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R-2024-032 - 2/22/2024 RESOLUTION NO. R-2024-032 WHEREAS,the City of Round Rock's Annual Comprehensive Financial Report("Report")for the fiscal year ended September 30, 2023 has been submitted to the City Council, and WHEREAS,the City Council desires to acknowledge the receipt and acceptance of the attached Report,Now Therefore BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ROUND ROCK,TEXAS, That the City of Round Rock's Annual Comprehensive Financial Report for the fiscal year ended September 30, 2023, attached hereto as Exhibit "A" and incorporated herein, is hereby received and accepted. The City Council hereby finds and declares that written notice of the date,hour,place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended. RESOLVED this 22nd day of February, 2024. 1,4 CRAI MON, Mayor City Rou ock, Texas ATTEST: MEAGAN S 4SC Clerk 0112.20242;4891-5061-9557 EXHIBIT „A„ ROUND ROCK TEXAS City of Round Rock, Texas Annual Comprehensive Financial Report Fiscal Year Ended September 30, 2023 ELECTED OFFICIALS Craig Morgan, Mayor Matthew Baker, Mayor Pro - Tem Michelle Ly, Council Member Rene Flores, Council Member Frank Ortega, Council Member Kristin Stevens, Council Member Hilda Montgomery, Council Member MANAGEMENT STAFF Laurie Hadley City Manager Brooks Bennett Assistant City Manager Bryan Williams Assistant City Manager OFFICIAL ISSUING REPORT Susan L. Morgan, CPA Chief Financial Officer v • �► TABLE OF CONTENTS INTRODUCTORY SECTION: Letter of Transmittal 1 City Organizational Chart 10 Certificate of Achievement for Excellence in Financial Reporting 11 FINANCIAL SECTION: Independent Auditors' Report 13 Management's Discussion and Analysis 17 Basic Financial Statements Government Wide Financial Statements: Statement of Net Position 32 Statement of Activities 34 Fund Financial Statements: Governmental Funds: Balance Sheet 36 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 38 Statement of Revenues, Expenditures and Changes in Fund Balances 40 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 42 Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual-General Fund 43 Statement of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual- Round Rock Transportation and Economic Development Corporation Fund 44 Proprietary Funds: Statement of Net Position 46 Statement of Revenues, Expenses and Changes in Net Position 48 Statement of Cash Flows 49 Notes to the Financial Statements 51 Required Supplementary Information Texas Municipal Retirement System (TMRS) Plan - Schedule of Changes in the Net Pension Liability and Related Ratios 102 Texas Municipal Retirement System (TMRS) Plan - Schedule of Contributions 104 Schedule of Changes in the Total OPEB Liability and Related Ratios 106 Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds: Combining Balance Sheet-Nonmajor Governmental Funds 110 Combining Statement of Revenues, Expenditures and Changes in Fund Balances-Nonmajor Governmental Funds 112 TABLE OF CONTENTS Schedules of Revenues, Expenditures and Changes in Fund Balances- Budget and Actual: General Fund 116 Debt Service Fund 120 Nonmajor Special Revenue Funds: Community Development Block Grant 121 Hotel-Motel Occupancy Tax 122 Hotel-Motel Occupancy Venue Tax 123 Innovation and Development 124 Library and Recreational 125 Public Safety 126 Public Education&Government 127 Roadway Impact Fees 128 STATISTICAL SECTION (UNAUDITED): Financial Trends: Net Position by Component—Last Ten Fiscal Years 130 Changes in Net Position—Last Ten Fiscal Years 132 Fund Balances of Governmental Funds—Last Ten Fiscal Years 136 Changes in Fund Balances of Governmental Funds—Last Ten Fiscal Years 138 Revenue Capacity: Actual and Taxable Assessed Value of Property—Last Ten Fiscal Years 140 Property Tax Rates—Direct and Overlapping Governments Per$100 of Assessed Value—Last Ten Fiscal Years 141 Principal Property Taxpayers—Current Year and Nine Years Ago 142 Property Tax Levies and Collections—Last Ten Fiscal Years 143 Sales Tax and Ad Valorem Tax—Last Ten Fiscal Years 144 Taxable Sales by Category—Last Ten Calendar Years 146 Hotel Taxpayers 148 Hotel Occupancy Tax Collection History by Quarter—Last Ten Fiscal Years 149 Debt Capacity: Ratios of Outstanding Debt by Type—Last Ten Fiscal Years 150 Ratios of Net General Bonded Debt Outstanding to Assessed Value and Net Bonded Debt Per Capita—Last Ten Fiscal Years 151 Computation of Direct and Overlapping Governmental Activities Debt 152 Legal Debt Margin Information—Last Ten Fiscal Years 154 Condensed Utility Statement of Operations-Last Ten Fiscal Years 156 Demographic and Economic Information: Demographic and Economic Statistics—Last Ten Fiscal Years 159 Principal Employers—Current Year and Nine Years Ago 160 Operating Information: Full-Time Equivalent City Government Employees by Function—Last Ten Fiscal Years 161 Operating Indicators by Function—Last Ten Fiscal Years 162 Capital Asset Statistics by Function—Last Ten Fiscal Years 164 Top Ten Water Customers 166 Water and Wastewater Retail Rates 167 TABLE OF CONTENTS SINGLE AUDIT SECTION: Schedule of Expenditures of Federal Awards 169 Notes to Schedule of Expenditures of Federal Awards 171 Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 172 Independent Auditors'Report on Compliance for Each Major Federal Program and on Internal Control Over Compliance Required by the Uniform Guidance 174 Schedule of Expenditures of Federal Awards 177 Summary Schedule of Prior Audit Findings 178 Corrective Action Plan 179 1 testi Z .... .. � ���� Mayor Coundlmembers City Manager Craig Morgan Michelle Ly Laurie Hadley Rene Flores Frank Ortega ROUND ROCK TEXAS Mayor Pro-Tem Kristin Stevens City Attorney ADMINISTRATION Matthew Baker Hilda Montgomery Stephanie L.Sandre February 5,2024 To the Honorable Mayor,Members of City Council,and Citizens City of Round Rock,Texas The Annual Comprehensive Financial Report of the City of Round Rock,Texas for the fiscal year ended September 30, 2023, is submitted herein.This report has been prepared by the City's Finance Department and responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data is accurate in all material aspects and is presented in a manner designed to clearly state the financial position and results of operations of the City as measured by the financial activity of its various funds. All disclosures have been included to enable the reader to gain the maximum understanding of the City's financial affairs. The City Charter requires an annual audit of the books of account, financial records, and transactions of all departments of the City by independent certified public accountants selected by the City Council. Whitley Penn, L.L.P., Certified Public Accountants, have issued an unmodified ("clean") opinion on the City of Round Rock's financial statements for the year ended September 30,2023.The independent auditors'report is located at the front of the financial section of this report. Management's discussion and analysis (MD8tA) can be found immediately following the report of the independent auditors. The MD&A is a narrative introduction, overview, and analysis to accompany the basic financial statements. This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. City of Round Rock Profile The City of Round Rock, established in 1851, is a municipal corporation incorporated under Article Xl, Section 5 of the Constitution of the State of Texas (Home Rule Amendment). The City operates under a Council-Manager form of government with six council members and a mayor. The City Manager is appointed by the City Council and is responsible to them for managing and administering all City affairs. The Chief Financial Officer is appointed by the City Manager and is responsible for supervising the operations of the Finance Department.This department maintains all accounting records of the City. The financial reporting entity (the government) includes all the funds of the primary government (the City of Round Rock as legally defined) as well as its component units. Component units are legally separate entities for which the primary government is financially accountable. The City provides a full range of services which include police and fire protection, parks and library, construction and maintenance of infrastructure, planning and community development, convention and tourism activities,and general administrative services. In addition,the City owns and operates a water, wastewater, and stormwater utility system and a golf course. These activities are included in the accompanying financial statements. Blended component units,although legally separate entities,are in substance part of the primary government's operations and included as part of the primary government. Accordingly, Round Rock Transportation and Economic Development Corporation(RRTEDC) revenues are reported in a special revenue fund of the City. 1 CITY O F ROU ND ROCK 221 East Main Street,Round Rock,Texas 78664 IPI 512.218.5401• IF]512.218.7097•roundrocktexas gov Annual budgets are legally adopted for the General Fund,Special Revenue Funds, Debt Service Fund,and the Proprietary Funds. Capital Projects Funds have no binding annual budget. Project-length financial plans are adopted for all capital projects;accordingly,no comparison of budget to actual is presented in the financial statements. Budgetary control is monitored at the department level by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors; however,the level of control at which expenditures may not exceed the budget is at the fund level. Purchase orders which result in an overrun of balances are not released until additional appropriations are made available. Significant Local Economic Events Strategic Goals Along with the entire Central Texas region,the City has experienced tremendous population growth over the past several years which has led to an increased demand for city services.To adequately prepare for the effect of this activity on the City, much effort goes into planning and funding infrastructure and service programs. Each January, Council reviews the City's successes and challenges and refines both the short-term and long-term strategic goals for the City. These goals set the direction for the allocation of staff and financial resources and are the basis for the development of the following year's budget. The goals and objectives identified by Council most recently are: Financially Sound City Providing High Value Services • Diversify City revenues to support defined City services and service levels • Expand the City tax base through economic expansion and diversity • Maintain responsible financial reserves consistent with City financial policies and national standards • Maintain City facilities,equipment,and apparatus • Develop,update,and use long-range organization and strategic master planning • Hire and retain top-quality, diverse City workforce dedicated to serving the Round Rock community • Be recognized as a financially responsible City by maintaining a "AAA" bond rating City Infrastructure:Today and For Tomorrow • Maintain responsible potable water used by City customers,City facilities and parks • Invest in City infrastructure to support future community growth and economic development • Expand water reuse system throughout the City where feasible • Improve mobility throughout the City and the region • Upgrade and expand roads ' • Upgrade and expand drainage and stormwater system • Maintain,upgrade and expand regional wastewater system Great Community to Live • Expand and diversify the local business and job opportunities for residents • il Redevelop older commercial areas and corridors • Expand and maintain quality-of-life amenities for residents • Build a community where people prefer to live • Diversify housing opportunities • Expand education campuses and programs • Retain medical/healthcare businesses 2 "The Sports Capital of Texas" for Tourism and Residents • Expand sports facilities (Sports Center/Multipurpose Complex)to support tourism • Increase number of tournaments:regional and national • Develop and maintain additional sports fields - practice,games,sports tourism • Upgrade the quality and maintenance of current City sports facilities • Increase revenues from sports tourism/convention for the benefit of residents and the local economy • Expand conventions/conferences Authentic Downtown - Exciting Community Destination • Increase public and commercial use of Brushy Creek • Expand housing opportunities:townhomes,apartments,condos • Develop The Depot and Tower Project • Increase Downtown connectivity • More attractive,aesthetically pleasing Downtown Sustainable Neighborhoods • Maintain reputation as a safe city • Upgrade older housing stock:exterior and interior ^ • Ensure homes and commercial areas comply with City codes ^ Increase neighborhood connectivity through streets and trails • Develop positive working relationships with homeowner associations/neighborhood WON' associations • Repair and upgrade neighborhood infrastructure: streets, sidewalks, utilities, fences, streetscapes • Upgrade neighborhood parks and open spaces The budget adopted for fiscal year 2024 reflects a fiscally responsible approach to improving the City's infrastructure and meets current demands while maintaining the City's strong financial position. Economy Round Rock has experienced robust economic growth in recent years.As the largest city in Williamson County and part of the Austin Metropolitan Statistical Area (MSA), Round Rock is a key part of one of the fastest growing regions in Texas and the country. From 2014 to the projected population for 2024, the City of Round Rock will have experienced 10-year population growth of 30%. Our long-range population estimates predict this increase continuing at a growth rate of around 2.5% per year for the foreseeable future. The state's strong economy, low unemployment rate, and low rate of overall taxation continues to draw new residents and businesses into Central Texas. The population for 2030 is projected to be over 161,000 within the City limits and over 229,000 in Greater Round Rock, which includes the City limits and the City's extraterritorial jurisdiction (ETJ). While most of the long-range growth will likely occur in northeast Round Rock where there are still large tracts of land that could be developed into additional neighborhoods, population density will likely increase across the City as residential development continues for single family townhomes, multifamily apartments, and senior living facilities. The City is planning and preparing for this population growth to ensure the high-quality services Round Rock residents have come to expect are expanded to serve residents of today and of tomorrow. 3 Round Rock continues to gain recognition for the value of the high-quality services provided to our residents. Below are a few of our most recent accolades: • Ranked number 1 by Bankrate.com as one of the"Best Places to Live" • Ranked number 1 by Bankrate.com as one of the"Best Cities in America to Start a Career" • Ranked number 2 by Milkeninstitute.org as one of the"Best Performing Cities" • Ranked number 14 by SmartAsset.com as one of the"Safest Cities in America" • Ranked number 19 by Niche.com as one of the"Best Cities to Raise a Family in America" • Awarded the "Leading the Way Award" by ETC Institute, an award that recognizes local governments for outstanding achievement in the delivery of services to residents • The American Planning Association (APA) Texas Chapter named Round Rock 2030, the City's comprehensive plan,the Best Comprehensive Plan in the state of Texas and awarded the City of Round Rock the"Community of the Year Award." Economic Development The City understands that diversification of Round Rock's economy is a key to financial stability. The long-standing partnership between the City and the Round Rock Chamber of Commerce continues to attract new development to the City. The funding is leveraged with the Chamber Momentum Fund to create a public/private partnership for economic development priorities. This partnership continues to yield new prospects through an inspired approach to economic development for Round Rock. Strong Local Base Round Rock's economy has become stronger and more diverse because of a variety of business relocations bringing capital investment,job opportunities, and new residents to the City. Emerson, a global engineering, technology, and software company, opened its $70 million, 282,000 square-foot international headquarters in January 2014. In February 2022, the City approved an economic development agreement for Emerson's $9 million expansion plan which is to include 50 to 60 additional employees by the end of the agreement.TECO-Westinghouse is the largest manufacturer of electric motors in North America. Round Rock is home to Dell's global headquarters with an estimated 12,000 employees in 2023. Since Dell relocated its global headquarters to Round Rock in 1994, the economic impact to the City has been transformative. Dell remains the City's largest sales taxpayer. Because of the company's commitment to Round Rock,the employment opportunities they offer,and the property tax and sales tax revenues they generate,Dell remains a major driver to the City's economy. United Parcel Service (UPS)opened a new facility in Round Rock in late 2018. This $70 million regional distribution center is 225,000 square-feet and is located on fifty acres of land near SH 45 and A.W. Grimes Boulevard.The new center employs more than 500 people with an annual average salary of at least$50,000. Kalahari Resorts and Conventions made its debut in Round Rock in November 2020,with an estimated 700 employees in 2023. The Round Rock location represents its fourth family resort and convention center. The authentically African-themed Kalahari Resorts and Convention Center features 975 well-appointed guest rooms,full-service amenities, fully equipped fitness centers, on-site restaurants, unique retail shops, state-of-the-art 150,000 square-foot conference center, and a 223,000 square-foot indoor/outdoor water park with a recent expansion. This resort has presented new opportunities for Round Rock and has provided substantial sales and hotel occupancy tax revenues, as well as diversify the local economy and available employment opportunities. Amazon opened a new delivery station in Round Rock in 2021 and has an estimated 650 employees. The 32-acre site is located at the Chisholm Trail Center near 1-35 and Old Settlers Boulevard and is comprised of three industrial buildings. The larger building is 180,550 square-feet and is used as the campus distribution center. The smaller two buildings total 260,970 square-feet and are used as parking for employees and delivery vehicles. The delivery station has created hundreds of local jobs. Amazon is expanding in Round Rock with plans to build a distribution center, data center, and electrical substation on 149 acres along County Road 172 and McNeil Road,north of SH 45. 4 East/West Manufacturing opened a new 43,000 square-foot facility in Round Rock in November 2021. East/West manufactures electronics and will relocate 30 jobs and create 30 new jobs over five years with the average salary being $50,000 a year. The company will invest $5 million into the new facility with an additional $650,000 in business personal property. A new Embassy Suites Hotel and Conference Center opened May 3, 2022, on nearly six acres of land near Bass Pro Shops and the Round Rock Premium Outlets. The hotel features 180 rooms with over 17,000 square-feet of beautiful event space with a grand ballroom for up to 600 guests. Embassy Suites Hotel and Conference Center has generated 77 jobs as of June 2022. Round Rock is the new home of Ametrine, Inc., a camouflage systems manufacturer relocating from Maryland. Ametrine will bring 140 new jobs with an average salary of $75,000 a year to a 40,000 square-foot facility where they hope to continue to grow the presence of the defense industry. The company will invest an estimated $8.6 million in business personal property and real property improvements and must sign a lease at the facility for at least 10 years. Triple Temp Cold Storage LLC recently opened a new cold storage and manufacturing facility in southwest Round Rock which started construction July 2021.The facility is 125,000 square-feet on a 10-acre site near Bratton Lane and generated 60 new jobs with salaries averaging $60,000 a year. The new facility will also serve as an incubator for entrepreneurs to create new food products and take them to market. This cold storage and incubator are the first to market in the Austin-Round Rock area, strategically located in central Texas along the 1-35 corridor. Triple Temp Cold Storage LLC was completed late in fiscal year 2023. On the Horizon Toppan Photomasks first established its U.S. presence in Round Rock in 1986 and is an advanced manufacturer of photomasks, which is a key component in the process of creating a semiconductor chip that is used by global companies such as Samsung,Texas Instruments, and others. Due to new funding opportunities through the U.S.CHIPS&Science Act, Toppan has been evaluating opportunities to modernize and expand to meet the demands of the rapidly advancing global semiconductor industry while also competing with China.After evaluating investment opportunities worldwide and in the U.S., Toppan selected its existing Round Rock location to move forward with a near $200 million expansion and modernization project that will create at least 50 new jobs. Switch, Inc., the exascale technology infrastructure corporation, will locate its Fifth Prime data center campus in Round Rock.Switch will build a 1.5 million square-foot campus of highly resilient Tier 5® data center space next to Dell.This new campus will be called "The Rock" and will continue with Switch's industry-leading commitment to sustainability by powering this facility with 100 percent renewable energy. Switch recently announced plans to open another data center less than a mile away from their current one under construction. Switch, Dell, and FedEx are working together to develop exascale multi-cloud edge infrastructure services to bring computer, storage and connectivity to the network edge and help customers overcome performance barriers for latency-sensitive applications. Over the next five years new economic development projects will reshape Round Rock's economy by diversifying the economy and bringing in new residents and visitors. The City entered into an agreement with Mark IV Capital for The District in February 2019, and proposed changes to the development were unveiled to Round Rock's City Council in June 2022. The planned development will be located near the intersection of 1-35 and SH 45. Revised plans for the development show The District is comprised of two to three million-square-feet of office space, 1,600 luxury multifamily residential units, 230,000 square-feet of lifestyle retail and hospitality space, walkable amenities, and open green space. This mixed-use development will be a great opportunity for continued growth and diversification of the City's economy. Sabey Data Centers (SDC), a premier colocation data center provider, broke ground in July 2022, on a new,40 acre data center campus in Round Rock; it's the company's first location in Texas.The new campus will provide up to 72-megawatt power capacity, supported by Sabey's industry-leading commitments to reliability, security, connectivity, and sustainability. In addition, Sabey's new campus will feature its latest innovations that maximize available data center space while shrinking its construction footprint. SDC will construct its data center on property formerly occupied by a Sears call center.The facility will consist of two buildings housing a data storage. Once completed, the facility's operation will bring 20 primary jobs to the area. The company will invest an estimated $185 million in real property improvements and $5 million in business personal property. 5 Kingslsle Entertainment, Inc., a digital technology company known for online role-playing games, will relocate its headquarters to Round Rock to expand its footprint in the City. The relocation comes after Kingslsle was acquired by Media and Games Invest.The company will lease a 33,000 square-foot facility for a minimum of three years to serve as its consolidated central office. It will invest a minimum of $500,000 in real property improvements and business personal property and create 150 diverse primaryjobs. Valex Corporation,a leading manufacturer of ultra-high purity process components used in the semiconductor,TFT/LCD and solar industries, will open its first Texas facility in Round Rock.The company currently operates three manufacturing locations in California, Korea, and China. The manufacturing company will invest a minimum of $5 million in property improvements and $7 million in new equipment to an existing 60,000 square-foot facility in the Crystal Park business development. Higher Education and Healthcare Round Rock also has several higher education facilities, many of which focus on healthcare disciplines. These institutions of higher learning include the Texas State University, Austin Community College, and Texas A&M Health Science Center. Texas State University opened its newest building, Willow Hall, in May 2018. This $67.5 million, 107,000 square-foot facility is home to the university's departments of communication disorders, physical therapy,and respiratory care which moved from the university's San Marcos campus as the university continues to consolidate the College of Health Professionals here in Round Rock. The 87th Texas Legislature, during its third special session in October 2021, passed Senate Bill 52 authorizing $3.3 billion in tuition revenue bonds for the construction of public university and health institution projects. Texas State University will receive an allocation from those funds for Esperanza Hall, the fourth academic building for the College of Health Professions on the Round Rock Campus.The hall will be 81,651 square-feet with an estimated total project cost of$52.4 million and will include classrooms, labs, and offices to support the College of Health Professions.Construction is expected to start Summer of 2024 and estimated to be complete January 2026. Austin Community College (ACC) celebrated the opening of a $33 million,45,000 square-foot expansion of its Round Rock campus in September 2018, featuring the college's third state-of-the-art ACCelerators, advanced science labs, classrooms, and made room for the enrollment of an additional 1,000 students. In November 2022, a bond proposition was passed that includes the next expansion of the campus for skilled trades,advanced manufacturing,and health science programs.On November 8,2022,a bond proposition passed for another expansion to the Round Rock campus for Skilled Trades,Advanced Manufacturing,and Health Sciences programs. In January 2023, Baylor Scott &White announced a $220 million expansion of their Round Rock facilities to include a neonatal intensive care unit, expanded labor and delivery department, additional operating rooms, cardiac catheterization, interventional radiology and testing laboratories, expanded emergency department, and other facility support,as well as more patient beds. The expansion is expected to be completed in 2026. In October 2023, Ascension Seton announced a $230 million expansion to their Round Rock campus. The expansion features a six story tower totaling 216,000 square-feet with 160 patient rooms, two operating rooms, more department space,a build out of nearby medical plaza to add outpatient and rehab care,and add over 400 positions. Relevant Financial Policies Accounting System and Controls The General Fund Reserve Policy remains at 25% of operating expenditures. The City's Concentration Risk Fund, a separate account to provide additional surety on the City's highest sales tax remitters,remains in place.Working capital in the Water/Wastewater Utility Fund is maintained at 33%of operating expenditures. Balances in excess of the above levels are earmarked for future uses or reduced to the target levels over an appropriate length of time. In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets.The concept of reasonable assurance recognizes 6 that: (1) the cost of a control should not exceed the benefits likely to be derived and (2) the evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within the above framework.We believe that the City's internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Long-Term Financial Planning The City uses a 5-year planning model for the General Fund which projects revenues and expenditures over a long-term period using assumptions about economic conditions and future spending scenarios. This model is developed internally and focuses on the anticipated future funding necessary to meet the City's strategic goals. The model takes a comprehensive approach to evaluating the long-term needs for property tax revenues and other revenues to provide for the maintenance and operations of the General Fund. The City's General Fund relies heavily on sales tax as a revenue source. Sales tax is a less stable revenue source than property tax but provides the taxpayers with more discretion and a lower property tax rate. Because of this revenue makeup, the City estimates sales tax revenues conservatively and introduces new programs somewhat more cautiously until projected revenue levels are attained. The City is also more attentive to the health of its economy because of the reliance upon commerce to produce sales tax. The City's economy is expected to generate approximately $113.9 million in sales tax revenue for fiscal year 2024, net of sales tax incentives paid to Dell, Bass Pro Shops, and Kalahari Resorts and Conventions in accordance with economic development agreements in effect.This amount includes the 0.5% in additional sales and use tax for roads and economic development. The remaining 1.5% is projected to generate $82.6 million for general operations, property tax reduction and capital projects. Dell continues to be a key driver for both Round Rock and the Central Texas region. To ensure good overall financial stability for the City,a concentration risk fund has been established to mitigate the City's annual net exposure to declining sales tax from any single sales taxpayer.Therefore, any single taxpayer that represents more than 15% of total budgeted sales tax revenue, net of incentives, will be limited to 15% in FY 2024 and thereafter in the General Fund, with excess being recognized in the General Self-Financed Construction Fund. In fiscal year 2022, the City Council adopted new financial policies to cap the sales tax reliance in the General Fund.Any expected or realized sales tax in the General Fund will not exceed 45% of the operating budget. Any amount above 45% will be recognized in the General Self-Financed Construction Fund for pay-as-you-go one-time capital expenditures of projects. The City sets utility rates based on the cost of service, establishing an equitable rate structure for total cost recovery.The utility rate model was updated during 2021 and the results showed no water rate increases were needed for the next several years. The City's wastewater rates decreased, and the new rates went into effect February 1, 2022.The utility rate model showed the cost of service for wastewater had decreased from the prior study projections due to the