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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brian LaMeres, City Controller
Anna Rosenberry, Director of Finance
Chris Kukulski, City Manager
(to be presented by Merrilee Glover of J.C.C.S.)
SUBJECT: Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2009-2010
MEETING DATE: December 20, 2010
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 2010, 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.
Attachments: CAFR Comprehensive Annual Financial Report - also posted online at: http://www.bozeman.net/Departments-(1)/Finance/Budgets-and-Financials
Audit Communication Letter to Management
Building Inspection Agreed-Upon Procedures Report
Report compiled on December 9, 2010
220 West Lamme, Suite 3A
P. O. Box 1965
Bozeman, Montana 59771-1965
ph. (406) 587-1277
fx. (406) 587-8794
Junkermier h Clark
Campanella h Stevens h P.C.
Certified Public Accountants and Business Advisors
Bozeman h Great Falls h Helena h Kalispell h Missoula h Whitefish
December 15, 2010
To the Honorable Mayor, City Commissioners, City Manager, and Audit Committee City of Bozeman, Montana:
We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Bozeman, Montana
as of June 30, 2010 and for the year then ended. Professional standards require that we provide you with the following information related to our audit.
Our Responsibilities under U.S. Generally Accepted Auditing Standards and Governmental Auditing Standards
As stated in our engagement letter dated April 14, 2010, our responsibility, as described by professional
standards, is to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting
principles. Our responsibility is to plan and perform the audit to obtain reasonable, but not absolute,
assurance that the financial statements are free of material misstatement. Our audit of the financial statements does not relieve you or management of your responsibilities.
As part of our audit, we considered the internal control of the City of Bozeman. Such considerations were solely for the purpose of determining our audit procedures and not to provide any assurance concerning such
internal control.
As part of obtaining reasonable assurance about whether the financial statements are free of material
misstatement, we performed tests of the City of Bozeman’s compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our tests was not to provide an opinion on
compliance with such provisions.
Planned Scope and Timing of the Audit
We performed the audit according to the planned scope and timing previously communicated to you in our
meeting about planning matters on May 17, 2010.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City of Bozeman are described in Note 1 to the financial statements. The application of existing policies was not changed during the year ended June 30, 2010. The City implemented
GASB 51 – Accounting for Intangibles – during the fiscal year ended June 30, 2010. We noted no
transactions entered by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial
statements in a different period than when the transaction occurred.
City of Bozeman, Montana Audit Communication Letter
Page 2
Accounting estimates are an integral part of the financial statements prepared by management and are based
on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial
statements and because of the possibility that future events affecting them may differ significantly from those
expected. The most sensitive estimate affecting the financial statements was Management’s estimate of the capital assets balances as the useful lives, potential impairments, and depreciation are estimates. We
evaluated the key factors and assumptions used to develop the estimates in determining that the capital asset
balance is reasonable in relation to the financial statements taken as a whole.
The disclosures in the financial statements are neutral, consistent and clear. Certain financial statement
disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were the Note 15 Post-Employment Benefits Other
than Pensions and Note 24 Pollution Remediation Obligations. These are particularly sensitive because the disclosures relate to new Governmental Accounting Standards Board Statements Numbers 45 and 49, respectively, both which became effective for the City during fiscal year ended June 30, 2009.
Difficulties Encountered in Performing the Audit
We are pleased to report that we encountered no difficulties with management in performing and completing
our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management.
Management has corrected all such misstatements. All adjusting journal entries proposed by us were subsequently recorded by management. Refer to the attachment to this letter for a detailed listing of the adjusting journal entries.
Disagreements with Management
For purposes of this letter, professional standards define a disagreement with management as a matter,
whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditor’s report. We are pleased to report that no
such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated December 15, 2010.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and audit standards, with management each year prior to retention as the governmental unit’s auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.
Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principal to the City’s financial statements or, a determination of the type of auditor’s
opinion that may be expressed on those statements, our professional standards require the consulting
accountant check with us to determine that the consultant has all the relevant facts. There were no such consultations with other accountants.
City of Bozeman, Montana Audit Communication Letter
Page 3
Current Year Observations and Recommendations
1. Observation: Per Montana Code Annotated (MCA) 2-18-611(4) and MCA 2-18-618(3),
respectively, an employee may not accrue annual vacation leave credits or sick leave credits while in
a leave-without-pay status. Although not material to the financial statements, the City had two instances during the year ended June 30, 2010 when employees placed on leave-without-pay status
continued to accrue vacation and sick leave.
Recommendation: Ongoing familiarization with the Montana Department of Administration’s
compliance supplements for local government services.
New Pronouncements
Governmental Accounting Standards Board Statement No. 54 – Fund Balance Reporting and Governmental
Fund Type Definitions. The requirements of this Statement are effective for financial statements for periods
beginning after June 15, 2010.
This Statement provides for fund balance for governmental funds to be reported in classifications that
comprise a hierarchy based primarily on the extent to which the government is bound to honor constraints on the specific purposes for which amounts in those funds can be spent.
• Nonspendable fund balance includes amounts that are not in a spendable form such as inventory, or
are required to remain intact, for example the principal of an endowment.
• The restricted fund balance category includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation.
• The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the government's highest level of decision-making
authority.
• Amounts in the assigned fund balance classification are intended to be used by the government for
specific purposes but do not meet the criteria to be classified as restricted or committed. In
governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed.
• Unassigned fund balance is the residual classification for the government's general fund and includes all spendable amounts not contained in the other classifications. In other funds, the unassigned
classification should be used only to report a deficit balance resulting from overspending for specific
purposes for which amounts had been restricted, committed, or assigned. Governments are required to disclose information about the processes through which constraints are imposed on amounts in the
committed and assigned classifications.
The definitions of the general fund, special revenue fund type, capital projects fund type, debt service fund
type, and permanent fund type are clarified by the provisions in this Statement. Interpretations of certain
terms within the definition of the special revenue fund type have been provided and, for some governments, those interpretations may affect the activities they choose to report in those funds. The capital projects fund
type definition also was clarified for better alignment with the needs of preparers and users. Definitions of other governmental fund types also have been modified for clarity and consistency.
We will be pleased to respond to any questions you have about the foregoing. We appreciate the opportunity to continue to be of service to the City.
City of Bozeman, Montana Audit Communication Letter
Page 4
This report is intended solely for the information and use of the Mayor, Members of the City Commission,
City Manager, the Audit Committee, the City’s management, and the Montana Department of Administration and is not intended to be used and should not be used by anyone other than the specified parties.
Sincerely,
Junkermier, Clark, Campanella, Stevens, P.C.
Certified Public Accountants
CITY OF BOZEMAN
STATEMENT OF NET ASSETS - CONVERSION WORKSHEET
JUNE 30, 2010
Total Total
Governmental Dr. (Cr) Dr. (Cr) Governmental
Funds Adjustments Reclassifications Activities
ASSETS
Cash and investments 16,565,257 37,240 (1)16,602,497
Restricted cash and investments 8,132,044 8,132,044
Receivables, net 11,999,476 21,731 (1)12,021,207
Notes receivable 701,201 701,201
Accrued interest 42,285 42,285
Inventories - -
Prepaid expenses 465,375 - (1)465,375
Deferred charges - 161,454 (12)161,454
Internal balances 40,694 (18,055) (1)- (A)22,639
Capital assets (Note 1):
Land and construction in progress - 10,314,825 (2)10,314,825
Other capital assets, net of depreciation - 651,634 (1)89,739,975
- (13)
- (14)
93,583,401 (2)
4,377,463 (2)
- (8,872,523) (8)
Total assets 37,946,332 138,203,502
LIABILITIES
Accounts payable and accrued expenses 1,226,177 (101,935) (1)1,328,112
Fiduciary fund payable - - (A)-
Compensated absences payable - (997,000) (C)997,000
Deferred revenue 10,390,171 894,506 (4)1,106,849
701,201 (5)
6,133,028 (6)
1,761,485 (7)
(206,898) (15)
Current portion capital leases (66,713) (B)66,713
Current portion long-term debt - (1,037,934) (B)1,037,934
Current portion opeb
Long-term liabilities (Note 2)
Capital lease - (360,127) (10 66,713 (B)224,524
68,890 (10)
Compensated absences - (10,092) (1) 357,339
(1,310,288) (3) 997,000 (C)
(33,959) (11)
Due in more than one year - (15,876,000) (3) 1,037,934 (B)14,602,137
1,125,929 (10)
(890,000) (10)
Other post-employment health benefits (1,174,927) (14)1,183,439
(8,512) (1)
Pollution remediation obligations (16,874) (15)16,874
Unamortized bond premium 436 (10)
(10,024) (10 - 9,588
Total liabilities 11,616,348 20,930,509
NET ASSETS
Invested in capital assets, net
of related debt - (84,113,904) (F) 84,113,904
Restricted for impact capital projects (7,537,972) (F) 7,537,972
Restricted for debt service - (F)-
Restricted for departmental special projects - (F)-
Restricted for planning - (F)-
Restricted for cemetery care (544,209) (F) 544,209
Reserved per governmental statements 4,524,769 - 4,524,769 (F)-
Unrestricted 21,805,215 (90,943,009) 87,671,316 (F) 25,076,908
Total net assets 26,329,984 117,272,993
Total liabilities and net assets 37,946,332 138,203,502
CITY OF BOZEMAN
STATEMENT OF ACTIVITIES - CONVERSION WORKSHEET
JUNE 30, 2010
Total Total
Governmental Dr. (Cr)Dr. (Cr) Governmental
Funds Adjustments Reclassifications Activities
REVENUES
Taxes 15,055,844$ (445,472) (4)15,501,316
Special assessments 1,643,500 1,008,802 (E)-
634,698 (6)
Licenses and permits 958,590 958,590 (E)-
Intergovernmental 7,900,176 (7,288) (9) 7,907,464 (G)-
Grants and cont - unrestricted (6,284,468) (G)6,284,468
Operating grants and cont (693,341) (G)693,341
Capital grants and cont (4,377,463) (2) (929,655) (G)5,307,118
Charges for services 5,790,382 (3,541,516) (E)9,331,898
Fines and forfeitures 1,518,481 (55,643) (7) 1,574,124 (E)-
Interest on investments 352,378 - #352,378
Loan repayment 10,401 10,401 (5)-
Other 2,256,071 2,256,071
Total revenues 35,485,823 39,726,590
EXPENDITURES
Current
General government 5,690,488 466,618 #6,299,831
(9,836) (11)
35,517 (9)
117,044 (14)
Public safety 11,709,170 417,676 (8)12,382,157
12,710 (11)
242,601 (14)
(12)
Public service 2,702,510 6,917,437 (8)9,703,594
(2,767) (11)
11,313 (12)
(6,768) (13)
59,587 (14)
22,282 #
- (15)
Public welfare 4,916,828 747,247 (5)6,915,557
33,852 (11)
146,838 (14)
1,070,792 (8)
Other - -
Capital outlay 4,248,758 (4,248,758) (2)-
Debt service
Principal payments 1,194,819 (1,125,929) (10)-
(68,890) (10)
Interest and fiscal fees 715,150 (436) (10)714,714
Total expenditures 31,177,723 36,015,853
OTHER FINANCING SOURCES (USES)
Operating transfers in 10,857,332 (698,456) (9) 11,033,925 (D)521,863
Operating transfers out (11,033,925) - (9) (11,033,925) (D)-
Proceeds of long-term debt 890,000 - (10)-
890,000 (10)
Transfers of capital assets - - (2)-
Premium on bonds - - (10)-
Sale of fixed assets 766,922 4,970 (2)761,952
Total other financing sources (1,480,329 1,283,815
Net change in fund balances 5,788,429 4,994,552
FUND BALANCE -
beginning of year 20,541,555 (91,736,886) 112,278,441
- (14)-
- (13)-
FUND BALANCE -
end of year 26,329,984$ 117,272,993$
CITY OF BOZEMAN
ADJUSTING JOURNAL ENTRIES
JUNE 30, 2010
Adjusting Entry
Number Account Debit Credit
(1) Cash and investments 37,240
Receivables, net 21,731
Prepaid expenses -
Internal balances 18,055
Capital assets, net of depreciation 651,634
Accounts payable and accrued expenses 101,935
Long-term compensated absences 10,092
Other post-employment health benefits - implicit rate subsidy 8,512
Net assets - beginning (Invested in capital assets, net)651,634
Net assets - beginning 79,623
To record the effect on assets and liabilities of the internal service
amounts allocated to governmental activities.
(2) Land and construction in progress 10,314,825
Other capital assets, net of depreciation 93,583,401
Other capital assets, net of depreciation 4,377,463
Donated capital assets 4,377,463
Capital asset expenditures 4,248,758
Net assets - beginning 99,649,468
Capital assets transferred from enterprise funds -
Net assets - beginning -
Sale of fixed assets 4,970
Net assets - beginning 4,970
To record capital assets and to capitalize capital asset expenditures.
(3) Net assets - beginning 17,186,288
Long-term debt - Due in more than one year 15,876,000
Long-term compensated absences 1,310,288
To record beginning balance in long-term liabilities.
(4) Deferred revenue 894,506
Net assets - beginning 449,034
Property tax revenue 445,472 .
To adjust revenue based on modified accrual accounting in the fund
financial statements to the accrual basis for the government-wide
financial statements for property taxes.
(5) Deferred revenue 701,201
Loan repayment revenue 10,401
Public welfare expenditure (747,247)
Net assets -beginning 1,458,849
To adjust revenue based on modified accrual accounting in the fund
financial statements to the accrual basis for the government-wide
financial statements for community loans.
(6) Deferred revenue 6,133,028
Special assessment revenue 634,698
Net assets - beginning 6,767,726
To adjust revenue based on modified accrual accounting in the fund
financial statements to the accrual basis for the government-wide
financial statements for SID's.
(7) Deferred revenue 1,761,485
Fine and forfeitures revenue 55,643
Net assets - beginning 1,705,842
To adjust revenue based on modified accrual accounting in the fund
financial statements to the accrual basis for the government-wide
financial statements for Municipal Court fine receivable.
(8) General government expenditure 466,618
Public safety expenditure 417,676
Public services expenditure 6,917,437
Public welfare expenditure 1,070,792
Other capital assets, net 8,872,523
To record depreciation expense and allocate to governmental activities.
(9) Other - Nondepartmental expenditures 35,517
Transfers in 698,456
Public service expenditures 22,282
Investment earnings -
Intergovernmental revenue 7,288
Net assets - beginning (647,945)
To record the effects on revenues, expenditures, and other changes
in net assets of the internal service amounts allocated to
governmental activities.
(10) Debt service - principal expenditure 1,125,929
Long-term liabilities more than one year 1,125,929
Capital lease 360,127
Net assets - beginning 370,151
Long-term liabilities more than one year 890,000
Proceeds from debt issuance 890,000
Capital lease 68,890
Debt service - principal expenditure 68,890
Unamortized bond premium 10,024
Unamortized bond premium 436
Debt service - interest and fees 436
To adjust debt related other financing source and uses to zero and to
adjust effect on long-tem liabilities.
(11) General Government Expenditures 9,836
Public Safety Expenditures 12,710
Public Service Expenditures 2,767
Public Welfare Expenditures 33,852
Long-term compensated absences 33,959
To adjust for change in compensated absences in current year.
(12) Deferred Charges - Bond Issuance Costs 172,767
Net assets - beginning 172,767
Public Service Expenditures 11,313
Deferred Charges - Bond Issuance Costs 11,313
To adjust bond issuance costs off the statement of activities and
record one year of amortization.
(13) Net assets - beginning 213,666
Deferred revenues 206,898
Public service expenditures 6,768
To recognize impact fee credits using the full accrual method of accounting
(14) General government expenditure 117,044
Public safety expenditure 242,601
Public services expenditure 59,587
Public welfare expenditure 146,838
Other post-employment health benefits 566,070
Net assets - beginning 608,857
Other post-employment health benefits 608,857
To recognize retire health insurance post-employment obligation
(15) Public services expenditure -
Net assets - beginning 16,874
Pollution Remediation Obligations 16,874
To recognize pollution remediation obligations
CITY OF BOZEMAN
RECLASSIFICATION JOURNAL ENTRIES
JUNE 30, 2010
Reclassification
Entry Account Debit Credit
(A) Internal balances -
Fiduciary fund payable -
To reclassify for reporting purposes.
(B) Long-term debt 1,037,934
Current portion of long-term debt 1,037,934
Capital leases 66,713
Current portion of capital leases payable 66,713
To reclass current portion of long-term debt and capital leases.
(C) Long-term compensated absences payable 997,000
Compensated absences payable 997,000
To reclass current portion of long-term compensated
absences payable.
(D) Transfers in 11,033,925
Transfers out 11,033,925
To offset transfers and correct internal service transfers.
(E) Fines and forfeitures revenues 1,574,124
Licenses and permits revenues 958,590
Special assessment revenues 1,008,802
Charges for services revenues 3,541,516
Reclass certain revenues into charges for services for reporting
purposes.
(F) Invested in capital assets, net 651,634
Invested in capital assets, net 83,462,270
Restricted for impact capital projects 7,537,972
Restricted for debt service -
Restricted for departmental special projects -
Restricted for planning -
Restricted for cemetery care 544,209
Reserved per governmental statements 4,524,769
Unrestricted net assets 87,671,316
To reclass to proper net asset categories.
(G) Intergovernmental revenues 7,907,464
Unrestricted grants and contributions 6,284,468
Capital grants and contributions 929,655
Operating grants and contributions 693,341
To reclass grants to those restricted for operations and capital
purchases.
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2010 Prepared by the City of Bozeman Finance Department
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2010 TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal ........................................................................................................................................................................................................ 1-14 Governmental Financial Officers’ Association Certificate of Achievement ...................................................................................................................... 15 Organizational Chart ........................................................................................................................................................................................................... 16 City Elected Officials and Officers ................................................................................................................................................................................ 17-18 II. FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT ..................................................................................................................................................................... 19-20 A. MANAGEMENT’S DISCUSSION AND ANALYSIS ................................................................................................................................................ 21-30 B. BASIC FINANCIAL STATEMENTS Government Wide Financial Statements Statement of Net Assets ............................................................................................................................................................................................... 31 Statement of Activities ................................................................................................................................................................................................. 32 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet – Governmental Funds .............................................................................................................................................................. 33-34 Reconciliation of the Balance Sheet to the Statement of Net Assets – Governmental Funds ............................................................................... 35 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ........................................................................... 36 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities – Governmental Funds ............................................................................................................................................... 37 Proprietary Fund Financial Statements Statement of Net Assets – Proprietary Funds ................................................................................................................................................... 38-39 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds ................................................................................... 40 Statement of Cash Flows – Proprietary Funds .................................................................................................................................................. 41-42 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets – Fiduciary Funds ........................................................................................................................................... 43 Notes to Financial Statements ........................................................................................................................................................................................ 44-87
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2010 TABLE OF CONTENTS (CONTINUED) C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS Schedule of Funding Progress – Other Post-Employment Health Care Benefits ............................................................................................................... 88 Statements of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual – General and Special Revenue Major Funds General Fund ................................................................................................................................................................................................................ 89 Street and Fire Impact Fees Fund ................................................................................................................................................................................. 90 Notes to Required Supplementary Information Other Than Management Discussion and Analysis .......................................................................... 91 D. SUPPLEMENTAL INFORMATION Combining and Individual Fund Statements and Schedules Combining Balance Sheet – Non-Major Governmental Funds ............................................................................................................................... 92-97 Combining Statement of Revenue, Expenditures, and Changes in Fund Balance – Nonmajor Governmental Funds ......................................... 98-102 Budget-to-Actual Statements – Other Major Funds Statements of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual - Other Major Funds SID Sinking Fund ....................................................................................................................................................................................................... 103 Capital Projects Fund ................................................................................................................................................................................................. 104 Note to Budget-to-Actual Statements – Other Major Funds ...................................................................................................................................... 105 Budget-to-Actual Statements- Nonmajor Funds Statements of Revenues, Expenditures, and Changes in Fund Balances - Budget to Actual – Nonmajor Governmental Funds Non-Major Governmental Funds ........................................................................................................................................................................ 106-120 Internal Service Funds Statements Combining Statements of Net Assets – Internal Service Funds ................................................................................................................................. 121 Combining Statements of Revenues, Expenses, and Changes in Fund Net Assets – Internal Service Funds ............................................................ 122 Combining Statements of Cash Flows ................................................................................................................................................................ 123-124 Agency Funds Combining Statements of Fiduciary Net Assets ......................................................................................................................................................... 125 Combining Schedules of Changes in Assets and Liabilities – Agency Funds ........................................................................................................... 126
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2010 TABLE OF CONTENTS (CONTINUED) III. STATISTICAL SECTION Financial Trends Section Net Assets by Component .......................................................................................................................................................................................... 127 Changes in Net Assets ......................................................................................................................................................................................... 128-129 Fund Balances of Governmental Funds ..................................................................................................................................................................... 130 Changes in Fund Balances, Governmental Funds ...................................................................................................................................................... 131 Revenue Capacity Section Assessed value of Taxable Property ........................................................................................................................................................................... 132 Direct and Overlapping Property Tax Rates .............................................................................................................................................................. 133 Principal Property Tax Payers .................................................................................................................................................................................... 134 Property Tax Levies and Collections ......................................................................................................................................................................... 135 Water Sold by Type of Customer ............................................................................................................................................................................... 136 Water and Sewer Rates ............................................................................................................................................................................................... 137 Debt Capacity Section Ratios of Outstanding Debt by Type .......................................................................................................................................................................... 138 Ratios of General Bonded Debt Outstanding ............................................................................................................................................................. 139 Direct and Overlapping General Bonded Debt Outstanding ...................................................................................................................................... 140 Legal Debt Margin Information ................................................................................................................................................................................. 141 Pledged Revenue Coverage ........................................................................................................................................................................................ 142 Demographics and Economic Section Demographic and Economic Statistics ....................................................................................................................................................................... 143 Principal Employers ................................................................................................................................................................................................... 144 Operating Section Full-time Equivalent City Government Employees by Function/Program ................................................................................................................ 145 Operating Indicators by Function/Program ................................................................................................................................................................ 146 Capital Assets Statistics by Function/Program ................................................................................................................................................................. 147
CITY OF BOZEMAN, MONTANA COMPREHENSIVE ANNUAL FINANCIAL REPORT JUNE 30, 2010 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 ................................................................................................................................................................... 148 Notes to Schedule of Expenditures of Federal Awards .................................................................................................................................................... 149 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 ......................................................................................................................................................................... 150-151 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........................................................................................................................................................................................... 152-153 Schedule of Findings and Questioned Costs ..................................................................................................................................................................... 154 Current Status of Prior Year Recommendations ............................................................................................................................................................... 155
PART I INTRODUCTORY SECTION
1 CITY OF BOZEMAN, MONTANA December 15, 2010 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, 2010 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.
2 CITY OF BOZEMAN, MONTANA 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 2010 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 The recession tightened its grip on Montana’s economy in 2009, producing the first back-to-back declines in consecutive years in real nonfarm labor earnings since 1986. What began as downturns in construction and wood products industries in 2008 spread out into nearly every segment of the economy in 2009, as well as into every corner of the state. It was a year that saw the global recession arrive at the doorstep of almost every sector of the state’s economy. In the first half of 2009: • Construction continued to see double-digit declines in earnings, led by big dips in building construction; • Montana’s transportation industries continued to be hurt by declines in goods shipments, with earnings in transportation and warehousing industries down by 4 to 5 percent; • Once fast-growing Flathead and Gallatin counties saw sharp declines in wage income due to steep cutbacks in construction and (for Flathead) forest products industry employment. The more modest declines in Missoula and Yellowstone counties were closer to the state average. • Most employment and earnings declines tapered off in their severity as we moved toward the summer. We expect to see some recovery overall in the state economy in 2010 as consumer spending in the national economy stabilizes and markets for Montana’s products begin to improve. Job growth will be slow, and the unemployment rate is expected to remain high through 2010. The closure of Smurfit-Stone in 2010 represents another challenge to growth.
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5 CITY OF BOZEMAN, MONTANA The biggest risk to the forecast is a “doubledip” recession in the national economy. This risk is particularly high if monetary authorities decide to tighten the economy too early. There is also a significant risk that U.S. job losses and high savings rates will keep consumer spending weak and leave the economy stagnant for a prolonged period.
6 CITY OF BOZEMAN, MONTANA Outlook for Gallatin County: The housing/real estate bubble was the biggest in Gallatin County. The corresponding bust was particularly stark. By mid-2009, construction employment was down 30 percent (or more than 1,600 jobs) from mid-2008 levels, which themselves were 15 percent below the corresponding 2007 figures. Adding to the “bubble” impacts, there were sizable declines in retail trade, transportation, and business services in early 2009. Finally, the national recession impacted nonresident travel. The 6.0 percent decline in 2009 in Gallatin County matches the decrease posted by Flathead County. On the bright side, manufacturing employment has been only modestly impacted. Montana State University, other state agencies, and the federal government account for about 40 percent of the economic base and contribute stability to the local economy. Growth is projected to return in 2010 and later, but the growth rates will be far below those posted from 2003 to 2007.
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8 CITY OF BOZEMAN, MONTANA For the Year Initiatives & Priorities ongoing, undertaken or completed during the year include: 1. Completed construction of Fire Station #3 and purchased Fire Engine #3. 2. Completed the first phase of the Story Mansion’s interior restoration. 3. Broke ground on Phase I of the Water Reclamation Plant (Wastewater Treatment Plant). Fire Station #3 4. Began construction of Vehicle Maintenance/HRDC facility 5. Completed new City Hall relocation on time and within budget and finalized sale of the old City Hall site. 6. Adopted a work plan of new initiatives and ongoing priorities for 2010 and 2011, in an effort to assist staff in allocating resources and time. 7. Adopted Bozeman Community Plan. 8. Adopted Economic Development Plan. 9. Adopted Downtown Improvement Plan. 10. Continued implementation of: a) Fire Services Master Plan— adopted 2006. b) Water and Wastewater Facility Plans—adopted 2006 c) Police Services Facility & Staffing Plan—adopted 2007. d) PROST Parks, Recreation, Open Space, and Trails Plan—Adopted 2007. e) Municipal Climate Action Plan—Adopted 2008. f) Aquatics Facility Survey for Swim Center & Bogert Park Pool—Adopted July 2008. g) Water Rate Study and Wastewater Rate Study – Adopted 2009 and updated every 5 years. 11. Improve Bozeman as a bike friendly environment, stripe all possible bike lanes and increase street sweeping.
