city of san marcos comprehensive financial report fy 2010-11

THE CITY OF SAN MARCOS, TEXAS

COMPREHENSIVE ANNUAL

FINANCIAL REPORT

YEAR ENDED SEPTEMBER 30, 2011

Issued by the City of San Marcos Finance Department

THIS PAGE LEFT BLANK INTENTIONALLY

CITY OF SAN MARCOS, TEXAS

COMPREHENSIVE ANNUAL FINANCIAL REPORT

YEAR ENDED SEPTEMBER 30, 2011 Page Number INTRODUCTORY SECTION Principal Public Officials .............................................................................................. i Certificate of Achievement ........................................................................................... ii Letter of Transmittal ..................................................................................................... iii – ix Organization Chart ........................................................................................................ x FINANCIAL SECTION Independent Auditors’ Report ....................................................................................... 1 – 2 Management’s Discussion and Analysis ...................................................................... 3 – 12 Basic Financial Statements Government-wide Financial Statements Statement of Net Assets .......................................................................................... 13 Statement of Activities ............................................................................................ 14 – 15 Fund Financial Statements Balance Sheet – Governmental Funds .................................................................... 16 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets ............................................................................. 17 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ................................................................ 18

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COMPREHENSIVE ANNUAL FINANCIAL REPORT (Continued)


Page Number

FINANCIAL SECTION (Continued) Fund Financial Statements (Continued) Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ......................................................................................... 19 Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund ............................................ 20 Statement of Net Assets – Proprietary Funds ......................................................... 21 Statement of Revenues, Expenses and Changes in Fund Net Assets – Proprietary Funds .................................................................. 22 Statement of Cash Flows – Proprietary Funds ........................................................ 23 – 24 Notes to Financial Statements .................................................................................... 25 – 53 Combining and Individual Fund Statements and Schedules General Fund: Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual ..................................................................... 54 – 57 Nonmajor Governmental Funds Combining Balance Sheet ....................................................................................... 58 – 61 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ................................................................................... 62 – 65

Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – Debt Service ............................................. 66

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YEAR ENDED SEPTEMBER 30, 2011 Page Number FINANCIAL SECTION (Continued) Nonmajor Governmental Funds (Continued) Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Community Development Block Grant ................................................................................... 67 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Police Grant ............................................ 68 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – WIC Project ............................................ 69 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Hotel Occupancy .................................... 70 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Municipal Court Technology ................................................................................................ 71 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Seized Assets .......................................... 72 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Municipal Court Security Fee ............................................................................................... 73 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Juvenile Case Manager Fee......................................................................................................... 74 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – TIRZ #2 .................................................. 75

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YEAR ENDED SEPTEMBER 30, 2011 Page Number FINANCIAL SECTION (Continued) Nonmajor Governmental Funds (Continued) Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – TIRZ #3 .................................................. 76 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Miscellaneous Grants ............................. 77 Nonmajor Enterprise Funds Combining Statement of Net Assets ....................................................................... 78 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ................................................................................ 79 Combining Statement of Cash Flows ..................................................................... 80 Internal Service Funds Statement of Net Assets .......................................................................................... 81 Statement of Revenues, Expenditures and Changes in Fund Net Assets ................................................................................ 82 Statement of Cash Flows ........................................................................................ 83

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YEAR ENDED SEPTEMBER 30, 2011 Page Table Number STATISTICAL SECTION (Unaudited) Net Assets by Component .............................................................................. 1 84 Changes in Net Assets ................................................................................... 2 85 – 86 Fund Balances – Governmental Funds .......................................................... 3 87 Changes in Fund Balances – Governmental Funds ....................................... 4 88 – 89 Assessed Value and Estimated Actual Value of Taxable Property ............... 5 90 Electric Utility Rate Comparison ................................................................... 6 91 Total Average kWh Per Month Comparison ................................................. 7 92 Total kWh Per Year Comparison ................................................................... 8 93 Ten Largest Electric Customers ..................................................................... 9 94 Direct and Overlapping Property Tax Rates .................................................. 10 95 Principal Property Taxpayers ......................................................................... 11 96 Property Tax Levies and Collections ............................................................. 12 97 Ratios of Outstanding Debt by Type ............................................................. 13 98 Ratios of General Bonded Debt Outstanding ................................................. 14 99 Direct and Overlapping Governmental Activities Debt ................................. 15 100 Legal Debt Margin Information ..................................................................... 16 101 – 102

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YEAR ENDED SEPTEMBER 30, 2011 Page Table Number STATISTICAL SECTION (Unaudited) Pledged Revenue Coverage ........................................................................... 17 103 Demographic and Economic Statistics .......................................................... 18 104 Principal Employers ....................................................................................... 19 105 Fulltime Equivalent City Government Employees ........................................ 20 106 Operating Indicators by Function/Program ................................................... 21 107 Capital Asset Statistics by Function/Program ................................................ 22 108

INTRODUCTORY SECTION

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THE CITY OF SAN MARCOS, TEXAS

COMPREHENSIVE ANNUAL FINANCIAL REPORT

YEAR ENDED

SEPTEMBER 30, 2011

CITY COUNCIL

Daniel Guerrero - Mayor Kim Porterfield – Place 1 Jude Prather – Place 2 Deputy Mayor Pro Tem Fred Terry – Place 3 Chris Jones – Place 4 Ryan Thomason – Place 5 Shane Scott – Place 6 Mayor Pro Tem

ADMINISTRATION

Jim Nuse – City Manager Collette Jamison – Assistant City Manager

Laurie Moyer – Assistant City Manager

Steve Parker – Director of Finance

Presented by The Finance Department

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Certificate of Achievement for Excellence

in Financial Reporting

Presented to

City of San Marcos Texas

For its Comprehensive Annual

Financial Report

for the Fiscal Year Ended

September 30, 2010

A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers

Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial

reports (CAFRs) achieve the highest standards in government accounting

and financial reporting.

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February 28, 2012 To the Honorable Mayor, Members of the City Council, And Citizens of the City of San Marcos, Texas: The Finance Department and City Manager’s office are pleased to submit the Comprehensive Annual Financial Report (the CAFR) of the City of San Marcos, Texas (the City) for the fiscal year ended September 30, 2011. This report is submitted in accordance with Section 3.16 of the City Charter. The financial statements are presented in conformity with generally accepted accounting principles (GAAP) as set forth by the Governmental Accounting Standards Board (GASB) and have been audited by independent auditors in accordance with generally accepted auditing standards. Pattillo, Brown and Hill, L.L.P., have issued an unqualified (“clean”) opinion on the City’s financial statements for the year ended September 30, 2011. The independent auditors’ report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditors’ report and provides a narrative introduction, overview and analysis of the basic financial statements. MD&A complements this transmittal letter and should be read in conjunction with it. The CAFR includes all funds of the City. The City provides a full range of services, which include police and fire protection; construction and maintenance of streets and other infrastructure; recreational activities and cultural events. In addition to general government activities, the City also provides electric, water, wastewater, storm water drainage, solid waste, WIC, and airport services which are included in the reporting entity. Management assumes full responsibility for the completeness and reliability of all information presented in this report, based upon a comprehensive framework of internal control that it established for this purpose. Because the cost of internal controls should not outweigh their anticipated benefits, the objective is to provide reasonable rather than absolute assurance that the financial statements are free of any material misstatements. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the various funds of the City. The disclosures included in this report are intended to provide the reader a good understanding of the City’s financial activities. The City is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act of 1984, the Single Audit Act Amendments of 1996 and U. S. Office of Management and Budget (OMB) Circular A-133. Information related to this single audit, including the Schedule of Expenditures of Federal Awards, findings and recommendations, and auditor’s reports on the internal control structure and compliance with applicable laws and regulations are included in the single audit report.

Transmittal Letter For the Fiscal Year Ended September 30, 2011 City of San Marcos San Marcos, Texas

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City of San Marcos Profile San Marcos is located on the IH-35 corridor 15 miles south of Austin and 30 miles north of San Antonio. The greater San Marcos region is situated between two of the fastest growing MSAs (Metropolitan Statistical Area) in the United States. The City has a 2010 census population of 44,894 with a daytime service population of 66,116. The City covers a total of 32.21 square miles within its city limits. The City operates under a council-manager form of government as provided by its Charter. The Mayor and six City Council members are elected “at large” on a non-partisan ballot. All members of the City Council, except the Mayor, are elected to staggered three-year terms. The Mayor is elected for a two-year term. The City Council appoints the City Manager, City Clerk, City Attorney, and Municipal Court Judge. The City Council also appoints members to certain boards, committees and commissions, as it deems necessary for the operation of the City. The City Manager is the chief executive officer for the City and has full responsibility for carrying out Council policies and administering City operations, including hiring department Directors and all other City employees. City service departments provide a full range of services including police and fire protection, health and social services, sanitation services, construction and maintenance of highways, streets and infrastructure, planning and zoning, recreational activities and cultural events, and general administrative services.

Economic Outlook and Financial Condition The City has remained stable and has not felt the impact of the recession and credit crisis to the extent of other parts of Texas and the nation. The Federal Reserve of Dallas in their Regional Economic Update for January 2012 reported:

“The Texas economy continues to expand at a moderate pace. Texas employment grew at a 2 percent rate in 2011. Government employment rose in November and December following four months of sharp declines. Housing indicators suggest that the sector continues to heal, and energy activity remains strong. However, a general slowing of exports has recently led to weakness in manufacturing activity, although exports rebounded somewhat in November. Jobs are projected to grow at about a 2 percent pace in 2012.”

Additionally, their Southwest Economy for the Fourth Quarter 2011 reported:

“As a majority of state economies entered recession in late 2007, Texas continued growing. And as most state economies emerged from recession in 2009-11, Texas outperformed the reminder of the country in employment growth by a full percentage point-about equal to Texas’ historical advantage over the past few decades. Texas’ favorable performance stems from a number of factors, including its oil and gas industry, a low cost of living, favorable demography, restrictive home-lending laws, and attractive business climate, and a housing sector that held up better than it did elsewhere.”

Tourism, retail and construction activities have continued to show sign of growth and prosperity. The City continues to benefit from other favorable conditions associated with San Marcos, including a stable, diversified economic base and a desirable location for work, destination, and living. In fact, the City of San Marcos was chosen in 2010 Business Week as one of the top 10 places to raise kids in the United States. Current low mortgage interest rates and new residential developments within San Marcos continue to bring in residential growth and commercial development. This continuing growth contributed to the City adding over $64 million in new valuations to the tax roll in 2011 and enjoying an overall increase of 4.1% in total valuations. The City expects this trend to continue as a result of the City’s commitment to targeted economic development efforts that focus on industry segments that complement the existing business mix.

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Retail Sales The City’s largest General Fund revenue source is sales tax generated from a well-balanced variety of business categories including automotive, construction, food stores, hotels/motels, department stores, retail stores, restaurants, utilities and rentals. The City of San Marcos recognized a 7.9% increase in sales tax collections in FY 2011. This increase is better that some cities in the region and in line with others. The City has seen a steady growth in sales tax revenues in recent years with the only decrease experienced in 2009, during the worst of the economic crisis. The City is perhaps best known for its Outlet Malls – Premium and Tanger – which have made San Marcos a popular tourist destination in Texas. The Outlet Malls provide access to hundreds of stores in the 1.2 million square feet complex and attracts shoppers from all over the United States and internationally. Employment San Marcos enjoyed a relatively low unemployment rate in 2011 of 5.0%. This rate was substantially lower than the Hays County rate of 6.3%, the state rate of 7.8% and the national rate of 8.9%. As a result of this low rate, San Marcos residents have greater job opportunities locally. Tourism Tourism is one of San Marcos’ largest industries and contributes significantly to the City’s economy. The City offers numerous tourist attractions, including the beautiful San Marcos River, and the City of San Marcos Conference Center that hosts over 20,000 out of town guests per year. The City’s has more actively promoted Sports Tourism since the completion of the 5 Mile Dam Soccer Complex in 2010, which has drawn many soccer tournaments to the complex along with attracting baseball and softball tournaments to the area fields. Hotels and motels in the area provide over 1,690 guest rooms which will increase to 1,770 by the end of 2012 with the opening of Candlewood Suites. More than 1,200 retail shops and boutiques are located throughout the City and a selection of over 165 restaurants is available. These services and facilities, complemented by the mild winter, have made San Marcos a popular vacation spot for tourists and winter visitors. Hotel/motel occupancy tax receipts increased 4.43% in FY 2010/11 over the previous year – reflecting consistent growth trend after anemic post 9/11 levels. The current forecast is that tourism will continue to experience positive gains, reflected by continued increases in occupancy, available rooms and room rates.

Major Initiatives In January 2011, the San Marcos City Council held a Visioning Workshop to explore important policy issues facing the City. At that meeting, five primary strategic initiatives were developed that will guide staff during the upcoming years. These initiatives include:

Sound Finances Customer Friendly Processes Big Picture Infrastructure San Marcos River Protection, Recreation and Maintenance Community Wellness/Encourage the Middle Class

Sound Finances Sound Finances is the number one priority focus for FY2011 and FY2012. In FY2011, the City’s planned capital projects were reprioritized and this reprioritization resulted in the deferral of bond issuance in FY 2011 and FY 2012 thus creating more capacity in General Fund Operations. Several other Sound Finance initiatives include:

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Creation of Self-Financed Capital Funds through various funding sources to provide a cash funding source for improvements to streets, parks, city facilities, and technology infrastructure.

Reduction in the General Fund’s reliance on the Enterprise Funds’ franchise fee revenue by lowering the fee from 9% of gross revenues to 7% over a period of four years.

Transition of Engineering/Capital Improvements Departmental operating expenses from bond proceeds to General Fund appropriations over a five year period.

Water/Wastewater Rates The City of San Marcos has recently completed a Water\Wastewater Rate Study. The results of the study showed that a 3% increase in Water was needed over the next 2 years as well as a 2.5% increase in Wastewater. The rate increase is primarily driven by standard operating cost increases and annual contract obligations. The City is continuing to explore future water supplies through the Hays County Public Utility Agency (HCPUA). This is a joint venture between San Marcos, Kyle, Buda, and some regional water corporations to firm up future water supplies through the year 2060. The City of San Marcos share of the total construction cost related to Phase 1 of the project is $41.3 Million and is anticipated for the year 2015. The City is still exploring water supply alternatives in hopes that this future expense can be reduced as much as possible. Long-Term Strategic Financial Planning Financial policies approved by the City Council guide the City’s financial management in planning for the future. Sufficient resources and adequate reserve levels will protect the City in the event of revenue shortfalls or increased expenditure needs. Fiscal integrity is the cornerstone upon which the City plans, monitors, and reports its financial activities. Particular emphasis is placed on maintaining the financial stability of the City. Each fiscal year, the budget is developed with this objective. Goals for financial stability enable the City to manage revenue shortfalls and cash flows to ensure continued operations, and to provide for unforeseen contingencies without impairing the level of quality service needed to respond to the community. Internal Controls The Finance Department is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles for local governments as prescribed by GASB and the American Institute of Certified Public Accountants (AICPA). The internal controls structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed the benefits likely to be derived and (2) the evaluation of costs and benefits requires estimates and judgments by management.

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Financial Rating The City of San Marcos had its underlying credit rating confirmed from Standard & Poor’s in October 2011. The City’s bond rating for Moody’s Investor Service and Standard & Poor’s is as follows:

Moody’s Investor Service Standard & Poor’s General Obligation Bonds and Certificates of Obligation

A1 AA-

Revenue Bonds A1 AA- Financial Reporting The City utilizes a computerized financial accounting system to capture all financial transactions and provide data for the preparation of this CAFR, including the audited financial statements. These statements present information on the financial position of the City and whether resources were adequate to cover the costs of providing services during the reporting period. The City’s award-winning CAFR is distributed to the City Council, executive management, federal and state agencies, bond rating agencies, and financial institutions, as well as others throughout the general public. Budgeting Process The annual budget serves as the foundation for the City’s financial planning and control. The City Council formally adopts the budget and legally allocates, or appropriates, available monies for the City’s various funds. Therefore, these funds have appropriated budgets, and budget to actual information is presented. The City Manager submits to the City Council a proposed budget for the fiscal year commencing the following October 1st. The budget includes proposed expenditures and the means of financing them. A public hearing is held prior to the budget’s final adoption in order to obtain taxpayer comments. The budget is legally enacted through passage of an ordinance. The ordinance sets the limit for expenditures during the fiscal year. The expenditure appropriations in the adopted budget are by department. The maximum legal expenditure permitted for the fiscal year is the total budget as adopted. Expenditure appropriations may be amended during the year. Upon the recommendation of the City Manager, and with the approval of the City Council: (1) transfers may be made from the appropriations for contingencies to departments; (2) transfers from fund balance accounts to departments or capital improvement program accounts; and (3) transfers from capital improvement program accounts to departments. Management control of budgets is further maintained through the use of an encumbrance accounting system. Encumbered amounts lapse at year-end. However, encumbrances generally are re-appropriated as part of the following year’s budget. As demonstrated by the statements and schedules included in the financial section of this report, the City continues meeting its responsibility for sound financial management. Single Audit As a recipient of federal, state and county financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure compliance with applicable laws and regulations related to those programs. This internal control structure is subject to periodic evaluation by management and the internal audit staff of the City.

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As a part of the City’s single audit, described earlier, tests are made to determine the adequacy of the internal control structure, including that portion related to federal financial assistance programs, as well as to determine that the City has complied with applicable laws and regulations. The results of the City’s single audit for the fiscal year ended September 30, 2010, provided no instances of material weaknesses in the internal control structure or significant violations of applicable laws and regulations. Cash Management Cash temporarily idle during the year was invested in U. S. Agency securities, Certificates of Deposit, Local Government Pools, Commercial Paper and Money Market Mutual Funds. At year-end, the carrying amount of the City’s deposits was $154.1 million. The U. S. government agency securities had a market value of $102,882,278 as of September 30, 2011, and a book value of $102,996,453. These investments are carried at book value. The City’s investment policy is to minimize credit and market risks while maintaining a competitive yield on its portfolio. Accordingly, deposits were either insured by federal depository insurance or collateralized. All collateral on deposits were held by the City’s agent in the City’s name. All investments are in compliance with the Public Funds Investment Act. Risk Management The City of San Marcos maintains a risk management program to prevent and mitigate financial loss. Components of the program include the identification of exposure to loss and the selection, implementation and monitoring of risk management techniques. Prevention measures include activities such as training, annual review of assets and exposures, driving and drug testing programs, safety awareness events and the “Safety Coach” Safety Leadership Development Program. Post incident measures designed to mitigate losses include incident investigation and management of all claims through final disposition. A cornerstone of our commitment to managing workers compensation claims is a return to work program. In rating a worker’s compensation program, an underwriter begins at 100% which represents premium modifier of an average employer. This is ‘modified’ based on a specific employer’s claims history. During this reporting period the City has achieved a 22% premium modifier. Collectively, risk management programs have resulted in direct savings of over one million dollars while improving the health, safety, and well-being of City Employees. The City’s Safety Program has been recognized by awards from the Public Risk Management Association (PRIMA) and the National Safety Council (NSC). The City participates in the National Safety Council Annual Awards Program which presents awards for occupational safety and health, safe worker and safe drivers. Seventeen departments were recognized for maintaining a perfect record or a reduction in frequency of lost time injuries with an Award for Excellence. Individual employees who serve in positions that are exposed to hazardous conditions and have a long work history without an accident are recognized at two levels by the National Safety Council: safe worker and safe driver. Three employees were recognized in each category for safe worker and safe driving this year. Each October the City holds an Annual Employee Benefit, Safety and Wellness Expo. The event includes over 55 Health and Safety vendors including safety demonstrations. Over 300 employees participated in the Expo this year. Other Information Independent Audit The City Charter requires an annual audit of the books, accounts, financial records and transactions of all administrative departments of the City by independent certified public accountants selected by the City Council. This requirement has been complied with, and the independent auditor’s report by Pattillo, Brown & Hill, L.L.P., Certified Public Accountants, has been included in this report.

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Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for the Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended September 30, 2010. The Certificate of Achievement is a prestigious national award-recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized comprehensive annual financial report whose contents conform to program standards. That report satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements. This report will once again be submitted to the GFOA for this annual reward. We are also proud to report that the GFOA has presented the Distinguished Budget Presentation Award to the City of San Marcos for each of the past 27 years. Acknowledgements The preparation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Department. Each member of the department has our sincere appreciation for the contributions made in the preparation of this report. We would also like to thank the members of the City Council and the citizens of the City of San Marcos for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. In conclusion, we would like to thank the City’s auditing firm, Pattillo, Brown & Hill, L.L.P., for their ongoing efforts, not only in the performance of the City’s annual audit, but for their close working relationship in advising the City when questions arise throughout the year. They have been an excellent source of information for preparation of the report.

FINANCIAL SECTION

INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and Members of City Council City of San Marcos, Texas

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

business-type activities, each major fund, and the aggregate remaining fund information of City of San Marcos, Texas (the “City”), as of and for the year ended September 30, 2011, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United

States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects,

the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information, and the respective budgetary comparison for the General Fund of the City, as of September 30, 2011, and the respective changes in financial position, and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

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

February 28, 2012, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

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401 WEST HIGHWAY 6 P. O. BOX 20725 WACO, TX 76702-0725 (254) 772-4901 FAX: (254) 772-4920 www.pbhcpa.com AFFILIATE OFFICES: BROWNSVILLE, TX (956) 544-7778 HILLSBORO, TX (254) 582-2583

TEMPLE, TX (254) 791-3460 ALBUQUERQUE, NM (505) 266-5904

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Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and analysis on pages 3 through 12 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

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

collectively comprise the City’s financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and budgetary schedules, and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual nonmajor fund financial statements and budgetary schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

February 28, 2012

MANAGEMENT’S DISCUSSION AND ANALYSIS

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MANAGEMENT’S DISCUSSION AND ANALYSIS

SEPTEMBER 30, 2011 As management of the City of San Marcos, we offer readers of the City of San Marcos’ financial statements this narrative overview and analysis of the financial activities for the City of San Marcos for the fiscal year ended September 30, 2011. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages iii – viii of this report. FINANCIAL HIGHLIGHTS

The assets of the City of San Marcos exceeded its liabilities at the close of the fiscal year ending September 30, 2011, by $226 million (net assets). Of this amount, $65.3 million (unrestricted net assets) may be used to meet the government’s ongoing obligations to citizens and creditors.

