ORDER N0.28620
FINANCIAL AUDIT REPORT 2003
Came to be heard this the 26~` day of April 2004 with a motion made by Commissioner
Williams, Seconded by Commissioner Baldwin, the Court unanimously approved by a
vote of 4-0-0, to accept the Comprehensive Annual Financial Report Fiscal year ended
September 30, 2003.
,~ u ~~ z ~;
COMMISSIONERS' COURT AGENDA REQUES
PLEASE FURNISH ONE ORIGINAL AND NINE COPIES OF THIS REQUEST AND DOCUMENTS TO BE
REVIEWED BY THE COURT.
MADE BY: AV~~ ~D (~ OFFICE:
MEETING DATE: ~ a 6 ' D~ TIME PREFERRED:
SUBJECT: (PLEASE BE SPECIFIC)
~Cc.p~~ ~~`PSen ~afi'Dn d ~ o~DDoZ"D3 ~v~-r~~~' A°ePOr~ 6s~
Pry S s ~ol; ~~rrlps o n ~ C~.
EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON)
NAME OF PERSON ADDRESSING THE COURT:
E iMATED LENGTH OF PRESENTATION:
IF PERSONNEL MATTER -NAME OF EMPLOYEE:
~o rs~ S u- n c~ ~ er'a
~S r~ rn
Time for submitting this request for Court to assure that the matter is posted in accordance with Title 5, Chapter
551 and 552, Government Code, is as follows:
Meeting scheduled for Mondays:
THIS REQUEST RECEIVED BY:
THIS REQUEST RECEIVED ON:
5:00 P.M. previous Tuesday.

All Agenda Requests will be screened by the County Judge's Office to determine if adequate information has been
prepared for the Court's formal consideration and action at time of Court Meetings. Your cooperation will be
appreciated and contribute towards you request being addressed at the earliest opportunity. See Agenda Request Rules
Adopted by Commissioners' Court.



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KERR COIINTY, TEXAS
COMPREHENSIVE ANNQAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30, 2003
PRESSLER, THOMPSON AND COMPANY
~,~, A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
KERRVILLE, TEXAS 78028

KERR COUNTY, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30, 2003
KERR COUNTY, TEXAS
TABLE OF CONTENTS
INTRODUCTORY SECTION
_ Letter of Transmittal
List of Principal Officials
PAGE
i
ii
FINANCIAL SECTION	
_ Independent Auditors' Report	2-3
Management's Discussion and Analysis (unaudited)	5-11
Basic Financial Statements:	
Government-wide Financial Statements:	
Statement of Net Assets	15
Statement of Activities	16-17
Fund Financial Statements:	
Governmental Funds:	
Balance Sheet	18
Reconciliation of the Governmental Funds Balance Sheet to	
Statement of Net Assets	19
Statement of Revenues, Expenditures, and Changes in Fund Balances	20-21
- Reconciliation of the Statement of Revenues, Expenditures, and Changes in	
Fund Balances of Governmental Funds to the Statement of Net Activities	22
Proprietary Fund:	
_ Statement of Net Assets	23
Statement of Revenues, Expenses and Changes in Fund Net Assets	24
Statement of Cash Flows	25
Fiduciary Funds:	
- Statement of Fiduciary Net Assets	26
Notes to Basic Financial Statements	27-45
_ Required Supplementary Information:	
Statement of Revenues, Expenditures, and Changes in Fund Balance -Budget	
to Actual -General Fund	48
Statement of Revenues, Expenditures, and Changes in Fund Balance -Budget	
to Actual -Road and Bridge	49
Combining and Individual Fund Statements - Nonmajor Governmental Funds:	
_, Combining Balance Sheet	52-56
Combining Statement of Revenues, Expenditures and Changes in Fund Balances	58-62
KERR COUNTY, TEXAS
TABLE OF CONTENTS
PAGE
FEDERAL AWARDS SECTION
Independent Auditors' Report on Compliance and Intemal Control
Over Financial Reporting Based on an Audit of
Financial Statements Performed in Accordance
With Government Auditing Standards 64
Independent Auditors' Report on Compliance with Requirements
Applicable to Each Major Program and Intemal Control Over
Compliance in Accordance with OMB Circular A-133 65
Schedule of Findings and Questioned Costs 67
Schedule of Expenditures of Federal Awards 68
Notes to Schedule of Expenditures of Federal Awards 69

