Document Murray_doc_2186002299

COMPREHENSIVE ANNUAL FINANCIAL REPORT MURRAY CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2013 ---PAGE BREAK--- MURRAY CITY, UTAH COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013 Prepared by Justin M. Zollinger CPA, Director of Finance Brenda Moore CPA, Controller Joseph Canepari, Senior Accountant JoAnn Miller, Payroll Coordinator Mindy Stacy, Accounts Payable ---PAGE BREAK--- TABLE OF CONTENTS Introductory Section 1 Letter of Transmittal 2 City Leadership 5 Organization Chart 6 Financial Section 8 Independent Auditor’s Report 9 Management’s Discussion and Analysis 11 Basic Financial Statements 20 Statement of Net Position 21 Statement of Activities 22 Balance Sheet – Governmental Funds 23 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position 24 Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds 25 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Funds to the Statement of Activities 26 Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget to Actual – General Fund 27 Statement of Net Position – Proprietary Funds 28 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds 29 Statement of Cash Flows – Proprietary Funds 30 Notes to the Financial Statements 31 Note 1 – Summary of Significant Accounting Policies 31 Note 2 – Reconciliation of Government-Wide and Fund Financial Statements 37 Note 3 – Stewardship, Compliance, and Accountability 38 Note 4 – Deposits and Investments 39 Note 5 – Receivables 41 Note 6 – Capital Assets 41 Note 7 – Interfund Receivables, Payables, and Transfers 43 Note 8 – Investments in Joint Ventures 44 Note 9 – Interlocal Agreements 45 Note 10 – Capital Leases 47 Note 11 – Long-Term Debt 48 Note 12 – Risk Management 49 Note 13 – Contingent Liabilities and Commitments 50 Note 14 – Conduit Debt Obligations 52 Note 15 – Redevelopment Agency 52 Note 16 – Employee Retirement Systems and Pension Plans 52 Note 17 – Other Postemployment Benefits 54 Note 18 – Fund Balance 55 Note 19 – Prior Period Adjustments 56 Note 20 – Subsequent Event 56 Supplementary Information 57 Combining Balance Sheet – Nonmajor Governmental Funds 58 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds 59 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Municipal Building Authority – Budget to Actual 60 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Library Fund – Budget to Actual 61 ---PAGE BREAK--- Schedule of Revenues, Expenditures, and Changes in Fund Balance – Redevelopment Fund – Budget to Actual 62 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Community Development Block Grant Fund – Budget to Actual 63 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Capital Projects – Budget to Actual 64 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Cemetery Perpetual Care Fund – Budget to Actual 65 Statement of Net Position – Internal Service Funds 66 Statement of Revenues, Expenses, and Changes in Net Position – Internal Service Funds 67 Statement of Cash Flows – Internal Service Funds 68 Statement of Net Position – Nonmajor Proprietary Funds 69 Statement of Revenues, Expenses, and Changes in Net Position – Nonmajor Proprietary Funds 70 Statement of Cash Flows – Nonmajor Proprietary Funds 71 Statistical Section 72 Net Position by Component 73 Changes in Net Position 74 Governmental Activities Tax Revenues by Source 75 Fund Balances of Governmental Funds 76 Changes in Fund Balance of Governmental Funds 77 Assessed Value and Estimated Actual Value of Taxable Property 78 Direct and Overlapping Property Tax Rates 79 Principal Sales Tax Payers 80 Property Tax Levies and Collections 81 Ratio of Outstanding Debt by Type 82 Direct and Overlapping Governmental Activities Debt 83 Legal Debt Margin Information 84 Pledged Revenue Coverage 85 Demographic and Economic Statistics 86 Principal Employers 87 Full Time Equivalent City Government Employees by Function 88 Operating Indicators by Function 89 Capital Asset Statistics by Function 90 Compliance Section 91 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 92 Independent Auditor’s Report on Compliance for each Major Program and on Internal Control over Compliance Required by OMB Circular A-133 94 Schedule of Expenditures of Federal Awards 96 Notes to The Schedule of Expenditures of Federal Awards 97 Schedule of Findings and Questioned Costs 98 State Compliance Section 100 Schedule of Expenditures of State Grants, Contracts, and Loan Funds 101 Independent Auditor’s Report on State of Utah Legal Compliance 102 Schedule of Findings and Recommendations 104 ---PAGE BREAK--- 1 INTRODUCTORY SECTION ---PAGE BREAK--- 2 November 19, 2013 LETTER OF TRANSMITTAL To the Honorable Mayor, Members of the City Council, and Citizens of Murray City: The Comprehensive Annual Financial Report (CAFR) of Murray City (City) for the fiscal year ending June 30, 2013, is submitted herewith. Utah state law requires that the Finance Director in cities of the first and second class shall present to the governing body an annual financial report prepared in conformity with generally accepted accounting principles (GAAP), and audited in accordance with generally accepted auditing standards by a firm of licensed, certified public accounts. This report, which fulfills these requirements, was prepared by the Murray City Finance Department. This report consists of management’s representations concerning the finances of the City. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, the City’s management has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The City’s financial statements have been audited by Keddington & Christensen LLC, a firm of licensed certified public accountants. The goal of the independent audit was to prove reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2013, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The report of the independent auditor is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City is part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on internal controls and compliance with legal requirements; special emphasis is placed on internal controls and legal requirements involving the administration of federal awards. These reports can be found as listed in the table of contents. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditors. ---PAGE BREAK--- 3 Profile of the Government Murray City, incorporated in 1903, is located in the central portion of Salt Lake County, approximately eight miles south of Salt Lake City. The City currently occupies a land area of about 11 square miles and serves a population of about 50,000. The City is empowered to levy a property tax on both real and personal properties located within its boundaries. It is also empowered by state statute to impose a 1 percent local option sales tax on all retail sales. The City has operated under the strong mayor-council form of government since 1982. Policy-making and legislative authority are vested in the City Council which is made up of five members elected by district. The City Council is responsible, among other things, passing ordinances, adopting the budget, approving appointments to committees, and approving the department heads appointed by the Mayor. The Mayor, who is full time, is responsible for carrying out the policies and ordinances of the City Council, overseeing the day-to-day operations of the government and appointing the heads of the various departments. The City Council is elected on a non-partisan basis with members serving on a staggered four year term basis. The Mayor is elected at-large for a four year term. The City provides a full range of services including; police projection; fire and ambulance services; construction and maintenance of highways, streets, and infrastructure; recreational activities and cultural events. In additions to general government activities, the governing body controls the Water Fund, the Waste Water Fund, the Power Fund, the Solid Waste Management Fund, the Storm Water Fund, the Telecommunication Fund and the Murray Parkway Recreation Fund; therefore, these activities are included in the reporting entity. However, the Murray City School District has not met the established criteria for inclusion in the reporting entity, and accordingly, is excluded from this report. Factors Affecting Financial Conditions The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which Murray City operates. Local Economy Murray City, like other cities in the area, has felt the effects of economic fluctuations. The City is a major retail center in Salt Lake County with a regional mall, nine major automobile dealerships and several big box retailers. Because of this diversification, the City has been able to maintain more stability during economic uncertainty. The reconstruction of Fashion Place Mall which includes several high end department stores, numerous restaurants and other retail stores, has helped to maintain a stable economic environment. Long-term Financial Planning Since the economy has slowly improved, Murray City has been cautiously preceding with capital construction projects. The City will continue to use General Fund monies to construct, repair and maintain city roads in accordance with the pavement management plan. The City is in the second year of implementing a strategic plan which utilizes a long-term planning framework for capital improvements. Because of this framework there is now added emphasis on the capital improvements. In fiscal year 2013, the City discontinued the Other Post-Employment Benefits plan for new retirees. This was done to help control current and future costs. ---PAGE BREAK--- 4 Awards and Acknowledgments The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement of Excellence in Financial Reporting to Murray City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2012. This was the thirty-second consecutive year that the City has achieved this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire Finance Department staff. I would like to express my appreciation to all staff members who assisted in and contributed to its preparation. Credit must also be given to the Mayor and the City Council for their unfailing support for maintaining the highest standards of professionalism in the management of Murray City’s finances. Respectfully submitted, Justin M. Zollinger, CPA Director of Finance ---PAGE BREAK--- 5 MURRAY CITY CITY LEADERSHIP Daniel C. Snarr Mayor Brett A. Hales Council Chairman Dave Nicponski Darren Stam Council Member Council Member James A. Brass Jared Shaver Council Member Council Member DEPARTMENT AND DIVISION HEADS Jan Wells Chief of Staff Kim Fong Library Director Peter A. Fondaco Police Chief Blaine Haacke Power General Manager Jennifer Kennedy City Recorder Douglas P. Hill Public Services Director Wendell Coombs City Treasurer Frank Nakamura City Attorney Gilbert Rodriguez Fire Chief Michael P. Terry Human Resources Director W. Paul Thompson Justice Court Judge B. Tim Tingey Administrative and Development Services Director Justin M. Zollinger Director of Finance/CFO Michael Williams Justice Court Administrator ---PAGE BREAK--- 6 ORGANIZATION CHART Citizens of Murray Mayor City Council Daniel C. Snarr 1. David Nicponski 2. Darren Stam 3. Jim Brass 4. Jared Shaver 5. Brett Hales Chief of Staff City Attorney Jan Wells Frank Nakamura Police Chief Finance Director Pete Fondaco Justin Zollinger Fire Chief Public Services Director Gilbert Rodriguez Doug Hill Court Administrator ADS Director Michael Williams Tim Tingey Human Resources Director Power Director Mike Terry Blaine Haacke ---PAGE BREAK--- 7 ---PAGE BREAK--- 8 FINANCIAL SECTION ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-9405 9 Salt Lake City, Utah 84123 Keddington Christensen Certified Public Accountants, LLC Gary K. Keddington, CPA Brent E. Christensen, CPA Phyl R. Warnock, CPA INDEPENDENT AUDITOR’S REPORT Honorable Mayor and Members of City Council City of Murray Murray, Utah Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Murray as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion 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 and the standards applicable to financial audits contained in Governmental Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Murray as of June 30, 2013, and the respective changes in financial position, and the respective budgetary comparison for the General Fund and the Major Special Revenue Funds, and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-9405 10 Salt Lake City, Utah 84123 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information, as noted on the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the City of Murray’s financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements, budgetary comparison schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison schedules, and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements, budgetary comparison schedules, and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report dated November 15, 2013, on our consideration of the City of Murray’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Murray City’s internal control over financial reporting and compliance. Keddington & Christensen, LLC November 15, 2013 ---PAGE BREAK--- 11 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS As management of Murray City, we offer readers of the Murray City financial statements this narrative overview and analysis of the financial activities of Murray City for the fiscal year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with the additional information we have furnished in our Letter of Transmittal. Financial Highlights  The assets of Murray City exceeded its liabilities at the close of the most recent fiscal year by $165,023,915 (net position). Of this amount, $45,283,732 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors.  Murray City’s total net position increased by $11,325,449. Much of this increase was due to a conservative estimate of fiscal year 2013 budgeted revenue. Actual revenues exceeded projections by $1,173,751 for the General Fund. The City also received $1,273,743 from the Sports Mall note prepayment; this note was held by the General Fund. Business-type activities saw increased revenue from another warmer than average year.  As of the close of the current fiscal year, Murray City’s governmental funds reported combined ending fund balances of $22,738,282 an increase of $3,435,973 in comparison with the prior year. A portion of this increased amount was from the City’s change to a 60 day availability policy which increased fund balance by $1,394,511. Approximately 42 percent of this total amount, $9,582,590 is available for spending at the government’s discretion (unassigned fund balance).  At the end of the current fiscal year, unassigned fund balance for the general fund was $9,582,590 or 25.38 percent of total general fund estimated revenue. The General Fund’s unassigned fund balance increased by $432,187. This was a result of careful spending by City departments, revenues coming in higher than anticipated (particularly sales tax), and the Sports Mall note prepayment. This money will be used for future City needs.  Murray City’s total bonded debt decreased by $3,110,000 (8.62 percent) during the current fiscal year. This discussion and analysis is intended to serve as an introduction to Murray City’s basic financial statements. Murray City’s basic financial statements comprise three components: government-wide financial statements, fund financial statements, and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of Murray City’s finances, in a manner similar to private-sector business. The statement of net position presents information on all of Murray City’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of Murray City is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods uncollected taxes and earned but unused vacation leave). ---PAGE BREAK--- 12 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS The Statement of Activities distinguish functions of Murray City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of Murray City include general government, public safety, highways and public improvements, parks and recreation, library, and community and economic development. The business-type activities of Murray City include a Water Fund, Wastewater Fund, Power Fund, Murray Parkway Fund, Telecommunication Fund, Solid Waste Management Fund, and Storm Water Fund. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Murray City, like any other state and local government, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of Murray City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financial requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Murray City maintains seven individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, capital projects, and redevelopment agency fund which are considered to be major funds. Data from the other four governmental funds are combined into a single aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements in the Supplementary Information section of this report. Murray City adopts an annual appropriated budget for its government funds. A budgetary comparison statement has been provided for the all of these funds to demonstrate compliance with the budgets. ---PAGE BREAK--- 13 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS Proprietary Funds Murray City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Murray City uses enterprise funds to account for its Water Fund, Waste Water Fund, Power Fund, Storm Water Fund, Murray Parkway Recreation Fund, Telecommunication Fund, and Solid Waste Management Fund. Internal service funds are an accounting device used to accumulate and allocate costs internally among Murray City’s various functions. Murray City uses internal service funds to account for maintenance of its vehicles and for its self- insurance programs. Because both of these services predominantly benefit government rather than business- type functions, they have been included within governmental activities in the government-wide financial statements. Individual fund data for the internal service funds is provided in the form of combining statements in the Supplementary Information section of this report. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water Fund, the Waste Water Fund, the Power Fund, and the Storm Water Fund all of which are considered to be major funds of Murray City. Data from other proprietary funds are combined into a single aggregate presentation. Individual fund data is provided in the form of combining statements in the Supplementary Information section of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of Murray City, assets exceeded liabilities by $165,023,915 at the close of the most recent fiscal year. The largest portion of Murray City’s net position (69.2 percent), reflects its investment in capital assets land, buildings, improvements, infrastructure, machinery and equipment,), less any related debt used to acquire those assets that is still outstanding. Murray City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although Murray City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. ---PAGE BREAK--- 14 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS Murray City's Change in Net Position Restated Restated Restated 2013 2012 2013 2012 2013 2012 Current and other assets 38,109,877 $ 37,467,858 $ 35,442,489 $ 29,225,517 $ 73,552,366 $ 66,693,375 $ Capital assets 66,534,680 67,268,328 80,885,476 80,892,441 147,420,156 148,160,769 Total assets 104,644,557 104,736,186 116,327,965 110,117,958 220,972,522 214,854,144 Total deferred outflows of resources - - 131,513 - 131,513 - Long-term liabilities outstanding 9,277,082 12,164,641 23,111,660 25,360,205 32,388,742 37,524,846 Other liabilities 5,311,121 15,746,046 8,561,975 7,884,786 13,873,096 23,630,832 Total liabilities 14,588,203 27,910,687 31,673,635 33,244,991 46,261,838 61,155,678 Total deferred inflows of resources 9,818,282 - - - 9,818,282 - Net position: Net investment in capital assets 57,482,749 56,770,185 56,679,015 55,047,253 114,161,764 111,817,438 Restricted 2,363,899 2,897,384 3,214,520 - 5,578,419 2,897,384 Unrestricted 20,391,424 17,157,930 24,892,308 21,825,714 45,283,732 38,983,644 Total net position 80,238,072 $ 76,825,499 $ 84,785,843 $ 76,872,967 $ 165,023,915 $ 153,698,466 $ Governmental Business-type Activities Activities Total An additional portion of Murray City’s net position (3.38 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position of $45,283,732 may be used to meet the City’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, Murray City is able to report positive balances in all three categories of net position, both for government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. There was an increase of $11,325,449 in net position for Murray City during the current fiscal year. The primary reason for this increase in net position was from conservative revenue forecasts that limited budgets and controlled expenses. ---PAGE BREAK--- 15 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS Murray City's Changes in Net Position Restated Restated Restated 2013 2012 2013 2012 2013 2012 Revenues: Program revenues: Charges for services 5,664,804 $ 6,479,306 $ 52,620,586 $ 52,358,497 $ 58,285,390 $ 58,837,803 $ Operating grants and contributions 5,085,195 4,478,557 - - 5,085,195 4,478,557 Capital grants and contributions 625,667 2,087,025 742,946 833,496 1,368,613 2,920,521 General revenues: Sales taxes 12,916,025 12,847,464 - - 12,916,025 12,847,464 Property taxes 10,298,590 10,075,782 - - 10,298,590 10,075,782 Franchise taxes 4,993,384 4,849,560 - - 4,993,384 4,849,560 Investment income 202,882 295,607 287,195 244,548 490,077 540,155 Gain/(loss) on disposal of assets 94,202 10,638 30,452 163,124 124,654 173,762 Miscellaneous 277,508 206,915 - - 277,508 206,915 Total revenues 40,158,257 41,330,854 53,681,179 53,599,665 93,839,436 94,930,519 Expenses: General government 7,405,522 8,984,119 - - 7,405,522 8,984,119 Public safety 16,355,899 16,678,415 - - 16,355,899 16,678,415 Highways & public improvements 8,666,544 7,880,076 - - 8,666,544 7,880,076 Parks, recreation, and culture 7,538,992 7,068,120 - - 7,538,992 7,068,120 Debt service - interest and fiscal charges 384,433 440,286 - - 384,433 440,286 Water - - 4,127,932 4,084,701 4,127,932 4,084,701 Waste water - - 3,353,890 3,255,545 3,353,890 3,255,545 Power - - 30,312,585 31,190,000 30,312,585 31,190,000 Murray parkway - - 1,260,353 1,697,025 1,260,353 1,697,025 Telecommunications - - 63,146 33,120 63,146 33,120 Solid waste - - 1,126,639 1,049,808 1,126,639 1,049,808 Storm water - - 1,918,052 1,884,519 1,918,052 1,884,519 Total expenses 40,351,390 41,051,016 42,162,597 43,194,718 82,513,987 84,245,734 Increase (decrease) in net position before transfers (193,133) 279,838 11,518,582 10,404,947 11,325,449 10,684,785 Transfers - net 3,605,706 3,129,995 (3,605,706) (3,129,995) - - Increase (decrease) in net position 3,412,573 3,409,833 7,912,876 7,274,952 11,325,449 10,684,785 Net position at beginning of year 76,825,499 73,415,666 76,872,967 69,598,015 153,698,466 143,013,681 Net position at end of year 80,238,072 $ 76,825,499 $ 84,785,843 $ 76,872,967 $ 165,023,915 $ 153,698,466 $ Activities Activities Total Governmental Business-type Governmental Activities Governmental activities increased Murray City’s net position by $3,412,573. Key elements are as follows:  Revenue exceeded budget by approximately $1,173,000, part of this positive variance was the result of the following revenues: o $528,000 from sales tax revenue o $391,000 from franchise tax o $184,000 from licenses and permits  Expenditures were less than budget by approximately $2,400,000 thanks to all Departments’ careful use of taxpayer dollars.  The discontinuation of the City’s Other Post-employment Benefits plan to new retirees contributed to the City’s improved financial position. ---PAGE BREAK--- 16 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS Business-Type Activities Business-type activities increased Murray City’s net position by $7,912,876. Key elements are as follows:  Total operating income was $11,122,341. This was an increase of $2,100,327 over the prior year. This was the result of increase Power project revenue of approximately $600,000, Storm Water other revenue increased by approximately $340,000, and power costs decreased approximately $675,000. The remaining difference was because the City discontinued its Other Post-employment Benefits plan to new retirees which resulted in a significantly lower liability.  Impact fees and capital contributions were $473,574 and $742,946 respectively.  Interest expense was $955,804, which was a decrease of $158,594 over the prior year.  The City changed the way it records unbilled sales; this resulted in a one-time decrease in net position. Financial Analysis of the Government’s Funds As noted earlier, Murray City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds The focus of Murray City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing Murray City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Governmental fund balance is reported in five separate categories: nonspendable, restricted, committed, assigned, and unassigned. Nonspendable fund balance includes amounts that cannot be spent for legal or practical reasons. Examples include long-term notes receivable and inventory. Restricted fund balance includes amounts restricted to specific purposes by external parties such as amounts restricted for debt service. Committed fund balance includes amounts that have been set aside by the City Council for a specific purpose prior to the end of the fiscal year. Assigned fund balance includes amounts that have been set aside by the City Council for a specific purpose, but subsequent to the end of the fiscal year. Unassigned fund balance includes all remaining amounts. As of the end of the current fiscal year, Murray City’s governmental funds reported combined ending fund balances of $22,738,282, an increase of $3,435,973 in comparison with the prior year. Of the total balance, $2,363,899 is restricted, $10,736,293 is assigned, and $9,582,590 is unassigned. The General Fund is the chief operating fund of the City. At fiscal year end, the General Fund reported total fund balance of $10,000,854, of which $55,500 is nonspendable, $362,764 is restricted, and $9,582,590 is unassigned. ---PAGE BREAK--- 17 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS The Capital Projects Fund has a total fund balance of $8,689,092, an increase of $3,849,852 over the prior year. The increase is for planned future capital needs. This fund will continue to increase over the next few years as saving occurs for future capital projects. Proprietary Funds Murray City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position of the Water Fund at the end of the year was $5,790,925, in the Waste Water Fund $5,540,806, in the Power Fund $11,586,526, and in the Storm Water Fund $1,019,455. The following funds received capital contributions: Water $229,519, Waste Water $65,233, Power $242,542, and Storm Water $205,652. These contributions of water and sewer lines, power improvements, and storm water improvements came from developers within the City. General Fund Budgetary Highlights The original budget and the final amended budget changed by $3,435,950, the material changes are summarized as follows:  A grant from the U.S. Department of Transportation/Federal Highway Administration was received for Highway Planning and Construction for $1,963,269. The City budgeted an additional $665,049 to complete the project.  Budget for the Cottonwood/Winchester Intersection project was appropriated for $230,744.  Budget for the road maintenance projects was appropriated for $105,000. Other minor increases in appropriations were for miscellaneous items and small grants. Capital Asset and Debt Administration Murray City’s investment in capital assets for its governmental and business-type activities as of June 30, 2013 was $147,420,156 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements other than buildings, machinery and equipment, infrastructure, intangibles, and construction in progress. The total change in Murray City’s investment in capital assets for the current fiscal year was a decrease of $740,613. This represents a decrease of $733,648 for governmental activities and a $6,965 decrease for business-type activities. These changes in capital assets will have no effect on the availability of fund reserves for future use. ---PAGE BREAK--- 18 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS Major capital projects and investments during the current fiscal year included the following:  McGhie Springs well rehabilitation project for approximately $788,000  Police cars $532,000  Fashion Boulevard water line project approximately $321,000  Winchester Storm Drain project approximately $214,000  Greenfield Avenue road project approximately $216,000  Indoor Pool Slide Tower $194,000  Cottonwood and Winchester intersection project approximately $133,000  Creekview Drive road project approximately $129,000  South Wood Park Restroom renovation project approximately $174,000 Murray City's Capital Assets (Net of depreciation) 2013 2012 2013 2012 2013 2012 Land 13,077,618 $ 13,077,618 $ 6,974,069 $ 6,974,069 $ 20,051,687 $ 20,051,687 $ Buildings 19,447,896 20,024,364 1,328,026 1,427,199 20,775,922 21,451,563 Improvements other than buildings 3,595,161 4,265,660 61,228,950 61,288,623 64,824,111 65,554,283 Machinery and equipment 3,746,998 2,989,190 7,288,336 7,146,116 11,035,334 10,135,306 Furniture and fixtures - 61,420 - 11,774 - 73,194 Infrastructure 26,130,013 26,762,295 - - 26,130,013 26,762,295 Intangibles - - 2,008,029 2,181,245 2,008,029 2,181,245 Construction in progress 536,994 87,781 2,058,066 1,863,415 2,595,060 1,951,196 Total net capital assets 66,534,680 $ 67,268,328 $ 80,885,476 $ 80,892,441 $ 147,420,156 $ 148,160,769 $ Governmental Business-type Activities Activities Total Additional information regarding the City’s capital assets can be found in the notes to the financial statements of this report. At the end of the current fiscal year, Murray City had total bonded debt outstanding of $32,980,000. All of Murray City’s debt represents bonds secured solely by specified revenue sources (i.e. revenue bonds). Murray City's Outstanding Debt 2013 2012 2013 2012 2013 2012 Revenue bonds 8,860,000 $ 10,365,000 $ 24,120,000 $ 25,725,000 $ 32,980,000 $ 36,090,000 $ Governmental Business-type Activities Activities Total Murray City’s bonded debt decreased by $3,110,000 or 8.62 percent in fiscal year 2013. ---PAGE BREAK--- 19 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS The Power Fund retired $2,660,000 million of electrical revenue bonds with interest ranging from 5% - 5.25% The Storm Water Fund was authorized to issue $3,000,000 in Storm Water revenue bonds for various construction projects. The bond’s interest rate ranges from 2% - Additional information on Murray City’s long-term debt can be found in the notes to the financial statements of this report. Economic Factors and Next Year’s Budgets and Rates In July 2013, the City increased storm water fees by $.50 per month. The increase will be used to cover capital improvements and debt services costs. In August 2013, the City increased solid waste fees by $1 per month for the first garbage and recycling can, and increased the charge for a second can by $.59 per month. This increase occurred to cover higher solid waste collection fees. In fiscal year 2013 the State Legislature extended the sales tax hold harmless provision until June 30, 2016. This provision will guarantees a certain level of sales tax revenue for the City for three more years. The City continues to approach budgeting for revenues conservatively with a focus on long-term sustainability. Requests for Information This financial report is designed to provide a general overview of Murray City’s finances for all those with an interest. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Finance Director, 5025 South State Street, Murray City, Utah, 84107. ---PAGE BREAK--- 20 BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 21 MURRAY CITY STATEMENT OF NET POSITION JUNE 30, 2013 Governmental Business-type Activities Activities Total ASSETS Current assets: Cash and cash equivalents 22,563,731 $ 21,550,340 $ 44,114,071 $ Accounts receivable (net of allowance) 10,449,857 4,651,936 15,101,793 Notes receivable - 25,220 25,220 Due from other governments 2,805,599 111,150 2,916,749 Inventory 72,521 2,205,872 2,278,393 Prepaid items 68,441 212 68,653 Noncurrent assets: Restricted cash 465,932 3,214,520 3,680,452 Notes receivable - 393,370 393,370 Investments in joint ventures 1,683,796 3,289,869 4,973,665 Capital assets, not being depreciated: Land 13,077,618 6,974,069 20,051,687 Construction in progress 536,994 2,058,066 2,595,060 Capital assets, net of accumulated depreciation: Buildings 19,447,896 1,328,026 20,775,922 Improvements other than buildings 3,595,161 61,228,950 64,824,111 Machinery and equipment 3,746,998 7,288,336 11,035,334 Infrastructure 26,130,013 - 26,130,013 Intangibles - 2,008,029 2,008,029 Total assets 104,644,557 116,327,965 220,972,522 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on defeasance - 131,513 131,513 Total deferred outflows of resources - 131,513 131,513 LIABILITIES Current liabilities: Accounts payable 916,027 3,965,380 4,881,407 Accrued liabilities 1,380,400 298,120 1,678,520 Customer deposits - 1,160,069 1,160,069 Compensated absences 1,762,490 679,989 2,442,479 Interest payable 53,656 121,197 174,853 Notes payable - 25,220 25,220 Bonds and leases payable 1,198,548 2,312,000 3,510,548 Noncurrent liabilities: Compensated absences 810,063 394,202 1,204,265 Net OPEB payable 613,636 429,627 1,043,263 Notes payable - 393,370 393,370 Bonds and leases payable 7,853,383 21,894,461 29,747,844 Total liabilities 14,588,203 31,673,635 46,261,838 DEFERRED INFLOWS OF RESOURCES Deferred inflows-property taxes 9,818,282 - 9,818,282 Total deferred inflows of resources 9,818,282 - 9,818,282 NET POSITION Net investment in capital assets 57,482,749 56,679,015 114,161,764 Restricted 2,363,899 3,214,520 5,578,419 Unrestricted 20,391,424 24,892,308 45,283,732 Total net position 80,238,072 $ 84,785,843 $ 165,023,915 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 22 MURRAY CITY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013 Net (Expense) Revenues Operating Capital and Changes in Net Position Charges for Grants and Grants and Governmental Business-type Expenses Services Contributions Contributions Activities Activities Total Governmental activities General government 7,405,522 $ 3,089,878 $ - $ - $ (4,315,644) $ - $ (4,315,644) $ Public safety 16,355,899 900,293 199,522 - (15,256,084) - (15,256,084) Highways and public improvements 8,666,544 58,318 4,659,783 625,667 (3,322,776) - (3,322,776) Parks, recreation, and culture 7,538,992 1,616,315 225,890 - (5,696,787) - (5,696,787) Debt service - interest and fiscal charges 384,433 - - - (384,433) - (384,433) Total governmental activities 40,351,390 5,664,804 5,085,195 625,667 (28,975,724) - (28,975,724) Business-type activities Water 4,127,932 5,937,903 - 229,519 - 2,039,490 2,039,490 Waste water 3,353,890 4,196,173 - 65,233 - 907,516 907,516 Power 30,312,585 37,990,725 - 242,542 - 7,920,682 7,920,682 Murray parkway 1,260,353 1,459,838 - - - 199,485 199,485 Telecommunication 63,146 66,878 - - - 3,732 3,732 Solid waste 1,126,639 1,211,654 - - - 85,015 85,015 Storm water 1,918,052 1,757,415 - 205,652 - 45,015 45,015 Total business-type activities 42,162,597 52,620,586 - 742,946 - 11,200,935 11,200,935 General Revenues: Sales taxes 12,916,025 - 12,916,025 Property taxes 10,298,590 - 10,298,590 Franchise taxes 4,993,384 - 4,993,384 Investment income 202,882 287,195 490,077 Gain on disposal of assets 94,202 30,452 124,654 Miscellaneous 277,508 - 277,508 Transfers - net 3,605,706 (3,605,706) - Total general revenue and transfers 32,388,297 (3,288,059) 29,100,238 Change in net position 3,412,573 7,912,876 11,325,449 Net position - beginning 77,384,024 80,098,951 157,482,975 Prior period adjustment (558,525) (3,225,984) (3,784,509) Net position - ending 80,238,072 $ 84,785,843 $ 165,023,915 $ Program Revenues ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 23 MURRAY CITY BALANCE SHEET – GOVERNMENTAL FUNDS JUNE 30, 2013 Governmental Fund Types Other Total Capital Redevelopment Governmental Governmental General Projects Agency Funds Funds ASSETS Cash and cash equivalents 8,496,828 $ 8,584,035 $ 2,125,732 $ 1,684,968 $ 20,891,563 $ Receivables, net: Property taxes 6,103,260 - 2,339,342 1,486,402 9,929,004 Other 520,853 - - - 520,853 Due from other funds 26,536 - - - 26,536 Due from other governments 2,779,063 - - 26,536 2,805,599 Prepaid items 55,500 - - - 55,500 Restricted cash 202 200,000 250,000 15,730 465,932 Total assets 17,982,242 8,784,035 4,715,074 3,213,636 34,694,987 LIABILITIES Accounts payable 716,401 94,943 19,007 13,068 843,419 Accrued liabilities 1,104,840 - - 17,683 1,122,523 Due to other funds - - - 26,536 26,536 Total liabilities 1,821,241 94,943 19,007 57,287 1,992,478 DEFERRED INFLOWS OF RESOURCES Deferred inflows-ambulance billing 145,945 - - - 145,945 Deferred inflows-property taxes 6,014,202 - 2,339,342 1,464,738 9,818,282 Total deferred inflows of resources 6,160,147 - 2,339,342 1,464,738 9,964,227 FUND BALANCE Nonspendable 55,500 - - - 55,500 Restricted 362,764 638,349 827,056 535,730 2,363,899 Assigned - 8,050,743 1,529,669 1,155,881 10,736,293 Unassigned 9,582,590 - - - 9,582,590 Total fund balances 10,000,854 8,689,092 2,356,725 1,691,611 22,738,282 Total liabilities, deferred inflows of resources, and fund balances (deficits) 17,982,242 $ 8,784,035 $ 4,715,074 $ 3,213,636 $ 34,694,987 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 24 MURRAY CITY RECONCILIATION OF THE BALANCE SHEET – GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION FOR THE YEAR ENDED JUNE 30, 2013 Amounts reported for governmental activities in the Statement of Net Position are different because: Total Fund Balances - Total Governmental Funds 22,738,282 $ Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds. 68,218,476 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as deferred inflows of resources. 145,945 Internal service funds are used by management to charge the costs of fleet management and risk management to individual funds. The assets and liabilities of internal service funds are included in governmental activities in the Statement of Net Position. 1,389,815 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. (12,254,446) Net Position - Governmental Activities 80,238,072 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 25 MURRAY CITY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Governmental Fund Types Other Total Capital Redevelopment Governmental Governmental General Projects Agency Funds Funds REVENUES Sales taxes 12,916,025 $ - $ - $ - $ 12,916,025 $ Property taxes 6,469,064 - 2,237,283 1,592,243 10,298,590 Franchise taxes 4,993,384 - - - 4,993,384 Licenses and permits 1,379,566 - - - 1,379,566 Intergovernmental 4,340,971 475,000 - 269,224 5,085,195 Administrative fees 3,025,037 - - - 3,025,037 Charges for services 2,573,616 - - 1,310 2,574,926 Fines and forfeitures 1,662,984 - - 47,328 1,710,312 Miscellaneous 258,687 11,976 - 6,845 277,508 Investment income 137,578 30,681 10,473 15,627 194,359 Total revenues 37,756,912 517,657 2,247,756 1,932,577 42,454,902 EXPENDITURES General government 8,544,565 224,213 - - 8,768,778 Public safety 16,017,663 1,224,816 - - 17,242,479 Highways and public improvements 6,491,564 784,589 613,362 215,832 8,105,347 Parks, recreation, and culture 5,359,310 751,074 - 1,588,988 7,699,372 Debt service: Principal 1,505,000 19,183 - - 1,524,183 Interest and fiscal charges 396,651 1,802 - 11,286 409,739 Pledge payment - UTOPIA debt service 1,583,543 - - - 1,583,543 Total expenditures 39,898,296 3,005,677 613,362 1,816,106 45,333,441 Excess (deficiency) of revenues over (under) expenditures (2,141,384) (2,488,020) 1,634,394 116,471 (2,878,539) OTHER FINANCING SOURCES (USES) Capital leases - 95,795 - - 95,795 Transfers in 4,620,102 6,267,625 - 34,873 10,922,600 Transfers out (6,302,498) (116,250) (898,146) - (7,316,894) Note payoff proceeds 1,273,743 - - - 1,273,743 Sale of capital assets - 90,702 - - 90,702 Total other financing sources (uses) (408,653) 6,337,872 (898,146) 34,873 5,065,946 Net change in fund balance (2,550,037) 3,849,852 736,248 151,344 2,187,407 Fund balance at beginning of year 11,302,325 4,839,240 1,620,477 1,540,267 19,302,309 Prior period adjustment 1,248,566 - - - 1,248,566 Fund balance at end of year 10,000,854 $ 8,689,092 $ 2,356,725 $ 1,691,611 $ 22,738,282 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 26 MURRAY CITY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds 2,187,407 $ Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays and capital contributions exceeded depreciation in the current period. (729,712) Revenues in the fund statements that are not recognized in the government-wide statements. (1,273,743) The issuance of long-term debt bonds, leases) provides current financial resources to governmental funds, while the payment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transactions, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas, these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long- term debt and related items. 