FY2009 Audit Report City (2)M
City of Blair, Nebraska
FINANCIAL STATEMENTS
AND INDEPENDENT AUDITOR'S REPORT
For the year ended September 30, 2009
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 3 - 4
MANAGEMENT'S DISCUSSION AND ANALYSIS 5-17
FINANCIAL STATEMENTS
Statement of net assets - Government -wide 18
Statement of activities - Government -wide 19
Balance sheet - Governmental funds 20
Reconciliation of the balance sheet of governmental funds
to the statement of net assets 21
Statement of revenues, expenditures, and changes in
fund balances - Governmental funds 22
Reconciliation of the statement of revenues, expenditures
and changes in fund balances of governmental funds
to the statement of activities 23
Statement of net assets - Proprietary funds 24
Statement of revenues, expenses, and changes in
fund net assets - Proprietary funds 25
Statement of cash flows - Proprietary funds 26
Statement of net assets - Fiduciary funds 27
NOTES TO FINANCIAL STATEMENTS 28-48
SUPPLEMENTAL INFORMATION
Budgetary comparison schedule - General fund and major special revenue funds 50
Budgetary comparison schedule - General fund revenues 51
Budgetary comparison schedule - Street fund 52
Budgetary comparison schedule - KENO fund 53
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 54-55
SCHEDULE OF FINDINGS AND RESPONSES
56-57
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 58
INDEPENDENT AUDITOR'S REPORT
Honorable Mayor and Members
of the City Council
City of Blair, Nebraska
We have audited the accompanying financial statements of the governmental activities, the
business -type activities, each major fund, and the aggregate remaining fund information of the
City of Blair, Nebraska (the City), as of and for the year ended September 30, 2009, which
collectively comprise the %:ity's basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the City's management. Our responsibility is
to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business -type activities, each
major fund, and the aggregate remaining fund information of the City, as of September 30, 2009,
and the respective changes in financial position and, where applicable, cash flows thereof for the
year then ended in conformity with accounting principles generally accepted in the United States
of America.
In accordance with Government Auditing Standards, we have also issued a report dated February
19, 2010 on our consideration of the City's internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing
of internal control over financial reporting and compliance and the results of that testing, and not
to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing
Standards and should be considered in assessing the results of our audit.
Westroads Pointe 11015 N.98th St. 1 Suite 200 I Omaha, NE 68114 I T402.390.2480 I F402,390,0885
The management's discussion and analysis and budgetary comparison information, as listed in
the table of contents, are not a required part of the basic financial statements but are
supplementary information required by accounting principles generally accepted in the United
States of America. We have applied certain limited procedures, which consisted principally of
inquires of management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion
on it.
A, ,- O L<L,•C.
l
Hayes & Associates, L.L.C.
Omaha, Nebraska
February 19, 2010
M
City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS
September 30, 2009
The discussion and analysis of the City of Blair's financial performance provides an overview
and analysis of the City's financial activities for the fiscal year ended September 30, 2009. It
should be read in conjunction with the accompanying basic financial statements.
FINANCIAL HIGHLIGHTS
o The assets of the City of Blair exceeded its liabilities at the close of the fiscal year
ending September 30, 2009 by $24.4 million (net assets). Of this amount, $3.4 million
(unrestricted net assets) may be used to meet the government's ongoing obligations to
citizens and creditors.
® The City of Blair's total net assets increased by $1.2 million for the year ended
September 30, 2009. The increase in net assets of $1.2 million can be attributed to
grants, water revenue, and sales tax revenue used to purchase capital assets.
a As of September 30, 2009, the City of Blair's governmental funds reported combined
ending fund balances of $3.2 million, a decrease of $1.5 million in comparison with the
prior fiscal year. This decrease is attributed in part to the completion of capital projects
funded by sales tax.
m The fund balances for the Street Fund decreased $175,000 for fiscal year ended
September 30, 2009. The fund balance for the General Fund decreased $50,000 during
the same period.
a The City's total debt decreased by $1.7 million during the current fiscal year. The
decrease is attributed entirely due to annual debt payment and the lack of issuing
additional long term debt.
OVERVIEW OF FINANCIAL STATEMENTS
The discussion and analysis serves as an introduction to the City of Blair's basic financial
statements. The City of Blair's basic financial statements are comprised of three components,
government -wide financial statements, fund financial statements, and notes to the financial
4statements. This repo.ro also cO ntainn. other supplementary information in addition to thPbasic
financial statements themselves.
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City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2009
Government -wide financial statements. The government -wide financial statements are
designed to provide readers with a broad overview of the City of Blair's finances in a manner
similar to a private -sector business. The statement of net assets presents information on all of
the City of Blair's assets and liabilities, with the difference between the two reported as net
assets. Over time, increases or decrease in net assets may serve as a useful indicator of whether
the financial position of the City of Blair is improving or deteriorating. The statement of net
assets combines and consolidates governmental funds' current financial resources (short-term
spendable resources with capital assets and long-term obligations. Other nonfinancial factors
should also be taken into consideration, such as changes in the City's property tax base and the
condition of the City's infrastructure (i.e. roads, drainage improvements, storm and sewer lines,
etc.), to assess the overall health or financial condition of the City. The statement of activities
presents information showing how expenses are taken into account regardless of when cash is
received or paid. Thus, revenues and expenses are reported in this statement for some items that
will only result in cash flows in future fiscal periods (e.g., uncollected taxes). Both the statement
of net assets and the statement of activities are prepared utilizing the accrual basis of accounting
as opposed to the modified accrual basis.
In the statement of net assets and the statement of activities, the City is divided into two kinds of
activities:
a Governmental Activities - Most of the City's basic services are reported here, including
the police, streets, fire, library, planning and development, parks and recreation, and
general administration. Property taxes, sales taxes, and state allocations finance most of
these activities.
® Business type Activities - The City charges a fee to customers to help it cover all or
most of the cost of certain services it provides. The City's water and sewer system are
reported here.
o Fiduciary Activities - The City accounts for Agency Funds for TIF District #1 Project
which are held in restriction to pay the costs of the District. TIF District #t bonds are
held by the developer and do not carry the full faith and credit of the City.
City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2009
Reporting the City's Most Significant Funds
Fund Financial Statements
The fund financial statements provide detailed information about the most significant funds -
not the City as a whole. Some funds are required to be established by state laws and by bond
covenants. However, the City establishes many other funds to help it control and manage money
for particular purposes or to show that it is meeting legal responsibilities for using certain taxes,
grant and other money. The City's three kinds of fund financial statements — governmental,
proprietary and fiduciary - utilize different accounting approaches.
o Governmental funds - The majority of the City's basic services are reported in
governmental funds, which focus on how money flows into and out of those funds and
the balances left at year-end that are available for spending. These funds are reported
using an accounting method identified as the modified accrual basis of accounting,
which measures cash and all other financial assets that can readily be converted into
cash. The governmental fund statements provide a detailed short-term view of the City's
general governmental operations and the basic services it provides. Governmental fund
information helps determine whether there are more or fewer financial resources that can
be spent in the near future to finance the City's programs. By comparing information
presented for governmental funds with similar information presented for governmental
activities in the government -wide statements, readers may better understand the long-
term effect of the government's near term financing decisions. The relationships of
differences between governmental activities (reported in the statement of net assets and
the statement of activities) and governmental funds are detailed in a reconciliation
following the fund financial statements.
The City of Blair maintains five individual governmental funds. Information is presented
separately in the governmental funds balance sheet and in the governmental funds
statement of revenues, expenditures, and changes in fund balances for the general fund,
debt service fund, street fund, keno fund and capital projects fund, all of which are
considered to be major funds.
-7-
City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2009
Fund Financial Statements - Continued
Proprietary, f� - The City charges customers for the services it provides, whether to
outside customers or to other units within the City. These services are generally reported
in proprietary funds. Proprietary funds are reported in the same way that all activities are
reported in the statement of net assets and the statement of activities. In fact, the City's
enterprise funds (a component of proprietary funds) are identical to the business -type
activities that are reported in the government -wide statements but provide more detail
and additional information, such as cash flows, for proprietary funds.
The City of Blair maintains two individual enterprise funds. The City uses enterprise
funds to account for its water and sewer. The funds provide the same type of information
as the government -wide financial statements, only in more detail and include some of
the internal service fund type activity. The proprietary fund financial statements provide
separate information for the water and sewer funds, both of which are considered to be
major funds in the City.
o Fiduciary fund - The City accounts for Agency Funds for TIF District #1 Project which
are held in restriction to pay the costs of the District. TIF District #1 bonds are held by
the developer and do not carry the full faith and credit of the City.
Notes to Financial Statements
The notes provide additional information that is essential to a full understanding of the data
provided in the government -wide and fund financial statements. The notes to the financial
statements can be found immediately following the basic financial statements.
