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CITY OF JEROME, IDAHO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 ---PAGE BREAK--- TABLE OF CONTENTS PAGE Independent Auditor’s Report 1-2 Management’s Discussion and Analysis 3-12 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 13 Statement of Activities 14 Fund Financial Statements: Governmental Funds: Balance Sheet 15 Statement of Revenue, Expenditures, and Changes In Fund Balances 16-17 Proprietary Funds: Statement of Net Position 18 Statement of Revenues, Expenses, and Changes In Net Position 19 Statement of Cash Flows 20 Fiduciary Funds: Statement of Fiduciary Net Position 21 Notes to Financial Statements 22-45 Required Supplementary Information: Budgetary Comparison Schedules: General Fund 46 Street Fund 47 Library Fund 48 Park Fund 49 Irrigation Fund 50 Sanitation Fund 51 Water Fund 52 Sewer Fund 53 PERSI Base Plan and FRF Schedules 54-55 Notes to Required Supplementary Information 56 Other Supplementary Information: Combining Balance Sheet Nonmajor Internal Service Funds 57 Combining Statement of Revenues, Expenses and Changes in Net Position Nonmajor Internal Service Funds 58 Schedules of: Expenditures by Object and Function - General Fund 59 Property Tax Levies and Collections - Last Ten Fiscal Years 60 Governmental Expenditures by Function - Last Ten Fiscal Years 61 General Revenues by Source - Last Ten Fiscal Years 62 Single Audit: Schedule of Expenditures of Federal Awards 63 Independent Auditor’s 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 64-65 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance. 66-67 Schedule of Findings and Questioned Costs 68 ---PAGE BREAK--- Rexroat, Harberd & Assoc., Certified Public Accountants P.O. Box 7 - 125 North Buchanan - Jerome, Idaho 83338 Telephone [PHONE REDACTED] Fax [PHONE REDACTED] ---PAGE BREAK--- 345& 757 ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 3 I. Background. As a result of heightened fiscal responsibility, taxpayers demand better accounting of how and where their money is being spent. With the drafting in June 1999 of GASB 34 – the Government Accounting Standards Board Statement Number 34 – the scope of maintaining public asset records has been changing. GASB 34 requires all government entities, including local and state governments, school districts, publicly operated hospitals, public utilities, and state universities, and all other public entities that collected tax revenues, to report on the value and condition of all capital and infrastructure assets. Two reporting methods are outlined in the statement: the standard approach, which is a simple depreciation method; and the modified method, which takes into account maintenance expenses and the value that these expenses add to an asset. This method requires a current inventory of all assets, a condition assessment every three years, and estimates of annual maintenance costs. In either case, local and state governments now must adhere to some of the accounting standards that have been required of private sector firms for years. At the conclusion of Fiscal Year 2004, the City of Jerome implemented a new accounting reporting requirement. Fiscal Year 2018 represents the fourteenth year in which the City has followed the financial standards established with the adoption of GASB-34. As part of these new standards, the City is now required to provide an overview of its financial activities in a narrative form called the “Management’s Discussion and Analysis”. This report highlights the general fiscal health of the City, outlines key financial decisions that were initiated by the City’s leadership and identifies future financial priorities and activities as determined by the Mayor, City Council and City Staff. In order to fully understand the financial statements included in the City’s Audit, residents should first read the Management’s Discussion and Analysis document. It is our goal that through its reading, our citizens will be better informed and involved. II. Understanding this Report. This Management’s Discussion and Analysis report is broken into three major components that include a Financial Statements Overview, a Debt Management and Administration Overview and a glimpse into the Fiscal Year 2019 Priorities. This report covers the Fiscal Year 2018 that began on October 1, 2017 and ended on September 30, 2018. Fiscal Year 2019 priorities address those financial activities that the City leadership is currently addressing as of the date of this analysis. Like the report issued at the conclusion of the previous fiscal year, the Fiscal Year 2018 Management Discussion and Analysis provides financial comparisons and financial trends analysis, all designed to provide the reader with a greater understanding of the City’s overall financial health. The City’s financial statements are broken into two categories: Government Wide Financial Statements and Fund Financial Statements. A. Government-Wide Financial Statements. Government-wide financial statements, presented on pages 13-14 of the audit, are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private sector business. The statement of net position presents information on all of the City of Jerome’s assets and liabilities with the difference between the two reported as net position. Over time, ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 4 increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. In other words, it will help to show how solvent the City is. The statement of activities presents information showing how the government’s assets and liabilities changed during the most recent fiscal year. All changes in net position are reported as they occur, regardless of the timing of related cash flows. This is accrual accounting and thus, revenues and expenses are reported in this statement for some items that might not reflect actual cash flows until future fiscal periods delinquent taxes and earned but unused compensated absences such as personal time off and short term disability). The government-wide financial statements distinguish functions of the City of Jerome as either governmental activities, those activities that are supported primarily by taxes and intergovernmental activity, or business-type activities, those activities that are intended to recover all or a significant portion of their costs through user fees and charges. The governmental activities of the City of Jerome include general government administration and operations, transportation assets, capital projects and asset depreciation. Business-type activities of the City of Jerome include water and sewer administration and operations. B. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been separated for specific activities or objectives. All of the funds of the City of Jerome can be divided into two categories: government funds or proprietary funds. Government Funds. Government funds are used to account for essentially the same activities as previously identified under governmental activities in the government-wide financial statement. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of City liquid resources as well as balances of liquid resources at the end of the fiscal year. Such information is helpful when determining the City’s near-term financing requirements and health. 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 both as readers may better understand the long-term impact of the government’s near-term financing decisions. The City of Jerome maintains four individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General Fund, Street Fund, Library Fund and Park Fund which are considered to be major funds. The other fund, which consists of the Cafeteria Fund, is considered an agency fund and the information related to this fund is presented on page 21 of the financial statements. ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 5 Proprietary Funds. The City of Jerome maintains one type of proprietary funds called enterprise funds. Enterprise funds are used to report the same functions as business-type activities in the government-wide financial statements. The City of Jerome uses enterprise funds to account for its water and sewer operations. Proprietary fund financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the irrigation, sanitation, water, and sewer operations, all of which are considered to be major funds of the City of Jerome. Data for these funds is found on pages 18-20 of the financial statements. If the reader comes upon either “Notes to the Financial Statements” or “Other Information”, these sections are to provide additional narrative and required supplementary information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. III. Health of the City – Financial Statements Overview Government-Wide Financial Analysis. One important question to ask about the City’s finances is, “Is the City better or worse off as a result of the previous year’s activities?” The information in the government-wide financial statement helps answer this question because it captures all City assets and liabilities using the accrual basis of accounting with the addition of reporting depreciation on capital assets. In this way, all of the City’s financial transactions both in revenues and expenses are captured both for the long-term and the near-term and one can see the true financial health of the City. For the City of Jerome for the Fiscal Year 2018, changes in governmental and business-type assets and liabilities are illustrated in Table 3.1, which appears on the following page. ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 Table 3.1 Net Position - FY 2017 & FY 2018 Governmental Governmental Business-Type Business-Type Total Total Activities Activities Activities Activities FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 Current Assets $4,366,505 $5,933,348 $18,283,206 $15,703,668 $22,649,711 $21,637,016 Capital Assets - Net $13,067,977 $14,486,802 $46,659,570 $60,250,969 $59,727,547 $74,737,771 Net Pension Assets $901,121 $1,154,622 $0 $0 $901,121 $1,154,622 Total Assets $18,335,603 $21,574,772 $64,942,776 $75,954,637 $83,278,379 $97,529,409 Total Deferred Outflows $277,652 $166,993 $184,319 $305,339 $461,971 $472,332 Current Liabilities $552,104 $1,914,858 $4,847,694 $1,812,608 $5,399,798 $3,727,466 Non-Current Liabilities $1,173,278 $1,109,940 $27,881,212 $39,165,606 $29,054,490 $40,275,546 Net Pension Liability $1,107,493 $1,029,766 $899,615 $832,651 $2,007,108 $1,862,417 Total Liabilities $2,832,875 $4,054,564 $33,628,521 $41,810,865 $36,461,396 $45,865,429 Total Deferred Inflows $237,699 $274,770 $154,916 $174,017 $392,615 $448,787 Net Position: Invested in Capital Assets $12,091,256 $13,591,892 $16,121,266 $20,945,165 $28,212,522 $34,537,057 Restricted $14,144 $17,925 $12,580,256 $11,914,440 $12,594,400 $11,932,365 Unrestricted $3,437,281 $3,802,914 $2,642,136 $1,415,489 $6,079,417 $5,218,403 Total Net Position $15,542,681 $17,412,731 $31,343,658 $34,275,094 $46,886,339 $51,687,825 As indicated in Table 3.1, the large proportion of the City of Jerome’s net assets of $51,687,825 are reflected in capital assets (land, buildings, machinery, equipment, etc.) less any debt used to acquire those assets that is still outstanding. The City of Jerome uses these assets to provide services to its citizens and so consequently, these assets are not available for future spending. When looking at the City’s net assets, the other area to look at is the restricted and unrestricted totals. The $11,932,365 in the restricted column for Fiscal Year 2018 represents amounts that are subject to external restrictions on how they may be used. The majority of these assets are related to debt service required for the issuance of revenue related debt in the water and sewer enterprises and leases in governmental activities. The remaining $5,218,403 in the unrestricted category represents assets that could be used to meet the City’s ongoing obligations to citizens and creditors. For comparison purposes, at the end of Fiscal Year 2017, the City of Jerome had total restricted net assets of $12,594,400 – which is a decrease of $662,035, or five and twenty-six hundredths percent (5.26%) and total unrestricted net assets of $6,079,417 – which is a decrease of $861,014, or fourteen and sixteen hundredths percent (14.169%). At the end of the fiscal year, the City of Jerome is able to report positive balances in its net position for both governmental and business-type activities. 6 ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 7 Table 3.2 Change in Net Position - FY 2017 & FY 2018 Governmental Governmental Business-Type Business-Type Total Total Activities Activities Activities Activities FY 2017 FY 2018 FY 2017 FY 2018 FY 2017 FY 2018 Revenues Program Revenues: Charges for Service $663,476 $936,283 $9,454,823 $10,530,514 $10,118,299 $11,466,797 Operating Grants $233,480 $52,926 $233,480 $52,926 & Contributions Capital Grants $489,010 $994,053 $489,010 $994,053 & Contributions General Revenues: Property & Other Taxes $4,520,894 $4,655,069 $4,520,894 $4,655,069 Other Governmental $1,648,173 $1,719,475 $1,648,173 $1,719,475 License & Permits Investment Earnings $31,013 $64,129 $125,392 $226,462 $156,405 $290,591 Net Change in value of investments $1,084 ($2,943) $10,519 ($14,498) $11,603 ($17,441) Total Revenues $7,587,130 $8,418,992 $9,590,734 $10,742,478 $17,177,864 $19,161,470 Expenses General Government $4,313,892 $4,165,794 $4,313,892 $4,165,794 Street Services $1,554,046 $1,611,983 $1,554,046 $1,611,983 Library Services $436,056 $462,518 $436,056 $462,518 Park Services $181,746 $192,578 $181,746 $192,578 Irrigation $139,137 $149,321 $139,137 $149,321 Sanitation $314,814 $336,348 $314,814 $336,348 Water $2,097,049 $2,135,429 $2,097,049 $2,135,429 Sew er $4,487,257 $4,850,436 $4,487,257 $4,850,436 Total Expenses $6,485,740 $6,432,873 $7,038,257 $7,471,534 $13,523,997 $13,904,407 Change in Net Position $1,101,390 $1,986,119 $2,552,477 $3,270,944 $3,653,867 $5,257,063 Net Position - beginning as reported $14,436,461 $15,542,681 $28,789,995 $31,343,658 $43,226,456 $46,886,339 Prior Period adjustment $4,830 ($116,069) $1,186 ($339,508) $6,016 ($455,577) Net Position - beginning as corrected $14,441,291 $15,426,612 $28,791,181 $31,004,150 $43,232,472 $46,430,762 Increase in contributed capital Net Position - ending $15,542,681 $17,412,731 $31,343,658 $34,275,094 $46,886,339 $51,687,825 ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 8 Table 3.2, Change in Net Position, reflects the overall change in net position for the City of Jerome. For the fiscal year, the City’s total revenues were $19,161,470 while total expenses were $13,904,407. This indicates that the City was able to cover its year’s overall costs. When looking at the Governmental and Business-Type Activities, the City reports a $1,986,119 and $3,270,944 change in net position, respectively. Fund Financial Analysis. As noted earlier, the City of Jerome uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Government Funds. The focus of the City of Jerome governmental fund reporting is to provide information on near-term inflows, outflows, and balances of expendable resources. Perhaps the key area to look at in government fund balance sheets is the final unassigned fund balance as they indicate resources available for spending at the end of the fiscal year. At the end of this last fiscal year, the City of Jerome reported positive combined ending fund balances of $3,725,645, which accounts for financial activities in the General Fund, Street Fund, Park Fund and Library Fund. For comparison purposes, the combined ending fund balances at the conclusion of Fiscal Year 2017 were $3,584,224. This represents an increase of $141,421 or three and ninety-five hundredths percent The City of Jerome reports positive balances in all of the governmental funds. Proprietary Funds. The City of Jerome’s proprietary funds include the Irrigation, Sanitation, Water, and Sewer Enterprise Funds. The City of Jerome reports a positive combined ending operating balance of $34,275,094 for the Proprietary Funds part of which is attributed to $60,250,969 in accumulated depreciated assets. When analyzing cash flows, the combined ending cash and cash equivalent balance at the end of the year was a positive $13,123,908 which is a decrease of $2,711,724 from the previous year. The Water and Sewer Enterprise Funds have a combined unrestricted pooled cash reserve of $1,065,484. (Not allocated to any debt payment). The unassigned fund balance of the general fund increased by $242,085 and the committed fund balance of the Street fund decreased by $444,729, due to reserve spending on street capital improvements. Net Position did improve in both the Water and Sewer funds due to new investments made in water and sewer infrastructure projects during the year. The combined total of net investment in capital assets, net of related debt, restricted and unrestricted net position is $51,687,825. The City leadership is proactively analyzing financial activities in both the restricted and unrestricted net assets for both governmental and proprietary funds. ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 9 IV. Capital Assets and Debt Management Administration Capital Assets. The City of Jerome’s investment in capital assets for its governmental and business-type activities as of September 30, 2018 was $74,737,771. This is an increase of $15,010,224 from the previous year and reflects the following investments: Table 4.1 Capital Assets Balance Balance 1-Oct-17 Increases Decreases 30-Sep-18 Governmental Activities: Land $842,589 $842,589 Buildings $4,075,749 $48,290 $4,124,039 Machinery and Equipment $6,168,089 $413,249 ($90,230) $6,491,108 Infrastructure $9,585,088 $852,569 $10,437,657 Construction in Progress $181,029 $1,016,864 ($181,029) $1,016,864 Less Accumulated Depreciation for: Buildings $1,825,088 $115,408 $1,940,496 Machinery and Equipment $4,114,489 $245,302 ($63,270) $4,296,521 Infrastructure $1,844,990 $343,448 $2,188,438 Net Capital Assets $13,067,977 $1,626,814 ($207,989) $14,486,802 Business Type Activities: Land $757,102 $757,102 Buildings $19,324,774 $1,000,000 $20,324,774 Machinery and Equipment $2,558,562 $55,482 $2,614,044 Infrastructure $24,571,247 $4,095,723 $28,666,970 Construction in Progress $15,567,310 $11,761,244 ($1,963,008) $25,365,546 Less Accumulated Depreciation for: Infrastructure $4,889,801 $683,744 $5,573,545 Buildings $9,410,937 $497,339 $9,908,276 Machinery and Equipment $1,818,687 $176,959 $1,995,646 Net Capital Assets $46,659,570 $15,554,407 ($1,963,008) $60,250,969 Of the capital expenditures $615,687 was received as a grant source in the fiscal year from the City of Jerome’s Urban Renewal Agency (JURA) to fund street improvements in JURA Area 2. Additionally, $361,950 and $11,228,119 were received in loan proceeds from the Idaho Department of Environmental Quality as part of the City’s $1.75 million and $22.2 million loans for wastewater collection system and plant upgrades. Beginning in 2016, the City of Jerome began to save funds toward a future law enforcement facility to replace the existing building. Funds are budgeted every year in the law enforcement budget under a line item titled “Capital/Equipment Replacement.” Although the line item is used to balance the budget, no expenditure is made resulting in a large budget variance. Total funds saved for the facility as of September 30, 2018 is $778,586. ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 10 Debt Management and Administration. The City of Jerome currently maintains long-term debt in the amount of $41,147,922. Included in long-term debt is the following: • Revenue Bonds in the amount of $21,140,516 in the Water and Sewer Funds (annual payments estimated at $1,792,697), • General Obligation Bond in the amount of $485,972 for the Senior Citizen Center (annual payment of $60,350), • Idaho Department of Environmental Quality note payable in the amount of $18,553,360 in the Sewer Fund, • Lease/Purchase agreement on fire pumper in the amount of $408,937 (annual payments of $56,210), • Debt payable to employees for compensated absences vacation and compensated time) in the amount of $479,605, • Customer deposits to be refunded at a future date in the amount of $79,532. The table of long-term debt is as follows: Table 4.2 Long-Term Debt Balance Additions Payment Balance 1-Oct-17 Adjustments 30-Sep-18 Governmental Activities: Loan Payable/Capital $455,312 ($46,375) $408,937 Bonds Payable $521,408 ($35,436) $485,972 Compensated Absences $277,933 $302,407 ($277,933) $302,407 Business-Type Activities: Customer Deposits $73,560 $5,972 $79,532 Loans Payable: $6,899,857 $11,653,503 $18,553,360 Revenue Bonds $23,977,618 $5,450,950 ($8,288,052) $21,140,516 Compensated Absences $165,177 $177,198 ($165,177) $177,198 Total $32,370,865 $17,590,030 ($8,812,973) $41,147,922 ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 11 V. Fiscal Year 2019 Fiscal Priorities In May of 2018, the Mayor, City Council and City Staff developed the Fiscal Year 2019 spending priorities to help focus the efforts of the City’s resources in the current fiscal year that began on October 1, 2018 and ends on September 30, 2019. The priorities with significant allocations are illustrated in Table 5.1. Table 5.1 2019 Fiscal Priorities Capital Improvements Projected Explanation Cost 100 W Main to 100 N Street improvement funded from State IOEM grant funds $528,477 $317,599 $196,191 $198,629 $206,077 100 N. N. Lincoln to 100W Frontage Road N. Date Main to 7th Ave. W. N. Davis Main to 8th 10th Street Well Project $1,550,000 The City will be replacing the 10th Street Well funded from City Capital Reserves Sewer System Improvements $23.95 million The City of Jerome, Idaho, has obtained loans in the amounts of $1,750,000 and $22,200,000 from the Idaho Department of Environmental Quality Drinking Water State Revolving Fund. The projects are for wastewater collection system and plant improvements and are in process at September 30, 2018. Of the $1,750,000 loan, $1,625,296 and $18,102,324 of the $22,200,000 loan was spent as of September 30, 2018. All of the projects are expected to be completed in the next year. VI. Jerome Urban Renewal Agency The Urban Renewal Agency of the City of Jerome, Idaho (JURA) was organized under Idaho law in 1994. The agency currently has three separate revenue allocation areas. Area 2 is commonly referred to as the “Southeast Industrial Project Area”. Area 3 is called the “Downtown Improvement Project Area” and Area 4 has not yet been assigned a project name. Previously, the Agency had an additional revenue allocation area. Area 1 was commonly referred to as the “South Lincoln Project Area”. Under governmental accounting standards the Agency is considered a component unit of the City so a summary of its financial information is discretely presented in the City’s financial statements. The Agency’s financial statements are available upon request. ---PAGE BREAK--- CITY OF JEROME MANAGEMENT’S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2018 12 Conclusion. This financial report is designed to provide a general overview of the City of Jerome’s finances for all those with an interest in the government’s finances and activities. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Ross Hyatt, Finance Director, 152 East Avenue A, Jerome, Idaho 83338. Ross Hyatt Finance Director City of Jerome ---PAGE BREAK--- CITY OF JEROME, IDAHO STATEMENT OF NET POSITION SEPTEMBER 30, 2018 Governmental Business-Type ASSETS: Activities Activities Total Component Unit Cash and cash equivalents 3,727,853 $ 1,129,936 $ 4,857,789 $ 1,842,328 $ Prepaid expenses 112,634 11,410 124,044 - Receivables 1,461,674 1,813,107 3,274,781 - Inventories - 367,171 367,171 - Restricted assets: Cash and cash equivalents 621,155 11,993,972 12,615,127 438,559 Capital assets: Land and construction in progress 842,589 26,122,648 26,965,237 - Buildings, equipment and infrastructure, less accumulated depreciation 13,644,213 34,128,321 47,772,534 - Other assets 10,032 388,072 398,104 4,267 Net pension assets 1,154,622 - 1,154,622 - Total assets 21,574,772 75,954,637 97,529,409 2,285,154 DEFERRED OUTFLOWS OF RESOURCES: Differences between expected and actual experience 7,674 196,766 204,440 - Changes in pension assumptions or other inputs 66,059 55,126 121,185 - Employer contributions to pension plan made subsequent to the measurement date for the net pension liability 93,260 53,447 146,707 - 166,993 305,339 472,332 - LIABILITIES: Accounts payable and other accrued liabilities 1,827,182 1,027,608 2,854,790 728,313 Long-term liabilities: Current portion 87,376 785,000 872,376 1,378,362 Noncurrent portion 1,109,940 39,165,606 40,275,546 2,533,844 Net pension liability 1,029,766 832,651 1,862,417 - Total liabilities 4,054,264 41,810,865 45,865,129 4,640,519 DEFERRED INFLOWS OF RESOURCES: Differences between expected and actual experience 78,942 61,715 140,657 - Net difference between projected and actual earnings on 159,897 82,136 242,033 - pension plan investments Change in proportionate share percentage from prior year 35,931 30,166 66,097 - 274,770 174,017 448,787 - NET POSITION: Net investment in capital assets, net of related debt 13,591,892 20,945,165 34,537,057 - Restricted for: Capital projects - 6,756,679 6,756,679 - Other 17,925 5,157,761 5,175,686 438,559 Unrestricted 3,802,914 1,415,489 5,218,403 (2,793,924) Total net position 17,412,731 $ 34,275,094 $ 51,687,825 $ (2,355,365) $ Primary Government The accompanying notes are an integral part of the financial statements -13- ---PAGE BREAK--- CITY OF JEROME, IDAHO STATEMENT OF ACTIVITIES SEPTEMBER 30, 2018 Operating Capital Charges for Grants and Grants and Governmental Business-Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Component Unit Primary Government: Governmental Activities: General government 4,165,794 $ 679,040 $ 42,511 $ - $ (3,444,243) $ - $ (3,444,243) $ - $ Street services 1,611,983 234,007 - 994,053 (383,923) - (383,923) - Library services 462,518 22,423 10,415 - (429,680) - (429,680) - Parks services 192,578 813 - - (191,765) - (191,765) - Total governmental activities 6,432,873 936,283 52,926 994,053 (4,449,611) - (4,449,611) - Business-type Activities: Irrigation 149,321 190,246 - - - 40,925 40,925 - Sanitation 336,348 328,654 - - - (7,694) (7,694) - Water 2,135,429 2,585,299 - - - 449,870 449,870 - Sewer 4,850,436 7,426,315 - - - 2,575,879 2,575,879 - Total business-type activities 7,471,534 10,530,514 - - - 3,058,980 3,058,980 - Total primary government 13,904,407 $ 11,466,797 $ 52,926 $ 994,053 $ (4,449,611) 3,058,980 (1,390,631) - Component Unit: 1,117,629 $ - $ - $ - $ - - - (1,117,629) General Revenues: Property and other taxes 4,655,069 - 4,655,069 1,660,893 State shared revenue 1,719,475 - 1,719,475 - Unrestricted investment earnings 64,129 226,462 290,591 27,881 Net change in value of investments (2,943) (14,498) (17,441) - Total general revenues 6,435,730 211,964 6,647,694 1,688,774 Change in net position 1,986,119 3,270,944 5,257,063 571,145 Net position: Net position beginning of year, as reported 15,542,681 31,343,658 46,886,339 (2,976,391) Prior period adjustment to record correct previous investment deferred outflow of resources and long-term debt (116,069) (339,508) (455,577) 49,881 Net position beginning of year, as corrected 15,426,612 31,004,150 46,430,762 (2,926,510) Net position-end of year 17,412,731 $ 34,275,094 $ 51,687,825 $ (2,355,365) $ Program Revenues Primary Government Net (Expense) Revenue and Change in Net Position The accompanying notes are an integral part of the financial statements -14- ---PAGE BREAK--- CITY OF JEROME, IDAHO BALANCE SHEET-GOVERNMENTAL FUNDS SEPTEMBER 30, 2018 Total ASSETS: General Street Library Park Governmental Pooled cash and cash equivalents 2,265,186 $ 1,127,980 $ 202,153 $ 123,783 $ 3,719,102 $ Non-pooled cash and cash equivalents 150 - 200 - 350 Prepaid workers compensation premium 102,734 - - - 102,734 Prepaid assessment 9,900 - - - 9,900 Receivables: Due from Irrigation Fund 2,513 - - - 2,513 Delinquent property taxes 161,491 37,296 18,162 9,425 226,374 Sales tax 71,762 12,435 7,278 3,620 95,095 Agriculture equipment tax 313 54 32 16 415 Highway user fee - 138,371 - - 138,371 Jerome Highway District - 7,302 - - 7,302 State revenue sharing 152,769 - - - 152,769 State grant - 42,520 - - 42,520 Other 47,593 748,724 - - 796,317 Restricted assets: Pooled cash and cash equivalents 16,399 603,230 - 1,526 621,155 TOTAL ASSETS 2,830,810 $ 2,717,912 $ 227,825 $ 138,370 $ 5,914,917 $ LIABILITIES: Accounts payable - trade 84,896 $ 913,919 $ 10,168 $ 3,566 $ 1,012,549 $ Miscellaneous payable 109,838 27 14 7 109,886 IOEM payable - 603,230 - - 603,230 Accrued payroll 33,893 10,312 5,648 1,370 51,223 TOTAL LIABILITIES 228,627 1,527,488 15,830 4,943 1,776,888 DEFERRED INFLOWS OF RESOURCES: Unavailable revenue 151,829 234,609 17,082 8,864 412,384 TOTAL DEFERRED INFLOWS OF RESOURCES 151,829 234,609 17,082 8,864 412,384 FUND BALANCES: Nonspendable 112,634 - - - 112,634 Restricted 16,399 - - 1,526 17,925 Committed 813,586 872,809 192,346 123,037 2,001,778 Assigned 126,802 83,006 2,567 - 212,375 Unassigned 1,380,933 - - - 1,380,933 TOTAL FUND BALANCES 2,450,354 955,815 194,913 124,563 3,725,645 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 2,830,810 $ 2,717,912 $ 227,825 $ 138,370 $ 5,914,917 $ Reconciliation to the Statement of Net Position: Total Fund Balances - Governmental Funds 3,725,645 $ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 14,486,802 Property tax revenues and other billed revenues will be collected after year-end but are not available soon enough to pay for the current period's expenditures and, therefore, are deferred outflows of resources in the funds 376,936 Deferred charges and related amortization are recognized in full in the year incurred and are not capitalized and amortized in the funds 10,032 Net pension assets not reported in the funds 1,154,622 Payables expected to be paid in the next year but not soon enough to use the current period's revenues are not included in the funds (6,444) Pension related deferred outflows of resources not reported in the funds 166,993 Pension related deferred inflows of resources not reported in the funds (274,770) Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds Long-term debt including amortized premium on bonds (1,197,319) Net pension liability (1,029,766) Total Net Position - Governmental Activities 17,412,731 $ The accompanying notes are an integral part of the financial statements -15- ---PAGE BREAK--- CITY OF JEROME, IDAHO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-GOVERNMENTAL FUNDS SEPTEMBER 30, 2018 Total REVENUES: General Street Library Park Governmental Property taxes 3,428,652 $ 748,434 $ 368,934 $ 188,835 $ 4,734,855 $ Penalties - property tax 21,475 5,133 2,449 1,292 30,349 Business and franchise taxes 196,977 66,419 - - 263,396 Payment in lieu of taxes 8,979 1,956 965 493 12,393 Licenses and permits 171,118 - - - 171,118 State shared 893,684 776,671 32,396 16,725 1,719,476 Grant income 42,511 184,352 3,500 - 230,363 Rent 35,024 - - - 35,024 Interest 33,409 26,224 2,778 1,718 64,129 Contributions 8,114 615,687 6,915 717 631,433 Refunds and reimbursements 179,867 166,368 842 96 347,173 Fines 56,512 - 6,551 - 63,063 Miscellaneous 5,898 1,220 15,031 - 22,149 Sale of city property 25,530 - - - 25,530 Total revenue 5,107,750 2,592,464 440,361 209,876 8,350,451 EXPENDITURES: Current: Salaries 2,193,188 508,707 227,368 66,001 2,995,264 Personnel benefits 936,780 199,127 92,508 26,520 1,254,935 Operating supplies 103,361 78,427 11,560 7,762 201,110 Public relations 66,705 - - - 66,705 Professional services 191,669 - - 9,477 201,146 Advertising and publishing 6,973 114 - - 7,087 Insurance 55,959 46,590 - - 102,549 Travel and meetings 3,651 - - - 3,651 Dues and subscriptions 16,608 660 12,698 260 30,226 Personnel training 72,943 1,800 5,047 305 80,095 Telephone 41,525 3,469 3,192 43 48,229 Utilities 40,082 11,645 9,292 43,114 104,133 Gas and Oil 55,555 10,523 - 2,637 68,715 Repairs and maintenance 105,178 211,682 14,690 4,743 336,293 Other purchased services 14,845 5,958 414 6,275 27,492 Cost share with Jerome County 98,860 - - - 98,860 Uniforms 23,897 1,969 - 549 26,415 Medical services 7,120 112 - 154 7,386 Books and magazines - - 46,764 - 46,764 Street lighting - 84,267 - - 84,267 Miscellaneous 8,346 1,096 430 2,844 12,716 Blue Cross Grant Agreements 19,962 - - - 19,962 Capital outlay 379,649 1,762,894 - 7,400 2,149,943 Debt service 115,660 - - - 115,660 Total expenditures 4,558,516 2,929,040 423,963 178,084 8,089,603 EXCESS (DEFICIENCY) OF REVENUE OVER 549,234 (336,576) 16,398 31,792 260,848 EXPENDITURES OTHER FINANCING SOURCES (USES): Net change in fair value of investments (1,451) (1,210) (191) (91) (2,943) Transfers in (out) (93,169) (25,443) (4,417) 6,545 (116,484) TOTAL OTHER FINANCING SOURCES (USES) (94,620) (26,653) (4,608) 6,454 (119,427) NET CHANGE IN FUND BALANCES 454,614 (363,229) 11,790 38,246 141,421 1,995,740 1,319,044 183,123 86,317 3,584,224 FUND BALANCE SEPTEMBER 30, 2018 2,450,354 $ 955,815 $ 194,913 $ 124,563 $ 3,725,645 $ Continued on next page FUND BALANCE SEPTEMBER 30, 2017 The accompanying notes are an integral part of the financial statements -16- ---PAGE BREAK--- CITY OF JEROME, IDAHO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE-GOVERNMENTAL FUNDS SEPTEMBER 30, 2018 