Tommy Tomlinson
KERB COUNTY AUDITOR
- March 24, 2004
- Honorable County Judge
Honorable County Commissioners
Ken County
- Kerrville, Texas 78028
Gentlemen:
Conforming to statutory requirements of the duties of the County Auditor, submitted herewith is
the annual financial report for Kerr County, Texas as of September 30, 2003, and for the fiscal
_ year then ended. Responsibility for both the accuracy of the presented date and disclosures rest
with the County. We believe that the data., as presented, is accurate in all material aspects; that it
is presented in a manner designed to fairly set forth the financial position and results of operations
_ of the County as measured by the financial activity of its various funds, and that all disclosures
necessary to enable the reader to gain the maximum understanding of the County's financial affairs
have been included.
- This report has been prepared following the guidelines recommended by the Governmental
Accounting Standards Board. In accordance with these guidelines, the accompanying report
consists of two parts:
1. Introductory Section
2. Financial Section, including financial statements and supplemental data of the County
'- accompanied by our independent auditors' opinion.
3. Federal Awards Section
- We appreciate the continued cooperation of those county officials and employees whose
contributions were essential for the timely completion of this annual financial report.
- Respectfully submitted,
Tommy Tomlinson
Kerr County Auditor
00 MAIN, ROOM l03 (830) 792-2235 KERRVILLE, TEXAS 78028-5327
KERR COUNTY, TEXAS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30, 2003
PRINCIPAL OFFICIALS
COUNTY JUDGE
COMMISSIONER, PRECINCT 1
COMMISSIONER, PRECINCT 2
COMMISSIONER, PRECINCT 3
COMMISSIONER, PRECINCT 4
COUNTY ATTORNEY
COUNTY AUDITOR
COUNTY CLERK
COUNTY TREASURER
DISTRICT ATTORNEY - 216th
DISTRICT ATTORNEY - 198th
DISTRICT CLERK
SHERIFF
TAX ASSESSOR-COLLECTOR
JUSTICE OF THE PEACE, PRECINCT 1
JUSTICE OF THE PEACE, PRECINCT 2
JUSTICE OF THE PEACE, PRECINCT 3
JUSTICE OF THE PEACE, PRECINCT 4
OFFICIAL ISSUING REPORT
Tommy Tomlinson
County Auditor
Pat Tinley
H.A."Buster" Baldwin
William "Bill" Williams
Jonathon Letz
Dave Nicholson
David Motley
Tommy Tomlinson
Jannett Pieper
Barbara Nemec
E. Bruce Curry
Ron Sutton
Linda Uecker
William F. "Rusty" Hierholzer
Paula Rector
Vance Elliott
Dawn Wright
Kari O'Dell
W. E. "Bill" Ragsdale
FINANCIAL SECTION
1
wll'lam F. Thompson, C.PA
Ernst H. Druebert, Jr., C.PA
Jerry N. Oliver, C.PA.
Douglas H. Sundberg, C.P.A
Timothy R. Porter, C.P.A
PxIJssLER, Txol-~soly AND COMPANY
A PROFESSIONAL CORPORATION
CERTIFlED PUBLIC ACCOUNTANTS
ONE SCHREINER CENTER
819 WATER STREET, SUITE 320
KERBVILLE, TEXAS 78028
INDEPENDENT AUDITORS' REPORT
The Honorable County Judge and
Members of the Commissioners Court
Kerr County, Texas
P.O. Box 290590
Telephone (830) 257-7247
Fax (830) 896-4041
Email: info@ptcocpa.com
We have audited the accompanying financial statements of the govemmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of Kerr County, Texas as of and
for the year ended September 30, 2003, which collectively comprise the County's basic financial statements
as listed in the table of contents. These financial statements are the responsibility of Kerr County
management. Our responsibility is to express an opinion 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 govemmental activities, the business-type activities, each major fund, and
the aggregate remaining fund information of Kerr County as of September 30, 2003, and the respective
changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
As described in Note 1, the County has implemented a new financial reporting model, as required by the
provisions of GASB Statement No. 34, Basic Financial Statements -and Management's Discussion and
Analysis -for State and Loca! Governments, as of September 30, 2003.
The Management's Discussion and Analysis and budgetary comparison information on pages 6 through 11
and 48 and 49, 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 inquiries of management regarding the methods of
measurement and presentation of the supplementary information. However, we did not audit the information
and express no opinion on it.
In accordance with Government Auditing Standards, we have also issued our report dated March 15, 2004,
on our consideration of Kerr County's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contrails, and grants. That report is an integral part
of an audit performed in accordance with Government Auditing Standards and should be read in conjunction
with this report in considering the results of our audit.
2
Our audit was pertormed for the purpose of forming opinions on the financial statements that collectively
comprise the Kerr County, Texas basic financial statements. The introductory section and combining and
individual nonmajor fund financial statements are presented for purposes of additional analysis and are not a
required part of the basic financial statements. The accompanying Schedule of Expenditures of Federal
Awards is presented for purposes of additional analysis as required by U.S. Office of Management and
_. Budget Circular A-133, Audits of States, Loca! Governments, and Non-Profit Organizations, and is not a
required part of the financial statements of Kerr County, Texas. The combining and nonmajor fund financial
statements and the Schedule of Federal Awards have been subjected to the auditing procedures applied in
the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in
relation to the basic financial statements taken as a whole. The introductory section has not been subjected
to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express
no opinion on them.
~~/
PRESSLER, THOMPSON AND COMPANY
A PROFESSIONAL CORPORATION
March 15, 2004
3
This page intentionally left blank
MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED)
5
KERR COUNTY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Within this section of the Kerr County (County) annual financial report, the Kerr County Commissioner's Court
provides a narrative discussion and analysis of the financial activities of the County for the fiscal year ending
September 30, 2003. The financial performance is discussed within the context of accompanying financial
statements and disclosures, wMch begin on page 15.
Financial Highlights (thousands)
• The County's net assets as indicated in the government-wide financial statements are $12,898.
• Total net assets aze comprised of the following:
1. Capital assets, net of related debt, of $3,171 include property and equipment, net of accumulated
depreciation.
2. Net assets of $4,577 are restricted by debt covenants and or grantee laws or regulations.
3. Unrestricted net assets of $5,150 are available to meet obligatica~s of creditors and citizens.
• The County completed a $927 project of installing acounty-wide communication system for law
enforcement.
• Total governmental long term debt of the County decreased by $917. See Note 3 for detail.
• Revenues exceeded expenditures for governmental activities $1,012.
• The unreserved fund balance in the general fund as shown in the fund financial statements on page 18 is
$5,872 or 35% of general fund expenditures. This amount is within the guidelines recommended by the
Commissioner's Court and the State Comptroller's Office.
• Long-term debt for business-type activities in the amount of $5,140 was issued to retire an existing debt of
$1,947 and construct an addition to the Kerr County Juvenile Detention Facility at the cost of $3,193.
Using This Annual Report
This annual report consists of a series of financial statements. The Statement of Net Assets and the Statement of
Activities (pages 15 through 17) provide information about the activities of the County as a whole and present a
longer-term view of the County's finances. Fund financial statements start on page 18. For govemmental
activities, these statements tell how these services were financed in the short term as well as what remains for
future spending. Fund financial statements also compare actual revenue collection and expenditures to budget.
Notes to the financial statement aze included to provide additional financial information.
Government-wide Financial Statements
t;Toveriunent-wide statements include all assets and liabilities using the accrual basis of accounting, whiff is
similar to the accounting methods used by most private-sector companies. Accrual of the current year's revenues
and expenses aze taken into account regardless of when cash is received ar paid. The statements are divided into
two activities, governmental activities which include basic functions of county government and business-type
activities which are totally supported by fees charged to customers.
The government-wide financial statements include two statements. One is the Statement of Net Assets; this
statement presents all of the assets and liabilities of the County as a whole, with the difl'erence reported as net
assets. It answers the question as to whether the financial condition of the County is better or worse as result of
the year's activities. Over time, increases or decreases in the Count's net assets are one indicator of whether its
financial heahh is improving or deteriorating. To assess the overall financial condition of the County, one must
also consider non-financial conditions such as property tax base and condition of assets.
- The other government-wide financial statement is the Statement of Activities. This statement reports how each
activity is funded by showing grants and program revenues related to each activity and how much reliance is
placed on general revenues. The statement relates to the Statement of Net Assets in that it shows how current
°' operations have changed net assets.
Fund Financial Statements
Funds aze established to account for money designated for specific purposes by the Commissioner's Court or
grantees such as the State of Texas. The fund financial statements differ from the government-wide statements in
that they focus on significant funds rather the County as a whole. Major funds are presented separately. The fund
"" financial statements for major funds begin on page 18. Fund data for non-major funds is included in a combining
statement on page 52. The basic funds are classified by type; each type used by the County is described in the
following paragraphs.
- Governmental funds -Most of the County'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 the modified accrual basis of accounting that measures cash and all other
'- financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-
term view of the County's general government operations and the basic services it provides. Governmental fund
information shows the amount of financial resources available in the near future to finance County programs.
In addition to the major government funds Balance Sheet and Statement of Revenues, Expenditures and Changes
in Fund Balances budgetary comparison statements are included for the general fund and major special revenue
fund. These schedules compare actual revenue and expenditures with adopted and amended budgets.
Proprietary funds -When the County charges customers for the full cost of the services it provides to County
units or to outside third parties, the services are reported in proprietary funds. Proprietary funds are reported in
- the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. The
County has only one proprietary fund (business activity) which accounts for the financial activities of the Kerr
County Juvenile Detention Facility. A majority of the revenue for this service comes from counties outside of the
County.
Notes to the financial statements -The notes aze presented immediately following the basic financial statements
to provide additional information to facilitate the understanding of the government-wide and fund financial
- statements. The notes explain accounting policies and disclose additional information concerning fixed assets,
long-term liabilities, and the County's retirement plan.
The County as a Whole
Our analysis of the County as a whole focuses on net assets (Table 1) and changes in net assets (Table 2). Under
Governmental Accounting Standard Board (GASB) regulafions, 2003 is the first fiscal year in which full accrual
- county-wide statements are required. The Statement of Activities reports annual expenditures by major function
along with the charges for services and grant proceeds available to support each function. This presentation
shows the cost of services that must be offset by general revenue such as property and sales taxes.
- The Summary of Net Assets (Table 1) list assets in the order of liquidity beginning with cash and ending in fixed
assets. Receivables include unpaid property taxes and unpaid court cost and fines assessed by the courts. Each
receivable is reported net of a reserve for uncollectable accounts. Historical collection data for property taxes
- shows an average annual collection rate of 98 percent. Total land and improvements are $10,465; this amount is
net of accumulated depreciation of $3,154 (23% of cost). Other assets (equipment) reported at $885 is net of
accumulated depreciation of $5,635; these assets are 87% depreciated. We have to conclude that many assets
exist with limited useful life that must be replaced in the near future. Liabilifies are reported by current (payable
- in one year) and long-term classifications. Information concerning long-term debt is detailed on page 40 in the
notes to the financial statements. Net assets at year-end are $12,898; a total of $4,577 is restricted for specific
