TOWN OF VALDESE VALDESE, NORTH CAROLINA Financial Statements, Supplemental Schedules, Independent Auditors' Report, and Compliance Reports For the Year Ended June 30, 2019 Lowdermilk Church & Co., L.L.P. Certified Public. Accountants TOWN OF VALDESE VALDESE, NORTH CAROLINA Town Officials June 30, 2019 Mayor John F. "Chip" Black Town Council Members Susan Stevenson Keith Ogle Frances Hildebran J.Andrew "Andy" Thompson Roy Sweezy Other Town Officials Seth Eckard Bo Weichel Roy Sweezy Susan Stevenson Kimberly Cline Marc Mitchell, P.A. Town Manager Finance Director Town Treasurer Mayor Pro Tem Tax Collector Town Attorney (THIS PAGE LEFTI BLANK INTENTIONALLY) TOWN OF VALDESE VALDESE, NORTH CAROLINA Table of Contents June 30, 2019 Exhibit Page(s) 1-3 4-11 Financial Section: Independent Auditors' Report Management's Discussion and Analysis Basic Financial Statements: Government-Wide Financial Statements: Statement ofNet Position Statement of Activities Fund Financial Statements: Balance Sheet - Governmental Funds Statement ofNetl Position Governmental Funds 1 2 12 13 3 4 5 6 7 8 9 10 14 15 16 17 18 19 20 21-22 23-57 Reconciliation ofthe Governmental, Funds Balance Sheet to the Statement ofl Revenues, Expenditures and Changes in Fund Balances- Reconciliation ofthe Statement ofl Revenues, Expenditures and Changes in] Fund Balances oft the Governmental Funds to the Statement of Activities Statement ofl Revenues, Expenditures and Changes in Fund Balance- Budget and. Actual General Fund Statement ofFund Net Position - Proprietary Fund Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Fund Statement of Cash. Flows Proprietary Fund Notes to thel Financial Statements Required Supplemental Financial Data: Schedule 1-1 Schedule of Changes in the Total OPEB Liability and Related Ratios 58 TOWN OF VALDESE VALDESE, NORTH CAROLINA Table ofContents (Continued) June: 30, 2019 Schedule Page(s) Required Supplemental Financial Data (cont): Employees' Retirement System Retirement System 1-2 1-3 1-4 1-5 Proportionate Share oft the Net Pension Liability (Asset) - Local Government 59 60 61 62 Schedule of Contributions - Local Government. Employees' Schedule of Changes in Total Pension Liability Law Enforcement Officers' Special Separation Allowance Officers' Special Separation Allowance Supplementary Statements: Schedule ofTotal Pension Liability as al Percentage of Covered Payroll Law Enforcement Combining and Individual Fund Financial Statements Section: Statement ofl Revenues, Expenditures and Changes in Fund Balance- Combining Balance Sheet-1 Nonmajor Governmental Funds (Deficit)-1 Nonmajor Governmental. Funds 2 3 4 4-1 Budget and Actual 63-73 74-75 76-77 78 79 80 81 82 83 Combining Statement of] Revenues, Expenditures and Changes in Fund Balances Facade Grant Fund - Statement ofRevenues, Expenditures and Changes in Fund Balance (Deficit) - Budget and Actual 4-2 Small Business and Entrepreneurial Assistance Fund Statement ofl Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Public Art Fund - Statement of] Revenues, Expenditures and Changes in] Fund Water Plant Capital Project Fund - Statement of Revenues, Expenditures and 4-3 4-4 Balance Budget and Actual Changes in Fund Balance- Budget and. Actual Changes in Fund Balance Budget and Actual and Changes in Fund Balance 4-5 Capital Project Fund Statement of Revenues, Expenditures and 4-6 Capital Outlay Fund - Statement of Revenues, Expenditures TOWN OF VALDESE VALDESE, NORTH CAROLINA Table ofContents (Continued) June 30, 2019 Schedule 4-7 Page(s) 84 85 86 87 88 89 90 Lake Rhodhiss Capital Project Fund Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Expenditures and Changes in] Fund Balance Budget and Actual Downtown Park Capital Fund Statement ofl Revenues, Expenditures and 4-8 Police. Department Capital Project Fund Statement of] Revenues, 4-9 Changes in Fund Balance Budget and Actual Changes in] Fund Balance- Budget and Actual Changes in Fund Balance - Budget and Actual Changes in Fund Balance Budget and Actual Changes in Fund Balance (Deficit) - Budget and Actual 4-10 NCDOT Pedestrian Plan Grant Fund Statement of] Revenues, Expenditures and 4-11 Lakeside Park Capital Fund - Statement ofI Revenues, Expenditures and 4-12 CDBG Scattered Sites Housing Fund Statement of Revenues, Expenditures and 4-13 Alba Waldensian Building Demo Fund - Statement ofRevenues, Expenditures and Enterprise Fund: 5 5-1 Utility Fund - Statement ofRevenues - Budget and Actual (Non-GAAP) Utility Fund - Statement of Expenditures- - Budget and Actual (Non-GAAP) Statement of] Revenues and Expenditures- Budget and Actual (Non-GAAP) Statement of Revenues and Expenditures- - Budget and Actual (Non-GAAP) Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) Statement of] Revenues and Expenditures Budget and Actual (Non-GAAP) Statement ofRevenues and! Expenditures Budget and Actual (Non-GAAP) Statement ofl Revenues and Expenditures- Budget and Actual (Non-GAAP) Statement of] Revenues and Expenditures- - Budget and Actual (Non-GAAP) 91 92-95 96 97 98 99 100 101 102 5-2 Utility Capital Projects Fund - Water Plant Capital Improvements 5-3 Utility Capital Projects Fund Infiltration and Inflow Study 5-4 Utility Capital Projects Fund Storm Water Program Phase II 5-5 Utility Capital Projects Fund -I&ISewer. Project 5-6 Utility Capital Projects Fund -I&IRehabilitation Phase II 5-7 Utility Capital Projects Fund - The Settings 5-8 Utility Capital Projects Fund - Kleen Tech TOWN OF VALDESE VALDESE, NORTH CAROLINA Table of Contents (Continued) June 30, 2019 Schedule 5-9 Page(s) 103 104 105 106 107 108 109 110 111 Utility Capital Projects Fund Meridian Water and Sewer Project Statement ofl Revenues and Expenditures- Budget and Actual (Non-GAAP) Statement of] Revenues and Expenditures Budget and Actual (Non-GAAP) Statement ofl Revenues and Expenditures - Budget and Actual (Non-GAAP) Statement ofRevenues and Expenditures Budget and Actual (Non-GAAP) Statement of Revenues and Expenditures- Budget and Actual (Non-GAAP) Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) Statement ofRevenues and Expenditures- Budget and Actual (Non-GAAP) Statement of Revenues and Expenditures-B Budget and Actual (Non-GAAP) 5-10 Utility Capital Projects Fund Waterline Rehabilitation 5-11 Utility Capital Projects Fund -1&IRehabilitation! 2014 5-12 Utility Capital Projects Fund - Water Plant Upgrades 5-13 Utility Capital Projects Fund Water System Improvements 5-14 Utility Capital Projects Fund Water Meter Replacement 5-15 Utility Capital Projects Fund St. Germain Avenue Water System Improvements 5-16 Utility Capital Projects Fund - Water Plant Bleach Conversion 5-17 Utility Capital Projects Fund Main Street Water Line Replacement Other Schedules: 6 7 Schedule of Ad Valorem Taxes Receivable Schedule of Analysis of Current Year Tax Levy 112 113 Compliance Section: Independent Auditors' Report On Internal Control Over Financial Reporting And On Compliance. And Other Matters Based On An Audit OfF Financial Statements Performed In Accordance With Government Auditing Standards Independent Auditors' Report On Compliance For Each Major State Program And Onl Internal Control Over Compliance Required By' The Uniform Guidance. And 114-115 The State Single Audit Implementation Act 116-117 TOWN OF VALDESE VALDESE, NORTH CAROLINA Table of Contents (Continued) June 30, 2019 Schedule ofl Findings and Responses Corrective Action Plan 118-120 121 122 123-124 Summary Schedule of Prior Year Audit Findings Schedule of Expenditures of! Federal and State Awards Financial Section (THIS PAGELEPTBLANK INTENTIONALLY) Lowdermilk Church & Co., L.L.P. Certified. Public Accountants 121 N. Sterling Street Phone: (828)433-1226 Fax: (828)433-1230 Morganton, North Carolina 28655 Independent Auditors' Report To the Honorable Mayor and Members oft the' Town Council of Town ofValdese, North Carolina We have audited the accompanying financial statements oft the governmental activities, business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information ofthe' Town ofValdese, North Carolina, as ofand for the year ended June 30, 2019, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements as listed in thet table ofc contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance ofinternal control relevant to thej preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in thel United States of America and thes standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that wej plan and perform the audit to obtain reasonable assurance about whether the financial statements are: free: from material misstatement. The financial statements ofthe Town ofValdese ABC Board were: not audited in accordance with Government Auditing Standards. An audit involyes performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Thej procedures selected depend on the auditor's judgment, including the assessment oft the risks ofmaterial misstatement ofthe financial statements, whether due to: fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation ofthe financial 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 oft the accounting policies used and the reasonableness ofs significant accounting estimates made by management, as well as evaluating the overall We believe that the audit evidence we have obtained is sufficient and appropriate to provide al basis for our audit presentation oft the financial statements. opinions. 1 Opinions Inc our opinion, based on our audit, the financial statements referred to above present fairly, in all material respects, the respective financial position oft the governmental activities, business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information ofthe' Town ofValdese, North Carolina, as ofJ June 30, 2019, and the respective changes ini financial position, and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, the Other Postemployment Benefit Schedule of Changes in the Total OPEB Liability and! Related Ratios, thel Local Government Employees' Retirement System Schedules ofthel Proportionate Share ofthel Net Pension Liability and Contributions and thel Law Enforcement Officers' Separation Allowance Schedules ofthe Changes in' Total Pension Liability and Total Pension Liability as al Percentage ofCovered Payroll, on pages 4-11 and 58-62, to be presented to supplement the basic financial statements. Such information, although not aj part of the basic financial statements, isi required by the Governmental Accounting Standards Board, who considers it tol be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted ofi inquiries ofi management about the methods of preparing the information and comparing thei information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit oft the basic financial statements. We do note express an opinion or provide any assurançe on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose ofi forming opinions on the financial statements that collectively comprise the Town of Valdese, North Carolina's basic financial statements. The individual fund financial statements, budgetary schedules and other schedules are presented for purposes ofadditional analysis and are: not ar required part of the basic financial statements. The schedule of expenditures of federal and State awards is presented for purposes ofadditional analysis as required by Title 2 U.S. Code ofFederal Regulations Part 200, Uniform. Administrative, Requirements, Cost Principles, and. Audit Requirements, for Federal. Awards, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part oft the basic financial The combining and individual fund financial statements, budgetary schedules and other schedules are the responsibility of management and were derived: from, and relate directly to, the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected tot the auditing procedures applied in the audit ofthe basic financial statements, and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements, or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, based on our audit, thej procedures performed as described above, the combining and individual fund financial statements, budgetary schedules and other schedules and the schedule ofe expenditures of federal and State awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. statements, 2 Other Reporting Required by Government Auditing Standards Ina accordance with Government Auditing Standards, wel have also issued our report dated November 7, 2019, on our consideration ofthe Town ofValdese, North Carolina'si internal control over financial reporting and on our tests ofi its compliance with certain provisions oflaws, regulations, contracts, and grant agreements and other matters. The purpose oft that report is to describe the scope of our testing ofinternal control over financial reporting and compliance, and the results oft that testing, and not to provide an opinion on the effectiveness ofthe Town ofValdese, North Carolina'si internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Town ofValdese, North Carolina'si internal control over financial reporting and compliance. RRGHA Morganton, North Carolina November 7,2019 3 Management's Discussion and Analysis As management oft the Town ofValdese, we offer readers oft the Town of Valdese's financial statements this narrative overview and analysis oft the financial activities ofthe Town ofValdese for the fiscal year ended June 30, 2019. We encourage readers to read the information presented here in conjunction with additional information that we. have furnished in the' Town's financial statements, which follow this narrative. Financial Highlights position). The assets of the' Town ofValdese exceeded its liabilities at the close oft the fiscal year by $29,432,412 (net As oft the close oft the current fiscal year, the' Town ofValdese's governmental funds reported combined ending fund balances of$6,303,670, with ai net increase of$710,161, in fund balance. Approximately 50.74 Att the end oft the current fiscal year, unassigned fund balance for the General Fund was $3,105,101, or 60.53 The government's total net position increased by $976,140. percent ofthist total amount, or $3,198,569, is non-spendable or restricted. percent oft total General Fund expenditures for the fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve: as an introduction to the' Town ofValdese's basic financial statements. The Town's basic financial statements consist oft three components: 1) Government-wide Financial Statements, 2)J Fund. Financial Statements, and 3) Notes to the Financial Statements (see Figure 1). The basic financial statements present two different views oft the Town through the use of government-wide statements and fund financial statements. In addition to the basic financial statements, this report contains other supplemental information that will enhance the reader's understanding oft the financial condition of the Town ofValdese. 4 Required Components of Annual Financial Report Figure: 1 Management's Discussion and Analysis Basic Financial Statements Government-wide Financial Statements Fund Financial Statements Notes tot the Financial Statements Summary-- Detail Basic Financial Statements The first two statements (Exhibits 1 and 2) in the basic financial statements are the Government-wide Financial Statements. They provide both short and long-term information about the Town's financial status. The next statements (Exhibits! 31 through 10) are. Fund Financial Statements. These statements focus on1 the activities ofthei individual parts oft the Town's government. These statements provide more detail than the government-wide statements. There are: four parts to thel Fund Financial Statements: 1)t the governmental funds statements; 2) the budgetary comparison statements; and 3) the proprietary fund statements. The next section oft the basic financial statements is thei notes. The notes to the financial statements explain in detail some oft the data contained in those statements. After the notes, supplemental information is provided to show details about the Town's individual funds. Budgetary information required by the General Statutes also can be found int this part oft the statements. 5 Goyermment-Wide Financial Statements. The government-wide financial statements are designed to provide the reader with a broad overview ofthe Town's finances, similar ini format to a financial statement ofap private-sector business. The government-wide statements provide short and long-term information about the' Town's financial status as a whole. The two government-wide statements report the' Town's net position and how it has changed. Net position is the difference between the Town's total assets and total liabilities, Measuring net position is one way to gauge the The government-wide statements are divided into three categories: I)governmental activities; 2) business-type activities; 3) component units. The governmental activities include most oft the Town's basic. services such as public safety, parks and recreation, and general administration. Property taxes and State and federal grant funds finance most ofthese activities. Thel business-type activities are those that the Town charges customers to provide. This includes the water and sewer services offered by the Town ofValdese. The final category is the component unit, Although legally separate from the Town, the ABC Board is important to the Town. The Town exercises control over thel Board by appointing its members and because thel Board is required to distribute its Town's financial condition. profits to the' Town. The government-wide financial statements are on Exhibits 1 and 2 ofthis report. Fund Financial Statements The fund financial statements (see) Figure 1) provide a more detailed look at the Town's most significant activities. A fund is a grouping of related accounts thati is used to maintain control over resources that have been segregated for specific activities or objectives. The Town of Valdese, like all other governmental entities in North Carolina, uses fund accounting to ensure and to reflect compliance (or non-compliance) with finance-related legal requirements, such as the General Statutes or the Town's budget ordinance. All ofthe funds of the' Town of Valdese can be divided into two categories: governmental funds and proprietary funds. Governmental Funds - Governmental funds are used to account for those functions reported as governmental activities in the government-wide financial statements. Most oft the' Town's basic services are accounted fori in governmental funds. These funds focus on how assets can readily be converted into cash flow in and out and what monies are left at year-end that will be available for spending in the next year. Governmental funds are reported using an accounting method called modified accrual accounting which provides as short-term spending focus. Asaresult, the governmental fund financial statements give the reader a detailed short-term view that helps him or her determine ifthere are: more or less financial resources available to finance the Town's programs. The relationship between government activities (reported in the Statement ofNet Position and the Statement of Activities) and governmental: funds is described in ai reconciliation that is a part ofthe fund: financial statements. The Town ofValdese adopts an annual budget for its General Fund, as required by the General Statutes. The budget is al legally adopted document thati incorporates input from the citizens of the Town, the management of the' Town, and the decisions of thel Board about which services to provide and how to pay for them. Italso authorizes the Town to obtain funds from identified sources to finance these current period activities. The budgetary statement provided for the General Fund demonstrates how well the Town complied with the budget ordinance and whether or not the Town: succeeded inj providing the: services as] planned when the budget was adopted. The budgetary comparison statement uses thel budgetary basis ofaccounting and is presented using the same format, language, and classifications as the legal budget document. The statement shows four columns: 1) the original budget as adopted by thel Board; 2) the final budget as amended by the Board; 3) the actual resources, charges to appropriations, and ending balances in the General Fund; and 4) the difference or variance between the final budget and the actual resources and charges. 