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1992 Financial Statement nju!j~m;l: !.,I;,j!;',::~¡J.t!iiillL::H., City of Fair1a~, Oh.io Stateme:n.ts 1992 Ge:n.era1 Purpose Fi:n.a:n.cia1 For th.e Year E:n.ded December 31, Compiled By: Hanagement Advisory Services Department THOMAS E. FERGUSON Auditor of State . City of Fairlavn, Ohio General Purpose Financial Statements For the Year Ended December 31, 1992 Table of Contents Table of Contents. . . . . . . . . . . . ~ . . Accountant's Compilation Report . . . . . . . . . . . . . 0 . . . . . . . . . . . . . . . Combined Balance Sheet--All Fund Types and Account Groups Combined Statement of Revenues, Expenditures and Changes in Fund Balances--AlI Governmental Fund Types. . . . . . . Combined Statement of Revenues, Expenditures and Changes in Fund Balances--Budget (Non-GAAP Basis) and Actual-- All Govemmental Fund Types. . . . . . . . . . . . . . . Notes to the General Purpose Financial Statements. . ..... - 1 - . . . . Page ,. . 1 " . 3 .. . 4 . . . . . 0 . 8 . . . . . . . . " .10 .' .14 j I This page intentionally left blauk - 2 - ~. t.\JtMO.ç~' '(~ 0,(- ,",. v"" THo,_aw' . ,,,", r8ft0' ;.. N cn ,-"~"",:,;.",..",--,,,' , . . A«DrmR,~~^1E ~, )Y.";'I'~~""--'t'fliJV"'" P.O.BOXII40. ÌI~2!jiO>.,' .(61414664514 ~. 'i.>~,:i!f';!' '?:::;¿; '",,,,~~O" , 'Honorable City Council City of Fairla1l1l 3487 S. Smith Road Fairlawn.Ohio 44313 Vehavecompiledthe accompanying general purpose financial statements e,f the City of Fairla1l1l. Ohio, as of and for the year ended December 31, 199'2. in accordance with standards established' by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of management. Ve have not audit,ed or reviewed the accompanying financial statements and, accordingly. dc, not express an opinion or any other form of assurance on them. THOMAS E. FERGUSON, cn Auditor of State ~/~j,- Paul V. Rennick. CPA Deputy Auditor , October 4, 1993 - 3 - Information Line toll free 1-806-282-0370 -..........-......- --..--'"'''"'' All Fund Types and Account Groups December 31, 1992 Governmental Fund 1~ypes ------------------------------------------- General Special Revenue Debt Service ------------- ------------- ------------- Assets and Other Debits: ----------------------- Assets: ------ Equity in Pooled Cash and Cash Equivalents Cash and Cash Equivalents In Segregated Accounts .Receivables: Taxes Accounts Special Assessments Intergovernmental Rotes Due from Other Funds llaterials and Supplies In'V'entory Advances Receivable Funds on Deposit with Deferred Compensation Plan Fixed Assets $1,567,986 $716,373 $23,943 0 1,320 0 636,264 100.739 0 0 0 0 0 0 4.077,683 97,661 19.288 0 0 0 0 8,762 3.019 0 78,406 1.197 0 20,000 0 0 0 0 0 0 0 0 Other Debits: ------------ .Amount Available in Debt Service Fund .Amount to be Provided for Retirement of General Long-Term Obligations 0 0 0 0 0 0 ------------- ------------- ------------- Total Assets and Other Debits $2,409,079 $841.936 $4,101,626 See accountant's compilation report. - 4 - Fiduciary Fund Type Account Groups ------------- ------------- ---------------------------- Capital Projects Agency General Fi.%ed Assets General Long-Term Obligations Totals (Hemorandum only) ------------ ------------- ------------- ------------- --------------.--- $3.511.737 $46,491 $0 $0 $5.866.5~10 0 15.212 0 0 16.5~12 219.386 0 0 0 956. 3~19 8.263 0 0 0 8.2E¡3 0 0 0 0 4,077. 6E~3 104.500 0 0 0 221.4~.9 270.000 0 0 0 270.0CJ10 0 0 0 0 11, n,l 0 0 0 0 79. 6Q'3 0 0 0 0 20.000 0 558.656 0 0 558,656 0 0 7,028.733 0 7.028.733 0 0 0 3,943 3. 94.3 0 0 0 3,376.036 3.376.0316 ------------- ------------- ------------- ------------- ---------------.-- $4,113,886 $620.359 $7,028.733 $3,379.979 $22, 495. 591! - .ee accountant's compilation report. ( continue.!) - 5 - City ot ~a1r~awn, UULU Combined Balance Sheet All Fund Types and Account Groups (continued) December 31, 1992 Liabilities, Fund Equity and Other Credits: ----------------------------- Liabilities: ----------- Accounts Payable Contracts Payable Accrued Vages Compensated Absences Payable Due to Other Funds Intergovernmental Payable Deferred.~venue Retainage . Payable Undistributed Bonies Accrued Interest Payable Note. Payable Deferred.. Compensation Payable Advances Payable Capital Lease Obligations Payable OVPCLoans Payable Special Assessment Bonds Payable Vith Governmental Commitment total Liabilities Fund Equity and Other Credits: ----------------------------- Investment in General Fixed Assets Fund Balances: Reserved for Encumbrances Reserved for Inventory Reserved for Advances Reserved for Notes Receivable Unreserved: Designated for Sever Line Repair Undesignated (deficit) 'lotal Fund Equity (deficit) and Other Credits 'lotal Liabilities, Fund Equity and Other Credits Governmental Fund Types ------------------------------------------- General Special Revenue Debt Service ------------- ------------- ------------- $32,851 $148,342 $0 0 0 0 65,100 770 0 702 0 0 0 0 0 121,590 46,839 0 361,352 92,389 4,077,683 0 0 0 0 o. 0 0 0 0 0 0 0 0 0 0 0 0 20,000 0 0 0 0 0 0 0 0 0 ------------- ------------- ------------- 581,595 288,340 4,097.683 ------------- ------------- ------------- 0 0 0 106.322 34.666 0 78.406 1.197 0 20.000 0 b 0 0 0 273.360 0 0 1,349.396 517 . 733 3.943 ------------- ------------.. ------------- 1,827.484 553.596 3.943 ------------- ------------.. ------------- $2.409,079 $841.936 $4.101.626 . See accountant's compilation report. See accompanying notes to the general purpose financial statements. - 6 - Fiduciary Fund Type Account Groups ------------- ------------- ---------------------------- Capital proj ects Agency General Fixed Assets General Long-Term Obligations Totals (IIemorandum Only) ------------- ------------- ------------- ------------. ----------------- $35.986 $400 $0 $0 $217.579 84.900 0 0 0 84.900 600 0 0 0 66.470 0 0 0 162.958 163.660 0 11.781 0 0 11.781 0 0 0 0 168.429 0 0 0 0 4.531.424 34.950 0 0 0 34.950 0 49.522 0 0 49. 52.2 101.821 0 0 0 101.821 4.370.000 0 0 0 4.370.000 0 558.656 0 0 558.656 0 0 0 0 20.000 0 0 0 235.412 235. 412 0 0 0 911.609 911.609 0 0 0 2.070.000 2.070.000 ------------- ------------- ------------- ------------- --------------_._- 4.628.257 620.359 0 3.379.979 13.596.21.3 ------------. ------------- ------------- ------------- --------------..-- 0 0 7.028.733 0 7.028.73:3 1.063.286 0 0 0 1.204.27.1. 0 0 0 0 79.60:3 0 0 0 0 .20.00ID 270.000 0 0 0 270.001D 0 0 0 0 273. 361D (1.847.657) 0 0 0 23.41.5 ------------- ------------- ------------- ------------- --------------_._- (514.371) 0 7.028.733 0 8.899.38.5 ------------- ------------- ------------- ------------- ---------------.-- $4.113.886 $620.359 $7.028.733 $3.379.979 $22.495.59,8 - See accountant's compilation report. - 7 - Combined Statement of Revenues. Expenditures ana \,oWOUS"''' All Governmental Fund Types For the Year Ended December 31. 1992 .LL&. s:u.u..... ",Q.~----- Governmental General ---------------------------- Special Revenue ------------- Revenues: -------- $2.735.016 1.501 194.209 99.987 . 626.180 0 182.480 63.892 Taxes Charges for Services Licenses. PeDllits and Fees Fines and Forfeitures Intergovernmental Special Assessments Interest Other ------------- Total Revenues 3.903.265 ------------- Expenditures: ------------ Current: General Government Security of Persons and Property Public Health Services Transportation Community Environment Basic Utility Services Leisure Time Activities Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Charges 1.302,412 1,419.361 60,938 521,094 25.710 164,985 22,341 0 ------------- Total Expenditures 3,516,841 ------------- Excess of Revenues Over (Under) Expenditures 386.424 - ------------- Other Financing Sources (Uses): ------------------------------ 0 (82.430) Operating Transfers In Operating Transfers Out Total Other Sources (Uses) ----_._------- (82.430) ------------- Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses Fund Balances (Deficit) Beginning of Year Restated (Note 4) 303.994 1.521.217 Increasè in Reserve for Inventory 2.273 -------------. Fund Balances (Deficit) End of Year $1,827.484 See accountant's compilation report. See accompanying notes to the general purpose financial statemen1;s. - 8 - ------------- $201.565 46.007 28.2.06 44.651 256.188 0 0 42. 62.0 ------------- 619.237 ------------- 0 347,217 0 129.992 11.812 0 145.922 0 0 0 0 0 ------------- 634.943 ------------- (15.706) ------------- 142.786 0 ------------- 142.786 ------------- 127.080 426.481 35 ------------- $553.596 Fund Types .--------------------------- Totals (Hemo:randum Only) Debt Service .------------ $0 0 0 0 0 221,948 0 0 .------------ 221,948 .------------ 55,doo 142,500 .------------ 197,500 .------------ 24,448 .------------ .------------ .