purposes as required by state law or by County policy. The $5,150 in unrestricted net assets are available for
- funding general operations.
_ Y 'able 1
Summary of Net ~issets (thousands)
Cash
Receivables
Capital Assets '
Total Assets
Accounts Payable
Other Liabilities and Deferred Revenue
Long-tetras Debt
Total Liabilities.'
Net Assets::' ~~ - '
Invested its capital assets, net of debt
Restricted
Unrestricted
Total Net Assets
Table 2
Changes in Net Assets (thousands)
Governmental
Activities
2003
6,443
1,739
11,315
19,497
421
1,767
5,047
7,235
5,289
2,550
4,423
12,262
Governmental
Activities
2003
Revenues:
Program Revenues
Charges For Services
Operating Grants & Contributions
Capital Grants & Contributions
General Revenues
Property Taxes
Other Taxes
Grants & Contributions
Investment Earnings
Other General Revenues
Total Revenues:
Expenditures:
General Government
Administration of Justice
Public Safety
Corrections
Health & Human Services
Community & Economic
Development
Infrastructure & Environmental
Services
Interest on long-term Debt
Total Expenditures:
Change in Net Assets
Beginning Net Assets
Net Assets
2,609
977
19
9,009
2,124
95
1,?O1
16,534
2,567
2,903
3,063
1,871
929
820
3,034
334
15,522
1,012
11,249
12,262
Business-Type
Activities
2003
2,530
290
3,022
5,842
27
197
4,982
5,206
(2,118)
2,027
727
636
Business-Type
Activities
2003
1,513
296
32
1,841
1,722
308
2,030
(189)
825
636
Total
Primary Govt.
2003
8,973
2,029
14,337
25,339
448
1,964
10,029
12,441
3,171
4,577
5,150
12,898
Total
Primary Govt.
2003
4,122
1,273
19
9,009
2,124
127
1,701
18,375
2,567
2,903
3,063
3,593
929
820
3,034
642
17,552
823
12,074
12,898
8
- The Changes in Net Assets (Table 2) itemizes the basic sources of revenue and expenditures as to the services
provided. Total revenue for governmental activifies was $16,534, or approximately 75% from general revenues.
Total governmental expenditures were $15,522 resulting in a net increase in net assets of $1,012. More detail
'i about the increase is discussed in the Financial Analysis of the County Funds.
Business-type activities generated $175 in operating net income; however this amount was offset by $364 in cost
._ related to construction activities as detailed in the Financial Analysis of the County Funds.
Revenues and expenditures for governmental activities are compared in Table 3 showing the relation between
the cost of services and the revenue generated from users of the service. This table also shows how much general
-' revenue (property and sales taxes) and grants are needed to provide each service. For the past several years the
County has maintained a constant property tax rate relying on the steady growth of the County for additional
revenues. This growth has also helped to maintain sales tax revenue. As all other entities in this country, the
.._. County has experienced a significant decline in investment revenues. The service requiring the least general
revenue is that of the courts and clerk offices of the courts. The County has a collection department that focuses
on the collection of fines and fees assessed by the courts.
"- Table 3
Governmental Activities (thousands)
General Government
Administration of Justice
Public Safety
Corrections
Health & Human Services
Community & Economic Development
Infrastructure & Environmental Services
Total Charges for Services
Investment Earnings
'- Grants
General Revenues
Total
Capital Assets and Debt Administration
				Funded By
Revenue	% of	Expenditures	% of	General Revenue
2003	Total	2003	Total	Amount
677		2,567	17%	1,890 74%
1,448		2,903	19%	1,455 50%
115		3,063	20%	2,948 96%
271		1,871	12%	1,600 86%
94		929	6%	835 90%
4		820	5%	816 100%
0		3,034	20%	3,034 100%
2,609	16%	15,187		12,578
95	1%			
996	6%			
12,834	78%			
16,534				
Capital Assets: total capital assets increased $1,772 due mostly to the purchase of a communication system for
the Sheriff's office for $978 reported in governmental activities, and the $990 construction cost of the addition to
the Kerr County Juvenile Detention Facility, the business-type activity. See Table 4 below.
Table 4
Capital Assets at Year-end
-- (thousands)
Land
Buildings
_ Equipment
Construction in Progress
Capital Leases
Total
Governmental	Business-Type	Total	
Activities	Activities	Primary Govt.
2003	2002	2003 2002	2003	2002
390	390	107 107	497	497
13,228	13,228	2,214 2,214	15,442	15,442
5,477	4,444	204 191	5,681	4,635
0	310	1,115 125	1,115	435
1,008	963	0 0	1,008	963
20,104	19,335	3,640 2,637	23,744	21,972
9
Outstanding Debt
Table 5 below reports the outstanding balances of each debt for 2002 and 2003 for governmental and business-
type activities. The County has financed large capital improvement projects with bonds or note obligations. The
capital lease obligations were to acquire heavy equipment for Road and Bridge operations and to maintain a
qualify fleet of vehicles for the Sheriff's Department In 2002-03 the County retired debt related to governmental
activities by $967. For business-type activities, a new obligation of $5,140 was incurred for capital
improvements of $3,193 and to retire an existing mortgage of $1,947. Detailed information concerning long-term
debt is available in the notes on pages 40 through 42.
Table 5
Outstanding Debt at Year-end
(thousands)
1998 Tax Anticipation Note
Original Amount ($2,650) Matures 2005
1994 General Obligation Bonds
Original Amount ($5,900) Matures 2012
2001 Public Finance General Oblig. Bonds
Original Amount ($990) Matures 2008
2002 Lease Revenue Bonds
Original Amount ($5,140) Matures 2023
Capital Lease Obligations
Frankenmuth Mutual Ins. Mortgage
Total
Governmental Business-Type Total
Activities Activities Activities
2003 2002 2003 2002 2003 2002
840 1,235 840 1,235
3,930 4,265 3,930 4,265
730 860 730 860
5,140 0 5,140
526 633 526 633
0 1,947 0 1947
6,026 6,993 5,140 .1,947 11 166 8 940
Financial Analysis of the County Funds (thousands)
Governmental Funds
The governmental funds statements presented on pages 18 through 26 include the general fund, road and bridge
fund, and all other governmental funds combined. These statements focus on short-term transactions and the
impact they have on financial resources for future financial requirements. The total of fund balances at year-eaid
far all governmental funds are $6,083, a decaease of $461 from the prior year.
The general fiord is the primary day-to-day operating fund that finances services such as the courts and law
enforcement. Approximately 50 % of the revenue to support these services is generated by ad valorem taxes.
General fund operations resulted in an increase in fund balance of $640; 75% of that increase came from ad
valorem taxes. The incxease in tax revenue was a result of higher appraised taxable values and an increase in new
properties. The ending fund balance of $4,290 is 41.8% of total expenditures; this percentage satisfies the 25%
recommendation by the State Comptroller and the County's policy is to have a minimum operating reserve of
25%.
The road and bridge fund is reported as a single major govemmental fund because it represents a material
percentage of the total revenue and expenditures of all governmental funds. The result of operation was a
decrease in fiord balance of $82; this lowered the fiord balance below the desired level. The County started the
process to address this problem in the 2003-04 budget.
All other governmental funds aze combined to form the non-major governmental fiord category, the fiords
included in this combination aze itemized in the combining statements on pages 52 through 62 of the report.
Combined fiord balances decreased by $1,019 to $1,278 at 32.8% of total expenditures. In 2001-02 the County
received proceeds from the sale of contrachaal obligation bonds in the amount of $990 for the purchase and
10
., installation of a communication system for the Kerr County Sheriff's Department; $615 was expensed in 2002-
03. The County used $231 of the accumulated fund balance of the Schreiner Road funds for the construction of a
road. Expenditures exceeded revenues in the indigent health care fund by $132; expenditures increased $62 from
T the prior year and payments from the State of Texas were down by $27. The indigent health care program is an
unfunded mandate by the State.
- Proprietary Funds
As stated previously, the County's proprietary funds statements reports the activities of the Kerr County Juvenile
Detention Facility. The facility provides short-term detention services and long-term rehabilitation services for
"' juvenile offenders. The services are provided on a contractual basis with Kerr County and other counties within
the state.
- Because of the in~ease in demand for services, the Kerr County Juvenile Board approved an addition to the
facility to increase capacity to 75 beds. Funding for this project was obtained from the sale of $5,140 Lease
Revenue Bonds. The amount was enough to complete the addition and pay off an existing mortgage on the
existing facility of $1,947. The addition will be completed in March of 2004. Net assets decxeased $189 resulting
- from the fact that interest payments on the new debt were paid before revenues could be generated by the
addition.
Budgetary Highlights
Budgetary statements of revenues and expenditures for the general fund and road and bridge fund are on pages
48 and 49. The statements report the original and fmal budget with actual amounts for each category. The
- variance is the difference between actual and the final budget. The original budget was adopted by the County's
Commissioners Court prior to the beginning of the fiscal year and amendments to the budget are approved by the
court during the year. During the current year the original general fund revenue budget was ina-eased by $52 in
- grants and refunds that were not anticipated in the original budget; the expenditure budget was increased by a
corresponding amount. The expenditure budget was also increased by an additional $92; a majority of that
increase was for additional funding requirements for criminal justice.
- The original general fund budget planned for expenditures to exceed revenue by $402, indicating that fund
balances of that amount would be used to fund general fund operations. Since actual revenues exceeded the fmal
budget by $637 and actual expenditures were $303 less than final budget, fund balances were not used.
The original and fmal road and bridge budget anticipated revenues to exceed expenditures by $126. Actual
revenues exceeded budget by $252; actual expenditures exceeded budget by $207. The net of the variances for
revenues and expenditures was $44. The County experienced a major flood in 2001 causing damage to
- infrastructure. In 2001-02 the County received federal grants to make repairs; those funds were expended in
2002-03. Those expenditures were not included in the final budget but were reported in the actual amounts, thus
causing the $207 negative variance for road and bridge maintenance.
Budget for 2003-004
For the 2003-04 fiscal year the County adopted a property tax rate of .3721 per hundred dollars of taxable value,
- no change from 2002-03. The combined property tax rate for general and non-major funds was reduced by
.0075. The road and bridge fund property tax rate was increased by .0075 in an effort to build the working capital
balance. Taxable property values increased approximately 1.5%, a significant decline from the 5% to 7% growth
- in recent years. With no material growth in anticipated revenues, the County funded the 2003-04 general and
non-major budget with $913 of fund balances. The remaining fund balances are budgeted to remain within the
levels as established by County policy.
- A total budget for capital expenditures is $268, a significant reduction from $1,084 in 2002-03. This budget
includes three new vehicles for Constables and replacement vehicles and equipment for the Sheriff's Department
and Road & Bridge. Long-term debt retirement is budgeted to be $895.
11
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12
BASIC FINANCIAL STATEMENTS
13
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14
KERR COUNTY, TEXAS
GOVERNMENT-WIDE STATEMENT OF NET ASSETS
SEPTEMBER 30, 2003
ASSETS
Current Assets:
Cash and Cash Investments
Receivables (Net of Allowance for Doubtful Accounts)
Ad Valorem Taxes Receivable
Accounts Receivable
- Court Fines and Fees
Due From Insurance Company
Due From Other Governments
- Prepaid Items
Total Current Assets
_ Noncurrent Assets:
Cash and Cash Investments
Capital Assets:
Land
-- Buildings and Improvements
Furniture and Equipment
Construction in Progress
Accumulated Depreciation
- Total Noncurrent Assets
Total Assets
LIABILITIES
Current Liabilities:
- Accounts Payable
Accrued Interest Payable
Accrued Expenses
Accrued Compensated Absences
- Deferred Tax Revenue
Current Portion of Long Term Debt
Total Current Liabilities
Noncurrent Liabilities:
Accrued Compensated Absences
Long Term Debt
- Total Noncurrent Liabilities
Total Liabilities
- NET ASSETS
Invested in Capital Assets, Net of Related Debt
Restricted for:
- Debt Service
Capital Projects
Other Purposes
Unrestricted
Total Net Assets
	Business-	
Governmental	type	
Activities	Activities	Total
$ 6,443,061	$ 2,118,972	$ 8,562,033
376, 933		376, 933
	290,152	290,152
654,654		654,654
230, 964		230, 964
415, 554		415, 554
60, 843		60, 843
8,182, 009	2, 409,124	10, 591,133
	411,542	411,542
390,457	107,000	497,457
13,227,992	2,213,671	15,441,663
6,485,129	204,318	6,689,447
-	1,114, 862	1,114, 862
(8,788,622)	(618,165)	(9,406,787)
11,314,956	3,433,228	14,748,184
19,496,965	5,842,352	25,339,317
421,101	27, 087	448,188
38,647	19,433	58,080
270,156		270,156
131, 364	12, 802	144,166
298, 088		298, 088
1, 028, 712	165, 000	1,193, 712
2,188,068	224,322	2,412,390
		
