2008MIAMI SHORES VILLAGE, FLORIDA
BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Prepared by
THE FINANCE DEPARTMENT
MIAMI SHORES VILLAGE, FLORIDA
TABLE OF CONTENTS
FINANCIAL SECTION
PAGE
Independent Auditors' Report 1 -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 -51
Required Supplementary Information:
Budgetary Comparison Schedule:
General Fund
52 -53
Special Revenue Funds:
Excise Tax Fund
54
Local Option Gas Tax Fund
55
Note to Budgetary Comparison Schedules
56
Schedule of Funding Progress
57
Schedule of Employer Contributions
58
Combining and Individual Fund Statements and Schedules:
Combining Balance Sheet — Nonmajor Governmental Funds 59 -60
Combining Statement of Revenues, Expenditures and Changes in Fund Balances —
Nonmajor Governmental Funds 61 -62
Budgetary Comparison Schedule:
Transportation Surtax Fund 63
Debt Service Fund 64
Internal Service Funds:
Combining Statement of Net Assets 65
Combining Statement of Revenues, Expenses and Changes in Net Assets 66
Combining Statement of Cash Flows 67
WUM SHORES VILLAGE, FLORIDA
TABLE OF CONTENTS
(Continued)
FINANCIAL SECTION (Continued)
PAGE
Fiduciary Funds:
Combining Statement of Fiduciary Net Assets — Pension Trust Funds 68
Combining Statement of Changes in Fiduciary Net Assets — Pension Trust Funds 69
Statement of Changes in Assets and Liabilities — Agency Fund 70
COMPLIANCE SECTION
Independent Auditors' Report on Internal Control over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 71 -72
Management Letter in Accordance with the Rules of the Auditor General of the State of Florida 73 -74
Summary Schedule of Prior Year Audit Findings
75
Schedule of Findings and Responses 76 -79
THIS PAGE INTENTIONALL Y LEFT BLANK
FINANCIAL SECTION
INDEPENDENT AUDITORS' REPORT
MARCUM
RACHLIN
ACCOUNTANTS ,& ADVISORS
INDEPENDENT AUDITORS' REPORT
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, 2008,
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 opinions on these financial statements based on our audit.
Except as discussed in the following paragraph, we conducted our audit in accordance with
auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government 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 consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Village's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also includes
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, as well as evaluating the overall financial statement presentation.. We believe that
our audit provides a reasonable basis for our opinions.
As disclosed in Note 2, the Village is conducting an on -going investigation which alleges the
misappropriation of assets by one of its former employees. Therefore, we were not able to gather
audit evidence and apply audit procedures relating to the alleged misappropriation.
Consequently, many documents and analysis are under the control of law enforcement agencies
or have not yet been completed and thus, the Village has not been able to determine the full
impact of this misappropriation on the financial statements.
Be
MARCUMGROUP
MEMBER
MarcumRachlin a division of Marcum up a marcumrachlin.com
One Southeast Third Avenue m Tenth Floor ® Miami, Florida 33131 ® Phone 305.377.4228 ® Fax 305.377.8331
FLORIDA o NEW YORK o NEW JERSEY a CONNECTICUT m GRAND CAYMAN
In our opinion, except for the effects of such adjustments, if any, that might have been
determined to be necessary as a result of the alleged misappropriation of assets, 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, 2008, 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 of
America.
In accordance with Government Auditing Standards, we have also issued our report dated
September 29, 2010, 2010 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 read in conjunction with this report in assessing the results of
our audit.
Management's Discussion and Analysis and the required supplementary information on pages 3
to 12 and 50 to 55 are not a required part of the basic financial statements, but are supplementary
information required by accounting principles generally accepted in the United States of
America. 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 Village's basic financial statements. The combining and individual
fund financial statements and schedules are presented for purposes of additional analysis and are
not a required part of the basic financial statements. The combining and individual fund
financial statements and schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, except for the effects of such
adjustments, if any, that might have been determined to be necessary as a result of the alleged
misappropriation of assets, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
�i(M.Cu�c.Rae.�Clc,�
a division of Marcum LLP
Miami, Florida
September 29, 2010
-2-
MARCUM
RACH LI N
ACCOUNTANTS • ADVISORS
A division of Marcum Lrr
THIS PAGE INTENTIONALLY LEFT BLANK
MANAGEMENT'S DISCUSSION AND ANALYSIS
l:
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, 2008.
Financial Highlights for Fiscal Year 2008
➢ At September 30, 2008, the Miami Shores Village's assets exceeded its liabilities by $23.5 million
(net assets). Of this amount, $11.9 million was invested in capital assets, net of related debt.
Additionally, $4.1 million was restricted by law, agreements, debt covenants or for capital projects.
The Village had unrestricted net assets of $7.5 million at September 30, 2008.
➢ During the fiscal year 2008, net assets increased by $3.4 million, before the restatement of $1.5
million. Of this increase, $361 thousand was in business -type activities and the remaining increase
of $3 million (before the restatement) was in governmental activities.
➢ At September 30, 2008, the Miami Shores Village's governmental funds had fund balances totaling
$10.6 million. Of the total fund balance, approximately $4.7 million or 44% was unreserved and
undesignated and approximately $1.5 million or 14% was unreserved and designated. The net
change in fund balances during the year was an increase of $2.1 million.
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) 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 of Net 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 of Activities 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 of related cash flows. 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., 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 and include
general government, public safety, public works and culture and recreation. The business -type activities
of the Village include sanitation and storm water operations.
The government -wide financial statements may be found on pages 13 -14 of this report.
-3-
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, uses 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 and 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 fifteen (15) 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 four major funds. Data from the
other ten 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.
The basic governmental fund financial statement may be found on pages 15 to 17 of this report.
Proprietary funds. Miami Shores Village maintains two types of proprietary 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 operations, which is a major fund, and stormwater operations, which is a non -major
fiend. The internal service funds are combined into a single, aggregated presentation in the proprietary
fund financial statements. Individual data for the internal service funds is provided in the form of
combining statements elsewhere in this report.
The basic proprietary fund financial statements may be found on pages 18 to 20 of this report.
Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside
the government. Fiduciary funds are not reflected in the government -wide financial statements because
the resources of those funds are not available to support the Village's own programs. The accounting
used for fiduciary funds is much like that used for proprietary funds.
The basic fiduciary fund financial statements may be found on pages 21 to 22 of this report.
-4-
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 23 to 51 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. This section also
includes comparison schedules between the Village's adopted and final budget and actual financial results
for the General Fund and each major special revenue fund with an annual adopted budget.
Required supplementary information may be found on pages 52 to 55 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 59 to 67 of
this report.
Government -wide Financial Analysis
The difference between a government's assets and its liabilities is its net assets. The Village's net assets
are summarized below:
Current and other assets
Capital assets
Total assets
Long -tern liabilities
outstanding
Other liabilities
Total liabilities
Invested in capital assets,
net of related debt
Restricted
Unrestricted
Total net assets
Table I
Miami Shores Village
Summary of Net Assets
(in thousands)
Total
Total Primary Percentage
Governmental Activities Business -Type Activities Government Change
2008 2007 2008 2007 2008 2007 2008 -2007
$13,128
21,745
$ 9,735
19,936
$2,173
624
$ 770
1,657
$15,301
22,369
$10,505
21,593
45.6%
3.5%
34,873
29,671
2,797
2,427
37,670
32,098
17.3%
11,837
1,295
11,620
806
65
975
71
960
11,902
2,270
11,681
1,766
1.9%
28.5%
13,132
12,426
1,040
1,031
14,172
13,457
5.3%
11,256
9,393 624
770 11,880
10,163 16.8%
4,112
3,345 -
- 4,112
3,345 22.9%
6,373
4,507 1,133
626 7,506
5,133 46.2%
$21,741
$17,245 $1,757
$1,396 $23,498
$18,641 26.0%
Net assets may be used to assess the financial position of the Village. The Village's combined net assets
as of September 30, 2008 were $23.5 million. Approximately 50 %, or $11.8 million, of the Village's net
assets represent the investment in capital assets, net of outstanding related debt. These assets include
land, buildings, machinery and equipment, and infrastructure and are not available for future spending.
Additionally, $4.1 million are restricted net assets and are subject to external restrictions on how they may
be spent.
At September 30, 2008, Miami Shores Village had unrestricted net assets of $7.5 million. At the end of
the current fiscal year, the Miami Shores Village 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.
-5-
The Village's net assets increased by $3.4 million during the current fiscal year, before the restatement of
$1.5 million. The increase is primarily attributable to the degree in which revenues have outstripped
similar increases in ongoing expenses. Revenues increased primarily as a result of rate increases and
increases in capital grants and contributions. Expenses decreased primarily as a result of savings in
personnel costs.
Financial activities for the fiscal year are reported below. Key indicators, including revenues and
expenses by category, are presented below:
Table 2
Miami Shores Village
Changes in Net Assets
(in thousands)
Total
Total Primary Percentage
Governmental Activities Business -Type Activities Government Change
2008 2007 2008 2007 2008 2007 2008 -2007
Revenues:
Program revenues:
Charges for services
$ 2,052
$2,041
$2,956
$2,704
$5,008
$4,745
5.5%
Operating grants and contributions
111
146
-
-
111
146
-24.0%
Capital grants and contributions
847
106
-
-
847
106
699.1%
General Revenues:
Property taxes
7,224
7,373
-
-
7,224
7,373
-2.0%
Other taxes
3,076
2,923
-
-
3,076
2,923
5.2%
Intergovernmental revenues,
unrestricted
895
955
-
-
895
955
-6.3%
Miscellaneous
563
582
-
-
563
582
-9.1%
Interest income - unrestricted
242
398
14
22
256
420
-30.9%
Total revenues
15,010
14,524
2,970
2,726
17,980
17,250
4.2%
Expenses:
General government
2,325
2,941
-
-
2,325
2,941
-24.1%
Public safety
4,650
4,452
4,650
4,452
4.6%
Public works
2,407
2,357
-
-
2,407
2,357
2.1%
Culture and recreation
2,321
2,191
-
-
2,321
2,191
5.9%
Interest on long -term debt
500
504
-
-
500
504
0.6%
Sanitation
-
-
2,260
2,329
2,260
2,329
2.9%
Stormwater
-
-
134
151
134
151
-
Total expenses
12,203
12,445
2,394
2,480
14,597
14,925
-2.7%
Increase in net assets before
transfers
2,807
2,079
576
246
3,383
2,325
Transfers
215
210
(215)
(210)
-
-
Increase in net assets
3,022
2,289
361
36
3,383
2,326
48.9%
Beginning net assets (restated)
18,719
14,956
1,396
1,360
20,115
16,316
22.8%
Ending net assets
$21,741
$17,245
$1,757
$1,396
$23,498
$18,641
26.1%
Governmental Activities. The Village's governmental activities increased net assets by $3 million
before the restatement. This increase is partially attributable to:
➢ Capital grants totaling approximately $847 thousand for the Building Better Communities program.
➢ Reduction in expenses, primarily in the general government category, due to a larger level of
attrition in employees resulting in salary savings.
Overall, the increase in revenues exceeded increases in expenses.
Ir
'�
Figure A -1
Expenses and Program Revenues — Governmental Activities
For the Fiscal Year Ended September 30, 2008
14,000,000
12, 000, 000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
Revenues Expenses
O General government ® Public safety O Public Works
O Culture /recreation Y Interest on long -term debt
Figure A -2
Revenues by Source — Governmental Activities
For the Fiscal Year Ended September 30, 2008
Other •,
Othertaxes
Property
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Charges for services
Investment eamings
Business -type activities. The Miami Shores Village business -type activities include the following
sanitation and stormwater services.
Net assets of business -type activities increased by approximately $361 thousand as a result of an increase
in rates charged for sanitation and stormwater services. The bar graph below summarizes the expenses
and program revenues of the business -type activities
-7-
Figure A -3
Expenses and Program Revenues — Business -type Activities
For the Fiscal Year ended September 30, 2008
3,000,000
2,000,000
1,000,000
Sanitation Stormwater
pProgram Revenue ®Expenses
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.
As of the end of the current fiscal year, the governmental funds for Miami Shores Village reported
combined ending fund balances of $10.6 million, a $2.1 million increase over FY 2007. Of this amount,
$4.7 million reflects unreserved and undesignated fund balance, which is available for spending at the
government's discretions. The remainder of the fund balance is reserved or designated to indicate that it
is not available for new spending as those dollars have already been committed to: 1) liquidate contracts
or encumbered fiscal obligations (outstanding purchase orders) valued at $116 thousand; 2) $786
thousand to pay debt service and 3) a variety of other restricted purposes ($4.9 million).
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 $4 million, which is comparable with the prior year
balance. Reserved fund balance decreased from $189 thousand in the prior year to $72 thousand for the
current fiscal year, this decrease was mainly due to encumbrances relating to ongoing projects which had
not been completed as of last year -end.
The Village's general fund fund balance increased by $1.3 million during the fiscal year. Key factors
associated with this increase are as follows:
• A larger than expected level of attrition in general fund employees resulting in salary savings.
• The reduction of anticipated expenditures wherever possible.
-8-
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 $818 thousand, a $415
thousand increase in unrestricted net assets from the prior year.
• Unrestricted net assets of the Storm water Fund at the end of the year totaled $313 thousand, a $91
thousand increase in unrestricted net assets from the prior year.
The increases in both proprietary funds were a result of an increase in the rates charged for services.
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, certain Special
Revenue Funds 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 V year. The Village has also adopted a policy which provides for the
reappropriation of reserved fund balance for encumbrances and prepaid items. 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.
Over the course of the year, the Village amended the General Fund budget three times. The budget
amendments fall into two categories: (1) Amendments are approved for rollovers related to prior year
encumbrances; and (2) supplemental appropriations to provide appropriations for various other needs
which have arisen since the adoption of the budget. Even with these adjustments, actual expenditures
were approximately $1.5 million below final budgeted amounts. There was approximately $840 thousand
in budget savings in the general government category, which was the most significant contributor to this
variance. There was a significant decrease in general government costs and various departmental savings
due to staff vacancies and turnover.
