ORDER NO. 31328 AUDIT OF BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION FOR YEAR END SEPTEMBER 30, 2008 Came to be heard this the 8th day of June, 2009, with a motion made by Commissioner Williams, seconded by Commissioner Baldwin, the Court unanimously approved by a vote of 4-0-0 to: Approve the Audit of the Basic Financial Statements and Supplementary Information for the year ended September 30, 2008, as presented by the outside Auditor. COMMISSIONERS' COURT AGENDA REQUEST MADE BY: Paula J. Hargis OFFICE: Auditor's Office MEETING DATE: June 8, 2009 TIME PREFERRED: 10:00 AM SUBJECT: Consider, lliscuss and 'fake Appropriate Action to approve the Audit of the Basic Financial Statements and Supplementary Information for the year ended September 30, 2008. EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON) NAME OF PERSON ADDRESSING THE COURT: Keith Neffendorf of Neffendorf, Knopp, Horry & Doss, P. C. ESTIMATED LENGTH OF PRESENTATION: I O Minutes 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: Meeting scheduled for Mondays: 5:00 PM previous Tuesday THIS REQUEST RECEIVED BY: THIS RQUEST RECEIVED ON: @ .M. 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 your request being addressed at the earliest opportunity. See Agenda Request Rules Adopted by Commissioners' Court. BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION COUNTY OF KERB, TEXAS Kerrville, Texas For the Year Ended September 30, 2008 ~r KERR COUNTY, TEXAS BASIC FINANCIAL STATEMEI~iTS AND SUPPLEMENTARY INFORiVIATION SEPTEMBER 30, 2008 yr ~. ICERR COUNTY, TEXAS '~''' ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2008 ~"" TABLE OF CONTENTS Exhibit Page Independent Auditors' Report ................................................................................:.............. 1 Management's Discussion and Analysis ............................................................................... 2 Basic Financial Statements Government Wide Statements: A-1 Statement of Net Assets .. . 9 . .................................................................................................... B-1 Statement of Activities .......................................................................................................... 10 Governmental Fund Financial Statements: C-1 Balance Sheet ...................~....:..............................,......... .......................... I1 ................,........ C-2 Reconciliation for C-1 ........................................................................................................... 13 C-3 Statement of Revenues, Expenditures and Changes in Fund Balance ................................ 1~4 C-4 Reconciliation for C-3 ............. 16 ....................................................................................~.:.....:; Fiduciary Funds: '~` E-1 Statement of 1~~ fiduciary Net Assets ...................................................... 17 ................................. Notes to fire Financial Statements ..................................:.................. 18 ................................... arr Required Su~pic;:nent~ry Information C-5 Budgetary Comparison Schedule -General Fund.....,,.~ ....................................................... 34 "~' C-6 Budgetary Comparison Schedule -Road and Bridge Fund ..................................... ...,.,,,.... 35 NEFFENDOIZF, KNOPP, DOSS ~ COMPANY, P. C. Certified Public Accountants P.O. BOX 874.736 S. WASHINGTON ST. FREDERICKSBURG, TEXAS 78624-0874 (830)997-3348 MEMBER FAX: (830) 997-3333 MEMBER AMERICAN INSTITUTE OF Email: nkhd~austin.rr.com TEXAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT Honorable Judge and County Commissioners Kerr County, Texas Kerrville, TX 78028 We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Kerr County, Texas, as of and for the year ended September 30, 2008, 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, Texas's management. Our responsibility is to express opinions on these financial statements based on our audit. ar We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fmancial 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 significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of "' Kerr County, Texas, as of September 30, 2008, and the respective changes in financial position for the year then ended in conformity with accounting principles generally accepted in the United States of America. The management's discussion and analysis (pages 2 through 8) and budgetary comparison information (pages 34 and 35) 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 required 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 April 24, 2009 on our consideration of the County's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts 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. (l~~uotanb, K,rwp~p, ~OaA.o .~ CumP~~ P. ~. ~' NEFFENDORF, KNOPP, DOSS & COMPANY, P.C. Fredericksburg, Texas April 24, 2009 0 r--~ ~r KERB COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (UNAUDITED) ~r FOR THE YEAR ENDED SEPTEMBER 30, 2008 MANAGEMENT'S DISCUSSION AND ANALYSIS ~, As management of Kerr County, Texas, we offer readers of the County's financial statements this narrative overview and analysis of the financial statements of the County for the year ended September 30, 2008. Please read it in conjunction with the independent auditors' report on page 1, and County's Basic Financial ,~„ Statements which begin on page 9. FINANCIAL HIGHLIGHTS - The assets of the County exceeded its liabilities at the close of the most recent fiscal year by $47,704,943 (net assets). Of this amount, $4,531,929 (unrestricted net assets) may be used to meet the County's ongoing obligations to citizen's and creditors. - The County's net assets decreased by $282,353; $176,357 as a result of this year's operations and $105,996 as a result of prior period adjustments. - At September 30, 2008, the County's governmental funds reported combined ending fund balances of $5,377,509, an increase of $819,353 in comparison with the prior year. - At September 30, 2008, the unreserved fund balance of the general fund was $2,574,590, or 17.9 percent of total general fund expenditures. - The County issued Tax Anticipation Notes -Series 2008 ($1,780,000) in January 2008 to cover long term capital items such as renovations to the Kerr County Courthouse and the Hill Country Youth Exhibit Center and vehicles and equipment for the Road and Bridge Department, Environmental Health Department and Animal Control Department. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The government-wide financial statements ,,,, include the Statement of Net Assets and the Statement of Activities (on pages 9 and 10). These provide information about the activities of the County as a whole and present alonger-term view of the County's property and debt obligations and other financial matters. They reflect the flow of total economic resources in a manner similar to the financial reports of a business enterprise. Fund financial statements (on pages 11 & 14) report the County's operations in more detail than the government-wide statements by providing information about the County's most significant funds. For ~r governmental activities, these statements tell how services were financed in the short term as well as what resources remain for future spending. They reflect the flow of current financial resources, and supply the basis for tax levies and the appropriations budget. The notes to the financial statements (starting on page 18) provide narrative explanations or additional data needed for full disclosure in the government-wide statements or the fund financial statements. The Budgetary Comparison Schedules (operating fund) are presented as required supplementary information on pages 34 and 35. Reporting the County as a Whole The Statement of Net Assets and the Statement of