Town of Carrboro, North Carolina Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2007 The report was prepared by members of the Management Services Department THIS PAGE LEFT INTENTIONALLY BLANK. Town of Carrboro, North Carolina TABLE OF CONTENTS Page No. INTRODUCTORY SECTION List of Principal Officials ............................................................................ i Organizational Chart................................................................................. ii Letter of Transmittal .................................................................................. iii GFOA Certificate of Achievement............................................................. xi FINANCIAL SECTION Report of Certified Public Accountants Independent Auditors’ Report ................................................................... 1 Management’s Discussion and Analysis .................................................. 3 Exhibit Basic Financial Statements Government-Wide Financial Statements: 1 Statement of Net Assets........................................................................ 17 2 Statement of Activities ........................................................................... 18 Fund Financial Statements: 3 Balance Sheet - Governmental Funds.................................................. 19 4 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds ......................................................... 20 4 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities ................................................................... 21 5 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund and Capital Reserve................................................................................................ 22 Notes to Financial Statements .................................................................. 25 Town of Carrboro, North Carolina TABLE OF CONTENTS (Continued) Exhibit Required Supplementary Financial Data Page No. A-1 Law Enforcement Officers’ Special Separation Allowance Required Supplementary Information - Schedule of Funding Progress................. 51 A-2 Law Enforcement Officers’ Special Separation Allowance Required Supplementary Information - Schedule of Employer Contributions ....... 52 Schedule SUPPLEMENTARY INFORMATION Combining and Individual Fund Statements and Schedules 1 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund ......................................... 53 2 Schedule of Revenues, Expenditures and Changes in Fund Balance - Project Authorization and Actual - Revolving Loan Fund....... 58 3 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Capital Reserve Fund ............................ 60 4 Schedule of Revenues, Expenditures and Changes in Fund Balance - Project Authorization and Actual - Capital Projects Fund ...... 61 5 Schedule of Revenues, Expenditures and Changes in Fund Balance - Project Authorization and Actual - Bond Fund ....................... 63 6 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Payment in Lieu Reserve Fund ............. 66 Other Schedules 7 Schedule of Ad Valorem Taxes Receivable ............................................. 68 8 Analysis of Current Tax Levy - Town-Wide Levy...................................... 69 Table STATISTICAL SECTION Financial Trends Information: 1 Net Assets by Component..................................................................... 75 2 Changes in Net Assets .......................................................................... 76 3 Fund Balances, Governmental Funds................................................... 77 4 Changes in Balances, Governmental Funds ........................................ 78 Revenue Capacity Information: 5 Program Revenues by Function/Program............................................. 80 6 Tax Revenues by Source, Governmental Funds.................................. 81 7 Assessed Value and Actual Value of Taxable Property ....................... 82 8 Direct and Overlapping Property Tax Rates ......................................... 83 9 Property Tax Levies and Collections..................................................... 84 10 Principal Property Taxpayers ................................................................ 85 Town of Carrboro, North Carolina TABLE OF CONTENTS (Continued) Debt Capacity Information: 11 Ratios of Outstanding Debt by Type ..................................................... 87 12 Ratios of General Bonded Debt Outstanding........................................ 88 13 Direct and Overlapping Governmental Activities Debt.......................... 89 14 Legal Debt Margin Information .............................................................. 90 Demographic and Economic Information: 15 Demographic and Economic Statistics.................................................. 92 16 Principal Employers............................................................................... 93 17 Full-Time Equivalent City Government Employees by Function/Program 94 Operating Information: 18 Operating Indicators by Function/Program ........................................... 96 19 Capital Asset Statistics by Function/Program ....................................... 97 COMPLIANCE SECTION 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................................................................................................. 101 Schedule SINGLE AUDIT SECTION Report on Compliance with Requirements Applicable to Each Major State Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 and the State Single Audit Implementation Act.................................................................................. 105 9 Schedule of Findings and Questioned Costs ........................................... 107 10 Summary Schedule of Prior Audit Findings.............................................. 109 11 Schedule of Expenditures of Federal and State Awards.......................... 110 THIS PAGE LEFT INTENTIONALLY BLANK. Town of Carrboro, North Carolina LIST OF PRINCIPAL OFFICIALS BOARD OF ALDERMEN Mark Chilton, Mayor Dan Coleman Alex Zaffron Joal Hall Broun John Herrera Randee Haven-O’Donnell Jacquelyn Gist TOWN MANAGER Steven E. Stewart ASSISTANT TOWN MANAGER L. Bingham Roenigk MANAGEMENT SERVICES DEPARTMENT Nancy Emslie, Accounting Officer Tonya Counts, Staff Accountant Annette Rogers, Accounting Technician II Jane Bowden, Accounting Technician Carrie Farrington, Program Support Assistant II Sandy Svoboda, Purchasing Officer Andy Vogel, IT Manager Greg Brusseau, IT Support Engineer - i - Town of Carrboro, North Carolina Organizational Chart - ii - October 31, 2007 The Honorable Mayor Mark Chilton, Board of Aldermen, and Residents of the Town of Carrboro Town of Carrboro 301 West Main Street Carrboro, North Carolina 27510 Dear Mayor Chilton and Members of the Board of Aldermen: The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Carrboro for its comprehensive annual financial report for the fiscal year ended June 30, 2006. For three consecutive years, the Town has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy 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 and will be submitting our Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2007 to the Government Finance Officers Association (GFOA). The Certificate Program managed by the GFOA was established in 1945, and is designed to recognize and encourage excellence in financial reporting by state and local governments. Further information about the Certificate Program can be obtained by visiting GFOA’s website at: www.gfoa.org. This report is the official comprehensive publication of the Town’s financial position at June 30, 2007, and the results of operations for the fiscal year then ended for all funds of the Town. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the Town. We believe the data, as presented, are accurate in all material respects; that they are presented in a manner designed to fairly set forth the financial activity of the Town’s various funds; and that all disclosures necessary to enable the reader to gain a maximum understanding of the Town’s financial activity have been included. The Town of Carrboro’s financial statements have been audited by Dixon Hughes PLLC. The goal of the independent audit is to provide reasonable assurance that the financial statements are free of material misstatement. The independent auditors concluded, based upon the audit, that there was a reasonable basis