Ratio Analysis -

Access the information contained in your selected organization?s balance sheet and income statement to calculate the following:

• Liquidity ratios
  • Current ratio
  • Acid-test, or quick, ratio
  • Receivables turnover
  • Inventory turnover
• Profitability ratios
  • Asset turnover
  • Profit margin
  • Return on assets
  • Return on common stockholders? equity
• Solvency ratios
  • Debt to total assets
  • Times interest earnedShow your calculations for each ratio.Create a horizontal and vertical analysis for the balance sheet and the income statement.Write a 350- to 700-word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following questions:
• What do the liquidity, profitability, and solvency ratios reveal about the financial position of the company?
• Which users may be interested in each type of ratio?
• What does the collected data reveal about the performance and position of the company?Format your memo consistent with APA guidelines.

ANNUAL FINANCIAL REPORT LEON COUNTY, "TEXAS For the Year Ended September 30, 2011 (This page intentionally left blank.) LEON COUNTY, TEXAS TABLE OF CONTENTS For the Year Ended September 30, 2011 INTRODUCTORY SECTION List of Elected and Appointed Officials Organizational Chart Paae 1 3 FINANCIAL SECTION Independent Auditors' Report 7 Management's Discussion and Analysis 11 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Assets Statement of Activities 21 22 Governmental Funds Financial Statements Balance Sheet Statement of Revenues, Expenditures, and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 29 Fiduciary Funds Financial Statements Statement of Fiduciary Net Assets - Agency Funds 31 Notes to Financial Statements 33 24 26 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - General Fund Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Road and Bridge Fund Schedule of Funding Progress - Texas County and District Retirement System Combining Statements and Schedules Schedule of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual - Nonmaj or Governmental Funds Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmaj or Governmental Funds Combining Statement of Net Assets - Agency Funds 48 51 53 58 78 84 92 (This page intentionally left blank.) INTRODUCTORY SECTION (This page intentionally left blank.) LEON COUNTY, TEXAS LIST OF ELECTED AND APPOINTED OFFICIALS For the Year Ended September 30, 2011 COMMISSIONERS' COURT Byron Ryder Joey Sullivan David Ferguson Mark Ivey Dean Player County Judge Commissioner, Precinct # 1 Commissioner, Precinct # 2 Commissioner, Precinct # 3 Commissioner, Precinct # 4 DISTRICTCOURTS Donald L. Kraemer Deborah Oakes Evans Kenneth Keeling Whitney T. Smith . Diane Oden Davis Judge, 12th Judicial District Judge, 87th Judicial District Judge, 278 th Judicial District District Attorney District Clerk COUNTYCOURT Byron Ryder James R. Witt Christie Wakefield County Judge County Attorney County Clerk JUSTICE COURTS Lori Reid Jack Keeling Doug Preston Justice of Peace, Precinct # 1 Justice of Peace, Precinct # 2 Justice of Peace, Precinct # 4 LAW ENFORCEMENT Jerry Wakefield Chris Johnson George Holleman Larry L.T. Watson Sheriff Constable, Precinct # 1 Constable, Precinct # 2 Constable, Precinct # 4 FINANCIAL ADMINISTRATION Susan Pugh Louise Wilson Brandi S. Hill County Auditor* Tax Assessor - Collector County Treasurer * Designated appointed official. All others elected. 1 (This page intentionally left blank.) 2 LEON COUNTY, TEXAS ORGANIZATIONAL CHART For the Year Ended September 30, 2011 Leon County Citizens County Commissioners Joey Sullivan, Pct. 1 David Ferguson, Pct. 2 Mark Ivey, Pct. 3 Dean Player, Pct. 4 County Clerk Christie Wakefield District Clerk Diane Oden Davis County Attorney James R. Witt Justices of the Peace Lori Reid, Pct. 1 Jack Keeling, Pct. 2 Doug Preston, Pct. 4 District Attorney Whitney T. Smith County Judge Byron Ryder Commissioners' Court Various Ad Hoc Committees 911 Mapping & Addressing Juvenile Probation Domestic Violence Senior Nutrition Veterans Officer Building Maintenance Elections Administrator County Treasurer Brandi S. Hill Tax Assessor - Collector Louise Wilson Leon County Health Resource Center Emergency Management County Sheriff Jerry Wakefield Constables Chris Johnson, Pct. 1 George Holleman, Pct. 2 Larry L. T. Watson, Pct. 4 3 District Judges Donald L. Kraemer, 12 th Deborah O. Evans, 87 th Kenneth Keeling, 278 th Adult Probation County Auditor Susan Pugh Juvenile Board (This page intentionally left blank.) 4 FINANCIAL SECTION 5 (This page intentionally left blank.) 6 INDEPENDENT AUDITORS' REPORT To the Honorable County Judge and Members of the Commissioners' Court of Leon County, Texas: We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of Leon County, Texas (the "County"), as of and for the year ended September 30, 2011, which collectively comprise the County's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the County's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fmancial 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 the County as of September 30, 2011, and the respective changes in financial position thereof for the year then ended in conformity with generally accepted accounting principles in the United States of America. The Management's Discussion and Analysis, budgetary comparison information, and schedules of funding progress are not a required part of the basic fmancial statements but are supplementary information required by accounting principles generally accepted in the United States of America. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the Required Supplementary Information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 7 Partners Robert Belt, CPA Stephanie E. Harris, CPA Nathan Krupke, CPA Partner of Counsel John R. Pechacek, CPA Houston 3210 Bingle Rd., Ste. 300 Houston, TX 77055 713.263.1123 Bellville 6100 Windy 1-1111 Lane Bellville, TX 77418 979.865.3169 Aus in 100 Congress Ave., Ste. 2000 Austin, TX 78701 512.381.0222 All Offices wxryxtexasauditors.com info@tcauditors.com 713.263.1550 fax = Governmental - Audit Quality Center AIC PA Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the County's financial statements as a whole. The introductory section and combining statements and schedules are presented for purposes of additional analysis and are not a required part of the financial statements. The combining fund statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. ELT / iRRIS EC HACEK, u..P Belt Harris Pechacek, LLLP Certified Public Accountants Houston, Texas November 18, 2011 8 1 VIA NA GE 1 I %f E 1 i r T' S DISCUSSION AND ANALYSIS 9 (This page intentionally left blank.) 