1,453,694 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 1,646,116 The net revenue of certain activities of the Internal Service Funds are reported with governmental activities 128,811 Change in net position of governmental activities 3,412,573 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 27 MURRAY CITY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – BUDGET TO ACTUAL – GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2013 Original Final Actual Variance with Budget Budget Amounts Final Budget REVENUES Sales taxes 12,285,000 $ 12,387,709 $ 12,916,025 $ 528,316 $ Property taxes 6,390,000 6,487,409 6,469,064 (18,345) Franchise taxes 4,601,617 4,601,617 4,993,384 391,767 Licenses and permits 1,195,000 1,195,000 1,379,566 184,566 Intergovernmental 1,554,654 4,148,644 4,340,971 192,327 Administrative fees 3,031,251 3,031,251 3,025,037 (6,214) Charges for services 2,663,700 2,693,700 2,573,616 (120,084) Fines and forfeitures 1,702,000 1,702,000 1,662,984 (39,016) Miscellaneous 156,500 185,831 258,687 72,856 Investment income 150,000 150,000 137,578 (12,422) Total revenues 33,729,722 36,583,161 37,756,912 1,173,751 EXPENDITURES General government: Legislative 377,912 381,489 310,868 70,621 Justice court 1,516,265 1,522,165 1,479,718 42,447 Mayor 481,545 481,545 465,410 16,135 Finance 544,477 544,477 491,963 52,514 Legal 446,272 440,372 434,894 5,478 Nondepartmental 880,202 975,501 517,924 457,577 Personnel 277,053 277,053 258,996 18,057 Administrative and development Services 4,818,408 4,818,408 4,584,792 233,616 Total general government 9,342,134 9,441,010 8,544,565 896,445 Public safety: Police department 10,085,547 10,182,303 9,608,909 573,394 Fire department 6,659,094 6,746,365 6,408,754 337,611 Total public safety 16,744,641 16,928,668 16,017,663 911,005 Highways and public improvements Engineering 630,999 630,999 607,628 23,371 Streets and highways 3,153,550 6,197,951 5,778,603 419,348 Shops and garages 95,600 95,600 105,333 (9,733) Total highways and public improvements 3,880,149 6,924,550 6,491,564 432,986 Parks, recreation, and culture Parks and recreation 5,028,660 5,133,673 4,957,819 175,854 Cemetery 402,797 402,797 401,491 1,306 Total parks, recreation, and culture 5,431,457 5,536,470 5,359,310 177,160 Debt service: Principal 1,505,000 1,505,000 1,505,000 - Interest 395,660 396,660 396,651 9 Pledge payment - UTOPIA debt service 1,580,910 1,583,543 1,583,543 - Total debt service 3,481,570 3,485,203 3,485,194 9 Total expenditures 38,879,951 42,315,901 39,898,296 2,417,605 OTHER FINANCING SOURCES (USES) Note payoff proceeds 215,000 215,000 1,273,743 1,058,743 Transfers in 4,620,102 4,620,102 4,620,102 - Transfers out (2,034,873) (6,302,498) (6,302,498) - Net other financing sources (uses) 2,800,229 (1,467,396) (408,653) 1,058,743 Net change in fund balance (2,350,000) (7,200,136) (2,550,037) 4,650,099 Fund balance at beginning of year 11,302,325 11,302,325 11,302,325 - Prior period adjustment - - 1,248,566 1,248,566 Fund balance at end of year 8,952,325 $ 4,102,189 $ 10,000,854 $ 5,898,665 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 28 MURRAY CITY STATEMENT OF NET POSITION – PROPRIETARY FUNDS JUNE 30, 2013 Business-type Activities - Enterprise Funds Governmental Non-Major Activities - Water Waste Water Power Storm Water Enterprise Internal Fund Fund Fund Fund Funds Total Service Funds ASSETS Current assets: Cash and cash equivalents 5,436,934 $ 2,045,933 $ 11,669,370 $ 1,191,012 $ 1,207,091 $ 21,550,340 $ 1,672,168 $ Accounts receivable (net) 804,110 323,896 3,280,478 134,815 108,637 4,651,936 - Notes receivable - - - - 25,220 25,220 - Due from other funds 164,776 - - - - 164,776 - Due from other governments - 111,150 - - - 111,150 - Inventory - - 2,121,365 - 84,507 2,205,872 72,521 Prepaid items - - 212 - - 212 12,941 Total current assets 6,405,820 2,480,979 17,071,425 1,325,827 1,425,455 28,709,506 1,757,630 Noncurrent assets: Restricted cash - 132,085 - 3,082,435 - 3,214,520 - Notes receivable - - - - 393,370 393,370 - Investment in joint venture - 3,289,869 - - - 3,289,869 - Capital assets: Land 2,155,313 455,921 1,691,650 2,344,849 326,336 6,974,069 - Buildings 904,024 949,132 3,410,311 - 797,534 6,061,001 - Improvements other than buildings 25,395,326 10,691,325 76,102,589 32,791,516 3,734,149 148,714,905 - Machinery and equipment 3,110,450 1,149,507 12,424,002 1,141,285 926,244 18,751,488 151,134 Intangibles - - 4,309,027 - - 4,309,027 - Construction in progress 550,926 1,270,950 - 236,190 - 2,058,066 - Accumulated depreciation and amortization (14,422,376) (6,223,356) (57,884,227) (22,782,025) (4,671,096) (105,983,080) (99,551) Total noncurrent assets 17,693,663 11,715,433 40,053,352 16,814,250 1,506,537 87,783,235 51,583 Total assets 24,099,483 14,196,412 57,124,777 18,140,077 2,931,992 116,492,741 1,809,213 DEFERRED OUTFLOWS OF RESOURCES Deferred charge on defeasance - - 131,513 - - 131,513 - Total deferred outflows of resources - - 131,513 - - 131,513 - LIABILITIES Current liabilities: Accounts payable 246,657 99,724 3,273,959 213,585 131,455 3,965,380 72,608 Accrued liabilities 25,229 12,557 218,533 8,940 32,861 298,120 257,877 Due to other funds - - - - 164,776 164,776 - Accrued interest payable 25,237 21,523 49,017 25,420 - 121,197 - Compensated absences 139,994 60,921 368,312 36,985 73,777 679,989 25,575 Notes payable - - - - 25,220 25,220 - Bonds payable 284,777 272,223 1,545,000 210,000 - 2,312,000 - Total current liabilities 721,894 466,948 5,454,821 494,930 428,089 7,566,682 356,060 Noncurrent liabilities: Deposits 4,550 - 1,155,519 - - 1,160,069 - Compensated absences 81,157 35,317 213,516 21,442 42,770 394,202 11,755 Net OPEB payable 92,071 - 337,556 - - 429,627 - Notes payable - - - - 393,370 393,370 - Bonds payable 3,150,446 2,811,172 13,040,883 2,891,960 - 21,894,461 - Total noncurrent liabilities 3,328,224 2,846,489 14,747,474 2,913,402 436,140 24,271,729 11,755 Total liabilities 4,050,118 3,313,437 20,202,295 3,408,332 864,229 31,838,411 367,815 NET POSITION Net investment in capital assets 14,258,440 5,210,084 25,467,469 10,629,855 1,113,167 56,679,015 51,583 Restricted for capital - 110,987 - 3,082,435 - 3,193,422 - Restricted for debt service - 21,098 - - - 21,098 - Unrestricted 5,790,925 5,540,806 11,586,526 1,019,455 954,596 24,892,308 1,389,815 Total net position 20,049,365 $ 10,882,975 $ 37,053,995 $ 14,731,745 $ 2,067,763 $ 84,785,843 $ 1,441,398 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 29 MURRAY CITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION – PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Business-type Activities - Enterprise Funds Governmental Non-Major Activities - Water Waste Water Power Storm Water Enterprise Internal Fund Fund Fund Fund Funds Total Service Funds OPERATING REVENUES Charges for services 5,751,056 $ 3,969,971 $ 35,304,472 $ 1,407,953 $ 2,737,536 $ 49,170,988 $ 1,313,575 $ Connection and servicing fees 12,267 5,540 201,742 - - 219,549 - Other 42,410 - 2,370,904 342,327 834 2,756,475 - Total operating revenues 5,805,733 3,975,511 37,877,118 1,750,280 2,738,370 52,147,012 1,313,575 OPERATING EXPENSES Wages and benefits 1,282,363 639,129 4,905,479 525,871 817,655 8,170,497 500,268 Administrative fees 685,828 484,097 1,561,621 30,787 73,778 2,836,111 1,250 Depreciation and amortization 937,972 414,601 3,071,780 1,159,811 166,273 5,750,437 3,936 Operations and maintenance 1,099,971 1,544,748 20,118,069 115,738 1,389,100 24,267,626 687,833 Total operating expenses 4,006,134 3,082,575 29,656,949 1,832,207 2,446,806 41,024,671 1,193,287 Operating income (loss) 1,799,599 892,936 8,220,169 (81,927) 291,564 11,122,341 120,288 NONOPERATING REVENUES (EXPENSES) Investment income 40,113 14,884 217,831 9,110 5,257 287,195 8,523 Interest and fiscal charges (121,798) (89,193) (655,636) (85,845) (3,332) (955,804) - Impact fees 132,170 220,662 113,607 7,135 - 473,574 - Equity in income of joint venture - (182,122) - - - (182,122) - Gain/(loss) on disposal of assets 5,219 2,390 6,990 13,853 2,000 30,452 - Total nonoperating revenues (expenses) 55,704 (33,379) (317,208) (55,747) 3,925 (346,705) 8,523 Income (loss) before contributions and transfers 1,855,303 859,557 7,902,961 (137,674) 295,489 10,775,636 128,811 Capital contributions 229,519 65,233 242,542 205,652 - 742,946 - Transfers in - - - 48,750 100,000 148,750 - Transfers out (553,028) (363,911) (2,723,320) (114,197) - (3,754,456) - Change in net position 1,531,794 560,879 5,422,183 2,531 395,489 7,912,876 128,811 Total net position, beginning 18,898,835 10,561,271 34,219,716 14,738,320 1,680,809 80,098,951 1,312,587 Prior period adjustment (381,264) (239,175) (2,587,904) (9,106) (8,535) (3,225,984) - Total net position - ending 20,049,365 $ 10,882,975 $ 37,053,995 $ 14,731,745 $ 2,067,763 $ 84,785,843 $ 1,441,398 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 30 MURRAY CITY STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Business-type Activities - Enterprise Funds Governmental Non-Major Activities - Water Waste Water Power Storm Water Enterprise Internal Fund Fund Fund Fund Funds Total Service Funds Cash flows from operating activities Receipts from customers and users 5,837,744 $ 3,952,499 $ 37,926,599 $ 1,746,928 $ 2,726,801 $ 52,190,571 $ 1,313,575 $ Payments to suppliers of goods and services (1,195,259) (1,643,960) (20,524,842) 15,796 (1,421,369) (24,769,634) (747,144) Payments to employees for services (1,271,808) (635,715) (4,888,351) (525,245) (807,848) (8,128,967) (494,082) Payment for interfund services (685,828) (484,097) (1,561,621) (30,787) (73,778) (2,836,111) (1,250) Investments in joint venture - (217,565) - - - (217,565) - Net cash provided (used) by operating activities 2,684,849 971,162 10,951,785 1,206,692 423,806 16,238,294 71,099 Cash flows from noncapital financing activities Transfers from other funds - - - 48,750 100,000 148,750 - Transfers to other funds (553,028) (363,911) (2,723,320) (114,197) - (3,754,456) - Changes to interfund receivables and payables 40,469 - - - (40,469) - - Net cash provided (used) by noncapital financing activities (512,559) (363,911) (2,723,320) (65,447) 59,531 (3,605,706) - Cash flows from capital and related financing activities Proceeds from sale of capital assets 5,219 2,390 6,990 60,397 2,000 76,996 - Purchases of capital assets (2,035,321) (1,500,473) (699,362) (701,199) (110,715) (5,047,070) - Impact fees 132,170 220,662 113,607 7,135 - 473,574 - Deferred defeasance costs - - (131,513) - - (131,513) - Proceeds from issuance of debt - - - 3,107,326 - 3,107,326 - Principal paid on debt (256,677) (153,427) (4,274,149) (61,800) - (4,746,053) - Interest and fiscal charges paid on capital debt (121,624) (84,798) (670,259) (61,471) (3,332) (941,484) - Net cash provided (used) by capital and related financing activities (2,276,233) (1,515,646) (5,654,686) 2,350,388 (112,047) (7,208,224) - Cash flows from investing activites Investment income 40,113 14,884 217,831 9,110 5,257 287,195 8,523 Net cash provided by investing activities 40,113 14,884 217,831 9,110 5,257 287,195 8,523 Net increase (decrease) in cash and cash equivalents (63,830) (893,511) 2,791,610 3,500,743 376,547 5,711,559 79,622 Cash and cash equivalents - beginning of year 5,500,764 3,071,529 8,877,760 772,704 830,544 19,053,301 1,592,546 Cash and cash equivalents - end of year 5,436,934 $ 2,178,018 $ 11,669,370 $ 4,273,447 $ 1,207,091 $ 24,764,860 $ 1,672,168 $ Reconciliation of operating income to net cash provided (used) by operating activities Operating income (loss) 1,799,599 $ 892,936 $ 8,220,169 $ (81,927) $ 291,564 $ 11,122,341 $ 120,288 $ Adjustments to reconcile operating income to net cash provided by: Depreciation and amortization 937,972 414,601 3,071,780 1,159,811 166,273 5,750,437 3,936 Investments in joint ventures - (217,565) - - - (217,565) - (Increase) decrease in receivables 32,011 (23,012) 49,481 (3,352) (11,569) 43,559 - (Increase) decrease in inventory and prepaid items - - (426,319) - 994 (425,325) (9,768) (Increase) decrease in liabilities (84,733) (95,798) 36,674 132,160 (23,456) (35,153) (43,357) Net cash provided by operating activities 2,684,849 $ 971,162 $ 10,951,785 $ 1,206,692 $ 423,806 $ 16,238,294 $ 71,099 $ Noncash investing, capital and financing activities Capital contributions - developers 229,519 $ 65,233 $ 242,542 $ 205,652 $ - $ 742,946 $ - $ ---PAGE BREAK--- 31 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The basic financial statements of Murray City (the City) have been prepared in conformity with generally accepted accounting principles (GAAP) in the United States of America as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing accounting and financial reporting principles. Murray City was incorporated January 3, 1903. The City operates under a strong Mayor Council form of government. As required by GAAP, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable if the City appoints a voting majority of that organization boards or there is a potential to provide specific financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable for an organization if that organization is fiscally dependent it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). The component units discussed below are included as part of the City’s reporting entity as blended component units. The Redevelopment Agency of Murray City (RDA) was established in 1976 to prepare and carry out plans to improve, rehabilitate, and redevelop blighted areas within the City. The RDA is governed by a board of trustees composed of the City Mayor and members of the Municipal Council. Although it is a legally separate entity from the City, the RDA is reported as if it were part of the primary government because of the City’s ability to impose its will upon the operations of the RDA. The RDA is included in these financial statements as the Redevelopment Agency Special Revenue Fund. Separate financial statements are not issued for the RDA. The Municipal Building Authority of Murray City (MBA) was established to finance and construct municipal buildings that are then leased to the City. The MBA is governed by a five-member board of trustees composed of the Municipal Council. Although it is a legally separate entity from the City, the MBA is reported as if it were part of the primary government because of the City’s ability to impose its will upon the operations of the MBA. The MBA is included in these financial statements as the Municipal Building Authority Special Revenue Fund. Separate financial statements are not issued for the MBA. Government-Wide and Fund Financial Statements The government-wide financial statements the statement of net position and the statement of activities) report information on all of the activities of the City and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely mainly on fees and charges for support. ---PAGE BREAK--- 32 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those which are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, and proprietary funds, even though the latter are excluded from the government-wide financial statements. Major governmental funds and enterprise funds are reported as separate columns in the financial statements. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The use of financial resources to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the government-wide financial statements, rather than as another financing source. Amounts paid to reduce long-term debt of the City are reported as a reduction of the related liability, rather than an expenditure in the government-wide financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City’s policy for revenues to be considered available is if they are collected with 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt-service expenditures, as well as expenditures related to compensated absences, claims, and judgments are recorded only when payment is due. Sales taxes, use taxes, franchise taxes, and earned but unreimbursed state and federal grants associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Property taxes are measurable as of the date levied (assessed) and are recognized as revenues when they become available. Available means when due, or past due, and received within the current period or collected soon enough thereafter (within 60 days) to be used to pay liabilities of the current period. All other revenues are considered to be measurable and available only when cash is received by the City. ---PAGE BREAK--- 33 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS The City reports the following major governmental funds:  The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except for those required to be accounted for in another fund.  The Capital Projects Fund accounts for the activities of the City’s various construction projects and capital improvements for governmental activities.  The Redevelopment Agency accounts for activities of the Central Business District, East Vine, Cherry Street, and Smelter Site redevelopment project areas. The City reports the following major proprietary funds:  The Power Fund accounts for the activities of the City’s electrical production and distribution operations.  The Water Fund accounts for the activities of the City’s water treatment and distribution operations.  The Waste Water Fund accounts for the operation and maintenance of the City’s sewer collection system and sewage treatment.  The Storm Water Fund accounts for the activities of the City’s storm water drainage system. Additionally, the City reports the following fund types: Internal Service funds are used by the City to account for the self-insurance activities of the various funds and for the costs of maintaining City owned vehicles and equipment. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments to the General Fund by various enterprise funds for providing administrative and billing services. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 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 all enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds includes 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. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources. ---PAGE BREAK--- 34 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Cash, Deposits and Investments Cash includes cash on hand, demand deposits with banks and other financial institutions, and deposits in other types of accounts or cash management pools that have the general characteristics of demand deposit accounts. City policy allows for the investment of funds in time certificates of deposit with federally insured depositories, investment in the Utah Public Treasurer’s Investment Fund, and other investments allowed by the State of Utah’s Money Management Act. Investments are reported at fair value. The State Treasurer’s Investment Fund operates in accordance with state laws and regulations. The reported value of the Fund is approximately the same as the fair value of the Fund shares. Cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Investments with maturities of three months or less when purchased meet this definition. Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to or due from other funds”. In the Power, Water, Wastewater, Storm Water, and Solid Waste Management funds, the City records utility revenues billed to customers when meters are read on a basis. Unbilled sales receivables for June 30, 2013 were estimated based on an average of June and July revenues less year end system receivables. These amounts were included in operating revenues and accounts receivable at year end. Receivables on the financial statements are shown net of allowance for uncollectible accounts. The allowance adjustment is estimated annually based on historical trends and professional judgment. Inventories and Prepaid Items Inventories of materials and supplies in the proprietary funds, consisting principally of materials used in the repair of the transmission, distribution, collection, and treatment systems are valued at cost and accounted for on a first-in, first-out basis (FIFO). 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. Restricted Assets Restricted assets are comprised of cash restricted for future debt service payments and unexpended portions of bonds issued for capital construction. ---PAGE BREAK--- 35 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Capital Assets Capital assets, which include property, plant, equipment, and infrastructure roads, bridges, sidewalks, and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an individual cost of more than $5,000 and an estimated useful life of three years or greater. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Property, plant, equipment, and infrastructure are depreciated using the straight-line method over the following estimated useful lives: Buildings 10 to 40 years Infrastructure 10 to 40 years Improvements other than buildings 20 to 40 years Machinery and equipment 3 to 15 years Deferred Outflows/inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has one item that is reported under this category, and it is deferred interest from the early retirement of bonds by the Power Fund. This amount will be deferred and amortized until the bond becomes callable. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Property taxes levied for calendar year 2013 are the only items that are reporting under this category. These amounts are deferred and recognized as an inflow of resources until a future period. Customer Deposits Enterprise fund customer deposits are required by the City for residential renters and any business receiving a utility connection. The deposit is refundable after 2 years for residential and business customers upon satisfactory payment history. Compensated Absences For governmental funds, the amount of vested or accumulated vacation leave, sick pay, and comp time that are not expected to be liquidated with available financial resources are reported as liabilities in the government-wide statement of net position and as expenses in the government-wide statement of activities. No expenditures are reported for these amounts in the fund financial statements. Vested or accumulated vacation leave, sick pay and comp time of proprietary funds is recorded as an expense and a liability of those funds as the benefits accrue to the employees and are thus recorded in both the government-wide financial statements and the individual fund financial statements. Sick pay amounts are charged to expenditures when incurred. Employees may accumulate sick leave without limitation. Accumulated sick leave is paid to employees upon termination or retirement, with a limitation of 25 percent of accumulated hours. Historically, compensated absences are paid by the individual funds as they become due, for governmental funds, most of the costs are paid by the general fund. ---PAGE BREAK--- 36 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Long-Term Obligations In the government-wide financial statements and proprietary fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the applicable debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, when incurred. The face amount of debt issued is reported as other financing sources while discounts on debt issuances are reported as other financing uses. Murray City adopted GASB 65 which requires issuance costs to be reported as debt service expense or expenditures in the period incurred. Fund Equity GASB Statement No. 54 outlined reporting categories for fund balance in governmental funds. The categories and descriptions are as follows:  Nonspendable Fund Balance – Prepaid expenditures and other similar assets not in a spendable form or that are contractually required to be maintained intact are classified as nonspendable fund balance.  Restricted Fund Balance – Assets that are constrained by externally imposed restrictions, or by law through constitutional provisions or enabling legislation.  Committed Fund Balance – Amounts formally designated by City Council through ordinance or resolution for a specific purpose that cannot be used for another purpose unless the City Council formally changes the use.  Assigned Fund Balance – Amounts constrained by City Council or City Management for a specific purpose normally through the appropriations process in establishing and amending budgets. Furthermore, funds in special revenue, capital project, and permanent funds are by their nature assigned to the purpose for which the resources are collected.  Unassigned Fund Balance – Amounts that may be used for any governmental purpose. When an expenditure qualifies to be used from more than one fund balance classification identified above, it is the City’s policy to use resources in the following order: restricted, committed, assigned, and then unassigned. The City has not adopted a formal policy on minimum fund balance. However, state statute requires the City to maintain a minimum fund balance in the general fund of at least 5 percent of total revenues. Estimates The preparation of the financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of certain financial statement balances. Actual results could vary from those estimates. ---PAGE BREAK--- 37 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Reclassifications Certain amounts presented in the prior year data have been reclassified in order to be consistent with the current year’s presentation and are considered by the City to be immaterial. NOTE 2 – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS Explanation of Certain Differences between the Governmental Fund Balance Sheet and the Government-Wide Statement of Net Position The governmental fund balance sheet includes a reconciliation between total governmental fund balances and net position of governmental activities as reported in the government-wide statement of net position. This difference primarily results from the long-term economic focus of the statement of net position versus the current financial resources focus of the governmental fund balance sheets. Capital related items: When capital assets (property, plant and equipment) that are to be used in governmental activities are purchased or constructed, the cost of these assets is reported as expenditures in governmental funds. However, the statement of net position includes those capital assets among the assets of the City as a whole. Cost of capital assets net 66,534,680 $ Investment in joint venture 1,683,796 Total difference 68,218,476 $ Long-term debt transactions: Long-term liabilities applicable to the City’s governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities in the fund financials. All liabilities (both current and long-term) are reported in the statement of net position. Balances at June 30, 2013 were: Sales tax revenue bonds 8,860,000 $ Bond issuance premium 115,319 Capital leases 76,612 Interest payable on long-term debt 53,656 Net OPEB payable 613,636 Compensated absences 2,535,223 Total difference 12,254,446 $ ---PAGE BREAK--- 38 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Explanation of Certain Differences between Governmental Fund Operating Statements and the Statement of Net Activities The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation between net changes in fund balances - total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. The first element of this reconciliation states that capital outlays are reported in the governmental funds as expenditures while the government-wide statement of activities allocates these costs over the useful lives of the assets as depreciation. While shown in the reconciliation as the net difference, the elements of this difference are as follows: Capital outlay 2,967,870 $ Trade-ins 3,500 Capital contributions 625,667 Depreciation expense (4,326,749) Net difference, as reported (729,712) $ NOTE 3 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information Prior to May 1, the Mayor submits to the Municipal Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the proposed sources of revenues. Between May 1 and June 20, the Municipal Council reviews and adjusts the Mayor’s proposed budget. On or before June 20, a public hearing is held and the budget is legally adopted through passage of a resolution. After the budget is adopted, the Finance Director may transfer any unencumbered or unexpended appropriation amount from one expenditure account to another within a department. The Municipal Council may, by resolution, transfer any unencumbered or unexpended appropriation amount from one department in a fund to another department within the same fund. Other budget openings occur throughout the year as deemed necessary with public hearing and council approval. Formal budgetary integration is employed as a management control device during the year for the General Fund, Special Revenue Funds, and Capital Projects Fund. In the General Fund, budgets are adopted at the functional level and budgetary control is exercised at the departmental level. For Special Revenue Funds, budgets are adopted and control is exercised at the level of total expenditures for each individual fund. ---PAGE BREAK--- 39 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Annual budgets for the General Fund, Capital Projects Fund, and all Special Revenue Funds (Municipal Building Authority Fund, Library Fund, Redevelopment Agency Fund, and Community Development Block Grant Fund) were prepared on the modified-accrual method of accounting and legally adopted by the Municipal Council. Encumbrances (commitments related to unpaid purchase orders or contracts for goods or services) are used only as an internal management control device during the year. All outstanding encumbrances lapse at year end. However, some encumbered amounts are re-authorized and honored as part of the following year’s budget. Although Utah State law requires the initial preparation of budgets for all City funds (both governmental and proprietary), it only requires the reporting of actual versus budget for governmental funds. Tax Revenues Property taxes are collected by the Salt Lake County Treasurer and remitted to the City. Taxes are levied and are due on November 1st and delinquent after November 30th. Delinquent taxes become property liens. An accrual for the current year’s property tax levy for the following November and December is made each year. Sales taxes are collected by the Utah State Tax Commission and remitted to the City An accrual has been made for all taxes received by the State for the period ended June 30th and thus due and payable to the City. Franchise taxes are charged to various utility companies doing business within the City including telephone, cable television, natural gas, and power companies. The fees are remitted on a quarterly, semi- annual, or annual basis. An accrual has been made for fees due and payable to the City at June 30th. NOTE 4 – DEPOSITS AND INVESTMENTS Utah State law establishes the rules and regulations for deposits and investments and is known as the Utah Money Management Act. The Act established the Money Management Council that promulgates additional rules and determines which financial institutions may qualify to hold deposits and investments for state and local entities. The City has complied with the Utah Money Management Act and the Money Management Council Rules with regard to deposits and investments. As of June 30, 2013, the City’s demand deposits and cash on hand totaled $7,289,543. As of June 30, 2013, the City has investments in the Utah Public Treasurer’s Investment Fund (PTIF) of $40,989,724. The PTIF is authorized and regulated by the Money Management Act. Deposits in the PTIF are not insured nor guaranteed by the State of Utah, and participants share proportionally in any realized gains or losses on investments. The PTIF values investments at fair market value at June 30 and December 30 each year in accordance with GASB 31. As of year end, the fair market value of the City’s investments in the PTIF was $41,195,574. However, the PTIF reports to participants on an amortized cost basis, which approximates the fair value at year end. ---PAGE BREAK--- 40 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Custodial Credit Risk - Deposits This is the risk that in the event of a bank failure, the City’s deposits may not be returned. As of June 30, 2013, $7,039,543 of the City’s $7,289,543 bank balance was exposed to custodial credit risk because it was uninsured and uncollateralized. The Utah Money Management Act does not require deposits to be insured or collateralized and the City has no formal policy regarding deposit credit risk. The Act requires that the City keep deposits in a qualified depository, which the City has done. In addition, $450,000 of the City’s deposits was held in an escrow for purchase of land and land rights. Custodial Credit Risk - Investments This is the risk that in the event of the failure of the counterparty, the City will not be able to recover the value of its investments that are in the possession of an outside party. The City has no formal policy regarding custodial credit risk for investments. Money invested in the Utah Public Treasurer’s Investment Fund (PTIF) is pooled with many other state and local entities, and is managed by the Utah State Treasurer. The PTIF fund has no investment rating. Interest Rate Risk This risk occurs when changes in interest rates adversely affect the fair value of an investment. The City’s policy for managing its exposure to fair value loss from changes in interest rates is to follow the Utah Money Management Act and only invest in instruments that mature in one year or less. Investments within the Public Treasurer’s Investment Fund have a weighted average maturity of less than 90 days. Credit Risk This is the risk that an issuer will not fulfill its obligations. The City policy is consistent with and complies with the Utah State Money Management Act. Investment is limited to U.S. Treasuries, U.S. Government Agency instruments, Utah Public Treasurer’s Investment Fund, and other instruments that are rated A or higher by Standard & Poor’s or Moody’s. The City only invested in the Utah Public Treasurer’s Investment Fund and qualified corporate debt securities during the year. The PTIF is not registered with the SEC as an investment company and is unrated. Concentration of Credit Risk City policy requires diversification and limits the amount that may be invested in the same company. First, the City may not invest more than 20 percent of its idle funds outside of the Utah Public Treasurer’s Investment Fund. Second, not more than 10 percent of the total portfolio may be invested in a single company’s credit instruments. The Utah Public Treasurer’s Investment Fund is highly diversified and must comply with various rules of the Utah State Money Management Act and Money Management Council. The deposits and investments are included on the government-wide statement of net position as follows: Cash and cash equivalents 44,114,071 $ Restricted cash 3,680,452 47,794,523 $ ---PAGE BREAK--- 41 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 5 – RECEIVABLES The City’s receivables as of year-end are as follows: General Redevelopment Agency Water Waste Water Power Storm Water Nonmajor Funds Total Property taxes 6,103,260 $ 2,339,342 $ - $ - $ - $ - $ 1,486,402 $ 9,929,004 $ Accounts receivable 942,973 - 816,311 334,949 3,436,458 137,936 108,383 5,777,010 Notes receivable - - - - - - 418,590 418,590 Intergovernmental 2,779,063 - - 111,150 - - 26,536 2,916,749 Gross receivables 9,825,296 2,339,342 816,311 446,099 3,436,458 137,936 2,039,911 19,041,353 Less: allowance for uncollectibles (422,120) - (12,201) (11,053) (155,980) (3,121) (2,770) (607,245) Net total receivables 9,403,176 $ 2,339,342 $ 804,110 $ 435,046 $ 3,280,478 $ 134,815 $ 2,037,141 $ 18,434,108 $ NOTE 6 – CAPITAL ASSETS Capital asset governmental activity for the year ended June 30, 2013 was as follows: Governmental activities Beginning Balance Increases Decreases Transfers Ending Balance Capital assets, not being depreciated: Land 13,077,618 $ - $ - $ - $ 13,077,618 $ Construction in progress 87,781 1,107,464 - (658,251) 536,994 Total capital assets, not being depreciated 13,165,399 1,107,464 - (658,251) 13,614,612 Capital assets, being depreciated: Buildings 31,700,614 251,980 - 40,271 31,992,865 Improvements other than buildings 16,072,009 98,324 - 17,000 16,187,333 Infrastructure 65,868,655 527,343 - 550,971 66,946,969 Machinery and equipment 11,435,408 1,611,926 (1,019,965) 1,010,381 13,037,750 Furniture and fixtures 1,286,618 - (326,246) (960,372) - Total capital assets being depreciated 126,363,304 2,489,573 (1,346,211) 658,251 128,164,917 Less accumulated depreciation for: Buildings (11,676,250) (868,719) - - (12,544,969) Improvements other than buildings (11,806,349) (785,823) - - (12,592,172) Infrastructure (39,106,360) (1,710,596) - - (40,816,956) Machinery and equipment (8,446,218) (904,127) 1,019,965 (960,372) (9,290,752) Furniture and fixtures (1,225,198) (61,420) 326,246 960,372 - Total accumulated depreciation (72,260,375) (4,330,685) 1,346,211 - (75,244,849) Total capital assets, being depreciated, (net) 54,102,929 (1,841,112) - - 52,920,068 Net governmental capital assets 67,268,328 $ (733,648) $ - $ - $ 66,534,680 $ ---PAGE BREAK--- 42 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Capital asset business-type activity for the year ended June 30, 2013 was as follows: Business-type activtities Beginning Balance Increases Decreases Transfers Ending Balance Capital assets, not being depreciated: Land 6,974,069 $ - $ - $ - $ 6,974,069 $ Construction in progress 1,863,415 3,628,178 - (3,433,527) 2,058,066 Total capital assets, not being depreciated 8,837,484 3,628,178 - (3,433,527) 9,032,135 Capital assets, being depreciated: Buildings 6,061,001 - - - 6,061,001 Improvements other than buildings 144,471,674 964,466 (140,614) 3,419,379 148,714,905 Machinery and equipment 18,740,025 1,197,372 (1,200,057) 14,148 18,751,488 Furniture and fixtures 546,542 - (546,542) - - Intangibles 4,309,027 - - - 4,309,027 Total capital assets, being depreciated 174,128,269 2,161,838 (1,887,213) 3,433,527 177,836,421 Less accumulated depreciation for: Buildings (4,633,802) (99,173) - - (4,732,975) Improvements other than buildings (83,183,051) (4,443,518) 140,614 - (87,485,955) Machinery and equipment (11,593,909) (1,022,756) 1,153,513 - (11,463,152) Furniture and fixtures (534,768) (11,774) 546,542 - - Intangibles (2,127,782) (173,216) - - (2,300,998) Total accumulated depreciation and amortization (102,073,312) (5,750,437) 1,840,669 - (105,983,080) Total capital assets, depreciated (net) 72,054,957 (3,588,599) (46,544) - 71,853,341 Net business-type capital assets 80,892,441 $ 39,579 $ (46,544) $ - $ 80,885,476 $ In the government-wide financial statements depreciation was charged as follows by program or activity: Governmental activities: General government 764,063 $ Public safety 869,360 Highways and public improvements 1,871,644 Parks, recreation, and culture 825,618 Total depreciation expense - governmental activities 4,330,685 $ Business-type activities: Water 937,972 $ Waste Water 414,601 Storm Water 1,159,811 Power 3,071,780 Murray Parkway Recreation 166,273 Total depreciation expense - business-type activities 5,750,437 $ ---PAGE BREAK--- 43 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 7 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS At June 30, 2013, interfund balances due to or from other funds was as follows: Receivable Fund Payable Fund Amount General CDBG 26,536 Water Murray Parkway Recreation 164,776 191,312 $ Interfund loans are generally for working capital requirements and are expected to be repaid within the next few fiscal years. In fiscal year 2012 the Murray Parkway Recreation Fund received a loan from the Water fund for $205,245 for the purchase of golf carts. The loan is for five years at 2.5 percent interest. In addition to the above amounts which will be repaid by the respective funds, transfers were made which will not be repaid. Such amounts for the fiscal year ended June 30, 2013 were as follows: Fund Transferring Out Fund Receiving Transfer Amount Water General 536,778 $ Waste Water General 347,661 Storm Water General 114,197 Power General 2,723,320 Redevelopment Agency General 898,146 General MBA 1,000 General Cemetery Perpetual Care 33,873 General Capital Projects 6,267,625 Water Storm Water 16,250 Waste Water Storm Water 16,250 Capital Projects Storm Water 16,250 Capital Projects Murray Parkway Recreation 100,000 11,071,350 $ The City commonly budgets transfers to various funds to finance capital and operating costs. The City also uses an operational transfer from the enterprise funds to the general fund; this amount will not be repaid and is considered a return on investment. ---PAGE BREAK--- 44 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 8 – INVESTMENTS IN JOINT VENTURES The City is a participant in several joint ventures that generate financial resources through member assessments, surcharge taxes, or user fees. The City reflects its equity position (in the net resources of the joint ventures) in the funds which have the rights to such resources. Trans-Jordan Cities The City has an approximate 8.62 percent ownership share in the Trans-Jordan Cities (the Association) joint enterprise. The City’s equity in the net resources of the Association at June 30, 2012, is reported in the government-wide statement of net position. The Association was organized in 1968 as a joint enterprise fund of the Cities of Sandy, Midvale, West Jordan, and Murray, Utah. The City of South Jordan, Utah joined the Association during fiscal year 1997. The cities of Draper and Riverton, Utah joined the Association during fiscal year 1998. The primary purpose of the Association