. .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> 12 Statement of Revenues, Expenditures and Changes in Fund Balances 3 Governmental Funds . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> 13-14 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . 15 Statement of Net Assets 3 Proprietary Fund .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . 16 Statement of Revenues, Expenses and Changes in Fund Net Assets 3 Proprietary Fund .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . 17 Statement of Cash Flows 3 Proprietary Fund .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . 18 Notes To Basic Financial Statement . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> 19-41 Required Supplemental Information 3 Texas Municipal Retirement System Plan 3 Schedule of Funding in Progress . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> 43 For Governments Using Modified Approach for Infrastructure . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . 44 Budgetary Comparison Schedule 3 General Fund .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> 45 Budgetary Comparison Schedule 3 Major Governmental Funds Besides General Fund . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . 46 Explanation of Differences between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> 47 Notes to Required Supplemental Information . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . 48 C O N T E N T S Supplementary Information 3 PAGE Combining Balance Sheet 3 Nonmajor Governmental Funds .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> 50 Combining Statement of Revenues, Expenditures and Changes in Fund Balance 3 Nonmajor Governmental Funds . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . 51 Schedule of Supplemental Tax Information . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> 52 Combined Schedule of Certificates of Obligation And Capital Leases . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> 53-54 Schedule of Insurance in Force - Unaudited . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . .<br><br> . . 55-64 INDEPENDENT AUDITOR'S REPORT The Honorable Members of City Council City of Lake Worth, Texas We have audited the accompanying financial statements of the governmental activities, business- type activities, each major fund, and aggregated remaining fund information of the City of Lake Worth, Texas (the cCity d) as of and for the year ended September 30, 2005, which collectively comprise the City 9s basic financial statements, as listed in the accompanying table of contents.<br><br> These financial statements are the responsibility of the City 9s 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.<br><br> Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.<br><br> We believe that our audit provides a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund and aggregate remaining fund information of the City as of September 30, 2005, and the respective changes in financial position and cash flows, where applicable, of those activities and funds, for the year then ended in conformity with accounting principles generally accepted in the United States of America. Management 9s Discussion and Analysis and the Required Supplemental Information as described in the table of contents are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board.<br><br> This supplementary information is the responsibility of the City 9s management. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplemental information. However, we did not audit the information and express no opinion on it.<br><br> 3024 Greene Avenue Fort Worth, Texas 76109 Telephone (817) 926-1588 Fax (817) 926-8842 MEMBER TEXAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR 9S REPORT 3 PAGE TWO Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The combining and individual fund financial statements and other supplementary information in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. This additional information is the responsibility of the City 9s management.<br><br> Such information, except for those schedules noted as unaudited, has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. MALCOM B. WETSEL, INC.<br><br> January 17, 2006 3 Management Discussion and Analysis For Fiscal Year Ended September 30, 2005 The Management Discussion and Analysis is intended to be a narrative overview of the financial activities for the City of Lake Worth. We encourage our readers to consider the information presented here in conjunction with additional information we have furnished on the following pages. This analysis focuses on significant financial issues, major financial activities and resulting changes in financial position, budget changes and variances from the budget and special issues related to funds and the economic factors affecting the City.