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CAFR & Parking Financial ReportMEMORANDUM December 26, 2002 TO:The Honorable Mayor and City Council Members FROM:Michael C. Van Milligen, City Manager SUBJECT:Submission of Fiscal Year Ended June 30, 2002 Comprehensive Annual Financial Report (CAFR), Parking Facilities Financial Statements, Management Letter and Responses to Management Letter Finance Director Ken TeKippe is transmitting the Fiscal Year 2002 Comprehensive Financial Report (CAFR), Parking Facilities Financial Statements, Management Letter and City Responses to the Management Letter. The City's independent auditor found no instances of matedal non-compliance with all applicable laws, regulations, contracts, and grants; and found the general-purpose financial statements free of material misstatement. The auditor's report also notes that there are no material weaknesses in the City's internal control structure. As part of the annual audit, the Auditor provides comments in a management letter for improving the financial management system of the City. The Auditor's comments are attached, as well as Finance Department responses. I concur with the recommendation and respectfully request Mayor and City Council approval. Michael C. Van Milligen MCVM/jh Attachment cc: Barry Lindahl, Corporation Counsel Cindy Steinhauser, Assistant City Manager Kenneth J. TeKippe, Finance Director CITY OF DUBUQUE, IOWA MEMORANDUM TO:Michael C. Van Milligen, City Manager FROM:Kenneth J. TeKippe, Finance Director SUBJECT:Submission of Fiscal Year Ended June 30, 2002 Comprehensive Annual Financial Report (CAFR), Parking Facilities Financial Statements, Management Letter and Responses to Management Letter DATE:December 23, 2002 INTRODUCTION The purpose of this memorandum is to submit the Fiscal Year 2002 CAFR and Parking Facilities Financial Statements audited by Eide Bailly, LLP, and to enclose the Auditor's Management Letter along with the City Finance staff's response. The City's independent auditor found no instances of material non-compliance with all applicable laws, regulations, contracts, and grants; and found the general-purpose financial statements free of material misstatement. The auditor's report also notes that there are no material weaknesses in the City's internal control structure. BACKGROUND The City of Dubuque is required to have an annual audit in accordance with generally accepted auditing standards, Chapter 11 of the Code of iowa, Government Auditing Standards and Office of Management and Budget (OMB) Circular A-133. This Comprehensive Annual Financial Report is in conformance with the standards set by OMB Circular A-133. This federal regulation mandates audit standards for federal programs. The financial reports for governmental funds were prepared on the modified accrual basis of accounting, under which revenues are recorded when they are measurable and available and expenditures (other than interest on long-term debt) are recorded when the liability is incurred. Financial reports for enterprise activities (Sewage Disposal Works, Water Utility, Parking Facilities, Refuse Collection, Transit System) were prepared on a full accrual basis. Separate financial statements are required for Parking Facilities and Dubuque Metropolitan Area Solid Waste Agency and have been received. The financial information for these entities is included in the City of Dubuque Comprehensive Annual Financial Report. AUDITOR'S MANAGEMENT LETTER As part of the annual audit, the Auditor provides comments in a management letter for improving the financial management system of the City. The Auditor's comments are attached as well as Finance Department responses. ACTION STEP It is recommended that the City Council receives and files the Fiscal Year 2001 reports identified above and receives and files this communication and related enclosures. Copies of the financial statements for the Dubuque Metropolitan Area Solid Waste Agency are available in the Finance Department if desired by Council members. KJT/jmg Enclosures:Fiscal Year 2002 CAFR Parking Facilities Financial Statements Auditor Management Letter Responses to Comments in Auditor Management Letter 2 CITY OF DUBUQUE, IOWA MEMORANDUM TO:Michael C. Van Milligen, City Manager FROM:Kenneth J. TeKippe, Finance Director SUBJECT:Responses to Audit Management Letter-Fiscal Year Ended June 30, 2002 DATE:December 23, 2002 INTRODUCTION Responses to the "other comments" section of the October 31,2002 management letter issued by Eide Bailly LLP subsequent to completion of the Fiscal Year 2002 audit of the City are hereby submitted. BACKGROUND A separate section in the Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2002 details specific findings and recommendations as well as City responses. Pages 101-103 of the report provide this information. In addition to the comments in the report, a management letter dated October 31, 2002 was issued which includes more general comments relative to improving the City's overall accounting and control systems. DISCUSSION Finance Department responses to the other comments follow: Conversion of Accounting Records - As noted in the management letter, City staff prepared all workpapers to convert records to the modified accrual/accrual basis. City staff will continue to work towards converting records from cash to GAAP at year end and preparation of the financial statements. The size of the City's professional accounting staff limits available resources to fully accomplish this goal. The current audit engagement arrangement provided for the auditing firm to convert the records and prepare the financial statements, but an anticipated change in accounting software and continued staff development may benefit in our efforts to implement this goal. Policies and Procedures - Selected policies and procedures, such as travel reimbursement, fixed asset accounting, insurance requirements, and purchasing are documented by City Administrative Policies. The Finance Department has prepared a manual the past two years to help define roles and duties of employees. This manual is beneficial in cross training employees and training new employees and is reviewed annually for changes in duties. A manual will be developed to detail significant accounting policies and procedures. Many accounting policies and procedures currently are documented, but not maintained in a central manual. Federal Awards - The City Finance Department has expanded consolidated record keeping for federal and state grants in recent years. The number of grants and departments involved in grant projects has grown considerably over the past few years, with the number of individual grants doubling. We will continue to expand the grant accounting function to include selected compliance elements other than financial. A recent change in the individual primarily responsible for grant accounting for the City will be beneficial in this area. Fixed Assets - The Assistant Finance Director and I will spend additional time prior to the audit fieldwork in future years to verify the accuracy of information included in the City's fixed asset records. Significant improvement over prior years was made in this area of the audit during fiscal year ended June 30, 2002. Implementation of GASB 34 will require major changes to the fixed asset records, primarily in regards to infrastructure and recording depreciation on all fixed assets. GASB 34 - Finance Department management is in the process of preparing for the implementation of GASB 34. The implementation is a major project for the Finance Department and requires the assistance of other City departments. A consulting firm, Virchow Krause and Company, has been retained to assist with the project. The firm has provided valuable assistance and beneficial guidance for implementation in fiscal year ending June 30, 2003. Considerable assistance and information for the project is being provided by Public Works/Engineering staff. KJT/jmg EideBailly Consultants · Certified Public Accountants To the Honorable Mayor and Members of the City Council City o f Dubuque Dubuque, Iowa We have audited the financial statements of the City of Dubuque, Iowa, for the year ended Jane 30, 2002, and have issued our report thereon dated October 31, 2002. Professional standards require that we provide you with the following information related to our audit. Our Responsibility under Auditing Standards Generally Accepted in the United States of America and OMB Circular A-133 As stated in our engagement letter dated May 9, 2001, our responsibility, as described by professional standards, is to plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the financial statmnants are flee of material misstatement. Because an audit is designed to provide reasonable, but not absolute, assurance and because we did not perform a detailed examination of all transactions, there is a risk that material misstatements may exist and not be detected by us. In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over fmancial reporting. We also considered internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determiue our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on intmxml control over compliance in accordance with OMB Circular A-133. As part of obtaining reasonable assurance about whether the City's fumncial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. Also, in accordance with OMB Circular A-133, we examined, on a test basis, evidence about the City's compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement applicable to each of its major federal programs for the purpose of expressing an opinion on the City's compliance with those requirements. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City's compliance with those requirements. 3999 PennsylvaniaAve. · Suite 100 ° Dubuque, Iowa52002-2639 · 563.556. I790 · Fax563.557.7842 Offices in Ar/zona, Iowa, Minnesota, Montana, North Dakota and South Dakota · Equal Opportunity EmlJloyer To the Honorable Mayor and Members of the City Council City of Dubuque Page 2 Significant Accounting Policies Management has the responsibility for selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City of Dubuque, Iowa, are described in Note 1 to the financial statements. For the year ended June 30, 2002, the City changed its policy regarding capitalization of fixed assets by increasing the capitalization threshold from $1,000 to $5,000. We noted no transactions entered into by the City during the year that ware both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus. Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and axe based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. Audit Adjustments For purposes of this letter, professional standards defme an audit adjustment as a proposed correction of the financial statements that, in our judgment, may not have been detected except through our auditing procedures. An audit adjustment may or may not indicate matters that could have a significant effect on the City's financial reporting process (that is, cause future financial statements to be materially misstated). In our judgment, none of the adjustments we proposed, whether recorded or unrecorded by the City, either individually or in the aggregate, indicate matters that could have a significant effect on the City's financial reporting process. Disagreements With Management For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Difficulties Encountered in Performing the Audit We encountered no difficulties in dealing with management in performing and completing our audit. Other Comments We have included additional comments regarding the financial statements and operations. These comments are not a result of in-depth study of any specific areas but are based on observations made during the course of our audit. Our observations indicate that overall financial operations of the City continue to be conducted in an efficient and effective manner. To the Honorable Mayor and Members of the City Council City of Dubuque Page 3 This report, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Dubuque, Iowa, and other parties to whom the City of Dubuque, Iowa, may report. This report is not intended to be and should not be used by anyone other than these specified parties. As always, we will be happy to discuss these or any other topics at your convenic~nce. We would 1/ke to take this oppommity to express our appreciation to you and your stuff for the f'me cooperation that we received during the course of the audit. We look forward to many years of continued service to the City of Dubuque, Iowa. Dubuque, Iowa October 31, 2002 CITY OF DUBUQUE, IOWA YEAR ENDED JUNE 30, 2002 OTHER COMMENTS Conversion of Accounting Records The City maintains its records using the cash basis of accounting. However, in order to comply with accounting principles generally accepted in the United States of America, the comprehensive annual financial report (CAFR) must be prepared using the modified accrual/accrual basis of accounting. Eide Bailly LLP currently posts all adjustments at year-end which are necessary to convert the City's cash-basis amounts to the amounts used in the CAFR. At this time, the City is preparing the workpapers needed to convert the accounting records to the modified accrual/accrual basis at year-end. Eide Bailly LLP posts the journal entries and prepares the financial statements. Although it may require increased staffing levels, we encourage the Finance Department to continue in their advancement of converting to the modified accrual/accrual basis and preparation of the financial statements required in the CAFR. Policies and Procedures We noted that the City is in the process of developing a written manual of accounting policies and procedures but that the manual is not complete at this time. A manual defining the roles and duties of employees is complete, but the detailed accounting manual is in process. Such a manual will ensure that policies and procedures are consistently applied. The City should continue to develop the manual of accounting polices and procedures and complete it as soon as possible. Federal Awards The City receives many federal awards each year. Some of these award programs are ongoing from year to year, such as the CDBG Entitlement Program. For all federal programs, there are requirements that must be adhered to in order to be in compliance with federal laws and regulations. Presently, the City's Finance Department provides limited accounting assistance to some of the departments with federal programs. We recommend that the City expand this position to offer compliance assistance, in addition to accounting assistance, to all departments that receive federal grants. This position would assist the City in staying in compliance with federal laws and regulations and would eliminate much unnecessary time being spent in various City departments trying to determine which compliance elmnents apply to their particular grant. Fixed Assets The City has a centralized custodian who maintains a record of the City's fixed assets, including additions and deletions made during the year. Many of the City's fixed assets (land, buildings, improvements, and equipment) and non-fixed assets (roads, bridges, and repairs) are accounted for by project numbers. When compiling fixed asset information, the custodian uses spreadsheets that include both fixed and non-fixed asset project information. Consequently, non-fixed asset projects are occasionally carried to the fixed asset records in errors. To ensure non- fixed asset projects are not included on fixed asset records, non-fixed asset projects should be segregated from fixed asset projects as soon as possible by City staff knowledgeable of both the projects and fixed asset policies. The distinction made between fixed and non-fixed asset projects and the project spreadsheets should be closely reviewed for errors by other City staff with knowledge of fixed asset policies. Compilation and review of fixed asset records should be completed prior to the begirming of audit work. CITY OF DUBUQUE, IOWA YEAR ENDED JUNE 30, 2002 OTHER COMMENTS GASB 34 The Governmental Accounting Standards Board has issued Statement 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments. Tiffs statement presents the most sweeping changes ever in financial reporting for local governments. When implemented it will create new information and will restructure much of the information that governments have presented in the past. The following are some of the major changes required by the statement: Management's discussion and analysis of the fmancial statements will be required supplementary information. The basic financial statements will now include additional entity-wide financial statements prepared on the accrual basis. The fund level statements will present "major funds" rather than having totals for each individual fund type. Since the fund level statements for governmental funds will continue to be presented on the modified accrual basis, a reconciliation to the entity-wide statements must be presented. F/xed assets and long-term debt, which had previously been reported in account groups separate from the funds, will now be reported within the funds in the entity-wide statements; and depreciation must be recorded on the fixed assets. Also, the fixed assets are to include infrastructure assets determined on a retroactive as ~ell as prospective basis. Infrastructure assets must also be depreciated unless you choose to adopt the allowable modified approach described in the statement. Budget to actual comparisons will now be required supplemental information and must include information on the original adopted budget as welt as the final adopted budget. There are many more changes that will be required to your financial reporting in order to comply with alt of the provisions of Statement 34. We recommend that you continue to address the statement and continue plann/ng for the many changes that will be needed. The requirements of the statement are effective in three phases based on a government's total revenues (excluding extraordinary itcuns) for the year ended June 30, 1999. Based on this information, the City of Dubuque is required to adopt the statement for the fiscal year ending June 30, 2003. I I I II I I I I I I I I I I I I I I I CITY OF DUBUQUE, IOWA PARKING FACILITIES FINANCIAL STATEMENTS JUNE 30, 2002 CITY OF DUBUQUE, IOWA PARKING FACILITIES Table of Contents OFFICIALS INDEPENDENT AUDITOR'S REPORT FINANCIAL STATEMENTS Balance Sheet Statement of Revenues, Expenses, and Changes in Retained Earnings Statement of Cash Flows Notes to Financial Statements SUPPLEMENTARY INFORMATION Combining Balance Sheet Combining Statcxment of Revenues, Expenses, and Changes in Retained Earnings Bond Ordinance Requirements Schedule of Insurance Coverage Schedule of Statistical Data REPORT ON BOND ORDINANCE COMPLIANCE REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS SCHEDULE OF FINDINGS Page 1 2 3 4 5 6-11 12 13 14 15-16 17 18 19-20 21 I CITY OF DUBUQUE, IOWA PARKING FACILITIES OFFICIALS Terrance M. Duggan Roy D. Buol Patricia A. Cline Ann E. Michalski John H. Markham Daniel E. Nicholson Joyce E. Cormors Michael C. Van Milligen Barry A. Lindahl Jeanne F. Schneider Kenneth J. TeKippe Timothy M. Horsfield Title Mayor Council Member Council Member Council Member Council Member Council Member Council Member CityManager Corporation Counsel CityClerk Finance Director/Treasurer Parking Division Manager TermExpkes December 2005 December 2003 December 2003 December 2003 December 2005 December 2005 December 2005 Appointed by Council Appointed by Council Appointed by Council Appointed by City Manager Appointed by City Manager EideBailly=P Consultants · Certified Public Accountant INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor end Members of the City Council: We have audited the accompanying fmancial statements of the Parldng Facilities of the City of Dubuque, Iowa, as of and for the year ended June 30, 2002, as listed in the table of contents. These fmencial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing stendards generally accepted in the United States of America; Chapter 11 of the Code of Iowa; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards and provisions require that we plan and perform the audit to obtain reasonable assurence about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the finencial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As discussed in Note 1, the financial statements referred to above present only the Parking Facilities of the City of Dubuque, Iowa, and are not intended to present fairly the financial position of the City of Dubuque and the results of its operations and the cash flows of its proprietary fund types and nonexpendable trust funds in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Parking Facilities of the City of Dubuque, Iowa, at June 30, 2002, and the results of its operations and cash flows 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 4, 2002, on our consideration of the Parking Facilities' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. 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 considmSng the results of our audit. Our audit was performed for the purpose of forming en opinion on the financial statmnents taken as a whole. The supplementary information listed in the table of contents is presented for purposes of additional analysis and is not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in our audit of the aforementioned financial statements and, in our opinion, is fairly stated in ali material respects in relation to the financial statements taken as a whole. Dubuque, Iowa September 4, 2002 3999 PennsyIvania Ave. · Suite 100 · Dubuclue, Iowa52002-2639 · 563.556. I790 * Fax563.557.7842 Offices in Arizona, Iowa, Minnesota, Montana, North Dakot, a and Sou~h Dakota * Equal Opportunity Employer 2 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable Accrued payroll General obligation bonds payable - current Revenue bonds payable - current Accrued compensated absences Total Current Liabilities CLrRRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS Accrued interest payable NONCURRENT LIABILITIES General obligation bonds payable (net of discount of $24,750) Revenue bonds payable (net of $21,333 deferred amount on refunding) Total Noncurrent Liabilities Total Liabilities EQUIIY Contributed capital by government Retained earnings Reserved by bond ordinance Unreserved Total Retained Earnings Total Equity Total Liabilities and Equity $ 19,043 6,528 95,000 180,000 35,117 335,688 25,909 2,540,250 1,518,667 4,058,917 4,420,514 240,323 553,225 5,619,403 6,172,628 6,412,951 10,833,465 3 CITY OF DUBUQUE, IOWA PARKING FACILITIES STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS FOR TIlE FISCAL YEAR ENDED JUNE 30, 2002 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING INCOME NONOPERATING REVENUES (EXPENSES) Interest revenue Interest expense Total Nonoperating Revenues (Expenses) INCOME BEFORE OPERATING TRANSFERS 1,390,060 11,634 1,401,694 450,165 60,315 28,024 181,957 16,080 362,576 1,099,117 302,577 50,658 (247,845) (197,187) 105,390 (984,911) (879,521) 7,052,149 $ 6,172,628 OPERATING TRANSFERS Operating transfers to City of Dubuque NET LOSS RETAINED EARNINGS, BEGINNING OF YEAR AS RESTATED RETAINED EARNINGS, END OF YEAR See notes to financial statements. 4 I CITY OF DUBUQUE, IOWA PARKING FACILITIES STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2002 CASH FLOWS FROM OPERATING ACTIVITIES Operating income Adjustments to reconcile operating income to net cash provided by operating activities Depreciation Changes in assets and liabilities Increase in accounts receivable Decrease in accounts payable Decrease in accrued payroll Increase in accrued compensated absences NET CASH PROVIDED BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Operating transfers to City of Dubuque CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of fixed assets Principal paid on bonds Interest paid on bonds NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES CASH FLOWS FROM ENVESTING ACTIVITIES Interest on cash and pooled cash investments NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVrI'IES Contributions of fixed assets from government See notes to financial statements. 