MUNICIPAL UTILITIES BOARD OF THE CITY OF ALBERTVILLE … · The Municipal Utilities Board (MUB) was...

MUNICIPAL UTILITIES BOARD OF THE CITY OF ALBERTVILLE

WATER SYSTEM Albertville, Alabama

AUDITED FINANCIAL STATEMENTS AND

SUPPLEMENTARY INFORMATION

FOR THE YEARS ENDED JUNE 30, 2015 AND 2014

CONTENTS

Page INDEPENDENT AUDITOR’S REPORT 1 – 2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 – 10 FINANCIAL STATEMENTS Statements of Net Position 11 – 12 Statements of Revenues, Expenses and Changes in Net Position 13 Statements of Cash Flows 14 Notes to Financial Statements 15 – 40 REQUIRED SUPPLEMENTARY INFORMATION Schedules of Changes in the Board’s Net Pension Liability and Related Ratios 42 Schedules of Employer Contributions 43 SUPPLEMENTARY INFORMATION Schedules of Operating Expense 45 Schedules of Operating Statistics 46 – 47 Schedules of Debt Service Requirements to Maturity 48 – 49

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LORI CRISWELL & ASSOCIATES, P.C.

SNEAD, ALABAMA 35952

Lori Criswell Certified Public Accountant AMERICAN INSTITUTE 87505 U.S. Highway 278 OF CERTIFIED PUBLIC ACCOUNTANTS P.O. BOX 606 Snead, Alabama 35952 ALABAMA SOCIETY PHONE: (205) 466-7157 OF CERTIFIED PUBLIC ACCOUNTANTS FAX: (205) 466-8144 email: [email protected]

To the Board of Directors The Municipal Utilities Board of the City of Albertville – Water System Albertville, Alabama

INDEPENDENT AUDITOR’S REPORT

We have audited the accompanying financial statements of the business-type activities of the Municipal Utilities Board of the City of Albertville – Water System, as of and for the years ended June 30, 2015 and 2014, and the related notes to the financial statements, which collectively comprise the Municipal Utilities Board of the City of Albertville – Water System’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of the Municipal Utilities Board of the City of Albertville – Water System, as of June 30, 2015 and 2014, and the respective changes in financial position and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America.

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MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A)

The MD&A represents management’s examination and analysis of the Water System’s financial condition and performance for the years ending June 30, 2015 and June 30, 2014. This information should be read in conjunction with the financial statements.

USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. These financial statements report information about the Water System using full accrual accounting methods. The Municipal Utilities Board (MUB) was reorganized and incorporated on May 15, 2013, under Article 9, Chapter 50, Title 11 (Sections 11-50-310 et seq.) of the Code of Alabama (1975). Prior to May 2013, MUB operated within the confines of an Act of the Alabama Legislature passed in 1943. While operating under the 1943 Act, MUB was organized as an entity of the City of Albertville and the City had to issue all debt for MUB. The new form of organization allows MUB to issue its own debt. The three member Board of Directors of MUB (appointed by the City Council of Albertville) was given complete control of the public utilities in the City of Albertville. In addition to the Water System, the Board also governs the Electric and Waste Water Systems of the City. The Water Supply Board of the City of Albertville, Alabama (the Board) was a quasi-municipal corporation formed under the laws of the State of Alabama in January 1954. A three member Board of Directors appointed by the City Council of the City of Albertville managed the property and business of the Board. The Water Supply Board of the City of Albertville had entered into an agreement with the City of Albertville to provide the water requirements of the City for fire protection and street purposes, for consumption in the City’s buildings, and for resale to the retail and wholesale customers of the City through the Municipal Utilities Board of the City of Albertville – Water System. Through an intergovernmental agreement, the City of Albertville, the Water Supply Board of the City of Albertville and the Municipal Utilities Board of the City of Albertville, agreed to dissolve the Water Supply Board effective November 30, 2013. The assets and liabilities comprising the entire operations of the Water Supply Board were transferred to the Municipal Utilities Board of the City of Albertville – Water System where the operations of the Water Supply Board will be continued by the Municipal Utilities Board of the City of Albertville – Water System. Even though MUB is a municipal entity, the financial statements are presented more similar to a private business entity because a majority of the revenues in the Electric, Water and Waste Water Systems are generated from user fees, not any type of public tax. The Governmental Accounting Standards Board requires that these types of municipal entities follow accounting procedures more similar to those of private business. However, the mission of the Board is not to be a profitable entity, unlike a private system, but is to be able to finance all or most of its activities through user fees and reinvest assets in improving and maintaining the system. The financial statements include a statement of net position; a statement of revenues, expenses and changes in net position; a statement of cash flows; and notes to the financial statements.

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The statement of net position presents the financial position of the Water System and all its assets and liabilities, with the difference reported as net position. Over time, increases or decreases in the System’s net assets are one indicator of whether the System’s financial position is improving or deteriorating. The statement of revenues, expenses, and changes in net position presents the results of the System’s activities over the course of the fiscal year. This statement also provides information about the System’s recovery of costs. Rate setting policies vary, however, the primary objective of any rate model is to improve equity among customer classes and ensure that capital costs are allocated on the basis of long-term capacity needs, ensuring that growth pays for growth. The statement of cash flows presents changes in cash and cash equivalents, resulting from operations, financing and investing activities. This statement presents cash inflows and cash outflows for the fiscal year. The notes to the financial statements provide required disclosures and other information vital to obtaining a full understanding of the System’s financial statements. The notes present information about the System’s accounting policies, significant account balances and activities, material risks, obligations, commitments, contingencies and subsequent events, if any. Supplementary information, providing additional financial detail, is also provided. The financial statements were prepared by the Board’s accounting staff from the detailed books and records of the System. The financial statements were then audited and adjusted, if necessary, during the independent external audit process.

The following comparative condensed financial statements serve as the key financial data and indicators for management,monitoring and planning. The financial statements are studied in depth to detect trends, project growth and prepare budgets for the upcoming year.

Municipal Utilities Board of the City of Albertville - Water SystemCondensed Financial StatementsFiscal Year Ending June 30, 2015

Condensed Statements of Net Position 2015 2014 Dollars Percent

Utility Plant $67,182,033 $66,860,150 $321,883 0.48%Less Accumulated Depreciation ($33,002,398) ($31,047,916) ($1,954,482) 6.30%Utility Plant Net of Depreciation $34,179,635 $35,812,234 ($1,632,599) -4.56%Restricted Assets $101,930 $101,707 $223 0.22%Current Assets and Other Assets $4,654,229 $4,466,785 $187,444 4.20%Deferred Outflows of Resources $151,560 $0 $151,560 n/a

Total Assets and Deferred Outflows $39,087,354 $40,380,726 ($1,293,372) -3.20%

Current Liabilities $1,679,783 $1,559,214 $120,569 7.73%Long Term Liabilities $17,765,898 $16,213,055 $1,552,843 9.58%Deferred Inflows of Resources $126,083 $0 $126,083 n/a

Total Liabilities and Deferred Inflows $19,571,764 $17,772,269 $1,799,495 10.13%

Net Position: Net Invested in Capital Assets $18,144,559 $18,741,608 ($597,049) -3.19% Restricted $0 $0 $0 n/a Unrestricted $1,371,031 $3,866,849 ($2,495,818) -64.54%

Total Net Position $19,515,590 $22,608,457 ($3,092,867) -13.68%

Total Liabilities, Deferred Inflows and Net Position $39,087,354 $40,380,726 ($1,293,372) -3.20%

Condensed Statements of Revenues, Expenses, and Changes in Net Position

2014Actual Budget Actual Dollars Percent Dollars Percent

Revenues:Water Sales Revenue 6,726,639$ 6,560,000$ 6,704,333$ 166,639$ 2.54% 22,306$ 0.33%Other Revenue 131,556$ 93,500$ 89,234$ 38,056$ 40.70% 42,322$ 47.43% Total Operating Revenue 6,858,195$ 6,653,500$ 6,793,567$ 204,695$ 3.08% 64,628$ 0.95%

Expenses:Operating Expense 7,008,286$ 6,550,000$ 6,990,784$ 458,286$ 7.00% 17,502$ 0.25%

Operating Income (150,091)$ 103,500$ (197,217)$ (253,591)$ -245.02% 47,126$ -23.90%

Non-Operating Income and Expense-Net (520,665)$ (510,000)$ (470,806)$ (10,665)$ 2.09% (49,859)$ 10.59%

Income (Loss) Before Capital

Contributions and Transfers (670,756)$ (406,500)$ (668,023)$ (264,256)$ 65.01% (2,733)$ 0.41%

Capital Contributions 23,675$ -$ 12,275$ 23,675$ n/a 11,400$ 92.87%Transfers -$ -$ 10,882,834$ -$ n/a (10,882,834)$ -100.00%

Increase (Decrease) in Net Position (647,081)$ (406,500)$ 10,227,086$ (240,581)$ 59.18% (10,874,167)$ -106.33%

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Financial Analysis

Variance

Variance of 2015 Actual Data To:2015 Budget 2014 Actual2015

The following comparative condensed financial statements serve as the key financial data and indicators for management,monitoring and planning. The financial statements are studied in depth to detect trends, project growth and prepare budgets for the upcoming year.