6 Proprietary Funds - The Town of Valdese has one proprietary fund. Enterprise Funds are used to report the same: functions presented as business-type activities in the government-wide: financial statements. The' Town of Valdese uses enterprise funds to account for its water and sewer activity. This fund is the same as those functions shown in the business-type activities in the Statement ofNet Position and the Statement of Activities. Notes to the Financial Statements The notes provide additional information that is essential to ai full understanding oft the data provided in the government-wide: and fund financial statements. The notes to the Other) Information - In addition to the basic financial statements and accompanying notes, this report includes certain required supplementary information concerning the Town of Valdese's progress in funding its obligation toj provide pension benefits to its employees. Required supplementary information can be found beginning on Interdependence with Other Entities The Town depends on financial resources flowing from, or associated with, both thel Federal Government and the State ofNorth Carolina. Because oft this dependency, the Town is subject to changes in specific flows ofi intergovermental revenues based on modifications to Federal and State laws and Federal and State appropriations. Iti is also subject to changes in investment earnings and asset values associated with U.S. Treasury Securities because of actions by foreign government and other holders of publicly financial statements begin on page 23 ofthis report. page 58 ofthis report. held U.S. Treasury Securities. Goyernment-Wide Financial Analysis The' Town of Valdese's Net] Position Figure2 Business-type Activities 2019 2018 $ 1,691,095 $ 2,088,842 21,493,602 20,809,528 226,566 149.078 23,411,263 23,047,447 2,375,164 2,497,585 96,020 283,953 14,836 13,851 2,486,020 2,795,391 19,602,746 18,692,988 1,322,495 1,559,068 $20,925,241 $20,252,056 Governmental Activities 2019 2018 $6,683,074 $6,040,391 6,612,538 6,646,194 630,467 452,794 13.926.079 13,139,379 5,212,054 4,788,039 102,883 110,222 103.971 36,902 5,418.908 4,935,163 3,342,961 3,504,042 751,098 746,910 4,413.112 3,953,264 $8,507.171 $8,204.216 Total 2019 2018 $8,374,168 $8,129,232 28,106,140 27,455,722 857.033 601,872 37,337.341 36,186,825 7,587,218 7,285,624 198,903 394,175 118,807 50,753 7,904.928 7,730,552 22,945,707 22,197,030 751,098 746,910 5,735,607 5,512,332 $29.432.412 $28,456,272 Current and other assets Capital assets Deferred outflows ofr resources Total assets and deferred outflows ofresources Long-term liabilities outstanding Other liabilities Deferred inflows ofr resources Total liabilities Net position: Net investment inc capital assets Restricted Unrestricted Total net! position As noted earlier, net position may serve, over time, as one useful indicator ofag government's financial condition. The assets of the Town of Valdese exceeded liabilities by $29,432,412 as ofJune 30, 2019. The Town's net position increased by $976,140 for the fiscal year ended. June 30, 2019. However, the largest portion, 77.96%, reflects the' Town's investment in capital assets (e.g., land, buildings, machinery, and equipment), less any related 7 debt still outstanding that was issued to acquire those items. The Town ofValdese uses these capital assets to provide services to citizens; consequently, these assets are: not available for future spending. Although the Town ofValdese's investment in its capital assets is reported net oft the outstanding related debt, the resources needed to repay that debt must bej provided by other sources, since the capital assets cannot be used to liquidate these liabilities. An additional portion oft the Town ofValdese's net position $751,098 (2.555%). represents. resources that are subject to external restrictions on how they may be used. The remaining balance of$5,735,607 is Several particular aspects oft the Town's financial operations positively influenced the total unrestricted unrestricted. governmental net position: Continued, concerted effort to control cost and manage expenditures responsibly. Continued diligence int the collection of! property taxes by maintaining: at tax collection percentage of97.25%. Sustained effort to stabilize property tax revenues with both new: residential and non-residential development. Continued acquisition of grant funding for major projects. Annual review and re-prioritizing of Capital needs. Adherence to the adopted budget. The" Town ofValdese's Changes inl Net] Position Figure3 Business-type Activities 2019 2018 Governmental Activities 2019 2018 717,154 188,012 556,663 175,000 1,321,941 2,130,678 2,194,177 1,776,432 1,695,834 286,235 293,474 5,273,511 6,763,247 1,157,916 1,304,120 1,843,651 408,249 270,091 39,552 1,531,672 106,426 5,357,557 6,138,133 (84,046) 387,000 S 302,954 $1.440.463 Total 2019 2018 188,012 556,663 1,286,132 2,231,083 2,130,678 2,194,177 1,776,432 1,695,834 165.637 310,393 11,232,948 12.364,764 1,157,916 1,304,120 1,843,651 1,827,730 408,249 750,751 270,091 231,403 39,552 329,773 1,531,672 1,607,968 106,426 86,388 4,899,253 4,544,064 10,256,810 10,682,197 976,138 1,682,567 976.138 1,682,567 $28,456,272 $27,176,757 (403,051) 28,456,272 26,773,706 976.138 1,682,567 Revenues: Program revenues: Charges fors services Operating grants and contributions Capital grants and contributions General revenues: Propertyt taxes Othert taxes Other Total revenues Expenses: General government Publics safety Transportation Environmental protection Economic and physical development Culture and recreation Interest onl long-term debt Watera and: sewer Total expenses Increase (decrease) inr netp position beforet transfer Transfers Increase (decrease) in net position Restatement Net position- July I, restated Increase (decrease) in net position Net position- June: 30 701,158 $4,968,903 $4,675,456 $ 5,686,057 $5,376,614 1,111,132 (120,598) 5,959,437 909,142 16,919 5,601,517 1,827,730 750,751 231,403 329,773 1,607,968 86,388 4,899.253 4,899,253 1,060,184 (387,000) 673,185 4,544,064 4,544,064 1,057,453 (815,348) 242,104 (64,488) 20,009,953 242,104 625,114 815.348 (338,563) Net position- July 1, previously reported $8,204,216 $7,102,316 $20,252,056 $20,074,441 8,204,216 6,763,753 20,252,056 302.954 1,440,463 673.185 $8.507.171 $8.204.216 $20,925,241 $20,252,056 $29,432,411 $28.456.272 8 Governmental. Activities. Governmental activities increased the Town's net position by $302,954. Key elements oft this increase are anticipated and unanticipated events as follows: Funds expended on capital projects not yet completed/captalized, Modest growth int tax revenues. Revenues higher than anticipated. Expenditures lower than anticipated. Key elements oft this increase are as follows: Business-type. Activities Business-type activities increased the Town ofValdese's net position by $673,185. Implementation ofa Capital Improvement Plan. Increase in revenue due to economic conditions. Increase in the amount of grants received. Decrease in debt service, Financial Analysis of the' Town's Funds Asi noted earlier, the' Town ofValdese uses fund accounting to ensure, and demonstrate compliance with, Governmental Funds The focus of the Town of Valdese's governmental funds is to provide information on near-term inflows, outflows, and balances oft usable resources. Such information is useful in assessing the Town ofValdese's financing requirements. Specifically, unassigned fund balance can be a useful measure ofa The General Fund is the chiefoperating fund oft the' Town ofValdese. At the end oft the current fiscal year, available fund balance of the General Fund was $3,105,101, while the total fund balance reached $4,164,568. The Town currently has an available fund balance of60.53 percent of General Fund expenditures, while the total AtJune 30, 2019, the governmental funds of the Town ofValdese reported a combined fund balance of $6,303,670, a 12.69 percent increase from last year. Included int this change in fund' balance are increases in the fund balance in the General Fund and a decrease in the fund balances oft the Other Governmental Funds. General Fund Budgetary Highlights -) During the fiscal year, the Town revised the budget on several occasions. Generally, budget amendments fall into one of three categories: 1) amendments made to adjust the estimates that are used to prepare the original budget ordinance once exact information is available; 2) amendments made to recognize newi funding amounts from external sources, such as Federal and State grants; and 3) increases in Proprietary Funds - The Town ofValdese's proprietary funds provide the same type ofi information found in the government-wide, statements, but in: more detail. Unrestricted net position ofthe Water and Sewer Fund at the end ofthe fiscal year amounted to $1,322,495. The total change in net position was an increase of $673,185. Other factors concerning the finances ofthis fund have already been addressed in the discussion of the' Town of finance-related legal requirements. government's net resources available fors spending at the end of the fiscal year. fund balance represents 81.19 percent ofthat same amount. appropriations that become necessary toi maintain services. Valdese's business-type activities. 9 Capital Assets and Debt Administration Capital Assets - The' Town of Valdese's investment in capital assets for its governmental and business-type activities as ofJune 30, 2019, totals $28,106,140 (net of accumulated depreciation). These assets include Major capital asset transactions during the year include the following additions (there were no significant buildings, land, equipment, plant and distribution systems, and vehicles. demolitions or disposals): Purchase of new equipment. Repair of equipment and: facilities. Purchase ofr new vehicles, including a fire truck. The' Town of Valdese's Capital Assets (Net of] Depreciation) Figure4 Business-type Activities 2019 2018 Governmental Activities 2019 2018 Total 2019 2018 Land Buildings Plant and distribution systems Equipment Construction inp progress Total Statements. $1,850,917 $1,870,979 $ 322,980 $ 322,980 $2,173,897 $2,193,959 3,204,041 3,463,823 427,038 3,204,041 3,463,823 827,430 1,274,856 1,051,458 527,686 4,179.994 20,098,231 15,945,957 20,098,231 15,945,957 403,822 907,570 400,392 144,314 527,686 216,707 143,888 4,179,994 620,529 Vehicles andi motorized equipment 1,130,542 $6,612,537 $6,646,194 $21.493.602 $20,809.528 $28.106,140 $27.455.722 Additional information on the Town's capital assets can be found in Note IL.A.4 oft thel Basic Financial Long-Term Debt- As ofJ June 30, 20191 the' Town ofValdese had total bonded debt outstanding of$5,160,432. The' Town ofValdese's Outstanding Debt Figure! 5 Business-type Activities 2019 319,516 Governmental Activities 2019 2018 Total 2019 2018 319,516 488.748 2018 488,748 General obligation bonds State loans and bonds Total $3,269,576 $3,142,152 $1,571,340 $1,627,791 $4,840,916 $4,769,943 $3,269.576 $3,142.152 $1,890,856 $2,116,539 $5,160,432 $5,258.691 The Town of Valdese's total debt decreased by $98,259 (1.87%) during the past fiscal year. 10 North Carolina general statutes limit the amount of general obligation debt that a unit of government can issue to 81 percent oft the total assessed value oftaxable property located within that government's boundaries. The legal Additional information regarding the Town of Valdese's long-term debt can be found in Note III.B.6 beginning on debt margin for the' Town ofValdesei is $25,523,296. page 51 ofthis report. Economic Factors and Next Year's Budgets and Rates The following are. key economic indicators that continue to affect the status oft the Town: The Town of Valdese (regional) unemployment rate was 3.3%, compared to the State's rate of4.2% and the Property taxes, our largest revenue. source, remained steady, with the upcoming fiscal year to see a Sales and Utility Franchise taxes are our next largest revenue sources. Both have been trending positive due to ai robust economy. We expect this trend to slow down in the upcoming fiscal year, with only a slight The effects ofl losing textile industries continues toj provide challenges for our Utility System. However, we are optimistic that the current and planned effort to expand our residential customer base through national rate of4.0%. reappraisal on property values. increase. development and acquisition will continue to partially offset these losses. Budget Highlights for thel Fiscal Yearl Ending June 30, 2020 The original budget for the fiscal year 2019-2020 increased 4.5% over the previous fiscal year. This is primarily due to implementation ofai market based pay plan, rising recycling costs, and property tax revaluation. This funding level provides for the continuation of all basic Town services, in addition to Community and Recreational The property tax rate remains at $0.545 per one hundred dollars ($100) valuation. There has been a County wide property revaluation that willl be reflected in the next fiscal year budget. Iti is anticipated to allocate realized increases of revenue towards streets and public safety. There will be slight increases to Town charges and fees as Budgeted expenditures for general operations in the General Fund are expected to increase. This increase is primarily due to an increased cost ofrecycling, employee compensation, facility maintenance, and inflation. The fiscal year 2020 budget maintains the current level of employee benefits with minor adjustments in deductibles. The water and sewer rates in the Town will follow the Utility Fund's Capital Improvement Plan and rate model for residential, commercial, and industrial customer base rates. Through this budgeting and capital project model, the Town has developed al balanced projection for needed revenues generated from these rates to cover the day to day operating needs oft the Utility Fund, as well as to address the aging infrastructure in our water and sewer services. reflected in the Fee Schedule. system in at timely manner. Requests for Information This report is designed to provide an overview of the Town's finances for those with an interest in this area. Questions concerning any oft thei information found in this report, or requests for additional information, should be directed to Director ofl Finance, Town ofValdese, P.O.1 Box 339, Valdese, N.C. 28690-0339. One can also call (828) 879-2120 or visit our website. www.lownohaldese.om 11 (THIS PAGE: LEFT BLANK INTENTIONALLY) Basic Financial Statements TOWN OF VALDESE, NORTH CAROLINA Exhibit1 Statement of Net Position June 30, 2019 Primary Government Business- type Activities 73,794 552,754 Town of Valdese ABCBoard Governmental Activities 5,546,401 $ 811,332 174,825 212,530 53,094 63,993 371,176 147,775 32,445 80,835 6,683,074 Assets Current assets: Cash and investments Restricted cash andi investments Taxes receivable, net Accounts receivable, net Interest receivable Due from other governmental. agencies Note receivable from component unit Prepaid expenses Inventories Total current assets Non-current: assets: Capital assets: Land, non-depreciable: assets and construction inj progress Other capital assets, net of depreciation Total capital assets Total non-current asset Total assets Deferred outflows ofr resources Liabilities Current liabilities: Customer deposits Long-term liabilities Due within one, year Duei ini more than one year Total liabilities Deferred inflows of resources Net] Position Net investment in capital assets Restricted for stabilization bys state statute Restricted: for town revitalization Restricted for streets Unrestricted Total net position Total 6,357,733 $ 113,078 248,619 212,530 605,848 63,993 371,176 147,775 41,619 324,875 8,374,168 9,174 244,040 1,691,095 160,742 273,820 1,850,917 4,761,621 6,612,538 6,612,538 13,295,612 630,467 102,883 256,405 4,955,649 5,314,937 103,971 3,342,961 680,430 13,247 57,421 4,413,112 850,667 20,642,935 21,493,602 21,493,602 23,184,697 226,566 22,226 73,794 226,679 2,148,485 2,471,186 14,836 19,602,746 2,701,584 25,404,556 28,106,140 28,106,140 36,480,307 857,033 125,109 73,794 483,084 7,104,134 7,786,121 118,807 22,945,707 680,430 13,247 57,421 5,735,607 78,286 78,286 78,286 352,106 4,730 96,583 42,000 105,775 244,358 Accounts payable and other current liabilities (36,003) 1,322,495 148,481 8,507,171 $ 2 20,925,241 $ 29,432,412 $ 112,478 The notes tot thej financial. statements are ani integral part of this statement. 12 TOWN OF VALDESE, NORTH CAROLINA Statement of Activities For the Year Ended June 30, 2019 Program Revenues Operating Capital Grants and $ 668 144,452 42,892 188,012 Charges for Grants and Services 3,855 227,032 395,644 717,154 4,968,903 4,968,903 5,686,057 1,122,746 1,122,746 Functions/Programs Governmental activities: Gencral government Publics safety Transportation Environmental protection Cultural andi recreational Economic: and physical development Interest on long-term debt Total governmental activities Business- type activities: Water ands sewer Total business-type: activities Total primary government Component unit: ABC Board Total component unit Expenses 1,843,651 408,249 270,091 1,531,672 39,552 106,426 5,357,557 4,899,253 4,899,253 10,256,810 1,052,800 1,052,770 Contributions Contributions 1,157,916 $ 90,623 $ 175,000 175,000 1,111,132 1,111,132 1,286,132 188,012 Thei notes tot thej fnancial statements are ani integral parto oft this statement. 13 Exhibit2 Primary Government Business- type Activities Net (Expense) Revenue and Changes in Net Position Governmental Activities (1,067,293) $ (1,839,128) (263,797) (43,059) (1,093,136) 135,448 (106,426) (4,277,391) Town of Valdese ABCBoard Functions/Programs Governmental activities: General government Public: safety Transportation Environmental protection Cultural andi recreational Economic and physical development Interest on long-term debt Total governmental activities Business-type: activities: Water and sewer Total business-type activities Total primary government Component unit: ABCI Board Total component unit General revenues: Taxes: Property taxes Local options sales tax Franchise tax Other taxes andl licenses Unrestricted: investment and earnings Miscellaneous Transfers Total $ (1,067,293) $ (1,839,128) (263,797) (43,059) (1,093,136) 135,448 (106,426) (4,277,391) 1,180,782 1,180,782 (3,096,609) 1,180,782 1,180,782 1,180,782 (4,277,391) 69,947 69,947 2,130,678 1,216,355 442,942 117,135 80,207 206,028 387,000 4,580,345 302,955 8,204,216 8,507,171 $ 20,925,241 2,130,678 1,216,355 442,942 117,135 94,282 71,355 4,072,747 976,139 28,456,272 29,432,411 14,075 (134,673) (387,000) (507,598) 673,185 20,252,056 509 509 70,456 42,021 112,478 Total general revenues, special items and transfers Changei ini net position Netp position- beginning Net position- ending 13 TOWN OF VALDESE, NORTH CAROLINA Exhibit3 Balance Sheet Governmental Funds June 30,2019 Major Fund General Fund 174,825 212,530 53,094 147,775 17,451 371,176 32,445 80,835 Total Funds Total Funds 174,825 212,530 53,094 147,775 17,451 371,176 32,445 80,835 Non-Major Governmental Assets Cash and investments Restricted cash and investments Taxes receivable, net Accounts receivable, net Loan receivable Due from other funds Prepaid expenses Inventories Total assets Liabilities and Fund Balances Liabilities: Due to other funds Total liabilities 3,389,422 $ 2,156,979 $ 5,546,401 Due from other governmental agencies $4,479,555 $2,156,979 $ 6,636,534 Accounts payable and other current liabilities $ 102,457 $ 102,457 212,530 426 $ 102,883 17,451 17,877 17,451 120,333 212,530 Deferred inflows of resources: Property taxes receivable Fund balances; Nonspendable: Prepaid expenses Inventories Restricted: Stabilization by State Statute Encumbrances Town revitalization Streets Committed: USDA reserve Assigned: Capital projects Unassigned Total fund balances Total liabilities and fund balances 32,445 80,835 680,430 90,932 57,421 117,404 3,105,101 4,164,568 32,445 80,835 680,430 90,932 13,247 57,421 117,404 2,125,855 3,105,101 6,303,670 13,247 2,125,855 2,139,102 $4,479,555 $2,156.979 $ 6,636,534 The notes to the financial statements are an integral part ofthis statement. 14 TOWN OF VALDESE, NORTH CAROLINA Reconciliation oft the Governmental Funds Balance Sheet to the Statement of Net Position Exhibit4 June 30, 2019 Total governmental fund balances $6,303,670 Amounts reported for governmental activities in the statement ofnet postion are different because: Capital assets used in governmental activities are not financial resources and, therefore are not reported in the funds. 6,612,538 625,842 4,625 276,521 (42,899) (61,072) Deferred outflows ofresources related to pensions are not reported in the funds Deferred outfloes of resouces related to OPEB are: not reported in the funds Other long-term assets are. not available to pay for current-period expenditures and, therefore, are deferred in the funds. Deferred inflows ofi resources related to pensions are not reported in the funds Deferred inflows of resources related to OPEB are. not reported in the funds Long-term liabilities, including bonds payable, OPEB, pension liability and compensated absences are not due and payable in the current period, and therefore, are not reported in the funds. (5,212,054) Net position of governmental activities $8,507,171 The notes to the financial statements are an integral part of this statement. 15 TOWN OF VALDESE, NORTH CAROLINA Exhibit5 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2019 Major Fund General Fund $2,190,827 $ 1,163,776 612,656 319,452 695,532 63,668 382,090 5,428,003 Total Non-Major Governmental Funds Total Funds 2,190,827 1,163,776 612,656 319,452 695,532 80,207 429,540 5,491,992 Revenues: Ad valorem taxes Other taxes and licenses Unrestricted intergovernmental. revenues Restricted intergovernmental revenues Sales and services Investment earnings Other revenues Total revenues Expenditures: Current: General government Public safety Environmental; protection Transportation Cultural and recreational Economic and physical development Debt service: Principal Interest and other charges Total expenditures Revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers- in Operating transfers- out Total other financing sources (uses) Net change in fund balances Fund balances, beginning Fund balances, ending 16,539 47,450 63,989 976,172 1,659,800 249,247 315,843 1,480,212 333,418 114,584 5,129,278 298,725 1,724,790 (25,000) (1,337,790) 1,699,790 (1,312,790) 1,998,515 2,166,052 976,172 1,659,800 249,247 315,843 1,480,212 39,552 333,418 114,584 5,168,830 323,162 1,749,790 (1,362,790) 387,000 710,161 5,593,507 6,303,670 39,552 39,552 24,437 25,000 (1,288,354) 3,427,455 $4,164,568 $2,139,102 The notes to thej financial. statements are an integral part oft this statement. 16 TOWN OF VALDESE, NORTH CAROLINA Reconciliation of the Statement of Revenues, Expenditures and Changes inj Fund Balances oft the Governmental Funds to the Exhibite 6 Statement of Activities For the Year Ended June 30, 2019 Amounts reported for governmental activities in thes statement of activities are different because: Net changes in fund balances total governmental funds 710,161 Governmental funds report capital outlays as expenditures. However, in the statement ofactivities, the cost oft those assets is allocated over their estimated useful lives andi reported as depreciation expense. Thisi is the amount by which depreciation exceeded capital outlayi in the current period. Contibutions to thej pension plani in the current fiscal year are not included Revenuesi ini thes statement of activities that dor not! provide current financial Thei issuance of1 long-term debt provides current financial resources to governmental funds, while the repayment oft the principal ofl long-term debt consumes the current financial resources oft the governmental funds. Neither transaction has any effect on net assets. Also, governmental: funds report the effect ofissuance cost, premiums, discounts and similar items when debti is first issued, whereas these amounts are deferred and amortized int the statement of activities. This amount is the net effect oft these differences in the treatment of Some expenses reported in thes statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in (365,631) 173,437 on the Statement of Activities resources are not reported as revenues: int thei funds. Change in deferred revenue: for tax revenues. 