Document Yerington_doc_5e5e313764

CITY OF YERINGTON, NEVADA FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 ---PAGE BREAK--- CITY OF YERINGTON, NEVADA FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 TABLE OF CONTENTS PAGE NO. I. Introduction Section List of City Officials II. Financial Section Independent Auditor’s Report on Financial Statements and Supplementary Data 1-3 Management’s Discussion and Analysis 4-11 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 12-13 Statement of Activities 14 Governmental Activities: Balance Sheet 15 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 16 Statement of Revenues, Expenditures and Changes in Fund Balances 17 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 18 Statement of Revenues, Expenses and Changes in Fund Balance - Budget and Actual: General Fund 19-23 Municipal Court Administrative Assessment Fund 24 Special Revenue Fund 25 Business-Type Activities: Statement of Net Position 26-27 Statement of Revenues, Expenses and Changes in Net Position 28 Statement of Cash Flows 29-30 Notes to Financial Statements 31-60 ---PAGE BREAK--- CITY OF YERINGTON, NEVADA FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 TABLE OF CONTENTS PAGE NO. Required Supplementary Information Schedules of OPEB Funding Progress and Employer Contributions 61 Schedules of Net Pension Liability and Employer Contributions 62 Supplementary Information Major Capital Projects Funds: Schedule of Revenues, Expenses and Changes in Fund Balance - Budget and Actual: Fixed Asset Acquisition Fund 63-64 Enterprise Funds: Water Utility Fund Schedule of Net Position 65 Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual 66 Schedule of Cash Flows - Budget and Actual 67-68 Sewer Utility Fund Schedule of Net Position 69 Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual 70 Schedule of Cash Flows - Budget and Actual 71-72 III. Other Supplementary Information Schedule of Property Tax Rates and Assessed Valuations - Last Twenty Years 73 Governmental Revenues and Other Financial Sources – Last Ten Years 74 Governmental Expenditures by Function – Last ten years 75 Graphical Presentations: Net Position – Last Ten Years 76 All Governmental Funds, Fund Balance - Last Ten Years 77 General Fund – Budget Basis: Fund Balance - Last Ten Years 78 Revenues, Expenditures, and Fund Balance – Last Ten Years 79 Revenues by Source 80 Expenditures by Function 81 Expenditures by Object 82 ---PAGE BREAK--- CITY OF YERINGTON, NEVADA FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2019 TABLE OF CONTENTS PAGE NO. IV. Compliance Section 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 83-84 Schedule of Findings and Responses 85 Status of Prior Year Findings 86 Independent Accountant’s Report on Nevada Revised Statutes Chapter 354.6241 87 INDEPENDENT AUDITOR'S COMMENTS Prior Year Recommendations 88 Current Year Recommendations 88 ---PAGE BREAK--- CITY OF YERINGTON, NEVADA CITY OFFICIALS City Council Members - George Dini, Mayor - Selena Catalano - John Garry - Larry Reynolds - Terceira Schunke City Manager - Robert Switzer ---PAGE BREAK--- A Professional Corporation INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and City Council City of Yerington, Nevada We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of the City of Yerington, Nevada, as of and for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the City of Yerington’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 opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government 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 from 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. 30 Broadway Avenue, Yerington, NV 89447│ [PHONE REDACTED] │ [PHONE REDACTED] │ Sciarani.com ---PAGE BREAK--- 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, and each major fund of the City of Yerington, Nevada, as of June 30, 2019, and the respective changes in financial position, and, where applicable, cash flows thereof, and the respective budgetary comparison for the General Fund, Municipal Administrative Assessment Fund, and Special Revenue Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, and the Schedule of Total OPEB Liability and Related Ratios and the Schedule of the City’s Proportionate Share of the Net Pension Liability on pages 4-11 and 61-62 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. Prior-Year Comparative Information We have previously audited the City’s 2018 financial statements, and we expressed unmodified audit opinions on the respective financial statements of the governmental activities, the business-type activities, and each major fund in our report dated November 29, 2018. In our opinion, the summarized comparative information presented herein as of and for the year ended June 30, 2018, is consistent, in all material respects, with the audited financial statements from which it has been derived, restated for the changes in accounting principles described above. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Yerington, Nevada’s basic financial statements. The individual fund financial statements, and supplementary information section are presented for purposes of additional analysis and are not a required part of the basic financial statements. ---PAGE BREAK--- The individual fund financial statements referred to in the preceding paragraph are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic 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 individual fund financial statements referred to above are fairly stated in all material respects in relation to the basic financial statements as a whole. The other supplementary information section has 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 our report dated November 25, 2019, on our consideration of the City of Yerington, Nevada’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 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 City of Yerington, Nevada’s internal control over financial reporting and compliance. Yerington, Nevada November 25, 2019 ---PAGE BREAK--- CITY OF YERINGTON, NEVADA MANAGEMENT’S DISCUSSION AND ANALYSIS FOR FISCAL YEAR ENDED JUNE 30, 2019 As financial management of the City of Yerington (the “City”), we offer the readers of these financial statements this narrative overview and analysis of the financial activities of the City for fiscal year ended June 30, 2019. This discussion and analysis is designed to assist the reader in focusing on the significant financial issues, provide an overview of the City’s financial activities, identify any significant changes in financial position, and to identify individual issues and concerns. We encourage readers to consider the information presented herein, in conjunction with the financial statements and notes to gain a more complete picture of the information presented. Financial Highlights  The City’s governmental net position decreased $16,376 to $6,246,495 from $6,262,871 in 2018. The City’s governmental net investment in capital assets is $6,514,130 in 2019 compared to $6,700,793 in 2018.  The City’s business-type activity net position decreased by $112,880 to $31,463,255 from $31,576,135 in 2018. The City’s business-type activity net investment in capital assets is $26,386,758 in 2019 compared to $25,418,733 in 2018.  The business-type activities recognized capital contributions totaled $138,150 in 2019 compared to $136,080 in 2018. This increase in capital contributions is attributable to the connection fees in both the water and sewer systems.  The City’s total revenues were $4,728,252 consisting of $2,065,379 in governmental activities and $2,662,873 in business-type activities. Business-type activities revenues of $2,662,873 included grants and contributions totaling $138,150. User fee charges were $2,524,723 and account for 56.3% of total revenue sources.  The City’s total expenses were $4,857,508 consisting of $2,081,755 in governmental activities and $2,775,753 in business-type expenses.  The City’s primary revenue sources (besides grants and contributions) are charges for services of $2,878,334 and consolidated taxes of $484,659. These two revenue sources comprise 60.8% and 10.2%, respectively, of total revenues. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City’s financial statements, which are comprised of the basic financial statements and the notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the basic financial statements. ---PAGE BREAK--- Government-wide Financial Statements Government-wide financial statements are designed to provide an overview of the City’s financial position by governmental and business-type activities, as well as the government as a whole. The Statement of Net Position combines and consolidates all of the City’s current financial resources with capital assets, deferred outflows of resources, long-term obligations, and deferred inflows of resources, distinguishing between governmental and business-type activities. The end result is net position which is segregated into three components: net investment in capital assets; restricted and unrestricted position. The Statement of Activities is focused on both the gross and net cost of governmental and business-type activities. Program revenue which directly offsets costs of specific functions is allocated to those functions, resulting in net expenses for governmental and business-type activities. The City’s general revenues offset remaining costs resulting in the annual increase or decrease in net position. This statement is intended to summarize the user’s analysis of the net cost of various governmental services that are supported by general revenues. Governmental activities reflect the City’s basic services on a functional basis. Departments included within those functions are identified in the fund financial statements. Ad valorem taxes, consolidated taxes, and other identified general revenues support the majority of these services. Business-type activities reflect enterprise operations where a fee for service typically funds all or most of the cost of operations, including depreciation. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objects. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Fund financial statements provide detailed information about the City’s major funds. Based on restrictions placed on the use of monies, the City has established many funds that account for the multitude of services provided to our residents. Governmental Funds – Governmental funds are used to account for essentially the same functions reported as governmental activities on the governmental-wide financial statements. The City’s major governmental funds are the General, Municipal Court Administrative Assessment, Special Revenue, and Fixed Asset Acquisition. Most of the City’s basic services are reported in these funds that focus on how money flows into and out of the funds and the year- end balances available for spending. These funds are reported on the modified accrual basis of accounting that measures cash and all other financial assets that can be readily converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services being provided, along with the financial resources available. Because the focus of the 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 on the government-wide financial ---PAGE BREAK--- statements. By doing so, readers may better understand the long-term effect of the government’s short-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities. The City maintains a multitude of individual governmental funds. Information is presented separately on the governmental fund balance sheet and on the governmental fund statement of revenues, expenditures, and changes in fund balance for the major funds, which were identified earlier. Proprietary Funds – The City maintains one proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities on the government-wide financial statements. The City uses enterprise funds to account for water and sewer operations provided to citizens within the City and nearby service areas. The City’s major proprietary funds are: Water Utility Fund, Sewer Utility Fund, and Clear Water Utility Fund. Notes to the Financial Statements – The notes provide additional information that is essential to a full understanding of the data provided on the government-wide and fund financial statements. Other Information – In addition to the basic financial statements and accompanying notes, this financial statement also presents individual fund statements and schedules. The City adopts an annual budget for all of its governmental and business-type individual funds. Budgetary comparison schedules have been provided for the General Fund and each major special revenue fund to demonstrate compliance with the budget and are presented as required supplementary information. Financial Analysis of the City One of the most important questions asked about the City’s finances is “Is the City as a whole better off or worse off as a result of this year’s activities?” The Statement of Net Position and the Statement of Revenues, Expenses, and Changes in Net Position report information about the City’s activities in a way that will help answer this question. These two statements report the net position of the City and the changes in them. One can think of the City’s net position – the difference between assets, deferred outflows, liabilities, and deferred inflows – as one way to measure financial health or financial position. Over time, increases and decreases in the City’s net position are one indicator of whether its financial health is improving or deteriorating. However, one will need to consider other non-financial factors such as changes in economic conditions, population growth, and new or changed government legislation. Net Position As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, net position was $37,709,750 ($6,246,495 in governmental activities and $31,463,255 in business-type activities) as of June 30, 2019. By far, the largest portion of the City’s net position (87.2%) reflects its net investment in capital assets (e.g. land, buildings, equipment and infrastructure, less any related debt used to acquire those assets that is still outstanding). The City uses these capital assets to provide services to citizens; ---PAGE BREAK--- consequently, these assets are not available for future spending. Although the City’s investments in its capital assets is reported net of related debt, it should be noted that the resources needed to repay the debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table 1 provides a summary of the City’s net position for 2019 compared to 2018. Net position decreased by $129,256 to $37,776,750 in 2019 from $37,839,006 in 2018. 2019 2018 2019 2018 2019 2018 Assets Current Assets 1,675,232 $ 1,791,783 $ 6,879,220 $ 7,660,361 $ 8,554,452 $ 9,452,144 $ Restricted Cash - - 226,386 202,861 226,386 202,861 Capital Assets, Net 6,514,130 6,700,793 26,386,758 25,418,733 32,900,888 32,119,526 Total Assets 8,189,362 8,492,576 33,492,364 33,281,955 41,681,726 41,774,531 Deferred Outflow Of Resources Post Measurement Date Employer Contributions 89,263 96,403 62,261 54,390 151,524 150,793 Deferred Pension Outflow 179,755 168,988 101,418 115,315 281,173 284,303 Deferred OPEB Outflow 17,935 18,820 17,792 18,549 35,727 37,369 Total Deferred Outflows 286,953 284,211 181,471 188,254 468,424 472,465 Liabilities Current Liabilities 240,554 503,909 735,782 376,805 976,336 880,714 Long-Term Liabilities Due After One Year 1,737,515 1,748,519 1,305,532 1,308,937 3,043,047 3,057,456 Total Liabilities 1,978,069 2,252,428 2,041,314 1,685,742 4,019,383 3,938,170 Deferred Inflow Of Resources Unearned revenue - - - 1,000 - 1,000 Deferred Pension Inflow 188,108 166,178 106,131 113,397 294,239 279,575 Deferred OPEB Inflow 63,643 95,310 63,135 93,935 126,778 189,245 Total Deferred Inflows 251,751 261,488 169,266 208,332 421,017 469,820 Net Position Invested in Capital Assets, Net of Debt 6,514,130 6,700,793 26,386,758 25,418,733 32,900,888 32,119,526 Restricted Position 4,670 - 217,981 1,292,691 222,651 1,292,691 Unrestricted (272,305) (437,922) 4,858,516 4,864,711 4,586,211 4,426,789 Total Net Position 6,246,495 $ 6,262,871 $ 31,463,255 $ 31,576,135 $ 37,709,750 $ 37,839,006 $ Governmental Activities Business-Type Activities Total Table 1 Statement of Net Position ---PAGE BREAK--- Governmental Activities While the Statement of Net Position shows the change in financial position of net position, the Statement of Activities provides answers as to the nature and scope of these changes. As can be seen in Table 2 above, changes in net position were a decrease of $16,376 for governmental activities and a decrease of $112,880 for business-type activities in fiscal year 2019. In the year 2019, the total decrease in net positon was $129,256.  The governmental activities total revenues in 2019 decrease by $2,144,539 from $4,209,918 in 2018 to $2,065,379 in 2019. This large decrease in revenue is largely attributable to the FFA airport runway construction grant of $2,541,028 in year 2018. 