The Firemen's Relief Fund is funded by a portion of the 61 fire and lightning insurance premiums that insurers remit to the State. The State passes these monies to the local board of the Firemen's Relief Fund. The funds are used to assist fire fighters in various ways. The City obtains an ongoing financial benefit from the Fund for the on- behalf of payments for salaries and fringe benefits made to members of the City's fire department by the board of trustees. During the fiscal year ended June 30, 2009, the City reported revenues and expenditures for the payments of $44,519 made through the Firemen's Relief Fund. The participating governments do not have any equity interest in the joint venture, so no equity has been reflected in the financial statements at June 30, 2009. The Firemen's Relief Fund does not issue separate audited financial statements. Instead, the local board of trustees files an annual financial report with the State Firemen's Association. This report can be obtained from the Association at Post Office Box 188, Farmville, North Carolina 27828. VI. RELATED ORGANIZATION The seven member board of the Monroe Housing Authority is appointed by the City Council and Mayor of the City of Monroe. The City is accountable for the Housing Authority because it appoints the governing board; however, the City is not financially accountable for the Housing Authority. The City of Monroe is also disclosed as a related organization in the notes to the financial statements for the Monroe Housing Authority. Complete financial statements for the Housing Authority can be obtained from the Authority's offices at Post Office Box 805, Monroe, North Carolina 28111. VII. RELATED PARTY TRANSACTIONS The City and its discretely presented component units engaged in the following transactions during the year ended June 30, 2009: City of Monroe ABC Board Payments to the City for profit distributions 199,000 Payments to the City for law enforcement 50,323 Total 249,323 Monroe Tourism Development Authority: Payment of a pro -rata portion of the occupancy tax by the City to the Authority 326,063 Payment by the Authority to the City for the occupancy tax project 217,346 VIIL SUMMARY DISCLOSURE OF SIGNIFICANT CONTINGENCIES Federal and State Assisted Programs The City has received proceeds from several federal and State grants. Periodic audits of these grants are required and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the refund of grant monies to the grantor agencies. Management believes that any required refunds will be immaterial. No provision has been made in the accompanying financial statements for the refund of grant monies. rM CITY OF ci heritage qfprocrress e"') c"I'll CITY OF MONROE, NORTH CAROLINA LAW ENFORCEMENT OFFICERS' SPECIAL SEPARA TION ALL 0 RANCE REQUIRED S UPPLEMENTAR Y INFORMATION SCHEDULE OF FUNDING PROGRESS *Reflects changes in actuarial assumptions. 64 Actuarial Accrued UAAL Actuarial Liability (AAL) Unfunded as a Actuarial Value of Projected AAL Funded Covered Percentage of Valuation Assets Unit Credit (UAAL) Ratio Payroll Covered Payroll Date (a) (b) (b -a) (a/b (c) ((b -a) /c) 12/31/99 903,751 903,751 0.00% 2,628,197 34.39% 12/31/00 1,162,961 1,162,961 0.00 2,574,271 45.18 12/31/01 1,164,941 1,164,941 0.00 2,819,591 41.32 12/31/02 1,210,250 1,210,250 0.00 2,777,185 43.58 12/31/03 1,295,336 1,295,336 0.00 2,910,965 44.50 12/31/04 1,406,395 1,406,395 0.00 2,865,536 49.08 12/31/05 1,400,593 1,400,593 0.00 3,368,588 41.58 12/31/06 1,442,095 1,442,095 0.00 3,623,857 39.79 12/31/07 1,650,670 1,650,670 0.00 3,761,162 43.89 12/31/08 1,703,401 1,703,401 0.00 3,933,354 43.31 *Reflects changes in actuarial assumptions. 64 CITY OF MONROE, NORTH CAROLINA LAW ENFORCEMENT OFFICERS' SPECIAL SEPARA TION ALL 0 RANCE REQUIRED S UPPLEMENTAR Y INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS Year Ended Annual Required Percentage June 30 Contribution Contributed 2000 100,561 123.55% 2001 112,650 94.37 2002 113,793 95.10 2003 111,195 99.37 2004 116,909 106.01 2005 121,658 113.76 2006 137,815 119.31 2007 138,373 149.68 2008 143,756 122.24 2009 164,695 127.34 Notes to the Required Schedules: The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation follows: Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return* Projected salary increases* Cost -of- living adjustments *Includes inflation at 3.75% December 31, 2008 Projected unit credit Level percentage of pay closed 22 Years Market value 7.25% 4.5% to 12.3% none 65 CITY OF MONROE, NORTH CAROLINA THE HEALTH CARE PLAN OF THE CITY OF MONROE SUPPLEMENTAL INFORMATION SCHEDULE OF FUNDING PROGRESS LAST FISCAL YEAR 66 Actuarial Accrued UAAL Actuarial Liability (AAL) Unfunded as a Actuarial Value of Projected AAL Funded Covered Percentage of Valuation Assets Unit Credit (UAAL) Ratio Payroll Covered Payroll Date (a) (b) (b -a) (a /b) (c) ((b -a) /c) July 1, 2007 15,877,000 15,877,000 0.00% 18,700,000 84.9% 66 CITY OF MONROE, NORTH CAROLINA THE HEALTH CARE PLAN OF THE CITY OF MONROE SUPPLEMENTAL INFORMATION SCHEDULE OFEMPLOYER CONTRIBUTION FISCAL YEAR ENDED JUNE 30, 2009 Year Ended Annual Required Percentage June 30 Contribution Contributed 2009 1,502,000 23.2% Notes to the Required Schedules: The information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation follows: Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return* Projected salary increases* Year of ultimate trend rate *Includes inflation at Cost -of- living adjustments July 1, 2007 Projected unit credit Level percentage of pay closed 30 Years Market value 4.00% 1.00% -5.00% 2014 3.75% none 67 CITY OF ci heritage qfprocrress e"') c"I'll Nonmajor Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for specified purposes. Community Development This fund is used to account for specific revenues that are restricted to fund continuing rehabilitation of housing within certain targeted areas of the City. Downtown Monroe This fund is used to account for specific revenues that are restricted for the purpose of downtown revitalization. Occupancy Tax This fund is used to account for specific revenues that are restricted for the purpose of tourism development. City Grant Programs This fund is used to account for specific revenues that are restricted to fund rehabilitation of homes within the Historic District, to make grants under the City's economic development incentive program, and to provide down payment assistance to qualified low and moderate income individuals to acquire homes. State Grant Programs This fund is used to account for specific state grant revenues that are restricted for housing development in designated areas of the City. Capital Projects Funds Capital Projects Funds account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds. Capital Reserve This fund is used to account for money held for future capital purposes. Capital Projects This fund is used to account for the purchase, renovation, furnishing, or construction of roadway and facility improvements. CITY OF MONROE, NORTH CAROLINA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30, 2009 ASSETS Cash and cash equivalents Restricted cash and cash equivalents Taxes receivable Accounts receivable Loans receivable Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities Deferred revenue Total liabilities Fund balances: Reserved for: State statute Encumbrances Unreserved for: Designated for subsequent year's expenditures Undesignated Total fund balances Total liabilities and fund balances Special Revenue Community Downtown Occupancy City Grant State Grant Development Monroe Tax Programs Programs 43,485 206,480 $1,459,816 2,774 27,755 1,755 20,296 65,536 209,254 27,755 $1,459,816 17,354 27,755 20,296 2,774 20,296 20,128 27,755 1,755 91,464 600 600 43,485 97,662 1,459,216 45,240 189,126 1,459,216 65,536 209,254 27,755 $1,459,816 70 STATEMENT I Funds Capital Total Projects Total Nonmajor Governmental Funds 1,709,781 886,467 2,596,248 2,457,903 2,457,903 30,529 30,529 1,755 1,755 20,296 20,296 1,762,361 3,344,370 5,106,731 45,709 16,759 62,468 23,070 23,070 68,779 16,759 85,538 1,755 1,755 91,464 91,464 3,327,611 3,327,611 1,600,363 1,600,363 1,693,582 3,327,611 5,021,193 1,762,361 3,344,370 5,106,731 71 CITY OF MONROE, NORTH CAROLINA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Fiscal Year Ended June 30, 2009 REVENUES Ad valorem taxes Other taxes and licenses Restricted intergovernmental Miscellaneous Program income Investment earnings Total revenues Special Revenue Community Downtown Occupancy City Grant State Grant Development Monroe Tax