Annual Comprehensive Financial Report 2021
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City of Red Oak, Texas<br />
<strong>Annual</strong> <strong>Comprehensive</strong> <strong>Financial</strong><br />
<strong>Report</strong><br />
for the Fiscal Year Ended<br />
September 30, <strong>2021</strong><br />
Prepared by the Finance Department
CITY OF RED OAK, TEXAS<br />
YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
TABLE OF CONTENTS<br />
Page<br />
Number<br />
INTRODUCTORY SECTION<br />
Letter of Transmittal .....................................................................................................<br />
GFOA Certificate of Achievement ....................................................................................<br />
Organizational Chart .....................................................................................................<br />
City Officials .................................................................................................................<br />
i – vi<br />
vii<br />
viii<br />
ix<br />
FINANCIAL SECTION<br />
Independent Auditors’ <strong>Report</strong> ......................................................................................... 1 – 2<br />
Management Discussion and Analysis .............................................................................. 3 – 10<br />
Basic <strong>Financial</strong> Statements<br />
Government-Wide <strong>Financial</strong> Statements:<br />
Statement of Net Position ......................................................................................... 11<br />
Statement of Activities ............................................................................................. 12 – 13<br />
Fund <strong>Financial</strong> Statements:<br />
Governmental Funds<br />
Balance Sheet ...................................................................................................... 14 – 15<br />
Reconciliation of the Balance Sheet of Governmental<br />
Funds to the Statement of Net Position ................................................................. 16<br />
Statement of Revenues, Expenditures, and<br />
Changes in Fund Balances .................................................................................. 17 – 18<br />
Reconciliation of Revenues, Expenditures and Changes<br />
In Fund Balances – Governmental Funds to the<br />
Statement of Activities ....................................................................................... 19<br />
Proprietary Funds<br />
Statement of Net Position ......................................................................................... 20<br />
Statement of Revenues, Expenses, and<br />
Changes in Fund Net Position ................................................................................. 21<br />
Statement of Cash Flows .......................................................................................... 22 – 23<br />
Notes to the <strong>Financial</strong> Statements ................................................................................... 24 – 43
Required Supplementary Information<br />
Schedule of Revenues, Expenditures, and Changes in<br />
Fund Balance – Budget (Budget Basis) and Actual – General Fund .............................. 44<br />
Schedule of Revenues, Expenditures, and Changes in<br />
Fund Balance – Budget (Budget Basis) and Actual – Industrial<br />
Development Corporation ...................................................................................... 45<br />
Schedule of Revenues, Expenditures, and Changes in<br />
Fund Balance – Budget (Budget Basis) and Actual – Economic<br />
Development Corporation ...................................................................................... 46<br />
Schedule of Changes in Net Pension<br />
Liability and Related Ratios .................................................................................... 47 – 48<br />
Texas Municipal Retirement System –<br />
Schedule of Employer Contributions ........................................................................ 49 – 50<br />
Schedule of Changes in Total OPEB<br />
Liability and Related Ratios .................................................................................... 51<br />
Combining Schedules<br />
Combining Balance Sheet – Nonmajor Governmental Funds ............................................ 52 – 53<br />
Combining Schedule of Revenues, Expenditures, and<br />
Changes in Fund Balances – Nonmajor Governmental Funds ......................................... 54 – 55<br />
Schedule of Revenues, Expenditures, and Changes in<br />
Fund Balance – Budget (Budget Basis) and Actual – Tourism ........................................ 56<br />
Schedule of Revenues, Expenditures, and Changes in<br />
Fund Balance – Budget (Budget Basis) and Actual – Debt Service ................................. 57<br />
STATISTICAL SECTION<br />
Table<br />
Net Position by Component .............................................................................. 1 58 – 59<br />
Changes in Net Position ................................................................................... 2 60 – 63<br />
Fund Balances of Governmental Funds .............................................................. 3 64 – 65<br />
Governmental Activities Tax Revenues by Source ............................................... 4 66 – 67<br />
Assessed Value and Actual Value of Taxable Property .......................................... 5 68 – 69<br />
Direct and Overlapping Property Tax Rates ........................................................ 6 70<br />
Principal Property Tax Payers ........................................................................... 7 71<br />
Property Tax Levies and Collections .................................................................. 8 72<br />
Ratios of General Outstanding Debt .................................................................. 9 73 – 75<br />
Ratios of General Bonded Debt ......................................................................... 10 76 – 77<br />
Direct and Overlapping Governmental Activities Debt .......................................... 11 78<br />
Legal Debt Margin Information ......................................................................... 12 79<br />
Pledge-Revenue Coverage ............................................................................... 13 80
Demographic and Economic Statistics ................................................................ 14 81<br />
Principal Employers ......................................................................................... 15 82<br />
Full-time Equivalent City Employees by Function and Program .............................. 16 83 – 84<br />
Operating Indicators by Function/Program ......................................................... 17 85 – 86<br />
Capital Asset Statistics by Function/Program ...................................................... 18 87<br />
COMPLIANCE SECTION<br />
Independent Auditor’s <strong>Report</strong> on Internal Control Over <strong>Financial</strong> <strong>Report</strong>ing<br />
and on Compliance and Other Matters Based on an Audit of <strong>Financial</strong><br />
Statements Performed in Accordance with Government Audit Standards ........................... 88 – 89<br />
Summary Schedule of Prior Year Audit Findings ............................................................. 90
THIS PAGE LEFT BLANK INTENTIONALLY
INTRODUCTORY SECTION
THIS PAGE LEFT BLANK INTENTIONALLY
June 2, 2022<br />
To the Honorable Mayor, City Council and<br />
Citizens of the City of Red Oak, Texas<br />
Submitted herewith is the <strong>Annual</strong> <strong>Comprehensive</strong> <strong>Financial</strong> <strong>Report</strong> (the “ACFR”) of the City of Red Oak (the<br />
“City”) for the fiscal year ended September 30, <strong>2021</strong>. Responsibility for the accuracy of the data and the<br />
completeness and fairness of the presentation, including disclosures, rests with the City. To the best of our<br />
knowledge and belief, the enclosed data is accurate in all material respects. The data is reported in a manner<br />
designed to present fairly the financial position and results of operations of the various funds of the City. To enable<br />
the reader to gain an understanding of the City’s financial activities, all necessary disclosures have been included.<br />
The ACFR is prepared in accordance with generally accepted accounting principles (GAAP) in the United States<br />
of America established by the Governmental Accounting Standards Board (GASB). The ACFR is presented in<br />
three sections: introductory, financial and statistical. The introductory section includes this transmittal letter, the<br />
City’s organizational chart, and a list of principal officials. The financial section includes the management’s<br />
discussion and analysis (MD&A), the government-wide and fund financial statements, notes to basic financial<br />
statements, required supplemental information, other supplemental information, as well as the independent<br />
auditor’s report on the basic financial statements. The Statistical section includes selected financial and<br />
demographic information which is presented on a multi-year basis.<br />
The MD&A is a narrative introduction, overview, and analysis to accompany the basic financial statements. The<br />
MD&A can be found immediately following the independent auditor’s report. This transmittal is designed to<br />
complement the MD&A and should be read in conjunction with it.<br />
THE REPORTING ENTITY<br />
The City was incorporated in 1849 under the general laws of the State of Texas. The City operates under a councilmanager<br />
form of government. The City provides a full range of municipal services authorized by statute or charter.<br />
These services include police and fire protection, water and wastewater services, the construction and maintenance<br />
of streets, infrastructure and other related facilities, code enforcement, building inspections, parks and recreation,<br />
library, public improvements, planning and zoning, economic development, and general administrative services.<br />
The ACFR includes all funds of the City. This report includes all government activities, organizations and functions<br />
for which the City is financially accountable. The criteria used in determining activities to be reported within the<br />
City’s basic financial statements are based upon and consistent with those set forth by the GASB.<br />
i
THE CITY<br />
The City of Red Oak (the “City” or “Red Oak”) is a political subdivision and municipal corporation of the State,<br />
duly organized and existing under the laws of the State, including the City’s Home Rule Charter. The City first<br />
adopted its Home Rule Charter in 1997. The City operates under a Council/Manager form of government with a<br />
City Council comprised of the Mayor and five Councilmembers. The Mayor and City Councilmembers are elected<br />
for staggered three-year terms. The City Manager is the chief administrative officer for the City. The 2000 Census<br />
population for the City was 5,235, the 2010 Census population for Red Oak was 10,769, the 2020 Census<br />
population for the City was 14,222, and North Central Texas Council of Governments (NCTCOG) projects by the<br />
year 2030, Red Oak’s population will grow to 63,329. The City covers approximately 15.22 square miles.<br />
The City is located in northern Ellis County, 20 miles south of downtown Dallas and is served by a major interstate<br />
highway I-35E bisecting the City, and I-20 located nine miles north. Red Oak is also bisected by state highways<br />
664 and 342 giving easy access in all directions. Red Oak is uniquely situated to provide easy accessibility to the<br />
entire North Texas area. The close proximity to job opportunities in Dallas, Fort Worth and the Mid-Cities<br />
continues to contribute to growth in the City. The City is a member of the Best-Southwest Communities, which<br />
also consists of Cedar Hill, Desoto, Duncanville and Lancaster.<br />
As a result of the exponential growth and development taking place in Red Oak and vicinity, the Texas Department<br />
of Transportation (TxDoT) is in the process of improving the public transportation network. Construction work<br />
has commenced on the improvements and widening to FM 664/Ovilla Road. These improvements and widening<br />
include the expansion of FM 664/Ovilla Road to six lanes extending from I-45 to at the City of Ferris to US 287<br />
at its intersection with FM 64/Ovilla Road at the City of Waxahachie. In addition, an overpass will be constructed<br />
along I-45 to the south of Ferris which will facilitate the flow of traffic along FM 664/Ovilla Road. Also, the FM<br />
664/Ovilla Road overpass located at I-35E will be reconstructed to improve traffic flows and increase the capacity<br />
of the overpass. This expansion and construction is necessary as current data shows that the intersection of FM 664<br />
and I-35E in Red Oak is currently one of the busiest intersections in Ellis County.<br />
Due to the growth and development of the Red Oak vicinity and the related traffic congestion, the long anticipated<br />
South Loop 9 project will become a reality! To this end, TxDoT is in the process of acquiring the right-of-way<br />
(ROW) for constructing Phase 1 of the roadway which will directly connect I-45 with I-35E. The route for the<br />
South Loop 9 project will closely follow along the northern boundary line for Ellis County and the southern<br />
boundary line for Dallas County.<br />
Red Oak is a growing, thriving community with good challenges. The population is increasing and exceptional<br />
quality homes and developments are being built in Red Oak to accommodate this growth. In addition, due to the<br />
growth in the City and the surrounding area, retail development has been rising, and is expected to continue to do<br />
so. The median household income for <strong>2021</strong> is $79,448, which is continuing to rise. Per HomeFacts.com, Red Oak<br />
enjoys a low unemployment rate of 6.3% as compared to 8.8% in 2009.<br />
As the community grows, the need for City services continues to increase. Staffing levels have across the City<br />
departments. This growth in staffing has caused the need for expansion of City facilities. The City issued debt in<br />
Fiscal Year 2019. The City used part of the debt proceeds to purchase a future site for the Municipal Center to<br />
meet this need to accommodate growth. The renovation of the facility is planned for Fiscal Year 2022. Growth<br />
within the city has caused property tax revenues to increase.<br />
In Fiscal Year <strong>2021</strong>, General Fund property tax revenues increased by over $720,000 from the previous year. At<br />
the same time, sales taxes revenues increased in the General Fund by $366,855 because of growth in population<br />
and retail services available within the community.<br />
ii
Growth in the city has also created the need for additional public infrastructure. More on this topic will be included<br />
in Management’s Discussion and Analysis, which starts on page 3.<br />
HOUSING – RESIDENTIAL DEVELOPMENT<br />
The City of Red Oak is strategically located within the Dallas-Fort Worth Motorplex. Therefore, Red Oak is a preferred<br />
residential location for individuals and families. A number of new single family residential developments within the Red<br />
Oak with approximately 662 new single-family residences are planned for construction during FY <strong>2021</strong>-2022, with 2,023<br />
new lots planned for construction during the years 2022 through 2024. The average permitted valuation per single family<br />
residence is approximately $362,760. These new residential developments include the Emerson Apartments, Legacy<br />
Square Apartments, Oakpointe Apartments, and single-family residential developments such as Creek Bend, Crystal Lake,<br />
Meadow Ridge, Oakmont, Summerwood, and The Oaks.<br />
COMMERCIAL AND RETAIL DEVELOPMENT<br />
The phase one portion of the public infrastructure for Red Oak Legacy Square is nearing completion. The Red Oak<br />
Legacy Square development is a major mixed use commercial retail and upper-scale multifamily living facility, The<br />
project is being developed by Victron Energy Group, one of the largest fuel distributorships in the United States. Red<br />
Oak Legacy Square is located on approximately 68 acres at the northwest quadrant of the I-35E and FM 664/Ovilla<br />
Road intersection.<br />
Victron Group and B&B Theatres, the 6 th largest theatre chain in North America, have partnered in the primary anchor for<br />
Red Oak Legacy Square which will be the B&B Theaters Family Entertainment Center. This new upscale, state-of-theart<br />
theater complex will feature 12 theaters and some of B&B’s most innovative theatrical concepts. The Grand<br />
Screen will be an unbelievable 70 feet wide, making it one of the largest screens in the nation!<br />
The tranquility of Pearson Park and the serene shores of City Lake provide a picture-perfect opportunity for Te’Jun the<br />
Texas Cajun Restaurant. The 8,000 square foot restaurant opened in November <strong>2021</strong>; it is located on approximately 4<br />
acres along the west side of the I-35E/US 77 corridor. The 450-seat restaurant features the finest in Cajun-style seafood<br />
for our Red Oak residents and visitors. Te’Jun the Texas Cajun is widely renowned for its distinctive Cajun-style cuisine<br />
throughout the North Central Texas and Central Texas Regions.<br />
Seven/11 is constructing a convenience store with fuel station at the southeast corner of FM 664/Ovilla Road and<br />
Hickory Creek Drive. Red Sky Development Group, the developer of the Seven/11 project, purchased approximately 2<br />
acres from the Red Oak Economic Development Corporation for the project. The 4,088 square foot building will feature<br />
a Seven/11 convenience store with the co-location of a Laredo Taco Company drive-through taqueria featuring original<br />
Mexican food with authentic tacos served on flour tortillas and fresh salsa bar.<br />
During <strong>2021</strong>, Victron Energy Group received approvals from the City of Red Oak to repurpose and redevelop the existing<br />
Knox Travel Center located on approximately 7 acres along the east side of I-35E at Daubitz Road. The newly designed<br />
Red Oak Travel Center development will include a Wendy’s restaurant with drive through, charging stations for electric<br />
vehicles, and landscaping improvements.<br />
INDUSTRY<br />
In <strong>2021</strong>, it was announced that Alamo Mission, LLC was selected by Trade & Industry Development as one of fifteen<br />
National Corporate Investment winners of the prestigious CiCi Award for Technology/R&D. The datacenter project in<br />
Red Oak was nominated for the CiCi Award by the Office of Texas Governor Greg Abbott. In mid-2019, it was announced<br />
that the company’s newest hyperscale data center will be located in Red Oak, Texas in a project that will cover 166 acres<br />
iii
at the intersection of State Highway 342 and Ovilla Road, about 20 miles south of Dallas. The land was previously used<br />
for agricultural purposes. Dallas-Fort Worth is one of the biggest data center markets in the world. The construction of<br />
the new data center is expected to create 40 direct jobs and additional indirect employment within the Red Oak area, both<br />
during construction and permanently.<br />
In <strong>2021</strong>, Compass Datacenters/Red Oak was awarded the “Best Datacenter Project” during D-CEO’s 9th <strong>Annual</strong><br />
Commercial Real Estate Awards program. Compass Data Centers prestigious award reaffirms the fact that Red Oak is<br />
well on its way to becoming the next major crossroads on the information superhighway. Compass Datacenters’ 225-acre<br />
data center is a huge part of that fact. Compass Datacenters “Red Oak I” facility is a 6MW data center and the first facility<br />
of 16 to be built on the campus that will bring the first 50 of 800 jobs expected to be created by the center. Compass<br />
Datacenters Red Oak development features a 252 Megawatt campus that sits on 225 acres along Houston School Road<br />
featuring an on-site sub-station serviced by multiple fiber paths to offer substantial room for future growth. Compass<br />
Datacenters Red Oak is developing its 225 acre campus to include multiple datacenter buildings for globally competitive<br />
high technology corporations.<br />
In <strong>2021</strong>, Triumph Aerospace Structures, LLC was acquired by Arlington Capital Partners, a Washington, DC-area private<br />
equity firm. Subsequently, the business name for the Triumph Aerospace Structures in Red Oak was changed to Qarbon<br />
Aerospace. Qarbon Aerospace is a premier manufacturer of cutting-edge composite components and assemblies at all<br />
levels of complexity, with products installed on the industry’s most advanced commercial and military aircraft. Qarbon<br />
Aerospace Red Oak facility is uniquely situated amid a thriving aerospace & defense marketplace. Leaning on a rich<br />
legacy extending over 100-years, the factory has a dominant military portfolio (Northrop Grumman HALE, Boeing V-22,<br />
Boeing T-7A, and Pratt & Whitney F135), while staying balanced with commercial (Boeing 767, Bell 525 Relentless) and<br />
business (Gulfstream G600) products. Adding to the robust manufacturing capabilities, the site integrates a Thermoplastics<br />
Center of Excellence and structural test capabilities that offer differentiating capabilities to our customers in the<br />
commercial, defense, space, eVTOL, and UAM marketplaces<br />
Bombardier Aerospace Red Oak is the home for the industry’s flagship Global 7500 aircraft. The Global 7500 aircraft<br />
stands alone as the world’s largest and longest range business jet. Within its luxurious interior are four true living spaces,<br />
a full-size kitchen and a dedicated crew suite. Elevate your flight experience and discover the uninhibited freedom and<br />
tailored luxury of the Global 7500 aircraft—a new class of business jet. Bombardier Aerospace Red Oak. Bombardier<br />
Aerospace Red Oak has partnered with Texas State Technical College North Texas in Red Oak (TSTC) in developing<br />
and implementing a two-year Bombardier Aviation Apprenticeship Program (BAAP). This innovative apprenticeship<br />
program offers students a chance to enter the high-tech aerospace sector with no formal qualifications. It challenges them<br />
to present a winning attitude and develop mechanical dexterity and sound logic skills to be able to pass an entry-level<br />
aptitude test. In turn, Bombardier and TSTC offer expert training in conjunction with TSTC’s excellent facilities, allowing<br />
students to benefit at no-cost from industry-tailored modules, experienced instructors, tools and equipment and financial<br />
support. The Bombardier apprenticeship training program and its association with Texas State Technical College (TSTC)<br />
in Red Oak, Texas, has gained official registration by the US Department of Labor. With this important designation,<br />
Bombardier can expand its search for talented individuals from across the USA to maximize its talent pool and drive<br />
regional aerospace growth for the manufacture of the advanced metallic wing for the Global 7500 aircraft at its Red Oak<br />
facility.<br />
EDUCATION AND INDUSTRY PARTNERSHIPS<br />
The City of Red Oak Industrial Development Corporation (“CROIDC”) partnered with Texas State Technical College<br />
North Texas in Red Oak (“TSTC”) to provide scholarships to Red Oak students planning to attend TSTC in Red Oak. The<br />
ROIDC scholarship to TSTC provides financial assistance to Red Oak students for attaining upward mobility and<br />
iv
improving the quality of life for our students and their families. In addition, the TSTC North Texas campus provides<br />
students the opportunity to receive state-of-the-art higher education technical and vocational workforce training in Red<br />
Oak so they may be better prepared for success well into the future. The ROIDC scholarship is available to students living<br />
within Red Oak’s city limits and may be used for TSTC school-related expenses. The recipient must attend the North<br />
Texas campus to be eligible. Students may be traditional or non-traditional students and attend school on a full time or<br />
part time basis. The scholarship is open to new and current students and all students must be in good academic and<br />
behavioral standing to be eligible. The college’s staff awards the scholarship, which may be presented to recipients in<br />
multiple semesters. Scholarships in the amount up to $1,000 are awarded to students.<br />
FINANCIAL PLANNING AND FISCAL POLICIES<br />
The City continues to update the master plans to guide the City’s long-term growth and financial planning. Significant<br />
master planning activity includes: 1) <strong>Comprehensive</strong> land use and thoroughfare plan, 2) Parks master plan, and a 3)<br />
Strategic Plan.<br />
Utilizing these plans, the City annually updates a rolling five-year capital improvement schedule. The City also maintains<br />
a police and fire department staffing plan as part of the strategic plan. These plans are used to determine budget allocations<br />
to the various departments and activities of the City.<br />
The City’s fiscal management policy requires a minimum fund balance for numerous funds. The fund balance reserve<br />
plan is guiding the City to meeting the fund balance reserve plans for each of the funds.<br />
ACCOUNTING SYSTEM AND BUDGETARY CONTROL<br />
City management is responsible for establishing and maintaining an internal control structure designed to ensure that the<br />
assets of the City are protected from loss, theft, or misuse. Management must also ensure that adequate accounting data<br />
is compiled to allow for the preparation of financial statements in conformity with GAAP. The internal control structure<br />
designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable<br />
assurance recognizes that (1) the cost of the control should not exceed the benefits likely to be derived, and (2) the<br />
valuation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur<br />
within the above framework.<br />
The City’s accounting records for general governmental operations are maintained on a modified accrual basis, with<br />
revenues recognized when measurable and available, and expenditures recorded when the liability is incurred. Proprietary<br />
operations are maintained on full accrual basis.<br />
The objective of budgetary controls is to ensure compliance with legal provisions contained in the annual budget<br />
approved by the City Council. Activities of the general fund, special revenue funds and debt service funds are included<br />
in the annual budget. The budget is developed and controlled at the department level although appropriations are set at<br />
the fund level, and encumbrances are entered at the time a purchase order is issued. Outstanding encumbrance’s lapse at<br />
fiscal year-end, and the subsequent year’s budget must absorb the expenditures when incurred. Separate multi-year<br />
budgets are developed for the capital projects funds.<br />
v
OTHER INFORMATION<br />
Independent Audit:<br />
The City Charter requires an annual audit of the accounting financial records and transactions of all departments of the<br />
City. The City charter specifies that such audit be conducted by independent auditors selected by the City Council.<br />
Pattillo, Brown & Hill, L.L.P. was selected by the City Council to conduct this year’s audit. The independent auditor’s<br />
report on the basic financial statements is included in the financial section of this report.<br />
Certificate of Achievement:<br />
This is the ninth year the City has submitted the annual comprehensive financial report (“ACFR”) to the Government<br />
Finance Officers Association of the United States and Canada (GFOA) to be reviewed for the Certificate of Achievement.<br />