As of September 30, 2011, the City of San Marcos’ governmental funds reported combined ending fund balances of $65.9 million, a decrease of $(14.7) million in comparison with the prior fiscal year.

At the end of the current fiscal year, unassigned fund balance for the General Fund was $14 million, or 33% of total General Fund expenditures.

The City’s total debt decreased by $(11.9) million during the current fiscal year. The City issued $17.2 million in General Obligation Refunding Bonds.

OVERVIEW OF THE FINANCIAL STATEMENTS The discussion and analysis serves as an introduction to the City of San Marcos’ basic financial statements. The City of San Marcos’ basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The comprehensive annual financial report (CAFR) also contains other supplementary information in addition to the basic statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of San Marcos’ finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City of San Marcos’ assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of San Marcos is improving or deteriorating.

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The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but not used vacation leave). The statement of net assets and the statement of activities are prepared utilizing the accrual basis of accounting. In the statement of net assets and the statement of activities, the City’s operations are divided into two kinds of activities:

Governmental Activities – Most of the City’s basic services are reported here, including the police, fire, libraries, planning and development, transportation, parks and recreation, and general administration. Property tax, sales tax and franchise fee revenues finance most of these activities.

Business-type Activities – The City charges a fee to customers to help cover all or most of the cost of certain services it provides. The City’s Electric, Water and Wastewater, Airport, Drainage and Waste Collection Funds are reported here.

The government-wide financial statements can be found on pages 13 – 15 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of San Marcos, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The fund financial statements provide detailed information about the most significant funds – not the City as a whole. Some funds are required to be established by state law and by bond covenants. However, the City establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other money. The City’s two kinds of funds – governmental and proprietary – utilize different accounting approaches. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds are more narrow than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. The relationships or differences between governmental activities (reported in the statement of net assets and the statement of activities) and governmental funds is detailed in a reconciliation following the fund financial statements.

5

The City of San Marcos maintains 19 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Capital Projects Fund, and Debt Service Fund, all of which are considered to be major funds. Data from the other 16 governmental funds are combined into a single, aggregated nonmajor fund presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in the CAFR The basic governmental fund financial statements can be found on pages 16 – 20 of this report. Proprietary funds. The City charges customers for certain services it provides. These services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net assets and the statement of activities. The City of San Marcos maintains five individual enterprise funds: Electric, Water and Wastewater, Airport, Drainage, and Waste Collection. The fund financial statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Electric, Water and Wastewater, and Stormwater Drainage Funds, all of which are considered to be major funds of the City. Data from the other two enterprise funds are combined into a single, aggregated nonmajor fund presentation. Individual fund data for each of these nonmajor enterprise funds is provided in the form of combining statements elsewhere in the CAFR. The basic proprietary funds financial statements can be found on pages 21– 24 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 25 – 53 of this report. Other Information. In addition to the basic financial statements and accompanying notes, this report presents the combining statements referred to earlier in connection with nonmajor governmental and enterprise funds, comparative information for the General Fund and budgetary information to demonstrate the City’s budgetary compliance. Combining and individual fund statements and schedules can be found on pages 54 – 83 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS The City’s combined net assets were $226.3 million as of September 30, 2011. Analyzing the net assets and net expenses of governmental and business-type activities separately, the business-type activities net assets are $123.2 million. This analysis focuses on the net assets (Table 1) and changes in net assets of the City’s governmental and business-type activities (Table 2).

6

By far, the largest portion of the City’s net assets (67%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The remaining balance of unrestricted net assets ($65.3 million) may be used to meet the government’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of San Marcos is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year

TABLE 1

CITY OF SAN MARCOS’ NET ASSETS

2011 2010 2011 2010 2011 2010

Current and other assets 82,605,912$ 96,191,952$ 98,007,233$ 105,673,439$ 180,613,145$ 201,865,391$

Capital assets 176,108,824 162,660,116 164,989,010 161,484,746 341,097,834 324,144,862

Total assets 258,714,736 258,852,068 262,996,243 267,158,185 521,710,979 526,010,253

Long-term liabilities

outstanding 143,129,795 147,884,495 129,152,626 135,332,293 272,282,421 283,216,788

Other liabilities 12,556,695 10,724,169 10,621,478 11,023,158 23,178,173 21,747,327

Total liabilities 155,686,490 158,608,664 139,774,104 146,355,451 295,460,594 304,964,115

Net assets:

Invested in capital assets,

net of related debt 74,247,634 66,361,134 76,737,408 84,316,321 150,985,042 150,677,455

Restricted 9,972,700 11,086,463 - - 9,972,700 11,086,463

Unrestricted 18,807,912 22,795,807 46,484,731 36,486,413 65,292,643 59,282,220

Total net assets 103,028,246$ 100,243,404$ 123,222,139$ 120,802,734$ 226,250,385$ 221,046,138$

Governmental Activities Business-type Activities Totals

Governmental activities. The City’s governmental revenues decreased when compared to the prior year by(2.7%) or $(1,451,463) This decrease is primarily due to the TxDot grand funds received in 2010 for the construction of the Wonder World Drive Pass Through Toll project. Property tax revenue remained stable but the City saw a slight decrease in existing property valuations along with the addition of new property throughout the City. The assessed value of the property in the City decreased by $30.7 million or 1.2% as compared to the prior year while the City property tax rate of $0.5302 per per $100 assessed valuation remained the same as in the prior year. This decrease in property taxes was offset by an increase in sales tax of $1.45 million and a total collection of $19.9 million for the year.

7

The most significant governmental expense for the City was in providing for public safety, which incurred expenses of $18.0 million. The public safety expense increase was primarily due to the funding of the second year of the meet and confirm contract entered into in 2010 and routine step increases. Business-type activities. Revenues of the City’s business-type activities were $83.2 million for the fiscal year ending September 30, 2011. Expenses for the City’s business-type activities were $74.5 million for the year, resulting in a net increase in net assets of $8.7 million. The net revenues are the result of several factors, including the following:

The City’s Water and Wastewater System recorded charges for services of $27.0 million, which exceeded operating expenses of $21.7 million. The most significant expenses of the Water and Wastewater Fund $7.1 million for contracted services for the operation of the surface water treatment plant, and $3.3 million in salaries and benefits.

The City’s Electric distribution system recorded charges for services of $48.5 million,

which exceeded operating expenses $42.9 million. The most significant expense of the Electric Fund was $34.8 million for the purchase of power.

The increase in net assets from business-type activities was primarily due to increased

revenue from water, sewer, and electric sales due to the unseasonably hot and dry spring and summer weather. Capital contributions of water and sewer infrastructure as new construction activity continues in the City.

Governmental and business-type activities decreased the City's net assets (Table 2) by $(5.2) million.

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TABLE 2

CITY OF SAN MARCOS’ CHANGES IN NET ASSETS

2011 2010 2011 2010 2011 2010

Revenues:

Program revenues:

Charges for services 3,576,394$ 3,392,192$ 79,715,074$ 77,262,042$ 83,291,468$ 80,654,234$

Operating grants

and contributions 2,619,600 3,145,119 - - 2,619,600 3,145,119

Capital grants

and contributions 1,149,409 2,373,110 1,085,830 852,403 2,235,239 3,225,513

General revenues:

Property taxes, levied

for general purposes 5,839,764 5,874,129 - - 5,839,764 5,874,129

Property taxes, levied

for debt service 8,396,878 8,457,874 - - 8,396,878 8,457,874

Sales taxes 19,854,399 18,398,707 - - 19,854,399 18,398,707

Franchise taxes 1,447,569 1,477,463 - - 1,447,569 1,477,463

Hotel/motel taxes 2,296,276 2,198,965 - - 2,296,276 2,198,965

Investment earnings 319,091 587,646 376,915 569,393 696,006 1,157,039

Other 959,702 1,986,767 2,029,511 1,337,440 2,989,213 3,324,207

Total revenues 46,459,082 47,891,972 83,207,330 80,021,278 129,666,412 127,913,250

Expenses:

General government 15,419,706 14,811,677 - - 15,419,706 14,811,677

Public safety 18,040,389 22,337,053 - - 18,040,389 22,337,053

Community service 10,092,399 10,463,722 - - 10,092,399 10,463,722

Interest and fiscal charges 6,412,611 6,525,172 - - 6,412,611 6,525,172

Electric - - 43,413,456 45,746,937 43,413,456 45,746,937

Water and sewer - - 26,701,908 25,878,300 26,701,908 25,878,300

Airport - - 710,558 694,070 710,558 694,070

Drainage - - 1,897,978 1,959,180 1,897,978 1,959,180

Waste collection - - 1,773,160 1,463,780 1,773,160 1,463,780

Total expenses 49,965,105 54,137,624 74,497,060 75,742,267 124,462,165 129,879,891

Increases in net assets

before transfers 3,506,023)( 6,245,652)( 8,710,270 4,279,011 5,204,247 1,966,641)(

Transfers 6,290,865 6,119,618 6,290,865)( 6,119,618)( - -

Increase in net assets 2,784,842 126,034)( 2,419,405 1,840,607)( 5,204,247 1,966,641)(

Net assets, beginning 100,243,404 100,369,438 120,802,734 122,643,341 221,046,138 223,012,779

Net assets, ending 103,028,246$ 100,243,404$ 123,222,139$ 120,802,734$ 226,250,385$ 221,046,138$


9

FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS As noted earlier, the City of San Marcos uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City of San Marcos’ governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of San Marcos’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City of San Marcos’ governmental funds reported combined fund balances of $65.9 million, a decrease of $(14.7) million in comparison with the prior year. Approximately 20.4% of this total amount constitutes unassigned fund balance, which is available for use within the City’s fund designation and fiscal policies. The remainder of fund balance is restricted to indicate that it is not available for new spending because it has already been committed 1) to liquidate contracts and purchase prepaid expenses of the prior period, 2) to pay debt service, 3) for capital projects, 4) to generate income to pay for the perpetual care of the municipal cemetery, 5) to be used for general government, or 6) to be used for community services. The General Fund is the main operating fund of the City of San Marcos. At the end of the current fiscal year, unassigned fund balance of the General Fund was $13.6 million, while total fund balance reached $13.8 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 33.4% of total General Fund expenditures. In the General Fund, the City budgeted for a fund balance decrease in the current year of $(1,267,663). It is one of the City’s financial policies to maintain fund balance in the General Fund equal to 90 days’ expenditures and when those balances exceed the 90-day target to transfer the excess to Capital Project Funds to fund pay-as-you-go capital expenditures. Even though use of fund balance was budgeted, $424,141 was added to fund balance at year-end. This is primarily attributable to actual expenditures being less than originally budgeted. The variance between the budgeted use and the actual addition to fund balance amounted to a $1,691,804 million increase to fund balance as compared to budget. The Debt Service Fund Balance decreased by $(1,743,639) from 2010 to 2011. This fund balance reduction was primarily due to the timing of the TxDot Pass Though Toll revenue and the advance payments from the refunding transaction. Progress on construction in the Capital Projects Funds contributed to the net change in fund balances of $(13,182,442).

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TABLE 3

GOVERNMENTAL TAX REVENUES

Increase2011 2010 (Decrease)

Property 14,260,359$ 14,325,877$ 65,518)$(

Sales 19,854,399 18,398,707 1,455,692

Franchise 1,184,223 1,210,874 26,651)(

Hotel/motel 2,296,276 2,198,965 97,311

Mixed drink 263,346 266,589 3,243)(

37,858,603$ 36,401,012$ 1,457,591$

Other factors concerning the finances of governmental funds have already been addressed in the discussion of the City’s governmental activities in the government-wide financial statements. Proprietary funds. The City of San Marcos’ proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net assets of Water and Wastewater Fund at the end of the year amounted to $32.5 million, and those for the Electric Fund amounted to $10.8 million. Other factors concerning the finances of these two funds have already been discussed in the discussion of the City of San Marcos’ business-type activities in the government-wide financial statements. GENERAL FUND BUDGETARY HIGHLIGHTS For FY 2011, actual expenditures on a budgetary basis were $40.6 million compared to the budget amount of $41.4 million. The $0.8 million positive variance was due to savings achieved through salary vacancy savings and conservative spending. For FY 2011, actual revenues on a budgetary basis were $35.4 million as compared to the budget amount of $34.5 million. The majority of the $910.921 variance was due to sales tax revenue collections above budgeted amounts. The City of San Marcos has a General Fund balance of $13.8 million as of the fiscal year-end, compared to the budgeted fund balance of $12.1 million. The variance in fund balance is primarily due to cost containment measures implemented by management and conservative budgetary practices. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. At the end of the fiscal year 2011, the City had $471.2 million invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, roads, bridges, and water and wastewater lines. (See Table 4 below.) For more detailed information on capital assets, please refer to the accompanying notes 38 – 39.

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TABLE 4

CITY OF SAN MARCOS’ CAPITAL ASSETS AT YEAR-END (Net of Accumulated Depreciation)

2011 2010 2011 2010 2011 2010

Land 7,224,964$ 7,224,964$ 1,446,029$ 1,446,029$ 8,670,993$ 8,670,993$

Buildings 36,544,215 31,903,631 6,369,767 6,369,767 42,913,982 38,273,398

Improvements other

than buildings 49,931,357 41,028,850 165,019,670 150,240,907 214,951,027 191,269,757

Equipment 22,255,300 21,447,965 8,418,119 7,873,904 30,673,419 29,321,869

Construction in

progress 86,332,855 86,204,170 62,287,907 65,938,055 148,620,762 152,142,225

Infrastructure 25,361,436 21,086,436 - - 25,361,436 21,086,436

Total capital assets 227,650,127$ 208,896,016$ 243,541,492$ 231,868,662$ 471,191,619$ 440,764,678$


Long-term debt. At year-end, the City had $264.7 million in General Obligation Bonds, Combination Tax and Revenue Certificates of Obligations and Revenue Bonds outstanding as compared to $276.6 million at the end of the prior fiscal year, a decrease of (4.3%). For more detailed information on long term debt, please refer to the accompanying notes on pages 41 – 44.

TABLE 5

CITY OF SAN MARCOS’ OUTSTANDING DEBT AT YEAR-END

2011 2010 2011 2010 2011 2010

General obligation bonds 26,980,000$ 17,480,000$ -$ -$ 26,980,000$ 17,480,000$

Certificates of obligation 109,235,000 124,305,000 - - 109,235,000 124,305,000

Revenue bonds - - 128,450,000 134,825,000 128,450,000 134,825,000

136,215,000$ 141,785,000$ 128,450,000$ 134,825,000$ 264,665,000$ 276,610,000$


During this fiscal year, General Obligation Refunding totaling $17.2 were issued to refund some previous debt issues. The City has maintained its AA- rating from Standard & Poor’s Corporation, and its A1 rating from Moody’s Investor Services on its tax supported debt. The City is permitted by Article XI, Section 5, of the State of Texas Constitution to levy taxes up to $2.50 per $100 assessed valuation for general governmental services including the payment of principal and interest on general obligation long-term debt. The current ratio of net tax-supported debt to assessed value of all taxable property is 2.85%. The City sponsors an employee benefit plan that provides partially self-insured medical and self-insured dental coverage to employees and voluntary coverage to their participating dependents. The plan is designed to provide a specified level of coverage, with excess insurance coverage provided by specific and aggregate reinsurance. The City’s maximum medical claim exposure is limited to $100,000 in claims per covered person and a dental benefit of $1,250 per covered person per year. Aggregate coverage based on a monthly enrollment limits the medical claims exposure. Claim liability was $897,277 at September 30, 2011, compared to $862,055 at September 30, 2010.

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ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The City’s elected and appointed officials considered many factors when setting the fiscal year 2012 budget, tax rates, and fees that will be charged. In January 2011, the San Marcos City Council held a Visioning Workshop to explore important policy issues facing the City. At that meeting, five primary strategic initiatives were developed that will guide staff during the upcoming years. These initiatives include:

Sound Finances Customer Friendly Processes Big Picture Infrastructure San Marcos River Protection, Recreation and Maintenance Community Wellness/Encourage the Middle Class

These strategic initiatives were used as the basis for setting and adopting the operating budget for fiscal year 2012. The total FY 2012 combined budget appropriation is $149.6 million. This represents an increase of $1.9 million or 1.0% over the FY 2011 budget. The increase in the annual budget is largely attributed to the cost of purchase power in the Electric Utility Fund. The General Fund’s largest single revenue source is sales taxes. The City collects a 1.5-cent sales tax on all taxable goods in the City. Sales tax revenue for FY 2012 is budgeted at $19.5 million. The property tax rate for FY 2012 is $0.5302 per $100 valuation. Of this tax rate, 44.0% or $0.2332 is used for operations and maintenance activities. The remaining 64.0% or $0.2970 is used for debt service. The operations and maintenance portion of property tax revenue for FY 2012 is estimated to be $6.3 million. The largest revenue source for the Water and Wastewater Fund is water sales, at $13.69 million. The base rate for FY 2012 is $19.55 for the first 2,000 gallons for a 5/8” – 3/4” meter in the city limits. This rate increases as the meter size increases and/or if the meter is located outside of the city limits. This rate was increased 3.0% for FY2012. The second largest revenue source for the Water and Wastewater Fund is wastewater charges, at $12.6 million. The base rate for FY 2012 is $22.98 for the first 2,000 gallons. This rate was increased 2.5% for FY2012. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Finance Department, at the City of San Marcos, 630 E. Hopkins, San Marcos, TX 78666.

BASIC FINANCIAL STATEMENTS

Governmental Business-typeActivities Activities Total

ASSETS Cash and equivalents 8,235,200$ 5,148,307$ 13,383,507$ Investments 62,965,940 77,985,695 140,951,635 Receivables (net of allowance for uncollectible): Accounts 4,897,316 10,882,848 15,780,164 Taxes 3,809,972 - 3,809,972 Other 46,875 - 46,875 Due from other governments 1,082,045 3,519 1,085,564 Internal balances 789,844)( 789,844 - Inventories 106,989 958,320 1,065,309 Prepaid items 121,453 20,722 142,175 Deferred charges 2,129,966 2,217,978 4,347,944 Capital assets: Land 7,224,964 1,446,029 8,670,993 Construction in progress 86,332,855 62,287,907 148,620,762 Buildings 36,544,215 6,369,767 42,913,982 Improvements other than buildings 49,931,357 165,019,670 214,951,027 Equipment 22,255,300 8,418,119 30,673,419 Infrastructure 25,361,436 - 25,361,436

Less: accumulated depreciation 51,541,303)( 78,552,482)( 130,093,785)(

Total capital assets 176,108,824 164,989,010 341,097,834

Total assets 258,714,736 262,996,243 521,710,979

LIABILITIES Accounts payable 2,952,514 6,571,468 9,523,982 Accrued liabilities 2,199,238 339,389 2,538,627 Unearned revenues 6,634,649 21,921 6,656,570 Customer deposits 7,408 2,875,072 2,882,480 Accrued interest payable 762,886 813,628 1,576,514 Noncurrent liabilities: Due within one year 6,185,255 7,349,520 13,534,775

Due in more than one year 136,944,540 121,803,106 258,747,646

Total liabilities 155,686,490 139,774,104 295,460,594

NET ASSETS Invested in capital assets, net of related debt 74,247,634 76,737,408 150,985,042 Restricted for: Grant requirements 220,576 - 220,576 Public safety 271,389 - 271,389 Debt service 7,135,423 - 7,135,423 Future convention center 1,320,918 - 1,320,918 Park and cemetery trust: Nonexpendable 1,024,394 - 1,024,394

Unrestricted 18,807,912 46,484,731 65,292,643

Total net assets 103,028,246$ 123,222,139$ 226,250,385$

The accompanying notes are an integral part of these financial statements.


