HomeMy WebLinkAbout12-15-08_Presentation of Comprehensive Annual Financial Report
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brian LaMeres, City Controller and
Chris Kukulski, City Manager
(to be presented by Merrilee Glover of J.C.C.S.)
SUBJECT: Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2007-2008
MEETING DATE: December 15, 2008
BACKGROUND: Section 2-7-503 MCA requires that a financial report be prepared for every fiscal
year. The statute requires a biannual audit of the accounts, financial records, and transactions of all
administrative departments of the City by independent certified accountants selected by the City
Commission. It has historically been the belief of the City Commission and City Administration that an
annual audit assures a higher level of financial management and fiscal responsibility than a biannual audit.
This policy, along with the legal reporting requirement, has been followed for fiscal year 2008, and the
clean unqualified opinion expressed by the audit firm of Junkermeir, Clark, Campanella & Stevens, PC
has been included in the accompanying report. The City’s Audit Committee has reviewed and accepted
the CAFR and the accompanying letter to management.
RECOMMENDATION: The City Commission accepts the CAFR and accompanying reports.
FISCAL EFFECTS: A clean unqualified audit opinion on the City’s financial statements is
viewed favorably by investment analysts and strengthens the City’s ability
to issue bonds or other debt at a lower interest cost.
ALTERNATIVES: As suggested by the City Commission.
Respectfully submitted,
Brian LaMeres, City Controller
Approved by:
Chris A. Kukulski, City Manager Attachments
Comprehensive Annual Financial Report,
:
Auditor’s Letter to Management, Building Codes Letter, Special Area Review – Recreation Dept Report compiled on December 10, 2008 87
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2008 Prepared by the City of Bozeman Finance Department 88
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2008 TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal........................................................................................................................................................................................................1-15 Governmental Finance Officers’ Association Certificate ..................................................................................................................................................16 Organizational Chart...........................................................................................................................................................................................................17 City Elected Officials and Officers................................................................................................................................................................................18-19 II. FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT.....................................................................................................................................................................20-21 A. MANAGEMENT’S DISCUSSION AND ANALYSIS................................................................................................................................................22-31 B. BASIC FINANCIAL STATEMENTS Government Wide Financial Statements Statement of Net Assets ...............................................................................................................................................................................................32 Statement of Activities.................................................................................................................................................................................................33 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet – Governmental Funds..............................................................................................................................................................34-35 Reconciliation of the Balance Sheet to the Statement of Net Assets – Governmental Funds...............................................................................36 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds...........................................................................37 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities – Governmental Funds...............................................................................................................................................38 Proprietary Fund Financial Statements Statement of Net Assets – Proprietary Funds...................................................................................................................................................39-40 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds...................................................................................41 Statement of Cash Flows – Proprietary Funds..................................................................................................................................................42-43 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets – Fiduciary Funds...........................................................................................................................................44 Notes to Financial Statements........................................................................................................................................................................................45-78 90
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2008 TABLE OF CONTENTS (CONTINUED) C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual General Fund................................................................................................................................................................................................................79 Street and Fire Impact Fee Special Revenue Fund.......................................................................................................................................................80 Notes to Required Supplementary Information Other Than Management Discussion and Analysis.................................................................................81 D. SUPPLEMENTAL INFORMATION Combining and Individual Fund Statements and Schedules Combining Balance Sheet – Non-Major Governmental Funds...............................................................................................................................82-87 Combining Statement of Revenue, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds ...........................................88-93 Budget-to-Actual Schedule – Other Major Funds Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual - Other Major Funds SID Sinking Fund.........................................................................................................................................................................................................94 Capital Projects Fund...................................................................................................................................................................................................95 Note to Budget-to-Actual Statements – Other Major Funds...............................................................................................................................................96 Budget-to-Actual Schedules- Nonmajor Funds Schedules of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual Non-Major Governmental Funds ..........................................................................................................................................................................97-110 Internal Service Funds Statements Combining Statements of Net Assets – Internal Service Funds.................................................................................................................................111 Combining Statements of Revenues, Expenses, and Changes in Fund Net Assets – Internal Service Funds............................................................112 Combining Statements of Cash Flows ................................................................................................................................................................113-114 Agency Funds Combining Statements of Fiduciary Net Assets.........................................................................................................................................................115 Combining Schedules of Changes in Assets and Liabilities – Agency Funds....................................................................................................116-117 91
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2008 TABLE OF CONTENTS (CONTINUED) III. STATISTICAL SECTION Financial Trends Section Net Assets by Component..........................................................................................................................................................................................118 Changes in Net Assets.........................................................................................................................................................................................119-120 Fund Balances of Governmental Funds .....................................................................................................................................................................121 Changes in Fund Balances, Governmental Funds......................................................................................................................................................121 Revenue Capacity Section Assessed value of Taxable Property...........................................................................................................................................................................123 Direct and Overlapping Property Tax Rates ..............................................................................................................................................................124 Principal Property Tax Payers....................................................................................................................................................................................125 Property Tax Levies and Collections .........................................................................................................................................................................126 Water Sold by Type of Customer...............................................................................................................................................................................127 Water and Sewer Rates...............................................................................................................................................................................................128 Debt Capacity Section Ratios of Outstanding Debt by Type..........................................................................................................................................................................128 Ratios of General Bonded Debt Outstanding.............................................................................................................................................................130 Direct and Overlapping General Bonded Debt Outstanding......................................................................................................................................131 Legal Debt Margin Information.................................................................................................................................................................................132 Pledged Revenue Coverage........................................................................................................................................................................................133 Demographics and Economic Section Demographic and Economic Statistics.......................................................................................................................................................................134 Principal Employers...................................................................................................................................................................................................135 Operating Section Full-time Equivalent City Government Employees by Function/Program................................................................................................................136 92
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2008 TABLE OF CONTENTS (CONTINUED) IV. REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS AND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AS REQUIRED BY OMB CIRCULAR A-133 Schedule of Expenditures of Federal Awards...................................................................................................................................................................137 Notes to Schedule of Expenditures of Federal Awards ....................................................................................................................................................138 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.........................................................................................................................................................................139-140 Independent Auditor’s Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133...........................................................................................................................................................................................141-142 Schedule of Findings and Questioned Costs.....................................................................................................................................................................143 Current Status of Prior Year Recommendations...............................................................................................................................................................144 93
PART I INTRODUCTORY SECTION 94
1 December 5, 2008 To the Citizens of the City of Bozeman, Montana The Comprehensive Annual Financial Report of the CITY OF BOZEMAN, MONTANA for the fiscal year ended June 30, 2008 is hereby submitted. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The comprehensive annual financial report is presented in four sections: introductory, financial, statistical, and single audit. The introductory section includes this transmittal letter, the government's organizational chart and a list of principal officials. The financial section includes management’s discussion and analysis, the basic financial statements and the required supplementary information and other supplemental information, as well as the auditor’s reports on the basic financial statements. The financial section begins with management’s discussion and analysis, which provides users of the basic financial statements with a narrative introduction, overview, and analysis of those statements. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984 and the Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Information related to the single audit, including the Schedule of Expenditures of Federal Awards and the Auditor’s Reports on Basic Financial Statements and Supplementary Schedule of Expenditures of Federal Awards, Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards, and Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133, are included in the single audit section of this report. This report includes all funds of the government. The government provides a full range of services. These services include police and fire protection; sanitation services; the construction and maintenance of streets and infrastructure; recreational activities; cultural events; planning and zoning; and general administrative services. The City, as a primary government, is supported or works closely with certain entities to provide these services to the citizens of the City of Bozeman. Of these entities, Bozeman Public Library Foundation, Inc. is considered a component unit subject to the requirements for inclusion as a discretely presented component unit. The Library Board of Trustees and the City Planning Board are presented as blended component units. The Senior Advisory Council and the Parking Commission are excluded from presentation in these financial statements, since their relationship with the City is strictly advisory in nature at this time. 96
2 ECONOMIC CONDITION AND OUTLOOK The Bureau of Business and Economic Research (BBER) is the research and public service branch of the University of Montana’s School of Business Administration. The Bureau is regularly involved in a wide variety of activities, including economic analysis and forecasting. Excerpts from the Bureau’s forecasts contained in the Spring 2008 issue of the Montana Business Quarterly relating to the United States, Montana in general, as well as Gallatin County and Bozeman, are restated below. Montana Outlook Wheat selling at greater than $8/bushel turbocharged the crops sector of Montana agriculture during late 2007. Montana’s economic base is now firing on almost all cylinders, and the state is completing a record-breaking streak of four straight years of greater than 4 percent real growth. Looking to the future, annual growth of 4 percent is likely to continue into 2008, and maybe even beyond. The state’s strong economic performance is attributable to buoyant conditions in most basic industries: • The metal (especially copper) and energy-related sectors of mining have been mushrooming because of worldwide demand growth associated with China and other developing countries. • Moderate (but persistent) 2 percent overall increases in nonresident travel, despite gas prices rise. • Robust commercial and residential construction activity (especially in Gallatin and Flathead counties). • Although it occurred earlier in the decade, right after Sept. 11, the federal government expanded as a result of homeland security (military and border-related) activity. • The wood products industry is the one exception. There have been several mill closings as a result of a long-term decline in timber availability and numerous market driven curtailments in 2006-07. • The other manufacturing sectors (which include Montana’s small, but robust high-tech producers) continue to expand, counter to the national trend. 97
3 The major risks to the forecast are: 1) A worldwide bumper crop, which would quickly depress wheat prices. 2) The U.S. economy does go into recession, and the recession takes an unanticipated turn that impacts important Montana industries. 3) Terrorist attacks and/or geopolitical events (such as financial or political crisis) that could dampen fast growth in developing countries and slow the natural resource boom. 4) After bucking the national trend, Montana construction activity nosedives. 98
4 Outlook for Gallatin County: Gallatin County has consistently reported the fastest growth of Montana’s major counties over the last decade, but it could decelerate rapidly if construction and real estate go into freefall. The strong local growth in both industries may have inflated the reported county growth rates since 2001. Both construction and real estate in Gallatin County have continued strong despite nationwide slowdowns. Bozeman’s economy is based on strong fundamentals with diverse components that almost all experienced significant recent growth. Gallatin County is home for much of the state’s high-tech industry, and it has more than recovered from the 2001 recession. From 2001 to 2005, the largest contributors to the county’s growth were Montana State University (mostly research) and state government. Unlike the state’s largest counties, all trade center components (especially retail trade) continue to grow in Gallatin County. Nonresident travel and the federal government also experienced significant growth. 99
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6 For the Year Water Conservation. The City Commission recognizes that an educational program is a critical first step in promoting water conservation. The Commission also acknowledges that finding an alternative source of water may become essential in upcoming years, possibly groundwater in the aquifer in the hills south of Bozeman. The Commission has chosen to delay the replacement of Mystic Dam as long as possible, without jeopardizing the City’s stored water rights. In March of 2002 a Water Conservation Study was prepared by independent consultants and formally adopted by the City thereafter. This study intended to guide policy making decisions regarding water conservation practices by projecting the affects recommended conservation programs would have upon future planning and capitalization of Bozeman’s water supply and distribution systems. Water & Wastewater Facility Plans. In 2004 the City undertook the task of planning for the future of its water and wastewater infrastructure in order to meet the needs of its rapidly growing population. Independent consultants and engineers were contracted to prepare 20-year Water and Wastewater Facility Plans to evaluate the condition of existing water and sewer systems, analyze alternatives for improvements, and make recommendations along with providing estimated costs. Recommendations from the Water Conservation Study of 2002 were incorporated into these facility plans. Earlier this year the Commission adopted these plans, which call for investing $95 million in water system expansion and improvements and $55 million in wastewater expansion and improvements. The top water priority is the planning, design, and construction of a new Water Treatment Plant to be online in 5-8 years, estimated at $25.4 million. The plan also outlined an additional water storage, supply, and distribution projects that should be undertaken over the next 20 years. The plan identifies the design and construction of a new BNR (Biological Nutrient Removal) Wastewater Treatment Plant (initial phases estimated at roughly $33M) as the City’s highest wastewater priority. Water & Wastewater Rate Structuring. City property owners are by-and-large required to utilize the city’s water and sewer treatment systems. The adopted facility plans outline large capital projects will need to be funded in the coming years. Rate studies have been completed for both utilities and recommend changes to our rate levels and structures in order to fund the utility improvements needed in the next 5 years. Those recommendations were adopted in August of 2007 and included changes to residential and commercial rate structures to better reflect their relative costs of service. As a result, Average Residential Customers saw slight decreases to their monthly bills this year. Rate increases for next year were adopted as part of a two-year rate resolution in August of 2007. Water service rates will not increase next year but sewer service rates will increase 9%, beginning in September of 2008. Gallatin County Solid Waste Management District The City of Bozeman has joined the Gallatin County Solid Waste Management District. The purpose of the Gallatin County Solid Waste Management District is: to provide constituents with cost efficient solid waste services; to provide for the balanced consideration and representation of the diverse views and issues regarding solid waste management; to advocate for the health, safety and welfare of the residents; to manage the processing, reclaiming, storing, transporting, or disposing of waste in ways that protect the ecology of lands in the District; to identify goals, policies and procedures that will aid local jurisdictions in meeting solid waste reduction and recycling goals. As of April 18th, 2008, the Recycling Drop-off Sites throughout the City and County are being managed by the District. Bozeman Solvent Site. The Bozeman Solvent Site is located in the northwest area of Bozeman and is the result of an inadvertent discharge of dry cleaning fluid into the subsurface at the Buttrey Shopping Center. Solvent-affected ground water was discovered in 1989, and the site has been monitored on a regular basis since. While voluntary remediation efforts were completed several years ago, the City continues to incur the costs of semi-annual monitoring. Ground water monitoring has involved domestic wells (residential and business) as well as a network of monitoring wells. 101
7 Impact Fees. In December 1995, the City Commission voted to implement impact fees for streets, fire, water, and wastewater, with an effective date of March 23, 1996. The lawsuit filed by the Southwest Montana Building Industry Association (SWMBIA) was settled in 2005 for $5.1 million. The combined balance in the impact fee funds after payout of this settlement was slightly over $21.7 million. Fee collections and interest income over the subsequent years, netted against spending on eligible projects, brought the balance to $27.2 million at the end of this fiscal year. The City Commission has budgeted approximately $16 million from those monies in the upcoming fiscal year for capacity expanding projects. Unified Development Ordinance. On November 24, 2003 the City Commission adopted a new unified development ordinance by a super-majority vote. The new unified development ordinance replaced the existing zoning and subdivision regulations that had governed the use and development of land. The new ordinance took effect on January 1, 2004. One of the identified implementation policies for the Bozeman 2020 Community Plan, a growth policy for the City, was to review and evaluate the City’s regulations regarding the use and development of land; and to make changes as needed to improve predictability, clarity, timeliness, effectiveness, and simplicity, while ensuring adequate review of community and environmental impacts. The preparation of the unified development ordinance was undertaken to meet these purposes. HB124. The 2001 Legislature dramatically revised the State’s funding mechanisms for local government. This bill included the combining of several State funding sources into a single entitlement program, with the revenues being distributed back to cities on a quarterly basis. This bill remained intact through the 2007 Legislature, despite several efforts to eliminate the inflationary increase. Workforce Housing Ordinance Increasingly, home ownership has become more difficult for the average family to afford. To help with the housing problem, the City of Bozeman Workforce Housing Ordinance (WFHO) was created in August 2007. The WFHO is the result of years of coordination with local citizens, community groups, builders, developers and governmental organization. All application to the Workforce Housing (WFH) program must be residents of Gallatin County, or employed in Gallatin County or demonstrate that they are moving to Gallatin County for a specific job at the time of application. Applicants must earn less than the current income limits for the program and have the ability to secure a mortgage meeting the WFH program requirement sufficient to purchase a WHF unit. For the Future Parking Facility. Last year the City approved a proposal for a downtown development that includes the design and construction of a three-story parking structure on the City’s parking lot at the intersection of North Tracy Avenue and East Mendenhall Street. The City has secured a variety of funding sources, including tax increment monies, a federal transportation appropriation, and City funds. The City advertised for and received bids on the Bozeman Intermodal Facility in the spring of this year, and the contract was subsequently awarded. Construction of the $9.2 million facility commenced in August of 2007 and is expected to continue for approximately one year. Construction Trends: Local building activity has many impacts on the operations and finances of the City; from the workload and revenues in the Planning and Building Inspection Divisions to the amount of funding available for Impact Fee programs and increases in Property Tax dollars. Just a few months after the City adopted updated Water, Wastewater and Street Impact fees, national credit and economic factors began affecting the amount of subdivision, building and construction activity we were seeing come through the doors of our Planning and Building Divisions. By March and April 2008, building and planning 102
8 revenues were markedly lower than in 2007. It appears that Bozeman’s “record breaking years” have slowed; to what extent, we aren’t able to easily determine at this point. As a result of this recent change, we have estimated next year’s revenues for Planning, Building Inspection, and the Impact Fee funds at an annualized fiscal year 2008 level through the month of April. We will be closely watching next year’s activity to determine whether additional budget cuts are necessary in these areas. Public Safety Staffing Levels and Changes. For over a decade, continued growth in our local population has strained the staffing levels of various departments at the City. During annual budget preparations this year, departments continued to submit requests for additional requests for personnel, especially in the public safety departments. A significant development occurred in November of 2007 when local voters approved increasing our tax levy to add staff to both the Police and Fire Departments. As a result of the levy, 4 Police Officers and 11 Firefighters have been added to next year’s budget. A new city-wide parking enforcement officer is also being added to better handle abandoned vehicles around town and parking enforcement outside of the existing parking districts. Long Term Facilities & Services Planning Efforts. The City plans for the long-term needs of our community through a number of efforts and studies. These documents are usually developed by consultants and staff, with numerous public hearings and advisory board meetings prior to their formal adoption by the City Commission. Once adopted, City staff works diligently to implement the recommendations and changes outlined in the plans. The status of the City’s primary long-range planning documents is as follows: 1. 2020 Growth Policy—being updated this year. 2. Bozeman Area Transportation Plan—being updated this year. 3. Police Services Facility & Staffing Plan—adopted 2007, currently implementing. 4. Fire Services Master Plan— adopted 2006, currently implementing. 5. Wastewater Facility Plan—adopted 2006, currently implementing. 6. Water Facility Plan—adopted 2006, currently implementing. 7. Storm water Facility Plan—presented February 2008, adoption pending. Over the decades, we have found these types of planning documents to be invaluable to the orderly growth and maintenance of city facilities. We wholeheartedly intend to continue to with the development and implementation of these types of long-term plans. Additional Debt. The budget for next year anticipates borrowing for the Wastewater Treatment Plant construction from the State’s Revolving Loan Fund. Over the 3 year construction period, the city will be borrowing approximately $20 million dollars. We also anticipate borrowing for the completion of Fire Station #3. Because there currently is no specific statutory authority to borrow against impact fee revenues, the city will utilize its general borrowing power under Montana Code Annotated (MCA 7-7-4104.) A loan through the State’s Intercap program will be sought. The loan will be repaid with Fire Impact Fees, over a maximum of 10 years. 103
9 DEPARTMENTAL FOCUS Each year the City selects a department to highlight for its efforts and accomplishments. In 2008, Parks, Recreation & Cemetery are selected for review. Parks: The City of Bozeman, Park Division is responsible for the development and maintenance of all public parks, trails, open space and sports fields within the City limits. We also have developed, working with volunteer service clubs, the East Gallatin Recreation Area and the Bozeman Pond and maintain these. These two Parks are owned by the State of Montana, Fish, Wildlife and Parks, but are leased and cared for by the City. There are approximately 8 Community Parks, 12 Neighborhood Parks, and 7 Sports Parks, maintained by the City parks division. There are also 18 playgrounds, 2 swimming pools, and 2 lakes with beaches, a Canine Beach, a small Dog Park, 45 miles of trails and more than 300 acres of Natural Parkland within the City limits. These are also maintained by a Parks crew consisting of 7 full-time employees and 16 seasonal employees. The Parks Division works extensively with volunteers and service clubs, to develop and improve Parks and Park Facilities. In addition to these parks there are 21 neighborhood Public Parks that are maintained by Homeowners Associations. Those parks are open to the public. Some of the recreational opportunities available in Bozeman include hiking, biking, kayaking, swimming, fishing, skateboarding, bird watching, festivals, soccer, baseball, softball, football, hockey, volleyball, and much more. Parks are open to the public from 8am to 11pm, everyday. Dogs must be on leash in all Parks, with the exception of Burke Park, the Canine Beach, at the Bozeman Pond and the Dog Park at the Softball Complex. Owners must also pick up after their pets. Doggie bags are provided at most trails heads and parks. During the winter months the Park Department builds ice rinks at three different locations. The ice rinks are at Beall park, South Side park and Bogert park. There is no set open and close date because rink construction is dependent on the weather. Traditionally the target date to open the rinks is around Christmas. Maintaining the rinks is stopped the first week of March regardless if the weather is still conducive to making ice. This is because the ice needs time to melt so the grass can grow in the spring. 104
