LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED SEPTEMBER 30, 2024 ANNUAL FINANCIAL REPORT LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2024 LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas ANNUAL FINANCIAL REPORT For the Year Ended September 30, 2024 TABLE OF CONTENTS Page Exhibit Number INTRODUCTORY SECTION Annual Filing Affidavit 1 FINANCIAL SECTION ndependent Auditors' Report on Financial Statements 2 Managements Discussion and Analysis (Required Supplementary Information) 5 Basic Financial Statements Government-Wide Financial Statements: Statement of Net Position A-1 14 Statement of Activities B-1 15 Governmental Fund Financial Statements: Balance Sheet-Governmental Funds C-1 16 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position C-1R 17 Statement of Revenues, Expenditures, and Changes In Fund Balances - Governmental Funds C-2 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities C-3 19 Proprietary Fund Financial Statements Statement of Net Position D-1 20 Statement of Revenues, Expenses, and Changes in Fund Net Position D-2 21 Statement of Cash Flows D-3 22 Notes to the Financial Statements 23 REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedules: General Fund E-1 53 Schedule of Changes in NPL and Related Ratios - TCDRS E-2 54 Schedule of Changes in Total OPEB Liability - TCDRS E-3 55 Schedule of Pension Contributions = TCDRS E-4 56 Schedule of OPEB Contributions - TCDRS E-5 57 Notes to the Required Supplementary Information 58 OTHER SUPPLEMENTARY INFORMATION Schedule of Expenditures by Department - 2024 F-1 60 Schedule of Expenditures by Department - 2023 F-2 61 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 62 NTRODUCTORY SECTION -1- ANNUAL FILING AFFIDAVIT THE STATE OF TEXAS 5530000 COUNTY OF LUBBOCK CO WCID 1 I, (Duly Authorized District Representative) of the (Name of District) Hereby swear, or affirm, that the District named above has reviewed, approved and filed at a meeting of the board of Directors of the Water District on the day of 20 a copy of its annual audit report of the fiscal year or period ended in the District office, located at (Address of District) The annual filing affidavit and the attached copy of the annual audit report are being submitted to the Texas Natural Resource Conservation Commission in satisfaction of all annual filing requirements within Section 49.194 of the Texas Water Code. Date 20 By: (Signature of District Representative) (Name and Title of District Representative) Sworn to and subscribed to before me this day of 20 (Signature of Notary) (SEAL) Commission expires on 20 Notary Public in the State of Texas. FINANCIAL SECTION Terry & King, CPAS, P.C. 5707 114th Street P.O. Box 93550 Randel J. Terry, CPA Lubbock, TX 79493-3550 Ryan R. King, CPA Telephone - (806) 698-8858 - Fax- -( (866) 288-6490 Independent Auditors' Report on Financial Statements Board of Directors Lubbock County Water Control and Improvement District No. 1 9999 High Meadow Road Lubbock, TX 79404 Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business- type activities, each major fund, and the aggregate remaining fund information of the Lubbock County Water Control and Improvement District No. 1 (LCWCID No. 1), as of and for the year ended September 30, 2024, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in 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 LCWCID No. 1 as of September 30, 2024, 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. Basis for Opinions 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 Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the LCWCID No. 1 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 al basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair oresentation 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 free from material misstatement, whether due to fraud or error. In 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 District's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Members American Institute of Certified Public Accountants and the Texas Society of Certified Public Accountants CPA The CPA. Never Underestimate The Value. -3- Auditor's Responsibilities for the Audit of the Financial Statements 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 to issue an auditor's report that 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 statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit 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 District's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall oresentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the District's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing oft the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, pension and OPEB schedules, and budgetary comparison information, identified as required supplementary information, be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the LCWCID No. 1's basic financial statements. The accompanying other schedules listed in the table of contents as Other Supplementary Information are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied ini the audit of the 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, this information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 10, 2025, on our consideration of the LCWCID No. 1's 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 LCWCID No. 1'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 LCWCID No. 1's internal control over financial reporting and compliance. Respectfully submitted, / dery f Ring Terry & King, CPAS Lubbock, Texas March 10, 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS Our discussion and analysis of the Lubbock County Water Control and Improvement District No. 1's financial performance provides an overview of the District's financial activities for the fiscal year ended September 30, 2024. Please read this in conjunction with the District's financial statements, which follow this section. FINANCIAL HIGHLIGHTS The District's net position increased as a result ofthis year's operations. While net position of our business-type activities increased by $9,490 net position of our governmental activities increased by $383,451. During the year, the District had expenses that were $526,404 less than the $2,909,932 generated in revenues for governmental programs prior to transfers out. In the District's business type activities, revenues increased $13,360 to $598,476 (or 2%) and operating expenses increased $43,489 to $731,939. The General fund reported a surplus this year of $29,405 prior to inter-fund transfers to other funds of $250,743 and proceeds from sale of assets of $6,030. The resources available for appropriation were $92,288 less than budgeted for the General Fund. Expenditures for the General Fund were less than the budgeted amounts by $200,793. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Position and the Statement of Activities provide information about the activities of the District as a whole and present a longer-term view of the District's finances. Fund financial statements start on page 15. For governmental activities, these statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the District's operations in more detail than the government-wide statements by providing information about the District's most significant funds. The remaining statements provide financial information about activities for which the District acts solely as a trustee or agent for the benefit of those outside of the government. 5 Reporting the District as a Whole - The Statement of Net Position and the Statement of Activities Our analysis of the District as a whole begins on page 6. One of the most important questions asked about the District's finances is, "Is the District as a whole better off or worse as a result of the year's activities?" The Statement of Net Position and the Statement of Activities report information about the District as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year's S revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the District' S net position and changes in it. You can think of the District's net position---the differences between assets and liabilities-as one way to measure the District's financial health, or financial position. Over time, increases 01 decreases in the District's net position is one indicator of whether its financial health is improving or deteriorating. You will need to consider other non- financial factors, however, such as changes in the condition of the District's infrastructure, to assess the overall health ofthe District. In the Statement of Net Position and the Statement of Activities, we divide the District into two kinds of activities: Governmental activities Most of the District's basic services are reported here, including general administration, police and safety, parks, special events, and customer service. Gate revenues, special event revenues, lot leases and rentals, and grants and contributions finance most of these activities. Business-type activities - The District charges a fee to customers to help it cover the cost of certain services it provides. The District's utility services are reported here. Reporting the District's Most Significant Funds - Fund Financial Statements Our analysis ofthe District's major funds begins on page 10. The fund financial statements begin on page 15 and provide detailed information about the most significant funds-not the District as a whole. At times the District may establish other funds to help it control and manage money for particular purposes, such as special projects or to show that it is meeting legal responsibilities for using certain Federal or State grants. Currently the District's governmental funds consist of the General Fund and a special revenue fund to account for special projects. The District's two kinds of funds - governmental and proprietary use different accounting approaches. 6 Governmental funds- Most of the District's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The Governmental fund statements provide a detailed short-term view of the District's general government operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the District's programs. We describe the relationship (or differences) between governmental activities (reported in the Statement ofl Net Position and the Statement of Activities) and govermental.fiumds in reconciliation on Exhibits C-1R and C-3. Proprietary funds When the District charges customers for the services it provides--whether to outside customers or to other units of the District -these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. In fact, the District's enterprise funds (a component of proprietary funds) are the same as the business-type activities we report in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. THE DISTRICT AS A WHOLE The District's combined net position was $6,823,199. Our following analysis focuses on the net position (Table 1) and changes in net position (Table 2) of the District's total primary government. 