HomeMy WebLinkAboutComprehensive Annual Financial Report, September 30, 2011
City of Port Arthur, Texas Comprehensive Annual Financial Report For the Year Ended September 30, 2011 Prepared by the Finance Department Rebecca Underhill, CPA Assistant City Manager-Administration
Deborah Echols, CPA Director of Finance Tammy Jacobs, CPA Comptroller Julie Saunders Accounting Manager
DELORIS “BOBBIE” PRINCE, MAYOR JOHN COMEAUX, P.E. HAROLD DOUCET, SR, MAYOR PRO TEM ACTING CITY MANAGER Office Of The Assistant City Manager /Administration, Rebecca Underhill P.O. Box
1089 | 444 4th Street | Port Arthur, Texas | (409) 983-8150 | Fax (409) 984-5463 SHERRI BELLARD COUNCIL MEMBERS CITY SECRETARY RAYMOND SCOTT, JR. ELIZABETH “LIZ” SEGLER VAL TIZENO MORRIS
ALBRIGHT, III CITY ATTORNEY JOHN BEARD, JR. ROBERT E. WILLIAMSON DERRICK FREEMAN KERRY “TWIN” THOMAS March 20, 2012 To the Honorable Mayor, Members of City Council and Citizens of the
City of Port Arthur, Texas Texas law requires that all municipalities publish a complete set of financial statements presented in conformity with generally accepted accounting principles
(GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive
annual financial report of the City of Port Arthur, Texas for the fiscal year ended September 30, 2011. This report consists of management’s representations concerning the finances of
the City of Port Arthur. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable
basis for making these representations, management of the City of Port Arthur has established a comprehensive internal control framework that is designed both to protect the government’s
assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Port Arthur’s financial statements in conformity with GAAP. Because
the cost of internal controls should not outweigh their benefits, the City of Port Arthur’s comprehensive framework of internal controls has been designed to provide reasonable, rather
than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial
report is complete and reliable in all material respects. The City of Port Arthur’s financial statements have been audited by Gayle Botley & Associates, a firm of licensed certified
public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Port Arthur for the fiscal year ended September
30, 2011, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing
the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon
the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Port Arthur’s financial statements for the fiscal year ended September 30, 2011, are
fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of the report. The independent audit of the financial
statements of the City of Port Arthur was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing
Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls
and compliance with legal
vi requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Port Arthur’s
separately issued Single Audit Report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form
of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to compliment MD&A and should be read in conjunction with it. The City of Port Arthur’s MD&A can
be found immediately following the report of the independent auditors. Governmental Structure The City of Port Arthur (City), incorporated May 30, 1898, is located in Southeastern Texas,
on the Gulf Coast. Bordered by Lake Sabine, an inland bay, the City has access to the Gulf of Mexico through Sabine Pass. Port Arthur is spread over 87.96 square miles and has a population
of 53,818. The City has all the powers granted to a home rule city by Texas law including: the power to levy tax on real and personal property within its boundaries, the right to extend
its boundaries by annexation, and the power to block annexation or incorporation in areas considered within its extra-territorial jurisdiction. The City has operated under the Council-Manager
form of government since March 8, 1932. Policy making and legislative authority rests with the City Council, which consists of a mayor and an eight-member council. Two council members
and the mayor are elected at large. Six council members are elected to staggered terms; two from combined districts, and four council members from their respective districts. All terms
are three years. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees and hiring the City's manager, attorney, and
secretary. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day to day operations of the City, and for appointing
the heads of the City's departments. The City provides a full range of municipal services including police and fire protection, solid waste removal and disposal, water and sanitary sewer,
the construction of streets, drainage and other infrastructure, recreational activities, library and other cultural activities. Component units are legally separate entities for which
the City is financially accountable. The financial data of the Port Arthur Economic Development Corporation and the Pleasure Island Commission have been included with that of the City.
These organizations, although legally separate entities, are in substance, part of the City's operations. Additional information on these entities may be found in Note I.A. in the notes
to the financial statements. The annual budget serves as the foundation for the City’s financial planning and control. The City Manager presents his proposed budget to the City Council
for review on or before August 31 of each year. The Council holds a public hearing and a final budget is adopted by September 30. The City maintains extensive budgetary controls. The
objective of these controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by City Council. Activities of the general fund, certain
special revenue funds and the proprietary funds, are included in the annual appropriated budget. Project-length budgets are prepared for the capital projects fund. The level of budgetary
control (i.e. the level at which expenditures cannot legally exceed the appropriated amount) is the department level within each fund. Budget-to-actual comparisons are provided in this
report for each individual governmental fund for which an appropriated annual budget has been adopted. For the General Fund, this comparison is presented on page 23 as part of the basic
financial statements for the governmental funds. For governmental funds, other than the General Fund, with appropriated annual budgets, this comparison is presented in the governmental
fund subsection of this report, which starts on page 75. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it
is considered from the broader perspective of the specific environment within which the City operates.
vii Local Economic Condition and Outlook Southeast Texas is one of the principal oil refining and petro-chemical manufacturing areas in the world and the City's economy is tightly tied
to these industries. The Spindletop gusher blew in on January 10, 1901 at Gladys City, near Beaumont and just north of Port Arthur. This event, coupled with our proximity to the Gulf
of Mexico, drove the development of oil refining in Port Arthur. For more than 100 years, the country's major oil and chemical refining companies have maintained major facilities here.
The local facilities of TOTAL Petrochemicals, BASF, Motiva, Valero, Flint Hills Resources, Chevron-Phillips, and Golden Pass LNG currently represent nearly $7 billion in property value.
These industries have provided a steady employment base, and in recent years, significant infusions of capital have dramatically increased economic activity in Port Arthur. In September
2007, the Motiva facility announced a major expansion. This $8 billion project is providing another boom to the local economy. This project is in construction, and upon completion, Motiva-Port
Arthur, will be the largest refinery in North America, increasing production from 325,000 to 600,000 barrels of refined fuels per day. The expansion is generating over 6,000 construction
jobs and 300 new full time jobs upon completion. TOTAL has recently completed a $1.8 billion refinery expansion which generated 2,000 construction jobs and 40 permanent jobs. Long-term
Financial Planning The City was successful in receiving an infusion of grant funds which will enhance capital project activities for the 2011 year. The City was awarded $15 million through
the American Relief and Recovery Act (ARRA) for sanitary sewer rehabilitation projects. Drainage and additional water and sewer projects will be funded through a $13 million Community
Development Block Grant related to Hurricane Ike recovery. Those projects are currently underway. The second phase of Ike Recovery funding is just under contract, and will provide another
$25 million in funding for infrastructure projects. These projects will be completed over the next two years. Cash Management Policies and Practices Cash temporarily idle during the
year was invested in obligations of the U.S. Treasury, Federated Agencies and TexPool (a local government investment pool). The maturities of the investments range from overnight, to
an average maturity of just under 1 year. The average yield on investments for the year was .16%. Investment income includes appreciation in the fair value of investments. Increases
in fair value during the current year, however, do not necessarily represent trends that will continue; nor is it always possible to realize such amounts, especially in the case of temporary
changes in the fair value of investments that the government intends to hold to maturity. Risk Management The City maintains a limited risk retention program for worker's compensation
and employee health benefits. As part of this program, resources are transferred to the employee benefit fund to meet potential losses. Additional information on the City’s risk management
activity can be found in Note V. A. of the notes to the financial statements. Pension and Other Post-employment Benefits The City of Port Arthur provides pension benefits for all permanent
employees, except for firefighters, through a nontraditional, joint contributory, hybrid defined benefit plan in the statewide Texas Municipal Retirement System (TMRS), an agent multi-employer
public employee retirement system. The City has funded 80.9% of the present value of the projected benefits earned by employees. The remaining unfunded amount is being systematically
funded over 26.9 years as part of the annual required contribution calculated by the actuary. The City sponsors a single-employer defined benefit pension plan for all firefighters. The
Board of Trustees of the Port Arthur Firemen’s Relief and Retirement Fund (the Fund) is the administrator of the plan. The Board is composed of the Mayor (or her designee) and the the
Finance Officer as ex-officio Trustees, three firefighters elected by a majority vote of the firefighters, and two citizens who must be appointed unanimously by the first
viii five trustees, is subject to administrative supervision by the State Firemen’s Pension Commissioner. The City does not hold title to any of the Fund’s assets, have right to any
surpluses, or have responsibility for any deficits. Accordingly, the financial statements of the fund are not included in this report. The City of Port Arthur also provides post-retirement
health care benefits for retirees and their dependents. As of the end of the current fiscal year, there were 200 retirees participating in the City’s group health program. Additional
information on the City’s pension arrangements and post-employment benefits can be found in Note V. C. of the notes to the financial statements. Awards and Acknowledgements 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 Port Arthur for
its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2010. This prestigious award is the result of achieving the highest standard of governmental accounting
and financial reporting. This was the seventeenth consecutive year that the City received this annual award. A Certificate of Achievement is valid for one year only. We believe our current
report continues to conform to Certificate of Achievement Program requirements, and are submitting it to GFOA to determine its eligibility for another certificate. Acknowledgments. The
preparation of this report could not have been accomplished without the efficient and dedicated services of the entire staff of the finance department. The professional expertise and
commitment of Deborah Echols, Director of Finance, Tammy Jacobs, Comptroller and all of the accounting staff make this presentation possible. Appreciation is also expressed to the staff
of the operating departments for their cooperation and contributions, to the firm of Gayle Botley & Associates, for their professional assistance and to City Council for their interest
and support. Respectfully Submitted, John A. Comeaux Rebecca Underhill John A. Comeaux, P.E. Rebecca Underhill, CPA Acting City Manager Assistant City Manager/Administration
CITY OF PORT ARTHUR, TEXASComprehensive Annual Financial ReportFor the Year Ended September 30, 2011Table of ContentsPageINTRODUCTORY SECTIONTitle Page Table of ContentsLetter of TransmittalvGovernme
nt Finance Officer's Association Certificate of AchievementixList of City OfficialsxOrganization ChartxiFINANCIAL SECTIONIndependent Auditors Report1Management's Discussion and Analysis5Basic
Financial StatementsGovernment Wide Financial StatementsStatement of Net AssetsExhibit 113Statement of ActivitiesExhibit 215Major Fund Financial StatementsGovernmental FundsBalance SheetExhibit
319Statement of Revenues, Expenditures and Changes in Fund BalancesExhibit 420Reconciliation of the Statement of Revenues, Expendituresand Changes in Fund Balances of Governmental Funds
to the Government-Wide Statement of ActivitiesExhibit 521Statement of Revenues, Expenditures and Changes in Fund Balance Budget (Budget Basis) and ActualGeneral FundExhibit 623Proprietary
FundsStatement of Net AssetsExhibit 727Statement of Revenues, Expenses and Changes in Net AssetsExhibit 828Statement of Cash FlowsExhibit 929Notes to the Basic Financial Statements 31
CITY OF PORT ARTHUR, TEXASComprehensive Annual Financial ReportFor the Year Ended September 30, 2011Table of ContentsPageRequired Supplementary InformationTexas Municipal Retirement
System, Schedule of Funding ProgressExhibit 1057Port Arthur Firemen's Relief and Retirement FundSchedule of Funding ProgressExhibit 1158Schedule of Employer ContributionsExhibit 1259Notes
to Required Supplementary InformationExhibit 1360Retiree Health Insurance ProgramSchedule of Funding ProgressExhibit 1461Combining and Individual Fund Statements and SchedulesCombining
Financial Statements-Non-Major Governmental FundsCombining Balance SheetA-166Combining Statement of Revenues, Expenditures and Changes in Fund BalancesA-270Schedules of Revenues, Expenditures
and Changes in Fund Balances -Budget and ActualDebt Service FundA-375Library Special FundA-476Golf Course FundA-577Municipal Court Technology FundA-678Hotel Occupancy Tax FundA-779Police
Special FundA-880Transit System FundA-981Combining Financial Statements -Internal Service FundsCombining Statement of Net AssetsB-185Combining Statement of Revenues, Expenditures and
Changes in Fund Net AssetsB-286Combining Statement of Cash FlowsB-387Individual Fund Statements -Port Arthur Economic Development CorporationBalance SheetC-191Statement of Revenues,
Expenditures and Changes in Fund BalancesC-292General Operating FundSchedule of Revenues, Expenditures and Changes in Fund Balance -Budget and ActualC-393
CITY OF PORT ARTHUR, TEXASComprehensive Annual Financial ReportFor the Year Ended September 30, 2011Table of ContentsPageDebt Service FundSchedule of Revenues, Expenditures and Changes
in Fund Balance -Budget and ActualC-494STATISTICAL SECTIONFinancial TrendsNet Assets by ComponentSchedule 198Changes in Net AssetsSchedule 2100Governmental Activities Tax Revenue by
SourceSchedule 3104Fund Balances of Governmental FundsSchedule 4106Changes in Fund Balances of Governmental FundsSchedule 5108General Governmental Tax Revenues by SourceSchedule 6110Revenue
CapacityAssessed Value and Estimated Actual Value of Taxable PropertySchedule 7111Property Tax Rates -Direct and Overlapping GovernmentsSchedule 8112Principal Property TaxpayersSchedule
9114Principal Industrial DistrictsSchedule 10115Property Tax Levies and CollectionsSchedule 11116Industrial District PaymentsSchedule 12117Debt CapacityRatios of Outstanding Debt by
TypeSchedule 13118Ratios of General Bonded Debt OutstandingSchedule 14119Direct and Overlapping Governmental Activities DebtSchedule 15120Legal Debt Margin InformationSchedule 16122Demographic
and Economic InformationDemographic and Economic StatisticsSchedule 17124Principal EmployersSchedule 18125Operating Information Full Time Equivalent City Employees by FunctionSchedule
19126Operating Indicators by FunctionSchedule 20128Capital Asset Statistics by FunctionSchedule 21130
X City of Port Arthur, Texas City Officials City Council Deloris Prince Mayor Raymond Scott, Jr. District 1 Elizabeth Segler District 2 Morris Albright III District 3 Harold Doucet,
Sr. Mayor Pro Tem John Beard, Jr. District 5 Robert E. Williamson District 6 Derrick Freeman District 7 Kerry Thomas District 8 Appointed Officials John A. Comeaux, P.E. City Manager
Sherri Bellard City Secretary Valecia Tizeno City Attorney
Certificate of Achievement ·r for Excellence in Financial Reporting Presented to City of Port Arthur I Texas For its Comprehensive Annual Financial Report for the Fiscal Year Ended September
30,2010 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 wbose comprehensive annual financial reports (CAFRs) achieve the higbest standards in government accounting and financial reporting. President
Executive Director
Municipal CourtCity SecretarySolid WasteWater UtilitiesHousing and Neighborhood ServicesTranistLibraryHealthPublic WorksFirePoliceParks and RecreationHuman ResourcesFinanceCity ManagerCity
AttorneyCity CouncilCITY OF PORT ARTHUR xi
qayCe W. (Botfey, OP..JI Certifiea<Pu6fic )lccountant :M.em6erof)lI(JP)l "Supponine 'Your Pinanciafgrowtli" INDEPENDENT AUDITOR'S REPORT The Honorable Mayor and City Council City ofPort
Arthur, Texas We have audited the accompanying financial statements of the governmental activities, businesstype activities, the aggregate discretely presented component units, each
major fund and the aggregate remaining fund information of the City of Port Arthur, Texas (the "City") as of and for the year ended September 30, 2011, which collectively comprise the
City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions
on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable
to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in
all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major
fund, and the aggregate remaining fund information, and the respective budgetary comparison for the general fund of the City of Port Arthur, Texas as of September 30, 2011, and the respective
changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States ofAmerica.
In accordance with Governmental Auditing Standards, we have also issued our report dated March 6, 2012, on our consideration of the City's internal control over financial reporting and
our test of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our
testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards and should be considered in assessing the results ofour audit. Community 'Tower (409)962-1040 4749 'Twin City1fury, Suite 280 ltv((409) 962-0668 (]'ort )frtliur, 'IX77642
(800)416-8757
Honorable Mayor and City Council Page 2 City of Port Arthur, Texas Accounting principles generally accepted in the United States of America require that the management's discussion and
analysis and budgetary comparison information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial
statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing
standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information
for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do
not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's financial statements as a whole. The introductory section,
combining and individual non-major fund financial statements and schedules, and statistical section as listed in the table of contents, are presented for purposes of additional analysis
and are not a required part of the financial statements. The combining and individual non-major fund financial statements and schedules are the responsibility of management and were
derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures
applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in
the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical
sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion or provide any assurance on
them. Gayle W. Botley, CPA Port Arthur, Texas March 6, 2012
BASIC FINANCIAL STATEMENTS
CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -5 -As management of the City of Port Arthur, Texas (City), we offer readers of the City’s financial statement this narrative
overview and analysis of the financial activities of the City for the year ended September 30, 2011. We encourage readers to consider the information presented here in conjunction with
additional information that we have furnished in our letter of transmittal, which can be found on page -v-of this report. The assets of the City of Port Arthur exceeded its liabilities
at the close of the fiscal year by $88.5 million (net assets). FINANCIAL HIGHLIGHTS • The City’s total net assets increased by $10.8 million. In part, this increase was driven by capital
improvements. These improvements were funded by a General Obligation Bond Issue, by Federal American Relief and Recovery Act (ARRA) grant awards. • As of the close of the fiscal year,
the City of Port Arthur’s governmental funds reported combined ending fund balances of $32.2 million. Over 66% of this total amount, $21.4 million is unreserved and available for use
within the City’s designation and policies. • At the end of the current fiscal year, unassigned balance in the General Fund was $21.8 million, or 59.3% of the total General Fund expenditures,
within the City’s General Fund balance policy requirement. This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic
financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also
contains other supplementary information in addition to the financial statements themselves. OVERVIEW OF THE FINANCIAL STATEMENTS Government-wide financial statements – The government-wide
financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to private-sector business. The Statement of Net Assets presents
information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful
indicator of whether the financial position of the City is improving or deteriorating. That being said, the net assets of the City increased $10.8 million in this fiscal year. The Statement
of Activities presents information showing how the City’s net assets changed during the fiscal year. All changes in net assets are reported when the underlying event giving rise to the
change occurs, regardless of the timing of the related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g. uncollected taxes and earned but unused compensated absences). Both of the government-wide financial statements distinguish
functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from functions that are intended to recover all or a significant
portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, community development,
public works, health and welfare, economic development, public transportation and culture and recreation. The business-type activities include the water and sewer utility and solid waste
operations. The government-wide financial statements are found on pages 13 and 15 of this report.
CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -6 -Fund financial statements -A fund is a grouping of related accounts that is used to maintain control over resources
that have been segregated for specific activities and objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance
related legal requirements. All of the funds of the City can be divided into two categories – governmental funds and proprietary funds. Governmental Funds – Governmental funds are used
to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements,
the governmental fund financial statements focus on current sources and uses of spendable resources, as well as on balances of spendable resources available at the end of the fiscal
year. Such information may be useful in evaluating a government’s near-term financing requirements. requirements. Because the focus of governmental funds is narrower than that of the
government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities on the government-wide
financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental funds balance sheet and
the governmental fund statements of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental
activities. The City maintains 34 governmental funds. Information is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures,
and Changes in Fund Balances for the General, Debt Service, CDBG/GLO IKE, and Capital Projects Funds which are considered to be major funds. Data from the other 30 funds are combined
into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements elsewhere in the report. Proprietary
Funds – The City maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial
statements. The City uses enterprise funds to account for the water and sewer utility and solid waste operations. Internal service funds are an accounting device used to accumulate and
allocate costs internally among the City’s various functions. The City uses internal service funds to account for liability insurance, employee benefits, and equipment replacement activities.
All internal service funds are combined into a single aggregated presentation on the proprietary fund financial statements. Individual fund data for the internal service funds is provided
in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements are found on pages 27-29 of this report. Notes to the Financial Statements
– The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information – In
addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its
obligation to provide pension and other post employment benefits to its employees. Required supplementary information can be found on pages 55-59 of this report. See section V.C. and
V.D. in the notes to the financial statements, on pages 46-51 of this report for additional information concerning the City’s retirement systems and other post employment benefits. As
noted earlier, net assets may serve, over time, as a useful indicator of the government’s financial position. In the case of the City of Port Arthur, Texas, assets exceeded liabilities
by $88.5 million GOVERNMENT-WIDE FINANCIAL ANALYSIS
CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -7 -as of September 30, 2011. The largest portion of the City’s net assets reflects investment in capital assets (e.g.
land, building, equipment, improvements, and construction in progress), less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide
service to citizens; consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, it should be
noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. City of Port
Arthur’s Net Assets Governmental ActivitiesBusiness-Type ActivitiesTotal201120102011201020112010Current and other assets65,407,943$ 64,270,739$ (11,554,186)$ (6,299,694)$ 53,853,757$
57,971,045$ Capital assets63,928,406 68,383,700 92,962,928 86,587,387 156,891,334 154,971,087 Total assets129,336,349$ 132,654,439$ 81,408,742$ 80,287,693$ 210,745,091$ 212,942,132$
Long term liabilities92,031,825$ 98,979,912$ 8,343,354$ 5,171,798$ 100,375,179$ 104,151,710$ Other liabilities20,157,021 25,742,847 1,707,905 5,371,904 21,864,926 31,114,751 Total liabilities112,188,
846$ 124,722,759$ 10,051,259$ 10,543,702$ 122,240,105$ 135,266,461$ Net AssetsInvested in capital assets, net of related debt41,646,196$ 52,886,404$ 92,962,928$ 86,587,387$ 88,452,674$
65,551,291$ Restricted7,950,939 12,159,977 9,254,080 10,896,172 17,205,019 23,056,149 Unrestricted(32,449,632) (57,114,701) (30,859,522) (27,739,568) (17,152,704) (10,931,769) Total
net assets17,147,503$ 7,931,680$ 71,357,486$ 69,743,991$ 88,504,989$ 77,675,671$ Analysis of City’s Operations – The following table provides a summary of the City’s operations for the
year ended September 30, 2011. Governmental activities increased the City of Port Arthur’s net assets by $9.2 million. The infusion of grant funded projects resulted in this increase
in assets. Business-type activities increased the City’s net assets by $1.6 million. Increases in water and sewer fund revenues and capital grants produced the increase in the assets.
CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -8 -City of Port Arthur’s Changes in Net Assets Governmental ActivitiesBusiness-Type ActivitiesTotal201120102011201020112010RevenuesPro
gram revenuesCharges for services3,787,286$ 3,141,147$ 25,498,798$ 24,584,884$ 29,286,084$ 27,726,031$ Operating grants15,661,881 9,980,518 --15,661,881 9,980,518 Capital grants and
-contributions1,172,641 7,520,035 6,850,178 7,520,035 8,022,819 General revenuesAd valorem taxes16,758,589 16,082,423 --16,758,589 16,082,423 Industrial revenue24,302,981 26,520,879
--24,302,981 26,520,879 Gross receipts taxes4,996,761 4,414,729 --4,996,761 4,414,729 Sales tax8,330,199 8,108,987 --8,330,199 8,108,987 Other taxes1,109,479 985,368 --1,109,479 985,368
Investment earnings256,516 379,046 17,688 53,355 274,204 432,401 Miscellaneous1,039,621 1,940,243 -6,555 1,039,621 1,946,798 Total revenues76,243,313$ 72,725,981$ 33,036,521$ 31,494,972$
109,279,834$ 104,220,953$ ExpensesGeneral government13,859,969$ 13,639,715$ -$ -$ 13,859,969$ 13,639,715$ Public safety28,627,623 29,371,645 --28,627,623 29,371,645 Public works15,838,978
14,006,598 --15,838,978 14,006,598 Community development3,025,958 3,201,371 --3,025,958 3,201,371 Culture and recreation4,649,682 4,968,703 --4,649,682 4,968,703 Health and welfare3,767,992
2,905,668 --3,767,992 2,905,668 Public transportation2,819,228 3,061,791 --2,819,228 3,061,791 Interest on long-term debt3,052,972 3,294,557 --3,052,972 3,294,557 Water and sewer--16,125,058
17,579,403 16,125,058 17,579,403 Solid waste--6,683,056 8,422,715 6,683,056 8,422,715 Total expenses75,642,402$ 74,450,048$ 22,808,114$ 26,002,118$ 98,450,516$ 100,452,166$ Increases
(decreases) in netassets before transfers600,911 (1,724,067) 10,228,407 5,492,854 10,829,318 3,768,787 Transfers8,614,912 7,487,001 (8,614,912) (7,487,001) --Increases (decreases) in
net assets9,215,823 5,762,934 1,613,495 (1,994,147) 10,829,318 3,768,787 Net assets -beginning of year7,931,680 2,168,746 69,743,991 71,738,138 77,675,671 73,906,884 Net assets -end
of year17,147,503$ 7,931,680$ 71,357,486$ 69,743,991$ 88,504,989$ 77,675,671$ FINANCIAL ANALYSIS OF THE GOVERNMENT’S FUNDS Governmental Funds – The focus of the City of Port Arthur’s
governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements.
In particular, unreserved fund balance may serve as a useful measure of the government’s net resources available for spending at the end of the fiscal year. At the end of the 2011 fiscal
year, the City of Port Arthur’s governmental funds reported combined ending fund balances of $32.2 million. Approximately 75% of this total amount ($24.2 million) consists of unreserved
fund balances. The remainder of the balance is reserved to indicate that it is not available for new spending because it has been committed to 1) provide for prepaid items ($1,589,293),
2) pay for
CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -9 -debt service ($2.6 million) and 3) capital projects ($5.26 million). In the General Fund, the City budgeted for a
decrease in fund balance of $826,000. This was a planned reduction. Due to actual revenues being more than projections by $1.85 million and transfers lagging budgeted projections by
$1.3 million with actual expenses being less than budgeted by $2.4million, the fund balance increased $2.14 million. The primary revenue variances were provided in Sales Tax and Gross
Receipts Tax which increased sharply in 2011 ($530,000 and $687,000, respectively, more than budget) due in part to increased spending by retail customers. Expenses were under budget
in every department. The CDBG/TDRA IKE fund carries a significant receivable from the federal government. This is due to outstanding project reimbursements from Hurricane Ike. General
Fund Budgetary Highlights – The City Council approved eight budget amendments to the original appropriations. This change resulted in an increase of 1% of the original operating appropriation,
or $714 thousand. These amendments were to fund additional capital projects, and unexpected operating expenses. Proprietary funds – The City’s proprietary fund statements provide the
same type of information found on the government-wide statements, but in more detail. Net assets in the proprietary funds increased $1.6 million. The water utility fund does not generate
sufficient revenue to fund the entire cost of capital. CAPITAL ASSETS The City of Port Arthur’s investment in capital assets for its governmental and business-type activities as of September
30, 2011, amounts to $218.28 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, equipment, improvements, infrastructure and construction
in progress. Major capital assets during the current year included the following: Capital Assets at Year-End Governmental ActivitiesBusiness-type ActivitiesTotal201120102011201020112010Land471,334
2,474,132$ 863,971 362,843$ 1,335,305$ 2,836,975$ Buildings26,233,511 20,464,102 35,363,300 35,348,650 61,596,811 55,812,752 Improvements23,946,085 8,526,264 -106,776,168 23,946,085
115,302,432 Infrastructure245,253,322 249,663,476 108,288,422 -353,541,744 249,663,476 Equipment35,825,635 41,181,159 3,840,700 4,318,666 39,666,335 45,499,825 Construction in progress8,113,531
13,113,198 17,875,465 8,848,584 (349,183,942) 21,961,782 Accumulated depreciation(275,915,012) (267,038,631) (73,268,930) (69,067,524) (349,183,942) (336,106,155) Total63,928,406$ 68,383,700$
92,962,928$ 86,587,387$ (218,281,604)$ 154,971,087$ Detailed information on capital asset activity can be found on pages 39-41 in the Notes to the Financial Statements, Note IV. C. DEBT
ADMINISTRATION The City of Port Arthur General Obligation Bond Refunding Series 2011, the last issue for the City, was
CITY OF PORT ARTHUR, TEXAS Management’s Discussion and Analysis -10 -rated ‘A’ by Standard and Poor’s and A2 by Moody’s Investors Service. At the end of the current fiscal year, the
City of Port Arthur had a total bonded debt of $74,140,000. More detailed information on long-term debt activity can be found on pages 43-45 in the Notes to the Financial Statements,
Note IV.F. Governmental Activities20112010General obligation bonds53,575,000$ 50,750,000$ Certificates of obligation20,565,000 29,560,000 Total74,140,000$ 80,310,000$ The City of Port
Arthur’s budget for fiscal year 2012 included increased property tax revenue due to a 3.6% increase in assessed valuation. However, industrial district revenues declined significantly
due to decreased values in the districts. The impact on revenue was limited however by a 10% floor in five of the major industrial contracts. The property tax rate remained the same
as the prior year, $0.792 per $100 valuation. Water and sewer user fees were restructured and a rate increase of approximately 5% was implemented. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS
AND RATES This financial report is designed to provide a general overview of the City of Port Arthur’s finances for all those with an interest in the government’s finances. Questions
concerning any of the information provided in this report, or requests for additional financial information should be addressed to the Office of the Assistant City Manager for Administration,
P.O. Box 1089, Port Arthur, Texas 77641-1089. REQUESTS FOR INFORMATION
CITY OF PORT ARTHUR, TEXASExhibit 1Statement of Net AssetsSeptember 30, 2011Primary GovernmentComponent UnitsEconomicPleasure GovernmentalBusiness-typeDevelopmentIsland ActivitiesActivitiesTotalCorpo
rationCommissionAssetsCash1,892,351$ 2,631,551$ 4,523,902$ 54,543$ 1,979,453$ Investments16,404,433 9,254,080 25,658,513 9,278,544 775,113 Due from other funds27,504,184 (27,504,184)
---Receivables (net of allowances for doubtful accounts)Property taxes2,914,419 -2,914,419 --Accounts1,540,681 3,309,228 4,849,909 239,375 12,418 Federal and state grants12,591,372 29,248
12,620,620 --Notes666,662 -666,662 --Inventories173,548 713,481 887,029 --Prepaid items1,720,293 12,410 1,732,703 -21,584 Capital assets:Land 471,334 863,971 1,335,305 5,757,631 -Buildings26,233,511
35,363,300 61,596,811 315,480 -Improvements23,946,085 -23,946,085 -8,893,480 Infrastructure245,253,322 108,288,422 353,541,744 --Equipment35,825,635 3,840,700 39,666,335 35,826 243,659
Construction in progress8,113,531 17,875,465 25,988,996 --Accumulated depreciation(275,915,012) (73,268,930) (349,183,942) (72,262) (4,157,252) Total Assets129,336,349 81,408,742 210,745,091
15,609,137 7,768,455 LiabilitiesWages payable1,662,202 258,059 1,920,261 16,288 -Accounts payable1,916,670 1,074,986 2,991,656 119,503 6,637 Other liabilities89,482 74,449 163,931 --Deferred
revenue10,440,000 -10,440,000 -1,893,438 Noncurrent liabilities:Due within one year: Bonded debt5,935,000 -5,935,000 345,000 -Capital leases113,667 -113,667 --Notes payable----30,000
Compensated absences-300,411 300,411 9,694 9,088 Due in more than one year:Bonded debt68,205,000 -68,205,000 5,435,000 -Capital leases288,327 -288,327 --Notes payable----52,447 Compensated
absences7,141,841 812,529 7,954,370 35,045 -Net pension obligation759,223 189,806 949,029 --Other post employment benefits14,420,602 3,639,325 18,059,927 --Refundable deposits-1,380,952
1,380,952 --Accrued landfill closure costs-2,320,742 2,320,742 --Long-term risk liability1,216,832 -1,216,832 --Total Liabilities112,188,846 10,051,259 10,051,259 122,240,105 5,960,530
1,991,610 Net AssetsInvested in capital assets, net of related debt41,646,196 92,962,928 88,452,674 256,675 4,979,887 Restricted for: Debt service2,684,021 -2,684,021 707,127 -Capital
projects5,266,918 9,254,080 14,520,998 --Future development---1,000,000 -Unrestricted(32,449,632) (30,859,522) (17,152,704) 7,684,805 796,958 Total Net Assets17,147,503$ 71,357,486$
88,504,989$ 9,648,607$ 5,776,845$ See accompanying notes to the basic financial statements13
CITY OF PORT ARTHUR, TEXAS Exhibit 2Statement of ActivitiesFor the Year Ended September 30, 2011 Program RevenuesPrimary GovernmentComponent UnitsFees, Fines andOperatingCapital GrantsEconomicPleasur
e Charges forGrants andandGovernmental Business-typeDevelopment IslandProgram ActivitiesExpensesServicesContributionsContributionsActivitiesActivitiesTotalCorporationCommissionGovernmental
activities General government13,672,278$ 665,108$ 6,917,374$ -$ (6,089,796)$ -$ (6,089,796)$ -$ -$ Culture and recreation4,649,682 114,721 16,312 (4,518,649) -(4,518,649) --Public safety28,627,623
2,343,485 2,322,708 (23,961,430) -(23,961,430) --Community development3,213,649 365,573 3,545,905 -697,829 -697,829 --Health and welfare3,767,992 170,333 1,406,191 -(2,191,468) -(2,191,468)
--Public transportation2,819,228 128,066 1,453,391 -(1,237,771) -(1,237,771) --Public works15,838,978 ---(15,838,978) -(15,838,978) --Interest on long term debt3,052,972 ---(3,052,972)
-(3,052,972) --Total governmental activities 75,642,402 3,787,286 15,661,881 -(56,193,235) -(56,193,235) --Business-type activities:Water and sewer16,125,058 18,072,757 -7,520,035 -9,467,734
9,467,734 --Solid waste6,683,056 7,426,041 ---742,985 742,985 --Total business-type activities22,808,114 25,498,798 -7,520,035 -10,210,719 10,210,719 --Total Primary Government98,450,516$
29,286,084$ 15,661,881$ 7,520,035$ (56,193,235) 10,210,719 (45,982,516) --Component UnitsEconomic Development Corp.(3,372,258) -Pleasure Island Commission-(3,904) Total Component Units(3,372,258)
(3,904) General RevenuesProperty taxes16,758,589 -16,758,589 --Industrial district payments24,302,981 -24,302,981 --Gross receipts taxes4,996,761 -4,996,761 --Sales8,330,199 8,330,199
4,164,991 -Other taxes1,109,479 -1,109,479 --Interest256,516 17,688 274,204 27,112 1,849 Miscellaneous1,039,621 1,039,621 317,733 -Transfers8,614,912 (8,614,912) --Total general revenues
and transfers65,409,058 (8,597,224) 56,811,834 4,509,836 1,849 Change in net assets9,215,823 1,613,495 10,829,318 1,137,578 (2,055) Net assets, beginning of year 7,931,680 69,743,991
77,675,671 8,511,029 5,768,855 Adjustment to beginning net assets, Note V. G.----10,045 Net assets, end of year17,147,503$ 71,357,486$ 88,504,989$ 9,648,607$ 5,776,845$ See accompanying
notes to the basic financial statements15
CITY OF PORT ARTHUR, TEXASExhibit 3Balance SheetGovernmental FundsSeptember 30, 2011CDBG/TDRANon MajorTotal Debt IKECapital GovernmentalGovernmental GeneralServiceFundProjectsFundsFundsAssetsCash
380,011$ 115,613$ -$ 61,574$ 613,557$ 1,170,755$ Investments2,756,201 2,500,000 -4,900,000 1,937,819 12,094,020 Due from other funds31,285,894 --291,070 234,572 31,811,536 Receivables
(net of allowance for doubtful accounts):Property taxes1,531,486 1,382,933 ---2,914,419 Accounts----1,481,045 1,481,045 Federal and state grants134,393 -6,058,477 91,796 6,306,706 12,591,372
Notes666,662 ----666,662 Inventories45,239 ---128,309 173,548 Prepaid items39,293 ---1,550,000 1,589,293 Total Assets36,839,179$ 3,998,546$ 6,058,477$ 5,344,440$ 12,252,008$ 64,492,650$
Liabilities and Fund BalancesLiabilities Wages payable1,498,043$ -$ -$ -$ 139,772$ 1,637,815$ Accounts payable1,571,058 -91,123 77,522 125,718 1,865,421 Due to other funds--5,967,354
-8,153,281 14,120,635 Other liabilities----89,482 89,482 Deferred revenue11,908,690 1,314,525 --1,345,634 14,568,849 Total Liabilities14,977,791 1,314,525 6,058,477 77,522 9,853,887
32,282,202 Fund Balances: Nonspendable:Inventory45,239 ----45,239 Prepaid items39,293 ---1,550,000 1,589,293 Restricted:Culture and recreation----13,922 13,922 Public safety----102,940
102,940 Public works----1,695 1,695 Debt service-2,684,021 --2,684,021 Capital projects---5,266,918 -5,266,918 Assigned:Culture and recreation----400,827 400,827 Community development----707,279
707,279 Unassigned, reported in: General fund21,776,856 ----21,776,856 Special revenue---(378,542) (378,542) Total fund balances21,861,388 2,684,021 -5,266,918 2,398,121 32,210,448 Total
liabilities andfund balances36,839,179$ 3,998,546$ 6,058,477$ 5,344,440$ 12,252,008$ Reconciliation to government-wide statement of net assetsCapital assets used in governmental activities
are not financial resources, and therefore, are not reported in these fund59,004,904 Other long-term assets are not available to pay for current period expenditures and, therefore, are
deferred in these fun4,128,849 Internal service funds are used by management to charge the costs of certain capital assets, employee benefitsand risk management activities to individual
funds. The assets and liabilities of the internal service funds are included in the governmental activities in the statement of net assets.18,264,968 Long term liabilities are not due
and payable in the current period, and therefore are not reported in these funds(96,461,666) Net assets of governmental activities17,147,503$ See accompanying notes to the basic financial
statements19
CITY OF PORT ARTHUR, TEXAS Exhibit 4 Statement of Revenues, Expenditures and Changes in Fund BalancesGovernmental Funds For the Year Ended September 30, 2011CDBG/TDRANon major Total
Debt IKECapital Governmental Governmental General ServiceFundProjects Funds Funds RevenuesTaxes:Property7,720,295$ 8,593,513$ -$ -$ -$ 16,313,808$ Penalty and interest380,543 ----380,543
Industrial district payments24,302,981 ----24,302,981 Gross receipts taxes4,996,761 ----4,996,761 Sales8,330,199 ----8,330,199 Other taxes148,388 ---961,091 1,109,479 Licenses and permits433,615
----433,615 User fees562,754 ---132,483 695,237 Fines and forfeitures2,149,118 ---216,776 2,365,894 Intergovernmental614,305 -6,604,066 313,308 8,020,966 15,552,645 Donations---9,240
9,240 Program revenue----346,166 346,166 Interest revenue167,788 19,999 -22,479 5,743 216,009 Miscellaneous309,278 554,491 -40,000 217,983 1,121,752 Total revenues50,116,025 9,168,003
6,604,066 375,787 9,910,448 76,174,329 ExpendituresCurrent:General government8,854,953 -3,669,358 -933,360 13,457,671 Culture and recreation3,648,983 ---854,262 4,503,245 Public safety28,402,351
---678,683 29,081,034 Community development----2,976,039 2,976,039 Health and welfare1,982,359 ---1,785,573 3,767,932 Public transportation----2,307,311 2,307,311 Public works9,799,980
--173,895 -9,973,875 Capital outlay---4,057,424 4,057,424 Debt service: Principal retirement-6,085,000 ---6,085,000 Interest and fiscal charges-3,026,995 ---3,026,995 Total Expenditures52,688,626
9,111,995 3,669,358 4,231,319 9,535,228 79,236,526 Excess (deficiency) of revenues over expenditures(2,572,601) 56,008 2,934,708 (3,855,532) 375,220 (3,062,197) Other financing sources
(uses)Issuance of general obligationrefunding debt-9,906,922 ---9,906,922 Payment to refunded bondescrow agent-(10,061,993) ---(10,061,993) Transfers in12,174,072 --171,000 1,136,168
13,481,240 Transfers out(3,976,643) (425,443) (2,934,708) -(792,123) (8,128,917) Total other financing sources (uses)8,197,429 (580,514) (2,934,708) 171,000 344,045 5,197,252 Net changes
in fund balances5,624,828 (524,506) -(3,684,532) 719,265 2,135,055 Fund balances, beginning of year16,236,560 3,208,527 -8,951,450 1,678,856 30,075,393 Fund balances, end of year21,861,388$
2,684,021$ -$ 5,266,918$ 2,398,121$ 32,210,448$ See accompanying notes to the basic financial statements20
CITY OF PORT ARTHUR, TEXASExhibit 5Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balancesof the Governmental Funds to the Statement of ActivitiesFor the
year ended September 30, 2011Amounts reported for governmental activities in the statement of activities aredifferent because:Net change in fund balances -total governmental funds 2,135,055$
Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful livesand reported
as depreciation expense. This is the amount by which capital outlaysexceeded depreciation in the current period.(2,984,945) Revenues in the statement of activities that do not provide
current financial resources arenot reported as revenues in the funds.10,612 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment
of the principal of long-term debt consumes the current financial resources of governmentalfunds. Neither transaction, however, has any effect on net assets. Also, governmental funds
report the effect of issuance cost, premiums, discounts, and similar items when debt is first issued, whereas theamounts are deferred and amortized in the statement of activities. This
amount is the net effect of thesedifferences in the treatment of long-term debt and related items.Bond principal retired6,085,000 Some expenses reported in the statement of activities
do not require the use of currentfinancial resources and, therefore, are not reported as expenditures in governmental funds.Increase in long term accrued compensated absences889,079
Increase in net pension obligation(253,874) Decrease in other post employment benefits68,348 Internal service funds are used by management to charge the costs of certain capital assetsand
employee benefits to individual funds. The net revenue of certain activities of internal service funds is reported with governmental activities. Change in net assets3,039,446 Net amount
allocated to business activities175,753 Change in net assets of governmental activities9,164,474$ 21
CITY OF PORT ARTHUR, TEXASExhibit 6General FundStatement of Revenues, Expenditures and Changes in Fund BalancesBudget and Actual (Budget Basis)For the Year Ended September 30, 2011Variance
withBudgeted AmountsActualFinal BudgetAmountsPositiveOriginalFinalBudget Basis(Negative)Revenues Taxes:Property taxes8,180,000$ 8,180,000$ 7,720,295$ (459,705)$ Penalty and interest295,000
295,000 380,543 85,543 Industrial district payments20,822,080 20,822,080 20,822,981 901 Gross receipts taxes4,310,000 4,310,000 4,996,761 686,761 Sales tax7,800,000 7,800,000 8,330,199
530,199 Other taxes120,000 120,000 148,388 28,388 Licenses and permits668,300 668,300 433,615 (234,685) User fees330,900 330,900 562,754 231,854 Fines and forfeitures1,705,000 1,705,000
2,149,118 444,118 Intergovernmental457,000 457,000 614,305 157,305 Interest revenue30,000 30,000 167,788 137,788 Miscellaneous102,000 102,000 309,278 207,278 Total revenues44,820,280
44,820,280 46,636,025 1,815,745 ExpendituresCurrent:General government: Administration1,618,232 1,742,232 1,513,127 229,105 City secretary1,179,537 1,179,537 1,149,657 29,880 City attorney569,087
569,087 537,050 32,037 Finance3,648,228 3,648,228 3,388,075 260,153 Human resources680,412 680,412 563,666 116,746 Neighborhood revitalization625,164 650,163 401,965 248,198 Community
services1,409,106 1,409,106 1,301,413 107,693 Culture and recreation:Civic center585,030 585,030 531,024 54,006 Parks and recreation2,002,062 2,002,062 1,972,217 29,845 Library1,260,132
1,260,132 1,145,742 114,390 Public safety:Police17,401,027 17,401,027 17,338,794 62,233 Fire11,108,165 11,233,165 11,063,557 169,608 Health and welfare2,172,898 2,172,898 1,982,359 190,539
Public works10,816,148 10,816,148 9,799,980 1,016,168 Total expenditures55,075,228 55,349,227 52,688,626 2,660,601 Excess (deficiency) of revenues over expenditures(10,254,948) (10,528,947)
(6,052,601) 4,476,346 Other financing sources (uses):Transfers in13,412,519 13,412,519 12,174,072 (1,238,447) Transfers out(2,282,000) (2,722,000) (3,976,643) (1,254,643) Total other
financing sources (uses)11,130,519 10,690,519 8,197,429 (2,493,090) Excess (deficiency) of revenues and other sourcesover expenditures and other uses875,571 161,572 2,144,828 1,983,256
Fund balance,
beginning of year -budget basis,as previously reported29,756,560 29,756,560 29,756,560 -Prior year adjustment, Note V.F.400,000 400,000 400,000 -Fund balance, beginning of year -budget
basis,as restated30,156,560 30,156,560 30,156,560 -Fund balance, end of year -budget basis31,032,131$ 30,318,132$ 32,301,388$ 1,983,256$ See accompanying notes to the basic financial
statements 23
CITY OF PORT ARTHUR, TEXASExhibit 7Statement of Net AssetsProprietary FundsSeptember 30, 2011GovernmentalActivities-Water andSolid InternalSewerWasteTotalsService FundsCurrent assets:
Cash2,631,551$ -$ 2,631,551$ 721,596$ Investments9,254,080 -9,254,080 4,310,413 Due from other funds112,806 -112,806 7,048,823 Receivables (net, where applicable, of allowance for doubtful
accounts)Accounts2,100,710 1,208,518 3,309,228 59,636 Federal and state grants29,248 -29,248 -Inventories713,481 -713,481 -Prepaid expense12,410 -12,410 131,000 Total current assets14,854,286
1,208,518 16,062,804 12,271,468 Noncurrent assets:Capital assets:Land362,844 501,127 863,971 -Buildings35,348,650 14,650 35,363,300 -Improvements108,288,422 -108,288,422 -Equipment3,429,822
410,878 3,840,700 23,137,120 Construction in progress17,875,465 -17,875,465 -Total capital assets165,305,203 926,655 166,231,858 23,137,120 Accumulated depreciation(72,842,402) (426,528)
(73,268,930) (18,213,618) Capital assets, net of accumulated depreciation92,462,801 500,127 92,962,928 4,923,502 Total assets107,317,087$ 1,708,645$ 109,025,732$ 17,194,970$ LiabilitiesCurrent
liabilities:Wages payable149,401$ 108,658$ 258,059 24,387$ Accounts payable876,628 198,358 1,074,986 51,249 Due to other funds23,771,058 1,081,469 24,852,527 -Capital leases payable
-current portion-113,667 Compensated absences238,596 61,815 300,411 -Total current liabilities25,035,683 1,450,300 26,485,983 189,303 Noncurrent liabilities:Refundable deposits1,380,952
-1,380,952 -Other liabilities74,449 -74,449 -Capital leases payable---288,327 Accrued landfill closure costs-2,320,742 2,320,742 -Compensated absences616,809 195,720 812,529 -Net pension
benefit obligation119,578 70,228 189,806 -Other post employment benefits2,292,775 1,346,550 3,639,325 -Long-term risk liability---1,216,832 Total non current liabilities4,484,563 3,933,240
8,417,803 1,505,159 Total liabilities29,520,246 5,383,540 34,903,786 1,694,462 Net AssetsInvested in capital assets92,462,801 500,127 92,962,928 4,521,508 Restricted for construction9,254,080
-9,254,080 -Unrestricted(23,920,040) (4,175,022) (28,095,062) 10,979,000 Total net assets 77,796,841$ (3,674,895)$ 74,121,946 15,500,508$ Reconciliation to government-wide statement
of net assets: Adjustment to reflect the consolidation of internal service funds activities related to enterprise funds(2,764,460) Net assets of business-type activities71,357,486$ See
accompanying notes to the basic financial statements27Business Type Activities-Enterprise FundsAssets
CITY OF PORT ARTHUR, TEXAS Exhibit 8Statement of Revenues, Expenses and Changes in Fund Net AssetsProprietary FundsFor the Year Ended September 30, 2011GovernmentalActivities-Water and
Solid InternalSewerWasteTotalService FundsOperating RevenuesCharges for services18,168,289$ 7,506,262$ 25,674,551$ 11,380,984$ Operating ExpensesPersonnel services6,168,556 2,933,890
9,102,446 -Other operating expenses5,444,224 3,248,954 8,693,178 7,413 Depreciation4,199,998 1,407 4,201,405 2,033,610 Health and life insurance---7,710,323 Employee injury claims---1,095,617
Other employee benefits---575,979 Damage claims---317,302 Landfill closure costs-192,946 192,946 -Loss on uncollectable accounts312,280 305,859 618,139 -Total operating expenses16,125,058
6,683,056 22,808,114 11,740,244 Income from operations2,043,231 823,206 2,866,437 (359,260) Nonoperating revenues (expenses)Interest revenue17,688 -17,688 40,503 Interest expense--(25,977)
Gain (loss) on sale of capital assets--21,592 Total nonoperating revenues (expenses)17,688 -17,688 36,118 Income before contributions and transfers2,060,919 823,206 2,884,125 (323,142)
Capital contributions -federal and state grants7,520,035 -7,520,035 100,000 Transfers in---3,564,917 Transfers out(7,829,972) (784,940) (8,614,912) (302,329) Net contributions and transfers(309,937)
