Loading...
Comprehensive Annual Financial Report - June 30, 2010City of Nor 0 arolina a heritage of progress City of Monroe, North Carolina Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2010 Prepared By Department of Finance Assistant City Manager/Director of Finance Greg Demko Assistant Director of Finance Lisa Strickland Budget Analyst Mary Lou Clark CITY OF �rIONROE a heritage of progress CITY OF MONROE, NORTH CAROLINA TABLE OF CONTENTS June 30, 2010 INTRODUCTORY SECTION: Page Letter of Transmittal ......... ............. ............. ............. ............. .............. ........................... vii - xiii GFOA Certcate ofAchievementfor Excellence in Financial Reporting ........................... xiv List of Principal Officials . ............. .... .... ............. ............. .............. ........................... xv Organizational Chart ....... ............. .............. ............. ............ .............. .... ...................... 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 ... .......... ............. .......... ......... ........................... 32-63 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 CITY OF MONROE, NORTH CAROLINA TABLE OF CONTENTS June 30,Z0K0 Combining Statement of Revenues, Expenses, and Page The Health Care Plan 75 Schedule of Funding Progress ................................................................. 66 The Health Care Plan Schedule of Employer Contribution .......................................................... 67 Other Supplemental Information: 77-80 Combining and Individual Fund Statements and Schedules: NomoajorGovonnmunta Funds: 81 -85 Combining Balance Sheet ..... .............. ............. ............. .............. ........................... 78-71 Combining Statement of Revenues, Expenditures, and 86-87 Changes in Fund Balances .............. ............. ............. .............. ............... ......... 72-73 Internal Service Funds: 8udgdond&otuo|-(N0N-G&Ap): Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets ................................................................. 75 Combining Statement ofCash 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 iu Fund Balances - Budget and Actual - Capital Projects Funds --------- 86-87 Enterprise Funds Budgetary Schedules: Schedule of Revenues and Expenditures - 8udgdond&otuo|-(N0N-G&Ap): Water and Sewer Fund ' .............. ............. ............. ----' --------- 88-90 Water and Sewer Capital Projects Fundu—. ............. ----' --------- 91 -92 Electric Fuud—. ............. ----' ............. ............. ----' --------- 93-95 Electric Capital Projects Fuod--. ............. ---- .............. --------- 96 Natural Gaayuud ---' .............. ............. ............. ----' --------- 97'99 Natural Gas Capital Projects Fund ............. ............. ----' --------- |OO M CITY OF MONROE, NORTH CAROLINA TABLE OF CONTENTS June 30,2010 Page Aquatics and Fitness Center Capital Projects Fund ... .............. ........................... 104 AirportFund ..... ............. .............. ............. ............. .............. .................. ........ |O5-l07 Airport Capital Projects Fund ....... ............. ............. — ........... —........................ |OD Storm Water Fund ............................ ............................................ 109-111 Solid Waste Fuud------------------------- 112-114 Internal Service Funds Budgetary Schedules: Schedule of Revenues and Expenditures —(NDN'GAAP): Other Schedules Schedule of Ad Valorem Taxes &cocivoh|c ...... .......... . .............. ........................... 118 Table Page STATISTICAL SECTION: Financial Trends: Nc&ometo6yCooqponoot---'----..----.----.----..--------- | 123 Changes in Net Assets ... ............. .............. ............. ............. .............. .................. ........ 2 124'|25 Fund Balances, Governmental Funds ......... ............ ............. .............. —........................ 3 126 Revenue Assessed Value and Actual Value of Taxable Property ......... .............. ........................... 5 128 Direoond0verkqpping Property Tax Rates ............ ............. .............. ........................... 6 129 Pdnoipu9,opertyToxpoyeo—'----..----.----.----..--------- 7 130 Debt Capacity: Ratios uf Outstanding Debt 6y Type ......... ............. ............. .............. ...... ...... ............. 0 132 Ratios of General Bonded Debt Outstanding ......... .......... . .............. .... ...................... 10 133 0rcound0vo6uppingGovornmeo1u&cdvitieuDcb1-------..--------- || 134 Legal Debt Margin Information ' .............. ............. ............. .............. ............... ......... 12 135 Coverage........ .............. ............. ............. .............. ........................... 13 136 Demographic and Economic Information: Demographic and Economic Statistics ....... ............. ............. .............. ........................... 14 137 PrincipalEmployers ..... ........... . .............. .... ........ ........... ......... —........................ .... 15 138 Operation Information: Full-Time Equivalent City Governmental EmployeesbyPuudion -- --------- 16 139 �� CITY OF MONROE, NORTH CAROLINA TABLE OF CONTENTS June 30, 2010 Page 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 iv Introductory Section • Letter of Transmittal • Certificate of Achievement for Excellence in Financial Planning • List of Principal Officials • Organizational Chart CITY OF �rIONROE a heritage of progress CITY OF MONROE P.O. BOX 69 – MONROE, NC 28111-0069 PHONE 704-282-4500 FAX 704-283-9098 October 26, 2010 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, 2010. 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, 2010. 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, Arc of Union County, Monroe Middle School, the Police Athletic League, United Family Services, Urban League of Central Carolinas 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 In spite of the national recession, new and existing industries have announced investments in manufacturing equipment and facility expansions totaling more than $72 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. Last fiscal year, Monroe was named in the Top 5 in the United States for Excellence in th Aerospace Recruitment by Expansion Solutions magazine and Union County was 10 in the nation in job creation from 2000 to 2008 by CNN/Money. April 2010 we were named “Top 10 Aerospace Communities in the South You May Not Know About” by Southern Business Development magazine. Because of our recruitment and retention efforts, Monroe has maintained the lowest unemployment in the Charlotte Region for 11 consecutive years. Monroe has evolved into a premier location for precision manufacturing. Nearly 12% 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 10 countries represented among 15 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 was put in service in April 2010, and will provide the City with capacity to significantly grow and expand the natural gas system and provide significant opportunities for economic development. With the line completed the City is 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 4/5 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 were successfully completed and placed in service. ix 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 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 is updating the stormwater infrastructure system maps, which is scheduled for completion by the end of 2010. As part of the program to enhance the existing stormwater system, the City established a 6-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 380 work orders in addition to completing four capital improvement projects and two major drainage 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 entire city. The engineering consultants completed a pilot stormwater master plan for the Stewart Creek Tributary 4 watershed. In 2010, the engineering consultant is completing the remaining stormwater master plan for the Stewarts Creek 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. Work continues on the Stewart Creek sewer outfall and pump station replacement. Project funding is via a proposed $13.0 million dollar SRF loan for the NCDENR Constructions Grants and Loans Division. The City continues to invest in its future. The Charlotte-Monroe Executive Airport is undergoing a $25+ million renovation and expansion, financed partially through a Combined Enterprise Revenue Bond. This project includes hangar acquisition and construction, terminal expansion design, 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 airport and 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 fire department has completed or made progress on various goals and objectives included in the department’s community driven strategic plan. Approximately 100 members of the community along with over 30 members of the fire department came together in 2009 to develop the strategic plan, which will guide the fire department over the next five years. The fire department developed and implemented a risk assessment program, which includes conducting surveys of facilities for associated fire risks. The fire department developed an enhanced annual training plan to meet core competencies and developed drills to meet the needs of the annual training plan. The department added mobile data terminals in 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 x 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. The fire department’s on-duty supervisor’s vehicle was equipped with a command center to aid in more efficient and effective management of emergency incidents. This command center features mobile CAD technology, an electronic accountability system to track firefighters and a video link to thermal imaging cameras used by firefighters inside of buildings during structure fires. 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 the 2009-2010 fiscal year, the police department was awarded reaccreditation by the Commission on Law Enforcement Agencies. This was a significant accomplishment for our entire agency and the City of Monroe. During the past year, the Monroe Police Department participated in the National Night Out Community stth Event. The Department finished 1 place in North Carolina and 8 in the United States for agencies our size. Monroe Police Department has a tremendous relationship with the communities it serves and the participation from these communities was a direct reflection in our success with this event. The Monroe Police Department participated in several significant community events during the past year. Monroe officers are involved with the DARE program and provide a week long educational program to the students that participate in the DARE program. The Monroe Police Department has three different sports teams in the Police Athletic League, and participated in the True Blue Christmas program that provides gifts to underprivileged children in local communities. The Community Intervention Team moved into Maurice Street Apartments. This increased the officer’s presence in this community and created a better working relationship with the Monroe Housing Authority. The Special Response Team and the Honor Guard were increased in personnel to meet the needs of our agency. The Traffic Team was expanded by an additional officer to assist with traffic enforcement and the traffic education programs that our department conducted throughout the year. Our agency continues to transition to the 800 MHz radio system and this process will continue until 2013. The City of Monroe continues to aggressively seek 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 nearing completion. In conjunction with the Downtown Master Plan, 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. This project will address congestion on Charlotte Avenue between the Franklin and Jefferson Street intersections. In addition, the City has design and construction drawings prepared for the re-alignment of Concord Avenue with Charlotte Avenue to address congestion as vehicles move out of the Downtown Area and once funding is obtained, 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. The Downtown Wi-Fi and sound system projects are complete. The Monroe Hardware Warehouse project, which will add both xi residential units and retail shops, is in the construction phase with completion anticipated by end of 2010. The Warehouse project has been approved for Federal and State Rehab Tax Credits and also Mill Tax Credits. Developers for the Joffre Hotel site have withdrawn their proposal due to the market and economy. The Five Points Gateway Signage project entering downtown has been completed. Future plans for downtown will be prioritized according to the Master Plan and the City’s Strategic Plan developed along with City Council. The IT department is in the process of updating the City’s server hardware and software. A few new servers have been installed to run VM-Ware. This virtual server environment will allow the IT department to better manage the server hardware requirements and provide more up-time to the City’s IT infrastructure. Additional virtual servers are planned for redundancy and growth. A new data center has been constructed within the City Hall building to accommodate needed growth and future expansion. The new data center has redundant cooling capacity and uninterruptable power supplies. The IT department has started replacing the network switches that will provide redundancy and faster throughput for the network. There are many other improvements that the IT department is in the process of completing or are planned for the near future that will put the entire IT infrastructure in a better position to handle upcoming IT requirements. The City of Monroe pursues grant funding to provide resources for the completion of various projects. The City has recently received funding from the NC Aeronautics Council / NC Division of Aviation for $2.6 million for the airport runway overlay and strengthening and apron pavement rehabilitation project. The City is also continuing to receive funding from the US Department of Justice for a three-year grant for two police officers. 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 $98,789,312 and the average investment earnings rate was 3.0%. Investment income includes the change in the fair value of investments. During the year monies were invested and secured in accordance with state law. xii 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 2010 results that are built into the 2010 -11 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 2010, these actions included a freeze on hiring, restricting travel to training conferences necessary for professional certifications, reduction in workforce by six positions, relocation of six employees in order to close their positions in the general fund and early retirement for seven employees who took advantage of the incentive offered. In fiscal year 2011 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, 2009. This was the 17th 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. 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 Assistant Finance Director Lisa Strickland and Budget Analyst Mary Lou Clark who have provided valuable assistance with 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, Wayne Herron Greg Demko City Manager Assistant City Manager /Director of Finance xm 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, 2009 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. fTSTAIES CMPAM Stu affo President Executive Director AV CITY OF MONROE, NORTH CAROLINA LIST OF PRINCIPAL OFFICIALS June 30, 2010 Elected Officials Bobby G. Kilgore Mayor Dottie M. Nash Mayor Pro Tem John B. Ashcraft, Jr. Billy A. Jordan Margaret Desio Lynn A. Keziah Freddie Gordon City Administration H. Wayne Herron, Jr. City Manager Brian J. Borne Greg Demko Assistant City Manager/Downtown Monroe Assistant City Manager/Finance Director Director Terry M. Sholar Bridgette H. Robinson City Attorney City Clerk R. Christopher Platé James N. Loyd, Jr. Executive Director of Economic Director of Engineering Development and Aviation Debra C. Reed Lisa W. Stiwinter Director of Human Resources Director of Planning Don D. Mitchell Debra C. Duncan Director of Energy Services Police Chief Ronald D. Fowler Bruce Bounds Fire Chief Director of Information Technology C. Michael Courtney Russell G. Colbath Director of Parks & Recreation Director of Water Resources xv City Of Monroe, North Carolina Organizational Chart Citizens Mayor and City Council City Manager City Clerk City Attorney Assistant City Manager/ Assistant City Manager/ Finance Director Downtown Monroe Director Human Resources Director I I Engineeering Director I I I Economic Development and Aviation Director Police Chief I I Fire Chief I I I Information Technology Director Water Resources Director I I Planning Director Energy Services Director Parks and Recreation Director POTTER &^O° / , PA. CERTIFIED PUBLIC ACCOUNTANT'S INDEPENDENT `REPORT The Honorable Mayor and The City Council City o[Monroe North Carolina Wc have audited the accompanying financial statements o[the governmental activities, the business-type amivkies, the discretely presented component units, each major fund, and the aggregate romuinioghundinkxnmtionofdmChy of Monroe, North Cmn|inu, as of and for the year ended June 30, 2010, which collectively comprise the City of Moovnc's basic financial statements as listed in the (uWc of contents, These finomoio| statements are the responsibility o[ the City ofK4onvoo'smanagement. Our responsibility isUo express an opinion on these financial statements based on our audit. We conducted our audit in 0000rdonoc with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in (;ovcrvmum Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perfbnn the audit to obtain ousoouHc assurance about whether the basic Onon6o| statements are free ofmaterial misstatement. The financial aNtmncn$ of City of Monroe ABC Board and K4onmc Tourism Development Authority were not audited in accordance with Government Auditing Standards. /\o audit includes examining, ooutest basis, evidence supporting the amounts and disclosures in the hounciu| statements. An audit also includes assessing the accounting principles used and d&oificun| estimates made by management, as well as evaluating the overall finuooio| s(o(cmcu, presentation. VV* believe that our audit provides u reasonable basis for our opinion. In our opinion, the financial statements referred tu above present 6aidy, in all material respects, the financial position of the @pvcmmcntu| activities, the business-type activities, the discretely presented component units' each major fund, and the aggregate remuinin�fund information o[ the City ofK4onroc'74n�h Carolina, usn[ June 30,20|0.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 n[America. ln accordance with Government Auditing Standards, we have also issued our report dated November l20lOonour 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. The purpose of the report ix(udescribe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting oron compliance. That report is an in{cyro/ pun of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report inconsidering the results of our audit. Management's Discussion and Analysis, the Law Enforcement ODlocm' Special Separation Allowance Schedule and Other Pommmp|oyment Benefits (OPE8) Schedules of Funding Progress and Employer Contributions are not n required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Boon]. Wc have applied certain limited procedures, which consisted principally of inquiries o[ management regarding the methods o[ measurement and presentation of the required supplementary information, However, we did not audit this information and express no opinion on h. Our audit was performed for the purpose o[foming an opinion on the financial statements that collectively comprise the basic Onuooiu| statements of the City of Monroe, North Carolina. The introductory section, the other supplementary io/omonainn section, and the statistical section as listed in the accompanying table of contents are presented for purposes of additional analysis and are not o required part of the basic financial xNmmcnM. The 114 North Church Street u Monroe, NC28112w704.283.8189m7O4.289.343V fax mvm^*xQotopotteccom 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 /\-|33' Audits of States, Local Co"crnn,cnu. and Non-Profit Organizations, and the State Single Audit Implementation Ac\, and an not u required pmt of the basic financial statements. The other supplementary information and the schedule of expenditures of federal and Skoxc awards have been subjected to the auditing procedures applied in the audit o[ the basic financial statements and, in our opinion, are fairly stated` in all material oxpcuta` in relation to the basic Onuodu| gmcmeota taken as u 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, *e express 000pinion on them. November l20|0 Monroe, North Carolina 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, 2010. 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 $321,497,500 (net assets). Of this amount, $106,677,791 (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 $7,619,742. This increase was the net of a decrease of $1,269,463 from governmental activities and an increase of $8,889,205 for business- type activities. As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $21,353,112, a decrease of $1,534,138 in comparison with the prior year. Approximately 82 percent of this total amount or $17,622,970 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 $15,613,450 or 60 percent of total general fund expenditures for the fiscal year. The City’s total debt not including compensated absences and OPEB liability, net of retirements, decreased $3,998,544 (4%) during the current fiscal year. The primary elements of the decrease was the issuance of an installment financing loan totaling $1,697,000 for equipment purchases offset by $5,695,544 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 Basic Financial and Analysis Statements Government-wideFund Financial Notes to the Financial Statements Statements Financial Statements Summary Detail 3 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 4 cash flow in and out, and what monies ure left at that will ie available for spending in the next year. Governmental funds are reported using ao accounting method called modified accrual accounting which provides u short-term spending focus. /\ou result, the governmental fund fiuuuciu|statements give the reader detailed obod,teoo view that helps him or her determine if there are more or less Duuociu] resources available to finance the City's programs. The relationship bctv/ocn government activities (reported in the Statement of Net /\aaetm 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 eight individual governmental funds. Information iu presented separately in the governmental fund balance sheet and in the govccuoocotul fund statement of revenues, expenditures, and changes in fund balances for the General Fund which is considered to be a major [und. Data from the other seven governmental funds are combined into u single, aggregated presentation. Individual fund data for each of these non-major govcmn/ncmdul funds is provided in the lbnm or combining statements r\orvvhece in this report. These other seven governmental funds are made up of two capital projects funds and five special revenue funds including Community Development, Dovvniuvvn Monroe, Occupancy Tax, City Grant Programs and State Grant Programs. The City of Monroe adopts an annual budget for its General Fund, uu required hv North Carolina General Btundou. 