Programs Programs 44,103 336,148 4,905 1,755 1,100 1,755 50,108 336,148 194,429 194,429 EXPENDITURES Current: Economic and physical development: Administration Loan assistance Incentive grants Program costs Tourism Capital outlay Total expenditures Revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers from other funds Transfers to other funds Installment purchase obligations issued Total other financing sources (uses) Net change in fund balances Fund balances, beginning Fund balances, ending 62 283,511 17,500 164,221 194,429 326,063 62 283,511 326,063 181,721 194,429 1,693 (233,403 10,085 181,721) 368,484 325,386 (10,085) (7,999) 368,484 10,085) 325,386 (7,999 1,693 135,081 143,665 (7,999) 43,547 54,045 1,315,551 7,999 45,240 189,126 $1,459,216 72 STATEMENT 2 Funds Total Nonmajor Capital Governmental Total Projects Funds 44,103 44,103 336,148 336,148 194,429 647,500 841,929 4,905 4,905 1,755 1,755 1,100 5,395 6,495 582,440 652,895 1,235,335 283,573 283,573 17,500 17,500 164,221 164,221 194,429 194,429 326,063 326,063 1,088,484 1,088,484 985,786 1,088,484 2,074,270 (403,346) (435,589) (838,935) 693,870 191,986 885,856 (18,084) (18,084) 2,391,720 2,391,720 675,786 2,583,706 3,259,492 272,440 2,148,117 2,420,557 1,421,142 1,179,494 2,600,636 1,693,582 3,327,611 5,021,193 73 CITY OF MONROE, NORTH CAROLINA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS June 30, 2009 ASSETS Current assets: Cash and investments Accounts receivable (net) Total current assets LIABILITIES Current Liabilities: Bank overdraft Accounts payable and accrued liabilities Total current liabilities NET ASSETS Unrestricted Health and Workers' Property and Dental Compensation Casualty Fund Fund Fund 1,107,473 1,910,093 STATEMENT 3 Total 314,216 2,224,309 839 1,108,312 1,107,473 1,910,093 315,055 3,332,621 137,587 137,587 475,548 15,646 57,747 548,941 613,135 15,646 57,747 686,528 494,338 1,894,447 257,308 2,646,093 74 STATEMENT 4 CITY OF MONROE, NORTH CAROLINA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Health and Workers' Property and Dental Compensation Casualty Fund Fund Fund Total OPERATING REVENUES Interfund charges and employee contributions Other operating revenue Total operating revenues OPERATING EXPENSES Operating expenses Health benefit claims and premiums Property and liability claims and premiums Total operating expenses Operating income NON OPERATING REVENUES Investment earnings OTHER FINANCING SOURCES Transfers from other funds: General Fund Change in net assets NET ASSETS Beginning Ending 4,694,557 300,000 144,350 5,138,907 2,782 2,782 4,694,557 300,000 147,132 5,141,689 5,816 219,303 225,119 4,446,767 4,446,767 313,123 313,123 4,452,583 219,303 313,123 4,985,009 241,974 80,697 (165,991) 156,680 8,189 31,041 7,394 46,624 244,175 1,782,709 415,905 2,442,789 494,338 1,894,447 257,308 2,646,093 494,338 1,894,447 257,308 2,646,093 75 CITY OF MONROE, NORTH CAROLINA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2009 STATEMENT S Health and Workers' Property and Dental Compensation Casualty Fund Fund Fund Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers for services 3,587,084 300,000 144,350 4,031,434 Other operating revenue 1,943 1,943 Cash paid for goods and services (3,977,035 (203,657 (255,376 (4,436,068 Net cash provided (used) by operating activities (389,951) 96,343 (109,083) (402,691) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from General fund 244,175 1,782,709 415,905 2,442,789 CASH FLOWS FROM INVESTING ACTIVITIES Investment earnings 8,189 31,041 7,394 46,624 Net increase (decrease) in cash and investments CASH AND INVESTMENTS Beginning of year End of year Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income(loss) to net cash provided (used) by operating activities: Change in assets and liabilities (Increase) decrease in accounts receivable Increase (decrease) in accounts payable and accrued liabilities Total adjustments Net cash provided (used) by operating activities (137,587) 1,910,093 314,216 2,086,722 1,910,093 2,086,722 (137,587 314,216 241,974 80,697 (165,991 156,680 (1,107,473) (839) (1,108,312) 475,548 15,646 57,747 548,941 (631,925 15,646 56,908 (559,371 (389,951 96,343 (109,083 (402,691 76 CITY OF MONROE, NORTH CAROLINA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2009 SCHEDULE 6 77 Continued Variance Positive Budget Actual (Negative) REVENUES Ad valorem taxes: Taxes 15,610,590 16,013,190 402,600 Penalties and interest 60,000 77,186 17,186 Total 15,670,590 16,090,376 419,786 Other taxes and licenses: Privilege licenses 386,000 389,394 3,394 Gross receipts tax on short-term rental property 40,000 40,286 286 Cablevision franchise fees 220,000 325,985 105,985 Motor vehicle tax 133,000 128,375 (4,625) Total 779,000 884,040 105,040 Unrestricted intergovernmental: Local option sales taxes 4,321,705 4,096,167 (225,538) Telecommunications sales tax 425,000 535,719 110,719 Utility franchise tax 1,400,000 1,363,810 (36,190) Beer and wine tax 140,000 161,522 21,522 State fire fees 3,500 3,853 353 ABC profit distribution 180,000 199,000 19,000 Total 6,470,205 6,360,071 (110,134 Restricted intergovernmental: Powell Bill allocation 1,068,000 1,075,718 7,718 Public safety reimbursement grants 450,268 312,593 (137,675) On- behalf payments Fire and Rescue 57,306 57,306 ABC Revenue for law enforcement 68,000 78,851 10,851 Senior Center grant 5,105 4,363 (742) Equitable sharing of federally forfeited property 229,917 229,917 Firefighters Assistance grant 7,380 7,380 Tourism Development Authority 190,950 217,376 26,426 Environment Protection grant 1,000 1,000 Total 1,790,703 1,984,504 193,801 Sales and services: Recreational fees 841,950 738,779 (103,171) Utilities collection fees 425,000 418,003 (6,997) Building permit fees 615,000 359,261 (255,739) Cemetery revenues 45,000 43,676 (1,324) Sale of fixed assets 80,000 95,018 15,018 Rentals 56,300 78,252 21,952 Other fees 161,370 227,937 66,567 Total 2,224,620 1,960,926 (263,694 77 Continued SCHEDULE 6, Continued CITY OF MONROE, NORTH CAROLINA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2009 Variance Positive Budget Actual (Negative) Investment earnings 718,500 488,511 (229,989 Miscellaneous: Resource officer reimbursement 100,000 111,622 11,622 Payment in lieu of taxes 378,700 382,614 3,914 Donations 30,441 52,050 21,609 Other 35,607 59,537 23,930 Total 544,748 605,823 61,075 Finance Total revenues 28,198,366 28,374,251 175,885 EXPENDITURES 46,931 Operating expenditures 360,118 Current: 72,286 Capital outlay 69,175 General government: (1,127) Interdepartmental charges (1,440,451) Administration 497,529 Salaries and employee benefits 2,054,072 2,042,838 11,234 Operating expenditures 1,434,772 1,299,010 135,762 Capital outlay 25,143 24,330 813 Interdepartmental charges (1,808,139) (1,807,958) (181) 1,705,848 1,558,220 147,628 Planning and zoning Salaries and employee benefits 778,556 776,863 1,693 Operating expenditures 83,547 82,904 643 Interdepartmental charges (43,350) (43,350) 818,753 816,417 2,336 Engineering Salaries and employee benefits 808,150 804,933 3,217 Operating expenditures 183,037 167,396 15,641 Capital Outlay 31,000 27,915 3,085 Interdepartmental charges (179,595 (179,595 842,592 820,649 21,943 Finance Salaries and employee benefits 1,508,687 1,461,756 46,931 Operating expenditures 360,118 287,832 72,286 Capital outlay 69,175 70,302 (1,127) Interdepartmental charges (1,440,451) (1,440,451) 497,529 379,439 118,090 Continued- 78 SCHEDULE 6, Continued CITY OF MONROE, NORTH CAROLINA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2009 Operations Center Salaries and employee benefits Operating expenditures Capital outlay Interdepartmental charges Special appropriations Operating expenditures Total Transportation: Streets and highways Salaries and employee benefits Operating expenditures Capital outlay Interdepartmental charges Total Public safety: Police Salaries and employee benefits Operating expenditures Capital outlay Fire Salaries and employee benefits Operating expenditures Capital outlay Building standards and code enforcement Salaries and employee benefits Operating expenditures Capital outlay Total Total 1,135,943 1,102,437 Variance 1,805,735 1,585,512 Positive Budget Actual (Negative) (391,093 523,051 487,838 35,213 240,725 180,884 59,841 72,667 72,673 (6) (543,317 (541,926 (1,391 293,126 199,469 93,657 688,755 59,642 413,875 307,197 106,678 96,531 96,368 4,571,723 4,081,391 490,332 1,135,943 1,102,437 33,506 1,805,735 1,585,512 220,223 707,110 698,181 8,929 (391,093 (344,757 (46,336 3,257,695 3,041,373 216,322 