TOWN OF ECLECTIC, ALABAMA ANNUAL FINANCIAL REPORT SEPTEMBER 30, 2018    TOWN OF ECLECTIC, ALABAMA ANNUAL FINANCIAL REPORT SEPTEMBER30, 2018  Table ofContents  Page 1  Independent Auditors' Report Financial Statements Govermment-wide. Financial Statements Statement ofNet] Position Statement of Activities Fund Financial. Statements Balance Sheet - Governmental: Funds Statement ofl Net Position Balances - Governmental Funds  3 4 5 6 7 8 9 10 11 12 27 28 29  Reconciliation oft the Governmental Funds Balance Sheet to the Statement ofl Revenues, Expenditures, and Changes in Fund Reconciliation oft the Governmental Funds Statement ofRevenues, Expenditures, and Changes in Fund Balances tot the Statement of  Activities  Statement ofNet Position- -1 Proprietary Fund  Statement of] Revenues, Expenses, and Changes inl Net Position- Statement of Cash! Flows - Proprietary Fund Notes to the Financial Statements Required Supplementary Information Budget to. Actual Comparison Schedule - General Fund Schedule of Proportionate Share of thel Net] Pension Liability Schedule of] Employer Contributions to the Town's Employee Pension Plan  Proprietary Fund    PATTERSON & DUKE, P.C. CERTIFIED: PUBLICA ACCOUNTANTS 1714GILMER. AVENUE TALLASSEE, ALABAMA36078  TASHAI D.1 PATTERSON, CPA PAULAJ.DUKE,CPA  PHONE: 334-283-4455 FAX: 334-991-4700  INDEPENDENT AUDITORS' REPORT  Honorable Mayor and Members of the Town Council Town of Eclectic, Alabama  We have audited the accompanying financial statements oft the governmental activities, thel business-type activities, and each major fund of the Town of Eclectic, Alabama (the Town), as of and for the year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise the Town's basic financial Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are: free An auditi involves performing procedures to obtain audit evidence about the amounts and disclosures int the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not fort the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit Inc our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, and each major fund of the Town as of September 30, 2018, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.  statements as listed in the table of contents.  Management's Responsibility for the Financial Statements  statements that are free from material misstatement, whether due to fraud or error.  Auditors' Responsibility  from material misstatement.  financial statements. opinions. Opinions    Other Matters  Required Supplementary Information  Management has omitted managements discussion and analysis that accounting principles generally accepted in the United States of America require to be presented to supplement the basic financial statements. Such missing 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. Our opinions on the basic financial Accounting principles generally accepted in the United States of America require that the budgetary comparison information and pension comparison information on pages 28-30 be presented to supplement the basic financial statements. Such information, although not ap part of thel 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 managements 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  statements is not affected by this missing information.  us with sufficient evidence to express an opinion or provide any assurance.  Patterson & Duke, P.C. Tallassee, Alabama November 18, 2019  2    FINANCIALSTATEMENTS    TOWN OF ECLECTIC, ALABAMA STATEMENT OF NET: POSITION SEPTEMBER 30, 2018  Governmental Activities $  Business-type Activities  Total  ASSETS Cash and cash equivalents Receivables, net Internal balances Inventories Prepaid expenses Capital assets not being depreciated Capital assets being depreciated, net TOTALI ASSETS  760,256.99 $ 966,565.21 $ 1,726,822.20  199,050.27 87,963.48 25,089.18 563,954.07 936,168.56 2,572,482.55 170,355.66 172,545.25 9,125.43 28,142.24 24,208.00 129,559.18 1,031,224.69 125,844.00 1,520,648.79 44,030.58 359,980.09 43,605.49 62,232.33 712,340.93  89,551.47 (87,963.48) 50,755.57 11,998.46 107,569.74 2,810,369.08 3,948,846.05 44,779.34 45,630.93 3,565.28 79,231.09 5,761.44 24,883.25 159,071.99 11,502.42 2,917,938.92  288,601.74 50,755.57 37,087.64 671,523.81 3,746,537.64 6,521,328.60 215,135.00 218,176.18 9,125.43 31,707.52 79,231.09 24,208.00 135,320.62 1,031,224.69 150,727.25 1,679,720.78 55,533.00 3,277,919.01 43,605.49 62,232.33 1,617,452.99  DEFERRED OUTFLOWS OF RESOURCES Deferred employer retirement contributions  LIABILITES Accounts Payable Accrued interest payable Other current liabilites Customer deposits Line of credit Long-term liabilities: Due within one, year Duei in more than one year Other liabilities due in more than one year: Net pension liability TOTALLIABILITIES  TOTALDEFERRED INFLOWS OF RESOURCES Deferred inflows related toj pension NETI POSITION Neti investment in capital assets Restricted for: Public works Municipal court Unrestricted TOTAL NET POSITION  905,112.06  $ 1,178,158.84 $ 3,823,050.98 $ 5,001,209.82  See accompanying notes to financial statements.  3        TOWN OF ECLECTIC, ALABAMA BALANCE: SHEET GOVERNMENTALI FUNDS SEPTEMBER 30, 2018  Total Governmental Funds 751,816.94 8,440.05 199,050.27 25,089.18 94,395.98 1,078,792.42  Municipal Court  General Fund Street Fund  ASSETS Cash Cash-I restricted Receivables Prepaid expenses Due from other funds TOTAL. ASSETS  $ 640,942.45 $ 34,114.87 $ 76,759.62 $  8,440.05 197,021.20 25,089.18 94,395.98 965,888.86  1,050.57 35,165.44  978.50 77,738.12  LIABILITIES AND FUND BALANCES  LIABILITIES Accounts payable Other current liabilities Duet to other funds Line of credit TOTAL: LIABILITIES FUND! BALANCES Nonspendable: Prepaid expenses Restricted: Public works Municipal court Unassigned TOTALFUND BALANCES TOTALLIABILITIES AND FUNDI BALANCES  169,184.40 15,997.30 6,432.50 24,208.00 215,822.20  3,360.85 12,144.94 15,505.79  172,545.25 28,142.24 6,432.50 24,208.00 231,327.99  25,089.18 8,440.05 716,537.43 750,066.66  25,089.18 43,605.49 62,232.33 716,537.43 847,464.43  35,165.44 35,165.44  62,232.33 62,232.33  965,888.86 $ 35,165.44 $ 77,738.12 $ 1,078,792.42  See accompanying notes to financial statements.  5    TOWN OF ECLECTIC, ALABAMA STATEMENT OF NETI POSITION SEPTEMBER: 30, 2018  RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL, FUNDS TOTHE  Differences in amounts reported in governmental activities in1 the Statement of Net Position:  Total fund balances - governmental funds Capital assets used in governmental activities are not financial resources and, therefore, are not reported in  $ 847,464.43  the governmental funds  1,500,122.63  Deferred employer retirement contributions are applicable toi future periods and, therefore, are noti reported in governmental funds Long-term liabilities, including bonds payable, and accrued interest are not due and payable in the current period and, therefore, are not reported in the governmental funds. Balances at September 30, 2018, were: Bonds, leases, and notes payable Accrued interest Deferred inflows related to pension Compensated absences Total long-term liabilities  170,355.66  (1,140,142.54) (9,125.43) (44,030.58) (20,641.33)  (1,213,939.88) (125,844.00) 1,178,158.84  Net pension liability as ai result of thei implementation of GASB 68  Net position of governmental activities  See accompanying notes to financial statements.  