7 FINANCIAL ANALYSIS OF THE DISTRICT AS A WHOLE Net position. The District's combined net position was $6,823,199 at September 30, 2024. (See Table A-1). Table A-1 Lubbock County Water Control and Improvement District No. 1's Net Position Total Primary Government Percentage September 30, 2023 September 30, 2024 Change Current assets: Cash and cash equivalents 2,771,273 3,214,619 16% Accounts Receivable 53,898 66,153 23% Leases Receivable 82,421 85,123 3% Deposits 50 50 0% Total current assets: 2,907,642 3,365,945 16% Noncurrent assets: Net Pension Asset 393,442 488,821 24% Leases Receivable 4,257,798 4,200,236 -1% Land 429,903 429,903 0% Construction in Progress 529,447 100% Buildings & Improvements 8,643,115 8,786,831 2% Less accumulated depreciation, buildings & improvements (6,176,289) (6,410,574) 4% Furniture & Equipment 1,762,951 1,955,267 11% Less accumulated depreciation, furniture & equipment (1,365,585) (1,455,943) 7% Total noncurrent assets 7,945,335 8,523,988 7% Total Assets 10,852,977 11,889,933 10% Deferred Outflows of Resources Deferred Outflows Pension & OPEB 107,485 94,316 -12% Total Deferred Outflows of Resources 107,485 94,316 -12% Current liabilities: Accounts Payable 79,717 329,264 313% Renter Deposits 5,450 3,400 -38% Unearned Revenue 3,032 462,097 15141% Total current liabilities 88,199 794,761 801% Long-term liabilities: Total OPEB Liability 39,389 44,858 14% Due within one year 14,149 14,149 0% Due in more than one year 14,149 -100% Total long-term liabilities 67,687 59,007 -13% Total Liabilities 155,886 853,768 448% Deferred Inflows of Resources Deferred Inflows Leases 4,340,219 4,285,359 -1% Deferred Inflows Pension & OPEB 34,099 21,923 -36% Total Deferred Inflows of Resources 4,374,318 4,307,282 -2% Net Position: Net investment in capital assets 3,294,095 3,834,931 16% Unrestricted 3,136,163 2,988,268 -5% Total Net Position 6,430,258 6,823,199 6% The $2,988,268 of unrestricted net position represents resources available to fund the programs of the District next year. 8 Net Position of the District as a whole, increased 6% ($6,430,258 compared to $6,823,199). Unrestricted net position - the part of net position that can be used to finance day-to-day operations without constraints established by debt covenants, enabling legislation, or other legal requirements - changed from $3,136,163 to $2,988,268. Table A-2 Changes in Lubbock County Water Control and Improvement District No. 1's Net Position Total Primary Government Percentage 2023 2024 Change Program Revenues: Charges for Services 2,608,475 2,606,519 0% Operating Grants and Contributions 54,869 -100% Capital Grants and Contributions 469,616 100% General Revenues: Lease Revenue 53,687 58,608 9% Lease Interest 148,265 148,492 0% Investment Earnings 119,995 151,364 26% Gain on Sale of Fixed Assets 22,352 6,030 -73% Other, Operating Revenue 60,800 67,779 11% Total Revenues 3,068,443 3,508,408 14% General Administration 618,447 546,728 -12% Police and Safety 370,216 550,479 49% Parks 767,960 806,447 5% Special Events 139,217 173,341 25% Customer Service 313,940 306,533 -2% Utility Activities 688,450 731,939 6% Total Expenses 2,898,230 3,115,467 7% Excess (Deficiency) Before Other Resources, Uses & Transfers 170,213 392,941 131% Other Resources (Uses) 0% Transfers In (Out) 0% Increase (Decrease) in Net Position 170,213 392,941 131% Net Position - Beginning 6,260,045 6,430,258 3% Net Position - Ending 6,430,258 6,823,199 6% The District's total revenues were $3,508,408. A significant portion, 17%, of the District's total revenue comes from the utilities operations. Revenue available to fund governmental activities consists of charges for services (69%), capital grants (16%), leases (7%), and other revenues (8%). 9 The total cost of all programs and services was $3,115,467; 23% of these costs were for utilities production and administration expenses. Expenses for governmental activities consisted of costs for general administration (23%), police and safety (23%), parks (34%), special events (7%), and customer service (13%). Governmental Activities Revenues for the District's governmental activities increased approximately 18%, and total expenses increased by 8%. Charges for services (gate revenues and special events revenues) decreased $20,749. The District received grants and contributions of $469,616 in the current year. Other revenues increased $49,526. The District sold assets in the current year for $6,030. The cost of all governmental activities this year was $2,383,528. As shown in the Statement of Activities, the amount that our lessors ultimately financed for these activities through lease revenues was $207,100 because most of the costs were paid by those who directly benefited from the programs ($2,008,043). Business-type Activities Revenues ofthe District's business-type activities (see table A-2) increased by $13,360 and expenses increased by 6% ($688,450 to $731,939). 10 THE DISTRICT'S FUNDS As the District completed the fiscal year, its governmental funds (as presented in the balance sheet on Exhibit C-1) reported a combined fund balance of $2,390,818, which is an increase from the prior year's total of $2,606,126. The following items effecting fund balance should be noted: In the current year, expenditures were more than revenues by $78,385 prior to proceeds from the sale of assets of $6,030 and transfers out of$142,953. The revenues in the governmental funds increased approximately 18% from the prior period and expenses for the governmental funds increased 27% from the prior period. In the current year, the general fund expended $823,291 for capital expenditures. General Fund Budgetary Highlights Over the course of the year, the District revised the budget several times. Even with these adjustments, actual revenues were $92,288 under budgeted amounts and expenditures were $200,793 less than final budget amounts. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of 2024, the District had $11,701,448 invested in a broad range of capital assets, including buildings, furniture and equipment, and utilities equipment (see Table A-3). This amount represents a net increase (including additions and deductions) of $865,480 over last year. Table A-3 Fixed Assets Governmental Balance Deletions/ Balance Activities: 10-1-23 Additions Reclassifications 9-30-24 Land $ 429,903 429,903 Construction in Progress 529,447 529,447 Buildings & Improvements 7,911,512 66,401 7,977,913 Furniture & Equipment 1,433,718 227,443 (45,027) 1,616,134 Accumulated Depreciation (6.842.584) (317.512) 45,027 (7.115.069) Net Capital Assets $ 2,932.549 $ 505,779 $ $ 3.438,328 11 Business-Type Balance Deletions/ Balance Activities: 10-1-23 Additions Reclassifications 9-30-24 Buildings& Improvements $ 731,602 $ 77,316 $ $ 808,918 Equipment 329,233 9,900 339,133 Accumulated Depreciation 699,290) (52,158) (751.448) Net Capital Assets $ 361,545 S 35,058 $ 396.603 More detailed information about the District's capital assets is presented in the notes to the financial statements. Debt The District owes Lubbock County for prior election costs $14,149. This liability is reported in the governmental funds. Due Governmental Balance Balance Within Activities: 10-1-23 Additions Decreases 9-30-24 One Year $ 28,298 $ $ 14.149 $ 14.149 $ 14,149 Total L-T Debt $ 28.298 $ $ 14,149 $ 14,149 $14.149 More detailed information about the District's long-term obligations is presented in the notes to the financial statements. 12 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The District's elected officials considered many factors when setting the fiscal year 2025 budget and fees. Factors considered include the current economy and the needs of the District in the coming year. The Board has adopted budgets and set fees accordingly. If these estimates are realized, the District's budgetary general fund fund balance is not expected to change appreciably by the close of 2025. CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, customers and creditors with a general overview oft the District's finances and to show the District' S accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the District's office located at Buffalo Springs Lake in Lubbock, Texas. 13 BASIC FINANCIAL STATEMENTS -14- EXHIBIT. A-1 LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas STATEMENT OF NET POSITION September 30, 2024 Primary Government Governmental Business-type Activities Activities Total ASSETS: Cash and Cash Equivalents $ 3,109,015 $ 105,604 $ 3,214,619 Accounts Receivable 66,153 66,153 Leases Receivable 4,285,359 4,285,359 Deposits 50 50 Net Pension Asset 424,996 63,825 488,821 Capital Assets: Land 429,903 429,903 Buildings & improvements, net 2,063,561 312,696 2,376,257 Furniture & Equipment, net 415,417 83,907 499,324 Construction in Progress 529,447 529,447 TOTAL ASSETS $ 11,257,698 $ 632,235 $ 11,889,933 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows - Pension $ 83,283 $ 409 $ 83,692 Deferred Outflows - OPEB 9,219 1,405 10,624 TOTAL DEFERRED OUTFLOWS OF RESOURCES $ 92,502 $ 1,814 $ 94,316 LIABILITIES: Current Liabilities: Accounts Payable $ 238,552 $ 90,712 $ 329,264 Renter Deposits 3,400 3,400 Unearned Revenue 462,097 462,097 Due within one year 14,149 14,149 Noncurrent Liabilities: Net OPEB Liability 38,803 6,055 44,858 Total Liabilities $ 757,001 $ 96,767 $ 853,768 DEFERRED INFLOWS OF RESOURCES Deferred Inflows Pension 8,708 524 9,232 Deferred Inflows - OPEB 10,979 1,712 12,691 Deferred Inflows - Leases 4,285,359 4,285,359 Total Deferred Inflows of Resources 4,305,046 2,236 4,307,282 NET POSITION Net investment in capital assets $ 3,438,328 $ 396,603 $ 3,834,931 Unrestricted 2,849,825 138,443 2,988,268 Total Net Position $ 6,288,153 $ 535,046 $ 6,823,199 The accompanying notes are an integral part of this statement. -15- EXHIBIT B-1 LUBBOCK COUNTY WATER CONTROL: AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas STATEMENT OF ACTIITIES Year Ended September 30, 2024 Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Capital Primary Governmen Charges for Grants and Grants and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Government Activities: General Administration 546,728 $ $ $ $ (546,728) (546,728) Police and Safety 550,479 (550,479) (550,479) Parks 806,447 1,947,623 469,616 1,610,792 1,610,792 Special Events 173,341 60,420 (112,921) (112,921) Customer Service 306,533 (306,533) (306,533) Total Government, Activities 2,383,528 2,008,043 469,616 94,131 94,131 Business-type Activities Utilities Fund 731,939 598,476 (133,463) (133,463) Total Primary Government 3,115,467 2,606,519 469,616 94,131 (133,463) (39,332) General Revenues Lease Revenue 58,608 58,608 Lease Interes! 148,492 148,492 Investment Earnings 151,364 151,364 Gain on Sale of Fixed Assets 6,030 6,030 Other Revenue (Expense 67,779 67,779 Transfers (142,953) 142,953 Total General Revenues and Transfers 289,320 142,953 432,273 Change in Net Position 383,451 9,490 392,941 Net Position Beginning 5,904,702 525,556 6,430,258 Net Position - Ending $ 6,288,153 $ 535,046 $ 6,823,199 The accompanying notes are an integral part of this statement. -16- EXHIBIT C-1 LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas BALANCE SHEET - GOVERNMENTAL FUNDS September 30, 2024 Other Total General Governmental Governmental Fund Fund Funds ASSETS Cash and Cash Equivalents $ 3,109,015 $ $ 3,109,015 TOTAL ASSETS $ 3,109,015 $ 5 3,109,015 LIABILITIES Current Liabilities Accounts Payable $ 238,551 $ $ 238,551 Renter Deposits 3,400 3,400 Unearned Revenues 462,097 462,097 Due to County-Election Costs 14,149 14,149 Total Liabilities 718,197 718,197 FUND EQUITIES Fund Balance-Unassigned 2,390,818 2,390,818 Total Fund Equities 2,390,818 2,390,818 TOTALI LIABILITIES & FUND EQUITIES $ 3,109,015 $ $ 3,109,015 The accompanying notes are an integral part of this statement. -17- EXHIBIT C-1R LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION September 30, 2024 Total Fund Balances Governmental Funds Balance Sheet $ 2,390,818 Amounts reported for governmental activities in the statement of net position (A-1) are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. 3,438,327 Included in the items related to noncurrent assets is the recognition of the City's proportionate share of the net pension asset required by GASB 68 in the amount of $424,996, a deferred resource outflow related to Pensions in the amount of $83,283, and a deferred resource inflow in the amount of $8,708. This resulted in an increase in net position by $499,571. 