10 Recreation: The Bozeman Recreation Department offers a wide variety of fun classes and youth specials that encourage participation, creativity, and positive sportsmanship. Classes will help your child gain self-confidence and meet new friends. Classes are available for youth age 2+. There is something for everyone and space is limited, so sign up early at the Beall Park Recreation Center. Beall Park Recreation Center is available for the public to rent for meetings, dinners, receptions and other special occasions. The Lindley Center is also available for the public to rent for meetings, dinners, receptions and other special occasions. The Swim Center is a 50-meter, eight lane indoor aquatic facility. The crystal-clear water is kept at 84F. The spacious pool is equipped with a slide, diving board, lifejackets, recreation toys, water aerobic equipment, and large inflatable pool toy. Clean suits and towels are available for rent for .50 each. The Swim Center has picnic tables inside and outside, a seating area on the pool deck, and a small fenced in play area outside the building. The Fitness Corner includes a weight machine and exercise bikes. The pool and locker rooms are well lit and clean. The highly skilled lifeguards enforce facility rules in a friendly and fair manner. The pool is equipped with an AED. Bogert Pool has an amazing 26-foot tall triple-tube water slide. The slide has 3 distinct tubes that offer 3 levels of excitement. All tubes empty into the deep end of the 25-yard pool, so you must be able to swim to use the slide. The 7-foot boomerang slide located on the west deck empties into 4 feet of water. The diving board on the south deck is open during recreation swim hours. The shallow pool, with depths from 1 to 3 feet, is ideal for young children. The shallow pool is also home to "Delaware the Duck," a slide designed for small children. The deck has been extended to offer additional space for sunning, seating, shade, and viewing. Bogert Pool will close during lightning and thunderstorms. Please be prepared to pick up your children if this occurs. See our weather closure procedure for more details. 105
11 Cemetery: Sunset Hills Cemetery is dedicated to excellence in providing professional and dignified services in a serene and beautiful surrounding to help survivors through their bereavement process. Sunset Hills Cemetery is a division of the Park, Recreation and Cemetery Department and is located on East Main Street directly south of Lindley Park. The cemetery office is located at 340 Golf Way. It is at this location where one can find and access burial records and plot locations. Staff is always willing to help you. There is a great interactive map on the web at http://www.bozeman.net/bozeman/cemetery/ cemeteryMap.aspx that provides public access to current information from our local archives. Here you will find records including “Interred” and “Date of Burial” as well as “Space Ownership” and “Space Availability.” Cemetery visitation is from dusk till dawn daily. Maintenance staff is on the premises 7:00 AM to 3:00 PM, Monday through Friday. There are 3 full-time staff, 6 to 7 seasonal laborers and 1 secretary. The secretary is located at City Hall. There are 73 acres that have been developed and 56 acres available for burials. There are over 15,000 known burials. Notables buried here include Chester "Chet" Huntley, Henry Comstock (discovered the famous Nevada Comstock Lode), John Bozeman (City's Namesake), Nelson Story and countless other easily recognizable Gallatin Valley names. Cemetery History: One of the most persistent legends of Sunset Hills Cemetery has been centered around the untimely death of Mary Blackmore on July 19, 1872. Wife of wealthy English railroad investor William Blackmore, Mary fell seriously ill during a trip she and her husband were taking to the newly established Yellowstone National Park. Stricken during the stagecoach ride from Helena to Bozeman, Mary was taken to the home of Lester and Emma Willson to recuperate while her husband continued his journey south to the Park. Mary died within days, and William returned to bury his wife on the brow of the hill overlooking the town. Shortly thereafter, again on route to the park, William encountered rancher Nelson Story, who informed him that his wife's grave actually stood on ground owned by Daniel E. Rouse. The Englishman requested Story to head up a committee to purchase the property for its permanent establishment as a public cemetery. 106
12 Story, along with Lester Willson, Charles Rich, and John Mendenhall paid Rouse $250 on December 1, 1872. The money for the purchase likely came from Blackmore, as did elaborate instructions for a mausoleum to be built over the unique pyramid-shaped tombstone he had ordered for Mary's grave. For some unknown reason, the Willsons never had the mausoleum erected and afterwards incorrectly assumed the aristocratic English couple were Peers of the Realm. In later years, the Willson family had a plaque set in Mary's tombstone identifying the couple as "Lord and Lady Blackmore", giving William credit for the purchase of the land as a public cemetery in gratitude for the care the townsfolk had shown his wife during her fatal illness. (As taken from the Sunset Hills Cemetery information booklet available upon request at City Hall and the Cemetery office) A quick stroll through the "Old Section" (Northwest side) of the cemetery will prove to be a living testament to Bozeman's and the Gallatin Valley's long and exciting past It is here that one can find the graves of Bozeman, Story, Rouse, Mendenhall, and countless others who laid the groundwork for a City we can be proud to call home. 107
13 CONTACTING PARKS & CEMETERY PERSONNEL: DIRECTOR OF PARKS, CEMETERY & RECREATION Ron Dingman rdingman@bozeman.net SUPERINTENDENT OF PARKS & CEMETERY Thom White twhite@bozeman.net PARKS DEPARTMENT FOREMAN Doug Eisenman deisenman@bozeman.net Bozeman Parks Department Mailing Address 814 North Bozeman P.O. Box 1230 Bozeman, Montana 59715 Bozeman, Montana 59771 Phone: 406-582-3200 Fax: 406-582-3201 CEMETERY FOREMAN Shane Surber ssurber@bozeman.net CEMETERY SERVICE WORKER Rick Fink rfink@bozeman.net CEMETERY SECRETARY (at City Hall) Carol Neibauer cneibauer@bozeman.net Cemetery Office Mailing Address Carol Neibauer at City Hall 340 Golf Way P.O. Box 1230 121 North Rouse Bozeman, Montana 59715 Bozeman, Montana 59771 Bozeman, Montana 59715 Phone: 406-586-7238 Fax: 406-522-0876 Phone: 406-582-2327 CONTACTING RECREATION PERSONNEL: Ron Dingman Sue Harkin Director of Parks, Cemetery, and Recreation Recreation Superintendent 814 North Bozeman Avenue 415 North Bozeman Avenue Phone: 406-582-3200 Phone: 406-582-2290 E-mail: rdingman@bozeman.net E-mail: sharkin@bozeman.net Contact Sue regarding water fitness information and in regards to scholarships. Jamie Saitta Doreen Olean Recreation Program Manager Recreation Administrative Assistant 415 North Bozeman Avenue 415 North Bozeman Avenue Phone: 406-582-2290 Phone: 406-582-2290 E-mail: jsaitta@bozeman.net E-mail: dolean@bozeman.net Contact Jamie regarding recreation Contact Doreen regarding office matters & reserving programs and T-Ball. the Lindley or Beall Park Recreation Centers. Dan McCarthy Kristy Mollgaard Aquatic Director Assistant Aquatic Director 1211 West Main Street 1211 West Main Street Phone: 406-587-4724 Phone: 406-587-4724 E-mail: dmccarthy@bozeman.net Email: kmollgaard@bozeman.net Contact Dan regarding the Swim Center or Contact Kristy regarding swimming lessons & other Bogert Pool questions or concerns. Questions about the Swim Center or Bogert pool. 108
14 FINANCIAL INFORMATION Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Budgeting Controls In addition, the City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the Montana Code Annotated and the annual appropriation resolution approved by the City Commission. All fund types are included in the appropriation ordinance. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the fund group level. Cash Management Cash temporarily idle during the year was invested in short-term deposits, obligations of the U.S. Treasury, repurchase agreements and the state's short-term investment pool (STIP). The average yield on investments during the year was 4.13 percent. The City earned interest revenue of $3,120,580 on all investments for the year ended June 30, 2008. The City invests all funds in accordance with State law. Risk Management The City of Bozeman joined with over 100 other Montana cities and towns to form a self-insurance pool offering workers' compensation and liability coverage. Liability limits of $750,000 per person and $1.5 million per incident were obtained through the insurance pool. The pool, (renamed the Montana Municipal Insurance Authority (the Authority)), issued $4.41 million in tax-exempt bonds to fund the program's liability reserves. The City signed a note with the Authority for $289,304, its pro rata share of the debt, in order to help secure the bonds. In September 1990, the pool issued $7.61 million in tax-exempt bonds to fund the program's workers' compensation reserves. The City signed a note with the Authority for $402,114, its pro rata share of the debt, in order to help secure the bonds. The debt service on the bonds was expected to be paid through insurance premiums of the Authority. A refunding of the liability bonds was completed in 1993 and a refunding of the workers’ compensation bonds was completed in 1994. In December of 2006 the City received notice from the Authority that the 1993 refunding liability bonds had been completely retired. OTHER INFORMATION Independent Audit The State of Montana requires a biannual audit of the books of accounts, financial records, and transactions of all administrative departments of the City by independent certified accountants selected by the City Commission. It is the belief of the City Commission and Executive staff that an annual audit assures a higher level of financial management and fiscal responsibility. This policy, along with the legal requirements, has been complied with and the auditors' opinion of Junkermier, Clark, Campanella & Stevens P.C., has been included in this report. 109
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16 CITY OF BOZEMAN, MONTANA GOVERNMENT FINANCE OFFICERS’ ASSOCIATION CERTIFICATE 111
17 CITY OF BOZEMAN, MONTANA ORGANIZATIONAL CHART CITY CLERKCITY COMMISSIONMUNICIPAL JUDGEVOTERS of THE CITY OF BOZEMAN DEPARTMENT OF FINANCE DEPARTMENT OF LAW DEPARTMENT OF PUBLIC SAFETY DEPARTMENT OF PUBLIC SERVICE DEPARTMENT OF PUBLIC WELFARE ASSISTANT CITY MANAGERCITY MANAGER112
18 CITY OF BOZEMAN, MONTANA CITY ELECTED OFFICIALS AND OFFICERS ELECTED OFFICIALS Legislative Kaaren Jacobsen Mayor Jeffrey Krauss Commissioner Sean Becker Commissioner Jeff Rupp Commissioner Eric Bryson Commissioner Judicial Karl Seel Municipal Judge OFFICERS Executive Chris Kukulski Stacey Ulmen City Manager City Clerk Department of Law Paul J. Luwe City Attorney Susan Wordal Assistant City Attorney Timothy A. Cooper Assistant City Attorney Patricia Day-Moore Assistant City Attorney Department of Finance Anna Rosenberry, CPA Director of Finance Brian LaMeres, CPA Controller Laurae Clark Treasurer 113
19 CITY OF BOZEMAN, MONTANA CITY ELECTED OFFICIALS AND OFFICERS (CONTINUED) OFFICERS (CONTINUED) Department of Public Safety Mark Tymrak Director of Public Safety-Police Mark Lachapelle Assistant Director of Public Safety-Police Support Marty Kent Assistant Director of Public Safety-Police Patrol Chuck Winn Director of Public Safety-Fire Greg Megaard Assistant Director of Public Safety-Fire Inspections Jason Shrauger Assistant Director of Public Safety-Fire Operations Department of Public Service Debra H. Arkell Director of Public Service Rick Hixson City Engineer John Alston Superintendent of Water and Waste Water Operations John Van Delinder Superintendent of Street Operations Steve Johnson Superintendent of Sanitation Operations Rick Moroney Superintendent of Water Treatment Plant Thomas Adams Superintendent of Waste Water Plant James Goehrung Superintendent of Facilities Department of Public Welfare Ron Dingman Director of Parks and Recreation Thomas White Superintendent Parks and Cemetery Sue Harkin Recreation Operations Superintendent Andrew Epple Director of Planning and Community Development Alice Meister Director of Library 114
PART II FINANCIAL SECTION 116
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21 The accompanying Management’s Discussion and Analysis and Budgetary Comparison Information, as listed on the table of contents, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Bozeman, Montana’s basic financial statements. The combining and individual non-major fund financial statements and other schedules, listed in the table of contents as supplementary information, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the U. S. Office of Management and Budget Circular A-133, Audit of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The accompanying introductory and statistical sections, as listed in the table of contents, are presented for purposes of additional analysis and are not a required part of the basic financial statements. This information has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. Junkermier Clark Campanella & Stevens P.C. Bozeman, Montana December 5, 2008119
A. MANAGEMENT’S DISCUSSION AND ANALYSIS 120
22 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS Our discussion and analysis of the City of Bozeman’s financial performance provides an overview of the City’s financial activities for the fiscal year ended June 30, 2008. Please read it in conjunction with the transmittal letter on page 1 and the City’s financial statements, which begin on page 32. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of Activities (on pages 32 and 33) provide information about the activities of the City as a whole and present a longer-term view of the City’s finances. Fund financial statements start on page 34. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City’s operations in more detail than the government-wide statements by providing information about the City’s most significant funds. The remaining statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government. Reporting the City as a Whole The Statement of Net Assets and the Statement of Activities Our analysis of the City as a whole begins on page 24. 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 the year’s activities?” The Statement of Net Assets and the Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the City’s net assets and changes in them. You can think of the City’s net assets, the difference between assets, what the citizens own, and liabilities, what the citizens owe, as one way to measure the City’s financial health, or financial position. Over time, increases or decreases in the City’s net assets are one indicator of whether its financial health is improving or deteriorating. You will need to consider other nonfinancial factors, however, such as changes in the City’s property tax base, income tax base, and the condition of the City’s capital assets (roads, buildings, and water and sewer lines) to assess the overall health of the City. In the Statement of Net Assets and the Statement of Activities, we divide the City into two kinds of activities: • Governmental activities—Most of the City’s basic services are reported here, including police, fire, public works, parks, and general administration. Property taxes, state shared revenues, court fines, and recreation fees finance most of these activities. • Business-type activities—The City charges a fee to customers to help it cover all or most of the cost of certain services it provides. The City’s water, sewer, and solid waste systems are reported here. 122
23 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Reporting the City’s Most Significant Funds Fund Financial Statements Our analysis of the City’s funds begins on page 28. The fund financial statements begin on page 34 and provide detailed information about the most significant funds, not the City as a whole. Some funds are required to be established by State law and by bond covenants. However, the City Commission establishes many other funds to help it control and manage money for particular purposes (like Street Maintenance District Funds) or to show that it is meeting legal responsibilities for using certain taxes, grants, and other money (like grants received from the Environmental Protection Agency). The City’s two kinds of funds, governmental and proprietary, use different accounting approaches. Governmental funds--Most of the City’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in reconciliation on pages 36 and 38 of the fund financial statements. Proprietary funds--When the City charges customers for the services it provides, whether to outside customers or to other units of the City, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. In fact, the City’s enterprise funds (a component of the proprietary funds) are the same as the business-type activities we report in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. We use internal service funds (the other component of proprietary funds) to report activities that provide supplies and services for the City’s other programs and activities, such as the Vehicle Maintenance Fund and Health Insurance Fund. Internal service fund activity is reported as governmental activity in the government-wide statements since this activity, the financing of goods and services for other funds of the government, is more governmental than business-type in nature. The City as Trustee Reporting the City’s Fiduciary Responsibilities The City is the trustee, or fiduciary, for other funds, including the Municipal Court Fund and the Montana Arts Council funds for the Montana Ballet, the Bozeman Symphony Orchestra and the Big Sky Association for the Arts. It is also responsible for other assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The guidelines for the administration of these funds are contained in applicable financial agreements and/or City ordinances. These documents contain the rules governing the receipt, expenditure, and management of the City’s fiduciary funds. All of the City’s fiduciary activities are reported in the Statement of Fiduciary Net Assets on page 44 and in the Combining Statement of Changes in Assets and Liabilities-Agency Funds on pages 116-117. As the statements reflect, the financial activity during the year for these funds is nominal. We exclude these activities from the City’s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. 123
24 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) THE CITY AS A WHOLE The City’s combined net assets increased by $32.2 million this year as compared to a $186.1 million increase last year. The primary reason for this large decrease over last year is that last year was the first year of booking infrastructure required under GASB Statement 34 which had previously not been booked. Therefore net assets last year were significantly higher than the year before. Going forward, however, the changes should be more moderate. Beyond that, looking at the net assets of governmental and business-type activities separately, two slightly different stories emerge. Our analysis focuses on the net assets (Table 1) and changes in net assets (Table 2) of the City’s governmental and business-type activities. Net assets of the City’s governmental activities increased by 6.4% ($113.6 million compared to $106.7 million). Unrestricted net assets of governmental activities, the part of net assets that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation or other legal requirements, increased to $23.4 million. The net assets of our business-type activities increased by 13.5% ($213.2 million compared to $187.9 million) in 2008. These net assets cannot be used to make up for deficits reported by governmental activities in the event any such deficits were reported. The City generally can only use the net assets of business-type activities to finance the continuing operations of the water, sewer and solid waste operations. 200820072008200720082007Current and Other Assets 39.7$ 33.5$ 40.1$ 37.7$ 79.8$ 71.2$ Capital Assets 97.9 90.3 177.5 154.5 275.4 244.8 Total Assets 137.6$ 123.8$ 217.6$ 192.2$ 355.2$ 316.0$ Long-term Debt Outstanding (16.7) (12.2) (2.8) (15.3) (19.5) (27.5) Other Liabilities (7.4) (4.9) (1.5) (6.1) (8.9) (11.0) Total Liabilities (24.0)$ (17.1)$ (4.3)$ (21.4)$ (28.4)$ (38.5)$ Net Assets:Invested in Capital Assets, net of related debt 80.9 77.7 177.4 154.2 258.3 231.9 Restricted for capital projects 8.7 7.8 17.8 18.2 26.5 26.0 Restricted for debt service - - 0.5 0.9 0.5 0.9 Restricted for parking projects0.03 - - - 0.0 - Restricted for cemetery care 0.5 0.5 - - 0.5 0.5 Unrestricted 23.4 20.7 17.5 14.6 41.0 35.3 Total Net Assets 113.6$ 106.7$ 213.2$ 187.9$ 326.8$ 294.6$ GovernmentalActivitiesTable 1Net Assets(in Millions)TotalPrimary GovernmentBusiness-typeActivities 124
25 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) The City’s total revenues (excluding special items) decreased by 9.4% ($9.0 million). The significant decrease is due to a decline in developer-contributed infrastructure as a result of the slowdown in new construction. The total cost of all programs and services increased by 5.8%, or $3.0 million. However, the City was again able to cover the year’s costs in both governmental activities and business-type activities. Our analysis below separately considers the operations of governmental and business-type activities. 200820072008200720082007RevenuesProgram revenues:Charges for Services 11.4$ 11.8$ 17.7$ 18.1$ 29.1$ 29.9$ Federal Grants 4.0 1.0 0.02 0.3 4.0 1.3 General RevenuesProperty Taxes 12.1 11.8 - - 12.1 11.8 Unrestricted Grants & Contributions 5.6 5.1 0.002 - 5.6 5.1 Other General Revenues 6.9 21.9 29.4 26.2 36.3 48.1 Total Revenues 40.0 51.6 47.2 44.6 87.2 96.2 Program ExpensesGeneral Government 5.8 5.3 - - 5.8 5.3 Public Safety 11.2 10.5 - - 11.2 10.5 Public Service 9.0 8.5 - - 9.0 8.5 Public Welfare 5.4 5.5 - - 5.4 5.5 Other 1.1 0.4 - - 1.1 0.4 Interest and Fiscal Fees 0.6 0.5 - - 0.6 0.5 Water - - 11.2 10.5 11.2 10.5 Waste Water - - 8.1 7.4 8.1 7.4 Solid Waste - - 2.6 3.3 2.6 3.3 Total Expenses 33.2 30.8 21.8 21.2 55.0 52.0 Excess (deficiency) beforespecial items and transfers 6.8 20.8 25.4 23.4 32.2 44.2 Extraordinary items - 31.7 - 110.2 - 141.9 Transfers - 0.5 - (0.5) - - Increase (decrease) in net assets6.8$ 53.0$ 25.4$ 133.1$ 32.2$ 186.1$ Activities Activities Primary GovernmentTable 2Changes in Net Assets(in Millions)Governmental Business-type Total 125
26 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Governmental Activities Revenues for the year from governmental activities decreased by 22.5% ($11.6 million), and total expenses increased by 7.7% ($2.4 million). The significant decrease is due to a decline in developer-contributed infrastructure as a result of the slowdown in new construction. The increase in net assets for governmental activities was $6.8 million in 2008. This compares to a $53.0 million increase in net assets in 2007. Property Tax collections increased by $151,119 or 1.3%, from $11,853,827 last year to $12,004,946 this year. This is due primarily to an increase in the City’s taxable value due to new construction and the continuing effects of the reappraisal conducted by the State of Montana. Intergovernmental revenues increased significantly by $3,527,221 or 57.7%, from $6,115,697 last year to $9,642,918 this year. This increase was due primarily to a significant increase in federal grant revenue. Major grant revenues include $1.9 million for the Intermodal Parking Facility and $1.4 million for the renovation of the Milwaukee Railroad Trail. Fines and forfeitures decreased by $101,446, or 5.8%, from $1,746,213 last year to $1,644,767 this year. This decrease reflects the continuing impact of reactive traffic law enforcement due to low staffing levels in the Police Department. With more police officers on patrol next year as a result of the Public Safety Mill levy being approved by voters, it is expected that fines and forfeiture revenues will rebound under a more proactive enforcement strategy. Interest on Investments increased significantly by $292,112, or 27.3%, from $1,068,802 last year to $1,360,914 this year. This increase is attributable to a continuing increase in interest rates over the past two years. Interest rates on investment income averaged 4.1% this year compared to 4.6% last year and 2.3% in the prior year. The cost of all governmental activities this year was $33.2 million compared to $30.8 million last year. However, as shown in the Statement of Activities on page 33, the amount that our taxpayers ultimately financed for these activities through City taxes was only $17,778,092 because some of the cost was paid by those who directly benefited from the programs ($11,384,881) or by other governments and organizations that subsidized certain programs with operating and capital grants and contributions ($4,030,348). Overall, the City’s revenues from governmental activities, including intergovernmental revenues and charges for services decreased in 2008 from $51.6 to $40.0 million. Charges for services decreased slightly, due in part to declining street and fire impact fee revenue, fine and forfeiture revenue decreased as well, while investment income increased significantly. But the main reason for the substantial decrease in governmental activity revenues was the drop in developer contributed infrastructure due to a sharp decline in new construction activity. . Table 3 presents the cost of each of the City’s six largest programs—Police, Fire, Public Service, Library, Parks and Recreation—as well as each program’s net cost (total cost less revenues generated by the activities). The net cost shows the financial burden that was placed on the City’s taxpayers by each of these functions. 126
27 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) 2008200720082007Police 5.8$ 5.1$ 3.9$ 3.3$ Fire 3.7 3.3 3.2 3.1 Public Service 9.0 8.5 5.9 5.2 Library 1.3 1.2 0.8 0.7 Parks 1.3 1.5 1.3 1.5 Recreation 1.2 1.0 0.7 0.5 All Others 11.0 10.1 2.0 3.7 Totals 33.2$ 30.8$ 17.8$ 18.0$ of Services of ServicesTable 3Governmental Activities(in Millions)Total Cost Net Cost Business-type Activities Revenues of the City’s business-type activities (see Table 2) increased by 5.6% ($47.1 million in 2008 compared to $44.6 million in 2007) and expenses increased by 64.0% ($21.8 million in 2008 compared to $21.2 million in 2007). The factors driving these results include: • The City’s water system revenues have steadily increased over the past decade as a result of an increase in the customer base and as a result of regular rate changes, including a 10% increase last year. Operating revenues for the year amounted to $6,163,883. In addition, water impact fee revenues amounted to $1,237,939. Operating expenses totaled $11,140,035. Major projects completed during the year include completing over $675,000 in general water line renovations, acquiring $700,000 in water rights, and purchasing a $91,000 backhoe. • The City’s wastewater system revenues have similarly increased due to a growing customer base in addition to increases attributable to the rate changes in prior years that were necessary in order to restore the financial position of the wastewater fund caused by remediation of the Solvent Site groundwater contamination. Additionally, a 10% rate increase was implemented this year. Operating revenues for the year amounted to $4,739,699. In addition, impact fee revenues amounted to $1,306,984. Wastewater operating expenses totaled $8,061,412. Major projects during the year included acquiring a $200,000 sewer line TV van, $80,000 in design services for sewer line rehabilitation, $38,000 to rebuild the dredge at the Wastewater Treatment Plant, and contributing $39,000 towards the implantation of a work order software program to be shared with other public works departments. 127
28 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) • The City’s solid waste collection and disposal system revenues have declined steadily over the past few years due to a policy change that excludes all commercial dumping at the landfill and limits landfill customers to just City residents. Operating revenues for the year amounted to $2,386,012. Operating expenses totaled $2,574,651. Fortunately revenues over the prior decade had increased steadily due to an increasing customer base and Bozeman’s economic growth, and this allowed for revenues in excess of operating costs to accumulate for the purpose of meeting the City’s obligation with respect to the EPA requirements for landfill closure and post-closure care. THE CITY’S FUNDS As the City completed the year, its governmental funds (as presented in the balance sheet on pages 34-35) reported a combined fund balance of $24,173,444. Included in this year’s total change in fund balance is a positive General Fund balance of $4,519,814. The primary reasons for the General Fund’s surplus are highlighted further below. In addition, these other causes of changes in fund balances should be noted: • Public Safety expenditures increased by $618,626 or 6.1%, from $10,160,291 last year to $10,778,917 this year. This change was due primarily to increased personnel costs in the Police and Fire departments. • Public Welfare expenditures increased by $504,672, or 11.7%, from $4,315,086 last year to $4,819,758 this year. Contributing factors include nearly $281,000 in increased personnel costs and nearly a $224,000 increase in operations costs, including $85,000 in repair and maintenance to the Swim Center and $68,500 in Parks operation costs. General fund budgetary highlights The City’s general fund balance increased from $4,370,538 in fiscal year 2007 to $4,519,814 this year. While this represents only a $149,276 or 3.4%, change in fund balance, this increase would have actually been $482,776, or 11%, due primarily to personnel vacancy savings, but the City Commission decided to transfer $333,500 from the general fund to the Story Mansion construction/rehabilitation fund. This year’s fund balance of $4,519,814 represents 27.8% of general fund operating revenues of $16,263,624 which is in compliance with the City Charter and GFOA recommendations. Other reasons for the increase in general fund balance include an increase in all revenues associated with the growing community. This includes property taxes, discussed on page 26, which were affected not just by new construction, but also by an increase the City’s population and mill value. The mill value increased 9.1%, from $63,249 last year to $68,981 this year. Other community related general fund revenues also showed gains, including licenses and permits, intergovernmental grant revenues, and general fund charges for services. 128
29 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Also contributing to the increased General Fund balance is the utilization of conservative budgetary practices. Conservative, yet realistic, revenue estimates, combined with departments operating within their original budgets, naturally has a favorable effect on the bottom line. Maintaining adequate reserves has several internal and external benefits. Internally, reserves can provide for cash flow needs until property tax revenues are received, reducing or eliminating the need for cash flow borrowing; provide funds to leverage state or federal grants; and provide for the unexpected. Externally, reserves tend to be viewed favorably by investors, rating agencies, and local banks with which we do business, thus benefiting rating and the potential need for lines of credit. The City’s General Fund balance was the primary focus during the bond rating for the 2003 refinancing of the City’s General Obligation Transportation Bonds and the remaining bonds issued in 2003 for the new Library. It was also the focus of the pooled 2008 Special Improvement District (SID) bonds for Valley Center Road and North 19th Avenue. In each of these instances, bond analysts looked favorably on the amount and trend of the City's General Fund balance in determining the City’s bond rating. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets As shown in Table 4, at the end of 2008 the City had $275.4 million invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, and water and sewer lines. This amount represents a net increase (including additions and deductions) of roughly $30.7 million, or 12.5% over last year. 200820072008200720082007Land 8.2$ 7.8$ 4.6$ 4.6$ 12.8$ 12.4$ Water Rights - - 1.0 0.3 1.0 0.3 Buildings 29.3 22.8 13.6 10.0 42.9 32.8 Other Structures and Improvements 1.2 1.2 30.4 30.3 31.6 31.5 Machinery & Equipment 8.0 7.4 6.4 5.9 14.4 13.3 Property under Capital Lease 0.4 0.2 - - 0.4 0.2 Vehicle 2.8 2.7 2.1 1.7 4.8 4.4 Infrastructure 103.3 95.7 233.7 203.1 337.0 298.8 Subtotal 153.2 137.7 291.7 256.0 444.9 393.7 Accumulated Depreciation (55.4) (47.4) (114.2) (101.5) (169.6) (149.0) Total Capital Assets 97.9$ 90.3$ 177.5$ 154.5$ 275.4$ 244.7$ TotalsTable 4Capital Assets at Year-end(in Millions)GovernmentalActivitiesBusiness-typeActivities129