------------ 24,448 Capital Projects ------------- ----------------- $1,907,096 788,923 ~1,416 0 1,158,227 0 0 150,959 $4,843,677 836,431 253,831 144,638 2,040,595 221,948 182,480 257,471 ------------- ----------------- 4,036,621 8,781,071 ------------- ----------------- 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2,378,456 1,302,412 1,766,578 60,938 651,086 37,522 164,985 168,263 2,378,456 29,743 224,845 84,743 367,345 ------------- ----------------- 2,633,044 6,982,328 ------------- ----------------- 1,403,577 1,798,743 ------------- ----------------- 0 0 301,632 (361,988) 444,418 (444,418) ------------- ----------------- 0 (60,356) 0 ------------- ----------------- 1,343,221 1,798,743 (20,505) (1,857,592) 69,601 0 0 2,308 ------------- ------------- ----------------- $3,943 ($514,371) $1,870,652 --- -- -=---=--~-- ----------------- iee accountant's compilation report. - 9 - City of Fairlawn, un10 Combined Statement of Revenues, Expenditures and ChuLges In Fund Balances - Budget (Non-GAAP Basis) and ActWlLl All Governmental Fund Types For the Year Ended December 31, 1992 Revenues: -------- Taxes Charges for Services Licenses, PeJ:!llits and Pees Fines and Forfeitures IntergoveJ:Dlllental Special Assessments Interest Other Total Revenues Expenditures: ------------ Current: General GoveJ:Dlllent Security of Persons and Property Public Health Services Transportation COlDIDunity Environment Basic Utility Services Leisure Time Activities Capital OUtlay Debt Service: Principal Retirement Interest and Fiscal Charges Total Expenditures Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses): ------------------------------ Advances In Advances Out Proceeds of Notes Sale of Fixed Assets Operating Transfers In Operating Transfers OUt Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses Fund Balances :Beginning of Year Unexpended Prior Year Encumbrances Pund Balances End of Year See accountant's compilation report. General Fund ------------------------------------------ Revised Budget Variance Favorable (Unfavorable) Actual ------------ ------------ ------------- $2,599,152 $2,661,129 $61,977 200 1,501 1,301 140,945 195,133 54,188 102,500 98,772 (3,728) 403,729 581,540 177,811 0 0 0 125,000 184,646 59,646 25,000 64,297 39,297 ------------ ------------ ------------- 3,396,526 3,781,018 390,492 ------------ ------------ ------------- 1,459,238 1,336,761 122,477 1,528,483 1,445,686 82,197 63,324 60,938 2,386 577,113 534,326 42,787 75,067 72,283 2,784 172,000 157,197 14,803 24,225 23,138 1,087 0 0 0 0 0 0 0 0 0 ------------ ------------ ------------- 3,899,450 3,630,329 269,121 ------------ ------------ ------------- (502,924) 156,689 659,613 ------------ ------------ ------------- 0 20,531 20,531 0 0 0 0 0 0 0 0 0 0 0 0 (117,360) (82,430) 34,930 ------------ -----------.. ------------- (117,360) (61,899) 55,461 ------------ -----------... ------------- (620,284) 94,790 715,074 1,276,278 1,276,278 0 42,840 42,840 0 ------------ -----------.. ------------- $698,834 $1,413,908 $715,074 . - 10 - Special Revenue Funds Debt Service Fund -------------------------------- ---------------------------------------- ------ Variance Varian.:e Revised Favorable Revised Favorahle Budget Actual (Unfavorable) Budget Actual (Unfavor¡ble) ---------- ----------- ------------- ----------- ----------- --------..---- $ln.814 $215.082 $40.208 $0 $0 $0 53.856 46.001 (1.849) 0 0 0 29.421 28.206 (1.21.5) 0 0 0 18.000 44.521. 26.521. 0 0 0 168.661 241.159 79.098 0 0 0 0 0 0 216.261 221.948 5,,681 0 \) 0 0 0 0 46.500 42.620 (3.880) 0 0 0 ---------- ----------- ------------- ----------- ----------- --------...---- 491.312 624.195 132.883 216.261 221.948 5,681 ---------- ----------- ------------- ----------- ----------- ---------.---- 0 0 0 0 0 0 361.195 347.193 20.002 0 0 0 0 0 0 0 0 0 198.375 165.841 32.534 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 119.513 144.968 34.545 0 0 0 0 0 0 0 0 0 0 0 0 110.469 4.480.000 (4.369.531) 0 0 0 408.164 363.154 44.410 ---------- ----------- ------------- ----------- ----------- ---------.---- 745.083 658.002 81.081 518.633 4.843.754 (4.325.121.) ..--------- ----------- ------------- ----------- ----------- ---------.---- (253.171) (33.807) 219.964 (302.372) (4.621.806) (4.319.434) ---------- ----------- ------------- ----------- ----------- ----------.--- 0 0 0 0 0 0 0 0 0 (20.531) (20.531) 0 0 0 0 4.310.000 4.370.000 0 0 0 0 0 0 0 150.631 142.786 (1.851) 0 0 0 0 0 0 0 0 0 .--------- ----------- ------------- ----------- ----------- ------------- 150,631 142.186 (7.851) 4.349.469 4.349.469 0 .--------- ----------- ------------- ----------- ----------- ------------- (103.134) 108.979 212,113 4.047.091 (272.337) (4.319.434) 417.923 417.923 0 687.864 ' 687.864 0 9.084 9.084 0 22.507 22.507 0 .--------- ----------- ------------- ----------- ----------- ------------- $323.873 $535.986 $212.113 $4,751.468 $438.034 ($4.319.434) --- !e accoUIltant 's compilation report. (contiDued) - 11 - City of Fairlawn, u~o Combined Statement of Revenues, Expenditures and Chan:ges In Fund Balances - Budget (Non-GAAP Basis) and Actual All Governmental Fund Types (continued) For the Year Ended December 31, 1992 Revenues: -------- Taxes Charges for Services Licenses, Permits and Fees Fines and Forfeitures Intergovernmental Special Assessments Interest Other Total Revenues Expenditures: ------------ Current: General Government Security of Persons and Property Public Health Services Transportation COllllllunity EnviroDlllent Basic Utility SerVices Leisure Time Activities Capital OUtlay' Debt Service: Principal Retirement , Interest and Fiscal Charges Total Expenditures Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses): ------------------------------ Advances In Advances OUt Proceeds of Notes Sale of Fixed Assets Operating Transfers In Operating Transfers Out Total Other Financing Sources (Uses) Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses J'and Balances BegiDning of Year Unexpended Prior Year Encumbrances Fund Balances End of Year Capital Projects Funds ----------------------------------------- Revised Budget Variance Favorable (Unfavorable) Actual ---------.--- ------------ ------------- $1,639,128 $1,844,062 $204,934 676,000 788,923 112,923 16,000 30,457 14,457 0 0 0 2,171,713 1,068,727 (1,102,986) 0 0 0 0 0 0 95,000 150,959 55,959 ------------ -----_._----- ------------- 4,597,841 3,883,128 (714,713) ------------ ------------ ------------- 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 3,771,362. 3,526,199 245,163 0 0 0 0 0 0 ------------ ------------ ------------- 3,771,362 3,526,199 245,163 ------------ ------------. ------------- 826,479 356,929 (469,550) ------------ -----.------. ------------- 0 0 0 0 0 0 0 0 0 20,000 30,000 10,000 300,000 301,632 1,632 (361,988) (361,988:1 0 ------------ ------------. ------------- (41,988) (30,356:1 11,632 ------------ -----------.. ------------- 784,491 326,573 (457,918) 1,372,380 1,372,380 0 215,324 215,324 0 ------------ ------------ ------------- $2,372,195 $1,914,277 ($457,918) - See accountant 1 s compilation report. See accompanying notes to the general purpose financial statemeJ]Lts - 12 - Totals (Kemorandum Only) ----------------------------------- sed get Actual Variance Favorable (Unfavorable) ------ ------------ ------------- 3.154 $4.720.273 $307.119 0.056 836.431 106.375 6.366 253.796 67.430 0.500 143.293 22.793 4.103 1.898.026 (846.077) 6.261 221.948 5.687 5.000 184.646 59.646 6.500 257.876 91.376 ------ ------------ ------------- 1.940 8.516.289 (185.651) ---.--- ------------ ------------- 9.238 1,336.761. 122.477 5.678 1,792.879 102,799 3,324 60,938 2,386 5.488 700,1.67 75,321 5.067 72.283 2,784 2,000 157.1.97 1.4.803 3,738 168.106 35.632 1.362 3.526.199 245.163 0.469 4. 48(), 000 (4.369.531) 8.164 363,754 44,410 ------ ------------ ------------- 4,528 12.658.284 (3,723.756) ------ ------------ ------------- 2.588) (4.141.995) (3.909.407) ------ ------------ ------------- 0 20,531. 20,531. 0,531.) (20.531) 0 O,OO!) 4,370,000 0 0,000 30.000 10.000 0,637 444,418 (6.219) 9,348) (444,418) 34,930 ------ ------------ ------------- 0,758 4,400,000 59.242 -----.- ------------ ------------- 8,170 258,005 (3,850,1.65) 4,445 3,754,445 0 9,755 289,755 0 ------ ------------ ------------- 2,370 $4,302,205 ($3,850,1.65) countant's compilation report. - 13 - Notes to the City of Fairlavn. Ohio General Purpose Financial December 31. 1992 Statements NOTE 1 - REPORTING ENTITY AND BASIS OF PRESENTATION The City of Fairlavn (the 'City') is a charter municipal corporat.ion. incorporated under the laws of the State of Ohio. The City operates under a CI¡)uncil-Kayor foElli of govemment. The Kayor and Council are elected. A. Renortinl!: Entity The City provides various services including police and j~ire protection; emergency medical. parks and recreation. planning. zoning. s1treet lIUlintenance and repair, refuse collection and general administrative services. !he operation of each of these activities is directly controllecl by the Council through the budgetary process. rb.ese City operations form tht~ oversight Unit and are included as part of the reporting entity. In evaluating how to define the City for financial repc)rting purposes, management has considered all potential component units. The decision tô include a potential component unit in the reporting entity was made by applying the criteria set forth in GAAP. The basic - but not the only - criterion for including a potential component unit within the reportin¡: entity is the Council's ability to e%ercise oversight responsibility. The most significant manifestation of this abiHty is financial interdepElndency. Other manifestlltions of the ability to e%ercise oversight responsibility include, but are not limited to, the selection of. governing authority, the designation of. management, the ability to significantly influence clperations, and accountability for fiscal IIUltters. A second criterion uSEid in evaluating potential component units is the scope of public service. ApJìtlicationQf this criterion involves considering whether the activity benefits the City and/or. its residents, or whether the activity is conducted withiDl the geographic boundaries of the City and is generally available to its residents. A third criterion used to evaluate potential component units for inclusion or e%clusicm: from the reporting entity is the e%!stence of special financicg relationships, regardless of whether the City is able to e%ercise oversight responsibilities. The following component unit has been combined with the oversight unit to create the reporting entity for financial statement purposes: Community Imnrovement Corporation of Fairlavn - The Community Improvement Corporation is a non-profit corporation which acts as an agency for the City of Fairlavn in securing industrial. commercial, distribution. . and research development. Elected officials of the City serve as voting trustees. Based upon the application of the criteria listed above. the potential component units have been e%cluded from the City's statements: following financial ConleY/Fairlavn City School District - The members of the Board of Education of the School District are elected by the voters within the School District. The Board is a body politic and corporate, capable of suing, Icontracting, and possessing. acquiring and disposing of real property. The Bo,ard controls its ovn operations and budget. - 14 - --~~ V~ ~A~~4---. ---- Notes to the General Purpose Financial Statements December 31. 