499,571 Included in the items related to debt is the recognition of the City's proportionate share of the net OPEB liability required by GASB 75 in the amount of $38,803. The net position included a deferred resource outflow related to OPEB in the amount of $9,219 and a deferred resource inflow of $10,979. This resulted in a decrease in net position by $40,563. (40,563) Net Position of Governmental Activities Statement of Net Position f 6,288,153 The accompanying notes are an integral part of this statement. -18- EXHIBIT C-2 LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES-- GOVERNMENTAL FUNDS For the Year Ended September 30, 2024 Other Total General Governmental Governmental Fund Fund Funds REVENUES: Gate Revenue $ 1,894,854 $ $ 1,894,854 Special Events Revenue 60,420 60,420 Lease Revenue 58,608 58,608 Lease Revenue - Interest 148,492 148,492 Rental Revenue 52,769 52,769 Permits Grant Revenue 469,616 469,616 Interest Revenue 151,364 151,364 Other Operating Revenue 67,779 67,779 Total Revenues 2,843,482 60,420 2,903,902 EXPENDITURES Current Salaries 1,089,542 57,540 1,147,082 Payroll Taxes 22,938 948 23,886 Employee Benefits 230,898 13,587 244,485 Tools and Supplies 55,000 55,000 Repairs & Maintenance 174,119 315 174,434 Utilities 127,772 794 128,566 Office Supplies 20,232 20,232 Printing and Postage 6,599 6,599 Advertising and Public Relations 1,312 33,865 35,177 Direct Promotional Expense 61,161 61,161 Dues, Fees and Subscriptions 27,415 27,415 Training and' Travel 9,385 9,385 Accounting and Legal 21,525 21,525 Election Expense 3,351 3,351 Contracted Services 50,613 50,613 Rental Expense 6,367 6,367 Bank Fees and Charges 81,732 81,732 Insurance 46,293 46,293 Other 15,693 15,693 Capital Outlay 823,291 823,291 Total Expenditures 2,814,077 168,210 2,982,287 Excess of Revenues Over (Under) Expenditures 29,405 (107,790) (78,385) OTHER FINANCING SOURCES (USES) Proceeds from Sale of Assets 6,030 6,030 Operating Transfers In 107,790 107,790 Operating Transfers Out (250,743) (250,743) Total Other Sources (Uses) (244,713) 107,790 (136,923) Excess of Revenues & Other Financing Sources Over (Under) Expenditures & Other Financing Uses (215,308) (215,308) Fund Balance-Begining of Year 2,606,126 2,606,126 Fund Balance--Endc ofYear $ 2,390,818 $ $ 2,390,818 The accompanying notes are an integral part of this statement. -19- EXHIBIT C-3 LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2024 Net Change in Fund Balances Total Governmental Funds $ (215,308) Amounts reported for governmental activities in the statement of activities ("SOA") are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their useful lives as depreciation expense. This is the amount of capital outlays during the current period. 823,291 The depreciation of capital assets is not reported in the funds. This is the amount of current depreciation on these assets. (317,514) Governmental funds report the sale of assets as resources. In the statement I activities the sale is reduced by the net cost of the asset: The implementation of GASB 68 required that certain expenditures be de-expended and recorded as deferred resource outflows. These contributions made after the measurement date of 12/31/23 caused the change in the ending net position to increase. Contributions made before the measurement date and during the 2024 fiscal year were also expended in the 2023 fiscal year and recorded as an increase in net pension expense for the District. The District's proportionate share of the TMRS pension expense on the plan as a whole had to be recorded as an expense. The result of these adjustments is to increase the change in net position by $95,418. 95,418 The implementation of GASB 75 required that certain expenditures be de-expended and recorded as deferred resource outflows. These contributions made after the measurement date of 12/31/23 caused the change in the ending net position to increase. Contributions made before the measurement date and during the 2024 fiscal year were also expended in the 2023 fiscal year and recorded as an increase in net OPEB expense for the District. The District's proportionate share of the OPEB expense on the plan as a whole had to be recorded as an expense. The resi oft these adjustments is to decrease the change in net position by $2,436. (2,436) Change in Net Position - Statement of Activities 5 383,451 The accompanying notes are an integral part of this statement. -20- EXHIBIT D-1 LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas STATEMENT OF NET POSITION - PROPRIETARY FUNDS September 30, 2024 Business-Type Activities-- Enterprise Funds Utilities Funds ASSETS Current Assets: Cash and Cash Equivalents $ 105,604 Accounts Receivable 66,153 Deposits 50 Total Current Assets 171,807 Fixed Assets: Buildings & Improvements, net 312,696 Furniture & Equipment, net 83,907 Total Fixed Assets 396,603 Other Assets: Net Pension Asset 63,825 Total Other Assets 63,825 IOTAL ASSETS $ 632,235 Deferred Outflows of Resources Deferred Outflows - Pension $ 409 Deferred Outflows - OPEB 1,405 TOTAL DEFERRED OUTFLOWS OF RESOURCES $ 1,814 LIABILITIES Current Liabilities Accounts Payable $ 90,712 Non-current] Liabilities Net OPEB Liability 6,055 Total Liabilities 96,767 DEFERRED INFLOWS OF RESOURCES Deferred Inflows - Pension 524 Deferred Inflows - OPEB 1,712 Total Deferred Inflows of Resources 2,236 NET POSITION Net investment in capital assets 396,603 Unrestricted 138,443 Total Net Position 535,046 The accompanying notes are an integral part of this statement. -21- EXHIBIT D-2 LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION-- PROPRIETARY FUNDS For the Year Ended September 30, 2024 Business-Type Activities-- Enterprise Funds Utilities Funds Operating Revenues Water Revenue $ 161,565 Sewer Revenue 229,115 Garbage Revenue 101,870 Reserve Charge Revenue 9,839 Roads 80,318 Late Charges 15,769 Total Operating Revenues 598,476 Operating Expenses Salaries Payroll Taxes Employee Benefits 13,701 Tools & Supplies 12,057 Repairs & Maintenance 111,267 Utilities 36,114 Sewer & Disposal Expense 357,976 Water Purchases 114,045 Dues, Fees & Subscriptions Training & Travel 667 Contracted Services Rental Expense 22,362 Insurance 2,135 Depreciation 52,157 Other 9,458 Total Operating Expenses 731,939 Operating Income (Loss) Before Operating Transfers (133,463) Non-Operating Revenues (Expenses) Operating Transfers In 142,953 Gain on Sale of Assets Total Non-Operating Revenues (Expenses) 142,953 Net Income (Loss) 9,490 NET POSITION Net Position, Beginning of Year 525,556 Net Position, End of Year 535,046 The accompanying notes are an integral part of this statement. -22- EXHIBIT D-3 LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas STATEMENT OF CASH FLOWS-- PROPRIETARY FUNDS For the Year Ended September 30, 2024 Business-Type Activities-- Enterprise Funds Utilities Funds Cash Flows from Operating Activities: Receipts from Customers $ 586,221 Payments to Suppliers (617,330) Payments to Employees (9,636) Net Cash Provided (Used) by Operating Activities (40,745) Cash Flows from Non-Capital Financing Activities: Operating Transfers 142,953 Net Cash Provided (Used) by Non-Capital Financing Activities 142,953 Cash Flows from Capital & Related Financing Activites: Acquisition of Fixed Assets (87,215) Sale of Capital Assets Net Cash Provided (Used) by Capital & Related Financing Activites (87,215) Net Increase (Decrease) in Cash & Cash Equivalents 14,993 Cash & Cash Equvalents-Begmning of Year 90,611 Cash & Cash Equivalents-End of Year 105,604 Reconciliaton of Operating Income (Loss) to Net Cash Flows from Operating Activities: Operating Income (Loss) (133,463) Adjustments to Reconcile to Net Cash Provided (Used) by Operating Activities: Depreciation 52,157 (Increase) Decrease in Receivables (12,255) (Increase) Decrease in Net Pension Asset (Increase) Decrease in Deferred Outflows of Resources 4,065 Increase (Decrease) in Liabilities 48,751 Increase (Decrease) in OPEB Liability Increase (Decrease) in Deferred Resource Inflows Net Cash Provided (Used) by Operating Activities (40,745) The accompanying notes are an integral part of this statement. -23- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS September 30, 2024 Note A: Summary of Significant Accounting Policies The Lubbock County Water Control and Improvement District No. 1, Texas was organized under the provisions of Section 59, Article 16, of the Constitution of Texas, as proved in Chapter 25, General Laws enacted by the 39th Legislature at its Regular Session in 1925. The District operates under a Counci-Manager form of government and provides the following services as authorized by its charter: Public safety, streets and roads, sanitation, culture- recreation, public improvements, planning and zoning, and general administrative services. Other services include utilities operations. The Board of Directors, a five-member group constituting an on-going entity, is the level of government which has governance responsibilities for the conserving, preserving, protecting, recharging and prevention of waste of the Buffalo Springs Lake, as permitted by Chapter 52 of the Texas Water Code. The District currently receives funding only from local sources, but must comply with the concomitant requirements of these funding source entities and some state sources. However, the District is not included in any other governmental "reporting entity" as defined in Section 2100, Codification of Governmental Accounting and Financial Reporting Standards, since Board members are elected by the public and have decision making authority, the power to designate management, the responsibility to significantly influence operations and primary accountability for fiscal matters. The basic financial statements oft the Lubbock County Water Control and Improvement District No. 1 have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") applicable to governmental units. The Governmental Accounting Standards Board ("GASB") is the accepted standard setting body for establishing governmental accounting and financial reporting principles. 1. The Reporting Entity The District, for financial purposes, includes all of the funds and account groups relevant to the operations of the Lubbock County Water Control and Improvement District No. 1. The financial statements presented herein do not include agencies which have been formed under applicable state laws or separate and distinct units of government apart from the Lubbock County Water Control and Improvement District No. 1. The financial statements of the District include those of separately administered organizations that are controlled by or dependent on the District. Control or dependence is determined on the basis of budget adoption, taxing authority, funding and appointment of the respective governing board. -24- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 2 September 30, 2024 Note A: Summary of Significant Accounting Polices (Continued) 2. Basis of Presentation, Basis of Accounting a. Basis of Presentation Government-wide Statements: The statement of net position and the statement of activities include the financial activities of the overall government. Eliminations have been made to minimize the over-reporting of internal activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange transactions. The statement of activities presents a comparison between direct expenses and program revenues for each function of the District's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. The District does not allocate indirect expenses in the statement of activities. Program revenues include (a) fees, fines, and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the District's funds, with separate statements presented for each fund category. The emphasis of fund financial statements is on major governmental funds, each displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds. The District reports the following major governmental funds: General Fund: This is the primary operating fund of the District. It accounts for all financial resources of the District except those required to be accounted for in another fund. -25- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 3 September 30, 2024 Note A: Summary of Significant Accounting Policies--Continued In addition, the District reports the following fund types: Enterprise Funds: Enterprise Funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. Operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Non-operating revenues, such as subsidies and investment earnings, result from non-exchange transactions or ancillary activities. b. Measurement Focus, Basis of Accounting Government-wide Financial Statements: These financial statements are reported using the economic resources measurement focus. They are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time the liabilities are incurred, regardless of when the related cash flows take place. Nonexchange transactions, in which the District gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenues from grants, entitlements, and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental Fund Financial Statements: Governmental funds are reported using the current financial esources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The District considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Revenues from local sources consist primarily of property taxes. Property tax revenues and revenues received from the State are recognized under susceptible-o-acrual concept. Miscellaneous revenues are recorded as revenue when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned, since they are both measurable and available. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims, and judgments, which are recognized as expenditures to the extent they have matured. General capital assets acquisitions are reported as expenditures in governmental funds. Proceeds from general long-term debt and acquisitions under capital leases are reported as other financing sources. -26- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 4 September 30, 2024 Note A: Summary of Significant Accounting Policies (continued) The Proprietary Fund Types are accounted for on a flow of economic resources measurement focus utilizing the accrual basis of accounting. This basis of accounting recognizes revenues in the accounting period in which they are earned and become measurable and expenses in the accounting period in which they are incurred and become measurable. The fund equity is segregated into net investment in capital assets, restricted net position, and unrestricted net position. C. Fund Balance Classification Restricted: This classification includes amounts for which constraints have been placed on the use of the resources either (a) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments, or (b) imposed by law through constitutional provisions or enabling legislation. The District does not currently have any restricted fund balances. Unassigned: This classification includes the residual fund balance for the General Fund. The District would typically use restricted fund balances first, followed by committed resources, as appropriate opportunities arise, but reserves the right to selectively spend unassigned resources first to defer the use of these other classified funds. 3. Financial Statement Amounts a. Cash and Cash Equivalents: The District has defined cash and cash equivalents to include cash on hand, demand deposits, short-term investments with original maturities of three months or less from the date of acquisition, and cash with fiscal agent. For purposes of the statement of cash flows, the District considers all highly liquid investments purchased with maturity of three months or less to be cash equivalents. b. Investments Investments for the District are reported at fair value. The District categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets. The State Treasurer's Investment Pools are operated in accordance with appropriate state laws and regulations. The reported values of the pools are the same as the fair value of the pool shares (Level 1 inputs). -27- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 5 September 30, 2024 Note A: Summary of Significant Accounting Policies (continued) C. Inventories and Prepaid Items The District records purchases of supplies as expenditures, utilizing the purchase method of accounting for inventory. Certain payments to vendors reflect cost applicable to future periods and are recorded as prepaid items. d. Capital Assets Purchased or constructed capital assets are reported at cost or estimated historical cost. Donated fixed assets are recorded at their estimated fair market value at the date of the donation. The cost of normal maintenance and repairs that do not add to the value of the assets' lives are not capitalized. A capitalization threshold of $5,000 is used. Capital assets are being depreciated using the straight-line method over the estimated useful lives: Estimated Asset Class Useful Lives Infrastructure 30 Buildings 50 Building Improvements 20 Vehicles 5-15 Office Equipment and Furniture 3-15 Computer Equipment 3 e. Receivable and Payable Balances The District believes that sufficient detail of receivable and payable balances is provided in the financial statements to avoid the obscuring of significant components by aggregation. Therefore, no disclosure is provided which disaggregates those balances. There are no significant receivables which are not scheduled for collection within one year of the period end. -28- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 6 September 30, 2024 Note A: Summary of Significant Accounting Policies (continued) f. Interfund Activity Interfund activity results from loans, services provided, reimbursements or transfers between funds. Loans are reported as interfund receivables and payables as appropriate and are subject to elimination upon consolidation. Services provided, deemed to be at market or near market rates, are treated as revenues and expenditures or expenses. Reimbursements occur when one fund incurs a cost, charges the appropriate benefiting fund and reduces its related cost as a reimbursement. All other interfund transactions are treated as transfers. Transfers In and Transfers Out are netted and presented as a single Transfers" line on the government-wide statement of activities. Similarly, interfund receivables and payables are netted and presented as a single Internal Balances" line of the government-wide statement of net position. g. Use of Estimates The preparation of financial statements in conformity with GAAP requires the use of management's estimates. Actual results could differ from those estimates. h. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net 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(s) and sO will not be recognized as an outflow of resources expenselexpenditure) until then. The District currently has two items which qualify for reporting in this category. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and SO will not be recognized as an inflow of resources (revenue) until that time. The District currently has two types of items which arise under the accrual basis of accounting. These amounts are deferred and recognized as an inflow of resources in the period when the amounts become available. i. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the Fiduciary Net Position of the Texas County & District Retirement System (TCDRS) and additions to/deductions from TCDRS's Fiduciary Net Position have been determined on the same basis as they are reported by TCDRS. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. -29- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 7 September 30, 2024 Note A: Summary of Significant Accounting Policies (continued) J Other Post-Employment Benefits For purposes of measuring the total OPEB liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the Fiduciary Net Position of the Texas County & District Retirement System (TCDRS) and additions to/deductions from TCDRS's Fiduciary Net Position have been determined on the same basis as they are reported by TCDRS. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Note B: Compliance and Accountability 1. Finance-Related Legal and Contractual Provisions In accordance with GASB Statement No. 38, "Certain Financial Statement Note Disclosures" violations of finance-related legal and contractual provisions, if any, are reported below, along with actions taken to address such violations: Violations Action Taken None Reported Not Applicable Note C: Deposits and Investments The District's funds are required to be deposited and invested under the terms of a depository contract. The depository bank deposits for safekeeping and trust with the District's agent bank approved pledged securities in an amount sufficient to protect District funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation ("FDIC") insurance. Cash Deposits At September 30, 2024, the carrying amount of the District's deposits (cash, certificates of deposit, and interest bearing saving accounts included in temporary investments) was $3,214,620 and the bank balance was $3,288,794. The District's cash deposits at September 30 and throughout the year were entirely covered by FDIC insurance or by pledged collateral held by the District's agent bank in the District's name. -30- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 8 September 30, 2024 Note C: Deposits and Investments (continued) Investments The District is required by Government Code Chapter 2256, The Public Funds Investment Act, to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. The Public Funds Investment Act ("Act") requires an annual audit of investment practices. Audit procedures in this area conducted as a part of the audit of the general purpose financial statements disclosed that in the areas of investment practices, management reports an establishment of appropriate policies, the District adhered to the requirements of the Act. Additionally, investment practices of the District were in accordance with local policies. The Act determines the types of investments which are allowable for the District. These include, with certain restrictions, (1) obligations of the U.S. Treasury, U.S. agencies, and the State of Texas, (2) certificates of deposit, (3) certain municipal securities, (4) securities lending program, (5) repurchase agreements, (6) bankers acceptances, (7) mutual funds, (8) investment pools, (9) guaranteed investment contracts, and (10) commercial paper. Texas Local Government Investment Pool (TexPool) The Interlocal Cooperation Act, Chapter 791 of the Texas Government Code, and the Public Funds Investment Act, chapter 2256 of the Texas Government Code (the "Act"), provide for the creation of public funds investment pools through which political subdivisions and other entities may invest public funds. TexPool uses amortized cost to value portfolio assets and follows the criteria established by Governmental Accounting Standards Board ("GASB") Statement No. 79 for use of amortized cost. Pursuant to subchapter G of chapter 404, the Comptroller of Public Accounts (the "Comptroller") administers the Texas Local Government Investment Pools (the "TexPool Portfolios") as public funds investment pools through the Texas Treasury Safekeeping Trust Company (the "Trust Company"). The Trust Company is a special-purpose trust company authorized to receive, transfer, and disburse money and securities as provided by statute or belonging to the state, agencies, and local political subdivisions and other organizations created on behalf of the state or agency or political subdivision of the state. The Comptroller is the sole officer, director, and shareholder of the Trust Company. The Comptroller and the