STATEMENT OF NET ASSETS

SEPTEMBER 30, 2011

13

Operating CapitalCharges Grants and Grants and

Functions/Programs Expenses for Services Contributions Contributions

Primary government Governmental activities: General government 15,419,706$ 1,283,941$ 481,073$ 303,869$ Public safety 18,040,389 1,653,099 505,547 - Community service 10,092,399 639,354 1,632,980 845,540 Interest on long-term debt 6,412,611 - - -

Total governmental activities 49,965,105 3,576,394 2,619,600 1,149,409

Business-type activities: Electric 43,413,456 48,453,727 - - Water and wastewater 26,701,908 26,986,572 - 1,085,830 Airport 710,558 256,710 - - Drainage 1,897,978 2,108,913 - - Waste collection 1,773,160 1,909,152 - -

Total business-type activities 74,497,060 79,715,074 - 1,085,830

Total primary government 124,462,165$ 83,291,468$ 2,619,600$ 2,235,239$

General revenues:Taxes:

Property taxes, levied for general purposesProperty taxes, levied for debt serviceSalesFranchise taxesHotel/motelOther

Investment earningsMiscellaneousGain on sale of capital assets

Transfers

Total general revenues and transfers

Change in net assets

Net assets - beginning

Net assets - ending


Program Revenue


STATEMENT OF ACTIVITIES

FOR THE YEAR ENDED SEPTEMBER 30, 2011

14

Governmental Business-typeActivities Activities Total

13,350,823)$( -$ 13,350,823)$( 15,881,743)( - 15,881,743)(

6,974,525)( - 6,974,525)( 6,412,611)( - 6,412,611)(

42,619,702)( - 42,619,702)(

- 5,040,271 5,040,271 - 1,370,494 1,370,494 - 453,848)( 453,848)( - 210,935 210,935 - 135,992 135,992

- 6,303,844 6,303,844

42,619,702)( 6,303,844 36,315,858)(

5,839,764 - 5,839,764 8,396,878 - 8,396,878

19,854,399 - 19,854,399 1,447,569 - 1,447,569 2,296,276 - 2,296,276

85,207 - 85,207 319,091 376,915 696,006 753,366 2,036,755 2,790,121 121,129 7,244)( 113,885

6,290,865 6,290,865)( -

45,404,544 3,884,439)( 41,520,105

2,784,842 2,419,405 5,204,247

100,243,404 120,802,734 221,046,138

103,028,246$ 123,222,139$ 226,250,385$

Primary GovernmentNet (Expense) Revenue and Changes in Net Assets

15

Capital Debt OtherGeneral Projects Service Governmental Total

ASSETS Cash and cash equivalents -$ 5,245,712$ -$ 1,585,765$ 6,831,477$ Investments 13,840,793 34,117,985 7,999,598 3,911,579 59,869,955 Receivables (net of allowance for uncollectibles): Accounts 1,642,868 5,973 3,030,000 150,578 4,829,419 Taxes 2,609,574 - 554,059 646,339 3,809,972 Loans - - - 46,875 46,875 Due from other funds 1,816,076 3,790,301 - 203,740 5,810,117 Due from other governments - - - 1,082,045 1,082,045 Inventories 106,989 - - - 106,989

Prepaid items 107,926 1,000 - 12,527 121,453

Total assets 20,124,226$ 43,160,971$ 11,583,657$ 7,639,448$ 82,508,302$

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 1,185,711$ 583,342$ 233$ 273,513$ 2,042,799$ Accrued liabilities 1,491,633 149,635 - 46,502 1,687,770 Deferred revenue 762,988 - 3,554,876 3,464,806 7,782,670 Customer deposits 7,408 - - - 7,408

Due to other funds 2,872,662 184,253 893,125 1,125,731 5,075,771

Total liabilities 6,320,402 917,230 4,448,234 4,910,552 16,596,418

Fund balances: Nonspendable for: Inventories 106,989 - - - 106,989 Prepaid items 107,926 - - 12,527 120,453 Restricted for: General government - - - 96,119 96,119 Public safety - - - 274,666 274,666 Community services - - - 1,442,098 1,442,098 Cemetery memorial - - - 1,024,394 1,024,394 Capital projects - 42,243,741 - - 42,243,741 Debt service - - 7,135,423 - 7,135,423

Unassigned 13,588,909 - - 120,908)( 13,468,001

Total fund balances 13,803,824 42,243,741 7,135,423 2,728,896 65,911,884

Total liabilities and

fund balances 20,124,226$ 43,160,971$ 11,583,657$ 7,639,448$ 82,508,302$



BALANCE SHEET

GOVERNMENTAL FUNDS

SEPTEMBER 30, 2011

16

Total fund balance, governmental funds 65,911,884$

Amounts reported for governmental activities in the Statement of Net Assets are different because:

Capital assets used in governmental activities are not current financial resources andtherefore are not reported in this fund financial statement, but are reported in thegovernmental activities of the Statement of Net Assets. 176,035,624

Certain other long-term assets are not available to pay current period expenditures andtherefore are not reported in this fund financial statement, but are reported in thegovernmental activities of the Statement of Net Assets. 1,215,918

The assets and liabilities of certain internal service funds are not included in the fundfinancial statement, but are included in the governmental activities of the Statement ofNet Assets. 2,065,803

Long-term liabilities, including bonds payable, are not due and payable in the currentperiod and therefore are not reported in the funds. 142,200,983)(

Net Assets of Governmental Activities in the Statement of Net Assets 103,028,246$



RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEETTO THE STATEMENT OF NET ASSETS

SEPTEMBER 30, 2011

17

Capital Debt Other

General Projects Service Governmental Total

REVENUES Taxes 26,808,963$ -$ 8,360,709$ 2,688,931$ 37,858,603$

Licenses and permits 994,123 - - - 994,123

Fees and penalties 1,537,951 - - 182,718 1,720,669

Charges for services 5,021,489 - - - 5,021,489

Intergovernmental 182,525 - - 3,171,681 3,354,206

Interest on investments 48,096 243,001 19,547 8,449 319,093

Miscellaneous 844,032 231,552 198,946 17,328 1,291,858

Total revenues 35,437,179 474,553 8,579,202 6,069,107 50,560,041

EXPENDITURES Current:

General government 14,890,128 460,051 - 400,530 15,750,709

Public safety 19,758,262 - - 532,794 20,291,056

Community service 5,975,860 - - 3,477,986 9,453,846

Capital outlay 16,958 14,703,002 - 539,348 15,259,308

Debt service:

Principal - - 5,870,000 - 5,870,000

Interest and fiscal charges - - 6,351,363 - 6,351,363

Bond issuance costs - - 152,734 - 152,734

Total expenditures 40,641,208 15,163,053 12,374,097 4,950,658 73,129,016

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES 5,204,029)( 14,688,500)( 3,794,895)( 1,118,449 22,568,975)(

OTHER FINANCING SOURCES (USES) Transfers in 7,628,731 1,583,142 1,896,370 41,282 11,149,525

Transfers out 2,021,352)( 177,422)( - 1,347,339)( 3,546,113)(

Insurance recoveries - 100,338 - - 100,338

Sale of capital assets 20,791 - - - 20,791

Capital related debt issued - - 11,245,000 - 11,245,000

Payment to refunded bond escrow agent - - 11,680,362)( - 11,680,362)(

Premium on debt issued - - 590,248 - 590,248

Total other financing sources and uses 5,628,170 1,506,058 2,051,256 1,306,057)( 7,879,427

NET CHANGE IN FUND BALANCES 424,141 13,182,442)( 1,743,639)( 187,608)( 14,689,548)(

FUND BALANCES, BEGINNING 13,379,683 55,426,183 8,879,062 2,916,504 80,601,432

FUND BALANCES, ENDING 13,803,824$ 42,243,741$ 7,135,423$ 2,728,896$ 65,911,884$



STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDS


18

Net change in fund balances - total governmental funds: 14,689,548)$(

Governmental funds report capital outlays as expenditures. However, in the statement ofactivities the cost of those assets is allocated over their estimated useful lives and reportedas depreciation expense. This is the amount by which capital outlays exceededdepreciation in the current period. 13,375,508

Revenues in the statement of activities that do not provide current financial resources arenot reported as revenues in the funds. 64,471

The issuance of long-term debt (e.g., bonds, leases) provides current financial resources togovernmental funds, while the repayment of the principal of long-term debt consumes thecurrent financial resources of governmental funds. Neither transaction, however, has anyeffect on net assets. 4,824,898

Some expenses reported in the statement of activities do not require the use of currentfinancial resources and, therefore, are not reported as expenditures in governmental funds. 49,051

Internal service funds are used by management to charge the costs of certain activities,such as fleet maintenance and information technology, to individual funds. The netrevenue (expense) of certain internal service funds is reported with governmental activities. 839,538)(

Change in net assets of governmental activities 2,784,842$



Amounts reported for Governmental Activities in the Statement of Activities are different because:


RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE

STATEMENT OF NET ACTIVITIES

19

Variance withFinal Budget -

Actual PositiveOriginal Final Amounts (Negative)

REVENUES Taxes 25,436,217$ 25,436,217$ 26,808,963$ 1,372,746$ Licenses and permits 801,742 801,742 994,123 192,381 Fines and penalties 1,955,124 1,955,124 1,537,951 417,173)( Charges for services 5,031,126 5,046,126 5,021,489 24,637)( Intergovernmental 203,304 203,304 182,525 20,779)( Interest on investments 110,000 110,000 48,096 61,904)( Miscellaneous 973,745 973,745 844,032 129,713)(

Total revenues 34,511,258 34,526,258 35,437,179 910,921

EXPENDITURES Current: General government 15,680,316 16,503,880 14,890,128 1,613,752 Public safety 18,785,522 18,763,252 19,758,262 995,010)( Community service 5,995,680 6,022,360 5,975,860 46,500 Debt service: Principal 29,160 29,160 - 29,160 Capital outlay:

Public safety 38,500 73,242 16,958 56,284

Total expenditures 40,529,178 41,391,894 40,641,208 750,686

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 6,017,920)( 6,865,636)( 5,204,029)( 1,661,607

OTHER FINANCING SOURCES (USES) Transfers in 6,105,691 7,544,902 7,628,731 83,829 Transfers out 1,818,071)( 1,994,929)( 2,021,352)( 26,423)( Sale of capital assets 48,000 48,000 20,791 27,209)(

Total other financing sources and uses 4,335,620 5,597,973 5,628,170 30,197

NET CHANGE IN FUND BALANCES 1,682,300)( 1,267,663)( 424,141 1,691,804

FUND BALANCES, BEGINNING 13,379,683 13,379,683 13,379,683 -

FUND BALANCES, ENDING 11,697,383$ 12,112,020$ 13,803,824$ 1,691,804$


Budgeted Amounts


STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCE - BUDGET AND ACTUAL

GENERAL FUND


20

Governmental

Activities-

Water and Stormwater Other Internal

Electric Wastewater Drainage Enterprise Total ServiceASSETS Current assets: Cash and cash equivalents 2,199,548$ -$ 2,196,693$ 752,066$ 5,148,307$ 1,403,723$ Investments 8,601,447 59,282,801 10,101,447 - 77,985,695 3,095,985 Accounts receivable, ne 6,763,324 3,516,443 280,203 322,878 10,882,848 - Due from other funds 611,047 785,315 31,422 54,331 1,482,115 344,007 Due from other governments - - - 3,519 3,519 - Inventories 561,428 396,892 - - 958,320 -

Prepaid items 18,722 2,000 - - 20,722 -

Total current assets 18,755,516 63,983,451 12,609,765 1,132,794 96,481,526 4,843,715

Non-current assets Deferred charges 173,235 1,784,210 260,533 - 2,217,978 -

Capital assets: Land 31,695 1,313,997 - 100,337 1,446,029 - Buildings 472,092 1,557,930 - 4,339,745 6,369,767 - Improvements other than buildings 15,311,656 133,921,582 7,570,165 8,216,267 165,019,670 - Furnishings and equipments 2,773,964 5,240,684 382,334 21,137 8,418,119 - Construction in progress 19,210,304 37,038,399 4,963,162 1,076,042 62,287,907 -

Less accumulated depreciation 13,716,377)( 54,509,384)( 1,303,958)( 9,022,763)( 78,552,482)( -

Total capital assets 24,083,334 124,563,208 11,611,703 4,730,765 164,989,010 -

Total non-current assets 24,256,569 126,347,418 11,872,236 4,730,765 167,206,988 -

Total assets 43,012,085$ 190,330,869$ 24,482,001$ 5,863,559$ 263,688,514$ 4,843,715$

LIABILITIES Current liabilities: Accounts payable 4,333,980 1,601,347 435,947 200,194 6,571,468 12,438 Accrued liabilities 192,532 133,791 4,884 8,182 339,389 - Due to other funds 108,431 731,931 7,023 74,794 922,179 1,638,289 Deferred revenue - - - 21,921 21,921 - Claims payable - - - - - 897,277 Customer deposits 2,097,719 653,725 924 122,704 2,875,072 - Accrued interest payable 129,416 581,424 102,788 - 813,628 - Compensated absences 115,433 92,308 6,779 - 214,520 -

Current maturities of long-term debt 1,035,000 5,325,000 775,000 - 7,135,000 -

Total current liabilities 8,012,511 9,119,526 1,333,345 427,795 18,893,177 2,548,004

Non-current liabilities Compensated absences 30,828 24,631 1,796 - 57,255 -

Long-term debt 7,561,718 96,515,574 17,658,944 9,615 121,745,851 -

Total non-current liabilities 7,592,546 96,540,205 17,660,740 9,615 121,803,106 -

Total liabilities 15,605,057 105,659,731 18,994,085 437,410 140,696,283 2,548,004

NET ASSETS Invested in capital assets, net of related debt 16,559,723 52,148,347 3,308,188 4,721,150 76,737,408 -

Unrestricted 10,847,305 32,522,791 2,179,728 704,999 46,254,823 2,295,711

Total net assets 27,407,028$ 84,671,138$ 5,487,916$ 5,426,149$ 122,992,231 2,295,711$

229,908

Total net assets per government-wide financial statements 123,222,139$


CITY OF SAN MARCOS, TEXASSTATEMENT OF NET ASSETS

PROPRIETARY FUNDS

SEPTEMBER 30, 2011

Business-type Activities - Enterprise Funds

The assets and liabilities of certain internal service funds are not included in the fund financial statement,but are included in the business-type activities of the statement of net assets.

21

Governmental

ActivitiesWater and Stormwater Other Internal

Electric Wastewater Drainage Enterprise Total Service

OPERATING REVENUES

Charges for services 48,453,727$ 26,986,572$ 2,108,913$ 2,118,877$ 79,668,089$ -$

Intergovernmental - - - 46,985 46,985 -

Employer contributions - - - - - 2,974,397

Employee contributions - - - - - 922,727 Retiree contributions - - - - - 166,093

Pharmacy rebates - - - - - 5,307 Other refunds - - - - - 352,462

Total operating revenues 48,453,727 26,986,572 2,108,913 2,165,862 79,715,074 4,420,986

OPERATING EXPENSES

Purchased power 34,828,016 - - - 34,828,016 - Personnel services 3,323,155 3,280,062 249,604 3,263 6,856,084 - Contracted services 1,159,210 7,106,738 466,348 2,058,381 10,790,677 -

Materials and supplies 344,350 825,192 17,504 9,765 1,196,811 - Indirect costs 1,009,144 3,082,019 - - 4,091,163 - Claims - - - - - 3,466,360

Other charges 1,480,680 580,566 38,381 4,455 2,104,082 586,176 Depreciation 772,242 6,800,458 274,138 407,854 8,254,692 -

Total operating expenses 42,916,797 21,675,035 1,045,975 2,483,718 68,121,525 4,052,536

OPERATING INCOME 5,536,930 5,311,537 1,062,938 317,856)( 11,593,549 368,450

NON-OPERATING REVENUES

(EXPENSES) Investment earnings 49,465 267,167 55,783 4,500 376,915 11,304

Interest and fiscal charges 450,032)( 4,980,245)( 852,003)( - 6,282,280)( -

Gain of sale of assets 7,087 14,331)( - - 7,244)( - Other 553,940 1,377,882 67,886 37,047 2,036,755 -

Total non-operating revenue (expenses) 160,460 3,349,527)( 728,334)( 41,547 3,875,854)( 11,304

INCOME BEFORE TRANSFERS 5,697,390 1,962,010 334,604 276,309)( 7,717,695 379,754

Capital contributions - 1,085,830 - - 1,085,830 - Transfers in 65,101 - - 185,319 250,420 - Transfers out 3,905,542)( 2,469,452)( 129,627)( 36,664)( 6,541,285)( 1,312,547)(

CHANGE IN NET ASSETS 1,856,949 578,388 204,977 127,654)( 2,512,660 932,793)(

TOTAL NET ASSETS, BEGINNING 25,550,079 84,092,750 5,282,939 5,553,803 120,479,571 3,228,504

TOTAL NET ASSETS, ENDING 27,407,028$ 84,671,138$ 5,487,916$ 5,426,149$ 122,992,231 2,295,711$

Change in net assets, per above 2,512,660

93,255)(

Change in business-type activities in net assets per government-wide financial statements 2,419,405$




STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDS


Internal service funds are used by management to charge the costs of certain activities to individual funds. The netrevenue (expense) of certain internal service funds is reported with Business Activities.

22

GovernmentalActivities -

InternalWater and Stormwater Other Service

Electric Wastewater Drainage Funds Totals Fund

CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers 48,480,405$ 28,273,458$ 2,118,259$ 2,166,423$ 81,038,545$ 4,420,986$

Cash paid to suppliers for

goods and services 39,269,959)( 11,954,540)( 745,430)( 2,049,850)( 54,019,779)( 2,766,624)(

Cash paid to employees

for services 3,169,479)( 3,148,246)( 245,498)( 1,509 6,561,714)( -

Net cash provided by

operating activities 6,040,967 13,170,672 1,127,331 118,082 20,457,052 1,654,362

CASH FLOWS FROM NONCAPITAL

FINANCING ACTIVITIES Transfers from other funds 65,101 - - 185,319 250,420 1,312,547)(

Transfers to other funds 3,905,542)( 2,469,452)( 129,627)( 36,664)( 6,541,285)( -

Net cash used by noncapital

financing activities 3,840,441)( 2,469,452)( 129,627)( 148,655 6,290,865)( 1,312,547)(

CASH FLOWS FROM CAPITAL AND

RELATED FINANCING ACTIVITIES Proceeds from capital debt - 1,330,245)( 2,315,000 - 984,755 -

Proceeds from capital lease - 66,690 - - 66,690 -

Capital contributions - 1,085,830 - - 1,085,830 -

Principal paid on debt 980,000)( 8,405,000)( 2,955,000)( - 12,340,000)( -

Interest and fiscal charges - - - - - -

paid on debt 512,255)( 466,535)( 1,009,088)( - 1,987,878)( -

Acquisition of capital assets 1,612,748)( 7,274,717)( 2,700,294)( 171,197)( 11,758,956)( -

Disposal of capital assets 7,087 14,331)( - - 7,244)( -

Net cash used by capital and

related financing activities 3,097,916)( 16,338,308)( 4,349,382)( 171,197)( 23,956,803)( -

CASH FLOWS FROM INVESTING

ACTIVITIES Purchase of investment securities 8,601,447)( 36,779,271)( 2,600,754)( - 47,981,472)( 1,595,635)(

Interest received 49,465 267,167 55,783 9,000 381,415 11,304

Net cash provided (used)

by investing activities 8,551,982)( 36,512,104)( 2,544,971)( 9,000 47,600,057)( 1,584,331)(

NET INCREASE (DECREASE) IN CASH

AND CASH EQUIVALENTS 9,449,372)( 42,149,192)( 5,896,649)( 104,540 57,390,673)( 1,242,516)(

CASH AND CASH EQUIVALENTS,

BEGINNING 11,648,920 42,149,192 8,093,342 647,526 62,538,980 2,646,239

CASH AND CASH EQUIVALENTS,

ENDING 2,199,548$ -$ 2,196,693$ 752,066$ 5,148,307$ 1,403,723$


(continued)


STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS


23

GovernmentalActivities -

Internal

Water and Stormwater Other Service

Electric Wastewater Drainage Funds Totals Fund

Reconciliation of operating income to net cash

provided by operating activities:

Operating income (loss) 5,536,930$ 5,311,537$ 1,062,938$ 317,856)$( 11,593,549$ 368,450$

Adjustments to reconcile operating income

to net cash provided by operating activities:

Depreciation 772,242 6,800,458 274,138 407,854 8,254,692 -

Amortization expense 73,392 280,017 33,332 - 386,741 -

Other nonoperating revenues 553,940 1,377,882 67,886 32,547 2,032,255 -

Changes in assets and liabilities:

Decrease (increase) in assets:

Accounts receivable 190,719)( 104,398 58,590)( 88,923)( 233,834)( -

Due from other funds 557,813)( 678,231)( 43,508 54,299)( 1,246,835)( 234,698)(

Due from other governments - - - 34,298 34,298 -

Inventories 70,133 46,201 - - 116,334 -

Prepaid items 44,096 4,549 - 13 48,658 -

Increase (decrease) in liabilities:

Accounts payable 124,544)( 63,355)( 124,624)( 62,173 250,350)( 21,478)(

Accrued liabilities 40,515 25,734 215 1,509 67,973 -

Due to other funds 336,543)( 195,394)( 175,413)( 3,974 703,376)( 1,638,289

Deferred revenue - - - 18,697 18,697 -

Claims payable - - - - - 96,201)(

Compensated absences 3,301 9,885 312 - 13,498 -

Customer deposits 46,177 50,794 50 14,832 111,853 -

Long-term debt 109,860 96,197 3,579 3,263 212,899 -

Net cash provided

by operations 6,040,967$ 13,170,672$ 1,127,331$ 118,082$ 20,457,052$ 1,654,362$





PROPRIETARY FUNDS(Continued)


24

25


NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The City of San Marcos, Texas (the City) was incorporated July 11, 1877, while the City’s Home Rule Charter was adopted by election in 1967. The City operates under a Council-Manager form of government and provides the following services as authorized by its charter: public safety (police and fire), highways and streets, sanitation, health and social services, culture-recreation, public improvements, planning and zoning, general and administrative, electric, water and wastewater services.

The accompanying financial statements comply with the provisions of the GASB Statement No. 14 and 39, “The Financial Reporting Entity,” in that the financial statements include all organizations, activities, functions and component units for which the City (the “primary government”) is financially accountable. Financial accountability is defined as the appointment of a voting majority of a legally separate organization’s governing body and either (1) the City’s ability to impose its will over the organization, or (2) the potential that the organization will provide a financial benefit to or impose a financial burden on the City. There are no component units which satisfy requirements for blending within the City’s financial statements or for discrete presentation.

B. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the activities of the primary government. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenue, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenue. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenue includes 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenue are reported instead as general revenue.

Separate financial statements are provided for governmental and proprietary funds. Major individual governmental funds and major individual Enterprise Funds are reported as separate columns in the fund financial statements.

(continued)

26

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenue is recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenue is recognized as soon as it is both measurable and available. Revenue is considered to be available when it is collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenue to be available if collected within 30 days of the end of the current fiscal period. Property taxes availability period is considered to be 60 days. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, sales taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenue of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the City.

The City reports the following major governmental funds:

The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Capital Projects Fund accounts for the acquisition of fixed assets or construction of major capital projects not being financed by other funds.

The Debt Service Fund accounts for the accumulation of resources for the payment of general long-term principal, interest, and related costs.

(continued)

27

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)

The City reports the following major proprietary funds:

The Electric Fund accounts for the activities necessary for the provision of electric services.

The Water and Wastewater Fund accounts for the activities necessary for the provision of water and sewer services. The Stormwater Drainage Fund was created to address the need for improvements in drainage channels throughout the City. The fund obtains revenue through the assessment of a monthly drainage utility fee to both residential and commercial customers.

Additionally, the City reports the following fund type:

Internal Service Fund accounts for benefits provided to other departments or agencies of the City on a cost-reimbursement basis.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and Enterprise Funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the City’s water and wastewater function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenue reported for the various functions concerned.

Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenue. Likewise, general revenue includes all taxes.

(continued)

28

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s Enterprise Funds are charges to customers for sales and services. Operating expenses for Enterprise Funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenue and expenses.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.

D. Assets, Liabilities and Net Assets or Equity

Deposits and Investments

The City’s cash and cash equivalents are considered to be cash on hand, certificates of deposit, investment securities with a maturity of three months or less from the date of purchase.

Statutes authorize the City to invest in obligations of U. S. Treasury or its agencies and instrumentalities, obligations of the state or its agencies, other investments guaranteed by the U. S. Treasury or the State of Texas, or investments rated by a national rating company at “A” or better. The City is also authorized to invest in fully collateralized repurchase agreements, local government investment pools, and in certificates of deposit issued by banks domiciled in Texas that are FDIC insured or have securities (of aforementioned quality) pledged to secure these deposits. The investment of idle funds has been restricted to U. S. Government Treasury and agency securities and time deposits with the City’s depository banks.

Investments for the City are reported at fair value. The State Treasurer’s Investment Pool operates in accordance with appropriate state laws and regulations. The reported value of the pool is the same as the fair value of the pool shares.