60,149 long-term debt and related items. 341,576 governmental funds. Other postemployment benefits Pension expense Compensated: absences (65,978) (573,021) 22,262 302,955 Total changes ini net position of governmental activities The notes to the financial. statements are an integral part of this statement. 17 TOWN OF VALDESE, NORTH CAROLINA Exhibit7 7 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement of] Revenues, Expenditures and Changes in] Fund Balance- General Fund Variance with Final Budget- Positive (Negative) (7,966) 41,584 (83) 17,587 47,108 110,229 354,827 Original Budget 1,171,742 506,000 144,535 649,966 13,300 118,600 4,626,270 Final Budget 1,171,742 571,070 319,535 677,945 16,560 271,861 5,073,176 Actual Amounts 1,163,776 612,656 319,452 695,532 63,668 382,090 5,428,003 Revenues: Ady valorem taxes Other taxes and licenses Unrestricted intergovernmental revenues Restricted intergovernmental revenues Sales ands serviçes Investment earnings Other revenues Total revenues Expenditures: Current: General government Public safety Transportation Environmental protection Cultural and recreational Debt service: Principal Interest and other charges Total expenditures Revenues over (under) expenditures Other Financing Sources (Uses): Appropriated: fund balance Operating transfers in (out) Total other financing sources (uses) Net change in fund balance Fund balance, beginning Fund balance, ending $2,022,127 $2,044,463 $2 2,190,827 $ 146,364 1,068,101 1,580,487 379,341 259,414 1,040,290 378,249 86,388 4,792,270 (166,000) 1,112,357 1,741,423 437,605 257,892 1,529,603 330,253 114,585 5,523,718 (450,542) 63,542 387,000 450,542 976,172 1,659,800 315,843 249,247 1,480,212 333,418 114,584 5,129,278 298,726 136,185 81,623 121,762 8,645 49,391 (3,165) 394,442 749,269 (63,542) 1,312,790 1,249,248 166,000 166,000 1,699,790 1,699,790 1,998,515 $ 1,998,515 2,166,052 $4,164,568 The notes toi thej financial. statements are an integral part of this statement. 18 TOWN OF VALDESE, NORTH CAROLINA Exhibit 8 Statement ofl Fund Net Position Proprietary Fund June 30, 2019 Enterprise Fund Utility Fund $ 811,332 552,754 244,040 9,174 73,794 1,691,095 322,980 19,710,567 24,068,575 1,489,591 651,945 527,687 (25,277,744) 21,493,602 21,493,602 23,184,697 226,566 22,226 73,794 57,446 169,233 322,700 1,513,894 150,283 289,905 134,445 59,958 2,471,186 14,836 19,602,746 1,322,495 20,925,241 20.925.241 Assets Current assets; Cash andi investments Accounts receivable, net Inventories Prepaid expenses Restricted cash and cash equivalents Total current assets Non current assets: Capital assets: Landa andi improvements Buildings andi improvements Distribution: systems Furniture and maintenance equipment Vehicles Construction: inp progress Less accumulated depreciation Capital assets, net Totalr noncurrent assets Total assets Deferred Outflows ofE Resources Liabilities Current liabilities: Accounts payable and other current liabilities Customer deposits General obligation bonds! payable- current Loans payable- current Totald current liabilities Noncurrent liabilities: General obligation bonds payable Loans payable Net pension liability Other postemployment! benefits liability Accrued compensated absences Totall liabilities Deferred Inflows of Resources Net Position Neti investment: inc capital assets Unrestricted Total netp position Netj position ofb business-type: activities The notes! to thej financials statements are ani integral! parto ofthiss statement. 19 TOWN OF VALDESE, NORTH CAROLINA Exhibit9 Statement ofRevenues, Expenses and Changes inl Fund Net Position Proprietary Fund For the Year Ended June 30,2019 Enterprise Fund Utility Fund $ 4,374,937 593,966 4,968,903 921,142 997,085 1,171,832 818,825 916,708 4,825,593 143,310 3,810 14,075 (73,660) (103,120) (35,363) (194,257) (50,947) 1,111,132 (387,000) 673,185 20,252,056 20,925,241 Operating Revenues: Charges fors services Other operating revenues Total operating revenues Operating Expenses: Administration Waters supply and treatment Wastewater treatment Watera and sewer maintenance Depreciation Total operating expenses Operatingi income (loss) Nonoperating Revenues (Expenses): Rent Investment earnings Interest expense Disposal oft fixed assets Other Nonoperating revenues (expenses), net Income (loss) before operating transfers and capital contributions Capital contributions Transfers (to): from other funds: General fund Change in net position Total net position-beginning Total net position- ending The notes to the financial. statements are an integral part ofthiss statement. 20 TOWN OF VALDESE, NORTH CAROLINA Exhibit 10 Pagelof2 Statement of Cash Flows Proprietary Fund For the Fiscal Year Ended June 30,2019 Enterprise Fund Utility Fund $ 4,918,516 (3,802,440) (284,893) 831,183 (549,855) (51,016) (225,684) (73,660) (125,148) 527,687 52,179 14,075 14,075 347,582 537,544 885,126 cont. Cash Flows From Operating Activities: Cash received from customers Cash paid for goods and services Cash paid to employees Net cash provided (used) by operating activities Cash Flows From Noncapital Financing Activities: Operating transfers out Acquisition of capital assets Principal paid on bonds Interest paid on bonds Other Capital contributions Cash Flows From Capital and Related Financing Activities: Net cash provided (used) for capital and related financing activities Cash Flows From Investing Activities: Interest on investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year $ 21 TOWN OF VALDESE, NORTH CAROLINA Exhibit 10, cont. Page2of2 Statement of Cash Flows Proprietary Fund For the Fiscal Year) Ended June 30, 2019 Enterprise Fund Utility Fund Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) $ 143,310 Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Depreciation 916,708 (55,337) (77,977) 489 (12,328) 102,101 (192,880) 1,162 282 703 4,950 687,873 831,183 Changes in assets, deferred outflows of resources and liabilities: (Increase) decrease in deferred outflows ofr resources - pension (Increase) decrease in deferred outflows ofresources-OPEB (Increase) decrease in receivables Increase (decrease) in inventories Increase (decrease) ini net pension liability Increase (decrease) inj payables Increase (decrease) in accrued vacation pay and other postemployment benefits Increase (decrease) in deferred inflows of resources - pension Increase (decrease) in deferred inflows of resources - OPEB Increase (decrease) in customer deposits Net cash provided (used) by operating activities Total adjustments The notes to thej financial statements are an integral part ofthis statement. 22 (THIS PAGE LEFTI BLANK INTENTIONALLY) TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 I. Summary of Significant Accounting Policies The accounting policies oft the' Town ofValdese, andi its discretely presented component unit, conform to generally accepted accounting principles as applicable to governments. The following is a summary ofthe more significant accounting policies: A. Reporting Entity The Town of Valdese is ai municipal corporation which is governed by an elected mayor and ai five member council. As required by generally accepted accounting principles, these financial statements present the Town and its component unit, al legally separate entity for which the Town is financially accountable. The discretely presented component unit presented below is reported in a separate column int the' Town's financial statements in order to emphasize that iti is legally separate from the Town. The' Town ofValdese ABC Board The members of the ABC Board's governing board are appointed by the Town. In addition, the ABC Board is required by State statute to distribute its surpluses to the General Fund of the Town. The ABC Board, which has a. June 30: year-end, is presented as ifit were aj proprietary fund (discrete presentation). Complete financial statements for the ABC Board may be obtained from the entity's administrative offices at' Town ofValdese ABC Board, P. O. Box 1058, Valdese, N.C. 28690. B. Basis of] Presentation Govermment-wide Statements: The Statement ofr net position and the statement of activities display information about the primary government and its component unit. These statements include the financial activities oft the overall government. Eliminations have been made to minimize the double counting ofi internal activities. These statements distinguish between the governmental and business- type activities oft the' Town. Governmental activities generally are: financed through taxes, intergovernmental revenues, and other non-exchange transactions. Business-type activities are The statement of activities presents a comparison between direct expense and program revenues for the different business-type activities oft the Town and for each function of the Town's governmental activities. Direct expenses are those that are: specifically associated with aj program or function and, therefore, are clearly identifiable to aj particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include: (a) fees and charges paid by the recipients ofg goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements ofaj particular program. Revenues that are not classified as program revenues, including all taxes, are presented as financed in whole, or in part, by fees charged to external parties. general revenues. 23 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 Fund Financial Statements: The fund financial statements provide information about the' Town's funds. Separate statements for each fund category governmental and proprietary are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with thej principal activity oft the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies, result from non-exchange transactions. Other non-operating revenues are ancillary activities such as reported as non-major funds. investment earnings. The Town: reports the following major governmental funds: General Fund The General Fund is the general operating fund oft the Town. The General Fund accounts for all finançial resources except those that are required to be accounted fori in another fund. The primary revenue sources are ad valorem taxes, State grants, and various other taxes and licenses. Thej primary expenditures are: for public safety, street maintenance and construction, and sanitation services. The Town: reports the following non-major governmental funds: Water Plant Capital Project Fund - This fund is used to account for improvements to the water plant. Police Department Capital Project Fund This fund is used to account for police department capital Facade Grant Fund - This fund is used to account for improvements to downtown buildings. Public Art Fund - This fund is used to account for assets to add art to the' Town. Capital Project Fund - This fund is used to account for future capital expenditures. Capital Outlay Fund This fund accounts for assets held by the Town for the construction ofa Lake] Rhodhiss Capital Project Fund - This fund is used to account for improvements to thel Lake Downtown Park Capital Project Fund- This fund is used to acquire revenue to construct ai new Lakeside Park Capital Project Fund - This fund is used to acquire revenue for ai new park on Lake Small Business and Entrepreneurial Assistance Fund - This fund is used to acquire grants to assist expenditures. community house or other capital projects. Rhodhiss Plant. downtown park. Rhodhiss. local businesses. 24 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 CDBG Scattered Sites Housing) Fund- - This fund is used to acquire revenue for housing rehabilitation. Alba Waldensian Building Demo Fund - This fund is used to acquire revenue: for the demolition of an NCDOTI Pedestrian Plan Grant Fund - This fund is used to fund planning for aj pedestrian trail. abandoned factory within the Town. The Town reports thei following major enterprise fund: Measurement Focus and Basis of Accounting year using the modified accrual basis ofaccounting. Utility Fund - This fund is used to account for the Town's water and sewer operations. In accordance with North Carolina General Statutes, all funds of the Town are maintained during the Government-wide and Proprietary Fund Financial Statements The government-wide and proprietary fund financial statements are reported using the economic resources measurement focus. The government-wide and proprietary fund financial statements are: reported using the accrual basis of accounting. Revenues are: recorded when earned, and expenses are: recorded at the time liabilities are incurred, regardless of when thei related cash flows take place. Non-exchange transactions, in which the Town gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, and donations. On an accrual basis, revenue from property taxes is recognized in thei fiscal year for which the taxes are. levied. Revenue from grants and donations is recognized in thei fiscal year in which all eligibility requirements have been satisfied. Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services andj producing and delivering goods inc connection with aj proprietary fund's principal ongoing operations. The principal operating revenues of the Town' 's enterprise fund are charges to customers for sales and services. The' Town also recognizes as operating revenue the portion oftap fees intended to recover the cost ofc connecting new customers to the water and sewer system. Operating expenses for enterprise funds include the cost ofs sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are: reported as non-operating revenues and expenses. Governmental Fund Financial Statements - Governmental funds are: reported using the current financial resources measurement focus and the modified accrual basis ofaccounting. Under this method, revenues arei recognized when measurable and available. Expenditures are recorded when the related fund liability is incurred, except for principal andi interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured, General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are: reported as other financing sources. 25 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 The' Town considers all revenues available if they are collected within 90 days after year-end, except for property taxes. Ad valorem taxes receivable are not accrued as ai revenue because the amount is not susceptible to accrual. AtJune 30, taxes receivable for property other than: motor vehicles are materially past due and are: not considered to be an available resource to finance the operations oft the current year. Also, as of September 1, 2013, State law altered the procedures for the assessment and collection ofproperty taxes on registered motor vehicles in North Carolina. Effective with this change int the law, the State ofNorth Carolina is responsible for billing and collecting thej property taxes on registered motor vehicles on behalfofa all municipalities and special tax districts. Property taxes are due when the vehicles are registered. The billed taxes are applicable to the fiscal year in which they are received. Uncollected taxes that were billed in periods prior to September 1, 2013, and for limited: registration plates, are: shown as ai receivable in these financial statements and are Sales taxes and certain intergovernmental revenues, such as the utilities franchise tax, collected and held by the State at year-end on behalf oft the' Town are recognized as revenue. Intergoyernmental revenues and sales and services are: not susceptible to accrual because, generally, they are not measurable until received in cash. Grant revenues which are unearned at year-end are recorded as unearned revenues. Under the terms ofg grant agreements, the Town funds certain programs bya combination of specific cost-reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there arel both restricted and unrestricted net assets available to finance the program, Itis the Town's! policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues, The Town's budgets are adopted as required by the North Carolina General Statutes. An annual budget is adopted for the General Fund and thel Enterprise Funds. All annual appropriations lapse at the fiscal year-end. Project ordinances are adopted for the Capital Project Funds, Special Revenue Funds and thel Enterprise Fund Capital Projects Funds, which are consolidated with the operating funds for reporting purposes. All budgets are prepared using the modified accrual basis of accounting. Expenditures may not legally exceed appropriations at the department level for all annually budgeted funds and at the object level for the multi-year funds. The Town manager has unlimited authority to transfer appropriations within a department. He is authorized to transfer up to $1,000 between departments of the same fund with subsequent Board approval. During the year, several immaterial amendments to the original budget were: necessary. Thel budget ordinance must be adopted by July 1 ofthe fiscal year, or the governing board must adopt an interim budget that covers that time until annual ordinance can be adopted. The Capital Outlay Fund is not required to be offset by deferred inflows of resources. D. Budgetary Data budgeted. 26 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 E. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Fund Equity 1. Deposits and Investments All deposits oft the Town and the ABC Board are made in Board-designated, official depositories and are secured as required by State law (G.S. 159-31). The Town and the ABC Board may designate as an official depository any bank or savings association whose principal office is located in North Carolina. Also, the Town and the ABC Board may establish time deposit accounts such as NOW and SuperNOW accounts, money market accounts, and certificates of State law (G.S. 159-30(c)) authorizes the Town and the. ABC: Board to invest in obligations ofthe United States or obligations fully guaranteed both as toj principal and interest by the United States; obligations oft the State ofNorth Carolina; bonds and notes ofanyl North Carolina local government or public authority; obligations of certain nonguaranteed federal agencies; certain high quality issues of commercial paper and bankers' acceptances; and thel North Carolina Capital The Town's investments and the ABC Board's investments are reported at fair value. Non- participating, interest earning contracts are accounted for at cost. The NCCMT-Cash Portfolio, a SEC-registered (2a-7) external investment pool, is measured at amortized cost, which is the NCCMT's share price. The NCCMT-Term Portfolio's securities are valued at fair value. deposit. Management Trust (NCCMT). 2. Cash and Cash Equivalents The Town pools money: from several funds to facilitate disbursement and investment and to maximize investment income and considers all cash and investments to be cash and cash equivalents. The. ABC Board considers all highly liquid investments (including restricted assets) with ai maturity oft three months or less when purchased to be cash and cash equivalents. 3. Restricted Assets Customer deposits held by the Town before any services are supplied are restricted to the service for which the deposit was collected. 27 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the) Fiscal Year Ended June 30, 2019 Powell Bill Funds are also classified as restricted cash, because they can be expended only for the purpose outlined in G.S. 136-41.1 through 136-41.4. Town ofValdese Restricted Cash Governmental activities General fund Streets USDA Total governmental activities Business-type activities Water and sewer fund Customer deposits Total restricted cash 4. Ad Valorem Taxes Receivable $57,421 117.404 174,825 73.794 $248,619 Ina accordance with State law [G.S. 105-347 and G.S. 159-13(a)), the Town levies ad valorem taxes on property other than motor vehicles on July 1, the beginning ofthe fiscal year. The taxes are due on September 1 (lien date); however, interest does not accrue until the following. January 6th. These taxes are based on the assessed values as ofJ January 1, 2018. As allowed by State law, the' Town has established a schedule of discounts that apply to taxes that are paid prior to the due date. In the Town's General Fund, ad valorem tax revenues are: reported net ofs such discounts. 5. Allowances for Doubtful Accounts All receivables that historically experience uncollectible accounts are: shown net of an allowance for doubtful accounts. This amount is estimated by analyzing thej percentage of receivables that was written offin prior years. Inventory and Prepaid Items The inventories oft the Town and the ABC Board are valued at cost (first-in, first-out), which approximates market. The Town's General Fund inventory consists ofexpendable supplies, and Thei inventory of the' Town's Enterprise Fund, and those ofthe ABC Board, consists of materials and supplies held for subsequent use. The cost of this inventory is expensed when held for resale Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund finançial statements and expensed they are recorded as expenditures as used rather than when purchased. rather than when purchased. as the items are used. 28 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the] Fiscal Year Ended June 30, 2019 7. Capital Assets Capital assets are defined by the government as assets with an initial, individual cost ofr more than acertain cost and an estimated useful life in excess oft two years. Minimum capitalization costs are: $5,000. Donated capital assets received prior to. June 15, 2015 are recorded at their estimated fair value at the date of donation. Donated capital assets received after. June 15, 2015 are recorded at acquisition value. All other purchased or constructed capital assets are: reported at cost or estimated historical cost. The cost ofnormal maintenance and repairs that do not add to the value of the asset, or materially extend assets' lives, is not capitalized. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Estimated Useful Lives 30 50 25 6 10 3 Asset Class Infrastructure Buildings Improvements Vehicles Furniture and equipment Computer equipment line basis as follows: Asset Class Equipment and furniture Leasehold improvements Computers Property and equipment oft the ABC Board are depreciated over their useful lives on a straight- Estimated Useful Lives 10 10-20 3 8. Deferred Outlows/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 ofResources, represents a consumption of net position that applies to a future period and sO will not be recognized as an expense or expenditure until then. The Town has one item that meets this criterion, pension deferrals for the 2018 fiscal year. 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 Inflowso ofResources, represents an acquisition of net position that applies to a future period and: sO will not be recognized as revenue until then. The Town! has two items that meet the criterion for this category property taxes receivable and pension deferrals. 29 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 9. Long-Term Obligations Int the government-wide financial statements, and proprietary fund types in the 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 assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method that approximates the effective interest method. Bonds payable are reported net of the applicable bond premiums or discounts. Bond issuance costs are reported as deferred charges and amortized over the term oft the related debt. Ini fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are: reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are: reported as debt service expenditures. 10. Compensated Absences The vacation policies of the Town provide for the accumulation of up to thirty days earned vacation leave with such leave being fully vested when earned. For the Town's government-wide and proprietary funds, an expense and a liability for compensated absences and the salary-related payments are recorded as the leave is earned. The Town has assumed a first-in, first-out method ofusing accumulated compensated time. Thej portion oft the time that is estimated to be used in the next fiscal year has been designated as current liability in the government-wide financial The Town'ss sick leave policy provides for an unlimited accumulation ofe earned sick leave. Sick leave does not vest, but any unused sick leave accumulated at the time ofretirement may be used int the determination ofl length ofservice for retirement benefit purposes. Since the Town has no obligation for the accumulated sick leave until it is actually taken, no accrual for sick leavel has statements. been made. 11. Net Position/Fund Balances Net Position Net position in government-wide and proprietary fund financial statements is classified as net investment in capital assets; restricted; and unrestricted. Restricted net position represents constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or imposed by law through State statute. 30 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 Fund Balances In the governmental fund financial statements, fund balance is composed of five classifications designed to disclose thel hierarchy of constraints placed on how fund balance can bes spent. The governmental fund types classify fund balances as follows: Non-spendable Fund Balance This classification includes amounts that cannot bes spent because they are either: (a) not in spendable form or (b) legally or contractually required to be maintained Inventories the portion off fund balance that is not an available resource because it represents the year-end balance ofe ending inventories, which are not spendable resources. Prepaid expense the portion of fund balance that is not an available. resource because it Restricted Fund Balance This classification includes amounts that are: restricted to specific intact. represents the year-end balance of prepaid expenses. purposes externally imposed by creditors or imposed by law. Restricted for Stabilization by State statute the portion of fund balance that is restricted by Restricted for Streets - the Powell Bill portion of fund balance that is restricted by revenue source for street construction and maintenance expenditures. This amount represents the Restricted for Town Revitalization - the portion of fund balance to be used for Town Committed Fund Balance the portion of fund balance that can only be used for specific purposes imposed by a majority votel by quorum oft the Town of Valdese's governing body (highest level ofdecision-making: authority). The governing body can, by adoption ofa an ordinance prior to the end ofthe fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action ist taken (the adoption of another ordinance) to USDA Reserve- the portion off fund balance restricted as stated by USDA. Assigned fund balance the portion of fund balance that the Town of Valdese intends to use: for Capital Projects - thej portion ofi fund balance that has been budgeted for future capital State Statute [G.S. 159-8(a)]. balance of the total unexpended. Powell Bill funds. improvements. remove or revise the limitation. specific purposes, projects. 31 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 Subsequent year's expenditures the portion off fund balance that is appropriated in thei next Unassigned fund balance the portion oft the fund balance that has not been restricted, committed, The Town of Valdese has a revenue spending policy that provides guidance for programs with multiple revenue sources. The Finance Officer will use resources in the following hierarchy: bond proceeds, federal funds, State funds, local, non-Town funds, Town funds. For purposes of fund balance classification expenditures are tol be spent from restricted fund' balance first, followed in-order by committed fund balance, assigned fund balance, and lastly, unassigned fund balance. The Finance Officer has the authority to deviate from this policy ifiti is in the best year's budget that is not already classified in restricted or committed. or assigned to specific purposes or other funds. interest oft the Town. Defined Benefit Cost Sharing Plans For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position ofthe Local Governmental Employees' Retirement System (LGERS) and additions to/deductions from LGERS' fiduciary net position have been determined on the same basis as they are: reported by LGERS. Fort this purpose, plan member contributions are recognized in the period in which the contributions are due. The Town ofValdese's employer contributions are recognized when due, and the Town of Valdese has a legal requirement to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms ofLGERS. Investments are reported at fair value. II. Stewardship, Compliance and Accountability A. Deficit in Fund Balance ofIndividual Funds None B. Excess of Expenditures over. Appropriations None. 32 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 III. Detail Notes on All Funds A. Assets 1. Deposits All the deposits of the Town and the ABCI Board are either insured or collateralized by using one oftwo methods. Under the Dedicated Method, all deposits that exceed thei federal depository insurance coverage level are collateralized with securities held by the Town's or the ABC Board's agent in these units' names. Under the Pooling Method, which is a collateral pool, all uninsured deposits are collateralized with securities held by the State Treasurer's agent in the name oft the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity for the Town and the ABC Board, these deposits are considered to bel held by the Town's and the ABC Board's agent int their names. The amount ofthe pledged collateral is based on an approved averaging method for non-interest bearing deposits and the actual current balance for interest-bearing deposits. Depositories using thel Pooling Method report to the State Treasurer the adequacy of their pooled collateral covering uninsured deposits. The State Treasurer does not confirm this information with the Town, the ABC Board, or the escrow agent. Because ofthe inability to measure the exact amounts ofcollateral pledged: for the' Town and the ABC Board under thel Pooling Method, the potential exists for under-colateralization, and this risk may increase in periods ofhigh cash flows. However, the State Treasurer ofl North Carolina enforces strict standards off financial stability for each depository that collateralizes public deposits under thel Pooling Method. The Town has no formal policy regarding custodial credit risk for deposits, but relies on the State Treasurer to enforce standards ofn minimum capitalization for alll Pooling Method financial institutions and to monitor them for compliance. The Town complies with thej provisions ofG.S. 159-31 when designating official depositories and verifying that deposits are properly secured. The ABC Board has no formal policy regarding custodial credit risk for deposits. AtJune 30, 2019, the Town's deposits had a carrying amount of $140,135 and a bank balance of $290,506. Ofthe bank balance, $258,686 was covered by federal depository insurance, and the remainder was covered by collateral held under the Pooling Method. The carrying amount of deposits for the ABCI Board was $113,078, and the bank balance was $102,072. All oft the bank balance was covered by federal depository insurance. 33 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 2. Investments At] June 30, 2019, the Town had $6,466,217 invested with thel North Carolina Capital Management Trust's Government Portfolio which carried a credit rating of AAAm by Standard and Poor's. The Town has no policy regarding credit risk. Valuation Measurement Book Value Method Investment by' Type N.C. Capital Management at 6/30/19 Maturity Rating Trust Government Portfolio Amortized Cost $6.466.217 N/A AAAm Interest Rate Risk. The Town has no formal investment policy that limits investment maturities as ai means ofr managing its exposure to fair value losses arising from increasing interest rates. 3. Receivables- Allowance for Doubtful Accounts Receivables at the government-wide level at June 30, 2018 were are follows: Taxes and Related Accrued Interest $357,978 357,978 (81.455) $276.523 $ Due from Other Governments $371,176 371,176 $371.176 $ Accounts $5 53,094 53,094 $53.094 $552,754 $552,754 Total $ 782,248 782,248 (81,455) $700.793 $5 552,754 552,754 Governmental activities: General Other governmental Total Allowance for doubtful accounts Total- governmental activities Business-type activities: Utility fund Allowance for doubtful accounts Total- - business-type activities The due from other governments that is owed to the' Town consists of the following: Sales tax and utility franchise tax $371.176 The amounts presented in the Balance Sheet and the Statement ofNet Position are net ofthe following allowances for doubtful accounts: General Fund: Taxes receivable 81.455 34 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 4. Capital Assets Capital asset activity for the Town for the year ended June 30, 2019 was as: follows: Beginning Balances $1,870.979 $ 1,870.979 6,887,441 1,824,887 2.782,002 11,494,330 3,423,618 1,421,065 1.874,432 6.719,115 $6,646.194 Ending Balances 1.850,917 6,678,545 1,579,968 2,803,646 Increases Decreases Governmental. Activities: Capital assets not being depreciated: Land Total capital assets not! being depreciated Capital assets being depreciated: Buildings Equipment Vehicles and motorized equipment Total capital assets being depreciated Less accumulated depreciation: for: Buildings Equipment Vehicles and motorized equipment Total accumulated depreciation $ 20,062 $1,850,917 20,062 208,896 343,554 477,552 98,635 499,196 597,831 1.030.002 11,062,159 120,892 75,419 276.225 472.536 125,295 70,006 343,554 477,552 891,112 138,890 3,474,504 1,152,930 1.673,104 6.300,539 4.761.620 Total capital assets being depreciated, net 4.775,215 Governmental activity capital assets, net 125,295 $158,952 $6.612.537 Depreciation expense was charged to unctions/programs of the Town as follows: General government Public safety Transportation Environmental protection Cultural and recreational Total depreciation expense $52,086 241,913 99,096 20,107 59,334 $472.536 35 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the] Fiscal Year Ended June 30, 2019 Beginning Balances 322,980 $ 4,179.994 4,502,974 39,020,383 1,535,339 814,105 41,369,828 23,074,426 1,318,632 670,217 25.063,275 16.306.553 Ending 322,980 527.686 850,666 Increases 1,404.831 1.404.831 5,057,139 245,337 49,529 5,352,005 809,383 53,528 53,797 916,708 4,435,297 Decreases Balances Utility Fund: Capital assets not being depreciated: Land Construction inj progress Total capital assets not being depreciated Capital assets being depreciated: Plant and distribution systems Equipment Vehicles Total capital assets being depreciated Less accumulated depreciation for: Plant and distribution: systems Equipment Vehicles Total accumulated depreciation Total capital assets being depreciated, net Utility fund capital assets, net $ 5,057,139 5,057,139 298,380 43,779,142 291,085 1,489,591 211,688 801,154 45,920,679 202,898 23,680,911 282,961 1,089,199 216,382 702.241 25,277,742 98.913 20,642,937 651,946 507,632 $20.809,528 $5,840.128 $5.156.053 $21,493,602 Discretely Presented Component Unit Activity for the. ABC Board for the year ended June 30, 2019, was as follows: Beginning $37,935 156,914 3,083 197,932 79,528 2,964 107,851 $90.081 Ending Balances $_41,936 156,914 3.083 201,933 30,641 89,989 3.016 123.646 $78,287 Balances Increases Decreases Capital assets being depreciated: Furniture and equipment Leasehold improvements Computers Total capital assets being depreciated Less accumulated depreciation for: Furniture and equipment Leasehold improvements Computers Total accumulated depreciation ABC capital assets, net $ 4,001 $4.001 10,461 52 $15.795 $ 25,359 $5,282 $ 36 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 B. Liabilities 1. Payables Payables at the government-wide level at. June 30, 2019 were as follows: Vendors $102,457 426 $102.883 $22.226 $22,226 Governmental activities: General Other Total - governmental activities Business-type activities: Water and Sewer Total business-type activities 2. Pension Plan and Post-employment Obligations a. Local Government Employees' Retirement System Plan. Description. The Town ofValdese is aj participating employer in the statewide) Local Governmental: Employees' Retirement System (LGERS), a cost-sharing, multiple-employer defined benefit pension plan administered by the State ofNorth Carolina. LGERS membership is comprised of general employees and local law enforcement officers (LEOs) of! participating local governmental entities. Article 3 ofG.S. Chapter 128 assigns the authority to establish and amend benefit provisions to1 the North Carolina General Assembly. Management oft the plan is vested in the LGERS Board of Trustees, which consists of 13 members -1 nine appointed by the Governor, one appointed by the State Senate, and one appointed by the Statel House of Representatives and the State Treasurer and State Superintendent, who serve: as ex-officio members. The] Local Governmental Employees' Retirement System is included in the Comprehensive, Annual Financial Report (CAFR) for the State ofNorth Carolina. The State'sCAFR includes financial statements and required supplementary information for LGERS. That report may be obtained by writing to the Office ofthe State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410, by calling (919)981-5454, or at www.0sc.nc.gov. Benefits Provided. LGERS provides retirement and survivor benefits. Retirement benefits are determined as 1.85% of the member's: average final compensation times the member's years ofcreditable service. A member's average final compensation is calculated as the average ofar member's four highest consecutive years of compensation. Plan members are eligible to retire with full retirement benefits at age 65 with five years of creditable service, at age 60 with 25; years of creditable service, or at any age with 30; years of creditable service. Plan members are eligible to retire with partial retirement benefits at age 50 with 20 years ofc creditable service or at age 60 with five years of creditable service (age 55 for 37 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 firefighters). Survivor benefits are available to eligible beneficiaries of members who die while in active service or within 180 days of their last day ofs service and who have either completed 20 years of creditable service regardless ofa age (15 years of creditable service: for firefighters and rescue squad members who are killed in the line of duty) or have completed five years of service and have reached age 60. Eligible beneficiaries may elect to receive a monthly Survivor's Alternate Benefit for life or a return of the member's contributions. The plan does not provide for automatic post-retirement benefit increases. Increases are contingent upon actuarial gains of LGERS plan members who are LEOS are eligible to retire with full retirement benefits at age 55 with five years of creditable service as an officer or at any age with 30; years of creditable service. LEO plan members are eligible to retire with partial retirement benefits at age 50 with 15 years of creditable service as an officer. Survivor benefits are available to eligible beneficiaries ofLEO members who die while in active service or within 180 days oftheir last day ofs service, and who also have either completed 20: years of creditable service regardless ofa age, or have completed 15 years ofs service as al LEO and have reached age 50, or have completed five years of creditable service as al LEO and have reached age 55, or have completed 15 years ofc creditable service as a LEO ifkilled in the line of duty. Eligible beneficiaries may elect to receive a monthly Survivor's Contributions. Contribution provisions are established by General Statute 128-30 and may be amended only by thel North Carolina General Assembly, The Town ofValdese's employees are required to contribute 6% oft their compensation. Employer contributions are actuarially determined and set annually by thel LGERS Board of'Trustees. The Town of Valdese's contractually required contribution rate: for the year ended. June 30, 2019 was 8.50% of compensation for law enforcement officers and 7.84% for general employees and firefighters, actuarially determined as an amount that, when combined with employee contributions, is expected to finance the costs ofbenefits earned by employees during the year. Contributions to the pension plan from the Town of Valdese were $237,585 for the year ended. June 30, 2019. Refunds ofContributions. Town employees who have terminated service as a contributing member ofLGERS, may file an application for ai refund of their contributions. By State law, refunds to members with at least five years ofservice include 4% interest. State law requires a 60 day waiting period after service termination before the refund may bej paid. The acceptance ofa refund payment cancels the individual's right to employer contributions or any other benefit Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred AtJune 30, 2019, the Town reported al liability of $1,073,722 fori its proportionate share ofthe net pension liability. Thei net pension liability was measured as ofJ June 30, 2018. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as ofDecember 31,2 2017. The total pension liability was then rolled: forward to the measurement date ofJ June 30, 2018 utilizing update procedures incorporating the actuarial assumptions. The Town's proportion of the net pension liability was based on a projection oft the Town's long-term share ofi future payroll covered by thej pension plan, relative to the projected future payroll covered by the pension plan ofa all participating LGERS employers, actuarially determined. At. June: 30, 2018, the Town's proportion was 0.04526% which was a decrease of the plan. Alternate Benefit for life or ai return oft the member's contributions. provided by LGERS. Inflows of Resources Related to. Pensions 38 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 0.00027% from its proportion measured as of. June 30, 2017. resources related to pensions from the following sources: For the year ended June 30, 2019, the' Town recognized pension expense of $295,862. At June 30, 2019, the' Town reported deferred outflows of resources and deferred inflows of Deferred Outflows of Resources $165,650 284,924 147,390 3,586 237,585 $839,135 Deferred Inflows of Resources $5,558 Differences between expected and actual experience Net difference between projected and actual earnings on Changes inj proportion, and differences between, the Town contributions and proportionate share of Town contributions subsequent to the measurement date Change in assumptions pension plan investments contributions Total 16,402 $21.960 $237,585 reported as deferred outflows of resources related to pensions resulting from Town contributions subsequent to the measurement date will be recognized as an increase oft the net pension liability in the year ending June 30, 2020. Other amounts reported as deferred inflows ofr resources related to pensions willl be recognized inj pension expense as follows: Year ending June 30: 2020 2021 2022 2023 $282,382 184,252 31,108 81,849 $579,591 39 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 Actuarial. Assumptions. The total pension liability in the December 31, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return 3.0 percent productivity factor including inflation 3.50 to 8.10 percent, including inflation and 7.00 percent, net of pension plan investment expense, The plan currently uses mortality tables that vary by age, gender, employee group (i.e., general, law enforcement officer) and health status (.e., disabled and healthy). The current mortality rates are based onj published tables and based on studies that cover significant portions of the U.S. population. The healthy mortality rates also contain aj provision to reflect future mortality improvements. The actuarial assumptions used in the December 31,2 2016 valuation were based on the results ofan actuarial experience study for the period January 1, 2010 through December 31, 2014. Future ad hoc COLA amounts are not considered to be substantively automatic and are therefore not The projected long-term investment returns and inflation assumptions are developed through review of current and historical capital markets data, sell-side investment research, consultant whitepapers, and historical performance ofi investment strategies. Fixed income return projections reflect current yields across the U.S. Treasury yield curve and market expectations of forward yields projected and interpolated for multiple tenors and over multiple year horizons. Global public equity return projections are established through analysis of the equity risk premium and the fixed income return projections. Other asset categories and strategies' return projections reflect the foregoing and historical data analysis. These projections 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 and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class as of. June 30, 2017 are summarized in the following table: included in the measurement. 40 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30,2019 Asset Class Fixed Income Global Equity Real Estate Alternatives Credit Inflation Protection Total Target Allocation 29.0% 42.0% 8.0% 8.0% 7.0% 6.0% 100% Long-Term Expected Real Rate of] Return 1.4% 5.3% 4.3% 8.9% 6.0% 4.0% The information above is based on 30 year expectations developed with the consulting actuary for the 2016 asset, liability and investment policy study for the North Carolina Retirement Systems, including LGERS. The long-term nominal rates ofreturn underlying the real rates of return are arithmetic annualized figures. The real rates of return are calculated from nominal rates by multiplicatively subtracting al long-term inflation assumption of3.00%. All rates of return and inflation are annualized. Discount rate, The discount rate used to measure the total pension liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will bei made at the current contribution rate and that contributions from employers will be made ats statutorily required rates, actuarially determined. Based on these assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of the current plan members. Therefore, the long-term expected rate ofreturn on pension plan investments was applied to all periods of projected benefit payments to determine thet total Sensitivity ofthe Town' 's proportionate share of the net pension asset to changes in the discount rate. The following presents the Town's proportionate share oft the net pension asset calculated using the discount rate of7.00 percent, as well as what the Town's proportionate share oft the net pension asset or net pension liability would bei ifit were calculated using a discount rate that is I-percentage-point lower (6.00 percent) or l-percentage-point higher (8.00 percent) than the current rate: pension liability. 1% Decrease (6.00%) Discount Rate (7.00%) 1%1 Increase (8.00%) Town's! proportionate share of the net pension liability (asset) $2.579,173 $1,073.722 $(184,257) Pension, planfiduciary net position. Detailed information about the pension plan's fiduciary net position is available in the separately issued Comprehensive Annual Financial Report (CAFR) for the State ofNorth Carolina. 41 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 b. Law Enforcement Officers' Special Separation Allowance 1. Plan Description Plan Description - The' Town administers aj public employee retirement system (the "Separation Allowance"), as single-employer defined benefit pension plan that provides retirement benefits to the Town's qualified sworn law enforcement officers under the age of62 who have completed atl least 30 years of creditable service or have attained 55 years of age and have completed five or more years of creditable service. The Separation Allowance is equal to. .85% oft the annual equivalent ofthe base rate of compensation most recently applicable to the officer for each year of creditable service. The retirement benefits are: not subject to any increases in salary or retirement allowances that may by authorized by the General Assembly. Article 12D ofG.S. Chapter 143 assigns the authority to establish and amend benefit provisions to the North Carolina General All full-time Town law enforcement officers are covered by the Separation Allowance. At December 31, 2017, the Separation Allowance's membership consisted of: Assembly. Inactive members currently receiving benefits Active plan members Total 12 12 2. Summary of Significant Accounting Policies Basis of Accounting The Town has chosen to: fund the Separation Allowance on aj pay as you go basis. Pension expenditures are made from the General Fund, which is maintained on the modified accrual basis of accounting. Benefits are: recognized when due and The Separation Allowance has no assets accumulated in at trust that meet the following payable in accordance with the terms oft the plan. criteria which we outlined in GASB Statements 73: 3. Actuarial Assumptions The entry age actuarial cost method was used in thel December 31,2017 valuation. The total pension liability in thel December 31, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Discount rate 2.5 percent productivity factor 3.64 percent 3.50to7.35 percent, including inflation and 42 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 The discount: rate is based on the yield ofthe S&P Municipal Bond 20 Year High Grade Mortality rates are based on the RP-2015 Mortality" Tables with adjustments for males and Rate Index as ofDecember 31, 2017. females. Contributions The Town is required by Article 12D ofG.S. Chapter 143 to provide these retirement benefits and has chosen to: fund the amounts necessary to cover the benefits earned on a pay: as you go basis through appropriations made in the General Fund operating budget. There were no contributions made by employees. The Town's obligation to contribute to this plan is established, and may be amended by, the North Carolina General Assembly. Administration costs of the Separation Allowance are financed through investment earnings. The Town paid $-0- as benefits came due: for the reporting period. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and At. June 30, 2019, the' Town: reported at total pension liability of $188,730. The total pension liability was measured as of December 31, 2018 based on al December: 31, 2017 actuarial valuation. The total pension liability was then rolled forward to the measurement date ofl December 31,2018 utilizing update procedures incorporating the actuarial assumptions. For the year ended. June 30, 2019, the' Town recognized pension expense of Deferred Inflows of] Resources Related to Pensions $16,197. Deferred Outflows Deferred Inflows of] Resources $3,717 9,556 $13.273 ofResources $14,590 11,654 $26,244 Differences between expected and actual experience Town benefit payments and plan administrative expense made subsequent to the measurement date Changes of assumptions Total 43 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For thel Fiscal Year Ended June 30, 2019 Amounts reported as deferred inflows oft resources related to pensions will be recognized in the pension expense as follows: Year ended June: 30: 2020 2021 2022 2023 2024 Thereafter $(2,597) (2,597) (2,597) (2,597) (1,862) (721) Sensitivity of the Town' ' total pension liability to changes in the discount rate. The following presents the' Town's total pension liability calculated using the discount rate of3.64 percent, as well as what the Town's total pension liability would be ifit were calculated using a discount rate that is l-percentage-point lower (2.64 percent) or I-percentage-point higher (4.64 percent) than the current rate: 1% Decrease Discount Rate 1% Increase (4.64%) $169.862 (2.64%) $209.448 (3.64%) $188,730 Total pension liability Law Enforcement Officers' Special Separation Allowance Beginning balance Service cost Interest on the total pension liability Changes ofbenefit terms $175,301 13,254 5,540 4,344 (9,709) $188.730 Differences between expected and actual experience in the measurement oftotal pension liability Changes ofa assumptions or other inputs Ending balance of the total pension liability Benefit payments Other changes 44 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 The plan currently uses mortality tables that vary by age and health status (i.e., disabled and healthy). The current mortality rates are based on published tables and based on studies that cover significant portions ofthe U. S. population. The healthy mortality rates also contain aj provision to The actuarial assumptions used in the December 31,2018 valuation were based on the results of an actuarial experience study for the period January 1,2 2010 through December31,2014. Total Expense, Liabilities, and Deferred Outflows and Inflows of Resources Related to Following is information related to thej proportionate share and pension expense: for all pension reflect future mortality improvements. Pensions plans: Pension expense Pension liability LGERS $295,862 1,073,722 0.04526% 165,650 284,924 147,390 3,586 237,585 LEOSSA $16,197 188,730 n/a 3,717 9,556 Total $312,059 1,262,452 Proportionate share oft ther net pension liability Deferred outflows ofresources Differences between expected and actual experience Changes of assumptions Net differencel between projected and actual earnings on plan investments Changes inj proportion, and differences between, contributions and proportionate share of contributions Benefit payments and administrative costs paid subsequent tot the measurement date Deferred inflows of resources Differences between expected and actual experience Changes of assumptions Net differencel between projected and actual earnings on plan investments Changes inj proportion, and differences between, contributions and proportionate share of contributions 169,367 294,480 147,390 3,586 237,585 20,148 11,654 5,558 14,590 11,654 16,402 16,402 45 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For thel Fiscal Year Ended June 30, 2019 Supplemental Retirement Income Plan for Law Enforcement Officers Plan Description - The Town contributes to the Supplemental Retirement Income Plan (thel Plan), a defined contribution pension plan administered by thel Department oft the State Treasurer and a Board ofTrustees. The Plan provides retirement benefits to law enforcement officers employed by the Town, Article 50 ofG.S. Chapter 135 assigns the authority to establish and amend benefit provisions to the North Carolina General Assembly. The Supplemental Retirement Income Plan for Law Enforcement Officers is included int the Comprehensive Annual Financial Report (CAFR) for the State ofl North Carolina. The State's CAFR includes the pension trust fund financial statements for the Internal Revenue Code Section 401(k) plan thati includes the Supplemental Retirement Income Plani for) Law Enforcement Officers. That report may be obtained by writing to the Office ofthe State Controller, 1410 Mail Service Center, Raleigh, Funding Policy Article 12E ofG.S. Chapter 143 requires the Town to contribute each month an amount equal to five percent ofeach officer's salary, and all amounts contributed are vested immediately. Also, thel law enforcement officers may make voluntary contributions tot the plan. Contributions for the year ended June 30, 2019 were $24,454, which consisted of$18,015 from North Carolina 27699-1410, or by calling (919)981-5454. the' Town and $6,439 from the law enforcement officers. d. Other Post-employment Benefits Healthcare Benefits Plan Description - Under the terms ofa Town: resolution, the Town administers a single-employer defined benefit Healthcare Benefits Plan (thel HCB Plan). This plan provides post-employment healthcare benefits to retirees of the Town, provided they participate in thel North Carolina Local Governmental Employees' Retirement System (the System) and have at least twenty-five years of creditable service with the Town and were hired prior to. July 1,2016. The Town pays the full cost ofo coverage fort these benefits through private insurers. Also, the Town retirees can purchase coverage for their dependents at the Town's group retiree rates. The Town Council may amend Membership oft thel HCB Plan consisted oft the following at June 30, 2017, the date ofthel latest the benefit provisions. A separate report was noti issued for the plan. actuarial valuation: Inactive members or beneticiaries currently receiving benefits Inactive members entitled to, but not yet receiving, benefits 3 0 74 77 Active plan members Total 46 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 Total OPEB Liability The Town's total OPEB liability of $980,556 was measured as of] June 30, 2018 and was Actuarial assumptions and other inputs. The total OPEB liability in the. June 30, 2017 actuarial valuation was determined using thei following actuarial assumptions, and other inputs, applied to determined by an actuarial valuation as ofthat date. allj periods inçluded in the measurement unless otherwise specified: Inflation Salary increases Discount rate Healthcare cost trend rates 2.5 percent 3.89 percent 3.5 to7.75 percent, average, including inflation Pre-Medicare 7.5% for 2017, decreasing to an ultimate rate of 5%1 by 2023 The discount rate is based on the yield of the Bond Buyer 20 Year General Obligation! Bond Index as oft the measurement date. Changes in the' Total OPEB Liability Balance atJuly 1, 2017 Changes for the year $945.586 53,146 33,291 2,074 (32,452) (21,089) 34.970 $980,556 Service Cost Interest Changes ofbenefit terms Differences between expected and actual experience Changes in assumptions or other inputs Benefit payments Net changes Balance at June: 30, 2017 Changes in assumptions and other inputs reflect a change in the discount rate from 3.56%1 to Mortality rates were based on thel RP-2014 Total Data Set for Healthy Annuitants Mortality Table. The actuarial assumptions used in the. June 30, 2017 valuation were based on the results ofa an actuarial experience study for the period January 20101 through December 2014. Sensitivity of the total OPEB liability to changes in the discount rate. The following presents the total OPEB liability oft the' Town, as well as what the Town's total OPEB liability would bei ifit were calculated using a discount rate that is l-percentage-point lower (2.89 percent) or 1- percentagepom-ngner (4.89 percent) than the current discount rate: 3.89%. 1% Decrease (2.89%) $1,082,527 Discount Rate (3.89%) $980.556 1% Increase (4.89%) $889.059 Total OPEB liability 47 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For thel Fiscal Year Ended June 30, 2019 Sensitivity ofthe total OPEB liability to changes in the healthcare cost trend rates. The following presents thet total OPEB liability ofthe Town, as well as what the Town's total OPEB liability would be ifit were calculated using healthcare cost trend rates that are -percentage-point lower or l-percentage-point higher than the current healthcare cost trend rates: 1%D Decrease $846.097 Current $980.556 1%] Increase $1.140.504 Total OPEB liability Related to OPEB OPEB Expense and Deferred Outflows of] Resources and Deferred Inflows of] Resources For the year ended June 30, 2019, the Town recognized OPEB expense of $77,469. At June 30, 2019, the Town: reported deferred outflows ofresources and deferred inflows oft resources related to OPEB from thei following sources: Deferred Outflows Deferred Inflows ofResources $ 4,625 $4,625 ofResources $ 70,603 $70.603 Differences between expected and actual experience Changes of assumptions Total Amounts reported as deferredi inflows ofresources related toj pensions willl be recognized in the pension expense as follows: Year ended June: 30: 2020 2021 2022 2023 2024 Thereafter $(8,968) (8,968) (8,968) (8,968) (8,968) (21,138) 48 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 Other Employee Benefits The Town has elected to provide death benefits to employees through thel Death Benefit Plan for members of the Local Governmental Employees' Retirement System (the Death Benefit Plan), a multiple-employer, State-administered, cost-sharing plan funded on a one-year term cost basis. The beneficiaries oft those employees who die in active service after one year ofc contributing membership in the System, or who die within 180 days after retirement or termination ofservice and have atl least one year of contributing membership service in the System at the time of death, are eligible for death benefits. Lump sum death benefit payments tol beneficiaries are equal to the employee's 12 highest months salaryi in ai row during the 24 months prior to the employee's death, but the benefit may not exceed $50,000, or be less than $25,000. Because all death benefit payments are: made from the Death Benefit Plan, and not by the' Town, the Town does not determine the number of eligible participants. The Town has no liability beyond the payment of monthly contributions. The contributions to1 thel Death Benefit Plan cannot be separated between the post-employment benefit amount and the other benefit amount. Contributions are determined as aj percentage ofi monthly payroll based upon rates established annually by the State. Separate rates are set for employees not engaged in law enforcement and for law enforcement officers. The Town considers these contributions to be immaterial. 3. Deferred Outflows and Inflows of Resources Deferred outflows ofresources at year-end is comprised oft the following: Contribution to pension plan in current fiscal year Difference between expected and actual experience Net difference between projected and actual earnings on Changes inj proportion, and differences between, employer contributions and proportionate share $237,585 294,480 173,992 147,390 3,586 $857.033 Changes of assumptions pension plan investments ofcontributions Total Deferred inflows of resources at year-end is comprised of the following: Taxes receivable, less penalties (General Fund) Differences between expected and actual experience Changes inj proportion, and differences between, employer contributions and proportionate share of $212,530 20,148 82,257 16,402 $331.337 Changes ofa assumptions contributions Total 49 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 4. 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; injuries to employees; and natural disasters. The' Town participates in three self-funded risk-financing pools administered by thel North Carolina League ofMunicipalities. Through these pools, the' Town obtains general liability and autol liability coverage of$1 million per occurrence, property coverage up to the total insurance values of the property policy, Workers' Compensation coverage up to statutory limits, and employee health coverage. The liability and property exposures are reinsured through commercial carriers for claims in excess ofretentions as selected by thel Board ofTrustees each year. Excess insurance coverage is purchased by the Board of Trustees toj protect against large Worker's Compensation claims that exceed certain dollar cost levels. Medical stop loss insurance is purchased by the Board ofTrustees to protect against large medical claims that exceed certain dollar cost levels. Specific information on the limits oft the reinsurance, excess and stop loss policies purchased by thel Board ofTrustees can be obtained by contacting the Risk Management Services Department oft the N. C. League of Municipalities. Thej pools are audited annually by certified public accountants, and the audited financial statements are available to the Town The Town carries commercial coverage for all other risks ofl loss. There have been no significant reductions ini insurance coverage in the prior year, and settled claims have not exceeded coverage in upon request. any of the past three fiscal years. The Town does not carry any additional insurance for flooding. Ina accordance with G.S. 159-29, the Town's employees that have access to $100 or more, at any given time, ofthe Town's funds are performance bonded through a commercial surety bond. The finance officer and tax collector are each individually bonded for $50,000 and $10,000, respectively. The remaining employees that have access to: funds are bonded under aj policy with thei following coverage: $10,000 per occurrençe fori forgery or alteration, $5,000 per occurrence for theft inside the premises, and $5,000 per occurrence for outside. Claims, Judgments and Contingent Liabilities At] June 30, 2019, the Town was a defendant to various lawsuits. In the opinion oft the Town's management and the Town's attorney, the ultimate effect of these legal matters will not! havea materially adverse effect on the Town's financial position. 