is the operation, maintenance, and control of a refuse dumping site east of Bingham Canyon in Salt Lake County. The City has no firm commitments to make additional equity investments in Trans-Jordan Cities. The City’s ownership in the Association is calculated from the tipping fees for the preceding ten fiscal years. Tipping fees are paid from the solid waste fund and were $173,316 for fiscal year 2013. The Association is governed by its Board of Directors. Under the organization agreement, the Board of Directors is composed of the Mayors, or their appointed representatives, of the participating cities. The Board of Directors appoints the management and staff of the Association and approves all financial matters such as the operating budget and usage fees. Separate audited financial statements for Trans-Jordan Cities may be obtained from Trans-Jordan Cities, Accounting Department at 10873 South 7200 West, South Jordan, UT 84095. Central Valley Water Reclamation Facility The Waste Water Fund (an enterprise fund) has an approximate 5.7 percent ownership in the Central Valley Water Reclamation Facility (the Facility). The Facility, a separate legal entity and political subdivision of the State of Utah, was formed pursuant to the Utah Interlocal Co-operation Act. The Facility’s membership consists of five special-purpose government entities and two cities. The Facility was formed to plan, construct and operate a regional sewage treatment facility for the benefit of the seven members. Members of the Facility are required to pay their proportionate share of operating costs, construction costs, maintenance, and administrative costs. The Facility is governed by its Board of Directors. Under the Organization Agreement, all seven members (one of whom is the City), are entitled to designate one of the Facility’s seven directors. The City’s share of operations, maintenance, administration expenses, and debt service amounted to $1,186,870 in 2013. The Waste Water Fund made a net contribution of $158,276 to the Facility in 2013 and recorded a ($182,122) loss in joint venture resulting in a net decrease in its investment in the Facility of ($23,846). During 2005, the Facility issued $35,000,000 of revenue bonds. The City’s share of the total outstanding obligation at December 31, 2012 is $2,568,220. The City is required to fund its proportionate share of debt service each year, which is included in the City’s assessment from the Facility. Separate compiled financial statements for Central Valley Water Reclamation Facility may be obtained from the Central Valley Water Reclamation Facility Accounting Department at 800 West Central Valley Road, Salt Lake City, UT 84119. ---PAGE BREAK--- 45 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 9 – INTERLOCAL AGREEMENTS Utah Associated Municipal Power System (UAMPS) The Power Department is a member of the Utah Associated Municipal Power Systems (UAMPS). UAMPS, a joint action agency and political subdivision of the State of Utah, was formed by an Organization Agreement dated November 6, 1980, pursuant to the provisions of the Utah Interlocal Co-operation Act. UAMPS’ membership consists of 34 municipalities, one joint action agency, one electric service district and one water conservancy district. UAMPS is a legally separate entity, which possesses the ability to establish its own budget, incur debt, sue and be sued, and own and lease property. No other governmental units in Utah exercise significant control over UAMPS. As such, UAMPS is not a component unit as defined by the Governmental Accounting Standards Board in their Statement No. 14, “The Financial Reporting Entity.” UAMPS’ purpose includes planning, financing, developing, acquiring, constructing, improving, operating, and maintaining projects. In addition, UAMPS acquires ownership interests and capacity rights, for generation, transmission, and distribution of electric energy for the benefit of its members. As a member of UAMPS, the City has participated in various individual projects. The City acquired for $45,662 an approximate five percent interest in the Hunter II Power Plant project. During the year ended June 30, 1990, the City acquired an approximate ten percent entitlement in UAMPS’ share of a transmission service project from Craig, Colorado to Mona, Utah (the Craig-Mona project) for $1,805,428. The City acquired an additional 1.6 megawatts of plant capacity in the San Juan Generating Station Unit 4 for $1,953,599 during 1994. During the year ended June 30, 2009, the City acquired an interconnection with Granger Electric at their electric generating facility in South Jordan for $550,000. These entitlement payments represent prepayment of future generation fees for the projects and are being amortized over the lives of the service contracts. The unamortized balance of prepaid generation and transmission fees at June 30, 2013 is $2,008,029, reported as an intangible asset. Under various power sales contracts, UAMPS’ members are required to pay their proportionate share of all operation and maintenance expenses and debt service on the revenue bonds issued by UAMPS, and any other energy-related costs, as defined in the contract regardless of whether any power is supplied to the Power Fund. The City has no firm commitments to make additional equity investments in UAMPS or in any specified projects of UAMPS. Under the organization agreement, the four members with the greatest financial obligations to UAMPS, one of which is the City, are each entitled to designate one of UAMPS’ directors. All other directors are selected from the representatives of the remaining UAMPS members. Separate financial statements for UAMPS may be obtained from the Manager of Finance at 2825 East Cottonwood Parkway, Suite #200, Salt Lake City, UT 84121. ---PAGE BREAK--- 46 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Valley Emergency Communications Center The City is a member of the Valley Emergency Communications Center (the Center). The Center was organized June 30, 1988, as a joint enterprise between the City, Midvale City, Salt Lake County, Sandy City, South Jordan City, West Jordan City, and West Valley City. The primary purpose of the Center is to fund and operate a communications center which handles communications and other services for the members, including police, fire, 911 service, dispatch, and records services. The Center is governed by a Board of Trustees consisting of one representative from each member appointed by the governing body thereof. The Center’s activities are funded by a surcharge tax on telephones within each member’s city and member assessments. The Board of Trustees sets assessments for all member agencies in amounts sufficient to provide the funds required for the annual budget. The Center determines the 911 assessments for the telephone users within the members’ jurisdictions. Separate audited financial statements for Valley Emergency Communications Center may be obtained from the Finance Director at 5360 South 5885 West, West Valley City, UT 84118. Drug Enforcement Administration - Metro Task Force The City is a member and lead agency of the Drug Enforcement Administration (DEA) Metro Task Force (the Task Force). The Task Force is an interlocal co-operative organized to investigate and prosecute controlled substance offenders in the Salt Lake metropolitan area. The membership of the Task Force consists of sixteen Federal, State, County and Municipal law enforcement agencies. Activities of the Task Force are funded through federal and state grants, with no funds being provided by the participating members. Separate audited financial statements for DEA-Metro Task Force may be obtained from Murray City, Finance Department 5025 South State Street, Murray, UT 84157-0520. Utah Infrastructure Agency (UIA) On June 7, 2010, the City joined 8 other cities in an interlocal cooperative to purchase, lease, construct or equip facilities that are designed to provide telecommunication services within the respective cities. This agreement was amended and restated on November 1, 2010. The purpose of the agreement is to work in conjunction with Utah Telecommunications Open Infrastructure Agency (UTOPIA) to complete a wholesale fiber optic network for the residences and businesses in each city (see note on UTOPIA pledge and loan agreement). ---PAGE BREAK--- 47 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 10 – CAPITAL LEASES The City has entered into lease agreements, as lessee, for financing the acquisition of equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date. The assets acquired through capital leases are as follows: Capital Asset Original Principal Interest Rates Historic Cost Accumulated Depreciation IBM Server 95,795 $ 2.480% 95,795 $ 15,966 $ The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2013 were as follows: June 30, Totals 2014 25,183 $ 2015 25,183 2016 25,183 2017 4,195 Total minimum lease payments 79,744 Less: interest portion (3,132) Present value of minimum lease payments 76,612 Amount due within one year (23,548) Amount due after one year 53,064 $ ---PAGE BREAK--- 48 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 11 – LONG-TERM DEBT The City has issued bonds where the revenues and assets of the issuing fund are pledged as security for the bonds. During fiscal year 2012 the City authorized the Waste Water Fund to issue bonds in the amount of $2,626,000, but as of June 30, 2013 only $1,030,000 was issued. In addition, during fiscal year 2013 the City authorized the Storm Water Fund to issue bonds in the amount of $3,000,000. Revenue bonds outstanding at June 30, 2013 by issue are as follows: Original Issue Annual Principal Interest Rate Final Due Date Amount 8,500,000 $ $305,000 to $630,000 2.00% to 5.25% 10/1/2023 805,000 $ 9,300,000 $305,000 to $685,000 3.00% to 5.25% 6/1/2025 3,775,000 9,700,000 $15,000 to $1,500,000 4.00% to 5.00% 6/1/2021 9,435,000 3,140,000 $1,020,000 to $1,070,000 1.90% 6/1/2014 1,070,000 5,070,000 $60,000 to 600,000 2.575% 10/1/2023 5,005,000 2,626,000 $102,000 to 165,000 2.5% 10/1/2032 1,030,000 3,000,000 $110,000 to 215,000 2.00% to 4.00% 2/1/2033 3,000,000 9,990,000 $710,000 to $875,000 3.75% to 5.000% 12/1/2020 5,245,000 4,580,000 $275,000 to $405,000 3.00% to 4.40% 4/1/2023 3,075,000 1,535,000 $235,000 to $275,000 3.00% to 3.75% 4/1/2015 540,000 57,441,000 $ 32,980,000 $ Electric Series 2006 Electric Series 2011 Water/Sewer Series 2012 Sewer Series 2012 Sales Tax Series 2007 Sales Tax Series 2009A Bond Description Water/Sewer Series 2003 - partial defeasance Electric Series 2004 Storm Water 2013 Sales Tax Series 2009B Revenue bond debt service requirements to maturity are as follows: Principal Interest Totals 3,487,000 $ 1,181,013 $ 4,668,013 $ 3,624,000 1,079,772 4,703,772 3,445,000 933,149 4,378,149 3,392,000 792,418 4,184,418 3,541,000 667,899 4,208,899 13,361,000 1,414,021 14,775,021 1,305,000 185,350 1,490,350 2029 - 2033 825,000 75,750 900,750 32,980,000 $ 6,329,372 $ 39,309,372 $ 2019 - 2023 2024 - 2028 2014 2015 2016 2017 2018 ---PAGE BREAK--- 49 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Advance Refunding The City advance refunded $4,680,000 of the Water and Sewer Bonds Series 2003 in fiscal year 2012. The debt remains outstanding until October 1, 2014. The original amount issued was $8,500,000. Changes in Long-Term Liabilities Long-term liability activity for the year ended June 30, 2013 was as follows: Beginning Balance Increases Decreases Ending Balance Due in One Year Governmental activities Bonds payable: Sales tax 10,365,000 $ - $ (1,505,000) $ 8,860,000 $ 1,175,000 $ Premium 133,143 - (17,824) 115,319 - Total bonds payable 10,498,143 - (1,522,824) 8,975,319 1,175,000 Capital leases - 95,795 (19,183) 76,612 23,548 Compensated absences 2,338,890 2,078,929 (1,845,266) 2,572,553 1,762,490 Net OPEB payable 2,521,200 - (1,907,564) 613,636 - Governmental activities, long-term liabilities 15,358,233 $ 2,174,724 $ (5,294,837) $ 12,238,120 $ 2,961,038 $ Business-type activities Bonds payable: Revenue bonds payable 25,725,000 $ 3,000,000 $ (4,605,000) $ 24,120,000 $ 2,312,000 $ Deferred loss (351,278) - 29,896 (321,382) - Premium 415,032 107,326 (114,515) 407,843 - Total bonds payable 25,788,754 3,107,326 (4,689,619) 24,206,461 2,312,000 Capital leases 56,434 - (56,434) - - Compensated absences 1,032,661 960,567 (919,037) 1,074,191 679,989 Net OPEB payable 823,357 - (393,730) 429,627 - Business-type activities, long-term liabilities 27,701,206 $ 4,067,893 $ (6,058,820) $ 25,710,279 $ 2,991,989 $ NOTE 12 – RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City’s Retained Risk Reserve Fund (an internal service fund) accounts for and accumulates resources for uninsured loss. Under this program, the Retained Risk Reserve Fund (the Fund) provides coverage for up to a maximum of $250,000 for each general liability claim. The City purchases commercial insurance for claims in excess of coverage provided by the Fund and for all other risks of loss. Settled claims have not exceeded this commercial coverage in any of the past three fiscal years. ---PAGE BREAK--- 50 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 13 – CONTINGENT LIABILITIES AND COMMITMENTS Contingent Liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims including amounts already collected, may constitute a liability of the applicable fund. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts, if any, to be immaterial. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s counsel the resolution of these matters will not have a materially adverse effect on the financial condition of the City. The City is a participant of the Intermountain Power Agency (IPA), a separate legal entity established under the guidelines of the Utah Interlocal Co-operation Act. The IPA operates a power production plant near Delta, Utah for the benefit of its members. IPA has approximately $5.1 billion of revenue bonds that are paid from the revenues received from participant charges. Under the terms of its original contract with IPA, the City is entitled and obligated to purchase four percent of the plant’s power output. However, under a subsequent excess power sales agreement, the City transferred its power entitlement to certain California purchasers for the duration of the project unless the City recalls any or all of the entitlement. In recent years, the City sold most of its entitlement to the California purchasers. The City is liable for operating expenses and repayment of the outstanding bonds only in the event of a prolonged power outage (in excess of 24 months) and/or failure to perform under the agreement on the part of each of the California participants. Commitments Construction The City has active construction commitments with street, water line, waste water line, and storm drain projects as of June 30, 2013. At year end, the City’s commitments with contractors are as follows: Remaining Project Type Spent-to-Date commitment Street construction 36,651 $ 384,896 $ Water line construction 252,867 252,136 Waste water line construction 1,255,269 178,079 Storm drain construction 94,045 283,616 ---PAGE BREAK--- 51 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Utah Telecommunication Open Infrastructure Agency (UTOPIA) The City entered into a Pledge and Loan Agreement with UTOPIA. UTOPIA is an interlocal cooperative created to finance, construct and operate a system of fiber optic communication lines in various cities in the state. UTOPIA leases use of the fiber optic system to retail vendors of telephone, video, and internet services. The pledge commits the City to set aside and deposit funds as security in a debt service fund for the portion of the project related to the City. Sales and use tax revenues have been pledged towards the payment of the City’s share of the debt service reserve fund requirement if withdrawals were made by the Trustee to make bond payments; however, the pledge is junior to any previously pledged sales and use tax revenue. On July 1, 2007, the City was required to deposit $1,235,039 into the UTOPIA Series 2004 Bond Debt Service Reserve Fund. These funds will remain on deposit until the sooner of the bonds being retired or 33 years from June 2, 2008. The City may, if additional bonds are issued, be required to deposit additional funds into a bond debt service reserve fund. The timing of these additional pledged deposits depends on the timing of additional bond issues. In June 2008, the City entered into an Amended and Restated Pledge and Loan Agreement as part of a restructuring of UTOPIA debt. The City pledged sales and use tax revenue towards its share of any debt service fund shortfall. In January 2010, the Trustees of the UTOPIA bond funds notified the City that part of UTOPIA’s Debt Service Reserve Fund was used to make the required bond payments. The City has received similar notices each month since this original notice mentioned above. The City understands that these withdrawals will continue for an undetermined period of time and that applicable replenishment payments will be required of the City for its share of the amounts withdrawn from the debt service reserve fund since January 2011. According to the Amended and Restated Pledge and Loan Agreement, the amounts withdrawn from the City’s share of the Debt Service Reserve fund becomes a loan to UTOPIA. It is currently unclear as to when UTOPIA will be in a position to repay the loan. In December 2011, UTOPIA completed a second amended and restated pledge and loan agreement with its member cities. This change occurred so that UTOPIA could refund the Series 2008 Bonds. This reduced UTOPIA’s market risk and administrative costs. This also drew down the restricted money that had been set aside for UTOPIA’s Series 2004 Debt Service Reserve Fund. This amendment also helps assure that money will be available to make timely debt service payments since the member cities pay directly into the Debt Service fund and are no longer paying into the Debt Service Reserve fund. The maximum amount committed by the City for year ended June 30, 2013 was $1,583,543, with a 2 percent increase per year through 2040. The total debt service payments paid by the City as of June 30, 2013 is $5,188,186. The amount paid by the City is a loan to UTOPIA, but as the likely hood of it being re-paid in the near future is remote the City has decided to disclose this amount rather than record this loan on its financial statements. UTOPIA’s total bonded debt as of June 30, 2013 is $184,996,270 of which the City is responsible for 12.30 percent or $22,754,541. Last, the City has previously recorded restricted fund balance for future UTOPIA debt service payments. Since no money has been received and no money is in a debt service reserve account the City has discontinued restricting fund balance as there is no money to restrict. ---PAGE BREAK--- 52 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Utah Infrastructure Agency (UIA) On May 1, 2011, the City entered into a “Communication Service Contract” with UIA to provide connections to a fiber optic network for the residences and businesses of the City. The agreement obligates the City to financially support UIA if UIA revenues are insufficient to pay operational and debt payments. The City has obligated up to $690,241 of its annual franchise tax revenue for this support. UIA’s total bonded debt as of June 30, 2013 is $28,835,000 of which the City is responsible for 13.40 percent or $3,863,890. The service contract also provides that the City will bill and collect connection service fees from the end users located in the City on behalf of UIA. The City is entitled to 5 percent of the fee for administrative costs and the remaining 95 percent is due to UIA. The City becomes a signatory party to the end user agreement, along with UIA and the end user. The City is responsible for collection of the user fees stipulated in the agreement should the end user default. NOTE 14 – CONDUIT DEBT OBLIGATIONS From time to time, the City has issued Industrial Revenue Bonds (IRBs) to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the City and the State, nor any political subdivision thereof, is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2013, there have been ten series of Industrial Revenue Bonds issued. The aggregate principal amount payable could not be determined; however, their original issue amounts totaled $97 million. NOTE 15 – REDEVELOPMENT AGENCY In connection with the activities of the Redevelopment Agency (RDA), incremental tax revenues totaling $2,237,283 was generated. Of this amount, the RDA was required to pay $400,000 to the Murray School District. There is no outstanding debt of the RDA at June 30, 2013; however, the RDA has agreed to make payments on the Series 2009A and 2009B sales tax bonds. During the year ended June 30, 2013, funds