TOWN OF ECLECTIC, ALABAMA ANNUAL FINANCIAL REPORT SEPTEMBER 30, 2022    TOWN OF ECLECTIC, ALABAMA ANNUAL FINANCIAL REPORT SEPTEMBER 30, 2022  Tableo ofContents  Page 1  Independent. Auditors' Report Financial Statements Government-wide, Financial. Statements Statement ofNet] Position Statement of Activities Fund Financial Statements Balance Sheet - Governmental Funds Statement ofNet Position Balances- - Governmental Funds  3 4 5 6 7 8 9 10 11 12 30 31 32  Reconciliation oft 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 of Net Position - Proprietary Fund  Statement of Revenues, Expenses, and Changes in Net Position-  Proprietary Fund  Statement of Cash Flows Proprietary Fund Notes to thel Financial Statements Required Supplementary Information Budget to Actual Comparison Schedule - General Fund Schedule of Proportionate Share of the! Net Pension Liability Schedule of Employer Contributions tot the Town's Employee Pension Plan    PATTERSON & DUKE, P.C. CERTIFIED! PUBLIC ACCOUNTANTS 174GILMERAVENUE TALLASSEE, ALABAMA36078  TASHA D. PATTERSON, CPA PAULAJ.DUKE, CPA  PHONE: 334-283-4455 FAX: 334-991-4700  INDEPENDENT AUDITORS' REPORT  To the Mayor and Members ofTown Council Town ofEclectic, Alabama Opinions  We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of the Town of Eclectic, Alabama as of and for the year ended September 30, 2022, and the related notes to the financial statements, which collectively comprise the' Town of Eclectic, Alabama's basic financial statements as listed in the In our opinion, thei financial statements referred to above present fairly, in all material respects, ther respective financial position of the governmental activities, the business-type activities, and each major fund oft the Town of Eclectic, Alabama, as of September 30, 2022, 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. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Town of Eclectic, Alabama, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit Management is responsible fort thej preparation and fair presentation oft the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, andi maintenance ofi internal control relevant tot the preparation and fairp presentation of financial statements that are freet from material misstatement, whether Inj preparing the financial statements, management is required to evaluate whether there are conditions or events, considered: in the aggregate, that raise substantial doubt about the Town of Eclectic, Alabama's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently knowni information that may raise substantial doubt Our objectives are to obtain reasonable assurançe about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report thati includes our opinions. Reasonable assurance isal high! level of assurançe buti is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect ai material misstatement when it exists. The risk ofr not detecting ar material misstatement: resulting from fraudi is higher than for one resulting from error, as fraud mayi involve collusion, forgery, intentional omissions, mistrepresentations, or the override ofi internal control. Misstatements are considered material ift there is  table of contents.  Basis for Opinions  evidence wel have obtained is sufficient and appropriate toj provide al basis for our audit opinions.  Responsibilities of Management for thel Financial Statements  due to fraud or error.  shortly thereafter.  Auditors' Responsibilities for the. Audit of the Financial Statements  1    a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user  based ont the financial statements.  Inp performing an audit in accordance with generally accepted auditing standards, we:  Exercise professional judgment andi maintain professional skepticism throughout the audit. evidence regarding the: amounts and disclosures in the financial statements. Alabama's internal control.. Accordingly, no such opinion is expressed.  Identify and assess the risks of material misstatement oft the finançial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures inçlude examining, on a test basis, Obtain an understanding ofi internal control relevant tot the auditi 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' Town of Eclectic, Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates Conclude whether, in our. judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town of Eclectic, Alabama's ability to continue as a going conçern for ar reasonable period oft time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing oft the audit, significant audit findings, and certain internal control-related: matters that we: identified during the audit. Management has omitted management's discussion and analysis that accounting principles in the United States of America require tol be presented to supplement thel basic financial statements. Such missing information, although nota aj part oft the basic financial statements, is required by the Governmental Accounting Standards Board, who considers itt to be an essential part of the financial reporting for placing the basic financial statements in an appropriate operational, economic, orl historiçal context. Accounting principles generally accepted in the United States of America require that the budgetary comparison information and pension comparison information on pages 30 - 32 be presented to supplement the basic financial statements, Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers itt to be an essential part of financial reporting for placing the! basic finançial statements in an appropriate operational, economic, or historical context. Wel have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, thet basic financial statements, and other knowledge we obtained during our audit of thel basic financial statements. We do note express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any  made by management, as well as evaluate the overall presentation oft the financial statements.  Required Supplementary Information  Our opinions on thel basic financial statements arei not affected by this missing information.  assurance.  