<br><br> Financial Highlights " The assets for the City have been properly recorded in each fund and reflect the following net asset values. Governmental Funds $ 20,996,375 Business Type Funds $ 7,313,005 Total Net Assets $ 28,309,380 " As of the close of fiscal year 2004/2005 the City 9s fund governmental balance is listed below: General Fund $ 1,567,152 Debt Service Fund $ 201,418 Economic Development Corporation $ 916,471 Other Governmental Funds $ 7,367,557 Combined Fund Balance $ 10,052,598 " As of the close of fiscal year 2004/2005, the City 9s General Fund unreserved or undesignated fund balance is $1,238,943, which is 22% of the operating budget. " Compensated absences for the Governmental Activities were included in the amount of $114,081 and $5,414 for Business-type activities.<br><br> Overview of the Financial Statements The City 9s annual financial report consists of several sections. Taken together they provide a comprehensive financial look at the City. The components of the report include the following: " Management 9s Discussion and Analysis: This section of the report provides financial overview and economic factors affecting the City.<br><br> " Government 3wide Financial Statements: This statement is designed to provide readers with a broad overview of the City 9s finances in a manner similar to private sector business. o The statement of net assets presents information on all of the City 9s assets and liabilities with the difference between the two reported as net assets. Over time increases or decreases in net assets may serve as a useful indication of whether the financial position of the City is improving for deteriorating.<br><br> 4 o The statement of activities presents information showing how the City 9s net assets changed during the fiscal year. All changes in net assets are reported when the underlying event giving rise to the change occurs regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (i.e.<br><br> uncollected taxes and earned but unused compensated absences). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities) The governmental activities of the City of Lake Worth include general government, public safety, development services, culture and recreation, debt service, economic development, street maintenance and crime district. The business-type activities of the City of Lake Worth include the water/sewer fund.<br><br> " Fund Financial statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided in two categories 3 governmental and proprietary.<br><br> " Governmental Funds: Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on current sources and uses of expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government 9s near-term financing requirements.<br><br> Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government 9s near-term financing decisions. Both the governmental fund balance and the government fund statement of revenues, expenditures and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.<br><br> The City maintains 5 governmental funds. They are General Fund, Debt Service Fund, Economic Development Fund, Street Maintenance Fund and Crime Control and Prevention District Fund (CCPD). " Proprietary Funds: The City of Lake Worth maintains only one proprietary type fund, which is the Water/Sewer Fund.<br><br> Proprietary fund financial statements provide the same type of information as the government-wide financial statements only in more detail. The proprietary fund financial statements provide separate information for the Water/Sewer Fund operations, which are considered to be a major source of funds for the City. " Notes to the Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.<br><br> " Other Information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City 9s progress in funding its obligation to provide pension benefits to its employees. 5 Government-Wide Financial Analysis The total net assets at September 30, 2005 were $45,891,537. The governmental type activities account for 83% and the business type activities the remaining 17%.<br><br> Accumulated depreciation is $4,782,664. The governmental activities represent 43% of the accumulated depreciation while the business type activities represent 57%. Pooled cash represents 21%.<br><br> CITY OF LAKE WORTH NET ASSETS AS OF SEPTEMBER 30, 2005 and 2004 (In Dollars) Governmental Type Activities Business Type Activities Totals 2004 2005 2004 2005 2004 2005 Current & Other Assets $6,616,019 $10,633,082 $732,898 $915,478 $7,348,917 $11,548,560 Capital Assets $25,494,950 $27,579,139 $6,911,294 $6,763,838 $32,406,244 $34,342,977 Total Assets $32,110,969 $38,212,221 $7,644,192 $7,679,316 $39,755,161 $45,891,537 Long Term Liabilities $10,234,980 $15,709,518 $109,686 $282,451 $10,344,666 $15,991,969 Other Liabilities $1,164,029 $1,506,329 $230,764 $80,860 $1,394,793 $1,587,189 Total Liabilities $11,399,009 $17,215,847 $340,450 $363,311 $11,739,459 $17,579,158 Net Assets: Invested in capital assets, net related debt $14,627,661 $16,638,585 $6,818,827 $6,738,806 $21,446,488 $23,377,391 Restricted $4,571,026 $3,293,577 $0 $0 $4,571,026 $3,293,577 Unrestricted $1,513,273 $1,064,213 $484,915 $574,199 $1,998,188 $1,638,412 Total Net Assets $20,711,960 $20,996,375 $7,303,742 $7,313,005 $28,015,702 $28,309,380 The restricted assets include $6,858,240 of Capital Project funds, which represents 33% of the $20,996,375 in total net assets in the governmental activities. Sixteen percent (16%) are restricted and only 5%, or $1,064,213 are unrestricted. In the business-type, 2% of the total net assets is unrestricted.