302,577 362,576 (2,486) (739) (907) 7,037 668,058 (984,911) (18,480) (255,958) (249,476) (523,914) 52,412 (788,355) 2,137,483 $ 1,349,128 $ 62,016 CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JLrNE 30, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Ent~' ty The financial statements include only those funds of the Parking Facilities and are not intended to present all funds of the City of Dubuque, Iowa. Basis of Accounting The Parking Facilities' accounting records are maintained on the cash basis. However, for financial reporting purposes, the accounting records have been adjusted to the accrual method, recognizing revenue when earned and expenses when liabilities are incurred. Budgets and Budgetary Accounting In accordance with the Code of Iowa, the City Council annually adopts a budget on the cash basis following required public notice and hearing for all funds. The armual budget may be amended during the year utilizing similar stamtorily prescribed procedures. Formal and legal budgetary control is based upon four major classes of expenditures known as programs, not by fund. These four programs are community protection, human development, home and community envirom~ent, and policy and administration. Deposits and Investments The Parking Facilities' cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of tttree months or less from the date of acquisition. Restricted Assets Certain proceeds of revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Fixed Assets Fixed assets are recorded at cost. Major outlays for capital assets and improvements are capitalized as projects are constructed or equipment is purchased. The costs of normal maintenance and repairs that do not add to the value of an asset or materially extend the life of an asset are not capitalized. Fixed assets are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings and/mprovements Machinery and equipment (continued on next page) Years 5-50 5 -20 CITY OF DUBUQUE, IOWA PARK1NG FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Compensated Absences The Parking Facilities allow employees to accumulate earned but unused vacation and sick pay benefits. Such benefits axe accrued when earned and are reported as liabilities. Equity Reservations of retained earnings represent mounts restricted by applicable bond covenants. NOTE 2 - DEPOSITS AND INVESTMENTS The Parking Facilities' deposits at June 30, 2002, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. ~lae Parking Facilities are authorized by statute to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured depository institutions approved by the City Council; prime eligible bankers acceptances; certain high rated commercial paper; perfected repurchase agreements; certain registered open-end management investment companies; certain joint investment trusts; and warrants or improvement certificates of a drainage district. Investments are stated at fair value. The Parking Facilities' investments are pooled with other investments of the City. It is, therefore, not possible to list the types of investments held by the Parking Facilities at June 30, 2002, nor is it possible to categorize the investments to give an indication of the level of risk assumed by the Parking Facilities at year-end. NOTE 3 - LONG-TERM DEBT General Obligation Bonds. The City issued general obligation bonds to provide financing for the acquisition and construction of parking facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds were issued as serial bonds with varying mounts of principal maturing annually and with interest payable semi-annually. General obligation bonds outstanding at June 30, 2002, are as follows: Amount Amount Date of Maturity Interest Originally Outstanding Issue Dates Rates Issued End of Year 06/01/00 06/01/02-06/01/20 5.80-5.875% $ 2,750,000$ 2,660,000 (continued on next page) 7 I CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Annual debt service requirements to maturity for general obligation bonds, including interest of $1,682,138 are as follows: Fiscal Year Ending June 30 Alnount 2003 $ 249,449 2004 243,939 2005 243,429 2006 242,629 2007 246,539 2008-2020 3,116,153 Total $ 4.342.138 Revenue Bonds. The City issued parking revenue bonds to provide financing for the acquisition and construction of parking facilities. These bonds were issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. Parking revenue bonds outstanding at June 30, 2002, are as follows: Amount Amount Date of Matttrity Interest Originally Outstanding Issue Dates Rates Issued End of Year 03/01/98 05/01/01-05/01/10 4.304.75% $ 2,515,000 $ 1,720,000 Annual debt service requirements to maturity for revenue bonds, including interest of $378,410 are as follows: Fiscal Year Endin~ June 30 Amount 2003 $ 258,625 2004 260,885 2005 262,525 2006 263,525 2007 263,970 2008 263,850 2009 263,155 2010 261,875 Total The resolution providing for the issuance of the revenue bonds includes the following provisions: A sum equal to one-tenth (1/I0) of the principal of all bonds maturing on May 1 next succeeding, plus a sum equal to one-fifth (1/5) of the interest coming due on the next succeeding interest payment date on all of the then outstanding bonds, shall be set aside into a restricted sinldng account from the net revenue of the Operating Fund until the full amount of such installments is on hand. (continued on next page) 8 CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 A restricted reserve account shall maintain the lesser of I) the maximum amount of principal and interest coming due in any fiscal year; or 2) ten percent of the proceeds of the sale of the bonds. $5,000 shall be set apart and paid into a restricted depreciation account from the balance o£the net off-street parking revenues and net on-street parking revenues remaining after first making the required payments into the sinking account and the reserve account on the first day of each month of each year up to a maximum of $250,000. NOTE 4 - PENSION AND RETIREMENT BENEFITS The Parking Facilities of the City of Dubuque, Iowa, contribute to the Iowa Public Employees Retirement System (IPERS) which is a cost-sharing multiple-employer defined benefit pension plan adminlstured by the State of Iowa: IPERS provides retirement and death benefits which are established by state statute to plan members and beneficiaries. IPERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to II?ERS, P.O. Box 9117, Des Moines, Iowa, 50306-9117. Plan members are required to contribute 3.70% of their annual covered salary, and the Parking Facilities are required to contribute 5.75% of annual covered payroll. Contribution requirements are established by state statute. The Parking Facilities' contributions to I?ERS for the years ended June 30, 2002, 2001, and 2000, were $19,449, $19,063, and $18,257, respectively, equal to the required contributions for each year. NOTE 5 - LEGAL COMPLIANCE WITH BUDGET The City of Dubuque, Iowa, adopts a budget annually as required by Iowa law. The budget, which is prepared on the cash basis of accounting, includes those funds of the Parking Facilities. Following is a schedule comparing the Parking Facilities' budget and actual disbursements using the cash basis of accounting for the year ended June 30, 2002: Variance - Pro,ram Budget Actual Favorable Home and Community Environment $ 6.761.155 $ 6.335.533 $ 425.622 As required by Iowa law, the City prepares its budget based upon four major classes of expenditures known as programs, not by individual fired. Therefore, the City must amend the budget only if the entire City's program amounts will be exceeded. For the year ended June 30, 2002, the City's actual disbursements were less than budgeted amounts for all programs, so the City has complied with legal budget requirements. (continued on next page) CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 NOTE 6 - RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the government carries commercial insurance and participates in a local government risk pool. The City of Dubuque has established a Health Insurance Reserve Fund for insuring benefits provided to City employees and covered dependents which is included in the Internal Service Fund Type. Health benefits were self-insured up to an individual stop loss amount of $70,000 and an aggregate stop loss of approximately $3,770,000 for 2002. Coverage from a private insurance company is maintained for losses in excess of the stop loss amount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. The City of Dubuque has established a Workers' Compensation Reserve Fund for insuring benefits provided to City employees which is included in the Internal Service Fund Type. Workers' compensation benefits were self-insured up to a specific stop loss amount of $400,000, and an aggregate stop loss consistent with statutory limits for 2002. Coverage fi:om a private insurance company is maintained for losses in excess of the stop loss amount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the last three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. All funds of the City participate in both programs and make payments to the Health Insurance Reserve Fund and the Workers' Compensation Reserve Fund based on actuarial estimates of the amounts needed to pay prior- and current-year claims. The City is a member in the Iowa Communities Assurance Pool, as allowed by Chapter 670.7 of the Code of Iowa. The Iowa Communities Assurance Pool (Pool) is a local government risk-sbahng pool whose 456 members include various governmental entities throughout the State of Iowa. The Pool was formed in August 1986 for the purpose of managing and funding third-party liability claims against its members. The Pool provides coverage and protection in the following categories: general liability, automobile liability, automobile physical damage, public officials liability, police professional liability, property, inland marine, and boiler/machinery. There have been no reductions in insurance coverage fi:om prior years. Each members' annual casualty contributions to the Pool fund current opemtiorm and a reserve fund. Annual operating contributions are those amounts necessary to fund, on a cash basis, the Pool's general mad administrative expenses, claims, claims expenses and reinsurance expenses due and payable in the current year, plus all or any portion of any deficiency in capital. During the first six years of membership, a portion of the member's contribution is allocated to a Cumulative Reserve Fund. Thereafier, no further armual contribution shall be made to the Camulative Reserve Fund unless the Board shall require further annual contributions for the purpose of maintaining the Cumulative Reserve Fund at a level equal to 300 percent of the total current Basis Rates of all Members, or to comply with the requirements of any applicable regulatory authority having jurisdiction over the Pool. (continued on next page) 10 CITY OF DUBUQUE, IOWA PARKING FACILITIES NOTES TO FIiNANCIAL STATEMENTS JUNE 30, 2002 The Pool also provides property coverage. Members who elect such coverage make annual operating contributions which are necessary to fund, on a cash basis, the Pool's general and administrative expenses and reinsus'ance premiums, all of which are due and payable in the current year, plus all or any portion of any deficiency in capital. Any year-end operating surplus is transferred to capital. Deficiencies in operations are offset by transfers from capital and, if hxsufficient, by the subsequent year's member contributions. The Pool uses reinsurance and excess risk-sharing agreements to reduce its exposure to large losses. The Pool retains general, automobile, police professional, and public officials' liability risks up to $250,000 per claim. Clahns exceeding $250,000 are reinsured in an mount not to exceed $1,750,000 per claim and $5,000,000 in aggregate per year. For members requiring specific coverage from $2,000,000 to $15,000,000, such excess coverage is also reinsured. Automobile physical damage risks are retained by the Pool up to $50,000 each accident, each location, with excess coverage reinsured on an individual- member basis. All property risks are also reinsured on an individual-member basis. The Pool's intergovernmental contract with its members provides that in the event a casualty claim or series of claims exceeds the amount of risk-sharing protection provided by the member's risk-shahng certificate, or in the event that a series of casualty claims exhausts total members' equity plus any reinsurance and any excess risk-sharing recoveries, then payment of such claims shall be the obligation of the respective individual member. The City does not report a liability for losses in excess of reinsurance or excess risk-sharing recoveries unless it is deemed probable that such losses have occurred and the amount of such loss can be reasonably estimated: Accordingly, at June 30, 2002, no liability has been recorded in the City's financial statements. As of June 30, 2002, settled claims have not exceeded the risk pool or reinsurance company coverage since the Pool's inception. Members agree to continue membership in the Pool for a period of not less than one full year. ARer such period, a member may withdraw from the Pool at anuiversary. If the notice to withdraw is within a 60 day period of the anuiversary date, the member forfeits all rights to their interest in the vested Cumulative Reserve Fund. Upon withdrawal, payments for all claims and claims expenses become the sole responsibility of the withdrawing member, regardless of whether a claim was incurred or reported prior to the member's withdrawal. Members withdrawing withLn the first six years of membership may receive a partial refund of their reserve contributions. If a member withdraws after the sixth year, the member is refunded 100 percent of its Cumulative Reserve Fund, however, the refund is reduced by an amount equal to the annual operating contribution which the withdrawing member would have made for the one-year period fo[lowing withdrawal. NOTE 7 - RESTATEMENT OF BEGINNING BALANCES The restatement of retained earnings was due to changing the fixed asset capitalization threshold to $5,000. Retained earrings June 30, 2001, as previously reported Adjustment Effect of change in capitalization policy Retained earnings June 30, 2001, as restated $ 7,073,988 (2L839) 1i CITY OF DUBUQUE, IOWA PARKING FACILITIES COMBINING BALANCE S~EET JUNE 30, 2002 ASSETS CURRENT ASSETS Cash and pooled cash investments Accounts receivable Aecmed interest receivable Total Current Assets Operating Construction Fund Fund Total 130,028 $ 665,875 $ 795,903 6,465 6,465 7,570 7,570 144,063 665,875 809,938 RESTRICTED ASSETS Cash and pooled cash investments FIXED ASSETS Land Buildings and improvmnents Machinery and equipment Construction in progress Accumulated depreciation Net Fixed Assets 553,225 553,225 1,237,209 1,237,209 11,870,381 11,870,381 571,269 571,269 573,861 573,861 (4,782,418) (4,782,418) 8,896,441 573,861 9,470,302 Total Assets $ 9,593,729 $ 1,239,736 $10,833,465 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable Accrued payroll General obligation bonds payable - current Revenue bonds payable - current Accrued compensated absences Total Current Liabilities CURRENT LIABILi 1 lES PAYABLE FROM RESTRICTED ASSETS Accrued interest payable NONCURRENT LIABILH'IES General obligation bonds payable (net of discount of $24,750) Revenue bonds payable (net of $21,333 deferred amount on refunding) Total Noncurrent Liabilities Total Liabilities EQUI'fY Contributed capital by government Retained earnings Reserved by bond ordinance Unreserved Total Retained Eanfings Total Equity Total Liabilities and Equity Operating Construction Fund Fund Total 16,800 $ 2,243 $ 19,043 6,528 6,528 95,000 95,000 180,000 180,000 35,117 35,117 333,445 2,243 335,688 25,909 25,909 2,540,250 2,540,250 1,518,667 1,518,667 4,058,917 4,058,917 4,418,271 2,243 4,420,514 240,323 240,323 553,225 553,225 4,381,910 1,237,493 5,619,403 4,935,135 1,237,493 6,172,628 5,I75,458 1,237,493 6,412,95I $ 9,593,729 $ 1,239,736 $ I0,833,465 12 CITY OF DUBUQUE, IOWA PARKING FACILITIES COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS FOR l'H ~; FISCAL YEAR ENDED JUNE 30, 2002 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Interest revenue Interest expense Total Nonoperating Revenues (Expenses) INCOME (LOSS) BEFORE OPERATING TRANSFERS OPERATING TRANSFERS Operating transfers from other funds Operating transfers to other funds Operating transfers to City of Dubuque Total Operating Transfers NET LOSS RETAINED EARNINGS, BEGINNING OF YEAR AS RESTATED RETAINED EARNINGS, END OF YEAR Operating Construction Fund Fund Total $ 1,390,060 $ $ 1,390,060 1,180 10,454 11,634 1,391,240 10,454 1,401,694 450,165 450,165 60,315 60,315 28,024 28,024 107,520 74,437 181,957 16,080 16,080 362,576 362,576 1,024,680 74,437 1,099,117 366,560 (63,983) 302,577 50,658 50,658 (247,845) (247,845) (197,187) (197,187) 169,37} (63,983) 105,390 300,763 300,763 (300,763) (300,763) (28,852) (956,059) (984,911) (329,615) (655,296) (984,911) (160,242) (719,279) (879,521) 5,095,377 1,956,772 7,052,149 $ 4,935,135 $ 1,237,493 $ 6,172,628 13 CITY OF DUBUQUE, IOWA PARKING FACILITIES BOND ORDINANCE REQUIREMENTS JUNE 30, 2002 Following is a summary of the bond ordinance requirements of the parking revenue refunding bond issue dated March 1, 1998. A sum equal to one-tenth (1/10) of the principal of all bonds maturing on May 1 next succeeding, plus a sum equal to one-fifth (1/5) of the interest coming due on the next succeeding interest payment date on all of the then outstanding bonds, shall be set aside into a restricted sinldng account fi:om the net revenue of the Operating Fund until the full mount of such installments is on hand. 2. A restricted reserve account shall maintain the lesser of I) the maximum mount of principal and interest coming due in any fiscal year; or 2) ten percent of the proceeds of the sale oftha bonds. $5,000 shall be set apart and paid into a restricted depreciation account fi:om the balance of the net off-street parking revenues and net on-street parking revenues remaining after first making the required payments into the sinking account and the reserve account on the first day of each month of each year up to a max/mum of $250,000. ~One City will cause an audit of such books and accounts of the Parking Facilities to be made by a certified public accountant not in the regular employ of the City showing the receipts and disbursements for each account of the Parldng Facilities. The audit report required shall include, but not be limited to, the following: a. An evaluation of the manner in which the City has complied with the covenants of this resolution, including particularly the rate covenants included herein; b. A statement of net revenues and current expenses; c. Analyses of each fund and account created, including deposits, withdrawals, and beginning and ending balances; d. A balance sheet; e. The rotes in effect at the end of the fiscal year, and the number of customers of the Parking Facilities; A schedule of insurance policies and fidelity bonds in force at the end of the fiscal year, showing with respect to each policy and bond the nature of the risks covered, the limits of liability, the name of the insurer, and the expiration date; g. An evaluation of the issuer's system of internal financial controls and the sufficiency of fidelity bond and insurance coverage in force; h. The names and titles of the principal officers of the City; and i. A general statement covering any events or circumstances which might affect the financial status of the Parking Facilities. 14 CITY OF DUBUQUE, IOWA PARKING FACILITIES SCI]EDULE OF INSURANCE COVERAGE FOR TlqE FISCAL YEAR ENDED JUNE 30, 2002 At June 30, 2002, the property of the Parking Facilities was insured through a blanket fire and extended coverage policy with the Cincinnati Insurance Company in the mount of $18,927,819. This policy expired July 1, 2002. The Parking Facilities were also insured against general, vehicle, and personal liability through the Iowa Communities Assurance Pool. These policies expired July 1, 2002. Also in force at June 30, 2002, was a self-funded workers' compensation plan and an employers' liability policy which expired July 1, 2002. Listed below is a detailed schedule of the policies in effect at June 30, 2002: FIRE AND EXTENDED COVERAGE Description VALUES Building and Structure Contents Total Concrete Parking Ramp 601-795 Iowa Street $ 3,788,250 $ 10, t06 $ 3,798,356 Concrete Parking Ramp 801-899 Locust Street 4,399,126 42,090 4,441,216 Concrete ParkSng Ramp 501-599 Iowa Street 5,372,247 5,372,247 Concrete Parking Ramp 100 West Fourth Street 5,304,000 12,000 5,316~000 64.196 $ 18.927.819 BUSINESS INCOME on earnings - $218,989 at 601-795 Iowa Street - 80% co-insurance. on eamings - $291,108 at 801-899 Locust Street - 80% co-insurance. on earnings - $297,400 at 501-599 Iowa Street - 80% co-insurance. on earnings - $180,000 at 100 West Fourth Street - 80% co-insurance. (continued on next page) 15 CITY OF DUBUQUE, IOWA PARKING FACILITIES SCHEDULE OF II~SURANCE COVERAGE FOR THE FISCAL YEAR ENDED JUNE 30, 2002 Each Occurrence BREAKDOWN COVERAGE - EQUIPMENT $ 2,50O,000 Each Occurrence GENERAL LIABILITY INSURANCE BODILY INJURY - PROPERTY DAMAGE - PRODUCTS ICAP $ 5,000,000 Each Occurrence vEmCLES ICAP $ 5,000,000 EXCESS WORKERS' COMPENSATION & EMPLOYERS' LIABILITY Each Accident Each Disease Limit Employers' Liability $ 400,000 Retention $ 400,000 Retention Workers' Compensation - Statutory $ 1,000,000 FIDELITY BOND COVERAGE Each employee $ 100,000 City Manager, Administrative Services Manager, Finance Director, and Assistant Finance Director - $900,000 additional. The above insurance pol/cies have been renewed through July 1, 2003. 16 CITY OF DUBUQUE, IOWA PARKING FACILITIES SCHEDULE OF STATISTICAL DATA FOR THE FISCAL YEAR ENDED JUNE 30, 2002 Number of Customers: (Estimated) Locust Ramp: Cash customers Monthly customers Iowa Ramp: Cash customers Monthly customers 5t~ Street Ramp: Cash customers Monthly customers Rates in Effect per Mouth: Locust Ramp: Reserved stalls (Bay) Reserved stalls (Undercover) Roof stalls (South Side) Roof stalls (Center) Iowa Ramp: Non-assigned stalls Reserved stalls Top of ramp stalls 5 m Street Ramp: Non-assigxted stalls Other: Residential Street Meters Lot 1 Lot 2 Lot 10 Lot 12 Holiday Inn N/A = Not Applicable 34,968 156,000 48,192 227,000 N/A 240,000 $ 49 44 38 32 N/A 44 32 38 37.50/qtr 25 25 35 25 36 17 EideBailly=P Consultants · Certified Public Accountants REPORT ON BOND ORDINANCE COMPLIANCE To the Honorable Mayor and Members of the City Council: We have audited the financial statements of the Parking Facilities of the City of Dubuque, Iowa, as of June 30, 2002, and for the year then ended, and have issued our report thereon dated September 4, 2002. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; Chapter 11 of the Code of Iowa; and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards and provisions require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the mounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation: We believe that our audit provides a reasonable basis for our opinion. In the course of our audit, nothing came to our attention that caused us to believe there had been a lack of compliance with the accounting or reporting requirements of the bond ordinance governing the parking revenue refunding bond issue dated March 1, 1998. Dubuque, Iowa September 4, 2002 3999 Pennsylvania Ave. * Suite 100 · Dubuque, Iowa 52002-2639 · 563.556. I790 · Fax 563.557.7842 Offices in Arkona, Iowa, M/nnesota, Montana, North Dakota and South Dakota · Equal Opportunity Employer 18 EideBailly=P Comultants · Certified Public Accountants REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS To the Honorable Mayor and Members of the City Council: We have audited the financial statements of the Parking Facilities of the City of Dubuque, Iowa, as of and for the year ended June 30, 2002, and have issued our report thereon dated September 4, 2002. We conducted our audit in accordance with auditing standards ganerally accepted in the United States of America; Chapter 11 of the Code of Iowa; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the Parking Facilities' financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, non-compliance with which could have a direct and material effect on the determination of financial statmuent amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly we do not express such an opinion. The results of our tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. Comments involving statutory and other legal matters about the Parking Facilities' operations for the year ended June 30, 2002, are based exclusively on knowledge obtained from procedures performed during our audit of the financial statements of the Parking Facilities and are reported in Part I of the accompanying Schedule of Findings. Since our audit was based on tests and samples, not all transactions that might have had an impact on the comments were necessarily audited. The comments involving statutory and other legal matters are not intended to constitute legal interpretations of those statutes. There were no prior year statutory comments and recommendations. 3999 Pennsylvania Ave. · Suite 100 · Dubuque, Iowa 52002.2639 · 563.556.1790 · Fax 563.557.7842 Offices in Arizona, Iowa, Minnesota, Montana, North Dakota and South Dakota · Equal Oppo~unity Employer 19 Internal Control Over Financial Reporting In planning and performing our audit, we considered the Parking Facilities' internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in mounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. There were no prior year reportable conditions. This report, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Dubuque and other parties to whom the City of Dubuque may report. This report is not intended to be and should not be used by anyone other than these specified parties. We would like to acknowledge the many courtesies and assistance extended to us by personnel of the City of Dubuque during the course of our audit. Should you have any questions concerning any of the above matters, we shall be pleased to discuss them with you at your convenience. Dubuque, Iowa September 4, 2002 20 CITY OF DUBUQUE, IOWA PARKING FACILITIES SCHEDULE OF FINDINGS FOR ~'H ~; FISCAL YEAR ENDED JUNE 30, 2002 Part I: I-A-02 I-B-02 I-C-02 I-D-02 I-E-02 I-F-02 I-G-02 I-H-02 1-I-02 Other Findings Related to Statutory Reporting: Official Depositories - A resolution naming official depositories has been approved by the City. The maximum deposit mounts stated in the resolution were not exceeded during the year ended June 30, 2002. Certified Budget - Disbursements dmSng the year ended June 30, 2002, did not exceed the mounts budgeted. Questionable Expenditures - No expenditures that fail to meet the requirements of public purpose as defined in an Attorney General's opinion dated April 25, 1979, were noted. Travel Expense - No expenditures of Parking Facit/ties' money for travel expenses of spouses of Parking Facilities' officials or employees were noted. Business Transactions No business transactions between the Park/rig Facilities and its officials or employees were noted. Bond Coverage - Surety bond coverage of Parking Facilities' officials and employees is in accordance with statutory provisions. The mount of coverage should be reviewed annually to insure that the coverage is adequate for current operations. Council Minutes - No transactions were found that we believe should have been approved in the Counc/1 minutes but were not. Revenue Bonds - The provisions of the Parking Facilities' Revenue Refimding Bond resolution have been met for the year ended June 30, 2002. Deposits and Investments - No instances of non-compliance with the deposit and investment provisions of Chapters 12B and 12C of the Code of Iowa and the City's investment policy were noted. 21 City of Dubuque, Iowa Comprehensive Annual Financial Report for the fiscal year ended June 30, 2002 CITY OF DUBUQUE, IOWA Comprehensive Annual Financial Report For the fiscal year ended June 30, 2002 Prepared by: Department of Finance INTRODUCTORY SECTION CITY OF DUBUQUE, IOWA Table of Contents INTRODUCTORY SECTION Table of Contents Letter of Transmittal City Organizational Chart Officials Certificate of Achievement for Excellence in Financial Reporting FINANCIAL SECTION Independent Auditor's Report General Purpose Financial Statements: Combined Balance Sheet - All Fund Types, Account Groups, and Discretely Presented Component Unit Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - All Governmental Fund Types and Expendable Trust Funds Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Budgetary Basis) - All Governmental Fund Types Combined Statement of Revenues, Expenses, and Changes in Retained Earnings/Fund Balances All Proprietary Fund Types, Nonexpendable Trust Funds, and Discretely Presented Component Unit Combined Statement of Cash Flows - All Proprietary Fund Types, Nonexpendable Trust Funds, and Discretely Presented Component Unit Notes to Financial Statements Combining, Individual Fund, and Account Group Statements and Schedules: General Fund: Balance Sheet Statement of Revenues, Expenditures, and Changes in Fund Balances Special Revenue Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Debt Service Fund: Balance Sheet Statement of Revenues, Expenditures, and Changes in Fund Balance Capital Projects Funds: Combining Balance Sheet Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficit) Exhibit 1 2 3 4 5 A-1 A-2 B-1 B-2 C-1 C-2 D-1 D-2 PaRe 1-3 4-14 15 16 17 18-19 20-22 23 24 25 26-27 28-50 51 52 53 54 55 56 57 58 CITY OF DUBUQUE, IOWA Table of Contents Enterprise Funds: Combining Balance Sheet Combining Statement of Revenues, Expenses, and Changes in Reta'med Earnings (Deficit) Combining Statement of Cash Flows Internal Service Funds: Combining Balance Sheet Combining Statement of Revenues, Expenses, and Changes in Retained Earnings (Deficit) Combining Statement of Cash Flows Trust and Agency Funds: Combining Balance Sheet Expendable Trust Funds: Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonexpendable Trust Funds: Combining Balance Sheet Combining Statement of Revenues, Expenses, and Changes in Fund Balances Combining Statement of Cash Flows Agency Funds: Combining Statement of Changes in Assets and Liabilities General Fixed Assets Account Group: Comparative Schedule of General Fixed Assets by Source Schedule of General Fixed Assets - By Program and Department Schedule of Changes in General Fixed Assets By Program and Department STATISTICAL SECTION (Unaudited) Genemi Governmental Expenditures by Function General Governmental Revenues by Source General Governmental Tax Revenues by Source Property Tax Levies and Collections Assessed and Estimated Actual Value of Property Property Tax Rates - Direct and Overlapping Governments Principal Taxpayers Special Assessment Billings and Collections Computation of Legal Debt Margin Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt Per Capita Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to Total General Governmental Expenditures Exhibit Page E-1 59-60 E-2 61 E-3 62-63 F-1 64 F-2 65 F-3 66 G-1 67 G-2 68 G-3 69 G-4 70 G-5 71 G-6 72 H-1 73 H-2 74 H-3 75 1 76 2 77 2A 77 3 78 4 79 5 8O 6 81 7 82 8 83 9 84 i0 85 2 CITY OF DUBUQUE, IOWA Table of Contents STATISTICAL SECTION (Unaudited) (continued) Computation of Direct and Overlapping Bonded Debt - General Obligation Bonds Revenue Bond Coverage - Paxking Bonds Prope~q~ Value, Conshmction Permits, and Bank Deposits Demographic Statistics Schedule of Insurance in Force Miscellaneous Statistics COMPLIANCE SECTION Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance with Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 Schedule of Expenditures of Federal Awards Notes to the Schedule of Expenditures of Federal Awards Schedule of Findings and Questioned Costs Table 11 12 13 14 15 16 Page 86 87 88 89 90-91 92 93-94 95-96 97-99 100 101-103 Finance Depaxtment 50 West 13th Street Dubuque, Iowa 520014864 October 31, 2002 TO THE CITIZENS OF DUBUQUE, IOWA: The comprehensive annual financial report of the City of Dubuque, Iowa, for the fiscal year ended June 30, 2002, is hereby submitted. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with this governing body. To the best of our knowledge and belief, the enclosed data is accurate in all material respects, and is reported in a manner designed to present fairly the financial position and results of operations of the various funds and account groups of this municipality. All disclosures necessary to enable the reader to gain an understanding of the government's financial activities have been included. The comprehensive annual financial report is presented in four sections: introductory, fmancial, statistical and compliance. The introductory section includes this transmittal letter, the government's organizational chart and a list of principal officials. The financial section includes the general-purpose financial statements and the combining and individual fund and account group financial statements and schedules, as well as the auditor's report on the financial statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The City of Dubuque is required to undergo an annual single audit in conformity with the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-Profit Organizations. Information related to this single audit, including the Schedule of Expenditures of Federal Awards, findings and recommendations, and the auditor's report on internal control over financial reporting and compliance with requirements applicable to laws, regulations, contracts, and grants, are included in the Compliance Section of this report. This report includes all funds and account groups of the City of Dubuque, as well as its component unit. Component units are legally separate entities for which the City of Dubuque is financially accountable. The City provides a full range of services including; police and fire protection, sanitation services, the construction and maintenance of roads, streets, and infrastructure, inspection and licensing functions, maintenance of grounds and buildings, municipal airport, library, recreational activities and cultural events. In addition to general government activities, the municipality owns and operates enterprises for a water system, water pollution control facility, parking facilities, refuse collection, and public transportation. Also, the governing body is financially accountable for the operations of the Dubuque Library Board, Airport Commission, Civic Center Commission, Cable TV Commission, Transit Board, and the Park and Recreation Commission. These activities are not legally separate entities, and therefore are included in the reporting entity. 4 Service People Integrity Responsibility Innovation Teamwork This report includes the Dubuque Metropolitan Area Solid Waste Agency (DMASWA) as a discretely presented component unit. The discretely presented component unit is reported in a separate column in the combined financial statements to emphasize that it is legally separate fi:om the City of Dubuque and to differentiate its f'mancial position, results of operations and cash flows fi:om those of the City. The City of Dubuque appoints a voting majority to the DMASWA governing board and operates the landfill. ECONOMIC CONDITION AND OUTLOOK The City of Dubuque is located on the Mississippi River in northeast Iowa, adjacent to the states of Illinois and Wisconsin. The City was founded by Julien Dubuque in 1785 and is the oldest City in Iowa. The City of Dubuque has a unique combination of the old and new ranging from cable cars, Victorian architecture, and a Civil War shot tower, to an enclosed shopping mall, riverboat casino, and a pari-mutuel dog track with a slot machine casino. Dubuque has a stable and diversified manufacturing base and is the major tri-state retail center. Employment growth was strong throughout the year, as Dubuque ended the fiscal year with an unemployment rate of approximately 3.4 pement. The City of Dubuque currently has a land area of 27 square miles and a population of 57,686. As the largest City in the tri-state area, Dubuque serves as the hub ora trade area with a population estimated at 250,000. The City of Dubuque is empowered to levy a property tax on real property located within the City limits. The City has operated under a council-manager form of government since 1920. Policymaking and legislative authorities are vested in the governing council, which consists of a mayor and a six-member council. The governing council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, Corporate Counsel, and City Clerk. The City Manager is responsible for overseeing the day-to- day operations of the government, and for appointing the heads of the government's departments. The council is elected on a non-partisan basis. Council members are elected to four-year staggered terms with three council members elected every two years. The mayor is elected to a four-year term. Four of the council members are elected within their respective wards; the mayor and the two remaining council members are elected at large. Development of Dubuque Industrial Center West continues. The first phase of the 550-acre development of City owned land made 135 acres available for medium to heavy industrial uses. Dubuque Area Industrial Development Corporation continues to market to developers its 40,000 square foot speculative industrial building located on twelve acres of Dubuque Industrial Center West. The McGraw-Hill Company has completed a 330,000 square foot warehouse and distribution center at Dubuque Industrial Center West. Also, the sale of 17 acres to Alliant Energy for a new operations facility is complete with constmctiun slated for spring 2003. Giese Manufacturing has begun conslruction ora 30,000 square foot manufacturing facility on a 5 acre site. The recent ribbon cutting for the John G. Bergfeld Recreation Area provides recreation opportunity for employees who work in the park, as well as the public. Dubuque Industrial Center West complements the recently completed, city-owned, 100 acre Dubuque Technology Park that has three occupants: Advanced Data-Comm, Cartegraph, and McLeod USA. Eagle Window & Door completed construction of a new 400,000 square foot manufacturing facility in the Kerper Boulevard industrial area, and moved into the facility in December 2000. This $17,000,000 project will add 168 employees over the next three years. Flynn Ready Mix constructed a new state-of-the-art facility on Kerper Court in 2002. CIGNA celebrated its grand opening in June 2001 following completion of a new 115,000 square foot office building in downtown Dubuque. With this expansion, CIGNA has already added more than 200 employees. SISCO, a Dubuque based third party insurance administrator, renovated the historic Town Clock Building adjacent to their downtown Dubuque facility. The renovation will give SISCO the potential to house another 100 employees. Other downtown development includes the construction of the three-story Harbor View Building at 300 Main Street. The building is home to the Chamber of Commerce and the Greater Dubuque Development Corporation and offers additional office space for lease. The $2.5 million renovation of the basement, first and second floors of the Cooper Wagon Works building (Bricktown) at Third and Main Street is complete. The building houses a restaurant, lounge, and banquet facilities. The Iowa Inn, former downtown YMCA, located at 9th and Iowa Street, has recently completed a $3.3 million renovation to convert to 33 units for low-income senior housing. Pepper Sprout Restaurant offers gourmet dining in a renovated historic building in the Old Main District. On Dubuque's west side, development of 330,000 square feet of retail space in Asbury Plaza began in July 2001. The plaza encompasses 190 acres and is anchored by Hy-Vee Food Store. Menards relocated to a new 162,340 square foot retail facility on the west side in May 2002. With the recent economic growth, the City has annexed over 2,400 acres since 1995. In contrast, only 40 acres were annexed in the first half of the decade. This is consistent with the non-residential construction numbers in the community. From 1990-1997 the City averaged 300,000 square feet of non-residential construction per year. In the four years from 1998-2001, the City has averaged 1,300,000 square feet of non-residential construction. MAJOR INITIATIVES For the Year. The City of Dubuque staff, following the adopted priorities of the Mayor and City Council, has been involved in a variety of projects throughout the year. These projects reflect the City's commitment to continue to provide high quality services to the citizens of Dubuque within the budget guidelines set by the Mayor and City Council. Downtown revitalization continued as a high priority of City Council, with programs such as the Downtown Rehabilitation Loan Program and Facade Grant Program providing incentives for property improvement in the downtown area. The opening of Eighth Street to traffic through the plaza was the first phase of a multi-million-dollar update of the Town Clock Plaza to meet the current development and functional needs of the downtown. The second phase was to open Town Clock Plaza from Fifth to Eighth Street to vehicle traffic, which was completed and opened to traffic on August 2, 2002. The balance of the reconstruction of the Town Clock Plaza is budgeted in the City's 5-year Capital Improvement Program. The City continued implementation of major parking expansion to meet the increased parking demand in the downtown area. Included in the expansion was a three-level, 240-space addition to the existing parking ramp at Fifth and Iowa Street, and construction of a new 400 space parking ramp facility at Third and Iowa Street, which opened in June 2002. The City also sponsored a downtown visioning process in conjunction with state and local partners. The next phase of this process will be a comprehensive planning process for the downtown, scheduled to commence in early 2003. Construction for the last phase of the Northwest Arterial, from JFK Road to U.S. 52, was completed in September, 2002. Grading for this project took place in 2001, and paving in 2002. The road was opened to traffic on September 13, 2002. American Airlines and Northwest Airlink maintained service in Dubuque following the tragic events of9-11. In the past year the airline industry has undergone major economic losses causing them to cut flights to cities large and small. The Dubuque Regional Airport was down only 3.38% in calendar year 2001 for a total of 56,353 passengers. The Dubuque Regional Airport has recently untaken a proactive approach by embarking on a vigorous marketing campaign designed to awaken the community to the need to retain air service with FLYDBQ campaign. The Dubuque Regional Airport celebrated the conversion of Runway 18/36 to a primary runway during the fall of 2002 with a ribbon cutting ceremony. This new primary runway should greatly reduce weather related flight cancellations. The final phases of this project should be completed and closed out in fiscal year 2003. A terminal study, initiated just prior to September 11, 2001, was held in abeyance for approximately eight months to determine industry trends and new security requirements. This study tentatively scheduled for completion by the end of 2002 should tell the City if the existing airline terminal should be expanded, the options for increasing the existing terminal space and auxiliary facilities, or if a new facility is desirable coupled with a recommendation on suitable locations. The City is currently served by two major commuter airlines: American Eagle, with three daily round-trip flights to Chicago; and Northwest Airlink, with three daily round-trip flights to Minneapolis. American Eagle has replaced their turbo-prop aircraft, and Dubuque is now served by 50 passenger regional jets. The Dubuque Regional Airport just received its 12th consecutive year ora perfect FAA Part 139 inspection compliance. Dubuque is the only airport in the nation to currently hold this record. The City and the Federal Government have invested $25 million in the airport over a 10-year period. Implementation of the City Council's Neighborhood Reinvestment Strategy provided many 'quality of life' improvements for City residents. The Community Oriented Policing Program expanded to include other City Departments in landlord/tenant training and building code enforcement. Dubuque is one of the safest places to live in the Midwest, and 13 police officer positions have been added since 1994 to implement new programs and enhance police coverage. The Housing and Community Development Department continued housing rehabilitation efforts including various home ownership initiatives. During the past fiscal year, 26 families were assisted in purchasing their first home through use of Community Development Block Grant (CDBG) funds. Housing rehabilitation assistance included $948,000 in grants to remove lead paint hazards in single and multi-family housing units. Through loans of $233,000 in CDBG funds, 64 rental units were rehabilitated. In total, the Housing and Community Development Department invested more than $4.5 million in homeowner and rental housing projects, matched by $3.9 million in private investment. Neighborhood park development included the installation of new play units in several neighborhood parks during the year. Seven million dollars has been invested in the park system over a five-year period. The City's ambitious riverfront development moved forward as planned during the year and was awarded $40 million from the State of Iowa Vision Iowa program. The America's River project is a public/private partnership between the City of Dubuque, the Dubuque County Historical Society, the Dubuque Area Chamber of Commerce, and Dubuque County, to carry out a comprehensive $188 million riverfront development in the Port of Dubuque. This area already includes historic sites, such as a Civil War Shot Tower, the William M. Black steamboat, Mississippi River Museum, Dubuque Star Brewery, and the Ice Harbor. Progress on riverfront development during the year included the following: Port of Dubuque Master Plan A strategic plan for the Port of Dubuque with land uses, economic analyses, and design standards was adopted in March, 2002. Mississippi River Discovery Center and Aquarium The River Discovery Center and Aquarium will be a world-class national museum for the entire Mississippi River. The Center will include 15 aquariums, including five that .measure 30 feet across. A dynamic immersion theater will surround visitors with the story of the Mississippi River's creation, its floods, its history, and its underwater life. An outdoor wetland will feature natural and living history with floating laboratories and classrooms. Stream tables will let visitors create their own rivers, and the educational overnight program will let visitors sleep on a "Boat and Breakfast" on a National Historic Landmark steamboat. Heritage Trail Riverfront System Two and one-half miles of an 18-mile extension of the Heritage Bike Trail from the north end of Dubuque through downtown, to the Mines of Spain State Recreation Area were recently completed, with the opening of the North End Neighborhood Trail and the Heron Pond Wetlands Nature Trail. Construction is proceeding on 13 miles of additional off-road and on-street segments of the trail extension. When completed, Heritage Trail Riverfront System, with links to riverfront parks and the Port of Dubuque, will create a major recreational facility. River's Edge Plaza Construction was completed on a 5,000 square foot plaza outside the floodwall gate at the historic Ice Harbor. This plaza serves as the City's riverfront gateway, as well as a landing for large steamboats. Mississippi Riverwalk The City acquired a riverfront property on the 4th Street Peninsula for construction of a one-third mile Riverwalk. This 15-foot wide promenade is scheduled for completion by calendar year end 2002. The walk will include benches, historic lighting, shade structures, and cascading stairs to the river. Grand Harbor Resort and Waterpark A 196-room seven-story hotel, and a 24,000 square foot indoor water park are under construction near the Ice Harbor with completion in December 2002. Mississippi River National Education and Conference Center An 115,000 square foot Education and Conference Center is under construction, with connections to the hotel and river walk to be completed by September 2003. The City's application for State Vision Iowa funding was approved for $40 million, with half of this going to the City for the conference center related public improvements. Star Brewery Building A request for proposals has been issued for the renovation and reuse of this 40,000 square foot historic building. A proposal for a mixed-use complex was received on November 1, 2002. The $188 million America's River Project is funded (River Discovery Center in process of raising final $4 million) and under construction. The 4th Street Peninsula has an additional 60 acres available for private development. The City is actively seeking to acquire additional property and relocate selected existing property owners to assemble into new development parcels for private development based on the newly adopted Port of Dubuque Master Plan. The new plan guides the redevelopment in the downtown riverfront area. For the Future. The Mayor and City Council will continue to take action to achieve their goals of maintaining a strong local economy, sustaining stable property tax levies, and enhancing the safety and security of citizens through neighborhood vitality. The City staff will work to implement the City Council's vision that Dubuque is a "Masterpiece on the Mississippi." A program of comprehensive service reviews has continued as a vehicle for analyzing City services, identifying oppommities for improvement, and determining areas of possible cost reductions. The goal of the service review program is to ensure that services desired by the citizens are provided in the most cost effective and efficient method possible. The City Council's goals for the next five years and beyond include the following: · Improved counectivity, including roads, air, and telecommunications · Strong diverse local economy · Riverfront development · Planned and managed growth · Parmering for a better Dubuque Specific programs are being implemented by City staff to meet the City Council's five-year goals. Some of the most significant programs include: · Riverfront Development - The City has partnered with several other agencies to enhance one of Dubuque's greatest treasures, the Mississippi riverfront area. A $188 million comprehensive plan for riverfront improvements has been developed, with implementation scheduled over the next five years. Redevelopment is guided by the Port of Dubuque Master Plan. · Industrial Park Development - The City has acquired over 900 acres of industrial land and has completed the first phase of construction for these industrial parks. City staff and the Greater Dubuque Development Corporation are working to attract new businesses and meet the expansion needs of current businesses. · Neighborhood Reinvestment - The highly successful Community Oriented Policing and Uptown Recreation programs will continue. Work will continue on neighborhood empowerment programs including property management and tenant training. The City Street, Historic Preservation and Housing programs are also being expanded to affect quality of life improvements at the neighborhood level. · Downtown Redevelopment - Dubuque's downtown, situated between the Mississippi River and tall tree-lined bluffs, is the home to many unique and historic buildings as well as being the center of commerce and tourism. The City Council adopted Vision Downtown, a community consensus for the future of Downtown Dubuque, in December 2001. Several initiatives with other public and private organizations have been completed for the downtown areas, including improvements to Flat Iron Park, continued reconstruction of Town Clock Plaza, and a master plan for the Five Flags Civic Center. The Downtown Master Plan is currently being developed. · Transportation Improvements - The City will maintain its aggressive program to improve local streets. Plans are in place to reconstruct or overlay sixty miles of streets over the next five years. In a sixteen-year period from 1990-2006, the City will have completed sixty- nine percent of the streets. From a more regional perspective, construction began on the Northwest Arterial extension in 2001. All of the traffic signals along U.S. 20 will be interconnected by 2004 to improve traffic flow and lessen travel delay and other new roadway connections, such as a new connection off University Avenue to U.S. 20 will be constructed as part of the project. The schedule for this phase is yet to be determined. U.S. 20 will be widened to five lanes from the Northwest Arterial to old U.S. 20 in 2004 to improve safety. Corridor studies will be completed for the Southwest Arterial and the Julien Dubuque Bridge four-lane replacement. Plans are also in place to expand U.S. Highway 151, providing Dubuque with a fuur-lane link to Madison, Wisconsin, and Cedar Rapids, Iowa, by 2004. The City, in partnership with local stakeholders, also will implement a comprehensive way finding signage program throughout the City with IDOT support. 10 All of this is being done while the City maintains fiscal integrity. Through efficient operation, revenue diversification, and debt reduction, the City has not increased the average homeowners property taxes in seven years, in fact, four of those year's property taxes went down. These are a few of the many activities being addressed by the community, City Council, and City staff to improve the quality of life in Dubuque. FINANCIAL INFORMATION City management is responsible for establishing and maintaining internal controls to ensure that the assets of the government are protected from loss, theft or misuse, and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal controls are designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates and judgments by management. Single Audit. As a recipient of federal and state financial assistance, the City of Dubuque's government is responsible for ensuring that adequate internal controls are in place to ensure compliance with applicable laws, regulations, contracts, and grants related to those programs. These internal controls are subject to periodic evaluation by management and finance staff. As a part of the government's single audit described earlier, tests are made to determine the adequacy of internal controls, including that portion related to federal programs, as well as to determine that the government has complied with applicable laws, regulations, contracts, and grants. The results of the government's single audit for the fiscal year ended June 30, 2002, provided no instances of material weaknesses in internal control over compliance, or significant violations of applicable laws, regulations, contracts and grants. Budgeting Controls. In addition, the government maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. All funds are included in the annual appropriated budget. The level of budgetary control (that is the level at which expenditures cannot legally exceed the appropriated amount) is established by program. The government also maintains an encumbrance accounting system as one technique for accomplishing budgetary control. Encumbered amounts lapse at year-end, however, encumbrances generally are re- appropriated as part of the following year's budget. As demonstrated by the statements and schedules included in the financial section of this report, the government continues to meet its responsibility for sound financial management. General Government Functions. The following schedule presents a summary of general fund, special revenue funds and debt service fund revenues for the fiscal year ended June 30, 2002, and the amount and percentage of increases and decreases in relation to prior year revenues. 