TOWN OF ECLECTIC, ALABAMA ANNUAL FINANCIAL REPORT SEPTEMBER 30, 2021    TOWN OF ECLECTIC, ALABAMA ANNUAL FINANCIAL REPORT SEPTEMBER 30, 2021  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 30 31 32  Reconciliation of the Governmental Funds Balance Sheet to the Statement of] Revenues, Expenditures, and Changes in Fund Reconciliation of the Governmental Funds Statement of] Revenues, Expenditures, and Changes. in Fund Balances to the Statement of  Activities  Statement ofNet Position - Proprietary Fund  Statement ofRevenues, 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 PUBLIÇ ACCOUNTANTS 1714 GILMER. AVENUE TALLASSEE, ALABAMA36078  TASHA D. 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 of the governmental activities, the business-typea activities, and each major fund of the Town of Eclectic, Alabama (the Town), as of and for the year ended Séptember 30, 2021, and the related notes to the financial statements, which colleçtively comprise the Town's basic finançial Management is responsible for the preparation and fair presentation of these financial statements in accordançe with: àccounting principles. generàlly accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to thé preparation' and fair presentation of financial Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit ina accordance with auditing standards génerally accepted in the United States of America, Those stândards require that we plan and perform the audit to obtain reasonable assurance about whéther the financial statements àre free An audit involves. performing procedures to obtain audit evidence about the amounts and disçlosures int the finaricial statements. The procedures selected depend on the; auditors' judgment, including the assessment of the risks of material misstâtement of the financial statements, whether due to fraud or error. Inmaking those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the finançial statements in order to design audit procedures that are appropriate in the circumstances, but not for 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 Wé believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmenta activities, the businéss-type activities, and each major fund of the Town as of September 30, 2021, and the respective changes in financial position. and, where appliçable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.  stâtements 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 misstatèment.  financial statements. opinions. Opinions  1    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 basiç 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 réporting for plaçing 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 29-31 be presented to supplement the basic financial statements. Such information, although not a part oft the basic financial statements, is required by the Governmental Açcounting Standards Board, who considers it to be an essential part of financial reporting. for placing the basic finançial statements in an appropriate operational, economic, or historical context. We have applied çertain limited procedures to the required. supplementay.momation in accordance. with- auditing standards generalyaccepted in the United States of America, which- consisted of inquiries of management about the methods of préparing the information and çomparing 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 proçedures do not provide  statements are. not affected by this missing information.  us with sufficient evidence to express an opinion or provide any assurance.  PaoisDl, PC Patterson & Duke, P.C. Tallassee, Alabama Deçembèr 5, 2022  2    FINANCIALSTATEMENTS    TOWN OF ECLECTIC, ALABAMA STATEMENT OFI NET POSITION SEPTEMBER30,2021  Governmental Activities  Business-type Activities  Total  ASSETS  Cash and cash equivalents Cash and cash equivalents, restricted Receivables, net Internal balances Inventories Prepaid expenses Capital assets not being depreciated Capital assets being depreciated, net TOTAL. ASSETS  $ 3,098,105.06 $ 473,091.68 $ 3,571,196.74  245,845.49 162,000.01 135,954.01 52,287.68 116,770.90 1,397,885.90 5,208,849.05 243,322.66  245,845.49 253,310.61 43,633.82 66,217.87 461,521.06 4,387,080.70 9,028,806.29 304,399.00  91,310.60 (135,954.01) 43,633.82 13,930.19 344,750.16 2,989,194.80 3,819,957.24 61,076.34  DEFERRED OUTFLOWS OF RESOURCES Deferred employer retirement contributions LIABILITIES Liabilities payable from restricted assets: Accounts payable Other current liabilities Accounts payable Accrued interest payable Other current liabilities Customer deposits Long-term liabilities: Due within one year Duei ini more than one year Other liabilities duei in more than one year: Net pension liability TOTALLIABLITIES  31,470.21 25,076.94 3,450.79 8,469.48 28,363.98 156,223.12 2,570,776.93 420,808.00 3,244,639.45 40,463.58 1,233,241.43 14,206.88 131,622.12 44,483.06 743,515.19  31,470.21 25,076.94 33,878.66 8,469.48 35,289.40 70,374.09 165,914.18 2,570,776.93 514,455.25 3,455,705.14 51,615.00 4,567,186.39 14,206.88 131,622.12 44,483.06 1,068,386.70  30,427.87 6,925.42 70,374.09 9,691.06 93,647.25 211,065.69 11,151.42 3,333,944.96  TOTALDEFERRED INFLOWS OF RESOURCES Deferred inflows related toj pension NETI POSITION Neti investment in capital assets Restricted for: Public safety Public works Municipal court Unrestricted TOTAL NETI POSITION  324,871.51  2,167,068.68 $ 3,658,816.47 $ 5,825,885.15  See accompanying notes to financial statements.  3    TOWN OF ECLECIIC, ALABAMA STATEMENT OF ACTIVITIES FOR THE YEAR ENDED SEPTEMBER. 30, 2021  Program Revenues Operating Capital  Net (Expense) Revenue and Changes in Net Position  Charges for Grants and Grants and Governmental Businèss -type  Function/Programs Primary Government Governmental: activities: General govémment Public safety Public works Public welfare Interest and fiscal charges on long-term debt Total governmental: activities Business-type: activities: Eclectic' Water and Sewer Fund Total primary govemment  Expenses Services Contributions Contributions Activities  Activities  Total  652,940.93 $ 379,901.96 $ 84,546.33 $ 1,121,050.26 221,943.59 226,075.09 17,237.00 109,371.03 23,778.81 20,260.00  S (188,492.64) $ (655,794.58) (245,828.66) (65,332.22) (68,901.34)  (188,492.64) (655,794.58) (245,828.66) (65,332.22) (68,901.34) (1,224,349.44)  275,631.61 68,901.34  29,802.95  2,227,895.17 625,624.36 360,684.37 17,237.00 (1,224,349.44)  1,046,660.93 799,340.06  (247,320.87) (247,320.87)  3,274,556.10 1,424,964.42 360,684.37 17,237.00 (1,224,349.44) (247,320.87) (1,471,670.31)  General Revenues Sales taxes Alcoholiç beverage taxes Franchise fee Othert taxes Interesti income Miscellaneous revenue Gain (loss) on sale ofcapital assets Transfers Total generali revenues and transfers Special Item Gain ons sale of real estate Changei ini net position Net position beginning Net] position- ending  1,443,330.96 37,497.86 77,839.61 18,447.40 2,459.96 23,305.02 (14,250.00) (267,224.03) 1,321,406.78 139,500.00 236,557.34 1,930,511.34 3,637,752.71 2,167,068.68 $ 3,658,816.47 $ 5,825,885.15  1,443,330.96 37,497.86 77,839.61 18,447.40 3,620.56 23,305.02 (14,250.00)  1,160.60 267,224.03 268,384.63 1,589,791.41 21,063.76  139,500.00 257,621.10 5,568,264.05  See accompanying notes to financial statements.    