cost savings in taking over operations at the regional wastewater plant. The Utility Fund continued to show cost savings by reducing its power costs,improving operations,and lowering interest payments by refinancing its debt in prior years for both water and wastewater utility services. The City continues to plan ahead to ensure its utility system will serve the future citizens of Round Rock. With multiple contracts in place with the Brazos River Authority, the City has secured its water supply through expected buildout in 2050. Water from Lake Georgetown and Stillhouse Hollow Lake in the Brazos River Basin provide water to the City's current 52 million gallons per day(MGD)water treatment plant.The City also secured water from Lake Travis in the Lower Colorado River Basin. In order to treat water from Lake Travis, the City partnered with the Cities of Cedar Park and Leander to form the Brushy Creek Regional Utility Authority (BCRUA).The BCRUA system will ultimately pump and treat 105.6 MGD which meets all three Cities' supply needs through buildout. A deep-water intake and underground raw waterline tunnel contract was awarded in the summer of 2022 is on schedule to start construction and projected to be completed in 2027.The City's cost share in the project is budgeted at$84.7 million. In 2009, in order to provide the most cost-effective wastewater services,the City partnered with the Cities of Cedar Park and Austin to purchase the Brushy Creek Regional Wastewater System (BCRWWS). The system is currently undergoing improvements to increase capacity to collect and treat up to 30 MGD of wastewater. The City's portion will be 7 approximately 20.1 MGD. The City assumed operational control of the BCRWWS effective October 1, 2018. This has increased efficiencies with no net cost increase. In December 2017,the City's Utility System and BCRUA both received an upgraded bond rating to AAA,the highest rating of creditworthiness, from Standard and Poor's (S&P). This raised rating reflects the stability of the City's utility system. S&P also noted that the system had good financial management policies and practices. In October 2018, the City's General Obligation (GO) bonds also received an upgraded rating to AAA; this rating was affirmed in April 2022. Round Rock is one of only eight(8)cities in Texas with AAA ratings for both GO and Utility debt.The upgrade"reflect[ed] Round Rock's very strong economy and maintenance of a strong financial position... (and)very strong management,with strong financial policies and practices",according to S&P. Prospects for the Future As we look to the future, there are several key initiatives in process now that will shape the development of Round Rock for the next decade. The City is leveraging available resources to attract industries from across the globe to strengthen its property tax and sales tax bases. Significant investment in the medical industry including several state-of-the-art medical facility expansions, combined with the impact of multiple higher education centers,will provide community development and unlimited opportunities. Not only will these initiatives shape the physical development of the City, but they will also influence the knowledge base and creativity found in the community. In June 2020,the Round Rock City Council adopted Round Rock 2030 as its comprehensive plan for the next decade.The nationally recognized award-winning plan was crafted over two years with extensive community input. The Round Rock 2030 establishes a set of land use and development policies, including a Future Land Use Map and location criteria for specific land uses. With the City's natural commercial attractiveness, a strong economic development plan, and a strengthening economy, projections for the future remain positive. Awards and Acknowledgments The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Round Rock,Texas for its annual comprehensive financial report for the fiscal year ended September 30, 2022. This was the thirty-seventh consecutive year that the City has achieved this prestigious award. To be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report.This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition, the City of Round Rock also received the GFOA's Distinguished Budget Presentation Award for its annual budget document for the fiscal year beginning October 1, 2022,for the twenty-sixth consecutive year. To qualify for the Distinguished Budget Presentation Award, the government's budget document had to be judged proficient as a policy document,a financial plan,an operations guide,and a communications device. The GFOA also awarded the City a Certificate of Outstanding Achievement in Popular Annual Financial Reporting for the fiscal year ended September 30, 2022. This award recognizes the City's ability to extract information from their annual comprehensive financial report to produce high quality popular annual financial reports specifically designed to be readily accessible and easily understandable to the general public and other interested parties without a background in public finance and then to recognize individual governments that are successful in achieving that goal. During fiscal year 2023, GFOA awarded the City the "Triple Crown" award which recognized Round Rock for receiving all three GFOA awards for fiscal year 2022: the Certificate of Achievement for Excellence in Financial Reporting Award; the Distinguished Budget Presentation Award; and the Certificate of Outstanding Achievement in Popular Annual Financial Report. 8 The City's investment policy was awarded the Certificate of Distinction by the Government Treasurers' Organization of Texas (GTOT) in June 2022. This is the third consecutive period the City has received this distinction. This certification recognizes the investment policy for meeting strict criteria in safeguarding the City's investments and is good for a two-year period. The City of Round Rock has earned all five Transparency Stars from the Texas Comptroller's Office recognizing the City's efforts to make information on the City's traditional finances, debt obligations, public pensions, economic development, and contracts and procurement transparent and readily available.The City of Round Rock is one of only 12 cities in Texas to earn all five stars. The presentation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Department. We would like to express our appreciation to all members of the Department who assisted and contributed to its presentation. Acknowledgment is also given to Whitley Penn, L.L.P. for their valuable assistance in the production of the report.We would also like to thank the Mayor and Council members for their commitment in planning and conducting the financial operations of the City in a responsible and progressive manner. Respectfully submitted, 44v—4dt Laurie Hadley City Manager Susan L.Morgan,CPA v Chief Financial Officer �`a�sParencys�d. sParen�ys�d^ �sparencyssParencys�d� �`a�SParency je ey ° c� ��c da�t�Onal F��`a�` '°�i�Dever°Q j,6tohrna�`°� A46jK PenS�°may dors&Proc`��e 9 CITY OF ROUND ROCK,TEXAS CITY ORGANIZATIONAL CHART N"Citizens o" Municipal Judge Mayor& City Attorney 7 City Manager Assistant City Assistant City Manor er Manager Office of the Utilities&Eri Planning&DE' Services Services Aam nislrehm InformationAw Planning&Engineering Commercial,Residential Gty Cled Admimstrahon support Se v ces &Civil Ins bons u ppo WaterNJasterater Technical Services Treatment �vdment Systems Operations FI Pudic Services Operetims Maintenance Long Range Planning Youth Se v ces Geospahal Sernces &Zoning Acccunhng 8 Water Conservation Treasury Adult Sernces Budget Solid Waste&Recyding SPorlSmar*)� Communicafi r Purchasing Tourism Stam Water Drainage Management General UDliry Blling Spats Center A is 8 Culture Convention&Visdors Social Meda& T@ Building Construdim Municipal Coud Bureau Di-lel Content De rtment � Forest Creek GolfCluD Video Production Operations 8 Faaliry Maintenance Human Resw DaMntown Events& Maintenance Dell Diamond Marketing TransportationVehide Maintenance Benefits Planning&EngineeringFaal ry MApurpose pose Complex Recruitment Transit/ Pudic Transportation Risk Management yW Legislla Parks&R construction Inspection Talent Development Parks Community&` Recreation Centers Fire DeAll Police DeAW Services AthlehcslAquafics Fre Suppression Patrol � Forestry Cade Enforcement Fire Prevention Investigatlons Inspec0ons SuppatSennces CDBG Community& Pu61ic Education Animal Control Nei boyhood Services Rev.Dec.2023 10 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Round Rock Texas For its Annual Comprehensive Financial Report For the Fiscal Year Ended September 30, 2022 � P- 7y� Executive Director/CEO 11 / dirldrAptift� 1�f �aNq ,g 12 Austin Office on 3600 N.Capital of Texas Hwy. �. Bldg.B,Suite 250 w h i t l e y p e n n Austin,Texas 78746 737.931.8200 Main whitleypenn.com INDEPENDENT AUDITORS'REPORT To the Honorable Mayor and Members of City Council City of Round Rock,Texas Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Round Rock,Texas (the "Citi"), as of and for the year ended September 30, 2023, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, as listed in the table of contents. In our opinion,the accompanying financial statements referred to above present fairly,in all material respects,the respective financial position of the governmental activities,the business-type activities,each major fund, and the aggregate remaining fund information of the City, as of September 30, 2023, and the respective changes in financial position, the respective budgetary comparison statements for the General Fund and the Round Rock Transportation and Economic Development Corporation Fund,and,where applicable,cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.We are required to be independent of the City, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter 13 To the Honorable Mayor and Members of City Council City of Round Rock,Texas Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists.The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error,as fraud may involve collusion,forgery, intentional omissions, misrepresentations,or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards,we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis,evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit 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 City's internal control.Accordingly,no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding,among other matters,the planned scope and timing of the audit,significant audit findings,and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that management's discussion and analysis, pension information, and other post-employment benefits information, as listed in the table of contents, be presented to supplement the basic financial statements.Such information is the responsibility of management and,although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements.We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 14 To the Honorable Mayor and Members of City Council City of Round Rock,Texas Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual fund statements and schedules and schedule of expenditures of federal awards, as required by Title 2 U.S Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, are presented for purposes of additional analysis and are not a required part of the basic financial statements.Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund statements and schedules and schedule of expenditures of federal awards are fairly stated,in all material respects,in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon.Our opinions on the basic financial statements do not cover the other information,and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements,our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated.If,based on the work performed,we conclude that an uncorrected material misstatement of the other information exists,we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 5, 2024, on our consideration of the City's internal control over financial reporting and our tests of its compliance with certain provisions of laws,regulations,contracts,grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing,and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. WI,;-Ney��LcP Austin,Texas February 5,2024 15 16 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 The discussion and analysis of the City of Round Rock's financial performance provides an overview and analysis of the City's financial activities for the fiscal year ended September 30, 2023. It should be read in conjunction with the accompanying transmittal letter and the accompanying basic financial statements. Financial Highlights • The assets and deferred outflows of resources of the City of Round Rock exceeded its liabilities and deferred inflows of resources at September 30, 2023, by $1,247,124,860 (net position). Of this amount, $822,958,278 (66.0%) is invested in capital assets. Net position restricted for specific purposes totals $196,820,152 (15.8%). The remaining amount, $227,346,430 (18.2%) (unrestricted net position) may be used to meet the City's ongoing obligations to its citizens and creditors. • The City of Round Rock's total net position increased by$110,199,638.The increase can be attributed to$71.8 million of operating and capital grants and contributions from both governmental and business-type activities. Grants and contributions increased $9.5 million compared to the previous year due in part to infrastructure contributions on completed residential and commercial developments.Total general revenues increased $33.5 million.Year over year, property taxes increased $3.5 million, sales tax was relatively stable with a slight increase of $0.3 million due to professional services. Hotel Occupancy Tax (HOT) increased $1.9 million primarily due to additional hotels and an increase in average daily room rates. • As of the close of the current fiscal year, the City of Round Rock's governmental funds reported combined ending fund balances of$309,383,934, a decrease of$5,034,757 in comparison to the prior year.The decrease is due in part to spending down debt issued in prior year for capital projects and no new debt being issued. The increase in revenues can be attributed to increased sales, property, and HOT taxes. Additionally, contributions increased $4.6 million, a result of reimbursements from Williamson County for local road projects, while investments and other revenue increased $18.4 million due to investment income from favorable market conditions and an increase in the Fire protection MUD contract. The increase in revenues was offset by an increase in expenditures of $16.6 million compared to last year. The increase in expenditures is mostly related to capital project costs and personnel. Unassigned fund balance of $63,341,210, or 20.5% of the total fund balance is available for spending at the government's discretion. • At the end of the current fiscal year, unassigned fund balance for the General Fund was $63,341,210, or 45.8%of the total General Fund expenditures. The City's fund balance policy requires the General Fund's fund balance to be a minimum of 25%of expenditures, or$34,554,149.The General Fund's total fund balance, $63,699,353, is 84.3% more than the fund balance policy requirement. • The City of Round Rock's total debt decreased by $21,554,052 during the current fiscal year. The decrease is the result of regularly scheduled debt principal retirements as more fully described in Note IV (F) to the financial statements. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Round Rock's basic financial statements. The City's basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City of Round Rock's finances,in a manner similar to a private-sector business. The statement of net position presents information on all of the City's assets,deferred outflows of resources, liabilities,and deferred inflows of resources with the difference reported as net position. Over time, increases or decreases in net 17 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 position may serve as a useful indicator of whether the financial position of the City of Round Rock is improving or deteriorating. The statement of activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs,regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods(e.g., unavailable tax revenues and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Round Rock that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, and culture and recreation. The business-type activities of the City of Round Rock include water,wastewater,and stormwater utility and a golf course. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives.The City of Round Rock, like other local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories:governmental funds and proprietary funds. Governmental funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on the near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Round Rock maintains 13 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund,the Debt Service Fund,the Round Rock Transportation and Economic Development Corporation (RRTEDC) Fund, the Debt-Financed Capital Projects Fund, and the Self-Financed Construction Fund, all of which are considered to be major funds. Data from the other eight (8) governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in the report. The City adopts an annual appropriated budget for its General Fund. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with the budget. Proprietary funds The City of Round Rock maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water,wastewater,and stormwater utility and for its golf course. 18 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions.The City uses an internal service fund to account for its self-funded health insurance program and funding of its other post-employment benefits (OPEB) liability as of September 30, 2023. The net income (loss) of the Internal Service Fund is allocated between governmental and business-type activities. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water,wastewater, and stormwater utility and for the golf course. The water, wastewater, and stormwater utility is considered a major fund of the City. Since the Golf Course Fund is the only remaining enterprise fund, it is presented separately even though it does not meet the criteria of a major fund in GASB Statement No. 34. The Internal Service Fund is a single presentation in the proprietary fund financial statements. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information The combining statements referred to earlier in connection with nonmajor governmental funds and individual fund schedules are presented immediately following the notes to the financial statements. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report also presents required supplementary information concerning the City's progress in funding its obligation to provide pension and OPEB benefits to its employees. Required supplementary information can be found beginning on page 102 of this report. Government-wide Financial Analysis Net position is a useful indicator of a government's financial position. For the City of Round Rock, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by$1,247,124,860 as of September 30,2023. The largest portion of the City's net position, $822,958,278 (66.0%) reflects its investments in capital assets (e.g., land, buildings and improvements, improvements other than buildings, machinery and equipment, right-to-use lease assets, right-to-use subscriptions, and construction in progress), less any debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending.Although the City's investment in capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position, $196,820,152 (15.8%) represents resources that are subject to external restriction on how they may be utilized. Restricted net position increased $50.6 million, or 34.6%, compared to the prior year.Restricted net position for the governmental activities increased$54.0 million,a result of an increase in capital assets combined with a decrease in related debt balances.The $3.5 million decrease in restricted net position for business-type activities is a result of capital project costs contributed to the Brushy Creek Regional Utility Authority(BCRUA) deep water intake project. The remaining balance is unrestricted net position of$227,346,430 which may be used to meet the City's ongoing obligations to citizens and creditors. As of September 30, 2023, and 2022, the City was able to report positive balances in all three categories of net position, both for the City as a whole,as well as for its separate governmental and business-type activities. 19 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Net Position (in thousands) Governmental Business-Type Activities Activities Total 2023 2022 2023 2022 2023 2022 Current and other assets $ 359,561 $ 362,014 S 245,993 $ 242,007 $ 605,554 $ 604,021 Capital assets 820,576 754,674 423,025 398,172 1,243,601 1,152,846 Total assets 1,180,137 1,116,688 669,018 640,179 1,849,155 1,756,867 Deferred outflows of resources 43,004 19,760 9,073 6,268 52,076 26,028 Long term liabilities 462,152 434,339 72,910 70,716 535,062 505,055 Other liabilities 83,999 80,010 31,148 39,731 115,148 119,741 Total liabilities 546,151 514,349 104,058 110,447 650,209 624,797 Deferred inflows of resources 3,552 18,631 347 2,541 3,899 21,172 Net position: Net investment in capital assets 461,229 402,308 361,729 333,196 822,958 735,504 Restricted 186,392 132,351 10,428 13,866 196,820 146,217 Unrestricted 25,817 68,809 201,529 186,397 227,346 255,206 Total net position,as restated $ 673,438 $ 603,468 $ 573,686 $ 533,459 $ 1,247,124 $ 1,136,927 Total Net Position Governmental&Business-Type Activities (in millions) $1,400 $1,200 ■ Unrestricted $1,000 ■ Restricted $800 ■ Net investment $600 in capital assets $400 $200 2019 2020 2021 2022 2023 20 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Analysis of Changes in Net Position The table below summarizes the changes in the City's net position from its activities for the fiscal year ended September 30,2023,with comparisons to the previous year. Changes in Net Position (in thousands) Governmental Business-Type Activities Activities Total 2023 2022 2023 2022 2023 2022 Revenues: Program revenues: Charges for services $ 14,439 S 12,087 $ 72,166 $ 71,093 $ 86,605 $ 83,180 Operating grants and contributions 4,950 4,802 308 - 5,258 4,802 Capital grants and contributions 27,815 23,442 38,688 34,040 66,503 57,482 General revenues: Property taxes 74,006 70,551 - - 74,006 70,551 Franchise taxes 8,018 7,430 8,018 7,430 Sales tax 104,714 104,397 104,714 104,397 Hotel occupancy tax 17,048 15,128 17,048 15,128 Public service taxes 1,158 1,021 - - 1,158 1,021 Investment earnings and other 31,393 11,176 7,004 95 38,397 11,271 Total revenues 283,541 250,034 118,166 105,228 401,707 355,262 Expenses: General government 48,259 41,213 - - 48,259 41,213 Public safety 78,793 67,534 78,793 67,534 Public works 46,225 40,068 46,225 40,068 Culture and recreation 34,899 30,668 34,899 30,668 Interest on long-term debt 11,000 11,293 - - 11,000 11,293 Water and wastewater utility - - 68,229 63,886 68,229 63,886 Golf course - - 4,104 4,291 4,104 4,291 Total expenses 219,176 190,776 72,333 68,177 291,509 258,953 Increases in net position before transfers 64,365 59,258 45,833 37,051 110,198 96,309 Transfers 5,605 5,355 (5,605) (5,355) - - Increase in net position 69,970 64,613 40,228 31,696 110,198 96,309 Net position-beginning.as restated 603,466 538,853 533,459 501,763 1,136,925 1,040,616 Net position-ending $ 673,436 $ 603,466 $ 573,687 $ 533,459 S 1,247,123 $ 1,136,925 Governmental Activities During the current fiscal year, governmental activities increased the City's net position by $69,969,774 or 63.5% of the total increase in the net position of the City over the prior year. Key factors for the increase in net position are as follows: Revenues • Amounts received for property taxes increased from last year by 4.9% due primarily to $423 million in new taxable property and a 4.8% increase in the property tax rate. The fiscal year 2023 tax rate of $0.342000 is 4.8% above the no-new-revenue rate of$0.326408.Property tax makes up 31.3%of total general revenues. • Sales tax collections of$104.7 million increased 0.3%,compared to prior year. Dell remains one of the City's top sales taxpayers for fiscal year 2023. Professional services sales tax was 37.3% higher than collections in the prior year.This growth combined with strong underlying growth in other City businesses led to the increase in sales tax collections. 21 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Hotel occupancy tax(HOT)revenues totaled $17.0 million compared to $15.1 million in the prior year, up 12.7%from the prior year.The increase is due in part to rising average daily room rates in the region,an increase in local events, as well as the Embassy Suites,which opened in April of 2022, being open a full year providing additional meeting and convention space. • Charges for services increased $2.4 million, or 19.5% over the prior year. The increase, in part, can be attributed to culture and recreation which saw an increase in demand for services,increased participation in programming,and an increase in admission fees to the City's water park and pool facilities. • Grants and contribution revenues increased $4.5 million over the prior year due to reimbursement of the American Rescue Plan Act(ARPA)for the Crisis Response Unit costs,as well as capital related contributions. • Unrestricted investment earnings and other general revenues increased $20.2 million.The increase can be attributed to market conditions and a sudden change in interest rates. Revenues by Type-Governmental Activities Hotel occupancy tax Sales taxes 5.9% 36.0% Public service taxes 0.4% Investment earnings 13.2% Charges for services 5.0% Operating grants and Franchise taxes contributions 2.8% 1.7% Property taxes 25.5% Capital grants and contributions 9.8% Expenses Expenses for governmental activities for the City totaled$219,176,418 for the year ended September 30,2023. Significant factors are listed below: • General government costs increased $7.0 million from $41.2 million in 2022 to $48.3 million in 2023, an increase of 17.1%. The increase can be attributed to economic development incentive payments and salary costs. The City provided its employees with a 4% cost of living adjustment mid-year FY 2022. This increase was recognized for the full year in FY 2023. • Public safety program costs including police and fire department activities totaled about $78.8 million, or 35.9% of total expenses for governmental activities. Total costs increased 16.7% over the prior year, due largely to personnel costs relating to Fire overtime due to deployments,as well as public safety salary increases. • Public works program costs increased $6.2 million, or 15.4%, compared to prior year. The increase is a result of increased salary expenses. • Culture and recreation increased $4.2 million from $30.7 million in 2022 to $34.9 million, or 13.8%, in 2023. This increase is due to salary expenses, in addition to the expansion and expenses associated with special events and programs. 22 CITY OF ROUND ROCK, TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Expenses-Governmental Activities (in thousands) $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 .. General Public safety Public works Culture and Interest on government recreation long-term debt ■2023 02022 Business-Type Activities Business-type activities increased the City's net position by$40,227,369 or 36.5%of the total growth in the net position of the City over the prior year. This increase can be attributed to $39.0 million in capital grants and contributions. Additionally, charges for services were up $1.1 million, which is offset with an increase in expenses by $4.2 million over the prior year. Key factors for the increase in net position are as follows: Revenues The City's water, wastewater, and stormwater utility continues to show increases in the number of customers and operating revenues. Planned uses of impact fees and rate revenues have allowed current rates to remain stable while still providing adequate times coverage of utility bonded debt service. Revenues- Business-Type Activities Capital grants and _contributions 32.3% Charges for_ services 67.6% Investment earnings 0.1% 23 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Comparative data for the past two fiscal years is presented as follows: 2023 2022 Operating revenues $ 68,264,956 $ 67,225,390 Operating income 2,368,005 5,832,830 Income available for debt service 33,664,516 28,163,395 Annual debt service 5,956,631 6,062,631 Coverage 5.65 4.65 Expenses Expenses of the business-type activities increased $4.2 million over the prior year due to the fulfillment of significant personnel vacancies from the prior year and an increase in depreciation and amortization. Expenses-Business-Type Activities (in thousands) $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 Water and wastewater utility Golf course ■2023 ■2022 Financial Analysis of the Government's Funds As noted earlier, the City of Round Rock uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. For the fiscal year ended September 30,2023,the City's governmental funds reported combined ending fund balances of $309,383,934. This is a decrease of $5.0 million, or 1.6% change from the prior year. Unassigned fund balance is $63,341,210, or approximately 20.5% of the total fund balance amount, is available for spending at the City's discretion. $4,022,080 is assigned to culture and recreation while $52,315,059 of the fund balance is committed to either capital projects or special revenue projects/programs.The remainder of fund balance is restricted or non-spendable to indicate that it is not available for new spending because it has already been restricted to 1) pay debt service of $6,492,541, 2) 24 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 fund authorized construction of $160,664,737, 3) other restricted purposes of $21,617,587 or 4) non-spendable of $930,720. Fund Balance Type-Governmental Funds Committed 16.9% Assigned Restricted 61.1% Unassigned 20.5% -Nonspendable 0.3% The General Fund is the primary operating fund of the City. At the close of the current fiscal year, fund balance of the General Fund reached $63,699,353, of which $63,341,210, or 99.4% of the total amount is unassigned. To measure the general fund's liquidity, it is useful to compare unassigned fund balance to total general fund expenditures. Unassigned fund balance represented 45.8%of total general fund expenditures. During the current fiscal year, the fund balance of the General Fund increased by $15,046,511 due to an increase in revenues over prior year. The General Fund's total revenues increased $19,128,116 and exceeded the budget by $7,817,075 due to subdivision development fees,building permits,and an increase to investment income due to favorable market conditions. The City continues to budget revenues conservatively but with the continued population growth and increase in property values, the property taxes, and other revenues continue to surpass budgeted projections. The increase in revenues was offset by an increase in expenditures totaling $12,353,078, a result of a cost of living adjustment in salaries and an increase in salaries and operating expenses for public safety. The Debt Service Fund had a total fund balance of$4,110,112 at the end of the fiscal year,all of which is restricted for the payment of debt service. Fund balance decreased during the year by $548,870. Debt service expenditure requirements increased by$5,321,728 during the fiscal year and were adequately funded by the debt service portion of the property tax rate. The fund balance of the RRTEDC Fund was $124,814,265, an increase of $12,932,052 compared to the prior year. The increase can be attributed to investment earnings increasing with the change in market conditions as well as contributed developer infrastructure. The fund balance of the Debt-Financed Capital Projects Fund was $36,151,062, a decrease of $25,627,272 compared to the prior year.The prior year's fund balance included the issuance of general obligation bonds, certificates of obligation, and limited tax notes.No new debt was issued this year. The fund balance of the Self-Financed Construction Fund was $47,277,029, a decrease of $12,610,291 compared to the prior year. Excess sales tax revenues were $10.0 million, down from the prior year by $7.6 million. The City has a policy that Dell sales tax receipts, net of incentive, exceeding 15% of budgeted General Fund revenues, is deposited in the General Self-Financed Construction Fund for pay-as-you-go, one-time capital expenditures. The decrease in revenues is offset with an increase of$5.6 million in capital project expenditures. 