<br><br> 6 Analysis of the City 9s Operations The following table provides a summary of the City 9s operations for years ended September 30, 2005 and 2004: CITY OF LAKE WORTH STATEMENT OF ACTIVITIES FOR YEARS ENDED SEPTEMBER 30, 2005 and 2004 (In Dollars) Governmental Type Activities Business Type Activities Totals 2004 2005 2004 2005 2004 2005 Fines/Fees/Charges for Services $882,569 $1,105,792 $1,729,702 $1,972,773 $2,612,271 $3,078,565 Grants/Contributions $31,165 $26,318 $0 $56,308 $31,165 $82,626 Taxes/Miscellaneous/ Gain on Assets $6,256,540 $6,982,312 ($309,173) ($318,930) $5,947,367 $6,663,382 Expenditures: General Government ($1,820,926) ($2,830,781) $0 $0 ($1,820,926) ($2,830,781) Public Safety ($2,293,995) ($2,754,174) $0 $0 ($2,293,995) ($2,754,174) Public Ways/Facilities ($718,657) ($939,192) $0 $0 ($718,657) ($939,192) Health & Sanitation ($130,667) ($148,330) $0 $0 ($130,667) ($148,330) Culture & Recreation ($436,106) ($425,122) $0 $0 ($436,106) ($425,122) Interest & Fiscal Charges ($546,083) ($732,408) $0 $0 ($546,083) ($732,408) Water Service $0 $0 ($833,323) ($994,302) ($833,323) ($994,302) Solid Waste $0 $0 ($730,206) ($706,586) ($730,206) ($706,580) Change in Net Assets $1,223,840 $284,415 ($143,000) ($9,263) $1,080,840 $293,678 Net Assets Beginning Balance $19,488,120 $20,711,960 $7,446,742 $7,303,742 $26,934,862 $28,015,702 Net Assets as of September 30, 2005 $20,711,960 $20,996,375 $7,303,742 $7,313,005 $28,015,702 $28,309,380 Financial Analysis of the Governmental Funds Governmental funds: The focus of the City 9s governmental funds is to provide information on near term inflows, outflows and balances of expendable resources. Such information is useful in assessing the City 9s financing requirements. In particular unreserved fund balance may serve as a useful measure of a government 9s net resources available for spending at the end of the fiscal year.<br><br> At the end of the current fiscal year, the City 9s governmental funds reported combined ending fund balances of $10,052,898. Approximately 12% of the total amount represents undesignated balances. Excluding Capital Project Fund, combined ending fund balance is $3,194,658 with undesignated being approximately 39%.<br><br> Total governmental fund balances increased by $3,873,881 and breaks down as listed below. 2004 2005 General Fund $1,813,868 $1,567,152 Debt Service Fund $194,099 $201,418 Economic Development Fund $1,267,501 $916,471 Capital Projects Fund $2,752,223 $6,858,240 Other Funds $151,326 $509,617 Total $6,179,017 $10,052,898 7 Proprietary Fund: The City of Lake Worth 9s proprietary fund 9s statements provide the same type of information found in the governmental statements. The City has only one proprietary fund, which is the Water/Sewer Fund.<br><br> Unrestricted net assets is $574,199 or 2%% of the total assets. Current and non current liabilities total $363,311, $210,888 less than total unrestricted net assets. The water/sewer fund had total operating revenue of $1,972,773 and operating expenses of $1,697,724, resulting in an operating income of $275,049.<br><br> Total non operating revenue is $91,915, reflecting a net income before contributions and transfers of $366,964. After the inclusion of capital contributions, transfers in and transfers out, the total change in net assets is $9,263. Budgetary Information as of September 30, 2005 (In Dollars) Actual Source Original Final Budgetary General Fund Revenue $4,886,039 $5,427,727 $5,610,136 General Fund Expenditures $4,771,724 $5,671,779 $5,725,131 Budgetary Balance $114,315 ($244,052) ($114,995) Listed below are the City 9s assets as of September 30, 2005 (In Dollars) Governmental Business Type Total Land $592,971 $46,240 $639,211 Infrastructure $19,720,835 $0 $19,720,835 Buildings and Improvements $4,812,513 $119,938 $4,932,451 Distribution and Collection System $0 $8,318,430 $8,318,430 Equipment and Vehicles $1,635,282 $541,393 $2,176,675 Office Furniture $166,372 $0 $166,372 Assets Under Capital Leases $1,001,807 $732,294 $1,734,001 Construction In Progress $1,715,470 $0 $1,715,470 Accumulated Depreciation ($2,066,111) ($2,994,457) ($5,060,568) Total $27,579,139 $6,763,838 $34,342,977 At the end of fiscal 2004/2005, the City of Lake Worth has $16,392,183 in outstanding certificates of obligation and capitalized leases.<br><br> CITY OF LAKE WORTH LONG-TERM DEBT OBLIGATION (In Dollars) Governmental Business Type Total Capital Leases $635,151 $22,032 $657,183 1997 A Certificates of Obligation $1,815,000 $0 $1,815,000 1997 B Certificates of Obligation $1,060,000 $0 $1,060,000 1999 Certificates of Obligation $3,200,000 $0 $3,200,000 2001 Certificates of Obligation $3,660,000 $0 $3,660,000 2005 Certificates of Obligation $6,000,000 $0 $6,000,000 Total $16,370,151 $22,032 $16,392,183 8 Note that certain certificates of obligation are recorded in governmental type funds. However, the annual payments are split between governmental and business-type funds. Property Taxes The property tax rate for the City of Lake Worth was set at .314029, generating $809,889 in revenue.<br><br> Total tax collections are at 98% leaving a balance of $17,618 uncollected. The City of Lake Worth 9s intention is to remain at the 31 cent level for as long as demands allow. Economic Factors and Next Year 9s Budget and Rates The economic outlook for the City of Lake Worth remains strong.