The Certificate of Achievement is a prestigious national award that recognizes conformance with the highest standards<br />
for preparation of state and local government financial reports.<br />
In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently<br />
organized <strong>Annual</strong> <strong>Report</strong>, whose contents conform to program standards. The <strong>Annual</strong> <strong>Report</strong> must satisfy both generally<br />
accepted accounting principles and applicable legal requirements.<br />
A Certificate of Achievement is valid for a period of one year. The City has received the Certificate of Achievement for<br />
the Fiscal Years 2012 - 2020. We believe the current report continues to conform to the Certificate of Achievement<br />
program requirements, and we are submitting the <strong>2021</strong> <strong>Annual</strong> <strong>Report</strong> to GFOA to determine its eligibility for another<br />
certificate.<br />
ACKNOWLEDGEMENTS<br />
The preparation of this report could not have been accomplished on a timely basis without the dedication and efficiency<br />
of the entire staff of the Finance Department. We would like to express our appreciation to all City employees who<br />
assisted and contributed to its presentation.<br />
Additionally, we would also like to thank the members of the City Council for their interest and support in planning and<br />
conducting the financial operations of the City in a responsible and progressive manner.<br />
Respectfully,<br />
Gloria Platt, CGFO<br />
Director of Finance<br />
vi
Government Finance Officers Association<br />
Certificate of<br />
Achievement<br />
for Excellence<br />
in <strong>Financial</strong><br />
<strong>Report</strong>ing<br />
Presented to<br />
City of Red Oak<br />
Texas<br />
For its <strong>Annual</strong> <strong>Comprehensive</strong><br />
<strong>Financial</strong> <strong>Report</strong><br />
for the Fiscal Year Ended<br />
September 30, 2020<br />
vii
CITIZENS<br />
City Attorney<br />
Robert Hager<br />
City Council<br />
Municipal Judge<br />
Scott Kurth<br />
City Manager<br />
Todd Fuller<br />
Assistant City Manager<br />
Jonathan Phillips<br />
Jonathan<br />
Phillips,<br />
Assistant City<br />
Manager<br />
Garland Wolf,<br />
Police Chief<br />
Ben Blanton,<br />
Fire Chief<br />
Caryn Stevens,<br />
Interim City<br />
Secretary<br />
Lee McCleary,<br />
Director of<br />
Economic<br />
Development<br />
Ben Hartman,<br />
City Engineer<br />
Kyle Kelley,<br />
Director of<br />
Parks &<br />
Recreation<br />
Logan Ragsdale,<br />
Director of<br />
Library Services<br />
Administration<br />
Police<br />
Department Fire Department City Secretary<br />
Animal Control<br />
Emergency<br />
Communication<br />
Tourism<br />
Economic<br />
Development<br />
Industrial<br />
Development<br />
Engineering<br />
Code and<br />
Development<br />
Services<br />
Parks &<br />
Recreation<br />
Library Services<br />
Gloria Platt,<br />
Director of<br />
Finance<br />
Scott Williams,<br />
Director of<br />
Public Works<br />
Amanda<br />
Monsivais,<br />
Director of<br />
Human<br />
Resources<br />
John Binford,<br />
Director of<br />
Information<br />
Technology<br />
Finance<br />
Public Works -<br />
Streets<br />
Human<br />
Resources<br />
Information<br />
Technology<br />
Utility Billing<br />
Water & Sewer<br />
Utilities<br />
Municipal Court<br />
Storm Drainage<br />
viii
CITY OF RED OAK, TEXAS<br />
CITY OFFICIALS<br />
Mark L. Stanfill, DVM<br />
Mayor<br />
Michael Braly<br />
Mayor Pro-Tern<br />
Willie G. Franklin Jr.<br />
Council Member — Place 1<br />
Ben Goodwyn<br />
Council Member — Place 2<br />
William L. Drake<br />
Council Member — Place 3<br />
Ron Wilson<br />
Council Member — Place 4<br />
City Manager<br />
Todd Fuller<br />
Assistant City Manager<br />
Jonathan Phillips<br />
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FINANCIAL SECTION
THIS PAGE LEFT BLANK INTENTIONALLY
INDEPENDENT AUDITOR’S REPORT<br />
Honorable Mayor and<br />
Members of the City Council<br />
City of Red Oak, Texas<br />
<strong>Report</strong> on the <strong>Financial</strong> Statements<br />
We have audited the accompanying financial statements of the governmental activities, the businesstype<br />
activities, each major fund, and the aggregate remaining fund information of City of Red Oak, Texas, as<br />
of and for the year ended September 30, <strong>2021</strong>, and the related notes to the financial statements, which<br />
collectively comprise the City of Red Oak, Texas’ basic financial statements as listed in the table of contents.<br />
Management’s Responsibility for the <strong>Financial</strong> Statements<br />
City of Red Oak, Texas’ management is responsible for the preparation and fair presentation of these<br />
financial statements in accordance with accounting principles generally accepted in the United States of<br />
America; this includes the design, implementation, and maintenance of internal control relevant to the<br />
preparation and fair presentation of financial statements that are free from material misstatement, whether<br />
due to fraud or error.<br />
Auditor’s Responsibility<br />
Our responsibility is to express opinions on these financial statements based on our audit. We<br />
conducted our audit in accordance with auditing standards generally accepted in the United States of America<br />
and the standards applicable to financial audits contained in Government Auditing Standards, issued by the<br />
Comptroller General of the United States. Those standards require that we plan and perform the audit to<br />
obtain reasonable assurance about whether the financial statements are free from material misstatement.<br />
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures<br />
in the financial statements. The procedures selected depend on the auditor’s judgment, including the<br />
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In<br />
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and<br />
fair presentation of the financial statements in order to design audit procedures that are appropriate in the<br />
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal<br />
control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of<br />
accounting policies used and the reasonableness of significant accounting estimates made by management, as<br />
well as evaluating the overall presentation of the financial statements.<br />
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis<br />
for our audit opinions.<br />
Opinions<br />
In our opinion, the financial statements referred to above present fairly, in all material respects, the<br />
respective financial position of the governmental activities, the business-type activities, each major fund, and<br />
the aggregate remaining fund information of the City of Red Oak, Texas, as of September 30, <strong>2021</strong>, and the<br />
respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in<br />
accordance with accounting principles generally accepted in the United States of America.<br />
1
Other Matters<br />
Required Supplementary Information<br />
Accounting principles generally accepted in the United States of America require that the<br />
management’s discussion and required supplementary information, as listed in the table of contents, be<br />
presented to supplement the basic financial statements. Such information, although not a part of the basic<br />
financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an<br />
essential part of financial reporting for placing the basic financial statements in an appropriate operational,<br />
economic, or historical context. We have applied certain limited procedures to the required supplementary<br />
information in accordance with auditing standards generally accepted in the United States of America, which<br />
consisted of inquiries of management about the methods of preparing the information and comparing the<br />
information for consistency with management’s responses to our inquiries, the basic financial statements, and<br />
other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion<br />
or provide any assurance on the information because the limited procedures do not provide us with sufficient<br />
evidence to express an opinion or provide any assurance.<br />
Other Information<br />
Our audit was conducted for the purpose of forming opinions on the financial statements that<br />
collectively comprise the City of Red Oak, Texas’ basic financial statements. The introductory section,<br />
combining and individual nonmajor fund financial statements and schedules, and statistical section, are<br />
presented for purposes of additional analysis and are not a required part of the basic financial statements.<br />
The combining and individual nonmajor fund financial statements and schedules are the responsibility<br />
of management and were derived from and relate directly to the underlying accounting and other records<br />
used to prepare the basic financial statements. Such information has been subjected to the auditing<br />
procedures applied in the audit of the basic financial statements and certain additional procedures, including<br />
comparing and reconciling such information directly to the underlying accounting and other records used to<br />
prepare the basic financial statements or to the basic financial statements themselves, and other additional<br />
procedures in accordance with auditing standards generally accepted in the United States of America. In our<br />
opinion, the combining and individual nonmajor fund financial statements and schedules are fairly stated, in<br />
all material respects, in relation to the basic financial statements as a whole.<br />
The introductory and statistical sections have not been subjected to the auditing procedures applied in<br />
the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any<br />
assurance on them.<br />
Other <strong>Report</strong>ing Required by Government Auditing Standards<br />
In accordance with Government Auditing Standards, we have also issued our report dated June 2,<br />
2022, on our consideration of the City of Red Oak, Texas’ internal control over financial reporting and on our<br />
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other<br />
matters. The purpose of that report is solely to describe the scope of our testing of internal control over<br />
financial reporting and compliance and the results of that testing, and not to provide an opinion on the<br />
effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an<br />
audit performed in accordance with Government Auditing Standards in considering the City of Red Oak, Texas’<br />
internal control over financial reporting and compliance.<br />
Waco, Texas<br />
June 2, 2022<br />
2
MANAGEMENT’S DISCUSSION AND ANALYSIS<br />
As management of the City of Red Oak, we offer readers of the City's financial statements this narrative<br />
overview and analysis of the financial activities of the City for the fiscal year ended September 30, <strong>2021</strong>. We<br />
encourage readers to consider the information presented here in conjunction with additional information that<br />
we have furnished in our letter of transmittal, which can be found preceding this report.<br />
FINANCIAL HIGHLIGHTS<br />
• On a government-wide basis, the assets and deferred outflows of resources of the City exceeded its<br />
liabilities and deferred inflows of resources at the close of the most recent fiscal year by $41,380,122<br />
(Net Position). Of this amount, $12,869,728 (unrestricted net position) may be used to meet the<br />
government's ongoing obligations to citizens and creditors.<br />
• On a government-wide basis, the City's total net position increased by $4,606,300. This increase is<br />
attributable largely to capital grants and contributions of $2,485,606, operating grants and<br />
contributions of $1,293,401, and the sale of land held for sale in the Economic Development<br />
Corporation in the amount of $1,103,869.<br />
• As of the close of the current fiscal year, the City's governmental funds reported combined ending<br />
fund balances of $43,396,048. Approximately 9.1% of this total amount, $3,962,045 is unassigned<br />
and available for use at the City's discretion.<br />
• At the end of the current fiscal year, unreserved fund balance for the General Fund was $3,962,045<br />
or 27.0% of the total General Fund expenditures.<br />
• The City's outstanding debt increased by $10,490,933 or 21.7% during the current fiscal year due to<br />
the issuance of bonds for various capital improvements, primarily including construction and<br />
resurfacing of roads, park improvements, and purchase and improvements for municipal buildings.<br />
OVERVIEW OF THE FINANCIAL STATEMENTS<br />
This discussion and analysis is intended to serve as an introduction to the City's basic financial statements.<br />
The City's basic financial statements are comprised of three components: 1) government-wide financial<br />
statements, 2) fund financial statements, and 3) notes to the financial statements. This report also<br />
contains other supplementary information in addition to the basic financial statements themselves.<br />
Government-wide <strong>Financial</strong> Statements. The government-wide financial statements are designed<br />
to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector<br />
business.<br />
The Statement of Net Position presents information on all of the City's assets, deferred outflows,<br />
liabilities and deferred inflows, with the difference between these reported as Net Position. Over time,<br />
increases or decreases in Net Position may serve as a useful indicator of whether the financial position of the<br />
City is improving or deteriorating.<br />
The Statement of Activities presents information showing how the City's Net Position changed during the<br />
most recent fiscal year. All changes in Net Position are reported when the underlying event giving rise to<br />
the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported<br />
in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,<br />
uncollected taxes and earned but unused compensated absences).<br />
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Both of the government-wide financial statements distinguish functions of the City that are principally<br />
supported by taxes and intergovernmental revenues (governmental activities) from functions that are<br />
intended to recover all or a significant portion of their costs through user fees and charges (business-type<br />
activities). The governmental activities of the City include general government, public safety, cultural and<br />
recreational, public works, industrial development and economic development. The business-type activities of<br />
the City include utility operations. The Red Oak Economic Development Corporation and Red Oak Industrial<br />
Development Corporation, although legally separate, functions for all practical purposes as a department<br />
of the City, and therefore has been included as an integral part of the primary government.<br />
The government-wide financial statements can be found on pages 11-13 of this report.<br />
Fund <strong>Financial</strong> Statements. A fund is a grouping of related accounts that is used to maintain control over<br />
resources that have been segregated for specific activities or objectives. The City, like other state and local<br />
governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal<br />
requirements. All of the funds of the City can be divided into two categories- governmental funds and<br />
proprietary funds.<br />
Governmental Funds. Governmental funds are used to account for essentially the same functions<br />
reported as governmental activities in the government-wide financial statements. However, unlike<br />
the government-wide financial statements, governmental fund financial statements focus on current<br />
sources and uses of spendable resources, as well as on balances of spendable resources available at the<br />
end of the fiscal year. Such information may be useful in evaluating a government's near-term financing<br />
requirements.<br />
Because the focus of governmental funds is narrower than that of the government-wide financial<br />
statements, it is useful to compare the information presented for governmental funds with similar<br />
information presented for governmental activities in the government-wide financial statements. By<br />
doing so, readers may better understand the long-term impact of the government's near-term financing<br />
decisions. Both the governmental fund balance sheet and the governmental fund statements of<br />
revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this<br />
comparison between governmental funds and governmental activities.<br />
The City maintains nine individual governmental funds. Information is presented separately in the<br />
Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures,<br />
and Changes in Fund Balances for the General, Industrial Development Corporation, and Economic<br />
Development Corporation funds, all of which are considered to be major funds. Data from the other five<br />
funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor<br />
governmental funds is provided in the form of combining statements elsewhere in this report.<br />
<strong>Annual</strong> appropriated budgets are adopted for the General Fund, Industrial Development Corporation<br />
and the Economic Development Corporation. A budgetary comparison schedule has been provided for<br />
the General Fund Industrial Development Corporation and the Economic Development Corporation, to<br />
demonstrate compliance with these budgets.<br />
The basic governmental fund financial statements can be found on pages 14-19 of this report.<br />
Proprietary Funds. Enterprise funds are used to report the same functions presented as business-type<br />
activities in the government-wide financial statements. The City uses two enterprise funds to account<br />
for its utility operations, one for water and sewer utilities and the other is for storm water utilities.<br />
Proprietary funds provide the same type of information as the government-wide financial statements, only<br />
in more detail.<br />
The basic proprietary fund financial statements can be found on pages 20-23 of this report.<br />
Notes to the <strong>Financial</strong> Statements. The notes provide additional information that is essential to a full<br />
understanding of the data provided in the government-wide and fund financial statements. The notes to<br />
the financial statements can be found on pages 24-44 of this report.<br />
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Other Information. In addition to the basic financial statements and accompanying notes, this report<br />
also presents combining statements referred to earlier in connection with non-major governmental funds.<br />
Combining and individual statements and schedules can be found on pages 53-54 of this report.<br />
GOVERNMENT-WIDE FINANCIAL ANALYSIS<br />
As noted earlier, Net Position may serve over time as a useful indicator of a government's financial<br />
position. In the case of the City, assets and deferred outflows exceeded liabilities and deferred inflows by<br />
$41,380,122 as of September 30, <strong>2021</strong>.<br />
Net Position<br />
Governmental Activities Business-type Activities Totals<br />
<strong>2021</strong> 2020 <strong>2021</strong> 2020 <strong>2021</strong> 2020<br />
Current and other assets $ 47,492,879 $ 41,375,373 $ 15,235,542 $ 5,838,395 $ 62,728,421 $ 47,213,768<br />
Capital assets 31,102,888 24,367,697 19,704,541 16,616,674 50,807,429 40,984,371<br />
Total assets 78,595,767 65,743,070 34,940,083 22,455,069 113,535,850 88,198,139<br />
Deferred outflows of<br />
resources 489,286 506,790 538,856 581,175 1,028,142 1,087,965<br />
Long-term liabilities 39,952,348 30,431,595 16,291,299 15,978,644 56,243,647 46,410,239<br />
Other liabilities 6,435,270 3,778,375 10,059,879 1,979,329 16,495,149 5,757,704<br />
Total liabilities 46,387,618 34,209,970 26,351,178 17,957,973 72,738,796 52,167,943<br />
Deferred inflows of<br />
resources 383,423 295,263 61,651 49,076 445,074 344,339<br />
Net position:<br />
Net investment<br />
in capital assets 3,708,559 3,113,430 4,677,953 833,237 8,386,512 3,946,667<br />
Restricted 19,338,628 23,330,619 785,254 553,249 20,123,882 23,883,868<br />
Unrestricted 9,266,825 5,300,578 3,602,903 3,642,709 12,869,728 8,943,287<br />
Total net position $ 32,314,012 $ 31,744,627 $ 9,066,110 $ 5,029,195 $ 41,380,122 $ 36,773,822<br />
A portion of the City's Net Position, $8,386,512 or 20.3%, reflects its investments in capital assets (e.g.,<br />
land, construction in progress, buildings, improvements, machinery and equipment and infrastructure),<br />
less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to<br />
provide service to citizens; consequently, these assets are not available for future spending. Although the<br />
City's investment in its capital assets is reported net of related debt, it should be noted that the resources<br />
needed to repay this debt must be provided from other sources, since the capital assets themselves cannot<br />
be used to liquidate these liabilities.<br />
An additional portion of the City's Net Position ($20,123,882 or 48.6%) represents resources that are<br />
subject to external restriction on how they may be used. The remaining balance of unrestricted Net<br />
Position ($12,869,728 or 31.1%) may be used to meet the government's ongoing obligations to citizens<br />
and creditors.<br />
At the end of the current fiscal year, the City is able to report a positive Net Position, both for the<br />
government as a whole, as well as for its separate categories - governmental activities and business-type<br />
activities.<br />
Analysis of the City's Operations: The following table provides a summary of the City's operations for<br />
the year ended September 30, <strong>2021</strong>. On a government-wide basis, governmental activities increased the<br />
City's Net Position by $569,385 and business-type activities increased the City's Net Position by<br />
$4,036,915.<br />
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Changes in Net Position<br />
Governmental Activities Business-type Activities Totals<br />
<strong>2021</strong> 2020 <strong>2021</strong> 2020 <strong>2021</strong> 2020<br />
Revenues:<br />
Program revenues:<br />
Charges for services $ 4,167,321 $ 9,851,729 $ 9,477,411 $ 8,715,261 $ 13,644,732 $ 18,566,990<br />
Operating grants and<br />
contributions 1,293,401 1,372,677 - - 1,293,401 1,372,677<br />
Capital grants and<br />
contributions 2,485,606 3,519,935 2,705,020 1,104,544 5,190,626 4,624,479<br />
General revenues:<br />
Property tax 8,571,758 8,000,818 - - 8,571,758 8,000,818<br />
Sales tax 6,343,642 5,584,807 - - 5,584,807<br />
Franchise tax 728,690 742,438 - - 728,690 742,438<br />
Hotel occupancy tax 317,525 162,389 - - 317,525 162,389<br />
Alcoholic beverage tax 11,185 9,878 - - 11,185 9,878<br />
Investment earnings 52,373 332,046 12,498 8,215 64,871 340,261<br />
Miscellaneous 45,403 56,382 - - 45,403 56,382<br />
Gain on sale of assets - - - 108,436 - 108,436<br />
Total revenues 24,016,904 29,633,099 12,194,929 9,936,456 36,211,833 39,569,555<br />
Expenses:<br />
General government 1,931,114 1,876,147 - - 1,931,114 1,876,147<br />
Public safety 8,910,297 8,680,540 - - 8,910,297 8,680,540<br />
Culture and recreation 1,051,184 848,530 - - 1,051,184 848,530<br />
Public works 2,895,417 2,774,598 - - 2,895,417 2,774,598<br />
Industrial development 5,596,763 1,104,636 - - 5,596,763 1,104,636<br />
Economic development 209,880 58,940 - - 209,880 58,940<br />
Interest on long-term debt 2,259,864 1,550,846 - - 2,259,864 1,550,846<br />
Utility - - 8,525,891 8,488,858 8,525,891 8,488,858<br />
Storm water - - 225,123 323,665 225,123 323,665<br />
Total expenses 22,854,519 16,894,237 8,751,014 8,812,523 31,605,533 25,706,760<br />
Transfers ( 593,000)<br />
- 593,000 - - -<br />
Change in net position 569,385 12,738,862 4,036,915 1,123,933 4,606,300 13,862,795<br />
Net position, beginning 31,744,627 19,005,765 5,029,195 3,905,262 36,773,822 22,911,027<br />
Net position, ending $ 32,314,012 $ 31,744,627 $ 9,066,110 $ 5,029,195 $ 41,380,122 $ 36,773,822<br />
FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS<br />
Governmental Funds: The focus of the City's governmental funds is to provide information on near-term<br />
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's<br />
financing requirements. In particular, unreserved fund balance may serve as a useful measure of a<br />
government's net resources available for spending at the end of the fiscal year.<br />
As of the end of the current fiscal year, the City's governmental funds reported combined ending fund<br />
balances of $43,396,048. Approximately 9.1% of this total amount, $3,962,045 is unassigned fund balance.<br />
The remainder of the fund balance is not available for new spending because it has already been restricted or<br />
assigned for other purposes.<br />
The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned<br />
fund balance of the General Fund was $3,962,045, while total fund balance reached $5,496,240. As a<br />
measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and<br />
total fund balance to total fund expenditures. Unassigned fund balance represents 27.0% of total<br />
General Fund expenditures, while total fund balance represents 37.5% of that same amount.<br />
The fund balance of the City's General Fund has a net increase of $541,211 during the current fiscal year<br />
adjustment. The increase is attributable to increases in property taxes, sales taxes, and licenses in<br />
permits. Property taxes and sales tax increased $1.3 million despite economic shutdowns caused by the<br />
COVID-19 pandemic. Expenditures in the general fund increased $1.76 million, offsetting some of the<br />
increases in revenues. Increases in expenditures were mainly caused by an increase to Culture and<br />
recreation expenses of $150,000 due to the addition of the Parks Department including personnel, benefits,<br />
general supplies and maintenance costs, an increase to Public Works and Engineering expenses in<br />
contractual services, and increases to capital expenses of $1.1 million.<br />
6
The Industrial Development Corporation fund has a total fund balance of $7,157,198. The net decrease<br />
in fund balance during the current year in the Industrial Development Corporation fund was $5,266,894 and<br />
mostly attributable to sales taxes and contributions being exceeded by current year expenditures and<br />
transfers out.<br />
The Economic Development Corporation fund has a total fund balance of $14,441,660. The net increase in<br />
fund balance during the current year in the Economic Development Corporation fund was $1,112,180. The<br />
increase is largely attributable to the sale of land, reduced by current year expenditures and transfers out.<br />
The Debt Service fund ended the year with total fund balance of $107,620, an increase of $1,565. The<br />
increase was caused by property tax revenues slightly exceeding debt service requirements for the year.<br />
The <strong>2021</strong> CO Bond Fund has a total ending fund balance of $3,808,755, an of $3,808,755. The increase is a<br />
result of bonds issued in the amount of $3685,000 during the current year.<br />
Proprietary Funds: The City's proprietary fund statements provide the same type of information found<br />
in the government-wide financial statements, but in more detail. The two enterprise funds were<br />
previously combined on the financial statements but were separated this year to more closely align with<br />
internal reporting.<br />
Unrestricted Net Position of the Utility Fund at the end of the year amounted to $3,085,454. Net Position<br />
increased by a net amount of $2,898,244. The increase is caused by capital contributions of $1.7 million, and<br />