6    TOWN OF ECLECTIC, ALABAMA GOVERNMENTAL, FUNDS FOR THE YEARI ENDED SEPTEMBER: 30,2018  STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND: BALANCES  Total Governmental Funds 1,297,740.93 238,903.25 106,915.73 222,199.79 144,942.35 31,523.31 3,468.82 2,045,694.18  Municipal Court  General Fund Street Fund  REVENUES Taxes Licenses and permits Intergoyernmental Charges fors services Fines and forfeitures Miscellaneous revenues Interest Total revenues EXPENDITURES Current operations: General government Public safety Public works Public welfare Debt service: Principal retirement Interest charges Total expenditures Excess ofrevenues over expenditures OTHER FINANCING SOURCES Transfers in Transfers out Total other financing sources Net change in fund balances FUND BALANCES BEGINNING, FUNDI BALANCES- ENDING  1,288,034.23 $ 9,706.70 $  237,462.75 106,915.73 222,199.79 32,063.87 31,523.31 3,460.41 1,921,660.09  1,440.50  112,878.48 8.41 112,886.89  11,147.20  349,364.71 865,849.31 166,714.95 281,625.95 113,822.12 60,233.58 1,837,610.62 84,049.47  115,817.87  465,182.58 865,849.31 169,450.03 281,625.95 113,822.12 60,233.58 1,956,163.57 89,530.61  2,735.08  2,735.08 8,412.12  115,817.87 (2,930.98)  84,049.47 666,017.19  8,412.12 26,753.32  (2,930.98) 65,163.31  89,530.61 757,933.82  750,066.66 $ 35,165.44 $ 62,232.33 $ 847,464.43  See accompanying notes to financial statements.  7    TOWN OF ECLECTIC, ALABAMA FOR THE YEARI ENDED SEPTEMBER: 30, 2018  RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INI FUND! BALANCES OF GOVERNMENTAL: FUNDS TOT THE: STATEMENT OF ACTIVITIES Differences in amounts reported for governmental activities in the Statement of Activities:  Net change in fund balances total governmental funds Capital outlays, reported as expenditures in governmental funds, are shown as capital assets in the Statement ofl Net] Position. The loss reported on the disposal of capital assets is reported in the Statement of Activities but not included as an expenditure in the governmental funds. The change in net assets differs fromi the change in Depreciation expense on governmental capital assets included in the governmental activities in the Statement of Activities. Repayment of long-term debt is reported as an expenditure in the governmental funds, but a reduction of long-term liabilities in the Statement of] Net Position: Principal payments on long-term liabilities  89,530.61 201,565.00  fund balances by this amount.  (4,400.00) (148,782.15)  113,822.10  Some expenses reported in the statement of activities do not require the use of current financial resources and; therefore, are not reported as Change in accrued interest payable on long-term debt Change in net pension liability and related deferred amounts Change in the accrual for compensated absences Change in net position of governmental activities  expenditures in the funds.  1,089.13 (33,647.00) (1,967.25)  (34,525.12) 217,210.44  See accompanying notes to financial statements.  8    TOWN OF ECLECTIC, ALABAMA STATEMENT OFI NETI POSITION PROPRIETARY FUND SEPTEMBER 30, 2018 ASSETS Current assets Cash Accounts receivable, net Due from other funds Prepaid insurance Inventory Total current assets Non-current assets Capital assets Non-depreciable: Land Depreciable: Buildings andi improvements Landi improvements Machinery and equipment Utility system Less: accumulated depreciation Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Accounts payable Other liabilities Compensated absences Duet to other funds Customer deposits Total current liabilities Non-current liabilities Net pension liability TOTALLIABILITES DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions NETI POSITION Neti investment in capital assets Unassigned TOTALNET! POSITION  $ 966,565.21 89,551.47 6,432.50 11,998.46 50,755.57 1,125,303.21  107,569.74 169,750.26 300,000.00 2,878,826.69 3,183,320.96 (3,721,528.83) 2,917,938.82 4,043,242.03 44,779.34 45,630.93 3,565.28 5,761.44 94,395.98 79,231.09 228,584.72 24,883.25 253,467.97 11,502.42 2,917,938.92 905,112.06 $ 3,823,050.98  DEFERRED OUTFLOWS OF RESOURCES Deferred employer retirement contributions  See accompanying notes to financial statements.  9    TOWN OFI ECLECTIC, ALABAMA FOR THE YEAR: ENDED SEPTEMBER 30, 2018  STATEMENT OF REVENUES, EXPENSES, AND CHANGES INI NETI POSITION  PROPRIETARY FUND OPERATING REVENUES Charges fors services Fee revenues Total operating revenues OPERATING EXPENSES Water purchases Personnel Operation and maintenance Depreciation Total operating expenses OPERATING INCOME (LOSS) NON-OPERATING REVENUES (EXPENSES) Interest income Interest expense Total non-operating revenues (expenses) Income (loss) before contributions Capital contributions CHANGE INI NETI POSITION NETI POSITION ATI BEGINNING OF YEAR NETI POSITION ATI END OF YEAR  $  734,739.26 32,125.00 766,864.26 156,142.45 215,420.33 230,156.05 141,077.37 742,796.20 24,068.06 6,675.27 6,675.27 30,743.33 107,505.00 138,248.33 3,684,802.65 3,823,050.98  $  See accompanying notes to financial statements.  10    TOWN OF ECLECTIC, ALABAMA STATEMENT OF CASHI FLOWS PROPRIETARY: FUND FOR THE YEAR ENDED SEPTEMBER: 30, 2018 CASH FLOWS FROM OPERATING ACTIVITIES  Receipts from customers Payments to vendors Payments to employees  $ 771,392.18 (619,239.35) (239,097.12) (86,944.29) (291,948.57) 254,665.00 (37,283.57) 6,675.27 6,675.27 (117,552.59) 1,084,117.80 966,565.21  Net cash provided by operating activities Purchase of property and equipment Construction inj progress sewer Cash payments to other funds Capital contributions from grant  CASH: FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES  Net cash used by capital and related financing activities CASH: FLOWS FROM: INVESTING ACTIVITIES Interest received on cash accounts Net cash used by investing activities Net Cash Used Cash Balances Beginning of the Year Cash Balances End of the Year  RECONCILIATION OF OPERATING INCOME' TO NET CASH PROVIDED  BY OPERATING ACTIVITIES Operating income (loss) by operating activities: Depreciation expense Changes in assets and liabilities: Accounts receivable Unbilled revenue Prepaid assets Inventory Accounts and other payables Accrued expenses Compensated absences payable Meter deposits Net cash provided by operating activities  $ 24,068.06 141,077.37 8,032.00 404.82 (2,839.90) (9,756.22) (247,225.45) (4,998.51) 848.54 3,445.00 $ (86,944.29)  Adjustments to1 reconcile operating income to net cash provided Pension contributions subsequent to the measurement date  See accompanying notes to: financial statements.  