10 LEON COUNTY, TEXAS MANA GEMENT'S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2011 The purpose of the Management's Discussion and Analysis (MD&A) is to give the readers an objective and easily readable analysis of the financial activities of Leon County, Texas (the "County"), for the year ended September 30, 2011. The analysis is based on currently known facts, decisions, or economic conditions. It presents short and long term analysis of the County's activities, compares current year results with those of the prior year, and discusses the positive and negative aspects of that comparison. Governmental Accounting Standards Board (GASB) Statement No. 34 establishes the content of the minimum requirements for MD&A. Please read the MD&A in conjunction with the County's financial statements, which follow this section. THE STRUCTURE OF OUR ANNUAL REPORT The table of contents presented at the beginning of this report provides an overview of the structure of the County's report, as well as the page numbers where the respective sections can be located within the report, as more fully described below. Components of the Financial Section Management's Discussion and Analysis Independent Auditors' Report Basic Financial Statements Government- Wide Financial Statements Required Supplementary Information Fund Financial Statements Notes to the Financial Statements Detail Summary The annual financial report is presented as compliant with the financial reporting model in effect pursuant to GASB Statement No. 34. The fmancial reporting model requires governments to present certain basic financial statements as well as a Management's Discussion and Analysis (MD&A) and certain other Required Supplementary Information (RSI). The basic financial statements include (1) government-wide financial statements, (2) individual fund financial statements, and (3) notes to the financial statements. Government - Wide Statements The government-wide statements report information for the County as a whole. These statements include transactions and balances relating to all assets, including infrastructure capital assets. These statements are designed to provide information about the costs of services, operating results and financial position of the County as an economic entity. The Statement of Net Assets and the Statement of Activities, which appear first in the County's financial statements, report information on the County's activities that enable the reader to understand the financial condition of the County. These statements are prepared using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's revenues and expenses are taken into account even if cash has not yet changed hands. 11 LEON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2011 The Statement of Net Assets presents information on all of the County's assets and liabilities. The difference between the two is reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the County is improving or deteriorating. Other non-financial factors, such as the County's property tax base and the condition of the County's infrastructure, need to be considered in order to assess the overall health of the County. The Statement of Activities presents information showing how the County's net assets changed during the most recent fiscal year. All changes in the net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows - the accrual method rather than modified accrual that is used in the fund level statements. In the Statement of Net Assets and the Statement of Activities, the County has only one type of activity: 1. Governmental activities - All of the County's basic services are reported here, including general government, judicial, legal, public safety, public welfare, and public transportation. The government-wide financial statements can be found after the MD&A within this report. FUND FINANCIAL STATEMENTS Funds may be considered as operating companies of the parent corporation, which is Leon County. They are usually segregated for specific activities or objectives. The County uses fund accounting to ensure and demonstrate compliance with fmance-related legal reporting requirements. The two categories of County funds are governmental and fiduciary. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide fmancial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the County's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar infonnation presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the County's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the general, road and bridge, and capital expenditures funds, which are considered to be major funds. Although not technically a major fund, management has elected to present the capital expenditures fund as major due to its significance. 12 LEON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2011 Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the County's own programs. Notes to Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information In addition to basic financial statements, this MD&A, and accompanying notes, this report also presents certain RSI. The RSI that GASB Statement No. 34 requires includes budgetary comparison schedules for the general and road and bridge funds, as well as a schedule of funding progress for the Texas County and District Retirement System. GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net assets may serve over time as a useful indicator of the County's financial position. For the County, assets exceed liabilities by $24,338,435 as of year end. A large portion of the County's net assets, 47% percent, reflects its investments in capital assets (e.g., land, buildings, and machinery and equipment) less any debt used to acquire those assets that is still outstanding. The County uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Governmental Activities - Statement of Net Assets 2011 Current and other assets Capital assets, net Total Assets $ 13,640,710 11,485,148 25,125,858 Long-term liabilities Other liabilities Total Liabilities 11,964,607 12,021,599 23,986,206 246,752 540,671 787,423 $ 246,859 705,644 952,503 11,485,148 3,311,584 9,541,703 Net assets: Invested in capital assets Restricted Unrestricted Total Net Assets 2010 $ 12,021,599 3,317,082 7,695,022 24,338,435 $ 23,033,703 Unrestricted net assets, $9,541,703, may be used to meet the County's ongoing obligation to citizens and creditors. 