TOWN OF ECLECTIC, ALABAMA BALANCE: SHEET GOVERNMENTALFUNDS SEPTEMBER: 30,2021  Total Governmental Funds  Municipal Court  General Fund Street Fund  ASSETS Cash Cash- restricted Receivables Prepaid expenses Due from other funds TOTAL ASSETS  3,098,105.06 $ 79,261.65 $ 74,036.27 $ 3,251,402.98  92,547.57 158,927.67 52,287.68 138,012.63 3,539,880.61  92,547.57 162,000.01 52,287.68 138,012.63 3,696,250.87  2,656.34 81,917.99  416.00 74,452.27  LIABILITIES ANDI FUNDI BALANCES  LIABILITIES Accounts payable Other current liabilities Due to other funds TOTALLIABILITIES FUND: BALANCES Nonspendable: Prepaid- expenses Restricted: Public safety Public works Municipal court Unassigned TOTAL: FUND BALANCES TOTAL LIABILITIES. AND FUND BALANCES  3,450.79 28,363.98 31,814.77  28,636.56 28,636.56  2,833.65 25,076.94 2,058.62 29,969.21  34,921.00 53,440.92 2,058.62 90,420.54  52,287.68 14,206.88 78,340.69 3,363,230.59 3,508,065.84  52,287.68 14,206.88 131,622.12 44,483.06 3,363,230.59 3,605,830.33  53,281.43 53,281.43  44,483.06 44,483.06  $3 3,539,880.61 $ 81,917.99 $ 74,452.27 $ 3,696,250.87  See accompanying notes to financial statements.  5    TOWNOFECLECTIC, ALABAMA STATEMENT OF NET POSITION SEPTEMBER: 30, 2021  RECONCILIATIONOF THE BALANCE SHEET OF GOVERNMENTALFUNDSTOTHE  Differences in amounts reported in governmental activities in the Statement ofNet Position:  Total fund balances governmental funds Capital assets usedi in governmental activities are: not financial resources and, therefore, are not reported in  3,605,830.33  the governmental funds  1,514,656.80  Deferred employer retirement contributions are applicable toi future periods and, therefore, are not reported in governmental funds Long-term liabilities, including bonds payable, and accrued interest are not due andj payable in the current period and, therefore, are not reported in the governmental funds. Balances at September 30, 2021, were: Bonds, leases, and notes payable Accrued interest Deferred: inflows related toj pension Compensated absences Total long-term liabilities  243,322.66  (2,701,415.37) (8,469.48) (40,463.58) (25,584.68)  (2,775,933.11) (420,808.00) 2,167,068.68  Net pension liability as a result oft the implementation ofGASB7 71  Net position of governmental activities  See accompanying notes to financial statements.  6    TOWN OF ECLECTIC, ALABAMA GOVERNMENTAL FUNDS FOR THE YEAR: ENDED SEPTEMBER 30, 2021  STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND: BALANCES  Total Governmental Funds 1,689,980.48 238,459.10 219,541.49 242,122.40 142,927.49 47,165.02 2,459.96 2,582,655.94  Municipal Court  General Fund Street Fund  REVENUES Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous revenues Interest Total revenues EXPENDITURES Current operations: General government Public safety Public works Public welfare Capital outlay Debt service: Principal retirement Interest charges Total expenditures Excess of revenues over expenditures OTHER FINANCING SOURCES Proceeds from general obligation bond Proceeds from sale of capital assets Transfers in Transfers out Total other financing sources Net change in fund balances FUNDI BALANCES - BEGINNING FUND. BALANCES - ENDING  : 1,661,662.16 $ 28,318.32 $  236,974.47 219,541.49 242,122.40 39,603.32 47,165.02 2,443.71 2,449,512.57  1,484.63  103,324.17 16.25 103,340.42  29,802.95  430,569.18 1,040,549.28 211,622.15 77,905.77 92,865.10 950,995.16 67,643.98 2,872,150.62 (422,638.05) 2,650,289.97 453,000.00 10,473.18 (267,224.03) 2,846,539.12 2,423,901.07 1,084,164.77  111,806.54  542,375.72 1,040,549.28 254,152.09 77,905.77 92,865.10 950,995.16 67,643.98 3,026,487.10 (443,831.16) 2,650,289.97 453,000.00 10,473.18 (277,697.21)  42,529.94  42,529.94 (12,726.99)  111,806.54 (8,466.12)  (10,473.18) (10,473.18) 2,836,065.94 (18,939.30) 2,392,234.78 63,422.36  (12,726.99) 66,008.42  1,213,595.55  3 3,508,065.84 $ 53,281.43 $ 44,483.06 $ 3,605,830.33  See accompanying notes to financial statements.  7    TOWN OF ECLECTIC, ALABAMA FOR THE YEARI ENDED SEPTEMBER: 30, 2021  RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND-CHANGES INI FUND: BALANCES OF GOVIRNMENTALFUNDS TOTHE 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 of Net Position Depreciation expense on governmental capital assets included in the governmental activities in the Statement of Activities Proceeds from the sale of capital assets are reported as "Other Financing Sources" in the governmental funds; however, only the gain on the sale of capital assets is reported in the Statement of Activities. Proceeds from the sale of capital assets, including land Net gain on sale of capital assets  2,392,234.78  92,865.10 (119,249.66)  (453,000.00) 125,250.00  (327,750.00)  Proceeds from thei issuance of debt provides current financial resources to the governmental funds, but issuing debt increases long-term liabilities in the Repayment of long-term debt is reported as an expenditure in the governmental funds, but a reduction of long-term liabilities in  Statement of Net Position.  (2,650,289.97)  the Statement ofNet Position: Principal payments on long-term liabilities  950,995.16  Some expenses reported int 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 ini net position of governmental activities See accompanying notes to financial statements.  expenditures in the funds.  (1,257.36) (95,428.00) (5,562.71)  (102,248.07) 236,557.34  8    TOWN OF ECLECTIC, ALABAMA STATEMENT OF NET POSITION PROPRIETARY FUND SEPTEMBER: 30,2021 ASSETS Current assets Cash Accounts receivable, net Prepaid insurance Inventory Total current assets Non-current assets Capital assets Non-depreciable: Land Construction inj progress Depreciable: Buildings and mprovements Land improvements Machinery and equipment Utility system Less: accumulated depreciation Total non-current assets TOTAL ASSETS  $ 473,091.68 91,310.60 13,930.19 43,633.82 621,966.29  284,550.16 60,200.00 305,991.61 300,000.00 2,115,674.10 4,457,701.75 (4,190,172.66) 3,333,944.96 3,955,911.25 61,076.34 30,427.87 6,925.42 9,691.06 135,954.01 70,374.09 253,372.45 93,647.25 347,019.70 11,151.42 3,333,944.96 324,871.51 3,658,816.47  DEFERRED OUTFLOWS OF RESOURCES Deferred employer retirement contributions  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 OFI RESOURCES Deferred inflows related toj pensions NET POSITION Net investment in capital assets Unrestricted TOTAL NETI POSITION  See accompanying notes to: financial statements.  9    TOWN OF ECLECTIC, ALABAMA FORTHE YEARI ENDED SEPTEMBER 30, 2021  STATEMENT OF REVENUES, EXPENSES, AND CHANGES INI NETI POSITION  PROPRIETARYFUND OPERATING REVENUES Charges for 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 transfers and contributions Transfers in (Transfers out) Capital contributions CHANGE. INI NETPOSITION NET! POSITION. ATI BEGINNING OF YEAR NET: POSITION. ATI END OF YEAR  $  753,015.06 46,325.00 799,340.06 247,923.16 275,097.51 354,702.76 168,937.50 1,046,660.93 (247,320.87) 1,160.60 1,160.60 (246,160.27) 267,224.03 21,063.76 3,637,752.71 3,658,816.47  See accompanying notes to financial statements.  10    TOWN OF ECLECTIC, ALABAMA STATEMENT OF CASHI FLOWS PROPRIETARY! FUND FOR THE YEARI ENDED SEPTEMBER: 30,2021 CASH FLOWS FROM OPERATING. ACTIVITIES  Receipts from customers Payments to vendors Payments to employees  $ 797,556.71 (589,242.42) (257,732.82) (49,418.53) (131,556.00) 27,850.25 (103,705.75) 1,160.60 1,160.60 (151,963.68) 625,055.36 $ 473,091.68  Net cash provided (used) by operating activities Purchase of property and equipment Net cash payments from (to) other funds Capital contributions  CASH FLOWS FROM CAPITAL ANDI RELATED FINANCING ACTIVITIES  Net cash provided (used) by capital and related financing activities CASH FLOWS FROM: INVESTING ACTIVITIES Interest received on cash accounts Net cashj provided (used) byi investing activities Net Cash Provided (Used) Cash] Balances- Beginning oft the Year Cashl Balances- End of the Year  RECONCILIATION OF OPERATING INCOME TOI NET CASH PROVIDED Adjustments to reconcile operating income to net cashj provided  BY OPERATING ACTIVITIES Operating income (loss) by operating activities: Depreciation expense Changes in assets and liabilities: Accounts receivable Inventory Accounts and other payables Compensated absences payable Due to other funds Meter deposits  (247,320.87) 168,937.50 21,987.00 3,645.41 5,413.20 (10,461.41) 2,479.15 11,330.25 (5,428.76) ee (49,418.53)  Net change in deferred outflows, deferred inflows and net pension liability  Net cash provided (used) by operating activities NONCASH CAPITAL FINANCING. ACTIVITIES  Capital assets of $288,183.99 were acquired using COVID grants and bond funds. The General Fund received the funds and made thej purchases on behalf oft thel Proprietary Fund. The on-behalf! payments are recorded as  Transfers In"  See accompanying notes to financial statements.  