49,942	6,893	56,835
4,997,182	4,975,000	9,972,182
5,047,124	4,981,893	10,029,017
7,235,192	5,206,215	12,441,407
		
5,289,062	(2,118,314)	3,170,748
209, 927	411, 542	621, 469
	1, 615, 774	1, 615, 774
2, 339, 859		2, 339, 859
4,422,925	727,135	5,150,060
$ 12,261,773	$ 636,137	$ 12,897,910
See accompanying notes to the basic financial statements.
15
KERR COUNTY, TEXAS
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Functions/Programs
Governmental Activities:
Administration of Justice
Public Safety
Corrections
Health and Human Services
Community and Economic Development
Infrastructure and Environmental
Interest on Long Term Debt
Administration
Total Governmental Activities
Business-type Activities:
Operating Expenses
Administration
Revenue Bond Issuance Cost
Interest on Long Term Debt
Total Business-type Activities
Total
Expenses
$ 2,902,896
3,063,431
1,871,342
929,398
819,979
3,034,189
334,480
2,566,727
15,522,442
1,508,186
125,902
87,275
308,307
2,029,670
$ 17,552,112
See accompanying notes to the basic financial statements.
16
_	Program Revenues		Net (Expense) Revenue
	Operating	Capital	and Changes in Net Assets
Charges	Grants and	Grants and	Governmental	Business-type
for Services	Contributions	Contributions	Activities	Activities Total
$ 1,447,569	$ 69,616	$ -	$ (1,385,711)	$ - $ (1,385,711)
- 115,207	193,726		(2,754,498)	(2,754,498)
271,280			(1,600, 062)	(1,600,062)
94,467	58,565		(776,366)	(776,366)
4,000		19,028	(796,951)	{796,951)
	655,292		(2,378,897)	(2,378,897)
			(334,480)	(334,480)
_ 676,768			(1,889,959)	(1,889,959)
2,609,291	977,199	19,028	(11,916,924)	- (11,916,924)
1,808,872
1,808, 872 - - -
$ 4,418,163 $ 977,199 $ 19,028 (11,916,924)
General Revenues:
Property Taxes Levied
Sales and Other Taxes
Investment Earnings
Other Income
Total General Revenue
Change in Net Assets
Net Assets at Beginning of Year
Net Assets at End of Year
300,686	300,686
(125,902}	(125,902)
(87,275)	(87,275)
{308,307}	(308,307)
(220,798)	(220,798)
(220,798) (12,137,722)
9,008,966		9,008,966
2,124,099		2,124,099
95,431	32,082	127,513
1,700, 909		1,700,909
12,929,405	32,082	12,961,487
1,012,481	(188,716)	823,765
11,249,292	824,853	12,074,145
$ 12,261,773	$ 636,137	$ 12,897,910
17
KERR COUNTY, TEXAS
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2003
ASSETS
Cash
Receivables
Delinquent Taxes Receivable, Net of
Allowance for Doubtful Accounts
Due from Insurance Company
Due from State/Other
Total Assets
LIABILITIES
Road and Nonmajor Total
General Bridge Govemmental Governmental
Fund Fund Funds Funds
$ 4,562,986 $ 617,099 $ 1,262,976 $ 6,443,061
248,918 33,360 94,655 376,933
230,964 230,964
356,895 3,876 54,783 415,554
$ 5,399,763 $ 654,335 $ 1,412,414 $ 7,466,512
Accounts Payable/Due to Other Offices $ 255,013 $ 98,413 $ 67,675 $ 421,101
Accrued Compensated Absences
and Liabilities 384,780 15,853 887 401,520
Deferred Tax Revenue 470,072 25,824 65,400 561,296
Total Liabilities 1,109,865 140,090 133,962 1,383,917
FUND BALANCES
Fund Balances
Reserved for Debt Service
Unreserved, reported in:
General Fund
Capital Projects Fund
Special Revenue Funds
Total Fund Balances
Total Liabilities and Fund Balances
209,927 209,927
4,289,898 4,289,898
37,639 37,639
514,245 1,030,886 1,545,131
4,289,898 514,245 1,278,452 6,082,595
$ 5,399,763 $ 654,335 $ 1,412,414 $ 7,466,512
See accompanying notes to the basic financial statements.
18
KERR COUNTY, TEXAS
RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET
_. TO THE STATEMENT OF NET ASSETS
SEPTEMBER 30, 2003
'-' Total Fund Balances -Governmental Fund
Amounts reported for governmental activities in the statement of net assets
are different because:
$ 6,082,595
Capital assets used in governmental activities are not financial resources and
- therefore are not reported in governmental funds. At the end of the year, the
cost of these assets was $20,103,578 and the accumulated depreciation was
$8,788,622. In addition, long-term liabilities, including bonds payable, are not
_ due and payable in the current period and therefore are not reported as liabilities
in the funds. The long-term debt was $6,025,895. The net effect of including
the balances for capital assets (net of depreciation) and long-term debt in the
governmental activities is to increase net assets. 5,239,120
Various other reclassifications and accruals are necessary to convert from the
modified accrual basis of accounting to accrual basis of accounting. These
include recognizing deferred revenue as revenue $263,208, recording court fines
and fees assessed $654,654, accruing interest on long-term debt ($38,647), and
- and reclassifying expenses as prepaid $60,843. The net effect of these items
is to increase net assets. 940,058
Net Assets of Governmental Activities
$12,261,773
See accompanying notes to the basic financial statements.
19
KERR COUNTY, TEXAS
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
	General
	Fund
REVENUES	
Ad Valorem Taxes (Including Interest and Penalties)	$ 5,880,558
Other Taxes, Licenses, and Permits	2,124,099
Automobile Registration	
Intergovernmental	498,049
Fines and Forfeitures	257,045
Fees of Office	1,549,157
Interest	70,177
Miscellaneous	513,291
Total Revenues	10,892,376
EXPENDITURES	
Current:	
General Government	1,816,404
Roads/Bridges Maintenance	
Road District/Park Construction	
Administration of Justice	6,977,762
Health and Welfare Services	801,057
Tax Administration	471,743
Libraries and Education	
Debt Service:	
Principal	162 484
Interest and Fees	4,374
Capital Outlay	213,054
Total Expenditures	10,446,878
Excess (Deficiency) of Revenues Over Expenditures	445,498
OTHER FINANCING SOURCES (USES)	
Capital Lease Financing	188,179
Operating Transfers In	7,3~
Operating Transfers (Out)	(ggg)
Total Other Financing Sources (Uses)	194,837
Excess (Deficiency) of Revenues and Other Sources Over	
Expenditures and Other Uses	640,335
Fund Balances at Beginning of Year 3,649,563
Fund Balances at End of Year $ 4,289,ggg
See accompanying notes to the basic financial statements.
20
Road and	Nonmajor	Total
Bridge	Governmental	Governmental
Fund	Funds	Funds
$ 543,180	$ 2,213,603	$ 8,637,341
		2,124, 099
925,351		925,351
32,022	524,159	1,054,230
679,699		936,744
	119,167	1,668, 324
6,361	18,893	95,431
3,104	18,466	534,861
2,189,717	2,894,288	15,976,381
	1,988	1,818,392
2,071,252	261,878	2,333,130
	2, 062	2, 062
	268,619	7,246,381
	844,805	1,645,862
		471, 743
	478,408	478,408
30,153	860, 000	1, 052,637
19,506	274,339	298,219
151,053	914,270	1,278,377
2,271,964	3,906,369	16,625,211
(82,247)	(1,012,081)	(648,830)
		188,179
	698	8,054
	(7,356)	(8,054)
-	(6,658)	188,179
(82,247)	(1,018,739)	(460,651)
596,492	2,297,191	6,543,246
$ 514,245	$ 1,278,452	$ 6,082,595
	21	
KERR COUNTY, TEXAS
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUND
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Net Change in Fund Balances -Govemmental Fund $ (460,651)
Amounts reported for govemmental activities in the statement of activities
are different because:
Current year capital outlays and long-term debt principal payments are
expenditures in the fund financial statements, but they should be shown
as increases in capital assets and reducctions in long-term debt in the
government-wide financial statements. The net effect of removing the 2003
capital outlays $806,970 and debt principal payments $1,052,637 is to
increase net assets. 1,859,607
Depreciation is not recognized as an expense in governmental funds since it
does not require the use of current financial resources. The net effect of the
current year's depreciation is to decrease net assets. (917,271)
Various other reclassifications and eliminations are necessary to convert from
the modified accrual basis of accounting to the accrual basis of accounting.
These include adjusting current year revenue to show the revenue earned from
the current year's tax levy $356,425, adjusting current year fines and fees col-
lected to show the amount assessed $202,117, to accrue additional expenses
such as interest on long-term debt and compensated absences ($88,589), and
adjust for expenses paid in advance $60,843. The net effect of the reclassifi-
cations and recognitions is to increase net assets. 530,796
Change in Net Assets of Govemmental Activities $ 1.,012,481
See accompanying notes to the basic financial statements.
22
KERR COUNTY, TEXAS
STATEMENT OF NET ASSETS
.,_, PROPRIETARY FUND
KERR COUNTY JUVENILE DETENTION FACILITY
SEPTEMBER 30, 2003
- ASSETS
Current Assets:
"' Cash and Cash Equivalents
Accounts Receivable
Total Current Assets
Noncurrent Assets
Cash and Cash Equivalents -Reserve Account
Land
Construction in Progress
Building and Equipment
Furniture and Fixtures
- Less Accumulated Depreciation
Total Noncurrent Assets
- Total Assets
LIABILITIES
Current Liabilities:
Accounts Payable
- Accrued Interest Payable -Lease Revenue Bond
Accrued Compensated Absences
Lease Revenue Bond Payable
Total Current Liabilities
Noncurrent Liabilities:
Accrued Compensated Absences
- Lease Revenue Bond Payable
Total Noncurrent Liabilities
Total Liabilities
NET ASSETS
- Investment in Capital Assets, Net of Related Debt
Restricted for Project Completion
Restricted for Debt Service
- Unrestricted
Total Net Assets
$ 2,118,972
290,152
2,409,124
411,542
107,000
1,'11.4,862
2,2.13,671
204, 318
(618,165)
3,433,228
5,842,352
27,087
19,433
12, 802
165,000
224,322
6,893
4,975,000
4,981,893
5,206,215
(2,118,314)
1,615,774
411, 542
727,135
$ 636,137
See accompanying notes to the basic financial statements.
23
KERR COUNTY, TEXAS
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUND
KERR COUNTY JUVENILE DETENTION FACILITY
FOR THE YEAR ENDED SEPTEMBER 30, 2003
OPERATING REVENUES
Charges for Services -Detention Revenue
Other
Total Operating Revenues
OPERATING EXPENSES
Personnel
Residential
Administrative
Facility and Equipment
Other
Depreciation
Total Operating Expenses
Income from Operations
NONOPERATING REVENUES (EXPENSES)
Interest Income
Revenue Bond Issuance Costs
Interest on Debt
Total Nonoperating Revenues (Expenses)
Change in Net Assets
Net Assets at Beginning of Year
Net Assets at End of Year
$ 1,513,023
295,849
1,808,872
1,220, 959
131,547
36,898
136,804
18,876
89,004
1,634,088
174,784
32,082
(87,275)
(308,307)
(363,500)
(188,716)
824,853
$ 636,137
See accompanying notes to the basic financial statements.
24
KERR COUNTY, TEXAS		
STATEMENT OF CASH FLOWS		
- PROPRIETARY FUND		
KERR COUNTY JUVENILE DETENTION FACILITY		
FOR THE YEAR ENDED SEPTEMBER 30, 2003		
CASH FLOWS FROM OPERATING ACTIVITIES:		
Detention Revenue	$	1,460,532
Other Operating Revenue		328,472
- Cash Payments for Detention		(1,529,258)
		