1992 JDIIIIit Countv Public Librarv The library is a distinct political lbdivision of the State of Ohio governed by a board of trustees appoiILted by l1e Summit County CollllDissioners and the judges of the Summit Court of COlDIRon Leas. The board of trustees possesses its own contracting and budgeting I1thority. hires and fires persoanel and does not depend on theClty for ¡leratianal subsidies. is Of Presentation - Fund ACCOuntin2 City uses funds and account groups to report on its financial positJlon and results of its operations. Fund accounting is designed to demolLstrate al compliance and .to aid financial. management by segregating transuctions ated to certain City :Eunctions or activities. und is defined as a fiscal and accounting entity with a self-balancJlng set accounts recording cash and other financial resources. together with all ated liabilities and residual equities or balances. and changes therein. eh are segregated for the purpose of carrying em specific activities or aining certain objectives in accordance with special regullLtions. trictions or limitations. An account group is a financial reporting device igned to provide accountability for certain assets and liabilities tl1&t are recorded in the funds because they do not directly affect net explmdable ilable financial resources. financial statement presentation purposes. grouped into the following generic fund egories governmental and fiduciary. the various funds types under the I , of tile City broa.i fund emmental funds are those through which most goveriuDental functions of the yare financed. The acquisition. use and balances! of the City's explmdable ancial resources and the related current liabiU.ties are accountl!d for ough governmental funds. The following are the þity' s governmental fund es: I ¡ eneral Fund. This fund is the operating fund of ~e City and is ulsed to ccount for all financial resources except those req~red to be accounlted for n another fund. The general fund balance is avail/ible to the. City :Eor any urpose provided it is expended or transferred accoirding to the gener~al laws ,f Ohio. I necial Revenue Funds. These funds are establi.hed to account :Eor the ,roceeds of specific revenue sources (other thanaiaounts relating tll) major :apital projects) that are legally restricted to þ:penditure for specified 'urposes. : lebt Service Fund. This fund is used to account I for the accwaulatlon of :esources for. and the payment of. general and spec~l assessment lœ~g-term ~bt principal. interest and related costs. I I These funds are used jl account for f~~cial the ~quisitlon or c.... rue""" of _jor c.pital I I I I , , :anital Proiects Funds. :esources to be used for :acilities. - 15 - Notes to U1ty 0:1: l"airJ.a1l'J1, UÐ..10 the General Purpose Financial December 31, 1992. Statements Fiduciarv Fund Tvoes: Fiduciary funds are used to account for assets held by the City in a trusteE capacity or as an agent for individuals, private organizations, othe! governmental units and/or other funds. There are two types of' fiduciary funds, trust and agency. The City has no trust funds. The City's agency funds arE purely custodial (assets equal liabilities) and thus do not involve measurement of results of operations.. . Account Grouns: To make a clear distinction between fixed assets related to specific funds anc those of general government, and between long-term liabilitIes related t( specific funds and those of a general nature, the following account groups arE used: General Fixed Assets Account Group. general fixed assets of the City. This account group accounts. for a11 General Lon2-Term Obli2ationsAccount Groun. 'This all unmatured long-term inde.btedness of the assessment debt for which the City is obligated in account group accounts fo! City, including speciaJ some llaDDer. . NOTE 2 - SU!lHARY 01" SIGNIFICANT. ACCOUNTING POLICIES The significant accounting policies followed in the preparation of these financiaJ statements are summarized below. These policies conform to generally acceptec accounting principles (GAAP) for local governmental units as prescribed in thE statements issued by the Governmental Accounting Standards Board and othe! recognized authoritative sources. A. Measurement Focus and' Basis of Accountin~ The accounting and reporting treatment applied to a fund is determined by itE measurement focus. All governmental fund types are accounted. for using a flo'l of current financial resources measurement focus. With this m.easurement focus. only current assets and current liabilities are generally included on thE balance. sheet. Operating statements of these funds present increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures anc other financing uses) in net current assets. Basis of accounting refers to when revenues and expenditures are recognized iJ: the accounts and reported in the financial statements. Basis of accountinl relates to the timing of the measurements made. All governmental fund types and agency funds are accounted for using thE modified accrual basis of accounting. Under this basls, revenues arE recognized in the accounting period when they become both, measurable an( available. Heasurable means the amount of the transaction can be determinec and available means collectible within the current year or soon enoug1 thereafter to be used to pay liabilities of the current yea.r. The availablE period for the City is thirty-one days after year end. - 16 - ""'LY UL ..,a:LI:J.awn, UIU.O Notes to the General Purpose Financial Statements December 31, 1992 in applying the susceptible to accrual concept under the modified accrual basis, the following revenue sources are deemed both measurable and aVlnilable: investment elU:D.Íngs, state-levied locally shared taxes (including I!:asoline tax), fines and forfeitures and. income tax withheld by employers. The City reports deferred revenues on its combined balance sheet. lleferred revenues arise when a potential revenue does not meet both the measurable and available criteria for recognition in the current period. In the sublsequent period, when both revenue recognition criteria are met, theliabi1.ity for deferred revenue is removed from the combined balance sheet. and revenue is recognized. Current and delinquent property taxes measurable as of. Dlecember 31, 1992, whose availability is indeterminate and which are not intended to finance current period obligatinns, have been recorded as a receivable and deferred revenue. Levied special assessments are l8easurable, and have been recorded as a receivable. Since all assessments are due outside of the available period, the entire amount has been deferred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable. Principal and interest on general long-term obligations are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made early in the following year. The costs of accumulatedunpaid vacation and sick leave are reported as fund liabilities in the period in which they will be liquidated with available financial resources rather than in. the period eamed by employees . Allocations of cost, such as depreciation and amortization, are not recognized in the governmental funds. Bud2etarv Process '!he budgetary process is prescribed by provisions of the Ohio Revised C,ode and entails the preparation of budgetary documents within an established timetable. The major docQlDents prepared are the tax budget, the certifilcate of estimated resources, and the appropriation ordinance, all of which are p:t'epared on the budgetary basis of accounting. . The certificate of estimated re,sources and the appropriations ordinance are subject to amendment throughout tJa.e year with the legal restriction that appropriations cannot exceed es't:imated resources, as certified. All funds, other than agency funds and the COJDllunity Improvement Corporation special revenue fund. are legally required to be budgeted and appropriated. Budgetary information for the Collll8l1l1i.ty Imprlovement Corporation special revenue fund is not reported because it is not inc~wded in the entity for which the -appropriated budget- is adopted. The legal ItlWel of budgetary control is at the object level within each department. Any bwigetary modifications at this level may only be made by resolution of the City CtJuncil. Tax Bud2et. At the first Council meeting in July, the Kayor prese11ts the annual operating budget for the following fiscal year to City Councll for consideration and passage. The adopted budget is submitted to the County Auditor, as Secretary of the County Budget CollllDiss!on, by July 20 of eacJ1 year, for the period January 1 to December 31 of the following year. Estimated Resources. The County Budget COllDliss!on determines if the budget substantiates a need to levy all or part of previously authorized t8J[es and reviews estimated revenue. The CollllDission certifies its actions to the C:ity by October 1. As part of this certification, the City receives the official - 17 - Notes City of Fairlawn, Ohio to