30 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) This year’s major additions and projects underway include: Water Lines & other Water Infrastructure - contributed by Developers 14,773,289$ Wastewater Lines & other Wastewater Infrastructure - contributed by Developers 14,615,989 Intermodal Parking Facility4,658,528 Streets & other Street Infrastructure - contributed by Developers 3,625,618 Wastewater Treatment Plant biological nutrient removal "BNR" upgrade 3,378,666 Milwaukee Railroad Trail Community Transportation Enhancement Project "CTEP" 1,463,439 New City Hall: reconstruction, renovation & remodeling of old Library building 1,271,611 Impact Fee credits cash payment to Lowes Home Improvement center for road improvements 731,642 Water rights acquisition - Middle Creek700,000 Water renovation projects outlined in Capital Improvement Plan 675,629 Parkland acquisition - Burke Park lots500,146 TOTAL 46,394,556$ Debt At year-end, the City had $17.3 million in bonds and notes outstanding versus $12.9 million last year – an increase of 34.6% – as shown in Table 5. New debt issued for the year consisted of $6,270,000 in Tax Increment Urban Renewal Revenue bonds to help fund the construction of the downtown intermodal parking garage facility. The outstanding balance of these bonds at year-end is $6,000,000. General obligation debt consists of $2,250,000 in refinanced 1995 Transportation Project bonds and $3,090,000 in Library Project bonds. There was no new general obligation debt or special improvement debt issued during the fiscal year. The City’s general obligation bonds continue to maintain a rating of A2 from Moody’s Investor Service. According to Moody’s, the A2 rating reflects the City's stable tax base and local economy, healthy financial operations, and manageable debt burden. Moody's expects the City to maintain a healthy financial position, given the City's historical performance and management's commitment to maintaining satisfactory reserve levels. As expressed in the fiscal year 2008 budget document, City officials expect to end next fiscal year with general fund reserves of at least 14.4% of operating revenues, which exceeds the minimum requirements of the City Charter and the recommendations of GFOA. Property taxes are the City's primary general revenue source (33%), followed by intergovernmental (26.5%), charges for services (18.5%), and special assessments (4.9%). Moody's expects the City to maintain a moderate debt position given current moderate debt burdens, above average principal payout, and expected tax base growth. More detailed information about the City’s long-term liabilities is presented in Note 9 to the financial statements. 130
31 CITY OF BOZEMAN, MONTANA MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) 200820072008200720082007General obligationbonds (backed by the City) 5.3$ 5.8$ -$ -$ 5.3$ 5.8$ Tax Increment Financing District (TIFD) bonds 6.0 - - - 6.0$ -$ Special ImprovementDistrict Debt 5.6 6.7 - - 5.6 6.7 Notes Payable - 0.1 - - - 0.1 Lease Payable 0.3 - - - 0.3 - Water Revenue Bonds(backed by specific fee revenues) - - 0.1 0.2 0.1 0.2 Totals17.2$ 12.7$ 0.1$ 0.2$ 17.3$ 12.9$ TotalsTable 5Outstanding Debt, at Year-end(in Millions)GovernmentalActivitiesBusiness-typeActivities ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City’s elected and appointed officials considered many factors when setting the fiscal year 2008-2009 budget, tax rates, and fees that will be charged for the business-type activities. Some of these factors includes: capital improvements identified in the City’s Capital Improvement Program; inflation rates, the City’s collective bargaining units, the local economy, and the citizen’s ability to pay. For the year, inflation rates continued to remain at relatively low levels. Inflation in the first half of calendar year 2008 has averaged 3.7% compared to 2.8% in 2007. Rising inflation rates could adversely impact the cost of City capital projects. When evaluating the cost of living, the City utilizes the national CIP indexes. The City adopted its first fully-funded Capital Improvements Program approximately nine years ago and it is currently in the process of being updated. In order to finance the needed improvements, the City enacted a number of “higher than normal” rate changes to provide the funding for these improvements. These rate changes are now contained in the current rate structures and more rate changes are anticipated in the foreseeable future, in order to keep pace with rising costs. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about this report or need additional information, contact the City’s Finance Director or Controller, at the City of Bozeman, 121 North Rouse Avenue, Bozeman, Montana 59715.131
B. BASIC FINANCIAL STATEMENTS132
GOVERNMENT - WIDE FINANCIAL STATEMENTS 134
32 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. STATEMENT OF NET ASSETS JUNE 30, 2008 Governmental ActivitiesBusiness-type Activities TotalASSETSCash and investments 18,094,038$ 19,030,729$ 37,124,767$ Restricted cash and investments 8,747,091 19,713,240 28,460,331 Accrued interest 126,883 320,531 447,414 Receivables, net 10,548,224 966,622 11,514,846 Notes receivable 1,530,699 36,000 1,566,699 Prepaid expenses 509,241 - 509,241 Deferred charges 184,080 - 184,080 Capital assetsNon-depreciable land 8,160,992 4,631,358 12,792,350 Other capital assets, net of depreciation 89,696,683 172,891,540 262,588,223 Total capital assets 97,857,675 177,522,898 275,380,573 Total assets 137,597,931$ 217,590,020$ 355,187,951$ LIABILITIESAccounts payable and accrued expenses 4,971,424$ 1,133,969$ 6,105,393$ Unearned revenue 496,303 - 496,303 Current portion of long-term liabilitiesCompensated absences payable 912,400 293,100 1,205,500 Capital leases 48,802 - 48,802 Bonds and notes 930,000 87,115 1,017,115 Long-term liabilities, due in more than one yearCompensated absences 438,360 86,746 525,106 Capital leases 207,030 - 207,030 Solvent site remediation liability - 435,000 435,000 Closure and post-closure care costs - 2,249,000 2,249,000 Unamortized bond premium 10,460 - 10,460 Bonds and notes 16,011,000 56,615 16,067,615 Total liabilities 24,025,779$ 4,341,545$ 28,367,324$ NET ASSETSInvested in capital assets, net of related debt 80,873,924$ 177,379,168$ 258,253,092$ Restricted for expendable purposes:Restricted for impact capital projects 8,690,896 17,782,152 26,473,048 Restricted for debt service - 539,937 539,937 Restricted for parking capital projects 31,195 - 31,195 Restricted for cemetery care 532,216 - 532,216 Unrestricted 23,443,921 17,547,218 40,991,139 Total net assets 113,572,152$ 213,248,475$ 326,820,627$ 136
33 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. STATEMENT OF ACTIVITIES Year Ended June 30, 2008 Net (Expense) Revenue and Changes in Net AssetsOperatingCapitalCharges for Grants and Grants and Governmental Business-typeExpenses Services Contributions Contributions Activities Activities TotalPrimary Government:Governmental activities:General government5,824,265$ 2,237,962$ -$ -$ (3,586,303)$ (3,586,303)$ Public safety11,183,637 3,575,133 318,860 1,901,339 (5,388,305) (5,388,305) Public service 8,979,085 4,858,444 125,553 5,018,299 1,023,211 1,023,211 Public welfare 5,412,192 713,342 58,450 233,465 (4,406,935) (4,406,935) Other 1,144,916 - - - (1,144,916) (1,144,916) Interest and fiscal fees 649,226 - - - (649,226) (649,226) Total governmental activities 33,193,321 11,384,881 502,863 7,153,103 (14,152,474) (14,152,474) Business-type activities:Water 11,150,266 8,222,724 - 14,789,610 11,862,068$ 11,862,068 Waste water8,061,412 6,918,132 - 14,615,989 13,472,709 13,472,709 Solid waste 2,574,651 2,608,662 - - 34,011 34,011 Total business-type activities 21,786,329 17,749,518 - 29,405,599 25,368,788 25,368,788 Total primary government54,979,650$ 29,134,399$ 502,863$ 36,558,702$ (14,152,474) 25,368,788 11,216,314 General revenues:Property taxes 12,070,765 - 12,070,765 Unrestricted grants and contributions 5,617,243 2,052 5,619,295 Investment earnings 1,362,790 - 1,362,790 Miscellaneous 1,859,313 - 1,859,313 Sale of capital assets 51,342 - 51,342 Transfers - - - Total general revenues and transfers 20,961,453 2,052 20,963,505 Change in net assets 6,808,979 25,370,840 32,179,819 Net assets, beginning of the year 106,763,173 187,877,635 294,640,808 Net assets, end of the year113,572,152$ 213,248,475$ 326,820,627$Functions/ProgramsPrimary GovernmentProgram Revenues 137
FUND FINANCIAL STATEMENTS 138
GOVERNMENTAL FUND FINANCIAL STATEMENTS 140
MAJOR GOVERNMENTAL FUNDS General Fund – this fund accounts for the financial operations of the City which are not accounted for in any other fund. Principal sources of revenue are property taxes, state and local shared revenues, licenses and permits, and charges for services provided to other funds. Principal expenditures in the general fund are made for police and fire protection, public works, and general government. Street and Fire Impact Fees Special Revenue Fund – this fund accounts for the collection and expenditures associated with the fire and street impact fees. SID Sinking Debt Service Fund – this fund accounts for the accumulation of resources and payment of special assessment bond principal and interest related to general improvement, sidewalk, and curb construction projects. General Improvements Capital Projects Fund – this fund accounts for the construction of general improvement projects financed by special assessments other than those financed by proprietary funds. 142
34 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2008 Street and Fire SID Other TotalGeneral Impact Fees Sinking Capital Governmental GovernmentalFund Special Revenue Debt Service Projects Funds FundsASSETSCash and investments 4,101,389$ -$ 2,055,589$ 3,232,184$ 8,504,459$ 17,893,621$ Receivables:Property taxes 869,423 - - - 355,745 1,225,168 Accrued interest 15,497 75,491 - 35,895 - 126,883 Customers, net 1,180,724 5,602 - - 31,548 1,217,874 Special assessments 95 - 7,469,268 - 180,589 7,649,952 Other governments 83,504 - - 312,312 47,081 442,897 Prepaid expenditures 3,000 - - - 506,241 509,241 Due from other City funds 888,888 - - - - 888,888 Notes receivable - - - - 1,530,699 1,530,699 Restricted cash and investments - 8,690,896 - - 56,195 8,747,091 Total assets 7,142,520$ 8,771,989$ 9,524,857$ 3,580,391$ 11,212,557$ 40,232,314$ (continued) 144
35 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. BALANCE SHEET GOVERNMENTAL FUNDS (CONTINUED) June 30, 2008 Street and Fire SID Other TotalGeneral Impact Fees Sinking Capital Governmental GovernmentalFund Special Revenue Debt Service Projects Funds FundsLIABILITIES AND FUND BALANCESLiabilities:Accounts payable 1,148,594$ 45,020$ 804,851$ 695,838$ 1,749,783$ 4,444,086$ Accrued employee benefits 155,891 - - - 32,632 188,523 Deferred revenue 1,289,804 - 7,428,922 - 1,784,965 10,503,691 Escheat property payable 28,417 - - - 5,265 33,682 Due to other City funds - - - - 888,888 888,888 Total liabilities 2,622,706 45,020 8,233,773 695,838 4,461,533 16,058,870 Fund balances:Reserved for:Cemetery perpetual care - - - - 532,216 532,216 Park development - - - 171,924 171,924 Debt service - - 1,291,084 - 629,510 1,920,594 Prepaid items 3,000 - - - 503,625 506,625 Unreserved 4,516,814 - - 2,884,553 - 7,401,367 Unreserved, reported in nonmajorSpecial revenue funds - 8,726,969 - - 4,996,877 13,723,846 Debt service funds - - - - (83,128) (83,128) Total fund balances 4,519,814 8,726,969 1,291,084 2,884,553 6,751,024 24,173,444 Total liabilities andfund balances 7,142,520$ 8,771,989$ 9,524,857$ 3,580,391$ 11,212,557$ 40,232,314$ 145
36 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS - GOVERNMENTAL FUNDS As of June 30, 2008 Fund balances - total governmental funds24,173,444$ Amounts reported for governmental activities in the statement of net assets are different because:Capital assets used in governmental activities are not financial resources and therefore are not reportedin the governmental funds.Governmental capital assets153,234,720$ Less: accumulated depreciation(55,377,045) 97,857,675 Internal service funds are used by management to charge the costs of certain activities to individualfunds.The assets and liabilities of the internal service funds that are reported in thegovernmental activities:Net assets(66,647) Less: capital assets included in governmental activities (188,151) Plus: accumulated depreciation included in governmental activities148,690 Plus: compensated absences included in governmental activities 13,725 (92,383) Deferred revenue in the governmental funds are reported on the full accrual method in the government-wide financial statements.10,249,295 Bond issuance costs are expensed in the governmental funds. They are deferred charges for thegovernment-wide financial statements and amortized over the life of the issuance.Bond issuance costs219,314 Less: amortization(35,234) 184,080 Bond premiums are other financing source revenue in the governmental funds. They are a liabilityfor the government-wide financial statements and amortized over the life of the issuance.Bond premium(10,896) Less: amortization436 (10,460) Impact fee credits do not affect current financial resources and therefore are not reported in thegovernmental funds.(241,907) Capital lease obligations not recorded in the governmental funds are reported in the entity-wide (255,832) statements.Long-term liabilities, are not due and payable in the current period and therefore are not reportedin the governmental funds.Bonds and notes payable(16,941,000) Compensated absences(1,350,760) (18,291,760) Net assets of governmental activities113,572,152$ 146
37 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES-GOVERNMENTAL FUNDS For the Year Ended June 30, 2008 Street and Fire SIDOther TotalImpact Fees SinkingCapital Governmental GovernmentalGeneralSpecial Revenue Debt ServiceProjects Funds FundsREVENUESTaxes 7,878,280$ -$ -$ -$ 4,126,666$ 12,004,946$ Special assessments 541 - 1,178,846 - 614,426 1,793,813 Licenses and permits 289,211 - - - 1,062,676 1,351,887 Intergovernmental 4,502,019 - - 2,134,803 3,006,096 9,642,918 Charges for services 2,021,056 2,208,277 4,006 - 2,515,552 6,748,891 Fines and forfeitures 1,305,701 - - - 339,066 1,644,767 Interest on investments 82,153 417,114 157,423 364,282 339,942 1,360,914 Loan repayment - - - - 19,849 19,849 Other 184,663 - 589 979,675 694,386 1,859,313 Total revenues 16,263,624 2,625,391 1,340,864 3,478,760 12,718,659 36,427,298 EXPENDITURESCurrentGeneral government 4,369,604 - - - 1,007,651 5,377,255 Public safety 8,545,711 44,301 - 103,455 2,085,450 10,778,917 Public service 481,337 151,365 - 133,989 2,254,164 3,020,855 Public welfare 3,711,578 - - 85,320 1,022,860 4,819,758 Other 570,578 - 90,207 3,272 112,526 776,583 Capital outlay 336,959 1,511,108 - 7,025,864 3,331,109 12,205,040 Debt servicePrincipal payments 79,198 - 1,135,700 - 798,334 2,013,232 Interest and fiscal fees 2,826 - 278,393 - 368,443 649,662 Total expenditures 18,097,791 1,706,774 1,504,300 7,351,900 10,980,537 39,641,302 Revenues over (under) expenditures (1,834,167) 918,617 (163,436) (3,873,140) 1,738,122 (3,214,004) OTHER FINANCING SOURCES (USES)Transfers in 2,955,947 - - 589,263 1,058,890 4,604,100 Transfers out (975,867) - - - (3,628,233) (4,604,100) Issuance of debt - - - 6,270,000 284,166 6,554,166 Premium on bonds issued - - - 10,896 - 10,896 Sale of capital assets 3,363 - - 205,856 40,469 249,688 Total other financing sources (uses) 1,983,443 - - 7,076,015 (2,244,708) 6,814,750 Net change in fund balances 149,276 918,617 (163,436) 3,202,875 (506,586) 3,600,746 FUND BALANCE, beginning of year 4,370,538 7,808,352 1,454,520 (318,322) 7,257,610 20,572,698 FUND BALANCE, end of year 4,519,814$ 8,726,969$ 1,291,084$ 2,884,553$ 6,751,024$ 24,173,444$ 147
CITY OF BOZEMAN, MONTANA 38 The Notes to Financial Statements are an integral part of the financial statements. RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES – GOVERNMENTAL FUNDS For the Year Ended June 30, 2008 Net change in fund balances - total governmental funds3,600,746$ Amounts reported for governmental activitiesin the statement of activities are different because:Governmental funds report capital outlays as expenditures. In the statement of activities, the cost ofthese assets is depreciated over the assets' useful lives.Expenditures for capital assets12,205,040$ Less: current year depreciation(8,065,388) 4,139,652 Governmental funds report asset disposals as sale of fixed assets for the cash received. In the statementof activities, those gains and losses must be adjusted by the assets basis, net of any depreciation.(198,346) Bond proceeds provide current financial resources in the governmental funds, but issuing debt increaseslong-term liabilities in the statement of net assets. Repayment of principal is an expenditure in thegovernmental funds, but this repayment reduces long-term liabilities in the statement of activities.Amortization of bond issuance costs(11,313) Payments for new bond issuance costs103,455 Premium on bond issuance(10,896) Amortization of bond premium436 Proceeds of long term debt(6,270,000) Principal payments on bonds and notes1,984,898 Principal payments on capital leases111,590 (4,091,830) Some capital additions were financed through capital leases. In governmental funds, a capital leasearrangement is considered a source of financing, but in the statement of net assets, the lease obligationis reported as a liability.(284,166) Deferred revenue in the governmental funds are reported on the full accrual method in the government-wide financial statements.Property taxes65,819 Notes receivable447,707 Special assessments(690,548) Fines 536,071 359,049 Governmental funds do not report a liability for compensated absences. The change in the liability is acurrent period expense.(122,626) Governmental funds do not report impact fee credits. The change in these credits during the year arecharged to the statement of activities.210,035 Governmental funds do not report donated assets which are reported as assets and revenue in the statements of activities and net assets.3,625,618 Internal service funds are used by management to charge the costs of certain activities to individual funds.The net revenue (expense) of the internal service funds is reported in the governmental activities.Net revenue (452,406) Current year depreciation expense included in governmental activities 18,888 Change in compensated absences included in governmental activities 4,365 (429,153) Change in net assets of governmental activities6,808,979$ 148
PROPRIETARY FUND FINANCIAL STATEMENTS 150
PROPRIETARY FUNDS These funds are used to account for the financing, acquisition, operation and maintenance of water, sewer, and solid waste facilities, which are supported by user charges. Enterprise Funds – Water Fund – Accounts for the City’s water utility operations and to collect and administer water impact fees. Waste Water Fund – Accounts for the City’s sewer utility operations and to collect and administer waste water impact fees. Solid Waste Fund – Accounts for the City’s garbage service operations. Internal Service Funds – used to account for the goods and services provided by one department to other departments of the City on a cost-reimbursement basis. 152
39 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2008 GovernmentalActivitiesWaste Solid InternalWater Fund Water Fund Waste Fund Total Service FundsASSETS Current assetsCash and investments 9,066,120$ 6,325,173$ 3,639,436$ 19,030,729$ 200,417$ ReceivablesAccrued interest 140,112 149,695 30,724 320,531 - Customers, net 409,931 377,391 178,831 966,153 12,333 Special assessments - - 469 469 - Other governments - - - - - Prepaid expenses - - - - - Total current assets 9,616,163 6,852,259 3,849,460 20,317,882 212,750 Non current assetsOther assetsNotes receivable 36,000 - - 36,000 - Restricted cash and investments 8,561,512 11,151,728 - 19,713,240 - Total other assets 8,597,512 11,151,728 - 19,749,240 - Property, plant and equipment Nondepreciable:Land 162,518 754,263 3,714,577 4,631,358 - Depreciable:Water rights 963,494 - - 963,494 - Buildings 3,298,846 9,796,554 480,083 13,575,483 - Other structures and improvements 13,509,411 14,763,061 2,155,300 30,427,772 - Machinery and equipment 1,133,663 2,055,117 3,211,731 6,400,511 132,631 Vehicles 468,057 929,413 664,102 2,061,572 55,520 Infrastructure 143,768,299 89,805,518 78,531 233,652,348 - Accumulated depreciation and amortization (66,093,495) (42,611,906) (5,484,239) (114,189,640) (148,690) Net property, plant and equipment 97,210,793 75,492,020 4,820,085 177,522,898 39,461 Total non current assets 105,808,305 86,643,748 4,820,085 197,272,138 39,461 Total assets 115,424,468$ 93,496,007$ 8,669,545$ 217,590,020$ 252,211$ (continued)Business-type ActivitiesEnterprise Funds154
40 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. STATEMENT OF NET ASSETS PROPRIETARY FUNDS (CONTINUED) June 30, 2008 GovernmentalActivitiesWaste Solid InternalWater Fund Water Fund Waste Fund Total Service FundsLIABILITIESCurrent liabilities:Accounts payable and accrued expenses 370,551$ 665,487$ 97,931$ 1,133,969$ 305,133$ Compensated absences payable 106,600 103,600 82,900 293,100 13,725 Due to other City funds - - - - - Bonds, notes, and loans payable 87,115 - - 87,115 - Total current liabilities 564,266 769,087 180,831 1,514,184 318,858 Noncurrent liabilitiesClosure and post-closure care costs - - 2,249,000 2,249,000 - Revenue bonds due after one year 56,615 - - 56,615 - Compensated absences payable 64,046 4,999 17,701 86,746 - Solvent site remediation liability - 435,000 - 435,000 - Total noncurrent liabilities 120,661 439,999 2,266,701 2,827,361 - Total liabilities 684,927 1,209,086 2,447,532 4,341,545 318,858 NET ASSETSInvested in capital assets, net of related debt 97,067,063 75,492,020 4,820,085 177,379,168 39,461 Restricted for impact capital projects 6,755,556 11,026,596 - 17,782,152 - Restricted for debt service 539,937 - - 539,937 - Unrestricted 10,376,985 5,768,305 1,401,928 17,547,218 (106,108) Total net assets 114,739,541 92,286,921 6,222,013 213,248,475 (66,647) Total liabilities and net assets 115,424,468$ 93,496,007$ 8,669,545$ 217,590,020$ 252,211$ Enterprise FundsBusiness-type Activities155
41 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - PROPRIETARY FUNDS For the Year Ended June 30, 2008 GovernmentalActivitiesWaste Solid InternalWater Fund Water Fund Waste Fund Totals Service FundsOPERATING REVENUES Charges for services 6,163,883$ 4,739,699$ 2,386,012$ 13,289,594$ 3,458,698$ OPERATING EXPENSESSalaries and benefits 1,577,213 1,345,742 1,088,357 4,011,312 230,883 Materials and supplies 732,900 246,136 243,235 1,222,271 283,815 Repairs and maintenance 117,970 141,274 142,314 401,558 12,556 Utilities153,387 359,805 419,806 932,998 615 Administrative charges 459,615 423,812 187,085 1,070,512 35,059 Insurance claims - - - - 3,264,686 Other expenses 728,856 464,395 323,616 1,516,867 69,037 Depreciation and amortization 7,370,094 5,080,248 370,750 12,821,092 18,888 Changes in estimated closure and post-closure care costs - - (200,512) (200,512) - Total operating expenses 11,140,035 8,061,412 2,574,651 21,776,098 3,915,539 Operating income (loss) (4,976,152) (3,321,713) (188,639) (8,486,504) (456,841) NONOPERATING REVENUES (EXPENSES)Interest income 770,706 817,142 169,952 1,757,800 1,876 Interest expense (10,231) - - (10,231) (2,114) Other income 45,774 53,814 48,932 148,520 4,673 Grant income 16,321 1,150 902 18,373 - Impact fees 1,237,939 1,306,984 - 2,544,923 - Gain on disposal of assets 4,422 493 3,766 8,681 - Total nonoperating revenues (expenses) 2,064,931 2,179,583 223,552 4,468,066 4,435 Income (loss) before contributions and transfers (2,911,221) (1,142,130) 34,913 (4,018,438) (452,406) Contributions of infrastructure 14,773,289 14,615,989 - 29,389,278 - Transfers out - - - - - Change in net assets 11,862,068 13,473,859 34,913 25,370,840 (452,406) NET ASSETS, beginning of year 102,877,473 78,813,062 6,187,100 187,877,635 385,759 NET ASSETS, end of year 114,739,541$ 92,286,921$ 6,222,013$ 213,248,475$ (66,647)$ Enterprise FundsBusiness-type Activities156
42 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS For the Year Ended June 30, 2008 GovernmentalActivitiesWaste Solid InternalWater Fund Water Fund Waste Fund Total Service FundsCash Flows from Operating ActivitiesReceipts from customers 6,225,020$ 4,723,599$ 2,421,783$ 13,370,402$ 3,458,698$ Receipts from others 386,000 203,814 48,932 638,746 4,673 Operating loans from other funds - - - - (353,397) Payments to suppliers (1,753,860) (791,353) (1,239,851) (3,785,064) 558,623 Payments to employees (1,578,561) (1,341,037) (1,086,035) (4,005,633) (3,491,204) Payments to internal service funds and administrative fees (459,615) (423,812) (187,085) (1,070,512) (35,059) Net Cash Flows From Operating Activities 2,818,984 2,371,211 (42,256) 5,147,939 142,334 Cash Flows from Capital and Related Financing ActivitiesAcquisition of capital assets (1,954,651) (4,218,446) (327,620) (6,500,717) (25,278) Principal paid on bonds, interfund loans, loans and leases (82,730) - - (82,730) - Receipts from Federal grants 16,321 1,150 902 18,373 - Interest paid on bonds, interfund loans, loans and leases (10,231) - - (10,231) (2,114) Transfers to other funds for capital outlay - - - - - Impact fees received 1,237,939 1,306,984 - 2,544,923 - Proceeds from sale of property, plant and equipment 4,422 493 3,766 8,681 - Net Cash Flows from Capital and Related Financing Activities (788,930) (2,909,819) (322,952) (4,021,701) (27,392) Cash Flows from Investing ActivitiesInterest on investments 717,833 766,929 157,408 1,642,170 1,876 Net Cash Flows from Investing Activities 717,833 766,929 157,408 1,642,170 1,876 Net Increase (Decrease) in Cash and investments 2,747,887 228,321 (207,800) 2,768,408 116,818 Cash and investments, beginning of year 14,879,745 17,248,580 3,847,236 35,975,561 83,599 Cash and investments, end of year 17,627,632$ 17,476,901$ 3,639,436$ 38,743,969$ 200,417$ Classified as:Cash and investments 9,066,120$ 6,325,173$ 3,639,436$ 19,030,729$ 200,417$ Restricted cash and investments 8,561,512 11,151,728 - 19,713,240 - Totals 17,627,632$ 17,476,901$ 3,639,436$ 38,743,969$ 200,417$ Noncash transactions: donated infrastructure 14,773,289$ 14,615,989$ -$ 29,389,278$ Enterprise FundsBusiness-type Activities157
43 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS (CONTINUED) For the Year Ended June 30, 2008 GovernmentalActivitiesWaste Solid InternalWater Fund Water Fund Waste Fund Total Service FundsOperating income (loss) (4,976,152)$ (3,321,713)$ (188,639)$ (8,486,504)$ (456,841)$ Adjustments to reconcile operating income (loss)to net cash provided (used) by operating activitiesDepreciation and amortization 7,370,094 5,080,248 370,750 12,821,092 18,888 Change in estimated closureand post-closure care costs - - (200,512) (200,512) - Other income 45,774 53,814 48,932 148,520 4,673 Change in Assets and Liabilities: (Increase) Decrease in:Accounts receivable 61,137 (16,100) 35,771 80,808 - Other governments receivable 340,226 150,000 - 490,226 Prepaid expenses - - - - 631,526 Increase (Decrease) in:Accounts payable (20,747) 420,257 (110,880) 288,630 293,120 Accrued employee benefits payable (1,348) 4,705 2,322 5,679 4,365 Total adjustments 7,795,136 5,692,924 146,383 13,634,443 599,175 Net cash provided (used) byoperating activities 2,818,984$ 2,371,211$ (42,256)$ 5,147,939$ 142,334$ Enterprise FundsBusiness-type Activities158
FIDUCIARY FUND FINANCIAL STATEMENTS 160
FIDUCIARY FUNDS AGENCY FUNDS Agency funds are used to account for assets held by the City as an agent for individuals, private organizations, other governments and/or other funds. Montana Arts Council – Accounts for pass-through grant monies given for use by the Montana Arts Council for various programs. Municipal Court – Accounts for monies held for appearance bonds and restitution. 162
44 CITY OF BOZEMAN, MONTANA The Notes to Financial Statements are an integral part of the financial statements. STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS June 30, 2008 AgencyFundsASSETSCash and cash equivalents 120,940$ Customer receivables 7,096 Total assets 128,036 LIABILITIESAccounts payable 128,036 Total liabilities 128,036$ 164
NOTES TO FINANCIAL STATEMENTS 166
45 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Bozeman of Gallatin County, Montana (the City) was incorporated as a municipal corporation in 1883. The present City Code of Ordinances was adopted November 22, 1982. Under the charter, the City is governed by a mayor and commission members who comprise the City Commission. The day-to-day affairs of the City are conducted under the supervision of the City Manager, who is appointed by and serves at the pleasure of a majority of the City Commission. The accompanying financial statements of the City have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB), the accepted standard-setting body for establishing governmental accounting and financial reporting principles. In June 1999 the GASB issued Statement 34 Basic Financial Statements-and Management’s Discussion and Analysis-for State and Local Governments (GASB 34). This Statement establishes new financial reporting requirements for state and local governments throughout the United States. It requires new information and restructures much of the information that governments have presented in the past. Comparability with reports issued in prior years is affected. The City adopted the provisions of GASB 34 for its fiscal year ended June 30, 2002. With the implementation of GASB 34, the City has prepared required supplementary information titled Management’s Discussion and Analysis which precedes the basic financial statements. Other GASB statements are required to be implemented in conjunction with GASB Statement 34. Therefore, the City implemented the following GASB statements in the year ended June 30, 2002: Statement 33 Accounting and Financial Reporting for Nonexchange Transactions, Statement 36 Recipient Reporting for Certain Shared Nonexchange Revenues, Statement 37 Basic Financials Statements-and Management’s Discussion and Analysis-for State and Local Governments: Omnibus, and Statement 38 Certain Financial Statement Note Disclosures. The accompanying financial statements present the financial position of the City and the various funds and fund types, the results of operations of the City and the various funds and fund types, and the cash flows of the proprietary funds. The financial statements are presented as of June 30, 2008, and for the year then ended. The more significant accounting policies of the City are described below. Reporting Entity The City has considered all potential component units for which it is financially accountable and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City’s financial statements to be misleading or incomplete. The Governmental Accounting Standards Board has set forth criteria to be considered in determining financial accountability in Statement 14 The Financial Reporting Entity and Statement 39, Determining Whether Certain Organizations are Component Units, an amendment to Statement 14. These criteria include appointing a voting majority of an organization's governing body and (1) the ability of the City to impose its will on that organization or (2) the potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the City. 168
46 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Reporting Entity (Continued) Although the following entities meet the requirements of Statement 14 and Statement 39, they are strictly advisory in nature. Therefore, the government-wide financial statements do not include the financial information of the following entities and their omission does not cause the City’s financial statements to be misleading or incomplete. Should there develop a financial element at some point in the future, the City shall include these entities on its government-wide financial statements. Senior Center Advisory Council - This council is advisory in nature on senior issues and on how to run the City-owned Senior Center building. The City is responsible for the maintenance and operation of the building. Parking Commission - The City Commission appoints the governing board of the Parking Commission, which was created by ordinance. The City owns the parking lots, collects the rents and assigns the lots to the individuals. The Parking Commission acts only in a volunteer advisory capacity to the City Commission on setting rates. Blended Component Units The following have been presented as blended component units since their governing bodies are substantially the same as the primary government’s government body and because their services are provided entirely or almost entirely to the primary government. Library Board of Trustees - The City Commission appoints all five trustees of the Library Board of Trustees. The Library is not a legally separate entity. City Planning Board - The agreement forming the City Planning Board holds that it will submit its budget to the City Commission for approval and the City provides all accounting functions and is responsible for the issuance of debt. It is presented with the Special Revenue Funds. Basis of Accounting/Measurement Focus The accounts of the City 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, fund equity, revenues and expenditures or expenses, as appropriate. Governmental 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. Government-Wide Financial Statements The Government-Wide Financial Statements (the Statement of Net Assets and the Statement of Activities) present information of all the non-fiduciary activities of the primary government and its component units. These statements present summaries of Governmental and Business-Type Activities for the City accompanied by a total column. These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets and long-term liabilities, are included in the accompanying Statement of Net Assets. The City has retroactively included infrastructure in its assets. 169
