CITY OF THRALL, TEXAS Audited Financial Statements Independent Auditor's Report And Supplemental Schedules For the Year Ended September, 30, 2023 CITY OFTHRALL, TEXAS ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Year Ended September 30, 2023 MINANCIALSECTION PAGE 1-2 3-8 Independent Auditor's Report on Financial Statements.. Management's) Discussion and Analysis... Basic Financial Statements: Government-wide Financial Statements: Statement ofl Net Position.. Statement of Activities., Fund Financial Statements 10 11 Balance Sheet - Governmental Funds. Reconciliation oft the Governmental Funds Balance Sheet To the Statement of Net Position. Statement of] Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds. 12 13 14 15 16 17 18-19 20-39 40 41 42 Reconciliation of the Statement of] Revenues, Expenditures and Changes in Fund Balances ofGovernmental Funds to the Statement of Activities.. Statement ofNet] Position - Proprietary Funds.. Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds.. Statement of Cash Flows - Proprietary Funds. Notes to thel Financial Statements.. Required Supplementary Information: Budgetary Comparison Statement - General Fund. Schedule of changes in Net Position Liability and Related Ratios.. Schedule of Contributions. Compliance and Internal Control Section Report on. Internal Control over Financial Reporting and On Compliance and Other) Matters Based on an Audit of Financial Statements Performed in Accordance with Governmental Auditing Standards. 43 TheAccounting Firm A Donald L.Allmat, CPA,EC CERTIFIED PUBLIC ACCOUNTANT Donald) LA Allman, CPA,PC 4749 Williams Drive,, Ste.3 322 Georgetown, Texas 78633 Email: alimm2omalimampacom Independent Auditor's Report To thel Honorable Mayor and City Council City ofThrall, Texas We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, andi the aggregate remaining fund information of the City ofThrall, Texas, as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the City of Thrall, Texas's basic financial statements as listed int the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Thrall, Texas, as of September 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsiblities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Thrall, Texas and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a! basis for our audit opinions. Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally. accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are freei from material misstatement, whether due to fraud ore error. Inj preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Thrall, Texas's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and toi issue an auditor'sreport thati includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial Basis for Opinions Responsibilities of Management for the Financial Statements known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilties for the Audit of the Financial Statements statements. 1 Inp performing an audit in accordance with generally accepted auditing standards and Government Auditing Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement oft the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on at test basis, evidence regarding the amounts and disclosures in thet financial Obtain an understanding of internal control relevant to the auditi in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Thrall, Texas's internal control. Accordingly, no such opinion is Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Thrall, Texas's ability to continue as a going concern We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information on pages 3-9 and 37-38 be presented to supplement the basic financial statements. Such information is the responsibility of management and, althoughi not a part of the! basici financial statements, is required by the Governmental. Accounting Standards Board who considers! itt to! be an essential part of financial reportingi for placing thel basici financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures tot the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with managements responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do note express an opinion or provide any assurance on thei information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Ina accordance with Government. Auditing Standards, we have also issued our report dated March 28, 2024, on our consideration of the City of Thrall, Texas internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Thrall, Texas's 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 City of Thrall, Texas internal control over financial reporting and compliance. Standards, we: statements. expressed. financial statements. for a reasonable period of time. that wei identified during the audit. Required Supplementary Information Other Reporting Required by Government. Auditing Standards Donald L. Allman, CPA, P.C. Da Georgetown, TX March 28, 2024 2 City ofThrall, Texas Management's) Discussion and Analysis September 30, 2023 Our discussion and analysis of the City's financial performance provides an overview oft the City's financial activities fori the fiscal year ended September 30, 2023. Please: read iti in conjunction with the city's financial statements, which follow this section. Financial Highlights The City's total net position decreased by $(325) for the year in comparison to the prior year The Proprietary Fund reported ai net income of $13,660 before transfers for the fiscal year ended September 30, 2023. The General Fund reported a net loss of $(13,985) before transfers for the The City'sGoyermental Funds balance: reported ai net increase of$63,9451 for thei fiscal year ended increase of $358,0500. fiscal year ended September 30, 2023. September 30, 2023. Using this Annual Report This annual report presents the following three components of the financial statements. 1. Goverment-wide financial statements provide information for the City as a whole. 2. Fund financial statements provide detailed information for the City'ss significant funds. 3. Notes to the financial statements provide additional information that is essential to This report also contains other supplementary information in addition to the basic financial statements. This information includesai management's discussion and analysis and al budgetary The government-wide, financial. statements are designed to provide readers with a broad overview The Statement of Net. Position presents information on all of the assets and liabilities of the City. The difference between assets and liabilities is presorted as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the understanding the government-wide and fund financial statements. comparison schedule. ofthe City's finances, in a manner similar to aj private-sector business. City is improving or deteriorating. Goyernment-Wide Financial Statements The. Statement of Activities presents information on. how the City's net position changed during the most recent fiscal year. This statement is presented using the accrual basis of accounting, which means that all of the current year's revenues and expenses are taken into account regardless of when the cash is received or paid. 3 City of Thrall, Texas Management's) Discussion. and Analysis (Continued) September 30, 2023 Both the Statement of] Net Position and the Statement of Activities present information for thei following: Governmental activities include general government, public safety, health, highways, streets, sanitation, community improvements, planning and zoning, judicial, general administrative, and other services are authorized by its code of ordinances and its citizens. Business activities include water and sewer services. Both oft the government-wide financial statements distinguish functions oft the City that are principally supported by taxes and intergovermental revenues (governmental activities): from functions that arei intended toi recovera all or as significant portion of their costs through user fees and charges (business-type activities). The government-wide financial statements begin on page 11. The following table is a summary of net position as of September 30, 2023: Government-Wide Net Position Governmental Activities 2023 2022 Business-type Activities 2023 Total Primary Government 2023 2022 2022 Current and other assets Capital assets Total assets Deferred outflows ofresources Current liabilities Long-term liabilities Total liabilities Deferred inflows of resources Net position: Neti investment in capital assets Restricted Unrestricted Total net position 466,006 $ 396,857 $ 488,409 $ 559,346 $ 954,415 $ 956,203 1,378,125 1,389,469 1,844,131 1,786,326 13,374 96,685 1,346,924 1,408,049 1,443,609 1,506,963 86,638 170,174 232,268 222,135 (75,184) (68,460) 2,296,280 2,298,168 2,784,689 2,857,514 13,377 138,365 163,129 301,494 86,634 2,132,550 2,126,078 46,953 230,435 3,674,405 3,687,637 4,628,820 4,643,840 26,751 235,050 1,510,053 1,745,103 173,272 2,302,724 2,188,278 279,221 155,251 182 98,914 63,670 62,200 185 95,496 176,891 272,387 63,666 17,867 377,701 367 194,410 1,584,940 1,779,350 127,336 240,002 309,241 $ 327,258 $ 215,875 $ 2,409,938 $2,521,646 $ 2,737,196 $2,737,521 Capital assets decreased by $(11,344) due to depreciation for governmental activities. Capital assets increased Long-term liabilities of the City reflected scheduled