): ¥ D:D: 3: FD ) ) ) JE Di FD ED ) VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 ANNUAL FINANCIAL REPORT For the fiscal year ended June 30, 2013239939) ) VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 ANNUAL FINANCIAL REPORT June 30, 2013 oo TABLE OF CONTENTS FINANCIAL SECTION Annual Filing Affidavit Independent Auditors’ Report... Management’ Discussion and Analysis sic Financial Statements ‘Statement of Net Position and Governmental Funds Balance Sheet. ‘Statement of Activities and Governmental Funds Revenues, Expenditures, and Changes in Fund Balance.. Notes to Financial Statements...... Required Supplementary Information Budgetary Comparison Schedule. Notes to Required Supplementary Information. ‘Texas Supplementary Information TSI-4: Services and Rates. TSI-2: Schedule of General Fund Expenditures. ‘TSI-3: Temporary Investments. ‘TSI-4: Taxes Levied and Receivable ‘TSI-8: Long-Term Debt Service Requirements by Years. TSI-6: Changes in Long-Term Bonded Debt. TSI-7: Comparative Schedule of Revenues and Expenditures - General Fund - Five Yeers, i : : TSI-8: Board Members, Key Personnel, and Consultants. Page " 20 24 NA 22. NA 23 NA NA 24 26» 9-939-999-7933. 9.999.9:99999.99999999999999999099999FINANCIAL SECTION PCUCCEECCCCOCECCCOCEC CEC CECEECCCOCCE CC ECC CCC CCC0999999792999 99199999 9999 99 0999,| 1D ) ANNUAL FILING AFFIDAVIT THE STATE OF TEXAS COUNTY OF VICTORIA VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 I, Thomas A. Cartwright (Ware of Duly Authorized Dist Representative) of the Victoria County Drainage District No, 3 hereby swear, or affirm, that the district named above has reviewed and approved at a meeting of the Board of the Directors of the District on the day of, 2014, its annual audit report for the fiscal period ended June 30, 2013 and those copies of the annual audit report have been filed in the district office, located at 1070 Bayer Road East, Victoria, Texas 77905, ‘The annual fling affidavit and the attached copy of the audit report are being submitted to the Texas Commission on Environmental Quality in satisfaction of the annual filing requirements of Texas Water Code Section 49.194. Date By: (Signature of Distia Representative) ‘Thomas A. Cartwright, Commissioner ‘yped Name and Tie of above Detict Represertatve) ‘Sworn to and Subscribed to before me this day of Giorature ofNotany (SEAL) My Commission Expires On: Notary Public in the State of Texas TCEQ.0723 (Rev. 07/2012)19D 797995 ) V) HARRISON, WALDROP & UHEREK, L.L.P. Ccempco rumuc accountants Torsmam sare 0 VOCE: ga 735055 ‘Were teas 790.9142 re (si S739591 INDEPENDENT AUDITORS’ REPORT Board of Directors Vietoria County Drainage District No. 3 Vietoria, Texas 77902 Report on the Financial Statements We have aucited the accompanying financial statements of the governmental activities and major fund of the Vietoria County Drainage District No. 3 the "Distrct”) as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the District's basic financiel statements as listed in the table of contents, Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of intemal control relevant to the preparation and fait presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibilty is fo express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. ‘Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. ‘An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal contol relevant to the entity's Preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements, We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for ‘our opinions. emers oF ‘ugacast sure Gr C2 FED FURUC ACCOUNTANTS Tag Soc OF CertreD Puave ACecUANSBoard of Directors Victoria County Drainage District No. 3 Opinion In our opinion, the financial statements referred to above present faily, in all material respects, the respective financial position of the governmental activities and major fund of the Victoria County Drainage District No. 3 as of June 30, 2013, and the respective changes in financial position for the year then tended in accordance with accounting principles generally accepted in the United States of America Other Matters Required Supplementary Information ‘Accounting principles generally accepted in the United States of America require that the management's Giscussion and analysis and budgetary comparison information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial 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 inquires, 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. Other Information ‘Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the District's financial statements taken as @ whole. The Texas Commission on Environmental Quality requires districts to include certain information in their Annual Financial Report in conformity with laws and regulations of the State of Texas. This information is designated as supplemental information in the table of contents and is included herein as Exhibits TSI-2 through TSI-8. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of ‘measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Hassine labdaay # Wha LP January 3, 2044 Cc GoCCCCCUCCGEUCTE {VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 MANAGEMENT'S DISCUSSION AND ANALYSIS. June 30, 2013 SS In this section of the Annual Financial Report, we, the managers of Victoria County Drainage District No. 3 (the “District, discuss and analyze the District's financial performance for the fiscal year ended June 30, 2013, Please read it in conjunction with the independent auditors’ report on page 2 and the District's basic financial statements, which begin on page 8. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. ‘The government-wide financial statements include the Statement of Net Position and the Statement of Activities (on pages 8 through 10), These statements provide information about the activities of the District as a whole and present a longer-ierm view of the District's properly and other financial matters. They reflect the flow of total economic resources in a manner similar to the financial reports of a business enterprise. Fund financial statements (also on pages 8 through 10) report the District's operations in more detail than the government-wide statements by providing information about the Districts most significant funds. For governmental activities, these statements tell how services were financed in the short-term as well as what fesources remain for future spending. They reflect the flow of current financial resources and supply the basis for tax levies and the appropriations budget. ‘The notes to the financial statements (starting on page 11) provide narrative explanations or additional data needed for full disclosure in the government-wide statements or the fund financial statements, Reporting the District as a Whole Tho Statement of Net Position and the Statement of Activitios The analysis of the District's overall financial condition and operations is on pages 8 through 10. Its primary Purpose is to show whether the District's financial condition improved or declined as a result of the years activities. The Statement of Net Position includes all the Distric’s assets and liabilities at the end of the year, while the Statoment of Activities includes all the revenues and expenses generated by the Distic’s operations Guring the year. ‘These statements apply the accrual basis of accounting, which is the basis used by private sector companies. All of the current year's revenues and expenses are taken into account regardless of when cash Is received or paid. ‘All of the District's assets are reported whether they serve the current year or future years. Liabillies are Considered regardless of whether they must be paid in the current year or future years, These two statements report the District's net position and changes in them. The District's net position (the difference between assets and liabilities) provide one measure of the District's financial health, or financial position. Over time, increases or decreases in the Districts net position are one indicator of whether its financial health is improving or dectining. To fully assess the overall health of the District, however, one should consider Non-financial factors as well, such as changes in the District's property tax base and the condition of the District's facilities. Im the Statement of Net Position and the Statement of Activities, we disclose the District's one type of activity: Govemmenta! activities - All of the District's basic services are reported here. Property taxes and unrestricted investment earings finance most of these activities.———— USING THIS ANNUAL REPORT - (Continued) Reporting the District's Most Significant Funds Fund Financial Statements ‘The fund financial statements are also included on pages 8 through 10 and provide detailed information about the most significant funds - not the District as a whole. Laws and contracts require the District to establish some funds. The District's administration can establish other funds, such as debt service and capital projects, to help it control and manage money for particular purposes. The District has only one fund, the General Fund, which is governmental. Governmental funds - All of the Distric’s basic services are reported in governmental funds, which use modified accrual accounting (a method that measures the receipt and disbursement of cash and all other financial assets that can be readily converted to cash) and report balances that are available for future spending. The ‘governmental fund statements provide a detailed short-term view of the District's general operations and the basic services it provides. We describe the differences between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds, as shown in the adjustments columns in the financial statements GOVERNMENT-WIDE FINANCIAL ANALYSIS As noted earlier, net position serve over time as a useful indicator of a government's financial position. The assets of Victoria County Drainage District No. 3 exceeded its: liabilities at the close of the fiscal year ended June 30, 2013 by $2,584,080 of which $1,849,314 was available to meet the District's ongoing obligations. Table! Victoria County Drainage District No. 3 NET POSITION Governmental Activities Total % 2013 2012 Change ASSETS Current assets $ 1,668,483 «$1,975,410 15.54% Capital assets (net) 934,767 592,542 57.75% Total assets 2,603,250, LIABILITIES Current labities 19,169 31.59% Total liabilities 19,169 NET POSITION Net investment in capital assets 934,767 592,542 57.76% Unrestricted 4,649,314 4,947,390 16.31% Total net position 2,584,081 $ 2,530,932 Cat ( CUGGCOCCGOCGK( CCOoctc ct ( (—_—- GOVERNMENT-WIDE FINANCIAL ANALYSIS - (Continued) Table It Victoria County Drainage District No. 3 CHANGES IN NET POSITION Governmental Activiles Total % 2013, 2012 Change REVENUES General revenues Tax collections S 603698 «$880,812 3.93% Penalty and interest 6217 5,745 9.19% Investment income 2,789 4,304 -35.20% Miscellaneous income (loss) 15,755 (2,331 -775.89% Total revenues 627,399 588,530 EXPENSES General government 583,250 583,304 -0.01% Total expenses 583,250 583,304 ‘Change in net position 44,149 5,226 74.80% Net position - July 4 ___ 2,530,932 2,534,706 0.21% Net position - June 30 $__2,984081 $2,530,932 ‘The District's total revenues increased over the prior year due to gains on the sale of capital assets, ‘THE DISTRICT'S FUNDS, At June 30, 2013, the District's governmental funds reported an ending unassigned fund balance of $1,504,798, which is a decrease of $313,101 in comparison with the prior year. This entire fund balance is unassigned and Is therefore available for spending, subject to regulatory, statutory, and budgetary resttictions. BUDGETARY HIGHLIGHTS. The Districts Board of Directors revised various general government categories to account for an increase in actual expenditures, mostly as a result of additional equipment purchases. The total increase in budgeted expenditures was $38,500. CAPITAL ASSETS The District had $934,766, net of accumulated depreciation, invested in capital assets, which includes land, vehicles, and machinery and equipment. This amount represents a net increase of $342,224 from the prior year. More detailed information about the District's capital assets is presented in Note 5 to the financial statements.eee ECONOMIC FACTORS AND NEXT YEAR'S BUDGET ‘The Districts Board of Directors considered many factors when setting the fiscal year 2014 budget and tax rates. ‘The District expects revenues and expenses to remain consistent in the 2014 fiscal year. The District expects its budgetary General Fund balance to decrease $298,500 by the close of the 2014 fiscal year. CONTACTING THE DISTRICT'S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the Disirict's finances and to show the District's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Districts business office, at Victoria County Drainage District No. 3, 1070 Bayer Road East, Victoria, Texas 77905.DDD 39 9939909909093033997 1D | BASIC FINANCIAL STATEMENTS.See VED De Dv YD ID I 9199.9VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 STATEMENT OF NET POSITION AND GOVERNMENTAL FUNDS BALANCE SHEET June 30, 2013 ASSETS Current assets Cash and cash equivalents Deposits Prepaid items ‘Taxes receivable (net) Other receivables Capital assets (net) Total assets LIABILITIES Current labitiies ‘Accounts payable Salaries payable Accrued compensated absences Total liabilities DEFERRED INFLOWS OF RESOURCES Unavailable revenue Total deferred inflows of resources FUND BALANCES/NET POSITION Fund balance Unassigned Total fund balance Total liabilities, deferred inflows of resources, and fund balance Net position Net investment in capital assets Unrestricted Total net position Amounts reported for governmental activities in the Statement of Net Position are different from the governmental funds because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds, Property taxes receivable will be collected this year, but are not available ‘soon enough to pay for the current period's expenditures and, therefore, are deferred in the govemmental funds. ‘The accompanying notes are an integral part of this statement. (54,516) (54,516) 1,594,798) 1,594,798) Statement of Net Position $1,611,859 100 600 54,516 4,408 934,766 2,603,249 TAIT 4,158 7,894 19,169 934,766, 1,643,314 $_2,584,080 934,768 S_s4s16VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUNDS REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE For the year ended June 30, 2013 General Statement of Fund Adjustments _Activities EXPENDITURES Current Salaries Directors S$ 16800 - $ 16,800 Employees 17.278 - 17,278 Longevity 4,025 : 4,025 Payroll taxes 14,912 - 14,912 Retirement contributions 25,307 - 25,307 Insurance Health 37,821 - 37,821 Worker's compensation 3,085 - 3,085 Other 10,209 - 40,209 Parts and supplies 18,678 - 18.678 Repair and maintenance 7.977 - 7.977 Fuel 80,222 - 80,222 Damages and fence repairs 46 - 46 Culverts and gravel 5,329 - 5,320 Miscellaneous 891 - 891 Utilities 450 - 450 Telephone 1,824 - 1,824 Legal and accounting 11,450 - 11,450 Professional services 5,891 - 5.891 Brush and weed control 39,430 : 39,430 Commissions and fees 7,934 - 7,934 Capital outlay Equipment purchases 439,671 (439,671) - Contract labor 1,394 - 1,394 Contributions. 2,000 - 2,000 Depreciation = __ 110.298 _ 110,298 Total expenditures 912,624 329,373) 583,251 REVENUES General revenues Tax collections 588,613 15,025 603,638 Penalty and interest 5217 - 5217 Investment income 2,789 - 2,789 Miscellaneous income (loss) 2,904 12851 15,755 Total revenues 599,523 27,876 627,399 Excess (deficiency) of revenues over expencitures (313,101) 313,101 Change in net position 44,148 44148 FUND BALANCEINET POSITION Beginning of year 4,907,899, 632,033 2,539,932 End of year $_1594,798 $989,282 $ 2,584,080ooo Amounts reported for governmental activities in the Statement of Activities are different ‘rom the governmental fund balances because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and eported as depreciation expense. This amount is the net change in capital assets including additions, dispositions and depreciation expense, ‘Some property taxes will not be collected for several months after the Districts fiscal year ends and, therefore, are not considered "available" revenues and are deferred in the governmental funds ‘The accompanying notes are an integral part ofthis statement. 