6,856,363 6,489,744 366,619 1,107,420 886,152 221,268 853,028 711,666 141,362 8,816,811 8,087,562 729,249 5,240,707 5,193,137 47,570 489,695 455,992 33,703 2,029,400 114,433 1,914,967 7,759,802 5,763,562 1,996,240 748,397 688,755 59,642 150,249 121,180 29,069 96,531 96,368 163 995,177 906,303 88,874 17,571,790 14,757,427 2,814,363 Continued 79 SCHEDULE 6, Continued CITY OF MONROE, NORTH CAROLINA GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2009 Culture and recreation: Salaries and employee benefits Operating expenditures Capital outlay Interdepartmental charges Total Budget Actual 2,632,790 2,554,463 1,838,004 1,509,881 249,045 198,342 (192,796 (192,796 4,527,043 4,069,890 Variance Positive (Negative) 78,327 328,123 50,703 Debt service: Principal retirement Interest and other charges Total Total expenditures Revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers from (to) other funds: Special Revenue Funds Occupancy Tax Fund City Grant Programs Capital Projects Funds Capital Projects Downtown Monroe Internal Service Funds Self Insured Workers Comp. Fund Self Insured Property And Casulty Fund Self Insured Health And Dental Fund Natural Gas Fund Airport Fund Solid Waste Fund Repayment of loan to Electric Fund Installment purchase obligations issued Total other financing sources (uses) FUND BALANCE APPROPRIATED Net change in fund balance Fund balance, beginning Fund balance, ending 457,153 1,868,968 1,827,814 41,154 309,512 309,512 2,178,480 2,137,326 41,154 32,106,731 28,087,407 4,019,324 (3,908,365 286,844 4,195,209 52,000 10,084 (41,916) (472,000) (317,387) 154,613 (191,986) (191,986) (368,484) (368,484) (1,711,657) (1,782,709) (71,052) (418,869) (415,905) 2,964 (536,400) (244,175) 292,225 (2,500) 2,500 (747,948) (747,948) (159,662) (159,662) (79,165) (79,165) 3,350,890 1,269,000 (2,081,890 (1,285,781 (3,028,337 (1,742,556 5,194,146 (5,194,146 (2,741,493) (2,741,493) 20,607,550 17,866,057 80 SCHEDULE 7, Page I of S CITY OF MONROE, NORTH CAROLINA SPECIAL REVENUE FUNDS COMMUNITY DEVELOPMENT SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2009 REVENUES Program income EXPENDITURES Current: Economic and physical development: Administration Net change in fund balance Fund balance, beginning Fund balance, ending Variance Positive Budget Actual (Negative) 5,000 1,755 (3,245 5,000 62 1,693 43,547 45,240 4,938 1,693 81 SCHEDULE 7, Page 2 of S CITY OF MONROE, NORTH CAROLINA SPECIAL REVENUE FUNDS DOWNTOWN MONROE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2009 REVENUES Ad valorem taxes Miscellaneous Investment earnings Total EXPENDITURES Current: Economic and physical development: Administration Revenues over (under) expenditures OTHER FINANCING SOURCES Transfers from other funds: General Fund FUND BALANCE APPROPRIATED Net change in fund balance Fund balance, beginning Fund balance, ending Variance Positive Budget Actual (Negative) 34,700 44,103 9,403 1,000 4,905 3,905 1,100 1,100 35,700 50,108 14,408 404,184 283,511 120,673 (368,484 (233,403 135,081 368,484 368,484 135,081 135,081 54,045 189,126 82 SCHEDULE 7, Page 3 of S CITY OF MONROE, NORTH CAROLINA SPECIAL REVENUE FUNDS OCCUPANCY TAX SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL For the Fiscal Year Ended June 30, 2009 REVENUES Other taxes and licenses: Occupancy tax EXPENDITURES Current: Economic and physical development: Tourism Revenues over expenditures OTHER FINANCING USES Transfers to other funds: General Fund Net change in fund balance Fund balance, beginning Fund balance, ending Budget Actual Variance Positive (Negative) 348,000 336,148 (11,852) 296,000 326,063 (30,063 52,000 10,085 (41,915 (52,000 (10,085 41,915 83 SCHEDULE 7, Page 4 of S CITY OF MONROE, NORTH CAROLINA SPECIAL REVENUE FUNDS CITY GRANT PROGRAMS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL From Inception and For the Fiscal Year Ended June 30, 2009 REVENUES Program income EXPENDITURES Current: Economic and physical development: Loan assistance Incentive grants Total expenditures Revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers from other funds: General Fund State Grant Project Fund Community Development Fund Total other financing sources (uses) Actual Variance Project Prior Current Total to Positive Authorization Year Year Date (Negative) 113,104 113,104 113,104 275,000 113,104 17,500 130,604 144,396 3,131,959 1,684,689 164,221 1,848,910 1,283,049 3,406,959 1,797,793 181,721 1,979,514 1,427,445 3,406,959) (1,684,689 (181,721 (1,866,410 1,540,549 3,131,959 2,814,567 317,387 3,131,954 (5) 7,999 7,999 7,999 275,000 185,674 185,674 (89,326 3,406,959 3,000,241 325,386 3,325,627 (81,332 Revenues and other financing sources over expenditures and other financing uses 1,315,552 Fund balance, beginning Fund balance, ending 143,665 1,459,217 1,459,217 1,315,551 1,459,216 84 SCHEDULE 7, Page S of S CITY OF MONROE, NORTH CAROLINA SPECIAL REVENUE FUNDS STATE GRANT PROGRAMS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL From Inception and For the Fiscal Year Ended June 30, 2009 Actual Variance Project Prior Current Total to Positive Authorization Year Year Date (Negative) REVENUES Restricted intergovernmental (06-C-1544) 400,000 7,175 194,429 201,604 (198,396) Restricted intergovernmental (04 -C -1312) 40,000 23,999 23,999 (16,001 Total Revenues 440,000 31,174 194,429 225,603 (214,397 EXPENDITURES Current: Economic and physical development: Program costs (06 -C -1544) Program costs (04 -C -1312) Total expenditures Revenues under expenditures OTHER FINANCING SOURCES Transfers from other funds: City Grant Programs Fund Revenues and other financing sources over (under) expenditures Fund balance, beginning Fund balance, ending 400,000 7,175 194,429 201,604 198,396 60,000 36,000 36,000 24,000 460,000 43,175 194,429 237,604 222,396 (20,000) (12,001 (12,001 7,999 20,000 20,000 (7,999 12,001 (7,999 7,999 (7,999) 7,999 85 CITY OF MONROE, NORTH CAROLINA CAPITAL PROJECTS FUNDS CAPITAL PROJECTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL From Inception And For The Fiscal Year Ended June 30, 2009 REVENUES Restricted intergovernmental Miscellaneous Investment earnings Total revenues EXPENDITURES Capital outlay: Construction costs capitalized Construction in progress Other costs Total expenditures Revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers from (to) other funds: General Fund Parks Recreation Fund Installment purchase obligations issued Total other financing sources (uses) Revenues and other financing sources over (under) expenditures and other financing uses Fund balance, beginning Fund balance, ending SCHEDULE 8 Actual Variance Project Prior Current Total to Positive Authorization Years Year Date (Negative) 1,495,486 651,498 647,500 1,298,998 (196,488) 588 588 588 8,144 5,395 13,539 13,539 1,495,486 660,230 652,895 1,313,125 (182,361 2,529,697 1,738,991 621,267 2,360,258 169,439 5,503,323 2,055,500 341,211 2,396,711 3,106,612 1,177,311 817,385 126,006 943,391 233,920 9,210,331 4,611,876 1,088,484 5,700,360 3,509,971 (7,714,845 3,951,646) (435,589 (4,387,235 3,327,610 2,638,406 2,446,420 191,986 2,638,406 784,719 784,719 784,719 4,291,720 1,900,000 2,391,720 4,291,720 7,714,845 5,131,139 2,583,706 7,714,845 1,179,493 2,148,117 3,327,610 3,327,610 1,179,494 3,327,611 86 SCHEDULE 9 CITY OF MONROE, NORTH CAROLINA WATER AND SEWER FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 REVENUES Operating revenues: Charges for services: Water sales Sewer charges Water and sewer taps County waste water charges Other operating revenues Total operating revenues Nonoperating revenues: Availability fees Other nonoperating revenues Investment earnings Total nonoperating revenues Total revenues OTHER FINANCING SOURCES Installment purchase obligations issued Total other financing sources FUND BALANCE APPROPRIATED Total revenues and other financing sources Variance Positive Budget Actual (Negative) 5,418,954 4,966,278 (452,676) 6,641,090 6,334,574 (306,516) 68,312 50,806 (17,506) 650,000 629,700 (20,300 12,778,356 11,981,358 (796,998) 252,339 225,408 (26,931 13,030,695 12,206,766 (823,929 993,244 468,520 (524,724) 8,757 8,085 (672) 507,316 689,538 182,222 1,509,317 1,166,143 (343,174 14,540,012 13,372,909 (1,167,103) 113,000 97,500 (15,500 113,000 97,500 (15,500 392,551 (392,551 15,045,563 13,470,409 (1,575,154) Continued 87 SCHEDULE 9, Continued CITY OF MONROE, NORTH CAROLINA WATER AND SEWER FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 EXPENDITURES Distribution system: Salaries and employee benefits Operating expenditures Total Water filter plant: Salaries