Net Cash Provided by Operating Activities		260,746
		
- CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:		
Proceeds from Issuance of Capital Debt -Revenue Bonds		5,140,000
- Payoff of Mortgage Debt		(1,946,518)
Interest Paid		(288,874)
Revenue Bond Issuance Costs		(87,275)
Acquisition and Construction of Capital Assets	(1,003,152)
Net Cash Provided by Capital and Related Financing Activities		1,814,181
		
CASH FLOWS FROM INVESTING ACTIVITIES:		
Interest Income		31,826
		
- Net Increase in Cash and Cash Equivalents		2,106,753
Cash and Cash Equivalents at Beginning of Year		423,761
		
'- Cash and Cash Equivalents at End of Year	$	2,530,514
		
- RECONCILIATION OF OPERATING INCOME TO NET CASH PROVIDED		
(USED) BY OPERATING ACTIVITIES:		
Operating Income	$	174,784
_. Adjustments to Reconcile Operating Income to Net Cash Provided		
(Used) by Operating Activities:		
Depreciation		89,004
- Changes in Assets and Liabilities:		
(Increase) in Accounts Receivable		(18,868)
(Decrease) in Accounts Payable		(3,869)
Increase in Accrued Expenses -Compensated Absences		19,695
		
Net Cash Provided by Operating Activities	$	260,746
See accompanying notes to the basic financial statements.
25
KERR COUNTY, TEXAS
STATEMENT OF FIDUCIARY NET ASSETS
SEPTEMBER 30, 2003
ASSETS
Cash and Cash Equivalents $ 578,004
Total Assets $ 578,004
LIABILITIES
Due to Other Governmental Units $ 578,004
Total Liabilities $ 578,004
See accompanying notes to the basic financial statements.
26
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- The financial statements of the County are prepared in accordance with Generally Accepted Accounting
Principles (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB)
pronouncements. In the government-wide financial statements and the financial statements for the
_ proprietary funds, Financial Accounting Standards Board (FASB) pronouncements and Accounting
Principles Board opinions issued on or before November 30, 1989, have been applied unless those
pronouncements conflict with or contradict GASB pronouncements, in which case, GASB prevails. For the
fiscal year ended September 30, 2003, the County implemented the financial reporting requirements of
- GASB Statement No. 34. As a result, an entirely new financial presentation format has been implemented.
1.A. FINANCIAL REPORTING ENTITY
The County is an independent unit and is managed by a governing body of elected officials. The
accompanying financial statements present the County's primary government and a component unit
- over which the County exercises significant influence. Significant influence or accountability is
based primarily on operational or financial relationships with the County (as distinct from legal
relationships).
- Due to restrictions of the State constitution relating to the issuance of municipal debt, the Kerr
County Juvenile Board created a Public Facility Corporation to finance the acquisition of the
Juvenile Detention Center. This was accomplished by assuming the existing mortgage on the
- property. The above service provided by the Public Facilities Corporation is solely for the benefit of
Kerr County and the Kerr County Juvenile Board. The Public Facility Corporation created to provide
financing services is blended into the County's primary government, although retaining separate
legal identity.
Component unit reported in the County's comprehensive annual financial report is shown below:
Blended Component Unit
Reported With The Brief Description of Activities and
Primary Government Relationship to the County Reported Funds
Hill Country Juvenile To provide financing for and on Enterprise Fund
Facility Corporation behalf of Kerr County for the
- acquisition of eligible correctional/
detention facilities and other
public buildings and facilities.
Kerr County Juvenile Board
- serves as the Board of Directors.
27
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.B BASIS OF PRESENTATION
Government-wide Financial Statements:
The Statement of Net Assets and Statement of Activities display information about the reporting
government as a whole. They include all funds of the reporting entity except for fiduciary funds.
The statements distinguish between governmental and business-type activities. Governmental
activities generally are financed through taxes, intergovernmental revenues, and other nonexchange
revenues. Business-type activities are financed in whole or in part by fees changed to external
parties for goods or services.
Fund Financial Statements:
Fund financial statements of the reporting enfrty are organized into funds, each of which is
considered to be separate accounting entities. Each fund is accounted for by providing a separate
set of self-balancing accounts that constitute its assets, liabilities, fund equity, revenues, and
expenditure/expenses. Funds are organized into three major categories: governmental,
proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and
proprietary categories. A fund is considered major if it is the primary operating fund of the County or
meets the following criteria.
a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental
or enterprise fund are at least 10 percent of the corresponding total for all funds of that
category or type; and
b. Total assets, liabilities, revenues, or expenditure/expenses of the individual governmental
fund or enterprise fund are at least 5 percent of the corresponding total for all governmental
and enterprise funds combined.
The funds of the financial reporting entity are described below:
Governmental Funds
General Fund
The General Fund is the primary operating fund of the County is always classified as a major fund.
It is the basic fund of the County and covers all activities for which a separate fund has not been
established.
Specia! Revenue Funds
Special Revenue Funds are used to account for the proceeds of specific revenue sources that are
legally restricted to expenditures for specified purposes.
Debt Service Funds
The Debt Service Fund accounts for the accumulation of financial resources for and the payment of
28
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.B BASIS OF PRESENTATION (Continued)
principal and interest on general long-term debt of the County other than debt service payments
made by enterprise funds. Ad valorem taxes are used for the payment of principal and interest on
the County's debt.
Capital Projects Fund
The Capital Projects Fund is used to account for proceeds of general long-term debt and other
revenues. Expenditures are restricted to the construction and acquisition of major capital facilities.
Proprietary Fund
Enterprise Fund
Enterprise Funds are used to account for business-like activities provided to the general public.
These activities are financed primarily by user charges and the measurement of financial activity
_ focuses on net income measurement similar to the private sector. All assets and Liabilities
associated with an enterprise fund's activities are included on its statement of net assets. The
reporting entity includes the Hill Country Juvenile Facility Corporation.
Fiduciary Funds (Not included in government wide statements)
Agency Funds
Agency funds account for assets held by the County in a purely custodial capacity. The reporting
entity includes 36 agency funds. Since agency funds are custodial in nature (i.e., assets equal
liabilities), they do not involve the measurement of results of operations.
Major and Nonmajor Funds
- The funds are further classified as major or nonmajor. The major funds are as follows:
Major Fund Brief Description
General See above for description.
Special Revenue Fund:
- Road and Bridge Accounts for all road and bridge construction and maintenance
activity.
Proprietary Fund:
Hill Country Juvenile Accounts for activities of juvenile detention facility in providing
Detention Facility long term and short term care, education, and rehabilitation.
-' Nonmajor funds consist of special revenue funds and debt service funds and are detailed in the
Combining and Individual Fund Statements -Nonmajor Funds.
_ 29
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING
Measurement focus is a term used to describe "which' transactions are recorded within the various
financial statements. Basis of accounting refers to "when" transactions are recorded regardless of
the measurement focus applied.
Measurement Focus
On the govemment-wide Statement of Nets Assets and the Statement of Activities, both
govemmental and business-like activities are presented using the economic resources
measurement focus as defined in item b. below.
In the fund financial statements, the "current financial resources" measurement focus or the
"economic resources" measurement focus is used as appropriate:
a. All govemmental funds utilize a "current financial resources" measurement focus. Only current
financial assets and liabilities are generally inGuded on their balance sheets. Their operating
statements present sources and uses of available spendable financial resources during a given
period. These funds use fund balance as their measure of available spendable financial
resources at the end of the period.
b. The proprietary fund utilizes an "economic Resources" measurement focus. The accounting
objectives of this measurement focus are the determination of operating income, changes in net
assets, financial position, and cash flows. All assets and liabilities (whether current or
noncurrent) associated with their activities are reported. Proprietary fund equity is classified as
net assets.
c. Agency funds are not involved in the measurement of results of operations; therefore,
measurement focus is not applicable to them.
Basis of Accounting
In the govemment-wide Statement of Net Assets and Statement of Activities, both govemmental
and business-like activities are presented using the accrual basis of accounting. Under the accrual
basis of accounting, revenues are recognized when earned and expenses are recorded when the
liability is incurred or economic asset used. Revenues, expense, gains, losses, assets, and
liabilities resulting from exchange and exchange-like transactions are recognized when the
exchange takes place.
In the fund financial statement, governmental funds and agency funds are presented on the
modified accrual basis of accounting. Under this modified accrual basis of accounting, revenues are
recognized revenues when both "measurable and available". Measurable means knowing or being
able to reasonably estimate the amount. Available means collectable within the current period or
within 60 days after year end. Also under the modified accrual basis of accounting, expenditures
(including capital outlay) are recorded when the related fund liability is incurred, except for general
obligation bond principal and interest which are reported as expenditures in the year due.
30
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1. C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING (Continued)
_ All proprietary funds utilize the accrual basis of accounting. Under the accrual basis, revenues are
recognized when earned and expenses are recorded when the liability is incurred or economic asset
used.
- 1.D. ASSETS, LIABILITIES, AND EQUITY
Cash and Cash Investments
For the purpose of the Statement of Net Assets, "Cash and Cash Equivalents" includes demand
deposit accounts, certificates of deposit, mutual funds, government investment pools, and fixed
income securities, each with an original maturity date of three months or less, if applicable.
- Therefore, except for certificates of deposit with maturities in excess of 3 months, all amounts are
considered available upon demand and are considered to be °cash equivalents"
Several funds may be invested in an investment account and each fund has an equity interest
'- therein. Interest earned on the investment of these monies is allocated based upon relative equity
at month end.
- Receivables
In the government-wide statements, receivables consist of all revenues earned at year-end and not
yet received. Allowances of uncollectible accounts receivable are based upon historical trends and
- the periodic aging of accounts receivable. The major receivable balances for the governmental
activities relate to property taxes and court fines and fees. Business-type activities report detention
revenue as its major receivable.
In the fund financial statements, material receivables in governmental funds include revenue
accruals such as property taxes, grants, and other intergovernmental revenues since they are
usually both measurable and available. Interest and investment earnings are recorded when earned
- only if paid within 60 days since they would be considered both measurable and available.
Proprietary fund material receivables consist of all revenues earned at year-end and not yet
received. Detention revenue from the detained juveniles' respective county represents the majority
- of proprietary fund receivables. As these receivables are from other Texas counties, all amounts
due are considered collectable and there is no allowance for doubtful accounts.
Fixed Assets
The accounting treatment over property, plant and equipment (fixed assets) depends on whether the
assets are used in governmental fund operations or proprietary fund operations and whether they
- are reported in the government-wide or fund financial statements.
Government-wide Statements
In the government-wide financial statements, fixed assets are accounted for as capital assets. All
fixed assets are valued at historical cost, or estimated historical cost if actual is unavailable.
31
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.D. ASSETS, LIABILITIES, AND EQUITY (Continued)
Donated assets are recorded at their estimated fair value at the date of donation.
Pursuant to GASB Statement Number 34, an extended period of deferral is available before the
requirement to record and depreciate infrastructure assets (e.g., roads, bridges, and similar items)
acquired before the implementation date becomes effective. Therefore, infrastructure assets
acquired prior to October 1, 2002 have not yet been capitalized.
Depreciation of all exhaustible fixed assets is recorded as an allocated expense in the Statement of
Activities, with accumulated depreciation reflected in the Statement of Net Assets. Depreciation is
provided over the assets' estimated useful lives using the straight-line method of depreciation. The
range of estimated useful lives by type of asset is as follows:
Buildings 25 - 50 years
Improvements 10 - 50 years
Machinery and Equipment 3 - 20 years
Infrastructure 25 - 50 years
Fund Financial Statements
In the fund financial statements, fixed assets used in governmental fund operations are accounted
for as capital outlay expenditures of the govemmental fund upon acquisition. Fixed assets used in
the proprietary fund operations are accounted for the same as in the govemment-wide statements.
Restricted Assets
Restricted assets include cash and investments of the proprietary fund that are legally restricted as
to their use. The restriction relates to the "Reserve Account required by the Trust Agreement
between the Bank of New York Trust Company of Florida, N.A. and the Hill Country Juvenile Facility
Corporation dated November 15, 2002, securing $5,140,000 Hill Country Juvenile Facility
Corporation Lease Revenue Bonds, Series 2002.
Long-term Debt
The accounting treatment for long-terrn debt depends on whether the assets are used in
governmental fund operations or proprietary fund operations and whether they are reported in the
govemment-wide or fund financial statements.
All long term debt to be repaid from governmental and business-type resources are reported as
liabilities in the govemment-wide statements. The long-term debt consists primarily of bond and
note payables and capital lease transactions.
Long-term debt for governmental funds is not reported as liabilities in the fund financial statements.
The debt proceeds are reported as other financing sources and payment of principal and interest
reported as expenditures.
32
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.D. ASSETS, LIABILITIES, AND EQUITY (Continued)
Compensated Absences
Full time and regular part time employees who work 20 hours per week or more are granted
vacation benefits in varying amounts to specified maximums depending on tenure with the County.
Sick leave accrues to full time and regular part time employees to specified maximums.
Accumulated vacation time may be taken in pay upon termination or retirement up to a maximum of
twenty (20) days; however, this policy does not apply to accumulated sick leave.
The liability for these compensated absences is recorded as long-term debt in the government-wide
statements. The current portion of this debt is estimated based on historical trends. to the fund
financial statements, governmental funds report only the compensated absence liability payable
- from expendable available resources. The proprietary fund reports the liability as it is incurred.
Equity Classifications
_ Government-wide Statements
Equity is classified as net assets and displayed in three components:
a. Invested in capital assets, net of related debt -Consists of capital assets including restricted
capital assets, net of accumulated depreciation and reduced by the outstanding balances of any
bonds, mortgages, notes, or other borrowings that are attributable to the acquisition,
'- construction, or improvement of those assets.
b. Restricted net assets -Consists of net assets with constraints placed on the use either by (1)
_ external groups such as creditors, grantors, or laws or regulations of other governments; or (2)
law through constitutional provisions or enabling legislation.
c. Unrestricted net assets -All other net assets that do not meet the definition of "restricted" or
"invested in capital assets, net of related debt."
Fund Statements
Governmental fund equity is classified as fund balance. Fund balance is further classified as
reserved and unreserved, with unreserved further split between designated and undesignated.
Proprietary fund equity is classified the same as in the government-wide statements.
1.E. REVENUES, EXPENDITURES, AND EXPENSES
Property Taxes
Property taxes are levied October 1 of each year. The taxes are due by January 31 following the
levy date. Penalties and interest are added for payments made after the January 31due date. The
'- County bills and collects its own property taxes and those of various other taxing entities.
Collections of these taxes pending distribution are accounted for in an agency fund.
33
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
1.E. REVENUES, EXPENDITURES, AND EXPENSES (Continued)
In the fund financial statements, property taxes are recorded as revenue in the period levied to the
extent they are colleded within 60 days of year-end. Due to the immaterial amount of additional
property taxes receivable after the 60-day period, no additional accrual is made in the govemment-
wide financial statements.
Operating Revenues and Expenses
Operating revenues and expenses for proprietary funds are those that result from providing services
and producing and delivering goods and/or services. It also includes all revenue and expenses not
related to capital and related financing, noncapital financing, or investing adivities.
Expend itures/Expenses
In the govemment-wide financial statements, expenses are classified by fundion for both
govemmental and business-type activities.
In the fund financial statements, expenditures are classified as follows:
Governmental Funds - By Charader: Current (further classified by fundion)
Debt Service
Capital Outlay
Proprietary Fund - By Operating and Nonoperating
In the fund financial statements, govemmental funds report expenditures of financial resources.
Proprietary funds report expenses relating to the use of economic resources.
Interfund Transfers
Permanent reallocation of resources between funds of the reporting entity are classified as interfund
transfers. For the purposes of the Statement of Adivities, all interfund transfers between individual
govemmental funds have been eliminated.
NOTE 2 -STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
By its nature as a local government unit, the County and its component unit are subjed to various federal,
state, and local laws and contractual regulations. An analysis of the County's compliance with significant
laws and regulations and demonstration of its stewardship over County resources follows.
2.A. BUDGETARY INFORMATION
The County Judge and staff prepare the proposed budget, using revenue estimates furnished by the
County Auditor and submit the data to Commissioners Court. A public hearing is held on the budget
by Commissioners Court. Before determining the final budget, Commissioners Court may increase
34
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE Z -STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Continued)
2.A. BUDGETARY INFORMATION (Continued)
or decrease the amounts requested by the various departments. In the final budget, which is
- usually adopted in September, expenditures for current operating funds cannot exceed the
estimated available cash balances in such funds on October 1, plus the estimate of revenues for the
ensuing year. At any time during the year, Commissioners Court may increase the budget for
- unexpected revenues. Commissioners Court may transfer amounts among individual budget line
items within major expenditure categories during the year, but no such transfer may increase the
overall total of the budget. Formal budgetary integration is employed for the General, Special
_ Revenue, Debt Service, Capital Projects Funds and Proprietary Fund operations. Budgets for these
funds are prepared on a cash basis. Unused appropriations lapse at the end of each year.
- 2.B DEPOSITS AND INVESTMENTS LAWS AND REGULATIONS
The Public Funds Investment Act (Government Code Chapter 2256) contains specific provisions in
the areas of investment practices, management reports and establishment of appropriate policies.
- Among other things, it requires the County to adopt, implement, and publicize an investment policy.
That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio
diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6)
- maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted
maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and
capabilities, (9) and bid solicitation preferences for certificates of deposit. Statutes authorize the
County to invest in (1) obligations of the U.S. Treasury, certain U.S. agencies, and the State of
-- Texas; (2) certificates of deposit, (3) certain municipal securities, (4) money market savings
accounts, (5) repurchase agreements, (6) bankers acceptances, (7) Mutual funds, (8) Investment
pools, (9) guaranteed investment contracts, (10) and common trust funds. The Act also requires the
- County to have independent auditors perform test procedures related to investment practices as
provided by the Act.
The funds of the County must be deposited and invested under the terms of a contract, contents of
- which are set out in the Depository Contract Law. The depository bank places approved pledged
securities for safekeeping and trust with the County's agent bank in an amount sufficient to protect
County funds on a day-to-day basis during the period of the contract. The pledge of approved
- securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit
Insurance Corporation ("FDIC's insurance.
For the year ended September 30 2003, the County complied, in all material respects, with the
-' requirements of the Public Funds Investment Act and with local policies.
35
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 3 -DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS
3.A. CASH AND CASH INVESTMENTS
The County's policies and applicable laws regarding deposits of cash and investments are
discussed in Note 1.D. and 2. B. The County's cash and cash investments at September 30, 2003,
are detailed by fiduciary account holder and type of account as follows:
Carrying Market Category
Fiduciary/Type of Deposit Value Value Risk
			