payments on bonds, loans and capital lease debt which reduced the outstanding principal balances of debt by $(61,125) in the General Fund and decreased by $(13,762) by$(1,888) due to depreciation: for business-type activities. int thel Proprietary Fund. 4 City of Thrall, Texas Management's Discussion and Analysis (Continued) September 30, 2023 Goyernment-wide Changes in Net Position Governmental Activities 2023 2022 751,145 729,231 (13,985) (63,279) 125,368 184,120 111,383 120,841 215,875 95,034 Business-type Activities 2023 545,614 13,660 (125,368) (111,708) Total Primary Government 2023 1,296,759 (325) (325) 2022 488,233 421,329 (184,120) 237,209 185,000 2022 1,217,464 358,050 358,050 185,000 2,194,471 Change in net position Total revenues Total expenses Change before transfers Transfers Change in net position Prior Period. Adjustment Net position beginning Net position ending 737,160 $ 665,952 $ 559,274 $ 909,562 $ 1,296,434 $ 1,575,514 2,521,646 2,099,437 2,737,521 327,258 $ 215,875 $ 2,409,938 $2,521,646 $ 2,737,196 $ 2,737,521 The specific changes ini revenues and expenses are shown int thet tables that follow, along with a discussion oft the events giving rise to those changes. Governmental Activities 2023 2022 Business-type Activities 2023 Total Primary Government 2023 2022 2022 Revenues Program revenues: Charges for services Operating grants and contributions Interest income General revenues: Property taxes Sales tax Franchise taxes Other general revenues Total revenues $ 55,138 $ 67,429 $ 557,976 $ 506,901 $ 613,114 $ 574,330 63,741 921 329,499 239,010 42,737 6,114 6,500 271 325,724 226,235 36,293 3,500 5 279,807 524 1,298 2,219 329,499 239,010 42,737 6,114 795 325,724 226,235 36,293 125,830 122,330 $ 737,160 $ 665,952 $ 559,274 $ 909,562 $ 1,296,434 $ 1,575,514 City ofThrall, Texas Management's! Discussion and. Analysis (Continued) September 30, 2023 Governmental Activities 2023 2022 549,416 $ 548,728 $ 83,954 40,337 14,080 19,740 30,491 14,431 73,204 86,321 Business-type Activities 2023 Total Primary Government 2023 549,416 $ 548,728 83,954 14,080 30,491 545,614 2022 $ 2022 40,337 19,740 14,431 488,233 Expenses General government Public safety Municipal court Park Public Works Streets Water and wastewater Total expenses 545,614 488,233 $ 751,145 $ 709,557 $ 545,614 $ 488,233 $ 1,296,759 $ 1,197,790 Financial Analysis of the City's Funds The general fund had a $111,383 increase overall, due to transferring money from the proprietary fund. The investment in capital assets increased $107,974, restricted funds increased $10,133 and unrestricted: fund balance The utility fund reported a changei ini net position ofS(111,708). Thei investment: in capital assetsi increased $6,472, decreased. $(6,724), for an overall net increase in net position of$111,383. restricted assets increased $29,086, and unrestricted fund balance decreased $(147,266). 6 City of Thrall, Texas Management 's Discussion and Analysis (Continued) September 30, 2023 General Fund Budgetary Highlights Municipal court fines were once again the largest budget deficit item with $(74,922) less revenues than budgeted. However, grant income and: salest taxi income actual: revenues were more than budgeted, sO the general fund overall had $13,596 more revenues actually received than budgeted. Total expenses were $79,483 less than budgeted due to public safety expenses being far less than what was budgeted. Capital Asset and Debt Administration Capital Assets The: following capital asset: information is presented net of depreciation. More detailed information canl be found on pages 29 and 30: in the notes to the financial statements. Governmental Activities 2023 2022 Business-type Activities 2023 Total Primary Government 2023 2022 279,807 1,875,787 2,156,342 296 8,069 2022 Land and CNN Construction: in progress Distribution and collection systems Buildings and improvements Equipment Infrastructure $ 2,971 $ 2,971 $ 134,209 $ 134,209 $ 137,180 $ 137,180 2,156,342 191 5,538 1,875,787 15,661 71,322 1,307,880 11,142 71,626 1,292,386 1,307,880 15,365 63,253 11,333 77,164 1,292,386 Totals at historical cost $1,378,125 $1,389,469 $ 2,296,280 $ 2,298,168 $ 3,674,405 $ 3,687,637 7 City of Thrall, Texas Management'sl Discussion and Analysis (Continued) September 30, 2023 Debt More detailed information on the City's debt can bef found onj pages 31-33i int the notes tot the financial statements. Governmental Activities 2023 2022 24,472 57,852 Business-type Activities 2023 Total Primary Government 2023 24,472 2022 2022 57,852 Revenue bonds Loans payable Capital leases payable Totals $1,360,000 $1,385,000 $ 163,730 $ 172,090 $ 1,523,730 $ 1,557,090 $1,384,472 $1,442,852 $ 163,730 $ 172,090 $ 1,548,202 $ 1,614,942 Economic Factors and Next Year's Budgets and Rates Council to provide additional funds as needed. Contacting the City's Financial Management Increases in wastewater and water rates charged to users and other revenue sources will be considered by the This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview oft the City's finances and to show the City'sa accountability for the money it receives. Ifyou have questions about this report or need additional financial information, please direct your requests to the City Secretary, City ofThrall, P.O. Box 346, Thrall, Texas, 76578. 8 (THIS PAGE: LEFT BLANK INTENTIALLY) 9 City of Thrall, Texas Statement ofl Net Position As of September 30, 2023 Primary Government Business-type Activities Governmental Activities $ Total 577,654 57,887 27,879 11,774 279,221 137,180 3,537,225 4,628,820 26,751 65,089 78,094 34,035 13,384 6,299 57,832 1,490,370 1,745,103 173,272 2,302,724 107,909 129,655 6,339 2,929 1,506 30,883 155,251 ASSETS Cash and cash equivalents (note 2) Receivables (net, where applicable, ofallowances for uncollectibles): Accounts receivables Property taxes, sales taxes & franchise fees Fines receivable Net Pension Asset Restricted cash (note 2) Capital assets (note 5): Land and CCN Construction inj progress Other capital assets, net of depreciation Total assets Deferred Outflows of] Resources LIABILITIES Accounts payable Accrued liabilities Customer deposits Noncurrent liabilities (note 7): Total OPEB: Liability Accrued vacation & sick leave payable Due within one year Duei ini more than one year Total liabilities Deferred Inflows of Resources NET: POSITION Neti investment: in capital assets Restricted for: Debts service Sales tax street repairs Municipal court Police training Park project Construction Unrestricted (deficit) 199,972 $ 377,682 57,887 5,887 46,953 134,209 2,162,071 2,784,689 13,377 29,004 66,966 34,035 6,691 1,068 8,360 155,370 301,494 86,634 2,132,550 16,070 27,879 5,887 232,268 2,971 1,375,154 1,844,131 13,374 36,085 11,128 6,693 5,231 49,472 1,335,000 1,443,609 86,638 170,174 91,839 129,655 6,339 2,929 1,506 (75,184) 30,883 230,435 Total net position $ 327,258 $ 2,409,938 $2,737,196 The accompanying notes are an integral part of thej financial statements. 10 City of' Thrall, Texas Balance Sheet-Govermenla!. Funds As of September 30, 2023 Debt Service Fund Special Revenue Governmenta Funds Total Funds $199,972 10,693 17,186 232,268 General Fund $199,972 $ 10,693 17,186 ASSETS Cash and cash equivalents Receivables (net, where applicable, ofallowances for uncollectibles): Sales Tax Property taxes Fines & Franchise fees receivable Due from other funds Restricted cash 91,839 140,429 Total assets $227,851 $91,839 140,429 $460,119 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable Accrued liabilities Total liabilities Deferred Inflows of Resources Deferred property tax revenue Deferred fine revenue Total deferred inflows of resources Fund Balances: Nonspendable Restricted for: Debt Service Committed for: Sales tax street repairs Committed for: Court' Tech & Security Committed for: Police training Committed for: Park project Committed for Construction Total fund balances Total liabilities, deferred inflows of resources, and fund balances 36,085 11,128 $ 47,213 17,186 17,186 36,085 11,128 47,213 17,186 17,186 91,839 129,655 6,339 2,929 1,506 163,452 395,720 91,839 129,655 6,339 2,929 1,506 140,429 140,429 $ 460,119 Unassigned 163,452 163,452 $227,851 $ 91,839 91,839 The accompanying notes are an integral part of the financial. statements. 12 City ofThrall, Texas tot the Statement ofNet Position Reconciliation of the Govermmental. Funds Balance Sheet As of September. 30, 2023 Total Fund Balance Governmental. Funds: Deferred Inflows are: noti included in governmental funds Net Pension Asset is not included in governmental funds Net Opeb liability is not included in governmental funds Amounts reported for governmental activities in the Vacation and sick leave payable not included in governmental funds Deferred Outflows noti included in governmental funds Differences inj property tax revenues and deferred revenues the current period and therefore are not reported in the funds. Long-term liabiities are: not due and payable in the current period and therefore. have not been included int the fund financial statements. Capital assets used in governmental activities are not financial resources and therefore are: not reported in the governmental funds. (Seel Note 6) Net Position of Governmental Activities $ 395,720 (86,638) 5,887 (6,693) (5,231) 13,374 17,186 (1,384,472) 1,378,125 327,258 The accompanying notes are an integral part ofthej financial statements. 