CITY OF MART, TEXAS BASIC FINANCIAL STATEMENTS ... - Mart, TX

CITY OF MART, TEXAS

BASIC FINANCIAL STATEMENTS

AND SUPPLEMENTAL SCHEDULES

AND INDEPENDENT AUDITOR’S REPORT

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016

City of Mart

Table of Contents

FYE 9/30/16

Page

Independent Auditors’ Report……………………………………………………………………... 1-2

Management Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-10

Statement of Net Position…………………………………………………………………………. 11

Statement of Activities…………………………………………………………………………….. 12

Balance Sheet – Governmental Funds…………………………………………………………….. 13

Reconciliation of the Governmental Funds Balance Sheet

To the Statement of Net Position…………………………………………………………………

14

Statement of Revenues, Expenditures and Changes

In Fund Balances – Governmental Funds……………………………………………………….

15

Reconciliation of the Statement of Revenues, Expenditures, and

Changes in Fund Balances – Governmental Funds to the

Statement of Activities……………………………………………………………………………

17

Statement of Net Position – Proprietary Funds……………………………………………………. 18

Statement of Revenues, Expenses and Changes in

Net Position – Proprietary Funds…………………………………………………………………

19

Statement of Cash Flows – Proprietary Funds…………………………………………………….. 20-21

Notes to the Financial Statements…………………………………………………………………. 22-45

Required Supplementary Information:

Budgetary Comparison Schedule – General Fund………………………………………………..

47

Schedule of Changes in Net Pension Liability and Related Ratios……………………………….. 48

Schedule of Contributions…………………………………………………………………………. 49

Compliance and Internal Control Section

Report on Internal Control over Financial Reporting and

On Compliance and Other Matters Based on an Audit of

Financial Statements Performed in Accordance with

Government Auditing Standards.....................................................................................................

50-51

INDEPENDENT AUDITOR’S REPORT

To the Honorable Mayor and

Members of the City Council

City of Mart, Texas

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Mart, Texas, as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Mart, Texas, as of September 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

1

Donald L. Allman, CPA, PC

205 E. University Ave.,Ste.165 Georgetown, Texas 78626

Phone: 512-422-3700

Fax: 512-240-5460 Email:[email protected]

http://www.donallmancpa.com/

Change in Accounting Principle

As discussed in Note 1 to the financial statements, in 2015 the City adopted new accounting guidance, Govermental Accounting Standards (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27 and Governmental Accounting Standards (GASB) Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB No. 68. Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 4-10 and 43–45 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Mart, Texas’ basic financial statements. The introductory section, combining and individual non-major fund financial statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining and individual non-major fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual non-major fund financial statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 17, 2017, on our consideration of the City of Mart, Texas’ internal control over financial 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Mart, Texas’ internal control over financial reporting and compliance.


Georgetown, TX February 17, 2017

2

MANAGEMENT’S DISCUSSION

AND ANALYSIS

3

City of Mart, Texas

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

September 30, 2016

The purpose of the Management’s Discussion and Analysis is to give the readers an objective and

easily readable analysis of the City of Mart’s financial activities for the year ended September 30,

2016. The analysis is based on currently known facts, decisions, or economic conditions. It presents

short and long-term analysis of the City’s activities, compares current-year results with those of the

prior year, and discusses the positive and negative aspects of that comparison. GASB Statement No.

34 establishes the content of the minimum requirements for MD&A. Please read the MD&A in

conjunction with the transmittal letter at the front of this report and the City’s financial statements,

which follow this section.

THE STRUCTURE OF OUR ANNUAL REPORT

Components of the Financial Section

Management's Basic Financial Required

Discussion and Statements Supplementary

Analysis Information

Notes to the

Independent Government Fund Financial Component Financial

Auditor's Report Wide Financial Statements Financial Statements

Statements Statements

Summary Detail

The Annual Financial Report is presented as compliant with the financial reporting model in effect

pursuant to GASB Statement No. 34. This financial reporting model requires governments to present

certain basic financial statements as well as a Management’s Discussion and Analysis (MD&A) and

certain other Required Supplementary Information (RSI). The basic financial statements include (1)

government-wide financial statements, (2) individual fund financial statements, and (3) notes to the

financial statements.

Government-Wide Statements

The government-wide statements report information for the City as a whole. These statements include

transactions and balances relating to all assets, including infrastructure capital assets. These statements

are designed to provide information about cost of services, operating results, and financial position of

the City as an economic entity. The Statement of Net Position and the Statement of Activities, which

4

City of Mart, Texas

MANAGEMENT’S DISCUSSION AND ANALYSIS, Continued

September 30, 2016

appear first in the City’s financial statements, report information on the City’s activities that enable the

reader to understand the financial condition of the City of Mart. These statements are prepared using

the accrual basis of accounting, which is similar to the accounting used by most private-sector

companies. All of the current year’s revenues and expenses are taken into account even if cash has not

yet changed hands.

The Statement of Net Position presents information on all of the City of Mart’s assets and liabilities.

The difference between the two is reported as net position. Over time, increases or decreases in net

position may serve as a useful indicator of whether the financial position of the City of Mart is

improving or deteriorating. Other non-financial factors, such as the City’s property tax base and the

condition of the City’s infrastructure, need to be considered in order to assess the overall health of the

City.

The Statement of Activities presents information showing how the City’s net position changed during

the most recent year. All changes in the net position are reported as soon as the underlying event

giving rise to the change occurs, regardless of the timing of related cash flows – the accrual method

rather than modified accrual that is used in the fund level statements.

The Statement of Net Position and the Statement of Activities divide the City into three classes of

activities:

1. Governmental Activities – Most of the City’s basic services are reported here, including

general government, public safety (police, fire, EMS); municipal court; and elected officials.

Interest payments on the City’s debt are also reported here. Sales tax, property tax, franchise

taxes, municipal court fines, and permit fees finance most of these activities.

2. Business-Type Activities – Services involving a fee for those services. These services, the

City’s water distribution, wastewater collection/treatment and refuse services are reported here.

3. Component Unit – The City of Mart itself is the primary government. The Mart Community

Center is established as a separate legal entity. The City maintains financial accountability;

thus, the Corporation is reported as a component unit, separate from the financial transactions

of the City.

FUND FINANCIAL STATEMENTS

Funds may be considered as operating companies of the parent corporation, which is the City of Mart.

They are usually segregated for specific activities or objectives. The City of mart uses fund accounting

to ensure and demonstrate compliance with finance-related legal reporting requirements. The two

categories of City funds are governmental and proprietary.

Governmental Funds

Governmental funds are used to account for essentially the same functions reported as governmental

activities in the government-wide financial statements. However, unlike the government-wide

5

City of Mart, Texas


September 30, 2016

financial statements, governmental fund financial statements focus on near-term inflows and outflows

of spendable resources, as well as on balances of spendable resources available at the end of the year.

Such information may be useful in evaluating the City’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial

statements, it is useful to compare the information presented for governmental funds with similar

information presented for governmental activities in the government-wide financial statements. By

doing so, readers may better understand the long-term impact of the government’s near-term financing

decisions. Both the governmental fund balance sheet and the governmental fund statement of

revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this

comparison between governmental funds and governmental activities.

The City of Mart maintains one individual governmental fund. Information is presented separately in

the governmental fund balance sheet and in the governmental fund statement of revenues,

expenditures, and changes in fund balances for the general fund which is considered to be a major

fund.

The City of Mart adopts an annual appropriated budget for its general fund. A budgetary comparison

schedule has been provided to demonstrate compliance with this budget.

Proprietary Funds

The City maintains one type of proprietary fund. Enterprise funds are used to report the same

functions presented as business-type activities in the government-wide financial statements. The City

uses enterprise funds to account for its water distribution, wastewater collection/treatment, water and

sewer impact (CIP), water construction operations and refuse services. The proprietary fund financial

statements provide separate information for the water distribution and wastewater collection/treatment

fund and refuse fund. The basic proprietary fund financial statements can be found in the basic

financial statements of this report.

Notes to Financial Statements

The Notes to the Financial Statements provide additional information that is essential to a full

understanding of the data provided in the government-wide and fund financial statements. The Notes

are the last section of the basic financial statements.

Other Information

In addition to the basic financial statements, MD&A, and accompanying notes, this report also presents

certain Required Supplementary Information (RSI). The RSI that GASB Statement No. 34 requires

includes budgetary comparison schedules for the general fund and debt service fund and schedule of

funding progress for Texas Municipal Retirement System. RSI can be found after the basic financial

statements.

6

City of Mart, Texas


September 30, 2016

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net position may serve over time as a useful indictor of the City’s financial position.

For the City of Mart, assets exceed liabilities by $3,527,074 as of September 30, 2016, in the primary

government.

The largest portion of the City’s net position, $2,059,148, reflects its investments in capital assets (e.g.,

land, city hall, police station, streets, and drainage systems, as well as the public works facilities), less

any debt used to acquire those assets that are still outstanding. The City uses these capital assets to

provide services to citizens; consequently, these assets are not available for future spending. Although

the City’s investments in its capital assets is reported net of related debt, it should be noted that the

resources needed to repay this debt must be provided from other sources, since the assets themselves

cannot be used to liquidate these liabilities.

