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2003................ ............................... •. M I V '•. I H 1 O L '•. M R L E A I G Comprehensive•., � E ,Annual �'•. /w� Financial Lepert For the year ended • September 309 2003 � • • r (flotilla ON"Alc*a1 MIAMI SHORES VILLAGE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2003 - Prepared by THE FINANCE DEPARTMENT MIAMI SHORES VILLAGE, FLORIDA TABLE OF CONTENTS INTRODUCTORY SECTION PAGE Letter of Transmittal i Organizational Chart v Village Officials A FINANCIAL SECTION Report of Independent Certified Public Accountants 1 -2 Management's Discussion and Analysis 3 -11 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 12 Statement of Activities 13 Fund Financial Statements: Balance Sheet — Governmental Funds 14 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 15 Reconciliation of the Statements of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 16 Statement of Net Assets — Proprietary Funds 17 Statement of Revenues, Expenses and Changes in Net Assets — Proprietary Funds 18 Statement of Cash Flows — Proprietary Funds 19 Statement of Fiduciary Net Assets — Fiduciary Funds 20 Statement of Changes in Fiduciary Net Assets — Fiduciary Funds 21 22 -43 Notes to Basic Financial Statements Required Supplementary Information: Schedule of Employer Contributions 44 Budgetary Comparison Schedule — General Fund 45-49 Budgetary Comparison Schedule — Special Revenue Fund — Excise Tax Fund 50 Notes to Budgetary Comparison Schedules 51 Combining and Individual Fund Statements: Combining Balance Sheet — Nonmajor Governmental Funds 52 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds 53 MIAMI SHORES VILLAGE, FLORIDA TABLE OF CONTENTS (Continued) FINANCIAL SECTION (Continued) PAGE Internal Service Funds: Combining Statement of Net Assets 54 Combining Statement of Revenues, Expenses and Changes in Net Assets 55 Combining Statement of Cash Flows 56 Fiduciary Funds: Combining Statement of Fiduciary Net Assets — Pension Trust Funds 57 Combining Statement of Changes in Fiduciary Net Assets — Pension Trust Funds 58 Statement of Changes in Assets and Liabilities — Agency Fund 59 STATISTICAL SECTION Government -wide Information: Government -wide Expenses by Function 60 Government -wide Revenues 61 Fund Information: General Governmental Expenditures by Function 62' General Governmental Revenues by Source 63 Property Tax Levies and Collections 64 Assessed Value of Taxable Properties 65 Property Tax Levies 66 Direct and Overlapping Debt 67 Demographic Information and Statistics 68 Property Value, Construction and Bank Deposits 69 Miscellaneous Information 70 Principal Taxpayers 71 Ten Largest Public and Private Employers Located in Miami -Dade County, Florida 72 COMPLIANCE SECTION Report of Independent Certified Public Accountants on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 73 -74 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida 75 -76 Schedule of Findings 77 -79 INTRODUCTORY SECTION Thomas J. Benton Village Manager Mark A. Malatak, C. P.A. Chief Financial Officer January 20, 2004 The Mayor and Members of the Village Council 10050 Northeast Second Avenue Miami Shores, Florida 33138 -2382 To the Mayor and Members of the Village Council: Miami Shores Village Office of the Village Manager 10050 N.E.2nd Avenue Miami Shores, Florida 33138 Tel: (305) 795.2207 Fax: (305) 756.8972 E -mail: gentonT @MiamiShoresVillage.com In compliance with Florida State Statute Chapter § 11.45 and Chapter § 10.550 of the Rules of the Auditor General, we are pleased to submit for your review and consideration the Miami Shores Village Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, 2003. The report is presented in conformity with generally accepted auditing standards by our outside auditors, Rachlin Cohen & Holtz, LLP, Certified Public Accountants. This report consists of management's representations concerning the finances of Miami Shores Village. Consequently management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of Miami Shores Village has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the Village's financial statements in conformity with generally accepted accounting Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the Village's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The financial statements for Miami Shores Village have been audited by Rachlin Cohen & Holtz LLP, a firm of licensed certified public accountants. The goal of the independent auditor was to provide reasonable assurance that the financial statements of the Village for the fiscal year ended September 30, 2003 are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the financial statements of Miami Shores Village for the fiscal year ended September 30, 2003 are fairly presented in conformity with generally accepted Transmittal Letter —FY 2002- 2003 Financials Management Discussion & Analysis January 20, 2004 accounting principles (GAAP). The independent certified public accountants report is presented as the first component of the financial section of this report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD &A). This letter of transmittal is designed to complement MD &A and should be read in conjunction with it. The MD &A of �. Miami Shores Village can be found immediately following the report of the independent auditors. Profile of the Government Miami Shores Village, a Florida municipal corporation incorporated in 1932, is located in Northeast Miami -Dade County. The Village has a year -round population estimated at 10,400 residents living within the 2.3 square mile jurisdiction. The Village begins at Biscayne Bay on the east and goes west to Northwest Second Avenue. The north and south boundaries are 115th Street and 91 ' Street respectively. The Village is primarily a residential or bedroom community with limited commercial district located on Second Avenue and Biscayne Boulevard. Operating under a Council- Manager form of government, the Council consists of five members elected at large. The Mayor is elected by each of the newly formed councils. Historically, the mayor has received the highest number of votes during the election with the Vice -mayor having received the second highest. Both the mayor and vice -mayor serve four (4) year terms, two as mayor /vice -mayor and two as regular council members. The Village Council is responsible for the selection and appointment of the Village Manager, Village Clerk and Village Attorney. All other executives and associate positions are appointed by the Village Manager. The Village, one of the top four most affluent communities in Miami Dade County continues to see considerable interest in properties and investments. From building permit activities, we find that economic and demographic changes have occurred. Property values continue to grow at rates that parallel or exceed the average increase on a county -wide basis. Staff identified three primary reasons for this growth trend: 1) the Village holds a key location to downtown Miami and the Brickell Avenue corridor, requiring less than 15 minutes from home to office; 2) the Village holds a considerable inventory of individual homes with distinctive and /or unique character; and 3) the low interest rates have allowed property owners to "buy up" as the costs of funds falls. This population transmigration began in mid -1996 and is expected to continue for the next few years. Miami Shores Village provides a full range of services including police, recreation and culture, public works and general administrative services for its residents and businesses. For the fiscal year ended September 30, 2003, no legally separate authorities or agencies operated under the auspices of the Village; therefore, no additional financial information will be incorporated into these statements. The annual budget serves as a foundation for the financial planning and control of Miami Shores Village. All departments are required to annually submit requests for appropriations to the Village Manager by June 1' of each year. The Village Manager then uses those requests as the base from which the annual operating and capital budgets are developed. The Manager then presents the consolidated proposal to the Village Council during budget workshops in July of each year. The preliminary property values, calculated by the Miami Dade County Property Appraiser, provide the values used to determine ad valorem tax value and are used to set tentative Millage rates to the Village Council for the subsequent fiscal year. Two public hearings are held in September of each year during which members of the public are offered the opportunity to provide insight and solicit information regarding the operations of their municipality. After �. ii Transmittal Letter —FY 2002- 2003 Financials Management Discussion & Analysis January 20, 2004 the second public hearing, resolutions present the final operating and debt service Millage rates along with corresponding budgets for the subsequent fiscal year and are subsequently adopted by the Village Council. The annual budget is adopted at the fund and department level. Line -item transfers are permitted with the approval of the Chief Financial Officer and Village Manager; however, changes to the bottom line of department or fund totals require council approval and are executed by resolution. Budget to actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on Page 45 as part of the basic financial statements for the governmental funds. For government funds, other than the general fund, with appropriated annual budgets, this comparison is presented in the governmental fund subsection of this report, which begins on Page 50. Also included in the governmental fund subsection are project - length budget to actual comparisons for each governmental fund for which a project - length budget has been adopted (i.e. — the capital projects fund). Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from a broader perspective of the specific environment within which MIAMI SHORES VILLAGE operates. Local Economy. Miami Shores Village current enjoys a favorable economic environment and local indicators point to continued stability and possible growth in property values. Unlike other municipalities in Miami -Dade County, Miami Shores is a residential based community. Nearly 95% of the Village's costs relate to service the needs of the residential community with the remaining portions dedicated to serving the business and governmental- components of the community. Miami Shores Village is considered an affluent community where a large number of its residents are employed as professional and /or executives in a wide variety of industries. Census data and home values clearly reflect the economic integrity of the community where investments in homes continue to exceed neighboring communities. Long -term financial planning. At the end of FY 2003, the Village Council approved the construction of a Charter High School. Funding for this expanded facility will originate from a $5,000,000 General Obligation Bond scheduled for sale during spring 2004. This debt will be added to the already existing $3.2 Million issue which was sold in 1999 to fund the design, development and construction of the Miami Shores Aquatics Facility. The new bond, as well as the previous issue will be rated AAA+ and will generate additional interest in the community, which will result in even higher property values and better visibility of the community. Cash management policies and practices. Cash temporarily idle during the year was invested in secured financial instruments, primarily certificates of deposits and higher yield money market instruments. All investments, in compliance with state and local statutes, require full collateralization and must be fully guaranteed and /or insured. Maturities for time investments ranged from three to nine months and were designed to mature within the reporting fiscal period. Risk management. The Village is self - insured for workers' compensation and general liability coverage. The Village purchases co- insurances for policies over and above the designated self - insurance reserve funds and deductibles. As part of the Village's overall risk structure, loss- control programs are provided to support staff and make every possible effort to reduce claims. Third -party claims management is contracted by an outside vendor, Johns Eastern Company, performing routine and special audit procedures throughout the year to enhance staffs' effort to control risk. However, with many issues affect risk and a risk - related venture, Miami Shores Village has also seen dramatic price hikes associated with co- policies. iii Transmittal Letter — FY2002- 2003 Financials Management Discussion & Analysis January 20, 2004 To control these price increases, the Village has modified reserves, deductibles and actively works to avoid risk. Pension and post- employment benefits. Miami Shores Village sponsors two defined benefit pension plans as well as offers a voluntary deferred compensation plan. Each year, each plan engages an independent actuary to calculate the amount of the annual contributions required by the Village to ensure that each benefit plan is able to fully meet its current future obligations for its retirees on a timely basis. As a matter of policy, Miami Shores Village fully funds each year's annual required contribution to each respective plan as determined by actuary. As a result of the conservative approach to these plans, both retirement systems are currently fully funded and report no unfunded liabilities for current or future obligations. No additional post - employment retirement benefits are offered by the Village at this time. Additional information related to the Village's two pension programs may be found in Note 10 in the Notes to the Financial Statements. Awards and Acknowledgements The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department. We would like to express our appreciation to Village Comptroller, Carolyn Modeste and other members of the department, each of whom dedicated numerous hours of hard work to produce a report of this magnitude. Credit must also be given to Mayor McCoy and the members of the Village Council for their unfailing support for maintaining the highest standards of professionalism in the financial and operational management of Miami Shores Village. Respectfully submitted, MIAMI SHORES VILLAGE � / /,,Z/ THOMAS J. BENTON Village Manager TJB:MAM: Attachments IV MARK A. MALATAK, CPA Chief Financial Officer MIAMI SHORES VILLAGE, FLORIDA ORGANIZATION CHART SEPTEMBER 30, 2003 MAYOR & COUNCIL MAYOR JIM McCOY VICE MAYOR HERTA HOLLY COUNCILMAN AL DAVIS COUNCILMAN ED QUINTON COUNCILMAN GREG ULLMAN VILLAGE CLERK BARBARAA. ESTEP EXECUTIVE ASST VILLAGE MANAGER TO VILLAGE MANAGER - BARBARA A. ESTEP THOMAS J. BENTON PUBLIC WORKS DIRECTOR FINANCE DIRECTOR BUILDING DIRECTOR DAVE TRAILL MARKA MALATAK CURTIS CRAIG RECREATION DIRECTOR JERRY ESTEP DIRECTOR OF LIBRARY SERVICES ELIZABETH ESPER V VILLAGE ATTORNEY RICHARD SARAFAN, ESQ. CHIEF OF POLICE RICHARD MASTEN I PLANNING & ZONING 1 CODE I ENFORCEMENT DIRECTOR ALLYN BERG MIAMI SHORES VILLAGE List of Elected and Appointed Officials September 30, 2003 ELECTED OFFICIALS Mayor....................................................... ............................... ............................Jim McCoy ViceMayor ......................................................................... ............................... Herta Holly CouncilMember ...................................................................... ............................... Al Davis CouncilMember .......................................................... ............................... Gregory Ullman CouncilMember ......................................... ............................... ................. Edward Quinton APPOINTED OFFICIALS VillageManager ................................ ............................... .........................Thomas J. Benton VillageClerk ............................................ ............................... ........................Barbara Estep DEPARTMENT HEADS BuildingDirector ................................................................ ............................... Curtis Craig Chief Financial Officer ..................................... ............................... Mark A. Malatak, CPA LibraryDirector ............................................................ ............................... Elizabeth Esper Planning, Zoning & Code Enforcement Director ...................... ..........................Allyn Berg PoliceChief ........................................... ............................... ........................ Richard Masten Public Works Director ......................................................... ............................... Dave Traill RecreationDirector .................................... ............................... ...........................Jerry Estep vi FINANCIAL SECTION REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ' Cohen ac in,Holtz Accountants - Advisors REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida 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 Miami Shores Village, Florida (the Village) as of and for the year ended September 30, 2003, which, collectively, comprise the Village's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Village's management. Our responsibility is to express an. opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as -well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. 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 Village, as of September 30, 2003, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States. In accordance with Government Auditing Standards, we have also issued a report dated January 20, 2004 on our consideration of the Village's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an internal part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. As discussed in Note 1, the Village implemented a new financial reporting model, as required by the provisions of GASB Statement No. 34, Basic Financial Statements — and Management's Discussion and Anal>sis —for State and Local Governments, for the year ended September 30, 2003. Management's Discussion and Analysis and the required supplementary information on pages 3 to 11 and pages 44 to 51, respectively, are not a required part of the basic financial statements, but are supplementary information required by the Governmental Accounting Standards Board. 