Municipal Utilities Board of the City of Albertville - Water SystemCondensed Financial StatementsFiscal Year Ending June 30, 2014

Condensed Statements of Net Position 2014 2013 Dollars Percent

Utility Plant $66,860,150 $17,203,065 $49,657,085 288.65%Less Accumulated Depreciation ($31,047,916) ($7,094,570) ($23,953,346) 337.63%Utility Plant Net of Depreciation $35,812,234 $10,108,495 $25,703,739 254.28%Restricted Assets $101,707 $0 $101,707 n/aCurrent Assets and Other Assets $4,466,785 $3,166,593 $1,300,192 41.06%

Total Assets and Deferred Outflows $40,380,726 $13,275,088 $27,105,638 204.18%

Current Liabilities $1,559,214 $611,803 $947,411 154.86%Long Term Liabilities $16,213,055 $281,914 $15,931,141 5651.06%

Total Liabilities $17,772,269 $893,717 $16,878,552 1888.58%

Net Position: Net Invested in Capital Assets $18,741,608 $9,968,488 $8,773,120 88.01% Restricted $0 $0 $0 n/a Unrestricted $3,866,849 $2,412,883 $1,453,966 60.26%

Total Net Position $22,608,457 $12,381,371 $10,227,086 82.60%

Total Liabilities and Net Position $40,380,726 $13,275,088 $27,105,638 204.18%

Condensed Statements of Revenues, Expenses, and Changes in Net Position

2013Actual Budget Actual Dollars Percent Dollars Percent

Revenues:Water Sales Revenue 6,704,333$ 6,935,000$ 6,582,076$ (230,667)$ -3.33% 122,257$ 1.86%Other Revenue 89,234$ 90,000$ 93,590$ (766)$ -0.85% (4,356)$ -4.65% Total Operating Revenue 6,793,567$ 7,025,000$ 6,675,666$ (231,433)$ -3.29% 117,901$ 1.77%

Expenses:Operating Expense 6,990,784$ 7,270,000$ 7,014,985$ (279,216)$ -3.84% (24,201)$ -0.34%

Operating Income (197,217)$ (245,000)$ (339,319)$ 47,783$ -19.50% 142,102$ -41.88%

Non-Operating Income and Expense-Net (470,806)$ (13,750)$ 987$ (457,056)$ 3324.04% (471,793)$ -47800.71%

Income (Loss) Before Capital

Contributions and Transfers (668,023)$ (258,750)$ (338,332)$ (409,273)$ 158.17% (329,691)$ 97.45%

Capital Contributions 12,275$ -$ 26,656$ 12,275$ n/a (14,381)$ -53.95%Transfers 10,882,834$ -$ -$ 10,882,834$ n/a 10,882,834$ n/a

Increase (Decrease) in Net Position 10,227,086$ (258,750)$ (311,676)$ 10,485,836$ -4052.50% 10,538,762$ -3381.32%

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Financial Analysis

Variance

Variance of 2014 Actual Data To:2014 2014 Budget 2013 Actual

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FINANCIAL POSITION Statement of Net Position For the fiscal year ending June 30, 2015, total assets and deferred outflows decreased $1,293,372 with Net Water Plant (assets less depreciation) decreasing $1,632,599 due to fewer capital improvements in the Water System and increased depreciation. Current and other assets increased $187,444, mostly due to increased cash and cash equivalents. Deferred Outflows of Resources increased $151,560 due to initial recording of deferred outflows related to the Net Pension Liability. Total liabilities and deferred inflows increased $1,799,495, a 10.13% increase mostly due to initial recording of Net Pension Liability. Total net position (total assets and deferred outflows less total liabilities) of $19,515,590 reflects a decrease of $3,092,867, a 13.68% decline. $18,144,559 of this amount is invested in net capital assets while $1,371,031 represents the non-restricted portion. For the fiscal year ending June 30, 2014, total assets and deferred outflows increased $27,105,638 or 204%, with Net Water Plant (assets less depreciation) increasing $25,703,739 or 254% mostly due to transfer of water plant assets from the Water Supply Board to the Water system. Current and other assets increased $1,300,192 or 41%. Total liabilities increased $16,878,552 from 2013, mostly due to transfer of bonds payable from Water Supply Board. Total net position (total assets and deferred outflows less total liabilities) of $22,608,457 reflects an increase of $10,227,086 from 2013, an 83% increase, due to transfer of operations from the Water Supply Board. $18,741,608 of this amount is invested in net capital assets while $3,866,849 represents the non-restricted portion of total net position. Results of Operations The majority of the Water System’s operating revenues derive from sales of water. The volume of water sold was 3.05 billion gallons in 2015. Other revenue consists of forfeited discounts, system development charges, service fees, and collection charges. The Water System has five classes of sales: residential, commercial, industrial, private fire protection, and sales to other distributors. Total sales revenue for 2015 increased $22,306 or .33%. Sales to other distributors decreased $170,704 or 8%. Commercial and industrial sales increased $101,768 or 4% and residential sales increased 4% or $90,864. Total operating expense (excluding purchased water) increased $17,502 in 2015, or 3.2%. Depreciation increased $585,008 due to transfer of water plant assets from the Water Supply Board. Administrative and general expense increased $49,765 mostly due to initial recording of pension expense per GASB68. Transmission and distribution expense increased $88,515 mostly due to tank maintenance costs. Source of Supply cost decreased ($660,259) due to no longer purchasing water from Water Supply Board. Purification expense decreased ($28,815) due to decreased chemical use. Power and pumping cost increased $4,774 due to increased operator payroll. Customer accounts expense decreased ($21,486) due to less meter reading expense allocated to the Water system as a result of the Joint Cost Study. Total sales revenue for 2014 increased $122,257 or 2%. Sales to other distributors decreased ($111,708) or 5%. Commercial and industrial sales increased $166,266 or 8% and residential sales increased 3% or $66,337. Private fire protection increased $727 or 7%. Uncollectable accounts decreased $635. The volume of water sold in 2014 was 3.12 billion gallons.

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$730,891 was used in 2014 to purchase water from the Water Supply Board of the City of Albertville. Prior to the transfer of operations from the Water Supply Board, the amount of this payment was dictated by the Water System’s contract with the Water Supply Board which required payment of an annual amount equal to 125% of its total debt service requirements. These payments ceased after the November 30, 2013 transfer which dissolved the Water Supply Board. Total operating expense (excluding purchased water) increased $1,007,904 in 2014, or 19%. Depreciation increased $964,554 due to transfer of water plant assets from the Water Supply Board. Administrative and general expense increased $80,208 due to the effects of the Joint Cost Study which reallocated more general and administrative expenses to the Water system. Transmission and distribution expense increased $42,200 mostly due to sludge disposal costs. Source of Supply cost increased $13,050 mostly due to increased employee welfare expense charged to water supply as a result of the Joint Cost Study. Purification expense decreased ($43,230) due to decreased chemical use. Power and pumping cost decreased ($38,586) due to less gallons pumped. Customer accounts expense decreased ($10,292) due to less meter reading expense allocated to the Water system as a result of the Joint Cost Study. Capital Contributions The Water System receives funds from grantor agencies, developers and individuals for new construction in the system. Contributions received in 2015 were $23,675 and $12,275 for 2014.

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Capital Assets and Debt Administration

Total Water Plant for 2015 (before depreciation and retirements) increased $321,883. Construction work in progress increased $139,288; most of which is invested in water tank rehabilitation. $49,731 was used for a roofing membrane at the water plant. $55,133 was invested in meters. Communication equipment increased $14,515 which included a new phone system. $8,751 was used for water main upgrades which included a main extension for Beulah Road. $11,796 was used for transportation to purchase new track hoe equipment. A new cashiering system was installed for $5,252. 53 new water services were added for $35,216. $2,201 was used to install a fire hydrant. The Water System’s long term debt in 2015 decreased $1,026,093. This includes 2008 SRF Bonds, 2010 SRF Bonds, 2012 SRF Bonds and a note payable to the Electric System for the purchase of a portion of the Office Land, Building and Equipment. Total long term debt remaining at June 30, 2015 is $15,947,595. Total Water Plant for 2014 (before depreciation and retirements) increased $49,696,222. Water Supply Board capital assets transferred to the Water system totaled $48,677,303 and included the following: Water Plant - $29,132,967 Transmission Mains - $10,390,503 Tanks - $4,256,519 Land, Land Rights & Structures - $3,140,239 Raw Water Main - $1,056,983 Operating & Office Equipment - $700,092 $736,195 was used to purchase Water’s portion of the main office building. $68,745 was used for water main upgrades including main extensions for McKnight Street, South Hambrick, Ham Road and Winding Stairs Road and main upgrades in Downtown Albertville. $67,597 was invested in meters. An 800HP motor was purchased for the #1 river pump for $60,639. $34,212 was used to purchase Water’s share of the office furnishings and equipment at the main office. Water’s share of a new server was $4,929. 19 new water services were added for $20,344. Water’s share of the land at the main office was purchased for $13,950. $6,949 was used to install 2 fire hydrants. A GPS network rover was purchased for $5,359. Prior to the transfer of operations of the Water Supply Board to the Water system, all water related debt was recorded on the Water Supply Board’s financial statements. As a condition of the transfer, all Water Supply Board debt was assumed by the Water System. This includes 2008 SRF Bonds, 2010 SRF Bonds and 2012 SRF Bonds. Total long term debt for the Water System increased $16,833,681 in 2014.

Economic Factors and Next Year’s Budget and Rates

The Capital Expenditures Budget for 2016 has been projected at $1,028,879. These expenditures will include: $350,000 – Tanks and Distribution Equipment – McKinney & Pine Tank Rehab $150,000 – Raw Water Pump Station – Capital Repairs $100,000 – Structures – Water Plant repairs $98,000 – Communication Equipment – Radios, Miscellaneous Mapping, Meter Reading Software $97,000 – Transportation Equipment – Includes two new pickup trucks $70,335 – Meters – Includes 500 automated meters

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$50,000 – Distribution Mains & Accessories – Capital Repairs $50,000 – Transmission Mains – Capital Repairs $28,544 – Services – Approximately 40 new services $10,000 – Hydrants $10,000 – Water Plant Lab Equipment - Miscellaneous $10,000 – General Plant Equipment – Miscellaneous $5,000 – Computer Equipment – Paperless Service Order System

Final Comments

The Water System’s management and the MUB Board annually prepare and review operating budgets, payroll budgets and capital purchases budgets. The preparation of these budgets involves reviewing several factors such as anticipated growth and expansion or cutbacks in industrial usage, forecasting expenses and determining capital needs. These budgets provide a blueprint for operations for the next year and also assist in determining financial position for the near future. It is the opinion of management that current water rates are not adequate to fund necessary expenditures and to maintain the Water System in good repair. A water rate study is planned for late 2015 and should be implemented in 2016 to maintain funds necessary for operations and expansions.

