Comprehensive Annual Financial Report 2020

City of Red Oak, Texas 

Comprehensive Annual Financial 

Report 

for the Fiscal Year Ended 

September 30, 2020 

Prepared by the Finance Department

CITY OF RED OAK, TEXAS 

YEAR ENDED SEPTEMBER 30, 2020 

TABLE OF CONTENTS 

Page 

Number 

INTRODUCTORY SECTION 

Letter of Transmittal ..................................................................................................... 

GFOA Certificate of Achievement .................................................................................... 

Organizational Chart ..................................................................................................... 

City Officials ................................................................................................................. 

i – vi 

vii 

viii 

ix 

FINANCIAL SECTION 

Independent Auditors’ Report ......................................................................................... 1 – 2 

Management Discussion and Analysis .............................................................................. 3 – 10 

Basic Financial Statements 

Government-Wide Financial Statements: 

Statement of Net Position ......................................................................................... 11 

Statement of Activities ............................................................................................. 12 - 13 

Fund Financial Statements: 

Governmental Funds 

Balance Sheet ...................................................................................................... 14 - 15 

Reconciliation of the Balance Sheet of Governmental 

Funds to the Statement of Net Position ................................................................. 16 

Statement of Revenues, Expenditures, and 

Changes in Fund Balances .................................................................................. 17 - 18 

Reconciliation of Revenues, Expenditures and Changes 

In Fund Balances – Governmental Funds to the 

Statement of Activities ....................................................................................... 19 

Proprietary Funds 

Statement of Net Position ......................................................................................... 20 

Statement of Revenues, Expenses, and 

Changes in Fund Net Position ................................................................................. 21 

Statement of Cash Flows .......................................................................................... 22 - 23 

Notes to the Financial Statements ................................................................................... 24 – 44

Required Supplementary Information 

Schedule of Revenues, Expenditures, and Changes in 

Fund Balance – Budget (Budget Basis) and Actual – General Fund .............................. 45 


Fund Balance – Budget (Budget Basis) and Actual – Industrial 

Development Corporation ...................................................................................... 46 


Fund Balance – Budget (Budget Basis) and Actual – Economic 

Development Corporation ...................................................................................... 47 

Schedule of Changes in Net Pension 

Liability and Related Ratios .................................................................................... 48 - 49 

Texas Municipal Retirement System – 

Schedule of Employer Contributions ........................................................................ 50 – 51 

Schedule of Changes in Total OPEB 

Liability and Related Ratios .................................................................................... 52 

Combining Schedules 

Combining Balance Sheet – Nonmajor Governmental Funds ............................................ 53 

Combining Schedule of Revenues, Expenditures, and 

Changes in Fund Balances – Nonmajor Governmental Funds ......................................... 54 


Fund Balance – Budget (Budget Basis) and Actual – Tourism ........................................ 55 


Fund Balance – Budget (Budget Basis) and Actual – Debt Service ................................. 56 

STATISTICAL SECTION 

Table 

Net Position by Component .............................................................................. 1 57 – 58 

Changes in Net Position ................................................................................... 2 59 – 62 

Fund Balances of Governmental Funds .............................................................. 3 63 – 64 

Governmental Activities Tax Revenues by Source ............................................... 4 65 – 66 

Assessed Value and Actual Value of Taxable Property .......................................... 5 67 - 68 

Direct and Overlapping Property Tax Rates ........................................................ 6 69 

Principal Property Tax Payers ........................................................................... 7 70 

Property Tax Levies and Collections .................................................................. 8 71 

Ratios of General Outstanding Debt .................................................................. 9 72 - 74 

Ratios of General Bonded Debt ......................................................................... 10 75 - 76 

Direct and Overlapping Governmental Activities Debt .......................................... 11 77 

Legal Debt Margin Information ......................................................................... 12 78 

Pledge-Revenue Coverage ............................................................................... 13 79

Demographic and Economic Statistics ................................................................ 14 80 

Principal Employers ......................................................................................... 15 81 

Full-time Equivalent City Employees by Function and Program .............................. 16 82 - 83 

Operating Indicators by Function/Program ......................................................... 17 84 - 85 

Capital Asset Statistics by Function/Program ...................................................... 18 86 

COMPLIANCE SECTION 

Independent Auditor’s Report on Internal Control Over Financial Reporting 

and on Compliance and Other Matters Based on an Audit of Financial 

Statements Performed in Accordance with Government Audit Standards ........................... 87 – 88 

Schedule of Findings and Responses ............................................................................ 89

THIS PAGE LEFT BLANK INTENTIONALLY

INTRODUCTORY SECTION


May 10, 2021 

To the Honorable Mayor, City 

Council and Citizens of the City of 

Red Oak, Texas 

Submitted herewith is the Comprehensive Annual Financial Report (the “Annual Report”) of the City of Red Oak 

(the “City”) for the fiscal year ended September 30, 2020. Responsibility for the accuracy of the data and the 

completeness and fairness of the presentation, including disclosures, rests with the City. To the best of our 

knowledge and belief, the enclosed data is accurate in all material respects. The data is reported in a manner 

designed to present fairly the financial position and results of operations of the various funds of the City. To 

enable the reader to gain an understanding of the City’s financial activities, all necessary disclosures have been 

included. 

The Annual Report is prepared in accordance with generally accepted accounting principles (GAAP) in the United 

States of America established by the Governmental Accounting Standards Board (GASB). The Annual Report is 

presented in three sections: introductory, financial and statistical. The introductory section includes this 

transmittal letter, the City’s organizational chart, and a list of principal officials. The financial section includes 

the management’s discussion and analysis (MD&A), the government-wide and fund financial statements, notes 

to basic financial statements, required supplemental information, other supplemental information, as well as 

the independent auditor’s report on the basic financial statements. The Statistical section includes selected 

financial and demographic information which is presented on a multi-year basis. 

The MD&A is a narrative introduction, overview, and analysis to accompany the basic financial statements. The 

MD&A can be found immediately following the independent auditor’s report. This transmittal is designed to 

complement the MD&A and should be read in conjunction with it. 

THE REPORTING ENTITY 

The City was incorporated in 1849 under the general laws of the State of Texas. The City operates under a 

council-manager form of government. The City provides a full range of municipal services authorized by statute 

or charter. These services include police and fire protection, water and wastewater services, the construction 

and maintenance of streets, infrastructure and other related facilities, code enforcement, building inspections, 

parks and recreation, library, public improvements, planning and zoning, economic development, and general 

administrative services. 

The Annual Report includes all funds of the City. This report includes all government activities, organizations 

and functions for which the City is financially accountable. The criteria used in determining activities to be 

reported within the City’s basic financial statements are based upon and consistent with those set forth by the 

GASB. 

i

THE CITY 

The City of Red Oak (the “City” or “Red Oak”) is a political subdivision and municipal corporation of the State, 

duly organized and existing under the laws of the State, including the City’s Home Rule Charter. The City first 

adopted its Home Rule Charter in 1997. The City operates under a Council/Manager form of government with 

a City Council comprised of the Mayor and five Councilmembers. The Mayor and City Councilmembers are elected 

for staggered three-year terms. The City Manager is the chief administrative officer for the City. The 2000 

Census population for the City was 5,235, The 2010 Census population for Red Oak was 10,769, and North 

Central Texas Council of Governments (NCTCOG) projects by the year 2030, Red Oak’s population will grow to 

63,329. According to the U.S Census Bureau, as of September 30, 2020, the estimated population for Red Oak 

was determined to be 14,732. The City covers approximately 15.22 square miles. 

The City is located in northern Ellis County, 20 miles south of downtown Dallas and is served by a major 

interstate highway I-35E bisecting the City, and I-20 located nine miles north. Red Oak is also bisected by state 

highways 664 and 342 giving easy access in all directions. Red Oak is uniquely situated to provide easy 

accessibility to the entire North Texas area. The close proximity to job opportunities in Dallas, Fort Worth and 

the Mid-Cities continues to contribute to growth in the City. The City is a member of the Best-Southwest 

Communities, which also consists of Cedar Hill, Desoto, Duncanville and Lancaster. 

As a result of the exponential growth and development taking place in Red Oak and vicinity, the Texas 

Department of Transportation (TxDoT) is in the process of improving the public transportation network. 

Construction work has commenced on the improvements and widening to FM 664/Ovilla Road. These 

improvements and widening include the expansion of FM 664/Ovilla Road to six lanes extending from I-45 to at 

the City of Ferris to US 287 at its intersection with FM 64/Ovilla Road at the City of Waxahachie. In addition, an 

overpass will be constructed along I-45 to the south of Ferris which will facilitate the flow of traffic along FM 

664/Ovilla Road. Also, the FM 664/Ovilla Road overpass located at I-35E will be reconstructed to improve traffic 

flows and increase the capacity of the overpass. This expansion and construction is necessary as current data 

shows that the intersection of FM 664 and I-35E in Red Oak is currently one of the busiest intersections in Ellis 

County. 

Due to the growth and development of the Red Oak vicinity and the related traffic congestion, the long 

anticipated South Loop 9 project will become a reality! To this end, TxDoT is in the process of acquiring the 

right-of-way (ROW) for constructing Phase 1 of the roadway which will directly connect I-45 with I-35E. The 

route for the South Loop 9 project will closely follow along the northern boundary line for Ellis County and the 

southern boundary line for Dallas County. 

Red Oak is a growing, thriving community with good challenges. The population is increasing and exceptional 

quality homes and developments are being built in Red Oak to accommodate this growth. In addition, due to 

the growth in the City and the surrounding area, retail development has been rising, and is expected to continue 

to do so. The median household income for 2020 is $79,448, which is continuing to rise. Per HomeFacts.com, 

Red Oak enjoys a low unemployment rate of 6.3% as compared to 8.8% in 2009. This unemployment rate is 

lower than both the State of Texas and the US unemployment rates. 

As the community grows, the need for City services continues to increase. Staffing levels have increased in 

many areas, including in the police, fire, public works, and finance departments. This growth in staffing has 

caused the need for expansion of City facilities. The City issued debt in Fiscal Year 2019. The City used part of 

the debt proceeds to purchase a future site for the Municipal Center to meet this need to accommodate growth. 

Growth within the city has caused property tax revenues to increase. 

In Fiscal Year 2020, General Fund property tax revenues increased by over $691,000 from the previous year. 

At the same time, sales taxes revenues increased in the General Fund by $432,852 because of growth in 

population and retail services available within the community. 

Growth in the city has also created the need for additional public infrastructure. More on this topic will be 

included in Management’s Discussion and Analysis, which starts on page 3. 

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EDUCATION 

The Red Oak Independent School District (the “District”) has a total enrollment of approximately 5,900 

students and consists of 1 high school serving grades 9 through 12; 1 middle school serving grades 6-8; and 5 

elementary schools serving Pre-K through 5. The District employs 863 persons. Quality instruction is provided 

by a qualified teaching staff, with a student-teacher ratio of 17:1. The District has many programs for students 

that prepare them for the future, including dual credit classes to allow students to receive high school and 

college credits at the same time. 

Texas State Technical College - North Texas campus located in Red Oak (“TSTC North Texas”) features a 

campus of more than 100,000 square feet that opened in September 2014. This campus houses many of TSTC's 

high-tech, advanced workforce programs with state-of-the-art labs for students to develop skills that are critical 

in the workplace. Located in the heart of Ellis County, this campus is ready to serve the businesses and students 

of the Dallas-Fort Worth Metroplex. 

The City is readily accessible to higher education facilities with many junior colleges, colleges and universities 

within commuting distance. In addition, an adult education program is provided within the City in conjunction 

with Navarro College, a two-year accredited, state-supported, community college with Ellis County district 

campuses located in Waxahachie and Midlothian. 

HOUSING – RESIDENTIAL DEVELOPMENT 

Because Red Oak is strategically located within the Dallas-Fort Worth Motorplex, our community is a preferred 

residential location for individuals and families. A number of new single family residential developments within 

the Red Oak totaling over 2,431 new lots will be constructed over the next few years. These new residential 

developments include: Camden Park of Red Oak (80 lots); Cole Manor (71 lots); Creek Bend (152 lots); Crystal 

Lake (90 lots); Meadow Ridge (232 lots); Oakmont (518 lots); The Oaks (432 lots); Summerwood (41 lots); 

and The Woods of Red Oak (132 lots). In addition, Legacy Oaks of Red Oak, a stratified senior living facility will 

feature 20 single story cottages, 87 independent living units in a two-story structure, and 80 assisted living and 

memory care units in a single-story structure. This activity is proven by the number of permits issued by the 

Community Development Department. In Fiscal Year 2020, there were 291 residential building permits issued, 

which was an increase of 94 permits from the previous year. 

COMMERCIAL AND RETAIL DEVELOPMENT 

In Fiscal Year 2020, there were 8 new commercial building permits issued, which was an increase of 2 permits 

from the previous year. Building permit and inspections revenues increased by over $390,000 from the previous 

year. New commercial construction in Fiscal Year 2020 included a new facility for Snap Fitness 24-7, La Quinta 

del Sol Hotel, the Hamptons Event Venue and Soulman’s Bar-B-Que. Soulman’s Bar-B-Que is now sharing its 

barbecue techniques and old family recipes with our residents of Red Oak. Soulman’s Bar-B-Que, which first 

opened its doors on October 19, 1974, is located along the south side of FM 664/Ovilla Road at its intersection 

with Austin Boulevard. The 3,000 square foot barbecue restaurant features abundant seating for 80 patrons. 

Victron Group and B&B Theatres, the 6th largest theatre chain in North America, have partnered in the primary 

anchor for Red Oak Legacy Square which will be the B&B Theaters Family Entertainment Center. This new 

upscale, state-of-the-art theater complex will feature 12 theaters and some of B&B’s most innovative theatrical 

concepts. The Grand Screen will be an unbelievable 70 feet wide, making it one of the largest screens in the 

nation! The tranquility of Pearson Park and the serene shores of City Lake provide a picture-perfect opportunity 

for Te’Jun the Texas Cajun Restaurant. The 8,000 square foot restaurant currently under construction with its 

planned opening during the Summer in 2021, is located on approximately 4 acres along the west side of the I- 

35E/US 77 corridor. The 450-seat restaurant will feature the finest in Cajun-style seafood for our Red Oak 

residents and visitors. Te’Jun the Texas Cajun is widely renowned for its distinctive Cajun-style cuisine 

throughout the North Central Texas and Central Texas Regions. 

iii

INDUSTRY 

During 2020, Compass Datacenters DFW III, LLC, completed its 40,000 square foot datacenter shell building for 

facilitating the first phase of development: “Red Oak 1.” Compass Datacenters Red Oak features a 252 Megawatt 

campus that sits on 165 acres along Houston School Road. This 165 acre campus will feature an on-site substation 

and is serviced by multiple fiber paths to offer substantial room for future growth. Compass Datacenters 

Red Oak plans future expansion on its 165 acre campus to include multiple datacenter buildings for globally 

competitive high technology corporations. 

In 2012, Triumph Aerospace Structures, LLC initially opened its one million square foot manufacturing facility in 

Red Oak. During 2020, Triumph Aerospace Structures capitalized on its successfully partnership with Boeing 

Defense, Space & Security and its global supply-chain partners whenever it commenced the construction and 

first delivery of the $9.2 billion T-7A project for the United States Department of Defense. The T-7A project 

could mean up to 900 new direct and indirect aircraft manufacturing jobs for the Triumph Aerospace Structures 

- Red Oak facility. 

EDUCATION AND INDUSTRY PARTNERSHIPS 

During FY 2018-2019, Bombardier acquired the Global 7500 wing manufacturing operation from Triumph. Since 

this acquisition, during 2020 Bombardier partnered with Texas State Technical College North Texas – Red Oak 

campus (“TSTC”) to develop a new aviation apprenticeship training program. The two-year Bombardier Aviation 

Apprenticeship Program (BAAP) will offer students a chance to enter the high-tech aerospace sector with no 

formal qualifications. It challenges them to present a winning attitude and develop mechanical dexterity and 

sound logic skills to be able to pass an entry-level aptitude test. In turn, Bombardier and TSTC will offer expert 

training in conjunction with TSTC’s excellent facilities, allowing students to benefit at no cost from industrytailored 

modules, experienced instructors, tools and equipment and financial support. 

In November 2020, the two-year Bombardier Aviation Apprenticeship Program (“BAAP”) was officially certified 

by the United State Department of Labor (“USDOL”). The official USDOL certification allows the BAAP to become 

a grassroots pipeline to attract quality individuals from across the United States to come to Red Oak and receive 

aerospace training through TSTC for a future career path with good-paying jobs at Bombardier in Red Oak. 

During 2020, the Red Oak Industrial Development Corporation (“ROIDC”) partnered with Texas State Technical 

College North Texas in red Oak (“TSTC”) to provide scholarships that are available to Red Oak students planning 

to attend TSTC in Red Oak. The ROIDC scholarship for TSTC will provide financial assistance to Red Oak students 

for attaining upward mobility and improving the quality of life for our students and their families. In addition, 

the TSTC North Texas campus provides our students the opportunity to receive state-of-the-art higher education 

technical and vocational workforce training in Red Oak so they may be better prepared for success well into the 

future. The ROIDC scholarship will be available to students living within Red Oak’s city limits and may be used 

for TSTC school-related expenses. The recipient must attend the North Texas campus to be eligible. 

Students may be traditional or non-traditional students and attend school on a full time or part time basis. The 

scholarship is open to new and current students and all students must be in good academic and behavioral 

standing to be eligible. The college’s staff will award the scholarship, which may be presented to recipients in 

multiple semesters. Scholarships in the amount of $1,000 will be awarded to students. 

SERVICES AVAILABLE WITHIN THE COMMUNITY 

Six banks presently offer quality services to the citizens of Red Oak and the surrounding areas. 

Red Oak residents are indeed fortunate that world-class hospitals and healthcare centers are readily available. 

Conveniently located within a 10-minute drive time at the intersection of IH-35E and US 287, the Baylor Scott 

& White Medical Center - North Texas provides superior medical and special services from allergists to urologists. 

In addition, Baylor Medical Center at Lancaster, located 6 miles away, and Methodist Medical Center, a major 

healthcare facility in Dallas County is located 20 miles away. Hospital Corporation of America/Arlington Medical 

Center is currently constructing a 20,400 square foot multiple component health care facility which will include 

an emergency room, women’s services, imaging, and internal medicine. 

Three hotels are available to visitors to the Red Oak and North Texas area. 

The City operates two municipal parks and a nature center. Several lakes are within an hour’s drive of the City. 

Joe Pool Lake is located 30 minutes away and is a multi-purpose water resource project covering approximately 

7,500 acres. Cedar Hill State Park adjoins Joe Pool Lake with abundant camping, hiking, and picnicking facilities. 

Several religious faiths are represented in the nine churches established in the City. 

iv

The Metroplex offers a wide array of entertainment, cultural and sports activities, including the Dallas Zoo, Fort 

Worth Zoo, Dallas World Aquarium, Six Flags Over Texas, Dallas Symphony Orchestra, Dallas Theater Center, 

and many museums. Within driving distance, professional and college football, baseball, basketball, hockey, 

and soccer games are available for area residents to attend. 

Numerous other services are available to the citizens of Red Oak and the surrounding area, as well. This growing 

community has something for everyone. The City Council works with staff and community leaders, striving to 

anticipate and meet the needs of all residents in order to ensure that once they arrive in Red Oak, they will want 

to stay! 

FINANCIAL PLANNING AND FISCAL POLICIES 

The City continues to update the master plans to guide the City’s long-term growth and financial planning. 

Significant master planning activity includes: 1) Comprehensive land use and thoroughfare plan, 2) Parks master 

plan, and a 3) Strategic Plan. 

Utilizing these plans, the City annually updates a rolling five-year capital improvement schedule. The City also 

maintains a police and fire department staffing plan as part of the strategic plan. These plans are used to 

determine budget allocations to the various departments and activities of the City. 

The City’s fiscal management policy requires a minimum fund balance for numerous funds. The fund balance 

reserve plan is guiding the City to meeting the fund balance reserve plans for each of the funds. 

ACCOUNTING SYSTEM AND BUDGETARY CONTROL 

City management 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. Management must also ensure that adequate 

accounting data is compiled to allow for the preparation of financial statements in conformity with GAAP. The 

internal control structure designed to provide reasonable, but not absolute, assurance that these objectives are 

met. The concept of reasonable assurance recognizes that (1) the cost of the control should not exceed the 

benefits likely to be derived, and (2) the valuation of costs and benefits requires estimates and judgments by 

management. All internal control evaluations occur within the above framework. 

The City’s accounting records for general governmental operations are maintained on a modified accrual basis, 

with revenues recognized when measurable and available, and expenditures recorded when the liability is 

incurred. Proprietary operations are maintained on full accrual basis. 

The objective of budgetary controls is to ensure compliance with legal provisions contained in the annual budget 

approved by the City Council. Activities of the general fund, special revenue funds and debt service funds are 

included in the annual budget. The budget is developed and controlled at the department level although 

appropriations are set at the fund level, and encumbrances are entered at the time a purchase order is issued. 

Outstanding encumbrance’s lapse at fiscal year-end, and the subsequent year’s budget must absorb the 

expenditures when incurred. Separate multi-year budgets are developed for the capital projects funds. 

OTHER INFORMATION 

Independent Audit: 

The City Charter requires an annual audit of the accounting financial records and transactions of all departments 

of the City. The City charter specifies that such audit be conducted by independent auditors selected by the City 

Council. Pattillo, Brown & Hill, L.L.P. was selected by the City Council to conduct this year’s audit. The 

independent auditor’s report on the basic financial statements is included in the financial section of this report. 

Certificate of Achievement: 

This is the eighth year the City has submitted the comprehensive annual financial report (“Annual Report”) to 

the Government Finance Officers Association of the United States and Canada (GFOA) to be reviewed for the 

Certificate of Achievement. The Certificate of Achievement is a prestigious national award that recognizes 

conformance with the highest standards for preparation of state and local government financial reports. 

v

In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and 

efficiently organized Annual Report, whose contents conform to program standards. The Annual Report must 

satisfy both generally accepted accounting principles and applicable legal requirements. 

A Certificate of Achievement is valid for a period of one year. The City has received the Certificate of Achievement 

for the Fiscal Years 2012 - 2019. We believe the current report continues to conform to the Certificate of 

Achievement program requirements, and we are submitting the 2020 Annual Report to GFOA to determine its 

eligibility for another certificate. 

ACKNOWLEDGEMENTS 

The preparation of this report could not have been accomplished on a timely basis without the dedication and 

efficiency of the entire staff of the Finance Department. We would like to express our appreciation to all City 

employees who assisted and contributed to its presentation. 

Additionally, we would also like to thank the members of the City Council for their interest and support in 

planning and conducting the financial operations of the City in a responsible and progressive manner. 

