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HomeMy WebLinkAbout2007 03 26 Regular 600 Acceptance of Comprehensive Annual Financial Report COMMISSION AGENDA ITEM 600 REGULAR March 26, 2007 Meeting MGR DEPT Authorization REQUEST: The Finance Department Is Requesting City Commission Acceptance Of The Comprehensive Annual Financial Report (CAFR), As Presented, For The Fiscal Year Ended September 30, 2006. PURPOSE: The presentation by the City Auditors of the Comprehensive Annual Financial Report for the fiscal year ended September 30, 2006. CONSIDERATIONS: The CAFR is prepared to give the City Commission and the citizens a greater understanding of the City's financial standing than can be obtained through the financial statements. RECOMMENDATION: Acceptance of the CAFR, as presented, for the fiscal year ended 9/30/06, by the City Commission. ATTACHMENTS: Comprehensive Annual Financial Report for the fiscal year ended 9/30/06 including the audited financial statements and the audit opinion. COMMISSION ACTION: City of Winter Springs Florida Comprehensive Annual Financial Report For the Year Ended September 30, 2006 This page intentionally left blank. City of Winter Springs, Florida COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended September 30,2006 Prepared by Finance Department This page intentionally left blank. INTRODUCTORY SECTION This section contains the following subsections: Table of Contents Letter of Transmittal GFOA Certificate of Achievement List of Principal Officials Organizational Chart This page intentionally left blank. City of Winter Springs Comprehensive Annual Financial Report Table of Contents Year Ended September 30, 2006 CITY OF WINTER SPRINGS COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Year Ended September 30, 2006 CITY OF WINTER SPRINGS COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS - continued Year Ended September 30, 2006 This page intentionally left blank. CITY OF WINTER SPRINGS March 19, 2007 To the Honorable Mayor, City Commission and Citizens of the City of Winter Springs, Florida State law requires that all general-purpose local governments publish a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and that they be audited inaccordance with generally accepted auditing standards (GAAS) by a firm of licensed certified public accountants. Pursuant to that requirement, it is with great pleasure that we present to you the City of Winter Springs, Florida Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30,2006. Management assumes full responsiblity for the completeness and reliability of all of the information prsented in this report. To provide a reasonable basis for making these representations, management of the City of Winter Springs ahs established a comprehensive internal contrl framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile suffiecient reliable information for the preparation of the City of winter Springs' financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Winter Springs' comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City of Winter Springs' financial statements have been audited by McDirmit, Davis & Company, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Winter Springs for the fiscal year ended September 30, 2006, are free of 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 evaluating the overall financial statement presentation. Based upon the audit, the independent auditor concluded that there was a reasonable basis for rendering an unqualified opinion that the City of Winter Springs' financial statements for the fiscal year ended September 30, 2006, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. The City of Winter Springs' Management's Discussion and Analysis (MD&A) can be found immediately following the report of the independent auditors and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complement this letter of transmittal and should be read in conjunction with it. iv Profile of the Government The City of Winter Springs, incorporated in 1959, is located in Seminole County, which is a part of the greater Orlando metropolitan area in East Central Florida. This area is one of the fastest growing areas in the country. The City currently has a land area of 14.78 square miles and a population of approximately 34,600. The City operates according to a Council/Manager form of government, with an appointed City Manager, five elected City Commissioners and a separately elected Mayor. The Mayor and Commission are elected for four-year terms. The governing body is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the City's Manager, Clerk and Attorney. The City Manager is responsible for carrying out the policies and ordinances of the governing body, for overseeing the day-to-day operations of the government, and for hiring the directors of the various department. The City of Winter Springs provides a full range of services, including police and fire protection; the construction and maintenancee of highways, streets and other infrastructure; and recreational activities and cultural events. The City maintains both a Water and Sewer Utility, a Stormwater Utility, and Development Services, which function, in essence, as departments of the city of Winter Springs and therefore have been included as an integral part of the City of Witner Springs' financial statements. The annual budget serves as the foundation for the City of Witner Springs' financial planning and control. All departments of the City of Winter Springs are required to submit requests for appropriation to the City Manager. the City Manager then