Document Murray_doc_cfc7e57408

COMPREHENSIVE ANNUAL FINANCIAL REPORT MURRAY CITY, UTAH FOR THE FISCAL YEAR ENDED JUNE 30, 2014 ---PAGE BREAK--- MURRAY CITY, UTAH COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2014 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 Organizational 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 38 Note 3 – Stewardship, Compliance, and Accountability 39 Note 4 – Deposits and Investments 40 The following are the City’s cash and cash equivalents and investments as of June 30, 2014: 41 The City has acquired the services of Moreton Asset Management, LLC; an investment advisor approved by the Utah State Treasurer. This entity invests City money in compliance with the Utah Money Management Act. At year end, the City adjusted investments to fair market value which resulted in a loss of 41 Note 5 – Receivables 43 Note 6 – Capital Assets 43 Note 7 – Interfund Receivables, Payables, and Transfers 45 Note 8 – Investments in Joint Ventures 46 Note 9 – Interlocal Agreements 47 Note 10 – Capital Leases 49 Note 11 – Long-Term Debt 50 Note 12 – Risk Management 51 Note 13 – Contingent Liabilities and 52 Note 14 – Conduit Debt Obligations 54 Note 15 – Redevelopment Agency 54 Note 16 – Employee Retirement Systems and Pension Plans 54 Note 17 – Other Postemployment Benefits 56 Note 19 – Subsequent Event 57 Supplementary Information 58 Combining Balance Sheet – Nonmajor Governmental Funds 59 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds 60 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Municipal Building Authority – Budget to Actual 61 ---PAGE BREAK--- Schedule of Revenues, Expenditures, and Changes in Fund Balance – Library Fund – Budget to Actual 62 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Redevelopment Fund – Budget to Actual 63 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Community Development Block Grant Fund – Budget to Actual 64 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Capital Projects – Budget to Actual 65 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Cemetery Perpetual Care Fund – Budget to Actual 66 Statement of Net Position – Internal Service Funds 67 Statement of Revenues, Expenses, and Changes in Net Position – Internal Service Funds 68 Statement of Cash Flows – Internal Service Funds 69 Statement of Net Position – Nonmajor Proprietary Funds 70 Statement of Revenues, Expenses, and Changes in Net Position – Nonmajor Proprietary Funds 71 Statement of Cash Flows – Nonmajor Proprietary Funds 72 Statistical Section 73 Net Position by Component 74 Changes in Net Position 75 Governmental Activities Tax Revenues by Source 76 Fund Balances of Governmental Funds 77 Changes in Fund Balance of Governmental Funds 78 Assessed Value and Estimated Actual Value of Taxable Property 79 Direct and Overlapping Property Tax Rates 80 Principal Sales Tax Payers 81 Property Tax Levies and Collections 82 Ratio of Outstanding Debt by Type 83 Direct and Overlapping Governmental Activities Debt 84 Legal Debt Margin Information 85 Pledged Revenue Coverage 86 Demographic and Economic Statistics 87 Principal Employers 88 Full Time Equivalent City Government Employees by Function 89 Operating Indicators by Function 90 Capital Asset Statistics by Function 91 Compliance Section 92 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 93 Independent Auditor’s Report in Accordance with The State Compliance Guide 95 Schedule of Findings and Recommendations 97 ---PAGE BREAK--- 1 INTRODUCTORY SECTION ---PAGE BREAK--- 2 November 12, 2014 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 (the City) for the fiscal year ending June 30, 2014, 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, 2014, 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. 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. 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 ---PAGE BREAK--- 3 district. Some of the City Council’s responsibilities are: adopting the annual budget, approving committee appointments, and approving department head appointments. 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 protection; fire and ambulance services; construction and maintenance of highways, streets, and infrastructure; recreational activities and cultural events. In addition 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 provide some economic stability. 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. 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, 2013. This was the thirty-third 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. ---PAGE BREAK--- 4 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 LEADERSHIP David Ted Eyre Mayor Brett A. Hales Council Chairman Dave Nicponski D. Blair Camp Council Member Council Member James A. Brass Diane K. Wiley-Turner Council Member Council Member DEPARTMENT AND DIVISION HEADS Kim Fong Library Director Craig D. Burnett 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 ORGANIZATIONAL CHART Citizens of Murray Mayor City Council David T. Eyre 1. David Nicponski 2. D. Blair Camp 3. Jim Brass 4. Diane Wiley‐ Turner 5. Brett Hales Public Services Director City Attorney Doug Hill Frank Nakamura Police Chief Finance Director Craig D. Burnett Justin Zollinger Fire Chief ADS Director Gilbert Rodriguez Tim Tingey Court Administrator Power Director Michael Williams Blaine Haacke Human Resources Director Mike Terry ---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, 2014, 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, 2014, 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 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, and budgetary comparison schedules 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 12, 2014, 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 12, 2014 ---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, 2014. 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 $171,703,062 (net position). Of this amount, $44,780,830 (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 $6,679,149. Much of this increase was due to conservative revenue budget estimates in fiscal year 2014. Actual General Fund revenues exceeded projections by $1,947,448. Part of this variance was from the financial reporting change the Utah State Auditor required local governments make with regards to emergency 911 fees. The audit release was not received by the City until June 24, 2014. The City will budget for emergency 911 fee revenue and expenditures in the future. Sales tax revenue also came in with a 6.8 percent positive budget variance. This was from improved auto and retail sales. Business-type activities saw stable revenue and measured expenses.  As of the close of the current fiscal year, Murray City’s governmental funds reported combined ending fund balances of $26,228,574 an increase of $3,490,292 in comparison with the prior year. A portion of this increase was from a state allocation of approximately 2.5 million for the 1300 East, 5900 South, and Vine Street road projects. Approximately 32 percent of this total amount, $8,440,291 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 $8,440,291 or 25 percent of actual general fund revenues. The General Fund’s allowable unassigned fund balance decreased by $1,142,299. This was a result of decreased intergovernmental grant revenue of approximately 2.2 million and reporting changes for Administrative Fees. The portion of reserves that was above the allowable amount was moved to the Capital Projects Fund to be used for one time future capital needs.  Murray City’s total bonded debt decreased by $5,904,000 or 17.90 percent fiscal year 2014. In the future, Murray City will continue to look for opportunities to retire debt early. 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 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 (business-type). 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 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 and internal service 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 $171,703,064 at the close of the most recent fiscal year. The largest portion of Murray City’s net position (69.16 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 2014 2013 2014 2013 2014 2013 Current and other assets 42,719,396 $ 38,109,877 $ 34,882,088 $ 35,442,489 $ 77,601,484 $ 73,552,366 $ Capital assets 66,012,818 66,534,680 80,233,788 80,885,476 146,246,606 147,420,156 Total assets 108,732,214 104,644,557 115,115,876 116,327,965 223,848,090 220,972,522 Total deferred outflows of resources - - - 131,513 - 131,513 Long-term liabilities outstanding 9,109,293 9,277,082 17,568,891 23,111,660 26,678,184 32,388,742 Other liabilities 6,205,564 5,311,121 8,722,754 8,561,975 14,928,318 13,873,096 Total liabilities 15,314,857 14,588,203 26,291,645 31,673,635 41,606,502 46,261,838 Total deferred inflows of resources 10,538,524 9,818,282 - - 10,538,524 9,818,282 Net position: Net investment in capital assets 56,504,553 57,482,749 62,237,115 56,679,015 118,741,668 114,161,764 Restricted 5,877,926 2,363,899 2,302,640 3,214,520 8,180,566 5,578,419 Unrestricted 20,496,354 20,391,424 24,284,476 24,892,308 44,780,830 45,283,732 Total net position 82,878,833 $ 80,238,072 $ 88,824,231 $ 84,785,843 $ 171,703,064 $ 165,023,915 $ 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 $44,780,830 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 $6,679,149 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 2014 2013 2014 2013 2014 2013 Revenues: Program revenues: Charges for services 6,635,339 $ 5,664,804 $ 52,005,251 $ 52,620,586 $ 58,640,590 $ 58,285,390 $ Operating grants and contributions 4,416,861 5,085,195 - - 4,416,861 5,085,195 Capital grants and contributions 189,034 625,667 38,446 742,946 227,480 1,368,613 General revenues: Sales taxes 13,547,887 12,916,025 - - 13,547,887 12,916,025 Property taxes 10,293,086 10,298,590 - - 10,293,086 10,298,590 Franchise taxes 4,931,685 4,993,384 - - 4,931,685 4,993,384 Investment income 120,002 202,882 287,922 287,195 407,924 490,077 Gain/(loss) on disposal of assets 57,336 94,202 24,856 30,452 82,192 124,654 Miscellaneous 279,039 277,508 - - 279,039 277,508 Total revenues 40,470,269 40,158,257 52,356,475 53,681,179 92,826,744 93,839,436 Expenses: General government 8,279,086 7,405,522 - - 8,279,086 7,405,522 Public safety 17,995,491 16,355,899 - - 17,995,491 16,355,899 Highways & public improvements 6,809,737 8,666,544 - - 6,809,737 8,666,544 Parks, recreation, and culture 7,947,202 7,538,992 - - 7,947,202 7,538,992 Debt service - interest and fiscal charges 363,093 384,433 - - 363,093 384,433 Water - - 4,139,275 4,127,932 4,139,275 4,127,932 Waste water - - 3,411,870 3,353,890 3,411,870 3,353,890 Power - - 32,412,110 30,312,585 32,412,110 30,312,585 Murray parkway - - 1,289,761 1,260,353 1,289,761 1,260,353 Telecommunications - - 71,298 63,146 71,298 63,146 Solid waste - - 1,189,055 1,126,639 1,189,055 1,126,639 Storm water - - 2,239,617 1,918,052 2,239,617 1,918,052 Total expenses 41,394,609 40,351,390 44,752,986 42,162,597 86,147,595 82,513,987 Increase (decrease) in net position before transfers (924,340) (193,133) 7,603,489 11,518,582 6,679,149 11,325,449 Transfers - net 3,565,101 3,605,706 (3,565,101) (3,605,706) - - Increase (decrease) in net position 2,640,761 3,412,573 4,038,388 7,912,876 6,679,149 11,325,449 Net position at beginning of year 80,238,072 76,825,499 84,785,843 76,872,967 165,023,915 153,698,466 Net position at end of year 82,878,833 $ 80,238,072 $ 88,824,231 $ 84,785,843 $ 171,703,064 $ 165,023,915 $ Governmental Business-type Activities Activities Total Governmental Activities Governmental activities increased Murray City’s net position by $2,640,761. Key elements are as follows:  Conservative revenue budgets are a significant reason why Murray City has a positive increase in net position. This in combination with leaders requiring a balanced budget promotes sustainability  Revenue exceeded budget by approximately $1,947,000, part of this positive variance was the result of the following revenues: o $724,000 from sales tax revenue o $423,000 from emergency 911 fees o $297,000 from licenses and permits o $260,000 from charges for service  Expenses were kept in check by City leaders following budget controls. ---PAGE BREAK--- 16 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS Business-Type Activities Business-type activities increased Murray City’s net position by $4,038,388. Key elements are as follows:  Total operating income was $7,693,548; this was a decrease of approximately $730,000 over the prior year. This equates to a 1.4 percent variances.  