and employee benefits Operating expenditures Total Waste treatment plant: Salaries and employee benefits Operating expenditures Total Debt service: Principal retirement Interest and other charges Total Capital outlay Total expenditures OTHER FINANCING USES Transfers to other funds: Water and Sewer Capital Projects Fund Total other financing uses Total expenditures and other financing uses Variance Positive Budget Actual (Negative) 2,184,412 2,156,517 27,895 3,246,152 2,066,305 1,179,847 5,430,564 4,222,822 1,207,742 657,850 627,536 30,314 2,200,989 2,025,181 175,808 2,858,839 2,652,717 206,122 873,877 872,085 1,792 1,790,224 1,355,745 434,479 2,664,101 2,227,830 436,271 2,120,660 2,057,005 63,655 758,100 761,809 (3,709 2,878,760 2,818,814 59,946 578,799 302,958 275,841 14,411,063 12,225,141 2,185,922 634,500 634,500 634,500 634,500 15,045,563 12,859,641 2,185,922 Continued 88 SCHEDULE 9, Continued CITY OF MONROE, NORTH CAROLINA WATER AND SEWER FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures and other financing uses Revenues and other financing sources over expenditures and other financing uses Reconciling items: Debt principal Installment purchase obligations issued Amortization of deferred loss on refunding Amortization of bond premimum Amortization of bond issuance costs Capital outlay Capital contributions Net book value of assets disposed Transfer to Water and Sewer Capital Projects Funds Net expense from capital projects consolidation Increase in compensated absences Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets 13,470,409 12,859,641 610,768 2,057,005 (97,500) (18,437) 4,024 (4,071) 110,084 530,453 (46,904) 634,500 109,133 (5,763) (149,457) (1,736,167 1,386,900 1,997,668 89 SCHEDULE 10, Page I of 2 CITY OF MONROE, NORTH CAROLINA WATER AND SEWER CAPITAL PROJECTS FUNDS CAPITAL RESERVE SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 OTHER FINANCING SOURCES (USES) Transfers from other funds: Water and Sewer Capital Projects Funds Increase in fund balance Total other financing sources (uses) Fund balance, beginning Fund balance, ending Variance Positive Budget Actual (Negative) 3,318,739 3,318,739 1, SCHEDULE 10, Page 2 of 2 CITY OF MONROE, NORTH CAROLINA WATER AND SEWER CAPITAL PROJECTS FUNDS CAPITAL PROJECTS SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) From Inception and For the Fiscal Year Ended June 30, 2009 Actual Variance Project Prior Current Total to Positive Authorization Years Year Date (Negative) REVENUES Investment earnings 69,127 109,133 178,260 178,260 EXPENDITURES Construction costs capitalized 678,735 458,147 192,783 650,930 27,805 Construction in progress 45,311,882 893,230 5,762,227 6,655,457 38,656,425 Other costs 9,945 9,945 9,945 Total expenditures 46,000,562 1,361,322 5,955,010 7,316,332 38,684,230 Revenues over (under) expenditures (46,000,562 (1,292,195 (5,845,877 (7,138,072 38,862,490 OTHER FINANCING SOURCES (USES) Transfers from (to) other funds: Water and Sewer Fund 5,949,500 5,315,000 634,500 5,949,500 Water and Sewer Capital Reserve Fund 50,000 50,000 50,000 Proceeds from revenue bonds 40,001,062 5,201,062 5,201,062 (34,800,000 Total other financing sources (uses) 46,000,562 10,566,062 634,500 11,200,562 (34,800,000 Revenues and other financing sources over (under) expenditures and other financing uses 9,273,867 (5,211,377 4,062,490 4,062,490 91 SCHEDULE 11 CITY OF MONROE, NORTH CAROLINA ELECTRIC FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 REVENUES Operating revenues: Charges for services: Electric power sales Sales tax Total Other operating revenues Total operating revenues Nonoperating revenues: Rate stabilization funds Power agency funding Other nonoperating revenues Investment earnings Total nonoperating revenues Total revenues Variance Positive Budget Actual (Negative) 42,374,000 39,822,033 (2,551,967) 1,271,000 995,064 (275,936 43,645,000 40,817,097 (2,827,903 80,500 445,168 364,668 43,725,500 41,262,265 (2,463,235 120,708 120,708 511,704 511,704 114,000 122,952 8,952 1,261,000 1,335,745 74,745 1,375,000 2,091,109 716,109 45,100,500 43,353,374 (1,747,126 OTHER FINANCING SOURCES Installment purchase obligations issued Repayment of loan from General Fund Repayment of advance from Airport Fund Total other financing sources 345,000 161,100 (183,900) 131,480 131,477 (3) 476,480 292,577 (183,903 FUND BALANCE APPROPRIATED Total revenues and other financing sources 16,896,998 (16,896,998 62,473,978 43,645,951 (18,828,027) Continued 92 SCHEDULE 11, Continued CITY OF MONROE, NORTH CAROLINA ELECTRIC FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 EXPENDITURES Operations: Salaries and employee benefits Operating expenditures Total Electric power purchases Debt service: Principal retirement Interest and other charges Total Capital outlay Total expenditures OTHER FINANCING USES Transfers to other funds Electric Capital Projects Funds Advance to Natural Gas Fund Advance to Stormwater Fund Natural Gas Fund Advance to Airport Fund Total other financing uses Total expenditures and other financing uses Variance Positive Budget Actual (Negative) 2,183,321 1,339,187 844,134 2,638,456 2,158,195 480,261 4,821,777 3,497,382 1,324,395 36,085,000 35,142,149 942,851 404,495 364,821 39,674 1,109,150 1,127,689 (18,539 1,513,645 1,492,510 21,135 1,776,785 1,955,362 (178,577 44,197,207 42,087,403 2,109,804 2,290,000 6,000,000 180,000 3,330,000 6,476,771 18,276,771 2,290,000 6,000,000 180,000 3,330,000 6,476,771 18,276,771 62,473,978 60,364,174 2,109,804 Continued 93 SCHEDULE 11, Continued CITY OF MONROE, NORTH CAROLINA ELECTRIC FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures and other financing uses Revenues and other financing sources under expenditures and other financing uses Reconciling items: Debt principal Installment purchase obligations issued Amortization of deferred loss on refunding Amortization of bond premimum Amortization of bond issuance costs Capital outlay Principal repayment of loan from General Fund Payments received on note receivable Advance to Airport Fund Advance to Natural Gas Fund Advance to Stormwater Fund Transfer to Electric Capital Projects Funds Net revenue from capital projects consolidation Increase in compensated absences Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets 43,645,951 60,364,174 (16,718,223 364,821 (161,100) (19,486) 16,904 (21,589) 1,626,702 (79,165) (420,534) 6,476,771 6,000,000 180,000 2,290,000 855,623 (17,434) (58,803) (2,050,298 14,982,412 (1,735,811 94 SCHEDULE 12 CITY OF MONROE, NORTH CAROLINA ELECTRIC CAPITAL PROJECTS FUNDS CAPITAL PROJECTS SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) From Inception and For the Fiscal Year Ended June 30, 2009 EXPENDITURES Construction costs capitalized 7,144,835 6,111,438 Actual 6,262,317 Variance Construction in progress Project Prior Current Total to Positive Other costs Authorization Years Year Date (Negative) REVENUES 51,308,092 20,069,093 9,642,225 29,711,318 21,596,774 Power agency funding 5,805,850 5,592,648 5,592,648 (213,202) Miscellaneous 6 6 6 Investment earnings 285,005 179,319 464,324 464,324 5,805,850 5,877,653 179,325 6,056,978 251,128 EXPENDITURES Construction costs capitalized 7,144,835 6,111,438 150,879 6,262,317 882,518 Construction in progress 37,693,747 13,684,943 9,491,346 23,176,289 14,517,458 Other costs 6,469,510 272,712 272,712 6,196,798 Total expenditures 51,308,092 20,069,093 9,642,225 29,711,318 21,596,774 Revenues over (under) expenditures (45,502,242 (14,191,440 (9,462,900 (23,654,340 21,847,902 OTHER FINANCING SOURCES Transfers from other funds: Electric Fund 23,060,467 20,770,463 2,290,000 23,060,463 (4) Natural Gas Fund 700,000 700,000 700,000 Proceeds from revenue bonds 21,741,775 21,741,775 21,741,775 45,502,242 42,512,238 2,990,000 45,502,238 (4) Revenues and other financing sources over expenditures 28,320,798 (6,472,900 21,847,898 21,847,898 95 SCHEDULE 13 CITY OF MONROE, NORTH CAROLINA NATURAL GAS FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 Budget REVENUES Operating revenues: Charges for services: Natural gas sales Other operating revenues Total operating revenues Nonoperating revenues: Other nonoperating revenues Investment earnings Total nonoperating revenues Total revenues OTHER FINANCING SOURCES Installment purchase obligations issued Electric Fund Transfers from other funds: General Fund Aquatics and Fitness Center Fund Total other financing sources Fund balance appropriated Total revenues and other financing sources Variance Positive Actual (Negative) 22,602,000 20,098,966 (2,503,034) 