The fiscal year 2008 final amended budget was $13 million, an increase of 5.2 % over the original
General Fund budget of $12.4 million. Correspondingly, the Consumer Price Index (or inflation index)
from the U.S. Bureau of Labor Statistic — All Urban Consumers South Urban for the past year was 3.0 %.
Beyond base revenues of $9.7 million and $2.6 million in transfers from the Excise Tax, Sanitation Fund
and Stormwater Fund, the final adopted budget is balanced without the use of any fund balance. The
original General Fund budget consisted of $12.1 million base expenditures and $286 thousand in the
transfers to other funds.
The difference between the original budget and the final amended budget was an increase in
appropriations of $651 thousand and can be briefly summarized as follows:
• $146 thousand in encumbrances carried over from FY2006 -07.
• $505 thousand for the capital lease to purchase 16 police vehicles.
-9-
Capital Assets and Debt Administration
Capital Assets. Miami Shores Village's investment in capital assets for its governmental and business -
type activities as of September 30, 2008 amounts to $22.3 million (net of accumulated depreciation).
This investment in capital assets includes Village -owned buildings, equipment and other infrastructure
(streets, sidewalks, easements, right -of- ways). The value of capital investments includes the cost of the
Doctors' Charter School of Miami Shores. The following table summarizes the components of the
Villages' investment in capital assets.
Miami Shores Village
Capital Assets as of September 30, 2008 and 2007
(net of depreciation)
Governmental Activities Business -Type Activities Total Primary Government
2007 2007
Classification 2008 (Restated) 2008 2007 2008 Restated
Land
Construction -in- progress
Buildings and
improvements
Land improvements
Infrastructure
Furniture, fixtures and
equipment
Total
$2,358,437
$2,358,437
$ - $ - $ 2,358,437
$ 2,358,437
868,575
-
- - 868,575
-
8,773,750
8,975,478
- - 8,773,750
8,975,478
1,913,457
2,065,932
- - 1,913,457
2,065,932
6,730,885
7,203,742
- - 6,730,885
7,203,742
1,101,004
806,476
624,398 770,301 1,725,402
1,576,777
121.746.108
$21,410,065
$624 398 $Z7 22,370.506
$22.180.366
Additional information on Miami Shores' capital assets may be found in Note 7 on Pages 36 to 37 of this
report.
Long -term Liabilities. At September 30, 2008, Miami Shores Village had $11.8 million in long -term
liabilities, which are summarized in the schedule below. Additional information on the Village's long-
term debt may be found in ]Vote 8 on Pages 37 to 38 of this report.
Miami Shores Village
Outstanding Long -Term Liabilities as of September 30, 2008 and 2007
-10-
Governmental Activities
2008 2007
Business -type activities
2008 2007
Total Primary Government
2008 2007
General obligation bonds
$ 7,235,000
$ 7,415,000
$ - $ -
$ 7,235,000
$ 7,415,000
Promissory note
2,980,681
3,215,811
- -
2,980,681
3,215,811
Capital lease
457,871
-
- -
457,871
-
10,673,552
10,630,811
- -
10,673,552
10,630,811
Compensated absences
663,521
591,938
65,406 70,562
728,927
662,500
Claims payable
509,047
406,000
- -
509,047
406,000
Total
] 1.846.120
$I1 628.749
$
$I 1,903.263
$11,690,717
-10-
Economic Factors and Next Year's Budgets and Rates
Miami Shores Village is a residential, single - family community. As such, standard economic indicators
used to determine the overall health of a community are slightly different for Miami Shores. Since the
Village's "business community" is restricted to a four -block area on Second Avenue and isolated pockets
of business entities on Biscayne Boulevard, the Village must monitor property values and other
residentially- related trends to determine the health and vitality of the community.
During the reporting year, Miami Shores found strong property value increases for the fourth consecutive
year. Many of the new residents to the Village have relocated from the western regions of the County and
enjoy the Village's close proximity to Downtown Miami and the adjacent business areas while still
having a suburban atmosphere. High recreational activities, including the Village's first -class aquatics
facility, support the residents' requirement for high standards and outstanding recreation and leisure
activities. This, along with its own public safety department, provides a higher standard of living than
that which is found in surrounding municipalities.
On January 29, 2008, the Florida electorate approved an amendment to the Florida Constitution relative to
property taxation. This amendment (referred to as Amendment 1) was placed on the ballot by the Florida
Legislature at a special session held in October 2007. With respect to homestead property, Amendment 1
increases the current $25,000 homestead exemption by another $25,000 (for property values between
$50,000 - $75,000), except for school district taxes. Since the new $25,000 homestead exemption does
not apply to school district taxes, this effectively amounts to a $15,000 increase to the existing homestead
exemption, resulting in an estimated annual saving of $240 for an average homeowner. Amendment 1
also allows property owners to transfer (make portable) up to $500,000 of their Save Our Homes benefits
to their next homestead when they move. Save Our Homes became effective in 1995 and limits (caps) the
annual increase in assessed value for homestead property to three percent (3 %) or the percentage change
in the Consumer Price Index, whichever is less.
With respect to non - homestead property, Amendment 1 limits (caps) the annual increase in assessed value
for non - homestead property (businesses, industrial property, rental property, second homes, etc.) to ten
percent (10 %), except for school district taxes. The Amendment also provides a $25,000 exemption for
tangible personal property.
Amendment 1 becomes effective on October 1, 2008 with the exception of the ten percent (10 %)
assessment cap on non - homestead property which becomes effective on January 1, 2009.
Based on information received from Miami -Dade County Property Appraiser's Office, the estimated
annual loss of property tax revenues for our Village from the additional homestead exemption and the
$25,000 exemption for tangible personal property is approximately $548,527. At present, there is no
accurate way to determine the impact of the portability and assessment cap on non- homestead property
provisions in terms of potential loss of property tax revenues. Estimates for our Village show an
additional loss of property tax revenues of $167,696.
During the current fiscal year, unreserved fund balance in the General Fund was $4 million compared to
$4 million from last year with an additional $1.5 million of unreserved, but designated fund balance. This
$4 million is approximately equal to 4 months of General Fund operating expenditures. The Village, as
can be shown in the following graph, is maintaining its unreserved fund balance so that a portion of
unreserved fund balance will be available to preclude or moderate future tax and user fee increases.
-11-
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
General Fund Unreserved Fund Balance
For the Fiscal Years ended September 30, 1999 -2008
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
In 1995, the state of Florida limited all local governments' ability to increase property assessments of
homestead property in any given year to 3 percent or cost of living, whichever is lower. The graph below
shows the millage rates over the past ten years. For many years, the Village, just like many cities across
the country, had to face the challenge of keeping taxes and service charges as low as possible while
providing residents with the level of service they have come to expect.
Miami Shores Village
Total Village Millage
12
10
8
6
4
2
0
yi
4;.
t(
=+P
r
It i�
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
In 1995, the state of Florida limited all local governments' ability to increase property assessments of
homestead property in any given year to 3 percent or cost of living, whichever is lower. The graph below
shows the millage rates over the past ten years. For many years, the Village, just like many cities across
the country, had to face the challenge of keeping taxes and service charges as low as possible while
providing residents with the level of service they have come to expect.
Miami Shores Village
Total Village Millage
12
10
8
6
4
2
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
D Operating Millage ® Debt Service Millage
Fiscal year 2009 budgeted expenditures and transfers are expected to be $13.6 million or 8.86 percent,
over fiscal year 2008. The largest increments are increased salaries and cost -of- living adjustments based
on labor agreements with the police and federal employees' unions.
Requests for Information
This financial report is designed to provide a general overview of Miami Shores Villages' finances to our
citizens, taxpayers, customers, investors, creditors, and others with an interest in the Villages' finances.
Questions concerning this report or requests for additional financial information should be directed to the
Acting Finance Director, Holly Hugdahl, CPA.
MIAMI SHORES VILLAGE
Finance Department
10050 Northeast Second Avenue
Miami Shores, Florida 33138 -2382
-12-
4;.
t(
=+P
r
It i�
E
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
D Operating Millage ® Debt Service Millage
Fiscal year 2009 budgeted expenditures and transfers are expected to be $13.6 million or 8.86 percent,
over fiscal year 2008. The largest increments are increased salaries and cost -of- living adjustments based
on labor agreements with the police and federal employees' unions.
Requests for Information
This financial report is designed to provide a general overview of Miami Shores Villages' finances to our
citizens, taxpayers, customers, investors, creditors, and others with an interest in the Villages' finances.
Questions concerning this report or requests for additional financial information should be directed to the
Acting Finance Director, Holly Hugdahl, CPA.
MIAMI SHORES VILLAGE
Finance Department
10050 Northeast Second Avenue
Miami Shores, Florida 33138 -2382
-12-
THIS PAGE INTENTIONALL Y LEFT BLANK
BASIC FINANCIAL STATEMENTS
MIANII SHORES VILLAGE, FLORIDA
STATEMENT OF NET ASSETS
ASSETS
Cash and cash equivalents
Investments
Accounts receivable
Due from other governments
Prepaid items
Inventories
Net pension asset
Deferred charges
Capital assets not being depreciated
Capital assets being depreciated, net
Total assets
LIABILITIES
Accounts payable and accrued liabilities
Unearned revenues
Accrued interest payable
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:
Law enforcement
Debt service
Transportation
Capital projects
Library
Recreation
Buildings
Pilot program
Charter School
Unrestricted
Total net assets
SEPTEMBER 30, 2008
Business -
Governmental type
Activities Activities Total
$ 5,027,999 $ 849,243 $ 5,877,242
5,799,651
262,855
6,062,506
883,712
955,159
1,838,871
1,104,300
-
1,104,300
75,779
-
75,779
106,524
105,125
211,649
53,273
-
53,273
76,323
-
76,323
3,227,012
-
3,227,012
18,519,096
624,398
19,143,494
34,873,669
2,796,780
37,670,449
1,087,136
89,630
1,176,766
90,312
884,916
975,228
116,810
-
116,810
738,150
17,365
755,515
11,099,707
48,041
11,147,748
13,132,115
1,039,952
14,172,067
11,255,620 624,398 11,880,018
219,292
- 219,292
735,260
- 735,260
1,949,416
- 1,949,416
333,099
- 333,099
57,154
- 57,154
108,487
- 108,487
63,599
- 63,599
83,214
- 83,214
562,845
- 562,845
6,373,568
1,132,430 7,505,998
$ 21,741,554
$ 1,756,828 $ 23,498,382
See notes to basic financial statements.
-13-
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MIAMI 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, 2008
Amounts reported for governmental activities in the statement of activities
are different because:
Net change in fund balances - total governmental funds $ 2,116,032
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 $ 948,227
Depreciation expense (935,066) 13,161
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. Also,
governmental funds report the effect of issuance costs, premiums, discounts,
and similar items when debt is first issued, whereas these amounts are
deferred and amortized in the statement of activities.
Principal payments:
General obligation bonds $ 180,000
Promissory note 235,130
415,130
Amortization of issuance costs, premiums and discounts (3,384) 411,746
Under the modified accrual basis of accounting used in the governmental funds,
revenues are not recognized until funds are measurable and available to
finance current expenditures. In the statement of activities, however, which
is presented on the accrual basis, revenues are reported when earned.
The detail of the difference is as follows:
Communications services tax refund
150,767
Some expenses reported in the statement of activities do not require the
use of current financial resources and, therefore, are not reported as
expenditures in governmental funds.
The details of the differences are as follows:
Allocation of internal service fund's net income
379,690
Compensated absences
(79,793)
Claims payable
20,658
Accrued interest payable
3,449
Net pension asset
6,513
Change in net assets of governmental activities
$ 3,022,223
See notes to basic financial statements.
-17-
MIAMI SHORES VILLAGE, FLORIDA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
ASSETS
Current assets:
Cash and cash equivalents
Investments
Accounts receivable
Inventories
Total current assets
Noncurrent assets:
Capital assets not being depreciated
Capital assets being depreciated, net
Total noncurrent assets
Total assets
LIABILITIES
Liabilities:
Current liabilities:
Accounts payable and accrued liabilities
Due to other funds
Unearned revenue
Compensated absences
Capital lease
Claims payable
Total current liabilities
Non - current liabilities:
Compensated absences
Capital lease
Claims payable
Total non - current liabilities
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt
Unrestricted
Total net assets
SEPTEMBER 30, 2008
Business -type Activities -
Enterprise Funds
Stormwater
Utility
(a Nonmajor
Sanitation Fund ) Totals
Governmental
Activities -
Internal
Service
Funds
$ 792,849 $ 56,394 $ 849,243 $ 1,134,775
-
262,855
262,855
298,869
895,480
59,679
955,159
6,640
105,125
-
105,125
84,625
1,793,454
378,928
2,172,382
1,524,909
-
-
-
-
-
7,127
554,784
69,614
624,398
677,105
554,784
69,614
624,398
684,232
2,348,238
448,542
2,796,780
2,209,141
81,884
7,746
89,630
403,543
-
-
-
54,626
828,553
56,363
884,916
-
16,014
1,351
17,365
8,724
-
-
-
96,426
-
-
-
41,084
926,451
65,460
991,911
604,403
48,041 -
48,041 -
48,041 26,171
- 361,445
- 298,916
48,041 686,532
974,492
65,460
1,039,952
1,290,935
554,784
69,614
624,398
324,839
818,962
313,468
1,132,430
593,367
$ 1,373,746 $
383,082
$ 1,756,828 $
918,206
See notes to basic financial statements.