THE CITY AS A WHOLE - Government -Wide Financial Analysis
The City's combined net assets were $24.4 million as of September 30, 2009. Analyzing the net
assets and net expenses of governmental and business -type activities separately, the business
type activities net assets were $12.6 million. This analysis focuses on the net assets (table 1) and
changes in general revenues (table 2) and significant expenses of the City's governmental and
business -type activities. The comparative government -wide results are provided in the tables for
additional analysis.
By far the largest portion of the City's net assets (85.9%) reflects its restricted capital assets
(e.g., donations, community betterment, debt service, and capital projects).
SEE TABLE T.
City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
SUMMARY OF NET ASSETS
Amounts expressed in thousands
TABLE 1
Governmental Activities Business -type Activities Total Primary Government
2009 2008 2009 2008 2009 2008
ASSETS
Current and other assets $ 7,464 $ 8,319 $ 1,870 $ 1,745 $ 9,334 $ 10,064
Capital assets 14,525 13,415 35,825 36,461 50,350 49,876
Total assets 21,989 21,734 37,695 38,206 59,684 59,940
LIABILITIES
Long-term debt outstanding 5,515 6,005 22,711 23,881 28,226 29,886
Other liabilities 4,638 4,579 2,384 2,257 7,022 6,836
Total liabilities 10,153 10,584 25,095 26,138 35,248 36,722
NET ASSETS
Invested in capital assets
net of related debt
Restricted
Unrestricted (deficit)
Total net assets
8,520
6,795
11,944
11,435
20,464
18,230
251
501
267
444
518
945
3,065
3,854
389
189
3,454
4,043
$ 11.836 $
11,150
$ 12,600 $
12,068
_$24436
_$ 23,218
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City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2009
GovernmentO 2ctivities: Governmental activities increased the City's net assets by $687,000.
Key elements of this increase are as follows:
The increase is in part due to a prior year adjustment of $500,000. This prior year
adjustment was summarized in note "M" of the notes to financial statements.
o The increase was in part due to the fact that all governmental activities were financed in
part by tax revenue. General Fund and Streets were the most effective at covering their
costs due to sales tax, fees charged, operating grants, capital grants, and contributions,
which was generally a positive increase.
The comparative financial analysis is provided for additional information. The City's general
revenues decreased when compared to the prior year by 1.6% or $102,000. The primary reason
for this decrease was due to sales tax revenue being lower than the previous year, but still
above what the City had budgeted for the year. The assessed value of the property in the City
increased by $14.36 million or 3.3% as compared to the prior year while the City property tax
rate of $.3569 per $100 assessed valuation stayed the same.
Business -type Activities
Revenues of the City's business -type activities were $6.5 million for the fiscal year ending
September 30, 2009. Expenses for the City's business -type activities were $5.88 million for the
year, resulting in net revenues of $.670,000. The net revenues are the result of several factors,
including the following:
The City's water system recorded charges for services of $5.4 million, which exceeded
expenses of $3.9 million, which included $1.08 million in depreciation, by $1.5 million.
The most significant expenses of the water fund were $814,000 for operating expenses,
$865,000 for salaries and benefits and $1,120,000 for material and supplies.
0 The sewer fund had a net operating income of $349,000 before depreciation.
SEE TABLE 2
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City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
CHANAGES IN NET ASSETS
Amounts expressed in thousands
TABLE2
Governmental Activities
Business -type
Activities
Total Primary
Government
2009
2008
2009
2008
2009
2008
REVENUES
Program revenues
Charges for services
$ 472
$ 356
$ 6,537
$ 5,331
$ 7,009
$ 5,687
Operating grants and
contributions
86
119
-
-
86
119
Capital grants and
contributions
333
409
333
409
General revenues
Taxes
4,580
4,562
-
4,580
4,562
Interest income
187
242
10
173
197
415
Other
606
678
-
606
678
Total revenues
6,264
6,366
6,547
5,504
12,811
11,870
EXPENSES
Administration
687
773
-
-
687
773
Police
1,699
1,576
1,699
1,576
Fire
279
213
-
-
279
213
Parks
506
447
506
447
Library
277
267
-
277
267
Swimming pool
54
68
54
68
Zoning
138
137
138
137
Animal control
82
94
82
94
Donated fund
20
95
-
-
20
95
Streets
1,645
1,547
1,645
1,547
Keno
46
68
46
68
Interest expense
282
280
-
-
282
280
Water
-
-
4,934
4,437
4,934
4,437
Sewer
944
773
944
773
Total expenses
5,715
5,565
5,878
5,210
11,593
10,775
CHANGE IN NET ASSETS
BEFORE TRANSFERS
549
801
669
294
1,218
1,095
TRANSFERS
(362)
(554)
362
554
CHANGE IN NET ASSETS
187
247
1,031
848
1,218
1,095
NET ASSETS,
BEGINNING OF YEAR
11,149
14,195
12,068
11,430
23,217
25,625
PRIOR PERIOD ADJUSTMENT
500
(3,292)
(500)
(210)
-
(3,502)
BEGINNING NET ASSETS, RESTATED
11,649
10,903
11,568
11,220
23,217
22,123
NET ASSETS, END OF YEAR
$ 11,836
$ 11,150
$ 12,599
$ 12.068
$ 24,435
$ 23,218
City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2009
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of the fiscal year 2009, the City has nearly $69.59 million invested in a broad range
of capital assets, including police and fire equipment, buildings, park facilities, and water and
sewer plants. (See Table 3) This amount represents a net increase (including additions and
deductions) of $2.13 million or 3.1% over the prior fiscal year. Beginning October 1, 2003, the
City began capitalizing general infrastructure assets and depreciating them over their useful
lives as required by GASB 34. The general infrastructure assets capitalized in 2009 were $1.3
million.
SEE TABLE 3
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City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
CHANGES IN CAPITAL ASSETS
Amounts expressed in thousands
TABLE 3
-13-
Balance
Balance
September 30, 2008
Additions
Deletions
September 30, 2009
GOVERNMENTAL ACTIVITIES
Land $
191
$ 15 $
$ 206
Street infrastructure
8,706
1,326
10,032
Buildings
5,503
206
(50)
5,659
Equipment
3,655
155
(89)
3,721
Total governmental
18,055
1,702
(139)
19,618
BUSINESS -TYPE ACTIVITIES
Water assets
41,298
409
(93)
41,614
Sewer assets
8,111
245
8,356
Total business -type
49,409
654
(93)
49,970
Totals $
67,464
$ 2,356 $
(232)
$ 69,588
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City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2009
Debt
At year-end, the City had $7.68 million in General Obligation Bonds and registered warrants
outstanding as compared to $7.35 million at the end of the prior fiscal year, an increase of 4.5%
as shown in Table 4. The Water Revenue Bonds outstanding were decreased by $1.09 million.
The City has a 25 year take or pay contract with Cargill to secure the debt. The expanded plant
will have a 17 million gallons per day (MPD) capacity with 12.5 MPD contracted to Cargill and
was designed to be easily expanded to 20 million gallon per day.
SEE TABLE 4
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City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
CHANGES IN OUTSTANDING DEBT
Amounts expressed in thousands
TABLE 4
Balance
September 30,
Description 2008
General Registered Warrants $ 734 $
General Obligation Bonds 6,620
Water Revenue Bonds
Sewer Revenue Bonds
Totals
22,826
2,200
Balance
September 30,
Additions Dispositions 2009
943 $ - $ 1,677
- (615)
6,005
- (1,085)
21,741
e (60)
2,140
$ 32,380 $ 943 $ (1,760) $ 31,563
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City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2009
THE CITY'S FUND
At the close of the City's fiscal year on September 30, 2009, the governmental funds of the City
reported a combined fund balance of $3.2 million. The primary reason for the general fund's
reduction is the transfer of cash to other funds for the purchase of capital improvements.
General Fund Budgetary Highlights
General Fund had revenues over expenditures of $737,000. This was primarily accomplished
from the fact revenues received were above budgeted projections and expenses were below
budget projections.
Debt Service had expenditures of $483,000 more than revenues. This was primarily result of
special assessments, including interest, was less than what had been budgeted.
Street Fund had an operating loss of $1,650,000. This was offset with the transfer in of
$1,444,000 in sales taxes for capital projects and miscellaneous income of $18,000.
Deno and Capital Projects Fund had no major deviations in revenues or expenditures.
Wates' and Sewer Funds had no major deviation of revenues or expenditures. Water finished the
year with a 1.30 ratio of operating income before depreciation, plus interest income and
operating transfers in divided by Debt Service. Sewer had a net operating income to debt ratio of
2.42.
Internal Service Fund had a fund balance of $359,000. The fund was created to manage the
city's partially self-funded employee health insurance program. The balance reflects positive
management of the fund and savings over the previous commercial employee health plan. The
fund balance represents a snapshot of the fund on Sept. 30, 2009 and doesn't include any
accrued liabilities or refunds from reinsurance. It does show the success the City has had in
helping manage the City's employee health care costs the past three and three quarter years. The
health care program and contracts operate on a calendar year bases. For the first four years of
the insurance program, it is estimated the City will have over $300,000 in cash savings reserves
above the expected medical costs to help hold down future premium costs.