Activities The analysis of the County's overall financial condition and operations begins on page 9. Its primary purpose is to show whether the County is better off or worse off as a result of the year's activities. The '~ Statement of Net Assets includes all the County's assets and liabilities at the end of the year while the Statement of Activities includes all the revenues and expenses generated by the County's operations during the year. These apply the accrual basis of accounting which is the basis used by private sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash is received or paid. All the County's assets are reported whether they serve the current year or future years. Liabilities are ~" considered regardless of whether they must be paid in the current or future years. These two statements report the County's net assets and changes in them. The County's net assets (the difference between assets and liabilities) provide one measure of the County's financial health, or financial position. Over time, increases or decreases in the County's net assets are one indicator of whether its financial health is improving or deteriorating. To fully assess the overall health of the County, however, you should consider other factors as well, such as changes in the County's customers or its property tax base and the condition of the County's facilities. ~,,, In the Statement of Net Assets and the Statement of Activities, the County has one kind of activity: - Governmental activity -Most of the County's basic services are reported here, including the public ;,,,,, safety, streets and highways, justice system, juvenile services, health and human services, culture and recreation, conservation and development and administration. Property taxes, grants, fees of office, automobile registration, sales tax and other taxes finance most of these activities. Reporting the County's Most Significant Funds Fund Financial Statements The fund financial statements on pages 11 & 14 provide detailed information about the most significant funds -not the County as a whole. ar- - Governmental funds -All of the County's basic services are reported in governmental funds. These use modified accrual accounting (a method that measures the receipt and disbursement of cash and all other ~"` financial assets that can be readily converted to cash) and report balances that are available for future spending. The governmental fund statements provide a detailed short-term view of the County's general operations and the basic services it provides. We describe the differences between governmental activities (reported in the Statement of Net Assets and the Statement of Activities) and governmental funds in Note 2 to the financial statements. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets of the County's governmental activities decreased from $47,987,293 to $47,704,943. Unrestricted net assets -the part of net assets that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements -was $4,531,929 at September 30, 2008. This decrease in governmental net assets was the result of five factors. First, the County's expenditures exceeded the revenues by $176,357. Second, the County acquired capital assets in the amount of $1,295,578. Third, the County issued long-term debt in the amount of $1,962,441 and paid principal on long-term debt of $1,431,833. Fourth, the County recorded depreciation in the amounts of $1,738,112. Fifth, the County recorded a prior period adjustment of ($105,996) to Machinery & Equipment assets. Table I KERR COUNTY, TEXAS NET ASSETS in thousands Governmental Activities 2008 2007 ~"" Current and Other Assets Receivables Other Noncurrent Assets ~" Capital Assets Total Assets ~, Long-Term Liabilities Accounts Payable Other Liabilities and Deferred Revenue ~,,, Long-term Debt Total Liabilities Net Assets: ~" Invested in Capital Assets Net of Related Debt Restricted ~"` Unrestricted Total Net Assets $ 5,826 $ 5,916 2,674 2,263 86 30 46,107 46,680 $ 54,693 $ 54,889 $ 872 $ 1,234 105 516 6,011 5,152 $ 6,988 $ 6,902 $ 40,370 $ 41,473 2,803 2,214 4 w Table II KERB COUNTY, TEXAS CHANGES IN NET ASSETS ~, in thousands Governmental Activities 2008 2007 Revenues: Program Revenue Charges for Services $ 4,086 $ 3,244 Operating Grants and Contributions 162 156 Capital Grants and Contributions - 445 General Revenues Property Taxes 12,778 11,687 Other Taxes 2,981 2,902 Grants and Contributions 644 - Investment Earnings 238 371 Other General Revenues 1,287 1,627 Total Revenue $ 22,176 $ 20,432 Expenses: General Government $ 4,026 $ 3,287 Administration of Justice 4,103 3,930 Public Safety 4,476 4,069 Corrections 3,531 3,048 Health and Human Services 1,647 1,425 Community & Economic Development 1,107 1,022 Infrastructure & Environmental Services 3,198 3,342 Long-term Debt Expenditures 264 248 Total Expenses $ 22,352 $ . 20,371 Increase (Decrease) in Net Assets $ (176) $ 61 Net Assets -Beginning 47,987 12,740 Prior Period Adjustment (106) 35,186 Net Assets -Ending $ 47,705 $ 47,987 ~. 5 r e The cost of all governmental activities this year was $22,351,999. However, the amount that our taxpayers ultimately financed for these activities through County taxes was only $12,778,127 because the other costs .rf were paid by other taxes ($2,980,794), operating grants and contributions ($806,188), user charges ($4,085,822) investment earnings ($237,507) and other miscellaneous ($1,287,204). THE COUNTY'S FUNDS As the County completed the year, its governmental funds (as presented in the balance sheet on page 11) ~„ reported a combined fund balance of $5,377,509, which is less than last year's total of $4,558,156. Included in this year's total change in fund balance is an increase of $230,616 in the County's General Fund. The primary reason for the General Fund's increase is because expenditures were less than budgeted amounts. The Commissioner's Court adopted the General Fund and Road and Bridge Fund budgets. In the General Fund, actual revenues and expenditures were less than the budgeted amounts, resulting in a net positive variance of $724,068. In the Road and Bridge Fund, actual revenues and expenditures were more than the ~ budgeted amounts, resulting in a net positive variance of $96,053. CAPITAL ASSET AND DEBT ADMINISTRATION At September 30, 2008, the County had the following amounts invested in capital assets, net of depreciation: CAPITAL ASSETS in thousands 2008 2007 Land $ 497 $ 497 Buildings & Improvements 15,131 15,081 Machinery & Equipment 9,373 8,313 Infrastructure 38,680 38,680 Total Capital Assets $ 63,681 $ 62,571 Accumulated Depreciation 17,574 15,891 Capital Assets, Net $ 46, ] 07 $ 46,680 6 This year's major additions included: •~ Improvements - Youth Exhibit Center $ 41,093 Courthouse -Sidewalk 8,850 ""~ Software 21,925 Teleconferencing System 39,800 Security Equipment 196,529 ~' (3) 2008 Chevrolet Tahoes 124,242 (2) 2008 Ford Crown Victorias 56,678 (5) 2008 Ford F 150 Crew Cabs 92,756 (2) 2008 Ford F350 Crew Cabs 55,706 (2) John Deere Tractors 70,103 Gradall XL3100 206,530 Vermeer Brush Chipper 40,642 Case Motor Grader 133,360 ,,, 2002 GMC C-7500 Cab with Altec Model LRV56 71,545 2007 Chevrolet Dump Truck 64,929 2008 Dodge Ram 3500 28,509 Other Equipment & Furniture 42,381 TOTALS $ 1,295,578 More detailed information about the County's capital assets is presented in Note 3.D. to the financial statements. DEBT At September 30, 2008, the County had the following outstanding debt: OUTSTANDING DEBT rr in thousands 2008 2007 Certificates of Obligation $ 4,515 $ 3,770 Notes Payable 642 786 '~' Capital Leases 525 596 Total Outstanding Debt $ 5,682 $ 5,152 air For governmental activities, the County had $5,682,574 in certificates of obligation and other long-term debt outstanding, an increase of 10.3 percent. The County paid $1,431,833 in principal on the outstanding long-term debt, and issued $1,780,000 in Tax Note Certificates of Obligation and $182,441 in capital lease ~r obligations. ~r More detailed information about the County's long-term liabilities is presented in Note 3.F. to the financial statements. 