11    TOWN OF ECLECTIC, ALABAMA NOTES TOFINANCIAL: STATEMENTS SEPTEMBER: 30, 2021  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 ofg 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, emergency medical services 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-Mide and Fund. Financial Statements  Thel basic financial statements consist oft the govemment-wide: financial statements andi 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 ofallofthen non-fiduciary activities oft thep primary: government andi its component units. For thei most part, the effect ofi inter-fund activity has been removed: from theses statements. The exception tot thisi isi inter-fund services provided and used which are eliminated in the consolidation process. Governmental activities which normally are supported by taxes and intergovermental revenues, are reported separately from business-type The statement of 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 fors 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 fundsi individually andi nonmajor fundsi in the aggregate for governmental funds. A reconciliation is provided that converts ther results ofgovernmental. fund accounting to the government-wide presentations. Measurement Focus, Basis ofAccounting, and Financial, Statement. Presentation The government-wide: financial statements are reported using the economic resources: measurement: focus andt 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 ofrelated cash flows. Property taxes are recognized as revenues in 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 using 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 to be available when they are collectible within the current period or soon enough thereafter toj pay liabilities of the current period, considered tol be sixty days for property taxes and ninety days for all other revenue. Expenditures generally are recorded when al 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 tol be accounted fori in another fund.  12    TOWN OF ECLECTIC, ALABAMA NOTESTOFINANCIAL STATEMENTS SEPTEMBER 30,2021  Street Fund - This isas special revenue fundi in which the Town accounts fort 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 ther maintenance and capital improvements of the Town's streets.  bonds received.  The Town reports thei following major enterprise (proprietary): fund:  Eclectic' Water and Sewer Fund - Accounts for water ands sanitary sewers services provided tot ther residents Proprietary funds are used to account for operations that are (a) financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) ofproviding goods or services to the general public on ac continuing basis bei financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, Proprietary funds distinguish operating revenues and expenses from 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. Thej principal operating revenues of the Water and Sewer Fund are charges to customers for sales and services. Operating expenses include the cost of sales and services, administrative expenses, and depreciation on capital assets.. Allr revenues and expenses not meeting this definition  of the' Town.  management control, accountability, or other purposes.  are reported as nonoperating revenues and expenses. Stewardship, Compliance, andA Accountabiity  An annual budget is adopted for the Town's General Fund. Under statel law, thei 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  fiscal year-end.  Management Estimates and Assumptions  Thej 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 ofc 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, Cash Equivalents and Investments  Cash and cash equivalents, for governmental and proprietary funds, are considered to be cash on hand, demand deposits and short-term investments with original maturities oft three months orl less from the date of State statutes authorizei the' Town toi investi in obligations oft thel U.S. Treasury, agencies, andi instrumentalities; U.S. dollar denominated deposit accounts and certificates of deposit; pre-funded public obligations as defined by state law; and interests in any common trust fund or other collective investment bank, trust company or  acquisition.  savings and loan association.  13    TOWN OF ECLECTIC, ALABAMA NOTESTOFINANCIAL STATEMENTS SEPTEMBER: 30, 2021  Receivables and Payables  Activity between funds that are representative of1 lending/borrowing arrangements outstanding at the end of thei fiscal year are referred to as either "duet to/from other funds" (i.e., the current portion ofi inter-fund loans) or"advancest to/from other funds" (i.e., ther noncurrent portion oft thei inter-fund1 loans). Any residuall balances outstanding between thé governmental activities and business-type activities are reported in the  govemmental-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 oni thes subsequent Octoberlf fort thei fiscal year beginning on the 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. Ifr real property taxes are not paid by the June 15 following the due date, a tax sale is required tol be held. Revenue is recognized in the year 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 using the average cost: method. The costs ofgovernmental fund typei inventories Inventories of the proprietary fund are valued at cost using the average cost method. Inventory in the 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. proprietary fund consists of expendable supplies used for future consumption.  current fiscal year but benefit thes subsequent fiscal year.  Capital Assets  Capital assets, purchased or constructed: are reported at cost ore estimated. historical cost. In the governmental funds, donated capital assets arei recorded: at acquisition value at the date of donation int theg goverment-wide financial statements only.. Acquisition valuei is an estimate ofa aj price that would be paid to acquire as similar Capital assets are defined by the Town as assets with an initial, individual cost of more than $5,000 and an estimated. usefull life greater than one year. The Town did not report infrastructure acquired prior to October The cost ofnormal maintenance and repairs that do not add to the value of the asset or materially extend the Capital assets are depreciated using the straight-line method over the following estimated useful lives:  asseti in an orderly market transaction at the acquisition date.  1,2003.  useful lives are: not capitalized.  