an operating income of $1.1 million.<br />
Unrestricted Net Position of the Storm Water Fund at the end of the year amounted to $517,449. Net<br />
Position increased by $1,138,671. The increase is primarily caused by operating income of $142 thousand<br />
and capital contributions in the amount of $1 million.<br />
General Fund Budgetary Highlights - Actual revenues collected exceeded management's original<br />
estimate of the General Fund's revenues by $1,294,174, mostly caused by larger than expected tax<br />
revenues and licenses and permits. Revenue budget amendments during the year included an increase<br />
to fire inspection fee revenue, fire department donations and miscellaneous revenues. Expenditures were<br />
less than appropriations by $2,205,520 due to reduced personnel and benefits costs due to staff<br />
turnovers during the year, reduced paper and supplies cost due to implementation of electronic<br />
processes, reduced training costs related to COVID-19 restrictions, delays to capital spending as well as<br />
an overall effort by all departments to reduce spending due to the unknowns related to COVID-19. These<br />
were offset some by an increase to public safety expenses in response to COVID-19. Significant budget<br />
amendments included increases to public safety vehicle maintenance, supplies, personal protective<br />
equipment, medical supplies and technology costs.<br />
CAPITAL ASSETS<br />
The City's investment in capital assets for its governmental and business-type activities as of September<br />
30, <strong>2021</strong> amounts to $31,102,888 and $19,704,541, respectively (net of accumulated depreciation). This<br />
investment in capital assets includes land, construction in progress, buildings, improvements,<br />
machinery and equipment, and infrastructure.<br />
Significant additions to capital assets included:<br />
• Increases in construction in progress of $4.7 million<br />
• Machinery and equipment of $1 million<br />
• Infrastructure and improvements of $6.4 million<br />
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Governmental Activities Business-type Activities Totals<br />
<strong>2021</strong> 2020 <strong>2021</strong> 2020 <strong>2021</strong> 2020<br />
Land $ 1,882,695 $ 1,882,695 $ 1,241,293 $ 1,241,293 $ 3,123,988 $ 3,123,988<br />
Construction in progress 3,724,478 2,941,345 2,076,828 404,939 5,801,306 3,346,284<br />
Buildings 12,229,108 8,258,310 101,181 101,181 12,330,289 8,359,491<br />
Improvements 499,230 398,358 32,501,400 29,753,985 33,000,630 30,152,343<br />
Machinery and equipment 12,069,668 11,036,305 2,362,708 2,156,708 14,432,376 13,193,013<br />
Infrastructure 18,928,780 16,476,752 - - 18,928,780 16,476,752<br />
Accumulated depreciation ( 18,231,071) ( 16,626,068) ( 18,578,869) ( 17,041,432) ( 36,809,940) ( 33,667,500)<br />
Total $ 31,102,888 $ 24,367,697 $ 19,704,541 $ 16,616,674 $ 50,807,429 $ 40,984,371<br />
Additional information on the City of Red Oak capital assets can be found in note V in the notes to the<br />
financial statements.<br />
LONG-TERM DEBT<br />
At the end of the current fiscal year, the City had long-term debt obligations as follows. The full<br />
amount of bonded debt is backed by the full faith and credit of the government.<br />
Governmental Activities Business-type Activities Totals<br />
<strong>2021</strong> 2020 <strong>2021</strong> 2020 <strong>2021</strong> 2020<br />
Certificates of obligation $ 14,966,000 $ 11,696,000 $ 4,809,000 $ 3,146,000 $ 19,775,000 $ 14,842,000<br />
General obligations 4,990,000 5,335,000 11,350,000 12,400,000 16,340,000 17,735,000<br />
Revenue bonds 16,015,000 11,110,000 - - 16,015,000 11,110,000<br />
Tax notes 2,754,000 1,350,000 346,000 419,000 3,100,000 1,769,000<br />
Premiums 1,819,613 1,026,537 1,121,841 1,181,654 2,941,454 2,208,191<br />
Compensated absences 737,255 754,974 34,261 32,872 771,516 787,846<br />
Total $ 41,281,868 $ 31,272,511 $ 17,661,102 $ 17,179,526 $ 58,942,970 $ 48,452,037<br />
Additional information on the City of Red Oak long term-debt can be found in note VII in the notes to<br />
the basic financial statements.<br />
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES<br />
In the fiscal year 2022 Budget, General Fund operating revenues are budgeted to increase by 5% from<br />
the fiscal year <strong>2021</strong> revenue collections with ad valorem taxes making up 50% of General Fund budgeted<br />
revenues. Certified assessed valuations, including estimated values on properties under protest,<br />
increased 11.5% for the fiscal year 2022 budget from fiscal year <strong>2021</strong>'s values. The Fiscal Year 2022<br />
budget was based on a property tax rate of 0.703645 per $100 of assessed value with 0.549874 for<br />
operations and 0.153771 for interest and principal on outstanding debt. Sales taxes are the second<br />
highest revenue source making up 23% of budgeted revenues and are budgeted to increase by 9.7%<br />
from fiscal year <strong>2021</strong> collections.<br />
There was no rate increase budgeted for Water and Sewer in the fiscal year 2022 budget. An increase of<br />
9.5% in Water and Sewer revenues from the fiscal year <strong>2021</strong> amended budget is budgeted in fiscal year<br />
2022 due to an increased customer base for water and sewer collections in fiscal year 2022.<br />
The state and local economy in this area continues to boom. Red Oak is poised to attract new retail and<br />
industrial development. The City's proximity to the DFW Metroplex and presence on 1-35E, along with<br />
the availability of quality retail and industrial property locations, ensure that the economic outlook for<br />
Red Oak will remain good for many years to come. Red Oak still has ample space available for future<br />
expansions in all sectors of the economy.<br />
In the fiscal year 2022 budget, all funds were presented with balanced budgets. Revenue estimates and<br />
expenses were conservative and consistent with established policies. The budget for the upcoming year<br />
sets a foundation for prudent fiscal management of City operations for the coming years and ensures<br />
that the City will have the tools to achieve the City Council's goals.<br />
8
BUILDING FOR THE FUTURE<br />
The City of Red Oak is creating a solid foundation for the future. The foundation is one that is driven by<br />
community needs and Council's vision of the future. The first step is to identify the goals that can guide<br />
policy makers and decision makers over the long-term. The City Council has identified critical goals to<br />
establish that foundation through decisions and the Strategic Planning process. The Strategic Planning<br />
Goals are outlined below.<br />
• Enhance and Maintain Public Safety<br />
• Enhance the Quality of life through Parks and other projects<br />
• Improve the City's Infrastructure<br />
• Enhance Economic Development<br />
• Develop, Retain and Attract Quality Staff<br />
• Improve long-term <strong>Financial</strong> Sustainability<br />
These goals were the foundation for the Fiscal Year 2022 Budget. These goals serve as a guide to future<br />
budgets and a new era of economic stability. How we spend our money today will impact future citizens<br />
of Red Oak.<br />
The City is working to update the master plans to guide the City's long-term growth and financial<br />
planning. Significant master planning activity includes: 1) <strong>Comprehensive</strong> land use and thoroughfare<br />
plan, 2) Parks master plan, and 3) Strategic Plan. Utilizing these plans, the City annually updates a<br />
rolling five-year capital improvement schedule. The City also maintains a police and fire department<br />
staffing plan as part of the strategic plan. These plans were used to determine budget allocations to the<br />
various departments and activities of the City.<br />
Distinguished Budget Award<br />
The City submitted its <strong>Annual</strong> Budget to the Government Finance Officer Association for the last five<br />
consecutive years and has received the Distinguished Budget Presentation Award for each year. The<br />
award is valid for one year only. The City has submitted the <strong>Annual</strong> Budget for the fiscal year beginning<br />
October 1, <strong>2021</strong> and plans to continue to submit for the award in future years. This represents the<br />
continued effort by the City Council and staff to prepare a budget document that reflects the<br />
transparency and professionalism of the City to its Citizens, bondholders, and rating agencies.<br />
Bond Ratings<br />
The City's bond ratings provide evidence of its financial strength. Fitch Ratings has assigned a rating of<br />
"AA", with a stable outlook, and Standard and Poors (S&P) has raised its long-term rating on the City<br />
from AA- and assigned a rating of "AA", with a stable outlook during fiscal year <strong>2021</strong>. These investment<br />
ratings indicate excellent investment quality. More information about the City's bond ratings is included<br />
in the notes to the basic financial statements.<br />
RESERVES<br />
Operating Reserves Another measure of the City's financial strength is the level of its fund balance, or<br />
operating reserves. Operating reserves are maintained by organizations to ensure services can be<br />
delivered during economic downturns, to address unforeseen expenditures in the case of an emergency<br />
or other event, and to take advantage of opportunities that may materialize outside of the budget<br />
processes. It is important to maintain operating cash reserves so that service delivery will not be<br />
negatively impacted if the economy takes a downturn, as 64% of the City's revenue is generated by<br />
sales taxes and property taxes. Policy guidelines adopted by the Council require reserve fund balances to<br />
be maintained at 30 days operating expenditures. This requirement was met, and exceeded, during<br />
Fiscal Year <strong>2021</strong>.<br />
Development Corporation Reserves Operating reserves are maintained by the development corporations<br />
at 25% of sales tax revenue for the year. As sales tax is the only revenue source for the development<br />
corporations, 25% of revenue is held in reserve as contingency amount should economic downturn occur.<br />
9
This requirement was met, and exceeded, during Fiscal Year <strong>2021</strong>.<br />
Capital Projects<br />
Capital project funds were added to the budget to facilitate the following Strategic Planning Goals;<br />
Improve and Expand City Offices and other Facilities; Enhance the Quality of life through Parks and other<br />
projects; and to Improve the City's Infrastructure. The FY 2022 budget includes capital budgeted in<br />
governmental capital projects funds in the amount of $14,413,850. These include the purchase of<br />
vehicles, public safety, information technology, public works and parks equipment, facility improvements<br />
for fire stations, animal shelter and the future municipal center, parks improvements and street<br />
improvements. The Water and Sewer Fund, Storm Water Drainage Fund, and Water and Sewer Capital<br />
Project Fund budgets include capital costs for the FY 2022 current year totaling $3,714,624. The capital<br />
projects budgeted in these funds include manhole rehabilitation, lift station improvements, SCADA<br />
upgrade, drainage improvements and various other projects.<br />
City Employees<br />
Staffing levels for FY 2022 will increase by 10 positions from the previous fiscal year. With these added<br />
positions, funding levels will reach 128 full-time and 3 part-time positions.<br />
Salary Adjustments<br />
We believe it is important to be able to recruit and retain valuable staff by ensuring competitive<br />
compensation rates. All employees will receive a market increase of 3% on October 1. Uniformed<br />
employees will receive step increases and other staff receive an annual 3% increase on April 1st,<br />
contingent upon performance review.<br />
Benefits<br />
Health insurance rates for employees and the City remained flat for the fiscal year <strong>2021</strong> Budget. The City<br />
continued to offer additional health plan options for employees. These included a high deductible health<br />
plan along with a corresponding health savings account which the City contributes to on behalf of<br />
employees, a buy-up plan and base PPO.<br />
REQUESTS FOR INFORMATION<br />
This financial report is designed to provide a general overview of the City's finances for all those with an<br />
interest in the government's finances. Questions concerning any of the information provided in this<br />
report or requests for additional financial information should be addressed to the Office of the City<br />
Secretary, P. 0. Box 393, Red Oak, Texas 75154.<br />
10
BASIC FINANCIAL STATEMENTS
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF RED OAK, TEXAS<br />
STATEMENT OF NET POSITION<br />
SEPTEMBER 30, <strong>2021</strong><br />
Primary Government<br />
Governmental Business-Type<br />
Activities Activities Total<br />
ASSETS<br />
Cash and cash equivalents $ 5,602,383 $ 4,066,768 $ 9,669,151<br />
Investments 17,131,766 851,986 17,983,752<br />
Accounts receivable (net) 1,847,973 1,856,857 3,704,830<br />
Inventory 21,565 35,118 56,683<br />
Prepaid assets 1,497,911 - 1,497,911<br />
Internal balances ( 4,760,000)<br />
4,760,000 -<br />
Restricted assets:<br />
Cash 6,061,139 1,465,736 7,526,875<br />
Investments 9,638,722 2,199,077 11,837,799<br />
Land held for resale 10,451,420 - 10,451,420<br />
Capital assets, net of<br />
accumulated depreciation:<br />
Non-depreciable 5,607,173 3,318,121 8,925,294<br />
Depreciable 25,495,715 16,386,420 41,882,135<br />
Total Assets 78,595,767 34,940,083 113,535,850<br />
DEFERRED OUTFLOWS OF RESOURCES<br />
Deferred charge on refunding - 459,723 459,723<br />
Pension related 426,364 68,545 494,909<br />
OPEB related 62,922 10,588 73,510<br />
Total Deferred Outflows of Resources 489,286 538,856 1,028,142<br />
LIABILITIES<br />
Accounts payable 3,668,826 924,512 4,593,338<br />
Accrued liabilities 195,282 27,228 222,510<br />
Accrued interest payable 216,848 59,842 276,690<br />
Due to other governments - 5,510,000 5,510,000<br />
Customer deposits payable 6,000 336,637 342,637<br />
Unearned revenue - 1,668,095 1,668,095<br />
Noncurrent liabilities:<br />
Due within one year<br />
Long-term debt 2,348,314 1,533,565 3,881,879<br />
Due in more than one year<br />
Long-term debt 38,933,554 16,127,537 55,061,091<br />
Net pension liability 779,161 125,241 904,402<br />
Total OPEB liability 239,633 38,521 278,154<br />
Total Liabilities 46,387,618 26,351,178 72,738,796<br />
DEFERRED INFLOWS OF RESOURCES<br />
Pension related 373,407 60,032 433,439<br />
OPEB related 10,016 1,619 11,635<br />
Total Deferred Inflows of Resources 383,423 61,651 445,074<br />
NET POSITION<br />
Net investment in capital assets 3,708,559 4,677,953 8,386,512<br />
Restricted for:<br />
Court security 34,519 - 34,519<br />
Court technology 3,293 - 3,293<br />
Public safety 73,534 - 73,534<br />
Culture and recreation 558,270 - 558,270<br />
Industrial development 7,157,198 - 7,157,198<br />
Economic development 11,255,287 - 11,255,287<br />
Capital projects 256,527 785,254 1,041,781<br />
Unrestricted 9,266,825 3,602,903 12,869,728<br />
Total Net Position $ 32,314,012 $ 9,066,110 $ 41,380,122<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 11
CITY OF RED OAK, TEXAS<br />
STATEMENT OF ACTIVITIES<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Program Revenues<br />
Operating<br />
Charges for<br />
Grants and<br />
Functions/Programs Expenses Services Contributions<br />
Primary government:<br />
Governmental activities:<br />
General government $ 1,931,114 $ - $<br />
-<br />
Public safety 8,910,297 657,512 871,688<br />
Culture and recreation 1,051,184 1,634,550 -<br />
Public works 2,895,417 649,678 -<br />
Industrial development 5,596,763 121,712 421,713<br />
Economic development 209,880 1,103,869 -<br />
Interest and fiscal charges 2,259,864 - -<br />
Total governmental activities 22,854,519 4,167,321 1,293,401<br />
Business-type activities:<br />
Utility 8,525,891 9,123,763 -<br />
Storm water 225,123 353,648 -<br />
Total business-type activities 8,751,014 9,477,411 -<br />
Total primary government $ 31,605,533 $ 13,644,732 $ 1,293,401<br />
General revenues:<br />
Property taxes<br />
Sales taxes<br />
Franchise tax<br />
Hotel occupancy tax<br />
Alcoholic beverage tax<br />
Investment earnings<br />
Miscellaneous<br />
Transfers<br />
Total general revenues and transfers<br />
Change in net position<br />
Net position - beginning<br />
Net position - ending<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 12
Program<br />
Revenues<br />
Capital<br />
Net (Expense) Revenue and Changes in Net Position<br />
Primary Government<br />
Grants and Governmental Business-type<br />
Contributions Activities Activities Total<br />
$ - $( 1,931,114) $ - $( 1,931,114)<br />
- ( 7,381,097)<br />
- ( 7,381,097)<br />
- 583,366 - 583,366<br />
2,485,606 239,867 - 239,867<br />
- ( 5,053,338)<br />
- ( 5,053,338)<br />
- 893,989 - 893,989<br />
- ( 2,259,864)<br />
- ( 2,259,864)<br />
2,485,606 ( 14,908,191)<br />
- ( 14,908,191)<br />
1,697,234 - 2,295,106 2,295,106<br />
1,007,786 - 1,136,311 1,136,311<br />
2,705,020 - 3,431,417 3,431,417<br />
$ 5,190,626 ( 14,908,191)<br />
3,431,417 ( 11,476,774)<br />
8,571,758 - 8,571,758<br />
6,343,642 - 6,343,642<br />
728,690 - 728,690<br />
317,525 - 317,525<br />
11,185 - 11,185<br />
52,373 12,498 64,871<br />
45,403 - 45,403<br />
( 593,000)<br />
593,000 -<br />
15,477,576 605,498 16,083,074<br />
569,385 4,036,915 4,606,300<br />
31,744,627 5,029,195 36,773,822<br />
$ 32,314,012 $ 9,066,110 $ 41,380,122<br />
13
CITY OF RED OAK, TEXAS<br />
BALANCE SHEET<br />
GOVERNMENTAL FUNDS<br />
SEPTEMBER 30, <strong>2021</strong><br />
Special Revenue<br />
Industrial<br />
Economic<br />
General Development Development<br />
Fund Corporation Corporation<br />
ASSETS<br />
Cash and cash equivalents $ 378,804 $ 380,301 $ 972,142<br />
Investments 3,254,791 6,977,776 2,849,839<br />
Accounts receivable (net) 1,024,751 479,928 273,027<br />
Due from other funds - - 36,955<br />
Prepaid Expenses - - -<br />
Inventory 21,565 - -<br />
Land held for resale - 4,099,594 6,351,826<br />
Restricted assets:<br />
Cash 1,387,669 412,424 45,916<br />
Investments 944,417 76,000 4,033,305<br />
Total assets $ 7,011,997 $ 12,426,023 $ 14,563,010<br />
LIABILITIES<br />
Accounts payable 1,134,579 454,760 121,350<br />
Accrued liabilities 176,187 16,610 -<br />
Due to other funds 15,392 4,796,955 -<br />
Customer Deposits - - -<br />
Total liabilities 1,326,158 5,268,325 121,350<br />
DEFERRED INFLOWS OF RESOURCES<br />
Unavailable revenue - Property taxes 140,816 500 -<br />
Unavailable revenue - Fines & fees 48,783 - -<br />
Total inflows of resources 189,599 500 -<br />
FUND BALANCES<br />
Nonspendable:<br />
Inventory 21,565 - -<br />
Restricted:<br />
Debt service - - -<br />
Culture and recreation - - -<br />
Industrial development - 7,157,198 -<br />
Economic development - - 14,441,660<br />
Capital projects 256,527 - -<br />
Court security 34,519 - -<br />
Court technology 3,293 - -<br />
Other public safety 73,534 - -<br />
Committed:<br />
Capital projects - - -<br />
Assigned:<br />
Subsequent year's budget 1,144,757 - -<br />
Unassigned 3,962,045 - -<br />
Total fund balances 5,496,240 7,157,198 14,441,660<br />
Total liabilities, deferred inflows<br />
and fund balances $ 7,011,997 $ 12,426,023 $ 14,563,010<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 14
Capital<br />
Special<br />
Projects Revenue Other Total<br />
Debt <strong>2021</strong> CO Park Governmental Governmental<br />
Service Bond Fund Improvements Funds Funds<br />
$ 106,314 $ - $ 725,826 $ 3,038,996 $ 5,602,383<br />
- - 33,150 4,016,210 17,131,766<br />
37,930 - - 32,337 1,847,973<br />
- - 121,155 - 158,110<br />
- 1,497,911 - 1,497,911<br />
- - - - 21,565<br />
- - - - 10,451,420<br />
- 4,215,130 - - 6,061,139<br />
- - - 4,585,000 9,638,722<br />
$ 144,244 $ 5,713,041 $ 880,131 $ 11,672,543 $ 52,410,989<br />
- 1,904,286 5,819 48,032 3,668,826<br />
- - - 2,485 195,282<br />
- - - 105,763 4,918,110<br />
- - - 6,000 6,000<br />
- 1,904,286 5,819 162,280 8,788,218<br />
36,624 - - - 177,940<br />
- - - - 48,783<br />
36,624 - - - 226,723<br />
- - - - 21,565<br />
107,620 - - - 107,620<br />
- - - 558,270 558,270<br />
- - - - 7,157,198<br />
- - - - 14,441,660<br />
- 3,808,755 874,312 8,488,866 13,428,460<br />
- - - - 34,519<br />
- - - - 3,293<br />
- - - - 73,534<br />
- - - 2,463,127 2,463,127<br />
- - - - 1,144,757<br />
- - - - 3,962,045<br />
107,620 3,808,755 874,312 11,510,263 43,396,048<br />
$ 144,244 $ 5,713,041 $ 880,131 $ 11,672,543 $ 52,410,989<br />
15
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CITY OF RED OAK, TEXAS<br />
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE<br />
STATEMENT OF NET POSITION<br />
SEPTEMBER 30, <strong>2021</strong><br />
Total Fund Balances - Governmental Funds $ 43,396,048<br />
Amount reported for governmental activities in the statement of net position are<br />
different because:<br />
Capital assets, net of accumulated depreciation, used in governmental activities are<br />
not financial resources and, therefore, are not reported in the funds.<br />
Capital assets 49,333,959<br />
Accumulated depreciation ( 18,231,071)<br />
Long-term liabilities, including bonds payable, that are not due and payable in the<br />
current period, and, therefore are not reported as liabilities in the funds.<br />
Revenue bonds ( 16,015,000)<br />
General obligation bonds ( 4,990,000)<br />
Certificates of obligation ( 14,966,000)<br />
Tax notes ( 2,754,000)<br />
Accrued interest payable on long-term debt ( 216,848)<br />
Compensated absences ( 737,255)<br />
Net pension liability ( 779,161)<br />
Total OPEB liability ( 239,633)<br />
Other long-term assets are not available to pay for current period expenditures and<br />
therefore, are deferred in the governmental funds. 226,723<br />
Governmental funds report the effect of premiums, discounts, and refundings and<br />
similar items when debt is first issued, whereas these amounts are deferred and<br />
amortized in the statement of activities.<br />
Premium on bonds ( 1,819,613)<br />
Differences between expected and actual experiences, assumption changes and<br />
netdifferences between projected and actual earnings and contributions subsequent<br />
to the measurement date for the postretirement benefits (pension and OPEB) are<br />
recognized asdeferred outflows of resources and deferred inflows of resources on<br />
the statement of netposition.<br />
Deferred outflows - pension related 426,364<br />
Deferred outflows - OPEB related 62,922<br />
Deferred inflows - pension related ( 373,407)<br />
Deferred inflows - OPEB related ( 10,016)<br />
Net Position of Governmental Activities $ 32,314,012<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 16
CITY OF RED OAK, TEXAS<br />
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES<br />
GOVERNMENTAL FUNDS<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Special Revenue<br />
Industrial<br />
Economic<br />
General Development Development<br />
Fund Corporation Corporation<br />
REVENUES<br />
Property taxes $ 6,780,776 $ - $ -<br />
Sales taxes 3,169,140 1,587,251 1,587,251<br />
Franchise tax 728,690 - -<br />
Hotel occupancy tax - - -<br />
Alcoholic beverage tax 11,185 - -<br />
Intergovernmental 871,688 - -<br />
Contributions 33,577 421,713 -<br />
Licenses and permits 1,284,074 - -<br />
Fines and forfeitures 341,300 - -<br />
Charges for services 654,699 - -<br />
Investment earnings 23,120 11,750 8,413<br />
Land sale - 121,712 1,103,869<br />
Miscellaneous 44,143 500 -<br />
Total revenues 13,942,392 2,142,926 2,699,533<br />
EXPENDITURES<br />
Current:<br />
General government 1,678,326 - -<br />
Public safety 8,303,211 - -<br />
Culture and recreation 853,375 - -<br />
Public works 2,016,707 - -<br />
Industrial development - 5,596,763 -<br />
Economic development - - 209,880<br />
Capital outlay 1,721,787 37,642 37,642<br />
Debt service:<br />
Principal - 397,000 355,000<br />
Interest and fiscal charges - 87,514 239,641<br />
Bond issuance costs 88,106 - 1,500<br />
Total expenditures 14,661,512 6,118,919 843,663<br />
Excess (deficiency) of revenues<br />
over (under) expenditures ( 719,120) ( 3,975,993) 1,855,870<br />
OTHER FINANCING SOURCES (USES)<br />
Issuance of bonds 1,930,000 - -<br />
Premium on issuance of bonds 160,760 - -<br />
Insurance recovery 23,064 - -<br />
Transfers in 961,364 - -<br />
Transfers out ( 1,814,857) ( 1,290,901) ( 743,690)<br />
Total other financing sources (uses) 1,260,331 ( 1,290,901) ( 743,690)<br />
CHANGE IN FUND BALANCE 541,211 ( 5,266,894) 1,112,180<br />
FUND BALANCE - BEGINNING 4,955,029 12,424,092 13,329,480<br />
FUND BALANCE - ENDING $ 5,496,240 $ 7,157,198 $ 14,441,660<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 17
Capital<br />
Projects<br />
Special<br />
Revenue<br />
Other<br />
Total<br />
Debt <strong>2021</strong> CO Park Governmental Governmental<br />
Service Bond Fund Improvements Funds Funds<br />
$ 1,895,159 $ - $ - $ - $ 8,675,935<br />
- - - - 6,343,642<br />
- - - - 728,690<br />
- - - 317,525 317,525<br />
- - - - 11,185<br />
- - - - 871,688<br />
- - - - 455,290<br />
- - 370,511 - 1,654,585<br />
- - - - 341,300<br />
- - 222,600 19,773 897,072<br />
716 130 2,083 6,161 52,373<br />
- - - - 1,225,581<br />
- - 760 - 45,403<br />
1,895,875 130 595,954 343,459 21,620,269<br />
- - - - 1,678,326<br />
- - - - 8,303,211<br />
- - - 148,096 1,001,471<br />
- - - 93,236 2,109,943<br />
- - - - 5,596,763<br />
- - - - 209,880<br />
- 406,375 2,923,938 1,131,240 6,258,624<br />
1,286,000 - - - 2,038,000<br />
608,310 - - - 935,465<br />
- 119,598 - 1,125,579 1,334,783<br />
1,894,310 525,973 2,923,938 2,498,151 29,466,466<br />
1,565 ( 525,843) ( 2,327,984) ( 2,154,692) ( 7,846,197)<br />
- 3,685,000 - 5,657,000 11,272,000<br />
- 649,598 - 53,579 863,937<br />
- - - 182,248 205,312<br />
- - - 2,314,857 3,276,221<br />
- - - ( 19,773) ( 3,869,221)<br />
- 4,334,598 - 8,187,911 11,748,249<br />
1,565 3,808,755 ( 2,327,984) 6,033,219 3,902,052<br />
106,055 - 3,202,296 5,477,044 39,493,996<br />
$ 107,620 $ 3,808,755 $ 874,312 $ 11,510,263 $ 43,396,048<br />
18
CITY OF RED OAK, TEXAS<br />
RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES<br />
IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Total net change in Fund Balances - Governmental Funds $ 3,902,052<br />
Amounts reported for governmental activities in the statement of activities are<br />
different because:<br />
Current year capital outlays are expenditures in the fund financial statements, but<br />
they should be shown as increases in capital assets in the government-wide<br />
financial statements. The net effect of removing the current year capital outlays is<br />
to increase net position. 5,888,165<br />
Depreciation is not recognized as an expense in governmental funds since it does<br />
not require the use of current financial resources. The net effect of the current<br />
year's depreciation is to decrease net position. ( 1,605,003)<br />
The net effect of miscellaneous transactions involving capital assets (i.e., sales,<br />
trade-ins, and donations) is to increase net position.<br />
Donation of capital assets 2,452,029<br />
The issuance of long-term debt (e.g. bonds, loans, leases) provides current<br />
financial resources to governmental funds, while the repayment of the principal of<br />
long-term debt consumes the current financial resources of governmental funds.<br />
Neither transaction, however, has any effect on the net position.<br />
Issuance of revenue bonds ( 5,657,000)<br />
Issuance of tax notes ( 1,930,000)<br />
Premium on issuance ( 863,937)<br />
Issuance of certificates of obligation ( 3,685,000)<br />
Principal paid on bonds 2,038,000<br />
Revenues and expenditures in the statement of activities that do not provide or use<br />