Respectfully, 

Gloria Platt, CGFO 

Director of Finance 

Sidney Smith 

Assistant Director of Finance 

vi


CITY OFFICIALS 

Mark L. Stanfill, DVM 

Mayor 

Gordon Toney 

Mayor Pro-Tern 

Ben Goodwyn 

Council Member — Place 2 

William L. Drake 


Ron Wilson 


Michael Braly 


City Manager 

Todd Fuller 

Assistant City Manager 

Jonathan Phillips 

ix

Government Finance Officers Association 

Certificate of 

Achievement 

for Excellence 

in Financial 

Reporting 

Presented to 

City of Red Oak 

Texas 

For its Comprehensive Annual 

Financial Report 

for the Fiscal Year Ended 

September 30, 2019 

vii

CITIZENS 

City Attorney 

Robert Hager 

City Council 

Municipal Judge 

Scott Kurth 

City Manager 

Todd Fuller 

Assistant City Manager 

Jonathan Phillips 

Jonathan 

Phillips, 

Assistant City 

Manager 

Garland Wolf, 

Police Chief 

Ben Blanton, 

Fire Chief 

Caryn Stevens, 

Interim City 

Secretary 

Lee McCleary, 

Director of 

Economic 

Development 

Ben Hartman, 

City Engineer 

Kyle Kelley, 

Director of 

Parks & 

Recreation 

Logan Ragsdale, 

Director of 

Library Services 

Administration 

Police 

Department Fire Department City Secretary 

Animal Control 

Emergency 

Communication 

Tourism 

Economic 

Development 

Industrial 

Development 

Engineering 

Code and 

Development 

Services 

Parks & 

Recreation 

Library Services 

Gloria Platt, 

Director of 

Finance 

Scott Williams, 

Director of 

Public Works 

Amanda 

Monsivais, 

Director of 

Human 

Resources 

John Binford, 

Director of 

Information 

Technology 

Finance 

Public Works - 

Streets 

Human 

Resources 

Information 

Technology 

Utility Billing 

Water & Sewer 

Utilities 

Municipal Court 

Storm Drainage 

viii


FINANCIAL SECTION


INDEPENDENT AUDITOR’S REPORT 

Honorable Mayor and 

Members of the City Council 


Report on the Financial Statements 

We have audited the accompanying financial statements of the governmental activities, the businesstype 

activities, each major fund, and the aggregate remaining fund information of City of Red Oak, Texas, as 

of and for the year ended September 30, 2020, and the related notes to the financial statements, which 

collectively comprise the City of Red Oak, Texas’ basic financial statements as listed in the table of contents. 

Management’s Responsibility for the Financial Statements 

City of Red Oak, Texas’s management is responsible for the preparation and fair presentation of these 

financial statements in accordance with accounting principles generally accepted in the United States of 

America; this includes the design, implementation, and maintenance of internal control relevant to the 

preparation and fair presentation of financial statements that are free from material misstatement, whether 

due to fraud or error. 

Auditor’s Responsibility 

Our responsibility is to express opinions on these financial statements based on our audit. We 

conducted our audit in accordance with auditing standards generally accepted in the United States of America 

and the standards applicable to financial audits contained in Government Auditing Standards, issued by the 

Comptroller General of the United States. Those standards require that we plan and perform the audit to 

obtain reasonable assurance about whether the financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures 

in the financial statements. The procedures selected depend on the auditor’s judgment, including the 

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In 

making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and 

fair presentation of the financial statements in order to design audit procedures that are appropriate in the 

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal 

control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of 

accounting policies used and the reasonableness of significant accounting estimates made by management, as 

well as evaluating the overall presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis 

for our audit opinions. 

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 Red Oak, Texas, as of September 30, 2020, and the 

respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in 

accordance with accounting principles generally accepted in the United States of America. 

1

Other Matters 

Required Supplementary Information 

Accounting principles generally accepted in the United States of America require that the 

management’s discussion and required supplementary information, as listed in the table of contents, be 

presented to supplement the basic financial statements. Such information, although not a part of the basic 

financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an 

essential part of financial reporting for placing the basic financial statements in an appropriate operational, 

economic, or historical context. We have applied certain limited procedures to the required supplementary 

information in accordance with auditing standards generally accepted in the United States of America, which 

consisted of inquiries of management about the methods of preparing the information and comparing the 

information for consistency with management’s responses to our inquiries, the basic financial statements, and 

other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion 

or provide any assurance on the information because the limited procedures do not provide us with sufficient 

evidence to express an opinion or provide any assurance. 

Other Information 

Our audit was conducted for the purpose of forming opinions on the financial statements that 

collectively comprise the City of Red Oak, Texas’ basic financial statements. The introductory section, 

combining and individual nonmajor fund financial statements and schedules, and statistical section, are 

presented for purposes of additional analysis and are not a required part of the basic financial statements. 

The combining and individual nonmajor fund financial statements and schedules are the responsibility 

of management and were derived from and relate directly to the underlying accounting and other records 

used to prepare the basic financial statements. Such information has been subjected to the auditing 

procedures applied in the audit of the basic financial statements and certain additional procedures, including 

comparing and reconciling such information directly to the underlying accounting and other records used to 

prepare the basic financial statements or to the basic financial statements themselves, and other additional 

procedures in accordance with auditing standards generally accepted in the United States of America. In our 

opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated, in 

all material respects, in relation to the basic financial statements as a whole. 

The introductory and statistical sections have not been subjected to the auditing procedures applied in 

the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any 

assurance on them. 

Other Reporting Required by Government Auditing Standards 

In accordance with Government Auditing Standards, we have also issued our report dated May 10, 

2021, on our consideration of the City of Red Oak, Texas’ internal control over financial reporting and on our 

tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other 

matters. The purpose of that report is to describe the scope of our testing of internal control over financial 

reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 

the City of Red Oak, Texas’ internal control over financial reporting or on compliance. That report is an 

integral part of an audit performed in accordance with Government Auditing Standards in considering the City 

of Red Oak, Texas’ internal control over financial reporting and compliance. 

Waco, Texas 

May 10, 2021 

2

MANAGEMENT’S DISCUSSION AND ANALYSIS 

As management of the City of Red Oak, we offer readers of the City's financial statements this narrative 

overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2020. We 

encourage readers to consider the information presented here in conjunction with additional information 

that we have furnished in our letter of transmittal, which can be found preceding this report. 

FINANCIAL HIGHLIGHTS 

• On a government-wide basis, the assets and deferred outflows of resources of the City exceeded its 

liabilities and deferred inflows of resources at the close of the most recent fiscal year by 

$36,773,822 (Net Position). Of this amount, $8,943,287 (unrestricted net position) may be used to 

meet the government's ongoing obligations to citizens and creditors. 

• On a government-wide basis, the City's total net position increased by $13,862,795. This increase 

is attributable largely to capital grants and contributions of $3.5 million and the sale of land held for 

sale in the Industrial Development Corporation in the amount of $7.5 million. 

• As of the close of the current fiscal year, the City's governmental funds reported combined ending 

fund balances of $39,493,996. Approximately 10.5% of this total amount, $4,154,178 is unassigned 

and available for use at the City's discretion. 

• At the end of the current fiscal year, unreserved fund balance for the General Fund was $4,154,178 

or 32.2% of the total General Fund expenditures. 

• The City's outstanding debt increased by $6,137,690 or 14.5% during the current fiscal year due to 

the issuance of bonds for various capital improvements, primarily including construction and 

resurfacing of roads, park improvements, and purchase and improvements for municipal buildings. 

OVERVIEW OF THE FINANCIAL STATEMENTS 

This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. 

The City's basic financial statements are comprised of three components: 1) government-wide financial 

statements, 2) fund financial statements, and 3) notes to the financial statements. This report also 

contains other supplementary information in addition to the basic financial statements themselves. 

Government-wide Financial Statements. The government-wide financial statements are designed 

to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector 

business. 

The Statement of Net Position presents information on all of the City's assets, deferred outflows, 

liabilities and deferred inflows, with the difference between these reported as Net Position. Over time, 

increases or decreases in Net Position may serve as a useful indicator of whether the financial position of 

the City is improving or deteriorating. 

The Statement of Activities presents information showing how the City's Net Position changed during the 

most recent fiscal year. All changes in Net Position are reported when the underlying event giving rise to 

the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are 

reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., 

uncollected taxes and earned but unused compensated absences). 

3

Both of the government-wide financial statements distinguish functions of the City that are principally 

supported by taxes and intergovernmental revenues (governmental activities) from functions that are 

intended to recover all or a significant portion of their costs through user fees and charges (business-type 

activities). The governmental activities of the City include general government, public safety, cultural and 

recreational, public works, industrial development and economic development. The business-type activities 

of the City include utility operations. The Red Oak Economic Development Corporation and Red Oak 

Industrial Development Corporation, although legally separate, functions for all practical purposes as a 

department of the City, and therefore has been included as an integral part of the primary government. 

The government-wide financial statements can be found on pages 11-13 of this report. 

Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over 

resources that have been segregated for specific activities or objectives. The City, like other state and local 

governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal 

requirements. All of the funds of the City can be divided into two categories- governmental funds and 

proprietary funds. 

Governmental Funds. Governmental funds are used to account for essentially the same functions 

reported as governmental activities in the government-wide financial statements. However, unlike 

the government-wide financial statements, governmental fund financial statements focus on current 

sources and uses of spendable resources, as well as on balances of spendable resources available at the 

end of the fiscal year. Such information may be useful in evaluating a government's near-term financing 

requirements. 

Because the focus of governmental funds is narrower than that of the government-wide financial 

statements, it is useful to compare the information presented for governmental funds with similar 

information presented for governmental activities in the government-wide financial statements. By 

doing so, readers may better understand the long-term impact of the government's near-term financing 

decisions. Both the governmental fund balance sheet and the governmental fund statements of 

revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this 

comparison between governmental funds and governmental activities. 

The City maintains nine individual governmental funds. Information is presented separately in the 

Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures, 

and Changes in Fund Balances for the General, Industrial Development Corporation, and Economic 

Development Corporation funds, all of which are considered to be major funds. Data from the other five 

funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor 

governmental funds is provided in the form of combining statements elsewhere in this report. 

Annual appropriated budgets are adopted for the General Fund, Industrial Development Corporation 

and the Economic Development Corporation. A budgetary comparison schedule has been provided for 

the General Fund Industrial Development Corporation and the Economic Development Corporation, to 

demonstrate compliance with these budgets. 

The basic governmental fund financial statements can be found on pages 14-19 of this report. 

Proprietary Funds. Enterprise funds are used to report the same functions presented as business-type 

activities in the government-wide financial statements. The City uses two enterprise funds to account 

for its utility operations, one for water and sewer utilities and the other is for storm water utilities. 

Proprietary funds provide the same type of information as the government-wide financial statements, only 

in more detail. 

The basic proprietary fund financial statements can be found on pages 20-23 of this report. 

Notes to the Financial Statements. The notes provide additional information that is essential to a full 

understanding of the data provided in the government-wide and fund financial statements. The notes to 

the financial statements can be found on pages 24-44 of this report. 

4

Other Information. In addition to the basic financial statements and accompanying notes, this report 

also presents combining statements referred to earlier in connection with non-major governmental funds. 

Combining and individual statements and schedules can be found on pages 53-54 of this report. 

GOVERNMENT-WIDE FINANCIAL ANALYSIS 

As noted earlier, Net Position may serve over time as a useful indicator of a government's financial 

position. In the case of the City, assets and deferred outflows exceeded liabilities and deferred inflows by 

$36,773,822 as of September 30, 2020. 

Net Position 

Governmental Activities Business-type Activities Totals 

2020 2019 2020 2019 2020 2019 

Current and other assets $ 41,375,373 $ 22,563,412 $ 5,838,395 $ 5,137,165 $ 47,213,768 $ 27,700,577 

Capital assets 24,367,697 22,568,000 16,616,674 16,744,592 40,984,371 39,312,592 

Total assets 65,743,070 45,131,412 22,455,069 21,881,757 88,198,139 67,013,169 

Deferred outflows of 

resources 506,790 828,933 581,175 605,448 1,087,965 1,434,381 

Long-term liabilities 30,431,595 23,668,997 15,978,644 16,633,248 46,410,239 40,302,245 

Other liabilities 3,778,375 3,270,848 1,979,329 1,948,055 5,757,704 5,218,903 

Total liabilities 34,209,970 26,939,845 17,957,973 18,581,303 52,167,943 45,521,148 

Deferred inflows of 

resources 295,263 14,735 49,076 640 344,339 15,375 

Net position: 

Net investment 

in capital assets 3,113,430 ( 1,441,691) 

833,237 892,476 3,946,667 ( 549,215) 

Restricted 23,330,619 18,622,126 553,249 - 23,883,868 18,622,126 

Unrestricted 5,300,578 1,825,330 3,642,709 3,012,786 8,943,287 4,838,116 

Total net position $ 31,744,627 $ 19,005,765 $ 5,029,195 $ 3,905,262 $ 36,773,822 $ 22,911,027 

A portion of the City's Net Position, $3,946,667 or 10.7%, reflects its investments in capital assets (e.g., 

land, construction in progress, buildings, improvements, machinery and equipment and infrastructure), 

less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to 

provide service to citizens; consequently, these assets are not available for future spending. Although the 

City's investment in its capital assets is reported net of related debt, it should be noted that the resources 

needed to repay this debt must be provided from other sources, since the capital assets themselves cannot 

be used to liquidate these liabilities. 

An additional portion of the City's Net Position ($23,883,868 or 64.9%) represents resources that are 

subject to external restriction on how they may be used. The remaining balance of unrestricted Net 

Position ($8,943,287 or 24.3%) may be used to meet the government's ongoing obligations to citizens and 

creditors. 

At the end of the current fiscal year, the City is able to report a positive Net Position, both for the 

government as a whole, as well as for its separate categories - governmental activities and business-type 

activities. 

Analysis of the City's Operations: The following table provides a summary of the City's operations for 

the year ended September 30, 2020. On a government-wide basis, governmental activities increased the 

City's Net Position by $12,738,862 and business-type activities increased the City's Net Position by 

$1,123,933. 

5

Changes in Net Position 



Revenues: 

Program revenues: 

Charges for services $ 9,851,729 $ 1,794,898 $ 8,715,261 $ 8,009,066 $ 18,566,990 $ 9,803,964 

Operating grants and 

contributions 1,372,677 575,728 - - 1,372,677 575,728 

Capital grants and 

contributions 3,519,935 - 1,104,544 - 4,624,479 - 

General revenues: 

Property tax 8,000,818 6,917,413 - - 8,000,818 6,917,413 

Sales tax 5,584,807 4,693,893 - - 4,693,893 

Franchise tax 742,438 777,141 - - 742,438 777,141 

Hotel occupancy tax 162,389 195,732 - - 162,389 195,732 

Alcoholic beverage tax 9,878 13,950 - - 9,878 13,950 

Investment earnings 332,046 353,138 8,215 14,194 340,261 367,332 

Miscellaneous 56,382 152,782 - - 56,382 152,782 

Gain on sale of assets - - 108,436 - 108,436 - 

Total revenues 29,633,099 15,474,675 9,936,456 8,023,260 39,569,555 23,497,935 

Expenses: 

General government 1,876,147 1,667,818 - - 1,876,147 1,667,818 

Public safety 8,680,540 9,257,914 - - 8,680,540 9,257,914 

Culture and recreation 848,530 427,254 - - 848,530 427,254 

Public works 2,774,598 1,847,970 - - 2,774,598 1,847,970 

Industrial development 1,104,636 155,888 - - 1,104,636 155,888 

Economic development 58,940 191,916 - - 58,940 191,916 

Interest on long-term debt 1,550,846 454,153 - - 1,550,846 454,153 

Utility - - 8,488,858 7,505,082 8,488,858 7,505,082 

Storm water - - 323,665 333,913 323,665 333,913 

Total expenses 16,894,237 14,002,913 8,812,523 7,838,995 25,706,760 21,841,908 

Change in net position 12,738,862 1,471,762 1,123,933 184,265 13,862,795 1,656,027 

Net position, beginning 19,005,765 17,534,003 3,905,262 3,720,997 22,911,027 21,255,000 

Net position, ending $ 31,744,627 $ 19,005,765 $ 5,029,195 $ 3,905,262 $ 36,773,822 $ 22,911,027 

FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS 

Governmental Funds: The focus of the City's governmental funds is to provide information on near-term 

inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's 

financing requirements. In particular, unreserved fund balance may serve as a useful measure of a 

government's net resources available for spending at the end of the fiscal year. 

As of the end of the current fiscal year, the City's governmental funds reported combined ending fund 

balances of $39,493,996. Approximately 10.5% of this total amount ($4,154,178) is unassigned fund 

balance. The remainder of the fund balance is not available for new spending because it has already been 

restricted or assigned for other purposes. 

The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund 

balance of the General Fund was $4,154,178, while total fund balance reached $4,955,029. As a measure 

of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund 

balance to total fund expenditures. Unassigned fund balance represents 32.2% of total General Fund 

expenditures, while total fund balance represents 38.4% of that same amount. 

The fund balance of the City's General Fund has a net increase of $1,876,247 during the current fiscal year 

adjustment. The increase is attributable to increases in property taxes, sales taxes, and licenses in 

permits. Property taxes and sales tax increased $1.1 million despite economic shutdowns caused by the 

COVID-19 pandemic. Licenses and permits increased $397 thousand due to continued growth in the area. 

Expenditures in the general fund increased $1.3 million, offsetting some of the increases in revenues. 

Increases in expenditures were mainly caused by an increase to Culture and recreation expenses of 

$430,000 due to the addition of the Parks Department including personnel, benefits, general supplies and 

maintenance costs, an increase to Public Works and Engineering expenses in contractual services, and 

increases to capital expenses of $100,000. 

6

The Industrial Development Corporation fund has a total fund balance of $12,424,092. The net increase 

in fund balance during the current year in the Industrial Development Corporation fund was $4,358,333 

and mostly attributable to the sale of land with net gain of $7.5 million, offset by transfers out of $3 

million. 

The Economic Development Corporation fund has a total fund balance of $13,329,480. The net increase in 

fund balance during the current year in the Economic Development Corporation fund was $8,014,612. The 

increase is largely attributable to the issuance of Sales Tax Revenue Bonds, Series 2019A and 2019B, in the 

amounts of $2.9 million and $5.7 million, respectively. 

The Debt Service fund ended the year with total fund balance of $106,055, an increase of $20,414. The 

increase was caused by property tax revenues slightly exceeding debt service requirements for the year. 

The 2019 CO Bond Fund has a total ending fund balance of $4,329,883, a decrease of $1,017,335. The 

decrease was caused by current year capital expenditures of $1.1 million for the improvements to the future 

City municipal building and the construction of a sports complex exceeding investment income earned. 

Proprietary Funds: The City's proprietary fund statements provide the same type of information found 

in the government-wide financial statements, but in more detail. The two enterprise funds were 

previously combined on the financial statements but were separated this year to more closely align with 

internal reporting. 

Unrestricted Net Position of the Utility Fund at the end of the year amounted to $3,168,410. Net Position 

increased by a net amount of $998,621. The increase is caused by capital contributions of $1.1 million, 

which offset an operating loss of $93 thousand. 

Unrestricted Net Position of the Storm Water Fund at the end of the year amounted to $474,299. Net 

Position increased by $125,312. The fund experienced operating income of $31 thousand and nonoperating 

revenues of $95 thousand. 

General Fund Budgetary Highlights - Actual revenues collected exceeded management's original 

estimate of the General Fund's revenues by $1,320,139, mostly caused by larger than expected tax 

revenues and licenses and permits. Revenue budget amendments during the year included an increase 

to fire inspection fee revenue, fire department donations and miscellaneous revenues. Expenditures were 

less than appropriations by $1,671,045 due to reduced personnel and benefits costs due to staff 

turnovers during the year, reduced paper and supplies cost due to implementation of electronic 

processes, reduced training costs related to COVID-19 restrictions, delays to capital spending as well as 

an overall effort by all departments to reduce spending due to the unknowns related to COVID-19. These 

were offset some by an increase to public safety expenses in response to COVID-19. Significant budget 

amendments included increases to public safety vehicle maintenance, supplies, personal protective 

equipment, medical supplies and technology costs. 

CAPITAL ASSETS 

The City's investment in capital assets for its governmental and business-type activities as of September 

30, 2020 amounts to $24,367,697 and $16,616,674, respectively (net of accumulated depreciation). This 

investment in capital assets includes land, construction in progress, buildings, improvements, 

machinery and equipment, and infrastructure. 

Significant additions to capital assets included: 

• Purchases of land for $590 thousand 

• Increases in construction in progress of $1.4 million 

• Infrastructure and improvements of $4.1 million 

7



Land $ 1,882,695 $ 3,470,485 $ 1,241,293 $ 1,241,293 $ 3,123,988 $ 4,711,778 

Construction in progress 2,941,345 1,543,201 404,939 397,344 3,346,284 1,940,545 

Buildings 8,258,310 8,163,080 101,181 101,181 8,359,491 8,264,261 

Improvements 398,358 398,358 29,753,985 28,649,441 30,152,343 29,047,799 

Machinery and equipment 11,036,305 10,943,248 2,156,708 2,141,494 13,193,013 13,084,742 

Infrastructure 16,476,752 13,436,443 - - 16,476,752 13,436,443 

Accumulated depreciation ( 16,626,068) ( 15,386,815) ( 17,041,432) ( 15,786,161) ( 33,667,500) ( 31,172,976) 

Total $ 24,367,697 $ 22,568,000 $ 16,616,674 $ 16,744,592 $ 40,984,371 $ 39,312,592 

Additional information on the City of Red Oak capital assets can be found in note V in the notes to the 

financial statements. 

LONG-TERM DEBT 

At the end of the current fiscal year, the City had long-term debt obligations as follows. The full 

amount of bonded debt is backed by the full faith and credit of the government. 



Certificates of obligation $ 11,696,000 $ 14,149,000 $ 3,146,000 $ 3,407,000 $ 14,842,000 $ 17,556,000 

General obligations 5,335,000 3,770,000 12,400,000 13,925,000 17,735,000 17,695,000 

Revenue bonds 11,110,000 2,937,000 - - 11,110,000 2,937,000 

Tax notes 1,350,000 1,020,000 419,000 73,000 1,769,000 1,093,000 

Premiums 1,026,537 813,628 1,181,654 594,457 2,208,191 1,408,085 

Note payable - 866,062 - - - 866,062 

Compensated absences 754,974 740,824 32,872 18,376 787,846 759,200 

Total $ 31,272,511 $ 24,296,514 $ 17,179,526 $ 18,017,833 $ 48,452,037 $ 42,314,347 

Additional information on the City of Red Oak long term-debt can be found in note VII in the notes to 

the basic financial statements. 

ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES 

In the fiscal year 2021 Budget, General Fund revenues are budgeted to increase by 0.15% from the 

fiscal year 2020 amended budget with ad valorem taxes making up 46% of General Fund 

budgeted revenues. Certified assessed valuations, including estimated values on properties under 

protest, increased 11.6% for the fiscal year 2021 budget from fiscal year 2020's values. The Fiscal 

Year 2021 budget was based on a property tax rate of 0.703645 per $100 of assessed value with 

0.549873 for operations and 0.153772 for interest and principal on outstanding debt. Sales taxes 

are the second highest revenue source making up 17.5% of budgeted revenues and are 

conservatively budgeted to remain flat from fiscal year 2020. 

There was no rate increase budgeted for Water and Sewer in the fiscal year 2021 budget. A decrease 

of 1.16% in Water and Sewer revenues from the fiscal year 2020 amended budget is budgeted in 

fiscal year 2021 due to more conservative projections for water collections and a decrease to the use 

of fund balance budgeted in fiscal year 2021. 

The state and local economy in this area continues to boom. Red Oak is poised to attract new retail and 

industrial development. The City's proximity to the DFW Metroplex and presence on 1-35E, along with the 

availability of quality retail and industrial property locations, ensure that the economic outlook for Red Oak 

will remain good for many years to come. Red Oak still has ample space available for future expansions in 

all sectors of the economy. 

In the Fiscal Year 2021 budget, all funds were presented with balanced budgets. Revenue estimates and 

expenses were conservative and consistent with established policies. As is the norm, the budget for the 

upcoming year sets a foundation for prudent fiscal management of City operations for the coming years and 

ensures that the City will have the tools to achieve the City Council's goals. 