Buildings Improvements Machinery and equipment Utility system Infrastructure  30 years 20 years 7-20 years 50 years 50 years  14    TOWN OF ECLECTIC, ALABAMA NOTESTOFINANCIAL STATEMENTS SEPTEMBER: 30, 2021  Compensated Absences  Effective February 2, 2003, Town employees are credited with 41 hours of annual leave per bi-weekly pay period of service with accumulation capped at 1201 hours.. Additional leavei is credited to employees based on tenure. Employees with 10 continuous years of service up to 15 years earn an additional 21 hours bi-weekly for a total of 6 hours with accumulation capped at 144 hours, and employees with 15 years or more of continuous service earn an additional 21 hours bi-weekly for a total of81 hours with accumulation capped at 1601 hours. Upon separation of employment, unused annual leave is paid to Town employees. The liability for compensated absences attributable tot the Towi'sgovemmental. fundsi is recordedi in the government-wide statements. The amount attributable tot the business-type: activities is charged to expense withac corresponding liability established in the govemment-wide. statements as well as the applicable business-type funds. After three months of service, all full-time employees are eligible to accrue sick leave at the rate of41 hours per bi-weekly pay period of service. Sick leave need not be used within a specified leave year and may be accumulated up to ar maximum of1,4561 hours. Upon retirement, an employee may convert unused sick leave tor retirement service credit. Employees separating from service: for any reason other than retirement forfeits For governmental activities, compensated absences are generally paid by the General Fund. For business- type activities, compensated absences are generally paid by the' Water Works Fund.  unused sick leave.  Deferred Outflows/Inflows of] Resources  In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows ofr resources, represents aconsumption of net position that applies to ai future period(s) and sO will not be recognized as an outflow ofresources (expenselexpenditure) 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 ofi net] position that applies to ai future period(s) ands sO will not be recognized as an inflow of resources (revenue) until that time. The Town reports deferred inflow items related to the Town's  Town'spension plan which are described further inl Note 8.  pension plan which are described further in Note 8.  Long-Term Obligations  In the government-wide financial statements and proprietary fund type 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 related to prepaid insurance, are deferred and amortized over thel life of the bond Bonds payable are reported net of the applicable bond premium or discounts. Bond jssuance costs are expensed at issuance, except for those related to prepaid insurance, which are recorded as prepaids in the In 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  using the effective interest method. Statement ofNet Position.  15    TOWN OF ECLECTIC, ALABAMA NOTES TOFINANCIAL: STATEMENTS SEPTEMBER 30, 2021  discounts on debt issuances are reported as other financing uses. Issuânce costs, whether or not withheld  from the actual debt proceeds received, are: reported as debt service expenditures.  Lease Obligations  Capital lease obligations are stated at the original fair market value of leased 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 govemment-wide: financial statements and the cost ofassets so acquired are reflected in the accounts ofthose  funds and statements. Pensions  The Employees' Retirement System of Alabama (the Plan or ERS) financial statements are prepared using the economic resources: measurement focus and accrual basis of accounting. Contributions are recognized as revenues when earned, pursuant to thej plan requirements. Benefits and refunds are recognized when due and payable in accordance with the terms of thel Plan. Expenses are recognized when the corresponding lability is incurred, regardless of when the payment is made. Investments are reported at fair value. Financial statements are prepared in accordance with the requirements of the Governmental Accounting Standards Board (GASB). Under these requirements, the Plan is considered a component unit of the State of Alabama  and isi included in the Sat'sComprehensive Annual Financial Report.  Net Position/Fund Balances  Net position is reported on the government-wide financial statements and is required to be classified for  accounting and réporting 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 ori inflows at year-end related to capital assets are not included in the calculation. Restricted - Constraints imposed on net position by external creditors, grantors, contributors, laws or regulations of fother governments, or law through constitutional provision or enabling legislation. At September 30, 2021, $14,206.88 is restricted for public safety, $131,622.12 is restricted for public works (street maintenance) and $44,483.06 is restricted for court operations. Unrestricted - The net amount of assets, deferred outflows of resources, liabilities, and deferred inflows ofr resources that are not included in the determination of neti 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 isl based primarily oni the extent to which the Towni is bound tol honor constraints on the specific purposes for which amounts in the respective governmental funds can be spent. The classifications used in  should: notl be reported on the face of the Statement ofl Net Position.  the governmental fund financial statements are as follows:  16    TOWN OFE ECLECTIC, ALABAMA NOTESTOFINANCIALSTATEMENTS SEPTEMBER 30,2021  Nonspendable This classification includes amounts that cannot be spent either because they are inr nonspendable form or because they are. legally or contractually required tol 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, grantorsycontributors, or 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.  ofother governments.  only through ordinances or resolutions approved by the' Town Council.  When an expenditure. isi incurred: for 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 to have been spent first out of çommitted funds, then assigned funds, and finally unassigned funds, as needed, unless the Town  Council has provided otherwise in its commitment or assignment actions. Recently Implemented Accounting Pronouncements  GASB Statement No. 89, Accounting forl Interest Cost Incurred before thel End ofa Construction: Period, enhances the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period and to simplify accounting for interest costi incurred before the end ofa construction period. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost isi incurred for financial statements prepared using the economic resources measurement focus. As a result, interest costs incurred before the end ofa construction period will nol longer be capitalized in  business-type activities.  2. CASH AND CASH EQUIVALENIS Custodial Credit. Risk - Deposits and Investments  Custodial credit risk is the risk that in the event of al bank failure, the Town' 's deposit may not be returned. to it. As of September 30, 2021, none of the Town's bank balance of $3,811,424.47 was exposed to custodial credit risk. All oft the Town's bank balances are insured by the Federal Deposit Insurance Corporation (FDIC) and the Security for Alabama Funds Enhancement (SAFE) Program. The SAFE] Program is a multiple financial collateral  The Town does not have a deposit policy for custodial credit risk.  pool administered by the State Treasurer according to State of Alabama statute.  As of September 30, 2021, the Town had no investments.  