-18-
MIAMI SHORES VILLAGE, FLORIDA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
PROPRIETARY FUNDS
Charges for services
Operating expenses:
Administrative and general
Personnel expenses
Depreciation
Contractual services
Insurance premiums
Insurance claims
Total operating expenses
Operating income
Non - operating revenues (expenses):
Loss on sale of capital assets
Interest income
Interest expense
Other revenues
Total non - operating revenues
Income before transfers
Transfers in
Transfers out
Change in net assets
Net assets, beginning
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Business -type Activities -
8,276
Enterprise Funds
Governmental
Stormwater
Activities -
utility
Internal
(a Nonmajor
Service
Sanitation Fund ) Totals
Funds
$ 2,729,793 $ 225,719 $ 2,955,512 $ 2,280,242
717,867
8,276
726,143
589,611
777,529
72,024
849,553
246,574
123,669
22,234
145,903
115,634
641,309
31,379
672,688
-
-
-
-
922,369
-
-
-
139,911
2,260,374
133,913
2,394,287
2,014,099
469,419
91,806
561,225
266,143
(7,634)
7,777 6,674 14,451 14,900
- - - (7,497)
- - - 33,778
7,777 6,674 14,451 33,547
477,196 98,480 575,676 299,690
- - 100,554
(185,000) (30,000) (215,000) (20,554)
292,196 68,480 360,676 379,690
1,081,550 314,602 1,396,152 538,516
Net assets, ending $ 1,373,746 $ 383,082 $ 1,756,828 $ 918,206
See notes to basic financial statements.
-19-
MIAMI SHORES VILLAGE, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Cash flows from operating activities:
Cash received from customers, governments and other funds
Cash paid to suppliers
Cash paid to employees
Other revenues
Net cash provided by operating activities
Cash flows from non - capital financing activities:
Transfers in
Transfers out
Net cash provided by (used in) non - capital
financing activities
Cash flows from capital and related financing activities:
Proceeds from capital lease
Proceeds from sale of capital assets
Acquisition of capital assets
Due to other funds
Principal paid on capital lease
Interest paid on capital lease
Net cash provided by capital and related
financing activities
Cash flows from investing activities:
Purchases of investments
Interest received
Net cash provided by (used in) investing activities
Net increase in cash and cash equivalents
Cash and cash equivalents, beginning
Cash and cash equivalents, ending
Reconciliation of operating income to net cash
provided by operating activities:
Operating income
Adjustments to reconcile operating income to net
cash provided by operating activities:
Depreciation
Other revenues
Changes in operating assets and liabilities:
Accounts receivable
Prepaid items
Inventories
Accounts payable and accrued liabilities
Unearned revenues
Compensated absences
Claims payable
Net cash provided by operating activities
Business -type Activities -
(906)
Enterprise Funds
Governmental
Stormwater
Activities -
Utility
Internal
(a Nonmajor
Service
Sanitation Fundl Totals
Funds
$ 2,691,521 $ 225,084 $ 2,916,605 $ 2,276,807
(1,387,922) (33,100) (1,421,022) (1,190,617)
(778,075) (76,634) (854,709) (254,784)
- - - 33,778
525,524 1151350 640,874 865,184
- - - 100,554
(185,000) (30,000) (215,000) (20,554)
(185,000) (30,000) (215,000) 80,000
- 505,000
- - 4,200
- - - (450,351)
- - - 54,626
- - - (47,129)
- - - (7,497)
58,849
- (262,855) (262,855) (298,869)
7,777 6,674 14,451 14,900
7,777 (256,181) (248,404) (283,969)
348,301 (170,831) 177,470 720,064
444,548 227,225 671,773 414,711
$ 792,849 $ 56,394 $ 849,243 $ 1,134,775
$ 469,419 $ 91,806 $ 561,225 $ 266,143
123,669 22,234 145,903 115,634
- - - 33,778
(36,243)
(906)
(37,149)
(3,435)
-
-
-
5,000
(37,707)
-
(37,707)
(42,989)
8,961
6,555
15,516
375,558
(2,029)
271
(1,758)
-
(546)
(4,610)
(5,156)
(8,210)
-
-
-
123,705
$ 525,524 $
115,350 $
640,874 $
865,184
See notes to basic financial statements.
-20-
MIAMI SHORES VILLAGE, FLORIDA
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30, 2008
ASSETS
Cash and cash equivalents
Investments:
Common stocks
Corporate bonds
U.S. Treasury obligations
U.S. Government agencies
Equity mutual funds
Money market mutual funds
Other investments
Due from State of Florida
Accrued interest receivable
Total assets
LIABILITIES AND NET ASSETS
Liabilities:
DROP liability
Deposits held in trust
Total liabilities
Net assets held in trust
Pension Private
Trust Purpose
Funds Trust Agency
$ - $ 217,451 $ 518
7,965,739 - -
1,257,423 - -
2,816,455 - -
1,931,889 - -
3,034,781
1,421,945 1,852,430 129,575
- 76,063 -
69,624 - -
80,972 - -
18,578,828 2,145,944 130,093
222,907 - -
- - 130,093
222,907 - 130,093
$ 18,355,921 $ 2,145,944 $ 130,093
See notes to basic financial statements.
-21-
MIAMI SHORES VILLAGE, FLORIDA
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2008
DEDUCTIONS
Pension benefits 1,152,870 -
Distribution to charter school - 180,000
Total deductions 1,152,870 180,000
Change in net assets (3,287,858) (141,071)
Net assets held in trust, beginning 21,643,779 2,287,015
Net assets held in trust, ending $ 18,355,921 $ 2,145,944
See notes to basic financial statements.
-22-
Pension
Private
Trust
Purpose
Funds
Trust
ADDITIONS
Contributions:
Village
$ 758,885
$ -
Employees
338,451
-
State
69,624
-
Total contributions
1,166,960
-
Investment income:
Net depreciation in fair value of investments
(3,774,963)
-
Interest income
249,357
38,929
Dividends
387,219
-
Less investment expenses
(163,561)
-
Net investment income
(3,301,948)
38,929
Total additions
(2,134,988)
38,929
DEDUCTIONS
Pension benefits 1,152,870 -
Distribution to charter school - 180,000
Total deductions 1,152,870 180,000
Change in net assets (3,287,858) (141,071)
Net assets held in trust, beginning 21,643,779 2,287,015
Net assets held in trust, ending $ 18,355,921 $ 2,145,944
See notes to basic financial statements.
-22-
NOTES TO BASIC FINANCIAL STATEMENTS
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
FISCAL YEAR ENDED SEPTEMBER 30, 2008
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 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 Village, organizations for
which the Village 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. Based on the application of these criteria, there were no
organizations that met the criteria described 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.
Governmental activities, which normally are supported by taxes and intergovernmental
revenues, are reported separately from business -type activities, which rely to a significant
extent on fees and charges for support.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include (1) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or privileges
-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)
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 or other proprietary
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 generally 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.
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 culture and recreation services.
1y3I
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)
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.
Local Option Gas Tax Fund — 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.
Buildin Better Communities — This fund accounts for the improvements to sidewalks and
drainage systems which are being funded by granting agencies.
General Trust Fund - This fund accumulates assets for its employees, other
governmental entities and/or funds, primarily for the recreation, library and police
departments, as well as the charter school.
The Village reports the following major proprietary fund:
Sanitation Fund — This fund accounts for the operations and maintenance of the Village's
sanitation system.
Additionally, the Village reports the following fund types:
Internal Service Funds — The internal service funds are used to account for the financing
of goods or services provided by one department to other departments of the Village, on a
cost reimbursement basis. The Village has two internal service funds, the Risk
Management Fund and the Fleet Maintenance Fund.
Pension Trust Funds — The pension trust funds account for the activities of the Police
Pension and General Employees' Retirement Plans, which accumulate resources for pension
benefits to qualified employees.
Private Purpose Trust Fund — This fund accounts for a donation from a foundation to be
held by the Village on behalf of the Doctors Charter School to assist with meeting operating
needs of the school.
A14ency Fund — The agency fund is custodial in nature and does not present results of
operations or have a measurement focus. This fund is used to account for assets that the
Village holds for others in an agency capacity.
-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)
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 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 the local option gas tax are used to fund transportation related
expenditures and therefore are reported as program revenues under the function "Public Works ".
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 internal
service funds are charges to customers for services. Operating expenses for the 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.
When both restricted and unrestricted resources are available for use, it is the Village's policy
to use restricted resources first, then unrestricted resources as they are needed.
d. Assets, Liabilities and Net Assets or Equity
1. Deposits and Investments
Cash and cash equivalents include cash on hand and demand deposits. The Village
maintains a cash pool that is available for use by all finds. Interest earned on pooled cash is
allocated to each of the funds based on the fund's average equity balance on a monthly
basis.
All investments, except the Florida PRIME and Fund B, are reported at fair value, which is
based on quoted market prices. The Florida PRIME is recorded at the value of the pool
shares (2A -7 like pool), which is fair value. Fund B is a fluctuating NAV pool and is
reported based on the fair value factor.
-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 (Continued)
1. Deposits and Investments (Continued)
Cash and cash equivalents, for purposes of the statement of cash flows, includes pooled cash
and investments which are defined as short-term, highly liquid investments with original
maturities of three months or less.
2. Interfund 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). Any residual balances outstanding between the
governmental activities and business -type activities are reported in the government -wide
financial statements as "internal balances."
3. Receivables
Receivables include amounts due from others for services provided by the Village.
Receivables are recorded and revenues are recognized as earned or specific program
expenditures /expenses are incurred.
4. Prepaid Items
Prepaid items consist of costs applicable to future accounting periods which have been paid
prior to the end of the fiscal year. Amounts reported in the governmental funds are offset by
an equal reservation of fund balance in the fund financial statements. This is an indication
that these components of current assets do not constitute "available spending resources ".
5. Inventories
Inventories consist principally of materials and supplies held for consumption and are
recorded at cost using the first -in, first -out method. In the governmental funds, the cost of
inventories are recorded as expenditures at the time of purchase, while in the proprietary
funds, the cost of inventories are recorded as expenses when consumed. In the
governmental funds, reported inventories are offset by a fund balance reserve which
indicates that they do not constitute available spendable resources.
6. 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,
-27-
NOTE 1.
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
d. Assets, Liabilities and Net Assets or Equity (Continued)
6. Capital Assets (Continued)
individual cost of more than $1,000 and an estimated useful life in excess of three years.
Purchased or constructed assets are recorded at actual cost or estimated historical cost if
actual cost is unavailable. Donated capital assets are recorded at their estimated fair market
value at the date donated.
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.
Capital assets of the Village are depreciated using the straight -line method over the
following estimated useful lives:
Years
Buildings and improvements
10 -40
Land improvements
40
Infrastructure
30
Sanitation equipment
10
Vehicles
5
Other equipment, machinery, furniture
3 -10
and fixtures
7. Deferred Charges
Deferred charges in the government -wide financial statements represent the unamortized
portion of bond issuance costs. These costs are being amortized over the term of the related
bond issue.
8. 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 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.
-28-
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. Compensated Absences (Continued)
The Village's sick leave policy provides for the accumulation of one 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. A liability for these amounts is reported in the
governmental funds only if they have matured, for example, as a result of employee
resignations and retirements. The general fund has typically been used to liquidate such
amounts.
9. 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. Bonds payable are reported net of the applicable bond premium or discount. Bond
issuance costs are reported as deferred charges and amortized over the term of the related
debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of
debt issued is reported as another financing source. Premiums received on debt issuances
are reported as other financing sources while discounts on debt issuances are reported as
other financing uses. Issuance costs, even if withheld from the net proceeds received, are
reported as debt service expenditures.
10. Property Taxes
Property taxes are levied on November 1" of each year, at which time taxes become an
enforceable lien on property assessed as of the previous January I". Tax bills are payable
upon receipt with discounts at the rate of 4% if paid in November, decreasing by 1% per
month with no discount available in the month of March of the following calendar year. All
unpaid taxes on real and personal property become delinquent on April I` and bear annual
interest at 18% until a tax sale certificate is sold at auction. As of September 30, 2008,
delinquent property taxes were immaterial in amount.
-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)
10. Property Taxes (Continued)
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 and sells certificates for delinquent taxes.
The Village is permitted by Article 7, Section 9 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 2007 -08 fiscal year was 7.140 mills
($7.14 per $1,000 of assessed valuation).
11. Net Assets
Net assets of the government -wide and proprietary funds are categorized as invested in
capital assets, net of related debt; restricted or unrestricted. Invested in capital assets, net of
related debt, is that portion of net assets that relates to the Village's capital assets reduced
by accumulated depreciation and by any outstanding debt incurred to acquire, construct or
improve those assets, excluding unexpended proceeds.
Restricted net assets is that portion of net assets that has been restricted for general use by
external parties (creditors, grantors, contributors, or laws or regulations of other
governments) or imposed by law through constitutional provisions or enabling legislation.
Unrestricted net assets consist of all net assets that do not meet the definition of either of the
other two components.
12. Fund Equity
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or are legally segregated for a specific
purpose. Designations of fund balance indicate tentative managerial plans or intent to use
financial resources in a future period. Such plans or intent are subject to change at the
discretion of the Village. Unreserved and undesignated fund balance is the portion of fund
balance which is available for future use.
13. 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 expenditures /expenses
during the period reported. These estimates include assessing collectibility of receivables,
-30-
MIAM 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)
13. Use of Estimates (Continued)
the use and recoverability of inventory, the recognition of pension 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. FINANCIAL IRREGULARITY
In March, 2009, an investigation alleging the possible misappropriation of public funds from the
Village was initiated. Through this investigation, it was learned that cash collected by the Village
from various departments was not being deposited into the Village's bank accounts. The Village's
comptroller, in May 2010, was arrested and charged, but the investigation is ongoing. Therefore,
the timing, extent and magnitude of the impact of this misappropriation on the financial statements
is not measurable at this time.
NOTE 3. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
Prior Period Adjustment
During the fiscal year ended September 30, 2008, it was determined that a prior period
adjustment was required to be made to the capital assets and accumulated depreciation in the
governmental activities. This adjustment pertains to capital assets that were not recorded and
depreciated in prior years, as well as errors in accumulated depreciation recorded on certain
assets in prior years. The adjustment resulted in an increase in capital assets of $391,852, a
decrease in accumulated depreciation of $1,082,234 and an increase in net assets of
$1,474,086.
Excess of Expenditures and Other Financing Uses over Appropriations
The Excise Tax Fund exceeded appropriations by $25,861.