-16-
City of Blair, Nebraska
MANAGEMENT'S DISCUSSION AND ANALYSIS - CONTINUED
September 30, 2009
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND DATES
Current economic conditions point toward a continued growth in the community that will allow
for a stable budget enviromnent in spite of the national economy downturn.
The property tax request for fiscal year 2009/2010 was increased 2.05%, which with the
valuation increase caused the levy per valuation dollar to not increase over the prior year.
The City's property valuation continues to grow at a 3% to 4% annual increase and sales taxes
continue to be stable. The City's short term (1-5 years) forecast continues to be solid as the City
budgets only $977,500 annually of the estimated $1.6 million in sales tax receipts for ear-
marked projects such as property tax relief, fire bond payment and economic development. The
balance of the sales tax dollars is currently available for discretionary capital projects and
equipment that are important to the citizens of the City. The 6 to 10 year projections also appear
to remain solid with exception that the City currently uses the $481,000 annual payment from
OPPD, from the sale of the City's electric system in 1984, for property tax relief. This $481,000
asset will go away in 2014. The Council, in annual discussion on the issue at budget preparation
time, is intent on expanding the City's economic growth in sales and property tax base through
economic development to offset the loss of revenue from the OPPD payment in FY 2015. In
addition, the City's current sales tax authorization is scheduled to expire on Sept. 30, 2015. The
extension of the sales tax beyond 2015 will be imperative to maintaining a reasonable property
tax levy.
CONTACTING THE CITY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and
creditors with a general overview of the City's finances and to show the City's accountability
for the money it receives. If you have questions about this report or need additional financial
information, contact the City of Blair, 218 S. 16th Street, Blair, NE 68008.
-17-
City of Blair, Nebraska
STATEMENT OF NET ASSETS
GOVERNMENT - WIDE
September 30, 2009
Governmental
Activities
Business -type
Activities Total
ASSETS
Cash and cash equivalents
$ 1,933,447
$ 448,987
$ 2,382,434
Accounts receivable
283,059
1,067,570
1,350,629
Due from County Treasurer
119,388
-
119,388
Accrued interest receivable
84,334
203
84,537
Prepaid expense
-
7,006
7,006
Special assessments receivable
2,438,593
-
2,438,593
Interfund balances
(79,669)
79,669
-
Contract receivable
1,874,094
-
1,874,094
Restricted cash and cash equivalents
811,223
267,000
1,078,223
Capital assets
Land
206,241
423,783
630,024
Street infrastructure
10,032,570
-
10,032,570
Buildings
5,658,662
47,539,681
53,198,343
Equipment
3,720,389
2,006,848
5,727,237
Accumulated depreciation
(5,092,591)
(14,145,185)
(19,237,776)
Total capital assets
'14,525,271
35,825,127
50,350,398
Total assets
21,989,740
37,695,562
59,685,302
LIABILITIES
Accounts payable
215,420
204,718
420,138
Accrued expenses
236,234
163,099
399,333
Accrued interest
58,990
344,717
403,707
Deposits payable
34,450
1,700
36,150
Registered warrants
1,177,416
500,000
1,677,416
Deferred revenue
2,425,551
-
2,425,551
Bonds payable
Due within one year
490,000
1,169,339
1,659,339
Due in more than one year
5,515,000
22,712,034
28,227,034
Total liabilities
10,153,061
25,095,607
35,248,668
NET ASSETS
Investment in capital assets,
net of related debt
8,520,271
11,943,754
20,464,025-
0,464,025Restricted:
Restricted:
Donated projects
33,239
-
33,239
Debt service
-
267,000
267,000
Community betterment
129,348
-
129,348
Capital projects
88,521
-
88,521
Unrestricted
3,065,300
389,201
3,454,501
Total net assets
$ 11,836,679
$ 12,599,955
$ 24,436,634
See accompanying notes and independent auditor's report.
-18-
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ASSETS
CURRENT ASSETS
Cash
Accounts receivable user fees
Accrued interest receivable
Prepaid expense
Total current assets
NON-CURRENT ASSETS
Restricted assets
Bond and interest sinking fund cash
and investments
CAPITAL ASSETS
Land
Buildings
Equipment
Accumulated depreciation
Total capital assets
Total assets
LIABILITIES AND NET ASSETS
CURRENT LIABILITIES
Accounts payable
Deposits
Accrued interest
Accrued expenses
Registered warrants
Bonds payable - current
Total current liabilities
NON-CURRENT LIABILITITES
Bonds payable
Total liabilities
City of Blair, Nebraska
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
September 30, 2009
Enterprise Funds Internal
Water Sewer Total Service Fund
$ 89,553 $ 359,434 $ 448,987 $ 359,240
905,491 162,079 1,067,570 -
- 203 203 -
4,701 2,305 7,006 -
999,745 524,021 1,523,766 359,240
177,000 90,000 267,000
373,908 49,875 423,783 -
40,309,942 7,229,739 47,539,681 -
929,893 1,076,955 2,006,848 -
(10,497,572) (3,647,613) (14,145,185) -
31,116,171 4,708,956 35,825,127 -
$ 32,292,916 $ 5,322,977 $ 37,615,893 $ 359,240
$ 184,864
$ 19,854
$ 204,718 $
1,700
-
1,700
304,364
40,353
344,717
119,385
43,714
163,099
500,000
(110,568)
500,000
1,109,339
60,000
1,169,339
2,219,652
163,921
2,383,573 -
20,632,034
2,080,000
22,712,034
22,851,686
2,243,921
25,095,607
NET ASSETS
Investment in capital assets net of related debt
9,374,798
2,568,956
11,943,754
Restricted for debt service
177,000
90,000
267,000 -
Unrestricted
(110,568)
420,100
309,532 359,240
Total net assets
$ 9.441.230
$ 3,079,056
12,520,286 $ 359,240
RECONCILIATION
Eliminating entry between business -type activities and governmental activities 79,669
_L12,599
See accompanying notes and independent auditor's report.
-24-
City of Blair, Nebraska
STATEMENT OF REVENUES, EXPENSES, AND
CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
For the year ended September 30, 2009
Operating transfers - in
Operating transfers - out
CHANGE IN NET ASSETS
NET ASSETS, BEGINNING OF YEAR
AS PREVIOUSLY REPORTED
PRIOR PERIOD ADJUSTMENT
NET ASSETS, BEGINNING OF YEAR,
AS RESTATED
394,415 192,036 586,451
(182,400) (42,200) (224,600)
806,763 204,543 1,011,306 121,714
9,134,467 2,874,513 12,008,980 237,526
(500,000) - (500,000)
8,634,467 2,874,513 11,508,980 237,526
NET ASSETS, END OF YEAR $ 9,441,230 $ 3,079,056 $ 12,520,286 $ 359,240
RECONCILIATION
Change in net assets $ 1,011,306
Change in eliminating entry between business -type activities
and governmental activities 20,090
Change in net assets business -type activities $ 1,031,396
See accompanying notes and independent auditor's report.
-25-
Enterprise Funds
Internal
Water
Sewer
Total
Service Fund
OPERATING REVENUES
Charges for services
$ 5,417,614
$ 938,172
$ 6,355,786
$ 821,989
Sale of merchandise
21,130
-
21,130
-
Forfeited discounts
13,950
-
13,950
-
Other
22,090
33,074
55,164
91,593
Total operating revenues
5,474,784
971,246
6,446,030
913,582
EXPENSES
Personnel
865,487
374,820
1,240,307
-
Operating expenses
813,927
229,140
1,043,067
Materials and supplies
1,120,277
14,299
1,134,576
-
Rental expense
7,282
4,262
11,544
-
Insurance claims and expenses
-
-
-
792,940
Depreciation
1,076,864
213,660
1,290,524
Total expenses
3,883,837
836,181
4,720,018
792,940
OPERATING INCOME
1,590,947
135,065
1,726,012
120,642
NONOPERATING REVENUES (EXPENSES)
Interest income
3,420
6,766
10,186
1,072
Interest expense
(948,262)
(87,124)
(1,035,386)
-
Bonding costs
(51,357)
-
(51,357)
-
Total nonoperating revenues (expenses)
(996,199)
(80,358)
(1,076,557)
1,072
Income(loss) before transfers
594,748
54,707
649,455
121,714
Operating transfers - in
Operating transfers - out
CHANGE IN NET ASSETS
NET ASSETS, BEGINNING OF YEAR
AS PREVIOUSLY REPORTED
PRIOR PERIOD ADJUSTMENT
NET ASSETS, BEGINNING OF YEAR,
AS RESTATED
394,415 192,036 586,451
(182,400) (42,200) (224,600)
806,763 204,543 1,011,306 121,714
9,134,467 2,874,513 12,008,980 237,526
(500,000) - (500,000)
8,634,467 2,874,513 11,508,980 237,526
NET ASSETS, END OF YEAR $ 9,441,230 $ 3,079,056 $ 12,520,286 $ 359,240
RECONCILIATION
Change in net assets $ 1,011,306
Change in eliminating entry between business -type activities
and governmental activities 20,090
Change in net assets business -type activities $ 1,031,396
See accompanying notes and independent auditor's report.
