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PRE-COUNCIL MEETING
AGENDA
Tuesday, February 7, 2006 at 6:30 p.m.
City Council Chambers
33 East Idaho Avenue, Meridian, Idaho
`Although the City of Meridian no longer requires sworn testimony,
all presentations before the Mayor and City Council are expected to be
truthful and honest to best of the ability of the presenter."
1. Roll-call Attendance:
Shaun Wardle Joe Borton
Charlie Rountree _~ Keith Bird
Mayor Tammy de Weerd
2. Adoption of the Agenda: Gi~~-~ ~~
3. Audit Pre entation for Fiscal Year 04-05 by Eide Bailly, LLP:
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4. Quarterly Financial Report by Stacy Kilchenmann:
* Approximate allowable time set for agenda item may change depending
on the discussion. Please us the designated minutes as a guideline
only.
Meridian City Council Pre-Council Meeting Agenda -February 7, 2006 Page 1 of 1
All materials presented at public meetings shall become property of the City of Meridian.
Anyone desiring accommodation for disabilities related to documents and/or hearing,
please contact the City Clerk's Office at 888-4433 at least 48 hours prior to the public meeting.
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PRE-COUNCIL MEETING
AGENDA
Tuesday, February 7, 2006 at 6:30 p.m.
City Council Chambers
33 East Idaho Avenue, Meridian, Idaho
"Although the City of Meridian no longer requires sworn testimony,
all presentations before the Mayor and City Council are expected to be
truthful and honest to best of the ability of the presenter."
1. Roll-call Attendance:
Shaun Wardle Joe Borton
Charlie Rountree Keith Bird
Mayor Tammy de Weerd
2. Adoption of the Agenda:
3. Audit Presentation for Fiscal Year 04-05 by Eide Bailly, LLP:
4. Quarterly Financial Report by Stacy Kilchenmann:
* Approximate allowable time set for agenda item may change depending
on the discussion. Please us the designated minutes as a guideline
only.
Meridian City Council Pre-Council Meeting Agenda -February 7, 2006 Page 1 of 1
All materials presented at public meetings shall become property of the City of Meridian.
Anyone desiring accommodation for disabilities related to documents and/or hearing,
please contact the City Clerk's Office at 888-4433 at least 48 hours prior to the public meeting.
Meridian Citv Pre Council Meeting February 7, 2006.
The regular Pre-Council meeting of the Meridian City Council was called to order at
6:30 p.m., Tuesday, February 7, 2006, by Council President Shaun Wardle.
Members Present: Mayor Tammy de Weerd, Shaun Wardle, Keith Bird, Charlie
Rountree and Joe Borton.
Others Present: Ted Baird, Will Berg, Stacy Kilchenmann, Len Grady, and Dean Willis.
Item 1: Roll-call Attendance:
Roll call.
X Shaun Wardle
X Charlie Rountree
X
X Joe Borton
X Keith Bird
Mayor Tammy de Weerd
Wardle: All right. I would like to welcome everyone to our Pre-council Meeting for
Tuesday, February 7th, 2006. I'll begin with roll call attendance. Mr. Clerk.
Item 2. Adoption of the Agenda:
Wardle: Item No. 2 is adoption of the agenda.
Rountree: Mr. President?
Wardle: Mr. Rountree.
Rountree: I move that we adopt the agenda for our Pre-council Meeting.
Borton: Second.
Wardle: It's been moved and seconded to adopt the agenda. All in favor?
MOTION CARRIED: THREE AYES. ONE ABSENT.
Item 3: Audit Presentation for Fiscal Year 04-05 by Eide Bailly, LLP:
Wardle: Item No. 3, the audit presentation for fiscal year 2004-2005 by Eide Bailly and I
will introduce this. Kevin Smith will be presenting the audit to us. I will mention that this
year we have an audit committee, which I believe I was the chairman of, and so --
De Weerd: You believe?
Rountree: That's a scary start.
Meridian Pre-Council Meeting
February 7, 2006
Page 2 of 9
Wardle: That's right. They let me know that I was the chairman of the audit committee
and Stacy and I participated on that, so we will have that presentation. Kevin.
Smith: Appreciate the opportunity to be here tonight and to go over the financial
statements of the City of Meridian for the fiscal year ended September 30th, 2005. And
we were engaged to audit financial statements for that year ended and the objective of
an audit is -- to remind you, is to provide reasonable assurance that the financial
statements are fairly stated in all material respects. So, keep in mind it's not absolute.
And also to consider the city's intemal controls, so we can develop our procedures
based on those controls that we assess. The results of the audit, if you would like to tum
with me in the financial statement to page one -- page one -- page two is the auditor's
opinion. And in the financial statements for the year ended September 30th, 2005, we
issued an unqualified opinion or a clean opinion, as we refer to it. And there are several
other types of opinions that could be rendered and unqualified being a clean opinion.
Also new to this year in the very back of the financial statement there is -- we had to do
some specific procedures related to what we call, single audit. It is regulated by the
federal govemment when you receive federal funds over 500,000 dollars you're required
to have a specific audit on those funds and how they were expended and auditing some
specific and some general requirements on those funds to make sure they were
accounted for properly. And so that's new this year. The City of Meridian, since we have
been auditing, has not had that type of audit, because they have not received federal
funds exceeding 500,000 dollars. So, you will see in the very back there is some
additional procedures that were done and some additional opinion letters back there
related to intemal controls and the federal financial assistance. And we found no -- we
had no findings related to the federal money and the way that they were expended.
De Weerd: Excuse me. Mr. Chairman?
Wardle: Madam Mayor.
De Weerd: I mean Mr. President. I'm song. I just did want to clarify the reason we
exceeded that was primarily because of two grants. One a community block grant for
one of our businesses here, as well apass-through grant for our senior center. So, I just
wanted to provide some clarity for that.
Smith: Thank you. And it's actually -- you know, it's most common to have a single
audit, you know, in govemment and most cities do expend, you know, quite a large
amount of federal funds and so, you know -- and so something that, you know, may
continue in the future. -Also in the report -- and this has been ongoing for a couple of
years now. I think this is, actually, the third year that we actually have -- maybe the
second year that we actually have the management discussion and analysis that's in the
front of the financial statement and that's written by management and as it's just -- we
look at it to make sure that it's consistent with the financial statements. We don't render
opinion on that information and provide some explanation to the financial statements,
some changes, some differences, comparison to the prior year, provide some graphs
and some charts that kind of help explain some of the changes that are going on in the
Meridian Pre-Council Meeting
February 7, 2006
Page 3 of 9
city and some of the plans for the future. And it also separates still between government
activities and enterprise activities, proprietary funds with the utility billings. A couple of
highlights in the financial statements that I noted. You know, one -- again, as has been
in the past, that expenditures were less than the budgeted amount, which is good. That
means that, you know, management's doing a good job and, you know, Council is doing
a good job, you know, watching the expenditures of the city and being fiscally
responsible for those. In the enterprise fund I also noted that net income was about 21
million dollars. However, that's a little bit misleading, because a lot of that is -- or most of
it is actually contributed to donated water lines and also connection assessment fees.
So, operating net income is, really, only about 90,000. So, you know, very close, you
know, operations, what's coming in for utility billing and what's going out is very close.
As far as internal controls, we issued a management letter. We have gone over that with
the audit committee. We have always gone over it with management. They responded
to the -- to some of the notes and findings that we had, suggestions that we had, and
we are satisfied with those -- with those remarks. And so I won't go into that in detail,
unless anyone has any questions -- any questions on the financial statements or the
management letter I would be happy to answer those.
Rountree: No questions.
Smith: Once, again, I think it was a great year and we appreciate the opportunity to
work with the City of Meridian and also with management. The accounting department
does a great job and it makes our job much easier and it also makes us more efficient,
so we can come in and, hopefully, not be too disruptive. We know we are somewhat
disruptive to day-to-day activities.
De Weerd: You're disruptive.
Smith: Yeah. We are. And if we can keep those disruptions to a minimum, then, you
know, we are happy and management is happy, accounting department is happy and
everybody gets their pay check on time. That's what we don't want to get in the way of,
so -- but thank you again.
Wardle: Thank you. Questions of Mr. Smith? I will say -- clarify my earlier statement as
being the chairman of this committee. The auditors presented the audit in a very
concise way and I believe that our staff did just a wonderful job. Obviously runs avery -
very clean set of books and made the process very smooth. So, from my perspective it
was -- it was very easy to see that all things were in order in our city. So, I'd like to thank
your staff, Kevin, for doing a wonderful job. I know that Mr. Bird was going to comment
on the timeliness of the reporting and some of the city ordinances that we have Bobby
and I discussed, there are some additional federal reporting requirements in addition to
the Christmas holiday, which may warrant a look at moving that ordinance and so it's a
discussion that I think we have had with Mr. Bird in the past and -- do we have a specific
opinion on a date that might work, Kevin, or --
Meridian Pre-Council Meeting
February 7, 2006
Page4of9
Smith: Yeah. I don't know that we have come up with a specific date, but we are
looking, you know, maybe two to three weeks. You know, if we could push it out just a
little bit it would be helpful.
Wardle: Okay.
De Weerd: Mr. President?
Wardle: Madam Mayor.
De Weerd: I would agree that we need to ask our legal staff to look at that and bring
back with the finances recommendations --anew date for that. Indeed, because of
some of the new reporting and some of our activities and being a little bit more proactive
with seeking out grant opportunities and that sort of thing, I would imagine that this is
just an indicator of future audits and so that would give us some more breathing room. I
also would like to note that the addition of audit, because of the grant monies, it was
also an additional time either for our staff and we would like to recognize our city clerk
and our finance department and the extra effort that they did in working with Sage in
getting the money passed through to the entities that were working with those grants
and appreciate the timeliness of that. I think it was a teaming experience, some of the
legal requirements, the necessary ordinances that our legal staff quickly responded to
and so it was a good experience and appreciate all the extra effort that went through to
make sure that we passed with a clean audit. Appreciate the auditor's time. They did try
to stay out of the way as much as possible and I think every year it just seems to go a
little bit more smooth and, again, I think our city does a fine job in keeping its financial
matters in order. I would like to request that, you know, I have always been part of that
summary in the past and would like to continue to be. I know we started the new team
with the Council president's involvement, but as management I would like to also
participate as well.
Wardle: Great.
De Weerd: And Mr. -- I'm sorry.
Wardle: Madam Mayor.
De Weerd: Finally, because I just got back in town last night I didn't read the audit. It's
still sitting on the pile that I was welcomed home with. So, I apologize I don't have any
stumping questions. I really wanted to throw one out there for you, Kevin, but we will do
it next year.
Wardle: Stacy, any additional comments on the audit? I will say, obviously, there is a
management letter attached to the audit. If you have specific questions on that, you can
certainly address them to me or to Stacy and we can, then, get any clarification that you
may need from either the audit committee or the auditors themselves. So, Mr. Baird,
Meridian Pre-Council Meeting
February 7, 2006
Page 5 of 9
procedural question. Is it now the City Council's duty to accept the audit and release it
for publication or do we do that during our regular agenda?
Baird: Mr. Chairman, you are in a duly noted public meeting of Council. You can
certainly take action at this time if it's your desire.
Wardle: Okay. Council, I would entertain a motion to accept the financial audit for the
fiscal year 2004-2005 by Eide Bailly.
Rountree: So moved.
Borton: Second.
Wardle: It's been moved and seconded to accept the audit for fiscal year 2004-2005.
Mr. Clerk, roll call vote.
Roll-Call: Bird, absent; Rountree, yea; Wardle, yea; Borton, yea.