NOTE 4. DEPOSITS AND INVESTMENTS
Deposits
In addition to insurance provided by the Federal Depository Insurance Corporation, deposits
are held in banking institutions approved by the State Treasurer of the State of Florida to hold
public funds. Under Florida Statutes Chapter 280, Florida Security for Public Deposits Act, the
State Treasurer requires all Florida qualified public depositories to deposit with the Treasurer
or another banking institution eligible collateral. In the event of a failure of a qualified public
depository, the remaining public depositories would be responsible for covering any resulting
losses. Accordingly, all amounts reported as deposits are deemed as insured or collateralized
with securities held by the entity or its agent in the entity's name.
-31-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 4. DEPOSITS AND INVESTMENTS (Continued)
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) as well as money market mutual funds.
The State Board of Administration (SBA) administers the Local Government Surplus Funds
Trust Fund (LGIP) and the Fund B Surplus Funds Trust Fund. (Fund B), both of which are
governed by Chapter 19 -7 of the Florida Administrative Code and Chapters 218 and 215 of the
Florida Statutes. These rules provide guidance and establish the policies and general operating
procedures for the administration of the LGIP and Fund B. The LGIP 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, which permits money market funds
to use amortized cost to maintain a constant net asset value (NAV) of $1 per share. The fair
value of the position in the LGIP is equal to the value of the pool shares. The Fund B is
accounted for as a fluctuating NAV pool. As of September 30, 2008, the fair value factor for
Fund B was $398385 per share. The Fund B is not subject to participant withdrawal requests.
Distributions from Fund B, as determined by the SBA, are affected by transferring eligible cash
or securities to the LGIP, consistent with the pro rata allocation of pool shareholders of record at
the creation of Fund B. One hundred percent of such distributions from Fund B are available as
liquid balance within the LGIP. The investments in the LGIP and Fund B are not insured by
FDIC or any other governmental agency.
Investments — Village
As of September 30, 2008, the Village had the following investments:
Fair Weighted Average
Investment Value Maturity
LGIP $1,415,317 8.5 days
Fund B 195,356 9.36 years
Money market mutual funds 7,925,218 48 days
$ 9,535,891
Interest Rate Risk
The Village does not have a written policy on interest rate risk, however, the Village
manages its exposure to declines in fair values by limiting the weighted average monthly
maturity of its investment portfolio to less than six months (180 days). The weighted
average maturity of each investment at September 30, 2008 is reflected in the above
chart.
-32-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 4. DEPOSITS AND INVESTMENTS (Continued)
Investments (Continued)
Investments — Village (Continued)
Credit Risk
Investments are limited to the highest ratings by two nationally recognized statistical
rating organizations (NRSRO) (Standard and Poor's and Moody's Investment Services).
The LGIP is rated AAAm by Standard and Poor's. The Fund B is not rated by an
NRSRO. The money market mutual funds are rated Aaa by Moody's and AAAm by
Standard & Poor's.
Concentration of Credit Risk
The Village diversifies its portfolio in such a way to control the risk of loss resulting
from a concentration of assets to a specific maturity, instrument, issue, dealer, or bank
through which these securities are bought and sold. As of September 30, 2008, the value
of each position held in the Village's portfolio is less than 5% in any one issuer.
Investments — Pension Plans
As of September 30, 2008, the Village's defined benefit pension Plans had the following
investments:
Corporate bonds
U.S. Treasury obligations
U.S. Government agencies
Money market mutual funds
Interest Rate Risk
1,421,945 1,421,945 - - -
$7,427,712 $1,550,195 $3,621,606 $1,866,519 $389,392
Interest rate risk refers to the portfolio's exposure to fair value losses arising from
increasing interest rates. The Plans have an investment policy that limits maturities on
individual investments to no more than 135% of the duration of the market index. The
market index is defined as the Merrill Lynch 1 -10 year Government/Corporate Bond
Index. At September 30, 2008, the investment maturities in years for each investment
type are included in the preceding table.
-33-
Investment Maturities (In Years)
Fair
Less than
1 to 5
6 to 10
More
Value
1 Year
Years
Years
Than 10
$1,257,423
$ 45,527
$ 600,804
$ 527,608
$ 83,484
2,816,455
42,877
1,690,908
1,082,670
-
1,931,889
39,846
1,329,894
256,241
305,908
1,421,945 1,421,945 - - -
$7,427,712 $1,550,195 $3,621,606 $1,866,519 $389,392
Interest rate risk refers to the portfolio's exposure to fair value losses arising from
increasing interest rates. The Plans have an investment policy that limits maturities on
individual investments to no more than 135% of the duration of the market index. The
market index is defined as the Merrill Lynch 1 -10 year Government/Corporate Bond
Index. At September 30, 2008, the investment maturities in years for each investment
type are included in the preceding table.
-33-
MIANII SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 4. DEPOSITS AND INVESTMENTS (Continued)
Investments — Pension Plans (Continued)
Credit Risk
State law and the Plans' investment policies limit investments in bonds, stocks, or other
evidences of indebtedness issued or guaranteed by a corporation organized under the laws
of the United States, any state or organized territory of the United States, or the District of
Columbia, provided the corporation is listed on one or more of the recognized national stock
exchanges or on the National Market System of the NASDAQ Stock Market and in the case
of bonds only, holds a rating in one of the three highest classifications by a major rating
service. Investment in foreign companies is limited to American Depository Receipts
(ADRs) and foreign common stock listed on U.S. Exchanges. The Plan's investment
policies limit investments in fixed income securities to a rating of "A" or higher by
Moody's or Standard & Poor's rating services and collateralized mortgage obligations
(CMG's) to a rating of "Aaa" by Moody's or "AAA" by Standard & Poor's rating services.
The Plans' U.S. Treasury obligations were rated AAA by Standard & Poor's and Aaa by
Moody's. The Plans' investments in U.S. Government agency bonds and notes were rated
AAA by Standard and Poors and Aaa by Moody's. The investments in U.S. Government
agency pools and U.S. Government agency collateralized mortgage obligations were not
rated. The Plans' investments in U.S. Government agencies were rated AAA by Standard &
Poor's and Aaa by Moody's. Investments in corporate bonds were all rated —A or better by
Standard & Poor's and Baal or better by Moody's. The investments in the money market
mutual funds were rated AAA by Standard and Poors and Aaa by Moody's.
Concentration of Credit Risk
The Plans' investment policies prohibit equity securities concentrations greater than 5% in
the securities of any one company at cost nor can the aggregate investment in equity
securities total more than 70% of the total funds asset value at market; and fixed income
securities concentrations greater than 10% in any one issuer with the exception of U.S.
government or agency issues. As of September 30, 2008, the value of each equity position
held by the Plans' portfolios consisted of less than 5% of total equity assets and less than
70% in the aggregate and there were no fixed income securities with concentrations greater
than 10% in any one issuer.
Custodial Credit Risk
The Plans' investment policies require all investments be placed in custody. Plan assets are
held by a third party custodian, and all securities purchased by and all other collateral
obtained by the Plan shall be properly designated as plan assets. Securities transactions
between a broker - dealer and the custodian involving purchase or sale of securities by the
transfer of money or securities must be made on a "delivery vs. payment" basis to insure
that the custodian will have the security or money in hand at the conclusion of the
transaction. At September 30, 2008, the Plans' investment portfolios were held with a third
party custodian.
-34-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO' BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 4. DEPOSITS AND INVESTMENTS (Continued)
Investments — Pension Plans (Continued)
Risks and Uncertainties
The Plans invest in various investment securities. Investment securities are exposed to
various risks such as interest rate, market, and credit risks. Due to the level of risk
i associated with certain investment securities, it is at least reasonably possible that changes
in the values of investment securities will occur in the near term and that such changes
could materially affect the amounts reported in the statement of plan net assets. The Plans,
through their investment advisors, monitor the Plans' investments and the risks associated
therewith on a regular basis which the Plans believe minimize these risks.
NOTE 5. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
Interfund receivables and payables at September 30, 2008 were as follows:
Fund
General fund
Excise tax fund
Building better communities
Fleet maintenance fund
Nonmajor governmental funds
Due from
Due to
Other Funds
Other Funds
$ 755,497
$ -
-
279,796
-
401,835
-
54,626
54,626
73,866
$ 810,123
$ 810,123
These outstanding balances between fiends result mainly from the time lag between the dates that
(a) interfund goods and services are provided or reimbursable expenditures /expenses occur, (b)
transactions are recorded in the accounting system and (c) payments between funds are made.
Interfund transfers during September 30, 2008 were as follows:
Transfers Out
General fund
Excise tax fund
Local option gas tax fund
Nonmajor governmental funds
Internal service funds
Sanitation fund
Stormwater fund
$2,517,616 $ 354,644 $ 436,658 $100,554 $3,409,472
-35-
Transfers In
Building
Nonmajor
Internal
General
Better
Governmental
Service
Fund
Communities
Funds
Funds
Total
$ -
$ -
$ 342,956
$ 80,000
$ 422,956
2,296,472
-
-
-
2,296,472
-
77,325
93,702
-
171,027
6,144
277,319
-
-
283,463
-
-
-
20,554
20,554
185,000
-
-
-
185,000
30,000
-
-
-
30,000
$2,517,616 $ 354,644 $ 436,658 $100,554 $3,409,472
-35-
MIANII SHORES VILLAGE, Y' LORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 5. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (Continued)
Transfers are used to (a) move revenues from the fund that statute or budget requires to collect
them to the fund the statute or budget requires to expend them and (b) move unrestricted revenues
collected in the General Fund to finance various programs accounted for in other funds in
accordance with budgetary authorization.
NOTE 6. RECEIVABLES
Receivables as of September 30, 2008 for the Village's major and nonmajor funds in the aggregate
are as follows:
Receivable:
Accounts
Taxes
Total receivable
Excise
General Tax
$ 238,537 $ -
211,903 279,796
$ 450,440 $ 279,796
NOTE 7. CAPITAL ASSETS
Local Nonmajor Internal
Option Governmental Storm- Service
Gas Tax Funds Sanitation water Funds Total
$ - $ 100,491 $ 895,480 $ 59,679
26,949 19,396 -
$26,949 $ 119,887 $ 895,480 $ 59,679
Capital asset activity for the year ended September 30, 2008 was as follows:
$ 6,640 $1,300,827
- 538,044
$6,640 $1,838,871
Beginning Ending
Balance* Additions Deductions Balance
Governmental activities:
Capital assets not being depreciated:
Land $ 2,358,437 $ - $ - $ 2,358,437
Construction -in- progress - 868,575 - 868,575
Total capital assets not being depreciated 2,358,437 868,575 - 3,227,012
Capital assets being depreciated:
Buildings and improvements
Land improvements
Infrastructure
Furniture, fixtures and equipment
Total capital assets being depreciated
Less accumulated depreciation for:
Buildings and improvements
Land improvements
Infrastructure
Furniture, fixtures and equipment
Total accumulated depreciation
Total capital assets being depreciated, net
Governmental activities capital assets, net
-36-
11,000,731
- - 11,000,731
3,776,380
17,601 - 3,793,981
15,661,729
- - 15,661,729
3,064,882
512,401 19,724 3,557,559
33,503,722 530,002 19,724 34,014,000
2,025,253
1,710,448
8,457,987
2,258,406
14,452,094
19,051,628
$ 21,410,065
201,728
170,076
472,857
206,039
1,050,700
520,698
$ 347,877
- 2,226,981
- 1,880,524
- 8,930,844
7,890 2,456,555
7,890 15,494,904
11,834 18,519,096
$ 11,834 $21,746,108
MIANII SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 7. CAPITAL ASSETS (Continued)
Business -type activities:
Capital assets being depreciated:
Utility plant and equipment
Less accumulated depreciation for:
Utility plant and equipment
Total capital assets being depreciated, net
Business -type activities capital assets, net
Beginning Ending
Balance* Additions Deductions Balance
$ 2,169,045 $ - $ - $ 2,169,045
1,398,744 145,903
770,301 145,903
$ 770,301 $ 145,903 $
1,544,647
624,398
$ 624,398
*The Village has restated its governmental activities capital assets, net of accumulated
depreciation, by $1,474,086, as of September 30, 2008. See Note 3 for further details.
Depreciation expense was charged to functions as follows:
Governmental activities:
General government
Public safety
Public works
Parks and recreation
Capital assets held by the government's internal service funds are
charged to the various functions based on their usage of assets
Total depreciation expense - governmental activities
Business -type activities:
Sanitation
Stormwater
Total depreciation expense - business -type activities
-37-
$ 138,879
79,102
473,507
243,578
935,066
115,634
$1,050,700
$ 123,669
22,234
$ 145,903
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 8. LONG -TERM LIABILITIES
a. Changes in Long -Term Liabilities
The following is a summary of changes in long -term liabilities of the Village for governmental
and business -type activities for the year ended September 30, 2008.
Governmental activities:
General obligation bonds payable - 2004
General obligation bonds payable - 1999
Promissory note - 2006
Capital lease obligation
Less deferred amounts - discount
Subtotal
Compensated absences
Claims payable
Business -type activities:
Compensated absences
Bonds and Notes Payable
Beginning
Principal
Interest
Ending
Due Within
Balance
Additions
Reductions
Balance
One Year
$ 210,930
$ 320,930
2010
$ 4,705,000
$ -
$ 105,000
$ 4,600,000
$ 110,000
2,710,000
-
75,000
2,635,000
75,000
3,215,811
-
235,130
2,980,681
248,739
-
505,000
47,129
457,871
96,426
(8,594)
-
331
(8,263)
-
10,622,217
505,000
461,928
10,665,289
530,165
591,938
106,478
34,895
663,521
157,157
406,000
123,705
20,658
509,047
50,828
$11,620,155
$735,183
$ 517,481
$11,837,857
$ 738,150
$ 70,562 $ 35,345 $ 40,501 $ 65,406 $ 17,365
2004 General Obligation Bonds (Charter School)
The 2004 General Obligation bonds were issued by the Village of Miami Shores. Principal is
due annually over 30 years at various amounts ranging from $110,000 in 2009 to a final
payment of $305,000 in 2033. The bonds bear interest at variable rates ranging from 3% to
5 %, payable semi - annually.