11 Revenues Increase (Decrease) Percent Amount Percent from 2001 of Increase (000's) of Total (000's) (Decrease) Taxes $ 26,304 48.81% $ (495) -1.85% Special assessments 632 1.17% (152) -19.39% Licenses and permits 703 1.30% 127 22.05% Intergovernmental 14,124 26.21% 355 2.58% Charges for services 8,847 16.42% 720 8.86% Fines and forfeits 410 0.76% 41 11.11% Miscellaneous 893 1.66% (311) -25.83% Interest 1,980 3.67% (740) -27.21% Total Revenues $ 53,893 100.00% $ (455) -.84% The tax rate of $6.39150 established for general fund operations (excluding fringe benefits) for FY 2002 is within the tax rate limit of $8.10 per $1,000 of taxable valuation allowed by the Code of Iowa. The $.40136 increase from FY 2001 is primarily a result of wage settlements and inflation. Under the heading of taxes is the annual DRA profit distribution which decreased $800,000. The distribution is used for capital projects. Intergovernmental revenue increased due to the number of grants received. Charges for services increased due to Dubuque Greyhound Park and Casino rent, golf cart rent, and aviation fuel sales. Interest earnings decreased due to significant drop in interest rates. The following schedule presents a smnmary of general fund, special revenue funds and debt service fund expenditures for the fiscal year ended June 30, 2002, and the percentage of increases and decreases in relation to prior year amounts. Increase (Decrease) Percent Amount Percent From 2001 of Increase Expenditures (000's) of Total (000's) (Decrease) Current: Policy & Administration Community Protection Home & Community Environ. Human Development $ 4,986 10.63% $ (456) -8.38% 16,386 34.95% 1,322 8.78% 14,361 30.63% (2,049) -12.49% 8,520 18.17% (133) -1.54% Debt Service: Principal Interest and fiscal charges Total Expenditures 1,785 3.81% (327) -15.48% 852 1.82% 82 10.65% $ 46,890 100.00% $ (1,561) -3.22% 12 The decrease in expenditure mounts for the Policy and Administration program was primarily related to capital improvement programs. The increase in expenditure amounts for the Community Protection programs was primarily related to the City's $1,400,000 contribution to the new Dubuque County Jail Project. The decrease in expenditure amounts for the Home & Community Environment programs was primarily related to the Tax Increment Financing Project (Eagle Window and Door). The decrease in debt service principal is due to the final payment on the 1987 Bond Issue incurred during 2001. General Fund Balance. The Dubuque City Council has set a budget guideline of maintaining a general fund balance of ten percent of the operating budget appropriation and this amount is set aside each year. Enterprise Operations. The enterprise operations consist of water and wastewater systems, parking facilities, refuse collection, and a transit system. With respect to the outstanding parking revenue bonds, enmings from the parking facilities have met bond covenant requirements for net revenues to be equal to either 130% or 135% of current debt service requirements. Debt Administration. At June 30, 2002, the City of Dubuque had a number of debt issues outstanding. These issues included $24,050,000 of general obligation bonds, $5,873,155 of tax increment financing debt, $1,720,000 of revenue bonds, and a $286,523 note payable to be funded by grants, donations and guarantors. The government has maintained its Aa3 rating from Moody's Investors Service on general obligation bond issues. Under current state statutes, the government's general obligation bonded debt issues are subject to a legal limitation based on five percent of total actual value of real property. As of June 30, 2002, the government's net general obligation debt of $31,932,678 was well below the legal limit of $102,359,000. Cash Management. Cash temporarily idle during the year was invested in demand deposits, certificates of deposit, repurchase agreements, U.S. Treasury securities, federal agency obligations, and authorized mutual funds. The City recorded investment earnings of $2,926,843 for the year. The investment policy adopted by the City Council stresses the importance of capital preservation. The policy directives intend to minimize credit and market risks while maintaining a competitive yield on the portfolio. Accordingly, deposits were either covered by federal depository insurance or collateralized. All collateral on uninsured deposits was held either by the State Treasurer, the government, its agent, or a financial institution's trust department in the government's name. All of the investments subject to risk categorization were classified in the category of lowest credit risk as defined by the Governmental Accounting Standards Board. The non-classified investments include mutual funds. Risk Management. The City of Dubuque is a member of a statewide risk pool for local governments, the Iowa Communities Assurance Pool. The coverage for general and auto liability, as well as public official and police professional liability are acquired through this 13 agency. Worker's compensation coverage up to $400,000 for each accident is provided through self-insurance. The accumulated reserve provision for such claims equaled $699,492 as of June 30, 2002. The City has also established self-insurance plans for medical, dental, prescription drug, and short-term disability. The accumulated reserve provision for such claims equaled $666,462 as of June 30, 2002. All self-insured health plans are certified as actuarially sound and certificates of compliance have been filed with the State of Iowa. OTHER INFORMATION Independent Audit. State statutes require an annual audit by independent certified public accountants. The accounting firm of Eide Bailly LLP was selected for this purpose. In addition to meeting the requirements set forth in state statutes, the audit also was designed to meet the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The independent auditor's report on the general-purpose financial statements and combining and individual fund statements and schedules is included in the financial section of this report. The auditor's report related specifically to the single audit is included in the Compliance Section. Awards. The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Dubuque, Iowa, for its comprehensive annual financial report for the fiscal year ended June 30, 2001. This was the fourteenth consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current comprehensive annual financial report continues to meet the Certificate of Achievement program requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments. We compliment the staff of the finance deparlment for their assistance in preparing this report. We also commend the City Council and all department and division managers for their interest and support in planning and conducting the financial operations of the City of Dubuque in a responsible and progressive manner. We also thank the independent certified public accountants, Eide Bailly LLP, whose competent assistance and technical expertise have enabled the production of this report. Sincerely, Michael C. Van Milligen City Manager Kenneth J. TeKippe, CPA Finance Director 14 Organizational chart CITY OF DUBUQUE, IOWA OFFICIALS JUNE 30, 2002 CITY COUNCIL Terrance M. Duggan Daniel E. Nicholson Ann E. Michalski John H. Markham Roy D. Buol Joyce E. Comaors Patricia A. C1Lne Mayor Council Member - At Large Council Member - At Large Council Member- 1st Ward Council Member - 2nd Ward Council Member - 3'd Ward Council Member - 4t~ Ward COUNCIL APPOINTED OFFICIALS Michael C. Van Milligen Barry A. Lindaht William G. Blum James A. O'Brien Jeanne F. Schneider City Manager Corporation Counsel City Solicitor Assistant City Attorney City Clerk DEPARTMENT MANAGERS Pauline J. Joyce Andrew D. Perry Cynthia M. Ste'mhauser Richard R. Russell William J. Baum Kenneth J. TeKippe E. Daniel Brown Mary Rose Corrigan David W. Harris, Jr. Kelly R. Larson Randall K. Peek Christine A. Kohlmarm CAi D. Spence Susan A. H~xicks Donald J. Vogt Laura B. Carstens Klm B. Wadding Michael A. Koch Robert M. Green Paul J. Horsfall Admiinstrative Services Manager Airport Manager Assistant City Manager Building Services Manager Economic Development Director Finance Director Fire Chief Health Services Manager Housing and Community Development Manager Human Rights D/rector Personnel Manager Information Services Manager Leisure Services Manager Library Director Operations & Maintenance Manager PlmmJng Services Manager Police Chief Public Works Director Water Department Manager Water Pollution Control Plant Manager 16 Certificate of Achievement for Excellence in Financial Reporting Presented to City of Dubuque, Iowa For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2001 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. ~ Executive Director 17 FINANCIAL SECTION EideBailly Consultants · Certified Public Accountants INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the accompanying general purpose financial statements of the City of Dubuque, Iowa, as of and for the year ended June 30, 2002, as listed in the table of contents. These general purpose financial statements are the responsibility of the management of the City of Dubuque, Iowa. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; Chapter 11 of the Code of Iowa; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards and provisions require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the mounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opkdon, the general propose fmancial statements referred to above present fairly, in all material respects, the financial position of the City of Dubuque, Iowa, as of June 30, 2002, and the results of its operations and the cash flows of its proprietary fund types and nonexpendable lamst funds 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 October 31, 2002, on our consideration of the City's intemat control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with ttds report in considering the results of our audit. 3999 Pennsylvania Ave. o Suite I00 ° Dublxque, Iowa 52002~2639 · 563.556.1790 ° Fax 563.557.78421 8 Offices in Arizona, Iowa, Minnesota, Montana, North Dakota and South Dakota · Equal Opportunity Employer Our audit was performed for the purpose of forming an ophfion on the general purpose financial statements taken as a whole. The combining and individual fired and account group financial statements, schedules, statistical data, and the Schedule of Expenditures of Federal Awards required by the U.S. Office of Management and Budget (OMB) Circular A-133 listed in the table of contents are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the City of Dubuque, Iowa. Such information, except for that portion marked "unaudited" on wlfich we express no opinion, has been subjected to the auditing procedures applied in our audit of the general purpose financial statements and, in our opinion, is fairly stated in alt material respects in relation to the general purpose financial statements taken as a whole. Dubuque, Iowa October 31, 2002 19 GENERAL PURPOSE FINANCIAL STATEMENTS CITY OF DUBUQUE, IOWA COMBINED BALANCE SHEET - ALL FUND TYPES, ACCOUNT GROUPS, AND DISCRETELY PRESENTED COMPONENT UNIT JUNE 30, 2002 Governmental Fund Types Proprietm-y ASSETS AND OTHER DEBITS ASSETS Cash and pooled cash investments Cash and pooled cash investments - nonexpendable trust Receivables Property tax Delinquent Succeeding year Accounts m~d other Special assessments Accrued interest Notes - current Notes - long-term Intergovernmental Due from other funds Inventory Prepaid items Advances to other funds Advances to primary government Restricted assets Cash and pooled cash investments Land Buildings and improveanents Improvements other than buildings Machinery and equipment Construction in progress Accumulated depreciation OTHER DEBITS Amount available in Debt Service Fund Amount to be provided for retirement ofgenerai long-term debt Total Assets and Other Debits Special Debt Capital General Revenue Service Projects Enterprise $ 20,134,800 $ 8,665,996 $ 194,356 $ 20,512,857 $ 9,107,850 220,355 45,874 19,257 7,260 i2,490,778 2,150,036 655,564 481,982 420,136 1,256,287 549,916 214,829 57,833 6,064 53,794 694,687 10,334,665 965,868 502,444 820,996 65,020 61,828 4,564 482,077 11,875 150,526 $ 34,915,383 $ 23,627.276 $ 875,241 $ 21,069,095 69,087 206,302 316,708 5,037 553,225 6,335,936 53,054,022 23,760,271 39,620,390 12,470,389 (52,688,460) $ 94,556,286 See notes to £mancial statements. EXHIBIT 1 Fiduciary Fund Types Fund Type Trust Internal and Service Agency Account Groups General General Fixed Long-Term Asses Debt Component Totals Unit Totals Primary Dubuque Reporting Government Metropolitan Entity (Memorandum Area Solid (Memorandum Only) Waste Agency Only) $ 2,124,201 $ 862,167 $ 140,275 $ 61,602,227 $ 6,398,835 $ 68,001,062 140,275 140,275 175,797 36,889 16,143 8,118 29,390 125,240 (51,751) 19,327 21,799,251 42,325,460 12,341,111 17,837,606 505,683 292,746 15,778,360 1,889,109 549,916 425,868 694,687 10,334,665 2,495,610 65,020 407,926 21,476 482,077 203,399 49,629 292,746 15,778,360 2,092,508 549,916 475,497 694,687 10,334,665 2,495,610 65,020 407,926 21,476 482,077 438,750 438,750 723,078 2,514,279 3,237,357 28,135,187 552,528 28,687,715 95,379,482 5,945,497 101,324,979 36,101,382 36,101,382 57,583,236 1,820,254 59,403,490 12,976,072 12,976,072 (52,740,211) (4,544,480) (57,284,691) 217,760 217,760 217,760 28,525,322 28,525,322 28,525,322 $ 2,419,020 $ 1,066,776 $ 94,809, Ill $ 28,743,082 $ 302,081,270 $ 13,378,691 $ 315,459,961 (continued) 20 CITY OF DUBUQUE, IOWA COMBINED BALANCE Stt~.ET -ALL FUND TYPES, ACCOUNT GROUPS, AND DISCRETELY PRESENTED COMPONENT UNIT JUNE 30, 2002 Governmental Fund Types Proprietary LIABILITIES, EQUI~f, AND OTHER CREDITS Special Debt Capital General Revenue Service Projects Enterprise LIABILITIES Accounts payable Accrued payroll General obligation bonds payable - current Revenue bonds payable - current Accrued compensated absences 386,438 Intargovemmental payable Due to other funds Payable fi.om restricted assets Accrued interest payable Advances fi.om other funds Advances fi.om component unit Notes payable General obligation bonds payable Revenue bonds payable Landfill closure and postclosure care Tax-increment financing bonds payable Defenced revenue Succeeding year property tax 12,490,778 Other 29,680 Total Liab'dities 13,554,157 $ 511,601 $ 261,698 $ 135,660 15,073 33,656 14,049 $ 1,507,513 $ 787,020 55,183 290,000 180,000 265,866 25,909 482,077 438,750 2,790,250 1,518,667 2,150,036 655,564 481,982 443,498 1,91T 2,918,010 657,481_ 1,507,513 7,315,704 See notes to financial statemcmts. E~X H I HFF 1 (continued) Fiduciary Fund Types Fund Type Account Groups Trust General General Internal and Fixed Long-Term Service Agency Assets Debt Totals Primary Government (Memorandum Only) Component Unit Dubuque Metropolitan Area Solid Waste Agency Totals Reporting Entity (Memorandm Only) 951,506 $ 18,021 65,020 8,866 381 - $ 4,028,204 224,318 290,000 180,000 1,598,404 2,284,364 14,049 65,020 1,864,690 20,945,000 4,334,988 4,334,988 63,377 $ 4,091,581 7~24 231,742 290,000 180,000 35,923 2,320,287 81,360 95,409 65,020 25,909 25,909 482,077 482,077 438,750 438,750 1,864,690 1,864,690 23,735,250 23,735,250 1,518,667 1,518,667 2,051,474 2,051,474 4,334,988 15,778,360 15,778,360 475,095 475,095 1,034,547 9,247 28,743,082 55,739,741 2,239,558 57,979,299 (continued) 21 CITY OF DUBUQUE, IOWA COMBINED BALANCE SI~F, ET - ALL FUND TYPES, ACCOUNT GROUPS, AND DISCRETELY PRESENTED COMPONENT L'NIT JUNE 30, 2002 Governmental Fund Types ~o~et~ EQUI~ AND OTHER CREDITS Contributed capital Investment in general fixed assets Retained earnings Reserved for/by State statute Bond ordinance Minority interests Unreserved Fund balances Reserved for/by Long-term notes receivable Encumbrances Dog track Franchise agreement Endowments Bond ordinance Advances Debt service Unreserved, undesignated Total Equity and Other Credits Total Liabilities, Equity, and Other Credits Special Debt Capital General Revenue Service Projects $ $ $ $ 10,334,665 3,330,054 600,693 150,526 4,126,950 896,162 482,077 217,760 17,54%095 9,623,382 14,538,470 21,361,226 20,709,266 217,760 19,561,582 $ 34,915,383 $ 23,627,276 $ 875,241 $ 21,069,095 Enterprise - $ 40,752,248 553,225 45,935,109 87,240,582 $ 94,556,286 See notes to financial statements. EXtt I HIT 1 (¢ontlnued) Fiduciary Component Fund Types Fund Type Account Groups Totals Unit Totals Primary Dubuque Reporting Trust General General Government Metropolitan Entity Internal and Fixed Long-Term (Memorandm Area Solid (Memorandum Service Agency Assets Debt Only) Waste Agency Only) 24,233 $ $ $ - $ 40,776,481 $ - $ 40,776,481 94,809,111 94,809,111 94,809,111 1,360,240 446,543 446,543 553,225 553,225 2,427,218 2,427,218 47,295,349 8,265,372 55,560,721 19,327 140,708 897,494 10,334,665 8,057,697 896,162 19,327 140,708 150,526 482,077 217,760 42,608,441 10,334,665 8,057,697 896,162 19,327 140,708 150,526 482,077 217,760 42,608,441 1,384,473 1,057,529 94,809,111 246,341,529 11,139,133 257,480,662 $ 2,419,020 $ 1,066,776 $ 94,809,111 $ 28,743,082 $ 302,081,270 $ 13,378,691 $ 315,459,961 22 CITY OF DUBUQUE, IOWA COlVIBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES AND EXPENDABLE TRUST FUNDS FOR TI~E FISCAL YEAR ENDED JIJNE 30, 2002 Governmental Special General Revenue REVENUES Taxes $ 21,400,553 $ 3,763,878 Special assessments 632,241 Licenses and permits 702,726 Intergovemmental 1,806,225 12,317,414 Charges for services 8,847,155 Fines and forfeits 410,464 Miscellaneous 791,788 101,574 Interest 1,528,893 414,429 Total Revenues 35,487,804 17,229,536 EXPENDITURES Current Policy and administration Community protection Home and commun/ty environment Human development Debt service Principal retirement Interest Capital outlay Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Proceeds from issuance of debt Operating transfers in Operating transfers from component unit Operating transfers out Total Other Financing Sources (Uses) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER (LrNDER) EXPENDITURES AND OTHER USES FUND BALANCES, BEGINNING FUND BALANCES, ENDING 4,579,274 403,477 16,384,737 1,259 5,631,886 8,728,851 8,294,080 226,090 543,467 706,212 34,889,977 10,609,356 597,827 6,620,180 40,000 269,787 3,309,807 395,878 29,074 (3,438,466) (10,336,105) (59,585) (9,670,440) 538,242 (3,050,260) 20,822,984 23,759,526 $ 21,361,226 $ 20,709,266 See notes to financial statements. E~,H~BIT 2 Fiduciary Fund Types Fund Type Debt Capital Expendable Service Projects Trust $ 1,139,237 $ $ 36,541 Totals Primary Government (Memorandum Ordy) 3,316,768 2,420,055 2,639,510 497,042 $ 29,620,436 632,241 702,726 16,543,694 8,847,155 410,464 614,770 4,147,642 2,476,905 t,175,778 8,873,375 614,770 63,381,263 3,703 18t,106 5,167,560 16,385,996 305,380 14,666,117 8,520,170 1,241,922 1,785,389 145,423 851,635 11,819,671 11,819,67I 1,391,048 11,819,671 486,486 59,196,538 (215,270) (2,946,296) 128,284 4,184,725 13,252,218 78,140 5,419,930 13,562,005 9,203,755 29,074 (4,617,818) (122,361) (18,514,750) 78,140 14,054,330 (122,361) 4,280,084 (137,130) 11,108,034 5,923 8,464,809 354,890 8,453,548 910,898 54,301,846 $ 217,760 $ 19,561,582 $ 916,821 $ 62,766,655 23 CITY OF DUBUQUE, IOWA COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (BUDGETARY BASIS) - ALL GOVERNMENTAL FUND TYPES FOR THE FISCAL YEAR ENDED JUNE 30, 2002 REVENUES Taxes Special assessments Licenses and permits Intergovexnmental Charges for services Fines and forfeits Miscellaneous Interest Total Revenues EXPENDITURES Current Policy and administration Community protection Home and community environment Human development Debt service Principal retirement Interest and fiscal charges Capital outlay Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Proceeds fi.om issuance of debt Operating transfers in Operating transfers out Total Other Financing Sources (Uses) EXCESS (DEFICIENCY) OF REVENUES AND OTI-IER SOURCES OVER (UNDER) EXPENDITLrR~s AND OT/GER USES FUND BALANCES, BEGINNING FLrND BALANCES, ENDING General Fund Special Revenue Budget Acmal Favorable (Unfavorable) $ 21,785,142 $ 21,304,082 $ (481,060) 710,962 702,724 (8,238) 4,369,600 1,705,150 (2,664,450) 9,423,080 8,789,676 (633,404) 359,500 410,047 50,547 1,062,903 1,122,478 59,575 798,508 1,434,708 636,200 Budget Actual $ 3,874,474 $ 3,738,997 800,000 656,558 16,369,492 12,434,529 2,629,283 839,088 145,172 238,808 38,509,695 35,468,865 (3,040,830) 23,818,421 17,907,980 4,938,295 4,556,942 381,353 505,246 393,682 17,507,739 16,475,835 1,031,904 1,297 1,464 12,431,017 5,613,094 6,817,923 19,888,755 11,396,532 11,017,421 8,524,315 2,493,106 257,249 211,508 515,642 543,467 744,289 706,211 45,894~72 35,170,186 I0,724,286 21,912,478 13,252,864 (7,384,777) 298,679 7,683,456 1,905,943 4,655,116 40,000 40,000 269,787 269,787 3,326,083 3,338,883 12,800 449,422 395,878 (8~305~850) (3,397,872) 4!907,978 (10,762,379) (6,495,918) (4,979,767) (18,989) 4,960,778 (10,043,170) (5,830,253) (12,364,544) 279,690 12,644,234 (8,137,227) (1,175,137) 19,596,728 19,596,728 9,976,793 9,976,793 $ 7,232,184 $ 19,876,418 $ 12,644,234 $ 1,839,566 $ 8,801,656 See notes to f'mancial statements. EXItlBIT 3 Funds Debt Service Fund Capital Projeets Funds Variance Variance Variance Favorable Favorable Favorable (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable) $ (135,477) $ 1,146,555 $ 1,136,564 $ (9,991) $ 3,185,098 $ 3,323,644 $ 138,546 (143,442) (3,934,963) 4,394,428 1,184,000 (3,210,428) 631,592 366,717 (264,875) (I,790,195) 6,503,482 4,909,021 (1,594,461) 93,636 35,000 35~065 65 5~000 477,877 472,877 (5,910,441) 1,181,555 1,171,629 (9,926) 14,719,600 10,261,259 (4,458,341) 111,564 2,350 4, i55 (i,805) (167) 8,492,223 45,741 (27,825) 1,215,000 1,215,000 38,078 131,752 131,752 25,358~367 11,636,306 13,722,061 8,659,614 1,349,102 1,350,907 (1,805) 25~358~367 11,636,306 13,722,061 2,749,173 (167,547) (179,278) (11,731) (10,638,767) (1,375,047) 9,263,720 12,360,000 13,252,218 892,218 (53,544) 37,547 37,547 8,548,101 5,654,929 (2,893,172) 4,266,461 (11,794!674) (4,852,818) 6,941,856 4,212,917 37,547 37,547 9,113,427 14,054,329 4,940,902 6,962,090 (130,000) 327~004 6,962,090 $ 197,004 (141,731) (11,731) (1,525,340) 12,679,282 14,204,622 327,004 7,752,604 7,752,604 $ 185,273 $ (11,731) $ 6,227,264 $ 20,431,886 $ 14,204,622 24 CITY OF DUBUQUE, IOWA COMBINED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS/FUND BALANCES - ALL PROPRIETARY FUND TYPES, NONEXPENDABLE TRUST FUNDS, AND DISCRETELY PRESENTED COMPONENT UNIT FOR ~'14 I~; FISCAL YEAR ENDED JUNE 30, 2002 OPERATING REVENUES Charges for sales and services Other Invesmaent earnings Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Landfill closure and postclosure care Depreciation Total Operating Expenses OPERATING LOSS NONOPERAT1NG REVENUES (EXPENSES) Interest revenue Interest expense Operating grants Taxes Loss on disposal of assets Total Nonoperating Revenues (Expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND OPERATING TRANSFERS CAPITAL CONTRIBUTIONS OPERATING TRANSFERS Operating transfers in Operating transfers out Operating transfers to primary government Total Operating Transfers NET INCOME (LOSS) RETAINED EARNINGS/FUND BALANCES, BEGINNING AS RESTATED RETAINED EARNINGS/FUND BALANCES, ENDING Proprietary Fund Types Internal Enterprise Service 11,856,642 $ 5,016,116 213,666 12,070,308 5,016,116 4,601,828 1,280,001 911,150 12,403 1,064,188 8,756 3,779,860 308,413 230,570 4,385,775 2,621,305 12,005 13,208,901 6,007,353 (1,138,593) (991,237) 408,791 123,948 (329,630) 797,493 410,872 (40,176) 1,247,350 123,948 108,757 (867,289) 2,525,786 I1,413,586 (2,101,351) (1,240) 9,312,235 (1,240) 11,946,778 (868,529) 34,541,556 2,228,769 46,488,334 $ 1,360,240 See notes to financial statements. EXHIBIT 4 Component Unit Totals Dubuque Totals Fiduciary Primary Metropolitan Reporting Fund Type Government Area Entity Nonexpendable (Memorandum Solid Waste (Memorandum Trust Only) Agency Only) $ - $ 23,298 (22,094) 1,204 16,872,758 $ 2,613,800 $ 19,486,558 236,964 236,964 (22,094) (22,094) 17,087,628 2,613,800 19,701,428 5,881,829 492,359 6,374,188 923,553 14,117 937,670 1,072,944 70,683 1,143,627 32,857 4,121,130 1,036,601 5,157,731 4,616,345 26,929 4,643,274 605,676 605,676 2,633,310 534,565 3,167,875 32,857 19,249,111 2,780,930 22,030,041 (31,653) (2,161,483) (167,130) (2,328,613) 532,739 245,046 777,785 (329,630) (329,630) 797,493 20,514 818,007 410,872 410,872 (40,176) (40,176) 1,371,298 265,560 1,636,858 (31,653) (790,185) 98,430 (691,755) 2,525,786 2,525,786 11,413,586 11,413,586 (2, I02,59I) (2,102,591) (29,074) (29,074) 9,310,995 (29,074) 9,281,92i (31,653) 11,046,596 69,356 11,115,952 172,361 36,942,686 11,069,777 48,012,463 $ 140,708 $ 47,989,282 $ 11,139,133 $ 59,128,415 25 CITY OF DUBUQUE, IOWA COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES, NONEXPENDABLE TRUST FUNDS, AND DISCRETELY PRESENTED COMPONENT UNIT FOR TH $', FISCAL YEAR ENDED JUNE 30, 2002 CASH FLOWS FROM OPERATING ACTIVITIES Operating loss Adjustments to reconcile operating loss to net cash provided (used) by operating activities Landfill closure and postclosure care Depreciation Investment earnings Changes in assets and liabilities (Increase) decrease in accounts and other receivables Increase in intergovernmental mceivable Decrease in due from primary government (Increase) decrease in inventory Increase (decrease) in accounts payable Increase (decrease) in accrued payroll Incease (decrease) in accrued compensated absences Decrease in intergovernmental payable Increase in due to other funds Decrease in due to component unit NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Property taxes received Operating grants received Operating transfers in Operating transfers out Operating transfers to primary govemmant Repayment of advances from other funds Repayment of advances from component unit Repayment of advances to primary government NET CASH PROVIDED (USED) BY NONCAPITAL FINANCING ACTiVITIES CASH FLOWS FROM CAPITAL AND RELATED FINANCiNG ACTIVITIES Acquisition and construction of fLxed assets Proceeds from disposal of fixed assets Principal paid on bonds Interest paid on bonds Capital contributions NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES Proprietary Fund Types Internal Enterprise Service $ (1,138,593) $ (991,237) 2,621,305 12,005 (47,671) (175,797) (180,389) (15) 14,216 (1,720,908) 205,572 (7,912) 2,802 14,209 64,690 (40,289) (500,263) (867,749) 408,387 797,493 11,413,586 (2,101,351) (1,240) (335,835) (550,000) 9,632,280 (1,240) (12,342,392) (49,776) 6,923 (465,958) (331,261) 2,525,786 (10,606,902) (49,776) See notes to financial statements. EXHIBIT 5 Component Unit Totals Dubuque Totals Fiduciary P~mary Metropol/tan Reporting Fund Type Government Area Entity Nonexpendable (Memorandum Solid Waste (Memorandum Trust Only) Agency Only) $ (31,653) $ (2,161,483) $ (167,130) $ (2,328,613) 605,676 605,676 2,633,310 534,565 3,167,875 22,094 22,094 22,094 (2,i25) (11,684) (223,468) 84,249 (139,219) (180,389) (t80,389) 40,289 40,289 14,201 14,201 (1,517,461) (17,003) (1,534,464) (5,110) 518 (4,592) 14,209 (1,249) 12,960 (5,517) (5,517) 64,690 64,690 (40,289) (40,289) (1,379,696) 1,074,398 (305,298) 408,387 408,387 797,493 20,514 818,007 11,413,586 11,413,586 (2,102,591) (2,102,591) (29,074) (29,074) (335,835) (335,835) (550,000) (550,000) 550,000 550,000 9,631,040 541,440 10,172,480 (12,392,168) (12,392,168) 6,923 6,923 (465,958) (465,958) (331,261) (331,261) 2,525,786 2,525,786 (10,656,678) (10,656,678) (continued) 26 CITY OF DUBUQUE, IOWA COMBINED STATEMENT OF CASH FLOWS - ALL PROPRIETARY FUND TYPES, NONEXPENDABLE TRUST FUNDS, AND DISCRETELY PRESENTED COMPONENT UNIT FOR TH E FISCAL YEAR ENDED JUNE 30, 2002 CASH FLOWS FROM INVESTING ACTIVITIES Interest on cash and pooled cash/nves~maents NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF 3YEAR Proprietary' Fund Types Internal Enterprise Service $ 441,012 $ 131,179 (1,033,873) (787,586) 10,694,948 2,911,787 $ 9,661,075 $ 2,124,201 $ 744,416 $ NONCASH iNVESTING, CAPITAL, AND FINANCING ACTIVITIES Contributions of fixed assets from government See notes to fmanciaI statements. EXHIBIT 5 (continued) Componem Uffit Totals Dubuque Totnls Fiduciary Primary Metropolitan Reporting Fund Type Government Area Entity Nonexpendable (Memorandum Solid Waste (Memorandum Trust Only) Agency Only) $ (22,620) $ 549,571 $ 248,788 $ 798,359 (34,304) (1,855,763) 1,864,626 8,863 174,579 13,781,314 7,048,488 20,829,802 $ 140,275 $ 11,925,551. $ 8,913,114 $ 20,838,665 $ - $ 744,416 $ $ 744,416 27 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 The notes to financial statements contain a summary of sigrfificant accounting policies and other notes considm'ed necessary for an understanding of the financial statements of the City and are an integral part of this report. The index to the notes is as follows: 1. Summary of Significant Accounting Policies 2. Stewardship, Compliance, and Accountability 3. Cash on Hand, Deposits, and Investments 4. Cash and Pooled Cash Investments Overdraft 5. Fixed Assets 6. Interfimd Receivables and Payables 7. Long-Term Debt 8. Contributed Capital 9. Risk Management 10. Segment Information Enterprise Funds 11. Commitments and Contingent Liabilities 12. Post-Employment Health Care Benefits 13. Employee Retirement Systems 14. Conduit Debt 15. Landfill Closure and Postclosure Care 16. Vision Iowa Grant 17. Restatement of Beginning Balances 18. New Governmental Accounting Standards Board (GASB) Standards 28 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The City of Dubuque, Iowa, is a municipal corporation governed by an elected mayor and a six-member council. As required by accounting principles generally accepted in the United States of America, these financial statements present the City and its component uint, an entity for winch the City is considered to be financially accountable. The City has no blended component traits. The discretely presented component unit is reported in a separate column in the combined financial statements to emphasize that it is legally separate from the City. The component trait also has a June 30 year end. Discretely Presented Component Unit. The Dubuque Metropolitan Area Solid Waste Agency has been organized as a joint venture under Chapter 28E of the Code of Iowa between the City of Dubuque and Dubuque County. The Agency's purpose is to provide solid waste management for the Dubuque metropolitan area. The City appoints a voting majority of the Agency's governing board and has authority over those persons responsible for the day-to-day operations of the Agency. The Agency is presented as a proprietary fund type. Complete financial statements for the Agency may be obtained from the City of Dubuque. City of Dubuque Finance Department 50 West 13th Street Dubuque, Iowa 52001 Jointly Governed Organizations The City also participates in several jointly governed organizations that provide goods or services to the citizenry of the City but do not meet the criteria of a joint venture since there is no ongoing financial interest or responsibility by the participating governments. City officials are members of the following boards and commissions: City of Dubuque Conference Board Dubuque County E-911 Committee Dubuque Drag Task Force Measurement Focus, Basis of Accounting, and Basis of Presentation The accounts of the City are organized and operated on the basis of funds and account groups. A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. (continued on next page) 29 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 The City has the following fund types and account groups: Governmental funds are used to account for the City's general government activities. Governmental fund types use the flow of currant financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., whea they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collected within the current period or expected to be collected soon enough thereal2er to pay liabilities of the current period. The City considers property taxes as available if they are collected withLn 60 days after year end. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and cch'rain compensated absences and claims and judgments winch are recognized when the obligations are expected to be liquidated with expendable available financial resources. Property taxes, franchise taxes, licenses, interest, and special assessments are susceptible to accrual. Sales taxes are considered measurable and available at the time the underlying transaction occurs provided they are collected by the City within 60 days afier year-end. Other receipts and taxes become measurable and available when cash is received by the City and are recognized as revenue at that time. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Governmental funds include the following fund types: The general fund is the City's primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The special revenue funds account for revenue sources that are legally restricted to expenditure for specific purposes (not including expendable trusts or major capital projects). The debt service fund accounts for the servicing of general long-term debt not being financed by proprietary or nonexpendable trust funds. The capitalprojectsfunds account for the acquisition of fixed assets or construction of major capital projects not being financed by proprietary or nonexpendable trust funds. Proprietary funds are accounted for on the flow of economic resources measurement focus and use the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. The City applies oiny the applicable FASB pronouncements issued prior to November 30, 1989, in accounting for and reporting its proprietary operations. Proprietary funds include the following fund types: Enterprise funds are used to account for those operations that are financed and operated in a manner similar to private business or where the City Council has decided that the determination of revenues earned, costs incurred, and/or net income is necessary for management accountability. (continued onnextpage) 30 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Internal service funds account for operations that provide services to other departments or agencies of the City or to other governments on a cost-reimbursement basis. Fiduciary funds account for assets held by the City in a trustee capacity or as an agent on behalf of others. Trust funds account for assets held by the City under the terms ora formal trust agrecunent. The expendable trust funds are accounted for in essentially the same manner as the governmental fund types, using the same measurement focus and basis of accounting. Expendable trusts account for assets where both the principal and interest may be spent. The nonexpendable trust funds are accounted for in essentially the same manner as the proprietary funds, using the same measurement focus and basis of accounting. Nonexpendable trust funds account for assets of which the principal may not be spent. The agency funds are custodial in nature and do not present results of operations or have a measurememt focus. The agency funds are accounted for using the modified accrual basis of accounting. These funds are used to account for assets that the City holds for others in an agency capacity. Account Groups. The general fixed assets account group is used to account for freed assets not accounted for in proprietary or trust funds. The general long-term debt account group is used to account for general long-term debt and certain other liabilities that are not specific liabilities of proprietary or trust funds. Assets, Liabilities, and Equity Deposits and Investments Cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. State statute authorizes the City and the Dubuque Metropolitan Area Solid Waste Agency to invest public funds in obligations of the United States government, its agencies and instrumentalities; certificates of deposit or other evidences of deposit at federally insured depository institutions approved by the City Council; prime eligible bankers acceptances; certain high-rated commercial paper; perfected repurchase agreements; cmtain registered open-end management investment companies; certain joint investment trusts; and warrants or improvement certificates ora drainage district. Investments are stated at fair value or amortized cost. Authorized cost is used only for money market investments that have a remaining maturity at time of purchase of one year or less. Receivables and Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as "due to/from other funds." (continued on next page) 31 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as "advances to/from other funds" to indicate the non-current nature of the interfimd loans. Advances between funds are offset by a fund balance reserve account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. Property tax receivable is recognized in these funds on the levy or lien date, which is the date that the tax asking is certified by the City to the County. Current year delinquent property taxes receivable represents unpaid taxes from the current year. The succeeding year property tax receivable represents taxes certified by the City to be collected in the next fiscal year for the purposes set out in the budget for the next fiscal year. By statute, the City is required to certify its budget to the County Auditor by March 15 of each year for the subsequent fiscal year. However, by statute, the tax asking and budget certification for the following fiscal year becomes effective on the first day of that year. Although the succeeding year property tax receivable has been recorded, the related revenue is deferred and will not be recognized as revenue until the year for which it is levied. Property taxes are levied as of July 1 on property values assessed as of January 1 of the previous year. The tax levy is divided into two billings. The first billing is mailed on July 1 and the second billing is mailed on January 1. The billings are considered due upon receipt by the taxpayer; however, the actual due date is based on a period ending three months after the tax bill mailing. On these dates (September 30 and March 31), the bill becomes delinquent, and penalties and interest may be assessed by the government. Inventory and Prepaid Items Inventory included in the governmental funds is valued at cost using the first-in, first-out (FIFO) basis. The costs of governmental fund inventories are recorded as expenditures when consumed rather than when purchased. Inventory of materials and supplies in the enterprise funds is determined by actual count and priced on the FIFO basis. Inventory included in internal service funds is stated at the lower of cost (FIFO basis) or market and consists of consumable supplies. The cost of these supplies is recorded as an expense at the time they are removed fi.om inventory for use. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. Restricted Assets Certain proceeds of the City's revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The "revenue bond operating" account is used to report resources set aside to subsidize potential deficiencies from the enterprise fund's operation that could adversely affect debt service payments. The "revenue bond sinking" account is used to segregate resources accumulated for debt service payments over the next twelve months. The "revenue bond reserve" account is used to report resources set aside to make up potential future deficiencies in the revenue bond sinking account. (continued on next page) 32 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Certain assets of the expendable trust funds are classified as restricted assets because their use is limited by the City's cable television franchise agreement. Certain assets of the Dubuque Metropolitan Area Solid Waste Agency are classified as restricted assets because their use is restricted by state statute for certain specified uses. Fixed Assets Fixed assets that have been purchased with City funds are valued at cost where historical records are available and at estimated cost where no historical records exist. Assets acquired by gift are amounted for at the asset's fair value as of the date the property was received. Fixed assets used in governmental fund types of the City are recorded in the general fixed assets account group and are not depreciated. Interest incurred during construction is not capitalized. Public domain (infrastructure) general fixed assets (e.g., roads, bridges, sidewalks, and other assets that are immovable and of value only to the City) are not capitalized. The cost of normal maintenance and repairs that do not add to the value of an asset or materially extend the life of an asset are not included in the general fixed assets account group or capitalized in the proprietary funds. Major outlays for capital assets and improvements are capitalized in proprietary ftmds as projects are constructed. Interest incun'ed during construction is not capitalized. Fixed assets are depreciated in the proprietary funds using the straight-line method over the following estimated useful lives: Buildings and improvements 50 years Improvements other than buildings 50 years Machinery and equipment 4 - 20 years Compensated Absences The City allows employees to accumulate earned but unused vacation end sick pay benefits. Vacation pay is payable to employees upon retirement or termination. Sick pay is payable only upon retirement, in which event employees are paid for 25% of all eligible hours (50% in the case of police and fire employees). A liability has been recorded for all earned but unused vacation and sick pay benefits. Vacation and sick pay is accrued when incurred in proprietary fimds and reported as a fund liability. Amounts that are expected to be liquidated with expendable available financial resources are reported as an expenditure and a fund liability of the governmental fund that will pay them. Amounts not expected to be liquidated with expendable available financial resources are reported in the general long-term debt account group. No expenditure is reported for these amounts. (continued on next page) 33 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Long-Term Obligations The City reports long-term debt of governmental funds at face value in the general long-term debt account group. Certain other governmental fund obligations not expected to be financed with current available financial resources are also reported in the general long-term debt account group. Long-term debt and other obligations financed by proprietary funds are reported as liabilities in the appropriate funds. For governmental fund types, bond premiums and discounts, as well as issuance costs, are recognized during the current period. Bond proceeds are reported as an other financing source net of the applicable premium or discount. Issuance costs, even if withheld from the actual net proceeds received, are reported as debt service expenditures. For proprietary fund types, bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are rePorted net of the applicable bond premium or discount. Issuance costs are reported as deferred charges. Fund Equity Reservations of fund balance represent amounts that are not appropriable or are Iegally segregated for a specific purpose. Reservations of retained earnings are limited to outside third-party restrictions. The proprietary funds' contributed capital represents equity acquired through capital grants and capital contributions from developers, customers, or other funds. Memorandum Only-Total Columns Total colunms on the general purpose financial statements are captioned as "memorandum only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects fmanciai position, results of operations, or cash flows in accordance with accounting principles generally accePted in the United States of America. Inteffund eliminations have not been made in the aggregation of this data. NOTE 2 - STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Budgetary Information The Code of Iowa requires the adoption of an annual budget on or before March 15 of each year which becomes effective July 1 and constitutes the appropriation for each program specified therein until amended. The legal level of control (the level on which expenditures may not legally exceed appropriations) is the program level for the City as a whole, rather than at the fund level. (continued on next page) 34 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 The City's budget is prepared on the cash basis of accounting. After the initial annual budget is adopted, it may be amended for specified purposes. Budget amendments must be prepared and adopted in the same manner as the original budget. Management is not authorized to amend the budget or to make budgetary transfers between programs without the approval of the City Council. Management may make budgeting transfers between funds as long as the transfers are within the same program. The City has adopted a policy relative to budgetary control and amendment which provides for control at the line-item level and review of the current year's budget at the time the next year's budget is prepared. This usually results in amending the appropriations of all programs to adjust to current conditions. Supplemental appropriations are only provided when unanticipated revenues or budget surpluses become available. Appropriations as adopted lapse at the end of the fiscal year. The budget for the fiscal year ended June 30, 2002, was amended two times during the year to allow the City to increase program expenditures by approximately $51,136,000, primarily for the carry-forward of unfinished capital improvement projects, expenditure of additional grants for capital improvements, and the expenditure of additional intergovernmental revenue for community development projects. Encumbrances represent commitments related to unperformed contracts for goods or services. Encumbrance accounting--under which purchase orders, contmcts, and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriation--is utilized in the governmental funds. Encumbrances outstanding at year-end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year. Budget/GAAP Reconciliation The accompanying "Combined Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual (Budgetary Basis) - All Governmental Fund Types" presents comparisons of the legally adopted budget with actual data on a budgetary basis for the general, special revenue, debt service, and capital projects fund types. Since accounting principles applied for purposes of developing data on a budgetary basis differ significantly from those used to present financial statements in conformity with acenunt'mg principles generally accepted in the United States of America, a reconciliation of resultant basis, t/ming, perspective, and entity differences in excess (deficiency) of revenues and other sources of f'mancial resources over (under) expenditures and other uses of financial resources for the year ended June 30, 2002, is presented as follows: Excess (deficiency) of revenues and other sources over (under) expenditures and other uses (budgetary basis) Special Debt Capital General Revenue Service Projects $ 279,690 $(1,175,137) $ (141,731) $12,679,282 Adjushments: To adjust revenues for accruals To adjust expenditures for accruals 18,937 (678,444) 44,742 (1,622,883) 239,615 (1,196,679) (40,141) 51,635 Excess (deficiency) of revenues and other sources over (under) expenditures and other uses (GAAP basis) $ 538,242 $(3,050,260) $ (137,130) $11,108,034 (continued on next page) 35 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Deficit Fund Equity The following funds had deficit retained eam~gs/fund balances mounts as of June 30, 2002: Capital Projects Airport Construction $ 127,625 Enterprise Transit Systec 2,581,535 Internal Service General Service 9,389 Garage Service 11,317 Comparison of Actual Disbursements with Budget (Budgetary Basis) Under Iowa law, cities are required to account for disbursements in terms of City government programs. The four City government programs are Policy and Administration, Community Protection, Home and Community Environment, and Human Development. The following table for the entire City, which includes the general, special revenue, debt service, capital projects, enterprise, internal service, and trust funds, has been prepared to deconstrate legal compliance with that requirement: Variance Actual Favorable Prom'am Appropriations Disbursements (Unfavorable) Policy and administration Community protection Home and community enviroumcnt Human development $ 6,671,022 $ 5,536,575 $ 1,134,447 18,258,053 17,217,399 1,040,654 130,064,398 58,726,922 71,337,476 13,433,503 9,745,746 3,687,757 Total $ 168.426.976 ~ $ 77.200.334 NOTE 3 - CASH ON HAND, DEPOSITS, AND INVESTMENTS Cash on Hand. Cash on hand represents undeposited collections together with authorized change funds and petty cash funds used for current operating purposes. The carrying amount at year-end was $8,475 for the City and $350 for the Dubuque Metropolitan Area Solid Waste Agency. Deposits. At year-end, the City's carrying amount of deposits was $36,981,615 and the bank balance was $39,604,217. The City's deposits in banks at June 30, 2002, were entirely covered by federal depository insurance or by the State Siaking Fund in accordance with Chapter 12C of the Code of Iowa. This chapter provides for additional assessments against the depositories to insure there will be no loss of public funds. (continued onnextpage) 36 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 The carrying mount of deposks for the Dubuque Metropolitan Area Solid Waste Agency was $8,912,764 and the bank balance was $9,227,529. The Agency's deposits in banks at June 30, 2002, were entirely covered by federal depository insurance or by the State Sinking Fund in accordance with Chapter 12C of the Code of Iowa. Investments. The City classifies its investments into categories which present an indication of the level of credit risk in relation to the nature of the investment and the custodial provisions. Category 1 records securities that are insured, registered, held by the City, or held by the City's agent in the City's name. Category 2 denotes uninsured and tmregistered securities that are held by a counterparty's trust department or agent in the City's name. Category 3 specifies uninsured and unregistered securities that are held by a cotmterparty's trust department or agent in other than the City's name. The City's investments at June 30, 2002, are as follows: Categories Fair 1 2 3 Value U.S. Treasury Securities $ 2,116,129 Federal Agency Obligations 21,675,146 Corporate Stock 61,008 $ $ $ 2,116,129 21,675,146 61,008 $ 23.852.28~3 Investment Pools: Mutual U.S. Government Bond Fund $ $ 23,852,283 1,623,207 Total Investments $ 25.475.490 The Dubuque Metropol/tan Area Solid Waste Agency had no investments at June 30, 2002. A reconciliation of cash and investments as shown on the combined balance sheet for the primary government follows: Cash on hand Carrying amount of deposits Carrying amount of investments 8,475 36,981,615 25~475,490 Total $ 62.465.580 Cash and pooled cash investments Cash and pooled cash investments - nonexpendable trust Cash and pooled cash investments restricted $ 61,602,227 140,275 723,078 Total $ 62.465.580 (continued on next page) 37 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 NOTE 4 - CASH AND POOLED CASH INVESTMENTS - OVERDRAFT When a fund overdraws its share of a pooled cash account, the overdraft is reported as aaa interfimd payable in that fund. The offsetting interfimd receivable has been reported in the General Fund. The difference between the General Fund's carrying amount of the cash pool and the equity displayed on the General Fund's balance sheet amounts to $65,020. NOTE 5 - FIXED ASSETS The following is a summary of changes in the general fixed assets account group during the fiscal year: Change in Capitalization Balance Policy Balance Jul'v 1, 2001 Deductions Additions Retirements June 30, 2002 Land Buildings and improvements Improvements other than buildings Machinery and equipment Construction in progress $ 15,543,862 $ 9,290 $ 8,326,435 $ 2,061,756 $ 21,799,251 40,430,140 67,224 2,200,580 238,036 42,325,460 19,808,901 34,156 890,079 8,323,713 12,341,111 18,369,074 3,261,498 3,591,149 861,119 17,837,606 2,521,883 18,069~812 20,086.012 505,683 Total General Fixed Asses $ 96.673.86~00 $ 3.372.16~8 $ 33.078.05~5 $ 31.570~.636 $ 94.809.11~11 The change in capitalization policy-deductions reflects increasing the fixed asset capitalization policy fi.om $1,000 to $5,000. The following is a summary of proprietary fund type assets at June 30, 2002: Internal Enterprise Service Funds Funds Land Buildings and improvements Improvements other than buildings Machinery and equipment Construction in progress Accumulated depreciation $ 6,335,936 $ 53,054,022 23,760,271 39,620,390 125,240 12,470,389 (52.688,460) (51,751) Net Fixed Assets $ 82.552.54~8 $ 73.489 (continued on next page) 38 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 The following is a summary of proprietary fund type fixed assets for the Dubuque Metropolitan Area Solid Waste Agency at June 30, 2002: Land Buildings and improvements Machinery and equipment Accumulated depreciation 552,528 5,945,497 1,820,254 (4,544,480) Net Fixed Assets $ 3.773.799 NOTE 6 - INTERFUND RECEIVABLES AND PAYABLES Due to/from other funds: Receivable Fund General Pavable Fund Lntemal Service Funds General Service Garage Service Advances to/from other funds: Receivable Fund General Payable Fund Enterprise Funds Water Utility Advances to/from primary government and component un/t: Receivable Entity Payable Entity Component unit- Dubuque Metropolitan Primary government Sewage Disposal Area Solid Waste Agency Works Enterprise Fund Amount $ 1,491 63,529 $ 65.020 Amount $ 482.077 Amount $ 438.750 NOTE 7 - LONG-TERM DEBT General Obligation Bonds. The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for general government. (continued on next page) 39 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds generally are issued as serial bonds with varying mounts of principal maturing annually and with interest payable smrd-annually. General obligation bonds outstanding at June 30, 2002, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Corpomtepurpose 06/01/93 05/01/94-05/01/03 4.50% $ 4,615,000 $ 425,000 Corporate purpose 05/01/94 05/01/95-05/01/04 5.13 3,100,000 595,000 Corporate purpose 07/01/95 05/01/96-05/01/05 4.65-4.90 2,000,000 950,000 Corporate purpose 06/01/00 06/01/02-06/01/20 5.80-5.88 2,750,000 2,660,000 Corporate pm-pose 11/01/00 06/01/02-06/0t/20 5.00-5.25 6,265,000 6,060,000 Corporate purpose 12/27/01 06/01/05-06/01/21 4.00-4.90 9,500,000 9,500,000 Corporate purpose 01/09/02 06/01/04-06/01/21 4.00-4.95 2,860,000 2,860,000 Corporate purpose 03/26/02 06/01/03-06/01/21 3.00-5.00 1.000,000 1,000,000 24.050.000 Annual debt sarvice requ/rements to maturity for general obligation bonds, including interest of $12,720,056, are as follows: General Long-Term Fiscal Year Ending Debt Account Group/ June 30 Enterprise Funds 2003 $ 2,794,434 2004 2,292,013 2005 2,448,790 2006 1,665,540 2007 1,883,i38 2008-2021 25,686,141 Total $ 36.770.056 Tax-Increment Financing Bonds. The City issues tax-increment fmancing bonds to provide funds for urban renewal projects. The City pledges property tax revenues from the tax-increment financing districts to pay debt service. These bonds generally are issued as serial bonds with varying amounts of principal maturing annually and with interest payable semi-annually. Tax-increment fm_ancing bonds outstanding at June 30, 2002, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Advanced Data- Comm 03/18/99 12/31/01-06/30/11 6.0-9.0% Categraph Systems 12/01/99 12/31/01-12/31/10 8.8 Eagle Window & Door 02/15/00 i2/31/02-06/30/12 9.1 (continued on next page) $ 900,000 $ 833,328 360,000 333,122 3,168,538 3A68.538 $ 4.428.538 $ 4.334.988 40 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS J-tYNE 30, 2002 Annual debt service requirmuents to maturity for tax-increment financing bonds, including interest of $2,105,229, are as follows: Fiscal Year Ending June 30 Amount 2003 $ 675,372 2004 675,372 2005 675,372 2006 675,372 2007 675,372 2008-2012 3,063,357 Total $ 6.440.21~7 Revenue Bonds. The City also issues bonds where the City pledges income derived fxom acquired or constructed assets to pay debt service. These bonds generally are issued as serial bonds with varying mounts of principal maturing armually and with interest payable semi-annually. Revenue bonds outstanding at June 30, 2002, are as follows: Amount Amount Date of Interest Originally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Parking facilities 03/01/98 05/01/98-05/01/10 4.30-4.75% $ 2.515.0013 $ 1.720.000 Revenue bond debt service requirements to maturity, including interest of $378,410, are as follows: Fiscal Year Ending June 30 Amount 2003 $ 258,625 2004 260,885 2005 262,525 2006 263,525 2007 263,970 2008-2010 788,880 Total $ 2.098.41~0 (cominued on next page) 41 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMEI'4TS JUNE 30, 2002 Notes Payable. Notes payable have been issued to provide funds for economic development and for the pm:chase of fixed assets. Notes payable at June 30, 2002, are as follows: Amount Amount Date of Interest Origir~ally Outstanding Purpose Issue Maturity Dates Rates Issued End of Year Economic development 04/15/97 05/01/03 4.40% $ 700,000 $ 616,000 Economic development 02/27/98 03/01/04 4.40 655,500 655,500 Economic development 07/15/99 07/01/00-07/01/02 None 800,000 266,667 Land purchase 06/30/00 07/01/03 6.00 320,000 286,523 Equipment 02/25/02 07/01/04 None 40,000 40,000 $ 2.5~15.50~0 $ 1.864.69~0 Debt service requirements to maturity for notes payable, including interest of $109,186, are as follows: Fiscal Year Ending June 30 Amount 2003 $ 671,946 2004 1,261,930 2005 40,000 Total $~1.9~73.87~6 Changes in Long-term Liabilities. During the fiscal year ended June 30, 2002, the following changes occurred in liabilities reported in the general long-term debt account group: Balance Balance Jui¥ 1, 2001 Additions Reductions June 30, 2002 Accrued Compensated Absences $ 1,570,162 Notes Payable - Long-term 2,118,279 General Obligation Debt 9,005,000 Tax-Increment Financing Debt 4,158,751 $ 28,242 $ $ 1,598,404 40,000 293,589 1,864,690 13,360,000 1,420,000 20,945,000 269,787 93,550 4,334,988 Totals $ 16.852.19~2 $ 13.698.02~9 $ 1.807~139 $ 28.743.082 (continued on next page) 42 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 NOTE 8 - CONTRIBUTED CAPITAL The changes in the City's contributed capital accounts for its enterprise and internal service funds were as follows: Sewage America's Disposal Water Parking Refuse Transit River Garage Sources Works UfiY~W Facilities Collection System Project Service Beginffmg balance, contributed capital $28,665,261 $ 4,213,543 $ 178,307 $ 336,354 $ 6,614,367 $ $ 24,233 Contributions received t~om government 62,016 682,400 Ending balance, contributed capital $28_665.26~1 $4.213.54~3 $ 240.323 $ 336.35~4 $6.614.36~7 $ 682_~400 $ 24.23~3 NOTE 9 - RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the government ennSes commercial insurance and participates in a local government risk pool. The City has established a Health Insurance Reserve Fund for insuring benefits provided to City employees and covered dependents which is included in the Internal Service Fund Type. Health benefits were self-insured up to au individual stop loss amount of $70,000, and an aggregate stop loss of approximately $3,770,000 for 2002. Coverage from a private insurance company is maintained for losses in excess of the stop loss mount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the past three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. The City has established a Workers' Compensation Reserve Fund for insuring benefits provided to City employees which is included in the Internal Service Fund Type. Workers' compensation benefits were self-insured up to a specific stop loss amount of $400,000, and an aggregate stop loss consistent with statutory limits for 2002. Coverage from a private insurance company is maintained for losses in excess of the stop loss amount. All claims handling procedures are