The operating expenses increased by approximately $2,680,000 over the prior year. The majority of this increase was from increased purchase power cost in the Power Fund.  Interest expense was $839,477, which was a decrease of $116,327 over the prior year.  Despite the decreases in revenue and increases in operating expenses the City still was able to improve its net position through financial restraint by its leadership. 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 endowments and prepaids. 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 $26,228,574, an increase of $3,490,292 in comparison with the prior year. Of the total balance, $138,264 is nonspendable, $5,877,926 is restricted, $1,403,959 is committed, $10,368,134 is assigned, and $8,440,291 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 $8,725,755, of which $122,454 is nonspendable, $163,010 is restricted, and $8,440,291 is unassigned. ---PAGE BREAK--- 17 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS The Capital Projects Fund has a total fund balance of $13,375,410, an increase of $4,686,318 over the prior year. Of the total fund balance, 3,007,276 was restricted. The remaining amount is for capital improvements and construction of a new city hall. This fund will continue to increase over the next few years as saving occurs for the new city hall. 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 $5,586,379, in the Waste Water Fund $5,689,772, in the Power Fund $11,046,311, and in the Storm Water Fund $841,087. The following funds received capital contributions: Water $24,524, Waste Water $10,422, and Power $3,500. These contributions of water and sewer lines, and power improvements came from developers within the City. General Fund Budgetary Highlights The original budget and the final amended budget decreased by ($1,977,262), the material changes are summarized as follows:  A decrease in how the City allocates cost for administrative overhead of ($2,919,532), this change was the result of the Utah’s State Auditor changing how this should be reported in Utah.  Increase budget in streets and highways for Class C road fund reserves use of $268,000.  Increase budget in streets and highways for Jordan Cannel reconstruction of $190,000.  Increase budget in the police for Beer Tax money of $157,000.  Increase budget in the police and fire for grant money of $131,000.  Increase budget in the police for narcotics equipment money of $30,000.  Increase budget in the police for animal control costs of $25,000. 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, 2014 was $146,246,606 (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 $1,173,550. This represents a decrease of $521,862 for governmental activities and a $651,688 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 Approximate costs for major capital projects and investments during fiscal year 2014 are as follows:  4874 South State property acquisition for $1,311,000 for the Redevelopment Agency  McGhie Well replacement water project for $769,000  Asphalt Grinder lease purchase of $414,000  5900 South storm drain project $389,000  Kenwood Drive road project $381,000  Capri storm drain project $378,000  Jensen Lane storm drain property acquisition $307,000  Parkside storm drain project $254,000  Avalon/Kenwood Drive storm drain project $197,000  Digger Derrick equipment purchase of $147,000 Murray City's Capital Assets (Net of depreciation) 2014 2013 2014 2013 2014 2013 Land 14,484,896 $ 13,077,618 $ 6,974,069 $ 6,974,069 $ 21,458,965 $ 20,051,687 $ Buildings 18,818,961 19,447,896 1,268,850 1,328,026 20,087,811 20,775,922 Improvements other than buildings 3,059,594 3,595,161 60,199,753 61,228,950 63,259,347 64,824,111 Machinery and equipment 3,897,906 3,746,998 7,659,078 7,288,336 11,556,984 11,035,334 Infrastructure 25,293,445 26,130,013 - - 25,293,445 26,130,013 Intangibles - - 1,457,500 2,008,029 1,457,500 2,008,029 Construction in progress 458,016 536,994 2,674,538 2,058,066 3,132,554 2,595,060 Total net capital assets 66,012,818 $ 66,534,680 $ 80,233,788 $ 80,885,476 $ 146,246,606 $ 147,420,156 $ Governmental Business-type Activities Activities Total Additional information regarding the City’s capital assets can be found in Note 6 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 $27,076,000. All of Murray City’s debt represents bonds secured solely by specified revenue sources (i.e. revenue bonds). 2014 2013 2014 2013 2014 2013 9,028,000 $ 8,860,000 $ 18,048,000 $ 24,120,000 $ 27,076,000 $ 32,980,000 $ Murray City's Outstanding Revenue Bonds Governmental Business-type Activities Activities Total Murray City’s bonded debt decreased by $5,904,000 or 17.90 percent in fiscal year 2014. ---PAGE BREAK--- 19 MURRAY CITY MANAGEMENT’S DISCUSSION AND ANALYSIS The Power Fund early retired $3,350,000 million of 2004 Electrical Revenue Bonds with interest ranging from 3.00% - 5.25%. This transaction retired all of the 2004 Electric Revenue Bonds and saved the City interest of $622,870. The Water & Waste Water Funds early retired $410,000 million of 2003 Water & Sewer Revenue Bonds with interest ranging from 2.00% - 5.25%. This transaction retired all of the 2003 Water & Sewer Revenue Bonds and saved the City interest of $8,303. Additional information on Murray City’s long-term debt can be found in Note 11 in the notes to the financial statements of this report. Economic Factors and Next Year’s Budgets and Rates In August 2014, the City increased solid waste fees by .25 cents per month for the first garbage and recycling can, and increased the charge for a second can by .15 cents 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 guarantees a certain level of sales tax revenue for the City for two more years. The City has not needed this provision the last three fiscal 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, 2014 Governmental Business-type Activities Activities Total ASSETS Current assets: Cash and cash equivalents 20,405,669 $ 16,046,917 $ 36,452,586 $ Investments 5,992,016 5,992,016 11,984,032 Accounts receivable (net of allowance) 11,159,383 4,378,479 15,537,862 Notes receivable - 30,984 30,984 Due from other governments 2,820,829 111,150 2,931,979 Inventory 70,548 2,411,804 2,482,352 Prepaid items 122,455 528 122,983 Noncurrent assets: Restricted cash 445,231 2,302,640 2,747,871 Notes receivable - 430,235 430,235 Investments in joint ventures 1,703,265 3,177,335 4,880,600 Capital assets, not being depreciated: Land 14,484,896 6,974,069 21,458,965 Construction in progress 458,016 2,674,538 3,132,554 Capital assets, net of accumulated depreciation: Buildings 18,818,961 1,268,850 20,087,811 Improvements other than buildings 3,059,594 60,199,753 63,259,347 Machinery and equipment 3,897,906 7,659,078 11,556,984 Infrastructure 25,293,445 - 25,293,445 Intangibles - 1,457,500 1,457,500 Total assets 108,732,214 115,115,876 223,848,090 LIABILITIES Current liabilities: Accounts payable 1,015,198 4,607,977 5,623,175 Accrued liabilities 1,232,713 367,532 1,600,245 Customer deposits 453,385 1,303,125 1,756,510 Compensated absences 1,884,736 722,969 2,607,705 Interest payable 54,827 111,167 165,994 Notes payable - 30,984 30,984 Bonds and leases payable 1,564,705 1,579,000 3,143,705 Noncurrent liabilities: Compensated absences 818,425 409,573 1,227,998 Net OPEB payable 347,308 311,410 658,718 Notes payable - 430,235 430,235 Bonds and leases payable 7,943,560 16,417,673 24,361,233 Total liabilities 15,314,857 26,291,645 41,606,502 DEFERRED INFLOWS OF RESOURCES Deferred inflows-property taxes 10,538,524 - 10,538,524 Total deferred inflows of resources 10,538,524 - 10,538,524 NET POSITION Net investment in capital assets 56,504,553 62,237,115 118,741,668 Restricted Capital 5,392,794 2,132,120 7,524,914 Debt service 74,502 170,520 245,022 Library 321,747 - 321,747 Other purposes 88,883 - 88,883 Unrestricted 20,496,354 24,284,476 44,780,830 Total net position 82,878,833 $ 88,824,231 $ 171,703,064 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 22 MURRAY CITY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2014 Net (Expenses) 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 8,279,086 $ 3,338,583 $ - $ - $ (4,940,503) $ - $ (4,940,503) $ Public safety 17,995,491 1,531,168 222,327 - (16,241,996) - (16,241,996) Highways and public improvements 6,809,737 70,970 3,990,131 189,034 (2,559,602) - (2,559,602) Parks, recreation, and culture 7,947,202 1,694,618 204,403 - (6,048,181) - (6,048,181) Debt service - interest and fiscal charges 363,093 - - - (363,093) - (363,093) Total governmental activities 41,394,609 6,635,339 4,416,861 189,034 (30,153,375) - (30,153,375) Business-type activities Water 4,139,275 5,496,992 - 24,524 - 1,382,241 1,382,241 Waste water 3,411,870 4,370,563 - 10,422 - 969,115 969,115 Power 32,412,110 37,513,547 - 3,500 - 5,104,937 5,104,937 Murray parkway 1,289,761 1,320,141 - - - 30,380 30,380 Telecommunication 71,298 70,828 - - - (470) (470) Solid waste 1,189,055 1,369,488 - - - 180,433 180,433 Storm water 2,239,617 1,863,692 - - - (375,925) (375,925) Total business-type activities 44,752,986 52,005,251 - 38,446 - 7,290,711 7,290,711 General Revenues: Sales taxes 13,547,887 - 13,547,887 Property taxes 10,293,086 - 10,293,086 Franchise taxes 4,931,685 - 4,931,685 Investment income 120,002 287,922 407,924 Gain on disposal of assets 57,336 24,856 82,192 Miscellaneous 279,039 - 279,039 Transfers - net 3,565,101 (3,565,101) - Total general revenue and transfers 32,794,136 (3,252,323) 29,541,813 Change in net position 2,640,761 4,038,388 6,679,149 Net position - beginning 80,238,072 84,785,843 165,023,915 Net position - ending 82,878,833 $ 88,824,231 $ 171,703,064 $ Program Revenues ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 23 MURRAY CITY BALANCE SHEET – GOVERNMENTAL FUNDS JUNE 30, 2014 Governmental Fund Types Other Total Capital Redevelopment Governmental Governmental General Projects Agency Funds Funds ASSETS Cash and cash equivalents 4,102,319 $ 10,363,532 $ 2,478,574 $ 1,786,261 $ 18,730,686 $ Investments 2,996,008 2,996,008 - - 5,992,016 Receivables, net: Property taxes 6,077,592 - 3,074,312 1,479,103 10,631,007 Other 502,853 24,768 - 224 527,845 Due from other funds 22,590 - - - 22,590 Due from other governments 2,784,091 - - 36,738 2,820,829 Prepaid items 122,455 - - - 122,455 Restricted cash 397 104,521 324,503 15,810 445,231 Total assets 16,608,305 13,488,829 5,877,389 3,318,136 39,292,659 LIABILITIES Accounts payable 353,788 113,419 416,184 68,853 952,244 Accrued liabilities 946,514 - - 24,186 970,700 Due to other funds - - - 22,590 22,590 Deposits 452,385 - 1,000 - 453,385 Total liabilities 1,752,687 113,419 417,184 115,629 2,398,919 DEFERRED INFLOWS OF RESOURCES Deferred inflows-ambulance billing 126,642 - - - 126,642 Deferred inflows-property taxes 6,003,221 - 3,074,312 1,460,991 10,538,524 Total deferred inflows of resources 6,129,863 - 3,074,312 1,460,991 10,665,166 FUND BALANCE Nonspendable 122,454 - - 15,810 138,264 Restricted 163,010 3,007,276 2,385,893 321,747 5,877,926 Committed - - - 1,403,959 1,403,959 Assigned - 10,368,134 - - 10,368,134 Unassigned 8,440,291 - - - 8,440,291 Total fund balances 8,725,755 13,375,410 2,385,893 1,741,516 26,228,574 Total liabilities, deferred inflows of resources, and fund balances (deficits) 16,608,305 $ 13,488,829 $ 5,877,389 $ 3,318,136 $ 39,292,659 $ ---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, 2014 Amounts reported for governmental activities in the Statement of Net Position are different because: Total Fund Balances - Total Governmental Funds 26,228,574 $ Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds. 67,716,083 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as deferred inflows of resources. 126,642 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. 