8

BUILDING FOR THE FUTURE 

The City of Red Oak is creating a solid foundation for the future. The foundation is one that is driven by 

community needs and Council's vision of the future. The first step is to identify the goals that can guide 

policy makers and decision makers over the long-term. The City Council has identified critical goals to 

establish that foundation through decisions and the Strategic Planning process. The Strategic Planning Goals 

are outlined below. 

• Enhance and Maintain Public Safety 

• Enhance the Quality of life through Parks and other projects 

• Improve the City's Infrastructure 

• Enhance Economic Development 

• Develop, Retain and Attract Quality Staff 

• Improve long-term Financial Sustainability 

These goals were the foundation for the Fiscal Year 2021 Budget. These goals serve as a guide to future 

budgets and a new era of economic stability. How we spend our money today will impact future citizens of 

Red Oak. 

The City is working to update the master plans to guide the City's long-term growth and financial 

planning. Significant master planning activity includes: 1) Comprehensive land use and thoroughfare plan, 

2) Parks master plan, and 3) Strategic Plan. Utilizing these plans, the City annually updates a rolling fiveyear 

capital improvement schedule. The City also maintains a police and fire department staffing plan as part 

of the strategic plan. These plans were used to determine budget allocations to the various departments and 

activities of the City. 

Distinguished Budget Award 

The City submitted its Annual Budget to the Government Finance Officer Association for the last five 

consecutive years and has received the Distinguished Budget Presentation Award for each year. The award 

is valid for one year only. The City has submitted the Annual Budget for the fiscal year beginning October 1, 

2020 and plans to continue to submit for the award in future years. This represents the continued effort by 

the City Council and staff to prepare a budget document that reflects the transparency and professionalism 

of the City to its Citizens, bondholders, and rating agencies. 

Bond Ratings The City's bond ratings provide evidence of its financial strength. Fitch Ratings has assigned a 

rating of "AA", with a stable outlook, while Standard and Poors (S&P) has assigned a rating of "AA-", with a 

stable outlook. These investment ratings indicate excellent investment quality. More information about 

the City's bond ratings is included in the notes to the basic financial statements. 

RESERVES 

Operating Reserves Another measure of the City's financial strength is the level of its fund balance, or 

operating reserves. Operating reserves are maintained by organizations to ensure services can be delivered 

during economic downturns, to address unforeseen expenditures in the case of an emergency or other event, 

and to take advantage of opportunities that may materialize outside of the budget processes. It is important 

to maintain operating cash reserves so that service delivery will not be negatively impacted if the economy 

takes a downturn, as 64% of the City's revenue is generated by sales taxes and property taxes. Policy 

guidelines adopted by the Council require reserve fund balances to be maintained at 30 days operating 

expenditures. This requirement was met, and exceeded, during Fiscal Year 2020. 

Development Corporation Reserves Operating reserves are maintained by the development corporations at 

25% of sales tax revenue for the year. As sales tax is the only revenue source for the development 

corporations, 25% of revenue is held in reserve as contingency amount should economic downturn occur. 

This requirement was met, and exceeded, during Fiscal Year 2020. 

9

Capital Projects 

Capital project funds were added to the budget to account for the remaining bond proceeds issued in FY 

2019 and carried over to FY 2021 to facilitate the following Strategic Planning Goals; Improve and Expand 

City Offices and other Facilities; Enhance the Quality of life through Parks and other projects; and to Improve 

the City's Infrastructure. The FY 2021 budget includes capital budgeted in governmental capital projects funds 

in the amount of $7,689,591. In addition, the current General Fund budget includes capital for FY 2021 totaling 

$1,696,418, which includes purchases of vehicles, public safety, information technology, public works and 

parks equipment, completion of the sports complex project, improvements to the future municipal building and 

street resurfacing. The Water and Sewer Fund, Storm Water Drainage Fund, and Water and Sewer Capital 

Project Fund budgets include capital costs for the FY 2021 current year totaling $1,740,785. The capital projects 

budgeted in these funds include manhole rehabilitation, replacement of lift station pumps, sub-surface leak 

detection equipment, and various other projects. 

City Employees 

Staffing levels for FY 2021 will increase by 1 positions from the previous fiscal year. With these added 

positions, funding levels will reach 117 full-time and 3 part-time positions. 

Salary Adjustments 

We believe it is important to be able to recruit and retain valuable staff by ensuring competitive 

compensation rates. Uniformed employees will receive step increases October 1 and other staff receive an 

annual 3% increase on April 1 st, contingent upon performance review. 

Benefits 

Health insurance rates for employees and the City decreased overall by just under 10% for the fiscal year 

2021 Budget. The City was able to offer an additional insurance plan to the options for employees. This is a 

high deductible health plan and a corresponding health savings account which the City contributes to on 

behalf of employees. 

REQUESTS FOR INFORMATION 

This financial report is designed to provide a general overview of the City's finances for all those with an 

interest in the government's finances. Questions concerning any of the information provided in this report 

or requests for additional financial information should be addressed to the Office of the City Secretary, P. 0. 

Box 393, Red Oak, Texas 75154. 

10

BASIC FINANCIAL STATEMENTS



STATEMENT OF NET POSITION 

SEPTEMBER 30, 2020 

Primary Government 

Governmental Business-Type 

Activities Activities Total 

ASSETS 

Cash and cash equivalents $ 3,889,719 $ 598,360 $ 4,488,079 

Investments 20,019,042 2,346,500 22,365,542 

Accounts receivable (net) 2,085,551 1,137,785 3,223,336 

Inventory 4,182 23,768 27,950 

Restricted assets: 

Cash 549,916 1,363,261 1,913,177 

Investments 4,302,659 368,721 4,671,380 

Land held for resale 10,524,304 - 10,524,304 

Capital assets, net of 

accumulated depreciation: 

Non-depreciable 4,824,040 1,646,232 6,470,272 

Depreciable 19,543,657 14,970,442 34,514,099 

Total Assets 65,743,070 22,455,069 88,198,139 

DEFERRED OUTFLOWS OF RESOURCES 

Deferred charge on refunding - 510,771 510,771 

Pension related 464,434 67,224 531,658 

OPEB related 42,356 3,180 45,536 

Total Deferred Outflows of Resources 506,790 581,175 1,087,965 

LIABILITIES 

Accounts payable 1,124,384 112,593 1,236,977 

Accrued liabilities 471,076 68,751 539,827 

Accrued interest payable 156,371 60,898 217,269 

Customer deposits payable 3,800 338,869 342,669 

Noncurrent liabilities: 

Due within one year 

Long-term debt 2,022,744 1,398,218 3,420,962 

Due in more than one year 

Long-term debt 29,249,767 15,781,308 45,031,075 

Net pension liability 998,157 166,668 1,164,825 

Total OPEB liability 183,671 30,668 214,339 

Total Liabilities 34,209,970 17,957,973 52,167,943 

DEFERRED INFLOWS OF RESOURCES 


OPEB related 11,497 1,694 13,191 

Total Deferred Inflows of Resources 295,263 49,076 344,339 

NET POSITION 

Net investment in capital assets 3,113,430 833,237 3,946,667 

Restricted for: 

Court security 34,519 - 34,519 

Court technology 3,293 - 3,293 

Public safety 73,534 - 73,534 

Culture and recreation 395,547 - 395,547 

Industrial development 12,424,092 - 12,424,092 

Economic development 10,143,107 - 10,143,107 

Capital projects 256,527 553,249 809,776 

Unrestricted 5,300,578 3,642,709 8,943,287 

Total Net Position $ 31,744,627 $ 5,029,195 $ 36,773,822 

The notes to the financial statements are an 

integral part of these financial statements. 11


STATEMENT OF ACTIVITIES 

FOR THE YEAR ENDED SEPTEMBER 30, 2020 

Program Revenues 

Operating 

Charges for 

Grants and 

Functions/Programs Expenses Services Contributions 

Primary government: 

Governmental activities: 

General government $ 1,876,147 $ - $ 

- 

Public safety 8,680,540 410,859 1,372,677 

Culture and recreation 848,530 1,105,967 - 

Public works 2,774,598 745,400 - 

Industrial development 1,104,636 7,589,503 - 

Economic development 58,940 - - 

Interest and fiscal charges 1,550,846 - - 

Total governmental activities 16,894,237 9,851,729 1,372,677 

Business-type activities: 

Utility 8,488,858 8,376,087 - 

Storm water 323,665 339,174 - 

Total business-type activities 8,812,523 8,715,261 - 

Total primary government $ 25,706,760 $ 18,566,990 $ 1,372,677 

General revenues: 

Property taxes 

Sales taxes 

Franchise tax 

Hotel occupancy tax 

Alcoholic beverage tax 

Investment earnings 

Gain on sale of capital assets 

Miscellaneous 

Total general revenues and transfers 

Change in net position 

Net position - beginning 

Net position - ending 



Revenues 

Net (Expense) Revenue and Changes in Net Position 

Capital 

Grants and Governmental 

Primary Government 

Business-type 

Contributions Activities Activities Total 

$ - $( 1,876,147) $ - $( 1,876,147) 

- ( 6,897,004) 

- ( 6,897,004) 

335,260 592,697 - 592,697 

3,184,675 1,155,477 - 1,155,477 

- 6,484,867 - 6,484,867 

- ( 58,940) 

- ( 

58,940) 

- ( 1,550,846) 

- ( 1,550,846) 

3,519,935 ( 2,149,896) 

- ( 2,149,896) 

1,104,544 - 991,773 991,773 

- - 15,509 15,509 

1,104,544 - 1,007,282 1,007,282 

$ 4,624,479 ( 2,149,896) 

1,007,282 ( 1,142,614) 

8,000,818 - 8,000,818 

5,584,807 - 5,584,807 

742,438 - 742,438 

162,389 - 162,389 

9,878 - 9,878 

332,046 8,215 340,261 

- 108,436 108,436 

56,382 - 56,382 

14,888,758 116,651 15,005,409 

12,738,862 1,123,933 13,862,795 

19,005,765 3,905,262 22,911,027 

$ 31,744,627 $ 5,029,195 $ 36,773,822 

13


BALANCE SHEET 

GOVERNMENTAL FUNDS 


Special Revenue 

Industrial 

Economic 

General Development Development 

Fund Corporation Corporation 

ASSETS 

Cash and cash equivalents $ 371,632 $ 145,501 $ 368,447 

Investments 3,749,816 8,467,176 1,692,003 

Accounts receivable (net) 1,385,850 439,243 232,342 

Due from other funds - - 287,844 

Inventory 4,182 - - 

Land held for resale - 3,001,084 7,523,220 


Cash 92,941 411,059 45,916 

Investments 1,040,286 76,000 3,186,373 

Total assets $ 6,644,707 $ 12,540,063 $ 13,336,145 

LIABILITIES 

Accounts payable 560,954 105,371 6,665 

Accrued liabilities 458,073 10,100 - 

Due to other funds 411,951 - - 

Customer Deposits - - - 

Total liabilities 1,430,978 115,471 6,665 


Unavailable revenue - Property taxes 216,907 500 - 

Unavailable revenue - Fines & fees 41,793 - - 

Total inflows of resources 258,700 500 - 

FUND BALANCES 

Nonspendable: 

Inventory 4,182 - - 

Restricted: 

Debt service - - - 

Culture and recreation - - - 

Industrial development - 12,424,092 - 

Economic development - - 13,329,480 

Capital projects 256,527 - - 

Court security 34,519 - - 

Court technology 3,293 - - 

Other public safety 73,534 - - 

Assigned: 

Subsequent year's budget 428,796 - - 

Unassigned 4,154,178 - - 

Total fund balances 4,955,029 12,424,092 13,329,480 

Total liabilities, deferred inflows 

and fund balances $ 6,644,707 $ 12,540,063 $ 13,336,145 



Capital 

Projects 

Other 

Total 

Debt 2019 CO Governmental Governmental 

Service Bond Fund Funds Funds 

$ 100,856 $ - $ 2,903,283 $ 3,889,719 

- 5,118,854 991,193 20,019,042 

28,116 - - 2,085,551 

- - 669,146 956,990 

- - - 4,182 

- - - 10,524,304 

- - - 549,916 

- - - 4,302,659 

$ 128,972 $ 5,118,854 $ 4,563,622 $ 42,332,363 

- 408,737 42,657 1,124,384 

- - 2,903 471,076 

- 380,234 164,805 956,990 

- - 3,800 3,800 

- 788,971 214,165 2,556,250 

22,917 - - 240,324 

- - - 41,793 

22,917 - - 282,117 

- - - 4,182 

106,055 - - 106,055 

- - 395,547 395,547 

- - - 12,424,092 

- - - 13,329,480 

- 4,329,883 3,953,910 8,540,320 

- - - 34,519 

- - - 3,293 

- - - 73,534 

- - - 428,796 

- - - 4,154,178 

106,055 4,329,883 4,349,457 39,493,996 

$ 128,972 $ 5,118,854 $ 4,563,622 $ 42,332,363 

15



RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE 



Total Fund Balances - Governmental Funds $ 39,493,996 

Capital assets, net of accumulated depreciation, used in governmental activities are 

not financial resources and, therefore, are not reported in the funds. 

Capital assets 40,993,765 

Accumulated depreciation ( 16,626,068) 

Long-term liabilities, including bonds payable, that are not due and payable in the 

current period, and, therefore are not reported as liabilities in the funds. 

Revenue bonds ( 11,110,000) 

General obligation bonds ( 5,335,000) 

Certificates of obligation ( 11,696,000) 

Tax notes ( 1,350,000) 

Accrued interest payable on long-term debt ( 156,371) 

Compensated absences ( 754,974) 

Net pension liability ( 998,157) 

Total OPEB liability ( 183,671) 

Other long-term assets are not available to pay for current period expenditures and 

therefore, are deferred in the governmental funds. 282,117 

Governmental funds report the effect of premiums, discounts, and refundings and 

similar items when debt is first issued, whereas these amounts are deferred and 

amortized in the statement of activities. 

Premium on bonds ( 1,026,537) 

Differences between expected and actual experiences, assumption changes and 

netdifferences between projected and actual earnings and contributions subsequent 

to the measurement date for the postretirement benefits (pension and OPEB) are 

recognized asdeferred outflows of resources and deferred inflows of resources on 

the statement of netposition. 

Deferred outflows - pension related 464,434 

Deferred outflows - OPEB related 42,356 

Deferred inflows - pension related ( 283,766) 

Deferred inflows - OPEB related ( 11,497) 

Net Position of Governmental Activities $ 31,744,627 




STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 



Special Revenue 

Industrial 

Economic 

General Development Development 

Fund Corporation Corporation 

REVENUES 

Property taxes $ 6,060,672 $ - $ - 

Sales taxes 2,802,285 1,391,261 1,391,261 

Franchise tax 742,438 - - 

Hotel occupancy tax - - - 

Alcoholic beverage tax 9,878 - - 

Intergovernmental 1,372,133 - - 

Contributions 144,367 - - 

Licenses and permits 1,068,879 - - 

Fines and forfeitures 379,145 - - 

Charges for services 550,359 7,589,503 - 

Investment earnings 77,730 112,672 63,162 

Miscellaneous 43,819 - 10,370 

Total revenues 13,251,705 9,093,436 1,464,793 

EXPENDITURES 

Current: 

General government 1,610,525 - - 

Public safety 8,070,342 - - 

Culture and recreation 704,904 - - 

Public works 1,971,561 - - 

Industrial development - 1,104,636 - 

Economic development - - 58,940 

Capital outlay 523,251 109,138 470,332 

Debt service: 

Principal - 385,000 981,062 

Interest and fiscal charges 22,100 99,504 191,627 

Bond issuance costs - - 255,321 

Total expenditures 12,902,683 1,698,278 1,957,282 

Excess (deficiency) of revenues 

over (under) expenditures 349,022 7,395,158 ( 492,489) 

OTHER FINANCING SOURCES (USES) 

Issuance of bonds 773,000 - 8,670,000 

Issuance of refunding bonds - - 

Premium on issuance of bonds - - 33,386 

Payment to escrow agent - current refunding - - - 

Transfers in 754,225 - - 

Transfers out - ( 3,036,825) ( 196,285) 

Total other financing sources (uses) 1,527,225 ( 3,036,825) 8,507,101 

CHANGE IN FUND BALANCE 1,876,247 4,358,333 8,014,612 

FUND BALANCE - BEGINNING 3,078,782 5,885,528 5,314,868 

PRIOR PERIOD ADJUSTMENT - 2,180,231 - 

FUND BALANCE - BEGINNING, RESTATED 3,078,782 8,065,759 5,314,868 

FUND BALANCE - ENDING $ 4,955,029 $ 12,424,092 $ 13,329,480 



Capital 

Projects 

Other 

Total 

Debt 2019 CO Governmental Governmental 

Service Bond Fund Funds Funds 

$ 1,844,434 $ - $ - $ 7,905,106 

- - - 5,584,807 

- - - 742,438 

- - 162,389 162,389 

- - - 9,878 

- - - 1,372,133 

- - - 144,367 

- - 208,241 1,277,120 

- - - 379,145 

- - 14,353 8,154,215 

- 63,554 14,928 332,046 

- - 2,193 56,382 

1,844,434 63,554 402,104 26,120,026 

- - - 1,610,525 

- - - 8,070,342 

- - 95,526 800,430 

- - 92,163 2,063,724 

- - - 1,104,636 

- - - 58,940 

- 1,080,889 41,562 2,225,172 

1,168,000 - - 2,534,062 

617,900 - - 931,131 

43,847 - - 299,168 

1,829,747 1,080,889 229,251 19,698,130 

14,687 ( 1,017,335) 

172,853 6,421,896 

- - - 9,443,000 

1,830,000 - - 1,830,000 

216,945 - - 250,331 

( 2,041,218) 

- - ( 2,041,218) 

- - 2,500,000 3,254,225 

- - ( 21,115) ( 3,254,225) 

5,727 - 2,478,885 9,482,113 

20,414 ( 1,017,335) 2,651,738 15,904,009 

85,641 5,347,218 1,697,719 21,409,756 

- - - 2,180,231 

85,641 5,347,218 1,697,719 23,589,987 

$ 106,055 $ 4,329,883 $ 4,349,457 $ 39,493,996 

18


RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES 

IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 


Total net change in Fund Balances - Governmental Funds $ 15,904,009 

Current year capital outlays are expenditures in the fund financial statements, but 

they should be shown as increases in capital assets in the government-wide 

financial statements. The net effect of removing the current year capital outlays is 

to increase net position. 2,294,539 

Depreciation is not recognized as an expense in governmental funds since it does 

not require the use of current financial resources. The net effect of the current 

year's depreciation is to decrease net position. ( 1,454,041) 

The net effect of miscellaneous transactions involving capital assets (i.e., sales, 

trade-ins, and donations) is to increase net position. 

Donation of capital assets 3,375,568 

Sales of capital assets ( 236,138) 

The issuance of long-term debt (e.g. bonds, loans, leases) provides current 

financial resources to governmental funds, while the repayment of the principal of 

long-term debt consumes the current financial resources of governmental funds. 

Neither transaction, however, has any effect on the net position. 

Issuance of revenue bonds ( 8,670,000) 

Issuance of tax notes ( 773,000) 

Premium on issuance ( 33,386) 

Refunding bonds ( 56,945) 

Principal paid on bonds 2,534,062 

Revenues and expenditures in the statement of activities that do not provide or use 

current financial resources are not reported as revenues and expenses in the 

governmental funds. 

Fines and fees 41,793 

Property taxes 95,712 

Some expenses reported in the statement of activities do not require the use of 

current financial resources and, therefore, are not reported as expenditures in the 

governmental funds. 

Accrued interest on long-term debt ( 109,238) 

Amortization of deferred loss on refunding ( 160,091) 

Compensated absences ( 14,150) 

Changes in pension liabilities and related deferred outflows/inflows 7,476 

Changes in OPEB liabilities and related deferred outflows/inflows ( 7,308) 

Total change in net position of Governmental Activities $ 12,738,862 





PROPRIETARY FUNDS 


Business-type Activities - Enterprise 

Total 

Utility Storm Water Proprietary 

Fund Fund Funds 

ASSETS 

Current assets: 

Cash and cash equivalents $ 114,207 $ 484,153 $ 598,360 

Investments 2,346,500 - 2,346,500 

Accounts receivable (net) 1,110,603 27,182 1,137,785 

Inventory 21,589 2,179 23,768 


Cash 1,348,800 14,461 1,363,261 

Investments 100,301 268,420 368,721 

Total current assets 5,042,000 796,395 5,838,395 

Noncurrent assets: 

Capital assets: 

Nondepreciable 1,646,232 - 1,646,232 

Depreciable, net 14,929,884 40,558 14,970,442 

Total noncurrent assets 16,576,116 40,558 16,616,674 

Total assets 21,618,116 836,953 22,455,069 

DEFERRED OUTFLOWS OF RESOURCES 


OPEB related 3,013 167 3,180 

Deferred charge on refunding 510,771 - 510,771 

Total deferred outflows of resources 573,508 7,667 581,175 

LIABILITIES 

Current liabilities: 

Accounts payable 111,474 1,119 112,593 

Accrued liabilities 60,737 8,014 68,751 

Customer deposits payable 338,869 - 338,869 

Accrued interest payable 60,193 705 60,898 

Due within one year: 

Long-term debt 1,312,350 85,868 1,398,218 

Total current liabilities 1,883,623 95,706 1,979,329 

Noncurrent liabilities: 

Long-term debt 15,360,540 420,768 15,781,308 

Net pension liability 146,658 20,010 166,668 

Net OPEB liability 26,986 3,682 30,668 

Total noncurrent liabilities 15,534,184 444,460 15,978,644 

Total liabilities 17,417,807 540,166 17,957,973 



OPEB related 1,503 191 1,694 

Total deferred inflows of resources 43,196 5,880 49,076 

NET POSITION 

Net investment in capital assets 1,008,962 ( 175,725) 

833,237 

Restricted for capital projects 553,249 - 553,249 

Unrestricted 3,168,410 474,299 3,642,709 

Total net position $ 4,730,621 $ 298,574 $ 5,029,195 




STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION 




Total 



OPERATING REVENUES 

Charges for services: 

Water charges $ 3,113,929 $ 339,174 $ 3,453,103 

Sewer charges 4,653,364 - 4,653,364 

Tap fees and reconnects 280,225 - 280,225 

Penalties 128,506 - 128,506 

Miscellaneous 200,063 - 200,063 

Total revenues 8,376,087 339,174 8,715,261 

OPERATING EXPENSES 

Personnel services 1,244,551 174,736 1,419,287 

Insurance 199,519 39,900 239,419 

Materials and supplies 359,374 11,422 370,796 

Contractual services 4,338,392 9,164 4,347,556 

Maintenance 85,366 8,304 93,670 

Other operating costs 98,945 - 98,945 

Depreciation 1,421,186 65,116 1,486,302 

Total expenses 7,747,333 308,642 8,055,975 

Operating income (loss) 628,754 30,532 659,286 

NON-OPERATING REVENUES (EXPENSES) 

Interest earnings 6,848 1,367 8,215 

Interest and fiscal charges ( 556,275) ( 15,023) ( 571,298) 

Gain on sale of capital assets - 108,436 108,436 

Bond issuance costs ( 185,250) 

- ( 185,250) 

Total non-operating revenues (expenses) ( 734,677) 

94,780 ( 639,897) 

Income (loss) before capital contributions ( 105,923) 