-25-
City of Blair, Nebraska
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
September 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers
Cash received from interfund services provided
Cash payments to suppliers
Cash payments to employees
Cash paid for interfund services used
Cash paid for judgments and claims
Cash provided from operating activities
CASH FLOWS FROM NON -CAPITAL
FINANCIAL ACTIVITIES
Operating transfers - in
Operating transfers - out
Cash used from non -capital financing
activities
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING
Acquisition of capital assets
Repayment of long-term debt
Interest payment long-term debt
Bonding costs
Cash used from capital and related
financing activities
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from interest earnings
Disbursements from (to) restricted assets
Cash provided from investing activities
CHANGE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS,
END OF YEAR
Reconciliation of operating income to net cash
from operating activities
Operating income
Adjustments to reconcile operating income
to net cash from operating activities
Depreciation
Change in receivables
Change in prepaid expenses
Change in accounts payable
Change in accrued expenses
Total adjustments
394,415 192,036 586,451
(182,400) (42,200) (224,600)
212,015
Enterprise Funds
361,851 -
Internal
Water
Sewer
Total
Service Fund
$ 5,495,432
$ 967,082
$ 6,462,514
$
-
-
-
913,582
(2,348,630)
(264,928)
(2,613,558)
-
(860,753)
(369,484)
(1,230,237)
(701,878)
_
-
(93,705)
2,286,049
332,670
2,618,719
117,999
394,415 192,036 586,451
(182,400) (42,200) (224,600)
212,015
149,836
361,851 -
1,076,864
213,660
1,290,524 -
(408,444)
(245,477)
(653,921)
(1,084,836)
(60,000)
(1,144,836)
(933,358)
(85,790)
(1,019,148)
(51,357)
5,336
(51,357)
(2,477,995) (391,267) (2,869,262)
4,747 10,289 15,036 1,072
6,187 170,500 176,687 -
10,934 180,789 191,723 1,072
31,003 272,028 303,031 119,071
58,550 87,406 145,956 240,169
$ 89,553 _L_159 434 $ 448,987 $ 359,240
$ 1,590,947 $
135,065
$ 1,726,012 $ 120,642
1,076,864
213,660
1,290,524 -
20,648
(4,164)
16,484 -
(525)
(232)
(757)
(406,619)
(16,995)
(423,614) (2,643)
4,734
5,336
10,070 -
695,102
197,605
892,707 (2,643)
CASH PROVIDED FROM OPERATING ACTIVITIES $ 2,286,049 $ 332,670 $ 2,618,719 $ 117,999
See accompanying notes and independent auditor's report.
-26-
City of Blair, Nebraska
STATEMENT OF NET ASSETS
FIDUCIARY FUNDS
September 30, 2009
ASSETS
Cash
NET ASSETS
TIF
Fund -I
$ 5,561
Net Assets (Deficit) Held in Trust for Tax Incentive Funds (TIF) $ 5,561
See accompanying notes and independent auditor's report.
-27-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS
September 30, 2009
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the City of Blair,
Nebraska:
1. ReportingEntity
ntity
The City of Blair, Nebraska (the City) is a Municipal Corporation which was
founded and incorporated in 1869. With a population of 7,612, the City of Blair
functions as a City of the First Class under Nebraska Statutes. The City operates
under a Mayor/Council form of govermnent and provides the following services:
public safety, streets, culture and recreation, public improvements, planning and
zoning, water and sewer services, and general administrative services. This report
includes all funds of the City (the "primary government").
2. Basis of Accounting/Measurement Focus
The accounts -of the City are organized on the basis of funds, each of which is
considered a separate accounting entity. The operations of each fund are
accounted for with a separate set of self -balancing accounts that comprise its
assets, liabilities, fund equity, revenues, and expenditures. Governmental
resources are allocated to and accounted for in individual funds based upon the
purpose for which they are to be spent and the means by which spending activities
are controlled.
Government -Wide Financial Statements
The City's government -wide financial statements include a statement of net assets
and a statement of activities (including changes in net assets). These statements
are prepared using the standards of the Governmental Accounting Standards
Board (GASB), General Accepted Accounting Principles (GAAP), as well as
FASB pronouncements issued through November 30, 1989. These statements
present summaries of governmental and business -type activities for the City.
Fiduciary activities of the City are not included in these statements. These
statements are presented on an "economic resources" measurement focus and the
accrual basis of accounting.
-28-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
2. Basis of Accounting/Measurement Focus - Continued
Government -Wide Financial Statements - Continued
Accordingly, all of the City's assets and liabilities, including capital assets and
infrastructure as well as long-term debt, are included in the statement of net
assets. The statement of activities presents changes in net assets. Under the
accrual basis of accounting, revenues are recognized in the period in which they
are earned while expenses are recognized in the period in which the liability is
incurred.
The statement of activities demonstrates the degree to which the direct expenses
of a given function are offset by program revenues. Direct expenses are those that
are clearly identifiable with a specific function. The types of transactions
reported as program revenues for the City are reported in three categories: 1)
charges for services, 2) operating grants and contributions, and 3) capital grants
and contributions. Charges for services include revenues from customers or
applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function. Grant and contributions include revenues
restricted to meeting the operational or capital requirements of a particular
function. Taxes and other items not properly included among program revenues
are reported instead as general revenues.
All internal balances in the statement of net assets and internal transactions in the
statement of activities have been eliminated. The purpose of transfers between
funds was to record proper allocation of expenses.
Amounts reported as program revenues include (1) charges to customers or
applicants for goods, services, or privileges provided, (2) operating grants and
contributions, and (3) capital grants and contributions, including special
assessments. Internally dedicated resources are reported as general revenues
rather than as program revenues. Likewise, general revenues include all taxes.
-29-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
2. Basis of Accounting/Measurement Focus - Continued
Governmental Fund Financial Statements
Governmental fund financial statements include a balance sheet and a statement
of revenues, expenditures, and changes in fund balances for all major
governmental funds. An accompanying schedule is presented to reconcile and
explain the differences in fund balances as presented in these statements to the net
assets presented in the government -wide financial statements. The City has
presented all major funds that meet the qualifications of GASB Statement No. 34.
All governmental funds are accounted for on a spending or "current financial
resources" measurement focus and the modified accrual basis of accounting.
Accordingly, capital assets and bonds payable are not included on the balance
sheet. The statement of revenues, expenditures and changes in fund balances
present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in fund balances. Under modified accrual
basis of accounting, revenues are recognized in the accounting period in which
they become both measurable and available to finance expenditures of the current
period. Accordingly, revenues are recorded when received in cash, except that
revenues subject to accrual (generally 60 -days after year-end are recognized when
due. The primary sources susceptible to accrual are property tax, sales tax,
transient occupancy tax, and grant revenues.
Expenditures are generally recognized under the modified accrual basis of
accounting when the related fund liability is incurred. An exception to this
general rule is principal and interest on general long-term debt which is
recognized when due.
The City reports the following major governmental funds:
The General Fund is the government's primary operating fund. It accounts for all
financial resources of the City, except those required to be accounted for in
another fund.
The Debt Service Fund is used to account for the payment of principal and
interest on general long-term debt. The primary sources of revenue are property
taxes and special assessments.
-30-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
2. Basis of Accounting/Measurement Focus - Continued
Governmental Fund Financial Statements - Continued
The Street Fund is used to record transactions in the Street department, as the
State of Nebraska requires an accounting to verify the matching of funds it
provides for this purpose.
The Keno Fund maintains an accounting of Keno gambling activity because the
funds earned are restricted to community betterment projects and require special
state reporting.
The Capital Projects Fund is used to record transactions in the TIF 2 development
area, as the funds are required to be accounted for separately.
Proprietary Fund Financial Statements
Proprietary Fund Financial Statements include a statement of net assets, a
statement of revenues, expenses and changes in fund net assets, and a statement of
cash flows for each major proprietary fund. A column representing internal
service funds is also presented in these statements. However, internal service
balances and activities have been combined with the governmental activities in
the Government -Wide financial statements.
Proprietary funds are accounted for using the "economic resources" measurement
focus and the accrual basis of accounting. Accordingly, all assets and liabilities
(whether current or noncurrent) are included on the statement of net assets. The
statement of revenues, expenses and changes in fiend net assets presents increases
(revenues) and decreases (expenses) in total net assets. Under the accrual basis of
accounting, revenues are recognized in the period in which they are earned while
expenses are recognized in the period in which the liability is incurred.
Proprietary funds distinguish operating revenues and expense from non-operating
items. Operating revenues and expense generally result from providing services
and producing and delivering goods in connection with a proprietary fund's
principal ongoing operations. Operating expenses for enterprise funds include the
cost of services, administrative expenses, and depreciation on capital assets. All
revenues and expenses not meeting this definition are reported as non-operating
revenues and expenses.