25 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Enterprise Funds The City's enterprise fund statements provide the same type of information found in the government-wide financial statements, but in more detail. At the end of the fiscal year, total net position of the enterprise funds totaled $572,064,644, an increase of$40,092,536 over the prior year. Unrestricted net position of the funds totaled $199,907,378 at September 30,2023.The unrestricted net position represented 34.9%of the enterprise funds'total net position. The Water and Wastewater Fund's net position increased $40,249,212 over the prior year due to charges for service remaining high for a second consecutive drought summer and an increase in contributed infrastructure. Operating revenues totaled $68,264,956, compared to $67,225,390 in the prior year relative to customer growth. Operating expenses were $65,896,951, an increase of $4,504,391 over the prior year. The increase is a result of fewer personnel vacancies,as well as higher chemical costs and repair. The Golf Course Fund ended the year with a net position of$11,757,353. Operating revenues totaled $3,765,883, a 3.9% decrease for the year, compared to $3,920,614 in the prior year. Operating expenses were $4,104,094, which is $186,432 lower than the previous year.The decrease can be attributed to personnel vacancies. Fee revenue decreased 4% due to extended summer heat. General Fund Budgetary Highlights One budget amendment was taken to City Council for the General Fund for the year ended September 30, 2023. The budget amendment added one (1) full-time equivalent (FTE) to create a Project Manager under the Transportation department. The budget amendment also added funds for Fire department personnel, as a result of the latest meet and confer agreement. The budget amendment increased funds due higher costs in the Parks and Recreation Department's personnel and operating expenditures related to attendance and events.The higher costs were offset by increased Park and Recreation fee revenues. Capital Assets and Debt Administration Capita!Assets The City of Round Rock's investment in capital assets for its governmental and business-type activities as of September 30, 2023, amounted to $1,243,601,984 (net of accumulated depreciation/amortization). This investment includes land, buildings and improvements (including infrastructure), machinery and equipment, right-to-use lease assets, right-to-use subscriptions and construction in progress. Major capital asset events for the year ended September 30,2023, included the following: Downtown Improvements • Construction was completed on the new Downtown Parking Garage at a total cost of$12.4 million. • Design is underway on the Griffith Building Remodel and new Paseo with$1.1 million spent to date. Facility Improvements • City facility improvements were completed at a cost of$1.2 million. • Information technology infrastructure upgrades were completed at a cost of$382,000. • Construction is underway on the new Fire Station#1 with $4.2 million spent to date. • Construction was completed on the new library at a total cost of$33.7 million.Of this $33.7 million, $23.3 million was funded from the 2014 and 2023 General Obligation(GO) bonds. • Design is underway on the Sports Center Expansion with $1.1 million spent to date. • Design is underway on the Dell Diamond Renovation&Expansion with $348,000 spent to date. 26 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Park Improvements and Trails • Expansion of other citywide trails is underway with $15.1 million spent to date.Of this $15.1 million, $13.5 million was funded from the 2014 and 2017 GO bonds. • Additional park and facility improvements were completed at a cost of$1.3 million. Transportation Improvements • Major arterial, signal, and road projects for transportation are underway and at various stages of completion. Completed projects totaled$45.8 million while construction in progress at year-end approximated $49.8 million. • Various neighborhood street improvement projects were completed at a cost of$3.7 million. • Developers contributed$13.7 million for transportation infrastructure improvements. Water,Wastewater,and Stormwater Improvements • Various water and wastewater system improvement projects were completed and placed in service at a cost of $2.8 million and similar projects were in progress with$19.0 million spent to date. • Various additional stormwater improvement projects are in process with$2.8 million spent to date. • Developers contributed $30.0 million for water,wastewater,and stormwater system infrastructure improvements. • The City has partnered with the cities of Cedar Park, Austin, and Leander on the Brushy Creek Regional Wastewater Treatment Plant Expansion project with estimated completion in 2024. Construction is underway with $15.2 million spent to date by the City. Capital Assets (in thousands) Governmental Business-Type Activities Activities Total 2023 2022 2023 2022 2023 2022 Land $ 124,457 $ 116,588 $ 9,463 $ 10,916 $ 133,920 $ 127,504 Buildings and improvements 1,117,465 1,022,181 658,277 627,420 1,775,742 1,649,601 Machinery and equipment 103,496 94,034 19,778 21,698 123,274 115,732 Right-to-use lease assets 902 547 214 214 1,116 761 Right-to-use subscription assets 8,726 598 - - 8,726 598 Accumulated depreciation/amortization (608,110) (571,511) (292,937) (274,513) (901,047) (846,024) Construction in progress 73,640 92,833 28,230 12,437 101,870 105,270 Total,as restated $ 820,576 $ 755,270 $ 423,025 $ 398,172 $ 1,243,601 $ 1,153,442 Restatement results from implementation of GASB 96, Subscription-Based Information Technology Arrangements for right-to-use assets associated with subscriptions effective in fiscal year 2023. Additional information on the City of Round Rock's capital assets can be found in Note IV(E)to the financial statements. 27 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Long-Term Debt At the end of the current fiscal year,the City of Round Rock had total debt outstanding of$438,578,978.Of this amount, $305,910,904 comprises debt backed by the full faith and credit of the City. The remainder of the City's debt is secured solely by specified revenue sources(i.e.,revenue bonds). During the current fiscal year, the City of Round Rock's total debt decreased by $21,554,052. Regularly scheduled debt principal was retired during 2023.The City did not issue any new debt in 2023. Long-Term Debt (in thousands) Governmental Business-Type Activities Activities Total 2023 2022 2023 2022 2023 2022 General obligation bonds $ 149,840 $ 162,165 $ - $ - $ 149,840 $ 162,165 Certificates of obligation 143,025 148,300 - - 143,025 148,300 Limited tax notes 5,155 6,915 - - 5,155 6,915 Hotel tax revenue bonds 6,720 7,375 - - 6,720 7,375 Sales tax revenue bonds 39,035 42,320 - - 39,035 42,320 State infrastructure bank loan 27,000 27,000 - - 27,000 27,000 Notes payable 601 2,132 - - 601 2,132 Leases 503 403 53 133 556 536 Subscriptions 6,787 595 - - 6,787 595 Water and wastewater revenue bonds - - 59,860 63,390 59,860 63,390 Total.as restated $ 378,666 $ 397,205 $ 59,913 $ 63,523 $ 438,579 $ 460,728 The City of Round Rock benefits substantially in reduced interest costs resulting from the bond rating by Standard & Poor's of AAA for both General Obligation and the Utility Revenue bonds. There is no direct debt limitation in the City Charter or under state law. The City operates under a Home Rule Charter (Article XI,Section 5,Texas Constitution),approved by the voters,that limits the maximum tax rate,for all City purposes to $2.50 per$100 assessed valuation.Administratively,the Attorney General of the State of Texas will permit allocation of up to $1.50 of the $2.50 maximum tax rate for general obligation debt service. The revenues from this maximum tax rate would be sufficient to cover the debt service on over $3.6 billion of bonds. Of the maximum tax rate for debt service of $1.50, the City uses $0.1176, or 7.84%. Of $74,262,463 levied in property taxes for the fiscal year ended September 30, 2023, 99.67% of taxes levied were collected during the fiscal year. The City is conservative in how it issues debt and has adopted a "pay as you go" philosophy by using excess cash funds to fund current projects and issuing debt only when deemed necessary. Additional information on the City's long-term debt can be found in Note IV(F)to the financial statements. 28 CITY OF ROUND ROCK,TEXAS MANAGEMENT'S DISCUSSION AND ANALYSIS SEPTEMBER 30, 2023 Economic Factors and Next Year's Budgets and Rates The development of the City's budget is guided by several factors including the Council's Strategic Goals, prevailing economic conditions, and the continuing need to provide basic and improved customer services for a growing population. The fiscal year 2023-2024 budget adopted by the City Council adheres to the City's financial policies and preserves the City's strong financial position while providing excellent levels of service. During the creation of the 2023-2024 budget process the City Manager and Executive team focused on various budget drivers in the decision-making process. • Addressing Council's Strategic Goals • Meeting the demands of growth with additions to maintain service levels • Biennial citizen survey results • Debt payments for new programs • Competitive employee compensation and benefits • Maintenance of parks,facilities,and streets • Compliance with financial policies • Inflation impacting both wage and operating costs Revenue assumptions, in general for fiscal year 2023-2024, have been built based on a slowing economy, rising interest rates,slowly declining inflation and recovery of availability and delivery of materials. The City's economy is expected to generate approximately $113.9 million in sales tax revenue for fiscal year 2024. This amount includes the 0.5%, or $31.3 million, in additional sales and use tax for roads and economic development. The remaining 1.5%is projected to generate$82.6 million for general operations,property tax reduction,and capital projects. The fiscal year 2024 certified taxable property value for Round Rock is $24.1 billion, an increase of 11.1%from last year's $21.7 billion. The adopted property tax rate for fiscal year 2024 is $0.342000 per $100 of valuation. The tax rate is an increase of 2.6 cents over the no-new-revenue rate of$0.316334,and well below the voter approval rate of$0.344659 The 2.6 cents increase over the no-new-revenue tax rate allows the City to provide funding for additional public safety positions with competitive salaries, as well as additional staffing for parks, library, and other departments. With an adopted rate of $0.342000, the City continues to have one of the lowest tax rates in Central Texas and is among the lowest rates in the state for medium-sized cities. The Water and Wastewater Utility operations are funded primarily through user fees. The City's utility infrastructure and service delivery systems have been carefully planned and have sufficiently met demand for a growing customer base. Water sales are conservatively estimated using customer base projections, while at the same time taking into account changing weather conditions.Water conservation and drought contingency programs continue to help the City conserve existing water sources. There are no rate increases for retail water, wastewater, or stormwater budgeted for fiscal year 2024. The City has not increased retail water rates since October 2018 and retail wastewater has not increased since 2016. Requests for Information This financial report is designed to provide citizens,taxpayers, customers, investors, and creditors with a general overview of the City's finances and to show the City's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Chief Financial Officer, City of Round Rock, 221 East Main Street,Round Rock,Texas 78664. 29 Z:. 1 ,`1 BASIC FINANCIAL STATEMENTS 31 CITY OF ROUND ROCK,TEXAS STATEMENT OF NET POSITION SEPTEMBER 30, 2023 Governmental Business-Type Activities Activities Total ASSETS Cash and cash equivalents $ 16,284,535 $ 27,541,019 $ 43,825,554 Investments 143,913,428 134,617,299 278,530,727 Receivables(net of allowance for uncollectibles)- Property taxes 367,048 - 367,048 Accounts and other 12,409,913 20,828,011 33,237,924 Accrued interest 855,531 3,083,144 3,938,675 Intergovernmental - 3,915,615 3,915,615 Grants 1,881,576 - 1,881,576 Interfund (1,621,812) 1,621,812 - Inventories 331,614 956,385 1,287,999 Prepaid items 1,008,882 608,298 1,617,180 Restricted assets- Cash and cash equivalents 70,568,000 2,480,852 73,048,852 Investments 110,347,590 9,249,465 119,597,055 Property tax receivable 209,688 - 209,688 Accounts and other 2,286,128 - 2,286,128 Accrued interest 718,588 51,072 769,660 Investment in joint venture - 41,039,999 41,039,999 Capital assets- Land and construction in progress 198,096,184 37,693,484 235,789,668 Capital assets, net of accumulated depreciation/amortization 622,480,275 385,332,041 1,007,812,316 Total assets 1,180,137,168 669,018,496 1,849,155,664 DEFERRED OUTFLOWS OF RESOURCES Deferred amount on refundings 368,327 3,432,261 3,800,588 Deferred outflows related to pensions 40,479,734 5,484,160 45,963,894 Deferred outflows related to OPEB 2,156,298 294,043 2,450,341 Total deferred outflows of resources 43,004,359 9,210,464 52,214,823 The accompanying notes are an integral part of this financial statement. 32 Governmental Business-Type Activities Activities Total LIABILITIES Accounts payable $ 22,769,861 $ 12,148,288 $ 34,918,149 Accrued payroll 5,483,139 814,333 6,297,472 Unearned revenue 21,852,382 11,671,261 33,523,643 Accrued interest payable 1,462,247 377,197 1,839,444 Customer deposits - 1,376,253 1,376,253 Due within one year Bonds,notes, leases,compensated absences 32,431,558 4,761,076 37,192,634 Due in more than one year Net pension liability 70,456,397 9,607,692 80,064,089 Total OPEB liability 18,035,791 2,459,426 20,495,217 Bonds,notes,leases,compensated absences 373,659,634 60,842,597 434,502,231 Total liabilities 546,151,009 104,058,123 650,209,132 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to OPEB 3,552,114 484,381 4,036,495 Total deferred inflows of resources 3,552,114 484,381 4,036,495 NET POSITION Net investment in capital assets 461,228,728 361,729,550 822,958,278 Restricted for- Debt service 4,110,112 81,555 4,191,667 Capital projects 160,664,737 10,346,161 171,010,898 Hotel-motel tax 19,061,932 - 19,061,932 Public safety 918,100 918,100 General government 1,637,555 - 1,637,555 Unrestricted 25,817,240 201,529,190 227,346,430 Total net position $ 673,438,404 $ 573,686,456 $ 1,247,124,860 33 CITY OF ROUND ROCK,TEXAS STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30,2023 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Governmental activities: General government $ 48,259,094 $ 3,619,177 $ 4,933,254 $ - Public safety 78,793,508 1,626,659 9,144 - Public works 46,224,524 1,874,377 - 27,622,958 Culture and recreation 34,898,867 7,318,494 7,334 192,322 Interest on long-term debt 11,000,425 - - - Total governmental activities 219,176,418 14,438,707 4,949,732 27,815,280 Business-type activities: Water and wastewater utility 68,229,079 68,399,789 308,019 38,529,032 Golf course 4,104,094 3,765,883 - 158,595 Total business-type activities 72,333,173 72,165,672 308,019 38,687,627 Total primary government $ 291,509,591 $ 86,604,379 $ 5,257,751 $ 66,502,907 The accompanying notes are an integral part of this financial statement. 34 Net(Expense) Revenue and Changes in Net Position Primary Government Governmental Business-Type Functions/Programs Activities Activities Total Governmental activities: General government $ (39,706,663) $ - $ (39,706,663) Public safety (77,157,705) - (77,157,705) Public works (16,727,189) - (16,727,189) Culture and recreation (27,380,717) - (27,380,717) Interest on long-term debt (11,000,425) - (11,000,425) Total governmental activities (171,972,699) - (171,972,699) Business-type activities: Water and wastewater utility - 39,007,761 39,007,761 Golf course - (179,616) (179,616) Total business-type activities - 38,828,145 38,828,145 Total primary government (171,972,699) 38,828,145 (133,144,554) General revenues: Taxes: Property taxes,levied for general purpose 48,625,359 - 48,625,359 Property taxes, levied for debt service 25,381,002 - 25,381,002 Franchise taxes 8,017,834 - 8,017,834 Sales taxes 104,713,662 - 104,713,662 Hotel occupancy tax 17,048,182 - 17,048,182 Public service taxes 1,157,865 - 1,157,865 Unrestricted investment earnings and other 31,393,569 7,004,224 38,397,793 Transfers 5,605,000 (5,605,000) - Total general revenues and transfers 241,942,473 1,399,224 243,341,697 Change in net position 69,969,774 40,227,369 110,197,143 Net position-beginning,as restated 603,468,630 533,459,087 1,136,927,717 Net position-ending $ 673,438,404 $ 573,686,456 $ 1,247,124,860 35 CITY OF ROUND ROCK,TEXAS GOVERNMENTAL FUNDS BALANCE SHEET SEPTEMBER 30, 2023 Round Rock Transportation and Economic General Debt Service Development Fund Fund Corporation Fund ASSETS Cash and cash equivalents $ 6,900,794 $ - $ 42,272 Investments 60,946,923 - 373,933 Receivables(net of allowance for uncollectibles)- Property taxes,including interest and penalties 367,048 - - Accounts and other 8,208,740 - 2,819,215 Accrued interest 412,341 - 2,133 Interfund 628 - - Grants 340,724 - 1,507,783 Inventories 331,614 - - Prepaid items 26,529 - - Restricted assets- Cash and cash equivalents 1,905,987 4,112,138 34,168,669 Investments - - 92,046,324 Receivables- Property taxes,including interest and penalties - 209,688 - Sales tax - - 2,286,128 Accrued interest - - 660,120 Total assets $ 79,441,328 $ 4,321,826 $ 133,906,577 LIABILITIES,DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities- Accounts payable $ 7,599,900 $ - $ 8,523,992 Accrued payroll 5,334,366 - - Interfund payables - 628 - Unearned revenue 2,440,661 - 568,320 Total liabilities 15,374,927 628 9,092,312 Deferred inflows of resources- Unavailable revenue-property taxes 367,048 211,086 - Total deferred inflows of resources 367,048 211,086 - Fund balances- Nonspendable 358,143 - - Restricted-debt service - 4,110,112 2,382,429 Restricted-authorized construction - - 122,013,498 Restricted-hotel-motel tax - - - Restricted-public safety - - - Restricted-general government - - - Committed-general government - - - Committed-capital projects funds - - 418,338 Committed-culture and recreation - - - Assigned-culture and recreation - - - Unassigned 63,341,210 - - Total fund balances 63,699,353 4,110,112 124,814,265 Total liabilities,deferred inflows of resources and fund balances $ 79,441,328 $ 4,321,826 $ 133,906,577 The accompanying notes are an integral part of this financial statement. 36 Debt-Financed Self-Financed Other Total Capital Projects Construction Governmental Governmental Fund Fund Funds Funds $ $ 5,072,131 $ 3,026,329 $ 15,041,526 44,867,575 26,729,466 132,917,897 - - 367,048 - - 1,381,958 12,409,913 192,443 186,809 793,726 - - 628 - 33,071 1,881,578 - - - 331,614 439,890 132,687 - 599,106 29,305,813 - 1,075,393 70,568,000 8,788,445 - 9,512,821 110,347,590 - - - 209,688 - - - 2,286,128 27,120 - 31,348 718,588 $ 38,561,268 $ 50,264,836 $ 41,977,195 $ 348,473,030 $ 2,410,206 $ 2,987,807 $ 244,937 $ 21,766,842 - - 148,773 5,483,139 - - 628 - - 8,251,372 11,260,353 2,410,206 2,987,807 8,645,082 38,510,962 - - - 578,134 - - - 578,134 439,890 132,687 - 930,720 - - - 6,492,541 35,711,172 - 2,940,067 160,664,737 - - 19,061,932 19,061,932 - - 918,100 918,100 - - 1,637,555 1,637,555 - - 1,198,346 1,198,346 - 47,144,342 2,070,978 49,633,658 - 1,483,055 1,483,055 - - 4,022,080 4,022,080 - - - 63,341,210 36,151,062 47,277,029 33,332,113 309,383,934 $ 38,561,268 $ 50,264,836 $ 41,977,195 $ 348,473,030 37 CITY OF ROUND ROCK,TEXAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2023 Total Fund Balances-Governmental Funds $ 309,383,934 Amounts reported for Governmental Activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. These assets consist of: Land $ 124,456,531 Construction in progress 73,639,653 Building and improvements 1,117,464,780 Equipment and right-to-use assets 113,125,374 Accumulated depreciation/amortization (608,109,879) Total capital assets $ 820,576,459 820,576,459 Deferred amounts on refundings are deferred outflows of resources and, therefore, are not reported in the funds. 368,327 Contributions to the pension plan after the measurement date are deferred outflows of resources and,therefore,are not reported in the funds. 20,769,357 Pension actuarial losses(gains)are deferred outflows(inflows)of resources and,therefore,are not reported in the funds. 19,710,377 Contributions to the OPEB plan after the measurement date are deferred outflows of resources and, therefore,are not reported in the funds. 517,230 OPEB actuarial losses (gains) are deferred outflows (inflows) of resources and, therefore, are not reported in the funds. (1,913,046) Property tax revenues collected in advance of the fiscal year to which they apply are recorded as deferred inflows of resources in the funds and recognized as revenue of the period to which they apply. 576,736 Internal service funds are used by management to charge the costs of self-funded insurance to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Position. 10,085,302 Unearned revenue associated with long-term economic development agreements are not a current financial resource and,therefore,are not reported in the funds. (10,590,645) Accrued interest payable in the governmental funds are not recognized because they are not paid within the prescribed time period after year end. (1,462,247) Some long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. They are detailed in Note III(A). (494,583,380) Net Position of Governmental Activities $ 673,438,404 The accompanying notes are an integral part of this financial statement. 38 A��ri y 39 CITY OF ROUND ROCK,TEXAS GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30,2023 Round Rock Transportation and Economic Debt Development General Service Corporation Fund Fund Fund Revenues- Taxes and franchise, including interest and penalties $ 123,005,330 $ 25,546,523 $ 29,372,531 Licenses,permits and fees 4,360,656 - - Charges for services 5,936,306 - - Fines and forfeitures 1,048,377 - - intergovernmental 4,212,345 - 6,268,237 Hotel occupancy tax - - - Contributions - - 5,184,981 Investment and other 8,297,834 858,737 5,924,782 Total revenues 146,860,848 26,405,260 46,750,531 Expenditures- Current- General government 27,642,483 - 1,512,808 Public safety 71,483,729 - - Public works 18,977,936 - 405,633 Culture and recreation 20,112,448 - - Debt service- Principal retirement - 24,867,905 - Interest and fiscal charges - 12,237,746 - Capital projects - - 45,463,934 Total expenditures 138,216,596 37,105,651 47,382,375 Excess(deficiency)of revenues over expenditures 8,644,252 (10,700,391) (631,844) Other financing sources(uses)- Transfers in 6,905,000 10,151,521 17,157,329 Transfers out (502,741) - (3,593,433) Total other financing sources(uses) 6,402,259 10,151,521 13,563,896 Net change in fund balances 15,046,511 (548,870) 12,932,052 Fund balances,October 1,2022 48,652,842 4,658,982 111,882,213 Fund balances,September 30,2023 $ 63,699,353 $ 4,110,112 $ 124,814,265 The accompanying notes are an integral part of this financial statement. 40 Debt-Financed Self-Financed Other Total Capital Projects Construction Governmental Governmental Fund Fund Funds Funds $ $ 10,020,131 $ 274,939 $ 188,219,454 - 82,575 4,443,231 - 2,812,816 8,749,122 - - 197,977 1,246,354 - 9,707,899 20,188,481 - - 17,048,182 17,048,182 - - 2,695,989 7,880,970 2,439,290 2,047,892 1,675,697 21,244,232 2,439,290 12,068,023 34,496,074 269,020,026 - - 10,437,386 39,592,677 - - 175,008 71,658,737 - - - 19,383,569 6,508,045 26,620,493 - - - 24,867,905 - - - 12,237,746 16,811,735 22,357,909 1,319,942 85,953,520 16,811,735 22,357,909 18,440,381 280,314,647 (14,372,445) (10,289,886) 16,055,693 (11,294,621) 5,902,502 2,657,605 675,000 43,448,957 (17,157,329) (4,978,010) (10,957,580) (37,189,093) (11,254,827) (2,320,405) (10,282,580) 6,259,864 (25,627,272) (12,610,291) 5,773,113 (5,034,757) 61,778,334 59,887,320 27,559,000 314,418,691 $ 36,151,062 $ 47,277,029 $ 33,332,113 $ 309,383,934 41 CITY OF ROUND ROCK,TEXAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED SEPTEMBER 30, 2023 Net Change in Fund Balances-Total Governmental Funds $ (5,034,757) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation/amortization expense. This is the amount by which capital outlays exceeded depreciation/amortization. They are detailed in Note III(B). 49,012,711 The net effect of various miscellaneous transactions involving capital assets (i.e. sales, disposals,and donations)is to increase net position. They are detailed in Note III (B). 13,549,842 Note receivable satisfied through lien transfer of collateral land, resulting in a gain on restructure. Related economic development project has been cancelled. 544,007 Property tax revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. (323,732) The repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued,whereas these amounts are deferred and amortized in the Statement of Activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. They are detailed in Note III (B). 25,533,326 Governmental funds do not report recognition of increases to lease or subscription debt. In contrast,the Statement of Activities treats these as increases in long-term liabilities. (8,443,180) Governmental funds report repayment of leases and subscriptions principal as expenditures. In contrast, the Statement of Activities treats such repayments as a reduction in long-term liabilities. 2,151,381 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. These are detailed in Note III (B)and include: Pension costs, net (5,932,298) OPEB costs,net (1,298,189) Interest and employee expense 118,143 Internal service funds are used to charge the costs of self-funded insurance to the individual funds. The net revenue of certain activities of the internal service fund is reported with governmental activities. 92,520 Change in Net Position of Governmental Activities $ 69,969,774 The accompanying notes are an integral part of this financial statement. 42 CITY OF ROUND ROCK,TEXAS GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2023 Budgeted Amounts Original Final Actual Variance Revenues- Taxes and franchise, including interest and penalties $ 121,580,000 $ 122,372,000 $ 123,005,330 $ 633,330 Licenses, permits and fees 2,073,075 2,248,075 4,360,656 2,112,581 Charges for services 4,515,200 4,780,200 5,936,306 1,156,106 Fines and forfeitures 1,125,000 1,125,000 1,048,377 (76,623) Intergovernmental 3,535,198 3,535,198 4,212,345 677,147 Investment and other 4,123,527 4,323,527 7,638,061 3,314,534 Total revenues 136,952,000 138,384,000 146,201,075 7,817,075 Expenditures- Current- General government 33,186,839 30,941,522 27,642,483 3,299,039 Public safety 70,614,914 72,595,972 71,483,729 1,112,243 Public works 20,531,151 21,033,171 18,977,936 2,055,235 Culture and recreation 19,129,096 20,450,835 20,112,448 338,387 Total expenditures 143,462,000 145,021,500 138,216,596 6,804,904 Excess(deficiency)of revenues over expenditures (6,510,000) (6,637,500) 7,984,479 14,621,979 Other financing sources(uses)- Transfers in 6,905,000 6,905,000 6,905,000 - Transfers out (200,000) (502,741) (502,741) - Total other financing sources(uses) 6,705,000 6,402,259 6,402,259 - Net change in fund balances $ 195,000 $ (235,241) 14,386,738 $ 14,621,979 Reconciliation between budgetary basis actual and GAAP Increase(decrease) in fair value of investments 659,773 Fund balance,October 1,2022 48,652,842 Fund balance,September 30,2023 $ 63,699,353 The accompanying notes are an integral part of this financial statement. 43 CITY OF ROUND ROCK,TEXAS ROUND ROCK TRANSPORTATION AND ECONOMIC DEVELOPMENT CORPORATION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2023 Budgeted Amounts Original Final Actual Variance Revenues- Sales tax $ 30,523,263 $ 30,523,263 $ 29,372,531 $ (1,150,732) Intergovernmental 11,994,594 11,994,594 6,268,237 (5,726,357) Contributions 15,350,000 15,350,000 5,184,981 (10,165,019) Investment and other - - 4,865,130 4,865,130 Total revenues 57,867,857 57,867,857 45,690,879 (12,176,978) Expenditures- Current- General government 10,369,332 10,369,332 1,512,808 8,856,524 Public works 650,000 650,000 405,633 244,367 Debt Service- Capital projects 113,724,558 113,724,558 45,463,934 68,260,624 Total expenditures 124,743,890 124,743,890 47,382,375 77,361,515 Excess(deficiency)of revenues over expenditures (66,876,033) (66,876,033) (1,691,496) 65,184,537 Other financing sources(uses)- Transfers in 40,209,628 40,209,628 17,157,329 (23,052,299) Transfers out (3,118,941) (3,593,433) (3,593,433) - Total other financing sources(uses) 37,090,687 36,616,195 13,563,896 (23,052,299) Net change in fund balances $ (29,785,346) $ (30,259,838) 11,872,400 $ 42,132,238 Reconciliation between budgetary basis actual and GAAP Increase(decrease)in fair value of investments 1,059,652 Fund balance,October 1,2022 111,882,213 Fund balance,September 30,2023 $ 124,814,265 The accompanying notes are an integral part of this financial statement. 44 .... OCA` o: * ........