performed by a third-party claims administrator. Incurred but not reported claims have been accrued as a liability based upon the claims administrator's estimate. Settled claims have not exceeded commercial coverage in any of the last three fiscal years. The estimated liability does not include any allocated or unallocated claims adjustment expense. (continued on next page) 43 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 All funds of the City participate in both programs and make payments to the Health Insurance Reserve Fund and the Workers' Compensation Reserve Fund based on actuarial estimates of the mounts needed to pay prior- and current-year claims. The claims liability of $608,502 in the Health Insurance Reseawe Fund and $325,751 in the Workers' Compensation Reserve Fund is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. Changes in reported liabilities for the fiscal years ended June 30, 2001 and 2002, are summarized as follows: Health Workers' Insurance Compensation Reserve Fund Reserve Fund Liabilities at June 30, 2000 Claims and changes in estimates during fiscal year 2001 Claim payments 458,867 $ 127,079 3,309,388 205,638 (3,231,747) (156,168) Liabilities at June 30, 2001 Claims and changes in est/mates dmSng fiscal year 2002 Claim payments 536,508 176,549 3,706,029 459,078 (3.634,035) (309,876) Liabilities at June 30, 2002 $ 608.502 $ 325.751 The City is a member in the Iowa Communities Assurance Pool, as allowed by Chapter 670.7 of the Code of Iowa. The Iowa Communities Assurance Pool (Pool) is a local government risk-sharing pool whose 456 members include various governmental entities throughout the State of Iowa. The Pool was formed in August 1986 for the purpose of managing and funding third-party liability claims against its members. The Pool provides coverage and protection in the following categories: general liability, automobile liability, automobile physical damage, public officials liability, police professional hability, property, inland marine, and boiler/machinery. There have been no reductions in insurance coverage fi.om prior years. Each member's annual casualty contributions to the Pool fund current opemftons and a reserve fund. Annual operating contributions are those amounts necessary to fund, on a cash basis, the Pool's general and administrative expenses, claims, claims expenses and reinsurance expenses due and payable in the current year, plus ali or any portion of any deficiency in capital. During the frrst six years of membership, a portion of the member's contribution is allocated to a Cumulative Reserve Fund. Thereafter, no further annual contribution shall be made to the Cumulative Reserve Fund unless the Board shall require further annual contributions for the purpose of maintaining the Cumulative Reserve Fund at a level equal to 300 percent of the total current Basis Rates of all Members, or to comply with the requirements of any applicable regulatory authority having jurisdiction over the Pool. (cuntLnued on ~ext page) 44 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 The Pool also provides property coverage. Members who elect such coverage make annual operating contributions which are necessary to fund, on a cash basis, the Pool's general and administrative expenses and re'insurance prenfiums, all of which are due and payable in the current year, plus all or any portion of any deficiency in capital. Any year-end operating surplus is transferred to capital. Deficiencies in operations are offset by transfers from capital and, if insufficient, by the subsequent year's member contributions. The City's property and casualty contributions to the risk pool are recorded as expenditures from its operating funds at the time of payment to the risk pool. The City's annual contributions to the Pool for the year ended June 30, 2002, were $346,948. The Pool uses reinsurance and excess risk-sharing agreements to reduce its exposure to large losses. The Pool retains general, automobile, pohce professional, and public officials' liability risks up to $250,000 per claim. Claims exceeding $250,000 are reinsured in an mount not to exceed $1,750,000 per claim and $5,000,000 in aggregate per year. For members requiring specific coverage from $2,000,000 to $15,000,000, such excess coverage is also reinsured. Automobile physical damage risks are retained by the Pool up to $50,000 each accident, each location, with excess coverage reinsured on an individual- member basis. All property risks are also reinsured on an individual-member basis. The Pool's intergovernmental contract with its members provides that in the event a casualty claim or series of claim exceeds the amount of risk-sharing protection provided by the member's risk-sharing certificate, or in the event that a series of casualty claims exhausts total members' equity plus any reinsurance and any excess risk-sharing recoveries, then payment of such ciaims shall be the obligation of the respective individual member. Tlie City does not report a liability for losses in excess of reinsurance or excess risk-sharing recoveries unless it is deemed probable that such losses have occurred and the amount of such loss can be reasonably estimated. Accorclingly, at June 30, 2002, no liability has been recorded in the City's financial statements. As of June 30, 2002, settled claims have not exceeded the risk pool or reinsurance company coverage since the Pool's inception. Members agree to continue membership in the Pool for a period of not less than one fall year. After such period, a member may withdraw from the Pool at anniversary. If the notice to withdraw is within a 60 day period of the anniversary date, the member forfeits all rights to their interest in the vested Cumulative Reserve Fund. Upon withdrawal, payments for all claims and claims expenses become the sole responsibility of the withdrawing member, regardless of whether a claim was incurred or reported prior to the member's withdrawal. Members withdrawing within the first six years of membership may receive a partial refund of their reserve contributions. If a member withdraws after the sixth year, the member is refunded 100 percent of its Cumulative Reserve Fund, however, the refund is reduced by an amount equal to the annual operating contribution which the withdrawing member would have made for the one-year period following withdrawal. NOTE 10 - SEGMENT INFORMATION - ENTERPRISE FUNDS The City maintains six enterprise funds which provide sewage disposal, water, parking, refuse, and transit services, as well as accounting for construction associated with the America's Pdver Project. Selected financial information for the fiscal year ended June 30, 2002, is as follows: (continued on next page) 45 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Sewage America's Total Disposal Water ParIdng Refuse Transit River Enterprise Works Uti~ty Faegities Collection System Project Funds Operafingrevenues $ 4,432,165 $ 4,135,239 $ 1,401,694 $ 1,905,779 $ 187,785 $ 7,646 $ I2,070,308 Depreciation expense 1,078,583 793,406 362,576 147,398 237,845 1,497 2,621,305 Operating income (loss) (12,305) 231,296 302,576 63,810 (1,620,395) 003,575) (1,138,593) Operating grants 950 796,543 797,493 Operating tcansfers: In 144,415 1,326,600 60,000 9,882,571 11,413,586 Out 412,175 497,977 984,911 179,822 26,466 2,101,351 Tax revenues 410,872 410,872 Net income (loss) 32,153 1,606,579 (879,521) (Ill,671) 919,092 10,380,I46 11,946,778 Current capital contdbutions 113,483 476,465 62,016 1,310,698 1,307,540 3,270,202 NOTE 11 - COMMITMENTS AND CONTINGENT LIABILITIES Grants The City has received financial assistance from numerous federal and state agencies in the form of grants and entitlements. The disbtwsemant of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit by the grantor agencies. Any disallowed claims resulting from such audits could become a liability of the general fund or other applicable fimds. However, in the opinion of management, liabilities resulting from disallowed claims, if any, will not have a material effect on the City's financial position as of June 30, 2002. Litigation The City's corporation counsel reported that as of June 30, 2002, various claims and lawsuits were on file against the City. The corporation counsel estimated that all potential settlements against the City not covered by insurance would not materially affect the financial position of the City. The City has authority to levy additional taxes (outside the regular limit) to cover auinsured judgments against the City. (continued on next page) 46 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Construction Contracts The City has recognized as a liability only that portion of construction contracts representing construction completed through June 30, 2002. The City has additional commitments for signed construction contracts of approximately $13,665,000 as of June 30, 2002. These commitments will be funded by federal and state grants, cash reserves, and bond proceeds. NOTE 12 - POST-EMPLOYMENT HEALTH CARE BENEFITS In addition to providing pension benefits, the City provides certain health care benefits for retired disabled police officers and firefighters as mandated by the Code of Iowa. The cost of health care benefits for retired disabled police officers and firefighters is recognized as an expenditure as claims are paid. As of June 30, 2002, 56 retirees were eligible for these benefits, and the cost of the benefits for the fiscal year ended June 30, 2002, totaled $26,298. NOTE 13 - EMPLOYEE RETIREMENT SYSTEMS MFPRSI The City contributes to the Municipal Fire and Police Retirement System of Iowa (the Plan), which is a cost-sharing, multiple-employer defined benefit pension plan administered by a Board of Trustees. The Plan provides retirement, disability, and death benefits which are established by state statute to plan members and beneficiaries. The Plan issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to Municipal Fire amd Police Retirement System of Iowa, 2836 104th Street, Urbandale, Iowa, 50322. Plan members are required to contribute 9.35% of earnable compensation, and the City's contribution rate may not be less than 17% of eamable compensation. Contribution requirements are established by state statute. The City's contributions to the Plan for the years ended June 30, 2002, 2001, and 2000, were $1,338,824, $1,327,178, and $1,280,060, respectively, which met the required minimum contribution for each year. IPERS The City contributes to the Iowa Public Employees Retirement System (IPERS) which is a cost-sharing multiple-employer defined benefit pension plan administered by the State of Iowa. IPERS provides retirement and death benefits which are established by state statute to plan members and beneficiaries. IPERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to IPERS, P.O. Box 9117, Des Moines, Iowa, 50306-9117. (continued on next page) 47 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Plan members are required to contribute 3.70% of their annual covered salary, and the City is required to contribute 5.75% of armual covered payroll. Contribution requirements are established by state statute. The City's contributions to IPERS for the years ended June 30, 2002, 2001, and 2000, were $834,972, $828,947, and $802,297, respectively, equal to the required contributions for each year. NOTE 14 - CONDUIT DEBT From time to time, the City has issued Industrial Revenue Bonds to provide fmancial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying fimmcial statements. As of June 30, 2002, there were three series of Industrial Revenue Bonds outstanding, with an aggregate principal amount payable of $6,694,500. NOTE 15 -LANDFILL CLOSURE AND POSTCLOSURE CARE State and federal laws and regulations require the Dubuque Metropolitan Area Solid Waste Agency to place a final cover on each celt of its landfill site when filled and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that each cell stops accepting waste, the Agency reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. The $2,051,474 reported as landfill closure and postclosure care liability at Jtme 30, 2002, represents the cumulative amount reported to date based on the use of 95 percent of the estimated capacity of cells 3 and 4 and the use of 45 percent of the estimated capacity of cells 5 and 6. The Agency will recognize the remaining est/mated cost of closure and postclosure care of $1,677,579 as the remaining capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in 2002. The Agency expects to close cells 3 and 4 in 2003 and to close the current generation of permitted ceils in 2010. The Agency is making plans to construct a second genemtiun of cells to extend the life of the landfill to 2050. Actual cost may be higher due to inflation, changes in technology, or changes in regulations. The agency has begun to accumulate resources to fund these costs in accordance with state and federal financial assurance requirements. At June 30, 2002, fonds have been restricted for closure and postclosure costs in the amount of $2,067,736, which exceeds the liability currently recognized. (continued on next page) 48 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 NOTE 16 - VISION IOWA GRANT The City, along with the Dubuque County Historical Society, has entered into a $40 million Vision Iowa Grant for the construction of the America's River Project. As part of the agreement, the City has issued $t2,360,000 in general obligation bonds and is to receive approximately $20 million of the grant proceeds, with the Historical Society receiving the remaining proceeds. NOTE 17 - RESTATEMENT OF BEGINNING BALANCES The restatement of retained earnings was due to chan~g the fixed asset capitalization threshold to $5,000. Retained earnings June 30, 2001, as previously reported Component Proprletaty Fuud 3~pes U~/t Dubuque Enterprise Internal Metropolitan Sewage Service Area Solid Disposal Water Parking Refuse Transit Garage Waste Works Utiliw Facilities Collecllton System Service Agency $ 7,157,040 $ 18,013,602 $ 7,073,988 $ 1,295,610 $ (3,484,162) $ 50,594 $ 11,076,682 Adjusunent Effect of chauge in capitalization policy (39,558) (233,882) (21,839) (1,433) (16,465) (4,878) (6,905) Retained earnings June 30, 2001, as restated $ 7,117,482 $ 17,779,720 $ 7,052,149 $ 1,294,177 $ (3~500,627) $ 45,716 $ 11,069,777 NOTE 18 - NEW GOVERNMENTAL ACCOUNTING STANDARDS BOARD (GASB) STANDARDS The Governmental Accounting Standards Board (GASB) has issued several statements not yet implemented by the City of Dubuque. The statements which might impact the City of Dubuque are as follows: Statement No. 34, Basic Financial Statements- and Management 's Discussion and Analysis- for State and Local Governments, issued June 1999 and GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements, issued March 2000, will be effective for the City of Dubuque for the fiscal year ending June 30, 2003. Statement No. 34 and Interpretation No. 6 impose new standards for financial reporting. Management has not yet completed their assessment of these pronouncements; however, they will have a material effect on the overall financial statement presentation of the City of Dubuque, Iowa. (continued on next page) 49 CITY OF DUBUQUE, IOWA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 Statement No. 37, Basic Financial Statements- and Management's Discussion and Analysis- for State and Local Governments: Omnibus, issued June 2001, will be effective for the City simultaneously with the implementation of GASB Statement No. 34. This Statement amends certain provisions of Statement No. 34 and Statement No. 21, Accounting for Escheat Property. Statement No. 38, Certain Financial Statement Note Disclosures, issued June 2001, will be effective for the City simultaneously with the implementation of GASB Statement No. 34. This Statement modifies, establishes, and rescinds certain financial statement disclosure requirements. Statement No. 39, Determining Whether Certain Organizations are Component Units, issued May 2002, will be effective for the City for the fiscal year ending June 30, 2004. This statement amends Statement No. 14, The Financial Reporting Entity, to provide additional guidance to determine whether certain organizations for which the City is not financially accountable should be reported as component units based on the nature end sigrtificance of their relationship with the City. The City's management has not yet determined the effect these Statements will have on the City's f'mancial statements. 50 GENERAL FUND The general fund is used to account for resources traditionally associated with government which are not required legally or by sound financial management to be accounted for in another fund. CITY OF DUBUQUE, IOWA GENERAL FUND BALANCE SHEET JUNE 30, 2002 EXHIBIT A-1 ASSETS Cash and pooled cash investments Receivables Property tax Delinquent Succeeding year Accounts Accmed interest Intergovernmental Due from other funds Inventory Prepaid items Advances to other funds Total Ass~s $ 20,134,800 220,355 12,490,778 420,136 214,829 820,996 65,020 61,828 4,564 482,077 $ 34,915,383 LIABILI'IIES AND FUND BALANCES LIABILITIES Accounts payable Accrued payroll Accrued compensated absences Deferred revenue Succeeding year property tax Other Total Liabilities FUND BALANCES Reserved for Encumbrances Advances Unreserved, undesignated Total Fund Balances Total Liabilities and Fund Balances $ 511,601 135,660 386,438 12,490,778 29,680 13,554,157 3,330,054 482,077 17,549,095 21,361,226 $ 34,915,383 51 CITY OF DUBUQUE, IOWA E~ H I ~;IT A-2 GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR TIlE FISCAL YEAR ENDED JUNE 30, 2002 REVENUES Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeits Miscellaneous Interest Total Revenues EXPENDITURES Current Policy and administration Community protection Home and community environment Human development Total Expenditures EXCESS OF REVENIYES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Proceeds from issuance of debt Operating transfers in Operating transfers from component unit Operating trar~fers out Total Other Financing Sources (Uses) EXCESS OF REVENUES AND OTHER SOURCES OVER EXPENDrlXORES AND OTHER USES FUND BALANCES, BEGINNING FUND BALANCES, ENDING $ 21,400,553 702,726 1,806,225 8,847,155 410,464 791,788 1,528,893 35,487,804 4,579,274 16,384,737 5,631,886 8,294,080 34,889,977 597,827 40,000 3,309,807 29,074 (3,438,466) (59,585) 538,242 20,822,984 $ 21,361,226 52 SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Road Use Tax Fund - This fund is used to account for state revenues allocated to the City for maintenance and improvement of City streets. Employee Benefits Fund - This fund is used to account for pension and related employee benefit costs for those employees paid wages from the General Fund. Community Development Fund - This fund is used to account for the use of Community Development Block Grant funds as received from federal and state governmental agencies. Section vm Housing Fund - This fund is used to account for the operations of federal Section vm existing, voucher, and mod rehab projects. Tort Liability Fund - This fund is used to collect a special property tax levy which is then transferred to the General Fund. The General Fund accounts for the administration and payment of damage claims against the City. Police and Fire Retirement Fund - This fund is used to account for the balance of actuarially- determined excess pension funds as calculated when local retirement systems were terminated and combined into a statewide retirement system. The excess funds may be used to help fired the City's portion of contributions to the statewide police and fire retirement system. Special Assessments Fund - This fired is used to account for the financing of public improvements that are deemed to benefit primarily the properties against which special assessments are levied and to accumulate monies for the payment of principal and interest on the outstanding long-term debt service. Tax Increment Financing Fund - This fund is used to account for the receipt of property taxes, for the payment of projects within the tax increment financing district, and for the payment of remaining principal and interest costs on the tax increment financing districts' long-term debt service. CITY OF DUBUQUE, IOWA SPECIAL REVENUE FUNDS COMBINING BALANCE SltEET JUNE 30, 2002 ASSETS Cash and pooled cash investments Receivables Property tax Delinquent Succeeding year Special assessments Accrued interest Notes - current Notes - long-term Intergovernmental Prepaid items Restricted assets Cash and pooled cash investments Total Assets Road Employee Commtmity Section VIII Use Tax Benefits Development Housing $ 4,661,148 $ 72,486 $ 2,158,801 $ 267,530 392,088 41,717 1,924,368 47,958 693,187 1,500 10,326,375 8,290 330,263 243,517 11,875 $ 5,053,236 $ 2,038,571 $ 13,568,459 $ 520,837 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Accrued payroll Accrued compensated absences Intergovernmental payable Deferred revenue Succeeding year property tax Other Total L/abilities FUND BALANCES Reserved for/by Long-term notes receivable Encumbrances Bond ordinance Unreserved, undesignated (deficit) Total Fund Balances $ 85,258 $ $ 77,831 $ 24,212 6,749 5,737 2,587 7,283 26,373 14,049 1,924,368 4,152 92,007 1,928,520 90,851 67,221 49,932 4,911,297 10,326,375 8,290 547,541 3,220 110,051 2,603,692 442,106 4,961,229 110,051 13,477,608 453,616 Total Liabilities and Fund Balances $ 5,053,236 $ 2,038,571 $ 13,568,459 $ 520,837 EXHIBIT B-1 Police Tax Tort and Fire Special Increment Liability Retirement Assessments Financing Total $ 15,205 $ 372,632 $ 1,062,382 $ 55,812 $ 8,665,996 4,157 225,668 549,916 6,976 $ 245,030 $ 372,632 $ 1,619,274 $ 45,874 2,150,036 549,916 2,899 57,833 694,687 10,334,665 965,868 11,875 150,526 150,526 209,237 $ 23,627,276 $ $ $ $ 74,397 $ 261,698 15,073 33,656 14,049 225,668 2,150,036 414 438,932 443,498 226,082 438,932 74,397 2,918,010 18,948 372,632 1,180,342 10,334,665 600,693 150,526 150,526 (t5,686) 9,623,382 18,948 372,632 1,180,342 134,840 20,709,266 $ 245,030 $ 372,632 $ 1,619,274 $ 209,237 $ 23,627,276 53 CITY OF DUBUQUE, IOWA SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2002 REVENUES Taxes Special assessments Intergovernmental Miscellaneous Interest Total Revenues EXPENDD~LrRES Current Policy and admirdslration Community protection Home and commtm/ty environment Human development Debt service Principal retirement Interest Total Expenditures EXCESS OF REVENUES OVER EXPENDITURES OTItlER FINANCING SOURCES (USES) Proceeds from issuance of debt Operating transfers in Operating ~mnsfers out Total Other Financing Sources (Uses) EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES FUNT) BALANCES, BEGINNING Road Employee Commtm/ty Section VIII Use Tax Benefits Development Housing - $ 2,236,850 $ 4,670,830 3,354,685 4,291,899 82,906 18,668 180,429 1,610 4,670,830 2,236,850 3,618,020 4,312,177 13,934 263 389,280 1,259 2,120,301 2,265,041 226,090 4,269,113 2,135~94 263 2,880,411 4,269,113 2,535,336 2,236,587 737,609 43,064 145,878 250,000 (1,721,243) (2,359,502) (1,505,523) (820) (1,721,243) (2,213,624) (1,255,523) (820) 814,093 22,963 (517,914) 42,244 4,147,136 87,088 13,995,522 411,372 FUND BALANCES, ENDING $ 4,961,229 $ 110,051 $ 13,477,608 $ 453,616 E~ H ~ ~IT B-2 Police Tax Tort and Fire Special Increment Liability Retirement Assessments Financing Total $ 223,049 $ $ $ 1,303,979 $ 632,241 3,763,878 632,241 12,317,414 101,574 85,435 146,955 414,429 223,049 717,676 1,450,934 17,229,536 403,477 1,259 74,396 8,728,851 226,090 543,467 543,467 706,212 706,212 1,324,075 10,609,356 223,049 717,676 126,859 6,620,180 269,787 269,787 395,878 (221,171) (145,878) (385,481) (3,996,487) (10,336,105 (221,171) (145,878) (385,481) (3,726,700) (9,670,440 1,878 (145,878) 332,195 (3,599,841) (3,050,260 i7,070 518,510 848,147 3,734,68I 23,759,526 $ 18,948 $ 372,632 $ 1,180,342 $ 134,840 $ 20,709,266 54 DEBT SERVICE FUND The debt service fund is used to account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the govemmcmt is obligated in some manner for the payment. CITY OF DUBUQUE, IOWA DEBT SERVICE FUND BALANCE SHEET JUNE 30, 2002 EXHIBIT C-1 ASSETS Cash and pooled cash investments Receivables Property tax Delinquent Succeeding year Accrued interest Total Assets $ 194,356 19,257 655,564 6,064 $ 875,241 LIABI].ITIES AND FUND BALANCE LIABILITIIzS Deferred revenue Succeeding year property tax Other $ 655,564 1,917 Total Liabilities FUND BALANCE Reserved for debt service Total Liabilities and Fund Balance 657,481 217,760 $ 875,241 55 CITY OF DUBUQUE, IOWA EYmmiT c-2 DEBT SERVICE FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE FOR THE FISCAL YEAR ENDED JUNE 30, 2002 REVENUES Taxes $ 1,139,237 Interest 36,541 Total Revenues 1,175,778 EXPENDITURES Current Policy and administration Debt service Principal retirement Interest Total Expenditures DEFICIENCY OF REVENUES UNDER EXPENDITURES OTHER FINANCING SOURCES Operating transfers in DEFICIENCY OF REVENUES AND OTHER SOURCES UNDER EXPENDITURES FUND BALANCE, BEGINNING FUND BALANCE, ENDING 3,703 1,241,922 145,423 1,391,048 (215,270) 78,140 (137,130) 354,890 $ 217,760 56 CAPITAL PROJECTS FUNDS Capital projects funds account for resources used for the acquisition of fixed assets and construction of major capital facilities other than those financed by proprietary funds and trust funds. Street Construction Fund - This fund is used to account for the resources and costs related to street capital improvements. Store Sewer Construction Fund - This fund is used to account for the resources and costs related to storm sewer capital improvements. Dog Track Depreciation Fund - This fund is used to account for the resources and costs related to capital improvements and maintenance at the greyhound racing facility. General Construction Fund - This fund is used to account for the resources and costs related to non- assignable capital improvements. Airport Construction Fund - This fund is used to account for the resources and costs related to airport capital improvements. Sales Tax Construction Fund - This fund is used to account for the resources and costs related to capital improvements financed through the local option sales tax. CITY OF DUBUQUE, IOWA CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 Street Storm Sewer Dog Track Construction Construction Depreciation ASSETS Cash and pooled cash investments Receivables Accrued interest Intergovernmental Total Assets $ 3,755,129 $ 775,820 $ 889,875 23,456 3,707 6,287 298,436 $ 4,077,021 $ 779,527 $ 896,162 LIABILITIES AND FUND BALANCES (DEFICIT) LIABILITIES Accounts payable FUND BALANCES (DEFICIT) Reserved for Encumbrances Dog track Unreserved, undesignated (deficit) Total Fund Balances (Deficit) $ 569,232 $ 1,389 $ 3,507,789 20,120 758,018 896,162 3,507,789 778,138 896,162 Total Liabilities and Fund Balances (Deficit) $ 4,077,021 $ 779,527 $ 896,162 ENH~BITD-1 General Airport Sales Tax Construction Construction Construction Total $13,192,316 $ 98,983 $ 1,800,734 $20,512,857 6,394 13,950 53,794 5,051 198,957 502,444 $13,198,710 $ 104,034 $ 2,013,641 $ 21,069,095 $ 693,557 $ 231,659 $ 11,676 $ 1,507,513 593,233 5,808 4,126,950 896,162 11,911,920 (127,625) 1,996,157 14,538,470 12,505,t53 (127,625) 2,001,965 19,561,582 $13,198,710 $ 104,034 $ 2,013,641 $ 21,069,095 57 CITY OF DUBUQUE, IOWA CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (DEFICIT) FOR TH E FISCAL YEAR ENDED JIf NE 30, 2002 REVENUES Taxes Intergovernmental Miscellaneous Racing Association Passenger facility charges Interest Total Revenues EXPENDITURES Capital outlay EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES) Proceeds from issuance of debt Operating transfers in Operating transfers out Total Other Financing Sources (Uses) EXCESS (DEFICBENCY) OF REVEN-LrES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES FUND BALANCES (DEFICIT), BEGINNING Street Storm Sewer Dog Track Construction Construction Depreciation $ 1,990,061 134,545 $ $ 3,329 120,000 158,018 20,196 46,395 2,282,624 23,525 166,395 6,875,530 71,666 26,293 (4,592,906) (48,141) 140,102 4,219,094 420,836 4,219,094 420,836 (373,812) 372,695 140,102 3,881,601 405,443 756,060 FUND BALANCES (DEFICIT), ENDING $ 3,507,789 $ 778,138 $ 896,162 BIT D-2 General Airport Sales Tax Construction Construction Construction Total $ $ 1,326,707 $ 3,316,768 500,000 1,920,055 2,420,055 2,108,368 26,551 2,272,793 15,000 135,000 231,717 231,717 173,948 3,276 95,209 497,042 2,797,316 2,155,048 1,448,467 8,873,375 t,i44,126 1,828,786 1,873,270 11,819,671 1,653,190 326,262 (424,803) (2,946,296) 13,252,218 13,252,218 780,000 5,419,930 (4,494,174) (123,644) (4,617,818) 9,538,044 (123,644) 14,054,330 11,I91,234 326,262 (548,447) 11,108,034 1,313,919 (453,887) 2,550,412 8,453,548 $12,505,153 $ (127,625) $ 2,001,965 $19,561,582 58 ENTERPRISE FUNDS Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises -- where the intent of the government's council is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the government's council has decided that periodic determination of net income is appropriate for accountability purposes. Sewage Disposal Works Fund- This fund is used to account for the operations of the City's sewage disposal works and services. Water Utility Fund - This fund is used to account for the operations of the City's water facilities and services. Parking Facilities Fund This fund is used to account for the operations of the City-owned parking ramps and other parking facilities. Refuse Collection Fund - This fund is used to account for the operations of the City's refuse collection services. Transit System Fund - This fund is used to account for the operations of the City's bus and other transit services. America's River Project - This fund is used to account for the construction of all projects covered by the Vision Iowa Grant, including all matching funds. CITY OF DUBUQUE, IOWA ENTERPRISE FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 Sewage Disposal Water Works Utility ASSETS CURRENT ASSETS Cash and pooled cash investments Receivables Property tax Delinquent Succeeding year Accounts Accrued interest Intergovernmcmtal Inventory Prepaid items Total Current Assets $ 4,584,431 $ 2,606,439 544,198 492,075 35,716 18,425 311,378 5,037 5,169,382 3,428,317 RESTRICTED ASSETS Cash and pooled cash investments FIXED ASSETS Land Buildings and improvements Improvements other than buildings 175,671 76,697 31,603,036 7,687,015 23,760,271 Machinery and equipment Cons/ruction in progress Accumulated depreciation Net F/xed Assets Total Assets 6,272,772 28,113,403 370,970 112,414 (30,559,734) (i4,935,t09) 31,622,986 21,054,420 $ 36,792,368 $ 24,482,737 E×HmlT E-1 America's Parking Refuse Transit River Facilities Collection System Project Total $ 795,903 $ 917,363 $ 203,714 $ $ 9,107,850 6,465 7,570 7,260 7,260 481,982 481,982 211,412 2,137 1,256,287 7,376 69,087 206,302 206,302 5,330 316,708 5,037 809,938 1,136,151 906,725 11,450,513 553,225 553,225 1,237,209 36,000 4,810,359 6,335,936 11,870,381 1,893,590 53,054,022 23,760,271 571,269 1,208,477 3,379,102 75,367 39,620,390 573,861 60,434 11,352,710 12,470,389 (4,782,418) (740,490) (1,669,212) (1,497) (52,688,460) 9,470,302 467,987 3,699,914 16,236,939 82,552,548 $10,833,465 $ 1,604,138 $ 4,606,639 $16,236,939 $ 94,556,286 (continued) 59 CITY OF DUBUQUE, IOWA ENTERPRISE FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 LIABILITIES AND EQUITY CURRENT LIABILITiES Accounts payable Accrued payroll General obligation bonds payable - current Revenue bonds payable - current Accrued compensated absences Advances from other funds Advances from component unit Deferred revenue - succeeding year property tax Total Current IJlabflities CURRENT LIABILITiES PAYABLE FROM RESTRICTED ASSETS Accrued interest payable NONCURRENT LIABILITiES General obligation bonds payable (net of discount of $24,750) Revenue bonds payable (net of $21,333 deferred mount on refunding) Total Noncurrent Liabilities Total Liabilities EQUI~/ Contributed Capital Government Intergovernmental Developers and users Total Contributed Capital Retained Earnings (Deficit) Reserved by bond ordinance Unreserved Total Retained Earnings (Defici0 Total Equity Sewage Disposal Water Works Utility 130,792 $ 183,572 18,183 6,082 140,000 55,000 79,747 76,164 482,077 438,750 807,472 802,895 170,000 80,000 170,000 80,000 977,472 882,895 5,369,732 1,623,408 11,943,895 i1,351,634 2,590,135. 