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 Onunoc 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 um planned when the budget was adopted. The budgetary comparison statement uses the budgetary basis o[ accounting and is presented using the same tbonui, language, and oluaaifion1ionouothe legal budget docomncut The statement shows four columns: l\ the original budget uu adopted by the Council; 2\the final budget as unnouded by the Council; 3) the actual rsunucoes` charges to appropriations, and ending balances in the Geuomn| Fund; and, 4) the difference or variance bctp/con the Oou| budget and the actual resources and charges. To account for the difference between the budgetary basis of accounting and the modified accrual basis, n reconciliation showing the differences in the reported activities is shown at the end of the budgetary statement. Proprietary Funds — The[ity 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 oodvhiem in the government-wide fiuuuuiol statements. The City uses enterprise funds to account for its water and sewer, e|oobio, natural gas, aquatics and Giucuu center, mk)nuvvuter, sanitation and airport operations. Theme funds are the munoo as those functions mho.vo in the business-type ecdvdiom in the Statement of Internal service funds are an accounting tool used to uooumu|eto and mUnoote costs internally among various functions. The City utilizes an internal service fund for its health, worker's compensation and property and oouuu|ty insurance. Because services accounted for in the internal service fund predominately benefit Oovenmmou1ul rather than business-type functions, it has been included within the governmental activities inthe government-wide financial statements. Notes to the Financial Statements — The notes provide additional information that is eoocnLu| to o full understanding ofthe data provided in the government-wide and fund financial statements. The notes 10 the financial statements begin on page 32 of this report. Other lof0000tioo — bo addition to the basic financial statements and accompanying nniom, this report includes certain required supplementary information concerning the City of Monmc`m progress in R 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. The total net assets of the City of Monroe were $321,497,500 as of June 30, 2010. Of the City's total net assets $214,564,835 (66 %) 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 ($254,874) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $106,677,791 (34 %) 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 $7,619,742 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 2010, 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 Net Assets Figure 2 Governmental Activities Business -type Activities Total 2010 2009 2010 2009 2010 2009 Current and other assets $25,542,119 $27,034,812 $101,007,280 $120,245,086 $126,549,399 $147,279,898 Capital assets 81,505,564 81,636,681 226,582,766 204,894,111 308,088,330 286,530,792 Total assets 107,047,683 108,671,493 327,590,046 325,139,197 434,637,729 433,810,690 Long -term liabilities outstanding 8,582,025 9,047,818 88,137,311 91,293,944 96,719,336 100,341,762 Other liabilities 4,555,829 4,444,383 11,865,064 15,146,787 16,420,893 19,591,170 Total liabilities 13137,854 13,492,201 100,002,375 106,440,731 113,140,229 119,932,932 Net assets: Invested capital assets, net of related debt 73,296,107 74,438,325 141,268,728 127,103,540 214,564,835 201,541,865 Restricted 254,874 2,060 - 254,874 2,060 Unrestricted 20,358,848 20,738,907 86,318,943 91,594,926 106,677,791 112,333,833 Total net assets $93,909,829 $95,179,292 $227,587,671 $218,698,466 $321,497,500 $313,877,758 The total net assets of the City of Monroe were $321,497,500 as of June 30, 2010. Of the City's total net assets $214,564,835 (66 %) 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 ($254,874) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $106,677,791 (34 %) 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 $7,619,742 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 2010, including revenues and expenses, with a comparison to the prior year. For more detail see the Statement of Activities on page 16 -17. - Revenues: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Other taxes Grants and contributions not restricted to City of Monroe's Changes in Net Assets Figure 3 Govemmental Activities Business-type Activities 2010 2009 2010 2009 $5,630,582 $5,620,750 2,238,247 2,218,413 1,972,323 3,459,973 16,953,881 16,285,937 6,714,313 7,391,328 $89,719,118 $82,446,884 483,552 789,584 Total 2010 2009 $95,349,700 $88,067,634 2,238,247 2,218,413 2,455,875 4,249,457 16,953,881 16,285,937 6,714,313 7,391,328 specific grant programs 241,952 225,478 - - 241,952 225,478 Other 934,426 995,167 1,656,520 3,008,423 2,590,946 4,003,590 Total revenues 34,685,724 36,196,946 91,859,190 86,244,891 126,544,914 122,441,837 Expenses: General government $4,951,760 $4,724,842 $ - $ - $4,951,760 $4,724,842 Transportation 5,666,866 5,441,377 5,666,866 5,441,377 Public safety 17,774,850 18,088,959 17,774,850 18,088,959 Culture and recreation 4,906,281 4,914,395 4,906,281 4,914,395 Economic and physical development 1,783,573 858,485 1,783,573 858,485 Interest in long-term debt 161,494 311,430 - - 161,494 311,430 Water and sewer - - 11,520,115 11,543,398 11,520,115 11,543,398 Electrical 43,587,914 41,629,010 43,587,914 41,629,010 Natural Gas 17,584,631 16,866,784 17,584,631 16,866,784 Aquatics and Fitness Center 3,435,820 3,725,357 3,435,820 3,725,357 Stormwater 1,351,596 794,566 1,351,596 794,566 Solid waste 2,702,185 2,697,447 2,702,185 2,697,447 Airport - - 3,498,087 3,232,053 3,498,087 3,232,053 Total expenses 35,244,824 34,339,488 83,680,348 80,488,615 118,925,172 114,828,103 (Decrease) Increase in net assets before transfers (559,100) 1,857,458 8,178,842 5,756,276 7,619,742 7,613,734 Transfers (710,363) (907,609) 710,363 907,609 - - (Decrease) Increase in net assets Net assets — beginning Net assets — ending (1,269,463) 949,849 8,889,205 6,663,885 7,619,742 7,613,734 95,179,292 94,229,443 218,698,466 212,034,581 313,877,758 306,264,024 $93,909,829 $95,179,292 $227,587,671 $218,698,466 $321,497,500 $313,877,758 Governmental activities — Governmental activities decreased the City of Monroe's net assets by $1,269,463. Key elements of this net decrease are as follows: • An increase in property taxes of 4% ($667,944), due primarily to an increase in the valuation and resulting levy of personal property. • Capital grants and contributions decreased by $1,487,550. This was due to $2,272,898 less additions of infrastructure in FY 2010 than FY 2009. Infrastructure includes streets, curbs, sidewalks and stormwater for several subdivisions, There was an increase in the Economic and Physical Development function with the receipt of a $785,348 grant from the North Carolina Rural Economic Development Center. • A decrease of $677,015 or 10% was reported in other taxes due primarily to a $559,586 decrease in collection for local option sales tax and a $108,351 decrease in collection for beer and wine tax. The State General Assembly retained a higher level of the beer and wine tax distribution, resulting in a decrease in revenue for the City of Monroe. • An increase in expense in economic and physical development due to the conveyance of land to a local industry and a pass-through grant to a local industry from the North Carolina Department of Commerce. Business-type activities — Business-type activities increased the City of Monroe's net assets by $8,889,205 accounting for 116% of the total net growth in the government's net assets. Key elements of this increase are as follows: 7 Charges for services increased in water and electric but decreased in natural gas due to fluctuations in demand. A one-time increase of $6,000,000 in natural gas revenue was recognized due to an agreement with PSNC for capacity. More information about this agreement can be found in the notes to the financial statements on page 62. A decrease in capital grants and contributions was due to less donated assets which is because of a decrease in development activity. A decrease in other revenues of $1,351,903 was due primarily to decreased investment interest earnings. A full year of expenses for the new state mandated storm water utility increased expenses. 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, 2010, the governmental funds of City of Monroe reported a combined fund balance of $21,353,112, which is a decrease of $1,534,138 from last year’s total of $22,887,250. Of the governmental funds combined ending fund balances, $17,622,970 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, 2010, the fund balance in the General Fund was $19,625,584, an increase of $1,759,527 in comparison with the prior year. Of the total fund balance in the General Fund, $15,613,450 (80%) 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 60% of total general fund expenditures, while total fund balance represents 75% of that same amount. This increase to fund balance is due to savings from vacant positions due to a hiring freeze, early retirement and reduction in force totaled approximately $868,000. Savings in operating expenses totaled approximately $1,543,000. Another factor that contributed to the increase was the transfer of savings from capital projects and incentive grants totaling $1,599,680. The Other Government Funds which consist of the Capital Projects Fund, Occupancy Tax 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 decrease of $4,258,568 in this category is due primarily to the construction of the Winchester Children’s Center and the addition of a gymnasium at J Ray Shute Recreation Center. A piece of land was conveyed in the City Grant Program Fund as an economic incentive grant to a local industry. Another factor that contributed to the decrease was the return of savings from capital projects and incentive grants to the general fund. 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. 8 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. Minor proprietary funds include Aquatics and Fitness Center, Stormwater and Solid Waste Funds. 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, 2010, the City of Monroe's water fund reported total net assets of $72,286,066, an increase of $1,098,927 in comparison with the prior year. This increase is primarily due to an increase in 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, 2010, the City of Monroe's electric fund reported total net assets of $93,443,705, an increase of $621,632 in comparison with the prior year. This increase is primarily due to an increase in operating income. 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, 2010, the City of Monroe's natural gas fund reported total net assets of $38,466,204, an increase of $6,973,655 in comparison with the prior year. This increase is due to an increase in capital assets and a new long-term note receivable from Public Service Company of North Carolina (PSNC). This receivable is for capacity charges that are payable over a six year period: For more information on this joint venture, please seepage 62. The Airport Fund accounts for the operation of the Charlotte-Monroe Executive Airport. As of June 30, 2010, the City of Monroe's airport fund reported total net assets of $13,985,433, a decrease of $791,393 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. VIIJ Unrestricted Net Assets Growth in Net Assets 2010 2009 2010 2009 Water and Sewer $21,869,547 $21,184,478 $1,098,927 $1,997,668 Electric 49,205,975 48,924,656 621,632 (1,735,811) Natural Gas 17,196,135 19,064,633 6,973,655 6,426,097 Airport (4,424,894) 522,031 (791,393) (555,973) Aquatics and Fitness Center 1,838,011 1,562,001 513,695 194,777 Stormwater 368,472 79,668 413,803 130,316 Solid Waste 357,810 216,057 141,753 216,057 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. Minor proprietary funds include Aquatics and Fitness Center, Stormwater and Solid Waste Funds. 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, 2010, the City of Monroe's water fund reported total net assets of $72,286,066, an increase of $1,098,927 in comparison with the prior year. This increase is primarily due to an increase in 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, 2010, the City of Monroe's electric fund reported total net assets of $93,443,705, an increase of $621,632 in comparison with the prior year. This increase is primarily due to an increase in operating income. 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, 2010, the City of Monroe's natural gas fund reported total net assets of $38,466,204, an increase of $6,973,655 in comparison with the prior year. This increase is due to an increase in capital assets and a new long-term note receivable from Public Service Company of North Carolina (PSNC). This receivable is for capacity charges that are payable over a six year period: For more information on this joint venture, please seepage 62. The Airport Fund accounts for the operation of the Charlotte-Monroe Executive Airport. As of June 30, 2010, the City of Monroe's airport fund reported total net assets of $13,985,433, a decrease of $791,393 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. VIIJ Total amendments to the General Fund increased expenditures by $932,507 or 3.3%. 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 $191,806 and unspent appropriations (various grants and police equitable sharing) in the amount of $546,757. • Funds were appropriated for grants and donations received in the amount of $218,021. Revenues exceeded final budget by $551,032. Expenditures decreased from the prior year. This is due to measures taken to preserve the City's fund balance. Expenditures were 91% of the final amended expenditure budget. Expenditures were held $2.6 million below final budget amounts. Some of the key differences are as follows: • $1,542,558 in savings for 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 $867,781 below the final budget primarily due to a hiring freeze, early retirement and reduction in force. 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 W.A.5 on pages 42 - 47 of this report. Land Buildings and improvements Equipment Vehicles and motorized City of Monroe's Capital Assets (Net of Depreciation) Figure 4 Governmental Activities 2010 2009 $4,676,942 $4,374,393 12,568,101 10,420,493 1,555,085 1,644,409 Business-type Activities 2010 2009 $15,393,766 $13,730,862 29,013,338 29,649,000 4,079,507 4,135,490 Total 2010 2009 $20,070,708 $18,105,255 41,581,439 40,069,493 5,634,592 5,779,899 equipment 3,975,347 4,587,790 2,414,622 1,907,535 6,389,969 6,495,325 Other Intangibles 344,696 - - - 344,696 - Infrastructure 57,289,776 58,212,884 100,889,358 93,043,385 158,179,134 151,256,269 Construction in progress 1,095,617 2,396,712 74,792,175 62,427,839 75,887,792 64,824,551 Total $81,505,564 $81,636,681 $226,582,766 $204,894,111 $308,088,330 $286,530,792 The City of Monroe's investment in capital assets for its governmental and business—type activities as of June 30, 2010, totals $308,088,330 (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 $21,557,538 (7.5%). Major capital asset events during the year included the following: • Completion of Winchester Day Care • Park improvements at Winchester, Dickerson, Sutton, Sunset, Parks Williams and J Ray Shute Parks • Completion of the new Upper Zone water mains • New elevated storage tank on Rocky River Road • New force main from Lake Lee to Lake Twitty • New portable pump station at Lake Lee • New electric transformer at Camp Sutton IL Purchase ofunew Energy Services Building Land acquisition for airport expansion General Fund infrastructure including streets, curbs, sidewalks and stormwater Construction in progress totaling $75,Q87,792 makes upmsignificant portion of the City's capital ummcts and accounts for the largest part nf the increase from last year. Funding for various projects was received iu fiscal year 2008 and 2OO9 which are still under construction. These projects inu|odeHhoCoUon'ing: • Water — construction of elevated water storage tank and installation of water transmission nnxus. • Electric — construction of a substation and construction of approximately 12.8 miles or transmission loop around the City. • Natural Ooo— land acquisition and construction of an b" natural &uo line loop around the City, and construction o[ approximately 43 nui|ce of natural gas pipeline to connect the City's system directly to the transcontinental pipeline. As of June 30, $41.8 million had been spent on this pipeline project. The pipeline was placed in service in April, 2010, but still had significant items tobe completed before the project isOnu|ized. • Airport — construction o[Go|dmninc Road, extension of runway 5. Debt Administration The following isa summary of the City's debt for governmental and activity for the current year with a comparison to the prior year. Additional in1bnnuhoo on kmg-benn debt can be found in note W.B.7 beginning on page 55 of this report. Install purchase obligations General obligation bonds Revenue bonds State revolving loans Certificates vrparticipation Total City wKMonroe,mOutstanding Debt General Obligation and Revenue Bonds Figure 5 Governmental Activities 2010 2009 $8,209,458 $9,656,258 $8,209,458 $9,656,258 Activities 2010 2 2009 $3,625,941 $ $3,345,606 - | |1o,0on 51,320,000 5 53.185,000 Total 2009 $11,835,399 $13,001,864 - |4o,0oo 51,320,000 58`185,000 4,277,753 5,104,832 32,665,000 32,665,000 $100,098,152 $104,096,696 As of June 30L 2010, the City of Monroe had total debt outstanding or $100.090,152. The City has completely satisfied all nutabmdiu8 general obligation debt. The City's bonded debt $51,320,000, represents bonds yeuonrd hv the combined revenues of the major business-type funds vvbioh ioo|ndc water and *cvvcr, electric, natural gum and airport. The oeciifiootcx of participation were issued to fund the construction of uutorui gum pipeline. The City's total debt, net ofretirements, decreased $3,998'544 during the Umou\ year. The primary elements of this change were issuance of an installment financing totaling $1,697,000 for equipment purchases and $5,695,544 in debt retirements. The City of Monroe has an A2 bond rating from `ulnvestor Service and AA- rating from Standard and Poor`y 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 u unit of government can ieeno to eight percent of the total assessed value of taxable property located vvdbiu that government's boundaries. The legal debt margin for the City of Monroe is $227,418,755. Economic Factors and Next Year's Budgets and Rates The following key economic indicators reflect the growth and prosperity of the City. • The uuuua| unemployment rate for City of Monroe has Dd|on to 9.0%' which is u decrease of 0.4% from |um1 year. This compares favorably to Union County's ,utc o79.596 and the State's average rate of9.596. • The taxable value of commercial and zrmideodu) property iuurcumod 4.2% from fixoalyear 2OO9 0o fiscal year 2O)O. • Population increased 2.396 from 37,28Oin2UOg1o30`l20in20)O. 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[ity raised the property tax rate from .495 to.555 for fiscal year 2011. Expenditures were budgeted to remain at fiscal year 2010 levels. Projects and capital purchases were deferred or cut in many areas. Business-type Activities — Wate,und sewer rates were increased by 4.5% to plan for the significant anticipated cost of future capital projects and necessary system improvements. The Water and Sewer Enterprise Fund will he making application for u state revolving |ouu in FY 2011 in the amount of approximately $13 nni)linu for the 8tc`pad Creek Sewer Upgrade Project. Electric rates were also increased by 5% to cover the increased cost of wholesale power. /\ $1.25 per month increase for solid waste collection was approved for mmna|\ buuiocoo accounts and all o1bs, ononoos»oiu| accounts were increased an average of 4.75% to have revenues meet costs of servicing this customer class. Residential solid waste, natural gas and n1oouvvo1er 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 urea. 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, 20112` or visit the City`svvmhsitc at www.monroenc.or . 0FN 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 �rIONROE a heritage of progress EXHIBIT I CITY OF MONROE, NORTH CAROLINA STATEMENT OF NET ASSETS June 30, 2010 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 $ 21,405,595 $ 73,538,957 $ 94,944,552 $ 416,945 $ 179,161 Taxes receivable 1,097,005 - 1,097,005 - - Accounts receivable 426,664 5,027,998 5,454,662 - 27,749 Note receivable - 1,517,475 1,517,475 - - Internal balances 92,113 (92,113) - - Due from other governments 2,665,985 - 2,665,985 - - Due from component units 75,000 - 75,000 - - Inventories 316,593 4,099,281 4,415,874 211,714 - Prepaid expenses 288,319 7,092 295,411 21,119 Loans receivable (net) 20,563 - 20,563 - - Total current assets 26,387,837 84,098,690 110,486,527 649,778 206,910 Restricted assets: Cash and cash equivalents 281,374 6,981,914 7,263,288 - - Noncurrent assets: Note receivable - 7,340,631 7,340,631 - - Due from (to) other funds (1,256,422) 1,256,422 - - - Deferred charges - 1,329,623 1,329,623 - - Prepaid pension obligation 129,330 - 129,330 - - Capital assets Land, non - depreciable improvements, and construction in progress 5,772,559 90,185,941 95,958,500 317,013 - Other capital assets, net of depreciation 75,733,005 136,396,825 212,129,830 744,590 - Total capital assets 81,505,564 226,582,766 308,088,330 1,061,603 - Total noncurrent assets 80,378,472 236,509,442 316,887,914 1,061,603 - Total assets 107,047,683 327,590,046 434,637,729 1,711,381 206,910 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 830,951 6,509,296 7,340,247 205,483 300 Unearned revenue 517,602 26,175 543,777 - - Due to primary government - - - 56,500 18,500 Current portion of long -term liabilities 2,767,359 4,752,620 7,519,979 - - Payable from restricted assets - 576,973 576,973 - - Property claims liability 6,451 - 6,451 - - Workers compensation claims 13,481 - 13,481 - - Health care benefits claims 419,985 - 419,985 - - Long -term liabilities: OPEB liability 1,601,658 668,342 2,270,000 - - Due in more than one year 6,980,367 87,468,969 94,449,336 - - Totalliabilities 13,137,854 100,002,375 113,140,229 261,983 18,800 NET ASSETS Invested in capital assets, net of related debt 73,296,107 141,268,728 214,564,835 1,061,603 - Restricted for: Streets 254,874 - 254,874 - - Other purposes - - - 146,228 - Unrestricted 20,358,848 86,318,943 106,677,791 241,567 188,110 Total net assets $ 93,909,829 $ 227,587,671 $ 321,497,500 $ 1,449,398 $ 188,110 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, 2010 Functions/Programs Expenses Primary government: Governmental activities: General government 4,951,760 Transportation 5,666,866 Public safety 17,774,850 Culture and recreation 4,906,281 Economic and physical development 1,783,573 Interest on long-term debt 161,494 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 35,244,824 11,520,115 43,587,914 17,584,631 3,435,820 1,351,596 2,702,185 3,498,087 83,680,348 Program Revenues Operating Grants Capital Grants Charges for and and Services Contributions Contributions $ 1,979,108 $ - $ - 235,796 985,763 1,186,975 2,212,839 732,298 - 1,194,399 194,684 - 8,440 325,502 785,348 5,630,582 2,238,247 1,972,323 12,365,114 - - 43,088,656 - 24,251,031 - 3,907,011 - 1,775,688 - 2,839,014 - - 1,492,604 - 483,552 89,719,118 - 483,552 $ 118,925,172 $ 95,349,700 $ 2,238,247 $ 2,455,875 $ 4,876,619 $ 4,936,353 $ - $ 295,226 - 285,119 $ 5,171,845 $ 4,936,353 285,119 $ 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 theft"nancial statements are an integral part of this statement. 16 EXHIBIT 2 Net (Expense) Revenue and ChanEes in Net Assets Primary Government Component Units Monroe Tourism Governmental Business -type City of Monroe Development Activities Activities Total ABC Board Authority $ (2,972,652) $ - $ (2,972,652) $ - $ - (3,258,332) - (3,258,332) - - (14,829,713) - (14,829,713) - - (3,517,198) - (3,517,198) - - (664,283) - (664,283) - - (161,494) - (161,494) - - (25,403,672} - (25,403,672) - - - 844,999 - (499,258) - 6,666,400 - 471,191 - 424,092 - 136,829 - (1,521,931) 6,522,322 $ (25,403,672) $ 6,522,322 844,999 - (499,258) - 6,666,400 - 471,191 - 424,092 - 136,829 - (1,521,931} - 6,522,322 - $ (18,881,350) $ - - $ 59,734 $ - - (10,107) 59,734 (10,107) 16,953,881 - 16,953,881 - - 3,536,581 - 3,536,581 - - 1,432,412 - 1,432,412 - - 1,745,320 - 1,745,320 - - 241,952 - 241,952 - - 272,523 970,794 1,243,317 2,019 374 565,407 394,869 960,276 - 799 96,496 290,857 387,353 - - (710,363) 710,363 - - - 24,134,209 2,366,883 26,501,092 2,019 1,173 (1,269,463) 8,889,205 7,619,742 61,753 (8,934) 95,179,292 218,698,466 313,877,758 1,387,645 197,044 $ 93,909,829 $ 227,587,671 $ 321,497,500 $ 1,449,398 $ 188,110 17 CITY OF MONROE, NORTH CAROLINA BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2010 ASSETS Cash and cash equivalents Receivables: Taxes Accounts Due from other governments Due from component unit Inventories Prepaid expenses 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 /unspent appropriations 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 $ 17,138,566 $ Other Governmental Funds EXHIBIT 3 Total Governmental Funds 1,854,119 $ 18,992,685 1,063,304 33,701 1,097,005 306,363 2,008 308,371 2,482,802 183,183 2,665,985 56,500 18,500 75,000 316,593 - 316,593 197,817 - 197,817 - 20,563 20,563 281,374 - 281,374 $ 21,843,319 $ 2,112,074 $ 23,955,393 $ 500,671 $ 1,199,462 517,602 330,282 $ 830,953 54,264 1,253,726 - 517,602 2,217,735 384,546 2,602,281 533,343 28,727 562,070 3,223,917 203,691 3,427,608 254,874 - 254,874 1,834,567 1,398,376 3,232,943 1.3,778,883 - 13,778,883 - 210,644 210,644 - (113,910) (113,910) 19,625,584 1,727,528 21,353,112 $ 21,843,319 $ 2,112,074 $ 23,955,393 The notes to the financial statements are an integral part of this statement. 18 EXHIBIT 4 CITY OF MONROE, NORTH CAROLINA RECONCILIATION OF GOItERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS June 30, 2010 Amounts reported for governmental activities in the statement of net assets are different because: Fund balances - total governmental funds (Exhibit 3) $ 21,353,112 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Gross capital assets at historical cost $ 130,455,917 Accumulated depreciation (48,950,353) 81,505,564 Other long -term assets are not available to pay for current period expenditures and therefore are deferred in the funds. Prepaid pension obligation 129,330 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. 82,571 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. 1,718,353 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. 380,868 Internal balance due from Business Type Activities to Governmental Activities, 92,113 Liabilities for earned but deferred revenues in fund statements. 1,253,726 Note payable to electric fund (1,256,424) Long -term liabilities are not due and payable in the current period and therefore are not reported in the funds (Note II.A.). (11,349,384) Net assets of governmental activities (Exhibit 1) $ 93,909,829 The notes to the financial statements are an integral part of this statement. K CITY OF MONROE, NORTH CAROLINA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -- GOVERNMENTAL FUNDS For the Year Ended June 34, 2 010 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 Repayment of advance from other funds Total expenditures Deficiency of revenues 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 balance, beginning, as previously stated Reclassification of Occupancy Tax Project Fund Fund balance, beginning, restated Fund balance, ending EXHIBIT S Other Total Governmental Governmental General Funds Funds $ 16,865,653 $ 43,005 $ 16,908,658 579,792 293,937 873,729 6,043,724 - 6,043,724 2,575,711 698,762 3,274,473 - 7,169 7,169 1,740,352 - 1,740,352 268,436 4,087 272,523 546,757 1,180 547,937 28,620,425 1,048,140 29,668,565 3,485,213 - 3,485,213 2,024,747 - 2,024,747 14,615,853 - 14,615,853 3,757,285 - 3,757,285 - 1,909,075 1,909,075 - 2,784,748 2,784,748 1,921,661 - 1,921,661 337,106 - 337,106 131,477 - 131,477 26,273,342 4,693,823 30,967,165 2,347,083 (3,645,683) (1,298,600) 1,093,827 454,042 1,547, 869 (1,191,304) (1,066,927) (2,258,231) 474,824 - 474,824 377,347 (612,885) (235,538) 2,724,430 (4,258,568) (1,534,138) 17,866,057 5,986,096 23,852,153 (964,903) - (964,903) 16,901,154 5,986,096 22,887,250 $ 19,625,584 $ 1,727,528 $ 21,353,112 The notes to the financial statements are an integral part of this statement. EXHIBIT CITY OF MOMROE, NORTH CAROLINA RECO8CILIA TION OF THE STA TEMENT OF REVENUES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF A C%JVITIES For the Year Ended June J0,2010 Amounts reported for governmental activities in the statement ofactivities are different because: Net change in fund balances - total governmental funds (Exhibit 5) $ (),534,1]8) Governmental funds report capital outlays as expenditures. However, io the statement nf activities the cost o[ those assets ixallocated over their estimated useful lives and reported as depreciation expense. This im the amount hy which depreciation exceeded capital outlays iu the current period (Note D.8.). (08`468) Governmental funds report the proceeds from the sale nf capital assets (824,842) usuo increase in financial resources. Tu the statement of activities, only the gain (|naa)oo the sale of capital assets im reported. Thus, the change io net assets differs from the cbou-oin fund balance by the net book (295`540) value of the capital assets sold. (32`648) Revenues in the statement of activities that do not provide current financial resources are not reported um revenues io the funds. (126`006) Change in deferred revenue 73`182 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment nf the principal oflong-term debt consumes the current fiououio|resources n[ governmental funds. Neither transaction has any effect on net assets io the gnvonnnont-nidc statements. Also, governmental fl/ndw report the effect of issuance costs, premiums, discounts and similar items when debt ix first issued, whereas these amounts are deferred and amortized in the statement nractivities. This amount ix the net effect of these differences iu the treatment of long-term debt and related items (Note lI.8.). 