7 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The County's elected and appointed officials considered many factors when setting the fiscal-year 2009 budget and tax rates. The major factors are the economy, population growth, and assessed properly ~„ valuation. These indicators were taken into account when adopting the General Fund budget for 2009. Amounts available for appropriation in the General Fund budget are $17,171,503 and expenditures are estimated to be $16,979,339. If these estimates are realized, the County's budgetary General fund balance is expected to increase $192,164 by the close of 2009. ~r The total budget for capital expenditures is $163,651 for fiscal-year 2009. The expenditures include equipment for the IT Department, air conditioners for the County Jail, and renovations and vehicles for the Hill Country Youth Exhibit Center. CONTACTING THE COUNTY'S FINANCIAL MANAGEMENT ~"' This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the County's finances and to show the County's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the ~"" County Auditor or Commissioners' Court at the Kerr County offices in Kerrville, Texas. 8 r-~ ar BASIC FINANCIAL STATEMENTS ,,,, ~ KERR COUNTY STATEMENT OF NET ASSETS SEPTEMBER 30, 2008 rimary Government Governmental Activities ASSETS '~"` Cash and Cash Equivalents $ 5,825,359 Receivables (net of allowance for uncollectibles) 823,497 Court Fines and Fees Receivable 1,825,590 Due from Others 25,000 Prepaid Items 46,824 Capitalized Debt Issuance Costs 39,363 Capital Assets: ~"" Land 497,457 Infrastructure, net 34,282,464 Buildings, net 9,253,856 a~ Machinery and Equipment, net 2,073,530 Total Assets 54,692,94G ;,,r„ LIABILI'T'IES Accounts Payable 872,605 Accrued Interest Payable 104,194 Deferred Revenues 537 "" Noncurrent Liabilities Due Within One Year 1,310,093 Due in More Than One Year 4,'700,568 ~"' Total Liabilities 6,987,997 NET ASSETS Invested in Capital Assets, Net of Related Debt 40,370,095 ~r Restricted for: Restricted for Special Revenue 1,651,753 Restricted for Debt Service 96,320 Restricted for Capital Projects 1,05 x,846 Unrestricted Net Assets 4,531,929 Total Net Assets $ 47,704,943 The notes to the Financial Statements are an integral part of this statement. 9 EXHIBIT A-1 KERR COUNTY r STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER 30, 2008 Program Revenues Operating Charges for Grants and Expenses Services Contributions EXHIBIT B-1 Net (Expense) Revenue and Changes in Net Assets Primary Gov. Governmental Activities ~ Primary Government: GOVERNMENTAL ACTIVITIES: General Government Administration of Justice ~` Public Safety Corrections Health and Human Services Community and Economic Development Infrastructure and Environmental Debt Interest Fiscal Agent's Fees ~"' Issuance Costs TOTAL PRIMARY GOVERTVMENT: $ 4,025,604 $ 1,170,485 $ 235 $ (2,854,884) 4,103,271 2,148,832 86,700 (1,867,739) 4,475,732 222,028 45,852 (4,207,852) 3,530,730 414,000 - (3,116,730) 1,646,725 28,783 252 (1,617,690) 1,107,461 - _ (1,107,461) 3,198,049 101,694 28,805 (3,067,550) 241,565 - - (241,565) 3,181 - _ (3,181) 19,681 - - (19,681) $ 22,351,999 $ 4,085,822 $ 161,844 (18,104,333) General Revenues: Taxes: Property Taxes, Levied for General Purposes 11,641,031 Property Taxes, Levied for Debt Service 1,137,096 Other Taxes 2,980,794 Grants and Contributions N ot Restricted 644,344 Miscellaneous Revenue 1,287,.7.04 Investment Earnings 237,507 "Total General Revenues 17,927,97(, Change in Net Assets (176,357) Net Assets--Beginning 47,987,296 Prior Period Adjustment { 105,996) Net Assets--Ending $ 47,704,943 The notes to the Financial Statements are an integral part of this statement. 10 ~. KERR COUNTY BALANCE SHEET GOVERNMENTAL FUNDS SEPTEMBER 30, 2008 Road and Capital General Bridge Projects Fund Fund Fund ASSETS Cash and Cash Equivalents Taxes Receivable Allowance for Uncollectible Taxes (credit) Intergovernmental Receivables Due from Others Prepaid Items Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable Deferred Revenues Total Liabilities Fund Balances: Reserved Fox: Prepaid Items Unreserved and Undesignated: Reported in the ~Tenerai Fund Reported in the Special Revenue Fund Reported in the Debt Service Fund Reported in the Capital Projects Fund Total Fund Balances Total Liabilities and Fund Balances $ 2,945,721 $ 533,977 $ 1,025,344 316,614 43,776 (15,831) (2,189) - 333,862 - - ~ s nnn - _ $ 775,880 $ 36,414 $ 301,320 41,587 - t m7 inn ~Q nni _ 46,424 - - 2,528,166 - - _ 497,563 - - 1,025,344- 2,574,590 497,563 1,025,344 $ 3,651,790 $ 575,564 $ 1,025,344 The notes to the Financial Statements are an integral part of this statement. 11 sir Nonmajor Total Governmental Governmental Funds Funds $ 1,320,317 $ 5,825,359 134,378 494,768 ~r (6,719) (24,739) 19,606 353,468 - 25,000 400 46,824 ~r ------ $ 1,467,982 $ 6,720,680 $ 60,31,1 $ 872,605 127,659 470,566 187,970 1,343,171 400 46,824 • 2,528,166 ~r 1,153,790 1,651,353 96,320 96,320 29,502 1,054,846 ~ 1.,280,012 5,377,509 $ 1,467,982 $ 6,720,680 12 EXHIBIT C-1 ~"' KERR COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2008 Capital assets used in governmental activities are not financial resources and therefore are not reported in governmental funds. At the beginning of the year, the cost of these assets was $62,571,298 and the accumulated depreciation was $15,891,385. 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 net effect of including the beginning balances for capital assets (net of depreciation) and long-term debt in the governmental activities is to increase (decrease) net assets. Total Fund Balances -Governmental Funds EXHIBIT C-2 5,377,509 41,397,078 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 reductions in long-term debt in the government-wide financial statements. The net effect of including the 2008 capital outlays and debt principal payments is to increase (decrease) net assets. The 2008 depreciation expense increases accumulated depreciation. The net effect of the cun•ent year's depreciation is to decrease net assets. ~Jarious other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include "~' recognizing deferred revenue as revenue, eliminating interfund transactions, reclassifying the proceeds of bond sales as an increase in bands payable, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to increase (decrease) net assets. Net Assets oi' Governmental Activities The notes to the Financial Statements are an integral part of this statement. 13 794,249 (1,738,112) 1,874,219 $ 47;704,943 ~. KERB COUNTY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS FOR THE YEAR ENDED SEPTEMBER 30, 2008 Road and General Bridge Fund Fund Capital Projects Fund REVENUES: Taxes: Property Taxes Other Taxes, Licenses, Permits Automobile Registration Intergovernmental Revenue and Grants Fees of Office Fines and Forfeitures Investment Earnings Other Revenue Total Revenues EXPENDITURES: Current: General Government Administration of Justice Public Safety Corrections Health and Human Services Community and Economic Development Infrastructure and Environmental Debt Service: Debt Principal Debt Interest Fiscal Agent's Fees Capital Outlay: Genera] Government Administration of Justice Public Safety Cpmmunity and Economic Development Infrastructure and Environmental Corrections Health and Human Services Tota] Expenditures Excess (Deficiencv) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES): Capital-related Debt Issued (Regular Bonds) Proceeds from Capital Leases Debt Issue Costs Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balance -October 1 (Beginning) Fund Balance -September 30 (Ending) $ 8,241,673 $ 1,004,904 $ - 2,980,794 - - 1,041,286 - 336,034 28,805 - 2,009,973 359,964 - 397,420 3,515 - 166,132 13,660 17,862 335,236 6,329 - 14,467,262 ,2,458,463 17,862 3,274,644 - _ 3,621,507 - 3,472,944 - 2,399,079 - 556,566 - 512,174 - 240,483 2,200,628 - 87,237 165,552 - 4,480 23,787 - 7,875 - 272,921 8,579 - 182,441 - .. 