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Home My WebLink About2000-09-30 Audit Balukoff Lindstrom Financial 9-30-2000Financial Statements CITY OF MERIDIAN, IDA jjp f: JAN 1 6 2601 ME RIDIAN' CITY TREASURER September 30, 2000 I TABLE OF CONTENTS Page No. INDEPENDENT AUDITORS' REPORT.................................................................. 1 GENERAL PURPOSE FINANCIAL STATEMENTS Combined Balance Sheet - All Fund Types and Account Groups ......................... 3 Combined Statement of Revenues, Expenditures and Changes in Fund Balance - All Governmental Fund Types ................................................... 7 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund ...................................................... 8 Statement of Revenues, Expenses and Changes in Retained Earnings - Enterprise Fund................................................................... 9 Statement of Cash Flows - Enterprise Fund............................................................ 10 Notes to Financial Statements................................................................................. 11 OTHER FINANCIAL INFORMATION General Fund Statement of Revenues - Budget and Actual ....................................................... 24 Statement of Expenditures - Budget and Actual ..........................................:....... 26 Enterprise Fund Statement of Revenues - (Non -GAAP Budgetary Basis) Budget and Actual..... 29 Statement of Expenses - (Non -GAAP Budgetary Basis) Budget and Actual ..... 30 Other Operationin Tax Rolls.......................................................................................... 31 OTHER INFORMATION Independent Auditors' Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditing Standards..... 33 BALUKOFF LINDSTROM & Co., P.A. INDEPENDENTAUDITORS' REPORT Mayor and Members of the City Council City of Meridian, Idaho Meridian, Idaho We have audited the accompanying general purpose financial statements of City of Meridian, Idaho, as of and for the year ended September 30, 2000, as listed in the table of contents. These general purpose financial statements are the responsibility of the management of City of Meridian, Idaho. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the City of Meridian, Idaho, as of September 30, 2000, and the results of its operations and the cash flows of its proprietary fund types for the year ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued a report dated December 14, 2000, on our considerationof City of Meridian's internal control over financial reporting and on our tests of its compliance with certain provisions of laws and regulations. That report is an integral part of an audit performed in accordance with GovernmentAuditing Standards and should be read in conj unction with this report in considering the results of our audit. -1- Mayor and Members of the City Council City of Meridian, Idaho Meridian, Idaho Our audit was performed for the purpose of forming an opinion on the general purpose financial statements of the City of Meridian, Idaho, taken as a whole. The other financial information listed in the table of contents is presented for purposes for additional analysis and is not a required part of ? the financial statements of the City of Meridian, Idaho. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial h statements taken as a whole. t December 14, 2000 -2- Account Groups General General Fixed Long -Term Assets Debt Totals (Memorandum Only) 2000 1999 _ $ 7,189,827 28,664,502 1,413,356 4,729,061 18,206 557,670 32,593 341,157 8,001 549,172 2,803,451 6,081,920 - 13,402,508 2,253,300 - 4,284,815 - - 36,860,216 2,475,506 - 8,300,133 493,070 - 9,022,660 - - (11,630,233) $ 5,754,733 30,883,293 1,770,319 4,151,486 30,312 616,234 11,649 246,366 3,555 556,414 208,686 10,932 10,992,214 4,155,509 31,443,044 6,534,519 6,163,930 (10,342,207) - 231,607 231,607 178,101 $ 11,303,796 $ 231,607 $ 106,778,702 $ 93,369,089 See accompanying notes -4- Account Groups General General Fixed Long -Term Assets Debt Totals (Memorandum Only) 2000 1999 $ $ $ 1,502,371 $ 2,240,008 - 190,236 181,297 221,269 289,751 215,442 _ - 1,473 4,621,201 4,063,990 _ - 190,000 6,790 6,790 6,402 - 137,458 70,678 3,548 3,548 10,338 231,607 6,751,355 6,979,628 11,303,796 - 11,303,796 8,763,862 _ - 54,153,820 47,770,400 _ - 11,520 219,618 _ - 23,362,814 19,648,942 _- 908,265 485,736 _ - 2,032,025 471,011 - 772,657 734,565 - 7,482,450 8,295,327 _ - 34,569,731 29,855,199 11,303,796 - 100,027,347 86,389,461 $ 11,303,796 $ 231,607 $ 106,778,702 $ 93,369,089 See accompanying notes -6- REVENUES Taxes Licenses and permits Intergovernmental Fines and forfeitures Charges for services Interest Miscellaneous CITY OF MERIDIAN, IDAHO COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - ALL GOVERNMENTAL FUND TYPES Year Ended September 30, 2000 With Comparative Totals for 1999 TOTAL REVENUES EXPENDFURES General government - Public safety Highway and streets Culture and recreation Capital outlay TOTAL EXPENDITURES EXCESS OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES Operating transfer in EXCESS OF REVENUES AND OTHER FINANCING SOURCES OVER EXPENDITURES Governmental Fund Types Totals Capital (Memorandum Only) General Projects 2000 1999 $ 4,239,026 $ - $ 4,239,026 $ 3,642,678 1,942,669 - 1,942,669 1,496,721 2,414,581 - 2,414,581 1,776,513 4,310 - 4,310 5,572 1,247,260 - 1,247,260 1,171,024 533,771 26,772 560,543 437,443 47,629 - 47,629 111,064 10,429,246 26,772 10,456,018 8,641,015 2,219,142 - 2,219,142 1,275,847 4,244,566 - 4,244,566 4,332,160 96,144 - 96,144 81,826 458,900 - 458,900 444,434 2,359,626 - 2,359,626 1,486,488 9,378,378 - 9,378,378 7,620,755 1,050,868 26,772 1,077,640 1,020,260 131,118 - 131,118 - 1,181,986 26,772 1,208,758 1,020,260 FUND BALANCE