9 CITY OF BOZEMAN, MONTANA For the Future New Policy Initiatives Enhance Downtown Development Opportunities • Utilize the federal HUD grant for the blast site (Finance, CM City Manager) • Conduct a "Full cost & benefit study: social, economic & traffic considerations for one-way conversion to 2-way, shared lanes, streetscape improvements and truck route modifications" as recommended by the Downtown Plan. (Engineers) • Increase density in the B-3 district. Bozeman Community Plan (BCP) Implementation Policy 8, 9, 16, 21a, 22, 27, 81. (Planning) • Implement the remaining parking recommendations identified in the downtown plan and review and update for the Downtown Parking SID/Cash-in-lieu program. BCP Implementation policies 2, 3, 9, 10, 11. (Planning, Parking) • Amend UDO to incentivize downtown redevelopment and the construction of multi-story buildings (Planning) Reform the development review process without decreasing quality • Increase the Planning Director and City Engineer’s responsibilities to make administrative approvals of projects as recommended in the Community Plan. (Planning, Engineers) • Amend the Sign Code (Planning) • Review DRB & DRC review procedures. (Planning) • Improve coordination between planning, engineering and building (Engineers, Planning, Building) Economic Development Ombudsman (CM) Shared City Vehicle Shop / Streamline Bus Garage • Hire the Economic Development Ombudsman (CM) • Work as a catalyst to bring the Chamber, Prospera, MSU and the City together (CM) • Increase salability of lots, final plat extensions, infrastructure guarantees (Planning, Engineers) • Support the Economic Development Council (CM) • Partner with MSU and all community stakeholders to develop a two-year college (City Commission)
10 CITY OF BOZEMAN, MONTANA Develop a plan to address deferred infrastructure maintenance. • Water Distribution System – the facility plan identifies 54,506 lineal feet (LF) of existing water mains that are undersized and need to be replaced at a cost of $11,768,253 and 53,661 LF of undersized water mains that need to be upgraded to meet fire flows on a max day at a cost of $11,659,652. (Engineers) • Sewer Collection System - improvements were identified in the 1998 Facility Plan. The 2005 Plan recommended lines be TV inspected to determine the greatest need. The projects identified in the 1998 Plan continue to be completed, but as annual televising continues, other more urgent projects may be identified and completed. (Engineers) • Street System - there are currently 27 miles of city streets which are in need of overlay treatments and 25 miles of streets which are in need of chip sealing. At our current rate of investment it would take us approximately 18 years to overlay the streets which need treatments if no further deterioration of the remaining streets took place. The street system includes the curbs and street related storm water. (Engineers) • Sidewalks. §12.20.035 BMC requires abutting owners to repair sidewalks, which Engineering Dept oversees. §12.20.060 BMC provides City Commission can order a sidewalk or curb to be constructed. (Engineers) • Facilities. Implement recommendations contained within Facility Condition Index Plans (CM) • Police Station & Municipal Courts - Develop a plan to replace our municipal courts and police station 1. Build a new police and municipal court facility: Select and purchase a site; Select architect and complete design; Educate the community on the need for bond approval; Award bids for the construction. (Police) Other • Utilize the Economic Development Council to make recommendations regarding Mandeville Farm - Preliminary plat expires April 2011 (CM) • Develop a transition plan for the Story Mansion based on the December 8, 2008 approved motion. (City Commission) • Adopt, implement and coordinate with the USFS, a Forestry Management Plan for the City’s sections of land consistent with the Gallatin NFS Watershed Management Plan protecting the health of Bozeman’s watershed. Improve safety and access to Hyalite Canyon to include guard rails and public restrooms. • Develop a long term plan for the Streamline bus system. • Bozeman Area Transportation Plan—being updated next year. • Impact Fee Studies (Water, Sewer, Streets, Fire) updates begin in FY11. • Reconstruct Kagy Boulevard (South 19th to Willson Avenue) and College Street from 11th Street west to Main Street: upgrade to urban arterials. • Storm water Facility Plan—presented February 2008, adoption pending. • Explore sources of funding for Park Maintenance and operations.
11 CITY OF BOZEMAN, MONTANA DEPARTMENTAL FOCUS Each year the City selects a department to highlight for its efforts and accomplishments. In 2010, Solid Waste Division is selected for review. Solid Waste: The City of Bozeman's Solid Waste Division offers numerous services to meet nearly any refuse disposal need. Residential collection, commercial collection, roll-offs, compost/yard waste collection, brush removal and curbside recycling. Residential The Solid Waste Collection Division offers service to all residents of Bozeman. We have a wide variety of containers available to choose from, to meet individual needs. If you need help deciding what size container you need, please call the residential collection foreman at 582-3237 for assistance. Residential property owners who are interested in using City of Bozeman trash collection service can call 582-2332 or go to City Hall at 121 N Rouse in Bozeman to sign up. Commercial The Solid Waste Division offers a comprehensive range of services to meet the needs of Business owners, apartment complexes and other Commercial concerns. Special services available to commercial customers are, container washing/deodorizing which is especially useful for restaurants, grocery stores, etc and cardboard collection at no additional cost. Curbside recycling is also available for a nominal additional fee. Acceptable commodities include paper, plastics and aluminum and steel cans. Please call the Commercial Foreman at 582-3236 to discuss how the Solid Waste Division can most conveniently meet your refusal disposal needs. Roll-off Service The Solid Waste Division offers a comprehensive selection of roll-off containers as well as the ability to service customer owned roll-off containers at very competitive prices. Containers are available on a temporary or long term basis to match customer needs. Situations where a roll-off container might be the best solution for disposal needs are: new construction projects, remodeling, demolition of existing structures, large brush/tree trimming projects, large retail/wholesale outlets and large “spring cleaning” or home clean-out projects. Container sizes offered include 20, 30 and 40 cubic yard open top, as well as covered (lockable) roll-offs. Please call the Commercial Foreman at 582-3236 for help in determining the appropriate container size to fit your needs.
12 CITY OF BOZEMAN, MONTANA Compost Collection and Brush and Tree Trimmings The Solid Waste Division collects yard trimmings for our customers at no additional cost. Items collected include grass clippings, leaves, small branches (pencil diameter & smaller) and garden waste. Items NOT acceptable for compost collection are sod, dirt, concrete and large branches (more that 1/4 inch in diameter). This service is available mid to late May through mid August, depending on the availability of temporary summer workers. To participate in the compost collection program, place your refuse in plastic or metal cans clearly labeled "Compost" or open plastic bags, near your regular trash collection container. Please have your compost out at 7 am on Monday, as the compost collection will NOT necessarily be on the same day as your trash collection. Please call the Residential Foreman at 582-3237 for more information on this portion of our services. The Solid Waste Division offers temporary containers for disposal of brush, and tree trimmings at a reduced rate. These woody products are then taken to the Story Mill site to be chipped and recycled. Please call the Commercial Foreman at 582-3236 to arrange for an appropriate container for your needs. Curbside Recycling The City of Bozeman started the “Bozeman Recycles Curbside” program December 1, 2008. This program offers once a week pickup and is available to everyone who uses City of Bozeman Garbage Collection Service. Acceptable commodities include paper, plastics and aluminum and steel cans. Please visit our website www.bozeman.net for a list of acceptable and unacceptable materials, and helpful hints for recycling. Customers wishing to sign up for curbside recycling service will be charged a basic $10 fee. This $10 fee includes one 18 gallon tote. The City also offers 65 gallon and 100 gallon totes for commercial and multi-residential customers. These totes may only be used for one type of commodity. Please call 582-2332 for questions or to get signed up. Contacting the Solid Waste Division: Superintendent of Solid Waste Steve Johnson sjohnson@bozeman.net Solid Waste-Foreman (Commercial) Kevin Handelin khandelin@bozeman.net Solid Waste-Foreman (Residential) Rob Green rgreen@bozeman.net Administrative Assistant Katherine Maines kmaines@bozeman.net Solid Waste Mailing Address: Phone: (406) 582-2273 2143 Story Mill Rd P.O. Box 1230 Bozeman, MT 59715 Bozeman, MT 59771
13 CITY OF BOZEMAN, MONTANA 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 1.25 percent. The City earned interest revenue of $1,078,355 on all investments for the year ended June 30, 2010. 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. Subsequent to this fiscal year, in September of 2010, the City received notice from the Authority that the Series 1994 bonds were completely retired.
15 CITY OF BOZEMAN, MONTANA GOVERNMENT FINANCE OFFICERS’ ASSOCIATION CERTIFICATE
16 CITY OF BOZEMAN, MONTANA ORGANIZATIONAL CHART CITY CLERK Stacy Ulmen CITY COMMISSION PARKING COMMISSION MUNICIPAL JUDGES Karl Seel & Matthew Monforton LIBRARY BOARD OF TRUSTEES LIBRARY DIRECTOR Alice Meister CITY MANAGER Chris Kukulski EXECUTIVE ASSISTANT Vacant ASSISTANT TO CITY MANAGER Brit FontenotPARKING MANAGER Paul Burns ASSISTANT CITY MANAGER Chuck Winn FACILITIES James Goehrung PUBLIC SAFETY FIRE Jason Shrauger PUBLIC SERVICE Debbie Arkell PARKS & RECREATION Ron Dingman HUMAN RESOURCES Pattie Berg PLANNING & COMMUNITY DEVELOPMENT Tim McHarg LEGAL Greg Sullivan FINANCE Anna Rosenberry INFORMATION TECHNOLOGY Brendan Steele PUBLIC SAFETY POLICE Ron Price CITIZENS OF BOZEMAN
17 CITY OF BOZEMAN, MONTANA CITY ELECTED OFFICIALS AND OFFICERS ELECTED OFFICIALS Legislative Jeffrey Krauss Mayor Sean Becker Deputy Mayor Christopher Mehl Commissioner Cynthia Andrus Commissioner Carson Taylor Commissioner Judicial Karl Seel Matthew Monforton Municipal Judge Municipal Judge OFFICERS Executive Chris Kukulski Chuck Winn Stacey Ulmen City Manager Assistant City Manager City Clerk Department of Law Gregory Sullivan City Attorney Susan Wordal Assistant City Attorney Timothy A. Cooper Assistant City Attorney Jessica Betley Assistant City Attorney Department of Finance Anna Rosenberry, CPA Director of Finance Brian LaMeres, CPA Controller Laurae Clark Treasurer
18 CITY OF BOZEMAN, MONTANA CITY ELECTED OFFICIALS AND OFFICERS (CONTINUED) OFFICERS (CONTINUED) Department of Public Safety Ronald Price Director of Public Safety - Police Marty Kent Assistant Director of Public Safety-Police Patrol Jason Shrauger Director of Public Safety-Fire Greg Megaard Assistant Director of Public Safety-Fire Inspections 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 Thomas White Carole Brennan Director of Parks & Recreation Superintendent of Parks & Cemetery Superintendent of Recreation Operations Timothy McHarg Director of Planning & Community Development Alice Meister Director of Library
PART II FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT Honorable Mayor, City Commissioners, and City Manager of the City of Bozeman, Montana: We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Bozeman, Montana (the City), as of and for the year ended June 30, 2010, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Bozeman's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Bozeman, Montana, as of June 30, 2010, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated December 15, 2010 on our consideration of the City of Bozeman's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Audit Standards and should be considered in assessing the results of our audit.
20 The accompanying Management’s Discussion and Analysis, Actuarial Valuation of Post-Employment Benefits, 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 15, 2010
A. MANAGEMENT’S DISCUSSION AND ANALYSIS
21 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, 2010. Please read it in conjunction with the transmittal letter on page 1 and the City’s financial statements, which begin on page 31. 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 31 and 32) 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 33. 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 23. 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, 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, solid waste, and parking systems are reported here.
22 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 27. The fund financial statements begin on page 33 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 35 and 37 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 43 and in the Combining Statement of Changes in Assets and Liabilities-Agency Funds on pages 125-126. 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.
23 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) THE CITY AS A WHOLE The City’s combined net assets increased by $300 thousand this year as compared to a $5.3 million increase last year. The primary reason for this reduced increase is that the last year experienced substantially more development in the community than this year, and therefore the amount of infrastructure contributed by developers was substantially higher. Therefore net assets last year were significantly higher last year. 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 actually increased by 4.4% ($117.3 million compared to $112.4 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 $25.1 million. However, the net assets of the City’s business-type activities decreased by 2.2% ($215 million compared to $219.8 million) in 2009. These net assets cannot be used to make up for deficits reported by governmental activities in the event any such deficits were reported. The City generally can only use the net assets of business-type activities to finance the continuing operations of the water, sewer solid waste, and parking operations. 201020092010200920102009Current and Other Assets 38.1$ 33.3$ 36.3$ 38.6$ 74.4$ 71.9$ Capital Assets 100.1 99.8 193.0 188.6 293.0 288.4 Total Assets 138.2$ 133.1$ 229.3$ 227.2$ 367.4$ 360.4$ Long-term Debt Outstanding (17.4) (16.2)$ (11.7) (3.7)$ (29.1) (19.9) Other Liabilities (3.5) (4.6) (2.5) (3.8) (5.9) (8.4) Total Liabilities (20.9)$ (20.7)$ (14.2)$ (7.4)$ (35.1)$ (28.2)$ Net Assets:Invested in Capital Assets, net of related debt 84.1 83.7$ 190.0 188.1$ 274.1 271.8 Restricted for capital projects 7.5 7.2 8.1 19.4 15.6 26.6 Restricted for debt service - - 0.9 0.3 0.9 0.3 Restricted for parking projects - - - 0.1 - 0.1 Restricted for cemetery care 0.5 0.5 - - 0.5 0.5 Unrestricted 25.1 20.9 16.1 11.9 41.1 32.8 Total Net Assets 117.3$ 112.4$ 215.0$ 219.8$ 332.3$ 332.2$ Activities Activities Primary GovernmentTabl e 1Net Assets(in Millions)Governmental Business-type Total
24 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) The City’s total revenues (excluding special items) decreased by 9.3% ($6.2 million), again primarily due to the significant decrease in developer-contributed infrastructure. The total cost of all programs and services decreased by $400 thousand, or .7%. Although the decrease in costs was not enough to offset the decrease in revenues, the City was again able to cover the year’s costs in both governmental activities and business-type activities. Our analysis below separately considers the operations of governmental and business-type activities. 201020092010200920102009RevenuesProgram revenues:Charges for Services 9.3$ 10.9$ 16.5$ 16.1$ 25.9$ 27.0$ Restricted Grants & Contributions 6.0 8.7 3.6 6.5 9.6 15.1 General RevenuesProperty Taxes 15.5 14.6 - - 15.5 14.6 Unrestricted Grants & Contributions 6.3 6.1 0.3 0.0 6.6 6.1 Other General Revenues 2.6 3.5 - - 2.6 3.5 Total Revenues 39.7 43.8 20.5 22.6 60.2 66.4 Program ExpensesGeneral Government 6.3 6.6 - - 6.3 6.6 Public Safety 12.4 11.6 - - 12.4 11.6 Public Service 9.7 10.1 - - 9.7 10.1 Public Welfare 6.9 6.5 - - 6.9 6.5 Interest and Fiscal Fees 0.7 0.7 - - 0.7 0.7 Water - - 12.0 11.9 12.0 11.9 Waste Water - - 9.1 10.3 9.1 10.3 Solid Waste - - 2.6 2.7 2.6 2.7 Parking - - 1.0 0.8 1.0 0.8 Total Expenses 36.0 35.5 24.7 25.6 60.7 61.1 Excess (deficiency) beforespecial items and transfers 3.7 8.3 (4.2) (3.0) (0.5) 5.3 Extraordinary items - - - - - - Transfers / Sale of Capital Assets 0.8 (6.3) - 6.3 0.8 - Transfers 0.5 (3.2) (0.5) 3.2 - - Increase (decrease) in net assets5.0$ (1.2)$ (4.7)$ 6.5$ 0.3$ 5.3$ Activities Activities Primary GovernmentTabl e 2Changes in Net Assets(in Millions)Governmental Business-type Total
25 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Governmental Activities Revenues for the year from governmental activities decreased by 9.3% ($4.1 million), and total expenses increased by 1.5% ($500 thousand). However, net assets for governmental activities actually increased by $5.0 million due to significantly less resources being transferred out to other funds this year compared to last. In fact, this year saw a net Transfer-In of $1.3 million compared to $9.5 million in Transfers-Out last year ($3.2 million in cash and $6.3 million in capital assets to the parking enterprise fund.) Property Tax collections increased by $900 thousand, or 6%, from $14,629,230 last year to $15,501,316 million this year. This is due to additional collections from the Public Safety mill levy plus an increase in the City’s taxable value. This increase in taxable value was due to some new construction but mainly due to the continuing effects of the reappraisal conducted by the State of Montana. Although new construction dropped considerably this year, there is a timing lag before these changes actually affect the City’s finances. Therefore, tax collections continued to reflect a positive trend this year, mainly due to the Public Safety Mill Levy and to the City’s mill value increasing by 5.5% from $74,178 last year to $78,290 this year. Intergovernmental revenues increased by $798,127 (or 11.2%), from $7,102,049 last year to $7,900,176 this year. This increase was due primarily to $560,000 in House Bill 645 Stimulus state grant money received for various Sidewalks and Parks improvements. Federal grant revenues actually decreased slightly from $1,003,166 last year to $968,419 this year. Fines and forfeitures decreased by $78,555 or 4.9%, from $1,597,236 last year to $1,518,481 this year. This decrease is mainly due to decreased ticket collections due to economic hardship. More fine payers have opted to pay their fine off in installments over a period of time or have opted to settle their debt by performing community service. Interest on Investments decreased noticeably by $319,481, or 90.7%, from $671,859 last year to $352,378 this year. This decrease is attributable to a substantial decrease in interest rates, combined with a decrease in cash balances, mainly in the impact fee funds and capital project funds due to construction of a new fire station and remodeling of other City facilities. Interest rates on investment income averaged 1.25% this year compared to 1.4% last year and 4.1% in the prior year. The cost of all governmental activities this year was $36 million compared to $35.5 million last year. However, as shown in the Statement of Activities on page 31, the amount that our taxpayers ultimately financed for these activities through City taxes was only $15,501,316 because some of the cost was paid by those who directly benefited from the programs ($9,331,898) or by other governments and organizations that subsidized certain programs with operating and capital grants and contributions ($693,342 + $5,307,118 = $6,000,460). Overall, the City’s revenues from governmental activities, including intergovernmental revenues and charges for services decreased in 2010 from $43.8 to $39.7 million. Charges for services decreased from $10.9 to $9.3 million, due in part to declining street impact fee revenue. Public welfare expenses increased by $500,000, or 6%, from $6,465,940 last year to $6,915,577 this year. This increase was primarily due to a $581,227 charge to record an allowance for doubtful accounts in the Economic Development Revolving Loan Fund. The Loan Board determined the repayment by two of the loan recipients in the portfolio was unlikely. As stated above, fine and forfeiture revenue decreased as well as interest income on investments. However, overall net assets for governmental activities still increased overall by $5 million due to revenues exceeding expenses. Table 3 presents the cost of each of the City’s six largest programs—Police, Fire, Public Service, Library, Parks and Recreation—as well as each program’s net cost (total cost less revenues generated by the activities). The net cost shows the financial burden that was placed on the City’s taxpayers by each of these functions.
26 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) 2010200920102009Police 6.5$ 6.2$ 4.7$ 4.5$ Fire 4.9 6.7 4.2 3.5 Public Service 9.7 10.1 5.8 5.6 Library 2.1 2.0 1.5 1.0 Parks 1.4 1.4 1.3 1.4 Recreation 1.0 1.1 0.6 0.6 All Others 10.4 8.5 2.5 (0.6) Total s 36.0$ 35.5$ 20.7$ 16.0$ Tabl e 3Governmental Activities(in Millions)Total Cost Net Costof Services of Services Business-type Activities Revenues of the City’s business-type activities (see Table 2) decreased 9.3% ($20.5 million in 2010 compared to $22.6 million in 2009) and expenses decreased by 3.6% ($24.7 million in 2010 compared to $25.6 million in 2009). The decline in overall revenues is mainly due not to a decrease in operating revenues/charges for services, but rather a $2.9 million overall decrease in federal grants and developer-contributed infrastructure, which is recorded in capital grant and contribution revenues. The specific factors driving these results include: • Prior to this year, the City’s water system operating revenues (charges for services) 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 3.2% increase in each of the past two years. However, operating revenues this year decreased 1.3% from $5,938,745 last year to $5,860,144 this year. The reason for this decrease is mainly a “wet summer”. City residents simply did not need to water their lawns as much this year as they did last year. Furthermore, water impact fee revenues decreased by $24,000 and cash-in-lieu of water rights revenue decreased by $25,000. Operating expenses totaled $12,013,709 this year compared to $11,867,006 last year. Major projects completed during the year include $739,000 in scheduled Capital Improvement Program water line repairs and $555,000 spent on engineering and design of the new Water Treatment Plant. Furthermore, the City acquired an additional $300,000 in Middle Creek water rights. • 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 10.2% rate increase was implemented in each of the past two years. Accordingly, operating revenues for the year increased 9.9% from $4,905,744 last year to $5,389,070 this year. A “wet summer” has no effect on wastewater revenues, since wastewater consumption charges are based on an average of winter-quarter months, so wastewater did not see a decline similar to the water system. Wastewater operating expenses decreased by 14.5% from $10,293,894 last year to $8,804,538 this year. This significant decrease was mainly attributable to a large $1.8 million charge last year to adjust estimated costs to reflect the most recent analysis of the Solvent Site remediation liability. Major projects during the year included construction costs of $17.3 million spent towards the ongoing conversion of the existing Wastewater Treatment Plant into a state-of-the-art Water Reclamation Facility.
27 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) • The City’s solid waste collection and disposal system revenues had been declining steadily over the past few years due to the closure of the landfill. However, operating revenues actually increased last year by $478,223, or 22%, from $2,183,330 to $2,661,553. In addition to a slightly increasing customer base – highlighted by a successful bid for the Bozeman Public School District’s garbage contract - this increase was mainly due to an administrative decision to accept $350,000 worth of asbestos-contaminated soil from land adjacent to the Bozeman Public Library. (This decision had no material impact on the estimated cost of landfill closure and post-closure reporting requirements). Operating expenses dropped 4.7% from $2,687,590 last year to $2,561,124 this year. Because of increased revenues and decreased expenses, Solid Waste realized a net increase in assets of $156,379 for the year. • The City’s parking revenues for the year decreased slightly by $37,500 from $342,666 to 305,195, mainly due to the same reason that fine revenue in Governmental Activities decreased – the tough economy has resulted in more tickets being paid on installment plans, community service, or other arrangements – some of which preclude revenue recognition in the current year. Operating expenses increased 29% from $742,269 last year to $955,759 this year, primarily due to full year’s worth of depreciation expense being charged since the parking garage was put in service. THE CITY’S FUNDS As the City completed the year, its governmental funds (as presented in the balance sheet on pages 32-33) reported a combined fund balance of $26,329,984. Included in this year’s total change in fund balance is a positive General Fund balance of $5,119,400. The primary reasons for the General Fund’s surplus are highlighted below, along with an analysis of each major fund. General fund The City’s general fund balance decreased slightly from $5,364,397 in fiscal year 2009 to $5,119,400 this year. This represents a $244,977 or 4.6%, decrease in fund balance. While tax revenues did increase - mainly due to the Public Safety Mill Levy and to the City’s mill value increasing by 5.5% from $74,178 last year to $78,290 this year - there were also some unfinished capital projects from the prior year which were completed this year with money from the General Fund. Ultimately expenditures exceeded revenues, and therefore the General Fund balance decreased this year. However, this year’s fund balance of $5,119,400 still represents 23.2% of total general fund operating revenues and budgeted recurring transfers-in of $22,100,892 which is well within compliance of the City Charter and GFOA recommendations. 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 2005 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. Variances in the General Fund between the original budget and the final budget appropriations amounted to $1.9 million. $1.7 million was amended from the General Government category to the Public Safety budget for the State’s share of Police and Firefighter retirement, resulting in a net amendment of zero. The Capital Outlay budget was amended by $448,500: $128,000 for Firefighter SCUBA equipment, $132,000 for Park Restrooms, and $188,500 for the Swim Center air system. Transfers to other funds was amended by $1.5 million mainly for reconstruction of the new City Hall in the Capital Projects fund. Variances between the final budgeted and actual expenditures in the general fund amounted to $1,719,966, mainly due to vacancy savings in the Police Department because not all Public Safety Mill Levy officers were hired by year-end. There was also a positive variance of $291,583 in Public Welfare due mainly to vacancy savings caused by unfilled Recreation Superintendent and Recreation Leader positions.