13 City ofThrall, Texas Statement ofl Revenues, Expenditures and Changes ini Fund Balances Govermmental Funds Fort the Year. Ended September 30, 2023 Debt Service Fund Special Revenue Governmental Fund Total Funds $ 328,409 239,010 42,737 39,078 63,741 6,114 921 720,010 General Fund e 328,409 239,010 42,737 39,078 63,741 6,114 921 720,010 REVENUES Property taxes, penalties, and interest Sales tax Franchise taxes Municipal court fines Grant income Miscellaneous Investment earnings EXPENDITURES Current: General government Public safety Municipal court & Parks Public Works Streets Capital Outlay Total expenditures Excess (deficiency) ofrevenues over expenditures OTHER FINANCING SOURCES (USES) Loan Proceeds received Interest expense paid Transfers out Total revenues 567,619 30,441 14,080 55,106 667,246 52,764 567,619 30,441 14,080 55,106 667,246 52,764 (55,807) (58,380) (124,320) 249,688 11,181 63,945 331,775 (55,807) (58,380) 98,518 (15,669) (15,669) 107,508 Debt principal paid Transfers in (124,320) 125,368 1,048 53,812 109,640 $ 163,452 $ 91,839 25,802 25,802 114,627 140,429 $ 395,720 Total other financing sources (uses) Net changei in fund balances Fund balances beginning Fund balances ending The accompanying notes are an integral part of thej financial. statements 14 City ofThrall, Texas Reconciliation of the Statement of1 Revenues Expenditures and Changes in Fund Balances- Govermental. Funds to the Statement of4 Activities For the Year. Ended. September 30, 2023 Net change in fund balances total governmental: funds $ 63,945 Amounts reported for governmental activities in the statement ofa activities Governmental: funds report capital outlays as expenditures. However, in the statement ofa activities, the cost of those assets is allocated over their are different because: estimated useful lives as depreciation expense. Add back capital outlays. Subtract depreciation expense. OPEB expense not included in govermental funds Revenues in the statement of activities that do not provide current financial resources are not reported as revenues int thei funds. Add deferred property tax revenues at the end of the year. Subtract deferred property tax revenues at the beginning oft the year. Add noncurrent. receivables at the end of the year Subcontract noncurrent receivables at the beginning oft the year Transfers outside of Governmental Funds noti included Long-term debt proceeds provide current financial resources to governmental funds, buti issuing debti increases long-term liabilities in the statement ofr net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces. long-term liabilities in the statement of 55,106 (66,450) (595) Property tax revenues: Fine revenues: 17,186 (16,096) net position. Subtract current period debti issued. Add back principal payments on long-term debt. Total Pension Expense is not included in Governmental Funds Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are: not reported as expenditures 58,380 (93) in governmental funds. Compensated absences: Subtract noncurrent liability at the end of the year. Add noncurrent liability at the beginning oft the year. Change in net position of governmental activities. (5,231) 5,231 111,383 $ The accompanying notes are an integral part of thej financial statements. 15 City of' Thrall, Texas Statemen! of Net Position Proprietary Fund As of September 30, 2023 Business-type Activities Enterprise Funds $ 377,682 57,887 435,569 5,887 46,953 134,209 2,162,071 2,349,120 2,784,689 13,377 29,004 66,966 34,035 8,360 138,365 6,691 1,068 155,370 163,129 301,494 86,634 2,132,550 46,953 230,435 2,409,938 ASSETS Current assets: Cash and cash equivalents Receivables (net, where applicable, ofallowances for uncollectibles): Accounts receivable Total current assets Noncurrent assets: Net Pension Asset Restricted cash Capital assets: Land and CCN Other capital assets, net of depreciation Total noncurrent assets Total assets Deferred Outflows of Resources LIABILITIES Current liabilities Accounts payable Accrued liabilities Due to other funds Customer deposits Long-term debt Noncurrent liabilities: Net Pension! Liability Total OPEB Liability Accrued vacation Long-term debt Total current liabilities Total noncurrent liabilities Total liabilities Deferred Inflows of] Resources NETI POSITION Neti inyestment in capital assets Restricted for debt service Unrestricted (deficit) Total net position The accompanying notes are an integral part of thej fnancial. statements. 16 CityofThrall, Texas Statement of Revenues, Expenses, and Changes inl Net Position Proprietary. Funds For the Year Ended September 30, 2023 Business-type Activities Enterprise Funds $ 557,976 557,976 187,861 149,206 3,930 7,467 11,787 32,582 53,435 687 90,752 537,707 20,269 1,298 (7,907) (6,609) 13,660 OPERATING REVENUES Charges for services (pledged for revenue debt) Miscellaneous OPERATING EXPENSES Water purchased & water service costs Salaries and benefits Professional fees Office expense Utilities Repairs and maintenance Miscellaneous Total Pension & OPEB Expense Depreciation Total operating revenues Total operating expenses Operating income (loss) NON-OPERATING REVENUES (EXPENSES) Interest and investment revenue Interest expense Total nonoperating: revenues (expenses) Net income (loss) before contributions and transfers Capital contributions grants Capital contributions recovery fees Transfers in/(out) (125,368) (111,708) 2,521,646 $ 2,409,938 Change in net position Net position beginning Net position ending The accompanying notes are an integral part of the financial statements. 17 City ofThrall, Texas Statement of Cash. Flows Proprietaryi Fund For the Year Ended September 30, 2023 Business-type Activities Enterprise Funds CASH! FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers Payments to employees $ 549,116 (272,488) (149,206) 127,422 Net cash provided (used) by operating activities CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds (125,368) (125,368) Net cash provided (used) by noncapital financing activities CASHI FLOWS FROM CAPITAL. AND RELATED FINANCING. ACTIVITIES Capital assets acquired Increase in Restricted Cash Interest payments on outstanding debt Principal payments on outstanding debt (88,864) (29,086) (7,907) (8,360) (134,217) Net cash provided (used) by capital and related financing activities CASH FLOWS FROM INVESTING ACTIVITIES Interest and investment revenue: received 1,298 1,298 (130,865) 508,547 377,682 Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Balances beginning oft the year Balances end of the year $ The accompanying notes are an integral part of thej financial. statements. 18 City ofThrall, Texas Statement of Cash Flows Proprietary Fund (Continued) Fort the Year Ended September 30, 2023 Business-type Activities Enterprise Funds Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation Changes in assets and liabilities: Increase in Accounts receivable Increase in Accounts payable Increase in Accrued liabilities Increase in Customer deposits Increase in Accrued vacation Net cash provided (used) by operating activities $ 20,269 90,752 (8,860) 26,992 15,877 (18,295) 687 Total Pension Expense is a: non cash expense $ 127,422 The accompanying notes are an integral part of thej financial. statements. 19 CityofThrall, Texas Notes to the Finmancial. Statements September 30, 2023 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City ofThrall, Texas (the City), is a general law city in Williamson County which is incorporated: ini the State of Texas. The City operates undera Council form of government and provides such services as: public safety, highways and streets, sanitation, culture-recreation, public improvements, planning and zoning, general administrative, and The accounting policies oft the City conform to generally accepted accounting principles applicable to governments as promulgated by the Governmental Accounting Standards Board (GASB). The following is a summary of the water and wastewater services. significant policies. A. GOVERNMENT-WIDE FINANCIAL STATEMENTS The Statement of Net Position and the Statement of Activities are government-wide financial statements. The government-wide financial statements provide information about the activities of the City as a whole presenting all assets, liabilities, and changes in net position oft the City. These statements are prepared using the accrual basis of Separate rows and columns are used in the government-wide statements to distinguish between governmental activities and business-type activities, with ai total column for the primary government as a whole. accounting. B. SCOPE OF THE: REPORTING ENTITY The City has used the criteria detailed in GASB Statement 14 as amended by GASB 61 to determine whether or not certain entities should bei included in the accompanying financial statements. The definition of the reporting entity is based primarily on the notion offinancial accountability. Aj primary government is financially accountable: for legally separate organizations ifi its officials appoint a voting majority of an organization's governing body and either iti is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. There were no legally separate organizations which should be treated as component units oft the City for the year ended September 30, 2015. C.F FUNDFINANCIALSTATEMENIS Fund financial statements are used to present more detailed information about the City's most significant funds. Separate fund financial statements are prepared for governmental funds and proprietary funds. The City has no fiduciary funds. The governmental and proprietary fund financial statements place an emphasis oni major funds. Those funds which are determined to be major funds are presented in separate columns, with all nonmajor funds being aggregated and displayed in a single column. Interfund receivable and payable balances and transfer between funds have not been eliminated in the fund financial statements. 