-31-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
2. Basis of Accounting/Measurement Focus - Continued
Proprietary Fund Financial Statements - Continued
The City reports the following major proprietary funds:
The Water and Sewer Fund accounts for the activities related to the operation of
the City's water delivery and sewage systems. It operates the water treatment and
sewer treatment plants, water distribution systems, sewer collection systems, and
pump stations.
Internal service funds of the City (which provide services primarily to other funds
of the City) are presented., in summary ,form, as part of the proprietary fund
financial statements. Since the principal users of the internal services are the
City's governmental activities, financial activities of the internal service funds are
presented in the governmental activities column when presented at the
government -wide level. The costs of these services are allocated to the
appropriate function/program (public safety, streets, culture and recreation, public
improvements, planning and zoning, water and sewer services, and general
administrative services) in the statement of activities.
Fiduciary Fund Financial Statements
Fiduciary fund financial statements include a statement of net assets. The City's
Fiduciary fund represents an agency fund, which is custodial in nature (assets
equal liabilities) and does not involve measurement of results of operations.
Accordingly, it presents only a statement of fiduciary net assets and does not
present a statement of changes in fiduciary net assets. Fiduciary funds are not
reflected in the government -wide financial statements because the resources of
those funds are not available to support the City's own programs. The agency
fiend is accounted for on a spending or "economic resources" measurement focus
and the accrual basis of accounting as is the proprietary funds explained above.
fhe City reports the following fiduciary fund:
The TIF 1 Fund is an agency fund that accounts for the activities related to
redevelopment costs financed by tax incremental finance bonds. The tax
incremental finance bonds are to be paid by the taxes of the redeveloped area.
-32-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
3. Budgetary Policy and Control
Budaetary Basis of Accountin
The City's legally adopted budget is not in conformity with accounting principles
generally accepted in the United States of America, but meets the requirements of
the Nebraska Budget Act. The budget is prepared and adopted using the cash
basis of accounting whereby revenues budgeted are expected to be received rather
than earned and expenditures budgeted are expected to be disbursed rather than
incurred. Differences between the budgeted basis of accounting and the generally
accepted basis are reconciled in the budget to actual schedule in the required
supplementary information. The City Council sets the property tax levy needed to
support the coming year's budget in August of each year and submits its budget as
required by State statute.
Budgetary Control
Each fund's appropriated budget is prepared on a detailed line item basis.
Revenues are budgeted by source. Expenditures are budgeted by department.
Expenditures at the fund level constitute the legal level of control. Expenditures
may not exceed appropriations at this level. All budget revisions at this level are
subject to final review by the Council. No revisions to the budget were made for
the year ended September 30, 2009.
4. The Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
5. Do osits and Investments
The City's cash and cash equivalents are considered to be cash on hand, demand
deposit and short-term investments with original maturities of three months or
less from the date of acquisition.
Investments are restricted and consist of certificates of deposit shown at cost.
There are no significant differences in cost and fair values at September 30, 2009.
-33-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
6. Capital Assets
Capital assets, which include land, buildings, and equipment (furniture, vehicles,
etc.) and infrastructure assets (street systems, storm drains, etc.), are reported in
govermm-nental activities column of the government -wide financial statements.
Capital assets are defined by the City as assets with an initial, individual cost of
more than $5,000. Such assets are recorded at historical cost or estimated
historical cost if purchased or constructed. Donated or annexed capital assets are
recorded at estimated market value at the date of donation or annexation.
The costs of normal maintenance or repairs that do not add to the value of the
asset or materially extend assets lives are not capitalized. Major outlays for
capital assets and improvements are capitalized as projects are constructed. The
City qualifies for the exemption under GASB 34 to not retroactively apply the
capitalization requirements of general infrastructure assets. The requirement to
capitalize and depreciate these assets has been applied as of October 1, 2003.
Depreciation is recorded in the government -wide financial statements on a
straight-line basis over the useful life of the assets as follows:
Assets
Years
Equipment
10
Vehicles
5
Buildings
40
Street infrastructure
40
7. Property Taxes
Property tax revenue is recognized when collected by the County as the City's
agent within the current period. There are no property taxes due which are not
delinquent and all delinquent taxes are considered collectible.
The City's December 31, 2008 valuation was $448,291,872. The levy for the
City for the year ending September 30, 2009 was $0.3569 per $100 of value. The
total tax levy was $1,599,789. Property taxes are collected by the County and are
due December 31 of each year and delinquent in halves at May 1 and September 1
of the following year. In -lieu of tax receipts are equivalent in value to payments
for service provided.
-34-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
8. Claims and Judgments Payable
The City records a liability for litigation, judgments, and claims when it is
probable that an asset has been impaired or a liability has been incurred prior to
year-end and the probable amount of loss (net of any insurance coverage) can be
reasonably estimated. The liability, if any, is reported in the government -wide
statement of net assets. The portion of the liability, which will be liquidated with
expendable, available financial resources, if any, is reflected as a liability of
applicable governmental funds.
9. Compensated Absences
General leave for the City includes both vacation and sick pay. Vacation leave is
based on an employee's length of employment. An employee is allowed to carry
forward each year, on their anniversary date, that year's earned vacation, plus 40
hours. Sick leave is earned at a rate approved by the personnel manual, which is
currently six (6) hours per month. Sick leave can be accumulated to a maximum
of 840 hours and can only be used for illness, medical care, and care of sick
members of the immediate family per the personnel manual.
Upon termination of employment, an employee is entitled to be compensated for
all accumulated unused vacation pay. Unused sick leave is compensated as
follows; (1) Upon death or retirement, 50% (2) Upon resignation in good
standing, 5% after 10 years of employment increasing to a maximum of 50% after
2.0 years of employment.
10. Restricted Assets
Assets are reported as restricted when limitations on their use change the nature or
normal understanding of the availability of the asset. Such constraints are either
externally imposed by creditors, contributions, grantors, or laws of other
governments, or are imposed by law through constitutional provisions or enabling
legislation. The City's policy is to first apply restricted resources to an expense
When incurred for purposes for which both restricted and unrestricted net assets
are available. Restricted assets in the debt service fund represent assets available
only for payment of general obligation debt or related expenses.
-35-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
11. Allowance for doubtful accounts
The City uses the direct write-off for uncollectable accounts. The doubtful
accounts at September 30, 2009 were insignificant.
12. Transfers
Transfers are used to move revenues from the fund that statute or budget requires
to collect them to the fund that statute or budget requires to expend them and to
move unrestricted revenue collected in the general fund to finance various
programs accounted for in other funds in accordance with budgetary
authorizations.
13. Reclassifications
Certain capital asset amounts in 2008 in have been reclassified from equipment to
infrastructure to conform to the 2009 presentation.
NOTE B. DEPOSITS AND INVESTMENTS
Deposits and investments consist of demand deposits and certificates of deposit. The
City maintains a cash pool that is available for all funds. The carrying amount of the
City's cash deposits was $3,466,218 at September 30, 2009. The bank balances of the
City's cash deposits at September 30, 2009 was $3,476,451. The City's investments
were made up of $205,383 of certificates of deposit. The City's cash deposits and
certificates of deposit were either entirely insured or collateralized with securities held by
the pledging financial institutions in the City's name.
The City has no formal policy for handling credit risk, interest rate risk, or concentration
risk; however, deposits and investments consist of demand deposits, certificates of
deposits, and United States Treasury Notes. The statutes of the State of Nebraska require
that local governmental units follow the "prudent man" rule with deposits, and that
deposits be secured by collateral valued at market or par whichever is lower less the
amount insured by the Federal Deposit Insurance Corporation. The City.has no deposit
and investment policy that would further limit its deposits, but the City administratively
has required all deposits to be collateralized at 105%.
-36-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE C, CAPITAL ASSETS
A summary of changes in capital assets is as follows:
Governmental Activities
Balance
September 30,
2008 Additions
Deletions
Capital assets not depreciated
Land $ 190,641 $ 15,600 $ -
Other capital assets
Street infrastructure
Buildings
Equipment
Total other capital assets
Less accumulated depreciation
Street infrastructure
Buildings
Equipment
Total accumulated
depreciation
Other capital assets, net
Balance
September 30,
2009
$ 205,241
8,706,752
1,325,818
-
10,032,570
5,503,145
205,917
(50,400)
5,658,662
3,654,302
155,278
(89,191)
3,720,389
17,864,199
1,687,013
(139,591)
19,411,621
(525,545)
(272,068)
-
(797,613)
(1,982,458)
(137,805)
38,637
(2,081,626)
(2,131,790)
(170,752)
89,190
(2,213,352)
(4,639,793)
(580,625)
127,827
(5,092,591)
13,224,406
1,106,388
(11,764)
14,319,030
Governmental activities capital
assets, net $ 13,415,047 $ 1,121,988 $ (11,764) $ 14,525,271
Depreciation expense was charged to functions as follows:
Governmental Activities:
A d�ninistratior.