MOTION CARRIED: THREE AYES. ONE ABSENT.
Wardle: Thank you again.
De Weerd: Mr. President?
Wardle: Madam Mayor.
De Weerd: One final comment. I appreciate the flexibility that Kevin had in making sure
we could use English this year. That was appreciated as well.
Item 4: Quarterly Financial Report by Stacy Kilchenmann:
Wardle: Thank you. Item No. 4 is quarterly financial report by Stacy Kilchenmann.
Kilchenmann: The first quarter of the year not very much happens financially. We are
just laboring to finish the audit and close the year. So, we are going to do a little
different kind of presentation this time. First, Ijust -- Kevin mentioned to you the
management discussion analysis, so I have a couple slides to highlight some of that.
The first one is on governmental activities and those are all the activities of the general
government, including the planning department, the building department, and so forth.
And as you can see in the comparative analysis in 2004 our net assets increased 5.5
million and in 2005 they increased 8.6 million. And there is really two basic components
of that. One are the assets which are highlighted in the yellow and you can see our
assets went up about two million dollars. And, then, the other is the cash that flows into
the fund balances. You can see the break out of those percentages of how much of that
total net asset belongs to fixed assets and which part is the fund balance. So, a pretty
good year for the govemmental activities. This is the enterprise fund, which are referred
Meridian Pre-Council Meeting
February 7, 2006
Page 6 of 9
to that MDNA and in the audit schedules as business type activities and, again, if we
look down at -- and try to analyze that change or the change in net assets, a big part of
that are the contributed capital assets and so I put those with the bottom, they were nine
million for 2005, with 17 million in assets that we purchased or projects that we finished.
And they still had a healthy increase in their net asset position of 20 million dollars.
Then, just to move onto 2006, to kind of give a refresher and remind you where we are,
our current budget for this year for the -- city wide is 89 million and that break out kind of
gives you an idea of where that money is budgeted and you can see a big portion of it --
almost athird of it is in enterprise capital outlay and that gray is new budget capital
outlay, with the carry forward of 24 percent being projects that we have budgeted in
years prior to 2006, but have not been completed. So, that almost is half of the city wide
budget. This is what we call by class, meaning is it personnel, operating, or capital
outlay. And, again, anything that in carry forward amount is capital outlay. So, you can
see the majority of our budget is in capital assets. And most of it is in the enterprise
fund. To return again to the general fund, our revenue that we budget is 16.6 million and
for 2006 62 percent of that is in property tax. And because property tax is such a hot
issue right now, in looking -- kind of looking at Meridian's position, these are some slides
that we prepared when we went before the interim tax -- legislative tax committee. The
first slide shows our building permit sales and, as we all know, 2000-2004 they
skyrocketed. The bottom slide below shows what happens to our levy rate during a
period of growth and I'm not going to go in and explain the mechanics of how the levy
rate works, but it's kind of an interesting comparison. Another big topic or consideration
going around right now is taking away new construction and new construction is
absolutely vital to the City of Meridian, because it allows us to increase our base to keep
up with growth. The year 2005 to 2006, or the year that we just had, our growth was
double -- our new construction dollars were double what they were the prior year. The
top slide, the yellow line is our actual property tax, including what we get to add for the
construction base and the annexation and the bottom line is taking out just the base
property tax or what our property tax would be if we couldn't add new construction and
annexation. And, then, the slide below, the green line is new construction dollars only
and the pink one is annexation only. And typically --
Borton: Mr. President?
Wardle: Mr. Gorton.
Borton: Could I ask a question on that?
Kilchenmann: Yes.
Borton: As described, these two graphs confuse me, Stacy, when I look at the top one,
the difference added with new construction looks to be about four million. Is that -- is
that right? Property tax -- actual property tax?
Kilchenmann: Yeah. The actual property tax is the amount that we actually levy.
Meridian Pre-Council Meeting
February 7, 2006
Page 7 of 9
Borton: Right.
Kilchenmann: And it increases -- go ahead.
Borton: When you pull out the purple, without new construction, that difference is about
four million?
Kilchenmann: Yeah. And it also includes annexation is in that yellow -- or that green
line on top. So, it's not -- it's not just new construction, it's all --
Borton: Construction and annexation?
Kilchenmann: Yes.
Borton: And, then, on the bottom how is that --
Kilchenmann: That's just new construction and just annexation.
Borton: This is probably a simple answer. I'm confusing myself. Why wouldn't the
figures on the bottom graph equal the gap that are referenced in the top graph? I mean
if the bottom is new construction and annexation --
Kilchenmann: They should.
Borton: See what I mean?
Kilchenmann: Yeah. I think -- they are graphed with the same numbers, so --
Borton: It looks like it's 400,000 on the bottom and it's got a gap of a million on the top.
Kilchenmann: Yeah. Those are the dollars that it just adds for the current year and,
then, the base -- I see what you're saying.
Borton: The actual property tax without new construction on the top is about four million
dollars and, then, on the bottom not anywhere close.
Kilchenmann: I will have to look at it. I can't see that far away, but --
Borton: It might just be a zero on the bottom graph. If those hundreds of thousands
were millions, it might -well --
Kilchenmann: I think it's right, because I just looked at it today, but I don't have the -- the
table that I made the numbers with, but I can a-mail them to you.
Borton: Okay. Thanks. I stumped myself.
Meridian Pre-Council Meeting
February 7, 2006
Page S of 9
Kilchenmann: Yeah. I think -- I see what you're saying. Okay. This graph, which is
really tiny, too, is just taking a projection and looking at how much has -- how much
have we grown in our base budget and the base budget is just personnel and operating.
So, in the past six years our growth rate has been -- can't even see that far -- about 12
percent. So, if we were to continued to grow the base at that percentage, this graph just
shows where we would cross -- where the revenue would fall below the base. And the
one below is shortening the historical growth period to nine -- or to four years, where we
have grown 19 percent. And, then, comparing our historical revenue growth of 12.5
percent. This is just another way to look at -- this looks at actual personnel -- number of
general fund personnel compared to the population and the personnel and operating
budget compared to the population. This is another way we looked at it. We did it by per
capita. We said how much are we spending in each of those departments per capita, so
-- and, then, this is looking at how much of our budget we spend on safety services,
which almost half of our budget is police. And, then, a third of it's Ron. And you have to
remember in admin we have the overpass money, which kind of throws it off. And I just
want to talk really briefly about a fund that is sometimes misunderstood. We used to call
it special services, we call it development services, and community planning, and it's
really, technically, it is part of the general fund, which I think is sometimes not
understood and it was set at a point in time -- the Council made the decision that certain
departments would be in that fund and they were the Planning and Zoning Department
and the building department and so those two departments were pulled in a separate
fund, separate checking account, and a separate accounting system was opened for
them and the money -- any money that would be like left over after expenditures, the
difference between revenue and expenditures, the Council said will go into the capital
improvement fund, which will be spent for any kind of capital improvements. City Hall.
Could be used for parks. Could be used for fire stations. So, the top shows what the
budget looks like currently for that fund and that big pink section for the capital
improvement fund, that's the City Hall. This is the first time we have really budgeted any
significant amount of money. And, then, because that's kind of distorting, I pulled it out
in the graph below and you just have the building department and planning and zoning.
We also have added economic development, code enforcement, and street lights to this
fund. So, this is what their revenue looks like. Eighty-seven percent of their revenue
comes through the building department from the sale of building permit fees. And, then,
to kind of understand how important the building permit fees -- that top graph shows the
base budget for the building department, which they have a few employees and, then,
the rest of that cost is in paying the building -- contract the building inspectors and the
green line shows you the revenue from the building department. You can see that right
now the building department is a good -- doing good. The bottom one is the planning
department revenue, which is the red line, and, then, they -- compared to their base
budget. So, you see they are not aself-supporting entity, they are pretty much
supported by the building department. And, then, finally, the enterprise fund. They have
-- their budget is 59 million. As we talked about, a lot of that is in carry forward through
our capital projects, with the next biggest chunk of that being the wastewater treatment
plant. And their revenue -- they are using quite a bit of fund balance now, because they
are budgeting those big major wastewater projects and they are also -- the sewer-water
connections or assessments or hook-up fees or whatever you want to call them, are
Meridian Pre-Council Meeting
February 7, 2006
Page 9 of 9
also -- because we are growing they are adding a significant portion of the pie. That's
just another way to look at their budget. And this -- if you look at their base budget
compared to their revenue, you can see that as far as their operations they are fine,
they have plenty of margin. You can see where we have budgeted kind of a leap in
those one-time projects. That's the yellow line. And that's the end.
Wardle: Thank you, Stacy. Council, questions?
Rountree: I have none. Another good report, Stacy.
Kilchenmann: I'll get you that. I'll get you the tables.
Borton: Okay.
Wardle: Thank you very much, Stacy. Excellent report. Council, that brings us to the
end of our agenda for the Pre-council meeting. I would entertain a motion to adjoum.
Borton: Move we adjoum.
Rountree: Second.
Wardle: Been moved and seconded to adjoum. All in favor?
MOTION CARRIED: THREE AYES. ONE ABSENT.
MEETING ADJOURNED AT 7:00 P.M.
(TAPE ON FILE OF THESE PROCEEDINGS)
COUNCIL PRESIDENT SHAUN WARDLE
/ /_
DATE APPROVED
ATTEST:
WILLIAM G. BERG, JR, CITY CLERK
•
February 3, 2006
MERIDIAN CITY COUNCIL MEETING February 7, 2~6
APPLICANT ITEM NO. 3
REQUEST Audit Presentation for Fiscal Year 04-05 by Eide Bailly, LLP
AGENCY COMMENTS
CITY CLERK:
CITY ENGINEER:
CITY PLANNING DIRECTOR:
CITY ATTORNEY
CITY POLICE DEPT:
CITY FIRE DEPT:
CITY BUILDING DEPT: ~ ~
CITY WATER DEPT: ' •Y
CITY SEWER DEPT:
CITY PARKS DEPT: C~
MERIDIAN SCHOOL DISTRICT: ~ "
ADA COUNTY HIGHWAY DISTRICT:
SANITARY SERVICE COMPANY
CENTRAL DISTRICT HEALTH:
NAMPA MERIDIAN IRRIGATION:
SETTLERS IRRIGATION:
IDAHO POWER:
US WEST:
INTERMOUNTAIN GAS:
MERIDIAN POST OFFICE:
OTHER: ~~
Contacted: Date: Phone:
Emailed: Staff Initials:
Materials presented at public meefin~ shall become properly of the City of Meridian.