AT BEGINNING OF YEAR 9,515,628 471,011 9,986,639 8,966,379 FUND BALANCE AT END OF YEAR $ 10,697,614 $ 497,783 $ 11,195,397 $ 9,986,639 See accompanying notes -7- CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERALFUND Year Ended September 30, 2000 REVENUES Taxes Licenses and permits Intergovernmental Fines and forfeitures Charges for services Interest Miscellaneous TOTAL REVENUES EXPENDITURES General government Public safety Highways and streets Culture and recreation Capital outlay TOTAL EXPENDITURES EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES Operating transfer in FUND BALANCE AT BEGINNING OF YEAR FUND BALANCE AT END OF YEAR Budget $ 4,090,000 1,627,250 2,297,323 8,000 1,227,000 237,727 67,200 9,554,500 3,406,805 4,320,710 98,000 540,500 3,316,485 11,682,500 $ (2,128,000) See accompanying notes -8- General Fund 1,050,868 $ 3,178,868 131,118 9,515,628 $ 10,697,614 Variance Favorable Actual (Unfavorable) $ 4,239,026 $ 149,026 1,942,669 315,419 2,414,581 117,258 4,310 (3,690) 1,247,260 20,260 533,771 296,044 47,629 (19,571) 10,429,246 874,746 2,219,142 1,187,663 4,244,566 76,144 96,144 1,856 458,900 81,600 2,359,626 956,859 9,378,378 2,304,122 1,050,868 $ 3,178,868 131,118 9,515,628 $ 10,697,614 { OPERATING REVENUES Charges for services Water revenues Sewer revenues Sale of meters Latecomers fees Miscellaneous OPERATING EXPENSES Personal services Other services and charges Depreciation Supplies Heat, lights and power CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS - ENTERPRISE FUND Year Ended September 30, 2000 With Comparative Totals for 1999 TOTAL OPERATING REVENUES TOTAL OPERATING EXPENSES OPERATING INCOME NONOPERATING REVENUES (EXPENSES) Interest revenue Loss on sale of fixed assets Loss on sale of investments Net decrease in fair value of investments Interest expense TOTAL NONOPERATING REVENUES INCOME BEFORE OPERATING TRANSFERS Operating transfer out NET INCOME ¢ Add depreciation of fixed assets that reduces contributed capital j INCREASE IN RETAINED EARNINGS RETAINED EARNINGS AT BEGINNING OF YEAR RETAINED EARNINGS AT END OF YEAR I See accompanying notes j -9- 2000 1999 $ 2,925,854 $ 2,585,074 2,767,008 2,393,808 187,650 178,820 75,741 328,599 41,937 33,415 4,496,135 5,998,190 5,519,716 1,827,629 1,765,705 807,045 1,187,742 1,338,976 1,166,539 155,855 246,664 248,971 129,485 4,378,476 4,496,135 1,619,714 1,023,581 1,635,539 1,302,482 (42,479) - (18,394) (3,228) (54,470) (69,056) (17,121) (32,863) 1,503,075 1,197,335 3,122,789 2,220,916 (131,118) - 2,991,671 2,220,916 514,103 434,035 3,505,774 2,654,951 19,868,560 17,213,609 $ 23,374,334 $ 19,868,560 CITY OF MERIDIAN, IDAHO STATEMENT OF CASH. FLOWS - ENTERPRISE FUND Year Ended September 30, 2000 With Comparative Totals for 1999 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES 18,115,776 17,057,661 Operating income $ 1,619,714 $ 1,023,581 Adjustments to reconcile operating income to net cash provided by operating activities 1,245,435 (7,195,335) Depreciation 1,338,976 1,166,539 Changes in assets and liabilities CASH EQUIVALENTS t 7 Accounts receivable 424,635 (172,746) Assessments and interest receivable 12,106 5,363 Due from other governments - 13,553 Accounts payable (503,330) (26,540) Accrued payroll and taxes 19,659 6,066 Customer deposits (47,710) NET CASH PROVIDED BY 3,992,749 $ 3,592,222 OPERATING ACTIVITIES 2,911,760 1,968,106 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Operating transfer to general fund (131,118) NET CASH USED BY NONCAPITAL FINANCING ACTIVITIES (131,118) - `q CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES ( Payments on bonds payable (190,000) (170,000) 11 Interest paid (18,594) (34,180) Contributed capital 2,799,584 2,855,915 Acquisition of capital assets (6,036,672) - (4,912,898) NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (3,445,682). (2,261,163) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investments (18,431,359) (25,487,768) Sale of investments 18,115,776 17,057,661 Interest received 1,561,018 1,234,772 NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 1,245,435 (7,195,335) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 580,395 (7,488,392) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 3,576,821 11,065,213 CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,157,216 $ .3,576,821 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Developer and customer contributed sewer and water lines $ 3,992,749 $ 3,592,222 I Donated land $ 105,190 $ - t See accompanying notes -10- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES City of Meridian, Idaho (City) was incorporated August, 1903. The City operates under a mayor and council form of government and provides the following services as authorized by its charter: public safety (police and fire), streets, culture and recreation, planning and zoning, and general administrative services. The financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described below. The accounting and reporting policies of the City relating to the funds and account groups included in the accompanying combined financial statements conform to generally accepted accounting principles applicable to state and local governments. Generally accepted accounting principles for local governments include those principles prescribed by the GASB, the American Institute of Certified Public Accountants in the publication entitled Audits of State and Local Governmental Units and by the Financial Accounting Standards Board (when applicable). As allowed in Section P80 of GASB's Codification of Governmental Accounting and Financial Reporting Standards, the City has elected not to apply to its proprietary activities Financial Accounting Standards Board Statements and Interpretations, Accounting Principles Board Opinions, and Accounting