47 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Accounting/Measurement Focus (Continued) The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Certain eliminations have been made as prescribed by GASB 34 in regards to inter-fund activities, payables and receivables. All internal balances in the Statement of Net Assets have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. The City applies all applicable GASB pronouncements (including all National Council on Governmental Accounting Statements and Interpretations currently in effect) as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board (APB) Opinions, and Accounting Research Bulletins (ARB) of the Committee on Accounting Procedure. In addition, the City applies all applicable FASB Statements and Interpretations issued after November 30, 1989, except those that conflict with or contradict GASB pronouncements to its business-type activities. Governmental Fund Financial Statements Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balances for all major governmental funds and nonmajor funds aggregated. An accompanying schedule is presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net assets and changes in net assets presented in the Government-Wide Financial Statements. The City has presented all major funds that met those qualifications. All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheets. The Statement of Revenues, Expenditures, and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Accordingly, revenues are recorded when received in cash, except that revenues subject to accrual (generally 60 days after year-end) are recognized when due. The primary revenue sources which have been treated as susceptible to accrual by the City are property taxes, intergovernmental revenues, and other taxes. Expenditures are recorded in the accounting period in which the related fund liability is incurred. The City has elected to apply the early recognition option of recognizing debt services expenditures provided by GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements. Under this option, an expenditure and a liability are recorded in debt service funds in the current year for amounts due early in the following year, for which resources have been provided during the current year. 170
48 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Accounting/Measurement Focus (Continued) Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues, Expenses and Changes in Net Assets, and a Statement of Cash Flows for each major proprietary fund. The City has no nonmajor proprietary funds. A column representing internal service funds is also presented with the Proprietary Fund Financial Statements. Internal service balances and activities, however, have been combined with the governmental activities in the Government-Wide Financial Statements. Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Net Assets presents increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. Fiduciary Fund Financial Statements Fiduciary Fund Financial Statements include a Statement of Net Assets. The City’s Fiduciary Funds represent Agency Funds, which are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Therefore, Agency Funds do not have a measurement focus. These funds are accounted for using the accrual basis of accounting. The following Agency Funds are included in the Fiduciary Fund financial statements: Montana Arts Council – Accounts for pass-through monies received from the State of Montana to fund local chapters of cultural enhancement activities such as the Bozeman Symphony Orchestra, Montana Ballet, Mandolin Society, Intermountain Opera Association, and the Emerson Cultural Center. Municipal Court – Accounts for monies held for appearance bonds and restitution related to criminal arrests and reimbursement for damage caused. Internal Service Funds Internal Service Funds are used to account for goods and services provided by one department to other departments of the City on a cost-reimbursement basis. These direct costs and certain indirect costs are included as part of the program expense reported for the individual functions and activities of these other departments. The following Internal Service Funds are included in the Proprietary Fund Financial Statements: Vehicle Maintenance Shop – Accounts for the maintenance and repair of vehicles used in the operation of City services. Medical Health Insurance – Accounts for insurance premium revenues received from the various City departments and retirees, and the related costs of health, vision, and dental claims incurred by City employees and retirees which are in-turn paid to the City’s insurance program coordinator. 171
49 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Basis of Accounting/Measurement Focus (Continued) Funds As mentioned, the Governmental Fund Financial Statements include a Balance Sheet and a Statement of Revenues, Expenditures, and Changes in Fund Balances for all major governmental funds and nonmajor funds aggregated. The following major funds are presented in separate columns on the Governmental Funds Financial Statements, and the Proprietary Funds Financial Statements, respectively: Governmental Funds General Fund – this fund accounts for the financial operations of the City which are not accounted for in any other fund. Principal sources of revenue are property taxes, state and local shared revenues, licenses and permits, and charges for services provided to other funds. Principal expenditures in the General Fund are made for police and fire protection, public works, and general government. SID Sinking Debt Service Fund – Accounts for the accumulation of resources and payment of special assessment bond principal and interest related to general improvement, sidewalk, and curb construction projects. General Improvements Capital Projects Fund – Accounts for the construction of general improvement projects financed by special assessments other than those financed by proprietary funds. Street and Fire Impact Fees Special Revenue Fund – on January 22, 1996, the City Commission adopted fire, street, water, and waste impact fees in Ordinance Number 1414. This fund accounts for the collection and expenditures associated with the fire and street impact fees. Proprietary Funds Water Fund - Accounts for the City's water utility operations and to collect and administer water impact fees. Waste Water Fund - Accounts for the City's sewer utility operations and to collect and administer waste water impact fees. Solid Waste Fund - Accounts for the City's garbage service operations. Use of Restricted/Unrestricted Net Assets When an expense is incurred for purposes for which both restricted and unrestricted net assets are available, the City’s policy is to apply restricted net assets first. Cash and Investments Cash and investments are under the management of the City's Treasurer and consist primarily of investments in U.S. Government Bonds. Interest income earned as a result of pooling of City deposits is distributed to the appropriate funds utilizing a formula based on the average balance of cash and investments of each fund. Montana State statutes authorize the City to invest in interest-bearing savings accounts, certificates of deposits, and time deposits insured up to $100,000 by the Federal Deposit Insurance Corporation or fully collateralized, U.S. government and U.S. agency obligations and repurchase agreements where there is a master repurchase agreement and collateral held by a third party. 172
50 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) For the year ended June 30, 2005, the City implemented a new accounting standard issued by GASB, Statement No. 40, Deposit and Investment Risk Disclosures. Statement No. 40 amends Statement No. 3, Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements. Statement No. 40 revises the existing requirements regarding disclosure regarding credit risk, concentration of credit risk, interest rate risk, and foreign currency risk. Restricted Cash and Investments Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Impact fees collected and line-oversizing fees are restricted for applicable use. Payments in lieu of parking are restricted by code for future parking related capital projects. 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. Eliminations and Reclassifications In the process of aggregating data for the Statement of Net Assets and the Statement of Activities, some amounts reported as inter-fund activity and balances in the funds have been eliminated or reclassified. Internal service fund activity has also been eliminated in the Statement of Activities to remove the “doubling-up” effect. Capital Assets The City’s assets are capitalized at historical cost or estimated historical cost. City policy has set the capitalization threshold for reporting capital assets at $5,000. Gifts or contributions of capital assets are recorded at fair market value when received. Depreciable capital assets are reported on the Statement of Net Assets, net of applicable accumulated depreciation. Capital assets which are not depreciable, such as land, and construction in progress are reported separately. Depreciation expense is reported in Statement of Activities and is calculated using the straight-line method based on the assets estimated useful life. Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: Vehicles5 yearsMachinery and equipment5 to 30 yearsBuildings20 to 50 yearsOther structures and improvements 10 to 25 yearsInfrastructure25 to 50 years In June 1999, GASB issued Statement No. 34 (GASB 34) which requires the inclusion of infrastructure capital assets in local governments’ basic financial statements. According to GASB 34, the City must record infrastructure assets prospectively from the date of implementation and has four years to include infrastructure acquired prior to implementation. 173
51 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Capital Assets (Continued) The City defines infrastructure as the basic physical assets that allow the City to function. The assets to be recorded will include the street system, water purification and distribution system, sewer collection treatment system; park and recreation lands and improvement system, storm water conveyance system, and buildings combined with the site amenities such as parking and landscaped areas; and streets, sidewalks, curbs, and street lights. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets, as applicable. Compensated Absences Payable Earned but unpaid vacation and sick pay is included as a liability in the proprietary fund types and Government-Wide Financial Statements. The portion relating to the governmental fund types not expected to be paid with expendable and available resources is not reported in the governmental fund statements unless the liability has matured (i.e., unused reimbursable leave still outstanding following an employee's resignation or retirement). Inter-fund Receivables and Payables During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those short-term loans related to goods and services type transactions are classified as “due to and from other funds”. Long-term inter-fund loans (noncurrent portion) are reported as “advances to and from other funds”. Inter-fund receivables and payables between funds are eliminated in the Statement of Net Assets. On-Behalf Payments for Fringe Benefits On-behalf payments for fringe benefits are direct payments made by one entity to a third-party recipient for the employees of another legally separate entity. On-behalf payments include pension plan contributions. The State's pension contribution is recorded as intergovernmental revenue with an offsetting public safety or general government expenditures in the Pension Special Revenue Fund. (See Note 14) Budgets Each year, the City Manager must submit to the City Commission a proposed operating budget for all budget units within the City for the fiscal year commencing July 1. This operating budget includes proposed expenditures and the means of financing them. Public hearings are conducted to obtain citizen comments on the proposed budget. The budget is then legally adopted through passage of the appropriation resolution by the City Commission, but not before the second Monday in August. Budgets are legally required for all governmental fund types. These budgets are prepared on the same basis and using the same accounting practices as are used to account and prepare financial reports for the funds. Budgets presented in this report for comparison to actual amounts are presented in accordance with generally accepted accounting principles. Annual appropriated budgets are adopted for all funds and all appropriations lapse at year end. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established at the fund type level. The City Commission may amend the budget during the course of the fiscal year, within each fund type. 174
52 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Budgets (Continued) Any accruing revenue of the municipality not appropriated and any balance at any time remaining after the purpose of an appropriation has been satisfied or abandoned may from time to time be appropriated to other uses that do not conflict with any uses for which specifically the revenue was accrued. A public hearing is required for an overall increase in appropriation authority, except in the case of an emergency. The City Commission delegated in its annual appropriation resolution, budget amendment authority to the City Manager, for the expenditure of funds from any or all of the following: debt service funds, enterprise funds, internal service funds, trust funds, federal and state grants accepted and approved by the governing body, special assessments, and donations. In all other funds, the City Manager may, without approval from the City Commission, make budget amendments as long as the total appropriation for the fund group is not exceeded. Spending control is established by the total amount of expenditures budgeted for the fund type, but management may exercise control at budgetary line items. NOTE 2. CASH AND INVESTMENTS At June 30, 2008, the carrying amount of the City's deposits in local banks and investments is $65,706,039 and the bank balance is $66,175,667. Of the bank balance, $100,000 was covered by federal depository insurance and up to $6,480,000 was covered by collateral held by the pledging bank's agent in the City's name. The City’s cash and investments are reported as follows: UnrestrictedRestrictedTotalGovernmental activities 18,094,038$ 8,747,091$ 26,841,129$ Business-type activities 19,030,729 19,713,240 38,743,969 Fiduciary funds 120,940 - 120,940 37,245,707$ 28,460,331$ 65,706,038$ Custodial credit risk for deposits is the risk that in the event of a financial institution failure, the City’s deposits may not be returned or the City will not be able to recover the collateral securities in the possession of the outside party. The City minimizes custodial credit risk by restrictions set forth in City policy and state law. The City’s policy requires deposits to be 102 percent secured by collateral valued at market value. The City Treasurer maintains a listing of financial institutions, which are approved for investment purposes. Types of securities that may be pledged as collateral are detailed in Section 17-6-103 of the Montana Code Annotated (MCA). City policy requires that specific safeguards against risk of loss be evidenced when the City does not physically hold the securities. On June 30, 2008, the book value approximated the fair value of the investments, therefore no unrealized gain or loss was recorded for the year. 175
53 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 2. CASH AND INVESTMENTS (CONTINUED) The following table provides information about the interest rate risks associated with the City’s deposits and investments. InvestmentMaturitiesCredit Risk RatingFair ValueU.S. Government bonds Jul 2008 - Jun 2009 AAA 9,621,204$ U.S. Government bonds Jul 2009 - Jun 2010 AAA 8,600,000 U.S. Government bonds Jul 2010 - Jun 2011 AAA 18,650,305 U.S. Government bonds Jul 2011 - Jun 2012 AAA 8,996,750 U.S. Bank Municipal Investor Account N/A N/A 18,546,982 Non-negotiable repurchase agreements N/A N/A 1,340,921 Demand deposits N/A N/A (55,006) Petty cash N/A N/A 4,882 65,706,038$ Credit risk is defined as the risk that an issuer or other counterpart to an investments will not fulfill its obligation. The above credit risk rating indicates the probability that the issuer may default in making timely principal and interest payments. The credit ratings presented in the previous tables are provided by Standard and Poor’s Corporation (S&P). The City’s investment policy is to hold investments to maturity with the contractual understanding that these investments are low risk, locked in to a guaranteed rate of return, are therefore not impacted significantly by changes in short term interest rates. NOTE 3. PROPERTY TAX CALENDAR Real property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien Date December 1 for the 1st installment and June 1 for the 2nd installment Levy Date November 1 Due Dates November 30 for the 1st installment and May 31 for the 2nd installment Personal property taxes are assessed on January 1 of each year and billed in May and November, with payment due within thirty days. Gallatin County collects all property taxes on behalf of the City and remits collections, including penalties and interest, on a monthly basis. The County assesses a delinquency penalty of 2%. If taxes become delinquent the County tax collector may sell the property to collect taxes due plus .83% per month interest. In the fund financial statements, the City accrues as receivable all property taxes received during the first sixty (60) days of the new fiscal year from Gallatin County, in accordance with the modified accrual basis. In the government-wide financial statements, all taxes billed, but not yet collected are accrued in accordance with the full accrual basis of accounting, as described in Note 1. 176
54 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 4. SPECIAL ASSESSMENTS RECEIVABLE/DEFERRED REVENUES Special assessments receivable represent the uncollected amounts levied against benefited property for the cost of local improvements. Assessments are payable over a period of 18 to 20 years and bear interest of 2.5% to 5.75% per annum. Recognition of the revenues from these assessments has been deferred until both measurable and available in governmental funds. In the Government-Wide Financial Statements, however, these amounts are reported as revenues in the period they are levied. Once received, the monies will be used to meet the annual debt service requirements on related bonds. Deferred revenues in the General Fund represent outstanding general property taxes at June 30, 2008. Again, these amounts are reported as revenue in the Government-Wide Financial Statements in the period in which they are levied. Deferred revenues in Special Revenue Funds represent either revenues received but not considered earned or amounts to be received in the future that are recorded as receivables but not yet earned. The deferred revenues in Debt Service Funds represent future assessments to be received to meet the related debt obligation. NOTE 5. PREPAID RENT (OPERATING LEASE) On October 22, 1992, the City signed a memorandum of understanding with Gallatin County, Montana, in which the City agreed to lease space from the County's Law and Justice Center for the City Police Department and Municipal Court. The City paid to the County $765,000 during the renovation of the building which started 1993. The $765,000 constitutes rent for four rental terms of ten years each. During the term of the lease and renewal of the lease, the principal balance of $765,000 will be decreased by equal annual rental payments in the amount of $19,125. If the City and County mutually agree to terminate the lease after the second ten year term, the County will refund $382,500, to the City for the unused portion of the rent. The lease began when renovations were complete on November 1, 1994. For the year ended June 30, 2008, rent expenditure was $19,125 regarding this lease. NOTE 6. NOTES RECEIVABLE The City had the following loans in Special Revenue Funds: Special Revenue Funds:Housing Revolving Loan Fund 92,500$ Economic Development Loan Fund 1,329,747 Community Housing Fund 43,958 Consolidated Parking Districts 64,494 Enterprise FundsWater FundNote receivable related to water main extension to a low cost housing project. The original note was for $70,000,due in semiannual principal payments, with interest accruingat 10%, only if payments are not made in a timely manner. 36,000$ 177
55 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 7. CAPITAL ASSETS In accordance with GASB 34, the City has reported all capital assets, with the exception of pre-July 1, 2001 infrastructure in the Government-Wide Statement of Net Assets. The assets are reported whereby accumulated depreciation and depreciation expense have been recorded. For the year ended June 30, 2008, depreciation expense on capital assets was charged to the functions and programs as follows: Governmental Activities:General Government 409,121$ Public Safety 442,466 Public Services 6,174,759 Public Welfare 1,039,042 Total depreciation expense - governmental activities 8,065,388$ Business-type Activities:Water 7,370,094$ Waste Water 5,080,248 Solid Waste 370,750 Total depreciation expense - business-type activities 12,821,092$ 178
56 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 7. CAPITAL ASSETS (CONTINUED) All capital assets of the City are depreciable with the exception of land. Capital assets activity of the City for the year ended June 30, 2008, consisted of the following: June 30, 2007 Additions Disposals June 30, 2008Governmental Activities: Non-depreciableLand 7,750,199$ 605,318$ (194,525)$ 8,160,992$ DepreciableBuildings 22,808,865 6,487,893 - 29,296,758 Other structures and improvements 1,201,076 14,217 - 1,215,293 Machinery and equipment7,392,783 778,685 (135,771) 8,035,697 Property under capital lease 154,992 284,166 - 439,158 Vehicles 2,659,991 177,113 (54,614) 2,782,490 Infrastructure 95,734,830 7,569,503 - 103,304,333 Total 137,702,736 15,916,895 (384,910) 153,234,721 Accumulated depreciation(47,437,263) (8,126,344) 186,561 (55,377,046) Total governmental activities 90,265,473$ 7,790,551$ (198,349)$ 97,857,675$ Business-type Activities: Non-depreciableLand 4,631,358$ -$ -$ 4,631,358$ Water rights 263,494 700,000 - 963,494 DepreciableBuildings 10,023,326 3,552,157 - 13,575,483 Other structures and improvements 30,342,869 84,903 - 30,427,772 Machinery and equipment5,946,970 570,730 (117,189) 6,400,511 Vehicles 1,706,667 411,139 (56,234) 2,061,572 Infrastructure 203,067,216 30,585,132 - 233,652,348 Total 255,981,900 35,904,061 (173,423) 291,712,538 Accumulated depreciation(101,527,906) (12,835,159) 173,425 (114,189,640) Total business-type activities 154,453,994$ 23,068,902$ 2$ 177,522,898$ Total capital assets 244,719,467$ 30,859,453$ (198,347)$ 275,380,573$ 179
57 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 7. CAPITAL ASSETS (CONTINUED) Changes in accumulated depreciation are as follows for the year ended June 30, 2008: Accumulated Depreciation:June 30, 2007 Additions Disposals June 30, 2008Governmental Activities:Buildings(6,498,846)$ (1,114,879)$ -$ (7,613,725)$ Other structures and improvements(659,644) (67,941) - (727,585) Machinery and equipment(5,939,570) (650,555) 131,947 (6,458,178) Property under capital lease(138,571) (50,578) - (189,149) Vehicles(2,028,405) (243,707) 54,614 (2,217,498) Infrastructure(32,172,227) (5,998,684) - (38,170,911) Total governmental activities(47,437,263) (8,126,344) 186,561 (55,377,046) Business-type Activities:Buildings(5,102,550) (534,565) - (5,637,115) Other structures and improvements(22,634,593) (1,114,878) - (23,749,471) Machinery and equipment(4,523,837) (623,652) 117,191 (5,030,298) Vehicles(1,536,873) (113,289) 56,234 (1,593,928) Infrastructure(67,730,053) (10,448,775) - (78,178,828) Total business-type activities(101,527,906) (12,835,159) 173,425 (114,189,640) Total accumulated depreciation(148,965,169)$ (20,961,503)$ 359,986$ (169,566,686)$ 180
58 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 8. COMPENSATED ABSENCES The City’s policy relating to compensated absences is described in Note 1. As shown in the table below, the long-term portion of the debt, amounting to $438,360 for governmental activities and $86,746 for business-type activities at June 30, 2008, is expected to be paid in future years from future resources. Historically, compensated absences have been liquidated primarily by the general fund and the proprietary funds. The total amounts outstanding at June 30, 2008, were $1,350,760 for governmental activities and $379,846 for business-type activities. Balance June 30, 2007 Incurred SatisfiedBalance June 30, 2008Compensated absencesGovernmental Activities $ 1,228,134 $ 1,034,990 $ (912,364) $ 1,350,760 Business-type Activities 374,167 298,740 (293,061) 379,846 Total compensated absences 1,602,301$ 1,333,730$ (1,205,425)$ 1,730,606$ Due within one yearDue after one year TotalCompensated absencesGovernmental Activities $ 912,400 $ 438,360 $ 1,350,760 Business-type Activities 293,100 86,746 379,846 Total compensated absences 1,205,500$ 525,106$ 1,730,606$ NOTE 9. LONG-TERM DEBT Governmental Activities Long Term Debt The following is a summary of long-term debt transactions of the City’s governmental activities for the year ended June 30, 2008: Balance June 30, 2007 Issuances RepaymentsBalance June 30, 2008General obligation bonds $ 5,840,000 $ - $ (500,000) $ 5,340,000 Tax increment financing bonds - 6,270,000 (270,000) 6,000,000 Special assessment debt 6,736,700 - (1,135,700) 5,601,000 Notes payable 79,198 - (79,198) - Totals 12,655,898$ 6,270,000$ (1,984,898)$ 16,941,000$ 181
59 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 9. LONG-TERM DEBT (CONTINUED) Governmental Activities Long Term Debt (Continued) The above long-term debt of the City’s governmental activities is presented in the accompanying Statement of Net Asset as follows: Current Portion (Due within one year)Long-term Portion (Due after one year)Total Long Term DebtGeneral obligation bonds $ 525,000 $ 4,815,000 $ 5,340,000 Tax increment financing bonds 150,000 5,850,000 6,000,000 Special assessment debt 255,000 5,346,000 5,601,000 Notes payable - - - 930,000$ 16,011,000$ 16,941,000$ General Obligation Bonds - The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations of the City and are backed by the full faith and credit of the City. General obligation bonds currently outstanding are as follows: Interest Rate AmountDue within one yearTransportation Project Refunding Bonds, Series 2003bserial maturities through 2014 1.30%-3.75% 2,250,000$ 340,000$ Library Project Bonds, Series 2002serial maturities through 2022 3.50%-5.00% 1,760,000 105,000 Library Project Bonds, Series 2003aserial maturities through 2021 1.25%-4.40% 1,330,000 80,000 Total general obligations bonds 5,340,000$ 525,000$ 182
60 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 9. LONG-TERM DEBT (CONTINUED) Governmental Activities Long Term Debt (Continued) Annual debt service requirements to maturity for general obligation bonds are as follows: Principal Interest TotalYear ending June 30,2009 $ 525,000 $ 207,202 $ 732,202 2010 540,000 191,622 731,622 2011 565,000 173,676 738,676 2012 590,000 154,198 744,198 2013 610,000 132,876 742,876 2014-2018 1,635,000 388,478 2,023,478 2019-2023 875,000 83,682 958,682 5,340,000$ 1,331,734$ 6,671,734$ Tax Increment Financing Bonds - Tax Increment Financing (TIF) Bonds are not general obligations, but are special limited obligations of the City. The Series 2007 Bonds, the premium, and the interest thereon are not a charge against the general credit or taxing powers of the City. The bonds are payable solely, and equally and ratably with additional bonds if and when issued from the tax increment received by the City from its Downtown Bozeman Improvement District. If the incremental revenues are insufficient to pay the principal and interest due on the TIF bonds when due, such payment shortfall shall not constitute a default under the TIF agreement. If and when the incremental revenues are sufficient, the City shall pay the amount of any shortfall to the paying agent and registrar without any penalty interest or premium thereon. Due to the uncertainty of the future tax increment receipts, future payments on the TIF bonds may vary from the summary of debt service requirements Annual debt services requirements to maturity for the TIF bonds are as follows: Principal Interest TotalYear ending June 30,2009$ 150,000 $ 275,288 $ 425,288 2010 155,000 269,288 424,288 2011 160,000 263,088 423,088 2012 165,000 256,688 421,688 2013 175,000 250,088 425,088 2014-2018 980,000 1,140,040 2,120,040 2019-2023 1,200,000 917,003 2,117,003 2024-2028 1,510,000 606,754 2,116,754 Thereafter 1,505,000 192,750 1,697,750 6,000,000$ 4,170,987$ 10,170,987$ 183
61 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 9. LONG-TERM DEBT (CONTINUED) Governmental Activities Long Term Debt (Continued) Special Assessment Debt - Special assessment bonds are payable from the collection of special assessments levied against benefited property owners within the special improvement district. To the extent that such special assessment collections are not sufficient to make the required debt service payments, the City is obligated to levy and collect a general property tax on all taxable property in the City to provide additional funding for the debt service payments. The cash balance in the SID Revolving Fund must equal at least 5% of the principal amount of bonds outstanding. If the cash balance is less than 5%, a levy is required to bring the cash balance to the required minimum. The City has issued various special assessment bonds with various maturities through 2025 at interest rates ranging from 2.5% to 5.75%. In addition, the City has issued three notes payable to finance special assessment projects. The following is a schedule of changes in special assessment debt: Balance June 30, 2007Issuances RepaymentsBalance June 30, 2008Special assessment bonds 6,250,000$ -$ (1,095,000)$ 5,155,000$ Note Payable to Montana Board of Investments 21,200 - (21,200) - Note Payable to Department of Natural Resources and Conservation, #WRF-05067 87,500 - (3,500) 84,000 Note Payable to Department of Natural Resources and Conservation, #SRF-05132 378,000 - (16,000) 362,000 6,736,700$ -$ (1,135,700)$ 5,601,000$ Annual debt service requirements to maturity for special assessment notes payable are as follows: Notes PayableYear ending June 30, PrincipalInterestTotal2009 20,000$ 16,913$ 36,913$ 2010 21,000 16,162 37,162 2011 22,000 15,356 37,356 2012 22,500 14,522 37,022 2013 23,500 13,687 37,187 2014-2018 131,000 54,407 185,407 2019-2023 160,000 27,471 187,471 2024-2028 46,000 12,156 58,156 446,000$ 170,674$ 616,674$ 184
62 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 9. LONG-TERM DEBT (CONTINUED) Governmental Activities Long Term Debt (Continued) Annual debt service requirements to maturity for special assessment bonds are as follows: Year ending June 30, Bonds2009 235,000$ 2010 370,000 2011 370,000 2012 370,000 2013 370,000 2014-2018 1,830,000 2019-2023 1,540,000 2024-2028 70,000 5,155,000$ Substantially all special assessment bonds mature eighteen to twenty years after the date of issuance but are redeemable at the option of the City whenever cash is available in the respective funds for each issue. The City follows the policy of early redemption on these bonds. Accordingly, a schedule of future interest payments through maturity of the bonds is deemed to be not meaningful and has been excluded. The net revenues of the water fund have been pledged as collateral to secure the debt service related to SID 665. This collateral is subordinate to commitments made prior to July 12, 1993 to pledge this collateral as a guarantee of the payment of other debt. In the event that the resources available to service debt related to SID 665 are insufficient, the City shall transfer amounts from the water fund to satisfy this obligation. The District will be under no obligation to reimburse the water fund for any such transfer. At this time, the City does not anticipate the need to make any such transfers. Business-type Activities Long Term Debt Revenue Bonds - The City also issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service. Revenue bonds outstanding at June 30, 2008 are as follows: Balance June 30, 2007 Issuances RepaymentsBalance June 30, 2008Revenue bonds $ 226,460 $ - $ (82,730) $ 143,730 185