Receivables and Payables

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due to/from other funds” (i.e., the current portion of interfund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade accounts receivable in excess of 180 days comprise the trade accounts receivable allowance for uncollectibles. The property tax receivable allowance is equal to 15 percent of outstanding property taxes at September 30, 2011.

(continued)

29

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Net Assets or Equity (Continued)

Receivables and Payables (Continued)

Property taxes are levied on October 1 and attach as an enforceable lien on property as of January 1. Statements are mailed on October 1, or as soon thereafter as possible, and are due upon receipt. All unpaid taxes become delinquent if not paid before February 1 of the following year.

Inventories and Prepaid Items

Inventory is valued at cost using the average cost method of accounting. Inventory in the General Fund consists of expendable supplies held for consumption. The cost of inventory is recorded as an expenditure at the time individual inventory items are consumed (consumption method). Inventory reported in the General Fund is offset by a fund balance reserve which indicates that it does not represent “available spendable resources” even though it is a component of net current assets. Inventory in the Water and Wastewater and Electric Funds consists of parts and maintenance items.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

Capital Assets

Capital assets, which include property, plant, equipment and infrastructure assets (e.g. roads, bridges, sidewalks and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized.

Property, plant and equipment is depreciated using the straight-line method over the following useful lives:

Assets Years

Buildings 20-50Improvements 10-40Equipment 5-10Infrastructure (streets and drainage) 35-125

(continued)

30

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Net Assets or Equity (Continued)

Compensated Absences

It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. A liability for these amounts is reported in the applicable governmental funds and business-type funds as it is due to the employees at the time of resignation and retirement. The liability is recorded as follows: All employees are entitled to be paid up to 30 days (90 days with 20 years of continuous service) of accumulated vacation; in addition Civil Service-Police are entitled to be paid up to 90 days of sick and Civil Service-Fire is entitled to 90 days of sick at 1,080 hours for 12-hour days.

Long-term Obligations

In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Balance Classification The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy that is based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in the governmental fund financial statements are as follows:

Nonspendable: This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) are legally or contractually required to be maintained intact. Nonspendable items are not expected to be converted to cash or are not expected to be converted to cash within the next year.

(continued)

31


D. Assets, Liabilities and Net Assets or Equity (Continued)

Fund Balance Classification (Continued)

Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation.

Committed: This classification includes amounts that can be used only for specific purposes pursuant to constraints imposed by court resolution of the City Council, the City’s highest level of decision making authority. These amounts cannot be used for any other purpose unless the City Council removes or changes the specified use by taking the same type of action that was employed when the funds were initially committed. This classification also includes contractual obligations to the extent that existing resources have been specifically committed for use in satisfying those contractual requirements.

Assigned: This classification includes amounts that are constrained by the City’s intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the City Council.

Unassigned: This classification includes the residual fund balance for the General Fund. The unassigned classification also includes negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of assigned fund balance amounts.

When expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted funds to have been spent first. When expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned.

Net Assets

Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used for the acquisition, construction or improvements of those assets, and adding back unspent proceeds. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislations adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments.

(continued)

32


D. Assets, Liabilities and Net Assets or Equity (Continued)

Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates.

Comparative Data/Reclassifications

Comparative total data for the prior year have been presented in order to provide an understanding of the changes in the financial position and operations. Also, certain amounts presented in the prior year have been reclassified in order to be consistent with the current year’s presentation.

2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the

Government-wide Statement of Net Assets The governmental fund balance sheet includes a reconciliation between fund balance – total governmental funds and net assets – governmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains, “Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds.” The details of this $(142,200,983) difference are as follows:

General obligation bonds 136,215,000)$( Discounts on bonds 689,969 Premiums on bonds 1,005,347)( Accrued interest payable 762,886)( Compensated absences 4,618,358)( Deferred charge for bond issuance costs 2,129,966 Deferred loss on refunding 972,876 Retainage payable 438,268)( TMRS Net pension obligation 2,447,927)( OPEB Net pension obligation 506,008)(

Net adjustment to reduce fund balance - total governmental funds to arrive at net assets - governmental activities 142,200,983)$(

(continued)

33

2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (Continued)

Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,

Expenditures and Changes in Fund Balances and the Government-wide Statement of Activities

The governmental fund statement of revenue, expenditures and changes in fund balances includes a reconciliation between net changes in fund balances – total governmental fund and changes in net assets of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains, “Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of this $13,375,508 difference are as follows:

Capital outlay 18,946,000$ Depreciation expense 5,570,492)(

Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 13,375,508$

Another element of that reconciliation states, “Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.” The details of this $64,471 difference are as follows:

Property taxes 61,490$ Court fines 2,981

Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 64,471$

Another element of that reconciliation states, “The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets.” The details of this $4,824,898 difference are as follows:

(continued)

34

2. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (Continued)

Explanation of Certain Differences Between the Governmental Fund Statement of Revenue,

Expenditures and Changes in Fund Balances and the Government-wide Statement of Activities (Continued)

Debt issued or incurred: Issuance of general obligation bonds 11,245,000)$( Deferred charge for bond issuance costs 152,734 Premium on bond issuance 590,248)( TMRS Net pension obligation 898,246)( OPEB Net pension obligation 144,704)( General obligation bonds refunded 10,945,000 Deferred loss on refunding 735,362 Principal repayments: General obligation debt 5,870,000

Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 4,824,898$

Another element of that reconciliation states, “Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.” The details of this $49,051 difference are as follows:

Compensated absences 110,299$ Accrued interest 197,428 Amortization of deferred charge on refunding 26,391)( Amortization of issuance costs 230,913)( Amortization of bond discounts 37,372)( Amortization of bond premiums 36,000

Net adjustment to decrease net changes in fund balances - total governmental funds to arrive at changes in net assets of governmental activities 49,051$

3. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

Budgetary Information The City Charter prescribes certain requirements for adoption of an annual operating budget by the City Council. The Council must have a public hearing on the budget and may not adopt the budget until after 14 days after the hearing. The budget is to be adopted at least 15 days before the beginning of the fiscal year to which it applies.

The amounts of proposed expenditures become appropriated to the objects and purposes named in the budget upon the effective date after adoption. The total estimated expenditures of the General Fund shall not exceed the total estimated resources of the fund (prospective income plus cash on hand).

(continued)

35

3. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued)

Budgetary Information (Continued)

The City budget may be amended and appropriations may be altered in cases of public necessity, as declared by the City Council. The City Manager has the ability to reallocate funds from one line item to another within the various budget categories within departments in the same fund (i.e., personnel services, other charges, contracted services, etc.), but City Council approval is required for budget adjustments between funds.

The budget ordinance states that expenditures should not exceed the budget in the various departments (administration, personnel, finance, etc.) within an individual fund. The City’s appropriation ordinance approves items as detailed in the approved budget. Budgeted amounts reported are based on the budget ordinance originally adopted and as amended by the City Council throughout the year.

Formal budgetary accounting is employed for all funds of the City, excluding Grants and Special Entitlements, Karnack, Emergency Relief, Library Memorial, Parks and Recreation, Capital Projects and the Cemetery Perpetual Permanent Fund. Annual operating budgets are prepared and presented for the General Fund, Debt Service Fund, and all other Special Revenue Funds. All annual appropriations lapse at fiscal year-end.

Budgets for the Governmental Fund Types are prepared and adopted on the GAAP basis. Budgets for expenses used for managerial control have been prepared for the Enterprise Funds on a non-GAAP basis, which excludes depreciation, but includes capital outlay and total debt service.

The City Council made several supplemental budgetary appropriations throughout the year. The supplemental budgetary appropriations were not considered material.

4. DETAILED NOTES ON ALL FUNDS

Deposits and Investments

The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports, and establishment of appropriate policies. Among other things, it requires the City to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable investments, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. Statutes authorize the City to invest in (1) obligations of the U. S. Treasury, certain U. S. agencies, and the State of Texas, (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) bankers acceptances, (7) Mutual Funds, (8) investment pools, (9) guaranteed investment contracts, and (10) common trust funds. The Act also requires the City to have independent auditors perform test procedures related to investment practices as provided by the Act. The City is in substantial compliance with the requirements of the Act and with local parties.

(continued)

36

4. DETAILED NOTES ON ALL FUNDS (Continued)

Deposits and Investments (Continued) In compliance with the Public Funds Investment Act, the City has adopted a deposit and investment policy. That policy does address the following risks:

1. Custodial Credit Risk – Deposits: In the case of deposits, this is the risk that, in

the event of a bank failure, the government’s deposits may not be returned to it. State statutes require that all deposits in financial institutions be fully collateralized by U. S. Government Obligations or its agencies and instrumentalities or direct obligations of Texas or its agencies and instrumentalities that have a fair value of not less than the principal amount of deposits. As of September 30, 2011, the City’s bank balance was fully collateralized with securities held by independent third party financial institutions.

2. Credit Risk: It is the City’s policy to limit investments to investment types with

an investment quality rating no lower than AAA or AAA-m or an equivalent rating by at least one nationally recognized rating service or no lower than investment grade by at least one nationally recognized rating service with a weighted average maturity no greater than 90 days. The City’s investment pool was rated AAAm by Standard and Poor’s Investors Services.

3. Interest Rate Risk: In accordance with the City’s investment policy, the City

manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio to 270 days or less, dependent on market conditions.

4. Concentration of Credit Risk: The government’s investment policy states the

maximum percentage allowed for each different investment instrument that can be used to make up the portfolio.

The City’s investments at September 30, 2011, are shown below:

RatingFair Value Rating Agency

TexStar 429,179$ AAAm Standard & Poor's 46TexPool 505,956 AAA Standard & Poor's 48TexasTERM 4,409,637 AAAf Standard & Poor's 54FNMA 6,253,906 AAA Standard & Poor's 543FHLB 16,979,632 AAA Standard & Poor's 624

Freddie Mac 79,943,771 AAA Standard & Poor's 651

Total Fair Value 108,522,081$

Weighted AverageMaturity (Days)

(continued)

37


Deposits and Investments (Continued)

Texas Short-term Asset Reserve Program (TexStar) has been organized in conformity with the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, Chapter 2256 of the Texas Government Code. These two acts provide for the creation of public fund investment pools and permit eligible governmental entities to jointly invest their funds in authorized investments. All investments are stated at amortized cost, which in most cases approximates the fair value of the securities. The objective is to maintain a stable $1.00 net asset value; however, the $1.00 net asset value is not guaranteed or insured. All securities will be marked-to-market daily. If the ratio of the market value of the portfolio divided by the book value of the portfolio is less than $0.995 or greater than $1.005, the pool will sell portfolio holdings, as required, to maintain the ratio between $0.995 and $1.005. All gains or losses from the sale of securities will be distributed among participants over a period of up to thirty (30) days from the date of which the gain or loss is realized.

Receivables Receivables as of year-end for the City’s individual major funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows:

Other Capital Debt Water/ Stormwater Nonmajor

General Governmental Projects Service Electric Wastewater Drainage Enterprise Total

Receivables: Taxes 2,655,199$ 646,339$ -$ 603,505$ -$ -$ -$ -$ 3,905,043$ Accounts 1,642,868 150,578 5,973 - 7,201,120 3,820,139 233,231 357,595 13,411,504 Due from governments - 1,082,045 - 3,030,000 - - - 3,519 4,115,564

Loans - 46,875 - - - - - - 46,875

Gross receivables 4,298,067 1,925,837 5,973 3,633,505 7,201,120 3,820,139 233,231 361,114 21,478,986 Less: allowance for

uncollectibles 45,625)( - - 49,446)( 437,796)( 303,696)( 25,028)( 34,717)( 896,308)(

Net total receivables 4,252,442$ 1,925,837$ 5,973$ 3,584,059$ 6,763,324$ 3,516,443$ 208,203$ 326,397$ 20,582,678$

Governmental funds report deferred revenue in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows:

(continued)

38


Receivables (Continued)

Unavailable Unearned

Delinquent property taxes receivable (General fund) 623,145$ -$ Activity Center (General fund) 139,843 - Delinquent property taxes receivable (Debt service) 524,876 - Grant drawdown (Debt service) - 3,030,000 Hotel occupancy (Nonmajor governmental) - 32 Grant drawdowns (Nonmajor governmental) - 3,464,774 Airport revenues (Nonmajor enterprise) - 21,921

Total Deferred/Unearned Revenue for Governmental Funds 1,287,864$ 6,516,727$

Capital Assets

Capital asset activity for the year ended September 30, 2011, was as follows:

Beginning EndingBalance Increases Decreases Balance

Government activities: Capital assets, not being depreciated: Land 7,224,964$ -$ -$ 7,224,964$

Construction in progress 86,204,170 13,428,921 13,300,236)( 86,332,855

Total assets not being depreciated 93,429,134 13,428,921 13,300,236)( 93,557,819

Capital assets, being depreciated: Buildings 31,903,631 4,640,584 - 36,544,215 Machinery and equipment 21,447,965 1,072,424 265,089)( 22,255,300 Improvements other than buildings 41,028,850 8,902,507 - 49,931,357

Infrastructure 21,086,436 4,275,000 - 25,361,436

Total capital assets being depreciated 115,466,882 18,890,515 265,089)( 134,092,308

Less accumulated depreciation: Buildings 5,418,329)( 667,764)( - 6,086,093)( Machinery and equipment 15,858,034)( 1,305,193)( 265,089 16,898,138)( Improvements other than buildings 17,738,577)( 2,676,368)( - 20,414,945)(

Infrastructure 7,220,960)( 921,167)( - 8,142,127)(

Total accumulated depreciation 46,235,900)( 5,570,492)( 265,089 51,541,303)(

Total capital assets being depreciated, net 69,230,982 13,320,023 - 82,551,005

Governmental activities capital assets, net 162,660,116$ 26,748,944$ 13,300,236)$( 176,108,824$

(continued)

39


Capital Assets (Continued)

Beginning EndingBalance Increases Decreases Balance

Business-type activities: Capital assets, not being depreciated: Land 1,446,029$ -$ -$ 1,446,029$

Construction in progress 65,938,055 11,160,237 14,810,385)( 62,287,907

Total assets not being depreciated 67,384,084 11,160,237 14,810,385)( 63,733,936

Capital assets, being depreciated: Buildings 6,369,767 - - 6,369,767 Machinery and equipment 7,873,904 598,717 54,502)( 8,418,119

Improvements other than buildings 150,240,907 14,810,387 31,624)( 165,019,670

Total capital assets being depreciated 164,484,578 15,409,104 86,126)( 179,807,556

Less accumulated depreciation: Buildings 3,246,078)( 120,721)( - 3,366,799)( Machinery and equipment 5,341,355)( 468,461)( 39,023 5,770,793)(

Improvements other than buildings 61,796,483)( 7,665,510)( 47,103 69,414,890)(

Total accumulated depreciation 70,383,916)( 8,254,692)( 86,126 78,552,482)(

Total capital assets being depreciated, net 94,100,662 7,154,412 - 101,255,074

Business-type activities capital assets, net 161,484,746$ 18,314,649$ 14,810,385)$( 164,989,010$

Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government 4,171,375$ Public safety 969,866 Community services 429,251

Total depreciation expense - governmental activities 5,570,492$

Business-type activities: Electric 772,242$ Water and wastewater 6,800,458 Airport 407,854 Stormwater drainage 274,138

Total depreciation expense - business-type activities 8,254,692$

(continued)

40


Interfund Receivables, Payables and Transfers

The composition of interfund balances as of September 30, 2011, is as follows:

Due to/from other funds:

Receivable Fund Payable Fund Amount

General Capital projects 142,664$ Nonmajor governmental 76,469 Internal service 1,312,547 Water and wastewater 200,389 Electric 83,431 Stormwater drainage 544 Nonmajor enterprise 32

Capital projects General 2,092,232 Debt service 640,634 Nonmajor governmental 1,038,546 Water and wastewater 12,785 Stormwater drainage 6,104

Nonmajor governmental General 88,264 Debt service 112,221 Water and wastewater 3,255

Electric General 7,270 Debt service 13,138 Water and wastewater 515,502 Stormwater drainage 375 Nonmajor enterprise 74,762

Water and wastewater General 518,847 Debt service 95,752 Nonmajor governmental 10,716 Electric 25,000 Internal service 135,000

Stormwater drainage General 42 Debt service 31,380

Nonmajor enterprise General 12,742 Capital projects 41,589

Internal service - insurance General 153,265

Internal service - equipment Internal service 190,742

(continued)

41


Interfund Receivables, Payables and Transfers (Continued)

Due to/from other funds (Continued)

Balances resulted from the time lag between the dates that 1) interfund goods and services are provided or reimbursable expenditures occur, 2) transactions are recorded in the accounting system, and 3) payments between funds are made.

Interfund transfers

Capital Debt Nonmajor NonmajorGeneral Projects Service Governmental Electric Enterprise Total

Transfers Out: General -$ 1,333,142$ 549,031$ 41,282$ -$ 97,897$ 2,021,352$ Capital projects 90,000 - - - - 87,422 177,422 Nonmajor governmental - - 1,347,339 - - - 1,347,339 Internal service 1,312,547 - - - - - 1,312,547 Electric 3,805,542 100,000 - - - - 3,905,542 Stormwater drainage 64,526 - - - 65,101 - 129,627 Water and wastewater 2,319,452 150,000 - - - - 2,469,452 Nonmajor enterprise 36,664 - - - - - 36,664

Total 7,628,731$ 1,583,142$ 1,896,370$ 41,282$ 65,101$ 185,319$ 11,399,945$

Transfers In

Transfers are used to 1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, 2) move receipts restricted to debt service from the funds collecting the receipts to the Debt Service Fund as debt service payments become due, and 3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations.

Long-term Debt

General Obligation Bonds and Combination Tax and Revenue Bonds

The government issues general obligation bonds and combination tax and revenue bonds to provide funds for the acquisition and construction of major capital facilities. These debt issues have been issued for both governmental and business-type activities. These bonds are reported in the proprietary funds if they are expected to be repaid from proprietary fund revenue. The original amount of general obligation and combination tax and revenue bonds issued in prior years was $276,610,000. During the year, general obligation and combination tax and revenue bonds totaling $17,210,000 were issued to fund both general obligation and revenue projects.

(continued)

42


Long-term Debt (Continued)

General Obligation Bonds and Combination Tax and Revenue Bonds (Continued)

General obligation bonds are direct obligations and pledge the full faith and credit of the government. Combination Tax and Revenue bonds constitute direct obligations of the City and are payable from a combination of the levy of ad valorem taxes and a limited pledge of surplus revenues of the City’s water and wastewater system. Both bonds generally are issued as 20-year serial bonds with equal amounts of principal maturing each year. Bonds currently outstanding are as follows:

Purpose Interest Rates Amount

Governmental activities 3.50 - 4.61% 117,665,000$ Governmental activities - refunding 3.50 - 5.375% 18,550,000 Business-type activities 3.50 - 5.00% 128,450,000

264,665,000$

Annual debt service requirements to maturity for general obligation bonds are as follows:

Year EndingSeptember 30, Principal Interest

2012 6,620,000$ 5,957,750$ 2013 6,795,000 5,728,319 2014 7,000,000 5,492,649 2015 6,775,000 5,234,543 2016 7,000,000 4,974,716

2017-2021 36,255,000 20,581,608 2022-2026 36,530,000 12,353,814 2027-2031 27,625,000 4,035,577 2032-2034 1,615,000 39,681

Total 136,215,000$ 64,398,657$

Governmental Activities

(continued)

43


Long-term Debt (Continued) Revenue Bonds Annual debt service requirements to maturity for revenue bonds are as follows:

Year EndingSeptember 30, Principal Interest

2012 7,135,000$ 5,594,423$ 2013 7,410,000 5,317,293 2014 7,665,000 5,054,692 2015 7,945,000 4,761,379 2016 8,265,000 4,429,119

2017-2021 38,550,000 16,874,084 2022-2026 32,270,000 9,188,797 2027-2031 16,130,000 2,389,268 2032-2036 3,080,000 495,500

Total 128,450,000$ 54,104,555$

Business-type Activities

Defeasance of Bonds

In prior years, the City defeased certain bonds by placing the proceeds of refunding bonds in irrevocable trusts to provide for all future debt service payments on the defeased bonds. Accordingly, the trusts’ assets and liabilities for the defeased bonds are not included in the City’s financial statements. At September 30, 2011, the outstanding balance of the defeased bonds is $43,655,000.

(continued)

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Long-term Debt (Continued)

Changes in Long-term Liabilities

Long-term liability activity for the year ended September 30, 2011, was as follows:

Beginning Ending Due WithinBalance Additions Reductions Balance One Year

Governmental activities General obligation bonds 141,785,000$ 11,245,000$ 16,815,000)$( 136,215,000$ 5,205,000$ Discount on bonds 727,341)( - 37,372 689,969)( 37,372 Premium on bonds 451,099 590,248 36,000)( 1,005,347 85,187)( Deferred amount on refundings 263,905)( 735,362)( 26,391 972,876)( 87,671 Compensated absences 4,728,657 1,742,908 1,853,207)( 4,618,358 1,020,111 TMRS Net pension obligation 1,549,681 4,700,743 3,802,497)( 2,447,927 -

OPEB Net pension obligation 361,304 276,583 131,879)( 506,008 -

Governmental activity

Long-term liabilities 147,884,495$ 17,820,120$ 22,574,820)$( 143,129,795$ 6,264,967$

Business-type activities Bonds payable: Revenue bonds 134,825,000$ 5,965,000$ 12,340,000)$( 128,450,000$ 7,135,000$ Premium on bonds 1,635,823 313,103 123,062)( 1,825,864 - Deferred amount on refundings 1,483,413)( 460,918)( 157,217 1,787,114)( - Discount on bonds 298,042)( - 15,907 282,135)( - Capital leases - 100,944 34,254)( 66,690 - TMRS Net pension obligation 319,498 969,152 783,961)( 504,689 -

OPEB Net pension obligation 75,150 52,958 25,251)( 102,857 -

Total bonds payable 135,074,016 6,940,239 13,133,404)( 128,880,851 7,135,000

Compensated absences 258,277 389,224 375,726)( 271,775 214,520

Business-type activity

Long-term liabilities 135,332,293$ 7,329,463$ 13,509,130)$( 129,152,626$ 7,349,520$

The compensated absences liability attributable to the governmental activities will be liquidated primarily by the General Fund.