1,378,802 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds. (12,571,268) Net Position - Governmental Activities 82,878,833 $ ---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, 2014 Governmental Fund Types Other Total Capital Redevelopment Governmental Governmental General Projects Agency Funds Funds REVENUES Sales taxes 13,547,887 $ - $ - $ - $ 13,547,887 $ Property taxes 6,561,335 - - 1,598,170 8,159,505 Tax increment - - 2,133,581 - 2,133,581 Franchise taxes 4,931,685 - - - 4,931,685 Licenses and permits 1,400,438 - - - 1,400,438 Intergovernmental 1,842,943 2,525,000 - 48,918 4,416,861 Charges for services 2,888,781 - - 3,510 2,892,291 Fines and forfeitures 1,877,818 - - 60,327 1,938,145 Emergency 911 Fees 423,768 - - - 423,768 Miscellaneous 237,571 30,123 3,644 7,701 279,039 Investment income 48,939 39,391 11,902 12,173 112,405 Total revenues 33,761,165 2,594,514 2,149,127 1,730,799 40,235,605 EXPENDITURES General government 6,276,318 193,993 - - 6,470,311 Public safety 17,167,250 463,420 - - 17,630,670 Highways and public improvements 3,830,982 1,084,716 2,472,964 36,738 7,425,400 Parks, recreation, and culture 5,444,320 171,986 - 1,676,261 7,292,567 Debt service: Principal 1,265,294 23,548 - - 1,288,842 Interest and fiscal charges 351,415 1,635 26,696 - 379,746 Pledge payment - UTOPIA debt service 1,615,214 - - - 1,615,214 Total expenditures 35,950,793 1,939,298 2,499,660 1,712,999 42,102,750 Excess (deficiency) of revenues over (under) expenditures (2,189,628) 655,216 (350,533) 17,800 (1,867,145) OTHER FINANCING SOURCES (USES) Capital leases 5,920 414,080 - - 420,000 Bonds issued - - 1,343,000 - 1,343,000 Transfers in 4,649,379 3,787,686 - 33,873 8,470,938 Transfers out (3,740,770) (200,000) (963,299) (1,768) (4,905,837) Sale of capital assets - 29,336 - - 29,336 Total other financing sources (uses) 914,529 4,031,102 379,701 32,105 5,357,437 Net change in fund balance (1,275,099) 4,686,318 29,168 49,905 3,490,292 Fund balance at beginning of year 10,000,854 8,689,092 2,356,725 1,691,611 22,738,282 Fund balance at end of year 8,725,755 $ 13,375,410 $ 2,385,893 $ 1,741,516 $ 26,228,574 $ ---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, 2014 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds 3,490,292 $ 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. (517,927) Revenue in the fund statements that are not recognized in the government-wide (19,303) 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 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. (457,505) 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. 160,152 The net revenue of certain activities of the Internal Service Funds are reported with governmental activities (14,948) Change in net position of governmental activities 2,640,761 $ ---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, 2014 Original Final Actual Variance with Budget Budget Amounts Final Budget REVENUES Sales taxes 12,682,000 $ 12,823,460 $ 13,547,887 $ 724,427 $ Property taxes 6,619,202 6,619,202 6,561,335 (57,867) Franchise taxes 4,825,000 4,825,000 4,931,685 106,685 Licenses and permits 1,103,000 1,103,000 1,400,438 297,438 Intergovernmental 1,586,017 1,835,869 1,842,943 7,074 Charges for services 2,586,500 2,628,468 2,888,781 260,313 Fines and forfeitures 1,703,000 1,703,000 1,877,818 174,818 Emergency 911 Fees - - 423,768 423,768 Miscellaneous 167,000 200,718 237,571 36,853 Investment income 75,000 75,000 48,939 (26,061) Total revenues 31,346,719 31,813,717 33,761,165 1,947,448 EXPENDITURES General government: Legislative 305,786 133,498 124,012 9,486 Justice court 1,532,011 1,533,411 1,497,981 35,430 Mayor 494,621 275,087 231,970 43,117 Finance 517,019 316,739 293,985 22,754 Legal 446,191 218,842 213,530 5,312 Nondepartmental 951,306 953,075 886,237 66,838 Personnel 302,905 225,712 206,985 18,727 Administrative and development Services 5,111,596 3,085,539 2,821,618 263,921 Total general government 9,661,435 6,741,903 6,276,318 465,585 Public safety: Police department 10,242,227 10,597,008 10,094,611 502,397 Fire department 6,853,996 6,938,989 6,648,871 290,118 Emergency 911 Service - - 423,768 (423,768) Total public safety 17,096,223 17,535,997 17,167,250 368,747 Highways and public improvements Engineering 662,879 663,740 608,770 54,970 Streets and highways 2,815,181 3,289,345 3,130,998 158,347 Shops and garages 95,600 95,600 91,214 4,386 Total highways and public improvements 3,573,660 4,048,685 3,830,982 217,703 Parks, recreation, and culture Parks and recreation 5,178,405 5,204,440 5,070,971 133,469 Cemetery 420,139 421,575 373,349 48,226 Total parks, recreation, and culture 5,598,544 5,626,015 5,444,320 181,695 Debt service: Principal 1,255,000 1,266,425 1,265,294 1,131 Interest 363,551 352,126 351,415 711 Pledge payment - UTOPIA debt service 1,619,333 1,619,333 1,615,214 4,119 Total debt service 3,237,884 3,237,884 3,231,923 5,961 Total expenditures 39,167,746 37,190,484 35,950,793 1,239,691 OTHER FINANCING SOURCES (USES) Capital leases - - 5,920 5,920 Transfers in 4,647,611 4,649,380 4,649,379 Transfers out (2,034,873) (4,125,642) (3,740,770) 384,872 Net other financing sources (uses) 2,612,738 523,738 914,529 390,791 Net change in fund balance (5,208,289) (4,853,029) (1,275,099) 3,577,930 Fund balance at beginning of year 10,000,854 10,000,854 10,000,854 - Fund balance at end of year 4,792,565 $ 5,147,825 $ 8,725,755 $ 3,577,930 $ ---PAGE BREAK--- The accompanying notes are an integral part of this statement. 28 MURRAY CITY STATEMENT OF NET POSITION – PROPRIETARY FUNDS JUNE 30, 2014 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 3,830,040 $ 2,314,780 $ 7,430,301 $ 1,123,062 $ 1,348,734 $ 16,046,917 $ 1,674,983 $ Investments 1,997,339 - 3,994,677 - - 5,992,016 - Accounts receivable (net) 759,306 328,484 3,032,217 142,345 116,127 4,378,479 531 Notes receivable - - - - 30,984 30,984 - Due from other funds 125,095 - - - - 125,095 - Due from other governments - 111,150 - - - 111,150 - Inventory - - 2,327,548 - 84,256 2,411,804 70,548 Prepaid items - - 278 - 250 528 - Total current assets 6,711,780 2,754,414 16,785,021 1,265,407 1,580,351 29,096,973 1,746,062 Noncurrent assets: Restricted cash 24 354,492 1,323 1,946,801 - 2,302,640 - Notes receivable - - - - 430,235 430,235 - Investment in joint venture - 3,177,335 - - - 3,177,335 - Capital assets: Land 2,155,313 455,921 1,691,650 2,344,849 326,336 6,974,069 - Buildings 919,021 949,132 3,410,311 - 819,374 6,097,838 - Improvements other than buildings 26,447,023 12,222,810 76,519,089 33,303,318 3,734,149 152,226,389 - Machinery and equipment 2,760,754 1,102,902 12,731,528 1,134,823 972,781 18,702,788 151,134 Intangibles - - 3,759,027 - - 3,759,027 - Construction in progress 1,091,111 4,034 30,842 1,548,551 - 2,674,538 - Accumulated depreciation and amortizatio (14,992,631) (6,599,158) (59,859,775) (23,961,838) (4,787,459) (110,200,861) (103,486) Total noncurrent assets 18,380,615 11,667,468 38,283,995 16,316,504 1,495,416 86,143,998 47,648 Total assets 25,092,395 14,421,882 55,069,016 17,581,911 3,075,767 115,240,971 1,793,710 LIABILITIES Current liabilities: Accounts payable 794,079 99,816 3,297,582 318,174 98,326 4,607,977 62,954 Accrued liabilities 31,827 13,535 243,894 18,871 59,405 367,532 262,013 Due to other funds - - - - 125,095 125,095 - Accrued interest payable 19,924 29,310 33,777 28,156 - 111,167 - Compensated absences 121,978 63,400 418,721 37,739 81,131 722,969 29,488 Notes payable - - - - 30,984 30,984 - Bonds payable 40,682 128,318 1,200,000 210,000 - 1,579,000 - Total current liabilities 1,008,490 334,379 5,193,974 612,940 394,941 7,544,724 354,455 Noncurrent liabilities: Deposits 9,950 - 1,293,175 - - 1,303,125 - Compensated absences 69,102 35,916 237,212 21,380 45,963 409,573 12,805 Net OPEB payable 84,714 - 226,696 - - 311,410 - Notes payable - - - - 430,235 430,235 - Bonds payable 2,871,870 2,540,644 8,328,565 2,676,594 - 16,417,673 - Total noncurrent liabilities 3,035,636 2,576,560 10,085,648 2,697,974 476,198 18,872,016 12,805 Total liabilities 4,044,126 2,910,939 15,279,622 3,310,914 871,139 26,416,740 367,260 NET POSITION Net investment in capital assets 15,468,039 5,466,679 28,754,107 11,483,109 1,065,181 62,237,115 47,648 Restricted for capital - 185,437 - 1,946,683 - 2,132,120 - Restricted for debt service 24 169,055 1,323 118 - 170,520 - Unrestricted 5,580,206 5,689,772 11,033,964 841,087 1,139,447 24,284,476 1,378,802 Total net position 21,048,269 $ 11,510,943 $ 39,789,394 $ 14,270,997 $ 2,204,628 $ 88,824,231 $ 1,426,450 $ ---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, 2014 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 5,334,346 $ 4,115,475 $ 34,667,148 $ 1,603,860 $ 2,759,379 $ 48,480,208 $ 1,331,791 $ Connection and servicing fees 11,834 1,475 215,173 - - 228,482 - Other 13,041 750 2,436,018 248,229 1,078 2,699,116 - Total operating revenues 5,359,221 4,117,700 37,318,339 1,852,089 2,760,457 51,407,806 1,331,791 OPERATING EXPENSES Wages and benefits 1,334,978 616,567 5,155,678 578,779 833,364 8,519,366 485,017 Administrative fees 583,809 379,821 1,569,251 89,381 114,496 2,736,758 1,250 Depreciation and amortization 1,008,531 428,728 3,074,664 1,199,304 159,751 5,870,978 3,935 Operations and maintenance 1,103,439 1,684,672 22,060,566 300,095 1,438,384 26,587,156 864,134 Total operating expenses 4,030,757 3,109,788 31,860,159 2,167,559 2,545,995 43,714,258 1,354,336 Operating income (loss) 1,328,464 1,007,912 5,458,180 (315,470) 214,462 7,693,548 (22,545) NONOPERATING REVENUES (EXPENSES) Investment income 28,410 11,581 223,494 18,796 5,641 287,922 7,597 Interest and fiscal charges (108,518) (102,831) (551,951) (72,058) (4,119) (839,477) - Impact fees 137,771 252,863 195,208 11,603 - 597,445 - Equity in income of joint venture - (199,251) - - - (199,251) - Gain/(loss) on disposal of assets 43,930 (41,298) 12,187 8,413 1,624 24,856 - Total nonoperating revenues (expenses) 101,593 (78,936) (121,062) (33,246) 3,146 (128,505) 7,597 Income (loss) before contributions and transfers 1,430,057 928,976 5,337,118 (348,716) 217,608 7,565,043 (14,948) Capital contributions 24,524 10,422 3,500 - - 38,446 - Transfers in - - 218,264 - - 218,264 - Transfers out (455,677) (311,430) (2,823,483) (112,032) (80,743) (3,783,365) - Change in net position 998,904 627,968 2,735,399 (460,748) 136,865 4,038,388 (14,948) Total net position, beginning 20,049,365 10,882,975 37,053,995 14,731,745 2,067,763 84,785,843 1,441,398 Total net position - ending 21,048,269 $ 11,510,943 $ 39,789,394 $ 14,270,997 $ 2,204,628 $ 88,824,231 $ 1,426,450 $ ---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, 2014 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 5,404,025 $ 4,113,112 $ 37,566,600 $ 1,844,559 $ 2,752,967 $ 51,681,263 $ 1,331,260 $ Payments to suppliers of goods and services (551,376) (1,683,602) (22,191,035) (185,575) (1,444,969) (26,056,557) (854,738) Payments to employees for services (1,365,049) (613,489) (5,081,573) (578,087) (822,817) (8,461,015) (480,054) Payment for interfund services (583,809) (379,821) (1,569,251) (89,381) (114,496) (2,736,758) (1,250) Investments in joint venture - (86,717) - - - (86,717) - Net cash provided (used) by operating activities 2,903,791 1,349,483 8,724,741 991,516 370,685 14,340,216 (4,782) Cash flows from noncapital financing activities Transfers from other funds - - 218,264 - - 218,264 - Transfers to other funds (455,677) (311,430) (2,823,483) (112,032) (80,743) (3,783,365) - Changes to interfund receivables and payables 39,681 - - - (39,681) - - Net cash provided (used) by noncapital financing activities (415,996) (311,430) (2,605,219) (112,032) (120,424) (3,565,101) - Cash flows from capital and related financing activities Proceeds from sale of capital assets 79,112 - 47,634 39,484 1,624 167,854 - Purchases of capital assets (1,706,117) (301,766) (1,335,931) (1,868,263) (111,764) (5,323,841) - Impact fees 137,771 252,863 195,208 11,603 - 597,445 - Principal paid on debt (522,671) (414,433) (5,057,318) (215,366) - (6,209,788) - Interest and fiscal charges paid on capital debt (113,831) (95,044) (435,678) (69,322) (4,119) (717,994) - Net cash provided (used) by capital and related financing activ (2,125,736) (558,380) (6,586,085) (2,101,864) (114,259) (11,486,324) - Cash flows from investing activites Sale (purchase) of investments (1,997,339) - (3,994,677) - - (5,992,016) - Investment income 28,410 11,581 223,494 18,796 5,641 287,922 7,597 Net cash provided by investing activities (1,968,929) 11,581 (3,771,183) 18,796 5,641 (5,704,094) 7,597 Net increase (decrease) in cash and cash equivalents (1,606,870) 491,254 (4,237,746) (1,203,584) 141,643 (6,415,303) 2,815 Cash and cash equivalents - beginning of year 5,436,934 2,178,018 11,669,370 4,273,447 1,207,091 24,764,860 1,672,168 Cash and cash equivalents - end of year 3,830,064 $ 2,669,272 $ 7,431,624 $ 3,069,863 $ 1,348,734 $ 18,349,557 $ 1,674,983 $ Reconciliation of operating income to net cash provided (used) by operating activities Operating income (loss) 1,328,464 $ 1,007,912 $ 5,458,180 $ (315,470) $ 214,462 $ 7,693,548 $ (22,545) $ Adjustments to reconcile operating income to net cash provided by: Depreciation and amortization 1,008,531 428,728 3,074,664 1,199,304 159,751 5,870,978 3,935 Investments in joint ventures - (86,717) - - - (86,717) - (Increase) decrease in receivables 44,804 (4,588) 248,261 (7,530) (7,490) 273,457 (531) (Increase) decrease in inventory and prepaid items - - (206,249) - 1 (206,248) 14,914 (Increase) decrease in liabilities 521,992 4,148 149,885 115,212 3,961 795,198 (555) Net cash provided by operating activities 2,903,791 $ 1,349,483 $ 8,724,741 $ 991,516 $ 370,685 $ 14,340,216 $ (4,782) $ Noncash investing, capital and financing activities Capital contributions - developers 24,524 $ 10,422 $ 3,500 $ - $ - $ 38,446 $ - $ ---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 for governmental entities. 