the General Purpose FiDancJ.al December 31, 1992 Statements certificate of estimated resources, which states the proj ected. revenue of each fund. Prior to December 31, the City must revise its budget so that the total contemplated expenditures from spy fund during the ensuing fisc:al year will not exceed the amount available as stated in the certificat.e of estimated resources. The revised budg~t then serves as the basis for the annual appropriation, ordinance. On or about January 1, the certifica~te of estimated resources is amended to include unencumbered fund balances ILt December 31 of the preceding year. The certificate may be further amended dtLring the year if the Finance Director determines. and the Budget CollllllÍssiotL agrees that an estimate needs to be either increased or decreased. The amcnll1ts reported on the budgetary statement reflect the amounts in the final amended official certificate of estimated resources issued during 1992. Apurouriations. A temporary, appropriation ordinance to con1~rol expenditures may be passed on or about January 1 of each year for the pedod January 1 to Barch 31. An annual appropriation ordinance IllUst be passed bJr April 1 of each year for the period January 1 to December 31. The approp]dation ordinance fixes spending authority at the fund, department and object level. The appropriation ordinance may be amended during the year as new informatiOll becomes available. provided that total fund appropriationls do not excee~ current estimated resources. as certified. The allocation ,it)f appropriation! among departments and objects within a fund may be modified d1l1ring the year bJ an ordinance of Council. During the year. several supplemen'tal appropriatiOt measures were passed. None of these supplemental appropriations had anJ significant affect on the original appropriations. The budg,et figures whic} appear in the statements of budgetary comparisons represent the finaJ appropriation amounts. including all amendments and modifications. Encumbrances. As part of formal budgetary control, purchase orders, contract! and other collllllitments for the expenditure of monies are recorded as tht equivalent of expenditures on the non-GAAP budgetary basis in, order to reservi that portion of the applicable appropriation and to determdne and maintaiJ legal compliance. The Ohio Revised Code prohibits expenditures plu' encumbrances from exceeding appropriations. On the GAAP basis, encumbrance outstanding at year end are reported as reservations of ,f'und balances fo subsequent-year expenditures for governmental funds. Lausin!! of Auurouriations. At the close of each year, the unelncumbered balanc of each appropriation reverts to the respective fund frtlm which it wa appropriated and becomes subject to future appropriations ,. The encumbere appropriation balance is carried forward to the succeedin¡, year and is no reappropriated. C. Cash received by the City is pooled in a central bank accoun1~. BODies for a] funds are maintained in this account or temporarily used to p11rchase short tel investments. Individual fund integrity ismainta1ned thr011gh City record¡ Each funds' interest in the pooled bank account is presenltedas .equity j pooled cash and cash equivalents. on the balance sheet. During 199. investments were limited to overni~t repurchase agreements and interest: STAR Ohio, the State Treasurer's Investment Pool. These investments are statl at cost which approximates market, except for investments in deferrl compensation, which are reported at market value. Investment procedures a] restricted by the provisions of the Ohio Revised Code. - 18 - ........y u¡; ~aJ.rJ.a'llJÌ, VIU.O Hotes to the General Purpose Financial. Statements December 31, 1992 The City has segregated bank accounts for monies held separate from the City's central bank account. These interest bearing depository accounts are p~!8ented in the. combined balance sheet as 'cash and cash equivalents in seg:regated accounts'. since they are not required to be deposited into the City trl!asury. See Hote 6,Deposits and.Investaents. For presentation on the combined balance sheet, investaents with an lnitial maturity.... of three months or .less and cash and investments in thl! cash management pool are considered to be cash equivalents. Investments w:lth an initial maturity of more than three months are reported as investments. Inventories of goverDlllental funds are stated at cost. For all funds, I:Ost. is determined on a first-in, first-out basis. The costs of inventory itl!ms are recorded as expenditures in the goverDlllental fund types. when purc:hased. Reported materials and supplies inventory is equally offset by a fund halance reserve in the goverDlllental fund which indicates that it does not con¡titute available expendable resources even though it is a component of net c:urrent assets. Fixed Assets and Depreciation General fixed assets are not capitalized in the funds used to acq\1Íre or construct thea. Instead, capital acquisition and construction are reflec:ted as expenditures in goverDlllental funds, and the related assets are reported in the general fixed assets account group. All purchased fixed assets are valued at cost when historical records are available and at an estimated historical cost when no historical J~ecords exist. Donated fixed assets are valued at their estimated fair market vlLlue on the date received. . The costs of normal asset or materially capitalized. maintenance and repairs that do not add to the value of the extend asset lives are not capitalized. ImprovemeILts are Public domain ('infrastructure') general fixed assets consisting of roads, bridges, curbs and gutters, streets and sidewalks, drainage .systells and lighting systems are nõt capitalized, as these assets are immovable and.of value only to the goverDlllent. Assets in the general fixed assets accoun1: group are not depreciated. Comoensated Absences Codification of GoverDlllental Accounting and Financial Reporting StllJ1dards Section C60.105 specifies that a liability should be accrued for leave bE~efits that meet the following conditions: 1. The employer' s obligation relating to employees' rights to J:eceive compensation for future absences is attributed to employees I sE!rvices already rendered. The obligation relates to rights that vest or accumulate. Payment of the compensation is probable. The amount can be reasonably estimated. 2. 3. 4. - 19 - V4~J ~. .--.----. --- Notes to the General Purpose Financial Statements December 31, 1992 For governmental funds, the City records a liability for acct~ulated unused vacation time when earned for all employees with more tlulJl one year of service. The City records a liability for accumulated unused slck leave in the period the employee becomes eligible to receive payment. The current portion of unpaid compensated absences is the amount expected to be paid using expendable available resources. These amounts are recorded in the account .compensated absences payable" in the fund from which the eDl]~loyees who have accumulated unpaid leave are paid. The remainder .is reported in the general long-term obligations account group. G. During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as "due from other funds" or "due to other funlils." Long-term interfund loans are classified as "advances receivable/payable" on the balance sheet. B. Fund Eauitv Reserves represent those portions of fund equity not available for appropriation for expenditure or legally segregated for a specific future use. Designated fund balances represent tentative plans for future use of financial resources. Fund balances are reserved for encumbrances, inventory, advances and notes receivable. A designation of fund balance has beeD. established for sewer line repairs. I. Interfund Transactions Quasi-external transactions are accounted for as revenues Transactions that constitute reimbursements to a fund initially made from it that are properly applicable to recorded as expenditures in the reimbursing fund and expenditures in the fund that is reimbursed. Nonrecurring or nonroutine residual equity transfers. operating transfers. permanent transfers of equity All other interfund transfers 3. Lon2-term Obli2ations and expenditures. for expenditures aLD.Other fund are aSI reductions of are are reported as reported as Long-term debt is recognized as a liability of a governmental :fund when due, OJ when resources have been accumulated in the debt service fund :for payment earl] in the following year. For other long-term obligations, O1l1.ly that portioJ expected to be financed from expendable available financ.ial resources it reported as a fund liability of a governmental fund. The remaining portion oj such obligations is reported in the general long-term obligations accoun1 group. - 20 - "',, ".] ~''''''¡I¡'''Iß''''~ ..,., , ':-ò~'(,',fin;l¡:il!lll;, ';.ii',j" Notes to the City of Faida1m, Ohio General Puxpose Financial December '1, 1992 Statements >", " , Under Ohio Law, a debt retirement fund must be created and used for the :payment of all debt principal and interest. Generally accepted accounting pr~~ciples require the allocation of the obligations liability among the appropriatle funds and the general long-term obligations account group, with princip,al and interest payments on matured special assessment bonds payable being repo:tted in the debt service fund. To comply with GAAP reporting requirements, the City's debt retireaentfund has been split among the appropriate funds and ¡account group. Debt service fund resources used to. pay both principal and ÎJl1terest have also been allocated accordingly. .t, ì, " " :x. Total Columns on General Purpose FinAncial Statements " Total columns on the General Purpose Financial