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COMMISSIONERS' COURT AGENDA REOUEST
D~/~o6 ~~a 1
PLEASE FURNISH ONE ORIGINAL AND NINE COPIES OF THIS
REOUEST AND DOCUMENTS TO BE REVIEWED BY THE COURT.
MADE BY: Jonathan Letz
MEETING DATE: August 14, 2006
OFFICE: Commissioner, Pct. 3
TIME PREFERRED:
SUBJECT: Consider, discuss and take appropriate acfion on the "Kerr County
Management's Discussion and Analysis" for the 2004-2005 audit.
EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON)
NAME OF PERSON ADDRESSING THE COURT; Commissioner, Pct. 3
ESTIMATED LENGTH OF PRESENTATION:
IF PERSONNEL MATTER -NAME OF EMPLOYEE:
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:
THIS REQUEST RECEIVED BY:
THIS REQUEST RECEIVED ON:
All Agenda Requests will be screened by the County Judge's Office to detennine 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.
Meeting scheduled for Mondays:
5:00 P.M. previous Tuesday.

KERB COUNTY
MANAGEMENT'S DISCUSSION AND ANALYSIS
All $ in Thousands
Within this section of the Kerr County (County) annual fmancial report, the Kerr County
Commissioner's Court provides a narrative discussion and analysis of the financial
activities of the County for the fiscal yeaz ending September 30, 2005. The financial
performance is discussed within the context of accompanying financial statements and
disclosures, which begin nn page 15.
Budget and Financial Highlights
• The County's net assets as indicated in the government-wide financial statements aze
$12,492 down from $13,1941ast year.
Total net assets are comprised of the following:
1. Capital assets, net of related debt, of $6,369 include property and equipment, net
of accumulated depreciation.
2. Net assets of $1,658 aze restricted by debt covenants and or grantee laws or
regulations.
3. Unrestricted net assets of $4,465 aze available to meet obligations of creditors and
citizens.
Total governmental long-term debt of the County decreased from $9,580 to $4,388.
In 2004 the debt associated with the Kerr County Juvenile Detention Facility, $4,975,
was listed as a proprietary fund and not included under total governmental long-term
debt. In 2005 this debt was included under total governmental long-term debt;
however, the amount was reduced to $2,000 by agreement with the bond holders.
• Governmental capital lease obligations increased by $141 to $723.
• Expenditures exceeded revenues for governmental activities by $425.
• The unreserved fund balance in the general fund as shown in the fund financial
statements is $3,048 or 25% of general fund expenditures down from 38% last yeaz.
This amount is within the guidelines recommended by the Commissioner's Court and
the State Comptroller's Office.
• On February 9, 2004 the Commissioner's Court authorized the County Attorney to
hire a litigation attorney on a 40% contingency fee basis to pursue claims or other
remedies against Employee Benefit Administrators and / or others azising out of
payment of $400 on a heath claim in 2002. This lawsuit was still pending on
September 30, 2005.
• In September 2004 the Kerr County Juvenile Boazd as directors of the Kerr
County Facilities Corporation and subsequently the Commissioner's Court both
voted to not appropriate funds to pay debt service for the business-type activities
(Kerr County Juvenile Detention Facility).
• In 2005 the Commissioner's Court reached an agreement with the holders of the debt
on the Ken County Juvenile Detention Facility and the original 2002 Lease Revenue
Bonds outstanding amount of $4,975 was replaced with a 2005 Certificate of
obligation in the amount of $2,000.
• All current long term will be retired by 2012.
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 19) provide information about
the activities of the County as a whole and present alonger-term view of the County's
finances. Fund financial statements start on page 20. For governmental 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 are included to provide
additional financial information.
Government-wide Financial Statements
Government-wide statements include all assets and liabilities using the accrual basis of
accounting, which is similar to the accounting methods used by most private-sector
companies. Accrual of the current yeaz's revenues and expenses aze taken into account
regazdless of when cash is received or paid. The statements are divided into two
activities, governmental activities which include basic functions of county government
and business-type activities which are 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 difference 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 yeaz's activities.
Over time, increases or decreases in the Count's net assets are one indicator of whether
its financial health 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
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statement relates to the Statement of Net Assets in that it shows how current operations
have changed net assets.
Fund Financial Statements
Funds are 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 aze presented sepazately. The fund
financial statements for major funds begin on page 20. Fund data for non-major funds is
included in a combining statement on page 52. The basic funds aze classified by type;
each type used by the County is described in the following pazagraphs.
Governmental funds -Most of the County's basic services aze reported in governmental
funds, which focus on how money flows into and out of those funds and the balances left
at yeaz-end that aze available for spending. These funds aze reported using the modified
accrual basis of accounting that measures cash and all other financial assets that can
readily be converted to cash. The govemmental 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 neaz 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 aze
included for the general fund and major special revenue fund. These schedules compaze
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 aze reported in
proprietary funds. Proprietary funds aze reported in the same way that all activities aze
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 Ken County Juvenile Detention Facility.
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.
Discussion and Analysis of the County Funds
Governmental Funds
The governmental funds statements on pages 20 through 22 include the general fund,
road and bridge fend, and all other governmental funds combined. These statements
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focus on short-term transactions and the impact they have on financial resowces and
futwe financial requirements.
Total expenditwes for all governmental funds were $21,540 for 2004-OS an increase of
$5,242 from the previous year. Total revenue for all governmental funds was $17,718 an
increase of $1,541 fmm the previous year. For 2004-OS ad valorem taxes accounted for
$9,595 of the revenue to support these services; $2,409 came from other taxes, primarily
sales taxes and the balance came from fees, grants and other revenues. Total
governmental fund balances decreased by $1,637 in 2004-05.
The general fund is the primary day-to-day operating fund that finances services such as
the courts, law enforcement and general county operations. General fund operations
resulted in an decrease in fund balance of $1,281 for 2004-05. The ending fund balance
of $3,048 is 25.1% 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 governmental fund because it
represents a material percentage of the total revenue and expenditwes of all governmental
funds. Total expenditures of $2,184 exceeded total revenues of $2,016. The result of
operations was a decrease in fund balance of $159 from $511 in 2003-0 4 to $353 this
year.
All other governmental funds are combined to form the non-major governmental fund
category; the funds included in this combination are itemized in the combining statements
on pages 52 through 54 of the report. Combined fund balances decreased by $961 to
$1,263.
In 2005 the operation of the Kerr County Juvenile Detention Facility was substantially
changed. The facility provides short-term detention services and long-term rehabilitation
services for juvenile offenders. The services are provided on a contractual basis with Ken
County and other counties within the state. This facility was owned by the Kerr County
Facility Corporation whose boazd of directors are the members of the Ken County
Juvenile Board. The Kerr County Juvenile Board and / or the Ken County Facility
Corporation were responsible for the operation and management of the Ken County
Juvenile Detention Facility in 2004. However, due to the decision by the Kerr County
Facilities Corporation to not appropriate funds for debt service in September 2004 and
subsequent negotiations between Kerr County and the holders of such debt, Kerr County
took over operation of the facility in 2005.
The agreement between Kerr County and the bond holders of the Kerr County Juvenile
Detention Facility reduced the outstanding debt from $4,975 to $2,000.
In 2004-OS operations of the Ken County Juvenile Detention Facility resulted in a
operating loss of $1,122 and required a transfer in from the general fund in the amount of
$986.
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