1,446`800 Principal repayment of advance from Electric Fond 82,086 Some expenses reported in the statement of activities dnnot require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Compensated absences (38'726) Net pension obligation (2,793) (lPEB|iobUity _-(783^323) (824,842) The internal service fund, determined to be governmental fund type, is used by management to charge the costs, net nf investment earnings, o[health and dental insurance program. (295`540) The internal service fund, determined tohogovernmental fund type, is used by management tn charge the costs, net of investment earnings, ofworkers' compensation program. (126`006) The internal service fund, determined to be governmental fund type, is used by management to charge the ooatw'ootofinvestment earnings, ofproperty and liability insurance program, 40,201 Change in net assets of governmental activities (Exhibit 2) $ The notes to thnfinanoalutatements are amintegra/partof this statement 21 CITY OF �rIONROE a heritage of progress 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, 2010 EXHIBIT 7 Variance with FUND BALANCE APPROPRIATED Net change in fund balance Fund balance, beginning, as previously stated Reclassification of Occupancy Tax Project Fund - See Note IX Fund balance, beginning, restated Fund balance, ending 2,288,092 562,936 The notes to the financial statements are an integral part of'this statement. 9J (562,936) 2,724,430 $ 2,724,430 17,866,057 (964,903) 16,901,154 $ 19,625,584 Budgeted Amounts Final Budget - Actual Positive Original Final Amounts (Negative) REVENUES Ad valorem taxes $ 15,885,000 $ 15,885,000 $ 16,865,653 $ 980,653 Other taxes and licenses 583,000 583,000 579,792 (3,208) Unrestricted intergovernmental 6,613,500 6,613,500 6,043,724 (569,776) Restricted intergovernmental 1,166,360 2,375,509 2,575,711 200,202 Sales and services 1,766,700 1,771,700 1,740,352 (31,348) Investment earnings 400,000 400,000 268,436 (131,564) Miscellaneous 529,000 440,684 546,757 106,073 Total revenues 26,943,560 28,069,393 28,620,425 551,032 EXPENDITURES Current: General government 4,112,032 4,295,382 3,485,213 810,169 Transportation 2,431,178 2,444,809 2,024,747 420,062 Public safety 14,845,294 15,523,802 14,615,853 907,949 Culture and recreation 4,122,154 4,179,172 3,757,285 421,887 Debt service: Principal retirement 1,958,208 1,958,208 1,921,661 36,547 Interest and other charges 400,000 400,000 337,106 62,894 Repayment of advance from other funds 131,485 131,485 131,477 8 Total expenditures 28,000,351 28,932,858 26,273,342 2,659,516 Revenues over (under) expenditures (1,056,791) (863,465) 2,347,083 3,210,548 OTHER FINANCING SOURCES (USES) Transfers from other funds (412,000) 1,134,830 1,093,827 (41,003) Transfers to other funds (1,371,301) (1,386,301) (1,191,304) 194,997 Installment purchase obligations issued 552,000 552,000 474,824 (77,176) Total other financing sources (uses) (1,231,301) 300,529 377,347 76,818 FUND BALANCE APPROPRIATED Net change in fund balance Fund balance, beginning, as previously stated Reclassification of Occupancy Tax Project Fund - See Note IX Fund balance, beginning, restated Fund balance, ending 2,288,092 562,936 The notes to the financial statements are an integral part of'this statement. 9J (562,936) 2,724,430 $ 2,724,430 17,866,057 (964,903) 16,901,154 $ 19,625,584 CITY OF MONROE, NORTH CAROLINA STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2010 Major Enterprise Funds Water and Sewer Electric Natural Gas Airport ASSETS Current assets: Cash and cash equivalents $ 21,430,678 $ 28,890,733 $ 16,647,504 $ 3,657,965 Accounts receivable 903,156 2,952,256 820,774 40,901 Note receivable - 647,644 869,831 - Prepaid expenses 4,736 1,008 496 210 Inventories 275,045 3,555,663 185,383 75,301 Total current assets 22,613,615 36,047,304 18,523,988 3,774,377 Noncurrent assets: Restricted assets: Cash and cash equivalents: Unspent bond proceeds 149 350,200 72,989 5,981,603 Customer deposits 77,265 352,614 147,094 - Bond issuance costs 91,576 385,027 719,619 133,401 Due from other funds - 14,873,101 - - Long -term note receivable - 2,307,825 5,032,806 - Capital assets: Land and other non- depreciable assets 1,968,675 25,806,133 44,711,783 16,773,756 Other capital assets, net of depreciation 63,370,308 43,327,892 13,666,342 8,527,094 Capital assets (net) 65,338,983 69,134,025 58,378,125 25,300,850 Total noncurrent assets 65,507,973 87,402,792 64,350,633 31,415,854 Total assets 88,121,588 123,450,096 82,874,621 35,190,231 LIABILITIES Current liabilities: Accounts payable and accrued liabilities 312,790 4,134,292 1,062,508 705,468 Unearned revenue - 14,106 - - Compensated absences 156,909 91,372 29,215 10,289 Installment purchase obligations 140,084 310,393 74,455 76,796 Certificates of participation - - 588,452 - Revenue bonds payable 502,108 780,745 183,318 470,000 State revolving loans payable 827,077 - - - Total current liabilities 1,938,968 5,330,908 1,937,948 1,262,553 Liabilities payable from restricted assets: Customer deposits 77,265 352,614 147,094 - Noncurrent liabilities: Due to other funds - - 5,911,644 7,558,943 Compensated absences 77,282 45,005 14,388 5,068 Installment purchase obligations 158,251 1,031,624 187,308 150,330 Certificates of participation - net of unamortized discounts - - 31,747,417 - Revenue bonds payable - net of deferred amount on refunding and unamortized premium 9,844,417 23,123,733 4,400,095 12,175,000 State revolving loans payable 3,450,676 - - - Other postemployment benefits payable 288,663 122,507 62,523 52,904 Total noncurrent liabilities 13,896,554 24,675,483 42,470,469 19,942,245 Total liabilities 15,835,522 30,006,391 44,408,417 21,204,798 NET ASSETS Invested in capital assets, net of related debt 50,416,519 44,237,730 21,270,069 18,410,327 Unrestricted 21,869,547 49,205,975 17,196,135 (4,424,894) Total net assets $ 72,286,066 $ 93,443,705 $ 38,466,204 $ 13,985,433 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 - Nonmajor - 6,404,941 Governmental - Enterprise - 576,973 Activities - - Funds - 1,329,623 Internal Aquatics and - - 14,873,101 Service Fitness Center Stormwater Solid Waste Total Funds $ 2,018,566 515,446 378,065 $ 73,538,957 $2,412,913 - 111,260 199,651 5,027,998 118,294 - - - 1,517,475 - 211 373 58 7,092 90,502 7,889 - - 4,099,281 - 2,026,666 627,079 577,774 84,190,803 2,621,709 - - - 6,404,941 - - - - 576,973 - - - - 1,329,623 - - - - 14,873,101 - - - - 7,340,631 - 925,594 - - 90,185,941 - 7,170,609 334,580 - 136,396,825 - 8,096,203 334,580 - 226,582,766 - 8,096,203 334,580 - 257,108,035 - 10,122,869 961,659 577,774 341,298,838 2,621,709 40,229 34,045 219,964 6,509,296 439,917 12,069 - - 26,175 - 25,331 23,635 - 336,751 - 424,369 38,072 - 1,064,169 - - - - 588,452 - - - - 1,936,171 - - - - 827,077 - 501,998 95,752 219,964 11,288,091 439,917 - - - 576,973 - - 146,092 - 13,616,679 - 12,476 11,640 - 165,859 - 913,398 120,861 - 2,561,772 - - - - 31,747,417 - - - - 49,543,245 - - - - 3,450,676 - 98,550 43,195 - 668,342 - 1,024,424 321,788 - 102,330,963 - 1,526,422 417,540 219,964 113,619,054 439,917 6,758,436 175,647 - 141,268,728 - 1,838,011 368,472 357,810 86,411,056 2,181,792 $ 8,596,447 $ 544,119 $ 357,810 227,679,784 $2,181,792 (92,113) $ 227,587,671 P CITY OF MONROE, NORTH CAROLINA STATEMENT OF REVENUES, EXPENSES, AND CHANCES IN FUND NET ASSETS -- PROPRIETARY FUNDS For the Year Ended June 30, 2010 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) Major Enterprise Funds Water and Sewer Electric Natural Gas Airport $ 12,074,458 $ 42,920,024 $ 18,240,065 $ 1,467,653 290,656 168,632 10,966 24,951 12,365,114 43,088,656 18,251,031 1,492,604 4,067,773 3,537,460 2,428,437 2,362,909 - - - 2,825,494 - - - - 37,075,040 - - - 12,493,870 - 2,124,844 139,206 63,704 30,672 25,953 1,830,233 2,081,017 517,033 648,843 11,225,615 42,757,221 15,470,012 2,799,640 1,139,499 331,435 2,781,019 (1,307,036) Rate stabilization funds - 60,360 - - Power agency funding - 255,852 - - Gain (loss) on sale of capital assets (35,931) 326,788 - - Availability fees 419,257 - 6,000,000 - Other nonoperating revenues 1,106 386,140 7,623 - Investment earnings 262,286 380,430 277,989 17,885 Interest and other charges (687,290) (1,1 19,373) (2,092,976) (723,057) Total nonoperating revenues (expenses) (40,572) 290,197 4,192,636 (705,172) Income (loss) before contributions and transfers 1,098,927 621,632 6,973,655 (2,012,208) CAPITAL GRANTS - - - 483,552 TRANSFERS (TO) FROM OTHER FUNDS - - - 737,263 Change in net assets 1,098,927 621,632 6,973,655 (791,393) Total net assets, beginning 71,187,139 92,822,073 31,492,549 14,776,826 Total net assets, ending $ 72,286,066 $ 93,443,705 $ 38,466,204 $ 13,985,433 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. 0 Nonmajor Enterprise Funds Aquatics and Fitness Center Stormwater Solid Waste Total $ 3,763,120 $ 1,775,649 $ 2,839,014 $ 83,079,983 143,891 39 - 639,135 3,907,011 1,775,688 2,839,014 83,719,118 - - - 10,033,670 - - - 2,362,909 - - - 2,825,494 - - - 37,075,040 - - - 12,493,870 3,040,270 - - 3,040,270 - - - 2,124,844 - 1,225,085 - 1,225,085 - - 2,701,541 2,701,541 49,548 23,594 - 332,677 262,585 79,912 - 5,419,623 3,3 52,403 1,328,591 2,701,541 79,63 5,023 554,608 447,097 137,473 4,084,095 - - - 60,360 - - - 255,852 - - - 290,857 - - - 6,419,257 - - - 394,869 23,853 4,071 4,280 970,794 (64,766) (10,465) - (4,697,927) (40,913) (6,394) 4,280 3,694,062 513,695 440,703 141,753 7,778,157 - - - 483,552 - (26,900) - 710,363 513,695 413,803 141,753 8,972,072 8,082,752 130,316 216,057 $ 8,596,447 $ 544,119 $ 357,810 (82,867) $ 8,889,205 27 EXHIBIT 9 Governmental Activities - Internal Service Funds 5,602,718 280,663 5,883,381 245,858 5,584,603 522,008 (469,088) 4,787 4,787 (464,301) (464,301) 2,646,093 $ 2,181,792 CITY OF MONROE, NORTH CAROLINA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30, 2010 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Net advances (to) from other funds - (877,822) (88,356) 1,044,565 Transfers from other funds - - - 737,263 Net cash provided (used) by noneapital financing activitic - Major Enterprise Funds (88,356) 1,781,828 Water CASH FLOWS FROM CAPITAL AND RELATED and Sewer Electric Natural Gas Airport CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from issuance of long -term debt Cash received from customers $ 12,088,170 $ 43,342,069 $ 18,493,863 $ 1,468,659 Cash paid for goods and services (6,134,872) (38,756,715) (18,234,738) (1,599,684) Cash paid to or on behalf of employees for services (3,672,577) (1,076,800) (578,865) (504,120) Customer deposits received 44,993 230,689 88,623 - Customer deposits returned (56,665) (286,533) (126,389) - Other operating revenues 291,762 554,772 18,589 24,951 Net cash provided (used) by operating activities 2,560,811 4,007,482 (338,917) (610,194) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Net advances (to) from other funds - (877,822) (88,356) 1,044,565 Transfers from other funds - - - 737,263 Net cash provided (used) by noneapital financing activitic - (877,822) (88,356) 1,781,828 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from issuance of long -term debt - 1,001,738 71,800 148,656 Proceeds from sale of capital assets - 594,000 - - Acquisition and construction of capital assets (884,176) (3,413,642) (16,293,015) (6,494,272) Note receivable collected (granted) - (1,796,567) - - Capital contributions - Federal Grants - - - 483,552 Principal paid on bond maturities and equipment obligation (1,627,732) (949,587) (254,539) (496,652) Interest paid on bond maturities and equipment obligations (681,495) (1,118,097) (2,087,722) (685,465) Rate stabilization funds - 60,360 - - Power agency funds - 255,852 - - Availability fees 419,257 - 97,363 - Net cash used by capital and related financing activities (2,774,146) (5,365,943) (18,466,113) (7,044,181) CASH FLOWS FROM INVESTING ACTIVITIES Earnings on investments 262,286 380,430 277,989 17,885 Net increase (decrease) in cash and cash equivalents 48,951 (1,855,853) (18,615,397) (5,854,662) Balances, beginning 21,459,141 31,449,400 35,482,984 15,494,230 Balances, ending $ 21,508,092 $ 29,593,547 $ 16,867,587 $ 9,639,568 Noncash investing, capital and financing activities: The net book value of assets disposed in the Water and Sewer Fund amounted to $35,931. During the year, the City issued a note receivable of $6,000,000 for availability fees, of which $97,363 was collected in cash during the year. The notes to the financial statements are an integral part of this statement. W EXHIBIT 10, Continued (26,900) (26,900) 78,387 710,363 788,750 - 1,222,194 - - 594,000 - (92,385) (167,444) - (27,344,934) - - (1,796,567) - - 483,552 - (407,886) (71,378) - (3,807,774) - (64,765) (10,465) - (4,648,009) - - 60,360 - - 255,852 - - 516,620 - (565,036) Nonmajor - (34,464,706) Governmental Enterprise Activities - 4,071 Funds 970,793 4,787 Internal Aquatics and 299,772 144,335 (25,549,416) Service Fitness Center Stormwater Solid Waste Total Funds $ 3,763,120 $ 1,774,020 $ 2,828,998 $ 83,758,899 $ 5,603,269 (1,467,537) (716,102) (2,632,450) (69,542,098) (6,461,990) (1,614,853) (486,069) (56,492) (7,989,776) - - - - 364,305 - - - - (469,587) - 143,891 39 - 1,034,004 1,180,125 824,621 571,888 140,056 7,155,747 321,404 (26,900) (26,900) 78,387 710,363 788,750 - 1,222,194 - - 594,000 - (92,385) (167,444) - (27,344,934) - - (1,796,567) - - 483,552 - (407,886) (71,378) - (3,807,774) - (64,765) (10,465) - (4,648,009) - - 60,360 - - 255,852 - - 516,620 - (565,036) (249,287) - (34,464,706) - 23,853 4,071 4,279 970,793 4,787 283,438 299,772 144,335 (25,549,416) 326,191 1,735,128 215,674 233,730 106,070,287 2,086,722 $ 2,018,566 $ 515,446 $ 378,065 $ 80,520,871 $ 2,412,913 M CITY OF MONROE, NORTH CAROLINA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended June 30, 2414 Major Enterprise Funds Water and Sewer Electric Natural Gas Airport Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) $ 1,139,499 $ 331,435 $ 2,781,019 $ (1,307,036) 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 1,830,233 2,081,017 517,033 648,843 1,106 386,140 7,623 - 13,712 422,045 253,798 1,006 28,219 119,941 10,942 (6,487) (4,736) (861) (98) (210) (588,883) 645,578 (3,914,317) 12,379 (11,672) (55,844) (37,766) - 139,206 63,704 30,672 25,953 14,127 14,327 12,177 15,358 1,421,312 3,676,047 (3,119,936) 696,842 $ 2,560,811 $ 4,007,482 $ (338,917) $ (610,194) The notes to the financial statements are an integral part of this statement. m Nonmajor Enterprise Funds Aquatics and Fitness Center Stormwater Solid Waste Total EXHIBIT 10 Governmental Activities - Internal Service Funds $ 554,608 $ 447,097 $ 137,473 $ 4,084,095 $ (469,088) 262,585 79,912 - 5,419,623 - - - - 394,869 - - (1,629) (10,016) 678,916 979,946 2,043 - - 154,658 - (211) (373) (58) (6,547) - (46,697) 13,652 12,657 (3,865,631) (109,024) - - - (105,282) - 49,548 23,594 - 332,677 - 2,745 9,635 - 68,369 - 270,013 124,791 2,583 3,071,652 790,492 $ 824,621 $ 571,888 $ 140,056 $ 7,155,747 $ 321,404 31 CITY OF MONROE, NORTH CAROLINA NOTES TO THE FINANCIAL STATEMENTS June 30, 2010 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 tugovernments. The following is u summary ofthe more significant accounting policies: A. Reporting Entity The City of Monroe isamunicipal corporation that is governed by an elected mayor and usix-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 ho|nvv 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 ia required by State statute to distribute a portion o[ its surpluses 0m the General Fund ofthe 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 /\8C Board may be obtained from the entity's administrative offices u( City o[ Monroe ABC Board, 1771 Dickerson Boulevard, Monroe, North Carolina 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 &Nbo6ty` which has n June 30 year end, is presented as if it were u general government fund (discrete presentation). Complete fiuuooio| oCo1umunta for the Authority may bc obtained from the cuhty`m administrative utDcco at City of Monroe Tourism Development Authority, 300 West Crowell Street, Monroe, North Carolina 28112. B. Basis o[Presentation 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. These statements distinguish 6ctpoon the governmental and business-type activities of the City. Oovunomcn{a| activities generally are financed through taxes, intergovernmental n:vcnuco` and other non- exchange tnmaw%inna. Business-type activities are Ooouood in whole oriu part bv fees charged {oexternal parties. The statement of activities presents o comparison between direct expuuacu and program revenues for the different business-type activities of the City and for each function of the City's governmental activities. 0oxt expenses no those that are specifically mmooiorud with a program or function and, therefore, are clearly idcobUnh|e to u particular function. [ndimooc expense u||oouziono that have been made in the funds have been reversed for the statement ofactivities. Program revenues include (u) fees and charges paid by the recipients of goods or services offered by the programs and (6) grants and contributions that are restricted to meeting the operational or capital requirements ofu particular program. Revenues that are not classified uu 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 andproprimary — are presented. The emphasis of fund financial statements ison major governmental and enterprise funds, each displayed inaseparate column. All remaining governmental and enterprise funds are aggregated andrcpouudnunomnojur8uodo. 32 Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity nfthe fund. Exchange transactions are those in which each party receives and gives up cow:nhu||y oqmd mduum. Nunoporatiogruvonues` 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 womcoo 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, moobu1ioo services, culture and recreation activities, and general government services. The City reports the following major enterprise funds: Water and Sewer Fund. This fund |o used 0o account for the activities associated with the production, distribution and transmission of potable water and the activities ooaoukgod 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. Aquatics and Fitness Center Fund. This fund is used to account for the activities associated with the operation of the City's Aquatics and Fitness Cunter. C. Measurement Focus and Basis nf Ac000udo& In accordance with North Carolina General Statutes, all funds of the City are maintained during the year using the mudifiodaccrual basis ufaccounting. 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 8mud financial statements are reported using the accrual homim of accounting. Revenues are recorded when cmmod and expenses are recorded at the time |iubiUdco are incurred, rceord|000 uf when the related cash flows take place. Nnncxcbunge 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 ocumo| bomix' revenue from property taxes is recognized in the fiocu| 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, 3) 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 novooucm and expenses from nouopcnging items. Operating n:vunuon and cxpouoco generally n:su|i from providing services and producing and delivering goods in connection with u proprietary fund's principal ongoing operations. The principal operating revenues ofthe City enterprise funds are charges tncustomers for sales and services. The City also recognizes uxoperating revenue the portion of /eox intended to recover the cost of connecting new or reconnecting current customers to the water and mower system. Operating expenses for enterprise funds and in1enon| service funds include the oom1 of sales and services, administrative expenses and depreciation on capital uooe1o. 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 2009 through February 2010 apply to the fiscal year ended June 30, 2010. 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. 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. 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 1 st, 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, 2009. 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 5. Other Taxes and Licenses The City also levies a tax of five dollars per motor vehicle residing in the City of Monroe. The revenue relating to this is accounted for under "Other Taxes and Licenses" in the General Fund. Union County is responsible for billing and collecting this special vehicle tax in addition to the property taxes on registered motor vehicles residing in the City of Monroe. 6. Allowance for Douhtful 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. 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. 8. 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; computer software, $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 Computer Software 5 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 Furniture/Equipment 5 - 7 Vehicles 5 The Tourism Development Authority had no capital assets at June 30, 2010. 36 y. DeferredlUnearned Revenues Governmental funds report deferred revenue in cou000dnn 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, 10. Long-Term Obligations In the de financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as Uuh\hieu iu 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 poyu6|c are reported net of the applicable bond premiums or discount. Bond issuance costs are reported as deferred charges and amortized over the term uf 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. loouonoc costs, whether u, not withheld from the actual debt proceeds received, are reported ux debt service expenditures. ||. Compensated Absences The vacation policy of the City provides for the accumulation of earned vuoutiuu leave with such leave being fully vested when earned omfollows: Employees hired before July /' 1992 Vacation leave may he accumulated without any applicable maximum until June 3O each year. However, if the employee separates from oc,vioe' payment for accumulated vacation |ouvo 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 000iod forward to July l of the next Oaou) yea,. The remaining excess amount will be converted to sick leave and added to the employee's sick leave balance. Employees hired ofterJuly /'/99O Vacation leave may be accumulated without any applicable maximum until June 30 of each year. However, if the employee separates from men/icc' payment for accumulated vacation \ouvo shall not exceed two times the employee's annual accrual rate (i.e. if the accrual rate im 15 days per year, the employee may only hu paid for 3Odoya). On June 3Oof each year, each employee may only carry over into the new fimoolyear two times the employee's annual accrual rate. The remaining excess amount will hc converted to sick leave and added to the employee's sick leave balance. Employees o[ the City of Monroe ABC Board earn two weeks paid vacation each your. Employees must take vacation leave in the year earned and are not allowed tu carry forward any vacation time tosubsequent years. The Tourism Development Authority had one employee during the year ended June 30, 2010. For the City's govurnmeot-wide and proprietary funds, on expense and o liability for compensated absences and the salary-related payments are recorded uothe leave is earned. The City has assumed ufirst-in, first- out method of using accumulated compensated time. The portion u[ that time that io estimated tohu used in the next fiscal year has been designated uxu current liability inthe guvooxoent-vvidcfinanniolstatements. The City and the ABC Board's sick leave policies provide for an unlimited accumulation of earned sick leave. Sick \ouvo does not vest, but any unused sick \cuvc accumulated n1 the time uf retirement may ho 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 uoh| it is actually taken, no accrual for sick leave has been made. 37 12. Net AsxelslFbmdBu/umceo Net Assets Net assets in and proprietary fund financial statements are classified m invested incapital assets, net of related debt restricted; and unrestricted. Restricted net myoeto represent constraints on resources that are either cxtocno]|y imposed by creditors, grantors, contributors, or laws or regulations of other governments nr imposed by law through state statute. Fund Balances In the governmental fund Uumnuio| statements, maepvo1iuna of fund balance represent amounts that cannot be appropriated or are legally segregated for n specific purpose. Designations myfund balance represent tentative management plans that are subject tochange. State 1uw|G.S. 159-13(b)(16)] restricts appropriation of fund balance for the subsequent year's budget to an amount not to ozoocd the mum 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 fiocm|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 10 purchase orders nr contracts which remain unperformed u( year end. Reserved by 8\u(u mtNm1e - portion of fund balance, in addition to reserves for cnuumbnmuem' which iu not available for appropriation under State |mv [G.8. 159-8(u)]. This amount is usually comprised of accounts receivable and iuterOund receivables which have not been offset bydeferred revenues. Reserved for streets -Powell Bill -portion of fund balance that ia 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.- Dooignmod - pnrtinooftntu| fund balance available for appropriation that has been designated for special purposes, such as: Subsequent year's expend iturco—dooignatod for the adopted 2OlO-2Ol1 budget ordinance. Uodesignoted - portion of total fund balance uvui|ub|o for appropriation that iu uncommitted ut year-end. 13. Management Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United 8tu¢ox nf America requires management uomake estimates and nomumpduom 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 expend iNruo/uxpcnoen during the reporting period. Actual results could differ from those estimates. 14. Other Resources The General Fund provides the basis of local resources for other gnvornmontm| funds. These 1mmomtionu are recorded as "Transfers —tu other 6uudo" in the General Fund and ^'Truumtem— from other funds" in the receiving fund. 38 11 Ill. 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 $11,349,384 difference are as follows: Installment purchase obligations $ 8,209,458 Compensated absences 1,538,268 Net OPEB liability 1,601,658 Net adjustment to reduce fund balance - total governmental funds to arrive at net assets - governmental activities $ 11,349,384 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 $(98,468) difference are as follows: Capital outlay Contributed capital — non-cash additions Depreciation expense $ 2,831,927 1,186,975 (4,117,370) Net adjustment to decrease net change in fund balances - total governmental funds to arrive at change in net assets ofgovernmental activities $ (98,468) 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 $1,446,800 are as follows: Debt issued or incurred: Installment purchase obligations Principal payments: Installment purchase obligations (474,824) 1,921,624 Net adjustment to increase net change in fund balances - total governmental funds to arrive at change in net assets ofgovernmental activities $ 1,446,800 DETAIL NOTES ON ALL FUNDS A. Assets 1. Deposits All of the deposits of the City, the ABC Board, and the Tourism Development Authority are either insured or collateralized by using one of two methods. Under the Dedicated Method, all deposits that exceed the 39 federal depository insurance onvoruXe |cvc| are collateralized with securities ko|d 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 o 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 Tn:omuoor is acting in u fiduciary capacity for the City` the &8C Buocd' and the Tourism Development Authority, these deposits are considered to he held by the City's, the ABC 8ourd`x' and the Tourism Development Authority's agents in their names. The amount uf the pledged coUo1crn| is based on an approved averaging method for non- interest bearing deposits and the uob/ol current balance for interest bearing deposits. Depositories using the Pooling Method report to the 8<u1c Treasurer the adequacy of their pooled oo1|nteru| covering uninsured deposits. The State Treasurer does not coofinnthis information with the City, the ABC Board, the Tourism Development Authority, or the emornvv 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-col lateral ization' and this risk may increase in periods o[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 pnu|iu8 method financial institutions and to monitor them for compliance. The City, the ABC Board and the Tourism Development Authority comply with the provisions ofG.8. 