uses these requests as the starting point for developing a proposed budget. The City Manager then presents this proposed budget to the City commission for review on or before July 1. The City Commission is required to hold public hearings on the proposed budget and to adopt a final budget no later than September 30, the close of the City of Winter Springs' fiscal year. The appropriated budget is prepared by builders, developers and residents for both commercial and residential development. This increased growth helps the City maintain a moderate property tax rate, which was at 4.75 mils during fiscal year 2006 (tax year 2005) and includes 0.1374 mills of voted debt service for Central Winds General Obligation debt. Presently, Florida's newly elected Governor, the House of representatives and the Senate are working to change the State's property tax system. Currently there are many proposals being discussed, many of which could dramatically impact local government's revenue sources which could in turn impact future service levels. It is too soon to tell what impact these potential changes will have on the city's fiscal year 2008 budget. Long term financial planning The city commission updated and adopted a 5-year Capital Improvements Plan (CIP) during fiscal year 2004. The CIP is currently being updated with an anticipated completion in summer 2007. The CIP is a multi-year prioritized schedule of improvements that lists each capital improvement by the year it is intyended to be purchased or commenced. the amount to be spent per year and the method of financing such improvement. each year during the annual budget Relevant Financial Policies The City has a policy to maintain at all times an Unreserved general fund fund balance not less than 25 % of the total operating expenses of the General Fund, excluding capital outlay and debt. major Initiatives. During fiscal year 2007, the City anticipates the following projects completion of the Public Works/Utilities Compound construction project at approximately 33,000 square feet and a total price of $4,500,000 Construction is expected to be completed by March 30, 2007. begin Senior Center expansion and Therapy Pool. Construction is expected to take 10 month and a cost of $1,800,000. finalize plans on expansion of City hall by approximately 5,000 square feet and a total price of $2,100,000 begin year three constinued construction on TLBD Improvements (Phase II) signage and streelighting, totaling begin Trotwood Park Improvements begin construction on the Town Center Trail and Infrastructure at a cost of begin Phase II of the Town Center project with James Doran and Company to include a Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Winter Springs for its CAFR for the fiscal year ended September 30, 2005. This was the sixth consecutive year that the government has received this prestigious award. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a perid of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program's requirements and we will be submitting it to the GFOA to determine its eligiblity for a certificate. The preparation of this report would not have been possible without the effiecient and dedicated services of the entire staff of the finance department. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. Other City departments, although not extensively involved in year-end audit acitivities, contributed significantly by ensuring the accuracy and integrity of accounting information compiled throughtout the year. Without their diligence, the work of the Finance Department would have been considerably more difficult. Appreciation must also be expressed to the City's auditors whose suggestions and attention to detail enhanced the quality of this report. Inclosing, we would also like to express appreciation to the Mayor and the city Commission for their unfailing support for amintaining the hgihest standards of professionalism in the management of the City of Winter Springs' finances. Respectfully submitted, Ronald W. McLemore Michelle Greco, CPA City Manager Finance Director Certificate of Achievement for Excellence in Financial Reporting presented to City of Winter Springs Florida For its comprehensive Annual Financial Report for the Fiscal Year Ended September 30, 2005 CITY OF WINTER SPRINGS, FLORIDA LIST OF PRINCIPAL OFFICALS SEPTEMBER 30, 2006 ELECTED OFFICIALS MAYOR JOHN F BUSH DEPUTY-MAYOR COMMISSIONER MICHAEL S BLAKE COMMISSIONER DONALD GILMORE COMMISSIONER JOANNE KREBS COMMISSIONER ROBERT S MILLER APPOINTED OFFICIALS CITY MANAGER RONALD MCLEMORE CITY CLERK ANDREA LORENZO-LUACES FINANCE DIRECTOR MICHELLE GRECO INFORMATION SERVICES JOANNE DALKA GENERAL SERVICES KEVIN SMITH POLICE CHIEF DANIEL KERR FIRE CHIEF TIMOTHY LALLATHIN UTILITY PUBLIC WORKS DIRECTOR KIPTON LOCKCUFF COMMUNITY DEVELOPMENT DIRECTOR RANDY STEVENSON PARKS AND RECREATION DIRECTOR CHUCK PULA LEGAL COUNSEL ANTHONY GARGANESE BROWN, GARGANESE, WIESS D'AGRESTA PA FINANCIAL ADVISOR DAVID MOORE PUBLIC FINANCIAL MANAGEMENT INC AUDITORS MCDIRMIT DAVIS & COMPANY LLC This page intentionally left blank. FINANCIAL SECTION This page intentionally left blank. McDIRMIT DAVIS CERTIFIED PUBLIC ACCOUNTANTS AND ADVISORS INDEPENDENT AUDITORS REPORT The Honorable Mayor and City Commissioners City of Winter Springs, Florida We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information fo the City of Winter Springs, Florida as of and for the year ended September 30, 2006 which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United Sttes. Those standards require that we plan perform the audit to obtain reasonable