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 organizations board 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. During fiscal year 2014, all remaining assets of the MBA were transferred to the General Fund, and the MBA was place into dormancy. The MBA is included in these financial statements as the Municipal Building Authority Special Revenue Fund, but will not be included in future years until taken out of dormancy. 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. 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 within 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, Fireclay, 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 internal service funds: Central Garage and Retained Risk. 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, 2014 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 weighted average cost method. 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. 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 2014 are the only items that are reported 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 expenditure in the period incurred. Fund Equity GASB Statement No. 54 outlines reporting categories for fund balance in governmental funds. The category definitions are as follows:  Nonspendable – Some of the resources reported in a governmental fund cannot be spent because they are not in spendable form. Other resources reported in governmental funds are in spendable form, but still cannot be spent because they are legally or contractually required to be maintained intact.  Restricted – Some constraints on the use of resources are externally enforceable. Most often, such restrictions are imposed by parties outside the government (creditors, grantors, contributors, and laws or regulations of other governments). Such restrictions also may result from constitutional provisions or enabling legislations.  Committed – A government at its highest level of decision-making authority may formally place a constraint on the use of its own resources (for example, dedicated revenues) that remain legally binding unless removed in the same manner.  Assigned – Governments frequently desire to set aside (earmark) resources for particular purposes. This requires the Mayor to propose the resources to be set aside and Council to ratify this action subsequent to the end of the fiscal period.  Unassigned – All other resources that are not required to be reported in one of the other four fund balance categories. This category is only used in the general fund. The City adopted into ordinance these fund balance definitions and policies on November 19, 2013. 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. ---PAGE BREAK--- 37 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Financial statement fund balance category details are as follows: Fund General Capital Projects Redevelopment Agency Other Governmental funds Total Nonspendable Prepaids 122,454 $ - $ - $ - $ 122,454 $ Library endowment - - - 15,810 15,810 Restricted Beer tax 73,383 - - - 73,383 Class C 74,127 - - - 74,127 Historic smelter 15,500 - - - 15,500 Escrow account - 104,521 250,000 - 354,521 State allowance - 2,902,755 - - 2,902,755 Redevelopment - - 1,860,065 - 1,860,065 Debt Service - - 74,502 - 74,502 Library - - - 321,747 321,747 Low income housing - - 201,326 - 201,326 Committed Cemetery perpetual care - - - 1,403,959 1,403,959 Assigned Capital projects - 10,368,134 - - 10,368,134 Unassigned 8,440,291 - - - 8,440,291 Total 8,725,755 $ 13,375,410 $ 2,385,893 $ 1,741,516 $ 26,228,574 $ 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--- 38 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 66,012,818 $ Investment in joint venture 1,703,265 Total difference 67,716,083 $ 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, 2014 were: Sales tax revenue bonds 9,028,000 $ Bond issuance premium 97,495 Capital leases 382,770 Interest payable on long-term debt 54,827 Net OPEB payable 347,308 Compensated absences 2,660,868 Total difference 12,571,268 $ ---PAGE BREAK--- 39 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 3,315,107 $ Trade-ins 28,000 Capital contributions 189,034 Depreciation expense (4,050,068) Net difference, as reported (517,927) $ 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--- 40 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, 2014, the City’s demand deposits and cash on hand totaled $6,905,897. As of June 30, 2014, the City has investments in the Utah Public Treasurer’s Investment Fund (PTIF) of $32,863,854. 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 $33,030,211. However, the PTIF reports to participants on an amortized cost basis, which approximates the fair value at year end. ---PAGE BREAK--- 41 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS The following are the City’s cash and cash equivalents and investments as of June 30, 2014: Less Quality Description Than 1 1-5 6-10 Ratings Cash and cash equivalents Public Treasurer's Investment Fund 32,863,854 $ - $ - $ Unrated Zions bank deposits 3,588,732 $ - $ - $ Unrated Total cash and cash equivalants 36,452,586 $ - $ - $ Investments Money Market Mutual Fund 750,469 - - AAA U.S. Agencies - 6,047,626 - AA+ Corporate notes 2,146,869 2,017,165 - BBB to A+ U.S. Treasuries - 772,405 - AA+ Municipal Agencies - 249,498 - AA Total investments 2,897,338 $ 9,086,694 $ - $ Amortized Cost Basis Fair Market Value Deposits and Investment Maturities (in Years) The City has acquired the services of Moreton Asset Management, LLC; an investment advisor approved by the Utah State Treasurer. This entity invests City money in compliance with the Utah Money Management Act. At year end, the City adjusted investments to fair market value which resulted in a loss of $15,701. 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, 2014, $6,655,897 of the City’s $6,905,897 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, $354,521 of the City’s deposits are held in an escrow for purchase of land and land rights. ---PAGE BREAK--- 42 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS 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 investment grade or higher by Standard & Poor’s or Moody’s. The City invests 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. 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 36,452,586 $ Investments 11,984,032 Restricted cash 2,747,871 51,184,489 $ ---PAGE BREAK--- 43 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 5 – RECEIVABLES The City’s receivables as of year-end are as follows: General Capital Projects Redevelopment Agency Other Governmental Funds Water Waste Water Power Storm Water Nonmajor Funds Internal Service Funds Total Property taxes 6,077,592 $ - $ 3,074,312 $ 1,479,103 $ - $ - $ - $ - $ - $ - $ 10,631,007 $ Accounts receivable 902,414 24,768 - 224 768,231 335,862 3,155,648 145,494 118,519 531 5,451,691 Notes receivable - - - - - - - - 461,219 - 461,219 Intergovernmental 2,784,091 - - 36,738 - 111,150 - - - - 2,931,979 Gross receivables 9,764,097 24,768 3,074,312 1,516,065 768,231 447,012 3,155,648 145,494 579,738 531 19,475,896 Less: allowance for uncollectibles (399,561) - - - (8,925) (7,378) (123,431) (3,149) (2,392) - (544,836) Net total receivables 9,364,536 $ 24,768 $ 3,074,312 $ 1,516,065 $ 759,306 $ 439,634 $ 3,032,217 $ 142,345 $ 577,346 $ 531 $ 18,931,060 $ NOTE 6 – CAPITAL ASSETS Capital asset governmental activity for the year ended June 30, 2014 was as follows: Governmental activities Beginning Balance Increases Decreases Transfers Ending Balance Capital assets, not being depreciated: Land 13,077,618 $ 1,407,278 $ - $ - $ 14,484,896 $ Construction in progress 536,994 855,373 - (934,351) 458,016 Total capital assets, not being depreciated 13,614,612 2,262,651 - (934,351) 14,942,912 Capital assets, being depreciated: Buildings 31,992,865 82,205 - 192,531 32,267,601 Improvements other than buildings 16,187,333 1,800 (7,844,595) - 8,344,538 Infrastructure 66,946,969 187,234 - 716,270 67,850,473 Machinery and equipment 13,037,750 998,251 (434,977) 25,550 13,626,574 Total capital assets being depreciated 128,164,917 1,269,490 (8,279,572) 934,351 122,089,186 Less accumulated depreciation for: Buildings (12,544,969) (903,671) - - (13,448,640) Improvements other than buildings (12,592,172) (537,367) 7,844,595 - (5,284,944) Infrastructure (40,816,956) (1,740,072) - - (42,557,028) Machinery and equipment (9,290,752) (872,893) 434,977 - (9,728,668) Total accumulated depreciation (75,244,849) (4,054,003) 8,279,572 - (71,019,280) Total capital assets, being depreciated, (net) 52,920,068 (2,784,513) - - 51,069,906 Net governmental capital assets 66,534,680 $ (521,862) $ - $ - $ 66,012,818 $ ---PAGE BREAK--- 44 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Capital asset business-type activity for the year ended June 30, 2014 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 2,058,066 3,718,551 - (3,102,079) 2,674,538 Total capital assets, not being depreciated 9,032,135 3,718,551 - (3,102,079) 9,648,607 Capital assets, being depreciated: Buildings 6,061,001 - - 36,837 6,097,838 Improvements other than buildings 148,714,905 451,446 - 3,060,038 152,226,389 Machinery and equipment 18,751,488 1,192,291 (1,796,195) 555,204 18,702,788 Intangibles 4,309,027 - - (550,000) 3,759,027 Total capital assets, being depreciated 177,836,421 1,643,737 (1,796,195) 3,102,079 180,786,042 Less accumulated depreciation for: Buildings (4,732,975) (96,013) - - (4,828,988) Improvements other than buildings (87,485,955) (4,540,681) - - (92,026,636) Machinery and equipment (11,463,152) (1,144,110) 1,653,197 (89,645) (11,043,710) Intangibles (2,300,998) (90,174) - 89,645 (2,301,527) Total accumulated depreciation and amortization (105,983,080) (5,870,978) 1,653,197 - (110,200,861) Total capital assets, depreciated (net) 71,853,341 (4,227,241) (142,998) - 70,585,181 Net business-type capital assets 80,885,476 $ (508,690) $ (142,998) $ - $ 80,233,788 $ In the government-wide financial statements depreciation was charged as follows by program or activity: Governmental activities: General government 540,145 $ Public safety 742,289 Highways and public improvements 1,919,748 Parks, recreation, and culture 851,821 Total depreciation expense - governmental activities 4,054,003 $ Business-type activities: Water 1,008,531 $ Waste Water 428,728 Storm Water 1,199,304 Power 3,074,664 Murray Parkway Recreation 156,394 Solid Waste 3,357 Total depreciation expense - business-type activities 5,870,978 $ ---PAGE BREAK--- 45 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS NOTE 7 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS At June 30, 2014, interfund balances due to or from other funds was as follows: Receivable Fund Payable Fund Amount General CDBG 22,590 Water Murray Parkway Recreation 125,095 147,685 $ 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 interfund loans 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, 2014 were as follows: Fund Transferring Out Fund Receiving Transfer Amount Water General 455,677 $ Waste Water General 311,430 Storm Water General 112,032 Power General 2,823,483 Solid Waste General 80,743 Redevelopment Agency General 864,246 Municipal Building Authority General 1,768 General Cemetery Perpetual Care 33,873 General Capital Projects 3,706,897 Redevelopment Agency Power 18,264 Redevelopment Agency Capital Projects 80,789 Capital Projects Power 200,000 8,689,202 $ 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--- 46 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 8.49 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, 2013, 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 $191,406 for fiscal year 2014. 