150-31 when designating otficia|depositories and verifying that deposits are properly secured. At June 30` 2010 the City's deposits had u carrying amount of $8`542,332 and u bunk balance of $8'851,235. In addition, there was $6,431,441 in an escrow account with a8omtee of unspent bond and installment financing proceeds. Of the bank balance, $5OO,0O0 was covered by federal depository insurance and the remainder was covered by collateral held under the Pooling Method. The City's petty ouxh fund totaled $4,725. AJ June 0,0|Uthe ABC Board's deposits had a carrying amount of $4l3,045 and u bank balance of $628'529. Uf the bank balance, $250,UO0 was covered by federal depository insurance, and $378,52Vwas covered by collateral held under the Pooling Method. The ABC Board's petty cash fund totaled $3,900. At June 3O`20lO, the Tourism Development Authority's deposits had a carrying amount oY$l7V]6| and bank balance of$|79,l6|. The entire balance was covered hy federal depository insurance. Z Investments Aauf June 30,2O|0, the City had the following investments and maturities: Investment Fair Value U.8. Government Agencies S 67,773,428 NCCupiLu\Mumagemen¢Tmst — Cash Portfolio 14'131,027 NC Capital Management Trust — Tenn Portfolio 324,887 Total 87,229,342 |-2 \ Yoar ycor $ 12,118/476 $ 20'146,000 3-5 Years � 35'508`052 N/A N/A N/A Interest Rate Risk. The City does not have uformal investment policy that limits investment maturities as 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 nfU.8. 159-30 and restricts the purchase nf securities tn the highest poxxih|c ratings whenever particular types of securities are rated. The iovcxUneo/ in D.S. Gnvcnnmco< Agencies (Federal Bmno Loan Bank) is rated /\/\A by Standard and Poor`u and &aa by &8ondy`o Investors Service. The City's iovcwU000t in the NC Capital Management Trust Cash Portfolio carried a credit rating uf/\AAm by Standard and Pnor`muxof June 3O'2OlO. The City's investment in the UK NC Capital Management Trust Tenn Portfolio is unrated. The Term Portfolio is authorized to invest in obligations of the U.S. government and agencies, and inhigh grade money market instruments as permitted under North Carolina General Statutes 159-30 as amended. Custodial Credit Risk, For an investment, the custodial risk im the risk that in the event of the failure of the oouot rparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession oCan 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 oythe City's investments are in Federal Home Loan Bank securities. This investment io4O.7Y6of the City's total investments. ln addition, the City had 2}.9%of its investment portfolio in the yJCCK8T— cash portfolio ui June 3O'2O|O. Note Receivable The City granted upromissory note in the amount of$404,92lNanelectric customer to reimburse the cost and installation nC equipment during the fiscal year 2006. The remaining bdonuu of the promissory note is payable in quarterly installments o[520'963 through August 20l0. The note calls for interest tohopaid quarterly at the applicable prime rate. Principal uu||eudnum on the note receivable for the fiscal year ended totaled $83,853. The note is secured byequipment. 2010 Total receivable $ 20.963 Less current portion 20,963 Total Note Receivob|c — Noucurreot $ ' Scheduled future maturities of the note receivable are umfollows: ME $ The City grunted promissory notes to an electric customer to reimburse the cost and installation of equipment. The remaining balances oC the promissory notes are payable in monthly installments. Due to the nature ofthe terms agreed upon the payment amounts will vary and are unpredictable. The monthly payment amounts are determined uofollows: Each month electric charges will becalculated based oo the DCPNCrate (L[CPNC Bill) and electric charges will be calculated based on the LDCPNCrate assuming peak generation had not been used (LJCPNC Bill NuGcmeratinn). The difference io these rate calculations (i.c. LlC9NC Bill No Generation —L]CPNC Bill) will be used tn fund the City's recovery o[one half ufthe installed cost ufthe generation. The customer's monthly bill will equal the L[C9NC Bill plus one half o[ the difference in the LIC9NC Bill No Generation and the LlCPMCBUi The first promissory note was granted during fiscal year 2007 for $1,730,070. 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 im secured byoquipmcui Principal collections nu the note receivable for the fiscal year ended totaled $35|,575. Future payments n[ the note receivable can vary based on the customers electricity usage. The cuff ontportion has been calculated huxod on payments received during the year ended June 30, 2010 Total receivable $ 702,511 Less current portion 336,681 Total Note Receivub|c — Noncurrent $ 365830 Scheduled future maturities of the note receivable are oufollows: 2011 320,681 3012 336,681 2013 29,149 � 702,5|| a The second promissory note was granted during fiscal year 2010 for $2,300,000. At the current rate of payment it is estimated that the note will be repaid in full during fiscal year 2018. The agreement is interest bearing at a rate of 4.5% and is secured by equipment. Principal collections on the note receivable for the fiscal year ended totaled $68,005. 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, 2010. 2010 Total receivable $ 2,231,995 Less current portion 290,000 Total Note Receivable — Noncurrent $ 1,941,995 Scheduled future maturities of the note receivable are as follows: 2011 $ 290,000 2012 290,000 2013 290,000 2014 290,000 2015 290,000 Thereafter 781,995 $ 2,231,995 The City granted a promissory note in the amount of $6,000,000 to a natural gas supplier for capacity charges related to the leased capacity of a natural gas line. The remaining balance of the promissory note is payable in monthly installments of $97,363 through June 2016. The note calls for interest to be paid monthly at the annual rate of 5.42 %. Principal collections for the fiscal year ended June 30, 2010 totaled $97,363. 2010 Total receivable $ 5,902,637 Less current portion 869,831 Total Note Receivable — Noncurrent $ 5,032,806 Scheduled future maturities of the note receivable are as follows: 2011 $ 869,831 2012 918,163 2013 969,183 2014 1,023,039 2015 1,079,884 Thereafter 1,042,537 $ 5,902,637 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 $ 20,895 5. Capital Assets Primary Government Capital asset activity for the primary government for the year ended June 30, 2010, was as follows: 42 Governmental activities capital assets, net $ 81,636,681 $ 81,505,564 Depreciation expense was charged to functions/programs of the primary government as follows: General government $ 314/496 Transportation 23V0838 Public safety ` ` 953558 Culture and recreation " 453573 Economic and physical development ' Iu1u| depreciation expense $ 4j17,370 43 Beginning Ending Balances Increases Dcorcumom Balances Governmental activities: General Fund Capital assets not being depreciated: Land and land improvements % 4,374,393 $ 232'400 $ - % 4,596,793 Construction iuprogress 2,396,712 2,642,991 3,944,086 1,095,617 Total capital assets not being depreciated 6,771,105 2,865,391 3,944,086 5,692,410 Capital assets being depreciated: Buildings and improvements 17'010'641 2,620,482 ' }9,63}`123 Equipment 3,984,465 }09,}84 26,774 4'066,875 Vehicles and motorized equipment 13`325,623 633`559 614`048 13'335`134 Other intangibles ' 418`410 - 418`410 lnbnxUooknc 85,946,770 1,186,975 - 87]33,745 Total capital assets being depreciated 120267499 4,958,610 640,822 124,585,287 Less accumulated depreciation 0ur' Buildings and improvements 6,500,148 472,874 - 7,063,022 Equipment 2'340'056 281'785 18,085 2'002,856 Vehicles and motorized equipment 8,737,033 1`211`143 589,189 9.359.707 Other intangibles - 73.714 - 73,714 Infrastructure 27,733,886 2j10,083 - 20,843,900 Total accumulated depreciation 45401923 4j49,599 $ 608j74 48,943,348 Total capital unnutn being depreciated, net 74,865,576 75,641,939 General Fund capital assets, net 81636681 81,334,349 Downtown Monroe Fund Capital assets not being depreciated: Land and land improvements - 80j40 00J49 Total capital assets not being depreciated - 80j49 - 80]49 Capital assets being depreciated: Equipment - 98,071 - 98,071 Total capital assets being depreciated ' 98,071 - 98,071 Less accumulated depreciation &`r: Equipment ' 7,005 - 7,005 Total accumulated depreciation - $ 7,005 $ - 7,005 Total capital assets being depreciated, net - 91,066 Downtown Monroe Fund capital assets, net ' 171,215 Governmental activities capital assets, net $ 81,636,681 $ 81,505,564 Depreciation expense was charged to functions/programs of the primary government as follows: General government $ 314/496 Transportation 23V0838 Public safety ` ` 953558 Culture and recreation " 453573 Economic and physical development ' Iu1u| depreciation expense $ 4j17,370 43 Capital assets being depreciated: Buildings and improvements Beginning - - Ending Equipment Balances Increases Decreases Balances Business -type activities: 2,886,334 75,000 84,315 2,877,019 Water and Sewer Fund 54,124,633 6,056,792 - 60,181,425 Capital assets not being depreciated: 82,611,000 6,233,174 154,416 88,689,758 Land and land improvements $ 662,216 $ 167,611 $ - $ 829,827 Construction in progress 6,655,456 1,032,394 6,549,002 1,138,848 Total capital assets not being depreciated 7,317,672 1,200,005 6,549,002 1,968,675 Capital assets being depreciated: Buildings and improvements 22,879,384 - - 22,879,384 Equipment 2,720,649 101,382 70,101 2,751,930 Vehicles and motorized equipment 2,886,334 75,000 84,315 2,877,019 Infrastructure 54,124,633 6,056,792 - 60,181,425 Total capital assets being depreciated 82,611,000 6,233,174 154,416 88,689,758 Less accumulated depreciation for: Buildings and improvements 9,405,305 483,507 - 9,888,812 Equipment 1,487,028 185,673 34,171 1,638,530 Vehicles and motorized equipment 2,243,296 157,661 84,315 2,316,642 Infrastructure 10,476,146 999,320 - 11,475,466 Total accumulated depreciation 23,611,775 1,826,161 118,486 25,319,450 Total capital assets being depreciated, net 58,999,225 63,370,308 Water and Sewer Fund capital assets, net 66,316,897 9,084 - 65,338,983 Electric Fund 2,064,670 302,762 - 2,367,432 Capital assets not being depreciated: 1,356,464 204,324 41,024 1,519,764 Land and land improvements 4,408,506 378,800 267,212 4,520,094 Construction in progress 23,176,290 3,368,336 5,258,587 21,286,039 Total capital assets not being depreciated 27,584,796 3,747,136 5,525,799 25,806,133 Capital assets being depreciated: Buildings and improvements 122,489 580,860 - 703,349 Equipment 4,496,867 18,528 - 4,515,395 Vehicles and motorized equipment 1,930,920 662,877 41,024 2,552,773 Infrastructure 59,637,836 3,680,742 - 63,318,578 Total capital assets being depreciated 66,188,112 4,943,007 41,024 71,090,095 Less accumulated depreciation for: Buildings and improvements 66,178 9,084 - 75,262 Equipment 2,064,670 302,762 - 2,367,432 Vehicles and motorized equipment 1,356,464 204,324 41,024 1,519,764 Infrastructure 22,234,289 1,565,456 - 23,799,745 Total accumulated depreciation 25,721,601 2,081,626 41,024 27,762,203 Total capital assets being depreciated, net 40,466,511 43,327,892 Electric Fund capital assets, net 68,051,307 69,134,025 Natural Gas Fund Capital assets not being depreciated: Land and land improvements 69,580 711,205 - 780,785 Construction in progress 29,670,114 17,523,834 3,262,950 43,930,998 Total capital assets not being depreciated 29,739,694 18,235,039 3,262,950 44,711,783 44 Less accumulated depreciation for: Buildings and improvements Beginning 12,598 Ending Equipment Balances Increases Decreases Balances Capital assets being depreciated: 407,892 44,156 38,314 413,734 Buildings and improvements 543,152 26,332 - 569,484 Equipment 252,422 394,923 - 647,345 Vehicles and motorized equipment 701,050 - 38,314 662,736 Infrastructure 15,838,257 899,675 - 16,737,932 Total capital assets being depreciated 17,334,881 1,320,930 38,314 18,617,497 Less accumulated depreciation for: Buildings and improvements 114,272 12,598 - 126,870 Equipment 140,767 44,552 - 185,319 Vehicles and motorized equipment 407,892 44,156 38,314 413,734 Infrastructure 3,846,906 378,326 - 4,225,232 Total accumulated depreciation 41509,837 479,632 38,314 4,951,155 Total capital assets being depreciated, net 12,825,044 7,035,285 852,474 13,666,342 Natural Gas Fund capital assets, net 42,564,738 58,378,125 Aquatics and Fitness Center Fund 14,086,828 9,300 - 14,096,128 Capital assets not being depreciated: 456,339 - - 456,339 Land and land improvements 925,594 - - 925,594 Total capital assets not being depreciated 925,594 - - 925,594 Capital assets being depreciated: 14,805,008 44,906 15,116,468 Buildings and improvements 9,386,103 47,479 - 9,431,009 Equipment 63,988 - - 111,467 Vehicles and motorized equipment 12,280 - 12,280 Total capital assets being depreciated 9,462,371 92,385 - 9,554,756 Less accumulated depreciation for: Buildings and improvements 2,081,389 253,262 - 2,334,651 Equipment 32,506 7,451 - 39,957 Vehicles and motorized equipment 7,666 1,873 - 9,539 Total accumulated depreciation 2,121,561 262,586 - 2,384,147 Total capital assets being depreciated, net 7,340,810 7,170,609 Aquatics and Fitness Fund capital assets, net 8,266,404 8,096,203 Airport Fund Capital assets not being depreciated: Land and land improvements 7,664,966 672,500 - 8,337,466 Construction in progress 2,925,979 6,362,785 852,474 8,436,290 Total capital assets not being depreciated 10,590,945 7,035,285 852,474 16,773,756 Capital assets being depreciated: Buildings and improvements 14,086,828 9,300 - 14,096,128 Equipment 456,339 - - 456,339 Vehicles and motorized equipment 261,841 148,760 - 410,601 Infrastructure - 153,400 - 153,400 Total capital assets being depreciated 14,805,008 311,460 - 15,116,468 45 Less accumulated depreciation for: Buildings and improvements Equipment Vehicles and motorized equipment Infrastructure 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 Business -type activities capital assets, net Construction commitments Beginning 15,160 Ending Balances Increases Decreases Balances 523,059 167,444 5,701,812 538,609 - 6,240,421 134,971 55,209 - 190,180 111,453 45,786 - 157,239 - 1,534 - 1,534 5,948,236 641,138 - 6,589,374 8,856,772 8,527,094 19,447,717 25,300,850 5,564 15,160 - 20,724 517,495 152,284 - 669,779 523,059 167,444 - 690,503 8,216,019 397 1,878 - 2,275 275,614 78,034 - 353,648 276,011 $ 79,912 $ - 355,923 247,048 334,580 247,048 334,580 $ 204,894,111 $ 226,582,766 The government has active construction projects as of June 30, 2010. At year end, the government's commitments with contractors are as follows: Spent -to- Remaining Projects Date Commitment Governmental Capital Projects Enterprise Aquatics and Fitness Center Water and Sewer Electric Natural Gas Airport Total $ 1,087,461 $ 323,477 1,138,849 518,033 23,586,039 2,004,137 45,596,073 2,101,687 8,436,289 3,268,685 $ 79,844,711 $ 8,216,019 46 Discretely presented component units Capital asset activity for the ABC Board for the year ended June 30, 2010, was as follows: Capital assets not being depreciated: Land and land improvements 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 Beginning Ending Balances Increases Decreases Balances $ 317,013 $ - $ - $ 317,013 1,023,364 14,015 - 1,037,379 114,230 2,902 - 117,132 15,830 - - 15,830 1,153,424 16,917 - 1,170,341 Business -type activities: 281,172 25,617 - 306,789 89,952 13,180 - 1 03,132 15,830 - - 15,830 386,954 $ 38,797 $ - 425,751 766,470 744,590 capital assets, net $ 1,083,483 $ 1,061,603 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, 2010, were as follows: Component units' payables at June 30, 2010, were as follows: Salaries and Vendors Benefits Other Total ABC Board $ 148,499 $ 484 $ 56,500 $ 205,483 Tourism Development Authority $ - $ - $ 300 $ 300 2. Pension Plan Obligations a. Local Governmental Employees' Retirement System 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 47 Salaries and Vendors Benefits Other Total Governmental activities: General Fund $ 493,674 $ 6,997 $ - $ 500,671 Nonmajor Funds 330,282 - - 330,282 Total - governmental activities $ 823,956 $ 6,997 $ - $ 830,953 Business -type activities: Enterprise Funds $ 6,535,475 $ - $ - $ 6,535,475 Component units' payables at June 30, 2010, were as follows: Salaries and Vendors Benefits Other Total ABC Board $ 148,499 $ 484 $ 56,500 $ 205,483 Tourism Development Authority $ - $ - $ 300 $ 300 2. Pension Plan Obligations a. Local Governmental Employees' Retirement System 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 47 hooufit provisions to the North Carolina General Assembly. The Local Governmental ' Retirement System is included in the Comprehensive &mxm| Financial Report (C&FQ) for the State of Y4odb Carolina. The State's CAF& includes financial statements and required supplementary inbonno1ion for LGE&8. That report may be obtained by writing to the Office of the State Controller, 1410 K4ui| 8orvicuCento,, Raleigh, North Carolina 2?69p-|4|O`orhy calling (V\V)v8|-j454. 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 detennined rate. For the City, the current rate for employees not engaged in law enforcement and for law enforcement officers io4.89%and 4.86%' respectively, of annual covered payroll. For the ABC Board, the current rate for ooup|oyeou not engaged in law enforcement is 6.50% 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 L(3ERS for the years ended June 30' 2010. 2009, and 2008' were $1`084'527' $1,058'105, and $990.287. respectively. The ABC Board's contributions to [GER8 for the years ended June 30'2O|O'2O0V. and 2OO8 were $\4^2iO'$l3^3V4' and Dl5,O96, respectively. The contributions made hy the City and the ABC Board equaled the required contributions for each year. b. Law Enforcement Officcm'Spoc/u/SepurudonA8ow'onco Plan Description. The City of Monroe administers o public employee rc1iromou( system (the "Separation &Uovvonco"), o single-employer defined benefit pension plan that provides retirement benefits to the City's qualified sworn law enforcement officers. The Separation &Uovvouuo is equal to .85 percent ofthe 000uu| equivalent ofthe 6umu rate of compensation most recently applicable tothe officer for each year ofcreditable service. The retirement benefits are not subject to any increases in ao|ury or retirement allowances that may be authorized hy the General Assembly. Article l2Dof(3.8.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 bythe Separation Allowance. At December 3l'2O88. the Separation Allowance's membership consisted o[ Retirees receiving benefits 13 Terminated plan mmnbcs outNud to but not yet receiving hcnufim - Active plan members 82 Total 95 /& separate report was not issued for the plan. Summary of3ignificun/ Accounting Policies: Basis of Accounting. The City has chosen 0o fund the Separation /\|1on/unoc on o pay as you go 6umio. Pension expenditures are made from the General Fund, which is maintained on the modified accrual basis of accounting. Method Used /o Value Investments. No funds are set aside to pay benefits and administration costs. These expenditures are paid as they come due. Contributions. The City is required by Article 12D o[(]. S. Chapter 143 to provide tkcmo retirement bcnuG10 and has chosen to fund the benefit payments on u pay unyou 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 byemployees. 48 The annual required contribution for the current year was determined as part of the December 31, 2008 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, 2008 was 22 years. 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 $ 174,367 Interest on net pension obligation (9,579) Adjustment to annual required contribution 8,323 Annual pension cost 173,111 Contributions made 170,318 Decrease in net pension obligation 2,793 Net pension obligation, beginning of year (132,123) Net prepaid pension obligation, end of year $ (129,330) 3 Year Trend Information For Year Annual Pension Percentage of Net Pension Ended Cost APC Obligation June 30 (APC) Contributed (Prepayment) 2008 $ 142,457 108.23% $ (129,331) 2009 163,225 101.71% (132,123) 2010 173,111 98.39% (129,330) Funded Status and Funding Progress As of December 31, 2009, 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 $2,184,631. The covered payroll (annual payroll of active employees covered by the plan) was $4,461,289, and the ratio of the UAAL to the covered payroll was 48.97 %. 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. C. 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, 2010, were $303,748 which consisted of $225,389 from the City and $78,359 from the law enforcement officers. 49 General The City has elected Ncontribute 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 on amount equal W five percent of each employee's ao|ag, and all amounts contributed are vested immediately. Also, the employees may make voluntary contributions tuthe plan. Contributions for the year ended June 3O'20lO' were $l,2V3,ll7, which consisted of$882,|24from the City and $4lO,AV] from the employees. d. Firemen's and Rescue Squad Workeo'PmskmFund Plan Description. The State of l4urt6 Carolina ountrihutcu, on huhu\[ 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 ftincling situation administered by the State of North Carolina. The Fund provides pension hcnuDtu for eligible fire and r000uo squad workers that have elected to become members o[ the fund. Article 86ufG.S. Chapter 58 assigns the authority to establish and amend honcfitprovisions to the North Carolina '3unura| Assembly. The Firemen's and Komuue Squad VVo,kum' Pension fund is included in the Comprehensive Annual Financial Kopurt(C/\FR) for the State of North Carolina. The State's C/\FR includes Onuouiu| statements and required supplementary information for the Pond. That report may 6e obtained bv writing tn the Office nf the State Controller, |4\0 Mail Service Center, Raleigh, North Carolina 276Vy-i4l0,urhy calling (9\V)yRl-5454. Funding Policy. 9|un members are required to contribute $10 per month to the Fund. The State, u non- employer contributor, funds the plan {brno#h appropriations. The City does not contribute to the Fund. Contribution requirements uf plan members and the State of North Carolina are established and may be amended by the North Carolina General Assembly. On-Beha4f Payments. For the fiscal year ended June 3O'20\0,the City of Monroe has recognized on-behalf payments for pension contributions made by the state as a revenue and an expenditure of $13,665 for the 48 employed fimcmcnwho perform fi/efigktiugduties for the City's fire department. The employees elected tu 6e members of the Firemen and Rescue Squad Worker's Pension Fund. o. 0/6mr 8omefitr Healthcare Benefits Plan Description Under the terms ofaCity resolution, the City administers o single employer Health and Dental Care Plan. This plan provides postemp\oymotbcukhcmr 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 uf creditable service with the City. The amount the City pays towards these benefits is based onyears of service with the City. The City pays the full cost of coverage for these benefits through private insurers. A stand-alone financial report im not issued. Funding Policy Employees with 2Oto25 years of semice — {heCity pays 50% and 75% of the cost of health and dental insurance, nmpoohvu|y. Employees with 3Oyears of semice — UmCity pays 100% of the cost of health and dental insurance. In addition, retirees with 30 years of service receive $5'5O0of life insurance coverage. When uretiree reaches age 65,they are transferred to the Medicare Supplement Group Plan and Part D Group Plan at the above referenced pmrcutugc of cost based on years of service. At that time, any dependents covered are offered COBRA coverage. 9E Membership of the Health Care Plan consisted of the following at July 1, 2009: Retirees and dependents receiving benefits Terminated plan members entitled to but not yet receiving benefits Active plan members All Employees 76 436 Total 512 The current ARC rate is 7.53% of annual covered payroll. For the current year, the City contributed $397,000 or 1.99% of annual covered payroll. For the year ended June 30, 2010, the City made payments for postretirement health benefit premiums of $295,182. 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. 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 46,000 Adjustment to annual required contribution (35,000) Annual OPEB cost (expense) 1,513,000 Contributions made (397,000) Increase (decrease) in net OPEB obligation 1,116,000 Net OPEB obligation, beginning of year 1,154,000 Net OPEB obligation, end of year $ 2,270,000 The City's annual OPEB costs, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2010 were as follows: For Year Annual Percentage of Annual Net OPEB Ended June 30 OPEB Cost OPEB Cost Contributed Obligation 2010 $ 1,513,000 33.3% $ 2,270,000 Funded Status and Funding Progress As of July 1, 2009, the plan was not funded. The actuarial accrued liability for benefits, and, thus the unfunded actuarial accrued liability (UAAL) was $19,201,000. The covered payroll (annual payroll of active employees covered by the plan) was $19,927,000, and the ratio of the UAAL to the covered payroll was 93.4 %. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and 51 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. 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, 2009 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, 2009 was 30 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, 2010, the City made contributions to the State for death benefits of $22,173. 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. 4. DeferredlUnearned 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: MN Property taxes receivable: General Nomnajor governmental Privilege license receivable: General Loans receivable: Nonmajor governmental Special vehicle tax receivable: General Code enforcement liens receivable: General Prepaid taxes and licenses: General Total Risk Management Deferred Unearned Revenue Revenue $ 1,058,212 $ - 5,092 - 19,151 - 25,655 - 30,689 - 86,318 - - 517,602 $ 1,225,117 $ 517,602 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. 