Elden Chumley Theresa Bailey, CPA General Manager/CEO Chief Financial Officer Municipal Utilities Board of Albertville Municipal Utilities Board of Albertville

MUNICIPAL UTILITIES BOARD OF THE CITY OF ALBERTVILLE - WATER SYSTEM

STATEMENTS OF NET POSITION

JUNE 30, 2015 AND 2014

2015 2014

ASSETSCURRENT ASSETS

Cash and Cash Equivalents $ 3,860,308 $ 3,690,343 Accounts Receivable

Related Party 277,425 272,216 Unbilled Revenue 192,892 175,091 Other - 750

Material and Supplies 267,108 273,172 Prepaid Expenses 30,219 25,290

4,627,952 4,436,862

NONCURRENT ASSETSRestricted Assets

Cash and Cash Equivalents 101,930 101,707

Capital AssetsLand and Construction in Progress 1,024,887 885,599 Water Plant in Service, Net of Accumulated Depreciation 33,154,748 34,926,635

34,179,635 35,812,234

Other AssetsUnamortized Debt Expense, Net of Accumulated

Amortization of $5,772 for 2015 and $2,126 for 2014 26,277 29,923

TOTAL ASSETS 38,935,794 40,380,726

DEFERRED OUTFLOWS OF RESOURCESNet Pension Liability - Contributions

Subsequent to the Measurement Date 151,560 -

TOTAL ASSETS AND DEFERRED OUTFLOWS $ 39,087,354 $ 40,380,726

The accompanying Notes to Financial Statements are an integral part of these financial statements.

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2015 2014

LIABILITIESCURRENT LIABILITIES

Accounts Payable $ 258,716 $ 145,991 Accrued Wages and Compensated Absences 227,645 182,805 Current Maturities of Note Payable - Related Party 72,852 71,090 Current Maturities of Note Payable - 60,003 Other Current Liabilities 6,159 5,680

565,372 465,569

CURRENT LIABILITIES, RESTRICTEDCurrent Maturities of Water Revenue Bonds 925,000 895,000 Accrued Interest Expense 189,411 198,645

1,114,411 1,093,645

LONG-TERM LIABILITIESWater Revenue Bonds, Net of Current Maturities 14,350,000 15,275,000 Note Payable - Related Party, Net of Current Maturities 599,743 672,595 Net Pension Liability 2,513,845 - Accrued Liability - Other Post Employment Benefits 302,310 265,460

17,765,898 16,213,055

TOTAL LIABILITIES 19,445,681 17,772,269

DEFERRED INFLOWS OF RESOURCESNet Pension Liability 126,083 -

NET POSITIONInvested in Capital Assets, Net of Related Debt 18,144,559 18,741,608 Restricted for Debt Service - - Unrestricted 1,371,031 3,866,849

19,515,590 22,608,457

TOTAL LIABILITIES, DEFERRED INFLOWSAND NET POSITION $ 39,087,354 $ 40,380,726

The accompanying Notes to Financial Statements are an integral part of these financial statements.

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STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION


2015 2014Percent of Percent ofOperating Operating

Amount Revenue Amount RevenueOPERATING REVENUE

Water Sales RevenueResidential Sales $ 2,403,294 35.04 % $ 2,312,430 34.04 %Commercial Sales 679,850 9.91 665,942 9.80Industrial Sales 1,605,770 23.41 1,517,910 22.34Fire Protection 11,238 0.16 11,179 0.16Sales to Other Water Distributors 2,033,506 29.65 2,204,210 32.45Less Uncollectible Accounts (7,019) (0.10) (7,338) (0.11)

6,726,639 98.08 6,704,333 98.69

Revenue From Forfeited Discounts and Collection Fees 55,034 0.80 51,859 0.76System Development Charge 49,790 0.73 14,445 0.21Miscellaneous Water Revenues 26,732 0.39 22,930 0.34

6,858,195 100.00 6,793,567 100.00

OPERATING EXPENSEOperating Expense

Source of Water Supply 658,963 9.61 1,319,222 19.42Power and Pumping 1,374,721 20.04 1,369,947 20.17Purification 832,410 12.14 861,225 12.68Transmission and Distribution 986,780 14.39 898,265 13.22Customer Accounting and Collections 314,684 4.59 336,170 4.95Administrative and General 887,266 12.94 837,501 12.33

5,054,824 73.70 5,622,330 82.76

Other Operating ExpenseProvision for Depreciation 1,953,462 28.48 1,368,454 20.14

7,008,286 102.19 6,990,784 102.90

OPERATING INCOME (LOSS) (150,091) (2.19) (197,217) (2.90)

NONOPERATING INCOMEInterest Income 6,750 0.10 5,787 0.09Interest Expense (527,415) (7.69) (476,593) (7.02)

(520,665) (7.59) (470,806) (6.93)

INCOME (LOSS) BEFORE CAPITALCONTRIBUTIONS AND TRANSFERS (670,756) (9.78) (668,023) (9.83)

Capital Contributions 23,675 0.35 12,275 0.18Transfer from Water Supply Board - 0.00 10,882,834 160.19

23,675 0.35 10,895,109 160.37

CHANGE IN NET POSITION (647,081) (9.44) % 10,227,086 150.54 %

NET POSITION - Beginning As Previously Stated 22,608,457 12,381,371

Cumulative Effect of Change in Accounting Principle (2,445,786) -

NET POSITION - Beginning - As Restated 20,162,671 12,381,371

NET POSITION - Ending $ 19,515,590 $ 22,608,457

The accompanying Notes to Financial Statements are an integral part of these financial statements.- 13 -


STATEMENTS OF CASH FLOWS


2015 2014CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from Customers $ 6,841,144 $ 6,805,488 Payments to Suppliers (3,433,820) (4,282,156) Payments to Employees (1,387,602) (1,333,792)

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 2,019,722 1,189,540

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESAcquisition and Construction of Capital Assets, Net (320,863) (276,198) Principal Paid on Bonds Payable (895,000) - Interest Paid on Bonds Payable (515,578) (264,860) Principal Payments on Loans Payable (131,093) (120,677) Interest Payments on Loans Payable (17,425) (10,961) Cash Transferred from Water Supply Board - 769,484 Customer Contributions and Grants in Aid of Construction 23,675 12,275

NET CASH PROVIDED (USED) BY CAPITAL ANDRELATED FINANCING ACTIVITIES (1,856,284) 109,063

CASH FLOWS FROM INVESTING ACTIVITIESInterest Received on Cash and Cash Equivalents 6,750 5,787

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 170,188 1,304,390

CASH AND CASH EQUIVALENTS - Beginning 3,792,050 2,487,660

CASH AND CASH EQUIVALENTS - Ending $ 3,962,238 $ 3,792,050

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASHPROVIDED (USED) BY OPERATING ACTIVITIES:

Operating Income (Loss) $ (150,091) $ (197,217) Adjustments to Reconcile Operating Income (Loss) toNet Cash Provided by Operating Activities:

Depreciation 1,953,462 1,461,389 Uncollectible Accounts 7,019 7,338

Changes in Assets and Liabilities:(Increase) Decrease in Accounts Receivable (24,070) 11,921(Increase) Decrease in Material and Supplies 6,064 (24,227) (Increase) Decrease in Prepaid Expenses (4,929) (3,075) (Increase) Decrease in Related Party (5,209) (59,543) Increase (Decrease) in Accounts Payable 112,725 (66,175) Increase (Decrease) in Accrued Wages and Compensated Absences 44,840 15,934 Increase (Decrease) in Other Current Liabilities 479 (354) (Increase) Decrease in Deferred Outflows of Resources - Net Pension Liability (151,560) - Increase (Decrease) in Deferred Inflows of Resources - Net Pension Liability 126,083 - Increase (Decrease) in Net Pension Liability 68,059 - Increase (Decrease) in Other Post Employment Benefits Liability 36,850 43,549

Total Adjustments 2,169,813 1,386,757

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ 2,019,722 $ 1,189,540

The accompanying Notes to Financial Statements are an integral part of these financial statements.- 14 -

MUNICIPAL UTILITIES BOARD OF THE CITY OF ALBERTVILLE - WATER SYSTEM NOTES TO FINANCIAL STATEMENTS JUNE 30, 2015 AND 2014

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION The Municipal Utilities Board of the City of Albertville, Alabama (the Board) was reorganized and incorporated on May 15, 2013, under Article 9, Chapter 50, Title 11 (Sections 11-50-310 et seq.) of the Code of Alabama (1975). Prior to May 15, 2013, the Board operated within the confines of an Act of the Alabama Legislature passed in 1943. While operating under the 1943 Act, the Board was organized as an entity of the City of Albertville and the City had to issue all debt for the Board. The new form of organization allows the Board to issue its own debt. The objectives for which the Board was formed are to acquire, operate, maintain, improve, and extend an electric system, a water distribution system, and a sanitary sewer system within the City of Albertville and the territory within Marshall County. The Board is also authorized to own and operate a natural gas distribution system, but no such system presently exists. The Board uses enterprise fund accounting for the separate departments, electric, water, and waste water, and issues separate financial statements for each. The financial statements present only the Municipal Utilities Board of the City of Albertville – Water System (the Water System) and do not purport to, and do not, present the financial position of the Municipal Utilities Board of the City of Albertville and the changes in its financial position or its cash flows. The property and business of the Municipal Utilities Board of the City of Albertville is managed by a three member Board of Directors appointed by the Mayor and City Council of the City of Albertville. The members of the Board and management at June 30, 2015 were as follows:

Board of Directors Management James Gentry, Chairman Elden Chumley, General Manager/CEO Paul McAbee, Secretary Harold Chitwood, Member

NATURE OF BUSINESS The Water System provides water service to residents, businesses, and other water distributors in the City of Albertville, Alabama area. Water was purchased under contract from the Water Supply Board of the City of Albertville, Alabama through November 30, 2013. ACCOUNTING PRINCIPLES The Water System’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America 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. BASIS OF PRESENTATION AND ACCOUNTING The Water System utilizes the accrual basis of accounting. Under this basis of accounting, revenues are recognized when earned and expenses are recognized when the related liability is incurred.