assurance about whether the In our opinion the financial statements referred to above present fairly inall material respects In accordance with Government Auditing Standards we have also issued a reprot dated January 5, 2007 on our consideration of the city of Witner Springs, Florida's internal control over financial reporting and our tests of its compliance with certain provision of laws, regulations, contracts and grants agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and should be read in conjunction with this report in considering the results of our audit The Management's Discussion and Analysis starting on page 3 and the schedule of funding progress for the defined benefit pension trust fund on page 65 are not a required part of the basic financial statements but are supplemental information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplemental information. however, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Winter Springs, Florida basic financial statements. The introductory section, combining and individual fund financial statements and schedules, the governmental capital asset schedule by function and activity, and statistical section are presented for purposes of additional analysis and are not a required aprt of the basic financial statements. The combingin and individual nonmajor fund financial statements and schedules and the governmental capital asset schedule by function and activity have been subjected to the auditing procedures applied in the audit of the basic financial statements and in our opinion are fairly stated in all material respects in relation to the basic financial statemnts taken as a whole. the introductory section and statisical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and accordingly we express no opinion on them McDirmit Davis & Company Management's Discussion and Analysis As management of the City of Winter Springs, we offer readers of the City of Winter Springs' financial statements this narrative overview and alalysis of the financial activities of the City of Winter Springs for the fiscal year ended September 30, 2006. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal which can be found on pages iv-vii of this report. Financial highlights the assets of the City of winter Springs exceeded its liabilities at the close of the most recent fiscal year by $78,075,306 (net assets). Of this amount $23,221,451 (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 $10,281,787 or 15%. The increase in total net assets is largely attributed to expenditures for the construction of the Public Works Utility Compound recorded in the Public Facilities Capital Projects Fund (21%) lower than anticipated expenditures in the General Fund (19%) and increased permit and impact fee revenues from increased construction activity in the development Services (11%) and Impact Fee Funds (Fire, Parks, Police, Public facilities and Transportation) (11%), respectively. As of the close of the current fiscal year the City of Winter Springs' governmental funds reported combined ending fund balances of $21,914,453 approximately 93% of this total amount, or $20,401,230 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 $7,801,674 or 44% of total general fund expenditures. The City total debt decreased by $1,051,868 (2%) during the current fiscal year. The decrease was the result of principal payments on existing debt. Overview of the Financial Statements The financial statements focus on both the City as a whole (government-wide) and on the major individual funds. Both perspectives (government-wide and major fund) allow the user to address relevant questions, broaden a basis for compansion (year-to-year or government-to government) and enhance the City's accountability. This discussion and analysis is intended to serve as an introduction to the City of Winter Springs' basic financial statements which are comprised of three components 1) government wide financial statements 2) fund financial statements and 3) notes to the financial statements. this report also contains other supplementary information in addition to the basic financial statements themselves The government wide financial statements are designed to provide readers with a broad overview of the City of Winter Sprins' finances, in a manner similar to a private sector business. the statement of net assets presents information on all of the City assets and liabilities difference reported as net assets. increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is imporving or declining. The Statement of Activities Fund financial statements Governmental funds. The City of Winter Sprins maintains 38 individual governmental funds. 4 The City of Winter Springs adopts an annual appropriated budget for all of its governmental funds. Budgetary comparison statements have been provided for the General Fund, the Public & Communications Service Tax Special Revenue Fund. Electric Franchise Fee Special Revenue Fund and Solid Waste Recycling Special Revenue Fund to demonstrate compliance with this budget on pages 25-29 Budgetary comparison schedules have been provided for the TLBD Debt Service Fund, Public facilities Capital Projects Fund and the nonmajor funds on pages 67-115. Proprietary funds Fiduciary funds. Notes to the financial statements. Required Supplementary Information (RSI) Other Information Government wide Financial Analysis Statement of Net Assets 5 Net assets that are subject to external restrictions as to how they may be used total $13,690,156 The remaining balance of unrestricted net assets may be used to meet the