Statement of Net Position:

The following table reflects the condensed Statement of Net Position:

` 2016 2015

Governmental Business-Type Governmental Business-Type

Activities Activities Total Activities Activities Total

Current and other assets 255,800$ 506,151$ 761,951$ 174,231$ 845,825$ 1,020,056$

Net Pension Position 198,578$ 45,803$ 244,381$ 248,412$ 65,521$ 313,933$

Restricted assets 105,403$ 616,653$ 616,653$ 195,216$ 195,216$

Capital assets, net 330,509 2,292,496 2,623,005 307,917 2,210,990 2,518,907

Total Assets 890,290 3,461,103 4,245,990 730,560 3,317,552 4,048,112

Deferred Outflow of Resources 83,219$ 28,842$ 112,061$ 30,973$ 8,169$ 39,142$

Other Liabilities 46,121 326,402 372,523 70,813 161,069 231,882

Long-term liabilities 52,213 511,644 563,857 - 692,541 692,541

Total Liabilities 98,334 838,046 936,380 70,813 853,610 924,423

Net Position:

Net Investment in Capital Assets 278,296 1,780,852 2,059,148 307,917 1,518,449 1,826,366

Restricted 105,403$ 616,653$ 722,056$ 279,385$ 268,906$ 548,291$

Unrestricted 491,476 254,394 745,870 103,418 684,756 788,174

Total Net Position 875,175$ 2,651,899$ 3,527,074$ 690,720$ 2,472,111$ 3,162,831$

7

City of Mart, Texas

MANAGEMENT’S DISCUSSION AND ANALYSIS , Continued

September 30, 2016

Statement of Activities:

The following table provides a summary of the city’s changes in net assets:

Total Total

Governmental Business-Type Primary Governmental Business-Type Primary

Activities Activities Government Activities Activities Government

Revenues

Program revenues:

Charges for services 107,494$ 964,013$ 1,071,507$ 54,254$ 929,044$ 983,298$

Grants and contributions 61,052 224,861 285,913 4,849 76,644 81,493

General revenues:

Property taxes 183,236 217,631 400,867 191,566 194,815 386,381

Sales taxes 127,790 - 127,790 125,251 - 125,251

Franchise and local taxes 65,594 - 65,594 76,074 - 76,074

Investment income 315 3,159 3,474 133 2,318 2,451

Fines and fees revenues 147,927 147,927 76,821 76,821

Other revenues 178,156 34,812 212,968 16,471 11,531 28,002

Total Revenues 871,564 1,444,476 2,316,040 545,419 1,214,352 1,759,771

Expenses

General government 201,677 - 201,677 147,605 - 147,605

Public safety 43,491 - 43,491 18,727 - 18,727

Public works 16,490 1,180,322 1,196,812 18,416 1,124,410 1,142,826

Municipal court 92,550$ - 92,550$ 68,491$ - 68,491$

Salaries, Taxes, Admin 380,313 - 380,313 342,151 - 342,151

Interest and fees on debt - 40,321 40,321 - 52,787 52,787

Total Expenses 734,521 1,220,643 1,955,164 595,390 1,177,197 1,772,587

Change in Net Position Before

Transfers and Contributions 137,043 223,833 360,876 (49,971) 37,155 (12,816)

Pension expense (2,412) (955) (3,367)

T ransfers (45,000) 45,000 - - - -

Total (47,412) 44,045 (3,367) - - -

Change in Net Position 184,455 179,788 364,243 (49,971) 37,155 (12,816)

Beginning Net Position 690,720 2,472,111 3,162,831 740,691 2,560,676 3,301,367

Prior Period Adjustment -$ -$ -$ (125,720)$ (125,720)$

Ending Net Position 875,175$ 2,651,899$ 3,527,074$ 690,720$ 2,472,111$ 3,162,831$

For the Year Ended September 30, 2016 For the Year Ended September 30, 2015

8

City of Mart, Texas


September 30, 2016

Graphic presentations of selected data from the summary tables follow to assist in the analysis of the

City’s activities.

Governmental Activities – Expenses

Governmental Activities – Revenues

Business-Type Activities – Revenues and Expenses

9

Public Safety 34%

Municipal Court

6%

Salaries, taxes, admin

28%

General Government

37%

Grants and

contribution

s 30% Charges for

services

13%

Property

taxes 25% Sales tax

12%

Franchise

and local

taxes

16%

Other

revenues

5%

(80,000)

120,000

320,000

520,000

720,000

920,000

1,120,000

Charges for Services

Expenses

City of Mart, Texas


September 30, 2016

Governmental Activities

For the year ended September 30, 2016, revenues from governmental activities totaled $871,564.

Property taxes, fines and fees, and sales tax revenues are the City’s largest revenue sources. Overall

property tax revenue is down $8,330 from the previous year due. Sales tax revenue increased by

$2,539 when compared to the previous year. Charges for Fines and Fees increased by $71,106 when

compared to the prior year. Other revenues also increased dramatically when compared to the

previous year.

General government expenses increased $51,072, Court expenses increased $24,059, and overall

expenses did increase about $131,931 in the General Fund.

Business-Type Activities

For the year ended September 30, 2016, charges for services by business-type activities totaled

$964,013. This is an increase of $34,969 from the previous year. Property tax revenue increased

$22,816 due to a higher allocation of property taxes to the Water & Sewer Fund. Water & Sewer

expenses increased $55,912 due to increased water costs.

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related

legal requirements.

Governmental Funds – The focus of the City’s governmental funds is to provide information of near-

term inflows, outflows and balances of spendable resources. Such information is useful in assessing

the City’s financing requirements. In particular, unreserved fund balance may serve as a useful

measure of the City’s net resources available for spending at the end of the year.

As of the end of the year the general fund reflect a fund balance of $194,576. Of this, $21,908 is

restricted for municipal court, grants and firemen’s pension. Unrestricted fund balance totaled

$172,668 as of year-end.

There was an increase in governmental fund balance of $91,158 over the prior year. The majority of

this increase is related to more revenue within the general fund.

Proprietary Funds – The City’s proprietary funds provide the same type of information found in the

government wide financial statements, but in more detail.

CAPITAL ASSETS

As of the end of the year, the City’s governmental activities funds had invested $330,509 in a variety

of capital assets and infrastructure, net of accumulated depreciation. Depreciation is included with the

governmental capital assets as required by GASB Statement No. 34.

10

City of Mart, Texas

MANAGEMENT’S DISCUSSION AND ANALYSIS , Continued

September 30, 2016

Major capital asset events during the current year include the following:

Assets of $338,006 in the Proprietary Fund and $187,519 in the General Fund.

LONG-TERM DEBT

At the end of the current year, the City had total bonds, notes payable and capital leases outstanding of

$563,857.

More detailed information about the City’s long-term liabilities is presented in the Notes to the

Financial Statements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

The Mayor and City Council are committed to maintaining and improving the overall well-being of the

City of Mart and improving services provided to their public citizens. The City is budgeting for

growth in the upcoming year. Proprietary fund revenues for fiscal year 2016 are budgeted at

$1,213,420 and expenses budgeted of $1,212,600.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT

This financial report is designed to provide a general overview of the City of Mart’s finances for all

those with an interest in the City’s finances. Questions concerning this report or requests for additional

financial information should be direct to the City Secretary, P.O. Box 360, Mart, Texas 76664.

11

FINANCIAL STATEMENTS

City of Mart, Texas

STATEMENT OF NET POSITION

September 30, 2016

Component

Unit

Governmental Business-Type Community

Activities Activities Total Center

Assets

Current assets:

Cash and cash equivalents 128,611$ 408,674$ 537,285$ 8,937$

Receivables, net 127,189 97,477 224,666 -

Net Pension Position 198,578 45,803 244,381 -

Restricted assets:

Cash and cash equivalents 105,403 616,653 722,056 120,541

Total Current Assets 559,781 1,168,607 1,728,388 129,478

Capital assets:

Land 72,579 - 72,579 -

Net depreciable capital assets 257,930 2,292,496 2,550,426 -

330,509 2,292,496 2,623,005 -

Total Assets 890,290 3,461,103 4,351,393 129,478

Deferred Outflow of Resources 83,219$ 28,842$ 112,061$

Liabilities

Current liabilit ies:

Accounts payable and

accrued liabilities 46,121 177,160 223,281 -

Customer deposits - 149,242 149,242 -

Accrued interest payable - - - -

46,121 326,402 372,523 -

Noncurrent liabilit ies:

Due within one year 26,106$ 193,242$ 219,348$ -

Due in more than one year 26,107 318,402 344,509 -

52,213 511,644 563,857 -

Total Liabilities 98,334 838,046 936,380 -

Net Position

Net Investment in Capital Assets 278,296 1,780,852 2,059,148 -

Restricted 105,403$ 616,653$ 722,056$

Unrestricted 491,476 254,394 745,870 129,478

Total Net Position 875,175$ 2,651,899$ 3,527,074$ 129,478$

See Notes to Financial Statements.