Trust Company have contracted with an administrator and investment manager ('Investment Manager") for the TexPool Portfolios. TexPool invests in U.S. Treasury and government agency securities, repurchase agreements, and certain mutual funds. -31- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 9 September 30, 2024 Note C: Deposits and Investments (continued) In accordance with the Act, the Comptroller has appointed the TexPool Investment Advisory Board to advise with respect to TexPool. The Board is composed equally of participants in the TexPool Portfolios and other persons who do not have a business relationship with the TexPool Portfolios and are qualified to advise the TexPool Portfolios. The TexPool portfolio is designed and managed to ensure that is maintains its AAAm rating (or the equivalent by a nationally recognized statistical rating organization. The following guidelines are followed by the Investment Manager to maintain the portfolio maturity consistent with a stable net asset value per share: 1) The maximum remaining maturity of any security or other investment acquired for the portfolio shall be 397 calendar days or less; 2) the portfolio maintains a weighted average maturity of 60 days or less; and 3) the portfolio maintains a weighted average life of 120 days or less. Maturity limits are applied as defined in GASB 79. State Street Bank and Trust, the custodian designated by the Investment Manager provides fund accounting services for TexPool and is responsible for marking-to-market the portfolio holdings of TexPool on a daily basis. The shadow price is the net asset value per share of TexPool, calculated using total investments measured at fair value at the calculation date. Analysis of Specific Deposit and Investment Risks GASB Statement No. 40 requires a determination as to whether the District was exposed to the following specific investment risks at year end and if sO, the reporting of certain related disclosures: a. Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The ratings of securities by nationally recognized agencies are designed to give an indication of credit risk. At year end, the District was not significantly exposed to credit risk. b. Custodial Credit Risk Deposits are exposed to custodial credit risk if they are not covered by depository insurance and the deposits are uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized with securities held by the pledging financial institution's trust department or agent but not in the District's name. Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the government, and are held by either the counterparty or the counterparty's trust department or agent but not in the District's name. Atyear end, the District was not exposed to custodial credit risk. -32- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 10 September 30, 2024 Note C: Deposits and Investments (continued) C. Concentration of Credit Risk This risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. At year end, the District was not exposed to concentration of credit risk. d. Interest Rate Risk This is the risk that changes in interest rates will adversely affect the fair value of an investment. At year end, the District was not exposed to interest rate risk. e. Foreign Currency Risk This is the risk that exchange rates will adversely affect the fair value of an investment. At year end, the District was not exposed to foreign currency risk. Note D: Leases Receivable a. The District, as lessor, has a lease agreement with a local business whereby a tract of land along 180 feet of shoreline is being leased for the installation and rental of boat and personal watercraft mooring slips for a fee to the general public. The lease has an initial lease term of April 1, 2021 and terminating on March 31, 2026. The Tennant has the right to renew for three successive five-year terms. The agreed rent to be paid by the Tenant to the District is the sum of $12,919.00 per year. Rent shall increase by 10% at year 2, 5, 7, 10, 12, and 17. Lease income of $4,098 and interest income of $8,821 was recognized for the fiscal year ending September 30, 2024. Future rental payments due from the tenant at September 30, 2024 are as follows: Governmental Activities: Principal Interest Total Year Ending September 30, 2025 $ 5,602 $ 8,609 $ 14,211 2026 5,810 8,401 14,211 2027 7,483 8,149 15,632 2028 7,808 7,824 15,632 2029 8,146 7,486 15,632 2030-2034 60,250 30,885 91,135 2035-2039 84,401 15,847 100,248 2040 19,942 864 20,806 Totals $ 199,442 $ 88.065 $ 287,507 -33- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 11 September 30, 2024 Note D: Leases Receivable (continued) b. The District, as lessor, has a lease agreement with a local business for a building and equipment commonly known as the Marina. The lease is for the term beginning March 1, 2021, with rent starting May 1, 2021, and terminating February 28, 2026. Lease payments are due as follows: $1,000 per month May 1, 2021 through February 28, 2022; $1,500 per month March 1, 2022 through February 28, 2023; $1,800 per month March 1, 2023 through February 28, 2026; with 5% increase every year thereafter. Lease income of $20,354 and interest income of $1,876 was recognized for the fiscal year ending September 30, 2024. Future rental payments due from the tenant at September 30, 2024 are as follows: Governmental. Activities: Principal Interest Total Year Ending September 30, 2025 $ 21,793 $ 887 $ 22,680 2026 8,997 88 9,085 Totals $ 30,790 $ 975 $ 31,765 C. The District, as lessor, has a lease agreement with a local business whereby a space in the campground area is being leased for the installation of an ice vending machine. The lease began on December 1, 2022 and terminates on November 30, 2027. There are no renewal options stated in the lease. The agreed rent to be paid by the Tenant to the District is the sum of $300 per month. Rent shall increase by 5% each year. Lease income of $1,003 and interest income of $1,097 was recognized for the fiscal year ending September 30, 2024. Future rental payments due from the tenant at September 30, 2024 are as follows: Governmental Activities: Principal Interest Total : Year Ending September 30, 2025 $ 2,586 $ 1,014 $ 3,750 2026 2,814 786 3,937 2027 3,063 537 4,134 2028 3,334 266 4,341 2029 1,301 24 730 Totals $ 13,098 $ 2.627 $ 15.725 -34- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 12 September 30, 2024 Note D: Leases Receivable (continued) d. The District leases lots to tenants for the personal residential use of the tenant and tenant's immediate family as a private residence. As of September 30, 2024, there are 343 lot leases each with a 50 year term. These leases have varying start dates and lease amounts. The lease amounts range from $427 to $2,050 per year. Lease income of $53,381 and interest income of $136,698 was recognized for the fiscal year ending September 30, 2024. Future rental payments due from the tenants at September 30, 2024 are as follows: Governmental. Activities: Principal Interest Total Year Ending September 30, 2025 $ 55,142 $ 133,341 $ 188,483 2026 56,961 131,521 188,482 2027 58,840 129,642 188,482 2028 60,781 127,701 188,482 2029 62,787 125,696 188,483 2030-2034 343,782 596,069 939,851 2035-2039 398,375 535,921 934,296 2040-2044 423,844 466,811 890,655 2045-2049 436,440 397,941 834,381 2050-2054 510,834 321,045 831,879 2055-2059 520,055 234,880 754,935 2060-2064 486,085 150,890 636,975 2065-2069 388,228 76,487 464,715 2070-2074 217,496 21,772 239,268 2075 22,378 738 23,116 Totals $4,042,028 $3.450,455 $7,492,483 -35- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 13 September 30, 2024 Note E: Capital Assets Capital asset activity for the period ended September 30, 2024, was as follows: Governmental Balance Deletions/ Balance Activities: 10-1-23 Additions Reclassifications 9-30-24 Land $ 429,903 $ 429,903 Construction in Progress 529,447 529,447 Buildings& Improvements 7,911,512 66,401 7,977,913 Furniture & Equipment 1,433,718 227.443 (45,027) 1,616,134 Total Capital Assets $9,775,133 $8 823,291 $ (45,027) $10,553.397 Less Accumulated Depreciation: Buildings& Improvements $5,712,614 $2 201,738 $5 5,914,352 Furniture & Equipment 1,129,970 115,774 (45,027) 1,200,717 Total Accumulated Depreciation $6,842,584 $317,512 $ (45,027) $7,115.069 Net Capital Assets $2,932,549 $505.779 $ $3,438,328 Depreciation was charged to functions as follows: General Administration $ 54,891 Police and Safety 37,601 Parks 110,812 Special Events 10,198 Streets 104,010 $317,512 -36- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 14 September 30, 2024 Note E: Capital Assets (continued) Business-Type Balance Deletions/ Balance Activities: 10-1-23 Additions Reclassifications 9-30-24 Buildings & Improvements $ 731,602 $ 77,316 $ $ 808,918 Operating Equipment 329,233 9,900 339,133 Total Capital Assets $ 1,060,835 $ 87,216 $ $ 1,148,051 Less Accumulated Depreciation: Buildings& Improvements $ 463,675 $ 32,547 $ $ 496,222 Operating Equipment 235,615 19,611 255,226 Total Accumulated Depreciation $ 699,290 $ 52,158 $ $ 751,448 Net Capital Assets $ 361,545 $ 35,058 $ $ 396,603 Note F: Long-Term Obligations Short term loans are accounted for through the applicable fund. General Fund proceeds from loans (except those issued and retired during the current year) are shown in the financial statements as Other Resources and principal payments as Other Uses. Enterprise fund loans are shown in the appropriate fund. The District owes Lubbock County for prior election costs, $14,149, which is due in annual installments of $14,149 for the next year. This liability is reported in the governmental funds. Changes in long-term obligations for the year ended September 30, 2024 are as follows: Due Beginning Ending Within Balance Increases Decreases Balance One Year Governmental Fund: Due to County $ 28,298 $ $ 14,149 $ 14,149 $ 14,149 Total OPEB Liability 33,334 6,477 1,008 38,803 Total $ 61,632 $ 6,477 $ 15,157 $ 52,952 14,149 Business-Type Activities: Total OPEB Liability $ 6,055 $ $ 6,055 Total $ 6,055 $ $ $ 6,055 -37- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 15 September 30, 2024 Note G: Pension Plan Plan Description The District provides retirement, disability, and survivor benefits for all of its non-temporary employees through a nontraditional defined benefit pension plan in the statewide Texas County and District Retirement System (TCDRS). TCDRS is a statewide, agent multiple- employer, public-employee retirement system. The system serves nearly 870 participating counties and districts throughout Texas. TCDRS, in the aggregate, issues an annual comprehensive financial report (ACFR) on a calendar year basis. The ACFR is available at www.tedrs.org, or is available upon written request from the TCDRS Board of Trustees at P.O. Box 2034, Austin, Texas 78768-2034. Each employer maintains its own customized plan of benefits. Plan provisions are adopted by the governing body of each employer, within the options available in the TCDRS Act. Employers have the flexibility and local control to adjust benefits annually and pay for those benefits based on their needs and budgets. Each employer has a defined benefit plan that functions similarly to a cash balance plan. The assets of the plans are pooled for investment purposes, but each employer's plan assets may be used only for the payment of benefits to the members of that employer's plan. In accordance with Texas law, it is intended that the pension plan be construed and administered in a manner that the retirement system will be considered qualified under Section 401(a) of the Internal Revenue Code. All employees (except temporary staff) of a participating employer must enroll in the plan. Benefits Provided 7% of each employee's paycheck is deposited into his or her TCDRS account. The employee's savings