Other Information

Benefits Management The City sponsors an employee benefit plan that provides partially self-insured medical and self-insured dental coverage to employees and voluntary coverage to their participating dependents. The plan is designed to provide a specified level of coverage, with excess insurance coverage provided in both specific and aggregate reinsurance. The City’s maximum medical claim exposure for a specific covered person is limited to $100,000 in claims. Each covered person is subject to a maximum lifetime benefit reimbursement of $1,000,000 for medical and a maximum annual benefit on dental of $1,250. Aggregate coverage is purchased for the plan in order to limit the total medical claims exposure.

(continued)

45


Other Information (Continued)

Benefits Management (Continued)

The plan includes a pre-existing clause to deter adverse selection into the plan subject to the provisions of the Health Insurance Portability and Accountability Act of 1996. Features of the medical plan include a preferred provider network, specialty networks and a pharmacy benefit which includes a tiered co-pay structure and various techniques to provide incentives to utilize lower cost drugs, over the counter alternatives and to manage utilization based on therapeutic equivalencies. An annual benefit and wellness fair is hosted to increase employee awareness. The City continues to identify and implement features to contain costs and provide a sustainable benefit program. Examples include specialty networks for lab services and specialized provider networks including pharmacy benefits. The plan is funded by contributions from the City and participating employees based on recommendations of maximum plan exposure as calculated by an employee benefits specialty firm. Projected claim costs are based on claims experience, lag studies, industry trends, census and aggregate factors. A liability for claims is established based on estimated incurred but not recorded claims outstanding and anticipated associated insurance and administrative costs. The stop-loss contract establishes the aggregate attachment point based on census and aggregate factors defined in the contract. A reconciliation of changes in the aggregate liabilities of the prior and current year is presented below:

Current YearClaims and

Year Ended Beginning Changes in Claim EndingSeptember 30, Liability Estimate Payments Liability

2009 862,545$ 2,962,518$ 2,982,543$ 842,520$ 2010 842,520 3,741,640 3,590,682 993,478 2011 993,478 3,455,750 3,551,951 897,277

Risk and Safety Management The City of San Marcos maintains a risk management program to prevent and mitigate financial loss. Components of the program include the identification of exposure to loss and the selection, implementation and monitoring of risk management techniques. Prevention measures include activities such as training, annual review of assets and exposures, driving and drug testing programs, safety awareness events and the “Safety Coach” Safety Leadership Development Program. Post incident measures designed to mitigate losses include incident investigation and management of all claims through final disposition. A cornerstone of our commitment to managing workers compensation claims is a return to work program. In rating a worker’s compensation program, an underwriter begins at 100% which represents an average employer. This is ‘modified’ based on a specific employer’s claims history. During this reporting period the City has achieved a 22% premium modifier. Collectively, risk management programs have resulted in direct savings in excess of a million dollars while improving the health, safety, and well-being of City Employees.

(continued)

46



Risk and Safety Management (Continued)

The City’s Safety Program has been recognized by awards from the Public Risk Management Association (PRIMA) and the National Safety Council (NSC). The City participates in the National Safety Council Annual Awards Program which presents awards for occupational safety and health, safe worker and safe drivers. Twenty-two departments were recognized for maintaining a perfect record or a reduction in frequency of lost time injuries. Individual employees who serve in positions that are exposed to hazardous conditions and have a long work history without an accident are recognized at two levels by the National Safety Council: safe worker and safe driver. Two employees were recognized in each category for safe worker and safe driving this year. In October the City held the Annual Benefits and Safety Expo. The event includes over 55 Health and Safety vendors including safety demonstrations. Over 300 employees participate in the Expo.

Contingent Liabilities

Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the government expects such amounts, if any, to be immaterial.

There are currently several claims and lawsuits pending against the City. It is the opinion of the City Attorney and City Staff that there is no pending litigation against the City that, if decided against the City, would have a material adverse effect upon the operations of the City or that would exceed the contingency amounts set aside for such purpose.

Commitments

The City purchases electric power at wholesale rates from The Lower Colorado River Authority for its own use to resell to customers of its electric distribution system. The initial term of the purchased-power agreement ends in 2016, with successive renewal periods of 10 years.

(continued)

47



Estimated costs to complete construction in progress at year-end totals approximately $34,207,780 for governmental capital assets, $29,425,713 for Water and Wastewater, $1,073,107 for Electric, and $10,130,429 for Drainage.

Pension Plans – Primary Government

Defined Benefit Plan – Texas Municipal Retirement System (TMRS)

Plan Description. The City provides pension benefits for all employees working a thousand hours or more annually through a nontraditional, joint contributory, hybrid defined benefit plan in the state-wide Texas Municipal Retirement System (TMRS), an agent multiple-employer public employee retirement system. The plan provisions that have been adopted by the City are within the options available in the governing state statutes of TMRS.

TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information (RSI) for TMRS; the report also provides detailed explanations of the contributions, benefits and actuarial methods and assumptions used by the System. This report may be obtained by writing to TMRS, P.O. Box 149153, Austin, TX 78714-9153 or by calling 800-924-8677; in addition, the report is available on TMRS’ website at www.TMRS.com.

The plan provisions are adopted by the governing body of the City, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Plan provisions for the City were as follows:

Plan Year 2010 Plan Year 2011

Deposit rate 7% 7%Matching ratio (city to employee) 2 to 1 2 to 1 A member is vested after 5 years 5 yearsService retirement eligibility (expressed as age/years of service) 60/5; 0/20 60/5; 0/20Updated service credit 100% repeating, 100% repeating,

transfers transfersAnnuity increases (to retirees) 70% of CPI. 70% of CPI.

repeating repeating

Contributions

Under the state law governing TMRS, the contribution rate for each City is determined annually by the actuary, using the Projected Unit Credit actuarial cost method. This rate consists of the normal cost contribution rate and the prior service cost contribution rate, which is calculated to be a level percent of payroll from year to year. The normal cost contribution rate finances the portion of an active member’s projected benefit allocated annually; the prior service contribution rate amortizes the unfunded (overfunded) actuarial liability (asset) over the applicable period for that city. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service Credits and Annuity Increases.

(continued)

48


Pension Plans – Primary Government (Continued)

Contributions (Continued)

The City contributes to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year when the rate goes into effect. The annual pension cost and net pension obligation/(asset) are as follows:

Annual Required Contribution (ARC) 5,643,841$ Interest on Net Pension Obligation 140,188 Adjustment to the ARC 114,134)(

Annual Pension Cost 5,669,895 Contributions Made 4,586,458)(

Increase (Decrease) in Net Pension Obligation 1,083,437 Net Pension Obligation/(Asset), beginning of year 1,869,179

Net Pension Obligation/(Asset), ending of year 2,952,616$

Three-Year Trend Information

Accounting Annual Actual Percentage NetYear Pension Contribution of APC Pension

Ending Cost (APC) Made Contributed Obligation

09/30/09 3,669,260$ 2,947,745$ 80.34 % 721,515$ 09/30/10 5,277,774 4,130,110 79.00% 1,147,664 09/30/11 5,669,895 4,586,458 80.89% 2,952,616

Contributions

The required contribution rates for fiscal year 2011 were determined as part of the December 31, 2008 and 2009 actuarial valuations. Additional information as of the latest actuarial valuation, December 31, 2010, also follows:

Actuarial Valuation Date 12/31/08 12/31/09 12/31/10 - prior to 12/31/10 -restructuring restructured

Actuarial cost method Projected Unit Credit Projected Unit Credit Projected Unit Credit Projected Unit Credit

Amortization method Level percent Level percent Level percent Level percentof payroll of payroll of payroll of payroll

GASB 25 equivalent single 29.0 years; 28.2 years; 27.2 years; 27.2 years; amortization period closed period closed period closed period closed period

Amortization period for new 30 years 30 years 30 years 30 years gains/losses

Asset valuation method Amortized cost 10-year smoothed 10-year smoothed 10-year smoothedmarket market market

Actuarial Assumptions: Investment rate of return* 7.5% 7.5% 7.5% 7.0% Projected salary increases* varies by age varies by age varies by age varies by age

and service and service and service and service *Includes Inflation at 3.0% 3.0% 3.0% 3.0% Cost-of-living adjustments 2.1% 2.1% 2.1% 2.1%

(continued)

49


Pension Plans – Primary Government (Continued)

Contributions (Continued)

Funded Status and Funding Progress

In June 2011, SB 350 was enacted by the Texas Legislature, resulting in a restructure of the TMRS funds. This legislation provided for the actuarial valuation to be completed, as if restructuring had occurred on December 31, 2010. In addition, the actuarial assumptions were updated for the new fund structure, based on an actuarial experience study that was adopted by the TMRS Board at their May 2011 meeting (the review compared actual to expected experience for the four-year period of January 1, 2006 through December 31, 2009). For a complete description of the combined impact of the legislation and new actuarial assumptions, including the effects on TMRS city rates and funding ratios, please see the December 31, 2010 TMRS Comprehensive Annual Financial Report (CAFR).

The funded status as of December 31, 2010, the most recent actuarial valuation date, is as follows:

Unfunded Unfunded ActuarialActuarial Actuarial Actuarial Actuarial Annual Accrued LiabilityValuation Value of Accrued Percentage Accrued Covered as a Percentage

Date Assets Liability Funded Liability Payroll of Covered Payroll

12/31/2008 53,410,196$ 86,818,868$ 61.5% 33,408,672$ 23,968,024$ 139.4% 12/31/2009 60,086,015 97,579,121 61.6% 37,493,106 26,691,575 140.5%

12/31/2010(1) 65,424,815 103,321,042 63.3% 37,896,227 27,415,320 138.2%

12/31/2010(2) 88,314,595 122,500,837 72.1% 34,186,242 27,415,320 124.7%

(1) Actuarial valuation performed under the original fund structure.(2) Actuarial valuation performed under the new fund structure.

Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Actuarial calculations are based on the benefits provided under the terms of the substantive plan in effect at the time of each valuation, and reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The schedule of funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability of benefits.

(continued)

50


Other Postemployment Benefits Post-retirement Health Care Benefits The City provides certain health care and life insurance benefits through a single employer defined benefit OPEB plan, under City ordinance, for all full time and part-time employees in an eligible class. Retired employees who have satisfied the requirement as defined by the Texas Municipal Retirement System and their dependents who were covered prior to retirement. The requirement as defined by the Texas Municipal Retirement System is any age with 20 years of service or 5 years of service for age 60 and above. Currently, the City has 521 active employees and 36 retirees and beneficiaries eligible to participate in the plan. Retirees pay premiums for coverage in the OPEB programs. The is not a maximum employer paid premium amount (capped benefit). Active employees do not contribute to the retiree health care plan. Retirees are eligible for medical, dental, prescription and life insurance benefits until death of employee in service. Once death of employee in service, spouse is eligible for dependents through COBRA only. Retirees are eligible for benefits immediately upon retirement. If retiree opts out of coverage, retiree is not eligible for re-enrollment. Annual OPEB Cost and Net OPEB Obligation The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. The City does not issue separate financial statements for the plan and the City has not established a trust fund to fund the plan. The City’s annual OPEB cost for the current year and the related information is listed below:

Annual Required Contribution (ARC) 328,504$ Interest on Net Pension Obligation 19,640 Adjustment to the ARC 18,604)(

Annual Pension Cost 329,540 Contributions Made 157,129)(

Increase (Decrease) in Net Pension Obligation 172,411 Net Pension Obligation/(Asset), beginning of year 436,454

Net Pension Obligation/(Asset), ending of year 608,865$

Expenses for post-retirement health care benefits are recognized on a pay-as-you-go basis.

(continued)

51


Other Postemployment Benefits (Continued) Annual OPEB Cost and Net OPEB Obligation (Continued) The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the prior three years (4.5% discount rate, and level percent of pay amortization).

Annual Net

Fiscal Year OPEB Employer Percentage OPEBEnded Cost Contribution Contributed Obligation

09/30/09 314,419$ 55,509$ 22.8% 258,910$ 09/30/10 315,034 137,490 43.7% 436,454 09/30/11 329,540 157,129 43.7% 608,865

Funding Status and Funding Progress

Actuarial UAAL as aActuarial Actuarial Accrued Unfunded PercentageValuation Value of Liability (AAL) Funded Covered of Covered

Date Assets (AAL) (UAAL) Ratio Payroll Payroll

12/31/09 -$ 3,373,453$ 3,373,453$ 0% 23,968,024$ 14.1%12/31/10 - 3,420,429 3,420,429 0% 26,691,575 12.8%

This is the second year of implementation of GASB 45. Accordingly, only one year of funding progress is available. The projection of future payments for an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the heath care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Actuarial Methods and Assumptions

The Projected Unit Credit actuarial cost method is used to calculate the GASB 45 ARC for the City’s retiree health care plan. Using the plan benefits, the present health premiums and a set of actuarial assumptions, the anticipated future payments are projected. The projected unit credit method then provides for a systematic recognition of the cost of these anticipated payments. The yearly ARC is computed to cover the cost of benefits being earned by covered members as well as to amortize a portion of the unfunded accrued liability.

(continued)

52


Other Postemployment Benefits (Continued)

Actuarial Methods and Assumptions (Continued)

Projections of health benefits are based on the plan as understood by the City and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the City and the City’s employees to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows:

Actuarial Methods and Assumptions

Actuarial Valuation Date 12/31/2010Actuarial Cost Method Projected Unit CreditAmortization Method Level as a percentage of payrollRemaining Amortization Period 27 years; open

Asset Valuation Method Market Value

Actuarial Assumptions: Investment Rate of Return 4.5% Payroll Growth Rate 3.0% General Inflation Rate 3.0% Health care trend 9% in 2011, declining by 0.5% per year to an

ultimate rate of 4.5% in 2020 thereafter

Supplemental Death Benefits Plan (SDBF)

Supplemental Death Benefits Fund

The City also participates in the cost sharing multiple-employer defined benefit group term life insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance to provide group term life insurance coverage to both current and retired employees. The City may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1.

The death benefit for active employees provides a lump sum payment approximately equal to the employee’s annual salary (calculated based on the employee’s actual earnings, for the 12-month period preceding the month of death); retired employees are insured for $7,500; this coverage is an “other postemployment benefit,” or OPEB.

Contributions

The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent is not to pre-fund retiree term life insurance during employees’ entire careers.

(continued)

53


Supplemental Death Benefits Plan (SDBF) (Continued)

Supplemental Death Benefits Fund (Continued)

Contributions (Continued) The City’s contributions to the TMRS SDBF for the years ended 2011, 2010 and 2009, were $54,726, $49,237, and $37,731, respectively, which equaled the required contributions each year.

Schedule of Contribution Rates (Retiree-only portion of the rate)

Plan/ Annual Required Actual Percentage

Calendar Contribution Contribution Made of ARCYear (Rate) (Rate) Contributed

2008 0.04% 0.04% 100.00%2009 0.02% 0.02% 100.00%2010 0.02% 0.02% 100.00%2011 0.02% 0.02% 0.02%2012 0.02% 0.02% 0.02%

Change in Accounting Principles For fiscal year 2011, the City has implemented Governmental Accounting Standards Board (GASB) Statement No. 54, “Fund Balance Reporting and Governmental Fund Type Definitions.” GASB Statement No. 54 enhances the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. This statement establishes fund balance classifications that compromise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. The implementation of this statement resulted in the City reclassifying fund balances of its governmental funds.

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

GENERAL FUND

Variance with

Final Budget -

Actual Positive 2010

Original Final Amounts (Negative) Actual

REVENUES Taxes

Property taxes:

Current ad valorem taxes 5,340,662$ 5,340,662$ 5,412,372$ 71,710$ 5,446,352$

Delinquent ad valorem taxes 70,846 70,846 56,831 14,015)( 50,412

Penalty and interest on delinquent taxes 38,148 38,148 37,792 356)( 37,943

Franchise 1,096,858 1,096,858 1,184,223 87,365 1,210,874

Sales 18,632,663 18,632,663 19,854,399 1,221,736 18,398,707

Mixed drink 257,040 257,040 263,346 6,306 266,589

Total taxes 25,436,217 25,436,217 26,808,963 1,372,746 25,410,877

Licenses and permits

Professional and occupational 49,219 49,219 44,680 4,539)( 46,906

Building 315,000 315,000 424,184 109,184 356,162

Development 57,633 57,633 53,423 4,210)( 24,790

Plumbing 39,349 39,349 40,272 923 41,446

Food 92,676 92,676 120,260 27,584 128,468

Cemetery - - 53,671 53,671 25,129

Other 247,865 247,865 257,633 9,768 224,081

Total licenses and permits 801,742 801,742 994,123 192,381 846,982

Fines and penalties

Parking meter 106,236 106,236 131,477 25,241 100,845

Traffic 652,447 652,447 491,980 160,467)( 529,851

Complaints 421,577 421,577 287,373 134,204)( 340,285

Library 66,978 66,978 63,065 3,913)( 60,901

Other 707,886 707,886 564,056 143,830)( 689,699

Total fines and penalties 1,955,124 1,955,124 1,537,951 417,173)( 1,721,581

Charges for services

Vital statistics 38,510 38,510 42,126 3,616 39,870

Pound charges 37,310 37,310 41,232 3,922 36,991

Charges to other funds 4,243,002 4,243,002 4,286,559 43,557 4,258,331

Building rental 120,036 120,036 106,387 13,649)( 66,009

Recreation program 473,684 488,684 469,902 18,782)( 447,627

Other services 118,584 118,584 75,283 43,301)( 101,511

Total charges for services 5,031,126 5,046,126 5,021,489 24,637)( 4,950,339


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL

GENERAL FUND


(continued)

Budgeted Amounts

54

Variance with

Final Budget -



REVENUES (Continued)

Intergovernmental 203,304$ 203,304$ 182,525$ 20,779)$( 182,825$

Investment earnings 110,000 110,000 48,096 61,904)( 83,606

Other

Donations 79,798 79,798 80,000 202 80,000

Miscellaneous 893,947 893,947 764,032 129,915)( 1,820,866

Total other 973,745 973,745 844,032 129,713)( 1,900,866

Total revenues 34,511,258 34,526,258 35,437,179 910,921 35,097,076


General government

Personnel services 1,955,938 1,955,938 1,902,564 53,374 1,873,065

Contracted services 303,889 295,189 173,131 122,058 152,933

Materials and supplies 133,900 121,900 110,825 11,075 107,723

Other charges 548,396 328,396 258,833 69,563 269,242

Total general government 2,942,123 2,701,423 2,445,353 256,070 2,402,963

Personnel:

Personnel services 738,506 738,506 646,725 91,781 665,207


Materials and supplies 20,000 20,000 39,760 19,760)( 19,919

Other charges 24,557 24,557 13,150 11,407 16,037

Total personnel 964,360 964,360 795,923 168,437 875,041

Finance:

Personnel services 1,673,385 1,673,385 1,681,214 7,829)( 1,672,411



Other charges 42,730 46,930 28,257 18,673 32,760

Total finance 1,889,318 1,889,718 1,837,050 52,668 1,849,362

FUND BALANCE-BUDGET AND ACTUAL


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN

GENERAL FUND(Continued)


Budgeted Amounts

(continued)

55

Variance with

Final Budget -



EXPENDITURES (Continued)

Planning:

Personnel services 1,189,761$ 1,145,431$ 1,124,033$ 21,398$ 1,153,690$



Other charges 43,928 43,628 29,990 13,638 40,324

Total planning 1,320,250 1,320,250 1,284,818 35,432 1,259,257

Public works:

Personnel services 2,008,137 2,008,137 1,901,968 106,169 1,970,233



Other charges 35,795 35,795 24,946 10,849 30,274

Total public works 2,852,414 2,860,964 2,657,660 203,304 2,833,988

General services:

Personnel services 1,632,378 1,732,378 931,467 800,911 957,847

Contracted services 2,377,832 2,414,196 2,428,219 14,023)( 1,905,976


Other charges 1,498,813 2,417,843 2,307,064 110,779 1,350,060

Total general services 5,555,642 6,610,956 5,714,780 896,176 4,251,093

Cemetery:


Materials and supplies 2,040 2,040 2,509 469)( 6,456

Total cemetery 156,209 156,209 154,544 1,665 132,208

Total general government 15,680,316 16,503,880 14,890,128 1,613,752 13,603,912

Public safety:

Fire:




Other charges 37,700 37,700 34,647 3,053 37,503

Total fire 5,710,462 5,722,862 6,029,262 306,400)( 5,182,111


(continued)

FUND BALANCE-BUDGET AND ACTUALSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN


Budgeted Amounts

(Continued)GENERAL FUND

56

Variance with

Final Budget -



EXPENDITURES (Continued)

Public safety (Continued)

Police:

Personnel services 11,599,358$ 11,593,358$ 12,426,829$ 833,471)$( 11,899,084$



Other charges 107,036 103,853 98,684 5,169 102,051

Total police 13,075,060 13,040,390 13,729,000 688,610)( 13,179,726

Total public safety 18,785,522 18,763,252 19,758,262 995,010)( 18,361,837

Community service


Contracted services 1,187,647 1,137,647 927,712 209,935 947,065


Other charges 123,784 154,892 132,160 22,732 96,672

Total community service 5,995,680 6,022,360 5,975,860 46,500 5,537,376

Debt service:

Principal 29,160 29,160 - 29,160 -

Total debt service 29,160 29,160 - 29,160 -

Capital outlay

Public safety 38,500 73,242 16,958 56,284 -

Total capital outlay 38,500 73,242 16,958 56,284 -

Total expenditures 40,529,178 41,391,894 40,641,208 750,686 37,503,125

EXCESS (DEFICIENCY) OF REVENUES

OVER (UNDER) EXPENDITURES 6,017,920)( 6,865,636)( 5,204,029)( 1,661,607 2,406,049)(

OTHER FINANCING SOURCES (USES) Transfers in 6,105,691 7,544,902 7,628,731 83,829 5,628,618

Transfers out 1,818,071)( 1,994,929)( 2,021,352)( 26,423)( 2,677,867)(

Sale of capital assets 48,000 48,000 20,791 27,209)( 36,394

Total other financing sources and uses 4,335,620 5,597,973 5,628,170 30,197 2,987,145

NET CHANGE IN FUND BALANCE 1,682,300)( 1,267,663)( 424,141 1,691,804 581,096

FUND BALANCE, BEGINNING 13,379,683 13,379,683 13,379,683 - 12,902,270

FUND BALANCE, ENDING 11,697,383$ 12,112,020$ 13,803,824$ 1,691,804$ 13,483,366$

Budgeted Amounts


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL


GENERAL FUND(Continued)

57

NONMAJOR SPECIAL REVENUE FUNDS

Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than expendable trusts, special assessments, or major capital projects) that are legally restricted to expenditures for specific purposes.

