Document Middleton_doc_1679f3db6e

CITY OF MIDDLETON Middleton, Wisconsin FINANCIAL STATEMENTS December 31, 2008 ---PAGE BREAK--- CITY OF MIDDLETON TABLE OF CONTENTS December 31, 2008 INDEPENDENT AUDITORS' REPORT BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Assets Statement of Activities Fund Financial Statements Balance Sheet - Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Net Assets - Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement of Fiduciary Net Assets - Fiduciary Funds Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and 1 - 2 3 4 5 6 7 8-9 10 11 - 12 13 14 - 54 Actual - General Fund 55 Schedule of Revenues Compared to Budget - Budget and Actual - General Fund 56 - 57 Schedule of Expenditures Compared to Budget - Budget and Actual - General Fund 58 - 59 Notes to Required Supplementary Information 60 SUPPLEMENTARY INFORMATION Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds Combining Statement of Fiduciary Net Assets - Agency Funds Statement of Cash Flows - Component Unit 61 - 62 63 - 64 65 66 ---PAGE BREAK--- To the City Council City of Middleton Middleton, Wisconsin INDEPENDENT AUDITORS' REPORT ~AKER TILLY BakorTilly Virchow K usc, LLP Ten Terrae.Ct, PO Box 7398 Mad;."n, WI 5370P398 td [PHONE REDACTED] fax [PHONE REDACTED] bakerlilly.oom We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Middleton, Wisconsin, as of and for the year ended December 31, 2008, which collectively comprise the city's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Middleton's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe thai our audit provides a reasonable basis for our opinions. In our opinion , the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Middleton, Wisconsin as of December 31, 2008, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The budgetary comparison information as listed in the table of contents is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. ~ BAKE R TI llY INTERNATIONAL Page 1 ---PAGE BREAK--- To the City Council City of Middleton Middleton, Wisconsin The City of Middleton, Wisconsin, has not presented the management's discussion and analysis that the Governmental Accounting Standards Board has determined is necessary to supplement, although not required to be part of, the basic financial statements. Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City of Middleton's basic financial statements. The combining financial statements and statement of cash flows - component unit as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining financial statements and statement of cash flows - component unit have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Madison, Wisconsin August?,2009 Page 2 ---PAGE BREAK--- CITY OF MIDDLETON STATEMENT OF NET ASSETS December 31, 2008 Prima!:i Govemment Business- Governmental type Component Activities Activities Totals Unit ASSETS Cash and investments $ 18,308,803 $ 5,973,492 $ 24,282,295 $ 484,769 Receivables (net of allowance for uncollectibles) Taxes 16,845,107 16,845,107 Delinquent taxes 69,285 69,285 Accounts 627,819 685,835 1,313,654 Interest 388,665 388,665 8,997 Loans 1,648,768 1,648,768 435,407 Special assessments 2,156,639 2,204,182 4,360,821 Delinquent special assessments 3,268 3,268 Due from other governments 336 336 Due from primary government 186,564 Due from component unit 1,781,388 1,781,388 Internal balances-current (114,587) 114,587 Internal balances-advances 1,701,968 (1,701,968) Prepaid items 852,996 852,996 Restricted Assets Temporarily Restricted Cash and investments 1,754,000 1,754,000 1,781,388 Leases receivable from primary government 14,020,000 Other assets 44,910 305,021 349,931 39,174 Capital Assets Land 7,439,100 2,505,107 9,944,207 Right of way 18,751,280 18,751,280 Construction in progress 482,785 482,785 Capital assets being depreciated 57,020,412 45,416,871 102,437,283 Less: Accumulated depreciation (12,290,838) (9,808,979) (22,099,817) Investment in joint venture (deficit) (127,347) (127,347) Total Assets 115,107,972 47,930,933 163,038,905 16,956,299 LIABILITIES Accounts payable 1,792,854 333,707 2,126,561 2,700 Accrued liabilities 604,378 130,936 735,314 186,564 Due to other governments 12,536 12,536 Due to primary government 1,781,388 Due to component unit 186,564 186,564 Unearned revenue 16,725,785 13,000 16,738,785 Noncurrent Liabilities Due within one year 12,087,708 2,617,303 14,705,011 872,150 Due in more than one year 49,621,756 8,707,041 58,328,797 12,996,860 Total Liabilities 81,031,581 11,801,987 92,833,568 15,839,662 NET ASSETS Invested in capital assets, net of related debt 27,441,980 29,059,718 56,501,698 Restricted for equipment replacement 54,000 54,000 Restricted for debt service 1,591,862 1,591,862 Restricted for subdivider's deposits 991,604 991,604 Restricted for park improvements 6,108 6,108 Restricted for police enforcement 12,142 12,142 Restricted for EMS 59,528 59,528 Restricted for library 221,577 221,577 Restricted for economic development 283,779 283,779 Restricted for senior citizens 93,182 93,182 Restricted for impact fees 113,930 113,930 Unrestricted 3,260,699 7,015,228 10,275,927 1,116,637 TOTAL NET ASSETS $ 34,076,391 $ 36,128,946 $ 70,205,337 $ 1,116,637 See accompanying notes to financial statements. Page 3 ---PAGE BREAK--- Functions/Programs Primary Government Governmental Activities General government Public safety Public works Leisure activities Conservation and economic development Interest and fiscal charges Total Governmental Activities Business-Type Activities Water Sewer Pleasant View Golf Course Total Business-Type Activities Total Primary Government Component Unit Community Development Authority CITY OF MIDDLETON STATEMENT OF ACTIVITIES For the Year Ended December 31,2008 Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services _Contributions Contributions $ 1,869,327 $ 123,290 $ 39,238 $ - 13,407,936 720,394 2,377,597 6,580,494 379,969 1,423,343 622,343 4,502,720 407,710 842,400 407,734 502,418 25,250 240,950 2,506,404 29,369,299 1,656,613 4,923,528 1,030,077 1,399,500 1,843,579 222,282 1,505,546 1,591,228 157,894 1,786,498 1,839,315 4,691,544 5,274,122 380,176 $ 34,060,843 $ 6,930,735 $ 4,923,528 $ 1,410,253 $ 820,337 $ 20,734 $ - $ General Revenues Taxes Property taxes, levied for general purposes and debt service Property taxes, levied for tax increment district Other taxes Cable television franchise fees Intergovernmental revenues not restricted to specific programs Public gifts and/or grants Investment income Miscellaneous Transfers Total General Revenues and Transfers Change in net assets NET ASSETS - Beginning NET ASSETS - ENDING See accompanying notes to financial statements. Net (Expense) Revenue and Changes in Net Assets Prima!}: Government Governmental Business-type Component Activities Activities Totals Unit $ (1,706,799) $ - $ (1,706,799) $ (10,309,945) (10,309,945) (4,154,839) (4,154,839) (2,844,876) (2,844,876) (236,218) (236,218) (2,506,404) (2,506,404) (21,759,081 ) (21,759,081 ) 666,361 666,361 243,576 243,576 52,817 52,817 962,754 962,754 (21,759,081) 962,754 (20,796,327) (799,603) 10,303,084 10,303,084 9,532,656 9,532,656 1,074,251 1,074,251 197,604 197,604 841,811 841,811 56,275 56,275 1,118,929 263,227 1,382,156 686,742 796,022 5,000 801,022 44,618 305,271 (305,271) 24,225,903 (37,044) 24,188,859 731,360 2,466,822 925,710 3,392,532 (68,243) 31,609,569 35,203,236 66,812,805 1,184,880 $ 34,076,391 $ 36,128,946 $ 70,205,337 $ 1,116,637 Page 4 ---PAGE BREAK--- CITY OF MIDDLETON BALANCE SHEET - GOVERNMENTAL FUNDS December 31, 2008 TIF District Capital General Debt Service NO.3 Projects ASSETS Cash and investments $ 2,629,036 $ 4,151,377 $ 3,291,371 $ 4,272,073 Receivables (net) Taxes 12,418,329 4,426,778 Delinquent taxes 69,285 Accounts 299,253 117,024 Interest 345,860 37,483 Loans 1,593,563 Special assessments 12,710 2,143,929 Delinquent special assessments 3,268 Due from other funds 17,290 Due from other governments 336 Due from component unit 1,781,388 Advances to other funds 2,020,541 Prepaid items 852,996 TOTAL ASSETS $ 17,815,908 $ 4,151,377 $ 13,274,512 $ 5,242,093 LIABILITIES AND FUND BALANCES Liabilities Accounts payable $ 618,469 $ - $ 154,421 $ 731,583 Due to other governments 12,536 Due to other funds 119,858 Deferred revenue 12,391,267 5,994,278 Deferred special assessments 15,977 2,143,929 Advances from other funds 154,794 Total Liabilities 13,158,107 8,447,422 731,583 Fund Balances Reserved for: Loans receivable 1,593,563 Delinquent personal property taxes 69,285 Advances 2,020,541 Debt service 4,151,377 1,594,857 Prepaid items 852,996 Unreserved and designated, reported in: General fund 610,000 Unreserved and undesignated (deficit), reported in: General fund 1,957,975 Special revenue funds Capital projects funds (deficit) 1,638,670 3,657,514 Total Fund Balances 4,657,801 4,151,377 4,827,090 4,510,510 TOTAL LIABILITIES AND FUND BALANCES $ 17,815,908 $ 4,151,377 $ 13,274,512 $ 5,242,093 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. Some receivables that are not currently available are reported as deferred revenue in the fund financial statements but are recognized as revenue when earned in the government-wide statements. See Note IV.B. Investment (deficit) in joint venture is not a financial resource and, therefore, is not reported in the funds. Some liabilities, including long-term debt, are not due and payable in the current period and, therefore, are not reported in the funds. See Note II.A. NET ASSETS OF GOVERNMENTAL ACTIVITIES See accompanying notes to financial statements. Non-major Total Governmental Governmental Funds Funds $ 3,964,946 $ 18,308,803 16,845,107 69,285 211,542 627,819 5,322 388,665 55,205 1,648,768 2,156,639 3,268 68,552 85,842 336 1,781,388 2,020,541 852,996 $ 4,305,567 $ 44,789,457. $ 288,381 $ 1,792,854 12,536 80,571 200,429 18,385,545 2,159,906 163,779 318,573 532,731 22,869,843 55,205 1,648,768 69,285 2,020,541 5,746,234 852,996 610,000 1,957,975 3,900,186 3,900,186 (182,555) 5,113,629 3,772,836 21,919,614 $ 4,305,567 70,919,954 3,819,666 (127,347) (62,455,496) $ 34,076,391 Page 5 ---PAGE BREAK--- CITY OF MIDDLETON STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended December 31,2008 Non-major Total TIF District Capital Governmental Governmental General Debt Service No.3 Projects Funds Funds REVENUES Taxes $ 10,656,683 $ - $ 9,532,656 $ - $ 720,652 $ 20,909,991 Intergovernmental 2,799,938 435,012 444,701 10,763 3,690,414 Licenses and permits 529,767 108,970 638,737 Fines, forfeitures and penalties 272,849 272,849 Public charges for services 786,042 740,382 1,526,424 Intergovernmental charges for services 307,010 307,010 Special assessments 81,276 189,008 270,284 Investment income (loss) 937,598 74,524 333,441 (46,905) 1,298,658 Miscellaneous 100,557 89,900 518,219 225,425 934,101 Total Revenues 16,471,720 74,524 10,580,017 962,920 1,759,287 29,841h468 EXPENDITURES Current General government 1,962,425 313,891 2,276,316 Public safety 6,251,812 32,221 6,284,033 Public works 3,087,043 3,087,043 Leisure activities 3,231,769 253,351 3,485,120 Conservation and economic development 410,575 1,597,728 2,008,303 Capital Outlay 672,056 8,326,376 8,998,432 Debt Service Principal retirement 15,831,154 850,000 16,681,154 Debt issuance costs 61,480 12,142 73,622 Interest and fiscal charges 1,748,854 856,811 2,605,665 Total Expenditures 14,943,624 17,641,488 2,378,867 8,338,518 2,197,191 45,499,688 Excess (deficiency) of revenues over (under) expenditures 1,528,096 (17,566,964) 8,201,150 (7,375,598) (437,904) (15,651,220) OTHER FINANCING SOURCES (USES) Debt issued 10,080,000 4,750,000 14,830,000 Premium on debt 191,314 85,267 276,581 Discount on debt (107,300) (38,000) (145,300) Sale of capital assets 7,591 7,591 Contribution from other municipalities 2,161,241 2,161,241 Transfers in 305,271 8,866,624 234,861 9,406,756 Transfers out (2,720,069) (5,314,941) (538,475) (528,000) (9,101,485) Total Other Financing Sources (Uses) (2,407,207) 21,191,879 (5,314,941) 4,258,792 (293,139) 17,435,384 Net Change in Fund Balance (879,111 ) 3,624,915 2,886,209 (3,116,806) (731,043) 1,784,164 FUND BALANCES - Beginning 5,536,912 526,462 1,940,881 7,627,316 4,503,879 20,135,450 FUND BALANCES - ENDING $ 4,657,801 $ 4,151,377 $ 4,827,090 $ 4,510,510 $ 3,772,836 $ 21,919,614 See accompanying notes to financial statements. Page 6 ---PAGE BREAK--- CITY OF MIDDLETON RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31,2008 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of net assets the cost of these assets is capitalized and they are depreciated over their estimated useful lives with depreciation expense reported in the statement of activities. Capital outlay is reported as an expenditure in the fund financial statements but is capitalized in the government-wide financial statements Less: Some items are reported as capital outlay but are not capitalized Depreciation is reported in the government-wide statements Capital contributions reported in the government-wide statements (infrastructure) Net book value of assets retired Receivables not currently available are reported as deferred revenue in the fund financial statements but are recognized as revenue when earned in the government-wide financial statements. Debt and lease proceeds provide current financial resources to governmental funds, but issuing these obligations increases long-term liabilities in the statement of net assets. Repayment of principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. Debt issued Debt retired The proportionate share of the change in net assets related to joint ventures reported in the statement of activities neither provides nor uses current financial resources and is not reported in the fund statements. Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Compensated absences Debt issuance costs Accrued interest on debt CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES See accompanying notes to financial statements. $ $ 1,784,164 8,998,432 (8,652,801 ) (1,272,171) 506,580 (34,674) (693,624) (14,830,000) 16,681,154 19,936 (81,778) (9,980) 51,584 2,466,822 Page 7 ---PAGE BREAK--- CITY OF MIDDLETON STATEMENT OF NET ASSETS - PROPRIETARY FUNDS December 31,2008 ASSETS Current Assets Cash and investments Accounts receivable, net Due from other funds Total Current Assets Noncurrent Assets Restricted assets Cash and investments Special assessments receivable Other assets Property held for future use Unamortized debt expenses Capital assets Construction work in progress Property and equipment Less: Accumulated depreciation Total Capital Assets (Net of Accumulated Depreciation) Total Noncurrent Assets Total Assets Business-Type Activities - Enterprise Funds Pleasant View Golf Water Sewer Course Totals $ 3,635,374 $ 323,464 126,251 2,338,118 $ 357,647 65,397 - $ 5,973,492 4,724 685,835 191,648 4,085,089 2,761,162 6,850,975 54,000 1,700,000 1,754,000 2,204,182 2,204,182 301,087 301,087 3,934 3,934 482,785 482,785 22,113,253 14,325,195 11,483,530 47,921,978 (5,917,680) (3,282,421 ) (608,878) (9,808,979) 16,678,358 11,042,774 10,874,652 38,112,999 16,979,445 13,304,890 12,574,652 42,858,987 21,064,534 16,066,052 12,579,376 49,709,962 Page 8 ---PAGE BREAK--- Business-T:tl2e Activities - Enterl2rise Funds Pleasant View Golf Water Sewer Course Totals LIABILITIES Current Liabilities Accounts payable $ 65,873 $ 235,773 $ 32,061 $ 333,707 Accrued interest 14,815 8,226 107,895 130,936 Accrued compensated absences 12,284 6,051 38,968 57,303 Due to other funds 5,271 71,790 77,061 Unearned revenues 13,000 13,000 Current portion of long term debt 215,000 175,000 2,170,000 2,560,000 Total Current Liabilities 326,243 496,840 2,348,924 3,172,007 Noncurrent Liabilities Accrued compensated absences 18,118 8,923 27,041 Advances from other funds 1,701,968 1,701,968 General obligation debt 725,000 380,000 7,575,000 8,680,000 Total Noncurrent Liabilities 743,118 388,923 9,276,968 10,409,009 Total Liabilities 1,069,361 885,763 11,625,892 13,581,016 NET ASSETS Invested in capital assets, net of related debt 15,738,358 10,491,708 2,829,652 29,059,718 Restricted for: Equipment replacement 54,000 54,000 Unrestricted (deficit) 4,256,815 4,634,581 (1,876,168) 7,015,228 TOTAL NET ASSETS $ 19,995,173 $ 15,180,289 $ 953,484 $ 36,128,946 See accompanying notes to financial statements. Page 9 ---PAGE BREAK--- CITY OF MIDDLETON STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS - PROPRIETARY FUNDS For the Year Ended December 31,2008 Business-Ty:~e Activities - Enter~rise Funds Pleasant View Golf Water Sewer Course Totals OPERATING REVENUES Charges for services $ 1,843,579 $ 1,591,228 $ 1,839,315 $ 5,274,122 Total Operating Revenues 1,843,579 1,591,228 1,839,315 5,274,122 OPERATING EXPENSES Operation and maintenance 943,460 1,250,021 1,302,588 3,496,069 Depreciation 404,290 223,428 121,419 749,137 Total Operating Expenses 1,347,750 1,473,449 1,424,007 4,245,206 Operating Income 495,829 117,779 415,308 1,028,916 NONOPERATING REVENUES (EXPENSES) Investment income 169,169 94,058 263,227 Interest expense (51,750) (30,187) (362,491) (444,428) Miscellaneous revenue 5,000 5,000 Amortization of debt issuance costs (1,910) (1,910) Total Nonoperating Revenues (Expenses) 122,419 61,961 (362,491 ) (178,111) Income before contributions and transfers 618,248 179,740 52,817 850,805 Capital contributions 222,282 157,894 380,176 Transfers out (305,271) (305,271) Change in Net Assets 535,259 337,634 52,817 925,710 TOTAL NET ASSETS - Beginning 19,459,914 14,842,655 900,667 35,203,236 TOTAL NET ASSETS - ENDING $ 19,995,173 $ 15,180,289 $ 953,484 $ 36,128,946 See accompanying notes to financial statements. Page 10 ---PAGE BREAK--- CITY OF MIDDLETON STATEMENT OF CASH FLOWS- PROPRIETARY FUNDS For the Year Ended December 31, 2008 Business-TYQe Activities - EnterQrise Funds Pleasant View Golf Water Sewer Course Totals CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 1,537,700 $ 1,619,635 $ 1,837,471 $ 4,994,806 Cash received from city for services 373,144 373,144 Cash paid to suppliers for goods and services (311,922) (1,129,531) (590,838) (2,032,291 ) Cash paid to employees for services {611,349) {98,614) {703,256) {1,413,219) Net Cash Flows From Operating Activities 987,573 391,490 543,377 1,922,440 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Advance from general fund 274,794 274,794 Cash paid for tax equivalent {298,254) {298,254) Net Cash Flows From Noncapital Financing Activities {298,254) 274,794 {23,460) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid (205,000) (160,000) (430,000) (795,000) Interest paid (55,417) (32,941) (369,000) (457,358) Debt proceeds 1,700,000 1,700,000 Acquisition and construction of capital assets {687,395) {28,008) {19,171) {734,574) Net Cash Flows From Capital and Related Financing Activities {947,812) {220,949) 881,829 {286,932) CASH FLOWS FROM INVESTING ACTIVITIES Investment income 228,623 114,874 343,497 Investments sold and matured 1,659,599 1,195,095 2,854,694 Marketable securities purchased {1 ,741 ,788) {1,029,932) {2,771 ,720) Net Cash Flows From Investing Activities 146,434 280,037 426,471 Net Increase in Cash and Cash Equivalents (112,059) 450,578 1,700,000 2,038,519 CASH AND CASH EQUIVALENTS - Beginning of Year 459,553 709,553 1,169,106 CASH AND CASH EQUIVALENTS - END OF YEAR $ 347,494 $ 1,160,131 $ 1,700,000 $ 3,207,625 Page 11 ---PAGE BREAK--- RECONCILIATION OF OPERATING INCOME TO NET CASH FLOWS FROM OPERATING ACTIVITIES Operating income Adjustments to Reconcile Operating Income to Net Cash Provided From Operating Activities Depreciation expense Depreciation charged to sewer utility Changes in Noncash Components of Working Capital Accounts receivable Other accounts receivable Due from other funds Accounts payable Accrued compensated absences Deferred revenues Due to other funds NET CASH FLOWS FROM OPERATING ACTIVITIES RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET ASSETS - PROPRIETARY FUNDS Cash and investments - statement of net assets - proprietary funds Restricted cash and investments - statement of net assets - proprietary funds Less: Non-cash equivalents CASH AND CASH EQUIVALENTS - END OF YEAR NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES Developer financed additions to utility plant Business-Tl'~e Activities - Enter~rise Funds Pleasant View Golf Water Sewer Course $ 495,829 $ 117,779 $ 415,308 404,290 223,428 121,419 42,299 20,332 33,722 (1,844) (5,182) (3,184) (5,315) 7,354 17,473 (1,820) 12,835 6,322 10,314 13,000 (1,919) $ 987,573 $ 391,490 $ 543,377 $ 3,635,374 $ 2,338,118 $ - 54,000 1,700,000 (3,287,880) (1,231,987) $ 347,494 $ 1,160,131 $ 1,700,000 $ 222,282 $ 157,894 See accompanying notes to financial statements. Totals $ 1,028,916 749,137 42,299 52,210 (5,182) (8,499) 23,007 29,471 13,000 (1,919) $ 1,922,440 $ 5,973,492 1,754,000 ( 4,519,867) $ 3,207,625 Page 12 ---PAGE BREAK--- ASSETS Cash and investments Taxes receivable CITY OF MIDDLETON STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS December 31,2008 Due from other governmental units TOTAL ASSETS LIABILITIES Accounts payable Due to other governmental units TOTAL LIABILITIES See accompanying notes to financial statements. Agency Funds $ 15,872,104 15,876,765 115,084 $ 31,863,953 $ 174,045 31,689,908 $ 31,863,953 Page 13 ---PAGE BREAK--- NOTE CITY OF MIDDLETON INDEX TO NOTES TO FINANCIAL STATEMENTS December 31, 2008 I. Summary of Significant Accounting Policies A. Reporting Entity B. Government-Wide and Fund Financial Statements C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation D. Assets, Liabilities, and Net Assets or Equity 1. Deposits and Investments 2. Receivables 3. Inventories and Prepaid Items 4. Restricted Assets 5. Capital Assets 6. Other Assets 7. Compensated Absences 8. Long-Term Obligations/Conduit Debt 9. Claims and Judgments 10. Equity Classifications 11. Basis for Existing Rates - Proprietary Funds II. Reconciliation of Government-Wide and Fund Financial Statements A. Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Statement of Net Assets III. Stewardship, Compliance, and Accountability A. Budgetary Information B. Excess Expenditures Over Appropriations C. Deficit Balances D. Limitations on the City's Tax Levy IV. Detailed Notes on All Funds A Deposits and Investments B. Receivables C. Restricted Assets D. Capital Assets E. Interfund Receivables/Payables, Advances and Transfers F. Long-Term Obligations G. Lease Disclosures H. Governmental Activities Net Assets/Fund Balances I. Component Unit Page 15 15 16 18 20 20 22 23 23 24 25 25 25 26 26 27 28 28 28 28 29 29 30 30 30 33 35 35 39 42 45 46 48 V. Other Information 51 A. Employees' Retirement System 51 B. Risk Management 51 C. Commitments and Contingencies 52 D. Joint Ventures 52 E. Effect of New Accounting Standards on Current-Period Financial Statements 54 F. Subsequent Event 54 Page 14 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31,2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Middleton, Wisconsin conform to generally accepted accounting principles as applicable to governmental units. The accepted standard-setting body for establishing governmental accounting and financial reporting principles is the Governmental Accounting Standards Board (GASB). A. REPORTING ENTITY This report includes all of the funds of the City of Middleton. The reporting entity for the city consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity's financial statements to be misleading or incomplete. A legally separate organization should be reported as a component unit if the elected officials of the primary government are financially accountable to the organization. The primary government is financially accountable if it appoints a voting majority of the organization's governing body and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or burdens on the primary government. The primary government may be financially accountable if an organization is fiscally dependent on the primary government. A legally separate, tax exempt organization should be reported as a component unit of a reporting entity if all of the following criteria are met: the economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents; the primary government is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization; the economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government. Blended component units, although legally separate entities, are, in substance, part of the government's operations and are reported with similar funds of the primary government. The discretely presented component unit is reported in a separate column in the government-wide financial statements (see note below for description) to emphasize that it is legally separate from the primary government. Discretely Presented Component Unit Community Development Authority of the City of Middleton The government-wide financial statements include the Community Development Authority of the City of Middleton ("CDA") as a component unit. The CDA is a legally separate organization. The board of the CDA is appointed by the mayor. Wisconsin Statutes provide for circumstances whereby the city can impose its will on the CDA and also create a potential financial benefit to or burden on the city. As a component unit, the CDA's financial statements have been presented as a discrete column in the basic financial statements. Separately issued financial statements of the CDA are not prepared. Other Organizations The Middleton Area Development Corporation is a separate legal organization that is not reported in these financial statements. The corporation does not meet the definition of a component unit. Page 15 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Government-Wide Financial Statements The statement of net assets and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. Likewise, the primary government is reported separately from the legally separate component unit for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The city does not allocate indirect expenses to functions in the statement of activities. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported as general revenues. Internally dedicated resources are reported as general revenues rather than as program revenues. Fund Financial Statements Financial statements of the reporting entity are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts, which constitute its assets, liabilities, net assets/fund equity, revenues, and expend iture/expenses. Separate financial statements are provided for governmental funds and proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Funds are organized as major funds or non-major funds within the governmental and proprietary statements. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the city or meets the following criteria: a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the corresponding total for all funds of that category or type, and b. The same element of the individual governmental fund or enterprise fund that met the 10% test is at least 5% of the corresponding total for all governmental and enterprise funds combined. c. In addition, any other governmental or enterprise fund that the city believes is particularly important to financial statement users may be reported as a major fund. Page 16 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) The city reports the following major governmental funds: Major Governmental Funds General Fund - accounts for the city's primary operating activities. It is used to account for all financial resources except those required to be accounted for in another fund. Debt Service Fund - accounts for resources accumulated and payments made for principal and interest on long-term debt other than TIF or enterprise fund debt. Tax Incremental Financing District (TIF) NO.3 Capital Projects Fund - accounts for expenditures outlined in the TIF project plan and related revenues and proceeds from long-term borrowing. Capital Projects Fund - accounts for proceeds from long-term borrowing and other resources to be used for capital improvement projects originally initiated. The city reports the following major enterprise funds: Major Enterprise Funds Water Utility - accounts for operations of the water system Sewer Utility - accounts for operations of the sewer system Pleasant View Golf Course - accounts for operations of the Pleasant View Golf Course The city reports the following non-major governmental funds: Non-Major Governmental Funds Special Revenue Funds - used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Subdividers' Deposits Land and Park Donations Drug Evidence Cable TV Youth Commission Donations EMS Lost and Damaged Book Library Gift EMS Equipment Replacement Library Endowment Retirement Benefits Airport Economic Development Grant Shop With a Cop Drug Forfeitures Federal Seizures Senior Citizen Tourism Commission National Night Out Soccer Stadium Community Awareness Big Event Safety, Impact Fee EMS & Fire Impact Fee Page 17 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) Capital Projects Funds - used to account for financial resources to be used for the acquisition or construction of equipment and/or major capital facilities. TIF District No.4 In addition, the city reports the following fund types: Agency funds are used to account for assets held by the city in a trustee capacity or as an agent for individuals, private organizations, and/or other governmental units. Tax Roll Fire District C. MEASUREMENT Focus, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION Government-Wide Financial Statements The government-wide statement of net assets and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Property taxes are recognized as revenues in the year for which they are levied. Taxes receivable for the following year are recorded as receivables and deferred revenue. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided. The business-type activities follow all pronouncements of the Governmental Accounting Standards Board, and have elected not to follow Financial Accounting Standards Board pronouncements issued after November 30, 1989. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the city's water and sewer utility and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Page 18 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) C. MEASUREMENT Focus, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (cont.) Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the city considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long-term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be paid with expendable available financial resources. Property taxes are recorded in the year levied as receivables and deferred revenues. They are recognized as revenues in the succeeding year when services financed by the levy are being provided. Intergovernmental aids and grants are recognized as revenues in the period the city is entitled the resources and the amounts are available. Amounts owed to the city which are not available are recorded as receivables and deferred revenues. Amounts received prior to the entitlement period are also recorded as deferred revenues. Special assessments are recorded as revenues when they become measurable and available as current assets. Annual installments due in future years are reflected as receivables and deferred revenues. Delinquent special assessments being held for collection by the county are reported as receivables and deferred revenue in the general fund. Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for services, special assessments and interest. Other general revenues such as fines and forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when received in cash or when measurable and available under the criteria described above. The city reports deferred revenues on its governmen'tal funds balance sheet. Deferred revenues arise from taxes levied in the current year which are for subsequent year's operations. For governmental fund financial statements, deferred revenues arise when a potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Deferred revenues also arise when resources are received before the city has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the city has a legal claim to the resources, the liability for deferred revenue is removed from the balance sheet and revenue is recognized. Page 19 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) C. MEASUREMENT FOcus, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (cont.) Fund Financial Statements (cont.) Proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this note. Agency funds follow the accrual basis of accounting and do not have a measurement basis. The enterprise funds follow all pronouncements of the Governmental Accounting Standards Board, and have elected not to follow Financial Accounting Standards Board pronouncements issued after November 30, 1989. The proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the water, sewer, and Pleasant View Golf Course are charges to customers for sales and services. Special assessments are recoded as receivables and contributions when levied. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY 1. Deposits and Investments For purposes of the statement of cash flows, the city considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents. Investment of city funds is restricted by state statutes. Available investments are limited to: a. Time deposits in any credit union, bank, savings bank or trust company maturing in three years or less. b. Bonds or securities of any county, city, drainage district, technical college district, village, town, or school district of the state. Also, bonds issued by a local exposition district, a local professional baseball park district, a local professional football stadium district, a local cultural arts district, or by the University of Wisconsin Hospitals and Clinics Authority. c. Bonds or securities issued or guaranteed by the federal government. d. The local government investment pool. Page 20 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LiABILITIES, AND NET ASSETS OR EQUITY (cont.) 1. Deposits and Investments (cont.) e. Any security maturing in seven years or less and having the highest or second highest rating category of a nationally recognized rating agency. f. Securities of an open-end management investment company or investment trust, subject to various conditions and investment options. g. Repurchase agreements with public depOSitories, with certain conditions. The city has adopted an investment policy that follows the state statute for allowable investments. The city is exposed to custodial credit risk and credit risk for deposits and investments, as well as interest rate risk for investments. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations to the city. To minimize credit risk, investments are limited to government agencies, the highest rated commercial paper, AAA rated money funds, and CD's from Wisconsin's highest rated banks. Custodial risk is the risk that, in the event of the failure of a depository financial institution, the city will not be able to recover deposits that are in possession of an outside party. Most institutions do not offer custodial/collateral services for CD's; therefore, investments should be diversified among institutions avoiding concentrations of credit. In addition, investments should be placed only with Wisconsin banks and savings and loans with current credit information kept on file for each institution. Interest rate risk is the risk that changes in interest rates will adversely affect the fair market value of an investment resulting in losses if the investment was liquidated prior to maturity. The investment portfolio should be laddered over a three year maturity schedule. Staggered investment maturities maximize liquidity to meet ongoing operations, and also allow the opportunity for reinvestment. Continual reinvestment allows city funds to ride the yield curve, minimizing interest rate risk for any given period. Investments should be held to maturity eliminating losses and risk from early liquidation. Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on quoted market prices. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on average balances. The difference between the bank balance and carrying value is due to outstanding checks and/or deposits in transit. Page 21 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQu/TY(cont.) 1. Deposits and Investments (cont.) The Wisconsin Local Government Investment Pool (LGIP) is part of the State Investment Fund (SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day's notice. At December 31, 2008, the fair value of the city's share of the LGIP's assets was substantially equal to the amount as reported in these statements. 2. Receivables Property taxes are levied in December on the assessed value as of the prior January 1. In addition to property taxes for the city, taxes are collected for and remitted to the state and county governments as well as the local school district and technical college district. Taxes for all state and local governmental units billed in the current year for the succeeding year are reflected as receivables and due to other taxing units on the accompanying agency fund statement of fiduciary net assets. Property tax calendar - 2008 tax roll: Lien date and levy date Tax bills mailed Payment in full, or First installment due Second installment due Personal property taxes in full Tax sale - 2008 delinquent real estate taxes December 2008 December 2008 January 31, 2009 January 31, 2009 July 31, 2009 January 31, 2009 October 2011 Accounts receivable have been shown net of an allowance for uncollectible accounts. Delinquent real estate taxes as of July 31 are paid in full by the county, which assumes the collection thereof. No provision for uncollectible accounts receivable has been made for the water and sewer utilities because they have the right by law to place delinquent bills on the tax roll, and other delinquent bills are generally not significant. During the course of operations, transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund loans are reported as "due to and from other funds." Long-term interfund loans (noncurrent portion) are reported as "advances from and to other funds." Interfund receivables and payables between funds within governmental activities are eliminated in the statement of net assets. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances". Page 22 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.) 2. Receivables (cont.) In the governmental fund financial statements, advances to other funds are offset equally by a fund balance reserve account which indicates that they do not constitute expendable available financial resources and, therefore, are not available for appropriation. The city has received federal grant funds for economic development loan programs to various businesses. The city records a loan receivable when the loan has been made and funds have been disbursed. It is the city's policy to record revenue when the initial loan is made from the federal grant funds. The net amount of the loan receivable balance is offset by a reserve for loans receivable. As loans are repaid, the reserve for loans receivable is reduced and the undesignated fund balance is increased. When new loans are made from loan repayments, the reserve for loans receivable is increased and the undesignated fund balance is decreased. Interest received from loan repayments is recognized as revenue when received in cash. Any unspent loan repayments at year end are presented as undesignated fund balance in the governmental fund balance sheet. 3. Inventories and Prepaid Items Governmental fund inventory items are charged to expenditure accounts when purchased. Year- end inventory was not significant. Proprietary fund inventories are generally used for construction or for operation and maintenance work. They are not for resale. They are valued at cost based on weighted average, and charged to construction and/or for operation and maintenance expense when used. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 4. Restricted Assets Mandatory segregations of assets are presented as restricted assets. Such segregations are required by bond agreements and other external parties. Current liabilities payable from these restricted assets are so classified. The excess of restricted assets over current liabilities payable from restricted assets will be used first for retirement of related long-term debt. The remainder, if generated from earnings, is shown as restricted net assets. Page 23 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.) 5. Capital Assets Government-Wide Statements Capital assets, which include property, plant and equipment, are reported in the government- wide financial statements. Capital assets are defined by the government as assets with an initial cost of more than $5,000 for general capital assets and $25,000 for infrastructure assets, and an estimated useful life in excess of one year. All capital assets are valued at historical cost, or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their estimated fair value at the date of donation. Additions to and replacements of capital assets of business-type activities are recorded at original cost, which includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. For tax-exempt debt, the amount of interest capitalized equals the interest expense incurred during construction netted against any interest revenue from temporary investment of borrowed fund proceeds. No net interest was capitalized during the current year. The cost of renewals and betterments relating to retirement units is added to plant accounts. The cost of property replaced, retired or otherwise disposed of, is deducted from plant accounts and, generally, together with removal costs less salvage, is charged to accumulated depreCiation. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the statement of activities, with accumulated depreciation reflected in the statement of net assets. Depreciation is provided over the assets' estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings Land Improvements Machinery and Equipment Infrastructure Water Plant Source of Supply Pumping Water Treatment Transmission and Distribution General Sewer Plant Collecting System Collecting System Pumping General 40 Years 30 Years 3 - 15 Years 20 - 50 Years 33 Years 20 - 40 Years 33 - 40 Years 16 - 90 Years 4 - 15 Years 30 - 100 Years 20 - 40 Years 7 - 40 Years Page 24 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.) 5. Capital Assets (cont.) Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same way as in the government-wide statements. 6. Other Assets In governmental funds, debt issuance costs are recognized as expenditures in the current period. For the government-wide and the proprietary fund type financial statements, debt issuance costs are deferred and amortized over the term of the debt issue. 7. Compensated Absences Under terms of employment, employees are granted sick leave and vacations in varying amounts. Only benefits considered to be vested are disclosed in these statements. All vested vacation and sick leave pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements, or are payable with expendable available resources. The city provides postemployment health insurance benefits for all eligible employees. Eligibility is based on retiring from the city or becoming disabled and being eligible to receive social security benefits or Wisconsin Retirement benefits. The benefits are based on contractual agreements with employee groups, local ordinances, and employee benefit policies. Employees may convert their accumulated sick leave to pay for health care premiums. The entire cost is paid by the city. Funding for those costs is provided by transferring funds from the general fund to a special revenue fund. Total expenditures for retirees' medical premiums during the year were $54,864. The number of participants currently eligible to receive benefits is 13. Payments for vacation and sick leave will be made at rates in effect when the benefits are used. Accumulated vacation and sick leave liabilities at December 31, 2008 are determined on the basis of current salary rates and include salary related payments. 8. Long-Term Obligations/Conduit Debt All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of notes and bonds payable, and accrued compensated absences. Page 25 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.) 8. Long-Term Obligations/Conduit Debt (cont.) Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face value of debts (plus any premiums) are reported as other financing sources and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government-wide statements. For the government-wide statements and proprietary fund statements, bond premiums and discounts are deferred and amortized over the life of the issue. Gains or losses on prior refundings are amortized over the remaining life of the old debt, or the life of the new debt, whichever is shorter. The balance at year end for both premiums/discounts and gains/losses, as applicable, is shown as an increase or decrease in the liability section of the statement of net assets. The city may approve the issuance of industrial revenue bonds (IRB) for the benefit of private business enterprises. IRB's are secured by mortgages or revenue agreements on the associated projects, and do not constitute indebtedness of the city. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. No industrial revenue bonds were outstanding as of the end of the year. 9. Claims and Judgments Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. Claims and judgments that would normally be liquidated with expendable available financial resources are recorded during the year as expenditures in the governmental funds. If they are not to be liquidated with expendable available financial resources, no liability is recognized in the governmental fund statements. The related expenditure is recognized when the liability is liquidated. Claims and judgments are recorded in the government-wide statements and proprietary funds as expenses when the related liabilities are incurred. There were no significant claims or judgments at year end. 10. Equity Classifications Government-Wide Statements Equity is classified as net assets and displayed in three components: a. Invested in capital assets, net of related debt - Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Page 26 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. ASSETS, LIABILITIES, AND NET ASSETS OR EQUITY (cont.) 10. Equity Classifications (cont.) Government-Wide Statements (cont.) b. Restricted net assets - Consists of net assets with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. c. Unrestricted net assets - All other net assets that do not meet the definition of "restricted" or "invested in capital assets, net of related debt." 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. Fund Statements Governmental fund equity is classified as fund balance. Fund balance is further classified as reserved and unreserved. Unreserved fund balance includes funds set aside by management for specific uses, which are labeled "designated". The balance of unreserved fund balance is labeled "undesignated", which indicates it is available for appropriation. Proprietary fund equity is classified the same as in the government-wide statements. 11. Basis for Existing Rates - Proprietary Funds Current water rates were approved by the PSCW on February 9, 2005. Current sewer rates were approved by the public works committee on November 28, 2005 and became effective January 1, 2007. Sewer rates are adjusted for rate changes from Madison Metropolitan Sewerage District. Page 27 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE II - RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANA TlON OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE STATEMENT OF NET ASSETS The governmental fund balance sheet includes a reconciliation between fund balance - total governmental funds and net assets - governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains that "some liabilities, including long-term debt are not due and payable in the current period and, therefore, are not reported in the funds. The details of this $62,448,496 difference are as follows: Bonds and notes payable Compensated absences Capital leases payable Accrued interest Accrued interest - due to component unit Unamortized debt issuance costs Combined Adjustment for Long-Term Liabilities NOTE III - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. BUDGETARY INFORMA TlON $ 45,758,419 1,931,045 14,020,000 604,372 186,564 (44,904) $ 62,455,496 Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in Note I. C. A budget has been adopted for the general fund, debt service fund, certain special revenue funds, and capital projects funds. Wisconsin Statute 65.90 requires that an annual budget be adopted for all funds. The budgeted amounts presented include any amendments made. The city administrator may authorize transfers of budgeted amounts between departments up to $1,000. Transfers exceeding $1,000 between departments and changes to the overall budget must be approved by a two-thirds council action. Appropriations lapse at year end unless specifically carried over. Budgets are adopted at the departmental level of expenditure. Page 28 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE III - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (cont.) B. EXCESS EXPENDITURES OVER ApPROPRIA nONS The following individual funds experienced excess expenditures over appropriations. Special Revenue Funds Subdivider's deposits Land and park donations Cable TV Lost and damaged book EMS equipment replacement Library endowment Retirement benefits Airport Shop with a cop Federal seizures Senior citizen National night out Tourism commission Soccer stadium Community awareness Debt service Capital Projects Funds TIF District NO.4 Budgeted Expenditures $ 735,000 8,133,547 $ Actual Expenditures 1,192,111 10,025 73,935 20,236 28,854 1,642 54,864 79,634 1,632 395 16,609 1,340 853,983 66,611 2,537 17,748,788 182,555 Excess Expenditures Over Budget $ 1,192,111 10,025 73,935 20,236 28,854 1,642 54,864 79,634 1,632 395 16,609 1,340 118,983 66,611 2,537 9,615,241 182,555 The city controls expenditures at the departmental level. Some individual departl')1ents experienced expenditures which exceeded appropriations. The detail of those items can be found in the city's year-end budget to actual report. C. DEFICIT BALANCES Generally accepted accounting principles require disclosure of individual funds that have deficit balances at year end. As of December 31, 2008, the following individual fund held a deficit balance: Special Revenue Fund Big event TIF District NO.4 $ 68,552 182,555 Excess expenditures over revenues. Excess expenditures over revenues. This deficit is anticipated to be funded by miscellaneous revenues. TIF district deficits are anticipated to be funded with future incremental taxes levied over the life of the districts, which is 27 years for the districts created before October 1, 1995, and 23 years for districts created thereafter through September 30, 2004. Beginning October 1, 2004, the life of new districts varies by type of district (20-27 years) and may be extended in some cases. Other fund deficits are anticipated to be funded with future contributions, general tax revenues, long-term borrowing, or transfers from the general fund. Page 29 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE III - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (cont.) D. LIMITATIONS ON THE CITY'S TAX LEVY As part of Wisconsin's Act 20 (2007), legislation was passed that limits the city's future tax levies. Generally, the city is limited to its prior tax levy dollar amount (excluding TIF districts), increased by the greater of the percentage change in the city's equalized value due to new construction, or 3.86% for the 2007 levy collected in 2008 and 2% for the 2008 levy collected in 2009. Changes in debt service from one year to the next are generally exempt from this limit. The levy limit is set to expire after the 2008 levy. NOTE IV - DETAILED NOTES ON ALL FUNDS A. DEPOSITS AND INVESTMENTS The city's cash and investments at year end were comprised of the following: Demand deposits Money market Mutual funds Other external investment pool - Madison Community Foundation LGIP Petty cash Total Cash and Investments Reconciliation to financial statements Per statement of net assets Carrying Value $ 16,735,255 265,995 20,678,418 139,337 4,088,919 475 $ 41,908,399 Unrestricted cash and investments $ 24,282,295 Restricted cash and investments 1,754,000 Per statement of net assets - Fiduciary Funds Agency 15,872,104 Total Cash and Investments $ 41,908,399 Bank Associated Balance Risks $ 17,937,187 Custodial credit 265,995 Custodial credit 20,678,418 Credit, interest rate Credit, interest rate 139,337 4,088,919 Credit, interest rate N/A $ 43,109,856 Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for interest bearing accounts and unlimited amounts for non interest bearing accounts. Page 30 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) A. DEPOSITS AND INVESTMENTS (cont.) Bank accounts are also insured by the State Deposit Guarantee Fund in the amount of $400,000. However, due to the relatively small size of the Guarantee Fund in relationship to the total deposits covered and other legal implications, recovery of material principal losses may not be significant to individual municipalities. This coverage has not been considered in computing the custodial credit risk. Investments in the local government investment pool are covered under a surety bond issued by Financial Security Assurance, Inc. The bond insures against losses arising from principal defaults on substantially all types of securities acquired by the pool except U.S. Government and agency securities. The bond provides unlimited coverage on principal losses, reduced by any FDIC and State of Wisconsin Guarantee Fund insurance. This coverage expired February 15, 2009. The Madison Community Foundation ("Foundation") is a community endowment fund. The Foundation is not registered with Securities and Exchange Commission. It constitutes a contractual agreement between the city and Foundation with respect to investment of city assets. The Foundation reports the fair value of its underlying assets annually. At December 31, 2008, the fair value of the Foundation's assets was substantially equal to the city's share as reported above. Custodial Credit Risk Deposits - Custodial credit risk is the risk that in the event of a financial institution failure, the city's deposits may not be returned to the city. As of December 31, 2008, $17,425,221 of the city's total bank balances were exposed to custodial credit risk as follows: Uninsured and uncollateralized $ 17,425,221 Investments - 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 or collateral securities that are in the possession of an outside party. The city had no investments exposed to custodial credit risk. Page 31 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) A. DEPOSITS AND INVESTMENTS (cont.) Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. As of December 31, 2008, the city's investments were rated as follows: Investment Type Mutual fund - Federated Securities Standard & Poor's AAA Fitch Ratings AAA The city also had investments in the following external pools which are not rated: Local Government Investment Pool Madison Community Foundation Interest Rate Risk Moody's Investor Service AAA The city also had $4,088,919 invested in the local government investment pool, which had a weighted average maturity of 80 days. In addition, the city had $139,337 in another external investment pool (Madison Community Foundation), which is made up primarily of equity securities that do not have a determinable maturity date. See Note 1.0.1. for further information on deposit and investment policies. Page 32 ---PAGE BREAK--- NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) B. RECEIVABLES CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 Receivables as of year end for the government's individual major funds and non major funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Nonmajor TIF District Capital Pleasant View and Other General No.3 ~ects Water Sewer Golf Course Funds Totals Receivables: Taxes $ 12,418,329 $ 4,426,778 $ - $ - $ - $ - $ - $ 16,845,107 Delinquent taxes 69,285 69,285 Accounts 511,520 117,024 323,624 357,647 4,724 211,542 1,526,081 Loans 1,593,563 55,205 1,648,768 Special assessments 12,710 2,143,929 2,204,182 4,360,821 Delinquent special assessments 3,268 3,268 Interest 345,860 37,483 5,322 388,665 Due from other governments 336 336 Gross Receivables 13,361,308 8,201,753 117,024 323,624 2,561,829 4,724 272,069 24,842,331 Less: Allowance for uncollectibles (212,267) (212,267) Net Total Receivables $ 13,149,041 $ 8,201,753 $ 117,024 $ 323,624 $ 2,561,829 $ 4,724 $ 272,069 $ 24,630,064 Amounts Not Expected to be Collected Within One Year $ - $ 3,711,429 $ - $ - $ 2,204,182 $ - $ 55,205 $ 5,970,816 Page 33 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) B. RECEIVABLES (cont.) Revenues of the city are reported net of uncollectible amounts. Total uncollectible amounts related to revenues of the current period are as follows: Uncollectibles related to ambulance billings $ 206,543 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Property taxes levied for the subsequent year are not earned and cannot be used to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Unavailable Unearned Totals Property taxes receivable for subsequent year $ $ 16,725,785 $ 16,725,785 Special assessments not yet due 2,159,906 2,159,906 Loan receivable 1,567,500 1,567,500 EMS receivable 92,260 92,260 Total Deferred/Unearned Revenue for Governmental Funds $ 3,819,666 $ 16,725,785 $ 20,545,451 For economic development loans, the city is limited by the Wisconsin Department of Commerce to the amount of program income from economic development loans that it may retain and loan to other businesses. Program income includes the principal and interest received from economic development loans repayments. Based upon its current population, the city may retain $750,000. At December 31, 2008, the city has not exceeded its maximum retention cap. When it does, a liability to the state will be recorded. Page 34 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) C. RESTRICTED ASSETS Replacement Account The sewer utility established an equipment replacement account to be used for significant mechanical equipment replacement as required by the Wisconsin Department of Natural Resources. Principal and Interest Account The Pleasant View Golf Course has a debt service account to be used solely for the purpose of paying principal on bonds. Following is a list of restricted assets at December 31, 2008: Replacement account Debt service account Total D. CAPITAL ASSETS $ 54,000 1,700,000 $ 1,754,000 Capital asset activity for the year ended December 31, 2008 was as follows: Beginning Balance Additions Deletions Governmental Activities Capital assets not being depreciated Land $ 7,439,100 $ - $ Right of way 18,620,870 130,410 Construction in progress 3,145,540 3,145,540 Total Capital Assets Not Being Depreciated 29,205,510 130,410 3,145,540 Capital assets being depreciated Land improvements 6,125,515 477,256 6,868 Buildings 9,047,640 2,617,573 34,448 Machinery and equipment 3,793,013 204,952 352,824 Streets - infrastructure 18,404,928 228,839 Storm sewers - infrastructure 8,668,081 82,113 Traffic signals - infrastructure 894,585 191,390 Sidewalks - infrastructure 3,014,458 65,218 Bridges - infrastructure 3,116,828 Rail spur - infrastructure 482,163 Total Capital Assets Being Depreciated 53,547,211 3,867,341 394,140 Ending Balance $ 7,439,100 18,751,280 26,190,380 6,595,903 11,630,765 3,645,141 18,633,767 8,750,194 1,085,975 3,079,676 3,116,828 482,163 57,020,412 Page 35 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) D. CAPITAL ASSETS (cont.) Governmental Activities (cont.) Less: Accumulated depreciation for Land improvements Buildings Machinery and equipment Streets - infrastructure Storm sewers - infrastructure Traffic signals - infrastructure Sidewalks - infrastructure Bridges - infrastructure Rail spur - infrastructure Total Accumulated Depreciation $ Beginning Balance (1,243,481 ) (2,765,752) (2,057,745) (2,279,358) (1,402,210) (365,119) (1,027,731 ) (194,836) (41,901 ) (11,378,133) Additions $ (202,102) (256,166) (240,871) (278,115) (142,226) (41,865) (60,943) (35,418) (14,465) (1,272,171 ) $ Deletions 17,202 10,334 331,930 359,466 Ending Balance (1,428,381 ) (3,011,584) (1,966,686) (2,557,4 73) (1,544,436) (406,984) (1,088,674) (230,254) (56,366) (12,290,838) Total Capital Assets, Net of Depreciation $ 71,374,588 $ 2,725,580 $ 3,180,214 $ 70,919,954 Depreciation expense was charged to functions as follows: Governmental Activities General government Public safety Public works, which includes the depreciation of streets, storm sewers, traffic signals, sidewalks, bridges and rail spur Leisure activities Total Governmental Activities Depreciation Expense $ 24,729 171,687 667,473 408,282 $ 1,272,171 Page 36 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cant.) D. CAPITAL ASSETS (cant.) Beginning Ending Balance Additions Deletions Balance Water Utility Capital assets not being depreciated Land and land rights $ 99,777 $ 122,500 $ $ 222,277 Construction work in progress 482,785 482,785 Total Capital Assets Not Being Depreciated 99,777 605,285 705,062 Capital assets being depreciated Source of supply 319,783 319,783 Pumping 1,685,768 82,156 28,413 1,739,511 Treatment 343,242 343,242 Transmission and distribution 18,688,539 238,455 825 18,926,169 Administrative and general assets 533,865 41,669 13,263 562,271 Total Capital Assets Being Depreciated 21,571,197 362,280 42,501 21,890,976 Total Capital Assets 21,670,974 967,565 42,501 22,596,038 Less: Accumulated depreciation for Source of supply (250,194) (10,553) (260,747) Pumping (943,619) (60,377) 28,413 (975,583) Treatment (331,038) (1,922) (332,960) Transmission and distribution (3,493,148) (341,688) 825 (3,834,011) Administrative and general assets (495,593) (32,049) 13,263 (514,379) Total Accumulated Depreciation (5,513,592) (446,589) 42,501 (5,917,680) Net Water Plant $ 16,157,382 $ 520,976 $ $ 16,678,358 Page 37 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) D. CAPITAL ASSETS (cont.) Beginning Ending Balance Additions Deletions Balance Sewer Utility Capital assets not being depreciated Land and land rights $ 66,830 $ $ $ 66,830 Capital assets being depreciated Collection system 12,385,397 157,894 12,543,291 Collection system pumping 1,305,786 1,305,786 Administrative and general assets 381,280 28,008 409,288 Total Capital Assets Being Depreciated 14,072,463 185,902 14,258,365 Total Capital Assets 14,139,293 185,902 14,325,195 Less: Accumulated depreciation (3,058,993) (223,428) (3,282,421 ) Net Sewer Plant $ 11,080,300 $ (37,526) $ $ 11,042,774 Beginning Ending Balance Additions Deletions Balance Pleasant View Golf Course Capital assets not being depreciated Land and land rights $ 2,216,000 $ $ $ 2,216,000 Total Capital Assets Not Being Depreciated 2,216,000 2,216,000 Capital assets being depreciated Land improvements 7,291,981 7,291,981 Buildings 1,325,553 1,325,553 Equipment 630,824 19,172 649,996 Total Capital Assets Being Depreciated 9,248,358 19,172 9,267,530 Total Capital Assets 11,464,358 19,172 11,483,530 Less: Accumulated depreciation for Buildings (102,875) (41,980) (144,855) Land improvements (114,748) (19,125) (133,873) Equipment (269,836) (60,314) (330,150) Total Accumulated Depreciation (487,459) (121,419) (608,878) Net Golf Course $ 10,976,899 $ (102,247) $ $ 10,874,652 Total Net Capital Assets - Business Type Activities $ 38,214,581 $ 38,595,784 Page 38 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) D. CAPITAL ASSETS (cont.) Depreciation expense was charged to functions as follows: Business-type Activities Water Sewer Pleasant View Golf Course Total Business-type Activities Depreciation Expense $ $ 404,290 223,428 121,419 749,137 Depreciation expense is different from additions because of joint metering, salvage cost of removal, internal allocations, and cost associated with the disposal of assets. E. INTERFUND RECEIVABLES/PAYABLES, ADVANCES AND TRANSFERS The following is a schedule of interfund receivables and payables including any overdrafts on pooled cash and investment accounts: Receivable Fund Drug forfeitures General General Water utility Sewer utility Water utility Total - Fund Financial Statements Less: Eliminations Payable Fund Big Event Tourism Water utility General General Sewer utility Total Government-Wide Financial Statements $ $ Amount 68,552 12,019 5,271 54,461 65,397 71,790 277,490 {162,903) 114,587 The balances resulted from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made. All amounts are due within one year. For the statement of net assets, interfund balances which are owed within the governmental activities or business-type activities are netted and eliminated. Page 39 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cant.) E. INTERFUND RECEIVABLES/PAYABLES, ADVANCES AND TRANSFERS (cant.) The general fund advanced funds to TIF District NO.3 and is charging interest on the advance at a rate which is 2% over the city's cost of funds. No repayment schedule has been established. Interest on the interfund advance is recorded as a deferred revenue in the general fund until paid by the TIF District. Interest costs on the advance are recorded as an expenditure of the TIF District when the expenditure is incurred. The general fund has also advanced funds to the Pleasant View Golf Course. No repayment schedules have been established on the advances to Pleasant View Golf Course. The following is a schedule of interfund advances: Receivable Fund General fund General fund General fund Payable Fund Pleasant View Golf Course TIF District No.3 TIF District NO.4 Total - Fund Financial Statements Less: Eliminations Total - Government-Wide Financial Statements Amount Not Due Within Amount One Year $ 1,701,968 $ 1,701,968 154,794 163,779 163,779 2,020,541 $ 1,865,747 (318,573) $ 1,701,968 The principal purpose of these interfunds is to finance costs incurred in these funds rather than borrowing externally. For the statement of net assets, interfund balances which are owed within the governmental activities or business-type activities are netted and eliminated. The following is a schedule of amounts due from the component unit to the primary government: TIF District NO.3 capital projects fund Component unit - CDA $ 1,781,388 This amount represents the unspent debt proceeds by the CDA that is intended to be spent on capital projects within TIF District NO.3 or used for debt payments. Page 40 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) E. INTERFUND RECEIVABLES/PAYABLES, ADVANCES AND TRANSFERS (cont.) The following is a schedule of interfund transfers: Principal Fund Transferred To Fund Transferred From Amount Purpose General EMS Retirement benefits Debt service fund Water utility General General TIF District No.3 $ 305,271 Payment in lieu of tax 40,000 Ambulance purchase 194,861 Future retirement benefits 5,314,941 Debt service Debt service fund General 2,485,208 Debt service Debt service fund Tourism commission 528,000 Debt service Debt service fund Capital projects 538,475 Debt service Subtotal - Fund Financial Statements 9,406,756 Less: Fund eliminations (9,101,485) Total Government-Wide Statement of Activities $ 305,271 Government Activity Business-type Activity Total Business-type Activity $ Government Activity $ 305,271 305,271 Generally, transfers are used to move revenues from the fund that collects them to the fund that the budget requires to expend them, move receipts restricted to debt service from the funds collecting the receipts to the debt service fund, and use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Page 41 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) F. LONG-TERM OBLIGA nONS Long-term obligations activity for the year ended December 31, 2008 was as follows: Beginning Ending Balance Increases Decreases Balance GOVERNMENTAL ACTIVITIES Bonds and Notes Payable: General obligation debt $ 37,544,573 $ 14,830,000 $ 6,616,154 $ 45,758,419 Note anticipation notes 9,215,000 9,215,000 Total Bonds and Notes Payable 46,759,573 14,830,000 15,831,154 45,758,419 Other Liabilities: Vested compensated absences 1,849,267 760,718 678,940 1,931,045 Capital leases 14,870,000 850,000 14,020,000 Total Other Liabilities 16,719,267 760,718 1,528,940 15,951,045 Total Governmental Activities Long-Term Liabilities $ 63,478,840 $ 15,590,718 $ 17,360,094 $ 61,709,464 Beginning Ending Balance Increases Decreases Balance BUSINESS-TYPE ACTIVITIES Bonds and Notes Payable: General obligation debt $ 10,335,000 $ 1,700,000 $ 795,000 $ 11,240,000 Other Liabilities: Vested compensated absences 54,873 65,425 35,954 84,344 Total Business-type Activities Long-Term Liabilities $ 10,389,873 $ 1,765,425 $ 830,954 $ 11,324,344 General Obligation Debt Amounts Due Within One Year $ 10,464,562 10,464,562 738,146 885,000 1,623,146 $ 12,087,708 Amounts Due Within One Year $ 2,560,000 57,303 $ 2,617,303 All general obligation notes and bonds payable are backed by the full faith and credit of the city. Notes and bonds in the governmental funds will be retired by future property tax levies or tax increments. Business-type activities debt is payable by revenues from user fees of those funds or, if the revenues are not sufficient, by future tax levies. In accordance with Wisconsin