53 Group Health Insurance Effective July L2002,the City established an employee medical benefit plan to self-insure claims up to 570`000 per year for each individual covered; claims above $70'000 and aggregate daimm exceeding 125% of expected incurred and paid claims are covered by a stop loss insurance policy. Workers' Compensation Insurance The City has uself-funded workers' insurance plan. Through this plan the City has workers` compensation coverage ofuptm the statutory limits. The self-insurance plan has u8350'0O0 retained risk per occurrence with u$l`OUO`UUU aggregate limit. The City also carries employer's liability coverage with similar retention and limit amounts. Due to the degree of turnover of the outstanding claims, the claims payable as of June 30,2O0are considered to be current liabilities. Changes in the balance of claims liabilities during the year ended June 3U,2U)U are aufollows: Health Benefit Workers' Property & Fund Compensation Fund Casualty Fund Unpaid claims ouuf June 3O,2OOD $ - $ - $ ' Claims and premiums paid 4,446,767 214,303 313`123 Incurred claims and premiums Unpaid claims unof June 3U,2OOA 475'548 15,646 57`747 Claims and premiums paid 5'584,683 179,418 522'008 Incurred claims and premiums Unpaid claims amof June 3O,20l0 $ 419,985 $ 13481 $ 6,451 The City protects itself from potential loss through participation in the North Carolina League of Municipalities lntedouu| DJuk Financing Fund of North Carolina for general liability, automobile hahi|k& public officials and law enforcement |b6i|by. The City maintains coverage of $5,000,000 for comprehensive general liability, automobile liability, public officials and |mp enforcement liability. The City's potential loss for liability coverage is limited 0u the deductible amount of$50`O0O per claim for all coverage except for real and personal property which has a deductible of $25,000 per claim. In accordance with G.Q.l59-29, the City's employees that have access N$l00 or more at any given time of the City's funds are performance bonded through u 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 u blanket bond for $25O`OOO. The City of Monroe ABC Board is exposed N 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 bexposed to various risks nfloss related to torts; theft of, damage to, and dcoUncdun of assets; errors and moiooi000; and natural disasters. The Authority dncm 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 itiu probable that oloss has occurred and the amount ofthat loss can he reasonably estimated. Based ooavailable information, the Authority had no liability claims uiJune 30, 2010. 6 Claims, Judgements, and Contingent Liabilities At June 30'2O|0, the City was udefendant 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 onthe City's financial position. 54 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,lQU including interest oi4.48%. Executed September 22, 1999. and refinanced on May l9,2UO4,to finance acquisition, renovation, and furnishing ofa police headquarters, requiring 21 semi-annual installments of $73,429 plus interest u12.8OY6. Executed December 22' 2003, to finance construction of an addition to the aquatics and fitness center, requiring 20 semi-annual ine<u||mcntm of $182,145 including in1cme< at 3.85%. Executed August l2,2O04,tu finance construction of a street maintenance building, requiring 30 semi-annual installments of$]4'53] plus interest at 3.89%. Execute] Juno 15, 2006, to finance equipment, requiring lU semi-annual installments of $245,203 including interest at 3.8 1 %. Executed June 15, 2007, to finance equipment, requiring 10 semi-annual installments of $132`518 including interest o1l0333Y6. Executed February 8, 2008. to Ononoo facility improvements, requiring 20 oomi'onuuo| installments oY$g5,O00plus interest ut3.827Y6. Executed June 20, 2008, to finance equipment, requiring 10 semi-annual installments o[$2l6'65| including interest u13.lVY6. Executed June 15,2009 to finance equipment, lO semi-annual installments of $201,937 including interest ut2.837Q%. Executed January 30'20O0to finance construction of u recreation center, requiring 30 semi-annual installments oy$70`724 plus interest a(4.57U%. Executed June |l' 2010^ W finance equipment, requiring 10 semi-annual installments of$|8|,6Oy including interest ut2.585Y6. RE Governmental Enterprise Funds Funds Total � - $ 155,522 0 155,522 ' 1]82,246 1,182246 656,133 656,133 352,515 124,953 477,468 309,744 106,261 506,005 1,520,000 ' 1,520,000 886,215 344,639 1^230`854 1,026,898 490144 1,517,042 2,232,272 - 2233,272 1,222,176 l 5 8,209,458 $ 3,625,941 Q |) Annual debt service payments of the installment purchase obligations as of June 30, 2010, are as follows: At June 30, 2010, the City had a legal debt margin of $227,418,755. b. 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 $200,000 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 $75,939. $ 3,319,061 $6,525,000 Combined Enterprise System Refunding Revenue Bonds, Series 1998, due annually in amounts ranging from $480,000 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 $95,364. 5,029,636 $30,920,000 Combined Enterprise System Revenue Bonds, Series 2008A, due annually in amounts ranging from $795,000 to $2,055,000 through March 1, 2033, interest rate varying between 4.0% and 5.0 %. The amount shown includes $330,721 in unamoritized bond premiums associated with the bonds. 30,485,721 $13,095,000 Combined Enterprise System Revenue Bonds, Series 2008B, due annually in amounts ranging from $470,000 to $1,005,000 through March 1, 2028, interest rate of 4.5404 %. 12,645,000 $ 51,479,418 56 Governmental Activities Business -Type Activities Year Ending June 30 Principal Interest Principal Interest 2011 $ 1,736,719 $ 285,965 $ 1,064,168 $ 105,881 2012 1,409,670 229,590 914,649 72,883 2013 1,225,390 183,134 833,958 43,734 2014 930,211 144,979 556,564 17,658 2015 591,635 115,383 256,602 4,986 2016 -2020 1,678,040 314,328 - - 2021 -2025 637,798 65,581 - - Total $ 8,209,458 $ 3,625,941 Total interest payments $ 1,338,960 $ 245,142 At June 30, 2010, the City had a legal debt margin of $227,418,755. b. 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 $200,000 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 $75,939. $ 3,319,061 $6,525,000 Combined Enterprise System Refunding Revenue Bonds, Series 1998, due annually in amounts ranging from $480,000 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 $95,364. 5,029,636 $30,920,000 Combined Enterprise System Revenue Bonds, Series 2008A, due annually in amounts ranging from $795,000 to $2,055,000 through March 1, 2033, interest rate varying between 4.0% and 5.0 %. The amount shown includes $330,721 in unamoritized bond premiums associated with the bonds. 30,485,721 $13,095,000 Combined Enterprise System Revenue Bonds, Series 2008B, due annually in amounts ranging from $470,000 to $1,005,000 through March 1, 2028, interest rate of 4.5404 %. 12,645,000 $ 51,479,418 56 The future payments of the revenue bonds for the years ending June 3O` are uufollows: Activities Year Ending June 30 Interest 2011 $ 1,945,000 2,215,085 2012 3'015,000 2233'385 3013 2,100,000 2,148,037 2014 2'190,000 2'058'361 3015 2,290'000 1,964'045 2016-2020 12,245'000 8'214'565 282} -2025 11,505'000 5,526,916 2O26-2030 11'040'000 2,851`377 2031'3033 5890000 568,200 Total $ 51320000 27,879,871 The future payments as presented above, have not been reduced by $171,303, the unamortized deferred loss incurred aou result of the advance mbundin@s and the $330'721 inouuoxrbizcd 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 o[Combined Enterprise System Revenue Bonds (Bond Order) since its adoption on May 3, 1994. Section 704(o)of the Bond Order requires the debt service coverage ratio to be no less than 12596 purity indoboudocmm and 100Y6 of the long term dch< service requirement for subordinated indebtedness for the fiscal year. The debt service coverage ratio calculation for the year ended June 30, 2010, is as follows: Operating revenues Q 75`197,405 Operating expenses (l) 67,175'362 Operating income 8,022,043 l4onoporuhog revenues (2) 938500 Income available for debt service 8,960,633 Parity debt service (3) 4,403,507 Debt service coverage ratio 20% Income available for debt service 8,960`633 Subordinated debt service (3) 7,673,048 Debt service coverage ratio 117% (l) Per rate covenants, this does not include the depreciation expense o[$5,0??l26. (2) Per rate covenants, this includes investment earnings only. (3) Per rate covenants, this does not include amortization wf the deferred loss incurred as result of advance robundio&x. The City has pledged future water and sewer, electric, airport, and natural gas customer revenues, net nf specified operating expenses, to repay $55.7 million in revenue bonds issued in 1998 and 2008. Proceeds from the bonds provided financing for various oupikd projects. The bonds are payable solely from the revenue sources ofibe enterprise funds noted above and are payable through 2O33. Annual principal and interest payments oo the bonds are expected torequire less than 6Y6of net revenues. The total principal and interest remaining to be paid on the bonds is $79,199,87 1. Principal and interest paid for the current year and total customer net revenues were $4`403,5O7 and $74.7 million, respectively. 57 C. AJvowxcRefux6ngs On October 27'l998, the City issued $6,30,000 in General Obligation Refunding Bonds with interest rates ranging from 3.3% to 5.0% to advance refund $5'925'000 of outstanding 1091 Water and Sewer general obligation bonds with interest rates ranging from 6.10Y6to 6.25%. On October 27^ 1998^ the City also issued 56'525'000 in Combined Enterprise System Refunding Revenue Bonds with interest rates ranging from 3.3Y6 to 4.6% to advance refund $5'715'000 of outstanding 1994 Combined Enterprise System Revenue Bonds with interest rates ranging from 42% to6.0%. The net proceeds of$}2'662,J9l were used 0w porubuae U.S. Government securities. 7booc securities were deposited in on irrevocable trust with an escrow agent to provide for all tbtno debt service payments outhe )OVl Water and Sewer Serial Bonds and the portion of the 1994 Combined Enterprise System Revenue Bonds which were refunded. Asoresult, these bonds are considered tohc dufeumod` 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 3O,2O0O none ofthe lyVl bonds were outstanding. The 1994 Combined Enterprise System Revenue Bonds were fully retired in fiscal year 20UO. The advance refundings resulted in a difference between the reacquisition price and the net carrying amount oƒ the old debt of$|'O22,39l. This difference, net of the accumulated amortization nf$768,377,iareported in the accompanying financial statements as u deduction from bonds poyuh|u and is being charged to operations through the year 20l9 using the effective interest method over the life of the new debt which is shorter than the life of the refunded debt. The bond iaauuuco costs ueaociuicd with the advance refunding were expensed during the period incurred because they were not considered to be material. The City completed the advance rofbndiugm to reduce its total debt service payments over the next 21 years by $841'061 and to obtain an ouuuonoio gain (difference between the present values of the old and new debt service payments) of$615,l85. d State Revolving Loans The City has entered into six State Revolving Loons to finance water and sewer improvements. N|8tato Revolving Loans are being serviced hy revenues from the Water and Sewer Fund: Loan payable to the State of North 0mhm Water Pollution Control Revolving Loan Fund with umaximum limit of$7`382`765 payable over J0 years with interest o1 3.385%. Loan payable to the State of North Carolina Water Pollution Control Revolving Loan Fund with umaximum limit ufD3`735`JlO payable over 2O years with interest a1 2.89%. Loan payable to the State oy North Carolina Water Bond Loan Fund with omuxhnum limit of$)'5|5'662 payable over 20 years with interest o(5.85Y6. Loan payable tothe State of North Carolina Water Bond Loan Fund with omumimmn limit oƒ$l'484,338 puyuh|o over 20 yuoo with u revised iuhorcm( rate of 3.43% effective May 1, 2003 (previous rate was 5]0%). Loan payable tothe State of North Carolina Water Pollution Control Revolving Loan Fund with umaximum limit of$}'l59'O3O payable over 2O years with interest ui ].O35Y6. Loan payable to the State of North Carolina Water Pollution Control Revolving Loan Fund with umoxinum limit uf$|,27O,lO5 payable over 2O years with interest ut 2.89%. 58 1,845,691 747,042 454,699 445,301 379,359 � Annual debt service requirements to maturity for the State Revolving Loans are as follows: Year Ending June 30 2011 2012 2013 2014 2015 2016-2017 Total e. Certificates of Participation Business -Tvne Activities Principal Interest $ 827,077 $ 145,855 827,077 117,508 827,077 88,861 827,077 60,441 640,316 32,050 329,130 10,691 $ 4,277,753 $ 455,406 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. The amount shown is net of the unamortized bond discount of $329,131. $ 32,335,869 Annual debt service requirements for Certificates of Participation are as follows: Year Ending June 30 2011 2012 2013 2014 2015 2016-2020 2021 —2025 2026 —2030 2031 -2035 2036 —2039 Total Business -Tvne Activities Principal Interest $ 600,000 $ 1,597,950 620,000 1,579,950 635,000 1,561,350 655,000 1,542,300 675,000 1,522,650 3,755,000 7,234,063 4,605,000 6,386,638 5,840,000 5,155,494 7,575,000 3,413,025 7,705,000 1,087,900 $ 32,665,000 $ 31,081,320 The future payments presented above, have not been reduced by $329,131, the unamortized bond discount incurred as a result of the issurance. f. Changes in Long -term Liabilities Balance July 1, 2009 Governmental activities: Installment purchase obligations $ 9,656,258 Compensated absences 1,499,542 OPEB liability 818,335 Current Balance Portion of Increases Decreases June 30, 2010 Balance $ 474,824 $ 1,921,624 $ 8,209,458 $ 1,736,719 1,108,222 1,069,496 1,538,268 1,030,640 783,323 - 1,601,658 - Governmental activities long -term liabilities $ 11,974,135 $ 2,366,369 $ 2,991,120 $ 11,349,384 $ 2,767,359 M Business -type activities: Compensated absences OPEB liability Installment purchase obligations Certificates of participation Less unamortized discounts Total certificates of participation General obligation bonds 140,000 Less deferred amount for loss on defeasance (1,416) Total general obligation bonds 138,584 Revenue bonds 53,185,000 Less deferred amount for loss on defeasance (206,002) Current Balance Total revenue bonds 53,333,469 Balance Portion of July 1, 2009 Increases Decreases June 30, 2010 Balance _ 23,752 330,719 23,229 - 1,854,051 $ 434,213 $ 419,406 $ 351,009 $ 502,610 $ 336,751 335,665 332,677 - 668,342 - 3,345,606 1,222,300 941,965 3,625,941 1,064,169 32,665,000 - - 32,665,000 600,000 (340,679) - (11,548) (329,131) (11,548) 32,324,321 - (11,548) 32,335,869 588,452 General obligation bonds 140,000 Less deferred amount for loss on defeasance (1,416) Total general obligation bonds 138,584 Revenue bonds 53,185,000 Less deferred amount for loss on defeasance (206,002) Plus bond premium 354,471 Total revenue bonds 53,333,469 - 140,000 - - - (1,416) - - 138,584 - - - 1,865,000 51,320,000 1,945,000 - (34,701) (171,301) (32,058) _ 23,752 330,719 23,229 - 1,854,051 51,479,418 1,936,171 State revolving loans 5,104,832 - 827,079 4,277,753 827,077 Business -type activities long -term liabilities $ 95,016,690 $ 1,974,383 $ 4,101,140 $ 92,889,933 $ 4,752,620 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. C. Interfund Balances and Activity Balances due to /from other funds at June 30, 2010, consist of the following: Due to the Electric Fund for the purchase of land to be used for incentive grants for industries: General Fund $ 1,256,422 Due to the Electric Fund to be used for capital improvements: Natural Gas Fund $ 5,91 1,644 Due to the Electric Fund for improvements: Airport Fund — principal $ 7,521,336 Airport Fund — interest 37,607 $ 7,558,943 Due to the Electric Fund for establishment of: Stormwater Fund $ 146,092 Balances due to /from component units at June 30, 2010, consist of the following: Due to the Primary Government for profit distributions from: Monroe ABC Board $ 56,500 Due to the Primary Government for Occupancy Tax: Monroe Tourism Development Authority 18,500 $ 75,000 ,1 Transfers to/from other funds at June 30,2O|0, consist nf the following: From the General Fund to the Airport Fund for current operating needs and construction projects $ 737,262 From the General Fund tn the Downtown Monroe Special Revenue Fund for general operations 454'042 From the 8tonmp/uicr Fund to the General Fund for proportionate share of new street department shed 26`900 From the Capital Projects Fund tn the General Fund for savings from onnshncinnprojects 709`990 From the Occupancy Tax Special Revenue Fund tothe General Fund for administrative fees 8'818 From City Grant Programs Fund tu the General Fund for expired incentive grants 258,119 � 2,285,131 D. Revenues, Expenditures, and Expenses Fringe Benefits and Salaries For the fiscal year ended June 30, 200` the City of Monroe has recognized on-behalf payments for pension contributions made by the state asorevenue and an expenditure of $13,665 for the 48employed 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, oonat-skarin&' 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 asarevenue and an expenditure on-behalf of payments for fringe benefits and salaries of $25,149 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, 2010. Under State law the |nco1 board of trustees for the Fund receives on amount each year, v/bioh 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 goveonments, is o member of the North Carolina Municipal Power Agency Number |(Agency). The Agency was formed tu enable municipalities that own electric distribution systems to finance, construct, own, operate, and maintain generation and transmission fooi|idcm. Each participating government appoints one cominissioner to the Agency's governing board. The nineteen members, which receive power from the Agency, have signed power sales agreements to purchase u specified share of the power generated by the Agency. Except for the power sales purchase requirements, no |oou| government participant has any obligation, entitlement, or residual iutorooL The City's purchases of power for the fiscal year ended June 30,20l0 were $37,075'040. Also, the City, in conjunction with eight Central North Carolina counties and fifty other municipalities established the Centralina Council ofGovernments (Council). The participating governments established the Council to coordinate various funding received from {idcro| and State agencies. Each participating goverment appoints one member to the Council's governing board. The City paid membership fees of $O.Vq2to the Council during the fiscal year ended June 30,20lO. 61 V� V7 JOINT VENTURE The City and the members of the City's fire department each appoint two members to the five-member local board uf trustees for the Firemen's Relief Fund, The State Insurance Commissioner appoints one additional member im the local board oftrustees. The Firemen's Relief Fund ia funded hya portion ofthe fire and lightning insurance premiums that insurers remit to the 8tu1c. The State puoocu these monies to the |nou| board ufthe Firemen's Relief Fund. The funds are used to assist fire fighters in various ways. The City obtains an ongoing Ouaociu| benefit from the Fund for the on-behalf ofpayments for an|nrica and fringe benefits made to members of the City's Dm department by the board of trustees. During the Omcu\ year ended June 30' 2010' the City reported revenues and expenditures for the payments of $25,149 made through the Firemen's Relief Fund. The participating governments do not have any equity interest in the joint venture, on no equity has been mOcc<od in the financial oCa1unenNu at June 30, 2010. The Firemen's Relief Fund does not issue separate audited financial statements. Instead, the local board of trustees files an annual finouoiu| report with the State Firemen's Association. This report can be oh<uiucd from the Association ot Post Office Box 188'FonnvU|e, North Carolina 2?828. The City has entered into ujoin< venture agreement with Public Service Company of North Carolina, Incorporated, uSuuth Carolina corporation d/b/a PSNC Eoor8y('PSNC"). The City has agreed \mdesign, oonoUmci and install natural gum pipeline, o oonhn| station, an emergency connector, various valves and electronic data control equipment in )rcdeK and Cubunmo Counties which is |nouiud in P8NC"o service area. These facilities will be "joint taoi|ihos" to be owed by the City subject to P8Y4C`m right to lease capacity in these facilities. PSNC has agreed to pay the City capacity charges in the amount of $6,000,000 payable in monthly installments over u period of six (6) years commencing June 30, 2010. The City will be responsible for providing all operation, muiotcouooc` inspection and repair of the joint facilities. PSNChox agreed to reimburse the City for its ubuo of the costs of operation and maintenance in proportion tothe percentage o[PSNC's capacity in the joint &mi|ihuy^ which initially will be 25%. PSNC files SC/\N&'x uomua| SEC Form lO-K with the North Carolina Utilities Commission. & tu1| copy uf this report can bo obtained from the Commission's webxi0o in Dmokoi No. O-5, Sub 400/\ or on 8CAN&`s webxitn o1: . Io addition, PSNC'x financial statements can be found onPSNC"swm6ui|cat: . RELATED ORGANIZATION The seven-member board of the Monroe Housing Authority ixappointed 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 oyMonroe is also disclosed as o n:|uiod organization in the notes to the §uouciu| statements for the Monroe Housing Authority. Complete Duaooiu| statements for the Housing Authority can be obtained from the Authority's offices a1 Post Office Box 8O5' Monroe, North Carolina 28lll. RELATED PARTY TRANSACTIONS The City and its discretely presented component units engaged in the following transactions during the year ended June J0,20l0: City m[ Monroe ABC Board: Payments tn the City for profit distributions $ 210,000 Payments to the City for law enforcement 74,418 Total $ 284,418_ Monroe Tourism Development Authority: Payment ufu pro-rata portion mf the occupancy tax by the City tothe Authority $ 285]19 Payment by the Authority to the City for the Occupancy Tax Project $ 190,079 62 V111. 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. IX, RECLASSIFICATIONS During the fiscal year ending June 30, 2010, the City decided to separate the Occupancy Tax Project Fund from the General Fund for presentation purposes. This required an adjustment of $964,903 to the General Fund's beginning fund balance. The Occupancy Tax Project Fund is shown as a capital project fund. 63 CITY OF MONROE, NORTH CAROLINA LAW ENFORCEMENT OFFICERS'SPECIAL SEPARATIONALLOWANCE REQUIRED SUPPLEMENTARY 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( lb) _ (c) * 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 12/31/09 - 2,184,631 2,184,631 0.00 4,461,289 48.97 *Reflects changes in actuarial assumptions. 64 CITY OF MONROE, NORTH CAROLINA LAW ENFORCEMENT OFFICERS'SPECIAL SEPARATIONALLOWANCE REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS Year Ended Annual Required Percentage June 30 Contribution Contributed 2000 $ 100,561 123.55% 2001 112,650 9437 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 1 38,373 149.68 2008 143,756 122.24 2009 164,695 127.34 2010 174,367 131.97 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% 65 December 31, 2009 Projected unit credit Level percentage of pay closed 21 Years Market value 5.00% 4.5% to 12.3% none Actuarial Valuation Date July 1, 2007 July 1, 2009 CITY OF MONROE, NORTH CAROLINA THE HEAL TH CARE PLAN OF THE CITY OF MONROE SUPPLEMENTAL INFORMA TION SCHEDULE OF FUNDING PROGRESS LAST FISCAL YEAR 66 Actuarial Accrued UAAL Actuarial Liability (AAL) - Unfunded as a Value of Projected AAL Funded Covered Percentage of Assets Unit Credit (UAAL) Ratio Payroll Covered Payroll (a) (b) (b -a) (alb) (c) ((b -a)lc) $ - $ 15,877,000 $ 15,877,000 0.00% $ 18,700,000 84.9% - 19,201,000 19,201,000 0.00% 19,927,000 93.4% 66 CITY OF MONROE, NORTH CAROLINA THE HEAL TH CARE PLAN OF THE CITY OF MONROE SUPPLEMENTAL INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTION FISCAL YEAR ENDED JUNE 30, 2009 Year Ended Annual Required Percentage June 30 Contribution Contributed 2009 $ 1,502,000 23.2°% 2010 1,502,000 26.2% 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 67 July 1, 2009 Projected unit credit Level percentage of pay closed 30 Years Market value 4,00% 1.00 % -5,00% 2016 3.75% none CITY OF �rIONROE a heritage of progress 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. Occupancy Tax Projects - This fund is used to account for tourism related capital expenditures. CITY OF MONROE, NORTH CAROLINA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FINDS June 30, 2010 ASSETS Cash and cash equivalents Taxes receivable Accounts receivable Due from other governments Due from component unit 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 $ 50,245 $ 205,983 $ - $ 397,777 $ - - 5,092 28,609 - - 2,008 - - - - 20,563 - - - - $ 72,816 $ 211,075 $ 28,609 $ 397,777 $ - $ - $ 16,857 $ - $ 127,745 $ 20,563 5,092 28,609 20,563 21,949 28,609 127,745 2,008 - - 28,727 - - - 270,032 - 50,245 160,399 - - - 52,253 189,126 - 270,032 - $ 72,816 $ 211,075 $ 28,609 $ 397,777 $ - Iff STATEMENT 1 $ 144,602 $ 185,680 $ 54,264 - 198,866 185,680 $ 185,680 $ 330,282 - - 54,264 - 185,680 384,546 2,008 Capital 18,500 201,683 203,691 Project Funds - - Funds Occupancy 270,032 Total Nonmajor 1,128,344 Capital Tax 1,398,376 Governmental Total Projects Projects Total Funds $ 654,005 $ 71,770 $ 1,128,344 $ 1,200,114 $ 1,854,119 33,701 - - - 33,701 2,008 - - - 2,008 - 183,183 - 183,183 183,183 - - 18,500 18,500 18,500 20,563 - - - 20,563 $ 710,277 $ 254,953 $ 1,146,844 $ 1,401,797 $ 2,112,074 $ 144,602 $ 185,680 $ 54,264 - 198,866 185,680 $ 185,680 $ 330,282 - - 54,264 - 185,680 384,546 2,008 183,183 18,500 201,683 203,691 28,727 - - - 28,727 270,032 - 1,128,344 1,128,344 1,398,376 210,644 (113,910) - (113,910) 96,734 511,411 69,273 1,146,844 1,216,117 1,727,528 $ 710,277 $ 254,953 $ 1,146,844 $ 1,401,797 $ 2,112,074 im 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, 2010 REVENUES Ad valorem taxes Other taxes and licenses Restricted intergovernmental Miscellaneous Program income Investment earnings Total revenues EXPENDITURES Current: Economic and physical development: Administration Loan assistance Incentive grants Tourism Capital outlay Total expenditures Revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers from other funds Transfers to other funds Total other financing sources (uses) Net change in fund balances Fund balances, beginning Fund balances, ending Special Revenue Community Downtown Occupancy City Grant State Grant Development Monroe Tax Programs Programs $ - $ 43,005 $ - $ - $ - 293,937 - - - 325,500 1,180 - - 7,169 - - - - 2,627 - 7,169 46,812 293,937 325,500 156 359,096 - - - - - 26,478 - 1,230,088 - 285,119 - - 141,758 - - 156 500,854 285,119 1,256,566 7,013 (454,042} 8,818 (931,066} 454,042 - - - (8,818 (258,119) 454,042 (8,818) (258,119) 7,013 - - (1,189,185) - 45,240 189,126 - 1,459,217 - $ 52,253 $ 189,126 $ - $ 270,032 $ - 72 STATEMENT 2 Capital Project Funds Funds Occupancy Total Nonmajor Capital Tax Governmental Total Projects Projects Total Funds $ 43,005 $ - $ - $ - $ 43,005 293,937 - - - 293,937 325,500 183,183 190,079 373,262 698,762 1,180 - - - 1,180 7,169 - - - 7,169 2,627 1,460 - 1,460 4,087 673,418 184,643 190,079 374,722 1,048,140 359,252 - 8,138 8,138 367,390 26,478 - - - 26,478 1,230,088 - - - 1,230,088 285,119 - - - 285,119 141,758 2,642,990 - 2,642,990 