Grants and Special Entitlements Community Development Block Grant Public Education Police Grant WIC Project Hotel Occupancy Municipal Court Technology Seized Assets Library Memorial Municipal Court Security Fee Juvenile Case Manager Fee Parks and Recreation TIRZ #2 TIRZ #3 Miscellaneous Grants

NONMAJOR PERMANENT FUNDS Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the City’s programs.

Cemetery Perpetual

Grant Communityand Special Development PublicEntitlements Block Grant Education

ASSETS Cash and cash equivalents 322,819$ -$ 119,392$ Investments - - - Receivables (net of allowance for uncollectibles): Accounts - - 21,911 Taxes - - - Loans 46,875 - - Due from other funds - 59 11,330 Due from other governments - 342,209 - Prepaid items - 150 -

Total assets 369,694$ 342,418$ 152,633$

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 20,003$ 60,203$ -$ Accrued liabilities - - - Deferred revenue 228,455 10,977 - Due to other funds - 271,238 -

Total liabilities 248,458 342,418 -

Fund balances: Nonspendable for prepaid items - 150 - Restricted for: General government - - - Public safety - - - Community services 121,236 - 152,633 Endowment - - - Unassigned - 150)( -

Total fund balances 121,236 - 152,633

Total liabilities and fund balances 369,694$ 342,418$ 152,633$

Special Revenue

SEPTEMBER 30, 2011


COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS

58

MunicipalPolice WIC Hotel Court Seized LibraryGrant Project Occupancy Technology Assets Memorial

2,267$ -$ 550,789$ 104,708$ 113,381$ 33,336$ - - - - - -

- - - - - - - - 646,339 - - - - - - - - -

2,499 8 - - - - 55,562 327,781 - - - -

- 12,377 - - - -

60,328$ 340,166$ 1,197,128$ 104,708$ 113,381$ 33,336$

-$ 44,876$ 61,892$ -$ 62,206$ -$ - 40,623 4,137 - - -

5,359 - 32 - - - 51,692 254,667 10 - - -

57,051 340,166 66,071 - 62,206 -

- 12,377 - - - -

- - - - - - 3,277 - - 104,708 51,175 - - - 1,131,057 - - 33,336 - - - - - - - 12,377)( - - - -

3,277 - 1,131,057 104,708 51,175 33,336

60,328$ 340,166$ 1,197,128$ 104,708$ 113,381$ 33,336$

Special Revenue

(continued)

59

Municipal JuvenileCourt Case Parks and

Security Fee Manager Fee Recreation

ASSETS Cash and cash equivalents 90,804$ 26,369$ 3,836$ Investments - - - Receivables (net of allowance for uncollectibles): Accounts - - - Taxes - - - Loans - - - Due from other funds 146 239 - Due from other governments - - - Prepaid items - - -

Total assets 90,950$ 26,608$ 3,836$

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable -$ -$ -$ Accrued liabilities - 1,742 - Deferred revenue - - - Due to other funds 310 - -

Total liabilities 310 1,742 -

Fund balances: Nonspendable - - - Restricted for: General government - - - Public safety 90,640 24,866 - Community services - - 3,836 Endowment - - - Unassigned - - -

Total fund balances 90,640 24,866 3,836

Total liabilities and fund balances 90,950$ 26,608$ 3,836$

Special Revenue

SEPTEMBER 30, 2011


COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS(Continued)

60

Permanent

Miscellaneous CemeteryTIRZ #2 TIRZ #3 Grants Perpetual Totals

-$ -$ 203,259$ 14,805$ 1,585,765$ - - 2,908,608 1,002,971 3,911,579

37,577 83,947 - 7,143 150,578 - - - - 646,339 - - - - 46,875

81,150 104,775 3,534 - 203,740 - - 356,493 - 1,082,045 - - - - 12,527

118,727$ 188,722$ 3,471,894$ 1,024,919$ 7,639,448$

-$ -$ 23,808$ 525$ 273,513$ - - - - 46,502 - - 3,219,983 - 3,464,806

118,671 297,103 132,040 - 1,125,731

118,671 297,103 3,375,831 525 4,910,552

- - - - 12,527

56 - 96,063 - 96,119 - - - - 274,666 - - - - 1,442,098 - - - 1,024,394 1,024,394 - 108,381)( - - 120,908)(

56 108,381)( 96,063 1,024,394 2,728,896

118,727$ 188,722$ 3,471,894$ 1,024,919$ 7,639,448$

Special Revenue

61

Grant Communityand Special Development PublicEntitlements Block Grant Education

REVENUES Taxes -$ -$ 85,207$ Fines and penalties - - - Intergovernmental 20,111 648,467 - Investment earnings - - - Miscellaneous - - -

Total revenues 20,111 648,467 85,207

EXPENDITURES Current: General government - - - Public safety - - - Community service 20,111 436,964 - Capital outlay - 211,503 -

Total expenditures 20,111 648,467 -

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES - - 85,207

OTHER FINANCING SOURCES (USES) Transfers in - - - Transfers out - - -

Total other financing sources and uses - - -

NET CHANGE IN FUND BALANCES - - 85,207

FUND BALANCES, BEGINNING 121,236 - 67,426

FUND BALANCES, ENDING 121,236$ -$ 152,633$

Special Revenue

AND CHANGES IN FUND BALANCES



COMBINING STATEMENT OF REVENUES, EXPENDITURES

NONMAJOR GOVERNMENTAL FUNDS

62

MunicipalPolice WIC Hotel Court Seized LibraryGrant Project Occupancy Technology Assets Memorial

-$ -$ 2,296,276$ -$ -$ -$ - - - 33,886 82,303 -

447,788 1,634,688 - - - - - - 1,424 - 2 - - - 30 - - 566

447,788 1,634,688 2,297,730 33,886 82,305 566

- - - - - - 473,525 - - 2,655 1,500 -

- 1,634,688 1,386,223 - - - - - - 125,780 62,206 -

473,525 1,634,688 1,386,223 128,435 63,706 -

25,737)( - 911,507 94,549)( 18,599 566

- - 41,282 - - - - - 1,025,703)( - - -

- - 984,421)( - - -

25,737)( - 72,914)( 94,549)( 18,599 566

29,014 - 1,203,971 199,257 32,576 32,770

3,277$ -$ 1,131,057$ 104,708$ 51,175$ 33,336$

(continued)

Special Revenue

63

Municipal JuvenileCourt Case Parks and

Security Fee Manager Fee Recreation

REVENUES Taxes -$ -$ -$ Fines and penalties 25,695 40,834 - Intergovernmental - - - Investment earnings - - - Miscellaneous - - 642

Total revenues 25,695 40,834 642

EXPENDITURES Current: General government - - - Public safety 8,358 46,756 - Community service - - - Capital outlay - - -

Total expenditures 8,358 46,756 -

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 17,337 5,922)( 642

OTHER FINANCING SOURCES (USES) Transfers in - - - Transfers out - - -

Total other financing sources and uses - - -

NET CHANGE IN FUND BALANCES 17,337 5,922)( 642

FUND BALANCES, BEGINNING 73,303 30,788 3,194

FUND BALANCES, ENDING 90,640$ 24,866$ 3,836$


COMBINING STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES

(Continued)NONMAJOR GOVERNMENTAL FUNDS

Special Revenue


64

Permanent

Miscellaneous CemeteryTIRZ #2 TIRZ #3 Grants Perpetual Totals

118,727$ 188,721$ -$ -$ 2,688,931$ - - - - 182,718 - - 420,627 - 3,171,681 - - - 7,023 8,449 - - - 16,090 17,328

118,727 188,721 420,627 23,113 6,069,107

119,762 - 280,768 - 400,530

- - - - 532,794 - - - - 3,477,986 - - 139,859 - 539,348

119,762 - 420,627 - 4,950,658

1,035)( 188,721 - 23,113 1,118,449

- - - - 41,282 - 321,636)( - - 1,347,339)(

- 321,636)( - - 1,306,057)(

1,035)( 132,915)( - 23,113 187,608)(

1,091 24,534 96,063 1,001,281 2,916,504

56$ 108,381)$( 96,063$ 1,024,394$ 2,728,896$

Special Revenue

65



REVENUES Taxes 8,394,768$ 8,394,768$ 8,360,709$ 34,059)$( Intergovernmental 3,030,000 3,030,000 - 3,030,000)( Interest on investments 55,000 55,000 19,547 35,453)( Miscellaneous 177,565 177,565 198,946 21,381

Total revenues 11,657,333 11,657,333 8,579,202 3,078,131)(

EXPENDITURES Debt service: Principal 5,630,000 5,630,000 5,870,000 240,000)( Interest and fiscal charges 6,600,568 6,600,568 6,351,363 249,205 Bond issuance cost - - 152,734 152,734)(

Total expenditures 12,230,568 12,230,568 12,374,097 143,529)(

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 573,235)( 573,235)( 3,794,895)( 3,221,660)(

OTHER FINANCING SOURCES (USES) Transfers in 1,896,370 1,896,370 1,896,370 - Payment to refunded bond escrow agent - - 11,680,362)( 11,680,362)( Premium on debt issued - - 590,248 590,248 Capital related debt issued - - 11,245,000 11,245,000

Total other financing sources and uses 1,896,370 1,896,370 2,051,256 154,886

NET CHANGE IN FUND BALANCE 1,323,135 1,323,135 1,743,639)( 3,066,774)(

FUND BALANCE, BEGINNING 8,879,062 8,879,062 8,879,062 -

FUND BALANCE, ENDING 10,202,197$ 10,202,197$ 7,135,423$ 3,066,774)$(

Budgeted Amounts


DEBT SERVICE


SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCE-BUDGET AND ACTUAL

66



REVENUES Intergovernmental 1,376,270$ 1,216,972$ 648,467$ 568,505)$(

Total revenues 1,376,270 1,216,972 648,467 568,505)(

EXPENDITURES Current: Community service 828,184 644,754 436,964 207,790 Capital outlay 548,086 572,218 211,503 360,715

Total expenditures 1,376,270 1,216,972 648,467 568,505

NET CHANGE IN FUND BALANCE - - - -

FUND BALANCE, BEGINNING - - - -

FUND BALANCE, ENDING -$ -$ -$ -$

Budgeted Amounts


COMMUNITY DEVELOPMENT BLOCK GRANT


FUND BALANCE-BUDGET AND ACTUALSCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN

67



REVENUES Intergovernmental 484,365$ 484,365$ 447,788$ 36,577)$(

Total revenues 484,365 484,365 447,788 36,577)(

EXPENDITURES Current: Public safety 511,444 511,444 473,525 37,919

Total expenditures 511,444 511,444 473,525 37,919

NET CHANGE IN FUND BALANCE 27,079)( 27,079)( 25,737)( 1,342

FUND BALANCE, BEGINNING 29,014 29,014 29,014 -

FUND BALANCE, ENDING 1,935$ 1,935$ 3,277$ 1,342$

Budgeted Amounts


POLICE GRANT



68



REVENUES Intergovernmental 1,776,298$ 1,776,298$ 1,634,688$ 141,610)$(

Total revenues 1,776,298 1,776,298 1,634,688 141,610)(

EXPENDITURES Current: Community service 1,754,498 1,757,998 1,634,688 123,310


NET CHANGE IN FUND BALANCE 21,800 18,300 - 18,300)(

FUND BALANCE, BEGINNING - - - -

FUND BALANCE, ENDING 21,800$ 18,300$ -$ 18,300)$(

Budgeted Amounts


WIC PROJECT



69



REVENUES Taxes 2,158,983$ 2,158,983$ 2,296,276$ 137,293$ Interest on investments 6,500 6,500 1,424 5,076)( Other - - 30 30

Total revenues 2,165,483 2,165,483 2,297,730 132,247

EXPENDITURES Current: Community service 1,720,034 1,927,034 1,386,223 540,811


EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 445,449 238,449 911,507 673,058

OTHER FINANCING SOURCES (USES) Transfers in 41,282 41,282 41,282 - Transfers out 1,025,703)( 1,025,703)( 1,025,703)( -

Total other financing sources and uses 984,421)( 984,421)( 984,421)( -


FUND BALANCE, BEGINNING 1,203,971 1,203,971 1,203,971 -

FUND BALANCE, ENDING 664,999$ 457,999$ 1,131,057$ 673,058$

Budgeted Amounts


STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN

HOTEL OCCUPANCY


FUND BALANCE - BUDGET AND ACTUAL

70



REVENUES Fines and penalties 40,000$ 40,000$ 33,886$ 6,114)$( Investment earnings 500 500 - 500)(

Total revenues 40,500 40,500 33,886 6,614)(

EXPENDITURES Current: Public safety 5,000 4,000 2,655 1,345 Capital outlay 125,000 126,000 125,780 220


NET CHANGE IN FUND BALANCE 89,500)( 89,500)( 94,549)( 5,049)(


FUND BALANCE, ENDING 109,757$ 109,757$ 104,708$ 5,049)$(

Budgeted Amounts


MUNICIPAL COURT TECHNOLOGY



71



REVENUES Fines and penalties 5,000$ 5,000$ 82,303$ 77,303$ Investment earnings 100 100 2 98)(

Total revenues 5,100 5,100 82,305 77,205

EXPENDITURES Current: Public safety 1,500 1,500 1,500 - Capital outlay - 98,800 62,206 36,594


NET CHANGE IN FUND BALANCE 3,600 95,200)( 18,599 113,799


FUND BALANCE, ENDING 36,176$ 62,624)$( 51,175$ 113,799$


Budgeted Amounts



SEIZED ASSETS

72



REVENUES Fines and penalties 30,000$ 30,000$ 25,695$ 4,305)$( Investment earnings 120 120 - 120)(

Total revenues 30,120 30,120 25,695 4,425)(

EXPENDITURES Current: Public safety 10,448 10,448 8,358 2,090


NET CHANGE IN FUND BALANCE 19,672 19,672 17,337 2,335)(


FUND BALANCE, ENDING 92,975$ 92,975$ 90,640$ 2,335)$(


Budgeted Amounts



MUNICIPAL COURT SECURITY FEE

73



REVENUES Fines and penalties 29,000$ 29,000$ 40,834$ 11,834$

Total revenues 29,000 29,000 40,834 11,834

EXPENDITURES Current: Public safety 45,508 45,508 46,756 1,248)(

Total expenditures 45,508 45,508 46,756 1,248)(



FUND BALANCE, ENDING 14,280$ 14,280$ 24,866$ 10,586$


Budgeted Amounts



JUVENILE CASE MANAGER FEE

74



REVENUES Taxes 183,446$ 183,446$ 118,727$ 64,719)$(

Total revenues 183,446 183,446 118,727 64,719)(


General government 183,445 183,445 119,762 63,683


NET CHANGE IN FUND BALANCE 1 1 1,035)( 1,036)(


FUND BALANCE, ENDING 1,092$ 1,092$ 56$ 1,036)$(


Budgeted Amounts



TIRZ #2

75



REVENUES Taxes 321,636$ 321,636$ 188,721$ 132,915)$(

Total revenues 321,636 321,636 188,721 132,915)(

EXPENDITURES - - - -

EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 321,636 321,636 188,721 132,915)(

OTHER FINANCING SOURCES (USES) Transfers in Transfers out 318,452)( 318,452)( 321,636)( 3,184)(

Total other financing sources and uses 318,452)( 318,452)( 321,636)( 3,184)(

NET CHANGE IN FUND BALANCE 3,184 3,184 132,915)( 136,099)(


FUND BALANCE, ENDING 27,718$ 27,718$ 108,381)$( 136,099)$(


Budgeted Amounts



TIRZ #3

76



REVENUES Intergovernmental 5,232,301$ 5,085,517$ 420,627$ 4,664,890)$(

Total revenues 5,232,301 5,085,517 420,627 4,664,890)(

EXPENDITURES Current: General government 563,765 378,863 280,768 98,095 Capital outlay 4,668,536 4,706,654 139,859 4,566,795

Total expenditures 5,232,301 5,085,517 420,627 4,664,890

NET CHANGE IN FUND BALANCE - - - -


FUND BALANCE, ENDING 96,063$ 96,063$ 96,063$ -$

Budgeted Amounts


MISCELLANEOUS GRANTS



77

NONMAJOR ENTERPRISE FUNDS Enterprise Funds are used to account for the acquisition, operations and maintenance of a City’s facilities and services which are entirely or predominantly supported by user charges or those for which the City has decided that periodic determination of the revenue earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. All activities necessary to provide services are accounted for in these funds, including, but not limited to, administration, operations and maintenance. Debt service is also included.

Airport Fund – This fund was established to account for all revenue and expenses of every nature derived by the City from its ownership and operation of the airport. Waste Collection Fund – This fund was created to account for waste collection and disposal services provided to residents of the City.

WasteAirport Collection Total

ASSETS Current assets: Cash and cash equivalents -$ 752,066$ 752,066$ Accounts receivable, net 9,839 313,039 322,878 Due from other funds 54,331 - 54,331

Due from other governments 3,519 - 3,519

Total current assets 67,689 1,065,105 1,132,794

Non-current assets: Capital assets: Land 100,337 - 100,337 Buildings 4,339,745 - 4,339,745 Improvements other than buildings 8,216,267 - 8,216,267 Furnishings and equipments 21,137 - 21,137 Construction in progress 1,076,042 - 1,076,042

Less accumulated depreciation 9,022,763)( - 9,022,763)(

Total capital assets 4,730,765 - 4,730,765

Total non-current assets 4,730,765 - 4,730,765

Total assets 4,798,454$ 1,065,105$ 5,863,559$

LIABILITIES Current liabilities: Accounts payable 25,011 175,183 200,194 Accrued liabilities - 8,182 8,182 Due to other funds 74,762 32 74,794 Deferred revenue 21,921 - 21,921

Customer deposits 3,549 119,155 122,704

Total current liabilities 125,243 302,552 427,795

Non-current liabilities:

Long-term debt 9,615 - 9,615

Total non-current liabilities 9,615 - 9,615

Total liabilities 134,858 302,552 437,410

NET ASSETS Invested in capital assets, net of related debt 4,721,150 - 4,721,150

Unrestricted 57,554)( 762,553 704,999

Total net assets 4,663,596$ 762,553$ 5,426,149$

Enterprise


COMBINING STATEMENT OF NET ASSETS

NONMAJOR ENTERPRISE FUNDS

SEPTEMBER 30, 2011

78

WasteAirport Collection Total

OPERATING REVENUES Charges for services 209,725$ 1,909,152$ 2,118,877$ Intergovernmental 46,985 - 46,985

Total operating revenues 256,710 1,909,152 2,165,862

OPERATING EXPENSES Personnel services 3,263 - 3,263 Contracted services 285,221 1,773,160 2,058,381 Materials and supplies 9,765 - 9,765 Other charges 4,455 - 4,455 Depreciation 407,854 - 407,854

Total operating expenses 710,558 1,773,160 2,483,718

OPERATING INCOME (LOSS) 453,848)( 135,992 317,856)(

NON-OPERATING REVENUES (EXPENSES) Transfer in 185,319 - 185,319 Transfer out - 36,664)( 36,664)( Loss on sale of asset 4,500 - 4,500 Other 4,500 32,547 37,047

Total non-operating revenue (expenses) 194,319 4,117)( 190,202

CHANGE IN NET ASSETS 259,529)( 131,875 127,654)(

TOTAL NET ASSETS, BEGINNING 4,923,125 630,678 5,553,803

TOTAL NET ASSETS, ENDING 4,663,596$ 762,553$ 5,426,149$

Enterprise



COMBINING STATEMENT OF REVENUES, EXPENSESAND CHANGES IN FUND NET ASSETS


79

Waste Airport Collection Totals

CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers 312,975$ 1,853,448$ 2,166,423$ Cash paid to suppliers for goods and services 336,097)( 1,713,753)( 2,049,850)(

Cash paid to employees for services - 1,509 1,509

Net cash provided (used) by operating activities 23,122)( 141,204 118,082

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 185,319 - 185,319 Transfers to other funds - 36,664)( 36,664)(

Net cash provided (used) by noncapital financing activities 185,319 36,664)( 148,655

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets 171,197)( - 171,197)(

Net cash used by capital and related financing activities 171,197)( - 171,197)(

CASH FLOWS FROM INVESTING ACTIVITIES Interest received 9,000 - 9,000

Net cash provided by investing activities 9,000 - 9,000

NET INCREASE IN CASH AND CASH EQUIVALENTS - 104,540 104,540

CASH AND CASH EQUIVALENTS, BEGINNING - 647,526 647,526

CASH AND CASH EQUIVALENTS, ENDING -$ 752,066$ 752,066$

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) 453,848)$( 135,992$ 317,856)$( Adjustments to reconcile operating loss to net cash provided (used) by operating activities: Depreciation 407,854 - 407,854 Other nonoperating income - 32,547 32,547 Changes in assets and liabilities: Decrease (increase) in assets: Accounts receivable 672)( 88,251)( 88,923)( Due from other funds 54,331)( 32 54,299)( Due from other governments 34,298 - 34,298 Prepaid items 13 - 13 Increase (decrease) in liabilities: Accounts payable 17,662 44,511 62,173 Accrued liabilities - 1,509 1,509 Due to other funds 3,942 32 3,974 Customer deposits - 14,832 14,832

Deferred revenue 18,697 - 18,697

Long-term debt 3,263 - 3,263

Net cash provided by operating activities 23,122)$( 141,204$ 118,082$

Enterprise


COMBINING STATEMENT OF CASH FLOWS



80

Health AssetInsurance Replacement Insurance Total

ASSETS Current assets: Cash and cash equivalents -$ 1,256,805$ 146,918$ 1,403,723$ Investments 3,095,985 - - 3,095,985 Due from other funds 153,265 190,742 - 344,007

Total current assets 3,249,250 1,447,547 146,918 4,843,715

Total assets 3,249,250$ 1,447,547$ 146,918$ 4,843,715$

LIABILITIES Current liabilities: Accounts payable 12,438 - - 12,438 Due to other funds 190,742 1,447,547 - 1,638,289 Claims payable 897,277 - - 897,277

Total current liabilities 1,100,457 1,447,547 - 2,548,004

Total liabilities 1,100,457 1,447,547 - 2,548,004

NET ASSETS Unrestricted 2,148,793 - 146,918 2,295,711

Total net assets 2,148,793$ -$ 146,918$ 2,295,711$

Internal Service


STATEMENT OF NET ASSETS

INTERNAL SERVICE FUNDS

SEPTEMBER 30, 2011

81


OPERATING REVENUES Employer contributions 2,974,397$ -$ -$ 2,974,397$ Employee contributions 922,727 - - 922,727 Retiree contributions 166,093 - - 166,093 Pharmacy rebates 5,307 - - 5,307 Other refunds 305,544 - 46,918 352,462

Total operating revenues 4,374,068 - 46,918 4,420,986

OPERATING EXPENSES Claims 3,466,360 - - 3,466,360 Other charges 586,176 - - 586,176

Total operating expenses 4,052,536 - - 4,052,536

OPERATING INCOME 321,532 - 46,918 368,450

NON-OPERATING REVENUES (EXPENSES) Interest on investment 10,057 1,247 - 11,304

Total non-operating revenue (expenses) 10,057 1,247 - 11,304

INCOME BEFORE TRANSFERS 331,589 1,247 46,918 379,754

Transfers out - 1,312,547)( - 1,312,547)(

CHANGE IN NET ASSETS 331,589 1,311,300)( 46,918 932,793)(

TOTAL NET ASSETS, BEGINNING 1,817,204 1,311,300 100,000 3,228,504

TOTAL NET ASSETS, ENDING 2,148,793$ -$ 146,918$ 2,295,711$

Internal Service


STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND NET ASSETS



82


CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers 4,374,068$ -$ 46,918$ 4,420,986$ Cash paid to suppliers for goods and services 4,110,853)( 1,344,229 - 2,766,624)(

Net cash provided by operating activities 263,215 1,344,229 46,918 1,654,362

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds - 1,312,547)( - 1,312,547)(

Net cash used by noncapital financing activities - 1,312,547)( - 1,312,547)(

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of investment securities 1,595,635)( - - 1,595,635)( Interest received 10,057 1,247 - 11,304

Net cash provided (used) by investing activities 1,585,578)( 1,247 - 1,584,331)(

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,322,363)( 32,929 46,918 1,242,516)(

CASH AND CASH EQUIVALENTS, BEGINNING 1,322,363 1,223,876 100,000 2,646,239

CASH AND CASH EQUIVALENTS, ENDING -$ 1,256,805$ 146,918$ 1,403,723$

Reconciliation of operating income to net cash provided (used) by operating activities:

Operating income (loss) 321,532$ -$ 46,918$ 368,450$ Adjustments to reconcile operating income to net cash provided by operating activities: Changes in assets and liabilities: Decrease (increase) in assets: Due from other funds 131,380)( 103,318)( - 234,698)( Increase (decrease) in liabilities: Accounts payable 21,478)( - - 21,478)( Due to other funds 190,742 1,447,547 - 1,638,289 Claims payable 96,201)( - - 96,201)(

Net cash provided (used) by operations 263,215$ 1,344,229$ 46,918$ 1,654,362$





Internal Service

83

STATISTICAL SECTION

STATISTICAL SECTION (Unaudited)

This part of City of San Marcos, Texas’ comprehensive annual financial report presents multiple years of data to provide a historical perspective for understanding the information available in the financial statements, note disclosures, and required supplementary information and for assessing the City’s overall financial health.