government's ongoing obligations to citizens and creditors. At September 30, 2006 the City is able to reprot positive balances in all three categories of net assets both for the government as a whole as well as for its separate governmental and business type activities this was also the case at the close of the prior fiscal year The following table reflects the condensed Statement of Net Assets for the current and prior years. City of Winter Springs State of Net Assets As of September 30 Statement of changes in Net assets 6 Business type activities increased net assets Following the Changes in Net Assets table is a series of bar and pie charts that relay in pictorial form the revenues and expenses for each of the governmental and business type activities as well as the revenue source for each Note that the first graph depicts governmental program specific revenues and espenses for this graph the revenue does not include property taxes 7 City of Winter Springs Changes in Net Assets For the Year Ended September 30 8 Governmental Program Specific Revenues and Expenses Governmental Revenues by Source 9 Business type Activities Revenues and Expenses Business type Activities Revenues by Source 10 Financial Analysis of the Government's Funds Governmental funds The General fund is the chief operating fund of the City of Winter Springs assessing the City of Winter Springs' financing The fund balance of the City of Winter Springs General Fund increased The Emergency and Disaster Relief Special Revenue Fund 11 12 stump removal expense in private roads and or gate community debris removal expense in the amount The appeal for stump grinding expense FEMA will not begin the close out process untial all appeals have been 13 Capital Lease proceeds increase in Police department expenses supplemental appropriation for special litigation efforts associated with a lawsuit with Seminole County relating to Charter and annexation issues Community development projects that were carried forward into fiscal year 2006 supplemental appropriation for Community development for increased streetlighting costs supplemental appropriation for KIVA special projects that is offset by an increase in transfers from Development Services. Informational Systems projects that were carried forward transfers out to Hazard Mitigation Grant Progrm Capital Project Fund Parks impact fee special revenue fund supplemental appropriation in executive for contract employee in ciy clerk department supplemental appropriations in Government for the golf course town feasibility studies The actual results of the General Fund for the year show an appropriation to fund balance favorable variance in Sales Tax revenues in Investment Income across all departments due to a new presentation requirement of Compensated Absences in the Financial statements in General Government due to the delay of Code Enforcement Corut in Fiance and Utility billing in General Services in Information Systems in Community Development due to lower than anticipated expenses in Urban Beautifications 14 favorable variance in Police favorable variance in Fire favorable variance in Public Works favorable variance in Parks and Recreation unfavorable variance in Transfers in due to information systems projects not being completed due to position vacancies, Utility Billing Vacancies favorable variance in Transfers out Capital Asset and Debt Administration The City of Winter Springs' investment in capital assets for its governmental and business type activities as of September 30, 2006 amouts Major capital asset events during the current fiscal year included the following 15 Continued work on the electrical improvements at Water Treatment Plant no 3 Capitalization of contributed water and sewer lines completion of sewer main relining additional information on the City of Winter Springs' capital assets can be found in Note 6 on pages 51-52 of this report. City of Winter Springs Capital Assets (Net of Depreciation) As of September 30 Long term debt Capital Improvement Revenue Note Series 2004 in the amount Capital Improvement Revenue Note Series 2006 in the amount A capital lease in the amount 16 a capital lease in the amount six public safety vehicles was added Both the City of Winter Springs Water and Sewer Utility, General Obligation and 19999 and 2003 Improvement debt maintain underlying ratings of A+ AA and A+ respectively, from Standard & Poor's There are no limitations placed on the amount of debt the City may issue either by the City's charter, code of ordinances or by the Florida State Statutes. Additional information on the City of Winter Springs long term debt can be found in Notes 7 and 8 on pages 53-58 of this report. City of Winter Springs Long Term Debt 17 Economic Factors and Next Year's Budgets and Rates The City considered many factors during the preparation of the fiscal year 2007 budget. Requests for Information This financial report is designed to provide a general overview of the City of Winter Springs This page intentionally left blank. Basic Financial Statements This page intentionally left blank. CITY OF WINTER SPRINGS FLORIDA STATEMENT OF NET ASSETS SEPTEMBER 30 2006 PRIMARY GOVERNMENT ASSETS LIABILITIES NET ASSETS THE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS. This page intentionally left blank. City of Winter Springs Florida Statement of Activities for the year ended September 30 2006 Program Revenues Net (Expense) Revenue and Changes in Net Assets Functions/Programs The accompanying Notes to Financial Statements are an integral part of these statements. 