Governmental Activities:			
Depository Bank			
Demand Deposit Accounts	$ 679,225	N/A	1
Banc of America LLC			
Money Market Obligations	3,056	3,057	2
LOGIC			
Liquid Asset Portfolio	1,320,748	1,321,912	
Morgan Stanley			
Money Market	998,785	999,295	2
Corporate Fixed Income	441,631	444,435	2
Certificates of Deposit			
Maturities less than 3 months	572,971	572,780	2
Maturities greater than 3 months	2.426.645	2,421,848	2
Total Govemmental Activities	~ 6 44,x,061		
Business-type Activities:			
Depository Bank			
Demand Deposit Accounts	$ 503,135	N/A	1
Bank of New York Trust Company of Florida, N.A.			
Mutual funds:			
Nations Treasury Reserves-Payment and			
Project Accounts	1,615,837	1,615,837	2
Nations Treasury Reserves-Reserve Account	411.542	411,542	2
Total Business-type Activities	$ 2,530,575		
The investment in LOGIC is considered a government pool investment. Government pool
investments are not categorized in accordance with GASB Statement No. 3, because they are
not evidenced by securities that exist in physical or book entry form.
36
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
- SEPTEMBER 30, 2003
NOTE 3 -DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
3.A. CASH AND CASH INVESTMENTS (Continued)
- The cash and cash investments held can be categorized into three categories of credit risk:
Category 1 - Deposits which are FDIC insured or collateralized with securities held
by the County or by its agent in the County's name.
Investments that are insured, registered or held by the County or by
its agent in the County's name.
Category 2 - Deposits which are collateralized with securities held by the pledging
financial institution's trust department or agent in the County's name.
- Investments that are uninsured and unregistered held by the
counterparty's trust department or agent in the County's name.
Category 3 - Deposits which are not collateralized.
Uninsured and unregistered investments held by the counterparty, its
trust department, or its agent, but not in the County's name.
In addition, the following is disclosed regarding coverage of combined deposit account balances on
the date of highest deposit at the Depository Bank, Security State Bank and Trust, Kerrville, Texas.
'r' a. The highest combined balances of cash, savings, and time deposit accounts amounted to
$8,860,462 and occurred during on February 6, 2003.
- b. The market value of securities pledged as of the date of the highest combined balance on
deposit was $10,289,310.
c. Total amount of FDIC coverage at the time of the highest combined balance was $200,000.
3.6. RESTRICTED ASSETS
The amount reported as noncurrent cash and cash equivalents in the proprietary fund is restricted
for debt service. This reserve was established by the trust agreement on the issuance of the Hill
- Country Juvenile Facility Corporation Lease Revenue Bonds and must remain in this reserve
account at the Bank of New York Trust Company of Florida, N.A. until the final year of payments on
this bond issue.
37
KERR COUNTY TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 3 -DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
3.C AD VALOREM TAXES RECEIVABLE
Ad Valorem taxes have been reported in the financial statements net of the allowance for
uncolledible taxes. Ad Valorem taxes are prorated between maintenance, debt service, and special
revenues based on rates adopted for the year of the levy. Allowances for uncollectible within the
General, Debt Service and Special Revenue Funds are based upon historical experience in
collecting property taxes. The County is prohibited from writing off real property taxes without
specific authority from the Texas Legislature.
Ad Valorem tax payments, received throughout the year, are recognized as revenue in the year
received, except for those received within 60 days after year-end, which are recognized as revenue
as of September 30, 2003.
The following is a summary, by major and nonmajor funds, of the gross taxes, the allowance for
uncolledible taxes, and net taxes receivable.
		Allowance For	
	Taxes	Uncolledible	Net Taxes
	Receivable	Taxes	Receivable
General Fund	$ 339.481	$ 90.563	$ 248.918
Road and Bridge	46,360	13,000	33.360
Nonmajor Funds			
Special Revenue Funds			
Public Library	23,485	6,265	17,220
Fire Protection	13,181	3,516	9,665
Indigent HeaRh Care	27,191	7,254	19,937
Debt Service Funds			
1998 Tax Anticipation Note	25,406	6,777	18.629
1994 Limited Tax General Obligation			
Bonds	30,214	8,060	22,154
2001 General Contractual Obligation			
Bonds	9.615	2.565	7.050
Total Nonmajor Funds	129,092
$ 514 933	34.437
$ 138.000	94.655
38
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 3 -DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
3.D. COURT FINES AND FEES RECEIVABLE
With the implementation of GASB Statement Number 34, the County has determined the amount of
court fines and fees receivable to be $4,270,744 which represents amounts owed and outstanding
for the last 10 years. Based on historical collection rates for the various courts, the County has
booked an allowance for uncollectible court fines and fees of $3,616,090, resulting in a net
receivable of $654,654.
3.E. CAPITAL ASSETS
The following is a summary of capital asset activity for the year ended September 30, 2003:
Governmental Activities:
Land
- Buildings
Equipment
Construction in Progress
Totals at Historical Cost
"- Less Accumulated Depreciation
Buildings
Equipment
Total Accumulated Depreciation
Capital Assets, net
Business-type Activities:
Land
Building
Furniture & Fixtures
' Constriction in Progress
Totals at Historical Cost
Less Accumulated Depreciation
Building
Furniture & Fixtures
Total Accumulated Depreciation
' Capital Assets, net
Balances			Balances
October 1,			September 30,
2002	Additions	Deletions	2003
$ 390,457	$	$	$ 390,457
13,227,992			13,227,992
5,406,557	1,305,318	226,746	6,485,129
310,169	616,532	926,701	-
19, 335,175	1.921,850	1,153,447	20,103,578
3,688,589	340,090		4,028,679
4,353,891	577,181	171,129	4,759,943
8,042,480
X11,292,695	917, 271
1.004.579	171.129
$	8,788,622
11.314.956
$ 107,000	$ $	$ 107,000
2,213,671		2,213,671
190,965	13,353	204,318
125,063	989,799	1.114,862
2.636,699	1,003,152	- 3.639,851
385,524	73,789	459,313
143,637	15,215	158,852
529,161
$ 2.107.538	89,004
~ $	- 618,165
- $ 3,921 686
39
KERR COUNTY TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 3 -DETAIL NOTES ON TRANSACTION CLASSESIACCOUNTS (Continued)
3.F. LONG-TERM DEBT
The reporting of long-term debt is segregated between the amounts to be repaid from govemmental
activities and amounts to be repaid from business-type activities.
Govemmental Activities
As of September 30, 2003, the govemmental long-term debt consisted of the following:
Notes and Bonds Payable:
Limited Tax General Obligation Bonds, Series 1994
Original issue amount $ 5,900,000, interest rates of
4.25°~ to 6.25%, with final maturity February 15, 2012 $ 3,930,000
Tax Anticipation Notes, Series 1998
Original issue amount $ 2,650,000, interest rates of
3.20% to 4.00%, with final maturity date August 15, 2005 840,000
Public Property Finance Contractual Obligations, Series 2001
Original issue amount $ 990,000, interest rates of
2.80% to 4.10%, with final maturity date February 15, 2008 730.000
Total Notes and Bonds Payable $ 5.500.000
Current Portion $ 895,000
Noncurrent Portion 4.605.000
Total Notes and Bonds Payable $ 5.500.000
Capital Lease Obligations:
Associates Commercial Corporation
Capital lease obligation for Bobcat Skid Steer Loader dated
April 16, 2001, principal and interest of $3,922.47 payable
annually, effective annual interest rate of 6.569%, final
payment due April 1, 2005.
Caterpillar Finanaal Services:
Capital lease obligation for Motor Grader dated December 18, 2001,
principal and interest of $1,295.00 paid monthly, interest
rate of 4.82%, final payment December 14, 2006.
Capital lease obligation for Motor Grader dated January 24, 2002,
principal and interest of $ 1,295.00 paid monthly, interest
rate of 4.82%, final payment February 21, 2007.
Capital lease obligation for Wheel Loader dated April 29, 2002,
principal and interest of $1,126.50 paid monthly, interest
rate of 4.40%, final payment February 25, 2007.
$ 7,135
138,791
140,654
76,054
40
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 3 -DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
3.F. LONG-TERM DEBT (Continued)
Ford Motor Credit Corporation:
Capital lease obligation for 6 -2001 Crown Victoria Police Sedans,
annual principal and interest payments of $ 45,036.20, interest
rate of 4.25%, final maturity October 23, 2003.
Capital lease obligation for 6 2003 Crown Victoria Police Sedans,
annual principal and interest payments of $53,526.46, interest
rate of 4.65%, final maturity November 4, 2004.
Capital lease obligation for 2003 Expedition,
annual principal and interest payments of $10,722.46, interest
rate of 4.65%, final maturity January 15, 2005.
Total Capital Lease Obligations
Current Portion
Noncurrent Portion
Total Capital Lease Obligation
Accrued Compensated Absences:
Current Portion
Noncurrent Portion
Total Compensated Absences
Business-type Activities
Hill Country Juvenile Facility Corporation Lease Revenue Bonds,
Series 2002, original issue amount $ 5,140,000, interest rate
of 3.00 to 5.5 %, with final maturity dated February 15, 2023.
Current Portion
Noncurrent Portion
Total Bonds Payable
Accrued Compensated Absences:
Current Portion
Noncurrent Portion
-' Total Compensated Absences
43,200
100,024
20.037
$ 525,895
$ 133,713
392.182
~ 525,895
$ 131,364
49.942
$ 181,305
$ 5,140,000
$ 165,000
4,975.000
$ 5,140,000
$ 12,802
6.893
$ 19,695
41
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 3 -DETAIL NOTES ON TRANSACTION CLASSES/ACCOUNTS (Continued)
3.F. LONG-TERM DEBT (Continued)
Changes in Long-Term Debt
The change in long-term debt outstanding for the year ended September 30, 2003, is summarized
below:
Igoe of Debt
Govemmental Activities:
Notes and Bonds Payable
Capital Lease Obligations
Accrued Compensated
Absences
Total Long-Term Debt
Business-Type Activities:
Mortgage Note Payable
Lease Revenue Bond
Accrued Compensated
Absences
Total Long-Term Debt
Balance
October 1,
2002 Additions
$ 6,360,000 $ -
632,578 184,310
49.941
$ 6 ~..~`L $ 234..251
$ 1,946,519 $ -
- 5,140,000
- 6.893
1.946.519 $ 5 146 893
Balance
September 30,
Deductions 2003
$ 860,000 $ 5,500,000
290,993 525,895
49.941
$ 1.150.993 6.075.83
$ 1,946,519 $ -
- 5,140,000
- 6.893
1.946.519 5.146.893
Annual Debt Service Requirements
The annual debt service requirements to maturity, including principal and interest, for long-term debt
as of September 30, 2003, are as follows.
	Govemmental Activities	Business-Tv	ae Activities
Year Ending				
September 30,	Principal	Interest	Principal	Interest
2004	$ 1,028,713	$ 257,943	$ 165,000	$ 247,960
2005	1,034,818	208,359	170,000	242,722
2006	566,161	160,780	175,000	236,679
2007	831,203	126,942	180,000	229,798
2008	595,000	96,521	190,000	222,279
Thereafter	1.970,000	172,763	4,260,000	2,097,640
Total	$ 6 025 895	$1 0~ 943	~ 5.140.000	$3,277,078
42
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 4 -OTHER NOTES
4.A. RETIREMENT PLAN
- Plan Description. Kerr County, Texas provides retirement, disability, and death benefits for all of
its full-time employees through a nontraditional defined benefit pension plan in the statewide Texas
County and District Retirement System (TCDRS). The Board of Trustees of TCDRS is responsible
for the administration of the statewide agent multiple-employer public employee retirement system
-- consisting of 509 nontraditional defined benefit pension plans. TCDRS, in the aggregate, issues a
comprehensive annual financial report (CAFR) on a calendar basis. The CAFR is available upon
written request from the TCDRS Board of Trustees at P. O. Box 2034, Austin, TX 78768-2034.
The County has adopted plan provisions within the options available in the Texas State statutes
governing TCDRS (TCDRS Act). Members can retire at ages 60 and above with 8 or more years of
service, with 30 years of service regardless of age, or when the sum of their age and years of
- service equal 75 or more. Members are vested after 8 years of service but must leave their
accumulated contributions in the plan to receive any employer-financed benefit. Members who
withdraw their personal deposits in a lump sum are not entitled to any amounts contributed by the
- County.
Benefit amounts are determined by the sum of the employee's deposits to the plan, with interest,
and employer-financed monetary credits. The level of these monetary credits is adopted by the
- County within the actuarial constraints imposed by the TCDRS Act so that the resulting benefits can
be expected to be adequately financed by the employer's commitment to contribute. At retirement,
death, or disability, the benefit is calculated by converting the sum of the employee's accumulated
deposits and the employer-financed monetary credits to a monthly annuity using annuity purchase
- rates prescribed by the TCDRS Act.
Funding Policy. The County has elected the annually determined contribution rate (variable rate)
- plan provisions of the TCDRS Act. The plan is funded by monthly contributions from both employee
members and the employer based on the covered payroll of employee members. Under the
TCDRS Act, the contribution rate of the employer is actuarially determined annually. The County
contributed using the actuarially determined rate of 7.52% for the months of the accounting year in
- 2002, and 7.92% for the months of the accounting year in 2003.
The deposit rate payable by the employee members for calendar year 2002 is the rate of 7%, as
- adopted by the County. For calendar year 2003, the employee contribution rate was 7%. The
employee deposit rate and the employer contribution rate may be changed by the governing body of
the County within the options available in the TCDRS Act.
Annual Pension Cost. For the County's accounting year ending September 30, 2003, the annual
pension cost for the TCDRS plan for its employees was $612,565, and the actual contributions were
$612,565.
The annual required contributions were actuarially determined as a percent of the covered payroll of
the participating employees, and were in compliance with the GASB Statement No. 27 parameters
based on the actuarial valuations as of December 31, 2000 and December 31, 2001, the basis for
- determining the contribution rates for calendar years 2001 and 2002. The December 31, 2002
actuarial valuation is the most recent valuation.
43
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 4 -OTHER NOTES (Continued)
4.A. RETIREMENT PLAN (Continued)		
	Actuarial Valuation Information	
Actuarial Valuation Date	12/31/00	12/31/01	12/31/02
Actuarial Cost Method	Entry Age	Entry Age	Entry Age
Amortization Method	Level Percentage	Level Percentage	Level Percentage
	of Payroll, Open	of Payroll, Open	of Payroll, Open
Amortization Period	20	20	20
Asset Valuation Method	Long-Term	Long-Term	Long-Term
	Appreciation	Appreciation	Appreciation
	With Adjustment	With Adjustment	With Adjustment
Actuarial Assumptions:
Investment Retum 8%		8%	8°~	
Projected Salary				
Increases 5.9%		5.5%	5.5%	
Inflation 4.0%		3.5%	3.5%	
Cost-of-Living				
Adjustments 0.0%		0.0%	0.0%	
Trend Information			
For the Retirement Plan for	the Employees	of Kerr County, Texas	
Annual	Percentage		Net	
Accounting Pension Cost	of APC		Pension	
Year Endin4 (APC)	Contributed		Obligation	
9/30/03 $ 612,565	7.92%		$ 0	
9/30!02 554,728	7.62%		0	
9/30/01 520,321	7.71 %		0	
Schedule of Funding Progress for the	Retirement Pl	an	
For the Employees of Kerr County, Texas		
				UAAL as a
Actuarial Actuarial Actuarial	Unfunded		Annual	Percentage
Valuation Value of Accrued	AAL	Funded	Covered	of Covered
Date Assets Liability (AAL}	(UAAL)	Ratio	Payroll	Payroll
(a) (b)	(b - a)	(alb)	(c)	((b-a)/c)
				