Primary Government

13

City of Mart, Texas

STATEMENT OF ACTIVITIES

For the Year Ended September 30, 2016

Operations

Charges for Grants and

Functions/Programs Expenses Services Contributions

Primary Government

Government Activities

General government 201,677$ 107,494$ 61,052$

Public Safety 43,491 - -

Public Works 16,490

Municipal court 92,550 147,927 -

Salaries, Taxes, Admin 380,313 - -

Pension expense (2,412) - -

Total Government Activities 732,109 255,421 61,052


Water, sewer and refuse 1,180,322 964,013 224,861

Interest and fees on debt 40,321 - -

Total Business-Type Activities 1,220,643 964,013 224,861

Total Primary Government 1,952,752$ 1,219,434$ 285,913$

Component Unit

Community Center 127,978$ 120,000$ -$

General Revenues:

Taxes

Property taxes

Sales taxes

Franchise and local taxes

Investment income

Other revenues

Transfers

Total General Revenues and Transfers

Change in Net Position

Beginning Net Position

Prior Period Adjustment

Ending Net Position

Program Revenues

14

Primary Government Component Unit

Governmental Business-Type Community

Activities Activities Total Center

$

(33,131)$ -$ (33,131)$

(43,491) - (43,491)

(16,490) (16,490)

55,377 - 55,377

(380,313) - (380,313)

2,412 955 3,367

(415,636) 955 (414,681)

- 8,552 8,552

- (40,321) (40,321)

- (31,769) (31,769)

(415,636)$ (30,814)$ (446,450)$

(7,978)

183,236 217,631 400,867 -

127,790 - 127,790 -

65,594 - 65,594 -

315 3,159 3,474 -

178,156 34,812 212,968 -

45,000 (45,000) - -

600,091 210,602 810,693 -

184,455 179,788 364,243 (7,978)

690,720 2,472,111 3,162,831 137,456

- -

875,175$ 2,651,899$ 3,527,074$ 129,478$

Net (Expense) Revenue and Changes in Net Position

15

City of Mart, Texas

BALANCE SHEET

GOVERNMENTAL FUNDS


General

Assets

Cash and cash equivalents 128,611$

Receivables, net 127,189

Due from other funds -

Restircted cash and cash equivalents 105,403

Total Assets 361,203$

Liabilities

Accounts payable and

accrued liabilities 39,438$

Deferred revenue 127,189

Total Liabilities 166,627$

Fund Balances

Restricted for:

Municipal court & Firemen's Pension 21,908

Unassigned reported in:

General fund 172,668

Total Fund Balances 194,576$

Adjustments for the Statement of Net Position:

Capital assets used in governmental activities are not current financial

resources and, therefore, not reported in the governmental funds.

Capital assets - non-depreciable 72,579$

Capital assets - net-depreciable 257,930

Net Pension Position 198,578

Deferred Outflows of Resources 83,219

Other long-term assets are not available to pay for current period

expenditures and, therefore, are deferred in the governmental funds. 68,293

Debt Proceeds received net of principal payments 52,213

Some liabilities, including bonds payable, are not reported as liabilities

in the governmental funds.

Non-current liabilities due in one year (26,106)

Non-current liabilities due in more than one year (26,107)

Net Position of Governmental Activities 875,175$


16

City of Mart, Texas STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

GOVERNMENTAL FUNDS


General

Revenues

Property tax 180,318$

Sales tax 127,790

Franchise and local taxes 65,594

Grants and contributions 61,052

Fines and forfeitures 147,927

Charges for services 107,494

Investment Income 315

Other revenue 178,156

Total Revenues 868,646$

Expenditures

Current:

General government 83,187

Public safety 24,294

Public Works -

Municipal court 92,550

Salaries, Taxes, Admin 380,313

Capital outlay 187,519

Debt Service:

Principal 52,213

Interest and fiscal charges 2,412

Total Expenditures 822,488

Excess (Deficiency) of Revenues

O ver (Under) Expenditures 46,158

O ther Financing Sources (Uses)

Current:

T ransfers in 45,000

T ransfers (out) -

Total O ther Financing Sources 45,000

Net Change in Fund Balance 91,158

Beginning Fund Balance 103,418

Ending Fund Balance 194,576$


17

City of Mart, Texas RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT

OF ACTIVITIES


Amounts reported for governmental activities in the statement of activities are

different because:

Net changes in fund balances – total governmental funds 91,158$

Revenues in the statement of activities that do not provide current financial

Resources are not reported as revenues in the funds. 50,623

Governmental funds report capital outlays as expenditures. However in the

statement of activities the cost of those assets is allocated over their estimated

useful lives and reported as depreciation expense.

Depreciation expense 44,927

Capital outlay (187,519)

Revenues in the statement of activities that do not provide current financial

Deferred Outflows are not reported in governmental funds 83,219

Changes in net pension position and deferred outflows of resources are not current expenditures 49,834

The issuance of long-term debt (e.g., bonds, leases, certificates of obligation)

provides current financial resources to governmental funds, while the

repayment of the principal of long-term debt consumes the current financial

resources of governmental funds. Neither transaction, however, has any

effect on net assets. Also, governmental funds report the effect of issuance

costs, premiums, discounts, and similar items when they are first issued; Whereas,

these amounts are deferred and amortized in the statement of activities;

This amount is the net effect of these differences in the treatment of long-term

debt and related items.

Principal Proceeds received, net of payment 52,213

Change in Net Position of Governmental Activities 184,455$


18

City of Mart, Texas STATEMENT OF NET ASSETS

PROPRIETARY FUNDS

September 30, 2016

Water, Sewer

and refuse

Assets

Current Assets:

Cash and cash equivalents 408,674$

Receivables, net 97,477


Restricted cash and cash equivalents 616,653

Total Current Assets 1,168,607$

Noncurrents Assets

Capital assets:

Net depreciable capital assets 2,292,496

Total Noncurrent Assets 2,292,496

Total Assets 3,461,103

Deferred Outflows of Resources 28,842

Liabilities

Current Liabilities

Accounts payable and accrued liabilit ies 177,160

Due to other funds -

Customer deposits 149,242

Accrued interest -

Total Current Liabilities 326,402

Noncurrent Liabilities

Due within one year 193,242

Due in more than one year 318,402

Total Liabilities 838,046

Net Position

Net Investment in Capital Assets 1,780,852

Restricted 616,653

Unrestricted 254,394

Total Net Position 2,651,899$


19

City of Mart, Texas STATEMENT OF REVENUE, EXPENSES, AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDS REVISED AND RESTATED


Water, Sewer

and refuse

O perating Revenues

Water charges 566,341$

Sewer charges 216,753

Sanitation charges 180,919

Other services 34,449

Total O perating Revenues 998,462$

O perating Expenses

Cost of sales - water 131,967

Cost of sales-wastewater 33,018

Cost of sales - sanitation 150,515

Administration 325,049

Repairs and maintenance 77,265

Depreciation 256,500

Miscellaneous 271,782

Total O perating Expenses 1,246,096

O perating Income (Loss) (247,634)

Nonoperating Revenues (Expenses)

Grant income and donations 224,861

CDBG Grant expenses -

Taxes 217,631

Investment income 3,159

Interest Expense (40,321)

Total Nonoperating Revenues 405,330

Income Before Transfers 157,696

T ransfers in -

T ransfers (out) -

-

Change in Net Position 157,696

Beginning Net Position 2,494,203

Ending Net Position 2,651,899$


20

City of Mart, Texas STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS (Page 1 of 2)


Water, Sewer

and refuse

Cash Flows from O perating Activities

receipts from customers 997,515$

Payments to suppliers and employees (824,263)

Net Cash Provided by O perating Activities 173,252$

Cash Flows from Noncapital Financing Activities


Deferred outflows of resources 1,419

Grant Income & Expenses 224,861

Taxes 217,631

Net Cash Provided by Noncapital Financing Activities 463,629

Cash Flows from Capital and Related

Financing Activities

Loan proceeds -

Capital purchases (338,006)

Principal paid on debt (180,897)

Interest paid on debt (40,321)

Net Cash (Used) by Capital and Related Financing Activities (559,224)

Cash Flows from Investing Activities

Interest on Investments 3,159

Net Cash Provided by Investing Activities 3,159

Net Increase in Cash and Cash Equivalents 80,816

Beginning cash and cash equivalents 944,511

Ending Cash and Cash Equivalents 1,025,327$

21

City of Mart, Texas STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS (Page 2 of 2)


Water, Sewer

and refuse

Reconciliation of O perating Loss

to Net Cash Provided by O perating Activities

Operating Income (247,634)$

Adjustments to reconcile operating

income to net cash provided:

Depreciation 256,500

Changes in O perating Assets and Liabilities:

(Increase) Decrease in:

Accounts receivable (947)

Increase/ (Decrease) in:

Accounts payable and accrued liabilities 153,539

Customer deposits 11,794

Net Cash Provided by O perating Activities 173,252$


22

City of Mart, Texas NOTES TO FINANCIAL STATEMENTS

September 30, 2016

I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The City of Mart, Texas (the “City”), is a General Law City which provides for a “Mayor-

Council” form of government. The City provides: police; fire; code enforcement; street

repair and maintenance; and general administrative services.

The City is an independent political subdivision of the State of Texas governed by an

elected council and a mayor and is considered a primary government. As required by

generally accepted accounting principles, these basic financial statements have been

prepared based on considerations regarding the potential for inclusion of other entities,

organizations, or functions as part of the City’s financial reporting entity. The Mart

Community Center, although legally separate, is considered part of the reporting entity. No

other entities have been included in the City’s reporting entity. Additionally, as the City is

considered a primary government for financial reporting purposes, its activities are not

considered a part of any other governmental or other type of reporting entity.