11    TOWN OF ECLECTIC, ALABAMA NOTES TO: FINANCIAL STATEMENTS SEPTEMBER 30, 2018  1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Reporting Entity  The' Town of] Eclectic (the Town) was incorporated under thel laws of the State of Alabama in 1907 and operates under an elected mayor-council: form of government as required by State of Alabama Legislative Act] No. 73-618 approved August 28, 1973. The Town provides the following services: public safety (police and fire), highways and streets, sanitation and utilities (water and sewer), health and social services, public improvements, planning  and: zoning, recreation and general administrative services. Govermment-Wide and Fund. Financial Statements  Thel basic financial statements consist oft the government-wide financial statements and fund financial statements. Both sets of statements distinguish between governmental and business-type activities. Government-wide financial statements are comprised of the statement of net position and the statement of activities and reports information ofallo ofther non-fiduciary activities ofthe primary government andi its component units. For thei most part, the effect ofinter-fund: activity has been removed from these statements. The exception to this is inter-fund services provided and used which are eliminated in the consolidation process. Governmental activities which normally are supported by taxes and intergovemmental. revenues, are reported separately from business-type The statement ofa activities demonstrates the degree to which the direct expenses ofa given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues are classified into three categories: charges for services, operating grants and contributions, and capital grants and contributions. Charges for services refer to direct recovery from customers for services rendered. Grants and contributions refer to revenues restricted for specific programs whose use may ber restricted further to operational or capital items. The general revenues section displays revenue collected that help support all functions of government and contributes to the change in the net position for the fiscal year. The fund financial statements follow and report additional and detailed information about operations for major funds individually and nonmajor fundsi int the aggregate for governmental funds. A reconciliation is] provided that converts the results of governmental fund accounting to the governmental-wide presentations. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic: resources measurement focus and the accrual basis ofa accounting as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when al liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues: int they year received or when an enforceable legal claim exists, whichever comes first. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the Governmental: fund financial statements are reported usingt the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered tol be available when they are collectible within the current period or soon enough thereafter toj pay liabilities oft the current period, considered tol be sixty days for] property taxes and ninety days for all other revenue. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and  activities, which rely to a significant extent on fees and charges for support.  provider have been met.  claims andj judgments, are recorded only when payment is due. The Town Reports the: following major governmental: funds:  General Fund - This is the Town's primary operating fund. It accounts for all financial resources of the  general government, except those required to be accounted for in another fund.  12    TOWN OF ECLECTIC, ALABAMA NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2018  Street Fund - This is a special revenue fundi in which the Town accounts for the gasoline taxes received that Municipal Court Fund - This is a special revenue fund in which the Town accounts for court fines and  are restricted to the maintenance and capital improvements oft the" Town's streets.  bonds received.  The Town reports the following major enterprise funds:  Eclectic Water and Sewer Fund - Accounts for water and sanitary sewer services provided to the residents Proprietary funds distinguish operating revenues and expenses fromi nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the enterprise funds and internal service funds include the cost ofsales and services, administrative expenses, and depreciation on capital assets.. Allrevenues and expenses not meeting this definition arei reported as nonoperating revenues and expenses. An annual budget is adopted for the Town's general fund. Under state law, the Mayor submits the annual budget to the Council for consideration and approval no later than October 1. Such budget is based on expected expenditures by program and estimated resources by source. The budget is prepared using the modified accrual basis of accounting. Revisions to the budget must be approved by Council. All annual appropriations lapse at  ofthe Town.  Stewardship, Compliance, and.Accountabiliy  fiscal year-end.  Management Estimates and. Assumptions  The preparation of financial statements in conformity with accounting principle generally accepted in the United States of America 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 expenses during the reporting period. Actual results could vary from  estimates used.  Assets, Liabilities, and Equity Cash and Cash Equivalents  Cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments  with original maturities oft three months or less from the date ofacquisition.  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 ofi inter-fund loans) or" "advances to/from other funds" (i.e., thei noncurrent; portion oft thei inter-fund loans). Any residual balances outstanding between the governmental activities and business-type activities are reported in the  governmental-wide financial statements as "internal balances."  All receivables are shown net of any applicable allowances for unçollectible amounts.  Property taxes are assessed on October 1 and levied on the subsequent October 1f fort thet fiscal year beginning on thel levy date, at which time al lieni is attached. These taxes are due and payable on October 1 (levy date) and delinquent after December 31 in each year (except with respect to motor vehicles, which have varying due dates), after which a penalty and interest are required to be charged. Ifreal property taxes are: not paid by the June 15 following the due date, ai tax sale is required tol be held. Revenue is recognized in the year  13    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER 30, 2018  when the taxes are levied and collected. The taxes are collected by the Elmore County tax collector and  remitted to the Town. Inventories and Prepaid Items  Inventories are valued at cost usingt the average cost: method. The costs of governmental fund typei inventories Prepaid items reflected in the governmental and proprietary funds relate to insurance premiums paid in the  are recorded as expenditures when consumed rather than when purchased. current fiscal year but benefit thes subsequent fiscal year.  