expended by the RDA were limited to the categories of debt service and administration costs. Administrative costs totaled $661,262 and debt service payments totaled $850,246 for the year. NOTE 16 – EMPLOYEE RETIREMENT SYSTEMS AND PENSION PLANS The City contributes to the Local Governmental Contributory Retirement System, Local Governmental Noncontributory Retirement System, Public Safety Retirement System for Employers with Social Security Coverage, and the Fire Fighters Retirement System for Employers without Social Security Coverage, (hereafter referred to cumulatively as the Systems) which are cost-sharing multiple-employer defined benefit pension plans administered by the Utah Retirement Systems (URS). The Systems provide retirement benefits, annual cost of living adjustments, death benefits, and refunds to plan members and beneficiaries in accordance with retirement statues. ---PAGE BREAK--- 53 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS The Systems are established and governed by the respective sections of Chapter 49 of the Utah Code Annotated 1953, as amended. The Utah State Retirement Office Act in Chapter 49 provides for the administration of the Systems under the direction of the Utah State Retirement Board (Board) whose members are appointed by the Governor. URS issues a publicly available financial report that includes financial statements and required supplementary information for the Systems. A copy of the report may be obtained by writing to the Utah Retirement Systems, 540 East 200 South, Salt Lake City, UT 84102 or by calling 1-[PHONE REDACTED]. Funding Policy Plan members are required to contribute a percent of their covered salary (all or part may be paid by the employer for the employee) to the respective systems to which they belong; 6 percent to the Local Government Contributory Retirement System and 15.05 percent to the Firefighters Retirement System. The City is required to contribute a percent of members’ annual covered salary to the respective systems; 12.03 percent to the Local Government Contributory Retirement System, 16.04 percent to the related Noncontributory Retirement System, 30.45 percent to the Public Safety Noncontributory Retirement System, and 2.66 percent to the Firefighters Retirement System. The contribution rates are the actuarially determined rates. The contribution requirements of the Systems are authorized by statute and specified by the Board. The City’s contributions in dollars to each of the Systems for the years ending June 30, 2013, 2012 and 2011, were equal to the required contributions for each year. The contribution amounts are as follows: 2013 2012 2011 Local Governmental Contributory Retirement System 178,865 $ 139,373 $ 149,231 $ Local Governmental Noncontributory Retirement System 1,958,863 1,647,739 1,823,498 Public Safety Retirement System for Employers with Social Security Coverage 1,061,989 983,825 1,030,602 Firefighters Retirement System 565,429 491,798 569,058 Deferred Compensation Plan Under the URS, the City offers its employees a Deferred Compensation Plan (the Plan) in accordance with Internal Revenue Code Section 457. The Plan, available to all City employees, permits them to defer a portion of their salary until future years. The payment of deferred compensation is not available to employees until termination, retirement, death, or emergency. The City discontinued matching contributions to this plan in 2003. ---PAGE BREAK--- 54 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Defined Contribution Plans The 401(k) plan provided by URS is a multiple-employer defined contribution plan. All employees of the City who participate in the URS contributory, noncontributory, or fire fighters system are eligible to participate in the plan. Employees are immediately 100 percent vested in their contributions to the plan. Employee contributions to the 401(k) plan and the Deferred Compensation Plan are voluntary. Employer contributions are also voluntary and are intended to standardize the contribution rates for all full time employees participating in the URS. The City’s contributions to the 401(k) plan were $756,820, $720,372, and $786,237 for the years ended June 30, 2013, 2012 and 2011, respectively. In addition to the URS plans, the City also participates in a 401 plan provided by International City Management Association, a multiple-employer defined contribution plan. Only elected or appointed employees of the City are eligible to participate in this plan. Employees are fully vested upon contribution to the plan. Currently, there are three employees who participate in the plan. The City contributes to the plan on behalf of the employee. Employees are not eligible to make contributions. The contribution requirement for the year ended June 30, 2013 was $50,796. NOTE 17 – OTHER POSTEMPLOYMENT BENEFITS For employees who retired prior to September 30, 2011, the City provided post-retirement health care benefits (OPEB) in accordance with City policy. Currently there are 36 retirees who qualified. The City pays 50 percent of the retirees’ health care insurance premiums for the first 18 months with the remaining 50 percent paid by the retirees on a pay-as-you-go basis. After 18 months, the City pays 20 to 30 percent of the premium, depending on the retiree’s years of service. This postemployment benefit is available until the retiree reaches the age of 65 at which time they are no longer eligible to participate. Terminated employees under the COBRA act are allowed to purchase the same insurance policy at their own expense for a period of 18 months. The City paid $132,884 in premiums for retirees during the fiscal year ended June 30, 2013. For governmental funds, most of the costs are paid by the general fund. From October 1, 2011 to March 31, 2013, retirees could stay on the City health insurance plan at their own expense until age sixty-five. On April 1, 2013, the City discontinued its OPEB plan and will no longer have new retirees on its health insurance plan except for 18 month COBRA period. This change greatly decreased the OPEB liability. The City does not prepare separate financial statements for the OPEB plan. The single-employer plan is administered by the City. Policy for the City’s OPEB plan is set and amended by the Mayor. The following table shows the components of the City’s annual OPEB costs for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation: Annual required contribution 356,484 $ Adjustments to annual required contribution (223,600) Annual OPEB cost (expense) 132,884 Contributions made (132,884) Increase in net OPEB obligation - Net OPEB obligation beginning of year 3,344,557 Decrease from OPEB plan discontinuation (2,301,294) Net OPEB obligation end of year 1,043,263 $ ---PAGE BREAK--- 55 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2013 and the two preceding years were as follows: Year Ended Annual Required Contribution OPEB Cost Contributed Net OPEB Obligation June 30, 2011 321,831 $ 30.7% 3,213,233 $ June 30, 2012 331,193 39.9% 3,344,557 June 30, 2013 356,484 37.3% 1,043,263 The City used an alternative measurement method to estimate the OPEB liability. The method uses the retiree premiums from June 2013 and projected out the future liability with an 8 percent growth rate. This grow rate is comparable to the City historical insurance rate increases. With no future plan additions, the only change in the liability occurs when retirees discontinue coverage or reach age 65. NOTE 18 – FUND BALANCE Financial statement fund balance category details are as follows: Fund General Capital Projects Redevelopment Agency Other Governmental funds Total Nonspendable Prepaids 55,500 $ - $ - $ - $ 55,500 $ Restricted Beer tax 78,890 - - - 78,890 Class C 268,374 - - - 268,374 Historic smelter 15,500 - - - 15,500 Escrow account - 200,000 250,000 - 450,000 State allowance - 438,349 - - 438,349 Library endowment - - - 15,730 15,730 Low income housing - - 577,056 - 577,056 Cemetery perpetual care - - - 520,000 520,000 Assigned Library - - - 314,520 314,520 Capital projects - 8,050,743 - - 8,050,743 Redevelopment - - 1,529,669 - 1,529,669 Municipal building authority - - - 1,768 1,768 Cemetery - - - 839,593 839,593 Unassigned 9,582,590 - - - 9,582,590 Total 10,000,854 $ 8,689,092 $ 2,356,725 $ 1,691,611 $ 22,738,282 $ ---PAGE BREAK--- 56 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 19 – PRIOR PERIOD ADJUSTMENTS The City adopted GASB 65. This statement says debt issuance costs should be recognized as an expense/expenditure in the period incurred. As the City had previously recorded issuance costs as assets, these costs were adjusted to beginning net position as GASB 65 suggested. This resulted in a decrease of $558,525 to beginning net position for governmental activities on the government-wide statement of net position. For proprietary funds, this resulted in a decrease of $774,426 to beginning net position. GASB 65 also requires revenues that are not available to be recorded as deferred inflows. This resulted in a decrease in fund balance of $145,945. This adjustment was reversed at the entity wide statement. The City changed from a 45 day to 60 day availability policy in fiscal year 2013. This resulted in an increase to fund balance of $1,394,511. This change was made to be consistent with industry standards. The City changed the way it estimates unbilled sales for its utility funds in fiscal year 2013. This resulted in a $2,451,558 decrease in net position. This change will more accurately report accounts receivable totals. NOTE 20 – SUBSEQUENT EVENT Management for Utah Infrastructure Agency (UIA) stated in September meeting minutes that it is possible they will need the member cities to contribute towards their debt service requirements. As Murray City has guaranteed UIA’s debt, this could have a financial impact on the City. UIA issued $11,205,000 of franchise tax revenue bonds in July 2013. The City’s share is 13.40 percent which equals $1,477,350. ---PAGE BREAK--- 57 SUPPLEMENTARY INFORMATION ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 58 MURRAY CITY COMBINING BALANCE SHEET – NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2013 Permanent Community Total Municipal Development Cemetery Nonmajor Building Library Block Grant Perpetual Care Governmental Authority Fund Fund Fund Funds ASSETS Cash and cash equivalents 1,768 $ 323,607 $ - $ 1,359,593 $ 1,684,968 $ Receivables: Property taxes - 1,486,402 - - 1,486,402 Due from other governments - - 26,536 - 26,536 Restricted cash - 15,730 - - 15,730 Total assets 1,768 1,825,739 26,536 1,359,593 3,213,636 LIABILITIES Accounts payable - 13,068 - - 13,068 Accrued liabilities - 17,683 - - 17,683 Due to other funds - - 26,536 - 26,536 Total liabilities - 30,751 26,536 - 57,287 DEFERRED INFLOWS OF RESOURCES Deferred inflows-property taxes - 1,464,738 - - 1,464,738 Total deferred inflows of resources - 1,464,738 - - 1,464,738 FUND BALANCE Restricted - 15,730 - 520,000 535,730 Assigned 1,768 314,520 - 839,593 1,155,881 Total fund balances 1,768 330,250 - 1,359,593 1,691,611 Total liabilities, deferred inflows of resources, and fund balances (deficits) 1,768 $ 1,825,739 $ 26,536 $ 1,359,593 $ 3,213,636 $ Special Revenue ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 59 MURRAY CITY COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Permanent Community Total Municipal Development Cemetery Nonmajor Building Library Block Grant Perpetual Care Governmental Authority Fund Fund Fund Funds REVENUES Property taxes - $ 1,592,243 $ - $ - $ 1,592,243 $ Intergovernmental - 53,402 215,822 - 269,224 Charges for services - - - 1,310 1,310 Fines and forfeitures - 47,328 - - 47,328 Investment income 1 6,964 - 8,662 15,627 Miscellaneous - 6,845 - - 6,845 Total revenues 1 1,706,782 215,822 9,972 1,932,577 EXPENDITURES Highways and public improvements 10 - 215,822 - 215,832 Parks, recreation, and culture - 1,588,988 - - 1,588,988 Debt service: Interest and fiscal charges - 11,286 - - 11,286 Total expenditures 10 1,600,274 215,822 - 1,816,106 Excess of revenues over (under) expenditures 106,508 - 9,972 116,471 OTHER FINANCING SOURCES (USES) Transfers in 1,000 - - 33,873 34,873 Transfers out - - - - - Total other financing uses 1,000 - - 33,873 34,873 Net change in fund balance 991 106,508 - 43,845 151,344 Fund balance, beginning of year 777 223,742 - 1,315,748 1,540,267 Fund balance, end of year 1,768 $ 330,250 $ - $ 1,359,593 $ 1,691,611 $ Special Revenue ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 60 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – MUNICIPAL BUILDING AUTHORITY – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2013 Actual Variance with Original Final Amounts Final Budget REVENUES Investment income - $ - $ 1 $ 1 $ Total revenues - - 1 1 EXPENDITURES Highways and public improvements 1,000 1,000 10 990 Total expenditures 1,000 1,000 10 990 Excess (deficiency) of revenues over (under) expenditures (1,000) (1,000) 991 OTHER FINANCING SOURCES Transfers in 1,000 1,000 1,000 - Total other financing sources 1,000 1,000 1,000 - Net change in fund balance - $ - $ 991 991 $ Fund balance at beginning of year 777 Fund balance at end of year 1,768 $ Budgeted Amounts ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 61 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – LIBRARY FUND – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2013 Actual Variance with Original Final Amounts Final Budget REVENUES Property taxes 1,555,000 $ 1,587,160 $ 1,592,243 $ 5,083 $ Intergovernmental 12,000 53,639 53,402 (237) Fines and forfeitures 48,000 48,000 47,328 (672) Investment income 2,500 2,500 6,964 4,464 Miscellaneous 7,000 7,000 6,845 (155) Total revenues 1,624,500 1,698,299 1,706,782 8,483 EXPENDITURES Parks, recreation, and culture 1,525,748 1,612,115 1,588,988 23,127 Debt service Principal 112,076 112,076 - 112,076 Interest and fiscal charges 11,288 11,288 11,286 2 Total expenditures 1,649,112 1,735,479 1,600,274 135,205 Excess (deficiency) of revenues over (under) expenditures (24,612) (37,180) 106,508 143,688 Net change in fund balance (24,612) $ (37,180) $ 106,508 143,688 $ Fund balance at beginning of year 223,742 Fund balance at end of year 330,250 $ Budgeted Amounts ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 62 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – REDEVELOPMENT FUND – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2013 Actual Variance with Original Final Amounts Final Budget REVENUES Property taxes 2,278,291 $ 2,278,291 $ 2,237,283 $ (41,008) $ Investment income 9,000 9,000 10,473 1,473 Total revenues 2,287,291 2,287,291 2,247,756 (39,535) EXPENDITURES Highways and public improvements 2,593,686 2,593,686 613,362 1,980,324 Total expenditures 2,593,686 2,593,686 613,362 1,980,324 Excess (deficiency) of revenues over (under) expenditures (306,395) (306,395) 1,634,394 1,940,789 OTHER FINANCING SOURCES (USES) Transfer out (898,146) (898,146) (898,146) - Total other financing sources (uses) (898,146) (898,146) (898,146) - Net change in fund balance (1,204,541) $ (1,204,541) $ 736,248 1,940,789 $ Fund balance at beginning of year 1,620,477 Fund balance at end of year 2,356,725 $ Budgeted Amounts ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 63 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – COMMUNITY DEVELOPMENT BLOCK GRANT FUND – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2013 Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental 271,804 $ 246,084 $ 215,822 $ (30,262) $ Total revenues 271,804 246,084 215,822 (30,262) EXPENDITURES Highways and public improvements 271,804 246,084 215,822 30,262 Total expenditures 271,804 246,084 215,822 30,262 Excess (deficiency) of revenues over (under) expenditures - - - - Net change in fund balance - $ - $ - - $ Fund balance at beginning of year - Fund balance at end of year - $ Budgeted Amounts ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 64 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – CAPITAL PROJECTS – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2013 Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental - $ 475,000 $ 475,000 $ - $ Investment income - - 30,681 30,681 Miscellaneous income - - 11,976 11,976 Total revenues - 475,000 517,657 42,657 EXPENDITURES General government 559,500 627,284 224,213 403,071 Public safety 767,520 1,289,020 1,224,816 64,204 Highways and public improvements 946,000 1,437,093 784,589 652,504 Parks, recreation, and culture 842,358 817,358 751,074 66,284 Debt service Principal - 25,011 19,183 5,828 Interest and fiscal charges - 3,000 1,802 1,198 Total expenditures 3,115,378 4,198,766 3,005,677 1,193,089 Excess (deficiency) of revenues over (under) expenditures (3,115,378) (3,723,766) (2,488,020) 1,235,746 OTHER FINANCING SOURCES (USES) Lease proceeds - 95,795 95,795 - Transfers in 2,000,000 6,271,258 6,267,625 (3,633) Sale of capital assets - - 90,702 90,702 Total other financing sources (uses) 1,883,750 6,250,803 6,337,872 87,069 Net change in fund balance (1,231,628) $ 2,527,037 $ 3,849,852 1,322,815 $ Fund balance at beginning of year 4,839,240 Fund balance at end of year 8,689,092 $ Budgeted Amounts ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 65 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – CEMETERY PERPETUAL CARE FUND – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2013 Actual Variance with Original Final Amounts Final Budget REVENUES Perpetual care fees - $ - $ 1,310 $ 1,310 $ Investment income 8,000 8,000 8,662 662 Total revenues 8,000 8,000 9,972 1,972 EXPENDITURES Parks, recreation, and culture - - - - Total expenditures - - - - Excess (deficiency) of revenues over (under) expenditures 8,000 8,000 9,972 1,972 OTHER FINANCING USES Transfers in 33,873 33,873 33,873 - Total other financing uses 33,873 33,873 33,873 - Net change in fund balance 41,873 $ 41,873 $ 43,845 1,972 $ Fund balance at beginning of year 1,315,748 Fund balance at end of year 1,359,593 $ Budgeted Amounts ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 66 MURRAY CITY STATEMENT OF NET POSITION – INTERNAL SERVICE FUNDS JUNE 30, 2013 Central Retained Risk Garage Reserve Fund Fund Total ASSETS Current assets: Cash and cash equivalents 39,699 $ 1,632,469 $ 1,672,168 $ Inventory 72,521 - 72,521 Prepaid items - 12,941 12,941 Total current assets 112,220 1,645,410 1,757,630 Noncurrent assets: Capital assets: Machinery and equipment 151,134 - 151,134 Less: accumulated depreciation (99,551) - (99,551) Total noncurrent assets 51,583 - 51,583 Total assets 163,803 1,645,410 1,809,213 LIABILITIES Current liabilities: Accounts payable 57,911 14,697 72,608 Accrued liabilities 5,617 252,260 257,877 Compensated absences 21,101 4,474 25,575 Total current liabilities 84,629 271,431 356,060 Noncurrent liabilities: Compensated absences 9,698 2,057 11,755 Total noncurrent liabilities 9,698 2,057 11,755 Total liabilities 94,327 273,488 367,815 NET POSITION Invested in capital assets 51,583 - 51,583 Unrestricted 17,893 1,371,922 1,389,815 Total net position 69,476 $ 1,371,922 $ 1,441,398 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 67 MURRAY CITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION – INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Central Retained Risk Garage Reserve Fund Fund Total OPERATING REVENUES Charges for services 297,299 $ 1,016,276 $ 1,313,575 $ Total operating revenues 297,299 1,016,276 1,313,575 OPERATING EXPENSES Wages and benefits 288,499 211,769 500,268 Administrative fees 750 500 1,250 Depreciation 3,936 - 3,936 Operations and maintenance 4,114 683,719 687,833 Total operating expenses 297,299 895,988 1,193,287 Operating income (loss) - 120,288 120,288 NONOPERATING REVENUES (EXPENSES) Investment income - 8,523 8,523 Total nonoperating revenues (expenses) - 8,523 8,523 Change in net position - 128,811 128,811 Total net position - beginning 69,476 1,243,111 1,312,587 Total net position - ending 69,476 $ 1,371,922 $ 1,441,398 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 68 MURRAY CITY STATEMENT OF CASH FLOWS – INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Central Retained Risk Garage Reserve Fund Fund Total Cash flows from operating activities Receipts from customers and users 297,299 $ 1,016,276 $ 1,313,575 $ Payments to suppliers of goods and services (45,574) (701,570) (747,144) Payments to employees for services (288,844) (205,238) (494,082) Payment for interfund services (750) (500) (1,250) Net cash provided (used) by operating activities (37,869) 108,968 71,099 Cash flows from investing activities Investment income - 8,523 8,523 Net cash provided by investing activities - 8,523 8,523 Net increase (decrease) in cash and cash equivalents (37,869) 117,491 79,622 Cash and cash equivalents, beginning of year 77,568 1,514,978 1,592,546 Cash and cash equivalents, end of year 39,699 $ 1,632,469 $ 1,672,168 $ Reconciliation of operating income to net cash provided by operating activities Operating income (loss) - $ 120,288 $ 120,288 $ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 3,936 - 3,936 (Increase) decrease in inventory and prepaid items 3,173 (12,941) (9,768) (Increase) decrease in liabilities (44,978) 1,621 (43,357) Net cash provided (used) by by operating activities (37,869) $ 108,968 $ 71,099 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 69 MURRAY CITY STATEMENT OF NET POSITION – NONMAJOR PROPRIETARY FUNDS JUNE 30, 2013 Murray Solid Parkway Waste Recreation Management Telecommunication Fund Fund Fund Total ASSETS Current assets: Cash and cash equivalents 582,103 $ 523,726 $ 101,262 $ 1,207,091 $ Accounts receivable (net) - 101,810 6,827 108,637 Notes receivable - - 25,220 25,220 Inventory 84,507 - - 84,507 Total current assets 666,610 625,536 133,309 1,425,455 Noncurrent assets: Notes receivable - - 393,370 393,370 Capital assets: Land 326,336 - - 326,336 Buildings 797,534 - - 797,534 Improvements other than buildings 3,734,149 - - 3,734,149 Machinery and equipment 926,244 - - 926,244 Accumulated depreciation (4,671,096) - - (4,671,096) Total noncurrent assets 1,113,167 - 393,370 1,506,537 Total assets 1,779,777 625,536 526,679 2,931,992 LIABILITIES Current liabilities: Accounts payable 5,148 126,307 - 131,455 Accrued liabilities 31,916 945 - 32,861 Due to other funds 164,776 - - 164,776 Compensated absences 71,739 2,038 - 73,777 Notes payable - - 25,220 25,220 Total current liabilities 273,579 129,290 25,220 428,089 Noncurrent liabilities: Notes payable - - 393,370 393,370 Compensated absences 41,588 1,182 - 42,770 Total noncurrent liabilities 41,588 1,182 393,370 436,140 Total liabilities 315,167 130,472 418,590 864,229 NET POSITION Net investment in capital assets 1,113,167 - - 1,113,167 Unrestricted 351,443 495,064 108,089 954,596 Total net position 1,464,610 $ 495,064 $ 108,089 $ 2,067,763 $ Enterprise Funds ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 70 MURRAY CITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION – NONMAJOR PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Murray Solid Parkway Waste Recreation Management Telecommunication Fund Fund Fund Total OPERATING REVENUES Charges for services 1,459,669 $ 1,210,989 $ 66,878 $ 2,737,536 $ Other 169 665 - 834 Total operating revenues 1,459,838 1,211,654 66,878 2,738,370 OPERATING EXPENSES Wages and benefits 770,506 47,149 - 817,655 Administrative fees 750 73,028 - 73,778 Depreciation 166,273 - - 166,273 Operations and maintenance 319,492 1,006,462 63,146 1,389,100 Total operating expenses 1,257,021 1,126,639 63,146 2,446,806 Operating income (loss) 202,817 85,015 3,732 291,564 NONOPERATING REVENUES (EXPENSES) Investment income 2,282 2,500 475 5,257 Interest and fiscal charges (3,332) - - (3,332) Gain/(loss) on disposal of assets 2,000 - - 2,000 Total nonoperating revenues (expenses) 950 2,500 475 3,925 Income before transfers 203,767 87,515 4,207 295,489 Transfers in 100,000 - - 100,000 Change in net position 303,767 87,515 4,207 395,489 Total net position - beginning 1,160,843 419,108 100,858 1,680,809 Prior period adjustment - (11,559) 3,024 (8,535) Total net position - ending 1,464,610 $ 495,064 $ 108,089 $ 2,067,763 $ Enterprise Funds ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 71 MURRAY CITY STATEMENT OF CASH FLOWS – NONMAJOR PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Murray Solid Parkway Waste Recreation Management Telecommunication Fund Fund Fund Total Cash flows from operating activities Receipts from customers and users 1,459,838 $ 1,201,133 $ 65,830 $ 2,726,801 $ Payments to suppliers of goods and services (401,039) (957,184) (63,146) (1,421,369) Payments to employees for services (763,919) (43,929) - (807,848) Payment for interfund services (750) (73,028) - (73,778) Net cash provided (used) by operating activities 294,130 126,992 2,684 423,806 Cash flows from noncapital financing activities Transfers from other funds 100,000 - - 100,000 Changes to interfund receivables and payables (40,469) - - (40,469) Net cash provided (used) by noncapital financing activities 59,531 - - 59,531 Cash flows from capital and related financing activities Proceeds from sale of capital assets 2,000 - - 2,000 Purchases of capital assets (110,715) - - (110,715) Interest and fiscal charges paid on capital debt (3,332) - - (3,332) Net cash provided (used) by capital activities (112,047) - - (112,047) Cash flows from investing activites Investment income 2,282 2,500 475 5,257 Net cash provided by investing activities 2,282 2,500 475 5,257 Net increase (decrease) in cash and cash equivalents 243,896 129,492 3,159 376,547 Cash and cash equivalents - beginning of year 338,207 394,234 98,103 830,544 Cash and cash equivalents - end of year 582,103 $ 523,726 $ 101,262 $ 1,207,091 $ Reconciliation of operating income to net cash provided (used) by operating activities Operating income (loss) 202,817 $ 85,015 $ 3,732 $ 291,564 $ Adjustments to reconcile operating income to net cash provided by: Depreciation and amortization 166,273 - - 166,273 (Increase) decrease in receivables - (10,521) (1,048) (11,569) (Increase) decrease in inventory and prepaid items 994 - - 994 (Increase) decrease in liabilities (75,954) 52,498 - (23,456) Net cash provided by operating activities 294,130 $ 126,992 $ 2,684 $ 423,806 $ Enterprise Funds ---PAGE BREAK--- 72 STATISTICAL SECTION (Unaudited) This part of the Murray City’s comprehensive annual financial report presents detailed information as a context for better understanding what the information in the financial statements, note disclosure, and required supplementary information says about the government’s overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess one of the City’s most significant local revenue sources, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. ---PAGE BREAK--- 73 MURRAY CITY NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED IN THOUSANDS) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Governmental activities Net investment in capital assets 28,343 $ 29,542 $ 52,275 $ 52,908 $ 52,903 $ 59,490 $ 58,427 $ 55,550 $ 56,770 $ 57,483 $ Restricted 2,202 1,899 1,900 520 520 6,295 3,432 4,151 2,897 2,364 Unrestricted 15,689 18,077 20,642 18,270 22,141 8,984 10,222 14,273 17,159 20,391 Total governmental net position 46,234 $ 49,518 $ 74,817 $ 71,698 $ 75,564 $ 74,769 $ 72,081 $ 73,974 $ 76,826 $ 80,238 $ Business-type activities Net investment in capital assets 49,573 $ 39,193 $ 42,286 $ 56,427 $ 53,269 $ 53,074 $ 51,828 $ 55,429 $ 55,047 $ 56,679 $ Restricted 4,283 314 314 - - 1,003 1,000 1,005 - 3,215 Unrestricted 3,189 18,453 16,911 16,279 18,306 16,660 14,758 16,389 20,611 24,892 Total business-type net position 57,045 $ 57,960 $ 59,511 $ 72,706 $ 71,575 $ 70,737 $ 67,586 $ 72,823 $ 75,658 $ 84,786 $ Primary government Net investment in capital assets 77,916 $ 68,735 $ 94,561 $ 109,335 $ 106,172 $ 112,564 $ 110,255 $ 110,979 $ 111,817 $ 114,162 $ Restricted 6,485 2,213 2,214 520 520 7,298 4,432 5,157 2,897 5,579 Unrestricted 18,878 36,530 37,553 34,549 40,447 25,644 24,980 30,662 37,770 45,283 Total primary government net position 103,279 $ 107,478 $ 134,328 $ 144,404 $ 147,139 $ 145,506 $ 139,667 $ 146,798 $ 152,484 $ 165,024 $ ---PAGE BREAK--- 74 MURRAY CITY CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED IN THOUSANDS) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Expenses Governmental activities General government 4,075 $ 4,054 $ 4,557 $ 5,090 $ 5,536 $ 9,033 $ 9,821 $ 10,198 $ 8,984 $ 7,406 $ Public safety 13,214 13,877 14,387 15,758 15,990 18,182 18,459 17,790 16,679 16,356 Highways and public improvements 5,400 4,408 8,037 6,349 5,989 7,008 8,034 7,277 7,880 8,666 Parks, recreation, and culture 6,822 7,464 8,025 8,183 7,741 7,265 7,717 7,480 7,068 7,539 Debt service - interest and fiscal charges 764 774 709 427 489 559 621 548 440 384 Total governmental expenses 30,275 30,577 35,715 35,807 35,745 42,047 44,652 43,293 41,051 40,351 Business-type activities Water 3,752 4,047 3,663 4,023 3,520 4,223 5,998 4,887 4,085 4,128 Waste water 2,945 3,033 3,404 3,354 2,746 3,563 3,274 2,732 3,255 3,354 Power 30,183 30,428 32,394 33,585 35,397 35,358 32,420 32,432 31,190 30,312 Murray parkway 1,448 1,469 1,398 1,729 1,538 1,574 1,485 1,614 1,697 1,260 Telecommunication - - - - - - - - 33 63 Solid waste 1,013 683 742 782 711 832 806 942 1,050 1,127 Storm water 214 - - 1,463 1,382 1,392 1,421 1,691 1,885 1,918 Total business-type activities expenses 39,555 39,660 41,601 44,936 45,294 46,942 45,404 44,298 43,195 42,162 Total primary government expenses 69,830 $ 70,237 $ 77,316 $ 80,743 $ 81,039 $ 88,989 $ 90,056 $ 87,591 $ 84,246 $ 82,513 $ Program revenues Governmental activities Charges for services General government 3,963 $ 4,303 $ 3,272 $ 3,386 $ 3,616 $ 5,964 $ 5,926 $ 6,149 $ 3,423 $ 3,090 $ Public safety 161 234 338 323 340 867 644 1,500 1,183 900 Highways & public improvements 670 1,743 798 1,041 - 97 85 78 99 58 Parks, recreation, and culture 1,341 1,431 1,541 1,724 1,742 1,678 1,750 1,925 1,775 1,616 Operating grants and contributions 307 370 457 555 365 457 406 1,385 4,478 5,085 Capital grants & contributions 1,613 1,366 1,491 14,893 1,591 1,232 2,179 2,472 2,087 626 Total governmental program revenues 8,055 9,447 7,897 21,922 7,654 10,295 10,990 13,509 13,045 11,375 Business-type activities Charges for services Water 4,593 5,083 5,106 5,566 5,594 5,492 4,781 5,989 6,373 5,938 Waste water 3,250 3,887 3,257 3,399 3,448 3,556 3,397 4,072 4,348 4,196 Power 29,041 28,963 29,904 33,379 33,707 35,617 33,187 36,329 37,628 37,990 Murray parkway 1,347 1,345 1,475 1,592 1,542 1,596 1,421 1,347 1,563 1,460 Telecommunication - - - - - - - - 34 67 Solid waste 799 813 807 829 833 819 818 962 1,010 1,212 Storm water 24 272 278 1,522 1,508 1,467 1,400 1,433 1,403 1,757 Capital grants & contributions - - - - - - - 2,860 833 743 Total business-type program revenues 39,054 40,363 40,827 46,287 46,632 48,547 45,005 52,992 53,192 53,363 Total primary government program revenues 47,109 $ 49,810 $ 48,724 $ 68,209 $ 54,286 $ 58,842 $ 55,995 $ 66,501 $ 66,237 $ 64,738 $ Net (expense)/revenue Governmental activities (22,219) $ (21,131) $ (27,818) $ (13,885) $ (28,090) $ (31,752) $ (33,663) $ (29,783) $ (28,006) $ (28,976) $ Business-type activities (502) 704 (774) 1,351 1,337 1,604 (399) 8,694 9,997 11,201 Total primary government net expense (22,721) $ (20,427) $ (28,592) $ (12,534) $ (26,753) $ (30,148) $ (34,062) $ (21,089) $ (18,009) $ (17,775) $ General revenues & other changes in net position Governmental activities Taxes Sales taxes 12,952 $ 13,677 $ 15,115 $ 15,235 $ 15,288 $ 12,444 $ 12,293 $ 12,800 $ 12,847 $ 12,916 $ Property taxes 7,116 6,801 8,517 8,784 8,975 8,774 9,700 9,823 10,076 10,299 Franchise taxes 2,141 2,933 3,173 3,481 3,503 5,056 4,931 4,925 4,849 4,993 Investment income 434 464 727 1,069 943 514 396 310 296 203 Gain/(loss) on sale & disposal of assets 88 127 115 109 165 51 (85) - 11 94 Miscellaneous 492 203 202 324 269 1,181 735 196 207 277 Rent, transfers & miscellaneous 451 209 1,019 (10,781) 2,813 2,937 3,005 3,622 3,130 3,606 Total governmental activities 23,674 24,414 28,868 18,221 31,956 30,957 30,975 31,676 31,416 32,388 Business-type activities Interest income 196 369 785 831 760 434 215 183 245 287 Gain/(loss) on sale & disposal of assets - 52 2,558 199 579 60 39 (17) 163 31 Rent & transfers (452) (209) (1,019) 10,813 (2,813) (2,937) (3,005) (3,622) (3,130) (3,606) Total business-type activities (256) 212 2,324 11,843 (1,474) (2,443) (2,751) (3,456) (2,722) (3,288) Total primary government 23,418 $ 24,626 $ 31,192 $ 30,064 $ 30,482 $ 28,514 $ 28,224 $ 28,220 $ 28,694 $ 29,100 $ Change in net position Governmental activities 1,454 $ 3,284 $ 1,049 $ 4,336 $ 3,866 $ (796) $ (2,687) $ 1,893 $ 3,410 $ 3,412 $ Business-type activities (757) 915 1,551 13,194 (136) (837) (3,151) 5,238 7,275 7,913 Total primary government 697 $ 4,199 $ 2,600 $ 17,530 $ 3,730 $ (1,633) $ (5,838) $ 7,131 $ 10,685 $ 11,325 $ ---PAGE BREAK--- 75 MURRAY CITY GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) Fiscal Year Property Tax Sales Tax Franchise Tax Transient Room Tax In Lieu of Tax Transfer Total 2004 6,369,655 11,871,337 3,160,337 60,990 1,374,758 22,837,077 2005 6,919,279 12,356,922 4,188,965 63,918 1,315,997 24,845,081 2006 6,959,296 13,464,760 4,742,777 80,409 - 25,247,242 2007 8,928,609 14,001,006 4,618,367 96,061 - 27,644,043 2008 8,975,027 13,941,921 4,918,591 103,260 - 27,938,799 2009 8,773,598 12,249,133 5,056,167 102,350 - 26,181,248 2010 9,700,152 12,517,564 4,931,012 73,421 - 27,222,149 2011 9,823,237 12,589,925 4,924,741 104,295 - 27,442,198 2012 10,075,782 12,613,871 4,849,560 85,884 - 27,625,097 2013 10,298,590 12,821,666 4,993,384 94,359 - 28,207,999 Note: Beginning in 2006 In Lieu of Tax Transfers were no longer classified as tax revenue. ---PAGE BREAK--- 76 MURRAY CITY FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED IN THOUSANDS) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 General fund Reserved 1,580 $ 1,745 $ 1,280 $ 3,065 $ 3,035 $ 2,459 $ 1,490 $ - $ - $ - $ Unreserved 4,032 6,233 7,781 8,092 5,962 7,060 7,522 - - - Nonspendable - - - - - - - - 235 - Restricted - - - - - - - 2,159 1,917 363 Assigned - - - - - - - - - - Unassigned - - - - - - - 10,546 9,150 9,638 Total General Fund 5,612 $ 7,978 $ 9,061 $ 11,157 $ 8,997 $ 9,519 $ 9,012 $ 12,705 $ 11,302 $ 10,001 $ All other governmental funds Reserved 1,949 $ 1,978 $ 1,952 $ 575 $ 576 $ 5,077 $ 3,028 $ - $ - $ - $ Unreserved 1,722 1,617 1,572 4,461 4,779 2,447 2,701 - - - Nonspendable - - - - - - - 20 - - Restricted - - - - - - - 1,992 981 2,001 Assigned - - - - - - - 4,163 7,019 10,736 Unassigned - - - - - - - - - - Total all other governmental funds 3,671 $ 3,595 $ 3,524 $ 5,036 $ 5,355 $ 7,524 $ 5,729 $ 6,175 $ 8,000 $ 12,737 $ Note: Per GASB Statement No. 54, fund balances have been reclassified beginning fiscal year 2011. ---PAGE BREAK--- 77 MURRAY CITY CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED IN THOUSANDS) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Revenues Taxes & special assessments 22,837 $ 24,845 $ 25,247 $ 27,644 $ 27,939 $ 26,181 $ 27,222 $ 27,442 $ 27,625 $ 28,208 $ Licenses & permits 1,025 2,235 1,449 1,659 1,629 1,236 1,180 1,439 1,526 1,380 Intergovernmental 1,920 1,736 1,948 2,099 1,956 1,688 2,585 3,423 4,478 5,085 Administrative fees 2,989 3,003 2,742 2,994 3,025 Charges for services 1,586 1,776 1,985 2,122 2,043 2,597 2,431 3,514 3,057 2,575 Fines & forfeitures 2,150 2,384 2,300 2,477 2,026 1,784 1,791 1,958 1,897 1,710 Rents & concessions 1,060 1,326 1,314 1,297 - - - - - Miscellaneous 492 203 202 325 269 1,181 734 196 207 278 Interest 434 464 727 1,026 905 496 391 306 286 194 Total revenues 31,504 34,969 35,172 38,649 36,767 38,152 39,337 41,020 42,070 42,455 Expenditures General government 4,302 4,566 5,105 5,407 5,212 7,969 7,991 7,952 9,697 8,561 Public safety 12,534 13,194 14,624 16,166 16,003 19,804 16,927 16,719 15,987 16,424 Highways & public improvements 4,768 3,952 6,340 3,619 3,342 3,467 4,738 4,657 6,204 6,496 Parks, recreation and culture 6,164 6,842 7,161 7,552 6,868 6,847 6,740 6,657 6,325 6,957 Capital outlay 4,095 2,967 231 1,371 8,358 4,342 5,134 1,058 2,883 3,377 Principal 935 1,260 1,300 1,340 1,305 1,723 2,066 2,634 1,754 1,524 Interest 745 772 713 448 515 515 659 589 475 410 Bond issuance costs - - - 159 - 141 - - - Pledge payment - UTOPIA - - - - - - 821 1,123 1,661 1,584 Total expenditures 33,543 33,553 35,474 36,062 41,603 44,808 45,076 41,389 44,986 45,333 Excess of revenues over (under) expenditures (2,039) 1,416 (302) 2,587 (4,836) (6,656) (5,739) (369) (2,916) (2,878) Other financing sources (uses) Proceeds from borrowing 3,000 - - 10,156 - 6,162 - - - - Payments to refunding bond escrow - - - (11,619) - (1,520) - - - - Capital lease financing - 733 180 - - 1,557 207 - - 96 Transfers in 25 245 1,576 5,195 8,809 4,681 4,181 4,824 7,261 10,923 Transfers out (25) (245) (557) (2,842) (5,996) (1,744) (1,176) (1,202) (4,131) (7,317) Sales of capital assets 418 141 115 130 184 210 224 886 208 1,363 Total other financing sources (uses) 3,418 874 1,314 1,020 2,997 9,346 3,436 4,508 3,338 5,065 Net change in fund balances 1,379 $ 2,290 $ 1,012 $ 3,607 $ (1,839) $ 2,690 $ (2,303) $ 4,139 $ 422 $ 2,187 $ Debt service as a % of noncapital expenditures 5.27% 6.45% 6.02% 5.22% 4.57% 5.26% 6.43% 8.44% 5.21% 4.46% ---PAGE BREAK--- 78 MURRAY CITY ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS 2004 2,646,945,401 3,578,000,000 73.98% 0.[PHONE REDACTED] 2,759,982,137 3,720,000,000 74.19% 0.[PHONE REDACTED] 2,862,401,216 3,863,000,000 74.10% 0.[PHONE REDACTED] 3,288,381,528 4,420,000,000 74.40% 0.[PHONE REDACTED] 3,866,773,720 5,225,000,000 74.01% 0.[PHONE REDACTED] 4,098,025,336 6,075,000,000 67.46% 0.[PHONE REDACTED] 3,603,823,596 5,388,000,000 66.89% 0.[PHONE REDACTED] 3,516,872,832 6,218,000,000 56.56% 0.[PHONE REDACTED] 3,352,596,180 6,078,768,680 55.15% 0.[PHONE REDACTED] 3,302,745,672 5,989,725,960 55.14% 0.002259 Source: Salt Lake County Auditor's Office Note: All property in Salt Lake County is assessed annually. All real property is assessed at its fair market value with a 45% reduction in fair market value allowed for primary residential property. Tax rates are per $1,000 of assessed value. Business personal property is self assessed annually and is not included above. Ratio of Total Assessed Value to Total Estimated Actual Value Fiscal Year Ending June 30 Total Real Taxable Assessed Value Total Direct Tax Rate Estimated Actual Real Taxable Value ---PAGE BREAK--- 79 MURRAY CITY DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS City Direct Rate 2004 0.001510 0.00651 0.00038 0.00287 0.00003 0.00036 2005 0.001500 0.00664 0.00051 0.00282 0.00003 0.00035 2006 0.001450 0.00653 0.00049 0.00268 0.00003 0.00040 2007 0.001770 0.00595 0.00043 0.00235 0.00003 0.00040 2008 0.001520 0.00509 0.00037 0.00199 0.00002 0.00030 2009 0.001420 0.00479 0.00035 0.00192 0.00002 0.00029 2010 0.001630 0.00552 0.00040 0.00228 0.00003 0.00040 2011 0.001740 0.00593 0.00042 0.00259 0.00005 0.00042 2012 0.001772 0.00620 0.00043 0.00270 0.00005 0.00044 2013 0.001817 0.00648 0.00044 0.00279 0.00002 0.00046 Overlapping rates are those of local and county governments that apply to property owners within Murray City. Source: Utah State Tax Commission Central Utah Water Conservation Overlapping Rates Fiscal Year Total Murray City Direct Murray School District Murray City Library Salt Lake County Mosquito Abatement District ---PAGE BREAK--- 80 MURRAY CITY PRINCIPAL SALES TAX PAYERS CURRENT YEAR AND NINE YEARS AGO Taxpayer Rank Percentage of Total City Sales Taxes Rank Percentage of Total City Sales Taxes Warehouse Store 1 12.39% 1 7.07% Auto Sales 2 4.96% 5 3.00% Furniture Store 3 4.14% 2 4.52% Clothing Store 4 4.06% 6 2.85% Auto Sales 5 3.33% 4 3.31% Auto Sales 6 3.08% 7 2.72% Auto Sales 7 2.89% 10 2.24% Electronics Store 8 2.89% Warehouse Store 9 2.87% 3 3.41% Auto Sales 10 2.50% Auto Sales 11 2.45% 8 2.59% Auto Sales 12 2.29% 18 1.29% Electronics Store 13 2.10% 13 1.80% Municipality 14 2.03% 16 1.62% Department Store 15 1.82% 11 1.94% Auto Sales 12 1.93% Department Store 9 2.34% Food Retailer 19 1.37% 15 1.69% Building Products 16 1.73% 14 1.80% Total 56.90% 42.63% Source: Utah State Tax Commission 2013 2004 ---PAGE BREAK--- 81 MURRAY CITY PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN YEARS Amount Amount 2004 4,050,520 $ 3,895,765 $ 96.18% 154,755 $ 4,050,520 $ 100.00% 2005 4,213,642 4,131,312 98.05% 82,330 4,213,642 100.00% 2006 4,252,740 4,125,737 97.01% 127,003 4,252,740 100.00% 2007 5,961,277 5,803,417 97.35% 112,287 5,915,704 99.24% 2008 5,680,958 5,382,672 94.75% 118,028 5,500,700 96.83% 2009 5,979,944 5,764,695 96.40% 171,506 5,936,201 99.27% 2010 5,863,420 5,669,616 96.69% 193,834 5,863,450 100.00% 2011 5,903,086 5,779,782 97.91% 109,701 5,889,483 99.77% 2012 5,903,253 5,839,394 98.92% 59,850 5,899,244 99.93% 2013 5,887,409 5,830,924 99.04% - Source: Salt Lake County Treasurer Fiscal Year Ending June 30 Collected within the Fiscal Year of the Levy Total Collections to Date Taxes Levied for the Fiscal Year Collections in Subsequent Years Percentage of Levy Percentage of Levy ---PAGE BREAK--- 82 MURRAY CITY RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN YEARS Total Percentage 2004 18,070,000 $ - $ 26,555,000 $ 387,000 $ 45,012,000 $ 3.22% 1,010 2005 16,810,000 713,000 34,820,000 290,000 52,633,000 3.59% 1,184 2006 15,510,000 543,000 33,450,000 200,000 49,703,000 3.27% 1,121 2007 13,115,000 550,159 32,505,000 639,562 46,809,721 2.71% 1,044 2008 11,810,000 372,998 31,005,000 420,924 43,608,922 2.73% 954 2009 14,865,000 1,746,581 29,420,000 531,008 46,652,589 2.80% 1,010 2010 13,305,000 1,448,203 27,765,000 378,420 42,896,623 2.58% 932 2011 11,850,000 269,149 