10 $_342,204 15,025ee Te De ewe ee ee ey ed er ed This page intentionally left blank.VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 NOTES TO FINANCIAL STATEMENTS June 30, 2013 —. OTE 1: _SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Vietoria County Drainage District No. 3 (the “Distrct”) operates under a Board of Directors (the “Board") form of government and provides drainage services to the residents of the District. The District was created by a vote of the electorate of Victoria County on June 23, 1916, under the authority of the State of Texas Water Code, Chapter 56. A. Reporting Entity The Board is elected by the public and has authority to make decisions, appoint administrators and managers, and significantly influence operations. It also has the primary accountabilty for fiscal matters. In evaluating how to define the government, for financial reporting purposes, the District's Board has considered all potential component units. ‘The decision to include a potential Component unit in the reporting entity was made by applying the criteria set forth in the Governmental Accounting Standards Board (GASB) Statement No. 14, The Financial Reporting Entity, and as amended by GASB Statement No. 39, Determining Whether Certain Organizations are Component Units. Under these guidelines the reporting entity consists of the primary government (all funds of the District), organizations for which the primary government is financially accountable, organizations for which the primary government is not financially accountable, organizations that raise and hold economic resources for the direct beneft of the primary government, and any other organization for which the nature and significance of the felationship with the primary government is such that exclusion could cause the District's financial statements to be misleading or incomplete. Under these guidelines there are not any entities that are considered to be component units B. Recently Issued Pronouncements Governmental Accounting Standards Board Statements (GASBS) No, 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, which requires governmental-type activities to report net position (not net assets), as well as deferred outflows of Fesources and deferred inflows of resources is effective for financial statements for periods beginning after December 15, 2011, with earlier implementation encouraged. The District is currently evaluating the effects of these authoritative guidance changes on its financial statements. 1"NOTE 4: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) c. Government-wide and Fund Financial Statements The governmentawide financial statements (i.e, the Statement of Net Position and the Statement of Activities) report information on all nonfiduciary activities of the District. For the most part, the effect of interfund activity has been removed from these statements, Governmental activities, ‘which normally are supported by taxes, and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The District had no businesstype activities during the year ended June 30, 2013, The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment, Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The governmentiwide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liabilty is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Govemmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting, Revenues are recognized as ‘soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to claims and judgments, are recorded only when payment is due. Property taxes and interest associated with the current period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the District. ‘The District reports the following major governmental fund: ‘The General Fund is the Districts primary operating fund, It accounts for all financial resources of the general government, except those required to be aceounted for in another fund. The District reports no other fund types,—. NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) E. Budgets and Budgetary Accounting The Board prepares and votes on the adopted budget. Budgets for the General Fund are adopted on a basis consistent with generally accepted accounting principles (GAAP). The original budget was amended during the year by unanimous consent of the Board. Both the original and final amended budgets are used in this report. The District does not employ the use of encumbrances in its budgetary accounting. F, Other Accounting Policies Deposits and Investments Cash and cash equivalents include amounts in pelty cash, demand deposits, time deposits, and any investment purchased with an original maturity date of 90 days or less, The District may invest its excess funds in any instruments authorized by the Public Funds tnvestment Act of Texas. Investments authorized under this Aet include, but are not limited to, the following: | Obligations of the United States or its agencies and instrumentalities; direct obligations of the State of Texas or its agencies and instrumentals; collateralized morigage obligations directly issued by a federal agency or instrumentality of the United States, the underlying security for which is guaranteed by an agency or instrumentalty of the United States: ccther obligations, the principal and interest of which are unconditionally guaranteed or insured by, or backed by full faith and credit of, the State of Texas or the United States or their respective agencies and instrumentalities; cericates of deposit issued by