50 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June 30, 2019 6. Long-Term Obligations a. General Obligation Indebtedness The Town's general obligations debt serviced by the governmental funds was. issued for the acquisition ofe equipment and Town Hall. Those general obligations debts issued to finance the construction of facilities utilized in the operations of the water and sewer system and which are being retired by its resources are reported as long-term debti in the Utility Fund, All general obligation debt is collateralized by the full faith, credit, and taxing power oft the Town. Int the event ofa default, the' Town agrees to pay the purchaser, on demand, interest on any and all amounts due and owing by the Town under the related agreements. Principal and interest The' Town'si indebtedness at June 30, 2019 is comprised oft the following individual issues: requirements are appropriated when due. Serviced by the General Fund: $350,000 USDA direct placement loan with annual payments of $26,908, including interest at 4.50%, final payment duel March 2024 $256,899 bank direct borrowing note payable with annual payments of$53,743, including interest at 2.30%, final payment duel February 2021 $469,000 USDA direct placement. loan with annual payments of $19,483, including interest at 2.75%, final payment due September 2058 $1,826,500 USDA direct placement loan with annual payments of $88,878, including interest at 3.75%, final payment duel November 2051 $473,274 bank direct borrowing note payable with annual payments of $121,856, including interest at 2.00%, final payment due September 2020 $850,000 USDA direct placement loan with annual payments of$ $52,761, including interest at 2.75%, final payment duel November 2038 1 123,339 103,888 462,415 1,639,854 119,466 820,614 51 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 Serviced by the Utility Fund: $379,000 direct placement revolving loan with aj principal payment of $18,950 due on May 1, with interest, and an interest only payment due November 1; $3,005,661 direct placement revolving loan with aj principal payment of$150,283 due on May 1, with interest, and an interest only payment due November 1; $1,280,000 direct placement bond payable with annual principal payments of $14,000 to $56,000 due on. June 1, with interest at 4.250%, final payment $230,913 direct placement bond payable with annual principal payments of $11,546 due on May 1, with interest, and an interest only payment due November 1; interest at 2.00%, final payment due May 2036 $501,000 direct borrowing note payable with annual payments of $36,855. Includes interest at 3.997%, due. January 29, with ai final payment due interest at 2.60%, final payment due May 2020 interest at 2.55%, final payment due May 2021 $ . 18,950 300,566 1,101,000 196,276 274,064 $5,160.432 due June 2048 January 2028 Total At June 30, 2019 the Town of Valdese had a legal debt margin of$ $25,523,296. Annual debt service requirements to maturity for long-term obligations are as follows: Year Ending June 30, 2020 2021 2022 2023 2024 2025-2029 2030-2034 2035-2039 2040-2044 2045-2049 2050-2054 2055-2058 Total Governmental Activities Principal $ 256,406 141,139 91,736 94,982 98,347 407,931 469,360 579,271 369,665 440,849 247,306 72.584 Business-type Activities Principal Interest 209,765 63,389 61,558 57,356 63,678 55,071 65,842 52,698 327,516 224,714 226,728 173,733 230,090 129,596 255,000 80,964 224,000 23,800 Interest 100,633 96,294 93,049 89,683 404,909 336,242 255,946 172,141 100,926 26,151 5,042 107,223 $ 226,679 $ 73,662 $3.269.576 $1,788.239 $1,890,856 $934.983 52 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 b. Changesi in Long-Term Liabilities Current Portion of Balance $170,819 85,586 Balance July1,2018 482,256 $ 2,659,896 816,736 507,768 175,301 146,082 $4.788.039 Balance June 30,2019 223,354 3,046,222 846,111 783,817 188,730 123,820 $5.212.054 $1,297,276 274,064 134,445 289,905 319,516 59,958 $2.375.164 Increases Decreases $258,902 82,674 22.262 $363,838 $31,819 24,632 169,232 4,433 $230,116 Governmental activities: Direct borrowing general obligation debt Direct placement general obligation debt Total OPEB liability Net pension liability (LGERS) Total pension liability (LEO) Compensated. absences Governmental activity long-term liabilities Business-type activities: Direct placement general obligation debt Direct borrowing note! payable Total OPEB liability Net pension liability (LGERS) Direct placement revolving loans Compensated absences Business-type activity long-term liabilities 469,000 29,375 276,049 13,429 787,853 $256.405 $31,546 25,900 169,233 $226,679 $1,329,095 $ 298,696 128,850 187,804 488,748 64.391 $2.497.584 5,595 102,101 107,696 Compensated absences typically have been liquidated in the General Fund and are accounted for onaLIFO basis assuming that employees are taking leave time as iti is earned. Interlocal Debt Agreement During the year ended. June 30, 2006, the Town entered into a interlocal agreement with five other local governments relating to the debt of the Burke Partnership forl Economic Development, Inc. As part of the agreement, the local governments are required to set aside, reserve, budget and make available to thel Partnership individual sums, which on a combined basis, would be sufficient to pay the scheduled principle and interest payment oft the debt. Payments of $81,829 by Burke Partnership for Economic Development, Inc. are: required quarterly until May 2020. Outstanding debt oft the Partnership was $300,989 at. June 30, 2019. 53 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the Fiscal Year Ended June: 30,2019 Discretely Presented Component Unit Debt obligation for the ABC Board for the year ended. June 30, 2019 was as follows: First Citizens Bank Line ofcredit payable to bank with total availability of $49,000. Bears interest at prime rate, plus 4%, with a minimum rate of8.0%. The total amount outstanding on this line ofcredit at On November 4, 2013, the Board obtained al loan from the Town ofValdese. The note provides for an initial disbursement to thel Board of $72,775 on November 15, 2013. Upon approval from the Town ofValdese Town Council, additional disbursements from the Town June 30, 2019 was $-0-. Secured by all personal property. The Town ofValdese to the ABC Board willl be as: follows: $30,000- I November 15,2014 $30,000 -1 November 15, 2015 $30,000 - November 15, 2016 4.0% with interest to be paid annually. The total disbursements under this note were $162,775. The note bears interest at a rate of Debt Summary Total debt Less: Current maturities Total long-term debt $147,775 42,000 $105.775 Scheduled principal payments on long-term debt are as follows: Years ending June 30, 2020 2021 2022 Total $ 42,000 48,000 57.775 $147.775 Interest expense for the year ended. June 30, 2019 was $6,711. 54 TOWN OF VALDESE, NORTH CAROLINA Notes to thel Financial Statements For the] Fiscal Year Ended June 30, 2019 C. Interfund Balances and Activities Balances due to/from other funds at. June 30, 2019 consist oft thei following: Due to the General Fund from the Alba Waldensian Building Demo Fund Transfers to/from other: funds at. June 30, 2019 consist oft the following: From the Facade Grant Fund to the General Fund - return ofTown contributions From the General Fund to the CDBG Scattered Housing Fund - to fund project From the Utility Fund to the General Fund - debt service From the Lake Rhodhiss Capital Project Fund to the General Fund return investments From the Capital Project Fund to the General Fund to close out fund due to timing of bills paid Transfers to/from Other Funds $17.451 $ 17,858 25,000 387,000 728,845 591,087 $1.749,790 Total D. On-BehairPayments forl Fringe Benefits and Salaries The Town has recognized, as a revenue and an expenditure, on-behalf! payments for fringe benefits and salaries of $3,759 for the salary supplement and: stipend benefits paid to eligible firemen by the local board of trustees oft thel Firemen'sl Relief Fund during the fiscal year ended June 30, 2019. Under State law the local board oftrustees for thel Fund receives an amount each year, which thel Board may use at its own discretion for eligible firemen or their departments. E. Fund Balance Thei following schedule provides management and citizens with information on the portion of General Fund Balance that is available for appropriations: Total fund balance General Fund Less: Inventories Prepaids Stabilization by State Statute Encumbrances USDA Reserve Streets-Powell Bill Remaining Fund Balance $4,164,568 80,835 32,445 680,430 90,932 117,404 57.421 $3.105.101 55 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 F. Net Investment in Capital Assets Governmental Business-type Capital assets Less long-term debt Add: unexpended debt proceeds Net investment in capital asset $6,612,537 3,269,576 $3.342,961 $21,493,602 1,890,856 $19.602.746 IV. Joint Venture The' Town, in conjunction with five other local governments, established thel Burke Partnership for Economic Development, Inc. The Town appoints two members of the 24 member board. The Town has an ongoing financial responsibility for the joint venture because thel Partnership's continued existence depends on the participating governments' continued funding. None ofthe participating governments have any equity interest in the Partnership, sO no equity interest has been reflected in the financial statements at. June 30, 2019. In accordance with thei intergovermmental agreement between the participating governments, the Town appropriated $46,250 to thel Partnership to supplement its activities. The Town also signed ai interlocal agreement relating to long-term debt ofthe Partnership (see Note III.B.6). Complete financial statements for thel Partnership can be obtained from thel Partnership'soffice in Morganton, North Carolina. Jointly Governed Organization Western Piedmont Council of Governments V. The Western Piedmont Council of Governments (WPCOG) is at regional planning organization. It consists oftwenty-four municipalities and four counties within western North Carolina. The WPCOG's governing board is comprised of one elected official from each oft these local governments and seven at- large citizen members. Each local government has one vote. The Town paid membership dues of $2,683 during the fiscal year ended. June 30, 2019. VI. Related Organization The five-member board of the Town ofValdese Housing Authority is appointed by the mayor oft the Town of Valdese. The Town is accountable for the Housing Authority because it appoints the governing board; however, the' Town is not financially accountable fort thel Housing Authority. The Town of Valdese is also disclosed as ai related organization int the notes to the financial statements for the Town of Valdese Housing Authority. 56 TOWN OF VALDESE, NORTH CAROLINA Notes to the Financial Statements For the Fiscal Year Ended June 30, 2019 VII. Summary Disclosure of Significant Contingencies Federal and State. Assisted Programs The Town has received proceeds from several federal and State grants. Periodic audits oft these grants are required, and certain costs may be questioned as not being appropriate expenditures under the grant agreements. Such audits could result in the refund of grant monies to the grantor agencies. Management believes that any required refunds will be immaterial. Noj provision has been made in the accompanying financial statements for the refund of grant moneys. Other The Town is subject to the authority of various federal and State regulatory agencies. Noj provision has been made in these financial statements for any sanctions which could be imposed ift the Town were found to be ini noncompliance or violation of regulations promulgated by these agencies. VIII. Significant Utility Customers The Town ofValdese has two utility customers whose sales represent approximately 19% ofthe total Utility Sales to all customers for fiscal year 2019. Loss oft these customers could have as significant impact on the Town's Utility Fund. Subsequent Event IX. Management has evaluated subsequent events through November 7, 2019, the date on which the financial statements were available to be issued. During the period from the end oft the year, and through this date, no circumstances occurred that require recognition or disclosure in these financial statements, X. Changes in Accounting Principle The' Town implemented Governmental Accounting Standards Board (GASB) No. Statement 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, ini the fiscal year ending June 30, 2019. The implementation oft the statement required the' Town to make changes to note disclosures related to debt. 57 Required Supplemental Financial Data TOWN OF VALDESE, NORTH CAROLINA Schedule 1-1 Schedule of Changes in the' Total OPEB Liability and Related Ratios Last Two Fiscal Years 2019 53,146 $ 57,631 33,291 2,074 (32,452) (53,731) (21,089) (21,248) 34,970 945,586 931,631 980,556 $945,586 $2,711,425 $2,711,425 36.16% 2018 27,725 3,578 13,955 Total OPEB Liability Service cost Interest Changes in benefit terms Difference between expected and actuarial experience Changes in assumptions and other inputs Benefit payments Net change in total OPEB liability Total OPEBI liability, beginning Total OPEBI liability, ending Covered payroll Notes to Schedule Total OPEBI liability as aj percentage of covered payroll 34.87% Changes of assumptions: Changes of assumptions and other inputs reflect the effects of changes in the discount rate of each] period. The following are the discount rates used in each period: Fiscal year Rate 2019 3.89% 58 9 TOWN OF VALDESE, NORTH CAROLINA Schedule of Changes in Total Pension Liability Law Enforcement Officers' Special Seperation Allowance Schedule 1-4 Last Three Fiscal Years 2019 13,254 5,540 4,344 (9,709) 2018 11,128 6,364 (20,472) 13,410 2017 13,364 5,421 (5,773) Beginning balance Service cost Interest Changes in benefit terms Differencel between expected and actuarial experience Changes in assumptions and other inputs Benefit payments Other changes 175,301 $ 164,871 $ 151,859 Ending balance ofthet total pension liability 188,730 $ 175,301 $ 164,871 The amounts presented for each fiscal year were determined as of thej prior fiscal year ending December 31. 61 TOWN OF VALDESE, NORTH CAROLINA Schedule ofTotal Pension Liability as al Percentage of Covered Payroll Law Enforcement Officers' Special Seperation Allowance Schedule 1-5 LastThree Fiscal Years 2019 502,527 37.58% 2018 479,954 36.52% 2017 534,204 30.86% Total pension liability Covered payroll Notes to schedules: 188,730 $ 175,301 $ 164,871 Total pension liability as aj percentage of covered payroll The" Town ofValdese! has no assets accumulated! in at trust that meet the criteria inj paragraph h4ofGASB: Statement 73 toj pay related benefits. 62 Supplementary Statements TOWN OF VALDESE, NORTH CAROLINA Schedule: 2 Pagelof11 General Fund Budget and Actual For the Year Ended June 30,2019 Statement ofF Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Revenues: Ad valorem taxes: Current year Prior years Penalties andi interest Discounts Total ad valorem taxes Other taxes and licenses: Unrestricted local option sales tax Cable' TVi franchise tax Total other taxes and licenses Unrestricted intergovernmental revenues: Payments in lieu oftaxes- Valdesel Housing Authority Franchise tax Alcohol/beverage tax Occupancy taxes Sales taxi refunds $1,979,627 $1,992,141 $ 12,514 77,336 4,500 (17,000) 2,044,463 1,119,742 52,000 1,171,742 175,960 44,199 (21,473) 2,190,827 1,151,283 12,494 1,163,776 98,624 39,699 (4,473) 146,364 31,541 (39,506) (7,966) 20,000 405,000 21,000 60,000 65,070 571,070 18,331 442,942 19,292 67,020 65,072 612,656 (1,669) 37,942 (1,708) 7,020 2 41,586 cont. Total unrestricted intergovernmental revenues 63 TOWN OF VALDESE, NORTH CAROLINA Schedule: 2 Page2of11 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Revenues (Continued): Restricted intergovernmental revenues: Grant "State Street- Aid" allocation Total restricted intergovernmental revenues Sales and services: Refuse collection fees Recycling fees Jail fees Rent and miscellaneous fees Valdese Community Center Valdese Tourism Commission Rock School fees Community: affairs Total sales ands services Investment earnings: Interest on investments Total investment earnings Other revenues: Sale of fixed assets Other Total other revenues Total revenues 175,000 $ 175,000 $ 144,535 319,535 202,000 25,000 1,200 68,993 303,200 1,000 61,552 15,000 677,945 16,560 16,560 62,250 209,611 271,861 5,073,176 144,452 319,452 202,077 24,955 3,855 68,402 315,714 598 65,543 14,387 695,532 63,668 63,668 67,535 314,556 382,090 5,428,003 (83) (83) 77 (45) 2,655 (591) 12,514 (402) 3,991 (613) 17,587 47,108 47,108 5,285 104,945 110,229 354,827 cont. 64 TOWN OF VALDESE, NORTH CAROLINA Schedule2 Page3of11 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Expenditures: General government: Governing body: Salaries and wages FICA tax expense Groupi insurance Travel Insurance and bonds Professional services Supplies Miscellaneous Total governing body Administration: Salaries and wages Professional services FICA tax expense Group insurance Retirement Telephone and postage Utilities Travel $ $ 17,600 $ 728 27,795 752 3,094 433 93 583 51,077 405,457 79,104 28,220 51,415 28,023 21,099 8,041 8,982 31,722 658 211 2,379 205 19,458 9,663 1,733 8,641 39,562 52,562 1,485 Maintenance and repair- buildings and grounds Maintenance and repair equipment Maintenance and repair autos and trucks Advertising Auto supplies Supplies and materials Dues and subscriptions Printing expense Insurance and bonds Contracted: services cont. 65 TOWN OF VALDESE, NORTH CAROLINA Schedule: 2 Page4 4of11 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Expenditures (Continued): Administration (continued): Historic Valdese Foundation Burke County Public Library Wellness program Capital outlay Industrial development Debt service Miscellaneous Utility fund reimbursement Total administration Planning and zoning: Salaries and wages Professional services FICA tax expense Group insurance Travel Advertising Auto supplies Supplies and materials Maintenance andi repair Insurance bonds Contracted: services Condeminations Miscellaneous Total planning and zoning Public works: Salaries and wages Professional services FICA tax expense Group insurance Retirement Telephone and postage Utilities $ $ (231) $ 50,000 3,048 7,028 30,100 88,878 42,702 (382,927) 583,172 33,256 28,636 2,209 4,646 237 (29) 89 336 8 3,053 1,015 4,500 8,970 86,926 324,050 968 22,175 56,400 23,418 1,826 8,517 661,963 78,791 104,655 17,729 cont. 66 TOWN OF VALDESE, NORTH CAROLINA Schedule: 2 Page 5of11 General Fund Budget and. Actual For the Yearl Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Expenditures (Continued): Public works (continued): Travel $ $ 325 $ 17,125 2,849 1,114 12,797 25,641 1,562 3,956 16,952 10,150 6,472 147 (192,567) 343,875 1,065,049 Maintenance and repair buildings and grounds Maintenance and repair equipment Maintenance and repair autos and trucks Autos supplies Supplies and materials Chemicals Uniforms Insurance and bonds Contracted services Arbor beautification Miscellaneous Utility fund reimbursement Total public works Total general government Public: safety: Police department: Salaries and wages FICA tax expense Group insurance Retirement Deferred compensation Professional services Telephone and postage Utilities Travel 382,055 1,201,235 38,180 136,186 568,887 40,203 88,254 43,741 18,015 1,715 4,573 3,182 638 4,630 6,384 10,108 26,251 34,681 9,864 Maintenance and repair- buildings and grounds Maintenance andi repair- equipment Maintenance and repair- auto andt trucks Auto supplies Supplies and materials Uniforms cont. 67 TOWN OF VALDESE, NORTH CAROLINA Schedule: 2 Page 6of11 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement of] Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Expenditures (Continued): Police department (continued): Insurance and bonds Dues and subscriptions Capital outlay Printing Advertising Contracted services Debt service Total police department Fire department: Salaries and wages FICA tax expense Group insurance Retirement Professional services Telephone and postage Utilities Travel $ $ 33,701 $ 386 60,429 497 153 15,041 36,000 1,007,333 405,673 28,989 46,907 24,001 23,774 478 11,028 10,357 5,873 10,619 11,939 7,374 19,713 5,894 26,611 7,170 863 14,063 5,772 150 21,238 124,879 (21) 813,346 1,820,679 1,032,439 25,106 Maintenance and repair buildings and grounds Maintenance and repair- equipment Maintenance and repair autos and trucks Auto supplies Supplies andi materials Uniforms Insurance and bonds Dues and subscriptions Printing Capital outlay equipment Fires safety expense Advertising Contracted services Debt service Miscellaneous Total fire department Total public safety 869,863 1,902,302 56,516 81,623 cont. 68 TOWN OF VALDESE, NORTH CAROLINA Schedule2 Page7of11 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Expenditures (Continued): Environmental protection: Sanitation department: Salaries and wages FICA tax expenses Groupi insurance Retirement Travel Maintenance andi repair- equipment Maintenançe andi repair autos and trucks Auto supplies Supplies and materials Uniforms Contracted: services Insurance bonds Miscellaneous Total sanitation department Total environmental protection $ $ 28,445 $ 2,027 6,865 2,091 (6) 52 778 2,570 665 751 201,361 2,816 833 249,247 249,247 257,892 257,892 8,645 8,645 cont. 69 TOWN OF VALDESE, NORTH CAROLINA Schedule: 2 Page 8 of11 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement ofF Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Expenditures (Continued): Transportation: Street department: Salaries and wages FICA tax expense Groupi insurance Retirement expense Professional services Insurance bonds Utilities $ 103,189 $ 7,236 20,681 7,605 2,708 10,123 65,382 13,934 10,188 4,977 17,101 8,421 1,961 336 40,595 53,743 703 368,884 Maintenance andi repair buildings and grounds Maintenance andi repair- equipment Maintenance and repair- autos andt trucks Auto supplies Supplies andt materials Uniforms Contracted: services Capital outlay