63 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 9. LONG-TERM DEBT (CONTINUED) Business-type Activities Long Term Debt (continued) Revenue bonds consist of the following as of June 30, 2008: Interest Rate AmountWater System Refunding Revenue Bonds, Series 1995,serial maturities through 2014 4.9% 60,728$ Water System Refunding Revenue Bonds, Series 1995,serial maturities through 2022 4.9% 83,002 Total revenue bonds 143,730$ Shown on the accompanying financial statements as:Revenue bonds due within one year 87,115$ Revenue bonds due after one year 56,615 143,730$ Revenue bond debt service requirements to maturity are as follows: Principal Interest TotalYear ending June 30,2009 $ 87,045 $ 5,983 $ 93,028 2010 27,622 2,440 30,062 2011 29,063 1,069 30,132 143,730$ 9,492$ 153,222$ The revenue bond ordinance specifies that the City shall establish various restricted asset accounts and distribute the net revenues for the water fund to the restricted asset accounts and set user rates at levels which will generate minimum net revenues, as defined. The revenue bond ordinances specify that City management and/or the City Commission shall take corrective actions to bring the City into compliance with the revenue bond ordinances, if necessary, and that bondholders shall have the right to institute proceedings, judicial or otherwise, to enforce the covenants of the revenue bond ordinances. The City is in compliance with applicable covenants as of June 30, 2008. 186
64 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 9. LONG-TERM DEBT (CONTINUED) Industrial Revenue and Private Activity Bonds The City issues tax exempt industrial revenue and private activity bonds to finance construction of facilities within the City which it sells on installment contracts to the facilities' users. The bonds and the interest payable thereon are not obligations of the City and do not constitute or give rise to a pecuniary liability or contingent liability of the City or a charge against the general credit or taxing power of the City. The bonds are issued under and collateralized by the indentures and are payable solely from the payments to be made pursuant to the loan agreements between the City and the facilities users. The bonds are not a lien on any of the City’s properties or revenues, other than the facilities for which they were issued. The City authorized the issuance of $1,100,000 of Limited Obligation First Mortgage Revenue bonds (Montana State University Foundation, Inc. Project); series 1995 dated March 15, 1995. The purpose of the bonds was to provide for the acquisition and construction of administrative, educational and related facilities, which is located contiguous to and is treated as part of the campus of Montana State University at 1501 South 11th Avenue, Bozeman, Montana. The bonds have interest rates ranging form 3.4% to 5.9%. The final bond and interest payment date is March 15, 2009. To provide financial assistance for the acquisition and improvements of the building occupied by a private elementary school, the City has issued a Private Activity Revenue Bond. This bond is secured by the property financed and is payable solely from payments received on the underlying mortgage loan. Upon repayment of the bond, ownership of the acquired facility transfer to the private-sector entity served by the bond issuance. Neither the City nor any political subdivision thereof is obligated in any manner for repayment of the bond. Accordingly, the bond is not reported as a liability in the accompanying financial statements. As of June 30, 2008, the Revenue Bond outstanding had an aggregate principal amount payable of $395,277. NOTE 10. CAPITAL LEASE OBLIGATIONS On May 8, 2004 the City entered into a lease for a Caterpillar grader. The lease term is five years payable in five consecutive annual installments with a balloon payment at maturity including interest at 4.0%. The total amount capitalized of $154,992 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund. The lease obligation was satisfied during the year ended June 30, 2008. On November 14, 2007, the City entered into a lease for a Volvo Grader. The lease term is four years payable in annual installments of $24,999 with a balloon payment of $100,811 at maturity including interest at 4.715%. The total amount capitalized of $198,078 represents the present value of the future lease payments. The payments of this obligation are being recorded in the street maintenance fund. On May 6, 2008, the City entered into a lease for a Caterpillar Grader. The lease term is four years payable in monthly installments of $1,984 at 5.25%. The total amount capitalized of $86,088 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund. 187
65 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 10. CAPITAL LEASE OBLIGATIONS (CONTINUED) The capital lease balance outstanding for governmental activities at June 30, 2008 is as follows: Balance June 30, 2007 Issuances RepaymentsBalance June 30, 2008Caterpillar Grader Capital Lease $ 83,256 $ - $ (83,256) $ - Caterpillar Grader Capital Lease - 86,088 (3,335) 82,753 Volvo Grader Capital Lease - 198,078 (24,999) 173,079 $ 83,256 $ 284,166 $ (111,590) $ 255,832 The following is a schedule, by year, of future minimum lease payments under capital lease, together with the present value of minimum lease payments at June 30, 2008: Governmental ActivitiesYear ending June 30,2009 $ 48,802 2010 48,802 2011 48,802 2012 145,650 2013 - Less amount representing interest (36,224) Present value of future minimum lease payments 255,832$ 188
66 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 11. CLASSIFICATION OF NET ASSETS In the Government-Wide Financial Statements, net assets are classified in the following categories: Invested in Capital Assets, Net of Related Debt – This category groups all capital assets, including infrastructure in future years, into one component of net assets. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce this category. Restricted Net Assets – This category represents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provision or enabling legislation. Additionally, this category presents restrictions placed on the categories of Capital Projects, Debt Service, and specific projects and programs established by the City Commission. Unrestricted Net Assets – This category represents the net assets of the City which are not restricted for any project or other purpose. In the Fund Financial Statements, reserves and designations segregate portions of fund balance that are either not available or have been earmarked for specific purposes. The various reserves and designations are established by actions of the City Commission and Management and can be increased, reduced or eliminated by similar actions. As of June 30, 2008, reservations of governmental fund balance are described below: General FundPrepaid items $ 3,000 Special Revenue FundsPrepaid items 503,625 Park development 171,924 Debt Service FundsDebt service payments 1,920,594 Permanent FundEndowment 532,216 Total reserved fund balance 3,131,359$ 189
67 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 12. DEFICIT FUND BALANCES At June 30, 2008, the funds listed below had fund balance deficits. The deficit balances do not represent any type of legal violation, and it is the City management's opinion that the deficits will be eliminated by additional grant funding, collection of long-term receivables, or transfers from other funds. Debt Service FundsGeneral Obligation Bonds Debt Service 83,128$ Special Revenue FundsCity Planning 76,334 Drug Forfeitures 53,664 Special Projects 2 Community Transportation 151,331 NOTE 13. DEFERRED COMPENSATION PLAN The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. In accordance with Governmental Accounting Standards Board Statements No. 32, the City has removed the balances related to the deferred compensation plan as of June 30, 1998, as these amounts represent neither assets nor liabilities to the City, and the plan is administered by an independent third party. NOTE 14. EMPLOYEE BENEFIT PLANS Plan Description and Provisions - All City of Bozeman full-time employees participate in one of three statewide cost-sharing multiple-employer retirement benefit plans administered by the Public Employees Retirement Division (PERD). Contributions to the three plans are as required by State statute. Fiscal years 2008 and 2007 total payroll and covered payroll for all retirement plans were $15,751,560 and $14,232,073 respectively. Financial information for all three plans is reported in the Public Employees' Retirement Board's published Comprehensive Annual Financial Report for the fiscal year end. It is available from the PERD at 100 North Park Avenue, Suite 220, P.O. Box 200131, Helena, MT 59620-0131. The authority to establish, amend and provide cost of living adjustments to all three plans is assigned to the State legislature. The authority to establish and amend contribution rates to all three plans is also assigned to the State legislature. 190
68 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Public Employees' Retirement System (PERS) All City employees, except firefighters and police officers, are provided pension benefits by this multi-employer plan. Funding is provided by participating units of government and their covered employees. The City's contributions to this plan for the years ended June 30, 2008, 2007, and 2006 were $737,573, $667,101 and $633,185 respectively. One hundred percent of required contributions were made for all three years. Plan members are required to contribute 6.9% of their compensation. The City is also required to contribute 6.935% of members' compensation. The State is required to contribute .1% of members’ compensation, which was $10,845. Covered payroll for the year ended June 30, 2008 was $10,845,187. Defined Benefit Retirement Plan (DBRP) - Participants become eligible for benefits after age 60 and 5 years of service, after age 65 regardless of service, or 30 years of service regardless of age. The benefit is 1/56 of the final compensation for each year of credited service, paid as a modified cash refund annuity. A participant is eligible for early retirement benefits after age 50 and 5 years of service or after 25 years of service regardless of age. Rights become vested after 5 years of service. Defined Contribution Retirement Plan (DCRP) – Participants may elect the defined contribution plan, in which the contributions into the plan are known, but the benefit is not. The retirement benefit received is based upon account balance, which is determined by contributions made plus investment earnings, or losses, less administrative costs. The total number of participating employees in both the defined benefit and defined contribution plans at the City at June 30, 2008 is 312. Firefighters' Unified Retirement System (FURS) Funding is provided by units of local government, their covered employees and the State of Montana. The City's contributions to this plan for the years ended June 30, 2008, 2007, and 2006 were $314,033, $275,516 and $256,686, respectively. One hundred percent of required contributions were made for all three years. Plan members are required to contribute 10.7% of monthly compensation, since all employees have elected to be covered under the guaranteed annual benefit adjustment (GABA). The City is required to contribute 14.36% of members' compensation. The State is required to contribute 32.61% of members' compensation, which was $713,135 for fiscal 2008. Covered payroll for the year ending June 30, 2008 was $2,186,861. Participants are eligible for benefits after 5 years of service and age 50. The benefit for participants hired prior to July 1, 1981 who have attained 50 years of age and 20 years of service is 50% of the monthly salary last received by the participant. Also, an additional 1% for each year of service in excess of 20 years, not to exceed a maximum of 60% of the recipient's latest monthly salary. A participant hired on or after July 1, 1981, or who retires prior to completion of 20 years of service, receives a benefit equal to 2.5% of average salary for each year of service, not to exceed 60%. Salary is averaged over the last 36 months for those hired on or after July 1, 1981. Rights become vested after 5 years of service. The total number of participating employees at the City of Bozeman at June 30, 2008 is 37. Municipal Police Officers' Retirement System (MPORS) Funding is provided by local units of government, their covered employees, and the State of Montana. The City's contributions to this plan for the years ended June 30, 2008, 2007, and 2006 were $390,871, $360,701, and $340,035, respectively. One hundred percent of required contributions were made for all three years. Plan members are required to contribute 9% of their compensation. The City is required to contribute 14.41% of members' compensation. The State is required to contribute 29.37% of members' compensation, which was $790,729. Covered payroll for the year ended June 30, 2008 was $2,719,512. 191
69 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 14. EMPLOYEE BENEFIT PLANS (CONTINUED) Participants are eligible for retirement benefits after 20 years of service and age 50. The minimum age requirement does not apply to participants first employed prior to July 1, 1975. The benefit is 1/2 of average monthly salary during the highest 36 consecutive months of earnings plus 1% of average monthly salary for each additional year of service in excess of 20 years, to a maximum of 60%. Benefits are paid as a modified cash refund annuity. Rights become vested after 5 years of service. The total number of participating employees at the City at June 30, 2008 is 47. NOTE 15. POST-EMPLOYMENT BENEFITS In addition to providing a deferred compensation plan, the City allows its retired employees to continue their medical, dental and vision care coverage through the City's group health plan until death, i.e. an implicit rate subsidy. The City's contract with Blue Cross/Blue Shield details the plan eligibility. MMIA is the administrator of the benefit plan. When an employee retires, they may continue coverage for themselves and their covered eligible dependents if they are eligible for public employees' retirement by virtue of their employment with the City of Bozeman. To continue coverage, they are required to pay the full cost of the benefits. The City also allows terminated employees to continue their health care coverage for 18 months past the date of termination as required by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). For the fiscal year ended June 30, 2008, the City has 39 retired employees with premiums cost of $252,508. The City's current labor contracts do not include any obligations for payments to retirees. The City is required to implement Governmental Accounting Standards Board Statement 45 - Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pension next fiscal year ending June 30, 2009. Although the statement does not require the City to fund its actuarially calculated contributions, it will require the City to recognize other post-employment benefits (OPEB) earned by employees during the time they are employed; associate the costs of OPEB with the accounting periods the benefits are earned rather than in the future, i.e. when paid or provided; calculate an actuarially determined liability for OPEB; provide a calculation of the portion of the liability that must be reported as an annual accounting expense; and make a cumulative accounting of the extent to which the City actually makes contributions to offset the liability. NOTE 16. JOINT VENTURE AGREEMENTS Joint ventures are legal entities or other organizations that result in a contractual arrangement, and that are owned, operated, or governed by two or more participants. Each participant retains both an ongoing financial interest and an ongoing financial responsibility. Joint ventures are legal entities or other organizations that result in a contractual arrangement, and that are owned, operated, or governed by two or more participants. Each participant retains both an ongoing financial interest and an ongoing financial responsibility. As of June 30, 2008, the City has entered into three joint venture contractual arrangements, as described below. 911 Communication Center The City and Gallatin County, Montana (the County) have entered into an inter-local agreement for the purposes of establishment of the operation and financing of a 911 communication services division (the Division) for dispatch and records services, to define the relationship of the Administrative Board with the City and County, and to establish the line of authority for personnel furnishing the communication services to the City and County and others who may contract for the services. Though the City has no equity interest in the Division, the City has indirect access to the joint venture’s resources, as the Division’s purpose is of direct interest to the City, and the City has the ability to influence the management of the Division. In addition, the City and County have agreed to pay 45% and 55% of the Division expenditures, respectively. The agreement expired December 19, 2005, and automatically renewed until terminated by either party. 192
70 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 16. JOINT VENTURE AGREEMENTS (CONTINUED) Financial information regarding the Division can be obtained by contacting Shelley Vance, Gallatin County, Clerk and Records Office, 311 West Main, Bozeman, MT 59715. City-County Drug Forfeitures The City and Gallatin County, Montana (the County) have entered into an inter-local agreement for the purposes of establishment of a joint drug forfeiture account funded from drug related forfeitures, seizures and prosecutions of City and County law enforcement cases and to establish an equitable means of distributing those funds to continue drug interdiction activities. The goal of the agreement is to make the City and County Drug Enforcement operations less reliant on the general and public safety fund monies of the City and County. The original term of the agreement was for a period of one year, beginning September 20, 2004 and automatically renews for a period of one year until terminated by either party with written notice of intent to terminate. Financial information regarding the joint drug forfeiture account can be obtained by contacting the City of Bozeman Department of Finance, 411 East Main Street, Bozeman, MT 59715. Justice Assistance Grant Program On June 26, 2007 the Gallatin County Sheriff’s Office and Bozeman Police Department were notified that the agencies could jointly apply for grant funds to a maximum amount of $23,465 for the purchase of law enforcement related equipment through the Justice Assistance Grant (JAG) Program. The agencies have jointly participated in this and similar grant projects for the past nine years. The Bozeman Police Department and Gallatin County Sheriff’s Office jointly provide the services of a Special Response Team (SRT) for public safety response. The Special Response Team utilizes specialized equipment to support public and community safety that enhance the services provided by the department patrol divisions. The Gallatin County Sheriff’s Office and Bozeman Police Department have jointly identified needed equipment in the amount of $21,631 and Indirect costs of $1,804 for a total grant request of $23,435. There is no requirement for additional matching funds to qualify for this JAG assistance grant. The Commission authorized the City to enter into this inter-local agreement with Gallatin County for fiscal year 2008. 193
71 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 17. RESTRICTED ASSETS At June 30, 2008, the balances of restricted asset accounts are as follows: Business-Type ActivitiesGovernmental Activities Water FundWaste Water Fund TotalRestricted by revenue bond covenantsFor debt service -$ 46,481$ -$ 46,481$ For bond reserve - 243,581 - 243,581 For operations - 249,875 - 249,875 Restricted by ordinanceCash in lieu of parking 31,195 - - 31,195 Cemetery perpetual care 532,216 - - 532,216 Impact fees 8,690,896 6,755,556 11,026,596 26,473,048 9,254,307$ 7,295,493$ 11,026,596$ 27,576,396$ NOTE 18. INTERFUND TRANSFERS AND ASSETS/LIABILITIES A summary of interfund transfers reported in the fund financial statements for the year ended June 30, 2008 follows: Transfers From General Fund Nonmajor Governmental Total General Fund -$ 2,955,947$ 2,955,947$ Impact Fees - - - SID Sinking - - - Capital Projects 589,263 - 589,263 Nonmajor Governmental 386,604 672,286 1,058,890 975,867$ 3,628,233$ 4,604,100$ Transfers ToGovernmental Funds 194
72 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 18. INTERFUND TRANSFERS AND ASSETS/LIABILITIES (CONTINUED) Transfers are used to (1) move revenues from the fund that statute or budgets requires to collect them to the fund that statute or budgets require to expend them, (2) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, and (3) to transfer non-restricted interest income from the permanent fund to the general fund. A summary of due from/to other funds at June 30, 2008, is as follows: Due From Due ToMajor Funds:General Fund 888,888$ -$ Nonmajor Funds:Special Revenue FundsDepartmental Special Revenues - 180,822 Planning - 64,111 Insurance - 150,531 Pension - 86,858 Drug Forfeiture - 80,791 Parking Districts - 148,952 Community Transportation - 87,759 Street Lighting - 89,064 888,888$ 888,888$ Interfund balances reported as due from or due to other funds are a result of transfers for reporting purposes to cover negative cash balances within a fund. These transfers are reversed as cash becomes available in a fund where cash previously had been in a deficit. 195
73 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 19. RISK MANAGEMENT The City faces a considerable number of risks of loss, including a) damage to and loss of property and contents, b) employee torts, c) professional liability (i.e. errors and omissions), d) environmental damage, e) workers' compensation (i.e. employee injuries), and f) medical insurance cost of employees. A variety of methods are used to provide insurance for these risks. Commercial policies, transferring all risks of loss except for small deductible amounts, are purchased for property and content damage and professional liabilities. The City participates in two state-wide public risk pools operated by the Montana Municipal Insurance Authority, for workers' compensation and for tort liability. Employee medical insurance is provided through a privately-administered, partially self-insured plan. Given the lack of coverage available, the City has no coverage for potential losses from environmental damages. Commercial Policies Coverage limits and the deductibles on the commercial policies have stayed relatively constant for the last several years. The premiums for the policies are allocated between the City's Enterprise Funds and the General Fund. Premiums are subsidized through a special purpose property tax levy, based on total appropriations. Settled claims resulting from these risks did not exceed commercial insurance coverage during the three years ended June 30, 2008, 2007, and 2006. Public Entity Risk Pools In 1986, the City joined together with other Montana cities to form the Montana Municipal Insurance Authority which established a workers' compensation plan, and a tort liability plan. Both public entity risk pools currently operate as common risk management and insurance programs for the member governments. The liability limits for damages in tort action are $750,000 per claim and $1.5 million per occurrence, and $2.5 million per occurrence for any claim that is not subject to the limitations on governmental liability, as described in Montana Code Annotated Section 2-9-108 (the Statute) or any successor stature, either as matter of law, by operation of the Stature, or by a judicial determination that the Statute is inapplicable or is otherwise invalid, with $11,250 deductible per occurrence. State tort law limits the City's liability to $1.5 million. The City pays premiums for its employee injury insurance coverage, which is allocated to the employer funds based on total salaries and wages. The agreements for formation of the pools provide that they will be self-sustaining through member premiums. The tort liability plan and workers' compensation program issued debt of $4.41 million and $6.155 million, respectively, to immediately finance the necessary insurance reserves. All members signed a contingent note for a pro rata share of this liability in case operating revenues were insufficient to cover the debt service. At June 30, 2008, the City's share is $99,430 for workers' compensation; based on the plan's current financial position, the City doesn't expect to make any payment on these notes. The City also owns a policy with MMIA for loss or damage to property. This is an all risk policy, essentially all property owned by the City being insured for 100% of replacement cost, subject to a $5,000 deductible per occurrence. MMIA reinsures their property insurance with a national municipal pool, Public Entities’ Property Insurance. 196
74 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 19. RISK MANAGEMENT (CONTINUED) Self- Insurance Starting in 1992, the City has provided medical insurance coverage for its employees via a partially self-insured plan administered by Blue Cross/Blue Shield. It provides medical, dental, and vision benefits and is operated as an Internal Service Fund. Rates are determined in consultation with Blue Cross/Blue Shield based on past claim experience for the coming year plus an administrative fee. The rates include a premium for a commercial "stop-loss" policy for when individual claim exceeds $75,000 in covered charges during a year. A reconciliation of claims payable follows: June 30, 2008 June 30, 2007Claims payable, beginning of year -$ 225,031$ Claims incurred during year 2,909,675 2,213,607 Claims paid during year (2,633,161) (2,438,638) Claims payable, end of year 276,514$ -$ On July 1, 2006 the City began purchasing employee health insurance from the Montana Municipal Insurance Authority’s Employee Health Benefits program; as of that date the City was no longer self-funded for health insurance claims. The fiscal year ending June 30, 2006 was the last year that the City was self-funded for employee health insurance claims. Over the course of the next months, the City paid claims that had been incurred but not reported as of June 30, 2006. On May 22, 2007, the City’s self-funded program administrator informed the City that they were closing out administration of Bozeman’s FY06 Self-Insured Health Benefits fund. The fund was closed because all incurred claims under the self-funded plan had been reported and paid. Going forward, as a purchaser of health insurance coverage, the City will have not “incurred but not reported” liabilities. NOTE 20. CONTINGENCIES Jewel v. City of Bozeman / State of Montana v. City of Bozeman This action was filed in the United States District Court for the District of Montana. The multi-count complaint reduced itself to a cost recovery action under the Federal Superfund (CERCLA) and State Superfund (CECRA). On July 8, 1999, the City, Jewel Food Stores, Inc. and the other parties reached a final settlement agreement in this action. The settlement, in part, required Jewel Food Stores, Inc. to pay the City of Bozeman $1,200,000, the City and Jewel to extend alternative water supply to businesses and residents in the North 19th Avenue area of the City; and Jewel and the City to share specified remediation costs on an equal basis (50% each) up to a cumulative amount of $4,000,000, and for eligible costs in excess of that amount, to be shared 70% by Jewel and 30% by the City. The City is reimbursed by insurers for 23% of the City’s expenditures for these purposes. As of the June 30, 2008, the only remaining work at the site is the final plume monitoring of the wells and remedial activity within the plume area. It is reasonably possible that the City will incur remediation costs as outlined in the settlement, however, the amount of costs for which the City is contingently liable cannot be reasonably estimated at this time. Accordingly, a $435,000 liability has been recorded in the accompanying financial statements. 197
75 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 20. CONTINGENCIES (CONTINUED) CMC Asbestos Bozeman CECRA Facility In 2001, the City purchased the former CMC property, the main portion of the CMC Asbestos Bozeman CECRA Facility (“Facility”), in order to build a new public library. The City submitted a Voluntary Cleanup Plan (“VCP”) pursuant to Montana statutes, to the Department of Environmental Quality (“DEQ”) in order to remediate contamination within the Facility. The DEQ approved the City’s VCP on December 20, 2002. The City implemented the VCP and its addendums and submitted a Voluntary Cleanup Completion Report for the CMC East Main Depot Site in August 2004. In 2003, at the commencement of the remedial activity, the City of Bozeman petitioned the DEQ for an allocation of liability at the facility. Montana statutes provide a voluntary process (CALA) that allows potentially liable parties to petition for an allocation of liability as an alternative to the strict, joint and several liability scheme included in state law. CALA involves negotiations designed to allocate liability among persons involved at the facility, including bankrupt or defunct persons, referred to as the “orphan shares.” CALA also provides the funding for the orphan share of the cost of remediation. An agreement was reached that allocates 80% liability to the orphan shares. Except under special, limited circumstances, claims may not be submitted and remedial action costs may not be reimbursed from the orphan share fund until all remedial actions are completed at a facility. The allocation agreement requires the City to complete remedial actions at the facility. The City retained the services of an environmental engineering firm, Tetra Tech, to prepare a Supplemental Investigation (SI) Work Plan. The plan was approved by the DEQ and implemented from December 2007 through June 2008. Tetra Tech’s Final SI Report was submitted to DEQ on June 20, 2008. This report describes the contaminated soils remaining at the Facility and provides recommendations for corrective actions. The recommendation for corrective action involves a DEQ-approved Addendum to the City’s original Voluntary Cleanup Plan. A draft addendum, based on the SI report, has been submitted to the DEQ. At the City’s request, the DEQ made a hardship determination for the City on August 8, 2007, pursuant to state statute. This hardship determination means that the City is eligible to have all of its ongoing actual documented remedial action costs reimbursed, subject to eligibility, as soon as the City expends the money. The City will be reimbursed for its actual documented remedial action costs incurred prior to August 8, 2007 upon the completion of the remedial action at the facility. The City’s Voluntary Cleanup Plan is scheduled to expire on June 30, 2009. If the necessary remedial activities are not completed by that date there may be implications for the reimbursement to the City through the orphan share fund for its cleanup costs. It is reasonably possible that the City will incur remediation costs as outlined in the settlement, however, the amount of costs for which the City is contingently liable cannot be reasonably estimated at this time. Delaney & Company v. City of Bozeman A suit was filed against the City by Delaney & Company and is in the 18th Judicial District, Gallatin County. The plaintiff, a Bozeman developer, offered to purchase real estate, known as the Mandeville farm, from a third party, but the City of Bozeman ultimately purchased the property. This matter was tried in March 2008. The jury rendered a verdict of $3,000,000 against the City of Bozeman. A post-trial motion to reduce the verdict to the statutory cap on damages ($750,000) was denied by the Court. This matter is now in appeal. Montana Municipal Insurance Authority (MMIA) has paid all fees and expenses. The City is involved with numerous other lawsuits which arise out of the normal course of operations by the City. Management of the City intends to vigorously defend each claim and believes no material losses will be incurred on such claims. 198