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TRANSFER OF OPERATIONS Pursuant to an intergovernmental agreement between the City of Albertville, the Water Supply Board of the City of Albertville and the Municipal Utilities Board of the City of Albertville, the Water Supply Board of the City of Albertville was dissolved. Effective November 30, 2013, the assets and liabilities comprising the entire operations of the Water Supply Board of the City of Albertville were transferred to the Municipal Utilities Board of the City of Albertville – Water System. As a result of the transfer, the Water Supply Board of the City of Albertville was dissolved and the Municipal Utilities Board of the City of Albertville – Water System recognized the following assets, liabilities, and net position:

Carrying Values TRANSFERRED ASSETS (Net) Cash and Cash Equivalents $ 403,197 Cash and Cash Equivalents – Restricted 366,287 Accounts Receivable 146,728 Capital Assets, Net of Accumulated Depreciation 26,104,573 Unamortized Debt Expense 32,049 27,052,834

TRANSFERRED LIABILITIES Long-Term Water Revenue Bonds 16,170,000 NET POSITION OF TRANSFERRED WATER SUPPLY BOARD OF THE CITY OF ALBERTVILLE $ 10,882,834

RECOGNITION OF WATER REVENUE Water revenue is recognized when water is used by the ultimate consumer. TAXES The Water System is not subject to federal and state income taxes. The Water System collects utility tax from its customers on behalf of the State of Alabama. Revenue is presented net of tax collected in the statement of revenues, expenses, and changes in net position. INVENTORIES Inventories of material and supplies are priced at the lower of average cost or market. CASH EQUIVALENTS The Water System considers all highly liquid investments with a maturity of three months or less when purchased to be cash and cash equivalents.


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ACCOUNTS RECEIVABLE All services for electric, water, and waste water are billed and collected by the Municipal Utilities Board of the City of Albertville - Electric System, with revenues recognized by each department through an intercompany system of accounting. As of June 30, 2015 and 2014, the total receivables due from customers, as reflected in the Electric System financial statements, were $6,555,096 and $6,328,847, respectively. The Board uses the direct write-off method for uncollectible accounts. An allowance for doubtful accounts at June 30, 2015 and 2014 is not considered necessary. The related party receivable amounts as of June 30, 2015 and 2014 were $277,425 and $272,216, respectively, and represent net amounts due from the Electric System to the Water System. CONCENTRATION OF CREDIT RISK The Board grants credit to its customers, substantially all of who are located in the City of Albertville, Alabama. AMORTIZATION Debt issuance costs, bond discounts or premiums, and deferred losses on refunding are amortized over the terms of the bonds using a method which approximates the effective interest method. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. RECLASSIFICATIONS Certain reclassifications have been made in the prior year amounts to conform to the classifications used in the current year. These reclassifications had no effect on net position.


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UTILITY PLANT Utility plant is stated at cost less accumulated depreciation. Depreciation is calculated on the composite-rate method. Retirements of units of property from service have been charged to the accumulated depreciation accounts at the original cost of the units plus cost of removal. Salvage value of the units retired is credited to the accumulated depreciation accounts. The costs of maintenance, repairs and replacing minor items are charged principally to expense as incurred. Depreciation rates are as follows:

Distribution Plant: Land and Land Rights 0.00% Water Plant Structures and Improvements 4.00 Raw Water Pump Station 4.00 Water Plant - Plant Equipment 15.00 Transmission Mains 1.50 Distribution Mains 2.00 Storage Tanks 2.00 Miscellaneous Structures 3.00 Pumping Equipment / Pump Stations 4.00 Services 2.00 Meters 2.50 Hydrants 2.00 General Plant: Furniture and Office Equipment 10.00 Transportation Equipment 10.00 Communication Equipment 20.00 General Plant Equipment 8.00

NET POSITION Net position is divided into three components:

Net Invested in Capital Assets – Net position invested in capital assets includes the historical cost of capital assets less accumulated depreciation and less any debt that remains outstanding that was used to finance those assets. Restricted – Restricted net position consists of net position that is restricted by the Water System’s creditors (for example, through debt covenants), by the state enabling legislation (through restrictions on shared revenues), by grantors (both federal and state), and by other contributors (including those who have donated to the Water System). Unrestricted – All other net position is reported in this category.


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PENSIONS The Employees’ Retirement System of Alabama (the Plan) financial statements are prepared using the economic resources measurement focus and accrual basis of accounting. Contributions are recognized as revenues when earned, pursuant to the plan requirements. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Expenses are recognized when the corresponding liability is incurred, regardless of when the payment is made. Investments are reported at fair value. Financial statements are prepared in accordance with requirements of the Governmental Accounting Standards Board (GASB). Under these requirements, the Plan is considered a component unit of the State of Alabama and is included in the State’s Comprehensive Annual Financial Report. NOTE 2 - CASH AND CASH EQUIVALENTS Cash and cash equivalents include the following amounts at June 30, 2015 and 2014:

2015 2014 UNRESTRICTED Working Funds $ 2,000 $ 2,000 Checking Accounts 3,858,308 3,688,343

3,860,308 3,690,343

RESTRICTED Debt Service Fund – SRF 2008 and 2010 44,752 44,654 Debt Service Fund – SRF 2012 57,178 57,053

101,930 101,707

TOTAL CASH AND CASH EQUIVALENTS $ 3,962,238 $ 3,792,050 The Municipal Utilities Board of the City of Albertville’s deposits at year-end were held by financial institutions in the State of Alabama’s Security of Alabama Funds Enhancement (SAFE) Program. The SAFE Program was established by the Alabama Legislature and is governed by the provisions contained in the Code of Alabama 1975, Sections 41-14A-1 through 41-14A-14. Under the SAFE Program all public funds are protected through a collateral pool administered by the Alabama State Treasurer’s Office. Under this program, financial institutions holding deposits of public funds must pledge securities as collateral against those deposits. In the event of failure of a financial institution, securities pledged by that financial institution would be liquidated by the State Treasurer to replace the public deposits not covered by the Federal Depository Insurance Corporation (FDIC). If the securities pledged failed to produce adequate funds, every institution participating in the pool would share the liability for the remaining balance.


NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2015 AND 2014

NOTE 3 - CAPITAL ASSETS

Balance at Balance atJune 30, 2014 Reclassifications Increases Decreases June 30, 2015

Capital assets not being depreciated:Water Plant: Land and Land Rights $ 870,836 $ (23,253) $ - $ - $ 847,583 General Plant: Land and Land Rights 13,950 23,253 - - 37,203 Construction in Progress, Net Change 813 - 139,288 - 140,101

Total capital assets not being depreciated 885,599 - 139,288 - 1,024,887

Capital assets being depreciated:Water Plant in Service:Distribution Plant:

Water Plant Structures and Improvements 29,579,735 (1,791,939) 49,731 - 27,837,527 Raw Water Pump Station - 3,888,890 - - 3,888,890 Water Plant - Plant Equipment - 639,711 - - 639,711 Booster Pump Station 610,532 (610,532) - - - Transmission Mains 11,447,485 (1,056,982) - - 10,390,503 Distribution Mains 7,885,311 - 8,751 - 7,894,062 Storage Tanks 4,256,518 - - - 4,256,518 Clearwells 1,277,602 (1,277,602) - - - Miscellaneous Structures 2,229,909 669,892 - - 2,899,801 Pumping Equipment / Pump Stations - 658,440 - - 658,440 Services 3,149,991 - 35,216 - 3,185,207 Meters 1,657,859 - 55,133 - 1,712,992 Hydrants 498,734 - 2,201 - 500,935

62,593,676 1,119,878 151,032 - 63,864,586

General Plant:Structures and Improvements 736,196 (736,196) - - - Furniture and Office Equipment 265,764 - 5,252 - 271,016 Transportation Equipment 1,041,595 - 11,798 - 1,053,393 Communication Equipment 186,715 256,029 14,513 - 457,257 Tools, Shop and Garage Equipment 53,698 (53,698) - - - Operating Equipment 639,711 (639,711) - - - General Plant Equipment 457,196 53,698 - - 510,894

3,380,875 (1,119,878) 31,563 - 2,292,560

Total capital assets being depreciated 65,974,551 - 182,595 - 66,157,146

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Information related to property, plant and equipment of the Water System for the year ended June 30, 2015 was as follows:



JUNE 30, 2015 AND 2014

Balance at Balance atJune 30, 2014 Reclassifications Increases Decreases June 30, 2015

Less accumulated depreciation for:Distribution Plant:

Water Plant Structures and Improvements $ 17,141,455 (1,845,754) $ 998,526 $ - $ 16,294,227 Raw Water Pump Station - 2,183,051 198,938 - 2,381,989 Water Plant - Plant Equipment - 616,700 23,011 - 639,711 Booster Pump Station 78,197 (78,197) - - - Transmission Mains 3,221,472 (126,515) 155,858 - 3,250,815 Distribution Mains 3,437,534 - 157,825 - 3,595,359 Storage Tanks 1,937,649 - 85,130 - 2,022,779 Clearwells 492,186 (492,186) - - - Miscellaneous Structures 480,026 - 86,201 - 566,227 Pumping Equipment / Pump Stations - 124,458 24,660 - 149,118 Services 1,198,533 - 63,259 - 1,261,792 Meters 479,956 - 41,874 (1,020) 522,850 Hydrants 216,034 - 10,008 - 226,042

28,683,042 381,557 1,845,290 (1,020) 30,910,909

General Plant:Structures and Improvements 20,884 (20,884) - - - Furniture and Office Equipment 232,123 - 26,293 - 258,416 Transportation Equipment 1,041,597 - - - 1,041,597 Communication Equipment 135,997 256,028 56,233 - 448,258 Tools, Shop and Garage Equipment 46,385 (46,385) - - - Operating Equipment 616,701 (616,701) - - - General Plant Equipment 271,187 46,385 25,646 - 343,218

2,364,874 (381,557) 108,172 - 2,091,489

Total accumulated depreciation 31,047,916 - 1,953,462 (1,020) 33,002,398

Total capital assets being depreciated, net 34,926,635 - (1,770,867) 1,020 33,154,748

Net Book Value $ 35,812,234 $ - $ (1,631,579) $ 1,020 $ 34,179,635

Depreciation expense for the year ended June 30, 2015 was charged to the following accounts:

Depreciation Expense $ 1,953,462 Transportation Expense Clearing -

$ 1,953,462

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JUNE 30, 2015 AND 2014

Balance at Balance at June 30, 2013 Increases Decreases June 30, 2014

Capital assets not being depreciated:Water Plant: Land and Land Rights $ 23,253 $ 847,583 $ - $ 870,836 General Plant: Land and Land Rights - 13,950 - 13,950 Construction in Progress, Net Change 39,950 - 39,137 813

Total capital assets not being depreciated 63,203 861,533 39,137 885,599

Capital assets being depreciated:Water Plant in Service:Distribution Plant:

Filter Plant and Pumping Equipment 47,909 29,531,826 - 29,579,735 Booster Pump Station - 610,532 - 610,532 Transmission Mains - 11,447,485 - 11,447,485 Distribution Mains 7,816,567 68,744 - 7,885,311 Storage Tanks - 4,256,518 - 4,256,518 Clearwells - 1,277,602 - 1,277,602 Miscellaneous Structures 2,163,605 66,304 - 2,229,909 Services 3,129,647 20,344 - 3,149,991 Meters 1,590,262 67,597 - 1,657,859 Hydrants 491,785 6,949 - 498,734

15,239,775 47,353,901 - 62,593,676

General Plant:Structures and Improvements - 736,196 - 736,196 Furniture and Office Equipment 219,940 45,824 - 265,764 Transportation Equipment 1,041,595 - - 1,041,595 Communication Equipment 181,356 5,359 - 186,715 Tools, Shop and Garage Equipment - 53,698 - 53,698 Operating Equipment - 639,711 - 639,711 General Plant Equipment 457,196 - - 457,196

1,900,087 1,480,788 - 3,380,875

Total capital assets being depreciated 17,139,862 48,834,689 - 65,974,551

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Information related to property, plant and equipment of the Water System for the year ended June 30, 2014 was as follows:



JUNE 30, 2015 AND 2014

Balance at Balance at June 30, 2013 Increases Decreases June 30, 2014

Less accumulated depreciation for:Distribution Plant:

Filter Plant and Pumping Equipment $ 46,248 $ 17,095,207 $ - $ 17,141,455 Booster Pump Station - 78,197 - 78,197 Transmission Mains - 3,221,472 - 3,221,472 Distribution Mains 3,281,039 156,495 - 3,437,534 Storage Tanks - 1,937,649 - 1,937,649 Clearwells - 492,186 - 492,186 Miscellaneous Structures 403,594 76,432 - 480,026 Services 1,133,196 65,337 - 1,198,533 Meters 429,816 50,140 - 479,956 Hydrants 206,175 9,859 - 216,034

5,500,068 23,182,974 - 28,683,042

General Plant:Structures and Improvements - 20,884 - 20,884 Furniture and Office Equipment 201,052 31,071 - 232,123 Transportation Equipment 1,041,597 - - 1,041,597 Communication Equipment 104,667 31,330 - 135,997 Tools, Shop and Garage Equipment - 46,385 - 46,385 Operating Equipment - 616,701 - 616,701 General Plant Equipment 247,186 24,001 - 271,187

1,594,502 770,372 - 2,364,874

Total accumulated depreciation 7,094,570 23,953,346 - 31,047,916

Total capital assets being depreciated, net 10,045,292 24,881,343 - 34,926,635

Net Book Value $ 10,108,495 $ 25,742,876 $ 39,137 $ 35,812,234

Depreciation expense for the year ended June 30, 2014 was charged to the following accounts:

Depreciation Expense $ 1,368,454 Transportation Expense Clearing -

$ 1,368,454

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NOTE 4 – COST OF PURCHASED WATER Until November 30, 2013, the Water Supply Board of the City of Albertville and the City of Albertville, Alabama had in effect a Water Supply Agreement through 2031. This agreement set the maximum quantities of water that the Water Supply Board was obligated to furnish the City and established an annual charge that the City was required to pay the Water Supply Board for water supplied. The agreement was amended if the debt service requirements of the Water Supply Board changed. The cost of water under this agreement consisted of an annual charge to cover 125% of debt service requirements and an operating charge. The operating charge was to be a sum sufficient to pay all costs incurred during the applicable period in the operation of the Water Supply System and in the maintenance thereof in good repair and efficient operating condition, including, without limitation, the costs of keeping the Water Supply System properly insured and any other charges therein to constitute a part of the expense of operating the Water Supply System. The total remitted to the Water Supply Board of the City of Albertville under this agreement was $730,891 for the five-months ended November 30, 2013.


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NOTE 5 - LONG-TERM DEBT Long-term debt of the Water System at June 30, 2015 and 2014 was as follows:

2015 2014 Water Revenue Bonds, Series 2008-SRF due annually on August 15 through 2029, with interest at 3.5% due semi-annually on February 15 and August 15, secured by water revenues $ 10,795,000

$ 11,335,000 Water Revenue Bonds, Series 2010-SRF due annually on August 15 through 2031, with interest at 3.1% due semi-annually on February 15 and August 15, secured by water revenues 1,935,000

2,020,000 Water Revenue Bonds, Series 2012-SRF due annually on August 15 through 2031, with interest at 2.5% due semi-annually on February 15 and August 15, secured by water revenues 2,545,000

2,815,000 Note payable to the Tennessee Valley Authority, due monthly from April 1, 2012 through March 1, 2015 -

60,003

Note payable to the Electric System, due monthly in payments of $7,376.31, with interest at 2.45%, through November 1, 2023, for the purchase of a portion of the Office Land, Building and Equipment

672,595 743,685 15,947,595 16,973,688

Less Current Maturities 997,852 1,026,093

$ 14,949,743 $ 15,947,595


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Changes in long-term debt of the Water System for the year ended June 30, 2015 was as follows:

Balance at June 30, 2014

Issues

Retirements


Water Revenue Bond Series 2008-SRF $ 11,335,000 $ - $ 540,000 $ 10,795,000 Water Revenue Bond, Series 2010-SRF 2,020,000 - 85,000 1,935,000 Water Revenue Bond, Series 2012-SRF 2,815,000 - 270,000 2,545,000 Note Payable – Tennessee Valley Authority 60,003 - 60,003 - Note Payable – Electric System 743,685 - 71,090 672,595 $ 16,973,688 $ - $ 1,026,093 $ 15,947,595

Changes in long-term debt of the Water System for the year ended June 30, 2014 was as follows:


Issues

Retirements


Water Revenue Bond Series 2008-SRF $ - $ 11,335,000 $ - $ 11,335,000 Water Revenue Bond, Series 2010-SRF - 2,020,000 - 2,020,000 Water Revenue Bond, Series 2012-SRF - 2,815,000 - 2,815,000 Note Payable – Tennessee Valley Authority 140,007 - 80,004 60,003 Note Payable – Electric System - 784,358 40,673 743,685 $ 140,007 $ 16,954,358 $ 120,677 $ 16,973,688


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Total principal and interest maturities of long-term debt for the years ended June 30 are as follows:

Maturities of Long-Term Debt Bonds Notes

Year Ending June 30, Principal Interest Principal Interest

2016 $ 925,000 $ 486,831 $ 72,852 $ 15,664 2017 955,000 457,138 74,657 13,859 2018 990,000 426,420 76,506 12,009 2019 1,025,000 394,588 78,402 10,114 2020 1,065,000 361,578 80,345 8,171

2021-2025 5,145,000 1,289,721 289,833 12,595 2026-2030 4,885,000 476,848 - - 2031-2035 285,000 8,913 - -

$ 15,275,000 $ 3,902,037 $ 672,595 $ 72,412

For the years ended June 30, 2015 and 2014, interest expense recognized on the revenue bonds and notes was $527,415 and $476,573, respectively. These amounts include amortization of debt costs of $3,645 and $2,126 for the years ended June 30, 2015 and 2014, respectively. The Water System must meet certain loan covenants in connection with its long-term debt. Management is not aware of any violations of these covenants at June 30, 2015. NOTE 6 - PENSION PLAN The Municipal Utilities Board of the City of Albertville (the Board) contributes to the Employees' Retirement System of Alabama, an agent multiple-employer public employee retirement system, which acts as a common investment and administrative agent for the various state agencies and departments. General Information About the Pension Plan Plan Description The Employees’ Retirement System of Alabama, an agency multiple-employer plan, was established October 1, 1945 under the provisions of Act 515 of the Legislature of 1945 for the purpose of providing retirement allowances and other specified benefits for state employees, State Police, and on an elective basis, to all cities, counties, towns and quasi-public organizations. The responsibility for the general administration and operation of ERS is vested in its Board of Control. The ERS Board of Control consists of 13 trustees. The Plan is administered by the Retirement Systems of Alabama (RSA). Title 36-Chapter 27 of the Code of Alabama grants the authority to establish and amend the benefit terms to the ERS Board of Control. The Plan issues a publicly available financial report that can be obtained at www.rsa-al.gov.

http://www.rsa-al.gov/�


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The ERS Board of Control consists of 13 trustees as follows:

1) The Governor, ex officio. 2) The State Treasurer, ex officio. 3) The State Personnel Director, ex officio. 4) The State Director of Finance, ex officio. 5) Three vested members of ERS appointed by the Governor for a term of four years, no two of whom

are from the same department of state government nor from any department of which an ex officio trustee is the head.

6) Six members of ERS who are elected by members from the same category of ERS for a term of four years as follows:

a. Two retired members with one from the ranks of retired state employees and one from the ranks of retired employees of a city, county, or a public agency each of whom is an active beneficiary of ERS.

b. Two vested active state employees. c. Two vested active employees of an employer participating in ERS pursuant to § 36-27-6.