<br><br> Within the last fiscal year one large development is substantially completed, with another large development starting on phase 2. This addition of retail sales should increase the City 9s sales tax revenue significantly. This will enable the City to maintain its goal of the .31/$100 value on the tax rate with increased property values.<br><br> The Crime Control and Prevention District (CCPD), will add funds in next year 9s budget to implement programs to facilitate a more pro-active law enforcement presence in the community. The CCPD revenue will be derived from one-quarter cent sales tax, investment income and donations. The one-quarter cent sales tax for street maintenance allowed $575,523 of street improvements to be made in 2004/2005.<br><br> Both the CCPD and street maintenance are estimated to generate approximately $688,484 each or 1.3 million dollars to the city coffers. Request for Additional Information The financial information provided in this report is designed to enable our citizens, customers, investors and creditors with a general overview of the City of Lake Worth finances. Should you have any questions concerning any portions of this report contact Vicki Mikel, Assistant City Manager/Director of Finance at 817-237-1211, ext 223 or email at vmikel@lakeworthtx.org .<br><br> CITY OF LAKE WORTH, TEXAS STATEMENT OF NET ASSETS SEPTEMBER 30, 2005 See accompanying notes to basic financial statements. 9 Governmental Business-type Activities Activities Total ASSETS Pooled cash and cash equivalents 96,141 $ 4,443 $ 100,584 $ Non-pooled cash 5,547 400 5,947 Pooled investments 9,204,179 --- 9,204,179 Non-pooled investments 840,258 658,572 1,498,830 Ad valorem taxes receivable - net 61,015 --- 61,015 Sales taxes receivable 328,619 --- 328,619 Accounts receivable - net 96,642 221,639 318,281 Miscellaneous receivable 681 665 1,346 Due from other governments --- --- --- Inventories and prepaid expenses --- 29,759 29,759 Capital Assets: Infrastructure reported using modified approach (see page 44) 19,720,835 --- 19,720,835 Not being depreciated Land 592,971 46,240 639,211 Construction in progress 1,715,470 --- 1,715,470 Being depreciated Infrastructure --- 8,318,430 8,318,430 Building and improvements 4,812,513 119,938 4,932,451 Equipment and vehicles 1,635,282 541,393 2,176,675 Office furniture and fixtures 166,372 --- 166,372 Assets under capital leases 1,001,807 732,294 1,734,101 Less accumulated depreciation (2,066,111) (2,994,457) (5,060,568) TOTAL ASSETS 38,212,221 $ 7,679,316 $ 45,891,537 $ LIABILITIES Accounts payable 368,805 $ 172,802 $ 541,607 $ Accrued expenses 353,638 6,902 360,540 Meter deposits -current --- 32,470 32,470 Payable to other governments 52,003 --- 52,003 Internal balances (42,831) 42,831 --- Compensated absences 114,081 5,414 119,495 Capitalized leases - current 130,633 22,032 152,665 Certificates of obligation - current 530,000 --- 530,000 Non-current: Meter deposits --- 80,860 80,860 Capitalized leases 504,518 --- 504,518 Certificates of obligation 15,205,000 --- 15,205,000 TOTAL LIABILITIES 17,215,847 $ 363,311 $ 17,579,158 $ NET ASSETS Invested in capital assets, net of related debt 16,638,585 $ 6,738,806 $ 23,377,391 $ Restricted for: Debt service 201,418 --- 201,418 Economic development 916,471 --- 916,471 Special revenue crime control district 328,054 --- 328,054 Special revenue street maintenance 181,563 --- 181,563 Capital projects funds 1,428,643 --- 1,428,643 Other 237,428 --- 237,428 Unrestricted 1,064,213 574,199 1,638,412 TOTAL NET ASSETS 20,996,375 $ 7,313,005 $ 28,309,380 $ Primary Government CITY OF LAKE WORTH, TEXAS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2005 See accompanying notes to basic financial statements. 10 Fines, Fees and Operating Capital Charges for Grants and Grants and Governmental Business-type Expenses Services Contributions Contributions Activities Activities Total rimary Government: overnmental: General government 2,830,781 $ 335,044 $ $ --- $ --- (2,495,737) $ $ --- (2,495,737) $ Public safety 2,754,174 620,029 449 --- (2,133,696) --- (2,133,696) Public ways and facilities 939,192 --- --- --- (939,192) --- (939,192) Health and sanitation 148,330 139,224 --- --- (9,106) --- (9,106) Culture and recreation 425,122 11,495 25,869 --- (387,758) --- (387,758) Interest and fiscal charges 732,408 --- --- --- (732,408) --- (732,408) Total Governmental Activities 7,830,007 $ 1,105,792 $ 26,318 $ $ --- (6,697,897) $ $ --- (6,697,897) $ usiness-type: Water 994,302 $ 1,148,163 $ $ --- 56,308 $ $ --- 210,169 $ 210,169 $ Solid waste 706,586 824,610 --- --- --- 118,024 118,024 Total Business-type Activities 1,700,888 $ 1,972,773 $ $ --- 56,308 $ $ --- 328,193 $ 328,193 $ otal Primary Government 9,530,895 $ 3,078,565 $ 26,318 $ 56,308 $ (6,697,897) $ 328,193 $ (6,369,704) $ General Revenues: Taxes: Property taxes levied for general purposes 836,426 $ $ --- 836,426 $ Sales taxes 4,747,174 --- 4,747,174 Franchise taxes 365,155 --- 365,155 Other taxes 105,674 --- 105,674 Grants and contributions not restricted to specific programs 72,318 --- 72,318 Miscellaneous 447,973 95,079 543,052 Gain on sale (loss) of assets (6,417) --- (6,417) Transfers 414,009 (414,009) --- Total General Revenues and Transfers 6,982,312 $ (318,930) $ 6,663,382 $ Changes in Net Assets 284,415 $ 9,263 $ 293,678 $ Net Assets - beginning 20,711,960 7,303,742 28,015,702 Net Assets - ending 20,996,375 $ 7,313,005 $ 28,309,380 $ Program Revenues Net (Expense) Revenue and Changes in Net Assets Activities CITY OF LAKE WORTH, TEXAS BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2005 See accompanying notes to basic financial statements.