76 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 21. CONSTRUCTION COMMITMENT On November 8, 1995, the citizens of Bozeman approved a $5,000,000 bond issue to finance a series of transportation projects contained in the Bozeman Urban Transportation Plan Update. At the close of fiscal 2008, $6,836,131 had been spent on these construction projects from bond proceeds and accumulated fund investment earnings. NOTE 22. SOLID WASTE LANDFILL CLOSURE AND POST-CLOSURE CARE COSTS State and Federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after final closure. The $2,249,000 reported as landfill closure and post-closure care liability at June 30, 2008, represents the cumulative amount reported to date based on the use of 95% of the total capacity of the landfill. This amount represents a $200,511 decrease from the $2,449,511 liability reported last year. These amounts are based on what it would cost to perform all closure and post-closure care in 2008. The City has stopped accepting waste effective June 30, 2008. The final capping of the cells is still pending. In 2008, the City budgeted for, and funded, landfill closure and post-closure care liability through normal operations and is in compliance with EPA requirements. NOTE 23. SEGMENT INFORMATION FOR WATER ENTERPRISE FUND The City’s Water Fund accounts for the City’s water utility operations and collection and administration of water impact fees. Segment information for the utility operations, excluding impact fees, is as follows: Condensed Statement of Net AssetsCurrent assets 9,562,508$ Capital assets 96,868,200 Other assets 1,841,956 Total assets 108,272,664$ Current liabilities 583,360$ Noncurrent liabilities 56,615 Total liabilities 639,975 Invested in capital assets, net of related debt 96,683,036 Restricted for debt service 865,513 Unrestricted 10,084,140 Total net assets 107,632,689 Total liabilities and net assets 108,272,664$ 199
77 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 23. SEGMENT INFORMATION FOR ENTERPRISE FUND (CONTINUED) OPERATING REVENUES AND EXPENSESOperating revenues 6,163,883$ Operating expensesDepreciation 7,351,048 Other operating 3,706,954 Total operating expenses 11,058,002 Operating loss (4,894,119) NONOPERATING REVENUES (EXPENSES)Interest income 475,325 Interest expense (10,231) Grant income 16,321 Contributions of infrastructure 14,773,289 Other income 50,196 Total nonoperating revenues 15,304,900 Change in net assets 10,410,781 NET ASSETS, beginning of year 97,221,908 NET ASSETS, end of year 107,632,689$ Condensed Statement of Cash FlowsNet cash provided by operating activities 2,806,206$ Net cash flows from capital and related financing activities (92,961) Net cash flows from noncapital and financing activities 62,095 Net cash flows from investing activities (1,260,462) Net increase (decrease) in cash flows 1,514,878 Beginning cash and equivalents 9,357,198 Ending cash and equivalents 10,872,076$ 200
78 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2008 NOTE 24. IMPACT FEES On January 22, 1996, the City Commission adopted fire, water, waste water and street impact fees in Ordinance number 1414. The impact fees were first effective on March 23, 1996. Impact fees were set at a percentage of the cost of the impact, as follows: Original, as of March 23, 1996Change as of May 10, 1998Change as of January 15, 1999Change as of July 15, 1999Fire impact fee 90% 90% 90% 90%Water impact fee 35% 50% 90% 90%Waste water impact fee 35% 50% 90% 90%Street impact fee 10% 10% 75% 90% An applicant may obtain an Impact Fee Credit by dedication of non-site-related land or construction of non-site-related improvements. Credits must be made before the beginning of improvement construction, must comply with the City’s Capital Improvements Program, and must be approved by the City Commission. Credits may be used only for like-type impact fees. The full provisions for impact fee credits are contained in Chapter 3.24 of the Bozeman Municipal Code. For proprietary type funds, the City records a liability for the impact fee credit and capitalizes the underlying asset. For governmental type funds the credits are only disclosed in the footnotes. For government-wide financial reporting the outstanding credits are reported as unearned revenue. The Water Impact Fee Fund, Street Impact Fee Fund, and Wastewater Impact Fee Fund have recorded impact fee credits amounting to $39,987, $241,907, and $21, respectively, as of June 30, 2008. The Fire Impact Fee Fund does not have any outstanding credits. The following impact fee revenues were collected and expensed/expended during fiscal year 2008: Beginning balances Impact fees Other incomeExpenses, expenditures and transfers Ending balancesFire 2,246,390$ 259,726$ 110,946$ (334,299)$ 2,282,763$ Water 5,655,566 1,237,939 295,381 (82,034) 7,106,852 Waste water 10,979,822 1,306,984 540,044 (1,410,988) 11,415,862 Streets 5,561,961 1,948,551 306,168 (1,372,474) 6,444,206 Total 24,443,739$ 4,753,200$ 1,252,539$ (3,199,795)$ 27,249,683$ 201
C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS 202
79 CITY OF BOZEMAN, MONTANA SCHEDULE OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL GENERAL FUND Year Ended June 30, 2007 Variance withActual Final BudgetOriginal Final Amounts Positive (Negative)Budgetary fund balance, July 1 4,370,538$ 4,370,538$ 4,370,538$ -$ Resources (inflows):Taxes 8,134,326 8,134,326 7,878,280 (256,046) Special assessments - - 541 541 Licenses and permits 279,250 279,250 289,211 9,961 Intergovernmental 4,448,348 4,448,348 4,502,019 53,671 Charges for services 1,986,040 1,986,040 2,021,056 35,016 Fines and forfeitures 1,482,500 1,482,500 1,305,701 (176,799) Sale of assets - - 3,363 3,363 Interest on investments 70,000 70,000 82,153 12,153 Transfers from other funds 3,053,356 3,053,356 2,955,947 (97,409) Other 135,500 135,500 184,663 49,163 Amounts available for appropriation 23,959,858 23,959,858 23,593,472 (366,386) Charges to appropriations (outflows):CurrentGeneral government 4,684,720 4,684,720 4,369,604 315,116 Public safety 7,072,910 8,567,660 8,545,711 21,949 Public service 567,293 567,293 481,337 85,956 Public welfare 3,945,222 3,965,222 3,711,578 253,644 Other 1,965,907 571,907 570,578 1,329 Capital outlay 599,589 608,589 336,959 271,630 Debt service 82,111 82,111 82,024 87 Transfers to other funds 663,477 996,977 975,867 21,110 Total charges to appropriations 19,581,229 20,044,479 19,073,658 970,821 Budgetary fund balance, June 30 4,378,629$ 3,915,379$ 4,519,814$ 604,435$ Budgeted Amounts 204
80 CITY OF BOZEMAN, MONTANA SCHEDULE OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES – BUDGET TO ACTUAL STREET AND FIRE IMPACT FEE SPECIAL REVENUE FUND Year Ended June 30, 2007 Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 7,808,352$ 7,808,352$ 7,808,352$ -$ Resources (inflows):Charges for services 2,693,600 2,693,600 2,208,277 (485,323) Interest on investments 120,000 120,000 417,114 297,114 Transfers from other funds - - - - Amounts available for appropriation 10,621,952 10,621,952 10,433,743 (188,209) Charges to appropriations (outflows):CurrentPublic safety 1,813,000 1,813,000 44,301 1,768,699 Public service - - 151,365 (151,365) Capital outlay 1,460,000 1,460,000 1,511,108 (51,108) Total charges to appropriations 3,273,000 3,273,000 1,706,774 1,566,226 Budgetary fund balance, June 30 7,348,952$ 7,348,952$ 8,726,969$ 1,378,017$ Budgeted Amounts205
81 CITY OF BOZEMAN, MONTANA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS Year Ended June 30, 2008 General ImpactFund FeesSources/inflows of resourcesActual amounts (budgetary basis) "available for appropriation" from the budgetarycomparison schedule23,593,472$ 10,433,743$ Differences - budget to GAAP:The fund balance at the beginning of the year is a budgetary resource but isnot a current-year revenue for financial reporting purposes. (4,370,538) (7,808,352) Transfers from other funds are inflows of budgetary resources but are notrevenues for financial reporting purposes. (2,955,947) - The proceeds from the sale of assets are budgetary resources but are regardedas a special item, rather than revenue, for financial reporting purposes (3,363) - Total revenues as reported on the statement of revenues, expenditures, andchanges in fund balances - governmental funds 16,263,624$ 2,625,391$ Uses/outflows of resourcesActual amounts (budgetary basis) "total charges to appropriations" from thebudgetary comparison schedule19,073,658$ 1,706,774$ Differences - budget to GAAP:Transfers to other funds are outflows of budgetary resources but are notexpenditures for financial reporting purposes. (975,867) - Total expenditures as reported on the statement of revenues, expenditures, andchanges in fund balances - governmental funds 18,097,791$ 1,706,774$ 206
D. SUPPLEMENTAL INFORMATION 207
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES208
NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Departmental Special Revenues – Accounts for monies received and expended for projects relating to various City departments. City Planning Board – Accounts for monies received from various sources including property taxes, fees, and County revenues. Expenditures are for short-term and long-term planning of City and adjacent County zones. Section 76-1-102 MCA provides that the purpose of City planning is to encourage local governments to improve the present health, safety, convenience, and welfare of the citizens. Insurance – Accounts for property tax revenues received and transferred to the general fund for premiums and deductibles on group insurance coverage for City employees and City’s property and liability insurance other than for proprietary funds. (The accounting for self insurance activities is captured in the Internal Service Funds.) Pension – Accounts for property tax revenues received and transferred to other funds for the City’s share of entitlement benefits for the police officers, firefighters, and other City employees, under regulation of the State government. The City is the Agent/Employer for this program, which is administered by the State. Gas Tax Apportionment – Accounts for revenues from State gasoline taxes apportioned from the State of Montana Department of Highways. Drug Forfeitures – Accounts for monies received from fines and forfeitures of drug-related criminal prosecution, to be expended on drug law enforcement and education. City-County Drug Forfeitures – Accounts for monies received from fines and forfeitures of drug-related criminal prosecution, from an inter-local agreement with Gallatin County, to be expended on drug law enforcement and education. Beautification of Bozeman– Accounts for monies for special beautification projects throughout Bozeman. Street and Tree Maintenance – Accounts for special assessment revenues levied, received, and expended for street and tree maintenance provided to specific property owners. Consolidated Parking Districts– Accounts for receipts and revenues and related expenditures for the various parking districts, in accordance to Title 7, Chapter 14 MCA. Law and Justice Center – Accounts for the receipt and expenditure of monies earmarked by the City Commission for the City’s share of the Law and Justice Center renovation. Special Projects – Accounts for the receipt and expenditure of Valley Unit Special Improvement District funds which are in excess of the amounts required to retire the outstanding SID indebtedness. Community Transportation – Accounts for federal funding for highways, mass transit, and alternative transportation programs as defined by the Intermodal Surface Transportation Efficiency Act (ISTEA). Money is distributed on a per-capita basis. Building Inspection – This fund was established to account for all activity of enforcing the building regulations adopted by the City. It includes all the money and staff associated with executing any aspect of the code enforcement program. Section 50-60-101 MCA established the code enforcement program requirement. 209
Highway Safety Improvement Projects – Accounts for grants, other revenues, and expenditure related to the U. S. Department of Transportation funded program to reduce number and severity of traffic accidents. Economic Development Revolving Loan Fund – Accounts for revenues received and expended relative to loans made in accordance with the Community Development Block Grant Program, for economic development purposes. Housing Revolving Loan Fund – Accounts for revenues received and expended relative to loans made in accordance with the Community Development Block Grant Program, for housing development purposes. Community Housing – Accounts for money set aside by the City Commission and related expenditure for the establishment of safe, decent and affordable housing for low and moderate-income citizens. Downtown Improvement District – In November 1995, the City adopted an Urban Renewal Plan for the downtown area. This fund accounts for the revenue and expenditures associated with the district. Street Lighting – Accounts for special assessment revenues levied, received and expended for street and public highway lighting provided to specific property owners. Park Land – Accounts for monies donated for the purpose of acquiring and developing City Parks. Municipal Court Restitution – Accounts for checks that were canceled on the restitution checking account, per MCA 46-18-250. DEBT SERVICE FUNDS Special Improvement District (SID) Revolving – Accounts for property tax revenues received and expended for the payment of special improvement district bond principal and interest. General Obligation Bonds Debt Service Fund – Accounts for the debt service payments associated with the Library and Transportation general obligation bonds. Tax Increment Financing Bonds Debt Service Fund – Accounts for the debt service payments associated with the Tax Increment Urban Renewal Revenue Bonds issued as partial funding for the construction of a Downtown Intermodal Parking Facility. PERMANENT FUNDS Perpetual Cemetery Care- Accounts for 15% maintenance fee received from the sale of City cemetery plots which is to be used for perpetual care. The interest income from the trust is transferred to the general fund for use in maintaining the City’s cemetery. 210
82 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS June 30, 2008 Special Revenue FundsDepartmental CitySpecial Planning Gas TaxRevenues Board Insurance Pension ApportionmentASSETSCash and cash equivalents 2,165,418$ -$ 40,880$ 55,783$ 565,633$ ReceivablesProperty taxes 7,332 13,287 181,308 78,424 - Accrued interest - - - - - Customers, net 7,100 10,800 - - - Special assessments - - - - - Other governments 19,060 - - - - Due from other City funds - - - - - Prepaid expenditures - - - - - Notes receivable - - - - - Restricted cash and cash equivalents 25,000 - - - - Total assets 2,223,910 24,087 222,188 134,207 565,633 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 109,074 25,021 - - 121,422 Escheat property payable- - - - - Accrued employee benefits payable - 5,913 - - - Deferred revenue 30,632 5,376 71,656 30,995 - Due to other City funds 180,822 64,111 150,531 86,858 - Total liabilities 320,528 100,421 222,187 117,853 121,422 Fund balances:Reserved for:Park development - - - - - Prepaid items - - - - - Unreserved 1,903,382 (76,334) 1 16,354 444,211 Total fund balances 1,903,382 (76,334) 1 16,354 444,211 Total liabilities and fund balances 2,223,910$ 24,087$ 222,188$ 134,207$ 565,633$ (continued) 211
83 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2008 Special Revenue FundsCity-County Beauti- Street and Consolidated Law andDrug Drug fication Tree Parking JusticeForfeitures Forfeitures of Bozeman Maintenance Districts CenterASSETSCash and cash equivalents -$ 317,948$ 5,082$ 840,888$ 133,168$ -$ ReceivablesProperty taxes - - - - - - Accrued interest - - - - - - Customers, net 2,370 - - 132 - - Special assessments - - - 108,060 31,235 - Other governments 28,021 - - - - - Due from other City funds - - - - - - Prepaid expenditures - - - 2,616 - 503,625 Notes receivable - - - - 64,494 - Restricted cash and cash equivalents - - - - 31,195 - Total assets 30,391 317,948 5,082 951,696 260,092 503,625 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 974 - 59 94,971 19,633 - Escheat property payable- - - - - - Accrued employee benefits payable 2,290 - - 11,275 1,590 - Deferred revenue - - - 46,965 64,494 - Due to other City funds 80,791 - - - 148,952 - Total liabilities 84,055 - 59 153,211 234,669 - Fund balances:Reserved for:Park development- - - - - - Prepaid items - - - - - 503,625 Unreserved(53,664) 317,948 5,023 798,485 25,423 - Total fund balances(53,664) 317,948 5,023 798,485 25,423 503,625 Total liabilities and fund balances 30,391$ 317,948$ 5,082$ 951,696$ 260,092$ 503,625$ (continued)212
84 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2008 Special Revenue FundsEconomic HousingSpecial Community Building Highway Development Revolving Projects Transportation Inspection Safety Revolving Loan Loan FundASSETSCash and cash equivalents 246,106$ -$ 786,751$ 20,898$ -$ 86,034$ ReceivablesProperty taxes - - - - - - Accrued interest - - - - Customers, net 3,973 - 4,242 - - - Special assessments - - - - - - Other governments - - - - - - Due from other City funds - - - - - - Prepaid expenditures - - - - - - Notes receivable - - - - 1,329,747 43,958 Restricted cash and cash equivalents - - - - - - Total assets 250,079 - 790,993 20,898 1,329,747 129,992 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 250,081 63,572 11,682 - - - Escheat property payable- - - - - - Accrued employee benefits payable - - 11,078 - - - Deferred revenue - - - - 1,329,747 43,958 Due to other City funds - 87,759 - - - - Total liabilities 250,081 151,331 22,760 - 1,329,747 43,958 Fund balances:Reserved for:Park development- - - - - - Prepaid items - - - - - - Unreserved(2) (151,331) 768,233 20,898 - 86,034 Total fund balances(2) (151,331) 768,233 20,898 - 86,034 Total liabilities and fund balances 250,079$ -$ 790,993$ 20,898$ 1,329,747$ 129,992$ (continued)213
85 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2008 Special Revenue FundsDowntownCommunity Improvement Street Park Municipal CourtHousing District Lighting Land RestitutionASSETSCash and cash equivalents 238,580$ 561,140$ 167,938$ 171,924$ 6,294$ ReceivablesProperty taxes - - - - - Accrued interest - - - Customers, net- - - - - Special assessments - 1,744 39,550 - - Other governments - - - - - Due from other City funds - - - - - Prepaid expenditures - - - - - Notes receivable 92,500 - - - - Restricted cash and cash equivalents - - - - - Total assets 331,080 562,884 207,488 171,924 6,294 LIABILITIES AND FUND EQUITYLiabilities:Accounts payable - 9,543 15,928 - 1,000 Escheat property payable - - - - 5,265 Accrued employee benefits payable 486 - - - - Deferred revenue 92,500 1,744 - - - Due to other City funds - - 89,064 - - Total liabilities92,986 11,287 104,992 - 6,265 Fund balances:Reserved for:Park development- - - 171,924 - Prepaid items - - - - - Unreserved 238,094 551,597 102,496 - 29 Total fund balances 238,094 551,597 102,496 171,924 29 Total liabilities and fund balances 331,080$ 562,884$ 207,488$ 171,924$ 6,294$ (continued)214
86 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2008 TotalASSETSCash and cash equivalents 6,410,465$ ReceivablesProperty taxes 280,351 Accrued interest - Customers, net 28,617 Special assessments 180,589 Other governments 47,081 Due from other City funds - Prepaid expenditures 506,241 Notes receivable 1,530,699 Restricted cash and cash equivalents 56,195 Total assets 9,040,238 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 722,960 Escheat property payable 5,265 Accrued employee benefits payable 32,632 Deferred revenue 1,718,067 Due to other City funds 888,888 Total liabilities 3,367,812 Fund balances:Reserved for:Park development 171,924 Prepaid items 503,625 Unreserved 4,996,877 Total fund balances 5,672,426 Total liabilities and fund balances 9,040,238$ (continued)215
87 CITY OF BOZEMAN, MONTANA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2008 PermanentDebt Service Fund Fund TotalNonmajorSID G.O. TIF Cemetery GovernmentalRevolving Bonds Bonds Total Care FundsASSETSCash and cash equivalents 629,510$ 481,993$ 416,223$ 1,527,726$ 566,268$ 8,504,459$ ReceivablesProperty taxes - 75,394 - 75,394 - 355,745 Accrued interest- - - - Customers, net- - - 2,931 31,548 Special assessments - - - - - 180,589 Other governments - - - - - 47,081 Due from other City funds - - - - - - Prepaid expenditures - - - - - 506,241 Notes receivable - - - - - 1,530,699 Restricted cash and cash equivalents - - - - - 56,195 Total assets 629,510 557,387 416,223 1,603,120 569,199 11,212,557 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable - 610,600 416,223 1,026,823 - 1,749,783 Escheat property payable - - 5,265 Accrued employee benefits payable - - - - - 32,632 Deferred revenue - 29,915 - 29,915 36,983 1,784,965 Due to other City funds - - - - - 888,888 Total liabilities - 640,515 416,223 1,056,738 36,983 4,461,533 Fund balances:Reserved for:Cemetery perpetual care - - - - 532,216 532,216 Park development- - - - - 171,924 Debt service 629,510 - - 629,510 - 629,510 Prepaid items - - - - 503,625 Unreserved - (83,128) - (83,128) - 4,913,749 Total fund balances 629,510 (83,128) - 546,382 532,216 6,751,024 Total liabilities and fund balances 629,510$ 557,387$ 416,223$ 1,603,120$ 569,199$ 11,212,557$ - 216
88 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCE- NONMAJOR GOVERNMENTAL FUNDS Year Ended June 30, 2008 Departmental CitySpecial Planning Gas TaxRevenues Board Insurance Pension ApportionmentREVENUESTaxes 125,954$ 136,177$ 1,811,190$ 782,367$ -$ Special assessments - - - - - Licenses and permits - - - - - Intergovernmental 168,660 85,450 77,316 286,818 605,810 Charges for services 3,748 245,327 - - - Fines and forfeitures 79,149 - - - - Interest on investments 74,113 3,051 - - 14,097 Loan repayment - - - - - Other 234,170 30,456 - - - Total revenues 685,794 500,461 1,888,506 1,069,185 619,907 EXPENDITURESCurrentGeneral government - 1,007,651 - - - Public safety 255,089 - - - - Public service - - - - 136,546 Public welfare 346,011 - - - - Other 68,787 - - - - Capital outlay 287,228 71,638 - - 296,269 Debt servicePrincipal - - - - - Interest and fiscal fees - - - - - Total expenditures 957,115 1,079,289 - - 432,815 Revenues over (under) expenditures (271,321) (578,828) 1,888,506 1,069,185 187,092 OTHER FINANCING SOURCES (USES)Transfers in 250,000 245,000 - - - Transfers out - - (1,908,169) (1,022,734) - Long-term debt issued - - - - - Sale of capital assets - - - - - Total other financing sources and uses 250,000 245,000 (1,908,169) (1,022,734) - Net change in fund balance (21,321) (333,828) (19,663) 46,451 187,092 FUND BALANCES, beginning of year 1,924,703 257,494 19,664 (30,097) 257,119 FUND BALANCES, end of year 1,903,382$ (76,334)$ 1$ 16,354$ 444,211$ (continued)Special Revenue Funds 217
89 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCE- NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsCity-County Beauti- Street and Consolidated Law andDrug Drug fication Tree Parking JusticeForfeitures Forfeitures of Bozeman Maintenance Districts CenterREVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - 7,715 - - Licenses and permits - - - 20,419 66,262 - Intergovernmental 119,846 - - 2,002 2,178 - Charges for services - - - 2,238,359 16,672 - Fines and forfeitures 39,935 54,671 - - 165,311 - Interest on investments - 12,304 177 30,748 4,999 - Loan repayment - - - - 10,506 - Other 6,657 1,500 4,330 10,328 - - Total revenues 166,438 68,475 4,507 2,309,571 265,928 - EXPENDITURESCurrentGeneral government - - - - - - Public safety 229,443 20,337 - - 263,170 19,125 Public service - - - 1,539,022 - - Public welfare - - - 329,403 - - Other - - 3,682 - - - Capital outlay - - - 577,933 67,059 - Debt servicePrincipal - - - 28,334 - - Interest and fiscal fees - - - - - - Total expenditures 229,443 20,337 3,682 2,474,692 330,229 19,125 Revenues over (under) expenditures (63,005) 48,138 825 (165,121) (64,301) (19,125) OTHER FINANCING SOURCES (USES)Transfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - 284,166 - - Sale of capital assets - - - 40,469 - - Total other financing sources and uses - - - 324,635 - - Net change in fund balances (63,005) 48,138 825 159,514 (64,301) (19,125) FUND BALANCES, beginning of year 9,341 269,810 4,198 638,971 89,724 522,750 FUND BALANCES, end of year (53,664)$ 317,948$ 5,023$ 798,485$ 25,423$ 503,625$ (continued) 218
90 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCE- NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsEconomic HousingSpecial Community Building Highway Development Revolving Projects Transportation Inspection Safety Revolving Loan Loan FundREVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - - - Licenses and permits - - 975,995 - - - Intergovernmental - 1,518,233 61,102 - 42,750 - Charges for services - - 3,878 - - - Fines and forfeitures - - - - - - Interest on investments 2,720 - 41,486 866 52 3,640 Loan repayment - - - - - 4,760 Other 4,125 90,000 13,238 - - - Total revenues 6,845 1,608,233 1,095,699 866 42,802 8,400 EXPENDITURESCurrentGeneral government - - - - - - Public safety - - 1,298,286 - - - Public service - 261,930 - - - - Public welfare - - - - 42,750 14,400 Other 30,873 - - - - - Capital outlay - 1,463,439 67,397 - - - Debt servicePrincipal - - - - - - Interest and fiscal fees - - - - - - Total expenditures 30,873 1,725,369 1,365,683 - 42,750 14,400 Revenues over (under) expenditures (24,028) (117,136) (269,984) 866 52 (6,000) OTHER FINANCING SOURCES (USES)Transfers in 9,405 - - - - - Transfers out (255,763) - - - (1,103) - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources and uses (246,358) - - - (1,103) - Net change in fund balance (270,386) (117,136) (269,984) 866 (1,051) (6,000) FUND BALANCES, beginning of year 270,384 (34,195) 1,038,217 20,032 1,051 92,034 FUND BALANCES, end of year (2)$ (151,331)$ 768,233$ 20,898$ -$ 86,034$ (continued) 219
91 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCE- NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsDowntown MunicipalCommunity Improvement Street Park CourtHousing District Lighting Land RestitutionREVENUESTaxes -$ 520,213$ -$ -$ -$ Special assessments - 105,171 501,540 - - Licenses and permits - - - - - Intergovernmental 17 34,620 - - - Charges for services - - - - - Fines and forfeitures - - - - - Interest on investments 8,166 31,006 3,886 18,602 11 Loan repayment 4,583 - - - - Other - - - 299,582 - Total revenues 12,766 691,010 505,426 318,184 11 EXPENDITURESCurrentGeneral government - - - - - Public safety - - - - - Public service - - 316,666 - - Public welfare 57,863 232,433 - - - Other - - - - - Capital outlay - - - 500,146 - Debt servicePrincipal - - - - - Interest and fiscal fees - - - - - Total expenditures 57,863 232,433 316,666 500,146 - Revenues over (under) expenditures (45,097) 458,577 188,760 (181,962) 11 OTHER FINANCING SOURCES (USES)Transfers in 137,962 - - - - Transfers out - (416,523) - - - Long-term debt issued - - - - - Sale of capital assets - - - - - Total other financing sources and uses 137,962 (416,523) - - - Net change in fund balance 92,865 42,054 188,760 (181,962) 11 FUND BALANCES, beginning of year 145,229 509,543 (86,264) 353,886 18 FUND BALANCES, end of year 238,094$ 551,597$ 102,496$ 171,924$ 29$ (continued) 220
92 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCE- NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 TotalsREVENUESTaxes 3,375,901$ Special assessments 614,426 Licenses and permits 1,062,676 Intergovernmental 3,004,802 Charges for services 2,507,984 Fines and forfeitures 339,066 Interest on investments 249,924 Loan repayment 19,849 Other 694,386 Total revenues 11,869,014 EXPENDITURESCurrentGeneral government 1,007,651 Public safety 2,085,450 Public service 2,254,164 Public welfare 1,022,860 Other 103,342 Capital outlay 3,331,109 Debt servicePrincipal 28,334 Interest and fiscal fees - Total expenditures 9,832,910 Revenues over (under) expenditures 2,036,104 OTHER FINANCING SOURCES (USES)Transfers in 642,367 Transfers out (3,604,292) Long-term debt issued 284,166 Sale of capital assets 40,469 Total other financing sources and uses (2,637,290) Net change in fund balance (601,186) FUND BALANCES, beginning of year 6,273,612 FUND BALANCES, end of year 5,672,426$ (continued) 221
93 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCE- NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Debt Service FundsPermanent FundTotalNonmajorSID G.O. TIF Cemetery Governmental Revolving Bonds Bonds Totals Care FundsREVENUESTaxes -$ 750,765$ -$ 750,765$ -$ 4,126,666$ Special assessments - - - - - 614,426 Licenses and permits - - - - 1,062,676 Intergovernmental - 1,294 - 1,294 - 3,006,096 Charges for services 2,574 - - 2,574 4,994 2,515,552 Fines and forfeitures - - - - 339,066 Interest on investments 54,602 11,475 - 66,077 23,941 339,942 Loan repayment - - - - 19,849 Other - - - - - 694,386 Total revenues 57,176 763,534 - 820,710 28,935 12,718,659 EXPENDITURESCurrent- General government - - - - 1,007,651 Public safety - - - - 2,085,450 Public service - - - - 2,254,164 Public welfare - - - - 1,022,860 Other - 9,184 9,184 - 112,526 Capital outlay - - - - 3,331,109 Debt servicePrincipal - 500,000 270,000 770,000 - 798,334 Interest and fiscal fees - 221,920 146,523 368,443 - 368,443 Total expenditures - 731,104 416,523 1,147,627 - 10,980,537 Revenues over (under) expenditures 57,176 32,430 (416,523) (326,917) 28,935 1,738,122 OTHER FINANCING SOURCES (USES)Transfers in - - 416,523 416,523 - 1,058,890 Transfers out - - - - (23,941) (3,628,233) Long-term debt issued - - - - 284,166 Sale of capital assets - - - - - 40,469 Total other financing sources and uses - - 416,523 416,523 (23,941) (2,244,708) Net change in fund balance 57,176 32,430 - 89,606 4,994 (506,586) FUND BALANCES, beginning of year 572,334 (115,558) - 456,776 527,222 7,257,610 FUND BALANCES, end of year 629,510$ (83,128)$ -$ 546,382$ 532,216$ 6,751,024$ 222
BUDGET TO ACTUAL SCHEDULES – OTHER MAJOR FUNDS223
94 CITY OF BOZEMAN, MONTANA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL OTHER MAJOR FUNDS – SID SINKING FUND Year Ended June 30, 2008 Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 1,454,520$ 1,454,520$ 1,454,520$ -$ Resources (inflows):Taxes - - - - Special assessments 1,500,000 1,500,000 1,178,846 (321,154) Licenses and permits - - - - Intergovernmental - - - - Charges for services - - 4,006 4,006 Fines and forfeitures - - - - Interest on investments - - 157,423 157,423 Transfers from other funds - - - - Proceeds from long term debt - - - - Premium on bonds issued - - - - Proceeds from the sale of fixed assets - - - Other - - 589 589 Amounts available for appropriation 2,954,520 2,954,520 2,795,384 (159,136) Charges to appropriations (outflows):CurrentGeneral government - - - - Public safety - - - - Public service - - - - Public welfare - - - - Other - - 90,207 (90,207) Capital outlay - - - - Debt service 3,400,000 1,900,000 1,414,093 485,907 Transfers to other funds - - - - Total charges to appropriations 3,400,000 1,900,000 1,504,300 395,700 Budgetary fund balance, June 30 (445,480)$ 1,054,520$ 1,291,084$ 236,564$ Budgeted Amounts 225
95 CITY OF BOZEMAN, MONTANA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL OTHER MAJOR FUNDS – CAPITAL PROJECTS FUND Year Ended June 30, 2008 Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 (318,322)$ (318,322)$ (318,322)$ -$ Resources (inflows):Taxes - - - - Special assessments - - - - Licenses and permits - - - - Intergovernmental 4,235,680 4,235,680 2,134,803 (2,100,877) Charges for services - - - - Fines and forfeitures - - - - Interest on investments 130,000 130,000 364,282 234,282 Transfers from other funds - - 589,263 589,263 Proceeds from long term debt 7,995,820 7,995,820 6,270,000 (1,725,820) Premium on bonds issued - - 10,896 10,896 Proceeds from the sale of fixed assets - - 205,856 205,856 Other 545,000 545,000 979,675 434,675 Amounts available for appropriation 12,588,178 12,588,178 10,236,453 (2,351,725) Charges to appropriations (outflows):CurrentGeneral government - 51,500 - 51,500 Public safety - 22,000 103,455 (81,455) Public service 71,500 148,000 133,989 14,011 Public welfare - - 85,320 (85,320) Other - - 3,272 (3,272) Capital outlay 10,500,000 12,850,000 7,025,864 5,824,136 Bond issuance costs - - - - Transfers to other funds - - - - Total charges to appropriations 10,571,500 13,071,500 7,351,900 5,719,600 Budgetary fund balance, June 30 2,016,678$ (483,322)$ 2,884,553$ 3,367,875$ Budgeted Amounts226
96 CITY OF BOZEMAN, MONTANA NOTE TO BUDGET TO ACTUAL SCHEDULE - OTHER MAJOR FUNDS June 30, 2008 SID CapitalSinking ProjectsSources/inflows of resourcesActual amounts (budgetary basis) "available for appropriation" from the budgetarycomparison schedule 2,795,384$ 10,236,453$ Differences - budget to GAAP:The fund balance at the beginning of the year is a budgetary resource but isnot a current-year revenue for financial reporting purposes. (1,454,520) 318,322 Proceeds of long term debt are inflows for budgetary purposes, but are notrevenues for financial reporting purposes. - (6,280,896) Proceeds from the sale of fixed assets are a budgetary resource but are not a current-year revenue for financial reporting purposes. - (205,856) Transfers from other funds are inflows of budgetary purposes, but are notrevenues for financial reporting purposes. - (589,263) Total revenues as reported on the statement of revenues, expenditures, andchanges in fund balances - Other nonmajor governmental funds 1,340,864$ 3,478,760$ Uses/outflows of resourcesActual amounts (budgetary basis) "total charges to appropriations" from thebudgetary comparison schedule 1,504,300$ 7,351,900$ Differences - budget to GAAP:Bond issuance costs are outflows for budgetary purposes, but are notexpenditures for financial reporting purposes. - - Transfers to other funds are outflows of budgetary purposes, but are notexpenditures for financial reporting purposes. - - Total expenditures as reported on the statement of revenues, expenditures, andchanges in fund balances - Other nonmajor governmental funds 1,504,300$ 7,351,900$ 227