28 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) Street and Fire Impact Fees Special Revenue Fund balance increased 5% from $7,199,220 last year to $7,556,287 this year. Revenues actually decreased by $550,000 from $1,624,243 last year to $1,073,895 this year. However, far less was transferred out to other funds to be used for construction projects this year compared to last. The net result was an increase in fund balance. SID Sinking Debt Service Fund balance increased 21% from $1,732,118 last year to $2,096,424 this year. This was simply due to debt service assessment revenues being greater than principal and interest expenditures. This is due to a substantial amount of Special Improvement District Bonds being called and paid in prior years with money borrowed from the SID Revolving Fund. Therefore there are much fewer bonds to be repaid now, so expenditures have decreased. Once all the SID assessment revenues have been collected from properties within the district and the SID has been closed out, the Revolving fund will be repaid by closing out the SID funds and transferring all residual balances to the Revolving Fund. This practice benefits the City by reducing the overall amount of interest paid on these bonds. Capital Projects Fund balance increased significantly by over 300% from negative ($890,615) last year to $1,793,287 this year due to transfers-in from the General Fund in order to remove the deficits in the construction funds for the new City Hall, CALA asbestos cleanup, and Story Mansion projects. Funding for the new City Hall project was due in large part to $759,000 in proceeds from the sale of the old City Hall building asset. The City’s major construction projects are listed on page 28. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets As shown in Table 4, at the end of 2010 the City had $298 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 $9.6 million, or 3.3% over last year. Refer to capital assets disclosure Note 7 beginning on page 54 for more information. 201020092010200920102009Land10.3$ 9.1$ 4.9$ 4.9$ 15.2$ 14.1$ Water Rights - - 1.6 1.3 1.6 1.3 Buildings 29.7 28.6 50.2 32.0 79.9 60.6 Other Structures and Improvements 1.2 1.2 31.6 31.2 32.9 32.5 Machinery & Equipment 8.7 8.6 6.0 6.1 14.7 14.6 Property under Capital Lease 0.6 0.6 - - 0.6 0.6 Vehicle 2.9 2.8 2.1 2.1 4.9 4.9 Infrastructure118.1 112.6 243.1 238.5 361.2 351.1 Subtotal171.5 163.6 339.7 316.0 511.1 479.6 Accumulated Depreciation(71.4) (63.8) (141.8) (127.4) (213.2) (191.2) Total Capital Assets 100.1$ 99.8$ 197.9$ 188.6$ 298.0$ 288.4$ Tabl e 4Capital Assets at Year-end(in Millions)Governmental Business-typeActivities Activities Totals
29 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) This year’s major additions and projects underway include: Waste Water Treatment Plant (WWTP) upgrade/conversion to Water Reclamation Facility (WRF) 17,318,028$ Streets & other Street Infrastructure - contributed by Developers 4,116,333 Water Lines & other Water Infrastructure - contributed by Developers 2,365,634 CMC Asbestos Bozeman CECRA Facility voluntary cleanup under CALA (see Footnote 20) 1,183,332 Wastewater Lines & other Wastewater Infrastructure - contributed by Developers 1,152,686 Water Distribution Line Rehabilitation and Upgrades 739,069 Water Plant Upgrade and Rehabilitation - Design & Engineering 554,493 Impact Fee credits cash payment to Town & Country Foods Inc. for S.11th & Kagy Intersection 496,220 Jewel / State of MT v. City of Bozeman: Solvent Site Superfund cleanup (see Footnote 20) 437,331 Lyman Creek Water supply infrastructure improvements 400,427 Gas Tax Street Improvements388,322 Solid Waste Division Office Building expansion and remodel 327,544 Waste Water Main Line Rehabilitation and Upgrades 289,390 Fire Station #3 construction200,122 Fire Truck / Fire Engine #3 for use at Station #3 - final payment of $539,651 total cost 172,211 TOTAL 30,141,142$ Debt At year-end, the City had $23.9 million in bonds and notes outstanding versus $16.3 million last year – a substantial increase of 46.5% – as shown in Table 5. This was due to $7,902,127 of new debt being issued for the construction of the new Waste Water Reclamation Facility which is reported under Business-Type Activities. General obligation debt, which is reported under Governmental Activities, consists of $1,560,000 in refinanced 1995 Transportation Project bonds and $2,715,000 in Library Project bonds for a total of $4.3 million. The City’s general obligation bonds continue to maintain a rating of A2 from Moody’s Investor Service. According to Moody’s, the A2 rating reflects the City's stable tax base and local economy, healthy financial operations, and manageable debt burden. Moody's expects the City to maintain a healthy financial position, given the City's historical performance and management's commitment to maintaining satisfactory reserve levels. As expressed in the fiscal year 2011 budget document, City officials expect to end next fiscal year with general fund reserves of at least 17.4% of operating revenues. This is above the 12% minimum that the City Manager’s Budget must contain, and it exceeds the minimum recommendations of GFOA. Property taxes are the City's primary general revenue source (42.4%), followed by intergovernmental revenues (22.3%), charges for services (16.3%), and special assessments (4.6%). Moody's expects the City to maintain a moderate debt position given current moderate debt burdens, above average principal payout, and expected tax base growth. More detailed information about the City’s long-term liabilities is presented in Note 9 to the financial statements.
30 MANAGEMENT’S DISCUSSION AND ANALYSIS (CONTINUED) 201020092010200920102009General obligationbonds (backed by the City) 4.3$ 4.8$ -$ -$ 4.3$ 4.8$ Tax Increment FinancingDistrict (TIFD) bonds 5.7 5.9 5.7 5.9 Special ImprovementDistrict Debt 4.8 5.2 - - 4.8 5.2 Notes Payable 0.9 - - - 0.9 - Lease Payable 0.3 0.4 - - 0.3 0.4 Water Revenue Bonds(backed by specific fee revenues) - - 7.9 0.1 7.9 0.1 Totals15.9$ 16.2$ 7.9$ 0.1$ 23.9$ 16.3$ Tabl e 5Outstanding Debt, at Year-end(in Millions)Governmental Business-typeActivities Activities Totals ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City’s elected and appointed officials considered many factors when setting the fiscal year 2010-2011 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. The Bureau of Labor Statistics of the U.S. Department of Labor reported that the All Items Consumer Price Index (CPI) in the West declined 0.4 percent during the past 12 months. However, if that trend reversed, rising inflation rates could adversely impact the cost of future City capital projects. 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.
B. BASIC FINANCIAL STATEMENTS
GOVERNMENT - WIDE FINANCIAL STATEMENTS
31Governmental Activities Business-type Activities TotalASSETSCash and investments 16,602,497$ 20,122,657$ 36,725,154$ Restricted cash and investments 8,132,044 9,887,636 18,019,680 Accrued interest42,285 112,691 154,976 Receivables, net12,021,207 1,159,341 13,180,548 Notes receivable701,201 75,584 776,785 Prepaid expenses465,375 - 465,375 Deferred charges161,454 - 161,454 Capital assetsNon-depreciable land 10,314,825 4,934,794 15,249,619 Other capital assets, net of depreciation 89,739,975 192,961,514 282,701,489 Total capital assets 100,054,800 197,896,308 297,951,108 Total assets 138,180,863$ 229,254,217$ 367,435,080$ LIABILITIESAccounts payable and accrued expenses 1,328,112$ 1,995,743$ 3,323,855$ Internal balances(22,639) 22,639 - Unearned revenue 1,106,849 - 1,106,849 Current portion of long-term liabilitiesCompensated absences payable 997,000 300,700 1,297,700 Capital leases66,713 - 66,713 Closure and post-closure care costs - 150,000 150,000 Other post-employment health benefits - implicit rate subsidy - - - Bonds and notes 1,037,934 210,992 1,248,926 Long-term liabilities, due in more than one yearCompensated absences 357,339 96,566 453,905 Capital leases224,524 - 224,524 Closure and post-closure care costs - 1,603,768 1,603,768 Pollution remediation obligations 16,874 1,786,000 1,802,874 Other post-employment health benefits - implicit rate subsidy 1,183,439 288,616 1,472,055 Bonds and notes 14,611,725 7,720,127 22,331,852 Total liabilities 20,907,870$ 14,175,151$ 35,083,021$ NET ASSETSInvested in capital assets, net of related debt 84,113,904$ 189,965,189$ 274,079,093$ Restricted for expendable purposes:Temporarily restricted for impact capital projects 7,537,972 8,079,238 15,617,210 Temporarily restricted for debt service - 899,777 899,777 Temporarily restricted for parking capital projects - 65,265 65,265 Permanently restricted for cemetery care 544,209 - 544,209 Restricted for library operations and capital outlay - - - Unrestricted 25,076,908 16,069,597 41,146,505 Total net assets 117,272,993$ 215,079,066$ 332,352,059$ CITY OF BOZEMAN, MONTANASTATEMENT OF NET ASSETSJune 30, 2010The Notes to Financial Statements are an integral part of the financial statements.
32Net (Expense) Revenue and Changes in Net AssetsOperating CapitalCharges for Grants and Grants and Governmental Business-typeExpenses Services Contributions Contributions Activities Activities TotalPrimary Government:Governmental activities:General government 6,299,831$ 2,774,869$ -$ -$ (3,524,962)$ (3,524,962)$ Public safety 12,382,157 2,414,893 596,232 369,731 (9,001,301) (9,001,301) Public service 9,703,594 3,742,856 - 4,578,517 (1,382,221) (1,382,221) Public welfare 6,915,557 399,280 97,110 358,870 (6,060,297) (6,060,297) Interest and fiscal fees 714,714 - - - (714,714) (714,714) Total governmental activities 36,015,853 9,331,898 693,342 5,307,118 (20,683,495) (20,683,495) Business-type activities:Water 12,016,149 6,986,247 - 2,467,125 (2,562,777)$ (2,562,777) Waste water 9,143,077 6,505,119 - 1,152,686 (1,485,272) (1,485,272) Solid waste 2,561,124 2,716,981 - - 155,857 155,857 967,077 326,820 - 1,240 (639,017) (639,017) Total business-type activities 24,687,427 16,535,167 - 3,621,051 (4,531,209) (4,531,209) Total primary government 60,703,280$ 25,867,065$ 693,342$ 8,928,169$ (20,683,495) (4,531,209) (25,214,704) General revenues:Property taxes 15,501,316 - 15,501,316 Unrestricted grants and contributions 6,284,467 342,653 6,627,120 Investment earnings 352,378 - 352,378 Miscellaneous 2,256,071 - 2,256,071 Sale of capital assets 761,952 - 761,952 Transfers 521,863 (521,863) - Total general revenues and transfers 25,678,047 (179,210) 25,498,837 Change in net assets 4,994,552 (4,710,419) 284,133 Net assets, beginning of the year 112,278,441 219,789,485 332,067,926 Net assets, end of the year 117,272,993$ 215,079,066$ 332,352,059$ ParkingCITY OF BOZEMAN, MONTANASTATEMENT OF ACTIVITIESYear Ended June 30, 2010Functions/ProgramsPrimary GovernmentProgram RevenuesThe Notes to Financial Statements are an integral part of the financial statements.
FUND FINANCIAL STATEMENTS
GOVERNMENTAL FUND FINANCIAL STATEMENTS
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.
33GOVERNMENTAL FUNDSStreet and Fire SID Other TotalGeneral Impact Fees Sinking Capital Governmental GovernmentalFund Special Revenue Debt Service Projects Funds FundsASSETSCash and investments 4,142,395$ -$ 2,037,217$ 1,103,466$ 9,282,179$ 16,565,257$ Receivables:Property taxes 1,545,117 - - - 597,161 2,142,278 Accrued interest 12,487 18,315 5,480 6,003 - 42,285 Customers, net 1,908,633 - - 652,563 8,676 2,569,872 Special assessments - - 6,189,904 - 369,792 6,559,696 Other governments 314,202 - - 34,496 378,932 727,630 Prepaid expenditures - - - - 465,375 465,375 Due from other City funds 776,397 - - - - 776,397 Notes receivable - - - - 701,201 701,201 Restricted cash and investments - 7,537,972 - - 594,072 8,132,044 Total assets 8,699,231$ 7,556,287$ 8,232,601$ 1,796,528$ 12,397,388$ 38,682,035$ (continued)CITY OF BOZEMAN, MONTANABALANCE SHEETJune 30, 2010The Notes to Financial Statements are an integral part of the financial statements.
34CITY OF BOZEMAN, MONTANABALANCE SHEETGOVERNMENTAL FUNDS (CONTINUED)June 30, 2010Street and Fire SID Other TotalGeneral Impact Fees Sinking Capital Governmental GovernmentalFund Special Revenue Debt Service Projects Funds FundsLIABILITIES AND FUND BALANCESLiabilities:Accounts payable 682,191$ -$ 3,149$ 3,241$ 246,905$ 935,486$ Accrued employee benefits 211,213 - - - 34,487 245,700 Deferred revenue 2,656,121 - 6,133,028 - 1,601,022 10,390,171 Escheat property payable 30,306 - - - 14,685 44,991 Due to other City funds - - - - 735,703 735,703 Total liabilities 3,579,831 - 6,136,177 3,241 2,632,802 12,352,051 Fund balances:Reserved for:Cemetery perpetual care - - - - 544,209 544,209 Park development - - - 190,564 190,564 Debt service - - 2,096,424 - 1,228,197 3,324,621 Prepaid items - - - - 465,375 465,375 Unreserved 5,119,400 - - 1,793,287 - 6,912,687 Unreserved, reported in nonmajorSpecial revenue funds - 7,556,287 - - 7,359,865 14,916,152 Debt service funds - - - - (23,624) (23,624) Total fund balances 5,119,400 7,556,287 2,096,424 1,793,287 9,764,586 26,329,984 Total liabilities andfund balances 8,699,231$ 7,556,287$ 8,232,601$ 1,796,528$ 12,397,388$ 38,682,035$ The Notes to Financial Statements are an integral part of the financial statements.
35CITY OF BOZEMAN, MONTANARECONCILIATION OF THE BALANCE SHEETTO THE STATEMENT OF NET ASSETS - GOVERNMENTAL FUNDSAs of June 30, 2010Fund balances - total governmental funds26,329,984$ 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 assets171,483,300$ Less: accumulated depreciation(71,428,500) 100,054,800 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 assets572,011 Less: capital assets included in governmental activities (832,270) Plus: accumulated depreciation included in governmental activities 180,636 Plus: other post-employment benefits included in governmental activities 8,512 Plus: compensated absences included in governmental activities 10,092 (61,019) Deferred revenue in the governmental funds are reported on the full accrual method in the government-wide financial statements.9,490,220 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(57,860) 161,454 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(10,460) Less: amortization872 (9,588) Impact fee credits do not affect current financial resources and therefore are not reported in thegovernmental funds.(206,898) Capital lease obligations not recorded in the governmental funds are reported in the entity-wide (291,237) 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(15,640,071) Pollution remediation obligations(16,874) Post-employment health benefits(1,183,439) Compensated absences(1,354,339) (18,194,723) Net assets of governmental activities117,272,993$ The Notes to Financial Statements are an integral part of the financial statements.
36Street and Fire SIDOther TotalImpact Fees SinkingCapital Governmental GovernmentalGeneralSpecial Revenue Debt ServiceProjects Funds FundsREVENUESTaxes 9,390,202$ -$ -$ -$ 5,665,642$ 15,055,844$ Special assessments 4,857 - 989,977 - 648,666 1,643,500 Licenses and permits 288,708 - - - 669,882 958,590 Intergovernmental 5,323,697 - - - 2,576,479 7,900,176 Charges for services 2,324,185 938,700 - - 2,527,497 5,790,382 Fines and forfeitures 1,336,298 - - - 182,183 1,518,481 Interest on investments 80,455 109,995 31,567 - 130,361 352,378 Loan repayment - - - - 10,401 10,401 Other 69,587 25,200 - 1,824,026 337,258 2,256,071 Total revenues 18,817,989 1,073,895 1,021,544 1,824,026 12,748,369 35,485,823 EXPENDITURESCurrentGeneral government 4,922,606 - - - 767,882 5,690,488 Public safety 10,153,415 - - - 1,555,755 11,709,170 Public service 420,381 - - 13,577 2,268,552 2,702,510 Public welfare 3,731,763 - - 4,009 1,181,056 4,916,828 Capital outlay 911,455 712,828 - 1,505,884 1,118,591 4,248,758 Debt servicePrincipal payments 38,929 - 392,000 - 763,890 1,194,819 Interest and fiscal fees 13,551 - 223,763 - 477,836 715,150 Total expenditures 20,192,100 712,828 615,763 1,523,470 8,133,562 31,177,723 Revenues over (under) expenditures (1,374,111) 361,067 405,781 300,556 4,614,807 4,308,100 OTHER FINANCING SOURCES (USES)Transfers in 3,282,903 - - 5,890,101 1,684,328 10,857,332 Transfers out (2,911,748) (4,000) (41,475) (4,396,755) (3,679,947) (11,033,925) Issuance of debt - - - 890,000 - 890,000 Sale of capital assets 757,959 - - - 8,963 766,922 Total other financing sources (uses) 1,129,114 (4,000) (41,475) 2,383,346 (1,986,656) 1,480,329 Net change in fund balances (244,997) 357,067 364,306 2,683,902 2,628,151 5,788,429 FUND BALANCE, beginning of year 5,364,397 7,199,220 1,732,118 (890,615) 7,136,435 20,541,555 FUND BALANCE, end of year 5,119,400$ 7,556,287$ 2,096,424$ 1,793,287$ 9,764,586$ 26,329,984$ CITY OF BOZEMAN, MONTANASTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDSFor the Year Ended June 30, 2010The Notes to Financial Statements are an integral part of the financial statements.
37CITY OF BOZEMAN, MONTANARECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES - GOVERNMENTAL FUNDSYear Ended June 30, 2010Net change in fund balances - total governmental funds5,788,429$ Amounts reported for governmental activities in 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 assets4,248,758$ Less: current year depreciation(8,872,523) (4,623,765) 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.(4,970) 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) Amortization of bond premium436 Proceeds of long term debt(890,000) Principal payments on bonds and notes1,125,929 Principal payments on capital leases68,890 293,942 Deferred revenue in the governmental funds are reported on the full accrual method in the government-wide financial statements.Property taxes445,472 Notes receivable(757,648) Special assessments(634,698) Fines 55,643 (891,231) Governmental funds do not report a liability for compensated absences. The change in the liability is acurrent period expense.(33,959) Governmental funds do not report a liability for other post-employment health benefits.(566,070) Governmental funds do not report impact fee credits. The change in these credits during the year arecharged to the statement of activities.6,768 Governmental funds do not report donated assets which are reported as assets and revenue in the statements of activities and net assets.4,377,463 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 640,820 Current year depreciation expense included in governmental activities 15,069 Change in compensated absences included in governmental activities(7,944) 647,945 Change in net assets of governmental activities4,994,552$ The Notes to Financial Statements are an integral part of the financial statements.
PROPRIETARY FUND FINANCIAL STATEMENTS
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. Parking Fund – Accounts for the City’s parking garage and services. 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.
38GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Total Service FundsASSETS Current assetsCash and investments 10,916,509$ 6,698,577$ 2,506,269$ 1,302$ 20,122,657$ 37,240$ ReceivablesAccrued interest 50,430 56,667 5,594 - 112,691 - Customers, net 457,091 468,071 198,572 33,835 1,157,569 21,731 Special assessments 139 77 1,556 - 1,772 - Other governments - - - - - - Prepaid expenses - - - - - - Total current assets 11,424,169 7,223,392 2,711,991 35,137 21,394,689 58,971 Non current assetsOther assetsNotes receivable - - - 75,584 75,584 - Restricted cash and investments 9,110,996 711,375 - 65,265 9,887,636 - Total other assets 9,110,996 711,375 - 140,849 9,963,220 - Property, plant and equipment Nondepreciable:Land 162,518 754,263 3,714,577 303,436 4,934,794 - Depreciable:Water rights 1,563,494 - - - 1,563,494 - Buildings 4,292,075 33,368,079 841,266 11,742,190 50,243,610 - Other structures and improvements 14,722,987 14,763,061 2,155,300 - 31,641,348 615,185 Machinery and equipment 1,191,088 2,060,820 2,705,619 91,958 6,049,485 161,565 Vehicles 488,490 908,032 670,219 16,857 2,083,598 55,520 Infrastructure 149,927,128 93,129,005 78,531 - 243,134,664 - Accumulated depreciation and amortization (82,279,846) (53,318,819) (4,965,612) (1,190,408) (141,754,685) (180,636) Net property, plant and equipment 90,067,934 91,664,441 5,199,900 10,964,033 197,896,308 651,634 Total non current assets 99,178,930 92,375,816 5,199,900 11,104,882 207,859,528 651,634 Total assets 110,603,099$ 99,599,208$ 7,911,891$ 11,140,019$ 229,254,217$ 710,605$ Business-type ActivitiesEnterprise FundsCITY OF BOZEMAN, MONTANASTATEMENT OF NET ASSETSPROPRIETARY FUNDSJune 30, 2010The Notes to Financial Statements are an integral part of the financial statements. (continued)
39GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Total Service FundsLIABILITIESCurrent liabilities:Accounts payable and accrued expenses 212,535$ 1,647,653$ 115,646$ 19,909$ 1,995,743$ 101,935$ Compensated absences payable 108,400 107,500 81,300 3,500 300,700 10,092 Due to other City funds - - - 22,639 22,639 18,055 Closure and post-closure care costs, current portion - - 150,000 - 150,000 - Bonds, notes, and loans payable 28,992 182,000 - - 210,992 - Total current liabilities 349,927 1,937,153 346,946 46,048 2,680,074 130,082 Noncurrent liabilitiesClosure and post-closure care costs - - 1,603,768 - 1,603,768 - Revenue bonds due after one year - 7,720,127 - - 7,720,127 - Compensated absences payable 66,965 15,467 10,605 3,529 96,566 - Deferred revenue - - - - - - Other post-employment health benefits - implicit rate subsidy 126,536 79,975 62,204 19,901 288,616 8,512 Solvent site remediation liability - 1,786,000 - - 1,786,000 - Total noncurrent liabilities 193,501 9,601,569 1,676,577 23,430 11,495,077 8,512 Total liabilities 543,428 11,538,722 2,023,523 69,478 14,175,151 138,594 NET ASSETSInvested in capital assets, net of related debt 90,038,942 83,762,314 5,199,900 10,964,033 189,965,189 651,634 Restricted for impact capital projects 7,791,747 287,491 - - 8,079,238 - Restricted for parking capital projects - - - 65,265 65,265 - Restricted for debt service 313,535 586,242 - - 899,777 - Unrestricted 11,915,447 3,424,439 688,468 41,243 16,069,597 (79,623) Total net assets 110,059,671 88,060,486 5,888,368 11,070,541 215,079,066 572,011 Total liabilities and net assets 110,603,099$ 99,599,208$ 7,911,891$ 11,140,019$ 229,254,217$ 710,605$ Enterprise FundsBusiness-type ActivitiesCITY OF BOZEMAN, MONTANASTATEMENT OF NET ASSETS (CONTINUED)PROPRIETARY FUNDSJune 30, 2010The Notes to Financial Statements are an integral part of the financial statements.
40GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Totals Service FundsOPERATING REVENUES Charges for services 5,860,144$ 5,389,070$ 2,661,553$ 305,195$ 14,215,962$ 3,893,813$ OPERATING EXPENSESSalaries and benefits 1,815,938 1,527,924 1,096,570 192,198 4,632,630 227,982 Materials and supplies 627,965 204,822 158,540 28,978 1,020,305 350,346 Repairs and maintenance 98,294 126,188 120,911 1,715 347,108 4,278 Utilities 148,898 349,393 387,560 31,435 917,286 3,618 Administrative charges 759,677 542,815 220,838 20,564 1,543,894 54,278 Insurance claims - - - - - 3,227,963 Other expenses 499,794 717,563 165,325 82,889 1,465,571 68,800 Depreciation and amortization 8,063,143 5,335,833 411,380 598,000 14,408,356 15,069 Changes in estimated closure and post-closure care costs - - - - - - Total operating expenses 12,013,709 8,804,538 2,561,124 955,779 24,335,150 3,952,334 Operating income (loss) (6,153,565) (3,415,468) 100,429 (650,584) (10,119,188) (58,521) NONOPERATING REVENUES (EXPENSES)Interest income 325,216 365,238 37,802 - 728,256 - Interest expense (2,440) (338,539) - (11,298) (352,277) (6,403) Other income 56,329 82,902 17,626 21,625 178,482 7,288 Grant income 101,491 341,771 882 1,240 445,384 - Impact fees 744,558 667,909 - - 1,412,467 - Gain (loss) on disposal of assets - - - - - - Total nonoperating revenues (expenses) 1,225,154 1,119,281 56,310 11,567 2,412,312 885 Income (loss) before contributions and transfers (4,928,411) (2,296,187) 156,739 (639,017) (7,706,876) (57,636) Contributions of infrastructure - developers 2,365,634 1,152,686 - - 3,518,320 - Transfers of capital assets - - - - - - Transfers in - - - - - 698,456 Transfers out (262,931) (258,932) - - (521,863) - Change in net assets (2,825,708) (1,402,433) 156,739 (639,017) (4,710,419) 640,820 NET ASSETS, beginning of year 112,885,379 89,462,919 5,731,629 11,709,558 219,789,485 (68,809) NET ASSETS, end of year 110,059,671$ 88,060,486$ 5,888,368$ 11,070,541$ 215,079,066$ 572,011$ Enterprise FundsBusiness-type ActivitiesCITY OF BOZEMAN, MONTANASTATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS - PROPRIETARY FUNDSYear Ended June 30, 2010The Notes to Financial Statements are an integral part of the financial statements.
41GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Total Service FundsCash Flows from Operating ActivitiesReceipts from customers 5,911,236$ 5,362,164$ 2,678,271$ 304,461$ 14,256,132$ 3,888,054$ Receipts from others 56,329 82,902 17,626 2,144,945 2,301,802 7,288 Operating loans from other funds - - - 22,639 22,639 447,269 Payments to suppliers (1,525,961) (1,942,559) (1,178,406) (412,959) (5,059,885) (350,096) Payments to employees (1,752,107) (1,485,237) (1,078,639) (180,052) (4,496,035) (3,463,889) Payments to internal service funds and administrative fees (759,677) (542,815) (220,838) (20,564) (1,543,894) (54,278) Net Cash Flows From Operating Activities 1,929,820 1,474,455 218,014 1,858,470 5,480,759 474,348 Cash Flows from Noncapital Financing Activities:Transfers in - - - - - - Transfers out(262,931) (258,932) - - (521,863) - Net Cash Flows from Noncapital Financing Activities (262,931) (258,932) - - (521,863) - Cash Flows from Capital and Related Financing ActivitiesAcquisition of capital assets (2,090,460) (17,671,495) (376,947) (26,124) (20,165,026) (520,028) Principal paid on bonds, interfund loans, loans and leases (27,622) (166,300) - - (193,922) - Receipts from grants 101,491 341,771 882 1,240 445,384 - Interest paid on bonds, interfund loans, loans and leases (2,440) (338,539) - (11,298) (352,277) (6,403) Proceeds from issuance of long-term debt - 8,068,427 - - 8,068,427 - Impact fees received 744,558 667,909 - - 1,412,467 - Proceeds from sale of property, plant and equipment - - - - - - Net Cash Flows from Capital and Related Financing Activities (1,274,473) (9,098,227) (376,065) (36,182) (10,784,947) (526,431) Cash Flows from Investing ActivitiesCollections on notes - - - 7,415 7,415 - Interest on investments 361,776 401,287 43,946 - 807,009 - Net Cash Flows from Investing Activities 361,776 401,287 43,946 7,415 814,424 - Net Increase (Decrease) in Cash and investments 754,192 (7,481,417) (114,105) 1,829,703 (5,011,627) (52,083) Cash and investments, beginning of year 19,273,313 14,891,369 2,620,374 (1,763,136) 35,021,920 89,323 Cash and investments, end of year 20,027,505$ 7,409,952$ 2,506,269$ 66,567$ 30,010,293$ 37,240$ Classified as:Cash and investments 10,916,509$ 6,698,577$ 2,506,269$ 1,302$ 20,122,657$ 37,240$ Restricted cash and investments 9,110,996 711,375 - 65,265 9,887,636 - Totals 20,027,505$ 7,409,952$ 2,506,269$ 66,567$ 30,010,293$ 37,240$ Noncash transactions: donated infrastructure 2,365,634$ 1,152,686$ -$ -$ 3,518,320$ CITY OF BOZEMAN, MONTANASTATEMENT OF CASH FLOWS - PROPRIETARY FUNDSYear Ended June 30, 2010Enterprise FundsBusiness-type ActivitiesThe Notes to Financial Statements are an integral part of the financial statements.