Statements are cal~t;toned memorandum only to indicate that they are presented only to facl1itate financial analysis. Data in these columns do not present financial pollition, results of operations or cash flows in conformity with generally ac:cepted accounting principles. Neither is such data comparable to a consoliclation. Interfund e1 iminAtions have not been made in the aggregation of this datiL. JNOTE , - BUDGETARY BASIS OF ACCOUNTING ,While reporting financial position, results of operations, and changes j.n fund balance on the basis of generally accepted accounting principles (GAAP basi!I), the , budgetary basis as provided by law is based upon accounting for transactiOJlLs on a ,basis of cash receipts, disbursements and encumbrances. .. The Combined Statement of Revenues, Expenditures and Changes in Fund BalaXJlces 'Budget (Non~GAAP Basis) and Actual - All Governmental Fund Types is preseD~ed on 'the budgetary basis to . provide a relevant comparison of actual results w1.th the ..budget and to deaonstrate compliance with state statute. The major diffe,rences :between the budget basis and the GAAP basis are: 1. Revenues are ' recorded when received in cash (budget) susceptible to accrual (GAAP). Expenditures are recorded "hen paid in cash (budget) as the liability is incurred (GAAP). as opposed t,o when 2. opposed to. when ,. Outstanding year end encumbrances are treated as expenditures (budget) rather than as a reservation of fund balance for governøaental fund .types (GAAP). 4. Proceeds frOll and principal payment reported on the operating statement sheet (GAAP). on short-term note obligations are (budget) rather than on the balance following tables summarize the adjustments necessary to reconcile basis statements to the budgetary basis statements on a fund type basis. the GAAP - 21 - --~J -- ._------. ---- Hates to the General Purpose Financial Statements December 31, 1992 . Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses All Governmental Fund Types Special Debt Capi1t:al General Revenue Service Proi~!cts $303,994 $127,080 $24,448 $I,34:S,221 (116,247) 4,958 -0- (15;1,493) 20,531 -0- -0- -0- -0- -0- -0- 3c),OOO -0- -0- 4,370,000 -0- -0- -0- (4,425,000) -0- -0- -0- (198,747) 19~I, 747 -0- -0- (20,531) -0- 24,774 145,516 -0- 6~I, 961 GAAP Basis' Revenue Accruals Advances In Sale of Fixed Assets Proceeds of Hotes Debt Service Principal Debt Service Interest Advances Out Expenditure Accruals Excess of Revenues Under Expenditures for Hon-Budgeted Fund Encumbrances Budget Basis NOTE 4 - ACCOUNTING CHANGE -0- 11,812 -0- -0- C138 . 262) (22.507) C1.16~1.863) S94.790 J108. 979 (S272.337) S32Ei.573 For the year ended December 31, 1992, the City has presented, for the, first time, general purpose financial statements by fund types and account groups in accordance with generally accepted. accounting principles. In conjunction with this presentation, the City has changed its basis of accounting from the cash basis to the modified accrual basis for governmental and agency funds. Th.ese changes include the recognition of revenues when measurable and available for governmental and agency funds and the recognition of expenditures when incurred. F'and balances as of .January I, 1992 have been restated for these changes. These restatements had the following effects OIJ. fund balance: Balance as Reststed Previously Stated at Balance at December 31. 1991 Adiustments .Januarv 1. 1992 Governmental Funds: General $1.319,118 $202,099 $1,521.217 Special Revenue 440.139 (13,658) 426.481 Debt Service 20,026 (40,531) (20.505) Capital Projects 2,278,049 (4,135,641) (1,857,592) Fiduciary Fund: Agency 33.438 (33,438) 0 - 22 - i Statutes require .. categories. Category 1 consists of .active. monies. those monies required to be kept Jln a '.cash. or .near-cash. status for immediate use by the City. Such monies mUllt be . maintained either as cash in the City tteasury or in depository accounts payab]Le or twithdrawable on demand. including negotiable order of withdrawal (HOW) accountll. ¡., , ~icategory 2 consists of .inactive. monies. those monies not required for use wlthin fthe current two year period of designation of depositories. Inactive monies ~LY be J,deposited or invested only as certificates of deposit maturing not later tbBŒL the ¡end of thecw,rent period of designation of depositories. if . 'T JCategory 3 consists of .interim. monies. those monies which are not needecJl for !ÏDuDediateuse but which will. be needed before the end of the current pericld of ídesignation. Interim monies may be invested or deposited in the follcldng !securities: ." I r l' j ! f l ! ~ f J I 6. The State Treasurer's investment pool (STAB. Ohio). fl,otwithstanding the foregoing requirements. the City may invest any monies not r~equired to be used for a period of six months in the following classes of rJJ1vestments: . I --"J ....~ ""'A~.L"'a...u. Ua.&..LU Hotes to the General Purpose Financial Statements December 31. 1992 - . HOTE 5 - ACCOOHTABn.ITY AND COMPLIANCE . .A. Fund Deficit The water/sewer $4.035.223 as requirement to proceeds. This note is bonded. extension capital projects fund had a deficit fund balance of of December 31. 1992. This deficit resulted from the GAAP report bond anticipation notes in the fund that received the deficit will be alleviated when the debt is paid. or whel1 the B. The debt service principal retirement expenditure account in the debt se:rvice fund had expenditures in excess of appropriations in the amount of $4.369.~531. \ HOTE 6 the classification of monies held by the City into 1three 1. Bonds. notes. or otherobligations or those for which the faith of payment of principal and interest. of or guaranteed by the United Sta.tes, the United States is pledged for the 2. Bonds. notes. debentures, or other obligations or securities issued b,. any federal government agency. or the Export-Import Bank of Washington. 3. Repurchase agreements in the securities enUlDerated above. 4. Interim deposits in the eligible institutions applying for interim monies. Bonds and other obligations of the State of Ohio. s. ¡ , I I I I ( - 23 - City of Fairlawn. Ohio Hotes to the General Purpose Financial Statements December 31. 1992 1. Bonds or other obligations of the United States. or those for which the faith of the United States is pledged for the payment of principal and interest. 2. Discount notes of the federal national mortgage association. 3. BOnds issued by the home owners' loan corporation. 4. Bonds of the State of Ohio. s. Bonds of any municipal corporation. political subdivision of the state. principal. interest. or coupons. Protection of the City's cash and investments is provided by the fedel~al deposit insurance corporation as well as qualified securities pledged by the :i.nstitution holding the assets. By law. financial institutions may establish a col1aLteral pool to cover all public deposits. The face value of the pooled collateral must equal at least 110 percent of public funds deposited. Collateral is held b" trustees including the Federal Reserve Bank and designated third party trustees of the f1nancialinstitutions. village. county. township" or other as to which there is no clefau1t of Denosits. At year-end. the carrying amount of the City's deposits was $27.590 and the bank balance was $122.731. Of the bank balance: 1. $115.212 was covered by federal depository insurance. $7.519 was uninsured and uncollateralized as defined by the GA:SB because the collateral pledged by the financial institution or th~~ir trust departments or agents is not in the City's name. The pledging blmk; has an investment and securities pool used to collateralize all public deposits which is held in the financial institution's name. This pool hacl a market value at December 31. 1992 in excess of 110 percent of the public: funds on deposit. 2. Investments. GASB Statement Ho. 3 8Denosits with Financial Inst:itutions. Investments (includinl! . Renurchase Al!reements). and Reverse Renurchase Aitreements 8 requires the City to categorize. investments to give an indication of thE! level of risk assumed by the City at year-end. Category 1 includes investments: that are insured or registered or are held by the City or its agent in the Cit,,' s name. Category 2 includes uninsured and unregistered investments which are he1.d by the counterparty's trust department or agent in the City's name. Category 3 includes uninsured and unregistered investments which are held by the counterparty or by its trust department or agent but not in the City's name. STAB. Ohio and. Deferred Compensation are unclassified investments since they are not evidenced by securities that exist in physical or book entry form. - 24 - Notes to the City of Fairla1fl1, Ohio General Purpose Financial December 31, 1992 Statements GASB Statement 9 1 Category 2 Repurchase Agreement Investment in State Treasurer's Investment Pool (STAR Ohio) Deferred Compensation Total Investments Carrying Value Jfarke1~ ValutL- 3 -0- -0- $3,806,503 $3,806,503 $3,806,,503 2,048,969 2,048,969 558.656 $6.414.128 558.656 $6.414.128 The classification of cash and cash equivalents, and investments on the combined financial statements is based on criteria set forth in GASB Statement No.9. Cash and cash equivalents are defined to include investments with original maturities of three months or less and cash. and investments of the cash management pool. A reconciliation between the classifications of cash and investments on the combined financial statements and the classification per GASB Statement No. .3 is as follows: Cash and Cash Eauivalentsl.Denosits $5,883,062 Investments $558,656 Investments which are part of a cash management pool: Repurchase Agreement STAR. Ohio (3,806,503) (2.048.9691 $27.590 3,806,503 2.048.969 $6.414.128 GASB Statement 3 NOTE 7 - PROPERTY TAXES Property taxes include amounts levied against all real and public utility prclperty, and tangible personal (used in business) property located in the City. . Real property taxes were levied after October I, 1991, on the assessed value as of .January I, 1991, the lien date, and were collected in 1992. Assessed val1Jles are established by State law at thirty-five percent of appraised market value!. All property is required to be revalued every six years. Public utility px'operty taxes received in 1992 attached as a lien on December 31, 1990, were levied after October I, 1991 and are collected with real property taxes. Public u.tility property taxes were assessed on tangible personal property at eighty-eight percent of true value. 