<br><br> 11 ECONOMIC CAPITAL OTHER TOTAL DEBT DEVELOPMENT PROJECT GOVERNMENTAL GOVERNMENTAL GENERAL SERVICE CORPORATION FUND FUNDS FUNDS ASSETS Pooled cash and cash equivalents 82,523 $ 8,817 $ $ --- 1,475 $ 3,326 $ 96,141 $ Non-pooled cash and cash equivalents 275 --- 720 --- 4,552 5,547 Pooled investments 1,585,599 158,200 --- 7,004,034 456,346 9,204,179 Non-pooled investments --- --- 840,258 --- --- 840,258 Receivable: Taxes 49,445 11,570 --- --- --- 61,015 Accounts 96,642 --- --- --- --- 96,642 Other 394 41 --- 8 238 681 Due from other funds - major 18,457 64,079 --- --- --- 82,536 Due from other governments 166,187 --- 81,696 --- 80,736 328,619 TOTAL ASSETS 1,999,522 $ 242,707 $ 922,674 $ 7,005,517 $ 545,198 $ 10,715,618 $ Liabilities: Accounts payable 219,675 $ $ --- 4,037 $ 117,335 $ 27,758 $ 368,805 $ Accrued expenses 102,354 --- 2,138 29,942 7,823 142,257 Deferred revenue 48,603 11,347 --- --- --- 59,950 Due to other funds - major 9,735 29,942 28 --- --- 39,705 Payable to other governments 52,003 --- --- --- --- 52,003 Total Liabilities 432,370 $ 41,289 $ 6,203 $ 147,277 $ 35,581 $ 662,720 $ Fund Balances Reserved for: Debt service $ --- 201,418 $ $ --- $ --- $ --- 201,418 $ Economic development --- --- 916,471 --- --- 916,471 Special revenue crime control district --- --- --- --- 328,054 328,054 Special revenue street maintenance --- --- --- --- 181,563 181,563 Capital projects funds --- --- --- 6,858 ,240 --- 6,858,240 Other 237,428 --- --- --- --- 237,428 Unreserved Designated Various 90,781 --- --- --- --- 90,781 Undesignated 1,238,943 --- --- --- --- 1,238,943 Total Fund Balances 1,567,152 $ 201,418 $ 916,471 $ 6,858,240 $ 509,617 $ 10,052,898 $ TOTAL LIABILITIES AND FUND BALANCES 1,999,522 $ 242,707 $ 922,674 $ 7,005,517 $ 545,198 $ 10,715,618 $ LIABILITIES AND FUND BALANCES CITY OF LAKE WORTH, TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS AS OF SEPTEMBER 30, 2005 See accompanying notes to basic financial statements. 12 otal Fund Balance - Government Funds - page 11 10,052,898 $ Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. These assets consist of: Land 592,971 $ Infrastructure 19,720,835 Buildings and improvements 4,812,513 Equipment and vehicles 1,635,282 Office furniture and fixtures 166,372 Assets under capital leases 1,001,807 Construction in progress 1,715,470 Accumulated depreciation (2,066,111) 27,579,139 $ 27,579,139 Some expenditures in the governmental funds represent the purchase of capital assets which are included in the listing of capital assets above Some revenues in the governmental funds are deferred because they are not collected within the prescribed time period after year-end.<br><br> However, on the accrual basis those revenues would be recognized, regardless of when they are collected. 59,951 Some long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Those liabilities consist of: Compensated absences 114,081 $ Accrued interest 211,381 Capital leases 635,151 Certificates of obligations 15,735,000 16,695,613 $ (16,695,613) et Assets of Governmental Activities - page 9 20,996,375 $ CITY OF LAKE WORTH, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2005 See accompanying notes to basic financial statements.<br><br> 13 ECONOMIC CAPITAL OTHER TOTAL DEBT DEVELOPMENT PROJECTS GOVERNMENTAL GOVERNMENTAL GENERAL SERVICE CORPORATION FUND FUNDS FUNDS Revenues: Property taxes 644,677 $ 187,912 $ $ --- $ --- $ --- 832,589 $ Sales taxes 2,399,181 --- 1,199,591 --- 1,148,402 4,747,174 Franchise taxes 365,155 --- --- --- --- 365,155 Other taxes 105,674 --- --- --- --- 105,674 Licenses and permits 361,434 --- --- --- --- 361,434 Charges for services 142,104 --- --- --- --- 142,104 Fine and forfeits, etc. 493,335 --- --- --- --- 493,335 Miscellaneous revenues 436,857 6,238 28,439 180,758 11,490 663,782 TOTAL REVENUES 4,948,417 $ 194,150 $ 1,228,030 $ 180,758 $ 1,159,892 $ 7,711,247 $ Expenditures: Current Mayor and council 43,666 $ $ --- $ --- $ --- $ --- 43,666 $ General expense 1,114,079 --- 134,813 --- --- 1,248,892 Police department 1,567,251 --- --- --- 195,130 1,762,381 Fire department 784,669 --- --- --- --- 784,669 Street department 1,029,790 --- --- --- 317,503 1,347,293 Library 171,221 --- --- --- --- 171,221 Park department 256,636 --- --- --- --- 256,636 Maintenance department 143,440 --- --- --- --- 143,440 Senior Citizens program 66,153 --- --- --- --- 66,153 Inspections and permits 192,740 --- --- --- --- 192,740 Municipal Court 133,137 --- --- --- --- 133,137 Information technology 123,283 --- --- --- --- FALSE Animal control 44,570 --- --- --- --- 44,570 Emergency management 1,148 --- --- --- --- 1,148 Debt Service: Principal retirement --- 709,415 --- --- --- 709,415 Issuance costs --- --- --- 51,565 --- 51,565 Interest and fiscal charges --- 532,393 --- --- --- 532,393 Capital outlay --- --- 559,126 1,971,378 360,664 2,891,168 TOTAL EXPENDITURES 5,671,783 $ 1,241,808 $ 693,939 $ 2,022,943 $ 873,297 $ 10,503,770 $ EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (723,366) $ (1,047,658) $ 534,091 $ (1,842,185) $ 286,595 $ (2,792,523) $ CITY OF LAKE WORTH, TEXAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2005 See accompanying notes to basic financial statements. 