Considerations regarding the potential for inclusion of other entities, organizations or

functions in the City’s financial reporting entity are based on criteria prescribed by

generally accepted accounting principles. These same criteria are evaluated in considering

whether the City is a part of any other governmental or other type of reporting entity. The

overriding elements associated with prescribed criteria considered in determining that the

City’s financial reporting entity status is that of a primary government are that it has a

separately elected governing body; it is legally separate; and is fiscally independent of

other state and local governments. Additionally prescribed criteria under generally

accepted accounting principles include considerations pertaining to organizations for which

the primary government is financially accountable, and considerations pertaining to

organizations for which the nature and significance of their relationship with the primary

government are such that exclusion would cause the reporting entity’s financial statements

to be misleading or incomplete.

Discretely Presented Component Unit

Mart Community Center

Mart Community Center (the “Center”), has been included in the reporting entity as a

discretely presented component unit. The mission of the Center is to enhance community

cohesiveness by providing and maintaining a community facility. The Board is composed

of nine voting members and two “ex-officio” Directors who cannot vote on any action of

the Center. As a discretely presented component unit, the Corporation is reported in a

separate column in the Basic Financial Statements to emphasize that it is legally separate

from the City. The Center has a September 30th

year end. Financial statements for the Mart

Community Center may be obtained by contacting Greta Watson P.O. Box 174, Mart,TX

76664.

23

City of Mart, Texas NOTES TO FINANCIAL STATEMENTS, Continued

September 30, 2016

B. Financial Statement Presentation

These financial statements include implementation of Governmental Accounting Standards

Boards (GASB) Statement No. 34, Basic Financial Statements – and Management’s

Discussion and Analysis – for State and Local Governments. Certain of the significant

changes in the Statement include the following:

A Management’s Discussion and Analysis (MD&A) section providing an analysis of

the City’s overall financial position and results of operations;

Financial statements prepared using full accrual accounting for all of the City’s

activities;

A change in the fund financial statements to focus on the major funds.

GASB Statement No. 34 established standards for external financial reporting for all state

and local governmental entities, which includes a statement of net assets and a statement of

activities. It requires the classification of net assets into three components: invested in

capital assets, net of related debt; restricted; and unrestricted. These classifications are

defined as follows:

Invested in capital assets, net of related debt – This component of net assets consists

of capital assets, including restricted capital assets, net of accumulated depreciation and

reduced by the outstanding balances of any bonds, mortgages, notes, or other

borrowings that are attributable to the acquisition, construction, or improvement of

those assets.

Restricted – This component of net assets consists of constraints placed on net asset

use through external constraints imposed by creditors (such as through debt covenants),

grantors, contributors, or laws or regulation of other governments or constraints

imposed by law through constitutional provisions or enabling legislation.

Unrestricted – This component of net assets consists of net assets that do not meet the

definition of “restricted” or “invested in capital assets, net of related debt.”

C. Government –Wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the

statement of changes in net assets) report information about the City as a whole. These

statements include all activities of the primary government and it component units. For the

most part, the effect of interfund activity has been removed from these statements.

24


September 30, 2016

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 presents a comparison between direct expenses and program

revenues for each segment of the business-type activities of the city and for each function

of the City’s governmental activities. Direct expenses are those that are specifically

associated with a program or function and, therefore, are clearly identifiable to a particular

function. Program revenues include charges paid by the recipients of goods or services

offered by the programs and grants that are restricted to meeting the operational or capital

requirements of a particular program. Revenues that are not classified as program

revenues, such as taxes and investment earnings, are presented as general revenues.

Separate financial 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. In the fund financial statements, the

accounts of the City are organized on the basis of funds, each of which is considered a

separate accounting entity. The operation of each fund are accounted for with a s separate

set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and

expenditures or expenses, as appropriate. Following is a description of the various funds:

Governmental Funds

Governmental funds are those funds through which most governmental functions are

typically financed.

General Fund

The general fund is used to account for all financial transactions not properly includable

in other funds. The principal sources of revenues include local property taxes, sales,

and franchise taxes, licenses and permits, fines and forfeitures, and charges for services.

Expenditures include general government and public safety.

Proprietary Fund Types

Proprietary funds are used to account for activities that are similar to those often found in

the private sector. All assets, liabilities, equities, revenues, expenses, an transfers relating to

the government’s business activities are accounted for through proprietary funds. The

measurement focus in on determination of net income, financial position, and cash flows.

Proprietary funds distinguish operating revenues and expenses from non-operating items.

Operating revenues include charges for services. Operating expenses include costs of

materials, contracts, personnel, and depreciation. All revenues and expenses not meeting

this definition are reported as non-operating revenues and expenses. Proprietary fund types

25


September 30, 2016

follow GAAP prescribed by the Governmental Accounting Standards Board (GASB) and

all financial Accounting Standards Board’s standards issued prior to November 30, 1989.

Subsequent to this date, the City accounts for its enterprise funds as presented by GASB.

The proprietary fund types used by the City include the following:

Enterprise Funds

The Water, Sewer, and Refuse Fund is used to account for the operations that provide

water and wastewater collection, wastewater treatment operation, and sanitation

services. The services are financed and operated in a manner similar to private business

enterprises where the intent of the governing body is that the costs (expenses including

depreciation) of providing goods or services to the general public on a continuing basis

will be financed or recovered primarily through user charges. The Water and Sewer

Fund is considered a major fund for reporting purposes.

D. Measurement Focus and Basis of Accounting

The government-wide statements of net assets and statements of activities and all

proprietary funds are accounted for on a flow of economic resources measurement focus,

accrual basis of accounting. With this measurement focus, all assets and all liabilities

associated with the operations of these activities are included on the balance sheet.

Proprietary fund equity consists of net assets. Proprietary fund-type operating statements

present increases (i.e., revenues) and decreases (i.e., expenses) in net total assets.

The accounting and financial reporting treatment applied to a fund is determined by its

measurement focus. All governmental funds and component units are accounted for using a

current financial resources measurement focus. With this measurement focus, only current

assets and current liabilities generally are included on the balance sheet. Operating

statements of these funds present increases (i.e., revenues and other financing resources)

and decreases (i.e., expenditures and other financing uses) in net current assets.

The City utilizes the modified accrual basis of accounting in the governmental fund type

and component units. Under the modified accrual basis of accounting, revenues are

recognized in the accounting period when they are susceptible to accrual (i.e, when they are

measureable and available). Measurable means the amount of the transaction can be

determined and available means collectible within the current period or soon enough

thereafter to pay liabilities of the current period. For this purpose, the City considers

revenues available if they are collected within 60 days of the end of the current period.

Revenues susceptible to accrual include charges for services and interest on temporary

investments.

Property taxes, sales taxes, franchise taxes, and interest associated with the current period

26


September 30, 2016

are all considered to be susceptible to accrual and so have been recognized as revenues of

the current period. Other receipts and other taxes become measurable and available when

cash is received by the government and are recognized as revenue at that time.

Under modified accrual accounting, expenditures are recognized in the accounting period in

which the liability is incurred, if measurable, except for interest on general long-term debt,

which is recognized when due.

The accrual basis of accounting is used for the proprietary fund types. This basis of

accounting recognizes revenues in the accounting period in which they are earned and

become measurable, and expenses in the accounting period in which they are incurred and

become measurable.

The statements of net assets, statements of activities, and financial statements of

proprietary fund types are presented on the accrual basis of accounting. Under this method

of accounting, revenues are recognized in the accounting period in which they are earned,

and expenses in the accounting period in which they are incurred.

Generally, the effect of interfund activity has been eliminated from the government-wide

financial statements.

E. Assets, Liabilities, and Net Assets or Fund Equity

1. Deposits and Investments

The City’s cash and cash equivalents are considered to be cash on hand, demand deposits

and short term investments with original maturities of three months or less from the date of

acquisition. For the purpose of the statement of cash flows, the proprietary fund types

consider temporary investments with maturity of three months or less when purchased to be

cash equivalents.

In accordance with GASB Statement No. 31, Accounting and Reporting for Certain

Investments and External Investment Pools, the City reports all investments at fair value,

except for “money market investments” and “2a7-like pools.” Money market investments,

which are short-term highly liquid debt instruments that may include U.S. Treasury and

agency obligations, are reported at amortized costs. Investment positions in external

investment pools that are operated in a manner consistent with the SEC’s Rule 2a7 of the

Investment Company Act of 1940, such as TexPool, are reported using the pools’ share

price.

The City has adopted a written investment policy regarding the investment of its funds as

defined in the Public Funds Investment Act, Chapter 2256, Texas Governmental Code. In

summary, the City is authorized to invest in the following:

27


September 30, 2016

Direct obligations of the U.S. Government

Fully collateralized certificates of deposit and money market accounts

Statewide Investment pools.

