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I 1 I I I ! • , I COMPREHENSIVE ANNUAL FINANCIAL REPORT MURRAY MURRAY CITY CORPORATION, UTAH F or the fiscal year ended JUNE 30,2010 Prepared by: Department of Finance and Administration Pat Wilson, Director ---PAGE BREAK--- . ) MURRAY CITY CORPORATION, UTAH Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2010 Table of Contents Page INTRODUCTORY SECTION Letter of Transmittal I City Officials 5 Organizational Chart 6 Certificate of Achievement for Excellence in Financial Reporting 7 FINANCIAL SECTION Report of Independent Certified Public Accountants 9 Management's Discussion and Analysis 11 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 23 Statel11ent of Activities 24 Fund Financial Statements: Balance Sheet - Governmental Funds 25 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 26 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds 27 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities 28 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund 29 Statement of Net Assets - Proprietary Funds 31 Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds 33 Statement of Cash Flows - Proprietary Funds 3 4 Notes to Financial Statements 37 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds 63 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - N onmajor Governmental Funds 64 ---PAGE BREAK--- MURRAY CITY CORPORATION, UTAH Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2010 Table of Contents FINANCIAL SECTION (CONTINUED) Combining and Individual Fund Statements and Schedules (Continued): Schedules of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual: Page Municipal Building Authority - Special Revenue Fund 65 Library - Special Revenue Fund 66 Redevelopment Agency - Special Revenue Fund 67 Community Development Block Grant - Special Revenue Fund 68 Capital Projects Fund 69 Cemetery Perpetual Care - Permanent Fund 70 Statement of Net Assets - Internal Service Funds 71 Statement of Revenues, Expenses, and Changes in Fund Net Assets- Internal Service Funds 72 Statement of Cash Flows - Internal Service Funds 73 Combining Balance Sheet - Nonmajor Proprietary Funds 74 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets -Nonmajor Proprietary Funds 75 Combining Statement of Cash Flows - Nonmajor Proprietary Funds 76 STATISTICAL SECTION Net Assets by Component 78 Changes in Net Assets 80 Governmental Activities Tax Revenues By Source 82 Fund Balances of Governmental Funds 83 Changes in Fund Balances of Governmental Funds 84 Assessed and Estimated Actual Value of Taxable Property 86 Property Tax Rates - Direct and Overlapping Governments 87 Principal Sales Taxpayers 88 Property Tax Levies and Collections 89 Ratio of Outstanding Debt by Type 90 Direct and Overlapping Governmental Activities Debt.. 91 Legal Debt Margin Information 92 Pledged Revenue Coverage 93 Demographic and Economic Statistics 94 Principal Employers 95 Full Time Equivalent City Government Employees by Function 96 Operating Indicators by Function/Program 97 Capital Asset Statistics by Function/Program 98 , , ---PAGE BREAK--- - "I , ! . COMPLIANCE SECTION MURRAY CITY CORPORATION, UTAH Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2010 Table of Contents Report of Independent Certified Public Accountants on Compliance and Other Matters and on Internal Control Over Financial Reporting Based on an Audit of Basic Financial Statements Performed in Accordance with Page Government Auditing Standards 99 Report ofIndependent Certified Public Accountants on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 101 Schedule of Expenditures of Federal Awards : 103 Notes to Schedule of Expenditures of Federal Awards 104 Schedule of Findings and Questioned Costs 105 Report ofIndependent Certified Public Accountants on State of Utah State Legal Compliance Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 106 Schedule of Findings 108 Managelnent Letter Comments 1 09 CONTINUING DISCLOSURE SECTION Sales Tax Revenue Bonds Series 2007 and 2009 Disclosure References 110 Table 1A - Sources of General Fund Revenue ; 111 Table 1B - Pledged Sales and Use Taxes 111 Table 2 - General Fund Balance Sheet 112 Table 2A - Statement of Revenues, Expenditures and Changes in Fund Balances 113 Electric Revenue Bonds - Series 2001, 2004, and 2006 Table 1 - Power Rates 114 Table 2 - Ten Largest Power Customers 116 Table 3 - Power Department Annual Operating Statistics 117 Table 4 - Power Fund Historical Operating Results 11 8 Table 4A-Power Fund Projected Operating Results 119 Water and Sewer Revenue Bonds - Series 2003 Table 1 - Historical Net Revenues and Debt Service Coverage 120 Table 2 - Ten Largest