Capital Assets  Capital assets, purchased or constructed are reported at cost or estimated historical cost. Donated capital assets are: recorded at acquisition value at the date of donation. Acquisition value is an estimate ofay price that would be paid to acquire a similar asset in an orderly market transaction at the acquisition date. Capital assets are defined by the Town as assets with an initial, individual cost of more than $5,000 and an estimated useful life greater than one year. The' Town did not report infrastructure acquired prior to October The cost ofr normal maintenance and repairs that do not add to the value oft the asset or materially extend the Capital assets are depreciated using the straight-linei method over the following estimated useful lives:  1,2003.  useful lives are not capitalized.  Buildings Improvements Machinery and equipment Utility system Infrastructure Compensated Absences periods.  30 years 20 years 7-20 years 50 years 50 years  The Town allows employees to accumulate vacation and sick leave up to certain limits for use in subsequent  Deferred Outlows/Intlows of Resources  Ina addition to assets, the statement of financial position will: sometimes report a separate section for deferred outflows ofresources. This separate financial statement element, deferred outflows ofresources, represents ac consumption of net position that applies to ai future period(s) and sO will not be recognized as an outflow of resources (expense/expenditure) until that time. The Town reports deferred outflow items related to the In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition ofnet position that applies to a future period(s) and so will not bei recognized as an inflow ofresources (revenue) until that time. The Town reports deferred inflow items related to the Town's  Town's pension plan which are described further inl Note 8.  pension plan which are described further in Note 8.  14    TOWN OF ECLECTIC, ALABAMA NOTES TO: FINANCIAL STATEMENTS SEPTEMBER: 30,2018  Long-Term Obligations  Int the government-wide financial statements, and proprietary fund types fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bond using the effective interest methods. Bonds payable are reported net oft the applicable bond premium or discounts. Bond issuance costs Int the fund financial statements, government fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of the debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld  are reported as deferred charges and amortized over the term oft the related debt.  from the actual debt proceeds received, are reported as debt service expenditures.  Lease Obligations  Capital lease obligations are: stated att the original fair market value ofleased assets capitalized, less payments since the inception of the lease discounted at the implicit rate of interest in the lease. Also, in the year an asset is acquired by capital lease, the expenditure for the asset and the offsetting amount of the financing source are reflected in the fund financial statements in the statement ofrevenues expenditures, and changes in fund balances. Capital lease obligations of proprietary funds and governmental activities in the government-wide financial statements and the cost ofassets so acquired are reflected in the accounts ofthose  funds and statements. Net] Position/Fund Balances  Net position is reported on the government-wide financial statements and is required to be classified for  accounting and reporting purposes into the following categories:  Net Investment in Capital Assets Capital assets net ofaccumulated depreciation and outstanding principal balances of debt attributable to the acquisition, construction or improvements of those assets plus or minus any deferred outflows of resources and deferred inflows of resources that are attributable to those assets or related debt. Any significant unspent related debt proceeds and any deferred outflows or inflows at year-end related to capital assets are noti included in the calculation. Restricted - Constraints imposed on net position by external creditors, grantors, contributors, laws orr regulations of other governments, or lawi through constitutional provision or enabling legislation. At September 30, 2018, $43,605.49 is restricted for street maintenance and $62,232.33 is restricted Unrestricted - The net amount of assets, deferred outflows of resources, liabilities, and deferred inflows ofresources that are noti included in the determination ofnet investment in capital assets or the restricted portion of net position. Assignments and commitments of unrestricted net position The governmental fund financial statements present fund balances based on classifications that comprise a hierarchy thati is based primarily ont the extent to which the Towni is bound tol honor constraints on thes specific purposes for which amounts ini the respective governmental funds can be spent. The classifications used in  for court operations.  should not be reported on the face oft the Statement of Net Position.  the governmental fund financial statements are as follows:  15    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER 30, 2018  Nonspendable - This classification includes amounts that cannot be spent either because they are inr nonspendable form or because they are legally or contractually required to be maintained intact. Restricted - This classification includes amounts that can be spent only for specific purposes because of constitutional provisions, charter requirements or enabling legislation or because of constraints that are externally imposed by creditors, grantors, contributors, ort the laws or regulations Committed - This classification includes amounts that can be used only for specific purposes determined by a formal action of the Town Council. The Town Council is the highest level of decision making authority for the" Town. Commitments may be established, modified, or rescinded Assigned - This classification includes amounts that do not meet the criteria to be classified as restricted or committed but that are intended to be used for specific purposes. Under the Town's adopted policy, only the Town Council may assign amounts for specific purposes. Unassigned -This classification includes all other spendable amounts.  ofo other governments.  only through ordinances or resolutions approved by the' Town Council.  When an expenditure isi incurred forj purposes for which both restricted and unrestricted fund balance is available, the Town considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the Town considers amounts tol have been spent first out ofc committed: funds, then assigned funds, and finally unassigned funds, as needed, unless the City Council  has provided otherwise ini its commitment or assignment actions.  