Research Bulletins of the Committee of Accounting Procedure issued after November 30, 1989. Financial Reporting Entity As required by generally accepted accounting principles, these general purpose financial statements present the City in conformance with GASB Statement No. 14, "The Financial Reporting Entity." Under Statement No. 14, component units are organizations that are included in the reporting entity because of the significance of their operational or financial relationships with the City. For financial reporting purposes, management has considered all potential component units which are controlled or whose boards are appointed by the City Council. Control by the City was determined on the basis of budget adoption, the selection of management, the ability to significantly influence operations, accountability for fiscal matters and other factors. Based on this criteria, there were no component units included in the City's report. The City contributes to the multi-employer Public Employer Retirement System of Idaho (the System). The System is administered by the State of Idaho and the City is not the major participant in the plan; therefore, the plan financial statements are not included in this report. -11- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 Fund Accounting The accounts of the City are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for within a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Government resources are allocated to, and accounted for in individual funds based upon the purposes for which they are to be spent and the years by which spending activities are controlled. The various funds are grouped, in the financial statements in this report, into two fund types and one account group as follows: Governmental Funds General Fund - The General Fund is the general operating fund of the City. It is used for all financial resources except those required to be accounted for in another fund. Capital Projects Fund- The Capital Projects Fund is used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds). Proprietary Fund Enterprise Fund — The Enterprise Fund is used to account for operations financed and operated in a manner similar to private business when the intent of the governing body is that costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or the governing body has decided that periodic determination of revenues earned, expenditures incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Account Groups The account groups are used to establish accounting control and accountability for the City's general fixed assets and general long-term obligations. Because these assets and obligations are long-term, they are not spendable resources and do not require current appropriation. These account groups are not funds since they only measure financial position and not operations. General Fixed Assets Account Group - To account for all fixed assets required for general City purposes, excluding fixed assets of the proprietary funds. General Long -Term Debt Account Group — To account for long-term obligations of the City, except for those accounted for in proprietary and trust funds. This group includes the long-term obligations of the City for certain capital leases and accrued vacation. -12- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 Measurement Focus The accounting and reporting treatment applied to a fund is determined by its measurement focus. Governmental funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and current liabilities are generally included on the balance sheet. Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. All proprietary funds are accounted for on a cost of services or 'capital maintenance" measurement focus. This means that all assets and all liabilities (whether current or non-current) associated with this activity are included on their balance sheets. Their reported fund equity (net total assets) is segregated into contributed capital and retained earnings components. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets. Basis of Accounting ! Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurement made, regardless of the measurement focus applied. Governmental funds are accounted for using the modified accrual basis of accounting. The revenues are recognized when they become measurable and available as net current assets. The revenues susceptible to accrual are property taxes, special assessments, charges for service, interest income and intergovernmental revenues. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred. Proprietary funds are accounted for using the accrual basis of accounting. Revenues are recognized when earned and expenses are recognized when incurred. Budgets and Budgetary Accounting The City follows these procedures in establishing the budgetary data reflected in the financial statements: Prior to September 1, the City Clerk, Mayor and City Council prepare a proposed operating budget for the fiscal year commencing on October 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted at City Hall to obtain taxpayer comments. Prior to October 1, the budget is legally enacted through passage of an ordinance. -13- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP) for the general fund. Budgets for enterprise funds are not legally required but are adopted on a non - GAAP basis. All annual appropriations lapse at fiscal year-end. The City Clerk is authorized to transfer budget amounts within departments and between departments within any fund. Revisions that alter the total expenditure appropriation of any fund must be approved by the City Council. State law does not allow fund expenditures to exceed fund appropriations. Formal budgetary integration is employed as a management control device during the