PMi R Patterson & Duke, PC Tallassee, Alabama January 4, 2024  2    FINANCIALSTATEMENTS    TOWN OF ECLECTIC, ALABAMA STATEMENT OFI NETI POSITION SEPTEMBER 30, 2022  Governmental Activities  Business-type Activities  Total 262,439.96 307,189.71 47,613.18 53,963.00 471,069.81 4,177,264.04 9,328,270.11 261,811.00  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 TOTALASSETS  $ 3,530,014.47 $ 478,715.94 $ 4,008,730.41  262,439.96 190,487.48 22,113.90 42,792.02 116,770.90 1,266,782.57 5,431,401.30 209,302.66  116,702.23 (22,113.90) 47,613.18 11,170.98 354,298.91 2,910,481.47 3,896,868.81 52,508.34  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 in more than one year Other liabilities duei ini more than one year: Net pension liability TOTALLIABILITIES  5,262.21 33,176.94 68,408.85 7,617.64 38,054.37 170,614.52 2,361,271.04 220,033.00 2,904,438.57 230,304.58 1,198,867.50 29,327.15 164,439.03 31,497.10 1,081,830.03  5,262.21 33,176.94 121,231.81 7,617.64 49,336.60 65,501.95 170,614.52 2,361,271.04 290,200.25 3,104,212.96 263,657.00 4,463,647.63 29,327.15 164,439.03 31,497.10 1,533,300.24  52,822.96 11,282.23 65,501.95  70,167.25 199,774.39 33,352.42 3,264,780.13  TOTAL DEFERRED INFLOWS OF RESOURCES Deferred inflows related toj pension NETPOSITION Neti investment in capital assets Restricted for: Public safety Public works Municipal court Unrestricted TOTALNETI POSITION  451,470.21  2,505,960.81 $ 3,716,250.34 $ 6,222,211.15  See accompanying notes to financial statements.  3        TOWN OF ECLECTIC, ALABAMA BALANCE SHEET GOVERNMENTAL FUNDS SBPTEMBER: 30, 2022  Total Governmental Funds 112,709.33 190,487.48 42,792.02 24,781.30 4,050,515.23  Municipal Court  General Fund Street Fund  ASSETS Cash Cash-restricted Receivables Prepaid expenses Due from other funds TOTALASSETS  3 3,530,014.47 $ 77,966.98 $ 71,763.65 $ 3,679,745.10  112,709.33 186,557.61 42,792.02 24,781.30 3,896,854.73  3,089.87 81,056.85  840.00 72,603.65  LIABILITIES AND: FUNDI BALANCES  LIABILITIES Accounts payable Other current liabilities Duet to other funds TOTALLIABILITIES FUND BALANCES Nonspendable: Prepaid expenses Restricted: Public safety Public works Municipal court Committed Unassigned TOTAL FUNDBALANCES TOTALLIABILITESAND FUNDI BALANCES  68,408.85 38,054.37 106,463.22  5,262.21 33,176.94 2,667.40 41,106.55  73,671,06 71,231.31 2,667.40 147,569.77  42,792.02 29,327.15 83,382.18 30,007.30 3,604,882.86 3,790,391.51  42,792.02 29,327.15 164,439,03 31,497.10 30,007.30 3,604,882.86 3,902,945.46  81,056.85  31,497.10 31,497.10  81,056.85  3,896,854.73 $ 81,056.85 $ 72,603.65 $ 4,050,515.23  See accompanying notest to financial statements.  5    TOWN OF ECLECTIC, ALABAMA STATEMENT OF NETPOSITION SEPTEMBER 30, 2022  RECONCILIATION: OF THE BALANCE SHEET OF GOVERNMENTALFUNDSTOTHE  Differences in amounts reported in governmental activities in 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  3 3,902,945.46  the governmental funds  1,383,553.47  Deferred employer retirement contributions are appliçable to future periods and, therefore, are not 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 ini the governmental funds. Balances at September 30, 2022, were: Bonds, leases, and notes payable Açcrued interest Deferred inflows related to pension Compensated absences Total long-term liabilities  209,302.66  (2,510,685.97) (7,617.64) (230,304.58) (21,199.59)  (2,769,807.78) (220,033,00) 2 2,505,960.81  Net] pension liability as a1 result oft thei implementation of GASB 71  Net position of governmental activities  See accompanying notes to: financial statements.  6    TOWN OF ECLECTIC, ALABAMA GOVERNMENTAL FUNDS FOR' THE YEAR ENDED SEPTEMBER 30,2022  STATEMENT OFI REVENUES, EXPENDITURES, AND CHANGES IN FUNDI BALANCES  Total Funds 2 2,036,488.93 248,954.00 152,670.34 233,147.31 88,854.34 38,582.83 2,368.49 2,801,066.24  Municipal Governmental  General Fund Street Fund 2 2,002,620.84 $ 33,868.09 $  Court  REVENUES Taxes Liçenses and permits Intergoyernmental Charges fors services Fines and forfeitures Miscellaneous revenues Interest Total revenues EXPENDITURES Current operations: General government Publics safety Public works Public welfare Capital outlay Debts service: Principal retirement Interest charges Total expenditures Excess ofrevenues over expenditures Transfers in Transfers out  247,635.87 152,670.34 233,147.31 14,227.85 38,582.83 2,354.59 2,691,239.63  1,318.13  74,626.49 13.90 74,640.39  35,186.22  470,556.65 1,195,380.15 225,267.00 117,038.46 190,729.40 72,802.49 2,271,774.15 419,465.48 43,553.20 10,936,90 (191,629.91) (137,139.81) 282,325.67 3,508,065.84  76,689.45  547,246.10 1,195,380.15 232,677.80 117,038.46 190,729.40 72,802.49 2,355,874.40 445,191.84 43,553.20 10,936,90 (202,566.81) (148,076.71) 297,115.13 3,605,830.33  7,410.80  7,410.80 27,775.42  76,689.45 (2,049.06)  OTHER FINANCING SOURCES(USES) Proceeds from sale of capital assets Total other financing sources (uses) Net change in fund balances FUNDI BALANCES-BEGINAING FUND BALANCES-  ENDING  (10,936.90) (10,936.90) (12,985.96) 44,483.06  27,775.42 53,281.43  3 3,790,391.51 $ 81,056.85 $ 31,497.10 $ 3,902,945.46  See accompanying notes to financial statements.  7    TOWN OF ECLECTIC, ALABAMA FOR THE YEAR ENDED SEPTEMBER 30, 2022  RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES INI FUND! BALANCES OF GOVERNMENTAL, FUNDS 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 ofl Net Position Depreciation expense on governmental capital assets included in the governmental activities ini the Statement of Activities Proceeds from the sale of capital assets are reported as' "Other Financing Sources" ini 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  297,115.13  (97,517.89)  (41,253.40) 7,667.96  (33,585.44)  Proceeds from the issuance of debt provides current financial resources to the governmental funds, but issuing debti increases long-term liabilities in the Repayment of long-term debti is reported as an expenditure in the governmental funds, but ai reduction of long-term liabilities in the Statement ofNet Position: Principal payments on long-term liabilities  Statement of1 Net Position.  190,729.40  Some expenses reported in the Statement of Activities do notr require the use ofcurrent finançial resources and; therefore, are not reported as Change in accrued interest payable on long-term debt Change ini net pension liability andi related deferred amounts Change in the accrual for compensated absences Change in net position ofg governmental activities See accompanying notes toi financial statements.  expenditures ini the funds.  851.84 (23,087.00) 4,386.09  (17,849.07) 338,892.13  8    TOWN OF ECLECTIC, ALABAMA STATEMENT OF NETPOSITION PROPRIETARY! FUND SEPTEMBER 30, 2022 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 improvements Land improvements Machinery ande equipment Utility system Less: accumulated depreciation Total non-current assets TOTAL. ASSETS  $ 478,715.94 116,702.23 11,170.98 47,613.18 654,202.33  284,550.16 69,748.75 307,985,90 300,000.00 2,145,972.66 4,521,976.09 (4,365,453.18) 3,264,780.38 3,918,982.71 52,508.34 52,822.96 7,025,59 4,256.64 22,113.90 65,501.95 151,721.04 70,167.25 221,888.29 33,352.42 3,264,780.13 451,470.21 3,716,250.34  DEFERRED OUTFLOWS OFI 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 TOTAL LIABILITIES DEFERRED INFLOWS OFI RESOURCES Deferred inflows related toj pensions NETI POSITION Neti investment in capital assets Unrestricted TOTALNETPOSITION  See accompanying notes to financial statements.  