a stato or financial institution domiciled in the State of Texas which is guaranteed or insured by the Federal Deposit Insurance Corporation (FDIC) or otherwise secured; and certain repurchase agreements The District has adopted a written investment policy regarding the investment of its funds as defined by the Public Funds Investment Act of 1995. The investments of the District are in compliance with the District's investment policies. Receivables Alltrade and property tax receivables are shown net of an allowance for uncollectibes. Capital Assets Capital assets, which include land, vehicles, and machinery and equipment, are reported in the applicable governmental activites column in the government-wide statement of net position. The District defines capital assets as all assets with an estimated useful life in excess of one yeer. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed, Donated capital assets are recorded at estimated fair market value at the date of donation, 13es NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued) F, Other Accounting Policies - (Continued) Capital Assets - (Continued) ‘The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized, Major outlays for capital assets and improvements are capitalized as projects are constructed. ‘The District’s capital assets are depreciated using the straight-line method over the following estimated useful ives: Assets Years Vehicles 0 Machinery and equipment 10 Compensated Absences Vacation benefits are accrued by District employees according to guidelines set out in the Districts personnel policy. This policy states that after completion of one year of service, each employee will thereafter acerue vacation according to the number of years of continuous service. Employees can carry over a maximum of vacation hours into the following calendar year equivalent to their vacation hours earned in one calendar year. Employees will not be paid in lew of taking vacation. Upon termination, employees are paid for any unused granted vacation. Due to the Districts policy on vacation, granted vacation is expected to be liquidated with expendable available financial resources and is reported as an expenditure and a fund liabilty in the General Fund. Employees are credited with sick leave according to the number of years of continuous service. Sick days may be accumulated up to a maximum of 60 working days (480 hours). District personnel policies state that unused sick leave benefits will not be paid to employees upon termination. Therefore, no sick leave benefits are accrued. ‘The preparation of the government-wide and fund financial statements in conformity with GAAP requires management to make estimates and assessments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Accordingly, actual results could differ from those estimates. 14- NOTE 4: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Co! F. Other Accounting Policies - (Continued) Budgetary Information The District annually adopts legally authorized appropriated budgets for the General Fund. The budgets are prepared on a basis of accounting that is used for reporting in accordance with generally accepted account principles. Once a budget is approved, itcan be amended at the function and fund level only by approval of 2 majority of the members of the Board. The function level isthe legal level of budgetary control and the object level is the administrative level of control. Amendments are presented to the Board at ts regular meetings. Each amendment crossing the function level must have Board approval. Such amendments made before the fact, are reflected in the official minutes of the Board and are not made after fiscal year-end, as dictated by law. During the year, several amendments were Necessary. Such amendments resulted in a net increase of $38,500 in budgeted expenditures for the Districts General Fund. All budget appropriations lapse at year-end. Excess of Expenditures Over Appropriations For the fiscal year ended June 30, 2013, the District complied with budgetary restriction at all function levels except as detailed in the following table: Fund/Eunetion Expenditure Variance General Fund Parts and supplies $ 678, Equipment purchases 206,671, ‘These over-expenditures were funded by available fund balance in the General Fund. NOTE 2: DEPOSITS AND INVESTMENTS ‘As of June 30, 2013 the District had the following investments: Weighted Average Investment Type Amortized Cost _Maturity (Days) LOGIC Poo! $1,611,972 86 {The pool operates in a manner consistent with the Securities and Exchange Commission's (SEC) Rule 2(a)(7) of the Investment Company Act of 1940 but is not registered with the SEC as an investment company. Instead, the regulatory oversight for the pool is the State of Texas, The pool uses amortized cost rather than market value to report net assets to compute share prices. Accordingly, the fair value of the position in these pools is the same as the value of the shares in ‘each pool. Interest Rate Risk {mn accordance with the District's investment policy, the District manages its exposure to declines in fair Yalues by limiting the weighted average maturity of its investment portfolio to less than one year from {he time of purchase, The LOGIC Poo!'s weighted average maturty cannot exczed 180 days 15ee NOTE 2: DEPOSITS AND INVESTMENTS - (Continued) Credit Risk ‘The District's investments in the public funds investment pool include those with the LOGIC Investment Pool, The pool operates