13 LEON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2011 Governmental Activities - Statement of Activities 2011 Revenues Program revenues: Charges for services Operating grants and contributions General revenues: Property taxes Sales taxes Investment income Other revenue $ 1,167,628 928,495 2010 $ 653,898 1,104,964 Total Revenues 8,820,524 1,896,964 204,959 915,785 13,934,355 8,768,894 1,662,317 136,479 782,922 13,109,474 Total Expenses 4,775,279 661,651 177,478 1,856,342 788,064 4,370,809 12,629,623 5,410,247 211,267 174,287 1,887,094 738,976 3,982,491 12,404,362 Change in Net Assets 1,304,732 705,112 23,033,703 22,328,591 Expenses General government Judicial Legal Public safety Public welfare Public transportation Beginning Net Assets Ending Net Assets 14 $ 24,338,435 $ 23,033,703 LEON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2011 Governmental Revenues Governmental Functional Expenses Public transportation 35% Governmental Activities Total revenues for governmental activities have increased by 6 percent or $824,881 when compared to the previous year. This is primarily related to the increase in charges for services of 79 percent. This increase is a result of County's reduction in their court fines receivable in the prior year. The County had a third party working on the collection of these fines. During the prior year, the receivable amount decreased by $548,899 from the preceding year. This results in higher charges for services at the fund level because this revenue had been deferred but lower charges for services at the government-wide level as a result of previously recognizing the revenue at the time the accounts receivable was recorded. In the current fiscal year, the receivable amount decreased by approximately $31,000. Sales tax revenue also increased by $234,647 and there was a slight decrease in operating grants and contributions of $176,469. Total expenses for governmental activities increased by $225,261 or 2 percent. This increase can be largely attributed to an increase in the judicial and public transportation by $450,384 or 213 percent and $388,318 or 10 percent, respectively. These increases are attributed to increases in salaries, court expenses and transportation projects within the road and bridge fund. Although total expenses increased, there was a decrease in general government expenses of $634,968 or 12 % from the prior year. 15 LEON COUNTY, TExAs 1VIANAGEIVIENT'S DISCUSSIONAND ANALYSIS (Continued) For the Year Ended September 30, 2011 FINANCIAL ANALYSIS OF THE COUNTY'S FUNDS As noted earlier, fund accounting is used to demonstrate and ensure compliance with finance-related legal requirements. Governmental Funds - The focus of the County's governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the County's financing requirements. In particular, the unreserved fund balance may serve as a useful measure of the County's net resources available for spending at the end of the fiscal year. The County's governmental funds reflect a combined fund balance of $11,980,348, an increase of $1,642,911 over the prior year. Of this, $2,500 is nonspendable for prepaids, $2,070,140 is restricted for road and bridges, $119,948 for capital projects, $196,634 for law enforcement, $26,593 for social services and $898,269 for other purposes. There was an increase in fund balance of $1,647,559 from the prior year for the general fund. This increase is a result of an increase in charges of services, as discussed in the governmental funds analysis and also the increase of sales tax revenue. The road and bridge fund experienced a slight decrease in fund balance of $162,007, due primarily to the increase in public transportation projects. Capital expenditures had an increase in fund balance of $81,150 due to transfers from the general fund. CAPITAL ASSETS At the end of the year, the County's governmental activities funds had invested $11,485,148 net of accumulated depreciation in a variety of capital assets. Depreciation is included with the governmental capital assets as required by GASB Statement No. 34. Major capital asset events during the current year include the following: Three patrol vehicles totaling $92,088; One motor grader for a total of $197,845. More detailed information about the County's capital assets is presented in the notes to the financial statements. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET The County has continued to experience decreased ad valorem revenue due to legislation passed in 2010 affecting oil and gas evaluations. These effects will continue to be seen through the 2011-2012 and possibly the 2012-2013 budgets. To account for the decreased revenue, elected officials have been asked to reduce their individual operating budgets by a minimum of ten percent and employee salaries have not been increased. However, the Commissioner's Court of Leon County has maintained the same tax rate of .417777 for its citizens even though the effective tax rate has increased to .461238. 16 LEON COUNTY, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued) For the Year Ended September 30, 2011 REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of Leon County's finances. Questions concerning this report or requests for additional financial information should be directed to Susan Pugh, County Auditor, Leon County, P.O. Box 898, Centerville, Texas 75833. 17 (This page intentionally left blank.) 18 BASIC FINANCIAL STATEMENTS 19 (This page intentionally left blank.) 20 LEON COUNTY, TEXAS STATEMENT OF NET ASSETS September 30, 2011 Primary Government Governmental Activities Assets Cash and cash equivalents Investments Receivables, net Prepaids $ Nondepreciable capital assets Depreciable capital assets, net 7,819,320 4,645,865 1,173,025 2,500 13,640,7'10 1,116,812 10,368,336 11,485,148 Total Assets 25,125,858 Liabilities Current: Accounts payable and accrued liabilities 540,671 540,671 Noncurrent liabilities: Long-term liabilities due within one year Long-term liabilities due in more than one year 222,077 24,675 246,752 Total Liabilities 787,423 Net Assets Invested in capital assets Restricted for: Road and bridges Capital projects Law enforcement Social services Other purposes Unrestricted 11,485,148 2,070,140 119,948 196,634 26,593 898,269 9,541,703 Total Net Assets See Notes to Financial Statements. 21 $ 24,338,435 LEON COUNTY, TEXAS STATEMENT OF ACTIVITIES For the Year Ended September 30, 2011 Functions/Programs Primary Government: Governmental Activities: General government Judicial Legal Public safety Public welfare Public transportation Total Governmental Activities Total Primary Government Program Revenues Operating Charges for Grants and Contributions Services Expenses $ $ 4,775,279 661,651 177,478 1,856,342 788,064 4,370,809 12,629,623 12,629,623 $ $ 140,550 1,032,493 135,135 $ 787,945 1,167,628 1,167,628 $ 928,495 928,495 General Revenues: Property taxes Sales taxes Investment income Other revenue Total General Revenues Change in Net Assets Beginning Net Assets Ending Net Assets See Notes to Financial Statements. 