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. -1- Rachlin Cohen & Holtz LLP One Southeast Third Avenue ■ Tenth Floor ■ Miami, Florida 33131 ■ Phone 305.377.4228 ■ Fax 305.377.8331 ■ www.rachlin.com An Independent Member of Baker Tilly International M I A M I ■ F O R T L A U D E R D A L E ■ W E S T P A L M B E A C H ■ S T U A R T • T A M P A ■ N E W J E R S E Y Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida. Page Two Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village's basic financial statements. The accompanying information identified in the table of contents as combining. and individual fund statements is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The information identified in the table of contents as the Introductory and Statistical Sections has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and, accordingly, we express no opinion thereon. XA P Miami, Florida January 20, 2004 R Accountants - Advisors MANAGEMENT'S DISCUSSION AND ANALYSIS (MD &A) FY2002 -2003 Financial Report January 20, 2004 Management's Discussion and Analysis As management of Miami Shores Village, we offer readers of the Village's financial statements this narrative overview and analysis ofthe financial activities of Miami Shores Village for the fiscal year ended September 30, 2003. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter oftransmittal, which can be found on pages i to iv ofthis report. All amounts, unless otherwise indicated, are expressed in thousands of dollars. Financial Highlights ✓ The assets of Miami Shores Village exceeded liabilities at the close of the most recent fiscal year by $5,901,873 (net assets). Of this amount, $142,448 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. ✓ As ofthe close ofthe current fiscal year, Miami Shores Village's governmental funds reported combined ending fund balances of $4,073,706, an increase of $195,713 in comparison with the prior fiscal year. ✓ At the end of the current fiscal year, unreserved fund balance for the general fund was $749,221 or 8% of total general fund expenditures. ✓ Miami Shores Village total debt increased by $950,000 during the fiscal year which represents the total new debt incurred to design, develop and rehabilitation the Second Avenue Business District, a project which will also include funding from the State of Florida and Miami -Dade County. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the basic financial statements of Miami Shores Village. The Village's basic financial statements comprise three components: 1) government -wide financial statements; 2) fund financial statements; and, 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the finances of Miami Shores Village, in a manner similar to a private- sector business. The Statement ofNetAssets presents information on all ofthe assets and liabilities of Miami Shores Village, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. The Statement ofActivities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless ofthe timing ofrelated cashflows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of Miami Shores Village that are principally supported by taxes and intergovernmental revenues (governmental activities) as well as other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of Miami Shores Village include general government, public safety, streets and sidewalks, building, planning, zoning, code enforcement, recreation and leisure. The business -type activities of the Village include Sanitation and Storm water operations. The government -wide financial statements may be found on pages 12 - 13 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Miami Shores Village, like other local governments, use fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All ofthe funds of Miami Shores Village can be divided into three categories: governmental funds, proprietary or fiduciary funds. FY 2002 -2003 Financial Report January 20, 2004 Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances ofspendable resources available at the end ofthe fiscal year. Such information may be useful in evaluating a government's near -term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government -wide financial statements. By doing so, readers may better understand the long -term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Miami Shores Village maintains seventeen (17) individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balance for the general fund, excise tax fund and 2 d avenue rehabilitation which are considered to be major funds. Data from the other eleven governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. Miami Shores Village adopts an annual appropriated budget for its general, special revenue, capital, enterprise and internal service funds. A budgetary comparison statement has been provided for the general fund to demonstrated compliance with this budget and corresponding state statutes. The governmental fund financial statement may be found on pages 14 -16 of this report. j Proprietary funds. Miami Shores Village maintains two different types of proprietary or enterprise funds. Enterprise Funds are used to report the same functions presented as business -type activities in the government - wide financial statement. Miami Shores uses enterprise funds to account for its Sanitation and Storm water Operations. Internal service funds provide for an accounting method whereby the organization can accumulate and allocate costs internally among the various functions of Miami Shores. The Village uses internal service funds to account for its risk management costs as well as its fleet operation. Because both of these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities in the government -wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Village's Sanitation and Storm water operations. The Sanitation fund is considered to be a major fund and the Storm water fund, non major fund of the Village. Additionally, the Village segregates the financial reporting of both internal service funds to better distinguish the costs of each function. The proprietary fund financial statements may be found on pages 17 — 19 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government -wide financial statements because the resources of those funds are not available to support the Village's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary fund financial statements may be found on pages 20 - 21 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government -wide and fund financial statements. The notes to the basic financial statements may be found on pages 22 - 43 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the progress in funding its obligations to provide pension benefits to the employees of Miami Shores Village. FY 2002 -2003 Financial Report January 20, 2004 Required supplementary information may be found on pages 44 - 51 of this report The combining statements referred to earlier in connection with non -major governmental funds and internal service funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules may be found on pages 52 - 59 of this report. Government -wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of Miami Shores Village, assets exceeded liabilities by $5,901,873 at the close of the most recent reporting year. By far, the largest component of Miami Shores net assets (60 %) reflects its investments in capital assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. Miami Shores uses these capital assets to provide services to citizens consequently these assets are not available for future spending. Although Miami Shores' investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. MIAMI SHORES VILLAGE Net Assets 2003 Governmental Business -type activities activities TOTAL Current and other assets $ 4,505,189 $ 608,186 $ 5,113,375 Capital assets 6,915,994 864,077 7,780,071 Total assets $ 11,421,183 $ 1,472,263 $ 12,893,446 Long -term liabilities outstanding $ 5,329,796 $ - $ 5,329,796 Other liabilities 951,025 710,752 1,661,777 Total liabilities Invested in capital assets, net of related debt $ $ 6,280,821 2,665,994 $ $ 710,752 864,077 $ $ 6,991,573 3,530,071 Restricted 1,651,651 - 1,651,651 Unrestricted 822,717 (102,566) 720,151 Total net assets $ 5,140,362 $ 761,511 $ 5,901,873 For the current reporting year, no portion of the Village's net assets is subject to external restrictions on how they maybe used. The remaining balance of unrestricted net assets ($720,151) maybe used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, Miami Shores is able to report positive balances in all three categories of net assets, both for the government as a whole as well as for its separate governmental and business -type activities. The same situation held true for the prior fiscal year. Continued on next page FY 2002 -2003 Financial Report January 20, 2004 Governmental activities. Financial activities for the fiscal year are reported below. Key indicators, including revenues and expenditures by category are presented herein for review: Property taxes 4,362,922 2003 4,362,922 Other taxes Business - - Governmental tXpe Category activities activities TOTAL Revenues: 155,327 17,763 Program revenues: Total Revenues $ 9,064,789 Charges for services $ 1,725,455 $ 1,876,850 $ 3,602,305 Operating grants and contributions 637,595 - 637,595 Capital grants and Public safety 3,891,173 contributions 3,891,173 Highways / Streets General revenues: - 1,749,842 Property taxes 4,362,922 - 4,362,922 Other taxes 1,221,854 - 1,221,854 Grants and contributions not restricted to specific programs 951,636 - 961,636 Other 155,327 17,763 173,090 Total Revenues $ 9,064,789 $1,894,613 $10,959,402 Expenses: General government $ 2,420,450 $ - $ 2,420,450 Public safety 3,891,173 - 3,891,173 Highways / Streets 1,749,842 - 1,749,842 Sanitation / Storm water - 1,517,220 1,517,220 Economic development _ _ Culture and recreation 2,280,170 - 2,280,170 Interest on long -term debt 159,124 - 159,124 Total expenses $10,500,759 $1,517,220 $12,017,979 Increase in net assets before transfers (1,435,970) 377,393 (1,058,577) Transfers _ Increase in net assets $ (1,435,970) $ 377,393 $(1,058,577) Net Assets on October 1, 2002 $ 6,576,332 $ 384,118 $ 6,960,450 Net Assets on September 30, 2003 $ 5,140,362 $ 761,511 $ 5,901,873 Property taxes increased by $958,812 (28 %) during the year. This increase primarily results from the increased property values as determined by the County as the tax rate (levy) remained constant from 2002 to 2003 at 7.7500 mills. Continued on next page FY 2002- -21143 Cw ET Orl Ji7n 2D, 21144 Expense & Programs Revenues - Governmental Activities v6eo,,e eo5es Tihousands S17,01 5.10,00 59,041, 5610 0 S4,W SVW so a Gener goveram i VlPoWc safety WHigbways / Streets a sanitation R Economic development ll3Oalinre & recreation 13 interest on long -term debt a Total Revextues by Source Governmentai Activities • k � i t caj f t t f f 0 0/0 operating grants 7% Other 2% (gees for vices 9% axes FY 20,02-2003 Financial Re"rt Jams 7.4 2004 For the most part, increases in expenses closely paralleled inflation and growth in the demand for services. However, the Village found considerable cost increases associated with risk services. Insurance premiums and claims management increased approximately 38% to $261,501 over the previous year. Additionally, there were 51 claims initiated during t he fiscal year ended September 30, 2003. This increase along with expected cost increases (i.e. wages and benefits, utility services, fuel, etc.) increased an average of 5.20/* or an amount slightly greater than the cost-of-living. Business-type activities. Business-type activities increased the Village's net assets by $377,393. Key elements related . to this increase include the following: ✓ Annual sanitation and storm water utility service charges increased to $440 and $32 respectively, This increase, the first in twelve years, represented an 9.3% aggregate increase for the year and was used to partially offset the dumping fee increases from Mmmi-Dade County along with an increased investment in capital infrastructure reporting in each fund. ✓ The Sanitation fund made an investment in a replacement front end loader ($90,955) and one new garbage truck ($1391,567) Financial Analysis of the Government's Funds As notedeexiier, Miami Shores Village uses fiord accounting to ensure and demonstrate compliance with finance - related legal requirements. Governmental gads. The focus of the governmental'_ vzds for Miami Shores Village is to provide information on near-term inflows, outflows and balances of spendable resources- Such information is useful in assessing the Villag, 7ielfik6c I m&requirements. In partkular, the unresvved the : . - fimd balance may serve as a useful indicator of goveinment7s net resources available for spending at the end of a fiscal year. Expenses and Program Revenues — Business-type Activities As of the end of the current fiscal yew, the governmental funds for Miami Shores Village reported combined ending fund balances of $4,473,747, a 5426,869 increase compared to prior fiscal year. Of this amount, $1,842,353 reflects unreserved, nd balance, which is available for spending at the goverament's discretion The remainder of the fund balance is reserved or designated to indicate that it is not available for new spending as those dollars have already been committed to-- 1) liquidate contracts or encumbered fiscal obligations (outstanding purchase orders) valued at $84,703; 2) $33,467 for prepaid assets; 3) $25,203 for inventories; 4) reserves for future financial obligations for the parks, recreation and aquatics facilities $495,000; 5) $2131,040 for debt service; 6)$306,477 for law enforcement; 7)$981,021 for transportation; and 8) $92,443 for construction. The general fund is the chief operating fund of the Village. At the end of the current fiscal year, the unreserved fund balance for the general fund was $749,221. As a measure of the general fund's liquidity, it may be useful to compare both the unreserved and total fund balances to total fund expenditures. Unreserved fund balance represents 8% of the total general fund expenditures, while total fund balance represents 15.6% of that same FY 2002 -2003 Financial Report January 20, 2004 amount. The value of the Village's fund balance decreased by $979,952 during the fiscal year. Key factors associated with this reduction are as follows: • A $125,000 capital contribution from the General to Fleet Maintenance Fund was recorded to partially offset deficit cash flow obligations. Over the long -run, the General Fund will recover this advance after all net valued replacement reserves are accumulated. • The debt service fund has total fund balance of $213,040, all of which is reserved for the payment of debt service associated with the Village's General Obligation Bond, Series 1999 (Aquatics Facility Bond). The Village levies an ad valorem property tax dedicated to pay the annual debt service obligations. Each year, the levy is slightly greater than the actual amount required each year in order to ensure full cash which may occur from property tax appeals to the Value Adjustment Board. Proprietary funds. The Village's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. • Unrestricted net assets of the Sanitation Fund at the end of the year totaled $551,139 a $510,948 increase in net asset values. This increase resulted primarily from improved cash flows from operation, the acquisition of new assets (garbage truck and front -end loader), and a prior period adjustment. General Fund Budgetary Highlights The Village adopts annual budgets by fund, department and line item in compliance with Florida State Statute Section 200.065 (commonly referred to as the Truth-in Millage Legislation). The law requires municipal organizations to prepare and adopt annual operating budgets for the General, Special Revenue and Debt Service Funds following specific guidelines and time tables surrounding levying of ad valorem taxes. The balanced budgets may be revised throughout the year. The Village's code allows for budgetary transfers at the department level without council approval; however, department and/or fund total changes require budgetary amendments and are adopted by resolution. The VilIage's policy is to adopt the budget following the second public hearing of each fiscal year, held in September for an October 1 n year. The Village has also adopted a policy which provides for the reappropriation of reserved fund balance for encumbrances and prepaid assets. This amendment is always adopted as the first budget amendment of each fiscal year and is normally presented at the first meeting in November of each fiscal year. Additional budget amendments may be presented to council at any time during the fiscal year. For FY 2003, the difference between the adopted and amended budgets relate to the following: • Budget Amendment #I provides for the reappropriation of reserved fund equity for encumbrance and prepaid asset funding ($254,626) • Budget Amendment #2 provides for revisions: • Creates Transport Surtax Fund 135, appropriating the FY 2003 Budget ($280,000) • Reorganizes the Building Department from Code Enforcement & Planning ($52,116) • Reorganizes the Finance Department, creating and appropriating funds for an Assistant Finance Director position ($20,750) Funding for Budget Amendment #1 originates as a contribution from the Reserved Fund Equity accounts in each affected operating fund. For Budget Amendment #2, funding originates from a restatement of Excise Tax proceeds which increases anticipated revenues by $77,316 and from the new transportation surtax, a new tax levy ratified by a county -wide referendum for a new V2-cent transportation surtax which began January 1, 2003. Capital Asset and Debt Administration Capital Assets. Miami