current financial resources are not reported as revenues and expenses in the<br />
governmental funds.<br />
Fines and fees 48,783<br />
Property taxes ( 104,177)<br />
Some expenses reported in the statement of activities do not require the use of<br />
current financial resources and, therefore, are not reported as expenditures in the<br />
governmental funds.<br />
Accrued interest on long-term debt ( 60,477)<br />
Amortization of deferred loss on refunding 70,861<br />
Compensated absences 17,719<br />
Changes in pension liabilities and related deferred outflows/inflows 91,285<br />
Changes in OPEB liabilities and related deferred outflows/inflows ( 33,915)<br />
Total change in net position of Governmental Activities $ 569,385<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 19
CITY OF RED OAK, TEXAS<br />
STATEMENT OF NET POSITION<br />
PROPRIETARY FUNDS<br />
SEPTEMBER 30, <strong>2021</strong><br />
Business-type Activities - Enterprise<br />
Total<br />
Utility Storm Water Proprietary<br />
Fund Fund Funds<br />
ASSETS<br />
Current assets:<br />
Cash and cash equivalents $ 3,547,349 $ 519,419 $ 4,066,768<br />
Investments 851,986 - 851,986<br />
Accounts receivable (net) 1,837,507 19,350 1,856,857<br />
Inventory 30,491 4,627 35,118<br />
Due from other funds 4,760,000 - 4,760,000<br />
Restricted assets:<br />
Cash 1,465,736 - 1,465,736<br />
Investments 1,930,657 268,420 2,199,077<br />
Total current assets 14,423,726 811,816 15,235,542<br />
Noncurrent assets:<br />
Capital assets:<br />
Nondepreciable 3,250,156 67,965 3,318,121<br />
Depreciable, net 15,388,521 997,899 16,386,420<br />
Total noncurrent assets 18,638,677 1,065,864 19,704,541<br />
Total assets 33,062,403 1,877,680 34,940,083<br />
DEFERRED OUTFLOWS OF RESOURCES<br />
Pension related 63,002 5,543 68,545<br />
OPEB related 9,732 856 10,588<br />
Deferred charge on refunding 459,723 - 459,723<br />
Total deferred outflows of resources 532,457 6,399 538,856<br />
LIABILITIES<br />
Current liabilities:<br />
Accounts payable 920,665 3,847 924,512<br />
Accrued liabilities 25,227 2,001 27,228<br />
Unearned revenue 1,668,095 - 1,668,095<br />
Customer deposits payable 336,637 - 336,637<br />
Due to other governments 5,510,000 - 5,510,000<br />
Accrued interest payable 58,354 1,488 59,842<br />
Due within one year:<br />
Long-term debt 1,446,863 86,702 1,533,565<br />
Total current liabilities 9,965,841 94,038 10,059,879<br />
Noncurrent liabilities:<br />
Long-term debt 15,792,942 334,595 16,127,537<br />
Net pension liability 115,137 10,104 125,241<br />
Total OPEB liability 35,410 3,111 38,521<br />
Total noncurrent liabilities 15,943,489 347,810 16,291,299<br />
Total liabilities 25,909,330 441,848 26,351,178<br />
DEFERRED INFLOWS OF RESOURCES<br />
Pension related 55,177 4,855 60,032<br />
OPEB related 1,488 131 1,619<br />
Total deferred inflows of resources 56,665 4,986 61,651<br />
NET POSITION<br />
Net investment in capital assets 3,758,157 919,796 4,677,953<br />
Restricted for capital projects 785,254 - 785,254<br />
Unrestricted 3,085,454 517,449 3,602,903<br />
Total net position $ 7,628,865 $ 1,437,245 $ 9,066,110<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 20
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CITY OF RED OAK, TEXAS<br />
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION<br />
PROPRIETARY FUNDS<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Business-type Activities - Enterprise<br />
Total<br />
Utility Storm Water Proprietary<br />
Fund Fund Funds<br />
OPERATING REVENUES<br />
Charges for services:<br />
Water charges $ 3,108,124 $ 353,648 $ 3,461,772<br />
Sewer charges 4,935,457 - 4,935,457<br />
Tap fees and reconnects 205,272 - 205,272<br />
Penalties 44,047 - 44,047<br />
Impact fees 695,196 - 695,196<br />
Miscellaneous 135,667 - 135,667<br />
Total revenues 9,123,763 353,648 9,477,411<br />
OPERATING EXPENSES<br />
Personnel services 1,170,736 91,021 1,261,757<br />
Insurance 230,192 32,495 262,687<br />
Materials and supplies 376,267 18,503 394,770<br />
Contractual services 4,541,520 9,811 4,551,331<br />
Maintenance 116,482 8,917 125,399<br />
Other operating costs 102,557 - 102,557<br />
Depreciation 1,486,992 50,445 1,537,437<br />
Total expenses 8,024,746 211,192 8,235,938<br />
Operating income (loss) 1,099,017 142,456 1,241,473<br />
NON-OPERATING REVENUES (EXPENSES)<br />
Interest earnings 10,138 2,360 12,498<br />
Interest and fiscal charges ( 430,135) ( 13,931) ( 444,066)<br />
Bond issuance costs ( 71,010)<br />
- ( 71,010)<br />
Total non-operating revenues (expenses) ( 491,007) ( 11,571) ( 502,578)<br />
Income (loss) before capital contributions<br />
and transfers 608,010 130,885 738,895<br />
CAPITAL CONTRIBUTIONS AND TRANSFERS<br />
Capital contributions 1,697,234 1,007,786 2,705,020<br />
Transfers in 593,000 - 593,000<br />
CHANGE IN NET POSITION 2,898,244 1,138,671 4,036,915<br />
NET POSITION - BEGINNING 4,730,621 298,574 5,029,195<br />
NET POSITION - END OF YEAR $ 7,628,865 $ 1,437,245 $ 9,066,110<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 21
CITY OF RED OAK, TEXAS<br />
STATEMENT OF CASH FLOWS<br />
PROPRIETARY FUNDS<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Business-type Activities - Enterprise<br />
Total<br />
Utility Storm Water Proprietary<br />
Fund Fund Funds<br />
CASH FLOWS FROM OPERATING ACTIVITIES<br />
Receipts from customers and users $ 9,144,627 $ 362,748 $ 9,507,375<br />
Payments to suppliers ( 4,372,047) ( 40,516) ( 4,412,563)<br />
Payments to employees ( 1,420,553) ( 137,335) ( 1,557,888)<br />
Net cash provided (used) by operating<br />
activities 3,352,027 184,897 3,536,924<br />
CASH FLOWS FROM NONCAPITAL FINANCING<br />
ACTIVITIES<br />
Payments from (to) other funds 593,000 - 593,000<br />
Net cash provided (used) by noncapital<br />
financing activities 593,000 - 593,000<br />
CASH FLOWS FROM CAPITAL AND RELATED<br />
FINANCING ACTIVITIES<br />
Proceeds from capital related debt 2,020,000 - 2,020,000<br />
Principal paid on bonds ( 1,306,000) ( 84,000) ( 1,390,000)<br />
Interest and fiscal charges paid on bonds ( 599,021) ( 14,487) ( 613,508)<br />
Cash received from other governments 1,668,095 - 1,668,095<br />
Acquisition and construction of capital assets ( 1,852,319) ( 67,965) ( 1,920,284)<br />
Net cash provided (used) by capital and<br />
related financing activities ( 69,245) ( 166,452) ( 235,697)<br />
CASH FLOWS FROM INVESTING ACTIVITIES<br />
Interest on investments 10,138 2,360 12,498<br />
Proceeds from sale and maturities of securities 1,494,514 - 1,494,514<br />
Purchase of investments ( 1,830,356)<br />
- ( 1,830,356)<br />
Net cash provided (used) by investing<br />
activities ( 325,704)<br />
2,360 ( 323,344)<br />
NET INCREASE (DECREASE) IN CASH<br />
AND CASH EQUIVALENTS 3,550,078 20,805 3,570,883<br />
CASH AND CASH EQUIVALENTS, BEGINNING 1,463,007 498,614 1,961,621<br />
CASH AND CASH EQUIVALENTS, ENDING $ 5,013,085 $ 519,419 $ 5,532,504<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 22
CITY OF RED OAK, TEXAS<br />
STATEMENT OF CASH FLOWS<br />
PROPRIETARY FUNDS<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
RECONCILIATION OF OPERATING INCOME<br />
(LOSS) TO NET CASH PROVIDED (USED) BY<br />
OPERATING ACTIVITIES<br />
Operating income 1,099,017<br />
Business-type Activities - Enterprise<br />
Total<br />
Utility Storm Water Proprietary<br />
Fund Fund Funds<br />
$ $ 142,456 $ 1,241,473<br />
Adjustments to reconcile operating income to net cash<br />
provided (used) by operating activities:<br />
Depreciation and amortization 1,486,992 50,445 1,537,437<br />
(Increase) decrease in:<br />
Accounts receivable 23,096 7,832 30,928<br />
Inventory ( 8,902) ( 2,448) ( 11,350)<br />
Deferred outflows of resources ( 9,997)<br />
1,268 ( 8,729)<br />
Increase (decrease) in:<br />
Accounts payable 809,191 2,728 811,919<br />
Other liabilities ( 35,510) ( 6,013) ( 41,523)<br />
Customer deposits ( 2,232)<br />
- ( 2,232)<br />
Deferred inflows of resources 13,469 ( 894) 12,575<br />
Net pension liability ( 31,521) ( 9,906) ( 41,427)<br />
Net OPEB liability 8,424 ( 571)<br />
7,853<br />
Total adjustments 2,253,010 42,441 2,295,451<br />
Net cash provided (used) by operating activities $ 3,352,027 $ 184,897 $ 3,536,924<br />
SCHEDULE OF NON-CASH CAPITAL AND<br />
RELATED FINANCING ACTIVITIES<br />
Contributions of capital assets $ 1,697,234 $ 1,007,786 $ 2,705,020<br />
The notes to the financial statements are an<br />
integral part of these financial statements. 23
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CITY OF RED OAK, TEXAS<br />
NOTES TO THE FINANCIAL STATEMENTS<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES<br />
A. <strong>Report</strong>ing Entity<br />
The City of Red Oak, Texas (the "City") was incorporated in 1949, and operates under a Council-<br />
Manager form of government. The accompanying financial statements present the government and<br />
its component units, entities for which the government is considered to be financially accountable.<br />
Blended Component Units<br />
The City of Red Oak Economic Development Corporation, Inc. (Economic Development Corporation)<br />
is responsible for collecting and disbursing the one-half percent sales tax to be used for economic<br />
development within and for the benefit of the City. The City Council is the governing board for the<br />
Corporation. The members of the Corporation's boardPageP are appointed by the City. The City<br />
holds operational responsibility for the Corporation. The Corporation is presented as a governmental<br />
fund type and has a September 30 year-end.<br />
The City of Red Oak Industrial Development Corporation, Inc. (Industrial Development Corporation)<br />
is responsible for collecting and disbursing the one-half percent sales tax to be used for economic<br />
development within and for the benefit of the City. The City Council is the governing board for the<br />
Corporation. The members of the Corporation's board are appointed by the City. The City holds<br />
operational responsibility for the Corporation. The Corporation is presented as a governmental fund<br />
type and has a September 30 year-end.<br />
Separate financial statements for the component units are not issued.<br />
B. Government-wide and Fund <strong>Financial</strong> Statements<br />
The government-wide financial statements (i.e., the statement of Net Position and the statement of<br />
changes in Net Position) report information on all of the primary government and its blended<br />
component units. Governmental activities, which normally are supported by taxes and<br />
intergovernmental revenues, are reported separately from business-type activities, which rely to a<br />
significant extent on fees and charges for support.<br />
The statement of activities demonstrates the degree to which the direct expenses of a given function<br />
or segment is offset by program revenues. Direct expenses are those that are clearly identifiable<br />
with a specific function or segment. Program revenues include 1) charges to customers or applicants<br />
who purchase, use, or directly benefit from goods, services, or privileges provided by a given<br />
function or segment and 2) grants and contributions that are restricted to meeting the operational<br />
or capital requirements of a particular function or segment. Taxes and other items not properly<br />
included among program revenues are reported instead as general revenues.<br />
Separate financial statements are provided for governmental funds and proprietary funds. Major<br />
individual governmental funds and major individual enterprise funds are reported as separate<br />
columns in the fund financial statement.<br />
C. Measurement Focus, Basis of Accounting, and <strong>Financial</strong> Statement Presentation<br />
The government-wide financial statements are reported using the economic resources measurement<br />
focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues<br />
are recorded when earned and expenses are recorded when a liability is incurred, regardless of the<br />
timing of related cash flows. Property taxes are recognized as revenues in the year for which they<br />
are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements<br />
imposed by the provider have been met.<br />
24
Governmental fund financial statements are reported using the current financial resources<br />
measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon<br />
as they are both measurable and available. Revenues are considered to be available when they are<br />
collectible within the current period or soon enough thereafter to pay liabilities of the current period.<br />
For this purpose, the government considers revenues to be available if they are collected within<br />
sixty days of the end of the current fiscal period. Expenditures generally are recorded when a liability<br />
is incurred, as under accrual accounting. However, inventories of materials and supplies are<br />
considered expenditures when used and debt service expenditures, as well as expenditures related<br />
to accumulated unpaid sick pay, are recorded only when payment is due.<br />
Property and taxpayer-assessed taxes estimated to be collectible within sixty days after balance<br />
sheet date, interest, and expenditure driven grants are all considered to be susceptible to accrual<br />
and so have been recognized as revenues of the current fiscal period. All other revenue items are<br />
considered to be measurable and available only when cash is received by the government.<br />
The City reports the following major governmental funds:<br />
The General Fund is the City’s primary operating fund. It accounts for all financial resources of<br />
the general government, except those required to be accounted for in another fund.<br />
The Industrial Development Corporation Fund is responsible for collecting and disbursing<br />
the one-half cent sales tax to be used for industrial development within the City.<br />
The Economic Development Corporation Fund is responsible for collecting and disbursing<br />
the one-half cent sales tax to be used for economic development within the City.<br />
The Debt Service Fund accounts for the property tax revenues received which were specifically<br />
levied for the purpose of covering debt service requirements.<br />
The <strong>2021</strong> Certificates of Obligation Bond Fund is used to account for the proceeds from the<br />
bonds issued for major capital projects.<br />
The Parks Improvements Fund is used to account for restricted revenue sources used to<br />
improve parks facilities in the City.<br />
The City reports the following major proprietary funds:<br />
The Utility Fund accounts for the activities of the sewage treatment plant, sewage pumping<br />
stations and collection systems, and the water distribution system.<br />
The Storm Water Drainage Fund accounts for the City's storm water revenues and related<br />
projects.<br />
As a general rule, the effect of interfund activity has been eliminated from the government-wide<br />
financial statements. Exceptions to this general rule are charges between the City's utility function<br />
and various other functions of the City. Elimination of these charges would distort the direct costs<br />
and program revenues reported for the various functions concerned.<br />
Amounts reported as program revenues include 1) charges to customers or applicants for goods,<br />
services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and<br />
contributions. Internally dedicated resources are reported as general revenues rather than as<br />
program revenues. Likewise, general revenues include all taxes.<br />
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating<br />
revenues and expenses generally result from providing services and producing and delivering goods<br />
in connection with a proprietary fund's principal ongoing operations. The principal operating<br />
revenues of the utility fund are charges to customers for sales and services and the portion of tap<br />
fees intended to recover the cost of connecting new customers to the system. Operating expenses<br />
for the utility fund include the cost of sales and services, administrative expenses, and depreciation<br />
on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating<br />
revenues and expenses.<br />
When both restricted and unrestricted resources are available for use, it is the government's policy<br />
to use restricted resources first, then unrestricted resources, as they are needed.<br />
25
D. Cash, Deposits and Investments<br />
The City's cash and cash equivalents are considered to be cash on hand, demand deposits and shortterm<br />
investments with original maturities of three months or less from the date of acquisition.<br />
The Economic Development Corporation and Industrial Development Corporation are authorized by<br />
their governing boards to invest in obligations of the U.S. Treasury and local government investment<br />
pools (TexPool and LOGIC).<br />
Investments in government pools are recorded at amortized cost. All other investments are recorded<br />
at fair value. Fair value is the amount at which a financial instrument could be exchanged in a<br />
current transaction between willing parties.<br />
E. Receivables and Payables<br />
Activity between funds that are representative of lending/borrowing arrangements outstanding at<br />
the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion<br />
of inter-fund loans) or "advances to/from other funds" (i.e., the non-current portion of inter-fund<br />
loans). All other outstanding balances between funds are reported as "due to/from other funds."<br />
Any residual balances outstanding between the governmental activities and business-type activities<br />
are reported in the government-wide financial statements as "internal balances."<br />
Advances between funds, as reported in the fund financial statements, are offset by a fund balance<br />
reserve account in applicable governmental funds to indicate that they are not available for<br />
appropriation and are not expendable available financial resources.<br />
All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade<br />
accounts receivables in excess of sixty days comprise the trade accounts receivable allowance for<br />
uncollectibles. The property tax receivable allowance is based on historical collection experience.<br />
The City's property tax is levied each October 1 on the assessed value listed as of the prior January<br />
1 for all real and personal property. Appraised values are established by the Ellis Central Appraisal<br />
District as market value and assessed at 100% of appraised value. Property taxes attach as an<br />
enforceable lien on property as of January 1. The Ellis County Tax Assessor/Collector bills and<br />
collects the City's property taxes, which are due October 1. Full payment can be made prior to the<br />
next January 31 to avoid penalty and interest charges. Overtime, substantially all property taxes<br />
are collected.<br />
F. Inventories and Prepaid Items<br />
All inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories are recorded<br />
as expenditures when consumed rather than when purchased.<br />
Certain costs applicable to future accounting periods are recorded as prepaid items. The cost of<br />
prepaid items is recorded as expenditures/expenses when consumed rather than when purchased.<br />
G. Restricted Assets<br />
Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside<br />
for their repayment, are classified as restricted assets on the statement of Net Position because they<br />
are maintained in separate bank accounts and their use is limited by applicable bond covenants.<br />
The "revenue bond construction" account is used to report those proceeds of bond issuances that<br />
are restricted for use in construction. The "interest and sinking" account is used to segregate<br />
resources accumulated for debt service payments over the next twelve months.<br />
H. Capital Assets<br />
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads,<br />
bridges, curbs and gutters, streets and sidewalks, drainage systems and lighting systems), are<br />
reported in the applicable governmental or business-type activities columns in the government-wide<br />
financial statements. Capital assets are defined by the City as assets with an initial, individual cost<br />
of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded<br />
at historical cost or estimated historical cost If purchased or constructed. Donated capital assets are<br />
recorded at estimated acquisition value.<br />
26
The costs of normal maintenance and repairs that do not add to the value of the asset or materially<br />
extend asset lives are not capitalized.<br />
Major outlays for capital assets and improvements are capitalized as projects are constructed.<br />
Interest incurred during the construction phase of capital assets of business-type activities is<br />
included as part of the capitalized value of the assets constructed, net of interest earned on the<br />
invested proceeds over the same period.<br />
Property, plant, equipment and infrastructure are depreciated using the straight-line method over<br />
the following estimated useful lives:<br />
Asset Type<br />
Number of Years<br />
Buildings 10-30<br />
Improvements 10-50<br />
Machinery and equipment 5-15<br />
Infrastructure 10-40<br />
I. Land Held for Sale<br />
The IDC and EDC owns land within the city which is held for the purpose of development. The land<br />
is reported at the lower of cost or net realizable value.<br />
J. Unearned Revenue<br />
The City has unearned revenue in the amount of $1,668,095. This is the amount of funds received<br />
from the State and Local Coronavirus Relief Fund which have not been spent on eligible projects as<br />
of year end. These funds will be recognized as revenue as the funds are spent.<br />
K. Compensated Absences<br />
It is the government's policy to permit employees to accumulate earned but unused vacation pay<br />
benefits. All vacation pay is accrued when incurred in the government-wide and proprietary fund<br />
financial statements. A liability for these amounts is reported in governmental funds only if they<br />
have matured, for example, as a result of employee resignations and retirements. Vacation leave<br />
shall be taken during the year following its accumulation.<br />
L. Deferred Outflows/Inflows of Resources<br />
In addition to assets, the statement of net position and/or balance sheet will sometimes report a<br />
separate section for deferred outflows of resources. This separate financial statement element,<br />
deferred outflows of resources, represents a consumption of net position that applies to a future<br />
period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then.<br />
The City has the following items that qualify for reporting in this category.<br />
• Deferred charges on refunding – A deferred charge on refunding results from the difference<br />
in the carrying value of refunded debt and its reacquisition price. This amount is deferred<br />
and amortized over the shorter of the life of the refunded or refunding debt.<br />
• Pension and OPEB contributions after measurement date – These contributions are deferred<br />
and recognized in the following fiscal year.<br />
• Changes in actuarial assumptions – These changes are deferred and recognized over the<br />
estimated average remaining lives of all members determined as of the measurement date.<br />
• Difference in projected and actual earnings on pension assets – This difference is deferred<br />
and amortized over a closed five-year period.<br />
In addition to liabilities, the statement of net position and/or balance sheet will sometimes report a<br />
separate section for deferred inflows of resources. This separate financial statement element,<br />
deferred inflows of resources, represents an acquisition of net position that applies to a future<br />
period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City<br />
has the following items that qualify for reporting in this category.<br />
27
• Unavailable revenue is reported only in the governmental funds balance sheet – These<br />
amounts are deferred and recognized as an inflow of resources in the period that the<br />
amounts become available.<br />
• Difference in expected and actual pension and OPEB experience – This difference is deferred<br />
and recognized over the estimated average remaining lives of all members determined as<br />
of the measurement date.<br />
• Changes in actuarial assumptions – These changes are deferred and recognized over the<br />
estimated average remaining lives of all members determined as of the measurement date.<br />
M. Long-Term Obligations<br />
In the government-wide financial statements, and proprietary fund types in the fund financial<br />
statements, long-term debt and other long-term obligations are reported as liabilities in the<br />
applicable governmental activities, business-type activities, or proprietary fund type statement of<br />
Net Position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized<br />
over the life of the bonds using the effective interest method. Bonds payable are reported net of the<br />
applicable bond premium or discount. Bond issuance costs are reported as deferred charges and<br />
amortized over the term of the related debt.<br />
In the fund financial statements, governmental fund types recognize bond premiums and discounts,<br />
as well as bond issuance costs, during the current period. The face amount of debt issued is reported<br />
as other financing sources. Premiums received on debt issuances are reported as other financing<br />
sources while discounts on debt issuances are reported as other financing uses. Issuance costs,<br />
whether or not withheld from the actual debt proceeds received, are reported as debt service<br />
expenditures.<br />
N. Pensions<br />
For purposes of measuring the net pension liability, pension related deferred outflows and inflows<br />
of resources, and pension expense, City specific information about its Fiduciary Net Position in the<br />
Texas Municipal Retirement System (TMRS) and additions to/deductions from TMRS’s Fiduciary Net<br />
Position have been determined on the same basis as they are reported by TMRS. For this purpose,<br />
plan contributions are recognized in the period that compensation is reported for the employee,<br />
which is when contributions are legally due. Benefit payments and refunds are recognized when due<br />
and payable in accordance with the benefit terms. Investments are reported at fair value.<br />
O. Other Post-Employment Benefits<br />
For purposes of measuring the total Texas Municipal Retirement System Supplemental Death Benefit<br />
Fund (TMRS SDBF) OPEB liability, related deferred outflows and inflows of resources, and expense,<br />
City-specific information about its total TMRS SDBF liability and additions to/deductions from the<br />
City’s total TMRS SDBF liability have been determined on the same basis as they are reported by<br />
TMRS. The TMRS SDBF expense and deferred (inflows)/outflows of resources related to TMRS SDBF,<br />
primarily result from changes in the components of the total TMRS SDBF liability. Most changes in<br />
the total TMRS SDBF liability will be included in TMRS SDBF expense in the period of the change.<br />
For example, changes in the total TMRS SDBF liability resulting from current period service cost,<br />
interest on the TOL, and changes of benefit terms are required to be included in TMRS SDBF expense<br />
immediately. Changes in the total TMRS SDBF liability that have not been included in TMRS SDBF<br />
expense are required to be reported as deferred outflows of resources or deferred inflows of<br />
resources related to TMRS SDBF.<br />
P. Net Position and Fund Balance<br />
In the government-wide and proprietary fund financial statements, the City reports restrictions of<br />
net position for amounts that are not available for appropriation or are legally restricted by outside<br />
