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City of Centerville P l April 14, 2000 / Page Eight The hook -up fees generate revenue for expansion of the system These fees contributed to the majority of the large cash balance. The rates currently appear adequate and are at a level sufficient to provide for the operation of the system. Sewer Fund The results of operations and cash position of the Sewer Fund the past three years are as follows: Percent Percent Percent 1999 of Total 1998 of Total 1997 of Total Charges for services $ 148,870 100.0% $ 137,573 100.0% $ 122,245 100.0% Operating expenses 240.347 161.5 295.890 215.1 149.708 122.5 Operating income (loss) before hook -up fees (91,477) (61.5) (158,317) (115.1) (27,463) (22.5) Hook -up fees 348.897 234.4 371.177 269.8 115.918 94.8 Operating income 424 122.2% $- 212.$64 154.7% 72.3% Cash balance, December 31 $1,473.262 51.215.614 $ 829 930 The Sewer cash also is very high compared with operating expenses but large hook -up fees have also been a major factor in the increase. The operations before hook -up fees have been at a loss for several years. It is important that the City review rates to ensure that the revenue is high enough to cover operating expenses. As mentioned in the Water fund analysis, the hook -up fees should be used for the expansion of the system. Other items Collateral on deposits State statutes require that the City have collateral to secure their bank deposits above FDIC limits. The City is responsible to monitor this. Currently, the only time it is reviewed is during the audit. We recommend that the City review collateral at the same time monthly bank reconciliations are done. Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements – and Management's Discussion and Analysis – for State and Local Governments GASB Statement No. 34 is the result of an almost decade -long effort by GASB to reexamine the financial reporting model for state and local governments. The most notable change is the presentation of a set of highly aggregated, "full accrual" financial statements. At the same time, however, the Statement retains many familiar features of current governmental financial reporting, in particular fund -based financial statements. State and local governmental fmancial statement preparers and auditors will need to comprehend and implement a vast number of changes in accounting and financial reporting. They will have to explain those changes to persons who are unfamiliar with the particulars of accounting, much less the unique area of state and local governmental accounting.