12/31/00 $ 9,244,354 $10,825,578	$1,581,224	85.39%	$ 6,242,589	25.33%
12/31/01 10,419,991 12,274,777	1,854,786	84.88°k	6,950,910	26.68%
12/31/02 11,344,919 13,455,125	2,110,206	84.32%	7,493,226	28.16%
44
KERR COUNTY, TEXAS
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2003
NOTE 4 -OTHER NOTES (Continued)
~- 4.6. RISK MANAGMENT
Workers CompensationlEmployers Liability and Unemployment Compensation Fund
The County contracts in the form of interlocal agreements with the Texas Association of Counties
(TAC) to provide the aforementioned types of insurance coverage through an intergovernmental risk
pool. These multi-employer accounts provide for a combination of modified self-insurance and stop
- loss coverage. Contributions are set annually by Texas Association of Counties. Liability by the
County is generally limited to the amounts calculated by the County interlocal agreements.
Self Insured Group Medical Insurance
The County has elected to provide group medical benefits to their employees on a partially self-
funded basis. They have contracted with an outside plan supervisor to administer all claims
- payments. The County sets a specific amount of money aside each month and as claims are
submitted to the plan supervisor the County reimburses them when notified. Under this plan the
County is limited to $40,000 per employee per calendar year with an aggregate amount of
_ $1,402,246 per year. After the deductible and aggregate amount, the balance is paid by a third
party carrier.
- 4.C. COMMITMENTS AND CONTINGENCIES
Operating Leases
_ The reporting entity has entered into a number of operating leases, which contain cancellation
provisions and are subject to annual appropriations. For the year ended September 30, 2003, rent
expenditures approximated $132,979 for all types of operating leases. These expenditures were
made primarily from the General Fund.
Grant Program Involvement
_ In the normal course of operations, the County participates in various federal or state grant
programs. The grant programs are often subject to additional audits by agents of the granting or
funding agency, the purpose of that is to ensure compliance with the specific conditions of the grant.
_ Any liability for reimbursement that may arise as a result of these audits cannot be reasonably
determined at this time, although it is believed the amount, if any, would not be material.
Insurance Receivable
This receivable represents the unreimbursed amount from a health insurance claim paid by the
County on behalf of a County employee.
45
This page intentionally left blank
46
REQUIRED SUPPLEMENTARY INFORMATION
47
KERR COUNTY, TEXAS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
BALANCES -BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2003
REVENUES
Ad Valorem Taxes (Including
Penalty and Interest)
Other Taxes, Licenses/Permits
Intergovernmental
Fines and Forteitures
Fees of Office
Interest
Miscellaneous
Total Revenues
EXPENDITURES
Current
General Government
Administration of Justice
Health and Welfare Services
Tax Administration
Debt Service
Capital Outlay
Total Expenditures
Budgeted Amounts Actual
Original Final Amounts
$ 5,775,924
2,025,400
239,600
251,065
1,419,700
100,500
391,300
10,203,489
$ 5,775,924
2,025,400
239,600
262,182
1,419,700
101,520
431,014
10,255,340
$ 5,880,558
2,124,099
498,049
257,045
1,549,157
70,177
513,291
10,892,376
1,981,919
7,107, 937
836,940
482,919
107, 645
88,573
10,605,933
1,895,567
7,299,207
857,734
494,721
107,645
95,105
10,749,979
1, 816,404
6,977,762
801,057
471,743
166, 858
213,054
10,446,878
79,163
321,445
56,677
22,978
(59,213)
(117,949)
303,101
Excess (Deficiency) of Revenues
Over Expenditures
OTHER FINANCING SOURCES (USES)
Capital Lease Financing
Operating Transfers In
Operating Transfers (Out)
Total Other Financing Sources (Uses)
Excess (Deficiency) of Revenues Over
Expenditures and Other Financing
Sources (Uses)
Fund Balances at Beginning of Year
Fund Balances at End of Year
(402,444) (494,639) 445,498 940,137
3,800
(4,498)
(698)
(402,444) (495,337)
188,179
7,356
(698)
194,837
640, 335
3,649,563 3,649,563 3,649,563
Variance with
Final Budget
Positive
(Negative)
$ 104,634
98,699
258,449
(5,137)
129,457
(31,343)
82,277
637,036
(188,179)
(3,556)
(3,800)
(195, 535)
1,135, 672
$ 3,247,119 $ 3,154,226 $ 4,289,898 $ 1,135,672
48
KERR COUNTY, TEXAS
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND
._ BALANCES -BUDGET AND ACTUAL
ROAD AND BRIDGE FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2003
				Variance with
--				Final Budget
	Budgeted Amounts	Actual	Positive
	Original	Final	Amounts	(Negative)
				
REVENUES				
- Ad Valorem Taxes (Including				
Penalty and Interest)	$ 531,804	$ 531,804	$ 543,180	$ 11,376
Automobile Registration	915,000	915,000	925,351	10,351
Intergovernmental	37,000	37,000	32,022	(4,978)
_
Fines and Forfeitures	435,000	442,247	679,699	237,452
Interest	12,000	12,000	6,361	(5,639)
Miscellaneous	-	-	3,104	3,104
Total Revenues	1,930,804	1,938,051	2,189,717	251,666
				
EXPENDITURES				
Current				
_
Roads/Bridges Maintenance	1,843,522	1,848,719	2,071,252	(222,533)
Debt Service	63,470	63,470	49,659	13,811
Capital Outlay	150,300	152,350	151,053	1,297
				
Total Expenditures	2,057,292	2,064,539	2,271,964	(207,425)
				
- Excess (Deficiency) of Revenues				
Over Expenditures	(126,488)	(126,488)	(82,247)	44,241
- Fund Balances at Beginning of Year	596,492	596,492	596,492	-
				
Fund Balances at End of Year	$ 470,004	$ 470,004	$ 514,245	$ 44,241
				
49
This page intentionally left blank
50
COMBINING AND INDIVIDUAL FUND STATEMENTS - NONMAJOR FUNDS
51
KERR COUNTY, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2003
ASSETS
Cash
Receivables
Delinquent Taxes, Net of
Allowance for
Uncollectibles
Due from Other Offices
Due from State/Other
Total Assets
LIABILITIES
Accounts Payable/Due to
Other Offices
Accrued Vacation, Compensatory
Time and Liabilities
Deferred Tax Revenue
Total Liabilities
FUND BALANCES
Fund Balances
Reserved for Debt Service
Unreserved, reported in:
Capital Projects Fund
Special Revenue Funds
Total Fund Balances
Total Liabilities and
Fund Balances
Fire	Law	Public	Road
Protection	Library	Library	District
$ 45,242	$ 93,200	$ 65,587	$ 161,480
9,665 17,220
667 22 1,205
$ 55,574 $ 93,222 $ 84,012 $ 161,480
$ 6,940 $ 5,195 $ - $
6,678 11,898
13,6y8 5,195 11,898
41,956	88,027	72,114	161,480
41,956	88,027	72,114	161,480
			
$ 55,574	$ 93,222	$ 84,012	$ 161,480
52
				Records			
			JP	Management			Colonia
	Flood	Traffic	Technology	and	Courthouse	Construction
-	Control	Safety	Fund	Preservation	Security		Grant
$	106,358	$ -	$ 1,049	$ 42,613	$ 20,307	$	-
-	95			20	5		45,081
$	106,453	$ -	$ 1,049	$ 42,633	$ 20,312	$	45,081
							
$	-	$ -	$ -	$ 5,000	$ -	$	45,081
-					887		
-	-	-	-	5,000	887		45,081
							
	106,453	-	1,049	37,633	19,425		
							
-	106,453	-	1,049	37,633	19,425		-
							
- $	106,453	$ -	$ 1,049	$ 42,633	$ 20,312	$	45,081
							
				53			
KERR COUNTY, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2003
ASSETS
Cash
Receivables
Delinquent Taxes, Net of
Allowance for
Uncollectibles
Due from Other Offices
Due from State/Other
Total Assets
LIABILITIES
Accounts Payable/Due to
Other Offices
Accrued Vacation, Compensatory
Time and Liabilities
Deferred Tax Revenue
Total Liabilities
FUND BALANCES
Fund Balances
Reserved for Debt Service
Unreserved, reported in:
Capital Projects Fund
Special Revenue Funds
Total Fund Balances
Total Liabilities and
Fund Balances
County Community Alternative Indigent
Park Development Dispute Health
Improvements Grant Resolution Care
$ 7,968 $ - $ 35,776 $ 214,321
19,937
1,473
$ 7,968 $ - $ 35,776 $ 235,731
$ 340 $ - $ - $ 723
13,775
340 - - 14,498
7,628
7,628
$ 7,968 $
35,776 221,233
_ 35,776 221,233
- $ 35,776 $ 235,731
54
Schreiner Kerr	Sheriff Law	216th	216th
Road County	Enforcement	District	District Permanent
_ Fund Child Care	Fund	Attorney	Probation Improvement
$ 80,894 $ -	$ 2,384	$ 21,266	$ 132,973 $ 39,580
_ 52 2,891 107
$ 80,946 $ - $ 2,384 $ 24,157 $ 133,080 $ 39,580
$ - $
80, 946
80,946
$ 80,946 $
- $ - $ 2,455 $ - $ 1,941
- - 2,455 - 1,941
- 2,384 21,702 133,080
- 2,384 21,702 133,080 37,639
- $ 2,384 $ 24,157 $ 133,080 $ 39,580
55
KERR COUNTY, TEXAS
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2003
ASSETS
Cash
Receivables
Delinquent Taxes, Net of
Allowance for
Uncollectibles
Due from Other Offices
Due from State/Other
Total Assets
2001
General
Contractual
Obligations
$ 70,706
7,050	18,629	22,154	94,655
487	1,237	1,441	54,783
$ 78,243	$ 87,661	$ 77,072	$ 1,412,414
1998
Tax
Anticipation
$ 67,795 $ 53,477
1994
Limited
Tax General
Obligation
Total
Nonmajor
Funds
1,262,976
LIABILITIES
Accounts Payable/Due to
Other Offices
Accrued Vacation, Compensatory
Time and Liabilities
Deferred Tax Revenue
Total Liabilities
FUND BALANCES
Fund Balances
Reserved for Debt Service
Unreserved, reported in:
Capital Projects Fund
Special Revenue Funds
Total Fund Balances
Total Liabilities and
Fund Balances
$ - $ - $ - $ 67,675
887
4,871 12,871 15,307 65,400
4, 871 12, 871 15 , 307 133, 962
73,372 74,790 61,765 209,927
37,639
- - - 1,030,886
73,372 74,790 61,765 1,278,452
$ 78,243 $ 87,661 $ 77,072 $ 1,412,414
56
This page intentionally left blank
57
KERR COUNTY, TEXAS
SPECIAL REVENUE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
REVENUES
Ad Valorem Taxes
Intergovernmental
Fees of Ofhce
Interest
Miscellaneous
Total Revenues
EXPENDITURES
Current:
Roads/Bridges Maintenance
Road District/Park Construction
Administration of Justice
Health and Welfare Services
Libraries & Education
Miscellaneous Fees
Debt Service:
Principal
Interest
Capital Outlay
Total Expenditures
Excess (Deficiency) of Revenues
Over Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In
Operating Transfers(Out)
Total Other Financing
Sources (Uses)
Excess (Deficiency) of Revenues and
Other Sources Over Expenditures
and Other Uses
Fund Balances at Beginning of Year
Fund Balances at End of Year
Fire Law Public
Protection Library Library
$ 183,617 $ - $ 396,067
Road
District
$ 19,775
51,180
578 169 924 1,131
184,195 51,349 396,991 20,906
177,000
35,868 397,180
177,000 35,868 397,180
7,195 15,481 (189) 20,906
7,195	15,481	(189)	20,906
34,761	72,546	72,303	140,574
			
$ 41,956 $	88,027 $	72,114	$ 161,480
58
-			Records		
		JP	Management		Colonia
Flood	Traffic	Technology	and	Courthouse	Construction
_, Control	Safety	Fund	Preservation	Security	Grant
					
					
_					277,197
		108	22,695	39,138	
1,684			204	5	
1,684	-	108	22,899	39,143	277,197
					
30,878					
				39,481	
			45,360		
					278,597
30,878	-	-	45,360	39,481	278,597
					
(29,194)	-	108	(22,461)	(338)	(1,400)
					
				698	
	(7, 356)				
					