•• ,� `j1 45 CITY OF ROUND ROCK,TEXAS PROPRIETARY FUNDS STATEMENT OF NET POSITION SEPTEMBER 30, 2023 Business-Type Activities Governmental Enterprise Funds Activities Water and Wastewater Golf Course Internal Fund Fund Total Service Fund ASSETS Current assets: Cash and cash equivalents $ 26,809,599 $ 731,420 $ 27,541,019 $ 1,243,009 Investments 134,428,612 188,687 134,617,299 10,995,531 Receivables(net of allowance for uncollectibles of$1,120,049) - Accounts and other 20,801,015 26,996 20,828,011 - Accrued interest 3,081,089 2,055 3,083,144 61,805 Intergovernmental 3,915,615 - 3,915,615 - Inventories 956,385 - 956,385 - Prepaid items 469,390 138,908 608,298 409,776 Total current assets 190,461,705 1,088,066 191,549,771 12,710,121 Noncurrent assets: Restricted cash,cash equivalents, and investments: Impact fees 3,812,037 - 3,812,037 - Construction 6,483,052 - 6,483,052 - Customer deposits 1,353,673 - 1,353,673 - Revenue bond covenant accounts 81,555 - 81,555 - Restricted accrued interest 51,072 - 51,072 - Investment in joint venture 41,039,999 - 41,039,999 - Capital assets: Land and construction in progress 33,389,170 4,304,314 37,693,484 - Capital assets being depreciated/amortized 378,608,387 6,723,654 385,332,041 - Total capital assets(net of accumulated depreciation/amortization of$292,937,045) 411,997,557 11,027,968 423,025,525 - Total noncurrent assets 464,818,945 11,027,968 475,846,913 - Total assets 655,280,650 12,116,034 667,396,684 12,710,121 DEFERRED OUTFLOWS OF RESOURCES Deferred amount on refundings 3,432,261 - 3,432,261 - Deferred outflows related to pensions 5,484,160 - 5,484,160 - Deferred outflows related to OPEB 294,043 - 294,043 - Total deferred outflows of resources 9,210,464 - 9,210,464 - The accompanying notes are an integral part of this financial statement. 46 CITY OF ROUND ROCK,TEXAS PROPRIETARY FUNDS (CONTINUED) STATEMENT OF NET POSITION SEPTEMBER 30, 2023 Business-Type Activities Governmental Enterprise Funds Activities Water and Wastewater Golf Course Internal Fund Fund Total Service Fund LIABILITIES Current liabilities: Accounts payable $ 11,966,587 $ 181,701 $ 12,148,288 $ 1,003,007 Accrued payroll 814,333 - 814,333 - Accrued benefit obligations 691,595 - 691,595 - Unearned revenue 11,546,983 124,278 11,671,261 - Accrued interest 377,197 - 377,197 - Customer deposits 1,376,253 - 1,376,253 - Lease payable 371 52,702 53,073 - Bonds payable 4,016,408 - 4,016,408 - Total current liabilities 30,789,727 358,681 31,148,408 1,003,007 Noncurrent liabilities: Net pension liability 9,607,692 - 9,607,692 - Total OPEB liability 2,459,426 - 2,459,426 - Accrued benefit obligations 183,842 - 183,842 - Bonds payable 60,658,755 - 60,658,755 - Total noncurrent liabilities 72,909,715 - 72,909,715 - Totalliabilities 103,699,442 358,681 104,058,123 1,003,007 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to OPEB 484,381 - 484,381 - Total deferred inflows of resources 484,381 - 484,381 - NET POSITION Net investment in capital assets 350,754,284 10,975,266 361,729,550 - Restricted for: Debt service 81,555 - 81,555 - Capital projects 10,346,161 - 10,346,161 - Unrestricted 199,125,291 782,087 199,907,378 11,707,114 Total net position $ 560,307,291 $ 11,757,353 572,064,644 $ 11,707,114 Reconciliation to government-wide statement of net position: Adjustment to reflect the cumulative net profit of the internal service fund that was allocated to enterprise fund functions. 1,621,812 Net position of business-type activities $ 573,686,456 47 CITY OF ROUND ROCK,TEXAS PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION YEAR ENDED SEPTEMBER 30,2023 Business-Type Activities Governmental Enterprise Funds Activities Water and Wastewater Golf Course Internal Fund Fund Total Service Fund Operating revenues- Charges for services $ 61,870,880 $ 3,765,883 $ 65,636,763 $ 16,455,350 Licenses,permits,and fees 6,394,076 - 6,394,076 - Total revenues 68,264,9S6 3,765,883 72,030,839 16,455,350 Operating expenses- Personnel services 16,702,089 - 16,702,089 - Contractual services 17,758,878 3,536,094 21,294,972 2,810,058 Supplies 1,806,816 144 1,806,960 4S Repair and maintenance 2,512,717 - 2,512,717 5,869 Heat,light and power 3,109,243 61,829 3,171,072 6,641 Claims expense - - - 13,468,525 Depreciation and amortization 24,007,208 506,027 24,513,235 - Total operating expenses 65,896,951 4,104,094 70,001,045 16,291,138 Operating income(loss) 2,368,005 (338,211) 2,029,794 164,212 Nonoperating revenues(expenses) - Investment and other revenues 7,289,303 22,940 7,312,243 718,005 Interest and fiscal charges (2,332,128) (2,332,128) - Total nonoperating revenues(expenses) 4,957,175 22,940 4,980,115 718,005 Income before contributions and transfers 7,325,180 (315,271) 7,009,909 882,217 Contributions and transfers- Contributions-impact fees 7,625,427 - 7,625,427 - Contributions-infrastructure 30,099,159 - 30,099,159 Contributions-other 804,446 158,595 963,041 - Transfers out (5,605,000) - (5,605,000) (654,864) Total contributions and transfers 32,924,032 158,595 33,082,627 (654,864) Change in net position 40,249,212 (156,676) 40,092,S36 227,353 Net position,October 1,2022 520,058,079 11,914,029 11,479,761 Net position,September 30,2023 $ 560,307,291 $ 11,7S7,353 $ 11,707,114 Reconciliation to government-wide statement of activities: Adjustment to reflect the net profit of the internal service fund that was allocated to enterprise fund functions 134,833 Change in net position of business-type activities $ 40,227,369 The accompanying notes are an integral part of this financial statement. 48 CITY OF ROUND ROCK,TEXAS PROPRIETARY FUNDS STATEMENT OF CASH FLOWS YEAR ENDED SEPTEMBER 30, 2023 Business-Type Activities- Governmental Enterprise Funds Activities Water and Wastewater Golf Course Internal Fund Fund Total Service Fund Cash flows from operating activities: Cash received from customers $ 66,805,317 $ 3,968,165 $ 70,773,482 $ 1,084,817 Cash received from other funds for services provided - - - 15,370,533 Cash payments to suppliers for goods and services (33,755,428) (3,624,574) (37,380,002) (15,900,106) Cash payments to employees for services (15,247,989) - (15,247,989) Net cash provided(used) by operating activities 17,801,900 343,591 18,145,491 555,244 Cash flows from noncapital financing activities: Transfers to other funds (5,605,000) - (5,605,000) (654,864) Net cash provided(used) by noncapital financing activities (5,605,000) - (5,605,000) (654,864) Cash flows from capital and related financing activities: Proceeds from sale of capital assets 2,590,130 - 2,590,130 - Acquisition and construction of capital assets (20,847,361) (215,936) (21,063,297) - Investment in joint venture (16,206,812) - (16,206,812) - Liability associated with right-to-use assets (1,434) (78,903) (80,337) - Acquisition of right-to-use assets - - - - Principal paid on revenue bonds (3,861,412) - (3,861,412) - Interest paid on revenue,certificates of obligation bonds,and leases (2,359,370) - (2,359,370) - Contributions and grant proceeds 804,446 - 804,446 - Impact fees 7,625,427 - 7,625,427 - Net cash provided(used)by capital and related financing activities (32,256,386) (294,839) (32,551,225) - Cash flows from investing activities: Purchase of investments (66,122,249) (86,836) (66,209,085) (5,060,265) Proceeds from sale and maturities of investments 87,440,003 474,495 87,914,498 4,302,213 Investment and other income 5,331,571 22,366 5,353,937 689,883 Net cash provided(used)by investing activities 26,649,325 410,025 27,059,350 (68,169) Net increase(decrease) in cash and cash equivalents 6,589,839 458,777 7,048,616 (167,789) Cash and cash equivalents at beginning of year 22,700,612 272,643 22,973,255 1,410,798 Cash and cash equivalents at end of year $ 29,290,451 $ 731,420 $ 30,021,871 $ 1,243,009 (CONTINUED) The accompanying notes are an integral part of this financial statement. 49 CITY OF ROUND ROCK,TEXAS PROPRIETARY FUNDS STATEMENT OF CASH FLOWS (CONTINUED) YEAR ENDED SEPTEMBER 30,2023 Business-Type Activities- Governmental Enterprise Funds Activities Water and Wastewater Golf Course Internal Fund Fund Total Service Fund Reconciliation of Cash and Cash Equivalents to Proprietary Fund Statement of Net Position Cash and cash equivalents $ 26,809,599 $ 731,420 $ 27,541,019 $ 1,243,009 Restricted assets- Cash and cash equivalents 2,480,852 - 2,480,852 - Cash and cash equivalents $ 29,290,451 $ 731,420 $ 30,021,871 $ 1,243,009 Reconciliation of operating income(loss)to net cash provided (used)by operating activities Operating income(loss) $ 2,368,005 $ (338,211) $ 2,029,794 $ 164,212 Adjustments to reconcile operating income (loss)to net cash provided(used)by operating activities: Depreciation&amortization 24,007,208 506,027 24,513,235 - Provision for bad debts 70,711 - 70,711 - (Increase)decrease in: Receivables (551,332) 78,004 (473,328) - Inventory (321,685) - (321,685) - Other assets (2,366) 9,840 7,474 (97,276) Pension related deferred outflows (5,684,098) - (5,684,098) - OPEB related deferred outflows 423,253 - 423,253 - Increase(decrease) in: Accounts payable (8,243,723) (36,347) (8,280,070) 488,308 Customer deposits (670,998) 124,278 (546,720) - Accrued payroll 468,125 - 468,125 - Unearned Revenue (308,020) - (308,020) - OPEB related deferred inflows - - Net pension liability 6,493,048 - 6,493,048 - Total OPEB liability (246,228) - (246,228) - Total adjustments 15,433,895 681,802 16,115,697 391,032 Net cash provided (used) by operations $ 17,801,900 $ 343,591 $ 18,145,491 $ 555,244 NOTES: Noncash capital and related financing activities: In fiscal year 2023,the Water and Wastewater Fund had $30,099,159 in capital assets contributed,recognized a change of$1,011,992 in fair value of investments,and a change of$16,206,812 in joint venture net position. The accompanying notes are an integral part of this financial statement. 50 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Round Rock,Texas (the City) is a municipal corporation incorporated under Article XI Section 5 of the Constitution of the State of Texas (Home Rule Amendment). The City operates under a Council-Manager form of government. The financial statements of the City have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The more significant of these accounting policies are described below, and where appropriate, subsequent pronouncements will be referenced. A. REPORTING ENTITY The City provides various services and performs many different functions. These include a police force, a fire fighting and protection force,emergency medical services, a park and recreation system,a municipal golf course, a public library, convention and tourism support, planning and zoning, a transportation system, and a waterworks and wastewater utility system. The City's staff provides the necessary support for the services provided. All are responsible to the citizens of Round Rock and are therefore included within the reporting entity. As required by generally accepted accounting principles, these financial statements present the City and its component unit, an entity for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City's operations and so data from these units are combined with data of the City. Blended Component Unit The Round Rock Transportation and Economic Development Corporation (RRTEDC) is a blended component unit presented as a major special revenue fund of the City and does not issue separate financial statements. The governing body of the RRTEDC consists of a seven-member board appointed by the City Council. The blended component unit provides services entirely to the City for financial and economic benefits. The purpose of the RRTEDC is to utilize sales tax revenues for economic development by the improvement of the City's transportation system and payment of economic development incentives, covered under local government code. The City Council maintains budgetary control for the RRTEDC. A five-year project spending plan is presented and adopted at least annually to ensure adequate funds are available for transportation, economic development and other allowed uses of RRTEDC funds. This five-year plan is reviewed by staff at least bi-annually and updates are presented to the RRTEDC board as needed for transportation capital improvements programs, economic incentive programs, and other legally allowable projects approved by the RRTEDC board and ratified by Council. B. BASIS OF PRESENTATION—GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements. GASB Statement No. 34 requires certain supplementary information. Management's Discussion and Analysis includes an analytical overview of the City's financial activities. In addition, budgetary comparison statements are presented that compare the adopted and amended budgets of the General Fund and the Round Rock Transportation and Economic Development Corporation Fund with their actual results. 51 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Government-wide Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all non-fiduciary activities of the primary government and its component unit. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities,which are funded by fees and charges for services. The City's statement of net position reports all assets, deferred outflows of resources, liabilities, deferred inflows of resources,and net position. The government-wide statement of activities demonstrates the degree to which the direct expenses of a functional category (police, fire, public works, etc.) are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment, 2) grants and contributions that are restricted to meeting the operational requirements of a particular function or segment, and 3) grants and contributions that are restricted to meeting the capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. In addition, the government-wide statement of activities reflects depreciation and amortization expense on the City's capital assets,including infrastructure. The net cost (by function or business-type activity) is normally covered by general revenue (property, sales or franchise taxes,intergovernmental revenues, interest income,etc.). The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from financial activities of the fiscal period. The focus of the fund financial statements is on the major individual funds of the governmental and business-type categories and the component unit. Each presentation provides valuable information that can be analyzed and compared to enhance the usefulness of the information. Fund Financial Statements Separate fund based financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. An emphasis is placed on major funds within the governmental and proprietary categories. GASB Statement No. 34 sets forth minimum criteria for the determination of major funds(i.e.,funds whose revenues, expenditures/expenses, assets, or liabilities are at least 10% of corresponding totals for all governmental or enterprise funds and at least 5%of the aggregate amount for all governmental and enterprise funds). The major governmental funds are the General Fund, the Debt Service Fund, the Round Rock Transportation and Economic Development Corporation Fund,the Debt-Financed Capital Projects Fund,and the Self-Financed Construction Fund. The nonmajor funds are combined in a separate column in the fund financial statements. The Internal Service Fund,which provides services to the other funds of the government, is presented as part of the proprietary fund financial statements. The net income (loss) of the Internal Service Fund is allocated between governmental and business-type activities. Because the principal users are the City's governmental activities,financial statements of the Internal Service Fund are consolidated into the governmental column when presented at the government-wide level. The costs of these services are reflected in the appropriate functional activity(general government,public safety,public works,etc.). 52 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 C. GOVERNMENTAL FUND TYPES Governmental funds are those through which most governmental functions of the City are financed. The acquisition, use and balances of the City's expendable financial resources and the related liabilities(except those, if any,which should be accounted for in proprietary funds)are accounted for through governmental funds. The measurement focus is upon determination of financial position and changes in financial position, rather than upon net income determination. The City maintains the following governmental fund types: The General Fund accounts for financial resources in use for general types of operations, which are not encompassed within other funds. The General Fund is considered a major fund in the fund financial statements. The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. There are nine (9) groups of funds within the Special Revenue Funds which account for the activities related to grant programs, hotel-motel room taxes,transportation system improvement, and economic development sales tax and funds designated for specific service programs.They are as follows: Major Fund • Round Rock Transportation and Economic Development Corporation Fund Nonmajor Funds • Community Development Block Grant Fund • Hotel-Motel Occupancy Tax Fund • Hotel-Motel Occupancy Venue Tax Fund • Innovation&Development Fund • Library&Recreational Fund • Public Safety Fund • Public Education&Government Fund • Roadway Impact Fees Fund The Round Rock Transportation and Economic Development Corporation Fund is considered a major fund in the fund financial statements. It accounts for sales tax monies and donations/developer contributions received for economic development and transportation system improvements, including maintenance and capital costs associated with such authorized projects. The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, governmental long-term debt principal, interest and related costs.The Debt Service Fund is considered a major fund in the fund financial statements. The Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of capital facilities(other than those financed by proprietary funds). There are two groups of funds within the Capital Projects Fund which account for the activities related to various capital improvements projects as follows: Major Funds • Debt-Financed Capital Projects Fund The Debt-Financed Capital Projects Fund accounts for projects related to fire department facilities, parks and recreational purposes,library facilities, police and fire training facilities,street maintenance, and road construction. Financing is provided by general obligation bonds and certificates of obligation. • Self-Financed Construction Fund 53 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 The Self-Financed Construction Fund accounts for the costs of authorized general capital improvements and facilities. Financing is provided by general government resources, such as sales tax. In fiscal year 2022, as part of the fiscal year 2023 budget adoption process,City Council adopted revisions to the financial policies.To reduce reliance on any single sales tax provider or group, all are limited not to exceed 16% of total General Fund budgeted sales tax revenue, net of incentives in fiscal year 2023, and 15%thereafter. Sales tax receipts, net of incentives, in excess of these amounts will be budgeted and deposited in the Self-Financed Construction Fund. Secondly, expected or realized sales tax total revenue in the General Fund exceeding 45% of the operating budget will be recognized in the Self-Financed Construction Fund.All funds in the Self-Financed Construction Fund are available for pay-as-you-go one-time capital expenditures or projects. D. PROPRIETARY FUND TYPES The Proprietary Funds are used to account for the City's ongoing organizations and activities that are similar to those found in the private sector. These funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. The accounting objectives are the determination of income before contributions and transfers,net position and cash flows.The City maintains both Enterprise Funds and an Internal Service Fund. The Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses including depreciation)of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The City's Enterprise Funds consists of the Water and Wastewater Fund, which includes the City's stormwater program, and the Golf Course Fund. These funds are primarily supported by user charges. The Internal Service Fund is used to account for the financing of goods or services provided by one department or agency to other City departments or agencies on a cost-plus basis. The City's Internal Service Fund is the Self-Funded Health Insurance Fund, which is used to account for the activities of the City's Self-Funded Health Insurance program. E. NON-CURRENT GOVERNMENTAL ASSETS/LIABILITIES GASB Statement No. 34 eliminated the presentation of the general fixed assets and general long-term debt account groups, but provides for these records to be maintained and incorporates the information into the governmental activities column in the government-wide statement of net position. F. BASIS OF ACCOUNTING Government-wide Statements The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor/provider have been met. Fund Financial Statements In the fund financial statements, all governmental funds are accounted for using a modified accrual basis of accounting. Governmental funds use the current financial resources measurement focus. Under this basis, 54 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 revenues are recognized in the accounting period in which they become measurable and available. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable. Governmental Funds Revenue Recognition In applying the susceptible to accrual concept under the modified accrual basis of accounting, revenues are recorded when deemed both measurable and available. Measurable means that the amount of the transaction can be determined. Available means the amount of the transaction is collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal year. Property tax revenues are recognized when they become available. In this case, available means when due, or past due and receivable within the current period and collected within the current period or soon enough thereafter to be used to pay liabilities of the current period. Such time thereafter shall not exceed 60 days. Hotel taxes, franchise fees, and special assessments are recorded when susceptible to accrual, both measurable and available. Sales taxes collected and held by the State at year-end on behalf of the City are also recognized as revenue. Licenses and permits, charges for services, fines and forfeitures and other revenues (except earnings on investments)are recorded as revenues when received in cash because they are generally not measurable until actually received. Earnings on investments are recorded on the accrual basis in all funds. Unrealized gains or losses on investments are also recognized in accordance with GASB Statement No. 31, but are not included in the budget basis.The fair market value change is reported as a separate impact on fund balance below the net change in fund balance. In applying the susceptible to accrual concept to grant revenues, the legal and contractual requirements of the individual grant programs are used for guidance. Monies received are generally unrestricted as to purpose of expenditure and are revocable only for failure to comply with prescribed compliance requirements. These resources are recognized as revenues at the time of receipt, or sooner, if the susceptible to accrual criteria are met. The City reports unavailable revenue on its fund financial statements. Unavailable revenues arise when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Unearned revenues arise when the City receives resources before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met or when the City has a legal claim to the resources, the liability for unearned revenue is removed from the balance sheet and revenue is recognized. Expenditure Recognition The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Most expenditures are measurable and are recorded when the related fund liability is incurred except for unmatured principal and interest on governmental long-term debt which are recognized when paid. Allocations of costs, such as depreciation and amortization, are not recognized in the governmental funds'fund financial statements. Proprietary Funds In the fund financial statements and the government-wide statements, proprietary and agency funds utilize the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized in the accounting 55 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 period in which they are earned and become measurable. Expenses are recorded in the accounting period incurred, if measurable. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Water and Wastewater Fund, the Golf Course Fund and the Internal Service Fund are charges to customers for sales and services. Operating expenses for the Enterprise Funds and Internal Service Fund include the cost of sales and service, administrative expenses, and depreciation/amortization on capital assets. All revenue and expenses not meeting this definition are reported as non-operating revenues and expenses. G. CASH AND CASH EQUIVALENTS In accordance with GASB Statement No. 9, for reporting purposes, the City has developed a definition of cash equivalents. Cash equivalents are demand deposit account balances, investments with the State Investment Pool, repurchase agreements, obligations of the United States government and its agencies, commercial paper and certificates of deposit with original maturities of three months or less. H. INVESTMENTS All investments are presented at fair value. The fair value of U.S. Government Securities is based upon discounted future cash flows. The fair value of the positions in the state investment pools is the same as the value of the pool shares. The City pools excess cash of the various individual funds to purchase these investments. These pooled investments are reported in the combined balance sheet as investments in each fund based on each fund's share of the pooled investments. Interest income is allocated to each respective individual fund, monthly, based on their respective share of investments in the pooled investments. The City's local government investment pools are recorded at amortized costs as permitted by GASB Statement No. 79, Certain Investment Pools and Pool Participants. 1. INVENTORIES AND PREPAID ITEMS Inventories of supplies for all funds are valued at cost. Cost is determined on the first-in, first-out method. The consumption method is used to account for inventories. Under the consumption method, an expenditure is recognized when inventory items are used. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items (other current assets) in both the government-wide and fund financial statements. The consumption method is used to account for prepaids such as postage,while equipment is recognized as an expenditure when the equipment is received. J. JOINT VENTURE The joint venture represents the City's equity interest calculated in accordance with the agreement for the Brushy Creek Regional Utility Authority(BCRUA). The City's initial investment in this joint venture was recorded at cost. The City shares in the operating results in this joint venture so the City adjusts its equity interest by the amount of its participating share of the joint venture's change in net position. 56 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 K. CAPITAL ASSETS Capital assets are stated at historical cost, except for intangible right-to-use lease assets and right-to-use subscriptions. Maintenance and repairs are charged to operations as incurred. Improvements and betterments, which extend the useful lives of assets,are capitalized. The accounting and reporting treatment applied to the capital assets associated with a fund are determined by the fund's measurement focus. The minimum capitalization threshold is $5,000 and greater for machinery and equipment with a useful life of at least five(5)years and $50,000 and greater with a useful life of at least ten(10) years for other asset categories. Donated capital assets, donated works of art, and similar items are reported at acquisition value rather than fair value. Intangible assets follow the same capitalization policies as tangible capital assets and are reported with tangible assets in the appropriate capital asset class. Public domain capital assets (infrastructure) have been capitalized. Infrastructure consists of certain improvements other than buildings, including roads, curbing, gutters, streets and sidewalks, and stormwater systems. In the government-wide statements, depreciation and amortization of plant, equipment, and the right-to-use lease assets and right-to-use subscriptions classified by functional components is provided by the straight-line method over their estimated useful lives. Estimated useful lives are as follows: Buildings 40 years Improvements to buildings 10 years Improvements other than buildings 10-30 years Machinery and equipment 5- 7 years Right-to-use lease assets 5- 7 years Right-to-use subscriptions 5- 7years When capital assets are retired or otherwise disposed of,a gain or loss on disposal of assets is recognized. In the fund financial statements,because of the application of the current financial resources focus and the use of modified accrual accounting for governmental funds, depreciation and amortization is only recognized for the Enterprise Funds. L. LONG-TERM DEBT In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable is reported net of the applicable bond premium or discount. Deferred amounts related to refundings are reported as deferred outflow of resources and amortized over the shorter of the refunded or refunding debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received,are reported as debt service expenditures. Limited Tax Notes have been issued for the purpose of purchasing City vehicles. The notes are to be repaid from ad valorem taxes. 57 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 A loan from the State Infrastructure Bank has been received to fund transportation improvements. The loan will be repaid from revenues of the Round Rock Transportation and Economic Development Corporation. Hotel Occupancy Tax Revenue Bonds were issued to fund the City's portion of the construction of a convention center complex. The project costs were shared with a private corporation in accordance with the Master Agreement Regarding Convention Center Development. Venue Tax and Hotel Occupancy Revenue Bonds were issued to fund a portion of the construction of a sports center. The Hotel Occupancy Tax Revenue Bonds and Venue Tax and Hotel Occupancy Tax Revenue Bonds are to be repaid from the hotel tax revenues. Revenue bonds, which have been issued to fund capital projects of the Enterprise Fund, are to be repaid from net revenues of the utility systems. Sales tax revenue bonds have been issued to fund transportation improvements. The bonds are to be repaid from revenues of the Round Rock Transportation and Economic Development Corporation. Taxable sales tax revenue bonds have been issued to fund the City's portion of the construction of a convention center facility located at Kalahari Resorts and Conventions. The bonds are to be repaid from sales tax,venue tax and ad valorem tax generated by Kalahari Resorts and Conventions. Principal and interest expenditures on lease and subscription liabilities are recognized based on specific accounting rules applicable when payment is due. General capital asset acquisitions, including entering into contracts giving the City right-to-use lease assets and subscriptions,are reported as expenditures while issuance of financing through leases and subscriptions are reported as other financing sources in governmental funds. M. ACCRUED BENEFIT OBLIGATIONS Unpaid Compensated Absences Regular full-time employees and regular part-time employees who are normally scheduled to work at least twenty(20) hours per week are eligible to accrue vacation leave. Public service employees, including the police department, can accrue a maximum of 320 hours. Regular, full-time suppression firefighters have a maximum accrual of 656 hours, while regular, full-time administration firefighters can earn a maximum of 437 hours. Employees are paid for the accumulated vacation upon termination. Effective January 1, 1994,sick pay does not vest for non-Civil Service employees; therefore, a liability is only recorded for sick leave relating to Civil Service employees. The City accrues a liability for accumulated vacation and sick leave benefits,which meet the following criteria: • The City's obligation to fund accumulated vacation and sick leave benefits is attributable to employees'services already rendered. • The obligation relates to rights that vest or accumulate. • Payment of the compensation is probable. • The amount can be reasonably estimated. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured,for example, as a result of employee resignations and retirements. Other Post-Employment Benefits The City provides its retirees the opportunity to maintain health insurance coverage by participating in the City's self-insurance plan. The City reports the total liability for this plan on the government-wide and proprietary fund 58 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 financial statements. The actual cost recorded in the governmental fund financial statements is the cost of the health benefits incurred on behalf of the retirees less the premiums collected from the retirees. Information regarding the City's total liability for this plan is obtained through a report prepared by Holmes Murphy & Associates, the City's third-party actuary, in compliance with GASB Statement No. 75,Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Additionally,the City participates in a defined benefit group-term life insurance plan,both for current and retired employees, administered by the Texas Municipal Retirement System (TMRS). The City reports the total liability for this plan on the government-wide and proprietary fund financial statements. Information regarding the City's total OPEB liability is obtained from TMRS through a report prepared for the City by TMRS' consulting actuary,Gabriel Roeder Smith&Company,in compliance with GASB Statement No.75. The governmental funds typically used to liquidate other post-employment benefit liabilities are the General, Hotel-Motel Occupancy Tax, Hotel-Motel Occupancy Venue Tax,and Library and Recreational Funds. N. TRANSACTIONS BETWEEN FUNDS Short-term advances between funds are accounted for in the appropriate interfund receivable and payable accounts. All legally authorized transfers are appropriately treated as transfers and are included in the results of operations of both governmental and proprietary funds. Nonrecurring or non-routine transfers of equity between funds-for example,contribution of capital assets to a proprietary fund or transfers of residual balances of discontinued funds to other funds-are accounted for as transfers. As a rule, the effect of interfund activity has been eliminated from the government-wide statement of net position. Exceptions to this rule are cost reimbursement transactions between the enterprise fund and various other functions of the government for utilities and for reimbursement of personnel costs for employees administering grant programs. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. O. NET POSITION Net position in government-wide and proprietary fund financial statements are classified as net investment in capital assets, restricted, and unrestricted. Net investment in capital assets consists of capital assets net of accumulated depreciation/amortization, outstanding balances of capital-related borrowings, and capital-related deferred outflows (inflows) of resources. Net position classified as restricted is balances with constraints on resources that are either externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through state statute. Certain bond proceeds, as well as resources set aside for their repayment, are classified as restricted assets because their use is limited by bond covenants. Other assets are restricted due to City Ordinance restrictions on their use. Net position has been restricted for the excess of restricted assets over related liabilities to the extent such restricted assets were accumulated from revenues (i.e., in some cases, restricted assets were obtained in total or in part from the proceeds of bond sales or grants). When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first,then unrestricted resources as they are needed. 59 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 P. CLASSIFICATION OF FUND EQUITY Governmental funds' fund balance classifications describe the relative strength of the spending constraints placed on the purposes for which resources can be used. Nonspendable fund balance—Nonspendable fund balances are amounts that are not in spendable form or are legally or contractually required to be maintained intact. Restricted fund balance — Restricted fund balances are amounts that are constrained to specific purposes by creditors,grantors,contributors,or laws or regulations of other governments. Committed fund balance—Committed fund balances are amounts that are committed to specific purposes by City Council through an ordinance. Amounts cannot be used for other purposes unless the City Council takes the same action to remove or change the constraint. The most significant commitments are for general government in the special revenue funds and for park improvements in the capital projects funds. Assigned fund balance — Assigned fund balances are amounts that are subject to a purpose constraint that represents an intended use but are neither restricted nor committed. Assignments are made by City Council or the City Manager as defined in the Financial Policies of the City. Unassigned fund balance— Unassigned fund balances are amounts that are available for any legal purposes. The General Fund is the only fund that reports a positive unassigned fund balance amount. Other governmental funds may report a negative unassigned fund balance if expenditures incurred for specific purposes exceeded the amounts restricted,committed,or assigned to those purposes. For the classification of governmental fund balances, the City considers the expenditure to be made from the most restrictive first when more than one classification is available. Q. MINIMUM FUND BALANCE POLICY It is the desire of the City to maintain an adequate fund balance in the General Fund to maintain liquidity in anticipation of economic downturns or natural disasters. The City Council has adopted a financial standard to maintain a General Fund minimum fund balance of 90 days or 25%of annual budgeted operating expenditures. R. DEFERRED OUTFLOWS/INFLOWS OF RESOURCES In addition to assets, the statement of net position and/or balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The items that qualify for reporting in this category by the City include the following: • Deferred charges on refundings-A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The deferred charge on refundings is reported in the government-wide statement of net position. • OPEB and pension contributions after measurement date - These contributions are deferred and recognized in the following fiscal year. • Difference between projected and actual investment earnings on pension assets, difference between expected and actual economic experience on pension and OPEB assets, and changes in actuarial assumptions used to determine the net pension and total OPEB liabilities. 60 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 In addition to liabilities, the statement of net position and/or balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources(revenue) until that time. Reported as a deferred inflow for the City both for OPEB and pension are the difference in expected and actual experience and the difference arising from changes in assumptions (both are deferred and recognized over the estimated average remaining lives of all members determined as of the measurement date). For the governmental funds, the property tax receivable is offset by unavailable revenue and reported as deferred inflows because this receivable will not be received within 60 days after fiscal year end. S. TAP-IN (CONNECTION FEES)AND IMPACT FEES Water and wastewater tap-in fees (connection fees) represent reimbursement of the costs incurred to perform the connection of the respective utilities. These fees are recorded as operating revenue at the time of service. The impact fee substantially exceeds the cost of connection to the water and wastewater system and is therefore viewed as a contribution. Effective with the implementation of GASB Statement No.33,impact fees are recorded as contributions in the Enterprise Fund. The City adopted a roadway impact fee ordinance in March 2019. Roadway impact fees are intended to recover the incremental cost of each new unit of development on the arterial and collector roadway infrastructure. Effective January 1, 2020, assessment of roadway impact fees began but no roadway impact fees were charged for any building permit application dated before January 1, 2021. The roadway impact fees were charged effective January 1, 2021. There are three phases in the roadway impact fee schedule. Phase 1 of the roadway impact fees are for final plat dates prior to January 1, 2023; phase 2 is for final plat dates between January 1, 2023,and December 31,2023;and phase 3 is for final plat dates on or after January 1,2024. T. 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. Specifically, the actuarial calculations to determine the net pension liability and total OPEB liability are based on assumptions about events far into the future. Accordingly, actual results could differ from those estimates. U. PENSIONS For purposes of measuring the net pension liability, pension related deferred outflows and inflows of resources, and pension expense, City specific information about its fiduciary net position in TMRS and additions to/deductions from the City's fiduciary net position have been determined on the same basis as they are reported by TMRS. For this purpose, plan contributions are recognized in the period that compensation is reported for the employee, which is when contributions are legally due. Benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Information regarding the City's total pension liability is obtained from TMRS through a report prepared for the City by TMRS' consulting actuary, Gabriel Roeder Smith &Company(GRS), in compliance with GASB Statement No.68,Accounting and Financial Reporting for Pensions-an amendment of GASB Statement No.27. The governmental funds typically used to liquidate pension liabilities are the General, Hotel-Motel Occupancy Tax, Hotel-Motel Occupancy Venue Tax,and Library and Recreational Funds. 61 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 V. NEW AND FUTURE FINANCIAL REPORTING REQUIREMENTS The GASB has issued the following statements which became effective for fiscal year 2023,as well as statements that are effective in future fiscal years, but the City implemented early. GASB Statement No. 96, "Subscription-Based Information Technology Arrangements"- This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements(SBITAs)for government end users.This Statement(1)defines a SBITA;(2)establishes that a SBITA results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments, including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA.To the extent relevant,the standards for SBITAs are based on the standards established in Statement No.87,Leases,as amended. GASB Statement No 99,"Omnibus 2023"-The objectives of this Statement are to enhance comparability in accounting and financial reporting and to improve the consistency of authoritative literature by addressing(1) practice issues that have been identified during implementation and application of certain GASB Statements and (2)accounting and financial reporting for financial guarantees. The GASB has issued the following statement which will become effective for fiscal year 2024: GASB Statement No. 100, "Accounting for Changes and Error Corrections"- an Amendment of GASB Statement No. 62. The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant,consistent, and comparable information for making decisions or assessing accountability. GASB Statement No. 101, "Compensated Absences"- The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences.That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. This Statement amends the existing requirement to disclose the gross increases and decreases in a liability for compensated absences to allow governments to disclose only the net change in the liability (as long as they identify it as a net change). In addition,governments are no longer required to disclose which governmental funds typically have been used to liquidate the liability for compensated absences. W. PRIOR PERIOD ADJUSTMENT The City restated its government-wide net position as of September 30, 2022, to recognize beginning net position due to implementation of GASB Statement 96, "Subscription-Based Information Technology Arrangements". Government-Wide Statement of Activities Governmental Business-Type Activities Activities Total Net Position at September 30,2022, as previously reported $ 603,466,135 $ 533,459,087 $ 1,136,925,222 Subscription assets 598,057 - 598,057 Subscription liabilities (595,562) - (595,562) Net restatement 2,495 - 2,495 Net position at September 30,2022, as restated $ 603,468,630 $ 533,459,087 $ 1,136,927,717 62 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 II. STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY A. BUDGETARY ACCOUNTING The City follows these procedures in establishing the appropriated budget as reflected in the accompanying financial statements: (1) At least sixty days prior to the beginning of each fiscal year, the City Manager submits to the City Council a proposed budget for the fiscal year beginning on the following October 1. The operating budget, which represents the financial plan for the ensuing fiscal year, includes proposed expenditures and the means of financing them. (2) Public hearings are conducted at which all interested persons' comments concerning the budget may be heard. (3) The budget is legally enacted by the City Council through passage of an appropriation ordinance and tax-levying ordinance not later than the final day of the last month of the fiscal year. (4) Formal budgetary integration is employed as a management control device during the year for the General Fund, Special Revenue Funds, Debt Service Fund and Proprietary Funds. Management control for the operating budget is maintained at the individual office,department,or agency level. (S) Fair market value adjustments related to investments are not included in the budgetary basis due to the non-cash nature of those changes. (6) Annual budgets are legally adopted for the General Fund, Special Revenue Funds, Debt Service Fund, and the Proprietary Funds. Capital Projects Funds have no binding annual budget. Project-length financial plans are adopted for all capital projects;accordingly, no comparison of budget to actual is presented in the financial statements. (7) Amendments that alter total expenditures of any fund must be approved by the City Council. Although costs are monitored on a departmental basis,the level of control at which expenditures may not exceed the budget is at the fund level. The reported budgetary data has been revised for amendments authorized. (8) Any appropriation balances lapse or revert to the undesignated fund balances at the close of each fiscal year. 63 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 The budgets of the various funds are prepared on a basis consistent with generally accepted accounting principles, with one exception as described above. The table below compares original to final budgets for the General Fund. Amendments Original Increase Final Budget (Decrease) Budget Revenues- Taxes and franchise, including interest and penalties $ 121,580,000 $ 792,000 $ 122,372,000 Licenses, permits and fees 2,073,075 175,000 2,248,075 Charges for services 4,515,200 265,000 4,780,200 Fines and forfeitures 1,125,000 - 1,125,000 Intergovernmental 3,535,198 - 3,535,198 Investment and other 4,123,527 200,000 4,323,527 Total revenues 136,952,000 1,432,000 138,384,000 Expenditures- Current- General government 33,186,839 (2,245,317) 30,941,522 Public safety 70,614,914 1,981,058 72,595,972 Public works 20,531,151 502,020 21,033,171 Culture and recreation 19,129,096 1,321,739 20,450,835 Total expenditures 143,462,000 1,559,500 145,021,500 Excess(deficiency)of revenues over expenditures (6,510,000) (127,500) (6,637,500) Other financing sources(uses) - Transfers in 6,905,000 - 6,905,000 Transfers out (200,000) (302,741) (502,741) Total other financing sources(uses) 6,705,000 (302,741) 6,402,259 Net change in fund balances $ 195,000 $ (430,241) $ (235,241) B. ENCUMBRANCES Encumbrances represent commitments related to unperformed (executory) contracts for goods or services. For budgetary purposes,encumbrances lapse at fiscal year-end. In accordance with the City Charter, Part I,Article 8, Section 8.03(a)(10)—Finance Administration,a capital improvement program may be revised and extended each year to indicate capital improvements pending or in process of construction or acquisition. Therefore, purchase orders and contracts associated with capital improvement programs roll at the end of the fiscal year. The encumbrances and significant commitments at September 30, 2023, associated with capital improvements for governmental funds, not proprietary funds, in accordance with GASB Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions,"are summarized below: Major Funds Round Rock Transportation and Economic Development Corporation Fund $ 40,965,000 Self-Financed Construction Fund 12,389,000 Debt-Financed Capital Projects Fund 11,095,000 Nonmajor Funds Special revenue funds $ 1,739,000 64 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 III. RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET POSITION The governmental fund balance sheet includes a reconciliation between fund balance-total governmental funds and net position-governmental activities as reported in the government-wide statement of net position. One element of that reconciliation explains that "some long-term liabilities are not due and payable in the current period and therefore are not reported in the funds."The details of this difference are as follows: Bonds, certificates, and limited tax notes payable -public placement $ 312,700,000 Plus: Issuance premium (amortized against interest expense) 17,226,338 Less: Issuance discount(amortized against interest expense) (25,121) Bonds,certificates, and limited tax notes payable- private placement 31,075,000 State infrastructure bank loan 27,000,000 Notes payable 600,837 Right-to-use lease payable 503,368 Right-to-use subscriptions payable 6,786,702 Net pension liability 70,456,397 Compensated absences 10,224,068 Total OPEB liability 18,035,791 Net adjustment to reduce fund balance-total governmental funds to arrive at net position -governmental activities $ 494,583,380 B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES The governmental fund statement of revenues, expenditures, and changes in fund balances includes a reconciliation of net changes in fund balances — total governmental funds to changes in net position of governmental activities as reported in the government-wide statement of activities. One element of that reconciliation explains that "Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation/amortization expense."The details of this difference are as follows: Capital outlay $ 90,130,318 Depreciation/amortization expense (41,117,607) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ 49,012,711 Another element of the reconciliation states that "The net effect of various miscellaneous transactions involving capital assets(i.e.sales,disposals,and donations) is to increase net position." The details of this difference are as follows: Donations $ 13,669,740 Reclassifications, disposals, and transfers (119,898) Net adjustment to increase net changes in fund balances - total governmental funds to arrive at changes in net position of governmental activities $ 13,549,842 65 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Another element of the reconciliation states that "The issuance of long-term debt (i.e., bonds, leases and subscriptions)provides current financial resources to governmental funds,while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities." Lastly, expenses related to accrued interest and amortization of premiums, discounts, and deferred gains/losses on refunding transactions are reported in the statement of activities, but do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. The details of this difference are as follows: Debt payments-public placement $ 18,635,000 Debt payments-private placement 4,665,000 Notes payments 1,531,203 Amortization of bond premium/discounts 957,756 Amortization of deferred amount on refunding-public placement (207,249) Amortization of deferred amount on refunding-private placement (48,384) Net adjustment to decrease net changes in fund balances- total governmental funds to arrive at changes in net position of governmental activities $ 25,533,326 Another element of the reconciliation states that "Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds." The details of these differences are as follows: Decrease in net pension liability $ (47,615,683) Increase in deferred outflows related to pensions 4,399,072 Increase in deferred inflows related to pensions 37,284,313 Net adjustment to decrease net changes in fund balances-total governmental funds to arrive at changes in net position of governmental activities $ (5,932,298) Increase in total OPEB liability $ 1,805,670 Decrease in deferred outflows related to OPEB (1,166,863) Decrease in deferred inflows related to OPEB (1,936,996) Net adjustment to decrease net changes in fund balances-total governmental funds to arrive at changes in net position of governmental activities $ (1,298,189) Change in compensated absences $ (453,742) Change in accrued interest-public placement 562,891 Change in accrued interest-private placement 8,994 Net adjustment to increase net changes in fund balances-total governmental funds to arrive at changes in net position of governmental activities $ 118,143 66 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 IV. DETAILED NOTES ON ALL FUNDS A. CASH AND INVESTMENTS Cash and investments at September 30, 2023, reconciled to the statement of net position amounts for cash and cash equivalents and investments is as follows: Cash in banks $ 57,883,628 Investments 457,118,560 Total cash and investments $ 515,002,188 Statement of net position presentation: Cash and cash equivalents $ 43,825,554 Investments 278,530,727 Restricted assets- Cash and cash equivalents 73,048,852 Investments 119,597,055 Total cash and cash equivalents and investments $ 515,002,188 At September 30,2023,the carrying amount of deposits was a debit balance of$57,883,628.including $5,648,146 in outstanding checks, and the respective bank balances totaled $63,531,773.The City's bank balances were fully insured or collateralized with securities held by the City's agent in the City's name and/or letters of credit. Investments All investments are presented at fair value. The fair value of U.S. Government Securities is based upon discounted future cash flows. The fair value of the positions in the state investment pools is the same as the value of the pool shares. Weighted Average Carrying Fair Maturity Amount Value (Days) U.S.Government Securities $ 312,529,146 $ 312,529,146 200 Certificates of Deposit 85,598,636 85,598,636 96 State Investment Pools 58,990,778 58,990,778 4 $ 457,118,560 $ 457,118,560 Portfolio weighted average maturity 300 Following GASB Statement No. 72, "Fair Value Measurement and Application,"the City categorizes its fair value measurements within the hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; and Level 3 inputs are significant unobservable inputs. As of September 30, 2023, the City has the recurring fair value measurements for U.S. Government securities of $312,529,146 valued using quoted prices for similar assets in active markets (level 2 inputs). 67 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Legal and Contractual Provisions Governing Deposits and Investments The Public Funds Investment Act (PFIA) (Government Code Chapter 2256) contains specific provisions in the areas of investment practices, management reports, and establishment of appropriate policies. Among other things, it requires the City to adopt, implement, and publicize an investment policy. That policy must address the following areas: (1) safety of principal and liquidity, (2) portfolio diversification, (3) allowable investments, (4) acceptable risk levels, (5) expected rates of return, (6) maximum allowable stated maturity of portfolio investments, (7) maximum average dollar-weighted maturity allowed based on the stated maturity date for the portfolio, (8) investment staff quality and capabilities, and (9) bid solicitation preferences for certificates of deposit. Statutes authorize the City to invest in (1)obligations of the U.S.Treasury,certain U.S.agencies,and the State of Texas, (2) certificates of deposit, (3) certain municipal securities, (4) money market savings accounts, (5) repurchase agreements, (6) banker's acceptances, (7) mutual funds, (8) investment pools, (9) guaranteed investment contracts,and (10)common trust funds. The Act also requires the City to have independent auditors perform test procedures related to investment practices as provided by the Act. The City is in substantial compliance with the requirements of the Act and with local policies. In addition,the funds of the City must be deposited and invested under the terms of a contract,the contents of which are set out in the Depository Contract Law. The depository bank places approved pledged securities for safekeeping and trust with the City's agent bank in an amount sufficient to protect City funds on a day-to-day basis during the period of the contract. The pledge of approved securities is waived only to the extent of the depository bank's dollar amount of Federal Deposit Insurance Corporation (FDIC) insurance and any letters of credit that are pledged. Policies Governing Deposits and Investments Foreign Currency Risk—The City's deposits and investments are not exposed to foreign currency risk. Custodial Credit Risk—The City's policy is to be collateralized. The City was fully collateralized during the year. Interest Rate Risk—In compliance with the City's Investment Policy,as of September 30,2023,the City minimized its interest rate risk in the portfolio by limiting the weighted average maturity to 540 days, structuring the portfolio so that maturities meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the secondary market prior to maturity, monitoring credit ratings of portfolio positions to assure compliance with rating requirements imposed by PFIA, and investing operating funds primarily in short-term securities, money market mutual funds,money market accounts,or government investment pools. Credit Risk—In compliance with the City's Investment Policy,as of September 30,2023,the City minimized credit risk losses due to default of security issuer or backer by limiting investments to the safest rated securities, using a registered investment advisor to provide investment and market advice,and diversifying the investment portfolio so that potential losses on individual securities were minimized. All the City's purchased investments in U.S. Agencies were rated AA+ by Standard&Poor's and Moody's respectively. Concentration Risk -The City invests in pools, certificates of deposit, money market funds, municipal bonds and U.S.Government Securities.State law authorizes the City to invest in obligations of the United States government and its agencies, commercial paper, money market funds, certificates of deposit of any state or federally chartered bank, obligations of states, agencies, counties, cities and other political subdivisions of any state not rated less than A or equivalent.All investments made in fiscal year 2023 were in the aforementioned categories. 68 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Local Government Investment Pools As of September 30, 2023, the City's investments included TexPool, TexSTAR, and Texas Term TexasDAILY Investment Pools. The investment pools' investments are not evidenced by securities that exist in physical or book entry form and, accordingly, do not have custodial risk. The City had $51,083,819 invested in TexPool, $211,170 invested in TexSTAR,and$7,695,789 in TexasDAILY at September 30, 2023. TexPool is a public funds investment pool created by the Texas Treasury Safekeeping Trust Company to provide a safe environment for the placement of local government funds in authorized short-term, fully collateralized investments, authorized by the PFIA.The Texas State Comptroller of Public Accounts has oversight responsibility for TexPool. Oversight includes the ability to significantly influence operations,designation of management,and accountability for fiscal matters. TexPool uses amortized cost rather than fair value to report net position to compute share prices. The fair value of the position in TexPool is the same as the value of TexPool shares. Accordingly, the City's investments in TexPool are stated at cost, which approximates fair value. TexPool is currently rated AAAm by Standard and Poor's. This rating indicates excellent safety and superior capacity to maintain principal value and limit exposure to loss. The City is invested in Texas Short Term Asset Reserve program (TexSTAR), a local government investment cooperative created under the Interlocal Cooperation Act, Chapter 791 of the Texas Government Code and the PFIA, specifically tailored to meet state and local government investment objectives of preservation of principal, daily liquidity and competitive yield. TexSTAR is co-administered by J.P. Morgan Investment Management Inc. and Hilltop Securities Inc. and is overseen by a five-member government board made up of three participants and one of each of the program's co-administrator or an affiliate. TexSTAR is currently rated AAAm by S&P Global.The responsibility of the board includes the ability to influence operations, designation of management, and accountability for fiscal matters. TexSTAR uses amortized cost rather than fair value to report net assets to compute share price. The fair value of the City's position in TexSTAR is the same as the value of TexSTAR shares. The City is also invested in TexasDAILY and TexasDAILY Select of the Texas Range Investment Program (Program).Texas Range Investment Program was established by the Common Investment Contract in conformity with Chapters 791 (Interlocal Cooperation Act) and 2256 (PFIA) of the Texas Government Code. An elected Advisory Board is responsible for the overall management of the Program, including formation and implementation of its investment and operating policies. The Program's investment advisor and administrator is PFM Asset Management, LLC. TexasDAILY is a money market portfolio with daily liquidity that is rated AAAmmf by Fitch. TexasDAILY's investment objectives are to provide shareholders with as high a level of current income as is consistent with stability,safety of principal,and liquidity,and to maintain a stable net asset value(NAV)of$1.00 per share. TexasDAILY Select invests in the full range of PFIA permitted investments and is rated AAAmmf by Fitch. TexasDAILY Select's investment objectives are to earn the highest income consistent with preserving principal and maintaining liquidity,and to maintain a stable NAV of$1.00 per share. In accordance with GASB Statement No. 79, Certain External Investment Pools and Pool Participants, the Local Government Investment Pools do not have any limitations and restrictions on withdrawals such as notice periods or maximum transaction amounts. These pools do not impose any liquidity fees or redemption gates. 