grow, by law, at a rate of 7%, compounded annually. The District has selected a matching rate of $2.00 per $1.00 in the employee's account. At retirement, the employee's account balance is combined with employer matching and converted into a lifetime monthly oenefit. Employees receive a month of service time for each month that they make a deposit into their account. The amount of service an employee needs to earn a future benefit is called the vesting requirement. When an employee is vested, he or she has the right to a monthly benefit, which includes employer matching, at age 60 or older. Plan provisions are adopted by the Board of Trustees, within the options available in the Texas state statutes governing TCDRS (TCDRS Act). Members can retire at ages 60 and above with 8 or more years of service, with 30 years of service regardless of age, or when the sum of their age and years of services equals 75 or more. Members are vested after 8 years of service but must leave their accumulated contributions in the plan to receive any employer-financed benefit. -38- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 16 September 30, 2024 Note G: Pension Plan (continued) Retirees elect to receive their lifetime benefit by choosing one of seven actuarially equivalent payment options. Employers may elect to provide other optional benefits. Prior service gives employees monetary credit for time worked for an organization before it joined the system. Buybacks allow current employees to re-establish a closed TCDRS account from previous service with an employer. Partial lump-sum payments at retirement allow employees to withdraw part or all of their TCDRS account balance as a lump sum at retirement with a reduced monthly benefit. Benefit amounts are determined by the sum of the employee's contributions to the plan, with interest, and employer-financed monetary credits. The level of these monetary credits is adopted by the Board within the actuarial constraints imposed by the TCDRS Act SO that the resulting benefits can be expected to be adequately financed by the District's commitment to contribute. At retirement, death, or disability, the benefit is calculated by converting the sum oft the employee's accumulated contributions and the employer-financed monetary credits to a monthly annuity using annuity purchase rates prescribed by the TCDRS Act. Annually, the District reviews the plan to determine benefit and contribution levels. Employees covered by benefit terms At December 31, 2023, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 9 Inactive employees entitled to but not yet receiving benefits 59 Active employees 20 Total 88 Contributions A combination of three elements funds each employer's plan: employee deposits, employer contributions and investment income. The deposit rate for employees is 4%, 5%, 6% or 7% of compensation, as adopted by the employer's governing body. Participating employers are required, by law, to contribute at a minimum the actuarially required rates, which are determined annually. Investment income funds a large part of the benefits employees earn. The district's contribution rate is calculated annually on an actuarial basis, although the employer may elect to contribute at a higher rate. The District contribution rate is based on the TCDRS funding policy adopted by the TCDRS Board of Trustees and must conform with the TCDRS Act. The employee contribution rates are set by the district and are currently 7%. -39- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 17 September 30, 2024 Note G: Pension Plan (continued) Employers have the option of paying more than the required contribution rate each year. Extra contributions can help employers "pre-fund" benefit increases, such as cost-of-living adjustment to retirees, and they can be used to help offset or mitigate future increases in the required rate due to negative plan experience. There are two approaches for making extra contributions: (a) paying an elected contribution rate higher than the required rate and (b) making an additional elective contribution as a lump sum. Administrative costs of TCDRS are financed through the system's general reserves, which are part of the Endowment Fund. Employees for the District were required to contribute 7% of their annual gross earnings during the fiscal year. The contribution rates for the District were 6.16% and 6.42% in calendar years 2023 and 2024, respectively. The District's contributions to TCDRS for the fiscal year ended September 30, 2024 were $65,349, and were equal to the required contributions. Net Pension Liability The District's Net Pension Liability (NPL) was measured as of December 31, 2023, and the Total Pension Liability (TPL) used to calculate the Net Pension Liability was determined by an actuarial valuation as of that date. Actuarial Methods and Assumptions Used for GASB Calculations: The actuarial assumptions that determine the Total Pension Liability as of December 31, 2023 were based on the results of an actuarial experience study for the period January 1, 2017 = December 31, 2020, except where required to be different by GASB 68. The key assumptions used in the calculation of the total pension liability are as follows: -40- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 18 September 30, 2024 Note G: Pension Plan (continued) Valuation Timing Actuarially determined contribution rates are calculated on a calendar year basis as of December 31, two years prior to the end of the fiscal year in which the contributions are reported. Actuarial Cost Method Entry Age (level percentage of pay) Amortization Method Recognition of economicdemographic Gains or losses Straight-line amortization over Expected Working Life Recognition of assumption changes Or inputs Straight-line amortization over Expected Working Life Asset Valuation Method Smoothing period 5y year Recognition method Non-asymptotic Corridor None Inflation 2.50% Salary Increases Same as funding valuation: See Below Investment Rate of Return 7.60% (Gross of administrative expenses) Cost-of-Living Adjustments Cost-of-Living Adjustments for Lubbock County Water Control and mprovement District #1 are not considered to be substantively automatic under GASB 68. Therefore, no assumption for future cost- of-living adjustments is included in the GASB calculation. No assumption for future cost-of-living adjustments is included in the funding valuation. Retirement Age Same as funding valuation: See Below Turnover Same as funding valuation: See Below Mortality Same as funding valuation: See Below 41- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 19 September 30, 2024 Note G: Pension Plan (continued) Actuarial Methods and Assumptions Used for Funding Valuation: Economic Assumptions TCDRS system-wide economic assumptions: Real Rate of return 5.00% Inflation 2.50% Long-term investment return 7.50% The assumed long-term investment return of 7.5% is net after investment and administrative expenses. It is assumed returns will equal the nominal annual rate of 7.5% for calculating the actuarial accrued liability and the normal cost contribution rate for the retirement plan of each participating employer. The annual salary increase rates assumed for individual members vary by length of service and by entry-age group. The annual rates consist of a general wage inflation component of 3.00% (made up of2.50% inflation and 0.5% productivity increase assumptions) and a merit, promotion and longevity component that on average approximates 1.7% per year for a career employee. Employer-specific economic assumptions: Growth in membership 0.00% Payroll Growth 3.00% The payroll growth assumption is for the aggregate covered payroll of an employer. Demographic Assumptions TCDRS system-wide demographic assumptions: Replacement of Terminated Members New employees are assumed to replace any terminated members and have similar entry ages. Disability - Members who become disabled are eligible to commence benefit payments regardless of age. Rates of disability are in a custom table based on TCDRS experience. Mortality rates for active members were based on 135% of Pub-2010 General Employees Amount-Weighted Mortality Table for males and 120% Pub-2010 General Employees Amount-Weighted Mortality Table for females, both projected with 100% of the MP-2021 Ultimate scale after 2010. Mortality rates for service retirees, beneficiaries, and non- depositing members were based on 135% of Pub-2010 General Retirees Amount-Weighted Mortality Table for males and 120% Pub-2010 General Retirees Amount-Weighted Mortality Table for females, both projected with 100% of the MP-2021 Ultimate scale after 2010. Mortality rates for disabled retirees were based on 160% of Pub-2010 General Disabled Retirees Amount-Weighted Mortality Table for males and 125% Pub-2010 General Disabled Retirees Amount-Weighted Mortality Table for females, both projected with 100% of the MP- 2021 Ultimate scale after 2010. -42- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 20 September 30, 2024 Note G: Pension Plan (continued) Former Employees Working for Another TCDRS Employer - Former employees who have left their accounts on deposit and are now active depositing members with another TCDRS employer are treated for valuation purposes as active members with no future member deposits. Family Composition = For current retirees, beneficiary information is supplied by TCDRS. For purposes of calculating the Survivor Benefit for current depositing and non-depositing members, male members are assumed to have a female beneficiary who is three years younger. Female members are assumed to have a male beneficiary who is three years older. Internal Revenue Code Section 415 Limit - The Internal Revenue Code Section 415 maximum benefit limitations are not reflected in the valuation for funding purposes. Any limitation is reflected in a member's benefit after retirement. Internal Revenue Code Section 401(a)(17) - Compensation is limited under IRC Section 401(a)(17) and the limit is assumed to increase at the rate of inflation for valuation purposes. Option Elected at Retirement - Future retired members are assumed to elect the standard (single life) retirement option with a monthly benefit for the retiree's lifetime only. Current retirees and beneficiaries are valued based on the option previously selected. All options include a cash refund feature which for valuation purposes is approximated by assuming monthly payments are received for a minimum of four years. This approximation applies for both current and future retirees. Replacement of Terminated Members New employees are assumed to replace any terminated members and have similar entry ages. Employer-specific demographic assumptions: Other Terminations of Employment - The rates of assumed future termination from active participation in the plan for reasons other than death, disability or retirement vary by length of service, entry-age group (age at hire) and gender. No termination after eligibility for retirement is assumed. Adjustment for Partial Lump-Sum Payment Option: Termination Rates The termination rate is 0% for the two years immediately prior to retirement eligibility. Rates are reduced at ages near retirement as it is anticipated that a member would be less likely to take a withdrawal if the partial lump-sum payment option was available. Withdrawals - Members who terminate may either elect to leave their account with TCDRS or withdraw their funds. The probability that a member elects a withdrawal varies by length of service and vesting schedule. For non-depositing members who are not vested, 100% are assumed to elect a withdrawal. -43- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 21 September 30, 2024 Note G: Pension Plan (continued) Timing of Withdrawals - For former employees only eligible