9    TOWN OF ECLECTIC, ALABAMA FORT THE YEAR ENDED SEPTEMBER 30, 2022  STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NETI POSITION  PROPRIETARYF FUND 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 NET POSITION NETI POSITION. ATBEGINNING OF YEAR NETI POSITION. ATI END OF YEAR  $  818,307.57 49,725.00 868,032.57 265,437.89 198,668,40 363,701.75 175,281.23 1,003,089.27 (135,056.70) 860.66 860.66 (134,196.04) 191,629.91 57,433.87 3,658,816.47 3,716,250.34  See accompanying notes toi financial statements.  10    TOWN OF ECLECTIC, ALABAMA STATEMENTOF CASH FLOWS PROPRIETARY FUND FOR THE YEAR ENDED SEPTEMBER: 30, 2022 CASH FLOWS FROM OPERATING ACTIVITIES  Receipts from customers Payments to vendors Payments to employees  $ 837,768.80 (607,964.70) (174,846.51) 54,957.59 (50,193.99) (50,193.99) 860.66 860.66 5,624.26 473,091.68 $ 478,715.94  Net cash provided (used) by operating activities Purchase of property and equipment Net cash payments from (to) other funds Capital contributions  CASHI FLOWS FROM CAPITAL AND RELATED: FINANCING ACTIVITIES  Net cash provided (used) by capital and related financing activities CASHI FLOWS FROM INVESTING ACTIVITIES Interest received on cash accounts Net cash provided (used) by investing activities Net Cash Provided (Used) Cash Balances Beginning of the Year Cash Balances End ofthe' 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: Açcounts receivable Inventory Accounts and other payables Compensated absences payable Due to other funds Meter deposits  $ (135,056.70) 175,281.23 7,042.24 (22,632.42) (3,979.36) 22,395.09 (5,334.25) 22,113.90 (4,872.14) 54,957.59  Adjustments to reconcile operating income to net cash provided  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 $55,922.66 were acquired using COVID grants and bond funds. The General Fund received the funds and made the purchases on behalfo 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, 2022  1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  Reporting Entity  The Town of] Eclectic (the Town) was incorporated under the laws ofthe 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 Townj provides the following services: public safety (poliçe, 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.  Government-Hide and Fund. Financial. Statements  Theb basic financial statements consist oft the government-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 ofallofther non-fiduciary activities oft the primary government andi its component units. Fort the most part, the effect ofinter-fund: activity! has been removed from these statements. The exception tot this isi inter-fund services provided and used which are eliminated in the consolidation process. Governmental activities which normally are supported by taxes and intergovernmental 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 be restricted further to operational or capital items. The general revenues section displays revenue collected that helps support alli 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 funds in the aggregate for governmental funds. A reconciliation is providedt that converts the results of governmental fund accounting toi the government-wide presentations. Measurement Focus, Basis fAccounting, and Financial, Statement Presentation The government-wide: financial statements are reported using the economic resources measurement focus and the accrual basis of accounting as are the proprietary fund financial statements. Revenues are: recorded when earned and expenses are recorded when al liability isi incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues int the 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 bes sixty days for property taxes andi 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, exceptt those required tol be accounted fori in another fund.  12    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER: 30, 2022  Street Fund- This is as special revenue fundi in which the' Town accounts for theg 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'ss streets.  bonds received.  The' Town reports the following major enterprise (proprietary) fund:  Eclectic Water and Sewer Fund - Accounts for water ands sanitary sewer services provided to the 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) of providing goods or services to the general public on a continuing basis be 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. The 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. Allrevenues: and expenses not meeting this definition  of the Town.  management control, accountability, or other purposes.  are reported as nonoperating revenues and expenses. Stewardship, Compliance, and Accountability  Ana annual budget is adopted for the' Town's General Fund. Under state 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 resourçes 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 principles generally accepted in thel 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 oft 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 or less from the date of State statutes authorize the Towni toi investi in obligations oftheU.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 NOTES TOI FINANCIAL STATEMENTS SEPTEMBER: 30, 2022  Receivables and Payables  Activity between funds that are representative of 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"advancesi to/from other funds"(i.e., ther 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 balançes."  All receivables are shown net of any applicable allowances for unçollectible amounts.  Property taxes are: assessed on October 1a and! levied on the subsequent October 1f fort the 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 aj penalty and interest are required to be charged. Ifreal property taxes are not paid by the. June 15 following the due date, at tax sale is required to 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 tot the Town. Inventories and Prepaid Items  Inventories: are valued at cost usingt the average costi method. The costs of governmental 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  arei recorded as expenditures when consumed rather than when purchased. proprietary fund consists of expendable supplies used for future consumption.  current fiscal year but benefit the subsequent fiscal year.  