Contents Page

Financial Trends 84 These schedules contain trend information to help the reader

understand how the City’s financial performance and well-being have changed over time.

Revenue Capacity 90 These schedules contain trend information to help the reader assess

the City’s most significant local revenue resources. Although Electric charges are the City’s most significant local revenue source, information about revenue payers is confidential under Texas statutes. Trend information about electric charges is provided in Table 2. Additionally, information about property tax revenue is provided.

Debt Capacity 98 These schedules contain trend information to help the reader assess

the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future.

Economic and Demographic Indicators 103 These schedules contain economic and demographic information

to help the reader understand the environment within which the City’s financial activities take place.

Operating Information 106 These schedules contain service and infrastructure data to help the

reader understand how the information in the City’s financial report relates to the services and activities performed by the City.

Sources: Unless otherwise noted, the information in these schedules is

derived from the comprehensive annual financial reports for the relevant year.

TABLE 1

2004 2005 2006 2007 2008 2009 2010 2011

Governmental activities:


net of related debt 39,032,075$ 44,394,312$ 50,982,992$ 34,026,741$ 52,331,211$ 69,504,636$ 66,361,134$ 74,247,634$

Restricted 2,607,077 3,295,738 4,096,953 7,178,953 13,656,718 11,771,448 11,086,463 9,972,700

Unrestricted 8,966,444 10,150,795 14,345,393 38,892,946 21,549,724 19,093,354 22,795,807 18,807,912

Total governmental activities

net assets 50,605,596$ 57,840,845$ 69,425,338$ 80,098,640$ 87,537,653$ 100,369,438$ 100,243,404$ 103,028,246$

Business-type activities:



Restricted - 1,776,852 - - - - - -

Unrestricted 23,106,838 57,935,375 65,067,633 71,918,198 55,197,775 45,845,181 36,486,413 46,484,731

Total business-type activities

net assets 76,425,642$ 87,549,394$ 97,005,361$ 109,085,469$ 119,147,838$ 122,643,341$ 120,802,734$ 123,222,139$

Primary government:



Restricted 2,607,077 5,072,590 4,096,953 7,178,953 13,656,718 11,771,448 11,086,463 9,972,700

Unrestricted 32,073,282 68,086,170 79,413,026 110,811,144 76,747,499 64,938,535 59,282,220 65,292,643

Total primary government

net assets 127,031,238$ 145,390,239$ 166,430,699$ 189,184,109$ 206,685,491$ 223,012,779$ 221,046,138$ 226,250,385$

Note:

The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.

Fiscal Year


NET ASSETS BY COMPONENT

LAST EIGHT FISCAL YEARS

84

TABLE 2

2004 2005 2006 2007 2008 2009 2010 2011EXPENSES Governmental activities: General government 7,827,799$ 11,113,362$ 9,416,555$ 13,769,853$ 12,565,540$ 11,789,804$ 14,811,677$ 15,419,706$ Public safety 12,022,559 11,873,017 12,896,427 13,537,545 16,406,242 18,223,349 22,337,053 18,040,389 Community service 7,339,792 7,448,224 8,032,845 9,077,477 9,114,632 9,120,980 10,463,722 10,092,399 Interest and fiscal charges 1,678,563 1,816,987 1,887,770 2,769,146 4,784,896 7,008,392 6,525,172 6,412,611

Total governmental activities expenses 28,868,713 32,251,590 32,233,597 39,154,021 42,871,310 46,142,525 54,137,624 49,965,105

Business-type activities: Water/wastewater 16,185,156 17,239,651 19,702,909 21,657,804 23,872,986 24,443,838 25,878,300 26,701,908 Electric 32,609,906 36,201,717 44,786,544 40,539,638 49,224,186 46,068,424 45,746,937 43,413,456 Airport 687,208 689,330 689,406 739,316 768,419 733,621 694,070 710,558 Drainage 556,759 615,424 374,013 577,461 811,057 1,482,765 1,959,180 1,897,978

Waste collection 996,341 1,049,390 1,410,264 1,503,213 1,703,744 1,228,122 1,463,780 1,773,160

Total business-type activities expenses 51,035,370 55,795,512 66,963,136 65,017,432 76,380,392 73,956,770 75,742,267 74,497,060

Total primary government program expenses 79,904,083$ 88,047,102$ 99,196,733$ 104,171,453$ 119,251,702$ 120,099,295$ 129,879,891$ 124,462,165$

PROGRAM REVENUES Governmental activities: Charges for services: General government 1,194,224$ 1,191,152$ 1,299,438$ 901,028$ 1,252,334$ 1,076,738$ 1,010,309$ 1,283,941$ Public safety 1,110,509 1,295,340 1,339,698 1,401,176 1,455,835 1,716,212 1,807,346 1,653,099 Community service 646,099 787,342 721,441 575,622 626,210 653,368 574,537 639,354 Operating grants and contributions 1,338,188 2,248,473 2,149,913 6,128,665 3,452,451 9,981,272 3,145,119 2,619,600

Capital grants and contributions 1,974,736 488,227 638,048 3,921,368 836,384 2,104,303 2,373,110 1,149,409

Total governmental activities program revenues 6,263,756 6,010,534 6,148,538 12,927,859 7,623,214 15,531,893 8,910,421 7,345,403

Business-type activities: Charges for services: Electric 32,700,974 39,412,677 45,564,818 45,038,579 49,787,885 49,461,030 48,768,174 48,453,727 Water and wastewater 19,112,445 21,415,438 26,318,349 24,138,588 28,352,029 26,279,549 25,241,695 26,986,572 Airport 165,010 185,508 209,512 210,224 203,780 273,788 178,432 256,710 Drainage 1,019,030 878,012 1,068,407 1,424,761 1,379,198 1,390,465 1,478,191 2,108,913 Waste collection 959,405 1,102,707 1,180,485 1,272,014 1,307,481 1,392,717 1,595,550 1,909,152 Operating grants and contributions 29,731 21,496 - - - - - -

Capital grants and contributions 312,941 551,553 1,122,112 309,307 1,649,020 1,214,327 852,403 1,085,830

Total business-type activities program revenues 54,299,536 63,567,391 75,463,683 72,393,473 82,679,393 80,011,876 78,114,445 80,800,904

Total primary government program revenues 60,563,292$ 69,577,925$ 81,612,221$ 85,321,332$ 90,302,607$ 95,543,769$ 87,024,866$ 88,146,307$

Fiscal Year

CITY OF SAN MARCOS, TEXASCHANGES IN NET ASSETS


(continued)

85

TABLE 2

2004 2005 2006 2007 2008 2009 2010 2011NET (EXPENSE) REVENUES Governmental activities 22,604,957)$( 26,241,056)$( 26,085,059)$( 26,226,162)$( 35,248,096)$( 30,610,632)$( 45,227,203)$( 42,619,702)$(

Business-type activities 3,264,166 7,771,879 8,500,547 7,376,041 6,299,001 6,055,106 2,372,178 6,303,844

Total primary government net expense 19,340,791)( 18,469,177)( 17,584,512)( 18,850,121)( 28,949,095)( 24,555,526)( 42,855,025)( 36,315,858)(

GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental activities:

Taxes

Property 8,428,032 8,668,066 8,912,647 9,558,703 11,696,800 12,401,892 14,332,003 14,236,642

Franchise 5,519,858 6,242,627 6,999,442 6,927,867 7,695,811 1,281,674 1,477,463 1,447,569

Sales 13,491,105 14,062,454 16,377,390 16,018,106 18,347,135 17,989,392 18,398,707 19,854,399

Other 1,076,824 1,206,769 1,358,869 1,519,896 1,698,905 2,030,247 2,266,391 2,381,483

Investment earnings 474,313 828,558 1,603,021 2,745,676 2,590,329 3,571,867 587,646 319,091

Miscellaneous 81,401 1,021,738 163,646 508,716 572,276 1,963,080 1,854,367 753,366

Gain on sale of capital assets - - - - - - 64,974 121,129

Transfers 212,798 831,723 2,479,810 379,500)( 85,853 5,759,854 6,119,618 6,290,865

Total governmental activities 29,284,331 32,861,935 37,894,825 36,899,464 42,687,109 44,998,006 45,101,169 45,404,544

Business-type activities:

Investment earnings 609,697 1,856,552 3,182,034 4,063,644 2,801,982 2,098,305 569,393 376,915

Other 16,038 15,551 27,620 260,923 618,072 1,101,946 1,337,440 2,029,511

Transfers 212,798)( 831,723)( 2,479,810)( 379,500 85,853)( 5,759,854)( 6,119,618)( 6,290,865)(

Total business-type activities 412,937 1,040,380 729,844 4,704,067 3,334,201 2,559,603)( 4,212,785)( 3,884,439)(

Total primary government 29,697,268 33,902,315 38,624,669 41,603,531 46,021,310 42,438,403 40,888,384 41,520,105

CHANGE IN NET ASSETS Governmental activities 6,679,374 6,620,879 11,809,766 10,673,302 7,439,013 14,387,374 126,034)( 2,784,842

Business-type activities 3,677,103 8,812,259 9,230,391 12,080,108 9,633,202 3,495,503 1,840,607)( 2,419,405

Total primary government 10,356,477$ 15,433,138$ 21,040,157$ 22,753,410$ 17,072,215$ 17,882,877$ 1,966,641)$( 5,204,247$

Note:

The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.


Fiscal Year


CHANGES IN NET ASSETS(Continued)

86

TABLE 3

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

General fund

Reserved 105,734$ 427,053$ 185,893$ 174,017$ 153,597$ 134,113$ 129,929$ 97,494$ 228,870$ -$

Unreserved 6,387,766 7,050,045 9,965,481 9,952,272 14,011,908 14,593,062 13,476,666 12,804,776 13,148,100 -

Nonspendable - - - - - - - - - 214,915

Unassigned - - - - - - - - - 13,588,909

Total general fund 6,493,500$ 7,477,098$ 10,151,374$ 10,126,289$ 14,165,505$ 14,727,175$ 13,606,595$ 12,902,270$ 13,376,970$ 13,803,824$

All other governmental funds

Reserved 844,999$ 800,095$ 845,475$ 930,722$ 1,155,404$ 1,303,282$ 1,315,807$ 2,365,271$ 1,744,662$ -$

Unreserved, reported in:

Special revenue funds 284,664 514,932 502,826 760,917 844,368 1,087,186 1,879,330 1,111,235 1,174,555 -

Capital projects funds 13,873,571 11,023,880 14,784,996 13,108,298 18,428,409 40,897,216 76,612,241 74,318,614 55,426,183 -

Debt service funds 1,394,621 961,232 1,206,412 1,531,736 2,232,229 5,764,165 10,494,115 8,544,491 8,879,062 -

Nonspendable - - - - - - - - - 12,527

Restricted - - - - - - - - - 52,216,441

Unassigned - - - - - - - - - 120,908)(

Total all other

governmental funds 16,397,855$ 13,300,139$ 17,339,709$ 16,331,673$ 22,660,410$ 49,051,849$ 90,301,493$ 86,339,611$ 67,224,462$ 52,108,060$

Notes:(1)

The City implemented GASB 54 in 2011, which changed the fund balance classifications reported in governmental funds. See the Fund Balance Classification note in theSummary of Significant Accounting Policies in the notes to the financial statements for descriptive information on the new classifications.

Fiscal Year


FUND BALANCESGOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS

87

TABLE 4

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

REVENUES Taxes 24,628,583$ 26,195,549$ 28,380,291$ 30,109,095$ 33,532,369$ 35,610,380$ 39,303,487$ 33,617,042$ 36,401,012$ 37,858,603$ Licenses and permits 786,000 566,245 716,219 854,818 930,496 688,943 813,976 847,678 821,853 994,123 Fees and penalties 874,677 1,043,706 1,099,498 1,331,391 1,404,734 1,450,558 1,504,429 1,722,705 1,851,308 1,720,669 Charges for services 4,712,696 4,999,001 3,922,202 4,413,393 4,539,296 4,673,630 4,941,970 4,978,075 4,954,980 5,021,489 From use of money/property 980,139 960,750 - - - - - - - - Intergovernmental 2,794,428 2,774,548 2,728,440 1,989,677 2,942,569 10,050,033 4,168,351 10,925,601 5,254,713 3,354,206 Investment earnings - 28,436 474,353 - 1,603,021 2,745,676 2,590,329 2,431,751 587,645 319,093 Contributions - - - - - - - 918,930 - - Other revenues 475,702 511,766 917,512 2,109,693 355,039 508,716 955,223 1,579,752 2,139,993 1,291,858

Total revenues 35,252,225 37,080,001 38,238,515 40,808,067 45,307,524 55,727,936 54,277,765 57,021,534 52,011,504 50,560,041

EXPENDITURES General government 11,029,407 11,565,441 10,564,127 12,971,819 11,095,617 17,011,106 15,663,181 14,983,807 14,548,005 15,750,709 Public safety 11,169,316 11,507,242 11,224,740 12,057,544 12,558,996 13,355,986 15,833,503 16,962,418 18,997,394 20,291,056 Community service 6,989,365 6,712,736 6,923,328 6,876,302 7,410,044 8,362,801 8,542,826 8,071,623 9,549,374 9,453,846 Capital outlay 7,616,569 5,922,994 5,293,105 8,588,886 7,394,546 17,832,454 26,710,357 27,655,480 30,093,216 15,259,308 Debt service Interest 2,249,507 1,720,522 1,741,277 1,813,982 2,061,346 3,273,903 4,907,332 7,414,683 6,450,663 6,504,097 Principal 2,431,310 3,359,634 3,061,337 2,954,906 3,123,832 2,749,077 4,749,496 4,594,059 4,780,000 5,870,000

Total expenditures 41,485,474 40,788,569 38,807,914 45,263,439 43,644,381 62,585,327 76,406,695 79,682,070 84,418,652 73,129,016

Fiscal Year


CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS


(continued)

88

TABLE 4

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 6,233,249)$( 3,708,568)$( 569,399)$( 4,455,372)$( 1,663,143$ 6,857,391)$( 22,128,930)$( 22,660,536)$( 32,407,148)$( 22,568,975)$(

OTHER FINANCING SOURCES (USES) Bond issuance costs - - - 60,102)( - - - - - - Bond sales - 1,928,823 7,140,604 2,650,000 6,225,000 34,190,000 62,695,000 22,895,000 8,625,000 11,245,000 Proceeds from - capital leases - - - - - - - - - - Discount on debt issued - - - - - - 522,859)( 63,173)( - - Premium on debt issued - - - - - - - 487,099 - 590,248 Other - - - - - - - 708,611 71,163 121,129 Payment to refunded bond escrow agent - - - - - - - 9,875,296)( - 11,680,362)( Transfers in 2,304,018 1,006,335 1,529,879 2,381,096 7,021,831 5,875,970 4,375,113 9,084,781 9,434,616 11,149,525

Transfers out 2,033,440)( 951,894)( 1,317,081)( 1,549,373)( 4,542,021)( 6,255,470)( 4,289,260)( 3,687,104)( 4,364,080)( 3,546,113)(

Total other financing sources (uses) 270,578 1,983,264 7,353,402 3,421,621 8,704,810 33,810,500 62,257,994 19,549,918 13,766,699 7,879,427

NET CHANGE IN FUND BALANCES 5,962,671)$( 1,725,304)$( 6,784,003$ 1,033,751)$( 10,367,953$ 26,953,109$ 40,129,064$ 3,110,618)$( 18,640,449)$( 14,689,548)$(

DEBT SERVICE AS A PERCENTAGE OF NONCAPITAL

EXPENDITURES 13.8% 14.6% 14.3% 13.0% 14.3% 13.5% 18.4% 23.7% 20.2% 22.8%

Fiscal Year

(Continued)


CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS


89

TABLE 5

Personal Personal EstimatedReal Property Real Property Property Property Less: Total Taxable Total Actual

Fiscal Assessed Estimated Assessed Estimated Tax-exempt Assessed Direct TaxableYear Value Actual Value Value Actual Value Property Value Tax Rate Value

2002 1,316,552,218$ 1,316,552,218$ 325,940,581$ 325,940,581$ 476,986,559$ 1,165,506,240$ 0.4710$ 1,642,492,799$

2003 1,620,712,252 1,620,712,252 381,541,166 381,541,166 429,285,702 1,572,967,716 0.4710 2,002,253,418

2004 1,662,822,489 1,662,822,489 390,220,742 390,220,742 - 2,053,043,231 0.4710 2,053,043,231

2005 1,388,279,224 1,388,279,224 418,678,715 418,678,715 372,839,529 1,434,118,410 0.4702 1,806,957,939

2006 1,939,132,089 1,939,132,089 441,477,940 441,477,940 340,976,008 2,039,634,021 0.4702 2,380,610,029

2007 1,989,713,898 1,989,713,898 440,441,736 440,441,736 263,175,949 2,166,979,685 0.5302 2,430,155,634

2008 2,179,929,050 2,179,929,050 477,501,560 477,501,560 380,495,763 2,276,934,847 0.5302 2,657,430,610

2009 2,508,719,271 2,508,719,271 499,821,131 499,821,131 385,175,216 2,623,365,186 0.5302 3,008,540,402

2010 2,401,078,222 2,401,078,222 538,901,712 538,901,712 435,944,478 2,504,035,456 0.5302 2,504,035,456

2011 2,452,170,753 2,452,170,753 548,200,983 548,200,983 367,414,019 2,452,170,753 0.5302 2,452,170,753

Source: Hays County Appraisal District

Note:


ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY


Property in Hays County is reassessed once every three years on average. The County assesses property at approximately 100 percent of actual value forcommercial and industrial property and 100 percent for residential property. Estimated actual taxable value is calculated by dividing taxable assessed valueby those percentages. Tax rates are per $100 of assessed value.