Benefits Provided State law establishes retirement benefits as well as death and disability benefits and any ad hoc increase in postretirement benefits for the ERS. Benefits for ERS members vest after 10 years of creditable service. State employees who retire after age 60 (52 for State Police) with 10 years or more of creditable service or with 25 years of service (regardless of age) are entitled to an annual retirement benefit, payable monthly for life. Local employees who retire after age 60 with 10 years or more of creditable service or with 25 or 30 years of service (regardless of age), depending on the particular entity’s election, are entitled to an annual retirement benefit, payable monthly for life. Service and disability retirement benefits are based on a guaranteed minimum or a formula method, with the member receiving payment under the method that yields the highest monthly benefit. Under the formula method, members of the ERS (except State Police) are allowed 2.0125% of their average final compensation (highest 3 of the last 10 years) for each year of service. State Police are allowed 2.875% for each year of State Police service in computing the formula method. Act 377 of the Legislature of 2012 established a new tier of benefits (Tier 2) for members hired on or after January 1, 2013. Tier 2 ERS members are eligible for retirement after age 62 (56 for State Police) with 10 years or more of creditable service and are entitled to an annual retirement benefit, payable monthly for life. Service and disability retirement benefits are based on a guaranteed minimum or a formula method, with the member receiving payment under the method that yields the highest monthly benefit. Under the formula method, Tier 2 members of the ERS (except State Police) are allowed 1.65% of their average final compensation (highest 5 of the last 10 years) for each year of service. State Police are allowed 2.375% for each year of state police service in computing the formula method. Members are eligible for disability retirement if they have 10 years of credible service, are currently in-service, and determined by the RSA Medical Board to be permanently incapacitated from further performance of duty. Preretirement death benefits are calculated and paid to the beneficiary based on the member’s age, service


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credit, employment status and eligibility for retirement. The ERS serves approximately 846 local participating employers. These participating employers include 287 cities, 65 counties, and 494 other public entities. The ERS membership includes approximately 83,874 participants. As of September 30, 2014, membership consisted of:

Retirees and beneficiaries currently receiving benefits 21,691 Terminated employees entitled to but not yet receiving benefits 1,252 Terminated employees not entitled to a benefit 5,048 Active Members 55,883 Total 83,874

Contributions Covered members of the ERS contributed 5% of earnable compensation to the ERS as required by statute until September 30, 2011. From October 1, 2011, to September 30, 2012, covered members of the ERS were required by statute to contribute 7.25% of earnable compensation. Effective October 1, 2012, covered members of the ERS are required by statute to contribute 7.50% of earnable compensation. Certified law enforcement, correctional officers, and firefighters of the ERS contributed 6% of earnable compensation as required by statute until September 30, 2011. From October 1, 2011, to September 30, 2012, certified law enforcement, correctional officers, and firefighters of the ERS were required by statute to contribute 8.25% of earnable compensation. Effective October 1, 2012, certified law enforcement, correctional officers, and firefighters of the ERS are required by statute to contribute 8.50% of earnable compensation. State Police of the ERS contribute 10% of earnable compensation. ERS local participating employers are not required by statute to increase contribution rates for their members. Tier 2 covered members of the ERS contribute 6% of earnable compensation to the ERS as required by statute. Tier 2 certified law enforcement, correctional officers, and firefighters of the ERS are required by statute to contribute 7% of earnable compensation. Tier 2 State Police members of the ERS contribute 10% of earnable compensation. These contributions rates are the same for Tier 2 covered members of ERS local participating employers. The ERS establishes rates based upon an actuarially determined rate recommended by an independent actuary. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with additional amounts to finance any unfunded accrued liability, the pre-retirement death benefit and administrative expenses of the Plan. For the year ended June 30, 2015, the Board’s active employee contribution rate was 5% of covered employee payroll, and the Board’s average contribution rate to fund the normal and accrued liability costs was 13.84% of covered employee payroll.


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The Board’s contractually required contribution rate for the year ended June 30, 2015 was 14.19% of pensionable pay for Tier 1 employees, and 11.89% of pensionable pay for Tier 2 employees. These required contribution rates are based upon the actuarial valuation dated September 30, 2013, a percent of annual pensionable payroll, and actuarially determined as an amount that, when combined with member contributions, is expected to finance the costs of benefits earned by members during the year, with an additional amount to finance any unfunded accrued liability. Total employer contributions to the pension plan from the Board were $749,824 and $680,972 for the years ended June 30, 2015 and 2014, respectively. The components of the Municipal Utilities Board of the City of Albertville's contributions for the year ended June 30, 2015 were as follows:

Electric Water Waste Water Total

Employee Contributions $ 121,081 $ 76,463 $ 75,539 $ 273,083 Employer Contributions 253,358 251,638 244,828 749,824 $ 374,439 $ 328,101 $ 320,367 $ 1,022,907

The components of the Municipal Utilities Board of the City of Albertville's contributions for the year ended June 30, 2014 were as follows:


Employee Contributions $ 110,070 $ 76,135 $ 75,387 $ 261,592 Employer Contributions 286,600 198,049 196,323 680,972 $ 396,670 $ 274,184 $ 271,710 $ 942,564

Employer contribution amounts include active employees and cost of living adjustments approved by the Board for retired employees.


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Net Pension Liability The Board’s net pension liability was measured as of September 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of September 30, 2013 rolled forward to September 30, 2014 using standard roll-forward techniques as shown in the following table:

Total Pension Liability as of September 30, 2013 (a)

$ 24,649,927

Entry Age Normal Cost for October 1, 2013 – September 30, 2014 (b)

364,766

Actual Benefit Payments and Refunds for October 1, 2013 – September 30, 2014 (c)

(1,564,873)

Total Pension Liability as of September 30, 2014 [(a) x (1.08)] + (b) – [(c) x (1.04)]

$ 25,359,219

Actuarial Assumptions The total pension liability in the September 30, 2013 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 3.00% Salary increases 3.75% - 7.25% Investment rate of return* 8.00%

*Net of pension plan investment expense

Mortality rates for ERS were based on the RP-2000 Combined Mortality Table Projected with Scale AA to 2015 set forward three years for males and two years for females. The rates of mortality for the period after disability retirement are according to the sex distinct RP-2000 Disability Mortality Table. The actuarial assumptions used in the September 30, 2013 valuation were based on the results of an investigation of the economic and demographic experience for the ERS based upon participant data as of September 30, 2010. The Board of Control accepted and approved these changes on January 27, 2012, which became effective at the beginning of fiscal year 2012.


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The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target asset allocation and best estimates of geometric real rates of return for each major asset class are as follows:

Target Allocation

Long-Term Expected

Rate of Return*

Fixed Income 25.00% 5.00% US Large Stocks 34.00% 9.00% US Mid Stocks 8.00% 12.00% US Small Stocks 3.00% 15.00% International Developed Market Stocks 15.00% 11.00% International Emerging Market Stocks 3.00% 16.00% Real Estate 10.00% 7.50% Cash 2.00% 1.50%

Total 100.00%

* Includes assumed rate of inflation of 2.50%. Discount Rate The discount rate used to measure the total pension liability was the long term rate of return, 8%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that the employer contributions will be made in accordance with the funding policy adopted by the ERS Board of Control. Based on those assumptions, components of the pension plan’s fiduciary net position were projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.


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Changes in Net Pension Liability

Increase (Decrease) Total Pension

Liability Plan Fiduciary

Net Position Net Pension

Liability (a) (b) (a)-(b)

Balances at 9/30/2013 $ 24,649,927 $ 14,899,201 $ 9,750,726 Changes for the Year Service Cost 364,766 - 364,766 Interest 1,909,399 - 1,909,399 Differences between expected and actual experience

-

-

-

Contributions – Employer - 692,260 (692,260) Contributions – Employee - 265,949 (265,949) Net Investment Income - 1,751,570 (1,751,570) Benefit Payments, Including Refunds of Employee Contributions

(1,564,873)

(1,564,873)

-

Administrative - - - Transfers Among Employees - 4,575 (4,575) Net Changes 709,292 1,149,481 (440,189) Balances at 9/30/2014 $ 25,359,219 $ 16,048,682 $ 9,310,537

The net pension liability is reflected in each System’s financial statements as follows:

System June 30, 2015 June 30, 2014

Electric $ 4,282,847 $ - Water 2,513,845 - Waste Water 2,513,845 -

Total $ 9,310,537 $ -

Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following table presents the Board’s net pension liability calculated using the discount rate of 8%, as well as what the Board’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (7%) or 1-percentage-point higher (9%) than the current rate:

1% Decrease Current Rate 1% Increase (7.00%) (8.00%) (9.00%)

Board’s Net Pension Liability $ 12,205,445 $ 9,310,537 $ 6,874,942


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Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued RSA Comprehensive Annual Report for the fiscal year ended September 30, 2014. The supporting actuarial information is included in the GASB Statement No. 68 Report for the ERS prepared as of September 30, 2014. The auditor’s report dated June 3, 2015 on the Schedule of Changes in Fiduciary Net Position by Employer and accompanying notes is also available. The additional financial and actuarial information is available at www.rsa-al.gov. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2015, the Board recognized pension expense of $749,824. At June 30, 2015, the Board reported deferred outflows of resources and deferred inflows of resources related to pensions of the following sources:

Deferred Outflows

of Resources

Deferred Inflows

of Resources Differences between expected and actual experience $ 0 $ 0 Changes of assumptions 0 0 Net difference between projected and actual earnings on pension plan investments 0 466,974 Employer contributions subsequent to the measurement date 540,609 0 Total $ 540,609 $ 466,974

The Deferred Outflows of Resources and Deferred Inflows of Resources were reported in each System’s financial statements as follows:

System

Deferred Outflows

of Resources

Deferred Inflows

of Resources

Electric $ 238,838 $ 214,808

Water 151,560 126,083

Waste Water 150,211 126,083 Total $ 540,609 $ 466,974


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Amounts reported as deferred outflows of resources and deferred inflows of resources to pensions will be recognized in pension expense as follows:

Year ended June 30: 2016 $116,743 2017 116,743 2018 116,743 2019 116,743 2020 0 Thereafter 0

NOTE 7 - POST-RETIREMENT HEALTH CARE BENEFITS In addition to pension benefits, the Board provides post-retirement health care benefits in accordance with Board policy. Description The Municipal Utilities Board of the City of Albertville (the Board) follows the provisions of GASB Statement No. 45, “Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions.” In addition to the relevant disclosures within this note related to GASB Statement No. 45, the financial statements reflect a long-term liability and related expense divided by system as follows:

System Long-Term

Liability Related Expense

Electric $ 405,130 $ 59,722 Water 302,310 36,850 Waste Water 239,448 38,120

Total $ 946,888 $ 134,692

The Board, through its commitment to provide other post-employment benefits (OPEB), provides medical benefits to eligible retired employees and their beneficiaries. The Board provides these benefits through the Local Government Health Insurance Plan (LGHIP), an agent multiple-employer healthcare plan affiliated with the Retirement System of Alabama (See Note 6). Once retirees and/or their dependents are eligible for Medicare, their coverage through LGHIP becomes secondary to Medicare. The Board is under no statutory or contractual obligation to provide these postretirement healthcare benefits. Because the plan consists solely of the Board’s firm commitment to provide OPEB through the payment of premiums to the LGHIP, no stand-alone financial report is either available or generated.