2019 2018 2019 2018 2019 2018 Program Revenues: Charges for Services 353,611 $ 170,708 $ 2,524,723 $ 2,272,213 $ 2,878,334 $ 2,442,921 $ Operating Grants and Contributions 201,024 124,547 - 233,455 201,024 358,002 Capital Grants and Contributions 37,940 2,583,760 138,150 136,080 176,090 2,719,840 592,575 2,879,015 2,662,873 2,641,748 3,255,448 5,520,763 General Revenues: Property taxes 276,354 258,079 - - 276,354 258,079 Other taxes 298,329 216,917 - - 298,329 216,917 Franchise fees 197,887 190,160 - - 197,887 190,160 Consolidated taxes 484,659 453,142 - - 484,659 453,142 Unrestricted grants 200,000 200,000 - - 200,000 200,000 Other 15,575 12,605 - - 15,575 12,605 Total Revenues 2,065,379 4,209,918 2,662,873 2,641,748 4,728,252 6,851,666 Expenses: General government 542,918 515,246 - - 542,918 515,246 Judicial 78,429 89,016 - - 78,429 89,016 Public safety 991,901 1,009,456 - - 991,901 1,009,456 Public works 363,619 327,379 - - 363,619 327,379 Health 12,936 18,635 - - 12,936 18,635 Cultural and recreation 91,952 71,292 - - 91,952 71,292 Utilities - - 2,775,753 2,404,388 2,775,753 2,404,388 Total Expenses 2,081,755 2,031,024 2,775,753 2,404,388 4,857,508 4,435,412 Change in Net Position (16,376) 2,178,894 (112,880) 237,360 (129,256) 2,416,254 Beginning Net Position 6,262,871 4,083,977 31,576,135 31,338,775 37,839,006 35,422,752 Ending Net Position 6,246,495 $ 6,262,871 $ 31,463,255 $ 31,576,135 $ 37,709,750 $ 37,839,006 $ Governmental Activities Business-Type Activities Total Table 2 Changes in Net Position ---PAGE BREAK---  Governmental activities 2019 expenses of $2,081,755 increased by $50,731 or 2.5% compared to $2,031,024 in year 2018. Business-Type Activities  The business-type activities charges for service revenues increased $252,510 from $2,272,213 in 2018 to $2,524,723 in 2019.  The business type activities total expenditures were $2,775,753 in 2019 compared to $2,404,388 in 2018 or an increase of $371,365 mainly due the Sewer Fund’s non-routine lagoon pond cleaning totaling $407,294.  The business-type activities capital contributions totaled $138,150 in 2019 compared to $136,080 in 2018. Year 2019 capital contribution were comprised totally of connection fees while year 2018 was largely comprised of capital grants totaling $123,765. Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds: The focus of the City’s governmental funds is to provide information on the near-term inflow, outflow, and balances of spendable resources. Such information is useful in assessing the City’s financial requirements. In particular, unrestricted fund balance may serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City’s governmental funds reported a combined ending fund balance of $1,431,230 which is an increase of $150,546 compared to the prior year amount of $1,280,684. This increase is largely attributable to the General Fund incurring an increase in fund balance of $223,3634 and the Fixed Asset Acquisition Fund reduction of fund balance of $120,345 due to various capital outlay projects. While the bulk of the governmental fund balances are not reserved in the governmental fund statements, they may lead to restricted net position on the Statement of Net Position due to being restricted for use for a particular purpose mandated by the sources of the resources, such as state statutes. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the fund balance of the General Fund was $508,773 while the 2018 fund balance was $285,410. Fund balance represents approximately 31.3% of the total General Fund expenditures and transfers out. The City’s General Fund ending fund balance increased by $223,363 in 2019 while the fiscal year 2018 has a decrease was $106,776. ---PAGE BREAK--- -10- General Fund Budgetary Highlights The City’s budget is prepared according to Nevada law and is based on generally accepted accounting principles. The City adopts an annual budget following budget workshops and a public hearing. The budget provides proposed expenditures and the means of financing them. The most significant budgeted fund is the General Fund. With the General Fund supporting many of our major activities such as our public safety programs, as well as most legislative, judicial and executive activities the General Fund is monitored closely looking for possible revenue shortfall or over spending by individual departments. In summary, the noted differences and explanations are as follows:  General Fund total revenues of $1,846,630 were $714,490 under budget but reflected a significant increase of $312,201 over 2018 total revenues of $1,534,429. The General Fund’s budgeted for RCT shared revenues of $767,377 which were not requested since the street project was move into fiscal year 2020.  The General Fund total expenditures of $1,615,463 were under budgeted appropriations of $2,445,635 by $830,172. This shortfall was largely due to the Street budget including capital outlay for new street expenditures of $767,377 while such expenditures were delayed until 2020. Capital Assets and Debt Administration Capital Assets: The City’s investment in capital assets, net of depreciation, for its governmental and business-type activities as of June 30, 2019 is $32,900,888 (net of accumulated depreciation and related debt). This investment in capital assets includes land, buildings and systems, improvements, equipment, vehicles, and roads and highways. In the notes to the financial statements, Note 3 (Capital Assets) provides capital asset activity during 2019. Major capital asset events during the current year include the following:  The Governmental Funds had $183,571 in asset additions for the year. Major additions were a two police cars totaling $102,016, information center remodel of $30,233, and ballpark dugout improvements of $32,200. The City is following a 5-year capital improvement plan and limits the purchase of new assets as deemed necessary. The Business Type Funds had net asset additions of $1,868,030 for the year. New asset additions consisted of largely $116,947 on rehabilitation of Broadway Avenue well, $869,581 in continued preliminary engineering design costs associated with upcoming City water line project and $851,501 in continued preliminary engineering design costs associated with upcoming City sewer line project. ---PAGE BREAK--- -11- Long-Term Debt: Governmental Activities: There are no governmental activity or business-type activity debt obligations in 2019. The City’s long-term obligations include compensated absences. Additional information on the City’s long-term debt can be found in Notes 4 and 5 of this financial report. Economic Factors and Next Years Budget The City Council and the management of the City consider many factors when setting the fiscal year 2020 budget, tax rates, user fees and other charges. Some of those factors are the local economy and the impact taxes, charges and rates have on the customers. The City of Yerington population growth has been very flat over the past several years with an estimated population of 3,095. Current economic indicators have suggested that the current economy will remain in a low growth mode for at least another year. The City remains optimistic that the Nevada Copper mining operations currently under the construction phase will have positive impact on future City revenues. Given these conditions, the City maintains a conservative approach to spending while maximizing its local revenues. All of these factors were considered in the preparation of the City’s 2020 budget. In conjunction with the current economic factors, the City limited its anticipated spending for 2020, and asked department heads to limit spending and capital outlay. Requests for Information This financial report is designed to provide our customers and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. Questions concerning any of the information provided in this report or request for additional financial information should be directed to the City Manager of the City of Yerington, 102 South Main Street, Yerington, Nevada, 89447. ---PAGE BREAK--- THIS PAGE LEFT INTENTIONALLY BLANK ---PAGE BREAK--- CITY OF YERINGTON, NEVADA JUNE 30, 2019 (With Comparative Totals for June 30, 2018) BUSINESS-TYPE ACTIVITIES ACTIVITIES Current Assets Cash and investments - Note 2 $ 1,446,776 $ 6,522,224 Taxes receivable, secured roll 3,448 - Use fees receivable, net of allowances for uncollectibles - 250,997 Due from other governments 133,990 18,833 Other receivables 68,917 49,750 Inventory 22,101 37,416 Total Current Assets 1,675,232 6,879,220 Noncurrent Assets Restricted cash and investments - Note 2 - 226,386 Capital Assets - Note 3 Land, improvements, and construction in progress 639,763 3,492,260 Other capital assets, net of depreciation 5,874,367 22,894,498 Total Noncurrent Assets 6,514,130 26,613,144 Total Assets 8,189,362 33,492,364 Deferred Outflow of Resources Post measurenment date employer contributions - Note 7 89,263 62,261 Deferred pension outflow - Note 7 179,755 101,418 Deferred OPEB outflows - Note 8 17,935 17,792 Total Deferred Outflow of Resources 286,953 181,471 GOVERNMENTAL STATEMENT OF NET POSITION ---PAGE BREAK--- 2019 2018 $ 7,969,000 $ 8,579,987 3,448 7,190 250,997 234,153 152,823 521,197 118,667 72,062 59,517 37,555 8,554,452 9,452,144 226,386 202,861 4,132,023 2,437,384 28,768,865 29,682,142 33,127,274 32,322,387 41,681,726 41,774,531 151,524 150,793 281,173 284,303 35,727 37,369 468,424 ` 472,465 TOTAL -12- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA JUNE 30, 2019 (With Comparative Totals for June 30, 2018) BUSINESS-TYPE ACTIVITIES ACTIVITIES Current Liabilities Accounts payable $ 159,653 $ 65,306 Construction contracts payable - 569,658 Accrued salaries and benefits 80,587 72,885 Due to other governments 75 19,528 Customers' deposits - 8,405 Bail deposits 239 - Total Current Liabilities 240,554 735,782 Long-term liabilities Compensated absences - Note 5 38,924 26,564 Accrued OPEB liability - Note 4, 5 & 8 386,356 380,879 Net pension liability - Note 7 1,312,235 898,089 Total Long-term Liabilities 1,737,515 1,305,532 Total Liabilities 1,978,069 2,041,314 Deferred Inflow of Resources Unearned revenues - - Deferred pension inflows - Note 7 188,108 106,131 Deferred OPEB inflows - Note 8 63,643 63,135 Total Deferred Inflow of Resources 251,751 169,266 Net Position Net investment in capital assets 6,514,130 26,386,758 Restricted - Note 9 4,670 217,981 Unrestricted (272,305) 4,858,516 Total Net Position $ 6,246,495 $ 31,463,255 STATEMENT OF NET POSITION GOVERNMENTAL ---PAGE BREAK--- 2019 2018 $ 224,959 $ 526,418 569,658 238,442 153,472 88,231 19,603 19,049 8,405 7,934 239 640 976,336 880,714 65,488 68,774 767,235 738,743 2,210,324 2,249,939 3,043,047 3,057,456 4,019,383 3,938,170 - 1,000 294,239 279,575 126,778 189,245 421,017 469,820 32,900,888 32,119,526 222,651 194,927 4,586,211 5,524,553 $ 37,709,750 $ 37,839,006 TOTAL The accompanying notes are an integral part of these financial statements -13- ---PAGE BREAK--- OPERATING CHARGES FOR GRANTS AND EXPENSES SERVICES CONTRIBUTIONS Governmental Activities: General government $ 542,918 $ - $ - $ - Judicial 78,429 32,352 - - Public safety 991,901 22,215 - - Public works 363,619 296,837 104,637 56,387 Health 12,936 2,207 - 5,740 Culture and recreation 91,952 - 40,000 32,200 Total Governmental Activities 2,081,755 353,611 144,637 94,327 Business-Type Activities: Water Utilities 1,541,069 1,467,932 - 50,750 Sewer Utilities 827,390 1,056,791 - 87,400 Total Business-type Activities 2,368,459 2,524,723 - 138,150 Total City $ 4,450,214 $ 2,878,334 $ 144,637 $ 232,477 General Revenues: Property taxes, levied for general purposes Other taxes Franchise fees Consolidated taxes Unrestricted investment earnings Miscellaneous income Grants not restricted to a specific program Special Item: Sewer pond lagoon cleaning Total General Revenues and Special Item Change in Net Position Net Position - Beginning Net Position - Ending CONTRIBUTIONS FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) CITY OF YERINGTON, NEVADA STATEMENT OF ACTIVITIES PROGRAM REVENUE CAPITAL GRANTS AND ---PAGE BREAK--- 2019 $ (542,918) $ - $ (542,918) $ (515,246) (46,077) - (46,077) (33,701) (969,686) - (969,686) (955,548) 94,242 - 94,242 2,400,455 (4,989) - (4,989) (16,677) (19,752) - (19,752) (31,292) (1,489,180) - (1,489,180) 847,991 - (22,387) (22,387) 57,380 - 316,801 316,801 179,980 - 294,414 294,414 237,360 (1,489,180) 294,414 (1,194,766) 1,085,351 276,354 - 276,354 258,079 298,329 - 298,329 216,917 197,887 - 197,887 190,160 484,659 - 484,659 453,142 - - - 637 15,575 - 15,575 11,968 200,000 - 200,000 200,000 - (407,294) (407,294) - 1,472,804 (407,294) 1,065,510 1,330,903 (16,376) (112,880) (129,256) 2,416,254 6,262,871 31,576,135 37,839,006 35,422,752 $ 6,246,495 $ 31,463,255 $ 37,709,750 $ 37,839,006 Net (Expenses) Revenues and Changes in Net Position 2018 ACTIVITIES ACTIVITIES TYPE BUSINESS- GOVERNMENTAL TOTALS The accompanying notes are an integral part of these financial statements. -14- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2019 (With Comparative Totals for June 30, 2018) ASSESSMENT REVENUE FUND FUND FUND Assets Cash and investments - Note 2 $ 505,490 $ 19,455 $ 130,426 Taxes receivable, secured roll 3,448 - - Accounts receivable 59,882 - 9,035 Due from other governments 101,790 - - Advance to other funds - - Fuel Inventory 22,101 - - Total Assets $ 692,711 $ 19,455 $ 139,461 Liabilities Accounts payable $ 99,664 $ 26 $ 26,649 Construction contracts payable - - - Accrued compensation 80,587 - - Due to other governments - 75 - Consumer / bail deposits and restitution 239 - - Total Liabilities 180,490 101 26,649 Deferred Inflow of Resources Unavailable taxes receivable 3,448 - - Fund Balances - Note 9 Nonspendable 22,101 - - Restricted - - 4,670 Committed 25,203 19,354 108,142 Assigned 34,040 - - Unassigned 427,429 - - Total Fund Balances 508,773 19,354 112,812 Total Liabilities, Deferred Inflows and Fund Balances $ 692,711 $ 19,455 $ 139,461 SPECIAL GENERAL ADMINISTRATIVE MUNICIPAL COURT ---PAGE BREAK--- ACQUISITION TOTALS 2019 $ 791,405 $ 1,446,776 $ 1,195,748 - 3,448 7,190 - 68,917 72,062 32,200 133,990 502,364 - - - - 22,101 14,419 $ 823,605 $ 1,675,232 $ 1,791,783 $ 33,314 $ 159,653 $ 218,642 - - 238,442 - 80,587 46,160 - 75 25 - 239 640 33,314 240,554 503,909 - 3,448 7,190 - 22,101 14,419 - 4,670 - 790,291 942,990 1,028,281 - 34,040 10,387 - 427,429 227,597 790,291 1,431,230 1,280,684 $ 823,605 $ 1,675,232 $ 1,791,783 2018 ASSET FIXED FUND The accompanying notes are an integral part of these financial statements. -15- ---PAGE BREAK--- THIS PAGE LEFT INTENTIONALLY BLANK ---PAGE BREAK--- Total Fund Balance - Governmental Funds $ 1,431,230 $ 1,280,684 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental funds are not current financial resources and therefore not reported in the governmental fund financial statements. 15,192,099 15,008,528 Accumulated depreciation has not been included in the governmental fund financial statements. (8,677,969) (8,307,735) Revenue reported as deferred revenue in the governmental fund financial statements is recorded as revenue in the government-wide financial statements. 3,448 7,190 The net pension liability is not due and payable in the current period and therefore is not reported in the governmental funds (1,312,235) (1,337,350) Deferred pension inflows and outflows of resources represent changes in the net pension liability that are to be amortized over future periods. They will not require current financial resources and are therefore not reported in the governmental funds. 80,910 99,213 Deferred OPEB inflows and outflows of resources represent changes in the OPEB liability that will be amortized over future periods. They will not require current financial resources and are therefore not reported in the governmental funds. (45,708) (76,490) Compensated absences have not been reflected in the governmental fund financial statements. (38,924) (39,116) Post-employment health insurance that is not due and payable in the current period and therefore is not reported in the governmental funds. (386,356) (372,053) Net Position of Governmental Activities $ 6,246,495 $ 6,262,871 2019 2018 CITY OF YERINGTON, NEVADA RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2019 (With Comparative Totals for June 30, 2018) The accompanying notes are an integral part of these financial statements. -16- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) GENERAL ASSESSMENT REVENUE FUND Revenues Taxes $ 280,096 $ - $ 107,079 Licenses and permits 519,595 - - Intergovernmental revenues 882,058 - 56,387 Charges for services 121,772 - - Fines and forfeits 30,134 2,218 - Other revenues 12,975 - 5,740 Total Revenues 1,846,630 2,218 169,206 Expenditures Current: General government 220,938 - 66,081 Judicial 79,604 - - Public safety 997,655 - - Public works 236,001 - 56,745 Health 12,055 - 1,070 Culture and recreation 77,014 - - Total Expenditures 1,623,267 - 123,896 Excess (Deficiency) of Revenues over Expenditures 223,363 2,218 45,310 Other Financing Sources (Uses) Transfers in - - - Transfers out - - - Total Other Financing Sources (Uses) of Funds - - - Excess (Deficiency) of Revenues and Other Financing Sources over Expenditures and Other Uses 223,363 2,218 45,310 Fund Balance, July 1 285,410 17,136 67,502 Fund Balance, June 30 $ 508,773 $ 19,354 $ 112,812 SPECIAL MUNICPAL COURT ADMINISTRATIVE FUND FUND ---PAGE BREAK--- $ - $ 387,175 $ 337,572 - 519,595 299,664 51,067 989,512 3,409,043 - 121,772 99,180 - 32,352 55,315 - 18,715 7,230 51,067 2,069,121 4,208,004 30,233 317,252 349,447 - 79,604 88,099 90,000 1,087,655 1,002,313 18,979 311,725 2,943,167 - 13,125 18,485 32,200 109,214 51,081 171,412 1,918,575 4,452,592 (120,345) 150,546 (244,588) - - - - - - - - - (120,345) 150,546 (244,588) 910,636 1,280,684 1,525,272 $ 790,291 $ 1,431,230 $ 1,280,684 2018 FIXED ASSET FUND 2019 ACQUISITION TOTALS The accompanying notes are an integral part of these financial statements. -17- ---PAGE BREAK--- Net Change in Fund Balances - Total Governmental Funds $ 150,546 $ (244,588) Amounts reported for governmental activities in the statement of activities are different because: Current year capital outlays are expenditures in the governmental fund financial statements, but they are shown as increases in capital assets in the government-wide financial statements. 