year for all funds. Cash and Cash Equivalents For purposes of the statement of cash flows, the proprietary funds consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Investments Idaho Code provides authorization for the investment of funds as well as specific direction as to what constitutes an allowable investment. City policy is consistent with this direction. The City currently invests in interest bearing bank accounts, certificates of deposit and U.S. Government and U.S. Government Agency bonds. Property Taxes Receivable and Deferred Revenue Property taxes are recognized as revenue when the amount of taxes levied is measurable, and proceeds are available to finance current period expenditures. Available tax proceeds includes property tax receivables expected to be collected within sixty days after year end. Property taxes attach as liens on properties on January 1, and are levied in September of each year. Tax notices are sent to taxpayers during November, with tax payments scheduled to be collected on or before December 20. Taxpayers may pay all or one half of their tax liability on or before December 20, and if one half of the amount is paid, they may pay the remaining balance by the following June 20. Since the City is on a September 30 fiscal year end, property taxes levied during September for the succeeding year's collection are recorded as deferred revenue at the City's year end and recognized as revenue in the following fiscal year. Ada County bills and collects taxes for the City. Customer Services Receivable Amounts owed to the City for customer services are due from area residents and businesses and relate to water, sewer and trash services provided by the City. -14- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 Property Plant and Equipment General Fixed Assets Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Asset Account Group, rather than in governmental funds. All material fixed assets are valued at cost. Donated fixed assets are valued at their estimated fair value on the date donated. No depreciation has been provided on general fixed assets. Public domain fixed assets consisting of roads, bridges, streets and sidewalks, and lighting systems are not capitalized. There are no public domain (infrastructure) assets included in the General Fixed Asset Account Group. Enterprise Fund Fixed Assets Capital additions, improvements and major renewals are classified as property, plant and equipment and are recorded at cost. Depreciation is recorded by use of the straight-line method. The book value of each asset is reduced by equal amounts over its estimated useful life as follows: Estimated Useful Life (Years) Buildings 30 Sewer plant 25 Sewer and water lines 50 Improvements other than buildings 10-50 Equipment 5-20 Maintenance, repairs and minor renewals are charged to operations as incurred. When an asset is disposed of, accumulated depreciation is deducted from the original cost, and any gain or loss arising from its disposal is credited or charged to operations. Compensated Absences Payable The City provides vacation and sick leave to its full -rime employees. Earned vacation is paid to employees when taken or paid to employees or beneficiaries upon the employees' termination, retirement or death. The City does not pay earned sick pay upon the employees' termination, retirement or death. The amount of unused vacation accumulated by City employees is accrued as expense when incurred in the Proprietary Fund, which use the accrual basis of accounting. In the Governmental Funds, only the amount that normally would be liquidated with expendable available financial resources is accrued as current year expenditures. Unless it is anticipated that compensated absences will be used in excess of a normal years accumulation, no additional expenditures are accrued. Therefore, the entire unpaid liability for the Governmental Funds is recorded in the General Long -Tenn Debt Account Group. -15- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 Bonded Indebtedness Revenue bonds are issued to provide funding for construction of water fund capital items. Revenues collected from water service fees are the primary source of monies to retire the bonds. Comparative Data Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding of the changes in the government's financial position and operations. P f Total Columns on the Combined Statements Total columns on the Combined Statements are captioned Memorandum Only to indicate they are presented only to facilitate financial analysis. Data in these columns does not present financial position. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. Risk Management The City is exposed to various risks of loss related to theft of, damage to, or destruction of assets. The City participates in a public entity risk pool, Idaho Counties Risk Management Pool (ICRMP), for liability, medical and disability insurance. The City's exposure to loss from its participation in ICRMP is limited only to the extent of their deductible. The City also partially self -insures health and accident insurance. Each fund accounts for uninsured risks of loss. Self-insurance is limited to the difference between the deductible paid by the employee and the deductible covered by the insurance policy. Fund Equity Contributions The following transactions are recorded as contributions in the Enterprise Fund: • Receipts of Federal grants for acquisition of fixed assets, net of the related accumulated depreciation. • Contributions from developers, customers and other governments for the acquisition of fixed assets normally capitalized by the City. -16- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 Reserved Fund Balance Reservations of fund balance represent amounts that are not appropriable or are legally segregated for a specific purpose. Reservations of retained earnings are limited to outside third -parry restrictions. Designations of fund balance represent tentative management plans that are subject to change. The proprietary fund's contributed capital represents equity acquired through capital grants and capital contributions from developers, customers or other funds. The City has established reserves to account for the resources received from donors for future park improvements. The City has also established a reserve to account for future fire truck purchases. Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the City. Estimates 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. Accordingly, actual results could differ from those estimates. NOTE B - DEPOSITS AND INVESTMENTS At year end, the carrying amount of the City's deposits was $7,738,999 and the bank balance was $7,719,051. Of the bank balance, $100,000 was covered by federal depository insurance and $7,619,051 was uninsured and uncollateralized. All cash is held in Farmers & Merchants State Bank located in Ada County, Idaho. Investments are categorized into these three categories of credit risk: 1. Insured or registered, or securities held by the entity or its agent in the entity's name. 2. Uninsured and unregistered, with securities held by the counterparty's trust department or agent in the entity's name. 3. Uninsured and unregistered, with securities held by the counterparty, or by its trust department or agent but not in the entity's name. -17- I CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 At year end, the government's investment balances were as follows: I Certificates of deposit $ 400,000 Money market accounts -- U.S. Government securities -- Repurchase agreements -- 400,000 Investments not required to be categorized due to their nature Investment in State of Idaho General Category $10,081,835 $20,302,620 30,784,455 30,709,500 Fund Investment Pool 758,453 758,453 Total investments $31,542,908 $31,467,953 A reconciliation of cash and investments as shown on the combined balance sheet follows: Cash and cash equivalents Cash and cash equivalents - restricted Investments Total Cash on hand Fair value of deposits Fair value of investments Total 0 $ 7,189,827 549,172 31,467,953 $ 39.206.952 $ 820 7,738,179 31,467,953 $ 39.206.952 Fair 2 3 Cost Value $9,636,316 $ -- $10,036,316 $10,036,316 583,596 583,596 583,596 -- 19,719,024 19,719,024 19,644,069 445.519 -- 445,519 445,519 $10,081,835 $20,302,620 30,784,455 30,709,500 Fund Investment Pool 758,453 758,453 Total investments $31,542,908 $31,467,953 A reconciliation of cash and investments as shown on the combined balance sheet follows: Cash and cash equivalents Cash and cash equivalents - restricted Investments Total Cash on hand Fair value of deposits Fair value of investments Total 0 $ 7,189,827 549,172 31,467,953 $ 39.206.952 $ 820 7,738,179 31,467,953 $ 39.206.952 CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 NOTE C - DUE FROM OTHER GOVERNMENTAL UNITS The following summarizes the intergovernmental receivables at September 30, 2000: State of Idaho Revenue sharing Liquor tax Department of Corrections Rural fire district Ada County Other Total NOTE D - CHANGES IN GENERAL FIXED ASSETS Changes to general fixed assets are as follows: $ 304,966 24,511 25 80,599 87,997 59,572 $ 557.670 Balance Balance Oct. 1, Sept. 30, 1999 Additions Deletions 2000 Land and buildings $ 3,918,555 Improvements other than buildings 2,130,196 Equipment 2,244,774 Construction in progress 470,337 $ 8,763,862 NOTE E — BONDS PAYABLE Refunded Debt $ 2,187,652 $ 24,287 $ 6,081,920 124,363 1,259 2,253,300 338,648 107,916 2,475,506 22,733 -- 493,070 $ 2,673,396 133 462 $ 11,303,796 The City has refunded water and sewer revenue bonds. The proceeds of the bond refunding issue, together with additional cash have been invested in U.S. Government obligations and placed in an irrevocable refunding escrow by the City. The maturing principal and interest of these investments will be used to pay the principal and interest of the redeemed bond issue as those payments fall due. As a result, the 1977 revenue bond is considered defeased and the City has removed the liability from the financial statements. At September 30, 2000, the outstanding principal of the defeased bond is $275,000. -19- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 NOTE F — CAPITAL LEASES The City entered into a capital lease agreement for the acquisition of a tractor. The lease has a term of five years with monthly payments of $602 and an interest rate of 5.9%. Assets acquired through capital leases are as follows: Balance Balance Oct. 1, Sept. 30, 1999 Additions Deletions 2000 Assets under capital lease $ 25,791 $ $ - $ 25.791 The future minimum lease obligation and the net present value of the minimum lease payments as of September 30, 2000 are as follows: Fiscal Year Principal Interest Total 2001 2002 $ 6,790 $ 428 NOTE G - DEFINED BENEFIT PENSION PLAN 3,548 $ 10,338 61 $ 7,218 3,609 $ 10.827 The Public Employee Retirement System of Idaho (PERSI), a cost sharing multiple -employer public retirement system, was created by the Idaho State Legislature. It is a defined benefit plan requiring that both the member and the employer contribute. The plan provides benefits based on members' years of service, age and compensation. In addition, benefits are provided for disability, death, and survivors of eligible members or beneficiaries. Designed as a mandatory system for eligible state and school district employees, the legislation provided for political subdivisions to participate by contractual agreement with PERSI. Financial reports for the plan are available from PERSI upon request. After 5 years of credited service, members become