(784,940) (1,094,877) 3,362,588 Change in net assets1,750,982 38,266 1,789,248 3,039,446 Net assets, beginning of year76,045,859 (3,713,161) 12,461,062 Net assets, end of year77,796,841$
(3,674,895)$ 15,500,508$ Reconciliation to government-wide statement of net assets: Adjustment to reflect the consolidation of internal service fund activities related to enterprise
funds(175,753) Increase in net assets of business-type activities1,613,495$ See accompanying notes to the basic financial statements28Business-Type Activities-Enterprise Funds
CITY OF PORT ARTHUR, TEXAS Exhibit 9Statement of Cash FlowsProprietary FundsFor the Year Ended September 30, 2011GovernmentalActivities-Water and SolidInternalSewerWasteTotalService
FundsCASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers and users20,675,334$ 7,518,884$ 28,194,218$ 11,350,799$ Payments to employees(6,174,616) (2,933,168) (9,107,784) (551,729)
Payments to vendors(6,344,881) (3,358,166) (9,703,047) (10,201,856) Net cash provided by operating activities8,155,837 1,227,550 9,383,387 597,214 CASH FLOWS FROM NONCAPITAL FINANCING
ACTIVITIES Advances from other funds4,352,065 (442,610) 3,909,455 (4,122,405) Transfers from other funds---2,195,443 Transfers to other funds(7,829,972) (784,940) (8,614,912) (302,329)
Net cash provided (used) by noncapital financing activities(3,477,907) (1,227,550) (4,705,457) (2,229,291) CASH FLOWS FROM CAPITAL AND RELATED ACTIVITIES Acquisition and construction
of capital assets(10,576,947) -(10,576,947) (636,545) Principal paid on capital debt---(399,466) Interest paid on capital debt---(25,977) Federal and state capital grants7,520,035 -7,520,035
100,000 Proceeds from sale of assets--21,592 Net cash (used) by capital and related financing activities(3,056,912) -(3,056,912) (940,396) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds
from sale of investments992,845 -992,845 4,060,270 Purchase of investments--(1,810,414) Interest on cash and investments17,688 -17,688 40,503 Net cash provided by investing activities1,010,533
-1,010,533 2,290,359 Net (decrease) in cash 2,631,551 -2,631,551 (282,114) Cash, beginning of year---1,003,710 Cash, end of year2,631,551$ -$ 2,631,551$ 721,596$ Reconciliation of income
from operations to net cash provided by operating activities:Income from operations2,043,231$ 823,206$ 2,866,437$ (359,260)$ Adjustments to reconcile income from operations to net cash
provided (used) by operating activities:Depreciation 4,199,998 1,407 4,201,405 2,033,610 Provision for doubtful accounts312,280 305,859 618,139 -Change in assets and liabilities:(Increase)
decrease in accounts receivable(525,518) 12,622 (512,896) (26,120) (Increase) decrease in grants receivable3,019,710 -3,019,710 -(Increase) decrease in inventory(304,556) -(304,556)
-(Increase) decrease in prepaid expense(12,410) -(12,410) -Increase (decrease) in wages payable(79,828) 4,226 (75,602) 24,250 Increase (decrease) in accounts payable(583,691) (109,212)
(692,903) 14,059 Increase in deposits12,853 -12,853 -Increase in landfill closure costs.192,946 192,946 -Increase (decrease) in compensated absences33,782 (26,987) 6,795 -Increase in
net pension benefit obligation39,986 23,483 63,469 -Increase in long-term risk liability---(1,089,225) Net cash provided by operating activities8,155,837$ 1,227,550$ 9,383,387$ 597,314$
See accompanying notes to the basic financial statements29Business-Type Activities-Enterprise Funds
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 31 I. Summary of Significant Accounting Policies The financial statements of the City of Port Arthur,
Texas (the “City”) have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board
(GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following represents the significant accounting policies
used by the City. A. REPORTING ENTITY The City of Port Arthur, Texas (City) was incorporated under the laws of the State of Texas, May 30, 1898 and has operated under a Council-Manager
form of government since March 8, 1932. As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Port Arthur
(the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or
financial relationships with the City. Each discretely presented component unit is reported in a separate column in the government-wide financial statements (see note below for description)
to emphasize that each is legally separate from the government. Discretely presented component units The Port Arthur Section 4A Economic Development Corporation (EDC), an entity legally
separate from the City, is governed by a nine member board of directors appointed by the City Council. The EDC is funded by a one half cent additional sales tax dedicated to economic
development activities, which was approved by voters November 7, 1995 and implemented April 1, 1996. The budget, financial reports, and bonds of the EDC must be approved by the City
Council. The Pleasure Island Commission (Commission) was created by the City’s Charter and an Act of the State of Texas to manage, control, maintain, operate, and develop lands owned
by the City in and under Sabine Lake. The Commission is governed by a nine-member commission appointed by the City Council. Although it is a legally separate entity, the Commission’s
operations are limited solely to property owned by the City and the City Council must approve many of the Commissions transactions, such as the issuance of bonds. The notes to the financial
statements include disclosures pertaining to the City as the primary government and also the Port Arthur Section 4A Economic Development Corporation as a component unit. There is not
a separately issued financial statement. Disclosures related to the Pleasure Island Commission are not included in these disclosures unless otherwise noted. The complete financial report
of the Pleasure Island Commission can be obtained directly from their administrative offices: Pleasure Island Commission, 520 Pleasure Pier Blvd., Port Arthur, Texas 77640. B. GOVERNMENT-WIDE
AND FUND FINANCIAL STATEMENTS The government-wide financial statements (i.e. the statement of net assets and the statement of changes in net assets) report information on all of the
activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which
normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.
Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities
demonstrates the degree to which the direct expenses of a given structure or segment, are offset by program revenues. Direct expenses are those that are clearly identifiable with a
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 32 specific function or segment. Program revenues include 1) charges to customers or applicants who purchase,
use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or
capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial
statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the
fund financial statements. C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND BASIS OF PRESENTATION The government-wide financial statements are reported using the economic resources measurement
focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as
soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus
and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible
within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenue to be available if they are collected
within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures
as well as expenditures related to compensated absences and claims and judgments are recorded only when payment is due. Property taxes, franchise taxes, licenses and interest associated
with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments
receivable due within the current period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available
only when cash is received by the government. The City reports the following major governmental funds: • The general fund is the government’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 debt service fund accounts for the resources accumulated and payments
made for principal and interest on long-term general obligation debt of governmental funds. • The community development block grant /Texas General Land Office hurricane Ike recovery
fund accounts for the activities under this Federal grant program. • The capital projects fund accounts for the City’s capital improvement plan. The City reports the following major
proprietary funds: • The water and sewer fund accounts for the activities of the water and sewer utility of the City. This fund operates the water treatment and distribution functions,
along with the wastewater collection and treatment. • The solid waste fund accounts for the activities of the solid waste function of the City. The fund operates the municipal landfill,
along with the collection of residential and commercial garbage, trash and green waste.
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 33 Additionally, the City reports the following fund type: • Internal service funds account for general
liability insurance, equipment replacement, and employee benefit costs. These costs are reimbursed, on a user cost basis, by departments. The internal service funds predominantly serve
the governmental funds and are reported accordingly. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the
government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board.
Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government
has elected not to follow subsequent private-sector guidance. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions
to this general rule are charges for administrative services between funds. Elimination of these charges would distort the direct costs and program revenues reported for the various
functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions,
and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering
goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s water and sewer and solid waste funds are from charges to customers
for sales and services. Operating expenses from the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital
assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use,
it is the government’s policy to use restricted resources first, and then unrestricted resources as they are needed. D. ASSETS, LIABILITIES AND EQUITY 1. Deposits and Investments The
City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with maturities of three months or less. Statutes of the State of Texas
and policies adopted by City Council authorize the City to invest in obligations of the U.S. Treasury, securities issued by U.S. government agencies, bankers’ acceptances, repurchase
agreements, certificates of deposit, and local government investment pools. Investments are stated at fair value in all funds. 2. Property Taxes Receivable The City’s property taxes
are levied annually, October 1, on the basis of assessed values as of January 1 of that calendar year, which are certified by the Jefferson County Appraisal District. Taxes are applicable
to the fiscal year in which they are levied. They become delinquent on February 1 of the subsequent calendar year at which time the applicable property is subject to lien, and penalties
and interest are assessed. 3. Receivables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible.
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 34 4. Interfund Receivables and Payables Interfund receivables and payables arise from interfund transactions
and are recorded by all funds affected in the period in which transactions are executed. 5. Inventories and Prepaid Items Inventories are valued at cost using the weighted average cost
method. Payments made to vendors for services that will benefit future accounting periods are recorded as prepaid items. 6. Capital Assets Capital assets, which include property, plant,
equipment and infrastructure assets (e.g. roads, bridges, sidewalks and similar items) are reported in the applicable governmental or business-type activities columns in the government-wide
financial statements. The government defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets
are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets’ lives are not capitalized. Property, plant and equipment of the
primary government are depreciated using the straight line method over the following estimated useful lives: Type of Asset Buildings Life 20 -55 years Improvements 20 -60 years Equipment
2 -10 years 7. Compensated Absences The City’s employees earn vacation and sick leave, which may be accumulated, subject to certain restrictions, until paid on termination. Employees
may accumulate vacation, in excess of that earned in the current year, only with the approval of the City Manager. Upon termination, employees are paid for all unused vacation that has
been accumulated. Accumulated vacation is expected to be liquidated with expendable available financial resources, and is reported as expenditure and a liability in the governmental
or proprietary fund that will pay for it. The limits for sick leave accumulation vary by hire date and position classification. Civil service employees (police officers and firefighters)
may accumulate sick leave without limit. Upon termination, they are paid for a maximum of 140 days. Non-civil service employees accumulate sick leave up to their limit, which is based
upon their hire date. For employees hired before May 31, 1989, the limit is 140 days. For employees hired after that date the limit is 90 days. This accumulated sick leave is not payable
upon termination, for non-civil service employees, until they have completed five (5) years of service. For non-civil service employees hired after January 1, 1996, the accumulated sick
leave will be paid at 50% of their unused, accumulated balance. After ten (10) years of service, these employees will be paid for 100% of their unused, accumulated balance, up to a maximum
of 60 days. Accumulated sick leave, attributable to governmental funds, that is not expected to be liquidated with available financial resources are reported as long term liabilities
on the statement of net assets. No expenditure is reported in the fund financial statements for these amounts. Those amounts attributable to proprietary funds are recorded as expenses
and liabilities in those funds as the benefits accrue to the employee. 8. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial
statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement
of net assets. Bond premiums and
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 35 discounts, as well as issuance costs, are deferred and amortized over the life of the bonds. Bonds
payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund
financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported
as other financial sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance
costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 9. Fund Equity Beginning with fiscal year 2011, the City of Port Arthur,
Texas implemented GASB Statement No. 54 “Fund Balance Reporting and Governmental Fund type Definitions.” This Statement provides more clearly defined fund balance categories to make
the nature and extent of the constraints placed on a government’s fund balances more transparent. The following classifications describe the relative strength of the spending constraints:
Nonspendable fund balance – amounts that are not in spendable form or are required to be maintained intact. As such, the inventor and prepaid items have been properly classified in the
Governmental Funds Balance Sheet. Restricted fund balance – amounts that can be spent only for specific purposes because of local, state or federal laws, or externally imposed conditions
by grantors or creditors. Committed fund balance – amounts constrained to specific purposes by the City itself, using its highest level of decision – making authority, the City Council.
To be reported as committed, amounts cannot be used for any other purposes unless the City takes the same highest level of action to remove or change the constraint. The City establishes,
modifies, or rescinds fund balance commitments by passage of a resolution. Assigned fund balance – balances that are ‘intended’ for a defined purpose. This is generally the purpose of
certain special revenue funds. The Assignment can be expressed by the City Manager, or his designee, the Director of Finance. The city did have assigned fund balance as of September
30, 2011. Unassigned fund balance – amounts that are available for any purpose. Balance that has not been restricted, committed, or assigned. When an expenditure is incurred for purposes
for which both restricted and unrestricted fund balance is available, the City considers restricted fund to have been spent first. The City has adopted a policy stating which fund balance
category is spent first when restricted, committed, assigned or unassigned fund balances are available. II. Reconciliation of Government-wide Financial Statements Explanation of Reclassification
Required on the Government-Wide Statement of Net Assets When governmental activities report debt that financed the acquisition of capital assets that business-type activities report,
that debt is not considered to be capital-related debt of the governmental activities. Such debt should not be part of the calculation of net assets invested in capital assets, net of
related debt within that reporting unit. However, when the total reporting entity is presented as the reporting unit, the debt is related to the capital assets within that reporting
unit. Thus reconciliation is necessary as follows:
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 36 Governmental ActivitiesBusiness-type ActivitiesReclassificationTotalNet AssetsInvested in capital,
net of41,646,196$ 92,962,928$ (46,156,450)$ 88,452,674$ related debtRestricted for: Debt service2,684,021 --2,684,021 Capital projects5,266,918 9,254,080 -14,520,998 Unrestricted(32,449,632)
(30,836,038) 46,156,450 (17,129,220) Total net assets17,147,503$ 71,380,970$ -$ 88,528,473$ Primary Government Explanation of Certain Differences Between the Governmental Funds Balance
Sheet and the Government-wide Statement of Net Assets The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and net assets-governmental
activities as reported in the government-wide financial statement of net assets. One element of that reconciliation explains, “long-term liabilities, including bonds payable are not
due and payable in the current period and therefore are not reported in the funds.” The details of this $96,461,666 difference are as follows: Bonds payable74,140,000$ Compensated absences7,141,841
Net pension obligation -TMRS759,223 Other post employment benefits14,420,602 Net adjustment to reduce fund balances-total governmental funds to arrive at net assets -governmental activities96,461,666
$ Explanation of Certain Differences Between the Governmental Funds Statement of Revenue, Expenditures and Changes in Fund Balance and the Government-wide Statement of Activities The
governmental fund statement of revenue, expenditures and changes in fund balances includes reconciliation between net changes in fund balances – total governmental funds and changes
in net assets of governmental activities as reported in the government-wide statement of activities. One element of the reconciliation explains, “Governmental funds report capital outlays
as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense.” The details of
this ($2,984,945) difference are as follows: Capital outlay4,415,975$ Depreciation expense(7,400,920) Net adjustment to increase fund balances-total governmental funds to arrive at net
assets -governmental activities(2,984,945)$
CITY OF PORT ARTHUR, TEXAS Notes to
the Financial Statements September 30, 2011 37 III. Stewardship, Compliance and Accountability A. BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with generally
accepted accounting principles (GAAP) for the following governmental fund types of the primary government: the General Fund, the Debt Service Fund, the Library Special Fund, the Golf
Course Fund, the Police Special Fund, Municipal Court Technology Fund, the Hotel Occupancy Tax Fund, and the Transit System Fund. The Capital Projects fund is budgeted on a project basis,
rather than an annual basis. The remaining governmental type funds are not budgeted. Budgets for the Enterprise Funds and the Internal Service Funds are adopted on a basis not consistent
with generally accepted accounting principles because the budget presents capital outlays as expenditures and there is no provision for depreciation expense. All operating funds of the
Port Arthur Section 4A Economic Development Corporation have annual budgets adopted on a basis consistent with GAAP. On or before August 31 of each year the City Manager presents the
City Council with a proposed budget for the ensuing fiscal year. The Council holds public hearings and a final budget must be prepared and adopted by September 30. Budgets are appropriated
by fund and department. The legal level of control is the department level. The City Council made eleven supplementary budgetary appropriations during the year. These ordinances added
$7.3 million in funding for various capital projects, development projects, equipment purchases, additional personnel, and unanticipated operating cost increases. The City’s department
heads may make transfers of appropriations within department line items with the City Manager’s approval. Transfers between departments require the approval of the City Council. General
Fund Statement of Revenues, Expenditures and Changes in Fund Balances, Budget and Actual (Budget Basis) is presented as Exhibit 6, on Page 23, of this report. The following is a reconciliation
of the differences between budget and GAAP basis: B. EXCESS OF EXPENDITURES OVER APPROPRIATIONS For the year ended September 30, 2011, expenditures exceeded appropriations in none of
the departments of the City of Port Arthur. In the General Fund total expenditures were $2,452,377 less than the budget, as amended. Actual amount (budgetary basis) of industrial revenue
received in fiscal 2011 as reported on Exhibit 620,822,981$ Year two of the five year amortization of prepaid industrial payments received in fiscal 2009 recorded as deferred revenue
3,480,000 GAAP Basis industrial revenue as reported on Exhibit 424,302,981$ Actual fund balance (budget basis) as reported on Exhibit 632,301,388$ Balance of advance industrial payments,
recorded as deferredrevenue for GAAP purposes(10,440,000) GAAP Basis fund balance as reported on Exhibit 421,861,388$
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 38 C. DEFICIT FUND EQUITY The following funds had deficit fund equity, or net assets, as of September
30, 2011: FundAmountHealth Grants Fund810,733$ JAG ARRA6,392 CDBG ARRA11,906 Solid Waste Fund3,651,412 IV. Detailed Notes on all Funds A. CASH AND INVESTMENTS For the purposes of managing
cash and investments, the funds of the Port Arthur Section 4A Economic Development Corporation (EDC) are pooled with those of the City. At year end, the carrying amount of these deposits
was $4,556,335 and the bank balance was $6,371,490. Of the bank balance, 100% was covered by federal depository insurance or by collateral held by the City’s agent in the City’s name.
The carrying amount of deposits for the Pleasure Island Commission, a discretely presented component unit, was $1,979,453. All balances are entirely insured or collateralized with securities
held by a financial institution in the Commission’s name. At year end, the City’s investment balances, including funds of the Port Arthur Section 4A Economic Development Corporation,
were as follows: AverageFairMaturityInvestment TypeValue(days)High yield deposits8,024,220$ 1Certificates of Deposit250,000 49Federal agency coupon secrurities1,945,000 350Texas Local
Government Investment Pool (Tex Pool)24,640,481 1Total fair value34,859,701$ Portfolio weighted average maturity21 Interest rate risk. In accordance with its investment policy, the City
manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio to less than 366 days for operating funds. Credit risk. The State
of Texas authorizes investment instruments allowed for local government funds. The City’s investment policy further restricts those authorized investments, maintaining safety and preservation
of principal as the primary goal of the policy. The City’s investments include deposits in the Texas Local Government Investment Pool (TexPool). Under the TexPool Participation Agreement,
administrative and investment services to TexPool are provided by Federated Investors Inc. through an agreement with the State of Texas Comptroller of Public Accounts. The State of Texas
Comptroller of Public Accounts is the sole officer, director and shareholder of the Texas Treasury Safekeeping Trust Company authorized to operated TexPool. TexPool operates on a $1
net asset value basis. In order to maintain a stable $1 price of the fund, the pool will sell portfolio holdings if the ratio of market value of the portfolio divided by the book value
of the portfolio is less that .995 or greater than 1.005. Tex Pool is rated AAA by Standard and Poor’s. Concentration of credit risk. The City’s investment policy limits investments
from a specific issuer, and by investing in instruments of varying maturities.