parties for use for a specific purpose. Net investment in capital assets represents the City’s<br />
investment in the book value of capital assets, less any unspent proceeds from capital-related debt<br />
issuances. Unrestricted net position consists of net position that does not meet the definition of<br />
restricted or net investment in capital assets.<br />
28
In the fund financial statements, governmental funds report fund balance categorized as follows:<br />
Nonspendable fund balance includes amounts that cannot be spent because they are either<br />
not in spendable form, or, for legal or contractual reasons, must be kept intact. This classification<br />
includes prepaid items.<br />
Restricted fund balance includes fund balance amounts that are constrained for specific<br />
purposes which are externally imposed by providers, such as creditors or amounts restricted<br />
due to constitutional provisions or enabling legislation. This classification includes the child<br />
nutrition program, retirement of long-term debt, construction programs and other federal and<br />
state grants.<br />
Committed fund balance includes fund balance amounts that are constrained for specific<br />
purposes that are internally imposed by the City through formal action of the highest level of<br />
decision making authority. Committed fund balance is reported pursuant to resolution passed<br />
by the City Council. This classification includes campus activity funds, local special revenue funds<br />
and potential litigation, claims and judgments.<br />
Assigned fund balance includes fund balance amounts that are self-imposed by the City to be<br />
used for a particular purpose. Fund balance can be assigned by the City Council, the City<br />
Manager, or the Finance Director. This classification includes insurance deductibles,<br />
encumbrances, program start-up costs, projected budget deficit for subsequent years and other<br />
legal uses.<br />
Unassigned fund balance includes residual positive fund balance within the General Fund which<br />
has not been classified within the other above mentioned categories. Unassigned fund balance<br />
may also include negative balances for any governmental fund if expenditures exceed amounts<br />
restricted, committed, or assigned for those specific purposes.<br />
Net Position Flow Assumption<br />
Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted<br />
bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as<br />
restricted – net position and unrestricted – net position in the government-wide and proprietary<br />
fund financial statements, a flow assumption must be made about the order in which the resources<br />
are considered to be applied. It is the City’s policy to consider restricted – net position to have been<br />
depleted before unrestricted – net position is applied.<br />
Fund Balance Flow Assumption<br />
Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted<br />
resources (the total of committed, assigned, and unassigned fund balance). In order to calculate<br />
the amounts to report as restricted, committed, assigned, and unassigned fund balance in the<br />
governmental fund financial statements a flow assumption must be made about the order in which<br />
the resources are considered to be applied. It is the City’s policy to consider restricted fund balance<br />
to have been depleted before using any of the components of unrestricted fund balance. Further,<br />
when the components of unrestricted fund balance can be used for the same purpose, committed<br />
fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied<br />
last.<br />
II.<br />
STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY<br />
Budgetary Control<br />
<strong>Annual</strong> budgets are adopted on a basis consistent with generally accepted accounting principles for<br />
the General, IDC, EDC, Tourism, and Debt Service funds. The capital projects funds are appropriated<br />
on a project-length basis. Other special revenue funds do not have appropriated budgets since other<br />
means controls the use of resources. The annual budget for the utility fund is prepared on the<br />
budgetary basis of accounting. All annual appropriations lapse at fiscal year-end. The legal level of<br />
budgetary control is the fund level.<br />
29
III.<br />
DEPOSITS AND INVESTMENTS<br />
Statutes authorize the City to invest in obligations of the U.S. Treasury and U.S. Agencies, municipal<br />
bonds, managed public fund investment pools, and certificates of deposit The Interlocal Cooperation<br />
Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter<br />
2256 of the Texas Government Code (the “Act”), provide for the creation of public funds investment<br />
pools, such as Texas Short-term Reserve Fund (“TexStar”), Local Government Investment<br />
Cooperative (“LOGIC”), TexasDAILY, and Lone Star Investment Pool (“Lone Star”), through which<br />
political subdivisions and other entities may invest public funds.<br />
TexPool, TexSTAR and LOGIC have a redemption notice period of one day and may redeem daily.<br />
The investment pool’s authority may only impose restrictions on redemptions in the event of a<br />
general suspension of trading on major securities markets, general banking moratorium or national<br />
state of emergency that affects the pool’s liquidity.<br />
The City's investments as of September 30, <strong>2021</strong> are:<br />
Weighted<br />
Credit Carrying Average Maturity<br />
Rating Value (days)<br />
Investment Pool:<br />
TexPool AAAm $ 118,518<br />
37<br />
TexSTAR AAAm 1,418,490 39<br />
LOGIC AAAm 28,252,817 59<br />
Total $ 29,789,825<br />
Portfolio 58<br />
Interest rate risk: In accordance with its investment policy, the City manages its exposure to<br />
declines in fair values by limiting the weighted average of maturity not to exceed five years;<br />
structuring the investment portfolio so that securities mature to meet cash requirements for ongoing<br />
operations; monitoring credit ratings of portfolio position to assure compliance with rating<br />
requirements imposed by the Public Funds Investment Act; and invest operating funds primarily in<br />
short-term securities or similar government investment pools.<br />
Credit risk: The City's investment policy limits investments to obligations of the United States, State<br />
of Texas, or their agencies and instrumentalities with an investment quality rating of not less than<br />
"A" or its equivalent, by a nationally recognized investment rating firm. Other obligations must be<br />
unconditionally guaranteed (either express or implied) by the full faith and credit of the United<br />
States Government or the issuing U.S. agency and investment pools with an investment quality not<br />
less than AAA or AAA-m, or equivalent, by at least one nationally recognized rating service. As of<br />
September 30, <strong>2021</strong>, the City's investment in investment pools were rated AAAm and AAA by<br />
Standard & Poor's.<br />
Custodial credit risk — deposits: In the case of deposits, this is the risk that in the event of a bank<br />
failure, the City's deposits may not be returned to it. State statutes require that all deposits in<br />
financial institutions be insured or fully collateralized by U.S. government obligations or its agencies<br />
and instrumentalities or direct obligations of Texas or its agencies and instrumentalities that have a<br />
market value of not less than the principal amount of the deposits. As of September 30, <strong>2021</strong>, the<br />
market values of pledged securities and FDIC insurance exceeded bank balances.<br />
Custodial credit risk — investments: For an investment, this is the risk that, in the event of the<br />
failure of the counterparty, the City will not be able to recover the value of its investments or<br />
collateral securities that are in the possession of an outside party. The City's investment policy<br />
requires that it will seek to safekeeping securities at financial institutions, avoiding physical<br />
possession. Further, all trades, where applicable, are executed by delivery versus payment to ensure<br />
that securities are deposited in the City's safekeeping account prior to the release of funds.<br />
30
IV.<br />
RECEIVABLES<br />
The City’s receivables as of September 30, <strong>2021</strong> consisted of the following:<br />
Industrial Economic<br />
General Development Development Debt Nonmajor Storm<br />
Fund Corporation Corporation Service Governmental Utility Water Total<br />
Due from other governments $ 750,115 $ - $ - $ - $ - $ - $ - $ 750,115<br />
Due from developer - 206,901 - - - - - 206,901<br />
Taxes 188,855 273,027 273,027 46,430 32,337 - - 813,676<br />
Fines & fees 487,829 487,829<br />
Accounts 80,362 - 36,955 - - 2,627,303 19,350 2,763,970<br />
Gross receivables 1,507,161 479,928 309,982 46,430 32,337 2,627,303 19,350 5,022,491<br />
Less: allowance for<br />
uncollectible accounts ( 482,410)<br />
- - ( 8,500)<br />
- ( 1,539,796) - ( 2,030,706)<br />
Net receivables $ 1,024,751 $ 479,928 $ 309,982 $ 37,930 $ 32,337 $ 1,087,507 $ 19,350 $ 2,991,785<br />
V. CAPITAL ASSETS<br />
Capital asset activity for the year ended September 30, <strong>2021</strong> was as follows:<br />
Beginning Transfers/ Ending<br />
Balance Additions Retirements Balance<br />
Governmental activities:<br />
Capital assets not being depreciated:<br />
Land $ 1,882,695 $ - $ - $ 1,882,695<br />
Construction in progress 2,941,345 4,748,473 ( 3,965,340) 3,724,478<br />
Total capital assets not<br />
being depreciated 4,824,040 4,748,473 ( 3,965,340) 5,607,173<br />
Capital assets being depreciated:<br />
Buildings 8,258,310 3,970,797 - 12,229,107<br />
Improvements 398,358 100,872 - 499,230<br />
Machinery and equipment 11,036,305 1,033,364 12,069,669<br />
Infrastructure 16,476,752 2,452,028 - 18,928,780<br />
Total assets being depreciated 36,169,725 7,557,061 - 43,726,786<br />
Less accumulated depreciation for:<br />
Buildings ( 2,816,044) ( 319,247)<br />
- ( 3,135,291)<br />
Improvements ( 291,820) ( 1,807)<br />
- ( 293,627)<br />
Machinery and equipment ( 8,754,186) ( 746,178)<br />
- ( 9,500,364)<br />
Infrastructure ( 4,764,018) ( 537,771)<br />
- ( 5,301,789)<br />
Total accumulated depreciation ( 16,626,068) ( 1,605,003)<br />
- ( 18,231,071)<br />
Total capital assets being<br />
depreciated, net 19,543,657 5,952,058 - 25,495,715<br />
Governmental activities capital<br />
assets, net $ 24,367,697 $ 10,700,531 $( 3,965,340) $ 31,102,888<br />
Beginning Transfers/ Ending<br />
Balance Additions Retirements Balance<br />
Business-type activities:<br />
Capital assets, not being depreciated:<br />
Land $ 1,241,293 $ - $ - $ 1,241,293<br />
Construction in progress 404,939 1,671,889 - 2,076,828<br />
Total capital assets, not being<br />
depreciated 1,646,232 1,671,889 - 3,318,121<br />
Capital assets being depreciated:<br />
Buildings 101,181 - - 101,181<br />
Improvements 29,753,985 2,747,415 - 32,501,400<br />
Machinery and equipment 2,156,708 206,000 - 2,362,708<br />
Total assets being<br />
depreciated 32,011,874 2,953,415 - 34,965,289<br />
Less accumulated depreciation for:<br />
Buildings ( 47,893) ( 5,032)<br />
- ( 52,925)<br />
Improvements ( 15,627,888) ( 1,266,191)<br />
- ( 16,894,079)<br />
Machinery and equipment ( 1,365,651) ( 266,214)<br />
- ( 1,631,865)<br />
Total accumulated depreciation ( 17,041,432) ( 1,537,437)<br />
- ( 18,578,869)<br />
Total capital assets being<br />
depreciated, net 14,970,442 1,415,978 - 16,386,420<br />
Business-type activities capital<br />
assets, net $ 16,616,674 $ 3,087,867 $ - $ 19,704,541<br />
31
Depreciation expense for the year ended September 30, <strong>2021</strong> was charged to functions/programs of<br />
the primary government as follows:<br />
Governmental activities:<br />
General government $ 262,451<br />
Public safety 661,262<br />
Culture and recreation 52,972<br />
Public works 628,318<br />
Total $ 1,605,003<br />
Business-type activities:<br />
Utility $ 1,486,992<br />
Storm Water 50,445<br />
Total $ 1,537,437<br />
VI.<br />
INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS<br />
Interfund transfers made during the fiscal year were as follows:<br />
Transfer From Transfer To Amount<br />
Industrial Development Corporation General Fund $ 125,149<br />
General Fund Nonmajor governmental 1,814,857<br />
Economic Development Corporation Nonmajor governmental 500,000<br />
Economic Development Corporation General Fund 125,938<br />
Industrial Development Corporation Water & Sewer Fund 475,248<br />
Industrial Development Corporation General Fund 690,504<br />
Economic Development Corporation Water & Sewer Fund 117,752<br />
Non-Major Governmental General Fund 19,773<br />
Total $ 3,869,221<br />
The transfer from the general fund and Economic Development Corporation to nonmajor governmental<br />
funds in the amounts of $1,814,857 and $500,000, respectively, were to fund upcoming capital projects.<br />
The transfer from Industrial Development Corporation to General fund was for upcoming projects.<br />
Interfund receivables and payables as of September 30, <strong>2021</strong> were as follows:<br />
Receivable Fund Payable Fund Amount<br />
Capital Projects General Fund $ 15,392<br />
Capital Projects <strong>2021</strong> Co Bond Fund 105,763<br />
Utility Fund Industrial Development Corporation 4,760,000<br />
Economic Development Corporation Industrial Development Corporation 36,955<br />
Total $ 4,918,110<br />
The outstanding balances between funds result mainly from the time lag between the dates that (1)<br />
interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are<br />
recorded in the accounting system, and (3) payments between funds are made.<br />
VII.<br />
LONG-TERM DEBT<br />
Long-term debt activity for the year ended September 30, <strong>2021</strong>, was as follows:<br />
Beginning Refunded/ Ending Amount Due<br />
Balance Issued Retired Balance Within One Year<br />
Governmental activities:<br />
Bonds payable:<br />
General obligation bonds $ 5,335,000 $ - $( 345,000) $ 4,990,000 $ 420,000<br />
Certificates of obligation 11,290,000 - ( 375,000) 10,915,000 390,000<br />
Certificates of obligation<br />
(private placement) 406,000 3,685,000 ( 41,000) 4,050,000 73,000<br />
Revenue bonds 8,555,000 - ( 355,000) 8,200,000 360,000<br />
Revenue bonds (private<br />
placement) 2,555,000 - ( 396,000) 2,159,000 404,000<br />
Tax notes 140,000 - ( 140,000)<br />
- -<br />
Tax notes (private placement) 1,210,000 1,930,000 ( 386,000) 2,754,000 517,000<br />
Special assessment revenue<br />
revenue bonds (private placement) - 5,657,000 - 5,657,000 -<br />
Issuance premium 1,026,537 863,937 ( 70,861) 1,819,613 -<br />
Total bonds payable 30,517,537 12,135,937 ( 2,108,861) 40,544,613 2,164,000<br />
Compensated absences 754,974 512,149 ( 529,868)<br />
737,255 184,314<br />
Total governmental $ 31,272,511 $ 12,648,086 $( 2,638,729) $ 41,281,868 $ 2,348,314<br />
Business-type activities:<br />
Bonds payable:<br />
General obligation bonds $ 12,400,000 $ - $( 1,050,000) $ 11,350,000 $ 1,105,000<br />
Certificates of obligation 2,247,000 - ( 84,000) 2,163,000 85,000<br />
Certificates of obligation<br />
(private placement) 899,000 2,020,000 ( 273,000) 2,646,000 268,000<br />
Tax notes 8,000 - ( 8,000)<br />
- -<br />
Tax notes (private placement) 411,000 - ( 65,000)<br />
346,000 67,000<br />
Issuance premium 1,181,654 51,009 ( 110,822) 1,121,841 -<br />
Total bonds payable 17,146,654 2,071,009 ( 1,590,822) 17,626,841 1,525,000<br />
Compensated absences 32,872 33,143 ( 31,754)<br />
34,261 8,565<br />
Total business-type $ 17,179,526 $ 2,104,152 $( 1,622,576) $ 17,661,102 $ 1,533,565<br />
32
Bond Reserve Fund<br />
For the Industrial Development Corporation's 2004 Sales Tax Revenue Refunding bonds and 2019 Sales<br />
Tax Revenue Refunding bonds, this section requires maintaining in the reserve fund the lesser of: (i)<br />
the maximum annual principal and interest requirement of the Bonds; (ii) 1.25 times the average annual<br />
principal and interest requirement of the Bonds; or (iii) 10 percent of the aggregate proceeds of the<br />
Bonds. This fund shall be used to pay principal of and/or interest on these bonds falling due at any time<br />
when moneys in the interest and sinking fund are insufficient for such purpose and to retire the last of<br />
the bonds that are outstanding.<br />
Total amounts required to be restricted compared to actual funds for the Industrial Development<br />
Corporation and Economic Development Corporation’s bonds are as follows:<br />
Required at Actual at Excess or<br />
9/30/<strong>2021</strong> 9/30/<strong>2021</strong> (Deficiency)<br />
Interest and Sinking:<br />
Sales Tax Revenue Refunding Bonds<br />
Series 2014 - Industrial Development $ 11,558 $ 11,558 $ -<br />
Series 2015 - Industrial Development 48,254 58,665 10,411<br />
Total $ 59,812 $ 70,223 $ 10,411<br />
Bond Reserve:<br />
Sales Tax Revenue Refunding Bonds<br />
Series 2014 - Industrial Development $ 76,000 $ 76,000 $ -<br />
Series 2015 - Industrial Development 335,000 342,201 7,201<br />
Total $ 411,000 $ 418,201 $ 7,201<br />
Interest and Sinking:<br />
Sales Tax Revenue Refunding Bonds<br />
Series 2019A - Economic Development $ 7,355 $ 7,355 $ -<br />
Series 2019B - Economic Development 41,979 41,979 -<br />
Total $ 49,334 $ 49,334 $ -<br />
Bond Reserve:<br />
Sales Tax Revenue Refunding Bonds<br />
Series 2019A - Economic Development $ 286,618 $ 286,618 $ -<br />
Series 2019B - Economic Development 507,865 507,865 -<br />
Total $ 794,483 $ 794,483 $ -<br />
Certificates of Obligation<br />
The City issues Certificates of Obligation to provide for the acquisition and construction of major capital<br />
facilities.<br />
In the current year, the City issued Certificates of Obligations, Series <strong>2021</strong> in the amount of $3,685,000.<br />
The obligations carry interest rates of 2.00-5.00% and mature in 2041. The proceed will be used for the<br />
acquisition and construction of major capital facilities.<br />
In the current year, the City issued Combination Tax and Revenue Certificates of Obligations, Series<br />
2020 in the amount of $2,020,000. The obligations carry interest rates of 2.00% and mature in 2040.<br />
The proceed will be used for the acquisition and construction of major capital facilities.<br />
Tax Notes<br />
The City issues tax notes to provide funds for the acquisition of equipment. Tax notes have been issued<br />
for both governmental and business-type activities. Tax notes are direct obligations and pledge the full<br />
faith and credit of the government.<br />
In the current year, the City issued Tax Notes, Series <strong>2021</strong>, in the amount of $1,095,000. The notes<br />
carry interest rates of 2.00-4.00% and mature in fiscal year 2028. The proceeds will be used for the<br />
purchase of materials, supplies, vehicles and equipment for the City.<br />
In the current year, the City issued Tax Notes, Series <strong>2021</strong>A, in the amount of $835,000. The notes<br />
carry interest rates of 1.15% and mature in fiscal year 2027. The proceeds will be used for the purchase<br />
of materials, supplies, vehicles and equipment for the City.<br />
General Obligation Bonds<br />
The City issues general obligation bonds to provide funds for the acquisition and construction of major<br />
capital facilities. General obligation bonds have been issued for both governmental and business-type<br />
activities. General obligation bonds are direct obligations and pledge the full faith and credit of the<br />
government.<br />
33
Special Assessment Revenue Bonds<br />
In the current year, the City issued Special Assessment Revenue Bonds, Series <strong>2021</strong> in the amount of<br />
$5,657,000. The obligations carry interest rates of 2.65-4.00% and mature in 2051. The proceed will<br />
be used for the financing of Red Oak Public Improvement District (PID) Number 1.<br />
Compensated Absences<br />
The compensated absence liabilities are generally liquidated by the General, Utility, and Storm Water<br />
Funds depending on the assignment of an employment at termination.<br />
Other Information<br />
Should the City default on its outstanding bonds, any registered owner of the certificates is entitled to<br />
seek a writ of mandamus from a court of proper jurisdiction requiring specific performance from the<br />
City.<br />
Bonds payable currently outstanding and reported as liabilities of the City's governmental activities are:<br />
Amounts<br />
Interest Original Maturity Amounts<br />
Description Rate Issue Date Outstanding<br />
Governmental activities:<br />
Certificates of Obligation, Series 2013 2.00-3.30% $ 1,090,000 2/15/2023 $ 170,000<br />
Certificates of Obligation, Series 2015 1.81% 569,000 2/15/2026 86,000<br />
Certificates of Obligation, Series 2015 1.81% 294,000 2/15/2026 279,000<br />
Certificates of Obligation, Series 2017 2.00-4.00% 1,575,000 2/15/2031 1,375,000<br />
Certificates of Obligation, Series 2018 4.00-5.00% 5,015,000 2/15/2038 4,430,000<br />
Certificates of Obligation, Series 2019 3.00-4.00% 5,115,000 2/25/2039 4,940,000<br />
Certificates of Obligation, Series <strong>2021</strong> 2.00-5.00% 3,685,000 2/15/2041 3,685,000<br />
General Obligation Bonds, Series 2014 2.00-3.50% 3,680,000 2/15/2030 2,505,000<br />
General Obligation Bonds, Series 2017 2.00-4.00% 945,000 2/15/2030 730,000<br />
General Obligation Bonds, Series 2020 3.00% 1,830,000 2/15/2030 1,755,000<br />
Revenue Bonds, Series 2014 2.44% 760,000 8/15/2023 179,000<br />
Revenue Bonds, Series 2015 3.32% 3,345,000 8/15/2026 1,980,000<br />
Revenue Bonds, Series 2019A 2.75-3.00% 2,990,000 2/15/2039 2,990,000<br />
Revenue Bonds, Series 2019B 2.10-3.35% 5,680,000 2/15/2034 5,210,000<br />
Tax Notes, Series 2017 1.79% 785,000 2/15/2024 556,000<br />
Tax Notes, Series 2020 1.80% 773,000 2/15/2026 472,000<br />
Tax Notes, Series <strong>2021</strong> 2.00-4.00% 1,095,000 2/15/2028 1,095,000<br />
Tax Notes, Series <strong>2021</strong>A 1.15% 835,000 2/15/2027 631,000<br />
Special Assessment Bonds, Series <strong>2021</strong> 2.65-4.00% 5,657,000 9/15/2051 5,657,000<br />
Total governmental activities $ 45,718,000<br />
$ 38,725,000<br />
Bonds payable currently outstanding and reported as liabilities of the City's business-type activities are:<br />
Amounts<br />
Interest Original Maturity Amounts<br />
Description Rate Issue Date Outstanding<br />
Business-type activities:<br />
Certificates of Obligation, Series 2015 1.81% $ 1,032,000 2/15/2026 $ 490,000<br />
Certificates of Obligation, Series 2015 1.81% 515,000 2/15/2026 258,000<br />
Certificates of Obligation, Series 2016 1.74% 435,000 8/15/2026 226,000<br />
Certificates of Obligation, Series 2017 2.00-4.00% 1,760,000 8/15/2034 1,760,000<br />
Certificates of Obligation, Series 2018 4.00-5.00% 240,000 2/15/2022 145,000<br />
Certificates of Obligation, Series 2020 2.00% 2,020,000 2/15/2040 1,930,000<br />
General Obligation Bonds, Series 2013 2.00-5.00% 10,375,000 2/15/2024 2,060,000<br />
General Obligation Bonds, Series 2014 2.00-3.50% 5,660,000 2/15/2025 1,035,000<br />
General Obligation Bonds, Series 2017 2.00-4.00% 3,340,000 8/15/2030 2,990,000<br />
General Obligation Bonds, Series 2020 3.00% 5,330,000 2/15/2030 5,265,000<br />
Tax Notes, Series 2020 1.80% 411,000 2/15/2026 346,000<br />
Total business-type activities $ 31,118,000<br />
$ 16,505,000<br />
34
<strong>Annual</strong> debt service requirements for the City’s bonds are as follows:<br />
Certificates of Obligation<br />
Governmental Activities Business-Type Activities<br />
Year Ended Total Total<br />
September 30, Principal Interest Principal Interest Principal Interest<br />
2022 $ 390,000 $ 394,525 $ 85,000 $ 80,983 $ 475,000 $ 475,508<br />
2023 405,000 379,475 86,000 78,321 491,000 457,796<br />
2024 335,000 365,100 87,000 75,641 422,000 440,741<br />
2025 505,000 347,575 92,000 72,827 597,000 420,402<br />
2026 460,000 327,025 53,000 70,879 513,000 397,904<br />
2027-2031 3,480,000 1,276,575 665,000 325,700 4,145,000 1,602,275<br />
2032-2036 3,390,000 631,250 1,095,000 66,900 4,485,000 698,150<br />
2037-2041 1,950,000 84,975 - - 1,950,000 84,975<br />
Total $ 10,915,000 $ 3,806,500 $ 2,163,000 $ 771,251 $ 13,078,000 $ 4,577,751<br />
Certificates of Obligation (private placement)<br />
Governmental Activities Business-Type Activities<br />
Year Ended Total Total<br />
September 30, Principal Interest Principal Interest Principal Interest<br />
2022 $ 73,000 $ 139,493 $ 268,000 $ 49,277 $ 341,000 $ 188,770<br />
2023 137,000 141,841 270,000 44,283 407,000 186,124<br />
2024 73,000 138,348 283,000 39,157 356,000 177,505<br />
2025 73,000 135,432 167,000 34,958 240,000 170,390<br />
2026 259,000 130,837 168,000 31,798 427,000 162,635<br />
2027-2031 720,000 572,500 485,000 125,050 1,205,000 697,550<br />
2032-2036 1,245,000 310,500 535,000 74,050 1,780,000 384,550<br />
2037-2041 1,470,000 76,100 470,000 19,000 1,940,000 95,100<br />
Total $ 4,050,000 $ 1,645,051 $ 2,646,000 $ 417,573 $ 6,696,000 $ 2,062,624<br />
General Obligations<br />
Governmental Activities Business-Type Activities<br />
Year Ended Total Total<br />
September 30, Principal Interest Principal Interest Principal Interest<br />
2022 $ 420,000 $ 148,800 $ 1,105,000 $ 326,478 $ 1,525,000 $ 475,278<br />
2023 445,000 137,713 1,130,000 300,816 1,575,000 438,529<br />
2024 560,000 123,925 1,155,000 272,575 1,715,000 396,500<br />
2025 595,000 107,250 1,250,000 238,900 1,845,000 346,150<br />
2026 680,000 87,438 1,285,000 200,875 1,965,000 288,313<br />
2027-2031 2,290,000 139,625 5,425,000 361,700 7,715,000 501,325<br />
Total $ 4,990,000 $ 744,751 $ 11,350,000 $ 1,701,344 $ 16,340,000 $ 2,446,095<br />
Tax Notes (private placement)<br />
Governmental Activities Business-Type Activities<br />
Year Ended Total Total<br />
September 30, Principal Interest Principal Interest Principal Interest<br />
2022 $ 517,000 $ 68,077 $ 67,000 $ 5,625 $ 584,000 $ 73,702<br />
2023 507,000 57,663 68,000 4,410 575,000 62,073<br />
2024 510,000 44,964 69,000 3,177 579,000 48,141<br />
2025 352,000 33,260 70,000 1,926 422,000 35,186<br />
2026 365,000 22,539 72,000 648 437,000 23,187<br />
2027-2031 503,000 16,521 - - 503,000 16,521<br />
Total $ 2,754,000 $ 243,024 $ 346,000 $ 15,786 $ 3,100,000 $ 258,810<br />
Governmental Acitivites<br />
Revenue Bonds<br />
Negotiated<br />
Private Placement<br />
Year Ended Total Total<br />
September 30, Principal Interest Principal Interest Principal Interest<br />
2022 $ 360,000 $ 232,008 $ 404,000 $ 70,104 $ 764,000 $ 302,112<br />
2023 370,000 224,268 420,000 57,474 790,000 281,742<br />
2024 380,000 216,128 430,000 44,322 810,000 260,450<br />
2025 385,000 207,388 445,000 30,046 830,000 237,434<br />
2026 395,000 197,955 460,000 15,272 855,000 213,227<br />
2027-2031 2,145,000 823,323 - - 2,145,000 823,323<br />
2032-2036 2,485,000 478,925 - - 2,485,000 478,925<br />
2037-2041 1,680,000 97,388 - - 1,680,000 97,388<br />
Total $ 8,200,000 $ 2,477,383 $ 2,159,000 $ 217,218 $ 10,359,000 $ 2,694,601<br />
35
Governmental Activities<br />
Special Assessment Bonds<br />
Year Ended<br />
September 30, Principal Interest<br />
2022 $ - $ 243,888<br />
2023 120,000 201,839<br />
2024 123,000 198,689<br />
2025 127,000 195,460<br />
2026 130,000 192,126<br />
2027-2031 709,000 900,663<br />
2032-2036 832,000 778,551<br />
2042-2046 986,000 628,128<br />
2042-2047 1,183,000 435,160<br />
2042-2048 1,447,000 178,280<br />
Total $ 5,657,000 $ 3,952,784<br />
VIII.<br />
DEFINED BENEFIT PENSION PLAN<br />
Plan Description<br />
The City participates as one of 895 plans in the nontraditional, joint contributory, hybrid defined benefit<br />
pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency<br />
created by the State of Texas and administered in accordance with the TMRS Act, Subtitle G, Title 8,<br />
Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for municipal<br />
employees in the State of Texas. The TMRS Act places the general administration and management of<br />
the System with a six-member Board of Trustees. Although the Governor, with the advice and consent<br />