2. CASH AND CASH EQUIVALENTS Custodial Credit Risk - Deposits  Custodial credit risk is the risk that in the event ofal bank failure, the Town's deposit may not be returned to it. As of September 30, 2018, none of the Town's bank balance of $1,725,109.07 was exposed to custodial credit risk. All of the Town' s bank balances are insured by thel Federal Deposit Insurance Corporation (FDIC) and the Security for Alabama Funds Enhancement (SAFE) Program. The SAFE Program isar multiple financial collateral  The Town does not! have a deposit policy for custodial credit risk.  pool administered byt the State Treasurer according to State of Alabama statute.  3. RECEIVABLES  Receivables as of September 30, 2018, for the government's individual major funds are as follows:  Eclectic Water $ 978.50 978.50  General Funds StreetFunds Municipal Court and SewerFund  Total 98,961.58 199,528.34 298,489.92 9,888.18  Taxes Accounts Receivable Gross receivables Less allowance for uncollectable Totall Receivables  $ 97,911.01 $. 1,050.57 $  99,110.19 197,021.20  99,439.65 99,439.65 9,888.18  1,050.57  $ 197,021.20 $ 1,050.57 $  978.50 $ 89,551.47 $ 288,601.74  16    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER 30, 2018 4. CAPITAL ASSETS Primary Government  Capital asseta activity for the year ended September 30, 2018, was as follows:  Beginning Balance 3 376,690.07 $ 376,690.07 903,952.73 1,539,959.52 21,317.88 2,465,230.13 189,999.41 1,189,406.69 11,458.32 1,390,864.42 1,074,365.71 (133,797.15)  Ending Balance $ 376,690.07 187,264.00 563,954.07 909,937.73 1,536,959.52 21,317.88 220,325.39 1,299,196.97 12,524.21 1,532,046.57 936,168.56 Ending Balance $ 105,291.00 105,291.00 3,864,462.68 290,865.00 300,000.00 1,729,085.33 150,756.19 1,605,356.99 236,329.71 2,812,647.57  Increase  Decrease $  Governmental activities: Non-depreciable assets: Land Construction: inp progress Total non-depreciable assets Depreciable assets: Buildings Machinery and equipment Land improvements Total depreciable assets Less accumulated depreciation for: Buildings Machinery and equipment Land improvements Total accumulated depreciation Total depreciable assets, net  187,264.00 187,264.00 5,985.00 9,000.00 12,000.00  14,985.00 12,000.00 2,468,215.13  30,325.98 117,390.28 1,065.89 148,782.15  7,600.00 7,600.00 4,400.00  Governmental: activities capital assets, net $1,451,055.78 $ 53,466.85 $ 4,400.00 $ 1,500,122.63  Beginning Balance 1 105,291.00 $ 506,563.68 611,854.68 3,074,263.43 290,865.00 2,083,321.00 300,000.00 5,748,449.43 1,613,981.61 145,492.46 1,607,598.53 226,164.14 3,593,236.74 2,155,212.69  Increase  Decrease $ 506,563.68 506,563.68  Business-type activities: Non-depreciable assets: Land Construction: inj progress Total non-depreciable: assets Depreciable assets: Utility system Buildings Machinery and equipment Landi improvements Total depreciable assets Less accumulated depreciation for: Utility system Buildings Machinery and equipment Landi improvements Total accumulated depreciation Total depreciable assets, net  790,199.25  8,313.00 12,785.89 2,078,848.11 798,512.25 12,785.89 6,534,175.79  115,103.72 5,263.73 10,544.35 12,785.89 10,165.57 657,434.88  141,077.37 12,785.89 3,721,528.22  Governmental activities capital assets, net $2,767,067.37 $657,434.88 $506,563.68 $ 2,917,938.57  17    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER: 30,2018  Depreciation expense was charged to functions/programs oft the primary government as follows:  Governmental activities: General government Public safety Public works Public welfare Business-type activities:  11,974.50 103,738.92 13,103.47 19,965.26 $1 148,782.15 $1 141,077.37  Total depreciation cxpense-govermental activities  5. INTERFUND BALANCES  Interfund balances are generally used to meet cash demands necessary toj pay operating expenditures. Except for amounts due from Enterprise and Internal Service Funds, these amounts should be repaid during the next fiscal  year. The composition ofi interfund balances as of September 30, 2018, is shown below.  Due to/from other funds: General  Receivable Fund  Payable Fund Eclectic Water & Sewer Fund  Total $ 94,395.98 6,432.50 100,828.48  Eclectic Water & Sewer Fund General  6. SHORT-TEM DEBT  The Town maintains a $200,000 line of credit to support operations pending collection and receipt of outstanding Town revenue. Interest is paid on outstanding balance at 3.75%. Short-term debt activity for the year ended  September 30, 2018, was as follows. Beginning balance Issues Redemptions Ending balance  $ 69,000.00 29,208.00 (74,000.00) $ 24,208.00  Intentionally Left Blank  18    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER 30, 2018 7. LONG-TERM DEBT  Long-term debt activity for the year ended September 30, 2018, was as follows:  Beginning Balance 810,000.00 $ 409,104.59 34,860.05 18,674.08 1,272,638.72 4,192.90 4,192.90  Ending Balance 357,343.50 17,799.04 20,641.33 5,761.44 5,761.44  Due Within One Year 46,118.81 17,799.04 20,641.33 129,559.18 5,761.44 5,761.44  Additions  Reductions (51,761.09) (17,061.01)  Govermmental activities: General obligation bonds Notes payable Capital leases Compensated: absences Governmental: activity long-term! liabilities Busi iness-type activities: Compensated absences Business-type activity long-term! liabilities Total long-term debt  (45,000.00) $ 765,000.00 $ 45,000.00  1,967.25 1,568.54 1,568.54  1,967.25 (113,822.10) 1,160,783.87  1,276,831.62 $ 3,535.79 $ (113,822.10) $ 1,166,545.31 $ 135,320.62  General Obligation Bonds  The Town issues general obligation! bonds toj provide fort thea acquisition and construction ofmajor capital projects. General obligation bonds are direct obligations and pledge the full faith and credit of the Town. At September $1,210,000 Series 2007 General Obligation Refunding' Warrants duei in annual installments of$10,000 to $80,0001 through. August 1, 2030, with ar maximum principal of $80,000 duei in fiscal year 2030, interest  30, 2018, the Town had one outstanding bond described as follows:  at 4.00%1 to 4.70%.  $765,000  The following schedule illustrates debt service to maturity for the general obligation bonds at September 30,2018:  Governmental Activities Principal 50,000.00 50,000.00 55,000.00 55,000.00 60,000.00 340,000.00 155,000.00  Interest 35,275.00 33,025.00 30,775.00 28,300.00 25,825.00 84,665.00 11,045.00  Total 85,275.00 83,025.00 85,775.00 83,300.00 85,825.00 424,665.00 166,045.00  Year ending September 30:  2019 2020 2021 2022 2023 2024-2028 2029-2030 Totals   765,000.00 $ 248,910.00 $ 1,013,910.00  19    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER: 30,2018 Notes Payable  The Town has received funding from local banks to provide for the acquisition of capital assets. The current  outstanding balances are as follows: Governmental activities:  Note payable with First Community Bank of Central Alabama usedt toj pay offt the original note with Trustmark and to reduce thel line ofc credit. Ther note is duei ini monthly payments of$1,171 through December 4, 2029 and has ani interest of4.2%. The note is secured by the municipal building. Note payable with First Community Bank ofCentral Alabama usedt to fund costs relatedt to the purchase oft two fire trucks. Thet note is duei in annual payments of $46,631 through. July 14, 2025 andl has ani interest rate of4.50%. The note iss secured byt two fire trucks.  