20 CityofThrall, Texas Notes toi the Financial Statements (Continued) September 30, 2023 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. FUND: FINANCIAL STATEMENTS (Continued) The City has reported the following major governmental funds. General Fund - The General Fund accounts for all revenues and expenditures oft the City which arei not accounted for in other funds. It receives a greater variety and number of taxes and other general revenues than any other fund. The General Fund's resources also finance a wider range of activities than any other fund. Major functions financed by the General Fund include administration, public safety, municipal court, sanitation, park maintenance and street maintenance. The City has no other governmental funds besides the general fund. The City has reported the following major proprietary funds. Utility System Fund - This fund's function is to provide for a source of supply of water, and its distribution to customers and toj provide for the sanitary collection, treatment and disposal ofs sewage on a user charge basis. The City has no other proprietary funds besides the utility fund. The City has no internal service: funds or fiduciary fund types. D. MEASUREMENT FOCUS. AND BASIS OF ACCOUNTING Measurement focus refers to whether aj particular type oft transaction will be recorded in the financial statements. The economic resources measurement: focus recognizes all: resources and obligations and the changes in them. The current financial resources measurement focus recognizes only current resources and obligations and transactions affecting current: resources and obligations. Basis of accounting refers to when revenues and expenditures are. recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing oft the measurement made, regardless oft the measurement focus applied. Government-wide financial statements The government-wide financial statements are prepared using the economic resources measurement focus and the accrual basis of accounting. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are: recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements specific to the class of nonexchange transaction. For the government-wide financial statements prepared on the accrual basis, property tax revenues are recognized in thej period for which the taxes arel levied. 21 City ofThrall, Texas Notes 10 the Financial Statements (Continued) September 30, 2023 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. MEASUREMENT FOCUS. AND BASIS OF. ACCOUNTING (Continued) Fund financial statements - governmental funds The fund financial statements for the governmental funds are prepared using the current financial resources measurement focus and the modified accrual basis ofaccounting. This measurement focus affects the accounting and reporting treatment of capital assets and long-term liabilities. The capital assets and long-term liabilities of the governmental activities are not recorded on the balance sheet of the fund financial statements oft the governmental funds. Transactions for thej purchase of assets, thei issuance ofdebt, and the payment ofo debt principal are: reflected in the governmental funds, but they are reported on the statement of revenues, expenditures, and changes in fund The modified accrual basis of accounting recognizes revenues in the accounting period in which they become measurable and available andi recognizes expenditures in the accounting period in which the fund liabilityi is incurred, While the City expects all taxes on real property to ultimately be collectible, the bulk of delinquent property taxes receivable at the end of the fiscal year are not anticipated to be collected soon enough thereafter to be used to pay liabilities ofthe current period. Therefore, revenue from delinquent property taxes receivable is not recognized in the Fines receivable but not past due at the end oft thei fiscal year may be subsequently reduced when the offender attends ad defensive driving course, provides proof ofinsurance, has the offense dismissed by the municipal court, or serves jail time. Current fines receivable thus do not meet the measurability criterion required to be susceptible to accrual. A significant portion ofpast due fines receivable: is not anticipated tol be collected soon enough the meet the criterion balances as capital outlay and debt service principal expenditures and proceeds from debt. except for unmatured interest on general long-term debt, which recognized when due. fund financial statements unless collected during the current period. that the revenue be available. Fund financial statements - proprietary funds and the accrual basis ofa accounting. E. CASH. AND CASH EQUIVALENTS The fund financial statements for the proprietary funds are prepared using the economic resources measurement: focus Cash and cash equivalents for purposes of the statement of cash flows represent demand accounts and petty cash. Certificates of deposit, U.S. government debt securities, money market mutual funds, and investments in local government investment pools are: recorded as investments and are not treated as cash or cash equivalents. 22 City ofThrall, Texas Notes tot the Financial Statements (Continued) September 30, 2023 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) F. INVESTMENTS The City had no: investments at September 30, 2023. The City is authorized to invest in certificates of deposit at the City's depository bank, obligations of the United States of America, and investment pools and no-load: money market mutual funds which meet the conditions of the State ofTexas Public Funds Investment Act. Money market mutual funds must bei no-load: funds which arei regulated byt the Securities and] Exchange Commission, havea a dollar-weighted average stated maturity of 90 days or fewer, and include the investment objective of the: maintenance of a stable net asset value of$ $1 for each: share. G. RECEIVABLES Unbilled service receivables have been accrued in the proprietary funds to record the estimated amount ofrevenues earned but not billed as of the end of the fiscal year. The estimate is based on the pro rata number of days in the billing cycle before and after the fiscal year end. H. CAPITAL ASSETS Capital assets are defined by the City as assets with an estimated useful life in excess oft two years. All capital assets are valued atl historical cost or estimated historical cost ifa actual historical cost ifnot available. Donated capital assets Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful are valued at their estimated fair market value on the date donated. lives are as follows: Infrastructure Distribution & Collection Buildings and Improvements Machinery and Equipment 20 years 24-50 years 20-40 years 5-20 years - ACCUMULATED UNPAID! PAID TIME OFF Paid time offmay be accumulated by employees at the rate of 801 hours after 1 year ofservice, 1601 hours for 21 through 4 years ofs service, and 200 hours with 5 or more years of service. Accrued, unused paid time offi is included in an employee'sf final pay. Thet total liability for the governmental fund'saccumulated paid time offofs 6,708 isi reflected in the government-wide: financial statements. None ofiti is reported in the: fund financial statements because none of itis considered tol be a current liability. 23 City ofThrall, Texas Notes tot the Financial Slatements (Continued) September 30, 2023 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) J. LONG-TERM DEBT In the government-wide financial statements, bonds payable are reported net of any applicable bond premium or discount. Bond premiums and discounts are deferred and amortized over the life of the bonds as an adjustment to Int the fund financial statements of governmental funds, thei face amount of debt issued and any premium received are reported as other financing sources, while discounts on debt issued are: reported as other financing uses, andi issuance interest expense. Bond issuance costs are: reported as expenses when incurred. costs are reported as debt service expenditures. K. COMMITED FUND: BALANCE The government's) highest level of decision-making authority is the City Council, and a formal resolution of the City Council is required to establish or rescind ai fund balance commitment. L. USE OF RESTRICTED RESOURCES. AND COMMITED RESOURCES When an expense. is incurred for purposes for which both restricted fund balance or net] position and unrestricted fund balance or net position are available, City policy is to first apply restricted resources. When an expense isi incurred for purposes for which both committed fund balance and unassigned fund balance are available, City policy is to first apply committed resources. M. INTERNAL ACTIVITY The City does not maintain any internal service funds or use the general fund to charge other funds or programs for centralized expenses, and there are: not administrative overhead charges which would need tol be either eliminated or disclosed as being included in direct expenses. N. PROGRAM REVENUES AND INDIRECT EXPENSES The government-wide statement ofactivitiesi is presentedi ins ai format thati identifies thei net cost ofthe City'si individual functions. The expenses of each function are reduced by the functions program revenues. Program revenues are revenues which derive directly from the program itselfand include charges for services, program-specific operating Some governmental functions such as administration are in essence indirect expenses of other functions. Governments are: not required to allocate those indirect expenses to other functions, but ifthey do, indirect expenses should be presented in a separate column from direct expenses. The City has chosen not to allocate those indirect grants and contributions, and program specific capital grants and contributions. expenses. 