26,130,000 220,314 38,469,463 2.16% 823 2012 10,365,000 - 25,725,000 56,434 36,146,434 1.97% 759 2013 8,860,000 76,612 24,120,000 - 33,056,612 1.68% 685 Per Capita Business-type Activities Primary Government of Personal Income Fiscal Year Ending June 30 Revenue Bonds Capital Leases Revenue Bonds Governmental Activities Capital Leases ---PAGE BREAK--- 83 MURRAY CITY DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2013 Governmental Unit Debt Outstanding Debt repaid with property taxes Murray City School District 46,525,000 $ 100.00% 46,525,000 $ Salt Lake County General Obligation Debt 246,900,000 5.05% 12,468,450 Other debt Salt Lake County Sales Tax Bonds 104,600,000 4.54% 4,748,840 Salt Lake County Lease Revenue Bonds 77,900,000 4.54% 3,536,660 Salt Lake County Capital Leases 2,300,000 4.54% 104,420 Salt Lake County Special Assessment Bonds 1,500,000 4.54% 68,100 Salt Lake County Transportation Rev. Bonds 76,400,000 4.54% 3,468,560 Salt Lake County Notes Payable 14,800,000 4.54% 671,920 Subtotal, overlapping debt 71,591,950 Murray City direct debt 8,936,612 Total direct and overlapping debt 80,528,562 $ Source: Debt outstanding data obtained from Salt Lake County Auditor. Murray City School District's debt is as of their fiscal year end which is June 30. Salt Lake County's debt is as of their fiscal year end which is December 31. For Debt repaid with property taxes the percentage of overlapping debt applicable to Murray City was estimated using taxable assessed property within Murray City divided by the Counties taxable assessed value. For Other debt the percentage of overlapping debt is Murray City's population divided by Salt Lake Counties Population according to the 2010 Census. Note: Overlapping governments are those that coincide, at least in part with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping Estimated Percentage Applicable Estimated Share of Overlapping Debt ---PAGE BREAK--- 84 MURRAY CITY LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Debt limit 286,240 $ 297,600 $ 309,040 $ 353,600 $ 418,000 $ 486,000 $ 431,040 $ 497,440 $ 486,302 $ 479,178 $ Total net debt applicable to limit 29,739 39,085 48,960 45,620 42,815 44,285 41,070 37,980 36,090 32,980 Legal debt margin 256,501 $ 258,515 $ 260,080 $ 307,980 $ 375,185 $ 441,715 $ 389,970 $ 459,460 $ 450,212 $ 446,198 $ Total net debt applicable to the limit as a percentage of debt limit 10.39% 13.13% 15.84% 12.90% 10.24% 9.11% 9.53% 7.64% 7.42% 6.88% 5,989,726 $ 479,178 32,980 446,198 $ Note: The bonded debt of the City is limited by statute to 8% of the "reasonable fair cash value" of property subject to property tax. Legal debt margin Legal Debt Margin Calculation for Fiscal Year 2012 Total reasonable fair cash value Debt limit of fair cash value) Debt applicable to debt limit ---PAGE BREAK--- 85 MURRAY CITY PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS Principal Interest Coverage 2004 29,174,680 25,364,029 3,810,651 700,000 931,300 2.34 2005 29,276,312 25,246,377 4,029,935 730,000 1,138,221 2.16 2006 32,957,429 27,534,067 5,423,362 1,060,000 1,276,823 2.32 2007 33,905,131 28,952,452 4,952,679 1,115,000 1,147,010 2.19 2008 34,091,482 30,928,405 3,163,077 1,175,000 1,207,253 1.33 2009 35,876,773 30,789,288 5,087,485 1,255,000 1,057,379 2.20 2010 33,372,210 27,194,578 6,177,632 1,315,000 1,003,759 2.66 2011 36,527,393 28,380,854 8,146,539 1,360,000 946,684 3.53 2012 37,868,196 27,374,850 10,493,346 1,505,000 763,671 4.63 2013 38,215,546 26,585,169 11,630,377 1,545,000 588,208 5.45 2005 9,075,720 4,799,802 4,275,918 305,000 346,825 6.56 2006 8,645,714 5,112,252 3,533,462 310,000 340,675 5.43 2007 9,565,796 5,363,965 4,201,831 315,000 345,122 6.37 2008 9,683,420 4,836,573 4,846,847 325,000 327,619 7.43 2009 9,263,744 5,980,985 3,282,759 330,000 319,425 5.05 2010 8,235,529 7,076,036 1,159,493 340,000 309,788 1.78 2011 10,022,697 6,188,768 3,833,929 350,000 299,000 5.91 2012 10,860,873 5,570,615 5,290,258 440,000 160,730 8.81 2013 10,196,682 5,736,136 4,460,546 557,000 178,361 6.07 2013 1,780,378 672,396 1,107,982 210,000 66,392 4.01 Note: Details regarding City's outstanding debt can be found in the notes to the financial statements. Revenues include operating and non-operating revenues. Expenses exclusive of depreciation, amortization, loss in joint venture, interest expense, and in lieu of tax transfers. 2013 Storm Water Revenue Bonds Net Available Revenues Debt Service 2004, 2006, 2011 Electric Revenue Bonds 2003, 2012 Water and Sewer Revenue Bonds Fiscal Year Utility Revenues(1) Less Utility Expenses(2) ---PAGE BREAK--- 86 MURRAY CITY DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS Year Population(1) 2004 44,621 1,331,401,398 29,838 5.7% 2005 44,555 1,397,467,575 31,365 4.8% 2006 44,453 1,466,193,299 32,983 4.7% 2007 44,844 1,728,467,186 38,544 2.4% 2008 45,732 1,598,379,132 34,951 3.4% 2009 46,201 1,663,605,608 36,008 5.7% 2010 46,010 1,715,068,760 37,276 6.3% 2011 46,746 1,777,329,666 38,021 7.3% 2012 47,632 1,861,506,192 39,081 5.7% 2013 48,263 1,963,676,681 40,687 4.3% United States Census Bureau for Murray City. U.S. Department of Commerce, Bureau of Economic Analysis for Salt Lake County/City. Utah Department of Workforce Services for Salt Lake County. Personal Income Per Capita Personal Income(2) Unemployment Rate(3) ---PAGE BREAK--- 87 MURRAY CITY PRINCIPAL EMPLOYERS AS OF JUNE 30, 2013 Employer Industry Type Employees Intermountain Medical Center Health Care 4463 Murray City School District Public Education 832 SelectHealth Health Care 800 Murray City Corporation City Government 796 IHC Health Services Health Care 757 University of Phoenix Education 422 Sutter Connect Health Care 449 3M Health Information Systems Data Processing Services 377 Costco Wholesale Corp Retailer 309 Inc. Retailer 286 Source: Murray City Business Licensing Note: Principal employers for 9 years prior is not available. ---PAGE BREAK--- 88 MURRAY CITY FULL TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Function/Program General Government 66 68 66 65 59 59 63 60 61 61 Police Officers 72 75 75 78 78 75 77 79 73 74 Civilians 17 17 17 17 17 18 14 12 10 12 Fire Firefighters 50 50 50 52 52 59 61 60 58 59 Civilians 2 2 2 2 2 3 2 2 1 1 Highways & Public Improvements 40 40 42 36 35 35 34 34 28 27 Parks & Recreation 34 34 34 34 34 34 33 33 33 32 Library 10 10 10 10 9 9 12 9 11 10 Community & Economic Development 6 5 5 5 4 4 5 5 6 6 Central Garage 6 5 5 4 4 4 4 4 4 4 Power 56 54 54 54 54 55 55 52 46 46 Water 16 16 16 16 16 16 17 16 16 16 Wastewater 10 10 9 9 8 9 9 8 8 8 Golf Course 9 9 9 9 8 8 10 8 7 7 Storm Water 0 0 0 6 6 7 6 7 7 7 Total Full Time Equivalent Employees 394 395 394 397 386 395 402 389 369 370 Seasonal Employees 555 574 543 575 560 579 514 459 477 426 Total Employees 949 969 937 972 946 974 916 848 846 796 Full Time Equivalent Employees as of June 30 ---PAGE BREAK--- 89 MURRAY CITY OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Function/Program Police Physical arrests 4,318 4,563 4,260 2,549 2,194 2,588 2,735 2,484 2,436 3,752 Traffic citations 11,429 13,588 11,959 6,935 6,666 8,141 8,057 8,694 6,847 5,508 Fire Fire calls 1,030 1,086 1,261 1,252 1,261 1,496 1,306 1,231 1,622 1,194 Medical calls 3,141 3,490 3,456 3,687 3,962 3,741 3,801 3,781 3,515 4,177 Inspections 1,266 1,132 1,176 1,200 1,261 794 1,309 2,017 1,673 1,448 Parks & recreation Park center admissions 30,317 32,074 34,000 33,257 43,272 34,000 46,744 38,451 35,691 29,839 Recreation participants 14,873 15,581 15,320 15,484 16,447 17,779 15,402 14,242 14,219 13,089 Library Volumes in collection 82,602 81,643 85,861 84,236 86,723 90,627 86,892 85,100 77,069 69,734 Total volumes borrowed 340,622 352,306 339,282 365,855 406,842 418,169 524,179 524,487 568,372 572,997 Water Customers 9,356 9,304 9,456 9,490 9,825 9,890 9,932 9,946 9,946 9,997 Annual consumption (in millions of gallons) 2,711 3,234 2,750 3,865 3,344 3,784 2,519 2,650 2,841 3,018 Sewer Customers 8,784 8,817 8,953 8,966 8,977 9,151 9,181 9,181 9,194 9,406 Power Customers 16,087 16,112 16,269 16,500 16,546 16,637 16,671 16,701 16,744 17,356 Peak demand (KW) 98,300 93,310 98,560 98,246 107,110 98,327 97,000 97,490 98,100 101,838 Internal generation (MWH) 42,411 25,729 27,655 53,055 62,038 21,261 23,031 17,546 19,523 9,465 Purchased power (MWH) 397,312 369,312 383,825 361,917 449,567 448,487 412,385 412,943 419,388 426,388 ---PAGE BREAK--- 90 MURRAY CITY CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Function/Program Police Stations 1 1 1 1 1 2 2 2 2 2 Patrol units 38 38 38 40 41 42 41 41 40 40 Fire stations 3 3 3 3 3 4 4 4 4 4 Public works Streets(miles) 142 143 143 144 144 144 144 144 147 147 Streetlights 2454 2458 2489 2584 2505 2610 2574 2584 2608 2639 Parks & recreation Acreage 259 259 259 259 259 252 252 252 252 252 Parks 10 10 10 10 10 10 10 10 10 10 Golf courses 2 2 2 2 2 2 2 2 2 2 Recreation centers 1 1 1 1 1 1 1 1 1 1 Water Water mains(miles) 177 178 178 179 183 185 185 192 201 201 Wastewater Sanitary sewers(miles) 124 125 125 125 124 128 128 128 129 129 Power Generators 4 4 4 4 5 5 5 5 5 5 Substations 4 4 4 5 5 6 6 6 6 6 ---PAGE BREAK--- 91 COMPLIANCE SECTION ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-9405 92 Salt Lake City, Utah 84123 Keddington Christensen Certified Public Accountants, LLC Gary K. Keddington, CPA Brent E. Christensen, CPA Phyl R. Warnock, CPA INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and Members of the City Council City of Murray Murray, Utah We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Murray, as of and for the year ended June 30, 2013, which collectively comprise the City of Murray’s (the City) basic financial statements and have issued our report thereon dated November 15, 2013. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-9405 93 Salt Lake City, Utah 84123 Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Keddington & Christensen, LLC November 15, 2013 ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-9405 94 Salt Lake City, Utah 84123 Keddington Christensen Certified Public Accountants, LLC Gary K. Keddington, CPA Brent E. Christensen, CPA Phyl R. Warnock, CPA INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Honorable Mayor and Members of the City Council City of Murray Murray, Utah Report on Compliance for Each Major Federal Program We have audited City of Murray’s (the City) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2013. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. , Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on Each Major Federal Program In our opinion, the City, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2013. Report on Internal Control Over Compliance, Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered The City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-9405 95 Salt Lake City, Utah 84123 and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of The City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. Keddington & Christensen, LLC November 15, 2013 ---PAGE BREAK--- 96 MURRAY CITY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2013 Federal Grantor/Pass‐Through Grantor/ Federal Federal Award/ Award Disbursements/ Program Title CFDA No. Contract No. Amount Expenditures U.S. Department of Housing and Urban Development (HUD) Passed through Salt Lake County Community Development Block Grant (CDBG) 14.218 BV03854 161,600 $ 131,339 $ Community Development Block Grant (CDBG) 14.218 BV03754 213,246 84,483 Total HUD 374,846 215,822 U.S. Department of Transportation/Federal Highway Administration (FHWA) Passed through the Utah Department of Transportation Highway Planning and Construction Grant ‐ ARRA 20.205 F‐LC35(182) 4,006,298 1,963,269 Total FHWA 4,006,298 1,963,269 U.S. Department of Homeland Security Passed through Utah Department of Public Safety Homeland Security Grant 97.067 11‐SHSP‐REG 2 29,677 29,677 Emergency Management Performance Grant 97.042 EMPG‐PROJECT‐2012‐DEM‐011 3,012 2,084 Emergency Management Performance Grant 97.042 EMPG‐2012‐DEM‐040 4,250 4,250 Emergency Management Performance Grant 97.042 EMPG‐2013‐DEM‐043 4,250 4,250 Total Department of Homeland Security 41,189 40,261 Institute of Museum and Library Services Passed through the State of Utah Department of Heritage and Arts Library Services and Technology Act Grant 45.310 UST 13‐0047 21,500 21,500 Library Services and Technology Act Grant 45.310 UST 13‐0045 17,411 17,411 Library Services and Technology Act Grant 45.310 UST 13‐0185 2,228 2,228 Library Services and Technology Act Grant 45.310 UST 13‐0086 479 479 Total Institute of Museum and Library Services 41,618 41,618 Federal Emergency Management Agency Passed through Utah Department of Public Safety Interoperable Emergency Communications Grant 69.118 2010‐HLS‐IECGP‐006 6,328 6,328 Total Federal Emergency Management Agency 6,328 6,328 U.S. Department of Justice Justice Assistance Grant (JAG) 16.738 2012‐DJ‐BX‐0892 31,090 31,090 Victims of Crime Act Grant (VOCA) 16.575 12‐VOCA‐34 38,838 37,338 Total Department of Justice 69,928 68,428 Total Federal Awards 4,540,207 $ 2,335,725 $ ---PAGE BREAK--- 97 MURRAY CITY NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS NOTE 1 – PURPOSE OF THE SCHEDULE The Schedule of Expenditures of Federal Awards (the Schedule) is a supplementary schedule to the basic financial statements. The Schedule is required by the U.S. Office of Management and Budget (OMB) Circular A-133, “Audits of States, Local Governments, and Non-Profits Organizations.” NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The information in the schedule is presented in accordance with OMB Circular A-133. The Schedule is prepared using the same accounting policies and basis of accounting as the basic financial statements. Major Programs OMB Circular A-133 establishes the levels of expenditures or expenses and other criteria to be used in defining major federal financial assistance. The federal awards tested as major programs were CFDA number 20.205. NOTE 3 – SUB-RECIPIENTS The following amounts were passed through to sub-recipients: CFDA # Program Amount 20.205 FWHA $1,963,269 ---PAGE BREAK--- 98 MURRAY CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2013 A. Summary of Auditor’s Results 1. The auditor’s report expresses an unqualified opinion on the basic financial statements of Murray City, Utah. 2. No significant deficiencies or material weaknesses relating to the audit of the financial statements are reported in the Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements performed in Accordance with Government Auditing Standards. 3. No instances of noncompliance material to the financial statements of Murray City, Corporation, Utah were disclosed during the audit. 4. The auditor’s report compliance for the major federal award programs for Murray City, Utah expresses an unqualified opinion. 5. No significant deficiencies or material weaknesses relating to internal control over major federal programs were identified. 6. The programs tested as major programs were: Department of Transportation – Highway Planning and Construction Grant – ARRA – 20.205 7. The threshold for distinguishing Type A and B programs was $300,000. 8. Murray City, Utah was determined to be a low-risk auditee. ---PAGE BREAK--- 99 MURRAY CITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2012 No matters were reported in the prior year. ---PAGE BREAK--- 100 STATE COMPLIANCE SECTION ---PAGE BREAK--- 101 MURRAY CITY SCHEDULE OF EXPENDITURES OF STATE GRANTS, CONTRACTS, AND LOAN FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Award/Contract # Year of Grant Name (if applicable) Last Audit Expenditures Utah Department of Health Emergency Medical Services and Preparedness E1222034 9,443 $ Total Utah Department of Health 9,443 Utah Department of Heritage and Arts Utah State History 950 Community Library Enhancement Fund (CLEF) USL13‐0111 11,784 Utah Division of Arts and Museums 1,200 Utah Division of Arts and Museums APP‐22647 1,500 Utah State History/Utah Humanities Council 1,800 Total Utah Department of Heritage and Arts 17,234 Utah Department of Transportation House Bill 377 Legislative Allowance 36,651 B & C Road 1,696,795 Total B & C Road 1,733,446 State Revolving Fund Utah Wastewater Loan Program 979,806 Total State Revolving Fund 979,806 Utah Department of Public Safety Utah State Fire Marshal Grant 5,000 Total Utah Department of Public Safety 5,000 Utah Commission on Criminal and Juvenile Justice State Asset Forfeiture Grant 13N35 2,500 Total Utah Commission on Criminal and Juvenile Justice 2,500 Total Grant, Contract, and Loan Fund Expenditures 2,747,429 $ ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-9405 102 Salt Lake City, Utah 84123 Keddington Christensen Certified Public Accountants, LLC Gary K. Keddington, CPA Brent E. Christensen, CPA Phyl R. Warnock, CPA INDEPENDENT AUDITOR'S REPORT ON STATE OF UTAH LEGAL COMPLIANCE Honorable Mayor and Members of the City Council City of Murray Murray, Utah Report on Compliance We have audited the City of Murray’s compliance with general and major state program compliance requirements described in the State of Utah Legal Compliance Audit Guide for the year ended June 30, 2013. The general compliance requirements applicable to the City are identified as follows: Cash Management Budgetary Compliance Fund Balance Justice Courts Impact Fees URS Compliance Transfers from Utility Enterprise Funds Government Records Access Management Act Conflicts of Interest The City received the following major assistance programs from the State of Utah: B & C Road Funds (Department of Transportation) Management’s Responsibility Compliance with the requirements referred to above is the responsibility of the City’s management. Our responsibility is to express an opinion on compliance with those requirements based on our audit. Auditor’s Responsibility Our responsibility is to express an opinion on Murray City’s compliance based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the State of Utah Legal Compliance Audit Guide. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above could have a material effect on the City and its major programs occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City’s compliance with those requirements. Opinion In our opinion, Murray City complied, in all material respects, with the general compliance requirements identified above and the compliance requirements that are applicable to each of its major state programs for the year ended June 30, 2013. ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-9405 103 Salt Lake City, Utah 84123 Other Matters The results of our auditing procedures disclosed instances of noncompliance with those requirements, which are required to be reported in accordance with the State of Utah Legal Compliance Audit Guide and which are described in the accompanying Schedule of Findings and Recommendations. Report on Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit, we considered the City’s internal control over compliance to determine the auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies, or material weaknesses in internal control over compliance. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses may exist that have not been identified. We did note a matter involving internal control over compliance which we are submitting for your consideration. This matter is described in the accompanying Schedule of Findings and Recommendations. The Murray City’s Response to Findings Management’s response to the finding identified in our audit is described in the accompanying Schedule of Findings and Recommendations. Management’s response was not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on it. Purpose of Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Keddington & Christensen, LLC November 15, 2013 ---PAGE BREAK--- CITY OF MURRAY SCHEDULE OF FINDINGS AND RECOMMENDATIONS For The Fiscal Year Ended June 30, 2013 104 State Legal Compliance Finding 1. General Fund Balance Limitation Utah State Code Section 10-6-116 states: The maximum unrestricted fund balance in the general fund may not exceed 25% of the total estimated revenue of the general fund. For cities, the total estimated revenue of the general fund is the current year’s total general fund revenue minus any beginning fund balances appropriated. During our audit we noted that the City had an instance of non-compliance with this section of the Utah Code. The City’s unrestricted general fund balance as of June 30, 2013 exceeded the 25% of estimated general fund revenue for 12-13 fiscal year. Recommendation The City should ensure that proper training on regulations is provided and appropriate procedures are put in place to comply with these State requirements. City Response The City has moved fund balance from the General Fund to the Capital Projects Fund in fiscal year 2014 to bring the City into compliance with state law.