90,528 266,816 $357,344  Total notes payable: Governmental Activities Interest 16,215 14,242 12,103 9,906 7,609 8,038 $ 68,113 $  The following schedule illustrates debt service to maturity fort the notes payable at September 30, 2018:  Principal 44,466 46,439 48,579 50,776 53,073 114,011 357,344  Total 60,681 60,681 60,682 60,682 60,682 122,049 425,457  Year ending September 30: 2019 2020 2021 2022 2023 2023-2028 Totals Capital Lease  The Town has entered into lease agreements as lessee for financing the acquisition of property and equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value oftheir future minimum lease payments as oft the inception date. The assets purchased through  capital leases are as follows:  Governmental Activities $ 91,016 81,914 9,102  Asset Machinery and equipment Less accumulated depreciation Total  Intentionally Left Blank  20    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER: 30, 2018 30, 2018, were as follows: Year ending September 30: 2019 Total minimum lease payments Less amount representing interest Present value of minimum lease payments  Thei future minimum lease obligations andt ther net present value ofthese minimum lease! payments as of September  Governmental Activities $ 18,569 18,569 770 $ 17,799  8. PENSION PLAN Plan. Description  The Employee's Retirement System of Alabama (ERS), an agency multiple-employer plan, was established October 1, 1945 under the provisions of Act 515 of the Legislature of 1945 for the purpose of providing retirement allowances and other specified benefits for state employees, State Police, and on an elective basis, to all cities, counties, towns, and quasi-public organizations. The responsibility for the general administration and operation ofERS is vested ini its Board of Control. Thel ERSI Board ofo control consists of131 trustees. The Plan is administered by the Retirement Systems of Alabama (RSA). Title 36-Chapter 27 of the Code of Alabama grants the authority to establish and amend the benefit terms tot thel ERS Board of Control. Thel Plan  issues aj publicly available financial report that can be obtained at www.rsa-al.gov. The ERS Board of Control consists of 13 trustees as follows:  1) The Governor, ex officio. 2) The State Treasurer, ex officio. 3) The State Personnel Director, ex officio. 4) The Statel Director of Finance, ex officio.  5) Three vested members of] ERS appointed by the Governor for a term of four years, no two ofv who are from the same department ofs state government nor from any department of which an ex officio trustee 6) Six members of ERS who are elected by members from the same category of ERS for a term of four a. Twor retired members with one: from the ranks of retired state employees and onet fromt ther ranks ofretired employees ofa city, county, or a public agency each ofv who is an active beneficiary Two vested active employees of an employer participating in ERS pursuant to $36-27-6.  ist thel head. years as follows:  ofERS.  b. Two vested active state employees.  Benefits. Provided  State law establishes retirement benefits as well as death and disability benefits and any ad hoc increase in postretirement benefits for thel ERS. Benefits forl ERS members vest after 105 years ofcreditable service. State employees who retire after 60 (52 for State Police) with 10 years or more of creditable service or with 25 years of service (regardless of age) are entitled to an annual retirement benefit, payable monthly for life. Local employees who retire after age 60 with 10 years of more of creditable service or with 25 or 30 years of service (regardless of age), depending on the particular entity's election, are entitled to an annual retirement benefit, payable monthly for life. Service and disability retirement benefits are based on a guaranteed minimum or a formula method, with the member receiving payment under ther method that yields thel highest monthly benefit. Under the formula method, members of] ERS (except State Police) are allowed  21    TOWN OF ECLECTIC, ALABAMA NOTESTOFINANCIAL STATEMENTS SEPTEMBER: 30, 2018  2.0125% of their average final compensation (highest 3 oft the last 10: years) for each year ofs service. State Police are allowed 2.875% for each year of State Police service in computing the formula method. Act 377 of thel Legislature of2012 established a new tier of benefits (Tier 2) for members hired on or after January 1, 2013. Tier 21 ERS members are eligible for retirement after age 62 (56 for State Police) with 10 years or more of creditable service and are entitled to an annual retirement benefit, payable monthly for life. Service and disability retirement benefits are based on a guaranteed minimum or a formula method, with the member receiving payment under the method that yields the highest monthly benefit. Under the formula method, Tier 2 member of the ERS (except State Police) are allowed 1.65% of their average final compensation (highest 5 of the last 10 years) for each year of service. State Police are allowed 2.375% for Members are eligible for disability retirement if they have 10 years of credible service, are currently in- service, and determined by the RSA Medical Board to be permanently incapacitated from further performance of duty. Preretirement deathl benefits are calculated andj paid tot the beneficiary oni the member's  each year ofstate police service in computing the formula method.  age, service credit, employment status and eligibility for retirement.  Number 5 0 19 21 0 45  Retired members or their beneficiaries currently receiving benefits  Vested inactive members Non-vested inactive members Active members Total  Post-DROP retired members still in active service  Contributions  The ERS establishes rates based upon an actuarially determined rate recommended by an independent actuary. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned' by employees during the year, with additional amounts to finance any unfunded accrued liability, the pre-retirement death benefit, and administrative expenses of the Plan. For the year ended September 20, 2018, the Town'sa active employee contribution rate was: 5% ofcovered payroll for Tier 1 employees and 6% of covered employee payroll for Tier 2 employees, and the Town's active employee contribution rate for certified law enforcement, correctional officers, and firefighters (FLC) was 6% of covered payroll for Tier1 1 FLC and 7% of covered payroll for Tier 21 FLC. The Town's average contribution: rate to fund the normal and accrued liability costs was 4.21% ofpensionable payroll for Tier employees and 1.05% of! pensionable The Town's contractually required contribution rate for the year ended September 30, 2017 was 4.58% of pensionable pay for Tier I employees, and 1.42% of pensionable pay for Tier 2 employees. These required contribution rates are based upon the actuarial valuation dated September 30, 2015, a percent of annual pensionable payroll, and actuarially determined as an amount that, when combined with member contributions, is expected to finance the costs of benefits earned by members during the year, with an additional amount to finance any unfunded accrued liability. Total employer contributions to the pension  payroll for Tier 2 employees.  