125,312 19,389 

Capital contributions 1,104,544 - 1,104,544 

CHANGE IN NET POSITION 998,621 125,312 1,123,933 

NET POSITION - BEGINNING 3,732,000 173,262 3,905,262 

NET POSITION - END OF YEAR $ 4,730,621 $ 298,574 $ 5,029,195 




STATEMENT OF CASH FLOWS 




Total 



CASH FLOWS FROM OPERATING ACTIVITIES 

Receipts from customers and users $ 8,451,574 $ 322,328 $ 8,773,902 

Payments to suppliers ( 4,852,058) ( 27,390) ( 4,879,448) 

Payments to employees ( 1,361,278) ( 180,622) ( 1,541,900) 

Net cash provided (used) by operating 

activities 2,238,238 114,316 2,352,554 

CASH FLOWS FROM NONCAPITAL FINANCING 

ACTIVITIES 

Payments from (to) other funds 30,428 ( 30,428) 

- 

Net cash provided (used) by noncapital 

financing activities 30,428 ( 30,428) 

- 

CASH FLOWS FROM CAPITAL AND RELATED 

FINANCING ACTIVITIES 

Principal paid on bonds ( 1,233,000) ( 83,000) ( 1,316,000) 

Interest and fiscal charges paid on bonds ( 95,179) ( 18,863) ( 114,042) 

Disposition of capital assets - 160,000 160,000 

Acquisition and construction of capital assets ( 305,404) 

- ( 305,404) 

Net cash provided (used) by capital and 

related financing activities ( 1,633,583) 58,137 ( 1,575,446) 

CASH FLOWS FROM INVESTING ACTIVITIES 

Interest on investments 5,180 1,367 6,547 

Purchase of investments ( 2,100,201) 

- ( 2,100,201) 

Net cash provided (used) by investing 

activities ( 2,095,021) 

1,367 ( 2,093,654) 

NET INCREASE (DECREASE) IN CASH 

AND CASH EQUIVALENTS ( 1,459,938) 143,392 ( 1,316,546) 

CASH AND CASH EQUIVALENTS, BEGINNING 2,922,945 355,222 3,278,167 

CASH AND CASH EQUIVALENTS, ENDING $ 1,463,007 $ 498,614 $ 1,961,621 




STATEMENT OF CASH FLOWS 



RECONCILIATION OF OPERATING INCOME 

(LOSS) TO NET CASH PROVIDED (USED) BY 

OPERATING ACTIVITIES 

Operating income 628,754 


Total 



$ $ 30,532 $ 659,286 

Adjustments to reconcile operating income to net cash 

provided (used) by operating activities: 

Depreciation and amortization 1,421,186 65,116 1,486,302 

(Increase) decrease in: 

Accounts receivable 24,768 ( 9,179) 15,589 

Inventory 9,344 ( 289) 

9,055 

Deferred outflows of resources ( 19,108) ( 7,667) ( 26,775) 

Increase (decrease) in: 

Accounts payable ( 40,062) ( 6,514) ( 46,576) 

Other liabilities 60,737 8,014 68,751 

Customer deposits 50,719 - 50,719 

Compensated absences 9,765 4,731 14,496 

Developer deposits ( 30,000) 

- ( 30,000) 

Deferred inflows of resources 42,556 5,880 48,436 

Net pension liability 60,489 20,010 80,499 

Net OPEB liability 19,090 3,682 22,772 

Total adjustments 1,609,484 83,784 1,693,268 

Net cash provided (used) by operating activities $ 2,238,238 $ 114,316 $ 2,352,554 

SCHEDULE OF NON-CASH CAPITAL AND 

RELATED FINANCING ACTIVITIES 

Contributions of capital assets $ 1,104,544 $ - $ 1,104,544 




NOTES TO THE FINANCIAL STATEMENTS 


I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. Reporting Entity 

The City of Red Oak, Texas (the "City") was incorporated in 1949, and operates under a Council- 

Manager form of government. The accompanying financial statements present the government and 

its component units, entities for which the government is considered to be financially accountable. 

Blended Component Units 

The Red Oak Economic Development Corporation, Inc. (Economic Development Corporation) is 

responsible for collecting and disbursing the one-fourth percent sales tax to be used for economic 

development within and for the benefit of the City. The City Council is the governing board for the 

Corporation. The members of the Corporation's board act as an advisory board and are appointed 

by the City. The City holds operational responsibility for the Corporation. The Corporation is 

presented as a governmental fund type and has a September 30 year-end. 

The Red Oak Industrial Development Corporation, Inc. (Industrial Development Corporation) is 

responsible for collecting and disbursing the one-fourth percent sales tax to be used for economic 

development within and for the benefit of the City. The City Council is the governing board for the 

Corporation. The members of the Corporation's board act as an advisory board and are appointed 

by the City. The City holds operational responsibility for the Corporation. The Corporation is 

presented as a governmental fund type and has a September 30 year-end. 

Separate financial statements for the component units are not issued. 

B. Government-wide and Fund Financial Statements 

The government-wide financial statements (i.e., the statement of Net Position and the statement of 

changes in Net Position) report information on all of the primary government and its blended 

component units. Governmental activities, which normally are supported by taxes and 

intergovernmental revenues, are reported separately from business-type activities, which rely to a 

significant extent on fees and charges for support. 

The statement of activities demonstrates the degree to which the direct expenses of a given function 

or segment is offset by program revenues. Direct expenses are those that are clearly identifiable 

with a specific function or segment. Program revenues include 1) charges to customers or applicants 

who purchase, use, or directly benefit from goods, services, or privileges provided by a given 

function or segment and 2) grants and contributions that are restricted to meeting the operational 

or capital requirements of a particular function or segment. Taxes and other items not properly 

included among program revenues are reported instead as general revenues. 

Separate financial statements are provided for governmental funds and proprietary funds. Major 

individual governmental funds and major individual enterprise funds are reported as separate 

columns in the fund financial statement. 

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation 

The government-wide financial statements are reported using the economic resources measurement 

focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues 

are recorded when earned and expenses are recorded when a liability is incurred, regardless of the 

timing of related cash flows. Property taxes are recognized as revenues in the year for which they 

are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements 

imposed by the provider have been met. 

24

Governmental fund financial statements are reported using the current financial resources 

measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon 

as they are both measurable and available. Revenues are considered to be available when they are 

collectible within the current period or soon enough thereafter to pay liabilities of the current period. 

For this purpose, the government considers revenues to be available if they are collected within 

sixty days of the end of the current fiscal period. Expenditures generally are recorded when a liability 

is incurred, as under accrual accounting. However, inventories of materials and supplies are 

considered expenditures when used and debt service expenditures, as well as expenditures related 

to accumulated unpaid sick pay, are recorded only when payment is due. 

Property and taxpayer-assessed taxes estimated to be collectible within sixty days after balance 

sheet date, interest, and expenditure driven grants are all considered to be susceptible to accrual 

and so have been recognized as revenues of the current fiscal period. All other revenue items are 

considered to be measurable and available only when cash is received by the government. 

The City reports the following major governmental funds: 

The General Fund is the City’s primary operating fund. It accounts for all financial resources of 

the general government, except those required to be accounted for in another fund. 

The Industrial Development Corporation Fund is responsible for collecting and disbursing 

the one-fourth cent sales tax to be used for industrial development within the City. 

The Economic Development Corporation Fund is responsible for collecting and disbursing 

the one-fourth cent sales tax to be used for economic development within the City. 

The Debt Service Fund accounts for the property tax revenues received which were specifically 

levied for the purpose of covering debt service requirements. 

The 2019 Certificates of Obligation Bond Fund is used to account for the proceeds from the 

bonds issued for major capital projects. 

The City reports the following major proprietary funds: 

The Utility Fund accounts for the activities of the sewage treatment plant, sewage pumping 

stations and collection systems, and the water distribution system. 

The Storm Water Drainage Fund accounts for the City's storm water revenues and related 

projects. 

As a general rule, the effect of interfund activity has been eliminated from the government-wide 

financial statements. Exceptions to this general rule are charges between the City's utility function 

and various other functions of the City. Elimination of these charges would distort the direct costs 

and program revenues reported for the various functions concerned. 

Amounts reported as program revenues include 1) charges to customers or applicants for goods, 

services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and 

contributions. Internally dedicated resources are reported as general revenues rather than as 

program revenues. Likewise, general revenues include all taxes. 

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating 

revenues and expenses generally result from providing services and producing and delivering goods 

in connection with a proprietary fund's principal ongoing operations. The principal operating 

revenues of the utility fund are charges to customers for sales and services and the portion of tap 

fees intended to recover the cost of connecting new customers to the system. Operating expenses 

for the utility fund include the cost of sales and services, administrative expenses, and depreciation 

on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating 

revenues and expenses. 

When both restricted and unrestricted resources are available for use, it is the government's policy 

to use restricted resources first, then unrestricted resources, as they are needed. 

25

D. Cash, Deposits and Investments 

The City's cash and cash equivalents are considered to be cash on hand, demand deposits and shortterm 

investments with original maturities of three months or less from the date of acquisition. 

The Economic Development Corporation and Industrial Development Corporation are authorized by 

their governing boards to invest in obligations of the U.S. Treasury and local government investment 

pools (TexPool and LOGIC). 

Investments in government pools are recorded at amortized cost. All other investments are recorded 

at fair value. Fair value is the amount at which a financial instrument could be exchanged in a 

current transaction between willing parties. 

E. Receivables and Payables 

Activity between funds that are representative of lending/borrowing arrangements outstanding at 

the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion 

of inter-fund loans) or "advances to/from other funds" (i.e., the non-current portion of inter-fund 

loans). All other outstanding balances between funds are reported as "due to/from other funds." 

Any residual balances outstanding between the governmental activities and business-type activities 

are reported in the government-wide financial statements as "internal balances." 

Advances between funds, as reported in the fund financial statements, are offset by a fund balance 

reserve account in applicable governmental funds to indicate that they are not available for 

appropriation and are not expendable available financial resources. 

All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade 

accounts receivables in excess of sixty days comprise the trade accounts receivable allowance for 

uncollectibles. The property tax receivable allowance is based on historical collection experience. 

The City's property tax is levied each October 1 on the assessed value listed as of the prior January 

1 for all real and personal property. Appraised values are established by the Ellis Central Appraisal 

District as market value and assessed at 100% of appraised value. Property taxes attach as an 

enforceable lien on property as of January 1. The Ellis County Tax Assessor/Collector bills and 

collects the City's property taxes, which are due October 1. Full payment can be made prior to the 

next January 31 to avoid penalty and interest charges. Overtime, substantially all property taxes 

are collected. 

F. Inventories and Prepaid Items 

All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories are recorded 

as expenditures when consumed rather than when purchased. 

Certain costs applicable to future accounting periods are recorded as prepaid items. The cost of 

prepaid items is recorded as expenditures/expenses when consumed rather than when purchased. 

G. Restricted Assets 

Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside 

for their repayment, are classified as restricted assets on the statement of Net Position because they 

are maintained in separate bank accounts and their use is limited by applicable bond covenants. 

The "revenue bond construction" account is used to report those proceeds of bond issuances that 

are restricted for use in construction. The "interest and sinking" account is used to segregate 

resources accumulated for debt service payments over the next twelve months. 

H. Capital Assets 

Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, 

bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems), are 

reported in the applicable governmental or business-type activities columns in the government-wide 

financial statements. Capital assets are defined by the City as assets with an initial, individual cost 

of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded 

at historical cost or estimated historical cost If purchased or constructed. Donated capital assets are 

recorded at estimated acquisition value. 

26

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. 

Major outlays for capital assets and improvements are capitalized as projects are constructed. 

Interest incurred during the construction phase of capital assets of business-type activities is 

included as part of the capitalized value of the assets constructed, net of interest earned on the 

invested proceeds over the same period. 

Property, plant, equipment and infrastructure are depreciated using the straight-line method over 

the following estimated useful lives: 

Asset Type 

Number of Years 

I. Compensated Absences 

Buildings 10-30 

Improvements 10-50 

Machinery and equipment 5-15 

Infrastructure 10-40 

It is the government's policy to permit employees to accumulate earned but unused vacation pay 

benefits. All vacation pay is accrued when incurred in the government-wide and proprietary fund 

financial statements. A liability for these amounts is reported in governmental funds only if they 

have matured, for example, as a result of employee resignations and retirements. Vacation leave 

shall be taken during the year following its accumulation. 

J. Deferred Outflows/Inflows of Resources 

In addition to assets, the statement of net position and/or balance sheet will sometimes report a 

separate section for deferred outflows of resources. This separate financial statement element, 

deferred outflows of resources, represents a consumption of net position that applies to a future 

period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. 

The City has the following items that qualify for reporting in this category. 

• Deferred charges on refunding – A deferred charge on refunding results from the difference 

in the carrying value of refunded debt and its reacquisition price. This amount is deferred 

and amortized over the shorter of the life of the refunded or refunding debt. 

• Pension and OPEB contributions after measurement date – These contributions are deferred 

and recognized in the following fiscal year. 

• Changes in actuarial assumptions – These changes are deferred and recognized over the 

estimated average remaining lives of all members determined as of the measurement date. 

• Difference in projected and actual earnings on pension assets – This difference is deferred 

and amortized over a closed five-year period. 

In addition to liabilities, the statement of net position and/or balance sheet will sometimes report a 

separate section for deferred inflows of resources. This separate financial statement element, 

deferred inflows of resources, represents an acquisition of net position that applies to a future 

period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City 

has the following items that qualify for reporting in this category. 

• Unavailable revenue is reported only in the governmental funds balance sheet – These 

amounts are deferred and recognized as an inflow of resources in the period that the 

amounts become available. 

• Difference in expected and actual pension and OPEB experience – This difference is deferred 

and recognized over the estimated average remaining lives of all members determined as 

of the measurement date. 

• Changes in actuarial assumptions – These changes are deferred and recognized over the 

estimated average remaining lives of all members determined as of the measurement date. 

27

K. Long-Term Obligations 

In the government-wide financial statements, and proprietary fund types in the fund financial 

statements, long-term debt and other long-term obligations are reported as liabilities in the 

applicable governmental activities, business-type activities, or proprietary fund type statement of 

Net Position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized 

over the life of the bonds using the effective interest method. Bonds payable are reported net of the 

applicable bond premium or discount. Bond issuance costs are reported as deferred charges and 

amortized over the term of the related debt. 

In the fund financial statements, governmental fund types recognize bond premiums and discounts, 

as well as bond issuance costs, during the current period. The face amount of debt issued is reported 

as other financing sources. Premiums received on debt issuances are reported as other financing 

sources while discounts on debt issuances are reported as other financing uses. Issuance costs, 

whether or not withheld from the actual debt proceeds received, are reported as debt service 

expenditures. 

L. Pensions 

For purposes of measuring the net pension liability, pension related deferred outflows and inflows 

of resources, and pension expense, City specific information about its Fiduciary Net Position in the 

Texas Municipal Retirement System (TMRS) and additions to/deductions from TMRS’s Fiduciary Net 

Position have been determined on the same basis as they are reported by TMRS. For this purpose, 

plan contributions are recognized in the period that compensation is reported for the employee, 

which is when contributions are legally due. Benefit payments and refunds are recognized when due 

and payable in accordance with the benefit terms. Investments are reported at fair value. 

M. Other Post-Employment Benefits 

For purposes of measuring the total Texas Municipal Retirement System Supplemental Death Benefit 

Fund (TMRS SDBF) OPEB liability, related deferred outflows and inflows of resources, and expense, 

City-specific information about its total TMRS SDBF liability and additions to/deductions from the 

City’s total TMRS SDBF liability have been determined on the same basis as they are reported by 

TMRS. The TMRS SDBF expense and deferred (inflows)/outflows of resources related to TMRS SDBF, 

primarily result from changes in the components of the total TMRS SDBF liability. Most changes in 

the total TMRS SDBF liability will be included in TMRS SDBF expense in the period of the change. 

For example, changes in the total TMRS SDBF liability resulting from current period service cost, 

interest on the TOL, and changes of benefit terms are required to be included in TMRS SDBF expense 

immediately. Changes in the total TMRS SDBF liability that have not been included in TMRS SDBF 

expense are required to be reported as deferred outflows of resources or deferred inflows of 

resources related to TMRS SDBF. 

N. Net Position and Fund Balance 

In the government-wide and proprietary fund financial statements, the City reports restrictions of 

net position for amounts that are not available for appropriation or are legally restricted by outside 

parties for use for a specific purpose. Net investment in capital assets represents the City’s 

investment in the book value of capital assets, less any unspent proceeds from capital-related debt 

issuances. Unrestricted net position consists of net position that does not meet the definition of 

restricted or net investment in capital assets. 

In the fund financial statements, governmental funds report fund balance categorized as follows: 

Nonspendable fund balance includes amounts that cannot be spent because they are either 

not in spendable form, or, for legal or contractual reasons, must be kept intact. This classification 

includes prepaid items. 

Restricted fund balance includes fund balance amounts that are constrained for specific 

purposes which are externally imposed by providers, such as creditors or amounts restricted 

due to constitutional provisions or enabling legislation. This classification includes the child 

nutrition program, retirement of long-term debt, construction programs and other federal and 

state grants. 

28

Committed fund balance includes fund balance amounts that are constrained for specific 

purposes that are internally imposed by the City through formal action of the highest level of 

decision making authority. Committed fund balance is reported pursuant to resolution passed 

by the City Council. This classification includes campus activity funds, local special revenue funds 

and potential litigation, claims and judgments. 

Assigned fund balance includes fund balance amounts that are self-imposed by the City to be 

used for a particular purpose. Fund balance can be assigned by the City Council, the City 

Manager, or the Finance Director. This classification includes insurance deductibles, 

encumbrances, program start-up costs, projected budget deficit for subsequent years and other 

legal uses. 

Unassigned fund balance includes residual positive fund balance within the General Fund which 

has not been classified within the other above mentioned categories. Unassigned fund balance 

may also include negative balances for any governmental fund if expenditures exceed amounts 

restricted, committed, or assigned for those specific purposes. 

Net Position Flow Assumption 

Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted 

bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as 

restricted – net position and unrestricted – net position in the government-wide and proprietary 

fund financial statements, a flow assumption must be made about the order in which the resources 

are considered to be applied. It is the City’s policy to consider restricted – net position to have been 

depleted before unrestricted – net position is applied. 

Fund Balance Flow Assumption 

Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted 

resources (the total of committed, assigned, and unassigned fund balance). In order to calculate 

the amounts to report as restricted, committed, assigned, and unassigned fund balance in the 

governmental fund financial statements a flow assumption must be made about the order in which 

the resources are considered to be applied. It is the City’s policy to consider restricted fund balance 

to have been depleted before using any of the components of unrestricted fund balance. Further, 

when the components of unrestricted fund balance can be used for the same purpose, committed 

fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied 

last. 

II. 

STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY 

Budgetary Control 

Annual budgets are adopted on a basis consistent with generally accepted accounting principles for 

all governmental funds. The annual budget for the utility fund is prepared on the budgetary basis of 

accounting. All annual appropriations lapse at fiscal year-end. The legal level of budgetary control 

is the fund level. 

III. 

DEPOSITS AND INVESTMENTS 

Statutes authorize the City to invest in obligations of the U.S. Treasury and U.S. Agencies, municipal 

bonds, managed public fund investment pools, and certificates of deposit The Interlocal Cooperation 

Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 

2256 of the Texas Government Code (the “Act”), provide for the creation of public funds investment 

pools, such as Texas Short-term Reserve Fund (“TexStar”), Local Government Investment 

Cooperative (“LOGIC”), TexasDAILY, and Lone Star Investment Pool (“Lone Star”), through which 

political subdivisions and other entities may invest public funds. 

TexPool, TexSTAR and LOGIC have a redemption notice period of one day and may redeem daily. 

The investment pool’s authority may only impose restrictions on redemptions in the event of a 

general suspension of trading on major securities markets, general banking moratorium or national 

state of emergency that affects the pool’s liquidity. 

29

The City's investments as of September 30, 2020 are: 

Weighted 

Credit Carrying Average Maturity 

Rating Value (days) 

Investment Pool: 

TexPool AAAm $ 118,703 

38 

TexSTAR AAAm 1,973,876 44 

LOGIC AAAm 24,868,343 52 

Total $ 26,960,922 

Portfolio 51 

Interest rate risk: In accordance with its investment policy, the City manages its exposure to 

declines in fair values by limiting the weighted average of maturity not to exceed five years; 

structuring the investment portfolio so that securities mature to meet cash requirements for ongoing 

operations; monitoring credit ratings of portfolio position to assure compliance with rating 

requirements imposed by the Public Funds Investment Act; and invest operating funds primarily in 

short-term securities or similar government investment pools. 

Credit risk: The City's investment policy limits investments to obligations of the United States, State 

of Texas, or their agencies and instrumentalities with an investment quality rating of not less than 

"A" or its equivalent, by a nationally recognized investment rating firm. Other obligations must be 

unconditionally guaranteed (either express or implied) by the full faith and credit of the United 

States Government or the issuing U.S. agency and investment pools with an investment quality not 

less than AAA or AAA-m, or equivalent, by at least one nationally recognized rating service. As of 

September 30, 2020, the City's investment in investment pools were rated AAAm and AAA by 

Standard & Poor's. 

Custodial credit risk — deposits: In the case of deposits, this is the risk that in the event of a bank 

failure, the City's deposits may not be returned to it. State statutes require that all deposits in 

financial institutions be insured or fully collateralized by U.S. government obligations or its agencies 

and instrumentalities or direct obligations of Texas or its agencies and instrumentalities that have a 

market value of not less than the principal amount of the deposits. As of September 30, 2020, the 

market values of pledged securities and FDIC insurance exceeded bank balances. 

Custodial credit risk — investments: For an investment, this is the risk that, in the event of the 

failure of the counterparty, the City will not be able to recover the value of its investments or 

collateral securities that are in the possession of an outside party. The City's investment policy 

requires that it will seek to safekeeping securities at financial institutions, avoiding physical 

possession. Further, all trades, where applicable, are executed by delivery versus payment to ensure 

that securities are deposited in the City's safekeeping account prior to the release of funds. 

IV. 