2,784,748 2,042,695 2,642,990 8,138 2,651,128 4,693,823 (1,369,277) (2,458,347} 181,941 (2,276,406) (3,645,683) 454,042 - - - 454,042 (266,937) (799,990) - (799,990) (1,066,927) 187,105 (799,990) - (799,990) (612,885) (1,182,172) (3,258,337) 181,941 (3,076,396) (4,258,568) 1,693,583 3,327,610 964,903 4,292,513 5,986,096 $ 511,411 $ 69,273 $ 1,146,844 $ 1,216,117 $ 1,727,528 73 CITY OF MONROE, NORTH CAROLINA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS .Tune 30, 2010 ASSETS Current assets: Cash and investments Accounts receivable (net) Prepaid expenses Deposits Total current assets LIABILITIES Current Liabilities: Accounts payable and accrued liabilities Total current liabilities NET ASSETS Unrestricted STATEMENT 3 Health and Workers' Property and Dental Compensation Liability Fund Fund Fund Total $ 294,545 $ 117,509 80,430 10,072 1,731,337 $ 497 387,031 $ 2,412,913 288 118,294 - 80,430 10,072 502,556 1,731,834 387,319 2,621,709 419,985 13,481 6,451 439,917 419,985 13,481 6,451 439,917 $ 82,571 $ 1,718,353 $ 380,868 $ 2,181,792 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, 2010 OPERATING REVENUES Interfund charges and employee contributions Other operating revenue Total operating revenues OPERATING EXPENSES Operating expenses Health care clinic Health benefit claims and premiums Property and liability claims and premiums Total operating expenses Operating income NON OPERATING REVENUES Investment earnings Change in net assets NET ASSETS Beginning Ending Health and Workers' Property and Dental Compensation Liability Fund Fund Fund Total $ 4,957,718 $ - $ 645,000 $ 5,602,718 280,606 - 57 280,663 5,238,324 - 645,057 5,883,381 - 179,418 - 179,418 66,440 - - 66,440 5,584,603 - - 5,584,603 - - 522,008 522,008 5,651,043 179,418 522,008 6,352,469 (412,719) (179,418) 952 3,324 (411,767) (176,094) 123,049 (469,088) 511 4,787 123,560 (464,301) 494,338 1,894,447 257,308 2,646,093 $ 82,571 $ 1,718,353 $ 380,868 $ 2,181,792 75 CITY OF MONROE, NORTH CAROLINA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2010 OPERATING ACTIVITIES Cash received for services Other operating revenue Cash paid for goods and services Net cash provided (used) by operating activities INVESTING ACTIVITIES Investment earnings 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 prepaid expenses Increase (decrease) in accounts payable and accrued liabilities Total adjustments Net cash provided (used) by operating activities STATEMENT 5 Health and Dental Fund Workers' Compensation Fund Property and Liability Fund Total $ 4,957,718 $ - $ 645,551 $ 5,603,269 1,180,068 - 57 1,180,125 (5,706,606) (182,080) (573,304) (6,461,990) 431,180 (182,080) 72,304 321,404 952 3,324 511 4,787 432,132 (178,756) 72,815 326,191 (137,587) 1,910,093 314,216 2,086,722 $ 294,545 $ 1,731,337 $ 387,031 $ 2,412,913 $ (412,719) $ (179,418) $ 123,049 $ (469,088) 979,892 (497) 551 979,946 (80,430) - - (80,430) (55,563) (2,165) (51,296) (109,024) 843,899 (2,662) (50,745) 790,492 $ 431,180 $ (182,080) $ 72,304 $ 321,404 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, 2010 REVENUES Ad valorem taxes: Taxes Penalties and interest Total Other taxes and licenses: Privilege licenses Gross receipts tax on short-term rental property Local franchise fees Motor vehicle tax Total Unrestricted intergovernmental: Local option sales taxes Telecommunications sales tax Utility franchise tax Cablevision franchise fees Beer and wine tax State fire fees ABC profit distribution Total Restricted intergovernmental: Powell Bill allocation Public safety reimbursement grants On- behalf payments - Fire and Rescue ABC Revenue for law enforcement Resource officer reimbursement Senior Center grant Equitable sharing of federally forfeited property NC Rural Economic Development Center Total Sales and services: Recreational fees Utilities collection fees Building permit fees Cemetery revenues Sale of fixed assets Rentals Other fees Total 77 Budget $ 15,825,000 60,000 15,885,000 375,000 40,000 35,000 133,000 583,000 4,200,000 470,000 1,400,000 220,000 140,000 3,500 180,000 6,613,500 914,360 503,582 785,349 2,375,509 835,850 406,000 200,000 30,400 80,000 68,500 150,950 1,771,700 Actual $ 16,764,727 100,926 16,865,653 367,831 46,279 40,770 124,912 579,792 3,536,581 512,958 1,432,412 288,249 53,171 3,853 216,500 6,043,724 979,429 416,321 38,814 74,418 93,339 4,218 183,824 785,348 2,575,711 681,326 411,605 245,354 45,485 129,144 63,154 164,284 1,740,352 SCHEDULE b Variance Positive (Negative) $ 939,727 40,926 980,653 (7,169) 6,279 5,770 (8,088) (3,208) (663,419) 42,958 32,412 68,249 (86,829) 353 36,500 (569,776) 65,069 (87,261) 38,814 6,418 (6,661) 183,824 (1) 200,202 (154,524) 5,605 45,354 15,085 49,144 (5,346) 13,334 (31,348) - 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, 2010 Variance Positive Budget Actual (Negative) Investment earnings $ 400,000 $ 268,436 $ (131,564) Miscellaneous: Payment in lieu of taxes 381,000 425,067 44,067 Donations 24,484 28,692 4,208 Other 35,200 92,998 57,798 Total 440,684 546,757 106,073 Total revenues 28,069,393 28,620,425 551,032 EXPENDITURES Current: General government: Administration Salaries and employee benefits 2,017,981 1,841,140 176,841 Operating expenditures 1,479,858 1,171,918 307,940 Capital outlay 27,900 32,290 (4,390) Interdepartmental charges (1,399,845) (1,399,845) - 2,125,894 1,645,503 480,391 Planning and zoning Salaries and employee benefits 726,732 685,398 41,334 Operating expenditures 79,520 57,299 22,221 806,252 742,697 63,555 Engineering Salaries and employee benefits 816,137 807,060 9,077 Operating expenditures 84,491 49,462 35,029 Capital Outlay 3,100 3,100 - Interdepartmental charges (237,027) (237,027) - Interdepartmental charges 666,701 622,595 44,106 Finance Salaries and employee benefits 1,620,263 1,593,563 26,700 Operating expenditures 366,951 306,358 60,593 Capital outlay 35,000 18,331 16,669 Interdepartmental charges (1,828,117) (1,828,117) - 194,097 90,135 103,962 - Continued- 78 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, 2010 Operations Center Salaries and employee benefits Operating expenditures 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 UN SCHEDULE 6, Continued Variance Positive Budget Actual (Negative) $ 505,871 $ 493,316 $ 12,555 206,108 164,124 41,984 (576,481) (586,339) 9,858 135,498 71,101 64,397 366,940 313,182 53,758 4,295,382 3,485,213 810,169 1,159,124 1,062,564 96,560 1,419,777 1,171,979 247,798 300,827 297,987 2,840 (434,919) (507,783) 72,864 2,444,809 2,024,747 420,062 7,008,875 6,875,597 133,278 1,374,662 978,013 396,649 192,000 181,897 10,103 8,575,537 8,035,507 540,030 5,492,725 5,274,079 218,646 502,561 459,558 43,003 19,500 19,639 (139} 6,014,786 5,753,276 261,510 806,587 748,041 58,546 96,883 50,016 46,867 30,009 29,013 996 933,479 827,070 106,409 15,523,802 14,615,853 907,949 - 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, 2010 Culture and recreation: Salaries and employee benefits Operating expenditures Capital outlay Interdepartmental charges Total Debt service: Principal retirement Interest and other charges Repayment of advance from other fiords 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 Stormwater Fund Airport Fund Installment purchase obligations issued Total other financing sources (uses) FUND BALANCE APPROPRIATED Net change in fund balance Fund balance, beginning, as previously stated Reclassification of Occupancy Tax Project Fund - See Note IX Fund balance, beginning, restated Fund balance, ending SCHEDULE 6, Continued Variance Positive Budget Actual (Negative) $ 2,663,751 $ 2,569,507 $ 94,244 1,650,076 1,363,360 286,716 243,577 202,650 40,927 (378,232) (378,23 - 4,179,172 3,757,285 421,887 1,958,208 1,921,661 36,547 400,000 337,106 62,894 131,485 131,477 8 2,489,693 2,390,244 99,449 28,932,858 26,273,342 2,659,516 (863,465) 2,347,083 3,210,548 50,000 8,818 (41,182) 258,119 258,119 - 799,811 799,990 179 (557,983) (454,042) 103,941 26,900 26,900 - (828,318) (737,262) 91,056 552,000 474,824 (77,176) 300,529 377,347 76,818 562,936 - (562,936) $ - 2,724,430 $ 2,724,430 17,866,057 (964,903) 16,901,154 $ 19,625,584 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 .tune 30, 2010 REVENUES Program income EXPENDITURES Current: Economic and physical development: Administration Revenues over (under) expenditures FUND BALANCE APPROPRIATED Net change in fund balance Fund balance, beginning Fund balance, ending N Budget Actual $ 7,000 $ 7,169 500 156 6,500 7,013 • ii SCHEDULE 7, Page I of S Variance Positive (Negative) 344 (175) 6,500 7,013 $ 6,325 45,240 $ 52,253 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, 2010 REVENUES Ad valorem taxes Miscellaneous Investment earnings Total EXPENDITURES Current: Economic and physical development: Administration Capital Outlay Total 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 82 SCHEDULE 7, Page 2 of S Variance Positive Budget Actual (Negative) $ 41,795 $ 43,005 $ 1,210 - 1,180 1,180 1,085 2,627 1,542 42,880 46,812 3,932 513,800 359,096 154,704 178,527 141,758 36,769 692,327 500,854 191,473 (649,447) (454,042) 195,405 557,983 454,042 (103,941) 91,464 - (91,464) 189,126 $ 189,126 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, 2010 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 83 SCHEDULE 7, Page 3 of 5 Variance Positive Budget Actual (NegativeL $ 335,000 $ 293,937 $ (41,063} 285,000 285,119 (119) 50,000 8,818 (41,182) (50,000) (8,818) 41,182 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 dune 34, 2010 REVENUES Restricted intergovernmental EXPENDITURES Current: Economic and physical development: Loan assistance Incentive grants Total expenditures Revenues over (under) expenditures Actual Project Prior Current Total to Authorization Year Year Date SCHEDULE 7, Page 4 of S Variance Positive (Negative) $ 688,604 $ 113,104 $ 325,500 $ 438,604 $ (250,000) 388,104 113,104 26,478 139,582 248,522 3,359,988 1,759,563 1,230,088 2,989,651 370,337 3,748,092 1,872,667 1,256,566 3,129,233 618,859 (1,189,185) $ 270,032 $ 270,032 (3,059,488) (1,759,563) (931,066) (2,690,629) 368,859 OTHER FINANCING SOURCES (USES) Transfers from (to) other funds: General Fund 2,784,488 State Grant Project Fund - Community Development Fund 275,000 Total other financing sources (uses) 3,059,488 Revenues and other financing sources over expenditures and other financing use $ - Fund balance, beginning 3,042,607 (258,119) 2,784,488 - 8,000 - 8,000 8,000 168,173 - 168,173 (106,827) 3,218,780 (258,119) 2,960,661 (98,827) $ 1,459,217 (1,189,185) $ 270,032 $ 270,032 1,459,217 Fund balance, ending $ 270,032 84 SCHEDULE 7, Page S of S CITY OF MONROE, NORTH CAROLINA CAPITAL PROJECT 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, 2010 Actual Variance Project Prior Current Total to Positive Authorization Year Year Date (Negative) REVENUES Restricted intergovernmental (09- C-1999, $ 400,000 $ - $ - $ - $ (400,000) Total Revenues 400,000 - - - (400,000) EXPENDITURES Current: Economic and physical development: Program costs (09 -C -1999) Total expenditures Revenues over expenditures Fund balance, beginning Fund balance, ending 400,000 - 400,000 - 85 400,000 400,000 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, 2010 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, Page I of 2 Actual Variance Project Prior Current Total to Positive Authorization Years Year Date (Negative) $ 1,985,486 $ 1,298,998 $ 183,183 $ 1,482,181 $ (503,305) - 588 - 588 588 - 13,539 1,460 14,999 14,999 1,985,486 1,313,125 184,643 1,497,768 (487,718) 4,881,867 3,391,211 1,534,897 4,926,108 (44,241) 1,444,400 47,685 1,047,932 1,095,617 348,783 2,574,253 2,261,463 60,161 2,321,624 252,629 8,900,520 5,700,359 2,642,990 8,343,349 557,171 (6,915,034) (4,387,234) (2,458,347) (6,845,581} 69,453 1,838,595 2,638,405 (799,990) 1,838,415 (180) 784,719 784,719 - 784,719 - 4,291,720 4,291,720 - 4,291,720 - 6,915,034 7,714,844 (799,990) 6,914,854 (180) $ - $ 3,327,610 (3,258,337) $ 69,273 $ 69,273 86 3,327,610 $ 69,273 CITY OF MONROE, NORTH CAROLINA CAPITAL PROJECT FUNDS OCCUPANCY TAX CAPITAL PROJECTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -- BUDGET AND ACTUAL From Inception and For the Fiscal Year Ended June 30, 2010 REVENUES Restricted intergovernmental Total Revenues EXPENDITURES Current: Other costs Total expenditures Revenues under expenditures OTHER FINANCING SOURCES Transfers from other funds: Pertbrming Arts Center Revenues and other financing sources over (under) expenditures Fund balance, beginning Fund balance, ending SCHEDULE 8, Page 2 of 2 Actual Variance Project Prior Current Total to Positive Authorization Year Year Date (Negative) $ 1,034,362 $ 959,970 $ 190,079 $ 1,150,049 $ 115,687 1,034,362 959,970 190,079 1,150,049 115,687 163,781 109,897 8,138 118,035 45,746 163,781 109,897 8,138 118,035 45,746 870,581 850,073 181,941 1,032,014 161,433 101,814 114,830 $ 972,395 $ 964,903 87 114,830 13,016 181,941 $ 1,146,844 $ 174,449 964,903 $ 1,146,844 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, 2010 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 FUND BALANCE APPROPRIATED Total revenues 88 011awflam Variance Positive Budget Actual (Negative) $ 4,840,544 $ 5,088,813 $ 248,269 6,173,537 6,256,526 82,989 24,069 131,972 107,903 573,015 597,147 24,132 11,611,165 12,074,458 463,293 230,080 290,656 60,576 11,841,245 12,365,114 523,869 224,550 419,257 194,707 7,395 1,106 (6,289) 431,446 259,809 (171,637) 663,391 680,172 16,781 12,504,636 13,045,286 540,650 67,799 - (67,799) $ 12,572,435 $ 13,045,286 $ 472,851 - 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, 2010 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 RZ SCHEDULE 9, Continued Variance Positive Budget Actual (Negative) $ 2,200,717 $ 2,165,001 $ 35,716 2,243,914 1,888,644 355,270 4,444,631 4,053,645 390,986 640,889 640,891 (2) 2,113,594 1,722,018 391,576 2,754,483 2,362,909 391,574 886,760 880,812 5,948 1,714,577 1,647,440 67,137 2,601,337 2,528,252 73,085 1,627,925 1,627,732 193 683,130 681,495 1,635 2,311,055 2,309,227 1,828 288,734 149,026 139,708 12,400,240 11,403,059 997,181 172,195 172,195 - 172,195 172,195 - $ 12,572,435 $ 11,575,254 $ 997,181 - Continued - CITY OFMONROE, NORTH CAROLINA WATER AND SEWER FUND SCHEDULE OF REVENUES AND EXPENDITURES -- BUDGET AND ACTUAL (NON GAAP) For the Fiscal Year Ended June 30, 2010 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues Total expenditures and other financing uses Revenues and other financing sources over expenditures and other financing uses Reconciling items: Debt principal Amortization of deferred loss on refunding Amortization of bond premimurn Amortization of bond issuance costs Capital outlay 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 a SCHEDULE 9, Continued $ 13,045,286 11,575,254 1,470,032 1,627,732 (9,824) 4,027 (4,070) 149,026 (35,930) 172,195 (294,765) (14,128) (139,205) (1,826,163) (371,105) $ 1,098,927 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, 2010 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 m Budget S - SCHEDULE 10, Page I of 2 Variance Positive Actual (Negative) 3,318,739 $ 3,318,739 SCHEDULE 1 P, Page 2 of 2 CITY OF MONROE, NORTH CAROLINA WATER AND SEWER CAPITAL PROJECTS FUNDS CAPITAL PROJECTS SCHEDULE OF REVENUES AND EXPENDITURES -- BUDGETAND ACTUAL (NON -GAAP) From Inception and For the Fiscal Year Ended June 30, 2010 Actual Variance Project Prior Current Total to Positive Authorization Years Year Date (Negative) REVENUES Investment earnings $ - $ 178,260 $ 2,478 $ 180,738 $ 180,738 EXPENDITURES Construction costs capitalized 19,073,046 6,495,273 133,670 6,628,943 12,444,103 Construction in progress 26,739,082 537,368 601,480 1,138,848 25,600,234 Other costs 360,629 283,691 297,243 580,934 (220,305) Total expenditures 46,172,757 7,316,332 1,032,393 8,348,725 37,824,032 Revenues over (under) expenditures (46,172,757) (7,138,072) (1,029,915) (8,167,987) 38,004,770 OTHER FINANCING SOURCES (USES) Transfers from (to) other funds: Water and Sewer Fund 6,121,695 5,949,500 172,195 6,121,695 - 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) 46,172,757 11,200,562 172,195 11,372,757 (34,800,000) Revenues and other financing sources over (under) expenditures and other financing uses $ - $ 4,062,490 $ (857,720) $ 3,204,770 $ 3,204,770 O CITY OF MONROE, NORTH CAROLINA ELECTRIC FUND SCHEDULE OF REVENUES AND EXPENDITURES -- BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2010 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 OTHER FINANCING SOURCES Installment purchase obligations issued Repayment of advance from General Fund Repayment of advance to Stormwater Fund Repayment of advance to Natural Gas Fund Repayment of advance from Airport Fund Total other financing sources FUND BALANCE APPROPRIATED Total revenues and other financing sources 93 SCHEDULE 11 Variance Positive Budget Actual (Negative) $ 44,242,205 $ 41,905,931 $ (2,336,274) 1,327,000 989,782 (337,218) 45,569,205 42,895,713 (2,673,492) 390,500 611,838 221,338 45,959,705 43,507,551 (2,452,154) - 60,360 60,360 - 255,852 255,852 110,000 765,928 655,928 855,396 378,690 (476,706) 965,396 1,460,830 495,434 46,925,101 44,968,381 (1,956,720) 810,000 131,485 39,518 208,356 6,562,913 7,752,272 1,001 ,738 191,738 131,477 (8) 39,518 - 208,356 - 6,562,913 - 7,944,002 191,730 4,206,208 - (4,206,208) $ 58,883,581 $ 52,912,383 $ (5,971,198) - 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, 2010 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 Airport Fund Total other financing uses Total expenditures and other financing uses ., Budget Actual SCHEDULE 11, Continued Variance Positive (Negative) $ 2,271,344 $ 1,091,127 $ 1,180,217 6,002,047 2,338,350 3,663,697 8,273,391 3,429,477 4,843,914 38,670,400 37,075,040 1,595,360 966,350 949,587 16,763 1,105,495 1,118,097 (12,602) 2,071,845 2,067,684 4,161 1,056,087 2,438,957 (1,382,870) 50,071,723 45,011,158 5,060,565 1,290, 522 1,290,522 - 7,521,336 7,521,336 - 8,811,858 8,811,858 - $ 58,883,581 $ 53,823,016 $ 5,060,565 - Continued - CITY OF MONROE, NORTH CAROLINA ELECTRIC FUND SCHEDULE OF REVENUES AND EXPENDITURES -- RUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2010 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 Net book value of assets disposed Payments received on note receivable Advance to Airport Fund Accrued interest on advance to Airport Fund Repayment of advance to Airport Fund Repayment of advance to Natural Gas Fund Repayment of advance to Stormwater Fund Repayment of advance to General 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 95 SCHEDULE II, Continued $ 52,912,383 (910,633) 949,587 (1,001,738) (18,193) 16,917 (17,307) 2,438,957 (267,212) (503,433) 7,521,336 37,607 (6,476,771) (88,356) (33,908) (82,086) 1,290,522 (91,913) (14,330) (63,704) (2,063,710) 1,532,265 $ 621,632 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, 2010 EXPENDITURES Construction costs capitalized 9,731,061 8,845,181 Actual 9,046,881 Variance Construction in progress Project Prior Current Total to Positive Other costs Authorization Years Year Date (Negative) REVENUES 52,598,614 27,411,318 3,368,337 30,779,655 21,818,959 Power agency funding $ 5,805,850 $ 5,592,648 $ - $ 5,592,648 $ (213,202) Miscellaneous - 6 - 6 6 Investment earnings - 464,324 1,740 466,064 466,064 5,805,850 6,056,978 1,740 6,058,718 252,868 EXPENDITURES Construction costs capitalized 9,731,061 8,845,181 201,700 9,046,881 684,180 Construction in progress 35,840,043 18,213,055 3,072,984 21,286,039 14,554,004 Other costs 7,027,510 353,082 93,653 446,735 6,580,775 Total expenditures 52,598,614 27,411,318 3,368,337 30,779,655 21,818,959 Revenues over (under) expenditures (46,792,764) (21,354,340) (3,366,597) (24,720,937) 22,071,827 OTHER FINANCING SOURCES Transfers from other funds: Electric Fund 24,350,989 23,060,463 1,290,522 24,350,985 (4) Natural Gas Fund 700,000 700,000 - 700,000 - Proceeds from revenue bonds 21,741,775 21,741,775 - 21,741,775 - 46,792,764 45,502,238 1,290,522 46,792,760 (4) Revenues and other financing sources over expenditures $ - $ 24,147,898 $ (2,076,075) $ 22,071,823 $ 22,071,823 96 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, 2010 REVENUES Operating revenues: Charges for services: Natural gas sales 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 97 Budget SCHEDULE I3 Variance Positive Actual (Negative) $ 20,157,300 $ 18,240,065 $ (1,917,235) - 9,964 9,964 20,157,300 18,250,029 (1,907,271) - 97,363 97,363 97,363 2,007,623 1,910,260 119,605 264,053 144,448 216,968 2,369,039 2,152,071 20,374,268 20,619,068 244,800 64,000 71,800 7,800 64,000 71,800 7,800 5,029,158 (5,029,158) $ 25,467,426 $ 20,690,868 $ (4,776,558) - 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, 2010 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: Repayment of Advance from Electric Fund Natural Gas Capital Projects Fund Total other financing uses Total expenditures and other financing uses SCHEDULE 13, Continued 88,356 88,356 Variance 3,688,000 3,776,356 Positive Budget Actual (Negative) $ 883,492 $ 591,042 $ 292,450 2,243,060 1,666,044 577,016 3,126,552 2,257,086 869,466 15,300,000 12,493,870 2,806,130 261,860 254,539 7,321 2,079,471 2,087,722 (8,251) 2,341,331 2,342,261 (930) 923,187 928,343 (5,156) 21,691,070 18,021,560 3,669,510 88,356 88,356 3,688,000 3,688,000 3,776,356 3,776,356 $ 25,467,426 $ 21,797,916 $ 3,669,510 - 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, 2010 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 Principal payment on advance from Electric Fund Issuance of note receivable to outside party Payment from outside party on note receivable Transfer to Natural Gas Capital Projects Fund Net income from capital projects consolidation Reimbursement from outside party for construction in progress Increase in compensated absences Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets 99 SCHEDULE 13, Continued $ 20,690,868 21,797,916 (1,1 07,048) 254,539 (71,800) (8,098) 2,844 (37,402) 928,343 88,356 6,000,000 (97,363) 3,688,000 (144,215) (2,000,000) (12,198) (30,672) (479,631) 8,080,703 $ 6,973,655 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, 2010 REVENUES Miscellaneous Investment earnings Total revenues EXPENDITURES Construction costs capitalized Construction in progress Other costs Total expenditures Revenues over (under) expenditures OTHER FINANCING SOURCES Transfers from other funds: Natural Gas Fund Electric Fund Certificates of Participation Proceeds from revenue bonds Total other financing sources Revenues and other financing sources over (under) expenditures SCHEDULE 14 (55,522,439) (30,055,457) (15,508,894) (45,564,351) 9,958,088 16,913,000 13,225,000 Actual 3,330,000 Variance Project Prior Current Total to Positive Authorization Years Year Date (Negative) $ - $ 5,933 $ 1,002 $ 6,935 $ 6,935 - 146,097 13,936 160,033 160,033 - 152,030 14,938 166,968 166,968 2,007,711 832,474 566,486 1,398,960 608,751 53,135,228 29,132,805 14,798,193 43,930,998 9,204,230 379,500 242,208 159,153 401,361 (21,861) 55,522,439 30,207,487 15,523,832 45,731,319 9,791,120 (55,522,439) (30,055,457) (15,508,894) (45,564,351) 9,958,088 16,913,000 13,225,000 3,688,000 16,913,000 3,330,000 3,330,000 - 3,330,000 31,628,998 31,628,998 - 31,628,998 3,650,441 3,650,441 - 3,650,441 55,522,439 51,834,439 3,688,000 55,522,439 $ - $ 21,778,982 $(11,820,894) $ 9,958,088 $ 9,958,088 m CITY OF MONROE, NORTH CAROLINA AQUA TICSAND FITNESS CENTER FUND SCHEDULE OF REVENUES AND EXPENDITURES -- B UDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2010 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 OTHER FINANCING SOURCES Transfers from other funds: MAFC Capital Projects Total other financing uses Total revenues and other financing uses M Budget SCHEDULE 15 Variance Positive Actual (Negative) $ 3,727,000 $ 3,763,120 $ 36,120 154,500 136,940 (17,560) 3,881,500 3,900,060 18,560 - 6,950 6,950 60,900 23,853 (37,047) 60,900 30,803 (30,097) 3,942,400 3,930,863 (11,537) 63,269 (63,269) 4,005,669 3,930,863 (74,806) 4,137 4,137 4,137 4,137 $ 4,009,806 $ 3,935,000 $ (74,806) - Continued - SCHEDULE 15, Continued CITY OF MONROE, NORTH CAROLINA AQUA TICS AND FITNESS CENTER FUND SCHEDULE OF REVENUES AND EXPENDITURES -- BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2010 - Continued - no Variance Positive Budget Actual (Negative) EXPENDITURES Operations: Salaries and employee benefits $ 1,712,572 $ 1,614,853 $ 97,719 Operating expenditures 1,738,916 1,422,668 316,248 Total 3,451,488 3,037,521 413,967 Debt service: Principal retirement 407,886 407,886 - Interest and other charges 64,764 64,765 (1) Total 472,650 472,651 (1) Capital outlay 85,668 92,385 (6,717) Total expenditures $ 4,009,806 $ 3,602,557 $ 407,249 - Continued - no 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, 2010 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures Revenues and other financing sources over expenditures and other financing uses Reconciling items: Debt principal Capital outlay Increase in compensated absences Transfer from MAFC Capital Project Fund Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets UR SCHEDULE 15, Continued 3,935,000 3,602,557 332,443 407,886 92,385 (2,749) (4,137) (49,548) (262,585) 181,252 513,695 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, 2010 REVENUES Miscellaneous EXPENDITURES Other costs Total expenditures Revenues over (under) expenditures SCHEDULE 16 Actual Variance Project Prior Current Total to Positive Authorization Years Year Date (Negative) $ - $ 733 $ 419,863 420,596 419,863 420,596 (419,863) (419,863} - $ 733 $ 733 420,596 (733) - 420,596 (733) (419,863) - OTHER FINANCING SOURCES (USES) Transfers (to) from other funds: Aquatics and Fitness Center Fund 419,863 424,000 (4,137) 419,863 - Total other financing sources 419,863 424,000 (4,137) 419,863 - Revenues and other financing sources over (under) expenditures $ - $ 4,137 $ (4,137) $ - $ - 1E CITY OF MONROE, NORTH CAROLINA AIRPORT FUND SCHEDULE OF REVENUES AND EXPENDITURES -- BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 34, 2010 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 Advance from Electric Fund Installment purchase obligations issued Total other financing sources FUND BALANCE APPROPRIATED Total revenues and other financing sources In" SCHEDULE 17 Variance Positive Budget Actual (Negative) $ 260,305 $ 283,503 $ 23,198 600 - (600) 1,5,21,200 1,183,345 (337,855) 1,782,105 1,466,848 (315,257) 24,150 25,756 1,606 1,806,255 1,492,604 (313,651) 828,318 737,262 (91,056) 7,521,336 7,521,336 - 450,000 148,656 (301,344) 8,799,654 8,407,254 (392,400) 16,807 - (16,807) $ 10,622,716 $ 9,899,858 $ (722,858) - Continued - CITY OF MONROE, NORTH CAROLINA AIRPORT FUND SCHED ULE OF REVENUES AND EXPENDITURES -- BUDGETAND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2010 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 from other funds: Repayment of advance from Electric Fund Total other financing sources Total expenditures and other financing sources 1• SCHEDULE 17, Continued 6,476,771 6,476,771 6,476,771 6,476,771 $ 10,622,716 $ 9,899,861 $ 722,855 - Continued - Variance Positive Budget Actual (Negative) $ 524,315 $ 519,478 $ 4,837 1,925,841 1,563,435 362,406 2,450,156 2,082,913 367,243 496,925 496,652 273 686,107 685,465 642 1,183,032 1,182,117 915 512,757 158,060 354,697 4,145,945 3,423,090 722,855 6,476,771 6,476,771 6,476,771 6,476,771 $ 10,622,716 $ 9,899,861 $ 722,855 - 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, 2010 