plan from the Town were $31,843.26 fort the year ended September 30, 2018.  Net Pension Liability  The Town'st net pension liability was measured as of September 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of September 30, 2016, rolled forward to September 30, 2017, using standard roll-forward techniques as shown in the following  table:  22    TOWN OF ECLECTIC, ALABAMA NOTES TO: FINANCIAL STATEMENTS SEPTEMBER: 30,2018  Expected  Actual  (a) TPL as of September 30, 2016 (b) Discount Rate (c) Entry Age Normal Cost for the period October 1,2016- September 30, 2017 (d)Transfers. Among Employers: (e) Actual Benefit Payments and Refunds for October 1, 2015 - September 30, 2016 (f) TPL as of September 30, 2016 (g) Difference between Expected and Actual: (h) Less Liability Transferred for Immediate GE Experience (Gain)/Loss s=(g)-(h)  $1 1,166,457 $ 1,256,400 7.75% 65,900  7.75% 65,900 5,291 (75,728) $102,205 5,291 $96,914  thej period  (75,728)  IOK0PHO-0-IOO +. .05(b))] $ 1,244,095 $ 1,346,300  Recognition:  Actuarial. Assumptions  The total pension liability as of September 30, 2017 was determined based on the annual actuarial funding  valuation report prepared as of September 30, 2016. The key actuarial assumptions  Inflation Salary increases Investment rate ofreturn* *Net of pension plan investment expense  2.75% 3.25%-5.00% 7.75%  Mortality rates werel based on thes sex distinct RP-2000 Blue Collar Mortality Tablel Projected with Scale BB to 2020 with an adjustment of1 125% at all ages for males and 120%1 for females ages 78 and older. The rates of mortality for the period after disability retirement are according to the sex distinct RP-2000 Disability Retiree Mortality Table Projected with Scale BB1 to: 2020 with an adjustment of 130% at ages for females. The actuarial assumptions used in the actuarial valuation as of September 30, 2016, werel based on the results ofani investigation of the economic and demographic experience for thel ERS based upon participant data as of September 30, 2015. The Board of Control accepted and approved these changes in September 2016, The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates ofreturn (expected returns, net ofpension plan investment expense and inflation) are developed for each major asset class. These ranges are combined toj produce the long-term expectedi rate ofreturn by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of geometric real rates ofreturn of each major asset class are as follows:  which became effective att the beginning ofi fiscal year 2016.  23    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER. 30,2018  Long-Term Expected Rate of Return 4.40% 8.00% 10.00% 11.00% 9.50% 11.00% 10.10% 7.50% 1.50%  Target Allocation 17.00% 32.00% 9.00% 4.00% 12.00% 3.00% 10.00% 10.00% 3.00% 100.00%  Fixed Income U.S. Large Stocks U.S. Mid Stocks U.S. Small Stocks Alternatives Real Estate Cash Equivalents Total  International Developed Market Stocks International Emerging Market Stocks  Thel long-term expected rate ofreturn includes an assumed rate ofinflation of2.50%.  Discount Rate  The discount rate used to measure the total pension liability was the long-term rate of return, 7.75%. The projection of cash flows used to determine the discount rate assumed that] plan contributions will be made at the current contribution rate and thatt the employer contributions willl be made in accordance with the funding policy adopted by the. ERSI Board of Control. Based on those assumptions, components ofthe pension plan's fiduciary net position were projected tol be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate ofreturn on pension plan investments was applied to  all periods of projected benefit payments to determine thet total pension liability.  Intentionally Left Blank  24    TOWN OF ECLECTIC, ALABAMA NOTES TOI FIMANCIALSTATEMENTS SEPTEMBER3 30,2018 Changes in Net Pension Liability  Total Pension Plan Fiduciary Net Net Position Liability  Liability (a) $ 1,166,457 $ 65,900 87,466 96,914  Position (b) 1,076,825 $  (Asset) (a)-(b) 89,632 65,900 87,466 96,914 (16,487) (35,970) (136,726) 0 0 0 61,097 150,729  Balances at September 30, 2016 Changes for the year: Service cost Interest Changes ofassumptions Differences between expected and actual experience Contributions - employer Contributions- - employee Net investment income Benefit payments, including refunds ofe employee contributions Administrative expense Transfers among employers Net changes Balances at September 30, 2017  16,487 35,970 136,726 (75,728) 0 5,291 118,746 1,195,571 $  (75,728) 5,291 179,843 $ 1,346,300 $  Sensitivity oft the Net Pension Liability to Changes in the Discount Rate  The following table presents the Town'si net pension asset calculated usingt the discount rate of7.75% as well as what the Town'sproportionate share ofthe net pension asset would be ifity were calculated usingad discount rate thati is one percentage point lower (6.75%) or one percentage point higher (8.75%) than the current rate:  1%1 Decrease Current Rate 1% Increase 327,302 $ 150,729 $  (6.75%)  (7.75%)  (8.75%) 2,990  Town's net pension liability (asset) Pension Plan Fiduciary Net Position  Detailedi information about the pension plan's fiduciary net position: is available int the separately issued RSA Comprehensive Annual Report for the fiscal year ended September 30, 2017. The supporting actuarial information is included in the GASB Statement No. 68 Report for the ERS prepared as of September 30, 2017. The auditor's: report dated August 31, 2018, on the Schedule of Changes in Fiduciary Net Position by Employer and accompanying notes is also available. The additional financial and actuarial information is  available at www.rsa-al.gov.  