-38-
Principal
Interest
Total
Fiscal year ended September 30:
2009
$ 110,000
$ 210,930
$ 320,930
2010
110,000
207,630
317,630
2011
115,000
204,110
319,110
2012
120,000
200,258
320,258
2013
125,000
196,058
321,058
2014 -2018
700,000
904,630
1,604,630
2019 -2023
855,000
739,213
1,594,213
2024 -2028
1,080,000
513,263
1,593,263
2029 -2033
1,385,000
214,500
1,599,500
Total
$ 4,600,000
$ 3,390,592
$ 7,990,592
-38-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 8. LONG -TERM LIABILITIES (Continued)
Bonds and Notes Payable (Continued)
1999 General Obligation Bonds (Aquatic Center)
The 1999 General Obligation bonds were issued by the Florida Municipal Loan Council.
Principal is due annually over 30 years at various amounts ranging from $75,000 in 2009 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.
Series 2006 Promissory Note
In May 2006, the Village borrowed $3,500,000 from SunTrust Bank. The note bears interest at
a rate of 4.56% per annum. The note was secured for the purpose of repaying outstanding
notes and lines of credit. The note matures in May 2018 and requires quarterly principal and
interest payments throughout the life of the note. Total principal and interest remaining on the
note is $3,707,652 payable through May 2018.
Principal
Interest
Total
Fiscal year ended September 30:
2009
$ 75,000
$ 129,338
$ 204,338
2010
80,000
126,150
206,150
2011
80,000
122,650
202,650
2012
85,000
119,050
204,050
2013
90,000
115,225
205,225
2014 -2018
525,000
504,625
1,029,625
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
$ 2,635,000
$ 1,667,988
$ 4,302,988
Series 2006 Promissory Note
In May 2006, the Village borrowed $3,500,000 from SunTrust Bank. The note bears interest at
a rate of 4.56% per annum. The note was secured for the purpose of repaying outstanding
notes and lines of credit. The note matures in May 2018 and requires quarterly principal and
interest payments throughout the life of the note. Total principal and interest remaining on the
note is $3,707,652 payable through May 2018.
-39-
Principal
Interest
Total
Fiscal year ended September 30:
2009
$ 248,739
$131,588
$ 380,327
2010
260,277
120,050
380,327
2011
272,350
107,977
380,327
2012
284,983
95,344
380,327
2013
298,203
82,125
380,328
2014-2018
1,616,129
189,887
1,806,016
Total
$ 2,980,681
$ 726,971
$ 3,707,652
-39-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 8. LONG -TERM LIABILITIES (Continued)
Capital Leases
The Village has entered into a lease purchase agreement as lessee for financing the acquisition
of police vehicles in the fleet maintenance fund. The lease agreement qualifies as a capital
lease for accounting purposes and has been recorded at the present value of the future minimum
lease payments as of the inception date. Under the terms of the agreement, the Village will
make quarterly payments of $27,313, including interest at 3.04% per annum, over a period of
60 months.
Future minimum lease payments and the present value of net minimum lease payments as
September 30, 2008 are as follows:
Governmental
The assets acquired through capital leases outstanding as of September 30, 2008 are as follows:
Assets:
Fleet $ 406,522
Less accumulated depreciation (18,866)
Total $ 387,656
NOTE 9. POST - EMPLOYMENT RETIREMENT 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.
-40-
Activities
Fiscal year ending September 30:
2009
$ 109,253
2010
109,253
2011
109,253
2012
109,253
2013
54,626
Total minimum lease payments
491,638
Less amount representing interest
(33,767)
Present value of net minimum lease payments
$ 457,871
The assets acquired through capital leases outstanding as of September 30, 2008 are as follows:
Assets:
Fleet $ 406,522
Less accumulated depreciation (18,866)
Total $ 387,656
NOTE 9. POST - EMPLOYMENT RETIREMENT 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.
-40-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 9. POST - EMPLOYMENT RETIREMENT BENEFITS (Continued)
Plan Description (Continued)
Only those police officers who retire under the provisions of the Village's pension plan with at
least 25 years of creditable service, or who are granted a disability benefit under the provisions
of the Village's Pension Plan, are eligible for the retiree health benefit.
Eligible retired police officers receive the retiree health benefit until they become eligible for
Medicare benefits, at which time the Village retiree health benefit is suspended.
The employer makes benefit payments directly to an insurance carrier or health benefit
program on behalf of the eligible retired police officer up to $100 which is funded through
payroll deductions from each police officer. Total contributions for six police officers for the
year were $7,200.
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.
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.
The Village does not provide any other post - employment retirement benefits.
NOTE 10. 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 it has purchased commercial insurance.
Prior to October 1, 2005, the Village was self - insured for these claims up to certain limits.
As of September 30, 2008, there were two liability claims and three workers' compensation claims
outstanding under the previous self - insurance program. Since the claims are still outstanding and
have not been settled as of year end, the Village increased the liability in order to meet actuarially
determined reserves to be able to meet the self - insured amount when these claims are ultimately
settled.
The amount of settlements for each of the past three fiscal years did not exceed insurance
coverage.
-41-
MIAAR SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 10. RISK MANAGEMENT (Continued)
Liabilities in the risk management internal service fund include amounts for claims that have been
incurred but not reported (IBNR's) as well as known claims that existed prior to purchasing
commercial insurance. Claim liabilities are calculated considering the recent claim settlement
trends.
Changes in the balances of estimated claims for the years ended September 30, 2008 and 2007 are
as follows:
Unpaid claims, beginning
Incurred claims (including IBNR's)
Claim payments and disbursements
Unpaid claims, ending
2008 2007
$ 406,000 $ 384,682
123,705 77,645
(20,658 ) (56,327
$ 509,047 $ 406,000
The above claims liability includes the Village's commitment to Miami -Dade County for a prior
workers' compensation claim for $169,047. This is the final remaining claim from a program with
the County that the Village participated in previously.. The Village is required to pay $2,200 per
quarter as well as any medical expenses the claimant incurs related to the injury. In the current
year, the Village paid the County $10,524 related to this claim. The current portion related to the
Miami -Dade County claim is $9,745.
NOTE 11. PENSION PLANS
The Village maintains two separate defined benefit single - employer pension plans, the General
Employees' Retirement Plan and the Police Officers' Retirement Plan which cover substantially
all of its full -time employees. The Village accounts for these pension plans as pension trust funds.
Basis of Accounting
The Village's pension plans are accounted for 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 national or international exchanges
are valued at the last reported sales price or exchange rate. Net appreciation (depreciation) in
fair value of investments includes the difference between cost and fair value of investments
held as well as the net realized gains or losses from securities sold. Interest and dividend
income is recognized on the accrual basis when earned. Purchases and sales of investments are
recorded on a trade date basis.
-42-
MIAAU SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 11. PENSION PLANS (Continued)
Membership
Membership of each Plan consisted of the following at September 30, 2008:
General
Employees' Police
Retirees and beneficiaries currently receiving benefits and
terminated employees entitled to benefits but not yet receiving them 42 22
Current employees:
Fully vested 20 12
Non - vested 46 16
66 28
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 Plan is 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 and death benefits to Plan members
and beneficiaries. The Plan does not issue a separate financial report.
Effective December 5, 2006, current employees may elect to participate in the deferred
retirement option plan (DROP) the first day of the month coincident with or next following
the date of normal retirement. Election into the DROP is voluntary. The employee may
elect to participate in the plan for a maximum of 60 months. Once participation in the
DROP commences, such participation constitutes an irrevocable election.
A member's continuous service and accrued benefit under the Plan shall be determined and
frozen on the effective date of the employee's election to participate in the DROP.
Additional continuous service or benefits under the Plan shall not be accrued. No payments
are made directly to the employee from the Plan while the member participates in the drop
plan.
During the period of the member's participation in the DROP, the employee's normal
retirement benefit shall be credited to the employee's DROP account. No further
contributions to the General Employees' Pension Plan will be required by the Village nor
the employee on behalf of any employee who has elected participation in the DROP. The
member's account is invested as part of the corpus of the system by the Board and is
credited with interest equal to the overall net rate of return on the fund assets during the
reporting period during which the member participates in the DROP.
-43-
MIAMI SHORES -VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 11. PENSION PLANS (Continued)
General Employees' Retirement Plan (Continued)
Plan Description (Continued)
Upon termination of employment with the Village or 60 months of DROP participation, the
balance of the DROP account will become payable in addition to the monthly normal
retirement benefit (which is based on credited service and average monthly salary on the
DROP election date). The DROP account is distributed to the member in a single lump sum
payment or a direct rollover to another qualified retirement plan. If a member dies before
the member's DROP account balance has been paid in full, distribution of the DROP
account balance will be made according to the member's designation. DROP payments to a
beneficiary will be in addition to any retirement benefits payable by the Plan. Under any
option and in no event may the total benefit payments to the member or the beneficiary be
less than the member's own accumulated contributions. At the end of September 30, 2008,
total liabilities for the DROP were $52,411.
Funding Policy
Plan members are required to contribute 6% of their annual covered salary. The employer
contributions for the fiscal year ending September 30, 2008, determined using the actuarial
valuation dated October 1, 2006, were 2.73% of covered payroll. The Village contributes at
actuarially determined rates that are designed to accumulate sufficient assets to pay benefits
when due.
Funding Status and Funding Progress
The funded status of the Plan as of October 1, 2007, the most recent actuarial valuation date,
is as follows:
Actuarial
Actuarial Accrued Unfunded
UAAL as a
Percentage
Actuarial
Value of
Liability
AAL
Funded
Covered
of Covered
Valuation
Assets
(AAL) Entry
(UAAL)
Ratio
Payroll
Payroll
Date
(a
Age b*
(b-a)
(a,b)
((b--a ).c)
October 1, 2007 $ 8,989,754 $ 8,474,105 $ (515,649) 106.1% $ 2,918,493 -17.7%
* For purposes of this schedule, the AAL for the Plan is determined using the entry age
actuarial cost method. Note the ARC for the Plan is calculated using the aggregate cost
method.
The schedule of funding progress, presented as required supplementary information (RSI)
following the notes to the financial statements, presents multiyear trend information about
whether the actuarial value of Plan assets are increasing or decreasing over time relative to
the AAL for benefits.
-44-
MIA1VII SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 11. PENSION PLANS (Continued)
General Employees' Retirement Plan (Continued)
Annual Pension Cost and Net Pension Obligation (Asset)
The Village's 2008 contribution was determined through an actuarial valuation performed
as of October 1, 2006. Significant actuarial assumptions used in the latest actuarial
valuation are as follows:
Valuation date
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return
Projected salary increases
Includes inflation and other general increases at
Cost of living adjustments
October 1, 2007
Aggregate
NA
NA
5 -Year Smoothed Market
8.0%
5.5%
4.0%
NA
The aggregate actuarial cost method is used to determine the annual required contribution of
the employer for the Plan. Because the method does not identify or separately amortize
unfunded actuarial liabilities, information about the Plan's funded status and funding
progress has been prepared using the entry age actuarial cost method for that purpose, and
the information presented is intended to serve as a surrogate for the funded status and
funding progress of the Plan.
As of September 30, 2008, the Village's annual pension cost and net pension asset was as
follows:
Annual required contributions (ARC)
$ 88,622
Interest on net pension asset
(83)
Adjustment to ARC
112
Annual pension cost (APC)
88,651
Actual contribution
88,622
Change in net pension asset
29
Net pension asset, beginning
(1,035
Net pension asset, ending
$_ ,O06
-45-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 11. PENSION PLANS (Continued)
General Employees' Retirement Plan (Continued)
Annual Pension Cost and Net Pension Obligation (Asset) (Continued)
Three -Year Trend Information
Annual Percentage Net Pension
Financial Information
The Plan does not issue separate stand -alone financial statements, therefore, included below
is the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets as of
and for the fiscal year ended September 30, 2008.
Statement of Plan Net Assets
September 30, 2008
Assets:
Cash and cash equivalents
Investments, at fair value
Accrued interest receivable
Total assets
Liabilities
Net assets held in trust for pension benefits
-46-
$ 439,785
7,309,142
34,628
7,783,555
52,411
$ 7,731,144
Pension
of APC
Obligation
Fiscal Year Ending
Cost (APC)
Contributed
Asset
9/30/2006
$ 15,245
103.9%
$ 15,244
9/30/2007
56,275
128.9%
(1,035)
9/30/2008
88,651
99.9%
(1,006)
Financial Information
The Plan does not issue separate stand -alone financial statements, therefore, included below
is the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets as of
and for the fiscal year ended September 30, 2008.
Statement of Plan Net Assets
September 30, 2008
Assets:
Cash and cash equivalents
Investments, at fair value
Accrued interest receivable
Total assets
Liabilities
Net assets held in trust for pension benefits
-46-
$ 439,785
7,309,142
34,628
7,783,555
52,411
$ 7,731,144
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 11. PENSION PLANS (Continued)
General Employees' Retirement Plan (Continued)
Financial Information (Continued)
Statement of Changes in Plan Net Assets
Year Ended September 30, 2008
ADDITIONS
Contributions
Net investment income
Total additions
DEDUCTIONS
Pension benefits
Total deductions
Change in net assets
Net assets held in trust for pension benefits, beginning
Net assets held in trust for pension benefits, ending
Police Officers' Retirement Plan
Plan Description
$ 272,957
1,471,410
1,198,453
374,924
374,924
(1,573,377)
9,404,521
$ 7,831,144
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.
Deferred Retirement Option Plan
Effective May 5, 1998, subsequent to the approval from the State of Florida, Division of
Retirement, current employees with at least 25 but not more than 30 years of continuous
service as a member of the plan may elect to participate in the deferred retirement option
plan (DROP) for sworn police personnel. The employee may elect to participate in the plan
for a maximum of 60 months before the employee attains 30 years of continuous service.
A member's continuous service and accrued benefit under the plan shall be determined and
frozen on the effective date of the employee's election to participate in the DROP. Additional
continuous service or benefits under the plan shall not be accrued, except for cost -of- living
adjustments provided to retirees under the plan. No payments are made directly to the
employee from the pension plan while the member participates in the drop plan.