Shores Village's investment in capital assets for its governmental and business -type activities as of September 30, 2003 amounts to $3,530,071 (net of accumulated depreciation). This investment in capital assets includes Village -owned buildings, equipment and other infrastructure (streets, sidewalks, easements, right -of- ways). The total capital asset increase for the year was 1.3 %. Major capital asset events during the current year included the following: FY 2002-2003-Financial Report January 20, 2004 ✓ Information technology enhancements including internet security and software upgrades ($82,330) ✓ Renovation and rehabilitation of the Police Headquarters' air conditioning system ($10,500) ✓ Acquisition of new public works equipment ($61,207) ✓ Striping of streets and curbs ($3,292) ✓ Median and street improvement projects including Grand Concourse ($213.974) ✓ Renovation of the Community Center kitchen ($15,645) ✓ Rehabilitation of the Village's soccer field, laser scanning the facility ($6,200) ✓ Supplemental soccer field rehabilitation ($1,723) ✓ Renovation to the Bathroom and adjacent facilities ($6,512) MIAMI SHORES VILLAGE Capital Assets (Net of depreciation) 2003 Classification Land Governmental activities $ 718,531 Business -type activities $ - TOTAL $ 718,531 Building and system 2,822,905 - 2,822,905 Improvements other than buildings 1,384,202 - 1,384,202 Machinery and equipment 1 545 861 864 077 2 409 938 Infrastructure - Construction in progress 444,495 - 444,495 TOTAL $ 6,915,994 $ 864,077 $ 7,780,071 Additional information on Miami Shores' capital assets may be found in Note 5 on Page 34 of this report. Long -term debt. At the end of the fiscal year, Miami Shores Village had total bonded debt outstanding of $4,650,000. Of this amount. $2,970,000 represents the balance outstanding on the General Obligation Bond, Series 1999 related to the Miami Shores Aquatics Facility; $950,000 represents the principal balance outstanding for the Second Avenue Revitalization program which was exercised during Fall, 2003; $330,000 reflects the balance outstanding from the consolidation and refinancing of the previously incurred debt for the acquisition and renovation of the Police Headquarters ($220,000) and balance due for public works' equipment purchased in 1998 ($110,010); and the outstanding seven year ling of credit exercised during Fall 2003 ($400,000). MIAMI SHORES VILLAGE Outstanding Debt General Obligation, Revenues, Bonds and Other Financing Instruments Business -tvae Governmental activities activities TOTAL Classification 2003 2002 2003 2002 2003 2002 General obligation bond $ 2,970,000 $3,030,000 $ - $ $ 2,970,000 $ 3,030,000 Special assessment debt (w/Village commitment) 950,000 - - 950,000 Revenue bonds - - Other debt 730,000 438,202 - - 730,000 438,202 TOTAL $ 4,650,000 $ 3,468,202 $ - $ - $ 4,650,000 $3,468,202 Miami Shores Villages' total debt increased $1,181,798 (34.1 %) during the current fiscal year. The key factor for this increase was the execution of the $950,000 Second Avenue Revitalization Note along with exercising the Village's credit line for $400,000. FY 2002 -2003 Financial Report January 20, 2004 During the current year, the government refinanced two of its outstanding debt issues to benefit from the lower costs of funds. ✓ Miami Shores issued $950,000 in new debt for the multi jurisdictional Second Avenue Rehabilitation Project. Repayment ofthis debt will originate from up to 30% ofthe Village's annual Local Option Gas Tax appropriations with the balance originating from general and special revenue funds. ✓ The Village exercised its option to use a $500,000 unsecured line of credit to meet cash flow obligations during the third and fourth quarters of the fiscal year. Repayment of the debt will originate from general, special revenue and sanitation fund proceeds. ✓ The Village refinanced $330,000 in previously- issued debt, $240,000 of which related to the Police Department Headquarters and the remaining $90,000 reflected the balance due for equipment purchased in 1998 for the public works' department. The police building restructuring will be paid by using Police Forfeiture (or confiscation) funds and the remaining debt will be repaid by using general, local option gas, and transportation surtax proceeds. The Village maintains an MBIA- insured rating of AAA for both S&P and Fitch Rating. Additionally state statute limits the amount of general obligation debt into which a governmental entity may be obligated for a threshold of 10% of its total assessed value. The current debt limitation for Miami Shores Village is $53,775,903 which is significantly in excess of the September 30, 2003 outstanding debt balance. Additional information on the Village's long -term debt may be found in Note 6 on Pages 35 - 37 of this report. Economic Factors and Next Year's Budgets and Rates Miami Shores Village is a residential, single- family community. As such, standard economic indicators used to determine the overall health of a community are slightly different for Miami Shores. Since the Village's "business community" is restricted to a four -block area on Second Avenue and isolated pockets of business entities on Biscayne Boulevard, the Village must monitor property values and other residentially- related trends to determine the health and vitality of the community. During the reporting year, Miami Shores found strong property value increases for the fourth consecutive year. Many of the new residents to the Village have relocated from the western regions of the County and enjoy the Village's close proximity to Downtown Miami and the adjacent business areas while still having a suburban atmosphere. High recreational activities, including the Village's first -class aquatics facility, support the residents' requirement for high standards and outstanding recreation and leisure activities. This, along with its own public safety department, provides a higher standard of living than that which is found in surrounding municipalities. Leading indicators continue to reflect stability and upward movement of property values for the Village. With the anticipated investments in Second Avenue, the Charter High school and additional infrastructure enhancement efforts as identified by the Village's comprehensive five -year planning cycle, it is anticipated that future financing needs will be met; however, on a cautionary sidebar, it must be recognized that other cost factors will have adverse impacts on the Village's overall financial condition, i.e., health and risk - related insurances, pension and other benefits and future actions should be taken with these underlying issues still pending. Requests for Information This financial report is designed to provide a general overview of the financial condition of Miami Shores Village. Questions concerning any of the information presented in this report or requests for additional financial information should be directed to the Village's Chief Financial Officer, Mark A. Malatak, CPA at: MIAMI SHORES VILLAGE Finance Department 10050 Northeast Second Avenue Miami Shores, Florida 33138 -2382 BASIC FINANCIAL STATEMENTS MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF NET ASSETS SEPTEMBER 30, 2003 ASSETS Cash and cash equivalents Receivables, net Receivables from other governments Due from pension trust funds Internal balances Inventories Other assets Restricted cash and cash equivalents Net pension asset Capital assets not being depreciated Capital assets being depreciated, net Total assets LIABILITIES Accounts payable and accrued liabilities Deferred revenue Other liabilities Noncurrent liabilities: Due within one year Due in more than one year Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Debt service Transportation Construction Law enforcement Other purposes Unrestricted Total net assets Business - Governmental type Activities Activities Total $ 2,712,552 $ 331,533 $ 3,044,085 772,366 489,640 1,262,006 47,050 - 47,050 25,254 - 25,254 257,116 (257,116) - 58,570 44,129 102,699 171,710 - 171,710 442,709 - 442,709 17,862 - 17,862 1,163,026 - 1,163,026 5,752,968 864,077 6,617,045 11,421,183 1,472,263 12,893,446 619,688 62,232 14,422 254,683 5,329,796 6,280,821 89,961 709,649 620,791 683,023 - 14,422 254,683 - 5,329,796 710,752 6,991,573 2,665,994 864,077 3,530,071 708,040 - 708,040 981,021 - 981,021 92,443 - 92,443 306,477 - 306,477 141,373 - 141,373 245,014 (102,566) 142,448 $ 5,140,362 $ 761,511 $ 5,901,873 See notes to basic financial statements. -12- d A rr0 F'�hI V d d ►.r W U d w O H w d H Cl) O COD0 N O M W W H W Q z W W w•a U w rte+ N ) h 1:4 z tn � � U Z o d � � O CO > O c7 p � U w i O bA ).., d • U a �° U C/] vI v N w i i ) I i i i 6s O M N O a M DD [- 00 � 0 01, o a; r- 110 00 It 00 tn M M tO h N - ,, M - N 00 6/j kn i 1 1 3 v7 M a h N O 00 h 00 M M h 5 h o a o a h M W) M r- N --i •~ E0 v M a N v 00 69 W� v-) ct 00 rte+ N ) h 1:4 z tn � � U Z o d � � O CO > O c7 p � U w i O bA ).., d • U a �° U C/] vI v N w i i ) I i i i 6s O M N O a M DD [- 00 � 0 01, o a; r- 110 00 It 00 tn M M tO h N - ,, M - N 00 6/j kn i 1 1 3 v7 ON a ' N a O M a M M h h kn M M to h O h tn r- 00 en \O O a 00 \p h M W� v-) ct 00 Vn o 0; 06 N v') r-�' kr a tn o v kn tn 110 C> Cr M h O ON 01 69 hai - O M N O NT ON Ile kr In O ON 0 0; O N a ' 00 k O M 00 h N 00 V7 a M M M \p O \p a Md a O CN N It %D a ' N t O M a M M h N kn M M to O h tn r- 00 h \O O a 00 \p h M W� v-) ct 00 r- kf- 0; 06 N r-�' kr a 06 O kn tn 110 C> h O ON 01 hai - �S Ile kr 69 •-+ a O O ' ' ' ' M O M M 00 •--� a M M M \p O \p a — 00 h \0 \O N lI') h M to M N a 0 h h l`- •-•+ M M M M M h r- O a O N N M O N N M M a O M h M \p h DD h a 00 N M M •--� •--' h N c v) [� -r to \O O N `n En cz N )n O 06 N w > N o fl kr� Md vi � 1 C Cd N C O W u O N N 07 t I� l a Cd w cn rr �� •> 0 Cd i-1 > BOA C7 y 4a: ai c', a C6 •U s>. G� w d~-� U aS N U i••I �„� O O y ,S V7 .. rn •y Q �' p C/D cd Oo cl /Q1lr Y O O O � it 00 o r- M O ti bA h DD \O N •--� •--' M c N N b�A N `n En cz N )n O a N w > N o fl N � +' N 0 1 � N Ohl - ' s:. � w co o\o Cl N h - - Co b0 N N O N •" 0 .~ a) 03 vi � 1 C Cd N C O W u O N N 07 t I� l Cd w cn rr �� •> 0 Cd i-1 > BOA C7 y 4a: ai c', a C6 •U s>. G� w d~-� U aS N U i••I �„� O O y ,S M �� C 6! p 0A .. rn •y Q �' p C/D cd Oo cl /Q1lr Y O O O vi � 1 C Cd N C O W u O N N 07 t I� l MIAMI SHORES VILLAGE, FLORIDA ASSETS Cash and cash equivalents Receivables, net Due from other funds Receivables from other governments Prepaid costs Inventories Total assets Liabilities: Accounts payable and accrued liabilities Due to other funds Deferred revenues Other liabilities Total liabilities Fund balances: Reserved for: Prepaid costs and encumbrances Inventories Debt service Law enforcement Transportation Construction Unreserved, reported in: General fund Special revenue funds Capital projects finds Total fund balances Total. liabilities and fund balances BALANCE SHEET GOVERNMENTALFUNDS SEPTEMBER 30, 2003 $ 342,068 $ - $ - $ 233,258 $ 575,326 Other Total 657,318 Excise 2nd Ave Governmental Governmental General Tax Rehabilitation Funds Funds 1,250,735 $ - $ 938,110 $ 966,416 $ 3,155,261 84,678 196,578 - 273,743 554,999 493,081 - - 935,701 1,428,782 47,050 - - - 47,050 33,467 - 17,226 121,017 171,710 25,203 - - - 25,203 $ 1,934,214 $ 196,578 $ 955,336 $ 2,296,877 $ 5,383,005 $ 342,068 $ - $ - $ 233,258 $ 575,326 142,319 - - 514,999 657,318 62,232 - - - 62,232 - - - 14,422 14,422 546,619 - - 762,679 1,309,298 118,170 - - - 118,170 25,203 - - - 25,203 495,000 - - 213,040 '708,040 - - - 306,477 306,477 - - 981,021 981,021- - - - 92,443 92,443 749,221 - - - 749,221 - 196,578 - 4,078 200,656 - - 955,336 (62,861) 892,475 1,387,594 196,578 955,336 1,534,198 4,073,706 $ 1,934,213 $ 196,578 $ 955,336 $ 2,296,877 5,383,004 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets (excluding internal service funds) used in governmental activities are not financial resources and, therefore, are not reported in the funds. Long -term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Net assets of internal service funds are not reported in the funds Accounts receivable related to taxes to be collected withal one year are not reported in the funds Net pension asset is not reported in the funds Net assets of governmental activities See notes to basic financial statements. -14- 6,480,788 (5,077,814) (476,159) 121,978 17,862 $ 5,140,361 MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Revenues: Taxes and fees Public service taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Interest Contributions Confiscated property Total revenues Expenditures: Current: General government Public safety Public services Culture and recreation Capital outlay Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Proceeds from long -term debt Payment to refunding agent Transfers in Transfers out Total other fmancing sources (uses) Net change in fund balances Fund balances, beginning, as previously reported Prior period adjustment (Note 11) Fund balances, beginning, as restated Fund balances, ending FISCAL YEAR ENDED SEPTEMBER 30, 2003 (2,659,249) 1,743,178 (23,066) (197,650) (1,136,787) - - 950,000 Other Total - Excise 2nd Ave Governmental Governmental General Tax Rehabilitation Funds Funds (244,971) $ 3,512,068 $ 521,324 $ - $ 775,362 $ 4,808,754 - 1,221,854 - - 1,221,854 433,156 - - - 433,156 1,120,152 - - 82,052 1,202,204 629,181 - - - 629,181 249,560 - - - 249,560 261,642 - - 6,089 267,731 28,784 - 1,611 24,701 55,096 - - - 31,906 31,906 - - - 60,870 60,870 6,234,543 1,743,178 1,611 980,980 8,960,312 1,906,821 - 13,501 291,911 2,212,233 3,514,738 - - 69,236 3,583,974 1,522,246 - - - 1,522,246 1,871,604 - - 22,933 1,894,537 67,670 - - 489,113 556,783 8,509 - - 159,693 168,202 2,204 - 11,176 145,744 159,124 8,893,792 - 24,677 1,178,630 10,097,099 (2,659,249) 1,743,178 (23,066) (197,650) (1,136,787) - - 950,000 730,000 1,680,000 - - - (330,000) (330,000) 1,924,467 - 28,402 69,971 2,022,840 (244,971) (1,731,328) - (64,041 (2,040,340) 1,679,496 (1,731,328) 978,402 405,930 1,332,500 (979,753) 11,850 955,336 208,280 195,713 2,136,192 184,728 - 1,325,918 3,646,838 231,155 - - - 231,155 2,367,347 184,728 - 1,325,918 3,877,993 $ 1,387,594 $ 196,578 $ 955,336 $ 1,534,198 $ 4,073,706 See notes to basic financial statements. -15- MIAMI SHORES VILLAGE, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EX TENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FISCAL YEAR ENDED SEPTEMBER 30, 2003 Amounts reported for governmental activities in the statement of activities (Page 15) are different because: Net change in fiord balances - total governmental funds (Page 17) $ 195,713 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 reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. The details of the difference are as follows: Capital outlay $ 463,581 Depreciation expense (excluding depreciation on internal service funds) (586,139) Net adjustment (122,558) The issuance of long -term debt (e.g., bonds) provides current financial resources to governmental funds, while the repayment of the principal of long -term debt consumes the current financial resources of governmental fiends. Neither transaction, however, has any effect on net assets. The details of the difference are as follows: Debt issued: Revenue notes payable (1,280,000) Line of credit (400,000) 1,680,000 Debt refinanced: Revenue notes payable 330,000 Principal payments: General obligation bonds 60,000 Revenue notes payable 108,202 168,202 Net adjustment (1,181,798) Tax revenues to be collected within one year are not reported in the funds 121,978 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental fiords. The details of the difference are as follows: Allocation of internal service fund's net loss (476,159) Workers compensation 17,083 Decrease in net pension asset (1,232) Compensated absences 11,002 Change in net assets of governmental activities (Page 15) $ (1,435,971) See notes to basic financial statements. -16- MIAMI SHORES VILLAGE, F LORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS ASSETS Current assets: Cash and cash equivalents Receivables, net Due from other funds Inventories Total current assets Noncurrent assets: Capital assets not being depreciated Capital assets being depreciated, net Total noncurrent assets Total assets LIABILITIES Liabilities: Accounts payable and accrued liabilities Due to other funds Deferred revenue Total current liabilities Non - current liabilities: Estimated insurance claims payable Total non - current liabilities Total liabilities NET ASSETS Invested in capital assets Unrestricted (deficit) Total net assets SEPTEMBER 30, 2003 Business -type Activities - 18,502 Enterprise Funds Governmental Stormwater Activities - Utility Internal (a Nonmajor Service Sanitation Fund ) Totals Funds $ 141,930 $ 189,603 $ 331,533 $ 471,138 18,502 489,640 95,389 9,234 917 10,151 88,452 44,129 - 44,129 33,367 666,431 209,022 875,453 217,208 - - - 7,127 732,396 131,681 864,077 428,079 732,396 131,681 864,077 435,206 1,398,827 340,703 1,739,530 652,414 72,378 17,583 89,961 44,362 191,471 75,796 267,267 577,546 583,839 36,952 620,791 - 847,688 130,331 978,019 621,908 - 506,665 - - - 506,665 847,688 130,331 978,019 1,128,573 732,396 131,681 864,077 435,206 (181,257) 78,691 102,566) (911,365) $ 551,139 $ 210,372 $ 761,511 $ (476,159) See notes to basic financial statements. -17- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2003 Charges for services Operating expenses: Administrative and general Personnel expenses Depreciation Contractual services Insurance premiums Insurance claims Total operating expenses Operating income (loss) Non - operating income: Interest income Income (loss) before transfers Transfers in Transfers out Change in net assets Net assets, beginning, as previously reported Prior period adjustment (Note 11) Net assets, beginning, as restated Net assets, ending Business -type Activities - 46,637 Enterprise Funds Governmental Stormwater Activities - Utility Internal (a. Nonmajor Service Sanitation Fund) Totals Funds $ 1,734,146 $ 142,704 $ 1,876,850 $ 1,098,649 604,545 46,637 651,182 422,210 653,265 50,998 704,263 - 98,176 17,955 116,131 211,623 34,269 11,375 45,644 - - - - 751,779 - - - 197,994 1,390,255 126,965 1,517,220 1,583,606 343,891 15,739 359,630 (484,957) - 263 263 3,280 343,891 16,002 359,893 (481,677) - 175,000 175,000 - (107,917) (49,583) (157,500) - 235,974 141,419 377,393 (481,677) _ 40,191 68,953 109,144 5,518 274,974 - 274,974 - 315,165 68,953 384,118 5,518 $ 551,139 $ 210,372 $ 761,511 See notes to basic financial statements. -18- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2003 Cash flows from operating activities: Cash received from customers, governments and other funds Cash paid to suppliers Cash paid to employees Net cash provided (used) by operating activities Cash flows from non - capital financing activities: Transfers in Transfers out Net cash provided by (used by) operating activities Cash flows from capital and related financing activities: Acquisition of capital assets Cash flows from investing activities: Interest received Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning Cash and cash equivalents, ending Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable Due from other funds Inventories Increase (decrease) in: Accounts payable and accrued liabilities Estimated insurance claims Due to other funds Deferred revenue Net cash provided by (used) operating activities Business -type Activities - Enterprise Funds Governmental Stormwater Activities - Utility Internal (a Nonmajor Service Sanitation Fund ) Totals Funds $ 1,707,418 $ 176,315 $ 1,883,733 $ 1,325,800 (715,154) (49,434) (764,588) (1,372,690) (653,265) (50,998) (704,263) - 338,999 75,883 414,882 (46,890) - 175,000 175,000 - (107,917) (49,583) (157,500) - (107,917) 125,417 17,500 - (228,170) (11,960) (240,130) (310,782) 263 263 3,278 2,912 189,603 192,515 (354,394) 139,018 - 139,018 354,394 $ 141,930 $ 189,603 $ 331,533 $ $ 343,891 $ 15,739 $ 359,630 $ (484,957) 98,176 17,955 116,131 211,623 (16,029) (8,415) (24,444) 14,953 (9,234) 42,016 32,782 3,546 (15,005) - (15,005) (2,971) 13,982 8,578 22,560 (24,085) - 377,530 (75,317) - (75,317) (142,529) (1,465) 10 (1,455) - $ 338,999 $ 75,883 $ 414,882 $ (46,890) See notes to basic financial statements. -19- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2003 Cash and cash equivalents Cash held with trustee Investments: Common stocks Corporate bonds Mortgage backed securities U.S. Obligations U.S. Federal agencies Municipal bonds Receivables: Due from other funds Accrued interest Total assets LIABILITIES AND NET PLAN ASSETS Liabilities: Accounts payable Due to other funds Due to brokers DROP liability Deposits held in trust Total liabilities Net assets held in trust for pension benefits See notes to basic financial statements. -20- Pension Trust Agency Funds Trust $ 382,076 $ - - 86,844 9,899,743 - 1,594,619 - 1,153,441 - 1,608,770 - 1,793,313 - 4,596 - 6,769 - 80,444 - 16,523,772 86,844 29,035 - 32,023 - 41,367 - 423,468 - - 86,844 525,893 86,844 $ 15,997,879 $ - MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2003 ADDITIONS Contributions: City Employees State Total contributions Investment income: Net appreciation in fair value of investments Interest Dividends Less investment expenses Net investment income Total additions DEDUCTIONS Pension benefits Refunds Professional services Total deductions Change in net assets Net assets, beginning Net assets, ending See notes to basic financial statements. -21- Pension Trust Funds $ 102,803 300,137 53,849 456,789 1,561,138 323,112 151,850 (133,425) 1,902,675 2,359,464 731,766 51,227 34,464 817,457 1,542,007 14,455,872 $ 15,997,879 NOTES TO BASIC FINANCIAL STATEMENTS MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2003 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Miami Shores Village, Florida (the Village) was incorporated in 1931 and is a political subdivision of the State of Florida located in northeastern Miami -Dade County. The Village operates under a Council - Manager form of government, with the legislative function being vested in a five- member council. The Village Council is governed by the Village Charter and by state and local laws and regulations. The Village Council is responsible for establishment and adoption of policy. The Village provides the following full range of municipal services authorized by its charter: public safety, streets, sanitation, stormwater, cultural and recreational activities, public improvements, planning and zoning, and general administrative services. The Village also operates two internal service funds. The basic financial statements of the Village have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard - setting body for governmental accounting and financial reporting. In fiscal year 2003, the Village adopted three new statements of financial accounting standards issued by GASB: Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments; Statement No. 37, Basic Financial Statements — and Management's Discussion and Analysis —for State and Local Governments; Omnibus, and amendment of GASB Statements No. 21 and 24; Statement No. 38, Certain Financial Statement Note Disclosures•, and Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements. As a result, an entirely new financial presentation format has been implemented. The more significant of the Village's accounting policies are described below. a. Financial Reporting Entity The financial statements were prepared in accordance with GASB Statement No. 14, The Financial Reporting Entity, which establishes standards for defining and reporting on the financial reporting entity. The definition of the financial reporting entity is based upon the concept that elected officials are accountable to their constituents for their actions. One of the objectives of financial reporting is to provide users of financial statements with a basis for assessing the accountability of the elected officials. The financial reporting entity consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The Village is financially accountable for a component unit if it appoints a voting majority of the organization's governing board and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the Village. The Village does not have any component units that meet the definition disclosed above. -T ?- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) b. Government -wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the non - fiduciary activities of the Village. 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 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. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. All remaining nonmajor governmental funds are aggregated and reported as other governmental funds. c. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability 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. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the Village considers revenues to be available if they are l collected within 60 days of the end of the current fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. -23- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Property taxes, franchise fees, utility taxes, sales taxes, licenses, and interest associated with the current fiscal 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 Village. The Village reports the following major governmental funds: General Fund — This is the Village's primary operating fund. It accounts for all financial resources of the Village, except those required to be accounted for in another fund. Resources are derived primarily from property taxes, franchise fees and utility taxes, charges for services and state shared revenues. Expenditures are incurred to provide general government, public safety, public works and community services. Excise Tax Fund — This fund records revenues received by the Village for contractually- adopted franchise fee agreements and corresponding public service or utility taxes. The receipts of these funds are used to subordinate the Village's General Obligation Bond Series 1999 should insufficient debt service revenues be received from ad valorem levies. Surplus proceeds are then transferred out of this fund and into the General Fund for operating purposes. 2 "d Avenue Rehabilitation Fund — This fund was created in fiscal year 2003 to account for the joint partnership agreement between the Village, Miami -Dade County and the State of Florida Department of Transportation to redesign and rehabilitate Second Avenue between 95`" and 103rd Streets. The Village is responsible for approximately $1,000,000 of the $2,500,000 project. The Village reports the following major proprietary fund: Sanitation Fund — This fund accounts for the operations and maintenance of the Village's sanitation system. The Village reports the following nonmajor proprietary fund: Stormwater Utilitv Fund — This fund accounts for the operations and maintenance of the Village's stormwater system. Additionally, the Village reports the following fund types: Other Governmental Funds — The other governmental funds are used to account for all other various special revenue, debt service and capital projects funds. -24- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Internal Service Funds — The internal service funds are used to account for the financing of goods or services provided by one department to other departments of the Village, on a cost reimbursement basis. The Village has two internal service funds, the Risk Management Fund and the Fleet Maintenance Fund. Pension Trust Funds — The pension trust funds are accounted for in the same manner as the proprietary funds, using the same measurement focus and basis of accounting. The pension trust funds account for the assets of the Village's two pension plans. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Agency Fund — The police insurance trust agency fund is custodial in nature and does not present results of operations or have a measurement focus. The agency fund is accounted for using the modified accrual basis of accounting. This fund is used to account for assets that the Village holds for others in an agency capacity. Private- sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. The Village has the option of following subsequent private - sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The Village has elected not to follow subsequent private- sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government - wide financial statements. Exceptions to this general rule are payments -in -lieu of taxes and other charges between the Village's utility functions and various other functions of the Village. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided, (2) operating grants and contributions, and (3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes with the exception of local option gas tax. Proceeds from local option gas tax are used to fund transportation related expenditures and therefore are reported as program revenues under the function "Public �. Services ". -25- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Proprietary funds distinguish operating revenues and expenses from non - operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Village's sanitation and stormwater services and of the Village's internal service funds are charges to customers for services. Operating expenses for enterprise funds and internal service funds include the costs of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non - operating revenues and expenses. d. Assets, Liabilities and Net Assets or Equity 1. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand and investments with the State Board of Administration investment pool (2A -7 Pool). The Village maintains a pooled cash account for all funds. This enables the Village to invest large amounts of idle cash for short periods of time and to optimize earnings potential. Cash and cash equivalents represents the amount owned by each fund of the Village. Interest earned on pooled cash and cash equivalents is allocated monthly based upon equity balances of the respective funds. 2. Investments The Village's investments are reported at fair value. The investments held with the State Board Investment Pool (2A -7 Pool) are reported at its fair value of its position in the Pool, which is the same as the value of the Pool shares. The investments in the pension trust fund are reported at fair value. 3. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to /from other funds" (i.e., the current portion of interfund loans) or "advances to /from other funds" (i.e., the non - current portion of interfund loans). Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." Wei MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Assets, Liabilities and Net Assets or Equity (Continued) 3. Receivables and Payables (Continued) Transactions for services rendered or facilities provided are recorded as revenue in the receiving fund and as expenditures in the disbursing fund. Transactions to transfer revenue or contributions from the fund budgeted to receive them to the fund budgeted to expend them are recorded as transfers in or out. 4. Inventories Inventories of materials and supplies in the General Fund are recorded as expenditures when purchased (purchase method) and are stated at cost. Inventory in the Proprietary Funds consists of fuel, oil, tires, parts, office supplies and other inventories held for consumption. The initial cost is recorded as an asset at the time of purchase and is charged against operations in the period when used (consumption method) using the first -in, first -out method. Inventories are stated at the lower of cost or market on the balance sheet with a related reservation of fund balance for inventories accounted for under the purchase method. 5. Capital Assets Capital assets, which include property, plant and equipment, and certain infrastructure assets (e.g., roads, curbs and gutters, lighting systems, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the Village as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of three years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their estimated fair market value at the date donated. Capital assets related to the golf and country club represents the contractually required capital investment made annually by the operator, PCM III. The retroactive reporting of infrastructure for governmental activities is being deferred to a later date. Only the current additions to infrastructure of governmental activities, for which �. depreciation is computed in the year of acquisition, are being reported at this time. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the asset constructed. No such costs were capitalized in 2003. -27- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Assets, Liabilities and Net Assets or Equity (Continued) 5. Capital Assets (Continued) Capital assets of the Village are depreciated using the straight -line method over the following estimated useful lives: Years Buildings and improvements 10-40 Drainage improvements 40 Sanitation equipment 10 Vehicles 5 Other equipment, machinery, furniture and fixtures 3 -10 6. Compensated Absences Village employees are granted vacation and sick leave in varying amounts based on length of service and the department which the employee serves. The Village's vacation policy allows all regular non - temporary employees to accrue vacation leave with pay on a monthly basis. Vacation leave accrued in a previous year must be used prior to the next year's anniversary date (unless authorized by the Village Manager). Upon separation from Village employment in good standing, employees shall receive a lump sum payment for any unused accrued vacation leave up to the maximum allotted for the employee's length of service. The Village's sick leave policy is to accumulate one normal work day per month up to a maximum of 720 hours for a general employee. A general employee shall receive payment for one hundred percent (100% to a maximum of 720 hours) of accrued sick leave upon retirement and fifty percent (50 %) upon separation in good standing. For both vacation and sick leave, there is no payout for an employee who is discharged for misconduct, termination or is not in good standing with the Village. All vacation and sick leave pay is accrued when incurred in the government -wide and proprietary fund financial statements. In the governmental funds, a liability is recorded only for vacation and sick leave payouts for employee separations occurring within 60 days subsequent to the year -end. The general fund has typically been used to liquidate such amounts. K-12 MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Assets, Liabilities and Net Assets or Equity (Continued) 7. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, Ion- term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight -line amortization method. The results of using this method do not differ significantly from the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bonds issued are reported as an other financing source as are the applicable premium or discount. Issuance costs, even if withheld from the net proceeds received, are reported as debt service expenditures. 8. Property Taxes Property taxes (ad valorem taxes) are assessed on January 1 (the lien date) and are billed and payable November 1. They are due March 31 and become delinquent April 1. On June 1, delinquent taxes are offered for sale in the form of tax certificates. These taxes are collected by the County and are remitted to the Village. As of September 30, 2003, delinquent property taxes were immaterial in amount. Assessed values are established by the Miami -Dade County Property Appraiser for all properties in the County at fair market value. The County bills and collects all property taxes for the Village. The assessed value of property at January 1, 2002, upon which the 2002 -2003 levy was based was approximately $490,000,000. Under Florida law, the assessment of all properties and the collection of all County, municipal, school district and special district property taxes are consolidated in the offices of the County Property Appraiser and County Tax Collector. The Village is permitted by Article 7, Section 8 of the Florida Constitution to levy taxes up to 10 mills ($10 per $1,000 of assessed valuation) for general governmental services other than general obligation debt service. To the extent required by voter approved general obligation debt, unlimited amounts may be levied to pay debt service. The millage rate levied to finance general governmental services for the 2002 -03 fiscal year was 7.750 mills ($7.75 per $1,000 of assessed valuation). 9. Fund Equity Reservations of fund balance represent amounts that are not available for appropriation or are legally segregated for a specific future use. The description of each reserve indicates the purpose for which each was intended. -29- l MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Assets, Liabilities and Net Assets or Equity (Continued) 9. Fund Equity (Continued) Designations of fund balance indicate that a portion of fund balance has been segregated based on previous fiscal obligations or tentative plans of the Village. Such plans or intent are subject to change at the discretion of the Village. Unreserved undesignated fund balance is the portion of fund equity available for any lawful use. 10. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the period reported. These estimates include assessing collectibility of receivables, the use and recoverability of inventory, the realization of pension and postretirement obligations, and useful lives and impairment of tangible assets, among others. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Actual results may differ from those estimates. NOTE 2. DEPOSITS AND INVESTMENTS Deposits In addition to insurance provided by the Federal Depository Insurance Corporation, deposits are held in banking institutions approved by the State Treasurer of the State of Florida to hold public funds. Under Florida Statutes Chapter 280, Florida Security for Public Deposits Act, the State Treasurer requires all Florida qualified public depositories to deposit with the Treasurer or another banking institution eligible collateral. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. Accordingly, all amounts reported as deposits are deemed as insured or collateralized with securities held by the entity or its agent in the entity's name. Investments The Village is authorized to invest in those instruments authorized by the Florida Statutes, including obligations of the U.S. Treasury, its agencies, instrumentalities and the State Board of Administration Investment Pool (SBA). The State Board of Administration administers the Local Government Surplus Funds Trust Fund and is governed by Ch. 19 -7 of the Florida -30- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 2. DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) Administrative Code. These rules provide guidance and establish the general operating procedures for the administration of the Local Government Surplus Funds Trust Fund. Additionally, the Office of the Auditor General performs the operational audit of the activities and investments of the State Board of Administration. The Local Government Surplus Funds Trust Fund is not a registrant with the Securities and Exchange Commission (SEC); however, the board has adopted operating procedures consistent with the requirements for a 2a -7 fund. The state investment pool contained certain floating rate notes during the fiscal year and at September 30, 2003, which were indexed based on the prime rate and/or one and three month LIBOR rates. The value of the pool shares is equal to the fair value of the Village's reported balance in the state investment pool. The Village's investments are categorized in the following table to give an indication of the level of risk assumed by the Village at year end. Category 1 includes insured or registered or securities held by the Village or its agent in the Village's name. Category 2 includes uninsured and unregistered, with securities held by the counterparty's trust department or agent in the Village's name. Category 3 includes uninsured and unregistered, with securities held by the counterparty's trust department or agent but not in the Village's name. The Village's investments held at September 30, 2003 are stated at carrying value, which is equal to fair value and include: Unrestricted assets: Cash and cash equivalents Investments Restricted assets: Cash and cash equivalents Total Investments not subject to risk categorization: State Board Investment Pool By category: Deposits Investments -31- Category 1 $ 1,490,940 621,105 l 442,709 2,554,754 932,040 $ 3,486,794 $ 3,334,609 16,675,587 $ 20,010,196 MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 2. DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) C4LQory 1 Statement of net assets: Cash and cash equivaents $ 3,486,794 Statement of fiduciary net assets: Cash held with Trustee, agency fund $ 86,844 Investments, pension trust funds 16,054,482 Cash and cash equivalents, pension trust funds 382,076 16,523,402 $ 20,010,196 NOTE 3. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Individual interfund receivables and payables at September 30, 2003 were as follows: -32- Due from Due to Other Other Fund Funds Funds General Fund $ 493,081 $ 142,319 Special Revenue Funds: Local Option Gas Tax Fund 593,800 - Grants Fund - 31,270 General Special Revenue Fund 155,417 - Police Forfeiture Fund 20,000 - Brockway Memorial Library Fund - 33,800 Debt Service Fund 46,754 - Capital Projects Funds: Capital Improvement Fund 85,413 106,716 Aquatic Facility Fund 34,317 335,084 Charter High School Fund - 8,129 Enterprise Funds: Stormwater Fund 917 75,796 Sanitation Fund 9,234 191,471 Internal Service Funds: Risk Management Fund 88,452 206,384 Fleet Maintenance Fund - ;71,162 Police Pension Trust Fund - 25,254 Total $ 1,527,385 $ 1,527,385 -32- MIAMI SHORES 'VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 3. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (Continued) Interfund transfers at September 30, 2003 were as follows: (a) Transfer made to fund operations. (b) Transfer made for deposit reasons as excise tax fund was created to separately track its activities. NOTE 4. ACCOUNTS RECEIVABLE Accounts receivable as of September 30, 2003 for the Village's major and nonmajor funds in the aggregate, including the applicable allowance for uncollectible amounts are as follows: Transfer In General 2nd Ave. Transfer Out Fund Rehab Nonmaior Stormwater Total General fund $ - $ - $ 69,971 $ 175,000 (a) $ 244,971 Excise tax 1,731,328 (b) - - - 1,731,328 Nonmajor governmental funds 35,639 28,402 - - 64,041 Stormwater 49,583 - - - 49,583 Sanitation 107,917 - - - 107,917 Unbilled $ 1,924,467 $ 28,402 $ 69,971 $ 175,000 $ 2,197.840 (a) Transfer made to fund operations. (b) Transfer made for deposit reasons as excise tax fund was created to separately track its activities. NOTE 4. ACCOUNTS RECEIVABLE Accounts receivable as of September 30, 2003 for the Village's major and nonmajor funds in the aggregate, including the applicable allowance for uncollectible amounts are as follows: -33- Nonmaj or Internal Excise Governmental Storm- Service General Tax Funds Sanitation water Fund Total Receivable: Billed $ 12,108 $ - $ 5,958 $ 644,755 $ 33,166 $ - $ 695,987 Unbilled 78,870 196,578 267,785 - - 95,389 638,622 Taxes 121.978 - - - - 121,978 Gross receivables 212,956 196,578 273,743 644,755 33,166 95,389 1,456,587 Less allowance for uncollectibles 6,300 - - 173,617 14,664 - 194,581 Net total receivable $ 206,656 $ 196,578 $ 273,743 $ 471,138 $ 18,502 $ 95,389 $ 1,262.006 -33- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 5. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2003 was as follows: Beginning Ending Balance Additions Deductions Balance Governmental activities: Capital assets not being depreciated: Land $ 718,531 $ - $ - $ 718,531 Construction in progress 313,007 131,488 - 444,495 Total capital assets not being depreciated 1,031,538 131,488 - 1,163,026 Capital assets being depreciated: Buildings and improvements Other Improvements Furniture, fixtures and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and improvements Other improvements Furniture, fixtures and equipment Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Capital assets being depreciated: Utility plant and equipment Total capital assets being depreciated Less accumulated depreciation for: Utility plant and equipment Total capital assets being depreciated, net Business -type activities capital assets, net -34- 5,463,593 21,062 - 5,484,655 3,458,831 11,623 - 3,470,454 5,328,383 610,190 (291,000) 5,647,573 14,250,807 642,875 (291,000) 14,602,682 2,560,418 101,332 - 2,661,750 2,032,063 54,189 - 2,086,252 3,750,471 642,241 (291,000) 4,101,712 8,342,952 797,762 (291,000) 8,849,714 5,907,855 (154,887) - 5,752,968 $ 6,939,393 $ (23,399) $ - $ 6,915,994 $ 1,254,029 $ 240,129 $ 85,000 $ 1,409,158 1,254,029 240,129 85,000 1,409,158 513,950 116,131 85,000 545,081 740,079 123,998 - 864,077 $ 740,079 $ 123,998 $ - $ 864,077 MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 5. CAPITAL ASSETS (Continued) Depreciation expense was charged to functions as follows: Governmental activities: General government $ 62,442 Public safety 84,918 Public services 149,553 Parks and recreation 289,226 Capital assets held by the government's internal service funds are One Year charged to the various functions based on their usage of assets 211,623 Total depreciation expense - governmental activities $ 797,762 Business -type activities: $ 60,000 Sanitation $ 98,176 Stormwater 17,955 Total depreciation expense - business -type activities $ 116,131 NOTE 6. LONG -TERM LIABILITIES a. Summary of Long -Term Liabilities The following is a summary of changes in long-term term liabilities of the Village for governmental activities for the year ended September 30, 2003. Governmental activities: General obligation bond payable Line of credit Revenue note payable - 2003 Revenue note payable - 2003 Revenue note payable Subtotal Compensated absences Estimated health insurance claims Workers' compensation claims Governmental activities long -term Iiabilities Beginning Ending Due Within Balance Additions Reductions Balance One Year $ 3,030,000 $ - $ 60,000 $ 2,970,000 $ 60,000 - 400,000 - 400,000 - - 950,000 - 950,000 78,683 320,000 330,000 320,000 330,000 116,000 118,202 - 118,202 - - 3,468,202 1,680,000 498,202 4,650,000 254,683 228,045 - (11,002) 217,043 - 506,665 197,994 197,994 506,665 - 227,854 - 17,083 210,771 - $ 4,430,766 $ 1,877,994 $ 702,277 $ 5,584,479 $ 254,683 -35- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 6. LONG -TERM LIABILITIES (Continued) a. Summary of Long -Term Liabilities (Continued) 1999 General Obligation Bonds The 1999 General Obligation bonds are issued by the Florida Municipal Loan Council. Principal is due annually over 30 years at various amounts from $60,000 in 2004 to a final payment of $195,000 in 2029. The bonds bear interest at variable rates ranging from 3.20% to 5.00 %, payable semi- annually. Fiscal year ended September 30: 2004 2005 2006 2007 2008 2009-2013 2014-2018 2019-2023 2024-2028 2029 Total Line of Credit Principal $ 60,000 $ 65,000 65,000 70,000 75,000 410,000 525,000 660,000 845,000 195,000 $ 2,970,000 Interest 142,554 $ 140,334 137,832 135,232 132,432 612,412 504,626 361,950 179,250 9,750 $ 2,356,372 Total 202,554 205,334 202,832 205,232 207,432 1,022,412 1,029,626 1,021,950 1,024,250 204,750 $ 5,326,372 On September 5, 2002, the Village secured a $500,000 non - revolving line of credit from a bank bearing interest at 2.270 %. The line matures in September 1, 2009 and requires quarterly interest payments in the first year. After the first year, principal and interest payments are due quarterly based on the outstanding balance. The line is secured by investments equaling the outstanding balance. The outstanding balance at September 30, 2003 is $400,000. Revenue Notes Payable On June 2, 2003, the Village secured a $950,000 note payable from a bank to renovate the Village's police building. The note bears interest at 3.9% per year and requires quarterly principal and interest payments of $113,608, commencing October 1, 2003. The note is secured by 33% of ZD local option gas tax proceeds and matures on June 1, 2013. -36- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 6. LONG -TERM LIABILITIES (Continued) a. Summary of Long -Term Liabilities (Continued) Revenue Notes Payable (Continued) Fiscal year ended September 30: 2004 2005 2006 2007 2008 2009-2013 Total Principal Interest Total $ 78,683 $ 34,925 $ 113,608 84,209 29,399 113,608 87,195 26,413 113,608 90,287 23,321 113,608 93,489 20,119 113,608 516,137 48,449 564,586 $ 950,000 $ 182,626 $ 1,132,626 On June 2, 2003, the Village secured a $330,000 note payable from a bank to refinance two existing revenue notes used to acquire police related equipment. The note bears interest at 4.99% per annum and requires quarterly principal and interest at various amounts. The note is collateralized by certain Village capital assets and matures on July 1, 2006. The note will be repaid by the Police Forfeiture Fund and the 2nd Avenue Rehabilitation Fund in the amount of $260,000 and $70,000, respectively. Fiscal year ended September 30: 2004 2005 2006 Total NOTE 7. COMMITMENTS AND CONTINGENCIES a. Legal Matters Principal Interest Total $ 116,000 $ 7,163 $ 123,163 116,000 4,263 120,263 98,000 1,419 99,419 $ 330,000 $ 12,845 1 342,845 The Village has several claims arising in the ordinary course of operations pending against the Village. In the opinion of legal counsel and management, any potential losses arising from such actions, would not have a materially adverse affect on the financial position of the Village. b. Workers' Compensation Claims The Village has a commitment to Miami -Dade County for prior workers compensation claims for $210,771 as of September 30, 2003. The Village makes annual payments to Miami -Dade County Risk Management on a reimbursable basis. -37- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 7. COMMITMENTS AND CONTINGENCIES (Continued) c. Employment Contract Effective May 1, 2002, the Village entered into a three -year employment contract with its retired Police Chief that provides for an annual salary, and certain benefits approximating $88,000 per year. d. Contingent Liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies. While no matters of non - compliance were disclosed by the audit, grantor agencies may subject grant programs to additional compliance tests, which may result in disallowed costs. In the opinion of management, future disallowances of current grant expenditures, if any, would not have a material adverse effect on the Village's financial condition. NOTE 8. POST - RETIREMENTS BENEFITS Plan Description The Village provides post- retirement health benefits in accordance with the requirements of an agreement between the Village and the Police Benevolent Association (PBA). Police officers who retire and begin receiving benefits from the Village's pension plan on or after October 1, 1991 are eligible to receive a monthly benefit of up to $100 to defray the cost of health insurance coverage for the retiree. Only those police officers who retire under the provisions of the Village's pension plan with at least 25 years of creditable service, or who are granted a disability benefit under the provisions of the Village's Pension Plan, are eligible for the retiree health benefit. Eligible retired police officers receive the retiree health benefit until they become eligible for Medicare benefits, at which time the Village retiree health benefit is suspended. The employer makes benefit payments directly to an insurance carrier or health benefit program on behalf of the eligible retired police officer. If the retired police officer is covered by any other insurance or health benefit program, the Village retiree health benefit will be secondary to any and all other insurance or benefit programs. If the actual cost of the retired police officer's participation in such other insurance or benefit program is less than $100 per month, the Village retiree health benefit payable is the actual cost of such insurance or benefit program. IN MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 8. POST - RETIREMENTS BENEFITS (Continued) Plan Description (Continued) The Village and police officers share the cost of establishing and maintaining the retiree health benefit on a 50150 basis. The total cost of the retiree health benefit is determined by periodic actuarial review. The fiscal year 2003 employee contribution applied to employers recognized by the PBA was $2.35 per employee per week, payable by payroll deduction during the year ended September 30, 2003. Employee and employer contributions are adjusted based on periodic actuarial review. Employee contributions to the retiree health benefit fund are refundable to the employee if the employee terminates Village employment after contributing to the retiree health benefit fund for ten (10) or more years. Any employee who receives a refund of contributions from the retiree health benefit fund is not eligible to receive a retiree health benefit. Funding Policy At September 30, 2003, there were 33 eligible participants. The Village contributions are advance funded from the general fund on an actuarially determined basis. The actuary uses the aggregate cost method based on the assumptions of an interest rate of 8% and salary increases of 6.5 %, which are consistent with the pension plan. Total contributions for the year were approximately $6,000 including employee contributions. As of September 30, 2003, the Plan had net assets of approximately $87,000 available for benefits and no liabilities. NOTE 9. RISK MANAGEMENT The Village is exposed to various risks of loss related to torts, theft, damage to and destruction of assets, errors and omissions and natural disasters for which they are self- insured. The maximum risk of loss for the Village is $350,000; thereafter the Village carries commercial insurance. Florida law limits the liability in any one claim or judgment not to exceed $100,000 and in each occurrence not to exceed $200,000. The amount of settlements for each of the past three fiscal years did not exceed insurance coverage. There was no reduction in insurance coverage from coverage in the prior year. Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNR's). Claim liabilities are calculated considering the recent claim settlement trends. The liability for claims is reported in the Internal Service Fund. -39- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 9. RISK MANAGEMENT (Continued) Changes in the balances of estimated health insurance claims for the years ended September 30 are as follows: NOTE 10. EMPLOYEE RETIREMENT SYSTEM The Village maintains two separate single - employer Public Employee Retirement Systems (PERS). These plans were established to provide pension benefits for its employees. The PERS is considered to be part of the Village's financial reporting entity and is included in the Village's financial statements as pension trust funds. Summary of Significant Account Policies Basis of Accounting The Village's defined benefit pension funds are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to each plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each Plan. Method Used to Value Investments Investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price. Net appreciation (depreciation) in fair value of investments, realized and unrealized gains (losses) are determined on the basis of specific cost. Within certain limitations as specified in each of the Plans, investment policy is determined by the Plans' Board of Trustees and is implemented by each Plan's investment advisor. There were no investments (other than U.S. Government Securities and U.S. Government Guaranteed Obligations) in any one organization that represented 5% or more of plan net assets, nor were there any investments in, loans to, or leases with any Village official, Plan Trustee or other related parties. !QI11 2003 2002 Unpaid claims, beginning $ 506,665 $ 443,065 Incurred claims (including IBNR's) 197,994 268,648 Claim payments and disbursements (197,994) (205,048) Unpaid claims, ending $ 506,665 $ 506,665 NOTE 10. EMPLOYEE RETIREMENT SYSTEM The Village maintains two separate single - employer Public Employee Retirement Systems (PERS). These plans were established to provide pension benefits for its employees. The PERS is considered to be part of the Village's financial reporting entity and is included in the Village's financial statements as pension trust funds. Summary of Significant Account Policies Basis of Accounting The Village's defined benefit pension funds are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to each plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each Plan. Method Used to Value Investments Investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price. Net appreciation (depreciation) in fair value of investments, realized and unrealized gains (losses) are determined on the basis of specific cost. Within certain limitations as specified in each of the Plans, investment policy is determined by the Plans' Board of Trustees and is implemented by each Plan's investment advisor. There were no investments (other than U.S. Government Securities and U.S. Government Guaranteed Obligations) in any one organization that represented 5% or more of plan net assets, nor were there any investments in, loans to, or leases with any Village official, Plan Trustee or other related parties. !QI11 MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. EMPLOYEE RETIREMENT SYSTEM (Continued) a. General Employees' Retirement Plan Plan Description The General Employees' Retirement System (the Plan) is a single- employer defined benefit pension plan that covers all Village employees, except for police, and certain appointed employees. The Plan was established on January 1, 1957 by the Village Council. On December 31, 1999, the Plan was split between the general employees and the police officers. The Plans are governed by certain provisions of Chapter 112, Florida Statutes. The Board of Trustees for the Plan administers the Plan. Plan amendments must be authorized by the Village Council. The Plan provides retirement, disability, and death benefits to Plan members and beneficiaries. The Plan does not issue a separate financial report. Funding Policy Plan members are required to contribute 6% of their annual covered salary. The Village is not required to contribute to the plan. Therefore, there is no annual required contribution, no annual pension cost and no net pension obligation. b. Police Officers' Retirement Plan Plan Description The Police Officers' Retirement System (the Plan) is a single- employer defined benefit pension plan that covers substantially all of the Village's certified police officers. The Plan was established as of the effective date of January 1, 1957 by the Village Council. It was amended on December 31, 1999, to split the Plan between General Employees and Police Officers. The Plan is also governed by certain provisions of Chapter 185, Florida Statutes. The Board of Trustees for the Plan administers the Plan. Plan amendments must be authorized by the Village Council. The Plan provides retirement, disability, and death benefits to Plan members and beneficiaries. The Plan does not issue a separate financial report. Funding Policy Plan members are required to contribute 9% of their annual covered salary. The State of Florida contributes a portion of the property insurance premiums, which pass through the Village as contributions to the Plan. The Village is required to contribute at actuarially determined rates that are designed to accumulate sufficient assets to pay benefits when due. -41- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. EMPLOYEE RETIREMENT SYSTEM (Continued) b. Police Officers' Retirement Plan (Continued) Annual Pension Cost and Negative Net Pension Obligation As of October 1, 2002, the date of the latest actuarial valuation, the Village's negative net pension obligation was as follows: Annual required contributions (ARC) $ 132,996 Interest on net pension asset (1,528) Adjustment to ARC 2,760 Annual pension cost 134,228 Actual contribution 1.32,996 Change in negative net pension obligation 1,232 Negative pension obligation, beginning of year (19,094) Negative net pension obligation, end of year $ (17,862) The annual required contributions for the current year were determined as part of the October 1, 2001 actuarial valuation using the frozen entry age normal actuarial cost method. This method is the same as the Aggregate Method when there is no unfunded liability and therefore does not identify and separately amortize the unfunded actuarial liabilities. The actuarial assumptions included (a) 8% investment rate of return and (b) projected salary increases of 6.5% per year. Both (a) and (b) included an inflation component of 4 %. The actuarial value of assets was determined using market values. Three -Year Trend Information Annual Percentage Negative Pension of APC Net Pension Fiscal Year Ending Cost (APC) Contributed Obligation 9/30/2001 $ 190,994 9/30/2002 129,233 9/30/2003 134,228 -42- 99.2% $ (17,919) 100.9% (19,094) 99.1% (17,862) MIAMI SHORES VILLAGE, FLORIDA I NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. EMPLOYEE RETIREMENT SYSTEM (Continued) c. Membership Membership of each Plan consisted of the following at October 1, 2002 the dates of the latest actuarial valuations: General Employees Police Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 37 19 Fully vested 70 25 Non - vested I - 81 25 d. Required Supplementary Information The schedule of employer contributions for each of the past six consecutive fiscal years for the Police plan is presented immediately after the notes to the basic financial statements. As the Plan uses the Frozen Entry Age Actuarial Cost Method for funding, a schedule of funding progress is not required. NOTE 11. PRIOR PERIOD ADJUSTMENTS During the fiscal year ended September 30, 2003, management discovered certain errors in prior periods requiring the correction and restatement of fund balance /net assets as of October 1, 2002. A summary of the adjustments are as follows: General Fund Enterprise Reduction of compensated absences $ 231,155 $ - Overstatement of expenses - 274,974 231,155 274,974 Fund balance /net assets, beginning, as previously reported 2,136,192 109,144 �. Fund balance /net assets, beginning, as restated $ 2,367,347 $ 384,118 ( -43- l REQUIRED SUPPLEMENTARY INFORMATION MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS Police Officer's Retirement Svstem Year Annual Contribution Contribution Ended Required from from Percentage September 30, Contribution Employer State Contributed 2001 $ 189,485 $ 151,348 $ 38,137 100% 2002 127,821 100,215 39,864 109% 2003 132,996 102,803 53,849 118% The information presented in the required supplemental schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation follows. The annual required contribution for the fiscal year ended September 30, 2003 was determined as part of the October 1, 2001 actuarial valuation. Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Actuarial assumptions: Police Officer's Retirement System 10/1/02 Frozen Entry Age (1) N/A N/A 5 year smoothed market Investment rate of return* 8% Projected salary increases` 6.5% Cost of living adjustments N/A *Includes inflation at 4% (1) This method is the same as the aggregate method when there is no unfunded liability. Based on this, a schedule of funding progress is not included as it is not required per GASB 25. -44- MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND FISCAL YEAR ENDED SEPTEMBER 30, 2003 r f , 1 f Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative) Revenues: Taxes: Property taxes, current and delinquent $ 3,975,] 68 $ 3,975,168 $ 3,512,068 $ (463,100) Licenses and permits: Business licenses 64,566 64,566 74,053 9,487 Building permits 207,900 207,900 313,145 105,245 Certificate of reoccupancy 7,550 7,550 12,200 4,650 Other licenses and permits 33,324 33,324 33,758 434 Total licenses and permits 313,340 313,340 433,156 119,816 Intergovernmental revenues: State shared revenues: State revenue sharing 246,849 246,849 248,885 2,036 Beverage licenses 1,200 1,200 1,022 (178) Local government half cent sales tax 563,083 563,083 608,520 45,437 Department of transportation (landscape maintenance) 21,395 21,395 9,951 (11,444) Police extra duty pay 234,988 234,988 189,952 (45,036) Alarm billings 5,618 5,618 2,785 (2,833) County shared revenues: County occupational licenses 22,932 22,932 21,157 (1,775) School crossing programs 24,936 24,936 37,880 12,944 Total intergovernmental revenues 1,121,001 1,121,001 1,120,152 (849) Charges for services: Physical environment 7,625 7,625 30,419 22,794 Culture /recreation 657,232 657,232 598,762 (58,470) Total charges for services 664,857 664,857 629,181 (35,676) Fines and forfeitures: Court fines and costs 103,218 103,218 101,528 (1,690) Other 143,200 143,200 148,032 4,832 Total fines and forfeitures 246,418 246,418 249,560 3,142 Miscellaneous revenue: Rents 150,000 15 0, 000 150,030 30 Other revenue 137,381 137,381 111,612 (25,769) Total miscellaneous revenue 287,381 287,381 261,642 (25,739) Interest 114,500 114,500 28,784 (85,716) Total revenues $ 6,722,665 $ 6,722,665 $ 6,234,543 $ (488,122) (Continued) -45- r f , 1 f MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND (Continued) FISCAL YEAR ENDED SEPTEMBER 30, 2003 Variance 190,100 245,289 156,965 88,324 (Continued) -46- with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative Expenditures: Current: General government: Village council: Personnel services $ 95 $ 95 $ 95 $ - Operating expenses 6,684 6,684 4,917 1,767 6,779 6,779 5,012 1,767 Village attorney: Operating expenses 170,893 1.70,893 142,045 28,848 170,893 170,893 142,045 28,848 Village manager: Personnel services 217,344 217,344 160,716 56,628 Operating expenses 45,285 45,285 41,132 4,153 262,629 262,629 201,848 60,781 Village clerk: Personnel services 97,616 97,616 88,304 9,312 Operating expenses 34,953 36,105 28,306 7,799 132,569 133,721 116,610 17,111 Code enforcement: Personnel services 151,937 195,975 118,535 77,440 Operating expenses 38,163 49,314 38,430 10,884 190,100 245,289 156,965 88,324 (Continued) -46- MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND (Continued) FISCAL YEAR ENDED SEPTEMBER 30, 2003 Expenditures: Current: General government: Building department: Personnel services Operating expenses Planning and zoning: Personnel services Operating expenses Capital outlay Finance: Personnel services Operating expenses Capital outlay Other general government: Non - departmental: Personnel services Operating expenses Capital outlay Total general government Variance with Final Budget - Budgeted Amounts Actual Positive Original Final .Amounts Ne ative $ 188,166 $ 188,166 $ 211,859 $ (23,693) 230,154 230,154 125,200 104,954 418,320 418,320 337,059 81,261 136,363 136,363 128,498 7,865 21,810 19,378 8,830 10,548 - 4,450 - 4,450 158,173 160,191 137,328 22,863 313,319 341,069 334,549 6,520 193,835 184,290 159,727 24,563 - 23,005 5,020 17,985 507,154 548,364 499,296 49,068 58,390 43,390 73,558 (30,168) 427,556 430,726 242,119 188,607 - 5,850 5,845 5 485,946 479,966 321,522 158,444 1,569,593 2,426,152 1,917,685 508,467 -47- (Continued) MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND (Continued) FISCAL YEAR ENDED SEPTEMBER 30, 2003 School crossing guard: Personnel services 36,972 36,972 22,127 14,845 Variance 2,031 1,064 967 39,003 with 23,191 15,812 Total public safety 3,675,552 3,709,531 Final 190,223 Budget - Personnel services Budgeted Amounts Actual Positive 48,908 Ori inal O Final Amounts (Negative) Public safety: 537,886 518,412 452,110 Law enforcement: Public works administration: Personnel services $ 3,240,486 $ 3,240,395 $ 3,053,498 $ 186,897 Operating expenses 396,063 428,183 438,049 (9,866) Capital outlay - 1,950 4,570 2,620 4,773 3,636,549 3,670,528 3,496,117 174,411 School crossing guard: Personnel services 36,972 36,972 22,127 14,845 Operating expenses 2,031 2,031 1,064 967 39,003 39,003 23,191 15,812 Total public safety 3,675,552 3,709,531 3,519,308 190,223 Public services: Parks: Personnel services 314,613 314,613 260,716 53,897 Operating expenses 199,636 199,636 183,194 16,442 514,249 514,249 443,910 70,339 Street maintenance: Personnel services 205,317 183,973 135,065 48,908 Operating expenses 332,569 334,439 317,045 17,394 537,886 518,412 452,110 66,302 Public works administration: Personnel services 319,300 319,300 331,827 (12,527) Operating expenses 124,413 124,413 116,659 7,754 443,713 443,713 448,486 4,773 Recreation maintenance: Personnel services 112,149 133,493 118,450 15,043 Operating expenses 67,186 70,916 59,290 11,626 179,335 204,409 177,740 26,669 Total public services 1,675,183 1,680,783 1,522,246 158,537 (Continued) -48- MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND (Continued) FISCAL YEAR ENDED SEPTEMBER 30, 2003 Culture and recreation: Recreation: Personnel services Operating expenses Capital outlay Library: Personnel services Operating expenses Capital outlay Total culture and recreation Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses) Appropriated fund balance Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances, beginning, as previously reported Prior period adjustment (Note 11) Fund balances, beginning, as restated Fund balances, ending (2,148,140) (3,048,542) (2,648,535) 400,007 350,000 409,566 - (409,566) 1,798,140 2,638,976 1,924,467 (714,509) - - (244,971) (244,971) 2,148,140 3,048,542 1,679,496 (1,369,046) (969,039) (969,039) 2,136,192 2;136,192 2,136,192 - - - 231,155 231,155 2,136,192 2,136,192 2,367,347 231,155 $ 2,136,192 $ 2,136,192 $ 1,398,308 -49- Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative $ 990,481 $ 990,481 $ 937,611 $ 52,870 611,019 615,283 620,456 (5,173) 4,000 4,000 1,907 2,093 1,605,500 1,609,764 1,559,974 49,790 242,781 242,781 261,343 (18,562) 51,046 51,046 52,194 (1,148) 51,150 51,150 50,328 822 344,977 344,977 363,865 (18,888) 1,950,477 1,954,741 1,923,839 30,902 8,870,805 9,771,207 8,883,078 888,129 (2,148,140) (3,048,542) (2,648,535) 400,007 350,000 409,566 - (409,566) 1,798,140 2,638,976 1,924,467 (714,509) - - (244,971) (244,971) 2,148,140 3,048,542 1,679,496 (1,369,046) (969,039) (969,039) 2,136,192 2;136,192 2,136,192 - - - 231,155 231,155 2,136,192 2,136,192 2,367,347 231,155 $ 2,136,192 $ 2,136,192 $ 1,398,308 -49- MIAMI SHORES VILLAGE, FLORIDA LORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE EXCISE TAX FUND FISCAL YEAR ENDED SEPTEMBER 30, 2003 Revenues: Taxes and fees Public services taxes Total revenues Expenditures: Current: General government Debt service: Principal Interest Total expenditures Excess of revenues over expenditures Other financing uses: Transfers out Net change in fund balance Fund balance, beginning Fund balance, ending -50 -- Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts e ative $ 527,500 $ 527,500 $ 521,324 $ (6,176) 1,260,693 1,260,693 1,221,854 (38,839) 1,788,193 1,788,193 1,743;178 (45,015 1,788,193 1,788,193 1,743,178 (45,015) (1,788,193) (1,788,193) (1,731,328) 56,865 - - 11,850 11,850 184,728 184,728 184,728 - 184,728 $ 184,728 $ 196,578 $ 11,850 MIAMI SHORES VILLAGE, FLORIDA NOTES TO BUDGETARY COMPARISON SCHEDULE FISCAL YEAR ENDED SEPTEMBER 30, 2003 NOTE 1. BUDGETS AND BUDGETARY ACCOUNTING Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States, except for encumbrances and special insurance premium assessments in the General Fund and for all governmental funds. (1) 35 days prior to fiscal year end, the Village Manager submits to the Village Council a proposed operating budget for the fiscal year commencing the following October lst. The operating budget is restricted to proposed expenditures and the means of financing them by means of appropriated revenues, other financing sources and appropriations of fund balances. Budgetary control over expenditures, including capital outlay and operating transfers in the General Fund is legally maintained at the departmental level. (2) Two public hearings are conducted to obtain taxpayer comments as required by Truth in Millage (TRIM) legislation. (3) Prior to September 28th (unless preempted by TRIM) as stated in the Village's Charter, the budget is legally enacted through passage of an ordinance. (4) The Village Manager may at any time transfer any unencumbered appropriated balance or portion thereof between general classifications of expenditures within an office, department or agency. At the request of the Village Manager and within the last three months of the budget year, the Council may by resolution transfer any unencumbered appropriated balance or portion thereof, from one office, department or agency to another. (5) Budgeted amounts are as originally adopted or as amended. No significant revisions to the budget were required in 2003. There was one supplemental appropriations during fiscal year ended September 30, 2003 for encumbrances and prepaid asset funding totaling $254,626. Of this amount, $59,566 pertained to the general fund. (6) Unencumbered appropriations lapse at year -end. NOTE 2. RECONCILIATION OF BUDGETED AND ACTUAL RESULTS The following adjustments were necessary to present the actual data on a budgetary basis at September 30, 2003: General Fund Net change in fund balance (GAAP) $ (979,752) Debt service not budgeted in 2003 10,713 Net change in fund balance (budgetary basis) $ (969,039) NOTE 3. EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended September 30, 2003, expenditures exceeded appropriations for personnel services in the Buildings, Non - departmental, Public Works and Library departments (the legal level of budgetary control) of the general fund by $23,693, $30,168, $12,527 and $18,562, respectively. These over expenditures were funded by transfers in from other funds. -51- COMBINING, INDIVIDUAL FUND STATEMENTS AND SCHEDULES NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Local Option Gas Tax — This fund accounts for the revenues from the six cents and additional three cents sales tax levied on all petroleum products sold in Miami -Dade County. Half -Cent Surtax — This fund accounts for the Village's portion of the Miami -Dade County one -half percent sales surtax approved by voters in November 2002. Grants — This fund accounts for the use of specific designated resources related to grant programs. General — This fund accumulates assets for its employees, other governmental entities and/or funds, primarily for the recreation, library or police departments. Law Enforcement Training — This fund accounts for proceeds obtained through fines designated specifically for training law enforcement officers. Police Forfeiture — This fund accounts for proceeds obtained through the sale of confiscated and unclaimed property turned over to the Village through court judgments. Proceeds are to be used solely for law enforcement purposes. Brockway Memorial Library — This fund accounts for donations and other receipts from private sources that will be used for the Brockway Memorial Library Expansion Project. Proceeds are reserved for capital outlay purposes only. Debt Service Fund 1999 General Obligation Bonds — This fund accounts for the $3,200,000 General Obligation Series 1999 bonds to fund the design, developments and construction of the Miami Shores Aquatic Facility. Capital Pro_lects Funds Capital Improvements — This fund accounts for major capital acquisitions and projects to improve the Village. Aquatic Facility - This fund accounts for the construction of the aquatic center funded by issuance of general obligation bonds through the Florida Municipal Loan Council. Charter High School — This fund accounts for all the advance costs associated with the design, development and construction of the Miami Shores. Charter High School. 00 O\ N CT r- O M — M oo r- IL g5 �f O 7 [� P O r- o0 kn C\ N N C1 tt r- V. r- V d' 7 O N o0 O r` ON r- 00 p E V' r- M N c, O` N as M 01 N F p � y W ni N N N Z o o u 00 r` O 00 C1 r- M �• N G1 r- r- M M O N M 7 0 00 I N E CN NV ON FI N V n CCU N h NO ' 'n ID Q � 0 to CD I Cl N I.S a) 00 r- 1— R Vr v' V 10 r- .-• M 01 O 00 C.\ 0\ fib ON 01 0 CQ 00 C, N M 00 C, M n �/") M ni Vl Vl M cd -- O "t M M M M t0 U N ID I M r C\. i M M C\ I .�-. v v In aCi v r N (O\ y o0 D\ O O G\ O G1 U o [f vj [s3 6.) h ' p ' ' V Ln y = M Ln wn O rn t�l r` N V1 O O O O oo � n M M M Q a) ^ Q ry N N cq N r- N r- — G, A p O r- C, M r- N O V N N It O O Vl C N O h V O N M d' 7 O o0 CT O1 N C' h x .a b9 [f3 tn 69 M W F o O G\ oo I O O . . • M M oo oo a z 0 3 .o " 000 ooq N v, E N M N N ^' O .O y M 0.¢i W 0.W1 q [s± ts3 0 W 7 0 F G o Ln c� G r- v I M O oo M M M (. CQ Ln O ry 0. N N N N U. Lli <19 b9 Q O ^ N O y CS F N W FH v Uhl rq In oo o0 .-. � � oho V N [� V' •-• •-• N I n. 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O I 000 C, 00 M O O! w CT M Oo r ONO O N Ir O000 r c V) I r C, C, 1 00 O O N 0, N 00 r Q O O 'V •7 O r r r r r r r r r c� rn �V M cq In M us O Or V 'n r CT o1 rw O r O 00 N N 'n M �D V) 00 V CN V ^ l0 'A O ' O O O N N p r r r 01 � n O 'n 'V l0 � Q o r r 00 60 N N 00 r r r r O N O M M NEA M O O N N 00 00 Ell) o? 00 M M L1 P (A 00 T W M 00 N N .- N O N EA r I 00 m M O O O O -- O 00 00 ob _ CT N 17 -• 1: r V' O G 17 O cl N CT C, N C, G, 'n 00 r O O C, V Vj b0 'n CT O N 00 In V r C, r) C') 'D L'1 O O N M N V r v V N a, p > aj on a, � -' ca bD LAI ' ' O v u .� N C, O O r V 00 ^ C oo O O �7 N V) M O O 4, wn •-- 'In M N .�. r Q p w O N 7 N U U K N N X N N > 4+ N .C' ' 7 R aNi S] U .�. p `-' @ «_. C td N .2 = O v • 0. ` 'tl .� 0. C .. yr A .D .- N O U ro cC V• V' 00 I W I CAI _W U C). N N O tE tL I'- J •O N U U O C L. .... c, o = U oo -. O 0- a. E^ H CS M N In 0 00 o L _ L L'. r r M M N 00 O CT v V �a ss 00 C, MO CT N 7 O O O 7 000 V L• b M M O O O M r V 00 O O O 00 O N M v O O C, M V V GS p r r r O V I V 1 001 In O O V V V r N V O) � V O r W N CT M .V 00 O r O 'n N O C, 10 In N b9 rV M M O Vr V M M 'n O 'V 00 O O .-. ^ r. 00 N O, cl O O� r -- G, N V O 00 'O O O N N yr N M 10 M O N N V V N CT v N 69 r r r r r r r V 00 M 10 O N O C, N O O ' V O V V O O 'n .V � v V1 C, N V M N r 00 r r 00 0O r r r � p Cb O O 00 = ON O N N M �r v 00 r` ds GD O 00 N N O M M CT CT N M V r 00 Cq 69 r r M 'n 69 In M Ill o� rq "- IN It -I 001 r I 00 ( ( ( 1 ( l• I� ( 1 ( l ( ( ( I� ( bq c N b0 a, p > aj on a, � -' ca bD u cu a0, v u .� r CIO A s0. �... C U U 4, wn •-- N Y� f- r Q p w N O U U U K N N X N N > 4+ N .C' .� N 7 R aNi S] U .�. p `-' @ «_. C td N .2 = O v • 0. ` 'tl .� 0. C .. yr A .D .- N O U ro cC _W U C). N N O tE tL I'- J •O N U U O C L. .... = U cd U -. O 0- a. E^ H 7 W 1 O L _ L L'. ( ( ( 1 ( l• I� ( 1 ( l ( ( ( I� ( INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one department to other departments of the Village on a cost reimbursement basis. Risk Management Fund This fund accounts for the accumulation and allocation of costs associated with insurance. Fleet Maintenance Fund — This fund accounts for all direct and indirect costs to maintain and operate the Village's vehicles and equipment fleet. MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30, 2003 ASSETS Current assets: Receivables, net Due from other funds Inventories Total current assets Capital Assets: Capital assets not being depreciated Capital assets being depreciated, net Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable and accrued liabilities Due to other funds Total current liabilities Noncurrent liabilities: Estimated insurance claims Total noncurrent liabilities Total liabilities NET ASSETS Invested in net assets Unrestricted Total net assets (deficit) -54- Risk Fleet Management Maintenance Total $ 95,389 $ - $ 95,389 88,452 - 88,452 - 33,367 33,367 183,841 33,367 217,208 621,908 - 7,127 7,127 - 428,079 428,079 - 435,206 435,206 183,841 468,573 652,414 25,_585 18,777 44,362 206,384 371,162 577,546_ 231,969 389,939 621,908 506,665 - 506,665 506,665 - 506,665 738,634 389,939 1,128,573 435,206 435,206 (554,793) (356,572) 911,365 $ (554,793) $ 78,634 $ 476,159 MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS INTERNAL SERVICE FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2003 Risk Fleet Management Maintenance Fund Fund Total Charges for services $ 684,411 $ 414,238 $ 1,098,649 Operating expenses: Insurance premiums 751,779 - 751,779 Claims 197,994 - 197,994 Administrative and general 40,653 381,557 422,210 Depreciation - 211,623 211,623 Total operating expenses 990,426 593,180 1,583,606 Operating loss (306,015) (178,942) (484,957) Non - operating income: Interest income 3,280 - 3,280 Loss before transfers (302,735) (178,942) (481,677) Transfers in Change in net assets (302,735) (178,942) (481,677) Net assets (deficit), beginning (252,058) 257,576 5,518 Net assets (deficit), ending $ (554,793) $ 78,634 $ (476,159) -55- MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF CASH FLOWS - INTERNAL SERVICE FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2003 Cash flows from operating activities: Cash received from customers, governments and other funds Cash paid to suppliers Net cash provided by operating activities Cash flows from capital and related financing activities: Acquisition of capital assets Cash flows from investing activities: Interest received Net decrease in cash and cash equivalents Cash and cash equivalents, beginning Cash and cash equivalents, ending Reconciliation of operating loss to net cash provided (used) by operating activities: Operating loss Depreciation Adjustments to reconcile operating loss to net cash provided (used) by operating activities: Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable Due from other funds Inventories Increase (decrease) in: Accounts payable and accrued liabilities Estimated insurance claims Due to other funds Net cash provided (used) by operating activities -56- Risk Fleet Management Maintenance Fund Fund Total $ 702,910 $ 622,890 $ 1,325,800 (912,602) (460,088) (1,372,690) (209,692) 162,802 (46,890) - (310,782) (310,782) 3,278 - 3,278 (206,414) (147,980) (354,394) 206,414 147,980 354,394 $ (306,015) $ (178,942) $ (484,957) - 21.1,623 211,623 14,953 - 14,953 3,546 - 3,546 - (2,971) (2,971) 575 (24,660) (24,085) 377,530 - 377,530 (300,281) 157,752 (142,529) $ (209,692) $ 162,802 $ 46,890 FIDUCIARY FUNDS TRUST AND AGENCY FUNDS These funds account for assets held by the Village in a trustee capacity or as an agent for employees. Pension Trust Funds: General Employees Retirement System — To account for the accumulation of resources for pension benefit payments to employees, other than police, who have retired from Miami Shores Village. Police Officers Retirement System — To account for the accumulation of resources for pension benefit payments to police officers who have retired from Miami Shores Village. Agency Fund: Police Insurance Trust Fund — To accumulate resources on behalf of police personnel to partially cover retirement health insurance. MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS ASSETS Cash and cash equivalents Cash held with trustee Investments: Common stocks Corporate bonds Mortgage backed securities U.S. Obligations U.S. Federal agencies Municipal bonds Receivables: Due from other funds Accrued interest Total assets LIABILITIES AND NET PLAN ASSETS Liabilities: Accounts payable Due to other funds Due to brokers DROP liability Deposits held in trust Total liabilities SEPTEMBER 30, 2003 15,226 General Total 58,070 25,254 Police Employees Pension 31,967 9,400 Pension Pension Trust Agency 423,468 - Trust Trust Funds Fund Total $ 249,953 $ 132,123 $ 382,076 $ - $ 764,152 - - - 86,844 86,844 5,757,570 4,142,173 9,899,743 - 19,799,486 896,803 697,816 1,594,619 - 3,189,238 670,617 482,824 1,153,441 - 2,306,882 889,612 719,158 1,608,770 - 3,217,540 1,117,576 675,737 1,793,313 - 3,586,626 2,298 2,298 4,596 - 9,192 6,769 - 6,769 - 13,539 47,464 32,980 80A44 - 160,889 9,638,663 6,885,109 16,523,772 86,844 33,134,388 15,226 13,809 29,035 - 58,070 25,254 6,769 32,023 - 64,047 31,967 9,400 41,367 - 82,734 423,468 - 423,468 - 846,936 _ - - - 86,844 86,844 495,915 29,978 525,893 86,844 1,138,630 Net assets held in trust for pension benefits $ 9,142,748 $ 6,855,131 $ 15,997,879 $ - $ 31,995,757 -57- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2003 ADDITIONS Contributions: City Employees State Total contributions Investment income: Net appreciation in fair value of investments Interest Dividends Less investment expenses Net investment income Total additions DEDUCTIONS Pension benefits Refunds Professional services Total deductions Change in net assets Net assets, beginning Net assets, ending -58- 517,435 214,331 731,766 18,755 32,472 51,227 20,664 13,800 34,464 556,854 260,603 817,457 801,554 740,453 1,542,007 8,341,194 6,114,678 14,455,872 $ 9,142,748 $ 6,855,131 $ 15,997,879 General Police Employees Pension Pension Pension Trust Fund Fund Funds $ 102,803 $ - $ 102,803 125,718 174,419 300,137 53,849 - 53,849 282,370 174,419 456,789 875,613 685,525 1,561,138 187,775 135,337 323,112 88,948 62,902 151,850 (76,298) (57,127) (133,425) 1,076,038 826,637 1,902,675 1,358,408 1,001,056 2,359,464 517,435 214,331 731,766 18,755 32,472 51,227 20,664 13,800 34,464 556,854 260,603 817,457 801,554 740,453 1,542,007 8,341,194 6,114,678 14,455,872 $ 9,142,748 $ 6,855,131 $ 15,997,879 MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FISCAL YEAR ENDED SEPTEMBER 30, 2003 Police Insurance Trust Agena Fund Balance Balance September 30, September 30, 2002 Additions Deductions 2003 ASSETS Cash held with trustee $ 80,510 $ 6,334 $ - $ 86,844 LIABILITIES Deposits held in trust $ 80,510 $ 6,334 $ - $ 86,844 -59- STATISTICAL SECTION A O O U jr� w W � GG d w In WZ r�vry'l]� w I� Q 3 � z � 7W ^7 .7 C w r i c d U cn w W E- E- a �I 0 H U N w 'y+ rn rn 0 N 69 V7 O� N 69 Ln N O O\ M 69 N_ ON EA O 0 00 N N 69 N 00 C M 01 M FA O Ln O N N 69 M O O N N i Q O � 0 erg, a� � v � o a� U Q U N N U N w 'y+ rn rn 0 N 69 V7 O� N 69 Ln N O O\ M 69 N_ ON EA O 0 00 N N 69 N 00 C M 01 M FA O Ln O N N 69 M O O N Q � 0 a� � v � y a� U Q U N N W v U U � O U N w 'y+ rn rn 0 N 69 V7 O� N 69 Ln N O O\ M 69 N_ ON EA O 0 00 N N 69 N 00 C M 01 M FA O Ln O N N 69 M O O N A w W a w � Q � 3 a H w a � W � � a H N N a� ME U N �4 bq O a f ( ( ( ( ( ( l ( l l L rn bl O W M O N � N U /r EA m a� 0 F rn Cd 00 y a E'yI U N o C) N 0 ON N C� ONI M G a� M GO c U cs> a� O U U M �= bUA '. 4O+ t7 O p _ U r/) �o K' w o c� 0 f ( ( ( ( ( ( l ( l l L MIAMI SHORES VILLAGE, FLORIDA GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS (1) (1) Includes general fund only (excludes capital outlay). -62- Recreation Fiscal General Public Public and Debt Year Government Sgfety Works Culture Service Total 1994 $ 882,339 $ 2,858,883 $ 2,180,109 $ 1,517,445 $ 475,103 $ 7,913,879 1995 905,890 3,177,645 2,408,825 1,470,847 77,744 8,040,951 1996 858,675 3,637,242 2,517,619 1,946,134 77,744 9,037,414 1997 1,006,853 3,552,639 2,398,900 1,666,977 275,353 8,900,722 1998 1,003,637 3,024,810 2,350,017 1,667,392 34,875 8,080,731 1999 894,358 3,026,323 2,145,106 1,539,543 22,759 7,628,089 2000 841,917 3,168,647 1,241,137 1,662,944 19,491 6,934,136 2001 1,070,889 3,529,091 1,089,441 2,174,840 22,769 7,887,030 2002 1,706,105 3,340,822 1,521,791 1,643,286 16,498 8,228,502 2003 1,906,820 3,414,738 1,522,246 1,871,604 10,713 8,726,121 (1) Includes general fund only (excludes capital outlay). -62- MIAMI SHORES VILLAGE, FLORIDA GENERAL GOVERNMENTAL REVENUES BY SOURCE LAST TEN FISCAL YEARS ( *) Sanitation services and fees transferred to newly created Enterprise Fund on 10 /01 /00. -63- Licenses Charges Fires Fiscal Property and Inter- for and Year Taxes Permits governmental Services ( Forfeitures Miscellaneous Total 1994 $ 4,044,767 $ 182,425 $ 1,026,376 $ 1,790,393 $ 158,786 $ 786,451 $ 7,989,198 1995 4,151,583 175,278 1,097,505 1,902,751 207,611 772,887 8,307,615 1996 4,226,963 218,768 1,156,703 1,927,433 215,633 484,328 8,229,828 1997 4,285,860 196,806 1,196,306 2,074,061 207,350 368,131 8,328,514 1998 4,525,306 211,459 1,203,077 2,304,259 205,237 370,648 8,819,986 1999 3,072,144 231,674 942,571 2,145,903 111,930 411,006 6,915,228 2000 3,092,104 292,917 910,633 492,005 258,611 617,994 5,664,264 2001 3,152,976 355,561 919,339 671,075 290,484 507,349 5,896,784 2002 3,404,110 396,766 1,097,231 672,946 264,248 305,188 6,140;489 2003 3,512,068 433,156 1,120,152 629,181 249,560 290,426 6,234,543 ( *) Sanitation services and fees transferred to newly created Enterprise Fund on 10 /01 /00. -63- MIAMI SHORES VILLAGE, FLORIDA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Source: Miami Shores Village Finance Department and Miami -Dade County Property Appraisers Office. -64- % of Total Ciurent %, of Delinquent Total Total Tax Fiscal Tax Tax Levy Tax Tax Collection Year Levy Collections Collected Collections Collections to Levy 1994 $ 2,766,898 $ 2,653,211 95.9% $ 19,871 $ 2,673,082 96.6% 1995 2,936,163 2,766,533 94.2% 22,689 2,789,222 95.0% 1996 2,904,311 2,765,122 95.2% 46,639 2,811,761 96.8% 1997 2,989,650 2,821,922 94.4% 35,579 2,857,501 95.6% 1998 2,986,804 2,985,026 99.9% 47,634 3,032,660 101.5% 1999 3,096,789 3,044,701 98.3% 27,443 3,072,144 99.2% 2000 3,100,630 3,051,598 98.4% 40,506 3,092,104 99.7% 2001 3,277,996 3,496,643 106.7% 153,480 3,650,123 111.4% 2002 3,507,040 3,723,063 106.2% 105,618 3,828,681 109.2% 2003 3,750,982 3,323,531 88.6% 104,404 3,427,935 91.4% Source: Miami Shores Village Finance Department and Miami -Dade County Property Appraisers Office. -64- MIA 11 SHORES VILLAGE, FLORIDA ASSESSED VALUE OF TAXABLE PROPERTIES LAST TEN FISCAL YEARS Source: Miami -Dade County Property Appraisers Office. -65- Real Personal Property Property Centrally Total Fiscal Assessed Assessed Assessed Assessed Year Value Value Value Value 1994 $ 304,864,072 $ 14,150,253 $ 498,901 $ 319,513,226 1995 324,627,082 13,757,768 664,077 339,048,927 1996 328,044,932 13,238,273 681,979 341,965,184 1997 327,242,080 14,159,332 663,877 342,065,289 1998 352,803,811 14,849,506 862,792 368,516,109 1999 367,730,418 17,216,418 854,252 385,801,088 2000 390,040,958 16,975,407 894,140 407,910,505 2001 424,016,297 15, 878,103 908,240 440, 802,640 2002 462,954,450 18,854,983 946,240 482,755,673 2003 516,425,642 20,389,383 944,009 537,759,034 Source: Miami -Dade County Property Appraisers Office. -65- MIAMI SHORES VILLAGE, FLORIDA PROPERTY TAX LEVIES LAST TEN FISCAL YEARS Source: Miami -Dade County Property Appraiser. -66- Total Fiscal County- Debt Tax Year Village Wide Service Fire MDCC Library School State Levies 1994 8.660 7.500 0.808 3.150 0.750 0.351 9.503 0.597 31.319 1995 8.660 6.828 0.789 2.558 0.030 0.329 10.389 0.687 30.270 1996 8.493 6.828 0.829 2.518 - 0.329 10.389 0.687 30.073 1997 8.740 6.469 0.774 2.745 - 0.339 10.366 0.710 30.143 1998 8.740 6.023 0.837 2.869 - 0.334 10.260 0.644 29.707 1999 8.740 - 0.607 2.752 - - 9.744 0.641 22.484 2000 8.363 6.403 0.515 2.752 - - 9.617 0.738 28.388 2001 8.363 6.403 0.515 2.752 - - 9.617 0.738 28.388 2002 7.750 6.279 0.515 2.661 - - 9.252 0.736 27.193 2003 7.750 6.382 0.515 2.337 - - 9.715 0.816 27.516 Source: Miami -Dade County Property Appraiser. -66- MIAMI SHORES VILLAGE, FLORIDA DIRECT AND OVERLAPPING DEBT SEPTEMBER 30, 2003 Jurisdiction Miami Shores Village, Florida Miami -Dade County, Florida Miami -Dade County Public Schools Sources: (1) Miami Shores Village, Florida - Finance Department (2) Miami -Dade County, Finance Department - Bond Administration Division (3) Miami -Dade County Pubic Schools - Finance Department -67- Percent Amount Net Applicable Applicable Debt to Name of to Name of Outstandine Government Government (1) $ 2,910,000 100.00% $ 2,910,000 (2) 242,087,000 0.41% 993,717 (3) 728,644,000 0.41% 2,990,933 Sources: (1) Miami Shores Village, Florida - Finance Department (2) Miami -Dade County, Finance Department - Bond Administration Division (3) Miami -Dade County Pubic Schools - Finance Department -67- MIAMI SHORES VILLAGE, F+ LORIDA DEMOGRAPHIC INFORMATION AND STATISTICS LAST TEN FISCAL YEARS Sources: University of Florida, Gainesville, Florida - Florida Bureau of Economic and Business Research State of Florida, Tallahassee, Florida - Florida Department of Labor & Security Miami -Dade County Public Schools - Finance Department, Budget & Planning Division Beacon Council Florida Research and Economic Database -68- Per Capita Personal Income Unemployment Rate Miami- State Miami- State Fiscal Village Median Miami Dade of Nation- Dade of Nation - Year Population Age Shores Coun1y Florida wide Coun Florida wide 1994 10,125 36.2 $ 21,452 $ 20,058 $ 21,777 $ 22,044 8.0 7.2 7.0 1995 10,125 36.2 20,359 21,058 23,031 23,196 7.9 6.9 6.8 1996 10,147 36.9 19,266 22,370 24,198 24,436 7.7 3.2 4.1 1997 10,137 38.7 19,459 22,392 24,234 24,680 6.5 4.2 4.6 1998 10,142 40.7 19,556 22,504 24,355 24,924 6.5 4.3 4.7 1999 10,139 39.9 19,947 22,954 24,843 25,171 6.3 4.3 4.9 2000 10,129 39.7 27,926 22,840 24,097 25,422 5.1 4.5 3.8 2001 10,130 39.5 28,624 23,183 24,217 26,058 4.1 4.9 4.2 2002 10,380 37.7 31,017 25,320 27,764 29,496 7.4 5.4 5.8 2003 10,385 35.6 33,033 25,953 28,403 29,938 6.4 4.5 6.0 Sources: University of Florida, Gainesville, Florida - Florida Bureau of Economic and Business Research State of Florida, Tallahassee, Florida - Florida Department of Labor & Security Miami -Dade County Public Schools - Finance Department, Budget & Planning Division Beacon Council Florida Research and Economic Database -68- MIAMI SHORES VILLAGE, FLORIDA PROPERTY VALUE, CONSTRUCTION AND BANK DEPOSITS LAST TEN FISCAL YEARS Construction Value Property Values (2) Fiscal Property Bank Year Values Commercial Residential Deposits (1) Commercial Residential 1993 $ 315,447,217 $ 1,439,194 $ 6,317,638 $ 10,425,099 $ 31,544,721 $ 283,902,496 1994 319,513,226 7,682,079 4,697,261 12,337,712 30,586,368 288,926,858 1995 339,048,927 1,881,706 5,152,751 10,876,146 33,902,278 305,146,649 1996 341,965,184 4,196,947 4,958,956 11,296,602 30,816,273 311,148,911 1997 342,065,289 1,622,916 3,934,603 10,524,759 30,594,928 311,470,361 1998 368,516,109 823,366 4,938,015 10,737,507 31,830,638 33605,471 1999 385,801,088 893,352 5,555,267 15,025,296 33,660,694 352,140,394 2000 407,910,505 2,683,853 3,888,687 17,366,270 33,885,496 374,028,009 2001 440,802,640 9,587,390 7,224,981 17,149,192 46,685,839 394,116,801 2002 482,755,673 12,827,928 7,586,230 20,365,445 53,994,591 428,761,082 2003 537,759,034 577,257 9,180,269 20,976,409 67,219,879 470,539,155 Sources: (1) Municipal Bank Deposit Records (2) Estimated Actual Values -69- MIAMI SHORES VILLAGE, FLORIDA MISCELLANEOUS INFORMATION SEPTEMBER 30, 2003 Date of incorporation January 1, 1932 Form of government Council/Manager Population as of September 30, 2003 10,380 Size (of Village Area) 2.5 square miles Total street miles 40 Number of streetlights 1,038 Fire protection (provided by Miami -Dade County): 71 Number of county- operated stations 1 Number of firefighters including officers 7 Police protection: Number of stations 1 Number of police officers (all ranks /staff) 43 Education: 5 University: 1 Number of classrooms 104 Number of academicians 564 Number of students 6,154 Elementary school: 1 Number of classrooms 71 Number of academicians 105 Number of students 2,101 Pre- school and centers: Number of classrooms 20 Number of academicians 40 Number of students 308 Recreation and cultural activities: Number of village -owned parks 5 Number of libraries 1 Number of volumes as of September 30, 2003 48,645 Number of public swimming facilities I Number of recreation facilities 1 Number of public golf courses 1 Village employment: Number of full -time employees 212 Number of part-time and seasonal employees 214 Other information: Number of new building /home constructions I -70- MIAMI SHORES VILLAGE, FLORIDA PRINCIPAL TAXPAYERS SEPTEMBER 30, 2003 Taxpayer Publix Supermarket Boris Moroz/Phil Glassman Trust Tropical Chevrolet, Inc. Bujolo, Inc. George and Nancy Bennett Thomas and Sandra Chaille Bank of America, N.A. Angelo Napilitano Trust George and Maria Sirota Omar Cassola Property Location 9050 Biscayne Boulevard Shores Square, 9000 Block Biscayne Boulevard 8800 Biscayne Boulevard W algreen's Center, 9020 Biscayne Boulevard 9500 Block NE Second Avenue, Two Residential Properties 1600 N.E. 104th Street 9105 North Bayshore Drive 9400 Block Biscayne Boulevard 9100 Block Biscayne Boulevard 9767 N.E. 13th Avenue 1430 N.E. 101st Street 9325 North Bayshore Drive -71- Assessed Value for 2003 $ 5,567,093 4,059,971 3,478,279 Percent of Total Village -Wide Assessment 1.078% 0.786% 0.674% 1,857,565 0.360% 1,467,858 0.284% 1,466,608 1,264,122 1,223,117 1,219,317 1,110,798 $ 22,714,728 0.284% 0.245% 0.237% 0.236% 0.215% MIAMI SHORES VILLAGE, FLORIDA TEN LARGEST PUBLIC AND PRIVATE EMPLOYERS LOCATED IN MIAMI -DADE COUNTY, FLORIDA SEPTEMBER 30, 2003 Ten Largest Public Employers Miami -Dade County Public Schools Miami -Dade County, Florida United States Government State of Florida Jackson Memorial Hospital Miami -Dade Community College Florida International University City of Miami, Florida Veterans Admin. Medical Center U.S. Coast Guard Ten Lamest Private Employers 45,886 University of Miami 9,079 32,000 American Airlines 9,000 20,100 Baptist Health Care Systems 7,000 18,900 Precision Response Corporation 6,000 11,700 UPS 5,000 7,500 BellSouth, Inc. 4,700 3,500 Carnival Cruise Lines 4,000 3,400 Publix Supermarkets 4,000 2,018 Florida Power & Light Company 3,665 1,823 Mt. Sinai Medical Center 3,000 Source: The Beacon Council - Research Department -72- COMPLIANCE SECTION Ra c h I i Cohen Accountants - Advisors Report of Independent Certified Public Accountants on Compliance and on Internal. Control over Financial Reporting Based on an Audit of General Purpose Financial Statements Performed in Accordance with Government Auditiniz Standards Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida We have audited the financial statements of the governmental activities, business -type activities, each major fund, and the aggregate remaining fund information of Miami Shores Village, Florida (the Village), as of September 30, 2003 and for the year then ended, which collectively comprise of the Village's basic financial statements and have issued our report thereon dated January 20; 2004. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable_ to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable. assurance about whether the Village's basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions, of laws, regulations; contracts and grants, noncompliance with which could have a direct and material effect on. the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Village's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the basic financial statements and not to- provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the basic financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we . consider to be material weaknesses. -73- Rachlin Cohen & Holtz LLP One Southeast Third Avenue ■ Tenth Floor ■ Miami, Florida 33131 ■ Phone 305.377.4228 ■ Fax 305.377.8331 ■ www.rachlin.com An Independent Member of Baker Tilly International M I A M I ■ F O R T L A U D E R D A L E ■ W E S T P A L M B E A C H ■ S T U A R T ■ T A M P A ■ N E W J E R S E Y Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Page Two However, we noted other matters involving the internal control over financial reporting that we have reported to management in the accompanying schedule of findings. This report is intended solely for the information and use of the Mayor, Village Council, management, and applicable governmental agencies and is not intended to be and should not be used by anyone other than these specified parties. Miami, Florida January 20, 2004 -74- RachlipCobfflo"/zen Accountants • Advisors -hen R a(i • � n .1 Holtz Accountants - Advisors Management Letter in Accordance with the Rules of the Auditor General of the State of Florida Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida We have audited the financial statements of the governmental activities, business -type activities, each major fund, and the aggregate remaining fund information of Miami Shores Village, Florida (the Village) as of September 30, 2003 and for the year then ended, which collectively comprise of the Village's basic financial statements and have issued our report thereon dated January 20, 2004. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable . for financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. We have issued our Report of Independent Certified Public Accountants on Compliance and on Internal Control over Financial Reporting. Disclosures in this report, which is dated January 20, 2004, should be considered in conjunction with this management letter. In connection with our audit of the basic financial statements of the Village for the. year ended September 30, 2003, we report the following in accordance with Chapter 10.550 Rules -of the Auditor General, Local Governmental Entity Audits, which requires that this report specifically address but not be limited to the matters outlined in Rule 10.554(1)(g): 1. No inaccuracies, shortages, defalcations, and/or violations of laws, rules, regulations and contractual provisions were reported in the preceding annual financial audit. 2. The Village, during fiscal year 2003, was not in a state of financial emergency as defined by Florida Statute, Section 218.503 (1). 3. The Village is in compliance with the investment policy of public funds established in Section 218.415 of the Florida Statutes. 4. Recommendations made in the preceding annual financial audit have been implemented, except as disclosed in the accompanying schedule of findings. 5. Recommendations to improve the Village's present financial management, accounting procedures and internal controls are accompanying this report in the schedule of findings. 6. During the course of our audit, nothing came to our attention that caused us to believe that the Village: a. Was in violation of any laws, rules, regulations and contractual provisions. b. Made any illegal or improper expenditures. c. Had improper or inadequate accounting procedures, except as noted in the schedule of findings. -75- Rachlin Cohen & Holtz LLP One Southeast Third Avenue ■ Tenth Floor ■ Miami, Florida 33131 ■ Phone 305.377.4228 ■ Fax 305.377.8331 ■ www.rachlin.com An Independent Member of Baker Tilly International M I A M I m F O R T L A U D E R D A L E ■ W E S T P A L M B E A C H ■ S T U A R T ■ T A M P A ■ N E W J E R S E Y Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Page Two d. Failed to record financial transactions, which could have a material effect on the Village's basic financial statements. e. Had other inaccuracies, shortages, defalcations and instances of fraud. 7. The annual financial report for the year ended September . 30, 2003 has been filed with. the Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes and is in agreement with the audited financial statements of the same period. 8. Miami Shores Village, Florida was incorporated by Laws of Florida .15690. . 9. During the course of our audit, we applied financial condition assessment procedures pursuant to Rule 10.566(8). It is management's responsibility to monitor the Village's financial condition, and our financial condition assessment, which was performed as of.the Village fiscal year end, was based on representations made by management and the review of financial information provided by the Village. There were no findings regarding deteriorating financial conditions. This report is intended solely for the information and use- of the Mayor, Village Council, management, and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. tra Miami, Florida January 20,. 2004 Wei R - Advisors MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF FINDINGS - FISCAL YEAR ENDED SEPTEMBER 30, 2003 PART I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS 01 -4. Fund Balance Journal Entries Condition During, audit, we noted that during the year, there were journal entries and postings made directly into various equity accounts. The balances in these accounts should change each year by only excess revenues over expenditures and equity transfers. There should be no other items affecting the equity accounts directly. Recommendation We recommend that finance personnel strictly review all journal entries before any postings are made. Management Response No entries to equity accounts will be made unless specifically authorized by the Chief Financial Officer. Entries to fund balance accounts were recorded to adjust year-end numbers as well as recording equity transfers associated with the creation of the fleet maintenance internal service funds. The Village will adhere to the auditors' recommendation that fund balance entries will be restricted and used only for absolutely "emergencies ". 01 -9. Accounting Procedures Manual Condition We noted that the Village does not have an accounting procedures manual. There may be an assumption that because the Village's accounting system is relatively simple and accounting personnel have direct access to the chief financial officer when questions arise, there is no need for a manual. However, written procedures, instructions, and assignments of duties will prevent or reduce misunderstandings, errors, inefficient or wasted effort duplicated or omitted procedures, and other situations that can result in inaccurate or untimely accounting records. Recommendation A well- devised accounting manual can also help to ensure that all similar transactions are treated consistently, that accounting principles used are proper, and that records are produced in the form desired by management. A good accounting manual assists with the training of new employees and possibly allows for delegation of some of the accounting functions currently performed by management for other employees. -77- MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF FINDINGS (Continued) PART I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) Management Response Management has initiated a comprehensive Accounting Procedures Manual, integrating the various module operations of the new .accounting software system. Additionally, new technologies have been introduced including a frame relay system, connecting all Village operations to a central computer system. The Procedures Manual will be complete along with an IS Protocol Handbook by September 2004. 99 -3. Grant Centralization Condition The Village made an attempt to centralize its grant procedures so that any grants applied for flowed through the Village's finance department and take a proactive approach to applying for any and all federal and state funding available. It was discovered that several of the departments are applying for monies without informing the finance department of the awards until after the funds have been expended ' or received. This subjects the Village to various degrees of. non - compliance in the areas of filing and reporting. Recommendation We recommend that the Village establish a formal grant process that requires sign -off by all of the responsible officials, department heads with final authorization passing through the finance department. Management Response Management has implemented new policies which require that the Finance Department be provided with all grant documentation at the point of application and/or award through .project close out. While some weaknesses still remain, it is anticipated that these issues will be resolved by the close of FY 2003 -04. It will take some time and effort for management to develop a manual; however, we believe this time will be more than offset by time saved later in training and supervising accounting personnel. Also, in the process of the comprehensive review of existing accounting procedures for the purpose of developing the manual, management might discover procedures that can be eliminated or improved to make the system more efficient and effective. Should management desire; we would be pleased to assist the Village in developing an accounting manual as a separate engagement. -78- MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF FINDINGS (Continued) PART II. PRIOR YEAR COMMENTS AND RECOMMENDATIONS NOT IMPLEMENTED 02 -01. Preparation of Books and Records The Village has implemented this recommendation. 01 -2. Computer;System The Village has implemented this recommendation. 01 -3. Post Closing Journal Entries The Village has implemented this recommendation. 01 -4. Fund Balance Journal Entries This comment is repeated at September 30, 2003. 01 -6. Monthly Account Reconciliations The Village has implemented this recommendation. 01 =9. Accounting Procedures Manual This comment is repeated at September 30, 2003. 99 -1. New Pronouncement The Village has implemented this recommendation. 99 -3. Grant Centralization This comment is repeated at September 30, 2003. -79-