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 39 Custodial credit risk. In the case of deposits, this is the risk that in the event of a bank failure,
the government’s deposits may not be returned to it. The City does not have a deposit policy for custodial risk. As of September 30, 2010, none of the City’s deposits were subject to
custodial credit risk. For an investment, this is the risk that, in the event of the failure of counterparty, the government will not be able to recover the value of its investments
or collateral securities that are in the possession of an outside party. The City limits this risk by contracting with a third party custodian for securities. This bank holds the securities
in the City’s name which are evidenced by safekeeping receipts of the institution. B. RECEIVABLES Receivables as of September 30, 2011 for the City’s individual major funds and non-major
and internal service funds in the aggregate, including applicable allowances for uncollectible amounts, are as follows: GeneralDebt ServiceProprietary FundsNonmajor Governmental and
Other FundsTotalReceivables:Taxes1,801,748$ 1,626,980$ -$ -$ 3,428,728$ Accounts7,207,436 -12,401,848 1,395,005 21,004,289 Intergovernmental134,393 -29,248 6,306,706 6,470,347 Notes886,662
---886,662 Gross receivables10,030,239 1,626,980 12,431,096 7,701,711 31,790,026 Less: allowance foruncollectibles(7,739,152) (244,047) (9,092,620) (86,040) (17,161,859) Net total receivables2,291,08
7$ 1,382,933$ 3,338,476$ 7,615,671$ 14,628,167$ Governmental funds report deferred revenues in connection with receivables for revenues that are not considered to be available to liquidate
liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current
fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Delinquent property taxes receivable (general general
and debt service funds)2,783,215$ Advance industrial district payments (general fund)10,440,000 Grant activity (special revenue funds)369,783 Total deferred revenue13,592,998$
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 40 C. CAPITAL ASSETS Capital asset activity of the primary government for the year ended September 30,
2011 was as follows: BalanceIncreaseDecreaseBalanceGovernmental activitiesCapital assets, not being depreciatedLand 2,474,132$ -$ -$ 2,474,132$ Construction in process13,113,198 4,057,424
(9,057,091) 8,113,531 Total capital assets, not being depreciated15,587,330 4,057,424 (9,057,091) 10,587,663 Capital assets, being depreciatedBuildings20,464,102 1,489,194 -21,953,296
Improvements8,526,264 3,250,786 -11,777,050 Infrastructure249,663,476 4,317,111 -253,980,587 Equipment41,181,159 995,097 (631,434) 41,544,822 Total capital asssets, being depreciateed319,835,001
10,052,188 (631,434) 329,255,755 Less: accumulated depreciation for:Buildings(12,804,733) (669,774) -(13,474,507) Improvements(5,019,673) (899,789) -(5,919,462) Infrastructure(221,300,115)
(4,842,315) -(226,142,430) Equipment(27,914,110) (3,025,954) 561,450 (30,378,614) Total accumulated depreciation(267,038,631) (9,437,832) 561,450 (275,915,013) Total capital assets,
being depreciated, net52,796,370 614,356 (69,984) 53,340,742 Governmental activities, capital assets, net68,383,700$ 4,671,780$ (9,127,075)$ 63,928,405$ BeginningEnding BalanceIncreaseDecreaseBalance
Business type activitiesCapital assets, not being depreciatedLand 362,843$ -$ -$ 362,843$ Construction in process8,848,584 10,539,137 (1,512,254) 17,875,467 Total capital assets, not
being depreciated9,211,427 10,539,137 (1,512,254) 18,238,310 Capital assets, being depreciatedBuildings35,348,650 --35,348,650 Improvements106,776,168 1,512,254 -108,288,422 Equipment4,318,666
37,811 -4,356,477 Total capital asssets, being depreciated146,443,484 1,550,065 -147,993,549 Less: accumulated depreciation for:Buildings(13,710,236) (1,041,838) -(14,752,074) Improvements(53,560,077
) (3,158,161) -(56,718,238) Equipment(1,797,211) (1,407) -(1,798,618) Total accumulated depreciation(69,067,524) (4,201,406) -(73,268,930) Total capital assets, being depreciated, net77,375,960
(2,651,341) -74,724,619 Business type activities, capital assets, net86,587,387$ 7,887,796$ (1,512,254)$ 92,962,929$
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 41 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental
activities:General government286,921$ Public safety526,368 Public works5,727,860 Community development242,792 Culture and recreation112,793 Health and welfare12,291 Public transportation491,895
Captial assets held by the government's internal service funds are charged to the various functions based on their usage of assets2,033,610 Total depreciation expense -governmental activities9,434,53
0$ Business type activities:Water and sewer4,199,999$ Solid waste1,407 Total depreciation expense -buisness type activities4,201,406$ Construction commitments The primary government
has active construction projects as of September 30, 2011. At year end, the City’s major commitments with contractors are as follows:ContractSpent thruRemainingProjectAmount9/30/2011CommitmentSabine
Pass Standpipe1,029,000$ -$ 1,029,000$ Wastewater Plant Generators1,192,606-1,192,606Sanitary Sewer Construction3,022,163 2,958,699 63,464 Activity for the capital assets of the Port
Arthur Economic Development Corporation, for the year ended September 30, 2011, was as follows: Port Arthur Economic Development Corporation Beginning EndingBalanceIncreaseDecreaseBalanceGovernmental
activitiesCapital assets, not being depreciatedLand5,757,631$ -$ -$ 5,757,631$ Total capital assets, not being depreciated5,757,631 --5,757,631 Capital assets being depreciatedBuilding315,480
--315,480 Equipment35,826 --35,826 Less: accumulated depreciation(53,704) (18,558) -(72,262) Total capital assets being depreciated297,602 (18,558) -279,044 Governmental activites, capital
assets, net6,055,233$ (18,558)$ -$ 6,036,675$
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 42 Activity for the capital assets of the Pleasure Island Commission, for the year ended September 30,
2011, was as follows: Pleasure Island Commission BeginningEnding BalanceIncreaseDecreaseBalanceGovernmental ActivitiesCapital assets, being depreciated:Buildings and improvements4,789,225$
-$ -$ 4,789,225$ Total capital assets being depreciated4,789,225 --4,789,225 Less:Accumulated depreciation for:Buildings and improvements(1,959,285) (152,660) -(2,111,945) Total accumulated
depreciation(1,959,285) (152,660) -(2,111,945) Governmental Activities, capital assets, net2,829,940$ (152,660)$ -$ 2,677,280$ Business-type ActivitiesCapital assets, not being depreciated:Constructi
on in progress-$ -$ -$ -$ Total capital assets, not being depreciated----Capital assets, being depreciated:Buildings and improvements4,104,255 --4,104,255 Equipment243,660 --243,660
Total capital assets being depreciated4,347,915 --4,347,915 Less: accumulated depreciation for:Buildings and improvements(1,691,384) (122,778) -(1,814,162) Equipment (228,084) (3,060)
-(231,144) Total accumulated depreciation(1,919,468) (125,838) -(2,045,306) Total capital assets, being depreciated, net2,428,447 (125,838) -2,302,609 Business-type activities, capital
assets, net2,428,447 (125,838) -2,302,609 Total assets5,258,387$ (299,334)$ -$ 4,959,053$ D. INTERFUND PAYABLES, RECEIVABLES AND TRANSFERS Interfund balances resulted from a time lag
between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between
funds are made. These balances also include the amount of working capital loans made from the general fund and debt service fund that are expected to be collected in the subsequent year.
The composition of interfund balances as of September 30, 2011, is as follows:
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 43 InterfundInterfundReceivablesPayablesGovernmental Fund Types:General fund31,285,893$ -$ CDBG /Ike Fund-5,967,354
Capital Projects291,070 -Nonmajor funds234,572 8,153,281 Governmental total31,811,535 14,120,635 Proprietary Fund Types:Enterprise FundsWater and Sewer fund112,806 23,771,058 Solid Waste
Fund-1,081,469 Enterprise Funds total112,806 24,852,527 Internal service funds7,048,823 -Proprietay funds total7,161,629 24,852,527 Total interfund receivables and payables38,973,164$
38,973,162$ Interfund transfers are budgeted cost allocations and reimbursements between funds for items such as administrative and insurance reimbursements. Certain transfers also fund
cash matches as required under grants. Transfers InTransfers OutGovernmental Fund Types:General fund12,174,042$ 3,976,642$ Debt service fund-425,443 GLO/Ike fund-2,934,708 Capital Projects171,000
-Nonmajor funds1,136,168 792,123 Governmental total13,481,210 8,128,916 Proprietary Fund Types:Enterprise FundsWater and Sewer fund-7,829,972 Solid Waste Fund-784,940 Enterprise Funds
total-8,614,912 Internal service funds3,564,917 302,329 Proprietay funds total3,564,917 8,917,241 Total interfund transfers17,046,127$ 17,046,157$ E. LEASES The City has entered into
lease agreements as lessee for financing the acquisition of equipment. These lease agreements qualify as capital leases for accounting purposes and have been recorded at the present
value of the future minimum lease payments as of the inception in the internal service funds. The assets acquired through capital leases are as follows:
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 44 AssetEquipment1,300,000$ Fire apparatus449,144 Total1,749,144$ The future minimum lease payments and
the net present value of these minimum lease payments as of September 30, 2011, were as follows: Year endingFireSeptember 30 EquipmentApparatusTotal201271,772$ 54,305$ 126,077$ 2013-54,305
54,305 2014-54,306 54,306 2015-54,306 54,306 2016-54,306 54,306 2017-54,306 54,306 2018-54,306 54,306 Total71,772 380,140 451,912 Interest(472) (49,445) (49,917) Net present value71,300$
330,695$ 401,995$ F. LONG -TERM DEBT General Obligation Debt. The City issues general obligation bonds and certificates of obligation to provide funds for the acquisition and construction
of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. The original amount of general obligation bonds issued in prior
years was $111,620,000. General obligation bonds are direct obligations and pledge the full faith and credit of the City. General obligation bonds of $74,140,000 are currently outstanding.
The annual debt service requirements to maturity, for all bonds, are as follows: Year EndedTotalSetpember 30PrincipalInterest20125,935,000$ 2,771,877$ 20136,135,000 2,563,615 20146,385,000
2,343,085 20155,560,000 2,128,739 20165,300,000 1,923,461 2017-202128,895,000 6,196,191 2022-202610,990,000 1,898,265 2027-20304,940,000 304,994 Total74,140,000$ 20,130,227$ At September
30, 2011, bonds payable consisted of the following individual issues:
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 45 2011 General Obligation Refunding Bonds, $9,530,000, 2.0% to 4.0%, $320,000 to9,530,000$ $2,200,000
annually to 20222010 General Obligation Bonds, $8,000,000,3.0% to 4.3%, $275,000 to $600,000, annually to 20307,725,000 2008 General Obligation Bonds, $9,000,000, 3.5% to 5.0%, $170,000
to $665,000 annually to 2028; $3,000,000 of which is funded by the City of Port Arthur Section 4AEconomic Development Corporation8,200,000 2007 Certificates of Obligation, $10,000,000,
4.05%, $330,000 to $715,000 annually to 20288,965,000 2006 General Obligation Refunding Series, $8,585,000, 4.0%, $0 to $1,540,000 annually to 20228,255,000 2005 General Obligation Refunding
Series, $11,280,000,3.25% to 5.0%, $0 to $1,125,000 annually to 20218,965,000 2003 General Obligation Refunding Series, $18,225,000, 2.0% to 4.0%, $1,050,000 to $1,435,000 annually to
202010,900,000 2002C Certificates of Obligation Series, $5,000,000, 4.25% to 5.1%, $180,000 to $395,000annually to 2022, funded by the City of Port Arthur Section 4A Economic Development
Corp475,000 2002B Certificates of Obligation Series, $17,000,000, 4.125% to 5.0%, $610,000 to $1,335,000annually to 20221,625,000 2002A Certificiates of Obligation Series, $15,000,000,
0.75% to 4.2%, $605,000 to $1,050,000 annually to 20229,500,000 74,140,000$ Changes in long-term liabilities Beginning BalanceAdditionsReductionsEnding BalanceDue within 1 YearGovernmental
activities:Bonds payableGeneral obligation bonds50,750,000$ 9,530,000$ (6,705,000)$ 53,575,000$ 3,835,000$ Certificates of obligation29,560,000 -(8,995,000) 20,565,000 2,100,000 Total
bonds payable80,310,000 9,530,000 (15,700,000) 74,140,000 5,935,000 Capital leases801,460 -(399,466) 401,994 113,667 Compensated absences8,030,920 1,238,795 (2,127,874) 7,141,841 -Governmental
activities Long-Term Liabilities89,142,380$ 10,768,795$ (18,227,340)$ 81,683,835$ 6,048,667$ Business-type activities:Compensated absences1,106,145 606,582 (599,786) 1,112,941 211,216
Business-type activities Long-Term Liabilities1,106,145$ 606,582$ (599,786)$ 1,112,941$ 211,216$ Internal service funds predominantly serve the governmental funds. Accordingly, long-term
liabilities for them are included as part of the above totals for governmental activities. At the year end, $401,994 of capital
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 46 lease obligations is included in the above amounts. Also, for the governmental activities, claims and
judgments and compensated absences are generally liquidated by the General Fund. Compensated absences due within one year, is estimated to be approximately equivalent to the value of
the accrued vacation at year end. The Tax Reform Act of 1986 established regulations for the rebate to the federal government of arbitrage earnings on certain local government bond issued
after December 31, 1985, and all local governmental bonds issued after August 31, 1986. Issuing governments must calculate any rebate due and remit the amount due at least every five
years. As of September 30, 2010, there is no estimated liability for arbitrage rebate. The debt service and residual balances in the capital project funds have typically been used to
liquidate the arbitrage liability in previous years. Arbitrage Rebate Liability The Port Arthur Economic Development (EDC) issued a sales tax revenue bond, Series 2003 to provide funds
for the development of infrastructure related to development projects. This issue, $ 8.05 million, pledged the sales tax revenue of the EDC. The issue is payable at $220,000 to $570,000,
3% to 5%, to 2024, the balance outstanding at September 30, 2010, $6,110,000. Port Arthur Economic Development Corporation As stated above, the EDC funds the City’s 2002C Certificates
of Obligation debt service, and 33% of the debt service for the 2008 General Obligation Bond. V. Other Information A. RISK MANAGEMENT The City is exposed to various risks of loss related
to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the City maintains a limited risk management program. Claims in excess
of the self-insured retention amounts are covered through third-party limited-coverage insurance policies. The City also maintains a limited risk management program for workers’ compensation.
Premiums are paid into the Employee Benefit Fund and the General Liability Fund by all other funds and are available to pay claims, claim reserves and administrative costs, and insurance
premiums. These interfund premiums are recorded as revenue in the Employee Benefit Fund and the General Liability Fund as they are Internal Service Funds. Liabilities are reported when
it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Worker'sGeneralCompensationLiabilityTotalEstimated liability, 9/30/09838,477$ 1,684,317$
2,522,794$ fiscal 2010 claims incurred762,920 1,352,435 2,115,355 fiscal 2010 claims paid(844,537) (1,486,555) (2,331,092) Estimated liability, 9/30/10756,860$ 1,550,197$ 2,307,057$
fiscal 2011 claims incurred872,436 (549,742) 322,694 fiscal 2011 claims paid(1,095,617) (317,302) (1,412,919) Estimated liability, 9/30/11533,679$ 683,153$ 1,216,832$ Liabilities of
the funds are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred
but not reported (IBNRs). The result of the process to estimate the claims liability is not an exact amount as it
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 47 depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards.
Accordingly claims are reevaluated periodically to consider the effects of inflation, recent claims trends (including frequency and amount of pay-outs), and other economic and social
factors. The estimate of claims liability also includes amounts for incremental claim adjustment expenses related to specific claims and other claim adjustment expenses regardless of
whether allocated to specific claims. Estimated recoveries, for example from salvage or subrogation, are another component of the claims liability estimate. An excess coverage insurance
policy covers claims in excess of $300,000. Settlements have not exceeded coverages for each of the past three fiscal years. B. CONTINGENT LIABILITIES The City is defendant in various
lawsuits arising in the ordinary course of its municipal and enterprise activities. In the opinion of City management, the outcome of all pending litigation will not materially affect
the financial position of the City. Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government.
Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor
cannot be determined at this time although the City expects such amounts, if any, to be immaterial. C. OTHER POSTEMPLOYMENT BENEFITS Retiree Health Insurance Program Program Description
In addition to the pension benefits described in Note D that follows, as required by state law, the City makes available healthcare benefits to all employees who retire from the City
and who are eligible to receive benefits from a City sponsored retirement program (Texas Municipal Retirement System, or the Port Arthur Firemen’s Relief and Retirement Fund) through
a single-employer defined benefit healthcare plan. This Program provides lifetime health insurance for eligible retirees, their spouses and dependents through the City's group health
insurance plan, which covers both active and retired participants. Benefit provisions are established by management. Employees retiring on or before December 31, 2010 are allowed to
remain in the health insurance plan at approximately 30% of the expected under age 65 cost or 75% of the expected over age 65 costs. These costs (a.k.a. retiree contribution rates) are
calculated separately for retirees not eligible for Medicare (under age 65) and retirees eligible for Medicare (over age 65). Employees retiring on or after January 1, 2011 contribute
a tiered percentage of the retiree contribution rates based upon their years of City service at retirement. The percentage ranges from 50% for retirees with at least 30 years of City
service to 100% for retirees with less than 20 years of City service. Employees hired on or after November 1, 2010 are required to contribute 100% of the retiree contribution rates upon
retirement. For financial reporting purposes, the Retiree Health Insurance Program is accounted for in the Employee Benefit Fund, an internal service fund. Funding Policy Current retirees
over age 65 contribute $163 per month effective October 1, 2009 and $179 effective October 1, 2010 or approximately 75% of their expected cost. Current retirees under age 65 contribute
$206 per month effective October 1, 2009 and $226 effective October 1, 2010 or approximately 30% of their expected cost. Future retirees who retire on or after January 1, 2011 will contribute
a percentage ranging from 50% to 100% of their expected costs. Effective January 1, 2011, the expected cost is $248 per month for retirees over age 65 and $833 for retirees under age
65.
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 48 Costs for retiree spouses and dependents are also similarly subsidized, in part, by the City. For fiscal
year 2010, the City finances this program on a pay-as-you-go basis. As of September 30, 2010 the City had 173 retirees participating in this plan,. In fiscal year 2010, the Program incurred
actual retiree costs of $2,285,541 offset by retiree contributions of $555,397 for a net cost to the City of $1,730,144. Annual OPEB Cost and Net OPEB Obligation The City's annual other
postemployment benefit (OPEB) cost (expense) for the Retiree Health Insurance Program is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially
determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover benefits earned each
year (i.e. normal costs) and an amortization of the unfunded actuarial liability (UAAL). UAAL). The following table shows the components of the City's annual OPEB cost for the year,
the amount actually contributed to the plan, and changes in the City's net OPEB obligation. 9/30/20089/30/20099/30/20109/30/2011Annual required contribution (ARC)10,041,987$ 10,041,987$
1,657,081$ 1,719,683$ Interest on Net OPEB obligation--727,865 758,582 Adjustment to ARC--(723,150) (769,214) Annual OPEB cost (expense)10,041,987$ 10,041,987$ 1,661,796$ 1,709,051$
Contributions made(939,553) (947,798) (1,730,144) (1,794,664) Change in OPEB obligation9,102,434$ 9,094,189$ (68,348)$ (85,613)$ Net OPEB -beginning of year-9,102,434 18,196,623 18,128,275
Net OPEB -end of year9,102,434$ 18,196,623$ 18,128,275$ 18,042,662$ Fiscal year endedDiscount RateAnnual OPEB CostPrecentage of OPEB Cost ContributedNet OPEB Obligation9/30/20094%10,041,987$
9.44%18,196,623$ 9/30/20104%1,661,796 104.11%18,128,275 9/30/20114%1,709,051 105.01%18,042,662 Actuarial Valuation DateActuarial Value of AssetsActuarial Accrued Liability (AAL)Funded
RatioUnfunded AAL (UAAL)Covered
PayrollUAAL as a Percentage of Covered Payroll12/31/2007-$ 93,760,224$ 0.0%93,760,224$ 28,698,357$ 326.71%12/31/2008Not Calculated12/31/2009-32,067,950 0.0%32,067,950 34,170,556 93.85%
Actuarial valuations on an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples
include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions
of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress,
presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets
is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 49 Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based
on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern
of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term
volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the October 1, 2009 actuarial valuation,
the Projected Unit Credit actuarial cost method was used. The actuarial assumptions used included a 4% discount rate, 4% expected long-term investment return and annual healthcare trend
rates of 10% initially declining ½% annually to an ultimate rate of 5% after 10 years. The initial UAAL and subsequent unanticipated changes in UAAL are being amortized with the level
dollar method, over closed 30-year periods in amounts that increase 3% per year (assumed payroll growth rate). Supplemental Death Benefit The City also participates in the cost sharing
multiple-employer defined benefit group-term life insurance plan operated by the Texas Municipal Retirement System (TMRS) known as the Supplemental Death Benefit Fund (SDBF). The City
elected, by ordinance, to provide group-term life insurance coverage to both current and retired employees (with the exception of firefighters). The City may terminate coverage under
and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year to be effective the following January 1. The death benefit for active employees provides
a lump sum payment approximately equal to the employee’s annual salary (calculated based on the employee’s actual earnings, for the 12 month period preceding the month of death); retired
employees are insured for $7,500; this coverage is an “other postemployment benefit,” or OPEB. The city contributes to the SDBF at a contractually required rate as determined by an annual
actuarial valuation. The rate is equal to the cost of providing one-year term life insurance. The funding policy for the SBF program is to assure that adequate resources are available
to meet all death benefit payments for the upcoming year; the intent is not to pre-fund retiree term life insurance during employees’ entire careers. The city’s contributions to the
TMRS SDB for the years 2011, 2010 and 2009 were $20,431, $22,783, and $25,827 respectively, which equaled the required contributions each year. Schedule of Contributions and Rates(Retiree-only
portion of the rate)Plan/Calender YearAnnual Required Contribution (ARC)Actual Contribution Made (Rate)% of ARC ContributedActual Contribution Made20070.10%0.10%100%21,349$ 20080.10%0.10%100%25,073
20090.09%0.09%100%25,827 20100.08%0.08%100%22,783 20110.08%0.07%100%20,481
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 50 D. EMPLOYEE RETIREMENT SYSTEMS Texas Municipal Retirement System (TMRS) Plan Description. The City
provides pension benefits for all of its eligible employees, with the exemption of firefighters, through a non-traditional, joint contributory, hybrid defined benefit plan in the state-wide
Texas Municipal Retirement System (TMRS), an agent multi-employer public employee retirement system. The plan provisions that have been adopted by the city are within the options available
in the governing state statutes of TMRS. TMRS issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information
(RSI) for TMRS; the report also provides detailed explanations of the contributions, benefits and actuarial methods and assumptions used by the System. This report may be obtained by
writing to TMRS, P.O. Box 149153, Austin, TX 78714-9153 or by calling 800-924-8677; in addition, the report is available on the TMRS’ website at www.TMRS.com. The plan provisions are
adopted by the City Council, within the options available in the state statutes governing TMRS and within the actuarial constraints also in the statutes. Plan provisions for the City
of Port Arthur were as follows: Plan Year 2010Plan Year 2011Employee deposit rate5%5%Matching ratio (city to employee)2 to 12 to 1Years required for vesting1010Service retirement eligibility
(expressed as age/years of service)60/10,0/2060/10,0/20Updated Service Credit100% Repeating, Transfers100% Repeating, TransfersAnnuity Increase (to retirees)70% of CPI Repeating70% of
CPI Repeating Contributions. Under the state law governing TMRS, the City’s contribution rate is annually determined by the actuary, using the Projected Unit Credit actuarial cost method.