of the Senate, appoints the Board, TMRS is not fiscally dependent on the State of Texas. TMRS’s defined<br />
benefit pension plan is a tax-qualified plan under Section 401(a) of the Internal Revenue Code. TMRS<br />
issues a publicly available annual comprehensive financial report that can be obtained at www.TMRS.org.<br />
All eligible employees of the City are required to participate in TMRS.<br />
Benefits Provided<br />
TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the<br />
governing body of the City, within the options available in the state statutes governing TMRS.<br />
At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and<br />
the city-financed monetary credits with interest were used to purchase an annuity. Members may choose<br />
to receive their retirement benefit in one of seven payments options. Members may also choose to<br />
receive a portion of their benefit as a Partial Lump Sum Distribution in an amount equal to 12, 24, or<br />
36 monthly payments, which cannot exceed 75% of the member's deposits and interest.<br />
Members can retire at ages 60 and above with five or more years of service or with 20 years of service<br />
regardless of age. A member is vested after five years. The plan provisions arc adopted by the governing,<br />
body of the City, with in the options available in the state statutes governing TMRS and within the<br />
actuarial constraints also in the statutes.<br />
Beginning in 2009, the City granted an annually repeating (automatic) basis monetary credit referred<br />
to as an updated service credit (USC) which is a theoretical amount that takes into account salary<br />
increases or plan improvements. If at any time during their career an employee earns a USC, this<br />
amount remains in their account earning interest at 5% until retirement. At retirement, the benefit is<br />
calculated as if the sum of the employee’s accumulated contributions with interest and the employer<br />
match plus employer-financed monetary credits, such as USC, with interest were used to purchase an<br />
annuity. Additionally, initiated in 2009, the City provided on an annually repeating (automatic) basis<br />
cost of living adjustments (COLA) for retirees equal to a percentage of the change in the consumer price<br />
index (CPI).<br />
36
A summary of plan provisions for the City are as follows:<br />
Employee deposit rate 7%<br />
Matching ratio (City to employee) 2 to 1<br />
Years required for vesting 5<br />
Service retirement eligibility<br />
20 years at any age,<br />
5 years at age 60 and above<br />
Uupdated service credit<br />
100% repeating, transfers<br />
Annuity increase to retirees<br />
70% of CPI repeating<br />
Employees Covered by Benefit Terms<br />
At the December 31, 2020 valuation and measurement date, the following numbers of employees were<br />
covered by the benefit terms:<br />
Contributions<br />
Inactive employees or beneficiaries currently receiving benefits 38<br />
Inactive employees entitled to but not yet receiving benefits 85<br />
Active employees 108<br />
Total 231<br />
The contribution rates for employees in TMRS are either 5%, 6%, or 7% of employee gross earnings,<br />
and the municipal matching percentages are either 100%, 150%, or 200%, both as adopted by the<br />
governing body of the municipality. Under the state law governing TMRS, the contribution rate for each<br />
municipality is determined annually by the actuary, using the Entry Age Normal (EAN) actuarial cost<br />
method. The actuarially determined rate is the estimated amount necessary to finance the cost of<br />
benefits earned by employees during the year, with an additional amount to finance any unfunded<br />
accrued liability.<br />
Employees for the City were required to contribute 7% of their annual gross earnings during the fiscal<br />
year. The City increased its employee contribution rate during the year. The contribution rates for the<br />
City were 7% and 7% in calendar years 2019 and 2020, respectively. The City’s contributions to TMRS<br />
for the year ended September 30, <strong>2021</strong>, were $540,444, and were equal to the required contributions.<br />
Net Pension Liability<br />
The City’s Net Pension Liability (NPL) was measured as of December 31, 2020, and the Total Pension<br />
Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of<br />
that date.<br />
Actuarial Assumptions<br />
The Total Pension Liability in the December 31, 2020 actuarial valuation was determined using the<br />
following actuarial assumptions:<br />
Inflation<br />
Overall payroll growth<br />
Investment Rate of Return<br />
2.50% per year<br />
2.75% per year<br />
6.75% net of pension plan investment expense,<br />
expense, including inflation<br />
Salary increases are based on a service-related table. Mortality rates for active members are based on<br />
the PUB(10) mortality tables with the Public Safety table used for males and the General Employee table<br />
used for females. Mortality rates for healthy retirees and beneficiaries are based on the Gender distinct<br />
2019 Municipal Retirees of Texas mortality tables. The rates for actives, healthy retirees and<br />
beneficiaries are projected on a fully generational basis by Scale UMP to account for future mortality<br />
improvements. For disabled annuitants, the same mortality tables for healthy retirees is used with a 4-<br />
year set-forward for males and a 3-year set-forward for females. In addition, a 3.5% and 3.0% minimum<br />
mortality rate is applied, for males and females respectively, to reflect the impairment for younger<br />
members who become disabled. The rates are projected on a fully generational basis by Scale UMP to<br />
account for future mortality improvements subject to the floor.<br />
37
The actuarial assumptions were developed primarily from the actuarial investigation of the experience<br />
of TMRS over the four-year period from December 31, 2014 to December 31, 2018. They were adopted<br />
in 2019 and first used in the December 31, 2019 actuarial valuation. The post-retirement mortality<br />
assumption for Annuity Purchase Rates (APRs) is based on the Mortality Experience Investigation Study<br />
covering 2009 through 2011 and dated December 31, 2013. Plan assets are managed on a total return<br />
basis with an emphasis on both capital appreciation as well as the production of income in order to<br />
satisfy the short-term and long-term funding needs of TMRS.<br />
The long-term expected rate of return on pension plan investments was determined using a buildingblock<br />
method in which best estimate ranges of expected future real rates of return (expected returns,<br />
net of pension plan investment expenses and inflation) are developed for each major asset class. These<br />
ranges are combined to produce the long-term expected rate of return by weighting the expected future<br />
real rates of return by the target asset allocation percentage and by adding expected inflation. In<br />
determining their best estimate of a recommended investment return assumption under the various<br />
alternative asset allocation portfolios, GRS focused on the area between (1) arithmetic mean<br />
(aggressive) without an adjustment for time (conservative) and (2) the geometric mean (conservative)<br />
with an adjustment for time (aggressive). The target allocation and best estimates of arithmetic real<br />
rates return for each major asset class in fiscal year <strong>2021</strong> are summarized in the following table:<br />
Long-Term Expected<br />
Real Rate of Return<br />
Asset Class Target Allocation (Arithmetic)<br />
Global Equity 30.00% 5.30%<br />
Core fixed income 10.00% 1.25%<br />
Non-core fixed income 20.00% 4.14%<br />
Real return 10.00% 3.85%<br />
Real estate 10.00% 4.00%<br />
Absolute return 10.00% 3.48%<br />
Private equity 10.00% 7.75%<br />
Total 100.00%<br />
Discount Rate<br />
The discount rate used to measure the Total Pension Liability was 6.75%. The projection of cash flows<br />
used to determine the discount rate assumed that employee and employer contributions will be made<br />
at the rates specified in statute. Based on that assumption, the pension plan’s Fiduciary Net Position<br />
was projected to be available to make all projected future benefit payments of current active and inactive<br />
employees. Therefore, the long-term expected rate of return on pension plan investments was applied<br />
to all periods of projected benefit payments to determine the Total Pension Liability.<br />
Changes in Net Pension Liability<br />
Increase (Decease)<br />
Total Pension Plan Fiduciary Net Pension<br />
Liability Net Position Liability<br />
(a) (b) (a)-(b)<br />
Balance at 12/31/2019 $ 11,324,846 $ 10,160,021 $ 1,164,825<br />
Changes for the year:<br />
Service cost 949,953 - 949,953<br />
Interest 784,454 - 784,454<br />
Difference between expected<br />
and actual experience ( 154,487)<br />
- ( 154,487)<br />
Contributions - employer - 540,005 ( 540,005)<br />
Contributions - employee - 532,399 ( 532,399)<br />
Net investment income - 773,124 ( 773,124)<br />
Benefit payments, including refunds<br />
of employee contributions ( 356,560) ( 356,560)<br />
-<br />
Change in assumptions - - -<br />
Administrative expense - ( 4,990)<br />
4,990<br />
Other changes - ( 195)<br />
195<br />
Net changes 1,223,360 1,483,783 ( 260,423)<br />
Balance at 12/31/2020 $ 12,548,206 $ 11,643,804 $ 904,402<br />
38
The City’s net pension liability is generally liquidated by the General Fund and Proprietary Funds<br />
depending on an employee’s assignment at termination.<br />
Discount Rate Sensitivity Analysis<br />
The following presents the net pension liability of the City calculated using the discount rate of 6.75%,<br />
as well as what the City’s net pension liability would be if it were calculated using a discount rate that<br />
is 1-percentage-point lower (5.75%) or 1-percentage-point higher (7.75%) than the current rate:<br />
1% Decrease in Current Single 1% Increase in<br />
Discount Rate Discount Rate Discount Rate<br />
(5.75%) (6.75%) (7.75%)<br />
City's net pension liability (asset) $ 2,974,434 $ 904,402 $( 781,020)<br />
Pension Plan Fiduciary Net Position<br />
Detailed information about the pension plan’s Fiduciary Net Position is available in a separately issued<br />
TMRS financial report. That report may be obtained electronically at www.TMRS.org.<br />
Pension Expense, Deferred Outflows, and Deferred Inflows of Resources Related to Pensions<br />
For the year ended September 30, <strong>2021</strong>, the City recognized pension expense in the governmental and<br />
business-type activities of $384,857 and $61,872, respectively.<br />
At September 30, <strong>2021</strong>, the City reported deferred outflows of resources and deferred inflows of<br />
resources related to pensions from the following sources:<br />
Deferred Outflows<br />
of Resources<br />
Deferred Inflows<br />
of Resources<br />
Differences between expected and actual<br />
economic experience $ 75,696 $ 148,139<br />
Changes in actuarial assumptions 6,725 -<br />
Difference between projected and actual<br />
investment earnings - 285,300<br />
Contributions subsequent to the<br />
measurement date 412,488 -<br />
Total $ 494,909 $ 433,439<br />
The City reported $412,488 as deferred outflows of resources related to pensions resulting from<br />
contributions subsequent to the measurement date will be recognized as a reduction of the net pension<br />
liability for the year ending September 30, 2022. Other amounts reported as deferred outflows and<br />
inflows of resources related to pensions will be recognized in pension expense as follows:<br />
For the Year Ended<br />
September 30,<br />
2022 $( 109,958)<br />
2023 ( 23,918)<br />
2024 ( 175,596)<br />
2025 ( 37,337)<br />
2026 ( 4,209)<br />
IX.<br />
DEFINED OTHER POST-EMPLOYMENT BENEFIT (OPEB) PLAN – TMRS SUPPLEMENTAL DEATH<br />
BENEFITS FUND<br />
Plan Description<br />
The City voluntarily participates in a single-employer other postemployment benefit (OPEB) plan<br />
administered by TMRS. The Plan is a group-term life insurance plan known as the Supplemental Death<br />
Benefits Fund (SDBF). The Plan is established and administered in accordance with the TMRS Act<br />
identically to the City’s pension plan. SDBF includes coverage for both active and retired members, and<br />
assets are commingled for the payment of such benefits. Therefore, the Plan does not qualify as an<br />
OPEB Trust in accordance with paragraph 4 of GASB Statement No. 75.<br />
39
Benefits Provided<br />
The SDBF provides group-term life insurance to City employees who are active members in TMRS,<br />
including or not including retirees. The City Council opted into this program via an ordinance, and may<br />
terminate coverage under, and discontinue participation in, the SDBF by adopting an ordinance before<br />
November 1 of any year to be effective the following January 1.<br />
Payments from this fund are similar to group-term life insurance benefits, and are paid to the designated<br />
beneficiaries upon the receipt of an approved application for payment. The death benefit for active<br />
employees provides a lump-sum payment approximately equal to the employee’s annual salary<br />
(calculated based on the employee’s actual earnings for the 12-month period preceding the month of<br />
death). The death benefit for retirees is considered an other employment benefit and is a fixed amount<br />
of $7,500.<br />
At the December 31, 2020 valuation and measurement date, the following employees were covered by<br />
the benefit terms:<br />
Contributions<br />
Inactive employees or beneficiaries currently receiving benefits 33<br />
Inactive employees entitled to but not yet receiving benefits 16<br />
Active employees 108<br />
Total 157<br />
The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial<br />
valuation, which was 0.13% for 2020 and 0.11% for <strong>2021</strong>, of which 0.01% and 0.02%, respectively,<br />
represented the retiree-only portion for each year, as a percentage of annual covered payroll. The rate<br />
is equal to the cost of providing one-year term life insurance. The funding policy for the SDBF program<br />
is to assure that adequate resources are available to meet all death benefit payments for the upcoming<br />
year; the intent is not to prefund retiree term life insurance during employees’ entire careers. The City’s<br />
contributions to the SDBF for the years ended September 30, <strong>2021</strong> and 2020 were $2,046 and $742,<br />
respectively, representing contributions for both active and retiree coverage, which equaled the required<br />
contributions each year.<br />
Total OPEB Liability<br />
The City's Net OPEB Liability (TOL) was measured as of December 31, 2020 and was determined by an<br />
actuarial valuation as of that date.<br />
Actuarial assumptions<br />
The Total OPEB Liability in the December 31, 2020 actuarial valuation was determined using the<br />
following actuarial assumptions:<br />
Inflation rate 2.50%<br />
Salary increases<br />
3.5% to 11.5% including inflation<br />
Discount rate 2.00%<br />
Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000<br />
Combined Healthy Mortality Tables with Blue Collar Adjustment, with male rates multiplied by 109%<br />
and female rates multiplied by 103%. The rates are projected on a fully generational basis by scale BB<br />
to account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000<br />
Combined Healthy Mortality Tables with Blue Collar Adjustment are used with male rates multiplied by<br />
109% and female rates multiplied by 103% with a 3-year set-forward for both males and females. In<br />
addition, a 3% minimum mortality rate is applied to reflect the impairment for younger members who<br />
became disabled. The rates are projected on a fully generational basis by scale BB to account for future<br />
mortality improvements subject to the 3% floor. Administrative expenses for the SDBF are paid through<br />
the TMRS Pension Trust Fund and are wholly accounted for under the provisions of GASB Statement No.<br />
68.<br />
Changes in assumptions reflect the annual change in the municipal bond rate. The actuarial assumptions<br />
used in the December 31, 2020 valuation were based on the results of an actuarial experience study for<br />
the period December 31, 2014 to December 31, 2018.<br />
40
Discount Rate<br />
The SDBF program is treated as an unfunded OPEB plan because the SDBF trust covers both actives<br />
and retirees and the assets are not segregated for these groups. As such, a single discount rate of<br />
2.00% was used to measure the Total OPEB Liability. Because the plan is essentially a “pay-as-you-go”<br />
plan, the single discount rate is equal to the prevailing municipal bond rate. The source of the municipal<br />
bond rate was fixed-income municipal bonds with 20 years to maturity that include only federally taxexempt<br />
municipal bonds as reported in Fidelity Index’s “20-year Municipal GO AA Index” as of December<br />
31, 2020.<br />
Changes in the Total OPEB Liability<br />
Total OPEB<br />
Liability<br />
Balance at 12/31/2019 $ 214,340<br />
Changes for the year:<br />
Service cost 16,733<br />
Interest 6,114<br />
Difference between expected and actual experience (754)<br />
Changes of assumptions 42,482<br />
Benefit payments (761)<br />
Net changes 63,814<br />
Balance at 12/31/2020 $ 278,154<br />
Discount Rate Sensitivity Analysis<br />
The following presents the total OPEB liability of the City, calculated using the discount rate of 2.00%,<br />
as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is<br />
1 percentage-point lower (1.00%) or 1 percentage-point higher (3.00%) than the current rate:<br />
1% Decrease in 1% Increase in<br />
Discount Rate Discount Rate Discount Rate<br />
Total OPEB Liability $ 351,411 $ 278,154 $<br />
223,405<br />
OPEB Expense, Deferred Outflows, and Deferred Inflows of Resources Related to OPEB<br />
For the year ended September 30, <strong>2021</strong>, the City recognized OPEB expense in the governmental<br />
activities and business-type activities of $28,816 and $4,633, respectively.<br />
At September 30, <strong>2021</strong>, the City reported deferred outflows of resources and deferred inflows of<br />
resources related to OPEB from the following sources:<br />
Deferred Outflows<br />
of Resources<br />
Deferred Inflows<br />
of Resources<br />
Differences between expected and actual<br />
economic experience $ -<br />
$ 3,009<br />
Changes in actuarial assumptions 71,684 8,626<br />
Contributions subsequent to the<br />
measurement date 1,826 -<br />
Total $ 73,510 $ 11,635<br />
The City reported $1,826 as deferred outflows of resources related to OPEB resulting from contributions<br />
subsequent to the measurement date which will be recognized as a reduction of the total OPEB liability<br />
for the year ending September 30, 2022. Other amounts reported as deferred outflows and inflows of<br />
resources related to pensions will be recognized in pension expense as follows:<br />
For the Year Ended<br />
September 30,<br />
2022 $ 10,603<br />
2023 10,603<br />
2024 10,603<br />
2025 10,603<br />
2026 8,858<br />
Thereafter 8,779<br />
41
X. COMMITMENTS AND CONTINGENCIES<br />
Wastewater Treatment Services<br />
The City has entered into a contract with the Trinity River Authority of Texas - Red Oak Creek Regional<br />
Wastewater System to obtain wastewater treatment services, which has no expiration date. In the<br />
contract, the Authority agreed to acquire and construct a regional wastewater treatment system to serve<br />
the City and other contractual parties, in the area of the watershed or drainage basin of Red Oak Creek,<br />
being a tributary of the Trinity River, and located in Ellis and Dallas Counties, Texas. The Trinity River<br />
Authority is a governmental agency, which is controlled by directors appointed by the governor.<br />
The City is responsible for a proportionate share of the system's annual operation, maintenance and<br />
debt service costs for the term of the contract. These costs are determined annually and are payable in<br />
monthly installments. Actual payments for the year ended September 30, <strong>2021</strong> were $3,452,046. The<br />
payments to be received from the City of Red Oak are used as collateral for the bonds issued by TRA to<br />
construct the facility.<br />
Complete separate financial statements far the Trinity River Authority may be obtained at Trinity River<br />
Authority of Texas, 5300 South Collins, P.O. Box 60, Arlington, Texas 76004.<br />
Police Dispatching Services<br />
The City has entered into a contract with the City of Midlothian, Texas to combine dispatching services<br />
for both cities, effective October 1, 2009. In May 2020, the contract was extended another five years.<br />
In the contract, the City of Midlothian will assume and provide all dispatching services.<br />
The City of Red Oak is responsible for a proportionate share of the cost of dispatching services for the<br />
term of the contract. The City of Red Oak has agreed to pay the sum of $585,396 to the City of Midlothian<br />
annually for the first three years of the contract, payable in quarterly installments. After the initial three<br />
years of the contract the costs will be determined annually and are payable in quarterly installments.<br />
Amounts received or receivable from grantor agencies ore subject to audit and adjustment by grantor<br />
agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the<br />
applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor, cannot<br />
be determined at this time although the government expects such amounts, if any, to be immaterial.<br />
Litigation Settlement<br />
In March 2022, the City of Red Oak and the City of Red Oak Industrial Development Corporation<br />
(CROIDC) signed a settlement agreement with the Rockett Special Utility District (RSUD). Under the<br />
settlement, the City has accrued $4,760,000 as of September 30, <strong>2021</strong> for the transfer of a portion of<br />
RSUD’s Certificate of Convenience and Necessity (CCN) to the City of Red Oak.<br />
XI.<br />
RISK MANAGEMENT<br />
The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of<br />
assets; errors and omissions; injuries to employees; and natural disasters. The City maintains<br />
commercial insurance coverage covering each of those risks of loss. Management believes such coverage<br />
is sufficient to preclude any significant uninsured losses to the City. Settled claims have not exceeded<br />
this commercial coverage in any of the past three fiscal years.<br />
42
XII.<br />
TAX ABATEMENTS<br />
The city enters into economic development agreements designed to promote development and<br />
redevelopment within the City, spur economic improvement, stimulate commercial activity, generate<br />
additional sales tax and enhance the property tax base and economic vitality of the City. A portion of<br />
the City's economic development agreements are authorized under Chapter 312 (Property<br />
Redevelopment and Tax Abatement) of the Texas Tax Code. The economic development agreements<br />
are designed to support the creation of new businesses, the expansion and retention of existing<br />
businesses within the City, and the attraction of companies that offer high impact jobs and share the<br />
community's values. Recipients may be eligible to receive economic assistance based on the<br />
employment, or community impact of the project requesting assistance. Recipients generally commit to<br />
building or remodeling real property and related infrastructures, redeveloping properties, expanding<br />
operations or bringing targeted businesses to the City. These agreements have no formal recapture<br />
provisions. For FY <strong>2021</strong>, the City abated $559,132 in taxes.<br />
The City enters into various agreements under Chapter 380 of the Texas Local Government Code to<br />
stimulate economic development. The City benefits from 380 agreements through the promotion of<br />
economic development activity, job creation, increased tax revenues, increased opportunity for input<br />
into new development construction of city/county projects, creation of new businesses, infrastructure<br />
commitments, and streamlining implementation. These development incentives typically take the form<br />
of property tax abatements, loans or grants, commitments for infrastructure, or payments of portions<br />
of the sales tax generated by the project. For FY <strong>2021</strong>, the City did not rebate any taxes.<br />
XIII. SIGNIFICANT FORTHCOMING STANDARDS<br />
Statement No. 87, Leases – This statement changes the recognition requirements for certain lease<br />
assets and liabilities for leases that are currently classified as operating leases. This statement will<br />
become effective in fiscal year 2022.<br />
Statement No. 96, Subscription-Based Information Technology Arrangements – This Statement provides<br />
guidance on the accounting and financial reporting for subscription-based information technology<br />
arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA;<br />
(2) establishes that a SBITA results in a right-to-use subscription asset-an intangible asset-and a<br />
corresponding subscription liability; (3) provides the capitalization criteria for outlays other than<br />
subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures<br />
regarding a SBITA.<br />
43
REQUIRED SUPPLEMENTARY<br />
INFORMATION
THIS PAGE LEFT BLANK INTENTIONALLY
CITY OF RED OAK, TEXAS<br />
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES<br />
IN FUND BALANCE - BUDGET (BUDGET BASIS) AND ACTUAL<br />
GENERAL FUND<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Variance with<br />
Final Budget<br />
Original Final Positive<br />
Budget Budget Actual (Negative)<br />
REVENUES<br />
Property taxes $ 6,800,074 $ 6,800,074 $ 6,780,776 $( 19,298)<br />
Sales taxes 2,489,095 2,489,095 3,169,140 680,045<br />
Franchise tax 763,000 763,000 728,690 ( 34,310)<br />
Alcoholic beverage tax 15,312 15,312 11,185 ( 4,127)<br />
Intergovernmental 596,000 716,773 871,688 154,915<br />
Contributions 20,000 20,000 33,577 13,577<br />
Licenses and permits 716,000 716,000 1,284,074 568,074<br />
Fines and forfeitures 432,500 432,500 341,300 ( 91,200)<br />
Charges for services 624,464 624,464 654,699 30,235<br />
Investment earnings 45,000 45,000 23,120 ( 21,880)<br />
Miscellaneous 26,000 26,000 44,143 18,143<br />
Total revenues 12,527,445 12,648,218 13,942,392 1,294,174<br />
EXPENDITURES<br />
Current:<br />
General government 1,843,116 1,843,116 1,678,326 164,790<br />
Public safety 8,620,029 8,740,802 8,303,211 437,591<br />
Culture and recreation 1,147,202 1,129,100 853,375 275,725<br />
Public works 2,067,139 2,067,139 2,016,707 50,432<br />
Capital outlay 2,462,718 2,980,480 1,721,787 1,258,693<br />
Debt service:<br />
Principal 66,395 66,395 - 66,395<br />
Bond issuance costs 40,000 40,000 88,106 ( 48,106)<br />
Total expenditures 16,246,599 16,867,032 14,661,512 2,205,520<br />
Excess (deficiency) of revenues<br />
over (under) expenditures ( 3,719,154) ( 4,218,814) ( 719,120) 3,499,694<br />
OTHER FINANCING SOURCES (USES)<br />
Issuance of bonds 802,654 802,654 1,930,000 1,127,346<br />
Premium on issuance of bonds - - 160,760 160,760<br />
Insurance recovery - - 23,064 23,064<br />
Transfers in 689,856 944,856 961,364 16,508<br />
Transfers out - ( 1,814,857) ( 1,814,857)<br />
-<br />
Total other financing sources<br />
(uses) 1,492,510 ( 67,347) 1,260,331 1,327,678<br />
CHANGE IN FUND BALANCE ( 2,226,644) ( 4,286,161) 541,211 4,827,372<br />
FUND BALANCE - BEGINNING 4,955,029 4,955,029 4,955,029 -<br />
FUND BALANCE - ENDING $ 2,728,385 $ 668,868 $ 5,496,240 $ 4,827,372<br />
44
CITY OF RED OAK, TEXAS<br />
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES<br />
IN FUND BALANCE - BUDGET (BUDGET BASIS) AND ACTUAL<br />
INDUSTRIAL DEVELOPMENT CORPORATION<br />
FOR YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Variance with<br />