42GovernmentalActivitiesWaste Solid Parking InternalWater Fund Water Fund Waste Fund Fund Total Service FundsOperating income (loss) (6,153,565)$ (3,415,468)$ 100,429$ (650,584)$ (10,119,188)$ (58,521)$ Adjustments to reconcile operating income (loss)to net cash provided (used) by operating activitiesDepreciation and amortization 8,063,143 5,335,833 411,380 598,000 14,408,356 15,069 Change in estimated closureand post-closure care costs - - (354,668) - (354,668) - Change in solvent site remediation obligation- - - - - - Other income 56,329 82,902 17,626 21,625 178,482 7,288 Change in Assets and Liabilities: (Increase) Decrease in:Accounts receivable 51,092 (26,906) 16,718 (734) 40,170 (5,759) Other governments receivable - - - 2,123,320 2,123,320 - Other City funds - - - 22,639 22,639 - Increase (Decrease) in:Accounts payable (151,010) (544,593) 8,598 (267,942) (954,947) 76,946 Accrued employee benefits payable 63,831 42,687 17,931 12,146 136,595 (7,944) Total adjustments 8,083,385 4,889,923 117,585 2,509,054 15,599,947 532,869 Net cash provided (used) byoperating activities 1,929,820$ 1,474,455$ 218,014$ 1,858,470$ 5,480,759$ 474,348$ Enterprise FundsBusiness-type ActivitiesCITY OF BOZEMAN, MONTANASTATEMENT OF CASH FLOWS - PROPRIETARY FUNDS (CONTINUED)Year Ended June 30, 2010The Notes to Financial Statements are an integral part of the financial statements.
FIDUCIARY FUND FINANCIAL STATEMENTS
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.
43AgencyFundsASSETSCash and cash equivalents 234,634$ Customer receivables 1,115 Total assets 235,749 LIABILITIESAccounts payable 235,749 Total liabilities 235,749$ CITY OF BOZEMAN, MONTANASTATEMENT OF FIDUCIARY NET ASSETSFIDUCIARY FUNDSJune 30, 2010The Notes to Financial Statements are an integral part of the financial statements.
NOTES TO FINANCIAL STATEMENTS
44 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2010 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 City adopted the provisions of GASB Statement 45 Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions for its fiscal year ended June 30, 2009. In addition to pensions, many state and local governmental employers provide other postemployment benefits (OPEB) as part of the total compensation offered to attract and retain the services of qualified employees. This Statement establishes standards for the measurement, recognition, and display of OPEB expense/expenditures and related liabilities (assets), note disclosures, and, if applicable, required supplementary information (RSI) in the financial reports of state and local governmental employers. The City adopted the provisions of GASB Statement 49 Accounting and Financial Reporting for Pollution Remediation Obligations for its fiscal year ended June 30, 2009. This Statement will enhance comparability of financial statements among governments by requiring all governments to account for pollution remediation obligations in the same manner, including required reporting of pollution remediation obligations that previously may not have been reported. The GASB has issued Statement 51 Accounting and Financial Reporting for Intangible Assets effective for periods beginning after June 15, 2009. This Statement establishes accounting and financial reporting requirements for intangible assets including easements, water rights, timber rights, patents, trademarks, and computer software. The GASB has issued Statement No 53 Accounting and Financial Reporting for Derivative Instruments effective for periods beginning after June 15, 2009. This Statement establishes accounting and financial reporting requirements for derivative instruments entered into by state and local governments. This statement did not have a material impact on the City’s financial statements.
45 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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, 2010, 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. 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.
46 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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.
47 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Accounting/Measurement Focus (Continued) 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. 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 present 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.
48 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Accounting/Measurement Focus (Continued) 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. 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. Parking Fund - Accounts for the City's parking garage and services. 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.
49 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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 $250,000 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. 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.
50 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Capital Assets (Continued) Depreciation is recorded on a straight-line basis over the useful lives of the assets as follows: 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 included infrastructure acquired prior to implementation within the four-year required period. 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) Vehicles 5 yearsMachinery and equipment 5 to 30 yearsBuildings 20 to 50 yearsOther structures and improvements 10 to 25 yearsInfrastructure 25 to 50 years
51 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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, 2010, the carrying amount of the City's deposits in local banks and investments is $54,979,468 and the bank balance is $55,792,388. Of the bank balance, $250,000 was covered by federal depository insurance and up to $6,480,000 was covered by collateral held by the pledging bank's agent in the City's name. The City’s cash and investments are reported as follows: UnrestrictedRestrictedTotalGovernmental activities 16,602,497$ 8,132,044$ 24,734,541$ Business-type activities 20,122,657 9,887,636 30,010,293 Fiduciary funds 234,634 - 234,634 36,959,788$ 18,019,680$ 54,979,468$
52 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 2. CASH AND INVESTMENTS (Continued) 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, 2010, the book value approximated the fair value of the investments, therefore no unrealized gain or loss was recorded for the year. 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 2010 - Jun 2011 AAA 8,111,878$ U.S. Government bonds Jul 2011 - Jun 2012 AAA - U.S. Government bonds Jul 2012 - Jun 2013 AAA 8,250,000 U.S. Government bonds Jul 2013 - Jun 2014 AAA 10,996,000 U.S. Government bonds Jul 2014 - Jun 2015 AAA 6,075,000 U.S. Bank Municipal Investor Account N/A N/A 18,748,699 Non-negotiable repurchase agreements N/A N/A 3,156,948 Demand deposits N/A N/A (365,531) Petty cash N/A N/A 6,474 54,979,468$ 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. The City has no formal policy relating to interest risk. 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.
53 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 3. PROPERTY TAX CALENDAR (Continued) 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. 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, 2010. 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, 2010, rent expenditure was $19,125 regarding this lease.
54 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 6. NOTES RECEIVABLE The City had the following loans in funds: Special Revenue Funds:Housing Revolving Loan Fund 82,499$ Economic Development Loan Fund 583,505$ Community Housing Fund 35,197$ Enterprise FundsParking Fund 75,584$ 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, 2010, depreciation expense on capital assets was charged to the functions and programs as follows: Governmental Activities:General Government 466,618$ Public Safety 417,676 Public Services 6,917,437 Public Welfare 1,070,792 Total depreciation expense - governmental activities 8,872,523$ Business-type Activities:Water 8,063,143$ Waste Water 5,335,833 Solid Waste 411,380 Parking 598,000 Total depreciation expense - business-type activities 14,408,356$
55 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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, 2010, consisted of the following: June 30, 2009 Additions Disposals Transfers June 30, 2010Governmental Activities: Non-depreciableLand 9,130,213$ 1,184,612$ -$ -$ 10,314,825$ DepreciableBuildings 28,611,222 1,333,232 (268,917) - 29,675,537 Other structures and improvements 1,223,948 6,964 - - 1,230,912 Machinery and equipment 8,561,115 1,086,171 (952,885) - 8,694,401 Property under capital lease 616,504 - - - 616,504 Vehicles 2,823,646 71,368 (51,337) 14,254 2,857,931 Infrastructure 112,624,451 5,468,739 - - 118,093,190 Total 163,591,099 9,151,086 (1,273,139) 14,254 171,483,300 Accumulated depreciation (63,809,891) (8,872,523) 1,268,168 (14,254) (71,428,500) Total governmental activities 99,781,208$ 278,563$ (4,971)$ -$ 100,054,800$ Business-type Activities: Non-depreciableLand 4,934,794$ -$ -$ -$ 4,934,794$ Water rights 1,263,494 300,000 - - 1,563,494 DepreciableBuildings 31,992,560 18,251,050 - - 50,243,610 Other structures and improvements 31,240,921 400,427 - - 31,641,348 Machinery and equipment 6,055,803 26,117 (32,435) - 6,049,485 Vehicles 2,074,883 22,969 - (14,254) 2,083,598 Infrastructure 238,451,881 4,682,783 - - 243,134,664 Total 316,014,336 23,683,346 (32,435) (14,254) 339,650,993 Accumulated depreciation (127,393,018) (14,408,356) 32,435 14,254 (141,754,685) Total business-type activities 188,621,318$ 9,274,990$ -$ -$ 197,896,308$ Total capital assets 288,402,526$ 9,553,553$ (4,971)$ -$ 297,951,108$
56 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 7. CAPITAL ASSETS (Continued) Changes in accumulated depreciation are as follows for the year ended June 30, 2010: June 30, 2009 Additions Disposals Transfers June 30, 2010Governmental Activities:Buildings (8,589,308)$ (1,186,653)$ 268,917$ -$ (9,507,044)$ Other structures and improvements (794,153) (105,155) - - (899,308) Machinery and equipment (6,794,863) (629,937) 947,914 - (6,476,886) Property under capital lease (262,441) (91,027) - - (353,468) Vehicles (2,367,900) (184,668) 51,337 (14,254) (2,515,485) Infrastructure (45,001,226) (6,675,083) - - (51,676,309) Total governmental activities (63,809,891) (8,872,523) 1,268,168 (14,254) (71,428,500) Business-type Activities:Buildings (6,467,832) (918,906) - - (7,386,738) Other structures and improvements (24,769,279) (783,229) - - (25,552,508) Machinery and equipment (4,391,999) (587,420) 32,435 - (4,946,984) Vehicles (1,668,299) (131,933) - 14,254 (1,785,978) Infrastructure (90,095,609) (11,986,868) - - (102,082,477) Total business-type activities (127,393,018) (14,408,356) 32,435 14,254 (141,754,685) Total accumulated depreciation (191,202,909)$ (23,280,879)$ 1,300,603$ -$ (213,183,185)$
57 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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 $357,339 for governmental activities and $96,566 for business-type activities at June 30, 2010, 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, 2010, were $1,354,339 for governmental activities and $397,266 for business-type activities. Balance June 30, 2009 Incurred SatisfiedBalance June 30, 2010Compensated absencesGovernmental Activities$ 1,320,380 $ 1,031,624 $ (997,665)$ 1,354,339 Business-type Activities 401,124 256,917 (260,775) 397,266 Total compensated absences 1,721,504$ 1,288,541$ (1,258,440)$ 1,751,605$ Due within one yearDue after one year TotalCompensated absencesGovernmental Activities$ 997,000 $ 357,339 $ 1,354,339 Business-type Activities 300,700 96,566 397,266 Total compensated absences 1,297,700$ 453,905$ 1,751,605$ 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, 2010: Balance June 30, 2009 Issuances RepaymentsBalance June 30, 2010General obligation bonds$ 4,815,000 $ - $ (540,000)$ 4,275,000 Tax increment financing bonds 5,850,000 - (155,000)5,695,000 Special assessment debt 5,211,000 - (392,000) 4,819,000 Intercap notes payable - 890,000 (38,929) 851,071 Totals 15,876,000$ 890,000$ (1,125,929)$ 15,640,071$
58 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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 Assets as follows: Current Portion (Due within one year)Long-term Portion (Due after one year)Total Long Term DebtGeneral obligation bonds$ 565,000 $ 3,710,000 $ 4,275,000 Tax increment financing bonds 160,000 5,535,000 5,695,000 Special assessment debt 235,000 4,584,000 4,819,000 Intercap notes payable 77,934 773,137 851,071 1,037,934$ 14,602,137$ 15,640,071$ 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% 1,560,000$ 365,000$ Library Project Bonds, Series 2002serial maturities through 2022 3.50%-5.00% 1,545,000 110,000 Library Project Bonds, Series 2003aserial maturities through 2021 1.25%-4.40% 1,170,000 90,000 Total general obligations bonds 4,275,000$ 565,000$
59 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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 30,2011$ 565,000 $ 173,676 $ 738,676 2012 590,000 154,198 744,198 2013 610,000 132,876 742,876 2014 640,000 110,028 750,028 2015 230,000 85,216 315,216 2016-2020 1,335,000 262,446 1,597,446 2021-2025 305,000 14,470 319,470 4,275,000$ 932,910$ 5,207,910$ 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 30,2011$ 160,000 $ 263,088 $ 423,088 2012 165,000 256,688 421,688 2013 175,000 250,088 425,088 2014 180,000 243,088 423,088 2015 190,000 235,888 425,888 2016-2020 1,060,000 1,058,858 2,118,858 2021-2025 1,315,000 805,173 2,120,173 2026-2030 1,660,000 453,790 2,113,790 Thereafter 790,000 59,750 849,750 5,695,000$ 3,626,411$ 9,321,411$
60 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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, 2009 Issuances RepaymentsBalance June 30, 2010Special assessment bonds 4,785,000$ -$ (370,000)$ 4,415,000$ Note Payable to Department of Natural Resources and Conservation, #WRF-05067 81,000 - (4,000) 77,000 Note Payable to Department of Natural Resources and Conservation, #SRF-05132 345,000 - (18,000) 327,000 5,211,000$ -$ (392,000)$ 4,819,000$ Annual debt service requirements to maturity for special assessment notes payable are as follows: Notes PayableYear ending June 30, PrincipalInterestTotal2011 22,500$ 14,943$ 37,443$ 2012 22,000 14,100 36,100 2013 25,000 13,246 38,246 2014 24,000 12,319 36,319 2015 25,000 11,400 36,400 2016-2020 146,000 41,632 187,632 2021-2025 139,500 12,178 151,678 404,000$ 119,818$ 523,818$
61 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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, Bonds2011 235,000$ 2012 370,000 2013 370,000 2014 370,000 2015 370,000 2016-2020 1,745,000 2021-2025 955,000 4,415,000$ 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. Intercap Loans – The City entered in a loan agreement with the Montana Board of Investments to finance the construction of a new fire station. The intercap loans payable had a balance outstanding at June 30, 2010 as follows: Due within one yearDue after one year TotalNote payable to Montana Board of Investments in uneven semi-annual installments including interest at variable ratesthrough July 2019 77,934$ 773,137$ 851,071$
62 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 9. LONG-TERM DEBT (Continued) Governmental Activities Long Term Debt (Continued) The debt service requirements for the fire station intercap loan at June 30, 2010 are as follows: Principal Interest TotalYear ending June 30,2011 82,351$ 16,262$ 98,613$ 2012 83,971 14,642 98,613 2013 85,623 12,990 98,613 2014 87,308 11,305 98,613 2015 89,025 9,587 98,612 2016-2020 422,793 20,965 443,758 $ 851,071 $ 85,751 $ 936,822 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. Water revenue bonds outstanding at June 30, 2010 are as follows: Balance June 30, 2009 Issuances RepaymentsBalance June 30, 20101991 Water Revenue bonds $ 56,614 $ - $ (27,622) $ 28,992 Water revenue bonds consist of the following as of June 30, 2010: Interest Rate AmountWater System Refunding Revenue Bonds, Series 1995,serial maturities through 2022 4.9% 28,992$
63 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 9. LONG-TERM DEBT (Continued) Business-type Activities Long Term Debt (continued) Water revenue bond debt service requirements to maturity are as follows: Shown on the accompanying financial statements as:Revenue bonds due within one year 28,992$ Water revenue bond debt service requirements to maturity are as follows: Principal Interest TotalYear ending June 30, 2011 $ 28,992 $ 1,069 $ 30,061 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, 2010. Waste Water revenue bonds outstanding at June 30, 2010 are as follows: Balance June 30, 2009 Issuances RepaymentsBalance June 30, 2010State Revolving Fund - 10252 ARRA B $ - $ 62,333 $ (7,300) $ 55,033 State Revolving Fund - 10230 - 7,904,521 (159,000) 7,745,521 State Revolving Fund - 10262 - 53,973 - 53,973 State Revolving Fund - 10251 - 1,000 - 1,000 State Revolving Fund - 10261 - 46,600 - 46,600 $ - $ 8,068,427 $ (166,300) $ 7,902,127
64 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 9. LONG-TERM DEBT (Continued) Business-type Activities Long Term Debt (continued) Waste Water revenue bonds consist of the following as of June 30, 2010: Interest Rate AmountWaste Water State Revolving -10252 ARRA BSeries 2010B, serial maturities through 2030 1.75% 55,033$ Waste Water Reclamation Facility Revenue Bonds,Series 2010D, serial maturities through 2030 3.75% 7,745,521 Waste Water Reclamation Facility Revenue Bonds,Series 2010F, serial maturities through 2030 3.75% 53,973 Waste Water Reclamation Facility Revenue Bonds,Series 2010A, serial maturities through 2030 0.00% 1,000 Waste Water Reclamation Facility Revenue Bonds,Series 2010E, serial maturities through 2030 0.00% 46,600 Total revenue bonds 7,902,127$ Waste water revenue bond debt service requirements to maturity are as follows: Shown on the accompanying financial statements as:Revenue bonds due within one year 182,000$ Revenue bonds due after one year 7,720,127 7,902,127$
65 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 9. LONG-TERM DEBT (Continued) Business-type Activities Long Term Debt (continued) Water revenue bond debt service requirements to maturity are as follows: Principal Interest TotalYear ending June 30,2011 182,000$ 193,239$ 375,239$ 2012 295,793 289,905 585,698 2013 308,861 275,288 584,149 2014 320,937 263,826 584,763 2015 301,123 252,177 553,300 2016-2020 1,686,957 1,079,538 2,766,495 2021-2025 2,034,264 743,606 2,777,870 2026-2030 2,453,074 1,045,423 3,498,497 Thereafter 319,118 5,131 324,249 $ 7,902,127 $ 4,148,133 $ 12,050,260 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, 2010.
66 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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. 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, 2010, the Revenue Bond outstanding had an aggregate principal amount payable of $368,253. NOTE 10. CAPITAL LEASE OBLIGATIONS 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. On February 24, 2009, the City entered into a lease for an Elgin Street Sweeper. The lease term is five years payable in annual installments of $27,900 at 6.3%. The total amount capitalized of $143,905 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund. On December 15, 2008, the City entered into a lease for a GMC Truck. The lease term is three years payable in annual installments of $10,000 and one of $3,441 at 12.0%. The total amount capitalized of $32,791 represents the present value of the future lease payments. The payments for this obligation are being recorded in the street maintenance fund.
67 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 10. CAPITAL LEASE OBLIGATIONS (Continued) The capital lease balance outstanding for governmental activities at June 30, 2010 is as follows: Balance June 30, 2009 Issuances RepaymentsBalance June 30, 2010Caterpillar Grader Capital Lease $ 62,741 $ - $ (21,088) $ 41,653 Volvo Grader Capital Lease 159,711 - (19,334) 140,377 Street Sweeper 118,325 - (20,790) 97,535 GMC Truck 19,350 - (7,678) 11,672 $ 360,127 $ - $ (68,890) $ 291,237 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, 2010: Governmental ActivitiesYear ending June 30,2011 $ 86,703 2012 76,177 2013 128,711 2014 27,900 Less amount representing interest (28,254) Present value of future minimum lease payments 291,237$ The property under capital lease for governmental and business-type activities and the corresponding accumulated depreciation at June 30, 2010, is as follows: Governmental ActvitiesBusiness-Type ActivitiesMachinery and equipment 616,504$ -$ Less: accumulated depreciation (353,468) - 263,036$ -$
68 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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, 2010, reservations of governmental fund balance are described below: Special Revenue FundsPrepaid items 465,375$ Park development 190,564 Debt Service FundsDebt service payments 3,324,621 Permanent FundEndowment - Cemetery Perpetual Care 544,209 Total reserved fund balance 4,524,769$ At June 30, 2010, 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 20,240$ TIF Bonds 3,384$
69 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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 2010 and 2009 total payroll and covered payroll for all retirement plans were $17,305,572 and $16,814,119, 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. 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, 2010, 2009, and 2008 were $808,792, $792,386 and $737,573 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 7.07% of members' compensation. The State is required to contribute .1% of members’ compensation, which was $11,435. Covered payroll for the year ended June 30, 2010 was $11,435,097. 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, 2010 is 226.
70 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 14. EMPLOYEE BENEFIT PLANS (Continued) 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, 2010, 2009, and 2008 were $394,606, $350,668 and $314,033, 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 $896,106 for fiscal 2010. Covered payroll for the year ending June 30, 2010 was $2,747,949. 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, 2010 is 42. 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, 2010, 2009, and 2008 were $449,956, $423,814, and $390,871, 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 $917,086. Covered payroll for the year ended June 30, 2010 was $3,122,526. 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, 2010 is 53.
71 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS In addition to providing a deferred compensation plan, the City provides other post-employment benefits (OPEB) allowing its retired employees to continue their medical, dental and vision care coverage through the City's group health plan until death (Retiree Health Plan). The plan allows retirees to participate, as a group, at a rate that does not cover all of the related costs. This results in the reporting of an implied rate subsidy in the financial statements and footnotes. The City's contract with Allegiance Benefits details the plan eligibility. MMIA is the administrator of the benefit plan which covers both active and retired members. In accordance with MCA 2-18-704, the City’s retirees 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. The City's current labor contracts do not include any obligations for payments to retirees. 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). OPEB is recorded on an accrual basis for all enterprise and internal service funds. OPEB is recorded on a modified accrual basis for the governmental funds. Plan contributions are recognized in the period in which the contributions are made. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Funding Policy. The plan is unfunded by the City and plan members receiving benefits contribute 100 percent of their cost of the benefits on a pay-as-you-go basis. The City plan’s administratively established retiree medical, dental and vision premiums vary between $264 and $1,111 per month depending on the medical plan selected, family coverage, and Medicare eligibility. The plan provides different coinsurance amounts depending on whether members use preferred, non-preferred, or other hospitals. For a single individual, after an annual deductible of $300 for most non-Medicare-eligible retirees, the plan reimburses 70% for the first $500 medical claims and 100% thereafter. For a family, after an annual deductible of $600 for most non-Medicare-eligible retirees, the plan reimburses 70% for the first $1,000 medical claims and 100% thereafter. For fiscal year ended June 30, 2010, the City has 38 retired members receiving benefits. Annual OPEB Cost and Net OPEC Obligation. The City’s annual other post-employment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC). The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation to the Retiree Health Plan: Annual required contribution/Annual OPEB Cost (Expense) 794,598$ Contributions made (79,563) Increase in net OPEB obligation 715,035 Net OPEB obligation - beginning of year 757,020 Net OPEB obligation - end of year 1,472,055$
72 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for fiscal year ended June 30, 2010 and the two preceding fiscal years were as follows: Percentage ofFiscal Year Annual Annual OPEB Cost Net OPEB Ended OPEB Cost Contributed ObligationJune 30, 2009 808,096$ 10.01% 757,020$ June 30, 2010 794,598$ 10.01% 1,472,055$ The June 30, 2010 year end OPEB obligation is reported in the City’s funds as follows: ExpensesPrimary Government:Governmental activities:General government 244,372$ Public safety 483,366 Public service 137,550 Public welfare 318,151 Total governmental activities 1,183,439 Business-type activities:Water 126,536 Waste water 79,975 Solid waste 62,204 19,901 Total business-type activities 288,616 Total primary government 1,472,055$ Functions/ProgramsParking
73 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) Funded Status and Funding Progress. The projection of future benefit payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The City has elected not to fund this liability. Actuarial Methods and Assumptions. As of July 1, 2008, the City’s actuarially accrued liability (AAL) for benefits was $4,899,179. The AAL by status breakdown is shown below: Fiscal Fiscal2009 2010Actives 4,288,165$ N/ARetirees, Dependents and Surviving Spouses 611,014 N/ATotal AAL 4,899,179$ N/ANormal Cost 504,592$ N/AImpact on Statement of Activities Annual OPEB Cost 808,096$ 794,598$ Impact on Statement of Net Assets Assumed Contributions51,076$ 79,563$ Net OPEB Obligation at June 30757,020$ 1,472,055$ Participant Information Actives258 N/A Retirees, Dependents and Surviving Spouses73 N/A Total331 N/A
74 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 15. POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS (Continued) The following key assumptions were chosen by the City: 1. Discount Rate: 4% 2. Expected Long Term Rate of Return on Assets: N/A 3. Healthcare and Contribution Trend Rates (Pre/Post-65): 9.52% as of July 1, 2008 reduced linearly to 5.00% by 2018, and remaining at 5.00% for fiscal 2019 and thereafter. 4. Retirement Rates: Based upon the separate rates used to value the pension obligations for Police Officers, Firefighters, and all other employees, respectively. 5. Participation Rate: 90% 6. Marital Assumption: For future retirees, 90% of males and 60% of females are assumed to be married, with husbands 3 years older than wives. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Examples, as detailed above, include assumptions about future employment, mortality, and the healthcare cost trend. Actuarially determined amounts are subject to continual revisions as actual results are compared with past expectations, and new estimates are made about the future. Actuarial calculations reflect a long-term perspective. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, is designed to present multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
75 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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, 2010, 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. 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.