fully vested in retirement benefits earned to date. Members are eligible for retirement benefits upon attainment of the ages specified for their employment classification. For each year of credited service, the annual service retirement allowance is 2% or 2.225% (depending upon employee classification) of the average monthly salary for the highest consecutive 42 months. -20- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 For PERSI's year ended June 30, 2000, the required contribution rates, as determined by PERSI, are as follows: General Member Police and Fire Member Employee Employer 5.86% 9.77% 7.21% 10.01% Contributions required and paid were $475,259, $437,103, and $367,556 for the three years ended September 30, 2000, 1999, and 1998, respectively. NOTE H - SEGMENT INFORMATION Enterprise Funds The City maintains one enterprise fund. The Water/Sewer fund accounts for the provision of basic utility service (water, sewer services) to substantially all residents. Selected segment information for the year ended September 30, 2000 is as follows: Fixed asset additions $ 10,134,611 Fixed asset deletions $ 93,428 Net working capital $ 28,590,378 Capital contributions $ 6,897,523 NOTE I - CONTRIBUTED CAPITAL The changes in the City's contributed capital accounts for its proprietary funds were as follows: Balance at October 1, 1999 $ 47,770,400 Contribution sources Customers 3,772,859 Developers 3,124,664 Depreciation on contributed fixed assets (514,103) Balance at September 30, 2000 $ 54 153,820 NOTE J - RESERVED RETAINED EARNINGS AND RESTRICTED ASSET ACCOUNTS The balances of the City's restricted assets accounts in the enterprise funds are as follows: Deposits to be paid to customers $ 11,520 -21- CITY OF MERIDIAN, IDAHO NOTES TO FINANCIAL STATEMENTS September 30, 2000 NOTE K - OTHER COMMITMENTS The City has the following commitments at September 30, 2000: Commitment Amount $ 32,000 Purpose overland/Eagle Phase II Brown Construction Carrollo Engineers / Turnkey $ 34,000 Dewatering Project CH2M Hill $ 170,000 Water Tower Upgrade CH2M Hill $ 590,000 W WTP Lab Construction CH2M Hill / McAlvain $ 106,000 Water Storage Tank ITD $ 144,768 Park — Five Mile Pathway JUB Engineers $ $1,240,065 5,000 Waterline — Ustick Phase I Sewer Trunk—Five Mile Relief JUB Engineers Kellar and Associates / Turnkey $ 666,793 Tpad / Clarifier Kellar and Associates $ 700 Aeration Basin Kellar and Associates $1,293,161 Sewer Trunk — White Drain Pierce Manufacturing $ 137,837 2000 Fire Truck Riverside $ 337,000 Well #21 Construction Wright Brothers $ 69,417 Park — Generations Plaza II NOTE L - CONTINGENT LIABILITIES The City has been named as a defendant in various legal actions, the results of which are not presently determinable. However, in the opinion of the City Attorney, the amount of losses that might be sustained, if any, would not materially affect the City's financial position. Under the terms of federal and state grants, periodic audits are required and certain costs may be questioned as not being appropriate expenditures under the terms of the grants. Any disallowed Claims, including amounts already collected, could become a liability of the City. City management believes disallowances, if any, will not be material. -22_ OTHER FINANCIAL INFORMATION Taxes Property Penalties and interest CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES - BUDGET AND ACTUAL GENERAL FUND Year Ended September 30, 2000 Total taxes Licenses and permits Alcoholic beverage licenses Building and utility permits Dog licenses Miscellaneous Total licenses and permits Variance Favorable Budget Actual (Unfavorable) $ 4,085,000 $ 4,223,996 $ 138,996 5,000 15,030 10,030 4,090,000 4,239,026 149,026 14,975 1,571,000 20,000 21,275 1,627,250 19,881 1,876,154 26,605 20,029 1,942,669 4,906 305,154 6,605 (1,246) 315,419 Intergovernmental 72,000 107,288 35,288 State liquor apportionment 250,000 283,940 33,940 Court revenues 116,800 159,038 42,238 State sales tax State revenue sharing 1,004,300 1,059,554 55,254 Rural fire 615,927 613,483 (2,444) Grants 238,296 191,278 (47,018) Total intergovernmental 2,297,323 2,414,581 117,258 Fines and forfeitures Parking fines Total fines and forfeitures -24- 8,000 8,000 4,310 (3,690) 4,310 (3,690) CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES - BUDGET AND ACTUAL (Continued) i GENERALFUND Year Ended September 30, 2000 Variance Favorable j 9 Budget Actual (Unfavorable) Charges for services $ 22,000 $ 22,000 $ - Impact fees 355,000 402,776 47,776 Franchise fees 51,500 130,329 78,829 Filing fees 85,000 97,785 12,785 Special police services 150,000 171,358 21,358 Administrative fees 41,500 33,807 (7,693) Recreation programs 39,000 26,650 (12,350) Golf course expansion fees 8,000 8,582 582 Park reservation fees 475,000 353,973 (121,027) Park impact fees Total charges for services 1,227,000 1,247,260 20,260 237,727 533,771 296,044 Interest Miscellaneous 6,000 6,000 - �I Rent Property development 5,000 1,550 (3,450) Miscellaneous 56,200 40,079 (16,121) Total miscellaneous 67,200 47,629 (19,571) TOTAL REVENUES $ 9,554,500 $ 10,429,246 $ 874,746 V y9 I_ P -25- CITY OF MERIDIAN, IDAHO STATEMENT OF EXPENDITURES - BUDGET AND ACTUAL GENERALFUND Year Ended September 30, 2000 Budget GENERAL GOVERNMENT Legislative Personal services $ 50,464 Other services and charges 51,000 Total legislative 101,464 Executive Personal services 59,289 Other services and charges 22,289 Total executive 81,578 Administrative Personal services Other services and charges Unrealized loss on investments Total administrative Human resources Personal services Other services and charges Total human resources Planning and Zoning Personal services Other services and charges Total planning and zoning Building Department Personal services Other services and