Final Budget<br />
Original Final Positive<br />
Budget Budget Actual (Negative)<br />
REVENUES<br />
Sales taxes $ 1,286,450 $ 1,286,450 $ 1,587,251 $ 300,801<br />
Contributions - - 421,713 421,713<br />
Investment earnings 35,000 35,000 11,750 ( 23,250)<br />
Land sale - - 121,712 121,712<br />
Miscellaneous - - 500 500<br />
Total revenues 1,321,450 1,321,450 2,142,926 821,476<br />
EXPENDITURES<br />
Current:<br />
Industrial development 9,550,499 9,550,499 5,596,763 3,953,736<br />
Capital outlay 55,000 55,000 37,642 17,358<br />
Debt service:<br />
Principal 397,000 397,000 397,000 -<br />
Interest and fiscal charges 87,542 87,542 87,514 28<br />
Total expenditures 10,090,041 10,090,041 6,118,919 3,971,122<br />
Excess (deficiency) of revenues<br />
over (under) expenditures ( 8,768,591) ( 8,768,591) ( 3,975,993) 4,792,598<br />
OTHER FINANCING SOURCES (USES)<br />
Transfers out ( 515,198) ( 515,198) ( 1,290,901) ( 775,703)<br />
Total other financing sources<br />
(uses) ( 515,198) ( 515,198) ( 1,290,901) ( 775,703)<br />
CHANGE IN FUND BALANCE ( 9,283,789) ( 9,283,789) ( 5,266,894) 4,016,895<br />
FUND BALANCE - BEGINNING 12,424,092 12,424,092 12,424,092 -<br />
FUND BALANCE - ENDING $ 3,140,303 $ 3,140,303 $ 7,157,198 $ 4,016,895<br />
45
CITY OF RED OAK, TEXAS<br />
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES<br />
IN FUND BALANCE - BUDGET (BUDGET BASIS) AND ACTUAL<br />
ECONOMIC DEVELOPMENT CORPORATION<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Variance with<br />
Final Budget<br />
Original Final Positive<br />
Budget Budget Actual (Negative)<br />
REVENUES<br />
Sales taxes $ 1,286,450 $ 1,286,450 $ 1,587,251 $ 300,801<br />
Investment earnings 35,000 35,000 8,413 ( 26,587)<br />
Land sale - - 1,103,869 1,103,869<br />
Total revenues 1,321,450 1,321,450 2,699,533 1,378,083<br />
EXPENDITURES<br />
Current:<br />
Economic development 4,724,948 4,724,948 209,880 4,515,068<br />
Capital outlay 218,000 218,000 37,642 180,358<br />
Debt service:<br />
Principal 594,640 594,640 355,000 239,640<br />
Interest and fiscal charges - - 239,641 ( 239,641)<br />
Bond issuance costs - - 1,500 ( 1,500)<br />
Total expenditures 5,537,588 5,537,588 843,663 ( 4,693,925)<br />
Excess (deficiency) of revenues<br />
over (under) expenditures ( 4,216,138) ( 4,216,138) 1,855,870 6,072,008<br />
OTHER FINANCING SOURCES (USES)<br />
Transfers out 4,216,138 4,216,138 ( 743,690) ( 4,959,828)<br />
Total other financing sources (uses) -<br />
(uses) 4,216,138 4,216,138 ( 743,690) ( 4,959,828)<br />
CHANGE IN FUND BALANCE - - 1,112,180 1,112,180<br />
FUND BALANCE - BEGINNING 13,329,480 13,329,480 13,329,480 -<br />
FUND BALANCE - ENDING $ 13,329,480 $ 13,329,480 $ 14,441,660 $ 1,112,180<br />
46
CITY OF RED OAK, TEXAS<br />
SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS<br />
TEXAS MUNICIPAL RETIREMENT SYSTEM (TMRS)<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Measurement year December 31, 2015 2016 2017<br />
Total pension liability<br />
Service cost $ 512,394 $ 580,682 $ 626,818<br />
Interest (on the total pension liability) 407,518 468,608 534,454<br />
Change in benefit terms including<br />
substantively automatic status - - -<br />
Difference between expected and<br />
actual experience 34,307 46,944 ( 21,482)<br />
Changes in assumptions 251,468 - -<br />
Benefit payments, including refunds<br />
of employee contributions ( 117,105) ( 121,238) ( 166,370)<br />
Net change in total pension liability 1,088,582 974,996 973,420<br />
Total pension liability - beginning 5,624,035 6,712,617 7,687,613<br />
Total pension liability - ending (a) $ 6,712,617 $ 7,687,613 $ 8,661,033<br />
Plan fiduciary net position<br />
Contributions - employer $ 230,360 $ 278,291 $ 332,845<br />
Contributions - employee 289,761 314,449 343,776<br />
Net investment income 7,757 382,950 903,473<br />
Benefit payments, including refunds<br />
of employee contributions ( 117,105) ( 121,238) ( 166,370)<br />
Administrative expenses ( 4,722) ( 4,321) ( 4,677)<br />
Other ( 234) ( 234) ( 237)<br />
Net change in plan fiduciary net position 405,817 849,897 1,408,810<br />
Plan fiduciary net position - beginning 5,255,769 5,661,586 6,511,483<br />
Plan fiduciary net position - ending (b) $ 5,661,586 $ 6,511,483 $ 7,920,293<br />
Net Pension Liability (a) - (b) $ 1,051,031 $ 1,176,130 $ 740,740<br />
Plan fiduciary net position as a<br />
percentage of total pension liability 84.34% 84.70% 91.45%<br />
Covered payroll $ 4,719,828 $ 5,113,962 $ 5,634,270<br />
Net pension liability as a percentage<br />
of covered payroll 22.27% 23.00% 13.15%<br />
Note: GASB Statement 68 requires this schedule to report 10 years of data. Data prior to 2015 is not<br />
available.<br />
47
2018 2019 2020<br />
$ 823,175 $ 921,228 $ 949,953<br />
613,494 690,759 784,454<br />
147,850 - -<br />
( 33,117)<br />
105,672 ( 154,487)<br />
- 10,591 -<br />
( 263,334) ( 352,505) ( 356,560)<br />
1,288,068 1,375,745 1,223,360<br />
8,661,033 9,949,101 11,324,846<br />
$ 9,949,101 $ 11,324,846 $ 12,548,206<br />
$ 409,733 $ 516,348 $ 540,005<br />
401,432 503,403 532,399<br />
( 237,587) 1,274,464 773,124<br />
( 263,334) ( 352,505) ( 356,560)<br />
( 4,585) ( 7,186) ( 4,990)<br />
( 240) ( 215) ( 195)<br />
305,419 1,934,309 1,483,783<br />
7,920,293 8,225,712 10,160,021<br />
$ 8,225,712 $ 10,160,021 $ 11,643,804<br />
$ 1,723,389 $ 1,164,825 $ 904,402<br />
82.68% 89.71% 92.79%<br />
$ 6,386,149 $ 7,191,473 $ 7,605,707<br />
26.99% 16.20% 11.89%<br />
48
CITY OF RED OAK, TEXAS<br />
SCHEDULE OF EMPLOYER CONTRIBUTIONS<br />
TEXAS MUNICIPAL RETIREMENT SYSTEM (TMRS)<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Fiscal year ended September 30, 2015 2016 2017<br />
Actuarially determined contribution $ 220,318 $ 270,906 $ 325,033<br />
Contribution in relation to the actuarially<br />
determined contribution 220,318 270,906 325,033<br />
Contribution deficiency - - -<br />
Covered payroll $ 4,719,828 $ 5,113,962 $ 5,631,270<br />
Contributions as a percentage of covered<br />
payroll 4.67% 5.30% 5.77%<br />
Notes to Schedule<br />
Valuation date<br />
Actuarially determined contribution rates are calculated<br />
Methods and assumptions used to determine contribution rates:<br />
Actuarial Cost Method<br />
Amortization Method<br />
Remaining Amortization Period<br />
Asset Valuation Method<br />
Inflation<br />
Salary increases<br />
Investment rate of return<br />
Retirement Age<br />
Entry age normal<br />
Level percentage of payroll, closed<br />
24 years<br />
10 year smoothed market: 12% soft corridor<br />
2.5%<br />
3.50% to 11.5% including inflation<br />
6.75%<br />
Experienced-based table of rates that are specific to the<br />
City's plan of benefits. Last updated for the 2019<br />
valuation pursuant to an experience study of the period<br />
2014-2018.<br />
Mortality<br />
Other information:<br />
Notes<br />
Post-retirement:2019 Municipal Retirees of Texas<br />
Mortality Tables. The rates are projected on a fully<br />
generational basis with scale UMP. Pre-retirement:<br />
PUB(10) mortality tables, with the Public Safety table<br />
used for males and General Employee table used for<br />
females. The rates are projected on a fully generational<br />
basis with scale UMP.<br />
There were no benefit changes during the year.<br />
49
2018 2019 2020 <strong>2021</strong><br />
$ 380,870 $ 511,496 $ 544,685 $ 540,444<br />
380,870 511,496 544,685 540,444<br />
- - - -<br />
$ 6,173,535 $ 7,012,203 $ 7,419,342 $ 7,605,707<br />
6.17% 7.29% 7.34% 7.11%<br />
50
CITY OF RED OAK, TEXAS<br />
SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY AND RELATED RATIOS<br />
TEXAS MUNICIPAL RETIREMENT SYSTEM (TMRS)<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Measurement year December 31, 2017 2018 2019 2020<br />
Total pension liability<br />
Service cost $ 10,313 $ 12,772 $ 12,226 $ 16,733<br />
Interest (on the total pension liability) 4,945 5,340 6,072 6,114<br />
Difference between expected and<br />
actual experience - ( 1,035) ( 2,388) ( 754)<br />
Changes in assumptions 14,611 ( 13,762) 41,224 42,482<br />
Benefit payments, including refunds<br />
of employee contributions ( 573) ( 639) ( 720) ( 760)<br />
Net change in total pension liability 29,296 2,676 56,414 63,815<br />
Total pension liability - beginning 125,953 155,249 157,925 214,339<br />
Total pension liability - ending (a) $ 155,249 $ 157,925 $ 214,339 $ 278,154<br />
Covered payroll $ 5,634,270 $ 6,386,149 $ 7,191,473 $ 7,605,707<br />
Net pension liability as a percentage<br />
of covered payroll 2.755% 2.473% 2.980% 3.657%<br />
51
COMBINING SCHEDULES
CITY OF RED OAK, TEXAS<br />
COMBINING BALANCE SHEET<br />
NONMAJOR GOVERNMENTAL FUNDS<br />
SEPTEMBER 30, <strong>2021</strong><br />
Special<br />
Revenue<br />
Capital Projects<br />
2018 CO 2019 CO<br />
Tourism Bond Fund Bond Fund<br />
ASSETS<br />
Cash and cash equivalents $ 541,891 $ - $<br />
-<br />
Investments - 628,325 3,387,885<br />
Accounts receivable (net) 32,337 - -<br />
Restricted assets:<br />
Investments - - -<br />
Total assets $ 574,228 $ 628,325 $ 3,387,885<br />
LIABILITIES<br />
Accounts payable 7,473 3,362 3,219<br />
Accrued liabilities 2,485 - -<br />
Due to other funds - - 105,763<br />
Customer Deposits 6,000 - -<br />
Total liabilities 15,958 3,362 108,982<br />
FUND BALANCES<br />
Restricted:<br />
Culture and recreation 558,270 - -<br />
Capital projects - 624,963 3,278,903<br />
Commited:<br />
Capital projects - - -<br />
Total fund balances 558,270 624,963 3,278,903<br />
Total liabilities and fund balances $ 574,228 $ 628,325 $ 3,387,885<br />
52
Special<br />
Revenue<br />
General<br />
Total Nonmajor<br />
Capital<br />
Governmental<br />
Projects Fund PID Funds<br />
$ 2,497,105 $ - $ 3,038,996<br />
- - 4,016,210<br />
- - 32,337<br />
- 4,585,000 4,585,000<br />
$ 2,497,105 $ 4,585,000 $ 11,672,543<br />
33,978 - 48,032<br />
- - 2,485<br />
- - 105,763<br />
- - 6,000<br />
33,978 - 162,280<br />
- - 558,270<br />
- 4,585,000 8,488,866<br />
2,463,127 - 2,463,127<br />
2,463,127 4,585,000 11,510,263<br />
$ 2,497,105 $ 4,585,000 $ 11,672,543<br />
53
CITY OF RED OAK, TEXAS<br />
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES<br />
NONMAJOR GOVERNMENTAL FUNDS<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Special<br />
Revenue<br />
Capital Projects<br />
2018 CO 2019 CO<br />
Tourism Bond Fund Bond Fund<br />
REVENUES<br />
Hotel occupancy tax $ 317,525 $ - $<br />
-<br />
Charges for services 19,773 - -<br />
Investment earnings 902 569 4,690<br />
Total revenues 338,200 569 4,690<br />
EXPENDITURES<br />
Current:<br />
Culture and recreation 148,096 - -<br />
Public works - 93,236 -<br />
Capital outlay 7,608 33,984 1,055,670<br />
Debt service:<br />
Bond issuance cost - - -<br />
Total expenditures 155,704 127,220 1,055,670<br />
Excess (deficiency) of revenues<br />
over expenditures 182,496 ( 126,651) ( 1,050,980)<br />
OTHER FINANCING SOURCES<br />
(USES)<br />
Issuance of bonds - - -<br />
Premium on issuance of bonds - - -<br />
Insurance recovery - - -<br />
Transfers in - - -<br />
Transfers out ( 19,773)<br />
- -<br />
Total other financing sources<br />
(uses) ( 19,773)<br />
- -<br />
CHANGE IN FUND BALANCE 162,723 ( 126,651) ( 1,050,980)<br />
FUND BALANCE - BEGINNING 395,547 751,614 4,329,883<br />
FUND BALANCE - ENDING $ 558,270 $ 624,963 $ 3,278,903<br />
54
Special<br />
Revenue<br />
General<br />
Total Nonmajor<br />
Capital<br />
Governmental<br />
Projects Fund PID Fund Funds<br />
$ - $ - $ 317,525<br />
- - 19,773<br />
- - 6,161<br />
- - 343,459<br />
- - 148,096<br />
- - 93,236<br />
33,978 - 1,131,240<br />
- 1,125,579 1,125,579<br />
33,978 1,125,579 2,498,151<br />
( 33,978) ( 1,125,579) ( 2,154,692)<br />
- 5,657,000 5,657,000<br />
- 53,579 53,579<br />
182,248 - 182,248<br />
2,314,857 - 2,314,857<br />
- - ( 19,773)<br />
2,497,105 5,710,579 8,187,911<br />
2,463,127 4,585,000 6,033,219<br />
- - 5,477,044<br />
$ 2,463,127 $ 4,585,000 $ 11,510,263<br />
55
CITY OF RED OAK, TEXAS<br />
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES<br />
IN FUND BALANCE - BUDGET (BUDGET BASIS) AND ACTUAL<br />
TOURISM<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Variance with<br />
Actual Final Budget<br />
Original Final GAAP Positive<br />
Budget Budget Basis (Negative)<br />
REVENUES<br />
Hotel occupancy tax $ 220,000 $ 220,000 $ 317,525 $ 97,525<br />
Charges for services 50,000 50,000 19,773 ( 30,227)<br />
Investment earnings - - 902 902<br />
Total revenues 270,000 270,000 338,200 68,200<br />
EXPENDITURES<br />
Current:<br />
Culture and recreation 172,558 172,558 148,096 24,462<br />
Capital outlay - - 7,608 ( 7,608)<br />
Total expenditures 172,558 172,558 155,704 16,854<br />
Excess (deficiency) of revenues<br />
over (under) expenditures 97,442 97,442 182,496 85,054<br />
OTHER FINANCING SOURCES (USES)<br />
Transfers out ( 50,000) ( 50,000) ( 19,773) 30,227<br />
Total other financing sources (uses) ( 50,000) ( 50,000) ( 19,773) 30,227<br />
CHANGE IN FUND BALANCE 47,442 47,442 162,723 115,281<br />
FUND BALANCE - BEGINNING 395,547 395,547 395,547 -<br />
FUND BALANCE - ENDING $ 442,989 $ 442,989 $ 558,270 $ 115,281<br />
56
CITY OF RED OAK, TEXAS<br />
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES<br />
IN FUND BALANCE - BUDGET (BUDGET BASIS) AND ACTUAL<br />
DEBT SERVICE FUND<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Variance with<br />
Actual Final Budget<br />
Original Final GAAP Positive<br />
Budget Budget Basis (Negative)<br />
REVENUES<br />
Property taxes $ 1,901,212 $ 1,901,212 $ 1,895,159 $( 6,053)<br />
Investment earnings - - 716 716<br />
Total revenues 1,901,212 1,901,212 1,895,875 ( 6,053)<br />
EXPENDITURES<br />
Debt service:<br />
Principal 1,231,810 1,231,810 1,286,000 ( 54,190)<br />
Interest and fiscal charges 542,385 542,385 608,310 ( 65,925)<br />
Bond issuance costs 134,570 134,570 - 134,570<br />
Total expenditures 1,908,765 1,908,765 1,894,310 14,455<br />
Excess (deficiency) of revenues<br />
over expenditures ( 7,553) ( 7,553)<br />
1,565 9,118<br />
OTHER FINANCING SOURCES (USES)<br />
Issuance of refunding bonds - 1,830,000 - (1,830,000)<br />
Premium on issuance of bonds - 216,945 - (216,945)<br />
Payment to escrow agent - current refunding - ( 2,041,218)<br />
- 2,041,218<br />
Total other financing sources (uses) - 5,727 - ( 5,727)<br />
CHANGE IN FUND BALANCE ( 7,553) ( 1,826)<br />
1,565 3,391<br />
FUND BALANCE - BEGINNING 106,055 106,055 106,055 106,055<br />
FUND BALANCE - ENDING $ 98,502 $ 104,229 $ 107,620 $ 109,446<br />
57
THIS PAGE LEFT BLANK INTENTIONALLY
STATISTICAL SECTION
THIS PAGE LEFT BLANK INTENTIONALLY
STATISTICAL SECTION<br />
(Unaudited)<br />
This part of the City of Red Oak, Texas’ annual comprehensive financial report presents detailed<br />
information as a context for understanding what the information in the financial statements, note<br />
disclosures, and required supplementary information says about the government’s overall financial<br />
health.<br />
Contents<br />
Page Number<br />
<strong>Financial</strong> Trends 58<br />
These schedules contain trend information to help the reader<br />
understand how the City’s financial performance and well-being have<br />
changed over time.<br />
Revenue Capacity 66<br />
These schedules contain trend information to help the reader assess<br />
factors affecting the City’s ability to generate its property and sales<br />
taxes.<br />
Debt Capacity 73<br />
These schedules present information to help the reader assess the<br />
affordability of the City’s current levels of outstanding debt and the<br />
City’s ability to issue additional debt in the future.<br />
Demographic and Economic Information 81<br />
These schedules offer demographic and economic indicators to help<br />
the reader understand the environment within which the City’s<br />
financial activities take place.<br />
Operating Information 85<br />
These schedules contain service and infrastructure data to help the<br />
reader understand how the information in the City’s financial report<br />
relates to the services the City provides and the activities it performs.<br />
Sources: Unless otherwise noted, the information in these schedules is derived from the<br />
annual comprehensive financial reports for the relevant year
CITY OF RED OAK, TEXAS<br />
NET POSITION BY COMPONENET<br />
LAST TEN FISCAL YEARS<br />
(UNAUDITED)<br />
(ACCRUAL BASIS OF ACCOUNTING)<br />
2012 2013 2014 2015<br />
Governmental activities:<br />
Net investment in capital assets $ 5,758,275 $ 2,857,779 $ 3,924,047 $ 3,341,213<br />
Restricted 4,666,499 7,755,036 4,630,580 5,182,954<br />
Unrestricted 1,526,449 1,200,906 2,195,547 3,379,870<br />
Total governmental activities $ 11,951,223 $ 11,813,721 $ 10,750,174 $ 11,904,037<br />
Business-type activities:<br />
Net investment in capital assets $ 791,014 $ 880,487 $ 47,760 $( 557,294)<br />
Restricted - - - -<br />
Unrestricted 1,729,831 1,151,083 892,368 1,395,088<br />
Total business-type activities $ 2,520,845 $ 2,031,570 $ 940,128 $ 837,794<br />
Primary government<br />
Net investment in capital assets $ 6,549,289 $ 3,738,266 $ 3,971,807 $ 2,783,919<br />
Restricted 4,666,499 7,755,036 4,630,580 5,182,954<br />
Unrestricted 3,256,280 2,351,989 3,087,915 4,774,958<br />
Total primary government $ 14,472,068 $ 13,845,291 $ 11,690,302 $ 12,741,831<br />
58
Table 1<br />
2016 2017 2018 2019 2020 <strong>2021</strong><br />
$( 61,393) $ 1,205,774 $ 1,569,243 $( 1,441,691) $ 3,113,430 $ 3,708,559<br />
6,588,865 13,639,229 14,435,879 18,622,126 23,036,280 19,338,628<br />
3,238,006 1,256,990 1,528,881 1,825,330 5,335,717 9,266,825<br />
$ 9,765,478 $ 16,101,993 $ 17,534,003 $ 19,005,765 $ 31,485,427 $ 32,314,012<br />
$( 2,110,124) $( 2,232,567) $( 258,524) $ 892,476 $ 833,237 $ 4,677,953<br />
- - - - 553,249 785,254<br />
2,857,208 4,656,000 3,979,521 3,012,786 3,642,709 3,602,903<br />
$ 747,084 $ 2,423,433 $ 3,720,997 $ 3,905,262 $ 5,029,195 $ 9,066,110<br />
$( 2,171,517) $( 1,026,793) $ 1,310,719 $( 549,215) $ 3,946,667 $ 8,386,512<br />
6,588,865 13,639,229 14,435,879 18,622,126 23,589,529 20,123,882<br />
6,095,214 5,912,990 5,508,402 4,838,116 8,978,426 12,869,728<br />
$ 10,512,562 $ 18,525,426 $ 21,255,000 $ 22,911,027 $ 36,514,622 $ 41,380,122<br />
59
CITY OF RED OAK, TEXAS<br />
CHANGES IN NET POSITION<br />
LAST TEN FISCAL YEARS<br />
(UNAUDITED)<br />
(ACCRUAL BASIS OF ACCOUNTING)<br />
2012 2013 2014 2015<br />
EXPENSES<br />
Governmental activities:<br />
General government $ 1,083,403 $ 1,042,914 $ 1,166,129 $ 1,213,141<br />
Public safety 6,076,660 5,628,721 5,955,135 6,324,778<br />
Culture and recreation 212,746 228,287 367,775 355,288<br />
Public works 1,477,838 1,488,066 1,194,723 1,407,964<br />
Industrial development 334,982 249,388 1,265,510 85,544<br />
Economic development 167,579 180,873 215,678 134,769<br />
Interest and fiscal charges 378,979 453,192 489,796 444,474<br />
Total governmental activities expense 9,732,187 9,271,441 10,654,746 9,965,958<br />
Business-type activities:<br />
Utility and storm water 4,982,041 5,239,606 5,849,502 5,672,450<br />
Total business-type activities expense 4,982,041 5,239,606 5,849,502 5,672,450<br />
Total Primary government expense 14,714,228 14,511,047 16,504,248 15,638,408<br />
PROGRAM REVENUES<br />
Governmental activities:<br />
Charges for services<br />
Public safety 644,856 554,342 668,752 744,683<br />
Cultural and recreational 17,669 161,049 240,294 321,703<br />
Public works 282,194 405,231 399,922 401,870<br />
Industrial and economic development - - - -<br />
Operating grants/contributions 641,779 427,099 162,785 224,921<br />
Capital grants/contributions 161,266 643,386 - -<br />
Total governmental activities 1,747,764 2,191,107 1,471,753 1,693,177<br />
Business-type activities:<br />
Charges for services 3,380,120 3,208,811 3,924,307 4,747,708<br />
Capital grants/contributions 147,996 205,388 - -<br />
Total business-type activities 3,528,116 3,414,199 3,924,307 4,747,708<br />
Total primary government 5,275,880 5,605,306 5,396,060 6,440,885<br />
NET (EXPENSE) REVENUES<br />
Governmental activities ( 5,913,026) ( 6,232,833) ( 8,260,434) ( 8,961,569)<br />
Business-type activities ( 678,143) ( 1,276,690) ( 1,057,734) ( 1,101,794)<br />
Total primary government ( 6,591,169) ( 7,509,523) ( 9,318,168) ( 10,063,363)<br />
60
Table 2<br />
2016 2017 2018 2019 2020 <strong>2021</strong><br />
$ 1,588,331 $ 1,785,438 $ 1,082,232 $ 1,667,818 $ 1,876,147 $ 1,931,114<br />
6,781,475 7,043,748 8,386,948 9,257,914 8,680,540 8,910,297<br />
367,427 393,236 415,230 427,254 848,530 1,051,184<br />
1,601,788 1,642,088 1,483,194 1,847,970 2,774,598 2,895,417<br />
63,339 96,124 173,975 155,888 1,104,636 5,596,763<br />
188,748 394,622 251,187 191,916 58,940 209,880<br />
328,730 563,095 453,671 454,153 1,550,846 2,259,864<br />
10,919,838 11,918,351 12,246,437 14,002,913 16,894,237 22,854,519<br />
6,461,674 6,605,036 6,838,560 7,838,995 8,812,523 8,751,014<br />
6,461,674 6,605,036 6,838,560 7,838,995 8,812,523 8,751,014<br />
17,381,512 18,523,387 19,084,997 21,843,908 25,706,760 31,605,533<br />
744,683 467,813 467,813 432,708 410,859 657,512<br />
321,703 453,860 453,860 811,267 1,105,967 1,634,550<br />
401,870 456,898 456,898 550,923 745,400 649,678<br />
- - - - 7,589,503 1,225,581<br />
224,921 339,721 339,721 575,728 1,372,677 1,293,401<br />
- - - - 3,519,935 2,485,606<br />
1,693,177 1,718,292 1,718,292 2,370,626 14,744,341 7,946,328<br />
4,747,708 5,577,700 5,577,700 8,009,066 8,715,261 9,477,411<br />
- 818,071 818,071 - 1,104,544 2,705,020<br />
4,747,708 6,395,771 6,395,771 8,009,066 9,819,805 12,182,431<br />
6,440,885 8,114,063 8,114,063 10,379,692 24,564,146 20,128,759<br />
( 8,961,569) ( 8,247,666) ( 8,247,666) ( 11,632,287) ( 2,149,896) ( 14,908,191)<br />
( 1,101,794) ( 94,750) ( 94,750) 170,071 1,007,282 3,431,417<br />
( 10,063,363) ( 8,342,416) ( 8,342,416) 11,462,216 ( 1,142,614) ( 11,476,774)<br />
61
CITY OF RED OAK, TEXAS<br />
CHANGES IN NET POSITION<br />
LAST TEN FISCAL YEARS<br />
(UNAUDITED)<br />
(ACCRUAL BASIS OF ACCOUNTING)<br />
2012 2013 2014 2015<br />
GENERAL REVENUES<br />
Governmental activities:<br />
Taxes<br />
Property taxes $ 3,740,229 $ 3,828,869 $ 4,090,144 $ 4,188,900<br />
Sales tax 2,430,548 2,754,847 3,020,651 4,072,836<br />
Franchise tax 585,424 577,663 648,314 780,644<br />
Hotel/motel taxes 83,506 94,877 103,030 1,228,282<br />
Alcoholic Beverage tax 4,186 5,728 8,224 8,663<br />
Investment earnings 98,132 87,121 103,083 108,996<br />
Gain on sale of land held for resale 1,178,986 - - 881<br />
Gain on sale of capital assets - - - -<br />
Miscellaneous 92,067 91,657 304,230 279,436<br />
Transfers - - 84,731 -<br />
Total governmental activities 8,213,078 7,440,762 8,362,407 10,990,388<br />
Business-type activities:<br />
Investment earnings 6,877 2,623 918 881<br />
Transfers - - ( 84,731)<br />
-<br />
Gain on sale of capital assets - - - -<br />
Total business-type activities 6,877 2,623 ( 83,813)<br />
881<br />
Total primary government 8,219,955 7,443,385 8,278,594 9,563,238<br />
CHANGE IN NET POSITION<br />
Governmental activities 648,869 ( 137,502) ( 845,039) 1,314,691<br />
Business-type activities ( 587,521) ( 489,275) ( 754,231) ( 93,869)<br />
Total primary government $ 61,348 $( 626,777) $( 1,599,270) $ 1,220,822<br />
62
Table 2<br />
2016 2017 2018 2019 2020 <strong>2021</strong><br />
$ 4,722,883 $ 5,271,979 $ 5,900,323 $ 6,917,413 $ 8,000,818 $ 8,571,758<br />
3,897,973 3,761,566 4,433,407 4,693,893 5,584,807 6,343,642<br />
759,708 853,683 735,818 777,141 742,438 728,690<br />
165,188 162,468 169,662 195,732 162,389 317,525<br />
12,501 11,887 13,641 13,950 9,878 11,185<br />
117,567 138,709 189,107 353,138 332,046 52,373<br />
1,148,148 196,685 - - - -<br />
- - - - - -<br />
166,420 199,281 126,087 - 56,382 45,403<br />
- - ( 137,958) 152,782 - ( 593,000)<br />
10,990,388 10,429,431 11,430,087 13,104,049 14,888,758 15,477,576<br />
1,412 5,545 13,203 14,194 8,215 12,498<br />
- 166,821 137,958 - - 593,000<br />
- - - - 108,436 -<br />
1,412 172,366 151,161 14,194 116,651 605,498<br />
10,991,800 10,601,797 11,581,248 13,118,243 15,005,409 16,083,074<br />
2,022,092 546,815 1,537,785 1,471,762 12,738,862 569,385<br />
( 90,710) 1,515,367 1,303,131 184,265 1,123,933 4,036,915<br />
$ 1,931,382 $ 2,062,182 $ 2,840,916 $ 1,656,027 $ 13,862,795 $ 4,606,300<br />
63
CITY OF RED OAK, TEXAS<br />
FUND BALANCES<br />
GOVERNMENTAL FUNDS<br />
LAST TEN FISCAL YEARS<br />
(UNAUDITED)<br />
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)<br />
2012 2013 2014 2015<br />
General Fund<br />
Nonspendable:<br />
Prepaids and Inventory $ 93,372 $ 75,521 $ 91,123 $ 91,692<br />
Restricted:<br />
Use of Bond proceeds - 1,057,000 - -<br />
Capital projects - - - 218,825<br />
Committed:<br />
Court Security 74,970 50,748 35,799 6,246<br />
Court Technology 46,611 39,835 29,049 28,868<br />
Public Safety 36,849 15,650 61,143 39,213<br />
Assigned:<br />
Subsequent year's budget - - - -<br />
Unassigned 1,016,686 1,064,147 958,619 1,479,205<br />
Total General Fund $ 1,268,488 $ 2,302,901 $ 1,175,733 $ 1,864,049<br />
All other Governmental Funds<br />
Nonspendable:<br />
Prepaid $ - $ - $ - $ -<br />
Restricted:<br />
Debt service 90,662 89,728 75,585 118,350<br />
Capital projects 1,243,228 506,821 231,865 180,078<br />
Committed:<br />
Culture and recreation 16,270 28,229 54,852 74,911<br />
Capital projects - - - -<br />
Industrial & economic development 2,814,814 4,278,133 6,229,501 5,642,893<br />
Total all other governmental funds 4,164,974 4,902,911 6,591,803 6,016,232<br />
Total Fund Balances $ 5,720,922 $ 5,433,462 $ 7,205,812 $ 7,767,536<br />
64
Table 3<br />
2016 2017 2018 2019 2020 <strong>2021</strong><br />
$ 92,413 $ 16,017 $ 7,222 $ 8,085 $ 4,182 $ 21,565<br />
- - - - - -<br />
218,825 218,825 256,527 256,527 256,527 256,527<br />
13,885 20,064 25,482 31,542 34,519 34,519<br />
923 1,017 305 37 3,293 3,293<br />
44,755 35,075 31,169 35,382 73,534 73,534<br />
- - - - 428,796 1,144,757<br />
1,580,167 2,032,692 2,205,015 2,747,209 4,154,178 3,962,045<br />
$ 1,950,968 $ 2,323,690 $ 2,525,720 $ 3,078,782 $ 4,955,029 $ 5,496,240<br />
$ - $ 198,789 $ 32,336 $ 32,336 $ - $ -<br />
98,857 79,449 96,442 85,641 106,055 107,620<br />
155,502 355,991 372,997 6,717,817 8,283,793 13,171,933<br />
118,313 238,186 268,902 327,120 395,547 558,270<br />
- - - - - 2,463,127<br />
6,864,906 12,491,833 13,332,513 11,168,060 25,753,572 21,598,858<br />
7,237,578 13,364,248 14,103,190 18,330,974 34,538,967 37,899,808<br />
$ 7,880,281 $ 15,687,938 $ 16,628,910 $ 21,409,756 $ 39,493,996 $ 43,396,048<br />
65
CITY OF RED OAK, TEXAS<br />
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS<br />
LAST TEN FISCAL YEARS<br />
(UNAUDITED)<br />
(MODIFIED ACCRUAL BASIS OF ACCOUNTING)<br />
2012 2013 2014 2015<br />
REVENUE<br />
Property taxes $ 3,751,225 $ 3,842,276 $ 4,081,650 $ 4,177,442<br />
Sales tax 2,430,548 2,754,847 3,020,651 4,072,836<br />
Franchise tax 585,424 577,663 648,314 780,644<br />
Hotel occupancy taxes 83,506 94,877 103,030 122,882<br />
Alcoholic Beverage tax 4,186 5,728 8,224 8,663<br />
Licenses and permits 236,842 321,703 342,782 453,860<br />
Fines and Forfeitures 707,514 744,683 495,823 467,813<br />
Charges for services 399,136 401,870 428,433 456,898<br />
Land sale - - - -<br />
Investment earnings 98,132 87,121 103,083 108,996<br />
Contributions - - - -<br />
Miscellaneous 100,902 91,657 328,881 274,542<br />
Grants from governmental agencies 600,002 - - -<br />
Intergovernmental 224,484 224,921 180,262 339,721<br />
Total Revenues 9,221,901 9,147,346 9,741,133 11,264,297<br />
EXPENDITURES<br />
Current:<br />
General government 840,664 888,119 1,023,145 1,033,065<br />
Public safety 4,739,546 5,095,260 6,122,424 5,607,528<br />
Culture and recreation 159,214 184,047 319,174 309,878<br />
Public works 897,334 927,032 919,529 980,329<br />
Industrial development 297,788 210,253 1,261,582 81,704<br />
Economic development 153,764 168,353 212,274 131,452<br />
Capital Outlay 2,553,143 595,495 1,703,768 541,862<br />
Debt Service:<br />
Principal 517,725 342,045 1,150,444 707,505<br />
Interest and fiscal charges 366,727 439,288 490,263 472,014<br />