69 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 B. PROPERTY TAXES AND RECEIVABLES Property taxes attach as an enforceable lien on January 1. Taxes are levied on or about October 1, are due on November 1, and are past due the following February 1. The Williamson and Travis Central Appraisal Districts established appraisal values in accordance with requirements of the Texas Legislature. The City Council levies taxes based upon the appraised values. Williamson County and Travis County bills and collects the City's property taxes. The property tax rates, established in accordance with state law, were based on 100% of the net assessed valuation of real and personal property within the City on the 2022 tax roll.The tax rate, based on total taxable assessed valuation of$21,693,026,463 was $0.342000 on each $100 valuation and was allocated to the General Fund and Debt Service Fund at$0.224400 and $0.117600,respectively. Property taxes receivable as of September 30,2023,were as follows: General Debt Service Fund Fund Total Current year levy $ 118,968 $ 58,596 $ 177,564 Prior years' levies 251,788 154,622 406,410 370,756 213,218 583,974 Less-allowance for uncollectible taxes (3,708) (3,530) (7,238) $ 367,048 $ 209,688 $ 576,736 Allowances for uncollectible taxes are based upon historical experience in collecting property taxes. The City is prohibited from writing off real property taxes without specific statutory authority from the Texas Legislature. C. INTERFUND,RECEIVABLES,PAYABLES AND TRANSFERS Interfund receivables and payables as of September 30,2023,were as follows: Receivable Fund Payable Fund Receivable Payable General Fund Debt Service Fund $ 628 $ 628 Governmental Funds $ 628 $ 628 Remaining balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. The City reports interfund transfers between many of its funds. These routine transfers are consistent with the activities of the funds. Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. A summary of transfers between funds is shown on the following page. 70 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Governmental Funds Transfers In Transfers Out General Fund - Water and Wastewater Fund $ 5,605,000 $ - Self-Financed Construction Fund - 502,741 RRTEDC Fund 1,300,000 - 6,905,000 502,741 Debt Service Fund- RRTEDC Fund 1,368,941 - Nonmajor Governmental Funds 8,782,580 - 10,151,521 - RRTEDC Fund - General Fund - 1,300,000 Debt Service Fund - 1,368,941 Debt-Financed Capital Projects Fund 17,157,329 924,492 17,157,329 3,593,433 Debt-Financed Capital Projects Fund - Self-Financed Construction Fund 4,978,010 RRTEDC Fund 924,492 17,157,329 5,902,502 17,157,329 Self-Financed Construction Fund- General Fund 502,741 - Debt-Financed Capital Projects Fund 1,500,000 4,978,010 Internal Service Fund 654,864 - 2,657,605 4,978,010 Other Governmental Funds- Debt Service Fund - 8,782,580 Self-Financed Construction Fund - 1,500,000 Nonmajor Governmental Funds 675,000 675,000 675,000 10,957,580 Subtotal of Governmental Funds 43,448,957 37,189,093 Proprietary Funds Water and Wastewater Fund - General Fund - 5,605,000 - 5,605,000 Internal Service Fund Self-Financed Construction Fund - 654,864 - 654,864 Subtotal of Proprietary Funds 6,259,864 Total Transfers $ 43,448,957 $ 43,448,957 71 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 D. JOINT VENTURE The City entered into a partnership with the cities of Leander and Cedar Park and formed Brushy Creek Regional Utility Authority(BCRUA). The BCRUA has the responsibility to provide reliable, cost effective sources of water. The City accounts for this partnership as a joint venture. Condensed financial statements for BCRUA are shown below. Financial statements may be obtained at the BCRUA,221 East Main Street,Round Rock,Texas,78664. STATEMENT OF NET POSITION As of September 30,2023 Total City's Interest ASSETS Cash and cash equivalents $ 2,929,480 $ 386,055 Accounts receivable 378,871 328,885 Restricted investments 121,267,854 6,767,223 Capital assets 273,061,295 87,264,432 Total assets 397,637,500 94,746,595 DEFERRED OUTFLOWS OF RESOURCES 11,080,143 4,317,602 LIABILITIES Accounts payable 15,989,042 4,274,046 Retainage payable 4,181,961 1,177,971 Due to partner cities 766,863 153,425 Current portion of bonds payable 11,885,000 2,395,000 Accrued bond interest payable 1,458,372 309,192 Total current liabilities 34,281,238 8,309,634 Noncurrent portion of bonds payable 294,746,161 49,714,564 Total liabilities 329,027,399 58,024,198 NET POSITION $ 79,690,244 $ 41,039,999 STATEMENT OF REVENUES,EXPENSES AND CHANGES IN NET POSITION For the Year Ended September 30,2023 Total City's Interest Operating revenues $ 3,971,718 $ 1,183,134 Interest expense (8,413,984) (1,690,911) Other operating expenses (8,416,875) (2,739,280) Other income(expense) 5,372,975 442,052 Changes in Net Position (7,486,166) (2,805,005) Net position,October 1,2022 47,924,337 24,833,187 Contribution of capital, net 39,252,073 19,011,817 Net position,September 30,2023 $ 79,690,244 $ 41,039,999 72 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 E. CAPITAL ASSETS Capital asset activity for the year ended September 30,2023,was as follows: October 1, 2022 Additions/ Retirements/ September 30, (restated) Completions Adjustments 2023 Governmental Activities: Capital assets not being depreciated/amortized: Land $ 116,587,882 $ 7,868,649 $ $ 124,456,531 Construction in progress 92,833,070 80,728,644 (99,922,061) 73,639,653 Total capital assets not being depreciated/ amortized 209,420,952 88,597,293 (99,922,061) 198,096,184 Capital assets being depreciated/amortized: Buildings and improvements 1,022,181,093 96,181,610 (897,923) 1,117,464,780 Equipment 94,034,523 13,202,544 (3,741,074) 103,495,993 Right-to-use lease assets 546,644 355,857 902,501 Right-to-use subscription assets 598,057 8,128,823 8,726,880 Total capital assets being depreciated/ amortized 1,117,360,317 117,868,834 (4,638,997) 1,230,590,154 Less accumulated depreciation/amortization for. Buildings and improvements 497,397,746 31,355,556 (897,923) 527,855,379 Equipment 73,969,394 8,115,587 (3,621,176) 78,463,805 Right-to-use lease assets 144,231 249,283 393,514 Right-to-use subscription assets - 1,397,181 1,397,181 Total accumulated depreciation/amortization 571,511,371 41,117,607 (4,519,099) 608,109,879 Total capital assets being depreciated/ amortized,net 545,848,946 76,751,227 (119,898) 622,480,275 Governmental activities capital assets,net $ 755,269,898 $ 165,348,520 $ (100,041,959) $ 820,576,459 Business-Type Activities: Capital assets not being depreciated/amortized: Land $ 10,916,012 $ 74,630 $ (1,527,294) $ 9,463,348 Construction in progress 12,437,208 21,706,999 (5,914,071) 28,230,136 Total capital assets not being depreciated/ amortized 23,353,220 21,781,629 (7,441,365) 37,693,484 Capital assets being depreciated/amortized: Buildings and improvements 627,419,716 33,635,968 (2,778,949) 658,276,735 Equipment 21,697,795 1,817,525 (3,737,431) 19,777,889 Right-to-use lease assets 214,462 - 214,462 Total capital assets being depreciated/ amortized 649,331,973 35,453,493 (6,516,380) 678,269,086 Less accumulated depreciation/amortization for. Building and improvements 259,542,524 22,220,012 (2,356,054) 279,406,482 Equipment 14,889,839 2,212,461 (3,733,261) 13,369,039 Right-to-use lease assets 80,762 80,762 161,524 Total accumulated depreciation/amortization 274,513,125 24,513,235 (6,089,315) 292,937,045 Total capital assets being depreciated/ amortized,net 374,818,848 10,940,258 (427,065) 385,332,041 Business-type activities capital assets,net $ 398,172,068 $ 32,721,887 $ (7,868,430) $ 423,025,525 (1)The implementation of GASB Statement No.96,Subscription-Based Information Technology Arrangements, resulted in restatement of the beginning capital asset balances for reporting the right-to-use assets associated with subscriptions,effective fiscal year 2023 for the City. 73 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Depreciation/amortization expense was charged to functions/programs of the primary government as follows: Governmental Activities: General government $ 4,623,435 Public safety 5,628,901 Public works 23,337,071 Culture and recreation 7,528,200 Total depreciation/amortization expense-governmental activities $ 41,117,607 Business-Type Activities: Water and wastewater utility $ 24,007,208 Golf course 506,027 Total depreciation/amortization expense-business-type activities $ 24,513,235 Net Investment in Capital Assets Detailed reconciliation of net investment in capital assets on the government-wide Statement of Net Position for September 30,2023,follows: Governmental Business-Type Activities Activities Total Net investment in capital assets: Total capital assets(net of accumulated depreciation/amortization) $ 820,576,459 $ 423,025,525 $ 1,243,601,984 Plus capital-related deferred outflows of resources 368,327 3,432,261 3,800,588 Less capital-related long-term debt (395,867,120) (64,728,236) (460,595,356) Plus unspent bond proceeds 36,151,062 - 36,151,062 Net investment in capital assets (net of related debt) $ 461,228,728 $ 361,729,550 $ 822,958,278 74 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 F. LONG-TERM DEBT The following is a summary of long-term debt transactions, including current portion, of the City for the year ended September 30,2023: Balance October 1, Balance 2022 Refundings/ September 30, Due within (restated) Additions Retirements 2023 one year Governmental Activities Public Placement General obligation bonds $ 158,460,000 $ - $ (11,040,000) S 147,420,000 $ 9,160,000 Certificates of obligation 120,350,000 - (4,140,000) 116,210,000 4,565,000 Hotel tax revenue bonds 7,375,000 - (655,000) 6,720,000 680,000 Sales tax revenue bonds 40,975,000 - (1,940,000) 39,035,000 1,970,000 Limited tax notes 4,175,000 - (860,000) 3,315,000 920,000 Plus deferred amount: For issuance premium 18,195,210 - (968,872) 17,226,338 1,155,869 For issuance discount (36,237) - 11,116 (25,121) 8,373 Total Public Placement 349,493,973 - (19,592,756) 329,901,217 18,459,242 Private Placement General obligation bonds 3,705,000 - (1,285,000) 2,420,000 1,305,000 Certificates of obligation 27,950,000 - (1,135,000) 26,815,000 1,980,000 Limited tax notes 2,740,000 - (900,000) 1,840,000 915,000 Sales tax revenue bonds 1,345,000 - (1,345,000) - - Total Private Placement 35,740,000 - (4,665,000) 31,075,000 4,200,000 State Infrastructure Bank Loan 27,000,000 - 27,000,000 - Notes payable 2,132,040 - (1,531,203) 600,837 600,837 Leases 402,579 350,857 (250,068) 503,368 247,390 Subscriptions(1) 595,562 8,092,323 (1,901,186) 6,786,699 2,073,963 Compensated absences 9,770,326 6,999,861 (6,546,119) 10,224,068 6,850,126 Total governmental activities 425,134,480 15,443,041 (34,486,332) 406,091,189 32,431,558 Business-Type Activities Public Placement Revenue bonds 63,390,000 - (3,530,000) 59,860,000 3,685,000 Plus deferred amount: For issuance premium 5,146,571 (331,408) 4,815,163 331,408 Leases 133,411 - (80,337) 53,074 53,073 Compensated absences 797,765 707,906 (630,234) 875,437 691,595 Total Public Placement 69,467,747 707,906 (4,571,979) 65,603,674 4,761,076 Total business-type activities 69,467,747 707,906 (4,571,979) 65,603,674 4,761,076 Total primary government $ 494,602,227 $ 16,150,947 $ (39,058,311) $ 471,694,863 $ 37,192,634 (1)The implementation of GASB Statement No.96,Subscription-Based Information Technology Arrangements, resulted in restatement of the beginning debt balances for reporting the subscription payable associated with subscriptions,effective fiscal year 2023 for the City. The General,Hotel-Motel Occupancy Tax,Hotel-Motel Occupancy Venue Tax,and Library and Recreational Funds are responsible for liquidating the liability for compensated absences in the governmental activities and the Water and Wastewater Fund is responsible for liquidating the liability for compensated absences in the business-type activities. 75 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Long-term debt at September 30,2023, is comprised of the following: Business- Governmental Governmental Type Activities Activities Activities Public Private Public Placement Placement Placement General Obligation Bonds: $8,615,000 2013 refunding bonds due in annual installments of$455,000 to$925,000 through 2024;interest at 1.00%to 1.65% $ 475,000 $ S $66,885,000 2014 GO bonds due in annual installments of$-0-to$4,790,000 through 2039;interest at 3.0%to 5.0% 7,735,000 $32,465,000 2015 refunding bonds due in annual installments of$-0-to$3,445,000 through 2032;interest at 4.0%to 5.0% 4,195,000 $6,995,000 2016 refunding bonds due in annual installments of$-0-to$1,755,000 through 2032;interest at 2.0%to 4.0% 3,130,000 $28,585,000 2017 GO bonds due in annual installments of$-0-to$1,945,000 through 2042;interest at 3.0%to 5.0% 26,130,000 $12,210,000 2019 refunding bonds due in annual installments of$1,330,000 to$1,775,000 through 2027;interest at 3.0%to 5.0% 6,600,000 $6,980,000 2020 refunding bonds due in annual installments of$375,000 to$2,005,000 through 2027;interest at 1.21% - 2,420,000 $79,860,000 2022 Refunding bonds due in annual installments of$190,000 to$6,705,000 through 2039;interest at 1.16%to 2.97% 78,450,000 - $20,985,000 2022 GO bonds due in annual installments of$280,000 to$1,310,000 through 2047;interest at 3.63%to 5.00% 20,705,000 Total General Obligation Bonds 147,420,000 2,420,000 Certificates of Obligation: $27,270,000 2014 Combination tax and limited revenue certificates of obligation due in installments of$175,000 to$1,700,000 through 2039;interest at 2.0%to 4.0% 5,620,000 $6,915,000 2018 Combination tax and limited revenue certificates of obligation due in installments of$-0-to$510,000 through 2038;interest at 3.0%to 5.0% 6,080,000 $27,250,000 2019 Combination tax and revenue certificates of obligation due in installments of$-0-to$1,740,000 through 2044;interest at 2.0%to 5.0% 25,090,000 - $30,000,000 2020 Combination tax and limited revenue certificates of obligation due in installments of$940,000 to$3,480,000 through 2032;interest at 1.81% - 26,815,000 $27,460,000 2021A Combination tax and limited revenue certificates of obligation due in installments of $-0-to$1,510,000 through 2046;interest at 2.0%to 5.0% 26,725,000 - $13,745,000 2021B Combination tax and limited revenue certificates of obligation due in installments of$-0-to$740,000 through 2046;interest at 2.0%to 5.0% 13,230,000 $13,810,000 2021C Combination tax and limited revenue certificates of obligation due in installments of$-0-to$715,000 through 2046;interest at 2.0%to 4.0% 13,245,000 - $26,570,000 2022 Combination tax and limited revenue certificates of obligation due in installments of$350,000 to$1,675,000 through 2047;interest at 4.0%to 5.0% 26,220,000 - Total Certificates of Obligation 116,210,000 26,815,000 76 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Business- Governmental Governmental Type Activities Activities Activities Public Private Public Placement Placement Placement Limited Tax Notes: $4,500,000 2020 Limited tax notes due in annual installments of $870,000 to$925,000 through 2025;interest at 1.15% $ - $ 1,840,000 $ $2,770,000 2021 Limited tax notes due in annual installments of $495,000 to$605,000 through 2026;interest at 2.0%to 4.0% 1,740,000 - $1,900,000 2022 Limited tax notes due in annual installments of $325,000 to$425,000 through 2027;interest at 5.0% 1,575,000 Total Limited Tax Notes 3,315,000 1,840,000 Hotel Tax Revenue Bonds: $4,455,000 2016 refunding bonds due in annual installments of$30,000 to$630,000 through 2024;interest at 2.0%to 4.0% 1,235,000 - - $5,560,000 2021 refunding bonds due in annual installments of$75,000 to$515,000 through 2037;interest at 4.0% 5,485,000 - - Total Hotel Tax Revenue Bonds 6,720,000 - - Sales Tax Revenue Bonds: $21,310,000 2019 taxable bonds due in annual installments of$-0- to$1.22 million through 2044;interest at 2.15%to 3.68% 19,230,000 $20,695,000 2021 taxable bonds due in annual installments of$-0-to$1,010,000 through 2046;interest at 0.45%to 3.25% 19,805,000 Total Sales Tax Revenue Bonds 39,035,000 Utility System Revenue Bonds: $8,000,000 2014 bonds due in annual installments of $-0-to$585,000 through 2034;interest at 2.0%to 4.0% 5,255,000 $35,185,000 2016 refunding bonds due in annual installments of $155,000 to$3,400,000 through 2035;interest at 2.0%to 5.0% 34,000,000 $32,785,000 2017 refunding bonds due in annual installments of $360,000 to$4,265,000 through 2039;interest at 3.0%to 5.0% 20,605,000 Total Utility System Revenue Bonds - 59,860,000 Issuance premium 17,226,338 4,815,163 Issuance discount (25,121) - State Infrastructure Bank Loan: $27,000,000 loan due in annual installments of$0 to$1,865,000 through 2042;interest at 2.1% 27,000,000 Notes payable: $2,900,000 notes due in semi-annual installments including interest of 1.992%due in 2024.The notes payable is funded with general revenue sources. 600,837 - Leases 503,368 53,073 Subscriptions 6,786,699 - Compensated absences 10,224,068 - 875,437 Total Primary Government Debt $ 375,016,189 $ 31,075,000 $ 65,603,673 77 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 The annual requirements to amortize bonds, certificates of obligation, limited tax notes, loan and notes payable debt at September 30,2023,including interest,are as follows: Governmental Activities: Year Ending General Obligation Bonds and Certificates of Obligation Sept.30, Public Placement Private Placement Principal Interest Total Principal Interest Total 2024 $ 13,725,000 $ 8,973,880 $ 22,698,880 $ 3,285,000 $ 514,634 $ 3,799,634 2025 13,190,000 8,388,057 21,578,057 2,395,000 463,005 2,858,005 2026 13,530,000 7,860,099 21,390,099 3,415,000 421,875 3,836,875 2027 13,940,000 7,373,151 21,313,151 3,560,000 362,284 3,922,284 2028 12,320,000 6,890,896 19,210,896 3,115,000 301,365 3,416,365 2029-2033 64,730,000 27,788,275 92,518,275 13,465,000 616,034 14,081,034 2034-2038 65,530,000 17,312,145 82,842,145 - - - 2039-2043 45,550,000 7,487,540 53,037,540 - - - 2044-2047 21,115,000 1,544,700 22,659,700 - - - $ 263,630,000 $ 93,618,743 $ 357,248,743 $ 29,235,000 $ 2,679,197 $ 31,914,197 Year Ending Limited Tax Notes Sept.30, Public Placement Private Placement Principal Interest Total Principal Interest Total 2024 $ 920,000 $ 136,250 $ 1,056,250 $ 915,000 $ 21,160 $ 936,160 2025 965,000 95,800 1,060,800 925,000 10,638 935,638 2026 1,005,000 53,350 1,058,350 - - - 2027 425,000 21,250 446,250 - - - $ 3,315,000 $ 306,650 $ 3,621,650 $ 1,840,000 $ 31,798 $ 1,871,798 Year Ending Sept.30, Hotel Tax Revenue Bonds- Public Placement Principal Interest Total 2024 $ 680,000 $ 255,200 $ 935,200 2025 705,000 227,500 932,500 2026 320,000 207,000 527,000 2027 335,000 193,900 528,900 2028 345,000 180,300 525,300 2029-2033 1,950,000 678,600 2,628,600 2034-2038 2,385,000 245,900 2,630,900 $ 6,720,000 $ 1,988,400 $ 8,708,400 78 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Year Ending Sept.30, Sales Tax Revenue Bonds-Public Placement Principal Interest Total 2024 $ 1,970,000 $ 1,091,684 $ 3,061,684 2025 2,000,000 1,060,930 3,060,930 2026 2,040,000 1,023,475 3,063,475 2027 2,075,000 982,664 3,057,664 2028 2,125,000 937,344 3,062,344 2029-2033 8,220,000 3,991,002 12,211,002 2034-2038 7,645,000 2,942,866 10,587,866 2039-2043 8,985,000 1,615,672 10,600,672 2044-2046 3,975,000 231,019 4,206,019 $ 39,035,000 $ 13,876,656 $ 52,911,656 Year Ending Sept.30, State Infrastructure Bank Loan Principal Interest Total 2024 - 2025 - - - 2026 1,340,000 567,000 1,907,000 2027 1,365,000 538,860 1,903,860 2028 1,395,000 510,195 1,905,195 2029-2033 7,430,000 2,098,950 9,528,950 2034-2038 8,235,000 1,285,515 9,520,515 2039-2042 7,235,000 383,670 7,618,670 $ 27,000,000 $ 5,384,190 $ 32,384,190 Year Ending Sept.30, Notes Payable Principal Interest Total 2024 $ 600,837 $ 8,675 $ 609,512 $ 600,837 $ 8,675 $ 609,512 Business-Type Activities: Year Ending Sept.30, Utility System Revenue Bonds Principal Interest Total 2024 $ 3,685,000 $ 2,263,181 $ 5,948,181 2025 3,860,000 2,092,331 5,952,331 2026 4,045,000 1,908,950 5,953,950 2027 3,350,000 1,715,100 5,065,100 2028 3,440,000 1,629,175 5,069,175 2029-2033 18,180,000 6,659,169 24,839,169 2034-2038 19,035,000 3,346,863 22,381,863 2039 4,265,000 181,262 4,446,262 $ 59,860,000 $ 19,796,031 $ 79,656,031 79 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 In prior years, the City defeased certain revenue and general obligation bonds by placing the proceeds of new bonds in an irrevocable trust to provide all future debt service payments on the old bonds.Accordingly,the trust account assets and the liability for the defeased bonds are not included in the City's financial statements. At September 30,2023,there are no bonds outstanding which have been reported as defeased. Bond ordinances also provide for other limitations and restrictions. The City is in compliance with all significant limitations and restrictions contained in the various bond ordinances. The City may incur non-voted debt payments from or secured by its levy and collection of ad valorem taxes and other sources of revenue, including tax notes, public property finance contractual obligations, leases and subscriptions for various purposes. Utility Revenue Bonds Utility revenue bonds are used to finance the acquisition and construction of major capital improvements to the City's water and wastewater systems. The City is required by bond ordinances to pledge the net revenues of the waterworks and wastewater system for the retirement of its outstanding revenue bonds, including interest thereon, and is required for such purposes to maintain debt service funds and bond reserve funds for all outstanding revenue bonds. The debt service funds are restricted within the Enterprise Fund and require that net revenues of the City's waterworks and wastewater system, after operating and maintenance expenses are deducted, be irrevocably pledged by providing equal monthly installments which will accumulate to the semi-annual principal and interest requirements as they become due. For fiscal year 2023, net revenues available for debt service were 4.65 times the average annual debt service requirement. The bond reserve funds for revenue bond retirement are also restricted within the Enterprise Fund. The City is in compliance with the requirement to maintain a combined reserve fund containing cash and investments in an amount equal to the average annual principal and interest requirements of all bonds then outstanding. The City also covenants under the bond indentures that reserve funds shall be invested in time deposits, certificates of deposit and direct or guaranteed obligations of the United States of America. Hotel Tax Revenue Bonds Hotel occupancy tax revenue bonds were issued to fund the City's portion of the convention center complex. The debt service fund for the hotel tax revenue bonds, aggregating $605,302 at September 30, 2023, is reported in the governmental funds. Bond covenants require that the hotel tax revenues be irrevocably pledged by providing quarterly installments,which will accumulate to the semi-annual principal and interest requirements as they become due. The bond reserve fund for hotel tax revenue bond retirement aggregates $918,590 at September 30, 2023. This amount is in compliance with the requirements contained in the bond's Indenture Agreement. This agreement requires 1/2 of the average annual debt service requirements of the bonds in the reserve fund be deposited upon issuance of the bonds,with quarterly installments until the required reserve is attained. Sales Tax Revenue Bonds Sales tax revenue bonds have been issued to fund transportation improvements.The Round Rock Transportation and Economic Development Corporation (RRTEDC) issued the sales tax revenue bonds. RRTEDC is a blended component unit of the City of Round Rock,which collects half of 1%of the sales tax collected by the State on its behalf. Although RRTEDC is presented as a blended component unit, none of the City's assets are pledged to payment of the bonds. The bonds are secured solely by a pledge of the revenues of the RRTEDC. 80 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 The debt service fund for the sales tax revenue bonds,aggregating $1,789,830 at September 30, 2023, is reported in the governmental funds. Bond covenants require that RRTEDC's share of the sales tax is pledged as security for the bonds. RRTEDC provides monthly installments that accumulate to the semi-annual principal and interest requirements as they become due. A reserve fund was not established for these bonds. RRTEDC purchased bond insurance to provide for payment of the principal and interest requirements in the event that pledged revenues are not sufficient. G. LEASES PAYABLE To enhance the relevance and consistency of information about the City's leasing activities, the City established a single model for lease accounting based on the principle that leases are financings of the right to use an underlying asset. The City is a lessee for noncancellable leases of equipment. The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the government-wide and proprietary financial statements. The City recognizes lease liabilities with an initial, individual value of$5,000 or more. 81 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Lease Accumulated Lease Asset Value Amortization Liability TAVCO Services, Inc.,lease for the use of equipment with required $ 8,214 $ 7,213 $ 743 monthly fixed payments of$404 including interest at 0.5820°/x,with three(3)extension options,each for 12 months. The lease liability was initially recorded for$8,214 with an estimated useful life of 27 months. PNC Equipment Finance,LLC,lease for the use of equipment with 96,861 72,797 24,267 required monthly fixed payments of$3,036 including interest at 0.2280%. The lease liability was initially recorded for$96,861 with an estimated useful life of 32 months. PNC Equipment Finance,LLC,lease for the use of equipment with 16,276 12,207 4,078 required monthly fixed payments of$510 including interest at 0.2280%. The lease liability was initially recorded for$16,276 with an estimated useful life of 32 months. PNC Equipment Finance LLC,lease for the use of equipment with 97,218 72,914 24,357 required monthly fixed payments of$3,047 including interest at 0.2280%. The lease liability was initially recorded for$97,218 with an estimated useful life of 32 months. United Site Services of Texas, Inc.,lease for the use of equipment with 126,979 89,632 37,449 required monthly fixed payments of$3,750 including interest at 0.2980%.The lease liability was initially recorded for$126,979 with an estimated useful life of 34 months. Pitney Bowes Global Financial Services LLC,lease for the use of 43,654 29,934 13,758 equipment with required monthly fixed payments of$1,253 including interest at 0.2980%.The lease liability was initially recorded for$43,654 with an estimated useful life of 35 months. Dahill Office Technology Corporation,lease for the use of equipment 371,904 165,291 207,437 with required monthly fixed payments of$12,000 including interest at 0.4350%.The lease liability was initially recorded for$371,904 with an estimated useful life of 54 months. Marathon Fitness,lease for the use of equipment with required 132,598 36,833 101,094 quarterly fixed payments of$12,460 including interest at 8.50%with a termination period of three months. The lease equipment has an estimated useful life of 36 months. Axon Fitness,lease for the use of equipment with required annual fixed 223,259 68,217 143,259 payments of$75,000 including interest at 3.121%.The lease equipment has an estimated useful life of 36 months. The lease has a termination penalty of$15,000. Totals,Right-to-use Lease Assets $ 1,116,963 $ 555,038 $ 556,442 82 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Year Ending Sept. 30, Governmental Activities Principal Interest Total 2024 $ 247,390 $ 12,540 $ 259,930 2025 202,110 6,170 208,280 2026 53,868 312 54,180 $ 503,368 $ 19,022 $ 522,390 Year Ending Sept.30, Business-Type Activities Principal Interest Total 2024 $ 53,074 $ 46 $ 53,120 83 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 H. SUBSCRIPTIONS For the year ended September 30, 2023, the financial statements include the adoption of GASB Statement No. 96, Subscription Based Information Technology Arrangements (SBITA). The primary objective of this statement is to enhance the relevance and consistency of information about the City's subscriptions activities. This statement establishes a single model for subscription accounting based on the principal that subscriptions are financings of the right to use of an underlying asset. Under this statement, an organization is required to recognize a subscription liability and an intangible right-to-use subscription asset. The City recognizes a subscription liability and an intangible right-to-use subscription asset in the government-wide and proprietary financial statements. The City recognizes subscription liabilities with an initial, individual value of $5,000 or more. The commitments below include subscriptions that were effective prior to implementation on October 1, 2022, and the estimated useful life of those subscriptions represents the months remaining at implementation. SBITA Accumulated SBITA Asset Value Amortization Liability Axon subscription liability for the use of underlying right-to-use asset $ 73,215 $ 29,286 $ 36,608 with annual fixed payments of$38,767 including interest at 3.1213%. The subscription liability was initially recorded for$73,215 with an estimated useful life of 30 months. ESO Solutions subscription liability for the use of underlying 84,116 28,487 41,378 right-to-use asset with annual fixed payments of$43,925 including interest at 3.1213%with a termination period of 1 month as of commencement. The subscription liability was initially recorded for $81,621 with an estimated useful life of 35 months. ESRI subscription liability for the use of underlying right-to-use asset 157,388 129,066 with annual fixed payments of$158,450 including interest at 3.074%. The subscription liability was initially recorded for$157,388 with an estimated useful life of 14 months. Tyler Technologies, Inc.subscription liability for the use of underlying 192,274 82,403 95,647 right-to-use asset with annual fixed payments of$98,618 including interest at 3.1067%. The subscription liability was initially recorded for $192,274 with an estimated useful life of 28 months. West Publishing Corp.subscription liability for the use of underlying 31,255 18,032 12,793 right-to-use asset with monthly fixed payments of$1,566 including interest at 2.31%. The subscription liability was initially recorded for $31,255 with an estimated useful life of 20 months. ESRI subscription liability for the use of underlying right-to-use asset 59,808 51,021 with annual fixed payments of$60,125 including interest at 3.074%. The subscription liability was initially recorded for$59,808 with an estimated useful life of 14 months. 