Continued from previous page Total net changes in fund balances - governmental funds (from previous page) 141,421 $ Repayment of note principal is reported as an expenditure in the governmental funds, but the payment reduces long-term liabilities in the Statement of Net Assets 81,811 Governmental funds report the acquisition or construction of capital assets as expenditures, while governmental activities report depreciation expense to allocate the cost of these assets over their estimated useful life. In the current period, these amounts are: Capital outlay 2,149,943 Depreciation expense (704,158) Revenues and expenditures in the Statement of Activities that do not provide or use current financial resources are not reported as revenues or expenditures in the funds 19,116 Changes in pension related deferred outflows of resources, deferred inflows of resources, and net pension liability do not require the use of current financial resources and are not reported in the governmental funds 297,986 Change in net position of governmental activities 1,986,119 $ Reconciliation to the Statement of Activities: The accompanying notes are an integral part of the financial statements -17- ---PAGE BREAK--- CITY OF JEROME, IDAHO STATEMENT OF NET POSITION-PROPRIETARY FUNDS SEPTEMBER 30, 2018 Governmental Activities- Internal ASSETS: Irrigation Sanitation Water Sewer Total Service Funds Current Assets: Pooled cash and cash equivalents - $ 64,052 $ 218,361 $ 847,123 $ 1,129,536 $ 8,401 $ Non-pooled cash and cash equivalents - - 400 - 400 - Prepaid assessments - - 11,410 - 11,410 - Patron receivables 132,961 44,969 459,143 1,181,288 1,818,361 - Less allowance for uncollectible accounts - (135) (1,516) (3,648) (5,299) - Accrued interest 45 - - - 45 - Inventory of supplies - - 367,171 - 367,171 - Total current assets 133,006 108,886 1,054,969 2,024,763 3,321,624 8,401 Restricted assets: Pooled cash and cash equivalents - 9,615 3,202,301 5,331,530 8,543,446 - Non-pooled cash and cash equivalents - - - 3,450,526 3,450,526 - Total restricted assets - 9,615 3,202,301 8,782,056 11,993,972 - Noncurrent Assets: Land - - 464,568 292,534 757,102 - Construction in progress - - 144,255 25,221,291 25,365,546 - Infrastructure 37,040 - 6,636,453 21,993,477 28,666,970 - Buildings - - 1,505,565 18,819,209 20,324,774 - Machinery and equipment 45,737 1,029 909,982 1,657,296 2,614,044 - Less accumulated depreciation (38,943) (723) (3,275,809) (14,161,992) (17,477,467) - Total noncurrent assets 43,834 306 6,385,014 53,821,815 60,250,969 - Other Assets: Deferred charge - Bonds - - 47,274 378,551 425,825 - Less accumulated amortization - - (104) (37,649) (37,753) - - - 47,170 340,902 388,072 - TOTAL ASSETS 176,840 118,807 10,689,454 64,969,536 75,954,637 8,401 DEFERRED OUTFLOWS OF RESOURCES: Differences between expected and actual experience 7,519 6,378 75,621 107,248 196,766 - Changes in pension assumptions or other inputs 1,763 1,920 19,893 31,550 55,126 - Employer contributions to pension plan made subsequent to the measurement date for the the net pension liability 1,746 1,860 19,209 30,632 53,447 - 11,028 10,158 114,723 169,430 305,339 - LIABILITIES AND NET POSITION LIABILITIES: Current Liabilities: Due to General Fund 2,513 - - - 2,513 - Accounts payable - trade 8,899 20,461 116,087 594,734 740,181 8,401 Accrued interest payable - - 4,585 242,910 247,495 - Accrued compensation 1,307 1,066 14,523 20,523 37,419 - Current maturity of long-term liabilities - - 235,000 550,000 785,000 - Total current liabilities 12,719 21,527 370,195 1,408,167 1,812,608 8,401 Long-term Liabilities: Bonds payable (including amortized premium) - - 2,399,732 36,509,144 38,908,876 - Customer deposits (payable from restricted assets) - 9,615 25,280 44,637 79,532 - Future compensated absences of employees 5,903 5,940 73,003 92,352 177,198 - Total long-term liabilities 5,903 15,555 2,498,015 36,646,133 39,165,606 - Net pension liability 32,690 29,473 298,292 472,196 832,651 - TOTAL LIABILITIES 51,312 66,555 3,166,502 38,526,496 41,810,865 8,401 DEFERRED INFLOWS OF RESOURCES: Differences between expected and actual pension experience related to the pension plan 2,326 2,183 22,143 35,063 61,715 - Net difference between projected and actual earnings on pension plan investments 361 2,766 29,618 49,391 82,136 - Change in proportionate share percentage from prior year 1,092 1,029 11,325 16,720 30,166 - 3,779 5,978 63,086 101,174 174,017 - NET POSITION: Invested in capital assets, net of related debt 43,834 306 3,797,452 17,103,573 20,945,165 - Restricted for: Capital projects - - 2,697,226 4,059,453 6,756,679 Other - - 479,795 4,677,966 5,157,761 Unrestricted 88,943 56,126 600,116 670,304 1,415,489 - TOTAL NET POSITION 132,777 $ 56,432 $ 7,574,589 $ 26,511,296 $ 34,275,094 $ - $ Business-type Activities The accompanying notes are an integral part of the financial statements -18- ---PAGE BREAK--- CITY OF JEROME, IDAHO STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION-PROPRIETARY FUNDS SEPTEMBER 30, 2018 Governmental Activities - Internal Operating Revenues: Irrigation Sanitation Water Sewer Total Service Funds Charges for services 189,624 $ 327,945 $ 2,567,974 $ 7,410,331 $ 10,495,874 - $ Miscellaneous income 622 709 17,325 15,984 34,640 - Total operating revenues 190,246 328,654 2,585,299 7,426,315 10,530,514 - Operating Expenses: Salaries 63,388 67,008 696,353 1,104,826 1,931,575 - Personnel benefits 22,469 22,653 247,207 372,801 665,130 - Office supplies 918 6,076 8,056 14,089 29,139 - Operating supplies 24,888 666 192,398 230,305 448,257 30,165 New equipment - non-capital - - 8,450 5,750 14,200 4,474 Public Relations - - 2,500 - 2,500 Professional services - - 59,112 87,777 146,889 141,740 Purchased services 641 233,947 5,767 178,298 418,653 - Advertising and publishing 32 - - 152 184 765 Insurance and bonds - - 55,465 85,779 141,244 - Dues and subscriptions - - 1,420 1,846 3,266 18,292 Personnel training 414 - 3,201 6,800 10,415 19,991 Telephone 625 - 6,491 12,854 19,970 3,833 Utilities 451 - 226,931 492,758 720,140 - Gas and oil 1,062 - 43,785 32,279 77,126 894 Repairs 25,585 - 36,455 177,569 239,609 1,296 Cost share with Jerome County - - 7,306 - 7,306 - Uniforms 1,208 - 2,914 3,985 8,107 379 Miscellaneous 515 1,456 9,346 17,628 28,945 1,250 Loss on uncollectible accounts - 65 1,513 11,785 13,363 - Allowance for depreciation 2,304 136 250,673 1,104,928 1,358,041 - Total operating expenses 144,500 332,007 1,865,343 3,942,209 6,284,059 223,079 Operating income (loss) 45,746 (3,353) 719,956 3,484,106 4,246,455 (223,079) Nonoperating Revenues (Expenses): Interest revenue 159 1,249 78,318 146,736 226,462 - Net change in fair value of investments 12 (130) (4,408) (9,972) (14,498) - Amortization of bond issue costs/discounts - - (928) (13,885) (14,813) - Interest expense - - (229,796) (836,271) (1,066,067) - Income before other revenues, expenses, gains, losses and transfers 45,917 (2,234) 563,142 2,770,714 3,377,539 (223,079) Operating transfers in (out) (4,821) (4,341) (39,362) (58,071) (106,595) 223,079 INCREASE (DECREASE) IN NET POSITION 41,096 (6,575) 523,780 2,712,643 3,270,944 - NET POSITION: Net position beginning of year, as reported 89,848 59,712 6,995,156 24,198,942 31,343,658 - Prior period adjustment to record correct previous accumulated depreciation and inventory 1,833 3,295 55,653 (400,289) (339,508) - Net position beginning of year, as corrected 91,681 63,007 7,050,809 23,798,653 31,004,150 - NET POSITION AT SEPTEMBER 30, 2018 132,777 $ 56,432 $ 7,574,589 $ 26,511,296 $ 34,275,094 $ - $ Business-type Activities The accompanying notes are an integral part of the financial statements -19- ---PAGE BREAK--- CITY OF JEROME, IDAHO STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS SEPTEMBER 30, 2018 Governmental Activities - Internal Cash Flows from Operating Activities: Irrigation Sanitation Water Sewer Total Service Funds Cash received from customers 161,082 $ 325,326 $ 2,497,531 $ 7,418,113 $ 10,402,052 $ - $ Cash payments for employees' services and benefits (85,993) (91,695) (955,225) (1,501,708) (2,634,621) - Cash payments to suppliers for goods and services (70,439) (239,889) (656,290) (2,137,067) (3,103,685) (249,839) Net cash provided (used) by operating activities 4,650 (6,258) 886,016 3,779,338 4,663,746 (249,839) Cash Flows from Noncapital Financing Activities: Operating subsidies and transfers to other funds (4,821) (4,341) (39,362) (58,071) (106,595) 223,079 Increase (decrease) in customer deposits - 780 1,665 3,527 5,972 - Net cash provided (used) by noncapital financing activities (4,821) (3,561) (37,697) (54,544) (100,623) 223,079 Cash Flows from Capital and Related Financing Activities: Proceeds from issuance of long-term debt - - - 11,578,530 11,578,530 - Principal payments on long-term debt - - (2,675,000) (540,000) (3,215,000) - Interest payments on long-term debt - - (235,006) (665,895) (900,901) - Purchase of property and equipment - - (320,195) (14,629,245) (14,949,440) - Net cash provided (used) by capital and related financing activities - - (3,230,201) (4,256,610) (7,486,811) - Cash Flows from Investing Activities: Change in net value of investments 12 (130) (4,408) (9,972) (14,498) Interest and dividends 159 1,249 78,318 146,736 226,462 - Net cash provided (used) by investing activities 171 1,119 73,910 136,764 211,964 - Net increase (decrease) in cash and cash equivalents - (8,700) (2,307,972) (395,052) (2,711,724) (26,760) Cash and cash equivalents October 1, 2017 - 82,367 5,729,034 10,024,231 15,835,632 35,161 Cash and cash equivalents September 30, 2018 - $ 73,667 $ 3,421,062 $ 9,629,179 $ 13,123,908 $ 8,401 $ Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) 45,746 $ (3,353) $ 719,956 $ 3,484,106 $ 4,246,455 $ (223,079) $ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 2,304 136 250,673 1,104,928 1,358,041 - (Increase) decrease in accounts receivable (29,164) (3,328) (87,768) (8,202) (128,462) - (Increase) decrease in prepaid assessments - - (11,410) - (11,410) - (Increase) decrease in inventories - - 56,587 - 56,587 - (Increase) decrease in deferred outflows (159) (241) 160 (4,711) (4,951) - Increase (decrease) in accounts payable (14,100) 2,321 (30,357) (777,413) (819,549) (26,760) Increase (decrease) in accrued liabilities 1,647 (117) 5,407 7,961 14,898 - Increase (decrease) in net pension liability (2,188) (2,329) (24,068) (38,379) (66,964) - Increase (decrease) in deferred inflows 564 653 6,836 11,048 19,101 - Net cash provided (used) by operating activities 4,650 $ (6,258) $ 886,016 $ 3,779,338 $ 4,663,746 $ (249,839) $ Reconciliation of Cash and Cash Equivalents at September 30, 2018: Pooled cash and cash equivalents in current assets - $ 64,052 $ 218,361 $ 847,123 $ 1,129,536 $ 8,401 $ Non-pooled cash and cash equivalents in current assets - - 400 - 400 - Pooled cash and cash equivalents in restricted assets - 9,615 3,202,301 5,331,530 8,543,446 - Non-pooled cash and cash equivalents in restricted assets - - - 3,450,526 3,450,526 - - $ 73,667 $ 3,421,062 $ 9,629,179 $ 13,123,908 $ 8,401 $ Supplemental Disclosure of Cash Flow Information: Business-type Activities Cash paid during the year for interest by all proprietary funds was $900,901. The accompanying notes are an integral part of the financial statements -20- ---PAGE BREAK--- CITY OF JEROME, IDAHO STATEMENT OF FIDUCIARY NET POSITION SEPTEMBER 30, 2018 ASSETS: CAFETERIA Pooled cash and cash equivalents 58,384 $ 58,384 LIABILITIES: Held for the benefit of employees 58,384 58,384 NET POSITION - $ The accompanying notes are an integral part of the financial statements -21- ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 22 - Note 1 - Summary of Significant Accounting Policies A) Basis of Presentation The financial statements of the City of Jerome (City) are presented in conformity with accounting principles generally accepted in the United States of America for governmental units as prescribed by the Governmental Accounting Standards Board (GASB) and other authoritative sources. GASB is responsible for establishing generally accepted accounting principles (GAAP) for state and local governments through its pronouncements. B) Financial Reporting Entity Reporting Entity The City of Jerome is located in Jerome County in southern Idaho. The City provides various services and facilities including police and fire protection, building inspection; library; street and park maintenance; irrigation, sanitation and water supply; and sewage treatment/disposal. Operations of the City are the responsibility of a mayor and four council members. As required by generally accepted accounting principles, these financial statements present the City and its component units. Component units of a governmental entity are legally separate entities for which the primary government is considered to be financially accountable and for which the nature and significance of their relationship with the primary government are such that exclusion would cause the combined financial statements to be misleading or incomplete. Financial accountability is defined as the appointment of a voting majority of the component unit’s board, and either the City’s ability to impose its will on the organization or (ii) there is potential for the organization to provide a financial benefit to or impose a financial burden on the City. Based on the application of the criteria set forth by the Governmental Accounting Standards Board, management has determined that the Jerome Urban Renewal Agency is a discretely presented component unit of the City, and is reported in a separate column in the government-wide financial statements to emphasize it is legally separate from the government. A brief description of the discretely presented component unit follows: Discretely Presented Component Unit-Jerome Urban Renewal Agency The Jerome Urban Renewal Agency is responsible for the rehabilitation, conservation and redevelopment of deteriorated properties in areas within the City’s jurisdiction. The five-member board is appointed by the City Council. The City and the Agency have an agreement that the City will make available certain personnel for administrative, engineering, budgeting, and accounting services and assistance to the Agency to the extent that the City has appropriated necessary funds to provide such assistance. The Agency has agreed to reimburse the City for these costs. The City has no responsibility for debt issuance of the Agency. The Agency is presented as a governmental fund type. For financial reporting purposes, the City’s basic financial statements include all financial activities that are controlled by or are dependent upon actions taken by the City Council. The financial statements of the Jerome Urban Renewal Agency may be obtained at the City’s administrative offices. ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 23 - C) Government-Wide and Fund Financial Statements The City’s financial statements include the activities of the City. The City’s government-wide financial statements provide both short-term and long-term information about the City’s overall financial status. Fund financial statements focus on the individual activities of City government, reporting the City’s operations in more detail than the government-wide financial statements. Government-wide financial statements - The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances in a manner similar to a private-sector business. The government-wide financial statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. The Statement of Net Position presents information on all of the City’s assets and liabilities, including capital assets as well as infrastructure assets and long- term liabilities, with the difference between the two presented as net position (deficit). Net position is divided into three components: a. Invested in capital assets, net of related debt - consists of the historical cost of capital assets less accumulated depreciation and less any debt that remains outstanding that was used to finance those assets. b. Restricted net position - consists of balances that are restricted by the City’s creditors (for example, through debt covenants), by state enabling legislation (through restrictions on shared revenues), by grantors (both federal and state), and by other contributors (including those who have donated to the City). c. Unrestricted - all other balances are reported in this category. The Statement of Activities presents information showing how the net position changed during the most recent year. All changes in net position are reported as soon as the underlying event gives rise to the change that occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods uncollected taxes and earned but unused vacation leave). Amounts reported as program revenues on the government-wide financial statements include charges for services - amounts received from customers or applicants who purchase, use or directly benefit from the goods, services or privileges provided by the City, program-specific operating grants and contributions, and program-specific capital grants and contributions. General revenues consist of taxes and all other revenues that do not meet the definition of program revenues. Special items are significant transactions or events within the control of management that are either unusual in nature or infrequent in occurrence. Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 24 - Fund Financial Statements – The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. 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 financial statements, governmental fund financial statements use a current financial resources measurement focus and the modified accrual basis of accounting, focusing on the near-term inflows and outflows of spendable resources, and balances of spendable resources available at fiscal year end. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual when they are measurable and available). “Measurable” means the amount of the transaction can be determined and “available” means collected within the current period or expected to be collected soon enough thereafter (usually 60 days) to be used to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt, which is recognized when the obligations are expected to be liquidated with expendable available financial resources. Property taxes are susceptible to accrual. Other receipts become measurable and available when the cash is received by the government and are recognized as revenue at that time. 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. Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds and non-major funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net position and changes in net position presented in the Government-Wide financial statements. The City has presented all major funds that met those qualifications. In addition, the City has presented certain funds as major funds because the City believes the financial position and activities of these funds are significant to the City as a whole. The City reports the following major governmental funds: a. General Fund – the principal operating fund of the City. It is used to account for and report all financial resources not accounted for and reported in another fund. b. Street Fund – a special revenue fund used to account for and report the receipt of street maintenance assessments and state gas tax distributions restricted or committed to expenditure for striping, signing, and other traffic safety functions, as well as street cleaning, snow and ice control, and other street maintenance functions. c. Library Fund – a special revenue fund used to account for and report property tax revenues restricted or committed for the operation and maintenance of the City’s library system. ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 25 - d. Park Fund – a special revenue fund used to account for and report property tax revenues restricted or committed for the operation and maintenance of the City’s parks. Proprietary Funds. Proprietary Fund Financial Statements include a Statement of Net Position, a Statement of Revenues, Expenses and Changes in Fund Net Position, and a Statement of Cash Flows for each major proprietary fund and non-major funds aggregated. A column representing internal service funds is also presented in these statements. However, internal service balances and activities have been combined with the governmental activities in the Government-Wide financial statements. The City reports the following major proprietary funds: a. Irrigation Fund – enterprise fund used to account for and report the receipt of irrigation assessments to expenditure for the operation and maintenance of the City’s irrigation system. b. Sanitation Fund – enterprise fund used to account for and report the receipt of sanitation assessments to expenditure for the contract of sanitation services. c. Water Fund – enterprise fund used to account for and report the financial activity related to operating the City’s water supply, treatment, and distribution system. Revenues consist primarily of charges for services. d. Sewer Fund – enterprise fund used to account for and report the financial activity related to operating the City’s wastewater collection and treatment system. Revenues consist primarily of charges for services. e. Internal Service Funds – Engineering, Human Resources, and Information Technology funds are used to account for the operations of the respective department to provide services to other departments of the City on a cost- reimbursement basis. Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non- operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. Fiduciary Funds. Fiduciary Fund Financial Statements include a Statement of Net Position. The City’s Fiduciary funds represent Agency Funds, which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. The Agency funds are accounted for on a spending or “economic resources” measurement focus and the accrual basis of accounting as are the proprietary funds explained above. The City reports the following fiduciary funds: a. Cafeteria Fund – used to account for and report the City’s Internal Revenue Code Section 125 Cafeteria Plan for employees. ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 26 - D) Use of Restricted Funds When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. E) Cash and Cash Equivalents For purposes of the statement of cash flows, the City considers all highly liquid investments (including restricted assets) with a maturity when purchased of three months or less and all local government investment pools to be cash equivalents. F) Receivables All receivables are reported net of estimated uncollectible amounts. The allowance for uncollectible accounts is based on of the outstanding balances of the accounts receivable in the sanitation, water and sewer funds. G) Inventories Inventories are carried at cost using the first-in first-out method. H) Capital Assets Capital assets, which include property, plant, equipment and infrastructure, are reported in the government-wide financial statements and the proprietary fund statements. Assets are capitalized when they have a useful life in excess of one year and have a cost of $5,000 or more. Purchased or constructed capital assets are valued at cost or estimated historical cost if actual cost is unavailable. Donated assets are reported at fair value at the time received. As a Phase 3 government under GASB No. 34, the City is allowed to and has elected not to report major general infrastructure assets retroactively. Exhaustible capital assets are depreciated on the straight-line method over the asset’s estimated useful life. Depreciation expense is recorded in the government- wide financial statements and proprietary fund statements. There is no depreciation recorded for land, construction in process, or other capital assets defined as inexhaustible. I) Deferred Outflows of Resources In the governmental fund statements, expenditures that are unearned or unavailable are reported as deferred outflows of resources. J) Deferred Inflows of Resources In the governmental fund statements, revenues that are unearned or unavailable are reported as deferred inflows of resources. K) Long-term Debt Obligations In the government-wide financial statements and proprietary fund statements long- term debt is reported as a liability. Bond discounts and issuance costs are deferred and amortized over the term of the bonds using the effective interest rate method. Bond premiums/discounts are presented as an addition to/reduction of the face amount of bonds payable, whereas issuance costs are recorded as deferred charges. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums and discounts ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 27 - on debt issuances are reported as other financing sources and other financing uses, respectively. L) Compensated Absences Compensated absences are those absences for which employees will be paid, such as vacation, sick leave, and sabbatical leave. A liability for compensated absences that is attributable to services already rendered and that is not contingent on a specific event that is outside the control of the government and its employees is accrued as employees earn the rights to the benefits. Compensated absences that relate to future services or that are contingent on a specific event that is outside the control of the government and its employees are accounted for in the period in which such services are rendered or such events take place. M) Property Tax Calendar The City is responsible for levying property taxes but the taxes are collected by the County. Taxes are levied in September with the first half of real property taxes, along with all personal property and mobile home taxes, due on December 20th. Taxes not paid on or before December 20th are considered to be delinquent. The second half of the real property taxes are due June 20th of the following year and are considered to be delinquent on June 21st. An initial late penalty of 2% of tax plus 1% per month interest charge is assessed on all delinquent taxes. A tax lien is filed for properties whose taxes become three years delinquent. Taxes collected by the County are remitted to the City on a basis. N) Encumbrances Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed as an extension of formal budgetary integration in the general fund, special revenue funds and proprietary funds. This is in conformance with Idaho State Statute which requires that appropriations lapse at the end of a fiscal year and are not available to be carried forward to be used in addition to the succeeding year’s appropriation. O) Interfund Transfers Permanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For the purpose of the statement of activities, all interfund transfers between individual governmental funds have been eliminated. P) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Q) Pensions For purposes of measuring the net pension liability (asset) and pension expense (revenue), information about the fiduciary net position of both the Public Employee Retirement System of Idaho Base Plan (Base Plan) and the Firefighters’ Retirement Fund Plan (FRF) and additions to/deductions from both fiduciary net positions have been determined on the same basis as they are reported by the Base Plan and FRF. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 28 - R) Investment Valuation The City categorizes the fair value measurements of its investments based on the hierarchy established by generally accepted accounting principles. The fair value hierarchy, which has three levels, is based on the valuation inputs used to measure an asset’s fair value: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City does not have any investments that are measured using Level 3 inputs. Fair value measurements of the City’s investments are as follows at September 30, 2018: State Investment Pool: valued at $15.6 million, based on quoted market prices (Level 1 inputs). U.S. Government Bonds: valued at $1.5 million, based on quoted market prices (Level 1 inputs). Note 2 - Cash and Investments Nearly all of the cash balances of the City’s funds are pooled for investment purposes. The individual funds’ portions of the pool’s cash and investments are reported as pooled cash and cash equivalents. Investments are stated at fair value (quoted market price or the best available estimate). Reconciliation of carrying amount to cash numbers on balance sheets: Sources of cash: Deposits with financial institutions $ 297,593 U.S. Government Bonds 1,561,125 State of Idaho Local Government Investment Pool 15,671,832 Petty cash 750 $17,531,300 Cash on balance sheets: Governmental funds: Pooled cash, unrestricted $ 3,719,102 Non-pooled cash, unrestricted 350 Pooled cash, restricted 621,155 Proprietary funds: Pooled cash, unrestricted 1,129,536 Non-pooled cash, unrestricted 400 Pooled cash, restricted 8,543,446 Non-pooled cash, restricted 3,450,526 Internal Service funds: Pooled cash, unrestricted 8,401 Fiduciary net position: Pooled cash, unrestricted 58,384 $17,531,300 The City of Jerome receives a large portion of revenues during the months of January and July. During the past year a significant portion of the additional funds could have been uninsured and uncollateralized. ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 29 - As of September 30, 2018, the City had the following investments and maturities: ____Investment Maturities (in Years)___ Less Than Investment Fair Value 1 _ State Investment Pool $ 15,671,832 $ 15,671,832 $ Federal Farm Credit Bank 321,949 321,949 Federal Farm Credit Bank 294,699 294,699 Federal Farm Credit Bank 297,280 297,280 Federal Home Loan Mortgage 323,428 323,428 Federal Natl Mortgage Assn 323,769 323,769 Total $ 17,232,957 $ 16,317,550 $ 915,407 Interest rate risk. Through its investment policy, the City manages its exposure to interest rate risk. Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The City’s investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Interest rate risk will be mitigated by: 1. Structuring the City’s portfolio so that securities mature to meet the City’s cash demands for ongoing operations, thereby precluding the need to sell securities on the open market prior to their maturity. 2. Investing operating funds primarily in shorter-term securities, money market funds, or LGIP and limiting the average weighted maturity of the portfolio to three years. Credit Risk. The City has a written investment policy that allows the Treasurer to invest money only in those investment instruments allowed by Idaho 50-1013. To minimize credit risk, the City’s general investment policy is to apply the prudent person standard which states that investments shall be made with judgment and care, under the circumstances prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. Custodial Credit Risk. The City has a deposit policy for custodial credit risk. As of September 30, 2018, the carrying amount of the City’s deposits with financial institutions (after considering outstanding and other reconciling items) was $297,593 and the bank balances were $513,423, of which $134,410 was uninsured or uncollateralized. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments that are in the possession of an outside party. The elected State Treasurer, following Idaho Code Section 67-2328, is authorized to sponsor an investment pool in which the City voluntarily participates. The Pool is not registered with the Securities and Exchange Commission or any other regulatory body. Oversight is with the State Treasurer and Idaho Code defines allowable investments. All investments are entirely insured or collateralized with securities held by the Pool or by its agent in the Pool’s name and the fair value of the City’s position in the external investment pool is the same as the value of the pool shares. The fund was assigned a AAAf fund credit quality rating and an S1+ volatility ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 30 - rating by Standard & Poor’s Rating Service in 2009 but has not had a credit rating since 2009. The City’s investment in the State of Idaho Local Government Investment Pool as of September 30, 2018, was $15,671,832. The City’s investment in Federal Farm Credit Bank, Federal Home Loan Mortgage, and Federal National Mortgage Association were rated Aaa by Moody’s Investors Service, AA+ by Standard & Poor’s, and AAA by Fitch Ratings. Concentration of Credit Risk. It is the policy of the City to diversify its investment portfolio to avoid incurring unreasonable and avoidable risks or loss resulting from over-concentration of assets in a specific maturity, specific insurer, or specific class of securities, with the exception of U.S. Treasury Securities and authorized pools. No more than 20% of the City’s total investment will be invested in corporate bonds, with no more than 5% in a single issuer. No more than 50% of the City's total investment portfolio will be invested in a single security type or with a single financial institution, with the exception of U.S. Treasury Securities and authorized pools. Investment Reported Issuer Type Amount Percentage_ State Investment Pool External Investment Pool $ 15,671,832 90.94% Federal Farm Credit Bank U.S. Government Bond 913,928 5.30% Federal Home Loan Mortgage U.S. Government Bond 323,428 1.88% Federal Natl Mortgage Assn U.S. Government Bond 323,769 1.88% Total $ 17,232,957 100.00% Of the carrying amount of cash and investments, the following are restricted for a particular purpose: General Fund: Released Evidence Drug Related $ 7,341 Animal Shelter 3,577 Fireworks Show 4,281 Fire Safehouse 1,200 16,399 Street Fund: IOEM Grant Advances 603,230 Park Fund: High Five Grant 1,000 Modern Woodmen 526 1,526 Sanitation Fund: Customer deposits 9,615 Water Fund: Customer deposits 25,280 Capital reserve fund 2,697,226 Debt reserve fund 479,795 3,202,301 Sewer: Customer deposits 44,637 Capital reserve fund 5,631,828 Debt service reserve fund 3,105,591 8,782,056 Total restricted funds $12,615,127 ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 31 - Interest earned on pooled cash and investments is allocated to participating funds based upon their combined cash and investment balances. Note 3 - Capital Assets Capital asset activity for the fiscal year ended September 30, 2018, was as follows: Balance Balance October September 1, 2017 Increases Decreases 30, 2018 Governmental activities: Land $ 842,589 $ $ $ 842,589 Buildings 4,075,749 48,290 4,124,039 Machinery and equipment 6,168,089 413,249 90,230 6,491,108 Infrastructure 9,585,088 852,569 10,437,657 Construction in progress 181,029 1,016,864 181,029 1,016,864 20,852,544 2,330,972 271,259 22,912,257 Less accumulated depreciation for: Buildings 1,825,088 115,408 1,940,496 Machinery and equipment 4,114,489 245,302 63,270 4,296,521 Infrastructure 1,844,990 343,448 _ 2,188,438 7,784,567 704,158 63,270 8,425,455 Net capital assets $13,067,977 $1,626,814 $ 207,989 $14,486,802 Balance Balance October September 1, 2017 Increases Decreases 30, 2018 Business-type activities: Land $ 757,102 $ $ $ 757,102 Infrastructure 24,571,247 4,095,723 28,666,970 Buildings 19,324,774 1,000,000 20,324,774 Machinery and equipment 2,558,562 55,482 2,614,044 Construction in progress 15,567,310 _11,761,244 1,963,008 25,365,546 62,778,995 _16,912,449 1,963,008 77,728,436 Less accumulated depreciation for: Infrastructure 4,889,801 683,744 5,573,545 Buildings 9,410,937 497,339 9,908,276 Machinery and equipment 1,818,687 176,959 1,995,646 16,119,425 1,358,042 17,477,467 Net capital assets $46,659,570 $15,554,407 $ 1,963,008 $60,250,969 Depreciation expense was charged to governmental functions as follows: General Fund: Administration $ 33,664 Building 1,586 Animal Control 1,455 Fire 111,747 Law Enforcement 67,394 215,846 Streets 430,542 Library 38,076 Parks 19,694 $ 704,158 ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 32 - Note 4 - Changes in Long-Term Liabilities (Governmental Activities) Long-term liability activity for the year ended September 30, 2018, was as follows: Balance Balance Amounts Due October September Within One 1, 2017 Additions Reductions 30, 2018 Year Notes payable: Zions Public Finance – Fire $ 455,312 $ $ 46,375 $ 408,937 $ 47,376 Bonds payable: General Obligation Bonds (including amortized premium of $5,972) 521,408 35,436 485,972 40,000 Other liabilities: Compensated absences 277,933 302,407 277,933 302,407 $1,254,653 $ 302,407 $359,744 $1,197,316 $ 87,376 Zions Public Finance lease/purchase for fire pumper – The contract interest rate is 2.16% with annual payments of $56,210 and a maturity date of February 15, 2026. The agreement is cancelable if funds for the payment are not appropriated in any fiscal year. The principal balance as of September 30, 2018, is $408,937. Bonds Payable - Series 2008 General obligation bonds for the construction of a new Senior Citizen Center were issued on April 1, 2008, for $800,000. The bonds are redeemable in annual install- ments and interest is payable semi-annually at various rates from 4.00% to 5.00%. The bonds have a maturity date of September 15, 2028. The total of the bonds at September 30, 2018, is $480,000. Compensated absences - In accordance with Statement Number 16 of the Governmental Accounting Standards Board, a liability has been accrued for employee rights to receive compensation for future absences in the amount of $302,407. As of September 30, 2018, debt service requirements to maturity for principal and interest, for the notes payable, are as follows: Year Ended Sept. 30, Principal Interest Total 2019 $ 87,376 $ 31,783 $ 119,159 2020 88,400 29,110 117,510 2021 89,445 26,414 115,859 2022 95,513 23,696 119,209 2023 96,604 20,355 116,959 2024-2028 _ 431,599 48,781 480,380 888,937 $180,139 $1,069,076 Premium on bonds less accumulated amortization 5,972 Compensated Absences 302,407 $1,197,316 ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 33 - Note 5 - Changes in Long-Term Liabilities (Business-Type Activities) Long-term liability activity for the year ended September 30, 2018, was as follows: Balance Balance Amounts Due October September Within One 1, 2017 Additions Reductions 30, 2018 Year Irrigation: Compensated absences $ 4,341 5,903 $ 4,341 $ 5,903 $ Sanitation: Compensated Absences 5,973 5,940 5,973 5,940 Customer deposits 8,835 780 9,615 14,808 6,720 5,973 15,555 Water: Revenue Bonds (including amortized premium of $374,732) 5,350,372 2,715,640 2,634,732 235,000 Compensated absences 68,201 73,003 68,201 73,003 Customer deposits 23,615 1,665 25,280 5,442,188 74,668 2,783,841 2,733,015 235,000 Sewer: Notes Payable Idaho Dept of Environmental Quality 6,899,857 11,653,503 18,553,360 Revenue Bonds (including amortized premium of $1,050,784) 18,627,246 5,450,950 5,572,412 18,505,784 550,000 Compensated absences 86,662 92,352 86,662 92,352 Customer deposits 41,110 _ 3,527 44,637 25,654,875 17,200,332 5,659,074 37,196,133 550,000 $31,116,212 $17,287,623 $8,453,229 $39,950,606 $ 785,000 As of September 30, 2018, debt service requirements to maturity for principal and interest, for the notes payable, are as follows: Year Ended Sept. 30, Principal Interest Total 2019 $ 785,000 $ 841,783 $ 1,626,783 2020 805,000 813,883 1,618,883 2021 845,000 773,633 1,618,633 2022 895,000 731,383 1,626,383 2023 935,000 686,633 1,621,633 2024-2028 4,825,000 2,727,638 7,552,638 2029-2033 4,800,000 1,758,500 6,558,500 2034-2038 _ 5,825,000 728,540 6,553,540 19,715,000 $ 9,061,993 $28,776,993 ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 34 - Premium on bonds less accumulated amortization 1,425,516 Idaho DEQ Loan, not fully funded 18,553,360 Compensated absences 177,198 Customer deposits 79,532 $39,950,606 Water Bonds Payable - Series 2017 Revenue refunding bonds for an advanced refunding of the Series 2008 Water Bonds were issued on March 1, 2017, for $2,265,000. The bonds are redeemable in annual installments and interest is payable semi-annually at various rates from 3.00% to 5.00%. The bonds have a maturity date of September 15, 2027. The total of the bonds at September 30, 2018, is $2,260,000. Sewer Bonds Payable - Series 2014C Revenue refunding bonds for an advanced refunding of the Series 2006 Sewer Bonds were issued on November 18, 2014, for $5,130,000. The bonds are redeemable in annual installments and interest is payable semi-annually at various rates from 2.00% to 5.00%. The bonds have a maturity date of September 15, 2026. The total of the bonds at September 30, 2018, is $4,220,000. Sewer Bonds Payable - Series 2014A Revenue bonds for improvements to the Sewer plant were issued on February 26, 2014, for $13,600,000. The bonds are redeemable in annual installments and interest is payable semi-annually at various rates from 1.50% to 5.00%. The bonds have a maturity date of September 15, 2038. The total of the bonds at September 30, 2018, is $13,235,000. Sewer Note Payable – Idaho Department of Environmental Quality A loan from the Idaho Department of Environmental Quality Clean Water State Revolving Fund was approved in May 2014 for $1,750,000. The loan had not been fully funded as of September 30, 2018. The loan will carry an interest rate of 1.25% and will be payable in biannual installments over 30 years. The balance at September 30, 2018 was $1,625,296. Sewer Note Payable – Idaho Department of Environmental Quality A loan from the Idaho Department of Environmental Quality Clean Water State Revolving Fund was approved in November 2014 for $22,200,000. The loan had not been fully funded as of September 30, 2018. The loan will carry an interest rate of 1.50% and will be payable in biannual installments over 30 years. The balance at September 30, 2018 was $16,928,064. Compensated Absences In accordance with Statement Number 16 of the Governmental Accounting Standards Board, a liability has been accrued at September 30, 2018, for employee rights to receive compensation for future absences in the amount of $177,198. Customer Deposits According to City resolution, customer utility deposits are collected and refunded at a future date according to City policy. The balance of customer deposits at September 30, 2018, is $79,532. ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 35 - Note 6 - Rent The City received rent from outside sources. During the year ended September 30, 2018, the general fund received $35,024 for rental of property owned by the City. Note 7 - Public Employee Retirement System of Idaho Pension Plan Plan Description The City of Jerome contributes to the Base Plan which is a cost-sharing multiple- employer defined benefit pension plan administered by Public Employee Retirement System of Idaho (PERSI or System) that covers substantially all employees of the State of Idaho, its agencies and various participating political subdivisions. The cost to administer the plan is financed through the contributions and investment earnings of the plan. PERSI issues a publicly available financial report that includes financial statements and the required supplementary information for PERSI. That report may be obtained on the PERSI website at www.persi.idaho.gov. The City of Jerome contributes to the FRF which is a cost-sharing multiple-employer defined benefit pension plan administered by Public Retirement System of Idaho (PERSI or System) that covers a closed group of firefighters who were hired before October 1, 1980, and who received benefits in addition to those provided under the PERSI Base Plan. The cost to administer the plan is financed through the contributions and investment earnings of the FRF. Additional FRF funding is obtained from receipts from a state fire insurance premium tax. PERSI issues a publicly available financial report that includes financial statements and the required supplementary information for PERSI. That report may be obtained on the PERSI website at www.persi.idaho.gov. Responsibility for administration of the Base Plan and FRF is assigned to the Board comprised of five members appointed by the Governor and confirmed by the Idaho Senate. State law requires that two members of the Board be active Base Plan/System members with at least ten years of service and three members who are Idaho citizens not members of the Base Plan/System except by reason of having served on the Board. Pension Benefits The Base Plan provides retirement, disability, death and survivor benefits of eligible members or beneficiaries. Benefits are based on members’ years of service, age, and highest average salary. Members become fully vested in their retirement benefits with five years of credited service (5 months for elected or appointed officials). Members are eligible for retirement benefits upon attainment of the ages specified for their employment classification. The annual service retirement allowance for each month of credited service is 2.0% (2.3% for police/firefighters) of the average salary for the highest consecutive 42 months. The benefit payments for the Base Plan are calculated using a benefit formula adopted by the Idaho Legislature. The Base Plan is required to provide a 1% minimum cost of living increase per year provided the Consumer Price Index increases 1% or more. The PERSI Board has the authority to provide higher cost of living increases to a maximum of the Consumer Price Index movement or whichever is less; however, any amount above the 1% minimum is subject to review by the Idaho Legislature. The FRF provides retirement, disability, death and survivor benefits of eligible members or beneficiaries. Benefits are based on members’ years of service as well as the final average salary. A firefighter must have 5 years of service to be ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 36 - eligible for a lifetime retirement allowance at age 60. Members are eligible for retirement benefits upon attainment of the ages specified for their employment classification. The annual service retirement allowance is based on Idaho Code Title 72 Chapter 14. The benefit payments for the FRF are calculated using a benefit formula adopted by the Idaho Legislature. The FRF cost of living is based on the increase in the statewide average firefighter’s wage. Member and Employer Contributions Member and employer contributions paid to the Base Plan and FRF are set by statute and are established as a percent of covered compensation. Contribution rates are determined by the PERSI Board within limitations, as defined by state law. The Board may make periodic changes to employer and employee contribution rates (expressed as percentages of annual covered payroll) that are adequate to accumulate sufficient assets to pay benefits when due. For the Base Plan the contribution rates for employees are set by statute at 60% of the employer rate for general employees and 72% for police and firefighters. As of June 30, 2018 it was 6.79% for general employees and 8.36% for police and firefighters. The employer contribution rate as a percent of covered payroll is set by the Retirement Board and was 11.32% general employees and 11.66% for police and firefighters. The City’s contributions were $459,860 for the year ended June 30, 2018. For the FRF Plan as of June 30, 2018, the total employer rate was 25.31% which includes the employer excess rate of 13.65% plus the PERSI class 2 firefighters rate of 11.66%. The FRF member rate for the year for class B is 11.45% which is 3.09% above the class 2 rate of 8.36%. The Jerome Fire Department’s contributions were $38,192 for the year ended June 30, 2018. Pension Liabilities, Pension Expense (Revenue), and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At September 30, 2018, the City reported a liability for its proportionate share of the net pension liability (asset). The net pension liability (asset) was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability (asset) was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability (asset) was based on the City’s share of contributions in the Base and FRF pension plans relative to the total contributions of all participating PERSI Base Plan and FRF employers. At June 30, 2018, the City’s proportion was .001262640 and the FRF’s proportion was .010202530. For the year ended September 30, 2018, the City recognized a pension expense of $148,029. At September 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $204,440 $140,657 Changes in pension assumptions or other inputs $121,185 $0 Net difference between projected and actual earnings on pension plan investments $0 $242,033 ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 37 - Changes in the employer’s proportion and differences between the employer’s contributions and the employer’s proportionate contributions $0 $66,097 Employer contributions subsequent to the measurement date $146,707 $0 Total $472,332 $448,787 $146,707 reported as deferred outflows of resources related to pensions resulting from Employer contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability (asset) in the year ending September 30, 2018. The average of the expected remaining service lives of all employees that are provided with pensions through the System (active and inactive employees) determined at July 1, 2017 the beginning of the measurement period ended June 30, 2018 is 4.9 and 5.5 for the measurement period June 30, 2017 for the Base Plan. The average of the expected remaining service lives of all employees that are provided with pensions through the System (active and inactive employees) determined at July 1, 2017 the beginning of the measurement period ended June 30, 2018 is 1 year and 1 year for the measurement period June 30, 2017 for the FRF Plan. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense (revenue) as follows: Base Plan Year ended September 30, 2018: 2019 $151,391 2020 $17,838 2021 ($152,612) 2022 ($38,573) Change in Proportionate Share Amortization FRF Plan Year ended September 30, 2018: 2019 $25,774 2020 ($5,532) 2021 ($45,396) 2022 ($9,953) Change in Proportionate Share Amortization $141,807 ($75,710) $66,097 $28,557 ($28,557) $0 ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 38 - Actuarial Assumptions Valuations are based on actuarial assumptions, the benefit formulas, and employee groups. Level percentages of payroll normal costs are determined using the Entry Age Normal Cost Method. Under the Entry Age Normal Cost Method, the actuarial present value of the projected benefits of each individual included in the actuarial valuation is allocated as a level percentage of each year’s earnings of the individual between entry age and assumed exit age. The Base Plan amortizes any unfunded actuarial accrued liability based on a level percentage of payroll. The maximum amortization period for the Base Plan permitted under Section 59-1322, Idaho Code, is 25 years. Unfunded actuarial accrued liability for FRF is the difference between the actuarial present value of the FRF benefits not provided by the Base Plan and the FRF assets. Currently FRF assets exceed this actuarial present value; therefore there is not an unfunded liability to amortize at this time. The maximum amortization period for the FRF permitted under Section 59-1394, Idaho code, is 50 years. The total pension liability (asset) in the July 1, 2018 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Base Plan Inflation 3.25% Salary increases 4.25 – 10.00% Salary inflation 3.75% Investment rate of return Cost-of-living adjustments 7.10%, net of investment expenses 1.00% FRF Fund Inflation 3.25% Salary increases 3.75% Salary inflation 3.75% Investment rate of return 7.10%, net of investment expenses Cost-of-living adjustments 3.75% Mortality rates were based on the RP – 2000 combined table for healthy males or females as appropriate with the following offsets: Set back 3 years for teachers No offset for male fire and police Forward one year for female fire and police Set back one year for all general employees and all beneficiaries For the Base Plan an experience study was performed for the period July 1, 2007 through June 30, 2013 which reviewed all economic and demographic assumptions other than mortality. Mortality and all economic assumptions were studied in 2014 for the period from July 1, 2009 through June 30, 2013. The Total Pension Liability as of June 30, 2018 is based on the results of an actuarial valuation date of July 1, 2018. For the FRF Plan an experience study was performed for the period July 1, 2011 ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 39 - through June 30, 2015 which reviewed all economic and demographic assumptions other than mortality. Mortality and all economic assumptions were studied in 2014 for the period from July 1, 2009 through June 30, 2013. The Total Pension Asset as of June 30, 2018 is based on the results of an actuarial valuation date of July 1, 2018. The long-term expected rate of return on pension plan investments was determined using the building block approach and a forward-looking model in which best estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Even though history provides a valuable perspective for setting the investment return assumption, the System relies primarily on an approach which builds upon the latest capital market assumptions. Specifically, the System uses consultants, investment managers and trustees to develop capital market assumptions in analyzing the System’s asset allocation. The assumptions and the System’s formal policy for asset allocation are shown below. The formal asset allocation policy is somewhat more conservative than the current allocation of System’s assets. The best-estimate range for the long-term expected rate of return is determined by adding expected inflation to expected long-term real returns and reflecting expected volatility and correlation. The capital market assumptions are as of January 1, 2018. Capital Market Assumptions Expected Expected Strategic Strategic Asset Class Return Risk Normal Ranges Equities 70% 66% - 77% Broad Domestic Equity 9.15% 19.00% 55% 50% - 65% International 9.25% 20.20% 15% 10% - 20% Fixed Income 3.05% 3.75% 30% 23% - 33% Cash 2.25% 0.90% 0% 0% - 5% Total Fund Expected Return Expected Inflation Expected Real Return Expected Risk Actuary 7.00% 3.25% 3.75% N/A Portfolio 6.58% 2.25% 4.33% 12.67% * Expected arithmetic return net of fees and expenses Actuarial Assumptions Assumed Inflation – Mean 3.25% Assumed Inflation – Standard Deviation 2.00% ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 40 - Portfolio Arithmetic Mean Return 8.42% Portfolio Long-Term Expected Geometric Rate of Return 7.50% Assumed Investment Expenses 0.40% Long-Term Expected Geometric Rate of Return, Net of Investment Expenses 7.10% Discount Rate The discount rate used to measure the total pension liability was 7.10%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the current contribution rate. Based on these assumptions, the pension plans’ net position was projected to be available to make all projected future benefit payments of current plan members. 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. The long-term expected rate of return was determined net of pension plan investment expense but without reduction for pension plan administrative expense. Sensitivity of the Employer's proportionate share of the net pension liability to changes in the discount rate. The following presents the Employer's proportionate share of the net pension liability calculated using the discount rate of 7.10 percent, as well as what the Employer's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.10 percent) or 1-percentage-point higher (8.10 percent) than the current rate: Base Plan 1% Decrease (6.10%) Current Discount Rate (7.10%) 1% Increase (8.10%) Employer's proportionate share of the net pension liability (asset) $4,662,049 $1,862,417 ($455,795) FRF Fund 1% Decrease (6.10%) Current Discount Rate (7.10%) 1% Increase (8.10%) Employer's proportionate share of the net pension liability (asset) ($856,538) ($1,154,622) ($1,408,305) Pension plan fiduciary net position Detailed information about the pension plan's fiduciary net position is available in the separately issued PERSI financial report. PERSI issues a publicly available financial report that includes financial ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 41 - statements and the required supplementary information for PERSI. That report may be obtained on the PERSI website at www.persi.idaho.gov. Payables to the pension plan At September 30, 2018, the City of Jerome reported no payables to the defined benefit pension plan for legally required employer contributions nor for legally required employee contributions which had been withheld from employee wages but not yet remitted to PERSI. Note 8- Other Employee Benefits The City of Jerome has instituted a "401(k)" profit-sharing retirement plan to supplement employees' income upon retirement. A cafeteria plan, by which employees can elect to reduce their gross income and choose from a variety of benefits including medical expense reimbursements, group life insurance, and dependent care reimbursements, is also in place. Note 9 - Individual Fund Deficits All governmental and proprietary funds showed surplus fund balances and net position, respectively. The Street and Sanitation funds showed an excess of expenditures over revenues. Note 10 - Cost Share Agreement with Jerome County The City of Jerome annually enters into a cost sharing arrangement with Jerome County. The agreement covers cost of law enforcement facilities, dispatching and the prosecutor's office. During the year ended September 30, 2018, the City of Jerome contributed $106,166 to this agreement. Note 11 - Risk The City of Jerome has risk from employee dishonesty, employee injury, property damage and general liability. Commercial insurance is purchased to cover these risks. Note 12 - Pledging of Net Revenues The City has pledged future revenues derived from the operation of the City’s Water Plant, net of operating and maintenance expenses, to repay a $2,265,000 2017 Series Water Revenue Bond. The general purpose of the 2017 bond is to refund the previous 2008 revenue bond used for water system improvements in order to decrease the associated interest rate costs. The bond is payable solely from the net revenues of the Water System and payments are required through the year ending September 30, 2027. The total principal and interest remaining to be paid on the bond at September 30, 2018, is $2,807,400. Net revenues for the year must not be less than 1.25 times the average annual debt service on the bonds, and the City met this requirement at September 30, 2018. Net revenues differ from net earnings as depreciation expense, amortization expense, and interest expense are not deducted. Principal and interest paid for the current year and net revenues were $2,910,006 and $1,005,177, respectively. The City has pledged future revenues derived from the operation of the City’s Sewer Plant, net of operating and maintenance expenses, to repay $18,730,000 in sewer revenue bonds. The general purpose of the bonds is to upgrade the sewer plant and refund the previous 2006 revenue bond used for sewer plant improvements. The bonds are payable solely from the net revenues of the Sewer System and payments are required through the year ending September 30, 2038. The total principal and interest remaining to be paid on the bonds is $25,969,590. Net revenues for the ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 42 - year must not be less than 1.25 times the average annual debt service on bonds, and the City met this requirement at September 30, 2018. Net revenues differ from net earnings as depreciation expense, amortization expense, and interest expense are not deducted. Principal and interest paid for the current year and net revenues were $1,205,895 and $4,667,727, respectively. Note 13 - Interest Expense Interest expense in the following amounts is included under direct expenses on the Statement of Activities: General government $ 34,285 Water 229,796 Sewer 836,271 Note 14 - Commitments At year end, the City had committed to complete public works construction projects for an estimated total cost of $5,890,248. $3,822,652 of the total are wastewater system improvement contracts funded from Idaho Department of Environmental Quality Drinking Water State Revolving Fund loans. $1,631,255 of the total is for street improvements funded from the Jerome Urban Renewal Agency and State grant funds and $436,341 of the total is for water system improvements funded from City reserve funds. Note 15 – Related Party Transactions The following schedule presents significant transactions between the primary government and its component unit during the year ended September 30, 2018: Component Unit Significant Transactions Jerome Urban Renewal Agency Major Assets paid for by the Agency and donated to the City of Jerome for the year were: 1. South Tiger Drive Improvements for $809,701. At year end, there was $726,224 in accrued reimbursement to the City for expenses incurred by the City relating to public works projects contracted in the name of the City. Note 16 – Fund Balances In accordance with GASB Statement No. 54, fund balances are classified as follows: Nonspendable – amounts that cannot be spent because they are in a nonspendable form or because they are legally or contractually required to be maintained intact. Restricted – amounts that can be spent only for specific purposes because of constitutional provisions or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, or the laws or regulations of other governments. Committed – amounts that can be used only for specific purposes determined by a formal action of the City Council. The City Council is the highest level of decision-making authority for the City. Commitments may be established, modified, or rescinded only through ordinances or resolutions approved by the City Council. Assigned – amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. Under the City’s adopted fund balance policy, discretion is given to the City Finance ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 43 - Director and City Administrator as delegated by the Mayor and Council to assign amounts for specific purposes. Unassigned – all other spendable amounts. As required by GASB 54, the City’s establishment, modification, and rescinding of a committed fund balance is decided upon by passage of an annual appropriations ordinance by the Mayor and City Council, acting as the highest level of decision- making authority. When expenditures are incurred for which both restricted and unrestricted fund balances are available, the City considers restricted fund balances to have been spent first. In the case of an expenditure being incurred for a purpose for which amounts in any of the unrestricted fund balances could be used, the City does not have a formal policy, but defaults to the order as follows: first against committed, then assigned and finally unassigned fund balance as considered to have been spent. The City’s policy regarding encumbrances and other significant commitments required to be disclosed by major funds and nonmajor funds in the aggregate per GASB 54 have been disclosed under Notes 1(N) and 15, respectively. As of September 30, 2018, fund balances are composed of the following: General Street Library Park Nonspendable: Prepaid insurance $ 112,634 $ $ $ 112,634 Restricted: Released evidence - Drug related 7,341 Animal Shelter 3,576 Fire Safehouse 1,200 Fireworks Show 4,282 High Five grant 1,000 Modern Woodmen 526 16,399 1,526 Committed: Building Vehicle Replacement 15,000 Animal Control Shelter Improvement 20,000 Police Building Replacement 778,586 Tennis Courts 20,000 Park Equipment 6,000 Playground Equipment 7,000 Street operations 743,776 Aerial Update 129,033 Library operations 192,346 Park operations 90,037 813,586 872,809 192,346 123,037 Assigned: Released evidence - Non-drug related 3,742 Curb and gutter 51,250 Employee Benefits 93,224 Federal Signage 5,000 Brush Chipper 19,000 Service Truck Replacement 7,500 Senior Center Taxes 22,330 Equipment replacement 7,506 256 2,567 126,802 83,006 2,567 Unassigned 1,380,933 Total fund balances $2,450,354 $ 955,815 $ 194,913 $124,563 ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 44 - The City formally adopted a fund balance policy on October 6, 2009. It states that the City will strive to maintain an unrestricted fund balance for each of the City’s funds equal to a minimum of 25% of the total budgeted annual expenditures of each respective fund. This percentage is to be maintained as a precaution to provide financing for unanticipated expenditures and revenue shortfalls. The City Council will be advised annually, during the budget process, of the unrestricted fund balances. The City will strive to budget each year the amount necessary to maintain the unrestricted fund balance at the appropriate amount. Amounts in excess of the aforementioned targeted 25% will be considered for future capital replacement needs. The City Administrator and Finance Director are authorized to assign fund balances for purposes of tracking designated activities within each of the City’s funds. The purpose of the streets, library, and parks funds as special revenue funds are to carry on the operations and programs of those funds as a part of services offered by the City. A major revenue source for the special revenue funds are property taxes, while the street fund also receives funding through road and bridge taxes as well as gas taxes. Note 17 – City Health Insurance Deductible Buy-Down Liability The City purchases a $2,000 deductible from SelectHealth for each employee. Employees are responsible for the first $1,000 of that deductible. The City of Jerome then self-insures the remaining deductible between $1,000 and $2,000 with a maximum annual reimbursement of $1,000 per person or $2,000 per family. The liability for these reimbursements for the year ranges from $0 with no claims to $165,000. Note 18 – Interfund Transactions A summary of interfund receivables and payables follows: Receivable Payable Fund _ Fund _ Major Funds: General $ 2,513 $ Irrigation 2,513 $ 2,513 $ 2,513 A summary of interfund transfers follows: Transfers Transfers In Major Funds: General $ $ 93,169 Street 25,443 Library 4,417 Park 9,477 2,932 Irrigation 4,821 Sanitation 4,341 Water 39,362 Sewer 58,071 Non-major Funds: Human Resources 12,790 Engineering 30,926 Information Technology 179,363 $ 232,556 $ 232,556 ---PAGE BREAK--- CITY OF JEROME, IDAHO NOTES TO FINANCIAL STATEMENTS YEAR ENDED SEPTEMBER 30, 2018 - 45 - Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those related to goods and services type transactions are classified as “due to and from other funds.” Short- term interfund loans are reported as “interfund receivables and payables.” Long- term interfund loans (noncurrent portion) are reported as “advances from and to other funds.” Interfund receivables and payables between funds are eliminated in the Statement of Net Position. The interfund receivable in the General Fund and interfund payable in the Irrigation Fund for $2,513 is due to several prior fiscal year decreases in net position in the Irrigation Fund. Interfund Transfers During the course of normal operations, the City has numerous transactions between funds, including expenditures and transfers of resources primarily to provide services and equipment. The Governmental and Proprietary fund financial statements generally reflect such transactions as transfers. Non-routine items occurring during the course of the year include a transfer of $9,477 from the General Fund to the Park Fund for professional services related to North Park improvements. Note 19 – Restatement of Prior Year Net Position Beginning net position for Governmental Activities and Business-Type Activities has been restated to correct errors in the prior year. An error was made in the prior year in reporting the investment deferred outflow of resources across the funds and long-term debt in the Sewer Fund. A reconciliation of the prior period ending net position to the current year beginning net position for the total of both Governmental Activities and Business-Type Activities is as follows: Beginning net position $ 46,886,339 Adjustment to correct investment deferred outflows and long-term debt (455,577) Beginning net position, as restated $ 46,430,762 The above adjustment decreased the change in net position $455,577 for the prior year and had no impact on the current year change in net position. Note 20 – Subsequent Events The City of Jerome, Idaho, has obtained loans in the amounts of $1,750,000 and $22,200,000 from the Idaho Department of Environmental Quality Drinking Water State Revolving Fund. The projects are for wastewater collection system and plant improvements and are in process at September 30, 2018. Of the $1,750,000 loan, $1,625,296 and $16,928,064 of the $22,200,000 loan was spent as of September 30, 2018. All of the projects are expected to be completed in the next year. At year end, a Company serviced by the City’s utility system had an outstanding and past due sewer balance of $43,536 related to chemical cleanup costs incurred by the City. Since the end of the fiscal year, and after discussion with Company Management, the City has determined to not enforce collection of this reimbursement. Accordingly, $43,536 of the total past due amount was determined no longer due, owed nor payable to the City. ---PAGE BREAK--- CITY OF JEROME, IDAHO BUDGETARY COMPARISON SCHEDULE GENERAL FUND YEAR ENDED SEPTEMBER 30, 2018 Actual Variance Amounts With Final Budgetary Budget Original Final Basis Over (Under) REVENUE: Property taxes 3,472,160 $ 3,472,160 $ 3,428,652 $ (43,508) $ Penalties and interest 26,793 26,793 21,475 (5,318) Business and franchise taxes 176,000 176,000 196,977 20,977 Payment in lieu of taxes 8,615 8,615 8,979 364 Licenses and permits 136,908 136,908 171,118 34,210 State shared 822,675 822,675 893,684 71,009 Federal grants - - 22,104 22,104 State grants - - 445 445 Local grants - - 19,962 19,962 Court revenues 43,000 43,000 56,252 13,252 Rents 31,309 31,309 35,024 3,715 Interest 5,000 5,000 33,409 28,409 Contributions 28,000 28,000 8,114 (19,886) Refunds and reimbursements 134,738 145,700 179,867 34,167 Fines 1,040 1,040 260 (780) Miscellaneous 5,600 5,600 5,898 298 Sale of city property - 23,808 25,530 1,722 Total revenue 4,891,838 4,926,608 5,107,750 181,142 EXPENDITURES: Legislative 66,261 66,261 65,740 (521) Executive 16,847 16,847 16,900 53 Finance and administration 705,415 716,377 730,638 14,261 Law enforcement 2,319,525 2,343,333 1,904,348 (438,985) Fire control 1,591,521 1,591,521 1,565,095 (26,426) Building inspection 133,521 133,521 134,817 1,296 Animal control 143,016 143,016 140,978 (2,038) Total expenditures 4,976,106 5,010,876 4,558,516 (452,360) EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES (84,268) (84,268) 549,234 633,502 OTHER FINANCING SOURCES (USES): Net change in fair value of investments - - (1,451) (1,451) Transfers in (out) (96,375) (96,375) (93,169) 3,206 TOTAL OTHER FINANCING SOURCES (USES) (96,375) (96,375) (94,620) 1,755 NET CHANGES IN FUND BALANCE (180,643) $ (180,643) $ 454,614 $ 635,257 $ Budgeted Amounts -46- ---PAGE BREAK--- CITY OF JEROME, IDAHO BUDGETARY COMPARISON SCHEDULE STREET FUND YEAR ENDED SEPTEMBER 30, 2018 Actual Variance Amounts With Final Budgetary Budget Original Final Basis Over (Under) REVENUE: Property taxes 756,794 $ 756,794 $ 748,434 $ (8,360) $ Penalties and interest 5,673 5,673 5,133 (540) Business and franchise taxes 81,519 81,519 66,419 (15,100) Payment in lieu of taxes 2,110 2,110 1,956 (154) State shared 751,232 751,232 776,671 25,439 State grants - - 184,352 184,352 Interest 4,362 4,362 26,224 21,862 Contributions - 1,174,057 615,687 (558,370) Refunds and reimbursements 20,000 20,000 166,368 146,368 Miscellaneous 1,400 1,400 1,220 (180) Total revenue 1,623,090 2,797,147 2,592,464 (204,683) EXPENDITURES: Salaries 493,760 493,760 508,707 14,947 Personnel benefits 204,843 204,843 199,127 (5,716) Office supplies and postage 500 500 1,138 638 Operating supplies 73,880 73,880 77,289 3,409 Professional services 40,000 40,000 - (40,000) Advertising 500 500 114 (386) Insurance and bonds 47,323 47,323 46,590 (733) Dues and subscriptions 400 400 660 260 Personnel training 4,240 4,240 1,800 (2,440) Telephone 3,200 3,200 3,469 269 Utilities 8,356 8,356 11,645 3,289 Gas and oil 10,000 10,000 10,523 523 Repairs and maintenance 54,000 54,000 51,390 (2,610) Street maintenance 378,989 378,989 160,292 (218,697) Other purchased services 6,000 6,000 5,958 (42) Uniforms 4,500 4,500 1,969 (2,531) Medical services 205 205 112 (93) Miscellaneous expense - - 1,096 1,096 Street lighting 86,530 86,530 84,267 (2,263) Equipment Replacement 81,500 81,500 - (81,500) Capital outlay - equipment 95,163 95,163 74,490 (20,673) Construction project 355,313 1,529,370 1,688,404 159,034 Total expenditures 1,949,202 3,123,259 2,929,040 (194,219) EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES (326,112) (326,112) (336,576) (10,464) OTHER FINANCING SOURCES (USES): Net change in fair value of investments - - (1,210) (1,210) Transfers in (out) (40,686) (40,686) (25,443) 15,243 TOTAL OTHER FINANCING SOURCES (USES) (40,686) (40,686) (26,653) 14,033 NET CHANGES IN FUND BALANCE (366,798) $ (366,798) $ (363,229) $ 3,569 $ Budgeted Amounts -47- ---PAGE BREAK--- CITY OF JEROME, IDAHO BUDGETARY COMPARISON SCHEDULE LIBRARY FUND YEAR ENDED SEPTEMBER 30, 2018 Actual Variance Amounts With Final Budgetary Budget Original Final Basis Over (Under) REVENUE: Property taxes 373,395 $ 373,395 $ 368,934 $ (4,461) $ Penalties and interest 4,000 4,000 2,449 (1,551) Payment in lieu of taxes 966 966 965 State shared revenue 32,304 32,304 32,396 92 Federal grants - - 3,000 3,000 State grants - - 500 500 Interest 395 395 2,778 2,383 Contributions 5,396 10,396 6,915 (3,481) Refunds and reimbursements 2,926 3,926 842 (3,084) Fines 7,599 7,599 6,551 (1,048) Miscellaneous 13,882 13,882 15,031 1,149 Total revenue 440,863 446,863 440,361 (6,502) EXPENDITURES: Salaries 233,820 233,820 227,368 (6,452) Personnel benefits 91,438 91,438 92,508 1,070 Office supplies and postage 1,200 1,200 1,506 306 Office supplies and postage 13,090 13,090 10,054 (3,036) Dues and subscriptions 1,508 1,508 12,698 11,190 Personnel training 7,542 8,542 5,047 (3,495) Telephone 2,915 2,915 3,192 277 Utilities 9,905 9,905 9,292 (613) Repairs 8,715 8,715 14,690 5,975 Other purchased services 805 805 414 (391) Books and magazines 41,345 46,345 46,764 419 Miscellaneous 600 600 430 (170) Total expenditures 412,883 418,883 423,963 5,080 EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES 27,980 27,980 16,398 (11,582) OTHER FINANCING SOURCES (USES): Net change in fair value of investments - - (191) (191) Transfers in (out) (27,083) (27,083) (4,417) 22,666 TOTAL OTHER FINANCING SOURCES (USES) (27,083) (27,083) (4,608) 22,475 NET CHANGES IN FUND BALANCE 897 $ 897 $ 11,790 $ 10,893 $ Budgeted Amounts -48- ---PAGE BREAK--- CITY OF JEROME, IDAHO BUDGETARY COMPARISON SCHEDULE PARK FUND YEAR ENDED SEPTEMBER 30, 2018 Actual Variance Amounts With Final Budgetary Budget Original Final Basis Over (Under) REVENUE: Property taxes 190,568 $ 190,568 $ 188,835 $ (1,733) $ Penalties and interest 1,800 1,800 1,292 (508) Payment in lieu of taxes 538 538 493 (45) State shared revenue 16,304 16,304 16,725 421 Interest 132 132 1,718 1,586 Contributions - - 717 717 Miscellaneous 717 717 96 (621) Total revenue 210,059 210,059 209,876 (183) EXPENDITURES: Salaries 65,578 65,578 66,001 423 Personnel benefits 22,936 22,936 26,520 3,584 Office supplies and postage 50 50 76 26 Operating supplies 10,000 10,000 7,686 (2,314) Professional services - 9,477 9,477 - Dues and subscriptions 300 300 260 (40) Personnel training 707 707 305 (402) Telephone - - 43 43 Utilities 52,036 52,036 43,114 (8,922) Gas and oil 1,200 1,200 2,637 1,437 Repairs and maintenance 6,250 6,250 4,743 (1,507) Other purchased services 15,092 15,092 6,275 (8,817) Tree maintenance 2,000 2,000 2,771 771 Miscellaneous 990 990 776 (214) Capital outlay - equipment 22,500 22,500 7,400 (15,100) Total expenditures 199,639 209,116 178,084 (31,032) EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES 10,420 943 31,792 30,849 Net change in fair value of investments - - (91) (91) Transfers in (out) (5,532) 3,945 6,545 2,600 TOTAL OTHER FINANCING SOURCES (USES) (5,532) 3,945 6,454 2,509 NET CHANGES IN FUND BALANCE 4,888 $ 4,888 $ 38,246 $ 33,358 $ Budgeted Amounts -49- ---PAGE BREAK--- CITY OF JEROME, IDAHO BUDGETARY COMPARISON SCHEDULE IRRIGATION FUND YEAR ENDED SEPTEMBER 30, 2018 Actual Variance Amounts With Final Budgetary Budget Original Final Basis Over (Under) REVENUE: Charges for services 195,706 $ 195,706 $ 189,624 $ (6,082) $ Miscellaneous 1,000 1,000 622 (378) Total revenue 196,706 196,706 190,246 (6,460) EXPENDITURES: Salaries 65,909 65,909 63,388 (2,521) Personnel benefits 27,489 27,489 22,469 (5,020) Office supplies and postage 1,700 1,700 918 (782) Operating supplies 31,385 31,385 24,888 (6,497) Professional services - - - - Advertising and publishing 200 200 32 (168) Personnel training 700 700 414 (286) Telephone 445 445 625 180 Utilities 415 415 451 36 Gas and oil 850 850 1,062 212 Repairs and maintenance 28,000 28,000 25,585 (2,415) Other services 1,500 1,500 641 (859) Office supplies and postage 1,185 1,185 1,208 23 Medical services 165 165 167 2 Miscellaneous 150 150 348 198 Allowance for depreciation - - 2,304 2,304 Total expenditures 160,093 160,093 144,500 (15,593) EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES 36,613 36,613 45,746 9,133 OTHER FINANCING SOURCES (USES): Interest revenue - - 159 159 Net change in fair value of investments - - 12 12 Transfers in (out) (8,620) (8,620) (4,821) 3,799 TOTAL OTHER FINANCING SOURCES (USES) (8,620) (8,620) (4,650) 3,970 INCREASE (DECREASE) IN NET POSITION 27,993 $ 27,993 $ 41,096 $ 13,103 $ Earnings 27,993 $ 27,993 $ 41,096 $ 13,103 $ Allowance for depreciation - - 2,304 2,304 27,993 $ 27,993 $ 43,400 $ 15,407 $ Budgeted Amounts Reconciliation of Earnings to Budget -50- ---PAGE BREAK--- CITY OF JEROME, IDAHO BUDGETARY COMPARISON SCHEDULE SANITATION FUND YEAR ENDED SEPTEMBER 30, 2018 Actual Variance Amounts With Final Budgetary Budget Original Final Basis Over (Under) REVENUE: Charges for services 321,288 $ 321,288 $ 327,945 $ 6,657 $ Miscellaneous 1,500 1,500 709 (791) Total revenue 322,788 322,788 328,654 5,866 EXPENDITURES: Salaries 58,652 58,652 67,008 8,356 Personnel benefits 22,244 22,244 22,653 409 Office supplies and postage 6,000 6,000 6,076 76 Operating supplies 2,800 2,800 666 (2,134) Purchased services 223,152 223,152 233,947 10,795 Loss on uncollectible accounts 300 300 65 (235) Miscellaneous 2,000 2,000 1,456 (544) Allowance for depreciation - - 136 136 Total expenditures 315,148 315,148 332,007 16,859 EXCESS (DEFICIENCY) OF REVENUE Office supplies and postage 7,640 7,640 (3,353) (10,993) OTHER FINANCING SOURCES (USES): Interest revenue 750 750 1,249 499 Net change in fair value of investments - - (130) (130) Transfers in (out) (5,551) (5,551) (4,341) 1,210 TOTAL OTHER FINANCING SOURCES (USES) (4,801) (4,801) (3,222) 1,579 INCREASE (DECREASE) IN NET POSITION 2,839 $ 2,839 $ (6,575) $ (9,414) $ Earnings 2,839 $ 2,839 $ (6,575) $ (9,414) $ Allowance for depreciation - - 136 136 2,839 $ 2,839 $ (6,439) $ (9,278) $ Budgeted Amounts Reconciliation of Earnings to Budget -51- ---PAGE BREAK--- CITY OF JEROME, IDAHO BUDGETARY COMPARISON SCHEDULE WATER FUND YEAR ENDED SEPTEMBER 30, 2018 Actual Variance Amounts With Final Amounts Budget Original Final Basis Over (Under) REVENUE: Charges for services 2,605,550 $ 2,605,550 $ 2,567,974 $ (37,576) $ Miscellaneous 7,843 12,170 17,325 5,155 Total revenue 2,613,393 2,617,720 2,585,299 (32,421) EXPENDITURES: Salaries 675,136 675,136 696,353 21,217 Personnel benefits 273,272 273,272 247,207 (26,065) Office supplies and postage 4,500 4,500 8,056 3,556 Operating supplies 143,688 143,688 192,398 48,710 New equipment - non-capital 10,466 10,466 8,450 (2,016) Public relations 5,000 5,000 2,500 (2,500) Professional services 46,530 46,530 59,112 12,582 Advertising and publishing 500 500 - (500) Insurance and bonds 55,467 55,467 55,465 Dues and subscriptions 1,910 1,910 1,420 (490) Personnel training 7,200 7,200 3,201 (3,999) Telephone 7,000 7,000 6,491 (509) Office supplies and postage 229,972 229,972 226,931 (3,041) Gas and oil 34,000 34,000 43,785 9,785 Repairs and maintenance 50,200 50,200 36,455 (13,745) Other purchased services 12,700 12,700 5,767 (6,933) Cost share with Jerome County 5,806 5,806 7,306 1,500 Uniforms 4,000 4,000 2,914 (1,086) Medical services 1,130 1,130 348 (782) Loss on uncollectible accounts 1,000 1,000 1,513 513 Miscellaneous 7,558 7,558 8,998 1,440 Allowance for depreciation - - 250,673 250,673 Total expenditures 1,577,035 1,577,035 1,865,343 288,308 EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES 1,036,358 1,040,685 719,956 (320,729) OTHER FINANCING SOURCES (USES): Interest revenue 19,144 19,144 78,318 59,174 Net change in value of investments - - (4,408) (4,408) Amortization of bond issuance costs - - (928) (928) Interest expense (339,850) (339,850) (229,796) 110,054 Transfers in (out) (62,168) (62,168) (39,362) 22,806 TOTAL OTHER FINANCING SOURCES (USES) (382,874) (382,874) (196,176) 186,698 INCREASE (DECREASE) IN NET POSITION 653,484 $ 657,811 $ 523,780 $ (134,031) $ Earnings 653,484 $ 657,811 $ 523,780 $ (134,031) $ Allowance for depreciation - - 250,673 250,673 Allowance for amortization - - 928 928 Capital outlay (1,023,663) (1,027,990) (320,195) 707,795 Principal on bonds payable - - (2,675,000) (2,675,000) (370,179) $ (370,179) $ (2,219,814) $ (1,849,635) $ Budgeted Amounts Reconciliation of Earnings to Budget -52- ---PAGE BREAK--- CITY OF JEROME, IDAHO BUDGETARY COMPARISON SCHEDULE SEWER FUND YEAR ENDED SEPTEMBER 30, 2018 Actual Variance Amounts With Final Amounts Budget Original Final Basis Over (Under) REVENUE: Charges for services 6,160,399 $ 6,492,899 $ 7,410,331 $ 917,432 $ Miscellaneous 10,504,555 10,504,555 15,984 (10,488,571) Total revenue 16,664,954 16,997,454 7,426,315 (9,571,139) EXPENDITURES: Salaries 1,080,580 1,080,580 1,104,826 24,246 Personnel benefits 412,387 412,387 372,801 (39,586) Office supplies and postage 2,250 2,250 14,089 11,839 Operating supplies 165,541 165,541 230,305 64,764 New equipment - non-capital 4,500 4,500 5,750 1,250 Professional services 90,274 90,274 87,777 (2,497) Advertising and publishing - - 152 152 Insurance and bonds 87,095 87,095 85,779 (1,316) Personnel training 7,500 7,500 6,800 (700) Dues and subscriptions 2,400 2,400 1,846 (554) Telephone 12,500 12,500 12,854 354 Utilities 464,469 464,469 492,758 28,289 Office supplies and postage 28,000 28,000 32,279 4,279 Repairs and maintenance 197,640 197,640 177,569 (20,071) Other purchased services 185,453 185,453 178,298 (7,155) Uniforms 6,000 6,000 3,985 (2,015) Medical services 1,500 1,500 489 (1,011) Equipment replacement 1,052,917 1,052,917 - (1,052,917) Loss on uncollectible accounts 3,600 3,600 11,785 8,185 Miscellaneous 1,300 1,300 17,139 15,839 Allowance for depreciation - - 1,104,928 1,104,928 Total expenditures 3,805,906 3,805,906 3,942,209 136,303 EXCESS (DEFICIENCY) OF REVENUE OVER EXPENDITURES 12,859,048 13,191,548 3,484,106 (9,707,442) OTHER FINANCING SOURCES (USES): Interest revenue 69,171 69,171 146,736 77,565 Net change in value of investments - - (9,972) (9,972) Interest expense (1,408,758) (1,408,758) (836,271) 572,487 Amortization of bond issuance costs - - (13,885) (13,885) Special items - - - - Transfers in (out) (85,776) (85,776) (58,071) 27,705 TOTAL OTHER FINANCING SOURCES (USES) (1,425,363) (1,425,363) (771,463) 653,900 INCREASE (DECREASE) IN NET POSITION 11,433,685 $ 11,766,185 $ 2,712,643 $ (9,053,542) $ Earnings 11,433,685 $ 11,766,185 $ 2,712,643 $ (9,053,542) $ Loan proceeds - - 11,578,530 11,578,530 Allowance for depreciation - - 1,104,928 1,104,928 Allowance for amortization - - 13,885 13,885 Capital outlay (13,086,377) (13,418,877) (10,263,135) 3,155,742 Principal on bonds payable - - (540,000) (540,000) (1,652,692) $ (1,652,692) $ 4,606,851 $ 6,259,543 $ Budgeted Amounts Reconciliation of Earnings to Budget -53- ---PAGE BREAK--- - 54 - City of Jerome, Idaho Required Supplementary Information September 30, 2018 Schedule of Employer’s Share of Net Pension Liability PERSI – Base Plan Last 10 – Fiscal Years * 2015 2016 2017 2018 Employer’s portion of net the pension liability .001319366 .001297833 .001276925 .001262640 Employer’s proportionate share of the net pension liability $1,737,391 $2,630,910 $2,007,107 $1,862,417 Employer’s covered-employee payroll $3,738,480 $3,904,821 $3,872,313 $4,051,303 Employer’s proportional share of the net pension liability as a percentage of its covered-employee payroll 46.47% 67.38% 51.83% 45.97% Plan fiduciary net position as a percentage of the total pension liability 91.38% 87.26% 90.68% 91.69% * GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City of Jerome will present information for those years for which information is available. Data reported is measured as of June 30, 2018 Schedule of Employer Contributions PERSI – Base Plan Last 10 – Fiscal Years * 2015 2016 2017 2018 Statutorily required contribution $431,567 $445,271 $458,097 $461,937 Contributions in relation to the statutorily required contribution Contribution (deficiency) excess Employer’s covered-employee payroll Contributions as a percentage of covered-employee payroll ($423,834) ($445,271) ($458,097) ($461,937) $7,733 $0 $0 $0 $3,738,480 $3,904,821 $3,872,313 $4,051,303 11.34% 11.40% 11.83% 11.40% * GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City of Jerome will present information for those years for which information is available. Data is reported is measured as of September 30, 2018. Schedule of Employer’s Share of Net Pension Asset FRF Last 10 – Fiscal Years * 2015 2016 2017 2018 Employer’s portion of net the pension asset .009588766 .010878382 .010503112 .010202530 Employer’s proportionate share of the net pension asset ($517,896) ($584,696) ($901,121)($1,154,622) Employer’s covered-employee payroll $684,379 $751,644 $775,130 $749,635 Employer’s proportional share of the net pension asset as a percentage of its covered-employee payroll 75.67% 77.79% 116.25% 154.02% Plan fiduciary net position as a percentage of the total 118.08% 118.42% 129.65% 140.15% pension liability ---PAGE BREAK--- - 55 - City of Jerome, Idaho Required Supplementary Information September 30, 2018 * GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City of Jerome will present information for those years for which information is available. Data reported is measured as of June 30, 2018 Schedule of Employer Contributions FRF Last 10 – Fiscal Years * 2015 2016 2017 2018 Statutorily required contribution $108,406 $125,224 $129,137 $124,889 Contributions in relation to the statutorily required contribution Contribution (deficiency) excess Employer’s covered-employee payroll Contributions as a percentage of covered-employee payroll ($108,406) ($125,224) ($129,137) ($124,889) $0 $0 $0 $0 $684,379 $751,644 $775,130 $749,635 15.84% 16.67% 16.66% 16.66% * GASB Statement No. 68 requires ten years of information to be presented in this table. However, until a full 10-year trend is compiled, the City of Jerome will present information for those years for which information is available. Data is reported is measured as of September 30, 2018. ---PAGE BREAK--- -56- CITY OF JEROME, IDAHO NOTES TO REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2018 NOTE 1 - BUDGETARY INFORMATION A) Budgetary-GAAP Reporting Reconciliation The accompanying Budgetary Comparison Schedules for the General, Street, Library and Park Funds compare the legally adopted budget with actual data on a budgetary basis. Accounting principles applied for purposes of developing data on the budgetary basis do not differ significantly from those used to present financial statements in conformity with generally accepted accounting principles (GAAP). The accompanying Budgetary Comparison Schedules for the Irrigation, Sanitation, Water, and Sewer funds compare the legally adopted budget with actual data on a budgetary basis. Because accounting principles applied for purposes of developing data on a budgetary basis differ significantly from those used to present financial statements in conformity with generally accepted accounting principles, a reconciliation is presented at the bottom of each schedule. B) Budgetary Policies The City of Jerome, Idaho, prepares an annual budget of revenue and expenditures prior to the beginning of the fiscal year. The budget is prepared on the modified accrual basis of accounting for all funds. Budget figures are based on prior levels of revenue and expenditures taking into account specific items which may be planned in advance by the City such as capital outlay expenditures. Any excess of budgeted expenditures over budgeted revenue are temporary situations and are budgeted so as to utilize cash balances in the individual fund. C) Net Change in Fund Balance The Budgetary Comparison Schedules for the General Fund, Street Fund, Water Fund, and Sewer Fund show budgeted expenditures in excess of revenue. The Street Fund and Sanitation Fund also show actual expenditures in excess of revenues. NOTE 2 – PERSI – BASE PLAN No Note 2 information to report. NOTE 3 – PERSI – FRF PLAN No Note 3 information to report. ---PAGE BREAK--- CITY OF JEROME, IDAHO COMBINING BALANCE SHEET NONMAJOR INTERNAL SERVICE FUNDS SEPTEMBER 30, 2018 Human Information ASSETS: Engineering Resources Technology Total Current Assets: Pooled cash and cash equivalents 5,372 $ 174 $ 2,855 $ 8,401 $ Total current assets 5,372 174 2,855 8,401 TOTAL ASSETS 5,372 174 2,855 8,401 LIABILITIES AND NET POSITION LIABILITIES: Current Liabilities: Accounts payable - trade 5,372 174 2,855 8,401 Total current liabilities 5,372 174 2,855 8,401 TOTAL LIABILITIES 5,372 174 2,855 8,401 TOTAL NET POSITON 5,372 $ 174 $ 2,855 $ 8,401 $ -57- ---PAGE BREAK--- CITY OF JEROME, IDAHO COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN NET POSITION NONMAJOR INTERNAL SERVICE FUNDS SEPTEMBER 30, 2018 Human Information Operating Revenue: Engineering Resources Technology Total Charges for services - $ - $ - $ - $ Miscellaneous income - - - - Total revenue - - - - Operating Expenses: Operating supplies 4,434 649 25,082 30,165 New equipment - non-capital 1,518 - 2,956 4,474 Professional services 9,604 5,915 126,221 141,740 Advertising and publishing - 765 - 765 Dues and subscriptions 541 349 17,402 18,292 Personnel training 10,307 3,249 6,435 19,991 Telephone 1,953 613 1,267 3,833 Utilities - - - - Gas and oil 894 - - 894 Repairs 1,296 - - 1,296 Uniforms 379 - - 379 Medical services - 1,250 - 1,250 30,926 12,790 179,363 223,079 Operating earnings (loss) (30,926) (12,790) (179,363) (223,079) Income before other revenues, expenses, gains, losses and Office supplies and postage (30,926) (12,790) (179,363) (223,079) Operating transfers in (out) 30,926 12,790 179,363 223,079 INCREASE (DECREASE) IN NET POSITION - - - - NET POSITION AT OCTOBER 1, 2016 - - - - NET POSITION AT SEPTEMBER 30, 2017 - $ - $ - $ - $ -58- ---PAGE BREAK--- CITY OF JEROME, IDAHO SCHEDULE OF EXPENDITURES BY OBJECT AND FUNCTION GENERAL FUND SEPTEMBER 30, 2018 Finance & Law Fire Building Animal Legislative Executive Administration Enforcement Control Inspections Control Total Current: Salaries 24,000 $ 12,000 $ 137,107 $ 1,079,394 $ 769,401 $ 90,120 81,167 $ 2,193,189 $ Personnel benefits 39,527 2,850 72,092 410,855 345,704 32,341 33,412 936,781 Office supplies - - 796 1,355 632 47 40 2,870 Supplies - - 5,818 12,661 27,658 364 7,265 53,766 Ammunition - - - 6,598 - - - 6,598 New equipment - non-capital - - 785 14,444 24,897 - - 40,126 Public relations - - 65,753 - 953 - - 66,706 Professional services - - 173,848 10,199 - 4,000 3,623 191,670 Advertising and publishing - - 6,973 - - - - 6,973 Insurance - - 55,550 410 - - - 55,960 Travel and meetings 2,213 1,437 - - - - - 3,650 Dues and subscriptions - - 8,275 5,588 1,972 412 360 16,607 Personnel training - - 20,052 30,794 20,672 1,425 - 72,943 Telephone - 613 5,941 23,460 8,055 2,871 585 41,525 Utilities - - 14,406 4,755 16,339 - 4,581 40,081 Gas and oil - - 492 37,783 13,455 2,334 1,492 55,556 Repairs - - 4,541 43,178 49,486 30 7,944 105,179 Other purchased services - - 7,593 1,415 5,168 669 - 14,845 Office supplies and postage - - - 96,150 2,710 - - 98,860 Uniforms - - 185 9,144 14,051 84 433 23,897 Medical services - - - - 7,120 - - 7,120 Crime prevention - - - 952 - - - 952 Blue Cross Foundation grants - - 19,962 - - - - 19,962 Miscellaneous - - 5,733 850 612 120 76 7,391 Total current 65,740 16,900 605,902 1,789,985 1,308,885 134,817 140,978 4,063,207 Capital outlay - - 65,286 114,363 200,000 - - 379,649 Debt service - - 59,450 - 56,210 - - 115,660 65,740 $ 16,900 $ 730,638 $ 1,904,348 $ 1,565,095 $ 134,817 $ 140,978 $ 4,558,516 $ -59- ---PAGE BREAK--- -60- CITY OF JEROME, IDAHO PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Fiscal Year Beginning Ending Balance Levy Ending Balance September 30, October 1, Charge Additions Deletions Collections September 30, 2018 $205,394 $5,644,260 $ 99 $2,598 $5,620,781 $226,374 2017 182,661 5,152,971 6,007 5,124,231 205,394 2016 212,098 4,918,098 2,841 4,944,694 182,661 2015 226,690 4,867,287 548 4,131 4,878,296 212,098 2014 226,807 4,881,668 116,132 4,765,653 226,690 2013 284,794 4,663,533 116,522 4,604,998 226,807 2012 273,179 5,130,454 7,530 5,111,309 284,794 2011 229,921 4,828,291 9,524 4,775,509 273,179 2010 178,472 5,107,660 10,596 5,045,615 229,921 2009 138,874 3,316,273 5,375 3,271,300 178,472 ---PAGE BREAK--- -61- CITY OF JEROME, IDAHO GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS Year Ended September GOVERNMENTAL FUNDS: 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Legislative $ 65,740 $ 60,758 $ 56,844 $ 47,839 $ 48,301 $ 48,438 $ 43,620 $ 47,302 $ 47,663 $ 47,663 Executive 16,900 17,293 16,448 16,188 16,736 27,095 21,123 22,887 21,568 20,825 Finance and administration 730,638 817,117 775,147 857,061 884,778 645,889 491,427 751,777 741,821 1,035,458 Law enforcement 1,904,348 1,967,300 1,763,964 1,766,094 1,724,941 1,697,970 1,534,474 1,461,979 1,588,824 1,437,053 Fire control 1,565,095 1,403,037 1,971,594 1,265,180 1,326,673 1,457,636 1,333,267 1,235,893 1,210,833 1,280,372 Building inspection 134,817 115,984 108,665 110,228 158,291 143,897 128,337 124,640 180,410 138,157 Animal control 140,978 125,664 116,687 111,800 83,819 80,075 73,038 73,791 71,392 73,949 Street 2,929,040 1,849,643 3,125,504 1,674,139 1,617,322 1,316,616 2,088,261 1,833,217 1,830,694 2,229,547 Library 423,963 385,658 375,819 354,091 394,328 366,226 328,037 307,603 322,316 288,919 Park 178,084 172,459 182,024 249,491 436,404 180,552 148,003 147,204 179,751 115,593 PROPRIETARY FUNDS: Irrigation 144,500 134,194 188,555 164,865 153,857 150,314 136,209 174,658 223,096 113,563 Sanitation 332,007 310,924 294,358 260,185 254,764 243,873 240,056 249,125 256,477 233,020 Water 2,096,067 2,059,830 1,899,408 1,754,404 1,975,553 1,914,384 1,756,280 1,855,539 1,737,893 1,397,332 Sewer 4,792,365 4,431,813 4,180,655 4,023,311 3,930,335 3,460,649 3,465,759 3,692,062 3,033,032 2,892,092 Engineering 30,926 37,398 35,868 27,276 22,365 26,944 21,944 26,894 23,046 Human Resources 12,790 15,022 16,099 19,938 13,338 13,101 19,509 15,299 10,919 Information technology 179,363 154,911 155,655 156,034 161,878 159,876 109,519 168,179 176,560 97,274 $15,677,621 $13,959,005 $15,263,294 $12,658,124 $13,203,683 $11,933,535 $11,938,863 $12,188,049 $11,656,295 $11,400,817 ---PAGE BREAK--- - 62 - CITY OF JEROME, IDAHO GENERAL REVENUES BY SOURCE LAST TEN FISCAL YEARS Year Ended September GOVERNMENTAL FUNDS: 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 Property tax and penalties $ 4,777,597 $ 4,360,505 $ 4,334,394 $ 4,297,319 $ 4,209,120 $ 4,152,497 $ 3,758,819 $ 3,600,762 $ 3,491,460 $ 2,674,442 Intergovernmental 1,949,839 1,874,150 1,772,103 1,438,573 1,460,915 1,356,440 1,403,350 1,388,723 1,336,685 1,149,548 Charges for services and taxable sales 14,773 14,359 14,143 34,471 13,562 13,975 10,446 11,653 15,450 6,361 Interest 64,129 31,013 12,385 8,112 4,793 5,857 3,272 5,793 7,339 33,458 Contributions 631,433 512,508 1,513,667 301,503 201,244 5,950 201,854 319,571 386,374 413,392 Other 912,680 634,205 627,096 865,219 656,863 1,132,156 1,690,535 710,832 661,616 503,201 8,350,451 7,426,740 8,273,788 6,945,197 6,546,497 6,666,875 7,068,276 6,037,334 5,898,924 4,780,402 PROPRIETARY FUNDS: Charges for services 10,753,593 9,662,154 9,413,747 9,331,657 8,832,947 7,524,911 6,234,414 5,634,469 6,034,733 6,034,733 Interest 226,462 125,392 67,976 34,762 18,186 11,943 10,610 9,614 57,617 57,617 Other _ (14,498) 10,519 1,566 19,708 21,601 56,941 (572) 2,585 21,159 21,159 10,965,557 9,798,065 9,483,189 9,386,127 8,872,734 7,593,795 6,244,452 5,646,668 6,113,509 6,113,509 $19,316,008 $17,224,805 $17,757,077 $16,331,324 $15,419,231 $14,260,670 $13,312,728 $11,684,002 $10,893,911 $10,893,911 ---PAGE BREAK--- CITY OF JEROME, IDAHO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED SEPTEMBER 30, 2018 Federal Pass-through Entity Federal Federal (Pass-through) Grantor/Program CFDA No. Identifying Number Expenditures Institute of Museum and Library Services: Pass-through program from State of Idaho: Grants to States 45.310 CE1800-10 $ 1,000 45.310 CE1800-31 1,000 45.310 CE1900-04 1,000 U.S. Department of Transportation: Pass-through program from State of Idaho: National Priority Safety Programs 20.616 H05D16 22,104 U.S. Environmental Protection Agency: Office of Water: Indirect programs: Capitalization Grants for Clean Water State Revolving Funds (Recovery Act Award) 66.458 WW1403 361,950 Capitalization Grants for Clean Water State Revolving Funds (Recovery Act Award) 66.458 WW1502 11,228,119 $ 11,615,173 Notes to Schedule of Expenditures of Federal Awards: Note 1. – Basis of Presentation: The accompanying schedule of expenditures of federal awards (the Schedule) includes the federal award activity of the City of Jerome under programs of the federal government for the year ended September 30, 2018. The Information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City of Jerome, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City of Jerome. Note 2. – Summary of Significant Accounting Policies: Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles in the Uniform Guidance and OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Note 3. – Indirect Cost Rate: The City of Jerome has not elected to use the 10 percent de minimis indirect cost rate as allowed under the Uniform Guidance. -63- ---PAGE BREAK--- Rexroat, Harberd & Assoc., Certified Public Accountants P.O. Box 7 - 125 North Buchanan - Jerome, Idaho 83338 Telephone [PHONE REDACTED] Fax [PHONE REDACTED] * * * ---PAGE BREAK--- ! ---PAGE BREAK--- Rexroat, Harberd & Assoc., Certified Public Accountants P.O. Box 7 - 125 North Buchanan - Jerome, Idaho 83338 Telephone [PHONE REDACTED] Fax [PHONE REDACTED] ) ---PAGE BREAK--- " ---PAGE BREAK--- -68- City of Jerome, Idaho Schedule of Findings and Questioned Costs Year Ended September 30, 2018 Section I - Summary of Auditor’s Results Financial Statements: Type of report the auditor issued on whether the financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting: • Material weakness(es) identified? No • Significant deficiency(ies) identified? None reported Noncompliance material to financial statement noted? No Federal Awards: Internal control over major federal programs: • Material weakness(es) identified? No • Significant deficiency(ies) identified? None reported Type of auditor’s report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with section 2 CFR 200.516(a)? No Identification of major federal programs: CFDA Number Name of Federal Program or Cluster 66.458 Capitalization Grants for Clean Water State Revolving Funds (Recovery Act Award) Dollar threshold used to distinguish between type A and type B programs: $750,000 Auditee qualified as low-risk auditee? Yes Section II - Financial Statement Findings No matters were reported. Section III - Federal Award Findings and Questioned Costs No matters were reported.