Issuance costs - - - -<br />
Total Expenditures 10,525,905 8,849,892 13,202,603 9,865,337<br />
EXCESS (DEFICIENCY) OF REVENUES<br />
OVER (UNDER) EXPENDITURES ( 1,304,004) 297,454 ( 3,461,470) 1,398,960<br />
OTHER FINANCING SOURCES (USES)<br />
Sale of capital assets 1,985,786 - - -<br />
Release of reserve ( 769,300)<br />
- - -<br />
Note and Lease proceeds 950,986 1,368,851 - -<br />
Insurance recovery - - - -<br />
Issuance of refunding bonds - - - -<br />
Issuance of bonds - 1,090,000 1,674,000 4,097,000<br />
Payment to refunding escrow agent - - - ( 3,762,314)<br />
Premium on issuance of bonds - ( 33,000)<br />
- 176,016<br />
Transfers in 245,140 290,544 457,750 398,950<br />
Transfers out ( 245,140) ( 290,544) ( 373,019) ( 398,950)<br />
Total other financing sources (uses) 2,167,472 2,425,851 1,758,731 510,702<br />
NET CHANGE IN FUND BALANCE $ 863,468 $ 2,723,305 $( 1,702,739) $ 1,909,662<br />
Debt service as a percentage of<br />
noncapital expenditures 11.1% 9.5% 14.3% 12.7%<br />
66
Table 4<br />
2016 2017 2018 2019 2020 <strong>2021</strong><br />
$ 4,718,288 $ 5,248,141 $ 5,919,915 $ 6,881,332 $ 7,905,106 $ 8,675,935<br />
3,897,973 3,761,566 4,433,407 4,693,893 5,584,807 6,343,642<br />
759,708 853,683 735,818 777,141 742,438 728,690<br />
165,188 162,468 169,662 195,732 162,389 317,525<br />
12,501 11,887 13,641 13,950 9,878 11,185<br />
383,631 448,161 924,535 811,267 1,277,120 1,654,585<br />
469,496 469,637 363,928 432,708 379,145 341,300<br />
490,104 492,042 525,998 550,923 8,154,215 897,072<br />
- - - - - 1,225,581<br />
117,567 138,703 189,107 353,138 332,046 52,373<br />
- - - - 144,367 455,290<br />
167,734 189,597 126,087 140,620 56,382 45,403<br />
- - - - - -<br />
608,311 454,275 701,691 567,042 1,372,133 871,688<br />
11,790,501 12,230,160 14,103,789 15,417,746 26,120,026 21,620,269<br />
1,165,085 1,277,771 755,204 1,052,036 1,610,525 1,678,326<br />
6,044,534 6,403,553 7,547,007 8,519,195 8,070,342 8,303,211<br />
342,409 324,024 373,696 393,798 800,430 1,001,471<br />
1,240,448 1,160,727 1,071,367 1,411,637 2,063,724 2,109,943<br />
59,489 94,367 173,975 155,888 1,104,636 5,596,763<br />
581,446 157,583 70,634 191,916 58,940 209,880<br />
937,304 2,494,281 1,203,551 7,000,822 2,225,172 6,258,624<br />
706,007 1,024,536 1,145,992 1,838,205 2,534,062 2,038,000<br />
401,682 599,303 491,610 822,758 931,131 935,465<br />
- - - - 299,168 1,334,783<br />
11,478,404 13,536,145 12,833,036 21,386,255 19,698,130 29,466,466<br />
312,097 (1,305,985) 1,270,753 ( 5,968,509) 6,421,896 (7,846,197)<br />
1,148,148 196,685 - - - -<br />
- - - - - -<br />
- - - - - -<br />
- - - - - 205,312<br />
- - - - 1,830,000 -<br />
4,208,000 3,305,000 - 10,130,000 9,443,000 11,272,000<br />
- ( 1,016,257)<br />
- - ( 2,041,218)<br />
-<br />
- 238,193 - 619,355 250,331 863,937<br />
402,540 578,062 449,480 1,251,476 3,254,225 3,276,221<br />
( 402,540) ( 744,883) ( 587,438) ( 1,251,476) ( 3,254,225) ( 3,869,221)<br />
5,356,148 2,556,800 ( 137,958) 10,749,355 9,482,113 11,748,249<br />
$ 5,668,245 $ 1,250,815 $ 1,132,795 $ 4,780,846 $ 15,904,009 $ 3,902,052<br />
10.5% 14.7% 14.1% 18.5% 21.5% 12.6%<br />
67
CITY OF RED OAK, TEXAS<br />
ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY<br />
LAST TEN FISCAL YEARS<br />
Fiscal<br />
Year<br />
Less:<br />
Tax<br />
Ended Real Personal Productivity Exempt Homestead<br />
9/30 Property Property Loss Property Cap<br />
2012 668,354,184 28,879,710 28,239,195 94,244,102 261,107<br />
2013 683,801,129 30,765,344 29,451,035 100,008,667 214,758<br />
2014 714,110,049 45,594,786 29,860,819 101,265,277 131,063<br />
2015 829,443,843 95,263,154 30,316,461 247,705,056 1,219,014<br />
2016 933,659,144 162,451,667 30,586,921 340,827,403 593,397<br />
2017 1,024,499,733 174,197,205 30,293,701 340,525,233 6,793,892<br />
2018 1,109,089,140 180,656,088 29,393,387 329,333,359 8,777,701<br />
2019 1,234,812,295 226,387,780 34,876,283 402,360,627 16,130,226<br />
2020 1,399,353,442 326,185,986 35,911,751 519,618,786 17,745,742<br />
<strong>2021</strong> 1,534,224,036 232,686,584 41,465,658 432,064,796 20,471,643<br />
Source: Ellis Central Appraisal District.<br />
68
Table 5<br />
Total Total Total<br />
Taxable Freeze Direct<br />
Assessed Freeze Adjusted Tax<br />
Value Taxable Taxable Rate<br />
574,489,490 41,253,593 533,235,897 0.64900<br />
584,892,013 42,696,948 542,195,065 0.64900<br />
628,447,676 45,092,454 583,355,222 0.64900<br />
645,466,466 51,633,715 593,832,751 0.64900<br />
724,103,090 51,347,942 672,755,148 0.64900<br />
821,084,112 66,884,157 754,199,955 0.64900<br />
922,240,781 72,570,160 849,670,321 0.64900<br />
1,007,832,939 84,595,368 923,237,571 0.70548<br />
1,152,263,149 102,372,801 1,049,890,348 0.70365<br />
1,272,908,523 101,249,110 1,171,659,413 0.70365<br />
69
CITY OF RED OAK, TEXAS<br />
DIRECT AND OVERLAPPING PROPERTY TAX RATES<br />
Table 6<br />
LAST TEN FISCAL YEARS<br />
Fiscal<br />
Year<br />
City Direct Rates<br />
Debt<br />
Ended General Service Ellis Red Oak<br />
9/30 Fund Fund Total County ISD<br />
2012 0.565100 0.083900 0.649000 0.380091 1.540000<br />
2013 0.559700 0.089300 0.649000 0.380091 1.540000<br />
2014 0.554100 0.094900 0.649000 0.380091 1.540000<br />
2015 0.544500 0.104500 0.649000 0.413599 1.540000<br />
2016 0.544300 0.104700 0.649000 0.413599 1.540000<br />
2017 0.544300 0.104700 0.649000 0.413599 1.540000<br />
2018 0.541800 0.107200 0.649000 0.393221 1.540000<br />
2019 0.549700 0.155780 0.705480 0.370533 1.540000<br />
2020 0.539203 0.164442 0.703645 0.329557 1.438350<br />
<strong>2021</strong> 0.549873 0.153772 0.703645 0.320194 1.359200<br />
Source: Ellis Central Appraisal District<br />
70
CITY OF RED OAK, TEXAS<br />
PRINCIPAL PROPERTY TAX PAYERS<br />
Table 7<br />
CURRENT YEAR AND NINE YEARS AGO<br />
<strong>2021</strong> FY % of Total 2012 FY % of Total<br />
Taxable Taxable Taxable Taxable<br />
Assessed Assessed Assessed Assessed<br />
Taxpayer Rank Valuation Valuation Valuation Rank Valuation<br />
Red Oak Town Village LP 1 $ 34,243,130<br />
2.69% $ 17,337,410 1 3.02%<br />
Triumph Aerostructures LLC 2 31,973,748 2.51%<br />
CSL Red Oak 2018 LLC 3 12,956,584 1.02%<br />
Wal Mart Real Estate 4 10,466,520 0.82%<br />
First Texas Homes Inc 5 9,636,130 0.76% 5,402,430 3 0.94%<br />
Oncor Electric Delivery Company 6 9,365,090 0.74% 5,619,530 2 0.98%<br />
Red Oak Depot 1 LTD 7 8,996,740 0.71% 3,401,110 4 0.59%<br />
Ovilla 35 Plaza LLC 8 7,526,200 0.59%<br />
Access Self Storage Red Oak LP 9 6,516,404 0.51% 2,700,000 7 0.47%<br />
Rose Sierra Grande LP 10 6,203,000 0.49%<br />
Knapheide Truck Equipment Southwest<br />
Red Oak Senior Care Center LLC 3,302,770 5 0.57%<br />
Blackstone Developers LLC 2,798,850 6 0.49%<br />
Tiger Mart #12 2,322,200 8 0.40%<br />
Apple Capital LLC 2,300,000 9 0.40%<br />
Southwestern Bell Telephone Co 2,236,490 10 0.39%<br />
$ 137,883,546 10.83% $ 47,420,790<br />
8.25%<br />
Source: First Southwest Securities<br />
Ellis Central Appraisal District<br />
71
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CITY OF RED OAK, TEXAS<br />
PROPERTY TAX LEVIES AND COLLECTIONS<br />
Table 8<br />
LAST TEN FISCAL YEARS<br />
Fiscal<br />
Interest<br />
Year and % of Delinquent<br />
Ended Tax General Sinking Adjusted Current Tax Tax<br />
9/30 Rate Fund Fund Tax Levy Collected Collections<br />
2012 0.649000 0.565100 0.083900 3,729,833 98.20% 53,372<br />
2013 0.649000 0.559700 0.089300 3,803,694 98.99% 49,498<br />
2014 0.649000 0.554100 0.094900 4,066,389 99.08% 29,363<br />
2015 0.649000 0.544500 0.104700 4,168,461 99.13% 25,275<br />
2016 0.649000 0.544300 0.104700 4,670,316 99.18% 55,383<br />
2017 0.649000 0.544300 0.104700 5,269,689 98.67% 26,384<br />
2018 0.649000 0.541800 0.107200 5,892,911 99.06% 50,326<br />
2019 0.705480 0.549700 0.155780 6,895,960 99.12% 20,516<br />
2020 0.703645 0.539203 0.164442 7,843,461 99.36% 68,634<br />
<strong>2021</strong> 0.703645 0.549873 0.153772 8,668,760 98.88% 69,328<br />
Note: Includes General and Debt Service Funds.<br />
Data comes from year end Tax <strong>Report</strong> form Ellis County.<br />
72
CITY OF RED OAK, TEXAS<br />
RATIOS OF GENERAL OUTSTANDING DEBT<br />
LAST TEN FISCAL YEARS<br />
Fiscal<br />
Governmental Activities<br />
Year General Certificate of<br />
Ended Obligation Obligation Revenue Tax Special Assessment Capital<br />
9/30 Bonds Bonds Bonds Notes Revenue Bonds Leases<br />
2012 5,260,000 1,770,000 895,000 - - 1,274,237<br />
2013 5,065,000 2,860,000 800,000 - - 1,185,006<br />
2014 4,865,000 2,825,000 739,000 914,000 - 269,282<br />
2015 4,580,000 2,770,000 663,000 1,171,000 - 170,124<br />
2016 4,415,000 3,493,000 3,931,000 934,000 - 96,752<br />
2017 4,200,000 4,881,000 3,663,000 1,477,000 - 65,244<br />
2018 3,990,000 4,669,000 3,305,000 1,254,000 - 32,769<br />
2019 3,770,000 14,149,000 2,937,000 1,020,000 - -<br />
2020 5,335,000 11,696,000 11,110,000 1,350,000 - -<br />
<strong>2021</strong> 4,990,000 14,965,000 10,359,000 2,754,000 5,657,000 -<br />
Note: Detail regarding the City's outstanding debt can be found in the notes to the financial statement.<br />
Source: City Staff and Statistical Projections based on U.S. Census Bureau data. As reported by Ellis<br />
County Appraisal District and City records.<br />
73
Table 9<br />
Governmental<br />
Activities<br />
Unamortized General<br />
Business Type Activities<br />
Certificate of Unamortized Total<br />
Premium Obligation Obligation Tax Capital Premium Primary<br />
(Discount) Bonds Bonds Notes Leases (Discount) Government<br />
69,949 7,775,000 9,930,000 - 32,603 81,146 27,087,935<br />
65,012 17,810,000 - - 140,528 34,398 27,959,944<br />
61,102 17,215,000 - 399,000 102,624 31,937 27,421,945<br />
197,856 16,740,000 - 380,000 72,504 103,631 26,848,115<br />
184,664 16,245,000 1,982,000 301,000 40,733 93,841 31,716,990<br />
392,848 15,520,000 3,652,000 221,000 12,305 528,973 34,613,370<br />
362,548 14,875,000 3,429,000 140,000 - 487,829 32,545,146<br />
332,248 13,925,000 3,407,000 73,000 - 446,685 40,059,933<br />
1,026,537 12,400,000 3,146,000 419,000 - 1,181,654 47,549,191<br />
1,819,613 11,350,000 4,809,000 346,000 - 1,121,841 58,171,454<br />
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CITY OF RED OAK, TEXAS<br />
RATIOS OF GENERAL OUTSTANDING DEBT<br />
Table 9<br />
LAST TEN FISCAL YEARS<br />
Fiscal<br />
% of<br />
Year Taxable Actual Taxable<br />
Ended Assessed Value of Estimated Per<br />
9/30 Valuation (2) Property Population (1) Capita<br />
2012 574,704,657 4.71% 11,090 0.0409%<br />
2013 586,085,389 4.77% 11,090 0.0397%<br />
2014 628,447,676 4.36% 11,245 0.0410%<br />
2015 645,466,466 4.16% 11,530 0.0429%<br />
2016 724,103,090 4.38% 12,260 0.0387%<br />
2017 821,084,112 4.22% 12,600 0.0364%<br />
2018 922,240,781 3.53% 12,760 0.0392%<br />
2019 923,237,571 4.34% 13,400 0.0334%<br />
2020 1,152,263,149 4.13% 14,732 0.0310%<br />
<strong>2021</strong> 1,272,908,523 4.57% 16,324 0.0281%<br />
75
CITY OF RED OAK, TEXAS<br />
RATIOS OF GENERAL BONDED DEBT<br />
LAST TEN FISCAL YEARS<br />
Net G.O. Certificates<br />
Fiscal Taxable Tax Debt of<br />
Year Taxable Assessed Outstanding Obligation<br />
Ended Estimated Assessed Valuation at End at End<br />
9/30 Population (1) Valuation (2) Per Capita of Year of Year<br />
2012 11,090 574,489,490 51,822 13,186,095 11,700,000<br />
2013 11,090 584,892,013 52,134 22,974,410 2,860,000<br />
2014 11,245 628,447,676 55,887 22,173,039 2,825,000<br />
2015 11,530 645,466,466 55,981 21,621,487 2,770,000<br />
2016 11,560 724,103,090 62,639 20,938,505 5,475,000<br />
2017 12,600 821,084,112 65,165 20,248,973 8,533,000<br />
2018 12,760 922,240,781 72,276 19,715,377 8,098,000<br />
2019 13,400 1,007,832,939 75,211 18,473,933 17,556,000<br />
2020 14,732 1,152,263,149 78,215 19,943,191 14,842,000<br />
<strong>2021</strong> 16,324 1,272,908,523 77,978 19,281,454 19,774,000<br />
(1) Source: City Staff and Statistical Projections based on U.S. Census Bureau data.<br />
(2) As <strong>Report</strong>ed by Ellis County Appraisal District.<br />
(3) See Statement of Net Position - Net Position Restricted for Debt Service.<br />
N/A Information not Available<br />
76
Table 10<br />
Accumulated Ratio of Net Net<br />
General Resources G.O. Tax Debt G.O. Tax<br />
Bonded Restricted for to Taxable Debt<br />
Tax Debt Repayment Net General Assessed Per<br />
Notes in Total of Debt (3) Bonded Debt Valuation Capita<br />
- 24,886,095 N/A N/A 2.30% 634<br />
- 25,834,410 75,585 25,758,825 3.93% 2,072<br />
1,313,000 26,311,039 118,350 26,192,689 3.53% 1,972<br />
1,551,000 25,942,487 98,857 25,843,630 3.35% 1,875<br />
1,235,000 27,648,505 97,121 27,551,384 2.89% 1,811<br />
1,698,000 30,479,973 79,449 30,400,524 2.47% 1,607<br />
1,394,000 29,207,377 96,442 29,110,935 2.14% 1,545<br />
1,093,000 37,122,933 85,641 37,037,292 1.83% 1,379<br />
1,769,000 36,554,191 - 36,448,136 1.73% 2,474<br />
3,100,000 42,155,454 - 42,047,834 3.30% 2,576<br />
77
CITY OF RED OAK, TEXAS<br />
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES<br />
Table 11<br />
SEPTEMBER 30, <strong>2021</strong><br />
City's<br />
Total Estimated Overlapping<br />
Tax Debt % GO<br />
Taxing Jurisdiction as of 9/30/<strong>2021</strong> Applicable Tax Debt<br />
Overlapping Debt<br />
Ellis County $ 30,460,583 7.59% $ 2,311,958<br />
Red Oak Independent School District 94,795,000 51.13% 48,468,684<br />
Total Overlapping Debt 50,780,642<br />
Direct Debt<br />
City of Red Oak 40,544,613 100.00% 40,544,613<br />
Total Direct Debt 40,544,613<br />
Total Direct and Overlapping GO Tax Debt $ 91,325,255<br />
Source: Hilltop Securities and/or Municipal Advisory Council of Texas<br />
78
CITY OF RED OAK, TEXAS<br />
LEGAL DEBT MARGIN INFORMATION<br />
Table 12<br />
SEPTEMBER 30, <strong>2021</strong><br />
Net Assessed Value $<br />
1,272,908,523<br />
Plus Exempt Property 494,002,097<br />
Total Assessed Value $<br />
1,766,910,620<br />
Debt Limit - (10%) of Total Assessed Value $<br />
176,691,062<br />
Less amount of debt applicable to debt limits 39,214,000<br />
Legal Debt Margin 137,477,062<br />
The Debt Rate legal limit percentage 22%<br />
As a home rule city, the City of Red Oak is not limited by law in the amount of debt it may issue.<br />
Chapter VIII, Section 8.01 of the City of Red Oak Charter states in part:<br />
The Council shall have the power granted to municipalities by the Constitution and laws of the state of Texas<br />
to levy, assess and collect lawful taxes on property within the territory of the City, not to exceed the<br />
maximum limits set by the constitution and laws of the State of Texas.<br />
Texas Local Government code section 1507.152 -.154 states the governing body may pledge to the payment<br />
of bonds issued under this subchapter an ad valorem tax sufficient to pay when due the principal of and<br />
interest on the bonds. A municipality may not issue bonds under this subchapter in a principal amount that:<br />
Exceeds the amount of loss sustained or anticipated by the municipality and the cost of issuing the bonds; or<br />
would result in the outstanding aggregate principal amount of tax bond indebtedness of the municipality<br />
exceeding 10% of the Assessed valuation of taxable property in the municipality according to the most<br />
recent ad valorem tax roll of the municipality.<br />
79
CITY OF RED OAK, TEXAS<br />
PLEDGE-REVENUE COVERAGE<br />
Table 13<br />
LAST TEN FISCAL YEARS<br />
Fiscal (1) (2) (3)<br />
Year Less Net Average<br />
Ended Gross Operating Available Debt<br />
9/30 Revenue Expense Revenue Service Coverage<br />
2012 4,367,643 3,104,920 1,262,723 1,775,620 0.95<br />
2013 4,747,708 3,491,798 1,255,910 1,389,497 1.05<br />
2014 5,179,084 4,042,943 1,136,141 1,521,694 1.31<br />
2015 5,577,700 3,945,042 1,632,658 1,542,945 1.54<br />
2016 6,369,552 4,579,093 1,790,459 1,698,340 1.42<br />
2017 7,129,965 4,631,965 2,498,000 1,484,467 1.97<br />
2018 7,676,753 4,851,428 2,825,325 1,538,190 1.79<br />
2019 8,009,066 5,633,340 2,375,726 1,581,608 1.27<br />
2020 8,727,199 6,569,673 2,157,526 1,316,000 1.14<br />
<strong>2021</strong> 9,477,411 6,701,841 2,775,570 1,390,000 1.51<br />
Source: <strong>Annual</strong> <strong>Comprehensive</strong> <strong>Financial</strong> <strong>Report</strong><br />
(1) Gross Revenue includes all Water and Sewer revenues.<br />
(2) Operating expense includes all Water and Sewer expense excluding depreciation.<br />
(3) Average annual debt service is the average principal and interest payments due over the<br />
remaining term of all water and sewer bonds.<br />
80
CITY OF RED OAK, TEXAS<br />
DEMOGRAPHIC AND ECONOMIC STATISTICS<br />
Table 14<br />
LAST TEN FISCAL YEARS<br />
Fiscal<br />
Year Per Capita Median<br />
Ended Estimated Personal Household Median<br />
9/30 Population (1) Income Income Age<br />
2012 11,090 24,075 63,098 33<br />
2013 11,090 24,075 63,098 33<br />
2014 11,245 24,985 64,992 33<br />
2015 11,530 24,985 64,992 33<br />
2016 11,560 24,985 64,992 33<br />
2017 12,600 N/A N/A N/A<br />
2018 12,760 27,019 70,250 34<br />
2019 13,400 28,250 78,712 34<br />
2020 14,732 32,195 79,448 34<br />
<strong>2021</strong> 16,324 32,194 79,448 34<br />
(1) Source: City Staff and Statistical Projections based on U.S. Census Bureau data.<br />
Note: Unable to obtain some date for the City of Red Oak<br />
N/D No reliable data<br />
N/A Information not available<br />
81
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CITY OF RED OAK, TEXAS<br />
PRINCIPAL EMPLOYERS<br />
Table 15<br />
SEPTEMBER 30, <strong>2021</strong><br />
Approximate<br />
Number of<br />
Name of Firm Type of Business Employees<br />
Red Oak Independent School District Education 863<br />
Bombardier US Aerospace Corporation Industry 802<br />
Triumph Aerostructures Industry 482<br />
Walmart General retail/grocery 328<br />
City of Red Oak Local Government 117<br />
Red Oak Health & Rehab Medical 105<br />
Life School Elementary School 103<br />
Brookshire Grocery Grocery Supermarket 95<br />
Life School Central Office School 79<br />
NFI Industries Industry 75<br />
Source: City Staff<br />
82
CITY OF RED OAK, TEXAS<br />
FULL-TIME EQUIVALENT CITY EMPLOYEES BY FUNCTION AND PROGRAM<br />
LAST TEN FISCAL YEARS<br />
Function/Program 2012 2013 2014 2015 2016<br />
General Government:<br />
Administration 9 9 9 3 3<br />
City Secretary - - - 1 1<br />
Finance - - - 4 4<br />
Human Resource - - - 1 1<br />
Information Technology 1 1 1 1 1<br />
Economic/ Industrial Development 1 1 1 1 1<br />
Utility Billing 2 2 2 2 2<br />
Public Works:<br />
Street 6 7 8 8 8<br />
Water and Sewer 8 9 10 10 10<br />
Storm Water Drainage N/A N/A N/A N/A 2<br />
Public Safety:<br />
Police 22 25 25 27 27<br />
Fire 24 26 26 26 26<br />
Municipal Court 2 2 2 2 2<br />
Community Services<br />
Code Enforcement 1 3 3 3 4<br />
Animal Control 1 1 1 1 1<br />
Parks - - - - -<br />
Library - - - - -<br />
Tourism 1 1 1 1 1<br />
Total City Employees 78 87 88 90 94<br />
Note: FTE are based on 2080 hours<br />
The Water and Sewer personnel are paid by the Water and Sewer Fund<br />
Economic development employees are paid from the General Fund<br />
Human Resources was created in 2007, terminated in 2010, re-instated in 2015.<br />
The Library is contracted through LSSI<br />
Storm Water Drainage was created in 2016<br />
N/A Information not available<br />
Source: City Staff<br />
83
Table 16<br />
2017 2018 2019 2020 <strong>2021</strong><br />
3 3 3 3 4<br />
1 1 1 1 1<br />
4 4 4 4 5<br />
1 2 2 2 1<br />
1 1 2 2 2<br />
1 1 1 1 1<br />
2 3 3 3 2<br />
8 9 9 10 10<br />
10 10 10 10 10<br />
3 4 4 4 4<br />
27 30 33 33 33<br />
26 27 30 30 30<br />
2 3 2 2 2<br />
4 7 7 6 6<br />
1 1 1 2 2<br />
- - - 4 4<br />
- - - - -<br />
1 1 1 1 1<br />
95 106 112 117 118<br />
84
CITY OF RED OAK, TEXAS<br />
OPERATING INDICATORS BY FUNCTION/PROGRAM<br />
LAST TEN FISCAL YEARS<br />
Function/Program 2012 2013 2014 2015<br />
General Government:<br />
Information Technology<br />
Installed computer 12 13 12 12<br />
Installed servers 1 2 2 2<br />
Public Works:<br />
Street<br />
Number of Lane Miles of Paved Streets N/D N/D N/D N/D<br />
Lane Miles - Concrete N/D N/D N/D N/D<br />
Lane Miles - Asphalt N/D N/D N/D N/D<br />
Water and Sewer<br />
Number of Water Customers 2,351 2,585 2,473 2,539<br />
Number of Sewer Customers 2,037 3,201 3,318 3,413<br />
Public Safety:<br />
Police<br />
Calls for Service 36,965 43,889 44,987 46,216<br />
Fire<br />
Calls for Service 2,226 2,200 2,297 2,115<br />
Municipal Court<br />
Cases Filed 7,077 7,663 3,773 2,977<br />
Cases Closed 8,397 7,566 4,217 3,455<br />
Cases appealed - 2 3 -<br />
Warrant issued 3,696 3,958 3,032 2,259<br />
Community Services<br />
Code Enforcement<br />
Building Permits Issued<br />
Residential 56 87 106 168<br />
Value $ 8,358,180 $ 13,345,633 $ 17,251,329 $ 30,083,192<br />
Commercial 5 2 11 25<br />
Value $ 22,351,000 $ 601,833,170 $ 1,324,400 $ 6,766,841<br />
Animal Control<br />
Number of Animals 397 422 473 708<br />
Source: City Departments<br />
N/D No reliable data<br />
N/A Information not available<br />
(1) Represents a partial year<br />
85
Table 17<br />
2016 2017 2018 2019 2020 <strong>2021</strong><br />
16 55 122 124 135 162<br />
5 22 24 24 22 28<br />
N/D N/D 66.58 71.86 75.00 75.00<br />
N/D N/D 30.16 35.44 38.00 38.58<br />
N/D N/D 36.42 36.42 36.42 36.42<br />
2,751 2,923 3,016 3,098 3,297 3,438<br />
3,365 3,520 3,611 3,833 4,007 4,042<br />
48,000 48,156 41,410 60,793 71,261 60,244<br />
2,300 2,655 2,789 2,710 3,468 4,280<br />
2,800 2,487 2,278 3,213 2,689 2,591<br />
2,300 652 1,818 1,218 963 697<br />
- - - - - -<br />
2,181 2,303 2,275 3,637 1,714 2,454<br />
102 94 180 197 291 799<br />
$ 20,857,288 $ 38,822,818 $ 67,114,128 $ 68,791,522 $ 85,152,245 $ 73,501,527<br />
5 8 29 16 8 99<br />
$ 3,605,000 $ 14,907,191 $ 44,895,826 $ 10,652,239 $ 52,117,773 $ 54,300,832<br />
675 590 (1) 513 616 456 498<br />
86
CITY OF RED OAK, TEXAS<br />
CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM<br />
Table 18<br />
LAST TEN FISCAL YEARS<br />
Function/Program 2012 2013 2014 2015 2016 2017 2018 2019 2020 <strong>2021</strong><br />
Public Works:<br />
Utilities<br />
Buildings 1 1 1 1 1 1 1 1 1 1<br />
Public Safety:<br />
Police<br />
Stations 2 2 2 2 2 2 2 2 2 2<br />
Fire<br />
Stations 2 2 2 2 2 2 2 2 2 2<br />
Municipal Court<br />
Buildings 1 1 1 1 1 1 1 1 1 1<br />
Community Services<br />
Parks<br />
Acreage 176.5 176.5 176.5 176.5 176.5 176.5 176.5 176.5 176.5 182.7<br />
Parks<br />
Buildings 1 1 1 1 1 1 1 1 1 10<br />
Animal Control<br />
Buildings 1 1 1 1 1 1 1 1 1 1<br />
Source:<br />
N/D<br />
N/A<br />
City Departments<br />
No reliable data<br />
Information not available<br />
87
COMPLIANCE SECTION
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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL<br />
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN<br />
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE<br />
WITH GOVERNMENT AUDITING STANDARDS<br />
Honorable Mayor and<br />
Members of the City Council<br />
City of Red Oak, Texas<br />
We have audited, in accordance with auditing standards generally accepted in the United States of<br />
America and the standards applicable to financial audits contained in Government Auditing Standards issued<br />
by the Comptroller General of the United States, the financial statements of the governmental activities, the<br />
business-type activities, each major fund, and the aggregate remaining fund information of the City of Red<br />
Oak, Texas as of and for the year ended September 30, <strong>2021</strong>, and the related notes to the financial<br />
statements, which collectively comprise the City of Red Oak, Texas’ basic financial statements and have issued<br />
our report thereon dated June 2, 2022.<br />
Internal Control Over Financing <strong>Report</strong>ing<br />
In planning and performing our audit of the financial statements, we considered the City of Red Oak,<br />
Texas’ internal control over financial reporting (internal control) as a basis for designing audit procedures that<br />
are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements,<br />
but not for the purpose of expressing an opinion on the effectiveness of City of Red Oak, Texas’ internal<br />
control. Accordingly, we do not express an opinion on the effectiveness of City of Red Oak, Texas’ internal<br />
control.<br />
A deficiency in internal control exists when the design or operation of a control does not allow<br />
management or employees, in the normal course of performing their assigned functions, to prevent, or detect<br />
and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of<br />
deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the<br />
entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant<br />
deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a<br />
material weakness, yet important enough to merit attention by those charged with governance.<br />
Our consideration of internal control was for the limited purpose described in the first paragraph of<br />
this section and was not designed to identify all deficiencies in internal control that might be material<br />
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any<br />
deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses<br />
may exist that have not been identified.<br />
88
Compliance and Other Matters<br />
As part of obtaining reasonable assurance about whether the City of Red Oak, Texas’ financial<br />
statements are free from material misstatement, we performed tests of its compliance with certain provisions<br />
of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and<br />
material effect on the financial statements. However, providing an opinion on compliance with those<br />
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results<br />
of our tests disclosed no instances of noncompliance or other matters that are required to be reported under<br />
Government Auditing Standards.<br />
Purpose of this <strong>Report</strong><br />
The purpose of this report is solely to describe the scope of our testing of internal control and<br />
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s<br />
internal control or on compliance. This report is an integral part of an audit performed in accordance with<br />
Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this<br />
communication is not suitable for any other purpose.<br />
Waco, Texas<br />
June 2, 2022<br />
89
FINANCE DEPARTMENT<br />
200 Lakeview Parkway<br />
Red Oak, Texas 75154<br />
Redoaktx.org<br />
(972) 617-3638<br />
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS<br />
FOR THE YEAR ENDED SEPTEMBER 30, <strong>2021</strong><br />
Item 2020-001<br />
Condition:<br />
While the City’s purchasing policy includes guidance for competitive bids, the purchasing policy does not reflect<br />
the current process for procurement. Rapid growth in the City coupled with turnover in staff has led to the City’s<br />
purchasing policy becoming outdated. Expenditures were made with vendors who were not procured in<br />
accordance with State of Texas competitive bidding requirements.<br />
Current Status:<br />
This matter has been resolved. The City has engaged a purchasing specialist to provide a policy that will ensure<br />
purchasing requirements set by state and federal procurement laws are met. Once the policy is updated, the<br />
City will ensure that procurement processes align with the policy and will provide training to all City purchasers<br />
on both policy and process. The City will evaluate procurement related personnel duties and consider providing<br />
specific duties related to the review of purchasing requirements, providing guidance and support to department<br />
purchasers, and monitoring and reporting on all purchases applicable to competitive requirements from budget<br />
to expense. A review of current fiscal year purchases will be conducted and monitored to ensure that all<br />
competitive requirements are being met.<br />
Address or P.O. BOX 393 | Red Oak, TX 75154<br />
90<br />
Building Our Future From Our Heritage<br />
www.redoaktx.org
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