84 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 SBITA Accumulated SBITA Asset Value Amortization Liability Kronos subscription liability for the use of underlying right-to-use asset $ 67,554 $ 17,889 $ 36,157 with monthly fixed payments of$1,440 including interest at 3.1213%. The subscription liability was initially recorded for$49,554 with an estimated useful life of 36 months. Remix Technology subscription liability for the use of underlying 48,635 12,159 33,385 right-to-use asset with annual fixed payments of$15,250 including interest at 2.5827%. The subscription liability was initially recorded for $48,635 with an estimated useful life of 36 months. Bonfire Interactive Ltd.subscription liability for the use of underlying 185,249 27,787 146,287 right-to-use asset with annual fixed payments of$38,963 including interest at 2.582%with a termination period of 1 month as of commencement. The subscription liability was initially recorded for $185,249 with an estimated useful life of 60 months. Microsoft subscription liability for the use of underlying right-to-use 1,889,079 314,847 1,243,588 asset with annual fixed payments of$645,490 including interest at 2.53%. The subscription liability was initially recorded for$1,889,079 with an estimated useful life of 36 months. WHC ATX subscription liability for the use of underlying right-to-use 5,938,307 686,204 5,140,856 asset with annual fixed payments of$778,950 including interest at 2.582%with a termination period of 1 month as of the subscription commencement. The subscription liability was initially recorded for $5,919,806 with an estimated useful life of 60 months. Totals, Right-to-use Subscriptions $ 8,726,880 $ 1,397,181 $ 6,786,699 Year Ending Governmental Activities Sept.30, Principal Interest Total 2024 $ 2,073,963 $ 175,251 $ 2,249,214 2025 1,957,435 121,222 2,078,657 2026 1,350,308 71,079 1,421,387 2027 1,404,993 36,277 1,441,270 $ 6,786,699 $ 403,829 $ 7,190,528 1. ACCRUED COMPENSATED ABSENCES Changes to accrued compensated absences for the year ended September 30,2023,were as follows: Governmental Business-Type Activities Activities Balance,October 1,2022 $ 9,770,326 $ 797,765 Additions 6,999,861 707,906 Reductions (6,546,119) (630,234) Balance,September 30,2023 $ 10,224,068 $ 875,437 85 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Accrued compensated absences due within one year were $6,850,126 for governmental activities and $691,595 for business-type activities. Liabilities for accrued compensated absences are funded from General, Hotel-Motel Occupancy Tax, Hotel-Motel Occupancy Venue Tax, and Library and Recreational Funds revenues for the governmental activities and Water and Wastewater Fund program revenues for the business-type activities. J. RESTRICTED ASSETS The following summarizes restricted assets by purpose at September 30,2023: Cash Property Sales Accrued and Cash Taxes Tax Interest Equivalents Investments Receivable Receivable Receivable Governmental Activities: General Fund $ 1,905,987 $ $ - $ - $ Debt Service Fund 4,112,138 209,688 Restricted by debt covenants- Round Rock Transportation and Economic Development Corporation Fund 34,168,669 92,046,324 2,286,128 660,120 Debt-Financed Capital Projects Fund 29,305,813 8,788,445 - 27,120 Other Governmental funds 1,075,393 9,512,821 - 31,348 Total Governmental Activities $ 70,568,000 $ 110,347,590 $ 209,688 $ 2,286,128 S 718,588 Cash Accrued and Cash Interest Equivalents Investments Receivable Business-Type Activities: Water and Wastewater Fund- Impact fees $ 387,171 S 3,424,866 $ Construction 658,453 5,824,599 Customer deposits 1,353,673 - Revenue bond debt service 81,555 - Accrued interest receivable - - 51,072 Total Business-Type Activities $ 2,480,852 $ 9,249,465 $ 51,072 V. OTHER INFORMATION A. COMMITMENTS AND CONTINGENCIES Tax Collections The City has a contract with the tax offices of Williamson and Travis counties to collect City taxes and deposit monies into the City's accounts. For this service,Williamson County was paid $11,809 and Travis County was paid $1,048 for the fiscal year ended September 30,2023. Commitments for Road Construction The City's component unit,the Round Rock Transportation and Economic Development Corporation has entered into various commitments with the State of Texas, Department of Transportation and neighboring cities/counties relative to the construction of roadways. 86 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Water Supply Agreements On May 2, 1978, the City entered into the "Water Supply Contract" with the Brazos River Authority (BRA), providing the City the right to purchase 6,720 acre-feet of water per year from Lake Georgetown. A new agreement, "System Water Availability Agreement for Lake Georgetown" dated September 1, 2001, replaced that agreement. The new agreement revised the rate methodology from a tiered system rate, wherein rates change based upon the City's consumption,to a level system rate. For the fiscal year ended September 30, 2023,the City's cost under this contract was$591,360. On September 12, 1991, the City entered into the "Replacement Water Supply Agreement" with the BRA,wherein it received the right to purchase 8,134 acre-feet of water per year from Stillhouse Hollow Lake. Rights for an additional 10,000 acre-feet of water were acquired in the November 13, 1996, "System Water Supply Agreement". These agreements were replaced with the "System Water Availability Agreement for Lake Stillhouse Hollow" dated September 1, 2001. Under this agreement, the City purchases 18,134 acre-feet per year at the new system rate. For the fiscal year ended September 30,2023,the City's cost under this contract was$1,595,792. Effective September 1, 2001, the City entered into a "System Water Availability Agreement for Colorado River Basin Water" with the BRA, wherein it received reserved water rights for an additional 6,944 acre-feet of water. Two subsequent agreements granted Round Rock rights to 13,984 additional acre-feet of water per year from the Colorado River Basin. For the fiscal year ended September 30, 2023, the City's cost under these contracts was $2,002,604. Future annual charges under the Water Supply Agreements will be based upon the system rate periodically set by the BRA. Regional Wastewater Project In December 2009, the Cities of Round Rock, Austin and Cedar Park purchased the Brushy Creek Regional Wastewater System (BCRWWS) assets from the Lower Colorado River Authority and entered into a Master Contract for the Financing, Construction, Ownership and Operation of the BCRWWS. The Master Contract provided for the terms and conditions by which the cities would jointly own and operate the BCRWWS. In June 2010, the Cities of Round Rock, Austin and Cedar Park sold a share of the BCRWWS assets to the City of Leander, and all parties entered into the Amended and Restated Master Contract for the Financing, Construction, Ownership and Operation of the Brushy Creek Regional Wastewater System. The BCRWWS treatment plant ownership is allocated based on the amount of reserved capacity each city has in the system.The system currently has a total treatment capacity of 24.5 MGD which is sufficient to meet future projected flows through 2023. The City of Round Rock's current reserved capacity in the system is 20.1 MGD, or 81.96%, of total treatment capacity. The BCRWWS East Plant is currently undergoing a 10 MGD expansion project of which 1.2 MGD will be allocated to the City of Round Rock. Construction is ongoing and 90% complete as of September 30, 2023.The expansion is estimated for completion in spring 2024. The Cities of Round Rock, Austin, Cedar Park and Leander entered into an interlocal agreement in July 2018 for the City of Round Rock to take over operations and maintenance of the BCRWWS effective October 1, 2018. Previously, the BCRWWS was operated by the Brazos River Authority on behalf of the cities. The cost of the BCRWWS operation and maintenance expenses are allocated based on each city's annual flow percentage into the system. For fiscal year ended September 30, 2023, the City of Round Rock's allocated share of operation and maintenance expenses was 70.16%. Other 87 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 The City is a defendant in a number of lawsuits arising principally from claims against the City for alleged improper actions by City employees. Total damages claimed are substantial; however, it has been the City's experience that such actions are usually dismissed or settled for amounts substantially less than the claimed amounts. The City Attorney estimates that the potential claims against the City not covered by various insurance policies would not materially affect the financial condition of the City. Arbitrage Rebate Due to requirements of the Tax Reform Act of 1986, the City annually contracts for the computations of arbitrage rebate requirements for the City's various bond issues. At September 30,2023,the potential rebate was calculated at $0. Deferred Compensation Plan The City offers its employees a deferred compensation plan that permits them to defer a portion of their current salary until future years. Any contributions made to the deferred compensation plan, in compliance with Section 457 of the Internal Revenue Code (IRC), are not available to employees until termination of employment, retirement, death or an unforeseen emergency. A third-party administrator, Nationwide Retirement Solutions, administers contributions to the plan. Effective January 1997,and in compliance with the provisions of the IRC Section 457(g),the plan assets are in custodial accounts for the exclusive benefit of the plans' participants and beneficiaries. In accordance with GASB Statement No. 32, the City provides neither administrative services nor investment advice to the plans and therefore,no fiduciary relationship exists between the City and the deferred compensation plan. Economic Development The City enters into economic development agreements designed to promote development and redevelopment within the City, create primary jobs, stimulate commercial activity, generate additional sales tax, and enhance the property tax base and economic vitality of Round Rock. The City negotiates property tax, hotel occupancy tax, and sales tax rebates and incentives on an individual basis. Each agreement was negotiated under Chapter 380 of the Texas Local Government Code.Under a 380 economic development agreement,the recipient pays the total taxes due to the City, and the City rebates a portion of the taxes paid based on the terms of the agreement. The City has a recapture clause in each agreement. Amounts paid for the rebate and incentive programs for the year ended September 30, 2023, are summarized below. No tax abatements were made under Chapter 312, Property Redevelopment and Tax Abatement Act,of the Texas Local Government Code. Rebate&Incentive Programs Amount Hotel Occupancy Tax $ 796,543 Property Tax 1,164,858 Sales Tax 10,889,851 The City is not subject to any tax abatement agreements entered into by other governmental entities. However, the City may also act as a conduit for the refunding of state sales and hotel occupancy taxes generated by a qualifying project under Sections 151.429(h), 351.102(b), and 351.1022 of the Texas Tax Code, Section 2303.5055 of the Texas Government Code,and other applicable laws. B. RISK MANAGEMENT The City is a member of the Texas Municipal League's Intergovernmental Risk Pool (Pool). The Pool was created for the purpose of providing coverage against risks,which are inherent in operating a political subdivision. The City pays annual premiums to the Pool for liability, property and workers' compensation and numerous other coverages. All billed premiums upon the coverage have been paid.The City's agreement with the Pool provides that the Pool will be 88 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 self-sustaining through member premiums and will provide reinsurance contracts through commercial companies. The Pool agrees to handle all liability, property and workers' compensation and other claims, including the costs of defense, as is necessary. The Pool makes available to the City loss control services to assist the City in following a plan of loss control that may result in reduced losses. The City agrees that it will cooperate in instituting any and all reasonable loss control recommendations made by the Pool. The City has experienced no significant reductions in coverage through the Pool over the past year. There have been no insurance settlements exceeding Pool coverage for any of the past three years. Self-Funded Health Insurance Fund The City is self-insured for medical and dental claims. The self-insurance program is maintained in the Self-Funded Health Insurance Internal Service Fund. This program provides health benefit coverage in accordance with a pre-approved plan that establishes coverage limits per employee per year with unlimited health coverage benefits. The City purchases commercial insurance for claims in excess of a contractual City liability limit. Additionally,commercial insurance covers claims in excess of an aggregate amount for the City up to $1,000,000 per plan year.Settled claims have not exceeded the commercial coverage in any of the past three fiscal years.The liability is estimated based upon claims settled within the next month. 89 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 An analysis of claims activities is presented below: Claims and Beginning Changes in Actual Claim Ending Fiscal Year Liability Estimates Payments Liability 2021 $ 188,593 $ 11,652,169 $ 10,987,608 $ 856,154 2022 853,154 12,960,388 10,987,608 514,699 2023 514,699 13,468,525 13,956,833 1,003,007 C. EMPLOYEE RETIREMENT PLAN Plan Description The City participates as one of 919 plans in the defined benefit cash-balance plan administered by TMRS. TMRS is a statewide public retirement plan created by the State of Texas and administered in accordance with the Texas Government Code,Title 8, Subtitle G (TMRS Act) as an agent multiple-employer retirement system for employees of Texas participating cities. The TMRS Act places the general administration and management of TMRS with a six-member, Governor-appointed Board of Trustees; however, TMRS does is not fiscally dependent on the State of Texas. TMRS issues a publicly available annual comprehensive financial report (ACFR) that can be obtained at www.tmrs.com. All eligible employees of the City are required to participate in TMRS. Benefits Provided TMRS provides retirement, disability, and death benefits. Benefit provisions are adopted by the governing body of the City,within the options available in the state statutes governing TMRS. At retirement,the member's benefit is calculated based on the sum of the member's contributions with interest and the city-financed monetary credits with interest. The retiring member may select one of seven monthly benefit payment options. Members may also choose to receive a portion of their benefit as a lump sum distribution in an amount equal to 12, 24, or 36 monthly payments, which cannot exceed 75%of the total member contributions and interest. A summary of plan provisions for the City is as follows: Employee deposit rate 7% Matching ratio(City to employee) 2 to 1 Years required for vesting 5 Service retirement eligibility 20 years and any age,vested and age 60 Updated Service Credit 100%Repeating,Transfers Annuity increase(to retirees) 70%of CPI Repeating Supplemental death benefits for employees and retirees Yes 90 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Employees Covered by Benefit Terms At the December 31, 2022, valuation and measurement date, the following employees were covered by the benefit terms: Inactive employees or beneficiaries currently receiving benefits 464 Inactive employees entitled to but not yet receiving benefits 541 Active employees 1,008 Total 2,013 Contributions Member contribution rates in TMRS are either 5%, 6%, or 7% of the member's total compensation, and the city matching percentages are either 100%, 150%, or 200%, both as adopted by the governing body of the city. Under the state law governing TMRS, the contribution rate for each city is determined annually by the actuary, using the entry age normal actuarial cost method. The City's contribution rate is based on the liabilities created from the benefit plan options selected by the City and any changes in benefits or actual experience over time. Employees for the City were required to contribute 7% of their total compensation during the fiscal year. The City elected to contribute for calendar years 2022 and 2023 as follows: 2022 2023 Total Retirement Rate 15.94% 16.20% Supplemental Death Benefit 0.14 0.24 Total Combined Contribution 16.08% 16.44% The City's contributions to TMRS for the year ended September 30, 2023, were $13,927,764 and were equal to the required contributions. Net Pension Liability The City's net pension liability(NPL) was measured as of December 31, 2022, and the total pension liability(TPL) used to calculate the NPL was determined by an actuarial valuation as of that date. Actuarial Assumptions The TPL in the December 31,2021,actuarial valuation was determined using the following actuarial assumptions: Inflation 2.50%per year Overall payroll growth 2.75%per year, adjusted down for population declines, if any Investment rate of return 6.75%, net of pension plan investment expense, including inflation Salary increases are based on a service-related table. Mortality rates for active members are based on the PUB (10) mortality tables with the Public Safety table used for males and the General Employee table used for females. Mortality rates for healthy retirees and beneficiaries are based on the Gender-distinct 2019 Municipal Retirees of Texas mortality tables. The rates for actives, healthy retirees and beneficiaries are projected on a fully generational basis by Scale UMP to account for future mortality improvements. For disabled annuitants, the same mortality tables for healthy retirees are used with a 4-year set-forward for males and a 3-year set-forward for females. In addition, a 3.5% and 3.0% minimum mortality rate is applied, for males and females respectively, to reflect the impairment for younger members who become disabled. The rates are projected on a fully generational basis by Scale UMP to account for future mortality improvements subject to the floor. 91 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the four-year period from December 31, 2014, to December 31, 2018. They were adopted in 2019 and first used in the December 31, 2019, actuarial valuation. The post-retirement mortality assumption for annuity purchase rates is based on the Mortality Experience Investigation Study covering 2009 through 2011 and dated December 31, 2013. Plan assets are managed on a total return basis with an emphasis on both capital appreciation as well as the production of income,in order to satisfy the short-term and long-term funding needs of TMRS. The long-term expected rate of return on pension plan investments was determined using a building-block method 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. In determining their allocation portfolios, GRS focused on the area between (1) arithmetic mean (aggressive) without an adjustment for time (conservative) and (2) the geometric mean (conservative) with an adjustment for time (aggressive).The target allocation and best estimates of real rates of return for each major asset class in fiscal year 2023 are summarized in the table that follows: Long-Term Expected Target Real Rate of Return Asset Class Allocation (Arithmetic) Global Equity 35.0% 7.7% Core Fixed Income 6.0% 4.9% Non-Core Fixed Income 20.0% 8.7% Other Public and Private Markets 12.0% 8.1% Real Estate 12.0% 5.8% Hedge Funds 5.0% 6.9% Private Equity 10.0% 11.8% Total 100.0% Discount Rate The discount rate used to measure the TPL was 6.75%. The projection of cash flows used to determine the discount rate assumed that member and employer contributions will be made at the rates specified in statute. Based on that assumption, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive 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 TPL. 92 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Changes in the Net Pension Liability Increase(Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) -(b) Balance at December 31,2021 $ 369,161,571 $ 343,206,213 $ 25,955,358 Changes for the year: Service cost 14,680,601 - 14,680,601 Interest 24,990,566 - 24,990,566 Difference between expected and actual experience 8,160,742 - 8,160,742 Contributions-employer - 13,046,505 (13,046,505) Contributions-employee - 5,728,802 (5,728,802) Net investment income - (25,094,034) 25,094,034 Benefit payments,including refunds of employee contributions (12,542,538) (12,542,538) - Administrative expense - (216,792) 216,792 Other - 258,697 (258,697) Net changes 35,289,371 (18,819,360) 54,108,731 Balance at December 31,2022 $ 404,450,942 $ 324,386,853 $ 80,064,089 Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the NPL of the City, calculated using the discount rate of 6.75%, as well as what the City's NPL would be if it were calculated using a discount rate that is 1-percentage-point lower(5.75%) or 1-percentage-point higher(7.75%)than the current rate: Current 1%Decrease Discount Rate 1%Increase 5.75% 6.75% 7.75% City's Net Pension Liability $ 143,809,587 $ 80,064,089 $ 28,259,738 Pension Plan Fiduciary Net Position Detailed information about the pension plan's fiduciary net position is available in the Schedule of Changes in Fiduciary Net Position by participating City.That report may be obtained at www.tmrs.com. 93 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources For the year ended September 30, 2023, the City recognized a decrease to pension expense of $5,932,298. At September 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual economic experience $ 12,606,769 $ - Difference between projected and actual investment earnings 22,398,157 - Changes in actuarial assumptions used to determine pension liability 182,128 - Pension contributions after measurement date 10,776,840 - Total $ 45,963,894 $ - Deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date of$10,776,840 will be recognized as a reduction of the NPL for the measurement year ending December 31, 2023, (i.e.,recognized in the City's financial statements September 30,2024). Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: Measurement Net Deferred Year Ending Outflows(Inflows) December 31, of Resources 2023 $ 5,332,777 2024 8,958,940 2025 8,721,018 2026 11,800,547 2027 373,772 Thereafter - Total $ 35,187,054 D. OTHER POST-EMPLOYMENT BENEFITS The City participates in funding two OPEB plans. One plan is the Supplemental Death Benefits Fund (SDBF) administered by TMRS. The other is medical and prescription drug coverage offered to retirees and their dependents and is a self-funded health insurance plan. SDBF: TMRS administers a defined benefit group-term life insurance plan known as the Supplemental Death Benefits Fund (SDBF). This is a voluntary program in which the City has elected, by ordinance, to provide group-term life insurance coverage (supplemental death benefits) to both current and retired employees. The City may terminate coverage under and discontinue participation in the SDBF by adopting an ordinance before November 1 of any year, to be effective the following January 1. The retiree portion of the SDBF is considered a single-employer plan. Self-Funded Health Insurance: The City offers its retirees and their dependents medical, dental and vision insurance until age 65. Medical insurance includes prescription drug coverage. The plans are the same as the active plans. The retirees are required to make significantly higher contributions than the actives. However,these higher contributions still do not fully cover the cost of the retirees on a stand-alone basis,thus generating a retiree medical liability.Once a retiree or dependent becomes eligible for Medicare at age 65, he/she is no longer eligible for benefits. Also, retirees are no longer eligible if they have insurance or are eligible for insurance through another employer. This significantly limits the number of retirees on the plan,the benefits paid during the life of a retiree and consequently, the liability.This plan is considered a single-employer defined benefit OPEB plan. 94 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30,2023 Benefits Provided SDBF: Payments from this fund are similar to group-term life insurance benefits and are paid to the designated beneficiaries upon the receipt of an approved application for payment. The death benefit for active employees provides a lump-sum payment approximately equal to the employee's annual salary (calculated based on the employee's actual earnings for the 12-month period preceding the month of death). Retired employees are insured for $7,500; this coverage is an "other post-employment benefit," or OPEB. The City offers supplemental death benefits to both active employees and retirees. As the SDBF covers both active and retiree participants,with no segregation of assets, the SDBF is considered to be an unfunded OPEB plan(i.e.,no assets are accumulated). Self-Funded Health Insurance: All retirees who are eligible to receive pension benefits under the City's pension system are eligible for OPEB. Retirees may also enroll eligible dependents under the medical, dental, and vision plan(s) in which they participate. Eligible dependents of the retiree include a legally married spouse, children under age 26, and eligible disabled children beyond 26 years of age, if covered prior to age 26. A surviving spouse of a deceased retiree is ineligible to continue retiree medical,dental,and/or vision coverage. However,a surviving spouse may elect COBRA coverage for no more than 36 months and are required to pay the entire COBRA premium plus a 2 percent administrative fee. Employees Covered by Benefit Terms At the December 31, 2022, valuation and measurement date, the following employees were covered by the benefit terms: SDBF: Inactive employees currently receiving benefits 378 Inactive employees entitled to but not yet receiving benefits 158 Active employees 1,008 Total 1,544 Self-Funded Health Insurance: Inactive employees(retirees) 43 Active employees 950 Total 993 Contributions SDBF: The City contributes to SDBF at a contractually required rate as determined by an annual actuarial valuation. The rate is equal to the cost of providing one-year term life insurance and represents 0.24%of required contributions. The City's contributions to SDBF for the years ended 2023, 2022, and 2021 were $24,027, $17,967 and $16,388, respectively, which equaled the required contributions each year. The funding policy for the SDBF program is to assure that adequate resources are available to meet all death benefit payments for the upcoming year;the intent is not to pre-fund retiree term life insurance during employees'entire careers. The retiree-only portion of the SDBF rate was 0.06%for the year ended 2023,and 0.05%for the years ended 2022 and 2021. Self-Funded Health Insurance: OPEB are funded on a pay-as-you-go basis. The City recognizes the cost of providing these benefits as an expense and corresponding revenue in the Internal Service Fund (self-funded health insurance). Medical,dental,vision,and life insurance premiums are reported in this fund. 95 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 The City is under no obligation,statutory or otherwise,to offer OPEB or to pay any portion of the cost of OPEB to any retirees or their dependents. Allocation of City funds to pay OPEB or to make OPEB available is determined on an annual basis by the City Council as part of the budget approval process. Total OPEB Liability For the fiscal year ended September 30, 2023,the City recognized a total OPEB liability of$20,495,217, $2,285,345 of which was for the SDBF, and $18,209,872 for the Self-Funded Health Insurance plan. Both were measured as of December 31,2022,and were determined by an actuarial valuation as of that date. Actuarial Assumptions The total OPEB liability in the December 31, 2022, actuarial valuation was determined using the following actuarial assumptions: SDBF Self-Funded Health Insurance Inflation 2.5% 2.5% Salary increases 3.5%to 11.5%including inflation 3.0% Discount rate" 4.05% 4.05% Healthcare cost trend rate None Getzen model(6.86%to 4.29%) Retirees'share of benefit- Varies based on plan elected and related costs $0 years of service Actuarial cost method' Entry Age Normal Actuarial Cost Method Entry Age Normal Cost Method Mortality For service retirees:2019 Municipal Retirees Mortality rates were based on the of Texas Mortality Tables. The rates are PUB-2010 General Table projected using projected on a fully generational basis with MP-2021. The mortality table was scale UMP. switched to the PUB-2010 as this is more tailored to public entities. For disabled retirees: 2019 Municipal Retirees of Texas Mortality Tables with a 4 year set-forward for males and 3 year set-forward for females. In addition,a 3.5% and 3% minimum mortality rate will be applied to reflect the impairment for younger members who become disabled for males and females, respectively. The rates are projected on a fully generational basis by Scale UMP to account for future mortality improvements subject to the floor. Development of claims None Retiree medical and pharmacy claims were projected to the following fiscal year and age-adjusted to age 65. A composite retiree contribution was netted out. That net age-65 cost was then average with the trended, age-65 cost from the prior valuation to smooth out any fluctuations. That average then was allocated to all pre-65 ages using the same age factors. ** Because this plan is considered an unfunded trust under GASB Statement No. 75, the relevant discount rate for calculating the total OPEB liability is based on the Fidelity Index's "20-Year Municipal GO AA Index" rate as of December 31,2022. 