19 20 City of Winter Springs Florida Balance Sheet Governmental Funds assets liabilities and fund balances the accompanying notes to Financial Statements are an integral part of these statements. 21 Public Facilities Capital Projects Other Governmental Funds Total Governmental Funds City of Winter Springs Florida Statement of Revenues, Expenditures and Changes in fund balances - governmental funds Revenues Expenditures Excess (Deficiency) of Revenues Over Expenditures Other Financing Sources 22 TLBD Debt Service Public Facilities Capital Projects Other Governmental Funds Total Governmental Funds 23 This page intentionally left blank. City of Winter Springs Florida Reconciliation of the Statement of Revenues Expenditures and changes in Fund Balances of Governmental funds to the statement of activities Amounts reported for the governmental activities in the state of activities are different because Net change in fund balances Governmental funds report capital outlays as expenditures The net effect of various miscellaneous transactions involving capital assets The issuance of longterm debt provides current financial resources to governmental funds, while the repayment of the principal of long term Revenues in the statement of activites that do not provide current financial resources are not reported as revenues in governmental funds Special assessment revenue and mortgage receivable collections Some expenses reported in the statement of activities do not require the Change in net assets of governmental activities City of Winter Springs Florida General Fund Statement of Revenues Expenditures and Changes in Fund Balance Budget and Actual Budgeted Amounts Original Final Actual Amounts Variance with Final Budget Positive (Negative) Revenues 25 Budgeted Amounts Original Final Actual Amounts Variance with Final Budget Positive (Negative) 26 This page intentionally left blank. City of Winter Springs Florida Public and Communications service tax special revenue fund Statement of revenues expenditures and changes in fund balances budget and actual Budgeted Amounts Original Final Actual Amounts Variance with Final Budget Positive (Negative) 27 City of Winter Springs This page intentionally left blank. City of Winter Springs Florida Electric Franchise Fee Special Revenue Fund Statement of Revenues Expenditures and Changes in Fund Balances Budget and Actual Budgeted Amounts Original Final Actual Amounts Variance with Final Budget Positive (Negative) 28 This page intentionally left blank. City of Winter Springs Florida SOLID WASTE/RECYCLING SPECIAL REVENUE FUND STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL Budgeted Amounts Original Final Actual Amounts Variance with Final Budget Positive (Negative) 29 City of Winter Springs Florida STATEMENT OF NET ASSETS PROPRIETARY FUNDS Business-type Activities - Enterprise Funds Water and Sewer Utility Fund Development Services Fund Stormwater Utility Fund Total 30 Business-type Activities - Enterprise Funds Water and Sewer Utility Fund Development Services Fund Stormwater Utility Fund Total 31 This page intentionally left blank. City of Winter Springs Florida Business-type Activities - Enterprise Funds Water and Sewer Utility Fund Development Services Fund Stormwater Utility Fund Total 32 City of Winter Springs Florida Business-type Activities - Enterprise Funds Water and Sewer Utility Fund Development Services Fund Stormwater Utility Fund Total 33 Business-type Activities - Enterprise Funds Water and Sewer Utility Fund Development Services Fund Stormwater Utility Fund Total 34 This page intentionally left blank. City of Winter Springs Florida STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS ASSETS LIABILITIES NET ASSETS DEFINED BENEFIT PENSION TRUST FUND. 35 This page intentionally left blank. City of Winter Springs Florida STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS ADDITIONS DEDUCTIONS CHANGE NET ASSETS NET ASSETS - BEGINNING NET ASSETS - END DEFINED BENEFIT PENSION TRUST FUND. 38 This page intentionally left blank. NOTES TO FINANCIAL STATEMENTS This page intentionally left blank. City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS Note 1 - Summary of Significant Accounting Policies Reporting Entity 37 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 1 - Summary of Significant Accounting Policies (Continued) B. Government Wide and Fund Financial Statements C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation 38 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 1 - Summary of Significant Accounting Policies (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (continued) Major Governmental Funds 39 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 1 - Summary of Significant Accounting Policies (continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Major Governmental Funds continued Non-Major Governmental Fund Types Major Proprietary Funds 40 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 1 - Summary of Significant Accounting Policies continued C. Measurement Focus, Basis of Accounting and Financial Statement Presentation continued Fiduciary Fund The Pension Trust Fund accounts for contributions to the defined benefit plan. Private-sector standards of accounting anf financial reporting issued prior to December 1, 1989, generally are followed in both the goverment wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private sector guidance for their business type activities and enterprise funds, subject to this same limitation. As a general rule the effect of interfund activity has been eliminated from the government wide financial statements. Exceptions to this general rule are other charges between the City's water and sewer function and various other functions of the government. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services or privileges provided 2) operating grants and contributions and 3) capital grants and contributions. Proprietary funds distinguish operating revenues and expenses from nonoperating items Operating revenues and expenses generally result from providing services and producing and delivering goods in connection witha proprietary fund's principal ongoing operations. When both restricted and untrestricted resources are available for use, it is the government's 41 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 1 Summary of Significant Accounting Policies continued D. Assets, Liabilities, and Net Assets or Equity 1. Deposits and Investments 2. Receivables and Payables 42 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 1 Summary of Significant Account Policies continued D. Assets, Liabilities and Net Assets or Equity continued 3 3. Inventories and Prepaid Items 4. Restricted Assets 5. Capital Assets 43 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 1 Summary of Significant Account Policies continued D. Assets, Liabilities and Net assets or Equity continued 5. Capital Assets continued 6. Compensated absences 7. Long term obligations 44 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 1 Summary of Significant Account Policies continued D. Assets, Liabilities and Net Assets or Equity continued 8. Fund equity Note 2 - 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 45 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 2 Reconciliation of Government-Wide and Fund Financial Statements continued B. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues Expenditures and Changes in Fund Balances and the Government-Wide Statement of Activities Capital outlay Depreciation expense Net adjustment to increase net changes in fund balances 46 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 2 Reconciliation of Government-Wide and Fund Financial Statements continued B. Explanation of Certain Differences Between the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances and the Government-Wide Statement of Activities continued Another element of that reconciliation states Compensated absences amoritization of issuance costs Amoritization of bond discounts accrued interest payable net adjustment to decrease net changes in fund balances Note 3 - Stewardship Compliance and Accountability A budgetary Information Annual budges are adopted on a basis consistent with generally accepted accounting 1. On or before July 1st of each year, the City Manager submits a Proposed Budget to the City Commission for the fiscal year beginning the following October 1st. The budget includes proposed revenues, expenditures and a description of capital activities for the ensuing fiscal year. 2. The City Commission then holds informal workshops wherein the public is invited to attend. 3. On or before September 30th of each year, two public hearings are completed and the Commission establishes the ad valorem tax milage followed by the adoption of the final budget. 4. The budget may be formally amended by the City Commission at any time. Budgeted amounts presented in the accompanying financial statements have been adjusted for any legally authorized revisions of the annual budgets during the year. 47 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 3 - Stewardship Compliance and Accountability (continued) A. Budgetary information continued 5. The City Manager is authorized to transfer budgeted amounts between accounts within a department. At any time during the fiscal year, the City Manager may transfer part or all of any ynencumbered appropriations among programs within one department. The legal level of budgetary control is the departmental level. Note 4 - Deposits and Investments: Deposits At year end, the carrying amount of the City's deposits Investments The City's investment policies are governed by State statutes and city ordinances 48 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 4 - Deposits and Investments continued Investments continued State Board of Administration Fair Value Credit Rating Weighted Average Maturity (Years) US Government Agency Securities US Treasury Pension Plan investments High Grade Bond Fund Credit Risk Custodial Credit Risk 49 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 4 - Deposits and Investments continued Custodial Credit Risk continued for an investment this is the risk that in the event of the failure of the couterparty the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. At September 30 2006 none of the investments listed are exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form. Concentration of Credit Risk Interest Rate Risk Note Receivables Receivables as of year end for the City's individual major fund and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts are as follows Accounts Receivable Allowance Uncollectible Accounts Net Receivable General Fund Public & Communications Service Tax Fund TLBD Debt Service Fund Water 7 Sewer Utility Fund Nonmajor Governmental Funds Solid Waste Recycling Fund 50 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 6 - Capital Assets Capital asset activity for the year ended September 30 2006 was as follows Beginning Balance Increases Decreases Ending Balance Governmental activities Capital assets Land Construction Total capital assets not being depreciated Capital assets, being depreciated Buildings Improvements Machinery and equipment