28,665,261 4,213,543 7,149,635 19,386,299 7,149,635 19,386,299 35,814,896 23,599,842 Total Liabilities and Equity $ 36,792,368 $ 24,482,737 EXnmIT E-1 (continued) America's Parking Refuse Transit River Facilities Collection System Project Total 19,043 $ 15,767 $ 62,108 $ 375,738 $ 787,020 6,528 14,847 9,543 55,183 95,000 290,000 180,000 180,000 35,117 54,664 20,174 265,866 482,077 438,750 481,982 481,982 335,688 85,278 573,807 375,738 2,980,878 25,909 25,909 2,540,250 2,790,250 1,518,667 1,518,667 4,058,917 4,308,917 4,420,514 85,278 573,807 375,738 7,315,704 240,323 61,704 1308,710 682,400 9,386,277 274,650 5,205,657 17,424,202 13,941,769 240,323 336,354 6,614,367 682,400 40,752,248 553,225 553,225 5,619303 1,182,506 (2,581,535) 15,178,801 45,935,109 6,172,628 1,182,506 (2,581,535) 15,178,801 46,488,334 6,412,951 1,518,860 4,032,832 15,861,201 87,240,582 $ 10,833365 $ 1,604,138 $ 4,606,639 $ 16,236,939 $ 94,556,286 60 CITY OF DUBUQUE, IOWA ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS (DEFICIT) FOR THE FISCAL YEAR ENDED JUNE 30, 2002 OPERATING REVENUES Charges for sales and services Other Total Operating Revenues OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES) Interest revenue Interest expense Operating grants Taxes Loss on disposal of assets Total Nonoperating Revenues (Expenses) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND OPERATING TRANSFERS CAPITAL CONTRIBUTIONS OPERATING TRANSFERS Operating transfers in Operating transfers out Total Operating Transfers NET INCOME (Loss) RETAINED EARNINGS (DEFICIT), BEGINNING AS RESTATED RETAINED EARNINGS (DEFICIT), ENDING Sewage Disposal Water Works Utility $ 4,345,309 $ 4,042,272 86,856 92,967 4,432,165 4,135,239 1,275,461 1,240,093 414,934 387,907 198,523 136,706 1,407,038 1,293,281 69,931 52,550 1,078,583 793,406 4,444,470 3,903,943 (12,305) 231,296 241,526 109,189 (42,791) (38,994) 198,735 70,195 186~30 301,491 113,483 476,465 144,415 1,326,600 (412,175) (497,977) (267,760) 828,623 32,153 1,606,579 7,117,482 17,779,720 $ 7,149,635 $ 19,386,299 EXHIR1T America's Parking Refuse Transit River Facilities Collection System Project Total 1,390,060 $ 1,905,729 $ 173,272 $ - $ 11,856,642 11,634 50 14,513 7,646 213,666 1,401,694 1,905,779 187,785 7,646 12,070,308 450,165 923,983 712,126 4,601,828 60,315 1,463 46,531 911,150 28,024 508,424 192,511 1,064,188 181,958 241,223 546,636 109,724 3,779,860 16,080 19,478 72,53t 230,570 362,576 147,398 237,845 1,497 2,621,305 1,099,118 1,841,969 1,808,i80 111,221 13,208,901 302,576 63,810 (1,620,395) (103,575) (1,138,593) 50,659 4,941 2,476 408,791 (247,845) (329,630) 950 796,543 797,493 410,872 410,872 (1,550) (38,626) (40,176) (197,186) 4,341 1,168,789 2,476 1,247,350 105,390 68,t51 (451,606) (101,099) 108,757 1,310,698 625,140 2,525,786 60,000 9,882,571 11A13,586 (984,911) (179,822) (26,466) (2,101,351) (984,911) (179,822) 60,000 9,856,105 9,312,235 (879,521) (111,671) 919,092 10,380,146 11,946,778 7,052,149 1,294,177 (3,500,627) 4,798,655 34,541,556 $ 6,172,628 $ 1,182,506 $ (2,581,535) $ 15,178,801 $ 46,488,334 61 CITY OF DUBUQUE, IOWA ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR I'll E FISCAL YEAR ENDED JUNE 30, 2002 CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities Depreciation Changes in assets and liabilities Increase in accounts receivable Increase in intergovernmental receivable (Increase) decrease in inventory Increase (decrease) in accounts payable Increase (decrease) in accrued payroll Increase (decrease) in accrued compensated absences Decrease in due to component unit NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Property tzxes received Operating grants received Operating transfers in Operating transfers out Repayment of advances from other funds Repayment of advances from component unit NET CASH PROVIDED (USED) BY NONCAP1TAL FINANCING ACTIVITIES Sewage Disposal Water Works Utility $ (12,305) $ 231,296 1,078,583 793,406 (29,896) (5,836) (2,348) (60,942) 47,976 1,430 (9,248) 3,665 2,116 980,535 1,057,362 144,415 1,326,600 (412,175) (497,977) (304,502) (31,333) (550,000) (1,122,262) 797,290 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTiViTIES Acquisition and construction of fixed assets Proceeds from disposal of fixed assets Pr/ncipal paid on bonds Interest paid on bonds Capital contributions NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (482,592) (1,482,850) (150,000) (60,000) (42,791) (38,994) 113,483 476,465 (561,900) (1,105,379) EXHIBIT E-3 America's Parking Refuse Transit River Facilities Collection System Proiect Total $ 302,576 $ 63,810 $ (1,620,395) $ (103,575) $ (1,138,593) 362,576 147,398 (2,486) (7,331) (739) 8,259 (907) 408 7,037 1,400 (40,289) 237,845 1,497 2,621,305 (2,122) (47,671) (180,389) (180,389) 2,333 (15) 38,898 (1,754,360) (1,720,908) 4O5 (7,912) (9) 14,209 (40,289) 668,057 173,655 (1,523,434) (1,856,438) (500,263) (984,911) 408,387 408,387 950 796,543 797,493 60,000 9,882,571 11,413,586 (179,822) (26,466) (2,101,35t) (335,835) (550,000) (984,911) (178,872) 1,264,930 9,856,105 9,632,280 (i8,480) (26,500) (1,704,687) (8,627,283) (12,342,392) 6,923 6,923 (255,958) (465,958) (249,476) (331,261) 1,310,698 625,140 2,525,786 (523,914) (26,500) (387,066) (8,002,143) (10,606,902) (continued) 62 CITY OF DUBUQUE, IOWA ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR ]'H ~', FISCAL YEAR ENDED JUNE 30, 2002 CASH FLOWS FROM INVESTING ACT1VITIIES Interest on cash and pooled cash investments NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR Sewage Disposal Water Works Utility $ 264,703 $ 114,159 (438,924) 863,432 5,023,355 1,743,007 $ 4,584,431 $ 2,606,439 NONCASH INVESTING, CAPITAL, AND FINANCING ACTiVITIES Contributions of fixed assets from government $ $ EXtt~IT (continued) America's Parking Refuse Transit River Facilities Collection System Project Total $ 52,413 $ 7,261 $ $ 2,476 $ 441,012 (788,355) (24,456) (645,570) (1,033,873) 2,137,483 941,819 849,284 10,694,948 $ 1,349,128 $ 917,363 $ 203,714 $ $ 9,661,075 $ 62,016 $ $ $ 682,400 $ 744,416 63 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 government and to other government units un a cost- reimbursement basis. General Service Fund - This fund is used to account for engineering, street, and general services supplied to other departments. Garage Service Fund - This fund is used to account for the maintenance and repair services for the City's automotive equipment. Stores/Printing Fund - This fund is used to account for printing, supplies, and other services provided to other departments. Health Insurance Reserve Fund - This fund is used to account for the health insurance costs of the City. Workers' Compensation Reserve Fund - This fund is used to account for the workers' compensation costs of the City. CITY OF DUBUQUE, IOWA INTERNAL SERVICE FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 General Garage Service Service ASSETS CURRENT ASSETS Cash and pooled cash investments Other receivables Accrued interest receivable Inventory Total Current Assets $ $ FIXED ASSETS Machinery and equipment Accumulated depreciation Net F/xed Assets Total Assets LIABILITIES AND EQUITY CURRENT LIABILII'IES Accounts payable Accrued payroll Due to other funds Total Liabilities EQUITY Contributed Capital - Government Retained earnings (deficit), unreserved Total Equity 25,041 25,041 125,240 (51,751) 73,489 $ $ 98,530 $ $ 11,962 7,898 I0,123 1,491 63,529 9,389 85,614 24,233 (9,389) (11,317) (9,389) 12,916 Total Liabilities and Equity $ $ 98,530 CITY OF DUBUQUE, IOWA INTERNAL SERVICE FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 General Garage Service Service ASSETS CURRENT ASSETS Cash and pooled cash investments Other receivables Accrued interest receivable Inventory Total Current Assets $ $ FIXED ASSETS Machinery and equipment Accumulated depreciation Net Fixed Assets Total Assets LIABILITIES AND EQUITY CUP.RENT LIABILITIES Accounts payable Accrued payroll Due to other funds Total Liabilities EQUITY Contributed Capital - Government Retained earnings (deficit), unreserved 25,041 25,041 Total Equity Total Liabilities a~d Equity (9,389) 12,916 $ $ 98,530 24,233 (9,389) (11,317) $ $ 98,530 $ $ 11,962 7,898 10,123 1,491 63,529 9,389 85,614 125,240 (51,751) 73,489 EXIilBIT F-1 Health Workers' Stores/ Insurance Compensation Printing Reserve Reserve Total 15,934 $ $ 2,124,201 175,797 16,143 4,349 29,390 20,283 1,274,964 1,025,243 2,345,531 125,240 (51,751) 73,489 $ 20,283 $ 1,274,964 $ 1,025,243 $ 2,419,020 $ 1,090,618 $ 1,0t7,649 175,797 8,549 7,594 $ 5,291 $ 608,502 $ 325,751 $ 951,506 18,021 65,020 5,291 608,502 325,751 1,034,547 24,233 14,992 666,462 699,492 1,360,240 14,992 666,462 699,492 1,384,473 $ 20,283 $ 1,274,964 $ 1,025,243 $ 2,419,020 64 CITY OF DUBUQUE, IOWA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN RETAINED EARNINGS (DEFICIT) FOR THE FISCAL YEAR ENDED JUNE 30, 2002 OPERATING REVENUES Charges for sales and services OPERATING EXPENSES Employee expense Utilities Repairs and maintenance Supplies and services Insurance Depreciation Total Operating Expenses OPERATING INCOME (LOSS) NONOPERAT1NG REVENUES Interest revenue General Garage Service Service $ 688,379 $ 843,905 690,381 589,620 12,403 8,756 270,710 6,204 12,005 690,381 899,698 (2,002) (55,793) INCOME (LOSS) BEFORE OPERATING TRANSFERS OPERATING TRANSFERS Operating transfers out NET INCOME (LOSS) RETAINED EARNINGS (DEFICIT), BEGINNING AS RESTATED RETAINED EARNINGS (DEFICIT), ENDING (2,002) (55,793) (1,240) (2,002) (57,033) (7,387) 45,716 $ (9,389) $ (11,317) EXHIBIT F-2 Health Workers' Stores/ Insurance Compensation Printing Reserve Reserve Total $ 39,185 $ 3,250,371 $ 194,276 $ 5,016,116 37,703 3,896,402 483,169 1,280,001 12,403 8,756 308,413 4,385,775 12,005 37,703 3,896,402 483,169 6,007,353 1,482 (646,031) (288,893) (991,237) 72,102 51,846 123,948 1,482 (573,929) (237,047) (867,289) (1,240) 1,482 (573,929) (237,047) (868,529) 13,510 1,240,391 936,539 2,228,769 $ 14,992 $ 666,462 $ 699,492 $ t,360,240 65 CITY OF DUBUQUE, IOWA INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FOR THE FISCAL YEAR ENDED JUNE 30, 2002 CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activ/ties Depreciation Changes in assets and liabilities Increase in other receivables (Increase) decrease in inventory Increase (decrease) in accounts payable Increase in accrued payroll Increase in due to other funds NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FLOWS FROM NONCAPITAL FINANCING ACTI¥£11ES Operating transfers out CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of fixed assets CASH FLOWS FROM INVESTING ACTIVrI'II~S Interest on cash and pooled cash investments NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR General Garage Service Service (2,002) $ (55,793) 12,005 (296) (5,678) 841 1,961 1,161 63,529 15,728 (1,240) (49,776) (35,288) 35,288 CASH AND CASH EQUIVALENTS AT END OF YEAR $ $ EXHIFI1T F-$ Health Workers' Stores/ Insurance Compensation Printing Reserve Reserve Total 1,482 $ (646,031) $ (288,893) $ (991,237) 12,005 (175,797) (175,797) t4,512 14,216 (9,946) 71,994 149,202 205,572 2,802 64,690 6,048 (749,834) (t39,691) (867,749) (1,240) (49,776) 77,607 53,572 131,179 6,048 (672,227) (86,119) (787,586) 9,886 1,762,845 1,103,768 2,911,787 $ 15,934 $ 1,090,618 $ 1,017,649 $ 2,124,201 66 TRUST AND AGENCY FUNDS Trust funds are used to account for assets held by the government in a trustee capacity. Agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments, and/or other funds. EXPENDABLE TRUST FUNDS Cable TV Fund - This fund is used to account for the monies and related costs as set forth in the cable franchise agremnent between the City of Dubuque and the cable franchisee. Respiratory Disease Trust Fund - This fund is used to acoount for the monies and related costs as agreed to by the City of Dubuque and the Dubuque Tuberculosis Association. NONEXPENDABLE TRUST FUNDS Ella Lyons Peony Trail Trust Fund - This fund is used for dividends and maintenance cost related to the City Peony Trail, per trust agreement. Library Gifts Trust Fund - This fund is used to account for testamentary gifts to the City library. AGENCY FUNDS Flexible Spending Fund - This fund is used to account for the accumulation and disbursement of laternal Revenue Service Section 125 flexible spending health care and child care accounts. Pre-tax contributions are made by employees, and qualifted expenditures fi.om the fund are made through a third party administrator. CITY OF DUBUQUE, IOWA TRUST AND AGENCY FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 EX H I BIT G-1 ASSETS Cash and pooled cash/nvestments Receivables Accounts Accrued interest Restricted assets Cash and pooled cash investments Total Assets Expendable Trust - Nonexpendable Cable TV Trust Totals $ 862,167 $ 140,275 $ t,002,442 36,889 36,889 7,044 1,074 8,118 19,327 19,327 $ 925,427 $ 141,349 $ 1,066476 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable Accrued payroll Total Liabilities FUND BALANCES Reserved for/by Franchise agreement Endowments Unreserved, undesignated Total Fund Balances Total Liabilities and Fund Balances $ 8,225 $ 641$ 8,866 381 381 8,606 641 9,247 19,327 19,327 140,708 140,708 897~94 897,494 916,821 140,708 1,057,529 925~27 $ 141,349 $ 1,066,776 67 CITY OF DUBUQUE, IOWA EXPENDABLE TRUST FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES FOR TI4'F~ FISCAL YEAR ENDED JUNE 30, 2002 REVENUES Franchise fees Miscellaneous Investment earnings Total Revenues EXPENDITURES Current Policy and administration Home and community environment Total Expenditures Respiratory Disease Cable TV Trust Total 556,888 $ $ 556,888 2,049 2,049 55,833 55,833 614,770 614,770 181,106 181,106 303,646 1,734 305,380 484,752 1,734 486,486 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING USES Operating transfers out EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES AND OTHER USES FUND BALANCES, BEGINNING FUND BALANCES, ENDING 130,018 (1,734) 128,284 122,361 122,361 7,657 (1,734) 5,923 909,164 1,734 910,898 $ 916,821 $ $ 916,821 68 CITY OF DUBUQUE, IOWA NONEXPENDABLE TRUST FUNDS COMBINING BALANCE SHEET JUNE 30, 2002 ASSETS Cash and pooled cash investments Accrued interest receivable Total Assets Ella Lyons Library Peony Trail Gifts Trust Trust Total $ 75,970 $ 64,305 $ 140,275 1,074 1,074 $ 75,970 $ 65,379 $ 141,349 LIABILITIES AND FL~YO) BALANCES LIABILITIES Accounts payable FUND BALANCES Reserved for endowmants Total Liabilities and Fund Balances $ $ 641 $ 641 75,970 64,738 140,708 $ 75,970 $ 65,379 $ 141,349 69 CITY OF DUBUQUE, IOWA NONEXPENDABLE TRUST FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND BALANCES FOR THE FISCAL YEAR ENDED JUNE 30, 2002 OPERATING REVENUES Miscellaneous Investment earnings Total Operating Revenues OPERATING EXPENSES Supplies and services NET LOSS FUND BALANCES, BEGINNING FUND BALANCES, ENDING Ella Lyons Library Peony Trail Girls Trust Trust Total $ 23,298 $ 23,298 (26,945) 4,851 (22,094) (26,945) 28,149 1,204 1,943 30,914 32,857 (28,888) (2,765) (31,653) 104,858 67,503 t72,361 $ 75,970 $ 64,738 $ 140,708 70 CITY OF DUBUQUE, IOWA NONEXPENDABLE TRUST FUNDS COMBINING STATEMENT OF CASH FLOWS FOR ']'H I~; FISCAL YEAR ENDED JUNE 30, 2002 E~x H IBIT G-5 CASH FLOWS FROM OPERATING ACTIVITIES Net loss Adjustments to reconcile net loss to net cash used by operating activities Investment earnings Changes in liabilities Decrease ha accounts payable NET CASH USED BY OPERATING ACTIV f CASH FLOWS FROM INVESTING ACTIVITII2S Interest on cash and pooled cash investments NET DECREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR Ella Lyons Library Peony Trail Gifts Trust Trust Total $ (28,888) $ (2,765) $ (31,653) 26,945 (4,851) 22,094 (2,125) (2,125) (1,943) (9,741) (11,684) (26,945) 4,325 (22,620) (28,888) (5,416) (34,304) 104,858 69,721 174,579 $ 75,970 $ 64,305 $ 140,275 71 CITY OF DUBUQUE, IOWA ALL AGENCY FUNDS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABII,ITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2002 EX H I BIT G-6 Flexible Spending Fund ASSETS Balance Balance July 1 Ne~ Net June 30 2001 Additions Deductions 2002 Restricted cash and pooled cash investments $ 9,763 $ 73,487$ 83,250$ LIABILITIES Due to employees $ 9,763 $ 73,487 $ 83,250 $ 72 GENERAL FIXED ASSETS ACCOUNT GROUP CITY OF DUBUQUE, IOWA COMPARATIVE SCH ~;DULE OF GENERAL FIXED ASSETS BY SOURCE JUNE 30, 2002 EX H ~ RIT H-1 GENERAL FIXED ASSETS Land Buildings and improvements Improvements other than buildings Machinery and equipment Construction in progress Total General Fixed Assets $ 21,799,251 42,325,460 12,341,111 17,837,606 505,683 $ 94,809,111 INVESTMENT IN GENERAL FIXED ASSETS BY SOURCE Investments in property acquired prior to July 1,1983 General fund Special revenue funds Capital projects fimds Donations Total Investment in General Fixed Assets by Source $ 1,440,960 36,527,312 1,959,850 52,419,059 2,461,930 $ 94,809,111 * It is impossible to determine the source of investments prior to this date because records reflecting information in this form were not maintained. 73 CITY OF DUBUQUE, IOWA SCHEDULE OF GENERAL FIXED ASSETS - BY PROGRAM AND DEPARTMENT JUNE 30, 2002 PROGRAM AND DEPARTMENT POLICY AND ADMINISTRATION Planning Services City Manager City Clerk Finance Cable TV Information Services Dog Track Unclassified Land Ice Harbor Improvements Total Policy and Administration COMMUNITY PROTECTION Police Emergency Communications Fire Disaster Services Total Community Protection HOME AND COMMUNITY' ENVIRONMENT Airport Operations and Maintanance Engineering Building Services Economic Development Housing Services and Community Development Total Home and Community Environment HUMAN DEVELOPMENT Health Services Park Civic Center Recreation Lthrary Total Human Development CONSTRUCTION IN PROGRESS Buildings and Land Improvements $ 106,000 $ 9,070,894 3,559,675 4,418,364 3,665,675 13,489,258 161,100 2,098,004 161,100 2,098,004 1,021,201 6,444,507 229,030 791,168 723,700 81,000 65,510 2,795,432 9,881,872 11,921,313 10,112,107 4,476,797 3,576,759 172,246 6,094,279 1,335,160 3,805,593 66,960 3,149,460 6,051,163 16,626,091 TOTAL GENERAL FIXED ASSETS $ 21,799,251 $ 42,325,460 EXHIBIT Improvements Machinery Other 'Ihan and Construction Buildings Equipment in Progress Total $ $ $ $ 1,073,877 44,347 593,631 31,604 293,784 201,250 224,304 150,347 593,631 31,604 293,784 201,250 224,304 10,144,771 3,559,675 4,418,364 1,073,877 1,388,920 19,617,730 1,052,615 1,052,615 31,996 31,996 3,173,382 5,432,486 22,705 ~ 22,705 4,280,698 6,539,802 1,308,316 2,181,284 13,135 3,730,030 134,521 248,768 162,382 7,519,496 10,782 214,382 8,975,468 6,547,628 10,955,308 4,763,363 1,187,989 3,023,324 17,412,150 214,382 37,556,516 57,666 2,034,518 2,111,962 43,573 1,053,975 213,675 1,182,53I 1,214,226 57,666 12,200,036 7,364,073 6,536,959 4,430,646 2,291,766 5,620,360 30,589,380 505,683 505,683 $ 12,341,111 $ 17,837,606 $ 505,683 $ 94,809,111 74 CITY OF DUBUQUE, IOWA SCHEDULE OF CHANGES IN GENERAL FIXED ASSETS - BY PROGRAM AND DEPARTMENT FOR THE FISCAL YEAR ENDED JUNE 30, 2002 EXHIBIT H-3 PROGRAM AND DEPARTMENT General Change in Fixed Assets Capitalization July 1 Policy 2001 Deductions POLICY AND ADMINISTRATION Planning Services $ 874,575 City Council 39,688 City Manager 443,551 City Clerk 52,147 Finance 333,488 Cable TV 32I,I27 Legal 25,087 Information Services 283,955 Dog Track 10,144,771 Unclassified Land 3,559,675 Ice Harbor Improvements 4,418,364 Total Policy and Administration Additions Deductions General Fixed Assets June 2002 $ 64,553 $ 37,511 $ 697,186 $ 150,347 39,688 86,403 271,947 35,464 593,631 20,543 31,604 72,825 52,17I 19,050 293,784 127,185 8,160 852 201,250 25,087 90,762 31,111 224,304 10,144,771 3,559,675 4318,364 20,496,428 527,046 400,900 752,552 19,617,730 COMMUNITY PROTECT[ON Police 1,466,334 Emergency Communications 71,829 Fire 4,850,371 Disaster Services 4,700 Total Community Protection 6,393,234 HOME AND COMMUNI~ ENVIRONMENT Airport Operations and Maintenance Engineering Building Services Economic Development Housing Services and Community Development Total Home and Community Environment HUMAN DEVELOPMENT Human Rights Health Services Park Civic Center Recreation Library Total Human Development CONSTRUCTION iN PROGRESS TOTAL GENERAL FIXED ASSETS 263,651 284,674 434,742 1,052,615 39,833 31,996 274,984 960,280 103,181 5,432,486 4,700 22,705 22,705 583,168 1,267,659 537,923 6,539,802 10,321,868 163,533 805,853 8,880 10,955,308 4,959,038 421,634 455,061 229,102 4,763,363 1,058,157 200,163 365,351 35,356 1,187,989 2,823,246 49,796 261,970 12,096 3,023,324 18,419,452 31,369 8,709,016 9,684,949 17,412,150 303,547 155,198 66,033 214,382 37,885,308 1,021,693 10,663,284 9,970,383 37,556,516 19,932 13,850 6,082 81,066 30, I18 17,752 11,034 57,666 11,724,913 298,425 892,187 118,639 12,200,036 6,971,272 441,223 834,024 7,364,073 5,791,932 154,193 899,220 6,536,959 4,787,892 302,452 33,217 88,01l 4,430,646 29,377,007 1,240,261 2,676,400 223,766 30,589,380 2,521,883 18,069,812 20,086,012 505,683 $ 96,673,860 $ 3,372,168 $ 33,078,055 $ 31,570,636 $ 94,809,111 75 STATISTICAL SECTION (Unaudited) CITY OF DUBUQUE, IOWA GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTION (1) LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 1 Home and Fiscal Community Human Community Policy and Year Protection Development Environment Administration Debt Service Total i993 $ 7,874 $ 3,548 $ 8,776 I994 11,068 4,407 11,092 1995 11,747 5,207 9,785 1996 12,202 5,508 10,060 1997 12,082 5,856 11,050 1998 12,827 6,200 10,380 1999 13,343 6,599 15,136 2000 13,907 7,493 14,983 2001 15,064 8,653 16,410 2002 16,386 8,520 14,361 (1) Includes general, special revenue, and debt service funds. 2,237 $ 3,915 $ 26,350 5,456 4,276 36,299 2,927 3,764 33,430 3,252 3,750 34,772 3,891 3,492 36,371 4,386 2,898 36,691 3,98t 2,747 41,806 4,938 2,312 43,633 5,442 2,882 48,451 4,986 2,637 46,890 76 CITY OF DUBUQUE, IOWA GENERAL GOVERNMENTAL REVENUES BY SOURCE (1) LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 2 Licenses Charges Fines Fiscal and liter- for and Year Taxes Permits Govmr~mental Services Forfeits Interest 1993 $15,016 $ 666 $ 7,662 $ 2,944 $ 337 $1,474 1994 20,295 673 10,417 3,526 388 1,438 1995 20,889 921 9,457 4,494 341 2,155 1996 21,620 717 9,253 5,491 350 1,686 1997 24,772 507 11,454 6,637 358 1,596 1998 24,848 507 10,351 7,106 371 1,989 1999 25,629 580 10,375 7,843 337 1,948 2000 25,562 613 12,140 7,882 34t 1,813 2001 26,800 576 13,769 8,127 369 2,720 2002 26,303 703 14,t24 8,847 410 1,980 (1) Includes general, special revenue, and debt service funds. Miscellaneous Total $ 749 $ 28,848 736 37,473 1,130 39,387 765 39,882 1,487 46,811 1,619 46,791 1,926 48,638 950 49,301 1,988 54,349 1,526 53,893 CITY OF DUBUQUE, IOWA GENERAL GOVERNMENTAL TAX REVENUES BY SOURCE (1) LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 2A Money and State Credits Mobile Replacement Fiscal Propm'ty Replacement Homes Personal Prop. Year Tax Tax Tax Exemption 1993 $ 8,762 $ 38 $ 31$ 493 1994 14,168 38 33 493 1995 14,300 39 33 493 1996 14,928 40 32 472 1997 18,454 15 33 492 1998 18,562 42 37 494 1999 19,890 44 33 492 2000 20,519 45 32 492 2001 21,615 45 31 490 2002 21,020 45 31 459 Hotel Sales Motel Tax Tax Total 4,821 $ 87I $ I5,016 4,796 767 20,295 5,182 842 20,889 5,318 830 21,620 5,373 784 25,151 4,856 857 24,848 4,206 964 25,629 3,489 985 25,562 3,624 995 26,800 3,797 951 26,303 (1) Includes general, special revenue, and debt service funds. 