1992 tangible personal property taxes were levied after October 1, 1991, on the value listed as of December 31, 1991, and were collected in 1992. Tangible personal property assessments were twenty-six percent of true value. The assessed value upon which the 1992 taxes were collected was $162,776,180. Real estate represented 87 percent ($141,581,340) of this total, public utility taBgible personal property represented 3 percent ($4,320,190) and general tangible personal property represented 10 percent ($16,874,650). The full tax rate for all City operations applied to taxable property for the year ended December 31, 199:Z, was $2.70 per $1,000 of assessed valuation. Real and public utility property taxes are payable annually or semi-annual~,. If paid annually, payment is due February 12. If paid semi-annually, the first - 25 - Notes ~1:fÿ''''5J: 'JI'ä::írIã1ffi., Ohio to the General Purpose Financial December 31, 1992 Statements payment is due circumstances, established. February 12 with the remainder payable by .July 14. state statute permits earlier or later payment Under dates certain to be Tangible personal property taxes paid by multi-county taxpayers are du,e September 20. Single county taxpayers may pay annually or semi-..nnl1..lly. If paild annually, payment is due April 30; if paid semi-annually, the first payment is ctu.e April 30, with the remainder payable by September 20. ' The County Treasurer collects property tax on behalf of all taxing distdcts within the County. The County Auditor periodically remits to the taxing dist¡dcts their portions of the taxes. collected. Accrued property taxes receivable represents delinquent taxes outstandinl~ and real property, public utility, and tangible personal property taxes wldch became measurable as of December 31. 1992. However, since these tax collectiOJ1S will not be received during the available period nor are they intended to fjlnance1992 operations, the receivable is offset by a credit to deferred revenue. NO'l'E 8 - RECEIVABLES Receivables at December 31,1992, consisted of taxes, accounts (billinl:S for user charged services),special assessments, interest, notes (sale of land to developer) and intergovernmental receivables arising from grants, entitlements, and shared revenues. Accounts, taxes, special assessments, interest, and intergclvernmental receivables are deemed collectible in full. A summary of the principal items of intergovernmental receivables follows:: Inter20vernmental Receivables Amount General Fund: Estate Tax Local Government Tax Total General Fund $91,855 5.806 97.661 . Special Revenue Funds: Motor Vehicle Permissive Gasoline Tax Motor Vehicle Total Special Revenue Funds Capital Projects Funds: Issue II SWlllllit County Total Capital Projects Funds 14,033 2,947 2.308 19.288 98,000 6.500 104.500 $221.449 Total - 26 - Notes to the City orF;.ia;w':~ Ohio General Purpose Financial December 31. 1992 Statements Deletions $0 0 0 (631) (77.545) (511.599) $589.775 - 27 - The City levies a municipal income tax of two percent on gross salaries. wa.ges ~d other personal service compensation earned by residents of the Cityandl on the earnings of nonresidents working within the City. This tax also applies to the net income of businesses operating within the City. Residents of the City are granted a credit up to two percent for taxes paid to other municipalities. Employers within the City are required to withhold income tax on employee compensation and remit the tax to the C1-ty either monthly or quarterly. as required. Corporations and other individual taxpayers are required to pay their estimated tax quarterly and file a declaration annually. By City ordinance. income t.ax proceeds are credited as follows: The general fund receives 75 percent. and the capital improvement fund receives 25 percent. of the first 1.5 percent of the two percent income tax. The capital improvements fund receives the remaining. 5 percent of the income tax. Balance December 3:L. 1992 $1.283.351 1.188.13~ 2.257.320 1.398.29.; 901.6215 I) $7.028.7"6. The City is exposed to various risks of loss related to torts. theft of. dam.uge to. and destruction of assets. errors and omissions. injuries to employees and Il8tural disasters. During 1992. the City contracted with Wichert Insurance Servi(:e Inc. for property and general. liability insurance. including boiler and maclLinery. Police and professional. liability are protected by the National Casualty C:ompany with a $1.000.000 limit and a $5.000 deductible. A commercial umbrella policy through International Insurance Company provides additional general liability and auto liability insurance up to a $6.000.000 limit. NOTE 9 - INCOHE TAX NOTE 10 - FIXED ASSETS A summary of changes in general fixed assets follows: Balance January 1. 1992 Additions Land Land Improvements Buildings Machinery and Equipment Vehicles Construction in Progress $1.268.851 676.539 2.251.146 $14.500 511.599 6.174 Vehicles are covered by Personal Service Insurance Company and hold aL $100 deductible for collision. Automobile liability coverage has no lim.i.t for collision. a $1.000.000 limit for bodily injury. and a $1.000.000 U..LÌt for uninsured motorist. Settled claims have not exceeded this commercial coveI~ge in any of the past three years. 1.331.054 885.538 67.873 93.635 381. 664 $6.794.792 129.935 Total NOTE 11 - RISK HANAGEHENT Notes City of :Páirlawn, Ohio to the General Purpose Financial December 31, 1992 Statements Volunteer Firemen's Insurance Services covers Firemen liabi1ity vith a $250 deductible and a limit of $1,000,000. and EHT professional The City pays the State Workers' $100 of salaries. This rate adminiRtrative costs. Compensation System a premium based on a rate per is calculated based on accident history and NOTE 12 - DEFINED BENEFIT PERSION PLAN'S A. Public Emplovees RetirementSvstem CPERS) All City of Fairlawn full-time employees, except non-administrative :full-time uniformed police officers and firemen, participate in the Public Jblployees Retirement System (.System.), a cost-sharing multiple-employer public employee retirement system created by the State. The payroll for employees clJVered by the System for the year ended December 31, 1992 was $1,094,369; th.~ City's total payroll was $1,962,250. All City employees, except non-administrative full-time uniformecl police officers and firemen, must participate in the System. Those studentll worJdng less than 1,500 hours per calendar year for the school, college, or wliversity they attend have an option to exempt themselves from membership. Benefits fully vest upon reaching five years of service and are established by state statute. Employees may retire at any age with thirty years of serviCE!, at age sixty with a minimum of five years of credited service, and at age flfty-five with a minimum of twenty-five years of service. Those individuals retiring with fewer than thirty years of service or less than age sixty-fivE! receive reduced retirement benefits. Hembers are entitled to a retirement benefit, payable monthly for life, equal to 2.1 percent of their final avera¡~ salary for each year of credited service up to thirty years. Hembers are ent:itled to 2.5 percent of their final average salary for each year of service in E!XCeSS of thirty years. Final average salary is the employee's average salary over the highest three years of earnings. Contribution rates are statutorily authorized and actuarially determinE!d. The rate set for employee contributions for 1992 was 8.5 percent. The employer contribution rate vas 13.55 percent of covered payroll; 8.44 percent was the portion used to fund pension obligations for 1992. The difference bet~ween the total employer rate and the portion used to fund pension obligations: was the amount used to fund the health care programs. The retirement cont~ribution requirement for the year ended December 31, 1992 was $241,308, which c:onsisted of $148,287 from the City and $93,021 from employees; these contI~butions represented 13.55 percent and 8.5 percent of covered payroll respective,ly. During 1992, Senate Bill 346 established a revised disability program. All public employees who were members of the System as of July 29, 1.992, the effective date of the legislation, were given the opportunity to elect coverage under either the original disability program or the revised di.sability program. Anyone hired after July 29, 1992 is automatically covered under the revised disability program. The revised program was designed to be cost neutral, and therefore does not affect the funding of the System. The inflation assumption rate changed from 5.S percent to 5.25 percent. Th.ere were no other changes in actuarial assumptions, benefit provisions, actuarial funding methods or other factors. - 28 - Hotes City of Fairlawn, Ohio to the General Purpose Financial December 31, 1992 Statements The 8pension benefit obligation8 is the actuarial present value of credJ.ted projected benefits, adjusted for the effects of projected salary increa~les and step-rate benefits, estimated to be payable in the future as a re~lu1t of employee service to date. The measure is intended to help users assellS the System's funding status on a going-concern basis, assess progress .