24 City ofThrall, Texas Notes to the Financial Statements (Continued) September. 30, 2023 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 0. OPERATING AND: NONOPERATING REVENUES AND: EXPENSES The City's policy in distinguishing proprietary fund operating and nonoperating revenues and expenses follows the guidance for distinguishing types of cash flows. Transactions for capital and related financing activities, noncapital financing activities, or investing activities are normally not treated as operating revenues or expenses. P. ESTIMATES Preparation of financial statements in conformity with generally accepted accounting principles requires the use of management's estimates. Items for which estimates are necessary include the amount oft receivables which may not be collectible, inventory obsolescence, and service lives and salvage values of depreciable assets. Estimates also include the likelihood ofl loss and potential loss amount from contingencies such as. litigation. 2 DEPOSITS ANDI INVESTMENTS Custodial Credit Risk ofDeposits Custodial credit risk is the risk that in the event ofal bank failure, the City's deposits may: not be returned to it. The City maintains a depository contract which requires its bank to pledge securities to the City in an amount sufficient to secure the total amount oft the City's funds on deposit, less any. portion of the deposit balance which is secured by FDIC coverage. The carrying amount of the City's deposits was $856,875 at year end and the bank balance was $856,875.Ofthe! bank balance, $250,000 wasi insured1 by federal depository insurance and the remaining $606,875was collateralized with securities held by the City's agent (safekeeping bank) in the City's name. 3 RECEIVABLES Receivables are: recorded net of allowançes for uncollectible accounts as follows: Allowance for Uncollectibles Gross Receivables $ Net Receivables $ $ $ (305) General Fund Accounts receivable Property taxes receivable Sales tax receivable Fines & Franchise fees receivable Utility System Fund Utility accounts receivable 260 $ 17,186 10,693 58,192 260 17,186 10,693 57,887 25 City of Thrall, Texas Notes tot the Financial. Statements (Continued) 4 AD VALOREM PROPERTYTAXES September 30, 2023 Property taxes are levied on October 1 on assessed values as of January 1 for all real and personal property located in the City. Taxes are due in January of the following year and become delinquent on February 1. On January 1 ofe each year, a tax lien attaches to property to secure the payment ofa all taxes, penalties, and interest ultimately imposed. The October 1, 2021 levy was based upon 100 percent of the assessed market value of $81,694,237: The: maximum tax rate permitted by the Constitution of the State ofTexas is $2.50 per $100.00 of assessed valuation. The tax rate for the October 1, 2021 levy was $.403332 for a levy of $329,499. Current Ift the effective tax rate excluding tax rates for bonds and other contractual obligations and adjusted for new improvements, exceeds the rate for the previous year by more than 8 percent, qualified voters oft the City may petition for an election to determine whether tol limit the tax rate to no: more than 8 percent above the tax rate of the previous year. The county-wide Appraisal District is required under the Property Tax Code to assess all property within the Appraisal District on the basis of 100 percent ofi its appraised value. The value of property within the Appraisal District: must bei reviewed at least every five years. The City ymay challenge appraised values property taxes receivable is $4,921 and delinquent property taxes receivable are $12,265. established by the Appraisal District through various appeals and, ifnecessary, legal action. 5 CAPITAL ASSEITS Primary Government Additions Retirement Beginning Balance $ 2,971 $ 2,971 229,085 409,814 1,539,529 2,178,428 (213,720) (346,561) (231,649) (791,930) 1,386,498 $1,389,469 $ (11,344) $ $ 6,401 14,720 36,252 9,077 $ 66,450 26 Ending Balance $ 2,971 2,971 229,085 437,800 1,566,649 2,233,534 (217,943) (366,174) (274,263) (858,380) 1,375,154 $1,378,125 Governmental activities: Land Construction in progress Total undepreciated assets Other capital assets: Buildings and improvements Equipment & Vehicles Infrastructure $ 27,986 27,120 55,106 (4,223) (19,613) (42,614) (66,450) (11,344) Total other capital assets at historical cost Less accumulated depreciation for: Buildings and improvements Equipment & Vehicles Infrastructure Total accumulated depreciation Other capital assets, net Governmental activities capital assets, net General government Public safety Public Works Streets Parks Depreciation expense for governmental activities was charged as: follows: Total governmental functions City ofThrall, Texas Notes tot the Financial. Statements (Continued) 5 CAPITAL. ASSETS (Continued) September 30, 2023 Primary Government Additions Retirement Beginning Balance 114,209 $ 20,000 279,807 414,016 3,851,394 4,203 153,951 4,009,548 368,671 (1,975,607) (88,116) (3,907) (145,882) (2,125,396) (90,752) 1,884,152 277,919 Ending Balance 114,209 20,000 134,209 4,220,065 4,203 153,951 4,378,219 (2,063,723) (4,012) (148,413) (2,216,148) 2,162,071 Business-type activities: Land Cert of convenience and necessity (CCN) Construction inj progress Total undepreciated assets Other capital assets: Distribution and collection systems Buildings and improvements Equipment Total other capital assets at historical cost Less accumulated depreciation for: Distribution and collection systems Buildings and improvements Equipment Total accumulated depreciation Other capital assets, net Business-type activities capital assets, net $ (368,671) (368,671) 88,864 88,864 368,671 (105) (2,531) $ 2,298,168 $366,783 $(368,671) $ 2,296,280 INTERFUND RECEIVABLES AND PAYABLES ANDTRANSEERS Charges for garbage service are billed and collected with water and sewer charges and are deposited first into the utility fund bank account, and then the garbage portioni is transferred tot the general fund bank account. The September transfer was made in October. Thei following is as summary of amounts due: from and due to other funds byi individual major fund. Payments to the City's retirement plan were made from the general fund, but withholdings from employees were recorded in both the utility fund and the general fund. The portion of the payment made from the general fund that should have been made from the utility funds has been recorded as a transfer. 27 City of Thrall, Texas Notes to the Financial Statements (Continued) 7 LONG-TERM DEBT Seplember 30, 2023 Long-term debt at September 30, 2023, is composed oft the following items: Equipment loans - Payable out of the General Fund Equipment loans Payable out oft the General Fund General Obligation Bonds, Series 2017 for Road: Improvements & Drainage, due in annual installments ranging from $15,000 to $80,000 due on. February 15, through February 15, 2052, with the interest rate. ranging from 2%1 to 4%. Revenue Bonds and other loans - Payable out of the Utility System Fund through revenues: Loan payable to Frontier Bank for Chevy Pickup for Police Department monthly installments of $820 including principal and interest through Loan payable to. Frontier Bank for Chevy Pickup for Police. Department monthly installments of $888 including principal and interest through 1,385,000 January 20, 2023; interest at 3.45 percent July 20, 2026; interest at: 3.45 percent 3,197 38,245 16,410 172,090 Loan payable to. Frontier Bank for Park Improvements, monthly installments of $1202.65, with an interest rate of4.1%, monthlyi intallments beginning December 15,201 $204,250 Series 2019 revenue bonds due in annual installments of $15,000 to $25,000 through October 1, 2019; interest at 5.00 percent for at term of 60 months. Total long-term debt $ 1,614,942 28 City ofThrall, Texas Notes 10 the Financial Statements (Continued) September 30, 2023 7 LONG-TERM DEBT (Continued) The following is a summary ofl long-term debt activity for September 30, 2023. Beginning Balance Ending Balance Due Within One Year Additions Reductions Govermental activities Loans and leases payable Loans payable General Obligation Bonds Other liabilities Net Pension Liability Net OPEB Liability Accrued vacation