7,200 - 37,399 - 127,218 387,863 38,628 - 5,250 - 45,055 14,419,087 2,517,185 743,238 48,175 (58,722) (725,376) - - 1,780,000 182,441 - - - (29,280) 182,441 - 1,750,720 230,616 (58,722) ],025,344 2,343,974 556,285 - $ 2,574,590 $ 497,563 $ 1,025,344 The notes to the Financial Statements are an integral part of this statement. 14 Nonmajor Total Governmental Governmental sal Funds Funds $ 3,505,463 $ 12,752,040 - 2,980,794 - 1,041,286 908,638 1,273,477 416,812 2,786,749 - 400,935 39,853 237,507 15,812 .357,377 4,886,578 21,830,165 178,751 3,453,395 457,610 4,079,117 437,275 3,910,219 875,826 3,'174,905 1,067,?.96 1,623,862 518,547 1,030,721 18,846 2,459,957 1,179,043 1,431,832 153,742 192,009 3,181 3,181 15,089 295,885 - 8,579 142,431 324,872 - 44,599 206,826 721,907 38,628 - 50,305 5,264,463 22,943,973 (377,885) (1,] 13,808) - 1,780,000 - 182,441 - (29,280) (377,885} 819,353 1,657,897 4,558,156 $ 1,280,012 $ 5,377,509 15 EXHIBIT C-3 EXHIBIT C-4 ~" KERR COUNTY RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES ,,,,r FOR THE YEAR ENDED SEPTEMBER 30, 2008 Total Net Change in Fund Balances -Governmental Funds $ 819,353 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 reductions in long-term debt in the government-wide financial statements. The net effect of removing the 2008 capital outlays and debt principal payments is to increase (decrease) net assets. 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. Various other reclassifications and eliminations are necessary to convert from the modified accrual basis of accounting to accrual basis of accounting. These include recognizing deferred revenue as revenue, adjusting current year revenue to show the revenue earned from the current year's tax levy, eliminating interfund transactions, reclassifying the proceeds of bond sales, and recognizing the liabilities associated with maturing long-term debt and interest. The net effect of these reclassifications and recognitions is to increase (decrease) net assets. Change in Net Assets of Governmental Activities The notes to the Financial Statements are an integral part of this statement. 16 794,249 (1,738,112) (51,847) $ (176,357) 0 ~""' KERR COUNTY STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS „r SEPTEMBER 30, 2008 Agency Funds ASSETS Cash and Cash Equivalents Total Assets LIABILITIES Due to Other Govermnenta] Units Total Liabilities The accompanying notes are an integral part of this statement. ~'~' 17 $ 551,726 $ 551,726 $ 551,726 $ 551,726 EXHIBIT E-1 KERR COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2008 ~.. NOTE I -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of Kerr County have been prepared in conformity with Generally Accepted Accounting. Principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the government's accounting policies are described below: l.A. REPORTING ENTITY The County has developed criteria to determine if the activities of any outside agencies or organizations should be included within its financial statements. The criteria includes the amount of ~r oversight responsibility exercised by the County over the activities of an agency or organization, the scope of public service of an agency or organization, and the nature of any special financing relationships which may exist between the County and an agency or organization. Oversight ~r responsibility includes financial interdependency, selection of the governing authority, designation of management, the ability to significantly influence operations, and accountability for fiscal matters. The County's financial statements include all funds over which the County exercises ~,,, oversight responsibility. Also, the County is not included as a part of any other reporting entity. l.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 .r revenues:. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. Fand Financial Statements: Fund financial statements of the reporting entity 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. 18 ~. The funds of the financial reporting entity are described below: Governmental Funds ~' General Fund The General Fund, the primary operating fund of the County, is always classifted 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. Special Revenue Funds '~" Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specific purposes. ~r Debt Service Funds The Debt Service Fund accounts for the accumulation of financial resources for and the payment of principal and interest on general long-term debt of the County ether than debt service payments ~, rnade by enterprise funds. Ad valorem taxes are used for tl7e payment of principal and interest on the County's debt. C pital 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. Fiduciary Funds (Not included in government-wide statement) Agent. Fads Agency funds account for assets held by the County in a purely custodial capacity. Since Agency fiords are custodial in nature (i.e., assets equal liabilities), they do not involve the measurement of results of operations. Major and Nonmajor Funds ~r 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: Accounts for all road and bridge construction and Road and Bridge maintenance activity. Capital Projects Fund: Accounts for all Capital Projects activity. Nonmajor funds consist of special revenue funds, debt service funds, and capital project funds. 19 0 ~ 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 government-wide Statement of Net Assets and the Statement of Activities, .both ~"' governmental and business-like activities are presented using the economic resources measurement focus as defined below. ~"' In the fund financial statements, the "current financial resources" measurement focus or the "economic resources" measurement focus is used as appropriate: a. All governmental funds utilize a "current financial resources" measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources ,rr during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. ,,~ b. Agency and Permanent Trust Funds are not involved in the measurement- of results of operations; therefore, measurement focus is not applicable to them. Basis of Accounting In the government-wide Statement of Net Assets and Statement of Activities, governmental activities are presented rasing 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 firnd 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 ~r (including capital outlay) are recorded when the related fund liability is incun•ed, except for general obligation bond principal and interest which are reported as expenditures in the year due. 1.D. ASSETS, LIABILITIF,S AND EQUITY Cash and Cash Investments For the purpose of the Statement of Net Assets, "Cash and Cash Equivalents" includes demand deposit accounts and government investment pools. 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. 