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures Revenues and other financing sources over expenditures and other financing uses Reconciling items: Debt principal Amortization of bond issuance costs Repayment of principal on original advance from Electric Fund Capital outlay Installment purchase obligations issued Net expense from capital projects consolidation Advance from Electric Fund Accrued interest on advance from Electric Fund Increase in compensated absences Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets 107 SCHEDULE 17, Continued 9,899,858 9,899,861 496,652 (7,705) 6,476,771 158,060 (148,656) 474,863 (7,521,336) (37,591) (15,357) (25,953) (641,138) (791,390) (791,393) 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, 2010 REVENUES Restricted intergovernmental Investment earnings Total revenues EXPENDITURES 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 Airport Fund Proceeds from revenue bonds Installment purchase obligations issued Total other financing sources (uses) SCHEDULE 18 322,537 322,537 Actual 6,476,771 Variance Project Prior Current Total to Positive Authorization Years Year Date (Negative) $ 4,944,069 $ 300,000 $ 483,552 $ 783,552 $ (4,160,517) - 392,160 17,885 410,045 410,045 4,944,069 692,160 501,437 1,193,597 (3,750,472) 5,276,437 3,259,851 672,499 3,932,350 1,344,087 19,919,680 2,772,577 5,663,713 8,436,290 11,483,390 50,000 - 26,574 26,574 23,426 25,246,117 6,032,428 6,362,786 12,395,214 12,850,903 (20,302,048) (5,340,268) (5,861,349) (11,201,617) 9,100,431 322,537 322,537 - 322,537 - 6,476,771 6,476,771 - 6,476,771 - 12,942,740 12,942,740 - 12,942,740 - 560,000 - - - (560,000) 20,302,048 19,742,048 - 19,742,048 (560,000) Revenues and other financing sources over (under) expenditures and other financing uses $ - $ 14,401,780 $ (5,861,349) $ 8,540,431 $ 8,540,431 1 CITY OF MONROE, NORTH CAROLINA STORM WATER FUND SCHEDULE OF REVENUESAND EXPENDITURES -- BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2010 REVENUES Operating revenues: Charges for services: Storm water receipts Total operating revenues Nonoperating revenues: Other nonoperating revenues Investment earnings Total nonoperating revenues Total revenues FUND BALANCE APPROPRIATED Total revenues 109 Budget Actual SCHEDULE 19 Variance Positive (Negative) $ 1,615,000 $ 1,775,649 $ 160,649 1,615,000 1,775,649 160,649 - 39 39 3,000 4,071 1,071 3,000 4,110 1,110 1,618,000 1,779,759 161,759 77,680 (77,680) $ 1,695,680 $ 1,779,759 $ 84,079 - 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, 2010 EXPENDITURES Operations: Salaries and employee benefits Reimbursements Operating expenditures Total Debt service: Principal retirement Interest and other charges Total Capital outlay Total expenditures OTHER FINANCING USES Transfers to other funds: General Fund Total other financing uses Total expenditures and other financing uses SCHEDULE 19, Continued 72,110 71,378 732 10,000 10,465 (465} 82,110 81,843 267 168,803 167,444 1,359 1,668,780 1,464,737 204,043 26,900 26,900 - 26,900 26,900 - $ 1,695,680 $ 1,491,637 $ 204,043 - Continued - Variance Positive Budget Actual (Negative) $ 539,537 $ 495,704 $ 43,833 423,155 423,155 - 455,175 296,591 158,584 1,417,867 1,215,450 202,417 72,110 71,378 732 10,000 10,465 (465} 82,110 81,843 267 168,803 167,444 1,359 1,668,780 1,464,737 204,043 26,900 26,900 - 26,900 26,900 - $ 1,695,680 $ 1,491,637 $ 204,043 - Continued - CITY OF MONROE, NORTH CAROLINA STORM WA TER FUND SCHEDULE OF REVENUES AND EXPENDITURES -- BUDGET AND ACTUAL (NON-GAAP) For the Fiscal Year Ended June 30, 2010 Reconciliation from budgetary basis (modified accrual) to full accrual: Total revenues and other financing sources Total expenditures and other financing uses C, Revenues and other financing sources over expenditures and other financing uses Reconciling items: Debt principal Principal payment on advance from Electric Fund Capital outlay Increase in compensated absences Increase in OPEB liability Depreciation and amortization Total reconciling items Change in net assets 111 SCHEDULE 19, Continued 1,779,759 1,491,637 288,122 37,470 33,908 167,444 (9,635) (23,594) (79,912) 125,681 $ 413,803 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, 2010 REVENUES Operating revenues: Charges for services: Refuse collection fees Total Other operating revenues Total operating revenues Nonoperating revenues: Investment earnings Total nonoperating revenues Total revenues FUND BALANCE APPROPRIATION Total revenues and other financing uses 112 SCHEDULE 20 Variance Positive Budget Actual (Negative) $ 2,850,997 $ 2,813,609 $ (37,388) 2,850,997 2,813,609 (37,388) 20,000 25,405 5,405 2,870,997 2,839,014 (31,983) 3,576 4,280 704 3,576 4,280 704 2,874,573 2,843,294 (31,279) 64,150 - 64,150 $ 2,938,723 $ 2,843,294 $ 32,871 - Continued - EXPENDITURES Operations: Salaries and employee benefits Operating expenditures Total Total expenditures CITY OF MONROE, NORTH CAROLINA SOLID WASTE FUND SCHEDULE OF REVENUESAND EXPENDITURES -- BUDGET AND ACTUAL (NON -GAAP) For the Fiscal Year Ended June 30, 2010 113 Budget SCHEDULE 20, Continued Variance Positive Actual (Negative) $ 56,499 $ 56,492 $ 7 2,882,224 2,645,049 237,175 2,938,723 2,701,541 237,182 $ 2,938,723 $ 2,701,541 $ 237,182 - 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, 2010 Reconciliation from budgetary basis (modified accrual) to full accrual Total revenues Total expenditures Revenues and other financing sources over expenditures 114 SCHEDULE 20, Continued 2,843,294 2,701,541 $ 141,753 CITY OF MONROE, NORTH CAROLINA HEALTHAND DENTAL FUND SCHEDULE OF REVENUES AND EXPENDITURES (NON -GAAP) FOR THE YEAR ENDED JUNE 30, 2010 REVENUES Operating revenues Interfund charges and employee contributions Other operating revenue Nonoperating revenues Investment earnings Total revenues EXPENDITURES Operating expenditures Health care clinic Health benefit claims and premiums Total expenditures Revenues over expenditures In SCHEDULE 21 Variance - Favorable Budget Actual (Unfavorable) $ 4,564,383 $ 4,957,718 $ 393,335 - 280,606 280,606 6,000 952 (5,048) 4,570,383 5,2391276 668,893 97,000 66,440 30,560 4,473,383 5,584,603 (1,111,220) 4,570,383 5,651,043 (1,080,660) $ - $ (411,767) $ (411,767) SCHEDULE 22 CITY OF MONROE, NORTH CAROLINA WORKERS' COMPENSATION FUND SCHEDULE OF REVENUES AND EXPENDITURES (NON -GAAP) FOR THE YEAR ENDED JUNE 30, 2010 FUND BALANCE APPROPRIATED Revenues under expenditures 116 300,000 300,000 $ - $ (176,094) $ (176,094) Variance - Favorable Budget Actual (Unfavorable) REVENUES Nonoperating revenues Investment earnings $ 19,200 $ 3,324 $ (15,876) Total revenues 19,200 3,324 (15,876) EXPENDITURES Operating expenditures Workers' compensation claims and premiums paid 319,200 179,418 139,782 Total expenditures 319,200 179,418 139,782 FUND BALANCE APPROPRIATED Revenues under expenditures 116 300,000 300,000 $ - $ (176,094) $ (176,094) CITY OF MONROE, NORTH CAROLINA PROPER TYAND CASUALTY FUND SCHEDULE OF REVENUES AND EXPENDITURES (NON -GAAP) FOR THE YEAR ENDED JUNE 30, 2014 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 117 Budget $ 645,000 $ SCHEDULE 23 Variance - Favorable Actual (Unfavorable) 645,000 $ - 57 57 5,000 511 (4,489) 650,000 645,568 (4,432) 650,000 522,008 127,992 650,000 522,008 127,992 $ - $ 123,560 $ 123,560 SCHEDULE 24 CITY OF MONROE, NORTH CAROLINA SCHEDULE OF AD VALOREM TAXES RECEIVABLE June 30, 2010 Ad valorem taxes receivable Uncollected $ Uncollected Balance Collections Balance Fiscal Year June 30, 2009 Additions And Credits June 30, 2010 2009-2010 $ - $ 16,872,372 $ 16,292,046 $ 580,326 2008-2009 562,074 - 383,305 178,769 2007-2008 180,955 - 65,723 115,232 2006-2007 101,901 - 20,909 80,992 2005-2006 57,693 - 29,305 28,388 2004-2005 24,016 - 3,263 20,753 2003-2004 18,412 - 2,608 15,804 2002-2003 19,318 - 1,035 18,283 2001 -2002 8,773 - 125 8,648 2000-2001 16,118 - 9 16,109 1999-2000 8,629 - 8,629 - $ 997,889 $ 16,872,372 $ 16,806,957 Ad valorem taxes receivable $ 1,063,304 Municipal Service District - Downtown Reconcilement with revenues: General Fund Monroe Fund Total Ad valorem taxes - General fund $ 16,822,897 $ 42,756 $ 16,865,653 Amounts written off per statute of limitations 8,629 - 8,629 Refunds, releases of prior years' taxes 33,545 56 33,601 Interest and advertising cost recovery (100,737) (189) (1 00,926) Total collections and credits $ 16,764,334 $ 42,623 $ 16,806,957 118 CITY OF AIONROE, NORTH CAROLINA ANALYSIS OF CURRENT TAX LEVY CITY- WIDE LEVY For the Fiscal Year Ended June 30,J0/0 City - Wide Property Tnm| Vuluudvo _Rate _Levy__ SCHE0ULEJ5 Total Lev Property excluding registered Registered Motor Motor Original levy: Property taxed mcurrent year's rate $l22V548,092 0.495 $ 16,016329 $ 15,501.114 $ 515.215 Municipal 9ovinoDistrict 21.130,212 0.200 42.485 42,485 ' Registered motor vehicles taxed at prior year's rate 77649361 431,082 ' 431,082 Total 3327327665 16489896 15,543599 946,297 Public Utility Allocation: City wide 59,385,679 0.495 297,909 297,909 - Municipal Service District 1,338,873 0.200 2,678 2,678 - Discoveries City wide 28.252.507 0.495 159,005 159.605 - Municipal Service District 97.030 0.200 196 196 - Abatements City wide (17.370,368) 0.495 (77'910) (54.397) (23.513) Municipal Service District 0.200 - Total property valuation Net levy 10.872'372 15.949.588 922.784 Uncollected taxes at June 30.20|0 (580.326) (427.760) (152.566) Current year's taxes collected $ 16.292.046 15,521.828 � 77O,Z|D Current levy collection percentage 96.56% 9732% 87.4796 Secondary Market Disclosures: Assessed Valuation: Assessment Ratio' Real property $2.]86.288.930 Motor vehicle property 186,438,906 Personal property 765.537.033 Public Service Cnmpemieuu 60,724,552 Total Assessed Valuation 3,398,989.421 Tax Rate per $|O0 0.495 Levy (includes discoveries, releases and ubntcmcnta)/ S 16824998 Distribution of levy: General Fund $ 16,827,015 Municipal Service District - Downtown Monroe Fund 45,357 'Percentage vf appraised value has been established hystatute. 2 Valuation of railroads, telephone companies and other utilities as determined by the North Carolina Property Tax Commission. ` The levy includes interest and pnndbo,. CITY OF �rIONROE a heritage of progress 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 property tax..... 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 the future..... 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. CITY OF �rIONROE a heritage of progress Governmental activities Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net assets Business -type activities Invested in capital assets, net of related debt Unrestricted Total business -type activities net assets Primary government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets CITY OF MONROE, NORTH CAROLINA NET ASSETS BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) (in thousands of dollars) FISCAL YEAR TABLE I 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $ $ $ 72,069 $ 73,696 $ 74,193 $ 73,177 $ 71,568 $ 73,467 $ 74,438 $ 73,296 629 538 624 239 144 45 2 255 17,884 19,638 19,717 18,683 20,924 20,718 20,739 20,359 $ $ $ 90,582 $ 93,872 $ 94,534 $ 92,099 $ 92,636 $ 94,229 $ 95,179 $ 93,910 $ $ $ 84,905 $ 92,356 $ 101,382 $ 109,561 $ 118,219 $ 127,957 $ 127,104 $ 141,269 62,267 62,274 63,956 68,479 77,350 84,078 91,595 86,319 $ $ $ 147,172 $ 154,630 $ 165,338 $ 178,040 $ 195,569 $ 212,035 $ 218,699 $ 227,588 $ $ $ 156,974 $ 166,052 $ 175,575 $ 182,738 $ 189,787 $ 201,424 $ 201,542 $ 214,565 629 538 624 239 144 45 2 255 80,151 81,912 83,673 87,162 98,274 104,796 112,334 106,678 $ $ $ 237,754 $ 248,502 $ 259,872 $ 270,139 $ 288,205 $ 306,264 $ 313,878 $ 321,498 Note: Data for fiscal years 2001 through 2002 not available. These periods were prior to the implementation of GASB Statement 34. 123 124 TABLE 2 CITY OFMONROE, NORTH CAROLINA CHANGES IN NET ASSETS LAST TEN FISCAL YEARS (accrual basis of accounting) (in thousands of dollars) FISCAL YEAR EXPENSES 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Governmental activities: General government $ $ $ 4,216 $ 4,243 $ 4,133 $ 4,600 $ 4,176 $ 4,945 $ 4,725 $ 4,952 Transportation 3,652 4,409 4,119 4,482 4,444 4,966 5,441 5,667 Public safety 9,156 10,291 10,776 12,069 13,557 14,247 17,974 17,775 Environmental protection 1,854 1,894 1,903 2,007 2,349 2,551 - - Culture and recreation 3,307 3,462 3,197 3,483 3,802 3,922 4,914 4,906 Economic and physical development 357 791 898 1,404 2,140 948 859 1,784 Interest on long -term debt 212 232 158 187 205 238 312 161 Total governmental activities expenses 22,754 25,322 25,184 28,232 30,673 31,817 34,225 35,245 Business -type activities: Water and sewer 8,388 9,202 8,826 8,525 8,907 11,381 11,543 11,520 Electric 31,120 32,369 33,990 35,491 37,042 39,703 41,629 43,588 Natural gas 14,867 20,171 19,305 20,791 16,037 16,942 16,867 17,585 Aquatics and Fitness Center 1,806 2,335 2,779 2,881 2,934 3,187 3,725 3,436 Stormwater - - - - - - 795 1,351 Solid Waste - - - - - - 2,698 2,702 Airport 489 595 596 1,272 2,187 2,865 3,232 3,498 Total business -type activities expenses 56,670 64,672 65,496 68,960 67,107 74,077 80,489 83,680 Total primary government expenses $ $ $ 79,424 $ 89,994 $ 90,680 $ 97,192 $ 97,780 $ 105,894 $ 114,714 $ 118,925 PROGRAM REVENUES Governmental activities: Charges for services: General government $ $ $ 887 $ 864 S 1,118 $ 1,279 S 1,261 $ 1,132 $ 2,029 $ 1,979 Transportation - - - - - - 243 236 Public safety 38 78 84 96 65 51 2,065 2,213 Environmental protection 1,742 1,855 1,914 2,062 2,761 2,795 43 - Culture and recreation 710 747 708 761 814 844 1,239 1,194 Economic and physical development 7 12 8 4 13 3 2 8 Operating grants and contributions: General government 20 314 32 69 85 8 - - Transportation 872 872 986 998 1,004 1,154 1,082 986 Public safety 508 270 206 246 897 1,017 604 732 Environmental protection - 26 2 4 2 2 1 - Culture and recreation 5 124 172 243 197 216 223 195 Economic and physical development 148 210 236 93 83 7 194 326 Capital grants and contributions: - Transportation 10,207 3,488 1,147 647 45 2,435 3,460 1,187 Economic and physical development - - - - - - - 785 Total governmental activities program revenues 15,144 8,860 6,613 6,502 7,227 9,665 11,184 9,841 124 Business -type activities: Charge for services: Water and sewer 10,362 10,434 11,180 12,080 13,303 12,705 12,207 12,365 Electric 33,926 34,513 35,993 39,118 39,854 43,051 40,926 43,089 Natural gas 17,056 21,940 21,064 22,683 18,163 18,836 20,116 24,251 Aquatics and Fitness Center 2,661 2,990 3,336 3,734 4,057 4,162 4,069 3,907 Stormwater - - - - - - 822 1,776 Solid Waste - - - - - - 2,748 2,839 Airport 138 178 255 676 1,398 1,897 1,559 1,493 Operating grants and contributions: Water and sewer - - - 8 - - - - - - Capital grants and contributions: Water and sewer 882 1,234 1,004 2,451 2,918 527 Stormwater - - - - - - - - 109 - Airport 1,852 584 681 324 903 154 483 Total business -type activities program revenues 65,995 71,529 73,743 79,619 80,129 83,569 83,236 90,203 Total primary government revenues $ $ $ 81,139 $ 80,389 $ 80,356 $ 86,121 $ 87,356 $ 93,234 $ 94,421 $ 100,044 NET(EXPENSE)REVENUE Governmental activities $ $ $ (7,610) $ (16,462) $ (18,571) $ (21,730) $ (23,446) $ (22,152) $ (23,041) $ (25,404) Business -type activities 9,325 6,857 8,247 10,659 13,022 9,492 2,748 6,523 Total primary government net (expense) revenue $ $ $ 1,715 $ (9,605) $ (10,324) $ (11,071) $ (10,424) $ (12,660) $ (20,293) $ (18,881) GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental activities: Taxes: Property taxes, levied for general purpose $ $ $ 10,478 $ 10,967 $ 11,577 $ 12,107 $ 13,851 $ 15,304 $ 16,286 $ 16,954 Local option sales tax - - 4,672 4,406 4,958 4,884 4,096 3,537 Utility taxes - - 1,199 1,299 1,364 1,430 1,364 1,432 Other taxes 6,067 7,302 1,449 1,610 1,790 1,878 1,931 1,745 Grants and contributions not restricted to specific programs 127 130 127 127 202 251 225 242 Unrestricted investment earnings 671 41 553 381 1,141 1,259 495 273 Miscellaneous 367 325 327 301 441 476 520 565 Gain on sale of capital assets - 964 72 99 - 199 (19) 96 Transfers (789) (383) (745) (1,035) 237 (442) (908) (710) Total governmental activities 16,921 19,346 19,231 19,295 23,985 25,239 23,990 24,134 Business -type activities: Grants and contributions not restricted to specific programs - - - - 1,632 - - - - - Unrestricted investment earnings 2,256 54 84 862 3,465 4,853 2,992 971 Miscellaneous (4) 179 - 150 65 60 63 395 Gain on sale of capital assets - - - (17) - (5) 1,214 1 (47) 291 Transfers 789 383 744 1,035 (237) 442 908 710 Total business -type activities 3,041 599 2,460 2,042 4,508 5,356 3,916 2,367 Total primary government $ $ $ 19,962 $ 19,945 $ 21,691 $ 21,337 $ 28,492 $ 30,596 $ 27,906 $ 26,501 CHANGE IN NET ASSETS Governmental activities $ $ $ 9,311 $ 2,884 $ 660 $ (2,435) $ 539 $ 3,087 $ 950 $ (1,270) Business -type activities 12,366 7,456 10,707 12,701 17,529 14,848 6,664 8,890 Total primary government $ $ $ 21,677 $ 10,340 $ 11,367 $ 10,266 $ 18,069 $ 17,935 $ 7,614 $ 7,620 Notes: Data for fiscal years 2001 through 2002 not available. These periods were prior to the implementation of GASB Statement 34. Solid Waste and Stormwater funds were established in 2009. Previously, these expenditures were included in the General Fund. Internal service funds were established in 2009. Per GASB, revenues for these funds are allocated between business type and governmental type activities. 125 General Fund Reserved for: Encumbrances State statute Streets - Powell bill Unreserved for: Designated for subsequent year's expenditures Designated for self - insurance expenditures Undesignated Total General Fund All other governmental funds Reserved for: Encumbrances State statute Unreserved for: Designated for subsequent year's expenditures Special Revenue Funds Capital Projects Funds Total all other governmental funds CITY OF MONROE, NORTH CAROLINA TABLE 3 FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) (in thousands of dollars) FISCAL YEAR 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $ 1,799 $ 3,625 $ 1,555 $ 1,140 $ 2,064 $ 2,011 $ 530 $ 769 $ 624 $ 533 2,655 2,092 2,279 3,285 2,913 3,340 3,577 4,158 3,432 3,224 345 629 629 538 624 239 144 45 2 255 - - 21010 1,905 2,015 1,799 1,724 2,231 2,288 1,835 3,062 2,663 2,917 2,973 2,947 2,711 2,607 2,658 - - 10,939 7,839 8,259 9,790 8,413 8,072 9,472 10,746 11,520 13,779 $ 18,800 $ 16,848 $ 17,649 $ 19,631 $ 18,976 $ 18,172 $ 18,054 $ 20,608 $ 17,866 $ 19,626 $ 655 $ 747 $ 556 $ 1,170 $ 367 $ 171 $ 359 $ $ 91 $ 29 141 150 245 47 458 115 71 3 2 204 - - - - - - - - - 1,398 276 297 323 201 307 433 1,552 1,418 1,600 211 2,173 903 819 245 1,101 1,076 1,884 1,179 3,328 (114) $ 3,245 $ 2,097 $ 1,943 $ 1,663 $ 2,233 $ 1,795 $ 3,866 $ 2,601 $ 5,021 $ 1,728 Notes: The self - insurance expenditures are no longer reported in the General Fund. In 2009, they were moved to separate internal service funds. CITY OF MONROE, NORTH CAROLINA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) (in thousands of dollars) TABLE 4 127 FISCAL YEAR 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 REVENUES Ad valorem taxes $ 9,696 $ 10,235 $ 10,640 $ 11,043 $ 11,578 $ 12,049 $ 13,655 $ 15,265 $ 16,134 $ 16,909 Other taxes and licenses 3,578 3,996 4,510 5,643 912 1,040 1,044 1,227 1,220 874 Unrestricted intergovernmental 2,299 761 1,672 1,749 6,490 6,332 7,176 7,177 6,360 6,044 Restricted intergovernmental 1,890 1,084 1,688 2,279 2,505 2,240 2,195 2,378 2,826 3,274 Program income 34 63 12 41 10 6 84 6 2 7 Sales and services (1) 5,169 3,443 3,334 4,513 3,742 4,292 5,012 5,137 1,961 1,740 Investment earnings 1,552 790 671 24 553 381 1,141 1,259 495 273 Miscellaneous 855 586 451 498 563 396 522 650 611 548 Total revenues 25,073 20,958 22,978 25,790 26,353 26,736 30,829 33,099 29,609 29,669 EXPENDITURES General government 2,822 2,707 3,791 3,967 4,207 4,273 3,801 4,578 4,086 4,170 Transportation 1,656 1,422 1,698 1,984 1,858 2,144 2,162 2,426 2,452 1,727 Public safety 7,105 8,025 8,483 9,939 9,957 10,996 12,593 13,304 13,864 14,385 Environmental protection (1) 1,960 1,847 1,732 1,761 1,784 1,896 2,349 2,551 - - Culture and recreation 4,363 3,134 3,064 2,827 2,924 3,037 3,426 3,536 3,902 3,554 Economic and physical development 686 169 344 792 610 585 1,460 830 986 1,909 Capital outlay 3,591 4,440 2,682 2,992 5,131 3,878 2,446 5,487 2,619 2,832 Debt service: Principal retirement 1,217 1,148 1,116 2,761 1,555 1,659 1,617 1,660 1,828 1,922 Interest and other charges 394 205 212 232 158 187 205 182 310 337 Repayment of Advance from other funds - - - - - - - - - 131 Total expenditures 23,794 23,097 23,122 27,255 28,184 28,655 30,059 34,554 30,047 30,967 Excess (deficiency) of revenues over (under) expenditures 1,279 (2,139) (144) (1,465) (1,831) (1,919) 770 (1,456) (438) (1,298) OTHER FINANCING SOURCES (USES) Transfers from (to) others 609 (714) (789) (383) (745) (1,035) 237 (573) (3,430) (710) Installment purchase obligations issued 1,419 727 1,578 3,142 2,492 1,713 945 3,317 3,661 475 Total other financing sources (uses) 2,028 13 789 2,759 1,747 678 1,182 2,744 231 (235) Net change in fund balances $ 3,307 $ (2,126) $ 645 $ 1,294 $ (84) $ (1,241) $ 1,952 $ 1,288 $ (207) $ (1,533) Debt service as a percentage of noncapital expenditures 7.97% 7.25% 6.50% 12.34% 7.43% 7.45% 6.60% 6.34% 7.79% 8.49% Note: (1) The Solid Waste Fund was established in 2009. Previously, these revenues and expenditures were included in the General Fund. 127 CITY OF MONROE, NORTH CAROLINA ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (in thousands of'dollars) Notes: (1) Property is assessed at actual value; therefore, the assessed value is equal to actual value. Tax Rates are per $100 of assessed value. Sources: Union County Tax Assessor's Office and North Carolina Property Tax Commission. 128 TABLE 5 Total Public Total Direct Fiscal Real Personal Motor Service Assessed Tax Rate Year Property Property Vehicle Companies Value (1) 2001 $ 1,272,748 $ 412,743 $ 178,568 $ 42,937 $ 1,906,996 $ 0.500 2002 1,332,315 449,127 188,341 44,021 2,013,804 0.500 2003 1,388,118 460,214 193,463 43,444 2,085,239 0.500 2004 1,490,483 451,967 170,653 41,854 2,154,957 0.500 2005 1,691,376 444,329 198,995 41,408 2,376,108 0.480 2006 1,697,294 459,106 238,446 43,934 2,438,780 0.490 2007 1,779,327 521,941 226,844 43,261 2,571,373 0.530 2008 1,878,050 583,078 227,535 49,984 2,738,647 0.550 2009 2,346,529 659,913 207,793 49,487 3,263,722 0.495 2010 2,386,289 765,537 186,439 60,724 3,398,989 0.495 Notes: (1) Property is assessed at actual value; therefore, the assessed value is equal to actual value. Tax Rates are per $100 of assessed value. Sources: Union County Tax Assessor's Office and North Carolina Property Tax Commission. 128 TABLE 5 CITY OF MONROE, NORTH CAROLINA DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN YEARS (rate per $100 of assessed value) Notes: (1) Total City tax rate is a weighted average of all types of City of Monroe tax rates. Union County rate is a direct rate. Source: Union County, Tax Assessment Division 129 TABLE 6 City of Monroe Overlapping Rates Total General Municipal Total Union Monroe Direct and Fiscal Fund Service District Weighted County School Overlapping Year Basic Rate Basic Rate Average Rate(i) Basic Rate District Rates 2001 $ 0.5000 S 0.2000 S 0.5015 S 0.4705 S 0.0590 $ 1.0310 2002 0.5000 0.2000 0.5014 0.4705 0.0700 1.0419 2003 0.5000 0.2000 0.5034 0.4705 0.0700 1.0439 2004 0.5000 0.2000 0.5042 0.5300 0.0700 1.1042 2005 0.4800 0.2000 0.4794 0.5250 0.0700 1.0744 2006 0.4900 0.2000 0.4938 0.5600 0.0700 1.1238 2007 0.5300 0.2000 0.5338 0.6367 - 1.1705 2008 0.5500 0.2000 0.5491 0.7111 1.2602 2009 0.4950 0.2000 0.4955 0.6650 1.1605 2010 0.4950 0.2000 0.4945 0.6650 1.1595 Notes: (1) Total City tax rate is a weighted average of all types of City of Monroe tax rates. Union County rate is a direct rate. Source: Union County, Tax Assessment Division 129 TABLE 6 CITY OFMONROE, NORTH CAROLINA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO (in thousands of'dollars) Source: City of Monroe Tax System 130 TABLE 7 2001 2010 Percentage Percentage of of Total Total Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Allegheny Technologies (Allvac) $ 54,367 2 2.8% $ 251,325 1 7.4% Charlotte Pipe & Foundry Co. 81,715 1 4.3% 115,370 2 3.4% Tyson Farms, Inc. (Tyson Foods, Inc.) 28,212 3 1.5% 44,034 3 1.3% Turbomeca - - 36,426 4 1.1% Consolidated Metco, Inc. 23,108 5 1.2% 34,434 5 1.0% Inland American Monroe Poplin - - 33,677 6 1.0% Yale Security (AssaAbloy - Door Security) 20,310 6 1.1% 24,512 7 0.7% Greiner Bio -One - - 20,302 8 0.6% Scott Technologies 19,623 9 0.6% Monroe Mall (Madison) - - 18,314 10 0.5% General Telephone of the Southeast 24,543 4 1.3% - Square D Company 17,563 7 0.9% Southeast Realty Investments 17,258 8 0.9% Cooper Industries 15,396 9 0.8% Rodel, Inc. 15,273 10 0.8% - Total $ 297,745 15.6% $ 598,017 17.6% Source: City of Monroe Tax System 130 TABLE 7 CITY OF MONROE, NORTH CAROLINA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (n thousands of dollars) TABLE 8 Source: City of Monroe Tax System 131 Collected within the Taxes Fiscal Year of Total Collections to Date Taxes Public Levied for the the Levy Collections in Percentage Fiscal Levied for the Utility Fiscal Year Percentage Subsequent of Adjusted Year Fiscal Year Allocation Discoveries Abatements (Adjusted) Amount of Levy Years Amount Levy 2001 $ 9,061 $ 215 $ 396 $ 60 $ 9,612 $ 9,296 96.71% $ 300 $ 9,596 99.83% 2002 9,774 220 214 51 10,157 9,833 96.81 315 10,148 99.91 2003 10,236 217 79 82 10,450 10,117 96.82 315 10,432 99.83 2004 10,682 209 107 90 10,908 10,644 97.58 248 10,892 99.85 2005 10,869 199 472 106 11,434 11,178 97.77 235 11,413 99.82 2006 11,959 215 17 100 12,091 11,754 97.22 309 12,063 99.77 2007 13,429 229 407 137 13,928 13,290 96.45 557 13,847 99.42 2008 14,647 275 278 107 15,093 14,607 96.78 371 14,978 99.24 2009 16,100 245 45 159 16,231 15,669 96.54 383 16,052 98.90 2010 16,490 300 160 78 16,872 16,292 96.56 - 16,292 96.56 Source: City of Monroe Tax System 131 CITY OF MONROE, NORTH CAROLINA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TENFISCAL YEARS (dollars in thousands, except per capita) TABLE 9 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) See Table 14 for personal income and population data. These ratios are calculated using personal income and population for prior calendar year. Calendar year 2008 and 2009 personal income not available to calculate fiscal year 2009 and 2010. (2) Personal income not available for 2009 and 2010. 132 Governmental Percentage Activities Business -type Activities of Installment General State Installment Total Per Personal Fiscal Purchase Obligation Revenue Revolving Purchase Primary Capita Income Year Obligations Bonds Bonds Loans Obligations Government (1) (1) 2001 $ 10,023 $ 5,735 $ 13,405 $ 11,721 $ 1,698 $ 42,582 $ 1,610 1.12% 2002 4,997 4,985 12,960 10,894 5,843 39,679 1,430 1.04% 2003 5,459 4,250 12,495 10,067 5,624 37,895 1,284 0.94% 2004 5,840 3,525 12,000 9,240 8,033 38,638 1,271 0.88% 2005 6,777 2,815 11,485 8,413 7,453 36,943 1,183 0.74% 2006 6,832 2,125 10,950 7,586 6,793 34,286 1,056 0.61% 2007 6,150 1,450 10,385 6,759 5,770 30,514 900 0.49% 2008 7,821 790 53,810 5,932 5,061 73,414 2,041 1.13% 2009 (2) 9,656 140 53,185 5,105 36,011 104,097 2,792 - 2010 (2) 8,209 - 51,320 4,278 36,291 100,098 2,626 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) See Table 14 for personal income and population data. These ratios are calculated using personal income and population for prior calendar year. Calendar year 2008 and 2009 personal income not available to calculate fiscal year 2009 and 2010. (2) Personal income not available for 2009 and 2010. 