76 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 17. RESTRICTED ASSETS At June 30, 2010, the balances of restricted asset accounts are as follows: Business-Type ActivitiesGovernmental Activities Water FundWaste Water Fund Parking Fund TotalRestricted by revenue bond covenantsFor debt service -$ 32,597$ -$ -$ 32,597$ For bond reserve - 15,031 586,242 - 601,273 For operations - 265,907 - - 265,907 Restricted by ordinanceCash in lieu of parking - - - 65,265 65,265 Cemetery perpetual care 544,209 - - 544,209 Impact fees 7,537,972 7,791,747 - - 15,329,719 8,082,181$ 8,105,282$ 586,242$ 65,265$ 16,838,970$ NOTE 18. INTERFUND TRANSFERS AND ASSETS/LIABILITIES A summary of interfund transfers reported in the fund financial statements for the year ended June 30, 2010 follows: Transfers From General Fund Impact Fees SID Sinking Capital Projects Nonmajor Governmental Water Waste Water Total General Fund -$ -$ -$ -$ 3,282,903$ -$ -$ 3,282,903$ Impact Fees - - - - - - - - SID Sinking - - - - - - - - Capital Projects 2,020,719 - - 3,869,382 - - - 5,890,101 Nonmajor Governmental 718,436 - 41,475 527,373 397,044 - - 1,684,328 Wastewater Enterprise - - - - - - - - Vehicle Internal Service - 4,000 - - - 262,931 258,932 525,863 Health Insurance Internal 172,593 - - - - - - 172,593 2,911,748$ 4,000$ 41,475$ 4,396,755$ 3,679,947$ 262,931$ 258,932$ 11,555,788$ Governmental Funds Proprietary FundsTransfers To
77 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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, 2010, is as follows: Due From Due ToMajor Funds:General Fund 776,397$ -$ Nonmajor Funds:Special Revenue FundsDepartmental Special Revenues - 535,612 Insurance - 17,744 Pension - 63,293 Drug Forfeiture - 35,707 Street Lighting- 34,494 Debt Service FundsGO Bonds - 45,469 TIF Bonds - 3,384 EnterpriseParking - 22,639 Internal ServiceMedical Health Insurance - 18,055 776,397$ 776,397$ 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.
78 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 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 Interlocal 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, 2010, 2009, and 2008. Public Entity Risk Pools In 1986, the City joined together with other Montana cities to form the Montana Municipal Interlocal 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 $12.5 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 statute, either as matter of law, by operation of the Statute, 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, 2010, the City's share is $34,892 for workers' compensation; based on the plan's current financial position, the City doesn't expect to make any payment on these notes.
79 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 19. RISK MANAGEMENT (Continued) 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. 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 $75,000 in covered charges during a year. A reconciliation of claims payable follows: June 30, 2010 June 30, 2009Claims payable, beginning of year -$ 276,514$ Claims incurred during year 3,227,963 2,950,421 Claims paid during year (3,227,963) (3,226,935) Claims payable, end of year -$ -$ On July 1, 2006 the City began purchasing employee health insurance from the Montana Municipal Interlocal 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 Delaney & Company v. City of Bozeman On December 23, 2009, the Montana Supreme Court upheld a jury verdict in Delaney and Co. v. City of Bozeman in favor of the plaintiff for $3,000,000. As the named defendant, this judgment is a legal obligation of the City of Bozeman. The City asserts coverage exists under the Memorandum of Liability Coverage with the MMIA; however, the MMIA disputes coverage for the judgment. Nevertheless, following the decision by the Montana Supreme Court, the MMIA and the City agreed the MMIA would pay the judgment. The agreement conditioned the MMIA’s payment that should a court of record finally determine the MMIA is obligated to provide coverage for all or a portion of the judgment the City would be obligated to reimburse the MMIA for only that portion of the judgment for which a court determines no coverage exists.
80 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 20. CONTINGENCIES (Continued) Delaney & Company v. City of Bozeman (Continued) The City is vigorously pursuing two legal actions in its assertion the City should not be obligated to pay any part of the judgment. To do so, the City retained Elizabeth O’Halloran from the Missoula, Montana, law firm of Milodragovich, Dale, Steinbrenner & Nygren, P.C. to represent the City in a declaratory judgment action to determine whether coverage exists under the MMIA. This action was filed in the First Montana Judicial District, Lewis and Clark County on April 20, 2010, naming both the MMIA and Government Entities Mutual, Inc. (GEM) as parties. GEM is MMIA’s reinsurer on the underlying claim. Both defendants have filed answers and discovery is commencing. The City also filed suit on October 5, 2010, against Moore, O’Connell & Refling, P.C., the law firm retained by the MMIA to handle the underlying litigation in Delaney v. City of Bozeman for professional negligence and breach of contract. As of the date of this letter, this suit has not been served. At this time, the City believes the likelihood of an unfavorable outcome in the coverage action is unlikely. At this time the uncertainty of the coverage action and the professional negligence suit is too great to provide a range of potential loss. Baxter Meadows Development v. City of Bozeman (Baxter I) Baxter Meadows started as a subdivision of approximately 460 acres in northwest Bozeman. In September of 2002, the developer sold 100 acres to Gallatin County for a regional park. The sales price was $200,000 less than the appraised value at the time, and Baxter Meadows sought to have the City of Bozeman ("City") give it credit toward parkland requirements for the subdivision, based on the reduction in the sales price, improvements Baxter Meadows is constructing in the regional park, and the proposed transfer of five acres in Baxter Meadows to the YMCA. The City declined to do that, and Baxter Meadows filed a lawsuit asking the court to order the City to grant the credit. Because the lawsuit is what is referred to as a mandamus action, if the plaintiff prevails it could recover its costs and attorney's fees from the City. Baxter Meadows has also asked the court to award it money damages from the City. In the spring of 2010, we were advised by the plaintiff’s attorney that the real estate in question was being placed for sale by the developer, and both parties agreed to suspend progress of the lawsuit until a later date. Although the court had established deadlines for certain activity in the case, the parties agreed to vacate those deadlines. No further action has taken place in the litigation since that time. We were recently advised by the engineering firm working with the development, Thomas, Dean & Hoskins, that the prope11y had been transferred to a creditor of the developer. We are attempting to confirm that fact. In the event the litigation is returned to active status, the City of Bozeman intends to contest the case vigorously. We believe the City has u strong defense to Baxter's claims, and do not see a strong need to seek an out-of-court settlement. We believe that the likelihood of an unfavorable outcome in this case is low. However, in the event the plaintiff prevails in the case, the potential loss for the City of Bozeman would almost certainly be in excess of $10,000, and could exceed $300,000.
81 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 20. CONTINGENCIES (Continued) Baxter Meadows Development v. City of Bozeman (Baxter II) The Baxter Meadows project was most recently being developed in phases, with several phases having reached final plat approval. Three phases of the project had reached preliminary plat approval. Those three phases are the subject of this litigation, and the preliminary plat approval was granted on February 2, 2004. That approval was for the maximum time allowed by law, three years. In early 2007, Baxter Meadows sought a one-year extension of that preliminary plat approval, and the City granted that extension on February 2, 2007. Baxter then sought a second one-year extension, which the City granted, with conditions, in January of2008. Baxter objected to some of the conditions imposed by the City, and filed this lawsuit. As with the case mentioned above, Baxter is asking for a writ of mandamus, requiring the City to grant further extension of the preliminary plat approval. As with the first Baxter Meadows case, the parties have agreed to vacate scheduling deadlines set by the court, and suspend this litigation for an indefinite period. In the event the case is reactivated, the City will vigorously defend its position. We feel there is ample evidence that the City acted fairly and appropriately, and in conformance with state and local law. Again, we do not see a strong need for an out-of-court settlement of this case. We believe that the likelihood of an unfavorable outcome in this case is low. However, if the plaintiff were to prevail at trial, damages for lost property value, delay in developing the subdivision, and attorney's fees, could be substantial. Such an award of damages would certainly exceed $10,000, and could exceed $500,000. Red Mountain Retail Group, Inc., and Bozeman Shopping Center, LLC v. City of Bozeman The plaintiffs in this case own and operate what is commonly known as the Hastings Shopping Center on Main Street in Bozeman. This lawsuit arose from a dispute over an improvements agreement entered into between Bozeman Shopping Center and the City of Bozeman, in October of 2005. In May of this year, the plaintiffs filed a complaint in the Gallatin County District Court, claiming that in August of 2008, the City had wrongly issued a notice of violation against Bozeman Shopping Center, and that the notice of violation interfered with the plaintiffs' ability to operate the shopping center. The complaint also claims that the plaintiffs had a prospective tenant for one portion of the shopping center, and that city staff had told the prospective tenant that it could not make improvements to or occupy the shopping center until the plaintiffs made certain improvements to the exterior of the structure. The complaint requests that the court declare the City's actions to be unlawful and void, to award money damages to the plaintiffs, and to further award the plaintiffs their attorney's fees and costs. In July, the City filed an answer to the complaint, and in early November, the court issued a scheduling order setting deadlines in the case. The parties are presently in the process of obtaining information about each other's claims and defenses. The City of Bozeman will defend this case on its merits. Over the last four years, the City has attempted to work with the developer to meet the needs of both parties. We believe that the City has acted fairly and reasonably, and in full compliance with state law and the City's Unified Development Ordinance. At this time, the City does not intend to seek an out-of-court settlement. We do not believe that an unfavorable outcome is likely in this case. If the plaintiffs succeed in obtaining a judgment for damages, costs and attorney's fees, the potential loss would at most certainly exceed $10,000, and could exceed $100,000.
82 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 20. CONTINGENCIES (Continued) 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. The following is list of pending litigation where an unfavorable outcome is possible but not likely: Possible Adverse Verdict Josephs v. City of Bozeman $100,000-$200,000 Verdi v. City of Bozeman $100,000-$150,000 Bickle v. Kent $ 75,000-$100,000 Montana Fair Housing v. City of Bozeman $ 50,000-$100,000 NOTE 21. 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 $1,753,768 reported as landfill closure and post-closure care liability at June 30, 2010, represents the cumulative amount reported to date based on the use of 95% of the total capacity of the landfill. This amount represents a $354,668 decrease from the $2,108,436 liability reported last year due actual closure and post-closure costs incurred during the year. The City stopped accepting waste effective June 30, 2008. The final capping of the cells is still pending. In 2010, the City budgeted for, and funded, landfill closure and post-closure care liability through normal operations and is in compliance with EPA requirements.
83 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 22. SEGMENT INFORMATION FOR WATER ENTERPRISE FUND The City’s Water Fund accounts for the City’s water utility operations and collection and administration of water impact fees. Segment information for the utility operations, excluding impact fees, is as follows: Condensed Statement of Net AssetsCurrent assets 12,723,600$ Capital assets 89,110,880 Other assets - Total assets 101,834,480$ Current liabilities 508,969$ Noncurrent liabilities - Total liabilities 508,969 Invested in capital assets, net of related debt 89,081,888 Restricted for debt service 313,535 Unrestricted 11,930,088 Total net assets 101,325,511 Total liabilities and net assets 101,834,480$
84 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 22. SEGMENT INFORMATION FOR ENTERPRISE FUND (Continued) Condensed Statement of Revenues, Expenses and Changes in Net AssetsOPERATING REVENUES AND EXPENSESOperating revenues 5,860,144$ Operating expensesDepreciation 8,013,855 Other operating 3,880,612 Total operating expenses 11,894,467 Operating loss(6,034,323) NONOPERATING REVENUES (EXPENSES)Interest income 197,544 Interest expense (2,440) Grant income 101,491 Gain on sale of assets 4,349 Contributions of infrastructure 2,365,634 Other income 51,980 Transfers (262,931) Total nonoperating revenues 2,455,627 Change in net assets (3,578,696) NET ASSETS, beginning of year104,904,207 NET ASSETS, end of year101,325,511$ Condensed Statement of Cash FlowsNet cash provided by operating activities 2,064,955$ Net cash flows from capital and related financing activities (30,062) Net cash flows from noncapital and financing activities (109,461) Net cash flows from investing activities (1,488,139) Net increase (decrease) in cash flows 437,293 Beginning cash and equivalents 11,798,465 Ending cash and equivalents 12,235,758$
85 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 23. 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 $33,232, $206,898, and $21, respectively, as of June 30, 2010. The Fire Impact Fee Fund does not have any outstanding credits. The following impact fee revenues were collected and expensed/expended during fiscal year 2010: Beginning balances Impact fees Other incomeExpenses, expenditures and transfers Ending balancesFire 122,604$ 187,476$ -$ (11,991)$ 298,089$ Water 7,981,173 744,558 127,673 (119,244) 8,734,160 Waste water 12,292,980 667,909 203,197 (12,876,615) 287,471 Streets 7,076,615 751,223 143,185 (712,828) 7,258,195 Total 27,473,372$ 2,351,166$ 474,055$ (13,720,678)$ 16,577,915$
86 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 24. POLLUTION REMEDIATION OBLIGATIONS 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, 2010, the only remaining work at the site is the final plume monitoring of the wells and remedial activity within the plume area. Based on the current year lifecycle cost projections, the City estimates the expected outlay for the active remediation scenario, which includes a bioremediation pilot test, full-scale bioremediation in 2009-2012, seven (7) subsequent years of aquifer flushing and monitoring, and an additional year for project closure, to be $1,070,000, net of insurance recovery. The City estimates the expected outlay for the natural attenuation scenario, which includes no remediation pilot test or active remediation but instead monitored natural attenuation for nineteen (19) years followed by seven (7) years of aquifer flushing and monitoring, and an additional year for project closure, to be $2,510,000, net of insurance recovery. Using the expected cash flow technique, the liability is recorded at current value in the Waste Water Fund at $1,786,000. The current timeline agreed to by the Montana Department of Environmental Quality and the responsible parties for issuing the Record of Decision (ROD) for the Bozeman Solvent Site is July 2011. Following the issuance of the ROD, final remediation may begin. However, though remediation may be completed in the near future, monitoring of the site will continue for a period of up to 30 years. CMC Asbestos Bozeman CECRA Facility In 2001, the City purchased the former CMC Heartland Partners 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 79% liability to the orphan shares.
87 CITY OF BOZEMAN, MONTANA NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2010 NOTE 24. POLLUTION REMEDIATION OBLIGATIONS (Continued) CMC Asbestos Bozeman CECRA Facility (continued) 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. 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. In the first phase of remediation the City spent approximately $2.4 million. State statute limits reimbursement from the orphan share fund to “eligible” remedial action costs incurred after the date of the CALA petition. DEQ determined that $2.1 million of the City’s costs were eligible. The 79% proportional share that the City may be reimbursed is approximately $1,663,718. The statute also provides that costs may not be reimbursed until all remedial actions are complete. However, DEQ agreed to reimburse a portion of the past cleanup costs in recognition of the City’s commitment and good faith efforts to keep moving forward with completion of the cleanup. Last year the DEQ paid the City $831,859. The City submitted its construction completion report/petition for closure in September 2009. DEQ is reviewing the report and will provide comments The DEQ is still reviewing various invoices and the documentation of certain remaining costs. The remaining reimbursement amount owed by DEQ to the City can be estimated by determining the appropriate allocation of that total amount to the orphan share. By the end of the cleanup project, the City expects to receive 79% of the estimated total eligible costs of $4,449,092, which amounts to $3,514,782. To date, all payments from DEQ have been received, leaving no estimated remaining reimbursement amount. As of June 30, 2010, the City has accrued $16,874 on the entity-wide financials for governmental activities, which is the potential remediation liability net of projected recoveries.
C. REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS
882010 for the Retiree Health Plan are as follows:Net OPEB Obligation757,020$ 1,472,055$ The funded status of the plan was as follows:4,899,179$ - 4,899,179$ 0.0%Not availableNot availableActuarial Valuation DateActuarial Value of Assets (a)Actuarial Accrued Liability (AAL) (b)Unfunded AAL (UAAL) (b-a)Funded Ratio (a/b)Covered Payroll(c) UAAL as a Percentage of Covered Payroll ((b - a) / c)7/1/2009 -$ 4,899,179$ 4,899,179$ 0%Not available Not availableFunded ratio (b) / (a)CITY OF BOZEMAN, MONTANASCHEDULE OF FUNDING PROGRESS - OTHER POST-EMPLOYMENT HEALTHCARE BENEFITSFor the Year Ended June 30, 2010ANNUAL OPEB COSTRetiree Health PlanBecause the year ended June 30, 2009 was the year of transition for GASB Statement No. 45, requirements of GASB Statement No. 45have been implemented prospectively. Therefore, the below illustration does not reflect similar information respective of years precedingJune 30, 2009. The annual OPEB costs, the percentage of OPEB cost contributed to the plan, and the net OPEB obligation for June 30,6/30/2010 715,035$ 10.01%SCHEDULE OF FUNDING PROGRESSRetiree Medical Plan(c) Covered payrollYear Ended6/30/2009Annual OPEB Cost794,598$ Percentage of OPEB Cost 6.32%FUNDED STATUSUnfunded actuarial accrued liability (funding excess) as a percentage of covered payroll ({(a) - (b)} / (c))(a) Actuarial accrued liability (AAL)(b) Actuarial value of plan assets (UAAL)Unfunded actuarial accrued liability (funding excess) [(a) - (b)]
89Variance withActual Final BudgetOriginal Final Amounts Positive (Negative)Budgetary fund balance, July 1 5,364,397$ 5,364,397$ 5,364,397$ -$ Resources (inflows):Taxes 9,893,899 9,893,899 9,390,202 (503,697) Special assessments - - 4,857 4,857 Licenses and permits 266,500 266,500 288,708 22,208 Intergovernmental 5,194,814 5,194,814 5,323,697 128,883 Charges for services 2,332,988 2,332,988 2,324,185 (8,803) Fines and forfeitures 1,221,500 1,221,500 1,336,298 114,798 Sale of assets - - 757,959 757,959 Interest on investments 70,000 70,000 80,455 10,455 Transfers from other funds 3,659,085 3,659,085 3,282,903 (376,182) Other 28,500 28,500 69,587 41,087 Amounts available for appropriation 28,031,683 28,031,683 28,223,248 191,565 Charges to appropriations (outflows):CurrentGeneral government 7,187,951 5,494,451 4,922,606 571,845 Public safety 9,169,500 10,863,000 10,153,415 709,585 Public service 490,372 490,372 420,381 69,991 Public welfare 4,023,346 4,023,346 3,731,763 291,583 Capital outlay 484,340 932,840 911,455 21,385 Debt service 108,000 108,000 52,480 55,520 Transfers to other funds 1,460,805 2,911,805 2,911,748 57 Total charges to appropriations 22,924,314 24,823,814 23,103,848 1,719,966 Budgetary fund balance, June 30 5,107,369$ 3,207,869$ 5,119,400$ 1,911,531$ Budgeted AmountsCITY OF BOZEMAN, MONTANASCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALGENERAL FUNDFor the Year Ended June 30, 2010
90Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 7,199,220$ 7,199,220$ 7,199,220$ -$ Resources (inflows):Charges for services 935,640 935,640 938,700 3,060 Interest on investments 100,000 100,000 109,995 9,995 Other- - 25,200 25,200 Proceeds from long-term debt - - - - Amounts available for appropriation 8,234,860 8,234,860 8,273,115 38,255 Charges to appropriations (outflows):CurrentPublic safety - - - - Public service - - - - Capital outlay 600,000 713,000 712,828 172 Transfers to other funds185,640 185,640 4,000 181,640 Total charges to appropriations 785,640 898,640 716,828 181,812 Budgetary fund balance, June 30 7,449,220$ 7,336,220$ 7,556,287$ 220,067$ Budgeted AmountsCITY OF BOZEMAN, MONTANASCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET TO ACTUALSTREET AND FIRE IMPACT FEE SPECIAL REVENUE FUNDYear Ended June 30, 2010
91General ImpactFund FeesSources/inflows of resourcesActual amounts (budgetary basis) "available for appropriation" from the budgetarycomparison schedule28,223,248$ 8,273,115$ 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. (5,364,397) (7,199,220) Transfers from other funds are inflows of budgetary resources but are notrevenues for financial reporting purposes. (3,282,903) - The proceeds from the sale of assets are budgetary resources but are regardedas a special item, rather than revenue, for financial reporting purposes (757,959) - Total revenues as reported on the statement of revenues, expenditures, andchanges in fund balances - governmental funds 18,817,989$ 1,073,895$ Uses/outflows of resourcesActual amounts (budgetary basis) "total charges to appropriations" from thebudgetary comparison schedule 23,103,848$ 716,828$ Differences - budget to GAAP:Transfers to other funds are outflows of budgetary resources but are notexpenditures for financial reporting purposes. (2,911,748) (4,000) Total expenditures as reported on the statement of revenues, expenditures, andchanges in fund balances - governmental funds 20,192,100$ 712,828$ CITY OF BOZEMAN, MONTANANOTES TO REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSISYear Ended June 30, 2010
D. SUPPLEMENTAL INFORMATION
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
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.
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.
92CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDSJune 30, 2010Special Revenue FundsDepartmental CitySpecial Planning Gas TaxRevenues Board Insurance Pension ApportionmentASSETSCash and cash equivalents 3,026,142$ 186,705$ 62,114$ 33,392$ 549,725$ ReceivablesProperty taxes 51,880 20,792 295,535 123,879 - Accrued interest - - - - - Customers, net 5,317 - - - - Special assessments - - - - - Other governments 342,690 - - - - Due from other City funds - - - - - Prepaid expenditures - - - - - Notes receivable - - - - - Restricted cash and cash equivalents 25,000 24,863 - - - Total assets 3,451,029 232,360 357,649 157,271 549,725 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 110,768 10,590 - - 17,040 Escheat property payable - - - - - Accrued employee benefits payable 1,499 6,391 - - - Deferred revenue 214,870 15,954 224,464 93,978 - Due to other City funds 535,612 - 17,744 63,293 - Total liabilities 862,749 32,935 242,208 157,271 17,040 Fund balances:Reserved for:Park development - - - - - Prepaid items - - - - - Unreserved 2,588,280 199,425 115,441 532,685 Total fund balances 2,588,280 199,425 115,441 - 532,685 Total liabilities and fund balances 3,451,029$ 232,360$ 357,649$ 157,271$ 549,725$ (continued)
93CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)June 30, 2010Special Revenue FundsCity-County Beauti- Street and Law andDrug Drug fication Tree JusticeForfeitures Forfeitures of Bozeman Maintenance CenterASSETSCash and cash equivalents -$ 192,615$ 1,389$ 795,734$ -$ ReceivablesProperty taxes - - - - - Accrued interest - - - - - Customers, net 2,992 - - 75 - Special assessments - - - 286,062 - Other governments 36,242 - - - - Due from other City funds - - - - - Prepaid expenditures - - - - 465,375 Notes receivable - - - - - Restricted cash and cash equivalents - - - - - Total assets 39,234 192,615 1,389 1,081,871 465,375 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 516 - - 58,987 - Escheat property payable - - - - - Accrued employee benefits payable 3,010 - - 16,689 - Deferred revenue - - - 233,414 - Due to other City funds 35,707 - - - - Total liabilities 39,233 - - 309,090 - Fund balances:Reserved for:Park development - - - - - Prepaid items - - - - 465,375 Unreserved 1 192,615 1,389 772,781 - Total fund balances 1 192,615 1,389 772,781 465,375 Total liabilities and fund balances 39,234$ 192,615$ 1,389$ 1,081,871$ 465,375$ (continued)
94CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)June 30, 2010Special Revenue FundsEconomic HousingSpecial Community Building Highway Development Revolving Projects Transportation Inspection Safety Revolving Loan Loan FundASSETSCash and cash equivalents 461,726$ 49,649$ 555,545$ 21,877$ -$ 70,619$ ReceivablesProperty taxes - - - - - - Accrued interest - - - - Customers, net - - - - - - Special assessments - - - - - - Other governments - - - - - - Due from other City funds - - - - - - Prepaid expenditures - - - - - - Notes receivable - - - - 583,505 35,197 Restricted cash and cash equivalents - - - - - - Total assets 461,726 49,649 555,545 21,877 583,505 105,816 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 23,719 - 5,556 - - - Escheat property payable - - - - - - Accrued employee benefits payable - - 6,898 - - - Deferred revenue - - - - 583,505 35,197 Due to other City funds - - - - - - Total liabilities 23,719 - 12,454 - 583,505 35,197 Fund balances:Reserved for:Park development - - - - - - Prepaid items - - - - - - Unreserved 438,007 49,649 543,091 21,877 - 70,619 Total fund balances 438,007 49,649 543,091 21,877 - 70,619 Total liabilities and fund balances 461,726$ 49,649$ 555,545$ 21,877$ 583,505$ 105,816$ (continued)
95CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)June 30, 2010Special Revenue FundsDowntownCommunity Improvement Street Park Municipal CourtHousing District Lighting Land RestitutionASSETSCash and cash equivalents 359,432$ 982,468$ 461,657$ 190,564$ 15,766$ ReceivablesProperty taxes - - - - - Accrued interest - - - Customers, net - - - - - Special assessments - 3,069 80,661 - - Other governments - - - - - Due from other City funds - - - - - Prepaid expenditures - - - - - Notes receivable 82,499 - - - - Restricted cash and cash equivalents - - - - - Total assets 441,931 985,537 542,318 190,564 15,766 LIABILITIES AND FUND EQUITYLiabilities:Accounts payable - 3,180 15,549 - 1,000 Escheat property payable - - - - 14,685 Accrued employee benefits payable - - - - - Deferred revenue 82,499 140 - - - Due to other City funds - - 34,494 - - Total liabilities82,499 3,320 50,043 - 15,685 Fund balances:Reserved for:Park development - - - 190,564 - Prepaid items - - - - - Unreserved 359,432 982,217 492,275 - 81 Total fund balances 359,432 982,217 492,275 190,564 81 Total liabilities and fund balances 441,931$ 985,537$ 542,318$ 190,564$ 15,766$ (continued)
96SpecialRevenueFundsTotalASSETSCash and cash equivalents 8,017,119$ ReceivablesProperty taxes 492,086 Accrued interest - Customers, net 8,384 Special assessments 369,792 Other governments 378,932 Due from other City funds - Prepaid expenditures 465,375 Notes receivable 701,201 Restricted cash and cash equivalents 49,863 Total assets 10,482,752 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 246,905 Escheat property payable 14,685 Accrued employee benefits payable 34,487 Deferred revenue 1,484,021 Due to other City funds 686,850 Total liabilities 2,466,948 Fund balances:Reserved for:Park development 190,564 Prepaid items 465,375 Unreserved 7,359,865 Total fund balances 8,015,804 Total liabilities and fund balances 10,482,752$ (continued)CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)June 30, 2010
97PermanentDebt Service Fund Fund TotalNonmajorSID G.O. TIF Perpetual GovernmentalRevolving Bonds Bonds Total Cemetery Care FundsASSETSCash and cash equivalents 1,228,197$ -$ -$ 1,228,197$ 36,863$ 9,282,179$ ReceivablesProperty taxes - 105,075 - 105,075 - 597,161 Accrued interest - - - - Customers, net - - - 292 8,676 Special assessments - - - - - 369,792 Other governments - - - - - 378,932 Due from other City funds - - - - - - Prepaid expenditures - - - - - 465,375 Notes receivable - - - - - 701,201 Restricted cash and cash equivalents - - - - 544,209 594,072 Total assets 1,228,197 105,075 - 1,333,272 581,364 12,397,388 LIABILITIES AND FUND BALANCESLiabilities:Accounts payable - - - - - 246,905 Escheat property payable - - 14,685 Accrued employee benefits payable - - - - - 34,487 Deferred revenue - 79,846 - 79,846 37,155 1,601,022 Due to other City funds - 45,469 3,384 48,853 - 735,703 Total liabilities - 125,315 3,384 128,699 37,155 2,632,802 Fund balances:Reserved for:Cemetery perpetual care - - - - 544,209 544,209 Park development - - - - - 190,564 Debt service 1,228,197 - - 1,228,197 - 1,228,197 Prepaid items - - - - 465,375 Unreserved - (20,240) (3,384) (23,624) - 7,336,241 Total fund balances 1,228,197 (20,240) (3,384) 1,204,573 544,209 9,764,586 Total liabilities and fund balances 1,228,197$ 105,075$ -$ 1,333,272$ 581,364$ 12,397,388$ June 30, 2010CITY OF BOZEMAN, MONTANACOMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)
98Departmental CitySpecial Planning Gas TaxRevenues Board Insurance Pension ApportionmentREVENUESTaxes 729,502$ 152,024$ 2,075,985$ 873,803$ -$ Special assessments - - - - - Licenses and permits - - - - - Intergovernmental 682,847 85,054 80,395 308,881 652,476 Charges for services 25,120 161,975 - - - Fines and forfeitures 73,597 - - - - Interest on investments 41,320 2,440 - - 6,288 Loan repayment - - - - - Other 123,496 18,184 - - - Total revenues 1,675,882 419,677 2,156,380 1,182,684 658,764 EXPENDITURESCurrentGeneral government 78,650 689,232 - - - Public safety 487,525 - - - - Public service 3,274 - - - 145,133 Public welfare 543,760 - - - - Capital outlay 372,466 - - - 388,322 Debt servicePrincipal - - - - - Interest and fiscal fees - - - - - Total expenditures 1,485,675 689,232 - - 533,455 Revenues over (under) expenditures 190,207 (269,555) 2,156,380 1,182,684 125,309 OTHER FINANCING SOURCES (USES)Transfers in 251,693 319,757 - - - Transfers out - - (2,040,939) (1,203,372) - Long-term debt issued - - - - - Sale of capital assets - - - - - Total other financing sources and uses 251,693 319,757 (2,040,939) (1,203,372) - Net change in fund balance 441,900 50,202 115,441 (20,688) 125,309 FUND BALANCES, beginning of year 2,146,380 149,223 - 20,688 407,376 FUND BALANCES, end of year 2,588,280$ 199,425$ 115,441$ -$ 532,685$ (continued)Special Revenue FundsCITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDSYear Ended June 30, 2010
99Special Revenue FundsCity-County Beauti- Street and Law andDrug Drug fication Tree JusticeForfeitures Forfeitures of Bozeman Maintenance CenterREVENUESTaxes -$ -$ -$ -$ -$ Special assessments - - - 14,888 - Licenses and permits - - - 23,131 - Intergovernmental 158,030 - - 2,721 - Charges for services - - - 2,330,877 - Fines and forfeitures 40,620 67,966 - - - Interest on investments - 3,439 29 11,557 - Loan repayment - - - - - Other - - - 20,482 - Total revenues 198,650 71,405 29 2,403,656 - EXPENDITURESCurrentGeneral government - - - - - Public safety 211,400 82,498 - - 19,125 Public service - - - 1,810,353 - Public welfare - - 685 395,335 - Capital outlay - - - 208,939 - Debt servicePrincipal - - - 68,890 - Interest and fiscal fees - - - 15,928 - Total expenditures 211,400 82,498 685 2,499,445 19,125 Revenues over (under) expenditures (12,750) (11,093) (656) (95,789) (19,125) OTHER FINANCING SOURCES (USES)Transfers in 8,806 - - - - Transfers out - - - - - Long-term debt issued - - - - - Sale of capital assets - - - 8,963 - Total other financing sources and uses 8,806 - - 8,963 - Net change in fund balances (3,944) (11,093) (656) (86,826) (19,125) FUND BALANCES, beginning of year 3,945 203,708 2,045 859,607 484,500 FUND BALANCES, end of year 1$ 192,615$ 1,389$ 772,781$ 465,375$ (continued)Year Ended June 30, 2010CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)
100Special Revenue FundsEconomic HousingSpecial Community Building Highway Development Revolving Projects Transportation Inspection Safety Revolving Loan Loan FundREVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - - - Licenses and permits - - 646,751 - - - Intergovernmental 559,924 - 11,531 - - - Charges for services - - 3,799 - - - Fines and forfeitures - - - - - - Interest on investments - - 10,396 390 - 749 Loan repayment - - - - - 5,401 Other - 50,384 12 - - 40,000 Total revenues 559,924 50,384 672,489 390 - 46,150 EXPENDITURESCurrentGeneral government - - - - - - Public safety - - 755,207 - - - Public service - 303 - - - - Public welfare 4,000 - - - - 14,400 Capital outlay 117,917 30,947 - - - - Debt servicePrincipal - - - - - - Interest and fiscal fees - - - - - - Total expenditures 121,917 31,250 755,207 - - 14,400 Revenues over (under) expenditures 438,007 19,134 (82,718) 390 - 31,750 OTHER FINANCING SOURCES (USES)Transfers in 1,132 30,515 - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources and uses 1,132 30,515 - - - - Net change in fund balance 439,139 49,649 (82,718) 390 - 31,750 FUND BALANCES, beginning of year (1,132) - 625,809 21,487 - 38,869 FUND BALANCES, end of year 438,007$ 49,649$ 543,091$ 21,877$ -$ 70,619$ (continued)CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010
101Special Revenue FundsDowntown MunicipalCommunity Improvement Street Park CourtHousing District Lighting Land Restitution TotalsREVENUESTaxes -$ 1,096,710$ -$ -$ -$ 4,928,024$ Special assessments - 116,008 517,770 - - 648,666 Licenses and permits - - - - - 669,882 Intergovernmental - 34,620 - - - 2,576,479 Charges for services - - - - - 2,521,771 Fines and forfeitures - - - - - 182,183 Interest on investments 4,843 12,431 6,322 3,299 31 103,534 Loan repayment 5,000 - - - - 10,401 Other 70,000 4,200 - 10,500 - 337,258 Total revenues 79,843 1,263,969 524,092 13,799 31 11,978,198 EXPENDITURESCurrentGeneral government - - - - - 767,882 Public safety - - - - - 1,555,755 Public service - - 309,489 - - 2,268,552 Public welfare 40,000 182,876 - - - 1,181,056 Capital outlay - - - - - 1,118,591 Debt servicePrincipal - - - - - 68,890 Interest and fiscal fees - - - - - 15,928 Total expenditures 40,000 182,876 309,489 - - 6,976,654 Revenues over (under) expenditures 39,843 1,081,093 214,603 13,799 31 5,001,544 OTHER FINANCING SOURCES (USES)Transfers in 78,290 - - - - 690,193 Transfers out - (425,287) - - - (3,669,598) Long-term debt issued - - - - - - Sale of capital assets - - - - - 8,963 Total other financing sources and uses 78,290 (425,287) - - - (2,970,442) Net change in fund balance 118,133 655,806 214,603 13,799 31 2,031,102 FUND BALANCES, beginning of year 241,299 326,411 277,672 176,765 50 5,984,702 FUND BALANCES, end of year 359,432$ 982,217$ 492,275$ 190,564$ 81$ 8,015,804$ (continued)Year Ended June 30, 2010NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-CITY OF BOZEMAN, MONTANA
102Debt Service FundsPermanent FundTotalNonmajorSID G.O. TIF Cemetery Governmental Revolving Bonds Bonds Totals Perpetual Care FundsREVENUESTaxes -$ 737,618$ -$ 737,618$ -$ 5,665,642$ Special assessments - - - - - 648,666 Licenses and permits - - - - - 669,882 Intergovernmental - - - - - 2,576,479 Charges for services 337 - - 337 5,389 2,527,497 Fines and forfeitures - - - - - 182,183 Interest on investments 11,777 2,367 2,334 16,478 10,349 130,361 Loan repayment - - - - - 10,401 Other - - - - - 337,258 Total revenues 12,114 739,985 2,334 754,433 15,738 12,748,369 EXPENDITURESCurrentGeneral government - - - - - 767,882 Public safety - - - - - 1,555,755 Public service - - - - - 2,268,552 Public welfare - - - - - 1,181,056 Capital outlay - - - - - 1,118,591 Debt servicePrincipal - 540,000 155,000 695,000 - 763,890 Interest and fiscal fees - 192,320 269,588 461,908 - 477,836 Total expenditures - 732,320 424,588 1,156,908 - 8,133,562 Revenues over (under) expenditures 12,114 7,665 (422,254) (402,475) 15,738 4,614,807 OTHER FINANCING SOURCES (USES)Transfers in 568,848 - 425,287 994,135 - 1,684,328 Transfers out - - - - (10,349) (3,679,947) Long-term debt issued - - - - - - Sale of capital assets - - - - - 8,963 Total other financing sources and uses 568,848 - 425,287 994,135 (10,349) (1,986,656) Net change in fund balance 580,962 7,665 3,033 591,660 5,389 2,628,151 FUND BALANCES, beginning of year 647,235 (27,905) (6,417) 612,913 538,820 7,136,435 FUND BALANCES, end of year 1,228,197$ (20,240)$ (3,384)$ 1,204,573$ 544,209$ 9,764,586$ CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010
BUDGET TO ACTUAL SCHEDULES – OTHER MAJOR FUNDS
103 Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 1,732,118$ 1,732,118$ 1,732,118$ -$ Resources (inflows):Taxes - - - - Special assessments 1,500,000 1,500,000 989,977 (510,023) Licenses and permits - - - - Intergovernmental - - - - Charges for services - - - - Fines and forfeitures - - - - Interest on investments - - 31,567 31,567 Transfers from other funds - - - - Proceeds from long term debt - - - - Premium on bonds issued - - - - Proceeds from the sale of fixed assets - - - Other - - - - Amounts available for appropriation 3,232,118 3,232,118 2,753,662 (478,456) Charges to appropriations (outflows):CurrentGeneral government - - - - Public safety - - - - Public service - - - - Public welfare - - - - Capital outlay - - - - Debt service 2,600,000 1,500,000 615,763 884,237 Transfers to other funds - - 41,475 (41,475) Total charges to appropriations 2,600,000 1,500,000 657,238 842,762 Budgetary fund balance, June 30 632,118$ 1,732,118$ 2,096,424$ 364,306$ Budgeted AmountsYear Ended June 30, 2010CITY OF BOZEMAN, MONTANASCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALOTHER MAJOR FUNDS - SID SINKING FUND
104Variance withActual Amounts Final BudgetOriginal Final Budgetary Basis Positive (Negative)Budgetary fund balance, July 1 (890,615)$ (890,615)$ (890,615)$ -$ Resources (inflows):Taxes - - - - Special assessments - - - - Licenses and permits - - - - Intergovernmental - - - - Charges for services - - - - Fines and forfeitures - - - - Interest on investments - - - - Transfers from other funds 1,704,000 1,704,000 5,890,101 4,186,101 Proceeds from long term debt - - 890,000 890,000 Premium on bonds issued - - - - Proceeds from the sale of fixed assets - - - - Other - - 1,824,026 1,824,026 Amounts available for appropriation 813,385 813,385 7,713,512 6,900,127 Charges to appropriations (outflows):CurrentGeneral government - - - - Public safety - - - - Public service - 14,000 13,577 423 Public welfare - 4,100 4,009 91 Capital outlay - 1,510,000 1,505,884 4,116 Bond issuance costs - - - - Transfers to other funds - 4,400,000 4,396,755 3,245 Total charges to appropriations - 5,928,100 5,920,225 7,875 Budgetary fund balance, June 30 813,385$ (5,114,715)$ 1,793,287$ 6,908,002$ Year Ended June 30, 2010Budgeted AmountsCITY OF BOZEMAN, MONTANASCHEDULE OF REVENUES, REXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALOTHER MAJOR FUNDS - CAPITAL PROJECTS FUND
105SID CapitalSinking ProjectsSources/inflows of resourcesActual amounts (budgetary basis) "available for appropriation" from the budgetarycomparison schedule 2,753,662$ 7,713,512$ 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. (1,732,118) 890,615 Proceeds of long term debt are inflows for budgetary purposes, but are notrevenues for financial reporting purposes. - (890,000) Proceeds from the sale of fixed assets are a budgetary resource but are not a current-year revenue for financial reporting purposes. - - Transfers from other funds are inflows of budgetary purposes, but are notrevenues for financial reporting purposes. - (5,890,101) Total revenues as reported on the statement of revenues, expenditures, andchanges in fund balances - Other nonmajor governmental funds 1,021,544$ 1,824,026$ Uses/outflows of resourcesActual amounts (budgetary basis) "total charges to appropriations" from thebudgetary comparison schedule 657,238$ 5,920,225$ 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. (41,475) (4,396,755) Total expenditures as reported on the statement of revenues, expenditures, andchanges in fund balances - Other nonmajor governmental funds 615,763$ 1,523,470$ CITY OF BOZEMAN, MONTANANOTE TO BUDGET TO ACTUAL STATEMENT - OTHER MAJOR FUNDSYear Ended June 30, 2010
BUDGET TO ACTUAL SCHEDULES – NONMAJOR FUNDS
106CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALYear Ended June 30, 2010Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes 758,963$ 729,502$ (29,461)$ 156,580$ 152,024$ (4,556)$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental 157,500 682,847 525,347 76,641 85,054 8,413 Charges for services 49,200 25,120 (24,080) 220,000 161,975 (58,025) Fines and forfeitures 70,000 73,597 3,597 - - - Interest on investments 32,200 41,320 9,120 - 2,440 2,440 Loan repayment - - - - - - Other 14,500 123,496 108,996 19,000 18,184 (816) Total revenues 1,082,363 1,675,882 593,519 472,221 419,677 (52,544) EXPENDITURES - BUDGETUNIT 2,288,675 1,485,675 803,000 777,768 689,232 88,536 Revenues over (under) expenditures (1,206,312) 190,207 1,396,519 (305,547) (269,555) 35,992 OTHER FINANCING SOURCES (USES)Transfers in 200,000 251,693 51,693 348,000 319,757 (28,243) Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) 200,000 251,693 51,693 348,000 319,757 (28,243) Revenues and other sources over(under) expenditures (1,006,312)$ 441,900 1,448,212$ 42,453$ 50,202 7,749$ FUND BALANCES, beginning of year 2,146,380 149,223 FUND BALANCES, end of year 2,588,280$ 199,425$ (continued)Departmental Special Revenues City Planning BoardNONMAJOR GOVERNMENTAL FUNDS
107CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALYear Ended June 30, 2010Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes 2,213,990$ 2,075,985$ (138,005)$ 934,784$ 873,803$ (60,981)$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental 78,555 80,395 - 301,980 308,881 6,901 Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - - - - - - Loan repayment - - - - - - Other - - - - - - Total revenues 2,292,545 2,156,380 (138,005) 1,236,764 1,182,684 (54,080) EXPENDITURES - BUDGETUNIT - - - - - - Revenues over (under) expenditures 2,292,545 2,156,380 (136,165) 1,236,764 1,182,684 (54,080) OTHER FINANCING SOURCES (USES)Transfers in - - - - - - Transfers out (2,277,735) (2,040,939) 236,796 (1,236,764) (1,203,372) 33,392 Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) (2,277,735) (2,040,939) 236,796 (1,236,764) (1,203,372) 33,392 Revenues and other sources over(under) expenditures 14,810$ 115,441 100,631$ -$ (20,688) (20,688)$ FUND BALANCES, beginning of year - 20,688 FUND BALANCES, end of year 115,441$ -$ (continued) Insurance PensionNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)
108CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALYear Ended June 30, 2010VariancePositiveBudget Actual (Negative)REVENUESTaxes -$ -$ -$ Special assessments - - - Licenses and permits - - - Intergovernmental 650,000 652,476 2,476 Charges for services - - - Fines and forfeitures - - - Interest on investments 7,500 6,288 (1,212) Loan repayment - - - Other - - - Total revenues 657,500 658,764 1,264 EXPENDITURES - BUDGETUNIT 616,500 533,455 83,045 Revenues over (under) expenditures 41,000 125,309 84,309 OTHER FINANCING SOURCES (USES)Transfers in - - - Transfers out - - - Long-term debt issued - - - Sale of capital assets - - - Total other financing sources (uses) - - - Revenues and other sources over(under) expenditures 41,000$ 125,309 84,309$ FUND BALANCES, beginning of year 407,376 FUND BALANCES, end of year 532,685$ (continued)NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Gas Tax ApportionmentSpecial Revenue Funds
109CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALYear Ended June 30, 2010Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental 98,000 158,030 60,030 - - - Charges for services - - - - - - Fines and forfeitures 50,000 40,620 (9,380) 50,000 67,966 17,966 Interest on investments - - - 5,000 3,439 (1,561) Loan repayment - - - - - - Other 10,000 - (10,000) - - - Total revenues 158,000 198,650 40,650 55,000 71,405 16,405 EXPENDITURES - BUDGETUNIT 211,764 211,400 364 335,000 82,498 252,502 Revenues over (under) expenditures (53,764) (12,750) 41,014 (280,000) (11,093) 268,907 OTHER FINANCING SOURCES (USES)Transfers in - 8,806 8,806 - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) - 8,806 8,806 - - - Revenues and other sources over(under) expenditures (53,764)$ (3,944) 49,820$ (280,000)$ (11,093) 268,907$ FUND BALANCES, beginning of year 3,945 203,708 FUND BALANCES, end of year 1$ 192,615$ (continued)NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Drug Forfeitures City-County Drug Forfeitures
110CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALYear Ended June 30, 2010Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ -$ -$ -$ Special assessments - - - - 14,888 14,888 Licenses and permits - - - 20,000 23,131 3,131 Intergovernmental - - - - 2,721 2,721 Charges for services - - - 2,527,898 2,330,877 (197,021) Fines and forfeitures - - - - - - Interest on investments - 29 29 22,000 11,557 (10,443) Loan repayment - - - - - - Other 4,000 - (4,000) 10,000 20,482 10,482 Total revenues 4,000 29 (3,971) 2,579,898 2,403,656 (176,242) EXPENDITURES - BUDGETUNIT 5,800 685 5,115 2,695,478 2,499,445 196,033 Revenues over (under) expenditures (1,800) (656) 1,144 (115,580) (95,789) 19,791 OTHER FINANCING SOURCES (USES)Transfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - 8,963 8,963 Total other financing sources (uses) - - - - 8,963 8,963 Revenues and other sources over(under) expenditures (1,800)$ (656) 1,144$ (115,580)$ (86,826) 28,754$ FUND BALANCES, beginning of year 2,045 859,607 FUND BALANCES, end of year 1,389$ 772,781$ (continued)NONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Beautification of Bozeman Street and Tree Maintenance
111CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental - - - - - - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - - - - - - Loan repayment - - - - - - Other - - - - - - Total revenues - - - - - - EXPENDITURES - BUDGETUNIT - - - 20,000 19,125 875 Revenues over (under) expenditures - - - (20,000) (19,125) 875 OTHER FINANCING SOURCESTransfers in - - - - - - Transfers out (132,800) - 132,800 - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) (132,800) - 132,800 - - - Revenues and other sources over(under) expenditures (132,800)$ - 132,800$ (20,000)$ (19,125) 875$ FUND BALANCES, beginning of year - 484,500 FUND BALANCES, end of year -$ 465,375$ (continued)Consolidated Parking Districts Law and Justice Center
112CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental 796,500 559,924 (236,576) - - - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - - - - - - Loan repayment - - - - - - Other - - - - 50,384 50,384 Total revenues 796,500 559,924 (236,576) - 50,384 50,384 EXPENDITURES - BUDGETUNIT 118,000 121,917 (3,917) 31,515 31,250 265 Revenues over (under) expenditures 678,500 438,007 (240,493) (31,515) 19,134 50,649 OTHER FINANCING SOURCESTransfers in - 1,132 1,132 30,515 30,515 - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) - 1,132 1,132 30,515 30,515 - Revenues and other sources over(under) expenditures 678,500$ 439,139 (239,361)$ (1,000)$ 49,649 50,649$ FUND BALANCES, beginning of year (1,132) - FUND BALANCES, end of year 438,007$ 49,649$ (continued)Special Projects Community Transportation
113CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments - - - - - - Licenses and permits 854,600 646,751 (207,849) - - - Intergovernmental - 11,531 11,531 - - - Charges for services 4,500 3,799 (701) - - - Fines and forfeitures - - - - - - Interest on investments 10,000 10,396 396 - 390 390 Loan repayment - - - - - - Other - 12 12 - - - Total revenues 869,100 672,489 (196,611) - 390 390 EXPENDITURES - BUDGETUNIT 901,807 755,207 146,600 19,000 - 19,000 Revenues over (under) expenditures (32,707) (82,718) (50,011) (19,000) 390 19,390 OTHER FINANCING SOURCESTransfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) - - - - - - Revenues and other sources over(under) expenditures (32,707)$ (82,718) (50,011)$ (19,000)$ 390 19,390$ FUND BALANCES, beginning of year 625,809 21,487 FUND BALANCES, end of year 543,091$ 21,877$ (continued)Highway SafetyBuilding Inspection
114CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments - - - - - - Licenses and permits - - - - - - Intergovernmental - - - - - - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - - - - 749 749 Loan repayment 215,000 - (215,000) 8,000 5,401 (2,599) Other - - - - 40,000 40,000 Total revenues 215,000 - (215,000) 8,000 46,150 38,150 EXPENDITURES - BUDGETUNIT 215,000 - 215,000 14,400 14,400 - Revenues over (under) expenditures - - - (6,400) 31,750 38,150 OTHER FINANCING SOURCES (USES)Transfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) - - - - - - Revenues and other sources over(under) expenditures -$ - -$ (6,400)$ 31,750 38,150$ FUND BALANCES, beginning of year - 38,869 FUND BALANCES, end of year -$ 70,619$ (continued)Economic Development Revolving Loan Fumd Housing Revolving Loan Fund
115Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - 635,287$ 1,096,710 461,423 Special assessments - - - 114,000 116,008 2,008 Licenses and permits - - - - - - Intergovernmental - - - 34,620 34,620 - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments 5,000 4,843 (157) 5,000 12,431 7,431 Loan repayment 5,000 5,000 - - - - Other - 70,000 70,000 - 4,200 4,200 Total revenues 10,000 79,843 69,843 788,907 1,263,969 475,062 EXPENDITURES - BUDGETUNIT 40,000 40,000 - 413,398 182,876 230,522 Revenues over (under) expenditures (30,000) 39,843 69,843 375,509 1,081,093 705,584 OTHER FINANCING SOURCES (USES)Transfers in - 78,290 78,290 - - - Transfers out - - - (425,287) (425,287) - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) - 78,290 78,290 (425,287) (425,287) - Revenues and other sources over(under) expenditures (30,000)$ 118,133 148,133$ (49,778)$ 655,806 705,584$ FUND BALANCES, beginning of year 241,299 326,411 FUND BALANCES, end of year 359,432$ 982,217$ (continued)Community Housing Downtown Improvement DistrictCITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010
116Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - -$ - - Special assessments 170,000 517,770 347,770 - - - Licenses and permits - - - - - - Intergovernmental - - - - - - Charges for services - - - - - - Fines and forfeitures - - - - - - Interest on investments - 6,322 6,322 - 3,299 3,299 Loan repayment - - - - - - Other - - - - 10,500 10,500 Total revenues 170,000 524,092 354,092 - 13,799 13,799 EXPENDITURES - BUDGETUNIT 310,000 309,489 511 - - - Revenues over (under) expenditures (140,000) 214,603 354,603 - 13,799 13,799 OTHER FINANCING SOURCES (USES)Transfers in - - - - - - Transfers out - - - - - - Long-term debt issued - - - - - - Sale of capital assets - - - - - - Total other financing sources (uses) - - - - - - Revenues and other sources over(under) expenditures (140,000)$ 214,603 354,603$ -$ 13,799 13,799$ FUND BALANCES, beginning of year 277,672 176,765 FUND BALANCES, end of year 492,275$ 190,564$ (continued)Park LandStreet LightingNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2009CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUAL
117Special Revenue FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ - - 4,699,604$ 4,928,024 228,420 Special assessments - - - 284,000 648,666 364,666 Licenses and permits - - - 874,600 669,882 (204,718) Intergovernmental - - - 2,193,796 2,576,479 382,683 Charges for services - - - 2,801,598 2,521,771 (279,827) Fines and forfeitures - - - 170,000 182,183 12,183 Interest on investments - 31 31 86,700 103,534 16,834 Loan repayment - - - 228,000 10,401 (217,599) Other - - - 57,500 337,258 279,758 Total revenues - 31 31 11,395,798 11,978,198 582,400 EXPENDITURES - BUDGETUNIT - - - 9,014,105 6,976,654 2,037,451 Revenues over (under) expenditures - 31 31 2,381,693 5,001,544 2,619,851 OTHER FINANCING SOURCES (USES)Transfers in - - - 578,515 690,193 111,678 Transfers out - - - (4,072,586) (3,669,598) 402,988 Long-term debt issued - - - - - - Sale of capital assets - - - - 8,963 8,963 Total other financing sources (uses) - - - (3,494,071) (2,970,442) 523,629 Revenues and other sources over(under) expenditures -$ 31 31$ (1,112,378)$ 2,031,102 3,143,480$ FUND BALANCES, beginning of year 50 5,984,702 FUND BALANCES, end of year 81$ 8,015,804$ (continued)Municipal Court Restitution TotalCITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET TO ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2009
118Debt Service FundsVariance VariancePositive PositiveBudget Actual (Negative) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ 783,622$ 737,618$ (46,004)$ Intergovernmental- - - - - - Interest on investments 20,000 11,777 (8,223) - 2,367 2,367 Total revenue 20,000 12,114 (7,886) 783,622 739,985 (43,637) EXPENDITURESOther - - - - - - Debt servicePrincipal - - - 540,000 540,000 - Interest and fiscal fees - - - 192,372 192,320 52 Total expenditures - - - 732,372 732,320 52 Revenues over (under)expenditures 20,000 12,114 (7,886) 51,250 7,665 (43,585) OTHER FINANCING SOURCES(USES)Operating transfers in- 568,848 568,848 - - - Operating transfers out - - - - - - Total other financingsources (uses) - 568,848 568,848 - - - Revenues and other sources over(under) expenditures 20,000$ 580,962 560,962$ 51,250$ 7,665 (43,585)$ FUND BALANCES, beginning of year647,235 (27,905) FUND BALANCES, end of year1,228,197$ (20,240)$ (continued)G.O. BondsCITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010SID Revolving
119Variance VarianceFavorable PositiveBudget Actual (Unfavorable) Budget Actual (Negative)REVENUESTaxes -$ -$ -$ 783,622$ 737,618$ (46,004)$ Intergovernmental- - - - - - Interest on investments- 2,334 2,334 20,000 16,478 (3,522) Total revenue - 2,334 2,334 803,622 754,433 (49,189) EXPENDITURESOther- - - Debt servicePrincipal 270,000 155,000 115,000 810,000 695,000 115,000 Interest and fiscal fees 66,886 269,588 (202,702) 259,258 461,908 (202,650) Total expenditures 336,886 424,588 (87,702) 1,069,258 1,156,908 (87,650) Revenues over (under)expenditures (336,886) (422,254) (85,368) (265,636) (402,475) (136,839) OTHER FINANCING SOURCES(USES)Operating transfers in425,287 425,287 - 425,287 994,135 568,848 Operating transfers out - - - - - - Total other financingsources (uses) 425,287 425,287 - 425,287 994,135 568,848 Revenues and other sources over(under) expenditures 88,401$ 3,033 (85,368)$ 159,651$ 591,660$ 432,009$ FUND BALANCES, beginning of year(6,417) 612,913 FUND BALANCES, end of year(3,384)$ 1,204,573$ CITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010TIF Bonds TotalDebt Service Funds
120Permanent FundVariancePositiveBudget Actual (Negative)Taxes -$ -$ -$ Licenses and permits - - - Charges for services 4,000 5,389 1,389 Fines and forfeitures - - - Interest on investments 16,000 10,349 (5,651) Loan repayment - - - Other - - - Total revenues 20,000 15,738 (4,262) EXPENDITURES - BUDGETUNIT - - - Revenues over (under) expenditures 20,000 15,738 (4,262) OTHER FINANCING SOURCES (USES)Transfers in - - - Transfers out (16,000) (10,349) 5,651 Long-term debt issued- - - Sale of capital assets - - - Total other financing sources(16,000) (10,349) 5,651 Revenues and other sources over(under) expenditures 4,000$ 5,389 1,389$ FUND BALANCES, beginning of year538,820 FUND BALANCES, end of year544,209$ Cemetery Perpetual CareCITY OF BOZEMAN, MONTANASCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUALNONMAJOR GOVERNMENTAL FUNDS (CONTINUED)Year Ended June 30, 2010
INTERNAL SERVICE FUNDS STATEMENTS
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.