77 CITY OF DUBUQUE, IOWA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Percent of Delinquent Fiscal Total Tax Current Tax Current Taxes Tax Total Tax Year Lev,? (l/ Collections Collected Collections Collections (2) Ratio of Total Tax Collections to Total Tax Levy ( 1 ) Includes tax increment levy. (2) Includes taxes collected in June by the County but not received by the City until July. 1993 $ 13,242 $ 12,635 95.4% $ 571 $ 13,206 99.7% 1994 14,851 14,101 94.9 16t 14,262 96.0 1995 14,997 14,635 97.6 116 14,751 98.4 1996 15,182 14,832 97.7 118 14,950 98.5 1997 15,299 15,025 98.2 132 15,157 99.1 1998 15,538 15,426 99.3 172 15,598 100.4 1999 16,587 16,528 99.6 121 16,649 100.4 2000 16,497 16,380 99.3 115 16,495 99.9 2001 17,163 16,662 97.1 120 16,782 97.8 2002 17,147 16,941 98.8 127 17,068 99.5 Table 3 Outstanding Delinquent Taxes 367 956 245 232 274 138 129 138 150 238 Ratio of Del'mquent Taxes to Total Tax Lew 2.8% 6.4 1.6 1.5 1.8 0.9 0.8 0.8 0.9 1.4 78 CITY OF DUBUQUE, IOWA ASSESSED AND ESTIMATED ACTUAL VALUE OF PROPERTY LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 4 Real Property Exemptions Fiscal Assessed Estimated Real Yeax Value Actual Value Property Total Assessed Estimated Value Actual Value Ratio of Total Assessed Value to Total Estimated Actual Value 1993 $ 960,732 $ 1,185,363 $ 10,783 $ 949,949 $ 1,185,363 80.14% 1994 997,573 1,229,395 10,681 986,892 1,229,395 80.27 1995 1,127,153 1,450,026 10,642 1,116,511 1,450,026 77.00 1996 1,151,187 1,487,208 10,467 1,140,720 1,487,208 76.70 1997 1,237,246 1,750,830 10,405 1,226,841 1,750,830 70.07 1998 1,259,649 1,776,342 10,218 1,249,431 1,776,342 70.34 1999 1,354,421 1,987,466 10,3t9 1,344,102 1,987,466 67.62 2000 1,389,352 1,990,428 10,018 1,379,334 1,990,428 69.30 2001 1,377,518 2,014,897 10,194 1,367,324 2,014,897 67.86 2002 1,429,025 2,047,186 10,097 1,418,928 2,047,186 69.31 79 CITY OF DUBUQUE, IOWA PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS TAX RATES PER $1,000 ASSESSED VALUE (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 5 Board Dubuque of Education Fiscal Dubuque School and Area 1 Year City District Independents Voc. Tech Dubuque Count,/ Ratio of Dubuque City Total to Total 1993 $12.4989 $13.6650 $ .6733 $ .4699 $ 7.6173 $34.9244 35.79% 1994 12.60588 13.92886 .50303 .47495 7.61714 35.12986 35.88 1995 11.78206 13.60398 .53777 .49222 6.95885 33.37488 35.30 1996 11.78215 13.70668 .74972 .49360 6.13169 32.86384 35.85 1997 tl.38153 12.39251 .70548 .50348 5.87236 30.85536 36.89 1998 11.40112 12.03974 .52563 .49951 5.54113 30.00713 37.99 1999 tl.07340 11.98226 .50368 .48592 5.52169 29.56695 37.45 2000 11.15945 11.53111 .66882 .55128 5.54016 29.45082 37.89 2001 tl.93556 13.50444 .54806 .57072 5.73669 32.29547 36.96 2002 11.85631 13.73882 .55492 .57507 5.60064 32.32576 36.68 Source: Dubuque County Auditor's Office. 80 CITY OF DUBUQUE, IOWA PRINCIPAL TAXPAYERS PAYABLE FISCAL YEAR 2002 (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 6 Taxpayer Kennedy Mall Medical Associates Realty Nordstrom, Inc. Plaza 20, Inc. U.S. West Communications Wal-Mart McGraw Hill American Trust and Savings Bank A.Y. McDonald Manufacturing Co. Lowe's Home Center, Inc. Totals 2000 Percentage of Assessed Total Assessed Type of Business Valuation Valuation Shopping Center $ 19,990 .93% Health Services 17,886 .83 Warehouse Distributor 15,532 .72 Shopping Plaza 8,733 .41 Telecommunications 8,575 .40 Retail Sales 7,744 .36 Publishing 7,730 .36 Bank 7,379 .34 Plumbing Supplies 6,904 .32 Building Supplies 6,278 .29 $ 106.751 4.96% Source: Dubuque County Auditor's Office. Alliant Energy Power Company and Peoples Natural Gas Company are not on the above schedule. Effective 2001 utility companies pay excise tax on revenue to the state rather than property taxes. 81 CITY OF DUBUQUE, IOWA SPECIAL ASSESSMENT BH J JNGS AND COLLECTIONS LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 7 Fiscal Special Assessment Special Assessments Year Billings Collected (1) 1993 $ 58 $ 333 1994 44 339 1995 51 6O9 1996 33 147 1997 41 378 1998 73 179 1999 67 644 2000 67 203 2001 82 698 2002 87 657 ( 1 ) Includes prepayments. 82 CITY OF DUBUQUE, IOWA COMPUTATION OF LEGAL DEBT MARGIN JUNE 30, 2002 (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 8 Actual Valuations $ 2.047.18~6 Legal debt margin: Debt limitation- 5% of actual valuations Debt applicable to limitation: Total bonded debt Less: Revenue bonds Total debt applicable to limi[ation Legal debt margin 31,970 (1,720~ $ 102,359 30,250 $ 72.109 83 CITY OF DUBUQUE, IOWA RATIO OF NET GENERAL OBLIGATION BONDED DEBT TO ASSESSED VALUE AND NET GENERAL OBLIGATION BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS (UNAUDITED) Table 9 Ratio of Net Bonded Net Net Debt to Bonded Fiscal Population Assessed Bonded Assessed Debt Per Year (1) * Value (2) * Debt (3) * Value Capita I993 58 $ 949,949 $ 16,340 1.72% $ 282 1994 58 986,892 17,125 1.74 295 1995 58 1,116,511 I4,775 1.32 255 1996 59 1,140,720 14,200 1.24 241 1997 59 1,226,841 11,755 0.96 199 1998 59 1,249,431 i0,795 0.86 183 1999 56 t,344,102 8,545 0.64 153 2000 56 1,379,334 10,51I 0.76 188 2001 58 1,367,324 9,005 0.66 155 2002 58 1,418,928 20,945 1.48 361 * Amounts expressed in thousands. (1) U.S. Census Bureau. (2) From Table 4. (3) From Table 11. Amount does not include revenue bonds. 84 CITY OF DUBUQUE, IOWA RATIO OF ANNUAL DEBT SERVICE EXPENDITURES FOR GENERAL OBLIGATION BONDED DEBT TO TOTAL GENERAL GOVERNMENTAL EXPENDITURES LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 10 Total Fiscal Debt Year Principal Interest ( 1 ) Service Total General Governmental Expenditures (2) 1993 $ 4,530* $ 1,137 $ 5,667 1994 2,315 908 3,223 1995 2,350 915 3,265 1996 2,435 757 3,192 1997 2,445 740 3,185 1998 2,150 551 2,701 1999 2,060 438 2,498 2000 1,655 320 1,975 2001 1,974 219 2,193 2002 1,346 132 1,478 26,350 36,299 33,430 34,772 36,371 36,691 41,806 43,633 48,451 46,890 (1) Excludes bond issrtance and other costs. (2) Includes general, special revenue, and debt service funds. * Includes advance refunded principal of $2,300,000. Ratio of Debt Service to General Governmental Expenditures 21.51% 8.88 9.77 9.18 8.76 7.36 5.98 4.53 4.53 3.15 85 CITY OF DUBUQUE, IOWA COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT GENERAL OBLIGATION BONDS JUNE 30, 2002 (AMOUNTS EXPRESSED IN THOUSANDS) (U~AUDrrED) Table 11 Jurisdiction Net General Percentage Obligation Applicable Amount Bonded Debt to Applicable Outstanding Government to Government Direct: City of Dubuque $ 20,945 (1) 100.00% $ 20~945 $ 20.945 $ 20.945 Total (t) Excluding general obligation bonds reported in the enterprise funds. 86 CITY OF DUBUQUE, IOWA REVENUE BOND COVERAGE PARKING BONDS LAST TEN FISCAL YEARS (AMOUNTS EXPRESSED IN THOUSANDS) (UNAUDITED) Table 12 Nat Revenue Gross Operating Available Fiscal Revenues Expenses For Debt Year (1) (2) Service Debt Service Requirements Principal Interest Total 1993 $ t,160 $ 504 $ 656 1994 1,090 543 547 1995 1,108 592 516 1996 1,152 631 521 1997 1,175 551 624 1998 1,268 570 698 1999 1,303 584 719 2000 1,278 582 696 2001 1,552 717 835 2002 1,452 737 715 Coverage (3) (1) Total revenues (including interest). (2) Total operating expenses exclusive of depreciation. (3) Bond ordinance requires 1.3 coverage. 85 $ 218$ 303 2.17 90 212 302 1.81 95 205 300 1.72 105 198 303 t.72 110 191 301 2.07 150 195 345 2.02 155 98 253 2.84 165 93 258 2.70 170 86 256 3.26 180 79 259 2.76 87 CITY OF DUBUQUE, IOWA PROPERTY VALUE, CONSTRUCTION PERMITS, AND BANK DEPOSITS LAST TEN FISCAL YEARS (UNAUDITED) Table 13 Fiscal Year Other (3) Property Value* Bank Deposits (2) Number of Calendar Total Residential Total (1) Permits Value* Year Deposits* Construction Perm/ts 1993 $ 352,979 1994 381,324 1995 441,399 1996 456,075 1997 519,104 1998 521,327 1999 589,760 2000 586,318 2001 593,085 2002 610,673 $ 832,384 $ 1,185,363 1,780 $ 41,964 1992 $ 869,000 848,071 1,229,395 1,862 56,928 1993 852,000 1,008,627 1,450,026 6,918 * 65,599 1994 883,000 1,031,133 1,487,208 4,190 75,569 1995 902,659 1,231,726 1,750,830 2,039 34,950 1996 901,724 1,255,015 1,776,342 1,572 35,647 1997 701,402® 1,397,706 1,987,466 1,500 58,309 1998 782,248 1,404,110 1,990,428 1,502 78,500 1999 842,165 1,421,812 2,014,897 1,448 72,073 2000 934,240 1,436,513 2,047,186 1,338 115,398 2001 1,019,49I * Amounts expressed in thousands. (1) Estimated acmaI value from Table 4. (2) Source: Federal Deposit Insurance Corporation. (3) Commercial, Industrial, and Utilities. · Hail and wind storm in August 1994, caused extensive roof and siding damage throughout the City, greatly increasing permit activity. ® In 1998, two major banks in the City were consolidated into larger bank corporations; deposits were recorded only at source of charter. 88 CITY OF DUBUQUE, IOWA DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) Table 14 Fiscal Year 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Data Sources: (1) (2) (3) (4) (5) (4) (2) (3) Public (5) (1) Per Capita Median School Uncnnployment Population Income A~e Enrollment Rate 57,538 $ 18,453 34 57,538 19,110 34 57,538 20,113 34 59,084 21,755 34 59,084 22,096 34 59,084 23,293 34 56,467 24,499 34 56,467 25,645 34 57,686 19,616 34 57,686 * 37 Bureau of Census; 2000 Census. U.S. Department of Commerce, Bureau of Economic Analysis. Bureau of Census; 2000 Census. Dubuque Community School District Iowa Department of Employment Services. Unavailable at report date. 9,995 5.5% 10,022 4.3 10,133 3.8 10,065 4.8 9,985 4.7 9,857 3.1 9,735 3.1 9,697 2.7 9,680 3.4 9,906 3.6 89 CITY OF DUBUQUE, IOWA SCHI~;DULE OF INSURANCE IN FORCE JUNE 30, 2002 Insurer LIABILITY INSURANCE Iowa Communities Assurance Pool Iowa Communities Assurance Pool Expiration Policy Number Date IP041901414000003 7/1/02 1P035901414000003 7/1/02 Details of Coverage Municipal General Liability Includes EMT's and Ambulance Service Municipal Auto Liability Includes Transit Liability Iowa Communities Assurance Pool 117015901414000003 7/t/02 Comprehensive & Collision Iowa Communities Assurance Pool 1P039901414000003 7/1/02 Public Official Liability Iowa Communities Assurance Pool IP040891414000003 7/1/02 Police Professional Zurich-American Insurance Group AA03783561-01 4/15/03 Environment Liability Lead Pollution Westchester Fire Insurance Company APN 679567 7/1/02 Airport Liability Northland Insurance Co. A4010489 7/1/02 Public Officials Liability St. Paul Fire & Mar/ne Insurance Company Mount Vernon Fire Insurance Co. Mount Vernon Fire Insurance Co. EM06649597 8/1/02 CL2236323 8/1/02 CL2231997 4/16/03 Professional Liability- Nurses Dram Shop Liability- Five Flags Dram Shop Liability - Bunker Hill Table 15 Liability Limits Am~ual Premium 5,000,000 100,000 10,000 Each Occurrence Aggregate Per Year Deductible Per Occurrence 5,000,000 Each Accident I00,000 Aggregate 10,000 Deductible Per Accident Per Scheduled Motor Vehicles 346,948* 5,000,000 Each Claim 100,000 Aggregate 10,000 Deductible Per Claim 5,000,000 Per Person/Agg. 100,000 Aggregate 10,000 Deductible Per Claim 1,000,000 Each Occurrence 2,000,000 Aggregate 5,000 Deductible 20,000,000 Aggregate Limit 2,500 Deductible 15,000 Deductible Aggregate 5,000,000 10,000 Each Occurrence/Aggregate Deductible 1,000,000 Each Person 3,000,000 Total Limit 15,000 37,150 7,554 175 5,000,000 Each Common Cause/Aggregate 5,914 5,000,000 Each Coramou Cause/Aggregate 5,124 (continued) * Includes the preraiums for ali policies of the Iowa Communities Assurance Pool. 90 CITY OF DUBUQUE, IOWA SCHEDULE OF INSURANCE IN FORCE JUNE 30, 2002 Insurer PROPERTY INSURANCE The Cincinnati Insurance Co. Expiration Policy Number Date CAP 769 5890 7/1/02 Deta'ds of Coverage Comprehensive Business Policy CRIME INSURANCE Allied Group Insmxnce Travelers Insurance Co. BD7900575274 7/1/02 020BY103338754BCM 7/1/02 Public Official Bond Public Official Bond BOILER INSURANCE The Cincinnati Insurance Co. BEP 264 96 23 7/1/02 Boiler & Machinery BIflLDERS RISK St. Paul Insurance Co. St. Paul Insurance Co. CF06301123 4/15/03 CF06301129 6/1/04 Mississippi Riverwalk Phase II Education and Convention Center Table 15 (continued) Liability Limits Annual Premium 119,568,464 10,000 20,000 20,000,000 987,947 695,000 87,454 317,347 16,000 252,560 BuilcYmg & Contents Deductible Per Occurrence Aggregate Per Year Earthquake Business Interruption EDP Equipment Mobile Equipment Communications Equ/pment Signing Artwork 117,028 100,000 900,000 900,000 900,000 900,000 All Employees City Manager Finance Director Assistant Finance Director Administrative Service Manager 3,100 1,200 2,500,000 Per Accident 5,000 Deductible 56,876 3,700,000 PerProject 10,000 Deductible 24,000,000 Per Project 10,000 Deductible Two year policy 2,854 50,422 91 CITY OF DUBUQUE, IOWA MISCELLANEOUS STATISTICS JUNE 30, 2002 (t At ITm)) Table 16 Date of Incorporation Form of Government Population - 2000 Census Number of employees: Full Time Part Time/Seasonal Area in square miles City of Dubuque facilities and services: Miles of streets Number of street lights Number of traffic signals Culture and Recreation: Parks Park acreage Golf courses Swimming Pools Civic Center Fire Protection: Number of stations Number of fire personnel and officers Police Protection: Number of stations Number of police personnel and officers Sewerage System: Miles of sanitary sewers Miles of storm sewers Number of treatment plants Number of service connections Daily average treatment in gallons Maximum daily capacity of treatment plant in gallons Water System: M/les of water mains Number of service connections Number of fire hydrants Daily average consumption in gallons Maximum daily capacity of plant in gallons Public Transit System Facilities and services not included in the reporting entity: Education: Number of elementary schools Number of secondary schools Number of colleges Number of universities Number of theological seroSnaries Hospitals: Number of hospitals Number of licensed patient beds 1837 Council/Manager-Ward 57,686 510 317 27.5 336 1,195 106 39 834 1 2 1 6 90 1 102 167 150.5 1 20,200 9,000,000 15,000,000 304.71 20,550 2,712 8,000,000 18,000,000 Vehicles- 22 19 7 4 1 2 2 478 92 COMPLIANCE SECTION EideBailly Consultants · Certified Public Accountants REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT A UDITING STANDARDS To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa We have audited the general purpose financial statements of the City of Dubuque, Iowa, as of and for the year ended Jtme 30, 2002, and have issued our report thereon dated October 31, 2002. We conducted our audit in accordance with auditing standards generally accepted in the United States of America; Chapter 11 of the Code of Iowa; and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the City's general purpose financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, non-compliance with which could have a direct and material effect on the determination of fmancial statement mounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly we do not express such an opinion. The results of our tests disclosed no instances of non-compliance that are required to be reported under Government Auditing Standards. However, we noted a certain immaterial instance of non-compliance that is described in Part H of the accompanying Schedule of Findings and Questioned Costs. Comments involving statutory and other legal matters about the City's operations for the year ended June 30, 2002, are based exclusively on knowledge obtained from procedures performed during our audit of the general purpose financial statements of the City. Since our audit was based on tests and samples, not all transactions that might have had an impact on the comments were necessarily audited. The comments involving statutory and other legal matters are not intended to constitute legal interpretations of those statutes. The prior year statutory comment has been resolved. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the propose of expressing our opinion on the general puipose financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material hi relation to the general purpose financial statements being audited may occur and not be detected within a timely period by employees in the normal course of perfomaing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management of the City of Dubuque, Iowa, in a separate letter dated October 31, 2002. The prior year reportable condition has been resolved. 3999 Penn~lvanla Ave. . Suite I00 ° DvJauque, lowa 52002.2639 · 563.556.1790 ° Fax 563.55L7842 93 Offices/n A~ona, Iowa, Minnesota, Montana, North Dakota and South Dakota · Equal Opportunity Employer This report, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Dubuque, Iowa, and other parties to whom the City of Dubuque, Iowa, may report. This report is not intended to be and should not be used by anyone other than these specified parties. We would like to acknowledge the many courtesies and assistance extended to us by personnel of the City of Dubuque, Iowa, during the course of our audit. Should you have any questions concerning any of the above matters, we shall be pleased to discuss them with you at your convenience. Dubuque, Iowa October 31, 2002 94 EideBailly REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE V~ITH OMB CIRCULAR A-133 To the Honorable Mayor and Members of the City Council City of Dubuque, Iowa Compliance We have audited the compliance of the City of Dubuque, Iowa, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2002. The City's major federal programs are identified in the summary of the independent auditor's resuks section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsihility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; Chapter 11 of the Code of Iowa; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizaiions. Those standards and provisions require that we plan and perform the audit to obtain reasonable assurance about whether non-compliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City's compliance with those requirements. In our opinion, the City of Dubuque, Iowa, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2002. Internal Control Over Compliance The management of the City of Dubuque, Iowa, is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the internal control over compliance in accordance with OMB Circular A-133. 3999 Pennsylvania Ave. ' Suite 100 · Dubuque, Iowa 52002-2639 o 563.556.1790 ° Fax 563.557.784295 Offices in Arizona, Iowa, M/nnesota, Montana, North Dakota and South Dakota · Equal Opportuni~ Employer Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that non-compliance with applicable requirements of laws, regulations, contracts, and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report, a public record by law, is intended solely for the information and use of the officials, employees, and citizens of the City of Dubuque, Iowa, and other parties to whom the City of Dubuque, Iowa, may report, including federal awarding agencies and pass-through entities. This report is not intended to be and should not be used by anyone other than these specified parties. Dubuque, Iowa October 31, 2002 96 CITY OF DUBUQUE, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR ~IH E FISCAL YEAR ENDED JUNE 30, 2002 Grantor/Pro~rarn CFDA Agency or Program Number Pass-Through Number Expenditures Direct: Department of Housing and Urban Development: Community Development Block Grants/ Entitlement Grants 14.218 B-XX-MC-19-0004 Community Development Block Grants/ Special Purpose Grants/Technical Assistance Program 14.227 SPG-IA-05SPG23 14.401 FF207K017006 Fair Housing Assistance Program - State and Local Lower Income Housing Assistance Program- Section 8 Moderate Rehabilitation Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation Lower Income Housing Assistance Program- Section 8 Moderate Rehabilitation Lower Income Housing Assistance Program- Section 8 Moderate Rehabilitation 14.856 KC-9004MR-002 14.856 KC-9004MR-001 14.856 KC-9004MR-005 14.856 KC-9004MR-007 Section 8 Housing Choice Vouchers Lead-Based Paint Hazard Control in Privately-Owned Housing Department of Justice: Public Safety Partnership and Community Policing Grants Public Safety Partnership and Community Policing Grants 14.871 KC-9004V 14.900 IALAG0066-97 16.710 2001SHWX0414 16.710 2000SHWX0668 Federal Drag Task Force Grant N/A WCIAN036 $ 2,067,964 145,500 56,280 15,879 20,414 261,142 17,712 315,147 3,944,662 788;833 10,90I 5L606 62,507 4O (continued) N/A Not Available 97 CITY OF DUBUQUE, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30~ 2002 CFDA Grantor/Pro~'am Number ~ Direct: (continued) Department of Transportation: Airport Improvemant Program Airport Improvement Program Airport Improvement Program Airport Improvement Program Airport Improvement Program Airport Improvement Program Airport Improvement Program Federal Transit Formula Grants Federal Transit Formula Grants Federal Trarmit - Formula Grants Total Direct Indirect: Department of Housing and Urban Development: Iowa Department of Economic Development: HOME Investment Partnerships Program Department of the Interior: Iowa Department of Natural Resources: Outdoor Recreation Acquisition, Development and Planrfing Department of Justice: Governor's Office of Drag Control Policy and Dubuque County, Iowa: Byrne Formula Grant Pro,am 20.106 20.106 20.106 20.106 20.106 20.106 20.106 20.507 20.507 20.507 14.239 15.916 16.579 Violence Against Women Formula Grants 16.588 Department of Transportation: Iowa Depamnent of Transportation: Highway Planning and Construction Recreational Trails Program 20.205 20.219 Federal Transit- Capital Investment Grants 20.500 Federal Transit- Capital Investment Grants 20.500 Federal Transit- Capital Investment Grants 20.500 Federal Transit- Capital Investment Grants 20.500 Agency or Pass-Throu~_,h Number Program Expenditures 3-19-0028-26 3-19-0028-30 3-19-0028-28 3-19-0028-29 3-19-0028-25 3-19-0028-24 3-19-0028-27 IA-90-X240 IA-90-X252 IA-90-X222 $ 240,610 1,110,794 32,970 187,900 139,205 19,551 134.287 1,865.317 129,480 581,389 43,160 754,029 10,000,279 99-HMS-135-21 148,278 19-01181 49,578 01A-0230 01V-0219 2,227 3,431 STP-U-2100(8)--81-31 STP-ES-2100(617)--81-31 03-0084-210-99 IA-03-0093-210-01 03-0085-210-00 03-0092-210-01 108,448 16,140 356,900 59,058 356,900 365,200 1,138,058 (continued) 98 CITY OF DUBUQUE, IOWA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAJL YEAR ENDED JUNE 30, 2002 Grantor/Program Indirect: (continued) Department of Transportation: (continued) Job Access - Reverse Commute Governor's Traffic Safety Bureau: State and Community Highway Safety State and Community Highway Safety Enx4ronmental Protection Agency: Iowa Department of Public Health and Linn County, Iowa: State Indoor Radon Grants Federal Emergency Management Agency: Iowa Department of Public Defense: Public Assistance Grants Public Assistance Grants Public Assistance Grants CFDA Agency or Number Pass-Throu~.h Number Program Expenditures 20.516 37-X006-210-01 $ 45,409 20.600 PAP 01-02, TASK 05 20.600 PAP 02-02, TASK 05 66.032 5889RC02 Hazard Mitigation Grant Department of Health and Human Services: Iowa Department of Public Health: Childhood Lead Poisoning Prevention Projects - State and Local Childhood Lead Poisoning Prevention and Surveillance of Blood Levels in Children 93.197 Iowa Department of Human Services: Temporary Assistance for Needy Families 93.558 Iowa Department of Public Health: Preventive Health and Health Services Block Grant Total indirect 83.544 FEMA-DR-1277-IA 83.544 FEMA-DR-t367-IA 83.544 FEMA-DR-1420-IA 83.548 HMGP 0996-0185 5882LP06 DEA01-007 Total 93.991 5881AS05 9,401 27,829 37,230 2,797 8,865 136,237 151,307 296,409 3,417 20A06 27,395 6,500 1,905,423 $ 11.905.702 See notes to the Schedule of Expenditures of Federal Awards. 99 CITY OF DUBUQUE, IOWA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED JUNE 30, 2002 NOTE 1 - BASIS OF PRESENTATION The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of Dubuque, Iowa, and is presented in conformity with the modified accrual basis of accounting. The information on this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the general purpose financial statements. NOTE 2 - SUBRECIPIENTS Of the federal expenditures presented in the schedule, the City of Dubuque, Iowa, provided federal awards to subrecipients as follows: Federal Amount Provided Prom Title CFDA Number to Subrecipients Community Development Block Grants/ Entitlement Grants 14.218 $ 298,824 100 CITY OF DUBUQUE, IOWA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2002 Part I: Summary of the Independent Auditor's Results: (a) An unqualified opinion was issued on the financial statements. (b) No reportable conditions in internal control over financial reporting were identified. (c) The audit did not disclose any non-compliance which is material to the financial statmnents. (d) No reportable conditions in internal control over major programs were identified. (e) An unqualified opinion was issued on compliance with requirements applicable to each major program. (f) The audit did not disclose any audit fmdings which are required to be reported in accordance with Office of Management and Budget Circular A- 133, Section .510(a). (g) Major programs were as follows: · CFDA Number 14.871 - Section 8 Housing Choice Vouchers · CFDA Number 14.900 - Lead-Based Paint Hazard Control in Privately-Owned Housing (h) The dollar threshold used to distinguish between Type A and Type B programs was $357,17 I. (i) The City of Dubuque, Iowa, did qualify as a iow-risk auditee. Part H: Other Findings Related to Statutory Reportinm H-A-02 Official Depositories - A resolution naming official depositories has been approved by the City. The maximum deposit amounts stated in the resolution were not exceeded during the year ended June 30, 2002. II-B-02 Certified Budget - Program disbursements during the year ended June 30, 2002, did not exceed the amounts budgeted. II-C-02 Questionable Expenditures - We noted no expenditures which fail to meet the requirements of public purpose as defmed in an Attorney Ganeral's opinion dated April 25, 1979. II-D-02 Travel Expense No expenditures of City money for travel expanses of spouses of City officials or employees were noted. I/-E-02 Business Transactions - Business transactions between the City and City officials or employees are detailed as follows: Name, Title, and Business Connection Randy Roth, employee Melissa McGinnis, employee, spouse is owner of Quality Brick Tmnsaction Description Amount Maintenance services Masonry services 4,364 4,054 101 CITY OF DUBUQUE, IOWA SCH ~;OULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2002 Part H: Other Findings Related to Statutory Reportlm,: (continued) Name, Title, and Transaction Business Cormection Description Amount Pat Coyle, employee, spouse is owner of Grant Painting Painting services $ 3,475 John Zenner, employee, own~ of building Building rent 3,300 Joleen Patterson, employee, spouse is owner of Patterson Heating- Cooling - Fireplaces Maintenance services 2,405 Chuck Kutsch, employee Remodeling services 1,233 In accordance with Chapter 362.5(10) of the Code of Iowa, the transactions with Chuck Kutsch do not appear to represent a conflict of interest since total transactions were less than $1,500 during the fiscal year. The transactions with Pat Coyle and John Zenner do not appear to represent a conflict of interest since the transactions were entered into through competitive bidding. The remaining transactions were not entered into through competitive bidding and may represent conflicts of interest. Recommendation - The City should consult legal counsel to determine the disposition of this matter. Response - Finance management will remind City department managers of Chapter 362.5(10) of the Code of Iowa requirements, stating that business transactions totaling $1,500 or more in a fiscal year between the City and City officials or employees be competitively bid. Conclusion - Response accepted. II-F-02 Bond Coverage Surety bond coverage of City officials and employees is in accord,ante with statutory provisions. The amount of coverage should be reviewed aunually to hnsure that the coverage is adequate for current operations. II-G-02 Counc/1 Minutes - No transactions were found that we believe should have been approved in the Council minutes but were not. 11-H-02 Revenue Bonds - No instances of non-compliance with the provisions of the City's revenue bond resolutions were noted. 11-1-02 Deposits and Investments - No instances of non-compliance with the deposit and investment provisions of Chapters 12B and 12C of the Code of Iowa and the City's investment policy were noted. i02 CITY OF DUBUQUE, IOWA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED JUNE 30, 2002 Part H: Other Findings Related to Statutory Reportino: (continued) II-J-02 Solid Waste Fees Retainage - The Dubuque Metropolitan Area Solid Waste Agency, a component unit of the City, used or retained the solid waste fees in accordance with Chapter 455B.310(2) of the Code o£ Iowa. 103