132 CITY OFMONROE, NORTH CAROLINA RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (dollars in thousands, except per capita) Notes : Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) See Table 14 for population data. (2) See Table 5 for total assessed value of property. 133 TABLE 10 Percentage of Actual General Taxable Value Per Fiscal Obligation of Property Capita Year Bonds (2) (1) 2001 $ 5,735 0.30% $ 217 2002 4,985 0.25 180 2003 4,250 0.20 144 2004 3,525 0.16 116 2005 2,815 0.12 90 2006 2,125 0.09 65 2007 1,450 0.06 43 2008 790 0.03 22 2009 140 0.004 4 2010 - N/A N/A Notes : Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) See Table 14 for population data. (2) See Table 5 for total assessed value of property. 133 TABLE 10 CITY OF MONROE, NORTH CAROLINA DIRECT AND OVERLAPPING GOVERNMENTAL AC77V777ES DEBT AS OF JUNE 30, 2010 (in thousands of'dollars) Governmental Unit Union County, overlapping debt Total direct debt Total direct and overlapping debt Notes: Source: 100% $ 450,285 $ 66,642 (1) Includes general obligation debt only. (2) Determined by ratio of assessed value of property subject to taxation in Union County ($22,905,687) and City of Monroe ($3,398,989). Union County Finance Department 134 TABLE 11 Estimated Estimated Share of Debt Percentage Direct and Outstanding Applicable Overlapping (1) (2) Debt $ 450,285 14.8% $ 66,642 100% $ 450,285 $ 66,642 (1) Includes general obligation debt only. (2) Determined by ratio of assessed value of property subject to taxation in Union County ($22,905,687) and City of Monroe ($3,398,989). Union County Finance Department 134 TABLE 11 Assessed value Debt limit (8% of total assessed value) Bonded debt Debt not evidenced by bonds Gross debt Less: deductions allowed by North Carolina General Statutes: Bonded debt incurred for water purposes Bonded debt incurred for sewer purposes Total deductions Net debt applicable to limit Legal debt margin Note: NC Statute GS 159 -55 limits the City's debt to 8% of the appraised value of property subject to taxation. The following deductions are made from gross to arrive at net debt applicable to the limit: money held for payment of principal; debt incurred for water, sewer, gas, or electric purposes; uncollected special assessments, funding and refunding bonds not yet issued; and revenue bonds. The legal debt margin is the difference between the debt limit and the City's net debt outstanding applicable to the limit, and represents the City's legal borrowing authority. 135 44,500 $ 44,500 $3,398,989 271,919 44,500 $ 227,419 TABLE 12 CITY OFMONROE, NORTH CAROLINA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS fn thousands of dollars) FISCAL YEAR 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Debt limit (8% of assessed value) $ 152,628 $ 161,380 $ 165,377 $ 172,397 $ 190,088 $ 195,102 $ 205,710 $ 219,092 $ 261,098 $ 271,919 Total net debt applicable to limit 11,721 10,841 11,083 13,874 14,229 13,624 11,920 12,882 46,667 44,500 Legal debt margin $ 140,907 $ 150,539 $ 154,294 $ 158,523 $ 175,859 $ 181,478 $ 193,790 $ 206,210 $ 214,431 $ 227,419 Total net debt applicable to the limit as a percentage of debt limit 7.68% 6.72% 6.70% 8.05% 7.49% 6.98% 5.79% 5.88% 17.87% 16.37% Legal Debt Margin Calculation for Fiscal Year 2010 Assessed value Debt limit (8% of total assessed value) Bonded debt Debt not evidenced by bonds Gross debt Less: deductions allowed by North Carolina General Statutes: Bonded debt incurred for water purposes Bonded debt incurred for sewer purposes Total deductions Net debt applicable to limit Legal debt margin Note: NC Statute GS 159 -55 limits the City's debt to 8% of the appraised value of property subject to taxation. The following deductions are made from gross to arrive at net debt applicable to the limit: money held for payment of principal; debt incurred for water, sewer, gas, or electric purposes; uncollected special assessments, funding and refunding bonds not yet issued; and revenue bonds. The legal debt margin is the difference between the debt limit and the City's net debt outstanding applicable to the limit, and represents the City's legal borrowing authority. 135 44,500 $ 44,500 $3,398,989 271,919 44,500 $ 227,419 Fiscal 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CITY OF MONROE, NORTH CAROLINA PLEDGED - REVENUE COVERAGE LAST TEN FISCAL YEARS (in thousands of dollars) Nonoperating Operating Less Income Operating Operating Expenses Revenues (1) $ 63,140 $ 54,238 $ 56,257 49,069 61,482 52,302 67,065 59,705 68,492 60,408 74,557 63,809 72,718 61,629 76,489 67,113 74,807 66,727 75,197 67,175 CITY OF MONROE, NORTH CAROLINA PLEDGED - REVENUE COVERAGE LAST TEN FISCAL YEARS (in thousands of dollars) Nonoperating Operating Revenues Income (2) 8,902 $ 2,816 $ 7,188 1,972 9,180 2,212 7,360 52 8,084 1,585 10,748 834 11,088 3,343 9,376 4,683 8,081 2,884 8,022 939 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) Per rate covenants, this does not include the annual depreciation expense. (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. 136 Income Available for Debt Service Debt (3) Service Principal Interest Coverage 11,718 $ 1,252 $ 1,057 508 9,160 1,195 838 451 11,392 1,200 791 572 7,412 1,220 743 378 9,669 1,225 692 504 11,582 1,225 641 621 14,431 1,240 588 789 14,059 1,250 815 681 10,964 1,275 2,456 294 8,961 2,005 2,399 203 TABLE 13 CITY OF MONROE, NORTH CAROLINA DEMOGRAPHIC AND ECONOMIC STA77STICS LAST TEN FISCAL YEARS Note: (1) Personal income not available for 2009 and 2010. Sources: (2) North Carolina Office of State Planning (3) US Department of Commerce - Bureau of Economic Analysis (4) Union County Schools (5) Employment Security Commission of North Carolina 137 TABLE 14 (County) Personal (County) (County) Income Per Capita Public (County) (City) (thousands of Personal School Unemployment Fiscal Population dollars) Income Enrollment Rate Year (2) (3) (3) (4) (5) 2001 26,456 3,790,817 28,814 22,875 3.70 2002 27,756 3,805,788 27,535 24,173 5.40 2003 29,508 4,019,969 27,913 25,680 5.40 2004 30,392 4,414,129 29,194 27,031 5.20 2005 31,234 4,987,416 31,064 28,815 4.50 2006 32,454 5,617,550 32,626 31,580 3.80 2007 33,908 6,207,640 33,650 34,564 4.30 2008 35,966 6,512,312 33,673 37,110 5.60 2009 (1) 37,280 - - 38,554 10.80 2010 (1) 38,120 39,366 9.50 Note: (1) Personal income not available for 2009 and 2010. Sources: (2) North Carolina Office of State Planning (3) US Department of Commerce - Bureau of Economic Analysis (4) Union County Schools (5) Employment Security Commission of North Carolina 137 TABLE 14 CITY OF MONROE, NORTH CAROLINA PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2001 Percentage of Employees Total City Employer (1) Employment Employees Tyson Foods, Inc. Allvac (Allegheny Technologies) Carolinas Medical Center -Union Union County Charlotte Pipe & Foundry Co. Scott Health & Safety (Tyco) City of Monroe Wal -Mart Stores, Inc. IMO Industries Goodrich Corporation Total 2010 Percentage of Total City Employment (2) 1,450 10.9% 1,060 8.0% 956 7.2% 573 4.3% 505 3.8% 500 3.8% 460 3.5% 350 2.6% 240 1.8% Notes: (1) Data for 2001 not available. (2) Percentage of total city employment based on North Carolina Employment Security Commission labor force estimate of 13,325 as of June 30, 2010. Sources: City of Monroe Economic Development Department 138 TABLE 15 CITY OFMONROE, NORTH CAROLINA FULL -77ME EQUIVALENT CITY GOVERNMENT EMPLOYEES BYFUNC77ON LAST TEN FISCAL YEARS Function General Government: Administration Planning and zoning Engineering Utility /tax billing and collection Operations center Transportation Police Fire Building standards and code enforcement Culture and recreation Water and sewer: Distribution system Water filter plant Waste treatment plant Stormwater (2) Electric Natural gas Aquatics and Fitness Center Airport (1) Total FISCAL YEAR 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 TABLE 16 22 23 24 25 25 24 31 30 32 33 13 12 13 12 12 12 11 11 11 8 6 8 11 10 11 10 11 10 10 10 15 17 16 17 17 14 17 18 18 19 10 9 10 10 9 12 12 12 8 9 21 21 24 23 22 24 25 24 21 15 68 71 76 75 80 87 90 91 95 99 38 48 55 58 61 70 82 78 82 82 12 11 11 10 10 10 9 9 10 4 48 46 46 46 48 49 50 50 49 46 23 26 29 32 31 31 29 31 33 33 10 9 8 10 10 10 10 10 11 11 11 12 13 14 14 15 15 15 14 13 - - - - - - - - 8 10 17 20 21 18 21 22 22 25 24 27 13 12 14 14 14 13 13 14 13 13 18 19 20 21 20 20 20 20 20 20 7 7 7 8 8 345 364 391 395 405 430 454 455 467 460 Note: (1) The City of Monroe assumed direct management of avaiation services at the Monroe Regional Airport in March of 2006. In prior years, the FBO (Fixed Base Operation) had been managed by a private enterprise under contract to the City. (2) City of Monroe established a Stormwater utility program in 2009 Source: City of Monroe payroll system. 139 Notes (1) The building standards department was established in 1999. Building permits and inspections in 2001 reflect a partial year. (2) The City of Monroe assumed direct management of aviation services at the Monroe Regional Airport in March of 2006. In prior years, the FBO (Fixed Base Operation) had been managed by a private enterprise under contract to the City. Sources: Various City departments. 140 CITY OF MONROE, NORTH CAROLINA TABLE 17 OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS (i available or unless otherwise noted) Fiscal Year Function 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Transportation Street reclamation (tons) - - - - 552 2,232 4,052 6,545 8,065 2,858 Street repair (tons) 1,286 2,702 3,592 2,511 2,131 1,057 1,765 2,100 1,219 595 Utility repair (tons) 160 342 422 552 368 119 314 296 321 527 Sidewalk repair (cubic yards concrete) 375 570 522 405 565 444 646 451 25 66 Pipe repair and replacement (linear feet) 1,588 657 433 768 247 956 440 911 2,016 2,132 Police Physical arrests (calendar year) 4,546 4,623 4,745 4,309 4,443 4,335 4,596 4,094 3,468 - Parking violations (calendar year) - 260 348 2,091 1,263 3,707 3,686 3,918 3,408 Traffic violations (calendar year) 6,184 5,295 6,274 6,929 5,571 8,433 7,282 6,672 4,889 Fire Calls for service (calendar year) 2,441 2,993 3,825 4,315 4,169 4,329 4,626 4,664 4,993 Fire code inspections (calendar year) - 191 286 586 1,633 1,974 1,348 1,860 1,860 Civilian fire injuries (calendar year) - 2 6 12 1 1 1 8 6 - Building standards & code enforcement (1) Building permits issued 95 2,536 3,768 3,357 4,943 5,129 3,943 3,951 3,845 2,876 Building inspections 205 6,495 10,857 10,697 11,728 13,750 13,817 11,381 8,642 7,553 Code enforcement inspections 2,130 1,856 1,912 2,573 3,398 1,431 1,341 2,565 5,518 6,422 Environmental protection Solid waste collected (annual tonnage) 33,432 37,041 38,914 40,787 42,660 44,533 44,917 42,352 35,928 34,155 Recyclables collected (annual tonnage) 706 722 730 739 747 756 973 925 707 788 Culture and recreation Rounds of golf played (calendar year) 37,373 33,163 28,238 31,388 30,888 35,364 32,988 28,667 30,075 - Aquatics and fitness center members 9,047 10,391 11,273 13,468 16,138 17,546 18,200 20,824 20,889 20,444 Youth athletic program participants (calendar year) - 425 450 630 750 800 775 775 486 - Water Average daily production (millions of gallons per day) 7.5 6.9 6.7 6.9 6.3 6.6 6.0 5.7 5.5 5.8 Maximum daily production (millions of gallons per day) 10.7 10.0 9.1 9.7 8.9 9.2 10.0 8.7 8.1 9.1 Customers 9,667 9,857 9,989 10,158 10,532 10,919 11,405 11,534 11,436 11,462 Gallons Billed (in thousands) 21,730 20,919 20,329 19,871 20,186 21,490 20,966 19,738 17,965 17,488 Sewer Average daily treatment (millions of gallons per day) 6 6.6 7.9 7.1 7.2 6.8 7.0 6.1 6.5 6.8 Customers 8,263 8,450 8,629 8,804 9,002 9,400 9,861 10,025 9,948 9,959 Gallons Billed (in thousands) 23,127 22,585 23,986 22,594 24,360 24,330 24,072 22,646 21,268 20,169 Electric Sales (megawatt hours) 514,534 521,550 520,540 550,615 524,129 585,253 587,377 620,185 595,689 591,112 Customers 9,207 9,480 9,611 9,710 9,892 10,142 10,452 10,467 10,331 10,324 Natural gas Sales /deliveries (thousand cubic feet) 240,884 230,201 275,125 268,447 257,326 261,484 279,446 275,840 264,370 273,909 Customers 7,895 8,389 8,711 8,932 9,167 9,533 10,113 10,340 10,287 10,216 Airport (2) Fuel sales (thousands of gallons) 363 328 314 327 367 377 390 421 324 345 Based aircraft 88 77 70 65 76 84 103 111 114 95 Notes (1) The building standards department was established in 1999. Building permits and inspections in 2001 reflect a partial year. (2) The City of Monroe assumed direct management of aviation services at the Monroe Regional Airport in March of 2006. In prior years, the FBO (Fixed Base Operation) had been managed by a private enterprise under contract to the City. Sources: Various City departments. 140 CITY OF MONROE, NORTH CAROLINA CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS (unless otherwise noted) FISCAL YEAR Function 2001 2002 2003 2004 2005 2006 2007 2008 Transportation 124 127 33 34 15,884 15,884 Municipal Boundary (square miles) 24.27 24.27 28.63 28.71 28.75 29.09 29.45 29.60 Streets (miles) 146 149 157 158 158 158 158 161 Sidewalks (miles) 40 42 43 43 44 44 45 50 Curb and gutter (miles) 105 107 107 109 110 110 111 119 Stormwater (miles) 26 27 28 29 29 29 30 32 Bridges (square feet) 15,468 15,468 15,468 15,468 15,468 15,468 15,884 15,884 Speed humps /cushions(each) 91 135 153 166 184 204 232 232 Public safety Police stations 1 1 1 1 1 1 1 1 Patrol vehicles 73 76 76 79 85 89 89 89 Fire stations 3 4 5 5 5 5 5 5 Fire apparatus (line and reserve) 8 9 11 13 14 14 14 14 Culture and recreation Acreage (city limits) 552 552 552 552 552 552 552 552 Aquatics and Fitness Center 1 1 1 1 1 1 1 1 Playgrounds 8 8 8 8 8 8 8 8 Gymnasiums (1) 3 3 3 3 3 3 3 3 Basketball courts 8 8 8 8 8 8 8 8 Tennis courts 10 10 10 10 10 10 10 10 Playing fields (baseball/soccer /football) (2) 15 15 15 15 15 20 20 20 Swimming pools 2 2 2 3 3 3 3 3 Golf course 1 1 1 1 1 1 1 1 Driving range 1 1 1 1 1 1 1 1 Greenway (miles) - - - - - 0.5 0.5 0.5 Water and sewer Water mains (miles) 270 272 276 279 289 292 293 291 Treatment capacity (millions of gallons per day) 11 11 11 11 11 11 11 11 Sewer Sanitary sewers (miles) (3) 261 268 269 270 285 287 283 294 Treatment capacity (millions of gallons per day) 9.0 9.0 9.0 9.0 10.4 10.4 10.4 10.4 Electric Substations (4) 7 7 7 7 7 7 7 8 Lines (miles per calendar year) 202 210 218 227 235 243 246 269 Natural gas Lines (miles per calendar year) 323 348 365 373 392 414 430 578 Airport Runway (feet) 5,500 5,500 5,500 5,500 5,500 5,500 5,500 5,500 Hangars (square feet) (5) 29,691 42,659 42,659 42,659 42,659 53,134 53,134 77,292 Notes: (1) A new gymnasium was built at the J Ray Shute recreation center in 2010. (2) In 2006, the City received a Parke and Recreation Trust Fund (PARTF) grant for Phase 11 development of the Parke Williams Athletic Complex. The complex increased the number of soccer and softball fields. (3) In 2007, miles reported were lower than the prior year, as a result of GIS mapping corrections and refinements. (4) In 2009, a substation was added to serve the airport and surrounding area. (5) In 2008, the City purchased an existing T- hangar from the Maxwell Group and built a new one. In 2009, the City bought the Southern Cross hangar. In addition to City owned hangars, there are private hangars on airport property. When these leases expire 20 years from initiation, they become property of the City. Currently, there is 17,530 square feet of private hangar space. Sources: Various City departments. 141 TABLE 18 2009 2010 29.63 29.63 164 166 54 61 124 127 33 34 15,884 15,884 242 279 1 1 92 92 5 5 14 14 552 552 1 1 8 8 3 4 8 8 10 10 20 20 3 3 1 1 1 1 0.5 0.5 291 291 11 11 294 295 10.4 10.4 9 9 281 - 594 - 5,500 5,500 85,865 85,865 CITY OF �rIONROE a heritage of progress POTTER &^Om N , PA. CERTIFIED PUBLIC ACCOUNTANTS REPORT ONINTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OFFINANCIAL STATEMENTS PERFORMED UNACCORDANCE WITH GOVERNMENTAUDITING STANDARDS To the Honorable Mayor and Members o[ the City Council City o[ Monroe, North Carolina We have audited the accompanying financial statements nf the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregated remoininAfund information of the City of Monroe, North Carolina, as of and for the year ended June 30, 2010, which collectively comprises the City o[&1mnroe's basic Uoonuiu| statements, and have issued our report dho/run dated November J, 2010. We uonJuoicJ our audit in accordance with auditing standards generally accepted in the United States of America and the standards upp|iuu6|c to financial audits contained in Government Auditing Standards issued by the Comptroller Oenco| of the United States. The fin000io| statements o[ the City of Monroe ABC Board and the City nfMonroe Tourism Development Authority were not audited in accordance with Government Auditing Standards. Tn planning and performing our audit, wr considered the City n[Monroc's internal control over financial reporting as u basis for designing our auditing procedures for the purpose of expressing our opinion on the financial sta/omon|o, but not for the purpose of expressing an opinion on the effectiveness of the City of&4onroo'a internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. & deficiency in internal control exists when the design or operation of control does not u||ov management or employees, in the nnnna| course of perfonniog their assigned functions, to prevent or detect and correct misstatements on u timely basis. & mo/crio| weakness is u deficiency, or o combination of deficiencies, in internol control such that there is o reasonable possibility that omaterial misstatement uf the entity's financial statements will not hcprevented, or detected and corrected on o timely basis. Our consideration of the internal control over financial reporting was for the limited purpose doaoi6cd in the Ors/ paragraph o[ this section and was not designed to identify all deficiencies in internal control over financial reporting that might be doOcicnuico' 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 port of obtaining reasonable assurance about *bctkor the City of K4unroo'a 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 rhnoc provisions was not an objective of our audit, and accordingly, we du not cxpn:ux such an opinion. The nxu|{s of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing S/unubru6 We noted certain matters that we reported to management of the City of Monroe, in a separate letter dated November |49 114 North Church Street m Monroe, NC28112m704.283.O189m7O4.289.3439 fax mvmxwvgotopotteccom This report is intended solely for the information and use of management, others within the entity, 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. November 3, 2010 Monroe, North Carolina 144 �� �� m ^�^u u u_� ^��^_�-^�vux � n� � ^, x ./ u. CERTIFIED PUBLIC ACCOUNTANTS REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-233 AND THE STATE SINGLE AUDIT IMPLEMENTATION ACT To the Honorable Mayor and Members of the City Council City o[ Monroe, North Carolina Compliance We have audited the City of Monroe, North Carolina, compliance with the types of compliance requirements described io the OMB Circular.4 133 Compliance Supplement and the Audit &/nnou//o/Governmental Auditors in North Carolina, issued by the Local Government Commission, that could have a direct and material effect on each of the City of Monroe's major federal programs for the year ended June 30, 2010. The City ofK4onznc'm 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, regu|u(inns, contracts and grants applicable to each of its major federal programs is the responsibility of the City of Mnncoc`xmunugemcn\. Our responsibility isioexpress on opinion on the City o[Mnnrnc'x compliance based ou our audit. We conducted our audit of compliance in accordance with auditing standards generally ucoupted in the United States oy America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and 0K48 Circular &-l3],Audits o/Stmes, Local Governments, uxdNmv- yrofi/ 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 odircot and mukoriu| effect on u major federal program occurred. An audit includes examining, on u test basis, evidence about the City of K4mnroo's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides 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 cnmp\icd, in all mmichn| /rspcctx, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, Internal Control Over Compliance Management of the City of Monroe k 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, *n considered the City ofK4nnroc`x internal control over compliance with requirements that could have u direct and material effect on u major federal program to dc\cuninc the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OK88 Circular A-133, but not for the purpose u[ expressing on opinion on the effectiveness n[ internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. &deficiency in internal control over compliance exists when the design moperation ofucontrol over compliance does not allow management ovemployees, io the normal course n[ performing their assigned functions, tu prevent, or detect and correct, noncompliance with u type ofcompliance requirement of federal program ono timely basis. /\ material vvcuknoou in iotcrou) control over compliance is o deficiency, or combination of deficiencies in internal control over compliance, such that ,6crr is a coaunoob|e possibility that material noncompliance with a typo of compliance requirement ofa federal program will not hcprevented, oc detected and corrected, ooa timely basis. /45 114 North Church Street m Monroe, NC281l2m7O4.283.818Pm7O4.289.3439 fax mvw^w.gotopnttocnom Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not dcsiAouj to identify all deficiencies in internal control over compliance that might be dchcicnoios, significant deficiencies or material weaknesses. We did not identify any deficiencies in inucnmu| ounun| over compliance that wo consider tohe material woukncsoco, as defined above. This report is intended solely for the information and use of management, others within the entity, 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. November I2O|O Monroe, North Carolina 146 � POTTER &COMPANY, P.A. CERTIFIED PUBLIC ACCOUNTANTS 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 City of Monroe, North Carolina, compliance with the types of compliance requirements described in the Audit Manual for Governmental Auditors in North Carolina, issued by the Local Government Commission, that could have a direct and material effect on each of its major State programs for the year ended June 30, 2010. 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 compliance requirements referred to above that could have a direct and material effect on each of its major State programs for the year ended June 30, 2010. Internal Control Over Compliance 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 the requirements that could have a direct and material effect on a major State program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance with applicable sections of OMB Circular A -133 and the State Single Audit Implementation Act, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a State program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a State program will not be prevented, or detected and corrected, on a timely basis. 147 114 North Church Street ■ Monroe, NC 28112 ■ 704.283.8189 ■ 704.289.3439 fax ■ www.gotopotter.com Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, and others within the entity, 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. November 3, 2010 Monroe, North Carolina 148 Z�� I `�� SCHEDULE26 CITY OF MONROE, NORTH CAROLINA SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Fiscal Year Ended June 30, 2010 Section 1. Summary of Auditors' Results Financial Statements Type ot auditors' report issued: Unqualified Internal control over financial reporting: ° Material wnaknuas(em)identified? yes X no ° Significant Deficiency(s) iduobbud 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: w K4ateria|weak0000(om) identified? yes X no * Significant Deficiency(s) identified that are not considered W be material weaknesses y yes 7{ none reported Type uC auditors' report issued on compliance for m major /edoru|poogramu: Unqualified. Any audit findings disclosed that are required 0nbu reported in accordance with Section 5|0(u)of Circular /\-i33 yes }{ no Identification ofmajor federal pn/&rmoo: CFDA Number N Name of Federal Program 20.106 A Airport Improvement Program Dollar dnembo|d used to distinguish between Type /\ and Type BPrograms $ $ 300000 &uditue qualified as low-risk uodi/ee7 } }< �um no S State Awards Internal control over major State programs: * Material wcukncmm(oo)identified? y yes }{ no Significant Deficiency(s) identified that are not considered to be material weaknesses yes X none reported -Continued- 149 CITY OF MONROE, NORTH CAROLINA SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Fiscal Year Ended June 30, 2010 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 North Carolina Infrastructure Program None reported. None reported. None reported. Section 11 - Financial Statement Findings Section III - Federal Award Findings and Questioned Costs Section IV - State Awards Findings and Questioned Costs SCHEDULE 26, Continued CITY OF MONROE, NORTH CAROLINA SUMMAR Y SCHEDULE OF PRIOR YEAR AUDIT FINDINGS For the Fiscal Year Ended June 30, 2010 Finding: None reported. 151 SCHEDULE 27 CITY OF MONROE, NORTH CAROLINA SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE A WARDS For the Fiscal Year Ended June 30, 2010 Grantor/Pass-Through Grantor /Program Title Federal Grants: Cash Programs: U.S. Department of Justice: Direct Programs: Drug Enforcement Administration Bulletproof Vest Partnership Program COPS Hiring Recovery Program ARRA - Recovery Act Edward Byrne Memorial Justice Assistance Grant U.S. Department of Homeland Security: Direct Programs: Staffing for Adequate Fire & Emergency Response (SAFER) Federal Aviation Administration: Airport Improvement Program Total Assistance - Federal Programs State Grants: Cash Assistance: N.C. Department of Transportation: Powell bill State Aid to Airports Program N.C. Department of Crime Control and Public LSafety: COPS Equipment Grant Violent Crimes Task Force N.C. Department of Commerce: The One North Carolina Fund N.C. Department of Health and Human Services: Aging Grant N.C. Rural Economic Development Center, Inc.: N.C. Economic Infrastructure Program Total Assistance - State Programs Total Federal and State Assistance SCHEDULE 28 Federal Federal (Direct CFDA and Pass-Through) State Local Number Expenditures Expenditures Expenditures 16.579 $ 109,029 $ 2,356 $ 4,975 16.607 3,862 - 4,523 16.710 77,224 21,258 16.808 69,716 - 97.083 195,227 296,881 20.106 247,301 - 27,478 702,359 2,356 355,115 152 979,429 - 236,250 26,250 - 7,544 - - 41,490 13,830 - 250,000 - - 4,218 1,406 785,349 1,410,456 - 2,304,280 1,451,942 $ 702,359 $ 2,306,636 $ 1,807,057 -Continued 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 �rIONROE a heritage of progress :ITY )F ONROE a heritage of progress P.O. Box 69 Monroe, NC 28111 (704)282 -4500