22 Net (Expense) Revenue and Changes in Net Assets Governmental Activities $ (4,634,729) 370,842 (42,343) (1,856,342) (119) (4,370,809) (10,533,500) (10,533,500) 8,820,524 1,896,964 204,959 915,785 11,838,232 1,304,732 23,033,703 $ 24,338,435 23 LEON COUNTY, TEXAS BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2011 Road and Bridge General Assets Cash and cash equivalents Investments Receivables, net Prepaids $ Capital Expenditures Liabilities Accounts payable and accrued liabilities Due to others Other liabilities Deferred revenue $ 803,115 1,320,000 219,431 $ $ $ 2,342,546 $ $ Total Assets 5,700,955 3,325,865 852,102 1,650 9,880,572 188,219 $ 225,671 798,768 1,212,658 Total Liabilities 119,948 119,948 Nonmajor Governmental Funds $ 1,195,302 $ 850 1,196,152 $ $ 52,975 219,431 272,406 9,307 64,499 73,806 Fund Balances Nonspendable Prepaids Restricted for: Road and bridge Capital projects Law enforcement Social services Other purposes Unassigned Total Fund Balances Total Liabilities and Fund Balances 1,650 850 2,070,140 119,948 196,634 26,593 898,269 $ 8,666,264 8,667,914 9,880,572 $ 2,070,140 2,342,546 $ 119,948 119,948 $ 1,122,346 1,196,152 Adjustments for the Statement of Net Assets: Capital assets used in governmental activities are not current financial resources and, therefore, not reported in the governmental funds. Capital assets - non-depreciable Capital assets - depreciable Accumulated depreciation Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the governmental funds. Long-term liabilities, including compensated absences, are not due and payable in the current period and, therefore, are not reported in the funds. Non-current liabilities due in one year Non-current liabilities due in more than one year Court fines receivable, net of related allowance, are not current financial resources and, therefore, are not reported in the governmental funds. Net Assets of Governmental Activities See Notes to Financial Statements. 24 Total Governmental Funds $ $ $ 7,819,320 4,645,865 1,071,533 2,500 13,539,218 197,526 64,499 278,646 1,018,199 1,558,870 2,500 2,070,140 119,948 196,634 26,593 898,269 8,666,264 11,980,348 1,116,812 15,598,416 (5,230,080) 1,018,199 (222,077) (24,675) $ 101,492 24,338,435 25 Toms LEON COUNTY, STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended September 30, 2011 Revenues Property taxes Sales taxes Intergovernmental revenue Charges for services Fines and forfeitures Investment income Other revenue $ 6,388,058 1,301,105 140,550 $ 990,981 127,536 101,243 9,049,473 Total Revenues Expenditures Current: General government Judicial Legal Public safety Public welfare Public transportation Capital outlay Capital Expenditures Road and Bridge General 2,203,573 595,859 $ 58,860 64,925 246,048 3,169,265 - Nonmaj or Governmental Funds $ 787,945 135,135 13,380 12,498 443,082 1,392,040 125,412 125,412 2,595,934 538,348 175,165 2,042,474 794,715 1,255,630 123,303 - - Total Expenditures 95,145 6,241,781 3,904,983 464,567 4,369,550 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,807,692 (1,200,285) 55,216 (1,215,349) (1,160,133) 1,118,830 (118,830) 38,278 1,038,278 81,694 81,694 133,655 (55,216) 78,439 1,647,559 (162,007) 81,150 76,209 38,798 1,046,137 Other Financing Sources (Uses) Transfers in Transfers (out) Sale of capital assets Total Other Financing Sources (Uses) Net Change in Fund Balances Beginning Fund Balances Ending Fund Balances $ 8,667,914 See Notes to Financial Statements. 26 125,956 125,956 (544) 2,232,147 7,020,355 $ 2,070,140 15,337 1,394,270 $ 119,948 (2,230) $ 1,122,346 Total Governmental Funds $ 8,591,631 1,896,964 928,495 135,135 1,063,221 204,959 915,785 13,736,190 3,851,564 661,651 175,165 2,042,474 794,715 3,904,983 701,005 12,131,557 1,604,633 1,389,395 (1,389,395) 38,278 38,278 1,642,911 10,337,437 $ 11,980,348 27 (This page intentionally left blank.) 28 LEON COUNTY, TExAs RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GO VERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2011 Amounts reported for governmental activities in the Statement of Activities are different because: Net changes in fund balances - total governmental funds $ Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay additions Capital outlay deletions Depreciation additions Depreciation deletions 577,867 (229,522) (1,033,750) 148,954 Revenues in the Statement of Activities that do not provide current fmancial resources are not reported as revenues in the funds. Deferred revenue Fines and fees receivable 228,893 (30,728) Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. This adjustment reflects the net change on the accrual basis of accounting for compensated absences. Change in Net Assets of Governmental Activities See Notes to Financial Statements. 29 1,642,911 107 $ 1,304,732 (This page intentionally left blank.) 30 LEON COUNTY, TExAs STATEMENT OF FID UCIARY NET ASSETS AGENCY FUNDS September 30, 2011 Total Agency Funds Assets Cash and investments $ Liabilities Due to others Total Liabilities See Notes to Financial Statements. 31 $ 1,587,233 $ Total Assets 1,587,233 1,587,233 $ 1,587,233 (This page intentionally left blank.) 32 LEON COUNTY, TExAS NOTES TO FINANCIAL STATEMENTS For the Year Ended September 30, 2011 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity Leon County, Texas (the "County") is an independent governmental entity created in 1846 by an act of the Texas Legislature. The County is governed by Commissioners' Court, which is composed of four County Commissioners and the County Judge, all of whom are elected officials. The County's financial statements include the accounts of all County operations. The County provides a vast array of services including general government, judicial, legal, public safety, public welfare, and public transportation. Considerations regarding the potential for inclusion of other entities, organizations, or functions in the County's financial reporting entity are based on criteria prescribed by generally accepted accounting principles. These same criteria are evaluated in considering whether the County is a part of any other governmental or other type of reporting entity. The overriding elements associated with the prescribed criteria considered in determining that the County's financial reporting entity status is that of a primary government are that it has a separately elected governing body, it is legally separate, and it is fiscally independent of other state and local governments. Additionally, prescribed criteria under generally accepted accounting principles include considerations pertaining to organizations for which the primary government is financially accountable, and considerations pertaining to organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. Blended Component Unit Leon County Juvenile Probation Department The Leon County Juvenile Probation Department is a legally separate entity from the County but is so closely related to the County that it is, in essence, an extension of the County. This entity is considered a blended component unit for reporting purposes. The financial data of this unit is combined with that of the County since the unit is, in substance, part of the County's operations. The financial statements of the unit are separately audited as of their fiscal year end (August 31) to meet the reporting requirements of their major funding source (the State of Texas). Audited financial statements for the blended component unit can be obtained by contacting the Leon County Auditor, P.O. Box 898, Centerville, Texas 75833. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of Activities) report information about the County as a whole, excluding fiduciary activities. These statements include all activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, of which the County has none. 33 LEON COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the County's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include charges paid by the recipients of goods or services offered by the programs and grants that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, such as taxes and investment earnings, are presented as general revenues. Separate financial statements are provided for governmental funds and fiduciary funds, event though the latter are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate. Following is a description of the various funds: Governmental Funds Governmental funds are those funds through which most governmental functions are typically financed. General Fund The general fund is used to account for all financial transactions not properly includable in other funds. The principal sources of revenues include local property taxes, sales taxes, fines and forfeitures, as well as licenses and permits. Expenditures include general government, judicial, legal, public safety, and public welfare. Special Revenue Funds The special revenue funds are used to account for and report the proceeds of specific revenue sources that are legally restricted or committed to expenditure for specified purposes other than debt service or capital projects. The special revenue funds are considered non-major funds for reporting purposes except one fund. The road and bridge fund is a major fund for reporting purposes. Capital Expenditures Fund Capital project funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets. The capital expenditures fund accounts for the acquisition or construction of major capital projects within the County. The capital expenditures fund is a major fund for reporting purposes. 34 LEON COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 Fiduciary Funds Fiduciary funds account for assets held by the County in a trustee capacity or as an agent on behalf of others. Fiduciary funds are not reflected in the government-wide financial statements, because the resources of those funds are not available to support the County's own programs. The County has the following types of fiduciary funds: Agency Funds Agency funds are custodial in nature and do not present results of operations or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting to recognize receivables and payables. These funds are used to account for assets that the County holds for others in an agency capacity. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide Statements of Net Assets and Statements of Activities are accounted for on a flow of economic resources measurement focus which is the accrual basis of accounting, as are the fiduciary fund financial statements. With this measurement focus, all assets and all liabilities associated with the operations of these activities are included on the balance sheet, including capital assets and long-term liabilities. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds are accounted for using a current financial resources measurement focus which is the modified accrual basis of accounting. With this measurement focus, only current assets and current liabilities are generally included on the balance sheet. The Statement of Revenues, Expenditures, and Changes in Fund Balance presents increases (i.e., revenues and other financing sources) and decreases (i.e., expenditures and other financing uses) in net current assets. An accompanying schedule is presented to reconcile and explain the differences in fund balances and changes in fund balances as presented in these statements to the net assets and changes in net assets presented in the government-wide financial statements. Under the modified accrual basis of accounting, revenues are recognized in the accounting period when they are susceptible to accrual (i.e., when they are measurable and available). "Measurable" means the amount of the transaction can be determined, and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the County considers revenues available if they are collected within 60 days of the end of the current fiscal period. Property taxes, sales taxes, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Other receipts and other taxes become measurable and available when cash is received by the government and are recognized as revenue at that time. Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Under modified accrual accounting, expenditures are recognized in the accounting period in which the liability is incurred, if measurable, except for interest on general long-term debt, as well as expenditures related to compensated absences and claims and judgments, which are recognized when payment is due, if applicable. 