BUDGET TO ACTUAL SCHEDULES – NONMAJOR FUNDS229
97 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes 73,981$ 125,954$ 51,973$ 137,962$ 136,177$ (1,785)$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental 30,112 168,660 138,548 80,800 85,450 4,650 Charges for services 5,000 3,748 (1,252) 447,350 245,327 (202,023) Fines and forfeitures 55,000 79,149 24,149 - - - Interest on investments 46,200 74,113 27,913 4,950 3,051 (1,899) Loan repayment - - - - - - Other 219,500 234,170 14,670 5,000 30,456 25,456 Total revenues 429,793 685,794 256,001 676,062 500,461 (175,601) EXPENDITURES - BUDGETUNIT 1,995,963 957,115 1,038,848 1,125,367 1,079,289 46,078 Revenues over (under) expenditures (1,566,170) (271,321) 1,294,849 (449,305) (578,828) (129,523) OTHER FINANCING SOURCESTransfers in 250,000 250,000 - 245,000 245,000 - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources 250,000 250,000 - 245,000 245,000 - Revenues and other sources over(under) expenditures (1,316,170)$ (21,321) 1,294,849$ (204,305)$ (333,828) (129,523)$ FUND BALANCES, beginning of year1,924,703 257,494 FUND BALANCES, end of year1,903,382$ (76,334)$ (continued)Departmental Special Revenues City Planning Board 231
98 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes 1,864,729$ 1,811,190$ (53,539)$ 806,871$ 782,367$ (24,504)$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental 75,504 77,316 - 290,252 286,818 (3,434) Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - - - - - - Loan repayment - - - - - - Other - - - - - - Total revenues 1,940,233 1,888,506 (53,539) 1,097,123 1,069,185 (27,938) EXPENDITURES - BUDGETUNIT - - - - - - Revenues over (under) expenditures 1,940,233 1,888,506 (51,727) 1,097,123 1,069,185 (27,938) OTHER FINANCING SOURCESTransfers in - - - - - - Transfers out (1,940,233) (1,908,169) 32,064 (1,097,123) (1,022,734) 74,389 Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (1,940,233) (1,908,169) 32,064 (1,097,123) (1,022,734) 74,389 Revenues and other sources over(under) expenditures -$ (19,663) (19,663)$ -$ 46,451 46,451$ FUND BALANCES, beginning of year19,664 (30,097) FUND BALANCES, end of year1$ 16,354$ (continued) Insurance Pension 232
99 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariancePositiveBudget Actual (Negative)REVENUESTaxes -$ -$ -$ Special assessments - - - Licenses and permits - - - Intergovernmental 583,750 605,810 22,060 Charges for services - - - Fines and forfeitures - - - Interest on investments 5,000 14,097 9,097 Loan repayment - - - Other - - - Total revenues 588,750 619,907 31,157 EXPENDITURES - BUDGETUNIT 610,500 432,815 177,685 Revenues over (under) expenditures (21,750) 187,092 208,842 OTHER FINANCING SOURCESTransfers in - - - Transfers out - - - Long-term debt issued - - - Sale of capital assets - - - Total other financing sources - - - Revenues and other sources over(under) expenditures (21,750)$ 187,092 208,842$ FUND BALANCES, beginning of year257,119 FUND BALANCES, end of year444,211$ Gas Tax Apportionment 233
100 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental 98,000 119,846 21,846 - - - Charges for services - - - - - - Fines and forfeitures 56,000 39,935 (16,065) 75,000 54,671 (20,329) Interest on investments - - - 5,000 12,304 7,304 Loan repayment - - - - - - Other 10,000 6,657 (3,343) - 1,500 1,500 Total revenues 164,000 166,438 2,438 80,000 68,475 (11,525) EXPENDITURES - BUDGETUNIT 229,471 229,443 28 230,000 20,337 209,663 Revenues over (under) expenditures (65,471) (63,005) 2,466 (150,000) 48,138 198,138 OTHER FINANCING SOURCESTransfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources - - - - - - Revenues and other sources over(under) expenditures (65,471)$ (63,005) 2,466$ (150,000)$ 48,138 198,138$ FUND BALANCES, beginning of year9,341 269,810 FUND BALANCES, end of year(53,664)$ 317,948$ (continued)Drug Forfeitures City-County Drug Forfeitures 234
101 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - 7,715 7,715 Licenses and permits - - - 20,000 20,419 419 Intergovernmental - - - - 2,002 2,002 Charges for services - - - 2,184,349 2,238,359 54,010 Fines and forfeitures - - - - - - Interest on investments - 177 177 15,000 30,748 15,748 Loan repayment - - - - - - Other - 4,330 4,330 10,000 10,328 328 Total revenues - 4,507 4,507 2,229,349 2,309,571 80,222 EXPENDITURES - BUDGETUNIT - 3,682 (3,682) 2,550,937 2,474,692 76,245 Revenues over (under) expenditures - 825 825 (321,588) (165,121) 156,467 OTHER FINANCING SOURCESTransfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - - 284,166 284,166 Sale of capital assets - - - - 40,469 40,469 Total other financing sources - - - - 324,635 324,635 Revenues and other sources over(under) expenditures -$ 825 825$ (321,588)$ 159,514 481,102$ FUND BALANCES, beginning of year4,198 638,971 FUND BALANCES, end of year5,023$ 798,485$ (continued)Beautification of Bozeman Street and Tree Maintenance 235
102 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments - - - - - - Licenses and permits 54,250 66,262 12,012 - - - Intergovernmental - 2,178 2,178 - - - Charges for services - 16,672 16,672 - - - Fines and forfeitures 201,500 165,311 (36,189) - - - Interest on investments 6,850 4,999 (1,851) - - - Loan repayment - 10,506 10,506 - - - Other - - - - - - Total revenues 262,600 265,928 3,328 - - - EXPENDITURES - BUDGETUNIT 351,341 330,229 21,112 20,000 19,125 875 Revenues over (under) expenditures (88,741) (64,301) 24,440 (20,000) (19,125) 875 OTHER FINANCING SOURCESTransfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources - - - - - - Revenues and other sources over(under) expenditures (88,741)$ (64,301) 24,440$ (20,000)$ (19,125) 875$ FUND BALANCES, beginning of year89,724 522,750 FUND BALANCES, end of year25,423$ 503,625$ Consolidated Parking Districts Law and Justice Center 236
103 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental - - - - 1,518,233 1,518,233 Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - 2,720 2,720 - - - Loan repayment - - - - - - Other - 4,125 4,125 - 90,000 90,000 Total revenues - 6,845 6,845 - 1,608,233 1,608,233 EXPENDITURES - BUDGETUNIT 1,744,000 30,873 1,713,127 30,515 1,725,369 (1,694,854) Revenues over (under) expenditures (1,744,000) (24,028) 1,719,972 (30,515) (117,136) (86,621) OTHER FINANCING SOURCESTransfers in - 9,405 9,405 30,515 - (30,515) Transfers out (256,000) (255,763) 237 - - - Long-term debt issued - - - - - - Sale of capital assets 1,680,000 - (1,680,000) - - - Total other financing sources 1,424,000 (246,358) (1,670,358) 30,515 - (30,515) Revenues and other sources over(under) expenditures (320,000)$ (270,386) 49,614$ -$ (117,136) (117,136)$ FUND BALANCES, beginning of year270,384 (34,195) FUND BALANCES, end of year(2)$ (151,331)$ Special Projects Community Transportation 237
104 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments - - - - - - Licenses and permits 1,010,860 975,995 (34,865) - - - Intergovernmental - 61,102 61,102 - - - Charges for services 14,000 3,878 (10,122) - - - Fines and forfeitures - - - - - - Interest on investments 25,000 41,486 16,486 - 866 866 Loan repayment - - - - - - Other - 13,238 13,238 - - - Total revenues 1,049,860 1,095,699 45,839 - 866 866 EXPENDITURES - BUDGETUNIT 1,457,289 1,365,683 91,606 19,000 - 19,000 Revenues over (under) expenditures (407,429) (269,984) 137,445 (19,000) 866 19,866 OTHER FINANCING SOURCESTransfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources - - - - - - Revenues and other sources over(under) expenditures (407,429)$ (269,984) 137,445$ (19,000)$ 866 19,866$ FUND BALANCES, beginning of year1,038,217 20,032 FUND BALANCES, end of year768,233$ 20,898$ Building Inspection Highway Safety 238
105 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental - 42,750 42,750 - - - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments 1,000 52 (948) 2,500 3,640 1,140 Loan repayment 215,000 - (215,000) 8,000 4,760 (3,240) Other - - - - - - Total revenues 216,000 42,802 (173,198) 10,500 8,400 (2,100) EXPENDITURES - BUDGETUNIT 111,000 42,750 68,250 14,400 14,400 - Revenues over (under) expenditures 105,000 52 (104,948) (3,900) (6,000) (2,100) OTHER FINANCING SOURCESTransfers in - - - - - - Transfers out - (1,103) (1,103) - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources - (1,103) (1,103) - - - Revenues and other sources over(under) expenditures 105,000$ (1,051) (106,051)$ (3,900)$ (6,000) (2,100)$ FUND BALANCES, beginning of year1,051 92,034 FUND BALANCES, end of year-$ 86,034$ Economic Development Revolving Loan Fumd Housing Revolving Loan Fund 239
106 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - 520,000$ 520,213 213 Special assessments - - - 104,000 105,171 1,171 Licenses and permits - - - - - - Intergovernmental - 17 17 34,620 34,620 - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments 1,000 8,166 7,166 2,000 31,006 29,006 Loan repayment 5,000 4,583 (417) - - - Other - - - - - - Total revenues 6,000 12,766 6,766 660,620 691,010 30,390 EXPENDITURES - BUDGETUNIT 143,962 57,863 86,099 624,000 232,433 391,567 Revenues over (under) expenditures (137,962) (45,097) 92,865 36,620 458,577 421,957 OTHER FINANCING SOURCESTransfers in 137,962 137,962 - - - - Transfers out - - - - (416,523) (416,523) Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources 137,962 137,962 - - (416,523) (416,523) Revenues and other sources over(under) expenditures -$ 92,865 92,865$ 36,620$ 42,054 5,434$ FUND BALANCES, beginning of year145,229 509,543 FUND BALANCES, end of year238,094$ 551,597$ Community Housing Downtown Improvement District 240
107 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments 170,000 501,540 331,540 - - - Licenses and permits - - - - - - Intergovernmental - - - - - - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - 3,886 3,886 - 18,602 18,602 Loan repayment - - - - - - Other - - - - 299,582 299,582 Total revenues 170,000 505,426 335,426 - 318,184 318,184 EXPENDITURES - BUDGETUNIT 317,000 316,666 334 500,150 500,146 4 Revenues over (under) expenditures (147,000) 188,760 335,760 (500,150) (181,962) 318,188 OTHER FINANCING SOURCESTransfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources - - - - - - Revenues and other sources over(under) expenditures (147,000)$ 188,760 335,760$ (500,150)$ (181,962) 318,188$ FUND BALANCES, beginning of year(86,264) 353,886 FUND BALANCES, end of year102,496$ 171,924$ Park LandStreet Lighting 241
108 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - 3,403,543$ 3,375,901 (27,642) Special assessments - - - 274,000 614,426 340,426 Licenses and permits - - - 1,085,110 1,062,676 (22,434) Intergovernmental - - - 1,193,038 3,004,802 1,811,764 Charges for services - - - 2,650,699 2,507,984 (142,715) Fines and forfeitures - - - 387,500 339,066 (48,434) Interest on investments - 11 11 114,500 249,924 135,424 Loan repayment - - - 228,000 19,849 (208,151) Other - - - 244,500 694,386 449,886 Total revenues - 11 11 9,580,890 11,869,014 2,288,124 EXPENDITURES - BUDGETUNIT - - - 12,074,895 9,832,910 2,241,985 Revenues over (under) expenditures - 11 11 (2,494,005) 2,036,104 4,530,109 OTHER FINANCING SOURCESTransfers in - - - 663,477 642,367 (21,110) Transfers out - - - (3,293,356) (3,604,292) (310,936) Long-term debt issued - - - - 284,166 284,166 Sale of capital assets - - - 1,680,000 40,469 (1,639,531) Total other financing sources - - - (949,879) (2,637,290) (1,687,411) Revenues and other sources over(under) expenditures -$ 11 11$ (3,443,884)$ (601,186) 2,842,698$ FUND BALANCES, beginning of year18 6,273,612 FUND BALANCES, end of year29$ 5,672,426$ Municipal Court Restitution Total 242
109 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Debt Service FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ 773,440$ 750,765$ (22,675)$ Intergovernmental - - - - 1,294 1,294 Interest on investments 30,000 54,602 24,602 - 11,475 11,475 Total revenue 30,000 57,176 27,176 773,440 763,534 (9,906) EXPENDITURESOther - - - 10,000 9,184 816 Debt servicePrincipal - - - 500,000 500,000 - Interest and fiscal fees - - - 221,206 221,920 (714) Total expenditures - - - 731,206 731,104 102 Revenues over (under)expenditures 30,000 57,176 27,176 42,234 32,430 (9,804) OTHER FINANCING SOURCES(USES)Operating transfers in- - - - - - Operating transfers out - - - - - - Total other financingsources (uses) - - - - - - Revenues and other sources over(under) expenditures 30,000$ 57,176 27,176$ 42,234$ 32,430 (9,804)$ FUND BALANCES, beginning of year572,334 (115,558) FUND BALANCES, end of year629,510$ (83,128)$ G.O. BondsSID Revolving 243
110 CITY OF BOZEMAN, MONTANA SCHEDULES OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES- BUDGET TO ACTUAL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) Year Ended June 30, 2008 Variance VarianceFavorable PositiveBudget Actual (Unfavorable) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ 773,440$ 750,765$ (22,675)$ Intergovernmental - - - - 1,294 1,294 Interest on investments - - - 30,000 66,077 36,077 Total revenue - - - 803,440 820,710 17,270 EXPENDITURESOther10,000 9,184 816 Debt servicePrincipal 270,000 270,000 - 770,000 770,000 - Interest and fiscal fees 146,523 146,523 - 367,729 368,443 (714) Total expenditures 416,523 416,523 - 1,147,729 1,147,627 102 Revenues over (under)expenditures (416,523) (416,523) - (344,289) (326,917) 17,372 OTHER FINANCING SOURCES(USES)Operating transfers in416,523 416,523 - 416,523 416,523 - Operating transfers out - - - - - - Total other financingsources (uses) 416,523 416,523 - 416,523 416,523 - Revenues and other sources over(under) expenditures -$ - -$ 72,234$ 89,606$ 17,372$ FUND BALANCES, beginning of year- 456,776 FUND BALANCES, end of year-$ 546,382$ TIF Bonds TotalDebt Service Funds 244
INTERNAL SERVICE FUNDS STATEMENTS 245
INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the goods or services provided by one department to other departments of the City on a cost-reimbursement basis. Vehicle Maintenance Shop – Accounts for the maintenance and repair of vehicles used in the operation of City services. Medical Health Insurance – Accounts for insurance premium revenues received from the various City departments and retirees, and the related costs of health and dental claims incurred by city employees and retirees which are in-turn paid to the City’s insurance program coordinator. 247
111 CITY OF BOZEMAN, MONTANA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS June 30, 2008 Vehicle MedicalMaintenance HealthShop Insurance Total ASSETSCurrent assetsCash and equivalents 14,107$ 186,310$ 200,417$ Customer receivables, net - 12,333 12,333 Total current assets 14,107 198,643 212,750 Machinery and equipment 132,631 - 132,631 Vehicles 55,520 - 55,520 Less: accumulated depreciation (148,690) - (148,690) Net machinery and equipment 39,461 - 39,461 Total assets 53,568 198,643 252,211 LIABILITIESCurrent liabilitiesAccounts payable 28,619 276,514 305,133 Accrued employee benefits 13,725 - 13,725 Due to other City funds - - - Total current liabilities 42,344 276,514 318,858 NET ASSETSInvested in capital assets, net of related debt 39,461 - 39,461 Unrestricted (28,237) (77,871) (106,108) Total net assets 11,224$ (77,871)$ (66,647)$ 249
112 CITY OF BOZEMAN, MONTANA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS For the Year Ended June 30, 2008 Vehicle MedicalMaintenance HealthShop Insurance TotalOPERATING REVENUESCharges for services 508,764$ 2,949,934$ 3,458,698$ OPERATING EXPENSESSalaries and benefits 230,883 - 230,883 Materials and supplies 283,622 193 283,815 Repairs and maintenance 12,556 - 12,556 Utilities 615 - 615 Administrative charges 35,059 - 35,059 Insurance claims - 3,264,686 3,264,686 Other expenses 14,109 54,928 69,037 Depreciation 18,888 - 18,888 Total operating expenses 595,732 3,319,807 3,915,539 Operating income (loss) (86,968) (369,873) (456,841) NON-OPERATING REVENUES (EXPENSES)Interest income 1,876 - 1,876 Interest expense - (2,114) (2,114) Other income 1,019 3,654 4,673 Total non-operating revenue (expenses) 2,895 1,540 4,435 Change in net assets (84,073) (368,333) (452,406) NET ASSETS, beginning of year 95,297 290,462 385,759 NET ASSETS, end of year 11,224$ (77,871)$ (66,647)$ 250
113 CITY OF BOZEMAN, MONTANA INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF CASH FLOWS For the Year Ended June 30, 2008 Vehicle MedicalMaintenance HealthShop Insurance TotalCASH FLOWS FROM OPERATIONS:Receipts from customers 508,764$ 2,949,934$ 3,458,698$ Receipts from others 1,019 3,654 4,673 Operating loans from other City funds - (353,397) (353,397) Payments to suppliers (294,296) 852,919 558,623 Payments to employees (226,518) (3,264,686) (3,491,204) Payments to Internal Service Funds and administrative fees (35,059) - (35,059) Net Cash Provided (Used) by Operating Activities (46,090) 188,424 142,334 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:Additions to property, plant and equipment (25,278) - (25,278) Interest paid on bonds, interfund loans, loans and leases - (2,114) (2,114) Net Cash Flows from Capital and Related Financing Activities (25,278) (2,114) (27,392) CASH FLOWS FROM INVESTING ACTIVITIES:Interest on investments 1,876 - 1,876 Net Increase (Decrease) in Cash and Cash Equivalents (69,492) 186,310 116,818 CASH AND EQUIVALENTS, beginning of year 83,599 - 83,599 CASH AND EQUIVALENTS, end of year 14,107$ 186,310$ 200,417$ 251
114 CITY OF BOZEMAN, MONTANA INTERNAL SERVICE FUNDS COMBINING STATEMENTS OF CASH FLOWS (CONTINUED) For the Year Ended June 30, 2008 A reconciliation of operating loss to cash provided by (used in) operating activities follows:Vehicle MedicalMaintenance HealthShop Insurance TotalOPERATING INCOME (LOSS) (86,968)$ (369,873)$ (456,841)$ Adjustments to reconcile operating income (loss)to net cash provided (used) by operating activitiesDepreciation 18,888 - 18,888 Other income 1,019 3,654 4,673 Changes in assets and liabilities:(Increase) Decrease in: Customer receivables - - - Prepaid expenses - 631,526 631,526 Increase (Decrease) in: Accounts payable 16,606 276,514 293,120 Accrued employee benefits payable 4,365 - 4,365 Interfund borrowings - (353,397) (353,397) Total adjustments 40,878 558,297 599,175 Net cash provided (used) by operating activities (46,090)$ 188,424$ 142,334$ 252
AGENCY FUNDS STATEMENTS253
AGENCY FUNDS Agency Funds are used to account for assets held by the City as an agent for individuals, private organizations, or other governments. Montana Arts Council – Accounts for pass-through monies granted by the State of Montana for use by the Montana Ballet Company, Bozeman Symphony Orchestra, Intermountain Opera Association, Children’s Museum of Bozeman, Emerson Cultural Center, and the Equinox Theater Company. Municipal Court – Accounts for monies held for court appearance bonds. 255
115 CITY OF BOZEMAN, MONTANA AGENCY FUNDS COMBINING STATEMENT OF FIDUCIARY NET ASSETS June 30, 2008 TotalMontana Municipal AgencyArts Council Court FundsASSETSCash and cash equivalents 100$ 120,840$ 120,940$ Customer receivables - 7,096 7,096 Interfund receivable - - - Total assets 100 127,936 128,036 LIABILITIESAccounts payable 100 127,936 128,036 Total liabilities 100$ 127,936$ 128,036$ 257
116 CITY OF BOZEMAN, MONTANA AGENCY FUNDS COMBINING STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES Year Ended June 30, 2008 MontanaArts Council Balance June 30, 2007 Additions Deletions BalanceJune 30, 2008 ASSETSCash and cash equivalents 2$ 5,555$ (5,457)$ 100$ Total assets 2 5,555 (5,457) 100 LIABILITIESAccounts payable 2 5,555 (5,457) 100 Total liabilities 2$ 5,555$ (5,457)$ 100$ 258
117 CITY OF BOZEMAN, MONTANA AGENCY FUNDS COMBINING STATEMENTS OF CHANGES IN ASSETS AND LIABILITIES (CONTINUED) Year Ended June 30, 2008 Municipal CourtBalance June 30, 2007 Additions Deletions Balance June 30, 2008 ASSETSCash and cash equivalents 233,961$ -$ (113,121)$ 120,840$ Customer receivables 5,520 1,576 - 7,096 Interfund receivable 11,566 - (11,566) - Total assets 251,047 1,576 (124,687) 127,936 LIABILITIESAccounts payable 251,047 1,576 (124,687) 127,936 Total liabilities 251,047$ 1,576$ (124,687)$ 127,936$ 259
PART III STATISTICAL SECTION261
CITY OF BOZEMAN, MONTANA This part of the City of Bozeman's comprehensive annual financial report presents detailed information as a context for understanding what the instatements, note disclosures and required supplementary information says about the government's overall financial health. ContentsPageFinancial TrendsThese schedules contain trend information to help the reader understand how the government's financial performance and 118 well-being have changed over timeRevenue CapacityThese schedules contain information to help the reader assess the government's most significant local revenue source, 123 the property tax.Debt CapacityThese schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future. 129Demographic and Economic InformationThese schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place.134Operating InformationThese schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. 136Sources: Unless otherwise noted, the information in these schedules is derived from the City of Bozeman comprehensive annual financial reportNote: The City of Bozeman implemented GASB Statement 34 in Fiscal Year 2002, therefore the data for prior years are not shown; schedules government-wide information include information beginning in that year. Statistical Section263
FINANCIAL TRENDS SECTION 264
118 CITY OF BOZEMAN, MONTANA Unaudited statistical section. NET ASSETS BY COMPONENT Past Seven Fiscal Years 2002200320042005200620072008Governmental activitiesInvested in capital assets, net of related debt 13,675,868$ (1,618,282)$ 5,197,117$ 8,409,053$ 22,987,166$ 77,734,584$ 80,873,924$ Restricted 5,508,776 6,890,530 10,615,720 12,343,248 5,242,903 546,916 9,254,307 Unrestricted 7,495,002 24,396,920 17,345,961 21,077,779 25,537,959 28,481,673 23,443,921 Total governmental activites net assets 26,679,646$ 29,669,168$ 33,158,798$ 41,830,080$ 53,768,028$ 106,763,173$ 113,572,152$ Business-type activitiesInvested in capital assets, net of related debt 13,008,835$ 19,960,910$ 25,174,352$ 28,124,307$ 28,416,015$ 154,227,534$ 177,379,168$ Restricted 7,747,249 967,939 13,357,348 11,041,147 13,462,443 17,099,866 18,322,089 Unrestricted 10,725,406 19,412,803 9,174,747 12,284,379 12,899,363 16,550,235 17,547,218 Total business-type activities 10,725,406$ 40,341,652$ 47,706,447$ 51,449,833$ 54,777,821$ 187,877,635$ 213,248,475$ Primary governmentInvested in capital assets, net of related debt 26,684,703$ 18,342,628$ 30,371,469$ 36,533,360$ 51,403,181$ 231,962,118$ 258,253,092$ Restricted 13,256,025 7,858,469 23,973,068 23,384,395 18,705,346 17,646,782 27,576,396 Unrestricted 18,220,408 43,809,723 26,520,708 33,362,158 38,437,322 45,031,908 40,991,139 Total primary government net assets 58,161,136$ 70,010,820$ 80,865,245$ 93,279,913$ 108,545,849$ 294,640,808$ 326,820,627$ Fiscal Year 266
119 CITY OF BOZEMAN, MONTANA Unaudited statistical section. CHANGES IN NET ASSETS Past Seven Fiscal Years 2002200320042005200620072008ExpensesGovernmental Activities:General government 3,488,562$ 3,847,265$ 4,404,421$ 4,758,743$ 5,092,865$ 5,322,040$ 5,824,265$ Public Safety 7,114,922 8,027,193 8,078,120 8,834,875 9,858,055 10,488,873 11,183,637 Public Service 2,847,989 3,182,445 3,096,273 3,475,067 4,163,644 8,511,308 8,979,085 Public Welfare 3,433,991 3,542,608 4,017,654 4,372,959 5,477,065 5,536,741 5,412,192 Other 826,944 1,248,136 23,255 227,670 573,204 411,331 1,144,916 Interest and fiscal fees 696,303 672,243 667,118 709,178 550,296 549,667 649,226 Total governmental activities expenses 18,408,711 20,519,890 20,286,841 22,378,492 25,715,129 30,819,960 33,193,321 Business-type activities:Water 2,948,638 2,924,951 3,782,726 4,292,503 4,824,505 10,490,811 11,150,266 Wastewater 2,880,228 2,556,245 3,353,567 4,246,156 4,586,959 7,376,348 8,061,412 Solid waste 2,206,010 1,955,939 2,462,291 2,720,738 3,547,902 3,283,135 2,574,651 Total business-type activities expenses 8,034,876 7,437,135 9,598,584 11,259,397 12,959,366 21,150,294 21,786,329 Total primary government expenses 26,443,587$ 27,957,025$ 29,885,425$ 33,637,889$ 38,674,495$ 51,970,254$ 54,979,650 Program RevenuesGovernmental activities: Charges for services:General government 3,554,700$ 1,230,771$ 793,529$ 1,261,652$ 1,496,818$ 2,023,362$ 2,237,962$ Public Safety 1,907,548 2,586,058 2,390,179 1,898,531 1,984,642 3,712,280 3,575,133 Public Service 3,070,566 4,084,641 3,934,801 10,302,583 9,217,198 5,361,852 4,858,444 Public Welfare 553,842 812,909 865,910 567,471 718,162 704,790 713,342 Operating grants and contributions 653,567 461,355 878,713 360,980 502,198 409,263 502,863 Capital grants and contributions 168,480 61,675 37,538 513,034 1,380,553 18,694,375 7,153,103 Total governmental activities program revenues 9,908,703 9,237,409 8,900,670 14,904,251 15,299,571 30,905,922 19,040,847 Business-type activities Charges for services:Water 4,621,617 5,503,363 5,842,122 6,547,228 7,434,574 8,604,498 8,222,724 Wastewater 5,067,571 5,626,790 5,765,594 6,074,615 6,430,206 7,052,987 6,918,132 Solid waste 3,282,979 3,632,183 3,884,723 3,648,930 2,582,437 2,428,230 2,608,662 Operating grants and contributions 155,033 14,643 35,396 36,129 - - - Capital grants and contributions: - 1,520,318 1,585,544 1,595,805 1,624,237 26,464,222 29,405,599 Total business-type activities program revenues 13,127,200 16,297,297 17,113,379 17,902,707 18,071,454 44,549,937 47,155,117 Total primary government program revenues 23,035,903$ 25,534,706$ 26,014,049$ 32,806,958$ 33,371,025$ 75,455,859$ 66,195,964 Fiscal Year 267
120 CITY OF BOZEMAN, MONTANA Unaudited statistical section. CHANGES IN NET ASSETS (CONTINUED) Past Seven Fiscal Years 2002200320042005200620072008Net (Expense) / RevenueGovernmental activities (8,500,008)$ (11,282,481)$ (11,386,171)$ (7,474,241)$ (10,415,558)$ 85,962$ (14,152,474)$ Business-type activities 5,092,324 8,860,162 7,514,795 6,643,310 5,112,088 23,399,643 25,368,788 Total primary government net expense (3,407,684) (2,422,319) (3,871,376) (830,931) (5,303,470) 23,485,605 11,216,314 General Revenues and Other Changes in Net AssetsGovernmental activities: TaxesProperty taxes 7,597,346 8,028,832 9,104,945 10,437,702 11,137,006 11,836,748 12,070,765 Unrestricted grants and contributions 4,382,091 4,732,127 4,327,489 4,910,306 5,163,288 5,375,807 5,617,243 Investment earnings 493,348 417,156 344,013 606,120 852,222 1,093,115 1,362,790 Miscellaneous 732,532 1,093,888 979,820 2,422,805 3,416,890 1,940,156 1,859,313 Sale of capital assets490,637 51,342 Transfers - - 150,000 - 1,784,100 489,780 - Extraordinary items(2,231,410) - Total governmental activities 13,205,317 14,272,003 14,906,267 16,145,523 22,353,506 21,226,243 20,961,453 Business-type activities: Unrestricted grants and contributions - - - - - 3,182 2,052 Transfers - - (150,000) - (1,784,100) (489,780) - Extraordinary items - - - (2,899,924) - - - Total business-tupe activities - - (150,000) (2,899,924) (1,784,100) (486,598) 2,052 Total primary government 13,205,317 14,272,003 14,756,267 13,245,599 20,569,406 20,739,645 20,963,505 Change in Net AssetsGovernmental activities 4,705,309 2,989,522 3,520,096 8,671,282 11,937,948 21,312,205 6,808,979 Business-type activities 5,092,324 8,860,162 7,364,795 3,743,386 3,327,988 22,913,045 25,370,840 Total primary government 9,797,633$ 11,849,684$ 10,884,891$ 12,414,668$ 15,265,936$ 44,225,250$ 32,179,819$ Fiscal Year 268
121 CITY OF BOZEMAN, MONTANA Unaudited statistical section. FUND BALANCES OF GOVERNMENTAL FUNDS Past Seven Fiscal Years 2002200320042005200620072008General FundReserved -$ -$ -$ 11,687$ 5,725$ 3,000$ 3,000$ Unreserved 3,600,359 3,083,832 3,345,541 3,996,600 3,173,374 4,367,538 4,516,814 Total general fund 3,600,359$ 3,083,832$ 3,345,541$ 4,008,287$ 3,179,099$ 4,370,538$ 4,519,814$ All Other Governmental Reserved 2,247,538$ 7,965,826$ 7,315,275$ 1,606,904$ 2,164,698$ 3,112,390$ 6,012,912$ Unreserved, reported in:Special revenue funds 8,598,213 11,993,869 14,362,029 16,296,309 9,776,823 13,205,328 13,723,846 Capital projects funds 2,505,735 3,656,555 2,037,255 4,545,867 6,598,235 - 0Debt service funds 1,899,540 - - - - (115,558) (83,128) Total all other governental funds 15,251,026$ 23,616,250$ 23,714,559$ 22,449,080$ 18,539,756$ 16,202,160$ 19,653,630$ Fiscal Year269
122 CITY OF BOZEMAN, MONTANA Unaudited statistical section. CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS Past Seven Fiscal Years 2002200320042005200620072008RevenuesTaxes 7,164,366$ 7,940,777$ 9,274,923$ 10,480,668$ 11,222,034$ 11,853,872$ 12,004,946$ Special assessments 1,168,813 1,234,119 1,164,151 2,478,024 1,931,261 1,866,717 1,793,813 Licenses and permits 817,263 1,138,801 1,120,864 1,566,812 1,653,546 1,762,086 1,351,887 Intergovernmental 5,204,138 5,255,157 5,243,740 5,784,320 7,046,039 6,115,697 9,642,918 Charges for service 4,756,114 5,637,618 5,246,608 5,818,566 6,347,087 7,403,739 6,748,891 Fines and forfietures 1,080,546 1,305,536 1,188,706 1,443,468 1,461,398 1,746,213 1,644,767 Interest on investments 463,199 413,212 342,979 545,805 848,909 1,068,802 1,360,914 loan repayment 266,683 211,936 183,987 426,076 291,338 10,193 19,849 Other 709,203 1,037,347 901,696 2,421,201 3,412,410 1,940,156 1,859,313 Total revenues 21,630,325 24,174,503 24,667,654 30,964,940 34,214,022 33,767,475 36,427,298 ExpendituresGeneral government 3,339,981 3,554,871 4,071,391 4,493,124 4,794,940 4,994,217 5,377,255 Public safety 6,723,263 7,232,374 7,661,421 8,535,646 9,494,622 10,160,291 10,778,917 Public service 2,094,552 2,028,864 2,115,856 2,363,585 2,276,802 3,060,672 3,020,855 Public welfare 3,538,748 3,430,983 4,154,228 4,320,299 5,099,873 4,315,086 4,819,758 Other 229,342 298,593 335,186 513,862 514,697 583,593 776,583 Capital outlay 4,649,508 3,536,045 4,824,965 6,417,671 18,374,651 11,397,365 12,205,040 Debt servicePrincipal 926,547 850,119 1,448,320 6,788,969 989,041 833,158 2,013,232 Interest 696,303 672,243 667,118 709,178 550,296 549,667 649,662 Bond Issuance Costs - - - - 20,064 - - Total expenditures 22,198,244 21,604,092 25,278,485 34,142,334 42,114,986 35,894,049 39,641,302 Excess of revenuesover (under) expenditures (567,919) 2,570,411 (610,831) (3,177,394) (7,900,964) (2,126,574) (3,214,004) Other Financing Sources (Uses)Proceeds from borrowing 3,460,602 5,271,000 - 4,804,467 1,376,869 - - Transfers in 1,962,695 3,012,716 3,137,517 5,497,553 17,619,744 4,565,896 4,604,100 Transfers out (1,962,695) (3,013,286) (2,987,517) (5,497,553) (15,835,644) (4,076,116) (4,604,100) Issuance of debt6,554,166 Premium on Bonds Issued10,896 Sales of capital assets 7,856 820,849 1,604 1,483 490,637 249,688 Total other financing sources (uses) 3,460,602 5,278,286 970,849 4,806,071 3,162,452 980,417 6,814,750 Extraordinary items(2,231,410) Net change in fund balances 2,892,683$ 7,848,697$ 360,018$ (602,733)$ (4,738,512)$ (1,146,157)$ 3,600,746$ Debt service as a percentage of 9.2% 8.4% 10.3% 27.0% 6.5% 5.6% 9.7%noncapital expendituresFiscal Year 270
REVENUE CAPACITY SECTION 271
123 CITY OF BOZEMAN, MONTANA Unaudited statistical information. ASSESSED VALUE OF TAXABLE PROPERTY Past Seven Fiscal Years FiscalTotal TotalYearTaxable DirectEnded Residential Commercial & Agricultural Assessed TaxJune 30,PropertyIndustrial PropertyPropertyValueRate2002 23,772,000 16,131,000 2,547,000 42,450,000 145.21 2003 25,790,800 17,500,900 2,763,300 46,055,000 154.21 2004 27,753,040 18,832,420 2,973,540 49,559,000 163.31 2005 29,671,600 20,134,300 3,179,100 52,985,000 171.99 2006 32,515,280 22,063,940 3,483,780 58,063,000 168.26 2007 35,419,440 24,034,620 3,794,940 63,249,000 163.42 2008 38,629,360 26,212,780 4,138,860 68,981,000 154.18 19.88%Source: Based on information provided by Gallatin County and Department of RevenueNote: Property is assessed by the State Department of Revenue every six years.273
124 CITY OF BOZEMAN, MONTANA Unaudited statistical information. DIRECT AND OVERLAPPING PROPERTY TAX RATES Past Seven Fiscal Years (rate per $1,000 of assessed value) Fiscal General TotalYear Obligation Direct BozemanEnded Basic Debt Tax School Gallatin State ofJune 30,RateServiceRateDistrictCountyMontana2002 136.21 9.00 145.21 248.06 61.48 46.00 2003 139.95 14.26 154.21 252.94 63.04 46.00 2004 154.09 9.22 163.31 266.43 66.46 46.00 2005 158.67 13.32 171.99 264.68 67.32 46.00 2006 155.89 12.37 168.26 265.55 71.26 46.00 2007 152.07 11.35 163.42 182.74 101.70 46.00 2008 142.98 11.20 154.18 212.53 169.16 46.00 274
125 CITY OF BOZEMAN, MONTANA Unaudited statistical information. PRINCIPAL PROPERTY TAX PAYERS Current and Nine Years Ago Percentage Percentageof Total City of Total CityTaxable Taxable Total TaxableAssessed Assessed Assessed AssessedTaxpayerValueRankValueValueRankValueNorthwestern Corp Transmission & Distribution 3,243,216$ 1 4.70%Qwest Corporation 1,259,168 2 1.83%Harry Daum - Gallatin Mall 520,427 3 0.75% 477,466$ 3 1.21%Bozeman Deaconess Foundation 504,873 4 0.73% 267,067 5 0.68%Wal-Mart Stores 387,238 5 0.56% 238,516 6 0.61%Lowes HIW Inc. 348,229 6 0.50%Stone Ridge Partners LLC 322,570 7 0.47%Machinery Power & Equipment 340,124 8 0.49%Costco Wholesale Corporation 308,461 9 0.45% 312,000 4 0.79%Highgate Bozeman LLC 297,102 10 0.43%Montana Power2,547,076 1 6.46%U.S. West1,893,047 2 4.80%First Security 223,486 7 0.57%Arcadia Gardens Apartments197,740 8 0.50%TCIP Partnership178,871 9 0.45%U2 LC & Ramada Land Co.164,836 10 0.42%Total 7,531,408$ 10.92% 6,500,105$ 16.49%Total City Taxable Assessed Value 68,981,000$ 39,420,000$ Source: Gallatin County Assessor's Office2008 1999 275