Capital Assets  Capital assets, purchased or constructed are: reported at cost or estimated. historical cost, In the governmental funds, donated capital assets are: recorded at acquisition value at the date of donation in the government-wide financial statements only. Acquisition value is an estimate ofa price that would bej paid to acquire a similar 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 ofi normal maintenance andi repairs that do not add to the value oft the asset or materially extend the Capital assets are depreciated using the straight-line method over the following estimated useful lives:  asset in an orderly market transaction att 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 OFI ECLECTIC, ALABAMA NOTES TOFINANCIAL STATEMENTS SEPTEMBER: 30, 2022  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 2 hours bi-weekly for ai total of 81 hours with accumulation capped at 160 hours. Upon separation of employment, unused annual leave is paid to Town employees. The liability ford compensated absences attributable tot the Town's governmental funds is recorded int the government-wide statements. The amount: attributable tot thel business-type: activities isc charged to expense with a corresponding liability established in the government-wide statements as well as the applicablel 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 al maximum of 1,456 hours. Upon retirement, an employee may convert unused sickl leave to retirement service credit. Employees separating from service fora 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 ofl Resources  In: 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 aconsumption of net position that applies to a future period(s) and so will not be recognized as an outflow ofresources 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 be recognized as an inflow of resources (revenue) until that time. The Town reports deferred inflow items related to the Town's  Town's pension plan which are described further in Note 8.  pension plan which are described further in) Note 8.  Long-Term Obligations  Int 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 oft net position. Bond premiums and discounts, as well as issuançe costs related to prepaid insurance, are deferred and amortized over the life of the bond Bonds payable are reported net of the applicable bond premium or discounts. Bond issuance costs are expensed at issuance, except for those related to prepaid insurance, which are recorded as prepaids in the 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  using the effective interest method. Statement of Net Position.  15    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER: 30, 2022  discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld  from the actual debt proceeds received, are reported as debt service expenditures.  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 oft the finançing source are reflected int 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 andt the cost ofassets so acquired are reflected int the accounts oft those  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 ofa accounting. Contributions are recognized as revenues when earned, pursuant tot the plan requirements. Benefits and refunds are recognized when due and payable in accordance with thet terms of the Plan. Expenses are recognized when the corresponding lability isi 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, thel Plan is considered a component unit oft the State of Alabama  and isi included in the Slate'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 andi 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 not included in the calculation. Restricted - Constraints imposed oni net position by external creditors, grantors, contributors, laws ori regulations ofother governments, orl law through constitutional provision or enabling legislation. At September 30, 2022, $29,327.15 is restricted for public safety, $164,439.03 is restricted for public works (street maintenance) and $31,497.101 is restricted for court operations. Unrestricted - The net amount of assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are noti included int 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 balançes based on classifications that comprise a hierarchy thati is based primarily oni the extent to whicht the Towni is bound tol honor constraints ont the specific purposes for which amounts in the respective governmental funds can be spent. The classifications usedi in  should not be reported on the face oft the Statement ofNet] Position.  the governmental fund financial statements are as follows:  16    TOWN OF ECLECTIC,ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER: 30, 2022  Nonspendable - This classification includes amounts that cannot be spent either because they are ini 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 externaily imposed by creditors, grantors,contributors, 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 fort the Town. Commitments may be established, modified, or rescinded only through ordinances or resolutions approved by the Town Council. At September 30, 2022, $30,007.30 was committed to serve as the match requirement for the impending Panther Palace 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.  playground grant.  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 tol have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the Town  Councill has provided otherwise in its commitment or assignment actions. Recently Implemented Accounting Pronouncements  GASB Statement No. 89, Accounting forl Interest Cost] Incurred before the End ofa Construction Period, enhances the relevance and comparability of information about capital assets and the cost of borrowing for a reporting period andt to simplify accounting fori interest costi incurred beforet the end ofa construction period. This Statement requires that interest cost incurred before the end of a construction period be reçognized as an expense in the period in which the cost isi incurred for financial statements prepared using the economic resources measurement focus. As aresult, interest costs incurred before the end of a construction period will no longer be capitalized in  business-type activities.  2. CASH AND CASH EQUIVALENTS 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. The Town has not formally adopted a deposit policy for custodial credit risk; however, it follows state statutes for investments and restricts deposits to financial institutions that participate in the SAFE Program. As of September 30, 2022, none of the Town's bank balance of $4,330,728.47 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 SAFEI Program is a multiple finançial collateral  pool administered by the State Treasurer according to State of Alabama statute.  