3. RECEIVABLES  Receivables as of September 30, 2021, for the government'si individual major funds are as follows:  17    TOWN OF ECLECTIC, ALABAMA NOTESTOFINANCIAL STATEMENTS SEPTEMBER: 30,2021  Eclectic Water $ 416.00 416.00  General) Fund Street Fund Municipal Court and Sewer Fund  Total $1 156,073.93 107,124.86 263,198.79 9,888.18  Taxes Accounts Receivable Gross Receivables Less Allowance: for Uncollectable  $ 153,417.59 $ 2,656.34 $  5,510.08 158,927.67  101,198.78 101,198.78 9,888.18  2,656.34  Total Receivables $ 158,927.67 $ 2,656.34 $  416.00 $ 91,310.60 $ 253,310.61  4. CAPITAL ASSETS Primary Government Governmental. Activities Non-depreciable: assets: Land Constructioni inp progress Totall non-depreciable: assets Depreciable assets: Buildings Machinery ande equipment Land improvements Total depreciable assets Less accumulated depreciation for: Buildings Machinery ande equipment Landi improvements Totala accumulated depreciation Total depreciable assets, net Governmental: activities capital assets, net  Capital asset activity for the year ended September 30, 2021, was as follows:  Beginning Balance $ 427,270.90 $ 427,270.90 909,937.73 1,691,425.01 532,567.74 3,133,930.48 281,077.09 1,371,968.61 39,364.32 1,692,410.02 1,441,520.46  Ending Balance  Increase  Decrease  $ 310,500.00 $ 116,770.90 310,500.00 158,717.34 158,717.34 141,467.34 141,467.34 17,250.00  116,770.90 909,937.73 1,625,572.77 532,567.74 3,068,078.24 311,452.94 1,297,434.19 61,305.21 1,670,192.34 1,397,885.90  92,865.10 92,865.10 30,375.85 66,932.92 21,940.89 119,249.66 (26,384.56)  1,868,791.36 $ (26,384.56) $ 327,750.00 $ 1,514,656.80  INTENTIONALLYLEFTBLANK  18    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCALSTATEMENIS SEPTEMBER 30, 2021  Beginning Balance $ 105,291.00 113,890.00 219,181.00 4,269,172.81 290,865.00 2,078,848.11 300,000.00 6,938,885.92 1,985,690.86 161,283.65 1,617,599.34 256,660.85 4,021,234.70 2,917,651.22 3,136,832.22  Ending Balance $ 284,550.16 60,200.00 344,750.16 4,472,827.64 290,865.00 2,115,674.11 300,000.00 7,179,366.75 2,130,525.39 166,547.38 1,626,273.01 266,826.42 4,190,172.20 2,989,194.55  Increase  Decrease  Business-Type. Activities Non-depreciable: assets: Land Constructioni inp progress Totaln non-depreciable: assets Depreciable assets: Utility system Buildings Machinery and equipment Landi improvements Total depreciable assets Lessa accumulated depreciation for: Utility system Buildings Machinery and equipment Landi improvements Total accumulated depreciation Total depreciable assets, net Business-type: activities capital assets, net  $179,259.16 $ 179,259.16 203,654.83 36,826.00 240,480.83 144,834.53 5,263.73 8,673.67 10,165.57 168,937.50 71,543.33  53,690.00 53,690.00  $250,802.49 $ 53,690.00 $ 3,333,944.71  Depreciation expense was charged toi functions/programs of the primary government as follows:  Governmental activities: General government Public safety Public works Public welfare Business-type activities:  9,574.50 56,730.38 21,479.52 31,465.26 $119,249.66 $168,937.50  Total depreciation expense - governmental activities  5. INTERFUND BALANCES  Interfund balances are generally used toi 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, 2021, is shown below:  Due tofrom other funds: Receivable: Fund General General  Payable Fund  Total 135,954.01 2,058.62 138,012.63  Eclectic Water & Sewer Fund Municipal Court  19    TOWN OF ECLECTIC, ALABAMA NOTES TOFINANCIALSTATEMENTS SEPTEMBER30,2021 6. SHORT-TEM DEBT  The Town maintains a $200,0001 line of credit to support operations pending collection and receipt of outstanding Town revenue. Interest is paid on outstanding balance at 3.25%. The line ofcredit matures May 1,2022. Short-  term debt activity for the year ended September 30, 2021, was as follows.  Beginning Balance Issues Redemptions Ending Balance  1,035.37 0.00 (1,035.37) S 0.00  7. LONG-TERM DEBT  Long-term debt activity for the year ended September 30, 2021, was as follows:  Beginning Balance  Ending Balance  Due Within One Year  Additions  Reductions  Governmental. Activities: General obligation bonds Notes payable Capital leases Compensated absences Governmental activity long-t term liabilities Business-Type. Activities: Compensated absences Business type: activity long-term liabilities Total long-term debt General Obligation. Bonds  665,000.00 $2,420,000.00 $ 665,000.00 $2,420,000.00 $ 94,000.00  237,427.72 99,692.84 20,021.97 1,022,142.53 2,655,852.68 7,211.91 7,211.91  230,289.97 5,562.71 2,479.15 2,479.15  262,504.23 23,490.93  205,213.46 76,201.91 25,584.68 9,691.06 9,691.06  12,217.45 24,420.99 25,584.68 9,691.06 9,691.06  950,995.16 2,727,000.05 156,223.12  $1 1,029,354.44 $2,658.331.83 $ 950,995.16 $2,736,691.11 $ 165,914.18  The Towni issues general obligation bonds toj provide for the 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 pursuant to the ordinance of the Town Council, duly adopted on. January 25,2021, all oft the outstanding 2007 Warrants were called for redemption at a price of $668,590.42, includes $3,590.42 interest. The warrants were redeemed with proceeds from the sale of the industrial park land ($450,000) and from the 2021 general obligation $2,420,000 Series 2021 General Obligation Warrant issued for thej purpose of financing the costs of acquisition andi installation of certain municipal capital improvements, redeem the warrants ofthe 2007 General Obligation Refunding Warrant, and to the pay the cost ofi issuance of the Warrant. Issuance costs totaled $40,000. $2,161,287.12 was deposited into an account at] PNC: Bank thati is known as the  30,2 2021, the Town had one outstanding bond described as follows:  bond ($218,712.88).  $ 0.00  Acquisition Fund and is controlled by the' Town.  $2,420,000.00  The following schedule reflects debt service to maturity for the general obligation bonds at September 30, 2021:  20    TOWN OF ECLECTIC, ALABAMA NOTES TOFINANCIAL STATEMENTS SEPTEMBER 30, 2021  Governmental Activities Principal $ 94,000.00 96,000.00 99,000.00 101,000.00 104,000.00 562,000.00 1,364,000.00 $2,420,000.00  Interest $ 62,172.60 59,683.60 57,129.10 54,509.10 51,823.60 216,202.40 128,249.00 $629,769.40  Total $156,172.60 155,683.60 156,129.10 155,509.10 155,823.60 778,202.40 1,492,249.00 $3,049,769.40  Year ending September 30:  2022 2023 2024 2025 2026 2027-2031 2032-2036 Totals: Notes. Payable  The Town has received funding from local banks to provide for the acquisition of capital assets. The current Note payable with First Community Bank of Central Alabama used to pay off the original note with Trustmark and to reduce thel line of credit. The note is due in monthly payments of$1,171 through December 4, 2029 andl has ani interest rate of4.2%. The note is secured by the municipal building. Note payable with First Community Bank of Central Alabama used toi fund costs related to the purchase oft two fire trucks. This note was refinanced with the purchase of additional fire truck. Note payable with First Community Bank of Central Alabama used to refinance loan for2 fire trucks and toj purchase additional firet truck. This note is duei in 6a annual installments of$43,939.69 andl has ai fixed interest rate of 4%. The note is secured by three firet trucks. Thel loan originated in April 2021 with the first  outstanding balances are as follows:  $ 15,704.69 0.00 189,508.77 $ 205,213.46  payment due April 2022. The Town paid the 2022 payment in. June 2021.  