2. Receivables

Transactions between funds that are representative of lending/borrowing arrangements

outstanding at the end of the year are referred to as either “interfund receivables/payables’

(i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-

current portion of interfund loans). All other outstanding balances between funds are

reported as “due to/from other funds” in the fund financial statements. If the transactions

are between the primary government and its component unit, these receivable and payables

are classified as “due to/from component unit/primary government.” Any residual balances

outstanding between the governmental activities and business-type activities are reported in

the government-wide financial statements as “internal balances.”

Advances between funds are offset by a fund balance reserve account in the applicable

governmental fund to indicate they are not available for appropriation and are not

expendable available financial resources.

All trade receivables are shown net of any allowance for uncollectible amounts.

Property taxes

Property taxes are levied on October 1 of each year, are due open receipt of the City’s tax

bill, and become delinquent on February 1 of the following year. The City’s tax lien exists

from January 1 (the assessment date) each year until the taxes are paid.

3. Inventories and Prepaid Items

The costs of governmental fund type inventories are recorded as expenditures when the

related liability is incurred, (i.e., the purchase method). Certain payments to vendors reflect

costs applicable to future accounting periods (prepaid expenditures) are recognized as

expenditures when utilized.

4. 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

28


September 30, 2016

business-type activities columns in the government-wide financial statements. In

accordance with GASB Statement No. 34, Infrastructure has been capitalized retroactively.

Capital assets are defined by the government, as assets with an initial, individual cost of

more than $5,000 and an estimated useful life in excess of one year. Such assets are

recorded at historical cost or estimated historical cost if purchased or constructed. Donated

capital assets are recorded at estimated fair market value at the date of donation. Major

outlays for capital assets and improvements are capitalized as projects are constructed.

Interest costs incurred in connection with construction of enterprise fund capital assets are

capitalized when the effects of capitalization materially impact the financial statements.

The costs of normal maintenance and repairs that do not add to the value of the asset or

materially extend assets’ lives are not capitalized.

Property, plant, and equipment of the primary government, as well as the component units,

are depreciated using the straight-line method over the following estimated useful years.

Estimated

Asset Description Useful Life

Vehicles 5 to 7 years

Furniture and equipment 2 to 10 years

Infrastructure 30 years

Water and sewer system 30 to 40 years

Buildings and improvements 20years

Pensions

For purposes of measuring the net pension liability, pension related deferred outflows and inflows of

resources, and pension expense, City specific information about its Fiduciary Net Position in the

Texas Municipal Retirement System (TMRS) and additions to/deductions from the City’s Fiduciary

Net Position have been determined on the same basis as they are reported by TMRS. For this

purpose, plan contributions are recognized in the period that compensation is reported for the

employee, which is when contributions are legally due. Benefit payments and refunds are recognized

when due and payable in accordance with the benefit terms. Investments are reported at fair value.

Information regarding the City’s Total Pension Liability is obtained from TMRS through a report

prepared for the City by TMRS consulting actuary, Gabriel Roeder Smith & Company, in compliance

with Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and

Financial Reporting for Pensions.

Deferred Outflows/Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for

deferred outflows of resources. This separate financial statement element, deferred outflows of

resources, represents a consumption of net position that applies to a future period(s) and so will not be

recognized as an outflow of resources (expense/expenditure) until then. The City has the following

items that qualify for reporting in this category.

29


September 30, 2016

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Pension contributions after measurement date – these contributions are deferred and

recognized in the following fiscal year.

Difference in projected and actual earnings on pension assets – This difference is deferred and

amortized over a closed five year period.

Difference in expected and actual pension experience – This difference is deferred and

recognized over the estimated average remaining lives of all members determined as of the

measurement date.

In addition to liabilities, the statement of financial position will sometimes report a separate section

for deferred inflows of resources. This separate financial statements element, deferred inflows or

resources, represents an acquisition of net position that applies to a future period(s) and so will not be

recognized as an inflow of resources (revenue) until that time. The City has only one type of item,

which arises only under a modified accrual basis of accounting that qualifies for reporting in this

category. Accordingly, this item is reported only in the governmental funds balance sheet. The

governmental funds report unavailable revenues from two sources: property taxes and municipal

court fines. These amounts are deferred and recognized as an inflow of resources in the period that

the amounts become available.

Net Position

Net position represents the difference between assets, deferred inflows/outflows of resources and

liabilities. Net position investment in capital assets consists of capital assets, net of accumulated

depreciation, reduced by the outstanding balances of any borrowing used for the acquisition,

construction or improvements of those assets, and adding back unspent proceeds. Net position is

reported as restricted when there are limitations imposed on their use either through the enabling

legislations adopted by the City or through external restrictions imposed by creditors, grantors or laws

or regulations of other governments.

5. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term

obligations are reported as liabilities in the applicable governmental activities statement of

net assets. The long-term debt consists primarily of bonds payable and accrued

compensated absences.

Long-term debt for governmental funds is not reported as liabilities in the fund financial

statements until due. The debt proceeds are reported as other financing sources, net of the

applicable premium or discount and payments of principal and interest reported as

expenditures. In the governmental fund types, issuance costs, even if withheld from the

actual net proceeds received, are reported as debt service expenditures. However, claims

and judgments paid from governmental funds are reported as a liability in the fund financial

statements only for the portion expected to be financed from expendable available financial

resources. Long-term debt and other obligations, financed by proprietary funds, are

reported as liabilities in the appropriate funds. For proprietary fund types, bond premiums,

30


September 30, 2016

discounts, and issuance costs are deferred and amortized over the life of the bonds using the

effective interest method, if material. Bonds payable are reported net of the applicable

bond premium or discount. Issuance costs are reported as deferred charges.

The property tax rate is allocated each year between the general and the water, sewer, and

refuse funds. The full amount estimated to be required for debt service on general

obligation debt is provided by the tax along with interest earned in the water, sewer, and

refuse fund.

Assets acquired under the terms of capital leases are recorded as liabilities and capitalized

in the government-wide financial statements at the present value of net minimum lease

payments at inception of the lease. In the year of acquisition, capital lease transactions are

recorded as other financing sources and as capital outlay expenditures in the general fund.

Lease payments representing both principal and interest are recorded as expenditures in the

general fund upon payment with an appropriate reduction of principal recorded in the

government-wide financial statements.

6. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for

amounts that are not available for appropriation or are legally restricted by outside parties

for use for a specific purpose. Designations of fund balance represent tentative

management plans that are subject to change.

7. Estimates The preparation of financial statements, in conformity with generally accepted accounting

principles, requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date

of the financial statements and the reported amounts of revenues and expenditures/expenses

during the reporting period. Actual results could differ from those estimates.

Prior Period Adjustments

The GASB has issued Statement No. 68, “Accounting and Financial Reporting for Pensions-an

amendment of GASB Statement No. 27,” which became effective for fiscal year 2015. This statement

changes the focus of pension accounting for employers from whether they are responsibly funding

their plan over time to a point-in-time liability that is reflected in the employer’s financial statements

for any actuarially unfunded portion of pension benefits earned to date. The implementation of

Statement No. 68 resulted in restatement of beginning net position for the elimination of the

previously reported net pension obligation, the recording of the beginning net pension liability and the

beginning deferred outflow for contributions made after the measurement date. The City of Mart has

actually overfunded their pension obligation thus far, and no prior pension amounts were recorded in

previous financial statements. The Net Pension Position, which is an asset, and Deferred Outflows of

Resources have been recorded for 2014 and 2015 which record a prior period adjustment of $252,021

in the general fund for 2014, $66,473 in the proprietary fund for 2014, and ($125,720) in the

proprietary fund for 2015 for fund balance.

31


September 30, 2016

II. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL

STATEMENTS

A. Explanation of certain differences between the governmental fund balance sheet and

the government-wide statement of net assets.

The governmental fund balance sheet includes reconciliation between fund balance-total

governmental funds and net assets-governmental activities as reported in the government-

wide statement of net assets. One element of that reconciliation explains that long-term

liabilities, including notes payable, are not due and payable in the current period and,

therefore, are not reported in the funds.

B. Explanation of certain differences between the governmental fund statement of

revenues, expenditures, and changes in fund balances and the government-wide

statement of activities.

The governmental fund statement of revenues, expenditures, and changes in fund balances

includes a reconciliation between net changes in fund balances – total governmental funds

and changes in net assets of governmental states that, “the issuance of long-term debt (e.g.,

bonds) provides current financial resources to governmental funds, while the repayment of

the principal of long-term debt consumes the current financial resources of governmental

funds. Also, governmental funds report the effect of issuance costs, premiums, discounts,

and similar items when debt is first issued, whereas these amounts are deferred and

amortized in the statement of activities.”

III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

Annual budgets are adopted on a basis consistent with generally accepted accounting

principles (GAAP). The original budget is adopted by the City Council prior to the

beginning of the year. The legal level of control as defined by City ordinance is the

department level in the general fund. No funds can be transferred or added to a budgeted

item without Council approval. Appropriations lapse at the end of the year.

For the year ended, expenditures exceeded appropriates at the legal level of control as

follows:

No general fund expense accounts were over budget.

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September 30, 2016

IV. DETAILED NOTES ON ALL FUNDS

A. Deposits and Investments

As of September 30, 2016, the primary government had the following investments:

Credit risk. The City’s investment policy limits investments in money market mutual funds

rated as to investment quality not less than AAA by Standard & Poor’s. As of September 30,

2015, the City’s investment in TexPool was rated AAAm by Standard & Poor’s.