35 LEON COUNTY, TEAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 The Statements of Net Assets and Statements of Activities are presented on the accrual basis of accounting. Under this method of accounting, revenues are recognized in the accounting period in which they are earned, and expenses are recognized in the accounting period in which they are incurred. Generally, the effect of interfund activity has been eliminated from the government-wide financial statements. D. Assets, Liabilities, and Net Assets or Fund Equity 1. Deposits and Investments The County's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. In accordance with GASB Statement No. 31, Accounting and Reporting for Certain Investments and External Investment Pools, the County reports all investments at fair value, except for "money market investments" and "2a7-like pools." Money market investments, which are short-term highly liquid debt instruments that may include U.S. Treasury and agency obligations, are reported at amortized costs. Investment positions in external investment pools that are operated in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940, such as TexPool, are reported using the pools' share price. The County has adopted a written investment policy regarding the investment of its funds as defined in the Public Funds Investment Act, Chapter 2256, Texas Governmental Code. In summary, the County is authorized to invest in the following; Fully collateralized certificates of deposit and money market accounts 2. Receivables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "interfund receivables/payables" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as "due to/from other funds" in the fund financial statements. Advances between funds are offset by a fund balance reserve account in an applicable governmental fund to indicate that they are not available for appropriation and are not expendable available financial resources. All trade receivables are shown net of an allowance for uncollectibles. Property taxes General property taxes are recorded as revenue when levied for the current year and are due, payable, and collected in the current year. Uncollected amounts at year end are reported as deferred revenue. Delinquent property taxes collected within 60 days subsequent to year end were not considered material. 36 LEON COUNTY, TExAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 The property tax calendar dates are: (a) Levy date - October 1 (b) Due date - October 1 (c) Collection dates - October 1 through January 31 (d) Lien date - January 1 (following year) The County bills and collects its own taxes and those for certain governmental entities within the County. Collections of the property taxes and subsequent remittances to the proper entities are accounted for in the tax assessor's ad valorem agency fund. Tax collections deposited for the County are distributed on a periodic basis to the general and road and bridge funds of the County. This distribution is based upon the tax rate established for each fund by order of the Commissioners' Court for the tax year for which the collections are made. The appraisal of property within the County is the responsibility of the county-wide appraisal district which is required under the Property Tax Code to assess all property within the appraisal district on the basis of 100 percent of its appraised value and is prohibited from applying any assessment ratios. The value of property within the County must be reviewed every three years by the appraisal district unless the County, at its own expense, requires more frequent reviews. The County may challenge the appraised values through various appeals and, if necessary, legal action. Under this legislation, the County sets tax rates on County property. Property taxes are levied by October 1 on the assessed value listed as of the prior January 1 for all real and business personal property 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. Property tax revenues are considered available when they become due or past due and receivable within the current period. 3. Inventories and Prepaid Items The costs of governmental fund type inventories are recorded as expenditures when the related liability is incurred (i.e., the purchase method). Certain payments to vendors reflecting costs applicable to the future accounting period (prepaid expenditures) are recognized as expenditures when utilized. 4. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental type activities columns in the government-wide financial statements. Capital assets are defined by the County as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of one year. 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. Property, plant, and equipment of the primary government are depreciated using the straight-line method over the following estimated useful years: 37 LEON COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 Estimated Useful Life Asset Description Buildings Building improvements Infrastructure Vehicles Equipment and machinery 30 years 30 years 40 years 5 years 10 years 5. Compensated Employee Absences It is the County's policy to permit employees to accumulate earned but unused vacation and compensatory time. Amounts accumulated may be paid to employees upon termination of employment or during employment in accordance with the County's personnel policy. The estimated amount of compensation for services provided that is expected to be liquidated with expendable, available financial resources is reported as an expenditure and a fund liability of the governmental fund that will pay it when it matures or becomes due. Amounts of vested or accumulated vacation leave that are not expected to be liquidated with expendable, available financial resources are maintained separately and represent a reconciling item between the fund and government-wide presentations. 6. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities' Statement of Net Assets. The longterm liabilities consist primarily of accrued compensated absences. Long-term debt for governmental funds is not reported as a liability in the fund financial statements until due. The debt proceeds are reported as other financing sources, net of the applicable premium or discount, and payment of principal and interest are reported as expenditures. In the governmental fund types, issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. However, claims and judgments paid from governmental funds are reported as a liability in the fund financial statements only for the portion expected to be financed from expendable available financial resources. Assets acquired under the terms of capital leases are recorded as liabilities and capitalized in the government-wide financial statements at the present value of net minimum lease payments at inception of the lease. In the year of acquisition, capital lease transactions are recorded as other financing sources and as capital outlay expenditures in the general fund. Lease payments representing both principal and interest are recorded as expenditures in the general fund upon payment with an appropriate reduction of principal recorded in the government-wide financial statements. 7. Fund Equity Fund balances of governmental funds are classified as follows: Nonspendable fund balance - represents amounts that cannot be spent because they are either in nonspendable form (such as inventory or prepaid insurance) or are legally required to remain intact (such as notes receivable or principal of a permanent fund). 