~de in accumulating sufficient assets to pay benefits when due, and make. compaLrisonB among PERS and employers. This calculation. does not reflect the method \Lsed by the System to determine funding requirements. - The System determine,s its actuarial liability based on the entry age normal method of funding. The System does not make separate measurements of assets and pension b,enefit obligations for indJ.vidual employers. The pension benefit obligat.i.on at December 31, 1991 (the latest date for which information is available) for the System as a whole, determined through an actuarial valuation performed as -' of that date, was $19,801.1 million. The System's net assets available for benefits on that date were $18,501.2 million, leaving an unfunded pension benefit obligation of $1,299.9 million. The City's contribution represented .02 percent of total contributions required of all participating entities. Historical trend information showing the System's progress in sufficient assets to pay benefits when due is presented in December 31, 1992 Comprehensive Annual Financial Report. accumulating the System's B. Police and Firemen's Disabilitv and Pension CPFDP) All City of Fairlawn non-administrative full-time uniformed police office:l:'s and firemen participate in the Police and Firemen's Disability and Pension Fund (8System8), a cost-sharing multiple-employer public employee retirement i!ystem created :by the State of Ohio. Volunteer firemen contribute toPERS or i!ocial security. This is a single retirement system with one administratio11 that provides retirement benefits to two classes of employees. The payroll for employees covered by the System for the year ended December 31, 199:! was $566,564 for police and $262,954 for firemen; the City's total payroU was $1,962,250. The System operates under the authority of the Ohio Revised Code Chaptel~742. The System provides pension, disability, and health care benefits to qualified police officers and firemen, and survivor and death benefits to qualified spouses, children, and dependent parents. when due. I!embers are .eligible for normal retirement benefits at age forty-eight with twenty-five years of sElrvice credit or at age suty-two with fifteen years of service credJ.t. RetiJ~ement with reduced benefits is available to members with 15 years of service (:redJ.t at the later of age forty-eight or twenty-five years from the date the Dlember became a qualified employee. The normal retirement benefit is equal t:o 2.5 percent of annual earnings for each of the first twenty years of service, 2 percent for each of the next five years of service and 1.5 percent for each year thereafter. However, this normal retirement benefit is not to excE!ed 72 percent of the member's average annual earnings for the three years cJluring which the total earnings were greatest. The Ohio Revised Code Chapter 742 provides statutory employer contributions. Actuarially determined percentage of covered payroll were as follows: authority for employe,e and contribution rates as a - 29 - Notes to the "J.1:Y 'Bii~'FÍ1iflåiñ~"()hio General Purpose Financial December 31. 1992 Statements Determined Actuarially ~ Determined at ece e 31 199 ~~ 0 1ce 1remen 0 1ce 1remen Employee Contribution Rate 10.00% 10.00% ' ant 11-ît av able avw. able Employer Contribution Rate 19.50 24.00' Dqt av~îiaJl)le ava11able Less portion to fund health 29.50 34.00 33.78 34.1~ care (actuarially determined) (7.51) (7.51) (7.51) (7.5:!.L Contr~tiCïiratt to fund 21.99% 26.49% 26.27% 26.6~Œ.. pens 0 1 gat ons Actual contributions. actual contributions as a percentage of coverecl payroll and the actuarially determined contribution amount for the year ended DeceJlber 31. 1992 were as follows: Police Percentage of Covered Payroll Firemen perc:entage of (:overed Amount --f.!tvroll Amount Statutory Employee Contribution $56.656 10.00% $26.295 10.00% Statutory Employer Contribution nO.480 19.50 63.109 24.00 Portion to Fund Health Care (42.549) (7.51) (19.748) (7.51) Total Statutory Contribution $124.587 21. 99% $69.656 26.49% Actuarially Determined $148.836 $70.130 Contribution 26.27% 26.67% Although this schedule indicates that the actuarially determined cont:dbution rates for employers are greater than the statutory contribution rlLtes for police and firemen. no liability has been recognized since no deaaand for additional contributions has been made by the System and since an . ILlternate source of funding. other than increased employer contdbutions. may be found. The .pension benefit obligation. is a standardized disclosure measurE! of the present value of pension benefits. adjusted for the effects of projectE!d salary increases and step-rate benefits. estimated to be payable in the fut1JLre as a result of employee service to date. The measure. which is the ~ctuarial present value of credited projected benefits. is intended to help useJ:~s assess the System's funding status on a going-concern basis. assess progressillÎ8.de in accumulating sufficient assets to pay benefits when due. and make coa~ari8ons among PFDP and employers. The System does not make separate measure;ments of assets and pension benefit obligations for individual employers. The; pension benefit obligation and net assets available for benefits at .January 1. 1992 (the latest date for which information is available) for the System as a whole. determined through an actuarial valuation performed as of that date; are as follows (in thousands): - 30 - Notes to City of Fairlawn. Ohio the General Purpose Financial December 31. 1992 Statements Police Fire Total Pension Benefit Obligation $2.645.300 $2.119.400 $4.764.700 Net Assets Available for Benefits 2.056.600 1.621.900 3.678.500 Unfunded Pension Benefit Obligation $588.700 $497.500 $1.086.200 We are presenting separate asset and obligation amounts for police uLd fire since the System establishes distinct contribution rates. The total IIlension benefit obligation and net assets available for benefits figures apply to the police and fire plan as a whole. The City's 1992 police and fire contributions represented .06 percent and .04 percent of total contributions required of all participating entities. respectively. Bistorical trend information showing the System's progress in sufficient assets to pay benefits when due is presented in December 31. 1992 audited financial statements. accumulating the System's NOTE 13 - POSTEHPLOYHENT BENEFITS A. Public Emnlovees Retirement Svstem (PERS1 The Public Employees Retirement System of Ohio provides post-retirement llealth care coverage to age and service retirants with ten or more years of quallfying Ohio service credit. Healthcare coverage for disability recipientlJ and primary survivor recipients is available. A portion of each emplt))"er's contribution to PERS is set aside for the funding of post retirement bealth care based on authority granted by State statute. The employer contribution rate was 13.55 percent of covered payroll; 5.11 percent was the portion that was used to fund health care for the year 1992. . . Benefits are advance-funded using the entry age normal cost m.,thod. Significant actuarial assumptions include a rate of return on investlDelLts of 7.75 percent; active employee payroll increases of 5.5 percent for inflation and an increase of between zero and 5.1 percent based on additiœutl pay increases. Health care premiums were assumed to increase 5.25 pElrcent annually. Short-term securities consisting of cOlDIDercial paper and U.S. Tre'asury obligations are carried at cost. Equity securities and investlDents in real estate are carried at cost. Fixed income investlDents are carried at amoztized cost. using the effective interest rate method of amortization. All investlDents are subject to adjustlDent for market declines judged to be other than temporary. For actuarial valuation purposes. assets are adjusted to reflect 25 percent of unrealized market appreciation or depreciation on investlDent assets. - 31 - Notes to the Cit;:~r~f~ pili¡;~', Ohio General Purpose Financial December 31, 1992 Statements B. The number of active contributing participants was 349,674. The Cit;r's actual contributions for 1992 which were used to fund postemployment benl!fits were $55.922. The actual contribution and the actuarially required cc)ntribution amounts are the same. The Retirement's Syste.'s net assets avallable for payment of benefits at December 31. 1991 (the latest inf.ormation ava:llable) was $4.988.9 million. The actuarially accrued liability and the unfundecl actuarial accrued liability were $6.444.1 million and $1.455.2 million. "respecHvely. Police and Firemen's Disabilitv Pension Fund The Police and Firemen's Disability and Pension Fund provides po st.. retirement health care coverage to any person who receives or is eligible to receive a monthly benefit check or is a spouse or eligible dependent child of such person. An eligible dependent child is any child under the age (If eighteen whether or not the child is attending school or under the age of tWE!nty-two if. attending full-time or ona two-thirds basis. The Ohio Revised Cod~ provides the authority allowing the Police and Firemen's Disability and Pens:ion Fund's board of trustees to provide health care coverage and states that bealth care cost paid from the Police and Firemen's Disability and Pension Fund shall be included in the employer's contribution rate. The total po1ic:e employer contribution is 19.5 percent of covered payroll and the total firemen's employer contribution rate is 24 percent of covered payroll of which 7.51 percent was applied to the postemployment health care program. Health care funding and accounting is on a pay-as-you-go basis. The number of participants eligible to receive health care benefits as of December 31. 