Users of Water and Sewer Facilities 121 Table 3A - Balance Sheet - Water Enterprise Fund 122 Table3B - Statement of Revenues, Expenses and Changes in Fund Net Assets - Water Enterprise Fund 123 Table 4A - Balance Sheet - Sewer Enterprise Fund 124 Table 4B - Statement of Revenues, Expenses and Changes in Fund Net Assets - Sewer Enterprise Fund 125 ---PAGE BREAK--- I i INTRODUCTORY SECTION I I i ---PAGE BREAK--- I I ! MURRAY CITY CORPORATION FINANCE & ADMINISTRATION December 6, 2010 Citizens of Murray City The Honorable Mayor and Members of the Municipal Council Murray City Corporation Murray, Utah 84107 Daniel C. Snarr, Mayor Pat Wilson CGFM, Finance Director [PHONE REDACTED] FAX [PHONE REDACTED] The Comprehensive Annual Financial Report (CAFR) of Murray City Corporation (Murray City) for the fiscal year ending June 30, 2010, 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 Division, This report consists of management's representations concerning the finances of Murray 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, management of the Murray City government 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 Murray City's financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, Murray 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. Murray City's financial statements have been audited by Hansen, Bradshaw, Malmrose and Erickson, P.C., a firm of licensed certified public accountants. The goal of the independent audit was to proved reasonable assurance that the financial statements of Murray City for the fiscal year ended June 30, 2010, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Murray City's 1 Murray City Municipal Building 5025 South State Street Murray, Utah 84107 ---PAGE BREAK--- financial statements for the fiscal year ended June 30, 2010, are fairly presented in conformity with GAAP. The report of the independent auditor is presented as the first component of the financial section of this report. 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 MD&A and should be read in conjunction with it. The Murray City's MD&A can be found immediately following the report of the independent auditors. Profile of the Government Murray City, incorporated in 1902, is located in the central portion of Salt Lake County, approximately eight miles south of Salt Lake City. Murray City currently occupies a land area of about 11 square miles and serves a population of about 50,000. Murray 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 % local option sales tax on all retail sales. Murray 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, for 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, for overseeing the day-to-day operations of the government and for 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. These services include police and fire protection; sanitation services, the 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 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. The annual budget serves as the foundation for Murray City's financial planning and control. All funds of the City are required to submit requests for appropriations to the Mayor on or before the third Monday in February each year. The Mayor uses these requests as the starting point for developing a tentative budget. The Mayor then presents 2 I L J [J n LJ H LJ n U n L ) ~ , i , , ~ II " - " ---PAGE BREAK--- I , J this tentative budget to the City Council for review by the second Tuesday of April. The City Council is required to hold a public hearing on the tentative budget and to adopt a final budget no later than June 20th. The appropriations budget is prepared by fund, function (e.g. public safety), and department ( e.g. police). With the consent of the budget officer, department heads may make transfer of appropriations within a department. Transfer of appropriations between departments requires approval of the City Council. Budget-to-actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. The level of budgeting control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the departmental level within an individual fund. 