Intentionally Left Blank  25    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER: 30, 2018  Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to For the year ended September 30,2018, the Town recognized pension expense of $60,004.62. At September 30, 2018, the Town reported deferred outflows of resources and deferred inflows of resources related to  Pensions  pensions ofthe following sources:  Deferred Outflows of Deferred Inflows of  Resources $ 153,352 31,772 0 30,011 215,135  Resources $20,241 0 35,292 0 $55,533  Differences between expected and actual experience Net difference between projected and actual earnings Employer contributions subsequent tot the  Changes of assumptions on plan investments measurement date Total  Amounts reported as deferred outflows of resources and deferred inflows of resources to pensions will be  recognized inj pension expense as follows: Year ended September 30: 2019 2020 2021 2022 2023 Thereafter  $ 35,334 42,965 28,714 8.662 13,916 0  9. RISK MANAGEMENT  The Town is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters. The Town has purchased general liability insurance through a commercial insurance carrier. Coverage provides up to $1,000,000 per claim for ai maximum total coverage of$3,000,000. The Town also purchased commercial insurance for others risks ofloss, including property The Town has worker's compensation insurance through the Municipal Workers Compensation Fund. The Town has employee health coverage through the Local Government Health Insurance Plan (LGHIP) administered by the State's Employees' Health Insurance Board. LGHIP is selfinsured health insurance program funded from the premiums ofthep participating local government units and theirs subscribers. LGHIP provides group health insurance for employees of local government units, certain organizations, and associations. Monthly premiums are determined by the plan's actuary and are based on past claims  and casualty insurance.  Coverage is provided up to $1,000,000: for each injury by accident or disease.  experience.  10. CONTINGENT LIABILITIES  Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal and state government. Any disallowed claims, including amounts already collected, may constitute al liability ofthe applicable funds. The amount, ifany, ofexpenditures that may be disallowed by the grantor cannot be determined at the time, although the Town expects such amounts, if any, to be  immaterial.  26    REQUIRED SUPPLEMENTARY INFORMATION    TOWN OF ECLECTIC, ALABAMA BUDGET ANDA ACTUAL- GENERALI FUND FOR THE YEAR ENDED SEPTEMBER: 30, 2018  STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES! INI FUNDI BALANCES  Variance Favorable (Unfavorable)  Budgeted. Amounts Original 232,900.00 24,800.00 11,204.00 248,203.00 101,784.00 178.00 1,926,569.00 1,926,569.00  Actual (Budgetary Basis)  Final 232,900.00 24,800.00 11,204.00 248,203.00 101,784.00 178.00  Revenues Taxes Licenses and] Permits Fines and] Forfeitures Intergovernmental Revenues Charges for Services Miscellaneous Interest Total Revenues Expenditures Current: General Government Public Safety Public Works Public Welfare Debt Service Total Expenditures Excess of Revenues Over (Under). Expenditures Other Financing Sources (Uses) Proceeds from sale of general capital assets Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balance Beginning Fund Balance Ending Note A: Budgetary Information so for the special revenue funds.  1,307,500.00 1,307,500.00 $ 1,288,034.23 $ (19,465.77)  237,462.75 32,063.87 106,915.73 222,199.79 31,523.31 3,460.41 1,921,660.09 349,364.71 865,849.31 166,714.95 281,625.95 174,055.70 1,837,610.62 84,049.47  4,562.75 7,263.87 95,711.73 (26,003.21) (70,260.69) 3,282.41 (4,908.91) 289,773.29 (57,758.31) (67,841.95) (179,357.95) 94,244.30 79,059.38 74,150.47 (8,211.00) (8,211.00)  639,138.00 808,091.00 98,873.00 102,268.00 268,300.00 1,916,670.00 1,916,670.00 9,899.00 8,211.00 8,211.00 18,110.00 $ 18,110.00  639,138.00 808,091.00 98,873.00 102,268.00 268,300.00 9,899.00 8,211.00 8,211.00  84,049.47 $ 65,939.47 666,017.19 750,066.66  $  The budgetary comparison schedule required by GASB Statement No. 34 includes the general fund only. The Town isr not legally required to adopt al budget and chooses not to do  27    TOWN OF ECLECTIC, ALABAMA REQUIRED: SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES. IN1 THEI NETI PENSION! LIABILITY FOR THE YEARI ENDED SEPTEMBER: 30, 2018  9/30/2017  9/30/2016  9/30/2015  9/30/2014  Totall Pension Liability Service Cost Interest Changes of Benefit Terms Changes in Assumptions  $ 65,900 $ 64,668 $ 56,043 $ 60,115  87,466 96,914 (75,728) 5,291 179,843 1,166,457  84,618 (29,879) 46,902 (51,857) (31,650) 82,802 1,083,655  67,230 146,293  62,226  Differences Between Expected and Actual Experience  Benefits Payments, Including) Refunds ofl Employee Contributions  (52,574) 216,992 866,663  (67,010) 55,331 811,332  Transfers. Among! Employers Net Change in1 Totall Pension Liability Totall Pension Liability Beginning Total) Pension Liability Ending (a) Plan Fiduciary Net Position Contributions Employer Contributions- Members Net Investment Income  $1,346,300 $1 1,166,457 $1 1,083,655 $ 866,663  $ 16,487 $ 15,980 $ 9,830 $ 20,087  35,970 136,726 (75,728) 5,291 1,076,825  37,505 100,916 (51,857) (31,650) 1,005,931  33,031 12,407 (52,574) (94,769) 1,098,006  32,091 114,529 (67,010) 72,749 925,560  Benefit Payments, Including Refunds of Employee Contributions  Transfers. Among) Employers Net Change inl Plànl Fiduciary Net Position Plan Net Position Beginning Plan] Net Position - Ending (b) Net Pension Liability (Asset)- Ending (a)- (b) Plan] Fiduciary Net Position as a Percentage of the  118,746 $ 70,894 $ (92,075) $ 172,446 $1,195,571 $ 1,076,825 $1 1,005,931 $ 1,098,006 150,729 $ 89,632 $ 77,724 $ (231,343)  Total) Pension Liability Covered Payroll* Covered Payroll  88.80%  92.32%  92.83%  126.69%  734,655 $ 729,167 $ 626,354 $ 626,354  Net Pension Liability (Asset): as al Percentage of  20.52%  12.29%  12.41%  -36.93%  Employer's covered payroll during the measurement; period is thet total covered payroll. For FY2018, the measurement period is October 1,2016- September 30, 2017. GASB issued as statement "Pension Issues" inl March 2016 tor redefine  covered payroll effective FY2017.  28    TOWN OF ECLECTIC, ALABAMA REQUIRED SUPPLEMENTARYI INFORMATION SCHEDULE OFI EMPLOYER CONTRIBUTIONS FOR THE YEAR ENDED SEPTEMBER 30, 2018  2018  2017  2016  2015  Actuarially determined contribution Contributions inr relation tot the actuarially determined contribution Contribution deficiency (excess) Covered payroll payroll  ) 30,011 $ 18,890 $ 18,295 $ (66,494)  30,011  18,890  18,295  9,555 76,049  $ 750,033 $ 653,910 $ 729,167 $ 626,354  Contributions asap percentage of covered  4.00%  2.89%  2.51%  12.14%  Notes to Schedule  Actuarially determined contribution: rates are calculated as of September 30, three years prior tot the end of the fiscal year iny which contributions are reported. Contributions for fiscal year 2018 were based on the Methods and assumptions used to determine contribution rates for the period October 1,2017t0  September 30, 2015 actuarial valuation.  September 30, 2018: Actuarial cost method Amortization method Remaining amortization period Asset valuation method Inflation Salary increases Investment rate ofreturn  Entry Age Level percent closed 25.3 years Five year smoothed market 3.00% 3.75-7.25%, including inflation 8.00%, net of pension plan investment expense, including inflation  29