' ~ ~
' FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
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I CITY OF MERIDIAN, IDAHO
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CITY OF MERIDIAN, IDAHO
Table of Contents
Page
INDEPENDENT AUDITORS' REPORT 1
MANAGEMENT'S DISCUSSION AND ANALYSIS 3
FINANCIAL SECTION
BASIC FINANCIAL STATEMENTS
Government-wide Financial Statements:
Statement of Net Assets 16
Statement of Activities 18
Fund Financial Statements:
Balance Sheet -Governmental Funds 20
Reconciliation of the Balance Sheet of Governmental Funds to the Statement
of Net Assets 21
Statement of Revenues, Expenditures, and Changes in Fund Balances -
Governmental Funds 22
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances of Governmental Funds to the Statement of Activities 23
Statement of Net Assets -Proprietary Fund 24
Statement of Revenues, Expenses, and Changes in Fund Net Assets -
Proprietary Fund 25
Statement of Cash Flows -Proprietary Fund 26
Notes to Financial Statements 28
REQUIRED SUPPLEMENTARY INFORMATION
Schedule of Revenues, Expenditures, and Changes in Fund Balance -Budget
and Actual -General Fund ~
Notes to Required Supplementary Information 46
OTHER INFORMATION
Independent Auditors' Report on Internal Control Over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards
Independent Auditors' Report on Compliance with Requirements
Applicable to Each Major Program and Internal Control Over
Compliance in Accordance with OMB Circular A-133
Schedule of Expenditure of Federal Awards
Notes to Schedule of Expenditure of Federal Awards
Schedule of Findings and Questioned Costs
48
50
52
53
54
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EideBailly~,
CPAs & BUSINESS ADVISORS
t INDEPENDENT AUDITORS' REPORT
Mayor and Members of the City Council
City of Meridian, Idaho
Meridian, Idaho
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the discretely presented component unit, and each. major fund of the City of Meridian, Idaho, as of and
for the year ended September 30, 2005, which collectively comprise the City's basic fmancial statements as listed
in the table of contents. These financial statements are the responsibility of City of Meridian, Idaho's,
management. Our responsibility is to express opinions on these fmancial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America
and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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 a.s
evaluating the overall fmancial statement presentation. We believe that our audit provides a reasonable basis for
our opinions.
In our opinion, the fmancial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, the discretely presented component
unit, and each major fund of the City of Meridian, Idaho, as of September 30, 2005, and the respective changes in
financial position and cash flows, where applicable, thereof for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated December 9, 2005, on our
consideration of City of Meridian, Idaho's internal control over fmancial reporting and on our tests of its compliance
' with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance.
' That report is an integral part of an audit performed in accordance with Government Auditing Standards and should
be read in conjunction with this report in considering the results of our audit.
PEOPLE. PRINCIPLES. POSSIBILITIES.
www.eidebailly.c®rvl 1
f 877 West Main St., Suite 8001 Boise, Idaho 8 3 702-5 6 5 8 I Phone 208.344.71501 Fax 208.344.7435 1 EOE
~ ~
' The Management's Discussion and Analysis and other required supplementary information listed in the table of
contents are not a required part of the basic financial statements but are supplementary information required by
' the accounting principles generally accepted in the United States of America. We have applied certain limited
procedures, which consisted principally of inquiries of management regarding the methods of measurement and
presentation of the required supplementary information. However, we did not audit the information and express
no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the City of Meridian, Idaho's, basic financial statements. The accompanying schedule of expenditures of federal
awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget
Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the
basic financial statements of City of Meridian, Idaho. Such information 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 basic financial statements taken as a whole.
~~~~
Boise, Idaho
December 9, 2005
2
CITY OF 1VIERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
This section of the City of Meridian's annual fmancial report presents management's discussion and analysis of
the City's fmancial performance during the year ended September 30, 2005. Please use this information in
conjunction with the information furnished in the City's fmancial statements.
Financial Highlights
• The total assets of the City of Meridian exceeded its liabilities at September 30, 2005 by $193,699,093.
Of this amount $64,274,207 is unrestricted and available to meet the City's on-going obligations to
citizens and creditors.
• During fiscal year 2005 the City's total net assets increased $29,471,994 as compared to an increase of
$24,159,521 during fiscal year 2004. Net assets of the governmental activities increased $8,675,629 and
net assets of business-type activities increased $20,796,365.
• Total fund balance of governmental funds at September 30, 2005 was $26,432,629 compared to a total
governmental fund balance at September 30, 2004 of $19,533,479. Of the September 30, 2005 balance
$3,627,778 is restricted for new park development costs, $8,326,178 is reserved for capital projects,
$400,000 is reserved due to a long-term lease agreement and $1,393,394 has been reserved by City,
Council for other purposes. The remaining $12,685,279 is unreserved.
• The City has $2,585,000 in long-term debt due to a capital lease and trust agreement with Wells Fargo
Bank for the construction of a police station. The agreement was executed in fiscal year 2002 and has a
term often years.
Overview of the Financial Statements
This annual report consists of five parts -management discussion and analysis, the government-wide financial
statements, fund financial statements, notes to the financial statements, and required supplementary information.
' Government- Wide Financial Statements
These statements report information about all of the operations of the City using accounting methods similar to
those used by private sector companies. These statements are prepared using the flow of economic resources
measurement focus and accrual basis of accounting. The current year's revenues and expenses are recorded as
transactions occur rather than when cash is received or paid.
The government-wide fmancial statements are divided into two categories:
Statement of Net Assets -Reports all of the City's 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 indicator or whether
the fmancial position of the City is improving or deteriorating.
Statement of Activities -Reports all of the City's revenues and expenses for the year by function. Examples of
' functions are public safety, administration, and water and sewer activities. Revenues, such as property tax which
cannot be traced to a specific function, are reported as General Revenues.
' Fund Financial Statements
The Fund fmancial statements provide information about the City's major funds, not the City as a whole. The
City uses a method of accounting, called fund accounting, to separate specific sources of funds and
' corresponding expenditures. Funds may be required by law or may be established by the City Council.
CITY ®F MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
The City of Meridian has the following funds:
Governmental Funds: These funds encompass the City's basic services, public safety, community planning and
development, administration, and parks and recreation. Governmental fund financial statements focus on short-
term inflows and outflows of spendable resources, an accounting approach known as the flow of current fmancial
resources measurement focus and the modified accrual basis of accounting. Information provided by these
statements provides ashort-term view of what resources will be available to meet needs.
The City of Meridian has two governmental funds:
General Fund -The general fund is the general operating fund of the City. It derives most of its income
from property tax and funds the operations of the City. It includes the Special Services Fund, used to
account for revenue and expenses of the community planning and development function and the Park
Impact Fee Fund, used to account for the park impact fee revenue and-park development costs.
Capital Projects Fund -The Capital Projects Fund is used to account for fmancial resources to be used for
the acquisition of major capital facilities.
Proprietary Fund: User fees finance activities in these funds. The City of Meridian only has one type of
propriety fund, the enterprise fund. The water and sewer utilities and all the activities necessary to support their
operation are accounted for in this fund. Accounting for this fund is the same as a private business on a full
accrual basis.
Notes to the Financial Statements
The notes provide additional information that is necessary to fully understand the date presented in the
government-wide and fund financial statements.
Required Supplementary Information
This section has information that further explains and supports the information in the financial statements by
including a comparison of the City's budget data for the year.
1 FINANCIAL ANALYSIS OF THE CITY OF MERIDIAN AS A WHOLE
Net Assets
Net assets measure the difference between what the City owns (assets) versus what the City owes (liabilities). At
September 30, 2005 the City's combined assets exceeded liabilities by $193,669,093. In comparison at
September 30, 2004 combined assets exceeded liabilities by $164,227,099.
The largest portion of the City's net assets, 62%, is invested in capital assets net of related debt. This is
consistent with the prior fiscal year. Capital assets include land, building, equipment and machinery, and sewer
and water utility infrastructure.
Assets restricted to a particular use are 5% of net assets. The City of Meridian restricted funds are principally the
park impact fee fund (portion of building permit collected for new park development) and the capital
improvement fund. The City puts excess funds generated from building permit sales into a fund marked
specifically for general fund capital projects. Last year restricted assets were 3.5% of total net assets.
4
•
CITY OF MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
Unrestricted net assets equal 36% of net assets. Some portion of the unrestricted net asset balance has been
designated by the City Council for specific purposes. The table below has been condensed from the Statement of
Net Assets.
Current and Other Assets
Capital Assets
Total Assets
Current Liabilities
Long-term Liabilities
Total Liabilities
Net Assets:
Invested in Capital Assets
Net of Related Debt
Restricted
Unrestricted
Total Net Assets
_ Primary Government
Governmental Business -type
Activities Activities Total
2005 2004 2005 2004 2005 2004
$39,417,898 $29,335,043 $50,618,580 $46,778,902 $90,036,478 $76,113,945
$20,855.809 $19,365,243 $101,766,901 $83,807,414 $122,622,710 $103,172,657
$13,370,523 $10,151,863 $2,803,530 $1,821,816 $16,174,052 $11,973,679
$2,679,341 $3,000,209 $106,701 $85,615 $2,786,043 $3,085,824
$16,049,864 $13,152,072 $2,910,231 $1,907,431 $18,960,095 $15,059,503
$18,270,809 $16,405,243. $101,766,901 $83,807,414 $120,037,710 $100,212,657
$9,387,176 $5,710,888 $9,387,176 $5,710,888
$16,565,858 $13,432,083 $47,708,349 $44,871,471 $64,274,207 $58,303,554
X44.223.843 $35.548.214 $149,475,250 $128,678,885 $193,699,093 $164,227,099
5
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
Changes in Net Assets
During the year the City's financial position improved by $29,471,994. The following condensed financial
information was derived from the government-wide Statement of Activities and shows how the City's net assets
changed during the year.
~1
' Revenues
Program Revenues
Charges for services
Operating grants and contributio
Capital Grants and Contribution
General Revenue:
Property taxes
Franchise fees
Sales tax and other govemmenta
Unrestricted Investment Earning
Other Revenue
Total Revenues
Expenses
General Govemment
Administration
Law Enforcement
Fire Department
Parks and Recreation
Community Planning and Devlp
Interest on long-term debt
Enterprise -sewer and water
Total Expenses
ns
s
I
s
Governmental Business-Tvoe Total Primary
Activities Activities Govemment
FY05 FY04 FY05 FY04 FY05 FY04
$7,806,291 $5,943,076 $11,735,802 $9,671,657 $19,542,093 $15,614,733
$624,550 $65,984 $10,530,370 $6,878,907 $11,154,920 $6,944,891
$3,199,253 $2,144,110 $9,333,965 $9,545,497 $12,533,218 $11,689,607
$8,550,028 $7,162,390 $8,550,028 $7,162,390
$913,877 $736,722 $913,877 $736,722
$2,549,958 $2,149,997 $2,549,958 $2,149,997
$757,842 $501,338 $1,611,564 $1,132,288 $2,369,406 $1,633,626
-$138,666 -$6,879 -$200,093 -$5,330 -$338,759 -$12,209
$24,263,133 $18,696,738 $33,011,608 $27,223,019 $57,274,741 $45,919,757
$2,345,255 $1,550,727 $2,345,255 $1,550,727
$5,613,930 $5,209,504 $5,613,930 $5,209,504
$3,628,724 $3,198,181 $3,628,724 $3,198,181
$1,052,744 $960,117 $1,052,744 $960,117
$3,217,099 $2,397,790 $3,217,099 $2,397,790
$127,450 $137,A50 $127,450 $137,050
$11,817,545 $8,306,867 $11,817,545 $8,306,867
$15,985,202 $13,453,369 $11,817,545 $8,306,867 $27,802,747 $21,760,236
Excess of revenues over expenditures
before transfers $8,277,931 $5,243,369 $21,194,063 $18,916,152 $29,471,994 $24,159,521
Transfers - internal activities $397,698 $308,815 -$397,698 -$308,815 $0 $0
Increase in net assets $8,675,629 $5,552,184 $20,796,365 $18,607,337 $29,471,994 $24,159,521
Net Assets October 1, 2004 $35,548,214 $29,996,030 $128,678,885 $110,071,548 $164,227,099 $140,067,578
Net Assets September 30, 2005 $44,223,843 $35,548,214 $149,475,250 $128,678,885 $193,699,093 $164,227,099
Governmental Activities:
Governmental activities increased the City's net assets by $8,675,629. The record number of 2,081 residential
building permits sold in FY04 was eclipsed in FY05 by the sale of 3,227 residential building permits. Building
permits and related fees are responsible for 76% of the Charges for Services number in the above Changes in Net
Assets table. When building permit sales increase, park impact fees also increase. Park impact fees are charged
when the building permit is sold. Park impact fees increased from $1.2 million dollars in FY04 to $2 million plus
in FY05. Park impact fees can only be used for new park development.