Governmental activities long-term liabilities Business-type activities Bonds and leases payable Revenue bonds Loans Other liabilities: Net Pension Liability Net OPEB Liability Accrued vacation Business-type activities long-term liabilities $ 57,852 $ 1,385,000 (1,773) 11,667 5,231 Beginning Balance 172,090 172,090 $ (1,772) 11,665 1,496 (33,380) $ 24,472 $ 24,472 (25,000) 1,360,000 (5,887) 6,693 5,231 Ending Balance 163,730 25,000 (4,114) (4,974) $1,457,977 $ (9,088) $ (58,380) $ 1,390,509 $ 49,472 Due Within One Year Additions Reductions 8,360 8,360 8,360 $ 163,730 $ 8,360 (4,115) (4,974) (5,887) 6,691 1,068 (428) 183,479 $ (4,115) $ 7,932 $ 165,602 $ 8,360 The City was in compliance with all significant limitations and restrictions contained in the debt agreements at year end. 29 City ofThrall, Texas Notes to the Financial. Statements (Continued) September 30, 2023 7 LONG-TERM DEBT (Continued) Debt service requirements on outstanding bonds and loans are as follows: Governmental Activities Loans Principal 37,578 35,015 38,558 30,000 30,000 130,000 195,000 240,000 295,000 360,000 Business-Type Activities Bonds and Loans Principal 8,556 8,756 8,961 9,170 9,384 39,785 55,193 23,925 Year Ended September 30 2024 2025 2026 2027 2028 2029-2032 2033-2037 2038-2042 2043-2047 2048-2052 Interest 54,261 53,150 52,279 50,450 44,300 190,300 198,900 155,600 102,500 37,400 Interest 7,514 7,111 6,244 5,404 4,951 15,070 7,318 $1,391,151 $ 939,140 $1 163,730 $ 53,612 30 City ofThrall, Texas Notes to the Financial Statements (Continued) 9 PENSION PLAN Plan Description September 30, 2023 The City of Thrall participates as one of 860 plans in the nontraditional, joint contributory, hybrid defined benefit pension plan administered by the Texas Municipal Retirement System (TMRS). TMRS is an agency created by the State ofTexas and administered in accordance with the' TMRS. Act, Subtitle G, Title 8, Texas Government Code (the TMRS Act) as an agent multiple-employer retirement system for municipal employees in the State of Texas. The TMRS Act places the general administration and management oft the System with a six-member Board of Trustees. Although the Governor, with the advice and consent of the Senate, appoints the Board, TMRS is not fiscally dependent on the State ofTexas. TMRS's defined benefit pension plan is a tax-qualified plan under Section 401(a) of the Internal Revenue Code. TMRS issues aj publicly available comprehensive annual report (CAFR) that can be obtained at www.tmrs.com. B.] Benefits Provided All eligible employees oft the city are required toj participate in TMRS. TMRS provides retirement, disability and death benefits. Benefit provisions are adopted by the governing body of At retirement, the benefit is calculated as if the sum of the employee's contributions, with interest, and the city financed monetary credits with interest were used to purchase an annuity. Members may choose to receive their retirement benefit in one of seven payment options. Members may also choose to: receive aj portion oft their benefit asal Partial Lump Sum Distribution in an amount equal to 12, 24 or 361 monthly payments, which cannot exceed' 75% At the December 31, 2020 valuation and measurement date, the following employees were covered by the benefit the city, within the options available in the state statutes governing TMRS. oft the member's deposits and interest. Employees covered by benefit terms. terms. Inactive employees or beneficiaries currently receiving benefits 0 Inactive employees entitled to but not yet receiving benefits 8 7 15 Active employees Total C.C Contributions The contribution rate for the employees in TMRS is 5%, 6% and 7% of employee gross earnings, and the City matching percentages are either 100%, 150% or 200%, both as adopted by the governing body ofthe City. Under the state law governing TMRS, the contribution rate for each cityi is annually determined by the actuary, using the Entry Age Normal (EAN) actuarial cost method. The actuarially determined rate is the estimated amount necessary to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded Employees fort the City ofThrall were required to contribute. 5% oftheir annual gross earnings during the fiscal year. The contribution rates for the City of Thrall were 5% and 5% in calendar years 2023 and 2022 respectively. The city'scontributionsi to' TMRS: for the year ended September 30, 2023 were $15,979, and werei in excess oftherequired accrued liability. contributions. 31 CityofThrall, Texas Notes to thel Financial Statements (Continued) 9 PENSION PLAN (Continued) D.I Net Pension Liability September 30, 2023 The city's Net Pension Liability (NPL) was measured as of December 31, 2022, and the Total Pension Liability (TPL) The Total Pension Liability in the December 31, 2022 actuarial valuation was determined using the following actuarial used to calculate thel Net Pension Liability was determined by an actuarial valuation as oft that date. Actuarial assumptions: assumptions: Inflation 2.5% per year Overall payroll growth 3.5-10.5% per year Investment Rate of] Return 6.75% net of pension plan investment expense, including inflation Salary increases were based on as service-related table. Mortality rates for active members, retirees, and beneficiaries were based on the gender-distinct RP2000 Combined Healthy Mortality Table, with male rates multiplied by 109% and female rates multiplied by 103%. The rates arej projected on a: fully generational basis by scale BB on account for future mortality improvements. For disabled annuitants, the gender-distinct RP2000 Disabled Retiree Mortality Table is used, with slight Actuarial assumptions used in thel December 31,2022, valuation were based on the results ofactuarial experience studies. The experience study in' TMRS wasi for the period. January 1,2 2016 through December 31, 2022, first used int thel December 31,2017valuation. Healthy post-retirement: mortality rates and annuity purchase rates were updated based on al Mortality Experience Investigation Study covering 20151 through 2019, and dated December. 31, 2022. These assumptions were: first used in the December. 31, 2021 valuation, along with a change to the. Entry Age Normal (EAN) actuarial cost method. The long-term expected rate of return on pension plan investments is 6.75%. The pension plan's policy in regard to the allocation ofi invested assets is established and may be amended by the' TMRS Board ofTrustees. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as thej production ofi income, in order tos satisfy The long-term expectedi rate ofreturn onj pension plani investments was determinedi using al building-block: method in which best estimate ranges of expected future real rates ofr return (expected returns, net of pension plan expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected: future real rates ofreturn byt thet target asset allocation percentage and! by adding expected: inflation. The target allocation and best estimates of arithmetici real rates of return for each major asset class are summarized in the adjustments. Assumptions are reviewed annually. No additional changes were: made for the 2022 valuation. thes short-term and long-term funding needs OfTMRS. following table: Asset class Domestic Equity International Equity Core Fixed Income Non-Core. Fixed Income Real Return Real Estate Absolute Return Private Equity Total Target allocationLong-lerm Expected Real! Rate ofl Return (Arithmetic) 17.5% 17.5% 30.0% 10.0% 5.0% 10.0% 5.0% 5.0% 100.0% 4.80% 6.05% 1.50% 3.50% 1.75% 5.25% 4.25% 8.50% 32 City ofThrall, Texas Notes to the Financial. Statements (Continued) NOTE9-H PENSION PLANS (continued) September 30, 2023 Discount Rate The discount rate used to measure the Total Pension Liability was 6.75%. Thej projection of cash flows used to determine the discount rate assumed that employee and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan's Fiduciary Net Position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods ofprojected benefit payments to determine the Total Pension Liability. City ofThrall September. 