10-25-04 Regular Meeting of La Porte Audit Committee

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1 • • CITY OF LA PORTE, TEXAS 1 1 Management's Discussion and Analysis For the Year Ended September 30, 2004 As management of the City of La Porte, we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2004. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 3-8 of this report. FINANCIAL HIGHLIGHTS • The assets of the City of La Porte exceeded its liabilities at the close of the most recent fiscal year by $87,019,858 (net assets). Of this amount, $28,662,825 (unrestricted net assets) may be used to meet the government's ongoing obligations to citizens and creditors in accordance with the City's fund designation and fiscal policies. • The government's total net assets decreased by $1,105,883. ' • As of the close of the current fiscal year, the City of La Porte's governmental funds reported combined ending fund balances of $23,143,855. Of this amount, $15,471,748 (67%) is unreserved and available for use within the City's designation and policies. ' • At the end of the current fiscal year, unreserved fund balance for the general fund was $6,632,833 (28%) of the total general fund expenditures. ' OVERVIEW OF THE FINANCIAL STATEMENTS 1 1 1 1 This discussion and analysis are intended to serve as an introduction of 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 basic financial statements themselves. 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 a 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. 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 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 report 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, public works, health and sanitation and culture and recreation. The business -type activities of the City include the Water and Sewer Utilities, Airport, La Porte Area Water Authority, Sylvan Beach Convention Center and Bay Forest Golf Course operations. The government -wide financial statements can be found on pages 27-29 of this report. 17