Custodial credit risk - deposits. In the case of deposits, this is the risk that in the event of a

bank failure, the City’s deposits may not be returned to it. The City’s investment policy

requires funds on deposit at the depository bank to be collateralized by securities with a

collective market value of at least 100 percent. As of September 30, 2015, market values of

pledged securities and FDIC coverage exceeded bank balances.

TexPool

TexPool was established as a trust company with the Treasurer of the state of Texas as trustee,

segregated from all other trustees, investments, and activities of the trust company. The State

Comptroller of Public Accounts exercises oversight responsibility over TexPool. Oversight

includes the ability to significantly influence operations, designation of management, and

accountability for fiscal matters. Additionally, the State Comptroller has established an

advisory board composed of both participants in TexPool and other persons who do not have a

business relationship with TexPool. The advisory board members review the investment policy

and management fee structure. Finally, Standard & Poor’s rate TexPool AAAm. As a

requirement to maintain the rating, weekly portfolio information must be submitted to Standard

& Poor’s, as well as to the office of the Comptroller of Public Accounts for review.

33


September 30, 2016

B. Receivables

The following comprise receivable balances at year end:

Water, Sewer

General and Refuse

Property taxes 47,022$ 23,429

Sales tax 9,622

Franchise taxes 30,100 -

Accounts, net 40,445 74,048

Other - -

127,189$ 97,477$ C. Capital Assets

A summary of changes in capital assets for the year end was as follows:

Beginning Ending

Balance Increases (Decreases) Balance


Capital assets not being depreciated: 192,579$ -$ (120,000)$ 72,579$

Land

Capital assets being depreciated:

Infrastructure 221,775 108,899 330,674

Buildings and systems 192,218 192,218

Machinery and equipment 1,025,083 78,620 1,103,703

Total capital assets being depreciated 1,439,076 187,519 1,626,595

Less accumulated depreciation for:

Infrastructures (167,447) (3,629) - (171,076)

Buildings and systems (192,218) (7,393) - (199,611)

Machinery and equipment (964,073) (33,905) - (997,978)

Total accumulated depreciation (1,323,738) (44,927) - (1,368,665)

Capital assets being depreciated, net 115,338 (44,927) - 257,930

Totals: 307,917$ (44,927)$ -$ 330,509$

Depreciation was charged to governmental functions as follows:

General government 9,240$

Public works 16,490

Public safety 19,197

Total Governmental Activities Depreciation Expense 44,927$

Primary Government

34


September 30, 2016


Beginning Decreases/ Ending

Balance Increases Reclasses Balance

Business-Type Activities:

Capital assets being depreciated:

Water and sewer system 5,472,004 338,006 - 5,810,010

Building 44,668 - - 44,668

Machinery and equipment 1,097,961 - - 1,097,961

Total 6,614,633 338,006 - 6,952,639

Less accumulated depreciation for:

Water and sewer system (3,848,554) (179,221) - (4,027,775)

Building (46,473) - - (46,473)

Machinery and equipment (508,616) (77,279) - (585,895)

Total accumulated depreciation (4,403,643) (256,500) - (4,660,143)

Total capital assets being depreciated, net 2,210,990$ 81,506$ -$ 2,292,496$ D. Long-term Debt

The following is a summary of changes in the City’s total governmental long-term

liabilities for the year ended. In general, the City uses the general and debt service funds to

liquidate governmental long-term liabilities.

Amounts

Beginning Ending Due within

Balance Additions Reductions Balance O ne Year


Bonds, notes and other

payables:

Notes payable -$ 78,620$ (26,407)$ 52,213$ 26,107$

Total Governmental Activitiesmental activities -$ 78,620$ (26,407)$ 52,213$ * 26,107$

Long-term liabilities due in more than one year 26,106$

*Debt associated with capital assets Business-Type Activities

Combination tax and revenue bonds 445,000$ -$ 140,000$ 305,000$ 150,000$

Revenue bonds 247,541 - 40,897 206,644 43,242

Less bond discount

692,541 - 180,897 511,644 * 193,242

Total Business-type activities 692,541$ -$ 180,897$ 511,644$ 193,242$

Long-term liabilities due in more than one year 318,402$

*Debt associated with capital assets 35


September 30, 2016

Interest

Rates Balance

Governmental Activities:

Notes payable 5.75% 52,213$

Total Governmental Activities 52,213$

Description

Business-type Activities:

Combination tax and revenue bonds

Series 1998 A & B 4.52-5.85% 305,000

Government capital corporation 3.39% 206,644

Capital leases 5.56% -

TCEQ fine N/A -

Total Business-Type 511,644

Total Long-Term Debt 563,857

Long-term liabilities applicable to the City’s governmental activities are not due and

governmental funds. Interest on long-term debt is not accrued in governmental funds, but

rather is recognized as an expenditure when due.

Long-term debt at year end was comprised of the following debt issues:

The annual requirements to amortize debt issues outstanding at year ending were as follows:

Year

Ending

Sept. 30 Principal Interest

2017 26,107 1,543

2018 26,106 1,542

Totals 52,213$ 3,085$


Year

Ending


2017 150,000 15,689

2018 155,000 8,005

Total 305,000$ 23,694$


Tax and revenue Bonds

Combination

Tax and revenue bonds are direct obligations of the City for which its full faith and credit are

pledged. Repayment of tax and revenue bonds are from taxes levied on all taxable property

located within the City and revenues earned from the enterprise fund.

36


September 30, 2016

Year

Ending


2017 43,242 6,330

2018 44,731 4,842

2019 46,269 2,968

2020 47,859 1,713

2021 24,543 243

-

Total 206,644$ 16,096$

Government capital corp


E. Fund Equity/Net Assets

The City records fund balance restrictions on the fund level to indicate that a portion of the

fund balance is legally restricted for a specific future use or to indicate that a portion of the

fund balance is not available for expenditures.

The following is a list of fund balances restricted by the City:

Grant Funds $ 0

Court Technology $15,229

Firemen’s Pension $ 628

Court Security $ 6,051

Total $21,908

V. OTHER INFORMATION

A. Risk Management

The City is exposed to various risks of loss related to torts; theft of, damage to and destruction

of assets, errors and omissions; and natural disasters for which the City participates along with

2,617 other entities in the Texas Municipal League’s Intergovernmental Risk Pools. The Pool

purchases commercial insurance at group rates for participants in the Pool. The City has no

additional risk or responsibility to the Pool outside of the payment of insurance premiums. The

City has not significantly reduced insurance coverage or had settlements, which exceeded

coverage amounts for the past three years.

37


September 30, 2016

B. Contingent Liabilities

Amounts received or receivable from granting agencies are subject to audit and adjustment by

grantor agencies, principally the federal government. Any disallowed claims, including

amounts already collected, may constitute a liability of the applicable funds. The amounts of

expenditures which may be disallowed by the grantor cannot be determined at this time

although the City expects such amounts, if any, to be immaterial.

Liabilities are reported when it is probable that a loss has occurred and the amount of the loss

can be reasonably estimated. Liabilities include an amount for claims that have been incurred

but not reported. Claim liabilities are calculated considering the effects of inflation, recent

claim settlement trends, including frequency and amount of payouts, and other economic and

social factors.

No other claim liabilities are reported at year end.

C. Arbitrage

The Tax Reform Act of 1986 instituted certain arbitrage consisting of complex regulations with

respect to issuance of tax-exempt bonds after August 31, 1986. Arbitrage regulations deal with

the investment of tax-exempt bond proceeds at an interest yield greater than the interest yield

paid to bondholders. Generally, all interest paid to bondholders can be retroactively rendered

taxable if applicable rebates are not reported and paid to the Internal Revenue Service at least

every five years for applicable bond issues. Accordingly, there is the risk that if such

calculations are not performed correctly, a substantial liability to the City could result. The

City does anticipate that it will have an arbitrage liability and performs monthly calculations to

estimate this potential liability. The City will also engage an arbitrage consultant to perform

the calculations in accordance with Internal Revenue Service’s rules and regulations if

indicated.

D. Pension Plans

1. Texas Municipal Retirement Systems Plan Description The City of Mart participates as one of 860 plans in the nontraditional, joint contributory, hybrid

defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS).

TMRS is an agency created by the State of Texas and administered in accordance with the TMRS Act,

Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer retirement

system for municipal employees in the State of Texas. The TMRS Act places the general

administration and management of the System with a six member Board of Trustees. Although the

Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally

dependent on the State of Texas. TMRS’s defined benefit pension plan is a tax-qualified plan under

Section 401(a) of the Internal Revenue Code. TMRS issues a publicly available comprehensive annual

report (CAFR) that can be obtained at www.tmrs.com.

38

http://www.tmrs.com/


September 30, 2016

All eligible employees of the city are required to participate in TMRS.

B. Benefits Provided

TMRS provides retirement, disability and death benefits. Benefit provisions are adopted by the

governing body of the city, within the options available in the state statutes governing TMRS.

At retirement, the benefit is calculated as if the sum of the employee’s contributions, with interest, and

the city financed monetary credits with interest were used to purchase an annuity. Members may

choose to receive their retirement benefit in one of seven payment options. Members may also choose

to receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24 or

36 monthly payments, which cannot exceed 75% of the member’s deposits and interest.