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Funding Policy Premiums under the Plan for post-employment healthcare benefits are funded by participating retirees in accordance with rates established by the Board and by the Board itself from appropriate system funds. For three years after retirement, retirees pay $30 per month for single coverage and $65 per month for family coverage; the same rate as active employees. At the end of the three year period, the retiree must pay the entire cost of their premium and that of their dependents. Medical and drug benefits are offered for both pre-Medicare and Medicare eligible retirees. Medical premiums for non-Medicare retirees was $817 per month for single coverage and $1,502 per month for family coverage. Medicare primary retirees paid $394 per month for single coverage and $796 per month for family coverage. For the years ended June 30, 2015 and 2014, Water System retirees receiving benefits paid $14,489 and $27,682, respectively, which was used to offset the Water System’s total outlay of $22,222 and $37,974, respectively, for retiree’s current year premiums. The net outlay of $7,733 and $10,292, respectively, represents the Water System’s net cost for retiree’s current year premiums due. The Plan is financed on a pay-as-you-go basis. Annual OPEB Cost and Net OPEB Obligation The Board’s annual OPEB cost is calculated based on the annual required contribution (ARC) of the Board, 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 normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period of 30 years. The following table illustrates the components of the Board’s annual OPEB cost for the year, the amount actually contributed to the Plan, and changes in the Board’s net OPEB obligation:


Annual Required Contribution $ 59,722 $ 36,850 $ 38,120 $ 134,692 Interest on Net OPEB Obligation - - - - Adjustment to Annual Required Contribution - - - - Annual OPEB Obligation 59,722 36,850 38,120 134,692 Contributions Made - - - - Increase in Net OPEB Obligation 59,722 36,850 38,120 134,692 Net OPEB Obligation – Beginning of Year 345,408 265,460 201,328 812,196 Net OPEB Obligation – End of Year $ 405,130 $ 302,310 $ 239,448 $ 946,888


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The Board’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for 2015 and the previous year were as follows:

TREND INFORMATION

Fiscal Year Ending Annual OPEB Cost (AOC)

Percentage of AOC Contributed

Net OPEB Obligation – End

of Year 2009 $124,320 0% $124,320 2010 $124,320 0% $248,640 2011 $144,910 0% $393,550 2012 $144,910 0% $538,460 2013 $138,510 0% $675,328 2014 $138,510 0% $812,196 2015 $137,170 0% $946,888

Funding Status and Funding Progress As of September 30, 2014, the most recent actuarial valuation date, the Plan was not funded. The funding progress is as follows:

SCHEDULE OF FUNDING PROGRESS

Actuarial Actuarial Actuarial Unfunded Funded Covered UAAL as a % Valuation Value of Liability (AAL) AAL(UAAL) Ratio Payroll of Covered

Date Assets (a) Projected Unit Credit (b)

(b-a) (a/b) (c) Payroll ((b-a)/c)

9/30/2008 $0 $1,447,146 $1,447,146 0% $4,427,320 32.69% 9/30/2010 $0 $1,795,803 $1,795,803 0% $4,852,639 37.01% 9/30/2012 $0 $1,540,685 $1,540,685 0% $4,789,790 32.17% 9/30/2014 $0 $1,456,206 $1,456,206 0% $5,186,278 28.08%

Each System’s portion of the actuarial accrued liability for benefits is as follows:

System Long-Term

Liability

Electric $ 624,130 Water 457,686 Waste Water 374,390

Total $ 1,456,206

Actuarial valuations of 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.


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The schedule of funding progress is to present multiyear trend information about whether the actuarial value of Plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. However, because the Board maintains no Plan assets, information relative to Plan asset required disclosures is not applicable. Additionally, because 2009 was the year of transition for GASB Statement No. 45, requirements of GASB Statement No. 45 have been implemented prospectively; therefore, the RSI does not reflect similar information respective of years preceding 2009. Actuarial Methods and Assumptions Projections of benefits for financial reporting purposes are based on the substantive Plan (the Plan as understood by the Board 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 Board and Plan members to that point. There are no legal or contractual funding limitations that would potentially affect the projection of benefits for financial accounting purposes. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities, consistent with the long-term perspective of the calculations. In the actuarial valuation dated September 30, 2014, the projected unit credit actuarial cost method was used. Because the Board funds its OPEB on a pay-as-you-go basis, the plan has no assets (investments) used specifically for paying the post-retirement medical benefits; therefore, the actuarial assumptions included a 4% discount rate, which approximates the expected rate of return on non-pension investments held by the Board. Actuarial assumptions also included annual medical cost trend rates of 7.5%, reduced by decrements to an ultimate rate of 5%. The UAAL is being amortized as a level percentage of pay dollar amounts over thirty years on an open basis.


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NOTE 8 - RELATED PARTY TRANSACTIONS The Municipal Utilities Board of the City of Albertville operates the Electric, Water and Waste Water Systems. In order to stream-line operations, the Electric System bills and collects revenues for the Water and Waste Water Systems and remits those billings monthly. Vendor payments are consolidated whenever practical while maintaining the proper coding of expenses to each department. The payroll system is maintained by the Electric System with reimbursements from the Water and Waste Water Systems. In addition, each system purchases utility services from the other respective systems. During the year ended June 30, 2014, the Electric System sold the Water System and the Waste Water System each a portion of the Office Land, Building and Equipment, as follows:

Water Waste Water

Land $ 13,950 $ 11,700 Building 736,196 617,455 Equipment 34,212 28,694

Total $ 784,358 $ 657,849

The Electric System financed the sale amount for the Water System (see Note 5). NOTE 9 - MAJOR CUSTOMERS The Water System had one customer to whom sales constitute 10% or more of total Water revenue. Information pertaining to this customer for the years ended June 30, 2015 and 2014 is shown below:

2015 2014 Sales for the Year $ 1,109,243 $ 1,392,586 Accounts Receivable at Year End 103,342 92,368


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NOTE 10 – RISK MANAGEMENT Significant losses are covered by commercial insurance for all major programs and worker’s compensation. Settlement amounts have not exceeded insurance coverage for the current year or the three prior years. There have been no significant reductions in insurance coverage. NOTE 11 – CHANGE IN ACCOUNTING PRINCIPLE The Municipal Utilities Board of the City of Albertville implemented Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions (an amendment of GASB Statement No. 27), in the fiscal year ending June 30, 2015. The implementation of the statement required the Board to record beginning net pension liability and the effects on net position of contributions made by the Board during the measurement period (fiscal year ending September 30, 2014). As a result, net position as of July 1, 2014 for the business-type activities decreased by $2,445,786. During 2014, the Municipal Utilities Board of the City of Albertville adopted GASB Statement No. 65 of the Governmental Accounting Standards Board (GASB 65), Items Previously Reported As Assets and Liabilities. GASB 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. GASB 65 also provides other financial reporting guidance related to the impact of the financial statement elements deferred outflows of resources and deferred inflows of resources, such as changes in the determination of the major fund calculations and limiting the use of the term “deferred” in the financial statement presentations. Adoption of GASB 65 resulted in no changes in net position. The deferred loss on refunding of debt is reclassified as a deferred outflow of resources. NOTE 12 - SUBSEQUENT EVENTS The Municipal Utilities Board of the City of Albertville evaluates events occurring subsequent to the date of the financial statements in determining the accounting for and disclosure of transactions and events that affect the financial statements. The Municipal Utilities Board of the City of Albertville evaluated subsequent events through November 12, 2015, which is the date the financial statements were available to be issued.

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REQUIRED SUPPLEMENTARY INFORMATION


SCHEDULES OF REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2015 AND 2014

SCHEDULES OF CHANGES IN THE BOARD'S NET PENSION LIABILITY AND RELATED RATIOS

Last Ten (10) Fiscal Years Ending September 30

September 30, 2014 September 30, 2013 September 30, 2012 September 30, 2011 September 30, 2010 September 30, 2009 September 30, 2008 September 30, 2007 September 30, 2006 September 30, 2005

Total Pension LiabilityService Cost $ 364,766 $ - $ - $ - $ - $ - $ - $ - $ - $ - Interest 1,909,399 - - - - - - - - - Changes of Benefit Terms - - - - - - - - - - Differences Between

Expected and Actual Experience - - - - - - - - - - Changes of Assumptions - - - - - - - - - Benefit Payments, Including

Refunds of Employee Contributions (1,564,873) - - - - - - - - -

Net Change in Total Pension Liability 709,292 - - - - - - - - -

Total Pension Liability - Beginning 24,649,927 - - - - - - - - -

Total Pension Liability - Ending $ 25,359,219 $ - $ - $ - $ - $ - $ - $ - $ - $ -

Plan Fiduciary Net PositionContributions - Employer $ 692,260 $ - $ - $ - $ - $ - $ - $ - $ - $ - Contributions - Employee 265,949 - - - - - - - - - Net Investment Income 1,751,570 - - - - - - - - - Benefit Payments, Including

Refunds of Employee Contributions (1,564,873) - - - - - - - - - Administrative Expense - - - - - - - - - - Other 4,575 - - - - - - - - -

Net Change in Plan Fiduciary Net Position 1,149,481 - - - - - - - - -

Plan Fiduciary Net Position - Beginning 14,899,201 - - - - - - - - -

Plan Fiduciary Net Position - Ending $ 16,048,682 $ - $ - $ - $ - $ - $ - $ - $ - $ -

Board's Net Pension Liability - Ending $ 9,310,537 $ - $ - $ - $ - $ - $ - $ - $ - $ -

Plan Fiduciary Net Position as aPercentage of the Total Pension Liability 63.29%

Covered-Employee Payroll * $ 5,296,453

Board's Net Pension Liability as aPercentage of Covered-Employee Payroll 175.79%

*Employer's covered-payroll during the measurement period is the total payroll paid to covered employees (not just pensionable payroll). For FY2014, the measurement period is October 1, 2013 - September 30, 2014.