20 Receivables and Payables ~ Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds." All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade "~ accounts receivable in excess of 60 days comprise the trade accounts receivable allowance for uncollectibles. ~" Ad valorem property taxes attach as enforceable liens as of January 1. Taxes are levied prior to September 30, payable on October 1, and are delinquent on February 1. The majority of the County's property tax collections occur during December and early January each year. To the extent that County properly tax revenue results in current receivables as defined by the Governmental Accounting Standards Board (GASB), they are recognized when levied. Capital Assets Government-wide Statements ~„ Capital assets, which include property, plant, equipment and infrastructure assets (e.g. roads, bridges, sidewalks and similar items) are reported in the governmental activities column in the government-wide financial statements. The County defines capital assets as assets with an initial, ~r individrial cost of more than $1,000 (amount not rounded) and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets' lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Property; plant and equipment is depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings and Improvements 25 - 50 ~` Improvements 10 - 50 Furniture and Equipment 3 - 20 Infrastructure 25 - 50 Fund Financial Statements In the fund financial statements, fixed assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. 21 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. Sick leave accrues to full time ~r employees to specified maximums; however neither the vacation or comp time accrual policy applies to accumulated sick leave. The liability for accrued compensated absences is not accrued in governmental funds using the modified accrual basis of accounting, but is reflected in the Government-Wide Statement of Net Assets. Long-term Obligations ~' In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as defen•ed charges and amortized over the term of the related debt. In the fund financial statements, governmental fund typos recognize bond premiums and discounts, as well as bond issuance costs during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing wr sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. )Equity Classificatians 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 r~;stricted 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, ~r 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. ~r 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. Use of Estimates The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual amounts could differ from those estimates. 22 .... 1.E. REVENUES, EXPENDITURES AND EXPENSES ~„ Property Taxes Property taxes are levied by October 1, in conformity with Subtitle E, Texas Property Tax Code. Taxes are due on receipt of the tax bill and are delinquent if not paid before February 1, of the year following the year in which imposed. On January 1, of each year, a tax lien attaches to property to secure the payment of all taxes, penalties, and interest ultimately imposed. For the 2007 tax roll, the total assessed valuation was $3,461,972,469 and the taxes assessed amounted to $13,487,845. The total tax rate was $.3896 per $100 valuation and allocated $.3154 to the General Fund and $.0438 to the Debt Service Funds and .0304 to the Road and Bridge Fund. The maximum tax levy allowed by State law for the above purposes is $.80 per $100 valuation. ~" In the fund financial statements, properly taxes are recorded as revenue in the period levied to the extent they are collected 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 government- "' wide financial statements. I;xpenditures/Expenses Tn the government-wide financial statements,. expenses are classified by function for governmental activities. In the fund financial statements, expenditures are classified as follows: Govemmental Funds - by Character: Current (fiirther classified by function) Debt Service Capital Qutlay In the ftznd financial statements, governmental funds report expenditures of financial resources. Interfund Transfers .rr Petrnanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For the purposes of the Statement of Activities, all interfund transfers between individual governmental funds have been eliminated. NOTE 2 - STEWARJ)SHIP, COMPLIANCE AND ACCOUNTABILITY Budgetary Information The County Judge and staff prepare the proposed budget, using revenue estimates furnished by the County Auditor. The proposed budget is then submitted to Commissioners Court for a public hearing. Before determining the final budget, Commissioners Court may increase 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 and Capital Projects Funds. Budgets for these funds are prepared on a cash basis. Unused appropriations lapse at the end of each year. 23 NOTE 3 -DETAILED NOTES ON ALL FUNDS 3.A. DEPOSITS AND INVESTMENTS 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") insurance. At September 30, 2008, the carrying amount of the County's deposits was $996,429 and the bank balance was $1,747,156. The County's cash deposits held at Security State Bank and Trust at September 30, 2008 and during the year ended September 30, 2008 were entirely covered by FDIC insurance or by pledged collateral held by the County's agent bank in the County's name. 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 mahirity 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 and guaranteed investment contracts: The Act also requires the County to have independent auditors perform test procedures related to investment practices as provided by the Act. T'he County's deposits and temporary investments at September 30, 2008 are shown below: Fiduciary/Type of Deposit Security State Bank & Trust Depository Bank Demand Deposit Accounts Carrying Market FDIC Pledged Amount Value Coverage Securities 996,429 $ 996,429 $ 200,000 $ 12,698,906 TEXPOOL Liquid Asset Portfolio Total Governmental Activities 4,828,930 4,828,930 $ 5,825,359 $ 5,825,359 $ 200,000 $ 12,698,906 * The investment in Texpool 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. Also, investments in government investment pools are not required to disclose custodial credit risk, concentration of credit risk and interest rate risk in accordance with GASB Statement No. 40. 24 r ~ Policies Governing Deposits and Investments In compliance with the Public Funds Investment Act, the County has adopted a deposit and ~e investment policy. That policy does address the following risks: Custodial Credit Risk -Deposits: This is the risk that in the event of bank failure, the County's " deposits may not be returned to it. The County was not exposed to custodial credit risk since its ~ deposits at year-end were covered by depository insurance or by pledged collateral held by the County's agent bank in the County's name.. ~" Custodial Credit Risk -Investments: This is the risk that, in the event of the failure of the counterparty, the County will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The County's investments (certificates of ~" deposit) were secured by FDIC insurance and pledged securities. Other Credit Risk: There is the risk that an issuer or other counterparty to an investment will not fulfill; its obligations. At September 30, 2008, the County was not exposed to concentration of credit risk, it-terest rate risk or foreign currency. risk. For the year ended September 30, 2008, the County complied in all material respects with the requirements of the Public Funds Investment Act and with local policies. 3.8. RECEIVABLES Receivables as of year-end for the government°s individual major funds and nonmajor funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Governmental Funds _ Road Other and Governmental General Bridge Funds TO'I'AI, Receivables: Property Taxes $ 316,614 $ 43,776 $ 134,378 $ 494,768 Other 358,862 - 19,606 378,468 Gross Receivables $ 675,476 $ 43,776 $ 153,984 $ 873,236 Less: Allowance far Uncollectibles 15,831 2,189 6,719 24,739 Net Total Receivables $ 659,645 $ 41,587 $ 147,265 $ 848,497 25 "' Governmental funds report deferred revenue in connection with receivables for revenue that is not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, deferred revenues reported in the governmental funds were as follows: General Fund - Delinquent Property Taxes Receivable $ 300,783 Other Receivables 537 Special Road and Bridge Fund - Delinquent Property Taxes Receivable 41,587 Other Governmental Funds - Delinquent Property Taxes Receivable 127,659 TOTAL DEFERRED REVENUES $ 470,566 +rl 3.C. COURT FINES AND FEES RECEIVABLE The County has determined the amount of court fines and fees receivable at September 30, 2008 to be $1,825,590 which represents amounts owed and outstanding for the last 10 years. This receivable is included on the government wide statement of net assets and is net of an allowance for uncollectible court fines and fees based on historical collection rates for the various courts. 