121Vehicle MedicalMaintenance HealthShop Insurance Total ASSETSCurrent assetsCash and equivalents 37,240$ -$ 37,240$ Customer receivables, net 3,676 18,055 21,731 Total current assets 40,916 18,055 58,971 Machinery and equipment 161,565 - 161,565 Vehicles 55,520 - 55,520 Buildings 615,185 - 615,185 Less: accumulated depreciation (180,636) - (180,636) Net property, plant, and equipment 651,634 - 651,634 Total assets 692,550 18,055 710,605 LIABILITIESCurrent liabilitiesAccounts payable 101,935 - 101,935 Accrued employee benefits 10,092 - 10,092 Other post-employment health benefits - implicit rate subsidy8,512 - 8,512 Due to other City funds - 18,055 18,055 Total current liabilities 120,539 18,055 138,594 NET ASSETSInvested in capital assets, net of related debt 651,634 - 651,634 Unrestricted (79,623) - (79,623) Total net assets 572,011$ -$ 572,011$ CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF NET ASSETSJune 30, 2010INTERNAL SERVICE FUNDS
122Vehicle MedicalMaintenance HealthShop Insurance TotalOPERATING REVENUESCharges for services 641,864$ 3,251,949$ 3,893,813$ OPERATING EXPENSESSalaries and benefits 227,982 - 227,982 Materials and supplies 350,116 230 350,346 Repairs and maintenance 4,278 - 4,278 Utilities 3,618 - 3,618 Administrative charges 54,278 - 54,278 Insurance claims - 3,227,963 3,227,963 Other expenses 8,735 60,065 68,800 Depreciation 15,069 - 15,069 Total operating expenses 664,076 3,288,258 3,952,334 Operating income (loss) (22,212) (36,309) (58,521) NON-OPERATING REVENUES (EXPENSES)Interest income - - - Interest expense (3,621) (2,782) (6,403) Other income 3,714 3,574 7,288 Total non-operating revenue (expenses) 93 792 885 Income (loss) before transfers (22,119) (35,517) (57,636) Transfers in 525,863 172,593 698,456 Transfers out - - - Change in net assets 503,744 137,076 640,820 NET ASSETS, beginning of year 68,267 (137,076) (68,809) NET ASSETS, end of year 572,011$ -$ 572,011$ CITY OF BOZEMAN, MONTANACOMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETSINTERNAL SERVICE FUNDSYear Ended June 30, 2010
123Vehicle MedicalMaintenance HealthShop Insurance TotalCASH FLOWS FROM OPERATIONS:Receipts from customers 641,864$ 3,246,190$ 3,888,054$ Receipts from others 3,714 3,574 7,288 Operating loans from other City funds 405,993 41,276 447,269 Payments to suppliers (289,801) (60,295) (350,096) Payments to employees (235,926) (3,227,963) (3,463,889) Payments to Internal Service Funds and administrative fees (54,278) - (54,278) Net Cash Provided (Used) by Operating Activities 471,566 2,782 474,348 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:Additions to property, plant and equipment (520,028) - (520,028) Interest paid on bonds, interfund loans, loans and leases (3,621) (2,782) (6,403) Net Cash Flows Used by Capital and Related Financing Activities (523,649) (2,782) (526,431) Net Increase (Decrease) in Cash and Cash Equivalents (52,083) - (52,083) CASH AND EQUIVALENTS, beginning of year 89,323 - 89,323 CASH AND EQUIVALENTS, end of year 37,240$ -$ 37,240$ (continued)CITY OF BOZEMAN, MONTANAINTERNAL SERVICE FUNDSCOMBINING STATEMENT OF CASH FLOWSYear Ended June 30, 2010
124A reconciliation of operating loss to cash provided (used) by operating activities follows:Vehicle MedicalMaintenance HealthShop Insurance TotalOPERATING INCOME (LOSS) (22,212)$ (36,309)$ (58,521)$ Adjustments to reconcile operating income (loss)to net cash provided (used) by operating activitiesDepreciation 15,069 - 15,069 Other income 3,714 3,574 7,288 Changes in assets and liabilities:(Increase) Decrease in: Customer receivables - (5,759) (5,759) Prepaid expenses - - - Increase (Decrease) in: Accounts payable 76,946 - 76,946 Accrued employee benefits payable (7,944) - (7,944) Interfund borrowings 405,993 41,276 447,269 Total adjustments 493,778 39,091 532,869 Net cash provided (used) by operating activities 471,566$ 2,782$ 474,348$ CITY OF BOZEMAN, MONTANAINTERNAL SERVICE FUNDSCOMBINING STATEMENT OF CASH FLOWS (CONTINUED)Year Ended June 30, 2010
AGENCY FUNDS STATEMENTS
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.
125TotalMontana Municipal AgencyArts Council Court FundsASSETSCash and cash equivalents -$ 234,634$ 234,634$ Customer receivables - 1,115 1,115 Total assets - 235,749 235,749 LIABILITIESAccounts payable - 235,749 235,749 Total liabilities -$ 235,749$ 235,749$ CITY OF BOZEMAN, MONTANAAGENCY FUNDSCOMBINING STATEMENT OF FIDUCIARY NET ASSETSJune 30, 2010
126MontanaArts Council Balance June 30, 2009 Additions Deletions Balance June 30, 2010 ASSETSCash and cash equivalents -$ 22,948$ (22,948)$ -$ Total assets - 22,948 (22,948) - LIABILITIESAccounts payable - 22,948 (22,948) - Total liabilities -$ 22,948$ (22,948)$ -$ Municipal Court Balance June 30, 2009 Additions Deletions Balance June 30, 2010 ASSETSCash and cash equivalents 139,313$ 95,321$ -$ 234,634$ Customer receivables 6,771 - (5,656) 1,115 Total assets 146,084 95,321 (5,656) 235,749 LIABILITIESAccounts payable 146,084 89,665 - 235,749 Total liabilities 146,084$ 89,665$ -$ 235,749$ CITY OF BOZEMAN, MONTANAAGENCY FUNDSCOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIESYear ended June 30, 2010
PART III STATISTICAL SECTION
This part of the City of Bozeman's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financialstatements, 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 well-being have changed over time127Revenue CapacityThese schedules contain information to help the reader assess the government's most significant local revenue source, the property tax.132Debt CapacityThese schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's abilityto issue additional debt in the future. 138Demographic and Economic InformationThese schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activitiestake place.143Operating InformationThese schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to theservices the government provides and the activities it performs.145Sources: Unless otherwise noted, the information in these schedules is derived from the City of Bozeman comprehensive annual financial reports for the relevant year.Note: The City of Bozeman implemented GASB Statement 34 in Fiscal Year 2002, therefore the data for prior years are not shown; schedules presenting government-wide information include information beginning in that year. Statistical Section
FINANCIAL TRENDS SECTION
127200220032004200520062007200820092010Governmental activitiesInvested in capital assets, net of related deb13,675,868 (1,618,282) 5,197,117 8,409,053 22,987,166 77,734,584 80,873,924 83,707,824 84,275,358 Restricted5,508,776 6,890,530 10,615,720 12,343,248 5,242,903 546,916 9,254,307 7,699,511 8,082,181 Unrestricted7,495,002 24,396,920 17,345,961 21,077,779 25,537,959 28,481,673 23,443,921 20,871,106 24,915,454 Total governmental activities net assets26,679,646$ 29,669,168$ 33,158,798$ 41,830,080$ 53,768,028$ 106,763,173$ 113,572,152$ 112,278,441$ 117,272,993$ Business-type activitiesInvested in capital assets, net of related deb13,008,835 19,960,910 25,174,352 28,124,307 28,416,015 154,227,534 177,379,168 188,077,778 205,587,443 Restricted7,747,249 967,939 13,357,348 11,041,147 13,462,443 17,099,866 18,322,089 19,775,588 9,446,695 Unrestricted10,725,406 19,412,803 9,174,747 12,284,379 12,899,363 16,550,235 17,547,218 11,936,119 44,928 Total business-type activities10,725,406$ 40,341,652$ 47,706,447$ 51,449,833$ 54,777,821$ 187,877,635$ 213,248,475$ 219,789,485$ 215,079,066$ Primary governmentInvested in capital assets, net of related deb26,684,703 18,342,628 30,371,469 36,533,360 51,403,181 231,962,118 258,253,092 271,785,602 289,862,801 Restricted13,256,025 7,858,469 23,973,068 23,384,395 18,705,346 17,646,782 27,576,396 27,475,099 17,528,876 Unrestricted18,220,408 43,809,723 26,520,708 33,362,158 38,437,322 45,031,908 40,991,139 32,807,225 24,960,382 Total primary government net assets58,161,136$ 70,010,820$ 80,865,245$ 93,279,913$ 108,545,849$ 294,640,808$ 326,820,627$ 332,067,926$ 332,352,059$ Fiscal YearCITY OF BOZEMAN, MONTANANET ASSETS BY COMPONENTPast Nine Fiscal YearsUnaudited statistical section.
128200220032004200520062007200820092010ExpensesGovernmental Activities:General government4,315,506 5,095,401 4,427,676 4,986,413 5,666,069 5,733,371 6,969,181 6,629,783 6,299,831 Public Safety7,114,922 8,027,193 8,078,120 8,834,875 9,858,055 10,488,873 11,183,637 11,556,016 12,382,157 Public Service2,847,989 3,182,445 3,096,273 3,475,067 4,163,644 8,511,308 8,979,085 10,130,184 9,703,594 Public Welfare3,433,991 3,542,608 4,017,654 4,372,959 5,477,065 5,536,741 5,412,192 6,465,940 6,915,557 Interest and fiscal fees696,303 672,243 667,118 709,178 550,296 549,667 649,226 737,762 714,714 Total governmental activities expenses18,408,711$ 20,519,890$ 20,286,841$ 22,378,492$ 25,715,129$ 30,819,960$ 33,193,321$ 35,519,685$ 36,015,853$ Business-type activities:Water2,948,638 2,924,951 3,782,726 4,292,503 4,824,505 10,490,811 11,150,266 11,872,984 12,016,149 Wastewater2,880,228 2,556,245 3,353,567 4,246,156 4,586,959 7,376,348 8,061,412 10,293,894 9,143,077 Solid waste2,206,010 1,955,939 2,462,291 2,720,738 3,547,902 3,283,135 2,574,651 2,687,590 2,561,124 Parking766,454 967,077 Total business-type activities expenses8,034,876 7,437,135 9,598,584 11,259,397 12,959,366 21,150,294 21,786,329 25,620,922 24,687,427 Total primary government expenses26,443,587$ 27,957,025$ 29,885,425$ 33,637,889$ 38,674,495$ 51,970,254$ 54,979,650 61,140,607 60,703,280 Program RevenuesGovernmental activities: Charges for services:General government3,554,700 1,230,771 793,529 1,261,652 1,496,818 2,023,362 2,237,962 1,795,469 2,774,869 Public Safety1,907,548 2,586,058 2,390,179 1,898,531 1,984,642 3,712,280 3,575,133 3,500,929 2,414,893 Public Service3,070,566 4,084,641 3,934,801 10,302,583 9,217,198 5,361,852 4,858,444 4,790,460 3,742,856 Public Welfare553,842 812,909 865,910 567,471 718,162 704,790 713,342 779,841 399,280 Operating grants and contributions653,567 461,355 878,713 360,980 502,198 409,263 502,863 439,131 693,342 Capital grants and contributions168,480 61,675 37,538 513,034 1,380,553 18,694,375 7,153,103 8,219,791 5,307,118 Total governmental activities program revenues9,908,703$ 9,237,409$ 8,900,670$ 14,904,251$ 15,299,571$ 30,905,922$ 19,040,847$ 19,525,621$ 15,332,358$ Business-type activities Charges for services:Water4,621,617 5,503,363 5,842,122 6,547,228 7,434,574 8,604,498 8,222,724 7,221,378 6,986,247 Wastewater5,067,571 5,626,790 5,765,594 6,074,615 6,430,206 7,052,987 6,918,132 6,052,668 6,505,119 Solid waste3,282,979 3,632,183 3,884,723 3,648,930 2,582,437 2,428,230 2,608,662 2,391,641 2,716,981 Parking- - - - - - - 467,607 326,820 Operating grants and contributions155,033 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 6,465,230 3,621,051 Total business-type activities program revenues13,127,200 16,297,297 17,113,379 17,902,707 18,071,454 44,549,937 47,155,117 22,598,524 20,156,218 Total primary government program revenues23,035,903$ 25,534,706$ 26,014,049$ 32,806,958$ 33,371,025$ 75,455,859$ 66,195,964 42,124,145 35,488,576 Fiscal YearCITY OF BOZEMAN, MONTANACHANGES IN NET ASSETSPast Nine Fiscal Years(accrual basis of accounting)Unaudited statistical section.
129CITY OF BOZEMAN, MONTANACHANGES IN NET ASSETSPast Nine Fiscal Years(accrual basis of accounting)200220032004200520062007200820092010Net (Expense) / RevenueGovernmental activities (8,500,008) (11,282,481) (11,386,171) (7,474,241) (10,415,558) 85,962 (14,152,474) (15,994,064) (20,683,495) Business-type activities5,092,324 8,860,162 7,514,795 6,643,310 5,112,088 23,399,643 25,368,788 (3,022,398) (4,531,209) 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$ (19,016,462)$ (25,214,704)$ General Revenues and Other Changes in Net AssetsGovernmental activities: TaxesProperty taxes7,597,346 8,028,832 9,104,945 10,437,702 11,137,006 11,836,748 12,070,765 14,629,230 15,501,316 Unrestricted grants and contributions4,382,091 4,732,127 4,327,489 4,910,306 5,163,288 5,375,807 5,617,243 6,125,789 6,284,467 Investment earnings493,348 417,156 344,013 606,120 852,222 1,093,115 1,362,790 671,859 352,378 Miscellaneous732,532 1,093,888 979,820 2,422,805 3,416,890 1,940,156 1,859,313 2,766,671 2,256,071 Sale of capital assets- - - - - 490,637 51,342 68,057 761,952 Transfers of capital assets- - - - - - - (6,311,324) - Transfers- - 150,000 - 1,784,100 489,780 - (3,249,929) 521,863 Extraordinary items- - - (2,231,410) - - - - - Total governmental activities13,205,317$ 14,272,003$ 14,906,267$ 16,145,523$ 22,353,506$ 21,226,243$ 20,961,453$ 14,700,353$ 25,678,047$ Business-type activities: Unrestricted grants and contributions- - - - - 3,182 2,052 2,155 342,653 Transfers of capital assets- - - - - - - 6,311,324 - Transfers- - (150,000) - (1,784,100) (489,780) - 3,249,929 (521,863) Extraordinary items- - - (2,899,924) - - - - - Total business-type activities- - (150,000) (2,899,924) (1,784,100) (486,598) 2,052 9,563,408 (179,210) Total primary government13,205,317$ 14,272,003$ 14,756,267$ 13,245,599$ 20,569,406$ 20,739,645$ 20,963,505 24,263,761 25,498,837 Change in Net AssetsGovernmental activities4,705,309 2,989,522 3,520,096 8,671,282 11,937,948 21,312,205 6,808,979 (1,293,711) 4,994,552 Business-type activities5,092,324 8,860,162 7,364,795 3,743,386 3,327,988 22,913,045 25,370,840 6,541,010 (4,710,419) Total primary government9,797,633$ 11,849,684$ 10,884,891$ 12,414,668$ 15,265,936$ 44,225,250$ 32,179,819$ 5,247,299$ 284,133$ Fiscal YearUnaudited statistical section.
130200220032004200520062007200820092010General FundReserved- - - 11,687 5,725 3,000 3,000 63,000 - Unreserved3,600,359 3,083,832 3,345,541 3,996,600 3,173,374 4,367,538 4,516,814 5,301,397 5,119,400 Total general fund3,600,359 3,083,832 3,345,541 4,008,287 3,179,099 4,370,538 4,519,814 5,364,397 5,119,400 All Other Governmental Reserved2,247,538 7,965,826 7,315,275 1,606,904 2,164,698 2,996,832 3,045,231 2,660,918 4,501,145 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 12,516,240 14,916,152 Capital projects funds 2,505,735 3,656,555 2,037,255 4,545,867 6,598,235 - 2,884,553 - 1,793,287 Debt service funds1,899,540 - - - - - - - - Total all other governmental funds 15,251,026 23,616,250 23,714,559 22,449,080 18,539,756 16,202,160 19,653,630 15,177,158 21,210,584 Fiscal YearCITY OF BOZEMAN, MONTANAFUND BALANCE, GOVERNMENTAL FUNDSPast Nine Fiscal Years(modified accrual basis of accounting)Unaudited statistical section.
131200220032004200520062007200820092010RevenuesTaxes7,164,366 7,940,777 9,274,923 10,480,668 11,222,034 11,853,872 12,004,946 14,451,954 15,055,844 Special assessments1,168,813 1,234,119 1,164,151 2,478,024 1,931,261 1,866,717 1,793,813 1,633,896 1,643,500 Licenses and permits817,263 1,138,801 1,120,864 1,566,812 1,653,546 1,762,086 1,351,887 1,140,831 958,590 Intergovernmental5,204,138 5,255,157 5,243,740 5,784,320 7,046,039 6,115,697 9,642,918 7,102,049 7,900,176 Charges for service4,756,114 5,637,618 5,246,608 5,818,566 6,347,087 7,403,739 6,748,891 6,468,006 5,790,382 Fines and forfeitures1,080,546 1,305,536 1,188,706 1,443,468 1,461,398 1,746,213 1,644,767 1,597,236 1,518,481 Interest on investments463,199 413,212 342,979 545,805 848,909 1,068,802 1,360,914 671,859 352,378 loan repayment266,683 211,936 183,987 426,076 291,338 10,193 19,849 9,985 10,401 Other709,203 1,037,347 901,696 2,421,201 3,412,410 1,940,156 1,859,313 2,766,671 2,256,071 Total revenues21,630,325 24,174,503 24,667,654 30,964,940 34,214,022 33,767,475 36,427,298 35,842,487 35,485,823 ExpendituresGeneral government3,569,323 3,853,464 4,406,577 5,006,986 5,309,637 5,577,810 6,153,838 5,946,355 5,690,488 Public safety6,723,263 7,232,374 7,661,421 8,535,646 9,494,622 10,160,291 10,778,917 11,056,742 11,709,170 Public service2,094,552 2,028,864 2,115,856 2,363,585 2,276,802 3,060,672 3,020,855 2,976,711 2,702,510 Public welfare3,538,748 3,430,983 4,154,228 4,320,299 5,099,873 4,315,086 4,819,758 5,161,997 4,916,828 Capital outlay4,649,508 3,536,045 4,824,965 6,417,671 18,374,651 11,397,365 12,205,040 9,380,742 4,248,758 Debt servicePrincipal926,547 850,119 1,448,320 6,788,969 989,041 833,158 2,013,232 1,138,051 1,194,819 Interest696,303 672,243 667,118 709,178 550,296 549,667 649,662 738,198 715,150 Bond Issuance Costs- - - - 20,064 - - - - Total expenditures22,198,244 21,604,092 25,278,485 34,142,334 42,114,986 35,894,049 39,641,302 36,398,796 31,177,723 Excess of revenuesover (under) expenditures(567,919) 2,570,411 (610,831) (3,177,394) (7,900,964) (2,126,574) (3,214,004) (556,309) 4,308,100 Other Financing Sources (Uses)Proceeds from borrowing3,460,602 5,271,000 - 4,804,467 1,376,869 - - - - Transfers in1,962,695 3,012,716 3,137,517 5,497,553 17,619,744 4,565,896 4,604,100 8,394,126 10,857,332 Transfers out(1,962,695) (3,013,286) (2,987,517) (5,497,553) (15,835,644) (4,076,116) (4,604,100) (11,733,378) #########Issuance of debt6,554,166 177,346 890,000 Premium on Bonds Issued10,896 - - Sales of capital assets7,856 820,849 1,604 1,483 490,637 249,688 86,326 766,922 Total other financing sources (uses)3,460,602 5,278,286 970,849 4,806,071 3,162,452 980,417 6,814,750 (3,075,580) 1,480,329 Extraordinary itemsNet change in fund balances2,892,683$ 7,848,697$ 360,018$ 1,628,677$ (4,738,512)$ (1,146,157)$ 3,600,746$ (3,631,889)$ 5,788,429$Debt service as a percentage of 9.2% 8.4% 10.3% 27.0% 6.5% 5.6% 9.7% 6.9% 7.1%noncapital expendituresFiscal YearCITY OF BOZEMAN, MONTANACHANGES IN FUND BALANCES, GOVERNMENTAL FUNDSPast Nine Fiscal Years(modified accrual basis of accounting)Unaudited statistical section.
REVENUE CAPACITY SECTION
132FiscalTotal 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 2009 41,539,680 28,187,640 4,450,680 74,178,000 171.16 2010 43,842,400 29,750,200 4,697,400 78,290,000 170.19 Source: Based on information provided by Gallatin County and Department of RevenueNote: Property is assessed by the State Department of Revenue every six years.CITY OF BOZEMAN, MONTANAASSESSED VALUE OF TAXABLE PROPERTYPast Nine Fiscal YearsUnaudited statistical section.
133FiscalGeneralTotalYearObligationDirectBozemanEnded BasicDebtTaxSchoolGallatinState ofJune 30,RateServiceRateDistrictCountyMontana2002136.21 9.00 145.21 248.06 177.65 46.00 2003139.95 14.26 154.21 252.94 189.94 46.00 2004154.09 9.22 163.31 266.43 200.59 46.00 2005158.67 13.32 171.99 264.68 194.15 46.00 2006155.89 12.37 168.26 265.55 196.74 46.00 2007152.07 11.35 163.42 182.74 197.36 46.00 2008142.98 11.20 154.18 212.53 205.40 46.00 2009160.59 10.57 171.16 199.54 210.14 46.00 2010160.18 10.01 170.19 196.89 210.25 46.00 Source: Based on information provided by Gallatin County and Department of RevenueCITY OF BOZEMAN, MONTANADIRECT AND OVERLAPPING PROPERTY TAX RATESPast Nine Fiscal Years(rate per $1,000 of assessed value)Unaudited statistical section.