Employees covered by benefit terms.

At the December 31, 2015 valuation and measurement date, the following employees were covered by

the benefit terms.

Inactive employees or beneficiaries currently receiving benefits 8

Inactive employees entitled to but not yet receiving benefits 32

Active employees 13

Total 53

C. Contributions

The contribution rate for the employees in TMRS is 5%, 6% and 7% of employee gross earnings, and

the City matching percentages are either 100%, 150% or 200%, both as adopted by the governing body

of the City. Under the state law governing TMRS, the contribution rate for each city is annually

determined by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially

determined rate is the estimated amount necessary to finance the cost of benefits earned by employees

during the year, with an additional amount to finance any unfunded accrued liability.

Employees for the City of Mart were required to contribute 5% of their annual gross earnings during

the fiscal year. The contribution rates for the City of Mart were 5% and 5% in calendar years 2014 and

2015 respectively. The city’s contributions to TMRS for the year ended September 30, 2016 were

$20,358, and were in excess of the required contributions.

39

City of Mart, Texas

Notes to the Financial Statements September 30, 2016 NOTE 9 – PENSION PLANS (continued) D. Net Pension Liability

The city’s Net Pension Liability (NPL) was measured as of December 31, 2015, and the Total Pension

Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as

of that date.

Actuarial assumptions:

The Total Pension Liability in the December 31, 2015 actuarial valuation was determined using the

following actuarial assumptions:

Inflation 3.0% per year

Overall payroll growth 3.0% per year

Investment Rate of Return 7.0% net of pension plan investment expense, including inflation

Salary increases were based on a service-related table. Mortality rates for active members, retirees,

and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Table, with

male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully

generational basis by scale BB o account for future mortality improvements. For disabled annuitants,

the gender-distinct RP2000 Disabled Retiree Mortality Table is used, with slight adjustments.

Actuarial assumptions used in the December 31, 2015, valuation were based on the results of actuarial

experience studies. The experience study in TMRS was for the period January 1, 2009 through

December 31, 2014, first used in the December 31, 2014 valuation. Healthy post-retirement mortality

rates and annuity purchase rates were updated based on a Mortality Experience Investigation Study

covering 2009 through 2011, and dated December 31, 2013. These assumptions were first used in the

December 31, 2013 valuation, along with a change to the Entry Age Normal (EAN) actuarial cost

method. Assumptions are reviewed annually. No additional changes were made for the 2015

valuation.

The long-term expected rate of return on pension plan investments is 7.0%. The pension plan’s policy

in regard to the allocation of invested assets is established and may be amended by the TMRS Board of

Trustees. Plan assets are managed on a total return basis with an emphasis on both capital appreciation

as well as the production of income, in order to satisfy the short-term and long-term funding needs of

TMRS.

The long-term expected rate of return on pension plan investments was determined using a building-

block method in which best estimate ranges of expected future real rates of return (expected returns,

net of pension plan expense and inflation) are developed for each major asset class. These ranges are

combined to produce the long-term expected rate of return by weighting the expected future real rates

of return by the target asset allocation percentage and by adding expected inflation. The target

allocation and best estimates of arithmetic real rates of return for each major asset class are

summarized in the following table:

40

City of Mart, Texas

Notes to the Financial Statements September 30, 2016 NOTE 9 – PENSION PLANS (continued)

Asset class Target allocation Long-Term Expected Real Rate of Return (Arithmetic)

Domestic Equity 17.5% 4.80%

International Equity 17.5% 6.05%

Core Fixed Income 30.0% 1.50%

Non-Core Fixed Income 10.0% 3.50%

Real Return 5.0% 1.75%

Real Estate 10.0% 5.25%

Absolute Return 5.0% 4.25%

Private Equity 5.0% 8.50%

Total 100.0%

Discount Rate

The discount rate used to measure the Total Pension Liability was 7.0%. The projection of cash flows

used to determine the discount rate assumed that employee and employer contributions will be made at

the rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position was

projected to be available to make all projected future benefit payments of current active and inactive

employees. Therefore, the long-term expected rate of return on pension plan investments was applied

to all periods of projected benefit payments to determine the Total Pension Liability.

41

A. Total pension liability

1. Service Cost 40,552$

2. Interest (on the Total Pension Liability) 69,973

3. Changes of benefit terms -

4. Difference between expected and actual experience (36,056)

5. Changes of assumptions 18,182

6. Benefit payments, including refunds of employee contributions(54,137)

7. Net change in total pension liability 38,514$

8. Total pension liability - beginning 1,006,404

9. Total pension liability - ending 1,044,918$

B. Plan fiduciary net position

1. Contributions - employer 2,039$

2. Contributions - employee 20,358

3. Net investment income 1,948

4. Benefit payments, including refunds of employee contributions(54,137)

5. Administrative Expense (1,187)

6. Other (59)

7. Net change in plan fiduciary net position (31,038)$

8. Plan fiduciary net position - beginning 1,320,337

9. Plan fiduciary net position - ending 1,289,299$

C. Net pension liability [A.9-B.9] (244,381)$

D. Plan fiduciary net position as a percentage

of the total pension liability [B.9 / A.9] 123.39%

E. Covered-employee payroll 407,151$

F. Net pension liability as a percentage

of covered employee payroll [C / E] -60.02%

City of Mart

Schedule of Changes in Net Pension Liability and Related Ratios Current Period

September 30, 2016

42

1. Total Service Cost 40,552$

2. Interest on the Total Pension Liability 69,973

3. Current Period Benefit Changes -

4. Employee Contributions (Reduction of Expense) (20,358)

5. Projected Earnings on Plan Investments (Reduction of Expense) (92,424)

6. Administrative Expense 1,187

7. Other Changes in Fiduciary Net Position 59

8. Recognition of Current Year Outflow (Inflow) of Resources - Liabilities (9,985)

9. Recognition of Current Year Outflow (Inflow) of Resources - Assets 18,095

10. Amortization of Prior Year Outflows (Inflows) of Resources - Liabilities (13,716)

11. Amortization of Prior Year Outflows (Inflows) of Resources - Assets 3,250

12. Total Pension Expense (3,367)$

CITY OF MART

SCHEDULE OF PENSION EXPENSE

SEPTEMBER 30, 2016

Sensitivity of the net pension liability to changes in the discount rate.

The following presents the net pension liability of the City, calculated using the discount rate of 7.0%,

as well as what the City’s net pension liability would be if it were calculated using a discount rate that

is 1 percentage point lower (5.75%) or 1 percentage point higher (7.75%) than the current rate:

1% Decrease in 1% Increase in

Discount Rate (5.75%) Discount Rate (6.75%)DiscountRate(7.75%)

City’s net pension liability $(85,967) $(244,381) $(371,309)

Pension Plan Fiduciary Net Position

Detailed information about the pension plan’s Fiduciary Net Position is available in a separately-issued

TMRS financial report. That report may be obtained on the Internet at www.tmrs.com

Actuarial valuations involve estimates of the value of reported amounts and assumptions about the

probability of events far into the future. Actuarially determined amounts are subject to continual

revision as actual results are compared to past expectations and new estimates are made about the

future.

Actuarial calculations are based on the benefits provided under the terms of the substantive plan in

effect at the time of each valuation and reflect a long-term perspective. Consistent with that

perspective, actuarial methods and assumptions used include techniques that are designed to reduce

short-term volatility in actuarial accrued liabilities and the actuarial value of assets.

43

http://www.tmrs.com/

Recognition 205

Period (or Total (Inflow) Recognized Deferred

amortization or Outflow of in current (Inflow) Outflow

yrs) Resources pension expense in future expense

Due to Liabilities:

Difference in expected

and actual experience 1.7900 (36,056)$ (20,143)$ (15,913)$

[actuarial (gains) or losses]

Difference in assumption changes 1.7900 18,182$ 10,158$ 8,024$


(9,985)$ (7,889)$

Due to Assets:

Difference in projected

and actual earnings 5.0000 90,475$ 18,095$ 72,380$

on pension plan investments


18,095$ 72,380$

Total: 64,491$

Net deferred

outflows

(inflows) of

resources

2016 11,546$

2017 21,345

2018 21,345

2019 18,095

2020 -

Thereafter -

Total 72,331$

CITY OF MART

SCHEDULE OF OUTFLOWS AND INFLOWS - CURRENT AND FUTURE EXPENSE

SEPTEMBER 30, 2016

Deferred Outflows and Deferred Inflows of Resources, by year, to be recognized in future pension

expense as follows:

44

City of Mart, Texas

Notes to the Financial Statements September 30, 2016

` NOTE 10 – SUPPLEMETAL DEATH BENEFITS PLAN

The City also participates in the cost-sharing multiple-employer defined benefit group term life

insurance plan operated by the Texas Municipal Retirement System (TMRS); known as the

Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide group-term

life insurance coverage to both current and retired employees. The City may terminate coverage under

and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to

be effective the following January 1.

The death benefit for active employees provides a lump-sum payment approximately equal to the

employee’s annual salary (calculated based on the employee’s actual earnings, for the 12-month

period preceding the month of death); retired employees are insured for $7,500; this coverage is on

“other postemployment benefit,” or OPEB.