This rate consists of the normal cost contribution rate and the prior service contribution rate, which is calculated to be a level percentage of payroll from year to year. The normal
cost contribution rate finances the portion of an active member’s projected benefit allocated annually; the prior service contribution rate amortizes the unfunded actuarially liability
over the applicable period. Both the normal cost and prior service contribution rates include recognition of the projected impact of annually repeating benefits, such as Updated Service
Credits and Annuity Increases. The City contributed to the TMRS Plan at an actuarially determined rate. Both the employees and the City make contributions monthly. Since the City needs
to know its contribution rate in advance for budgetary purposes, there is a one-year delay between the actuarial valuation that serves as the basis for the rate and the calendar year
when the rate goes into effect. The annual pension cost and the net pension obligation are as follows:
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 51 Annual Required Contribution (ARC)5,107,564$ Interest on Net Pension Obligation-Adjustment to the ARC-Annual
Penison Cost (APC)5,107,564 Contributions Made(4,790,221) Increase in net pension obligation317,343 Net Pension Obligation, beginnning of the year631,685 Net Pension Obligation, end
of the year949,028$ Fiscal year endedAnnual Pension Cost (ARC)Actual Contribtuion MadePrecentage of ARC ContributedNet OPEB Obligation9/30/20094,460,181$ 4,216,075$ 94.53%244,106$ 9/30/2010
5,073,226 4,685,646 92.36%387,580 9/30/2011 5,107,564 4,790,221 93.79%317,343 The required contribution rates for fiscal year 2011 were determined as part of the December 31, 2008 and
2009 actuarial valuations. Additional information as of the latest actuarial valuation, December 31, 2010, also follows: Valuation date12/31/201012/31/201012/31/200912/31/2008Projected
unit creditProjected unit creditProjected unit creditProjected unit creditProjected unit creditAmortization methodLevel % of payrollLevel % of payrollLevel % of payrollLevel % of payrollGASB
25 equiv. single amortization period (closed)26.9 yrs27 yrs28 yrs29 yrsAmortization period for new gains/losses30 years30 years30 years30 yearsAsset valuation method10 yr. smoothed market10
yr. smoothed market10 yr. smoothed marketamortized costInvestment rate of return7%7.5%7.5%7.5%Payroll growthVaries by age and serviceVaries by age and serviceVaries by age and serviceVaries
by age and serviceIncludes inflation at3%3%3%3%
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 52 In June 2011, SB350 was enacted by the Texas Legislature, resulting in a restructure of the TMRS funds.
This legislation provided for the actuarial valuation to be completed, as if restructuring had occurred on December 31, 2010. In addition, the actuarial assumptions were updated for
the new fund structure, based on an actuarial experience study that was adopted by the TMRS Board at their May, 2011 meeting (the review compared actual to expected experience for the
four-year period of January 1, 2006 through December 31, 2009). For a complete description of the combined impact of the legislation and new actuarial assumptions, including the effects
on TMRS city rates and funding ratios, please see the December 31, 2010 TMRS Comprehensive Annual Financial Report (CAFR). Actuarial Valuation DateActuarial Value of AssetsActuarial
Accrued Liability (AAL)Funded RatioUnfunded AAL (UAAL)Covered PayrollUAAL as a Percentage of Covered Payroll12/31/200856,101,664$ 94,396,612$ 59.4%38,294,948$ 25,708,137$ 148.96%12/31/200958,868,681
97,757,164 60.2%38,888,483 27,175,618 143.10%The funded status as of December 31, 2010, under the two separate actuarial valuations, is presented as follows:12/31/10 162,298,833$ 100,608,117$
61.9%38,309,284$ 27,801,064$ 137.80%12/31/10 2113,947,460 140,890,870 80.9%26,943,410 27,801,064 96.92%1 Acutarial valuation performed under the original fund structure2 Acutarial valuation
performed under the new fund structure Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially
determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Actuarial calculations are based
on the benefits provided under the terms of the substantive plan in effect at the time of each valuation, and reflect a long-term perspective. Consistent with that perspective, actuarial
methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial valued of assets. The schedule of
funding progress, presented as Required Supplementary Information following the notes to the financial statements, presents multi-year trend information about whether the actuarial value
of plan assets is increasing of decreasing over time relative to the actuarial accrued liability of benefits. The schedule of funding progress, presented as Required Supplementary Information
following the notes to the financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative
to the actuarial accrued liability of benefits. Port Arthur Firemen’s Relief and Retirement Fund (Fund) Plan Description. The fund is established pursuant to the Texas Local Fire Fighters
Retirement Act (TELFRA). TELFRA provides for a Board of Trustees to administer a single-employer defined benefit pension plan covering all City firefighters. The plan is an independent
entity for financial reporting purposes. The Board (composed of the Mayor and the Director of Finance as ex-officio Trustees, three firemen elected by a majority vote of firemen, and
two citizens who must be appointed unanimously by the first five trustees), is subject to administrative supervision by the State Firemen’s Pension Commissioner. The City does not hold
title to any of the Fund’s assets, have right to any surpluses, or responsibility for any deficits. The City’s contribution rate is set by the City Charter to be the same as the rate
required by the TMRS. The fund issues its own stand alone financial statements, prepared using the accrual basis of accounting, which can be obtained from the fund’s office at P.O. Box
1089, Port Arthur, Texas 77641.
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 53 All active firefighters of the City are members of the Fund. The Fund provides service retirement,
death, disability, and withdrawal benefits. Benefits vest after 20 years of credited service. Employees may retire at age 50 with 20 years of service. Vested termination benefits on
a deferred basis are available for firefighters who terminate employment with 20 or more years of service but who have not attained age 50 at their date of termination. A firefighter
who becomes disabled is eligible for disability benefits for 30 months. After 30 months, the board may continue, terminate or reduce benefits. In the event of the death of a firefighter
in active service, the firefighter’s spouse will receive a monthly benefit. Each unmarried child will also receive benefits until 18 (22 if full-time student or for life if disabled).
The sum of all benefits payable may not exceed the service retirement benefit to which the firefighter was entitled as the date of his/her death. A firefighter at age of 53 and with
at least 20 years of service may enroll in the Deferred Retirement Option Plan (DROP), which allows the participant to receive certain amount of benefits in lump a sum payment. For the
plan in effect January 1, 2010, the Fund required fire fighters to contribute 13% of pay and 17% was the City’s contribution rate. A summary of actuarial assumptions is as follows: Actuarial
Valuation Date January 1, 2010 Actuarial Cost Method Individual Entry Age Amortization Method Level Percent of Payroll Remaining Amortization Method 22.5 Years – Open Period Asset Valuation
Method 5 Year Smoothed Market Value Investment Rate of Return 8% Payroll Growth Rate 4% Projected Salary Increases 5% Post Retirement Cost-of-Living Adjustments None Fiscal year endedAnnual
Pension Cost (ARC)Actual Contribtuion MadePrecentage of ARC ContributedNet OPEB Obligation9/30/2008 $ 898,683 $ 898,683 100.00% $ -9/30/2009 1,118,605 1,118,605 100.00%-9/30/2010 1,192,906
1,192,906 100.00%-The funded status as of December 31, 2012, the most recent actuarial valuation date, is as follows: Actuarial Valuation DateActuarial Value of AssetsActuarial Accrued
Liability (AAL)Funded RatioUnfunded AAL (UAAL)Covered PayrollUAAL as a Percentage of Covered Payroll12/31/200731,142,242$ 40,077,603$ 77.7%8,935,361$ 5,848,497$ 152.78%12/31/2008Not
Calculated12/31/200933,233,278 45,889,421 72.4%12,656,143 6,994,938 180.93%
CITY OF PORT ARTHUR, TEXAS Notes to the Financial Statements September 30, 2011 54 E. LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS State and federal laws and regulations require that
the City place a final cover on its landfill when closed and perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. In addition to
operating expenses related to current activities of the landfill, an expense provision and related liability are being recognized based on the future closure and postclosure care costs
that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the
landfill used during the year. The estimated liability for landfill closure and postclosure care cost has a balance of $2,320,742 as of September 30, 2011, which is based on 21.7% usage
(filled) of the landfill. It is estimated that an additional $8,373,655 will be recognized as closure and and postclosure care expenses between the date of the balance sheet and the
date the landfill is expected to be filled to capacity (2035). The estimated total current cost of the landfill closure and postclosure care $10,694,397 based on the amount that would
be paid if all equipment, facilities, and services required to close, monitor, and maintain the landfill were acquired as of September 30, 2011. However, the actual cost of closure and
postclosure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The City was required by state and federal laws and regulations to
meet financial assurance regulations by April 9, 1997, with updates annually. The City met these requirements and is in full compliance with the financial assurance requirement. F. PRIOR
PERIOD ADJUSTMENTS The beginning fund balance (budget basis) for the General Fund as of October 1, 2010 was restated to correct prior year ending balance. Beginning Fund Balance as Previously
Reported29,756,560$ Adjustment400,000 Beginning Fund Balance, As Restated30,156,560$
REQUIRED SUPPLEMENTARY INFORMATION
CITY OF PORT ARTHUR, TEXASExhibit 10REQUIRED SUPPLEMENTARY INFORMATIONFUNDING PROGRAMS FOR EMPLOYEE RETIREMENT SYSTEMSFOR THE YEAR ENDED SEPTEMBER 30, 2011TEXAS MUNICIPAL RETIREMENT
SYSTEMSCHEDULE OF FUNDING PROGRESS(Unaudited)Fiscal YearActuarial Value of AssetsActuarial Accrued Liability (AAL) Funded RatioUnfunded AAL (UAAL) Covered PayrollUAAL as a Percentage
of Covered Payroll 200151,791,900$ 68,595,818$ 75.50%16,803,918$ 17,731,568$ 94.77%200252,575,295 70,081,814 75.02%17,506,519 17,843,154 98.11%200352,706,294 72,720,969 72.48%20,014,675
18,796,803 106.48%200455,364,346 76,399,642 72.47%21,035,296 19,549,195 107.60%200555,693,241 77,526,396 71.84%21,833,155 21,282,677 102.59%200656,992,953 80,450,851 70.84%23,457,898
20,998,934 111.71%2007*56,671,406 92,838,703 61.04%36,167,297 22,849,680 158.28%200856,101,664 94,396,612 59.43%38,294,948 25,708,137 148.96%200958,868,681 97,757,164 60.22%38,888,483
27,547,731 141.17%20101**62,298,833100,608,11761.92%38,309,284 27,801,064 137.80%20102**113,947,460140,890,87080.88%26,943,410 27,801,064 96.92%* New actuarial cost method and assumptions
were adopted by the TMRS Board of Trustees effective for the2007 valuation.** In June 2011, the Texas Legislature approved the restructure of TMRS funds1Actuarial valuation performed
under the original fund structure2Actuarial valuation performed under the new fund structure57
CITY OF PORT ARTHUR, TEXASExhibit 11REQUIRED SUPPLEMENTARY INFORMATIONFUNDING PROGRAMS FOR EMPLOYEE RETIREMENT SYSTEMSFOR THE YEAR ENDED SEPTEMBER 30, 2011PORT ARTHUR FIREMEN'S RELIEF
& RETIREMENT FUNDSCHEDULE OF FUNDING PROGRESSYearActuarial Value of AssetsActuarial Accrued Liability (AAL)Percentage FundedUnfunded AAL (UAAL)Annual Covered PayrollUAAL as a Percentage
of Covered Payroll 200122,465,692$ 27,464,875$ 81.8%4,999,183$ 4,653,127$ 107.44%2002Not Calculated200322,728,64730,926,64573.5%8,197,9984,987,935164.36%2004Not Calculated200526,289,67435,769,25273.5
%9,479,5785,462,233173.55%2006Not Calculated2007*31,142,24240,077,60377.7%8,935,3615,848,497152.78%2008Not Calculated2009*33,233,27845,889,42172.4%12,656,1436,994,938180.93%2010Not Calculated*
Date of actuarial study 1/158
CITY OF PORT ARTHUR, TEXASExhibit 12REQUIRED SUPPLEMENTARY INFORMATIONFOR THE YEAR ENDED SEPTEMBER 30, 2011PORT ARTHUR FIREMEN'S RELIEF & RETIREMENT FUNDSCHEDULE OF EMPLOYER CONTRIBUTIONSPlan
Year Ended December 31Annual Contribution As a Fixed Percentage of PayrollAnnual Required ContributionPercentage Contributed200112.37%12.08%102.40%200212.66%12.66%100.00%200312.96%12.66%102.37%200412
.85%12.20%105.33%200513.64%12.20%113.40%200613.77%8.85%155.59%2007*13.47%10.22%131.80%200814.08%11.54%137.77%200914.68%11.54%127.21%201017.00%12.42%136.88%* Date of actuarial study 1/1/200859
CITY OF PORT ARTHUR, TEXASExhibit 13REQUIRED SUPPLEMENTARY INFORMATIONFOR THE YEAR ENDED SEPTEMBER 30, 2011PORT ARTHUR FIREMEN'S RELIEF & RETIREMENT FUNDNOTES TO THE REQUIRED SUPPLEMENTARY
INFORMATIONThe information presented in the required supplementary schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the
latest actuarial evaluation follows:Valuation dateJanuary 1, 2010Actuarial cost methodEntry Age NormalAmortization methodlevel percent openRemaining amortization period for the plan
22.5 yearsAsset valuation method5 year smoothed marketActuarial assumptionsInvestment rate of return, net of expensescompounded annually8.00%Projected salary increases includingpromotion
and longevity5.00%Payroll growth rate4.00%Post retirement cost of living adjustmentsNone60
CITY OF PORT ARTHUR, TEXASExhibit 14REQUIRED SUPPLEMENTARY INFORMATIONFUNDING PROGRAMS FOR OTHER POST EMPLOYMENT BENEFITS (OPEB)FOR THE YEAR ENDED SEPTEMBER 30, 2011RETIREE HEALTH INSURANCE
PROGRAMANALYSIS OF FUNDING PROGRESSValuation DateActuarial Value of AssetsDiscount RateActuarial Accrued Liability (AAL)Percentage Funded Unfunded AAL (UAAL) Annual Covered PayrollUAAL
as a Percentage of Covered Payroll10/1/2005-$ N/AN/AN/AN/AN/AN/A10/1/2006-N/AN/AN/AN/AN/AN/A10/1/2007-4%93,760,224$ 0.00%93,760,224$ 28,698,357$ 326.7%10/1/2008NOT CALCULATED10/1/2009-4%32,067,950
0.00%32,067,950 34,170,556 93.8%10/1/2010NOT CALCULATED61
COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES
Non-Major Governmental Funds Special Revenue Funds Special Revenue Funds are used to account for resources which may be used only for purposes specified by law or City Council. A brief
description of each fund reported as a Special Revenue Fund follows: Health Grants Fund Accounts for grants received from the State of Texas to provide health care services. Library
Special Fund Accounts for donations received by the City's public library. These revenues are set aside for the library's use. Library Grant Fund Accounts for various State and local
grants received by the Public Library. Golf Course Fund Accounts for funds derived from the operation of the Babe Zaharias public golf course. These funds are designated for improvements
to this golf course, and for operations at the Palms on Pleasure Island Course. Municipal Court Technology Fund Accounts for funds received from a portion of municipal court fines dedicated,
by State law, to technology acquisition for the court. JAG – ARRA Grant Accounts for supplemental Office of Justice Programs – Justice Assistance Grant funding received from the American
Recovery and Reinvestment Act of 2009 (ARRA). CDBG Rita Supplement Fund Accounts for revenues received through the Federal Community Development Block Grant program specifically for
Hurricane Rita recovery activities. CDBG /TDHCA Ike Fund Accounts for revenues received from the Federal Community Development Block Grant program through the Texas Department of Housing
and Community Affairs, specifically for Hurricane Ike housing recovery activities. CDBG Accounts for revenues received from the Federal Community Development Block Grant program. CDBG
– ARRA Fund Accounts for supplemental Community Development Block Grant funding received from the American Recovery and Reinvestment Act of 2009 (ARRA). HOME Grant Fund Accounts for
grants received from the federal government, passed through the State of Texas, under the HOME program. TCEQ SEP Fund Accounts for funds received from industry for Supplemental Environmental
Projects (SEP) through the Texas Commission of Environmental Quality (TCEQ). Job Training Fund Accounts for funds received from the National Institute of Environmental Health, Katrina
and Rita Brownsfield Minority Worker Training Program. Revolving Loan Fund Accounts for the proceeds from repayments of loans made from Community Development Block Grant Funds and City
Revolving Loan Fund contributions. These funds are restricted for additional loans to stimulate job development by the small business sector of the City’s economy.
HPRP – ARRA Fund Accounts for Homeless Assistance and Rapid Re-housing funds received from the American Recovery and Reinvestment Act of 2009 (ARRA). Literacy Support Fund Accounts for
donations received by the Port Arthur Literacy Support Program. Police Special Fund Accounts for assets seized by the City's police department as the result of drug enforcement arrests.
These assets are forfeited to the City to be used to fund specific types of expenditures for the police department. Law Enforcement Grants Fund Accounts for federal funds received under
the Local Law Enforcement Block Grant. Housing Programs Fund Accounts for funds designated by the City of Port Arthur and the Port Arthur Housing Finance Corporation. These funds are
used to finance programs providing affordable housing in the City. Social Services Block Grant Fund Accounts for the funds received under the Social Services Block Grant program for
Hurricane Rita recovery projects. Energy ARRA Grant Accounts for funds received from the American Recovery and Reinvestment Act of 2009(ARRA) through the Department of Energy. Federal
Emergency Management Agency Accounts for funds received from the United States Department of Homeland Security’s Federal Emergency Management Agency for response and recovery to hurricane
disasters Rita and Ike. Neighborhood Stabilization Fund Accounts for funds received from the Department of Housing and Urban Development through the Texas Department of Housing and Rural
Affairs for community stabilization efforts. Weed and Seed Fund Accounts for funds received through the United States Department of Justice Weed and Seed program. Hotel Occupancy Tax
Fund Accounts for the hotel occupancy tax revenue received by the City. Downtown Renaissance District Accounts for funds dedicated to downtown redevelopment activities Assessment Projects
Fund Accounts for special assessments levied on property owners. Library Trust Fund Accounts for trust revenues received and related interest income. Transit ARRA Grant Accounts for
funds received from the American Recovery and Reinvestment Act of 2009 (ARRA) for Transit projects. Transit System Fund Accounts for the operations of the City’s bus service. This fund
is heavily subsidized by Federal and State Grants and contributions from the City’s General Fund.