The utilization of new construction in the property tax levy formula has meant that residential and commercial
building growth increased property tax revenue 19% from FY04 to FY05.
CITY OF MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
Public Safe accounts for 58% of governmental expenses. Police and Fire expenses increased 8% and 12%
respectively as new personnel were hired. Community Planning and Development expenses account for 20% of
governmental expenses. This number is made up of the cost of doing inspections for building permits and the
cost of the Planning Department.
Business-Type Activities:
Business-type activities, the provision of water and sewer services, increased net assets by $20.8 million. $9.3
million of this increase was the result of developer contributed sewer and water lines. Developers put lines in
subdivisions they develop and if certain size criteria are met, the lines are turned over to the City when they are
completed. 48% of FY05 Enterprise revenue is from assessment fees. Commercial and residential assessments
are fees charged new connections to pay for system build out and capacity increase. Due to building growth in
Meridian, assessment fees increased from $6.9 million dollars in FY04 to $9.6 million dollars in FY05. Utility
sales account for the majority of the remainder of business activity income.
The assessment fees are considered to be for capital development, new lines, treatment plant expansion, well
development, and major renovations. Utility sales income and Public Works review fees are used for the
maintenance and operations expenses incurred to supply customers with water and sewer service. It includes the
cost of engineering, accounting, plant operators, meter readers, and line maintenance. Contributed capital is not a
'~ cash inflow but the developer cost of donated sewer and water lines. As discussed above, it accounts for a
substantial percentage of the audited enterprise revenue. The graph below shows the sources of enterprise
revenue.
Business-type Activities - FY05 Revenue
Sources
Public Works
Review Fees Mist
2% 1%
1
r'.
~J
Latecomers Utility Sales
7% 24%
Contributed fi~ Interest Income
Ca pits I Iv 4%
27%
Commercial
~~ Assessments
5%
Meter Sales
3"/o dential
Assessments
CITY OF MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
Ex enditures in fiscal ear 2005 were up 42% over fiscal year 2004. 75% of this increase was due to paying off
P y
all existing latecomer agreements. Latecomer agreements were agreements entered into with developers who
built out sewer and water lines with enough capacity that additional subdivisions could be added to the system.
T'he City would collect fees from these "latecomers" and reimburse the original developer. In FY05 the City
changed the fee structure and added a fee on all new connections that will be used to reimburse developers
initially rather then waiting for future development. This made the existing agreements obsolete. Therefore the
City paid off all existing agreements for a total of $2,641,607.
i
FY05 Business-Type Activities Operating
Expenses
Supplies Utilites
11% 4% Personnel
30%
~_
-------
,-~ ~~'
®epreciation
~2% Operating
33%
Only three large capital projects were completed, wells #24 and #25 and a DAFT Waste Thickener Project.
Depreciation expense increased by $197,000. The Wastewater Treatment Plant and Water Construction accounts
are used to track assessment revenue and the costs of construction. At the end of the year the construction in
progress and completed construction projects are moved into the balance sheet and the depreciation is recognized
in the Water and Wastewater Operating accounts. Although only three projects were completed in FY05 there
were $15.7 million dollars in construction in progress at September 30, 2005. The following graph compares
dollars budgeted for construction with dollars actually spent for construction. Most projects take several years to
complete.
1
1
~ e
CITY OF MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
1
1
1
1
Utility Dollars Budgeted for Construction
$35,000,000
$30,000,000 '~
'~ v Amount Budgeted
$25,000,000
^ Actual Spent
$20,000,000
$15,000,000 ~,
+; ,
$10,000,000 ~ } f
$5,000,000
,N
$0
FY05 FY04
FINANCIAL ANALYSIS OF.THE CITY'S FUNDS
Governmental Funds
General Fund -the general fund is the principal fund used for the City's major operations including public safety,
planning and development, parks, and City administration. The fund balance at September 30, 2005 was
$21,073,231, an increase of 30% over the prior September 30 balance of $16,177,477. The major factor boosting
fund balance is development growth. Building permit sales alone were over $5.6 million dollars, $1.7 million
more than in fiscal year 2004 and over double what they were in fiscal year 2003. Park impact fees, collected at
the sale of residential building permits have gone from $640,000 in FY03 to $1.25 million dollars in FY04, to
over $2 million dollars in FY05.
~ 9
~ o
CITY OF MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
1
1
1
1
Cl
property tax revenue and state sharing revenue exceeded the original budgeted amount by close to $2 million
dollars. On the expenditure side, the City had savings of close to $600,000 due to delays in hiring and training
public safety positions.
The general fund balance is composed of several reserved and restricted funds. The restricted Park Impact Fee
balance of $3,627,778 may be spent only for the development of new parks. The City Council has set aside
850 is reserved in the Fire Truck fund, $2,966,780 is
several other amounts to be used for specific purposes; $405, osed Locust Grove
reserved for capital improvements, $987,544 is reserved to pay for easements along the pure
Overpass, and $400,000 is reserved for the last payment on the lease for the construction of the police station.
The general fund is the principal fund used for the City's major operations. The unreserved balance in this fund
of $12,685,279 increased $2,532,254 from the end of fiscal year 2004 to the end of fiscal year 2005. In fiscal
year 2005 the unreserved fund balance was 48% of the fmal personnel and operating budget compared to 67%
last year. The percentage has decreased due to the growth in the park impact and capital improvement funds.
General Fund Budgetary Highlights
There were several minor amendments made to the original general fund FY05 budget. They were to move funds
r between expenditure categories: personnel, operating, and capital outlay, move funds from one capital outlay
project to another, and to recognize various small unexpected incomes.
~J
10
__ e^
City of Meridian -Residential Building Permit Sales
• o
CITY OF MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
There were three more material budget amendments. Two had no net impact on fund balance, recognizing grant
revenue and expense, and removing the revenue and expense for a fire station that the rural fire district paid for.
The third was to add an additional fire chief position.
The park impact budget was amended to increase the parks capital projects expenditures, offset by a
corresponding increase in park impact fee revenue.
In the special services budget, the portion of the general fund used to account for Community Planning and
Development, amendments were required to increase the Building Department revenue and corresponding cost of
performing building inspections. The budget is always amended to move the prior year's Special Services year-
end surplus and the anticipated current year's surplus to the Capital Improvement Fund.
Excluding park impact fees, rural fire district cost sharing, and Planning and Development revenue from
governmental revenue, total actual general fund revenues exceeded budgeted revenue by $2.6 million. Property
tax and state revenue sharing make up 75% of the surplus. The amount of new construction increased the
property tax amount from the County's original estimate. State revenue sharing out-performed early estimates.
General Government expenditures are substantially under budget. In FY02 the City appropriated $1,800,000 to
pay ACfID for easements and right of way purchases to facilitate the development of the Locust Grove Overpass.
Over the past four years only about $800,000 has been expended and almost $1 million was re-appropriated in
the FY06 budget. This is budgeted in the Administration or General Government budget so it appears
significantly under budget. There were also some General Government savings in consulting and training items
and in personnel expense.
Delays in hiring a number of Police officer positions resulted in personnel savings of almost $600,000. The
Parks Department appears significantly under budget because they did not complete $2.5 million dollars of
budgeted capital projects. Those capital dollars were carried over into the FY06 budget.
0
11
1
•
CITY OF MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
Revenue -Governmental Fund FY05
Amended Budget to Actual
1
t
r
i
1
1
1
12
AioAe 6o,~a ~,~~~o a,~' o~~°~ ~AS~ ~°a,~c~, ~~O,e~~ ~~r~
O ` 'b,~ ,~ ,~ s~
~ es SeZ ~~s
•
CITY OF MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
1
1
1
1
General Fund Personnel & Operating Expenditures -
Budget to Actual - FY05
$s,ooo,oao , ~ Actual
® Amended Budget
$5,000,000 II ^ Original Budget
$a,ooo,ooo
$3,000,000
li
I
$2,000,000
i
$1,000,000 I ~ II' I
~~ Q
I ~ - = li
;; ~
_ r;.` I ~
$ General Locust Grove Police Fire Planning/Devlp Parks and Rec
Government Overpass
Capital Asset and Debt Administration
Capital Assets
At the end of fiscal year 2005 the City had $122 million invested in capital assets (net of accumulated
depreciation). During fiscal year 2005 the City's total investment in net assets increased 19 percent. 83% of
that increase was due to business activities. See table below:
Capital Assets as of September 30,2005
(net of depreciation)
Governmental Business -type Total Primary
Activities Activities Govern ment
2004
2005 2004 2005 2004 2005
Land $7,447,008 $6,886,008 $781,814 $721,481 $8,228,822 $7,607,489
Buildings &
Improvements other than
330
049
$8
$8,386,036
$12,006,331 $11,499,094
$20,055,661
$19,885,130
buildings ,
, 932 $57,957,390
877
$65 $65,877,932 $57,957,390
Sewer and Water Lines ,
,
8
7 $
Construct on in Progress $3,244,937 $1,908,096 , 02
,13
$$5,705,001 $ 8,949 938
$ $9,039,098
___ .. w.......nn -yen @~I~9 A79 R~.7
13
1
•
CITY ®F MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
es land buildin s sewer and water lines, buildings, automobiles
The City s mvestment in capital assets mclud g
and equipment and street lights. Sidewalks, bridges, and roads belong to the Ada County Highway District.
Major capital asset events in FY05 included:
• General Government donations;
o Adventure Island Playground - $518,0000
o Fire station lot -Linder and Chinden - $357,000
o Autumn Faire Parkland - $204,000
• Contributed water and sewer lines of $9.3 million
• Well #25 donated for $420,000
• Well #24 completed for $588,585
• Waste Water Treatment Plant waste thickener project for $697,000.
The City booked $926,885 in depreciation expense for governmental City functions and $2,633,986 for business-
- type activities.
Long-Term Debt
The City has a capital lease and trust agreement with Wells Fargo Bank. This agreement was entered into, as the
result of a judicial review on August of 2001 in the amount of $4,000,000 for the purpose of constructing a police
station. At September 30, 2005 the long-term balance was $2,585,000.
FY06 Budgetary Considerations
The City of Meridian bases the budget on a revenue analysis and projection. Population and new construction
drives most of the City's revenues from property tax to utility accounts, underlying all revenue projections for all
funds was the assumption of continued growth in residential housing. The initial forecasts for fiscal year 2004
residential building permits was 1,350 based on growth rates during prior years of approximately 8%. In
actuality the total sold for the year was 2,081, a record high for the City. Fiscal year 2005 sales were projected to
be in the same range, in actuality they were 3,227. It is expected that growth will be slightly less or the same in
FY06 as it was in FY05.
Population and commercial growth challenges the City's ability to provide general services like public safety and
parks and recreation. Statutory limitations on property tax collections mean that in periods of rapid growth the
revenue does not keep up with demand for services. Meeting those needs will be the City's biggest challenge the
rest of this decade. When building growth slows down it will become even more challenging to meet general
government service needs without the extra income generated by growth. The City is making long range
financial planning a priority.