90

TABLE 6

Medium Gen Serv


ELECTRIC UTILITY RATE COMPARISON


Fiscal Year Residential Small Gen Serv Large Gen Serv -PrimaryLarge Gen Serv - SecondaryMedium Gen ServFiscal Year Residential Small Gen Serv Large Gen Serv -PrimaryLarge Gen Serv - Secondary

Cus

tom

er C

harge

Ener

gy C

harg

e per

kwh

Cus

tom

er C

harge

Ener

gy C

harg

e per

kwh

Cus

tom

er C

harge

Ener

gy C

harg

e per

kwh

Dem

and p

er k

w

Cus

tom

er C

harge

Ener

gy C

harg

e per

kwh

Dem

and p

er k

w

Cus

tom

er C

harge

Ener

gy C

harg

e per

kwh

Dem

and p

er k

w

2011 8.93$ 0.0200$ 10.50$ 0.0200$ 47.25$ 0.0098$ 3.47$ 210.00$ 0.0098$ 3.31$ 735.00$ 0.0078$ 3.05$

2010 8.50 0.0190 10.00 0.0190 45.00 0.0093 3.30 200.00 0.0093 3.15 700.00 0.0074 2.90

2009 8.50 0.0190 10.00 0.0190 45.00 0.0093 3.30 200.00 0.0093 3.15 700.00 0.0074 2.90

2008 8.50 0.0190 10.00 0.0190 45.00 0.0093 3.30 200.00 0.0093 3.15 700.00 0.0074 2.90

2007 8.50 0.0190 10.00 0.0190 45.00 0.0093 3.30 200.00 0.0093 3.15 700.00 0.0074 2.90

2006 8.50 0.0190 10.00 0.0190 45.00 0.0093 3.30 200.00 0.0093 3.15 700.00 0.0074 2.90

2005 8.50 0.0190 10.00 0.0190 45.00 0.0093 3.30 200.00 0.0093 3.15 700.00 0.0074 2.90

2004 6.50 0.0582 8.75 0.0556 45.00 0.0303 8.90 200.00 0.0292 8.60 700.00 0.0286 8.50

2003 6.50 0.0582 8.75 0.0556 45.00 0.0303 8.90 200.00 0.0292 8.60 700.00 0.0286 8.50

2002 6.50 0.0582 8.75 0.0556 45.00 0.0303 8.90 200.00 0.0292 8.60 700.00 0.0286 8.50

91

TABLE 7

Year Commercial Residential Total Usage

2002 21,609,816$ 12,930,494$ 34,540,310$ 2003 17,929,096 14,820,678 32,749,774 2004 23,718,467 14,243,456 37,961,923 2005 24,023,825 14,849,650 38,873,475 2006 25,993,916 15,420,114 41,414,030 2007 26,358,702 15,889,148 42,247,850 2008 28,517,068 15,836,725 44,353,793 2009 28,942,450 15,648,779 44,591,229 2010 29,518,678 16,420,286 45,938,964 2011 30,148,212 17,354,788 47,503,000


TOTAL AVERAGE kWh PER MONTH COMPARISON

92

TABLE 8

Year Commercial Residential Total Usage Total Purchased Loss%

2002 N/A N/A N/A N/A N/A2003 N/A N/A N/A N/A N/A2004 N/A N/A N/A N/A N/A2005 297,082,190 178,405,368 475,487,558 N/A N/A2006 311,926,699 185,040,610 496,967,309 524,152,775 5.19%2007 316,304,431 190,669,778 506,974,209 522,933,027 3.05%2008 342,204,187 190,040,702 532,244,889 565,300,166 5.85%2009 347,308,566 187,785,353 535,093,919 568,397,378 5.86%2010 354,224,141 197,043,431 551,267,572 583,284,525 5.49%2011 361,778,549 208,257,452 570,036,001 603,401,092 5.53%

Note: Information prior to 2005 is not available.


TOTAL kWh PER YEAR COMPARISON

93

TABLE 9

CustomerConsumption

(kWh) Amount Billed% of Total

kWh

TEXAS STATE UNIV, COGEN 102,232,011$ 7,480,449$ 17.93%

H E BUTT GROCERY 21,823,399 1,782,183 3.83%

CITY OF SAN MARCOS 10,449,041 914,647 1.83%

TEXAS STATE UNIVERSITY 10,274,902 882,770 1.80%

SMCISD 9,596,562 829,096 1.68%

CTMC 8,422,390 657,602 1.48%

EMBASSY SUITES HOTEL & CONF. CENTER 7,198,563 606,306 1.26%

WALMART-SUPER STORE 6,539,458 543,033 1.15%

HAYS COUNTY JUVENILE CENTER 4,740,028 393,781 0.83%

WALMART STORES TEXAS #4958 3,887,691 324,905 0.68%

Note: % of total consumption based on total kWh of: 570,036,001

TEN LARGEST ELECTRIC CUSTOMERS

SEPTEMBER 30, 2011


94

TABLE 10

Other TotalFiscal Basic School Special DirectYear Rate District County Road Rate

2002 0.4710% 1.4296% 0.3702% 0.0759% 2.3467%

2003 0.4710% 1.6000% 0.3751% 0.0710% 2.5171%

2004 0.4710% 1.6000% 0.3751% 0.0710% 2.5171%

2005 0.4710% 1.7300% 0.3920% 0.0710% 2.6640%

2006 0.4702% 1.7000% 0.3790% 0.0710% 2.6202%

2007 0.5302% 1.3700% 0.3714% 0.0860% 2.3576%

2008 0.5302% 1.3700% 0.3714% 0.0801% 2.3517%

2009 0.5302% 1.3700% 0.4181% 0.0511% 2.3694%

2010 0.5302% 1.3500% 0.4248% 0.0444% 2.3494%

2011 0.5302% 1.3500% 0.4248% 0.0444% 2.3494%

Information provided by Hays County Tax Office/393-5545

City Direct Rates


DIRECT AND OVERLAPPING PROPERTY TAX RATES


95

TABLE 11

Percentageof Total City

Taxable TaxableAssessed Assessed

Taxpayer Value Value

Hays Energy Ltd Partnership 192,160,630$ 7.84% HEB Warehouse 111,762,920 4.56% Tanger Properties 42,921,511 1.75% San Marcos Factory Stores 42,615,260 1.74% Prime Outlets 34,654,530 1.41% Vista Del Blanco, Ltd. 22,450,581 0.92% Goodrich Corp. 21,749,095 0.89% JQH-San Marcos Development 21,068,160 0.86% Cabana Beach Apts 19,230,351 0.78% Stone Creek Crossing LP 18,903,929 0.77%

Total 527,516,967$ 21.52%


Taxable TaxableAssessed Assessed

Taxpayer Value Value

Hays Energy Ltd Partnership 224,353,520$ 7.06% HEB Warehouse 34,358,320 2.40% San Marcos Factory Shops 26,194,370 1.83% Tanger Properties 22,612,876 1.58% Century Telephone 20,366,570 1.42% CFAN 18,065,800 1.26% HEB Grocery Co. 15,296,581 1.07% Grande Communications 15,096,380 1.05% Lowes Home Centers, Inc. 11,502,439 0.80% Butler Mfg. 10,718,850 0.75%

Total 398,565,706$ 19.22%

*Information provided by Hays County Tax office.

2002

2011


PRINCIPAL PROPERTY TAXPAYERS

CURRENT YEAR AND NINE YEARS AGO

96

TABLE 12

Taxes Levied CollectionsFiscal for the Percentage in Subsequent Percentage

Year Ended Fiscal Year Amount of Levy Years Amount of Levy

2002 7,457,502$ 7,206,875$ 96.64% 149,150$ 7,356,025$ 98.6%

2003 7,662,979 7,315,055 95.46% 334,962 7,650,017 99.83%

2004 8,198,030 7,904,217 96.42% 260,642 8,164,859 99.60%

2005 8,503,149 8,363,474 98.36% 124,293 8,487,767 99.82%

2006 8,796,101 8,620,179 98.00% 159,371 8,779,550 99.81%

2007 9,590,359 9,455,292 98.59% 116,648 9,571,940 99.81%

2008 11,451,045 11,291,991 98.61% 131,392 11,423,383 99.76%

2009 12,147,748 11,964,114 98.49% 141,004 12,105,118 99.65%

2010 14,099,916 13,907,121 98.63% 106,575 14,013,696 99.39%

2011 13,970,763 13,809,687 98.85% - 13,809,687 98.85%

Subsequent years includes penalties

Fiscal Year of the LevyCollected With the

Total Collections to Date


PROPERTY TAX LEVIES AND COLLECTIONS


97

TABLE 13

General Certificates Water Electric Drainage Total PercentageFiscal Obligation of Capital Revenue Revenue Certificate of Capital Primary of Personal PerYear Bonds Obligation Leases Bonds Bonds Obligation Leases Government Income Capita

2002 20,620,000$ 13,095,000$ 1,014,522$ 48,870,000$ 6,131,283$ -$ 54,636$ 89,785,441$ 4.88% 2,216$

2003 18,750,000 14,250,000 2,295,348 56,425,000 58,570,000 - - 150,290,348 6.83% 3,564

2004 16,825,000 20,555,000 1,569,622 67,150,000 71,435,000 - 92,907 177,627,529 5.93% 3,968

2005 14,835,000 22,385,000 464,427 78,595,000 10,500,000 6,670,000 92,907 133,542,334 4.53% 3,035

2006 12,300,000 28,115,000 140,044 78,595,000 10,500,000 6,500,000 38,490 136,188,534 4.36% 2,893

2007 12,925,000 58,485,000 393,426 86,125,000 10,430,000 8,025,000 75,804 176,459,230 5.32% 3,672

2008 15,200,000 114,210,000 14,059 96,420,000 9,605,000 12,315,000 - 247,764,059 5.93% 3,890

2009 19,815,000 58,145,000 - 102,010,000 8,740,000 16,900,000 - 205,610,000 5.70% 3,814

2010 17,480,000 64,325,000 - 106,265,000 9,480,000 19,080,000 - 216,630,000 0.00% 4,018

2011 15,975,000 60,865,000 - 102,590,000 16,590,000 18,440,000 - 214,460,000 5.10% 3,800

Governmental Activities Business-type Activities


RATIOS OF OUTSTANDING DEBT BY TYPE


98

TABLE 14

Percentage ofGross Debt Actual Taxable

Fiscal Bonded Service Value of PerYear Debt Fund Total Property Capita

2002 33,715,000$ 1,167,908$ 32,547,092$ 1.98% 803$

2003 33,000,000 941,463 32,058,537 1.60% 760

2004 37,380,000 1,109,256 36,270,744 1.77% 810

2005 40,030,000 1,531,736 38,498,264 2.13% 875

2006 40,415,000 1,557,638 38,857,362 2.06% 776

2007 48,930,000 5,764,165 43,165,835 2.00% 862

2008 77,010,000 6,003,239 71,006,761 3.12% 1,411

2009 77,960,000 7,199,004 70,760,996 3.11% 1,313

2010 81,805,000 6,428,387 75,376,613 2.87% 1,480

2011 76,840,000 7,913,022 68,926,978 2.55% 1,149

General Bonded Debt Outstanding


RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING


99

TABLE 15

EstimatedShare of

Estimated Direct andDebt Percentage Overlapping

Outstanding Applicable Debt

Debt repaid with property taxes City of San Marcos - City direct debt 76,840,000$ 100.000% 76,840,000$

San Marcos Independent School District 125,696,849 78.150% 98,232,087 Caldwell county 8,800,000 2.390% 210,320 Hays County 273,269,998 7.000% 19,128,900

Subtotal overlapping debt 117,571,307

Total direct and overlapping debt 194,411,307$

Sources: Information for Hays County provided by Hays County Auditor's officeInformation for Caldwell County provided by Caldwell Auditor's officeInformation for SMCISD provided by School District, Debbie White

Note:

Government Unit


DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

AS OF SEPTEMBER 30, 2011

Overlapping rates are those of local and county governments that apply to property owners within the City ofSan Marcos. Not all overlapping rates apply to all City of San Marcos property owners (i.e. the rates forcounties apply only to the proportion of the City's property owners whose property is located within thegeographic boundaries of that county.)

100

2002 2003 2004 2005

Debt limit 164,249,280$ 200,225,342$ 205,304,323$ 180,695,794$

Total net debt applicable to limit 32,547,092 31,844,133 36,270,744 38,498,264

Legal debt margin 131,702,188$ 168,381,209$ 169,033,579$ 142,197,530$

Total net debt applicable to the limit as a percentage of debt limit. 1.98% 1.60% 1.77% 2.13%

Fiscal Year


LEGAL DEBT MARGIN INFORMATION


101

TABLE 16

Assessed value 2,699,820,281$ Debt limit (10% of assessed value) 269,982,028 Debt applicable to limit: General obligation bonds 76,840,000 Less: Amount set aside for repayment of general

obligation debt 7,913,022

Total net debt applicable to limit 68,926,978

Legal debt margin 201,055,050$

2006 2007 2008 2009 2010 2011

203,963,402$ 215,975,954$ 227,693,485$ 227,693,485$ 259,260,471$ 269,982,028$

35,688,262 43,165,835 71,006,761 70,760,996 73,240,069 76,840,000

168,275,140$ 172,810,119$ 156,686,724$ 156,932,489$ 186,020,402$ 193,142,028$

1.75% 2.00% 3.12% 3.11% 2.82% 2.85%

Legal Debt Margin Calculation for Fiscal Year 2011

Fiscal Year

102

TABLE 17

Less: NetFiscal Gross Operating AvailableYear Revenue Expenses Revenue Principal Interest Coverage

2002 15,983,823$ 10,679,779$ 5,304,044$ 2,638,056$ 1,344,697$ 1.33$ 2003 17,595,675 11,339,435 6,256,240 2,690,556 1,322,620 1.56 2004 19,502,026 11,076,196 8,425,830 2,808,810 1,364,756 2.02 2005 21,415,438 11,677,318 9,738,120 3,507,750 1,578,546 1.91 2006 26,318,349 12,782,882 13,535,467 3,140,000 3,045,435 2.19 2007 24,138,588 17,796,700 6,341,888 3,195,000 3,633,942 0.93 2008 28,352,029 19,568,829 8,783,200 3,620,000 3,383,614 1.25 2009 26,279,549 19,637,393 6,642,156 4,065,000 4,531,610 0.77 2010 25,241,695 14,630,182 10,611,513 4,585,000 4,626,338 1.15 2011 26,986,572 14,874,577 12,111,995 4,895,000 5,034,288 1.22


2002 26,779,981$ 25,562,838$ 1,217,143$ 906,000$ 297,298$ 1.01$ 2003 29,551,713 28,725,521 826,192 906,000 297,298 0.69 2004 33,070,143 31,418,256 1,651,887 910,714 292,778 1.37 2005 39,412,677 35,068,455 4,344,222 924,231 279,315 3.61 2006 45,564,818 43,679,087 1,885,731 770,000 437,183 1.56 2007 45,038,579 40,134,868 4,903,711 790,000 414,457 4.70 2008 49,787,885 48,713,986 1,073,899 825,000 451,891 0.84 2009 49,461,030 45,689,134 3,771,896 865,000 394,994 2.99 2010 48,768,174 44,500,751 4,267,423 900,000 364,006 3.38 2011 48,453,727 42,144,555 6,309,172 980,000 438,706 4.45


2005 878,012$ 313,785$ 564,227$ 70,000$ 267,658$ 1.67$ 2006 1,068,207 338,748 729,459 170,000 274,973 1.64 2007 1,424,761 577,461 847,300 175,000 266,998 1.92 2008 1,373,094 811,057 562,037 315,000 349,000 0.85 2009 1,390,465 866,427 524,038 350,000 957,806 0.40 2010 1,478,191 871,308 606,883 595,000 786,466 0.44 2011 2,108,913 771,837 1,337,076 730,000 892,251 0.82

Debt Service

Drainage

Debt Service


PLEDGED REVENUE COVERAGE


Debt Service

Water Revenue Bonds

Electric

103

TABLE 18

Per CapitaCalendar Personal Personal Unemployment

Year Population Income Income Rate

2002 40,514 638,266,712$ 23,375$ 5.1%

2003 42,165 655,629,845 23,418 5.4%

2004 44,769 708,173,860 24,259 4.7%

2005 43,994 697,326,193 32,604 4.0%

2006 47,069 747,576,687 42,095 4.2%

2007 50,049 779,770,400 41,960 3.4%

2008 50,317 802,392,217 44,317 3.4%

2009 50,913 861,466,554 45,646 4.7%

2010 53,913 718,793,973 45,259 5.4%

2011 47,505 762,122,715 16,043 6.0%


DEMOGRAPHIC AND ECONOMIC STATISTICS


The City of San Marcos estimates a higher population than was documented by the 2010 Census.

For reporting purposes, we are using 2010 Census numbers.

104

TABLE 19


Employer Employees Employment

Texas State University 3,036 4.04% Prime Outlets San Marcos 2,100 2.79% Tanger Factory Outlet Center 1,540 2.05% San Marcos CISD 1,200 1.60% Hays County 813 1.08% Hunter Industries 650 0.86% Cental Texas Medical Center 800 1.06% H.E.B. Distribution Center 650 0.86% Gary Job Corps 560 0.74% City of San Marcos 550 0.73%

Total 11,899 15.82%

Total City Employees 75,200


Employer Employees Employment

Hunter Industry 500 *Marshall Gas Controls 292 *Thermon Manufacturing 275 *Trico Industries 275 *CFAN 270 *HEB Distribution Center 250 *Butler Manufacturing 225 *Chatleff Controls 200 *Palm Harbor 200 *Rohr- San Marcos 200 *

Total 2,687

Source: Chamber of Commerce website (sanmarcostexas.com/Area Demographics/Business Resources

* Information not available

2002


PRINCIPAL EMPLOYERS

CURRENT AND NINE YEARS AGO

2011

105

TABLE 20

Function/Program 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

General government

Administration 22.00 18.00 19.00 19.00 19.00 19.00 19.00 19.00 19.50 20.38

Human resources 10.00 9.00 9.00 9.00 9.00 9.00 10.00 9.00 9.00 10.00

Finance 30.10 27.58 28.60 31.64 31.64 32.64 32.64 15.54 15.54 15.54

Municipal court - - - - - - - 9.60 9.98 10.48

Technology services - - - - - - - 10.00 10.00 10.00

Planning 9.00 9.50 9.50 9.50 9.50 10.00 10.00 10.50 10.50 9.50

Building 6.00 6.00 6.00 6.00 6.00 9.50 9.50 5.50 5.50 10.50

Code enforcemen t - - 4.00 4.00 4.00 6.00 6.00 13.00 13.00 6.48

Police

Administration 34.28 34.19 35.19 38.19 37.90 40.90 40.90 40.52 43.52 43.52

Operations 74.00 74.00 75.00 75.00 75.00 81.00 86.00 88.00 85.00 85.00

Fire

Firefighters and officers 47.00 47.00 45.00 48.00 48.00 52.00 55.00 60.50 64.00 65.00

Main Street 1.48 1.48 1.48 1.48 1.48 1.48 1.48 1.48 1.48 1.48

Public works 33.00 32.00 32.00 32.00 32.50 32.50 32.50 35.00 35.00 35.00

Engineering 13.00 12.48 12.48 12.48 11.98 12.98 12.98 9.48 9.48 12.48

Parks and recreation 53.11 46.99 46.98 45.98 46.98 48.08 49.62 53.14 51.64 52.57

Health 11.90 10.90 11.90 11.90 14.65 17.16 17.67 18.67 18.67 18.67

Library 18.41 17.19 17.19 17.93 17.93 18.77 18.77 18.80 18.80 18.80

Water/wastewater 60.00 58.50 58.50 41.50 46.00 50.50 54.00 51.50 51.50 51.50

Electric 50.00 50.00 50.00 50.00 50.00 51.00 50.50 49.00 49.00 49.00

Airport 1.00 1.00 1.00 1.00 2.00 2.00 2.00 1.00 1.00 -

Drainage - - - - - - - 2.00 2.00 2.00

WIC 27.00 20.00 20.00 20.00 22.00 23.00 23.00 24.00 26.00 28.00

Total 501.28 475.81 482.82 474.60 485.56 517.51 531.56 545.23 550.11 555.90

Source: City Budget Office

Fulltime Equivalent Employees as of September 30,


FULLTIME EQUIVALENT CITY GOVERNMENT EMPLOYEESBY FUNCTION/PROGRAM


106

TABLE 21


General government

Building permits issued 2,348 2,100 2,100 2,220 3,426 2,326 2,205 2,200 2,200 2,400

Police

Physical arrests 1,704 2,200 2,700 1,450 1,480 1,500 2,126 2,698 2,602 2,647

Parking violations 3,749 5,128 6,000 5,022 2,500 3,100 5,260 4,484 6,185 5,799

Traffic violations 7,287 5,000 6,000 9,587 9,500 9,950 9,683 12,486 10,135 10,325

Fire

Emergency responses 1,176 1,193 1,596 2,158 2,468 3,700 3,550 3,125 3,000 3,100

Fires extinguished 169 160 158 142 175 190 201 145 122 210

Prevention/safety education 7,000 7,500 11,321 10,396 10,820 12,000 10,000 15,000 15,000 10,000

Other public works

Street resurfacing (miles) 495 550 14 8 8 8 8 8 8 6

Potholes repaired 826 875 475 486 530 230 220 175 300 350

Parks and recreation

Facility Rental Bookings 580 605 1,337 2,956 2,900 1,452 1,400 5,500 5,500 5,500

Community center admissions 40,505 55,000 62,214 1,980 2,300 2,900 2,600 2,450 2,500 150,000

Library

Volumes in collection 124,237 128,000 128,908 132,435 136,000 142,000 143,000 148,900 149,500 154,500

Total volumes borrowed 326,515 349,000 359,000 390,567 398,000 384,200 404,300 449,000 471,800 481,000

Water

New connections 100 120 216 110 150 110 100 100 224 200

Water main breaks 260 280 208 7 10 10 10 300 100 200

Average daily consumption 5,717 6,284 5,571 6,236 6,141 5,810 6,447 6,667 7,091 7,221

(thousands of gallons)

Peak daily consumption 6,633 7,687 6,933 9,387 10,061 8,916 10,153 10,652 11,383 10,268


Wastewater

Average daily sewage treatment 250 250 579 4,960 5,070 5,600 5,600 5,700 5,700 5,750


Source: Various City departments

Fiscal Year


OPERATING INDICATORS BY FUNCTION/PROGRAM


107

TABLE 22


Police

Stations 1 1 1 1 1 1 1 1 1 1

Zone offices 1 1 1 1 1 1 1 1 1 1

Patrol units N/A N/A 55 63 63 66 84 118 117 118

Fire

Stations 4 4 4 4 4 4 4 4 5 5

Other public works

Streets (miles) 224 250 250 263 277 282 292 309 309 302

Streetlights 1,516 1,529 1,535 1,540 1,546 3,500 3,591 3,517 3,518 3,559

Traffic signals 5 5 5 5 5 5 49 52 54 48

Parks and recreation

Acreage 120 120 120 120 120 120 1,154 1,178 1,699 1,699

Playgrounds 15 15 15 30 36 36 39 39 50 59

Baseball/softball diamonds 9 9 9 9 9 9 9 9 9 9

Soccer/football fields 3 3 3 3 3 3 9 9 10 10

Community centers 2 2 2 2 2 2 2 2 2 2

Water

Fire hydrants N/A 983 1,066 1,133 1,324 1,565 1,484 1,727 1,775 1,551

Wastewater

Sanitary sewers (miles) N/A N/A N/A N/A N/A N/A 196 198 205 206

Storm sewers (miles) N/A N/A N/A N/A N/A N/A 41 43 52 55

Treatment capacity 9 MGD* 9 MGD* 9 MGD* 9 MGD* 9 MGD* 9 MGD* 9 MGD* 9 MGD* 9 MGD* 9 MGD*


*MGD - Million Gallons per day

Source: Various City departments

Fiscal Year


CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM


108

city of san marcos comprehensive financial report fy 2010-11

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