3.D. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2008, was as follows: Primary Government Balance Prior Period Balance 10/1/07 Increases Decreases Adjustments 9/30/08 Governmental Activities: Capital Assets, Not Being Depreciated: Land $ 497,457 $ - $ - $ - $ 497,457 Capital Assets, Being Depreciated: Buildings and Improvements 15,081,321 49,943 - - 15,131,264 Furniture and Equipment 8,313,187 1,245,635 79,066 (105,996) 9,373,760 ~ Infrastructure 38,679,333 - - - 38,679,333 Total Capital Assets Being Depreciated 62,073,841 1,295,578 79,066 (105,996) 63,184,357 air Less Accumulated Depreciation: Buildings and Improvements (5,506,847) (370,561) - - (5,877,408) Fumiture and Equipment (6,450,684) (904,536) 54,990 - (7,300,230) Infrastructure (3,933,854) (463,015) - - (4,396,869) srr Total Accumulated Depreciation (15,891,385) (1,738,112) 54,990 - (17,574,507) Total Capital Assets Being Depreciated, Net 46,182,456 (442,534) 24,076 (105,996) 45,609,850 Governmental Activities Capital Assets, Net $ 46,679,913 $ (442,534) $ 24,076 $ (105,996) $ 46,107,307 The County recorded a prior period adjustment of $105,996 for the retroactive reduction of furniture and equipment assets. Wr 26 ~.. Depreciation expense was charged to functions/programs of the County as follows: Governmental Activities: General Government $ 424,154 Public Safety 320,983 ~, Administration of Justice 20,373 Community & Economic Development 23,432 Health and Human Services 13,675 Corrections 208,049 Infrastructure & Environmental 727,446 Total Depreciation Expense - Governmental Activities $ 1,738,112 ~" 3.E. iNTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Transfers are used to 1) move revenues from the fund with collection authorization to the debt ~"' service fund as debt service principal and interest payments become due, 2) move restricted amounts from borrowings to the debt service fund to establish mandatory reserve accounts, 3) move unrestricted general fund revenues to finance various programs that the government. must account for in other fi.tnds in accordance with budgetary authorizations, including amounts provided as subsidies or matching funds for various grant programs. There were no interfund balances as of September 30, 2008. 3.F. LONG-TERM LIABILITIES ~` The following is a summary of the long-term liability transactions of the County fir the year ended September 30, 2008. Balance Balance Due SNithin Type of Debt 10/01/07 Issued Retired 9/30/08 i~ne Year Governmental Activities: , Limited Tax General $ 2,405,000 $ - $ 435,000 $ 1,970,000 $ 455,000 Obligation Series 1994 Public Property Finance 160,000 - 160,000 - - Contractual Obligation 2001 Certificates of Obligation 1,205,000 - 440,000 765,000 375,000 Series 2005 "`~ Tax Notes Series 2008 - 1,780,000 - 1,780,000 135,000 Bank of America Noie Payable 786,192 - 144,043 642,149 205,681 Capital Lease Obligations 595,774 182,441 252,790 525,425 139,412 ar SUBTOTAL $ 5,151,966 $ 1,962,441 $ 1,431,833 $ 5,682,574 $ 1,310,093 '~ Compensated Absences - 328,087 - 328,087 - TOTAL $ 5,151,966 $ 2,290,528 $ 1,431,833 $ 6,010,661 $ 1,310,093 27 ~r Balance at Due Within Certificates of Obligation and Notes Payable 9/30/08 One Year 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 $ 1,970,000 $ 455,000 Certificates of Obligation, Series 2005 Original issue amount $2,000,000, interest rates of 3.2.5% to 3.50%, with final maturity date February 15, 2010 765,000 375,000 Bank of America Note for purchase of computer software dated May 1, 2006, principal and interest payment of $231,463, interest rate is 4.015%, final ' maturity date of March 16, 2011 642,149 205,681 Tax Notes, Series 2008 ~' Original issue amount $1,780,000, interest rates of 3.30%, With final maturity date February 15, 2013 1,780,000 135,000 TOTAL CEIZ1'IFICATES OF OBLIGATION AND NOTES PAYABLE $ 5,157,149 $ 1,170,681. The annual regisirements for principal and interest on the outstanding certificates of obligation and notes payable are as follows: .~ Year Ending Annual September 30, Principal Interest .Requirements. Y 2009 $ 1,170,681 $ 189,433 $ 1,360,114 2010 1,283.,939 129,035 1,412,974 2011 1,002,529 85,339 1,087,568 2012 820,000 45,087 865,087 2013 880,000 14,520 894,520 TOTAL $ 5,157,149 $ 463,414 $ 5,620,563 28 err Balance at Due Within Capital Lease Obligations 9/30/08 One Year Security State Bank & Trust: Capital lease obligation for (2) Motor Graders and (1) Wheel Loader dated December 27, 2006, principal and interest of $45,637 paid yearly, interest rate of4.82%, fmal maturity date December 27, 2013. $ 231,132 $ 34,055 Catetkillar Financial Services: Capital lease obligation for a Caterpillar Backhoe Loader dated June 15, 2004, principal and interest of $786 paid monthly, interest rate of 4.73%, fmal payment August 1, 2009. 27,204 5,504 Capital lease obligation for (2) Caterpillar 420D Backhoe Loaders dated April 28, 2006, annual principal and interest payments of $23,368, interest rate of 5.35%, fmal maturity April, 2011. 104,012 18,259 an Ford Motor Credit Corporation: Capital lease obligation for four (4) 2007 Crown Victoria Police Sedans dated March 9, 2007, annual principal and interest payments of $37,332, interest rate of 6.60%, fmal maturity date March 9, 2009. 35,021 35,021 Capital lease obligation for three (3) 2008 Chevrolet Tahoes Sheriff Vehicles dated January 24, 2008, annual principal and interest payments of $34,027, interest rate of 6.10%, fmal maturity date January 24, 2011. 90,786 28,489 Capital lease obligation for two (2) 2008 Crown Victoria Police Sedans dated February 5, 2008, annual principal and interest payments of $23,357, interest rate of 6.10%, final maturity date February 5, 2010. 37,270 18,084 TOTAL CAPITAL LEASE OBLIGATIONS $ 525,425 $ 139,412 A summary of the future minimum lease payments under the lease along with the present value of the minimum lease payments as of September 30, 2008 follows: Year Ended September 30 2009 $ 167,009 2010 145,089 2011 91,348 2012 102,108 2013 45,637 2014 45,637 Total Minimum Lease Payments $ 596,828 Less Amount Representing Interest 71,403 Present Value of Lease Payments $ 525,425 ~r 29 .. ~„ 3.G. EMPLOYEE RETIREMENT PLAN Plan Description ~ Kerr County 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 574 nontraditional defined benefit pension plans. TCDRS in the aggregate issues a comprehensive annual financial report (CAFR) on a calendar year basis. The CAFR is available upon written request from the TCDRS Board of Trustees at P.O. Box 2034, Austin, Texas 78768- 2034. The plan provisions are adopted by the governingbody of the employer, 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 equals 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 contributions in a lump sum prior to .retirement are not entitled to any amounts contributed by their employer. Partial lump sum distributions are allowed at retirement. Benefit amounts are determined by the sum of the employee's contributions to-the plan, with interest, and employer-financed monetary credits. The level of these monetary credits is adopted by the governing body of the employer 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 contributions 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. iJnder the 'TCDRS Act, the contribution rate of the employer is actuarially determined annually. The County contributed using the actuarially determined rate of 9.08% for the months of the accounting year in 2008 and 8.51 for,_the months of the accounting year in 200 7. ~` The contribution rate payable by the employee members for calendar year 2008 is the rate of 7%, as adopted by the County. For calendar year 2007, the employee contribution rate was also 7%. The employee 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 ended September 30, 2008, the annual pension cast for the TCDRS plan for its employees was $821,096, and the actual contributions were $821,096. The annual required contributions were actuarially determined as a percent of the covered payroll of the participating employees, and was in compliance with the GASB Statement No. 27 parameters based on the actuarial valuation as of December 31, 2005 and December 31, 2006, the basis for determining the contribution rate for calendar years 2007 & 2008. The December 31, 2007 actuarial valuation is the most recent valuation. 