11,836 11,836 22,602,000 20,110,802 (2,491,198 15,711 15,711 247,000 202,664 (44,336) 247,000 218,375 (28,625 22,849,000 20,329,177 (2,519,823 107,000 101,700 (5,300) 6,000,000 6,000,000 2,500 (2,500) 100,000 243,347 143,347 6,209,500 6,345,047 135,547 945,224 (945,224 30,003,724 26,674,224 (3,329,500) Continued 96 SCHEDULE 13, Continued CITY OF MONROE, NORTH CAROLINA NATURAL GAS FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 EXPENDITURES Operations: Salaries and employee benefits Operating expenditures Total Natural gas purchases Debt service: Principal retirement Interest and other charges Total Capital outlay Total expenditures OTHER FINANCING USES Transfers to other funds: Electric Capital Projects Fund Natural Gas Capital Projects Fund Total other financing uses Total expenditures and other financing uses 700,000 7,600,000 700,000 7,600,000 Variance 8,300,000 Positive Budget Actual (Negative) 871,174 614,283 256,891 1,940,169 1,719,149 221,020 2,811,343 2,333,432 477,911 18,005,000 13,728,374 4,276,626 155,880 142,397 13,483 217,200 224,060 (6,860 373,080 366,457 6,623 514,301 478,227 36,074 21,703,724 16,906,490 4,797,234 700,000 7,600,000 700,000 7,600,000 8,300,000 8,300,000 30,003,724 25,206,490 4,797,234 Continued 97 SCHEDULE 13, Continued CITY OF MONROE, NORTH CAROLINA NATURAL GAS FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures and other financing uses Revenues and other financing sources over expenditures and other financing uses Reconciling items: Debt principal Installment purchase obligations issued Amortization of deferred loss on refunding Amortization of bond premimum Amortization of bond issuance costs Capital outlay Advance From Electric Fund Transfer to Natural Gas Capital Projects Fund Net income from capital projects consolidation Increase in compensated absences Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets 26,674,224 25,206,490 1,467,734 142,397 (101,700) (8,673) 2,824 (20,135) 478,227 (6,000,000) 7,600,000 3,341,146 (3,980) (31,851) (439.892) 4,958,363 6,426,097 98 SCHEDULE 14 CITY OF MONROE, NORTH CAROLINA NATURAL GAS CAPITAL PROJECTS FUNDS CAPITAL PROJECTS SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) From Inception and For the Fiscal Year Ended June 30, 2009 EXPENDITURES Construction costs capitalized 1,143,390 Actual 689,549 Variance 6,336 Project Prior Current Total to Positive 29,670,117 Authorization Years Year Date (Negative) REVENUES 89,863 14,637 Total expenditures 52,523,988 Miscellaneous 2,493 3,441 5,934 5,934 Investment earnings 48,527 97,568 146,095 146,095 Total revenues 51,020 101,009 152,029 152,029 EXPENDITURES Construction costs capitalized 1,143,390 447,505 689,549 1,137,054 6,336 Construction in progress 51,276,098 4,590,324 25,079,793 29,670,117 21,605,981 Other costs 104,500 65,839 24,024 89,863 14,637 Total expenditures 52,523,988 5,103,668 25,793,366 30,897,034 21,626,954 Revenues over (under) expenditures (52,523,988) (5,052,648) (25,692,357) (30,745,005) 21,778,983 OTHER FINANCING SOURCES Transfers from other funds: Natural Gas Fund 13,225,000 5,625,000 7,600,000 13,225,000 Electric Fund 3,330,000 3,330,000 3,330,000 Certificates of Participation 32,318,547 32,318,547 32,318,547 Proceeds from revenue bonds 3,650,441 3,650,441 3,650,441 Total other financing sources 52,523,988 9,275,441 43,248,547 52,523,988 Revenues and other financing sources over (under) expenditures 4,222,793 17,556,190 21,778,983 21,778,983 CITY OF MONROE, NORTH CAROLINA AQUATICS AND FITNESS CENTER FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 REVENUES Operating revenues: Charges for services: Recreational fees Other operating revenues Total operating revenues Nonoperating revenues: Other nonoperating revenues Investment earnings Total nonoperating revenues Total revenues FUND BALANCE APPROPRIATED Total revenues Budget SCHEDULE-15 Variance Positive Actual (Negative) 4,100,000 3,925,719 (174,281) 164,000 142,656 (21,344 4,264,000 4,068,375 (195,625 6,060 6,060 73,000 102,742 29,742 73,000 108,802 35,802 4,337,000 4,177,177 (159,823 1,529,144 (1,529,144 5,866,144 4,177,177 (1,688,967 Continued 100 SCHEDULE 15, Continued CITY OF MONROE, NORTH CAROLINA AQUATICS AND FITNESS CENTER FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 EXPENDITURES Operations: Salaries and employee benefits Operating expenditures Total Debt service: Principal retirement Interest and other charges Total Capital outlay Total expenditures OTHER FINANCING USES Transfers to other funds: Natural Gas Fund Total other financing uses Total expenditures and other financing uses 243,347 243,347 243,347 243,347 5,866,144 5,101,030 765,114 Continued 101 Variance Positive Budget Actual (Negative) 1,756,572 1,623,578 132,994 1,532,456 1,230,082 302,374 3,289,028 2,853,660 435,368 2,035,685 1,822,560 213,125 172,384 125,308 47,076 2,208,069 1,947,868 260,201 125,700 56,155 69,545 5,622,797 4,857,683 765,114 243,347 243,347 243,347 243,347 5,866,144 5,101,030 765,114 Continued 101 SCHEDULE 15, Continued CITY OF MONROE, NORTH CAROLINA AQUATICS AND FITNESS CENTER FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures and other financing uses Revenues and other financing sources over expenditures and other financing uses Reconciling items: Debt principal Decrease in compensated absences Net expense from capital projects consolidation Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets 4,177,177 5,101,030 (923,853 1,822,560 680 (398,269) (49,002) (257,339 1,118,630 194,777 102 SCHEDULE 16 CITY OF MONROE, NORTH CAROLINA AQUATICS AND FITNESS CENTER CAPITAL PROJECTS FUNDS CAPITAL PROJECTS SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) From Inception and For the Fiscal Year Ended June 30, 2009 Actual REVENUES Miscellaneous EXPENDITURES Construction costs capitalized Other costs Total expenditures Revenues over (under) expenditures OTHER FINANCING SOURCES Transfers from other funds: Aquatics and Fitness Center Fund Total other financing sources Revenues and other financing sources over expenditures Project Prior Authorization Years Current Year Variance Total to Positive Date (Negative) 424,000 22,327 398,269 420,596 3,404 424,000 22,327 398,269 420,596 3,404 401,673 (397,536 (424,000 (22,327 (398,269 (420,596 3,404 424,000 424,000 733 424,733 733 424,000 424,000 733 424,733 733 401,673 (397,536 4,137 4,137 103 SCHEDULE 17 CITY OF MONROE, NORTH CAROLINA AIRPORT FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 REVENUES Operating revenues: Charges for services: Leases Flowage fee Sales of fuel Total Other operating revenues Total operating revenues OTHER FINANCING SOURCES Transfers from other funds: General Fund Electric Fund Airport Capital Reserve Installment purchase obligations issued Total other financing sources FUND BALANCE APPROPRIATED Total revenues and other financing sources Variance Positive Budget Actual (Negative) 498,840 279,747 (219,093) 800 (800) 1,343,996 1,249,900 (94,096 1,843,636 1,529,647 (313,989 40,440 29,343 (11,097 1,884,076 1,558,990 (325,086 747,948 747,948 6,476,771 6,476,771 540,299 540,299 55,000 49,000 (6,000 7,820,018 7,814,018 (6,000 56,638 (56,638 9,760,732 9,373,008 (387,724 Continued 104 SCHEDULE 17, Continued CITY OF MONROE, NORTH CAROLINA AIRPORT FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 EXPENDITURES Operations: Salaries and employee benefits Operating expenditures Total Debt service: Principal retirement Interest and other charges Total Capital outlay Total expenditures OTHER FINANCING USES Transfers to other funds: Airport Capital Project Total other financing uses Total expenditures and other financing uses 6,474,531 6,474,531 6,474,531 6,474,531 9,760,732 9,152,052 608,680 Continued 105 Variance Positive Budget Actual (Negative) 586,554 503,735 82,819 1,912,177 1,490,268 421,909 2,498,731 1,994,003 504,728 39,870 35,936 3,934 594,600 598,499 (3,899 634,470 634,435 35 153,000 49,083 103,917 3,286,201 2,677,521 608,680 6,474,531 6,474,531 6,474,531 6,474,531 9,760,732 9,152,052 608,680 Continued 105 SCHEDULE 17, Continued CITY OF MONROE, NORTH CAROLINA AIRPORT FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures and other financing uses Revenues and other financing sources over expenditures and other financing uses Reconciling items: Debt principal Amortization of bond issuance costs Capital outlay Installment purchase obligations issued Net expense from capital projects consolidation Transfer to Airport Capital Project Fund Transfer from Airport Capital Reserve Fund Advance from Electric Fund Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets 9,373,008 9,152,052 220,956 35,936 (8,468) 49,083 (49,000) 370,973 6,474,531 (540,299) (6,476,771) (26,951) (605.963) (776,929 (555,973) 111TA SCHEDULE 18, Page I of 2 CITY OF MONROE, NORTH CAROLINA AIRPORT CAPITAL PROJECTS FUNDS CAPITAL RESERVE SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 REVENUES Restricted intergovernmental Investment earnings Total revenues OTHER FINANCING SOURCES (USES) Transfers from (to) other funds: Airport Capital Projects Funds Increase in fund balance Total other financing sources (uses) Revenues and other financing sources over (under) expenditures and other financing uses Fund balance, beginning Fund balance, ending Variance Positive Budget Actual (Negative) 153,500 153,500 153,500 153,500 (540,299) (540,299) 540,299 (540,299 (540,299) (540,299 (386,799) 386,799 107 SCHEDULE 18, Page 2 of 2 CITY OF MONROE, NORTH CAROLINA AIRPORT CAPITAL PROJECTS FUNDS CAPITAL PROJECTS SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) From Inception and For the Fiscal Year Ended June 30, 2009 108 Actual Variance Project Prior Current Total to Positive Authorization Years Year Date (Negative) REVENUES Restricted intergovernmental 2,407,819 300,000 300,000 (2,107,819) Investment earnings 174,687 217,473 392,160 392,160 Total revenues 2,407,819 474,687 217,473 692,160 (1,715,659 EXPENDITURES Construction costs capitalized 8,266,592 1,968,936 1,137,515 3,106,451 5,160,141 Construction in progress 14,443,275 219,309 2,706,668 2,925,977 11,517,298 Total expenditures 22,709,867 2,188,245 3,844,183 6,032,428 16,677,439 Revenues over (under) expenditures (20,302,048 (1,713,558 (3,626,710 (5,340,268 14,961,780 OTHER FINANCING SOURCES (USES) Transfers from (to) other funds: General Fund 322,537 324,777 (2,240) 322,537 Airport Fund 6,476,771 6,476,771 6,476,771 Proceeds from revenue bonds 12,942,740 12,942,740 12,942,740 Installment purchase obligations issued 560,000 (560,000 Total other financing sources (uses) 20,302,048 13,267,517 6,474,531 19,742,048 (560,000 Revenues and other financing sources over (under) expenditures and other financing uses 11,553,959 2,847,821 14,401,780 14,401,780 108 SCHEDULE 19 CITY OF MONROE, NORTH CAROLINA STORM WATER FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 REVENUES Operating revenues: Charges for services: Storm water receipts Total operating revenues Nonoperating revenues: Other nonoperating revenues Total nonoperating revenues Total revenues OTHER FINANCING SOURCES Advance from Electric fund Installment purchase obligations issued Total other financing sources Total revenues and other financing sources Variance Positive Budget Actual (Negative) 646,500 822,351 175,851 646,500 822,351 175,851 33 33 33 33 646,500 822,384 175,884 180,000 180,000 245,000 196,400 (48,600 425,000 376,400 (48,600 1,071,500 1,198,784 127,284 Continued 109 SCHEDULE 19, Continued CITY OF MONROE, NORTH CAROLINA STORM WATER FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 EXPENDITURES Operations: Salaries and employee benefits Reimbursements Operating expenditures Total Capital outlay Total expenditures Total expenditures and other financing uses Variance Positive Budget Actual (Negative) 358,100 317,890 40,210 177,088 177,088 338,312 274,823 63,489 873,500 769,801 103,699 198,000 196,864 1,136 1,071,500 966,665 104,835 1,071,500 966,665 104,835 Continued 110 SCHEDULE 19, Continued CITY OF MONROE, NORTH CAROLINA STORM WATER FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures and other financing uses Revenues and other financing sources over expenditures and other financing uses Reconciling items: Installment purchase obligations issued Capital outlay Capital contribution Increase in compensated absences Advance from Electric Fund Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets 1,198,784 966,665 232,119 (196,400) 269,654 108,664 (25,640) (180,000) (19,601) (58,480 (101,803 130,316 111 SCHEDULE 20 CITY OF MONROE, NORTH CAROLINA SOLID WASTE FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 REVENUES Operating revenues: Charges for services: Refuse collection fees Total Restricted intergovernmental revenue Total operating revenues Nonoperating revenues: Investment earnings Total nonoperating revenues Total revenues OTHER FINANCING SOURCES Transfers from other funds: General Fund Total other financing sources Total revenues and other financing sources Budget Actual Variance Positive (Negative) 2,750,000 2,731,167 (18,833) 2,750,000 2,731,167 (18,833) 10,000 16,739 6,739 2,760,000 2,747,906 (12,094 5,936 5,936 5,936 5,936 2,760,000 2,753,842 (6,158) 159,662 159,662 159,662 159,662 2,919,662 2,913,504 (6,158 Continued 112 SCHEDULE 20, Continued CITY OF MONROE, NORTH CAROLINA SOLID WASTE FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 EXPENDITURES Operations: Reimbursements Operating expenditures Total Total expenditures FUND BALANCE APPROPRIATION Total expenditures and other financing uses Variance Positive Budget Actual (Negative) 43,350 43,350 2,716,650 2,654,097 62,553 2,760,000 2,697,447 62,553 2,760,000 2,697,447 62,553 159,662 159,662 2,919,662 2,697,447 222,215 Continued 113 SCHEDULE 20, Continued CITY OF MONROE, NORTH CAROLINA SOLID WASTE FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2009 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures and other financing uses Revenues and other financing sources under expenditures and other financing uses and change in net assets 2,913,504 2,697,447 216,057 114 CITY OF MONROE, NORTH CAROLINA HEALTH AND DENTAL FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) FOR THE YEAR ENDED JUNE 30, 2009 REVENUES Operating revenues Interfund charges and employee contributions Nonoperating revenues Investment earnings Total revenues EXPENDITURES Operating expenditures Health benefit claims and premiums Other operating expenditures Total expenditures Revenues over expenditures OTHER FINANCING SOURCES Transfers from other funds: General Fund APPROPRIATED FUND BALANCE Revenues and appropriated fund balance over expenditures SCHEDULE 21 Variance Favorable Budget Actual (Unfavorable) 4,581,393 4,694,557 113,164 12,500 8,189 (4,311 4,593,893 4,702,746 108,853 4,887,079 4,446,767 440,312 77,621 5,816 71,805 4,964,700 4,452,583 512,117 (370,807) 250,163 620,970 536,400 244,175 (292,225 (165,593 165,593 494,338 494,338 115 CITY OF MONROE, NORTH CAROLINA WORKERS' COMPENSATION FUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) FOR THE YEAR ENDED JUNE 30, 2009 REVENUES Operating revenues Interfund charges and employee contributions Nonoperating revenues Investment earnings Total revenues EXPENDITURES Operating expenditures Workers' compensation claims and premiums paid Total expenditures Revenues over expenditures OTHER FINANCING SOURCES Transfers from other funds: General Fund APPROPRIATED FUND BALANCE Revenues and appropriated fund balance over expenditures SCHEDULE 22 Variance Favorable Budget Actual (Unfavorable) 300,000 300,000 35,000 31,041 (3,959 335,000 331,041 (3,959 307,457 219,303 88,154 307,457 219,303 88,154 27,543 111,738 84,195 1,711,657 1,782,709 71,052 (1,739,200 1,739,200 1,894,447 1,894,447 116 SCHEDULE 23 CITY OF MONROE, NORTH CAROLINA PROPERTYAND CASUALTYFUND SCHEDULE OF REVENUES AND EXPENDITURES BUDGET AND ACTUAL (NON -GAAP) FOR THE YEAR ENDED JUNE 30, 2009 REVENUES Operating revenues Interfund charges and employee contributions Other operating revenue Nonoperating revenues Investment earnings Total revenues EXPENDITURES Operating expenditures Property and liability claims and premiums Total expenditures Revenues over expenditures OTHER FINANCING SOURCES Transfers from other funds: General Fund APPROPRIATED FUND BALANCE Revenues and appropriated fund balance over expenditures Variance Favorable Budget Actual (Unfavorable) 141,350 144,350 3,000 2,782 2,782 10,472 7,394 (3,078 151,822 154,526 2,704 251,108 313,123 (62,015 251,108 313,123 (62,015 (99,286) (158,597) (59,311) 418,869 415,905 (2,964 (319,583 319,583 257,308 257,308 117 SCHEDULE 24 CITY OF MONROE, NORTH CAROLINA SCHEDULE OF AD VALOREM TAXES RECEIVABLE June 30, 2009 Reconcilement with revenues: Ad valorem taxes General fund 16,090,376 Amounts written off per statute of limitations 26,293 Refunds, releases of prior years' taxes 17,277 Interest and advertising cost recovery (77,186) Total collections and credits 16,056,760 118 Uncollected Uncollected Balance Collections Balance Fiscal Year June 30, 2008 Additions And Credits June 30, 2009 2008-2009 16,230,793 15,668,719 562,074 2007-2008 485,778 304,823 