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 7.3 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 $1,310,785 in 2014. The Waste Water Fund made a net contribution of $158,276 to the Facility in 2014 and recorded a ($199,251) loss in joint venture resulting in a net decrease in its investment in the Facility of ($40,975). During 2005, the Facility issued $35,000,000 of revenue bonds. The City’s share of the total outstanding obligation at December 31, 2013 is $2,408,952. 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--- 47 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 35 municipalities, one joint action agency, one electric service district, two public utility districts, two water conservancy districts, two co-ops, one municipal utility district, and one nonprofit corporation. 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, 2014 is $1,457,500, 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 155 North 400 West Suite 480, Salt Lake City, UT 84103, or from the Utah State Auditor’s website at http://auditor.utah.gov/accountability/financial-reports-of-local-governments/. ---PAGE BREAK--- 48 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 13 on UTOPIA pledge and loan agreement). ---PAGE BREAK--- 49 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 $ 35,125 Asphalt Grinder 420,000 $ 1.230% 414,080 $ 34,507 The future minimum lease obligations and the net present value of these minimum lease payments as of June 30, 2014 were as follows: June 30, Totals 2015 111,250 $ 2016 111,249 2017 90,261 2018 80,014 Total minimum lease payments 392,774 Less: interest portion (10,004) Present value of minimum lease payments 382,770 Amount due within one year (107,705) Amount due after one year 275,065 $ ---PAGE BREAK--- 50 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, 2014 only $1,030,000 was issued. The City issued $1,343,000 million in 2014 Sales Tax Revenue Bonds for purchase of land for the Redevelopment Agency. This bond issue will be repaid by the Redevelopment Agency Fund. Revenue bonds outstanding at June 30, 2014 by issue are as follows: Original Issue Annual Principal Interest Rate Final Due Date Amount 9,700,000 $15,000 to $1,500,000 4.00% to 5.00% 6/1/2021 9,385,000 5,070,000 $60,000 to 600,000 2.575% 10/1/2023 4,945,000 2,626,000 $102,000 to 165,000 2.5% 10/1/2032 928,000 3,000,000 $110,000 to 215,000 2.00% to 4.00% 2/1/2033 2,790,000 9,990,000 $560,000 to $875,000 3.75% to 5.000% 12/1/2020 4,685,000 4,580,000 $275,000 to $405,000 3.00% to 4.40% 4/1/2023 2,725,000 1,535,000 $235,000 to $275,000 3.00% to 3.75% 4/1/2015 275,000 1,343,000 $262,000 to $276,000 1.32% 4/1/2019 1,343,000 37,844,000 $ 27,076,000 $ Bond Description Storm Water 2013 Sales Tax Series 2009B Electric Series 2006 Water/Sewer Series 2012 Sewer Series 2012 Sales Tax Series 2007 Sales Tax Series 2009A Sales Tax Series 2014 Revenue bond debt service requirements to maturity are as follows: Fiscal Year(s) Principal Interest Totals 3,036,000 $ 948,444 $ 3,984,444 $ 3,255,000 819,808 4,074,808 3,185,000 692,414 3,877,414 3,323,000 582,408 3,905,408 3,410,000 470,215 3,880,215 9,472,000 849,349 10,321,349 725,000 160,000 885,000 2030 - 2034 670,000 51,000 721,000 27,076,000 $ 4,573,638 $ 31,649,638 $ 2015 2016 2017 2018 2019 2020 - 2024 2025 - 2029 ---PAGE BREAK--- 51 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Changes in Long-Term Liabilities Long-term liability activity for the year ended June 30, 2014 was as follows: Beginning Balance Increases Decreases Ending Balance Due in One Year Governmental activities Bonds payable: Sales tax 8,860,000 $ 1,343,000 $ (1,175,000) $ 9,028,000 $ 1,457,000 $ Premium 115,319 - (17,824) 97,495 - Total bonds payable 8,975,319 1,343,000 (1,192,824) 9,125,495 1,457,000 Capital leases 76,612 420,000 (113,842) 382,770 107,705 Compensated absences 2,572,553 2,039,572 (1,908,964) 2,703,161 1,884,736 Net OPEB payable 613,636 - (266,328) 347,308 - Governmental activities, long-term liabilities 12,238,120 $ 3,802,572 $ (3,481,958) $ 12,558,734 $ 3,449,441 $ Business-type activities Bonds payable: Revenue bonds payable 24,120,000 $ - $ (6,072,000) $ 18,048,000 $ 1,579,000 $ Deferred loss (321,382) - 29,896 (291,486) - Premium 407,843 - (167,684) 240,159 - Total bonds payable 24,206,461 - (6,209,788) 17,996,673 1,579,000 Compensated absences 1,074,191 715,275 (656,924) 1,132,542 722,969 Net OPEB payable 429,627 - (118,217) 311,410 - Business-type activities, long-term liabilities 25,710,279 $ 715,275 $ (6,984,929) $ 19,440,625 $ 2,301,969 $ 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--- 52 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. The future of the IPA power plant, after the original contract expires in 2027, is in discussion. Because of recent California air emission law changes, which outlaw any coal fired power generation to cross California state lines, the future of the plant is in question. The California municipal utilities consume up to 95% of the generation from the plant and so keeping those cities in the entitlement mix is imperative. Therefore, the IPA Board and staff is presently proposing the change of fuel from coal to natural gas prior to the agreement expiration, a move which would keep the majority of the existing shareholders in the mix. In order to pursue this option of fuel change all 36 existing owners must sign an agreement allowing IPA to study, engineer and actively begin modification of the plant. To date, 24 of those entities have signed agreements allowing IPA to pursue the major plant modification. Murray City is one that has signed approval. It is expected that the remaining entities will also sign. The continuation of the plant beyond 2027, and a continued cooperative agreement with the Californians, remains imperative to Murray City’s resource portfolio. ---PAGE BREAK--- 53 MURRAY CITY NOTES TO THE FINANCIAL STATEMENTS Commitments The City has active construction commitments with street, water line, waste water line, and storm drain projects as of June 30, 2014. At year end, the City’s commitments with contractors are as follows: Remaining Project Type Spent-to-Date commitment Street construction 1,170 $ 1,266,501 $ Water line construction 789,430 1,541,121 Waste water line construction 25,192 24,265 Storm drain construction 699,309 1,263,232 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. 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. 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, 2014 was $1,615,214, with a 2 percent increase per year through 2040. The total debt service payments paid by the City as of June 30, 2014 is $6,803,400. 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, 2014 is $184,970,208 of which the City is responsible for 12.30 percent or $22,751,336. ---PAGE BREAK--- 54 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, 2014 is $39,355,000 of which the City is responsible for 13.40 percent or $5,273,570. 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, 2014, 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 $2,133,581 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, 2014; however, the RDA has agreed to make payments on the Series 2009A, 2009B, and 2014 sales tax bonds. During the year ended June 30, 2014, funds expended by the RDA were limited to the categories of debt service and administration costs. Administrative costs totaled $2,028,340, low income housing $591,577, and debt service payments totaled $843,042 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--- 55 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; 13.28 percent to the Local Government Contributory Retirement System, 17.29 percent to the related Noncontributory Retirement System, 32.14 percent to the Public Safety Noncontributory Retirement System, and 2.96 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, 2014, 2013 and 2012, were equal to the required contributions for each year. The contribution amounts are as follows: 2014 2013 2012 Local Governmental Contributory Retirement System 214,394 $ 178,865 $ 139,373 $ Local Governmental Noncontributory Retirement System 2,123,458 1,958,863 1,647,739 Public Safety Retirement System for Employers with Social Security Coverage 1,136,705 1,061,989 983,825 Firefighters Retirement System 580,086 565,429 491,798 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--- 56 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 $764,092, $756,820, and $720,372 for the years ended June 30, 2014, 2013 and 2012, 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, 2014 was $52,500. 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 31 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, 2014. 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 the 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 336,467 $ Adjustments to annual required contribution (238,900) Contributions made (97,567) Increase in net OPEB obligation - Net OPEB obligation beginning of year 1,043,263 Net OPEB obligation end of year 658,718 $ ---PAGE BREAK--- 57 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 2014 and the two preceding years were as follows: Year Ended Annual OPEB cost Percentage of annual OPEB cost contributed Net OPEB obligation June 30, 2012 331,193 $ 39.9% 3,344,557 $ June 30, 2013 356,484 37.3% 1,043,263 June 30, 2014 336,467 29.0% 658,718 The City used an alternative measurement method to estimate the OPEB liability. The method uses the retiree premiums from June 2014 to project out the future liability with an 8 percent growth rate. This grow rate is comparable to the City’s historical insurance rate increases. With no future plan additions, the only changes in the liability occur when retirees discontinue, change coverage, or reach age 65. NOTE 19 – SUBSEQUENT EVENT The City issued an additional $486,000 of the Sewer Series 2012 bonds in August 2014. ---PAGE BREAK--- 58 SUPPLEMENTARY INFORMATION ---PAGE BREAK--- 59 MURRAY CITY COMBINING BALANCE SHEET – NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2014 Permanent Community Total Municipal Development Cemetery Nonmajor Building Library Block Grant Perpetual Care Governmental Authority Fund Fund Fund Funds ASSETS Cash and cash equivalents - $ 382,302 $ - $ 1,403,959 $ 1,786,261 $ Receivables: Property taxes - 1,479,103 - - 1,479,103 Other - 224 - - 224 Due from other governments - - 36,738 - 36,738 Restricted cash - 15,810 - - 15,810 Total assets - 1,877,439 36,738 1,403,959 3,318,136 LIABILITIES Accounts payable - 54,705 14,148 - 68,853 Accrued liabilities - 24,186 - - 24,186 Due to other funds - - 22,590 - 22,590 Total liabilities - 78,891 36,738 - 115,629 DEFERRED INFLOWS OF RESOURCES Deferred inflows-property taxes - 1,460,991 - - 1,460,991 Total deferred inflows of resources - 1,460,991 - - 1,460,991 FUND BALANCE Nonspendable - 15,810 - - 15,810 Restricted - 321,747 - - 321,747 Committed - - - 1,403,959 1,403,959 Assigned - - - - - Total fund balances - 337,557 - 1,403,959 1,741,516 Total liabilities, deferred inflows of resources, and fund balances (deficits) - $ 1,877,439 $ 36,738 $ 1,403,959 $ 3,318,136 $ Special Revenue ---PAGE BREAK--- 60 MURRAY CITY COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2014 Permanent Community Total Municipal Development Cemetery Nonmajor Building Library Block Grant Perpetual Care Governmental Authority Fund Fund Fund Funds REVENUES Property taxes - $ 1,598,170 $ - $ - $ 1,598,170 $ Intergovernmental - 12,180 36,738 - 48,918 Charges for services - - - 3,510 3,510 Fines and forfeitures - 60,327 - - 60,327 Investment income - 5,190 - 6,983 12,173 Miscellaneous - 7,701 - - 7,701 Total revenues - 1,683,568 36,738 10,493 1,730,799 EXPENDITURES Highways and public improvements - - 36,738 - 36,738 Parks, recreation, and culture - 1,676,261 - - 1,676,261 Debt service: Interest and fiscal charges - - - - - Total expenditures - 1,676,261 36,738 - 1,712,999 Excess of revenues over (under) expenditures - 7,307 - 10,493 17,800 OTHER FINANCING SOURCES (USES) Transfers in - - - 33,873 33,873 Transfers out (1,768) - - - (1,768) Total other financing uses (1,768) - - 33,873 32,105 Net change in fund balance (1,768) 7,307 - 44,366 49,905 Fund balance, beginning of year 1,768 330,250 - 1,359,593 1,691,611 Fund balance, end of year - $ 337,557 $ - $ 1,403,959 $ 1,741,516 $ Special Revenue ---PAGE BREAK--- 61 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – MUNICIPAL BUILDING AUTHORITY – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2014 Actual Variance with Original Final Amounts Final Budget REVENUES Investment income - $ - $ - $ - $ Total revenues - - - - EXPENDITURES Highways and public improvements 1,000 1,000 - 1,000 Total expenditures 1,000 1,000 - 1,000 Excess (deficiency) of revenues over (under) expenditures (1,000) (1,000) - 1,000 OTHER FINANCING SOURCES Transfers in 1,000 1,000 - (1,000) Transfer out - (1,769) (1,768) 1 Total other financing sources 1,000 (769) (1,768) (999) Net change in fund balance - $ (1,769) $ (1,768) 1 $ Fund balance at beginning of year 1,768 Fund balance at end of year - $ Budgeted Amounts ---PAGE BREAK--- 62 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – LIBRARY FUND – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2014 Actual Variance with Original Final Amounts Final Budget REVENUES Property taxes 1,619,738 $ 1,619,738 $ 1,598,170 $ (21,568) $ Intergovernmental 12,500 25,822 12,180 (13,642) Fines and forfeitures 45,000 45,000 60,327 15,327 Investment income 6,000 6,000 5,190 (810) Miscellaneous 6,500 6,500 7,701 1,201 Total revenues 1,689,738 1,703,060 1,683,568 (19,492) EXPENDITURES Parks, recreation, and culture 1,689,738 1,723,060 1,676,261 46,799 Total expenditures 1,689,738 1,723,060 1,676,261 46,799 Excess (deficiency) of revenues over (under) expenditures - (20,000) 7,307 27,307 Net change in fund balance - $ (20,000) $ 7,307 27,307 $ Fund balance at beginning of year 330,250 Fund balance at end of year 337,557 $ Budgeted Amounts ---PAGE BREAK--- 63 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – REDEVELOPMENT FUND – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2014 Actual Variance with Original Final Amounts Final Budget REVENUES Property taxes 2,339,342 $ 2,339,342 $ 2,133,581 $ (205,761) $ Rents and concessions - - - - Investment income 8,000 8,000 11,902 3,902 Miscellaneous - - 3,644 3,644 Total revenues 2,347,342 2,347,342 2,149,127 (198,215) EXPENDITURES Highways and public improvements 1,633,209 3,176,008 2,472,964 703,044 Total expenditures 1,633,209 3,207,209 2,499,660 707,549 Excess (deficiency) of revenues over (under) expenditures 714,133 (859,867) (350,533) 509,334 OTHER FINANCING SOURCES (USES) Bonds issued - 1,343,000 1,343,000 - Transfer out (1,064,246) (1,083,246) (963,299) 119,947 Total other financing sources (uses) (1,064,246) 259,754 379,701 119,947 Net change in fund balance (350,113) $ (600,113) $ 29,168 629,281 $ Fund balance at beginning of year 2,356,725 Fund balance at end of year 2,385,893 $ Budgeted Amounts ---PAGE BREAK--- 64 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, 2014 Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental 116,679 $ 147,380 $ 36,738 $ (110,642) $ Total revenues 116,679 147,380 36,738 (110,642) EXPENDITURES Highways and public improvements 116,679 147,380 36,738 110,642 Total expenditures 116,679 147,380 36,738 110,642 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--- 65 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – CAPITAL PROJECTS – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2014 Actual Variance with Original Final Amounts Final Budget REVENUES Intergovernmental 725,000 $ 2,525,000 $ 2,525,000 $ - $ Investment income - - 39,391 39,391 Miscellaneous income - 20,335 30,123 9,788 Total revenues 725,000 2,545,335 2,594,514 49,179 EXPENDITURES General government 151,620 737,620 193,993 543,627 Public safety 370,722 500,631 463,420 37,211 Highways and public improvements 2,423,313 4,242,838 1,084,716 3,158,122 Parks, recreation, and culture 182,000 193,500 171,986 21,514 Debt service Principal 28,500 26,864 23,548 3,316 Interest and fiscal charges - 1,636 1,635 1 Total expenditures 3,156,155 5,703,089 1,939,298 3,763,791 Excess (deficiency) of revenues over (under) expenditures (2,431,155) (3,157,754) 655,216 3,812,970 OTHER FINANCING SOURCES (USES) Capital leases (425,000) 425,000 414,080 (10,920) Transfers in 2,200,000 4,290,769 3,787,686 (503,083) Sale of capital assets - - 29,336 29,336 Total other financing sources (uses) 1,775,000 4,515,769 4,031,102 (484,667) Net change in fund balance (656,155) $ 1,358,015 $ 4,686,318 3,328,303 $ Fund balance at beginning of year 8,689,092 Fund balance at end of year 13,375,410 $ Budgeted Amounts ---PAGE BREAK--- 66 MURRAY CITY SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – CEMETERY PERPETUAL CARE FUND – BUDGET TO ACTUAL FOR THE YEAR ENDED JUNE 30, 2014 Actual Variance with Original Final Amounts Final Budget REVENUES Perpetual care fees - $ - $ 3,510 $ 3,510 $ Investment income 7,000 7,000 6,983 (17) Total revenues 7,000 7,000 10,493 3,493 EXPENDITURES Parks, recreation, and culture - - - - Total expenditures - - - - Excess (deficiency) of revenues over (under) expenditures 7,000 7,000 10,493 3,493 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 40,873 $ 40,873 $ 44,366 3,493 $ Fund balance at beginning of year 1,359,593 Fund balance at end of year 1,403,959 $ Budgeted Amounts ---PAGE BREAK--- 67 MURRAY CITY STATEMENT OF NET POSITION – INTERNAL SERVICE FUNDS JUNE 30, 2014 Central Retained Risk Garage Reserve Fund Fund Total ASSETS Current assets: Cash and cash equivalents 127,304 $ 1,547,679 $ 1,674,983 $ Receivables - accounts 531 - 531 Inventory 70,548 - 70,548 Prepaid items - - - Total current assets 198,383 1,547,679 1,746,062 Noncurrent assets: Capital assets: Machinery and equipment 151,134 - 151,134 Less: accumulated depreciation (103,486) - (103,486) Total noncurrent assets 47,648 - 47,648 Total assets 246,031 1,547,679 1,793,710 LIABILITIES Current liabilities: Accounts payable 49,124 13,830 62,954 Accrued liabilities 7,108 254,905 262,013 Compensated absences 22,455 7,033 29,488 Total current liabilities 78,687 275,768 354,455 Noncurrent liabilities: Compensated absences 9,751 3,054 12,805 Total noncurrent liabilities 9,751 3,054 12,805 Total liabilities 88,438 278,822 367,260 NET POSITION Invested in capital assets 47,648 - 47,648 Unrestricted 109,945 1,268,857 1,378,802 Total net position 157,593 $ 1,268,857 $ 1,426,450 $ ---PAGE BREAK--- 68 MURRAY CITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION – INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2014 Central Retained Risk Garage Reserve Fund Fund Total OPERATING REVENUES Charges for services 430,118 $ 901,673 $ 1,331,791 $ Total operating revenues 430,118 901,673 1,331,791 OPERATING EXPENSES Wages and benefits 308,492 176,525 485,017 Administrative fees 750 500 1,250 Depreciation 3,935 - 3,935 Operations and maintenance 28,824 835,310 864,134 Total operating expenses 342,001 1,012,335 1,354,336 Operating income (loss) 88,117 (110,662) (22,545) NONOPERATING REVENUES (EXPENSES) Investment income - 7,597 7,597 Total nonoperating revenues (expenses) - 7,597 7,597 Change in net position 88,117 (103,065) (14,948) Total net position - beginning 69,476 1,371,922 1,441,398 Total net position - ending 157,593 $ 1,268,857 $ 1,426,450 $ ---PAGE BREAK--- 69 MURRAY CITY STATEMENT OF CASH FLOWS – INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2014 Central Retained Risk Garage Reserve Fund Fund Total Cash flows from operating activities Receipts from customers and users 429,587 $ 901,673 $ 1,331,260 $ Payments to suppliers of goods and services (34,147) (820,591) (854,738) Payments to employees for services (307,085) (172,969) (480,054) Payment for interfund services (750) (500) (1,250) Net cash provided (used) by operating activities 87,605 (92,387) (4,782) Cash flows from investing activities Investment income - 7,597 7,597 Net cash provided by investing activities - 7,597 7,597 Net increase (decrease) in cash and cash equivalents 87,605 (84,790) 2,815 Cash and cash equivalents, beginning of year 39,699 1,632,469 1,672,168 Cash and cash equivalents, end of year 127,304 $ 1,547,679 $ 1,674,983 $ Reconciliation of operating income to net cash provided by operating activities Operating income (loss) 88,117 $ (110,662) $ (22,545) $ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 3,935 - 3,935 (Increase) decrease in inventory and prepaid items 1,973 12,941 14,914 (Increase) decrease in liabilities (5,889) 5,334 (555) Net cash provided (used) by by operating activities 87,605 $ (92,387) $ (4,782) $ ---PAGE BREAK--- 70 MURRAY CITY STATEMENT OF NET POSITION – NONMAJOR PROPRIETARY FUNDS JUNE 30, 2014 Murray Solid Parkway Waste Recreation Management Telecommunication Fund Fund Fund Total ASSETS Current assets: Cash and cash equivalents 717,705 $ 529,016 $ 102,013 $ 1,348,734 $ Investments - - - - Accounts receivable (net) - 110,091 6,036 116,127 Notes receivable - - 30,984 30,984 Inventory 84,256 - - 84,256 Prepaids 250 - - 250 Total current assets 802,211 639,107 139,033 1,580,351 Noncurrent assets: Notes receivable - - 430,235 430,235 Capital assets: Land 326,336 - - 326,336 Buildings 819,374 - - 819,374 Improvements other than buildings 3,734,149 - - 3,734,149 Machinery and equipment 918,168 54,613 - 972,781 Accumulated depreciation (4,784,102) (3,357) - (4,787,459) Total noncurrent assets 1,013,925 51,256 430,235 1,495,416 Total assets 1,816,136 690,363 569,268 3,075,767 LIABILITIES Current liabilities: Accounts payable 10,382 87,944 - 98,326 Accrued liabilities 57,937 1,468 - 59,405 Due to other funds 125,095 - - 125,095 Accrued interest payable - - - - Compensated absences 78,609 2,522 - 81,131 Notes payable - - 30,984 30,984 Bonds and leases payable - - - - Total current liabilities 272,023 91,934 30,984 394,941 Noncurrent liabilities: Notes payable - - 430,235 430,235 Compensated absences 44,533 1,430 - 45,963 Bonds and leases payable - - - - Total noncurrent liabilities 44,533 1,430 430,235 476,198 Total liabilities 316,556 93,364 461,219 871,139 NET POSITION Net investment in capital assets 1,013,925 51,256 - 1,065,181 Unrestricted 485,655 545,743 108,049 1,139,447 Total net position 1,499,580 $ 596,999 $ 108,049 $ 2,204,628 $ Enterprise Funds ---PAGE BREAK--- 71 MURRAY CITY STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION – NONMAJOR PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2014 Murray Solid Parkway Waste Recreation Management Telecommunication Fund Fund Fund Total OPERATING REVENUES Charges for services 1,320,141 $ 1,368,410 $ 70,828 $ 2,759,379 $ Other - 1,078 - 1,078 Total operating revenues 1,320,141 1,369,488 70,828 2,760,457 OPERATING EXPENSES Wages and benefits 767,786 65,578 - 833,364 Administrative fees 750 113,746 - 114,496 Depreciation 156,394 3,357 - 159,751 Operations and maintenance 360,712 1,006,374 71,298 1,438,384 Total operating expenses 1,285,642 1,189,055 71,298 2,545,995 Operating income (loss) 34,499 180,433 (470) 214,462 NONOPERATING REVENUES (EXPENSES) Investment income 2,966 2,245 430 5,641 Interest and fiscal charges (4,119) - - (4,119) Gain/(loss) on disposal of assets 1,624 - - 1,624 Total nonoperating revenues (expenses) 471 2,245 430 3,146 Income before transfers 34,970 182,678 (40) 217,608 Transfers out - (80,743) - (80,743) Change in net position 34,970 101,935 (40) 136,865 Total net position - beginning 1,464,610 495,064 108,089 2,067,763 Total net position - ending 1,499,580 $ 596,999 $ 108,049 $ 2,204,628 $ Enterprise Funds ---PAGE BREAK--- 72 MURRAY CITY STATEMENT OF CASH FLOWS – NONMAJOR PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2014 Murray Solid Parkway Waste Recreation Management Telecommunication Fund Fund Fund Total Cash flows from operating activities Receipts from customers and users 1,320,141 $ 1,361,207 $ 71,619 $ 2,752,967 $ Payments to suppliers of goods and services (329,457) (1,044,214) (71,298) (1,444,969) Payments to employees for services (757,971) (64,846) - (822,817) Payment for interfund services (750) (113,746) - (114,496) Net cash provided (used) by operating activities 231,963 138,401 321 370,685 Cash flows from noncapital financing activities Transfers from other funds - - - - Transfers to other funds - (80,743) - (80,743) Changes to interfund receivables and payables (39,681) - - (39,681) Net cash provided (used) by noncapital financing activities (39,681) (80,743) - (120,424) Cash flows from capital and related financing activities Proceeds from sale of capital assets 1,624 - - 1,624 Purchases of capital assets (57,151) (54,613) - (111,764) Interest and fiscal charges paid on capital debt (4,119) - - (4,119) Net cash provided (used) by capital activities (59,646) (54,613) - (114,259) Cash flows from investing activites Investment income 2,966 2,245 430 5,641 Net cash provided by investing activities 2,966 2,245 430 5,641 Net increase (decrease) in cash and cash equivalents 135,602 5,290 751 141,643 Cash and cash equivalents - beginning of year 582,103 523,726 101,262 