14
• •
CITY OF MERIDIAN
MANAGEMENT'S DISCUSSION AND ANALYSIS
SEPTEMBER 30, 2005
1
i
1
1
1
1
1
Requests for Information
This report is designed to provide a general overview of the City of Meridian's finances for our citizens and
customers. If you have questions about this report or need additional financial information, contact:
City of Meridian
Finance Office
33 E. Idaho Ave.
Meridian, Idaho 83642
Phone: (208) 888-4433
15
•
CITY OF MERIDIAN
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2005
Primary Government
Governmental
Activities Business-type
Activities
Total Component
Unit
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$ 4,636,794
$ 4,985,585 $
9,622,379
064
903
61
$ 194,076
Investments 18,260,701 43,642,363 ,
,
Receivables
Accounts (net of $40,945 allowance
for enterprise fund uncollechbles)
589,385
1,506,364
2,095,749 -
Property taxes 10,382,110 - 10,382,110 404,149
Assessments - 6,164 6,164 =
Due from other governmental units 1,000,383 263,271 1,263,654
Interest 99,591 214,833 314,424 -
ids
P 416
8 - 8,416 -
repa ,
Total Current Assets 34,977,380 50,618,580 85,595,960 598,225
NONCURRENT ASSETS
Restricted cash and cash equivalents 1,700,553 - 1,700,553 -
Restricted investments 2,739,965 - 2,739,965 -
Capital assets
Land, infrastructure, and other assets not
depreciated 10,691,945 16,486,815 27,178,760 -
Buildings, improvements and equipment,
net of depreciation 10,163,864 85,280,086 95,443,950 -
$ 60,273,707 $152,385,481 $ 212,659,188 $ 598,225
See Notes to Financial Statements 16
•
CITY OF MERIDIAN
' STATEMENT OF NET ASSETS
SEPTEMBER 30, 2005
LLABII.,ITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable
Accrued payroll and taxes
Accrued vacation, current portion
Interest payable
Deferred revenue
Customer deposits
Capital leases -current portion
Total Current Liabilities
NONCURRENT LIABILITIES
Accrued vacation -less current portion
Capital leases -less current portion
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
$ 1,312,142 $ 2,201,494 $ 3,513,636 $ 11,934
510,513 187,582 698,095 -
53,816 11,854 65,670 -
34,467 - 34,467 -
10,257,216 - 10,257,216 404,149
812,369 402,599 1,214,968 -
390,000 - 390,000 -
13,370,523 2,803,529 16,174,052 416,083
484,341 106,702 591,043 -
2,195,000 - 2,195,000 -
16,049,864 2,910,231 18,960,095 416,083
NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Park improvements
Capital improvements
Police center debt service
Unrestricted
Total Net Assets
18,270,809 101,766,901 120,037,710 -
3,627,778 - 3,627,778 -
5,359,398 - 5,359,398 -
400,000 - 400,000 -
16,565,858 47,708,349 64,274,207 182,142
44,223,843 149,475,250 193,699,093 182,142
$ 60,273,707 $152,385,481 $ 212,659,188 $ 598,225
17
~ • •
Net (Exp ense) Revenue and Changes in Net Assets
Pri mary Government
Governmental Business-type Component
Activities Activities Total Unit
' $ (1,693,119) $ - $ (1,693,119) $ -
(4,984,808) - (4,984,808) -
(2,297,048) = (2,297,048)
1,875,995 -
1,875,995
2,871,322 - 2,871,322 -
(127,450) - (127,450) =
(4,355,108} - (4,355,108)
- 19,782,592 19,782,592 -
- 19,782,592 19,782,592 -
$ (4,355,108) $ 19,782,592 $ 15,427,484 $ -
$ _ $ _ $ _ $ (110,915)
8,550,028 - 8,550,028 218,161
913,877 - 913,877 -
2,549,958 - 2,549,958 -
757,842 1,611,564 2,369,406 3,780
(157,369) (372,194) (529,563) -
Z5,515 172,101 197,616 -
(6,812) - (6,812) -
397,698 (397,698) - -
13,030,737 1,013,773 14,044,510 221,941
8,675,629 20,796,365 29,471,994 111,026
35,548,214 128,678,885 164,227,099 71,116
$ 44,223,843 $149,475,250 $193,699,093 $ 182,142
19
i
CITY OF MERIDIAN
BALANCE SHEET -GOVERNMENTAL FUNDS
SEPTEMBER 30, 2005
General
ASSETS
Cash and cash equivalents
Investments
Receivables
Accounts
Property taxes
Due from other governmental units
Interest
Prepaid items
Restricted assets
Cash and cash equivalents
Investments
LIABILITIES AND FUND BALANCES
Liabilities
Accounts payable
Accrued payroll and taxes
Deferred revenue
Customer deposits
Total
Capital Governmental
Projects Funds
$ 4,563,267 $ 73,527 $ 4,636,794
13,002,909 5,257,792 18,260,701
589,385 - 589,385
10,382,110 - 10,382,110
1,000,383 - 1,000,383
70,312 29,279 99,591
8,416 - 8,416
1,700,553 - 1,700,553
2,739,965 - 2,739,965
$ 34,057,300 $ 5,360,598 $ 39,417,898
$ 1,310,942
510,513
10,350,245
812,369
$ 1,200
1,200
$ 1,312,142
510,513
10,350,245
812,369
12,985,269
12,984,069
Fund balances
Reserved for park improvements
Reserved for capital improvements
Reserved for police center debt service
Reserved for fire truck purchases
Reserved for overpass construction
Unreserved
See Notes to Financial Statements
3,627,778 - 3,627,778
2,966,780 5,359,398 8,326,178
400,000 - 400,000
405,850 - 405,850
987,544 - 987,544
12,685,279 - 12,685,279
21,073,231 5,359,398 26,432,629
$ 34,057,300 $ 5,360,598 $ 39,417,898
20
CITY OF MERIDIAN
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2005
Fund balance -total governmental funds $ 26,432,629
Amounts reported for governmental activities in the statement of net assets are different
because:
Capital assets used in governmental activities are not fmancial resources and therefore
are not reported in the funds. 20,855,809
Some of the property taxes receivable are not available to pay for current period
expenditures and therefore are deferred in the funds. 93,029
Long-term debt is not due and payable in the current period and therefore is not reported
in the funds. (2,585,000)
Accrued vacation is not due and payable in the current period and therefore is not
reported in the funds. (538,157)
Interest on long-term debt is not due and payable in the current period and therefore is
not reported in the funds. (34,467)
Net assets of governmental activities $ 44,223,843
See Notes to Financial Statements 21
•
CITY OF MERIDIAN
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-
GOVERNMENTAL FUNDS
YEAR ENDED SEPTEMBER 30, 2005
REVENUES
Taxes
Licenses and permits
Intergovernmental
Franchise fees
Fines and forfeitures
Charges for services
Interest
Miscellaneous
Total Revenues
EXPENDITURES
General government
Public safety
Community planning and development
Parks and recreation
Debt service
Principal
Interest
Capital outlay
Total Expenditures
EXCESS OF REVENUES OVER EXPENDITURES
OTHER FINANCING SOURCES (USES)
Operating transfer in
Operating transfer out
Unrealized loss on investments
Proceeds from sale of capital assets
Total Other Financing Sources (Uses)
NET CHANGE IN FUND BALANCES
FUND BALANCE, BEGINNING OF YEAR
FUND BALANCE, END OF YEAR
See Notes to Financial Statements
Total
Capital Governmental
General Projects Funds
$ 8,567,301 $ - $ 8,567,301
5,791,958 - 5,791,958
3,917,201 - 3,917,201
913,877 - 913,877
345,813 - 345,813
2,932,140 - 2,932,140
587,802 170,040 757,842
132,169 - 132,169
23,188,261 170,040 23,358,301
2,259,638 5,912 2,265,550
8,546,048 - 8,546,048
3,206,439 - 3,206,439
841,015 - 841,015
375,000 - 375,000
127,450 - 127,450
1,339,765 9,488 1,349,253
16,695,355 15,400 16,710,755
6,492,906 154,640 6,647,546
397,698 1,897,123 2,294,821
(1,897,123) - (1,897,123)
(109,002) (48,367) (157,369)
11,275 - 11,275
(1,597,152) 1,848,756 251,604
4,895,754 2,003,396 6,899,150
16,177,477 3,356,002 19,533,479
$ 21,073,231 $ 5,359,398 $ 26,432,629
22
• •
CITY OF MERIDIAN
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN
FUND BALANCES OF GOVERNMENTAL FUND5 TO THE STATEMENT OF ACT1ViTIES
YEAR ENDED SEPTEMBER 30, 2005
Net change in fund balances -total governmental funds $ 6,899,150
Amounts reported for governmental activities in the statement of activities are
different because:
Governmental funds report capital outlay as expenditures. However, in the statement
of activities the cost of those assets is allocated over their estimated useful lives and
reported as depreciation expense. This is the amount by which capital outlays
($1,349,253) exceeded depreciation ($926,886) in the current period. 422,367
Capital assets contributed by developers are not a source of fmancial resources and
' thus, are not recognized in the governmental funds. 1,086,289
In the statement of activities, only the gain or loss on disposal of assets is reported,
i whereas in the governmental funds, the gains from the disposal increase financial
resources. Thus, the change in net assets differs from the change in fund balance by the
net book value of the assets disposed o£ (18,090)
Some property tax revenue in the statement of activities that do not provide current
financial resources is not reported as revenue in the funds. (17,273)
Repayment of long-term debt principal is an expenditure in the governmental funds, but
the repayment reduces long-term debt in the statement of net assets. 375,000
In the statement of activities, accrued vacation is measured by the amounts earned
during the year. In governmental funds, however, expenditures for these items are
measured by the amount of financial resources used. This is the amount by which
benefits earned exceeded benfits paid in the current year. (76,814)
Interest expense accrued but not paid reported in the statement of activities does not
require the use of current financial resources and therefore is not reported as
expenditures in governmental funds. 5,000
Change in net assets of governmental activities $ 8,675,629
See Notes to Financial Statements 23
• •
CITY OF MERIDIAN
STATEMENT OF NET ASSETS -PROPRIETARY FUND
YEAR ENDED SEPTEMBER 30, 2005
Enterprise Fund
Water and Sewer .