for a refund of their account balance, it is assumed there is a 10% probability of the former employee electing a refund of their account balance in each of the ten years following the valuation date. That is, the account balance is assumed to be distributed within ten years of the valuation date. For current active members who will receive a refund of their account balance, it is assumed that 50% of those members elect a refund of their account balance immediately upon termination, and the remaining 50% elect a refund at a rate of 10% in each of the ten years following the year of refund. Current deferred vested inactive members are assumed to keep their accounts with TCDRS until their assumed retirement. The long-term expected rate of return on TCDRS assets is determined by adding expected inflation to expected long-term real returns, and reflecting expected volatility and correlation. The capital market assumptions and information shown below are provided by TCDRS' investment consultant, Cliffwater LLC. The numbers shown are based on January 2024 information for a 10-year time horizon. Note that the valuation assumption for long-term expected return is re-assessed in detail at a minimum of every four years, and is set based on a long-term time horizon. The TCDRS Board of Trustees adopted the current assumption at their March 2021 meeting. The assumption for the long-term expected return is reviewed annually for continued compliance with the relevant actuarial standards of practice. Geometric Real Target Rate of] Return Asset Class Allocation (Expected minus Inflation) US Equities 11.50% 4.75% Global Equities 2.50% 4.75% Int'l Equities-Developed Markets 5.00% 4.75% International Equities-Emerging 6.00% 4.75% Investment-Grade Bonds 3.00% 2.35% Strategic Credit 9.00% 3.65% Direct Lending 16.00% 7.25% Distressed Debt 4.00% 6.90% REIT Equities 2.00% 4.10% Master Limited Partnerships 2.00% 5.20% Private Real Estate Partnerships 6.00% 5.70% Private Equity 25.00% 7.75% Hedge Funds 6.00% 3.25% Cash Equivalents 2.00% 0.60% Total 100.00% LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 22 September 30, 2024 Note G: Pension Plan (continued) Discount Rate The discount rate is the single rate of return that, when applied to all projected benefit payments results in an actuarial present value of projected benefit payments equal to the total of the following: 1. The actuarial present value of benefit payments projected to be made in future periods where the plan assets are projected to be sufficient to meet benefit payments, calculated using the Long-Term Expected Rate of Return. 2. The actuarial present value of projected benefit payments not included in (1), calculated using the municipal bond rate. Therefore, if plan investments in a given future year are greater than projected benefit payments in that year and are invested such that they are expected to earn the long-term rate of return, the discount rate applied to projected benefit payments in that year should be the long-term expected rate of return on plan investments. If future years exist where this is not the case, then an index rate reflecting the yield on a 20-year, tax-exempt municipal bond should be used to discount the projected benefit payments for those years. The determination of a future date when plan investments are not sufficient to pay projected benefit payments is often referred to as a depletion date projection. A depletion date projection compares projections of the pension plan's fiduciary net position to projected benefit payments and aims to determine a future date, if one exists, when the fiduciary net position is projected to be less than projected benefit payments. The funding requirements under the employer's funding policy and the legal requirements under the TCDRS Act are such that a depletion is not projected to occur. Since the fiduciary net position is projected to be sufficient to pay projected benefit payments in all future years, the discount rate for purposes of calculating the total pension liability and net pension liability of the employer is equal to the long-term assumed rate of return on investments. For GASB 68 this long-term assumed rate of return is net of investment expenses, but gross of administrative expenses. Therefore, a discount rate of 7.60% has been used. This rate reflects the long-term assumed rate of return on assets for funding purposes of 7.50%, net of all expenses, increased by 0.10% to be gross of administrative expenses. -45- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 23 September 30, 2024 Note G: Pension Plan (continued) Change in the Net Pension Liability Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a)-(b) Balance at 12/31/22 $ 2,013,464 $ 2,406,906 $ (393,442) Changes for the year: Service cost 114,229 114,229 Interest 156,868 156,868 Change ofbenefit terms Effect of conomicdemographic gains or losses 31,136 31,136 Changes of assumptions Refund of contributions (27,563) (27,563) Contributions - employer 62,398 (62,398) Contributions employee 70,906 (70,906) Net investment income 264,558 (264,558) Benefit payments, including refunds of employee contributions (102,102) (102,102) Administrative expense (1,397) 1,397 Other changes 1,147 (1,147) Net changes 172.568 267.947 (95.379) Balance at 12/31/23 $ 2,186,032 $ 2,674,853 $ (488,821) Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the District, calculated using the discount rate of 7.60%, as well as what the District's net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.60%) or -percentage-point higher (8.60%) than the current rate: 1% Decrease in 1% Increase in Discount Rate Discount Rate Discount Rate (6.60%) (7.60%) (8.60%) District's net pension liability/(asset) $ (216,848) $ (488,821) $ (718,617) Pension Plan Fiduciary Net Position Detailed information about the pension plan's Fiduciary Net Position is available in a separately-issued TCDRS financial report. That report may be obtained on the Internet at www.tcdrs.com. -46- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 24 September 30, 2024 Note G: Pension Plan (continued) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended September 30, 2024, the district recognized pension expense of ($26,108). At September 30, 2024, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of of Resources Resources Differences between expected and actual economic experience $ 20,757 $ 9,232 Changes in actuarial assumptions $ $ Difference between projected and actual investment earnings $ 11,346 $ Contributions subsequent to the measure date December 31, 2023 $ 51,589 $ Total $ 83,692 $ 9,232 $51,589 reported as deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability for the year ending September 30, 2025. Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Year ended Dec 31: 2024 $ (15,760) 2025 2,398 2026 52,535 2027 (16,302) 2028 Thereafter Total $ 22,871 47- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 25 September 30, 2024 Note H: Postemployment Benefits Other Than Pensions 1. Plan Description The District participates in the retiree Group Term Life program for the Texas County & District Retirement System (TCDRS), which is a statewide, multiple-employer, public employee retirement system. The TCDRS Group Term Life (GTL) program has been determined to be an unfunded OPEB plan as the GTL fund does not meet the requirements of a trust under Paragraph 4b of GASB 75, as the assets of the GTL fund can be used to pay active GTL benefits which are not part of the OPEB plan. For GASB 75 purposes, the OPEB plan is not a cost sharing plan, SO the annual benefit payments are treated as being equal to the employer's actual retiree GTL contributions for the year. 2. Benefits Provided All full- and part-time non-temporary employees participate in the plan, regardless of the number of hours they work in a year and are eligible for the TCDRS pension plan. Only employers that have elected participation in the retiree Group Term Life program are included in the OPEB plan. The plan provides a $5,000 post-retirement death benefit to beneficiaries of service retirees and disability retirees of employers that have elected participation in the retiree GTL program. The OPEB benefit is a fixed $5,000 lump-sum benefit. No future increases are assumed in the $5,000 benefit amount Benefit terms are established under the TCDRS Act. Participation in the retiree GTL program is optional and the employer may elect to opt out of (or opt into) coverage as of Jan. 1 each year. At the December 31, 2023 valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 7 Inactive employees entitled to but not yet receiving benefits 7 Active employees 20 Total 34 3. Contributions Contributions made to the retiree GTL Program are held in the GTL Fund. The GTL fund does not meet the requirements of a trust under Paragraph 4b of GASB 75, as the assets of the GTL fund can be used to pay active GTL benefits which are not part of the OPEB plan. -48- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 26 September 30, 2024 Note H: Postemployment Benefits Other Than Pensions The District's contribution rate for the retiree GTL program is calculated annually on an actuarial basis, and is equal to the cost of providing a one-year death benefit equal to $5,000. Contribution Rates 2023 2024 District 0.16% 0.19% Current Fiscal Year Employer Contributions $ 1,881 4. Actuarial Assumptions All actuarial assumptions and methods that determined the total OPEB liability as of December 31, 2023 were based on the results of an actuarial experience study for the period January 1, 2017 = December 31, 2020, except where required to be different by GASB 75. Additional Actuarial Methods and Assumptions Valuation Date December 31, 2023 Actuarial Cost Method Entry Age Level Percent of Salary Amortization Method Recognition of economic.demographic Gains or losses Straight-line amortization over Expected Working Life Recognition of assumption changes Ori inputs Straight-line amortization over Expected Working Life Asset Valuation Method Does not apply Inflation Does not apply Salary increases Salary increases do not affect benefits but are used in the allocation of costs under the actuarial cost method. Investment Rate of Return (Discount Rate) 3.26% 20 Year Bond GO Index published by bondbuyer.com as of December 28, 2023 Cost-of-Living Adjustments Does not apply Administrative expenses All administrative expenses are paid through the Pension Trust and accounted for under reporting requirements under GASB Statement No. 68 Mortality rates - depositing members 135% of Pub-2010 General Employees Amount-Weighted Mortality Table for males and 120% Pub-2010 General Employees Amount-Weighted Mortality Table for females, both projected with 100% of the MP-2021 Ultimate scale after 2010. -49- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 27 September 30, 2024 Note H: Postemployment Benefits Other Than Pensions Mortality rates service retirees 135% of Pub-2010 General Healthy Retirees Amount-Weighted Mortality Table for males and 120% Pub-2010 General Healthy Retirees Amount- Weighted Mortality Table for females, both projected with 100% of the MP- 2021 Ultimate scale after 2010. Mortality rates - disabled retirees 160% of Pub-2010 General Disabled Retirees Amount-Weighted Mortality Table for males and 125% Pub-2010 General Disabled Retirees Amount- Weighted Mortality Table for females, both projected with 100% of the MP- 2021 Ultimate scale after 2010. 5. Discount Rate The TCDRS GTL program is treated as an unfunded OPEB plan because the GTL trust covers both actives and retirees and the assets are not segregated for these groups. Under GASB 75 (paragraph 155), the discount rate for an unfunded OPEB plan should be based on 20-year tax-exempt AA or higher Municipal Bonds. Therefore, a discount rate of 3.26% based on the 20 Year Bond GO Index published by bondbuyer.com is used as of the measurement date of December 31, 2023. 