-47-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 11. PENSION PLANS (Continued)
Police Officers' Retirement Plan (Continued)
Deferred Retirement Option Plan (Continued)
During the period of the member's participation in the DROP, the employee's normal
retirement benefit shall be credited to the employee's DROP account. No further
contributions to the police officers' retirement system will be required by the Village nor the
employee on behalf of any employee who has elected participation in the DROP. The
member's account is invested as part of the corpus of the system by the Board and is
credited with interest equal to the overall net rate of return on the fund assets during the
reporting period during which the member participates in the DROP.
At the conclusion of the member's participation in the DROP, the member will receive a
normal benefit calculated in accordance with the plan using an average monthly earnings
and continuous service as of the effective date of the member's election to participate in the
DROP. The DROP account is distributed to the member in a cash lump sum, unless the
member alternatively elects to receive payments in approximately equal quarterly or annual
installments over a period designated by the member. If a member dies before distribution
of the member's DROP plan commences, the account balance is paid to the member's
designated beneficiary in an immediate cash lump sum. Provisions of the plan do not allow
for the distribution of a member's DROP account to begin later than April 1 following the
later of the calendar year in which the member separates from service with the Village or
attains age 70' /z years. At the end of September 30, 2008, total liabilities for the DROP
were $170,496.
Funding Policy
The Village's contribution rate is adjusted each year to an amount equal to the total pension
cost for the year, as determined by the most recent actuarial valuation which is designed to
accumulate sufficient assets to pay benefits when they are due. Members are required to
contribute 9% of their annual covered earnings. Pursuant to Chapter 185 of the Florida
Statutes, a premium tax on certain casualty insurance contracts written on Miami Shores
properties is collected by the State and is remitted to the Plan. This amount totaled $66,924
for the year ended September 30, 2008. This amount was recognized as expenditure and
revenue in the General Fund. The Village is required to contribute the remaining amounts
necessary to finance the benefits through periodic contributions of actuarially determined
amounts. For the year ended September 30, 2008, the Village's contribution was 41.10% of
annual covered earnings which was determined by the October 1, 2006 actuarial valuation.
-48-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 11. PENSION PLANS (Continued)
Police Officers' Retirement Plan (Continued)
Funding Status and Funding Progress
The funded status of the Plan as of October 1, 2007, the most recent actuarial valuation date,
is as follows:
October 1, 2007 $11,320,831 $15,114,334 $3,793,503 74.9% $1,683,969
UAAL as a
Percentage
of Covered
Payroll
0-0.0
225.3%
*For purposes of this schedule, the AAL for the Plan is determined using the entry age
actuarial cost method. Note the ARC for the Plan is calculated using the aggregate cost
method.
The schedule of funding progress, presented as required supplementary information (RSI)
following the notes to the financial statements, presents multiyear trend information about
whether the actuarial value of plan assets are increasing or decreasing over time relative to
the AAL for benefits.
Annual Pension Cost and Net Pension Asset
The Village's 2008 contribution was determined through an actuarial valuation performed
as of October 1, 2006. Significant actuarial assumptions in the latest actuarial valuation are
as follows:
Valuation date
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return
Projected salary increases
Includes inflation and other general increases at
Cost of living adjustments
October 1, 2007
Aggregate
NA
NA
5 -Year Smoothed Market
8.0%
6.5%
4.0%
1.5%
The aggregate actuarial cost method is used to determine the annual required contribution of
the employer for the Plan. Because the method does not identify or separately amortize
unfunded actuarial liabilities, information about the Plan's funded status and funding
progress has been prepared using the entry age actuarial cost method for that purpose, and
the information presented is intended to serve as a surrogate for the funded status and
funding progress of the Plan.
-49-
Actuarial
Actuarial
Accrued
Unfunded
Actuarial Value of
Liability
AAL Funded Covered
Valuation Assets
(AAL) Entry
(UAAL) Ratio Payroll
Date (a)
Age *
bb--a) (ab) c
October 1, 2007 $11,320,831 $15,114,334 $3,793,503 74.9% $1,683,969
UAAL as a
Percentage
of Covered
Payroll
0-0.0
225.3%
*For purposes of this schedule, the AAL for the Plan is determined using the entry age
actuarial cost method. Note the ARC for the Plan is calculated using the aggregate cost
method.
The schedule of funding progress, presented as required supplementary information (RSI)
following the notes to the financial statements, presents multiyear trend information about
whether the actuarial value of plan assets are increasing or decreasing over time relative to
the AAL for benefits.
Annual Pension Cost and Net Pension Asset
The Village's 2008 contribution was determined through an actuarial valuation performed
as of October 1, 2006. Significant actuarial assumptions in the latest actuarial valuation are
as follows:
Valuation date
Actuarial cost method
Amortization method
Remaining amortization period
Asset valuation method
Actuarial assumptions:
Investment rate of return
Projected salary increases
Includes inflation and other general increases at
Cost of living adjustments
October 1, 2007
Aggregate
NA
NA
5 -Year Smoothed Market
8.0%
6.5%
4.0%
1.5%
The aggregate actuarial cost method is used to determine the annual required contribution of
the employer for the Plan. Because the method does not identify or separately amortize
unfunded actuarial liabilities, information about the Plan's funded status and funding
progress has been prepared using the entry age actuarial cost method for that purpose, and
the information presented is intended to serve as a surrogate for the funded status and
funding progress of the Plan.
-49-
MIAMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 11. PENSION PLANS (Continued)
Police Officers' Retirement Plan (Continued)
Annual Pension Cost and Net Pension Asset (Continued)
As of September 30, 2008, the Village's net pension asset was as follows:
Annual required contributions (ARC)
$ 700,455
Interest on net pension asset
(1,091)
Adjustment to ARC
1,892
Annual pension cost (APC)
701,256
Actual contribution
739,887
Change in net pension asset
(38,631)
Net pension asset, beginning
(13,636
Net pension asset, ending
$ (52,267)
Three -Year Trend Information
Annual Percentage Net
Pension of APC Pension
Fiscal Year Ending Cost (APC) Contributed Asset
9/30/2006
9/30/2007
9/30/2008
Financial Information
$ 298,867 99.6% $ (14,561)
595,136 99.8% (13,636)
701,256 105.5% (52,267)
The Plan does not issue separate stand -alone financial statements, therefore, included below
is the Statement of Plan Net Assets and the Statement of Changes in Plan Net Assets as of
and for the fiscal year ended September 30, 2008.
Statement of Plan Net Assets
September 30, 2008
Assets:
Cash and cash equivalents
Investments, at fair value
Due from state
Accrued interest receivable
Total assets
Liabilities
Net assets held in trust for pension benefits
-50-
$ 481,943
10,097,362
69,624
46,344
10,695,273
170,496
$10,524,777
ML LMMI SHORES VILLAGE, FLORIDA
NOTES TO BASIC FINANCIAL STATEMENTS
(Continued)
NOTE 11. PENSION PLANS (Continued)
Police Officers' Retirement Plan (Continued)
Financial Information (Continued)
Statement of Changes in Plan Net Assets
Year Ended September 30, 2008
ADDITIONS
Contributions $ 894,003
Net investment income (1,830,538)
Total additions (936,535)
DEDUCTIONS
Pension benefits 777,946
Total deductions 777,946
Change in net assets (1,714,481)
Net assets held in trust for pension benefits, beginning 12,239,258
Net assets held in trust for pension benefits, ending $10,524,777
NOTE 12. 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. 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.
-51-
REQUIRED SUPPLEMENTARY INFORMATION
MIAMI SHORES VILLAGE, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
GENERAL FUND
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Revenues:
Taxes:
Property taxes
Licenses and permits:
Business licenses - Village
Business licenses - County
Building permits
Certificate of reoccupancy
Other licenses and permits
Total licenses and permits
Intergovernmental revenues:
State shared revenues:
State revenue sharing
Local government half cent sales tax
Other
Total intergovernmental revenues
Charges for services:
Physical environment
Police extra duty
Landscape maintenance
Culture /recreation
Total charges for services
Fines and forfeitures:
Court fines and costs
School crossing guards
Other
Total fines and forfeitures
Miscellaneous:
Rents
Other
Total miscellaneous
Interest income
Total revenues
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
$ 6,533,787 $ 6,533,787 $ 6,605,878 $ 72,091
70,000
70,000
72,110
2,110
22,000
22,000
27,861
5,861
500,000
500,000
518,374
18,374
7,000
7,000
5,951
(1,049)
61,000
61,000
58,655
(2,345)
660,000
660,000
682,951
22,951
233,337
233,337
230,369
(2,968)
718,726
718,726
663,582
(55,144)
11,625
11,625
1,237
(10,388)
963,688
963,688
895,188
(68,500)
24,500
24,500
69,734
45,234
135,000
135,000
156,918
21,918
19,901
19,901
19,901
-
939,530
939,530
854,747
(84,783)
1,118,931
1,118,931
1,101,300
(17,631)
70,000
70,000
136,056
66,056
35,000
35,000
26,864
(8,136)
135,500
135,500
104,515
(30,985)
240,500
240,500
267,435
26,935
25,000
25,000
99,971
74,971
8,200
8,200
63,354
55,154
33,200
33,200
163,325
130,125
195,000 195,000 134,903 (60,097)
$ 9,745,106 $ 9,745,106 $ 9,850,980 $ 105,874
(Continued)
See note to budgetary comparison schedules.
-52-
MIAMI SHORES VILLAGE, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
GENERALFUND
(Continued)
Expenditures:
Current:
General government:
Village council
Village attorney
Village manager
Village clerk
Code enforcement
Building department
Planning and zoning
Finance
Other general government
Total general government
Public safety:
Law enforcement
School crossing guard
Total public safety
Public works:
Parks
Street maintenance
Public works administration
Recreation maintenance
Total public services
Culture and recreation:
Recreation
Library
Total culture and recreation
Capital outlay
Total expenditures
Deficiency of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Capital leases
Total other financing sources (uses)
Net change in fund balance
Fund balance, beginning of year
Fund balance, end of year
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Variance with
Final Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
$ 7,501 $
7,501
$ 5,755 $
1,746
196,989
196,989
119,971
77,018
253,453
253,453
246,349
7,104
141,625
141,625
124,783
16,842
178,449
178,449
162,080
16,369
393,629
393,629
324,452
69,177
236,580
269,203
147,425
121,778
573,418
573,418
389,185
184,233
1,102,948
898,893
553,569
345,324
3,084,592
2,913,160
2,073,569
839,591
4,676,772
4,845,282
4,616,505
228,777
39,155
39,155
33,216
5,939
4,715,927
4,884,437
4,649,721
234,716
559,693
559,693
497,866
61,827
627,144
627,144
536,097
91,047
498,149
498,149
453,165
44,984
215,340
215,340
208,862
6,478
1,900,326
1,900,326
1,695,990
204,336
1,986,357
1,976,808
1,778,566
198,242
393,575
391,475
352,449
39,026
2,379,932
2,368,283
2,131,015
237,268
65,620
89,920
85,816
4,104
12,146,397 12,156,126 10,636,111 1,520,015
(2,401,291) (2,411,020) (785,131) 1,625,889
2,687,917 2,833,976 2,517,616 (316,360)
(286,626) (927,956) (422,956) 505,000
505,000 - (505,000)
2,401,291 2,411,020 2,094,660 (316,360)
See note to budgetary comparison schedules.
-53-
1,309,529 1,309,529
4,212,236 4,212,236
$ 5,521,765 $ 5,521,765
MIAMI SHORES VILLAGE, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
BUDGETARY COMPARISON SCHEDULE
EXCISE TAX FUND
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Variance
with
Final
Budget -
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Revenues:
Public services taxes $ 2,270,611 $ 2,270,611 $ 2,222,806 $ (47,805)
Expenditures - - - -
Excess (deficiency) of revenues
over expenditures 2,270,611 2,270,611 2,222,806 (47,805)
Other financing uses:
Transfers out (2,270,611) (2,270,611) (2,296,472) (25,861)
Net change in fund balance - - (73,666) (73,666)
Fund balance, beginning of year - - 73,666 73,666
Fund balance, end of year $ - $ - $ - $ -
See note to budgetary comparison schedules.
-54-
MIANII SHORES VILLAGE, FLORIDA
BUDGETARY COMPARISON SCHEDULE
LOCAL OPTION GAS TAX FUND
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Revenues:
Other taxes
Interest income
Total revenues
Expenditures:
Current:
Public works
Total expenditures
Excess of revenues
over expenditures
Other financing uses:
Transfers out
Net change in fund balance
Fund balance, beginning of year
Fund balance, end of year
203,869 203,869 128,487 75,382
203,869 203,869 128,487 75,382
171,027 171,027 267,209 96,182
171,027 (171,027) (171,027) -
See note to budgetary comparison schedules.
-55-
96,182 96,182
967,839 967,839
$ 1,064,021 $ 1,064,021
Variance
with
Final
Budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative
$ 371,744
$ 371,744
$ 366,668
$ (5,076)
3,152
3,152
29,028
25,876
374,896
374,896
395,696
20,800
203,869 203,869 128,487 75,382
203,869 203,869 128,487 75,382
171,027 171,027 267,209 96,182
171,027 (171,027) (171,027) -
See note to budgetary comparison schedules.
-55-
96,182 96,182
967,839 967,839
$ 1,064,021 $ 1,064,021
MIAMI SHORES VILLAGE, FLORIDA
NOTE TO BUDGETARY COMPARISON SCHEDULES
FISCAL YEAR ENDED SEPTEMBER 30, 2008
NOTE 1. BUDGETS AND BUDGETARY ACCOUNTING
Annual budgets are adopted on a basis consistent with accounting principles generally accepted in
the United States of America. The Village annually adopts an operating budget for the General
Fund, Excise Tax Fund, Local Option Gas Tax Fund, Half Cent Surtax Fund and the Debt Service
Fund.
(1) 35 days prior to the 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 for the General Fund is legally maintained at the
departmental level. For all other funds it is legally maintained at the fund 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 a resolution.
(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. There were supplemental
appropriations in the general fund totaling $651,059 during the fiscal year ended September
30, 2008 for funding outstanding obligations and unanticipated expenses.
(6) Unencumbered appropriations lapse at year end.