Infrastructure Total capital assets being depreciated Less accumulated depreciation for Total accumulated deprecition Total capital assets being depreciated net Governmental activities capital assets, net Beginning Balance Increases Decreases Ending Balance 51 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 6 - Capital Assets continued Capital asset activity for the year ended September 30 2006 was as follows Beginning Balance Increases Decreases Ending Balance Business type activities Capital assets being depreciated Less accumulated depreciation for Business type activities capital assets net Depreciation expense was charge to functions programs as follws Governmental activities General government Public safety Physical environment Culture and recreation Business type activities Water and sewer Development service Stormwater 52 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 7 - Leases Capital Leases The assets acquired through capital leases are as follows Governmental Activities assets machinery and equipment less accumulated depreciation total Year Ending September 30 2007 2008 2009 2010 Governmental Activities 53 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED Note 8 - Long Term Debt Revenue Bonds Interest Rates and Dates Maturity Original Amount Balance September 30, 2006 Governmental Activities Improvement Refunding Revenue Bonds Series 1999 Special Assessment Revenue Bonds Series 2001 Improvement Refunding Revenue Bonds Series 2003 Business Type Activities Water and sewer Refunding Revenue Bonds Series 2000 Water and Sewer Refunding Revenue Bonds Series 2001 Water and Sewer Refunding Revenue Bonds Series 2002 54 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED Note 8 - Long Term Debt continued Revenue Bonds continued Annual debt service requirements to maturity for revenue bonds are as follows Year Ending September 30 2007 2008 2009 2010 2011 Governmental Activities Principal Interest Business type activities Principal Interest 2012-2016 2017-2021 2022-2026 2027-2031 General Obligation Bonds Governmental Activities 55 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED Note 8 - Long Term Debt continued General Obligation Bonds continued Annual debt service requirements to maturity for the general obligtion bonds are as follows: Notes Payable 2004 Capital Improvement Revenue Note The City is City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED Note 8 - Long Term Debt Notes Payable continued Special Assessment Revenue Note Series 2006 Annual debt service requirements 57 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED Note 8 - Long Term Debt continued Changes in Long Term Liabilities Governmental activities Notes payable Capital lease Compensated absences Business type activities 58 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED Note 9 - Interfund Receivables Payables and Transfers Receivable Fund General Payable Fund Public and Communications Service tax Recipient Fund Amount Purpose 1999 Debt Service Fund 1999 Debt Service Fund 2003 Debt Service Fund 2003 Debt Service Fund 2004 Capital Projects Debt Service Fund development Services Fund 59 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED Note 9 - Interfund Receivables Payables and Transfers continued Recipient Fund Amount Purpose General Fund 60 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED Note 9 - Interfund Receivables Payables and Transfers continued Recipient Fund Amount Purpose General Fund Homeland Mitigation Grant Program Capital Project Fund Parks Impact Fee Special Revenue Fund Public Facilities Capital Projects Fund Road Improvements Special Revenue Fund Senior Center Expansion Capital Projects Fund 61 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED Note 9 - Interfund Receivables Payables and Transfers continued Recipient Fund Amount Purpose Special Law Enforcement Storm Reserve Special Revenue Fund Stormwater Utility Fund TLBD Debt Service Fund TLBD Water and Sewer Utility Fund Note 10 - Defined Benefit Pension Plan Plan Description 62 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS continued Note 10 - Defined benefit Pension Plan continued Summary of Significant Accounting Principles Funding Policy Annual Pension Cost and Net Pension Obligation Three Year Trend information 63 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED NOTE 10 - DEFINED BENEFIT PENSION PLAN CONTINUED ANNUAL PENSION COST AND NET PENSION OBLIGATION CONTINUED ASSUMPTIONS ACTUARIAL VALUATION NOTE 11 - DEFERRED COMPENSATION PLAN 64 City of Winter Springs Florida NOTES TO FINANCIAL STATEMENTS CONTINUED NOTE 12 - RISK MANAGEMENT NOTE 13 - CONTINGENT LIABILITIES NOTE 14 - COMMITMENTS 65 City of Winter Springs Florida REQUIRED SUPPLEMENTARY INFORMATION DEFINED BENEFIT PENSION TRUST FUND SCHEDULE OF FUNDING PROGRESS ACTUARIAL VALUATION DATE ACTUARIAL VALUE OF ASSETS ACTUARIAL ACCRUED ENTRY AGE UNFUNDED AAL FUNDED RATIO COVERED PAYROLL UAAL AS A % SCHEDULE OF CONTRIBUTIONS FROM THE EMPLOYER FISCAL YEAR ENDED ANNUAL REQUIRED CONTRIBUTION ARC PERCENTAGE OF ARC CONTRIBUTION 66 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES This page intentionally left blank. MAJOR GOVERNMENTAL FUNDS DEBT SERVICE FUND TLBD DEBT SERVICE FUND CAPITAL PROJECTS FUND PUBLIC FACILITIES CAPITAL PROJECTS FUND This page intentionally left blank. City of Winter Springs Florida TLBD DEBT SERVICE FUND SCHEDULE OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL REVENUES EXPENDITURES EXCESS OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES NET CHANGE IN FUND BALANCE 67 This page intentionally left blank. City of