Debt service Miscellaneous Total street department 468,668 99,784 cont. 70 TOWN OF VALDESE, NORTH CAROLINA Schedule: 2 Page 9 of11 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Expenditures (Continued): Powell Bill: Supplies andi materials Snow andi ice removal Debts service Total Powell Bill Total transportation Cultural and recreational: Recreation: Salaries and wages Officials and umpires FICA tax expense Group insurance Retirement Telephone and postage Utilities Travel $ $ 442 $ 260 121,856 122,558 491,442 144,535 613,203 21,977 121,761 454,401 (110) 32,787 46,150 15,449 3,124 86,802 (33) 130,433 14,915 98 830 19,354 10,961 34,764 4,760 18,419 (165) 1,997 3,575 893 41,181 100 22,646 727 944,057 Maintenance and repair- buildings and grounds Maintenance and repair- equipment Maintenance andi repair- autos and trucks Auto supplies Supplies and materials Chemicals Purchases for resale Dues ands subscriptions Insurance and bonds Miscellaneous Swim team Triathlon Uniforms Contracted. services Advertising Debt service Professional services Total recreation 947,226 3,169 cont. 71 TOWN OF VALDESE, NORTH CAROLINA Schedule 2 Page 10of11 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget $ Actual Expenditures (Continued): Community affairs: Salaries and wages FICA taxe expense Group insurance Retirement expense Printing Utilities Supplies andi materials Professional services Telephone and postage Maintenance and repair Advertising Contracted: services Insurance and bonds Dues ands subscriptions Uniforms Building reuse and facade Main Street program Valdese Tourism Commission Rock School Arts Foundation Festival Parking lot Concession stand trailer Miscellaneous Utility fund reimbursement Total community affairs 147,612 $ 10,617 20,996 9,743 6,294 36,346 27,010 1,500 5,672 61,215 5,014 139,436 12,372 878 (31) 189,910 3,924 59,984 3,000 21,319 2,972 2,308 103,283 (312,572) 558,802 601,861 43,059 cont. 72 TOWN OF VALDESE, NORTH CAROLINA Schedule: 2, cont. Page 11of11 General Fund Budget and Actual For the Year Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Total cultural and recreational Total expenditures $1,549,086 $1,502,859 $ 46,227 5,523,718 (450,542) 5,129,277 298,726 394,441 749,268 Revenues over (under) expenditures Other) Financing Sources (Uses): Operating transfers in (out) Capital project funds Enterprise fund Appropriated fund balance Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses Fund balance, July 1 Fund balance, June 30 1,312,790 387,000 1,699,790 1,312,790 (63,542) 1,249,248 387,000 63,542 450,542 1,998,515 $1,998,515 2,166,052 $4,164,568 73 GAIcAl $A S 6A SAI A E 6A 6A A $ 6A A A A $ TOWN OF VALDESE, NORTH CAROLINA Schedule 4-1 Facade Grant Fund Budget and Actual Statement of] Revenues, Expenditures and Changes inj Fund Balance (Deficit) From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date $ 82,000 133,000 215,000 Revenues: Contributions Grants Total revenues Expenditures: Facade design Miscellaneous Rock School restrooms Hmong festival Feasibility study Vedic Revitalization Total expenditures $ 81,500 $ 82,000 $ 133,000 215,000 81,500 13,415 54,750 123,500 5,000 28,000 167,000 62,600 454,265 7,400 54,748 123,500 4,600 8,846 186,554 68,617 454,265 7,400 54,748 123,500 4,600 8,846 186,554 68,617 454,265 (239,265) Revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in from General Fund Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses Fund balance (deficit), beginning of year Fund balance (deficit), end ofs year (372,765) (239,265) 372,765 372,765 257,123 257,123 17,858 (17,858) (17,858) (17,858) $ 17,858 $ 239,265 239,265 $ This fund was closed out during the year ending June 30, 2019. 78 TOWN OF VALDESE, NORTH CAROLINA Small Business & Entrepreneurial Assistance! Fund Statement of Revenues, Expenditures and Changes in Fund Balance From Inception and for the Year Ended June 30, 2019 Schedule 4-2 Budget and Actual Actual Current Year Project Authorization Prior Years Total to Date $248,130 248,130 Revenues: CDBG grant Total revenues Expenditures: Administration Planning Valdese Cleaners Downtown Delights Total expenditures $ 250,000 $248,130 $ 250,000 248,130 5,000 20,000 112,500 112,500 250,000 $ 5,334 19,666 110,631 112,500 248,130 5,334 19,666 110,631 112,500 248,130 Revenues over (under) expenditures Fund balance, beginning of year Fund balance, end of year $ This fund was closed out during the year ending June 30, 2019. 79 TOWN OF VALDESE, NORTH CAROLINA Schedule 4-3 Public. Art Fund Budget and Actual Statement of Revenues, Expenditures and Changes in Fund Balance From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Vears Total to Date Revenues: Contributions Grants Total revenues Expenditures: Display Public art Total expenditures $ 10,000 $ 4,251 $ 6,225 $ 10,476 10,000 20,000 4,251 6,225 10,476 10,000 60,000 70,000 (50,000) 1,829 12,000 13,829 (9,578) 1,829 12,000 13,829 (3,353) Revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers - in from General Fund Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses Fund balance, beginning ofy year Fund balance, end of year 6,225 50,000 50,000 16,600 16,600 $ 7,022 16,600 16,600 $ 6,225 $ 13,247 7,022 $ 13,247 80 TOWN OF VALDESE, NORTH CAROLINA Water Plant Capital Project Fund Budget and Actual Schedule 4-4 Statement of Revenues, Expenditures and Changes in Fund Balance From Inception and for the Year Ended June: 30, 2019 Actual Current Year Project Authorization $ Prior Years Total to Date $ 67,854 Revenues: Investment earnings Expenditures: Professional services Repairs and maintenance Total expenditures $ 67,854 $ 80 27,170 27,250 40,604 80 27,170 27,250 40,604 Revenues over (under) expenditures Other Financing Souirces (Uses): Operating transfers in (out): From Utility Fund To Capital Projects 30,000 (30,000) 636,019 636,019 676,624 636,019 636,019 676,624 Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses $ Fund balance, beginning of year Fund balance, end of year 676,624 $ 676,624 81 TOWN OF VALDESE, NORTH CAROLINA Schedule 4-5 Capital Project Fund Budget and. Actual Statement ofR Revenues, Expenditures and Changes in] Fund Balance From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization $ Prior Years 15,000 $ 94,340 112,800 222,140 Total to Date 15,000 94,340 112,800 222,140 Revenues Donations State grant Other Total revenue Expenditures 732,000 (732,000) Revenues over (under)e expenditures Other Financing Sources (Uses): Operating transfers - in (out) Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses Fund balance, beginning of year Fund balance, end of year 222,140 222,140 732,000 732,000 368,947 368,947 $591,087 (591,087) (222,140) (591,087) (222,140) (591,087) $ 591,087 $ This fund was closed out during the year ending June 30, 2019. 82 TOWN OF VALDESE, NORTH CAROLINA Schedule 4-6 Capital Outlay Fund For the Year Ended June 30, 2019 Statement of Revenues, Expenditures and Changes in Fund Balance Variance Positive (Negative) Budget Actual Revenues: Investment earnings Expenditures $275,000 $ 16,550 $(258,450) 275,000 275,000 16,550 Revenues over (under) expenditures Fund balance, beginning of year Fund balance, end of year 16,550 759,374 $775,924 83 TOWN OF VALDESE, NORTH CAROLINA Lake Rhodhiss Capital Project Fund Schedule 4-7 Statement of] Revenues, Expenditures and Changes in Fund Balance From Inception and for the Year Ended June 30, 2019 Budget and Actual Actual Current Year Project Authorization Prior Years Total to Date Revenues: Other local revenues: Town of[ Drexel Burke County Total other local revenues Investment earnings Total revenues Expenditures: Maintenance and repair Miscellaneous Capital outlay Total expenditures $ 133,400 $ 77,073 $ 2,568 $ 79,641 106,800 240,200 240,200 61,099 138,172 513,868 652,040 1,322 3,890 3,890 62,421 142,063 513,868 655,931 32,000 27,900 59,900 180,300 13,715 13,715 638,325 13,715 13,715 642,216 Revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers in (out): To Utility Fund From Utility Fund To General Fund From Capital Projects Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses Fund balance, beginning ofyear Fund balance, end ofy year 3,890 (1,940,100) 1,759,800 (399,691) 974,691 125,000 700,000 $1,338,327 (399,691) 974,691 (728,845) 125,000 (28,845) (728,845) (728,845) (180,300) $ (724,955) $ 613,372 1,338,327 613,372 84 TOWN OF VALDESE, NORTH CAROLINA Police Department Capital Project Fund Schedule 4-8 Statement of] Revenues, Expenditures and Changes in Fund Balance From Inception and for the Year Ended June 30, 2019 Budget and Actual Actual Current Vear Project Authorization Prior Years Total to Date Revenues: Restricted intergovernmental revenues: Drug abuse funds Investment earnings: Interest earned Total revenues Expenditures: Repairs and maintenance Capital outlay equipment Total expenditures $ 10,000 $ 7,910 $ 668 $ 8,578 404 8,314 404 8,982 10,000 668 10,000 88,300 98,300 (88,300) 1,290 81,863 83,153 (74,839) 1,290 81,863 83,153 (74,171) Revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers - in (out) From General Fund 668 88,300 88,300 78,033 78,033 $ 3,194 78,033 78,033 Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses Fund balance, beginning of year Fund balance, end ofy year 668 $ 3,862 3,194 3,862 85 TOWN OF VALDESE, NORTH CAROLINA Schedule 4-9 Downtown Park Capital Fund Budget and Actual Statement of Revenues, Expenditures and Changes in Fund Balance From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date $250,000 408,600 658,600 Revenues: Contributions Interest earned Grants Total revenues Expenditures: Buildings and grounds Professional services ArchitectEngineering fees Community building Equipment Advertising Contingencies Total expenditures $ 250,000 $250,000 $ 11 408,600 658,611 (11) (11) 408,600 658,600 5,000 32,550 110,755 837,550 100,000 603 41,142 4,709 1,158 122,161 849,960 99,996 604 47,418 291 31,392 (11,406) (12,410) 4 (1) (6,276) 5,000 32,550 110,755 837,550 100,000 603 41,142 1,127,600 1,126,006 (469,000) 1,594 1,127,600 (1,605) (469,000) Revenues over (under) expenditures Other Financing Sources: Loan proceeds (467,395) 469,000 469,000 469,000 469,000 $ 1,605 469,000 469,000 Total other financing sources Revenues and other sources over (under) Fund balance, beginning of year Fund balance, end of year expenditures s (1,605) $ 1,605 $ This project was completed and closed out during the year ending. June 30, 2019. 86 TOWN OF VALDESE, NORTH CAROLINA NCDOT Pedestrian Plan Grant Fund Schedule 4-10 Statement of Revenues, Expenditures and Changes in Fund Balance From Inception and for the Year Ended June 30, 2019 Budget and Actual Actual Current Year Project Authorization $ Prior Vears Total to Date $ 3,254 26,773 30,027 Revenues: Contributions Grants Total revenues Expenditures: Consultation Total expenditures 1,627 $ 3,254 $ 28,400 30,027 26,773 30,027 35,500 35,500 (5,473) 35,500 35,500 (5,473) 35,500 35,500 (5,473) Revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers - in from General Fund Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses Fund balance (deficit), beginning of year Fund balance (deficit), end of year 5,473 5,473 5,473 5,473 5,473 5,473 This project was closed out during thes year ending. June 30, 2019. 87 TOWN OF VALDESE, NORTH CAROLINA Schedule 4-11 Lakeside Park Capital Fund Budget and Actual Statement of Revenues, Expenditures and Changes in Fund Balance From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Contributions Grants Total revenues Expenditures: Professional services Site planning and design Land Equipment Other improvements Total expenditures $ 441,667 $ 405,000 $ 36,667 $ 441,667 973,246 961,659 961,659 1,414,913 1,366,659 36,667 1,403,326 10,000 87,605 1,290,841 15,000 51,467 10,000 9,005 858 10,000 87,605 1,276,070 858 78,600 1,276,070 1,454,913 1,354,670 (40,000) 19,863 1,374,533 16,804 Revenues over (under) expenditures Other Financing Sources: From General Fund Total other financing sources Revenues and other sources over (under) Fund balance, beginning of year Fund balance, end of year 11,989 28,793 40,000 40,000 20,375 20,375 32,364 20,375 20,375 49,168 expenditures 16,804 32,364 $ 49,168 88 TOWN OF VALDESE, NORTH CAROLINA CDBG Scattered Sites Housing Fund Schedule 4-12 Statement of Revenues, Expenditures and Changes in Fund Balance From Inception and for the Year Ended June 30, 2019 Budget and Actual Actual Current Year $ Project Authorization Prior Years Total to Date $ Revenues: CDBG grant Total revenues Expenditures: Adminisration Rehabilitation Total expenditures 350,600 $ 350,600 31,800 343,800 375,600 (25,000) 218 218 (218) 218 218 (218) Revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers - in from General Fund Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses Fund balance (deficit), beginning of year Fund balance (deficit), end of year 25,000 25,000 25,000 25,000 25,000 25,000 e 24,782 $ - 24,782 5 24,782 89 TOWN OF VALDESE, NORTH CAROLINA Alba Waldensian Building Demo Fund Schedule4-13 Statement of] Revenues, Expenditures and Changes in Fund Balance (Deficit) Budget and Actual From Inception and for the Year Ended June 30, 2019 Actual Current Year $ Project Authorization Prior Years Total to Date Revenues: CDBG grant Total revenues Expenditures: Adminisration Professional services Demolition Total expenditures 500,000 $ 500,000 25,000 650,000 675,000 (175,000) 17,020 857 17,877 (17,877) 17,020 857 17,877 (17,877) Revenues over (under) expenditures Other Financing Sources (Uses): Operating transfers - in from General Fund Total other financing sources (uses) Revenues and other sources over (under) expenditures and other uses Fund balance (deficit), beginning of year Fund balance (deficit), end ofyear 175,000 175,000 $ (17,877) $(17,877) $_(17,877) 90 TOWN OF VALDESE, NORTH CAROLINA Statement of Revenues - Budget and Actual (Non-GAAP) Schedule5 Utility Fund For the Year Ended June 30, 2019 Variance Positive (Negative) Budget Actual Revenues: Operating revenues: Charges for services: Water charges Wastewater charges Contract sales Total charges for services Other operating revenues: Tap and connection fees Long term monitoring fees Sprinkler service charges Utility bill penalties Meter usage charge Reconnection fees Total other operating revenues Total operating revenues Nonoperating revenues: Interest on investments Rent-nonoperating property Sale of fixed assets Miscellaneous Retained earnings appropriated Total nonoperating revenues Total revenues $2,202,694 $2,448,966 $ 246,272 1,189,932 662,637 4,055,263 12,000 14,050 500 51,000 591,674 22,500 691,724 4,746,987 4,000 1,080 2,000 211,322 218,402 1,111,200 814,770 4,374,937 25,492 19,861 100 55,865 475,295 17,354 593,966 4,968,903 14,075 3,810 (103,120) (35,315) (120,550) (78,732) 152,133 319,674 13,492 5,811 (400) 4,865 (116,379) (5,146) (97,758) 221,916 10,075 2,730 (103,120) (37,315) (211,322) (338,952) $4,965,389 $4,848,353 $ (117,036) 91 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-1 Page 10 of4 Utility Fund Statement of] Expenditures- Budget and Actual (Non-GAAP) For the Year Ended June 30, 2019 Variance Positive (Negative) Budget Actual Expenditures: Administration: Reimbursement Total administration Water and supply treatment: Salaries and wages Professional services FICA tax expense Group insurance Retirement Telephone and postage Utilities Travel General Fund - administrative services: 921,142 $ 921,142 $ 921,142 921,142 285,899 12,975 20,035 61,163 21,439 1,384 215,201 615 23,882 26,445 14 894 32,387 64,981 3,064 5,469 3,815 13,093 16,196 19,634 Maintenance and repair - building and grounds Maintenance and repair - equipment Maintenance and repair - autos and trucks Auto and truck supplies Supplies and materials Chemicals Uniforms Contracted services Dues and subscriptions Laboratory supplies Water testing Insurance and bonds cont. 92 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-1 Page 2 of4 Utility Fund Statement ofl Expenditures - Budget and Actual (Non-GAAP) For the Year Ended June 30, 2019 Variance Positive (Negative) Budget $ 1,061,766 Actual Expenditures (Continued): Water and supply treatment (continued): Safety Economic incentives Total water and supply treatment Waste water treatment: Salaries and wages Professional services FICA tax expense Group insurance Retirement Telephone and postage Utilities Travel $ 1,246 $ 141,551 971,383 414,021 2,149 29,747 70,429 31,053 3,382 240,568 7,873 106,344 66,530 1,642 3,264 8,507 73 23,558 10,114 56,540 3,284 13,415 16,802 8,060 33,597 1,979 4,038 1,156,969 90,383 Maintenance and repair - buildings and grounds Maintenance and repair - equipment Maintenance and repair - autos and trucks Auto and truck supplies Laboratory supplies Advertising Insurance bonds Supplies and materials Chemicals Uniforms Contracted services Long term monitoring Dues and subscriptions Wood chips Safety Economic incentives Total waste water treatment 1,157,266 297 cont. 93 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-1 Page3of4 Utility Fund Statement of Expenditures Budget and Actual (Non-GAAP) For the Year Ended June 30, 2019 Variance Positive (Negative) Budget Actual Expenditures (Continued): Water and sewer maintenance: Salaries and wages Professional services Travel expense FICA tax expense Group insurance Retirement $ $ 313,236 $ 33,112 730 22,064 54,532 22,016 111,879 14,555 2,561 18,438 50,179 1,126 72,204 27 21,383 5,750 22,032 4,927 (1,926) 768,823 20,637 7,154 23,225 225,684 73,660 387,000 737,360 Maintenance and repair - buildings and grounds Maintenance and repair equipment Maintenance and repair - autos and trucks Auto and truck supplies Supplies and materials Advertising Contracted services Postage Utilities Uniforms Insurance and bonds Meters Miscellaneous expense Total water and sewer maintenance Budgetary appropriations: 769,651 60,317 51,000 122,476 236,876 69,595 515,300 1,055,564 828 39,680 43,846 99,251 11,192 (4,064) 128,300 318,204 Capital outlay-waste water treatment plant Capital outlay-water supply and treatment Capital outlay-water and sewer maintenance Payment on debt principal Interest and fees Transfer to (from) other funds Total budgetary appropriations Total expenditures $4,965,389 $4,555,677 $ 409,712 Note: Prepared on the Budgetary Basis which is modified accrual. cont. 94 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-1,cont. Page4of4 Utility Fund Statement of Expenditures- Budget and Actual (Non-GAAP) For the Year Ended June 30, 2019 Variance Positive (Negative) Budget Actual Reconciliation from Budgetary Basis (Modified) Accrual Basis) to. Full Accrual Basis: Total revenues on Schedule 5 Total expenditures on Schedule 5-1 Revenues over (under) expenditures Budgetary appropriations (above): Payment of debt principal Adjustment for contributed capital Capital outlay Increase (decrease) ini inventory (Increase) decrease in accrued vacation pay (Increase) decrease in other postemployment benefits Increase (decrease) in deferred outflows- - OPEB (Increase) decrease in deferred inflows - OPEB (Increase) decrease in net pension liability Increase (decrease) in deferred outflows pension (Increase) decrease in deferred inflows - pension $ 4,848,353 4,555,677 292,676 225,684 856,706 51,016 (12,328) 1,162 (5,595) (489) 703 102,101 77,977 282 (916,708) 673,185 Depreciation Change in net position (Exhibit9) 95 TOWN OF VALDESE, NORTH CAROLINA Schedule5-2 Utility Capital Projects Fund Water) Plant Capital Improvements Statement of] Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30,2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: State energy funds Expenditures: Professional services Engineering Advertising Capital outlay other improvements Contracted services Total expenditures 200,000 $ $ 6,907 17,957 46 256,247 960 282,117 (282,117) 6,907 17,957 46 254,273 960 280,144 (280,144) 200,000 125,000 325,000 (125,000) (1,973) (1,973) 1,973 Revenues over (under) expenditures Other Financing Sources (Uses): Transfer from Utility Fund Unexpended revenues and receipts 125,000 $ 257,913 $(24,204) 22,231 24,204 $ 280,144 This project was closed out during the year ending June 30, 2019. 96 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-3 Utility Capital Projects Fund Infiltration and Inflow Study Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30, 2019 Actual Current Year $ Project Authorization $ Prior Years $ Total to Date Revenues Expenditures: Professional services Department supplies Contracted services Hickory Hill Total expenditures 91,753 400,000 491,753 44,469 1,713 274,109 171,462 491,753 44,469 1,713 274,109 171,462 491,753 (491,753) Revenues over (under) expenditures Other Financing Sources (Uses): Appropriated fund balance Transfer from Utility Fund Total other financing sources (uses) Unexpended revenues and receipts (491,753) (491,753) 50,000 441,753 491,753 664,391 (172,639) 664,391 491,753 491,753 (172,639) $172,639 $(172,639) $ This project was closed out during the year ending June 30, 2019. 97 TOWN OF VALDESE, NORTH CAROLINA Schedule: 5-4 Utility Capital Projects Fund Storm Water Program Phase II Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and For the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Town contrbutions Expenditures: Professional services $ 20,000 $ $ 2,565 $ 2,565 20,000 2,565 (2,565) 2,565 Revenues over (under) expenditures Unexpended revenues and receipts 2,565 $ $ - (2,565) $ 2,565 $ This project was closed out during the year ending June 30, 2019. 98 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-5 Utility Capital Projects Fund I& IS Sewer Project Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: State grants - State Revolving Loan Fund Rural Center grant Total revenues Expenditures: Engineering Administration Cline street pump station Professional services I&IConstruction Legal Total expenditures $ 500,000 $ 380,190 $ $380,190 30,000 410,190 30,000 410,190 500,000 38,400 10,000 455,600 1,000 505,000 (5,000) 17,926 10,000 86,744 56,061 318,690 489,421 (79,232) 17,926 10,000 86,744 56,061 318,690 489,421 (79,232) Revenues over (under) expenditures Other Financing Sources (Uses): Transfer from Utility Fund Unexpended revenues and receipts 5,000 79,232 79,232 $ $(79,232) $ 79,232 $ This project was closed during the year ending. June 30,2019. 