30 ACTUARIAL VALUATION INFORMATION Actuarial valuation date 12/31/07 12/31/06 12/31/05 o> Actuarial cost method entry age entry age entry age Amortization method level percentage level percentage level percentage ~r of payroll, closed of payroll, closed of payroll, open Amortization period 15 15 20 Asset valuation method SAF: 10-yr SAF: 10-yr long-term smoothed value smoothed value appreciation ~+ ESF: Fund value ESF: Fund value with adjustment Actuarial Assumptions: ;~r Investment return' 8% 8% 8% Projected salary increases) 5.3% 5.3% 5.3% Inflation 3.5% 3.5% 3.5% ~' Cost-of-living adjustments 0.0% 0.0% 0.0% 'Inchzdes inflation at the stated rate TRE ND INFORMATION FOR THE ~ RETIREMENT PLAN FOR THE EMPLOYEES OF F:ERR COUNTY ~„ Accounting Annual Percentage Net Y'~;ar Pension of APC Pension ]Ending Cost (APC) Contributed C)bligation 9/30/06 $ 741,520 100% -0- 9/30/U7 800,621 100% -0- 9130/0$ 82 ],096 100% -0- SCHEDULE OF FUNDING PROGRESS F'OR THE RETIREMENT PLAN FOR THE EMPLOYEES OF KERR COUNTY Actuarial IJAAL as a Actuarial Value Accrued Annual Covered Percentage of Actuazial of Assets Liability (AAL) Unfunded AAL Funded Ratio Payroll Covered Payroll Valuation Date (a) (b) (UAAL) (b-a) (a/b) (c) ((b-a)/c] 12/31/03 $ 13,000,396 $ 15,187,317 $ 2,186,921 85.60% $ 8,020,926 27.27% 12/31/04 14,260,964 16,668,166 2,407,202 $5.56% 8,870,350 27.14% 12/31/05 16,152,206 18,786,439 2,634,233 85.98% 9,247,537 28.49% 12/31/06 18,402,681 20,642,315 2,239,639 89.15% 9,320,152 24.03% 12/31/07 19,612,015 21,996,008 2,383,993 89.16% 9,954,080 23.95% ' The annual covered payroll is based on th e employee contributions received by TCDRS for th e year ending with the valuation date. z Revised economic and demographic assumptions due to an experience review were reflected in this valuation. 31 .. 3.H. INVESTMENT IN JOINT VENTURE The County and the City of Kerrville (the "participants") operate a municipal airport under a ~- joint venture agreement. Each participant provides financial support and is entitled to an undivided 50% interest i n the physical property. Separate financial statemen ts of the joint venture are not available. Following is a financial summary for the airport as of and for the year ~,,, ended September 30, 2007: ASSETS REVENUES Cash $ 969,716 Lease and Rental Revenue $ 198,597 Accounts Receivable 475 Intergovernmental Revenue 421,944 Nondepreciable Property 3,197,041 Total Revenues 620,541 Depreciable Property (Net) Buildings 1,003,009 EXPENSES Machinery & Equipment 8,685 Airport Operations 479,187 Total Assets 5,178,926 Depreciation 67,071 Total Expenses 546,258 "'i LIABILITIES Accounts Payable & OPERATING INCOME Accrued Liabilities 16,060 Deferred Revenues 7,055 OTHER SOURCES (USES) Deposits 4,605 Interest Income 7,425 Total Liabilities 27,720 Capital Contribution 40,002 Transfer In 834,807 NET ASSETS Transfer Out (449) Invested in Capital Assets 4,208,735 Total Other Sources (Uses) 881,785 Unrestricted 942,471 Total Net Assets $ 5,151,206 Increase in Net Assets 956,068 Net Assets -Beginning 4,195,138 Net Assets -Ending $ 5,151,206 3.I. RISK MANAGEMENT Workers Compensation, Unemployment, and Property and Liability Coverage a The County is exposed to various risks of loss related to torts; damage to and theft or destruction of assets; errors and omissions; injuries to employees; automobile liability and natural disasters. To reduce the risk of exposure in these areas, the County contracts in the form of interlocal agreements with risk pools created by the Texas Association of Counties (TAC). The County is a member of workers compensation, unemployment, and property and liability risk pools. rr The pools are public entity risk pools and were created based on the general objectives of formulating, developing and administering a program of self-insurance for the membership and obtaining lower costs for coverage. The pools have the power to establish fees, contributions and ~. methods for establishing rates. Under contract with the pools, the TAC provides for such services as claims administration and management, underwriting, loss control services and training, and financial reporting for its members. The pools are governed by a board of directors made up of employees or officials of counties which are members of the pool. Member counties ~r make contributions to the pools, and the pools provide insurance coverage and applicable reinsurance or stop loss coverage. Contributions are set annually and the interlocal agreements carry various deductibles and aggregate maximum loss totals. Liability by the County is generally limited to the amounts calculated by the County interlocal agreements. The by-laws and audited financial statements of the pools are detailed in separate documents and can be obtained from the Texas Association of Counties, 1210 San Antonio Street, Austin, TX '' 78701. The County has had no significant reduction in insurance coverage from prior years and the County has had no settlements which exceeded insurance coverage in the current or prior years. 32 .. 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 $50,000 per employee per calendar year with an aggregate amount of $2,000,000 per year. After the deductible and aggregate amount, the balance is paid by a third party carrier. 3.J. 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, 2008, rent expenditures approximated $73,714 for all types of operating leases. These expenditures were made primarily from the General Fund. Commitments under operating (non-capitalized) lease agreements for equipment provide for minimum future rental payments as of September 30, 2008, as follows: Year Ended September 30 2009 $ 59,896 +~ 2010 47,077 2011 39,319 2012 27,114 ~"' 2013 11,342 Total Minimum Rentals $ 184,748 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 which 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. 3.K. RESTRICTED NET ASSETS Net assets restricted for debt service include the excess of assets over certain liabilities restricted for the debt service on revenue bonds. Net assets of governmental funds restricted by enabling legislation for the specific purpose of debt service total $96,320 at September 30, 2008. 