1,207,091 Cash and cash equivalents - end of year 717,705 $ 529,016 $ 102,013 $ 1,348,734 $ Reconciliation of operating income to net cash provided (used) by operating activities Operating income (loss) 34,499 $ 180,433 $ (470) $ 214,462 $ Adjustments to reconcile operating income to net cash provided by: Depreciation and amortization 156,394 3,357 - 159,751 (Increase) decrease in receivables - (8,281) 791 (7,490) (Increase) decrease in inventory and prepaid items 1 - - 1 (Increase) decrease in liabilities 41,069 (37,108) - 3,961 Net cash provided by operating activities 231,963 $ 138,401 $ 321 $ 370,685 $ Enterprise Funds ---PAGE BREAK--- 73 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--- 74 MURRAY CITY NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED IN THOUSANDS) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Governmental activities Net investment in capital assets 29,542 $ 52,275 $ 52,908 $ 52,903 $ 59,490 $ 58,427 $ 55,550 $ 56,770 $ 57,483 $ 56,505 $ Restricted 1,899 1,900 520 520 6,295 3,432 4,151 2,897 2,364 5,878 Unrestricted 18,077 20,642 18,270 22,141 8,984 10,222 14,273 17,159 20,391 20,496 Total governmental net position 49,518 $ 74,817 $ 71,698 $ 75,564 $ 74,769 $ 72,081 $ 73,974 $ 76,826 $ 80,238 $ 82,879 $ Business-type activities Net investment in capital assets 39,193 $ 42,286 $ 56,427 $ 53,269 $ 53,074 $ 51,828 $ 55,429 $ 55,047 $ 56,679 $ 62,237 $ Restricted 314 314 - - 1,003 1,000 1,005 - 3,215 2,303 Unrestricted 18,453 16,911 16,279 18,306 16,660 14,758 16,389 20,611 24,892 24,284 Total business-type net position 57,960 $ 59,511 $ 72,706 $ 71,575 $ 70,737 $ 67,586 $ 72,823 $ 75,658 $ 84,786 $ 88,824 $ Primary government Net investment in capital assets 68,735 $ 94,561 $ 109,335 $ 106,172 $ 112,564 $ 110,255 $ 110,979 $ 111,817 $ 114,162 $ 118,742 $ Restricted 2,213 2,214 520 520 7,298 4,432 5,157 2,897 5,579 8,181 Unrestricted 36,530 37,553 34,549 40,447 25,644 24,980 30,662 37,770 45,283 44,780 Total primary government net position 107,478 $ 134,328 $ 144,404 $ 147,139 $ 145,506 $ 139,667 $ 146,798 $ 152,484 $ 165,024 $ 171,703 $ ---PAGE BREAK--- 75 MURRAY CITY CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED IN THOUSANDS) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Expenses Governmental activities General government 4,054 $ 4,557 $ 5,090 $ 5,536 $ 9,033 $ 9,821 $ 10,198 $ 8,984 $ 7,406 $ 8,279 $ Public safety 13,877 14,387 15,758 15,990 18,182 18,459 17,790 16,679 16,356 17,996 Highways and public improvements 4,408 8,037 6,349 5,989 7,008 8,034 7,277 7,880 8,666 6,837 Parks, recreation, and culture 7,464 8,025 8,183 7,741 7,265 7,717 7,480 7,068 7,539 7,947 Debt service - interest and fiscal charges 774 709 427 489 559 621 548 440 384 336 Total governmental expenses 30,577 35,715 35,807 35,745 42,047 44,652 43,293 41,051 40,351 41,395 Business-type activities Water 4,047 3,663 4,023 3,520 4,223 5,998 4,887 4,085 4,128 4,139 Waste water 3,033 3,404 3,354 2,746 3,563 3,274 2,732 3,255 3,354 3,412 Power 30,428 32,394 33,585 35,397 35,358 32,420 32,432 31,190 30,312 32,412 Murray parkway 1,469 1,398 1,729 1,538 1,574 1,485 1,614 1,697 1,260 1,290 Telecommunication - - - - - - - 33 63 71 Solid waste 683 742 782 711 832 806 942 1,050 1,127 1,189 Storm water - - 1,463 1,382 1,392 1,421 1,691 1,885 1,918 2,240 Total business-type activities expenses 39,660 41,601 44,936 45,294 46,942 45,404 44,298 43,195 42,162 44,753 Total primary government expenses 70,237 $ 77,316 $ 80,743 $ 81,039 $ 88,989 $ 90,056 $ 87,591 $ 84,246 $ 82,513 $ 86,148 $ Program revenues Governmental activities Charges for services General government 4,303 $ 3,272 $ 3,386 $ 3,616 $ 5,964 $ 5,926 $ 6,149 $ 3,423 $ 3,090 $ 3,338 $ Public safety 234 338 323 340 867 644 1,500 1,183 900 1,531 Highways & public improvements 1,743 798 1,041 - 97 85 78 99 58 71 Parks, recreation, and culture 1,431 1,541 1,724 1,742 1,678 1,750 1,925 1,775 1,616 1,695 Operating grants and contributions 370 457 555 365 457 406 1,385 4,478 5,085 - Capital grants & contributions 1,366 1,491 14,893 1,591 1,232 2,179 2,472 2,087 626 4,606 Total governmental program revenues 9,447 7,897 21,922 7,654 10,295 10,990 13,509 13,045 11,375 11,241 Business-type activities Charges for services Water 5,083 5,106 5,566 5,594 5,492 4,781 5,989 6,373 5,938 5,497 Waste water 3,887 3,257 3,399 3,448 3,556 3,397 4,072 4,348 4,196 4,371 Power 28,963 29,904 33,379 33,707 35,617 33,187 36,329 37,628 37,990 37,514 Murray parkway 1,345 1,475 1,592 1,542 1,596 1,421 1,347 1,563 1,460 1,320 Telecommunication - - - - - - - 34 67 71 Solid waste 813 807 829 833 819 818 962 1,010 1,212 1,369 Storm water 272 278 1,522 1,508 1,467 1,400 1,433 1,403 1,757 1,864 Capital grants & contributions - - - - - - 2,860 833 743 38 Total business-type program revenues 40,363 40,827 46,287 46,632 48,547 45,005 52,992 53,192 53,363 52,044 Total primary government program revenues 49,810 $ 48,724 $ 68,209 $ 54,286 $ 58,842 $ 55,995 $ 66,501 $ 66,237 $ 64,738 $ 63,285 $ Net (expense)/revenue Governmental activities (21,131) $ (27,818) $ (13,885) $ (28,090) $ (31,752) $ (33,663) $ (29,783) $ (28,006) $ (28,976) $ (30,154) $ Business-type activities 704 (774) 1,351 1,337 1,604 (399) 8,694 9,997 11,201 7,291 Total primary government net expense (20,427) $ (28,592) $ (12,534) $ (26,753) $ (30,148) $ (34,062) $ (21,089) $ (18,009) $ (17,775) $ (22,863) $ General revenues & other changes in net position Governmental activities Taxes Sales taxes 12,421 $ 13,545 $ 14,097 $ 13,872 $ 12,444 $ 12,293 $ 12,800 $ 12,847 $ 12,916 $ 13,548 $ Property taxes 6,801 8,517 8,784 8,975 8,774 9,700 9,823 10,076 10,299 10,293 Franchise taxes 4,189 4,743 4,619 4,919 5,056 4,931 4,925 4,849 4,993 4,932 Investment income 464 727 1,069 943 514 396 310 296 203 120 Gain/(loss) on sale & disposal of assets 127 115 109 165 51 (85) - 11 94 57 Miscellaneous 203 202 324 269 1,181 735 196 207 277 279 Rent, transfers & miscellaneous 209 1,019 (10,781) 2,813 2,937 3,005 3,622 3,130 3,606 3,565 Total governmental activities 24,414 28,868 18,221 31,956 30,957 30,975 31,676 31,416 32,388 32,794 Business-type activities Interest income 369 785 831 760 434 215 183 245 287 288 Gain/(loss) on sale & disposal of assets 52 2,558 199 579 60 39 (17) 163 31 25 Rent & transfers (209) (1,019) 10,813 (2,813) (2,937) (3,005) (3,622) (3,130) (3,606) (3,565) Total business-type activities 212 2,324 11,843 (1,474) (2,443) (2,751) (3,456) (2,722) (3,288) (3,252) Total primary government 24,626 $ 31,192 $ 30,064 $ 30,482 $ 28,514 $ 28,224 $ 28,220 $ 28,694 $ 29,100 $ 29,542 $ Change in net position Governmental activities 3,284 $ 1,049 $ 4,336 $ 3,866 $ (796) $ (2,687) $ 1,893 $ 3,410 $ 3,412 $ 2,640 $ Business-type activities 915 1,551 13,194 (136) (837) (3,151) 5,238 7,275 7,913 4,039 Total primary government 4,199 $ 2,600 $ 17,530 $ 3,730 $ (1,633) $ (5,838) $ 7,131 $ 10,685 $ 11,325 $ 6,679 $ In FY2014 the state auditor has required E911 fees passed to VECC to be recorded as an expense and revenue for Public Safety. ---PAGE BREAK--- 76 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 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 2014 10,293,086 13,461,012 4,931,685 86,875 - 28,772,658 Note: Beginning in 2006 In Lieu of Tax Transfers were no longer classified as tax revenue. ---PAGE BREAK--- 77 MURRAY CITY FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED IN THOUSANDS) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 General fund Reserved 1,745 $ 1,280 $ 3,065 $ 3,035 $ 2,459 $ 1,490 $ - $ - $ - $ - $ Unreserved 6,233 7,781 8,092 5,962 7,060 7,522 - - - - Nonspendable - - - - - - - 235 - 123 Restricted - - - - - - 2,159 1,917 363 163 Assigned - - - - - - - - - - Unassigned - - - - - - 10,546 9,150 9,638 8,440 Total General Fund 7,978 $ 9,061 $ 11,157 $ 8,997 $ 9,519 $ 9,012 $ 12,705 $ 11,302 $ 10,001 $ 8,726 $ All other governmental funds Reserved 1,978 $ 1,952 $ 575 $ 576 $ 5,077 $ 3,028 $ - $ - $ - $ - $ Unreserved 1,617 1,572 4,461 4,779 2,447 2,701 - - - - Nonspendable - - - - - - 20 - - 16 Restricted - - - - - - 1,472 461 1,481 5,715 Committed - - - - - - 1,322 1,316 1,359 1,404 Assigned - - - - - - 3,361 6,223 9,897 10,368 Unassigned - - - - - - - - - - Total all other governmental funds 3,595 $ 3,524 $ 5,036 $ 5,355 $ 7,524 $ 5,729 $ 6,175 $ 8,000 $ 12,737 $ 17,503 $ Note: Per GASB Statement No. 54, fund balances have been reclassified beginning fiscal year 2011. ---PAGE BREAK--- 78 MURRAY CITY CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED BASIS OF ACCOUNTING) (AMOUNTS EXPRESSED IN THOUSANDS) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenues Taxes & special assessments 24,845 $ 25,247 $ 27,644 $ 27,939 $ 26,181 $ 27,222 $ 27,442 $ 27,625 $ 28,208 $ 28,773 $ Licenses & permits 2,235 1,449 1,659 1,629 1,236 1,180 1,439 1,526 1,380 1,400 Intergovernmental 1,736 1,948 2,099 1,956 1,688 2,585 3,423 4,478 5,085 4,417 Administrative fees - - - - 2,989 3,003 2,742 2,994 3,025 - Charges for services 1,776 1,985 2,122 2,043 2,597 2,431 3,514 3,057 2,575 2,892 Fines & forfeitures 2,384 2,300 2,477 2,026 1,784 1,791 1,958 1,897 1,710 1,938 Rents & concessions 1,326 1,314 1,297 - - - - - - - Miscellaneous 203 202 325 269 1,181 734 196 207 278 703 Interest 464 727 1,026 905 496 391 306 286 194 113 Total revenues 34,969 35,172 38,649 36,767 38,152 39,337 41,020 42,070 42,455 40,236 Expenditures General government 4,566 5,105 5,407 5,212 7,969 7,991 7,952 9,697 8,561 6,169 Public safety 13,194 14,624 16,166 16,003 19,804 16,927 16,719 15,987 16,424 17,387 Highways & public improvements 3,952 6,340 3,619 3,342 3,467 4,738 4,657 6,204 6,496 6,190 Parks, recreation and culture 6,842 7,161 7,552 6,868 6,847 6,740 6,657 6,325 6,957 5,785 Capital outlay 2,967 231 1,371 8,358 4,342 5,134 1,058 2,883 3,377 3,315 Principal 1,260 1,300 1,340 1,305 1,723 2,066 2,634 1,754 1,524 1,289 Interest 772 713 448 515 515 659 589 475 410 353 Bond issuance costs - - 159 - 141 - - - - - Pledge payment - UTOPIA - - - - - 821 1,123 1,661 1,584 1,615 Total expenditures 33,553 35,474 36,062 41,603 44,808 45,076 41,389 44,986 45,333 42,103 Excess of revenues over (under) expenditures 1,416 (302) 2,587 (4,836) (6,656) (5,739) (369) (2,916) (2,878) (1,867) Other financing sources (uses) Proceeds from borrowing - - 10,156 - 6,162 - - - - 1,343 Payments to refunding bond escrow - - (11,619) - (1,520) - - - - Capital lease financing 733 180 - - 1,557 207 - - 96 420 Transfers in 245 1,576 5,195 8,809 4,681 4,181 4,824 7,261 10,923 8,471 Transfers out (245) (557) (2,842) (5,996) (1,744) (1,176) (1,202) (4,131) (7,317) (4,906) Sales of capital assets 141 115 130 184 210 224 886 208 1,363 29 Total other financing sources (uses) 874 1,314 1,020 2,997 9,346 3,436 4,508 3,338 5,065 5,357 Net change in fund balances 2,290 $ 1,012 $ 3,607 $ (1,839) $ 2,690 $ (2,303) $ 4,139 $ 422 $ 2,187 $ 3,490 $ Debt service as a % of noncapital expenditures 6.45% 6.02% 5.22% 4.57% 5.26% 6.43% 8.44% 5.21% 4.46% 4.06% In FY2014 the Utah State Auditor started requiring that the govermental activities be reported without administrative fees. In FY2014 the Utah State Auditor started requiring that E911 fees being passed to VECC be reported as income and expenditures. ---PAGE BREAK--- 79 MURRAY CITY ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS 2005 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.