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,985,585
Investments 43,642,363
Receivables
Accounts (net of $40,945 allowance for uncollectibles) 1,512,528
Due from other governmental units 263,271
Interest _214,833
Total Current Assets 50,618,580
NONCURRENT ASSETS
Capital assets
781,814
Land 15,705,001
Construction in progress 307
528
19
Buildings and improvements other than buildings ,
,
Sewer and water lines 76,627,553
Machinery and equipment 11,359,134
(22,234,908)
Less accumulated depreciation
$ 152,385,481
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
$ 2,201,494
Accounts payable 187,582
Accrued payroll and taxes 118,556
Accrued vacation 402,599
Customer deposits
Total Current Liabilities 2,910,231
NET ASSETS
Invested in capital assets, net of related debt 101,766,901
Unrestricted 47,708,349
Total Net Assets 149,475,250
$ 152,385,481
24
See Notes to Financial Statements
•
•
CITY OF MERIDIAN
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS-
PROPRIETARY FUND
YEAR ENDED SEPTEMBER 30, 2005
Enterprise Fund
Water and Sewer
OPERATING REVENUES
Charges for services
$ 3,310,002
Water revenues 4,699,816
Sewer revenues 830,000
Sale of meters 2,350,824
Latecomers fees 545,160
Engineering fees 172,101
Miscellaneous
11,907,903
Total Operating Revenues
OPERATING EXPENSES
3,567,675
Personnel services 3,855,025
Other services and charges 2,633,986
Depreciation 1,305,382
Supplies
455,477
Heat, lights and power
Total Operating Expenses 11,817,545
90,358
OPERATING INCOME
NONOPERATING REVENUES (EXPENSES)
1,611,564
Interest revenue 10,530,370
Connection assessment fees (372,194)
Net decrease in fair value of investments _
Total Nonoperating Revenues (Expenses) 11,769,740
INCOME BEFORE CONTRIBUTIONS AND TRANSFERS 11,860,098
Donated waterlines and sewerlines 9,333,965
(397,698)
Operating transfers out
CHANGE IN NET ASSETS 20,796,365
NET ASSETS, BEGINNING OF YEAR 128,678,885
NET ASSETS, END OF YEAR $ 149,475,250
25
See Notes to Financial Statements
•
CITY OF MERIDIAN
STATEMENT OF CASH FLOWS-PROPRIETARY FUND
YEAR ENDED SEPTEMBER 30, 2005
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers and users $ 11,746,938
Payments to suppliers (4,538,856)
Payments to employees (3,523,505)
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,684,577
CASH FLOWS FROM NONCAPITAL
FINANCING ACTIVITIES
Operating transfer to general fund (397,698)
NET CASH USED BY NONCAPII'AL FINANCING ACTIVITIES (397,698)
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Connection assessment fees 10,530,370
Acquisition of capital assets (11,259,508)
NET CASH USED BY CAPITAL AND
RELATED FINANCING ACTIVITIES (729,138)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (24,327,674)
Sale of investments 20,303,378
Interest received 1,621,924
NET CASH USED BY INVESTING ACTIVITIES (2,402,372)
NET INCREASE IN CASH 155,369
CASH, BEGINNIl~iG OF YEAR 4,830,216
CASH, END OF YEAR $ 4,985,585
See Notes to Financial Statements 26
CITY OF MERIDIAN
STATEMENT OF CASH FLOWS-PROPRIETARY FUND
YEAR ENDED SEPTEMBER 30, 2005
RECONCILIATION OF OPERATING INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
$ 90,358
Operating income
Adjustments to reconcile operating income to net
cash provided by operating activities
2,633,986
Depreciation
Changes in assets and liabilities
161,950
Accounts receivable (263,271)
Due from other governments 58,754
Prepaid items 691,737
Accounts payable 44,170
Accrued payroll and taxes (59,644)
Deferred revenue 326,537
Customer deposits
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 3,684,577
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Developer and customer contributed
sewer and water lines $ 9,333,965
27
See Notes to Financial Statements
•
CI'T'Y OF 1~RIDIAN
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2005
NOTE 1-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),
' community planning and development, parks and recreation, 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 included in the accompanying basic 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 Locad
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 Repotting 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 Repotting Entity
As required by generally accepted accounting principles, these basic financial statements present the City in
conformance with GASB Statement No. 39, "Determining Whether Certain Organizations ate Component Units."
Under Statement No. 39, component units are organizations that are included in the reporting entity because of the
significance of their operational or financial relationships with the City.
The component unit column in the combined financial statements is the financial data of the City's single
component unit, the Meridian Development Corporation (MDC). MDC is a separate and distinct legal entity created
by state statute. The directors of MDC are appointed by the Mayor and approved by the City Council. MDC
provides urban development services for the citizens of the City. Complete financial statements can be obtained
M from the City of Meridian Division of Financial Management, 33 East Idaho, Meridian, Idaho.
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 plans
financial statements are not included in this report.
1
28
(continued on next page)
' •
NOTES TO FINANCIAL STATEMENTS
1
GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS
The government-wide fmancial statements (i.e., the statement of net assets and the statement of changes in net
assets) report information on all of the nonfiduciary activities of the primary government. For the most part, the
effect of interfimd activity has been removed from these statements. Governmental activities, which normally are
supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which
rely to a significant extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given function or segment
are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or
segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit
from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that
are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general revenues.
Separate fmancial statements are provided for governmental funds and proprietary funds. Major individual
governmental funds and major individual enterprise funds are reported as separate columns in the fund financial
statements.
MEASUREMENT FOCUS, BASIS OF ACCOUNTIl~TG, AND FINANCIAL STATEMENT PRESENTATION
The government-wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as are the proprietary fiord and fiduciary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash
flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similax items are
recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be
available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are
', recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as
expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.
Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of
special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as
revenue of the current period. All other revenue items are considered to be measurable and available only when
cash is received by the government.
The City reports the following major governmental funds:
General Fund -The General Fund is the general operating fiend of the City. It is used for all financial resources
except those required to be accounted for in another fund.
(continued on next page) 29
NOTES TO FINANCIAL STATEMENTS
Capital Projects Fund- The Capital Projects Fund is used to account for financial resources to be used for the
acquisition or construction of maj or capital facilities (other than those financed by proprietary funds).
The City reports the following major proprietary fund:
Enterprise Fund -The Enterprise Fund is used to account for operations financed and operated in a manner similaz
to private business when the intent of the governing body is that costs (expenses, including depreciation) of
r 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.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
statements. Exceptions to this general rule aze charges between various functions of the government when
elimination of these charges would distort the direct costs and program revenues reported for the various functions
concerned.
Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or
privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special
assessments. Internally dedicated resources aze reported as general revenues rather than as program revenues.
Proprietary funds distinguished operating revenues and expenses from nonoperating items. Operating revenues and
expenses generally result from providing services and products and delivering goods in connection with a
proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds are
charges for services to customers for sales and services. The Water and Sewer Funds also recognizes as operating
revenue the portion of hook-on fees intended to recover the cost of connecting new customers . to the system.
Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and
depreciation on capital assets. All revenues and expenses not meeting this definition aze reported as nonoperating
revenues and expenses.
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
Within the governmental fund financial statement, property taxes are recognized as revenue when the amount of
1 taxes levied is measurable, and proceeds are available to finance current period expenditures.
30
(continued on next page)
t
r
L~
1
J
1
i_.
NOTES TO FINANCIAL STATEMENTS
Available tax proceeds include 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.
Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks,
and similar items) are reported in the applicable governmental or business-type activities columns in the
government-wide fmancial statements. Capital assets are defined by the government as assets with an initial,
individual cost of more than $1,000 and an estimated useful life in excess of two years. All material fixed assets
are valued at cost. Donated fixed assets are valued at their estimated fair value on the date donated. Public domain
fixed assets consisting of roads, bridges, streets and sidewalks, and lighting systems are also reported in the
applicable governmental or business-type activities columns in the government-wide financial statements.
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:
Buildings
Sewer plant
Sewer and water lines
Improvements other than buildings
Equipment
Public domain infrastructure
Estimated Useful
Life (Years)
30
25
50
10-50
5-20
40
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.
Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest costs incurred
during construction of capital assets of business-type activities are capitalized when they are material. There were
no interest costs included as part of the costs of capital assets under construction in the current year.
31
(continued on next page)
•
NOTES TO FINANCIAL STATElV~IENTS
Compensated Absences Payable
The City provides vacation and sick leave to its full-time 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 for non-union employees. The fire
department union members are paid fifteen percent of their sick leave accrual 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 year's
accumulation, no additional expenditures are accrued.
Capital Leases
The City is the lessee under a capital lease and trust agreement with Wells Fargo Bank for the law enforcement .
building. Under the terms of the agreement the City constructed the project on behalf of the lessor. The lease
requires annual payments. T'he City will acquire the asset at the end of the lease for a bargain purchase price of $1.
Risk Nfanagement
'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.
Fund Equity
In the fund financial statements, 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
i 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. It is the government's policy to first apply restricted resources when an
expense is incurred for purposes for which both restricted and unrestricted net assets are available.
The City has established reserves to account for the resources received from donors for future park and capital
improvements. The City has also established a reserve for the police center and future fire truck purchases.
EncumbYances
Encumbrance accounting, under which purchase orders, contracts, and other corrunitments for the expenditure of
monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the City.
32
1 (continued on next page}
~ ~ i
NOTES TO FINANCIAL STATEMENTS
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 2 -CASH AND INVESTMENTS
Cash and investments as of September 30, 2005 are classified in the accompanying financial statements as follows:
~ Cash and cash equivalents $ 9,622,379
, Cash and cash equivalents -restricted 1,700,553
$ 11,322,932
Total
$ 61,903,064
Investments
2,739,965
Investments -restricted $ 64,643,029
Total
Investments Authorized by the State of Idaho and the City of Meridian's Investment Policy
Investment types that are authorized for the City of Meridian by the Idaho Code and the City's investment policy
are as follows:
1. Local and State Agency Bonds
2. U. S. Agency Bonds
3. U. S. Agency Securities
4. Certificates of Deposit
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely impact the fair value of an
investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to
changes in market interest rates. One of the ways the City manages its exposure to interest rate risk is by
purchasing a combination of long and short-term investments. The City keeps funds needed for operations in
short-term liquid investments while maintaining a stable longer-term investment portfolio with duration matched
to expected completion of capital projects. Generally, overall portfolio duration is maintained between 3 and 3.5,
but the City has no specific limitations.
33
' (continued on next page)
•
NOTES TO FINANCIAL STATEMENTS
Deposit and investments subject to duration measurement:
Commercial Paper
Agency Bonds
Certificates of Deposit
Total deposits and investments subject to duration measurement
Fair Value Duration
$ 5,700,000 0.2
23,599,682 3.9
11,338,805 3.8
40,638,487 3.4
Deposits and investments not subject to duration measurement:
Idaho Diversified Bond Pool (DBF)
Idaho Local Government Investment Pool (LGIP)
Money Market Fund
Other Cash and Cash Equivalents
Total deposits and investments not subject to duration measurment
Total deposits and investments
Disclosures Relating to Credit Risk
17,385,875
6,618,667
187,148
11,135,784
35,327,474
$ 75,965,961
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the
investment. This is measured by the assignment of a rating by a nationally recognized statistical rating
organization. The City's investment policy requires a rating of A or better by Standard & Poor's or other
nationally recognized rating agency. The investments are in compliance with policy.
Concentration of Credit Risk
The City's investment policy has no limitations on the amount that .can be invested in any one issuer.
i Investments in any one issuer (other than State investment pools) that represents 5% or more of total City
investments are as follows:
Issuer Investment Type Reported Amount Percentage
Federal Home Loan Bank U.S. Agency Bond $ 9,191,834 14%
18%
Federal Home Loan Mortgage Corporation U.S. Agency Bond $ 11,867,835 6%
Famers and Merchants Bank Certificate of Deposit $ 3,700,449
Home Federal Savings Certificate of Deposit $ 3,501,884 5%
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a
government will not be able to recover its deposits or will not be able to recover collateral securities that are in
possession of an outside party. The custodial credit risk for investments is the risk that in the event of the failure
of the counterparty (e.g. broker-dealer) to a transaction, a government will not be able to recover the value of its
34
(continued on next page)
•
NOTFS TO FINANCIAL STATEMENTS
investment or collateral securities that are in the possession of another party. The City does not have a policy
restricting the amount of deposits and investments subject to custodial credit risk.
At year end, the carrying amount of the City's deposits was $11,322,932 and the bank balance was $11,830,818.
i Of the bank balance, $300,000 was covered by federal depository insurance and $11,530,818 was uninsured and
uncollateralized. All cash is held in Farmers & Merchants State Bank, Wells Fargo National Bank, Washington
Federal Savings Bank and Charles Schwab & Co located in Ada County, Idaho.
e Ci minimizes ex osure to custodial credit risk by requiring that investments, to the extent possible, be
Th ty P
identified as to City of Meridian ownership and be held in the City's name. All commercial paper, agency bonds
and money market funds are held in custody by Charles Schwab & Co. in the City's name.