14 ECONOMIC CAPITAL OTHER TOTAL DEBT DEVELOPMENT PROJECTS GOVERNMENTAL GOVERNMENTAL GENERAL SERVICE CORPORATION FUND FUNDS FUNDS Other financing sources (uses): Transfers in 663,963 $ 1,054,977 $ $ --- $ --- $ --- 1,718,940 $ Transfers (out) (207,220) --- (885,121) (51,798) (160,793) (1,304,932) Sale of assets 15,201 --- --- --- 26,537 41,738 Proceeds from certificates of obligation --- --- --- 6,000,000 --- 6,000,000 Proceeds from leases 4,706 --- --- --- 205,9 52 210,658 TOTAL OTHER FINANCING SOURCES (USES) 476,650 $ 1,054,977 $ (885,121) $ 5,948,202 $ 71,696 $ 6,666,404 $ NET CHANGE IN FUND BALANCES (246,716) $ 7,319 $ (351,030) $ 4,106,017 $ 358,291 $ 3,873,881 $ FUND BALANCE - OCTOBER 1 1,813,868 194,099 1,267,501 2,752,223 151,326 6,179,017 FUND BALANCE - SEPTEMBER 30 1,567,152 $ 201,418 $ 916,471 $ 6,858,240 $ 509,617 $ 10,052,898 $ CITY OF LAKE WORTH, TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2005 See accompanying notes to basic financial statements.<br><br> 15 Net Change in Fund Balances - Total Government Funds - page 14 3,873,881 $ Amounts reported by governmental activities in the statement of activities as reported on page 10 are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets are allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays ($2,463,593) exceed depreciation ($331,249) in the current period.<br><br> 2,132,344 In the statement of activities, only the gain (loss) from the sale of fixed assets is reported , whereas in the governmental funds, the proceeds from the sale increase financial resources. Thus, the change in net assets differs in the change in fund balance by the net cost of the assets sold. (48,155) Revenues in the statement of activities that do not provide current financial resources are not reported as revenue in the funds.<br><br> (4,416) Certificate of obligations and capital leases proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of notes payable, capital leases and certificates of obligation principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. This the amount by which preceeds($6,210,658) exceeds principal payments ($709,415).<br><br> (5,501,243) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (167,996) Change in Net Assets of Governmental Activities - page 10 284,415 $ CITY OF LAKE WORTH, TEXAS STATEMENT OF NET ASSETS PROPRIETARY FUND FOR THE YEAR ENDED SEPTEMBER 30, 2005 See accompanying notes to basic financial statements. 16 Enterprise Fund Water and Sewer ASSETS Current Assets: Pooled cash and cash equivalents 4,443 $ Non-pooled cash and cash equivalents 400 Non-pooled investments 658,572 Receivables, net 221,639 Miscellaneous receivable 665 Inventories 29,759 Due from other funds --- Total Current Assets 915,478 $ Noncurrent Assets: Capital Assets: Land and improvements 46,240 $ Buildings 119,938 Distribution and collection systems 8,318,430 Equipment and vehicles 541,393 Assets under capital leases 732,294 Less accumulated depreciation (2,997,457) Total Noncurrent Assets 6,760,838 $ TOTAL ASSETS 7,676,316 $ LIABILITIES Current Liabilities: Accounts payable 172,802 $ Accrued expenses 6,902 Compensated absences 5,414 Due to other funds 42,831 Meter deposits 32,470 Capital leases payable 22,032 Total Current Liabilities 282,451 $ Noncurrent Liabilities: Meter deposits 80,860 $ Capital leases payable --- Total Noncurrent Liabilities 80,860 $ TOTAL LIABILITIES 363,311 $ NET ASSETS Invested in capital assets, net of related debt 6,738,806 $ Unrestricted 574,199 TOTAL NET ASSETS 7,313,005 $ CITY OF LAKE WORTH, TEXAS STATEMENT REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUND FOR THE YEAR ENDED SEPTEMBER 30, 2005 See accompanying notes to basic financial statements.<br><br> 17 Enterprise Fund Water and Sewer Operating Revenues: Charges for services: Water charges 1,145,280 $ Wastewater charges 821,950 Miscellaneous 5,543 TOTAL OPERATING INCOME 1,972,773 $ Operating Expenses: Personal services 202,219 $ Contractual services 258,330 Water purchased 275,559 Disposal charge - wastewater 378,819 Supplies 53,557 Maintenance 156,366 General and administrative 91,970 Depreciation 280,904 TOTAL OPERATING EXPENSES 1,697,724 $ OPERATING INCOME (LOSS) 275,049 $ Nonoperating Revenues (Expenses): Interest revenue 15,397 $ Miscellaneous income 79,682 Gain on sale of assets --- Interest expense and fiscal charges (3,164) TOTAL NONOPERATING REVENUES (EXPENSES) 91,915 $ INCOME (LOSS) BEFORE CONTRIBUTIONS AND TRANSFERS 366,964 $ Capital contributions 56,308 $ Transfers in 152,743 Transfers (out) (566,752) CHANGE IN NET ASSETS 9,263 $ TOTAL NET ASSETS - BEGINNING 7,303,742 $ TOTAL NET ASSETS - ENDING 7,313,005 $ CITY OF LAKE WORTH, TEXAS STATEMENT OF CASH FLOWS INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FOR THE YEAR ENDED SEPTEMBER 30, 2005 See accompanying notes to basic financial statements. 