[PHONE REDACTED] 3,445,859,945 6,253,259,680 55.11% 0.002216 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--- 80 MURRAY CITY DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS City Direct Rate 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 2014 0.001782 0.00700 0.00043 0.00318 0.00002 0.00045 Overlapping rates are those of local and county governments that apply to property owners within Murray City. Source: Utah State Tax Commission Salt Lake County Mosquito Abatement District Central Utah Water Conservation Overlapping Rates Fiscal Year Total Murray City Direct Murray School District Murray City Library ---PAGE BREAK--- 81 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 8.58% 1 7.34% Auto Sales 2 3.35% 4 3.04% Furniture Store 3 2.00% 2 4.38% Clothing Store 4 2.68% 6 2.85% Auto Sales 5 2.38% 5 2.97% Auto Sales 6 2.19% 9 2.03% Auto Sales 7 2.18% 8 2.47% Warehouse Store 8 2.04% 3 3.08% Electronics Store 9 2.00% Auto Sales 10 1.99% Auto Sales 11 1.65% 7 2.61% Auto Sales 12 1.65% 15 1.68% Municipality 13 1.38% 18 1.39% Electronics Store 14 1.38% 13 1.71% Auto Sales 15 1.29% 19 1.38% Building Products 16 1.24% 14 1.71% Department Store 17 1.22% 12 1.83% Auto Sales 18 1.00% 20 1.20% Food Retailer 19 0.97% 17 1.47% Auto Sales 10 1.98% Department Store 11 1.87% Total 41.17% 43.14% Percentage based on direct point of sales tax collection of FY2014 $18,868,093 and FY2005 $15,191,381 Source: Utah State Tax Commission 2014 2005 ---PAGE BREAK--- 82 MURRAY CITY PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN YEARS Amount Amount 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% 157,860 5,961,277 100.00% 2008 5,711,000 5,586,752 97.82% 124,248 5,711,000 100.00% 2009 5,979,944 5,764,695 96.40% 215,249 5,979,944 100.00% 2010 5,863,420 5,669,616 96.69% 193,804 5,863,420 100.00% 2011 5,903,086 5,779,782 97.91% 123,304 5,903,086 100.00% 2012 5,903,253 5,839,394 98.92% 63,859 5,903,253 100.00% 2013 5,887,409 5,830,924 99.04% 47,287 5,878,211 99.84% 2014 6,014,202 5,964,588 99.18% - 5,964,588 99.18% 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--- 83 MURRAY CITY RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN YEARS Total Percentage 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 1.67% 685 2014 9,028,000 382,770 18,048,000 - 27,458,770 1.32% 565 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--- 84 MURRAY CITY DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2014 Governmental Unit Debt Outstanding Debt repaid with property taxes Murray City School District 44,590,000 $ 100.00% 44,590,000 $ Salt Lake County General Obligation Debt 239,800,000 4.89% 11,726,220 Other debt Salt Lake County Sales Tax Bonds 97,600,000 4.54% 4,431,040 Salt Lake County Lease Revenue Bonds 74,500,000 4.54% 3,382,300 Salt Lake County Capital Leases 1,200,000 4.54% 54,480 Salt Lake County Special Assessment Bonds 1,000,000 4.54% 45,400 Salt Lake County Transportation Rev. Bonds 76,000,000 4.54% 3,450,400 Salt Lake County Notes Payable 22,400,000 4.54% 1,016,960 Subtotal, overlapping debt 68,696,800 Murray City direct debt 9,410,770 Total direct and overlapping debt 78,107,570 $ Source: Debt outstanding data obtained from Salt Lake Counties 2013 CAFR. 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 government. Estimated Percentage Applicable Estimated Share of Overlapping Debt ---PAGE BREAK--- 85 MURRAY CITY LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Debt limit 297,600 $ 309,040 $ 353,600 $ 418,000 $ 486,000 $ 431,040 $ 497,440 $ 486,302 $ 479,178 $ 500,261 $ Total net debt applicable to limit 39,085 48,960 45,620 42,815 44,285 41,070 37,980 36,090 32,980 27,076 Legal debt margin 258,515 $ 260,080 $ 307,980 $ 375,185 $ 441,715 $ 389,970 $ 459,460 $ 450,212 $ 446,198 $ 473,185 $ Total net debt applicable to the limit as a percentage of debt limit 13.13% 15.84% 12.90% 10.24% 9.11% 9.53% 7.64% 7.42% 6.88% 5.41% 6,253,260 $ 500,261 27,076 473,185 $ 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--- 86 MURRAY CITY PLEDGED REVENUE COVERAGE LAST TEN FISCAL YEARS Principal Interest Coverage 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 2014 37,749,228 28,785,495 8,963,733 1,200,000 405,319 5.58 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 2014 9,910,178 5,703,286 4,206,892 169,000 149,697 13.20 2013 1,780,378 672,396 1,107,982 210,000 66,392 4.01 2014 1,890,901 968,255 922,646 210,000 67,575 3.32 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--- 87 MURRAY CITY DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN CALENDAR YEARS Year Population(1) 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 1,764,381,024 37,744 7.3% 2012 47,632 1,880,273,200 39,475 5.7% 2013 48,263 1,980,616,994 41,038 4.3% 2014 48,612 2,073,933,756 42,663 3.5% 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--- 88 MURRAY CITY PRINCIPAL EMPLOYERS AS OF JUNE 30, 2014 Employer Industry Type Employees Intermountain Medical Center Health Care 4463 SelectHealth Health Care 1200 Murray City School District Public Education 862 Murray City Corporation City Government 752 IHC Health Services Health Care 757 Sutter Connect Health Care 579 3M Health Information Systems Data Processing Services 350 Inc. Retailer 268 The Cheese Cake Factory Restaurant 255 Costco Wholesale Corp Retailer 255 Zevex Manufacturer 221 Sorenson Bio Science Inc. Manufacturer 217 Source: Murray City Business Licensing, Murray City School District Note: Principal employers for 9 years prior is not available. ---PAGE BREAK--- 89 MURRAY CITY FULL TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Function/Program General Government 68 66 65 59 59 63 60 61 61 62 Police Officers 75 75 78 78 75 77 79 73 74 70 Civilians 17 17 17 17 18 14 12 10 12 11 Fire Firefighters 50 50 52 52 59 61 60 58 59 55 Civilians 2 2 2 2 3 2 2 1 1 1 Highways & Public Improvements 40 42 36 35 35 34 34 28 27 27 Parks & Recreation 34 34 34 34 34 33 33 33 33 34 Library 10 10 10 9 9 12 9 11 10 12 Community & Economic Development 5 5 5 4 4 5 5 6 6 7 Central Garage 5 5 4 4 4 4 4 4 4 4 Power 54 54 54 54 55 55 52 46 46 46 Water 16 16 16 16 16 17 16 16 16 17 Wastewater 10 9 9 8 9 9 8 8 8 7 Golf Course 9 9 9 8 8 10 8 7 7 7 Storm Water 0 0 6 6 7 6 7 7 7 7 Total Full Time Equivalent Employees 395 394 397 386 395 402 389 369 371 367 Seasonal (Part Time) Employees 574 543 575 560 579 514 459 477 426 385 Total Employees 969 937 972 946 974 916 848 846 797 752 Full Time Equivalent Employees as of June 30 ---PAGE BREAK--- 90 MURRAY CITY OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Function/Program Police Physical arrests 4,563 4,260 2,549 2,194 2,588 2,735 2,484 2,436 3,752 2,175 Traffic citations 13,588 11,959 6,935 6,666 8,141 8,057 8,694 6,847 5,508 8,231 Fire calls 1,086 1,261 1,252 1,261 1,496 1,306 1,231 1,622 1,194 1,156 Medical calls 3,490 3,456 3,687 3,962 3,741 3,801 3,781 3,515 4,177 4,117 Inspections 1,132 1,176 1,200 1,261 794 1,309 2,017 1,673 1,448 1,694 Parks & recreation Park center admissions 32,074 34,000 33,257 43,272 34,000 46,744 38,451 35,691 29,839 34,839 Recreation participants 15,581 15,320 15,484 16,447 17,779 15,402 14,242 14,219 13,089 13,768 Library Volumes in collection 81,643 85,861 84,236 86,723 90,627 86,892 85,100 77,069 69,734 74,971 Total volumes borrowed 352,306 339,282 365,855 406,842 418,169 524,179 524,487 568,372 572,997 611,633 Water Customers 9,304 9,456 9,490 9,825 9,890 9,932 9,946 9,946 9,997 10,034 Annual consumption (in millions of gallons) 3,234 2,750 3,865 3,344 3,784 2,519 2,650 2,841 3,018 3,066 Wastewater Customers 8,817 8,953 8,966 8,977 9,151 9,181 9,181 9,194 9,406 9,441 Power Customers 16,112 16,269 16,500 16,546 16,637 16,671 16,701 16,744 17,356 15,578 Peak demand (KW) 93,310 98,560 98,246 107,110 98,327 97,000 97,490 98,100 101,838 103,478 Internal generation (MWH) 25,729 27,655 53,055 62,038 21,261 23,031 17,546 19,523 9,465 18,096 Purchased power (MWH) 369,312 383,825 361,917 449,567 448,487 412,385 412,943 419,388 426,388 407,148 ---PAGE BREAK--- 91 MURRAY CITY CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Function/Program Police Stations 1 1 1 1 2 2 2 2 2 2 Patrol units 38 38 40 41 42 41 41 40 40 39 Public works Streets(miles) 143 143 144 144 144 144 144 147 147 147 Streetlights 2458 2489 2584 2505 2610 2574 2584 2608 2639 2670 Parks & recreation Acreage 259 259 259 259 252 252 252 252 252 252 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) 178 178 179 183 185 185 192 201 201 201 Wastewater Sanitary sewers(miles) 125 125 125 124 127 127 127 127 127 127 Power Generators 4 4 4 5 5 5 5 5 5 5 Substations 4 4 5 5 6 6 6 6 6 6 ---PAGE BREAK--- 92 COMPLIANCE SECTION ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-940593 93 Salt Lake City, Utah 84123 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, 2014, which collectively comprise the City of Murray’s (the City) basic financial statements and have issued our report thereon dated November 12, 2014. 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--- 94 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 12, 2014 ---PAGE BREAK--- Telephone (801) 590-2600 5292 So. College Dr., Suite 102 Fax (801) 265-9405 95 Salt Lake City, Utah 84123 INDEPENDENT AUDITOR'S REPORT IN ACCORDANCE WITH THE STATE COMPLIANCE AUDIT GUIDE ON:  COMPLIANCE WITH GENERAL STATE COMPLIANCE REQUIREMENTS  COMPLIANCE FOR EACH MAJOR STATE PROGRAM  INTERNAL CONTROL OVER COMPLIANCE  SCHEDULE OF EXPENDITURES OF STATE AWARDS Honorable Mayor and Members of the City Council City of Murray Murray, Utah Report on Compliance with General State Compliance Requirements and for Each Major State Program We have audited the City of Murray’s compliance with the applicable general state and major state program compliance requirements described in the State Compliance Audit Guide, issued by the Office of the Utah State Auditor, that could have a direct and material effect on the City of Murray’s or each of its major state programs for the year ended June 30, 2014. General state compliance requirements were tested for the year ended June 30, 2014 in the following areas: Budgetary Compliance Fund Balance Justice Courts Utah Retirement Systems Transfers from Utility Enterprise Funds Nepotism Open and Public Meetings Act The City received the following major assistance programs from the State of Utah: B & C Road Funds (Department of Transportation) Management’s Responsibility Management is responsible for compliance with the general state requirements referred to above and the requirements of laws, regulations, contracts, and grants applicable to its state programs. Auditor’s Responsibility Our responsibility is to express an opinion on the City of Murray’s compliance based on our audit of the 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 the State Compliance Audit Guide. Those standards and the State Compliance Audit Guide require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a direct and material effect on the City of Murray’s or its major state programs occurred. An audit includes examining, on a test basis, evidence about the City of Murray’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 with general state compliance requirements and for each major state program. However, our audit does not provide a legal determination of the City of Murray’s compliance. Opinion on General State Compliance requirements and Each Major State program In our opinion, Murray City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on the City of Murray or on each of its major state programs for the year ended June 30, 2014. ---PAGE BREAK--- 96 Other Matters The results of our auditing procedures disclosed no instances of noncompliance, which are required to be reported in accordance with the State Compliance Audit Guide. Report on Internal Control over Compliance Management of the City of Murray is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City of Murray’s internal control over compliance with the compliance requirements that could have a direct and material effect on the City of Murray or on each major state program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance with general state compliance requirements and for each major state program and to test and report on internal control over compliance in accordance with the State Compliance Audit Guide, 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 of Murray’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 general state or major state program compliance requirement 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 general state or major state program compliance requirement 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 general state or major state program compliance requirement 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 and compliance and the results of that testing based on the requirements of the State Compliance Audit Guide. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of State Awards as Required by the State Compliance Audit Guide 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, 2014, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements. We issued our report thereon dated November 10, 2014, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of state awards is presented for purposes of additional analysis as required by the State Compliance Audit Guide and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of state awards is fairly stated in all material respects in relation to the financial statements as a whole. Keddington & Christensen, LLC November 12, 2014 ---PAGE BREAK--- CITY OF MURRAY SCHEDULE OF FINDINGS AND RECOMMENDATIONS For The Fiscal Year Ended June 30, 2014 97 State Legal Compliance Finding None