183,571 2,727,663 Depreciation is not recognized as an expense in governmental funds, since it does not require the use of current financial resources. The effect on the current year's depreciation is to decrease net assets. (370,234) (283,685) Revenues from property taxes and other revenues is deferred in the fund financial statements until they are considered available to finance current expenditures, but such revenues are recognized when assessed in the government-wide financial statements. (3,742) 1,914 Compensated absences are not due and payable in the current period and therefore are not reported in the governmental fund financial statements. 192 9,787 Future health insurance post-employment benefits are reported in the statement of activities but do not require the use of current financial resources and therefore are not reported as expenditures in the governmental fund financial statements. 16,479 25,062 Pension contributions made after the measurement date of the pension liability are expensed in the governmental fund financial statements but deferred to the subsequent fiscal year in the statement of activities. (7,140) 8,043 Changes in net pension liability resulting from differences in actual and projected earnings, experience and changes in proportionate share do not affect current financial resources and are not reported in the governmental funds. 13,952 (65,302) Change in Net Position of Governmental Activities $ (16,376) $ 2,178,894 RECONCILIATION OF THE STATEMENT OF REVENUES, CITY OF YERINGTON, NEVADA 2019 2018 FOR THE YEAR ENDED JUNE 30, 2019 TO THE STATEMENT OF ACTIVITIES EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS (With Comparative Totals for the Year Ended June 30, 2018) The accompanying notes are an integral part of these financial statements. -18- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL ACTUAL VARIANCE 2018 Revenues Taxes Ad valorem taxes $ 273,244 $ 273,244 $ 280,096 $ 6,852 $ 256,165 Licenses, Permits and Fees Business licenses 94,000 94,000 122,221 28,221 93,291 Franchise taxes Natural gas 35,000 35,000 36,397 1,397 38,320 Electric 130,000 130,000 123,745 (6,255) 122,518 Cable television 7,000 7,000 10,930 3,930 6,726 Sanitation 20,000 20,000 26,815 6,815 22,596 192,000 192,000 197,887 5,887 190,160 Non-business licenses and permits Animal licenses - - 97 . 97 188 Building permits 207,425 207,425 198,590 (8,835) 14,875 Planning and zoning 2,450 2,450 800 (1,650) 1,150 209,875 209,875 199,487 (10,388) 16,213 Total Licenses and Permits 495,875 495,875 519,595 23,720 299,664 Intergovernmental Revenues State and federal shared revenues Motor vehicle fuel tax 58,695 58,695 61,770 3,075 60,547 Consolidated tax distribution 450,354 450,354 484,659 34,305 453,142 509,049 509,049 546,429 37,380 513,689 Other local government shared revenues County road ad valorem tax 20,000 20,000 20,000 - 20,000 County ad valorem agreement 200,000 200,000 200,000 - 200,000 County gaming licenses 34,500 34,500 37,485 2,985 31,272 RTC shared revenue 767,377 767,377 - (767,377) - School resource officer 25,000 25,000 - (25,000) - 1,046,877 1,046,877 257,485 (789,392) 251,272 BUDGETED AMOUNT ORIGINAL -19- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL ACTUAL VARIANCE 2018 Payments in lieu of taxes County parks agreement $ 40,000 $ 40,000 $ 40,000 $ - $ 40,000 County airport contribution 4,000 4,000 4,000 - 4,000 Yerington Paiute Tribe - marijuana compact - - 31,544 31,544 10,947 State rural housing 3,775 3,775 2,600 (1,175) 5,375 47,775 47,775 78,144 30,369 60,322 Total Intergovernmental Revenues 1,603,701 1,603,701 882,058 (721,643) 825,283 Charges for Services Airport charges 12,000 12,000 13,271 1,271 12,676 Airport fuel charges 100,000 100,000 84,176 (15,824) 65,345 Animal shelter 1,300 1,300 2,110 3,410 1,770 Weed abatement 2,000 2,000 - (2,000) 223 Police services: Night in the Country 18,000 18,000 19,533 1,533 15,881 Other charges for services 3,000 3,000 2,682 (318) 3,285 Total Charges for Services 136,300 136,300 121,772 (14,528) 99,180 Fines and Forfeits Municipal court fines 36,000 36,000 26,555 (9,445) 43,514 Other court fees 2,500 2,500 3,579 1,079 4,030 Total Fines and Forfeits 38,500 38,500 30,134 (8,366) 47,544 Other Revenues Highlands tower lease 12,000 12,000 10,300 (1,700) - Annexation - - - - 6,000 Other income 1,500 1,500 2,675 1,175 593 Total Other Revenues 13,500 13,500 12,975 (525) 6,593 Total Revenues 2,561,120 2,561,120 1,846,630 (714,490) 1,534,429 BUDGETED AMOUNT ORIGINAL -20- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) ORIGINAL FINAL VARIANCE 2018 Operating Expenditures General Government Mayor and Council Salaries and wages $ 21,600 $ 21,600 $ 21,442 $ 158 $ 21,300 Employee benefits 3,220 8,220 5,598 2,622 6,201 Services and supplies 2,350 2,350 1,358 992 650 Total Mayor and Council 27,170 32,170 28,398 3,772 28,151 Management and Administration Salaries and wages 61,816 73,816 53,452 20,364 65,970 Employee benefits 29,937 29,937 28,270 1,667 30,524 Services and supplies 82,396 82,396 103,014 (20,618) 148,237 Total Management and Administration 174,149 186,149 184,736 1,413 244,731 Total General Government Function 201,319 218,319 213,134 5,185 272,882 Judicial Municipal Court Salaries and wages 23,795 23,795 25,161 (1,366) 28,683 Employee benefits 13,290 13,290 14,823 (1,533) 16,537 Services and supplies 36,647 43,647 39,620 4,027 42,879 Total Judicial Function 73,732 80,732 79,604 1,128 88,099 Public Safety Police Department Salaries and wages 505,445 458,445 449,191 9,254 457,588 Employee benefits 285,409 285,409 245,554 39,855 256,449 Services and supplies 127,079 127,079 134,270 (7,191) 110,255 Capital outlay - - 12,160 (12,160) - Total Police Department 917,933 870,933 841,175 29,758 824,292 BUDGETED AMOUNT ACTUAL -21- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL ACTUAL 2018 Fire Department Services and supplies Contractual agreement $ 156,480 $ 156,480 $ 156,480 $ - $ 143,279 Total Public Safety Function 1,074,413 1,027,413 997,655 29,758 967,571 Public Works Building Department Salaries and wages - - - - - Employee benefits - - - - - Services and supplies 41,125 41,125 45,884 (4,759) 21,018 Total Building Department 41,125 41,125 45,884 (4,759) 21,018 Street Department Salaries and wages 22,779 22,779 17,259 5,520 28,423 Employee benefits 4,831 4,831 5,297 (466) 10,096 Services and supplies 71,915 71,915 63,301 8,614 96,954 Capital outlay 767,377 767,377 - 767,377 - Total Street Department 866,902 866,902 85,857 781,045 135,473 Airport Salaries and wages 3,456 3,456 2,970 486 2,853 Employee benefits 2,146 2,146 1,563 583 1,467 Services and supplies 103,972 106,972 99,727 7,245 81,261 Total Airport 109,574 112,574 104,260 8,314 85,581 Total Public Works Function 1,017,601 1,020,601 236,001 784,600 242,072 Health Animal Control Salaries and wages 3,113 3,113 3,802 (689) 5,100 Employee benefits 2,740 2,740 2,130 610 2,836 Services and supplies 8,025 8,025 6,123 1,902 10,549 Total Health Function 13,878 13,878 12,055 1,823 18,485 BUDGETED AMOUNT VARIANCE ORIGINAL -22- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL VARIANCE 2018 Culture and Recreation Parks and recreation Salaries and wages $ 20,693 $ 20,693 $ 19,729 $ 964 $ 14,034 Employee benefits 8,669 8,669 8,985 (316) 5,496 Services and supplies 35,330 55,330 48,300 7,030 31,551 Total Culture and Recreation Function 64,692 84,692 77,014 7,678 51,081 Total Expenditures 2,445,635 2,445,635 1,615,463 830,172 1,640,190 Excess (Deficiency) of Revenues over Expenditures 115,485 115,485 231,167 115,682 (105,761) Other Financing (Uses) Contingency (73,369) (73,369) - 73,369 - Transfer to Fixed Asset Acquisition Fund (52,502) (52,502) - 52,502 - Total Other Financing Sources (Uses) (125,871) (125,871) - 125,871 - Excess (Deficiency) of Revenues and Other Financing Sources over Expenditures and Other Financing Uses (10,386) (10,386) 231,167 241,553 (105,761) Fund Balance, July 1 126,829 126,829 254,300 127,471 360,061 Fund Balance - Budget Basis, June 30 $ 116,443 $ 116,443 485,467 $ 369,024 254,300 RECONCILIATION TO GAAP BASIS Expenditures General Government $ (48,903) $ (48,903) (7,804) $ (41,099) (1,015) Fund Balance, July 1 48,903 48,903 31,110 (17,793) 32,125 Fund Balance, June 30 $ - $ - 23,306 $ 23,306 31,110 Fund Balance - GAAP Basis, June 30 $ 508,773 $ 285,410 BUDGETED AMOUNT ORIGINAL The Compensated Absence Fund is included within the General Fund for GAAP basis reporting. The following items from this fund reconcile the budget to GAAP basis. ACTUAL The accompanying notes are an integral part of these financial statements. -23- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA MUNICIPAL COURT ADMINISTRATIVE ASSESSMENT FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) BUDGET ACTUAL VARIANCE 2018 Revenues Fines and Forfeits Municipal Court assessments $ 1,000 $ 1,000 $ 924 $ (76) $ 3,544 Special facility assessments 1,500 1,500 1,294 (206) 4,227 Total Revenues 2,500 2,500 2,218 (282) 7,771 Expenditures Judicial Capital outlay Court assessments 5,000 5,000 - 5,000 - Administrative assessments 6,000 6,000 - 6,000 - Total Expenditures 11,000 11,000 - 11,000 - Excess (Deficiency) of Revenues over Expenditures (8,500) (8,500) 2,218 10,718 7,771 Fund Balance, July 1 8,865 8,865 17,136 8,271 9,365 Fund Balance, June 30 $ 365 $ 365 $ 19,354 $ 18,989 $ 17,136 ORIGINAL BUDGETED AMOUNT The accompanying notes are an integral part of these financial statements. -24- ---PAGE BREAK--- Revenues Room taxes $ 75,000 $ 75,000 $ 107,079 $ 32,079 $ 81,407 Intergovernmental Community Development Block Grant - 64,219 56,387 (7,832) 7,990 - 64,219 56,387 (7,832) 7,990 Other revenues Animal shelter donations - 5,740 5,740 - - Total Revenues 75,000 144,959 169,206 24,247 89,397 Expenditures General Government Room tax distributions 62,500 62,500 49,643 12,857 61,968 Room tax State reimttance 4,688 4,688 6,164 (1,476) - Room tax County remittance 7,812 7,812 10,274 (2,462) 13,582 Total General Government 75,000 75,000 66,081 8,919 75,550 Public Works CDBG, Pumpkin Hallow - 64,219 56,745 7,474 8,174 Total Public Works - 64,219 56,745 7,474 8,174 Health Animal shelter - 5,740 1,070 4,670 - Total Health - 5,740 1,070 4,670 - Total Expenditures 75,000 144,959 123,896 21,063 83,724 Excess of Revenues over Expenditures - - 45,310 45,310 5,673 Fund Balance, July 1 61,829 61,829 67,502 5,673 61,829 Fund Balance, June 30 $ 61,829 $ 61,829 $ 112,812 $ 50,983 $ 67,502 Total Intergovernmental CITY OF YERINGTON, NEVADA SPECIAL REVENUE FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) 2018 VARIANCE ACTUAL FINAL ORIGINAL BUDGETED AMOUNT The accompanying notes are an integral part of these financial statements. -25- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2019 (With Comparative Totals for June 30, 2018) Current Assets Unrestricted Cash - Note 2 $ 5,265,453 $ 1,256,771 Accounts receivables, net of allowance for doubtful accounts 151,736 99,261 Due from other governments 9,468 9,365 Other receivables 49,750 - Inventory of materials and supplies 37,416 - Restricted Cash - Note 2 Customer deposits 6,334 2,071 AB 198 capital reserve 217,981 - Total Current Assets 5,738,138 1,367,468 Property, Plant and Equipment - Note 3 Land and water rights 307,393 10,120 Construction in progress - Note 16 1,652,941 1,521,806 Building, wells, tanks, and distribution system 24,798,764 - Treatment plant and collection system - 6,032,049 Vehicles 68,558 46,009 Maintenance equipment 2,810,777 423,632 Office equipment 82,846 45,080 29,721,279 8,078,696 Accumulated depreciation (7,506,836) (3,906,381) Total Property, Plant and Equipment 22,214,443 4,172,315 Total Assets 27,952,581 5,539,783 Deferred Outlfow of Resources Post measurement date employer pension contributions - Note 7 34,184 28,077 Deferred pension outflow of resources - Note 7 56,414 45,004 Deferred OPEB outflow of resources - Note 8 9,825 7,967 Total Deferred Outflow of Resources 100,423 81,048 UTILITY FUND UTILITY FUND (Page 1 of 2) UTILITY ENTERPRISE FUNDS WATER SEWER ---PAGE BREAK--- TOTALS 2019 2018 $ 6,522,224 $ 7,384,239 250,997 234,153 18,833 18,833 49,750 - 37,416 23,136 8,405 7,934 217,981 194,927 7,105,606 7,863,222 317,513 317,513 3,174,747 1,480,108 24,798,764 24,655,373 6,032,049 6,032,049 114,567 114,567 3,234,409 3,234,409 127,926 127,926 37,799,975 35,961,945 (11,413,217) (10,543,212) 26,386,758 25,418,733 33,492,364 33,281,955 62,261 54,390 101,418 115,315 17,792 18,549 181,471 188,254 -26- ---PAGE BREAK--- Liabilities Current liabilities payable from unrestricted assets: Accounts payable and accrued liabilities $ 50,281 $ 15,025 Construction contracts payable 162,950 406,708 Accrued salaries and wages 39,479 33,406 Due to other governments 11,802 7,726 Advance from Water Utility Fund - - Current liabilities payable from restricted assets: Customer deposits 6,334 2,071 Total Current Liabilities 270,846 464,936 Long-term liabilities: Accrued compensated absences 14,424 12,140 Accrued OPEB payable 210,990 169,889 Net Pension Liability - Note 7 514,359 383,730 Total Long-Term Liabilities 739,773 565,759 Total Liabilities 1,010,619 1,030,695 Deferred Inflow of Resources Unearned revenue - - Deferred pension inflows - Note 7 59,037 47,094 Deferred OPEB inflows - Note 8 34,864 28,271 Total Deferred Inflow of Resources 93,901 75,365 Net Position Net Investment in capital assets 22,214,443 4,172,315 Restricted - loan reserves - Note 9 217,981 - Unrestricted 4,516,060 342,456 Total Net Position $ 26,948,484 $ 4,514,771 (Page 2 of 2) UTILITY ENTERPRISE FUNDS WATER SEWER UTILITY FUND UTILITY FUND CITY OF YERINGTON, NEVADA PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2019 (With Comparative Totals for June 30, 2018) ---PAGE BREAK--- 2019 2018 $ 65,306 $ 44,973 569,658 262,803 72,885 42,071 19,528 19,024 - - 8,405 7,934 735,782 376,805 26,564 29,658 380,879 366,690 898,089 912,589 1,305,532 1,308,937 2,041,314 1,685,742 - 1,000 106,131 113,397 63,135 93,935 169,266 208,332 26,386,758 25,418,733 217,981 194,927 4,858,516 5,962,475 $ 31,463,255 $ 31,576,135 TOTALS The accompanying notes are an integral part of these financial statements. -27- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) Operating Revenues Use fees, net of bad debts $ 1,295,233 $ 1,025,484 Operating Expenses Salaries and wages 278,668 234,098 Employee benefits 105,214 95,269 Service and supplies 497,233 324,468 Depreciation 696,450 173,555 Total Operating Expenses 1,577,565 827,390 Operating Income (Loss) (282,332) 198,094 Nonoperating Revenue (Expenses) Late fees / administrative fees 17,667 2,307 Water tank lease 15,532 - Willowcreek agreement 19,000 29,000 Nevada Copper water reservation fee 87,500 - Water rights revenue 33,000 - Miscellaneous revenues - - Atlantic Richfield Co. - customer hookup revenues - - Atlantic Richfield Co. - customer hookup expenses 36,496 Interest expense - - Total Nonoperating Revenue (Expenses) 209,195 31,307 Income (Loss) before Contributions (73,137) 229,401 Capital Contributions Atlantic Richfield Co. - Sunset Hills Project - - U.S.D.A. grant - - Connection fees from customers 50,750 87,400 Total Capital Contributions 50,750 87,400 Special Item Sewer pond lagoon cleaning - (407,294) Change in Net Position (22,387) (90,493) Net Position, July 1 - Note 10 26,970,871 4,605,264 Net Position, June 30 $ 26,948,484 $ 4,514,771 UTILITY ENTERPRISE FUNDS WATER SEWER UTILITY FUND UTILITY FUND ---PAGE BREAK--- 2018 $ 2,320,717 $ 2,096,388 512,766 431,939 200,483 185,066 821,701 657,757 870,005 896,171 2,404,955 2,170,933 (84,238) (74,545) 19,974 18,960 15,532 15,640 48,000 48,000 87,500 87,500 33,000 3,000 - 2,725 - 233,455 36,496 (233,455) - - 240,502 175,825 156,264 101,280 - 40,014 - 83,751 138,150 12,315 138,150 136,080 (407,294) - (112,880) 237,360 31,576,135 31,338,775 $ 31,463,255 $ 31,576,135 2019 TOTALS The accompanying notes are an integral part of these financial statements. -28- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) Cash Flows From Operating Activities Receipts from customers $ 1,356,650 $ 1,049,035 Payments to Lyon County (59,629) (41,207) Payments of personnel costs (392,052) (326,071) Payments for service and supplies (494,639) (728,774) Net Cash Provided by Operating Activities 410,330 (47,017) Cash Flows From Noncapital Financing Activities Water tank lease income 9,532 - Water rights revenue 33,000 - Willow Creek agreement revenues 19,000 29,000 Nevada Copper reservation fee 43,750 - Administrative fees 13,505 - ARCO reimbursements - - Sunset Hills customer connections - - Miscellaneous income 40,658 2,307 Net Cash Provided by Noncapital Financing Activities 159,445 31,307 Cash Flows From Capital and Related Financing Activities Capital contributed from customers 50,750 87,400 Capital contributed by ARCO - - Capital contributed by USDA - - Acquisition of capital assets (954,746) (575,959) Principal paid on long-term debt - - Interest paid on long-term debt - - Net Cash Provided (Used) by Capital and Related Financing Activities (903,996) (488,559) Net Increase (Decrease) in Cash and Cash Equivalents (334,221) (504,269) Cash and Cash Equivalents, July 1 5,823,989 1,763,111 Cash and Cash Equivalents, June 30 $ 5,489,768 $ 1,258,842 UTILITY ENTERPRISE FUNDS WATER SEWER UTILITY FUND UTILITY FUND ---PAGE BREAK--- 2019 2018 $ 2,405,685 $ 2,200,273 (100,836) (112,512) (718,123) (656,908) (1,223,413) (462,387) 363,313 968,466 9,532 15,640 33,000 3,000 48,000 48,000 43,750 87,500 13,505 15,299 - 233,455 - (233,455) 42,965 6,386 190,752 175,825 138,150 12,315 - 102,498 - 175,132 (1,530,705) (1,171,272) - - - - (1,392,555) (881,327) (838,490) 262,964 7,587,100 7,324,136 $ 6,748,610 $ 7,587,100 TOTALS The accompanying notes are an integral part of these financial statements. -29- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA PROPRIETARY FUNDS STATEMENT OF CASH FLOWS FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating income $ (282,332) $ 198,094 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 696,450 173,555 Deferred OPEB expense (8,618) (7,236) Deferred pension expense (12,501) (3,239) Special Item - lagoon cleaning - (407,294) Changes in assets and liabilities: Decrease (increase) in accounts receivable 1,134 (17,977) Decrease in inventory (14,280) - Increase in consumer deposits 358 113 Increase in deferred lease revenue (1,000) - Increase in accounts payable and accrued liabilities 31,119 16,967 Net Cash Provided by Operating Activities $ 410,330 $ (47,017) UTILITY ENTERPRISE FUNDS UTILITY FUND WATER SEWER UTILITY FUND ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -31- Note 1 - Summary of Significant Account Policies: The City of Yerington (the “City”) is an incorporated city operated under the applicable laws and regulations of the State of Nevada. The financial statements of the City of Yerington have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards, which along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units in addition to other authoritative sources issued by the American Institute of Certified Public Accountants. GASB Statement No. 34 established a financial reporting model for state and local governments that included the addition of a management’s discussion and analysis, government- wide financial statements, required supplementary information and the elimination of the effects of internal service activities and the use of account groups. The GASB determined that fund accounting has and will continue to be essential in helping governments to achieve fiscal accountability and should, therefore, be retained. The GASB also determined that government-wide financial statements are needed to allow the users of the financial reports to assess a government’s operational accountability. The GASB model integrates fund-based financial reporting and government-wide financial reporting as complementary components of a single comprehensive financial reporting model. Reporting Entity The City, for financial purposes, includes all of the funds relevant to the operations of the City of Yerington. The financial statements of the City of Yerington include those organizations that are controlled by or dependent on the City and fall under the direct jurisdiction of the Mayor and City Council, which is a separately elected body by the citizens of the City. The Mayor and City Council are legally separate and fiscally independent from other governing bodies, with decision-making authority, authority to levy taxes, authority to prepare its own budget, the power to designate management, the ability to significantly influence operations and is accountable for fiscal matters. Therefore, the City is a primary government and is not reported as a component unit by any other entity; nor is the City accountable for any other entity required to be included in the City's annual financial report. Basic Financial Statements: The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements. The reporting model's focus is on either the City as a whole or major individual funds (within the fund financial statements). Both the government- wide and fund financial statements categorize activities as either governmental activities or business-type activities. In the government-wide Statement of Net Position, both the governmental and business-type activities columns are presented on a consolidated basis by ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -32- column, and are reflected, on a full accrual, economic resource basis, which incorporates long-term assets and receivables as well as long-term debt and obligations. The government-wide Statement of Activities reflects both the gross and net cost per functional category (public safety, public works, etc.) which are otherwise being supported by general government revenues (property, sales and use taxes, certain intergovernmental revenues, fines, permits and charges, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. The program revenues must be directly associated with the function or a business-type activity. Program revenues include revenues from fines and forfeitures, licenses and permits fees, service assessments, and charges for services. The operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. The net costs (by function or business-type activity) are normally covered by general revenue (property, sales or gas taxes, intergovernmental revenues, interest income, etc.). Historically, the previous model did not summarize or present net cost by function or activity. This government-wide focus is more on the substantiality of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. For the most part, the effect of interfund activity has been removed from the government-wide statements. Interfund activities relating to services provided and used between functions are not eliminated. The fund financial statements' emphasis is on the major funds in either the governmental or business-type categories. Any non-major funds (by category) or fund type would be summarized into a single column. The governmental major fund financial statements and the individual fund financial statements are presented on a current financial resource and modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. This presentation is deemed most appropriate to demonstrate legal and covenant compliance, demonstrate the source and use of liquid resources, and demonstrate how the City's actual experience conforms to the budget or fiscal plan. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements’ governmental column, a reconciliation is presented on the page following each statement which briefly explains the adjustments necessary to transform the fund based financial statements into the governmental column of the government-wide presentation. The focus of the model is on the City as a whole and the fund financial statements, including the major individual funds of the governmental and business-type categories, (by category). Each presentation provides valuable information that can be analyzed and compared (between years and between governments) to enhance the usefulness of the information. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -33- Basis of Presentation: The accounts of the City of Yerington are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, net position, revenues, and expenditures (or expenses, as appropriate). Resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds are reported by generic classification within the financial statements. The model, as defined in GASB Statement No. 34, establishes criteria (percentage of the assets, liabilities, revenues or expenditures/expenses of either fund category or the governmental and enterprise combined) for the determination of major funds. Management may also elect to designate a fund, which does not meet the criteria, as a major fund. When applicable, nonmajor funds are be combined in a single column in the fund financial statements. Since the City has a limited number of funds, all of the City’s funds are considered major funds as follows: Major Funds: Governmental Major Funds The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in other funds. The Municipal Court Administrative Assessment Fund accounts for a special court assessment for the use in the court system. Special Revenue Fund is used to account for the proceeds from specific revenue sources that are legally restricted to expenditures for specific purposes. The Fixed Asset Acquisition Fund is used to accumulate resources for the acquisition or construction of major capital facilities (other than those financed by Proprietary Funds). Proprietary Major Funds The Water Utility Fund accounts for water utility activities within the City limits of Yerington, Town of Mason, and surrounding areas. The Sewer Utility Fund accounts for sewer utility activities within the City limits of Yerington. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -34- Basis of Accounting: Basis of accounting refers to the point at which revenues and expenditures/expenses are recognized in the accounts and reported in the financial statements. It relates to the timing of the measurements made, regardless of the measurement focus applies. The Government-wide Financial Statements and the Proprietary Combining Financial Statements are presented on an accrual basis of accounting. The Governmental Funds in the Fund Financial Statements are presented on a modified accrual basis. Governmental Funds: The City of Yerington maintains its accounting records for all Governmental Funds on the modified accrual basis of accounting as defined by the Governmental Accounting Standards Board (GASB). This method provides for recognizing expenditures, other than accrued interest on general long-term obligations, at the time liabilities are incurred, while revenues are recorded when measurable and available to finance expenditures of the fiscal period. Available is defined as being due and collected within the current period or within 60 days after year-end. When revenues are due, but will not be collected within this 60-day period, the receivable is recorded and an offsetting deferred revenue account is established. Most major sources of revenues reported in Governmental Funds in the Governmental Fund Financial Statements are susceptible to accrual under the modified accrual basis of accounting. A summary of revenue recognition policies for all major revenue sources is as follows: Financial Reporting Income Recognition Policies Accrued When Available To Recognized Accrued Finance Current When When Type of Revenue Operations Received Earned Property Taxes X Consolidated Tax Distribution X Licenses and Permits X Fines and Forfeits X Motor Vehicle Fuel Taxes X State Gaming License Fees X Interest X Grants X Miscellaneous Revenue X ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -35- Governmental funds in the Governmental Fund Financial Statements are accounted for on a spending or “financial flow” measurement focus. As such, only current assets and current liabilities are generally included on their balance sheets. Proprietary Funds: The Enterprise Funds (Water and Sewer Utility Funds) are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. Private–sector standards of accounting and financial reporting issued prior to December 1, 1989, are generally followed in proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board (GASB). Governments also have the option of following subsequent private-sector guidance for their business-type activities, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. Budgets and Budgetary Accounting Budget Policies: The City of Yerington adheres to the Local Government Budget Act incorporated within state statutes, which includes the following major procedures to establish the budgetary data, which is reflected in these financial statements. 1. On or before April 15 of each year, the budget officer shall prepare, or the governing body shall cause to be prepared, on appropriate forms prescribed by the Department of Taxation for the use of local governments, a tentative budget for the ensuing fiscal year. The tentative budget must be filed for public record and inspection. 2. Public hearings on the tentative budget are held not sooner than the third Monday in May and not later than the last day in May. 3. Prior to June 1, at a public hearing, the Council indicates changes, if any, to be made to the tentative budget and adopts a final budget by the favorable vote of a majority of the members of the Council. The final budget must then be forwarded to the Nevada Tax Commission to approve the requested ad valorem tax rate. 4. Formal budgetary integration in the financial records of all funds is employed to enhance management control during the year. 5. Budgets for all funds are adopted on a basis consistent with Generally Accepted Accounting Principles (GAAP) other than the City's election to account and budget for activities required to be reported within the General Fund in two separate funds. Appropriations lapse at year-end. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -36- 6. Budget amounts within funds, and between funds, may be transferred if amounts do not exceed the original budget. Such transfers are to be approved by the budget officer and/or the City Council, depending on established criteria. Budget augmentations in excess of original budgetary amounts may not be made without prior approval of the City Council, following a scheduled and noticed public hearing. During the year, the City Council approved one budget augmentation. 7. The above dates may be modified as necessary during years when the Nevada Legislature is in session. In accordance with state statutes, actual expenditures may not exceed budget appropriations of the various governmental functions of the General Fund, or total appropriations of the individual Special Revenue and Capital Projects Funds. In Enterprise Funds, actual expenses may not exceed the sum of budgeted operating and nonoperating expenses. Cash and Investments Cash balances from all funds are combined and, to the extent practicable, invested as permitted by NRS 355.170. Investments are stated at fair market value. Pursuant to NRS 355.170, the City may only invest in the following types of securities: - United States bonds and debentures maturing within ten (10) years from the date of purchase. - Certain farm loan bonds. - Securities of the United States Treasury, United States Postal Service or the Federal National Mortgage Association maturing within ten (10) years from the date of purchase. - Negotiable certificates of deposit from commercial banks and insured savings and loan associations within the State of Nevada. - Certain securities issued by local governments of the State of Nevada. - Other securities expressly provided by other statutes, including repurchase agreements. - Certain short-term commercial paper issued by U. S. Corporations. - Certain "AAA" rated mutual funds that invest in Federal securities. Cash Restrictions Restricted cash balances represent cash held by the entity for specific purposes. Cash and Cash Equivalents For purposes of the statement of cash flows, the Enterprise Funds consider all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -37- Allowance for Doubtful Accounts: Each year, the year-end accounts receivable balances in the enterprise funds are reviewed and accounts believed to be uncollectible are identified. The allowance for doubtful accounts is then adjusted to equal the anticipated loss and bad debt expense is charged for estimated losses arising from the current year’s operation. Subsequently, the governing board reviews this list of uncollectible accounts and if they agree the accounts are uncollectible and should be written off, the receivable is charged against the allowance for doubtful accounts. Allowance for doubtful accounts at June 30, 2019 for all Enterprise Funds is $17,220. Interest Earned on Investments Interest earned is allocated to the utility funds based upon the proportions of the utility funds' cash balances to the total City cash. All other interest income is recognized in the Fixed Asset Acquisition Fund. Inventory of Consumable Supplies All funds, except the enterprise funds, account for materials and supplies inventories as expenditures using the "purchase method", whereby inventories are recorded as expenditures when they are purchased. Enterprise funds account for inventories using the "consumption method" which reclassifies inventories as expenditures when they are used. Enterprise Fund inventories are valued at cost, on a first-in first-out basis as identified by a physical inventory count at year-end. Capital Assets Capital assets purchased in all governmental funds are recorded in the Governmental Fund Financial Statements as expenditures at the time of purchase and capitalized at historical cost in the government-wide financial statements. Proprietary funds capitalize fixed assets at historical cost. Interest costs incurred during the construction of capital assets are capitalized as part of the cost of construction (if material). Donated assets are recorded at their estimated fair market value on the date of donation. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Public domain (infrastructure) fixed assets, consisting of improvements such as curbs and gutters, streets and sidewalks, and bridges are valued at historical cost or estimated historical cost. The capitalization threshold for all types of fixed assets is $5,000. Depreciation is provided in an amount sufficient to allocate the cost of the depreciable assets to operations over their estimated service lives on the straight-line basis. The service lives by type are as follows: ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -38- Capital Assets (continued) Buildings and other improvements 10-50 years Wells and distribution systems 20-60 years Treatment and collection systems 10-50 years Equipment 5-20 years Streets 25 years Sidewalks, curb & gutter, storm drains, and traffic signals 50 years Property Taxes All real property in the City of Yerington is assigned a parcel number by the County Assessor in accordance with state laws, with each parcel being subject to physical reappraisal every five years. A factoring system is used to adjust the appraised value during the years between physical appraisals. The property and its improvements are assessed at 35% of "taxable value" as defined by statute. The amount of tax levied is developed by multiplying the assessed value by the City's tax rate. The maximum tax rate was established in the State Constitution at $5.00 per hundred dollars of assessed valuation; however, as a result of the 1979 legislature session, the tax rate was further limited to $3.64 per hundred dollars of assessed valuation unless an additional rate is approved by the electorate. Taxes on real property are a lien on the property and attached on July 1 of the year for which taxes are levied. Taxes may be paid in four installments payable on the third Monday in August, and the first Mondays in October, January, and March to the Treasurer of Lyon County in which the City of Yerington is located. Penalties are assessed if a taxpayer fails to pay an installment within ten days of the installment due date. After a two-year waiting period, if the taxes remain unpaid, a tax deed is issued conveying the property to the County with a lien for back taxes and accumulated charges. Redemption may be made by the owner and such persons as described by statute by paying all back taxes and accumulated penalties, interest and costs before sale. Taxes on personal property are collected currently. Personal property declarations are mailed out annually by the County and the tax is computed using percentages of taxable values established by the Department of Taxation and tax rates described above. The major classifications of personal property are commercial, mobile homes, aircraft and agricultural. Taxes Receivable, delinquent Secured roll property taxes receivable reflect only those taxes receivable from the delinquent roll years. No provision for uncollectible accounts has been established since management does not anticipate any material collection loss in respect to the remaining balances. Amounts not collected within 60 days after year-end have been recorded as deferred revenue. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -39- Long-Term Debt In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities column in the statement of net assets. In the fund financial statements, governmental fund types recognize bond issuance costs during the current period. The face amount of the debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance cost, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Compensated Absence Benefits Governmental Fund Types: The costs involved in vacation time and sick leave benefits are not accrued as earned but are recorded as payroll costs only when the time is actually used or accumulated benefits are paid or accrued as the result of a termination of services. The liability for accrued vacation and sick leave benefits is recorded in the government-wide financial statements. Proprietary Fund Types: These costs are recognized as expenses when the benefits are earned. The City of Yerington has established a compensated absence fund to accumulate resources to pay the cost of accumulated leave due upon employee retirement. The City has suspended its annual contributions to the fund. Net Position Net Position represents the difference between assets and deferred outflow of resources, and liabilities and deferred inflow of resources. Net positions comprise various net earnings from operating and non-operating revenues and expenses, and contributions of capital. Net positions are classified in the following three components: net investment in capital assets, restricted and unrestricted net position. Investment in capital assets consists of all capital assets, net of accumulated depreciation, reduced by outstanding debt that is attributable to the acquisition, construction and improvement of those assets; debt related to unspent proceeds or other restricted cash and investments is excluded from that determination. Restricted net position consists of assets for which constraints are placed thereon by external parties, such as lenders, grantors, contributors, regulations and enabling legislation, including self-imposed legal mandates, less any related liabilities. Unrestricted consists of all other net position not included in the above categories. The City applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net assets are available. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -40- Fund Balance In the governmental fund financial statements, governmental funds report up to five components of fund balance, as applicable. These five classifications are: nonspendable, restricted, committed, assigned, and unassigned. Nonspendable fund balance is reserved for portions of net resources that cannot be spent because of their form, such as inventories or prepaid items, or that cannot be spent because they must be kept intact. Restricted fund balance is reserved for the portion of net resources that have externally enforceable limitation on use, such as those imposed by creditors, grantors, contributors, or laws enacted by external entities. Committed fund balance is reserved for the portion of net resources that have had self-imposed limitations set in place by formal action of the governing board. Assigned fund balance is reserved for the portion of net resources that have an intended use established by the governing board or a designated official. Unassigned fund balance is for that portion of net resources that does not meet the criteria to be placed in any of the other four components of fund balance. Capital Contributions Contributions are recognized in the Statement of Revenues, Expenses and Changes in Net Position when earned. Contributions normally include capital grants and customer funded system improvements. Operating Revenues and Expenses Operating revenues are those revenues that are generated directly from the primary activity of the proprietary funds. For the City, these revenues are charges for services for water and sewer activities. Operating expenses are necessary costs incurred to provide the goods or services which is the primary activity of the fund. Revenues and expenses which do not meet these criteria are considered non-operating and are reported as such. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Grant Revenue Grant revenues received before the revenue recognition criteria established by the Governmental Accounting Standards Board have been met are reported as deferred inflow of resources. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -41- Cost Allocations A number of employees provide service to multiple departments and funds. The City allocates the respective labor cost based on management's estimates established at the beginning of each fiscal year. Public works employees are the primary group whose costs are allocated. These employees serve the various enterprise funds as well as the public works departments within the general fund. The City also allocates administrative employee costs to enterprise funds. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Nevada Public Employees Retirement System (PERS) and additions to/deductions from PERS’s fiduciary net position have been determined on the same basis as they are reported by PERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Changes in the net pension liability are recorded, in the period incurred, as pension expense or as deferred inflows of resources or deferred outflow of resources depending on the nature of the change. The changes in net pension liability that are recorded as deferred inflow of resources or deferred outflow of resources (that arise from changes in actuarial assumptions or other inputs and differences between expected or actual experience) are amortized over the weighted average remaining service life of all participants in the respective pension plan and are recorded as a component of pension expense beginning with the period in which they are incurred. Projected earnings on pension investments are recognized as a component of pension expense. Differences between projected and actual investment earnings are reported as deferred inflow of resources or deferred outflow of resources and amortized as a component of pension expense on a closed basis over a five-year period beginning with the period in which the difference occurred. Each subsequent year will incorporate an additional closed basis five-year period or recognition. Deferred Inflows and Outflows of Resources Transactions that result in the consumption or acquisition of net assets in one period that are applicable to future periods are reported as either a deferred inflow of resources or deferred outflow of resources in the statement of net position. Comparative Data The basic financial statements include certain prior-year summarized comparative information in total but not at the level of detail required for a presentation in conformity with generally accepted accounting principles. Such information can only be obtained by referring to the June 30, 2018 audit report. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -42- Note 2 - Cash and Investments: The City of Yerington maintains all of its cash and investments in bank accounts and time certificates of deposits. The City's cash balance is maintained at Wells Fargo Bank and at Financial Horizons Credit Union, both of which are fully covered by FDIC insurance and collateral pledged to the City of Yerington accounts. The collateral pledged consists of obligations insured or guaranteed by the U.S. Government and its agencies. The following schedule summarizes cash and investments for the City of Yerington at June 30, 2019: Cash and Investment Balance Held By: General Activities: General Fund $ 505,490 Municipal Court Administrative Assessment Fund 19,455 Special Revenue Fund 130,426 Fixed Asset Acquisition Fund 791,405 Total General Activities Cash and Investments $ 1,446,776 Business Type Activities: Water Utility Fund 5,489,768 Sewer Utility Fund 1,258,842 Total Business-Type Activities Cash and Investments 6,748,610 Total Cash and Investments $ 8,195,386 Cash Balances Classified By Depository: Cash on Hand $ 300 Commercial Account: Wells Fargo Bank 8,108,725 Financial Horizons Credit Union 86,361 Subtotal Cash $ 8,195,386 ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -43- Note 2 – Cash and Investments (continued): The following is a list of cash and deposits indicating collateral or insurance on these deposits: Carrying Bank Amount Balance Cash on Hand $ 300 $ - Insured (FDIC) 336,361 336,361 Uninsured but collateralized by securities held in the name of the City by its agent 7,858,725 7,846,215 $8,195,386 $8,182,576 Interest Rate Risk: The City does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk: State law limits types of allowable investments under Nevada Revised Statutes 355.170 as listed in the accompanying Note 1. Concentration of Credit Risk: The City places no limit on the amount that may invest in any one issuer. Cash Restrictions: The City’s water utility system received grant financing totaling $2,760,986 through the Nevada Division of Environmental Protection’s Board of Financing Water Projects for a line extension and new water system. Under the Board for Financing Water Projects Policy, the grantee must guarantee that funds will be available in the future for the replacement of capital improvement projects financed with grant funds based on the life of the projects. The City is required to annually deposit into a cash reserve account $23,044 in the City Water Fund to cover future capital costs. At June 30, 2019, cash reserve balances were $217,981 for the City Water Fund. Cash received from customers as security deposits by the City's Water Utility Fund and Sewer Utility Fund are restricted for future refund or forfeit. The amounts at June 30, 2019 are $6,334 and $2,071 respectively. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -44- Note 3 - Capital Assets: A summary of changes in capital assets is as follows: Balance Balance July 1, 2018 Additions Deletions June 30, 2019 Governmental Activities: Capital assets, not being depreciated: Land and improvements $ 639,763 $ - $ - $ 639,763 Total capital assets, not being depreciated 639,763 - - 639,763 Capital assets being depreciated: Land improvements 5,741,468 - - 5,741,468 Buildings and improvements 979,025 62,433 - 1,041,458 Equipment and vehicles 2,563,950 121,138 - 2,685,088 Infrastructure 5,084,322 - - 5,084,322 Total capital assets being depreciated 14,368,765 183,571 - 14,552,336 Less accumulated depreciation for: Land improvements 2,051,476 162,174 - 2,213,650 Buildings and improvements 685,350 21,676 - 707,026 Equipment and vehicles 1,405,725 108,860 - 1,514,585 Infrastructure 4,165,184 84,632 - 4,249,816 Total accumulated depreciation 8,307,735 377,342 - 8,685,077 Total capital assets being depreciated, net 6,061,030 (193,771) - 5,867,259 Governmental activities capital assets, net $ 6,700,793 $ (193,771) $ - $ 6,507,022 Depreciation expense was charged to the following functions of the City: Governmental Activities: General Government $ 12,321 Judicial 618 Public safety 30,835 Public works 70,717 Culture and recreation 16,795 Infrastructure 246,056 Total Depreciation Expense – Governmental Activities $ 377,342 ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -45- Note 3 - Capital Assets (continued): Balance Balance July 1, 2018 Additions Deletions June 30, 2019 Business-type Activities: Capital assets, not being depreciated: Land and improvements $ 317,513 $ - $ - $ 317,513 Construction in progress 1,480,108 1,721,083 26,444 3,174,747 1,797,621 1,721,083 26,444 3,492,260 Capital assets being depreciated: Buildings, wells, tanks and distribution system 24,655,373 143,391 - 24,798,764 Treatment plant and collection system 6,032,049 - - 6,032,049 Vehicles 114,567 - - 114,567 Maintenance equipment 3,234,409 - - 3,234,409 Office Equipment 127,926 - - 127,926 Total capital assets being depreciated 34,164,324 143,391 - 34,307,715 Less accumulated depreciation for: Buildings, wells, tanks and distribution system 5,530,211 544,597 - 6,074,808 Treatment plant and collection system 3,346,288 131,262 - 3,377,550 Vehicles 109,802 702 - 110,504 Maintenance equipment 1,437,851 191,228 - 1,629,079 Office Equipment 119,060 2,216 - 121,276 Total accumulated depreciation 10,543,212 870,005 - 11,413,217 Total capital assets being depreciated, net 23,621,112 (726,614) - 22,894,498 Business-type activities capital assets, net $25,418,733 $ 994,469 $ 26,444 $26,386,758 Depreciation expense of $870,005 was charged to the public works - utilities function of the City. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -46- Note 4 – Enterprise Fund Obligations: The following are the long-term obligations of the enterprise funds outstanding at June 30, 2019. Changes in Business-Type Activities Long-term Obligations: Balance Balance July 1, Obligations Obligations June 30, Due Within 2018 Issued Retired 2019 One Year Long-Term Debt: Compensated absences $ 29,658 $ - $ 3,094 $ 26,564 $ - Net Pension Liability 912,589 - 14,500 898,089 OPEB liability 366,690 14,189 - 380,879 - Total Long-Term Obligations $1,308,937 $ 14,189 $ 17,594 $1,305,532 $ - Note 5 - General Long-Term Debt: Governmental Activities: The estimated value of the accrued compensated absences liability at June 30, 2019 was $38,934. This balance includes the value of the general government's annual leave and sick leave, which is earned at a rate based upon an employee's longevity with the City. An employee may carry forward unused annual leave, not exceeding 30 days as of the employee's anniversary date, to the next year. The City has adopted a sick leave payback policy based on several factors; ten years of continuous service and employees' vesting in the PERS retirement system with amounts paid for those employees in excess of 30 days upon retirement, not to exceed $1,000. Changes in Governmental Activities Long-term Debt: Balance Balance July 1, Obligations Obligations June 30, Due Within 2018 Issued Retired 2019 One Year Long-Term Debt: Compensated absences $ 39,116 $ - $ 192 $ 38,924 $ - Net Pension Liability 1,337,350 - 25,115 1,312,235 - OPEB liability 372,053 14,303 - 386,356 - Total Long-Term Obligations $1,748,519 $ 14,303 $ 25,307 $1,737,515 $ - The lawful City general obligation debt limit at June 30, 2019 was $21,032,202 (NRS 266.600), which leaves a statutorily-available borrowing capacity of $21,032,202 since the City does not have any general obligation bonds outstanding. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -47- Note 6 - Contracts and Agreements: The City has entered into several inter-local government agreements. Brief descriptions of the agreements are provided below. Lyon County Ad Valorem Tax Agreement In accordance with an agreement dated July 1, 2007, between the City and Lyon County, $200,000 of the County's annual consolidated tax revenue shall be paid to the City of Yerington in consideration for the City's previous surrender of ad valorem tax rate to the County. The agreement was renewed July 1, 2010, and shall automatically renew on each subsequent three year term thereafter unless terminated by either party upon 60 days notice. The amount is reported as intergovernmental revenue in the General Fund. Fire Protection and Ambulance Service Fire protection, emergency medical, and other related services are provided to the City of Yerington by the Mason Valley Fire Protection District in accordance with an agreement effective July 1, 1993. The fee for such service is determined each fiscal year and based on the preceding year's fee adjusted by changes in the City's assessed valuation and Mason Valley Fire Protection District's ad valorem tax rate. The amount paid for fiscal year 2019 was $156,480 and is reported within the General Fund's public safety function. County Parks Agreement Park and recreation facilities located within the City of Yerington were previously provided jointly by Lyon County and the City. Effective April 16, 1992, the City agreed to provide all the services, personnel and equipment which are necessary to operate and maintain the parks and the County agrees to pay the City an amount agreed to by both entities each year. The amount should equal, as nearly as possible, the percentage of budgeted appropriation allocated by the County for parks that the assessed value of the property in the City and Mason Valley Fire Protection District bears to the assessed value of all property in the County. If no agreement is reached, then the amount will be the amount provided in the previous fiscal year. The amount received in fiscal year 2019 was $40,000. Water and Wastewater Agreements with Willowcreek General Improvement District Effective January 1, 2005, the City of Yerington began overseeing daily operations of the water and wastewater systems owned by the Willowcreek General Improvement District. In accordance with the agreement, The City bills and collects fees and is responsible for most system repairs and maintenance. User fees are remitted to the District and the District compensates the City a fixed amount each six months. The City received $19,000 and $29,000 for operating the water and sewer wastewater systems respectively. Compensation and costs associated with operating the District's utility systems are included within the City's Water Utility Fund and Sewer Utility Fund. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -48- Note 6 - Contracts and Agreements (continued): In addition to agreements with other local governments, the City has the following agreements outstanding at June 30, 2019 with private companies. Nevada Copper Inc. - Water Service Agreement The City of Yerington has entered into an agreement with Nevada Copper, Inc. to reserve 3,500 acre feet of water for future use in a proposed mining operation in exchange for semi-annual payments of $43,750 until such time that Nevada Copper, Inc. begins using the water. The agreement also specifies the future use fees to be charged. The agreement, dated August 10, 2009, is for a period of thirty years and revenues are credited to the Water Utility Fund. Note 7 - Defined Benefit Pension Plan: General Information about the Pension Plan Plan description: All permanent full time employees are provided pensions through the Public Employees Retirement Plan (PERS). The plan is a cost-sharing multiple-employer defined benefit pension plan administered by the Public Employees Retirement System of Nevada. Chapter 286 of the Nevada Revised Statutes (NRS) establishes a governing board, appointed by the Governor that is responsible for managing the System, including arranging for a biennial actuarial valuation and adoption of actuarial tables and formulas prepared and recommended by the actuary. Benefits provided: Benefits, as required by the Nevada Revised Statutes (NRS or statute), are determined by the number of years of accredited service at time of retirement and the member’s highest average compensation in any 36 consecutive months with special provisions for members entering the System on or after January 1, 2010. Benefit payments to which participants or their beneficiaries may be entitled under the plan include pension benefits, disability benefits, and survivor benefits. benefit allowances for members are computed at 2.5% of average compensation for each accredited year of service prior to July 1, 2001. For service earned on and after July 1, 2001, this multiplier is 2.67% of average compensation. For members entering the System on or after January 1, 2010, there is a 2.5% multiplier and for regular members entering the System on or after July1, 2015, there is a 2.25% factor. The System offers several alternatives to the unmodified service retirement allowance which, in general, allow the retired employee to accept a reduced service retirement allowance payable during his or her lifetime and various optional payments to a named beneficiary after his or her death. Post-retirement increases are provided by authority of NRS 286.575–.579. Regular members are eligible for retirement at age 65 with five years of service, at age 60 with ten years of service, or at any age with thirty years of service. Regular members entering the System on or after January 1, 2010, are eligible for retirement at age 65 with five years of service, or age 62 with ten years of service, or any age with thirty years of service. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -49- Note 7 – Defined Benefits Pension Plan (continued): Regular members who enter the system on or after July 1, 2019 are eligible for retirement at age 65 with 5 years of service, or at age 62 with 10 years of service or at age 55 with 30 years of serve or any age with 33 1/3 years of service. Police/Fire members are eligible for retirement at age 65 with five years of service, at age 55 with ten years of service, at age 50 with twenty years of service, or at any age with twenty- five years of service. Police/Fire members entering the System on or after January 1, 2010, are eligible for retirement at age 65 with five years of service, or age 60 with ten years of service, or age 50 with twenty years of service, or at any age with thirty years of service. Only service performed in a position as a police officer or firefighter may be counted towards eligibility for retirement as Police/Fire accredited service. The normal ceiling limitation on benefit allowances is 75% of average compensation. However, a member who has an effective date of membership before July 1, 1985, is entitled to a benefit of up to 90% of average compensation. Both Regular and Police/Fire members become fully vested as to benefits upon completion of five years of service. Contributions: The authority for establishing and amending the obligation to make contributions, and member contribution rates, is set by statute. The contribution rates are based on biennial actuarial valuations and expected to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability.. New hires, in agencies which did not elect the Employer-Pay Contribution (EPC) plan prior to July 1, 1983 have the option of selecting one of two contribution plans. One plan provides for matching employee and employer contributions (EEC), while the other plan provides for employer-pay contributions only. Under the matching Employee/Employer Contribution plan a member may, upon termination of service for which contribution is required, withdraw employee contributions which have been credited to their account. All membership rights and active service credit in the System are canceled upon withdrawal of contributions from the member’s account. If EPC was elected, the member cannot convert to the Employee/Employer Contribution plan. The City has elected the EPC plan for all employees. The City’s contribution to the plan was $303,048 for the year ended June 30, 2019. The respective rates on which contributions for EPC plans were based were 40.5% of covered compensation for police/fire members and 28.0% for other members. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2019, the City reported a liability of $2,210,324 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the plan’s net pension liability was based on the City’s share of contributions to the pension plan relative to the contributions of all ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -50- Note 7 – Defined Benefits Pension Plan (continued): participating entities for the year ended June 30, 2018. At June 30, 2018, the City’s proportion of the plan was .01621% while the prior year’s proportionate rate was .01692%. For the year ended June 30, 2018, the City recognized pension expense of $153,640 and $117,519 in its governmental and business-type activities respectively. At June 30, 2019, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Governmental Business-Type Governmental Business-Type Activities Activities Activities Activities Difference between expected and actual experience $ 44,267 $ 24,976 $ 65,591 $ 37,006 Net difference between projected and actual earnings on pension plan investments - - 6,727 3,796 Changes in assumptions 74,460 42,010 - - Changes in proportion and differences between City contributions and proportionate share of contributions 61,028 34,432 115,790 65,329 $ 179,755 $ 101,418 $ 188,108 $ 106,131 The amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Governmental Business-Type Activities Activities Year Ended June 30: 2020 $ 14,618 $ 8,248 2021 (9,656) (5,448) 2022 (10,803) (6,096) 2023 (3,071) (1,732) 2024 2,195 1,239 Thereafter (1,636) (924) $ (8,353) $ (4,713) In addition, $89,263 and $62,261 are reported as deferred outflows of resources related to pensions in the governmental and business-type activities and represent the City’s contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability reported as of June 30, 2019. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -51- Note 7 – Defined Benefits Pension Plan (continued): Actuarial assumptions: The total pension liability at June 30, 2018 was determined by an actuarial valuation as of that date. The total pension liability was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.75% Payroll growth assumption for future years including inflation Investment rate of return 7.50% Productivity pay increases: 0.5% Plus Salary increases Regular: 4.25% to 9.15% Police/Fire: 4.55% to 13.90% vary by service, including inflation Consumer Price Index 2.75% Other assumptions Same as those used in the June 30, 2018 funding actuarial valuation Investments: The Board evaluates and establishes expected real rates of return (expected returns, net of investment expenses and inflation) for each asset class. The Board reviews these capital market expectations annually. The PERS’s current long-term geometric expected real rates of return for each asset class included in the plan’s investment portfolio as of June 30, 2017 are included in the following table: Target Long-Term Geometric Asset Class Allocation Expected Real Rate of Return* Domestic Equity 42% 5.50% International Equity 18% 5.75% Domestic Fixed Income 30% 0.25% Private Markets 10% 6.80% *As of June 30, 2018, PERS’ long-term inflation assumption was 2.75%. Discount Rate: The discount rate used to measure the total pension liability was 7.50% as of June 30, 2018. The projection of cash flows used to determine the discount rate assumed plan contributions will be made in amounts consistent with statutory provisions and recognizing the plan’s current funding policy and cost-sharing mechanism between employers and members. For this purpose, all contributions that are intended to fund benefits for all plan members and their beneficiaries are included, except that projected contributions that are intended to fund the service costs for future plan members and their beneficiaries are not included. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -52- Note 7 – Defined Benefits Pension Plan (continued): Sensitivity of the City’s proportionate share of the net pension liability to changes in the discount rate: The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.50%) or 1-percentage-point higher (7.50%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (6.50%) (7.50%) (8.50%) $3,371,194 $2,210,324 $1,246,356 Note 8 – Postemployment Benefits Other Than Pensions (OPEB): The City offers post-employment health benefits to its retirees under two plans on the pay-as-you-go basis. Accordingly, the City has implemented GASB No. 75 prospectively beginning with the year ended June 30, 2018. Actuarial studies are done periodically to determine the OPEB liability. The most recent valuation was performed for June 30, 2019. Plan Information Nevada Public Employees' Benefits Program: The City contributes to an agent multiple-employer defined healthcare plan, Nevada Public Employees’ Benefits Program (PEBP). PEBP is administered by the State of Nevada pursuant to NRS 287. City retirees previously had the option to join the PEBP offered by the State of Nevada. Local Governments are required to pay the same portion of cost of coverage for their retirees joining PEBP that the State of Nevada pays for those persons retired from state service. As of June 30, 2019, thirteen City retirees were covered by this benefit plan. The PEBP issues a publicly available report that includes financial statements and required supplementary information. That report may be obtained by writing to Public Employees' Benefit Program, 901 South Stewart Street, Suite 1001, Carson City, Nevada 89701. The information is also available on their website at www.pebp.state.nv.us or by calling (800)326-5496. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -53- Note 8– Postemployment Benefits Other Than Pensions (continued): Funding Policy: Nevada Public Employees' Benefits Program: The contributions to Nevada Public Employees' Benefits Program are established and may be amended by the Board of the Public Employee's Benefits Program. The amount of subsidy for City retirees is billed Amounts contributed by retirees are paid directly to the State of Nevada and, as such, are not available. The required contribution is based on projected pay-as-you-go financing requirements. The City has not elected the option to pay additional amounts into a qualified trust to prefund benefits. There are twelve past employees under this plan. City of Yerington Health Care Plan: The City pays the full cost of active employee coverage. Employees pay the full cost of any optional dependent coverage and retirees pay the full cost of their personal and dependent coverage. Claims experience of employees and retirees are pooled when determining premiums and retiree and active employees pay the same rates. Therefore, an "implicit" subsidy of retirees cost by active employees could results. A separate report is not issued for the plan. There are 18 activity employees under this plan Total OPEB Liability: Following is the City’s total OPEB liability that was measured as of June 30, 2019, and was determined by an actuarial valuation as of July 1, 2017. $ 767,235 Actuarial Methods and Assumptions Projections of benefits are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the City and the plan members to that point. Projections of benefits for financial reported purposes do not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long- term perspective and employ methods and assumptions that are designed to reduce short- term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculation. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -54- Note 8 – Postemployment Benefits Other Than Pensions (OPEB) (continued): Significant methods and assumptions used to value both plans are as follows: Valuation date July 1, 2017 Funding method Entry Age Normal Cost, ((AMM) Asset valuation method N/A - No trust established Discount rate (S & P General 2.79% as of June 30, 2019 Obligation Municipal Bond 20 Year High Grade Rate Index) Participants valued – PEBP Only current PEBP retirees are valued – City Plan Only current active employees and retired participants and covered spouses are valued. No future entrants are considered Actuarial assumptions: Projected salary increases 3.5% (N/A for PEBP) Assumed wage inflation 3.0% (N/A for PEBP) General inflation rate 2.75% Healthcare cost trend rates 7.8% in 2019 to 5% in 2028 and thereafter Mortality: The mortality table reflects recent rates developed by the Society of Actuaries and used the RP-2014 Combined Mortality Table for males and females. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -55- Note 8 – Postemployment Benefits Other Than Pensions (OPEB) (continued): Changes in Total OPEB Liability Governmental Business-Type Activities Activities Total Balance at June 30, 2018 $ 372,053 $ 366,690 $ 738,743 Changes for the year: Service cost 2,707 2,685 5,392 Interest 11,869 11,775 23,644 Changes in assumptions 20,899 20,733 41,632 Benefit payments (21,172) (21,004) (42,176) Net Change 14,303 14,189 28,492 Balance at June 30, 2019 $ 386,356 $ 380,879 $ 767,235 Sensitivity of the total OPEB liability to changes in the discount rate: The following presents the City’s total OPEB liability calculated using the discount rate of 2.79 percent, as well as what the City’s OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (1.79%) or 1-percentage-point higher (3.79%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (1.79%) (2.79%) (3.79%) $ 866,833 $ 767,235 $ 684,433 Sensitivity of the total OPEB liability to changes in the healthcare cost trend: The following presents the City’s total OPEB liability of the City as well as what the City’s OPEB liability would be if it were calculated using a healthcare cost trend rates that are 1-percentage-point lower or 1-percentage-point higher than the current rates: Decrease Current Increase - 1% rend Rate + 1% $ 685,093 $ 767,235 $ 864,494 ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -56- Note 8 – Postemployment Benefits Other Than Pensions (OPEB) (continued): OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB: For the year ended June 30, 2019, the City recognized OPEB expense of $9,836. At June 30, 2019, the City reported deferred outflows resources of $35,727 and deferred inflows of resources $126,778 related to OPEB from changes in assumptions and differences between expected and actual expenses. Deferred Outflows Deferred Inflows of Resources of Resources Governmental Business-Type Governmental Business-Type Activities Activities Activities Activities Difference between expected and actual experience $ - $ - $ 20,493 $ 20,329 Changes in assumptions 17,935 17,792 43,150 42,806 $ 17,935 $ 17,792 $ 63,643 $ 63,135 The amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Governmental Business-Type Activities Activities Year Ended June 30: 2020 $ (9,638) $ (9,562) 2021 (9,638) (9,562) 2022 (9,638) (9,562) 2023 (9,638) (9,562) 2024 (9,638) (9,562) 2025 2,482 2,467 $ (45,708) $ (45,343) ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -57- Note 9- Fund Equity: Net position includes the following restricted amounts at June 30, 2019. Governmental Funds: Special Revenue Fund : Private donation restricted for animal shelter expense $ 4,670 Business-Type Funds: Nevada Division of Environmental Protection grant (AB-198) requires annual contributions of $23,044 to a Capital Reserve account held for future improvements in the Water Utility Fund. 217,981 $ 222,651 At June 30, 2019, the governmental funds had the following fund balance classified as follows. Part of the General Fund’s year-end balance is represents fuel inventory and therefore non-spendable. $ 22,101 Part of the City Governmental Funds’ year-end balances are committed for: General Fund – Drug forfeiture monies $ 1,897 General Fund – Compensated absences 23,306 Municipal Court Administrative Assessments 19,354 Special Revenue Fund 108,142 Fixed Asset Acquisition Fund 790,291 $ 942,990 Part of the General Fund’s year-end balance fund balance been assigned as a financial resource for the subsequent year’s appropriations. $ 34,040 Note 10– Tax Abatements: City consolidated tax distributions were reduced by $7,186 under agreements entered into by the State of Nevada. The agreements provide for a partial abatement of sales and use taxes imposed on eligible machinery or equipment used by certain new or expanded businesses. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -58- Note 11 - Business License Fees: The following schedule summarizes all fees imposed by the City of Yerington, which are subject to the provisions of NRS 354.5989. The City's basic business license fee did not increase from the previous year. The population index had no increase and the consumer price index increased by 1.9%. FY 2019 FY 2019 Over Adjusted Percent Maximum Actual (Under) Base Increase Allowed Revenue Allowable 6-30-18 CPI Index Revenue Received Amount Business Licenses $129,996 X 1.90% = $132,466 $ 122,221 $ (10,245) Note 12 - Regional Highways and Street Revenues: The City participates in the optional nine-cent gasoline tax to fund Lyon County’s Regional Highway and Street Fund. The Fund is administered by a Regional Transportation Commission composed of a five-member board of which the City has one representative. The revenues derived from this fund are remitted to Lyon County for proper accounting. The City receives an allocation of the nine-cent tax revenue based on its total assessed valuation compared with the total assessed valuation of the County. Nevada Revised Statutes 373.150 requires any funds not disbursed currently in aid of an approved project shall remain in the fund to the credit of the City. At June 30, 2019, there were funds in the amount of $734,856 reserved in Lyon County's Regional Highway and Street Fund for the sole use by the City of Yerington. The Regional Transportation Commission must first approve a project plan before any funds will be released to the City. The City recognizes these revenues only upon meeting the revenue recognition criteria as stated in Note 1. In addition, Lyon County holds Road Construction Tax totaling $107,554 for the benefit of the City. Note 13 - 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 as are all entities. The City has joined together with similar public entities (cities, counties, school districts, and special districts) throughout the State of Nevada to create a pool under the Nevada Inter-local Cooperation Act. The Nevada Public Agency Insurance Pool (Pool) is a public-entity risk pool currently operating as a common-risk management and insurance program for 106 members. The City pays an annual premium and specific deductibles, as necessary, to the Pool for its general insurance coverage. The Pool is considered a self-sustaining risk pool that will provide property loss coverage for its members up to $200,000 per insured event. The Pool obtains independent coverage for insured events in excess of the $200,000 limit. The Pool also is considered a self-sustaining risk pool that will provide coverage for its members up to $500,000 per casualty insured event. The Pool obtains independent coverage for insured events in excess of the $500,000 limit. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -59- The City has joined together with similar public entities (cities, counties, school districts, and special districts) throughout the State of Nevada to create a pool under the Public Agency Compensation Trust. The Pool is considered a public-entity risk pool currently operating as a common-risk management and insurance program providing workman’s compensation benefits for its 76 members. The City continues to carry commercial insurance for other risks of loss such as employee health and accident insurance. Settled claims from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. Note 14 - Major Commitments: On March 27, 2017 the City was awarded two USDA Rural Development Grants on the Yerington Colony Tribe Water and Sewer Line Replacement project in the amount of $1,476,000 and $1,248,000, respectively. Farr West Engineering was awarded a $350,750 preliminary design and engineering contract with cost incurred at June 30, 2019 of $151,972 leaving a remaining contract balance of $198,778. These two USDA Rural Development grant awards provide for 100% funding of said project costs with construction anticipated in the fall of 2019. On March 27, 2017, the City signed a letter of intent with USDA Rural Development to obligate financing with both loan and grant funding for the City Water and Sewer Line Replacement Project. The estimated total cost of the City Water and Sewer Line Replacement Project is $35.8 million dollars. USDA Rural Development has obligated $17,253,000 for the City Water Line Project in two separate loans of $9,901,000 and $7,352.000. USDA Rural Development has obligated $15,577,000 for the City Sewer Line Project in two separate loans of $8,577,000 and $7,000,000 along with $741,000 in grant funding. The terms of the loan require payments of both interest and principal at 1.375% over a forty-year period. The four USDA Rural Development loans will be issued as revenue bonds for which the City pledges to generate sufficient user fee revenues to meet debt service requirements. In anticipation of these loans, the City Council authorized rate increases, effective July 1, 2017, for both water and sewer customers. The water rate initially increased $2.38 from $29.00 to $31.38 and the sewer rate increased $3.79 from $28.00 to $31.79. The current water base rate is $33.75 and the current sewer base rate is $43.16. Farr West Engineering was awarded a $5,592,136 preliminary design and engineering contract with cost incurred at June 30, 2019 of $2,887,318 leaving a remaining contract balance of $2,704,818. Before the City is eligible to begin drawing USDA Rural Development Loan funding, the City first must incur initial costs of $1,811,000 and $953,000 on the City Water and City Sewer projects respectively. As of June 30, 2019, the City has incurred preliminary engineering cost of $1,456,493 and $1,430,825 for the City Water and City Sewer projects respectively. ---PAGE BREAK--- CITY OF YERINGTON, NEVADA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2019 -60- Note 14 - Major Commitments: (continued) Following is a summary of projects. City of Yerington Yerington Colony Tribe Water Line Sewer Line Water Line Sewer Line Loan A $ 9,901,000 $ 8,577,000 $ - $ - Loan B 7,352,000 7,000,000 - - Grants - 741,000 1,476,000 1,248,000 City contribution 1,811,000 953,000 - - Total estimated cost $19,064,000 $17,271,000 $ 1,476,000 $ 1,248,000 Note 15 - Contingencies: Federal and State Grants The City received grants from the Federal government, passed through State agencies. These grants may be subject to compliance audits by the grantor agencies and ultimate retention of these monies is contingent upon satisfying the grantors that proper procedures were followed and that the resources were spent in accordance with grant requirements. Claims and Lawsuits Lawsuits are occasionally filed against the City of Yerington. The financial impact of these actions, if any, is not determinable at June 30, 2019. However, the City believes it has adequate insurance to cover any potential judgments should a judgement ever arise. Note 16 - Subsequent Event: Management has evaluated subsequent events through November 25, 2019, which is the date the financial statements were available to be issued. Note 17 - Compliance with Nevada Revised Statutes: The City conformed to all significant statutory constraints on its financial administration during the year as detailed in the Independent Accountant’s Report on Nevada Revised Statutes Chapter 354 Compliance Examination Report found on page 87 except for expenses exceeding budgeted appropriations in the Sewer Fund which is an apparent violation of NRS 354.626. ---PAGE BREAK--- 2018 2019 City of Yerington Health Benefits Plan Total OPEB Liability Service cost 5,380 $ 5,392 $ Interest 29,432 23,644 Difference between expected and actual experience (119,998) - Change in assumptions 19,543 41,632 Benefit payents (38,266) (42,176) Other changes (76,531) - Net Change in total OPEB Liability (180,440) 28,492 Total Liability, July 1 919,183 738,743 Total Liability, June 30 738,743 $ 767,235 $ Covered employee payroll 880,285 $ 1,067,723 $ Total liability as a percentage of covered-employee payroll 83.9% 71.9% Notes to Schedule: Changes of assumptions and other inputs reflect the effects of changes in the discount rate each period. Applicable discount rates 3.27% 2.79% CITY OF YERINGTON, NEVADA SCHEDULE OF CHANGES IN TOTAL OTHER POSTEMPLOYMENT BENEFITS (OPEB) LIABILITY AND RELATED RATIOS REQUIRED SUPPLEMENTARY INFORMATION -61- ---PAGE BREAK--- 2015 2016 2017 Schedule of Proportionate Share of the Net Pension Liability City's proportion of the net pension liability 0.01716% 0.01755% 0.01607% City's proportionate share of the net pension liability 1,788,913 $ 2,011,063 $ 2,163,221 $ City's covered-employee payroll 854,015 $ 867,725 $ 855,015 $ City's proportionate share of the net pension liability as a percentage of its covered-employee payroll 74.3% 231.8% 253.0% Plan fiduciary net position as a percentage of the total pension liability 76.3% 75.1% 72.2% * The above amounts presented for each fiscal year have a measurement date of June 30 of the preceding year. Schedule of Employer Contributions Statutorily required employer contribution 136,442 $ 136,805 $ 143,690 $ Contributions in relation to the statutorily required contribution 136,442 136,805 143,690 Contribution deficiency - $ - $ - $ City's covered-employee payroll 867,725 $ 855,015 $ 878,891 $ Contributions as a percentage of covered payroll 15.7% 16.0% 16.3% JUNE 30, 2019 CITY OF YERINGTON, NEVADA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULES OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY AND EMPLOYER CONTRIBUTIONS NEVADA PUBLIC EMPLOYEES RETIREMENT SYSTEM ---PAGE BREAK--- 2018 2019 0.01692% 0.01621% 2,249,939 $ 2,210,324 $ 878,891 $ 880,285 $ 256.0% 251.1% 74.4% 75.1% 151,535 $ 152,524 $ 151,535 152,524 - $ - $ 880,285 $ 931,454 $ 17.2% 16.4% -62- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA FIXED ASSET ACQUISITION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL ACTUAL VARIANCE 2018 Revenues Taxes County capital project tax $ 35 $ 35 $ - $ (35) $ - Other Local Revenues Interest income 750 750 - (750) 637 Total Other Revenues 750 750 - (750) 637 Intergovernmental Lyon County Park grant - 32,200 32,200 - - Nevada O.H.V. Program - - - - 34,742 State aviation grant - - 18,867 18,867 - FAA grant - - - - 2,541,028 Total Intergovernmental Revenues - 32,200 51,067 18,867 2,575,770 Total Revenues 785 32,985 51,067 18,082 2,576,407 Expenditures General Government Capital outlay, information center 40,000 40,000 30,233 9,767 - Total General Government 40,000 40,000 30,233 9,767 - Public Safety Capital outlay, vehicle 90,000 90,000 90,000 - 34,742 Total Public Safety 90,000 90,000 90,000 - 34,742 Public Works Capital outlay 20,000 20,000 18,979 1,021 2,692,921 Culture and Recreation Capital Outlay - 32,200 32,200 - - Total Culture and Recreation - 32,200 32,200 - - Total Expenditures 150,000 182,200 171,412 10,788 2,727,663 Excess (Deficiency) of Revenues over Expenditures (149,215) (149,215) (120,345) 28,870 (151,256) BUDGETED AMOUNT ORIGINAL -63- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA FIXED ASSET ACQUISITION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL ACTUAL VARIANCE #REF! Other Financing Sources Sale of fixes assets $ 2,500 $ 2,500 $ - $ (2,500) $ - Transfers in - General Fund 52,503 52,503 - (52,503) - Total Other Financing Sources (Uses) 55,003 55,003 - (55,003) - Excess of Revenues and Other Financing Sources, over Expenditures (94,212) (94,212) (120,345) (26,133) (151,256) Fund Balance, July 1 1,070,400 1,070,400 910,636 (159,764) 1,061,892 Fund Balance, June 30 $ 976,188 $ 976,188 $ 790,291 $ (185,897) $ 910,636 BUDGETED AMOUNT ORIGINAL -64- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA WATER UTILITY FUND 2019 2018 Current Assets Unrestricted Cash $ 5,265,453 $ 5,623,086 Accounts receivable, net of allowance for doubtful accounts of $7,060 and $7,060 respectively 151,736 152,870 Due from other governments 9,468 9,468 Other receivables 49,750 - Inventory of materials and supplies 37,416 23,136 Restricted Cash Customer deposits 6,334 5,976 AB 198 capital reserve 217,981 194,927 Total Current Assets 5,738,138 6,009,463 Property, Plant And Equipment Land & water rights 307,393 307,393 Construction in progress 1,652,941 809,803 Building, wells, tanks and distribution system 24,798,764 24,655,373 Vehicles 68,558 68,558 Maintenance equipment 2,810,777 2,810,777 Office equipment 82,846 82,846 29,721,279 28,734,750 Accumulated depreciation (7,506,836) (6,810,387) Total Capital Assets 22,214,443 21,924,363 Total Assets 27,952,581 27,933,826 Deferred Outflow of Resources Post valuation employer contributions 34,184 30,255 Deferred OPEB outflow or resources 9,825 10,265 Deferred pension outflow of resources 56,414 66,549 Total Deferred Inflows of Resources 100,423 107,069 SCHEDULE OF NET POSITION JUNE 30, 2019 (With Comparative Totals for June 30, 2018) ---PAGE BREAK--- 2019 2018 Liabilities Current liabilities payable from unrestricted assets: Accounts payable $ 50,281 $ 33,407 Construction payable 162,950 131,166 Accrued salaries and benefits 39,479 23,147 Due to other governments 11,802 11,506 Current liabilities payable from restricted assets: Customer deposits 6,334 5,976 Total Current Liabilities 270,846 205,202 Long-term liabilities: Accrued compensated absences 14,424 16,807 Accrued OPEB payable 210,990 202,928 Net pension liability 514,359 526,661 Total Long-term Liabilities 739,773 746,396 Total Liabilities 1,010,619 951,598 Deferred Inflow of Resources Unearned revenue - 1,000 Deferred OPEB inflows 34,864 51,984 Deferred pension inflows 59,037 65,442 Total Deferrred Inflow of Resources 93,901 118,426 Net Position Net investment in capital assets 22,214,443 21,924,363 Restricted for AB 198 capital reserves 217,981 194,927 Unrestricted (Restated) 4,516,060 4,851,581 Total Net Position $ 26,948,484 $ 26,970,871 -65- ---PAGE BREAK--- THIS PAGE LEFT INTENTIONALLY BLANK ---PAGE BREAK--- CITY OF YERINGTON, NEVADA WATER UTILITY FUND SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL ACTUAL VARIANCE 2018 Operating Revenues Water use fees $ 1,296,739 $ 1,289,779 $ 1,268,385 $ (21,394) $ 1,240,452 Meter replacement / Other charges 25,005 22,505 26,848 4,343 26,989 Less bad debts (4,500) - - - - Total Operating Revenues 1,317,244 1,312,284 1,295,233 (17,051) 1,267,441 Operating Expenses Salaries and wages 298,108 280,348 278,668 1,680 238,646 Employee benefits 154,501 149,533 105,214 44,319 90,441 Services and supplies 407,381 383,129 497,233 (114,104) 396,852 Depreciation 735,635 778,635 696,450 82,185 722,556 Total Operating Expenses 1,595,625 1,591,645 1,577,565 14,080 1,448,495 Operating Income (Loss) (278,381) (279,361) (282,332) (2,971) (181,054) Nonoperating Revenues (Expenses) Late fees 2,000 2,000 4,162 2,162 3,476 Administrative fee 12,100 12,100 13,505 1,405 15,299 Willow Creek agreement 19,000 19,000 19,000 - 19,000 Water tank lease 12,000 12,000 15,532 3,532 15,640 Water rights revenue 1,000 1,000 33,000 32,000 3,000 Nevada Copper reservation fee 87,500 87,500 87,500 - 87,500 ARCO - customer hookup revenue - - - - 233,455 ARCO - customer hookup expenses - - - - (233,455) Miscellaneous income 1,200 1,200 36,496 35,296 2,725 Interest expense (117,590) (117,590) - 117,590 - Total Nonoperating Revenues (expenses) 17,210 17,210 209,195 191,985 146,640 Income (loss) before contributions (261,171) (262,151) (73,137) 189,014 (34,414) Capital Contributions ARCO - Sunset Hills Project - - - - 40,014 U.S.D.A. grant - - - - 39,465 Connection fees from customers - - 50,750 50,750 12,315 Total Capital Contributions - - 50,750 50,750 91,794 Special Items Transfer of Clear Water Fund - - - - 2,683,287 Change in Net Position $ (261,171) $ (262,151) (22,387) $ 239,764 2,740,667 Net Position, July 1 26,970,871 24,230,204 Net Position, June 30 $ 26,948,484 $ 26,970,871 ORIGINAL BUDGETED AMOUNT -66- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA WATER UTILITY FUND SCHEDULE OF CASH FLOWS - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL ACTUAL VARIANCE 2018 Cash Flows From Operating Activities Receipts from customers $ 1,321,744 $ 1,321,744 $ 1,356,650 $ 34,906 $ 1,331,822 Payments to Lyon County (55,000) (55,000) (59,629) (4,629) (66,388) Payments of personnel costs (452,609) (452,609) (392,052) 60,557 (363,870) Payments for service and supplies (407,381) (407,381) (494,639) (87,258) (297,854) Net Cash Provided by Operating Activities 406,754 406,754 410,330 3,576 603,710 Cash Flows From Noncapital Financing Activities Water tank lease income 12,000 12,000 9,532 (2,468) 15,640 Water right revenue 1,000 1,000 33,000 32,000 3,000 Willowcreek revenue 19,000 19,000 19,000 - 19,000 Nevada Copper reservation fee 87,500 87,500 43,750 (43,750) 87,500 Administrative fees 12,100 12,100 13,505 1,405 15,299 ARCO reimbursements - - - - 233,455 Sunset Hills customer connections - - - - (233,455) Miscellaneous income 1,200 1,200 40,658 39,458 6,201 Net Cash Provided Non-Capital Financing Activities 