in full compliance with the Public Funds Investment Act. The LOGIC Investment Poo! is rated AAAm by Standard and Poor's. Concentration of Credit Risk ‘The Districts investment policy requires that the investment portfolio shall be diversified in terms of investment instruments, maturity scheduling, and financial institutions to reduce the risk of loss resulting from over concentration of assets in a specific class of investments, specific maturity or specific user. At year-end, the District was not exposed to concentration of credit risk. Custodial Credit Risk - Deposits In the case of deposits, this is the risk that in the event of a bank failure, the Distric’s deposits may not be retumed to it. During the fiscal year, all deposits held in the depository bank, First Victoria National Bank, were fully collateralized. Custodial Credit Risk - Investments For an investment, this is the risk that, in the event of the failure of the counterparty, the District will not be able to recover the value of its investments or collateral securities that are in the possession of ‘an outside party. All of the District's investments are invested in the LOGIC Investment Pool and it has no custodial credit risk. NOTE 3: TAXES RECEIVABLE Taxes receivable at June 30, 2013 consisted of net property taxes receivable of $54,516 ($60,573 {gross taxes receivable less a $6,057 allowance for uncollectible taxes). Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied October 1 ‘and payable by the following January 31. The Victoria County Tax Assessor-Colector bills and Collects the taxes forthe District. The assessed value at January 1, 2012, upon which the 2012 levy ‘was based, was §1,770,325,108, The tax assessment of October 1 set a tax levy at $0.0337 per $100 of assessed valuation. ‘The District's governmental funds recognize property tax revenues only to the extent of actual collections. Net uncollected taxes are reported as a receivable and as deferred revenues in the accompanying fund financial statements. 16 GGElCCCCeCOrcceEs C C4 ( C CoE Cf3 ) J SS NOTE : RETIREMENT PLAN A, Plan Description ‘The District provides retirement and disability benefits for all of its fulltime employees through a nontraditional, defined contribution pension pian in the statewide Texas County and District Retirement System (TCDRS), The Board of Trustees of TCDRS is responsible for the administration of the statewide agent muttiple-employer public employee retirement system Consisting of 624 nontracitional defined benefit pension plans. TCDRS in the aggregate issues a Comprehensive annual financial report (CAFR) on a calendar year basis. The CAFR is available upon written request from the TCDRS Board of Trustees at P.O. Box 2034, Austin, Texas 78768-2034. The plan provisions are adopted by the governing body of the employer, within the options available in the Texas state statutes governing TCDRS (TCDRS Act). Members can telire at ages 60 and above with 10 or more years of service, with 30 years of service regardless of age, ‘or when the sum of their age and years of service equals 80 or more, Members are vested afier 10 years of service but must leave their accumulated deposits in the plan to receive any employer-financed benefit. Members who withdraw their personal deposits in a lump sum are not entitled to any amounts contributed by their employer. Benefit amounts are determined by the sum of the employee's deposits to the plan, with interest, and employer-financed monetary credits, The level of these monetary credits is adopted by the governing body of the employer within the actuarial constraints imposed by the TCDRS Act so that the resulting benefts can be expected to be adequately ‘inanced by the employer's commitment to contribute, At retirement, death, or disabilty, the benefit is caleulated by Converting the sum of the employee's accumulated deposits and the employer financed monetary credits to a monthly annuity using annuity purchase rates prescribed by the TCDRS Act B. Funding Policy ‘The employer has elected the annually determined contribution rate (ADCR) plan provisions of the TCDRS Act. The plan is funded by monthly contributions from both employee members and the employer based on the covered payroll of employee members. Under the TCDRS Act, the contribution rate of the employer is actuarially determined annually. The employer contributed using the actuarially determined rate of 14.19% for the months of the accounting year in 2012, and 13.36% for the months of the accounting year in 2013 ‘The deposit rate payable by the employer for calendar year 2013 is the rate of 13.35% as adopted by the governing body of the employer. The employee members deposit rate and the employer contribution rate may be changed by the governing body of the employer within the options available in the TCDRS Act C. Annual Pension Cost For the employer's accounting year ending June 30, 2013, the annual pension cost for the TCDRS pian for its employees was $25,307 and the actual contributions were $25,307, ‘The annual requited contributions were actuarially determined as a percent of the covered payroll of the participating employees, and were in compliance with the GASB Statement No. 27 parameters based on the actuarial valuations as of December 31, 2010, December 31, 2011, and December 31, 2012, the basis for determining the contribution rates for calendar years 201 and 2013. The December 31, 2012 actuarial valuation is the most recent valuation. 