-	(7,356)	-	-	698	-
					
(29,194)	(7,356)	108	(22,461)	360	(1,400)
135,647	7,356	941	60,094	19,065	1,400
$ 106,453	$ -	$ 1,049	$ 37,633	$ 19,425	$ -
					
			59		
KERR COUNTY, TEXAS
SPECIAL REVENUE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
REVENUES
Ad Valorem Taxes
Intergovernmental
Fees of Office
Interest
Miscellaneous
Total Revenues
EXPENDITURES
Current:
Roads/Bridges Maintenance
Road District/Park Construction
Administration of Justice
Health and Welfare Services
Libraries & Education
Miscellaneous Fees
Debt Service:
Principal
Interest
Capital Outlay
Total Expenditures
Excess (Deficiency) of Revenues
Over Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In
Operating Transfers(Out)
Total Other Financing
Sources (Uses)
Excess (Deficiency) of Revenues and
Other Sources Over Expenditures
and Other Uses
Fund Balances at Beginning of Year
Fund Balances at End of Year
County
Park
Improvements
$ 4,557
4,000
Community Alternative Indigent
Development Dispute Health
Grant Resolution Care
$ - $ - $ 449,490
5,200
6,046
4,095
18,193
8,557 5,200 6,046 471,778
2,062
42,480
604,638
5,200
2,062 5,200 42,480 604,638
6,495 - (36,434) (132,860)
6,495 - (36,434) (132,860)
1,133 - 72,210 354,093
$ 7,628 $ - $ 35,776 $ 221,233
60
Schreiner	Kerr	Sheriff Law	216th	216th	
Road	County	Enforcement	District	District	Permanent
_ Fund	Child Care	Fund	Attorney	Probation	Improvement
$ -	$ -	$ -	$ -	$ -	$ 13,671
	55,782		181,980		
2,485			285	1,647	1,194
	273				
2,485	56,055	-	182,265	1,647	14,865
231,000					
		35	181,961	4,662	
	63,167				
'"					630,473
231,000	63,167	35	181,961	4,662	630,473
(228,515)	(7,112)	(35)	304	(3,015)	(615,608)
(228,515)	(7,112)	(35)	304	(3,015)	(615,608)
309,461	7,112	2,419	21,398	136,095	653,247
$ 80,946	$ -	$ 2,384	$ 21,702	$ 133,080	$ 37,639
		61			
KERR COUNTY, TEXAS
SPECIAL REVENUE FUNDS
COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
REVENUES
Ad Valorem Taxes
Intergovernmental
Fees of Office
Interest
Miscellaneous
Total Revenues
EXPENDITURES
Current:
Roads/Bridges Maintenance
Road District/Park Construction
Administration of Justice
Health and Welfare Services
Libraries 8~ Education
Miscellaneous Fees
Debt Service:
Principal
Interest
Capital Outlay
Total Expenditures
Excess (Deficiency) of Revenues
Over Expenditures
OTHER FINANCING SOURCES (USES)
Operating Transfers In
Operating Transfers(Out)
Total Other Financing
Sources (Uses)
Excess (Deficiency) of Revenues and
Other Sources Over Expenditures
and Other Uses
Fund Balances at Beginning of Year
Fund Balances at End of Year
2001	1998	1994 Limited	
General	Tax	Tax General	Total
Contractual	Anticipation	Obligation	Nonmajor
Obligations	Notes	Bonds	Funds
			
$ 144,569	$ 476,346	$ 525,511	$ 2,213,603
			524,159
			119,167
614	2,682	1,196	18,893
			18,466
			
145,183	479,028	526,707	2,894,288
261,878
2,062
268,619
844,805
478,408
470 768 750 1, 988
130,000 395,000 335,000 860,000
29,145 48,398 196,796 274,339
914,270
159,615 444,166 532,546 3,906,369
(14,432) 34,862 (5,839) (1,012,081)
698
(7,356)
_ (6,658)
(14,432)	34,862	(5,839)	(1,018,739)
87,804	39,928	67,604	2,297,191
			
$ 73,372 $	74,790 $	61,765	$ 1,278,452
62
FEDERAL AWARDS SECTION
63
PxESSLER, TsOIViP30N AND COMPANY
A PROFESSIONAL CORPORATION
Winlam F. Thompson, C.PA CERTIFIED PUBIJC ACCOUNTANTS
Emst H. Dniebert, Jr., C.PA ONE SCIiREINER CENTER P.O. Box 290590
Jerry N. Oliver, C.PA 819 WATER STREET, SUITE 320 Telephone (830) 257-7241
Douglas H. Sundberg, C.PA Fax (830) 898-4041
rmothy a. Porter. C.P.A KERRVILLE, TEXAS 78028 Email: inio@ptcorpa.oom
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER
FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
The Honorable County Judge and
Members of the Commissioners Court
Kerr County, Texas
We have audited the basic financial statements of Kerr County, Texas as of and for the year ended
September 30, 2003, and have issued our report thereon dated March 15, 2004. 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 Govemment Auditing Standards, issued by the Comptroller
General of the United States.
Com lance
As part of obtaining reasonable assurance about whether Kerr County's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grants, noncompliance with which could have a direct and material effed on the determination
of financial statement amounts. However, providing an opinion on compliance with those 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 that are required to be reported under Govemment Auditing
Standards.
Intemal Control Over Financial Reaortin
In planning and perforrning our audit, we considered Kerr County's internal control over financial reporting in
order to determine our auditing procedures for the purpose of expressing our opinion on the financial
statements and not to provide assurance on the Intemal control over financial reporting. Our consideration
of the internal control over financial reporting would not necessarily disclose all matters in the Intemal control
over financal reporting that might be material weaknesses. A material weakness is a condition in which the
design or operation of one or more of the Intemal conVol components does not reduce to a relatively low
level the risk that misstatements in amounts that would be material in relation to the financial statements
being audited may occur and not be deteded within a timely period by employees in the normal course of
performing their assigned functions. We noted no matters involving the internal control over financial
reporting and its operation that we consider to be material weaknesses.
This report is intended solely for the information and use of management, Kerr County Commissioners, 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.
(~~,Laa~! ~Ger''
PRESSLER, THOMPSON AND COMPANY
A PROFESSIONAL CORPORATION
March 15, 2004
64
PftESSLEA, THOMPSON AND COMPANY
	A PROFESSIONAL CORPORATION
William F Thompson, C.P.A.	CERTIFIED PUBLIC ACCOUNTANTS
Ernst H. Druebert, Jr., C.P.A.	ONE SCHREINER CENTER
Jerry N. Oliver, C.P.A.
Douglas H. Sundberg, C.P.A.	819 WATER STREET, SUITE 320
Timothy R. Porter, c.PA.	KER.RVILLE, TEXAS 78028
P.O. Box 290590
Telephone (830) 257.7241
Fax (830) 896-4041
Email: info@ptcocpa.com
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 .
The Honorable County Judge and
Members of the Commissioners Court
Kerr County, Texas
Compliance
- We have audited the compliance of Kerr County with the types of compliance requirements described in the
U. S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable
to each of its major federal programs for the year ended September 30, 2003. Kerr County's major federal
_ programs are identified in the summary of auditors' results section of the accompanying schedule of findings
and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants
applicable to each of its major federal programs is the responsibility of the Kerr County's management. Our
responsibility is to express an opinion on the Kerr County's compliance based on our audit.
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of
_ States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133
require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance
with the types of compliance requirements referred to above that could have a direct and material effect on a
major federal program occurred. An audit includes examining, on a test basis, evidence about Kerr County's
compliance with those requirements and performing such other procedures as we considered necessary in
the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does
not provide a legal determination on Kerr County's compliance with those requirements.
In our opinion, Kerr County complied, in all material respects, with the requirements referred to above that
are applicable to each of its major federal programs for the year ended September 30, 2003.
Internal Control Over Compliance
The management of Kerr County is responsible for establishing and maintaining effective internal control
over compliance with the requirements of laws, regulations, contracts and grants applicable to federal
programs. In planning and perForrning our audit, we considered Kerr County's internal control over
compliance with requirements that could have a direct and material effect on a major federal program in
order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to
test and report on the internal control over compliance in accordance with OMB Circular A-133.
65
Our consideration of the internal control over compliance would not necessarily disclose all matters in the
intemal control that might be material weaknesses. A material weakness is a condition in which the design
or operation of one or more of the intemal control components does not reduce to a relatively low level the
risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would
be material in relation to a major federal program being audited may occur and not be detected within a
timely period by employees in the norrnal course of pertorming their assigned functions. We noted no
matters involving the intemal control over compliance and its operation that we consider to be material
weaknesses.
This report is intended solely for the information and use of management, Kerr County Commissioners, 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.
W(f ~ mo`d' ~
PRESSLER, THOMPSON AND COMPANY
A PROFESSIONAL CORPORATION
March 15, 2004
66
KERR COUNTY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
1. Summary of Auditors' Results
a. The Independent Auditors' Report expressed an unqualified opinion on the financial
statements taken as a whole.
b. The Report on Compliance and on Internal Control Over Financial Reporting Based bn an
~" Audit of Financial Statements Performed in Accordance with Government Auditing
Standards disclosed no matters involving the internal control over financial reporting and its
operation that we consider to be material weaknesses.
c. The Report on Compliance and on Internal Control Over Financial Reporting Based on an
Audit of Financial Statements Performed in Accordance with Government Auditing
Standards disclosed no instances of noncompliance which are material to the financial
statements taken as a whole.
d. The Report on Compliance with Requirements Applicable to Each Major Program and
_ Intemal Control over Compliance in Accordance with OMB Circular A-133 disclosed no
matters involving the internal control over compliance and its operation that we consider to
be material weaknesses.
e. The Report on Compliance with Requirements Applicable to Each Major Program and
Internal Control over Compliance in Accordance with OMB Circular A-133 expressed an
unqualified opinion on compliance with the requirements applicable to each major federal
program.
f. The Report on Compliance with Requirements Applicable to Each Maior Program and
Internal Control over Compliance in Accordance with OMB Circular A-133 disclosed no audit
'- findings required to be reported under OMB Circular A-133.
g. Major federal programs were Texas Community Development Program (TCDP) and
_ Community Oriented Policing Services (COPS) in Schools.
h. The dollar threshold used to distinguish between Type A and Type B programs was
$300, 000.
i. Kerr County did not qualify as a low-risk auditee under OMB Circular A-133.
2. Findings Related to the Financial Statements Required to be Reported Under Government Auditing
Standards.
None
3. Findings and Questioned Costs for Federal Awards Required to be Reported Under OMB Circular
A-133.
None
67
KERR COUNTY
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
Federal GrantodPass-Through Grantor/Program Title
U.S. Department of Agriculture
Passed through Texas Department of Human Services:
National School Lunch Program
U.S. Department of Housing and Urban Development
Passed through State of Texas Office of Rural Community Affairs:
Texas Community Development Program:
Contract Number 721075
Contract Number 722411
Contract Number 721095
Total Texas Community Development Program
U.S. Department of Justice
Passed through Texas Criminal Justice Division:
Juvenile Accountability Incentive Block Grant
Juvenile Behavioral Transition Program
Juvenile Residential Substance Abuse Program
Total Passed through Texas Criminal Justice Division
Direct Programs:
COPS in Schools
Hill Country Sex Offender Management Discretionary Grant
Bulletproof Vest Partnership Program
Local Law Enforcement Block Grant
Total Direct Programs - U. S. Department of Justice
Department of Health and Human Services
Passed through South Texas Regulatory Advisory Council
Rural Access To Emergency Devices Grant
Total Expenditures of Federal Awards
Pass-Through
Federal Entity
CFDA Identifying
Number Number
10.555
14.228
14.228
14.228
TX133-2004
357
357
357
Federal
Expenditures
$ 74,224
238,848
5,200
13,000
257,048
16.523	3301301301-7000 10,393
16.540	3301301301-7000 34,470
16.593	3301301301-7000 35,292
	80,155
16.710	88,655
16.203	7,853
16.607	5,278
16.592	10,957
	112,743
93.259	1,850
	$ 526,020
See Accompanying Notes to Schedule of Expenditures of Federal Awards
68
KERR COUNTY
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
FOR THE YEAR ENDED SEPTEMBER 30, 2003
NOTE A -BASIS OF PRESENTATION
The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activities of Kerr
County, Texas and is presented on the accrual basis of accounting. The information in this schedule is
--~ presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local
Governments, and Non-Profrt Organizations. Therefore, some amounts presented in this schedule may
differ from amounts presented in, or used in the preparation of, the basic financial statements.
69