As of September 30, 2022, the Town had noi investments.  17    TOWN OF ECLECTIC, ALABAMA NOTESTOPINANCIAL STATEMENTS SEPTEMBER3 30,2 2022 3. RECEIVABLES below:  Receivables as of September 30, 2022, for the government'si individual major funds are shown in the table  Eclectic' Water $ 840.00 126,590.41 840.00 126,590.41 9,888.18  General Fund Street] Fund Municipal Court and Sewer Fund  Total $ 184,556,44 132,521.45 317,077.89 9,888.18  Taxes Accounts Receivable Gross Reçeivables Less Allowance: for Uncollectable  181,466.57 $ 3,089.87 $ 5,091.04 186,557.61  3,089.87  Total Receivables $ 186,557.61 $ 3,089.87 $  840.00 $ 116,702.23 $ 307,189.71  4. CAPITAL ASSETS Primary Government 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 Landi improvements Total accumulated depreciation Total depreciable assets, net Governmental activities capital assets, net  Capital asset activity for the year ended September 30, 2022, was as follows:  Beginning Balance $ 116,770.90 $ 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  Ending Balance $ 116,770,90 116,770.90 909,937.73 1,553,685.10 532,567.74 2,996,190.57 341,828.79 1,304,333.11 83,246.10 1,729,408.00 1,266,782.57  Increase  Decrease  71,887.67 71,887.67 38,302.23 38,302.23 33,585.44  30,375.85 45,201.15 21,940.89 97,517.89 97,517.89  1,514,656.80 $ (97,517.89) $ 33,585.44 $ 1,383,553.47  INTENTIONALLYILLYLEFTBLANK  18    TOWN OF ECLECTIC, ALABAMA NOTES TOI FNANCALSTATEMENTS SEPTEMBER: 30, 2022  Beginning Balance $ 284,550.16 $ 75,326.35 359,876.51 4,457,701,29 290,865.00 2,115,674.11 300,000.00 7,164,240.40 2,130,525.39 166,547.38 1,626,273.01 266,826.42 4,190,172.20 2,974,068.20  Ending Balance $ 284,550,16 69,748.75 354,298.91 4,521,976.09 307,985.90 2,145,972.66 300,000.00 7,275,934.65 2,281,078.85 170,611.11 1,636,937.05 276,826.42 4,365,453.43 2,910,481.22  Increase  Decrease $ 18,148,75 18,148.75 64,274.80 17,120.90 30,298.55 111,694.25 150,553.46 4,063.73 10,664.04 10,000.00 175,281.23 (63,586.98)  Business-Type Activities Non-depreciable assets: Land Construction inp progress Total non-depreciable assets Depreciable assets: Utility system Buildings Machinery and equipment Land improvements Total depreciable assets Less accumulated depreciation for: Utility system Buildings Machinery and equipment Landi improvements Total accumulated depreciation Total depreciable assets, net Business-type activities capital assets, net  23,726.35 23,726.35  3,333,944.71 $ (45,438.23) $ 23,726.35 $ 3,264,780.13  Depreciation expense was charged to functions/programs of the primary government as follows:  Governmental activities: General government Public safety Public works Public welfare Business-type activities:  $ 9,574.50 35,265.94 21,212.19 31,465.26 $97,517.89 $175,281.23  Total depreciation expense governmental activities  5. INTERFUND BALANCES  Interfundt transfers and! balances are generally usedt tor meet cash demands necessary to 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, 2022, is shown! below:  Due to/from other funds: Receivable Fund General General  Payable Fund  Total $ 22,113.90 2,667.40 $24,781.30  Eclectic Water & Sewer Fund Municipal Court  19    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER 30, 2022 6. SHORT-TERM DEBT  The Town maintains a $200,0001 line of credit to support operations pending collection andi receipt ofo outstanding Town revenue. Interest is paid on outstanding balance at 6.25%. Thel line ofcredit matures May 1,2023. Short-  term debt activity for the year ended September 30, 2022, was as follows.  Beginning Balance Issues Redemptions Ending Balance  $ 0.00 0.00 0.00 $ 0.00  7. LONG-TERM DEBT  Long-term debt activity for the year ended September 30, 2022, was as follows:  Beginning Balance 2,420,000.00 $ 205,213.46 76,201.91 25,584.68 2,727,000.05 9,691.06 9,691.06 $ 2 2,736,691.11 $  Ending Balance  Due' Within One Year  Additions  Reductions  Governmental. Activities: General obligation bonds Notes payable Capital leases Compensated: absences Governmental activity long-term liabilities Business-Type. Activities: Compensated absences Business type activityl long-term liabilities Totall long-term debt General Obligation. Bonds  94,000.00 2,326,000.00 $ 96,000.00  52,158.78 44,570.62 4,385.09 5,434.42 5,434.42  153,054.68 31,631.29 21,199.59 4,256.64 4,256.64  37,977.99 15,436.94 21,199.59 4,256.64 4,256.64  195,114.49 2,531,885.56 170,614.52  $ 200,548.91 $2,536,142.20 $ 174,871.16  TheTowni 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 $2,420,000 Series 2021 General Obligation Warranti issued for thep purpose of financing the costs of acquisition andi installation of certain municipal capital improvements,' redeem the warrants ofthe2 2007 General Obligationl Refunding Warrant, and to the pay the cost ofi issuance oft the Warrant. Issuance costs totaled $40,000. $2,161,287.12 was deposited into an account at PNCI Bank thati is known ast the Acquisition Fund andi is controlled by the Town. Interest paid in 2022t totaled $62,172.60.  30,2022, the Town had one outstanding bond described as follows:  $2,326,000.00  INTENTIONALLYILLYLEFTBLANK  20    TOWN OF ECLECTIC, ALABAMA NOTES TOFINANCIAL STATEMENTS SEPTEMBER 30, 2022  Thei following schedule reflects debt service to maturity fort the general obligation bonds at September 30, 2022:  Principal $ 96,000.00 99,000.00 101,000.00 104,000.00 107,000.00 576,000.00 1,243,000.00 $2,326,000.00  Interest $ 59,683.60 57,129.10 54,509.10 51,823.60 49,059.50 201,294.60 94,097.30 $567,596.80  Total $155,683.60 156,129.10 155,509.10 155,823.60 156,059.50 777,294.60 1,337,097.30 $2,893,596.80  Year ending September 30:  2023 2024 2025 2026 2027 2028-2032 2033-2036 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 refinance loan for 21 fire trucks andt top purchase additional firet truck. This note is duei in 6 annual installments of $43,939.69 and! hasa ai fixed interest rate of4%. The note is secured by three firet trucks. Thel loan originated in April 2021 with thei first payment due. April 2022. The' Townj paid the 2022 payment in June 2021 and continues tos service the debt The following schedule illustrates debt service tor maturity for the notes payable at September 30, 2022:  outstanding balances are as follows:  early.  $153,054.68  Principal $37,977.99 39,031.71 40,601.68 35,443.30 $153,054.68  Interest $5,961.70 6,417.25 4,907.98 $17,286.93  Total $43,939.69 45,448.96 45,509.66 35,443.30 $170,341.61  Year ending September 30:  2023 2024 2025 2026 Totals: Capital Lease Payable  The Town of Eclectic entered into al lease agreement as lessee for the financing acquisition of3 police vehicles. Thel lease agreement qualifies as ai financed purchase and, therefore, has been recorded at the present value ofi its future minimum lease payments as of thei inception date. Thel lease requires 5 annual payments of $27,438 with the first due andj paid on August 1,2 2020.. Ali subsequent annual payments are due on August 1. The lease During thei fiscal year, 1 vehicle was wrecked. Insurance proceeds were: applied tot the lease liability and the The following schedulei reflects details about cost and related accumulated depreciation of assets purchased using  agreement has as stated interest rate of3.926%. remaining balance was re-amortized.  ac capital lease. Amounts reflected are as oft the financial statement date.  Governmental Activities $ 79,821.36 20,620.51 $ 59,200.85  Asset Machinery and equipment Less accumulated depreciation Total  21    TOWN OF ECLECTIC, ALABAMA NOTESTOI FINANCIAL STATEMENTS SEPTEMBER3 30, 2022  The following schedule illustrates debt service to maturity for the capital lease payable at September 30, 2022:  Principal 15,436.94 16,194.35 $31,631.29  Interest 1,551.19 793.77 $2,344.96  Total 16,988.13 16,988.12 $33,976.25  Year ending September 30: 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 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 ofControl. The ERS Board ofcontrol consists of13t trustees. Effective October 1, 2021, Act 390 of the Legislature of2021 created two additional representatives: and changed the composure ofrepresentatives within thel ERSI Board ofControl. Thel Plan is administered by thel Retirement Systems of Alabama (RSA). Title 36-Chapter 27 oft 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, Thel ERS Board of Control consists of 15t 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 ofs state government nor from any department of which an ex officio trustee 6) Eight members of ERS who are elected by members from the same category ofl ERS fora a term of four a. Tworetiredi members with one from thei ranks ofretired state employees and one fromt ther ranks ofretired employees ofa city, county, or aj public agency each of who is an active beneficiary One full time employee of aj participating municipality or city in ERS pursuant to the Code of d. One: fullt time employee ofap participating county inl ERS pursuant tot the Code ofAlabama 1975, e, One full time employee or retiree ofap participating employer in ERS pursuant to the Code of One full time employee ofap participating employer other than ar municipality, city or county in  is the head. years as follows:  ofERS.  b. Two vested active state employees. Alabama 1975, Section. 36-27-6. Section. 36-27-6. Alabama 1975, Section. 36-27-6.  ERS pursuant to Code of Alabama 1975, Section 36-27-6.  Benefits Provided  State law establishes retirement benefits as well as death and disability benefits and any ad hoci increase in postretirement benefits fort thel ERS. Benefits for ERS members vestafter 10years of creditable 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.  22    TOWN OF ECLECTIC,. ALABAMA NOTESTOFINANCIAL STATEMENTS SEPTEMBER: 30, 2022  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 or a formulai method, with ther member receiving payment under thei methodt thaty yields thel highest monthly benefit. Under the formula method, members of] ERS (except State Police) are allowed 2.0125% oft their average final compensation (highest 3 of the last 10: years) for each year ofservice. State Police are allowed2.8759: for each year of State Police service in computing the formula method. Act 377 of the Legislature of 2012 established a new tier of benefits (Tier 2) for members hired on or after January 1,2013. Tier 2 ERS members are eligible for retirement after age 62 (561 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 oraf formula method, with the member receiving payment under the method that yields the highest monthly benefit. Under the formula method, Tier 2 members 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 oft thei member as reported to thel Plan for the preceding year ending September 30 are paidt to the 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 Tier Ir retirement benefits to' Tier 2 members. Tier 2 members of employers adopting Act 2019-132 will contribute 7.5% ofearnable compensation for regular employees and 8.5%1 for firefighters and law enforcement officers. A total of 590 employers adopted Act 2019-132. Ini the January 2020 council meeting, Town Council approved the implementation of Act 2019-132. Act 316 oft thel Legislature of2019 allows employees at the time ofr retirement to receive aj partial lump sum (PLOP) distribution as a single payment not to exceed the sum of 24 months of the maximum monthly retirement allowance the member could receive. This option may be selected in addition to the election of another retirement allowance option at a reduced amount based upon the amount of partial lump sum The ERS serves approximately 879 local participating employers. The ERS membership includes approximately 104,510 participants. As of September 30, 2021, total ERS membership consisted of:  each year ofs state police service in computing the formulai method.  distribution selected.  Retirees and beneficiaries currently receiving benefits Terminated employees entitled tol buti not yet receiving benefits Terminated employees not entitled to al benefit Post-DROP participants who are stilli in active service  29,727 2,130 16,415 56,184 54 104,510  Active members Total  As of September 30, 2021, ERS membership attributed to the Town ofl Eclectic consisted of:  Retired members ort their beneficiaries currently receiving benefits  6 0 4 25 0 35  Vested inactive members Non-vested inactive members Active members Total  Post-DROP retired members still in active service  23    TOWN OF ECLECTIC, ALABAMA NOTESTOFNANCIAL STATEMENTS SEPTEMBER: 30, 2022 Contributions  Covered members of the ERS contributed 5% ofe earnable compensation to the ERS as required by statute until September 30, 2011. From October 1,2011, to September 30, 2012, covered members of thel ERS were required by statute to contribute 7.25% of earnable compensation. Effective October 1,2012, covered members oft thel ERS are required by statute to contribute 7.50% of earnable compensation. Certified law enforcement, correctional officers, and firefighters of thel 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 of thel ERS were required' by statute to contribute 8.25% ofe earnable compensation. Effective October 1,2012, certified law