99 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-6 Utility Capital Projects Fund I&IRehabilitation! Phase II Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Federal grants- STAG/SPAP Rural Center grant Total revenues Expenditures: Engineer Professional services Administration Construction Total expenditures $ 216,800 $216,800 $ $216,800 400,000 616,800 400,000 616,800 400,000 616,800 52,622 3,943 41,327 583,098 680,990 (64,190) 52,622 3,943 41,325 583,098 680,986 (64,186) 52,622 3,943 41,325 583,098 680,986 (64,186) Revenues over (under) expenditures Other Financing Sources (Uses): Transfer from Utility Fund Unexpended revenues and receipts 64,190 64,186 $ 64,186 $ This project was closed out during thes year ending. June 30, 2019. 100 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-7 Utility Capital Projects Fund The Settings Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization $ Prior Years Total to Date 18,256 Revenues: Expenditures: Engineering Administration Planning Construction Professional services Contracted services Postage Debt service Advertising Total expenditures 12,650 $ 18,256 $ 144,678 15,000 10,000 1,073,322 1,072,229 35,820 24,178 177,898 685 26,095 3,249 514 14,178 8,551 177,898 685 1,072,229 25,695 3,249 514 14,178 8,551 (400) 1,302,998 1,303,399 (1,290,348) (1,285,143) (400) 1,302,999 (400) (1,284,743) Revenues over (under) expenditures Other Financing Sources (Uses): Local contributions Proceeds from bonds 10,348 1,280,000 1,280,000 1,290,348 1,280,000 163,741 163,741 1,280,000 Total other financing sources (uses) Revenues over (under) expenditures and other financing sources (uses) 163,741 1,443,741 $ (5,143) $163,341 158,998 101 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-8 Utility Capital Projects Fund KleenTech Statement ofl Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year] Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Federal grants- CDBG s 450,000 150,000 42,500 15,000 657,500 450,000 $ 150,000 36,536 636,536 450,000 150,000 36,536 15,919 652,455 Rural Economic Development Center Private company contribution Town ofValdese Total revenues Expenditures: Engineering Administration Public sewer improvement Advertising Professional service Total expenditures 15,919 15,919 50,000 37,500 569,530 470 657,500 47,500 37,500 566,980 370 105 652,455 47,500 37,500 566,980 370 105 652,455 Revenues over (under) expenditures $(15,919) $ 15,919 $ This project was closed during hte year ending June 30, 2019, 102 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-9 Utility Capital Projects Fund Meridian Water and Sewer Project Statement of] Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Vears Total to Date Revenues: CDBG IDF grant Total revenues Expenditures: 1,000,000 $ 946,340 $ 53,660 $ 1,000,000 898,425 1,898,425 702,114 755,774 702,114 1,702,114 946,340 Architectural and engineering Administration and envorionmental Construction Total expenditures 276,000 55,000 1,866,900 2,197,900 (299,475) 145,172 47,664 753,504 946,340 32,457 13,825 830,862 877,144 (121,370) 177,629 61,489 1,584,366 1,823,484 (121,370) Revenues over (under) expenditures Other Financing Sources (Uses): Town contribution 299,475 121,370 121,370 Unexpended revenues and receipts $ $ This project was completed and closed during the year ending June 30, 2019. 103 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-10 Utility Capital Projects Fund Waterline Rehabilitation Statement of] Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Town ofValdese Total revenues Expenditures: Engineering Construction Total expenditures $ 254,400 $ 349,800 $(349,800) $ 254,400 349,800 (349,800) 25,440 228,960 254,400 Revenues over (under) expenditures $349,800 $(349,800) $ This project was closed out during the year ending June 30, 2019. 104 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-11 Utility Capital Projects Fund I&IRehabilitation 2014 Statement ofl Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June: 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: State grants- State Revolving Loan Fund Total revenues Expenditures: Engineer Administration Construction Closing cost Contingency Total expenditures $ 285,917 $230,913 $ $2 230,913 230,913 285,917 230,913 35,000 9,000 232,245 5,718 9,672 291,635 (5,718) 12,452 232,735 12,452 232,735 245,187 (14,274) 245,187 (14,274) Revenues over (under) expenditures Other Financing Sources (Uses): Transfer from Utility Fund Unexpended revenues and receipts 5,718 14,274 14,274 $ $(14.274) $ 14,274 $ This project was closed out during the year ending. June 30, 2019. 105 TOWN OF VALDESE, NORTH CAROLINA Schedule: 5-12 Utility Capital Projects Fund Water Plant Upgrades Statement of] Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Total revenues Expenditures: Engineering Loan administration NCDEQ Loan administration ER/EID preparation Construction Total expenditures $ $ $ $ 88,000 40,000 16,000 10,000 704,770 858,770 (858,770) 49,800 49,800 49,800 (49,800) 49,800 (49,800) Revenues over (under) expenditures Other Financing Sources (Uses): DWSRF prinicpal forgiveness loan DESRF loan Transfer from Utility Fund Total other financing sources Unexpended revenues and receipts 210,692 632,078 16,000 858,770 ( (49,800) $(49,800) 106 TOWN OF VALDESE, NORTH CAROLINA Schedule5 5-13 Utility Capital Projects Fund Water System Improvements Statement of] Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Total revenues Expenditures: Engineering Loan administration NCDEQLoan administration Permit fees and advertising Construction administration Construction observation Engineering & environmental report Land surveying Construction Contingencies Total expenditures $ $ $ 60,000 15,000 23,634 750 15,000 20,000 10,000 10,000 955,450 95,500 1,205,334 (1,205,334) 35,741 928 395 10,000 10,000 35,741 928 395 10,000 10,000 57,064 (57,064) 57,064 (57,064) Revenues over (under) expenditures Other Financing Sources (Uses): DWSRF prinicpal forgiveness loan DESRF loan Transfer from Utility Fund Total other financing sources Unexpended revenues and receipts 500,000 681,700 23,634 1,205,334 (57,064) $(57,064) 107 TOWN OF VALDESE, NORTH CAROLINA Schedule: 5-14 Utility Capital Projects Fund Water Meter Replacement Statement of] Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30,2019 Actual Current Year $ Project Authorization $ 238,416 $ 238,416 Prior Years Total to Date Revenues: Grants Total revenues Expenditures: Engineering Administration Construction Total expenditures 2,921 76,064 8,606 87,591 (87,591) 2,921 76,064 8,606 87,591 (87,591) 238,416 2,026,970 2,265,386 (2,026,970) Revenues over (under) expenditures Other Financing Sources (Uses): SRP loan 2,026,970 2,026,970 $ Total other financing sources Unexpended: revenues and receipts $(87,591) (87,591) 108 TOWN OF VALDESE, NORTH CAROLINA Utility Capital Projects Fund St. Germain Avenue Water System Improvements Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year) Ended June 30, 2019 Schedule: 5-15 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Total revenues Expenditures: Engineering Loan administration NCDEQLoan administration Construction administration Construction observation ER/EID preparation Land surveying Construction Contingencies Total expenditures $ $ $ $ 23,500 5,000 6,587 6,700 6,000 6,000 5,000 295,589 14,780 369,156 (369,156) 4,630 2,286 6,587 4,880 2,589 272,283 293,254 4,630 2,286 6,587 4,880 2,589 272,283 293,254 Revenues over (under) expenditures Other! Financing Sources (Uses): DWSRF prinicpal forgiveness loan DESRF loan Transfer from Utility Fund Total other financing sources Unexpended revenues and receipts (293,254) (293,254) 156,828 172,510 39,818 369,156 156,828 21,620 39,818 218,266 156,828 21,620 39,818 218,266 $(74,988) $(74,988) 109 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-16 Utility Capital Projects Fund Water Plant Bleach Conversion Statement of Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30,2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Grants Total revenues Expenditures: Engineering Loan administration NCDEQ Loan administration Construction administration ER/EID preparation Construction Total expenditures $ 164,575 $ 164,575 $ $ 47,300 16,000 12,343 40,100 18,000 536,750 670,493 (505,918) 400 400 18,000 18,400 (18,400) 18,000 18,400 (18,400) Revenues over (under) expenditures Other Financing Sources (Uses): State reserve loan Transfer from Utility Fund Total other financing sources Unexpended revenues and receipts 493,575 12,343 505,918 (18,400) (18,400) 110 TOWN OF VALDESE, NORTH CAROLINA Schedule 5-17 Utility Capital Projects Fund Main Street Water Line Replacement Statement of] Revenues and Expenditures Budget and Actual (Non-GAAP) From Inception and for the Year Ended June 30, 2019 Actual Current Year Project Authorization Prior Years Total to Date Revenues: Total revenues Expenditures: Engineering Loan administration NCDEQ Loan administration Construction administration ER/EID preparation Construction Total expenditures $ $ P $ 184,000 28,000 55,659 143,000 30,000 2,397,950 2,838,609 (2,838,609) 13,750 2,100 30,000 45,850 (45,850) 13,750 2,100 30,000 45,850 (45,850) Revenues over (under) expenditures Other Financing Sources (Uses): DWSRF prinicpal forgiveness loan DESRF loan Transfer from Utility Fund Total other financing sources Unexpended revenues and receipts 1,000,000 1,782,950 55,659 2,838,609 $ $(45,850) (45,850) 111 (THIS PAGE. LEFT BLANK INTENTIONALLY) Other Schedules Schedule of Ad Valorem Taxes Receivable Analysis of Current ofTax Levy (THIS PAGEI LEFT BLANK INTENTIONALLY) TOWN OF VALDESE, NORTH CAROLINA Schedule of Ad Valorem Taxes Receivable Schedule6 June 30, 2019 Collections Fiscal Year 2018-2019 2017-2018 2016-2017 2015-2016 2014-2015 2013-2014 2012-2013 2011-2012 2010-2011 2009-2010 Total July1,2018 Additions and Credits June 30,2019 $2,091,988 $2,015,158 $ 76,830 20,751 22,131 14,902 15,393 63,849 30,550 21,961 14,169 13,449 293,985 (81,455) 212,530 73,945 68,645 38,833 38,757 71,133 33,183 24,361 15,859 16,145 53,194 46,514 23,931 23,364 7,284 2,633 2,400 1,690 2,696 S 380,861 $2,091,988 $2,178,864 Less allowance for uncollectibles Balance Reconcilement With Revenues: Ad valorem taxes General Fund (Schedule 2) Discounts Other adjustments Subtotal 2,168,101 21,473 33,489 2,223,063 (44,199) 2,178,864 Less penalities and interest collected Total collections and credits 112 TOWN OF VALDESE, NORTH CAROLINA Schedule of Analysis of Current Year' Tax Levy Schedule' 7 June 30, 2019 Total Levy Property Excluding Registered Registered Motor Vehicles Town-wide Rate Property Valuation Total Levy Motor Vehicles Original levy: Discoveries Releases Late lists Total Property taxes at current year's rate 389,457,482 0.545 $ 2,064,654 $ 1,875,244 $ 189,410 10,803,303 0.545 (5,774,435) 0.545 $394.486,350 58,878 (33,203) 1,659 2,091,988 58,878 (33,203) 1,659 1,902,578 189,410 Net levy 2,091,988 76,830 1,902,578 58,217 189,410 18,613 Less uncollected taxes at. June 30, 2019 Current year's taxes collected Current levy collection percentage $2,015,158 $1,844,361 ) 170,797 96.32 96.94 90.17 113 Compliance Section (THIS PAGE LEFTI BLANK INTENTIONALLY) Lowdermilk Church & Co., L.L.P. Certified. Public Accountants 1211 N. Sterling Street Phone: (828)433-1226 Fax: (828)433-1230 Morganton, North Carolina 28655 Independent Auditors' Report On Internal Control Over Financial Reporting And On Compliance And Other Matters Based On An Audit Of Financial Statements Performed In Accordance With Government Auditing Standards To thel Honorable Mayor and Members of the Town Council Town ofValdese Valdese, North Carolina Wel have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States, the financial statements oft the governmental activities, the business- type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information ofthe' Town ofValdese, North Carolina as ofand for the year ended. June 30, 2019, and the related notes to the financial statements, which collectively comprise the' Town ofValdese North Carolina'sb basic financial statements and have issued our report thereon dated November 7, 2019. Internal Control over Financial Reporting Inj planning and performing our audit oft thei financial statements, we considered the' Town of Valdese, North Carolina'sinternal control over: financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for thej purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness oft the Town of Valdese, North Carolina'si internal control. Accordingly, we do not express an opinion on the effectiveness oft the Town ofValdese, North A deficiency in internal control exists when the design or operation ofa control does not allow management or employees, ini the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on at timely basis. A material weakness is a deficiency, or a combination ofd deficiencies, ini internal control such that there is a reasonable possibility that a material misstatement oft the entity's financial statements will not bej prevented, or detected and corrected, on at timely basis. A, significant deficiency is a deficiency, ora combination ofd deficiencies, in internal control thati is less severe than ai material weakness, yet important enough Our consideration ofinternal control was for the limited purpose described in the first paragraph oft this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been Carolina'si internal control. toi merit attention by those charged with governance. identified. 114 Compliance and Other Matters As part of obtaining reasonable assurançe about whether the Town ofValdese, North Carolina's financial statements are free from material misstatement, we performed tests ofi its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose oft this report is solely to describe the scope of our testing ofinternal control and compliance, and the results of that testing, and not to provide an opinion on the effectiveness oft the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. CLA-RMLA Morganton, North Carolina November 7,2019 115 Lowdermilk Church & Co., L.L.P. Certified Public Accountants 121 N. Sterling Street Phone: (828)433-1226 Fax: (828)433-1230 Morganton, North Carolina 28655 Independent Auditors' Report On Compliance For Each Major State Program And On Internal Control Over Compliance Required By' The Uniform Guidance And' The State Single Audit Implementation Act To the Honorable Mayor and Members Ofthe Town Council of Town ofValdese, North Carolina Report on Compliance for Each Major State Program We have audited the' Town ofValdese, North Carolina'sc compliance with the types of compliance requirements described in the. Audit. Manual for Governmental. Auditors in North Carolina, issued by the Local Government Commission, that could have a direct and material effect on each ofthe Town ofValdese, North Carolina's major State programs for the year ended June 30, 2019. Town ofValdese, North Carolina'si major State programs are identified in the summary of the auditor's results section oft the accompanying schedule of findings and responses. Management's Responsibility Management is responsible for compliance with the requirements of State statutes, regulations, and thet terms and conditions ofi its State awards applicable to its State programs. Auditor's Responsibility Our responsibility is to express an opinion on compliance for each of the Town of Valdese, North Carolina's major State programs based on our audit of the types of compliance requirements referred to above. We conducted our audit ofo compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government. Auditing Standards, issued by the Comptroller General oft thel United States; and the audit requirements ofTitle 21 U.S. Code of State Regulations Part 200, Uniform. Administrative Requirements, Cost Principles, and. Audit Requirements) for State Awards (Uniform Guidance) and the State Single Audit Implementation Act. Those standards, and the Uniform Guidance and the State Single Audit Implementation Act, require that we plan and perform the audit to obtain reasonable. assurance about whether noncompliance with the types ofcompliance requirements referred to above that could have a direct and material effect on ai major State program occurred. An audit includes examining, on a test basis, evidence about the Town of Valdese, North Carolina's compliance with those requirements and We believe that our audit provides ai reasonable basis for our opinion on compliance for each major State program. However, our audit does not provide al legal determination oft the Town ofValdese, North Carolina's performing such other procedures as we considered necessary in the circumstances. compliance. 116 Opinion on Each Major State Program In our opinion, the Town ofValdese, North Carolina complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each ofi its major State programs for the year ended. June 30, 2019. Report on Internal Control over Compliance Management oft the' Town of Valdese, North Carolina, is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. Inj planning and performing our audit of compliance, we considered the Town of Valdese, North Carolina's internal control over compliance with the types oft requirements that could have a direct and material effect on each major State program to determine the auditing procedures that are appropriate int the circumstances for the purpose of expressing an opinion on compliance for each major State program, and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness ofi internal control over compliance. Accordingly, we do not express an opinion on the effectiveness A deficiency in internal control over compliance exists when the design or operation ofa control over compliance does not allow management or employees, in thei normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with at type of compliance requirement ofa State program on a timely basis. A. material weakness in internal control over compliance is a deficiency, or combination of deficiencies, ini internal control over compliance such that there is ai reasonable possibility that material noncompliance with at type of compliance requirement ofa State program will not be prevented, or detected and corrected, on at timely basis. A significant deficiency in internal control over compliance is a deficiency, ora combination of deficiencies, ini internal control over compliance with at type of compliance requirement ofa State program that is less severe than a material weakness in internal control over compliance, yet important enough to Our consideration ofinternal control over compliance was for the limited purpose described ini thei first paragraph oft this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies ini internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not The purpose ofthis report on internal control over compliance is solely to describe the scope ofour testing of internal control over compliance and the results oft that testing based on the requirements oft the Uniform ofthe Town of Valdese, North Carolina'si internal control over compliance. merit attention by those charged with governance. been identified. Guidance. Accordingly, this report is not suitable for any other purpose. AkDR6Eh Morganton, North Carolina November 7,2019 117 TOWN OF VALDESE, NORTH CAROLINA Schedule of Findings and Responses For the Year Ended June 30, 2019 Pagelof3 Section I. Summary of Auditors' Results Financial Statements Type of report the auditor issued on whether thei financial statements audited were prepared in accordance with GAAP: Unmodified Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified? yes yes yes X no X none reported Xno Noncompliance material to: financial statements noted Internal control over major federal programs: Material weakness(es) identified: Significant deficiency(ies) identified? Federal Awards yes yes Xno XI none reported Type of auditors' report issued on compliance for major federal programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2-CFR 200.516(a) Identification of major federal programs; No major federal programs Dollar threshold used to distinguish between' Type A and Type B programs Auditee qualified as low-risk auditee? yes Xno $750,000 yes X_no cont. 118 TOWN OF VALDESE, NORTH CAROLINA Schedule ofl Findings and Responses For the Year Ended June 30, 2019 Page2 2of3 State Awards Internal control over major State programs: Material weakness(es) identified? Significant deficiency(ies) identified? Type ofauditors' report issued on compliance for major State programs: Any audit findings disclosed that are required to be reported in accordance with the State Single Audit Implementation Act? Identification of major State programs: Program Name Industrial development fund grant Section II. Financial Statement Findings yes yes Unmodified Xno X none reported yes Xno None reported cont. 119 TOWN OF VALDESE, NORTH CAROLINA Schedule of Findings and Responses For the Year Ended June 30, 2019 Page: 3 of3, cont. Section III. Federal Award Findings and Questioned Costs Section IV. State. Award Findings and Questioned Costs None reported. None reported. 120 TOWN OF VALDESE NORTH CAROLINA'S FRIENDLY TOWN VALDESE, NORTH CAROLINA 28690-0339 Historic - VALDESE P.O.BOX 339 PHONE (828) 879-2120 I FAX (828) 879-2139 I TOWNOFVALDESE.COM Corrective Action Plan For the Year Ended June 30, 2019 Section II. Fimancial Statement Findings None reported. Section III. None reported. Section IV. None reported. Federal Award Findings and Questioned Costs State Award Findings and Questioned Costs 121 TOWN OF VALDESE: NORTH CAROLINA Summary Schedule of] Prior Year Audit Findings For the Year Ended June 30, 2019 Finding 2018-001: Corrected for the year ending June 30, 2019. 122 11 - 3 4