CITY OF PORT ARTHUR, TEXASCombining Balance Sheet Non-Major Governmental FundsSeptember 30, 2011Special Revenue Funds MunicipalHealthLibrary Library Golf CourtJAGGrantsSpecialGrantCourseTechnologyARR
AFundFundFundFundFundFundAssetsCash-$ 22,408$ 3,922$ 11,638$ 30,925$ -$ Investments-100,000 10,000 65,000 80,000 -Due from other funds------Accounts receivable, net of allowance------Federal
and state grants receivable273,772 -----Prepaids------Inventories------Total assets273,772$ 122,408$ 13,922$ 76,638$ 110,925$ -$ Liabilities and Fund BalancesLiabilities Wages payable57,200$
-$ -$ -$ -$ -$ Accounts payable18,112 -----Due to other funds1,009,193 ----6,392 Other liabilities------Deferred revenue------Total liabilities1,084,505 ----6,392 Fund balances (deficit):Nonspendable
:Prepaid items------Restricted:Culture and recreation--13,922 ---Public safety------Public works------Assigned:Culture and recreation-122,408 -76,638 --Community development------Unassigned(810,733)
---110,925 (6,392) Total fund balances(810,733) 122,408 13,922 76,638 110,925 (6,392) Total liabilities and fund balances273,772$ 122,408$ 13,922$ 76,638$ 110,925$ -$ 66
A-1Special Revenue Funds CDBGCDBG/CDBGCDBGHOMETCEQJobRevolving HPRPRita TDHCAARRAGrantSEPTrainingLoanARRASupplementIKE FundFundFundFundFundFundFund -$ -$ -$ -$ 129,095$ 695$ 53,007$
19,734$ -$ -----1,000 -100,000 ------------998,486 -138,130 --158,262 -111,211 145,787 968,065 528 81,178 ---97,557 ------------------111,211$ 145,787$ 1,966,551$ 528$ 348,403$ 1,695$
53,007$ 277,996$ 97,557$ -$ 1,487$ 15,496$ -$ 1,730$ -$ -$ -$ 437$ -2,604 13,462 -4,257 ---10,637 101,954 141,696 961,740 12,434 ----86,483 -----------975,853 -137,976 --164,941 -101,954
145,787 1,966,551 12,434 143,963 --164,941 97,557 --------------------------------1,695 ----------------204,440 --113,055 -9,257 --(11,906) --53,007 --9,257 --(11,906) -1,695 53,007
--111,211$ 145,787$ 1,966,551$ 528$ 143,963$ 1,695$ 53,007$ 164,941$ 97,557$ continued on next page67
CITY OF PORT ARTHUR, TEXASCombining Balance Sheet Non-Major Governmental FundsSeptember 30, 2011(continued from previous page)Special Revenue Funds LawSocialLiteracyPoliceEnforcementHousingServicesEn
ergySupportSpecialGrantsProgramsBlock ARRAFundFundFundFundGrantGrantAssetsCash7,595$ 82,422$ -$ 47,498$ 10,605$ -$ Investments-110,000 -250,000 60,000 996,819 Due from other funds----234,572
-Accounts receivable, net of allowance---48,107 4,548 -Federal and state grants receivable--157,239
---Prepaids--1,550,000 ---Inventories------Total assets7,595$ 192,422$ 1,707,239$ 345,605$ 309,725$ 996,819$ Liabilities and Fund BalancesLiabilities Wages payable-$ -$ -$ -$ -$ -$ Accounts
payable--4,830 250 --Due to other funds--584,030 --949,226 Other liabilities-89,482 ----Deferred revenue---66,864 --Total liabilities-89,482 588,860 67,114 -949,226 Fund balances (deficit):Nonspendab
le:Prepaid items--1,550,000 ---Restricted:Culture and recreation------Public safety-102,940 ----Public works------Assigned:Culture and recreation7,595 -----Community development---278,491
--Unassigned--(431,621) -309,725 47,593 Total fund balances7,595 102,940 1,118,379 278,491 309,725 47,593 Total liabilities and fund balances7,595$ 192,422$ 1,707,239$ 345,605$ 309,725$
996,819$ 68
A-1Special Revenue FundsHotelTotalFEMANeighbor-Weed OccupancyDowntownAssessmentLibraryTransit TransitNonmajorhoodand SeedTaxRenaissanceProjectsTrustARRASystemGovernmentalStabilizationFundFundBoardFun
dFundGrantFundFunds-$ -$ 1,513$ 28,769$ 111,614$ 50,992$ 625$ -$ 500$ 613,557$ ---140,000 --25,000 --1,937,819 ---------234,572 ---8,341 -125,229 --(58) 1,481,045 3,331,630 802,714 ------337,025
6,306,706 ---------1,550,000 --------128,309 128,309 3,331,630$ 802,714$ 1,513$ 177,110$ 111,614$ 176,221$ 25,625$ -$ 465,776$ 12,252,008$ -$ -$ -$ -$ -$ -$ -$ -$ 63,422$ 139,772$ 5,784
--8,549 321 ---56,912 125,718 3,116,517 779,741 ---112,806 --291,069 8,153,281 ---------89,482 ---------1,345,634 3,122,301 779,741 -8,549 321 112,806 --411,403 9,853,887 ---------1,550,000
---------13,922 ---------102,940 ---------1,695 ---168,561 --25,625 --400,827 ----111,293 ----707,279 209,329 22,973 1,513 --63,415 --54,373 (378,542) 209,329 22,973 1,513 168,561 111,293
63,415 25,625 -54,373 2,398,121 3,331,630$ 802,714$ 1,513$ 177,110$ 111,614$ 176,221$ 25,625$ -$ 465,776$ 12,252,008$ 69
CITY OF PORT ARTHUR, TEXASCombining Statement of Revenues, Expenditures and Changes in Fund BalancesNonmajor Governmental FundsSpecial Revenue For the Year Ended September 30, 2011Special
Revenue Funds MunicipalHealth Library Library GolfCourtJAGGrantsSpecialGrantsCourseTechnologyARRAFundFundFundFundFundFundRevenues: Taxes-$ -$ -$ -$ -$ -$ User fees---4,017 --Fines and
forfeiture ----59,363 -Intergovernmental1,406,171 -12,728 ---Donations2,757 827 ---Program revenue------Interest revenue-366 -342 235 -Miscellaneous------Total revenues1,406,171 3,123
13,555 4,359 59,598 -Expenditures:Current:General government----1,705 -Culture and recreation--10,841 41,276 --Public safety-----105,789 Community development------Health and welfare1,785,573
-----Public transportation------Total expenditures1,785,573 -10,841 41,276 1,705 105,789 Excess (deficiency) of revenuesover expenditures(379,402) 3,123 2,714 (36,917) 57,893 (105,789)
Other financing sources (uses):Transfers in60,168 -----Transfers out------Total other financing sources (uses)60,168 -----Net change in fund balances(319,234) 3,123 2,714 (36,917) 57,893
(105,789) Fund balances, beginning of yearas previously reported(491,499) 119,285 11,208 113,555 53,032 99,397 Prior period adjustment, Note V.F.------Fund balances, beginning of yearas
restated(491,499) 119,285 11,208 113,555 53,032 99,397 Fund balances end of year(810,733)$ 122,408$ 13,922$ 76,638$ 110,925$ (6,392)$ 70
A-2Special Revenue FundsCDBGCDBG/CDBG CDBG /HOMETCEQJobRevolvingHPRPRita TDHCAARRAGrantSEPTrainingLoanARRASupplementIKE FundFundFundFundFundFundFund-$ -$ -$ -$ -$ -$ -$ -$ -$ -------------------152,6
61 1,458,605 81,609 972,619 ---363,617 -----------41,866 -296,786 --------45 -345 ------7,500 ----152,661 1,500,471 81,609 1,269,405 7,545 -345 363,617 ---93,515 -92,730 ----------------------152,661
878,348 -1,263,896 --632 363,617 -------------------152,661 878,348 93,515 1,263,896 92,730 -632 363,617 --622,123 (11,906) 5,509 (85,185) -(287) ------------(622,123) --------(622,123)
---------(11,906) 5,509 (85,185) -(287) -9,257 ---198,931 86,880 53,007 113,342 ---------9,257 ---198,931 86,880 53,007 113,342 -9,257$ -$ -$ (11,906)$ 204,440$ 1,695$ 53,007$ 113,055$
-$ continued on next page71
CITY OF PORT ARTHUR, TEXASCombining Statement of Revenues, Expenditures and Changes in Fund BalancesNonmajor Governmental FundsSpecial Revenue For the Year Ended September 30, 2011(continued
from previous page) Law Social LiteracyPolice EnforcementHousing ServicesEnergySupportSpecialGrantsProgramsBlock ARRAFundFundFundFundGrantGrantRevenues: Taxes-$ -$ -$ -$ -$ -$ User fees------Fines
and forfeiture-129,460 ----Intergovernmental--1,602,771 --Donations-5,656 ----Program revenue---7,514 --Interest revenue23 400 -883 946 1,254 Miscellaneous-4,062 ---34,050 Total revenues23
139,578 1,602,771 8,397 946 35,304 Expenditures:Current:General government----(51,626) 617,451 Culture and recreation------Public safety-53,845 519,049 ---Community development---12,181
--Health and welfare------Public transportation------Total expenditures-53,845 519,049 12,181 (51,626) 617,451 Excess (deficiency) of revenuesover expenditures23 85,733 1,083,722 (3,784)
52,572 (582,147) Other financing sources (uses):Transfers in-----147,000 147,000 Transfers out------Total other financing sources (uses)-----147,000 Net change in fund balances23 85,733
1,083,722 (3,784) 52,572 (435,147) Fund balances, beginning of yearas previously reported7,572 17,207 34,657 282,275 257,153 482,740 Prior period adjustment, Note V.F.-----Fund balances,
beginning of yearas restated7,572 17,207 34,657 282,275 257,153 482,740 Fund balances end of year7,595$ 102,940$ 1,118,379$ 278,491$ 309,725$ 47,593$ 72
A-2Special Revenue FundsHotel TotalFEMANeighbor-WeedOccupancyDowntownAssessmentLibraryARRATransitNonmajorhoodand SeedTaxRenaissanceProjectsTrustTransitSystemGovernmentalStabilizationFundFundBoardFund
FundGrantFundFunds-$ -$ -$ 961,091$ -$ -$ -$ -$ -$ 961,091$ -----400 --128,066 132,483 ---14,943 -13,010 ---216,776 207,090 304,704 --5,000 --7,834 1,445,557 8,020,966 ---------9,240
---------346,166 ---329 -381 78 -116 5,743 99,616 -------72,755 217,983 306,706 304,704 -976,363 5,000 13,791 78 7,834 1,646,494 9,910,448 119,377 ---60,208 ----933,360 ---802,145 -----854,262
---------678,683 -304,704 -------2,976,039 ---------1,785,573 -------7,834 2,299,477 2,307,311 119,377 304,704 -802,145 60,208 --7,834 2,299,477 9,535,228 187,329 --174,218 (55,208)
13,791 78 -(652,983) 375,220 22,000 25,000 --132,000 ---750,000 1,136,168 ---(100,000) ----(70,000) (792,123) 22,000 25,000 -(100,000) 132,000 ---680,000 344,045 209,329 25,000 -74,218
76,792 13,791 78 -27,017 719,265 -(2,027) 1,513 94,343 34,501 49,624 25,547 -27,356 1,678,856 -----------(2,027) 1,513 94,343 34,501 49,624 25,547 -27,356 1,678,856 209,329$ 22,973$
1,513$ 168,561$ 111,293$ 63,415$ 25,625$ -$ 54,373$ 2,398,121$ 73
CITY OF PORT ARTHUR, TEXASA -3Schedule of Revenues, Expenditures and Changes in Fund BalancesBudget and ActualDebt Service FundFor the Year Ended September 30, 2011Variance withBudgeted
AmountsActualFinal BudgetGAAPPositiveOriginalFinalBasis(Negative)Revenues Taxes: Property8,500,000$ 8,500,000$ 8,593,513$ 93,513$ Interest7,500 7,500 19,999 12,499 Miscellaneous income606,817
606,817 554,491 (52,326) Total revenues9,114,317 9,114,317 9,168,003 53,686 ExpendituresDebt service:Principal retirement6,085,000 6,085,000 6,085,000 -Interest and fiscal charges3,193,398
3,193,398 3,026,995 166,403 Total expenditures9,278,398 9,278,398 9,111,995 166,403 Excess (deficiency) of revenues over expenditures(164,081) (164,081) 56,008 220,089 Other financing
sources (uses)Issuance of GOR debt--9,906,922 (9,906,922) Payment to refunded bond--(10,061,993) 10,061,993 Transfers out(425,443) (425,443) (425,443) -Total other financing sources
(uses)(425,443) (425,443) (580,514) 155,071 Net changes in fund balances(589,524)$ (589,524)$ (524,506) 65,018$ Fund balance, beginning of the year3,208,527 Fund balance, end of the
year2,684,021$ 75
CITY OF PORT ARTHUR, TEXASA -4Schedule of Revenues, Expenditures and Changes in Fund BalancesBudget and ActualLibrary Special FundFor the Year Ended September 30, 2011Variance withActualFinal
BudgetGAAPPositiveOriginalFinalBasis(Negative)Revenues: Donations1,500$ 1,500$ 2,757$ 1,257$ Interest250 250 366 116 Total revenues1,750 1,750 3,123 1,373 Expenditures:Current:Culture
and recreation10,000 10,000 -10,000 Total expenditures10,000 10,000 -10,000 Excess (deficiency) of revenuesover expenditures(8,250)$ (8,250)$ 3,123 11,373$ Fund balance, beginning of
the year119,285 Fund balance, end of the year122,408$ Budgeted Amounts76
CITY OF PORT ARTHUR, TEXASA -5Schedule of Revenues, Expenditures and Changes in Fund BalancesBudget and ActualGolf Course FundFor the Year Ended September 30, 2011Variance withActualFinal
BudgetGAAPPositiveOriginalFinalBasis(Negative)Revenues: User fees10,000$ 10,000$ 4,017$ (5,983)$ Interest150 150 342 192 Total revenues10,150 10,150 4,359 (5,791) Expenditures:Current:Culture
and recreation50,000 50,000 41,276 8,724 Total expenditures50,000 50,000 41,276 8,724 Excess (deficiency) of revenues over expenditures(39,850) (39,850) (36,917) 2,933 Other financing
sources:Operating transfers in----Net change in fund balance(39,850)$ (39,850)$ (36,917) 2,933$ Fund balance, beginning of the year113,555 Fund balance, end of the year76,638$ Budgeted
Amounts77
CITY OF PORT ARTHUR, TEXASA -6Schedule of Revenues, Expenditures and Changes in Fund BalancesBudget and ActualMunicipal Court Technology FundFor the Year Ended September 30, 2011Variance
withActualFinal BudgetGAAPPositiveOriginalFinalBasis(Negative)Revenues: Fines and forfeiture45,000$ 45,000$ 59,363$ 14,363$ Interest200 200 235 35 Total revenues45,200 45,200 59,598
14,398 Expenditures:Current:General government80,000 80,000 1,705 78,295 Total expenditures80,000 80,000 1,705 78,295 Excess (deficiency) of revenues over expenditures(34,800)$ (34,800)$
57,893 92,693$ Fund balance, beginning of the year53,032 Fund balance, end of the year110,925$ 78Budgeted Amounts
CITY OF PORT ARTHUR, TEXASA -7Schedule of Revenues, Expenditures and Changes in Fund BalancesBudget and ActualHotel Occupancy Tax FundFor the Year Ended September 30, 2011Variance withActualFinal
BudgetGAAPPositiveOriginalFinalBasis(Negative)Revenues: Hotel occupancy tax850,000$ 850,000$ 961,091$ 111,091$ Penalty and interest500 500 14,943 14,443 Interest600 600 329 (271) Total
revenues851,100 851,100 976,363 125,263 Expenditures:Current:Culture and recreation875,136 875,136 802,145 72,991 Total expenditures875,136 875,136 802,145 72,991 Excess (deficiency)
of revenuesover expenditures(24,036) (24,036) 174,218 198,254 Other financing (uses):Transfers out--(100,000) (100,000) Total other financing (uses)--(100,000) (100,000) Excess (deficiency)
of revenues over expenditures and other uses(24,036)$ (24,036)$ 74,218 98,254$ Fund balance, beginning of the year94,343 Fund balance, end of the year168,561$ 79Budgeted Amounts
CITY OF PORT ARTHUR, TEXASA -8Schedule of Revenues, Expenditures and Changes in Fund BalancesBudget and ActualPolice Special FundFor the Year Ended September 30, 2011Variance withActualFinal
BudgetGAAPPositiveOriginalFinalBasis(Negative)Revenues: Fines and forfeiture59,416$ 59,416$ 129,460$ 70,044$ Donations5,656$ 5,656 Interest revenue 492 492 400 (92) Miscellaneous4,062
4,062 Total revenues59,908 59,908 139,578 79,670 Expenditures:Public safety15,000 15,000 53,845 (38,845) Excess of revenues over expenditures44,908$ 44,908$ 85,733 40,825$ Fund balance,
beginning of the year17,207 Fund balance, end of the year102,940$ 80Budgeted Amounts
CITY OF PORT ARTHUR, TEXASA-9Statement of Revenues, Expenditures and Changes in Fund BalancesBudget and ActualTransit System FundFor the Year Ended September 30, 2011Variance withBudgeted
AmountsActualFinal BudgetGAAPPositiveOriginalFinalBasis(Negative)Revenues:User fees120,000$ 120,000$ 128,066$ 8,066$ Intergovernmental2,046,418 2,046,418 1,445,557 (600,861) Miscellaneous--72,871
72,871 Total revenues2,166,418 2,166,418 1,646,494 (519,924) Expenditures:Public transportation3,104,744 3,104,744 2,299,477 805,267 Excess (deficiency) of revenuesover expenditures(938,326)
(938,326) (652,983) 285,343 Other financing (uses):Transfers in750,000 750,000 750,000 -Transfers out(70,000) (70,000) (70,000) -Total other financing sources (uses)680,000 680,000 680,000
-Excess (deficiency) of revenuesover expenditures and other financing uses(258,326)$ (258,326)$ 27,017 285,343$ Fund balance, beginning of the year27,356 Fund balance, end of the year54,373$
81
INTERNAL SERVICE FUNDS
CITY OF PORT ARTHUR, TEXASB -1Internal Service FundsCombining Statement of Net AssetsSeptember 30, 2011EquipmentGeneralEmployeeEquipmentServicesLiabilityBenefitsReplacementFundFundFundFundTotalAssets
Current assetsCash-$ 554,985$ 48,198$ 118,413$ 721,596$ Investments-2,500,000 150,000 1,660,413 4,310,413 Due from other funds--7,048,823 -7,048,823 Accounts receivable--59,636 -59,636
Prepaid expense--131,000 -131,000 Total current assets-3,054,985 7,437,657 1,778,826 12,271,468 Non current assetsCapital assetsEquipment---23,137,120 23,137,120 Total---23,137,120 23,137,120
Accumulated depreciation---(18,213,618) (18,213,618) Total capital assets, net of accumulated depreciation---4,923,502 4,923,502 Total assets-$ 3,054,985$ 7,437,657$ 6,702,328$ 17,194,970$
LiabilitiesCurrent liabilitiesWages payable-$ -$ 24,387$ -$ 24,387$ Accounts payable-159 51,090 -51,249 Capital leases payable---113,667 113,667 Total current liabilities-159 75,477
113,667 189,303 Noncurrent liabilities Capital leases payable---288,327 288,327 Long-term risk liability-533,679 683,153 -1,216,832 Total noncurrent liabilities-533,679 683,153 288,327
1,505,159 Total liabilities-533,838 758,630 401,994 1,694,462 Net AssetsInvested in capital assets, netof related debt---4,521,508 4,521,508 Unrestricted-2,521,147 6,679,027 1,778,826
10,979,000 Total net assets-$ 2,521,147$ 6,679,027$ 6,300,334$ 15,500,508$ 85
CITY OF PORT ARTHUR, TEXASB -2Internal Service FundsCombining Statement of Revenues, Expenses and Changes in Fund Net AssetsFor the Year Ended September 30, 2011EquipmentGeneralEmployeeEquipmentServi
cesLiabilityBenefitsReplacementFundFundFundFundTotalOperating revenues:Charges for services-$ 4,065$ 10,170,024$ 1,206,895$ 11,380,984$ Operating expenses:Contractual services---7,413
7,413 Depreciation---2,033,610 2,033,610 Health and life insurance--7,710,323 -7,710,323 Employee injury claims--1,095,617 -1,095,617 Other employee benefits--575,979 -575,979 Damage
claims-317,302 --317,302 Total operating expenses-317,302 9,381,919 2,041,023 11,740,244 Income (loss) from operations-(313,237) 788,105 (834,128) (359,260) Nonoperating revenues (expenses)Interest
revenue-6,655 21,188 12,660 40,503 Interest expense---(25,977) (25,977) State capital grants---100,000 100,000 Gain on asset disposal---21,592 21,592 Total nonoperating revenues (expenses)-6,655
21,188 108,275 136,118 Income (loss) before transfers-(306,582) 306,582) 809,293 (725,853) (223,142) Transfers in1,369,474 1,770,000 -425,443 3,564,917 Transfers out--(302,329) -(302,329)
Change in net assets1,369,474 1,463,418 506,964 (300,410) 3,039,446 Net assets, beginning of year,(1,369,474) 1,057,729 6,172,063 6,600,744 12,461,062 Net assets, end of year-$ 2,521,147$
6,679,027$ 6,300,334$ 15,500,508$ 86
CITY OF PORT ARTHUR, TEXASB -3Internal Service FundsCombining Statement of Cash FlowsYear Ended September 30, 2011EquipmentGeneralEmployeeEquipmentServicesLiabilityBenefitsReplacementFundFundFundFund
TotalCASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers and users-$ -$ 10,143,904$ 1,206,895$ 11,350,799$ Payments to employees--(551,729) -(551,729) Payments to suppliers(100)
(1,330,481) (8,852,620) (18,655) (10,201,856) Net cash provided by operating activities(100) (1,330,481) 739,555 1,188,240 597,214 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESAdvances
from (to) other funds--(4,122,405) -(4,122,405) Transfers from other funds-1,770,000 -425,443 2,195,443 Transfers to other funds--(302,329) -(302,329) Net cash provided by noncapital
financing activities-1,770,000 (4,424,734) 425,443 (2,229,291) CASH FLOWS FROM CAPITAL AND RELATED ACTIVITIESAcquisition and construction of capital assets---(636,545) (636,545) Principal
paid on capital debt---(399,466) (399,466) Interest paid on capital debt---(25,977) (25,977) Capital grants---100,000 100,000 Proceeds from sale of capital assets---21,592 21,592 Net
cash by capital and related financing activities---(940,396) (940,396) CASH FLOWS FROM INVESTING ACTIVITIESProceeds from the sale of investments--3,000,000 1,060,270 4,060,270 Purchase
of investments--(150,000) (1,660,414) (1,810,414) Interest on cash and investments-6,655 21,188 12,660 40,503 Net cash provided by investing activities-6,655 2,871,188 (587,484) 2,290,359
Net (decrease) in cash and cash investments(100) 446,174 (813,991) 85,803 (282,114) Cash, beginning of year100 108,811 862,189 32,610 1,003,710 Cash, end of year-$ 554,985$ 48,198$ 118,413$