enforcement, correctional offiçers, and firefighters oft the ERS are required by statute to contribute 8.5% of earnable compensation. State Police Employers participating in thel ERS pursuant to Code of Alabama 1975, Section 36-27-6 were not required bys 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%t to 7.5% of earnable compensation and Tier 1 firefighters and law enforcement officers increased from 6%t to Tier 2 covered members ofthe 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% of earnable compensation. Tier 2 State Police members oft thel ERS contribute 10% ofearnable compensation. These contribution rates are thes 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, 2022, the Town's active employee contribution: rate was: 5% of covered 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 Tierl FLC: and 7% of covered payroll for Tier 2FLC. The' Town's average contribution rate to fund the normal and accrued liability costs was 7.38% ofp pensionable payroll for Tier 1 employees and4 4.85% of pensionable The Town's contractually required contribution rate for the year ended September 30, 2022, was 7.38% of pensionable pay for Tierl 16 employees, and 4.85% of pensionable pay for Tier 2 employees. These required contribution rates are based upon the actuarial valuation dated September 30, 2019, aj 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  oft the ERS contribute 10% ofearnable compensation.  8.5% ofe earnable compensation.  participating employers.  payroll for Tier 2 employees.  plan from the" Town were $59,628 for the year ended September 30, 2022.  INTENTIONALLYLLYLEFTBLANK  24    TOWN OF ECLECTIC, ALABAMA NOTESTOFINANCIAL STATEMENTS SEPTEMBER: 30, 2022  Net Pension Liability  The' Town's net pension liability wasi measured: as of September 30, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of September 30, 2020, rolled forward to September 30, 2021, using standard roll-forward techniques as shown in the following  table:  Actual Study 7.45% 89,476 13,375 (75.732)  Actual After After 2020 Act 2019- Experience 132 7.70% 82,260 13,375 (75,732)  Actual Before Act 2019-132  Expected $1,937,027 7.70% 82,260 0 (75.732) $2,089,790  (a)TPL as of September 30, 2020 (b) Discount Rate (c) Entry Age Normal Cost fort the period October 1, 2020- - September 30, 2021 (d) Transfers Among Employers: (e)A Actual Benefit Payments and Refunds for thej period October 1, 2020 - September 30, 2021 (f) TPL as of September 30, 2021 -[(a)x(1.077)) + (c)+(d)+ [(e)x(1+. .05(b))1 (g)) Difference between Expected and Actual: (h)] Less Liability Transferred for Immediate Recognition: () Experience (Gain)/Loss - (g)- (h) ()D Difference' between Actual TPLI Before and After. Act 2019- 132 - Benefit Change (Gain)/Loss (k) Difference between Actual TPL Before and After 2020 Experience Study - Assumption Change (Gain)/Loss Actuarial. Assumptions  $1,823,626 $1,823,626 $1,904,988  7.70% 82,260 13,375 (75,732)  $1,981,033 $1,981,033 $2,071,208  ($108,757) $13,375 ($122,132)  $0  $90,175  The total pension liability as of September 30, 2021 was determined based on the annual actuarial funding  valuation report prepared as of September 30, 2020. Thel key actuarial assumptions  Inflation Salary increases Investment rate ofreturn* *Net of pension plan investment expense  2.50% 3.259-6.00% 7.45%  25    TOWN OF ECLECTIC, ALABAMA NOTESTOFINANCIAL STATEMENTS SBPTEMBER 30, 2022  Mortality rates were based on the Pub-2010 Below-Median Tables, projected generationally using the MP-  2020 scale, which is adjusted by 66-2/3% beginning with year 2019:  Set Forward (+) Set Back ()  Adjustment to Rates Male: 90% ages <65, 96% ages >-65, None  Group Non-FLCService Retirees FLC/State Police Service Retirees Beneficiaries Non-FLCI Disabled Retirees FLC/State Police Disabled Retirees  Membership Table General Healthy Below Median Below Median Contingent Survivor Below Median General Disability Public Safety Disability none  Male: +2, Female: +2 Female: 96% all ages  Public Safety Healthy Male: +1, Female:  none  Male: +2, Female: +2 None Male: +7, Female: +3 None Male: +7, Female:  None  The actuarial assumptions used! in the actuarial valuation as of September 30, 2020, were based ont thei results ofa an actuarial experience study for the period October 1,2015 - September 30, 2020. The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges ofe expected future real rates of return (expected returns, net of pension plani investment expense andi inflation) are developedi fore each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage andl 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 2.80% 8.00% 10.00% 11.00% 9.50% 11.00% 9.00% 6.50% 1.50%  Target Allocation 15.00% 32.00% 9.00% 4.00% 12.00% 3.00% 10.00% 10.00% 5.00% 100.00%  Fixed Income U.S. Large Stocks U.S. Mid Stocks U.S. Small Stocks Alternatives Reall Estate Cash Equivalents Total  International Developed Market Stocks International Emerging Market Stocks  Thel long-term expected rate of return includes an assumed rate ofi inflation of2.00%.  26    TOWN OF ECLECTIC, ALABAMA NOTES TOI FINANCIAL STATEMENTS SEPTEMBER 30, 2022 Discount Rate  The discount rate used to measure the total pension liability was the long-term rate of return, 7.45%. The projection of cash flows used to determine the discount rate assumed that plan contributions willl be made at thec current contribution: rate and that the employer contributions willl ber made in accordance with the funding policy adopted by thel ERS Board ofControl. Based on those assumptions, components oft the pension plan's fiduciary net position were projected tol be available to1 make all projected future benefit payments of current plan members. Therefore, thel long-term expected rate ofr return on pension plan investments was applied to  allp periods ofp projected benefit payments to determine thet total pension liability.  