126 CITY OF BOZEMAN, MONTANA Unaudited statistical information. PROPERTY TAX LEVIES AND COLLECTIONS Past Seven Fiscal Years FiscalYear Taxes Levied CollectionsEnded for the Percentage in Subsequent PercentageJune 30,Fiscal YearAmountof LevyYearsAmountof Levy2002 6,164,165$ 6,115,656$ 99.21% 32,431$ 6,148,087$ 99.74%2003 7,102,142 6,688,829 94.18% 174,883 6,863,712 96.64%2004 8,093,480 7,536,498 93.12% 283,760 7,820,258 96.62%2005 9,112,890 8,825,662 96.85% 197,333 9,022,994 99.01%2006 9,769,893 9,490,225 97.14% 53,850 9,544,075 97.69%2007 10,336,467 10,227,386 98.94% 13,515 10,240,901 99.08%2008 10,635,491 10,383,035 97.63% - 10,383,035 97.63%Collected within the Fiscal Year of the Levy Total Collections to Date 276
127 CITY OF BOZEMAN, MONTANA Unaudited statistical information. WATER SOLD BY TYPE OF CUSTOMER Past Seven Fiscal Years (in hundreds of cubic feet “HCF”) 2002200320042005200620072008Type of CustomerResidential 1,194,801$ 1,224,671$ 1,255,288$ 1,286,670$ 1,318,837$ 1,437,114$ 1,379,115$ Government 25,041 25,667 26,308 26,966 27,640 62,913 49,623 MSU 267,365 274,049 280,901 287,923 295,121 298,352 260,232 Commercial 644,926 661,049 677,576 694,515 711,878 659,831 626,846 Total 2,132,133$ 2,185,436$ 2,240,072$ 2,296,074$ 2,353,476$ 2,458,209$ 2,315,816$ Total direct rate 1,544.74$ 1,653.23$ 1,790.77$ 1,753.67$ 2,055.72$ 2,396.70$ 2,544.07$ per 1,000 HCFFiscal Year 277
128 CITY OF BOZEMAN, MONTANA Unaudited statistical information. WATER AND SEWER RATES Past Seven Fiscal Years FiscalYear Monthly Rate per Monthly Rate perEnded Base 1,000 Base 1,000June 30,RateGallonsRateGallons2002 9.36$ 15.15$ 10.74$ 17.80$ 2003 9.92 16.06 10.74 17.80 2004 9.92 17.24 10.74 17.80 2005 10.42 16.83 8.59 14.20 2006 11.46 18.53 9.88 16.30 2007 12.60 19.74 10.87 18.00 2008 12.60 19.74 11.17 18.50 * For Residential Customers, using 5/8 inch meter size.Water Sewer 278
DEBT CAPACITY SECTION 279
129 CITY OF BOZEMAN, MONTANA Unaudited statistical information. RATIOS OF OUSTANDING DEBT BY TYPE Past Seven Fiscal Years FiscalYear General Special Less: Water Less: Total PercentageEnded Obligation Notes Assessment Capital Revenue Capital Primary of Personal PerJune 30,BondsPayableBondsLeasesBondsLeasesGovernmentIncomeCapita2002 6,110,000$ 443,880$ 5,515,000$ -$ 2,390,631$ (178,530)$ 14,280,981$ 2.67% 497.47$ 2003 10,960,000 377,761 5,152,000 - 1,995,578 (292,329) 18,193,010 2.96% 591.58 2004 10,565,000 308,397 4,149,800 - 1,582,299 (210,972) 16,394,524 2.47% 531.10 2005 6,800,000 235,628 6,065,600 - 1,150,633 (90,385) 14,161,476 1.89% 436.92 2006 6,325,000 159,286 7,004,769 - 700,412 - 14,189,467 1.70% 423.12 2007 5,840,000 79,198 6,736,700 (83,256) 226,460 - 12,799,101 1.38% 365.05 2008 5,340,000 - 5,601,000 (255,832) 143,729 - 10,828,897 1.08% 285.11 Business-Type ActivitiesGovernmental Activities 281
130 CITY OF BOZEMAN, MONTANA Unaudited statistical information. RATIOS OF GENERAL BONDED DEBT OUTSTANDING Past Seven Fiscal Years Percentage ofFiscalActual Year General Special TaxableEnded Obligation Assessment Value of PerJune 30, Bonds Bonds Total Property Capita2002 6,110,000$ 5,515,000$ 11,625,000$ 27.4% 404.95$ 2003 10,960,000 5,152,000 16,112,000 35.0% 523.92 2004 10,565,000 4,149,800 14,714,800 29.7% 476.69 2005 6,800,000 6,065,600 12,865,600 24.3% 396.94 2006 6,325,000 7,004,769 13,329,769 23.0% 397.49 2007 5,840,000 6,736,700 12,576,700 19.9% 358.71 2008 5,340,000 5,601,000 10,941,000 15.9% 288.07 General Bonded Debt Outstanding 282
131 CITY OF BOZEMAN, MONTANA Unaudited statistical information. DIRECT AND OVERLAPPING GENERAL BONDED DEBT OUTSTANDING Past Two Fiscal Years Applicable ApplicableAs of to City of As of to City ofJune 30, 2008 Bozeman June 30, 2007 BozemanCity of Bozeman, MontanaGeneral obligation debt 5,340,000$ 5,840,000$ Less: Debt Service Fund balance (deficit) (83,128) (115,558) Net general obligation debt5,423,128$ 100% 5,955,558$ 100%Overlapping Bonded IndebtednessGallatin County:Various issues 11,026,800$ 34% 11,620,000$ 34%Bozeman School District #7:Various issues 79,310,000 70% 55,095,000 70%Total overlapping bond indebtedness 90,336,800$ 66,715,000$ Sources:City Hall, Bozeman, MontanaGallatin County Assessor's OfficeBozeman School District #7 283
132 CITY OF BOZEMAN, MONTANA Unaudited statistical information. LEGAL DEBT MARGIN INFORMATION Past Seven Fiscal Years 2002200320042005200620072008Debt limit* 17,643,745$ 21,560,620$ 23,737,036$ 26,559,967$ 29,591,000$ 34,755,653$ 54,804,000$ Total net debt applicable to limit (6,424,838) (7,747,833) (7,588,181) (3,750,411) (6,568,569) (5,595,558) (5,423,128) Legal debt margin11,218,907$ 13,812,787$ 16,148,855$ 22,809,556$ 23,022,431$ 29,160,095$ 49,380,872$ Total net debt applicable to the limit 36.4% 35.9% 32.0% 14.1% 22.2% 16.1% 9.9% as a percentage of debt limit*2.5% of total market value of taxable property of $2.192 BillionFiscal Year 284
133 CITY OF BOZEMAN, MONTANA Unaudited statistical information. PLEDGED REVENUE COVERAGE Past Seven Fiscal Years FiscalYear Utility Less: SpecialEnded Service Operating AssessmentJune 30,Charges Expenses Principal Interest Coverage Collections Principal Interest Coverage2002 3,556,447$ (2,326,317)$ (376,978)$ (120,747)$ 732,405$ 979,283$ (709,000)$ (336,405)$ (66,122)$ 2003 3,935,636 (2,271,120) (395,052) (103,613) 1,165,851 1,050,180 (479,000) (270,202) 300,978 2004 4,359,299 (2,440,762) (413,280) (85,391) 1,419,866 932,771 (997,200) (250,571) (315,000) 2005 4,429,294 (2,647,507) (431,666) (65,963) 1,284,158 588,887 (2,951,200) (364,814) (2,727,127) 2006 5,401,069 (2,866,140) (450,220) (45,317) 2,039,392 1,472,058 (437,700) (297,876) 736,482 2007 6,124,533 (3,114,053) (473,952) (23,391) 2,513,137 1,428,084 (268,069) (309,119) 850,896 2008 6,163,883 (3,769,941) (82,731) (10,231) 2,300,981 1,178,846 (1,135,700) (278,393) (235,247) Water Revenue Bonds Special Assessment BondsDebt Service Debt Service 285
DEMOGRAPHICS AND ECONOMIC SECTION 287
134 CITY OF BOZEMAN, MONTANA Unaudited statistical information. DEMOGRAPHIC AND ECONOMIC STATISTICS Past Seven Fiscal Years Fiscal Per ResidentsYear Capita with Bachelors K-12Ended Personal PersonalAverage Degree or School UnemploymentJune 30,Population Income IncomeAge Higher Schooling Enrollment Rate2002 28,707 534,242,581$ 18,610$ 31.79 yrs 41.0% 5,124 3.4%2003 30,753 615,242,946$ 20,006$ 31.79 yrs 41.0% 5,101 3.3%2004 30,869 663,880,909$ 21,506$ 31.79 yrs 41.0% 5,086 3.2%2005 32,412 749,345,172$ 23,119$ 31.79 yrs 41.0% 5,198 2.8%2006 33,535 833,456,347$ 24,853$ 31.79 yrs 41.0% 5,332 2.0%2007 35,061 927,082,962$ 26,442$ 31.79 yrs 41.0% 5,356 1.5%2008 37,981 1,004,293,602$ 26,442$ 31.79 Yrs 41.0% 5,413 2.9%Sources: Bozeman Area Chamber of Commerce Bozeman Public Schools 289
135 CITY OF BOZEMAN, MONTANA Unaudited statistical information. PRINICPAL EMPLOYERS Current and Nine Years Ago Private Employer Private EmployerEmployers Class Employers ClassBy Class Size By Class SizeBozeman Deaconess Hospital 9 Bozeman Deaconess Hospital 8Albertson’s 7 Home Care Services 7RightNow Technologies 7 Powerhouse Technologies 7Wal-Mart 7 Wal-Mart 7Zoot Enterprises 7 Albertsons 6Bay Bar and Grill 6 Big Sky Publishing 6Bozeman Daily Chronicle 6 Costco 6Community Food Co-Op 6 Gran Tree Inn 6Costco 6 Hamilton Stores 6JTL Group Inc. - Belgrade 6 Holnam Inc 6Kenyon Noble Lumber & Hardware 6 Kenyon Noble Lumber & Hardware 6Laidlaw Transit 6 Kmart 6Martel Construction 6 Life Link International 6McDonald's 6 Louisiana Pacific 6Murdoch's Ranch & Home Supply 6 Martel Construction 6On Site Management 6 Montana Conservation Corps 6Ressler Chevrolet Cadillac & Toyota 6 Ranch & Home Supply (Murdoch's ?) 6Riverside Country Club 6 Simkins Hallin Lumber 6Simkins-Hallin Lumber 6 Video Lottery Cons 6Williams Plumbing & Heating 6 Williams Plumbing and Heating 6Public Employer Public EmployerEmployers Class Employers ClassBy Class Size By Class SizeMontana State University 9 Montana State University 9School District #7 8 School District #7 8City of Bozeman 7 Gallatin County 7Gallatin County 7 City of Bozeman 7Class 6 - 100 to 249 EmployeesClass 7 - 250 to 499 EmployeesClass 8 - 500 to 999 EmployeesClass 9 - 1,000+ EmployeesSource: Montana Department of Labor & Industry20081999 290
OPERATING SECTION 291
136 CITY OF BOZEMAN, MONTANA Unaudited statistical information. FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Past Seven Fiscal Years 2002 2003 2004 2005 2006 2007 2008General GovernmentCity commission 4.00 4.00 4.00 4.00 2.10 2.10 2.10 City manager 5.50 6.50 7.50 7.50 9.50 9.50 10.50 Municipal court 5.00 5.00 6.00 6.00 6.00 6.00 7.00 City attorney 6.00 6.00 6.00 6.00 6.00 6.00 7.00 Finance 16.75 16.00 16.00 16.00 16.00 16.00 10.00 Information Technology (used to be in Finance) - - - - - - 6.00 Office of planning & community development 11.70 12.70 12.70 12.70 12.70 12.70 15.20 Zoning - - - - - - - Building maintenance 0.55 0.55 1.55 2.55 2.55 2.55 3.05 Total general government 49.50 50.75 53.75 54.75 54.85 54.85 60.85 Public SafetyPolice department 48.25 48.25 48.25 49.75 52.75 54.75 57.75 Fire department 28.75 29.75 29.75 29.25 29.25 31.25 34.25 Building inspection 10.05 10.55 10.55 15.05 15.05 15.55 16.55 Parking 1.75 2.75 2.75 2.75 2.75 3.75 3.75 9-1-1 - - - - - - - Total public safety 88.80 91.30 91.30 96.80 99.80 105.30 112.30 Public ServicesPublic services administration 7.15 7.15 7.15 7.15 7.15 7.15 8.15 Streets 13.62 13.62 13.62 13.62 13.62 15.62 15.62 Water plant 9.27 9.27 9.27 9.27 9.27 9.27 9.27 Water operations 13.12 14.12 14.12 14.12 14.62 14.62 15.62 Wastewater operations 6.75 7.75 7.75 7.75 9.25 9.25 10.25 Wastewater plant 15.87 15.87 14.87 14.87 14.87 14.87 14.87 Solid waste collection 10.74 10.74 10.74 11.74 11.74 12.74 14.74 Solid waste disposal 7.66 7.66 7.66 7.66 7.66 7.66 2.00 Solid waste recycling - - - - - - 1.00 Vehicle maintenance 2.50 2.50 2.50 3.50 3.50 4.00 3.00 Total public services 86.68 88.68 87.68 89.68 91.68 95.18 94.52 Public WelfareCemetery 5.25 5.25 5.25 5.25 5.25 5.25 5.75 Parks 11.95 11.95 11.95 11.95 11.95 12.95 13.45 Forestry 3.60 3.60 3.60 3.60 3.60 4.60 4.60 Library 19.66 19.66 19.66 19.66 19.66 19.66 20.66 Recreation 14.65 14.65 14.65 14.65 14.65 14.65 14.90 Community development - 1.00 1.00 1.00 1.00 1.00 2.00 Total public welfare 55.11 56.11 56.11 56.11 56.11 58.11 61.36 Total all funds 280.09 286.84 288.84 297.34 302.44 313.44 329.03 Fiscal Year Ended June 30,293
PART IV REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS AND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AS REQUIRED BY U.S. OFFICE OF MANAGEMENT AND BUDGET CIRCULAR A-133, AUDITS OF STATE AND LOCAL GOVERNMENTS AND NON-PROFIT ORGANIZATIONS 295
137 CITY OF BOZEMAN, MONTANA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2008 Grant Grant FederalGrant Balance Revenue Revenue Total Awards BalanceCFDA Award June 30, 2007 Received Accrued Revenue Expended June 30, 2008U.S. Department of JusticeRural Domestic Assistance 16.589 99,393$ - 99,393 - 99,393 99,393 -$ Passed through Gallatin County:Missouri River Drug Task Force 16.579 82,666 - 54,645 28,021 82,666 82,666 - Secure Our Schools 16.579 79,250 - 64,650 14,600 79,250 79,250 - U.S. Department of TransportationPassed through MT Dept. of Transportation:Highway Traffic SafetyBozeman Occupant Protection: 00-03-09-02 20.600 16,319 - 13,562 2,757 16,319 16,319 - CTEP Community Transportation Enhancement ProjectsMDT STPE 1299(11) - East Willson Roof 20.205 125,553 - 125,553 125,553 125,553 - MDT STPE 1299(18) - Milwaukee Railroad Trail 20.205 1,392,681 - 1,392,681 - 1,392,681 1,392,681 - Safe Routes to Schools 20.205 24,465 - 5,405 19,060 24,465 24,465 - Federal Transit Authority Intermodal Transportation Facility 20.507 1,901,339 - 1,822,492 78,847 1,901,339 1,901,339 - U.S. Department of InteriorPassed through the Historical Society:Historic Preservation 15.904 5,700 - 5,700 - 5,700 5,700 - Federal Emergency Management Agency310802 FIRE FEMA FED GRANT 83.554 16,767 - 16,767 - 16,767 16,767 - U.S. Department of Housing & Urban DevelopmentPassed through MT Department of Commerce:#MT-CDBG-Reach Inc. Work Center for Disabled 14.228 10,000 - 10,000 10,000 10,000 - #MT-BSEDTF-01-07-03 - CDI-Aerospace 14.228 42,750 - 42,750 - 42,750 42,750 - City of Bozeman / Story MansionHUD EDI-SP #B-05-SP-MT-0425 14.246 233,465 - - 233,465 233,465 233,465 - Total Federal Financial Assistance 4,030,348$ - 3,653,597 376,751 4,030,348 4,030,348 -$ FEDERAL GRANTOR 297
138 CITY OF BOZEMAN, MONTANA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS June 30, 2008 NOTE 1. REPORTING ENTITY The City of Bozeman’s reporting entity is defined in Note 1 of the City’s financial statements. Expenditures of federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included in the accompanying schedule. NOTE 2. BASIS OF ACCOUNTING The accompanying Schedule of Expenditures of Federal Awards is presented using the modified accrual basis of accounting, which is described in Note 1 of the City’s financial statements. NOTE 3. NON-CASH TRANSACTIONS The City had no non-cash transactions in the accompanying schedule of expenditures of federal awards. 298
299
140 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Bozeman’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, 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 that is required to be reported under Government Auditing Standards, as noted in the Schedule of Findings and Questioned Costs. This report is intended solely for the information and use of the City of Bozeman’s management, Board of Commissioners, the Montana Department of Administration, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Junkermier, Clark, Campanella, Stevens, P.C. Bozeman, Montana December 5, 2008 300
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142 A control deficiency in an entity’s internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more inconsequential will not be prevented or detected by the entity’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity’s internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. This report is intended solely for the information and use of the City of Bozeman’s management, Board of Commissioners, the Montana Department of Administration, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. JUNKERMIER CLARK CAMPANELLA & STEVENS, PC Bozeman, Montana December 5, 2008 302
143 SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended June 30, 2008 SUMMARY OF AUDIT RESULTS The auditor’s report expresses an unqualified opinion on the financial statements. No significant deficiencies or material weaknesses of the financial statements were disclosed during the audit of the financial statements performed in accordance with Government Auditing Standards. No instances of noncompliance material to the financial statements of the City of Bozeman were disclosed during the audit. No significant deficiencies relating to the audit of the major federal awards programs are reported in the report on compliance with requirements applicable to its major programs and internal control over compliance in accordance with OMB Circular A-133. The auditor’s report on compliance for the major federal awards programs for the City of Bozeman expresses an unqualified opinion on the major programs. The audit did not disclose any audit findings which the auditor is required to report under OMB Circular A-133. The major programs are: FTA Intermodal Transportation Facility, CFDA number 20.507 and Story Mansion, CFDA number 14.246 The threshold for distinguishing Types A and B programs was $300,000. The City of Bozeman was determined to be a high-risk auditee. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT None reported. 303
144 CURRENT STATUS OF PRIOR YEAR RECOMMENDATIONS Year Ended June 30, 2008 The following were findings with regard to the financial statement audit for the year ended June 30, 2007: 2007-1 Criteria: The City is required to record donated infrastructure in enterprise funds and the entity-wide governmental statements in the year of donation. Condition: Donated infrastructure was not recorded subsequent to implementation of Governmental Accounting Standards Board Statement 34 in the entity-wide governmental funds. Donated infrastructure in the water and sewer funds was not recorded in the year of donation. Effect: The City’s financial statements for the year ended June 30, 2007 reflect material prior period adjustments to record the prior year’s donated infrastructure, net of accumulated depreciation. Recommendation: The City’s Finance Department needs to be given the value of donated infrastructure from the City’s engineers on a timely basis. Further, the infrastructure should be recorded in the proper period. Status: The City has adequately addressed this finding for the year ended June 30, 2008 by adding increased and timely communication between the City’s Engineering and Finance Departments. 2007-2 Criteria: The City’s Finance Department is responsible for timely closing the books at yearend and providing accurate financial reporting. Condition: The process to close the books is time consuming, the Finance Department suffered from staff shortages much of the year, and the majority of the reporting duties are the Controller’s alone. Effect: The City’s financial statements for the year ended June 30, 2007 were not closed to the point of being ready for audit until December 2007. Management does not have access timely and accurate financial information, and additionally, the City is experiencing difficulty making the December 31 deadline for the GFOA reporting certificate. Recommendation: Closing procedures should be stream-lined and appropriate staffing levels and training should be maintained. Status: The City has adequately addressed this finding for the year ended June 30, 2008. The Finance Department has established a schedule for monthly and year end closing and adhered to the schedule in preparation for the audit. 2007-3 Criteria: For effective cash management, the City’s cash and investment accounts should be reconciled with the financial institution on a timely and accurate basis. Condition: Due to the conditions mentioned in Finding 2007-2, Finance Department personnel were not reconciling significant bank account balances on a monthly basis. Effect: City personnel spent an inordinate amount of time reconciling the June 30, 2007 statements to verify that yearend balances were not materially misstated. Recommendation: The City’s Finance Department should develop a procedure to simplify matching of deposits made at the bank with the method the deposits are recorded in HTE. Status: The City has adequately addressed this finding for the year ending June 30, 2008. Finance Department personnel greatly improved the efficiency and timeliness of the reconciliation process. Personnel ultimately found an understatement of the June 30, 2007 cash balance which was not material to the audited statements and was internally adjusted during the current year. 304
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City of Bozeman, Montana SPECIAL AREA RECREATION DEPARTMENT June 30, 2008318
1RECREATION DEPARTMENT ASSESSMENT OF INTERNAL CONTROLS AND OPERATIONS NOVEMBER 19, 2008 OBJECTIVES o To gain an understanding of the internal controls and operations of the Recreation Department o To assess the operational effectiveness of the design and operation of internal controls in place at the Recreation Department o To assess the operating performance of the Recreation Department o To provide recommendations for improvement of the system of internal controls and overall operating efficiency o To communicate the results of our assessment to management of the Recreation Department and the City of Bozeman EXECUTIVE SUMMARY Each year, the management of the City of Bozeman selects a specific area of operations that will be subject to an in-depth review by their contracted independent public accountants. The scope of the review includes an assessment of the system of internal controls and the overall operating effectiveness. This year, the Recreation Department has been selected for this specific area review. We have made several recommendations to improve internal controls at the Recreation Department. PROCEDURES We met with the Sue Harkin (Recreation Superintendent), Jamie Saitta (Recreation Program Manager), Doreen Olean (Recreation Administrative Assistant), and Dan McCarthy (Aquatics Director). Through these meetings we gained an understanding of the internal controls and operations in place at the Recreation Department, which we documented below. We reviewed financial documents and reports generated and used by the Recreation Department. 319
2CASH RECEIPTS-Beall Park Recreation Center Payment is received in the mail or in person Registration Fees Facility Rental Fees All receipts are entered into Rec Trac and placed in till 3 Copies of receipt printed: Patron, Rec Center File, Receipt Book When Receipt Book is full it is sent to City Hall End of day, till is counted by 2 staff members Cash Balance Report completed and signed; report and cash are placed in safe in locked cash bag Treasurer at City Hall reconciles cash, checks, and CC receipts to Cash Balance Report City Hall prepares deposit slip, updates Rec Trac and Cash Balance Report for adjustments 320
3Beall Park Recreation Center (Rec Center) Payments are received (mostly checks and credit cards) for one-time reservations of facilities, monthly billings for regular use of facilities, and registration fees for City recreation programs like swimming lessons and T-ball. All receipts are entered into the Recreation Department’s software system, Rec Trac, and are placed in the cash drawer as received. Receipts are printed for all forms of payment. Doreen is usually at the front desk, but other employees fill in as necessary. Each employee has an individual log-in for Rec Trac that they use when entering transactions. Cash is limited but any employee may handle cash transactions. The Rec Center does not maintain a checkbook. All cash receipts are sent to the City for deposit. Rec Department employees can make purchases using petty cash or one of the Department’s charge cards. Cash disbursements for the charge cards and petty cash reimbursement are done by the City. • Reservations – When a facility is reserved for rental, Doreen receives payments for the deposit and sometimes facility rental fee at that date. Payment for facility rental fee is due in full when the key is picked up. All cash payments are entered into Rec Trac and a receipt is printed. Receipts are printed in triplicate. One copy of the receipt is given to the patron, Doreen retains one copy at the Rec Center, and one copy stays in the receipt book. Once the receipt book is full, it is sent to the Treasurer at City Hall. • Monthly billings – Doreen tracks monthly usage of the Rec Center, Swim Center, and Bogert Pool for regular user groups. She sends monthly bills to each user group with a calendar showing the group’s usage by day and a total amount owing. Each invoice is also added to the ledger for each user group showing total amount owed and history of invoices and payments. Payments are received and entered into Rec Trac and manually entered into the same ledger. • Registration Fees – Payments are received by Doreen. She enters these into Rec Trac and generates a receipt. If Doreen is not available, Sue or Jamie can also receive and record payments. When the registration payment is entered into Rec Trac, the participant’s name is added to the list for that program. Only participants on the list are admitted into the program, so it serves as a double check that a participant would know if he/she paid and the money was never recorded into the system for that program (as his/her name would not be on the list). • Cash, check, and credit cards are counted by two people at the end of the day and compared to Rec Trac. A total for each of the cash, check, and credit cards is entered on a cash balancing sheet. The sheet is signed by both people responsible for counting cash for that day. Receipts are then placed in a locked cash bag in the facility’s safe. The next day the cash bag is sent to City Hall via the City’s delivery service with the cash and checks. City Hall reviews and verifies amounts and makes bank deposits. • Petty cash is limited to $100 and used only for purchases where there is no charge account and credit cards are not used. All expenses are supported by receipts. At least once a month, Doreen prepares a request for reimbursement with receipts in the receipt book and sends it to the Treasurer at City Hall. City Hall then cuts check to replenish petty cash. 321
4 • A change bag of $100 is maintained and used to make change for cash payments. This is not used often at the Rec Center. • A safe is located at the Rec Center. The combination for the safe is changed at least every year and a half. The location of the combination is moved on a regular basis. Sue, Jamie, Doreen & Linda know the safe combination at the Rec Center. • Accounts Receivable write-offs are very infrequent. Doreen keeps close track of payments and generally knows if a user group is behind on payments. While user groups have a good history of paying, the payments are not always made on time. • Credit/Charge Cards: The Rec Center has charge cards (Home Depot, Costco, etc) and gas cards that can be checked out by employees. A credit card log is maintained, detailing information regarding who checked it out and when, as well as when it was returned. Employees must get receipts for all purchases. Receipts are approved by Beall Park staff and require two signatures. Once approved, Doreen sends the receipts to City Hall to be processed through the City’s accounts payable system. City Hall receives the monthly statements, reconciles the receipts to the statement and pays the credit card companies. 322
5CASH RECEIPTS-Swim Center and Bogert Pool Swim Center and Bogert Pool Payments are received for daily swim admissions, merchandise, group rental fees, registration fees, and locker rentals. Payments are made in the form of cash, check, and credit card. Cash comes mostly from daily swim admissions, merchandise, and locker rentals. Group rental fees and registration fees are usually paid by check or credit card. All receipts, cash, signed credit card receipts, and checks are entered into Rec Trac and placed in the till as received. Receipts may be printed for all forms of payment. However, most customers paying cash for daily swims and using change for locker rentals do not want receipts. Employees (life guards) at each pool rotate through positions around the pools and through taking payments at the front desks. Each employee uses their own log-in for Rec Trac during their time at the front desk. Cash is handled by all employees. Cash drawers are counted at the beginning and end of each day. The front desks are under surveillance Payment is received in the mail or in person Daily Swim Admissions Merchandise Sales Registration Fees Facility Rental Fees All receipts are entered into Rec Trac and placed in tillEnd of day, till is counted by a Life Guard II and one other employeeCash Balance Report completed, and signed. Locked cash bag placed in safe Treasurer at City Hall reconciles cash bag to Cash Balance Report and AS400 by day City Hall prepares deposit slip, updates Rec Trac and Cash Balance Report for adjustments Management reviews Cash Balance Report, signs it, uploads Rec Trac data into City AS400323
6cameras which can be monitored by management. Management also makes it very clear as new employees start that theft is not tolerated from the very first incident. Checkbooks are not maintained by either the Swim Center or Bogert Pool, as deposits and cash disbursements are made through City Hall. • Cash balancing process: At the end of each day, till is counted by Life Guard II and one other employee. They detail the receipts on the Cash Balancing Report and sign it. Cash, checks, and credit card receipts are placed in a cash bag that is locked and put in the safe overnight. Doreen picks up the locked cash bag at Bogert and takes to City Hall next morning. The Cash bag for Swim Center is sent to City Hall via city delivery next morning. Also next morning, management at Bogert and Swim Center review Cash Balancing Report and verify totals and reconcile differences. They then sign the report and transfer the information electronically from Rec Trac to the City’s AS400 accounting system. The Cash Balancing Report is then sent to City Hall. City Hall reconciles information in AS400 with locked cash bags and Cash Balancing Report for each respective day. • Locker rentals are entered into Rec Trac at both locations and are counted by two staff members. The fees are $15 for deposit and $20 for rental for 3 months (recently increased from $15). These fees are included on the cash balancing sheet filled out at the end of the day and signed by both staff members. At least one of the staff members counting has to be a Lifeguard II (member of management) or higher. A staff member from each facility is responsible for maintaining the log book for locker rentals. This includes placing notices on lockers as they approach the end of the 3 month term. • Change bags: The Swim Center and Bogert Pool each have $200 change bags. These are used to make change for cash payments if the till runs low. They are kept in safes when not in use. • Cash drawers: The Swim Center keeps $50 in the cash drawer; Bogert Pool keeps $75. These cash drawers, also referred to as morning startup cash, are counted each morning and at the end of the day by two staff members. They complete the cash balancing form and sign and date it. One of the staff must be a Lifeguard II or higher. The money is then put in a locked bag in the safe. • The Rec Center bills user groups for the regular use of either pool facility. Payments from those groups are sent directly to the Rec Center. • Safes are located at both the Swim Center and Bogert Pool. Combinations for the safes are changed at least every year and a half. The locations of the combinations are moved roughly every 4-5 months. Management staff and Lifeguard IIs know the safe combinations at each facility. 324
7• Attendance: Each day the Lifeguard II’s compare the total amount of money received with total attendance to determine if it seems reasonable. Also, management do the cash balancing sheets in the morning and know approximately what should have been receipted the day before based on the attendance sheets. • Training: Management and Life Guard II staff must have been employed for at least six months and attend training on the procedures related to the safes, counting money and filling out cash balance sheets. • Safety: The facilities are very safety-oriented with training for lifeguards and plans in place for different potential scenarios. Each location maintains an Accident Book, Rescue Book, and Safety Plan. Each accident or rescue is documented by the staff that handled it and any management on duty. • Theft: Opportunities for theft of equipment and supplies are minimal. Most of the equipment is old and mainly comprised of small items with little value. Small items include donated toys and small tools, which are the main items subject to theft. All small tools are painted bright pink and labeled by the facility to deter theft. Management noted some are stolen by employees, but only occasionally and it is hard to completely prevent. Most of the larger, valuable items would be difficult to steal; some examples of large items are inflatable jumping machines for events and workout equipment. OBSERVATIONS • Cash drawers are counted at the end of each day rather than at each employee change at the front desk. Because this is the procedure, having a separate log-in for each person is necessary, as it serves to show who may have contributed to any over/short issues for any given day. It does not allow for tracking back to the employee that made a mistake, or may have stolen money, since separate cash drawers are not kept by employee. However, given that the life guards are only at the front desk for a portion of each hour and there are no current concerns about ongoing theft, it does not seem necessary to recommend using separate cash drawers. • Dan McCarthy noted that they cannot create a swim pass unless the information and payment are entered into Rec Trac. This means that the exposure to staff creating swim passes without collecting money is limited to one, maybe two days before it would be caught during the balancing process, either by management or City Hall. 325
8RECOMMENDATIONS • Swim passes all have expiration dates. Rec Trac does allow staff to change the expiration dates with no audit trail. The recommendation is to have Rec Trac create an audit trail noting which passes have had dates extended and who extended the dates. • Dan’s staff said Doreen, from the Rec Center, picks up the locked cash bags at Bogert Pool and personally takes them to City Hall. Doreen confirmed this for Bogert Pool, and she said the City Delivery Service picks up the cash bags from the Rec Center and the Swim Center and delivers them to City Hall. The recommendation is to either use the City Delivery Service for Bogert Pool as well, or to have an armored service pick up and deliver the cash bags for all locations to mitigate the risk of theft in transit. OTHER RECOMMENDATIONS o Formal written policies and procedures should be prepared for each position title and given to all new employees. 326