Statutes, total general obligation indebtedness of the city may not exceed five percent of the equalized value of taxable property within the city's jurisdiction. The debt limit as of December 31, 2008, was $136,621,480. Total general obligation debt outstanding at year end was $56,998,419. Page 42 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) F. LONG- TERM OBLIGA TlONS (cont.) General Obligation Debt (cont.) Original Date of Final Interest Indebted- Balance Governmental Activities Issue Maturit~ Rates ness 12-31-08 General Obligation Debt 1999 General obligation promissory notes 5-15-99 3-01-09 3.50% - 4.40% $ 6,800,000 $ 1,150,000 2000 General obligation promissory notes 4-01-00 3-01-10 4.80% - 5.20% 6,800,000 3,550,000 2001 General obligation prom issory notes 3-15-01 3-11-11 4.00% - 4.40% 8,000,000 4,525,000 2002 General obligation promissory notes 3-15-02 3-01-12 2.125% - 4.50% 6,250,000 4,050,000 2002 State trust fund loan 11-06-02 3-15-19 5.00% 2,170,000 1,691,426 2003 General obligation promissory notes 5-01-03 9-01-13 2.00% - 3.40% 9,980,000 6,665,000 2003 State trust fund loan 1-30-03 3-15-19 5.00% 930,000 716,993 2004 General obligation refunding bond 6-15-04 3-01-12 2.00% - 4.00% 4,540,000 870,000 2004 General obligation promissory notes 6-15-04 3-01-14 2.50% - 4.25% 1,910,000 1,180,000 2005 General obligation promissory notes 6-01-05 12-01-11 3.25% - 3.50% 3,300,000 2,600,000 2006 General obligation promissory notes 6-01-06 12-01-13 4.00% - 4.25% 2,000,000 1,800,000 2006 General obligation promissory notes 12-27-06 12-01-14 3.75% - 4.00% 2,330,000 2,130,000 2008 General obligation refunding bonds 6-02-08 12-01-27 3.00% - 4.00% 6,530,000 6,530,000 2008 General obligation prom issory notes 6-09-08 12-01-17 3.50% - 4.00% 2,000,000 2,000,000 2008 General obligation refunding bonds 12-30-08 9-01-21 3.50% - 4.45% 3,550,000 3,550,000 2008 General obligation promissory notes 12-30-08 12-01-17 3.00% - 4.25% 2,750,000 2,750,000 Total Governmental Activities - General Obligation Debt $ 45,758,419 Page 43 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) F. LONG- TERM OBLIGA TlONS (cont.) General Obligation Debt (cont.) Business-type Activities General Obligation Debt 1999 General obligation prom issory notes 2001 General obligation promissory notes 2002 General obligation promissory notes 2004 General obligation refunding 2006 General obligation prom issory notes 2008 General obligation refunding bonds Date of Issue 5-15-99 3-15-01 3-15-02 6-15-04 12-27-06 12-30-08 Total Business-type Activities - General Obligation Debt Final Maturity 3-01-09 3-11-11 3-01-12 3-01-12 12-01-14 9-01-21 Debt service requirements to maturity are as follows: Interest Rates 3.50% - 4.40% 4.00% - 4.80% 2.125% - 4.50% 2.00% - 4.00% 3.75% - 4.00% 3.50% - 4.45% $ Original Indebted- ness 500,000 2,000,000 6,005,000 2,040,000 1,200,000 1,700,000 Governmental Activities Business-type Activities General Obligation Debt General Obligation Debt Principal Interest Principal Interest 2009 $ 10,464,562 $ 1,794,050 $ 2,560,000 $ 368,884 2010 6,943,040 1,315,542 870,000 326,902 2011 6,026,944 1,075,609 925,000 283,564 2012 6,446,034 836,613 1,000,000 236,564 2013 4,451,092 632,307 660,000 197,078 2014 - 2018 7,430,572 1,796,505 4,125,000 510,989 2019 - 2023 2,181,175 611,607 1,100,000 67,975 2024 - 2027 1,815,000 184,800 Totals $ 45,758,419 $ 8,247,033 $ 11,240,000 $ 1,991,956 $ Balance 12-31-08 60,000 1,700,000 5,145,000 1,435,000 1,200,000 1,700,000 $ 11,240,000 Totals $ 15,187,496 9,455,484 8,311,117 8,519,211 5,940,477 13,863,066 3,960,757 1,999,800 $ 67,237,408 Estimated payments of accumulated employee benefits and other commitments are not included in the above schedule. The note anticipation notes are included in the next section. Also, the capital lease principal and interest requirements are not included. They are equal to the CDA's lease revenue bonds required payments. See Note IV.I. for the repayment schedule. Page 44 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) F. LONG-TERM OBLIGA TlONS (cont.) Current Refunding On December 30, 2008, the city issued $5,250,000 in general obligation bonds to refund $1,075,000 of general obligation notes due March 1, 2010 and $4,175,000 due March 1, 2011. The city will refund the notes on March 1, 2009. Capital Leases Refer to Note IV.G. Other Debt Information The compensated absences liability attributable to governmental activities will be liquidated primarily by the general fund. There are a number of limitations and restrictions contained in the various bond indentures and loan agreements. The city believes it is in compliance with all significant limitations and restrictions, including federal arbitrage regulations. G. LEASE DISCLOSURES Lessee - Capital Leases The Tax Increment District NO.3 (TIF District No.3) is leasing land and other capital assets from the Community Development Authority (CDA). The CDA borrowed $16,475,000 in revenue bonds for these costs in 2002. The annual lease payments to be paid are the same as the CDA's annual debt service payments on the bonds. See Note IV.l.c. for the repayment schedule. Tax increment revenues generated by TIF District No.3 are expected to be paid over to the CDA to make the debt payments. Lessee - Operating Leases The city has no material outstanding operating leases. Lessor - Capital Leases The city has no material outstanding sales-type or direct financing leases. Lessor - Operating Leases The city does not receive material lease payments from property rented to others. Page 45 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) H. GOVERNMENTAL ACTIVITIES NET ASSETS/FuND BALANCES Governmental activities net assets reported on the government wide statement of net assets at December 31, 2008 include the following: Governmental Activities Invested in capital assets, net of related debt Capital assets, net of accumulated depreciation Less: related long-term debt outstanding (excluding unspent capital related debt proceeds) Total Invested in Capital Assets, Net of Related Debt Restricted Debt service Subdivider's deposits Park improvements Police enforcement EMS Library Economic development Senior citizens Impact fees Total Restricted Unrestricted Total Governmental Activities Net Assets $ 70,919,954 (43,477,974) 27,441,980 1,591,862 991,604 6,108 12,142 59,528 221,577 283,779 93,182 113,930 3,373,712 3,260,699 $ 34,076,391 Governmental fund balances reported on the fund financial statements at December 31, 2008 include the following: Reserved Major Funds General Fund Delinquent personal property taxes Advances Total Debt Service Fund Debt service TIF District NO.3 Capital Projects Fund Reserved for loans receivable Reserved for debt service Total Capital Projects Fund Reserved for prepaid items $ 69,285 2,020,541 $ 2,089,826 $ 4,151,377 $ 1,593,563 1,594,857 $ 3,188,420 $ 852,996 Page 46 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) H. GOVERNMENTAL ACTIVITIES NET ASSETS/FuND BALANCES (cont.) Governmental Activities (cont.) Reserved (cont.) Non-Major Funds Economic Development Grant Special Revenue Fund Reserved for loans receivable Unreserved - Designated General Fund 2009 budget Unreserved - Undesignated (Deficit) Major Funds General fund TIF District NO.3 capital projects fund Capital projects fund Non-Major Funds Special Revenue Funds Subdividers' deposits Land and park donations Drug evidence Cable TV Youth commission donations EMS Lost and damaged book Library gift EMS equipment replacement Library endowment Retirement benefits Airport Economic development grant Shop with a cop Drug forfeitures Federal seizures Senior citizen Tourism commission National night out Soccer stadium Community awareness Big event (deficit) Safety impact fee EMS and fire impact fee Total Capital Projects Fund TIF District NO.4 (deficit) $ 55,205 $ 610,000 $ 1,957,975 $ 1,638,670 $ 3,657,514 $ 991,604 6,108 9,150 233,038 2,095 59,528 54,835 66,317 335,426 155,260 1,259,613 233,486 228,574 18,321 2,992 2,774 93,182 91,729 473 10,188 115 (68,552) 66,811 47,119 $ 3,900,186 $ (182,555) Page 47 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) H. GOVERNMENTAL ACTIVITIES NET ASSETS/FuND BALANCES (cont.) Business-Type Activities Invested in Capital Assets, Net of Related Debt The following calculations support the net assets invested in capital assets, net of related debt. Pleasant View Golf Water Sewer Course Totals Capital assets $ 22,596,038 $ 14,325,195 $ 11,483,530 $ 48,404,763 Accumulated depreciation (5,917,680) (3,282,421 ) (608,878) (9,808,979 ) Sub-totals 16,678,358 11,042,774 10,874,652 38,595,784 Less: Current portion of capital related long-term debt (215,000 ) (175,000) (2,170,000) (2,560,000) Long-term portion of capital related long-term debt (725,000 ) (380,000) (7,575,000) (8,680,000) Unamortized debt issuance costs 3,934 3,934 Unspent bond proceeds 1,700,000 1,700,000 Sub-totals (940,000 ) (551,066) (8,045,000) (9,536,066) Total Net Assets Invested in Capital Assets, Net of Related Debt $ 15,738,358 $ 10,491,708 $ 2,829,652 $ 29,059,718 Restricted Equipment replacement $ $ 54,000 $ - $ 54,000 Total Restricted $ - $ 54,000 $ - $ 54,000 Unrestricted (Deficit) $ 4,256,815 $ 4,634,581 $ p,876,168) $ 7,015,228 I. COMPONENT UNIT This report contains the Community Development Authority (CDA), which is included as a component unit. Financial information is presented as a discrete column in the statement of net assets and statement of activities. In addition to the basic financial statements and the preceding notes to financial statements which apply, the following additional disclosures are considered necessary for a fair presentation. a. Basis of Accounting/Measurement Focus The CDA follows the full accrual basis of accounting and the flow of economic resources measurement focus. Page 48 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) I. COMPONENT UNIT (cont.) b. Restricted Cash and Investments The bond ordinances relating to the CDA bonds requires the establishment of certain accounts. These are as follows: Construction fund Debt reserve fund Total Additional information on the above deposits and investments follows: $ 186,522 1,594,866 $ 1,781,388 The investments of the CDA in U.S. treasuries have associated risks of custodial credit risk and interest rate risk. Custodial Rate Risk Investments - for an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the CDA will not be able to recover the value of its investments or collateral securities that are in possession of an outside party. As of December 31, 2008, the CDA's investments were exposed to custodial credit risk as follows: U.S. Treasuries Neither insured nor registered and held by counterparty $ 1,531,388 Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. As of December 31, 2008, the CDA's investments were as follows: Maturity (In Months) Investment Type Fair Value Less than 6 7-12 12-60 U.S. Treasuries $ 1,781,388 $ 1,781,388 $ $ Page 49 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE IV - DETAILED NOTES ON ALL FUNDS (cont.) I. COMPONENT UNIT (cont.) c. CDA Lease Revenue Bonds 2002 redevelopment lease revenue bonds dated August 15, 2002 with interest at 2.60%-4.75%. Principal payments vary. Bonds mature Balance 1-1-08 Increases Decreases Balance 12-31-08 Amounts Due in Less Than One Year October 1, 2020. $ 6,605,000 $ - $ 405,000 $ 6,200,000 $ 415,000 2002 redevelopment lease revenue bonds dated August 15, 2002 with interest at 4.3%- 6.65%. Principal payments vary. Bonds mature October 1, 2020. Less: Unamortized debt discounts 8,265,000 (163,840) 445,000 (12,850) 7,820,000 470,000 (150,990) (12,850) Totals $ 14,706,160 $ 837,150 $ 13,869,010 Debt service requirements to maturity are as follows: Principal Interest Totals 2009 $ 885,000 $ 746,258 $ 1,631,258 2010 920,000 707,030 1,627,030 2011 965,000 664,384 1,629,384 2012 1,010,000 617,836 1,627,836 2013 1,060,000 567,720 1,627,720 2014 - 2018 6,195,000 1,936,972 8,131,972 2019 - 2020 2,985,000 263,344 3,248,344 Totals $ 14,020,000 $ 5,503,544 $ 19,523,544 There are a number of limitations and restrictions contained in the various bond indentures and agreements. The CDA believes it is in compliance with all significant limitations and restrictions. Page 50 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE V - OTHER INFORMATION A. EMPLOYEES' RETIREMENT SYSTEM All eligible city employees participate in the Wisconsin Retirement System (System), a cost- sharing multiple-employer defined benefit public employee retirement system (PERS). All permanent employees expected to work over 600 hours a year are eligible to participate in the System. Covered employees in the General category are required by statute to contribute 6.0% of their salary (3.0% for Executives and Elected Officials, 3.4% for Protective Occupations with Social Security, and 5.1 % for Protective Occupations without Social Security) to the plan. Employers generally make these contributions to the plan on behalf of employees. Employers are required to contribute an actuarially determined amount necessary to fund the remaining projected cost of future benefits. The payroll for city employees covered by the system for the year ended December 31, 2008 was $7,144,589 the employer's total payroll was $7,865,008. The total required contribution for the year ended December 31, 2008 was $882,965 or 12.4% of covered payroll. Of this amount, 100% was contributed by the employer for the current year. Total contributions for the years ending December 31, 2007 and 2006 were $885,304 and $766,294, respectively, equal to the required contributions for each year. Employees who retire at or after age 65 (62 for elected officials, 54 for protective occupation employees with less than 25 years of service, and 53 for protective occupation employees with more than 25 years of service) are entitled to receive a retirement benefit. Employees may retire at age 55 (50 for protective occupation employees) and receive actuarially reduced benefits. The factors influencing the benefit are: final average earnings, years of creditable service, and a formula factor. Final average earnings is the average of the employee's three highest year's earnings. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and, by doing so, forfeit all rights to any subsequent benefit. For employees beginning participation on or after January 1, 1990 and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998 are immediately vested. The System also provides death and disability benefits for employees. Eligibility for and the amount of all benefits is determined under Chapter 40 of Wisconsin Statutes. The System issues an annual financial report which may be obtained by writing to the Department of Employee Trust Funds, P.O. Box 7931, Madison, WI 53707-7931. The city has no pension-related liability. B. RISK MANAGEMENT The city is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; errors and omissions; workers compensation; and health care of its employees. All of these risks are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year. Page 51 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS Decem ber 31, 2008 NOTE V - OTHER INFORMATION (cont.) C. COMMITMENTS AND CONTINGENCIES From time to time, the city is party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and the city's legal counsel that the likelihood is remote that most of such claims or proceedings will not have a material adverse effect on the city's financial position or results of operations. Funding for the operating budget of the city comes from many sources, including property taxes, grants and aids from other units of government, user fees, fines and permits, and other miscellaneous revenues. The State of Wisconsin provides a variety of aid and grant programs which benefit the city. Those aid and grant programs are dependent on continued approval and funding by the Wisconsin governor and legislature, through their budget processes. The State of Wisconsin is currently experiencing budget problems, and is considering numerous alternatives including reducing aid to local governments. Any changes made by the State to funding or eligibility of local aid programs could have a significant impact on the future operating results of the city. The city has received federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for expenditures disallowed under terms of the grants. Management believes such disallowances, if any, would be immaterial. As stated in Note V.D., the city jointly operates the Metropolitan Refuse District, Inc. (District). The District's fund balance at September 30, 2008 is a deficit of $223,415. Reporting standards require the city to report its share of the net deficit. The city's proportionate share in the operations of the District is 57%, which amounts to $127,347 of the District's net deficit. The city's share of the net deficit has been reported in the government-wide statement of net assets. See also Note V.D. D. JOINT VENTURES Metropolitan Refuse District, Inc. The City of Middleton and the Villages of Shorewood Hills and Waunakee jointly operate the local sanitary landfill, which is called the Metropolitan Refuse District, Inc. The landfill stopped accepting waste in 1997. The communities share in the operation of the District based on estimated population as follows: City of Middleton Village of Shorewood Hills Village of Waunakee 57% 6 37 The governing body is made up of citizens from each community. Local representatives are appOinted by each city. The governing body has authority to adopt its own budget and control the financial affairs of the District. The city made payments totaling $61,560 to the District in 2008. The city has an equity interest (deficit) of $(127,347) at year end. The city will continue to support the District's postclosure care costs in the future. Page 52 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE V - OTHER INFORMATION (cont.) D. JOINT VENTURES (cont.) Metropolitan Refuse District, Inc. (cont.) The District's landfill is being monitored for possible groundwater contamination as required by the Wisconsin Department of Natural Resources. The costs for groundwater monitoring are being budgeted for on an annual basis. At the current time it is not possible to determine if extensive contamination has occurred and the effects, if any, on the District. Separately issued financial statements of the District are not prepared. Multijurisdictional Public Safety Information System Commission (MJPISC) The City of Fitchburg, City of Sun Prairie, and City of Middleton jointly operate the Multijurisdictional Public Safety Information System Commission. On March 20, 2003, the City of Middleton, City of Fitchburg, and City of Sun Prairie executed an intergovernmental agreement under authority of Section 66.0301 of the Wisconsin Statutes. The commission adopts its own budget. Net operating costs including debt service are shared by the three communities equally. The department is governed by the Intermunicipal Commission. The commission consists of one representative from each community. The transactions of the commission are not reflected in these financial statements. Separately issued financial statements of the commission can be obtained from the City of Middleton's city hall at 7426 Hubbard Avenue, Middleton, WI 53562. The city does not have an equity interest in this joint venture. Middleton Fire District The City of Middleton and the Towns of Springfield, Westport and Middleton jointly operate the local fire District, which is called the Middleton Fire District, which provides fire protection. The communities share in the operation of the District based on the ratio of equalized values of each member. The governing body is made up of elected officials from each community. Local representatives are appointed by the municipalities. The governing body has authority to adopt its own budget and control the financial affairs of the District. The city has made payments totaling $556,567 to the District in 2008 for operating expenses. The city believes that the District will continue to provide services in the future at similar rates. The transactions of the District are not reflected in these financial statements. The city does not have an equity interest in this joint venture. Separately issued financial statements of the District are not prepared. Page 53 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO FINANCIAL STATEMENTS December 31, 2008 NOTE V - OTHER INFORMATION (cont.) E. EFFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASB) has approved GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets and Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. Application of these standards may restate portions of these financial statem~nts. GASB No. 51 is effective for the year ending December 31,2010. GASB No. 53 is effective for the year ending December 31,2010. F. SUBSEQUENT EVENT On June 16, 2009, the City of Middleton issued $10,000,000 Note Anticipation Notes dated July 1, 2009 with interest at The notes are due July 1, 2010. Page 54 ---PAGE BREAK--- REQUIRED SUPPLEMENTARY INFORMATION ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For the Year Ended December 31,2008 Budgeted Amounts Variance with Original Final Actual Final BUdget REVENUES Taxes $ 10,665,281 $ 10,665,281 $ 10,656,683 $ (8,598) Intergovernmental 2,698,413 2,698,413 2,799,938 101,525 Licenses and permits 555,865 555,865 529,767 (26,098) Fines, forfeitures and penalties 281,000 281,000 272,849 (8,151) Public charges for services 1,000,200 1,000,200 786,042 (214,158) Interdepartmental charges for services 302,600 302,600 307,010 4,410 Special assessments 56,500 56,500 81,276 24,776 Investment income 610,000 610,000 937,598 327,598 Miscellaneous 60,000 60,000 100,557 40,557 Total Revenues 16,229,859 16,229,859 16,471,720 241,861 EXPENDITURES Current General government 2,107,843 2,107,843 1,962,425 145,418 Public safety 6,378,694 6,378,694 6,251,812 126,882 Public works 2,968,405 2,968,405 3,087,043 (118,638) Leisure activities 3,195,199 3,195,199 3,231,769 (36,570) Conservation and development 445,168 445,168 410,575 34,593 Total Expenditures 15,095,309 15,095,309 14,943,624 151,685 Excess of revenues over expenditures 1,134,550 1,134,550 1,528,096 393,546 OTHER FINANCING SOURCES (USES) Sale of capital assets 5,000 5,000 7,591 2,591 TIF No.3 repayment 1,070,000 1,070,000 (1,070,000) Transfers in 295,000 295,000 305,271 10,271 Transfers out (3,054,550) (3,054,550) {2,720,069) 334,481 Total Other Financing Sources (Uses) {1,684,550) {1,684,550) {2,407,207) {722,657) Net Change in Fund Balance (550,000) (550,000) (879,111) (329,111) FUND BALANCE - Beginning 5,536,912 5,536,912 5,536,912 FUND BALANCE - ENDING $ 4,986,912 $ 4,986,912 $ 4,657,801 $ {329, 111) See independent auditors' report and accompanying notes to required supplementary information. Page 55 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND SCHEDULE OF REVENUES COMPARED TO BUDGET - BUDGET AND ACTUAL For the Year Ended December 31, 2008 Budgeted Amounts Variance with Original Final Actual Final Budget TAXES General property tax $ 10,303,171 $ 10,303,171 $ 10,303,084 $ (87) Fees in lieu of taxes 44,110 44,110 44,110 Room tax 315,000 315,000 308,851 (6,149) Interest on taxes 3,000 3,000 638 (2,362) TOTALS 10,665,281 10,665,281 10,656,683 (8,598) INTERGOVERNMENTAL REVENUES Shared taxes from state 362,802 362,802 353,287 (9,515) State aid - road allotment 1,396,671 1,396,671 1,395,718 (953) State aid - exempt computer aid 145,000 145,000 140,582 (4,418) State aid - fire insurance dues 78,000 78,000 74,411 (3,589) State aid - law enforcement 16,462 16,462 State aid - miscellaneous grants 20,143 20,143 Federal and state aid - other 77,500 77,500 92,837 15,337 Federal aid - FEMA grant 39,519 39,519 County aid - library 532,285 532,285 552,767 20,482 County aid - signals 2,500 2,500 3,067 567 County aid - senior citizens 44,901 44,901 46,690 1,789 School district payments for liaison officer 58,754 58,754 64,455 5,701 TOTALS 2,698,413 2,698,413 2,799,938 101,525 LICENSES AND PERMITS Liquor and malt beverage licenses 33,700 33,700 39,908 6,208 Operators' licenses 9,000 9,000 9,485 485 Contractor's licenses 6,000 6,000 6,625 625 Alarm licenses 6,265 6,265 7,138 873 Cigarette licenses 150 150 165 15 Bicycle licenses 100 100 74 (26) Dog and cat licenses 450 450 1,978 1,528 Cable TV franchise license 130,000 130,000 130,000 Other miscellaneous licenses 1,200 1,200 1,630 430 Building permits 200,000 200,000 189,289 (10,711) Recycling permits 5,000 5,000 2,448 (2,552) Electrical permits 60,000 60,000 45,506 (14,494) Plumbing permits 60,000 60,000 47,486 (12,514) Erosion control permits 30,000 30,000 35,400 5,400 Park reservation permits 14,000 14,000 12,635 (1,365) TOTALS 555,865 555,865 529,767 (26,098) FINES, FORFEITURES AND PENALTIES Court penalties 180,000 180,000 157,594 (22,406) Parking violations 42,000 42,000 50,220 8,220 Court costs 59,000 59,000 65,035 6,035 TOTALS 281,000 281,000 272,849 (8,151) See independent auditors' report and accompanying notes to required supplementary information. Page 56 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND SCHEDULE OF REVENUES COMPARED TO BUDGET - BUDGET AND ACTUAL (cont) For the Year Ended December 31,2008 Budgeted Amounts Original Final Actual PUBLIC CHARGES FOR SERVICES Clerk fees $ 10,000 $ 10,000 $ 14,877 Police special seNices 10,000 10,000 14,420 Police department fees 30,000 30,000 22,160 Ambulance seNices 509,200 509,200 254,891 EMS fixed cost abatement 75,000 75,000 78,081 Plan commission charges 15,000 15,000 13,825 Senior citizens 16,000 16,000 30,324 Swimming pool 224,000 224,000 231,108 Summer recreation 62,000 62,000 63,856 Public works charges 3,500 3,500 14,699 Other recreation 43,000 43,000 43,001 Zoning 2,500 2,500 4,800 TOTALS 1,000,200 1,000,200 786,042 INTERDEPARTMENTAL CHARGES FOR SERVICES Administration reimbursements - utilities 100,000 100,000 104,410 Administration reimbursements - TIF 195,000 195,000 195,000 Administration reimbursements - Landfill 5,000 5,000 5,000 Administration reimbursements - Fire District 2,600 2,600 2,600 TOTALS 302,600 302,600 307,010 SPECIAL ASSESSMENTS Curb, gutter and sidewalks 56,000 56,000 80,542 Interest on special assessments 500 500 734 TOTALS 56,500 56,500 81,276 INVESTMENT INCOME Investment income 610,000 610,000 643,271 Interest on advances 294,327 TOTALS 610,000 610,000 937,598 MISCELLANEOUS Rent of city buildings and offices 28,000 28,000 27,238 Compensation for loss of fixed assets 11,403 Refund of prior year's expenditures 30,000 30,000 25,323 Sale of materials 2,000 2,000 1,593 Contribution from cell phone company 20,000 Miscellaneous revenue - MADC 15,000 TOTALS 60,000 60,000 100,557 OTHER FINANCING SOURCES Sale of capital assets 5,000 5,000 7,591 TIF No.3 repayment 1,070,000 1,070,000 Transfer in - Water Utility 295,000 295,000 305,271 TOTALS 1,370,000 1,370,000 312,862 TOTAL REVENUES AND OTHER FINANCING SOURCES $ 17,599,859 $ 17,599,859 $ 16,784,582 See independent auditors' report and accompanying notes to required supplementary information. Variance with Final Budget $ 4,877 4,420 (7,840) (254,309) 3,081 (1,175) 14,324 7,108 1,856 11,199 1 2,300 (214,158) 4,410 4,410 24,542 234 24,776 33,271 294,327 327,598 (762) 11,403 (4,677) (407) 20,000 15,000 40,557 2,591 (1,070,000) 10,271 (1,057,138) $ {815,277) Page 57 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET - BUDGET AND ACTUAL For the Year Ended December 31,2008 Budgeted Amounts Variance with Original Final Actual Final Budget GENERAL GOVERNMENT Council $ 51,073 $ 51,073 $ 48,759 $ 2,314 Police commission 9,000 9,000 12,845 (3,845) Landmarks commission 600 600 16,469 (15,869) Middleton youth commission 24,935 24,935 21,786 3,149 Art committee 3,000 3,000 3,609 (609) Board of review 375 375 130 245 Municipal court 74,092 74,092 79,119 (5,027) General administration 648,688 648,688 661,030 (12,342) Information technology 458,868 458,868 397,895 60,973 Independent auditing 39,000 39,000 39,647 (647) Legal counseling 165,000 165,000 209,548 (44,548) Special legal counsel 5,000 5,000 5,000 Buildings and grounds 131,698 131,698 119,569 12,129 Illegal taxes and tax refunds 5,000 5,000 5,000 Property and liability insurance 250,000 250,000 320,320 (70,320) Income continuation insurance 12,000 12,000 13,508 (1,508) Contingency 212,514 212,514 212,514 Group life insurance 12,000 12,000 13,191 (1,191) Additional expenditures - prior years 5,000 5,000 5,000 TOTALS 2,107,843 2,107,843 1,962,425 145,418 PUBLIC SAFETY Police administration 514,487 514,487 500,880 13,607 Police patrol 3,225,704 3,225,704 3,177,553 48,151 Code compliance 80,013 80,013 73,727 6,286 Training 41,800 41,800 57,242 (15,442) Police uniform allowance and equipment 24,875 24,875 25,667 (792) School patrol 10,830 10,830 12,231 (1,401 ) Fire suppression 642,653 642,653 556,567 86,086 Public fire protection 373,144 373,144 373,144 EMS 780,436 780,436 811,996 (31,560) Building inspector 100,180 100,180 99,784 396 Electrical inspector 89,264 89,264 87,787 1,477 Plumbing inspection 66,867 66,867 61,015 5,852 Emergency preparedness 6,120 6,120 7,411 (1,291 ) Sealer of weights and measures 5,000 5,000 4,400 600 Erosion control enforcement 27,000 27,000 35,689 (8,689) Special projects 1,400 1,400 1,432 (32) Communications 388,921 388,921 365,287 23,634 TOTALS 6,378,694 6,378,694 6,251,812 126,882 See independent auditors' report and accompanying notes to required supplementary information. Page 58 ---PAGE BREAK--- CITY OF MIDDLETON GENERAL FUND SCHEDULE OF EXPENDITURES COMPARED TO BUDGET - BUDGET AND ACTUAL (cont.) For the Year Ended December 31,2008 Budgeted Amounts Variance with Original Final Actual Final Budget PUBLIC WORKS Machinery $ 261,395 $ 261,395 $ 372,773 $ (111,378) Garage 51,200 51,200 59,549 (8,349) Public works salaries and fringes 579,436 579,436 642,463 (63,027) Protective equipment 3,300 3,300 3,348 (48) Engineering 718,338 718,338 711,237 7,101 Street maintenance 30,050 30,050 27,617 2,433 Street cleaning 6,300 6,300 6,230 70 Snow and ice control 60,000 60,000 76,037 (16,037) Traffic signals 21,600 21,600 16,288 5,312 Traffic signs and markings 34,000 34,000 34,937 (937) Street lighting 95,000 95,000 100,441 (5,441 ) Tree and brush 2,200 2,200 460 1,740 Storm sewers 10,500 10,500 6,788 3,712 Mass transit 397,836 397,836 347,118 50,718 Garbage collection 408,000 408,000 409,781 (1,781) Sanitary landfill 61,650 61,650 61,560 90 Recycling 227,600 227,600 210,416 17,184 TOTALS 2,968,405 2,968,405 3,087,043 (118,638) LEISURE ACTIVITIES Library 1,548,526 1,548,526 1,552,980 (4,454) Historical society 10,970 (10,970) Senior citizens center 377,213 377,213 369,264 7,949 Dining center 3,000 3,000 14,358 (11,358) Recreation programs and events 55,645 55,645 46,698 8,947 Recreation administration 110,522 110,522 110,522 Swimming pool 268,425 268,425 260,468 7,957 Summer recreation 77,000 77,000 90,183 (13,183) Parks 754,868 754,868 776,326 (21,458) TOTALS 3,195,199 3,195,199 3,231,769 (36,570) CONSERVATION AND DEVELOPMENT Water resources 48,800 48,800 46,822 1,978 Conservancy land commission 117,621 117,621 88,324 29,297 Planning commission 278,747 278,747 275,027 3,720 Other conservation and development 402 (402) TOTALS 445,168 445,168 410,575 34,995 OTHER FINANCING USES Transfers out - debt service fund 3,054,550 3,054,550 2,485,208 569,342 Transfers out - retirement benefits fund 194,861 (194,861) Transfers out - EMS equipment replacement fund 40,000 (40,000) TOTALS 3,054,550 3,054,550 2,720,069 334,481 TOTAL EXPENDITURES AND OTHER FINANCING SOURCES $ 18,149,859 $ 18,149,859 $ 17,663,693 $ 486,568 See independent auditors' report and accompanying notes to required supplementary information. Page 59 ---PAGE BREAK--- CITY OF MIDDLETON NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2008 BUDGETARY iNFORMA TlON Budgetary information is derived from the annual operating budget and is presented using generally accepted accounting principles and the modified accrual basis of accounting. Excess expenditures and other financing uses over appropriations are as follows: Original and Amended Budget EX12enditures Excess General Fund Current Expenditures Police commission $ 9,000 $ 12,845 $ 3,845 Landmarks Commission 600 16,469 15,869 Art committee 3,000 3,609 609 Municipal court 74,092 79,119 5,027 General administration 648,688 661,030 12,342 Independent auditing 39,000 39,647 647 Legal counseling 165,000 209,548 44,548 Property and liability insurance 250,000 320,320 70,320 Income continuation insurance 12,000 13,508 1,508 Group life insurance 12,000 13,191 1,191 Training 41,800 57,242 15,442 Police uniform allowance and equipment 24,875 25,667 792 School patrol 10,830 12,231 1,401 EMS 780,436 811,996 31,560 Emergency preparedness 6,120 7,411 1,291 Special projects 1,400 1,432 32 Erosion control enforcement 27,000 35,689 8,689 Machinery 261,395 372,773 111,378 Garage 51,200 59,549 8,349 Public works salaries and fringes 579,436 642,463 63,027 Protective equipment 3,300 3,348 48 Snow and ice control 60,000 76,037 16,037 Traffic signs and markings 34,000 34,937 937 Street lighting 95,000 100,441 5,441 Garbage collection 408,000 409,781 1,781 Library 1,548,526 1,522,980 4,454 Historical society 10,970 10,970 Dining center 3,000 14,358 11,358 Summer recreation 77,000 90,183 13,183 Parks 754,868 776,326 21,458 Other conservation and development 402 402 Transfers out - retirement benefits fund 194,861 194,861 Transfers out - EMS equipment replacement fund 40,000 40,000 See Independent Auditors' Report. Page 60 ---PAGE BREAK--- SUPPLEMENTARY INFORMATION ---PAGE BREAK--- CITY OF MIDDLETON COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2008 S~ecial Revenue Funds Economic Sub- Land and Youth Lost and EMS Develop- dividers' Park Drug Cable Commission Damaged Library Equipment Library Retirement ment De~osits Donations Evidence TV Donations EMS Book Gift Re~lacement Endowment Benefits Air~rt Grant ASSETS Cash and investments $ 1,186,172 $ 6,108 $ 9,150 $ 182,845 $ 2,095 $ 59,528 $ 55,412 $ 66,317 $ 261,552 $ 155,260 $ 1,259,613 $ 245,525 $ 228,574 Accounts receivable 50,193 4,290 Interest receivable 5,322 Loans receivable 55,205 Due from other funds 68,552 TOTAL ASSETS $ 1,186,172 6,108 $ 9,150 $ 233,038 $ 2,095 $ 59,528 $ 55,412 $ 66,317 $ 335,426 $ 155,260 $ 1,259,613 $ 249,815 $ 283,779 LIABILITIES AND FUND BALANCES Accounts payable 194,568 577 16,329 Due to other funds Advance from other funds Total Liabilities 194,568 577 16,329 Fund Balances Reserved for loans receivable 55,205 Unreserved Undesignated (deficit) 991,604 6,108 9,150 233,038 2,095 59,528 54,835 66,317 335,426 155,260 1,259,613 233,486 228,574 Total Fund Balances 991,604 6,108 9,150 233,038 2,095 59,528 54,835 66,317 335,426 155,260 1,259,613 233,486 283,779 TOTAL LIABILITIES AND FUND BALANCES $ 1,186,172 $ 6,108 $ 9,150 $ 233,038 $ 2,095 $ 59,528 $ 55,412 $ 66,317 $ 335,426 $ 155,260 $ 1,259,613 $ 249,815 $ 283,779 Page 61 ---PAGE BREAK--- CITY OF MIDDLETON COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS (cont.) December 31, 2008 S(lecial Revenue Funds Capital Projects Total Fund Nonmajor Shop With Drug Federal Senior Tourism National Soccer Community Big Safety EMS & Fire TIF District Governmental a CO(l Forfeitures Seizures Citizen Commission Night Out Stadium Awareness Event Im(lact Fee Im(lact Fee NO.4 Funds ASSETS Cash and investments $ 18,321 $ 2,992 $ 2,774 $ 94,002 $ - $ 473 $ 14,188 $ 115 $ $ 66,811 $ 47,119 $ - $ 3,964,946 Accounts receivable 157,059 211,542 Interest receivable 5,322 Loans receivable 55,205 Due from other funds 68,552 TOTAL ASSETS $ 18,321 $ 2,992 $ 2,774 $ 94,002 $ 157,059 $ 473 $ 14,188 $ 115 $ $ 66,811 $ 47,119 $ - $ 4,305,567 LIABILITIES AND FUND BALANCES Accounts payable 820 53,311 4,000 18,776 288,381 Due to other funds 12,019 68,552 80,571 Advance from other funds 163,779 163,779 Total Liabilities 820 65,330 4,000 68,552 182,555 532,731 Fund Balances Reserved for loans receivable 55,205 Unreserved Un designated (deficit) 18,321 2,992 2,774 93,182 91,729 473 10,188 115 (68,552) 66,811 47,119 (182,555) 3,717,631 Total Fund Balances 18,321 2,992 2,774 93,182 91,729 473 10,188 115 (68,552) 66,811 47,119 (182,555) 3,772,836 TOTAL LIABILITIES AND FUND BALANCES $ 18,321 $ 2,992 $ 2,774 $ 94,002 $ 157,059 $ 473 $ 14,188 $ 115 $ - $ 66,811 $ 47,119 $ - $ 4,305,567 Page 62 ---PAGE BREAK--- CITY OF MIDDLETON COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON MAJOR GOVERNMENTAL FUNDS For the Year Ended December 31,2008. S~ecial Revenue Funds Sub- Land and Youth Lost and EMS Economic dividers' Park Drug Cable Commission Damaged Library Equipment Library Retirement Development De~osits Donations Evidence TV Donations EMS Book Gift Re~lacement Endowment Benefits Air~ort Grant REVENUES Taxes $ $ $ $ - $ $ - $ - $ $ $ - $ $ - $ Intergovernmental 6,696 Licenses and permits Public charges for services 519,301 67,604 39,420 114,057 Investment income (loss) (60,318) 13,413 Miscellaneous 14,245 24,660 14,800 17,145 Total Revenues 519,301 14,245 67,604 6,696 39,420 24,660 (45,518) 17,145 114,057 13,413 EXPENDITURES Current: General government 73,935 54,864 Public safety 28,854 Leisure activities 10,025 20,236 1,642 Conservation and development 1,192,111 79,634 Total Expenditures 1,192,111 10,025 73,935 20,236 28,854 1,642 54,864 79,634 Excess (defiCiency) of revenues over expenditures (672,810) 4,220 (6,331) 6,696 19,184 24,660 (28,854) (47,160) (37,719) 34,423 13,413 OTHER FINANCING SOURCES (USES) Transfers In 40,000 194,861 Transfers Out Total Other Financing Sources (Uses) 40,000 194,861 Net change in fund balance (672,810) 4,220 (6,331) 6,696 19,184 24,660 11,146 (47,160) 157,142 34,423 13,413 FUND BALANCES - Beginning of Year 1,664,414 1,888 9,150 239,369 2,095 52,832 35,651 41,657 324,280 202,420 1,102,471 199,063 270,366 FUND BALANCES (DEFICIT) - END OF YEAR $ 991,604 $ 6,108 $ 9,150 $ 233,038 $ 2,095 $ 59,528 $ 54,835 $ 66,317 $ 335,426 $ 155,260 $1,259,613 $ 233,486 $ 283,779 Page 63 ---PAGE BREAK--- CITY OF MIDDLETON COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NON MAJOR GOVERNMENTAL FUNDS (cont.) For the Year Ended December 31,2008 Seecial Revenue Funds Capital Projects Total Funds Nonmajor Shop With Drug Federal Senior Tourism National Soccer Community Big Safety EMS & Fire TIF District Governmental aCoe Forfeitures Seizures Citizen Commission Night Out Stadium Awareness Event Imeact Fee Imeact Fee No.4 Funds REVENUES Taxes $ $ $ - $ - $ 720,652 $ $ $ $ $ $ $ $ 720,652 Intergovernmental 4,067 10,763 Licenses and permits 63,843 45,127 108,970 Public charges for services 740,382 Investment income (loss) (46,905) Miscellaneous 5,420 37,315 2,164 500 39,800 69,376 225,425 Total Revenues 9,487 37,315 722,816 500 39,800 69,376 63,843 45,127 1,759,287 EXPENDITURES Current: General government 2,537 182,555 313,891 Public safety 1,632 395 1,340 32,221 Leisure activities 16,909 66,611 137,928 253,351 Conservation and development 325,983 1,597,728 Total Expenditures 1,632 395 16,909 325,983 1,340 66,611 2,537 137,928 182,555 2,197,191 Excess (deficiency) of revenues over expenditures 7,855 - (395) 20,406 396,833 (840) (26,811) (2,537) (68,552) 63,843 45,127 (182,555) (437,904) OTHER FINANCING SOURCES (USES) Transfers In 234,861 Transfers Out (528,000) (528,000) Total Other Financing Sources (Uses) (528,000) (293,139) Net change in fund balance 7,855 (395) 20,406 (131,167) (840) (26,811) (2,537) (68,552) 63,843 45,127 (182,555) (731,043) FUND BALANCES - Beginning of Year 10,466 2,992 3,169 72,776 222,896 1,313 36,999 2,652 2,968 1,992 4,503,879 FUND BALANCES (DEFICIT) - END OF YEAR $ 18,321 $ 2,992 $ 2,774 $ 93,182 $ 91,729 $ 473 $ 10,188 $ 115 $ !68,552) $ 66,811 $ 47,119 $ p82,555) $3,772,836 Page 64 ---PAGE BREAK--- CITY OF MIDDLETON COMBINING STATEMENT OF FIDUCIARY NET ASSETS AGENCY FUNDS December 31, 2008 Fire Tax Roll District ASSETS Cash and investments $ 15,813,143 $ 58,961 Taxes receivable 15,876,765 Due from other governmental units 115,084 TOTAL ASSETS $ 31,689,908 $ 174,045 LIABILITIES Accounts payable $ - $ 174,045 Due to other governmental units 31,689,908 TOTAL LIABILITIES $ 31,689,908 $ 174,045 Totals $ 15,872,104 15,876,765 115,084 $ 31,863,953 $ 174,045 31,689,908 $ 31,863,953 Page 65 ---PAGE BREAK--- CITY OF MIDDLETON STATEMENT OF CASH FLOWS - COMPONENT UNIT For the Year Ended December 31, 2008 CASH FLOWS FROM OPERATING ACTIVITIES Cash received from economic loan repayments Economic and housing loans Cash received from customers Cash paid to suppliers for goods and services Net Cash Flows From Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received CASH FLOWS FROM NONCAPIT AL FINANCING ACTIVITIES Paid to primary government Principal paid Interest paid Capital lease interest received Capital lease principal received Net Cash Flows From Noncapital Financing Activities Net Increase in Cash and Cash Equivalents CASH AND CASH EQUIVALENTS - Beginning of Year CASH AND CASH EQUIVALENTS - END OF YEAR RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM OPERATING ACTIVITIES Operating income (loss) Changes in Assets and Liabilities Loans receivable Accounts payable NET CASH FLOWS FROM OPERATING ACTIVITIES RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET ASSETS - COMPONENT UNIT Cash and investments - statement of net assets - component unit Restricted cash and investments - statement of net assets - component unit CASH AND CASH EQUIVALENTS - END OF YEAR NONCASH INVESTING, CAPITAL AND RELATED FINANCING ACTIVITIES: The CDA has a long-term receivable with accrued interest of $11,527. Component Unit - CDA $ 7,124 (43,000) 65,352 (30,288) (812) 25,452 (11,502) (850,000) (781,672) 781,672 850,000 (11,502) 13,138 2,253,019 $ 2,266,157 $ 34,017 (35,876) 1,047 $ (812) $ 484,769 1,781,388 $ 2,266,157 CDA loans receivable were adjusted for loans that were collected in prior years totaling $125,191. Page 66