180,955 2006-2007 144,214 42,313 101,901 2005-2006 67,972 10,279 57,693 2004-2005 43,540 19,524 24,016 2003-2004 19,156 744 18,412 2002-2003 19,440 122 19,318 2001-2002 8,938 165 8,773 2000-2001 16,298 180 16,118 1999-2000 8,718 89 8,629 1998- 1999 9,802 9,802 823,856 16,230,793 16,056,760 Ad valorem taxes receivable 997,889 Reconcilement with revenues: Ad valorem taxes General fund 16,090,376 Amounts written off per statute of limitations 26,293 Refunds, releases of prior years' taxes 17,277 Interest and advertising cost recovery (77,186) Total collections and credits 16,056,760 118 SCHEDULE 25 Original levy Property taxed at current year's rate Registered motor vehicles taxed at prior year's rate Total Public Utility Allocation Discoveries Abatements Total property valuation Net levy Uncollected taxes at June 30, 2009 Current year's taxes collected Current levy collection percentage Secondary Market Disclosures: CITY OF MONROE, NORTH CAROLINA ANALYSIS OF CURRENT TAX LEVY CITY -WIDE LEVY For the Fiscal Year Ended June 30, 2009 Assessed Valuation: Assessment Ratio' Real property Motor vehicle property Personal property Public Service Companies Total Assessed Valuation Tax Rate per $100 Levy (includes discoveries, releases and abatements)' 'Percentage of appraised value has been established by statute. 2 Valuation of railroads, telephone companies and other utilities as determined by the North Carolina Property Tax Commission. 'The levy includes interest and penalties. In addition to the City -wide rate, the levy by the City on behalf of the Downtown Monroe District for the fiscal year ended June 30, 2009 was $45,380. 2,366,529,135 190,426,660 657,278,852 49,487,408 3,263,722,055 0.495 16,155,424 119 Total Levy Property excluding City Wide registered Registered Property Total Motor Motor Valuation Rate Levy Vehicles Vehicles 3,155,319,640 0.495 15,595,468 14,993,372 602,096 83,276,482 504,238 504,238 3,238,596,122 16,099,706 14,993,372 1,106,334 49,487,408 0.495 244,963 244,963 8,147,494 0.495 44,830 44,830 (32,508,969) 0.495 (158,706) (126,934) (31,772) 3,263,722,055 16,230,793 15,156,231 1,074,562 (562,074) (370,825) (191,249) 15,668,719 14,785,406 883,313 96.54% 97.55% 82.20% Assessed Valuation: Assessment Ratio' Real property Motor vehicle property Personal property Public Service Companies Total Assessed Valuation Tax Rate per $100 Levy (includes discoveries, releases and abatements)' 'Percentage of appraised value has been established by statute. 2 Valuation of railroads, telephone companies and other utilities as determined by the North Carolina Property Tax Commission. 'The levy includes interest and penalties. In addition to the City -wide rate, the levy by the City on behalf of the Downtown Monroe District for the fiscal year ended June 30, 2009 was $45,380. 2,366,529,135 190,426,660 657,278,852 49,487,408 3,263,722,055 0.495 16,155,424 119 CITY OF ci heritage qfprocrress e"') c"I'll Statistical Section This part of the City of Monroe's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Page Financial Trends These tables contain trend information to help the reader understand how the City's financial performance and well being have been changed over time 123 Revenue Capacity These tables contain information to help the reader assess the City's most significant local revenue source, the propertytax 128 Debt Capacity These tables present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in thefuture 132 Demographic and Economic Information These tables offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place 137 Operation Information These tables contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities 139 Sources: Unless otherwise noted, the information in these tables is derived from the comprehensive annual financial reports to the relevant year. 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O N M 7t v, to oc a, a z W O N O N O N O N O N O N O N O N O N O N 0 z v .M. h ti W h �i Q' V W O ti Q W A W V 0 ayW7 h ^G V V w C N N N vl vl C� y C OO l0 M M M M N U A O O N O O O N 0 z v 0 oc O O l0 O O M O Vn O O l� 7t V) V) O a, W O O w N a W O y O L� U O O z O M b A O L7 N vi L7 l0 U W O V cC Q 4 X23 o b 4 'y U o OO H U U i C7 O O O N 0 z v 0 oc b ti W h 00 a, N O 7t M N 00 M 00 M M O o0 l� O 7t O N O 7t O N r M N a 00 O 7t O N N O N 00 l� 7t oc M O 7t O N o0 Nn N N o0 l0 7t M N N O O 7t 1 N a, W O O FG �t o -zt N N V 7t a oo m N o N N c V M N o0 00 l0 l0 N O N 7t 7t 7t 10 C7 O M N M l0 vl O 00 00 N o0 M O l� M 00 vl M N W tr '�t O 7 t a, O a, l� a, W N h W o w v v� cd cC cd iy ,-y 'd 3 4 b 3 i o 3 N i N p] o N 3 3 3 O O J3 -d O N O N o o a o 0 z v U v 0 .M. I w V Q O V Y m rti Q Q V con Q F H V a Q N N O h N O N h N Vt N 0 vt N N O v N N N m N N N N ri a O cG C. C m N x N NU O A y O N Vt .T U 3r U N W U' P c G v; O W a• C'.'O a• ccUCC U U X cG c t pp pp w t cG L o C. 'O N O o' 7 N N d U N N y V V M M t N N •--i x M x O O M •--i N O G O Q N N •--i Q N •--i CO M CO O O M •--i •--i �n •--i x O x O N 10 V .--i M CO M CO .--i V1 .--i N O Q •--i O 10 h O O O, 00 •--i •--i O N V1 00 V1 .--i O N •--i Q N •--i 00 M 00 O O M •--i •--i M •--i M h �O O O •--i M 00 M 00 .--i •--i N Q •--i 00 M O M r •--i •--i CO N �n N N N �n •--i N N Q 00 O Q 00 •--i Q N •--i 00 M 00 O O M •--i •--i N •--i h h M O A O �n •--i N �O O CO •--i �n •--i N Q •--i CO O M N N k V1 00 O 00 •--i V1 V1 N 00 M 00 O V1 M V1 h V1 N O c¢' h •--i N �O 00 00 .--i •--i .--i CO •--i 00 M Q O �J y7 •--i •--i �n N N N M �n �O O y O .--i 00 M Q Q 00 \O •--i Q M N •--i 00 M 00 O M •--i •--i Q •--i O O h h M O Q V M h M h 00 00 M •--i �O •--i N •--i 00 M 00 O N •--i •--i �O •--i Q O h 00 O Q .-O N y O �O �n O N �O �n h •--i �n .--i .--i h •--i �O •--i �O O �n w0 y s O N N~ .--i N w N h Q N h h co •--i �O Q N •--i CO M CO O �n N •--i •--i N •--i CO O h O CO O Q y O N b-0 0 N N N 7J O 7 c�OC W 9 5-0 3 C O l 't O �n rA co M M co N co M co O N O O h N M O 5D N 't 't O N 10 Q h •--i •--i h •--i �O O N O Q O q N N w 0 N O 6' m co N N N cd T O Fes-' O y u O u y w i' 'y cC N 'JOA O bD y ctl N p cC y tj 45 7J w w V V U .r O C V V w q 'o A g o �a �n kj s d a�i a�i S� a�i o vi vi U r7i Cq vi A a+ a+ vi u W v w CITY OF ci heritage qfprocrress e"') c"I'll 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 To the Honorable Mayor and Members of the City Council City of Monroe, North Carolina We have audited the accompanying financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregated remaining fund information of the City of Monroe, North Carolina, as of and for the year ended June 30, 2009, which collectively comprises the City of Monroe's basic financial statements, and have issued our report thereon dated October 26, 2009. 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. The financial statements of the City of Monroe ABC Board and the City of Monroe Tourism Development Authority were not audited in accordance with Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Monroe's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Monroe's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City's financial statements that is more than inconsequential will not be prevented or detected by the City's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control over financial reporting that might be 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. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Monroe'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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 143 This report is intended solely for the information and use of management, others within the organization, members of City Council, and federal and State awarding agencies and pass through entities and is not intended to be and should not be used by anyone other than these specified parties. October 26, 2009 Monroe, North Carolina *4 1�k &W/7 144 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A -133 AND THE STATE SINGLE AUDIT IMPLEMENTATION ACT To the Honorable Mayor and Members of the City of Council City of Monroe, North Carolina Compliance We have audited the compliance of the City of Monroe, North Carolina, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A -133 Compliance Supplement and the Audit Manual for Governmental Auditors in North Carolina, issued by the Local Government Commission, that are applicable to each of its major federal programs for the year ended June 30, 2009. The City of Monroe's major federal programs are identified in the summary of auditor's 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 Monroe's management. Our responsibility is to express an opinion on the City of Monroe's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A -133, Audits of States, Local Governments, and Non Profit Organizations, and the State Single Audit Implementation Act. Those standards, OMB Circular A- 133, and the State Single Audit Implementation Act 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 Monroe's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City of Monroe's compliance with those requirements. In our opinion, the City of Monroe complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2009. Internal Control Over Compliance The management of the City of Monroe 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 Monroe's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies that adversely affects the entity's ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the City's internal control. 