721,596$ Reconciliation of operating income (loss) to net cash provided (used) by operating activities:Income (loss) from operations-$ (313,237)$ 788,105$ (834,128)$ (359,260)$ Adjustments
to reconcile income (loss) fromoperations to net cash provided (used) by operating activities:Depreciation---2,033,610 2,033,610 Change in assets and liabilities (Increase) Decrease
in other receivables--(26,120) -(26,120) Decrease in inventory-----Decrease in prepaid expense-----Increase (decrease) in wages payable--24,250 -24,250 Increase (decrease) in accounts
payable-(726) 26,027 (11,242) 14,059 (Decrease) in compensated absences-----(Decrease) in long term risk liability-(1,016,518) (72,707) -(1,089,225) Net cash provided (used) by operating
activities-$ (1,330,481)$ 739,555$ 1,188,240$ 597,314$ 87
COMPONENT UNIT PORT ARTHUR ECONOMIC DEVELOPMENT CORPORATION
CITY OF PORT ARTHUR, TEXASC -1Component UnitPort Arthur Economic Development CorporationBalance SheetSeptember 30, 2011Debt General Service FundFundTotalAssetsCash 25,960$ 28,583$ 54,543$
Investments8,600,000 678,544 9,278,544 Accounts receivable239,375 -239,375 Total Assets8,865,335$ 707,127$ 9,572,462$ Liabilities and Fund Balances Liabilities Wages payable16,288$ -$
16,288$ Accounts payable119,501 -119,501 Deferred revenue213,810 -213,810 Total liabilities349,599 -349,599 Fund balancesReserved for: Future development1,000,000 -1,000,000 Debt service-707,127
707,127 Special projects---Unreserved, reported in: General fund7,515,734 -7,515,734 Total fund balances 8,515,734 707,127 9,222,861 Total liabilities and fund balances8,865,333$ 707,127$
Reconciliation to government wide statement of net assets:Capital assets used in governmental activities are not financial resources, and, therefore, are not reported in these funds6,036,675
Other long-term assets are not available to pay for current period expenditures and, therefore, are deferredin these funds213,810 Long term liabilities are not due and payable in the
current period, and therefore are not reported in these funds(5,824,739) Net assets of governmental activities9,648,607$ 91
CITY OF PORT ARTHUR, TEXASC-2Component UnitPort Arthur Economic Development CorporationStatement of Revenue, Expenditures and Changes in Fund BalancesFor the Year Ended September 30,
2011Debt General Service FundFundTotalRevenuesTaxes:Sales3,591,605$ 573,386$ 4,164,991$ Interest revenue25,261 1,851 27,112 Loan repayments239,295 -239,295 Business park10,471 -10,471
Miscellaneous276,308 -276,308 Total revenues4,142,940 575,237 4,718,177 Expenditures:Current:Economic development3,075,315 -3,075,315 Capital outlay---Debt service: Principal retirements-330,000
330,000 Interest and fiscal charges-243,385 243,385 Total expenditures3,075,315 573,385 3,648,700 Excess of revenueover expenditures before transfers1,067,625 1,852 1,069,477 Fund balances,
beginning of year, as previously reported7,448,109 705,275 Prior period adjustment, Note V.F.-Fund balances, beginning of year, as restated7,448,109 705,275 Fund balances, end of year8,515,734$
707,127$ Amounts reported for governmental activities in the statement of activities are different because:Governmental funds report capital outlay as expenditure. However, in the statement
of activities, the cost of those assets are allocated over their estimated usefullives and reported as depreciation expense. This is the amount by which capitaloutlays exceeded depreciation
in the current period.(18,558) The net effect of miscellaneous transactions involving capital assets is to decrease net assetsRevenues in the statement of activities that do not provide
current financial resources are not reported asrevenues in the funds(208,341) Some expenses reported in the statement of activities do not require the use of current financial resources,
andtherefore, are not reported as expenditures in the governmental funds(35,000) The repayment of the principal of long-term debt consumes the current financial resources ofgovernmental
funds, however has no effect on net assets.330,000 Changes in net assets1,137,578$ 92
CITY OF PORT ARTHUR, TEXASC -3Component UnitPort Arthur Economic Development CorporationGeneral Operating FundSchedule of Revenues, Expenditures and Changes in Fund BalancesBudget and
ActualFor the Year Ended September 30, 2011Variance withBudgeted AmountsFinal BudgetActualPositiveOriginalFinalAmounts(Negative)Revenues: Taxes:Sales3,326,615$ 3,326,615$ 3,591,605$
264,990$ Interest revenue25,000 25,000 25,261 261 Loan repayments45,000 45,000 239,295 194,295 Business park revenues12,000 12,000 10,471 (1,529) Miscellaneous revenue--276,308 276,308
Total revenues3,408,615 3,408,615 4,142,940 734,325 Expenditures:Current:General government:Personnel services421,722 421,722 421,447 275 Supplies21,840 21,840 13,962 7,878 Contractual
services457,739 457,739 403,301 54,438 Capital outlay5,000 5,000 -5,000 Development projects3,941,527 4,082,027 1,682,113 2,399,914 Debt Service606,817 606,817 554,492 52,325 Total expenditures5,454,
645 5,595,145 3,075,315 2,519,830 Excess (deficiency) of revenuesover expenditures(2,046,030)$ (2,186,530)$ 1,067,625 3,254,155$ Fund balance, beginning of year7,448,109 Fund balance,
end of year8,515,734$ 93
CITY OF PORT ARTHUR, TEXASC -4Component UnitPort Arthur Economic Development Corporation Debt Service FundSchedule of Revenues, Expenditures and Changes in Fund BalancesBudget and ActualFor
the Year Ended September 30, 2011Variance withBudgeted AmountsFinal BudgetActualPositiveOriginalFinalAmounts(Negative)Revenues: Taxes:Sales573,386$ 573,386$ 573,386$ -$ Interest revenue1,000
1,000 1,851 851 Total revenues574,386 574,386 575,237 851 Expenditures:Debt service:Principal retirement330,000 330,000 330,000 -Interest and fiscal charges243,385 243,385 243,385 -Total
expenditures573,385 573,385 573,385 -Excess of revenuesover expenditures1,001$ 1,001$ 1,852 851$ Fund balance, beginning of year 705,275 Fund balance, end of year 707,127$ 94
CITY OF PORT ARTHUR, TEXASComprehensive Annual Financial ReportFor the Year Ended September 30, 2011Statistical Table of ContentsFinancial TrendsThese schedules contain trend information
to help the reader understand how theCity's financial performance and well-being have changed over time.Net Assets by ComponentSchedule 1Changes in Net AssetsSchedule 2Governmental Activities
Tax Revenue by SourceSchedule 3Fund Balances of Governmental FundsSchedule 4Changes in Fund Balances of Governmental FundsSchedule 5General Governmental Tax Revenues by SourceSchedule
6Revenue CapacityThese schedules contain information to help the reader assess the City'smost significant local revenue sources.Assessed Value and Estimated Actual Value of Taxable PropertySchedule
7Property Tax Rates -Direct and Overlapping GovernmentsSchedule 8Principal Property TaxpayersSchedule 9Principal Industrial DistrictsSchedule 10Property Tax Levies and CollectionsSchedule
11Industrial District PaymentsSchedule 12Debt CapacityThese schedules contain information to help the reader assess the affordabilityof the City's current level of outstanding debt and
the City's ability to issue additional debt in the future.Ratios of Outstanding Debt by TypeSchedule 13Ratios of General Bonded Debt OutstandingSchedule 14Direct and Overlapping Governmental
Activities DebtSchedule 15Legal Debt Margin InformationSchedule 16
CITY OF PORT ARTHUR, TEXASComprehensive Annual Financial ReportFor the Year Ended September 30, 2011Statistical Table of ContentsDemographic and Economic InformationThese schedules offer
demographic and economic indicators to help the reader understand the environment within which the City's financialactivities take place.Demographic and Economic StatisticsSchedule 17Principal
EmployersSchedule 18Operating InformationThese schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates
to the services the government provides and the activities in performs.Full Time Equivalent City Employees by FunctionSchedule 19Operating Indicators by FunctionSchedule 20Capital Assets
by FunctionSchedule 21
CITY OF PORT ARTHUR, TEXASNet Assets by ComponentLast Eight Fiscal Years(accrual basis of accounting)Fiscal Year 200420052006 Governmental activitiesInvested in capital assets, net of
related debt17,575,084$ 4,671,088$ 6,298,355$ Restricted3,960,448 4,622,619 6,175,645 Unrestricted19,604,098 12,446,595 16,642,827 Total governmental activities net assets41,139,630$
21,740,302$ 29,116,827$ Business-type activitiesInvested in capital assets, net of related debt25,397,872$ 89,380,233$ 89,789,908$ Restricted16,200,454 9,028,750 7,251,971 Unrestricted(7,450,385)
(11,174,963) (14,669,600) Total business-type activities net assets34,147,941$ 87,234,020$ 82,372,279$ Primary GovernmentInvested in capital assets, net of related debt42,972,956$ 94,051,321$
96,088,263$ Restricted20,160,902 13,651,369 13,427,616 Unrestricted12,153,713 1,271,632 1,973,227 Total primary government net assets75,287,571$ 108,974,322$ 111,489,106$ Note: The City
began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003.98
Schedule 1Fiscal Year200720082009201020113,965,040$ (16,787,610)$ 57,871,638$ 52,886,404$ 41,646,196$ 8,115,974 14,529,546 10,073,955 12,159,977 7,950,939 16,593,389 18,325,406 (65,869,037)
(57,237,045) (32,449,632) 28,674,403$ 16,067,342$ 2,076,556$ 7,809,336$ 17,147,503$ 87,847,713$ 84,578,549$ 82,251,758$ 86,587,387$ 92,962,928$ 5,302,979 13,721,708 12,748,482 10,896,172
9,254,080 (16,625,691) (17,758,037) (23,262,102) (27,739,568) (30,836,039) 76,525,001$ 80,542,220$ 71,738,138$ 69,743,991$ 71,380,969$ 91,812,753$ 67,790,939$ 140,123,396$ 139,473,791$
134,609,124$ 13,418,953 28,251,254 22,822,437 23,056,149 17,205,019 (32,302) 567,369 (89,131,139) (84,976,613) (63,285,671) 105,199,404$ 96,609,562$ 73,814,694$ 77,553,327$ 88,528,472$
99
CITY OF PORT ARTHUR, TEXASChanges in Net Assets Last Eight Fiscal Years(accrual basis of accounting) 200420052006Expenses Governmental activitiesGeneral government6,630,177$ 6,826,332$
20,165,793$ Public safety19,466,665 21,583,467 21,074,558 Public works6,000,333 11,677,900 11,348,530 Community development1,982,109 1,526,504 1,565,422 Culture and recreation2,904,238
3,432,762 2,993,539 Health and welfare1,746,368 2,024,499 1,831,279 Public transportation1,601,850 1,604,625 1,938,632 Interest on long-term debt3,556,107 3,325,994 3,002,311 Total governmental
activities expenses43,887,847 52,002,083 63,920,064 Business-type activitiesWater and sewer12,472,993 13,114,542 14,010,621 Solid waste5,112,665 5,673,696 5,208,237 Total business-type
activities expenses17,585,658 18,788,238 19,218,858 Total primary government expenses61,473,505 70,790,321 83,138,922 Program RevenuesGovernmental activitiesCharges for services:General
government318,326 296,826 739,412 Public safety985,525 843,246 807,375 Community development-444,190 500,794 Culture and recreation202,962 180,893 87,395 Health and welfare163,821 179,116
221,907 Public transportation126,249 118,888 103,975 Operating grants and contributions7,199,995 5,701,339 12,003,439 Capital grants and contributions413,514 1,784,209 4,146,167 Total
governmental activities program revenues9,410,392 9,548,707 18,610,464 Business-type activitiesCharges for services:Water and sewer14,319,481 13,327,211 14,507,437 Solid waste5,182,936
4,994,403 5,909,138 Operating grants and contributions-28,348 1,615,186 Capital grants and contributions183,592 564,361 -Total business-type activities program revenues19,686,009 18,914,323
22,031,761 Total primary government program revenues29,096,401 28,463,030 40,642,225 100
CITY OF PORT ARTHUR, TEXASChanges in Net Assets Last Eight
Fiscal Years (continued)(accrual basis of accounting) 200420052006Net (Expense)Governmental activities(34,477,455)$ (42,453,376)$ (45,309,600)$ Business-type activities2,100,351 126,085
2,812,903 Total primary government net expenses(32,377,104) (42,327,291) (42,496,697) General Revenues and Other Changes in Net AssetsGovernment activitiesTaxesProperty Taxes9,810,300
11,102,923 12,432,896 Industrial district payments13,325,800 14,179,684 14,898,245 Gross receipts2,547,414 2,858,715 3,219,599 Sales taxes5,323,127 5,651,775 6,939,254 Other taxes474,722
496,789 667,218 Investment earnings479,080 815,493 971,310 Miscellaneous414,325 1,066,517 7,942,824 Transfers7,334,192 6,082,634 6,245,740 Total governmental activities39,708,960 42,254,530
53,317,086 Business-type activities Investment earnings27,843 30,742 79,711 Miscellaneous31,809 16,707 28,418 Transfers(7,334,192) (6,082,634) (6,245,740) Total Business-type activities(7,274,540)
(6,035,185) (6,137,611) Total primary government general revenuesand other changes in net assets32,434,420 36,219,345 47,179,475 Change in Net AssetsGovernmental activities5,231,505
(198,846) 8,007,486 Business-type activities(5,174,189) (5,909,100) (3,324,708) Total primary government57,316$ (6,107,946)$ 4,682,778$ Note: The City began to report accrual information
when it implemented GASB Statement 34, in fiscal year 2003.102
Schedule 2 Fiscal Year2007200820092010201115,620,967$ 13,332,504$ 21,411,497$ 13,639,715$ 13,672,278$ 22,822,830 25,025,968 32,421,145 29,371,645 28,627,623 11,859,564 14,038,090 14,588,581
14,006,598 15,838,978 1,453,406 1,543,713 1,490,108 3,201,371 3,213,649 5,824,415 4,351,668 5,361,406 4,968,703 4,649,682 2,106,857 4,349,172 2,723,071 2,905,668 3,767,992 2,122,404
2,361,839 2,563,463 3,061,791 2,819,228 2,753,310 2,944,208 3,421,325 3,294,557 3,052,972 64,563,753 67,947,162 83,980,596 74,450,048 75,642,402 14,081,351 15,767,793 16,965,508 17,579,403
16,125,058 6,798,600 6,934,443 9,685,522 8,422,715 6,683,056 20,879,951 22,702,236 26,651,030 26,002,118 22,808,114 85,443,704 90,649,398 110,631,626 100,452,166 98,450,516 1,178,285
692,713 915,882 728,594 665,108 1,307,213 1,378,647 1,778,882 1,793,753 2,343,485 443,473 (92,746) 144,867 155,726 365,573 75,477 105,849 120,472 338,417 114,721 207,120 211,292 195,722
-170,333 130,319 127,961 120,483 124,657 128,066 9,666,676 11,074,206 19,279,958 9,858,174 15,661,881 80,551 -34,800 1,172,641 -13,089,114 13,497,922 22,591,066 14,171,962 19,449,167
15,216,011 15,262,727 15,543,061 16,931,852 18,072,757 6,698,486 7,056,561 10,667,345 7,653,032 7,426,041 234,871 -------6,850,178 7,520,035 22,149,368 22,319,288 26,210,406 31,435,062
33,018,833 35,238,482 35,817,210 48,801,472 45,607,024 52,468,000 101
Schedule 2 Fiscal Year20072008200920102011(51,474,639)$ (54,449,240)$ (61,389,530)$ (60,278,086)$ (56,193,235)$ 1,269,417 (382,948) (440,624) 5,432,944 10,210,719 (50,205,222) (54,832,188)
(61,830,154) (54,845,142) (45,982,516) 11,424,235 13,139,237$ 15,329,768$ 16,082,423$ 16,758,589$ 15,259,988 16,238,958 14,605,507 26,520,879 24,302,981 3,933,880 4,251,127 4,439,957
4,414,729 4,996,761 7,288,008 8,248,052 9,801,361 8,108,987 8,330,199 793,620 1,083,948 1,115,410 985,368 1,109,479 1,221,857 692,378 240,344 379,046 256,516 3,885,701 2,192,092 1,999,733
1,940,243 1,039,621 7,224,926 (4,003,613) 6,651,553 7,487,001 8,614,912 51,032,215 41,842,179 54,183,633 65,918,676 65,409,058 107,236 349,468 108,582 53,355 17,688 5,652 42,429 -6,555
-(7,224,926) 4,003,613 (6,651,553) (7,487,001) (8,614,912) (7,112,038) 4,395,510 (6,542,971) (7,427,091) (8,597,224) 43,920,177 46,237,689 47,640,662 58,491,585 56,811,834 (442,424)
(12,607,061) (7,205,897) 5,640,590 9,215,823 (5,842,621) 4,012,562 (6,983,595) (1,994,147) 1,613,495 (6,285,045)$ (8,594,499)$ (14,189,492)$ 3,646,443$ 10,829,318$ 103
CITY OF PORT ARTHUR, TEXASSchedule 3Governmental Activities Tax Revenues by SourceGovernmental FundsLast Eight Fiscal Years(accrual basis of accounting) IndustrialGross Hotel Fiscal
Property District ReceiptsSalesOccupancyPenaltiesYearTaxesPaymentsTaxesTaxTaxes& InterestTotal2004 9,581,920$ 13,325,800$ 2,547,415$ 5,323,127$ 410,254$ 228,380$ 31,416,896$ 200510,839,546
14,179,6842,858,7155,651,775433,668263,37734,226,765 200612,174,338 14,898,2452,059,0246,939,254605,375258,55836,934,794 200711,118,394 15,259,9883,933,8807,288,008712,663305,841 38,618,774
200812,803,551 16,238,9584,251,1278,248,052990,764335,686 42,868,138 200915,003,724 14,605,5074,439,9579,801,361997,171326,044 45,173,764 201015,772,539 26,520,8794,414,7298,108,987985,368309,884
56,112,386 201116,378,046 24,302,9814,996,7618,330,199961,091361,309 55,330,387 Note: The City began to report accrual information when it implemented GASB Statement 34 in fiscal year
2003.104
CITY OF PORT ARTHUR, TEXASFund Balances of Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting) 2002200320042005General FundReserved31,203$ 98,812$ 111,752$
86,971$ Unreserved9,567,007 9,794,228 9,838,483 8,834,592 Nonspendable:Inventory----Prepaid items----Unassigned----Total general fund9,598,210$ 9,893,040$ 9,950,235$ 8,921,563$ All Other
Governmental FundsReserved, reported inSpecial revenue funds5,160$ -$ -$ 2,000,000$ Capital projects funds8,118,398 3,383,376 1,561,719 1,402,753 Debt service funds2,532,067 3,072,973
2,398,729 3,219,866 Unreserved, reported in: Special revenue funds3,207,977 2,442,946 3,410,724 1,627,937 Nonspendable:Prepaid items----Restricted:Culture and recreation----Public safety----Public
wroks----Debt service funds----Capital projects----Assigned:Culture and recreation----Community development----Unassigned----Total all other governmental funds13,863,602$ 8,899,295$
7,371,172$ 8,250,556$ Total governmental funds23,461,812$ 18,792,335$ 17,321,407$ 17,172,119$ 106
Schedule 4 Fiscal Year20062007200820092010201154,376$ 33,104$ 30,962$ 28,561$ 128,709$ -$ 10,899,509 11,875,374 14,477,134 11,387,958 16,107,851 ------45,239 -----39,293 -----21,776,856
10,953,885$ 11,908,478$ 14,508,096$ 11,416,519$ 16,236,560$ 21,861,388$ -$ 386,650$ -$ -$ -$ -$ 2,097,248 2,346,951 10,831,709 6,020,546 8,951,450 -4,078,397 4,821,810 3,697,837 4,053,409
3,208,527 -2,311,065 -3,351 2,211,515 1,678,856 ------1,550,000 -----13,922 -----102,940 -----1,695 -----2,684,021 -----5,266,918 -----400,827 -----707,279 -----(378,542) 8,486,710$
7,555,411$ 14,532,897$ 12,285,470$ 13,838,833$ 10,349,060$ 19,440,595$ 19,463,889$ 29,040,993$ 23,701,989$ 30,075,393$ 32,210,448$ 107
CITY OF PORT ARTHUR, TEXASChanges in Fund Balances, Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting)Fiscal Year 20022003200420052006RevenuesTaxes16,477,379$
17,160,937$ 18,155,563$ 20,110,202$ 23,007,397$ Industrial district payments15,848,972 13,343,972 13,325,800 14,179,684 14,898,245 Licenses, fees, and permits353,777 313,080 239,364
276,052 668,483 User fees440,394 570,646 609,033 550,239 492,619 Fines and penalties606,793 730,169 948,488 792,678 798,962 Intergovernmental3,731,662 4,932,581 6,422,103 5,697,146 15,129,686
Investment earnings760,309 727,260 451,975 728,342 827,537 Other revenues655,294 747,485 1,221,619 2,644,732 7,360,537 Total revenues38,874,580 38,526,130 41,373,945 44,979,075 63,183,466
ExpendituresGeneral Government10,566,650 5,592,267 6,370,974 6,423,106 20,035,929 Public safety17,110,280 17,908,692 19,129,229 20,220,301 20,312,025 Community development-2,129,993
1,974,243 1,368,945 1,404,831 Culture and recreation-2,527,931 2,745,206 3,140,721 2,879,934 2,879,934 Health and welfare551,147 1,685,247 1,739,565 1,925,058 1,890,588 Public transportation-1,438,52
8 1,445,171 1,517,573 1,728,129 Public works5,955,094 5,928,990 5,920,879 6,777,147 5,905,021 Capital outlay3,585,880 5,087,137 3,378,300 1,961,024 3,978,598 Debt service Lease payments210,175