Changes in Net Pension Liability  Total Pension Plan Fiduciary Net  Net Position Liability (Asset) (a)-(b) 514,457 82,260 146,235 0 90,175 (122,132) (49,791) (50,847) (320,154) 0 0 0 (224,254) 290,203  Liability (a) $ 1,937,027 $ 82,260 146,235 0 90,175 (122,132)  Position (b) 1,422,570 $  Balances at September 30, 2020 Changes for the year: Service cost Interest Changes ofbenefit terms Changes of assumptions Differences between expected and actual experience Contributions employer Contributions - employee Neti investment income Benefit payments, including refunds ofemployee contributions Administrative expense Transfers among employers Net changes Balances at September 30, 2021  49,791 50,847 320,154 (75,732) 0 13,375 358,435 1,781,005 $  (75,732) 0 13,375 134,181 $ 2,071,208 $  Sensitivity of thel 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 7.45% as well as what the Town's proportionate share of the net pension liability (asset) would be ifit were calculated using a discount rate that is one percentage point lower (6.45%) or one percentage point higher  (8.45%) than the current rate:  1% Decrease Current Rate 1% Increase  (6.45%) 567,672  (7.45%) 290,203 $  (8.45%) 58,724  Town's net pension liability (asset)  27    TOWN OF ECLECTIC, ALABAMA NOTESTOI FINANCIAL STATEMENTS SEPTEMBER: 30, 2022  Pension Plan Fiduciary Net Position  Detailedi information about thej pension plan's fiduciary net position is available ini the separately issued RSA Comprehensive Annual Report for the fisçal year ended September 30, 2021. The supporting actuarial information is included in the GASB Statement No. 68 Report for the ERS prepared as of September 30, 2021. The auditor's report on the Schedule of Changes in Fiduciary Net Position by Employer and accompanying notes detail by employer is also available. The additional financial and actuarial information isa available at www.ra-algovindexphpemployeryinancla-rgporsgasb-b8-reports. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Fort the year ended September 30, 2022, the Town recognized pension expense of $90,003.61. At September 30, 2022, 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 $ 123,169 79,014 0 59,628 $ 261,811  Resources $ 136,447 0 127,210 0 $ 263,657  Differences between expected and actual experience Net differençe between projected and actual earnings Employer contributions subsequent to the  Changes of assumptions on plan investments measurement date Total  $59,628 reported as deferred outflows of resources related toj pensions resulting from System contributions subsequent to thei measurement date willl be recognized as ai reduction of the net) pension liability in the year ended September 30, 2023. Other amounts reported as deferred outflows ofi resources and deferred inflows  ofresources related to pensions willl be recognizedi in pension expense as follows:  Year ended September 30: 2023 2024 2025 2026 2027 Thereafter  $20,835 (23,167) (30,372) (29,240) 1,989 (1,519)  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 ar maximum total coverage of $3,000,000. The Town also purchased commercial insurançe 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 of thep participating local government units and their subscribers. LGHIP  and casualty insurance.  Coverage is provided upt to $1,000,000 for eachi injury by accident or disease.  28    TOWN OF ECLECTIC, ALABAMA NOTES TOFINANCIAL STATEMENTS SEPTEMBER 30, 2022  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  experience.  10. CONTINGENT LIABILITIES  Amounts received or receivable from grant agencies are: subject to audit and adjustment by grantor agençies, 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.  11. RELATED PARTY TRANSACTIONS  On. July 30, 2019, the' Town entered into a Biosolids Procurement. Agreement with George Family Farm locatedi in Eclectic, Alabama. The term oft the agreement is 3 years with an automatic lyear renewal, unless During thei fiscal year ended September 30, 2022, the Town ofl Eclectic paid George Family Farms a total of$25,549 for services rendered relative to thes sewer system and the Biosolids Procurement Agreement. During the 20201 fiscal year, Chris George, owner of George Family Farm and the individual responsible for fulfilling the Biosolids Procurement. Agreement, became ai management level employee ofthe Town of Eclectic. The' Town of Eclectic obtained an opinion from its legal counsel regarding the impact of Mr. George's employment status on the agreement named above. The contract is not compromised by Mr. George's employment. The details oft the related party contract have been filed with the Alabama Ethics During the 2022 fiscaly year, Chris George resigned from his position with the Town ofEclectic. The Biosolids  the Town gives George Family Farm a written 90-day notice oftermination.  Commission pursuant to Section 11-43-12.1 oft the Code of Alabama.  Procurement Agreement remains in place. 12. SUBSEQUENT EVENTS  The Town was awarded a $300,000 grant from ADECA on. January 20,2022, to use to replace the play structure atl Panther Palace Playground. The grant award has a 10%1 match requirement. A contract has been let on the project. Work began in December 2022. Thej playground was dedicated in September 2023. Management has evaluated subsequent events through January 4,2023, the date in which the financial  statements were available to be issued.  29    REQUIRED SUPPLEMENTARY INFORMATION    TOWN OF ECLECTIC, ALABAMA BUDGETARY COMPARISON: SCHEDULE FOR THE YEARI ENDED SEPTEMBER 30, 2022  GENERAL FUND  Variance Favorable (Unfavorable) 464,620.84 5,135.87 140,170.34 1,547.31 (23,572.15) 15,582.85 354.59 603,839.65 246,543.35 (45,276.15) 68,283.00 7,266.54 (37,387.89) 239,428.85 843,268.50 33,553.20 10,936.90 (191,629.91) (147,139.81) 696,128.69  Budgeted Amounts Original 242,500.00 12,500.00 231,600.00 37,800.00 23,000.00 2,000.00 2,087,400.00 2,087,400.00  Actual (Budgetary Basis)  Final 242,500.00 12,500.00 231,600.00 37,800.00 23,000.00 2,000.00  Revenues Taxes Licenses and permits Intergovernmental: revenues Charges for serviçes Fines and: forfeitures Miscellaneous Interest Total revenues Expenditures Current: General government Public: safety Public works Public welfare Capital outlay Debt service Total expenditures Excess of Revenues Over (Under) Expenditures Other Financing Sources (Uses) Proceeds from general obligation bond Proceeds from sale ofg general capital assets Transfers in Transfers out Total Other Financing Sourçes (Uses) Net Change inE Fund Balances Fund Balance- Beginning Fund Balance- Ending Note A: Budgetary Information revenue funds.  1,538,000.00 $ 1,538,000.00 $ 2,002,620.84 $  247,635.87 152,670.34 233,147.31 14,227.85 38,582.85 2,354.59 2,691,239.65 470,556.65 1,195,380.15 225,267.00 117,038.46 263,531.89 2,271,774.15 419,465.50 43,553.20 10,936.90 (191,629.91) (137,139.81) 282,325.69 $  717,100.00 1,150,104.00 1,150,104.00 293,550.00 124,305.00 226,144.00 2,511,203.00 2,511,203.00 (423,803.00) (423,803.00)  717,100.00 293,550.00 124,305.00 226,144.00  10,000.00 10,000.00  10,000.00 10,000.00  (413,803.00) $ (413,803.00) $  1 1,162,784.44 $ 1,162,784.77 $ 3,508,065.84 $ 748,981.44 $ 748,981.77 $ 3,790,391.53  696,1 128.69  Theb budgetary comparison schedulei required by GASB inçludes the general fund only. The Towni isr not legally required to adopt a budget ando chooses not to dos so fort the special  30        DE