The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial

valuation. The rate is equal to the cost of providing one-year term life insurance. The funding policy

for the SDBF program is to assure that adequate resources are available to meet all death benefit

payments for the upcoming year; the intent is not to pre-fund retiree term life insurance during the

employees’ entire careers.

The City’s contributions to the TMRS SDBF for the years ended 2016, 2015, and 2014 were $1275,

$1275, and $1,275 respectively, which equaled the required contributions each year.

TMRS records indicate the following percentages contributed by the City (as employer contributions)

for the following fiscal years ending:

Plan/ Annual Required Percentage of Calendar Contribution Actual Contribution Made ARC

Contributed

Year (Rate) (Rate)

2013 0.05% 0.05% 100%

2014 0.08% 0.08% 100%

2015 0.09% 0.09% 100%

2016 0.10% (city to provide) (city to provide)

2017 0.10% (city to provide) (city to provide)

NOTE 11 – SUBSEQUENT EVENTS The City did not have any subsequent events through February 17, 2017, which is the date the

financial statements were available to be issued for events requiring recording or disclosure in the

financial statement for the fiscal year ended September 30, 2016. Page 20 was revised and restated to

correct an error in the formula but the ending totals were correct. Cost of sales was not included in the

original formula but was included in miscellaneous expenses for the total. This has been corrected.

45

REQUIRED SUPPLEMENTARY INFORMATION

City of Mart, Texas SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCE – BUDGET AND ACTUAL

GENERAL FUND


Variances with

2016 Final Budget

O riginal Budget Final Budget Actual Plus (Minus)

Revenues

Property tax 190,000$ 190,000$ 180,318$ (9,682)$

Sales tax 115,000 115,000 127,790 12,790

Franchise and local taxes 80,000 80,000 65,594 (14,406)

Grants and donations 25,000 25,000 61,052 36,052

Fines and forfeitures 55,000 55,000 147,927 92,927

Charges for services 140,000 140,000 107,494 (32,506)

Investment income 200 200 315 115

Other revenue 60,300 60,300 178,156 117,856

Total Revenues 665,500 665,500 868,646 203,146

Expenditures

Current:

General government 216,300 216,300 83,187 133,113

Public safety 38,800 38,800 24,294 14,506

Public works 16,000 16,000 - 16,000

Municipal court 38,800 38,800 92,550 (53,750)

Salaries, Taxes, Admin 349,700 349,700 380,313 (30,613)

Capital outlay - - 187,519 (187,519)

Debt service:

Principal - - 52,213 (52,213)

Interest and fiscal charges - - 2,412 (2,412)

Total Expenses 659,600 659,600 822,488 (162,888)

Revenues O ver (Under) Expenditures 5,900 5,900 46,158 40,258


Transfers in - - 45,000 -

T ransfers (out) - - - -

Total O ther Financing Sources - - 45,000 -

Net Change in Fund Balance 5,900$ - 91,158$ 40,258$

Beginning fund balance 103,418

Ending Fund Balance 194,576$ Notes to

Required Supplementary information

1. Annual budgets are adopted on a basis consistent with generally accepted accounting

principles (GAAP).

2. * Expenditures exceeded appropriations at the legal level of control.47

City of Mart, Texas SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCE – BUDGET AND ACTUAL

PROPRIETARY FUND

For the Fiscal Year Ended September 30, 2016

Variances with

2016 Final Budget

O riginal Budget Final Budget Actual Plus (Minus)

Revenues

Water Service Revenue 624,000$ 624,000$ 566,341$ (57,659)$

Sewer Service Revenue 195,000 195,000 216,753 21,753

Refuse Service Revenue 132,000 132,000 180,919 48,919

Other revenue 43,600 43,600 34,449 (9,151)

Property Tax revenues 216,000 216,000 217,631 1,631

Grant income - - 224,861 224,861

Investment income 2,820 2,820 3,159 339

Total Revenues 1,213,420 1,213,420 1,444,113 230,693

Expenditures

Current:

Cost of Sales 308,700 308,700 183,533 125,167

Administration 634,000 634,000 325,049 308,951

Repairs & maintenance 50,700 50,700 77,265 (26,565)

Depreciation - - 256,500 (256,500)

Miscellaneous 1,200 1,200 271,782 (270,582)

Capital outlay - - 338,006 (338,006)

Debt service:

Principal 185,000 185,000 180,897 (180,897)

Interest and fiscal charges 33,000 33,000 40,321 (40,321)

Total Expenditures 1,212,600 1,212,600 1,673,353 (678,753)

Revenues O ver (Under) Expenditures 820 820 (229,240) (448,060)


Grant expenses - - - -

T ransfers (out) - - - -

Total O ther Financing Sources - - - -

Net Change in Fund Balance 820$ - (229,240)$ (448,060)$

Beginning fund balance 2,494,203

Ending Fund Balance 2,264,963$

Add back Principal payments and capital outlay 518,903

GAAP Fund Balance 2,783,866 48

City of Mart

Schedule of Changes in Net Pension Liability and Related Ratios

Last ten years (will ultimately be displayed)

Total pension liability 2014 2015 2016 2017

1. Service Cost 37,761$ 40,552 xxxx xxxx

2. Interest (on the Total Pension Liability) 67,945 69,973 xxxx xxxx

3. Changes of benefit terms - -

4. Difference between expected and actual experience (29,342) (36,056) xxxx xxxx

5. Changes of assumptions - 18,182

6. Benefit payments, including refunds of employee contributions (43,458) (54,137) xxxx xxxx

7. Net change in total pension liability 32,906$ 38,514 xxxx xxxx

8. Total pension liability - beginning 973,498 1,006,404 xxxx xxxx

9. Total pension liability - ending 1,006,404$ 1,044,918 xxxx xxxx

Plan fiduciary net position

1. Contributions - employer 2,996$ 2,039 xxxx xxxx

2. Contributions - employee 19,386 20,358 xxxx xxxx

3. Net investment income 72,623 1,948 xxxx xxxx

4. Benefit payments, including refunds of employee contributions (43,458) (54,137) xxxx xxxx

5. Administrative Expense (758) (1,187) xxxx xxxx

6. Other (62) (59) xxxx xxxx

7. Net change in plan fiduciary net position 50,727$ (31,038) xxxx xxxx

8. Plan fiduciary net position - beginning 1,269,610 1,320,337 xxxx xxxx

9. Plan fiduciary net position - ending 1,320,337$ 1,289,299 xxxx xxxx

Net pension liability [A.9-B.9] (313,933)$ (244,381) xxxx xxxx

Plan fiduciary net position as a percentage

of the total pension liability [B.9 / A.9] 131.19% 123.39% xxx xxx

Covered-employee payroll 387,712$ 407,151 xxx xxx

Net pension liability as a percentage

of covered employee payroll [C / E] -80.97% -60.02% xxxx xxx

49

2014 2015 2016 2017

Actual ly Determined Contribution 1,006,404$ 1,044,918$ $xxx,xxx $xxx,xxx

Contributions in relation to the actuaria l ly

determined contribution 1,320,337 1,289,299 xxx,xxx xxx,xxx

- xxx,xxx xxx,xxx

Contribution deficiency (excess ) (313,933) (244,381) xxx,xxx xxx,xxx

Covered employee payrol l 387,712$ 407,151$ $xxx,xxx $xxx,xxx

Contributions as a percentage of covered

employee payrol l -80.97% -60.02% xx.xx% xx.xx%

City of Mart

Schedule of Contributions

Last 10 Fiscal Years (will ultimately be displayed)

September 30, 2016

Notes

Actuarial Cost Method

Amortization Method

Remaining Amortization Period

Asset Valuation Method

Inflation

Salary Increases

Investment Rate of Return

Retirement Age

Mortality

Last updated for the 2015 valuation pursuant to an experience study of the

Valuation Date: Actuarially determined contribution rates are calculated as of December 31 and become

effective in January 13 months later.

Methods and Assumptions Used to Determine Contribution Rates:

Entry Age Normal

Level Percentage of Payroll, Closed

25 Years

10 Year Smoothed Market 15% Soft Corridor

2.5%

3.50% to 10.5% Including Inflation

6.75%

Experience-based table of rates that are specefic to the City's plan of benefits.

period 2010-2014

RP2000 Combined Mortality Table with Blue Collar Adjustment with male

rates multiplied by 109% and female rates multiplied by 103% and projected

on a fully generational basis with scale BB

50

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

To the Honorable Mayor and

Members of the City Council

City of Mart, Texas

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of City of Mart, Texas, as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise City of Mart, Texas’ basic financial statements, and have issued our report thereon dated February 17, 2017.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered City of Mart, Texas’ internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Mart, Texas’ internal control. Accordingly, we do not express an opinion on the effectiveness of City of Mart, Texas’ internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Mart, Texas’ financial statements are free from 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 or other matters that are required to be reported under Government Auditing Standards.

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205 E. University Ave.,Ste.165 Georgetown, Texas 78626

Phone: 512-422-3700

Fax: 512-240-5460

Email:[email protected]

http://www.donallmancpa.com/

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


Georgetown, TX

February 17, 2017

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CITY OF MART, TEXAS BASIC FINANCIAL STATEMENTS ... - Mart, TX

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