$ 42,362
Police
38,228
Fire
118,564
Parks
39,897
Library
3,561
Swimming pool
2.0,793
Animal control
8,114
Streets
309106
Total depreciation
580,625
-37-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE C. CAPITAL ASSETS - CONTINUED
Business -Type Activities
Capital assets not depreciated
Land
Other capital assets
Infrastructure
Equipment
Total other capital assets
Less accumulated depreciation
Infrastructure
Equipment
Total accumulated
depreciation
Other capital assets, net
Business -type activities capital
assets, net
Balance
September 30,
$ 423,783
46,982,682
2,002,346
48,985,028
Additions
Balance
September 30,
Deletions 2009
$ - $ 423,783
639,892 (82,893) 47,539,681
14,322 (9,820) 2,006,848
654,214 (92,713) 49,546,529
(i 1,369,578)
(1,226,592)
82,599
(12,513,571)
(1,577,502)
(63,932)
9,820
(1,631,614)
(12,947,080)
(1,290,524)
92,419
(14,145,185)
36,037,948
(636,310)
(294)
35,401,344
$ 36,461,731
$ (636,310)
$ (294)
$ 35,825,127
- 38 -
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City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30 2009
NOTE D. BONDS PAYABLE - CONTINUED
Annual principal requirements for Water Bonds:
Year ending September 30,
2010
2011
2012
2013
2014
2015-2016
Total
Annual principal requirements for Sewer Bonds:
Year ending September 30,
2010
2011
2012
2013
2014
2015-2019
Total
Principal
$ 1,109,339
1,134,438
15,670,151
1,196,495
1,15 8,492
1,472,458
$ 21,741,373
Principal
$ 60,000
1,520,000
60,000
65,000
65,000
370,000
$ _2,140,000
Interest
$ 921,259
880,956
837,357
130,101
85,630
49,278
$ 2,904,581
Interest
$ 84,065
52,614
21,028
18,791
16,370
38,478
$ 231,346
Bonds issued for the water and sewer funds are collateralized by a pledge of revenues derived and to be
derived from the operations of the water and sewer fund. Sinking fund requirements for Water and
Sewer debt were a total reserve of $267,000 at September 30, 2009.
-40-
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City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
For the year ended September 30, 2009
NOTE D. BONDS PAYABLE - CONTINUED
-42-
Principal
Interest
Total
Year endinw; September 30,
2010
$ 490,000
$ 253,140
$ 743,140
2011
520,000
234,315
754,315
2012
550,000
213,845
763,545
2013
430,000
191,680
621,680
2014
395,000
174,666
569,666
2015-2019
1,740,000
634,164
2,374,164
2020-2024
1,335,000
293,220
1,628,220
2025-2029
545,000
55,250
600,250
$ 6,005,000
$ 2,050,280
$ 8,055,280
-42-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE E. RISK MANAGEMENT
The City of Blair is exposed to various risks of loss related to torts; theft, damage to and
destruction of assets; errors and omissions; injuries to employees; and natural disasters.
These risks are covered by the purchase of commercial insurance. The City assumes
liability for any deductibles and claims in excess of coverage limitations. Settled claims
from these risks have not exceeded commercial insurance coverage in any of the past
three fiscal years.
NOTE F. NET ASSETS
In the government -wide financial statements net assets are classified in the following
categories:
Invested in Capital Assets - This category groups all capital assets, including
infrastructure, into one component of net assets. Accumulated depreciation on these
assets reduces this category.
Restricted Net Assets - This category presents external restrictions imposed by creditors,
grantors, contributors or laws or regulations of other governments and restrictions
imposed by law through constitutional provisions or enabling legislation.
Unrestricted Net Assets- This category represents the net assets of the City that are not
restricted for any project or other purpose.
In the Fund financial statements, reserves and designations segregate portions of fund
balance that are either not available or have been earmarked for specific purposes. The
various designations are established by actions of the City Council and Management and
can be increased, reduced, or eliminated by similar actions.
Following is a description and summary of reservations of fund balance at September 30,
2009:
Donated Funds - The City has received donations toward specific projects. The
undisbursed funds with specific restrictions are accounted for in the donated fund
balance.
Debt Service - The Water and Sewer restricted cash is a sinking fund required by
conditions of Revenue Bonds. These funds will become unrestricted in the year 2010.
-43 -
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE F. NET ASSETS — CONTINUED
Community Betterment - The City has sponsored a licensed Keno operation and the
restricted funds are the accumulation of net proceeds to be used only for community
betterment projects.
Capital Projects - The TIF 2 fund balance is restricted to development projects within the
TIF 2 area.
Governmental Funds
Reserved for:
Donated projects
Debt service
Community betterment
Capital projects
NOTE G. PENSION PLANS
$ 33,239
129,348
88,521
Business -Type Activities
267,000
The City has three pension plans covering substantially all of its employees. Employees
other than policemen are covered by a defined contribution plan, either a 414(h) or
457(b) plan. Policemen are covered under a defined contribution plan established by the
statutes by the State of Nebraska.
The 414(h) pension plan was established on April 1, 1996 and last restated on August 25,
2008 (effective January 1, 2008). All contributions from a minimum of 3% up to 6% of
gross wages in employee contributions and up to a 6% match of gross wage in
contributions from the City are invested with an investment manager. The employees
must have accumulated six months of service, be at least age 21, and work 40 hours per
week to participate in the plan. Employees are 100% vested in employer contributions
after six years of service. The plan is a single employer plan with the City maintaining
fiduciary responsibility for it. Contributions for the year ended September 30, 2009,
totaled $183,048 which consisted of $91,524 contributed by employees and $91,524
contributed by the City. Contributions are expected to remain relatively level from year
to year. The City may amend, modify, or terminate the 414(h) plan. Funds in the plan
cannot be diverted to any purposes other than for the exclusive benefit of the participants
or their beneficiaries or estates.
The 457(b) pension plan was established on July 1, 2008. The 457(b) plan allows
employees to contribute additional dollars to their pension above the 414(h) requirement
and match. The City will contribute a maximum match of 6% based on a one-to-one
match.
-44-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE G. PENSION PLANS - CONTINUED
between the 457(b) and 414(h) plans. An employee can contribute voluntary pre-tax
amounts up to the legal limits as established by IRS code. The plan is a single employer
plan with the City maintaining fiduciary responsibility for it. Contributions for the year
ended September 30, 2009, totaled $47,988 which consisted of $40,925 contributed by
employees and $,7,063 contributed by the City. Contributions are expected to remain
relatively level frond year to year. The City may amend, modify, or terminate the 457(b)
plan. Funds in the plan cannot be diverted to any purposes other than for the exclusive
benefit of the participants or their beneficiaries or estates.
The policemen are covered under a defined contribution plan established by the statues of
the State of Nebraska. Policemen terminating before retirement age receive payment for
their contributions to date of termination plus interest accrued and the vested portion of
the City's contributions based on the statues of the State of Nebraska. The City has
fiduciary responsibility for the plan and it is a single employer plan only. Contributions
of $54,895 for 2009, were 120X0 of gross wages, which complies with statutory
requirements. The City contributed 6% of gross wages and the policemen contributed
6%. The City expects contributions to remain relatively level from year to year. The
contributions are not actuarially determined. All qualifying police payroll was covered in
2009.
NOTE H. CONTRACT RECEIVABLE
In April 1984, the City contracted to sell its electrical transmission and distribution
generating facilities to the Omaha Public Power District. The terms of the agreement
were as follows:
Omaha Public Power District agreed to buy the City facilities for the sum of
$5.95 million. The terms of payment shall be $1.0 million payable at the date
of the contract and the balance of $4.95 million amortized over thirty years at
nine percent interest per annum, with annual payments of $481,815
commencing in April 1985. This contract is unsecured.
This contract also provided for the Omaha Public Power District to supply electrical
service directly to the City and its residents. Tile transfer of electrical services was
completed on September 30, 1984.
- 45 -
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE I. LANDFILL CLOSURE
The City has closed its landfill operations. All material closing and monitoring costs
were accrued over the remaining life of the landfill. The Landfill closed October 31,
1993 and any remaining monitoring costs will be paid from City funds but are not
anticipated to be material to the financial statements.
NOTE J. SPECIAL ASSESSMENTS RECEIVABLE
The City's special assessments outstanding as of September 30, 2009, are composed of
special assessment principle of $2,438,593.
The delinquent special assessments at September 30, 2009 are 9% of those outstanding.
No special assessments have been pledged to specific debt, although special assessments
principle and interest is reserved for various purpose bonds payments only.
NOTE K. CONCENTRATION OF CREDIT RISK
All of the receivables of the City proprietary funds and special assessments in the debt
service fund are from the local Blair area, thereby creating a concentration of credit risk.