Investment in State Investment Pools
The City is a voluntary participant in the State of Idaho Local Government Investment Pool (LGIP) and the State
of Idaho Diversified Bond Fund (DBF). Both the T,GIP and the DBF are regulated by State of Idaho code under
the oversight of the Treasurer of the State of Idaho. The fair value of the City's investment in the pools is
reported in the accompanying financial statements at amounts based on the City's pro-rata share of the fair
market value provided by the fund for the entire portfolio. Neither the LGIP nor the DBF are rated by a
nationally recognized statistical rating organization.
NOTE 3 -DUE FROM OTHER GOVERNMENTAL U1~TITS
The following summarizes the intergovernmental receivables at September 30, 2005:
State of Idaho
State Liquor Dispensary $ 58,476
State Tax Commission 575,253
Dept Commerce/Labor 1,708
Meridian Rural Fire District 144,912
Ada County 165,495
Ada County Highway District 312,548
Other 5,262
Total $ 1,263,654
35
(continued on next page)
0
NOTES TO FYNANCIAL STATEMENTS
NOTE 4 -CAPITAL ASSETS
Changes to capital assets are as follows:
Governmental Activities:
Capital assets, not depreciated:
Land
Construction in progress
Total capital assets,
not depreciated
Capital assets, depreciated:
Buildings
Improvements other
than buildings
Equipment
Total capital assets,
depreciated
Less accumulated depreciation for:
Buildings
Improvements other than
•
Balance Balance
Oct. 1, Sept. 30,
2004 Additions Deletions 2005
$ 6,886,008 $ 561,000 $ - $ 7,447,008
1,908,096 1,348,017 11,176 3,244,937
8,794,104 1,909,017 11,176 10,691,945
6,348,024
3,844,577
4,932,165
15,124,766
927,577
20,414
50,342
470,190
540,946
217,203
2,681
183,181
185,862
2,681
6,365,757
3,894,919
5,219,174
15,479,850
1,142,099
buildings 878,988 190,259 - 1,069,247
Equipment 2,747,062 519,424 161,846 3,104,640
Total accumulated depreciation 4,553,627 926,886 164,527 5,315,986
Total net capital assets, depreciated 10,571,139 (385,940) 21,335 10,163,864
Governmental activities capital
assets, net
$19,365,243 $ 1,523,077 $ 32,511 $20,855,809
(continued on next page) 36
•
NOTES TO FINANCIAL STATEMENTS
Business-type activities
Capital assets, not depreciated:
Land
Construction in progress
Total capital assets,
not depreciated
Capital assets, depreciated:
Buildings and improvements
other than buildings
Sewer and water lines
Machinery and equipment
Total capital assets,
depreciated
Balance
Oct. 1,
2004
Additions Deletions
Balance
Sept. 30,
2005
$ 721,481 $ 60,333 $ - $ 781,814
7,131,002 10,796,536 2,222,537 15,705,001
7,852,483 10,856,869 2,222,537 16,486,815
18,376,108 1,152,199
67,280,982 9,347,172
9,898,763 1,460,371
95,555,853 11,959,742
- 19,528,307
601 76,627,553
- 11,359,134
601 107,514,994
Less accumulated depreciation for:
Buildings and improvements
other than buildings 6,877,014 644,962 - 7,521,976
Sewer and water lines 9,323,592 1,426,029 - 10,749,621
Machinery and equipment 3,400,316 562,995 - 3,963,311
Total accumulated depreciation 19,600,922 2,633,986 - 22,234,908
Total net capital assets, depreciated 75,954,931 9,325,756 601 85,280,086
Business-type activities capital
assets, net $ 83,807,414 $ 20,182,625 $ 2,223,138 $ 101,766,901
(continued on next page) 37
~ • •
' NOTES TO FINANCIAL STATEMENTS
Depreciation expense was charged to functions/programs of the City as follows:
Governmental activities:
General government $ 67,987
Public safety 636,167
Community planning and development 9,193
Parks and recreation 213,539
Total depreciation expense -governmental activites $ 926,886
Business-type activities:
Water and Sewer $ 2,633,986
Total depreciation expense -business-type activities $ 2,633,986
NOTE 5 - INTERFUND BALANCES AND TRANSFERS
The following transfers were made for the purpose of funding operations:
Transfer In:
Transfer out:
Capital
General Projects
Fund Fund Total
General fund $ - $ 1,897,123 $ 1,897,123
Enterprise fund 397,698 - 397,698
Total transfers $ 397,698 $ 1,897,123 $ 2,294,821
As of September 30, 2005, there were no internal balances due to or from other funds.
NOTE 6 - CHANGES IN LONGTERM DEBT
The City is the lessee under a capital lease and trust agreement with Wells Fargo Bank for the law enforcement
building. Under the terms of the agreement the City constructed the project on behalf of the lessor. The lease
requires annual payments. At the end of the lease, the City has the option to purchase the facility for $1. The lease
has a term often years with annual principal payments of $375,000 to $475,000 and interest rates of 3.5% to 4.5%.
The following is a summary of changes in long-term debt of the City for the year ended September 30, 2005.
(continued on next page) 38
NOTES TO FINANCIAL STATEMENTS
Due
Balance Balance Within
Oct.l, Debt Debt Sept. 30, One
2004 Issued Retired 2005 Year
Governmental activities:
Capital leases
Building $2,960,000 $ - $ 375,000 $2,585,000 $ 390,000
Accrued vacation 461,343 76,814 - 538,157 53,816
Governmental activities
long-term liabilities $3,421,343 $ 76,814 $ 375,000 $3,123,157 $ 443,816
Business-type activities:
Accrued vacation $ 95,128 $ 23,428 $ - $ 118,556 $ 11,855
The future minimum lease obligation and the net present value of the minimum lease payments as of September 30,
2005 are as follows:
Fiscal Year
2006
2007
2008
2009
2010
2011
Principal Interest Total
$ 390,000 $ 110,200 $ 500,200
405,000 94,600 499,600
420,000 78,400 498,400
440,000 60,550 500,550
455,000 41,850 496,850
475,000 21,375 496,375
$ 2,585,000 $ 406,975 $ 2,991,975
The City leases the law enforcement building under anon-cancelable capital lease. The cost and accumulated
depreciation by funds/account activity group are as follows at September 30, 2005:
Governmental activities
Accumulated
Cost Depreciation
$ 3,582,021 $ 368,142
(continued on next page) 39
' NOTES TO FINANCIAL STATEMENTS
' NOTE 7 -DEFINED BENEFIT PENSION PLAN
Public Employee Retirement System of Idaho -The Public Employee Retirement System of Idaho (PERS)), 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. The authority to establish and amend benefit
' provisions is established in Idaho Code. Designed as a mandatory system for eligible state and school district
employees, the legislation provided for other political subdivisions to participate by contractual agreement with
PERSI. Financial reports for the plan are available from PERSI upon request.
' After 5 ears of credited service, members become fully vested in retirement benefits earned to date. Members
Y
are eligible for retirement benefits upon attainment of the ages specified for their employment classification. For
each month of credited service, the annual service retirement allowance is 2.0% (2.3% police/firefighter) of the
average monthly salary for the highest consecutive 42 months.
' The contribution requirements of the City of Meridian and its employees are established and may be amended by
the PERSI Board of Trustees. For the year ended September 30, 2005, the required contribution rate as a
percentage of covered payrolls for members was 6.23% for general members and 7.65% for police/firefighters.
The employer rate as a percentage of covered payroll was 10.39% for general members and 10.73% for
police/firefighter members. These percentages changed after July 1, 2005 to 6.60% for general members and
8.09% for police/firefighters. The employer rate as a percentage of covered payrolls changed to 11.00% for
general members and 11.34% for police/firefighter members.
For PERSI's year ended June 30, 2005, the required contribution rates, as determined by PERSI, are as follows:
Employ e Employer
General Member 6.23-6.60% 10.39-11.00%
Police and Fire Member 7.65-8.09% 10.73-11.34%
Contributions required and paid were $992,266, $864,785 and $741,217 for the three years ended September 30,
2005, 2004, and 2003, respectively.
1
(continued on next page) 40
1
1
t
1
i~
NOTES TO FINANCIAL STATEMENTS
The City has the following commitments at September 30, 2005:
NOTE 8 - OTHER COMNIITMENTS
Commitment Purpose of Agreement Amount
Ada County Highway Locust Grove Overpass Easements, Nola to Eagle Road Utility Line
District Installation $ 3,216,552
AspireOn Mgmt & Employee Career Development/training $ 60,500
Bodiford Construction Black Cat Pressure Sewer $ 106,903
Boise City Attorney Prosecutorial & police legal advisor $ 20,040
C&A Paving Heroes Park Pals Soccer Construction $ 559,821
Carollo Engineering Wastewater Facility Plan Update, Dissolved Air Floatation Thickener
Project at WWTP, Headworks Expansion Project, WWTP Noise &
Odor Study, WWTP Centrate Equalization Tank $ 561;487
CH2M Hill Water Master Plan Update, Pretreatment Program Application
Modifications $ 84,599
Civil Suvey Consultants Overland Road (Meridian to Locust Grv to Eagle), Franklin Rd (E 1st to
Nola to E of Gaudian), Water Main Extention Victory Road, Franklin
Rd construct sewer,water,service lines, Well 10 By-Pass & Seven
Flushing Stations design, New pumping facilities at Well#25 Victory
Rd, Construct sewer/water Lines Franklin Rd, Well #20 Piping Pressure
Zone Modifications, Locust Grove Water/Sewer Improvements design,
Water Main Extension Linder At I-84 $ 70,597
Contractors Northwest Headworks Expansion Project $ 64,138
Guho Corporation Well #20B Pump House Expansion $ 372,246
HDR Engineering GIS Phase II $ 49,625
Hillside Lanscape Co Autumn Faire Park construction $ 234,341
Hydro Logic Drilling of Well #25 production well, Well#26 Production well
oversight services, Well #20B Design & OversightWell, #27 design of
pumping facilities, Well #27 Test Well Oversight, Ongoing
consultation, Municipal Water Rights Project, Well #27 professional
services, Ground Water Studies, Supply well evaluations $ 160,167
JC Contractors Black Cat Lift Station contruction $ 1,036,925
JUB Engineers Black Cat, Design Waterline crossing of Meridian & Victory, North
Black Cat Trunk & Lift Station design project, Black Cat Trunk Sewer
construction assistance, Sewer Master Plan Update & expansion, Ten
Mile Sewer design project, Design Black Cat trunk sewer & lift station
$ 637,176
Lune Construction Eagle road waterline extension $ 26,560
(continued on next page) 41
1 NOTES TO FINANCIAL STATEMENTS
Masco Inc. McMillan Water Extension, Franklin Road Waterline Extension $ 73,902
Paul Construction Ustick Water & Sewer construction $ 225,157
Pipeline Inspections 2005 Sewer Cleaning/TV inspection project $ 50,323
RSCI Centrate Equalization Project construction $ 314,950
Sommer Construction North Slough Trunk Line Construction $ 221,062
SourceOne Wireless Area Network Services $ 40,739
Star Construction Autumn Faire Park constructionDrilling of Well #25 production well,
Well#26 Production well oversight services, Well #20B Design &
OversightWell, #27 design of pumping facilities, Well #27 Test Well
r Oversight, Ongoing consultation, Municipal Water Rights $ 288,234
Western States Equipment WW'TP Supply of Backup Power system & procurement $ 30,873
NOTE 9 -CONTINGENT LIABILITIES
The City has been named as a defendant in various legal actions, the results of which are not presently detern7inable.