Total notes payable: Interest $1,833.35 7,893.16 6,417.25 4,907.98 3,338.01 1,553.80 $25,943.55  The following schedule illustrates debt service to maturity for the notes payable at September 30, 2021:  Principal $12,217.45 39,558.77 37,522.44 39,031.71 40,601.68 36,281.41 $205,213.46  Total $14,050.80 47,451.93 43,939.69 43,939.69 43,939.69 37,835.21 $231,157.01  Year ending September 30:  2022 2023 2024 2025 2026 2027 Totals: Capital Lease Payable  The Town of Eclectic entered into al lease agreement as lessee for the financing acquisition of3 police vehicles. The lease agreement qualifies as a financed purchase and, therefore, has been recorded at the present value ofi its future minimum lease payments as of the inception date. The lease requires 5 annual payments of $27,438 with the first due and paid on August 1, 2020. All subsequent annual payments are due on. August 1.7 The lease Thei following schedule reflects details about cost and related accumulated depreciation of assets purchased using  agreement has a stated interest rate of3.926%.  acapital lease. Amounts reflected are as of the financial statement date.  21    TOWN OF ECLECTIC, ALABAMA NOTES TO. FNANCALSTATEMENIS SEPTEMBER 30, 2021  Governmental Activities $ 121,370.36 19,216.97 $ 102,153.39  Asset Machinery and equipment Less accumulated depreciation Total  Thei following schedule illustrates debt service to maturity for the capital lease payable at September 30, 2021:  Principal 24,420.99 25,387.87 26,393.05 $76,201.91  Interest 3,017.01 2,050.13 1,044.95 $6,112.09  Total 27,438.00 27,438.00 27,438.00 $82,314.00  Year ending September 30:  2022 2023 2024 Totals:  8. PENSION PLAN Plan Description  The Employee's Retirement System of Alabama (ERS), an agent multiple-employer public employee retirement plan, was established October 1, 1945 under the provisions of Act 515 oft the Legislature of1945 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 of ERS is vested in its Board ofControl. The ERS Board of control consists of 13 trustees. Effective October 1, 2021, Act 390 of the Legislature of 2021 will create two additional representatives and change the composure of representatives within the ERS Board of Control. Thél Plan is administeredby the Retirement Systems of Alabama (RSA). Title 36-Chapter 27 of the Code of Alabama grants the authority to establish and amend thel benefit terms to the ERS Board of Control. The Plani issues aj publicly available financial report that can be obtained at www.rsa-algov.  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 State Director of Finance, ex officio.  5) Three vested members of ERS appointed by the Governor for a term of four years, no two of who are from the same department of 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. Two retired members with one: from the ranks ofretired state employees and one from ther ranks of retired employees ofa city, county, or aj public agency each of who is an: active beneficiary Two vested active employees ofa an employer participating in ERS pursuant to $36-27-6.  ist the 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 the ERS. Benefits for ERS members vest after 10 years of creditable service. State employees who retire after 60 (52 for State Police) with 10 years or more of creditable service or with 25  22    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER 30, 2021.  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 ofmore 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 oraf formulai method, with the member reçeiving payment under thei method that yields thel highest monthly benefit. Under the formula method, members of] ERS (except Statel Police) are allowed 2.0125% oft their average final compensation (highest 3 of thel last 10 years) for each year of service. State Police are allowed2.875%: for each year of State Police service in computing the formula method. Act 377 of thel Legislature of2012 established a new tier oft 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 forl life. Service and disability retirement benefits arel based on a guaranteed minimum ora 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 death benefits equal to the annual earnable compensation of the member as reported to the Plani for thej preceding yeare ending September 30 are paid to thel beneficiary. Act 132 of the Legislature of 2019 allowed employers who participate in the ERS pursuant to Code of Alabama, 1975, Section 36-27-61 toj provide Tier1 1 retirement benefits to' Tier 2 members. Tier 2 members of employers adopting Act 2019-132 will contribute 7.5% of earnable compensation: for regular employees and 8.5% for firefighters and law enforcement officers. A total of 590 employers adopted Act 2019-132. In the January 2020 council meeting, Town Council approved thei implementation of Act 2019-132. The ERS serves approximately 853 local participating employers. The ERS membership includes approximately 101,245 participants. As of September 30,2020, total] ERS membership consisted of:  each year of state police service in computing the formula method. Tierl 1 retirement  Retirees and beneficiaries currently receiving benefits Terminated employees entitled tol but not yeti receiving benefits Terminated employees not entitled to al benefit Post-DROP participants who are still in active service  28,672 1,974 14,133 56,369 97 101,245  Active members Total  As of September 30, 2020, ERS: membership attributed to the Town ofE Eclectic consisted of:  Retired members or their beneficiaries currently receiving benefits  6 0 6 23 0 35  Vested inactive members Non-vested inactive members Active members Total Contributions  Post-DROP retired members still in active service  Covered members of thel ERS contributed 5% of earnable compensation to thel ERS as required by statute until September 30, 2011. From October 1,2011, to September 30,2012, covered members oft thel ERS were required bys statute to contribute 7.25% of earnable compensation. Effective October 1,2012, covered members of the ERS are required bys statute to contribute 7.50% ofe earnable compensation. Certified law  23    TOWN OF ECLECTIC, ALABAMA NOTES TOFRANCALSTATMENIS SEPTEMBER 30,2021  enforcement, correctional officers, and firefighters oft the ERS contributed 6% of earnable compensation as required by statute until September 30, 2011. From October 1, 2011 to September 30, 2012, certified law enforcement, correctional officers, and firefighters oft the ERS were required by statute to contribute 8.25% of earnable compensation. Effective October 1,2012, certified law enforcement, correctional officers, and firefighters of the ERS are required by statute to contribute 8.5% of earnable compensation. State Police of the ERS contribute 10% of earnable compensation. State Police of thel ERS contribute 10% of earnable Employers participating in thel ERS pursuant to Code of Alabama 1975, Section 36-27-6 were not required by statute toi increase covered: member contribution: rates but were provided the opportunity to do sO through Act 2011-676. By adopting Act 2011-676, Tier 1 regular members contribution rates increased from 5%1 to 7.5% of earnable compensation and' Tier 1 firefighters and law enforcement officers increased from 6%t to Tier 2 covered members of thel ERS contribute 6% of earnable compensation to the ERS as required by statute. Tier 2 certified law enforcement, correctional officers, and firefighters of thel ERS are: required by statute to contribute 7% ofe earnable compensation. Tier 2 State Police members of the ERS contribute 10% ofearnable compensation. These contribution rates are the same for Tier 2 covered members of ERS local 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 30, 2021, the Town's active employee contribution rate was 5% ofcovered payroll for Tier 1 employèes 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 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 6.62% of pensionable payroll for Tier 1 employees and 4.38% ofpensionable The Town's contractualy required contribution rate for the year ended September 30, 2021, was 6.99% of pensionable pay for Tier 1 employees, and 4.75% of pensionable pay for Tier 2 employees. These required contribution rates are based upon the actuarial valuation dated September 30, 2018, 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  compensation.  8.5% ofe earnable compensation.  participating employers.  payrol! for Tier 2 employees.  plan from the Town were $53,825 for the year ended September 30, 2021.  Intentionally Left Blank  24    TOWN OF ECLECTIC; ALABAMA NOTES TO FINANCIAL STATEMENTS SEPTEMBER: 30,2021  Net Pension Liability  The' Town's: net pension liability was measured as of September 30, 2020, and the total pension liabilityused to calculate the net pension liability was determined by an actuarial valuation as of September 30, 2019, rolled forward to September 30, 2020, using standard roll-forward techniques as shown in the following  table:  Actual Before Act 2019-132 Act 2019-132 $1,827,913 $1,847,277 7.70% 73,642 (57,290) (71,503) $1,910,758 $1,937,027 $55,750 (57,290) $113,040  Actual After  Expected $1,722,954 7.70% 73,642 0 (71,503) $1,855,008  (a)7 TPL as of September 30, 2019 (b) Discount Rate (c) Entry Age Normal Cost for the period October 1,2019 - September 30, 2020 (d) Transfers Among Employers: (e). Actual Benefit Payments and Refunds for the period October 1, 2019- September 30, 2020 ()TPL as of September 30, 2020 TexdmD-0-0-1exd .05(b))] (g) Difference between Expected and Actual: (h)Less Liability Transferred: for Immediate Recognition: (i) Experience (Gain)/Loss = (g)-(h) G) Difference between. Actual TPLI Before and After Act 2019-132- - Benefit Change (Gain)/Loss Actuarial. Assumptions  7.70% 79,056 (57,290) (71,503)  26,269  The total pension liability as of September 30, 2020 was determined based on the annual actuarial funding  valuation report prepared as of September 30, 2019. Thel key actuarial assumptions  Inflation Salary increases Investment rate ofreturn* *Net ofpension plan investment expense  2.75% 3.25%-5.00% 7.70%  Mortality rates were based on the sex distinct RP-2000 Blue Collar) Mortality Table Projected with Scale BB to 2020 with an adjustment of1 125% at all ages for males and 120% 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 Retireel Mortality" Table! Projected with Scale BB to 2020 with an adjustment of 130% at all ages for females. The actuarial assumptions used in the actuarial valuation as of September 30, 2018, were based ont 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, which became effective at the beginning of fiscal year 2016 (the discount rate of 7.70% was adopted on The long-term expected rate of retur on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net ofp pension plan investment expense andi inflation) are developed for each major asset class. Theser ranges  December 4, 2018).  25    TOWN OF ECLECTIC, ALABAMA NOTESTOFINANCIAL STATEMENTS SEPTEMBER 30, 2021  are combined toj produce the long-term expected rate of return 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 of return of each major asset class are as follows:  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  The long-term expected rate of return 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, 7.70%. The projection of cash flows used to determine the discount rate assumed that plan contributions will be made at the current contribution: rate and that the employer contributions will be made in accordançe with thei funding policy adopted by the ERSI Board of Control. Based on those assumptions, components ofthe pension plan's fiduciary net position were projected to be available to make all projected future benefit payments of current plan members. Therefore, thel long-term expected rate of return on pension plan investments was applied to  all periods of projected benefit payments to determine the total pension liability.  Intentionally Left Blank  26    TOWN OF ECLECTIC, ALABAMA NOTEST TOFRANCALSTATMENIS SEPTEMBER 30, 2021  Changes in Net Pension. Liability  Totall Pension Planl Fiduciaryl Net  Net] Position Liability (Asset) (a)-(b) 343,005 73,642 129,915 26,269 0 113,040 (49,282) (44,284) (77,848) 0 0 0 171,452 514,457  Liability (a) $ 1,722,954 $ 73,642 129,915 26,269 0 113,040  Position (b)  Balances at September 30, 2019 Changes for the year: Service cost Interest Changes oft benefit. terms Changes of assumptions Differences between expected and actual experience Contributions - employer Contributions employee Neti investment income Benefit payments, including refunds ofe employee contributions Administrative expense Transfers among employers Net changes Balances at September 30, 2020  1,379,949 $  49,282 44,284 77,848 (71,503) 0 (57,290) 42,621 1,422,570 $  (71,503) (57,290) 214,073 $ 1,937,027 $  Sensitivity of the Net Pension Liability to Changes in the Discount. Rate  The following table presents the Town's net pension liability (asset) calculated using the discount rate of 7.70% as well as what the Town's proportionate share oft the net] pension liability (asset) would be ifit were calculated using a discount rate that is one percentage point lower (6.70%) or one percentage point higher.  (8.70%) than the current: rate:  1%1 Decrease Current Rate 1% Increase  (6.70%) 788,683  (7.70%) 514.457 $  (8.70%) 285,752  Town's net pension liability (asset) Pension Plan Fiduciary Net Position  Detailed information about thej pension plan' 's fiduciary net] position is available in thes separately issued RSA Comprehensive Annual Report for the fiscal year ended September 30, 2020. The supporting actuarial information is included in the GASB Statement No. 68 Report for the ERS prepared as of September 30, 2020. The auditor's report dated April 30, 2021 on the Schedule of Changes in! Fiduciary Net Position by Employer and accompanying notes detail by employer and in aggregate additional information needed to comply with GASB 68. The additional financial and actuarial information is available at www.rsa-  lgov/indexphplemployfinamcialrpersportgasb-6-reports.  27    TOWN OF ECLECTIC, ALABAMA NOTES TOPNANCALSTATMENS SEPTEMBER30,2021  Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to For the year ended September 30, 2021, the Town recognized pension expense of$139,507.31. At September 30, 2021, the Town reported deferred outflows of resources and deferred inflows of resources related to  Pensions  pensions of the following sources:  Deferred Outflows of Deferred Inflows of  Resources $ 193,194 12,541 44,839 53,825 $ 304,399  Resources $ 51,615 0 0 0 $51,615  Differences between expected and actual experience Net difference between projected and. actual earnings Employer contributions subsequent to the  Changes of assumptions on plan investments measurement date Total  $53,825 reported as deferred outflows of resources related to pensions resulting from System contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended September 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows  ofresources related to pensions will be recognized in pension expense as follows:  Year ended September 30: 2022 2023 2024 2025 2026 Thereafter  $66,235 67,736 23,734 16,529 17,663 7,062  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 a maximum total coverage of$3,000,000. The Town also purchased commercial insurance for other risks of loss, 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 self-insured health insurance program funded from the premiums oft the participating local goverment units and their 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 a liability of the applicable funds. The amount, ifany, ofe expenditures that may be disallowed  28    TOWN OF ECLECTIC, ALABAMA NOTES TOFINANCIAL STATEMENTS SEPTEMBER: 30, 2021  by the grantor cannot be determined at the time, although the Town expects such amounts, ifany, to be  immaterial.  