1991 (the latest available inf.ormation) was 16.541 for police and 13.652 for firemen. The City's actual contributions for 1992 that were used to fund postemployment benefits were $42.549 for police and $19.748 for firemen. The Fund's total health care expenses for the year ending December 31, 1991 (the latest inf.ormation available) were $61.748.019. NOTE 14 - OTHER EMPLOYEE BENEFITS A. Deferred Comnensation Plans City employees and elected officials participate in the Aetna Life Insurance and Annuity Company deferred compensation plan. The plan was" Icreated in accordance with Internal Revenue Code Section 457. ParticipatiOJI1 is on a voluntary payroll deduction basis. The plan permits deferral of cOlnpensation until future years. According to the plan. the deferred compensatitJD is not available to employees until termination. retirement. death or unf.t)reseeable emergency. All amounts of. compensation deferred under the plan. all property Imd rights purchased with those amounts, and all income attributable to those amounts, property. or rights are (until paid or made available to the employec! or other beneficiary) solely the property and rights of the City (withc)ut being restricted to the provisions of benefits under the plan), subject mlly to the claims of the City's general creditors. Participants' rights undel~ the plall. are equal to those of general creditors of the City in an amount equal to the fair market value of the deferred account for each participant. The Plan Agreement states that the City and the Aetna Lif.e Insurance and Annui1:y Company have no liability for losses under the plan with the exception of fraud or wrongf.ul taking.. - 32 - Notes to the City of Fairlawn, Ohio General Purpose Financial December 31, 1992 Statements An agency fund has been established to account for these moneys as prescribed by Governmental Accounting Standards Board Statement No.2 "Financial Reporting of Deferred Compensation Plans Adopted under the Provisions of Internal Revenue Code Section 457". As of December 31, 1992. the amount on deposit 'with the Aetna Life Insurance and Annuity Co. was $558.656 valued at market. B. Comnensated Absences The criteria for determining vested vacation and sick leave compOll1l!nts are derived from negotiated agreements and State laws. Employees earn two to six weeks of vacation per year. depending upon length of service. "acation accumulation is limited to one year. All accwaul.ated unused vacation time is paid upon termiDation of employment. Year Endin@ 1993 1994 1995 1996 1997 1998-2002 Total Hinimum Lease Payments Less: Amount Representing Interest Present Value of Minimum Lease Payments - 33 - Employees earn sick leave at the rate of 1.25 days per month of servicl~. Sick leave accumulation is limited to ninety days. provided that any person who was a City employee on .July 6.1984. who has accumulated any number of s:lck days between ninety and 120. may accumulate in a time bank up to a total of 180 days. and upon retirement such employee will be paid for. the total number of days accumulated up to. but not to exceed the amount of time accumuluted on July 6. 1984. As of December 31. 1992. the total liability for unpaid compensated absences was $163.660. In prior years the City entered into capitalized leases for the acquisit;ion of radio equipment. Each lease meets the criteria ofa capital lease as defined by Statement òf Financial Accounting Standards No. 13 "Accounting for Leases". which defines a capital lease generally as one which transfers benefits and risks of ownership to the lessee. Capital lease payments have been reclassified and are reflected as debt service in the general purpose financial statements for the governmental funds. These expenditures are reflected as program/function expenditures on a budgetary basis. General fixed assets acquired by lease have been capitalized in the general fixed assets account group in an amount equal to the present value of the future minimum lease payments at the time of acqul.sition. A corresponding liability was recorded in the general long-term obligations account group. NOTE 15 - CAPITALIZED LEASES - LESSEE DISCLOSURE The following is a schedule of the future long-term minimum lease payments required under the capital leases and the present value of the minimum lease payments as of December 31. 1992: Amount $51.428 51.428 51.428 51.428 51.428 51.428 308.568 (73.156) $235.412 Notes City of Fairlawn, Ohio to the General Purpose Fin~n~ial December 31, 1992 Statements NOTE 16 - LONG-TERM OBLIGATIONS of the City as of December 31, 1992, were as followsl Outstanding Outst8Jooing 12-31-91 12-31,:.2L: Long-term obligations Various Purpose Special Assessment Bond 7% OWPC Loans Payable Capital Leases Compensated Absences Total General Long- Term Debt Additions Reductions $0 $55,000 911,609 0 0 29,743 37.068 13.117 $948.677 $97.860 $2,125,000 0 265,155 139.007 $2.529.162 $2,070,000 911,609 235,412 162.958 $3.379.979 The special , assessment bond will be paid from the proceeds of special as:sessments levied against benefited property owners. In the event that a property' OY1l1er would fail to pay the assessment, payment ...ould be made by the City. COID.pensated absences reported in the .compensated absences payable. account ...ill be ]~aid from the fund from which the employees' salaries are paid. Capital leases are ]~aid from revenues of the capital improvement capital projects fund. Principal and interest requirements to December 31, 1992 are as follows: retire long-term obligations outstlmding at 1993 1994' 1995 1996 1997 1998-2002 2003-2007 2008-2011 Totals Special Assessment Bonds $199,860 196,740 198,500 199,860 200,800 992,418 988,535 791. 450 $3.768.163 The City has entered into agreements with the Ohio Public 1lorks COIDDI!ssitm (OWPC) for two projects. The monies sent to the City thus far for these projects are for reimbursements of expenditures incurred. There£ore, the City's liability j~or these loans, as of December 31, 1992, are for the amounts forwarded to the City j~or those projects. The City is not yet making payments on these loans. Although the 01lPC has provided the City ...ith a .temporary. amortization schedule, these li.bilities are not reflected within the accompanying SUllllllllry of the City' s future annual debt service requirements for long term debt. These .temporary. amortization ¡chedules are based on the estimated total amount of funds to be borrowed by the C:ity even though only a portion has been received. Upon completion of the project, ]~ermanent amortization schedules will be compiled and all future debt payments by the City for OWPCwill be based on these schedules. As o£December 31. 1992, the City's liability to OWPC was $911,609. - 34 - Notes to the City of Fairlawn,Ohio General Purpose Financial December 31, 1992 Statements NOTE 17 - NOTE DEBT The City's note activity, including amounts outstanding, interest purpose for which the note was issued is as follows: rates and the Balance Balan(:e 12-31-91 Additions Reductions 12-31..92 $55,000 $0 $55,000 $0 4.370.000 4.370.000 4.370.000 4.370,,000 Capital Improvement 5.74% Vater/Sewer Extension 3.6% Total Notes $4.425.000 $4.370.000 $4.425.000 $4.370..000 A1lof the notes are backed by the full faith and credit of: the City of Fnirlawll and mature within one year. The note liability is reflected in the fund which received the proceeds and which will repay the debt. The notes are geIlerally issued in anticipation of long-term bond financing and are refinanced untU such bonds are issued. NOTE 18 - CONSTRUCTION COMMITMENTS As of December 31, 1992, the City had outstanding contractual commitmeIlts $595,691 for road improvements. of NOTE 19 - INTERFIJND TRANSACTIONS Interfund balances at December 31, 1992, consist of the following: General Fund Due From Due To $8,762 $0 3,019 0 0 11.781 $11.781 $11.781 Advances Advances Receivable Pavable $20,000 $0 0 20.000 $20.000 $20.000 Children and Adolescent Special Revenue Fund Hayor's Court Agency Fund Totals General Fund Debt Service Fund Totals - 3S - Notes to the City of Fairlawn. Ohio General Purpose Financial December 31.1992 Statements NOTE 20 - CONTINGENCIES A. Grants The City received financial assistance from federal and state agencies;~ the form. of grants. The disbursement of funds received under these p:rograms generally requires compliance with terms and conditions specified in thl! grant agreements and is subject to audit by the grantor agencies. Any dis¡illowed claims resulting from such audits could become a liability of the gene~il fund or other applicable funds. Bovever. in the opinion of management. an:, such disallowed claims will not have a material adverse effect on the IJVerall financial position of the City at December 31. 1992. Litittation B. The City of Fairlawn is 'a party to legal proceedings seeking ~iges or injunctive relief generally incidental to its operations and pending prc)jects. The City management is of the opinion that ultimate disposition of these claims and legal proceedings will not have a material effect. if any. on the fil1ancial condition of the City. NOTE 21 - SUBSEOUENT EVENT On August 10. 1993. the City issued bonds in the amount of $2.875.000 rates ranging from 2.8 percent in 1994 to 5.75 percent in 2013. The these bonds. along with other City monies. retired the $4.370.000 outstanding at December 31. 1992. - 36 - with iJlterest proceecls from note payable