145 A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the City's internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be 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 management, others within the organization, members of City Council, and federal and State awarding agencies and pass through entities and is not intended to be and should not be used by anyone other than these specified parties. October 26, 2009 Monroe, North Carolina P,e, ie�» 146 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR STATE PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH APPLICABLE SECTIONS OF OMB CIRCULAR A -133 AND THE STATE SINGLE AUDIT IMPLEMENTATION ACT To the Honorable Mayor and Members of the City Council City of Monroe, North Carolina Compliance We have audited the compliance of the City of Monroe, North Carolina, with the types of compliance requirements described in the Audit Manual for Governmental Auditors in North Carolina, issued by the Local Government Commission, that are applicable to each of its major State programs for the year ended June 30, 2009. The City of Monroe's major State programs are identified in the summary of auditor's 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 State programs is the responsibility of the City of Monroe's management. Our responsibility is to express an opinion on the City of Monroe'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 applicable sections of OMB Circular A -133, as described in the Audit Manual for Governmental Auditors in North Carolina, and the State Single Audit Implementation Act. Those standards, applicable sections of OMB Circular A -133, and the State Single Audit Implementation Act require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major State program occurred. An audit includes examining, on a test basis, evidence about the City of Monroe's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City of Monroe's compliance with those requirements. In our opinion, the City of Monroe complied, in all material respects, with the requirements referred to above that are applicable to each of its major State programs for the year ended June 30, 2009. Internal Control Over Compliance The management of the City of Monroe is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to State programs. In planning and performing our audit, we considered the City of Monroe's internal control over compliance with requirements that could have a direct and material effect on a major State program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a State program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies that adversely affects the entity's ability to administer a State program such that there is more than a remote likelihood that noncompliance with a type of a compliance requirement of a State program that is more than inconsequential will not be prevented or detected by the City's internal control. 147 A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a State program will not be prevented or detected by the City's internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be 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 management, and others within the organization, members of City Council, and federal and State awarding agencies and pass through entities and is not intended to be and should not be used by anyone other than these specified parties. October 26, 2009 Monroe, North Carolina 148 CITY OF MONROE, NORTH CAROLINA SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Fiscal Year Ended June 30, 2009 SCHEDULE 26 Section L Summary of Auditors' Results Financial Statements Type of auditors' report issued: Unqualified Internal control over financial reporting: Material weakness(es) identified? yes X no Significant Deficiency(s) identified that are not considered to be material weaknesses yes X none reported Noncompliance material to financial statements noted yes X no Federal Awards Internal control over major federal programs: Material weakness(es) identified? yes X no Significant Deficiency(s) identified that are not considered to be material weaknesses yes X none reported Type of auditors' report issued on compliance for major federal 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 federal programs: CFDA Number Name of Federal Program 97.083 Staffing for Adequate Fire Emergency Response (SAFER) Dollar threshold used to distinguish between Type A and Type B Programs 300,000 Auditee qualified as low -risk auditee? X yes no State Awards Internal control over major State programs: Material weakness(es) identified? yes X no Significant Deficiency(s) identified that are not considered to be material weaknesses yes X none reported Continued- 149 SCHEDULE 26, Continued CITY OF MONROE, NORTH CAROLINA SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Fiscal Year Ended June 30, 2009 Type of auditors' report issued on compliance for major State programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with the State Single Audit Implementation Act yes X no Identification of major State programs: Program Name Powell Bill Aeropointe Parkway Section II Financial Statement Findings None reported. Section III Federal Award Findings and Questioned Costs None reported. Section IV State Awards Findings and Questioned Costs None reported. 150 CITY OF MONROE, NORTH CAROLINA SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS For the Fiscal Year Ended June 30, 2009 Finding: None reported. SCHEDULE 27 151 SCHEDULE 28 CITY OF MONROE, NORTH CAROLINA SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS For the Fiscal Year Ended June 30, 2009 State/ Federal Pass Through Federal (Direct Grantor /Pass- Through CFDA Grantor's and Pass Through) State Local Grantor Prouram Title Number Number Expenditures Expenditures Expenditures Federal Grants: Cash Programs: U.S. Department of Justice: Direct Programs: Drug Enforcement Administration 16.579 72,792 Law Enforcement Byrne Grant 16.592 595 U.S. Department of Homeland Security: Direct Programs: Staffing for Adequate Fire Emergency Response (SAFER) 97.083 303,795 164,984 Assistance to Firefighers Grant 97.044 7,380 1,470 U.S. Department of Housing and Urban Development: Direct Programs: Economic Development Incentive Special Pr( 14.251 247,500 Federal Hi6way Administration: Passed through the N.C. Department of Transportation: Government Highway Safety Program 20.600 7,603 7,603 Total Assistance Federal Programs 639,665 174,057 State Grants: Cash Assistance: N.C. Department of Transportation: Powell bill 1,210,058 State Aid to Airports Program 153,500 17,894 Aeropointe Parkway 400,000 352,430 N.C. Department of Community Assistance: Scattered Site Housing Grant 194,429 N.C. Department of Environment and Natural Resources: Citizen Recycling Incentive Program 1,000 N.C. Department of Health and Human Services: Aging Grant 4,363 1,454 Total Assistance State Programs 1,963,350 371,778 Total Federal and State Assistance 639,665 1,963,350 545,835 Continued 152 SCHEDULE 28, Continued CITY OF MONROE, NORTH CAROLINA SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS For the Fiscal Year Ended June 30, 2009 Notes to the Schedule of Expenditures of Federal and State Financial Awards: The accompanying Schedule of Expenditures of Federal and State Awards includes the Federal and State grant activity of the City of Monroe and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A -133, Audits of States, Local Governments, and Non -Profit Organizations, and the State Single Audit Implementation Act. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. 153 CITY OF ci heritage qfprocrress e"') c"I'll