-56-
MIANII SHORES VII.LAGE, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS
General Employees' Retirement System
October 1, 2001
$ 6,739,527
$ 4,908,521
UAAL as a
137.3%
Actuarial
(73.5 %)
Percentage
Actuarial
Accrued
Unfunded
of
Actuarial Value of
Liability
AAL Funded Covered
Covered
Valuation Assets
(AAL) Entry
(UAAL) Ratio Payroll
Payroll
Date
A e b *))
(c)
b -a =c
October 1, 2001
$ 6,739,527
$ 4,908,521
$ (1,831,006)
137.3%
$ 2,490,298
(73.5 %)
October 1, 2002
7,038,780
5,959,283
(1,079,497)
118.1%
2,871,867
(37.6 %)
October 1, 2003
7,458,449
6,533,561
(924,888)
114.2%
2,895,480
(31.9 %)
October 1, 2005
8,173,688
7,680,175
(493,513)
106.4%
2,786,865
(17.7 %)
October 1, 2006
8,297,232
7,995,304
(301,928)
103.8%
3,243,186
(9.3 %)
October 1, 2007
8,989,754
8,474,105
(515,649)
106.1%
2,918,493
(17.7°/x)
Police Officer's Retirement System
October 1, 2001
$ 10,090,680
$ 9,726,578
UAAL as a
103.7%
Actuarial
(25.1 %)
Percentage
Actuarial
Accrued
Unfunded
of
Actuarial Value of
Liability
AAL Funded
Covered Covered
Valuation Assets
(AAL) Entry
(UAAL) Ratio
Payroll Payroll
Date (aa)
Age (b)*
Cb-a) ( -hl
b -a =c
October 1, 2001
$ 10,090,680
$ 9,726,578
$ (364,102)
103.7%
$ 1,453,248
(25.1 %)
October 1, 2002
10,112,018
10,279,369
167,351
98.4%
1,425,992
11.7%
October 1, 2003
10,238,221
10,983,149
744,928
93.2%
1,514,310
49.2%
October 1, 2005
10,151,153
13,679,903
3,528,750
74.2%
1,424,759
247.7%
October 1, 2006
10,332,878
14,573,821
4,240,943
70.9%
1,630,878
260.0%
October 1, 2007
11,320,831
15,114,334
3,793,503
74.9%
1,683,969
225.3%
*The annual required contribution (ARC) is calculated using the aggregate actuarial cost method. Information
in this schedule is calculated using the entry age actuarial cost method as a surrogate for the funding progress of
the plan.
-57-
MIANH SHORES VILLAGE, FLORIDA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER CONTRIBUTIONS
Police Officer's Retirement System
Contribution
Year Annual from
Ended Required Employer Percentage
September 30, Contribution and State Contributed
2003
General Employees' Retirement System
$ 132,996
Year
Annual Contribution
197,498
Ended
Required from
Percentage
September 30,
Contribution Employer
Contributed
2003
$ - $ -
100.0%
2004
- -
100.0%
2005
15,845 -
0.0%
2006
15,845 15,845
100.0%
2007
56,709 72,554
127.9%
2008
88,622 88,622
100.0%
Police Officer's Retirement System
Contribution
Year Annual from
Ended Required Employer Percentage
September 30, Contribution and State Contributed
2003
$ 132,996
$ 132,996
100.0%
2004
197,498
197,498
100.0%
2005
279,522
279,522
100.0%
2006
297,812
297,812
100.0%
2007
594,211
594,211
100.0%
2008
739,887
739,887
100.0%
-58-
COMBINING AND INDIVIDUAL FUND
STATEMENTS AND SCHEDULES
NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds
Transportation Surtax — This fund accounts for the Village's portion of the Miami -Dade
County one -half percent transportation surtax approved by voters in November 2002.
Grants — This fund accounts for the use of specific designated resources related to grant
programs.
Hurricane Fund — This fund accounts for hurricane related expenditures as well as FEMA
reimbursements. The fund is used to centralize financial activities required to restore the Village
to normal operations following a natural disaster.
Charter High School — This fund accounts for the initial cost and transactions associated with
the Charter High School.
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.
Debt Service Fund
General Obligation Bonds — This fund accounts for the 1999 and 2004 General Obligation
bonds issued to fund the design, developments and construction of the Miami Shores Aquatic
Facility (1999) and for the charter school construction (2004) and other banking financing.
Capital Proiects Funds
Capital Improvement Fund - This fund accounts for major capital acquisitions and projects to
improve the Village.
Aquatic Facility Fund — This fund accounts for all the cost associated with the design,
development and construction of the aquatic facility which was completed in fiscal year 2005
and funded by general obligation bonds issued through the Florida Municipal Loan Council.
Charter High School Construction — This fund accounts for all costs associated with the
construction of the Doctors Charter School of Miami Shores which was substantially complete in
2005
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19
MIANH SHORES VILLAGE, FLORIDA
BUDGETARY COMPARISON SCHEDULE
TRANSPORTATION SURTAX FUND
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Revenues:
Other taxes
Interest income
Total revenues
Expenditures:
Current:
Public works
Excess of revenues over expenditures
Other financing uses:
Transfers out
Net change in fund balance
Fund balance, beginning
Fund balance, ending
-63-
182,578 182,578 148,969 33,609
190,211 190,211 213,041 22,830
(277,319 (277,319 277,319 -
(87,108) (87,108) (64,278) 22,830
87,108 87,108 949,673 862,565
$ - $ - $ 885,395 $ 885,395
Variance
with
Final
Budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
$ 369,289
$ 369,289
$ 335,957
$ (33,332)
3,500
3,500
26,053
22,553
372,789
372,789
362,010
(10,779)
182,578 182,578 148,969 33,609
190,211 190,211 213,041 22,830
(277,319 (277,319 277,319 -
(87,108) (87,108) (64,278) 22,830
87,108 87,108 949,673 862,565
$ - $ - $ 885,395 $ 885,395
ML4M SHORES VILLAGE, FLORIDA
BUDGETARY COMPARISON SCHEDULE
DEBT SERVICE FUND
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Revenues:
Property taxes
Interest income
Total revenues
Expenditures:
Current:
General government
Debt service:
Principal
Interest
Total debt service
Total expenditures
Deficiency of revenues over expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources
Net change in fund balance
Fund balance, beginning
10,000
13,250
12,620
Variance
with
462,858
415,130
47,728
Final
513,981
495,997
17,984
Budget -
Budgeted Amounts
Actual
Positive
Original
Final
Amounts
(Negative)
$ 651,511
$ 651,511
$ 618,460
$ (33,051)
10,000
10,000
18,238
8,238
661,511
661,511
636,698
(24,813
10,000
13,250
12,620
630
400,728
462,858
415,130
47,728
506,111
513,981
495,997
17,984
906,839
976,839
911,127
65,712
916,839
990,089
923,747
66,342
255,328 (328,578 (287,049 41,529
380,328 435,328 435,328 -
125,000 106,750 - 106,750
255,328 328,578 435,328 106,750
148,279 148,279
- 703,791 703,791
Fund balance, ending $ - $ - $ 852,070 $ 852,070
-64-
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
ASSETS
Current assets:
Cash and cash equivalents
Investments
Accounts receivable
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
Compensated absences
Capital lease
Claims payable
Total current liabilities
Noncurrent liabilities:
Compensated absences
Capital lease
Claims payable
Total noncurrent liabilities
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt
Unrestricted
Total net assets
SEPTEMBER 30, 2008
-65-
Risk Fleet
Mana eg ment Maintenance Total
$ 366,015 $ 768,760 $ 1,134,775
298,869
-
298,869
6,640
-
6,640
-
84,625
84,625
671,524
853,385
1,524,909
-
7,127
7,127
-
677,105
677,105
-
684,232
684,232
671,524
1,537,617
2,209,141
45,436 358,107
403,543
- 54,626
54,626
- 8,724
8,724
- 96,426
96,426
41,084 -
41,084
86,520 517,883
604,403
26,171 26,171
- 361,445 361,445
298,916 - 298,916
298,916 387,616 686,532
385,436 905,499 1,290,935
- 324,839 324,839
286,088 307,279 593,367
$ 286,088 $ 632,118 $ 918,206
MIAMI SHORES VILLAGE, FLORIDA
COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS
INTERNAL SERVICE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Risk Fleet
Management Maintenance
Fund Fund Total
Charges for services $ 1,229,538 $ 1,050,704 $ 2,280,242
Operating expenses:
Administrative and general
52,831
536,780
589,611
Personnel expenses
-
246,574
246,574
Depreciation
-
115,634
115,634
Insurance premiums
755,144
167,225
922,369
Insurance claims
139,911
-
139,911
Total operating expenses
947,886
1,066,213
2,014,099
Operating income (loss)
281,652
(15,509)
266,143
Non - operating revenues (expenses):
Loss on sale of capital assets
-
(7,634)
(7,634)
Interest income
6,077
8,823
14,900
Interest expense
-
(7,497)
(7,497)
Other revenues
18,913
14,865
33,778
Total non - operating revenues
24,990
8,557
33,547
Income (loss) before transfers
306,642
(6,952)
299,690
Transfers in
-
100,554
100,554
Transfers out
(20,554)
-
(20,554)
Change in net assets
286,088
93,602
379,690
Net assets, beginning
-
538,516
538,516
Net assets, ending
$ 286,088 $
632,118
$ 918,206
-66-
MIAMI SHORES VILLAGE, FLORIDA
COMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Cash flows from capital and related financing activities:
Proceeds from capital lease
Risk
Fleet
Proceeds from sale of capital assets
- 4,200
Management
Maintenance
- (450,351)
(450,351)
Fund
Fund
Total
Cash flows from operating activities:
- (47,129)
(47,129)
Interest paid on capital lease
Cash received from customers, governments
_ (7,497)
Net cash provided by capital and related
414,711
and other funds
$ 1,226,103
$ 1,050,704
$ 2,276,807
Cash paid to suppliers
(789,564)
(401,053)
(1,190,617)
Cash paid to employees
-
(254,784)
(254,784)
Other revenues
18,913
14,865
33,778
Net cash provided by operating activities
455,452
409,732
865,184
Cash flows from noncapital financing activities:
Transfers in
-
100,554
100,554
Transfers out
(20,554)
-
(20,554)
Net cash provided by (used in) noncapital
financing activities
(20,554)
100,554
80,000
Cash flows from capital and related financing activities:
Proceeds from capital lease
- 505,000
505,000
Proceeds from sale of capital assets
- 4,200
4,200
Acquisition of capital assets
- (450,351)
(450,351)
Due to other funds
- 54,626
54,626
Principal paid on capital lease
- (47,129)
(47,129)
Interest paid on capital lease
- (7,497)
_ (7,497)
Net cash provided by capital and related
414,711
Cash and cash equivalents, ending
financing activities
- 58,849
58,849
Cash flows from investing activities:
Interest received
6,077
8,823
14,900
Purchases of investments
(298,869)
-
_ (298,869)
Net cash provided by (used in) investing activities
(292,792)
8,823
_ (283,969)
Net increase in cash and cash equivalents
142,106
577,958
720,064
Cash and cash equivalents, beginning
223,909
190,802
414,711
Cash and cash equivalents, ending
$ 366,015
$ 768,760
$ 1,134,775
Reconciliation of operating income (loss) to net cash
provided by operating activities:
Operating income (loss)
$ 281,652
$ (15,509)
$ 266,143
Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:
Depreciation
-
115,634
115,634
Other revenues
18,913
14,865
33,778
Changes in operating assets and liabilities:
Accounts receivable
(3,435)
-
(3,435)
Prepaid items
-
5,000
5,000
Inventories
-
(42,989)
(42,989)
Accounts payable and accrued liabilities
34,617
340,941
375,558
Compensated absences
-
(8,210)
(8,210)
Claims payable
123,705
-
123,705
Net cash used by operating activities
$ 455,452
$ 409,732
$ 865,184
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FIDUCIARY FUNDS
These funds account for assets held by the Village in a trustee capacity or as an agent for
employees.
Pension Trust Funds:
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.
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.
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
SEPTEMBER 30, 2008
ASSETS
Investments:
Common stocks
Corporate bonds
U.S. Treasury obligations
U.S. Government agencies
Equity mutual funds
Money market mutual funds
Due from State of Florida
Accrued interest receivable
Total assets
LIABILITIES AND NET ASSETS
Liabilities:
DROP liability
Net assets held in trust for pension benefits
-68-
General
Police Employees'
Pension Pension
Trust Trust Total
$ 4,297,979 $ 3,667,760 $ 7,965,739
722,015
535,408
1,257,423
1,885,897
930,558
2,816,455
974,358
957,531
1,931,889
1,716,896
1,317,885
3,034,781
982,160
439,785
1,421,945
69,624
-
69,624
46,344
34,628
80,972
10,695,273
7,883,555
18,578,828
170,496 52,411 222,907
$ 10,524,777 $ 7,831,144 $ 18,355,921
MIAMI SHORES VILLAGE, FLORIDA
COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
FISCAL YEAR ENDED SEPTEMBER 30, 2008
ADDITIONS
Contributions:
Village
Employees
State
Total contributions
Investment income:
Net depreciation in fair value of investments
Interest income
Dividends
Less investment expenses
Net investment income
Total additions
DEDUCTIONS
Pension benefits
Change in net assets
Net assets held in trust for pension benefits, beginning
Net assets held in trust for pension benefits, ending
-69-
General
Police Employees'
Pension Pension
Fund Fund Total
$ 670,263 $ 88,622 $ 758,885
154,116 184,335 338,451
69,624 - 69,624
894,003 272,957 1,166,960
(2,093,311)
143,653
215,900
(96,780)
(1,830,538)
(936,535)
(1,681,652)
105,704
171,319
(66,781)
(1,471,410)
(1,198,453)
(3,774,963)
249,357
387,219
(163,561)
(3,301,948)
(2,134,988)
777,946 374,924 1,152,870
(1,714,481) (1,573,377) (3,287,858)
12,239,258 9,404,521 21,643,779
$ 10,524,777 $ 7,831,144 $ 18,355,921
MIAMI SHORES VILLAGE, FLORIDA
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUND
ASSETS
Cash and cash equivalents
Investments
LIABU,ITIES
FISCAL YEAR ENDED SEPTEMBER 30, 2008
Police Insurance Trust Agency Fund
Balance Balance
September 30, September 30,
2007 Additions Deductions 2008
$ 2,213 $ - $ 1,695 $ 518
116,502 13,073 - 129,575
$ 118,715 $ 13,073 $ 1,695 $ 130,093
Deposits held in trust $ 118,715 $ 13,073 $ 1,695 $ 130,093
-70-
COMPLIANCE SECTION
M ARCUM
RAcHLIN
ACCOUNTANTS e ADVISORS
Independent Auditors' Report on Internal Control over
Financial Reporting and on Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with Government Auditing Standards
Honorable Mayor, Village Council and Village Manager
Miami Shores Village, Florida
We have audited the 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, 2008, which
collectively comprise the Village's basic financial statements, and have issued our report thereon
dated September 29, 2010. Our report contains a scope qualification relating to our inability to
gather audit evidence related to the timing, extent and magnitude of the alleged
misappropriation. We conducted our audit in accordance with auditing standards generally
accepted in the United States of America and the standards applicable to financial audits
contained in Government Auditing Standards, issued by the Comptroller General of the United
States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the Village's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our
opinion on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the Village's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the Village's internal control over financial reporting.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and was not designed to identify all deficiencies in internal
control over financial reporting that might be significant deficiencies or material weaknesses and
therefore, there can be no assurance that all deficiencies, significant deficiencies, or material
weaknesses have been identified. However, as described in the accompanying schedule of
findings and responses, we identified certain deficiencies in internal control over financial
reporting that we consider to be material weaknesses.