30, 2023 Schedule of Changes inl Net Pension Liability and Related Ratios Current Period A. Total pension liability 1.Service Cost 2. Interest (on the Total Pension Liability) 3. Changes ofbenefit terms 4. Difference between expected and actual experience 5. Changes of assumptions 6. Benefit payments, including refunds of employee contributions 7. Net change in total pension liability 8. Total pension liability beginning 9.Total pension liability ending B. Plan fiduciary net position 1.C Contributions - employer 2. Contributions - employee 3. Net investment. income 5.. Administrative Expense 6. Other $ 23,301 16,968 (37,424) (10,371) (7,526) 244,906 237,380 15,979 13,360 (18,296) (10,371) (157) 188 703 248,451 249,154 (11,774) 104.96% 267,208 -4.41% $ $ $ 4. Benefit payments, including refunds of employee contributions 7. Net change inj plan fiduciary net position 8. Plan fiduciary net position - beginning 9.F Plan fiduciary net position - ending C. Net pension liability [A.9-B.9] D. Plan fiduciary net position as aj percentage of the total pension liability [B.9/A.9] E. Coyered-employee payroll F. Net pension liability as a percentage of covered employee payroll [C/E] $ $ 33 CityofThrall, Texas Notes tot the Financial: Statements September 30, 2023 NOTE: 9-PENSION: PLANS (Continued) Sensitivity of the net pension liability to changes in the discount rate. The following presents the net pension liability oft the City, calculated using the discount rate of 6.75%, as well as what the City's net] pension liability would be ifit were calculated using a discount rate that is 1 percentage point lower (5.75%) or 1 percentage point higher (7.75%) than the current rate: 1% Decrease in 1%1 Increase in $(35,429) Discount rate (5.75%) Discount Rate (6.75%) Discount Rate (7.75%) City's net pension liability $16,942 Pension Plan Fiduciary Net Position $(11,774) Detailed information about the pension plan's Fiduciary Net Position is available in a separately-issued TMRS financial report. That report may be obtained on the Internet at www.tmrs.com CITY OF THRALL SCHEDULE OF PENSION. EXPENSE SEPTEMBER 30, 2023 1. Total Service Cost 2. Interest on the Total Pension Liability 3. Current. Period Benefit Changes 4. Employee Contributions (Reduction of] Expense) 5. Projected Earnings on Plan Investments (Reduction of] Expense) 6. Administrative Expense 7. Other Changes in Fiduciary Net Position $23,301 16,968 (13,360) (16,670) 157 (187) (12,271) 7,014 (1,821) (2,946) $ 185 8. Recognition of Current Year Outflow (Inflow) of Resources - Liabilities 9. Recognition of Current Year Outflow (Inflow) ofResources - Assets 10. Amortization of Prior Year Outflows (Inflows) of Resources - Liabilities 11. Amortization of Prior Year Outflows (Inflows) of] Resources - Assets 12. Total Pension Expense Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are Actuarial calculations are based on thel benefits provided under the terms oft the substantive plan in effect at the time of each valuation and reflect a long-term perspective. Consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities compared to past expectations and new estimates are made about the future. and the actuarial value of assets. 34 City ofThrall, Texas Notes to the Financial. Statements September 30, 2023 NOTE: 9 - PENSION PLANS (Continued) CITY OF THRALL SEPTEMBER 30, 2023 SCHEDULE OF OUTFLOWS AND INFLOWS - CURRENT AND FUTURE EXPENSE Recognition Period (or amortization yrs) 2022 Recognized in current pension expense Total (Inflow) or Outflow of Resources Deferred (Inflow) Outflow in future expense Due to) Liabilities: Difference in expected and actual experience [actuarial (gains) or losses] Difference in assumption changes [actuarial (gains) or losses] Due to. Assets: Difference inj projected and actual earnings on pension plan investments [actuarial (gains) or losses] 3.0500 3.0500 $ (37,424) $ $ $ $ (12,271) $ $- $ (25,153) (12,271) (25,153) 5.0000 $ 35,066 $ 7,014 7,014 $ $ $ 28,052 28,052 2,899 Total: Deferred Outflows and Deferred Inflows of Resources, by year, to be: recognized in future pension expense as: follows: Net deferred outflows (inflows) of resources $ (10,750) (8,761) 3,950 7,010 $ (8,551) 2023 2024 2025 2026 2027 Thereafter Total 35 City ofThrall, Texas Notes to thei Financial Statements September. 30, 2023 NOTE: 10-SUPPLEMENTAL DEATH BENEFITS. PLAN The City also participates in the cost-sharing multiple-employer defined benefit group term life insurance plan operated by the Texas Municipal Retirement System (TMRS); known as the Supplemental Death Benefits Fund (SDBF). The City elected, by ordinance, to provide group-term life insurance coverage to both current and retired employees. The City may terminate coverage under and discontinue participation in the SDBF by adopting an The death benefit for active employees provides al lump-sum payment approximately equal to the employee'sa annual salary (calculated based on the employee's actual earnings, for the 12-month period preceding the month of death); retired employees are insured for $7,500; this coverage is on "other postemployment benefit," or OPEB. The City contributes to the SDBF at a contractually required rate as determined by an annual actuarial valuation. Thei rate is equal to the cost of! providing one-year term life insurance. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year; the intent The City's contributions to the TMRS SDBF for the years ended 2023, 2022, and 2021 were $1275, $1275, and TMRS: records indicate the following percentages contributed by the City (as employer contributions) for the ordinance before November 1 ofany year to be effective the following January 1. isr not toj pre-fund retiree term life insurance during the employees' entire careers. $1,275 respectively, which equaled the required contributions each year. following fiscal years ending: Plan/ Calendar Year 2019 2020 2021 2022 2023 Annual Required Contribution (Rate) N/A N/A 0.00% 0.00% 0.00% Percentage of ARC Contributed Actual Contribution. Made (Rate) N/A N/A 0.00% (city toj provide) (city to provide) 100% 100% 100% (city to provide) (city to provide) Net Other Post Employment Benefits Liability. Actuarial Assumptions Actuarial assumptions were developed from the actuarial investigation oft the experience OfTMRS over thei four year period from December 31, 2015 to. December 31,2022. These assumptions were adopted in 2019 and first All administrative expenses are paid through the Pension Trust and accounted for under reporting requirements The Mortality Experience Investigation Study covering 20151 through 2019 ist used as thel basis for thej post- retirement: mortality assumption for healthy annuitants and Annuity Purchase! Rate (APRs). Mortality Rates for service employees uses the RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103%. The rates are projected on a fully generational basis with used in the December 31,2019 valuation. under GASB Statement No. 68. scale BB to account for future mortality improvements subject to the 3% floor. 36 CITY OF THRALL, TEXAS SEPTEMBER, 30, 2023 NOTESTOBASIC FINANCIAL STATEMENTS NOTE: 10-SUPPLEMENTALI DEATH BENEFITS PLAN Inflation Overall payroll growth Discount rate 2.50% per year 2.75% 3.50 to 10.5% per year including inflation Changes in the Net Other Post Employment Benefits Liability Increase (Decrease) Total OPEBLiability $23,332 2,084 448 0 (3,859) (8,621) 0 (9,948) $13,384 5.01% Balance at 12/31/21 Changes for the year Service Cost Interest on Total OPEB liability Changes ofl benefit terms Differences between expected and actual experience Changes in assumption or other inputs Benefit payments Net changes Total OPEB. Liability - end of year Total OPEB Liability as al Percentage of Covered Payroll Sensitivity oft the' Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability oft the City, calculated using the current discount rate of3.31% as well as what the City's total OPEB liability would bei ifit were calculated using a discount rate that is 1j percentage point lower (2.31%) or -1 percentage point higher (4.31%) than the current rate. Because the SDBF is considered an unfunded trust, thei relevant discount rate to calculate the total OPEB liability is based on the Fidelity Index's 20 year Municipal GO AA Index. 1% Decrease in $16,537 1% Increase in Discount Rate (3.00%) $11,045 Discount Rate (1.00%) Discount Rate (2.00%) Total OPEB liability $13,384 CITY OF THRALL SCHEDULE OF OPEB EXPENSE SEPTEMBER 30, 2023 1. Total Service Cost 2. Interest on the Total OPEB Liability 3. Changes in Benefit terms 4. Employer administrative costs 2,084 448 5. Recognition of deferred outflows/inflows of resources 6. Difference between expected and actual experience 7. Changes in assumptions or other inputs 8 Total OPEB Expense (908) (434) 1,190 37 CITY OF THRALL, TEXAS SEPTEMBER, 30, 2023 NOTES' TO BASIC FINANCIALSTATEMENTS NOTEIO-SUPIENENIAL DEATH BENEFITS PLAN OtherInformation Due tot the SDBF being considered an unfunded OPEB plan, benefit payments are treated as being equal to the employer's yearly contributions for retirees. No assets are accumulated in a trust that meets the criteria inj paragraph 4 of GASB Statement No. 75 to pay related benefits. In order to determine the retiree portion oft the City's Supplemental Death Benefit Plan contributions (that which is considered OPEB), the City should perform the following calculation: Total covered payroll * retiree Portion of SDB Contribution (Rate) 2022 Recognized incurrent opeb expense Deferred (Inflow) Outflow inf future expense Duet to Liabilities: Difference in expected and actual experience [actuarial (gains) orl losses) Difference! ina assumpt [actuarial (gains) or losses) Due to Assets: Difference inj projected anda actuale earnings onp pension plani investments [actuarial (gains) or losses] 5.1800 5.1800 (3,859) (8,621) (745) (1,665) (2,410) (3,114) (6,956) (10,070) Total: expense asf follows: (10,070) Deferred Outflows and Deferred Inflows of Resources, by year, to be recognizedi in future pension Net deferred outflows (inflows) of resources (1,909) (2,180) (2,539) (2,412) (430) (9,470) 2023 2024 2025 2026 2027 thereafter 38 City ofThrall, Texas Notes to the Financial Statements 11. RISK MANAGEMENT September. 