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 akeady
' collected, could become a liability of the City. City management believes disallowances, if any, will not be material.
NOTE 10 -COMPONENT UNIT
The Meridian Development Corporation (MDC) is created by and exists under the Idaho Urban Renewal Law of
1965, as amended, and is a separate and legal entity.
The following is a summary of the disclosures required for a fair presentation of the component unit in the City's
financial statements.
Cash
At year-end, the bank balance and carrying amount of deposits, reported as cash was $194,076, of which $94,076
was uninsured and uncollateralized and exposed to custodial credit risk. All cash is held in a financial institution
located in Idaho.
42
~ ~
CITY OF MERIDLIN
REQUIRED SUPPLEMENTARYINFORMATION
L~
l
1
1
~,~
~~
•
CITY OF MERIDIAN
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -
BUDGET AND ACTUAL -GENERAL FUND
YEAR ENDED SEPTEMBER 30, 2005
REVENUES
Taxes
Licenses and permits
Intergovernmental
Franchise fees
Fines and forfeitures
Charges for services
Interest
Miscellaneous
Total Revenues
EXPENDITURES
General government
Public safety
Police
Fire
Community planning and development
Parks and recreation
Debt service
Principal
Interest
Capital outlay
General government
Public safety
Police
Fire
Community planning and development
Parks and recreation
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER (UNDER) EXPENDITURES
Budgeted Amounts Variance
Actual With
Original Final Amounts Final Budget
$ 7,756,619 $ 7,756,619 $ 8,567,301 $ 810,682
2,108,500 5,041,188 5,791,958 750,770
3,822,914 3,269,973 3,917,201 647,228
724,000 724,000 913,877 189,877
275,500 309,000 345,813 36,813
1,341,550 2,733,550 2,932,140 198,590
448,000 448,000 587,802 139,802
6,000 38,500 132,169 93,669
16,483,083 20,320,830 23,188,261 2,867,431
3,133,093 3,578,053 2,259,638 1,318,415
5,832,012 5,848,352 5,187,666 660,686
3,288,294 3,349,230 3,358,382 (9,152)
2,309,206 3,392,206 3,206,439 185,767
916,398 934,698 841,015 93,683
375,000 375,000 375,000 -
125,000 125,000 127,450 (2,450)
5,460 17,960 16,654 1,306
312,045 330,705 323,732 6,973
1,135,330 229,530 71,179 158,351
73,610 73,610 49,393 24,217
1,903,300 3,425,729 878,807 2,546,922
19,408,748 21,680,073 16,695,355 4,984,718
(2,925,665) (1,359,243) 6,492,906 7,852,149
44
CITY OF MERIDIAN
SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE -
BUDGET AND ACTUAL -GENERAL FUND
YEAR ENDED SEPTEMBER 30, 2005
Budgeted Amounts Variance
Actual With
Original Final Amounts Final Budget
OTHER FINANCING SOURCES (USES)
Operating transfer in 425,845 524,105 397,698 (126,407)
Operating transfer out (77,983) (1,950,983) (1,897,123) 53,860
Unrealized loss on investments - - (109,002) (109,002)
Sale of capital assets - - 11,275 11,275.
Total Other Financing Sources (Uses) 347,862 (1,426,878) (1,597,152) (170,274)
EXCESS (DEFICIENCY) OF REVENUES AND
OTHER SOURCES (USES) OVER (UNDER)
EXPENDITURES 577,803)
(2 (2,786,121) 4,895,754 7,681,875
,
BEGINNING OF YEAR
FUND BALANCE 477
16
177 16,177,477 16,177,477 -
, ,
,
FUND BALANCE, END OF YEAR $ 13,599,674 $ 13,391,356 $ 21,073,231 $ 7,681,875
45
1
CITY OF MERIDIAN
NOTES TO REQUIltED SUPPi.EMENTARY INFORMATION
YEAR ENDED SEPTEMBER 30, 2005
~~J
Budgets and Budgetary Accounting
The City follows these procedures in establishing the budgetary data reflected in the financial statements:
Prior to September 1, the Finance Officer, 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.
I
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. 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. The
budget presented in the report has been amended.
Formal budgetary integration is employed as a management control device during the year for all funds.
46
CITY OF MERIDIAN, IDAHO
OTHER INFORMATION
~~~~
EideBaillysM
CPAs & BUSINESS ADVISORS
1
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT A UDITING STANDARDS
Mayor and Members of the City Council
City of Meridian, Idaho
Meridian, Idaho
We have audited the financial statements of the governmental activities, the business-type activities, the discretely
presented component unit, and each major fund of City of Meridian, Idaho, as of and for the year ended September
30, 2005, which collectively comprise the City of Meridian, Idaho's basic financial statements and have issued
our report thereon dated December 9, 2005. We conducted our audit in accordance with auditing standards
generally accepted in the United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Repotting
In planning and performing our audit, we considered City of Meridian, Idaho's internal control over financial
reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the 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
fmancial reporting that might be material weaknesses.
A material weakness is a reportable 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 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 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 fmancial reporting that we have reported to
management of City of City of Meridian, Idaho, in a separate letter dated December 9, 2005.
~l
PEOPLE. PRINCIPLES. POSSIBILITIES.
www.eidebailly.com 48
877 West Main St., Suite 8001 Boise, Idaho 83702-5858 1 Phone 208.344.7150 1 Fax 208.344.7435 1 EOE
~ ~
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Meridian, Idaho's financial statements are free
of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of
our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing
Standards.
This report is intended solely for the information and use of the audit committee, management, City Council and
federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone
other than these specified parties.
~~~~
Boise, Idaho
December 9, 2005
49
1 0 .» ~
~~
EideBailly~,
CPAs & BUSINESS ADVISORS
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE WITH OMB CIRCULAR A-133
Mayor and Members of the City Council
City of Meridian, Idaho
Meridian, Idaho
We have audited the compliance of City of Meridian, Idaho, with the types of compliance requirements described
in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are
applicable to each of its major federal programs for the year ended September 30, 2005. City of Meridian,
Idaho's major federal programs are identified in the summary of auditor's results section of the accompanying
schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and
grants applicable to each of its major federal programs is the responsibility of City of Meridian, Idaho's
management. Our responsibility is to express an opinion on City of Meridian, Idaho's compliance based on our
audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and
perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance
requirements referred to above that could have a direct and material effect on a major federal program occurred.
An audit includes examining, on a test basis, evidence about City of Meridian, Idaho's compliance with those
requirements and performing such other procedures as we considered necessary in the circumstances. We believe
that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on
City of Meridian, Idaho's compliance with those requirements.
In our opinion, City of Meridian, Idaho, complied, in all material respects, with the requirements referred to
above that are applicable to each of its major federal programs for the year ended September 30, 2005.
PEOPLE. PRINCIPLES. POSSIBILITIES.
www.eidebailly.com 50
877 West Main St., Suite 800 I Boise, Idaho 83702-5858 1 Phone 208.344.71501 Fax 208.344.7435 1 EOE
Internal Control Over Com liance
P
The management of City of Meridian, Idaho, is responsible for establishing and maintaining effective internal
control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal
programs. In planning and performing our audit, we considered City of Meridian, Idaho's internal control over
compliance with requirements that could have a direct and material effect on a major federal program in order to
determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report
on the internal control over compliance in accordance with OMB Circular A-133.
Our consideration of the internal control over compliance would not necessarily disclose all matters in the
internal control that might be material weaknesses. A material weakness is a reportable 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 noncompliance with applicable requirements of laws, regulations, contracts, and grants caused by
error or fraud that would be material in relation to a mayor federal program being audited may occur and not be
detected within a timely period by employees in the normal course of performing their assigned functions. We
noted no matters involving the internal control over compliance and its operation that we consider to be material
weaknesses.
This report is intended solely for the information and use of the audit committee, management, City Council, and
federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone
other than these specified parties.
~G~
Boise, Idaho
December 9, 2005
51
~ #
CITY OF MERIDIAN
SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS
YEAR ENDED SEPTEMBER 30, 2005
Federal
CFDA Current Year
Federal Grantor/Program Title Number Disbursements
U.S. DEPARTMENT OF HUD
Passed through the State of Idaho:
Community Development Block Grant-Entitlement Grants 14.228 $ 324,923
TOTAL U.S. DEPARTMENT OF HUD $ 324,923
U.S. DEPARTMENT OF INTERIOR
Passed through the Idaho Historical Society:
Historic Preservation 15.904 $ 3,000
TOTAL U.S. DEPARTMENT OF INTERIOR $ 3,000
U.S. DEPARTMENT OF JUSTICE
Passed through the State of Idaho:
Community Prosecution/Project Safe 16.609 $ 101,601
TOTAL U.S. DEPARTMENT OF JUSTICE $ 101,601
U.S. DEPARTMENT OF HOMELAND SECURITY
Passed through the State of Idaho:
Domestic Preparedness Grant 97.004 $ 118,803
TOTAL DEPARTMENT OF HOMELAND SECURITY $ 118,803
TOTAL FEDERAL ASSISTANCE $ 548,327
52
CITY OF MERID
IAN
NOTES TO SCHEDULE OF EXPENDITURE OF FEDERAL AWARDS
YEAR ENDED SEPTEMBER 30, 2005
1. The Schedule of Expenditures of Federal Awards presents the activity of all federal financial assistance
programs of City of Meridian, Idaho. The reporting entity is defined in Note 1 to the City's basic financial
statements.
2. The Schedule of Expenditures of Federal Awards is presented using the modified accrual basis of
accounting as described in Note 1 to the City's basic financial statements.
3. Major programs are identified in the Schedule of Findings and Questioned Costs.
53
CITY OF MERIDIAN
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED SEPTEMBER 30, 2005
Section I -Summary of Auditor's Results
Financial Statements
Type of auditor's report issued
Internal control over financial reporting:
Material weakness identified
Reportable conditions
Noncompliance material to financial
statements noted?
Federal Awards
Internal control over major programs:
Material weakness identified?
Reportable conditions
Type of auditor's report issued on compliance
for major programs
Any audit findings disclosed that are required
to be reported in accordance with Circular
A-133, Section .510(a)?
Unqualified
No
No
No
No
No
Unqualified
No
Identification of major programs:
CFDA number
14.228
Name of Federal Program or Cluster
Community Development Block Grant
54
i ~
February 3, 2006
MERIDIAN CITY COUNCIL MEETING February 7, 2006
APPLICANT ITEM NO. 4
REQUEST Quarterly Financial Report by Stacy Kilchenmann
AGENCY COMMENTS
CITY CLERK: See attached
CITY ENGINEER:
CITY PLANNING DIRECTOR:
CITY ATTORNEY
CITY POLICE DEPT:
CITY FIRE DEPT:
CITY BUILDING DEPT:
CITY WATER DEPT:
CITY SEWER DEPT:
CITY PARKS DEPT:
MERIDIAN SCHOOL DISTRICT:
ADA COUNTY HIGHWAY DISTRICT:
SANITARY SERVICE COMPANY
CENTRAL DISTRICT HEALTH:
NAMPA MERIDIAN IRRIGATION:
SETTLERS IRRIGATION:
IDAHO POWER:
US WEST:
INTERMOUNTAIN GAS:
MERIDIAN POST OFFICE:
OTHER:
Contacted: Date: Phone:
Emailed: Staff Initials:
Materials presented at publk meetings shah become properly of tite Ctiy of Meridian.
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