18 Enterprise Fund Water and Sewer Cash Flows From Operating Activities: Receipts from customers 1,932,672 $ Payments to suppliers (1,179,639) Payments to employees (202,167) Other receipts 20,087 Net Cash Provided (Used) by Operating Activities 570,953 $ Cash Flows From Noncapital Financing Activities: Transfers from other funds 196,715 $ Transfers to other funds (567,341) Net Cash Provided (Used) by Noncapital Financing Activities (370,626) $ Cash Flows From Capital and Related Financing Activities: Proceeds capital lease $ --- Purchase of capital assets (75,760) Proceeds from sale of capital asset --- Payment for water tower leases, etc 79,682 Principal payments on notes payable --- Principal payments on capital leases (68,815) Interest paid on notes payable and capital leases (4,133) Net Cash Provided (Used) by Capital and Related Financing Activities (69,026) $ Cash Flows From Investing Activities: Purchase of investments (1,280,402) $ Proceeds from maturity of investments 1,096,444 Interest earned from investments 15,386 Net Cash Provided (Used) by Investing Activities (168,572) $ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (37,271) $ CASH AND CASH EQUIVALENTS BEGINNING OF YEAR 42,114 CASH AND CASH EQUIVALENTS END OF YEAR 4,843 $ Reconciliation of Operating Income (Loss) to Net Cash Provided By Operating Activities Operating income (loss) 275,049 $ Adjustments to reconciles operating income to net cash provided by operating activities: Depreciation 280,904 Change in assets and liabilities: Receivables - net (34,558) Miscellaneous receivable 1,325 Inventories (2,649) Accounts payable 37,611 Accrued wages 3 Accrued compensated absences 49 Meter deposits 13,219 NET CASH PROVIDED BY OPERATING ACTIVITIES 570,953 $ NON-CASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: Assets contributed 54,688 $ Assumption of capital lease 1,620 CITY OF LAKE WORTH, TEXAS NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2005 19 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INTRODUCTION The financial statements of the City of Lake Worth, Texas are prepared in accordance with Generally Accepted Accounting Principles (GAAP) that are generally accepted in the United States of America. The Governmental Accounting Standards Board (GASB) is the accepted standards setting body for establishing governmental accounting and financial reporting principles.<br><br> The City follows all relevant GASB pronouncements. Under GASB Statement No. 20, Accounting and Reporting for Proprietary Fund and Other Governmental Entities That Use Proprietary Fund Accounting , all proprietary funds will continue to follow Financial Accounting Standards Board (FASB) standards issued on or before November 30, 1989.<br><br> However, from that date forward, proprietary funds have the option of either: (1) choosing not to apply future FASB standards (including amendments of earlier pronouncements), or (2) continuing to follow new FASB pronouncements (unless they conflict with GASB guidance). The City has chosen not to apply future FASB standards. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.<br><br> The following is a summary of such significant policies. REPORTING ENTITY AND SERVICES Form of Government : As a result of the propositions approved February 1, 2003, the City operates under the Council-Manager form of government. The Council is comprised of the Mayor and seven Council members, who enact local laws, determine policies and adopt the annual budget.<br><br> The Manager is appointed by the Council and is responsible for the daily management of the City. Services: Major services provided by general government and enterprise functions are: public safety (police and fire), highway and streets, sanitation, health and social services, culture-recreation, public improvements, planning and zoning, water supply, sewer disposal, and general and administrative services. Reporting Unit: As required by GAAP, these financial statements present the City (the primary government) and its component units, entities for which the government is considered to be financially accountable.<br><br> Component units are organizations for which the City is financially accountable and all other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the reporting entity 9s financial statements to be misleading or incomplete. Financial accountability exists if the City appoints a voting majority of an organization 9s governing board and is either able to impose its will on that organization or there is potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the City. The City may be financially accountable for governmental organizations with a separately elected governing board, a governing board appointed by another government, or a jointly appointed board that is fiscally dependent on the City.