-71-
H
MARCUMGROUP
MEMBER
MarcunnRachlin a division of Marcum LLP m marcumrachlin.com
One Southeast Third Avenue m Tenth Floor m Miami, Florida 33131 ® Phone 305.377.4228 m Fax 305.377.8331
FLORIDA a NEW YORK a NEW JERSEY a CONNECTICUT a GRAND CAYMAN
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the Village's financial statements will not be
prevented, or detected and corrected on a timely basis. We consider the deficiencies described in
the accompanying schedule of findings and responses as items 08 -01 and 08 -02 to be material
weaknesses.
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 an instance of
noncompliance or other matters that are required to be reported under Government Auditing
Standards and.is described in the accompanying schedule of findings and responses as item 08-
03.
The Village's response to the findings identified in our audit are described in the accompanying
schedule of findings and responses. We did not audit the Village's response and, accordingly,
we express no opinion on it.
This report is intended solely for the information and use of the Mayor, Village Council,
management and regulatory agencies and is not intended to be and should not be used by anyone
other than these specified parties.
a division of Marcum LLP
Miami, Florida
September 29, 2010
MARCUM
RACH LI N
ACCOUNTANTS • ADVISORS
A division of Marcum LLa
MARCUM
RACHLIN
ACCOUNTANTS A 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 Miami Shores Village, Florida (the Village) as of and for the
year ended September 30, 2008, and have issued our report thereon dated September 29, 2010. Our
report contains a scope qualification relating to our inability to gather audit evidence related to the timing,
extent and magnitude of the alleged misappropriation.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. We have issued our Independent Auditors'
Report on Internal Control over Financial Reporting and Compliance and Other Matters and Schedule of
Findings and Responses. Disclosures in that report and schedule, which are dated September 29, 2010,
should be considered in conjunction with this management letter.
Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General,
which governs the conduct of local governmental entity audits performed in the State of Florida. This
letter includes the following information, which is not included in the aforementioned auditor's report or
schedule:
➢ Section 10.554(1)(i)l., Rules of the Auditor General, requires that we determine whether or not
corrective actions have been taken to address findings and recommendations made in the preceding
annual financial audit report. The status of findings and recommendations made in the preceding
annual financial report are reported in the accompanying summary schedule of prior audit findings.
➢ Section 10.554(1)(i)2., Rules of the Auditor General, requires our audit to include a review of the
provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In
connection with our audit, we determined that the Village complied with Section 218.415, Florida
Statutes.
➢ Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address in the management
letter any recommendations to improve financial management. In connection with our audit, our
findings and recommendations are incorporated in the accompanying schedule of findings and
responses.
➢ Section 10.554(1)(i)4., Rules of the Auditor General, requires that we address violations of laws,
regulations, contracts or grant agreements, or abuse that have occurred, or are likely to have
occurred, that have an effect on the determination of financial statement amounts that is less than
material but more than inconsequential. Matters required to be disclosed by the Rules of the
Auditor General are reported in the accompanying schedule of findings and responses.
-73-
MARCUMGROUP
MEMBER
MarcurnRachlin a division of Marcum uP ® marcumrachlin.com
One Southeast Third Avenue ® Tenth Floor ® Miami, Florida 33131 o Phone 305.377.4228 ® Fax 305.377.8331
FLORIDA n NEW YORK a NEW JERSEY n CONNECTICUT a GRAND CAYMAN
Honorable Mayor, Village Council and Village Manager
Miami Shores Village, Florida
Page Two
➢ Section 10.554(1)(i)5., Rules of the Auditor General, provides that the auditor may, based on
professional judgment, report the following matters that have an inconsequential effect on financial
statements, considering both quantitative and qualitative factors: (1) violations of provisions of
contracts or grant agreements, fraud, illegal acts, or abuse, and (2) control deficiencies that are not
significant deficiencies. Matters required to be disclosed by the Rules of the Auditor General are
reported in the accompanying schedule of findings and responses.
➢ Section 10.554(1)(i)6., Rules of the Auditor General, requires that the name or official title and legal
authority for the primary government and each component unit of the reporting entity be disclosed
in this management letter, unless disclosed in the notes to the financial statements. The Village has
made these disclosures in the notes to the financial statements.
➢ Section 10.554(l)(i)7.a., Rules of the Auditor General, requires a statement be included as to
whether or not the local governmental entity has met one or more of the conditions described in
Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In
connection with our audit, we determined that the Village did not meet any of the conditions
described in Section 218.503(1), Florida Statutes.
➢ Section 10.554(1)(i)7.b., Rules of the Auditor General, requires that we determine whether the
annual financial report for the Village for the fiscal year ended September 30, 2008 filed with the
Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in
agreement with the annual financial audit report for the fiscal year ended September 30, 2008. In
connection with our audit, we determined that these two reports were in agreement.
➢ Pursuant to Sections 10.554(1)(i)7.c. and 10.556(7), Rules of the Auditor General, we applied
financial condition assessment procedures. It is management's responsibility to monitor the
Village's financial condition,. and our financial condition assessment was based in part on
representations made by management and the review of financial information provided by same.
Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is
not limited. Auditing standards generally accepted in the United States of America require us to indicate
that this letter is intended solely for the information and use of the Mayor, Village Council, management,
and the Florida Auditor General, and is not intended to be and should not be used by anyone other than
these specified parties
a division of Marcum LLP
Miami, Florida
September 29, 2010
-74-
MARCUM
RACHLIN
ACCOUNTANTS • ADVISORS
A division of Marcum up
MIAMI SHORES VILLAGE, FLORIDA
SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS
FISCAL YEAR ENDED SEPTEMBER 30, 2008
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND STATUS
The following addresses the status of financial statement findings reported in the fiscal year ended
September 30, 2007 schedule of findings and responses.
Matters that are repeated in the accompanying schedule of findings and responses:
06 -01 Excess of Expenditures over Appropriations (revised and included as comment 08 -03)
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MIAMI SHORES VILLAGE, FLORIDA
SCHEDULE OF FINDINGS AND RESPONSES
SEPTEMBER 30, 2008
FINANCIAL STATEMENT FINDINGS
Material Weaknesses
08 -01 Override of Controls
Criteria
The opportunity to commit and conceal fraud exists where there are assets susceptible to misappropriation
and inadequate controls to prevent or detect fraud. Certain steps should be taken so that no one employee
should have access to both physical assets and the related accounting records or to all phases of a
transaction. Steps should also be taken by senior management to ensure there are adequate controls in
place to ensure employees are not able to override existing controls.
Safeguards against misappropriation of assets include an adequate segregation of duties, a timely review
of bank reconciliations by an appropriate level of management as well as the review and approval by an
appropriate level of management of adjusting journal entries and supporting documentation.
Condition
During our review of internal controls, we noted that bank reconciliations and journal entries were
prepared by the Village's comptroller, but were not reviewed by an appropriate level of management.
Furthermore, we noted that many journal entries lacked supporting documentation.
During the year, it was learned that cash collected by the Village from various departments was not being
deposited into the Village's bank account. The Village's comptroller, in May 2010, was arrested and
charged. The investigation is ongoing.
Cause
Lack of sufficient internal controls over the review and approval process as well as safeguards to ensure
employees are not able to override existing controls. The adequacy of internal controls can be affected by
the design of the internal controls as well as the adequacy of staffing levels and skill sets.
Effect
Unauthorized and /or fraudulent transactions posted to the general ledger, the appearance of no oversight
of the bank reconciliation process and employee override of controls. In addition, the Village
experienced a misappropriation of assets by the former comptroller.
-76-
MIAMI SHORES VILLAGE, FLORIDA
SCHEDULE OF FINDINGS AND RESPONSES (Continued)
SEPTEMBER 30, 2008
Recommendation
We recommend that the Village implement policies and procedures to ensure that there is evidence of
bank reconciliation and journal entry review by an appropriate level of senior management. We also
recommend that the Village implement controls to ensure that no one employee has access to both
physical assets and the related accounting records or to all phases of a transaction. Also, the Village
should take steps to ensure that procedures in place do not allow for employee override of controls.
View of Responsible Officials and Planned Corrective Action
In early 2008, bank reconciliations and journal entries were handled consistent with prior years. In the
latter part of 2008, a new Finance Director was selected. At that time, new internal controls began to be
implemented. As part of these procedures, the Finance Director directly receives the bank statements,
reviews all bank reconciliations and reviews and approves all journal entries. Additional controls have
been implemented over the entire cash receipt process. Management discovered that cash collected by the
Village was not being deposited into the Village's bank accounts during the process of implementing
appropriate internal controls.
08 -02 Prior Period Adjustment
Criteria
The establishment and maintenance of accurate accounting records for capital assets is necessary to help
assure that the Village's property, plant and equipment are not stolen, misused or subject to undue wear
and tear. These records are a necessary element in an on -going governmental capital asset repair and
preventative maintenance program and enhance efforts to obtain optimum insurance coverage.
Condition
During the 2008 fiscal year, the Village determined that certain transactions relating to capital assets were
not properly recorded in prior years. It was noted that certain capital assets totaling $391,852 and the
related accumulated depreciation was not properly recorded in prior years. Furthermore, accumulated
depreciation was adjusted for $1,082,434 as a result of depreciation expense being improperly calculated
on certain other capital assets in prior years. The net effect of these adjustments was an increase in net
assets of $1,474,086.
Effect
The potential effect was, that without the above noted corrections, the Village's financial statements were
materially misstated.
Cause
Internal controls were not in place to determine if capital assets and the related accumulated depreciation
was properly recorded.
-77-
MIAMI SHORES VILLAGE, FLORIDA
SCHEDULE OF FINDINGS AND RESPONSES (Continued)
SEPTEMBER 30, 2008
Recommendation
We recommend that the Village perform procedures to ensure that capital assets are properly captured and
recorded on a monthly basis. These procedures, with the appropriate supervisory review, should ensure
accurate reporting of capital assets in the Village's financial statements.
View of Responsible Officials and Planned Corrective Action
Management does not concur with the cause of this prior period adjustment. This adjustment is related to
the implementation of GASB 34 in fiscal year 2007. The GASB 34 fixed asset implementation was a
joint effort between the auditors and Village staff. The discrepancy in the fixed assets was discovered by
Village staff while analyzing the recording of the capital assets during fiscal year 2008.
Noncompliance Matters
08 -03 Excess of Expenditures and Other Financing Uses Over Appropriations
Criteria
Pursuant to Section 166.241 (2) of Chapter 166 of the Florida Statutes, the governing body of each
municipality shall adopt a budget each fiscal year. The budget must be adopted by ordinance or
resolution unless otherwise specified in the respective municipality's charter. The amount available from
taxation and other sources, including amounts carried over from prior fiscal years, must equal the total
appropriations for expenditures and reserves. The budget must regulate expenditures of the municipality,
and it is unlawful for any officer of a municipal government to expend or contract for expenditures in any
fiscal year except in pursuance of budgeted appropriations.
Condition
We noted that the Excise Tax Fund exceeded appropriations by $25,861.
Effect
The Village is not in compliance with Florida Statutes.
Cause
The Village did not monitor the budget to ensure compliance with Florida Statutes.
Recommendation
Section 166.241(3)a of the Florida Statutes provides the authority for the governing body of the Village to
increase and decrease appropriations within each fund. We suggest that, in the future, all budgets be
monitored to ensure compliance with Florida Statutes.
-78-
MIAMI SHORES VILLAGE, FLORIDA
SCHEDULE OF FINDINGS AND RESPONSES (Continued)
SEPTEMBER 30, 2008
View of Responsible Officials and Planned Corrective Action
Management does not concur with the cause of the over appropriation. Management analyzes budget to
actual expenses on a weekly basis. Budget amendments are prepared when necessary and are approved
by resolution. There were three budget amendments during fiscal year 2008. This over appropriation is
related to the transfer of funds from the Excise Tax Fund to the General Fund in 2007. The Village
maintains an Excise Tax Fund to record certain general fund revenues in order to segregate these funds to
substantiate compliance with a note payable. The over appropriation occurred as not all funds were
transferred during fiscal year 2007. This transfer occurred just after the close of 2007 and was not
recognized during fiscal year 2007. It is the opinion of management that this transfer should not be
considered a normal budget expenditure as all revenues received in this fund are transferred to the
General Fund and should actually be considered as part of the General Fund revenues. No other
expenditures exceeded appropriations. The Village does monitor the budget in compliance with Florida
Statutes.
-79-