RECEIVABLES 

The City’s receivables as of September 30, 2020 consisted of the following: 

Industrial Economic 

General Development Development Debt Storm 

Fund Corporation Corporation Service Utility Water Total 

Due from other governments $ 695,806 $ - $ - $ - $ - $ - $ 695,806 

Due from developer - 206,901 - - - - 206,901 

Taxes 650,353 232,342 232,242 38,391 - - 1,153,328 

Fines & fees 417,926 

Accounts 51,020 - - - 2,472,346 27,182 2,523,366 

Gross receivables 1,815,105 439,243 232,242 38,391 2,472,346 27,182 4,579,401 

Less: allowance for 

uncollectible accounts ( 429,255) 

- - ( 10,275) ( 1,361,743) 

- ( 1,801,273) 

Net receivables $ 1,385,850 $ 439,243 $ 232,242 $ 28,116 $ 1,110,603 $ 27,182 $ 2,778,128 

30

V. CAPITAL ASSETS 

Capital asset activity for the year ended September 30, 2020 was as follows: 

Beginning Transfers/ Ending 

Balance Additions Retirements Balance 


Capital assets not being depreciated: 

Land $ 3,470,485 $ 592,441 $( 2,180,231) $ 1,882,695 

Construction in progress 1,543,201 1,398,144 - 2,941,345 

Total capital assets not 

being depreciated 5,013,686 1,990,585 ( 2,180,231) 4,824,040 

Capital assets being depreciated: 

Buildings 8,163,080 95,230 - 8,258,310 

Improvements 398,358 - - 398,358 

Machinery and equipment 10,943,248 543,983 ( 450,926) 11,036,305 

Infrastructure 13,436,443 3,040,309 - 16,476,752 

Total assets being depreciated 32,941,129 3,679,522 ( 450,926) 36,169,725 

Less accumulated depreciation for: 

Buildings ( 2,509,772) ( 306,272) 

- ( 2,816,044) 

Improvements ( 283,881) ( 7,939) 

- ( 291,820) 

Machinery and equipment ( 8,271,439) ( 697,536) 214,789 ( 8,754,186) 

Infrastructure ( 4,321,723) ( 442,295) 

- ( 4,764,018) 

Total accumulated depreciation ( 15,386,815) ( 1,454,042) 214,789 ( 16,626,068) 

Total capital assets being 

depreciated, net 17,554,314 2,225,480 ( 236,137) 19,543,657 

Governmental activities capital 

assets, net $ 22,568,000 $ 4,216,065 $( 2,416,368) $ 24,367,697 

Beginning Transfers/ Ending 

Balance Additions Retirements Balance 


Capital assets, not being depreciated: 

Land $ 1,241,293 $ - $ - $ 1,241,293 

Construction in progress 397,344 7,595 - 404,939 

Total capital assets, not being 

depreciated 1,638,637 7,595 - 1,646,232 

Capital assets being depreciated: 

Buildings 101,181 - - 101,181 

Improvements 28,649,441 1,104,544 - 29,753,985 

Machinery and equipment 2,141,494 297,809 ( 282,595) 2,156,708 

Total assets being 

depreciated 30,892,116 1,402,353 ( 282,595) 32,011,874 

Less accumulated depreciation for: 

Buildings ( 42,842) ( 5,051) 

- ( 47,893) 

Improvements ( 14,398,877) ( 1,229,011) 

- ( 15,627,888) 

Machinery and equipment ( 1,344,442) ( 252,240) 231,031 ( 1,365,651) 

Total accumulated depreciation ( 15,786,161) ( 1,486,302) 231,031 ( 17,041,432) 

Total capital assets being 

depreciated, net 15,105,955 ( 83,949) ( 51,564) 14,970,442 

Business-type activities capital 

assets, net $ 16,744,592 $( 76,354) $( 51,564) $ 16,616,674 

Depreciation expense for the year ended September 30, 2020 was charged to functions/programs of 

the primary government as follows: 


General government $ 237,766 

Public safety 599,066 

Culture and recreation 47,990 

Public works 569,220 

Total $ 1,454,042 


Utility $ 1,486,302 

Total $ 1,486,302 

31

VI. 

INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS 

Interfund transfers made during the fiscal year were as follows: 

Transfer From Transfer To Amount 

Industrial Development Corporation General Fund $ 536,825 

Industrial Development Corporation Non-Major Governmental 2,500,000 

Economic Development Corporation General Fund 196,285 

Non-Major Governmental General Fund 21,115 

Total $ 3,254,225 

The transfers to the General Fund from the Industrial Development Corporation and Economic 

Development Corporation consisted of annual transfers to for contract services in the amounts of 

$536,825 and $196,285, respectively. In addition, $21,115 was transferred to the General Fund from 

the Tourism Fund for rental fees. The Industrial Development Corporation transferred $2,500,000 to the 

Parks Improvement Fund for upcoming projects. 

Interfund receivables and payables as of September 30, 2020 were as follows: 

Receivable Fund Payable Fund Amount 

Economic Development Corporation General Fund $ 287,844 

Non-Major Governmental 2019 CO Bond Fund 380,234 

Non-Major Governmental Non-Major Governmental 164,805 

Non-Major Governmental General Fund 124,107 

Total $ 956,990 

The outstanding balances between funds result mainly from the time lag between the dates that (1) 

interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are 

recorded in the accounting system, and (3) payments between funds are made. 

32

VII. 

LONG-TERM DEBT 

Long-term debt activity for the year ended September 30, 2020, was as follows: 

Beginning Refunded/ Ending Amount Due 

Balance Issued Retired Balance Within One Year 


Bonds payable: 

General obligation bonds $ 3,770,000 $ 1,830,000 $( 265,000) $ 5,335,000 $ 345,000 

Certificates of obligation 13,700,000 - ( 2,410,000) 11,290,000 375,000 

Certificates of obligation 

(private placement) 449,000 - ( 43,000) 406,000 41,000 

Revenue bonds - 8,670,000 ( 115,000) 8,555,000 355,000 

Revenue bonds (private 

placement) 2,937,000 - ( 497,000) 2,440,000 751,000 

Tax notes 287,000 - ( 147,000) 140,000 140,000 

Tax notes (private placement) 733,000 773,000 ( 296,000) 1,210,000 182,000 

Less deferred amounts: 

Underwriter's discount ( 669) 

- 669 - - 

Issuance premium 814,297 250,331 ( 38,091) 1,026,537 - 

Total bonds payable 22,689,628 11,523,331 ( 3,810,422) 30,402,537 2,189,000 

Note payable 866,062 - ( 866,062) 

- - 

Compensated absences 740,824 542,530 ( 528,380) 754,974 188,744 

Total governmental $ 24,296,514 $ 12,065,861 $( 5,204,864) $ 31,157,511 $ 2,377,744 


Bonds payable: 

General obligation bonds $ 13,925,000 $ 5,330,000 $( 6,855,000) $ 12,400,000 $ 1,050,000 

Certificates of obligation 2,330,000 - ( 83,000) 2,247,000 84,000 

Certificates of obligation 

(private placement) 1,077,000 - ( 178,000) 899,000 183,000 

Tax notes 73,000 - ( 65,000) 

8,000 8,000 

Tax notes (private placement) - 411,000 - 411,000 65,000 

Less deferred amounts: 

Underwriter's discount ( 2,966) 

- 2,966 - - 

Issuance premium 597,423 631,866 ( 47,635) 1,181,654 - 

Total bonds payable 17,999,457 6,372,866 ( 7,225,669) 17,146,654 1,390,000 

Compensated absences 18,376 22,408 ( 7,912) 32,872 8,218 

Total business-type $ 18,017,833 $ 6,395,274 $( 7,233,581) $ 17,179,526 $ 1,398,218 

Bond Reserve Fund 

For the Industrial Development Corporation's 2004 Sales Tax Revenue Refunding bonds, this section 

requires maintaining in the reserve fund the lesser of: (i) the maximum annual principal and interest 

requirement of the Bonds; (ii) 1.25 times the average annual principal and interest requirement of the 

Bonds; or (iii) 10 percent of the aggregate proceeds of the Bonds. This fund shall be used to pay principal 

of and/or interest on these bonds falling due at any time when moneys in the interest and sinking fund 

are insufficient for such purpose and to retire the last of the bonds that are outstanding. 

Total amounts required to be restricted compared to actual funds for the Industrial Development 

Corporation's bonds are as follows: 

Required at Actual at Excess or 

9/30/2020 9/30/2020 (Deficiency) 

Interest and Sinking: 

Sales Tax Revenue Refunding Bonds 

Series 2014 - Industrial Development $ 11,309 $ 11,537 $ 

228 

Series 2015 - Industrial Development 48,249 58,686 10,437 

Total $ 59,558 $ 70,223 $ 10,665 

Bond Reserve: 

Sales Tax Revenue Refunding Bonds 

Series 2014 - Industrial Development $ 76,000 $ 76,000 $ - 

Series 2015 - Industrial Development 335,000 340,836 5,836 

Total $ 411,000 $ 416,836 $ 5,836 

33

Certificates of Obligation 

The City issues Certificates of Obligation to provide for the acquisition and construction of major capital 

facilities. 

Sales Tax Revenue Bonds 

In the current year, the City issued Sales Tax Revenue Bonds, Series 2019A and 2019B in the amounts 

of $2,990,000 and $5,680,000, respectively. The 2019A bonds carry interest rates of 2.75-3.00% and 

mature in fiscal year 2038. The 2019B bonds carry interest rates of 2.10-3.35% and mature in fiscal 

year 2040. The proceeds of the bonds will be used for the construction, improvement, and expansion of 

streets, roads, sidewalks, parks, land and drainage and utility infrastructure to promote new or 

expanded business development. 

Tax Notes 

The City issues tax notes to provide funds for the acquisition of equipment. Tax notes have been issued 

for both governmental and business-type activities. Tax notes are direct obligations and pledge the full 

faith and credit of the government. 

In the current year, the City issued Tax Notes, Series 2020, in the amount of $1,184,000. The notes 

carry an interest rate of 1.80% and mature in fiscal year 2026. The proceeds will be used for the 

purchase of materials, supplies, vehicles and equipment for the City. 

General Obligation Bonds 

The City issues general obligation bonds to provide funds for the acquisition and construction of major 

capital facilities. General obligation bonds have been issued for both governmental and business-type 

activities. General obligation bonds are direct obligations and pledge the full faith and credit of the 

government. 

Current Refunding 

In the current year, the City issued General Obligation refunding bonds, Series 2020, in the amount of 

$7,160,000. The bonds carry an interest rates 3.00% and mature in fiscal year 2030. The proceeds from 

issuance were used to refund Certificates of Obligation, Series 2010; General Obligation Refunding 

Bonds, Series 2010; Certificates of Obligation, Series 2013; and General Obligation Refunding Bonds, 

Series 2013. The net proceeds (including a $848,811 premium after payment of bond issuance costs) 

were used to refund the old debt. As a result, a portion of these bonds have been removed from the 

statement of net position. The current refunding reduced the City’s total debt service payments by 

$1,007,437 and produced an economic gain (difference between the present values of the debt service 

payments on the old and new debt) of $915,153. 

Compensated Absences 

The compensated absence liabilities are generally liquidated by the General, Utility, and Storm Water 

Funds depending on the assignment of an employment at termination. 

Other Information 

Should the City default on its outstanding bonds, any registered owner of the certificates is entitled to 

seek a writ of mandamus from a court of proper jurisdiction requiring specific performance from the 

City. 

34

Bonds payable currently outstanding and reported as liabilities of the City's governmental activities are: 

Amounts 

Amounts 

Interest Original Maturity Outstanding 

Description Rate Issue Date 9/30/20 


Certificates of Obligation, Series 2013 2.00-3.30% $ 1,090,000 2/15/2028 $ 250,000 

Certificates of Obligation, Series 2015* 1.81% 569,000 2/15/2026 126,000 


Certificates of Obligation, Series 2017 2.00-4.00% 1,575,000 2/15/2031 1,475,000 



General Obligation Bonds, Series 2014 2.00-3.50% 3,680,000 2/15/2030 2,700,000 

General Obligation Bonds, Series 2017 2.00-4.00% 945,000 2/15/2027 805,000 

General Obligation Bonds, Series 2020 3.00% 1,830,000 2/15/2030 1,830,000 

Revenue Bonds, Series 2014* 2.44% 760,000 8/15/2023 265,000 

Revenue Bonds, Series 2015* 3.32% 3,345,000 8/15/2026 2,290,000 

Revenue Bonds, Series 2019A 2.75-3.00% 2,990,000 2/15/2039 2,990,000 

Revenue Bonds, Series 2019B 2.10-3.35% 5,680,000 2/15/2034 5,565,000 

Tax Notes, Series 2014A 1.60% 693,000 2/15/2021 104,000 

Tax Notes, Series 2014B 0.60-2.39% 417,000 2/15/2021 36,000 

Tax Notes, Series 2017* 1.79% 785,000 2/15/2024 649,000 

Tax Notes, Series 2020* 1.80% 773,000 2/15/2026 561,000 

Total governmental activities $ 35,556,000 

$ 29,491,000 

* Private placement 

Bonds payable currently outstanding and reported as liabilities of the City's business-type activities are: 

Amounts 

Amounts 

Interest Original Maturity Outstanding 

Description Rate Issue Date 9/30/20 


Certificates of Obligation, Series 2015* 1.81% $ 1,032,000 2/15/2026 $ 630,000 

Certificates of Obligation, Series 2015 1.81% 515,000 2/15/2026 312,000 



Certificates of Obligation, Series 2018 4.00-5.00% 240,000 2/15/2025 175,000 




General Obligation Bonds, Series 2020 3.00% 5,330,000 2/15/2030 5,330,000 

Tax Notes, Series 2014B 2.00-3.50% 1,980,000 2/15/2025 8,000 

Tax Notes, Series 2020* 1.80% 411,000 2/15/2026 411,000 

Total business-type activities $ 31,078,000 

$ 15,965,000 

* Private placement 

35

Annual debt service requirements for the City’s bonds are as follows: 

Certificates of Obligation 

Governmental Activities Business-Type Activities 

Year Ended Total Total 

September 30, Principal Interest Principal Interest Principal Interest 

2021 $ 375,000 $ 408,475 $ 84,000 $ 83,547 $ 459,000 $ 492,022 

2022 390,000 394,525 85,000 80,983 475,000 475,508 

2023 405,000 379,475 86,000 78,321 491,000 457,796 

2024 335,000 365,100 87,000 75,641 422,000 440,741 

2025 505,000 347,575 92,000 72,827 597,000 420,402 

2026-2030 3,035,000 1,403,700 378,000 345,979 3,413,000 1,749,679 

2031-2035 3,570,000 752,700 1,435,000 117,500 5,005,000 870,200 

2036-2040 2,675,000 163,425 - - 2,675,000 163,425 

Total $ 11,290,000 $ 4,214,975 $ 2,247,000 $ 854,798 $ 13,537,000 $ 5,069,773 

Certificates of Obligation (private placement) 




2021 $ 41,000 $ 6,962 $ 183,000 $ 14,794 $ 224,000 $ 21,756 

2022 23,000 6,384 183,000 11,527 206,000 17,911 

2023 87,000 5,391 185,000 8,233 272,000 13,624 

2024 23,000 4,398 193,000 4,857 216,000 9,255 

2025 23,000 3,982 77,000 2,458 100,000 6,440 

2026-2030 209,000 1,887 78,000 1,098 287,000 2,985 

Total $ 406,000 $ 29,004 $ 899,000 $ 42,967 $ 1,305,000 $ 71,971 

General Obligations 




2021 $ 345,000 $ 163,470 $ 1,050,000 $ 366,953 $ 1,395,000 $ 530,423 

2022 420,000 148,800 1,105,000 326,478 1,525,000 475,278 

2023 445,000 137,713 1,130,000 300,816 1,575,000 438,529 

2024 560,000 123,925 1,155,000 272,575 1,715,000 396,500 

2025 595,000 107,250 1,250,000 238,900 1,845,000 346,150 

2026-2030 2,970,000 227,063 6,710,000 562,575 9,680,000 789,638 

Total $ 5,335,000 $ 908,221 $ 12,400,000 $ 2,068,297 $ 17,735,000 $ 2,976,518 

Tax Notes 




2021 $ 140,000 $ 1,262 $ 8,000 $ 96 $ 148,000 $ 1,358 

Total $ 140,000 $ 1,262 $ 8,000 $ 96 $ 148,000 $ 1,358 

Tax Notes (private placement) 




2021 $ 182,000 $ 20,082 $ 65,000 $ 6,813 $ 247,000 $ 26,895 

2022 290,000 15,848 67,000 5,625 357,000 21,473 

2023 279,000 10,747 68,000 4,410 347,000 15,157 

2024 265,000 5,868 69,000 3,177 334,000 9,045 

2025 96,000 2,628 70,000 1,926 166,000 4,554 

2026-2030 98,000 882 72,000 648 170,000 1,530 

Total $ 1,210,000 $ 56,055 $ 411,000 $ 22,599 $ 1,621,000 $ 78,654 

36

Revenue Bonds - Governmental Activities 

Negotiated 

Private Placement 



2021 $ 355,000 $ 239,640 $ 396,000 $ 82,494 $ 751,000 $ 322,134 

2022 360,000 232,008 404,000 70,104 764,000 302,112 

2023 370,000 224,268 420,000 57,474 790,000 281,742 

2024 380,000 216,128 430,000 44,322 810,000 260,450 

2025 385,000 207,388 445,000 30,046 830,000 237,434 

2026-2030 2,085,000 881,185 460,000 15,272 2,545,000 896,457 

2031-2035 2,410,000 554,155 - - 2,410,000 554,155 

2036-2040 2,210,000 162,250 - - 2,210,000 162,250 

Total $ 8,555,000 $ 2,717,022 $ 2,555,000 $ 299,712 $ 11,110,000 $ 3,016,734 

VIII. 

DEFINED BENEFIT PENSION PLAN 

Plan Description 

The City participates as one of 887 plans in the nontraditional, joint contributory, hybrid defined benefit 

pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency 

created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8, 

Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for municipal 

employees in the State of Texas. The TMRS Act places the general administration and management of 

the System with a six-member Board of Trustees. Although the Governor, with the advice and consent 

of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS’s defined 

benefit pension plan is a tax-qualified plan under Section 401(a) of the Internal Revenue Code. TMRS 

issues a publicly available comprehensive annual financial report that can be obtained at www.TMRS.org. 

All eligible employees of the City are required to participate in TMRS. 

Benefits Provided 

TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the 

governing body of the City, within the options available in the state statutes governing TMRS. 

At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and 

the city-financed monetary credits with interest were used to purchase an annuity. Members may choose 

to receive their retirement benefit in one of seven payments options. Members may also choose to 

receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or 

36 monthly payments, which cannot exceed 75% of the member's deposits and interest. 

Members can retire at ages 60 and above with five or more years of service or with 20 years of service 

regardless of age. A member is vested after five years. The plan provisions arc adopted by the governing, 

body of the City, with in the options available in the state statutes governing TMRS and within the 

actuarial constraints also in the statutes. 

Beginning in 2009, the City granted an annually repeating (automatic) basis monetary credit referred 

to as an updated service credit (USC) which is a theoretical amount that takes into account salary 

increases or plan improvements. If at any time during their career an employee earns a USC, this 

amount remains in their account earning interest at 5% until retirement. At retirement, the benefit is 

calculated as if the sum of the employee’s accumulated contributions with interest and the employer 

match plus employer-financed monetary credits, such as USC, with interest were used to purchase an 

annuity. Additionally, initiated in 2009, the City provided on an annually repeating (automatic) basis 

cost of living adjustments (COLA) for retirees equal to a percentage of the change in the consumer price 

index (CPI). 

37

A summary of plan provisions for the City are as follows: 

Employee deposit rate 7% 

Matching ratio (City to employee) 2 to 1 

Years required for vesting 5 

Service retirement eligibility 

20 years at any age, 

5 years at age 60 and above 

Uupdated service credit 

100% repeating, transfers 

Annuity increase to retirees 

70% of CPI repeating 

Employees Covered by Benefit Terms 

At the December 31, 2019 valuation and measurement date, the following numbers of employees were 

covered by the benefit terms: 

Inactive employees or beneficiaries currently receiving benefits 34 

Inactive employees entitled to but not yet receiving benefits 76 

Active employees 105 

Total 215 

Contributions 

The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings, 

and the municipal matching percentages are either 100%, 150%, or 200%, both as adopted by the 

governing body of the municipality. Under the state law governing TMRS, the contribution rate for each 

municipality is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost 

method. The actuarially determined rate is the estimated amount necessary to finance the cost of 

benefits earned by employees during the year, with an additional amount to finance any unfunded 

accrued liability. 

Employees for the City were required to contribute 7% of their annual gross earnings during the fiscal 

year. The City increased its employee contribution rate during the year. The contribution rates for the 

City were 7% and 7% in calendar years 2019 and 2020, respectively. The City’s contributions to TMRS 

for the year ended September 30, 2020, were $544,685, and were equal to the required contributions. 

Net Pension Liability 

The City’s Net Pension Liability (NPL) was measured as of December 31, 2019, and the Total Pension 

Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of 

that date. 

Actuarial Assumptions 

The Total Pension Liability in the December 31, 2019 actuarial valuation was determined using the 

following actuarial assumptions: 

Inflation 

Overall payroll growth 

Investment Rate of Return 

2.50% per year 

2.75% per year 

6.75% net of pension plan investment expense, 

expense, including inflation 

Salary increases are based on a service-related table. Mortality rates for active members are based on 

the PUB(10) mortality tables with the Public Safety table used for males and the General Employee table 

used for females. Mortality rates for healthy retirees and beneficiaries are based on the Gender distinct 

2019 Municipal Retirees of Texas mortality tables. The rates for actives, healthy retirees and 

beneficiaries are projected on a fully generational basis by Scale UMP to account for future mortality 

improvements. For disabled annuitants, the same mortality tables for healthy retirees is used with a 4- 

year set-forward for males and a 3-year set-forward for females. In addition, a 3.5% and 3.0% minimum 

mortality rate is applied, for males and females respectively, to reflect the impairment for younger 

members who become disabled. The rates are projected on a fully generational basis by Scale UMP to 

account for future mortality improvements subject to the floor. 

38

The actuarial assumptions were developed primarily from the actuarial investigation of the experience 

of TMRS over the four-year period from December 31, 2014 to December 31, 2018. They were adopted 

in 2019 and first used in the December 31, 2109 actuarial valuation. The post-retirement mortality 

assumption for Annuity Purchase Rates (APRs) is based on the Mortality Experience Investigation Study 

covering 2009 through 2011 and dated December 31, 2013. Plan assets are managed on a total return 

basis with an emphasis on both capital appreciation as well as the production of income in order to 

satisfy the short-term and long-term funding needs of TMRS. 

The long-term expected rate of return on pension plan investments was determined using a buildingblock 

method in which best estimate ranges of expected future real rates of return (expected returns, 

net of pension plan investment expenses and inflation) are developed for each major asset class. These 

ranges are combined to produce the long-term expected rate of return by weighting the expected future 

real rates of return by the target asset allocation percentage and by adding expected inflation. In 

determining their best estimate of a recommended investment return assumption under the various 

alternative asset allocation portfolios, GRS focused on the area between (1) arithmetic mean 

(aggressive) without an adjustment for time (conservative) and (2) the geometric mean (conservative) 

with an adjustment for time (aggressive). The target allocation and best estimates of arithmetic real 

rates return for each major asset class in fiscal year 2020 are summarized in the following table: 

Long-Term Expected 

Real Rate of Return 

Asset Class Target Allocation (Arithmetic) 

Global Equity 30.00% 5.30% 

Core fixed income 10.00% 1.25% 

Non-core fixed income 20.00% 4.14% 

Real return 10.00% 3.85% 

Real estate 10.00% 4.00% 

Absolute return 10.00% 3.48% 

Private equity 10.00% 7.75% 

Total 100.00% 

Discount Rate 

The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows 

used to determine the discount rate assumed that employee and employer contributions will be made 

at the rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position 

was projected to be available to make all projected future benefit payments of current active and inactive 

employees. Therefore, the long-term expected rate of return on pension plan investments was applied 

to all periods of projected benefit payments to determine the Total Pension Liability. 

39

Changes in Net Pension Liability 

Increase (Decease) 

Total Pension Plan Fiduciary Net Pension 

Liability Net Position Liability 

(a) (b) (a)-(b) 

Balance at 12/31/2018 $ 9,949,101 $ 8,225,712 $ 1,723,389 

Changes for the year: 

Service cost 921,228 - 921,228 

Interest 690,759 - 690,759 

Difference between expected 

and actual experience 105,672 - 105,672 

Contributions - employer - 516,348 ( 516,348) 

Contributions - employee - 503,403 ( 503,403) 

Net investment income - 1,274,464 ( 1,274,464) 

Benefit payments, including refunds 

of employee contributions ( 352,505) ( 352,505) 

- 

Change in assumptions 10,591 - 10,591 

Administrative expense - ( 7,186) 

7,186 

Other changes - ( 215) 

215 

Net changes 1,375,745 1,934,309 ( 558,564) 

Balance at 12/31/2019 $ 11,324,846 $ 10,160,021 $ 1,164,825 

The City’s net pension liability is generally liquidated by the General Fund and Proprietary Funds 

depending on an employee’s assignment at termination. 