3.L. PRIOR PERIOD ADJUSTMENT The Government Wide Statement of Net Assets and the Government Wide Statement of Activities shows a net prior period adjustment of $105,996. This decrease in Net Assets was due to a prior period adjustment made to furniture, machinery and equipment for $105,996 in order to reclassify assets to expendable inventory. ar 33 REQUIRED SUPPLEMENTARY INFORMATION 0 KERB COUNTY EXHIBIT C-5 a~ STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL -GENERAL FUND FOR THE YEAR ENDED SEPTEMBER 30, 2008 yr REVENUES: Taxes: Property Taxes Other Taxes, Licenses, Permits Intergovernmental Revenue and Grants Fees of Office Fines and Forfeitures Investment Earnings Other Revenue Total Revenues EXPENDITURES: Current: General Government Administration of Justice Public Safety Corrections Health and Human Services Community and Economic Development Infrastructure and Environmental Unallocated Expense Debt Service: Debt Principal Debt Interest Capital Outlay: General Governtent Administration of Justice Public Safety Community and Economic Development Corrections Health and Human Services Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES): Proceeds from Capital Leases Transfers Out (Use) Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balance -October 1 (Beginning) Fund Balance -September 30 (Ending) Actual Amounts Variance With (GAAP BASIS) Final Budget Budgeted Amounts Positive or Original Final (Negative) $ 8,353,275 $ 8,416,942 $ 8,241,673 $ (175,269) 2,925,400 2,925,400 2,9.80,794 55,394 228,848 222,354 336,034 113,680 1,859,890 1,859,890 2,009,973 150,083 332,750 338,260 397,420 59,160 220,000 220,000 166,132 (53,868) 332,720 335,988 335,236 (752) 14,252, 883 14,318, 834 14,467,262 148,428 3,535,481 3,478,171 3,274,644 203,527 3,631,719 3,746,567 3,621,507 125,060 3,805,673 3,663,089 3,472,944 190;145 2,306,950 2,339,447 2,399,079 (59,632) 577,863 581,525 556,566 24,959 499,388 536,819 512,174 24,645 263,903 264,088 240,483 23,605 176 176 - 176 - - 87,237 (87,237) - - 4,480 (4,480} - 8,000 7,875 125 10,000 10,000 8,579 1,421 58,454 58,454 182,441 (123,987) 7,200 7,200 7,200 - 63,500 63,500 38,628 24,872 5,550 5,250 5,250 - 14,765,857 14,762,286 14,419,087 343,199 (512,974) (443,452) 48,175 491,627 - - 182,441 182,441 (50,000) (50,000) - 50,000 (50,000) (50,000) 182,441 232,441 (562,974) (493,452) 230,616 724,068 2,343,974 2,343,974 2,343,974 - $ 1,781,000 $ 1,850,522 $ 2,574,590 $ 724,068 The accompanying notes are an integral part of this statement. 34 ar I{ERR COUNTY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL -ROAD AND BRIDGE FUND FOR THE YEAR ENDED SEPTEMBER 30, 2008 EXHIBIT C-6 Actual Variance With Final Budget Budgeted Amounts GAAP BASIS Positive or Original Final (See Note) (Negative) REVENUES: Taxes: Property Taxes $ 1,007,931 $ 1,007,931 $ 1,004,904 $ (3,027) Automobile Registration 957,500 957,500 1,041,286 83,786 Intergovernmental Revenue and Grants 29,000 29,000 28,805 (195) Fees of Office 315,800 315,800 359,964 44,164 Fines and Forfeitures 3,100 3,100 3,515 415 Investment Earnings 34,000 34,000 13,660 (20,340) Other Revenue 4,600 4,600 6,329 1,729 Total Revenues 2,351,931 2,351,931 2,458,463 106,532 - - -- EXPENDITURES: Current: Infrastructure and Environmental 2,219,666 2,190,149 2,200,628 (10,479) ~i Debt Service: Debt Principal 158,665 189,339 165,552 23,787 Debt Interest - - 23,787 (23,787) Capital Outlay: Infrastructure and Environmental 128,400 127,218 127,218 - Total Expenditures 2,506,731 2,506,706 2,517,185 (10,479) Change in Fund Balance (154,800) (154,775) (58,722) 96,053 Fund Balance -October 1 (Beginning) 556,285 556,285 556,285 - Fund Balance -September 30 (Ending) $ 401,485 $ 401,510 $ 497,563 $ 96,053 ~" The accompanying notes are an integral part of this statement. 35 ~. NEFFENDORF, KNOPP, D D S S ~ COMPANY, P. C. Certified Public Accountants P.O. BOX 874 ~ 736 S. WASHINGTON ST. FREDERICKSBURG, TEXAS 78624-0874 (830) 997-3348 MEMBER FAX: (830) 997-3333 MEMBER AMERICAN INSTITUTE OF Email: nkhdQaustin.rr.com TEXAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS CEKTIFIED PUBLIC ACCOUNTANTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITINGSTANDARDS Independent Auditor's Report Honorable Judge anc' Commissioners Kerr County, Texas Ikerrville, TX 78028 We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of County of Kerr, as of and for the year ended September 30, 2008, which collectively comprise the County of Kerr's basic financial statements and have issued our report thereon dated April 24, 200Q. 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 rtundar•ds; issr~ed by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered County of Kerr's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the County of Ken's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the County of Kerr's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiertey is a control deficiency, or combination of control deficiencies, that adversely affects the County of Ken's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the County of Kerr's financial statements that is mare than inconsequential will not be prevented or detected by the County of Kerr's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the County of Ken's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. Compliance and Other Matters As part of obtaining reasonable assurance about whether County of Kerr's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of 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 or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of County of Kerr, in a separate letter dated April 24, 2009. This report is intended solely for the information and use of management, the County Commissioners, federal awarding agencies, pass-through entities and others within the entity and is not intended to be and should not be used by anyone other than these specified parties. Sincerely, f'lA,~b~,n~, lGrw p p, ~o~.o ,~ ~'um p cam, ~ L . NEFFENDORF, KNOPP, DOSS & COMPANY, P.C. Fredericksburg, Texas Apri124, 2009 NEFFENDORF, KNOPP, DOSS £~ COMPANY, P.C. Certified Public Accountants P.O. BOX 874.736 S. WASHINGTON ST. FREDERICKSBURG, TEXAS 78624-0874 (830) 997-3348 MEMBER FAX: (830) 997-3333 MEMBER AMERICAN INSTITUTE OF Email: nkhdQaustin.rr.com TEXAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS April 24, 2009 Honorable Judge and Commissioners Kerr County, Texas Kerrville, TX 78028 CERTIFIED PUBLIC ACCOUNTANTS We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Kerr County, Texas for the year ended September 30, 2008, and have issued our report thereon dated April 24, 2009. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under U.S. Generally Accepted Auditing Standards As stated in our engagement letter our responsibility, as described by professional standards, is to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by Kerr County, Texas are described in Note I to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during 2008. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The disclosures in the financial statements are neutral, consistent, and clear. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated April 24, 2009. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the governmental unit's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. We did find non-material weakness, included for informational purposes as follows: Internal Audits -Officials & Departments During our audit of the various offices and departments of the County, again, we found that very few internal audits were done. Most of the offices and departments had adequate internal controls to the extent possible (size of staff). Again, we recommend that the County Auditor perform internal audits on a periodic basis of each office and department. County & District Clerks During our audit of the County and District Clerk offices we noted that there was a lack of control over the accounts held for the benefit of others (these being mostly minors). We recommend that a summary sheet be kept listing all of the accounts held in each office and updated at least on annual basis to show the increases, decreases and account balances. We appreciate the cooperation of the County Auditor's offices and the various officials and employees of the County. This information is intended solely for the use of the Commissioner's Court and management of Kerr County, Texas and is not intended to be and should not be used by anyone other than these specified parties. Sincerely, /1,e~du~, ~Cu.a pp, iUt/lo f ~' i»-ip ate; ~P, C. NEFFENDORF, KNOPP, DOSS & COMPANY, P.C. Fredericksburg, Texas