Winter Springs Florida PUBLIC FACILITIES CAPITAL PROJECTS FUND STATEMENT OF REVENUES EXPENDITURES AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL REVENUES EXPENDITURES EXCESS OF REVENUES OVER EXPENDITURES This page intentionally left blank. NON MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS POLICE EDUCATION FUND SPECIAL LAW ENFORCEMENT TRUST FUND LOCAL TRANSPORTATION IMPROVEMENT FUND RECREATION ACQUISTION FUND TRANSPORTATION IMPACT FEE FUND POLICE IMPACT FEE FUND FIRE IMAPCT FEE FUND PARKS IMPACT FEE FUND PUBLIC FACILITIES IMPACT FEE MEDICAL TRANSPORT SERVICES FUND NON MAJOR GOVERNMENTAL FUNDS CONTINUED SPECIAL REVENUE FUNDS CONTINUED ARBOR FUND TLBD MAINTENANCE FUND OAD FORSET MAINTENANCE ROAD IMPROVEMENTS FUND EMERGENCY AND DISASTER RELIEF FUND SPECIAL LAW ENFORCEMENT TRUST FUND FEDERAL HOA PROJECTS STREETLIGHTING AND SIGNAGE FUND STORM RESERVE FUND 2003 DEBT City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida This page intentionally left blank. City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida This page intentionally left blank. City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida This page intentionally left blank. City of Winter Springs Florida This page intentionally left blank. This page intentionally left blank. This page intentionally left blank. City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida City of Winter Springs Florida This page intentionally left blank. This page intentionally left blank. McDirmit Davis Certified Public Accountants and Advisors Report on internal control over financial reporting and on compliance and other matters based on audit of financial statements performed in accordance with government auditing standards The Honorable Mayor and City Commissioners City of Winter Springs Florida We have audited the basic financial statements of the City of Winter Springs Florida as of and for the year ended have issued our report thereon date January 5 2007 We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States The Rules of the Auditor General (Section 10.554(1)(h)4.) require disclosure in the management letter of the following matters if not already addressed in the auditor[s reports on compliance and internal controls and are not clearly inconsequential (1) violations of laws, rules, regulations, and contractual provisions that have occurred, or are likely to have occurred; (2) improper or illegal expenditures; (3) improper or inadequate accounting procedures (e.g. the omission of required disclosures from the financial statements); (4) failures to properly record financial transactions; and (5) other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of the auditor. Our audit disclosed one matter required to be disclosed by Rules of Auditor General (Section 10.554(1)(b)4. Bond Compliance The City still has not met the requirement to spend 85% of the improvement Refunding Revenue Bonds, Series 1999. Subsequent to September 30, 2006, the City engaged a firm to perform arbitrage rebate compliance services for these bonds. The Rules of the Auditor General (Section 10.554(1)(h)5.) also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless dislcosed in the notes to the financial statements. This information has been disclosed in the notes to the financial statements. As required by the Rules of the Auditor General (Section 10.554(1)(h)6a.) a statement must be included as to whether or not the local government entity has met one or more of the conditions described in Section 218.503(1), Florida Statutes. In connection with our audit, we determined that the City of Winter Springs, Florida did not meet any of the conditions described in Section 218.503(1), Florida Statutes. As required by the Rules McDirmit Davis & Company LLC January 5, 2007 March 19, 2007 McDimit, Davis & Company, LLC 605 E. robinson Street, Suite 635 Orlando, Florida 32801 Dear Sir or Madam: Your management comment related to fiscal year ended September 30, 2006 was well received by both the City Manager and the Finance Department. The comment represents an opportunity for improvement, which will be pursued in fiscal year 2007. Below is our response to your management comment as required by the Rules of the Auditor General of the State of Florida. Bond Compliance We concur with the recommendation. Funds have been in essence "yield restricted" due to the low investment rate environment in prior years, but we realize this environment is quickly changing. The City has engaged a consultant to calculate arbitrage and yield restriction liabilities associated with the bond proceeds in question. Unfortunately, construction delays have come into paly, such as wetland mitigation issues in Magnolia Park and final completion of the state Road 434 Improvement Project (Village Walk) in fiscal year 2006 - a joint project with the Florida Department of Transportation (FDOT), Seminole County and the City; however, the City is committed to spending the remaining bond proceeds as quickly as possible and will continue to make every effort to do so. Sincerely, Ronald W. Mc Lemore Michelle Greco City Manager Finance Director City of Winter Springs Florida Affidavit of Impact Fee Compliance March 19, 2007 Impact Fees are assessed in accordance with Chapter 9: Land Development, Article VIII Impact Fees, of the City of Winter Springs Code of Ordinances. Impact fee collections, expenditures and accounting are provided for in separate accounting funds and comply with Florida Statute 163.31801. Michelle Greco Finance Director. City of WInter Springs, FL CAFR FY06 Final Meeting 03/26/07 Reg. Agenda #600