Discount Rate Sensitivity Analysis 

The following presents the net pension liability of the City calculated using the discount rate of 6.75%, 

as well as what the City’s net pension liability would be if it were calculated using a discount rate that 

is 1-percentage-point lower (5.75%) or 1-percentage-point higher (7.75%) than the current rate: 

1% Decrease in Current Single 1% Increase in 

Discount Rate Discount Rate Discount Rate 

(5.75%) (6.75%) (7.75%) 

City's net pension liability (asset) $ 3,033,324 $ 1,164,825 $( 361,971) 

Pension Plan Fiduciary Net Position 

Detailed information about the pension plan’s Fiduciary Net Position is available in a separately issued 

TMRS financial report. That report may be obtained electronically at www.TMRS.org. 

Pension Expense, Deferred Outflows, and Deferred Inflows of Resources Related to Pensions 

For the year ended September 30, 2020, the City recognized pension expense in the governmental and 

business-type activities of $529,205 and $88,365, respectively. 

At September 30, 2020, the City reported deferred outflows of resources and deferred inflows of 

resources related to pensions from the following sources: 

Deferred Outflows 

of Resources 

Deferred Inflows 

of Resources 

Differences between expected and actual 

economic experience $ 106,968 $ 33,353 

Changes in actuarial assumptions 40,312 - 

Difference between projected and actual 

investment earnings - 297,795 

Contributions subsequent to the 

measurement date 384,378 - 

Total $ 531,658 $ 331,148 

40

The City reported $384,378 as deferred outflows of resources related to pensions resulting from 

contributions subsequent to the measurement date will be recognized as a reduction of the net pension 

liability for the year ending September 30, 2021. Other amounts reported as deferred outflows and 

inflows of resources related to pensions will be recognized in pension expense as follows: 

For the Year Ended 

September 30, 

2021 $( 27,140) 

2022 ( 62,438) 

2023 23,601 

2024 ( 128,076) 

2025 10,185 

IX. 

DEFINED OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLAN – TMRS SUPPLEMENTAL DEATH 

BENEFITS FUND 

Plan Description 

The City voluntarily participates in a single-employer other postemployment benefit (OPEB) plan 

administered by TMRS. The Plan is a group-term life insurance plan known as the Supplemental Death 

Benefits Fund (SDBF). The Plan is established and administered in accordance with the TMRS Act 

identically to the City’s pension plan. SDBF includes coverage for both active and retired members, and 

assets are commingled for the payment of such benefits. Therefore, the Plan does not qualify as an 

OPEB Trust in accordance with paragraph 4 of GASB Statement No. 75. 

Benefits Provided 

The SDBF provides group-term life insurance to City employees who are active members in TMRS, 

including or not including retirees. The City Council opted into this program via an ordinance, and may 

terminate coverage under, and discontinue participation in, the SDBF by adopting an ordinance before 

November 1 of any year to be effective the following January 1. 

Payments from this fund are similar to group-term life insurance benefits, and are paid to the designated 

beneficiaries upon the receipt of an approved application for payment. The death benefit for active 

employees provides a lump-sum payment approximately equal to the employee’s annual salary 

(calculated based on the employee’s actual earnings for the 12-month period preceding the month of 

death). The death benefit for retirees is considered an other employment benefit and is a fixed amount 

of $7,500. 

At the December 31, 2019 valuation and measurement date, the following employees were covered by 

the benefit terms: 

Contributions 

Inactive employees or beneficiaries currently receiving benefits 30 

Inactive employees entitled to but not yet receiving benefits 12 

Active employees 105 

Total 147 

The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial 

valuation, which was 0.13% for 2020 and 0.13% for 2019, of which 0.01% and 0.01%, respectively, 

represented the retiree-only portion for each year, as a percentage of annual covered payroll. The rate 

is equal to the cost of providing one-year term life insurance. The funding policy for the SDBF program 

is to assure that adequate resources are available to meet all death benefit payments for the upcoming 

year; the intent is not to prefund retiree term life insurance during employees’ entire careers. The City’s 

contributions to the SDBF for the years ended September 30, 2020 and 2019 were $742 and $701, 

respectively, representing contributions for both active and retiree coverage, which equaled the required 

contributions each year. 

Total OPEB Liability 

The City's Net OPEB Liability (TOL) was measured as of December 31, 2019 and was determined by an 

actuarial valuation as of that date. 

41

Actuarial assumptions 

The Total OPEB Liability in the December 31, 2019 actuarial valuation was determined using the 

following actuarial assumptions: 

Inflation rate 2.50% 

Salary increases 

3.5% to 11.5% including inflation 

Discount rate 2.75% 

Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 

Combined Healthy Mortality Tables with Blue Collar Adjustment, with male rates multiplied by 109% 

and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB 

to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 

Combined Healthy Mortality Tables with Blue Collar Adjustment are used with male rates multiplied by 

109% and female rates multiplied by 103% with a 3-year set-forward for both males and females. In 

addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who 

became disabled. The rates are projected on a fully generational basis by scale BB to account for future 

mortality improvements subject to the 3% floor. Administrative expenses for the SDBF are paid through 

the TMRS Pension Trust Fund and are wholly accounted for under the provisions of GASB Statement No. 

68. 

Changes in assumptions reflect the annual change in the municipal bond rate. The actuarial assumptions 

used in the December 31, 2019 valuation were based on the results of an actuarial experience study for 

the period December 31, 2014 to December 31, 2018. 

Discount Rate 

The SDBF program is treated as an unfunded OPEB plan because the SDBF trust covers both actives 

and retirees and the assets are not segregated for these groups. As such, a single discount rate of 

2.75% was used to measure the Total OPEB Liability. Because the plan is essentially a “pay-as-you-go” 

plan, the single discount rate is equal to the prevailing municipal bond rate. The source of the municipal 

bond rate was fixed-income municipal bonds with 20 years to maturity that include only federally taxexempt 

municipal bonds as reported in Fidelity Index’s “20-year Municipal GO AA Index” as of December 

31, 2019. 

Changes in the Total OPEB Liability 

Total OPEB 

Liability 

Balance at 12/31/2018 $ 157,925 

Changes for the year: 

Service cost 12,226 

Interest 6,072 

Difference between expected and actual experience (2,388) 

Changes of assumptions 41,224 

Benefit payments (720) 

Net changes 56,414 

Balance at 12/31/2019 $ 214,339 

Discount Rate Sensitivity Analysis 

The following presents the total OPEB liability of the City, calculated using the discount rate of 2.75%, 

as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is 

1 percentage-point lower (1.75%) or 1 percentage-point higher (3.75%) than the current rate: 

1% Decrease in 1% Increase in 

Discount Rate Discount Rate Discount Rate 

Total OPEB Liability $ 267,238 $ 214,339 $ 

173,999 

42

OPEB Expense, Deferred Outflows, and Deferred Inflows of Resources Related to OPEB 

For the year ended September 30, 2020, the City recognized OPEB expense in the governmental 

activities and business-type activities of $20,010 and $3,341, respectively. 

At September 30, 2020, the City reported deferred outflows of resources and deferred inflows of 

resources related to OPEB from the following sources: 

Deferred Outflows 

of Resources 

Deferred Inflows 

of Resources 

Differences between expected and actual 

economic experience $ - 

$ 2,853 

Changes in actuarial assumptions 44,995 10,338 

Contributions subsequent to the 

measurement date 541 - 

Total $ 45,536 $ 13,191 

The City reported $541 as deferred outflows of resources related to OPEB resulting from contributions 

subsequent to the measurement date which will be recognized as a reduction of the total OPEB liability 

for the year ending September 30, 2021. Other amounts reported as deferred outflows and inflows of 

resources related to pensions will be recognized in pension expense as follows: 

For the Year Ended 

September 30, 

2021 $ 5,053 

2022 5,053 

2023 5,053 

2024 5,053 

2025 5,053 

Thereafter 6,539 

X. COMMITMENTS AND CONTINGENCIES 

Wastewater Treatment Services 

The City has entered into a contract with the Trinity River Authority of Texas - Red Oak Creek Regional 

Wastewater System to obtain wastewater treatment services, which has no expiration date. In the 

contract, the Authority agreed to acquire and construct a regional wastewater treatment system to serve 

the City and other contractual parties, in the area of the watershed or drainage basin of Red Oak Creek, 

being a tributary of the Trinity River, and located in Ellis and Dallas Counties, Texas. The Trinity River 

Authority is a governmental agency, which is controlled by directors appointed by the governor. 

The City is responsible for a proportionate share of the system's annual operation, maintenance and 

debt service costs for the term of the contract. These costs are determined annually and are payable in 

monthly installments. Actual payments for the year ended September 30, 2020 were $3,452,046. The 

payments to be received from the City of Red Oak are used as collateral for the bonds issued by TRA to 

construct the facility. 

Complete separate financial statements far the Trinity River Authority may be obtained at Trinity River 

Authority of Texas, 5300 South Collins, P.O. Box 60, Arlington, Texas 76004. 

Police Dispatching Services 

The City has entered into a contract with the City of Midlothian, Texas to combine dispatching services 

for both cities, effective October 1, 2009. In May 2020, the contract was extended another five years.. 

In the contract, the City of Midlothian will assume and provide all dispatching services. 

The City of Red Oak is responsible for a proportionate share of the cost of dispatching services for the 

term of the contract. The City of Red Oak has agreed to pay the sum of $585,396 to the City of Midlothian 

annually for the first three years of the contract, payable in quarterly installments. After the initial three 

years of the contract the costs will be determined annually and are payable in quarterly installments. 

43

Amounts received or receivable from grantor agencies ore subject to audit and adjustment by grantor 

agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the 

applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor, cannot 

be determined at this time although the government expects such amounts, if any, to be immaterial. 

XI. 

RISK MANAGEMENT 

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of 

assets; errors and omissions; injuries to employees; and natural disasters. The City maintains 

commercial insurance coverage covering each of those risks of loss. Management believes such coverage 

is sufficient to preclude any significant uninsured losses to the City. Settled claims have not exceeded 

this commercial coverage in any of the past three fiscal years. 

XII. 

TAX ABATEMENTS 

The city enters into economic development agreements designed to promote development and 

redevelopment within the City, spur economic improvement, stimulate commercial activity, generate 

additional sales tax and enhance the property tax base and economic vitality of the City. A portion of 

the City's economic development agreements are authorized under Chapter 312 (Property 

Redevelopment and Tax Abatement) of the Texas Tax Code. The economic development agreements 

are designed to support the creation of new businesses, the expansion and retention of existing 

businesses within the City, and the attraction of companies that offer high impact jobs and share the 

community's values. Recipients may be eligible to receive economic assistance based on the 

employment, or community impact of the project requesting assistance. Recipients generally commit to 

building or remodeling real property and related infrastructures, redeveloping properties, expanding 

operations or bringing targeted businesses to the City. These agreements have no formal recapture 

provisions. For FY 2020, the City abated $673,135 in taxes. 

The City enters into various agreements under Chapter 380 of the Texas Local Government Code to 

stimulate economic development. The City benefits from 380 agreements through the promotion of 

economic development activity, job creation, increased tax revenues, increased opportunity for input 

into new development construction of city/county projects, creation of new businesses, infrastructure 

commitments, and streamlining implementation. These development incentives typically take the form 

of property tax abatements, loans or grants, commitments for infrastructure, or payments of portions 

of the sales tax generated by the project. For FY 2020, the City did not rebate any taxes. 

XIII. 

PRIOR PERIOD ADJUSTMENTS 

Beginning fund balance in the Industrial Development Corporation was restated by $2,180,231 to correct 

assets held for sale purchased in prior years. 

44


REQUIRED SUPPLEMENTARY 

INFORMATION


SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES 

IN FUND BALANCE - BUDGET (BUDGET BASIS) AND ACTUAL 

GENERAL FUND 


Variance with 

Final Budget 

Original Final Positive 

Budget Budget Actual (Negative) 

REVENUES 

Property taxes $ 5,948,267 $ 5,948,267 $ 6,060,672 $ 112,405 

Sales taxes 2,523,556 2,523,556 2,802,285 278,729 

Franchise tax 771,218 771,218 742,438 ( 28,780) 

Alcoholic beverage tax 15,000 15,000 9,878 ( 5,122) 

Intergovernmental 567,930 567,930 1,372,133 804,203 

Contributions 20,000 26,385 144,367 117,982 

Licenses and permits 704,000 704,000 1,068,879 364,879 

Fines and forfeitures 575,900 575,900 379,145 ( 196,755) 

Charges for services 606,510 606,510 550,359 ( 56,151) 

Investment earnings 75,000 75,000 77,730 2,730 

Miscellaneous 54,000 117,800 43,819 ( 73,981) 

Total revenues 11,861,381 11,931,566 13,251,705 1,320,139 

EXPENDITURES 

Current: 

General government 1,713,318 1,713,318 1,610,525 102,793 

Public safety 8,438,423 8,448,608 8,070,342 378,266 

Culture and recreation 1,069,460 1,069,460 704,904 364,556 

Public works 2,081,287 2,081,287 1,971,561 109,726 

Capital outlay 1,094,660 1,154,660 523,251 631,409 

Debt service: 

Principal 66,395 66,395 - 66,395 

Interest and fiscal charges 40,000 40,000 22,100 17,900 

Total expenditures 14,503,543 14,573,728 12,902,683 1,671,045 


over (under) expenditures ( 2,642,162) ( 2,642,162) 349,022 2,991,184 


Issuance of bonds 790,000 790,000 773,000 ( 17,000) 

Transfers in 799,110 799,110 754,225 ( 44,885) 

Total other financing sources 

(uses) 1,589,110 1,589,110 1,527,225 ( 61,885) 

CHANGE IN FUND BALANCE ( 1,053,052) ( 1,053,052) 1,876,247 2,929,299 

FUND BALANCE - BEGINNING 3,078,782 3,078,782 3,078,782 - 

FUND BALANCE - ENDING $ 2,025,730 $ 2,025,730 $ 4,955,029 $ 2,929,299 

45




INDUSTRIAL DEVELOPMENT CORPORATION 

FOR YEAR ENDED SEPTEMBER 30, 2020 

Variance with 

Final Budget 



REVENUES 

Sales taxes $ 1,286,450 $ 1,286,450 $ 1,391,261 $ 104,811 


Charges for services - 2,500,000 7,589,503 5,089,503 

Total revenues 1,293,950 3,793,950 9,093,436 5,299,486 

EXPENDITURES 

Current: 

Industrial development 1,071,586 1,071,586 1,104,636 ( 33,050) 

Capital outlay 1,000 1,000 109,138 ( 108,138) 

Debt service: 

Principal 385,000 385,000 385,000 - 

Interest and fiscal charges 99,539 99,539 99,504 35 

Total expenditures 1,557,125 1,557,125 1,698,278 ( 141,153) 


over (under) expenditures ( 263,175) 2,236,825 7,395,158 5,158,333 


Transfers out ( 536,825) ( 3,036,825) ( 3,036,825) 

- 


(uses) ( 536,825) ( 3,036,825) ( 3,036,825) 

- 

CHANGE IN FUND BALANCE ( 800,000) ( 800,000) 4,358,333 5,158,333 


PRIOR PERIOD ADJUSTMENT - - 2,180,231 2,180,231 

FUND BALANCE - BEGINNING, 

RESTATED 5,885,528 5,885,528 8,065,759 2,180,231 


46





ECONOMIC DEVELOPMENT CORPORATION 


Variance with 

Final Budget 



REVENUES 

Sales taxes $ 1,286,450 $ 1,286,450 $ 1,391,261 $ 104,811 


Miscellaneous - - 10,370 10,370 

Total revenues 1,329,200 1,329,200 1,464,793 135,593 

EXPENDITURES 

Current: 

Economic development 3,458,475 11,731,366 58,940 11,672,426 

Capital outlay 1,800 39,100 470,332 ( 431,232) 

Debt service: 

Principal 489,891 866,587 981,062 ( 114,475) 

Interest and fiscal charges - - 191,627 ( 191,627) 

Bond issuance costs - 16,500 255,321 ( 238,821) 

Total expenditures 3,950,166 12,653,553 1,957,282 ( 10,696,271) 


over (under) expenditures ( 2,620,966) ( 11,324,353) ( 492,489) 10,831,864 


Issuance of bonds - 8,670,000 8,670,000 - 

Premium on issuance of bonds - 33,386 33,386 - 

Transfers out ( 196,285) ( 196,285) ( 196,285) 

- 

Total other financing sources (uses) 

(uses) ( 196,285) 8,507,101 8,507,101 - 

CHANGE IN FUND BALANCE ( 2,817,251) ( 2,817,252) 8,014,612 10,831,864 



47


SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS 

TEXAS MUNICIPAL RETIREMENT SYSTEM (TMRS) 


Measurement year December 31, 2015 2016 2017 

Total pension liability 

Service cost $ 512,394 $ 580,682 $ 626,818 

Interest (on the total pension liability) 407,518 468,608 534,454 

Change in benefit terms including 

substantively automatic status - - - 

Difference between expected and 

actual experience 34,307 46,944 ( 21,482) 

Changes in assumptions 251,468 - - 


of employee contributions ( 117,105) ( 121,238) ( 166,370) 

Net change in total pension liability 1,088,582 974,996 973,420 

Total pension liability - beginning 5,624,035 6,712,617 7,687,613 

Total pension liability - ending (a) $ 6,712,617 $ 7,687,613 $ 8,661,033 

Plan fiduciary net position 

Contributions - employer $ 230,360 $ 278,291 $ 332,845 

Contributions - employee 289,761 314,449 343,776 

Net investment income 7,757 382,950 903,473 


of employee contributions ( 117,105) ( 121,238) ( 166,370) 

Administrative expenses ( 4,722) ( 4,321) ( 4,677) 

Other ( 234) ( 234) ( 237) 

Net change in plan fiduciary net position 405,817 849,897 1,408,810 

Plan fiduciary net position - beginning 5,255,769 5,661,586 6,511,483 

Plan fiduciary net position - ending (b) $ 5,661,586 $ 6,511,483 $ 7,920,293 

Net Pension Liability (a) - (b) $ 1,051,031 $ 1,176,130 $ 740,740 

Plan fiduciary net position as a 

percentage of total pension liability 84.34% 84.70% 91.45% 

Covered payroll $ 4,719,828 $ 5,113,962 $ 5,634,270 

Net pension liability as a percentage 

of covered payroll 22.27% 23.00% 13.15% 

Note: GASB Statement 68 requires this schedule to report 10 years of data. Data prior to 2014 is not 

available. 

48

2018 2019 

$ 823,175 $ 921,228 

613,494 690,759 

147,850 - 

( 33,117) 

105,672 

- 10,591 

( 263,334) ( 352,505) 

1,288,068 1,375,745 

8,661,033 9,949,101 

$ 9,949,101 $ 11,324,846 

$ 409,733 $ 516,348 

401,432 503,403 

( 237,587) 1,274,464 

( 263,334) ( 352,505) 

( 4,585) ( 7,186) 

( 240) ( 215) 

305,419 1,934,309 

7,920,293 8,225,712 

$ 8,225,712 $ 10,160,021 

$ 1,723,389 $ 1,164,825 

82.68% 89.71% 

$ 6,386,149 $ 7,191,473 

26.99% 16.20% 

49


SCHEDULE OF EMPLOYER CONTRIBUTIONS 



Fiscal year ended September 30, 2015 2016 2017 

Actuarially determined contribution $ 220,318 $ 270,906 $ 325,033 

Contribution in relation to the actuarially 

determined contribution 220,318 270,906 325,033 

Contribution deficiency - - - 


Contributions as a percentage of covered 

payroll 4.67% 5.30% 5.77% 

Notes to Schedule 

Valuation date 

Actuarially determined contribution rates are calculated 

Methods and assumptions used to determine contribution rates: 

Actuarial Cost Method 

Amortization Method 

Remaining Amortization Period 

Asset Valuation Method 

Inflation 

Salary increases 

Investment rate of return 

Retirement Age 

Entry age normal 

Level percentage of payroll, closed 

25 years 

10 year smoothed market: 12% soft corridor 

2.5% 

3.50% to 11.5% including inflation 

6.75% 

Experienced-based table of rates that are specific to the 

City's plan of benefits. Last updated for the 2019 

valuation pursuant to an experience study of the period 

2014-2018. 

Mortality 

Other information: 

Notes 

Post-retirement:2019 Municipal Retirees of Texas 

Mortality Tables. The rates are projected on a fully 

generational basis with scale UMP. Pre-retirement: 

PUB(10) mortality tables, with the Public Safety table 

used for males and General Employee table used for 

females. The rates are projected on a fully generational 

basis with scale UMP. 

There were no benefit changes during the year. 

50

2018 2019 2020 

$ 380,870 $ 511,496 $ 544,685 

380,870 511,496 544,685 

- - - 

$ 6,173,535 $ 7,012,203 $ 7,419,342 

6.17% 7.29% 7.34% 

51


SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY AND RELATED RATIOS 



Measurement year December 31, 2017 2018 2019 

Total pension liability 

Service cost $ 10,313 $ 12,772 $ 12,226 

Interest (on the total pension liability) 4,945 5,340 6,072 

Difference between expected and 

actual experience - ( 1,035) ( 2,388) 

Changes in assumptions 14,611 ( 13,762) 

41,224 


of employee contributions ( 573) ( 639) ( 720) 

Net change in total pension liability 29,296 2,676 56,414 

Total pension liability - beginning 125,953 155,249 157,925 

Total pension liability - ending (a) $ 155,249 $ 157,925 $ 214,339 


Net pension liability as a percentage 

of covered payroll 2.755% 2.473% 2.980% 

52

COMBINING SCHEDULES


NONMAJOR GOVERNMENTAL FUNDS 

TOURISM FUND – This fund is to account for hotel occupancy taxes collected within the City. These resources 

are restricted for the purpose of promoting tourism in the City. 

PARKS IMPROVEMENT FUND – This fund is to account for contributions and fees restricted for for 

improvements to parks. 

STREET CONSTRUCTION – This fund is to account for street construction and improvements in the City. 

2018 CO BOND FUND – This fund is to account for capital construction funded by the 2018 Certificates of 

Obligation.