11. RELATED PARTY TRANSACTIONS  On. July 30, 2019, the' Town entered into al Biosolids Procurement Agreement with George Family Farm located in Eclectic, Alabama. The term oft the agreement is 3 years with an automatic 1 year renewal, unless During the fiscal year ended September 30, 2021, the Town of Eclectic paid George Family Farms a total of$29,281 for services rendered relative to the sewer system and the Biosolids Procurement Agreement. During the 20201 fiscal year, Chris George, owner of George Family Farm and thei individual responsible for fulfilling the Biosolids Procurement Agreement, became a management level employee of the Town of Eclectic. The Town of Eclectic obtained an opinion from its legal counsel regarding the impact ofMr. George's employment status on the agreement named above. The contract is not compromised by Mr. George's employment. The details of the related party contract have been filed with the Alabama Ethics  the' Town gives George Family Farm a written 90-day notice oft termination.  Commission pursuant to Section 11-43-12.1 oft the Code of Alabama.  12. SUBSEQUENT EVENTS  The Town was awarded a $300,000 grant from ADECA on January 20,2022, to use to replace the play structure at) Panther Palace Playground. The grant award has a 10% match requirement. A contract has been let on the project. Work began inl December 2022 with an expected completion in Summer 2023.  29    REQUIRED SUPPLEMENTARY INFORMATION    TOWN OF ECLECTIC, ALABAMA BUDGETARY COMPARISON SCHEDULE FOR THE YEAR ENDED SEPTEMBER 30, 2021  GENERAL FUND  Variance Favorable (Unfavorable) 138,662.16 (11,625.53) 148,116.49 (577.60) 13,103.32 14,865.02 443.71. 302,987.57 152,978.82 (108,649.28) 16,727.85 4,044.23 (10,865.10) (858,482.14) (804,245.62) (501,258.05) 2,650,289.97 453,000.00 10,473.18 (267,224.03) 2,846,539.12  Budgeted. Amounts Original 248,600.00 71,425.00 242,700.00 26,500.00 32,300.00 2,000.00 2,146,525.00 2,146,525.00  Actual (Budgetary Basis)  Final 248,600.00 71,425.00 242,700.00 26,500.00 32,300.00 2,000.00  Revenues Taxes Licenses and permits Intergovermmental. revenues Charges for services Fines and forfeitures Miscellaneous Interest Totalrevenues Expenditures Current: General government Public safety Public works Public welfare Capital outlay Debt service Total expenditures Excess ofrevenues over (under) expenditures Other Financing Sources (Uses) Proceeds from general obligation bond Proceeds from sale of general. capital assets Transfers in Transfers out Total Other Financing Sources (Uses) Net Change in Fund Balances Fund Balance- Beginning Fund Balance- Ending Note A: Budgetary. Information  1,523,000.00 $ 1,523,000.00 $ 1,661,662.16 $  236,974.47 219,541.49 242,122.40 39,603.32 47,165.02 2,443.71 2,449,512.57 430,569.18 1,040,549.28 211,622.15 77,905.77 92,865.10 1,018,639.14 2,872,150.62 (422,638.05) 2,650,289.97 453,000.00 10,473.18 (267,224.03) 2,846,539.12  583,548.00 931,900.00 228,350.00 81,950.00 82,000.00 160,157.00 2,067,905.00 2,067,905.00 78,620.00  583,548.00 931,900.00 228,350.00 81,950.00 82,000.00 160,157.00 78,620.00  78,620.00 S 78,620.00 $ 2,423,901.07 $ 2,345,281.07 1,084,164.77 $ 1,084,164.77 $ 1,084,164.77 $  S 1,162,784.77 $ 1,162,784.77  3,508,065.84 e$ 2,345,281.07  Thel budgetary comparison schedule required by GASB includes the general fund only. The' Towni is not legally required to adopt a budget and chooses not to do so for the special  revenue funds.  30    TOWN OFE ECLECTIC, ALABAMA REQUIREDSUPALEMEBNTARYA INFORMATION SCHEDULEOF CHANGESI INT THEN NETE PENSIONIIABILITY FOR THEY YEAR ENDEDS SEPTEMBER; 30,2 2021 Totall Pension Liability Service Cost Interest Changes ofBenefit Terms Differences BetweenE Expecteda andA Actual Experience Changesi inA Assumptions Benefits! Payments, Including! Refunds ofEmployee Contributions Transfers AmongE Employers Net Changei inTotall Pension) Liability Totall Pensionl Liability- Beginning Totall Pension! Liability-E Ending (a) Plan! Fiduciaryl NetF Position Contributions Employer Contributions- Members Neth InvestmentI Income Benefit Payments,! Including! Refunds ofEmployee Contributions Transfèrs Among! Employers Net Change inF PlanF Fiduciary NetF Position Plan NetF Position- Beginning Plan NetF Position-1 Ending (b) NetF Pension) Liability (Asset)- Ending (a)-(b) Plan Fiduciary NetP Position: asa aP Percentage ofthe Total Pensionl Liability Covered Payroll* NetF Pension) Liability (Asset): asaP Percentage of Covered! Payroll areb based.  9/30/2020 9/30/2019 9/30/2018 9/30/2017 9/30/2016 9/30/2015 9/30/2014 73,642 $ 69,148 $ 78,384 $ 65,900 S 64,668 $ 56,043 $ 60,115  129,915 125,778 101,619 26,269  87,466  84,618 67,230  62,226  113,040 (72,021) 174,698 96,914 (29,879) 146,293  8,936  46,902  (71,503) (70,096) (70,185) (75,728) (51,857) (52,574) (67,010) 1,722,954 1,668,530 1,346,300 1,166,457 1,083,655 866,663 811,332 $1,937,027 $1,722,954 $1,668,530 $1,346,300 $1,166,457 $1,083,655 866,663  (57,290) 214,073  1,615 28,778  5,291 (31,650)  54,424 322,230 179;843 82,802 216,992  55,331  49,282 $ 35,629 $ 27,239 S 16,487 S 15,980 $ 9,830 $ 20,087  44,284  43,399  41,664  35,970 37,505 33,031  32,091 12,407 114,529  77,848 34,416 111,919 136,726 100,916  (71,503) (70,096) (70,185) (75,728) (51,857) (52,574) (67,010) 42,621 $ 44,963 $ 139,415 $ 118,746 $ 70,894 $ (92,075) $ 172,446 1,379,949 1,334,986 1,195,571 1,076,825 1,005,931 1,098,006 925,560 $1,422,570 $1,379,949 $1,334,986 $1,195,571 $1,076,825 $ 1,005,931 $1,098,006 514,457 $ 343,005 $ 333,544 S 150,729 $ 89,632 $ 77,724 $ (231,343) 73.44% 80.09% 80.01% 88.80% 92.32% 92.83% 126.69% 800,926 $ 738,195 $ 750,033 $ 653,910 $ 729,167 $ 626,354 $ 626,354 64% 46.47% 44.47% 23.05% 12.29% 12.41% -36.93%  (57,290)  1,615 28,778  5,291 (31,650) (94,769). 72,749  Employer's covered payrolld duringt ther measurement periodi ist thet totalc covered payroll, ForF FY 2021, thet measurement period is Octoberl 1,2019- September 30,2 2020. GASBi issueda as statement' "Pension Issues" inN March2 2016t tor redefine covered payrolle effèctivel FY 2017. Covered payrolli is defined as payroll onv which contributions toa pension plan  31    TOWN OF ECLECTIC, ALABAMA REQUIREDS SUPPLEMENTARYI INFORMATION SCHEDULEC OFE EMPLOYER CONTRIBUTIONS FOR THE YEARE ENDEDS SEPTEMBER: 30,2021  2021  2020  2019  2018  2017  2016  2015  Actuarially determined contribution Contributionsi inn relationt tot thea actuarially determined contribution Contribution deficiency (excess) Covered payroll payroll  53,825 $ 53,592 $ 37,058 $ 30,011 $ 18,890 $ 18,295 $ (66,494)  53,825  53,592  37,058  30,011  18,890  18,295  9,555 76,049  866,231 $ 800,926 $ 738,195 $ 750,033 $ 653,910 $ 729,167 $ 626,354  Contributions: asap percentage ofcovered  6.00%  6.69%  5.02%  4.00%  2.89%  2.51%  12.14%  Notes to Schedule  Actuarially determined contribution rates arec calculated aso ofSeptember 30, threey years priort tot thec end of thef fiscal yeari inv which contributions: arer reported. Contributions forf fiscaly year 2021 wereb based ont the Methods and assumptions used to determine contributioni ratesf fort they period Octoberl 1,2 20201 to  September 30, 2018 actuarial valuation. September 30, 2021: Actuarial costr method Amortizationi method Remaining amortization) period Asset valuation method Actuarial assumptions: Inflation Salaryi increases Investment rated ofretum Cost-of-living: adjustments  Entry Age Level percento closed 26.8y years Fivey years smoothed market 2.75% 3.25-5.00%, includingi inflation 7.70%, net ofpension plani investment expense, including inflation None  32