38 LEON COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 Restricted fund balance - represents amounts that are constrained by external parties, constitutional provisions, or by enabling legislation. Committed fund balance - represents amounts constrained to specific purposes by the County itself, using its highest level of decision-making authority (i.e., Commissioners' Court). To be reported as committed, amounts cannot be used for any other purpose unless the County takes the same highest level action to remove or change the constraint. The commitment must be made prior to year end. Assigned fund balance - represents amounts the County intends to use for a specific purpose. Intent can be expressed by the Commissioners' Court or by an official or body to which the Commissioners' Court delegates the authority. Assignments can be made at any time. Unassigned fund balance represents amounts that are available for any purpose. Positive amounts are reported only in the general fund. Other governmental funds might report a negative balance in this classification because of overspending for specific purposes for which amounts had been restricted, committed, or assigned. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the County considers amounts to have been spent first out of committed, then assigned funds, and finally unassigned funds. As of yearend, the County has not implemented a policy to define the formal action to be taken to establish (and modify or rescind) a fund balance commitment or the body or official(s) authorized to assign amounts to a specific purpose. 8. 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 disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. H. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY The original budget is adopted by the Commissioners' Court prior to the beginning of the period. The legal level of control is the department level. Management may not amend the budget without the approval of Commissioners' Court. The final amended budget is used in this report. Budgets are adopted for the general fund and most special revenue funds. All funds that adopted a budget did so on a GAAP basis. Several supplemental budget appropriations were made for the period ended September 30, 2011. 39 LEON COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 III. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments As of September 30, 2011, the County had the following investments: Investment Type Fair Value Certificates of Deposit $ Weighted Average Maturity (Years) 5,424,930 5,424,930 .21 Custodial credit risk - deposits. In the case of deposits, this is the risk that in the event of a bank failure, the County's deposits may not be returned to it. The County's investment policy requires funds on deposit at the depository bank to be collateralized. As of September 30, 2011, bank balances were sufficiently covered by FDIC and market values of pledged securities. B. Receivables The following comprises receivable balances at year end: Property taxes Other $ $ General 634,718 217,384 852,102 40 Road and Bridge $ 219,431 $ $ $ 219,431 Total 854,149 217,384 1,071,533 LEON COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 C. Capital Assets A summary of changes in capital assets for the year end is as follows: Primary Government Beginning Decreases/ Balance Ending Transfers Increases Balance Governmental Activities: Capital assets not being depreciated: Land $ 491,480 Construction in process $ 532,613 Total capital assets not being depreciated 35,508 $ 77,000 112,508 1,024,093 - $ (19,789) (19,789) 526,988 589,824 1,116,812 Other capital assets: Buildings and improvements 7,224,684 1,366,631 5,865,248 Infrastructure Equipment Vehicles 19,789 353,482 7,244,473 1,366,631 886,227 Total capital assets 92,088 15,342,790 465,359 (209,733) 15,598,416 16,366,883 577,867 (229,522) 16,715,228 (1,011,361) (241,482) (1,252,843) (68,332) Total other capital assets (155,764) (53,969) 99,594 (102,498) (3,241,161) 49,360 148,954 (633,578) (5,230,080) (568,391) (60,779) 10,368,336 (455,883) $ (80,568) $ 11,485,148 6,062,966 924,346 Less accumulated depreciation for: Buildings and improvements Infrastructure Equipment (2,719,532) (34,166) (621,223) Vehicles (546,059) (4,345,284) (136,879) (1,033,750) Total accumulated depreciation Total capital assets being depreciated, net 10,997,506 Governmental activities capital assets, net $ 12,021,599 $ Depreciation was charged to governmental functions as follows: General government $ Legal 299,845 2,313 Public safety 422 Public welfare 36,845 Public transportation 694,325 Total Governmental Activities Depreciation Expense 41 $ 1,033,750 LEON COUNTY, TExAs NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 D. Long - Term Liabilities The following is a summary of changes in the County's total governmental long-term liabilities for the year ended September 30, 2011. Beginning Balance Governmental Activities: Compensated absences Total Governmental Activities $ $ Additions Ending Balance (Reductions) 104,584 104,584 $ $ $ $ (104,691) (104,691) Long-term liabilities due in more than one year $ $ 246,752 246,752 $ 246,859 246,8 59 Due Within One Year 24,675 $ $ E. Interfund Transactions Transfers between the primary government funds during the year were as follows: Transfer Out General Road and bridge Capital expenditures Nomnajor governmental funds $ 1,215,349 118,830 55,216 1,389,395 $ Transfer In $ $ 55,216 1,118,830 81,694 133,655 1,389,395 Amounts transferred between funds relate to amounts collected by general, capital projects, and special revenue funds for various governmental expenditures. IV. OTHER INFORMATION A. Risk Management The County is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the County carries commercial insurance. In addition, the County participates along with 338 other entities in the Texas Association of Counties Workers' Compensation Self-Insurance Fund. This pool was created by the Texas Association of Counties in 1974 to insure the County for workers compensation related claims. This pool purchases commercial insurance at group rates for participants in the pool. The County has no additional risk or responsibility to either of the pools in which it participates, outside of payment of insurance premiums. The County has not significantly reduced insurance coverage or had settlements that exceeded coverage amounts for the past three fiscal years. B. Related Party Transactions The County purchases fuel and other related costs from Ryder Oil Company. Ryder Oil is a family owned business by Judge Byron Ryder. Fuel payments and other related costs totaled $488,666 for the fiscal year 2011. The Judge has not voted in any matter related to Ryder Oil Company. In instances where there were discussions or decisions related to Ryder Oil Company, the Judge removed himself from the discussion and abstained from voting. 