30, 2023 The City's risk management program includes coverage for property, general liability, automobile liability, public official's liability and employee dishonesty bonds. The City participates in the Texas Municipal League joint self- insurance: fund, which is aj public entity risk] pool. Thej premiums paid to TMLI result int thet transfer ofrisk to the pool. Proprietary fund accounts receivable are concentrated within the geographic service area oft the utility system, which is within the City of Thrall. Those receivables are not concentrated within any individually significant customers. The City requires a deposit from each utility customer prior to establishing service. The net amount of proprietary fund accounts receivable at year end after reducing receivables for the allowance for doubtful accounts and after including estimated amounts fors service provided buti not yet billed at year end was $57,887.Utility customer deposits 12 CONCENTRATIONS OF CREDIT RISK held at year end totaled $34,035. NOTE: 13-SUBSEQUENT EVENTS The City did not have any subsequent events through March 28, 2024, which is the date the financial statements were available to bei issued for events requiring recording or disclosure in the financial statement for the fiscal year ended September 30, 2023. 39 REQUIRED SUPPLEMENTALINFORMATION City ofThrall, Texas Budgetary Comparison. Schedule General Fund Fort the Year Ended. September 30, 2023 Actual Amounts Budgetary Basis 328,409 239,010 42,737 63,741 39,078 6,114 921 720,010 Variance With Final Budget (11,516) 35,106 737 63,741 (74,922) (4,585) 4,114 921 13,596 Budgeted Amounts Original 339,925 203,904 42,000 114,000 4,585 2,000 706,414 Final 339,925 203,904 42,000 114,000 4,585 2,000 706,414 REVENUES Sales tax Franchise taxes grant income Municipal court: fines Lease income Miscellaneous Investment earnings EXPENDITURES Current: General government Public safety Public Works Streets Municipal court Property taxes, penalties, andi interest Total revenues 528,806 162,817 691,623 14,791 528,806 162,817 691,623 14,791 567,619 30,441 14,080 612,140 107,870 (55,106) (58,380) (55,807) 125,368 (43,925) 63,945 331,775 (38,813) 132,376 (14,080) 79,483 93,079 (55,106) (58,380) (55,807) 125,368 (43,925) 49,154 Total expenditures Excess (deficiency) ofrevenues over expenditures OTHER FINANCING SOURCES (USES) Capital Outlay Debt issued Debt service principal paid Debt service interest paid Transfers In Transfers out Total other financing sources (uses) Net change in fund balances 14,791 218,561 14,791 218,561 Fund balances beginning Fund balances ending $233,352 $233,352 $ 395,720 $ 49,154 40 City ofThrall Schedule of Changes inl Net] Pension Liability and) Related Ratios Last ten years (will ultimately be displayed) Total pension liability 1. Service Cost 2.1 Interest (on the' Total Pension Liability) 3. Changes oft benefit terms 4.) Difference between expected and actual experie 1,537 5. Changes of assumptions 6.1 Benefit payments, including refunds of employe 7.7 Net change int total pension liability 8. Total pension liability beginning 9. Total pension liability- ending Plani fiduciary net position 1.Contributions- employer 2. Contributions employee 3.1 Neti investment income 4.3 Benefit payments, including refunds ofe employe 5.4 Administrative Expense 6. Other 7.1 Net change inj plan fiduciary net position 8.1 Plani fiduciary net position beginning 9.1 Plani fiduciary net position ending Net pension liability [A.9-B.9] Plan fiduciary net position as a percentage oft the total pension liability [B.9/A.9] Covered-employee payroll Net pension liability as a percentage of covered employee payroll [C/E) 2015 5,128 4,861 3,479 2016 2017 2018 2019 2020 2021 2022 10,724 13,936 15,633 16,457 19,286 23,266 23,801 23,301 6,462 7,501 9,284 10,486 12,495 14,899 16,968 (5,580) 3,137 (9,338) (929) (409) (2,626) (37,424) (1,073) (540) (10,371) 25,729 14,818 25,731 16,403 27,770 35,352 36,074 (7,526) 63,029 88,758 103,576 129,307 145,710 173,480 208,832 244,906 88,758 103,576 129,307 145,710 173,480 208,832 244,906 237,380 9,508 12,090 14,167 14,640 18,014 18,904 17,791 15,979 13,297 13,360 (10,371) (116) (157) 188 56,224 703 8,099 19 (12) 8,246 8,882 9,175 10,774 12,756 2,090 7,403 (2,504) 16,249 11,413 25,252 (18,296) (540) (38) (3) (23) (1) (48) (3) (91) (3) (73) (3) 17,614 22,402 29,871 21,260 44,943 42,997 13,140 30,754 53,156 83,027 104,287 149,230 192,227 248,451 30,754 53,156 83,027 104,287 149,230 192,227 248,451 249,154 58,004 50,420 46,280 41,423 24,250 16,605 (3,545) (11,774) 34.65% 51.32% 64,21% 71.57% 86.02% 92.05% 101.45% 104.96% $161,987 $ 164,927 177,642 183,464 215,481 255,114 265,933 267,208 35.81% 30.57% 26.05% 22.58% 11.25% 6,51% -1,33% -4.41% 41 City of Thrall Schedule of Contributions September 30, 2023 Last 101 Fiscal Years (will ultimately be displayed) 2015 2016 2017 2018 2019 2020 2021 Actually Determined Contribution Contributions ini relation to the actuarially determined contribution I 17,607 $ 20,336 $ 23,049 23,813 28,788 31,660 31,08E 17,607 20,336 23,049 23,813 28,788 31,660 31,088 Contribution deficiency (excess) Covered employee payroll Contributions as aj percentage of covered employee payroll Notes to Schedule of Contributions Valuation Date determined Notes Valuation Date: Notes $161,987 $164,927 $177,642 183,464 215,481 255,114 265,93: 10.87% 12.33% 12.97% 22.58% 11.25% 12.41% 11.695 12/31/2022 Actuarially determined contribution rates are calculated as ofDecember 31 and become effective in January 13 months later. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Amortization Method Remaining Amortization Perioc9 Years Asset Valuation Method Inflation Salary Increases Retirement Age Mortality Entry Age Normal Level Percentage of Payroll, Closed 10 Year Smoothed Market 15% Soft Corridor 3.50% to 10.50% Including Inflation 2.5% Investment Rate of Return 6.75% Experience-based table ofi rates that are specific to the City's plan of benefits. Last updated for the 2015 valuation pursuant to an experience study of the RP2000 Combined Mortality Table with Blue Collar Adjustment with male rates multiplied by 109% and female rates multiplied by 103% and projected period 2010-2014 ona fully generational basis with scale BB There were no benefit changes during the year. Other Information: Notes 42 Donald L. Allman, CPA, PC 4749 Williams Drive, Ste. 322 Georgetown, Texas" 78633 The Acvounting) Fimm o Donald L. Allman, GPA CERTIFIED: PUBLIC. ACCOUNTANT INDEPENDENT AUDITOR'S REPORT ONI INTERNAL CONTROL OVER FINANCIAL REPORTING ANDO ON COMPLIANCE, AND OTHER MATTERS BASED ON. AN AUDIT OFI FINANCIAL STATEMENTS: PERFORMED IN ACCORDANCE WITH GOPERMMENTAUDITAUDITINGSTANDARDS Tot thel Mayor & City Council City ofThrall, Texas 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 oft the United States, the financial statements oft the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of1 Thrall, Texas, as of andi for the year ended September 30, 2023 and the related notes to thet financial statements, which collectively comprise the City ofT Thrall, Texas' basici financial statements, and! havei issued our report thereon dated Inj planning and performing oura audit of the financial: statements, we considered the City of Thrall, Texas' internal control over financial reporting (internal control) to determine the: audit procedures that are appropriate int the circumstances for thep purpose of expressing our opinions ont thef financial statements, but not for the purpose of expressing an opinion ont the effectiveness oft the City of Thrall," Texas' internal control. Accordingly, we do not express an opinion on the effectiveness oft the City ofl Thrall, Texas' A deficiency ini internal control exists when the design or operation ofa control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness isa deficiency, ora a combination of deficiencies, ini internal control, such that there isa reasonable possibility thata material misstatement oft the entity's financial statements willr not be prevented, or detected: and corrected on at timely basis. A significant deficiencyisa a deficiency, or a combination of deficiencies, ini internal control that is less severe than a material weakness, Our consideration of internal control was for the limited purpose described int thef first paragraph of this section and was not designed toi identify all deficiencies ini internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we didr noti identify any deficiencies ini internal control that we consider to be material weaknesses. As part of obtaining reasonable assurance: about whether the City of Thrall, Texas' financial statements are freet 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 ont the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was nota and objective of our audit, and: accordingly, we do not express sucha an opinion. Ther results of our tests disclosed noi instances of noncompliance or other matters that are required to be reported The purpose oft this reporti is solely to describe the scope of our testing ofi internal control and compliance. andt ther results of that testing, and not to provide an opinion ont the effectiveness oft thee entity'si 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 March 28, 2024. Internal Control over Financial Reporting internal control. yeti important enough to merit attention byt those charged withg governance. However, material weaknesses may exist that have not beeni identified. Compliance and Other Matters under Government. Auditing. Standards. Purpose oft this Report and compliance. Accordingly, this communication! is not suitable for any other purpose Donald L. Alliman, CPA, PC lav Georgetown, TX March 28, 2024 43