134Percentage Percentageof Total City of Total CityTaxable Taxable Total TaxableAssessed Assessed Assessed AssessedTaxpayerValueRankValueValueRankValueNorthwestern Corp Transmission & Distribution3,126,536 13.99%Qwest Corporation1,138,418 21.45%Harry Daum - Gallatin Mall533,461 30.68%Bozeman Deaconess Foundation504,584 40.64%277,986 40.70%BVI/HJSI Bozeman LLC402,806 50.51%Wal-Mart Stores377,391 60.48%174,933 100.44%Stone Ridge Partners LLC357,325 70.46%Celloco Partnership344,823 80.44%Lowes HIW Inc.340,678 90.44%Mitchell Development & Investment LLC326,043 100.42%Montana Power2,633,735 16.60%U.S. West1,134,686 22.84%Gallatin Mall517,629 31.30%Costco Wholesale Corporation272,815 50.68%Dayton Hudson Corporation220,029 60.55%First Security Bank210,106 70.53%Arcadia Gardens Apartments193,977 80.49%TCIP Partnership175,544 90.44%Total7,452,065$ 9.52%5,811,440$ 14.55%Total City Taxable Assessed Value78,290,000$ 39,932,003$ Source: Gallatin County Assessor's Office20102001CITY OF BOZEMAN, MONTANAPRINCIPAL PROPERTY TAX PAYERSCurrent Year and Nine Years AgoUnaudited statistical section.
135FiscalYear Taxes LeviedCollectionsEnded for thePercentagein SubsequentPercentageJune 30,Fiscal YearAmountof LevyYearsAmountof Levy20026,164,165 6,157,972 99.90% 34,526$ 6,192,498 100.46%2003 7,102,142 6,691,991 94.22% 333,589$ 7,025,580 98.92%20048,093,480 7,910,446 97.74%125,054$ 8,035,500 99.28%20059,112,890 8,825,662 96.85%197,333$ 9,022,994 99.01%20069,769,893 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%117,091$ 10,500,126 98.73%2009 12,696,306 12,593,566 99.19%74,717$ 12,668,283 99.78%2010 13,324,175 12,780,713 95.92%-$ 12,780,713 95.92%Source: Gallatin CountyCity Manager's Final Adopted BudgetCollected within the Fiscal Year of the LevyTotal Collections to DateCITY OF BOZEMAN, MONTANAPROPERTY TAX LEVIES AND COLLECTIONSPast Nine Fiscal YearsUnaudited statistical section.
136200220032004200520062007200820092010Type of CustomerResidential 1,194,801 1,224,671 1,255,288 1,286,670 1,318,837 1,437,114 1,379,115 1,516,359 1,224,164Government 25,041 25,667 26,308 26,966 27,640 62,913 49,623 66,253 51,168MSU267,365 274,049 280,901 287,923 295,121 298,352 260,232 254,891 228,789Commercial644,926 661,049 677,576 694,515 711,878 659,831 626,846 670,961 571,223Total2,132,133 2,185,436 2,240,072 2,296,074 2,353,476 2,458,209 2,315,816 2,508,464 2,075,343Total direct rate1,544.74$ 1,653.23$ 1,790.77$ 1,753.67$ 2,055.72$ 2,190.03$ 2,478.36$ 2,495.43$ 2,679.44$ per 1,000 HCFSource: City of Bozeman Finance DepartmentFiscal YearCITY OF BOZEMAN, MONTANAWATER SOLD BY TYPE OF CUSTOMERPast Nine Fiscal Years(in hundreds of cubic feet "HCF")Unaudited statistical section.
137FiscalYearMonthlyRate perMonthlyRate perEndedBase1,000Base1,000June 30,RateGallonsRateGallons20029.36$ 15.15$ 10.74$ 17.80$ 20039.92$ 16.06$ 10.74$ 17.80$ 20049.92$ 17.24$ 10.74$ 17.80$ 200510.42$ 16.83$ 8.59$ 14.20$ 200611.46$ 18.53$ 9.88$ 16.30$ 200712.60$ 19.74$ 10.87$ 18.00$ 200812.60$ 19.74$ 11.17$ 18.50$ 200912.60$ 19.74$ 12.13$ 20.10$ 201013.00$ 20.37$ 13.37$ 22.15$ * For Residential Customers, using 5/8 inch meter size.Sources: City of Bozeman, Montana Commission Resolution 3804City of Bozeman, Montana Commission Resolution 3805City of Bozeman, Montana Commission Resolution 3929City of Bozeman, Montana Commission Resolution 3930City of Bozeman, Montana Commission Resolution 4042City of Bozeman, Montana Commission Resolution 4043City of Bozeman Montana Commission Resolution 4184City of Bozeman Montana Commission Resolution 4185WaterSewerCITY OF BOZEMAN, MONTANAWATER AND SEWER RATESPast Nine Fiscal YearsUnaudited statistical section.
DEBT CAPACITY SECTION
138FiscalYear 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 2.65% 493.86$ 2003 10,960,000 377,761 5,152,000 - 1,995,578 (292,329) 18,193,010 3.03% 606.07$ 2004 10,565,000 308,397 4,149,800 - 1,582,299 (210,972) 16,394,524 2.42% 519.72$ 2005 6,800,000 235,628 6,065,600 - 1,150,633 (90,385) 14,161,476 1.84% 425.67$ 2006 6,325,000 159,286 7,004,769 - 700,412 - 14,189,467 1.69% 421.08$ 2007 5,840,000 79,198 6,736,700 (83,256) 226,460 - 12,799,101 1.31% 349.05$ 2008 5,340,000 - 5,601,000 (255,832) 143,729 - 10,828,897 1.00% 287.67$ 2009 5,815,000 - 5,211,000 (360,127) 56,615 - 10,722,487 0.89% 274.91$ 2010 4,342,000 - 4,819,000 (291,237) 28,992 - 8,898,755 0.68% 226.54$ Sources: City Manager's Final Adopted BudgetCity of Bozeman Finance DepartmentBusiness-Type ActivitiesGovernmental ActivitiesCITY OF BOZEMAN, MONTANARATIO OF OUTSTANDING DEBT BY TYPEPast Nine Fiscal YearsUnaudited statistical section.
139Percentage ofFiscal Actual 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% 402.01$ 2003 10,960,000 5,152,000 16,112,000 35.0%536.74$ 2004 10,565,000 4,149,800 14,714,800 29.7%466.47$ 20056,800,000 6,065,600 12,865,600 24.3%386.71$ 20066,325,000 7,004,769 13,329,769 23.0%395.57$ 20075,840,000 6,736,700 12,576,700 19.9%342.99$ 20085,340,000 5,601,000 10,941,000 15.9%290.65$ 20094,815,000 5,211,000 10,026,000 13.5%257.05$ 20104,342,000 4,819,000 9,161,000 11.7%233.21$ Source: City Manager's Final Adopted BudgetGeneral Bonded Debt OutstandingCITY OF BOZEMAN, MONTANARATIOS OF GENERAL BONDED DEBT OUTSTANDINGPast Nine Fiscal YearsUnaudited statistical section.
140ApplicableApplicableAs of to City of As of to City ofJune 30, 2010 Bozeman June 30, 2009 BozemanCity of Bozeman, MontanaGeneral obligation debt4,275,000 4,815,000$ Less: Debt Service Fund balance (deficit)(20,240) (27,905) Net general obligation debt4,295,240$ 100% 4,842,905$ 100%Overlapping Bonded IndebtednessGallatin County:Various issues46,510,586$ 34% 48,800,000$ 34%Bozeman School District #7:Various issues71,685,000 70% 75,370,000 70%Total overlapping bond indebtedness118,195,586$ 124,170,000$ Sources:City of Bozeman Finance DepartmentGallatin County Assessor's OfficeBozeman School District #7CITY OF BOZEMAN, MONTANARATIOS OF GENERAL BONDED DEBT OUTSTANDINGPast Two Fiscal YearsUnaudited statistical section.
141200220032004200520062007200820092010Debt limit*17,643,745 21,560,620 23,737,036 26,559,967 29,591,000 34,755,653 54,804,000 60,185,000 66,375,000Total 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) (4,842,905) (4,295,240)$ Legal debt margin11,218,907$ 13,812,787$ 16,148,855$ 22,809,556$ 23,022,431$ 29,160,095$ 49,380,872$ 55,342,095$ 62,079,760$Total net debt applicable to the limit36.4% 35.9% 32.0% 14.1% 22.2% 16.1% 9.9% 8.0% 6.5% as a percentage of debt limit*2.5% of total market value of taxable property of $2.655 BillionSource: City Manager's Final Adopted BudgetFiscal YearCITY OF BOZEMAN, MONTANALEGAL DEBT MARGIN INFORMATIONPast Nine Fiscal YearsUnaudited statistical section.
142FiscalYear Utility Less:SpecialEnded Service OperatingAssessmentJune 30,Charges Expenses Principal Interest CoverageCollections Principal Interest Coverage- 20023,556,447 (2,326,317) (376,978) (120,747) 732,405 979,283 (709,000) (336,405) (66,122) 20033,935,636 (2,271,120) (395,052) (103,613) 1,165,851 1,050,180 (479,000) (270,202) 300,978 20044,359,299 (2,440,762) (413,280) (85,391) 1,419,866 932,771 (997,200) (250,571) (315,000) 20054,429,294 (2,647,507) (431,666) (65,963) 1,284,158 588,887 (2,951,200) (364,814) (2,727,127) 20065,401,069 (2,866,140) (450,220) (45,317) 2,039,392 1,472,058 (437,700) (297,876) 736,482 20076,124,533 (3,114,053) (473,952) (23,391) 2,513,137 1,428,084 (268,069) (309,119) 850,896 20086,163,883 (3,769,941) (82,731) (10,231) 2,300,981 1,178,846 (1,135,700) (278,393) (235,247) 20095,938,745 (3,770,800) (87,009) (5,978) 2,074,958 1,022,641 (390,000) (241,395) 391,246 20105,860,144 (3,950,566) (27,622) (2,440) 1,879,516 989,977 (392,000) (223,763) 374,214 Water Revenue BondsSpecial Assessment BondsDebt ServiceDebt ServiceCITY OF BOZEMAN, MONTANAPLEDGED-REVENUE COVERAGEPast Nine Fiscal YearsUnaudited statistical section.
DEMOGRAPHICS AND ECONOMIC SECTION
143FiscalEstimatedPerResidentsYearAnnual %Capitawith Bachelors K-12EndedChange in PersonalPersonal Average Degree orSchool UnemploymentJune 30,Population Population IncomeIncomeAge Higher Schooling EnrollmentRate200228,917 n/a 538,150,720$ 18,610$ 31.79 yrs41.0%5,124 3.4%200330,018 3.7%600,538,573$ 20,006$ 31.79 yrs41.0%5,101 3.3%200431,545 4.8%678,419,232$ 21,506$ 31.79 yrs41.0%5,086 3.2%200533,269 5.2%769,158,476$ 23,119$ 31.79 yrs41.0%5,198 2.8%200633,698 1.3%837,507,439$ 24,853$ 31.79 yrs41.0%5,332 2.0%200736,668 8.1%979,670,959$ 26,717$ 31.79 yrs41.0%5,356 1.5%200837,643 2.6%1,081,149,380$ 28,721$ 31.79 yrs41.0%5,432 2.9%200939,004 3.5%1,204,256,746$ 30,875$ 31.79 yrs41.0%5,463 6.6%201039,282 0.7%1,303,803,059$ 33,191$ 31.79 yrs41.0%5,509 7.6%Sources: Bozeman Area Chamber of Commerce Bozeman Public Schools U.S. Census BureauCITY OF BOZEMAN, MONTANADEMOGRAPHIC AND ECONOMIC STATISTICSPast Nine Fiscal YearsUnaudited statistical section.
144PrivateEmployerPrivateEmployerEmployersClassEmployersClassBy ClassSizeBy ClassSizeBozeman Deaconess Hospital9Bozeman Deaconess Hospital8RightNow Technologies7Capital Opportunities (Home Care Services)7Wal-Mart7Ranch & Home Supply (Murdoch's ?)7Albertson’s6Wal-Mart7Bozeman Daily Chronicle6Big Sky Publishing6Community Food Co-Op6Costco6Costco6First Security Bank6First Security Bank6Gibson Guitar6First Student Management6Holnam Inc6Grantree Inn6ILX Lightwave Corp6JTL Group6Kenyon Noble Lumber & Hardware6Kenyon Noble Lumber & Hardware6Louisiana Pacific6Korman Marketing Group6Martel Construction6Lowes6Montana Conservation Corps6McDonald's6Revelation Engineering6Murdoch's Ranch & Home Supply6Right Now Technologies6Ressler Chevrolet Cadillac & Toyota6Simkins Hallin Lumber6Town & Country Foods6Video Lottery Cons6Town Pump6Yellowstone Traditions6Zoot Enterprises6Zoot Enterprises6PublicEmployerPublicEmployerEmployersClassEmployersClassBy ClassSizeBy ClassSizeMontana State University9Montana State University9School District #78School District #78City of Bozeman7Gallatin County7Gallatin County7City of Bozeman7Class 6 - 100 to 249 EmployeesClass 7 - 250 to 499 EmployeesClass 8 - 500 to 999 EmployeesClass 9 - 1,000+ EmployeesSource: Montana Department of Labor & Industry20102001CITY OF BOZEMAN, MONTANAPRINCIPAL EMPLOYERSCurrent Year and Ten Years AgoUnaudited statistical section.
OPERATING SECTION
14520022003200420052006200720082009 2010General GovernmentCity commission4.00 4.00 4.00 4.00 2.10 2.10 2.10 2.10 2.10 City manager5.50 6.50 7.50 7.50 9.50 9.50 10.50 10.50 11.50 Municipal court5.00 5.00 6.00 6.00 6.00 6.00 7.00 7.00 7.50 City attorney6.00 6.00 6.00 6.00 6.00 6.00 7.00 6.00 11.50 Finance16.75 16.00 16.00 16.00 16.00 16.00 10.00 10.00 8.75 Information Technology (used to be in Finance)- - - - - - 6.00 6.00 5.88 Office of planning & community development11.70 12.70 12.70 12.70 12.70 12.70 15.20 13.70 12.20 Zoning- - - - - - - - - Building maintenance0.55 0.55 1.55 2.55 2.55 2.55 3.05 3.55 3.55 Total general government49.50 50.75 53.75 54.75 54.85 54.85 60.85 58.85 62.98 Public SafetyPolice department48.25 48.25 48.25 49.75 52.75 54.75 57.75 62.75 71.75 Fire department28.75 29.75 29.75 29.25 29.25 31.25 34.25 45.25 41.75 Building inspection10.05 10.55 10.55 15.05 15.05 15.55 16.55 13.55 9.55 Parking1.75 2.75 2.75 2.75 2.75 3.75 3.75 4.75 4.75 9-1-1- - - - - - - - - Total public safety88.80 91.30 91.30 96.80 99.80 105.30 112.30 126.30 127.80 Public ServicesPublic services administration7.15 7.15 7.15 7.15 7.15 7.15 8.15 8.15 8.15 Streets13.62 13.62 13.62 13.62 13.62 15.62 15.62 17.62 17.62 Water plant9.27 9.27 9.27 9.27 9.27 9.27 9.27 9.27 9.27 Water operations13.12 14.12 14.12 14.12 14.62 14.62 15.62 16.62 15.62 Wastewater operations6.75 7.75 7.75 7.75 9.25 9.25 10.25 11.25 10.25 Wastewater plant15.87 15.87 14.87 14.87 14.87 14.87 14.87 15.87 15.87 Solid waste collection10.74 10.74 10.74 11.74 11.74 12.74 14.74 14.74 14.74 Solid waste disposal7.66 7.66 7.66 7.66 7.66 7.66 2.00 - - Solid waste recycling- - - - - - 1.00 1.00 1.00 Vehicle maintenance2.50 2.50 2.50 3.50 3.50 4.00 3.00 4.00 5.00 Total public services86.68 88.68 87.68 89.68 91.68 95.18 94.52 98.52 97.52 Public WelfareCemetery5.25 5.25 5.25 5.25 5.25 5.25 5.75 5.75 5.75 Parks11.95 11.95 11.95 11.95 11.95 12.95 13.45 13.45 13.45 Forestry3.60 3.60 3.60 3.60 3.60 4.60 4.60 4.60 4.60 Library19.66 19.66 19.66 19.66 19.66 19.66 20.66 21.66 21.66 Recreation14.65 14.65 14.65 14.65 14.65 14.65 14.90 15.00 15.00 Community development- 1.00 1.00 1.00 1.00 1.00 2.00 1.00 2.00 Total public welfare55.11 56.11 56.11 56.11 56.11 58.11 61.36 61.46 62.46 Total all funds280.09 286.84 288.84 297.34 302.44 313.44 329.03 345.13 350.76 Source: City Manager's Final Adopted BudgetFiscal Year Ended June 30,CITY OF BOZEMAN, MONTANAFULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAMPast Nine Fiscal YearsUnaudited statistical section.
146200220032004200520062007200820092010FinanceSID Statements9,525 9,955 10,443 10,443 11,086 11,086 14,919 15,000 15,000 Utility Bills97,627 101,303 105,720 111,463 111,463 112,775 134,460 134,000 135,000 Grants Recorded and Reported19 23 25 26 25 26 13 30 30 Business Licenses2,742 2,812 3,360 3,588 3,596 3,596 3,836 3,750 3,750 PoliceNumber of Officers44 39 40 42 47 45 51 52 52 Calls for Service33,514 34,000 34,797 36,842 39,790 40,758 42,728 45,145 43,148 Arrests3,709 3,800 2,400 2,106 2,299 2,524 2,581 2,853 2,208 Citations Issued - Motorcycle Patrol2,960 2,500 742 1,500 2,538 1,204 1,000 2,500 2,377 Citations Issued9,150 9,800 9,238 8,603 7,968 7,723 8,280 8,000 7,606 Traffic Crashes1,732 1,800 1,644 1,521 1,666 1,780 1,519 1,302 1,278 FireFires, Hazardous Conditions & Misc220 265 295 280 226 262 237 317 332 Emergency Medical Services1,103 1,300 1,398 1,270 1,367 1,595 1,576 1,363 1,431 Service Calls43 50 50 55 108 125 148 177 186 Business Inspections952 1,100 1,100 1,100 2,932 2,600 2,326 2,000 661 Building InspectionCommercial Permits: Number24 30 22 37 44 50 212 222 253 Value (Millions)23.27 22.04 27.91 36.85 43.11 38.54 85.94 79.44 39.28 Residential Permits: Number272 440 257 927 890 764 431 705 974 Value (Millions)40.50 67.29 34.11 118.25 135.64 118.15 77.60 28.10 18 WaterNew Service Main Taps21 28 30 39 76 79 15 39 30 Meter Replacement/Repair00100 120 844 663 878 368 650 Water Main Breaks13 13 6 6 5 8 5 6 6 WastewaterMain Line Flushing (in Miles)74 94 120 134 101 95 110 90 95 New Infrastructure TV (in Miles)4.577610 19 4.8 1 1 New Service Taps27 33 20 41 29 37 22 15 15 Population Served32,500 33,800 35,150 36,560 35,700 37,300 38,900 40,500 41,800 Solid WasteResidential Customers5,239 5,549 5,551 5,800 6,310 6,608 6,779 6,957 6,900 Commercial Customers168 202 202 200 211 239 254 262 260 Yearly Tonnage Collected7,725 8,500 8,499 9,000 11,171 11,953 11,879 10,397 12,895 Vehicle MaintenanceWork Orders Processed1,156 1,261 1,275 1,300 1,068 1,070 974 907 868 Gallons of Oil Disposed10,825 14,382 13,500 14,500 11,384 10,000 9,350 9,175 9,000 ParksPark Reservations 425 500 330 330 340 340 360 221 300 Sources: City Manager's Final Adopted Budget City of Bozeman Finance DepartmentFiscal Year Ended June 30,CITY OF BOZEMAN, MONTANAOPERATING INDICATORS BY FUNCTION/PROGRAMPast Nine Fiscal YearsUnaudited statistical section.
14720022003200420052006200720082009 2010PoliceStations1 1 1 1 1 1 1 1 1 Patrol Units (Cars)12 13 14 15 16 17 18 19 19 Patrol Units (Motorcycles)2 4 4 4 4 4 4 4 4 FireStations2 2 2 2 2 2 2 3 3 Fire Trucks5 5 5 5 5 5 5 5 6 StreetsStreet & Alley Mileage145.364 145.364 172.817 188.694 196.773 229.905 234.736 242.650 246.951Lineal Fee of Curb Replaced160 562 275 1,330 737 750 1,526 240 0Number of Signs Installed309 310 370 649 756 652 652 732 750WaterWater Mains (Miles)196.75 198.99 203.35 219.95 231.17 247.91 250.84 253.15 254.23Fire Hydrants1,729 1,754 1,908 1,993 2,064 2,226 2,257 2,286 2,291 WastewaterSanitary Sewers (Miles)157 159.88 165.80 174.43 182.59 198.09 199.86 200.94 201.2Number of Manholes3,303 3,326 3,341 3,393 3,567 3,884 3,941 3,974 3,979 Solid WasteNumber of Collection Vehicles33445 7 6 7 7Number of Roll-off Trucks1 1 1 1 1 2 3 4 4Number of Recycling Trucks0 `0000001 1ParksFormal Turf Acres218 228 250 250 258 258 265 120 120Natural Parkland Acres219 219 118 118 110110115205 205Miles of Trails22 23 25 25 45 45 50 50 55Sources: City Manager's Final Adopted Budget City of Bozeman Finance Department City of Bozeman GIS Department City of Bozeman Police DepartmentFiscal Year Ended June 30,CITY OF BOZEMAN, MONTANAPast Nine Fiscal YearsCAPITAL ASSET STATISTICS BY FUNCTION/PROGRAMUnaudited statistical section.
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, SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2010 AUDITS OF STATE AND LOCAL GOVERNMENTS AND NON-PROFIT ORGANIZATIONS
148 CITY OF BOZEMAN, MONTANA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2010 Balance Grant GrantFederal BalanceGrant June 30, Revenue Revenue Total Awards June 30,FEDERAL GRANTORCFDA Award 2009 Received Accrued Revenue Expended 2010U.S. Department of JusticeRural Domestic Violence Assistance Program 16.589 232,067$ - - 232,067 232,067 232,067 -$ Passed through Gallatin County:Missouri River Drug Task Force16.579 92,600 - 56,358 36,242 92,600 92,600 - Edward Byrne - JAG Local Solicitation16.804 28,153 - 28,153 - 28,153 28,153 - Edward Byrne - JAG State Solicitation16.738 12,171 - - 12,171 12,171 12,171 - U.S. Department of TransportationSafe Routes to Schools20.205 14,517 - 14,517 - 14,517 14,517 - U.S. Department of InteriorPassed through the Historical Society:Historic Preservation 15.904 5,500 - 5,500 - 5,500 5,500 - Federal Emergency Management AgencySAFER Firefighter Grant 97.083 257,049 - - 257,049 257,049 257,049 - Homeland Security Grant Program for Dispatch & Radios97.067 257,839 - 257,839 - 257,839 257,839 - U.S. Environmental Protection AgencySTAG Grant - Water Reclamation Facility Generator 66.709 162,500 - 162,500 - 162,500 162,500 - U.S. Department of ArmyArmy Corps of Engineers Section 595 Fed Grant 12.115 178,000 - 178,000 - 178,000 178,000 - U.S. Department of Housing & Urban DevelopmentHUD EDI-SP #B-10-SP-MT-007514.246 68,524 - - 68,524 68,524 68,524 - Total Federal Financial Assistance1,308,919$ - 702,866 606,053 1,308,919 1,308,919 -$
149 CITY OF BOZEMAN, MONTANA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS June 30, 2010 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.
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor, City Commissioners, and City Manager of the City of Bozeman, Montana: We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Bozeman, Montana, as of and for the year ended June 30, 2010, and have issued our report thereon dated December 15, 2010. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control over Financial Reporting In planning and performing our audit, we considered the City of Bozeman’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph of the section and was not designed to identify all deficiencies in internal control over financial reporting that might e deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
151 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 grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that is required to be reported under Government Auditing Standards. However, we noted another matter involving compliance that we have reported to the management of the City of Bozeman, Montana, in a separate letter dated December 15, 2010. 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 15, 2010
INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 Honorable Mayor, City Commissioners, and City Manager of the City of Bozeman, Montana: Compliance We have audited the City of Bozeman’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City of Bozeman’s major federal programs for the year ended June 30, 2010. The City of Bozeman’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirement of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City of Bozeman’s management. Our responsibility is to express an opinion on the City of Bozeman’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City of Bozeman’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City of Bozeman’s compliance with those requirements. In our opinion, the City of Bozeman complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2010.
153 Internal Control Over Compliance Management of the City of Bozeman is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City of Bozeman’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Bozeman’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. 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 15, 2010
154 CITY OF BOZEMAN SCHEDULE OF FINDINGS AND QUESTIONED COSTS Year Ended June 30, 2010 SUMMARY OF AUDIT RESULTS Financial Statements The auditor’s report expresses an unqualified opinion. No significant deficiencies or material weaknesses related to internal control over financial reporting were identified. No instances of noncompliance material to the financial statements were noted. Federal Awards No significant deficiencies or material weaknesses related to the internal control over major programs were identified. The auditor’s report on compliance for the major federal awards programs expresses an unqualified opinion. The audit did not disclose any audit findings that are required to be reported in accordance with section 510(a) of Circular A-133. Major Programs The major programs are: SAFER Firefighter Grant, CFDA number 97.083 and Rural Domestic Violence Assistance Program, CFDA number 16.589 The threshold for distinguishing Types A and B programs was $300,000. The City of Bozeman was determined to be a low-risk auditee. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT None reported.
155 CITY OF BOZEMAN CURRENT STATUS OF PRIOR YEAR RECOMMENDATIONS Year Ended June 30, 2010 There were no prior year audit findings relative to federal award programs.