6. Discount Rate Sensitivity Analysis The following schedule shows the impact of the Total OPEB Liability if the discount rate used was 1% less than and 1% greater than the discount rate that was used (3.26%) in measuring the Total OPEB Liability. Note that the healthcare cost trend rate does not affect the Total OPEB Liability, sO sensitivity to the healthcare cost trend rate is not shown. 1%. Decrease in Discount Rate 1% Increase in Discount Rate (2.26%) (3.26%) Discount Rate (4.26%) Total OPEB Liability $53,989 $ 44,858 $37,773 -50- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 28 September 30, 2024 Note H: Postemployment Benefits Other Than Pensions 7. OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBS At September 30, 2024, the District reported al liability of $44,858 for total OPEB liability. The total OPEB liability was measured as of December 31, 2023 by an actuarial valuation as of that date. For the year ended September 30, 2024, the District recognized OPEB expense of $4,421. Change in the Total OPEB Liability Total OPEB Liability (a) Balance at 12/31/22 $ 39,389 Changes for the year: Service cost 1,375 Interest 1,505 Change of benefit terms Effect ofe economie/demographic experience (280) Changes of assumptions 3,477 Benefit payments, including refunds of employee contributions (608) Other changes Net changes 5.469 Balance at 12/31/23 $ 44,858 -51- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 29 September 30, 2024 Note H: Postemployment Benefits Other Than Pensions At December 31, 2023, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual actuarial experiences P 1,242 $ 1,158 Changes in actuarial assumptions $ 7,857 $ 11,533 Difference between projected and actual Investment earnings $ $ Changes in proportion and difference between The employer's contributions and the Proportionate share of contributions $ $ Total as of Dec. 31, 2023 measurement date $ 9,099 $ 12,691 Contributions paid to TCDRS subsequent to the measurement date $ 1,525 D Total as of fiscal year-end $ 10,624 $ 12,691 The net amounts of the employer's balances of deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year ended December 31: OPEB Expense Amount 2024 $ 534 2025 1,064 2026 (1,397) 2027 (1,397) 2028 (1,397) Thereafter (999) Note :: Transfers The following is a summary of District interfund transfers for the year ended September 30, 2024: Transfer from Amount Transfer To Explanation General Fund $ 107,790 Special Revenue Fund Supplement special events General Fund $ 142,953 Enterprise Fund Normal operating transfer -52- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO FINANCIAL STATEMENTS, Page 30 September 30, 2024 Note J: Litigation From time to time the District is party to various legal proceedings which occur in the District's operations. These legal proceedings are not expected to have an adverse impact on the operations or affected funds of the District. Note K: Risk Management The District is exposed to various risks of loss from torts, theft of, damage to and destruction of assets; business interruptions; errors and omissions; employee injuries and illnesses; natural disaster; and employee health, dental and accidental benefits. Commercial insurance is purchased for claims arising from such matters. REQUIRED SUPPLEMENTARY NFORMATION -53- EXHIBIT E-1 LUBBOCK WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas BUDGETARY COMPARISON SCHEDULE GENERAL FUND For the Fiscal Year Ended September 30, 2024 General Fund Variance Favorable Budget Actual (Unfavorable) Revenues Gate Revenue $ 2,069,370 $ 1,894,854 $ (174,516) Lease Revenue 56,000 58,608 2,608 Lease Interest 142,400 148,492 6,092 Rental Revenue 53,000 52,769 (231) Grant Revenue 465,000 469,616 4,616 Interest Revenue 90,000 151,364 61,364 Other Operating Revenue 60,000 67,779 7,779 Total Revenues 2,935,770 2,843,482 (92,288) Expenditures Current Salaries 1,095,000 1,089,542 5,458 Payroll Taxes 25,000 22,938 2,062 Employee Benefits 240,000 230,898 9,102 Tools and Supplies 55,000 55,000 Repairs & Maintenance 180,000 174,119 5,881 Utilities 145,000 127,772 17,228 Office Supplies 22,000 20,232 1,768 Printing and Postage 7,000 6,599 401 Advertising and Public Relations 2,500 1,312 1,188 Dues, Fees and Subscriptions 28,500 27,415 1,085 Training and Travel 10,000 9,385 615 Accounting and Legal 23,500 21,525 1,975 Election Expense 3,500 3,351 149 Contracted: Services 52,500 50,613 1,887 Rental Expense 12,500 6,367 6,133 Bank Fees and Charges 84,500 81,732 2,768 Insurance 50,000 46,293 3,707 Other 17,500 15,693 1,807 Capital Outlay 960,870 823,291 137,579 Total Expenditures 3,014,870 2,814,077 200,793 Other Financing Sources (Uses) Proceeds from Sale of Assets 5,000 6,030 1,030 Operating Transfers In (Out) (255,000) (250,743) 4,257 Total Other Financing Sources (Uses) (250,000) (244,713) 5,287 Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses (329,100) (215,308) 113,792 Fund Balance, Beginning of Year 2,606,126 2,606,126 Fund Balance. End of Year $ 2,277,026 $ 2,390,818 $ 113,792 -54- EXHIBIT E-2 8 1 -55- EXHIBIT E-3 -56- EXHIBIT E-4 -57- EXHIBIT E-5 -58- LUBBOCK COUNTY WATER CONTROL AND IMPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO REQUIRED SUPPLEMENTARY INFORMATION September 30, 2024 Schedule of Pension Contributions - TCDRS Valuation Timing Actuarially determined contribution rates are calculated each December 31, two years prior to the end of the fiscal year in which contributions are reported. Actuarial Cost Method Entry Age (level percentage of pay) Amortization Method Level percentage of payroll, closed Remaining Amortization Period 0.0 years (based on contribution rate calculated in 12/31/2023 valuation) Asset Valuation Method 5-year smoothed market Inflation 2.50% Salary Increases Varies by age and service. 4.7% average over career including inflation. investment Rate of Return 7.50%, net of administrative and investment expenses, including inflation Retirement Age Members who are eligible for service retirement are assumed to commence receiving benefit payments based on age. The average age at service retirement for recent retirees is 61. Mortality 135% of the Pub-2010 General Retirees Table for males and 120% of the Pub-2010 General Retirees Table for females, both projected with 100% of the MP-2021 Ultimate scale after 2010. Changes in Assumptions and 2015: New inflation, mortality and other Methods Reflected in the Schedule assumptions were reflected of Employer Contributions* 2017: New mortality assumptions were reflected. 2019: New inflation, mortality and other assumptions were reflected. 2022: New investment return and inflation assumptions were reflected Changes in Plan Provisions 2015: No changes in plan provisions were reflected in the Schedule Reflected in the Schedule of 2016: No changes in plan provisions were reflected in the Schedule Employer Contributions* 2017: New Annuity Purchase Rates were reflected for benefits earned after 2017. 2018-2023: No changes in plan provisions were reflected in the Schedules. *Only changes that affect the benefit amount and that are effective 2015 and later are shown in the Notes to Schedule. -59- LUBBOCK COUNTY WATER CONTROL AND MPROVEMENT DISTRICT NO. 1 Lubbock, Texas NOTES TO REQUIRED SUPPLEMENTARY INFORMATION September 30, 2024 Schedule of OPEB Contributions = TCDRS Valuation Timing Actuarially determined contribution rates are calculated on a calendar year basis as of December 31, two years prior to the end of the fiscal year in which the contributions are reported. Actuarial Cost Method Entry Age Level Percent of Salary Amortization Method Recognition of economicdemographic gains or losses Straight-Line amortization over Expected Working Life Recognition of assumption changes or inputs Straight-Line amortization over Expected Working Life Asset Valuation Method Does not apply Inflation Does not apply Salary Increases Varies by age and service. Salary increases do not affect benefits but are used in the allocation of costs under the actuarial cost method. Investment Rate of Return 3.26% 20 Year Bond GO Index published by bondbuyer.com as of December 28, 2023 Cost-of-Living Adjustment Does not apply Disability Members who become disabled are eligible to commence benefit payments regardless of age. Rates of disability are in a custom table based on TCDRS experience. Mortality Depositing members 135% of Pub-2010 General Employees Amount-Weighted Mortality Table for males and 120% Pub-2010 General Employees Amount- Weighted Mortality Table for females, both projected with 100% of the MP-2021 Ultimate scale after 2010. Service retirees, beneficiaries and non-depositing members 135% of Pub-2010 General Healthy Retirees Amount-Weighted Mortality Table for males and 120% Pub-2010 General Healthy Retirees Amount-Weighted Mortality Table fort females, both projected with 100% of the MP-2021 Ultimate scale after 2010. Disabled retirees 160% of Pub-2010 General Disabled Retirees Amount-Weighted Mortality Table for males and 125% Pub-2010 General Disabled Retirees Amount-Weighted Mortality Table fort females, both projected with 100% of the MP-2021 Ultimate scale after 2010. Retirement Members eligible for service retirement are assumed to retire at rates based on age and gender. Other Termination of Employment The rate of assumed future termination from active participation in the plan for reasons other than death, disability or retirement vary by length of service, entry-age group (age at hire) and gender. No termination after eligibility for retirement is assumed. OTHER SUPPLEMENTARY NFORMATION -60- XHIBIT F-1 0 -61- EXHIBIT F-2 Terry & King, CPAs, P.C. 5707 114th Street P.O. Box 93550 Randel J. Terry, CPA Lubbock, TX 79493-3550 Ryan R. King, CPA Telephone - (806) 698-8858 - Fax - (866) 288-6490 Independent Auditors' Report 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 Board of Directors Lubbock County Water Control and Improvement District No. 1 9999 High Meadow Road Lubbock, TX 79404 Members of the Board of Directors: We 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 of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Lubbock County Water Control and Improvement District No. 1 (LCWCID No. 1), as of and for the year ended September 30, 2024, and the related notes to the financial statements, which collectively comprise the LCWCID No. 1's basic financial statements, and have issued our report thereon dated March 10, 2025. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the LCWCID No. 1's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control. Accordingly, we do not express an opinion on the effectiveness of the LCWCID No. 1's internal control. A deficiency in internal control exists when the design or operation of a 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 is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected, on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. -62- Members American Institute of Certified Public Accountants and the Texas Society of Certified Public Accountants CPA The CPA. Never Underestimate The Value" -63- Independent Auditors' Report Page 2 Our consideration of internal control was for the limited purpose described in the first paragraph of 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 or significant deficiencies may exist that were not identified. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the LCWCID No. 1's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. 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 of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 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. Respectfully submitted, Jerve S Krg Terry & King, CPAS, P.C. Lubbock, Texas March 10, 2025