If the Blair area economy was depressed, this could have an adverse effect on the
collection of the outstanding accounts receivable. Cargill, Inc. is a major water customer
for the City. Cargill, Inc. represents 83.5% of water sales for the year ended September
30, 2009. Although Cargill represents 83.5% of water sales, the City has a contract with
the company that secures a minimum monthly revenue stream for payment of the water
debt through June 2032, which minimizes the risk for payment of water bonds.
NOTE L. SELF INSURANCE
The City's Self Insurance Fund is used to account for employee health, dental, and vision
liability claims and is accounted for as an internal service fund. Claims expense as
reported in the find was reported based on actual expenses paid during the year fiscal
year ended September 30, 2009. Tine City has not recorded a liability for insurance
claims expected to be paid in future years, as the amount of these future claims cannot be
reasonably estimated. For the fiscal year ending September 30, 2009, the Self Insurance
Fund received inter -fund premiums of $585,831 from various City departments in
monthly payments. Additionally, the fund received premiums $148,335 from employees
of the City. Claims expense for the year, which totaled $792,940, exceeded the total
premiums of $734,166 received by the fund.
-46-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE L. SELF INSURANCE - CONTINUED
The City has purchased insurance for claims expenses incurred over a certain dollar
amount each year in order to limit its risk of loss. For the year ended September 30,
2009, the City received $91,593 in insurance recoveries from claims. These recoveries
have been reported as other operating revenues in the statement of revenues, expenses,
and changes in fiend net assets, proprietary funds.
NOTE M. PRIOR PERIOD ADJUSTMENTS
During the current year, it was determined that taxes receivable had been understated in
the prior year by $58,514. To correct this error, the beginning balances of the General
Fund, Debt Service Fund, and Street Fiend were increased by $45,238, $1,654, and
$11,622, respectively.
In the prior year, the City improperly recorded $500,000 in registered warrant debt in the
debt service fund. However, this debt should have been recorded in the water fund.
Accordingly, a prior period adjustment to increase the net assets of the Debt Service Fund
and to decrease the net assets of the Water Fund in the amount of $500,000 has been
made. In addition, beginning net assets of Governmental Activities and Business -type
Activities have been adjusted by the same amounts.
NOTE N. CONSTRUCTION COMMITMENTS
At September 30, 2009, the City had several uncompleted construction contracts in the
street and sewer funds. The remaining commitment on these construction contracts was
approxin-lately $402,212.
NOTE O. GASES No. 54
T
n March 2009, the Goverritnental Accounting Standards Board (GASB) approved
Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions
(Statement). Cer�ain significant changes in the Statement will require the following:
C. Fund balances fbr each of the City's governmental funds (General Fund,
Special Revenue Funds, Capital Projects Fund, and Debt Service Fund) will
be displayed in the following classifications depicting the relative strength of
the spending constraints placed on the purposes for which resources can be
used:
-47-
City of Blair, Nebraska
NOTES TO FINANCIAL STATEMENTS - CONTINUED
September 30, 2009
NOTE O. GASBS No. 54 - CONTINUED
Nonspendable fund balance—amounts that cannot be spent because they are
either not in a spendable form (such as inventories and prepaid amounts) or
are legally or contractually required to be maintained intact.
Restricted fund balance—air,ounts that can be spent only for specific purposes
because of constraints imposed by external providers (such as grantors,
bondholders, and higher levels of government), or imposed by constitutional
provisions or enabling legislation.
Cominitted fund balance—amounts that can be spent only for specific
purposes determined by a formal action of the government's highest level of
decision-making authority.
Assigned fund balance—amounts the government intends to use for specific
purposes that do not meet the criteria to be classified as restricted or
committed.
Unassigned fund balance—amounts that are available for any purpose; these
amounts can be reported only in the City's General Fund.
The Statement also establishes several new presentation and disclosure requirements,
including requirements related to stabilization arrangements (i.e., "rainy day" amounts).
In addition, the Statement clarifies the definitions of the various types of governmental
funds. Interpretations of certain terms within the new definition of special revenue funds
may affect which activities the City can report in special revenue funds.
The provisions of GASBS No. 54 must be implemented by the City no later than the
fiscal year beginning October 1, 2010. Implementation will require the City to restate
existing fund balances for the governmental funds.
SUPPLEMENTAL INFORMATION
City of Blair, Nebraska
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND AND MAJOR SPECIAL REVENUE FUNDS
For the year ended September 30, 2009
REVENUES
Taxes
Charges for services
Interest income
Other revenues
Total revenues
EXPENDITURES
Administration
Police Department
Fire Department
Parks Department
Library
Swimming Pool
Zoning
Animal control
Donated Funds
Total expenditures
REVENUES OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Operating transfers - in
Operating transfers - out
REVENUES AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
AND OTHER SOURCES
Original and
Variance
Final
Favorable
Budget
Actual
(Unfavorable)
$ 3,557,240
$ 3,552,064
$ (5,176)
321,030
383,521
62,491
20,900
4,520
(16,380)
1,419,114
876,336
(542,778)
5,318,284
4,816,441
(501,843)
3,193,655
1,677,352
1,516,303
1,658,010
1,589,444
68,566
306,400
160,026
146,374
509,170
461,833
47,337
268,400
314,702
(46,302)
26,700
33,570
(6,870)
146,990
137,289
9,701
98,330
78,919
19,411
90,171
97,690
(7,519)
6,297,826
4,550,825
1,747,001
(979,542)
265,616
1,245,158
732,600
751,350
18,750
(838,000)
(738,609)
(99,391)
(1,084,942) 278,357 $ 1,164,517
FUND BALANCE - September 30, 2008 1,277,087 1,277,087
FUND BALANCE - September 30, 2009 $ 192,145 $ 1,555,444
An explanation of the differences between budgetary inflows and outflows and
revenues and expenditures determined in accordance with generally accepted
accounting principles follows:
The budget fund balance at the beginning of the year is a based on cash
reserves rather than fund balance. $ 2,759,565
Accrual adjustments made because the City budgets for revenues and
expenditures on the cash basis, rather than on the modified accrual basis. (1,932,709)
Adjustments for expenses paid out of the general fund that were for other
funds. 1,604,232
General Fund Balance $ 3,986,532
See independent auditor's report,
-50-
City of Blair, Nebraska
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND REVENUES
For the year ended September 30 2009
Charges for services
Business licenses and permits
Original and
176,251
Variance
Library
Final
14,927
Favorable
Equipment rental
Budget
Actual
(Unfavorable)
REVENUES
20,000
9,725
(10,275)
Taxes
25,000
19,125
(5,875)
Property tax
$ 1,235,240
$ 1,172,062
$ (63,178)
Sales tax
1,830,000
1,842,079
12,079
Motor vehicle tax
134,000
128,630
(5,370)
Occupation and franchise tax
280,000
252,420
(27,580)
Other taxes
78,000
156,873
78,873
Total
3,557,240
3,552,064
(5,176)
Charges for services
Business licenses and permits
193,680
176,251
(17,429)
Library
14,000
14,927
927
Equipment rental
19,000
18,518
(482)
Cemetery lots
20,000
9,725
(10,275)
Grave openings
25,000
19,125
(5,875)
Towing
21,000
18,407
(2,593)
Rescure Squad
-
98,648
98,648
Other fees and charges
7,750
6,156
(1,594)
Sales of fireworks
15,000
15,000
-
RV park
5,600
6,764
1,164
Total
321,030
383,521
62,491
INTEREST INCOME
20,900
4,520
(16,380)
OTHER REVENUES
State grants
91,400
74,592
(16,808)
Federal grants
410,000
-
(410,000)
Donations
61,250
66,740
5,490
Reimbursements
33,000
78,485
45,485
Other miscellaneous revenue
823,464
656,519
(166,945)
Total
1,419,114
876,336
(542,778)
Total revenues
$ 5,318,284
$ 4,816,441
$ (501,843)
See independent auditor's report.