7eee NOTE 4: _ RETIREMENT PLAN - (Continued) D. Actuarial Valuation and Trend Information Actuarial Valuation Information Actuarial valuation date 42/3440 42/34/14 121312 Actuarial cost method entry age entry age entry age Amortization method level percentage level percentage _level percentage cf payroll, closed of payroll, closed _of payroll, closed ‘Amortization period 20 20 20 Asset valuation method SAF: 10-yr SAF: 10-yr SAF: 10-yr ‘Actuarial assumptions: smoothed value ESF: Fund value smoothed value ESF: Fund value smoothed value ESF: Fund value Investment return 8.0% 8.0% 8.0% Projected salary increases 54% 5.4% 5.4% Infation 3.5% 3.5% 3.5% Costoftiving adjustments 0.0% 0.0% 0.0% Trend Information For the Retirement Plan for the Employees of Victoria County Drainage District No. 3 Fiscal Annual Percentage Net Year Ending Pension of APC Pension June 30 Cost (APC) _ Contributed Obligation 2014 19,156 00.00% $ - 2012 20,744 100.00% - 2013 25,307 100.00% - ‘Schedule of Funding Progress for the Retirement Plan for the Employees of Victoria County Drainage District No. 3 UAALasa ‘Actuarial Actuarial’ «== Actuarial «Unfunded Annual Percentage Valuation Value of Acorued AAL Funded Covered of Covered Date Assets Liability (AL) __(UAAL) Ratio Payroll Payroll 121310 $ 974,352 § 1,058,938 $ 84,584 92.01% $ 143,470 58.98% yasiii 1,049,264 1,138,668 89,402 92.15% 155,051 57.65% 422 1,134,882 1,257,697 122,815 90.23% 169,505 R4B% 18 { ( COCOCCC( C (V) 33D ) ) 12 ) SSK NOTE 5: CAPITAL ASSETS Capital asset activity for the year ended June 30, 2013, was as follows: Governmental activities Capital assets, not being depreciated Land Total capital assets, not being depreciated Capital assets, being depreciated Vehicles Machinery and equipment Total capital assets, being depreciated Less accumulated depreciation for Vehicles Machinery and equipment ‘Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Beginning Balance _ $11,870 11.870 76,015 __935,944 —ion1,958 41,562 389,725 431,287 880,672 $592,542 Increases $_466,339 Decreases 394744 304,741 270827 270827 124,114 s 424114 $_934,767 Depreciation expense of $110,297 was charged to the general government function/program in 2013 NOTE 6: _FUND BALANCE CLASSIFICATIONS During the year of 1998 there was an epic flood which resulted in drainage problems whereby the Midway Road Bridge over the Casa Blanca Creek was washed out. County Precinct No. 4 had to replace this bridge. County Judge Walker ordered that the district pay for one-half of the cost of construction. The Midway Road Bridge over Marcado Creek isin danger of a similar washout that wil require rebuilding of the bridge. ‘The Board had designated the estimated one-half cost, in the amount of $52,000, of replacement of this bridge in order to honor the commitment to the ‘County ‘when replacement becomes necessary. The Board has not adopted any policies pertaining to the new classifications of fund balances. As a result the entire fund balance is unassigned. but the Board intends $52,000 to remain set aside for the purpose of the bridge replacement. 199:9:99:39.9993999999999099.399999999999-99999099999 This page intentionally left blank.d) 13333 | ) REQUIRED SUPPLEMENTARY INFORMATIONDs DAV D DD DD D1 DD 19 919399 9199.19: 99.9 DIDVICTORIA COUNTY DRAINAGE DISTRICT NO. 3 MAJOR GOVERNMENTAL FUNDS - GENERAL FUND. ‘SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET (GAAP BUDGETARY BASIS) AND ACTUAL, For the year ended June 30, 2013 Variance Original Final Positive Budget Budget Actual (Negative REVENUES Tax revenues Tax collections $ 585,000 $ 585,000 $ 588613 $ Penalty and interest 7,000 7,000 5217 Investment income 4,500 4,500 2,789 Miscellaneous : 2.904 Total revenues 596,500 596,500 599,523, EXPENDITURES. Current Salaries Directors 18,000 18,000 416,800 41,200 Employees 180,000 180,500 117278 3,222 Longevity 4,200 4,200 4,025 175 Payroll taxes 16,000 16,000 14.912 1,088 Retirement contributions 27,000 27,000 25,307 1,693 Insurance Health 45,000 45,000 37,821 7.479 Worker's compensation 3,600 3,500 3,085 415 Other 5,000 17,000 10,209 791 Parts and supplies 15,000 18,000 18,678 (678) Repairs and maintenance 20,000 20,000 7,977 12,023, Fuel 85,000 85,000 80,222 4778 Damages and fence repairs 500 500 46 454 Culverts and gravel 25,000 25,000 5329 19671 Miscellaneous 3,000 3,000 891 2,109 Uslities 1,000 1,000 450 ‘550 Telephone 2,000 2,000 1,824 176 Legal and accounting 12,000 12,000 11,450 550 Professional services 10,000 10,000 5,801 4,109 Brush and weed control 0,000 90,000 39,430 50,570 Machine hire 10,000 6,000 1,304 4,606 Soil conservation 2,000 2,000 2,000 - Commissions and fees 8,000 8,000 7,934 66 Creek improvements, 150,000 150,000 - 150,000 Capital outlay Equipment purchases 200,000 233,000 439.671 (206,671 Total expenditures 932,200 970,700 912,624 58,076 Excess (deficiency) of revenues over (under) ‘expenditures (GAAP budgetary basis) (335,700) (374,200) (813,101) 61,089 Fund balance at beginning of year 1,907,899 _1,907,899 _ 1,907,899 Fund balance at end of yoar $1,572,109 $1,593,699 $1,594 798 $61,099 The accompanying notes are an integral part of this schedule. 20VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION June 30, 2013 SS NOTE 1: BUDGETARY BASIS OF ACCOUNTING ‘The District annually adopts budgets that are prepared using the modified accrual basis of accounting, wich is consistent with generally accepted accounting principles. NOTE2: BUDGETARY LEGAL COMPLIANCE. For the fiscal year ended June 20, 2013, the District complied with budgetary restriction at all function levels except as detailed in the following table: Fund/Function Expenditure Variance General Fund Parts and supplies $ 678 Equipment purchases 206671 a aft Coc. (133 2a 2 TEXAS SUPPLEMENTARY INFORMATIONVICTORIA COUNTY DRAINAGE DISTRICT NO. 3 TSI-2: SCHEDULE OF GENERAL FUND EXPENDITURES For the year ended June 30, 2013 Personnel expenditures (including benefits)" Professional fees: Auditing Contracted services: Bookkeeping Appraisal district, Tax collector Repairs and maintenance Administrative expenditures: Directors’ fees Insurance Other administrative expenditures Capital outlay: Capitalized assets Total expenditures * Number of persons employed by the Distrct’_4_Full-Time_1_Part-Time 22 s 8 259,343 7.750 3,700 7,934 5,891 155,076 16,800 13,294 3,165 430,671 912,624 ec CCGlI ( { rfVICTORIA COUNTY DRAINAGE DISTRICT NO. 3 TSl-4: TAXES LEVIED AND RECEIVABLE For the year ended June 30, 2013 —.W.w Taxes receivable at beginning of year $43,879 2012 Original tax levy 596,600 Adjustments 8,707 Total to be accounted for 649,185 ‘Tax collections Current year Prior years 6304 Total ‘Taxes receivable at ond of year 3 Taxes receivable by levy years 2004 and prior s 13,032 2005 1,386 2006 1907 2007 1,886 2008 1,765 2009 3,363 2010 3,704 2011 3,966 2012 29,564 + Taxes receivable at end of year $___60573 * Amount includes current year taxes receivable and rollbacks ASSESSED VALUATION SUMMARY 2ore 2011 2010 Property valuations: Land $ 351,745,798 S$ 243,431,556 S 334,815,825 Improvements 1,180,092,328 1,079,878,608 1,072,418,890 Personal property 420,736,120 349,649,420 282,342,730 Minerals 8,400,080 5,485,470 5,794,090 Less: Adjustments/exemptions 190,649,231 190,750,589) 192/336 ,087) Total property valuations $1,770,325,405 $.1,587,694,465 $1,503,035,448 Tax rate per $100 valuation Maintenance tax rates 8 0.0337 8 0.0360 $ 0.0381 s 0.0337 $ 0.0360 s 0.0384 Original tax levy $596,600 $571,570 $__572.857 Percent of taxes collected to taxes levied 98.86% 98.86% 29.20% 23VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 TSI-7: COMPARATIVE SCHEDULE OF REVENUES AND EXPENDITURES - GENERAL FUND Five years ended June 30 Amounts, tla _ a _ ____. REVENUES Property taxes $ 588,613 $ 581475 $ 572216 $ 562,273 Penalty and interest 5217 7.238 6727 6,149 Investment income 4461 441 27,249 Miscellaneous income 924 2,008 98,208 Total revenues 594,098 _ 585,593 _ 693,979 EXPENDITURES Current Salaries Directors 16,800 18,000 14,100 12,150 14,700 Employees 477.278 171,337 168,764 187,267 150,898 Part-time - - - : 9,426 Longevity 4,025 4,135 3,895 3,655 3,415 Payroll taxes 14,912 15,347 13,403 14,038 13,142 Retirement contributions 25,307 20,744 19,156 15,526 20,564 Insurance Health 37821 29,022 20,228 22,261 25,001 ‘Worker's compensation 3,085 3,492 - : 778 Other 10,209 3,807 9710 11,237 2,998 Parts and supplies 18,678 11,436 10,717 8511 9,054 Repairs and maintenance 7.977 13,304 14,297 2,655 16,919 Fuel 80,222 82,483 87.574 45,774 52,439 Damages and fence repairs 46 150 529 - : Culverts and gravel 5,828 7,122 26,950 15,910 28,337 Miscellaneous 891 3,996 2.117 4,159 4,122 Utlities 450 523 518 584 434 Telephone 1,824 4,821 1,745 2,345 2,220 Legal and accounting 41,450 9,450 9600 9,450 9,928 Professional services 5891 5,826 6,494 14,599 605 Brush and weed control 39,430 95,672 26,129 19811 66,017 Machine hire - 9,438 5,602 3,590 Election expense : a 7 : ‘Commissions and fees 7676 7272 2,000 16,279 Bank charges - 2 324 338 Contributions 2,000 2,000 7 s Capital outlay Equipment purchases 4 282,238 Total expenditures 367,949 732,439 Spocial tom Elective retirement contribution : oe ae : EXCESS REVENUES OVER (UNDER) EXPENDITURES $ (313,101) $ (135,538) $ $217,644 $ (38,460) 24 { ( (2013 98.18 0.87 0.47 0.48 4100.00 2.80 29.57 0.87 2.49 422 6.31 051 1.70 3.12 1.33 13.38 0.01 0.89 0.15 0.08 0.30 191 0.98 6.58 0.23 1.32 0.33 73.34 152.22 Percent of Total Revenue 2012 98.27 097 73 0.03 400.00 3.04 28.91 070 2.59 350 4.90 0.59 O64 1.93 2.28 13.92 0.03 4.20 067 0.09 0.31 159 0.98 16.14 1.30 0.34 3725 122.88 (22.88) — 2011 97.88 4.22 0.75 0.15 100.00 237 28.41 2010 srr 114 0.80 0.34 100.00 2.07 26.86 0.62 2.40 2.65 3.80 1.92 1.45 0.45 7.82 272 on a.10 0.40 161 2.49 3.38 0.97 37.18 25 2009 81.02 0.89 3.92 147 100.00 212 24.74 1.36 0.49 1.89 2.98 3.60 ott 0.43 1.30 2.44 7.56 4.08 0.59 0.06 0.32 1.43 0.09 9.51 0.52 2.20 0.05 40.67 (05.52 5,52)VICTORIA COUNTY DRAINAGE DISTRICT NO. 3 TSI-8: BOARD MEMBERS, KEY PERSONNEL AND CONSULTANTS For the year ended June 30, 2013 Complete District Mailing Address.__1070 Bayer Road East. Victoria, Texas 7905 District Business Telephone Number:_(361) §74-9882 ‘Submission Date of the most recent District Registration Form (TWC Seetions 36.054 and 49,054); _ 9/02/09. Limit on Fees of Office that a Director may receive during a fiscal year (Set by Board Resolution - TWC Section 49.080):_$6,000 Term of Office Fees of Expense (Elected or Office Reimburse- Appointed) Paid ments Title at Names: orDate Hired © (FYE6/30/13) _(FYE6I30/13)_ _Year-End Board Members: Thomas A. Cartwright (Flected) $s 5600 $ - President 5/12- 5/16 Victor Neisser (Elected) $ 5,400 - Vice-President 912-5116 dustin Leita (Elected) 8 5,800 - Secretary 5/12 - 5/16 Key Administrative Personnel: None Consultants: Harrison Waldrop & Uherek, LLP 4/03- present $ 7,750 - Auditor cee CLE CCl ( (POCCCCCOCCCOCCCOCCCCOCCECE CEC EC EC CCE CC CEC CCCUCCLOYII}FIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIID