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2004MIAMI IHOREf VI I.I. J.�GE •.•.•..........• ••••.•.•••••.•..•.••.•••••...•• � 1 1 1 1 ............................... FISCAL YEAR 2003 -2004 of dl'lotida d 1 smietpahig Ob MIAMI SHORES VILLAGE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2004 Prepared by THE FINANCE DEPARTMENT MIAMI SHORES VILLAGE, FLORIDA TABLE OF CONTENTS INTRODUCTORY SECTION PAGE Letter of Transmittal i-ix Organization Chart x List of Elected and Appointed Officials xi FINANCIAL SECTION Report of Independent Certified Public Accountants i -2 Management's Discussion and Analysis 3 -12 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 13 Statement of Activities 14 Fund Financial Statements: Balance Sheet — Governmental Funds 15 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 16 Reconciliation of the Statements of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 17 Statement of Net Assets — Proprietary Funds 18 Statement of Revenues, Expenses and Changes in Net Assets — Proprietary Funds 19 Statement of Cash Flows — Proprietary Funds 20 Statement of Fiduciary Net Assets — Fiduciary Funds 21 Statement of Changes in Fiduciary Net Assets — Fiduciary Funds 22 Notes to Basic Financial Statements 23 -45 Required Supplementary Information: Schedule of Employer Contributions 46 Budgetary Comparison Schedule — General Fund 47 -51 Budgetary Comparison Schedule — Special Revenue Fund — Excise Tax Fund 52 Notes to Budgetary Comparison Schedules 53 Combining and Individual Fund Statements: Combining Balance Sheet — Nonmajor Governmental Funds 54 -55 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds 56 -57 MIAMI SHORES VILLAGE, FLORIDA TABLE OF CONTENTS (Continued) FINANCIAL SECTION (Continued) PAGE Internal Service Funds: Combining Statement of Net Assets 58 Combining Statement of Revenues, Expenses and Changes in Net Assets 59 Combining Statement of Cash Flows 60 Fiduciary Funds: Combining Statement of Fiduciary Net Assets — Pension Trust Funds 61 Combining Statement of Changes in Fiduciary Net Assets — Pension Trust Funds 62 Statement of Changes in Assets and Liabilities — Agency Fund 63 STATISTICAL SECTION Government -wide Information: Government -wide Expenses by Function 64 Government -wide Revenues 65 Fund Information: General Governmental Expenditures by Function 66 General Governmental Revenues by Source 67 Property Tax Levies and Collections 68 Assessed Value of Taxable Properties 69 Property Tax Levies 70 Direct and Overlapping Debt 71 Demographic Information and Statistics 72 Property Value, Construction and Bank Deposits 73 Miscellaneous Information 74 Principal Taxpayers 75 Ten Largest Public and Private Employers Located in Miami -Dade County, Florida 76 COMPLIANCE SECTION Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 77 -78 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida 79 -80 Schedule of Findings 81 -85 INTRODUCTORY SECTION THOMAS J. BENTON VILLAGE MANAGER )70 Miatnt SLrej 11ili 10050 N. E. SECOND AVENUE MIAMI SHORES, FLORIDA 33 136-2362 TELEPHONE (305) 795 -2207 FAX (305) 756.8972 February 4, 2005 0 The Mayor and Members of the Village Council 10050 Northeast Second Avenue Miami Shores, Florida 33138 -2382 Subject: FY 2003 -04 To the Mayor and Members of the Village Council: Financial Report (CAFR) In compliance with Florida State Statute Chapter §11.45, Chapter §10.550 of the Rules of the Auditor General, and Chapter 34(3) of the Miami Shores Village Code of Ordinances, 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, 2004. 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 financial condition of Miami Shores Village ( "The Village "). Consequently, management assumes full responsibility for the complete presentation, reliability, and accuracy of all of the information presented in this report. To provide a reasonable basis for making these representations, the Village's management 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 principles generally accepted in the United States. 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 accompanying report consists of three parts: • The Introductory Section, including this letter of transmittal, provides general information on the Village's structure and personnel as well as other information that will assist readers to better understand the organization's financial condition. • The Financial Section contains the basic financial statements and required supplementary information including Management's Discussion and Analysis (MD &A), the report of the independent certified public accountants, and other supplemental information useful to statement readers. The MD &A is a narrative required to accompany the basic financial statements, providing an objective and `easy -to -read' analysis of the Village's financial activities. These FY2003-04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 activities are based on currently known facts, decisions, or conditions available able to management at the time of preparation. This letter of transmittal is designed to complement the MD &A for a graphical presentation of the report. • The Statistical Section provides tables and graphs of unaudited data depicting the financial history of the Village over the course of the past 10 years including, but not limited to demographics, key taxpayers, revenue and expense trends and more. Independent Audit Rachlin Cohen & Holtz LLP, a firm of licensed certified public accountants, has audited the Village's financial statements for the fiscal year ended September 30, 2004. Their audit was in accordance with principles of auditing standards generally accepted in the United States, Government Auditing Standards issued by the Comptroller General of the United States and the Rules of the Auditor General, State of Florida. 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, 2004 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, 2004 are fairly presented in conformity with generally accepted accounting principles (GAAP). The independent auditor's report is presented as the first component of the financial section of this report. 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 115`h Street and 91 �' Street respectively. The Village is primarily a residential -based community with two (2) commercial districts located on Second Avenue and Biscayne Boulevard. Demonstrating continued economic growth, the Village is recognized as the fifth most affluent residential community in the County. Property values have grown at an average five -year rate of 11.15% (compared to the County's five -year average of 7.18 %). For the last ten fiscal years, the Village's average growth rate was 6.51 % compared to the County's ten -year average of 5.11 %. The primary factor associated with the continued value growth may be traced back to the Village's proximity to downtown Miami and Fort Lauderdale commercial districts. With the location of the Village so close to these business areas, commuting is significantly reduced allowing for enhanced leisure and family time, an indicator identified by more than 40% of the new property owners. Government structure and services provided Operating under a Council - Manager form of government, the Council consists of five members elected at large. The Mayor is chosen by each ofthe newly formed councils. Historically, the individual receiving the highest number of votes during the election is chosen as the Mayor and the Vice -mayor has 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. The Village Manager is responsible for engaging all department heads and their subordinates. FY2003-04 Financial Report Transmittal with Management's Discussion &Analysis February 4, 2005 Miami Shores Village provides a full range of municipal services including public safety through the police, recreation and culture, public works and general administrative services for its residents and businesses. For the fiscal year ended September 30, 2004, no legally separate authorities or agencies operated under the auspices of the Village; therefore, no additional financial information will be incorporated into these statements. However, the Village Council, at the direction of the residents, authorized the expansion of the charter school facilities. Beginning with the FY'05 financial reports, the Village will report a separate agency and related activities associated with the Doctors Charter School of Miami Shores. The capital costs to move forward with the program is funded through a $5,000,000 general obligation bond and a $2,000,000 grant from the North Shore Medical Foundation. The financial reporting entity under which the financial statements are prepare includes all of the organizations, activities and functions for which the Village as the primary government is financially accountable. Budeetary Process and Control Florida State Statute §200.065 requires that all municipal governments prepare, approve, adopt and execute an annual budget for such funds as may be required by law or by sound fiscal practices. In compliance with this Statute as well other state regulatory items, the Village adopts an annual operating budget into which funds are either formally appropriated by resolution or non - appropriated in nature, depending upon the fund (i.e. — general, special revenue, debt service, enterprise, internal service or trust funds). However, in practice, all funds by those identified as fiduciary in nature, receive annual budgets and corresponding appropriations. The annual budget serves as a foundation for the financial planning, guidance and control ofthe Village. Funds which require legal appropriations cannot exceed their original and amended budgets. All departments are required to annually submit requests for appropriations to the Village Manager by June l'` of each year. The Village Manager then uses those requests as the base from which the annual operating and capital budgets are developed. The budget is presented to the Village Council immediately following the release of the tentatively assessed property values in early July of each year. Workshops are held in July during which council members are free to address department staff with general and specific issues proposed in the budget. Following the summer workshops, the Council adopts a resolution which sets the tentative millage rates which are subsequently sent to the County using Florida Form DR420 for inclusion on the Proposed Tax Bills. 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 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 ofthe 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 47 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 52. 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). iii FY2003-04 Financial Report Transmittal with Managements Discussion & Analysis Fehruary 4, 2005 Cash Management To maximize returns on liquid cash, the Finance Department pursues aggressive cash management and investment programs within the constraints and parameters imposed by Florida Statutes and local policies. Working capital is maintained in investment accounts including, but not limited to, overnight repurchase agreements, money market accounts, short-term secured financial instruments such as certificate of deposits, commercial paper and other short- and mid -term investments. Interest earnings are allocated based on asset values reported in each fund at the close of each month. For those funds which are used as clearing funds (i.e., Fund 120, Excise Tax Fund), no interest allocations are reported. Additionally, interest earned on dedicated or segregated funds, such as capital loan proceeds and restricted cash funds, are invested at par. A summary and comparison of treasury activity for the last three fiscal years, not including cash with fiscal agents are as follows: The following chart summaries the value of Village's investments as of September 30, 2004 excluding those investments related to the General Employees and Police Officers' Retirement Funds: CDs 14f0 Mr Cash Equivalent and Investment Types Other SSA Repos paper °fv 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 the Village operates. iv 2004 2003 2002 Average Portfolio balance $7,143,220 $ 1,934,722 $2,743,401 Average Yield 1.91% 1.82% 4.83% Interest earned on Investments Managed by Finance Department $ 40,282 $ 60,279 $ 121,168 The following chart summaries the value of Village's investments as of September 30, 2004 excluding those investments related to the General Employees and Police Officers' Retirement Funds: CDs 14f0 Mr Cash Equivalent and Investment Types Other SSA Repos paper °fv 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 the Village operates. iv FY2003-04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 PENSION and POST - EMPLOYMENT BENEFIT COSTS The Village sponsors two independent defined benefit pension plans: the General Employees' Retirement Plan and the Police Officers' Retirement Plan. Additionally, a voluntary deferred compensation plan is made available to those employees who wish to augment their future retirement benefits with no financial obligation to the Village. Complying with the Village's Code, along with various state statutes, an independent actuary is engaged each year to calculate 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, the Village maintains fully- funded plans and funds each year's annual required contribution to each respective plan as part of the annual budget process. 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 (a -d) in the Notes to the Financial Statements. Long -term Debt Management The Village continues to obtain, in an efficient and innovative manner, long -term financing for the construction or acquisition of long -term assets and equipment. Management's objective is to adequately plan and meet the Village's comprehensive capital plan and related demands which are critical to the continue enhancement of our infrastructure. At the same time, however, we do not want to place a significant burden on the taxpayers through general obligation debt through ad valorem taxes. Following the voters direction, the Village has issued and sold two independent General Obligation Bonds: Series 1999 and Series 2004 funding the capital investment for the Village's $3,500,000 - Aquatics Facility and $5,000,000 - Doctors Charter School of Miami Shores respectively. The Village's debt service millage for 2004 was 0.5151 for the Aquatics facility. Levies to repay the Charter School debt begins after the start of FY 2004 -05. The Following chart indicates the principal amortization of the Village's general obligation debt for the next five fiscal years: General Obligation Debt Principal Amortization For the Five -Year Increment Following FY 2007 -08 Fiscal Principal Year Amortization 2009 $ 185,000 2010 190,000 2011 195,000 2012 205,000 2013 215.000 Total LIA FY2003 -04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 ENTERPRISE OPERATIONS The Village operates two individual enterprise operations: Sanitation and Stormwater utilities. Each area operates separate from the other functions of the Village and are fully supported by fees charged to users for the service provided. The following is a brief introduction to these two divisions: Sanitation Sanitation is an operating division of the Public Works Department. Comprised of 25 full time employees, the department provides comprehensive solid waste collections and recycling services to the Village's residents and commercial operations. Service in excess of 3,400 customers, the Village provides regular trash services, special pickups, recycling programs and other sanitation- related services. Over 14- million pounds (7,300 tons) of trash was transferred to the County's dump site for removal costing in excess of $375,000. These costs along with personnel, operating, administrative and non -cash charges are fully funded by the quarterly and annual fees charged to Village customers. Stormwater Utilities The Public Works Department is also responsible for the day -to -day operations of the Village's stormwater utility. Stormwater utilities as defined by Section 20 -102 of the Village's Code of Ordinances provides for a comprehensive drainage control program throughout the Village. Through the Public Works Department, the Village is responsible for the maintenance of the system as well as managing various contracts engaged to repair, rehabilitate, replace and expand the the system. Charges for this division are based on a fee determined by identifying the impervious area of each residential and commercially- developed property in the Village. The calculation determines each property's Equivalent Residential Units [ERUsl equaling 2,466 square feet divided by the total impervious area. Impervious means that area of any given property which does not permit rain or run off to naturally filter back through the ground. The annual fee of $34.00 funds all costs associated with the function including, but not limited to personnel, operating, administrative, debt service and capital investment costs. This function reports through an Enterprise Fund and uses the full accrual method of accounting including amortization and depreciation charges. INTERNAL SERVICE OPERATIONS The Village provides for two internal service funds: Fleet Maintenance and Risk Management. Internal service funds are used to capture the true costs for service which are for the sole benefit of Village. The following are brief introductions for both service areas. Fleet Maintenance Fleet Maintenance, a division of the Village's Public Works Department, is fully responsible for the day - to -day maintenance of all equipment and vehicles operated by the organization. Maintenance includes the costs for routine repairs, preventive services, general maintenance, fuel, personnel costs and other operational functions. Additionally, the acquisition of all vehicles and equipment, not specifically identified as an asset of an enterer eration are recorded in this division. Through annual depreciation charges, replacement funds accumulate as a reserve for future equipment requirements. As an internal service fund, operational revenues originate as charges recorded in each `user' division, transferring the corresponding cash to this self - balancing fund including non -cash charges such as depreciation, amortization and transfers to reserves. A FY2003-04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 Risk Manav-ement Risk Management, a sub - function of the Village's Finance Department, is a division accumulating the costs to manage risk and losses of the Village. The Village is a self - insured entity meaning that all losses incurred by the Village are paid by Village Funds; however, as the cost to manage loss has astronomically escalated, the Village engages co- insurance coverage for each risk -loss area including general liability, property and casualty, workers' compensation and bondings. In addition, retention costs (deductibles) are accumulated and disbursed through this fund along with direct losses, legal, third party administrative and actuarial costs. As with the Fleet Maintenance ISF, the full cost of the Village's risk loss operations are funded by expenses charged to all departments and divisions ofthe Village including costs to fund future losses and mandatory reservations. FACTORS AFFECTING FINANCIAL CONDITIONS The information presented in the Village's financial statements primarily focus on the financial position at the end of each fiscal year as measured by existing resources and claims against those resources. To better understand the Village's financial condition, readers should focus on both existing and future resources and potential claims (or liabilities) against those resources. This broader concept is used to assist the financial condition of Miami Shores, reflecting the current financial position as well as the prospects that today's financial condition will improve or deteriorate. To achieve this objective, the Village uses a wide -range of information including local economic conditions and outlook; long -term debt management; capital construction and investments; cash management / investments; and, of course, risk controls. ECONOMIC CONDITIONAND OUTLOOK For the fiscal year ended September 30, 2003 readers may recall that a continue sense of growth and a resurgence of interest in Miami Shores was highlighted. As of the end of FY 2004, strong demand for Village real estate continued as a byproduct of low housing stock or inventory, low interest rates and the Village's prime locations. Additionally, significant investment in concurrent property owners were identified through the number and value of building permits issued during the fiscal year. While the marked increase in assessed values is positively accepted, a few economic indicators now point toward a slight slow down. Federal Fund rates are beginning to reflect slow increases and the reserve anticipates a steady trend to higher rates in an effort to block off inflation. Net property values have increased, yet the Village does not recognize the cash as the incremental values are on paper and not in cash. This dichotomy creates a common misperception that significant property value increases result in a proportionate increases in cash to the municipality. Quite to the contrary, the Village only benefits from the additional valuation when a property sells or changes hands in some other method. In November 1992, voters approved an amendment to Article VII of the Florida State Constitution. The "Save the Homeowners" amendment was designed to control taxes increases levied on properties with standard ($25,000) homestead exemptions. It effectively locked out government from recognizing the potential incremental tax revenue increase associated with home improvements. The assessed value on properties with homestead exemptions could not increase greater than 3% or the cost of living, whichever is less. Accordingly, the only time a local government may benefit from increased property values and the corresponding ad valorem tax revenue results after the property is sold or the homestead exemption is removed for whatever reason. In the case of the Village, property values have gained exponentially. There is a common misperception that the Village has increased the overall cash position as a result of the increased values. That is just not the case since the Village would only recognize additional tax values after the new value is placed on the property. And, on top of that, increased values do not become effective until January I" of each year. vii FY2003-04Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 According the Village will not recognize the value of property sales up to December 31 " of each calendar year until the next fiscal year which begins each October 1 't (or approximately 11 months later). Property Values & Economic Development As previously indicated, The Village continues to enjoy and reap the benefits of a generally favorable economic environment (both at the local, county, state and national levels). Leading local economic indicators and associated variables point to property value growth in the 10% range. As the Village is primarily a residential -based community, any improvement to the commercial districts will favorably benefit the Village on a dollar- for - dollar basis. For example, the Village began the multi- agency Second Avenue Revitalization Project. The project provides for a comprehensive rehabilitation ofthe business- district including new sidewalks, streetlights, curb & gutter work, landscaping and related capital improvements. It is anticipated that the project, estimated to cost in excess of $2,000,000 or approximately $300 per linear foot. The project is now scheduled for a Summer 2005 start. Already, the Village has seen considerable investments in the area with recent property sales, rehabilitation of the Village Cafe and the beginning of the capital improvement of the property located on the southwest comer of 95t` Street at Northeast Second Avenue. The Administration has great expectation that this project will be the beginning of a strong fiscal commitment for enhanced business opportunities throughout the Village without adversely impacting the home -town feel so deeply entrenched by its residents. The Village has also seen continued interest in community relocation, home improvements, expansions and development projects. An additional 25 town home units were added to the tax roll during the fiscal year with an aggregate assessment of over $9 million. An additional $5,000,000 in new assessed value was added to the tax rolls during the year for individual construction projects throughout the community. Staff also believes that an additional $15 -$20 million in new properties will be added to the Village's roll relating to the new condominium projects currently under construction during FY'05. The Village has also seen an increased demand for commercial renovations during FY'04. As previously mentioned, the Village was contacted by investors expressing strong interest to develop a commercial facility on Northeast Second Avenue at 95`b Street. Subsequent to year end, this project was approved and the existing facility was razed to begin construction of the new two -story facility in which various small office and related space will be available sometime during 2005. FUTURE OUTLOOK As with any bullish or favorable economy resulting from the positive influences of low interest, low unemployment rates, low costs of funds, and the anticipation of a favorable future, consumers are placed into a position of impunity with little concern about tomorrow. If history tells us anything, it demonstrates that for every period of prosperity, a period of austerity will rise up to some degree and for some time. Knowing that, we will operate with fiscal conservatism and look for possible revenue sources that do not hinge on property taxes, values or other local- source dollars. We continue to believe in the future of the Village and will work to maintain, improve and enhance the services provided along with our fiscal integrity in both the near -term as well as for the future. viii FY2003-04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 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 ofthe 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. And, finally, we would like to express our sincere thanks and appreciation to the management and staff of our auditing firm, Rachlin Cohen and Holtz, LLC, specifically Jerry Chiocca, CPA and Jonathan Goodman. Their dedication to ensuring the accuracy of the data presented to you in this report was greatly evident during the past several weeks. Respectfully submitted, MIAMI SHORES VILLAGE THOMAS J. BENTON Chief Executive Officer TJB:MAM: Attachments ix MARK A. MALATAK, CPA Chief Financial Officer MIAMI SHORES VILLAGE ORGANIZATION CHART AS OF SEPTEMBER 30, 2004 MAYOR & COUNCIL MAYOR JIM MCCOY VICE MAYOR HERTA HOLLY COUNCILMAN AL DAVIS COUNCILMAN GREGORY ULLMAN C-OUNC 1AAN EDWARD QUINTON BARBARA A_ FUGAZZI E>EcUTrvEASST VILLAGE MANAGER TO VILLAGE MANAGER BARBARA RJGAZZI THOMAS J_ BENTON PUBLIC WORKS DIRECTOR FINANCE DIRECTOR BUILDING DIRECTOR DAVID G; TRAILL MARKAA MALATAK CPA CURMS CRAIG RECREATION DIRECTOR JERRY ESTEP PLANNING & ZONING J CODE ENFORCEMENT DIRECTOR ALLYN BERG KI VILLAGE ATTORNEY RICHARD SARAFAN, ESQ CHIEF OF POLICE RICHARD H. MASTEN DIRECTOR OF LIBRARY SERVICES ELIZABETH ESPER MIAMI SHORES VILLAGE List of Elected and Appointed Officials As of September 30, 2004 ELECTED OFFICIALS Mayor........................................................................... ............................... Jim McCoy ViceMayor .................................................................. ............................... Herta Holly CouncilMember ............................................................. ............................... Al Davis CouncilMember ......................... ............................... ......................... Gregory Ullman Council Member .................................................. ............................... Edward Quinton APPOINTED OFFICIALS VillageManager ......................... ............................... ......................... Thomas J. Benton Village Attorney ..................... ............................... ........................ Richard Sarafan, Esq VillageClerk ............................................................ ............................... Barbara Estep DEPARTMENT HEADS Building Director ........................................................ ............................... 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 xi THIS PAGE INTENTIONALLY LEFT BLANK FINANCIAL SECTION REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS fJ a JJ 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, 2004, 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 Audit 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, 2004, 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 our report dated February 4, 2005 on our consideration of the Village's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 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 0 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 Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Page Two Management's Discussion and Analysis and the required supplementary information on pages 3 to 12 and 46 to 53 are not a required part of the basic financial statements, but are supplementary information required by accounting principles generally accepted in the United States. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Miami Shores Village's basic financial statements. The combining nonmajor fund financial statements are 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 and 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. Miami, Florida February 4, 2005 -2- Accountants Advisors MANAGEMENT'S DISCUSSION AND ANALYSIS (MD &A) FY2003-04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 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 of the financial activities of Miami Shores Village for the fiscal year ended September 30, 2004. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i to iv of this 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 $5,005,779 (net assets). Of this amount, $3,968,937 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors. ✓ As of the close of the current fiscal year, Miami Shores Village's governmental funds reported combined ending fund balances of $8,227,990, an increase of $4,154,284 in comparison with the prior fiscal year. ✓ At the end of the current fiscal year, unreserved fund balance for the general fund was $1,131,248 or 12.5% of total general fund expenditures. ✓ Miami Shores Village total debt increased by $5,234,987 during the fiscal year representing the repayment of the General Obligation Bond, Series 1999 (- $60,000): Second Avenue Rehab Project (-95,000)= Police HQ Refinancing (- $73,345); Public Works Equipment (- $36,667) which are offset by increased debt comprised of the General Obligation Bond, Series 2004 — Charter School ($5,000,000); and the Revenue Note, 2004 — Fleet Maintenance Reconstruction ($500,000). Overview of the Financial Statements This discussion and analysis is 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) individual 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 financial activity of Miami Shores Village, in a manner similar to a private-sector business. The Statement offNet Assets presents information on all of the 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 ofActAdties 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 of the timing ofrelated cash slows. 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. FY2003 -04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 The government-wide financial statements may be found on pages 1 - 2 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 of the funds of Miami Shores Village can be divided into three categories: governmental funds, proprietary or fiduciary funds. 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 of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term cash flow and 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 and the impact on short term cash flow requirements to meet basic on-going operations. 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 and the debt service fund, both of which are considered to be major funds. Data from the other six 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 basic governmental fund financial statement may be found on pages 3 - 4 of this report. Proprietwyfunds. Miami Shores Village maintains two 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 other user divisions. 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, both of which are considered to be major funds of the Village. Additionally, the Village segregates the financial reporting of both internal service funds to better distinguish the costs of each function. The basic proprietary fund financial statements may be found on pages 6 — 7 of this report. 4 FY2003-04 Financial Report Transmittal with Management's Discussion &Analysis February 4, 2005 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 basic fiduciary fund financial statements may be found on pages 38 — 39 of this report. Notes to the financial statements. The notes provide additional information that is essential to fully understand the data provided in the government-wide and fund financial statements. The notes to the financial statements may be found on pages 8 — 30 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. Required supplementary information may be found on pages 46 to 53 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 37 - 38 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 $12,259,787 at the close of the most recent reporting year. By far, the largest component of Miami Shores net assets (68.1 %) 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 Current and other assets Capital assets Total assets Governmental activities $ 6,853,010 8,182,242 $ 15,035,252 Business-type activities $ 856,252 1,036,842 $ 1,893,094 Long -term liabilities outstanding $ 9,998,983 $ - Other liabilities 971,550 952,034 Total liabilities $ 10,970,533 $ 952,034 Invested in capital assets, net of Related debt $ - $ 1,036,842 Restricted - - Unrestricted 4,064, 719 (95, 782) Total net assets 4.064.719 941,060 TOTAL $ 7,709,262 9.219.084 $ 9,219,084 $ 9,998,983 1,923,584 $ 11,922,567 $ 1,036,842 3,968,937 $ 5.005.779 FY2003-04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 For the current reporting year, no portion of the Village's net assets is subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($3,968,937) may be 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. Governmental activities. Financial activities for the fiscal year are reported below. Key indicators, including revenues and expenditures by category are presented herein for review: 2004 Net Assets: September 30, 2004 For FY 2004, property tax revenues increased some 23.7% or $1,035,495 more than the $4,362,922 recorded in the previous fiscal year. This increase results from an overall increase in assessed values as well as recovery of delinquent taxes from the previous two fiscal years. Continued on next page 6 Business- Governmental type Category activities activities TOTAL Revenues= Program revenues: Charges for services $ 1,558,571 $ 2,009,901 $ 3,568,492 Operating grants & Contributions 89,545 89,545 Capital grants and Contributions - General Revenues: Property taxes $ 5,398,417 $ $ 5,398,417 Other taxes 1,213,775 1,213,775 Grants and contributions not Restricted to specific programs 1,442,274 1,442,274 Other 523,421 (194,357) 329,064 Total Revenues 10,226,003 $ 1,815,544 $ 12,041,547 Expenses= General government $ 3,517,307 $ $ 3,517,307 Public safety 3,699,805 3,699,805 Highways / Streets 1,409,982 1,409,982 Sanitation / Stormwater - 1,635,994 1,635,994 Economic development - - - Culture & recreation 2,488,378 2,488,378 Interest on Long-term Debt 186,174 186, ] f Total Expenses $ 11,301,646 $ 1,635,994 $12,937 -0 Increase in net assets Before transfers (1,075,643) 179,550 (896,093) Transfers - Increase in Net Assets $ (1,075,643) $ 179,550 $ (896,093) Net assets on October 1, 2003 $ 5,140,362 $ 761,511 $ 5,901,873 Net Assets: September 30, 2004 For FY 2004, property tax revenues increased some 23.7% or $1,035,495 more than the $4,362,922 recorded in the previous fiscal year. This increase results from an overall increase in assessed values as well as recovery of delinquent taxes from the previous two fiscal years. Continued on next page 6 FY2003-04 Financial Report Transmittal nth Management's Discussion & Analysis .February 4 2005 Expense & Program Revenues - Governmental Activities �eep�es EOe�5� Thousands S''s-00© Soso" S o" S1,00" M M General government itpubfic safety BRIghways t Streets Manitat onn 1 Economic development ® Culture & recreation 0Interest on tang -term debt 0 Total Revenues by Source — CovermuenW Aei ivi ies grants & contributions -not restricted 14 °!o other taxes 12% capital grants \-operating grants 0% 1% 7 FY2003-04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 For the most part, increases in expenses closely paralleled inflation and growth in the demand for services. However, the Village continues to experience a significant number of liability and other claims reflected in the Risk Management Internal Service Fund. From FY 2003 to FY 2004, the loss experience reduced from 24 to 18 claims; however, the individual costs of those claims increased dramatically. For FY'03, total loss costs incurred were $144,344 compared to $307,353 for FY'04, an increase of $163,009 or 113% more. Of the 24 claims opened in FY 2003, only one remains outstanding. For FY'04, 18 claims were initiated and 15 remained active as of fiscal year end. Reserves for these outstanding liabilities increased $218,474 to $224,914. The Administration continues to monitor these experiences and losses, implementing training programs and taking preventive measure to reduce the Village's liability exposures.. Business-type activities. Business-type activities increased the Village's net assets by $179,549 accounting for 23.8% of the total growth in the government's net assets. Key elements related to this increase include the following= ✓ Recovery of FEMA- related and authorized losses; ✓ Continued productivity improvements relating to dumping processed at the County - operated facility (this program was previously managed by Village staff, but due to County - imposed restrictions, Village staff are no longer authorized to sort debris at Public Works. Staff implemented new procedures to efficiently move trash from the Village to the disposal sites; ✓ The Sanitation fund made an investment in new equipment required to expedite trash removal, funding for which originated from increased user fees approved by the Village Council. Financial Analysis of the Government's Funds As noted earlier, Miami Shores Village uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the governmental funds 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 Village's financing requirements. In particular, the unreserved fund balance may serve as a useful indicator of the governments 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 year, the governmental funds for Miami Shores Village reported combined ending fund balances of $8,227,590, a $4,154,283 increase over FY 2003. Of this amount, $1,714,358 reflects unreserved fund balance, which is available for spending at the government's FY2003-04 Financial Report Transmittal with Management's Discussion &Analysis February 4, 2005 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 contacts or encumbered fiscal obligations (outstanding purchase orders) valued at $472,889; 2) reserved $20,080 for prepaid assets; 3) reserves for construction at $4,586;914; 4) reserves for transportation-related projects funded by CITT proceeds ($1,354,363); and 5) reservations for special projects ($78,986). The general fund is the primary operating fund of the Village. At the end of the current fiscal year, the unreserved fund balance for the general fund was $1,131,249. 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 12.5% of the total general fund expenditures, while total fund balance represents 13.2% of that same amount. The value of the Village's fund balance decreased by $197,390 during the fiscal year. Key factors associated with this reduction are as follows: • A supplemental $125,000 was transferred out from the General to Risk Management Fund, to partially offset the previously accumulated deficit. • Management fees transferred into the General from Enterprise Funds were temporarily suspended in FY'04 to allow for additional capital investments in the latter funds. This resulted in a $38,775 revenue shortfall. • The interfund liability between the Debt Service and General Funds which was created to clear the initial debt payment was cleared, valued at $33;615. 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 $941,060 a $179,549 increase in net asset values. The increased equity results from complete cost recoveries on equipment purchased prior to FY 1998. 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 uniform time frames related to property tax levies. The balanced budgets may be revised throughout the year. The Village's code allows for department level budget transfers without council approval; however, department and fund total changes require Council-approved budget amendments adopted by resolution. The Village's policy is to adopt the budget following the second public hearing of each fiscal year, held in September for an October 1A 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 2004, the difference between the adopted and amended budgets relate to the following: • Budget Amendment #1 provides for the reappropriation of reserved fund equity for encumbrance and prepaid asset funding ($456,057) • Budget Amendment #2 provided for revisions: • Additional funding in the Office of the Village Attorney required as a result of a significantly larger number of litigation and claims against the Village ($160,250); • Increased funding to the Unclassified Department to pay for an unusually large number of employee departments, specifically, distribution of accumulated leave accounts for unused vacation and sick leave ($56,436) • Increase revenue budget for excise taxes, specifically Franchise Fees for Electricity, Gas and Public Service Taxes received from Electricity, Simplified telecommunications and gas ($30,500) 9 FY2003-04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 • Informal Budget Amendments — Law Enforcement Trust Fund amendments presented by the Police Chief, requesting authorization to disburse reserve funds for police-related expenditures. 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 $7,780;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: ✓ 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) NIIAMI SHORES VILLAGE Capital Assets (Net of depreciation) 2004 Business- Government type Classification activities activities TOTAL Land $ 718,531 $ $ 718,531 Building & System 2,053,556 - 2,053,556 Improvements other Than Buildings 1,429,564 1,429,564 Machinery & Equipment 1,336,393 1,036,842 2,373,235 Infrastructure - - Construction in progress 657,483 - 657,483 TOTAL 6.853.010 1.036.842 $ 7.889,852 Additional information on Miami Shores' capital assets may be found in Note 5 on Page 36 of this report. Long-term debt. At the end of the fiscal year, Miami Shores Village had total bonded debt outstanding of $4,810,000. Of this amount. $3,030,000 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 ($500,000). 10 FY2003 -04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 MIAMI SHORES VILLAGE Outstanding Debt General Obligation, Revenues, Bonds and Other Financing Instruments Business-type Governmental activities activities TOTAL Classification 2004 2004 2004 2003 2004 2003 General obligation bond $ 7,900,413 $ 2,970,000 $ $ $ 7,900,413 $ 2,970,000 Special assessment debt (w/Village commitment) 871,868 950,000 871,868 950,000 Revenue bonds Other debt 614,000 730,000 614,000 730,000 TOTAL $ 9,386,281 $ 4,650,000 $ - $ - $ 9,386,281 $ 4,650,000 Miami Shores Villages' total debt increased $4,736,281 during the current fiscal year. This increase is directly related to the sale of the $5,000,000 General Obligation Bond, Series 2004 for the Doctors Charter School of Miami Shores. 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 $59,372,139 which continues to exceed the value of all outstanding debt as of the September 30, 2004. Additional information on the Village's long-term debt may be found in Note 6 on Pages 37-39 of this report. Economic Factors and Next Year's Budeets 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. 11 FY2003 -04 Financial Report Transmittal with Management's Discussion & Analysis February 4, 2005 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 12 BASIC FINANCIAL STATEMENTS MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF NET ASSETS ASSETS Cash and cash equivalents Receivables, net Due from pension trust funds Deferred charges Prepaids Internal balances Inventories Other assets Net pension asset Capital assets not being depreciated Capital assets being depreciated, net Total assets LIABILITIES Accounts payable and accrued liabilities Unearned 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 SEPTEMBER 30, 2004 Business - Governmental type Activities Activities Total $ 6,576,299 $ 589,104 $ 7,165,403 895,351 603,688 1,499,039 25,254 - 25,254 88,535 - 88,535 148,332 - 148,332 367,266 (367,266) - 64,463 30,726 95,189 175 - 175 16,567 - 16,567 1,376,014 - 1,376,014 5,476,996 1,036,842 6,513,838 15,035,252 1,893,094 16,928,346 556,803 88,728 645,531 37,355 810,697 848,052 17,183 - 17,183 360,209 52,609 412,818 9,998,983 - 9,998,983 10,970,533 952,034 11,922,567 2,055,725 1,036,842 3,092,567 280,180 - 280,180 1,354,363 - 1,354,363 4,586,914 - 4,586,914 212,586 - 212,586 462,191 - 462,191 (4,888,241) (95,782) (4,984,023) $ 4,064,719 $ 941,060 $ 5,005,779 See notes to basic financial statements. -13- A W �i a O U] F-' U w E� w w Q H 0 0 N O M Qi W Q� W H w Q A w x w a U w N 00 N oo rt O --• 00 00 l- l- M M lO 01 M '-+ V"1 �I N 0\ 00 l0 M 00 O 00 00 r) b9 N N 0000 V) O 000 l� lD v 01 N M N N d' Q\ 69 — .-+ V'1 to � y Cd z o ¢ cd C7 � � O �i El rA O ti) bUD U Cd 42 U v� 0l N ti N W i i i i i I i 6s N N 00 O .--i 00 00 [\ M M lO Cl N 1p 01 00 l0 M N d O 00 00 tr) cq -I C% y) i i i i N M N te) OMO O N kr) 00 00 O O1 l0 00 b9 N N 0000 V) O 000 l� lD M 01 to N N d' l� 7t — .-+ V'1 to 00 IT C) � CI\ in MN N M N dam• in M OOi O l� N N 00 ct to O O 00 l-- r` M 00 0\ M l0 0\ 01 00 1p .� r••� 01 O 00 00 O N 1p O t .•••a M M Cl M W) to _ 1�0 00 O 0\ N M N 01 OMO O N n 00 O O1 l0 N N 0000 V) O 000 l� lD M 01 00 M N d' M l0 .-+ V'1 00 IT o CI\ M M N M N dam• M OOi O C) cli 69 69 L) W r- O O O N 00 O O cq3 Cl M W) to _ 1�0 00 O 0\ o1 cN Cd S 0 L+ 0; o 00 M to V'1 O N tr) d' CN — ~ .� .� M M M o H o 0 H 0 H � C� .,:F W C 00 " a� C7 It t•p O O I� to M d r` M N 0\ 00 .--� O h M 00 M N M W) C` N O ct U M ct 1p M N N o kn O- O N r+ o; •~ y 00 -kr .D Ci N N cd U ccf 0 U 0 07 Cld 0\ 00 o 'C:t Cd � C) cli 69 L) W cq3 Cl L. co w cN Cd S 0 L+ 0; o 0 to 0 N 3 .fl .� .� 000 o rn It o H o 0 H 0 H oC7aaUcnrio .,:F W C 00 " a� C7 It t•p O 1p pa , tw 00 .--� O h GS U M ct O 0 o U N N r+ •~ y to 0 .D 00 .-a 0% "t N U i a> O (:, l0 - > - � rn ct3 co cn 1p 01 00 W) r- M A 10 N N c 1p 01 y ,0 0 U n cd cl H - 0 0 Ci N N cd U ccf 0 U 0 07 Cld o 'C:t Cd C) cli L) cq3 Cl co w cN Cd S 0 L+ 0; o 0 to 0 N 3 .fl .� .� o H o 0 H 0 H oC7aaUcnrio C7 pa Ci N N cd U ccf 0 U 0 07 MIAMI SHORES VILLAGE, FLORIDA ASSETS Cash and cash equivalents Receivables, net Due from other funds Prepaid costs Inventories Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued liabilities Due to other funds Deferred revenues Other liabilities Total liabilities Fund balances: Reserved for: Prepaid costs Encumbrances Inventories Debt service Law enforcement Transportation Construction Unreserved, reported in: General fund Special revenue funds Capital projects funds Total fund balances Total liabilities and fund balances BALANCE SHEET GOVERNMENTALFUNDS SEPTEMBER 30, 2004 $ 167,367 $ - $ - $ 337,149 $ 504,516 Other Total 639,526 Excise 2nd Ave Governmental Governmental General Tax Rehabilitation Funds Funds 26,525 $ 450,986 $ - $ 832,099 $ 5,615,412 $ 6,898,497 171,334 194,720 - 391,934 757,988 761,105 - - 825,034 1,586,139 26,525 - 20,604 88,953 136,082 32,430 - - - 32,430 $ 1,442,380 $ 194,720 $ 852,703 $ 6,921,333 $ 9,411,136 $ 167,367 $ - $ - $ 337,149 $ 504,516 46,754 - - 592,772 639,526 37,355 - - - 37,355 700 - - 1,049 1,749 252,176 - - 930,970 1,183,146 26,525 - 20,604 - 47,129 119,831 - - 120,948 240,779 32,430 - - - 32,430 - - - 280,180 280,180 - - - 212,586 212,586 - - - 1,325,643 1,325,643 4,586,914 4,586,914 1,011,418 - - - 1,011,418 - 194,720 - (1,887) 192,833 - - 832,099 (534,021) 298,078 1,190,204 194,720 852,703 5,990,363 8,227,990 $ 1,442,380 $ 194,720 $ 852,703 $ 6,921,333 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 Net pension asset is not reported in the funds Net assets of governmental activities See notes to basic financial statements. -15- 6,545,460 (9,733,538) (991,940) 16,747 $ 4,064,719 MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2004 Excess (deficiency) ofrevenues over expenditures (2,050,605) 1,752,520 (102,633) Other Total Other financing sources (uses): Excise 2nd Ave Governmental Govemmental Bonds issued General Tax Rehabilitation Funds Funds Revenues: - - - (9,587) (9,587) Taxes and fees $ 4,042,656 $ 1,213,983 $ - $ 831,161 $ 6,087,800 Public service taxes - 538,537 - - 538,537 Licenses and permits 645,238 - - - 645,238 Intergovernmental 1,164,631 - - 277,643 1,442,274 Charges for services 653,943 - - - 653,943 Fines and forfeitures 253,121 - - - 253,121 Miscellaneous 224,528 - - 59,696 284,224 Interest 2,249 - 8,099 33,015 43,363 Contributions - - - 49,970 49,970 Confiscated property - - - 31,697 31,697 Total revenues 6,986,366 1,752,520 8,099 1,283,182 10,030,167 Expenditures: Current: General government 2,114,666 - 502 520,747 2,635,915 Public safety 3,553,207 - - 32,492 3,585,699 Public services 1,232,009 - - - 1,232,009 Culture and recreation 2,056,544 - - 25,674 2,082,218 Capital outlay 57,022 - - 940,434 997,456 Debt service: Principal 22,175 - 78,132 153,825 254,132 Interest 1,348 - 32,098 241,261 274,707 Total expenditures 9,036,971 - 110,732 1,914,433 11,062,136 Excess (deficiency) ofrevenues over expenditures (2,050,605) 1,752,520 (102,633) (631,251) (1,031,969) Other financing sources (uses): Bonds issued - - 5,000,000 5,000,000 Discounts on issued bonds - - - (9,587) (9,587) Transfers in 1,978,213 - 131,000 2,109,213 Transfers out (125,000) (1,754,378) - (34,001) (1,913,379) Total other financing sources (uses) 1,853,213 (1,754,378) - 5,087,412 5,186,247 Net change in fund balances (197,392) (1,858) (102,633) 4,456,161 4,154,278 Fund balances, beginning 1,387,596 196,578 955,336 1,534,202 4,073,712 Fund balances, ending $ 1,190,204 $ 194,720 $ 852,703 $ 5,990,363 $ 8,227,990 See notes to basic financial statements. -16- MUM SHORES VILLAGE, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FISCAL YEAR ENDED SEPTEMBER 30, 2004 Amounts reported for governmental activities in the statement of activities (Page 16) are different because: Net change in fund balances - total governmental funds (Page 16) $ 4,154,278 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 $ 682,131 Depreciation expense (excluding depreciation on internal service funds) 617,642 Net adjustment 64,489 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 funds. Neither transaction, however, has any effect on net assets. Debt issued: G.O. bond payable 4,990,413 Principal payments: General obligation bonds 60,000 Revenue notes payable 194,132 254,132 Net adjustment (4,736,281) Some expenses reported in the statement of activities do not require the use of current fmancial resources and, therefore, are not reported as expenditures in governmental funds. The details of the difference are as follows: Allocation of internal service fund's net loss (515,781) Workers compensation 16,741 Decrease in net pension asset (1,115) Compensated absences 17,880 Other item (75,854) Change in net assets of governmental activities (Page 14) $ 1,075,643 See notes to basic financial statements. -17- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS SEPTEMBER 30, 2004 See notes to basic financial statements. -18- Business -type Activities - Enterprise Funds Governmental Stormwater Activities - utility Internal (a Nonmajor Service Sanitation Fund ) Totals Funds ASSETS Current assets: Cash and cash equivalents $ 458,893 $ 130,211 $ 589,104 $ (322,198) Receivables, net 559,135 44,553 603,688 137,361 Prepaids - - - 12,250 Due from other funds - - - 88,452 Inventories 30,727 - 30,727 32,033 Total current assets 1,048,755 174,764 1,223,519 (52,102) Noncurrent assets: Capital assets not being depreciated - - - 7,127 Capital assets being depreciated, net 893,024 143,818 1,036,842 300,605 Total noncurrent assets 893,024 143,818 1,036,842 307,732 Total assets 1,941,779 318,582 2,260,361 255,630 LIABILITIES Liabilities: - Accounts payable and accrued liabilities 79,146 9,582 88,728 67,725 Due to other funds 291,471 75,796 367,267 642,545 Deferred revenue 764,891 45,806 810,697 - Total current liabilities 1,135,508 131,184 1,266,692 710,270 Non - current liabilities: Compensated absences 51,105 1,504 52,609 30,635 Estimated insurance claims payable - - - 506,665 Total non - current liabilities 51,105 1,504 52,609 537,300 Total liabilities 1,186,613 132,688 1,319,301 1,247,570 NET ASSETS Invested in capital assets 893,024 143,818 1,036,842 307,732 Unrestricted (deficit) (137,858) 42,076 (95,782) (1,299.672) Total net assets $ 755,166 $ 185,894 $ 941,060 See notes to basic financial statements. -18- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2004 Business -type Activities - 485,445 Enterprise Funds Governmental Stormwater Activities - Utility Internal (a Nonmajor Service Sanitation Fund ) Totals Funds Charges for services $ 1,844,807 $ 165,094 $ 2,009,901 $ 1,098,574 Operating expenses: Administrative and general 485,445 48,123 533,568 487,296 Personnel expenses 729,621 51,915 781,536 237,998 Depreciation 107,376 21,206 128,582 127,474 Contractual services 164,541 27,767 192,308 11,481 Insurance premiums - - - 667,504 Insurance claims - - - 134,745 Total operating expenses 1,486,983 149,011 1,635,994 1,666,498 Operating income (loss) 357,824 16,083 373,907 (567,924) Non - operating income: Interest income 371 1,106 1,477 5,226 Income (loss) before transfers 358,195 17,189 375,384 (562,698) Transfers in - - - 46,917 Transfers out (154,167) (41,667) (195,834) - Change in net assets 204,028 (24,478) 179,550 (515,781) Net assets, beginning 551,138 210,372 761,510 (476,159) Net assets, ending $ 755,166 $ 185,894 $ 941,060 L___(991,940) See notes to basic financial statements. -19- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2004 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 (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 Prepaids 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 (used) by operating activities Business -type Activities - 21,206 Enterprise Funds Governmental Stormwater Activities - Utility Internal (a Nonmajor Service Sanitation Fund ) Totals Funds $ 2,068,198 $ 148,814 $ 2,217,012 $ 1,044,192 (599,166) (186,217) (785,383) (1,183,533) (729,621) 51,915 (677,706) - 739,411 14,512 753,923 (139,341) - - - 46,917 (154,167) (41,667) (195,834) - (154,167) (41,667) (195,834) 46,917 (268,652) (33,342) (301,994) - 371 1,106 1,477 5,226 316,963 (59,391) 257,572 (87,198) 141,930 189,602 331,532 (235,000) $ 458,893 $ 130,211 $ 589,104 $ (322,198) $ 357,824 $ 16,083 $ 373,907 $ (567,924) 107,376 21,206 128,582 127,474 (87,997) (26,051) (114,048) (41,972) 324 - 324 (12,250) 9,234 917 10,151 - 13,402 - 13,402 1,334 7,091 (6,497) 594 23,362 51,105 - 51,105 30,635 100,000 - 100,000 300,000 181,052 8,854 189,906 - $ 739,411 $ 14,512 $ 753,923 $ (139,341) See notes to basic financial statements. -20- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2004 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/brokers Accrued interest Other assets Total assets LIABILITIES AND NET PLAN ASSETS Liabilities: Accounts payable Due to other funds DROP liability Deposits held in trust Total liabilities Net assets held in trust for pension benefits See notes to basic financial statements. -21- Pension Trust Agency Funds Trust $ 202,058 $ - - 93,004 10,851,540 - 1,466,158 - 1,081,754 - 2,017,767 - 1,058,909 - 53,250 - 148,834 - 66,473 - 103 - 16,946,846 93,004 15,800 - 25,254 - 272,999 - - 93,004 314,053 93,004 $ 16,632,793 $ - MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2004 ADDITIONS Contributions: City Employees 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. -22- Pension Trust Funds $ 167,305 300,516 467,821 719,389 304,983 158,382 (120,566) 1,062,188 1,530,009 685,371 83,816 2,080 771,267 758,742 15,874,051 $ 16,632,793 NOTES TO BASIC FINANCIAL STATEMENTS MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2004 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. The more significant of the Village's accounting policies are described below. a. Financial Reporting Entity The financial statements were prepared in accordance with government accounting standards 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. 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. -23- 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 (Continued) 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 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. 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. -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) 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 956' and 103`d 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 Utility 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. 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. -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) 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 ". 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. -26- 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 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." 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. -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 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 2004. 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. 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) 6. Compensated Absences (Continued) 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. 7. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight -line 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, 2004, 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, 2003, upon which the 2003 -2004 levy was based was approximately $490,000,000. -29- 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) 8. Property Taxes (Continued) 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 2003 -04 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. 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 -30- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 2. DEPOSITS AND INVESTMENTS (Continued) Deposits (Continued) 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 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, 2004, 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, 2004 are stated at carrying value, which is equal to fair value and include: Category 1 Unrestricted assets: Cash and cash equivalents $ 5,874,688 Investments 620,984 Total 6,495,672 Investments not subject to risk categorization: State Board Investment Pool 669,732 $ 7,165,403 -31- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 2. DEPOSITS AND INVESTMENTS (Continued) Investments (Continued) The following is a reconciliation of deposits and investments to the statement of net assets: Deposits $ 6,169,750 Investments Other 17,820,093 Fund $ 23,989,843 Primary government: $ 761,105 $ 46,754 Cash and cash equivaents $ 7,165,403 Fiduciary funds: 568,546 - Cash held with trustee, agency fund - 93,004 Investments, pension trust funds 155,417 16,529,378 Cash and cash equivalents, pension trust funds 20,000 202,058 Total fiduciary funds 46,754 16,824,440 Total government $ 23,989,843 NOTE 3. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Individual interfund receivables and payables at September 30, 2004 were as follows: 9W Due from Due to Other Other Fund Funds Funds General Fund $ 761,105 $ 46,754 Special Revenue Funds: Local Option Gas Tax Fund 568,546 - Hurricane Fund - 150,972 General Special Revenue Fund 155,417 - Police Forfeiture Fund 20,000 - Debt Service Fund 46,754 - Capital Projects Funds: Capital Improvement Fund - 106,716 Aquatic Facility Fund 34,317 335,084 Charter High School Fund - - Enterprise Funds: Stormwater Fund - 75,796 Sanitation Fund - 291,471 Internal Service Funds: Risk Management Fund 88,452 129,135 Fleet Maintenance Fund - 513,410 Police Pension Trust Fund - 25,254 Total $ 1,674,591 $ 1,674,591 9W MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 3. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (Continued) Interfund transfers at September 30, 2004 were as follows: NOTE 4. ACCOUNTS RECEIVABLE Accounts receivable as of September 30, 2004 for the Village's major and nonmajor funds in the aggregate, including the applicable allowance for uncollectible amounts are as follows: Nonmajor Transfer In Governmental General 2nd Ave. Risk Transfer Out Fund Rehab Nonmajor Sanitation Total General fund $ - $ - $ 125,000 $ 100,000 $ 225,000 Excise tax 1,754,378 - - - 1,754,378 Nonmajor governmental funds 28,001 - - - 28,001 Stormwater 41,667 - - - 41,667 Sanitation 154,167 - - - 154,167 Unbilled $ 1,978,213 $ - $ 125,000 $ 100,000 $ 2,203,213 NOTE 4. ACCOUNTS RECEIVABLE Accounts receivable as of September 30, 2004 for the Village's major and nonmajor funds in the aggregate, including the applicable allowance for uncollectible amounts are as follows: Nonmajor -33- Excise Governmental Storm- Risk General Tax Funds Sanitation water Management Total Receivable: Billed $ - $ - $ 398,126 $ 683,478 $ 44,553 $ 137,363 $ 1,263,520 Unbilled 194,720 - - - 194,720 Taxes 171,334 - - - - - 171,334 Gross receivables 171,334 194,720 398,126 683,478 44,553 137,363 1,629,574 Less allowance for uncollectibles - - 6,192 124,343 - - 130,535 Net total receivable $ 171,334 $ 194,720 $ 391,934 $ 559,135 $ 44,553 $ 137,363 $ 1,499,039 -33- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 5. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2004 was as follows: Beginning Ending Balance Additions Deductions Balance Governmental activities: Capital assets not being depreciated: Land $ 718,531 $ - $ - . $ 718,531 Construction in progress 444,494 212,989 - 657,483 Total capital assets not being depreciated 1,163,025 212,989 - 1,376,014 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- 5,484,655 63,500 - 5,548,155 3,470,454 100,810 - 3,571,264 5,664,464 304,832 (10,356) 5,958,940 14,619,573 469,142 (10,356) 15,078,359 2,734,990 102,126 - 2,837,116 2,086,252 55,448 - 2,141,700 4,045,363 587,540 (10,356) 4,622,547 8,866,605 745,114 (10,356) 9,601,363 5,752,968 (275,972) - 5,476,996 $ 6,915,993 $ (62,983) $ - $ 6,853,010 $ 1,409,158 $ 301,347 $ 65,000 $ 1,645,505 1,409,158 301,347 65,000 1,645,505 545,081 128,582 65,000 608,663 864,077 172,765 - 1,036,842 $ 864,077 $ 172,765 $ - $ 1,036,842 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 $ 12,353 Public safety 74,117 Public services 401,467 Parks and recreation 129,705 Capital assets held by the government's internal service funds are One Year charged to the various functions based on their usage of assets 135,485 Total depreciation expense - governmental activities $ 753,126 Business -type activities: $ - Sanitation $ 107,376 Stormwater 21,206 Total depreciation expense - business -type activities $ 128,582 NOTE 6. LONG -TERM LIABILITIES a. Summary of Long -Term Liabilities The following is a summary of changes in long -term liabilities of the Village for governmental activities for the year ended September 30, 2004. Governmental activities: General obligation bond payable - 2004 Less issuance discount General obligation bond payable - 1999 Line of credit Revenue note payable - 2003 Revenue note payable - 2003 Subtotal Compensated absences Estimated health insurance claims Workers' compensation claims Beginning Ending Due Within Balance Additions Reductions Balance One Year $ - $ 5,000,000 $ - $ 5,000,000 $ 95,000 - (9,587) - (9,587) - 2,970,000 - 60,000 2,910,000 65,000 400,000 - - 400,000 - 950,000 - 78,132 871,868 84,209 330,000 - 116,000 214,000 116,000 4,650,000 4,990,413 254,132 9,386,281 360,209 254,336 261,209 (243,330) 272,216 - 506,665 153,000 (153,000) 506,665 - 210,771 - 16,741 194,030 - $ 5,621,772 $ 5,404,622 $ (125,457) $ 10,359,192 $ 360,209 -35- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 6. LONG -TERM LIABILITIES (Continued) a. Summary of Long -Term Liabilities (Continued) 2004 General Obligation Bonds The 2004 General Obligation bonds are issued by the Village of Miami Shores. Principal is due annually over 30 years at various amounts from $95,000.00 in 2005 to a final payment of $305,000.00 in 2033. The bonds bear interest at variable rates ranging from 3% to 5 %, payable semi- annually. 1999 General Obligation Bonds The 1999 General Obligation bonds are issued by the Florida Municipal Loan Council. Principal Interest Total Fiscal year ended September 30: to 5.00 %, payable semi- annually. 2005 $ 95,000 $ 222,930 $ 317,930 2006 100,000 220,080 320,080 2007 100,000 217,080 317,080 2008 105,000 214,080 319,080 2009 110,000 210,930 320,930 2010 -2019 1,325,000 1,876,060 3,201,060 2020 -2029 2,030,000 1,158,350 3,188,350 2030 -2033 1,135,000 145,250 145,250 Total $ 5,000,000 $ 4,264,760 $ 8,129,760 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 $65,000 in 2005 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. Principal Interest Total Fiscal year ended September 30: 2005 $ 65,000 $ 140,334 $ 205,334 2006 65,000 137,832 202,832 2007 70,000 135,232 205,232 2008 75,000 132,432 207,432 2009 -2013 410,000 612,412 1,022,412 2014 -2018 525,000 504,626 1,029,626 2019 -2023 660,000 361,950 1,021,950 2024 -2028 845,000 179,250 1,024,250 2029 195,000 9,750 204,750 Total $ 2,910,000 $ 2,213,818 $ 5,123,818 -36- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 6. LONG -TERM LIABILITIES (Continued) a. Summary of Long -Term Liabilities (Continued) Line of Credit 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 on demand. The line is secured by investments equaling the outstanding balance. The outstanding balance at September 30, 2004 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 local option gas tax proceeds and matures on June 1, 2013. Fiscal year ended September 30: 2005 2006 2007 2008 2009-2013 Total Principal Interest Total $ 84,209 $ 29,399 $ 113,608 87,195 26,413 113,608 90,287 23,321 113,608 93,489 20,119 113,608 516,688 48,449 565,137 $ 871,868 $ 147,701 $ 1,019,569 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: 2005 2006 Total -37- Principal Interest Total $ 116,000 $ 4,263 $ 120,263 98,000 1,419 99,419 $ 214,000 $ 5,682 $ 219,682 MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 7. COMMITMENTS AND CONTINGENCIES a. Legal Matters 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 $194,030 as of September 30, 2004. The Village makes annual payments to Miami -Dade County Risk Management on a reimbursable basis. 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. -38- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 8. POST - RETIREMENTS BENEFITS (Continued) Plan Description (Continued) 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. 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 2004 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, 2004. 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, 2004, 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, 2004, 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: 2004 2003 Unpaid claims, beginning $ 506,665 $ 506,665 Incurred claims (including IBNR's) 153,000 971,946 Claim payments and disbursements (153,000) (971,946) 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 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. 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. Other The General Employees Retirement Plan does not issue separate stand -alone financial statements, therefore, included below is the Statement of Fiduciary Net Assets and the Statement of Changes in Net Assets as of and for the fiscal year ended September 30, 2004. Statement of Fiduciary Net Assets Assets: Cash and cash equivalents Investments, at fair value Receivable Total assets Liabilities Net assets held in trust for pension benefits -41- $ 74,647 7,032,051 92,713 7,199,411 5,683 $ 7,193,728 MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. EMPLOYEE RETIREMENT SYSTEM (Continued) a. General Employees' Retirement Plan (Continued) Statement of Changes Year Ended September 30, 2004 ADDITIONS Contributions $ 165,095 Net investment income 440,352 Total additions 605,447 DEDUCTIONS Pension benefits 216,288 Refunds 48,999 Other 902 Total deductions 266,189 Changes in net assets 339,258 Net assets, beginning 6,854,470 Net assets, ending $ 7,193,728 b. Police Off=icers' 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. EPA MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. EMPLOYEE RETIREMENT SYSTEM (Continued) b. Police Officers' Retirement Plan (Continued) 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. Annual Pension Cost and Net Pension Obligation (Asset) As of October 1, 2003, the date of the latest actuarial valuation, the Village's net pension obligation (asset) was as follows: Annual required contributions (ARC) $ 197,498 Interest on net pension asset (1,429) Adjustment to ARC 2,544 Annual pension cost 198,613 Actual contribution 197,498 Change in net pension obligation (asset) 1,115 Net pension obligation (asset), beginning (17,862) Net pension obligation (asset), ending $ (16,747) The annual required contributions for the current year were determined as part of the October 1, 2003 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 Net Pension Pension of APC Obligation Fiscal Year Ending Cost (APC) Contributed (Asset) 9/30/2001 $ 129,233 9/30/2002 134,228 9/30/2003 198,613 -43- 100.9% $ (19,094) 99.1% (17,862) 99.4% (16,747) MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. EMPLOYEE RETIREMENT SYSTEM (Continued) b. Police Officers' Retirement Plan (Continued) The Police Officers Retirement Plan does not issue separate stand -alone financial statements,. therefore, included below is the Statement of Fiduciary Net Assets and the Statement of Changes in Net Assets as of and for the fiscal year ended September 30, 2004. Statement of Fiduciary Net Assets Assets: Cash and cash equivalents Investments, at fair value Receivable Total assets Liabilities Net assets held in trust for pension benefits ADDITIONS Contributions Net investment income Total additions DEDUCTIONS Pension benefits Refunds Other Total deductions Changes in net assets Net assets, beginning Net assets, ending Statement of Changes in Net Assets Year Ended September 30, 2004 $ 127,411 9,497,327 122,697 9,747,435 308,370 $ 9,439,065 $ 302,726 621,836 924,562 469,083 34,817 1,178 505,078 296,317 9,142,748 $ 9,439,065 MIAMI SHORES VILLAGE, FLORIDA 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, 2003 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 36 19 Fully vested 74 25 Non - vested 3 _ 77 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. -45- THIS PAGE INTENTIONALLY LEFT BLANK REQUIRED SUPPLEMENTARY INFORMATION MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS Police Officer's Retirement System Year Annual Contribution Contribution Ended Required from from Percentage September 30, Contribution Employe State Contributed 2002 $ 127,821 $ 100,215 $ 39,864 109.0% 2003 132,996 102,803 39,564 99.1% 2004 197,498 167,305 53,849 99.4% 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, 2003 actuarial valuation. Police Officer's Retirement Svstem Valuation date 10/1/03 Actuarial cost method Frozen Entry Age (1) Amortization method N/A Remaining amortization period N/A Asset valuation method 5 year smoothed market Actuarial assumptions: 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. -46- MIAMI SHORES VILLAGE, F LORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND FISCAL YEAR ENDED SEPTEMBER 30, 2004 Charges for services: Physical environment 60,000 60,000 35,574 Variance with Police extra duty 165,735 179,735 193,342 Final Budget - Landscape maintenance Budeeted Amounts Actual Positive (1,494) Original Final Amounts (Negative Revenues: Total charges for services 923,369 937,369 885,573 Taxes: Property taxes, current and delinquent $ 4,858,191 $ 4,870,358 $ 4,042,656 $ (827,702) Licenses and permits: Business licenses- Village 68,303 68,303 102,563 34,260 Business licenses- County 23,506 23,506 23,290 (216) Building permits 294,933 334,933 485,202 150,269 Certificate ofreoccupancy 7,500 7,500 15,126 7,626 Other licenses and permits 56,400 72,150 42,227 (29,923) Total licenses and permits 450,642 506,392 668,408 162,016 Intergovernmental revenues: State shared revenues: State revenue sharing 248,401 248,401 276,160 27,759 Beverage licenses 1,000 1,000 1,317 317 Local government half cent sales tax 598,775 598,775 628,458 29,683 Gasoline Tax Rebate 5,000 5,000 8,792 3,792 Mobile Home License - - 119 119 Total intergovernmental revenues 853,176 853,176 914,846 61,670 Charges for services: Physical environment 60,000 60,000 35,574 (24,426) Police extra duty 165,735 179,735 193,342 13,607 Landscape maintenance 21,395 21,395 19,901 (1,494) Culture /recreation 676,239 676,239 636,756 (39,483) Total charges for services 923,369 937,369 885,573 (51,796) Fines and forfeitures: Court fines and costs 79,556 79,556 69,194 (10,362) School crossing guards 31,367 31,367 30,814 (553) Other 80,502 80,502 162,688 82,186 Total fines and forfeitures 191,425 191,425 262,696 71,271 Miscellaneous revenue: Rents 150,000 150,000 150,030 30 Other revenue 66,750 101,750 53,685 (48,065) Total miscellaneous revenue 216,750 251,750 203,715 (48,035) Interest 46,780 46,780 12,814 (33,966) Total revenues $ 7,540,333 $ 7,657,250 $ 6,990,708 $ (666,542) (Continued) -47- MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND (Continued) FISCAL YEAR ENDED SEPTEMBER 30, 2004 Variance 244,657 244,657 144,585 100,072 (Continued) -48- with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts (Negative Expenditures: Current: General government: Village council: Personnel services $ 95 $ 95 $ 95 $ - Operating expenses 7,013 7,013 4,327 2,686 7,108 7,108 4,422 2,686 Village attorney: Operating expenses 193,256 353,506 250,531 102,975 193,256 353,506 250,531 102,975 Village manager: Personnel services 223,168 223,168 169,506 53,662 Operating expenses 44,715 44,715 37,245 7,470 267,883 267,883 206,751 61,132 Village clerk: Personnel services 99,230 99,230 94,009 5,221 Operating expenses 35,905 37,535 31,214 6,321 135,135 136,765 125,223 11,542 Code enforcement: Personnel services 205,585 169,544 86,541 83,003 Operating expenses 39,072 75,113 58,044 17,069 244,657 244,657 144,585 100,072 (Continued) -48- MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND (Continued) FISCAL YEAR ENDED SEPTEMBER 30, 2004 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 (Negative) $ 203,635 $ 203,635 $ 182,616 $ 21,019 130,518 130,518 121,789 8,729 334,153 334,153 304,405 29,748 110,181 105,971 104,723 1,248 21,204 25,414 12,113 13,301 131,385 131,385 116,836 14,549 401,731 401,731 357,631 44,100 149,101 154,221 154,016 205 3,460 3,460 899 2,561 554,292 559,412 512,546 46,866 63,826 91,258 104,588 (13,330) 551,771 582,651 471,046 111,605 - 5,199 5,199 - 615,597 679,108 580,833 98,275 1,635,427 2,713,977 2,246,132 467,845 -49- (Continued) MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND (Continued) FISCAL YEAR ENDED SEPTEMBER 30, 2004 Public services: Parks: Personnel services 325,118 316,255 243,829 Variance Operating expenses 276,579 287,353 149,865 with 601,697 603,608 393,694 Final Street maintenance: Budget - Personnel services Budgeted Amounts Actual Positive 118,775 Original Final Amounts (Negative) Public safety: 574,833 574,833 405,905 Law enforcement: Public works administration: Personnel services $ 3,295,579 $ 3,294,822 $ 3,186,085 $ 108,737 Operating expenses 460,853 526,742 337,179 189,563 Capital outlay - - - - 19,150 3,756,432 3,821,564 3,523,264 298,300 School crossing guard: Personnel services 124,822 123,207 124,594 Personnel services 45,882 35,315 28,349 6,966 Operating expenses 1,733 12,300 1,595 10,705 45,987 47,615 47,615 29,944 17,671 Total public safety 3,804,047 3,869,179 3,553,208 315,971 Public services: Parks: Personnel services 325,118 316,255 243,829 72,426 Operating expenses 276,579 287,353 149,865 137,488 601,697 603,608 393,694 209,914 Street maintenance: Personnel services 242,724 197,724 78,949 118,775 Operating expenses 332,109 377,109 326,956 50,153 574,833 574,833 405,905 168,928 Public works administration: Personnel services 357,367 357,367 352,524 4,843 Operating expenses 117,347 117,347 103,040 14,307 474,714 474,714 455,564 19,150 Recreation maintenance: Personnel services 124,822 123,207 124,594 (1,387) Operating expenses 76,682 82,446 35,072 47,374 201,504 205,653 159,666 45,987 Total public services 1,852,748 1,858,808 1,414,829 443,979 (Continued) -50- MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND (Continued) FISCAL YEAR ENDED SEPTEMBER 30, 2004 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 Fund balances, ending 9,487,617 10,638,675 9,161,970 1,476,705 (1,947,284) (2,981,425) (2,171,262) 810,163 532,264 678,866 - (678,866) 2,263,059 2,302,559 1,978,213 (324,346) - - (125,000) (125,000) 2,795,323 2,981,425 1,853,213 (1,128,212) 848,039 - (318,049) (318,049) 1,398,308 1,398,308 1,387,594 (10,714) $ 2,246,347 $ 1,398,308 $ 1,069,545 $ 328,763 -51- Variance with Final Budget - Budgeted Amounts Actual Positive O_rig Final Amounts (Negative) $ 1,119,197 $ 1,095,720 $ 940,572 $ 155,148 659,207 684,000 629,014 54,986 4,000 4,000 - 4,000 1,782,404 1,783,720 1,569,586 214,134 289,036 289,036 267,099 21,937 69,365 71,664 60,192 11,472 54,590 52,291 50,924 1,367 412,991 412,991 378,215 34,776 2,195,395 2,196,711 1,947,801 248,910 9,487,617 10,638,675 9,161,970 1,476,705 (1,947,284) (2,981,425) (2,171,262) 810,163 532,264 678,866 - (678,866) 2,263,059 2,302,559 1,978,213 (324,346) - - (125,000) (125,000) 2,795,323 2,981,425 1,853,213 (1,128,212) 848,039 - (318,049) (318,049) 1,398,308 1,398,308 1,387,594 (10,714) $ 2,246,347 $ 1,398,308 $ 1,069,545 $ 328,763 -51- MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE EXCISE TAX FUND FISCAL YEAR ENDED SEPTEMBER 30, 2004 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 -52- 1,772,388 1,811,888 1,752,521 (59,367) (1,772,388 ) (1,811,888) (1,754,378) 57,510 - - (1,857) (1,857) 196,578 196,578 196,578 - $ 196,578 $ 196,578 $ 194,721 $ (1,857) Variance with Final Budget - Budaeted Amounts Actual Positive Original Final Amounts e ative $ 687,500 $ 703,438 $ 623,767 $ (79,671) 1,084,888 1,108,450 1,128,754 20,304 1,772,388 1,811,888 1,752,521 (59,367) 1,772,388 1,811,888 1,752,521 (59,367) (1,772,388 ) (1,811,888) (1,754,378) 57,510 - - (1,857) (1,857) 196,578 196,578 196,578 - $ 196,578 $ 196,578 $ 194,721 $ (1,857) MIAMI SHORES VILLAGE, FLORIDA NOTES TO BUDGETARY COMPARISON SCHEDULE FISCAL YEAR ENDED SEPTEMBER 30, 2004 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 1st. 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. EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended September 30, 2004, expenditures exceeded appropriations for personnel services in the Non - departmental and Recreation Maintenance departments (the legal level of budgetary control) of the general fund by $13,330 and $1,387, respectively. These over expenditures were funded by transfers in from other funds. -53- COMBINING AND INDIVIDUAL FUND STATEMENTS 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. Hurricane — This fund accounts for hurricane expenditures as well as FEMA reimbursements. Charter High — This fund accounts for the initial cost and transactions associated with the Charter High School. 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 Proiects 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. 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N N oo" ZA 1 6N9 00 N � V �Q y 0 7 0 � C C > H y N b0 p N LE > c E o> b ba w a"xi ,>° ca 0 C 8 a 0 •� 0 5 Q u p b ° w N Y 0 h .~0. c •o .a X. C N y b00 cod 9 . 0 0 ❑ D U O S U U A 0 .: W W O Z w w 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, 2004 ASSETS Current assets: Cash and cash equivalents Receivables, net Due from other funds Prepaids 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) -58- Risk Fleet Management Maintenance Total $ (101,850) $ (220,348) $ (322,198) 137,361 - 137,361 88,452 - 88,452 10,000 2,250 12,250 32,033 32,033 133,963 (186,065) 52,102 - 7,127 7,127 - 300,605 300,605 - 307,732 307,732 133,963 121,667 255,630 25,787 41,938 67,725 129,135 513,410 642,545 154,922 555,348 710,270 506,665 30,635 537,300 506,665 30,635 537,300 661,587 585,983 1,247,570 - 307,732 307,732 (527,624) (772,049) 1,299,673 $ (527,624) $ (464,317) $ 991,941 MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS INTERNAL SERVICE FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2004 Risk Fleet Management Maintenance Fund Fund Total Charges for services $ 986,321 $ 112,094 $ 1,098,415 Operating expenses: Insurance premiums 667,504 - 667,504 Claims 134,745 - 134,745 Administrative and general 161,686 563,609 725,295 Depreciation - 127,474 127,474 Debt service interest 8,011 3,470 11,481 Total operating expenses 971,946 694,553 1,666,499 Operating income (loss) 14,375 (582,459) (568,084 Non - operating income: Interest income 4,325 901 5,226 Income (loss) before transfers 18,700 (581,558) (562,858) Transfers in 8,309 38,608 46,917 Change in net assets 27,009 (542,950) (515,941) Net assets (deficit), beginning (554,633) 78,633 (476,000) Net assets (deficit), ending $ (527,624) $ (464,317) $ (991,941 -59- MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2004 Cash flows from operating activities: Cash received from customers, governments and other funds Cash paid to suppliers Net cash used by operating activities Cash flows from non - capital financing activities: Transfers in 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 revenue (loss) to net cash used by operating activities: Operating income (loss) Depreciation Adjustments to reconcile operating income (loss) to net cash used in by operating activities: Changes in operating assets and liabilities: (Increase) decrease in: Accounts receivable Prepaids Inventories Increase (decrease) in: Accounts payable and accrued liabilities Estimated insurance claims Due to other funds Net cash used by operating activities no Risk Fleet Management Maintenance Fund Fund Total $ 934,348 $ 109,844 $ 1,044,192 (971,584) (211,949) (1,183,533) (37,236) (102,105) (139,341) 8,309 38,608 46,917 4,325 (24,602) 901 5,226 (62,596) (87,198) (77,248) (157,752) (235,000) $ (101,850) $ (220,348) $ 322,198 $ 14,534 $ (582,459) $ (567,925) - 127,474 127,474 (41,971) - (41,971) (10,000) (2,250) (12,250) 1,334 1,334 201 23,161 23,362 - 30,635 30,635 - 300,000 300,000 $ (37,236) $ (102,105) $ 139,341 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 Investments: Common stocks Corporate bonds Mortgage backed securities U.S. Obligations U.S. Federal agencies Limited partnership Receivables: Due from brokers Accrued interest Other assets Total assets LIABILITIES AND NET ASSETS Liabilities: Accounts payable Due to other funds DROP liability Total liabilities Net assets held in trust for pension benefits SEPTEMBER 30, 2004 -61- General Police Employees Pension Pension Trust Trust Totals $ 127,411 $ 74,647 $ 202,058 6,230,729 4,620,811 10,851,540 824,968 641,190 1,466,158 614,465 467,289 1,081,754 1,180,504 837,263 2,017,767 616,486 442,423 1,058,909 30,175 23,075 53,250 84,719 64,115 148,834 37,875 28,598 66,473 103 - 103 9,747,435 7,199,411 16,946,846 10,117 5,683 15,800 25,254 - 25,254 272,999 - 272,999 308,370 5,683 314,053 $ 9,439,065 $ 7,193,728 $ 16,632,793 i MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2004 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 held in trust for pension benefits, beginning Net assets held in trust for pension benefits, ending -62- General Police Employees Pension Pension Pension Trust Fund Fund Funds $ 167,305 $ - $ 167,305 135,421 165,095 300,516 302,726 165,095 467,821 419,588 299,801 719,389 179,097 125,886 304,983 91,990 66,392 158,382 (68,839) (51,727) (120,566) 621,836 440,352 1,062,188 924,562 605,447 1,530,009 469,083 216,288 685,371 34,817 48,999 83,816 1,178 902 2,080 505,078 266,189 771,267 419,484 339,258 758,742 9,019,581 6,854,470 15,874,051 $ 9,439,065 $ 7,193,728 $ 16,632,793 MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FISCAL YEAR ENDED SEPTEMBER 30, 2004 Police Insurance Trust Agency Fund Balance Balance September 30, September 30, 2003 Additions Deductions 2004 ASSETS Cash held with trustee $ 86,844 $ 6,160 $ - $ 93,004 LIABILITIES Deposits held in trust $ 86,844 $ 6,160 $ - $ 93,004 -63- THIS PAGE INTENTIONALLY LEFT BLANK STATISTICAL SECTION A O U w w L7 � d W4 a un Z WZ W v� w Q O w W H H 4 19 o, o rn � 0 o rn � N N 69 U 0 N Cl) 69 v� M O 00 � N O \0 CIA 00 Eoa y On tn o0 00 0 a GS 0 00 0 � 0 m cd Do 00 � N � Goq U U y 0000 O\ .� C� a I�t N � y � GOCI rOr� -OR N 00 �O a � M M 69 " O l- U` p N Ki 69 U O O O O V., 4 19 � w 2 7 \ Qr) \ � c � m \ \ \ � ƒ 2 m ] / 7 k 2 $ - M % � m . ) / ( ON It \ � >1 Q \ — — � rA \ / q ? / \ / - � m P-0 / \ k m U) \ \ / / E � A � [ § m U m § « 2 E « .a � m t 2 C> �10 . . ( U @ m r GS ct 2 G / / W N \ \ MIAMI SHORES VILLAGE, FLORIDA GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION LAST TEN FISCAL YEARS (1) (1) Includes general fund only (excludes capital outlay). -66- Culture Fiscal General Public Public and Debt Year Government Safejy Service Recreation Service Total 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 3,314,738 1,522,246 1,871,604 10,713 8,626,121 2004 2,114,665 3,553,208 1,232,009 2,056,544 23,423 8,979,849 (1) Includes general fund only (excludes capital outlay). -66- 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. -67- Licenses Charges Fires Fiscal Property and Inter- for and Year Taxes Permits governmental Services ( *) Forfeitures Miscellaneous Total 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 2004 4,042,656 645,238 1,164,631 653,943 253,121 226,777 6,986,366 ( *) Sanitation services and fees transferred to newly created Enterprise Fund on 10/01/00. -67- 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. -68- % of Total Current % of Delinquent Total Total Tax Fiscal Tax Tax Levy Tax Tax Collection Year Levy Collections Collected Collections Collections to Lew 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% 2004 4,183,498 4,132,154 98.8% 14,001 4,146,155 99.1% Source: Miami Shores Village Finance Department and Miami -Dade County Property Appraisers Office. -68- MIAMI SHORES VILLAGE, FLORIDA ASSESSED VALUE OF TAXABLE PROPERTIES LAST TEN FISCAL YEARS Source: Miami -Dade County Property Appraisers Office. .• Real Personal Property Property Centrally Total Fiscal Assessed Assessed Assessed Assessed Year Value Value Value Value 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 2004 572,491,450 23,151,545 1,078,390 596,721,385 Source: Miami -Dade County Property Appraisers Office. .• MIAMI SHORES VILLAGE, FLORIDA PROPERTY TAX LEVIES LAST TEN FISCAL YEARS Source: Miami -Dade County Property Appraiser. -70- Total Fiscal County- Debt Tax Year Village Wide Service Fire MDCC Library School State Levies 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 27.515 2004 8.250 6.664 1.125 2.661 - - 8.787 0.636 28.123 Source: Miami -Dade County Property Appraiser. -70- MIAMI SHORES VILLAGE, FLORIDA DIRECT AND OVERLAPPING DEBT SEPTEMBER 30, 2004 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 -71- Percent Amount Net Applicable Applicable Debt to Name of to Name of Outstanding Government Government (1) $ 7,443,000 100.00% $ 7,443,000 (2) 221,554,000 0.40% 886,216 (3) 685,603,000 0.40% 2,742,412 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 -71- MIAMI SHORES VILLAGE, FLORIDA 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 -72- Per Capita Personal Income Unemployment Rate Miami- State Miami- State Fiscal Village Median Miami Dade of Nation- Dade of Nation - Year Population Age Shores County Florida wide Coun Florida wide 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 2004 10,385 37.7 34,129 26,594 28,523 30,413 6.6 5.3 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 -72- 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 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 31,830,638 336,685,471 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 2004 596,721,385 2,387,812 10,078,404 12,594,055 49,289,186 547,432,199 Sources: (1) Municipal Bank Deposit Records (2) Estimated Actual Values -73- MIAMI SHORES VILLAGE, FLORIDA MISCELLANEOUS INFORMATION SEPTEMBER 30, 2004 Date of incorporation January 1, 1932 Form of government Council /Manager Population as of September 30, 2004 10,385 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, 2004 48,645 Number of public swimming facilities 1 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 2 -74- MIAMI SHORES VILLAGE, FLORIDA PRINCIPAL TAXPAYERS SEPTEMBER 30, 2004 Taxpayer Publix Supermarket Boris Moroz /Phil Glassman Trust Tropical Chevrolet, Inc. Bujolo, Inc. Omar Cassola Village of Del Mar Development George and Nancy Bennett Bank of America, N.A. George and Maria Sirota Thomas and Sandra Chaille Property Location 9050 Biscayne Boulevard Shores Square, 9000 Block Biscayne Boulevard 8800 Biscayne Boulevard W algreen's Center, 9020 Biscayne Boulevard 9325 North Bayshore Drive Vacant Land on NE 105 Street 9500 Block NE Second Avenue, Two Residential Properties 9400 Block Biscayne Boulevard 9100 Block Biscayne Boulevard 1430 N.E. 101st Street 1600 N.E. 104th Street 9105 North Bayshore Drive Assessed Value Source: Miami -Dade County Property Appraiser Office -75- Assessed Value for 2004 $ 5,732,073 4,104,988 3,221,674 Percent of Total Village -Wide Assessment 1.001% 0.717% 0.563% 1,857,565 0.324% 1,615,135 0.282% 1,453,275 0.254% 1,436,675 0.251% 1,264,122 1,242,486 1,169,191 $ 23,097,184 $ 572,491,450 0.221% 0.217% 0.204% MIAMI SHORES VILLAGE, FLORIDA TEN LARGEST PUBLIC AND PRIVATE EMPLOYERS LOCATED IN MIAMI -DADE COUNTY, FLORIDA SEPTEMBER 30, 2004 Ten Largest Public Employers Miami -Dade County Public Schools 45,886 Miami -Dade County, Florida 32,000 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 Largest Private Employers University of Miami 9,079 American Airlines 20,100 Baptist Health Care Systems 18,900 Precision Response Corporation 11,700 UPS 7,500 BellSouth, Inc. 3,500 Camival Cruise Lines 3,400 Publix Supermarkets 2,018 Florida Power & Light Company 1,823 Mt. Sinai Medical Center Source: The Beacon Council - Research Department -76- 9,000 7,000 6,000 5,000 4,700 4,000 4,000 3,665 3,000 COMPLIANCE SECTION en n Accountants :, Advisors Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 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, 2004 and for the year then ended, which collectively comprise of the Village's basic financial statements and have issued our report thereon dated February 4, 2005. 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. 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. However, we noted other matters involving the internal control over financial reporting that we have reported to management in the accompanying schedule of findings. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Village's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the 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. -77- Rachlin Cohen & H0ltz 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 0 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 Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Page Two 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 February 4, 2005 -78- Rock ,hen M SRI Accountants Advisors 'oen olt 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, 2004 and for the year then ended, which collectively comprise of the Village's basic financial statements and have issued our report thereon dated February 4, 2005. 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 Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements. Disclosures in this report, which is dated February 4, 2005, 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, 2004, 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)(h): There were no significant findings or recommendations made in the preceding financial audit report, except as disclosed in the accompanying schedule of findings. 2. The Village was in compliance with Section 218.415, Florida Statutes, regarding the investment of public funds. 3. There are no recommendations to improve the Village's present financial management, accounting procedures, and internal controls, except as disclosed in the accompanying schedule of findings. 4. During the course of our audit, other than matters that are clearly inconsequential, considering both quantitative and qualitative factors, nothing came to our attention that caused us to believe that the Village: a. Was in violation of any laws, rules or regulations and contractual provisions or abuse that have occurred, or were likely to have occurred, or were discovered within the scope of the audit. -79- Rachlin Cohen & HDltz 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 0 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 Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Page Two b. Made any illegal or improper expenditures that were discovered within the scope of the audit that may materially affect the financial statements. c. Had deficiencies in internal control that are reportable conditions including but not limited to: (1) Improper or inadequate accounting procedures (2) Failures to properly record financial transactions (3) Other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that came to the attention of the auditor. Miami Shores Village, Florida was incorporated by Laws of Florida 15690. 6. a. The Village, during fiscal year 2004, was not in a state of financial emergency as defined by Florida Statutes 218.503(1). b. The annual financial report for'the fiscal year ended September 30, 2004 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 for the fiscal year ended September 30, 2004. c. 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's fiscal year end, was based on representations made by management and the review of financial information provided by the Village. There were no findings that identified 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. A4,12". L d ,zk/° Miami, Florida February 4, 2005 :1 Accountants > Advisors MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF FINDINGS FISCAL YEAR ENDED SEPTEMBER 30, 2004 PART I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS 04 -01 Governmental Accounting Standards Board Statement No. 45 —Accounting and Financial Reporting by Employers for Post - Employment Benefits Other than Pensions As part of the total compensation offered to attract and retain the services of qualified employees, many state and local governmental employers, in addition to pensions, provide other post - employment benefits (OPEB). OPEB includes post - employment healthcare, as well as other forms of post - employment benefits when provided separately from a pension plan. The Governmental Accounting Standards Board has issued Statement No. 45 which establishes standards for the measurement, recognition, and display of OPEB expenses /expenditures and related liabilities (assets), note disclosures, and if applicable, required supplementary information (RSI) in the financial reports of state and local governmental employers. Post - employment benefits (OPEB) are part of an exchange of salaries and benefits for employee services rendered, and are taken after the employee's services have ended. From an accrual accounting perspective, the cost of OPEB should be associated with the periods in which the exchange occurs, rather than with the periods, often many years later, when benefits are paid or provided. However, in current practice, most OPEB plans are financed on a pay -as- you -go basis, and financial statements generally do not report financial effects of OPEB until the promised benefits are paid. As a result, current financial reporting generally fails to recognize the cost of the benefits in periods when the related services are received by the employer, provide information about the actuarial accrued liabilities for promised benefits associated with past services and whether and to what extent those benefits have been funded and provide information useful in assessing potential demands on the employer's future cash flows. The Statement improves the relevance and usefulness of financial reporting by (a) requiring systematic, accrual basis measurement and recognition of OPEB expense over a period that approximates employees' years of service and (b) providing information about actuarial accrued liabilities associated with OPEB and whether and to what extent progress is being made in funding the plan. OPEB expenditures for governmental funds should be recognized on the modified accrual basis. The amount recognized should be equal to the amount contributed to the plan or expected to be liquidated with expendable available resources. Essentially, there is no change from current practice for governmental funds. However, for proprietary and government -wide financial statements, the accrual basis must be used. The accrual method will require the calculations to be made using actuarial computations and will result in the recognition of a present value liability which measures the value of OPEB benefits earned by employees during their tenure with the government and likely to be paid upon retirement. This calculation will result in substantial amounts, due to the current cost of such benefits and their escalating costs. It should also be emphasized that there is no requirement to fund these benefits with current resources. The Statement merely requires the reporting of the value of the benefit primarily in the government -wide financial statements. The computations are extremely complex and the use of an actuary will'invariably be required. WIJE MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF FINDINGS (Continued) PART I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) The Statement would permit prospective implementation, that is, employers would be permitted to set the beginning net OPEB obligation at zero as of the beginning of the initial year. Implementation would occur in three phases based on the government's total annual revenues in the first fiscal year ending after June 15, 1999. The definitions and cutoff points for that purpose otherwise would be the same as in GASB's Statement No. 34, Basic Financial Statements — and Management's Discussion and Analysis — for State and Local Governments. For the Miami Shores Village, this Statement is effective for periods beginning after June 15, 2006. Recommendation The contents of this statement are highly complex and will require significant lead time to implement on the respective implementation date. We would suggest that the City obtain a thorough understanding of the requirements and initiate planning for implementation in a prudent manner. Management Response The Village is reviewing this standard to ascertain the effect on the Village. 01 -4. Fund Balance Journal Entries Condition During our 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. This comment was also reported in the prior year. 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 ". MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF FINDINGS (Continued) PART I. CURRENT YEAR COMMENTS AND RECOMMENDATIONS (Continued) 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. This comment was also reported in the prior year. 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. M 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. This comment was also reported in the prior year. 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. MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF FINDINGS (Continued) PART II. PRIOR YEAR COMMENTS AND RECOMMENDATIONS NOT IMPLEMENTED 01 -04 Fund Balance Journal Entries This comment is repeated at September 30, 2004. 01 -09 Accounting Procedures Manual This comment is repeated at September 30, 2004. 99 -03 Grant Centralized This comment is repeated at September 30, 2004. -85-