<br><br> The financial statements of the component units may be discretely presented in a separate column from the primary government or blended with the financial statements of the primary government. CITY OF LAKE WORTH, TEXAS NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2005 20 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The financial statements of the following component units have been cblended d with those of the City because (i) their governing bodies are substantially the same as the governing body of the City or (ii) the component unit provides services entirely for the City. The Lake Worth Development Corporation The Lake Worth Development Corporation is governed by a seven member board of directors appointed by the City Council.<br><br> Beginning July 1, 1996, a one-half cent sales tax was levied within the city limits for the purpose of benefiting and accomplishing public purposes on behalf of the City for the citizens of Lake Worth, Texas. The City of Lake Worth Crime Control and Prevention District The City of Lake Worth Crime Control and Prevention District is governed by an eight member board of directors appointed by the City Council. Citizens, by a vote held February 7, 2004, approved a one-quarter cent sales tax to be levied within the city limits effective July 1, 2004 for the purpose of crime control and protection of the citizens of the City of Lake Worth, Texas.<br><br> The City of Lake Worth Street Maintenance Fund The City Lake Worth Street Maintenance Fund is for the depositing of a one-quarter cent sales tax. The levy for this sales tax was approved by a vote of the citizens held on February 7, 2004. The purpose of the levy of this sales tax is for maintaining and repairing municipal streets existing on the date of the election.<br><br> Individual audited financial statements of the component units are not issued. Management issued financial statements are available at the City 9s administration building. The City has no component units reported discretely.<br><br> BASIS OF PRESENTATION Government-Wide Statements The two government-wide financial statements, the Statement of Net Assets and the Statement of Activities, display information on all the nonfiduciary activities of the City. Material eliminations have been made to the government-wide financial statements to minimize the double counting of internal activities. These statements distinguish between the governmental and business-type activities of the City.<br><br> Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The Statement of Activities presents a comparison between direct expenses and program revenues for the different business-type activities of the City and for each function of the City 9s governmental activities.<br><br> Direct expenses are those that are clearly identifiable with a specific program. Indirect expenses have been allocated based on the direct expenses of the activities. Program revenues include charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function.<br><br> They also include operating and capital grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported as general revenues. CITY OF LAKE WORTH, TEXAS NOTES TO THE BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2005 21 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Fund Financial Statements The City segregates transactions related to certain functions or activities in separate funds in order to aid financial management and to demonstrate legal compliance.<br><br> Separate statements, that emphasize major funds, are provided for each fund category, governmental and proprietary. To emphasize the major governmental and enterprises funds, each major fund is displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds.<br><br> Major Governmental Funds Governmental funds are those through which most governmental functions are typically financed. The measurement focus of governmental funds is on the sources, uses and balance of financial resources. The City reports the following major governmental funds: General Fund This is the main operating fund of the City.<br><br> The fund is used to account for all the financial resources that are not accounted for in other funds. All general tax revenues and other receipts that are not restricted by law or contractual agreement to some other fund are accounted for in this fund. General operating expenditures, fixed charges and capital improvement costs that are not paid through other funds are paid from the General Fund.<br><br> Debt Service Fund This fund accounts for the accumulation of financial resources for the payment of principal, interest and related costs on long-term obligations paid primarily from taxes levied or collected by the City. The fund balance of the Debt Service Fund is reserved to signify the amounts that are restricted exclusively for debt service expenditures. Economic Development Corporation This fund is a blended special revenue fund that accounts for the one-half cent sales tax levied within the city limits for the purpose of benefiting and accomplishing public purposes on behalf of the City for the citizens of Lake Worth, Texas.<br><br> This money by law is restricted to certain type expenditures. Accordingly the fund balance is reserved to signify restrictions imposed by State law. Capital Project Fund Capital Project Funds are used to account for financial resources to be used for the<br><br>

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