-51 -
City of Blair, Nebraska
BUDGETARY COMPARISON SCHEDULE
STREET FUND
For the year ended September 30 2009
REVENUES
Highway allocation
Property taxes
Other taxes
Incentive payment
State maintenance agreement
In -Lieu of tax
Homestead exemption
Interest income
Other revenue
Total revenues
EXPENDITURES
Salaries
FICA
Employee insurance
Retirement
Legal
Auditing
Engineering
Office expense
Utilities
Telephone
Travel
Training
Insurance
Maintenance
Street lighting
County fees
Car expense
Contract mowing
Gas, diesel, and oil
Materials and supplies
Rental
Capital outlay
Equipment
Street improvements
Total expenditures
REVENUES OVER (UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES)
Payment of warrant liabilities
Operating transfers - in
REVENUES AND OTHER FINANCING SOURCES
OVER (UNDER) EXPENDITURES AND OTHER SOURCES
Original and
Variance
Final
Favorable
Budget
Actual
(Unfavorable)
$ 530,000 $
555,957
S 25,957
287,516
275,090
(12,426)
93,000
99,518
6,518
6,000
6,000
-
21,798
21,798
17,000
10,571
(6,429)
-
12,841
12,841
3,000
414
(2,586)
3,022,000
570,009
(2,451,991)
3,980,314
1,552,198
(2,428,116)
357,820
307,911
49,909
25,000
21,881
3,119
105,370
103,103
2,267
21,600
19,190
2,410
3,000
6,664
(3,664)
3,200
8,659
(5,459)
15,000
5,665
9,335
4,700
10,332
(5,632)
7,000
6,226
774
2,400
2,314
86
5,OQ0
5,849
(849)
1,200
1,178
22
22,200
16,441
5,759
43,250
42,944
306
145,000
172,106
(27,106)
-
3,022
(3,022)
2,000
1,356
644
15,000
17,484
(2,484)
35,000
20,914
14,086
112,100
158,386
(46,286)
25,000
11,472
13,528
130,000
9,789
120,211
1,675,000
749,324
925,676
2,755,840
1,702,210
1,053,630
1,224,474
(150,012)
(1,374,486)
(1,515,000) - 1,515,000
175,000 2,095 (172,905)
(115,526) (147,917)
FUND BALANCE - September 30, 2008 168,078 168,078
FUND BALANCE - September 30, 2009 $ 52,552 $ 20,161
An explanation of the differences between budgetary inflows and outflows and revenues and expenditures determined in
accordance with generally accepted accounting principles follows;
The budget fund balance at the beginning of the year is a based on cash reserves rather than fund balance. (14,047)
Accrual adjustments made because the City budgets for revenues and expenditures on the cash basis, rather than on
the modified accrual basis. (27'779)
Street Fund Balance $ (21,665)
See independent auditor's report.
-52-
City of Blair, Nebraska
BUDGETARY COMPARISON SCHEDULE
KENO FUND
For the year ended September 30 2009
GROSSPROCEEDS
PRIZES
Declared prizes
Unclaimed wins
Net Prizes paid
NET HOLD
ALLOWABLE EXPENSES PAID
Lottery Operator's Commission
NET KENO PROCEEDS
EXPENSES PAID BY CITY
State taxes
Other expenses
TOTAL EXPENSES PAID
PROCEEDS AVAILABLE FOR DISTRIBUTION
TRANSFER FROM (TO) PRIZE RESERVES
COMMUNITY BETTERMENT - Direct
TRANSFER TO GENERAL
TRANSFER TO DEBT SERVICE
NET AFTER TRANSFERS
Beginning Keno account
Fund balance
Interest
Reimbursements
KENO ACCOUNT FUND BALANCE
PRIZE RESERVE FUND RECONCILIATION FOR
THE REPORTING PERIOD
Beginning reserve balance
Increase in reserve
Withdrawals from reserve
Ending reserve balance (deficit)
Original and Variance
Final Favorable
Budget Actual (Unfavorable)
$ - $ 989,523 $ 989,523
764,713 764,713
(1,415) (1,415)
763,298 763,298
226,225 226,225
- (138,533) (138,533)
75,000 87,692 87,692
16,660
19,795
(3,135)
3,100
3,272
(172)
19,760
23,067
(3,307)
(99,760)
55,240
64,625
9,385
2,740 2,740
130,000
23,000
(107,000)
20,000
25,000
25,000
-
(99,760)
(635)
119,125
129,853
129,853
100
130
30
$ 30,193 $
129,348 $
99,155
See independent auditor's report.
-53-
$ 44,327
17,671
(20,451)
$ 41,547
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT A UDITING STANDARDS
Honorable Mayor and Members
of the City Council
City of Blair, Nebraska
We have audited the financial statements of the governmental activities, the business -type
activities, each major fund, and the aggregate remaining fund information of City of Blair,
Nebraska (the City), as of and for the year ended September .30, 2009, which collectively
comprise the City's basic financial statements and have issued our report thereon dated February
19, 2010. We conducted our audit in accordance with auditing standards generally accepted in
the United States of America and the standards applicable to financial audits contained in
Government Auditiraa Standards, issued by the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinions on the financial statements, but not for the purpose of expressing an opinion of the
effectiveness of the City's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the City's internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow management
or employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis.
A significant deficiency is a control deficiency, or combination of control deficiencies, that
adversely affects the City's ability to initiate, authorize, record, process, or report financial data
reliably in accordance with generally accepted accounting principles such that there is more than
a remote likelihood that a misstatement of the City's financial statements that is more than
inconsequential will not be detected or prevented by the City's internal control. A material
weakness is a significant deficiency, or a combination of significant deficiencies, that results in
more than a remote likelihood that a material misstatement of the financial statements will not be
prevented or detected by the City's internal control.
Westroads Pointe 11015 N.98th St. I Suite 200 I Omaha, NE 68114 I T402.390.2480 ( F402.390.0885
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and would not necessarily identify all deficiencies
in internal control over financial reporting that might be significant deficiencies or material
weaknesses. However, we consider the deficiencies described in the accompanying schedule of
findings and responses to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City's financial statements are free
of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of finari-:;ial statement amounts. However, providing an
opinion on compliance with triose provisions was not an objective of our audit, and accordingly,
we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that are required to be reported under Governinent Auditing
Standards.
We noted certain other matters that we reported to management of the City, in a separate letter
dated February 19, 2010.
The City's response to the findings identified in our audit is described in the accompanying
schedule of findings and responses. We did not audit the City's response and, accordingly, we
express no opinion on it.
This report is intended solely for the information and use of management, City Council, others
within the entity, and federal awarding agencies and pass-through entities and is not intended to
be and should not be used by anyone other than these specified parties.
101 1
6 k,L.0
Hayes & Associates, L.L.C.
Omaha, Nebraska
February 19, 2010
-55-
City of Blair, Nebraska
SCHEDULE OF FINDINGS AND RESPONSES
For the year ended September 30, 2009
Finding 09-01
Criteria - Many organizations, including the City, rely on their auditor to generate the
annual financial statements including footnotes. We assisted in the proper presentation of
the financials and proposed material adjusting entries to present fairly the financial
statements of the City.
Condition - The City of Blair keeps it books on a cash basis and relies on its, auditors to
prepare the financial statements.
Cause - Lack of the required expertise in preparing the basic set of financial statements.
Effect - Material adjusting entries are required to be made during the audit for the proper
presentation of the City's financial statements.
Recommendation - The City of Blair may consider gathering the necessary expertise to
prepare a required set of financial statements in a format acceptable for GAAP reporting.
Officials Response - The City will work to develop the ability to prepare necessary
financial statements. This maybe through the hiring of additional staff or contracting
with an independent entity.
Finding 09-92:
Criteria - The City of Blair should have formalized policies and procedures for its key
administrative functions. A standard operating procedure (SOP) can be an effective
catalyst to drive performance improvements and improving overall results. SOP's will
ensure that City operations are done consistently, approved procedures are being
followed in compliance with City regulations, they will serve as training documents for
teaching users about processes, and they will serve as a historical record of the how,
where, when, and why of City's operations and information.
condition - Employees do not have documentation of procedures to support their job
duties.
Cause - Lack of forrnaiized standard operating procedures and controls.
-56-
City of BIair, Nebraska
SCHEDULE OF FINDINGS AND RESPONSES - CONTINUED
For the year ended September 30, 2009
)Finding 09-02 Continued -
Effect - Reliance on informal information from City Administrator and City Treasurer on
majority of City's accounting procedures and information.
Recommendation - We recommend that the City formalize and maintain a policy and
procedures manual. This manual should include all key areas of activities, including
administration and operations. A policy and procedures manual will document how the
City operates and will support cross -training and reduce training issues relating to
employee turnover.
Officials Response - City will work to develop a policy and procedures manual for all key
areas of activities.
-57-
City of Blair, Nebraska
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the year ended September 30, 2009
Finding 08-01.
Condition - Certain schedules were prepared by the City for year-end financial statement
preparation that needed material adjustments to properly support the financial statements.
The schedules should be prepared during the closing process to assist the City in preparing
adjusting entries for the preparation of the financial statements and to reconcile balances
between the schedules and the general ledger. The schedules should also be prepared to
support disclosures for the City's footnotes.
Recommendation - Implement internal control policies to define schedules needed, and
internal control procedures to create and maintain proper schedules to track City activities on
a full accrual basis for financial statement reporting.
Current Status - Resolved
Finding 08 -02 -
Condition - The City of Blair keeps it books on a cash basis and relies on its auditors to
prepare the financial statements.
Recommendation - The City of Blair should consider gathering the necessary expertise to
prepare a required set of financial statements in a format acceptable for GAAP reporting.
Current Status — Unresolved, see finding 09-01
Finding 68 -03 -
Condition - Employees do not have documentation of procedures to support their job duties.
Recommendation - We recommend that the City formalize and maintain a policy and
procedures manual. This manual should include all key areas of activities, including
administration and operations. A policy and procedures manual will document how the City
operates and will support cross -training and reduce training issues relating to employee
turnover.
Current Status — Unresolved, see finding 09-02
-58-