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, is experiencing an economic slowdown. Murray 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, Murray City has been able to maintain more stability during this economic change that other cities. The reconstruction of Fashion Place Mall which includes two high end department stores, numerous restaurants and other retail stores, has helped to maintain a stable economic environment. Long-term financial planning. Due to the economic slowdown, Murray City has been less aggressive in capital construction projects within its five year plan. The City has continued to purchase land for the Downtown Development Project from the remaining 2009 Bond proceeds. Further development of the Downtown area will continue as funds are made available. The City will continue to use General Fund monies to construct, repair and maintain city roads in accordance with the pavement management plan. Other long term capital plans will be implemented as future economic conditions allow. Pension and other post-employment benefits. Murray City is a mandatory participant in the state-wide Utah Retirement System (URS), a defined benefit pension plan. Each year the URS engages an independent actuary to determine the contributory rate which must be made to the pension plan to ensure that the plan will be able to fully meet its obligations to retired employees on a timely basis. Murray City is legally required to make this actual determined contribution to pension plans in which the City participates. As a result of the current economic conditions, the URS' s Contributory Retirement System is 90% funded, the Non-contributory Retirement System in 86% funded, the Public Safety Retirement System is 81 % funded and the Firefighters Retirement System is 97% funded. URS is currently evaluating the Retirement System to determine the course of action toward returning funding levels to higher prior year levels. 3 ---PAGE BREAK--- Murray City provides some post-retirement health and dental care benefits for its retirees and their dependents. An actuarial study was completed during the last fiscal year and results of the study have been included in the current year financial statements as required by GASB Statement No. 45. 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 Corporation for its comprehensive annual financial report for the fiscal year ended June 30, 2009. This was the twenty-ninth consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, the government published 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 staff of the Finance Division. I would like to express my appreciation t6 all members of my staff 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, Pat Wilson Director of Finance and Administration Chief Financial Officer 4 ---PAGE BREAK--- ~ 1 i , , ! J MURRAY CITY CORPORATION James A. Brass Council Member Krista Dunn Council Member PRINCIPAL OFFICERS ELECTED OFFICIALS Daniel C. Snarr Mayor Jeffery L. Dredge Council Chairman Darren Starn Council Member Jared Shaver Council Member DEPARTMENT AND DIVISION HEADS Daniel Barr Peter A. Fondaco Blaine Haacke Carol D. Heales Douglas P. Hill Ronald L. Koller David K. Larsen Frank Nakamura Gilber Rodriguez Michael P. Terry W. Paul Thompson B. Tim Tingey Patricia D. Wilson Library Director Police Chief Power General Manager City Recorder Public Services Director City Treasurer MIS Director City Attorney Fire Chief Human Resources Director Justice Court Judge Economic Development Director Director of Finance and Administration/CFO 5 ---PAGE BREAK--- MURRAY CITY ORGANIZATION CHART EXECUTIVE BRANCH MURRAY CITY LEGISLATIVE BRANCH The Mayor is the CEO of Murray CORPORATION The City Council is responsible for City. He works with his own staff in passing ordinances (laws) and setting the Mayor's Office and the City MURRAY the City budget. They also meet as the department heads to administrate RESIDENTS Redevelopment Agency. daily City functions. Stakeholders of Murray I I MAYOR JUDICIAL BRANCH Daniel C. Snarr CITY COUNCIL I The Judge is appointed by the Mayor with I MAYOR'S OFFICE confirmation by the City Council. He will Jan Wells review cases brought tb the Murray City Chief of Staff Municipal Justice Court by the City Attorney. I CITY JUDGE District 1 District 2 District 3 District 4 District 5 W. Paul Thompson Jeff r- Darren V. t- Jim - Jared A. - Krista K. I Dredge Starn . Brass Shaver Dunn CITY DEPARTMENTS COURT ADMINISTRATOR CITY COUNCIL OFFICE Mike Williams Michael Wagstaff Executive Director I I I I I I I I I I CITY COMMUNITY & FINANCE FIRE CHIEF HUMAN MIS POLICE POWER PUBLIC RECORDER TREASURER ATTORNEY ECONOMIC RESOURCES CHIEF SERVICES DEVELOPMENT Frank Tim Patricia Gil Mike David Pete Blaine Doug Carol Ron Nakamura Tingey Wilson Rodriguez Terry Larsen Fondaco Haacke Hill Heales Koller - ---PAGE BREAK--- Certificate of Achievemellt for Excellence in Financial Reporting Presented to Murray City Corporation Utah For its Comprehensive Annual Financial Report j~)r the Fiscal Year r:ndcd June 30,2009 Ccnilicalc of fOI' Excellence in Financlu J Reporting is presented by the Government finance Officers Association or-the United Slates and Canada to units and public employee retirement systems whose comprehensive