42 222,077 222,077 LEON COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 C. Contingent Liabilities Amounts received or receivable from granting agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount of expenditures which may be disallowed by the grantor cannot be determined at this time although the County expects such amounts, if any, to be immaterial. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts, and other economic and social factors. No claim liabilities are reported at year end. D. Pension Plan Plan Description The 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 586 nontraditional defined benefit pension plans. TCDRS in the aggregate issues a comprehensive annual fmancial 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 787682034. The plan provisions are adopted by Commissioners' Court within the options available in Texas state statutes governing TCDRS (TCDRS Act). Members can retire at ages 60 and above with eight or more years of service, or when the sum of their age and years of service equals 75 or more, or with 20 years of service, regardless of age. Members are vested after eight 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 are not entitled to any amounts contributed by their employer. Benefit amounts are determined by the sum of the employee's deposits to the plan, with interest, and employer-financed monetary credits. The level of these monetary credits is adopted by the Commissioners' Court 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 (ADCR) plan provisions of the TCDRS Act. The plan is funded by monthly contributions from both employee members and the employer based on the covered payroll of employee members. Under the TCDRS Act, the contribution rate of the employer is actuarially determined annually. The County contributed using 43 LEON COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 the actuarially determined rate of 2.98 percent for the months of the accounting year in 2010 and 3.40 percent for the months of the accounting year in 2011. The contribution rate payable by the employee members for calendar year 2011 is the rate of seven percent as adopted by Commissioners' Court. The employee contribution rate and the employer contribution rate may be changed by Commissioners' Court within the options available in the TCDRS Act. Annual Pension Costs The required contribution was determined as part of the December 31, 2010 actuarial valuation using the entry age actuarial cost method. The actuarial assumptions at December 31, 2010 included (a) an eight percent investment rate of return (net of administrative expenses), and (b) projected salary increases of 5.4 percent. Both (a) and (b) included an inflation component of 3.5 percent. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a ten-year period. The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2010 was 30 years. Actuarial Cost Method Amortization Method Amortization Period Asset Valuation Method Entry Age Level Percent of Payroll - Open 30 years 10 year smoothed value ESF: Fund Balance 8% 5.4% 3,5% None Investment Rate of Return Projected Salary Increases Includes Inflation at Cost of Living Adjustments Annual Req. Contrib. (ARC) Contributions Made NPO at the End of Period $ 2011 291,025 291,025 $ $ 2010 293,491 293,491 $ 2009 287,588 287,588 $ Funded Status and Funding Progress As of December 31, 2010, the most recent actuarial valuation date, the plan was 112.95 percent funded. The actuarial accrued liability for benefits was $6,682,201, and the actuarial value of assets was $7,547,430, resulting in an overfunded actuarial accrued liability (OAAL) of $865,229. The covered payroll (annual payroll of active employees covered by the plan) was $4,210,223, and the ratio of the OAAL to the covered payroll was 20.55 percent. The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. 44 LEON COUNTY, TEXAS NOTES TO FINANCIAL STATEMENTS (Continued) For the Year Ended September 30, 2011 E. Other Post Employment Benefits TCDRS - Optional Group Term Life Plan Description The County participates in a cost-sharing multiple-employer defined-benefit group-term life insurance plan operated by the TCDRS. This plan is referred to as the Optional Group Term Life Fund (OGTLF). This optional plan provides group term life insurance coverage to current eligible employees and, if elected by employers, to retired employees. The coverage provided to retired employees is a post employment benefit other than pension benefits (OPEB). Retired employees are insured for $5,000. The OGTLF is a separate trust administered by the TCDRS board of trustees. TCDRS issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and Required Supplementary Information for the OGTLF. This report may be obtained by writing to the Texas County and District Retirement System, P.O. Box 2034, Austin, TX 78768-2034, or by calling 800-823-7782. TCDRS' CAFR is also available at www.tcdrs.org . Funding Policy Each participating employer contributes to the OGTLF at a contractually required rate. An annual actuarial valuation is performed and the contractual rate is determined using the unit credit method for providing one-year term life insurance. The dollars contributed for the years ended September 30, 2011, 2010, and 2009 were $27,046, $28,408, and $25,987, respectively. 45 (This page intentionally left blank.) 46 REQUIRED SUPPLEMENTARY INFORMATION 47 LEON COUNTY, TEXAS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (Page 1 of 2) GENERAL FUND For the Year Ended September 30, 2011 Budgeted Amounts Original Final Revenues Property taxes Sales taxes Intergovernmental revenue Fuses and forfeitures Investment income Other revenue Total Revenues Expenditures General Government: Commissioners' court County clerk County court District clerk County auditor County treasurer County tax assessor Nondepartmental County courthouse complex Judicial: Adult probation services District court Justices of peace Legal: County attorney Public Safety: Justice center Constables License weights Texas ranger Highway patrol $ 6,469,155 1,002,500 130,500 671,100 100,000 61,300 8,434,555 $ 6,126,097 1,002,500 80,500 729,100 100,000 396,358 8,434,555 Actual Amounts $ 6,388,058 1,301,105 140,550 990,981 127,536 101,243 9,049,473 Variance with Final Budg