charges Total facilities maintenance Elections Personal services Total elections TOTAL GENERAL GOVERNMENT 348,221 1,456,820 1,805,041 58,142 33,700 91,842 236,480 310,260 546,740 126,440 645,700 772,140 8,000 8,000 3,406,805 -26- Variance Favorable Actual (Unfavorable) $ 43,713 25,235 68,948 54,466 17,031 71,497 284,925 509,057 1,621 795,603 57,182 31,972 89,154 229,263 235,096 464,359 65,429 661,851 727,280 2,301 2,301 2,219,142 $ 6,751 25,765 32,516 4,823 5,258 10,081 63,296 947,763 (1,621) 1,009,438 960 1,728 2,688 7,217 75,164 82,381 61,011 (16,151) 44,860 5,699 5,699 1,187,663 CITY OF MERIDIAN, IDAHO STATEMENT OF EXPENDITURES - BUDGET AND ACTUAL - GENERAL FUND (Continued) Year Ended September 30, 2000 Variance Favorable Budget Actual (Unfavorable) PUBLIC SAFETY Law Enforcement Personal services $ 2,695,846 $ 2,695,791 Other services and charges 312,800 307,292 Total law enforcement 3,008,646 3,003,083 Fire Department Personal services Other services and charges Total fire department Animal Control Personal services Other services and charges Total animal control TOTAL PUBLIC SAFETY HIGHWAY AND STREETS Highway and Streets Other services and charges Street lighting Total highway and streets TOTAL HIGHWAY AND STREETS 1,020,080 252,370 1,272,450 32,414 7,200 39,614 4,320,710 -27- 8,000 90,000 98,000 98,000 995,612 207,546 1,203,158 32,158 6,167 38,325 4,244,566 1,675 94,469 96,144 96,144 $ 55 5,508 5,563 24,468 44,824 69,292 256 1,033 1,289 76,144 6,325 (4,469) 1,856 1,856 CITY OF MERIDIAN, IDAHO STATEMENT OF EXPENDITURES - BUDGET AND ACTUAL - GENERAL FUND (Continued) Year Ended September 30, 2000 Variance Favorable Budget Actual (Unfavorable) CULTURE AND RECREATION Parks Personal services $ 300,932 $ 274,783 $ ` 26,149 Other services and charges 152,700 118,714 33,986 Total parks 453,632 393,497 60,135 Recreation Personal services 54,942 31,788 23,154 Other services and charges 31,926 33,615 (1,689) Total recreation 86,868 65,403 21,465 TOTAL CULTURE AND RECREATION 540,500 458,900 81,600 CAPITAL OUTLAY 137,815 2 111,46 Administrative 1 1441 ,441 (1,4441) Human resources 5,000 5,529 (529) Planning and zoning 1,000,000 1,006,121 (6,121) Law enforcement Fire department 1,187,550 931,713 255,837 Facilities maintenance 340,620 8,917 331,703 Parks 643,000 379,236 263,764 Recreation 2,500 - 2,500 TOTAL CAPITAL OUTLAY 3,316,485 2,359,626 956,859 TOTAL EXPENDITURES $ 11,682,500 $ 9,378,378 $ 2,304,122 i CITY OF MERIDIAN, IDAHO STATEMENT OF REVENUES - (NON -GAAP BUDGETARY BASIS) BUDGET AND ACTUAL ENTERPRISE FUND Year Ended September 30, 2000 Variance Favorable Budget Actual (Unfavorable) Charges for services: $ 3,003,500 $ 2,925,854 $ (77,646) Water revenues 2,693,900 2,767,008 73,108 Sewer revenues 217,800 187,650 (30,150) Sale of meters - 75,741 75,741 s Latecomers fees 4,000 41,937 37,937 Miscellaneous 978,450 1,635,539 657,089 Interest income Contributed capital: 2,572,430 1,864,550 (707,880) Sewer connections 1,207,745 935,034 (272,711) Water connections $ 10,677,825 $ 10,433,313 $ (244,512) a� I I -29- CITY OF MERIDIAN, IDAHO STATEMENT OF EXPENSES - (NON -GAAP BUDGETARY BASIS) BUDGET AND ACTUAL ENTERPRISE FUND Year Ended September 30, 2000 Water Personal services Supplies Heat, lights and power Other services and charges, including depreciation Capital outlay Bond redemption Total water Waste water Personal services Supplies Heat, lights and power Other services and charges, including depreciation Capital outlay Bond redemption Total waste water Construction Other services and charges, including depreciation 46,624 (46,624) Total expenses $ 14,995,671 $ 10,668,893 $ 4,326,778 -30- Variance Favorable Budget Actual (Unfavorable) $ 839,275 $ 709,774 $ 129,501 207,651 113,963 93,688 151,250 131,680 19,570 1,120,220 1,164,582 (44,362) 3,070,200 2,239,610 830,590 51,920 51,780 140 5,440,516 4,411,389 1,029,127 1,275,585 1,117,855 157,730 37,071 41,892 (4,821) 126,250 117,291 8,959 1,443,074 981,439 461,635 6,517,425 3,797,062 2,720,363 155,750 155,341 409 9,555,155 6,210,880 3,344,275 Construction Other services and charges, including depreciation 46,624 (46,624) Total expenses $ 14,995,671 $ 10,668,893 $ 4,326,778 -30- i ! CITY OF MERIDIAN, IDAHO OPERATION IN TAX ROLLS September 30, 2000 1 1995 1996 1997 1998 1999 Total Balance at October 1, 1999 $ 168 $ 1,836 $ 16,861 $ 47,916 $ $ 66,781 - - 4,213,147 4,213,147 Roll charge - - - - 17,680 17,680 Penalty - 168 1,836 16,861 47,916 4,230,827 4,297,608 Collections 168 1,836 13,022 29,045 4,135,938 4,180,009 - 268 1,383 23,214 24,865 Adjustments 168 1,836 13,290 30,428 4,159,152 4,204,874 6 Balance at September 30, 2000 $ - $ - $ 3,571 $ 17,488 $ 71,675 $ 92,734 OTHER INFORMATION BALUKOFF LINDSTROM & Co., P.A. INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF GENERAL PURPOSE FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTA UDITING STANDARDS Mayor and Members of the City Council City of Meridian, Idaho Meridian, Idaho We have audited the general purpose financial statements of City of Meridian, Idaho, as of and for the year ended September 30, 2000, and have issued our report thereon dated December 14, 2000. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether City of Meridian's general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered City of Meridian's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We -33- Mayor and Members of the City Council City of Meridian, Idaho Page 2 noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management of the City of Meridian, in a separate letter dated December 14, 2000. This report is intended solely for the information and use of the City Council and management and is not intended to be and should not be used by anyone other than these specified parties. December 14, 2000 I -34- Management Letter CITY OF MERIDIAN September 30, 2000 jadata\client files\meridian, city oflfiscal year 2000\audit\workpapers\report file\a-26.doc RALUKOFF LINDSTROM & Co., P.A. Certified Public Accountants 877 West Main Street, Suite 805 Boise, Idaho 83702 (208) 344-7150 FAX: (208) 344-7435 www.blco.com December 14, 2000 Mayor and Members of City Council City of Meridian, Idaho Meridian, Idaho In planning and performing our audit of the financial statements of City of Meridian, Idaho, for the year ended September 30, 2000, we considered the City's internal control structure to determine our auditing procedures for the purpose of expressing an opinion on the financial statements and not to provide assurance on the internal control structure. However, during our audit we became aware of opportunities for strengthening internal controls and operating efficiency. The memorandum that accompanies this letter summarizes our comments and suggestions regarding those matters. We previously reported on the City's internal control structure in our report dated December 14, 2000. This letter does not affect our report dated December 14, 2000 on the financial statements of City of Meridian, Idaho. We have already discussed many of these comments and suggestions with various City personnel, and we will be pleased to discuss them in further detail at your convenience, to perform any additional study of these matters, or to assist you in implementing the recommendations. Very truly yours, Balukoff, Lindstrom & Co., P.A. ACCOUNTING SYSTEM Contracts Grants and Agreements Condition: The accounting department is not provided pertinent information from contracts, grants and other agreements to accurately and timely record transactions in the accounting system. Recommendation: When contracts and agreements are signed, a copy should be given to the accounting department. When a department is awarded a grant and grant reimbursements are requested, a copy should be provided to the accounting department. PERSONNEL Condition: Currently, there is no information technology staff. Recommendation: With the continued growth of the City and the continual change in technology, we suggest the City hire an information technology director who is given the responsibility to oversee the information technology needs of the City. -2- BALUKOFF LINDSTROM & Co., P.A. December 14, 2000 To the Mayor and Members of City Council of City of Meridian, Idaho We have audited the general purpose financial statements of City of Meridian, Idaho for the year ended September 30, 2000, and have issued our report thereon dated December 14, 2000. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under Generally Accepted Auditing Standards As stated in our engagement letter dated September 20, 2000, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the general purpose financial statements are free of material misstatement and are fairly presented in accordance with generally accepted accounting principles. Because of the concept of reasonable assurance and because we did not perform a detailed examination of all transactions, there is a risk that material errors, fraud, or other illegal acts may exist and not be detected by us. As part of our audit, we considered the internal control of City of Meridian, Idaho. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such internal control. Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by City of Meridian, Idaho are described in Note A to the general purpose financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the City of Meridian, Idaho during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. j:\data\client files\meridian, city oflfiscal year 2000\audiftorkpapers\report file\auditcom.doe Mayor and Members of City Council City of Meridian, Idaho Page 2 Accounting Estimates Accounting estimates are an integral part of the general purpose financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the general purpose financial statements and because of the possibility that future events affecting them may differ significantly from those expected. Audit Adjustments For purposes of this letter, professional standards define a significant audit adjustment as a proposed correction of the general, purpose financial statements that, in our judgment, may not have been detected except through our auditing procedures. These adjustments may include those proposed by us but not recorded by the City of Meridian, Idaho that could potentially cause future financial statements to be materially misstated, even though we have concluded that such adjustments are not material to the current financial statements. We proposed the following adjustment that was material to the financial statements. An adjustment of $150,576 was made to accounts payable for work that was completed during fiscal year 2000 on the digester clarifier project. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the general purpose financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a second opinion on certain situations. If a consultation involves application of an accounting principle to the governmental unit's general purpose financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Issues Discussed Prior to Retention of Independent Auditors We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City of Meridian, Idaho's Mayor and Members of City Council City of Meridian, Idaho Page 3 auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Difficulties Encountered in Performing the And We encountered no significant difficulties in dealing with management in performing our audit. This information is intended solely for the use of City Council and management of City of Meridian, Idaho and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, r Balukoff, Lindstrom & Co., P.A.