COMBINING BALANCE SHEET 



Special 

Revenue 


Total Nonmajor 

Park Street 2018 CO Governmental 

Tourism Improvements Construction Bond Fund Funds 

ASSETS 

Cash and cash equivalents $ 403,283 $ 2,500,000 $ - $ - $ 2,903,283 

Investments - 33,150 - 958,043 991,193 

Accounts receivable (net) - - - - - 

Due from other funds - 669,146 - - 669,146 

Total assets $ 403,283 $ 3,202,296 $ - $ 958,043 $ 4,563,622 

LIABILITIES 

Accounts payable $ 1,033 $ - $ - $ 41,624 $ 42,657 

Accrued liabilities 2,903 - - - 2,903 

Due to other funds - - - 164,805 164,805 

Customer Deposits 3,800 - - - 3,800 

Total liabilities 7,736 - - 206,429 214,165 

FUND BALANCES 

Restricted: 

Culture and recreation 395,547 - - - 395,547 

Capital projects - 3,202,296 - 751,614 3,953,910 

Total fund balances 395,547 3,202,296 - 751,614 4,349,457 

Total liabilities and fund balances $ 403,283 $ 3,202,296 $ - $ 958,043 $ 4,563,622 

53


COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES 



Special 

Revenue 


Total Nonmajor 

Park Street 2018 CO Governmental 

Tourism Improvements Construction Bond Fund Funds 

REVENUES 

Property taxes $ - $ - $ - $ - $ 

- 

Hotel occupancy tax 162,389 - - - 162,389 

Licenses and permits - 208,241 - - 208,241 

Charges for services 14,353 - - - 14,353 

Investment earnings - - - 14,928 14,928 

Miscellaneous 1,564 629 - - 2,193 

Total revenues 178,306 208,870 - 14,928 402,104 

EXPENDITURES 

Current: 

Culture and recreation 95,526 - - - 95,526 

Public works - - - 92,163 92,163 

Capital outlay - - - 41,562 41,562 

Debt service: 

Principal - - - - - 

Interest and fiscal charges - - - - - 

Bond issuance cost - - - - - 

Total expenditures 95,526 - - 133,725 229,251 


over expenditures 82,780 208,870 - ( 118,797) 172,853 

OTHER FINANCING SOURCES 

(USES) 

Issuance of bonds - - - - - 

Premium on issuance of bonds - - - - - 

Transfers in - 2,500,000 - - 2,500,000 

Transfers out ( 14,353) 

- ( 6,762) 

- ( 21,115) 


(uses) ( 14,353) 2,500,000 ( 6,762) 

- 2,478,885 

CHANGE IN FUND BALANCE 68,427 2,708,870 ( 6,762) ( 118,797) 2,651,738 

FUND BALANCE - BEGINNING 327,120 493,426 6,762 870,411 1,697,719 

FUND BALANCE - ENDING $ 395,547 $ 3,202,296 $ - $ 751,614 $ 4,349,457 

54




TOURISM 


Variance with 

Actual Final Budget 

Original Final GAAP Positive 

Budget Budget Basis (Negative) 

REVENUES 

Hotel occupancy tax $ 220,000 $ 220,000 $ 162,389 $( 57,611) 

Charges for services 66,000 66,000 14,353 ( 51,647) 

Miscellaneous - - 1,564 1,564 

Total revenues 286,000 286,000 178,306 ( 107,694) 

EXPENDITURES 

Current: 

Culture and recreation 142,936 142,936 95,526 47,410 

Total expenditures 142,936 142,936 95,526 47,410 


over (under) expenditures 143,064 143,064 82,780 ( 60,284) 


Transfers out ( 66,000) ( 66,000) ( 14,353) 51,647 

Total other financing sources (uses) ( 66,000) ( 66,000) ( 14,353) 51,647 

CHANGE IN FUND BALANCE 77,064 77,064 68,427 ( 8,637) 

FUND BALANCE - BEGINNING 327,120 327,120 327,120 - 

FUND BALANCE - ENDING $ 404,184 $ 404,184 $ 395,547 $( 8,637) 

55




DEBT SERVICE FUND 


Variance with 

Actual Final Budget 

Original Final GAAP Positive 

Budget Budget Basis (Negative) 

REVENUES 

Property taxes $ 1,811,428 $ 1,811,428 $ 1,844,434 $ 33,006 

Total revenues 1,811,428 1,811,428 1,844,434 33,006 

EXPENDITURES 

Debt service: 

Principal 1,007,028 1,007,028 1,168,000 ( 160,972) 


Bond issuance costs - - 43,847 ( 43,847) 

Total expenditures 1,811,428 1,811,428 1,829,747 ( 18,319) 


over expenditures - - 14,687 14,687 


Issuance of refunding bonds - 1,830,000 1,830,000 - 

Premium on issuance of bonds - 216,945 216,945 - 

Payment to escrow agent - current refunding - ( 2,041,218) ( 2,041,218) 

- 

Total other financing sources (uses) - 2,046,945 5,727 ( 2,041,218) 

CHANGE IN FUND BALANCE - 2,046,945 20,414 ( 2,026,531) 

FUND BALANCE - BEGINNING 85,641 85,641 85,641 85,641 

FUND BALANCE - ENDING $ 85,641 $ 2,132,586 $ 106,055 $( 1,940,890) 

56


STATISTICAL SECTION


STATISTICAL SECTION 

(Unaudited) 

This part of the City of Jacksonville, Texas’ comprehensive annual financial report presents detailed 

information as a context for understanding what the information in the financial statements, note 

disclosures, and required supplementary information says about the government’s overall financial 

health. 

Contents 

Page Number 

Financial Trends 57 

These schedules contain trend information to help the reader 

understand how the City’s financial performance and well-being have 

changed over time. 

Revenue Capacity 65 

These schedules contain trend information to help the reader assess 

factors affecting the City’s ability to generate its property and sales 

taxes. 

Debt Capacity 72 

These schedules present information to help the reader assess the 

affordability of the City’s current levels of outstanding debt and the 

City’s ability to issue additional debt in the future. 

Demographic and Economic Information 80 

These schedules offer demographic and economic indicators to help 

the reader understand the environment within which the City’s 

financial activities take place. 

Operating Information 84 

These schedules contain service and infrastructure data to help the 

reader understand how the information in the City’s financial report 

relates to the services the City provides and the activities it performs. 

Sources: Unless otherwise noted, the information in these schedules is derived from the 

comprehensive annual financial reports for the relevant year


NET POSITION BY COMPONENET 

LAST TEN FISCAL YEARS 

(UNAUDITED) 

(ACCRUAL BASIS OF ACCOUNTING) 

2011 2012 2013 2014 


Net investment in capital assets $ 5,871,282 $ 5,758,275 $ 2,857,779 $ 3,924,047 

Restricted 3,936,986 4,666,499 7,755,036 4,630,580 

Unrestricted 1,494,086 1,526,449 1,200,906 2,195,547 

Total governmental activities $ 11,302,354 $ 11,951,223 $ 11,813,721 $ 10,750,174 


Net investment in capital assets $ 2,871,854 $ 791,014 $ 880,487 $ 47,760 

Restricted - - - - 

Unrestricted 236,512 1,729,831 1,151,083 892,368 

Total business-type activities $ 3,108,366 $ 2,520,845 $ 2,031,570 $ 940,128 

Primary government 

Net investment in capital assets $ 8,743,136 $ 6,549,289 $ 3,738,266 $ 3,971,807 

Restricted 3,936,986 4,666,499 7,755,036 4,630,580 

Unrestricted 1,730,598 3,256,280 2,351,989 3,087,915 

Total primary government $ 14,410,720 $ 14,472,068 $ 13,845,291 $ 11,690,302 

57

Table 1 

2015 2016 2017 2018 2019 2020 

$ 3,341,213 $( 61,393) $ 1,205,774 $ 1,569,243 $( 1,441,691) $ 3,113,430 

5,182,954 6,588,865 13,639,229 14,435,879 18,622,126 23,330,619 

3,379,870 3,238,006 1,256,990 1,528,881 1,825,330 5,300,578 

$ 11,904,037 $ 9,765,478 $ 16,101,993 $ 17,534,003 $ 19,005,765 $ 31,744,627 

$( 557,294) $( 2,110,124) $( 2,232,567) $( 258,524) $ 892,476 $ 833,237 

- - - - - 553,249 

1,395,088 2,857,208 4,656,000 3,979,521 3,012,786 3,642,709 

$ 837,794 $ 747,084 $ 2,423,433 $ 3,720,997 $ 3,905,262 $ 5,029,195 

$ 2,783,919 $( 2,171,517) $( 1,026,793) $ 1,310,719 $( 549,215) $ 3,946,667 

5,182,954 6,588,865 13,639,229 14,435,879 18,622,126 23,883,868 

4,774,958 6,095,214 5,912,990 5,508,402 4,838,116 8,943,287 

$ 12,741,831 $ 10,512,562 $ 18,525,426 $ 21,255,000 $ 22,911,027 $ 36,773,822 

58


CHANGES IN NET POSITION 


(UNAUDITED) 


2011 2012 2013 2014 

EXPENSES 


General government $ 919,332 $ 1,083,403 $ 1,042,914 $ 1,166,129 

Public safety 4,736,612 6,076,660 5,628,721 5,955,135 


Public works 1,827,254 1,477,838 1,488,066 1,194,723 

Industrial development 156,953 334,982 249,388 1,265,510 

Economic development 221,164 167,579 180,873 215,678 


Total governmental activities expense 8,423,940 9,732,187 9,271,441 10,654,746 


Utility and storm water 4,690,889 4,982,041 5,239,606 5,849,502 

Total business-type activities expense 4,690,889 4,982,041 5,239,606 5,849,502 

Total Primary government expense 13,114,829 14,714,228 14,511,047 16,504,248 

PROGRAM REVENUES 


Charges for services 

General government 140,565 - - - 

Public safety 660,196 644,856 554,342 668,752 

Cultural and recreational 38,856 17,669 161,049 240,294 

Public works - 282,194 405,231 399,922 

Industrial development - - - - 

Operating grants/contributions 337,921 641,779 427,099 162,785 

Capital grants/contributions 115,491 161,266 643,386 - 

Total governmental activities 1,293,029 1,747,764 2,191,107 1,471,753 


Charges for services 2,768,747 3,380,120 3,208,811 3,924,307 

Capital grants/contributions 18,350 147,996 205,388 - 

Total business-type activities 2,787,097 3,528,116 3,414,199 3,924,307 

Total primary government 4,080,126 5,275,880 5,605,306 5,396,060 

NET (EXPENSE) REVENUES 

Governmental activities ( 6,255,809) ( 5,913,026) ( 6,232,833) ( 8,260,434) 

Business-type activities ( 1,581,597) ( 678,143) ( 1,276,690) ( 1,057,734) 

Total primary government ( 7,837,406) ( 6,591,169) ( 7,509,523) ( 9,318,168) 

59

Table 2 

2015 2016 2017 2018 2019 2020 

$ 1,213,141 $ 1,588,331 $ 1,785,438 $ 1,082,232 $ 1,667,818 $ 1,876,147 

6,324,778 6,781,475 7,043,748 8,386,948 9,257,914 8,680,540 

355,288 367,427 393,236 415,230 427,254 848,530 

1,407,964 1,601,788 1,642,088 1,483,194 1,847,970 2,774,598 

85,544 63,339 96,124 173,975 155,888 1,104,636 

134,769 188,748 394,622 251,187 191,916 58,940 

444,474 328,730 563,095 453,671 454,153 1,550,846 

9,965,958 10,919,838 11,918,351 12,246,437 14,002,913 16,894,237 

5,672,450 6,461,674 6,605,036 6,838,560 7,838,995 8,812,523 

5,672,450 6,461,674 6,605,036 6,838,560 7,838,995 8,812,523 

15,638,408 17,381,512 18,523,387 19,084,997 21,843,908 25,706,760 

- - - - - - 

744,683 744,683 467,813 467,813 432,708 410,859 

321,703 321,703 453,860 453,860 811,267 1,105,967 

401,870 401,870 456,898 456,898 550,923 745,400 

- - - - - 7,589,503 

224,921 224,921 339,721 339,721 575,728 1,372,677 

- - - - - 3,519,935 

1,693,177 1,693,177 1,718,292 1,718,292 2,370,626 14,744,341 

4,747,708 4,747,708 5,577,700 5,577,700 8,009,066 8,715,261 

- - 818,071 818,071 - 1,104,544 

4,747,708 4,747,708 6,395,771 6,395,771 8,009,066 9,819,805 

6,440,885 6,440,885 8,114,063 8,114,063 10,379,692 24,564,146 

( 8,961,569) ( 8,961,569) ( 8,247,666) ( 8,247,666) ( 11,632,287) ( 2,149,896) 

( 1,101,794) ( 1,101,794) ( 94,750) ( 94,750) 170,071 1,007,282 

( 10,063,363) ( 10,063,363) ( 8,342,416) ( 8,342,416) 11,462,216 ( 1,142,614) 

60


CHANGES IN NET POSITION 


(UNAUDITED) 


2011 2012 2013 2014 

GENERAL REVENUES 


Taxes 

Property taxes $ 3,724,495 $ 3,740,229 $ 3,828,869 $ 4,090,144 

Sales tax 1,943,444 2,430,548 2,754,847 3,020,651 

Franchise tax 585,450 585,424 577,663 648,314 

Hotel/motel taxes 55,940 83,506 94,877 103,030 

Alcoholic Beverage tax 3,731 4,186 5,728 8,224 


Gain on sale of land held for resale - 1,178,986 - - 

Miscellaneous 87,343 92,067 91,657 304,230 

Transfers - - - 84,731 

Total governmental activities 6,503,129 8,213,078 7,440,762 8,362,407 


Investment earnings 15,887 6,877 2,623 918 

Transfers - - - ( 84,731) 

Gain on sale of capital assets - - - - 

Total business-type activities 15,887 6,877 2,623 ( 83,813) 

Total primary government 6,519,016 8,219,955 7,443,385 8,278,594 

CHANGE IN NET POSITION 

Governmental activities ( 449,058) 648,869 ( 137,502) ( 845,039) 

Business-type activities ( 750,695) ( 587,521) ( 489,275) ( 754,231) 

Total primary government $( 1,199,753) $ 61,348 $( 626,777) $( 1,599,270) 

61

Table 2 

2015 2016 2017 2018 2019 2020 

$ 4,188,900 $ 4,722,883 $ 5,271,979 $ 5,900,323 $ 6,917,413 $ 8,000,818 

4,072,836 3,897,973 3,761,566 4,433,407 4,693,893 5,584,807 

780,644 759,708 853,683 735,818 777,141 742,438 

1,228,282 165,188 162,468 169,662 195,732 162,389 

8,663 12,501 11,887 13,641 13,950 9,878 

108,996 117,567 138,709 189,107 353,138 332,046 

881 1,148,148 196,685 - - - 

279,436 166,420 199,281 126,087 - 56,382 

- - - ( 137,958) 152,782 - 

10,990,388 10,990,388 10,429,431 11,430,087 13,104,049 14,888,758 

881 1,412 5,545 13,203 14,194 8,215 

- - 166,821 137,958 - - 

- - - - - 108,436 

881 1,412 172,366 151,161 14,194 116,651 

9,563,238 10,991,800 10,601,797 11,581,248 13,118,243 15,005,409 

1,314,691 2,022,092 546,815 1,537,785 1,471,762 12,738,862 

( 93,869) ( 90,710) 1,515,367 1,303,131 184,265 1,123,933 

$ 1,220,822 $ 1,931,382 $ 2,062,182 $ 2,840,916 $ 1,656,027 $ 13,862,795 

62


FUND BALANCES 



(UNAUDITED) 

(MODIFIED ACCRUAL BASIS OF ACCOUNTING) 

2011 2012 2013 2014 

General Fund 

Nonspendable: 

Prepaids and Inventory $ 45,024 $ 93,372 $ 75,521 $ 91,123 

Restricted: 

Use of Bond proceeds - - 1,057,000 - 

Capital projects - - - - 

Committed: 

Court Security 72,582 74,970 50,748 35,799 

Court Technology 65,772 46,611 39,835 29,049 

Public Safety 27,414 36,849 15,650 61,143 

Assigned: 

Subsequent year's budget - - - - 

Unassigned 932,165 1,016,686 1,064,147 958,619 

Total General Fund $ 1,142,957 $ 1,268,488 $ 2,302,901 $ 1,175,733 

All other Governmental Funds 

Nonspendable: 

Prepaid $ - $ - $ - $ - 

Restricted: 

Debt service 41,236 90,662 89,728 75,585 

Capital projects 1,469,680 1,243,228 506,821 231,865 

Committed: 

Culture and recreation - 16,270 28,229 54,852 

Industrial & economic development 3,067,049 2,814,814 4,278,133 6,229,501 

Total all other governmental funds 4,577,965 4,164,974 4,902,911 6,591,803 

Total Fund Balances $ 7,227,643 $ 5,720,922 $ 5,433,462 $ 7,205,812 

63

Table 3 

2015 2016 2017 2018 2019 2020 

$ 91,692 $ 92,413 $ 16,017 $ 7,222 $ 8,085 $ 4,182 

- - - - - - 

218,825 218,825 218,825 256,527 256,527 256,527 

6,246 13,885 20,064 25,482 31,542 34,519 

28,868 923 1,017 305 37 3,293 

39,213 44,755 35,075 31,169 35,382 73,534 

- - - - - 428,796 

1,479,205 1,580,167 2,032,692 2,205,015 2,747,209 4,154,178 

$ 1,864,049 $ 1,950,968 $ 2,323,690 $ 2,525,720 $ 3,078,782 $ 4,955,029 

$ - $ - $ 198,789 $ 32,336 $ 32,336 $ - 

118,350 98,857 79,449 96,442 85,641 106,055 

180,078 155,502 355,991 372,997 6,717,817 8,283,793 

74,911 118,313 238,186 268,902 327,120 395,547 

5,642,893 6,864,906 12,491,833 13,332,513 11,168,060 25,753,572 

6,016,232 7,237,578 13,364,248 14,103,190 18,330,974 34,538,967 

$ 7,767,536 $ 7,880,281 $ 15,687,938 $ 16,628,910 $ 21,409,756 $ 39,493,996 

64


CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS 


(UNAUDITED) 

(MODIFIED ACCRUAL BASIS OF ACCOUNTING) 

2011 2012 2013 2014 

REVENUE 

Property taxes $ 3,727,806 $ 3,751,225 $ 3,842,276 $ 4,081,650 

Sales tax 1,943,444 2,430,548 2,754,847 3,020,651 

Franchise tax 585,450 585,424 577,663 648,314 

Hotel occupancy taxes 55,940 83,506 94,877 103,030 

Alcoholic Beverage tax 3,731 4,186 5,728 8,224 

Licenses and permits 240,294 236,842 321,703 342,782 

Fines and Forfeitures 668,752 707,514 744,683 495,823 

Charges for services 399,922 399,136 401,870 428,433 


Contributions - - - - 

Miscellaneous 87,343 100,902 91,657 328,881 

Grants from governmental agencies - 600,002 - - 

Intergovernmental 762,785 224,484 224,921 180,262 

Total Revenues 8,578,193 9,221,901 9,147,346 9,741,133 

EXPENDITURES 

Current: 

General government 854,042 840,664 888,119 1,023,145 

Public safety 4,391,479 4,739,546 5,095,260 6,122,424 


Public works 916,419 897,334 927,032 919,529 

Industrial development 115,968 297,788 210,253 1,261,582 

Economic development 206,930 153,764 168,353 212,274 

Capital Outlay 3,720,815 2,553,143 595,495 1,703,768 

Debt Service: 

Principal 323,762 517,725 342,045 1,150,444 


Issuance costs - - - - 

Total Expenditures 11,113,649 10,525,905 8,849,892 13,202,603 

EXCESS (DEFICIENCY) OF REVENUES 

OVER (UNDER) EXPENDITURES ( 2,535,456) ( 1,304,004) 297,454 ( 3,461,470) 


Sale of real property - 1,985,786 - - 

Release of reserve - ( 769,300) 

- - 

Note and Lease proceeds 445,367 950,986 1,368,851 - 

Issuance of refunding bonds - - - - 

Issuance of bonds 1,790,000 - 1,090,000 1,674,000 

Payment to refunding escrow agent - - - - 

Premium on issuance of bonds 45,371 - ( 33,000) 

- 

Transfers in 226,825 245,140 290,544 457,750 

Transfers out ( 226,825) ( 245,140) ( 290,544) ( 373,019) 

Total other financing sources (uses) 2,280,738 2,167,472 2,425,851 1,758,731 

NET CHANGE IN FUND BALANCE $( 254,718) $ 863,468 $ 2,723,305 $( 1,702,739) 

Debt service as a percentage of 

noncapital expenditures 10.1% 11.1% 9.5% 14.3% 

65

Table 4 

2015 2016 2017 2018 2019 2020 

$ 4,177,442 $ 4,718,288 $ 5,248,141 $ 5,919,915 $ 6,881,332 $ 7,905,106 

4,072,836 3,897,973 3,761,566 4,433,407 4,693,893 5,584,807 

780,644 759,708 853,683 735,818 777,141 742,438 

122,882 165,188 162,468 169,662 195,732 162,389 

8,663 12,501 11,887 13,641 13,950 9,878 

453,860 383,631 448,161 924,535 811,267 1,277,120 

467,813 469,496 469,637 363,928 432,708 379,145 

456,898 490,104 492,042 525,998 550,923 8,154,215 

108,996 117,567 138,703 189,107 353,138 332,046 

- - - - - 144,367 

274,542 167,734 189,597 126,087 140,620 56,382 

- - - - - - 

339,721 608,311 454,275 701,691 567,042 1,372,133 

11,264,297 11,790,501 12,230,160 14,103,789 15,417,746 26,120,026 

1,033,065 1,165,085 1,277,771 755,204 1,052,036 1,610,525 

5,607,528 6,044,534 6,403,553 7,547,007 8,519,195 8,070,342 

309,878 342,409 324,024 373,696 393,798 800,430 

980,329 1,240,448 1,160,727 1,071,367 1,411,637 2,063,724 

81,704 59,489 94,367 173,975 155,888 1,104,636 

131,452 581,446 157,583 70,634 191,916 58,940 

541,862 937,304 2,494,281 1,203,551 7,000,822 2,225,172 

707,505 706,007 1,024,536 1,145,992 1,838,205 2,534,062 

472,014 401,682 599,303 491,610 822,758 931,131 

- - - - - 299,168 

9,865,337 11,478,404 13,536,145 12,833,036 21,386,255 19,698,130 

1,398,960 312,097 (1,305,985) 1,270,753 ( 5,968,509) 6,421,896 

- 1,148,148 196,685 - - - 

- - - - - - 

- - - - - - 

- - - - - 1,830,000 

4,097,000 4,208,000 3,305,000 - 10,130,000 9,443,000 

( 3,762,314) 

- ( 1,016,257) 

- - ( 2,041,218) 

176,016 - 238,193 - 619,355 250,331 

398,950 402,540 578,062 449,480 1,251,476 3,254,225 

( 398,950) ( 402,540) ( 744,883) ( 587,438) ( 1,251,476) ( 3,254,225) 

510,702 5,356,148 2,556,800 ( 137,958) 10,749,355 9,482,113 

$ 1,909,662 $ 5,668,245 $ 1,250,815 $ 1,132,795 $ 4,780,846 $ 15,904,009 

12.7% 10.5% 14.7% 14.1% 18.5% 21.6% 

66


ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY 


Fiscal 

Year 

Less: 

Tax 

Ended Real Personal Productivity Exempt Homestead 

9/30 Property Property Loss Property Cap 

2011 652,514,386 29,903,129 26,412,051 83,514,075 330,918 

2012 668,354,184 28,879,710 28,239,195 94,244,102 261,107 

2013 683,801,129 30,765,344 29,451,035 100,008,667 214,758 

2014 714,110,049 45,594,786 29,860,819 101,265,277 131,063 

2015 829,443,843 95,263,154 30,316,461 247,705,056 1,219,014 

2016 933,659,144 162,451,667 30,586,921 340,827,403 593,397 

2017 1,024,499,733 174,197,205 30,293,701 340,525,233 6,793,892 

2018 1,109,089,140 180,656,088 29,393,387 329,333,359 8,777,701 

2019 1,234,812,295 226,387,780 34,876,283 402,360,627 16,130,226 

2020 1,399,353,442 326,185,986 35,911,751 519,618,786 17,745,742 

Source: Ellis Central Appraisal District. 