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SCHEDULES OF REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2015 AND 2014

SCHEDULES OF EMPLOYER CONTRIBUTIONS

Last Ten (10) Fiscal Years Ending June 30

June 30, 2015 June 30, 2014 June 30, 2013 June 30, 2012 June 30, 2011 June 30, 2010 June 30, 2009 June 30, 2008 June 30, 2007 June 30, 2006

Actuarially Determined Contribution * $ 749,824 $ - $ - $ - $ - $ - $ - $ - $ - $ -

Contributions in Relation to theActuarially Determined Contribution * 749,824 - - - - - - - - -

Contribution Deficiency (Excess) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -

Covered-Employee Payroll ** $ 5,415,852

Contributions as a Percentageof Covered Employee Payroll 13.84%

* Amount of employer contributions related to normal and accrued liability components of employer rate net of any refunds or error service payments. For FY2015, the fiscal year is the twelve month period beginning after 6/15/2014.

** Employer's covered-payroll during fiscal year is the total payroll paid to covered employees (not just pensionable payroll). For FY2015, the fiscal year is the twelve month period beginning after 6/15/2014.

Notes to Schedule

Methods and assumptions used to determine contribution rates:Actuarial Cost Method Entry AgeAmortization Method Level Percent ClosedRemaining Amortization Period 30 YearsAsset Valuation Method Five Year Smoothed MarketInflation 3.00%Salary Increases 3.75 - 7.25%, Including InflationInvestment Rate of Return 8.00%, Net of Pension Plan Investment Expense, Including Inflation

Actuarially determined contribution rates are calculated as of September 30, two years prior to the end of the fiscal year in which contributions are reported. Contributions for fiscal year 2015 were based on the September 30, 2012 actuarial valuation.

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SUPPLEMENTARY INFORMATION


SCHEDULES OF OPERATING EXPENSE


2015 2014Percent of Percent ofOperating Operating

Amount Revenue Amount RevenueSOURCE OF WATER SUPPLY EXPENSE

Purchased Water $ - 0.00 % $ 730,891 10.76 %Salaries and Wages 265,039 3.86 235,467 3.47Supplies 15,821 0.23 26,091 0.38Maintenance 53,117 0.77 28,222 0.42Employee Welfare 318,327 4.64 289,835 4.27General 6,659 0.10 8,716 0.13

658,963 9.61 1,319,222 19.42

POWER AND PUMPING EXPENSEPurchased Power 1,066,785 15.55 1,076,879 15.85Salaries and Wages 230,732 3.36 215,036 3.17Supplies 864 0.01 1,359 0.02Maintenance 43,854 0.64 40,990 0.60Maintenance of Generator 32,486 0.47 35,683 0.53

1,374,721 20.04 1,369,947 20.17

PURIFICATION EXPENSESalaries and Wages 210,984 3.08 215,096 3.17Supplies and Chemicals 619,913 9.04 641,469 9.44Maintenance 1,513 0.02 4,660 0.07

832,410 12.14 861,225 12.68

TRANSMISSION AND DISTRIBUTION EXPENSESludge Disposal 77,753 1.13 73,369 1.08System Operation 310,748 4.53 310,747 4.57System Maintenance 558,276 8.14 486,436 7.16Meter Repair and Tests 720 0.01 828 0.01Mapping 39,283 0.57 26,885 0.40

986,780 14.39 898,265 13.22

CUSTOMER ACCOUNTS EXPENSEMeter Reading and Collection 314,684 4.59 336,170 4.95

ADMINISTRATIVE AND GENERAL EXPENSESalaries and Wages 67,272 0.98 56,770 0.84General 127,824 1.86 134,310 1.98Employee Pensions and Benefits 569,396 8.30 525,647 7.74Insurance 115,533 1.68 117,360 1.73Maintenance of Property 7,241 0.11 3,414 0.05

887,266 12.94 837,501 12.33

$ 5,054,824 73.70 % $ 5,622,330 82.76 %

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SCHEDULES OF OPERATING STATISTICS

FOR THE YEAR ENDED JUNE 30, 2015

Customer Accounts and Gallons SoldAverage

Number of AnnualCustomers Consumption

Residential 8,872 532,663,700Commercial 1,127 225,456,500Industrial 28 1,012,882,200Other Distributors 11 1,281,826,200Fire Protection 71 0

10,109 3,052,828,600

Largest Customers - Water Revenue, Percentage of Total Water Revenue and Gallons

PercentageWater of Water

Revenues Revenues Consumption

Boaz Water and Sewer $ 1,109,243 16.49% 702,052,700Tyson Foods, Inc. 649,548 9.66% 404,100,300Collinsville Water Works 420,697 6.25% 266,264,000Wayne Farms, LLC 364,489 5.42% 225,778,600Huhtamaki Retail 349,546 5.20% 219,443,000Northeast Alabama Water 315,071 4.68% 198,852,500Alatrade Foods, LLC 140,395 2.09% 83,651,500Water and Sewer Board of Guntersville 125,579 1.87% 77,692,000Albertville Quality Foods, Inc. 78,724 1.17% 43,692,800Mueller Company 62,553 0.93% 34,105,700Asbury Water System 61,420 0.91% 36,965,000Southern Parallel 35,210 0.52% 19,551,100Diamond Foods, LLC 34,034 0.51% 18,477,500

$ 3,746,509 55.70% 2,330,626,700

Total Water Sales Revenue $ 6,726,639

Unaudited

(Continued)

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MUNICIPAL UTILITIES BOARD OF ALBERTVILLE - WATER SYSTEM

SCHEDULES OF OPERATING STATISTICS (Continued)

FOR THE YEAR ENDED JUNE 30, 2015

Average Residential Usage - GallonsAverage

Total Average Average MonthlyAnnual Monthly Number of Consumption

Consumption Consumption Customers Per Customer

532,663,700 44,388,642 8,872 5,003

Measurement of Transmission Mains and Distribution Lines

Total Total PriceFeet Cost Per Foot

1 1/2" Galvanized Iron 200 $ 87 $ 0.432" Galvanized Iron 81,564 65,970 0.812" Cast Iron Pipe 131,028 117,836 0.902" PVC Pipe 313,253 662,996 2.113" Cast Iron Pipe and PVC 26,557 20,448 0.774" Cast Iron and Galvanized Pipe 1,860 1,922 1.036" Cast Iron Pipe 136,177 1,177,167 8.646" PVC Pipe 582,180 3,545,395 6.088" Cast Iron Pipe 78,813 503,228 6.398" PVC Pipe 21,400 144,082 6.7310", 12" and 14" PVC and

Cast Iron Pipe 53,688 544,848 10.15

1,426,720 $ 6,783,980 $ 44.04

Total Miles of Pipeline 270.21

Unaudited

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SCHEDULES OF DEBT SERVICE REQUIREMENTS TO MATURITY

JUNE 30, 2015

Water Revenue Bonds, Series 2008-SRF Water Revenue Bonds, Series 2010-SRF Water Revenue Bonds, Series 2012-SRFDated December 1, 2008 Dated September 16, 2010 Dated February 13, 2012

Maturity Interest Interest InterestDate Rate Principal Interest Rate Principal Interest Rate Principal Interest

2016 3.50 % $ 555,000 $ 368,113 3.10 % $ 90,000 $ 58,590 2.50 % $ 280,000 $ 60,128 2017 575,000 348,338 90,000 55,800 290,000 53,000 2018 595,000 327,863 95,000 52,933 300,000 45,625 2019 620,000 306,600 95,000 49,988 310,000 38,000 2020 640,000 284,550 100,000 46,965 325,000 30,063 2021 665,000 261,713 100,000 43,883 335,000 21,813 2022 685,000 238,088 105,000 40,688 345,000 13,313 2023 710,000 213,675 110,000 37,355 360,000 4,500 2024 735,000 188,388 115,000 33,868 - - 2025 765,000 162,138 115,000 30,303 - - 2026 790,000 134,925 120,000 26,660 - - 2027 820,000 106,750 125,000 22,863 - - 2028 850,000 77,525 125,000 18,988 - - 2029 880,000 47,250 130,000 15,035 - - 2030 910,000 15,925 135,000 10,928 - - 2031 - - 140,000 6,665 - - 2032 - - 145,000 2,248 - -

$ 10,795,000 $ 3,081,838 $ 1,935,000 $ 553,756 $ 2,545,000 $ 266,441

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SCHEDULES OF DEBT SERVICE REQUIREMENTS TO MATURITY

JUNE 30, 2015

Note Payable - Electric SystemDated December 1, 2013

Maturity Interest Total PrincipalDate Rate Principal Interest and Interest

2016 2.45 % $ 72,852 $ 15,664 $ 1,500,346 2017 74,657 13,859 1,500,653 2018 76,507 12,009 1,504,936 2019 78,402 10,114 1,508,103 2020 80,345 8,171 1,515,093 2021 82,335 6,181 1,515,924 2022 84,375 4,141 1,515,603 2023 86,466 2,050 1,524,046 2024 36,656 226 1,109,137 2025 - - 1,072,440 2026 - - 1,071,585 2027 - - 1,074,613 2028 - - 1,071,513 2029 - - 1,072,285 2030 - - 1,071,853 2031 - - 146,665 2032 - - 147,248

$ 672,595 $ 72,412 $ 19,922,041

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MUNICIPAL UTILITIES BOARD OF THE CITY OF ALBERTVILLE … · The Municipal Utilities Board (MUB) was...

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Transcript of MUNICIPAL UTILITIES BOARD OF THE CITY OF ALBERTVILLE … · The Municipal Utilities Board (MUB) was...