132,800 132,800 159,445 26,645 146,640 Cash Flows From Capital And Related Financing Activities Capital contributions by customers 8,900 8,900 50,750 41,850 12,315 Transfer of Clear Water Utility Fund - - - - 104,099 Capital contributions by ARCO - - - - 102,498 Capital contributions by USDA 17,500,000 17,500,000 - (17,500,000) 82,165 Acquisition of capital assets (17,580,000) (17,580,000) (954,746) 16,625,254 (626,414) Principal paid on long-term debt 162,909 162,909 - Interest paid on long-term debt 117,590 117,590 - (117,590) - Net Cash (Used) by Capital and Related Financing Activities 209,399 209,399 (903,996) (950,486) (325,337) Net Increase (Decrease) In Cash and Cash Equivalents 748,953 748,953 (334,221) (920,265) 425,013 Cash and Cash Equivalents, July 1 6,010,196 6,010,196 5,823,989 (186,207) 5,398,976 Cash and Cash Equivalents, June 30 $ 6,759,149 $ 6,759,149 $ 5,489,768 $ (1,106,472) $ 5,823,989 ORIGINAL BUDGETED AMOUNT -67- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA WATER UTILITY FUND SCHEDULE OF CASH FLOWS - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) ACTUAL VARIANCE 2018 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating income (loss) $ (278,381) $ (279,361) $ (282,332) $ (2,971) $ (181,054) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 735,635 778,635 696,450 (82,185) 722,556 Bad debts 4,500 - - - - Net change deferred OPEB expense - (8,618) (8,618) (10,290) Net change deferred pension expense - (12,501) (12,501) (28,474) Changes in assets and liabilities Decrease (increase) in accounts receivable (55,000) (55,000) 1,134 56,134 2,255 Decrease (increase) in inventory - - (14,280) (14,280) (5,038) Increase (decrease) in consumer deposits - - 358 358 209 Increase in deferred lease revenue - - (1,000) (1,000) 1,000 (Decrease) increase in accounts payable and accrued liabilities - - 31,119 31,119 102,546 Net Cash Provided by Operating Activities $ 406,754 $ 444,274 $ 410,330 $ (33,944) $ 603,710 BUDGETED AMOUNT ORIGINAL FINAL -68- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA SEWER UTILITY FUND SCHEDULE OF NET POSITION JUNE 30, 2019 (With Comparative Totals for June 30, 2018) 2019 2018 Current Assets Unrestricted Cash $ 1,256,771 $ 1,761,153 Accounts receivable, net of allowance for doubtful accounts of $10,160 and $10,160 respectively 99,261 81,283 Grant Receivable - USDA 9,365 9,365 Restricted Cash Customer deposits 2,071 1,958 Total Current Assets 1,367,468 1,853,759 Property, Plant And Equipment Land 10,120 10,120 Treatment plant and collection systems 6,032,049 6,032,049 Vehicles 46,009 46,009 Maintenance equipment 423,632 423,632 Office equipment 45,080 45,080 Construction in progress 1,521,806 670,305 8,078,696 7,227,195 Accumulated depreciation (3,906,381) (3,559,211) Total Capital Assets 4,172,315 3,494,370 Total Assets 5,539,783 5,348,129 Deferred Outflow of Resources Post valuation employer contributions 28,077 24,135 Deferred OPEB inflow or resources 7,967 8,284 Deferred pension inflow of resources 45,004 48,766 Total Deferred Outflow of Resources 81,048 81,185 ---PAGE BREAK--- 2019 2018 Liabilities Current liabilities payable from unrestricted assets: Accounts payable $ 15,025 $ 12,037 Construction payable 406,708 131,166 Accrued salaries and benefits 33,406 18,924 Due to other governments 7,726 7,518 Current liabilities payable from restricted assets: Customer deposits 2,071 1,958 Total Current Liabilities 464,936 171,603 Long-term liabilities: Accrued compensated absences 12,140 12,851 Accrued OPEB payable 169,889 163,762 Net pension liability 383,730 385,928 565,759 562,541 Total Liabilities 1,030,695 734,144 Deferred Inflow of Resources Deferred OPEB inflows 28,271 41,951 Deferred pension inflows 47,094 47,955 Total Deferred Inflow of Resources 75,365 89,906 Net Position Net investment in capital assets 4,172,315 3,494,370 Unrestricted 342,456 1,110,894 Total Net Position $ 4,514,771 $ 4,605,264 -69- ---PAGE BREAK--- THIS PAGE LEFT INTENTIONALLY BLANK ---PAGE BREAK--- CITY OF YERINGTON, NEVADA SEWER UTILITY FUND SCHEDULE OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL ACTUAL VARIANCE 2018 Operating Revenues Sewer use fees $ 1,211,229 $ 1,211,229 $ 1,025,484 $ (185,745) $ 828,947 Bad debts - - - - - $ 1,211,229 $ 1,211,229 $ 1,025,484 $ (185,745) $ 828,947 Operating Expenses Salaries and wages 245,786 245,786 234,098 11,688 193,293 Employee benefits 126,182 126,182 95,269 30,913 94,625 Services and supplies 239,739 239,739 324,468 (84,729) 260,905 Depreciation 180,000 180,000 173,555 6,445 173,615 Total Operating Expenses 791,707 791,707 827,390 (35,683) 722,438 Operating Income (Loss) 419,522 419,522 198,094 (221,428) 106,509 Nonoperating Revenues (Expenses) Late fees 1,000 1,000 2,307 1,307 185 Willowcreek agreement 29,000 29,000 29,000 - 29,000 Interest expense (104,402) (104,402) - 104,402 - Total Nonoperating Revenues (Expenses) (74,402) (74,402) 31,307 105,709 29,185 Income (Loss) before Contributions and Special Item 345,120 345,120 229,401 (115,719) 135,694 Capital Contributions U.S.D.A. grant - - - - 44,286 Connect fees - - 87,400 87,400 - Special Item Sewer lagoo pond cleaning - - (407,294) (407,294) - Total Capital Contributions and Special Item - - (319,894) (319,894) 44,286 Change in Net Position $ 345,120 $ 345,120 (90,493) $ (755,507) 179,980 Net Position, July1 4,605,264 4,425,284 Net Position, June 30 $ 4,514,771 4,605,264 ORIGINAL BUDGET AMOUNT -70- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA SEWER UTILITY FUND SCHEDULE OF CASH FLOWS - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) FINAL ACTUAL VARIANCE 2018 Cash Flows From Operating Activities Receipts from customers $ 1,211,229 $ 1,211,229 $ 1,049,035 $ (162,194) $ 868,451 Payments to Lyon County (38,000) (38,000) (41,207) (3,207) (46,124) Payments of personnel costs (371,968) (371,968) (326,071) 45,897 (293,038) Payments for service and supplies (239,739) (239,739) (728,774) (489,035) (164,533) Net Cash Provided by Operating Activities 561,522 561,522 (47,017) (608,539) 364,756 Cash Flows From Noncapital Financing Activities Miscellaneous income 1,000 1,000 2,307 1,307 185 Willowcreek agreement 29,000 29,000 29,000 - 29,000 Net Cash Provided by Non-Capital Financing Activities 30,000 30,000 31,307 1,307 29,185 Cash Flows From Capital And Related Financing Activities Capital contributions by customers 20,000 20,000 87,400 67,400 - Captial contributions from USDA (Tribe) 1,248,000 1,248,000 - (1,248,000) 92,967 Captial contributions from USDA (City) 15,068,000 15,068,000 - (15,068,000) - Acquisition of capital assets USDA (Tribe) (1,248,000) (1,248,000) - 1,248,000 - Acquisition of capital assets USDA (City) (15,068,000) (15,068,000) (575,959) 14,492,041 - Acquisition of capital assets USDA (741,000) (741,000) - 741,000 - Acquisition of capital assets 150,000 150,000 (150,000) - Principal paid on long-term debt 144,638 144,638 - (144,638) - Interest paid on long-term debt 104,402 104,402 - (104,402) (544,858) Net Cash (Used) by Capital and Related Financing Activities (321,960) (321,960) (488,559) (166,599) (451,891) Net Increase (Decrease) in Cash and Cash Equivalents 269,562 269,562 (504,269) (773,831) (57,950) Cash and Cash Equivalents, July 1 2,015,240 2,015,240 1,763,111 (252,129) 1,821,061 Cash and Cash Equivalents, June 30 $ 2,284,802 $ 2,284,802 $ 1,258,842 $ (1,025,960) $ 1,763,111 ORIGINAL BUDGETED AMOUNT -71- ---PAGE BREAK--- CITY OF YERINGTON, NEVADA SEWER UTILITY FUND SCHEDULE OF CASH FLOWS - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2019 (With Comparative Totals for the Year Ended June 30, 2018) ACTUAL VARIANCE 2018 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating income (loss) $ 419,522 $ 419,522 $ 198,094 $ (221,428) $ 106,509 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 180,000 180,000 173,555 (6,445) 173,615 Net deferred OPEB expense - - (7,236) (7,236) 8,325 Net deferred pension expense - - (3,239) (3,239) (18,855) Special Item - lagoon cleaning (407,294) Changes in assets and liabilities Decrease (increase) in accounts receivable (38,000) (38,000) (17,977) 20,023 (1,977) Increase (decrease) in consumer deposits - - 113 113 65 (Decrease) increase in accounts payable and accrued liabilities - - 16,967 16,967 97,074 Net Cash Provided by Operating Activities $ 561,522 $ 561,522 $ (47,017) $ (608,539) $ 364,756 BUDGETED AMOUNT ORIGINAL FINAL -72- ---PAGE BREAK--- FISCAL YEAR 2018-19 $ .4044 $ 70,107,341 2017-18 .4044 64,193,011 2016-17 .4044 62,844,811 2015-16 .4044 60,903,135 2014-15 .4044 57,524,066 2013-14 .4044 56,732,755 2012-13 .4044 53,647,403 2011-12 .4044 55,656,691 2010-11 .4044 58,857,733 2009-10 .4044 64,470,671 2008-09 .4044 62,852,734 2007-08 .4044 57,998,651 2006-07 .4044 52,378,316 2005-06 .4044 42,627,093 2004-05 .4044 41,425,164 2003-04 .4044 41,832,125 2002-03 .4044 41,803,125 2001-02 .4044 41,796,083 2000-01 .3407 38,116,242 1999-00 .3236 37,951,799 Source: Nevada Department of Taxation Property Tax Rates for Nevada Local Governments TAX RATE CITY ASSESSED VALUATION CITY OF YERINGTON, NEVADA Schedule of Property Tax Rates and Assessed Valuations (Unaudited) Last Twenty Years -73- ---PAGE BREAK--- Other Fiscal Year Licenses and Intergovernmental Charges For Other Financing Ending June 30 Taxes Permits Revenues Services Revenues Sources Totals 2019 387,175 $ 519,595 $ 989,512 $ 121,772 $ 51,067 $ - $ 2,069,121 $ 2018 337,572 299,664 3,409,043 99,180 62,545 - 4,208,004 2017 312,558 335,821 975,377 89,170 64,140 - 1,777,066 2016 295,252 316,683 929,979 141,187 2,064,209 - 3,747,308 2015 307,099 297,192 1,188,242 139,547 1,171,605 - 3,103,683 2014 295,033 333,179 849,934 189,037 40,287 - 1,707,470 2013 289,584 305,453 930,448 207,627 39,240 - 1,772,352 2012 273,462 287,970 1,984,277 216,665 34,992 6,079 2,803,445 2011 224,021 284,437 1,213,410 207,546 57,512 - 1,986,926 2010 245,629 291,418 1,492,058 204,772 41,249 - 2,275,126 This Schedule includes revenues of the General Fund, Special Revenue Funds, and Capital Projects Fund. Significant contributions from Atlantic Richfield Company and Nevada Copper, Inc are included. CITY OF YERINGTON, NEVADA Governmental Revenues and Other Financing Sources by Source Last Ten Years (Unaudited) -74- ---PAGE BREAK--- Fiscal Year General Public Public Culture and Debt Ending June 30 Government Judicial Safety Works Recreation Health Service Totals 2019 317,252 $ 79,604 $ 1,087,655 $ 311,725 $ 109,214 $ 13,125 $ - $ 1,918,575 $ 2018 349,447 88,099 1,002,313 2,943,167 51,081 18,485 - 4,452,592 2017 330,854 89,928 951,671 415,725 119,457 15,461 - 1,923,096 2016 2,352,006 75,397 906,068 382,133 99,828 11,036 - 3,826,468 2015 429,264 95,885 928,787 677,111 56,505 13,447 - 2,200,999 2014 286,085 49,772 799,852 344,146 44,512 14,950 - 1,539,317 2013 252,402 51,054 728,799 534,752 54,904 10,882 - 1,632,793 2012 235,120 42,045 786,894 1,657,718 58,104 13,621 - 2,793,502 2011 242,827 48,938 791,991 900,016 59,046 13,518 - 2,056,336 2010 297,916 49,934 883,107 1,027,487 58,669 14,951 49,655 2,381,719 This Schedule includes expenditures of the General Fund, Special Revenue Funds, and Capital Projects Fund. CITY OF YERINGTON, NEVADA Governmental Expenditures by Function Last Ten Years (Unaudited) -75- ---PAGE BREAK--- Last Ten Years (Unaudited) CITY OF YERINGTON, NEVADA NET POSITION Year 2014 net position was restated by $1,146,798 for governmental activities and $846,696 business-type activities as required by GASB 68. $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Series1 4,575,697 4,430,364 4,911,928 4,781,104 3,763,251 4,887,314 4,666,325 4,083,977 6,262,871 6,246,495 Series2 19,165,004 22,304,972 23,131,459 23,067,097 22,262,413 23,725,350 30,531,103 31,338,775 31,576,135 31,463,255 -76- ---PAGE BREAK--- (Unaudited) CITY OF YERINGTON, NEVADA ALL GOVERNMENTAL FUNDS FUND BALANCE - LAST TEN YEARS $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 594,279 530,119 540,062 679,621 847,774 1,750,460 1,671,302 1,525,272 1,280,684 1,431,230 Years -77- ---PAGE BREAK--- (Unaudited) CITY OF YERINGTON, NEVADA GENERAL FUND - BUDGET BASIS FUND BALANCE - LAST TEN YEARS $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 370,127 245,208 242,728 384,792 564,093 546,656 460,422 360,061 254,300 485,467 Years -78- ---PAGE BREAK--- (Unaudited) REVENUES, EXPENDITURES, AND FUND BALANCE - LAST TEN YEARS GENERAL FUND - BUDGET BASIS CITY OF YERINGTON, NEVADA $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Years Series1 Series2 Series3 -79- ---PAGE BREAK--- GENERAL FUND - BUDGET BASIS REVENUES BY SOURCE (Unaudited) FOR THE YEAR ENDED JUNE 30, 2019 CITY OF YERINGTON, NEVADA Taxes 15.2% License and permits 28.1% Intergovernmental revenues 47.8% Charges for services 6.6% Fines and forfeits 1.6% Other revenues 0.7% -80- ---PAGE BREAK--- GENERAL FUND - BUDGET BASIS EXPENDITURES BY FUNCTION FOR THE YEAR ENDED JUNE 30, 2019 (Unaudited) CITY OF YERINGTON, NEVADA General Government 13.2% Public Works 14.6% Public Safety 61.8% Judicial 4.9% Culture & Recreation 4.8% Health 0.7% -81- ---PAGE BREAK--- (Unaudited) FOR THE YEAR ENDED JUNE 30, 2019 CITY OF YERINGTON, NEVADA GENERAL FUND - BUDGET BASIS EXPENDITURES BY OBJECT Salaries 36.7% Employee Benefits 19.3% Services & Supplies 43.2% Capital Outlay 0.8% -82- ---PAGE BREAK--- A Professional Corporation -83- 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 To the Honorable Mayor and City Council City of Yerington, Nevada We have audited, in accordance with the 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, business-type activities, each major fund of the City of Yerington, Nevada, as of and for the year ended June 30, 2018, and the related notes to the financial statements, which collectively comprise the City of Yerington’s basic financial statements and have issued our report thereon dated November 25, 2019. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Yerington, Nevada’s internal control over financial reporting (internal control) to determine the 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 of Yerington, Nevada’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Yerington, Nevada’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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. 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. 30 Broadway Avenue, Yerington, NV 89447│ [PHONE REDACTED] │ [PHONE REDACTED] │ Sciarani.com ---PAGE BREAK--- -84- Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Yerington, Nevada’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. 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. Yerington, Nevada November 25, 2019 ---PAGE BREAK--- CITY OF YERINGTON, NEVADA SCHEDULE OF FINDINGS AND RESPONSES JUNE 30, 2019 -85- A. Summary of Auditor’s Results – GAAS Audit: The auditor’s report expresses an unmodified opinion on the financial statements of the City of Yerington. (ii) No significant deficiencies related to the audit of the financial statements are reported in the Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. (iii) No instances of noncompliance material to the financial statements of the City of Yerington, which would be required to be reported in accordance with Government Auditing Standards, were disclosed during the audit. B. Findings – Financial Statement Audit None ---PAGE BREAK--- CITY OF YERINGTON, NEVADA SCHEDULE OF PRIOR YEAR FINDINGS AND RESPONSES JUNE 30, 2019 -86- B. Summary of Auditor’s Results – GAAS Audit: None C. Findings – Financial Statement Audit None ---PAGE BREAK--- A Professional Corporation -87- INDEPENDENT ACCOUNTANT’S REPORT ON NEVADA REVISED STATUTES 354.6241 To the Honorable Mayor and City Council City of Yerington, Nevada We have reviewed management’s assertion made in accordance with Nevada Revised Statute 354-624(5)(a) with respect to the funds of the City of Yerington as of and for the year ended June 30, 2019 that:  The identified funds are being used expressly for the purposes for which that were created.  The Funds are administered in accordance with accounting principles generally accepted in the United States of America.  The restricted fund balance/net position in the funds were reasonable and necessary to carry out the purposes of the funds at June 30, 2019 (based on the interpretation of reasonable and necessary provided by the Legislative Counsel Bureau).  The sources of revenues, including transfers, available for the funds are as noted in the financial statements.  The funds conform to significant statutory and regulatory constraints on their financial statements administration during the year ended June 30, 2019 except for the one instances of expenses in excess of budget appropriations as described in Note 17. This assertion is the responsibility of the management of the City of Yerington. Our review was conducted in accordance with attestation standard established by the American Institute of Certified Public Accountants. A review is substantially less in scope that an examination, the objective of which is the expression of an opinion on management’s assertion. Accordingly, we do not express such an opinion. Based on our review, nothing came to our attention that caused us to believe that management’s assertion referred to above is not fairly stated in all material respects. Yerington, Nevada November 25, 2019 30 Broadway Avenue, Yerington, NV 89447│ [PHONE REDACTED] │ [PHONE REDACTED] │ Sciarani.com ---PAGE BREAK--- -88- INDEPENDENT AUDITOR'S COMMENTS JUNE 30, 2019 Statute Compliance The required disclosure on compliance with Nevada Revised Statutes and the Nevada Administrative Code is contained in Note 17 to the financial statements. Prior Year Audit Recommendation There were no specific recommendations made in the audit report for the fiscal year ended June 30, 2018. Current Year Audit Recommendations The Schedule of Findings and Responses included in this audit report provides a listing of our current year recommendations.