67

Table 5 

Total Total Total 

Taxable Freeze Direct 

Assessed Freeze Adjusted Tax 

Value Taxable Taxable Rate 

572,160,471 38,539,898 533,620,573 0.64900 

574,489,490 41,253,593 533,235,897 0.64900 

584,892,013 42,696,948 542,195,065 0.64900 

628,447,676 45,092,454 583,355,222 0.64900 

645,466,466 51,633,715 593,832,751 0.64900 

724,103,090 51,347,942 672,755,148 0.64900 

821,084,112 66,884,157 754,199,955 0.64900 

922,240,781 72,570,160 849,670,321 0.64900 

1,007,832,939 84,595,368 923,237,571 0.70548 

1,152,263,149 102,372,801 1,049,890,348 0.70365 

68


DIRECT AND OVERLAPPING PROPERTY TAX RATES 

Table 6 


Fiscal 

Year 

City Direct Rates 

Debt 

Ended General Service Ellis Red Oak 

9/30 Fund Fund Total County ISD 

2011 0.553700 0.095300 0.649000 0.360091 1.540000 

2012 0.565100 0.083900 0.649000 0.380091 1.540000 

2013 0.559700 0.089300 0.649000 0.380091 1.540000 

2014 0.554100 0.094900 0.649000 0.380091 1.540000 

2015 0.544500 0.104500 0.649000 0.413599 1.540000 

2016 0.544300 0.104700 0.649000 0.413599 1.540000 

2017 0.544300 0.104700 0.649000 0.413599 1.540000 

2018 0.541800 0.107200 0.649000 0.393221 1.540000 

2019 0.549700 0.155780 0.705480 0.370533 1.540000 

2020 0.539203 0.164442 0.703645 0.329557 1.438350 

Source: Ellis Central Appraisal District 

69


PRINCIPAL PROPERTY TAX PAYERS 

Table 7 

CURRENT YEAR AND NINE YEARS AGO 

2020 FY % of Total 2011 FY % of Total 

Taxable Taxable Taxable Taxable 

Assessed Assessed Assessed Assessed 

Taxpayer Rank Valuation Valuation Valuation Valuation 

Triumph Aerostructures LLC 1 $ 51,194,772 

4.44% $ 

- 

Red Oak Town Village LP 2 32,200,000 2.79% 17,337,410 3.03% 

Wal Mart Real Estate 3 10,229,250 0.89% - - 

Red Oak Depot 1 LTD 4 8,287,500 0.72% 5,402,430 0.94% 

Oncor Electric Delivery Company 5 7,342,170 0.64% 5,619,530 0.98% 

Rose Sierra Grande LP 6 6,427,670 0.65% 3,401,110 0.59% 

Ovilla 35 Plaza LLC 7 5,463,120 0.47% - - 

Rose Living Oaks LP 8 5,113,300 0.44% 2,700,000 0.47% 

Access Self Storage Red Oak LP 9 5,091,650 0.44% - - 

Knapheide Truck Equipment Southwest 10 4,766,960 0.41% - - 

Red Oak Senior Care Center LLC 3,302,770 0.58% 

Blackstone Developers LLC 2,798,850 0.49% 

Tiger Mart #12 2,322,200 0.41% 

Apple Capital LLC 2,300,000 0.40% 

Southwestern Bell Telephone Co 2,236,490 0.39% 

$ 136,116,392 14.76% $ 47,420,790 

8.29% 

Source: First Southwest Securities 

Ellis Central Appraisal District 

70



PROPERTY TAX LEVIES AND COLLECTIONS 

Table 8 


Fiscal 

Interest 

Year and % of Delinquent 

Ended Tax General Sinking Adjusted Current Tax Tax 

9/30 Rate Fund Fund Tax Levy Collected Collections 

2011 0.649000 0.553700 0.095300 3,719,127 97.98% 41,953 

2012 0.649000 0.565100 0.083900 3,729,833 98.20% 53,372 

2013 0.649000 0.559700 0.089300 3,803,694 98.99% 49,498 

2014 0.649000 0.554100 0.094900 4,066,389 99.08% 29,363 

2015 0.649000 0.544500 0.104700 4,168,461 99.13% 25,275 

2016 0.649000 0.544300 0.104700 4,670,316 99.18% 55,383 

2017 0.649000 0.544300 0.104700 5,269,689 98.67% 26,384 

2018 0.649000 0.541800 0.107200 5,892,911 99.06% 50,326 

2019 0.705480 0.549700 0.155780 6,895,960 99.12% 20,516 

2020 0.703645 0.539203 0.164442 7,843,461 99.36% 68,634 

Note: Includes General and Debt Service Funds. 

Data comes from year end Tax Report form Ellis County. 

71


RATIOS OF GENERAL OUTSTANDING DEBT 


Fiscal 

Year General 

Governmental Activities 

Certificate of 

Ended Obligation Obligation Revenue Tax Capital 

9/30 Bonds Bonds Bonds Notes Leases 

Governmenta 

2011 5,450,000 1,770,000 985,000 - 563,938 

2012 5,260,000 1,770,000 895,000 - 1,274,237 

2013 5,065,000 2,860,000 800,000 - 1,185,006 

2014 4,865,000 2,825,000 739,000 914,000 269,282 

2015 4,580,000 2,770,000 663,000 1,171,000 170,124 

2016 4,415,000 3,493,000 3,931,000 934,000 96,752 

2017 4,200,000 4,881,000 3,663,000 1,477,000 65,244 

2018 3,990,000 4,669,000 3,305,000 1,254,000 32,769 

2019 3,770,000 14,149,000 2,937,000 1,020,000 - 

2020 5,335,000 11,696,000 11,110,000 1,350,000 - 

Note: Detail regarding the City's outstanding debt can be found in the notes to the financial statement. 

Source: City Staff and Statistical Projections based on U.S. Census Bureau data. As reported by Ellis 

County Appraisal District and City records. 

72

Table 9 

Governmental 

Activities 

Unamortized General 

Business Type Activities 

Certificate of Unamortized Total 

Premium Obligation Obligation Tax Capital Premium Primary 

(Discount) Bonds Bonds Notes Leases (Discount) Government 

73,910 8,060,000 10,200,000 - 56,553 86,795 27,246,196 

69,949 7,775,000 9,930,000 - 32,603 81,146 27,087,935 

65,012 17,810,000 - - 140,528 34,398 27,959,944 

61,102 17,215,000 - 399,000 102,624 31,937 27,421,945 

197,856 16,740,000 - 380,000 72,504 103,631 26,848,115 

184,664 16,245,000 1,982,000 301,000 40,733 93,841 31,716,990 

392,848 15,520,000 3,652,000 221,000 12,305 528,973 34,613,370 

362,548 14,875,000 3,429,000 140,000 - 487,829 32,545,146 

332,248 13,925,000 3,407,000 73,000 - 446,685 40,059,933 

1,026,537 12,400,000 3,146,000 419,000 - 1,181,654 47,549,191 

73



RATIOS OF GENERAL OUTSTANDING DEBT 

Table 9 


Fiscal 

% of 

Year Taxable Actual Taxable 

Ended Assessed Value of Estimated Per 

9/30 Valuation (2) Property Population (1) Capita 

2011 573,055,050 4.75% 10,769 0.0395% 

2012 574,704,657 4.71% 11,090 0.0409% 

2013 586,085,389 4.77% 11,090 0.0397% 

2014 628,447,676 4.36% 11,245 0.0410% 

2015 645,466,466 4.16% 11,530 0.0429% 

2016 724,103,090 4.38% 12,260 0.0387% 

2017 821,084,112 4.22% 12,600 0.0364% 

2018 922,240,781 3.53% 12,760 0.0392% 

2019 923,237,571 4.34% 13,400 0.0334% 

2020 1,152,263,149 413.00% 14,732 0.0310% 

74


RATIOS OF GENERAL BONDED DEBT 


Net G.O. Certificates 

Fiscal Taxable Tax Debt of 

Year Taxable Assessed Outstanding Obligation 

Ended Estimated Assessed Valuation at End at End 

9/30 Population (1) Valuation (2) Per Capita of Year of Year 

2011 10,769 572,160,471 51,673 13,670,705 11,970,000 

2012 11,090 574,489,490 51,822 13,186,095 11,700,000 

2013 11,090 584,892,013 52,134 22,974,410 2,860,000 

2014 11,245 628,447,676 55,887 22,173,039 2,825,000 

2015 11,530 645,466,466 55,981 21,621,487 2,770,000 

2016 11,560 724,103,090 62,639 20,938,505 5,475,000 

2017 12,600 821,084,112 65,165 20,248,973 8,533,000 

2018 12,760 922,240,781 72,276 19,715,377 8,098,000 

2019 13,400 1,007,832,939 75,211 18,473,933 17,556,000 

2020 14,732 1,152,263,149 78,215 19,943,191 14,842,000 

(1) Source: City Staff and Statistical Projections based on U.S. Census Bureau data. 

(2) As Reported by Ellis County Appraisal District. 

(3) See Statement of Net Position - Net Position Restricted for Debt Service. 

N/A Information not Available 

75

Table 10 

Accumulated Ratio of Net Net 

General Resources G.O. Tax Debt G.O. Tax 

Bonded Restricted for to Taxable Debt 

Tax Debt Repayment Net General Assessed Per 

Notes in Total of Debt (3) Bonded Debt Valuation Capita 

- 25,640,705 N/A N/A 2.39% 651 

- 24,886,095 N/A N/A 2.30% 634 

- 25,834,410 75,585 25,758,825 3.93% 2,072 

1,313,000 26,311,039 118,350 26,192,689 3.53% 1,972 

1,551,000 25,942,487 98,857 25,843,630 3.35% 1,875 

1,235,000 27,648,505 97,121 27,551,384 2.89% 1,811 

1,698,000 30,479,973 79,449 30,400,524 2.47% 1,607 

1,394,000 29,207,377 96,442 29,110,935 2.14% 1,545 

1,093,000 37,122,933 85,641 37,037,292 1.83% 1,379 

1,769,000 36,554,191 106,055 36,448,136 316.00% 2,474 

76


DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES 

Table 11 


City's 

Total Estimated Overlapping 

Tax Debt % GO 

Taxing Jurisdiction as of 9/30/2020 Applicable Tax Debt 

Overlapping Debt 

Ellis County $ 33,200,000 7.70% $ 2,556,400 

Red Oak Independent School District 98,605,000 51.87% 51,146,414 

Total Overlapping Debt 53,702,814 

Direct Debt 

City of Red Oak 34,346,000 100.00% 34,346,000 

Total Direct Debt 34,346,000 

Total Direct and Overlapping GO Tax Debt $ 88,048,814 

Source: Hilltop Securities and/or Municipal Advisory Council of Texas 

77


LEGAL DEBT MARGIN INFORMATION 

Table 12 


Net Assessed Value $ 

1,152,263,149 

Plus Exempt Property 573,276,279 

Total Assessed Value $ 

1,725,539,428 

Debt Limit - (10%) of Total Assessed Value $ 

172,553,943 

Less amount of debt applicable to debt limits 33,332,000 

Legal Debt Margin 139,221,943 

The Debt Rate legal limit percentage 19% 

As a home rule city, the City of Red Oak is not limited by law in the amount of debt it may issue. 

Chapter VIII, Section 8.01 of the City of Red Oak Charter states in part: 

The Council shall have the power granted to municipalities by the Constitution and laws of the state of Texas 

to levy, assess and collect lawful taxes on property within the territory of the City, not to exceed the 

maximum limits set by the constitution and laws of the State of Texas. 

Texas Local Government code section 1507.152 -.154 states the governing body may pledge to the payment 

of bonds issued under this subchapter an ad valorem tax sufficient to pay when due the principal of and 

interest on the bonds. A municipality may not issue bonds under this subchapter in a principal amount that: 

Exceeds the amount of loss sustained or anticipated by the municipality and the cost of issuing the bonds; or 

would result in the outstanding aggregate principal amount of tax bond indebtedness of the municipality 

exceeding 10% of the Assessed valuation of taxable property in the municipality according to the most 

recent ad valorem tax roll of the municipality. 

78


PLEDGE-REVENUE COVERAGE 

Table 13 


Fiscal (1) (2) (3) 

Year Less Net Average 

Ended Gross Operating Available Debt 

9/30 Revenue Expense Revenue Service Coverage 

2011 3,924,307 2,744,619 1,179,688 1,745,700 1.03 

2012 4,367,643 3,104,920 1,262,723 1,775,620 0.95 

2013 4,747,708 3,491,798 1,255,910 1,389,497 1.05 

2014 5,179,084 4,042,943 1,136,141 1,521,694 1.31 

2015 5,577,700 3,945,042 1,632,658 1,542,945 1.54 

2016 6,369,552 4,579,093 1,790,459 1,698,340 1.42 

2017 7,129,965 4,631,965 2,498,000 1,484,467 1.97 

2018 7,676,753 4,851,428 2,825,325 1,538,190 1.79 

2019 8,009,066 5,633,340 2,375,726 1,581,608 1.27 

2020 8,727,199 6,569,673 2,157,526 1,316,000 1.14 

Source: Comprehensive annual report 

(1) Gross Revenue includes all Water and Sewer revenues. 

(2) Operating expense includes all Water and Sewer expense excluding depreciation. 

(3) Average annual debt service is the average principal and interest payments due over the 

remaining term of all water and sewer bonds. 

79


DEMOGRAPHIC AND ECONOMIC STATISTICS 

Table 14 


Fiscal 

Year Per Capita Median 

Ended Estimated Personal Household Median 

9/30 Population (1) Income Income Age 

2011 10,769 24,823 66,375 33 

2012 11,090 24,075 63,098 33 

2013 11,090 24,075 63,098 33 

2014 11,245 24,985 64,992 33 

2015 11,530 24,985 64,992 33 

2016 11,560 24,985 64,992 33 

2017 12,600 N/A N/A N/A 

2018 12,760 27,019 70,250 34 

2019 13,400 28,250 78,712 34 

2020 14,732 32,195 79,448 34 

(1) Source: City Staff and Statistical Projections based on U.S. Census Bureau data. 

Note: Unable to obtain some date for the City of Red Oak 

N/D No reliable data 

N/A Information not available 

80



PRINCIPAL EMPLOYERS 

Table 15 


Approximate 

Number of 

Name of Firm Type of Business Employees 

Red Oak Independent School District Education 863 

Bombardier US Aerospace Corporation Industry 802 

Triumph Aerostructures Industry 482 

Walmart General retail/grocery 328 

City of Red Oak Local Government 117 

Red Oak Health & Rehab Medical 105 

Life School Elementary School 103 

Brookshire Grocery Grocery Supermarket 95 

Life School Central Office School 79 

NFI Industries Industry 75 

Source: City Staff 

81


FULL-TIME EQUIVALENT CITY EMPLOYEES BY FUNCTION AND PROGRAM 


Function/Program 2011 2012 2013 2014 2015 2016 

General Government: 

Administration 9 9 9 9 3 3 

City Secretary - - - - 1 1 

Finance - - - - 4 4 

Human Resource - - - - 1 1 

Information Technology 1 1 1 1 1 1 

Economic/ Industrial Development 1 1 1 1 1 1 

Utility Billing 2 2 2 2 2 2 

Public Works: 

Street 6 6 7 8 8 8 

Water and Sewer 7 8 9 10 10 10 

Storm Water Drainage N/A N/A N/A N/A N/A 2 

Public Safety: 

Police 21 22 25 25 27 27 

Fire 21 24 26 26 26 26 

Municipal Court 2 2 2 2 2 2 

Community Services 

Code Enforcement 1 1 3 3 3 4 

Animal Control 1 1 1 1 1 1 

Parks 1 - - - - - 

Library - - - - - - 

Tourism 1 1 1 1 1 1 

Total City Employees 74 78 87 88 90 94 

Note: FTE are based on 2080 hours 

The Water and Sewer personnel are paid by the Water and Sewer Fund 

Economic development employees are paid from the General Fund 

Human Resources was created in 2007, terminated in 2010, re-instated in 2015. 

The Library is contracted through LSSI 

Storm Water Drainage was created in 2016 


Source: City Staff 

82

Table 16 

2017 2018 2019 2020 

3 3 3 3 

1 1 1 1 

4 4 4 4 

1 2 2 2 

1 1 2 2 

1 1 1 1 

2 3 3 3 

8 9 9 10 

10 10 10 10 

3 4 4 4 

27 30 33 33 

26 27 30 30 

2 3 2 2 

4 7 7 6 

1 1 1 2 

- - - 4 

- - - - 

1 1 1 1 

95 106 112 117 

83


OPERATING INDICATORS BY FUNCTION/PROGRAM 


Function/Program 2011 2012 2013 

General Government: 

Information Technology 

Installed computer 12 12 13 

Installed servers 2 1 2 

Public Works: 

Street 

Number of Lane Miles of Paved Streets N/D N/D N/D 

Lane Miles - Concrete N/D N/D N/D 

Lane Miles - Asphalt N/D N/D N/D 

Water and Sewer 

Number of Water Customers 2,293 2,351 2,585 

Number of Sewer Customers 1,970 2,037 3,201 


Police 

Calls for Service 18,739 36,965 43,889 

Fire 

Calls for Service 2,265 2,226 2,200 


Cases Filed 8,037 7,077 7,663 

Cases Closed 6,626 8,397 7,566 

Cases appealed - - 2 

Warrant issued 3,036 3,696 3,958 


Code Enforcement 

Building Permits Issued 

Residential 47 56 87 

Value $ 6,783,986 $ 8,358,180 $ 13,345,633 

Commercial 4 5 2 

Value $ 10,571,000 $ 22,351,000 $ 601,833,170 


Number of Animals N/D 397 422 

Source: City Departments 

N/D No reliable data 


(1) Represents a partial year 

84

Table 17 

2014 2015 2016 2017 2018 2019 2020 

12 12 16 55 122 124 135 

2 2 5 22 24 24 22 

N/D N/D N/D N/D 67 72 75 

N/D N/D N/D N/D 30 35 38 

N/D N/D N/D N/D 36.42 36.42 36 

2,473 2,539 2,751 2,923 3,016 3,098 3,297 

3,318 3,413 3,365 3,520 3,611 3,833 4,007 

44,987 46,216 48,000 48,156 41,410 60,793 71,261 

2,297 2,115 2,300 2,655 2,789 2,710 3,468 

3,773 2,977 2,800 2,487 2,278 3,213 2,689 

4,217 3,455 2,300 652 1,818 1,218 963 

3 - - - - - - 

3,032 2,259 2,181 2,303 2,275 3,637 1,714 

106 168 102 94 180 197 291 

$ 17,251,329 $ 30,083,192 $ 20,857,288 $ 38,822,818 $ 67,114,128 $ 68,791,522 $ 85,152,245 

11 25 5 8 29 16 8 

$ 1,324,400 $ 6,766,841 $ 3,605,000 $ 14,907,191 $ 44,895,826 $ 10,652,239 $ 52,117,773 

473 708 675 590 (1) 513 616 456 

85



CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM 

Table 18 


Function/Program 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 

Public Works: 

Utilities 

Buildings 1 1 1 1 1 1 1 1 1 1 


Police 

Stations 2 2 2 2 2 2 2 2 2 2 

Fire 

Stations 2 2 2 2 2 2 2 2 2 2 


Buildings 1 1 1 1 1 1 1 1 1 1 


Parks 

Acreage 176.5 176.5 176.5 176.5 176.5 176.5 176.5 176.5 176.5 176.5 

Parks 

Buildings 1 1 1 1 1 1 1 1 1 1 


Buildings 1 1 1 1 1 1 1 1 1 1 

Source: 

N/D 

N/A 

City Departments 

No reliable data 

Information not available 

86


INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL 

REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN 

AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE 

WITH GOVERNMENT AUDITING STANDARDS 

Honorable Mayor 

Members of the City Council 


We have audited, in accordance with auditing standards generally accepted in the United States of 

America and the standards applicable to financial audits contained in Government Auditing Standards issued 

by the Comptroller General of the United States, the financial statements of the governmental activities, the 

business-type activities, the aggregate discretely presented component units, each major fund, and the 

aggregate remaining fund information of the City of Red Oak, Texas as of and for the year ended September 

30, 2020, and the related notes to the financial statements, which collectively comprise the City of Red Oak, 

Texas’ basic financial statements and have issued our report thereon dated May 10, 2021. 

Internal Control Over Financing Reporting 

In planning and performing our audit of the financial statements, we considered the City of Red Oak, 

Texas’ internal control over financial reporting (internal control) as a basis for designing audit procedures that 

are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, 

but not for the purpose of expressing an opinion on the effectiveness of City of Red Oak, Texas’ internal 

control. Accordingly, we do not express an opinion on the effectiveness of City of Red Oak, Texas’ internal 

control. 

A deficiency in internal control exists when the design or operation of a control does not allow 

management or employees, in the normal course of performing their assigned functions, to prevent, or detect 

and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of 

deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the 

entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant 

deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a 

material weakness, yet important enough to merit attention by those charged with governance. 

Our consideration of internal control over financial reporting was for the limited purpose described in 

the preceding paragraph and was not designed to identify all deficiencies in internal control that might be 

material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies 

may exist that have not been identified. We did identify certain deficiencies in internal control, described in 

the accompanying schedule of findings and responses as item 2020-001, to be material weaknesses. 

87

Compliance and Other Matters 

As part of obtaining reasonable assurance about whether the City of Red Oak, Texas’ financial 

statements are free from 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 financial statements. 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 instances of noncompliance or other matters that are required to be reported under 

Government Auditing Standards, and which are described in the accompanying schedule of findings and 

responses as item 2020-001. 

City of Red Oak, Texas’ Response to Findings 

The City of Red Oak, Texas’ response to the findings identified in our audit is described in the 

accompanying schedule of findings and responses. The City’s response was not subjected to the auditing 

procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. 

Purpose of this Report 

The purpose of this report is solely to describe the scope of our testing of internal control and 

compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s 

internal control or on compliance. This report is an integral part of an audit performed in accordance with 

Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this 

communication is not suitable for any other purpose. 

Waco, Texas 

May 10, 2021 

88


SCHEDULE OF FINDINGS AND RESPONSES 


Item 2020-001 

Criteria: 

Condition: 

Effect: 

Recommendation: 

Management’s Response: 

Before a municipality may enter into a contract that requires an 

expenditure of more than $50,000, the municipality must comply with 

State of Texas competitive bidding requirements (Local Government Code 

Chapter 252, Chapter 2269, or Chapter 2254). 

While the City’s purchasing policy includes guidance for competitive bids, 

the purchasing policy does not reflect the current process for procurement. 

Rapid growth in the City coupled with turnover in staff has led to the City’s 

purchasing policy becoming outdated. 

Expenditures were made with vendors who were not procured in 

accordance with State of Texas competitive bidding requirements noted 

above. 

The City should strengthen the internal controls governing the procurement 

process, including designing and implementing a purchasing policy that 

complies with state and federal procurement law. 

Management agrees with the auditor’s finding and recommendation. The 

City has developed the following corrective action plan to strengthen 

internal controls governing the procurement process. 

The City has engaged a purchasing specialist to provide a policy that will 

ensure purchasing requirements set by state and federal procurement laws 

are met. Once the policy is updated, the City will ensure that procurement 

processes align with the policy and will provide training to all City 

purchasers on both policy and process. The City will evaluate procurement 

related personnel duties and consider providing specific duties related to 

the review of purchasing requirements, providing guidance and support to 

department purchasers, and monitoring and reporting on all purchases 

applicable to competitive requirements from budget to expense. A review 

of current fiscal year purchases will be conducted and monitored to ensure 

that all competitive requirements are being met. 

89

Comprehensive Annual Financial Report 2020

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