----Other contractual payments-----Principal2,350,000 3,635,000 3,450,000 3,815,000 3,815,000 Interest and fiscal charges3,111,430 3,498,373 3,534,281 3,059,150 2,956,278 Total Expenditures43,440,656
49,432,158 49,687,848 50,208,025 64,906,333 Excess (deficiency) of revenues over expenditures(4,566,076) (10,906,028) (8,313,903) (5,228,950) (1,722,867) Other Financing Sources (uses)Bonds
issued47,550,000 18,124,979 -11,981,093 -Capital contributed to other funds(28,000,000) --(11,946,796) -Payment of refunding bonds(11,550,792) (18,435,215) ---Bond issuance cost(86,171)
(163,907) -(219,220) -Transfers in9,059,988 8,487,673 8,749,430 8,589,031 7,621,520 Transfers out(4,425,850) (2,022,056) (2,111,385) (3,324,447) (2,999,216) Total other financing sources12,547,175
5,991,474 6,638,045 5,079,661 4,622,304 Net change in fund balances7,981,099$ (4,914,554)$ (1,675,858)$ (149,289)$ 2,899,437$ Debt service as a percentage of non capital expenditures16.49%19.17%17.76
%16.62%12.50%108
Schedule 5Fiscal Year2007200820092010201123,323,221$ 26,534,916$ 30,592,466$ 29,448,938$ 31,130,790$ 15,259,988 16,238,958 14,605,507 26,520,879 24,302,981 1,152,675 679,444 868,612
702,347 433,615 474,310 489,141 521,730 489,321 695,237 1,271,429 1,347,877 1,747,157 1,793,753 2,365,894 9,666,577 11,064,309 19,279,958 11,060,266 15,552,645 926,542 531,776 201,293
314,485 216,009 5,088,475 2,096,949 2,080,210 2,085,663 1,477,158 57,163,217 58,983,370 69,896,933 72,415,652 76,174,329 15,178,668 12,958,322 21,851,794 13,243,057 13,457,671 22,951,494
23,347,832 25,633,260 28,914,842 29,081,034 3,077,736 1,503,913 1,581,240 3,008,202 2,976,039 3,892,484 3,920,103 4,591,672 4,579,614 4,503,245 2,121,923 4,334,973 2,652,941 2,862,270
3,767,932 1,778,597 1,808,289 1,857,396 3,242,534 2,307,311 6,871,788 7,018,114 7,749,763 8,224,026 9,973,875 184,686 1,572,125 6,362,702 7,553,541 4,057,424 ----------3,410,000 3,290,000
4,275,000 5,414,884 6,085,000 2,682,620 2,881,939 3,362,396 3,252,051 3,026,995 62,149,996 62,635,610 79,918,164 80,295,021 79,236,526 (4,986,779) (3,652,240) (10,021,231) (7,879,369)
(3,062,197) 8,514,181 9,000,000 -8,092,240 9,906,922 -----(8,351,347) ---(10,061,993) (137,511) ----9,597,019 8,362,563 9,782,085 10,191,957 13,481,240 (4,612,629) (4,132,859) (5,099,858)
(4,943,382) (8,128,917) 5,009,713 13,229,704 4,682,227 13,340,815 5,197,252 22,934$ 9,577,464$ (5,339,004)$ 5,461,446$ 2,135,055$ 10.90%11.24%11.59%13.53%13.79%109
CITY OF PORT ARTHUR, TEXASSchedule 6General Governmental Tax Revenues by SourceLast Ten Fiscal Years(modified accrual basis of accounting)IndustrialGrossHotelFiscal PropertyDistrictReceipts
SalesOccupancyPenalties YearTaxesPaymentsTaxesTaxTaxes& InterestTotal2002 8,822,136$ 15,848,973$ 2,468,176$ 4,512,538$ 415,614$ 196,826$ 32,264,263$ 20039,064,850 13,343,9732,578,5044,860,621367,2322
30,80230,445,9822004 9,581,920 13,325,8002,547,4155,323,127410,254228,38031,416,896200510,843,420 14,179,6842,858,7155,651,775433,668263,37734,230,639200611,924,508 14,898,2452,059,0246,939,254605,37
5258,55836,684,964200710,988,432 15,259,9883,933,8807,288,008793,620319,281 38,583,209 200812,616,103 16,238,9584,251,1278,248,052990,764335,686 42,680,690 200914,909,694 14,605,5074,439,9579,801,361
997,171326,044 45,079,734 201015,604,285 26,520,8794,414,7298,108,987858,192335,569 55,842,641 201116,313,807 20,822,9814,996,7618,330,199961,061395,487 51,820,296 110
City of Port Arthur, TexasSchedule 7Assessed Value and Estimated Actual Value of Taxable PropertyLast Ten Fiscal Years EstimatedTaxable AssessedTotal TaxableTotalActualValue as aFiscal
ResidentialCommercialAssessedTaxTaxablePercentage ofYearPropertyPropertyValueRateValueActual Taxable Value2002 396,639,950$ 763,744,880$ 1,160,384,830$ 0.775$ 1,160,384,830$ 100%2003411,629,657
771,740,713 1,183,370,370 0.775 1,183,370,370 100%2004 457,002,827 787,178,758 1,244,181,585 0.775 1,244,181,585 100%2005492,468,962 926,454,971 1,418,923,933 0.775 1,418,923,933 100%2006526,306,321
1,001,079,529 1,527,385,850 0.775 1,527,385,850 100%2007462,014,658 968,998,2871,431,012,9450.775 1,431,012,945 100%2008613,616,150 1,117,679,9651,731,296,1150.760 1,731,296,115 100%2009721,579,294
1,249,334,5731,970,913,8670.760 1,970,913,867 100%2010757,766,082 1,292,473,2502,050,239,3320.792 2,050,239,332 100%20111,031,950,841 1,106,422,3442,138,373,1850.792 2,138,373,185 100%Source:
Jefferson and Orange County Appraisal DistrictsNotes:Property in Jefferson and Orange Counties are assessed once every two years on average. The counties assess property at 100 percent
of actual value for commercial, industrial, and residential property.Estimated actual taxable value is calculated by dividing taxable assessed value by those percentages. Taxrates are
per $100 at assessed value.111
CITY OF PORT ARTHUR, TEXASDIRECT AND OVERLAPPING PROPERTY TAX RATESLast Ten Fiscal Years(rate per $100 of assessed value)City Direct RatesOverlapping Rates General ObligationTotalPort
Port Neches -FiscalMaintenanceDebt DirectArthurNederlandGrovesYear& OperationServiceRateI.S.D.I.S.D.I.S.D.20020.221000$ 0.554000$ 0.775$ 1.532$ 1.530$ 1.677181$ 20030.1073100.6676900.775
1.5321.5601.65636220040.2845140.4904860.775 1.5001.5501.63330020050.2603330.5146670.775 1.6241.5501.62779220060.2866440.4883560.775 1.6811.5501.61900020070.3092000.4658000.775 1.4841.3801.47830020080
.4655990.2944010.760 1.2781.1201.19250020090.3579900.4020100.760 1.3111.1201.28400020100.3874690.4045310.792 1.3701.2151.45495020110.3985090.3934910.792 1.3681.1101.437000Source: Jefferson
County Appraisal DistrictNote: Overlapping rates are those of local and county governments that apply to property owners withinthe City of Port Arthur. Not all overlapping rates apply
to all city property owners.112
Schedule 8Overlapping RatesSabine PortSabinePassArthurJeffersonPassPortNavigationCountyJeffersonI.S.D.AuthorityDistDD #7CountyTotal1.685$ 0.295151$ 0.131937$ 0.170500$ 0.3650$ 8.16177$
1.689 0.2951510.1312770.1881000.36508.191891.689 0.3086000.1308700.1881000.36508.139871.696 0.2513770.1219090.1881000.42508.259181.675 0.1837090.1281500.1790630.42508.215921.542 0.2681040.1281500.160
0000.40007.615661.177 0.2576500.1281500.1458090.39006.449701.177 0.2044790.1281500.1396500.36506.489471.116 0.1998860.1281500.1389770.36506.780111.140 0.1456850.1281500.1409490.36506.62678
113
CITY OF PORT ARTHUR, TEXASSchedule 9PRINCIPAL PROPERTY TAX PAYERSCURRENT YEAR AND NINE YEARS AGO 20112002PercentagePercentageof Total Cityof Total CityTaxableTaxableTaxableTaxable AssessedAssessed
AssessedAssessed TaxpayerValueRankValueValueRankValueEntergy 172,016,050$ 16.829%158,065,922$ 113.622%Southeast Texas Hospital71,719,870 22.847%-Wal-Mart Stores36,363,410 31.444%Central
Mall30,746,180 41.221%23,067,630 21.988%Motiva Enterprises24,795,210 50.984%Horizon Vessels19,204,380 60.762%Madison Clearview18,192,090 70.722%TOTAL Petrochemical18,240,710 80.724%Southwestern
Bell15,408,270 90.612%16,008,230 51.380%Stone Creek Apartments LTD14,522,480 100.577%Restaurant Management--19,204,860 31.655%Park Place Hospital--16,384,220 41.412%Friede Goldman Offshore--12,396,88
0 61.068%Kansas City Southern Industries--12,256,090 81.056%Equilon Pipeline--10,347,240 90.892%KMCO--10,309,160 100.888%421,208,650$ 16.723%278,040,232$ 23.961%Source: Jefferson County
Appraisal District114
CITY OF PORT ARTHUR, TEXASSchedule 10PRINCIPAL INDUSTRIAL DISTRICTSCURRENT YEAR AND NINE YEARS AGO 20112002PercentagePercentageof Totalof TotalTaxableIndustrial TaxableIndustrial AssessedDistrictAsse
ssedDistrictIndustryValueRankValuesValueRankValuesMotiva (formerly Star Enterprises)3,052,762,980$ 145.51%629,924,560$ 123.21%Valero (formerly Premcor Refining)1,157,147,820 217.25%405,087,890
314.92%TOTAL (formerly American Petrofina)628,742,680 39.37%349,932,700 512.89%BASF/Fina Joint Venture385,827,150 45.75%426,170,400 215.70%ExxonMobil Golden Pass LNG448,683,930 66.69%Flint
Hills Resources (formerly Huntsman)225,840,690 53.37%298,937,550 611.01%Chevron-Phillips176,549,360 72.63%401,718,910 414.80%Air Products174,814,240 82.61%Sabina Petrochemicals112,989,300
91.68%Chevron, USA92,253,690 101.38%OxBow Calcining (formerly GLC)34,409,500 81.27%BASF (formerly Sandoz)115,222,700 74.24%Onyx Environmental 17,166,320 90.63%Equistar12,428,850 100.46%6,455,611,840$
96.24%2,690,999,380$ 99.14%Source: Jefferson County Appraisal District115
CITY OF PORT ARTHUR, TEXASSchedule 11PROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARS Collected within the Taxes LeviedFiscal Year of the LevyCollection inTotal Collections to
DateFiscalfor the PercentageSubsequent PercentageYearFiscal YearAmountof LevyYearsAmountof Levy20028,777,851$ 8,518,287$ 97.0%165,265$ 8,683,552$ 98.9%20038,997,418 8,697,696 96.7%189,501
8,887,197 98.8%20048,756,655 8,230,587 94.0%409,424 8,640,011 98.7%200510,764,466 10,305,833 95.7%326,399 10,632,232 98.8%200611,860,231 11,322,307 95.5%353,941 11,676,249 98.4%200711,112,67210,672,1
6996.0%280,920 10,953,089 98.6%200813,028,64712,645,88297.1%173,161 12,819,043 98.4%200915,214,11914,610,05696.0%268,594 14,878,650 97.8%201015,991,14315,151,50294.7%317,937 15,469,439
96.7%201116,561,11415,764,64395.2%-15,764,643 95.2%(1) All funds(2) Excluding industrial district payments116
CITY OF PORT ARTHUR, TEXASSchedule 12INDUSTRIAL DISTRICT PAYMENTSLAST TEN FISCAL YEARSTotal Total FiscalPaymentsPaymentsPercentAmountYearDueCollectedCollectedOutstanding200215,848,972$
(1)15,848,972$ 100%-$ 200313,343,97213,343,972100%-200413,325,80013,325,800100%-200514,179,68414,179,684100%-200614,898,25514,898,255100%-200715,259,98815,259,988100%-200816,238,95816,238,958100%-200
914,605,50714,605,507100%-201023,040,87923,040,879100%-201120,822,98120,822,981100%-(1) Includes a one time payment that crossed fiscal years117
CITY OF PORT ARTHUR, TEXASSchedule 13Ratios of Outstanding Debt by TypeLast Ten Fiscal Years Governmental Activities GeneralCertificatesTotalPercentageFiscalObligationofCapital Primary
of Personal Per YearBondsObligationLeasesGovernmentIncome 1Capita 1200238,690,000$ 43,650,000$ 288,323$ 82,628,323$ 10.09%1,431$ 200341,965,000 38,140,000 1,099,173 81,204,173 9.91%1,406
200439,625,000 36,480,000 880,937 76,985,937 9.40%1,333 200538,155,000 34,740,000 1,333,496 74,228,496 9.06%1,285 200635,890,000 33,190,000 990,094 70,070,094 8.55%1,213 200742,075,000
24,215,000 1,756,033 68,046,033 8.31%1,178 200848,835,000 33,165,000 1,655,776 83,655,776 10.21%1,448 200945,980,000 31,745,000 1,286,830 79,011,830 9.65%1,368 201050,750,000 29,560,000
801,460 81,111,460 9.90%1,404 201153,575,000 20,565,000 401,994 74,541,994 9.10%1,291 Details regarding the City's outstanding debt can be found in the notes to the financial statements.1See
the Schedule of Demographic and Economic Statistics (Schedule 17) for personalincome and and population data. 118
CITY OF PORT ARTHUR, TEXASSchedule 14Ratios of General Bonded Debt OutstandingLast Ten Fiscal Years General Bonded Debt OutstandingAs aPercentage ofGeneralCertificateActual TaxableFiscalObligationof
Value ofPerYearBondsObligationTotalPropertyCapita 200238,690,000$ 43,650,000$ 82,340,000$ 7.10%1,426$ 200341,965,000 38,140,000 80,105,000 6.77%1,387 200439,625,000 36,480,000 76,105,000
6.12%1,317 200538,155,000 34,740,000 72,895,000 5.14%1,262 200635,890,000 33,190,000 69,080,000 4.52%1,196 200742,075,000 24,215,000 66,290,000 4.63%1,147 200848,835,000 33,165,000 82,000,000
4.74%1,419 200945,980,000 31,745,000 77,725,000 3.94%1,345 201050,750,000 29,560,000 80,310,000 3.92%1,390 201153,575,000 20,565,000 74,140,000 2.94%1,283 Notes: Details regarding the
City's outstanding debt can be found in the notes to the financial statements.See Schedule 7 for property value data.Population data can be found in Schedule 17.119
CITY OF PORT ARTHUR, TEXAS Schedule 15Direct and Overlapping Governmental Activities DebtAs of September 30, 2011EstimatedShare ofEstimatedDirect andDebtPercentageOverlappingOutstandingApplicableDebt
Overlapping debt:Port Arthur Independent School District233,617,550$ 100.00%233,617,550$ Jefferson County60,770,000 10.83%6,581,391 Jefferson County Drainage District #7-20.13%-Port
of Port Arthur Navigation District36,985,000 34.62%12,804,207 Nederland Independent School District8,845,000 7.57%669,567 Port Neches -Groves Independent School District128,326,078 5.35%6,865,445
Sabine Pass Independent School District31,681,529 100.00%31,681,529 Sabine Pass Port Authority1,270,000 100.00%1,270,000 Subtotal, overlapping debt293,489,689$ Direct debt:City of Port
Arthur80,310,000 100.00%80,310,000 Total, direct and overlapping debt373,799,689$ Estimate of overlapping percentages are provided by the Municipal Advisory Council of Texas120
CITY OF PORT ARTHUR, TEXASDebt Margin InformationLast Ten Fiscal YearsDebt Margin Calculation for Fiscal Year 2010Assessed value plus industrial district value9,226,488,408$ Debt Limit
(10%of assessed value)922,648,841 Debt applicable to limit:General obligation bonds74,140,000 Other debt401,994 Less: Amount set aside for repayment of general obligaton debt(2,684,021)
Total net debt applicable to limit71,857,973 Debt margin850,790,868$ 2002200320042005Debt Limit306,049,348$ 304,904,211$ 354,749,275$ 499,690,528$ Total net debt applicable to limit82,128,323
82,128,323 77,535,937 74,228,497 Debt margin223,921,025$ 222,775,888$ 277,213,338$ 425,462,031$ Total net debt applicable to the limitas a percentage of debt limit26.83%26.94%21.86%14.85%There
is no debt limit established by law; therefore, the limit is governed by the City's ability to levy and collect taxes to service the debt. The Attorney General of the State of Texas
will not approvemore than $1.00 of the tax rate for debt service. The City's maximum maximum legal tax rate is $2.00 per $100valuation assessed at 100% of the market value. Ten percent
(10%) of the assessed value has been applied as a "rule of thumb" procedure.122
Schedule 16200620072008200920102011528,470,070$ 728,339,922$ 790,629,481$ 836,028,026$ 826,894,052$ 850,790,868$ 65,991,697 63,224,223 79,957,939 74,908,421 77,902,933 71,857,973 462,478,373$
665,115,699$ 710,671,542$ 761,119,605$ 748,991,119$ 778,932,895$ 12.49%8.68%10.11%8.96%9.42%8.45%123
CITY OF PORT ARTHUR, TEXASSchedule 17Demographic and Economic StatisticsLast Ten Fiscal Years MedianEducation IncomeLevel in Calendar perMedianPersonalYears ofSchool UnemploymentyearPopulation(1)hous
ehold (1)Age (1)Income (1)Schooling (2)Enrollment (2)Rate (3)200257,755 26,455$ 34.5 14,183 11.9 10,971 10.7%200357,755 26,455 35.1 14,183 12.1 10,438 13.9%200457,775 26,455 35.1 14,183
12.1 9,439 13.0%200557,775 26,455 35.1 14,183 12.1 8,824 9.1%200657,775 26,455 35.1 14,183 12.1 8,442 7.6%200757,775 26,455 34.6 14,183 12.1 7,922 7.2%200857,529 26,455 36.0 16,895 12.1
9,097 9.4%200953,989 27,150 35.4 16,895 12.1 9,261 10.7%201053,818 31,043 35.6 16,895 12.1 9,238 14.5%201153,818 31,043 35.6 16,895 12.1 9,107 14.8% 1) U. S. Census Bureau2) Texas Education
Agency3) Texas Workforce Commission124
CITY OF PORT ARTHUR, TEXASSchedule 18PRINCIPAL EMPLOYERSCURRENT YEAR AND NINE YEARS AGO 20112002 Percentage Percentage of Total City of Total CityEmployerEmployeesRankEmploymentEmployeesRankEmploymen
tPort Arthur Independent School District 1,28215.26%1,425 15.85%Motiva Enterprises 1,09624.20%---Christus St. Mary Hospital *90033.45%1,200 44.92%Valero Refining (formerly Clark)82543.16%800
83.28%City of Port Arthur67952.60%---Wal-Mart Supercenters (2 locations) **65062.49%---The Medical Center of Southeast Texas56272.15%653 72.68%TOTAL Petrochemicals50081.91%465 101.91%Flint
Hills Resources (formerly Huntsman)20190.77%1,290 35.29%Park Place Hospital---1,085 54.45%Texas Drydock---650 92.67%Star Enterprise---1,300 25.34%Dupont---900 63.69%Ameripol/Synpol---860
73.53%125
CITY OF PORT ARTHUR, TEXASSchedule 19Full-time Equivalent City Government Employees by Function/ProgramLast Ten Fiscal Years 2002200320042005200620072008200920102011General government67
68 66.3 65 66 89.5 88.5 89.5 108.5 92.5 Culture and recreation37.25 38.75 34.25 34.25 33.25 34 34 36 37.25 34.25 Public SafetyPolice 145 145 145 148 146 151.9 154.9 154.9 165 165 Fire107
107 107 107 107 107 107 107 107 107 Community development8 8 8 10 10 10 12 12 --Health and welfare26.1 26.1 28.1 27.5 29.5 32.5 32.5 29.5 38.5 45.8 Public works69 68 63 63 63 67 67 69
73 75 Public transportation23.5 23.5 24.5 24.5 23.5 24.5 24.5 24.5 24.5 26.5 Water utilities103 104 98 98 97 85 85 85 85 84 Solid waste49 49 47 45 45 47 49 50 51 49 Equipment services15
15 9 9 11 12 12 12 12 -Total 649.60 652.10 630.10 631.50 631.50 660.40 666.40 669.40 701.75 679.00 Source: City of Port Arthur annual budgets126Fiscal Year
CITY OF PORT ARTHUR, TEXASOperating Indicators by Function/ProgramLast Ten Fiscal Years 2002200320042005General governmentBulding permits issuedCommercial Construction230 134 122 116
Residential Construction92 87 69 82 PoliceCalls for service53,438 58,122 57,312 55,472 FireFires 478 470 429 506 Rescue, EMC4,297 5,456 5,797 5,045 Other Calls1,353 1,431 1,516 1,573
LandfillCompacted refuse disposed (cubic yards)146,870 175,626 159,743 145,699 Non-compacted refuse disposed (cubic yards)154,429 280,213 258,169 206,953 Other public worksStreet resurfacing
(miles)9.51 --8.22 4.43 Drainage regrading (miles)13.62 15.76 15.34 9.88 LibraryVolumes in collection158,939 158,939 158,939 156,100 Library cards in force37,803 38,703 37,803 18,969
Water and SewerMeters in service18,295 18,390 18,390 18,390 Water calls5,719 4,728 4,679 4,755 Average daily production (millions of gallons)11.52 11.42 13.76 14.94 Peak daily production
(millions of gallons)13.20 12.92 18.07 19.49 WastewaterSewer calls 11,225 10,428 9,416 9,368 TransitTotal route miles345,134 348,146 347,246 333,155 Passengers171,652 143,263 146,145
137,102 Sources: Various city departments. 128
Schedule 20 Fiscal Year200620072008200920102011217 160 21 10 69 89 61 174 136 531 768 862 56,681 59,633 63,366 62,249 59,790 63,899 551 517 544 475 427 410 5,667 5,811 6,295 6,084 6,299
6,481 1,665 2,394 1,696 1,387 1,567 1,612 156,921 171,896 194,568 194,568 208,967 232,629 390,544 513,933 559,872 559,872 660,081 417,984 4.67 5.67 6.13 5.67 10.09 3.40 4.04 14.97 19.46
19.46 30.10 30.70 137,575 159,436 159,440 159,729 163,886 174,404 10,862 11,319 8,384 9,113 10,364 11,437 17,492 17,895 18,025 18,156 18,174 19,023 6,129 3,816 4,061 4,345 5,109 5,796
13.61 12,811 12,668 13,102 14,303 16,630 16.17 15,255 18,530 16,494 20,325 20,354 8,660 7,373 6,627 7,603 8,363 8,139 328,495 333,327 246,208 365,650 373,436 365,693 116,828 99,923 98,862
119,083 115,625 127,683 129
CITY OF PORT ARTHUR, TEXASCapital Asset Statistics by FunctionLast Ten Fiscal YearsFiscal Year 2002200320042005Public SafetyPoliceStations1 1 1 1 Fires Stations7 7 7 7 Hydrants1,907
1,926 1,926 1,985 StreetsStreets (miles)331.4 341.8 341.8 341.8 Sidewalks (miles)125.7 125.7 125.7 125.7 DrainageStorm Sewers (miles)181.4 181.4 181.4 181.4 LibrariesNumber of libraries1
1 1 1 Parks and RecreationAcreage332.52 515.10 515.10 515.10 Golf Course1 2 2 2 Swimming Pools3 3 3 3 Playgrounds33 33 33 33 Recreation center1 1 1 1 Water and SewerWater mains (miles)371
371 371 371 Sanitary sewer mains (miles)282 282 282 282 Sources: Various city departments.130
Schedule 21Fiscal Year2006200720082009201020111 1 1 1 1 1 7 7 7 8 8 7 2,014 2,015 2,026 2,128 2,162 2,165 341.8 341.8 341.8 341.8 342.7 349.0 125.7 125.7 125.7 125.7 125.7 126.0 181.4
181.4 181.4 181.4 182.0 185.0 1 1 1 1 1 1 515.10 515.10 515.10 515.02 515.02 515.02 2 2 2 2 2 2 3 3 3 3 3 3 33 33 33 33 33 33 1 1 1 1 1 1 371 371 371 350 353 381 282 282 282 354 356
356 131