Comprehensive Annual Financial Report (CAFR) That Can Be Obtained At
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City of Round Rock, Texas Comprehensive Annual Financial Report Fiscal Year Ended September 30, 2018 ELECTED OFFICIALS Craig Morgan, Mayor Writ Baese, Mayor Pro Tem Tammy Young, Council Member Rene Flores, Council Member Matthew Baker, Council Member Will Peckham, Council Member Hilda Montgomery, Council Member MANAGEMENT STAFF Laurie Hadley City Manager Bryan Williams Assistant City Manager Brooks Bennett Assistant City Manager OFFICIAL ISSUING REPORT Susan L. Morgan, CPA Chief Financial Officer TABLE OF CONTENTS INTRODUCTORY SECTION: Letter of Transmittal 3 City Organizational Chart 13 Certificate of Achievement for Excellence in Financial Reporting 14 FINANCIAL SECTION: Independent Auditors' Report 17 Management’s Discussion and Analysis 21 Basic Financial Statements Government-Wide Financial Statements: Statement of Net Position 34 Statement of Activities 36 Fund Financial Statements: Governmental Funds: Balance Sheet 38 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 41 Statement of Revenues, Expenditures and Changes in Fund Balances 42 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 44 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual – General Fund 45 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual – Round Rock Transportation and Economic Development Corporation Fund 46 Proprietary Funds: Statement of Net Position 48 Statement of Revenues, Expenses and Changes in Net Position 50 Statement of Cash Flows 51 Notes to the Financial Statements 55 Required Supplementary Information Schedule of Changes in the Net Pension Liability and Related Ratios 10 8 Schedule of Contributions 110 Schedule of Changes in the Total OPEB Liability and Related Ratios 111 TABLE OF CONTENTS Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds 113 Combining Statement of Revenues, Expenditures and Changes in Fund Balance – Nonmajor Governmental Funds 114 Combining Balance Sheet – Nonmajor Special Revenue Funds 116 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Special Revenue Funds 118 Combining Balance Sheet – Nonmajor Capital Projects Funds 122 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Capital Projects Funds 124 Schedules of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: General Fund 128 Debt Service Fund 132 Nonmajor Special Revenue Funds: Community Development Block Grant 133 Hotel-Motel Occupancy Tax 134 Hotel-Motel Occupancy Venue Tax 135 Landscape 136 Library 137 Multipurpose Sports Complex 138 Municipal Court 139 Police 140 Public Education & Government 141 Traffic Safety Program 142 Supplemental Schedules: Schedule of Capital Assets for Governmental Activities 144 TABLE OF CONTENTS STATISTICAL SECTION (UNAUDITED): Financial Trends: Net Position by Component – Last Ten Fiscal Years 148 Changes in Net Position – Last Ten Fiscal Years 150 Fund Balances of Governmental Funds – Last Ten Fiscal Years 154 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years 156 Revenue Capacity: Actual and Taxable Assessed Value of Property – Last Ten Fiscal Years 158 Property Tax Rates – Direct and Overlapping Governments Per $100 of Assessed Value – Last Ten Fiscal Years 159 Principal Property Taxpayers – Current Year and Nine Years Ago 160 Property Tax Levies and Collections – Last Ten Fiscal Years 161 Sales Tax and Ad Valorem Tax – Last Ten Fiscal Years 162 Taxable Sales by Category – Last Ten Calendar Years 164 Hotel Taxpayers 166 Hotel Occupancy Tax Collection History by Quarter – Last Ten Fiscal Years 167 Debt Capacity: Ratios of Outstanding Debt by Type – Last Ten Fiscal Years 168 Ratios of Net General Bonded Debt Outstanding to Assessed Value and Net Bonded Debt Per Capita – Last Ten Fiscal Years 169 Computation of Direct and Overlapping Bonded Debt 171 Legal Debt Margin Information – Last Ten Fiscal Years 172 Condensed Utility Statement of Operations – Last Ten Fiscal Years 174 Demographic and Economic Information: Demographic and Economic Statistics – Last Ten Fiscal Years 177 Principal Employers – Current Year and Nine Years Ago 178 Operating Information: Full-Time Equivalent City Government Employees by Function – Last Ten Fiscal Years 179 Operating Indicators by Function – Last Ten Fiscal Years 180 Capital Asset Statistics by Function – Last Ten Fiscal Years 182 Top Ten Water Customers 184 Water and Sewer Retail Rates 185 TABLE OF CONTENTS SINGLE AUDIT SECTION: Schedule of Expenditures of Federal Awards 189 Notes to Schedule of Expenditures of Federal Awards 190 Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 191 Independent Auditors’ Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by the Uniform Guidance 193 Schedule of Findings and Questioned Costs 195 INTRODUCTORY SECTION 1 2 February 6, 2019 Honorable Mayor and Members of the City Council City of Round Rock, Texas The Comprehensive Annual Financial Report of the City of Round Rock, Texas for the fiscal year ended September 30, 2018, is submitted herewith. This report has been prepared by the City’s Finance Department and responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data is accurate in all material aspects and is presented in a manner designed to clearly state the financial position and results of operations of the City as measured by the financial activity of its various funds. All disclosures have been included to enable the reader to gain the maximum understanding of the City's financial affairs. The City Charter requires an annual audit of the books of account, financial records and transactions of all departments of the City by independent certified public accountants selected by the City Council. Whitley Penn, L.L.P., Certified Public Accountants, have issued an unmodified (“clean”) opinion on the City of Round Rock’s financial statements for the year ended September 30, 2018. The independent auditors’ report is located at the front of the financial section of this report. Management’s discussion and analysis (MD&A) can be found immediately following the report of the independent auditors. The MD&A is a narrative introduction, overview and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. City of Round Rock Profile The City of Round Rock, established in 1851, is a municipal corporation incorporated under Article XI, Section 5 of the Constitution of the State of Texas (Home Rule Amendment). The City operates under a Council- Manager form of government with six council members and a mayor. The City Manager is appointed by the City Council and is responsible to them for managing and administering all City affairs. The Chief Financial Officer is appointed by the City Manager and is responsible for supervising the operations of the Finance Department. This department maintains all accounting records of the City. The financial reporting entity (the government) includes all the funds of the primary government (the City of Round Rock as legally defined) as well as its component units. Component units are legally separate entities for which the primary government is financially accountable. The City provides a full range of services which include police and fire protection, parks and library, construction and maintenance of infrastructure, planning and community development, convention and tourism activities, and general administrative services. In addition, the City owns and operates a water, sewer and drainage utility system. These activities are included in the accompanying financial statements. 3 3 Blended component units, although legally separate entities, are in substance part of the primary government’s operations and included as part of the primary government. Accordingly, Round Rock Transportation and Economic Development Corporation (RRTEDC) revenues are reported in a special revenue fund of the City. Annual budgets are legally adopted for the General Fund, Special Revenue Funds, Debt Service Fund, and the Proprietary Funds. Capital Projects Funds have no binding annual budget. Project-length financial plans are adopted for all capital projects; accordingly, no comparison of budget to actual is presented in the financial statements. Budgetary control is maintained at the department level by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders which result in an overrun of balances are not released until additional appropriations are made available. Significant Local Economic Events Strategic Goals The City of Round Rock is the largest city within Williamson County and is adjacent to the City of Austin. The City has experienced tremendous population growth which has led to an increased demand for city services. To adequately prepare for the effect of this activity on the City, much effort goes into planning and funding infrastructure and service programs. Each February,