96 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 ***This method develops the annual cost of the plan in two parts: that attributable to benefits accruing in the current year, known as the normal cost,and that due to service earned prior to the current year,known as the amortization of the unfunded actuarial accrued liability. The normal cost and the actuarial accrued liability is calculated individually for each member. The normal cost rate for an employee is the contribution rate which, if applied to a member's compensation throughout their period of anticipated covered service with the municipality, would be sufficient to meet all benefits payable on their behalf. The normal cost is calculated using an entry age based on benefit service with the current city. If a member has additional time-only vesting service through service with other TMRS cities or other public agencies, they retain this for determination of benefit eligibility and decrement rates. The salary-weighted average of these rates is the total normal cost rate. The unfunded actuarial accrued liability reflects the difference between the portion of projected benefits attributable to service credited prior to the valuation date and assets already accumulated. Specific to the self-funded health insurance plan, at the time the employee enters the plan (usually at date of hire), the present value of future benefits is set equal to the present value of future normal costs. Instead of the normal costs being a level dollar amount,they are set as a level percent of salary. The accrued liability then is just the present value of past normal costs brought forward from the entry date to the measurement date. SDBF:The actuarial assumptions were developed primarily from the actuarial investigation of the experience of TMRS over the period December 31, 2014, to December 31, 2018. They were adopted in 2019 and first used in the December 31,2019,actuarial valuation. Changes in the Total OPEB Liability Self-Funded Health SDBF Insurance Total Balance at December 31,2021 $ 3,360,455 $ 19,186,660 $ 22,547,115 Changes for the year: Service cost 204,579 1,743,411 1,947,990 Interest 63,338 377,547 440,885 Differences between expected and actual experience 20,053 (113,031) (92,978) Changes in assumptions or other inputs (1,322,164) (2,275,360) (3,597,524) Benefit payments (40,916) (709,355) (750,271) Net changes (1,075,110) (976,788) (2,051,898) Balance at December 31,2022 $ 2,285,345 $ 18,209,872 $ 20,495,217 Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following tables present the total OPEB liability of the City, calculated using the discount rate (4.05% both for SDBF and the Self-Funded Health Insurance plan), as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current discount rate: Current 1%Decrease Discount Rate 1%Increase 3.05% 4.05% 5.05% SDBF $ 2,784,283 $ 2,285,345 $ 1,902,197 Self-Funded Health Insurance 19,433,638 18,209,873 17,020,876 The following table presents the total OPEB liability of the City,calculated using the healthcare trend rate of 6.86%to 4.29%,as well as what the City's total OPEB liability would be if it were calculated using a healthcare trend rate that is 97 CITY OF ROUND ROCK,TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 1-percentage-point lower (5.86% to 3.29%) or 1-percentage-point higher (7.86% to 5.29%) than the current healthcare trend rate: Healthcare 1%Decrease Trend Rate 1%Increase Self-Funded Health Insurance $ 16,367,766 $ 18,209,873 $ 20,329,535 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources For the fiscal year ended September 30, 2023, the City recognized total OPEB expense of $1,475,214, $144,360 of which was for the SDBF, and $1,330,854 for the Self-Funded Health Insurance plan. At September 30, 2023,the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Self- Self- Funded Funded Health Health SDBF Insurance Total SDBF Insurance Total Difference between expected and actual economic experience S 17,077 $ $ 17,077 $ 89,755 $ 693,875 $ 783,630 Changes in assumptions and other inputs 577,793 1,338,241 1,916,034 1,177,009 2,075,856 3,252,865 OPEB contributions after measurement date 38,877 478,353 517,230 - - - Total $ 633,747 S 1,816,594 S 2,450,341 F1,266,764 S 2,769,731 $ 4,036,495 Deferred outflows of resources related to OPEB resulting from contributions subsequent to the measurement date of $517,230 will be recognized as a reduction of the total OPEB for the measurement year ending December 31, 2023, (i.e., recognized in the City's financial statements September 30,2024). Other amounts reported as deferred outflows and inflows of resources related to OPEB will be recognized in OPEB expense as follows: Net Deferred Outflows(Inflows) of Resources Measurement Self-Funded Year Ending Health December 31, SDBF Insurance 2023 $ 73,099 $ (194,599) 2024 88,930 (205,768) 2025 78,945 (266,949) 2026 114,839 (266,949) 2027 173,871 (319,744) Thereafter 142,210 (177,481) Total $ 671,894 $ (1,431,490) 98 CITY OF ROUND ROCK, TEXAS NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2023 E. MUNICIPAL GOLF COURSE Management Agreement Management of the City's golf course has been performed by a private operator in accordance with the terms of a Management Agreement since 1989.The current Management Agreement had an initial term of three years that shall automatically renew for two additional 1-year terms.The agreement began on January 1, 2017,with the fourth 1-year renewal period beginning on January 1, 2024. The contract will continue automatic 1-year renewal terms unless one of the parties chooses to terminate. Under conditions set forth in the Management Agreement, the operator shall be paid a monthly base management fee. Additionally, the operator may earn an annual incentive management fee based upon gross receipts of the golf course. F. SUBSEQUENT EVENTS Crow Group Series, LLC On July 26, 2018, the City entered into an Economic Development Program Agreement with Crow Group Series, LLC (Crow) to promote economic development. Crow intended to construct, develop and operate three Class A office buildings containing a total of approximately 125,000 square feet of office, parking, and related space(the"project"). Crow is required to invest approximately $24.0 million in improvements to the property and the City provided funding through an economic development loan for$2.2 million to defray a portion of the Project's costs. The loan is secured by a first lien on a portion of the land to be developed. The project consists of three phases. As of December 31, 2020, Crow was in default on the agreement as Phase 2 had not been completed by the agreement date specified. The agreement was cancelled in August 2023, and a transfer of the land to the City was performed in full satisfaction of the note receivable resulting in a gain recognized of$544,007. Sales Tax A significant multi-entity sales taxpayer with an incentive agreement notified the City during FY 2023 that the Comptroller was in the final phase of a 5-year sales tax audit. Preliminary results indicate that sales tax was overreported and overpaid which will result in a one-time sales tax repayment from the City to the Comptroller of approximately $9 million. The City will recover a portion of the assessment through an adjustment to the existing incentive agreement. The City anticipates settlement of the amounts during FY 2024. Wastewater Treatment Plant Ownership In August 2023, a Second Amendment to the Amended and Restated Master Contract for the Financing, Construction, Ownership and Operation of the Brushy Creek Regional Wastewater System was approved by all participating City Councils. The Second Amendment provides for the City of Leander's purchase of an undivided interest in the Administration Building, the East Wastewater Treatment Plant real property, and the West Wastewater Treatment Plant real property. Effective October 1, 2023, the ownership percentages will be realigned, changing the City's capacity from 20.08 MGD of 24.5 MGD capacity to 20.05 MGD of 33.00 MGD capacity, changing the ownership percentage from 81.96%to 60.76%. 99 �rt *'�•• ....... poi 1,0z 100 a� 101 CITY OF ROUND ROCK,TEXAS REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2023 (UNAUDITED) Texas Municipal Retirement System(TMRS) Plan Schedule of Changes in the Net Pension Liability and Related Ratios Measurement period ended December 31, 2014 2015 2016 Total Pension Liability Service cost $ 8,066,254 $ 8,990,916 $ 9,609,823 Interest(on the Total Pension Liability) 13,330,143 14,481,391 15,065,206 Difference between expected and actual experience (50,055) (662,530) 704,655 Change of assumptions - (1,208,085) - Benefit payments,including refunds of employee contributions (5,231,094) (5,493,451) (5,706,408) Net Change in Total Pension Liability 16,115,248 16,108,241 19,673,276 Total Pension Liability- Beginning 189,013,034 205,128,282 221,236,523 Total Pension Liability-Ending(a) $ 205,128,282 $ 221,236,523 $ 240,909,799 Plan Fiduciary Net Position Contributions-Employer $ 7,787,328 $ 8,195,714 $ 8,302,118 Contributions- Employee 3,423,287 3,644,800 3,779,341 Net investment income 8,955,552 252,867 12,021,503 Benefit payments, including refunds of employee contributions (5,231,094) (5,493,451) (5,706,408) Administrative expense (93,479) (154,001) (135,695) Other (7,685) (7,607) (7,311) Net Change in Plan Fiduciary Net Position 14,833,909 6,438,322 18,253,548 Plan Fiduciary Net Position -Beginning 156,512,946 171,346,855 177,785,177 Plan Fiduciary Net Position -Ending(b) 171,346,855 177,785,177 196,038,725 Net Pension Liability-Ending(a) -(b) $ 33,781,427 $ 43,451,346 $ 44,871,074 Plan Fiduciary Net Position as a Percentage of Total Pension Liability 83.53% 80.36% 81.37% Covered Payroll $ 48,839,040 $ 51,731,390 $ 53,776,289 Net Pension Liability as a Percentage of Covered Payroll 69.17% 83.99% 83.44% Notes to Schedule: 1) No significant factors noted to disclose. 2) No significant methods and assumptions to disclose. 3)Schedule will be built out to 10 years. See Independent Auditors'Report. 102 2017 2018 2019 2020 2021 2022 $ 10,430,650 $ 11,165,127 $ 12,125,301 $ 13,315,518 $ 13,320,453 $ 14,680,601 16,360,878 17,747,611 19,262,844 21,130,343 22,912,308 24,990,566 671,908 773,706 4,071,075 2,225,761 5,600,114 8,160,742 - - 608,160 - - - (7,483,495) (7,089,473) (8,347,798) (9,643,873) (10,905,346) (12,542,538) 19,979,941 22,596,971 27,719,582 27,027,749 30,927,529 35,289,371 240,909,799 260,889,740 283,486,711 311,206,293 338,234,042 369,161,571 $ 260,889,740 $ 283,486,711 $ 311,206,293 $ 338,234,042 $ 369,161,571 $ 404,450,942 $ 9,138,705 $ 9,753,253 $ 10,471,204 $ 11,366,407 $ 11,712,945 $ 13,046,505 4,113,985 4,406,956 4,793,245 5,184,834 5,177,300 5,728,802 27,187,574 (6,861,490) 35,438,150 20,602,217 38,962,631 (25,094,034) (7,483,495) (7,089,473) (8,347,798) (9,643,873) (10,905,346) (12,542,538) (140,808) (132,486) (199,970) (133,140) (180,015) (216,792) (7,136) (6,921) (6,007) (5,193) 1,233 258,697 32,808,825 69,839 42,148,824 27,371,252 44,768,748 (18,819,360) 196,038,725 228,847,550 228,917,389 271,066,213 298,437,465 343,206,213 228,847,550 228,917,389 271,066,213 298,437,465 343,206,213 324,386,853 $ 32,042,190 $ 54,569,322 $ 40,140,080 $ 39,796,577 $ 25,955,358 $ 80,064,089 87.72% 80.75% 87.10% 88.23% 92.97% 80.20% $ 58,533,388 $ 62,831,331 $ 68,196,291 $ 74,016,219 $ 73,961,425 $ 81,831,666 54.74% 86.85% 58.86% 53.77% 35.09% 97.84% 103 CITY OF ROUND ROCK,TEXAS REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2023 (UNAUDITED) Texas Municipal Retirement System(TMRS) Plan Schedule of Contributions Fiscal year ended September 30, 2015 2016 2017 Actuarially Determined Contribution $ 8,077,742 $ 8,507,987 $ 8,897,294 Contributions in relation to the actuarially determined contribution 8,193,478 8,739,633 9,059,953 Contribution deficiency(excess) $ (115,736) $ (231,646) $ (162,659) Covered payroll $ 51,159,783 $ 54,924,766 $ 57,346,696 Contributions as a percentage of covered payroll 16.02% 15.91% 15.80% Notes to Schedule of Contributions Valuation Date Actuarially determined contribution rates are calculated as of December 31 and become effective in January, 13 months and a day later. Methods and Assumptions Used to Determine Contribution Rates: Actuarial Cost Method Entry Age Normal Amortization Method Level Percentage of Payroll,Closed Remaining Amortization Period 22 years(longest amortization ladder) Asset Valuation Method 10-year smoothed market; 12%soft corridor Inflation 2.5% Salary Increases 3.5%to 11.5%including inflation Investment Rate of Return 6.75% Retirement Age Experience-based table of rates that are specific to the City's plan of benefits. Last updated for the 2019 valuation pursuant to an experience study of the period 2014-2018. Mortality Post-retirement:2019 Municipal Retirees of Texas Mortality Tables.The rates are projected on a fully generational basis with scale UMP. Pre-retirement:PUB(10) mortality tables,with the Public Safety table used for males and the General Employee table used for females.The rates are projected on a fully generational basis with scale UMP. Other Information There were no benefit changes during the year. Schedule will be built out to ten years. See Independent Auditors'Report. 104 2018 2019 2020 2021 2022 2023 $ 9,582,199 $ 10,313,421 $ 10,806,103 $ 11,542,600 $ 12,658,167 $ 14,190,981 9,618,245 10,377,168 10,635,298 11,865,291 12,729,994 13,927,874 $ (36,046) $ (63,747) $ 170,805 $ (322,691) $ (71,827) $ 263,107 $ 61,743,107 $ 67,091,746 $ 68,196,291 $ 74,016,219 $ 73,961,425 $ 81,831,666 15.57% 15.46% 15.60% 16.03% 17.21% 17.02% 105 CITY OF ROUND ROCK,TEXAS REQUIRED SUPPLEMENTARY INFORMATION SEPTEMBER 30, 2023 (UNAUDITED) Schedule of Changes in the Total OPEB Liability and Related Ratios Supplemental Death Benefit Fund Measurement period ended December 31, 2017 2018 2019 Service Cost $ 87,800 $ 106,813 $ 102,294 Interest 63,146 66,031 72,369 Changes in assumptions or other inputs 176,033 (160,017) 438,301 Differences between expected and actual experience - (41,694) (36,755) Benefit payments (11,707) (12,566) (13,639) Net change in total OPEB liability 315,272 (41,433) 562,570 Total OPEB liability-beginning 1,632,491 1,947,763 1,906,330 Total OPEB liability-ending $ 1,947,763 $ 1,906,330 $ 2,468,900 Covered payroll $ 58,533,338 $ 62,831,331 $ 68,196,291 Total OPEB liability as a percentage of covered payroll 3.33% 3.03% 3.62% Self-Funded Health Insurance Measurement period ended December 31, 2017 2018 2019 Service Cost $ 837,881 $ 886,296 $ 919,177 Interest 477,714 498,983 532,239 Changes in assumptions or other inputs 798,106 (643,572) 882,735 Differences between expected and actual experience (114,595) - (196,828) Benefit payments (431,570) (465,610) (597,720) Net change in total OPEB liability 1,567,536 276,097 1,539,603 Total OPEB liability-beginning 12,758,523 14,326,059 14,602,156 Total OPEB liability-ending $ 14,326,059 $ 14,602,156 $ 16,141,759 Covered payroll $ 58,533,338 $ 62,831,331 $ 68,196,291 Total OPEB liability as a percentage of covered payroll 24.5% 23.2% 23.7% Notes to Schedule: 1) No assets are accumulated in a trust that meets the criteria in paragraph 4 of GASB Statement No.75 to pay related benefits. 2) No significant methods and assumptions to disclose. 3)Schedule will be built out to 10 years. See Independent Auditors' Report. 106 2020 2021 2022 $ 148,032 $ 177,507 $ 204,579 69,727 63,208 63,338 461,065 115,743 (1,322,164) (42,783) (49,160) 20,053 (14,803) (36,981) (40,916) 621,238 270,317 (1,075,110) 2,468,900 3,090,138 3,360,455 $ 3,090,138 $ 3,360,455 $ 2,285,345 $ 74,016,219 $ 73,961,425 $ 81,831,666 4.17% 4.54% 2.79% 2020 2021 2022 $ 1,405,816 $ 1,743,411 $ 1,743,411 472,779 337,146 377,547 - 1,414,747 (2,275,360) (756,790) (113,031) (711,164) (861,044) (709,355) 1,167,431 1,877,470 (976,788) 16,141,759 17,309,190 19,186,660 $ 17,309,190 $ 19,186,660 $ 18,209,872 $ 74,016,219 $ 73,171,576 $ 81,845,996 23.4% 26.2°x6 22.2% 107 108 NONMAJOR GOVERNMENTAL FUNDS Nonmajor Governmental Funds account for specific resources, other than major capital projects that are restricted to expenditures for specified purposes. Community Development Block Grant Fund — To account for grant monies received for programs benefiting persons of low to moderate income. Hotel - Motel Occupancy Tax Fund —To account for the levy and use of the 7% hotel — motel bed tax received. Proceeds from this tax are to be used toward tourism, community events, cultural enhancements, ongoing repairs, maintenance and capital improvements to the City-owned Dell Diamond, a minor league baseball stadium and conference center,and for promotion of the City. Hotel - Motel Occupancy Venue Tax Fund—To account for the levy and use of the 2%hotel—motel bed venue tax received. Proceeds from this tax are to be used toward the construction and maintenance of the sports center that prompts tourism and promotion of the City. Innovation and Development Fund—To account for the activities of select economic development and Chapter 380 agreements. Library and Recreational Fund — To account for amounts received through the City's landscape ordinance, contributions and general government resources designated for library and recreational programs of the City. Public Safety Fund — To account for amounts received through child safety fines, court security, court technology fees,and drug enforcement actions,some of which promote traffic safety programs. Public Education&Government Fund—To account for amounts received for programs to provide public education in government. Roadway Impact Fees Fund—To account for amounts received from developers to recover the incremental cost of each new unit of development on the arterial and collector roadway infrastructure and identify them by designated service area. 109 CITY OF ROUND ROCK,TEXAS NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET SEPTEMBER 30, 2023 Community Hotel-Motel Development Hotel-Motel Occupancy Innovation and Block Grant Occupancy Tax Venue Tax Development ASSETS Cash and cash equivalents $ - $ 756,630 $ 1,051,755 $ 148,126 Investments - 6,693,074 9,275,846 1,310,303 Receivables- Accounts and other - 1,078,083 303,875 - Accrued interest - 53,997 51,873 26,614 Grants 33,071 - - - Restricted assets- Cash and cash equivalents - 279,990 - 150,627 Investments - 2,476,770 - 1,332,428 Accrued interest receivable - - - - Total assets $ 33,071 $ 11,338,544 $ 10,683,349 $ 2,968,098 LIABILITIES AND FUND BALANCES Liabilities - Accounts payable $ 33,071 $ 116,428 $ 31,059 $ Accrued payroll - 36,282 83,586 - Unearned revenue - - - - Total liabilities 33,071 152,710 114,645 - Fund balances- Restricted -authorized construction - 2,692,606 - - Restricted -hotel-motel tax - 81493,228 10,568,704 - Restricted -public safety - - - - Restricted -general government - - - - Committed -general government - - - - Committed -capital projects funds - - - - Committed -culture and recreation - - - 1,483,055 Assigned -culture and recreation - - - 1,485,043 Total fund balances - 11,185,834 10,568,704 2,968,098 Total liabilities and fund balances $ 33,071 $ 11,338,544 $ 10,683,349 $ 2,968,098 110 Public Total Nonmajor Library and Education& Roadway Governmental Recreational Public Safety Government Impact Fees Funds $ 811,569 $ 92,779 $ 165,470 $ - $ 3,026,329 7,165,792 820,716 1,463,735 - 26,729,466 - - - - 1,381,958 41,370 4,605 8,350 - 186,809 - - - - 33,071 - - - 644,776 1,075,393 - - 5,703,623 9,512,821 - - - 31,348 31,348 $ 8,018,731 $ 918,100 $ 1,637,555 $ 6,379,747 $ 41,977,195 $ 64,379 $ - $ - $ - $ 244,937 28,905 - - - 148,773 2,119,086 - - 6,132,286 8,251,372 2,212,370 - - 6,132,286 8,645,082 - - - 247,461 2,940,067 - - - - 19,061,932 918,100 - - 918,100 - - 1,637,555 - 1,637,555 1,198,346 - - - 1,198,346 2,070,978 - - - 2,070,978 - - - - 1,483,055 2,537,037 - - - 4,022,080 5,806,361 918,100 1,637,555 247,461 33,332,113 $ 8,018,731 $ 918,100 $ 1,637,555 $ 6,379,747 $ 41,977,195 111 CITY OF ROUND ROCK, TEXAS NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES YEAR ENDED SEPTEMBER 30, 2023 Community Hotel-Motel Development Hotel-Motel Occupancy Innovation and Block Grant Occupancy Tax Venue Tax Development Revenues- Taxes and franchise $ $ - $ - $ 108,855 Licenses, permits and fees - - - - Charges for services - 2,057,515 - Fines and forfeitures - - - Intergovernmental 730,053 - - 8,977,846 Hotel occupancy tax - 7,644,857 3,796,262 5,607,063 Contributions - - - - Investment and other - 504,469 346,014 172,188 Total revenues 730,053 8,149,326 6,199,791 14,865,952 Expenditures- Current- General government 369,958 - - 9,948,042 Public safety - - - - Culture and recreation - 2,578,413 2,593,485 - Capital projects 360,095 755,966 - - Total expenditures 730,053 3,334,379 2,593,485 9,948,042 Excess(deficiency)of revenues over expenditures - 4,814,947 3,606,306 4,917,910 Other financing sources(uses)- Transfers in - - - - Transfers out - (1,654,267) (1,869,680) (4,933,633) Total other financing sources(uses) - (1,654,267) (1,869,680) (4,933,633) Net change in fund balances - 3,160,680 1,736,626 (15,723) Fund balances,October 1,2022 - 8,025,154 8,832,078 2,983,821 Fund balances, September 30, 2023 $ - $ 11,185,834 $ 10,568,704 $ 2,968,098 112 Total Public Nonmajor Library and Education& Roadway Governmental Recreational Public Safety Government Impact Fees Funds $ - $ $ 166,084 $ - $ 274,939 82,575 - - - 82,575 755,301 - - - 2,812,816 - 197,977 - 197,977 - - - 9,707,899 - - - - 17,048,182 195,989 - - 2,500,000 2,695,989 286,379 67,341 57,762 241,544 1,675,697 1,320,244 265,318 223,846 2,741,544 34,496,074 1,695 59,256 58,435 - 10,437,386 - 175,008 - - 175,008 1,336,147 - - - 6,508,045 203,881 - - - 1,319,942 1,541,723 234,264 58,435 - 18,440,381 (221,479) 31,054 165,411 2,741,544 16,055,693 675,000 - - - 675,000 - - - (2,500,000) (10,957,580) 675,000 - - (2,500,000) (10,282,580) 453,521 31,054 165,411 241,544 5,773,113 5,352,840 887,046 1,472,144 5,917 27,559,000 $ 5,806,361 $ 918,100 $ 1,637,555 $ 247,461 $ 33,332,113 113 OWN.....RO O x 114 SCHEDULES OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL, DEBT SERVICE, AND NONMAJOR SPECIAL REVENUE FUNDS 115 CITY OF ROUND ROCK,TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30,2023 WITH COMPARATIVE TOTALS FOR YEAR ENDED SEPTEMBER 30, 2022 Budgeted Amounts 2022 Original Final Actual Variance Actual Revenues- Taxes and franchise- Property tax $ 48,937,000 $ 48,937,000 $ 48,675,329 $ (261,671) $ 46,826,726 Penalty and interest 89,000 89,000 108,241 19,241 93,749 Sales tax 64,529,000 65,321,000 65,321,000 - 57,602,102 Franchise 7,125,000 7,125,000 7,851,750 726,750 7,246,074 Bingo tax 50,000 50,000 51,299 1,299 52,897 Mixed drink tax 850,000 850,000 997,711 147,711 967,945 Total taxes and franchise 121,580,000 122,372,000 123,005,330 633,330 112,789,493 Licenses,permits and fees- Building permits 950,000 950,000 1,851,207 901,207 1,460,043 Other permits 42,400 42,400 98,435 56,035 29,297 Fees 1,080,675 1,255,675 2,411,014 1,155,339 1,130,500 Total licenses,permits,and fees 2,073,075 2,248,075 4,360,656 2,112,581 2,619,840 Charges for services- Trash collection fees 1,286,900 1,286,900 1,308,868 21,968 1,292,162 Swimming pool fees 1,222,000 1,222,000 1,812,496 590,496 1,462,896 Recreation program fees 1,918,000 2,183,000 2,654,955 471,955 2,389,551 Filing and reproduction fees 11,000 11,000 9,504 (1,496) 21,140 Other 77,300 77,300 150,483 73,183 143,046 Total charges for services 4,515,200 4,780,200 5,936,306 1,156,106 5,308,795 Fines and forfeitures 1,125,000 1,125,000 1,048,377 (76,623) 1,143,039 Grants 3,535,198 3,535,198 4,212,345 677,147 4,177,384 Investment and other- Investment income 250,000 250,000 2,294,840 2,044,840 674,279 Other 3,873,527 4,073,527 5,343,221 1,269,694 2,445,733 Total investment and other 4,123,527 4,323,527 7,638,061 3,314,534 3,120,012 Total revenues 136,952,000 138,384,000 146,201,075 7,817,075 129,158,653 116 CITY OF ROUND ROCK,TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL(CONTINUED) YEAR ENDED SEPTEMBER 30,2023 WITH COMPARATIVE TOTALS FOR YEAR ENDED SEPTEMBER 30,2022 Budgeted Amounts 2022 Original Final Actual Variance Actual Expenditures- Current- General government Executive- Personnel services $ 19,235,120 $ 17,523,927 $ 16,466,009 $ 1,057,918 $ 15,136,168 Operations 12,570,750 11,954,650 9,945,863 2,008,787 9,727,878 Capital projects 75,000 120,000 10,394 109,606 49,671 Total executive 31,880,870 29,598,577 26,422,266 3,176,311 24,913,717 Judicial- Personnel services 1,234,019 1,270,995 1,155,658 115,337 1,073,984 Operations 71,950 71,950 64,559 7,391 68,168 Total judicial 1,305,969 1,342,945 1,220,217 122,728 1,142,152 Total general government 33,186,839 30,941,522 27,642,483 3,299,039 26,055,869 Public safety Police- Personnel services 34,795,905 35,097,280 34,896,719 200,561 32,220,833 Operations 5,125,672 5,114,673 4,682,830 431,843 4,157,072 Police-capital projects 186,995 197,994 8,899 189,095 47,985 Total police 40,108,572 40,409,947 39,588,448 821,499 36,425,890 Fire- Personnel services 27,092,897 29,427,180 29,426,458 722 25,339,589 Operations 3,189,843 2,535,243 2,400,040 135,203 2,454,961 Capital outlay 223,602 223,602 68,783 154,819 132,878 Total fire 30,506,342 32,186,025 31,895,281 290,744 27,927,428 Total public safety 70,614,914 72,595,972 71,483,729 1,112,243 64,353,318 117 CITY OF ROUND ROCK, TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL(CONTINUED) YEAR ENDED SEPTEMBER 30, 2023 WITH COMPARATIVE TOTALS FOR YEAR ENDED SEPTEMBER 30, 2022 Budgeted Amounts 2022 Original Final Actual Variance Actual Expenditures- Current- Public works Administration- Personnel services $ 5,822,175 $ 6,161,938 $ 5,980,667 $ 181,271 $ 5,211,576 Operations 4,288,547 4,243,447 4,158,974 84,473 3,571,520 Capital outlay - - - - 224,388 Total administration 10,110,722 10,405,385 10,139,641 265,744 9,007,484 Streets- Personnel services 3,819,871 3,893,027 3,287,149 605,878 2,674,078 Operations 4,196,342 4,196,342 3,345,302 851,040 3,180,676 Capital outlay - 63,400 63,350 50 177,721 Total streets 8,016,213 8,152,769 6,695,801 1,456,968 6,032,475 Maintenance shop- Personnel services 1,791,053 1,861,854 1,780,999 80,855 1,509,554 Operations 593,163 593,163 343,892 249,271 274,015 Capital outlay 20,000 20,000 17,603 2,397 55,007 Total maintenance shop 2,404,216 2,475,017 2,142,494 332,523 1,838,576 Total public works 20,531,151 21,033,171 18,977,936 2,055,235 16,878,535 118 CITY OF ROUND ROCK,TEXAS GENERAL FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL(CONTINUED) YEAR ENDED SEPTEMBER 30, 2023 WITH COMPARATIVE TOTALS FOR YEAR ENDED SEPTEMBER 30, 2022 Budgeted Amounts 2022 Original Final Actual Variance Actual Expenditures- Current- Culture and recreation Library- Personnel services $ 3,295,287 $ 3,478,301 $ 3,478,263 $ 38 $ 2,878,137 Operations 753,896 734,796 724,753 10,043 754,623 Total library 4,049,183 4,213,097 4,203,016 10,081 3,632,760 Parks and recreation- Personnel services 10,867,518 11,643,643 11,515,503 128,140 10,336,413 Operations 4,110,495 4,459,695 4,280,614 179,081 4,420,858 Culture-Parks-capital projects 101,900 134,400 113,315 21,085 185,765 Total parks and recreation 15,079,913 16,237,738 15,909,432 328,306 14,943,036 Total culture and recreation 19,129,096 20,450,835 20,112,448 338,387 18,575,796 Total expenditures 143,462,000 145,021,500 138,216,596 6,804,904 125,863,518 Excess(deficiency)of revenues over expenditures (6,510,000) (6,637,500) 7,984,479 14,621,979 3,295,045 Other financing sources(uses) - Transfers in 6,905,000 6,905,000 6,905,000 - 6,455,000 Transfers out (200,000) (502,741) (502,741) - (18,961,811) Total other financing sources(uses) 6,705,000 6,402,259 6,402,259 - (12,506,811) Net change in fund balances $ 195,000 $ (235,241) 14,386,738 $ 14,621,979 (9,211,766) Reconciliation between budgetary basis actual and GAAP Increase(decrease)in fair value of investments 659,773 (1,425,831) Fund balance,October 1,2022 48,652,842 59,290,439 Fund balance,September 30,2023 $ 63,699,353 $ 48,652,842 119 CITY OF ROUND ROCK, TEXAS DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL YEAR ENDED SEPTEMBER 30, 2023 Budgeted Amounts Original Final Actual Variance Revenues- Taxes and franchise $ 25,996,210 $ 25,996,210 $ 25,546,523 $ (449,687) Investment and other 15,000 15,000 858,737 843,737 Total revenues 26,011,210 26,011,210 26,405,260 394,050 Expenditures- Debt service- Principal retirement 24,176,203 24,867,905 24,867,905 - Interest and fiscal charges 11,984,848 12,237,746 12,237,746 - Total expenditures 36,161,051 37,105,651 37,105,651 - Excess(deficiency)of revenues over expenditures (10,149,841) (11,094,441) (10,700,391) 394,050 Other financing sources (uses) - Transfers in 7,771,900 7,771,900 10,151,521 2,379,621 Total other financing sources(uses) 7,771,900 7,771,900 10,151,521 2,379,621 Net change in fund balances $ (2,377,941) $ (3,322,541) (548,870) $ 2,773,671 Fund balance, October 1,2022 4,658,982 Fund balance, September 30,2023 $ 4,110,112 120 CITY OF ROUND ROCK,TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT FUND YEAR ENDED SEPTEMBER 30,2023 Budgeted Amounts Original Final Actual Variance Revenues- Intergovernmental $ 1,631,951 $ 1,631,951 $ 730,053 $ (901,898) Total revenues 1,631,951 1,631,951 730,053 (901,898) Expenditures- Current- General government- Operations 542,107 542,107 369,958 172,149 Capital projects 1,089,844 1,089,844 360,095 729,749 Total expenditures 1,631,951 1,631,951 730,053 901,898 Net change in fund balances $ - $ - - $ - Fund balance,October 1,2022 Fund balance,September 30,2023 $ - 121 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL HOTEL-MOTEL OCCUPANCY TAX FUND YEAR ENDED SEPTEMBER 30, 2023 Budgeted Amounts Original Final Actual Variance Revenues- Hotel occupancy tax $ 5,396,648 $ 5,396,648 $ 7,644,857 $ 2,248,209 Investment and other 30,500 30,500 418,071 387,571 Total revenues 5,427,148 5,427,148 8,062,928 2,635,780 Expenditures- Current- Culture and recreation- Personnel services 642,291 671,391 671,375 16 Operations 1,799,776 1,913,721 1,907,038 6,683 Capital projects 25,000 755,966 755,966 - Total expenditures 2,467,067 3,341,078 3,334,379 6,699 Excess(deficiency)of revenues over expenditures 2,960,081 2,086,070 4,728,549 2,642,479 Other financing sources (uses) - Transfers out (1,284,587) (1,654,267) (1,654,267) - Total other financing sources(uses) (1,284,587) (1,654,267) (1,654,267) - Net change in fund balances $ 1,675,494 $ 431,803 3,074,282 $ 2,642,479 Reconciliation between budgetary basis actual and GAAP Increase(decrease) in fair value of investments 86,398 Fund balance, October 1,2022 8,025,154 Fund balance, September 30,2023 $ 11,185,834 122 CITY OF ROUND ROCK,TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL HOTEL-MOTEL OCCUPANCY VENUE TAX FUND YEAR ENDED SEPTEMBER 30,2023 Budgeted Amounts Original Final Actual Variance Revenues- Charges for services $ 1,450,000 $ 1,450,000 $ 2,057,515 $ 607,515 Hotel occupancy tax 3,234,245 3,234,245 3,796,262 562,017 Investment and other 47,500 47,500 263,014 215,514 Total revenues 4,731,745 4,731,745 6,116,791 1,385,046 Expenditures- Current- Culture and recreation- Personnel services 1,603,052 1,574,952 1,555,627 19,325 Operations 1,010,036 1,038,136 1,037,858 278 Total expenditures 2,613,088 2,613,088 2,593,485 19,603 Excess(deficiency)of revenues over expenditures 2,118,657 2,118,657 3,523,306 1,404,649 Other financing sources(uses) - Transfers out (1,869,680) (1,869,680) (1,869,680) - Total other financing sources(uses) (1,869,680) (1,869,680) (1,869,680) - Net change in fund balances $ 248,977 $ 248,977 1,653,626 $ 1,404,649 Reconciliation between budgetary basis actual and GAAP Increase(decrease) in fair value of investments 83,000 Fund balance,October 1,2022 8,832,078 Fund balance,September 30,2023 $ 10,568,704 123 CITY OF ROUND ROCK, TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL INNOVATION AND DEVELOPMENT FUND YEAR ENDED SEPTEMBER 30, 2023 Budgeted Amounts Original Final Actual Variance Revenues- Taxes and franchise $ - $ 108,855 $ 108,855 $ - Intergovernmental - 8,977,846 8,977,846 - Hotel occupancy tax - 5,607,063 5,607,063 - Investment and other 172,188 129,603 (42,585) Total revenues 14,865,952 14,823,367 (42,585) Expenditures- Current- General Government- Operations - 9,948,042 9,948,042 - Total expenditures - 9,948,042 9,948,042 - Excess(deficiency)of revenues over expenditures - 4,917,910 4,875,325 (42,585) Other financing sources(uses) - Transfers out - (4,933,633) (4,933,633) Total other financing sources(uses) - (4,933,633) (4,933,633) Net change in fund balances $ - $ (15,723) (58,308) $ (42,585) Reconciliation between budgetary basis actual and GAAP Increase(decrease) in fair value of investments 42,585 Fund balance, October 1,2022 2,983,821 Fund balance, September 30,2023 $ 2,968,098 124 CITY OF ROUND ROCK,TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL LIBRARY AND RECREATIONAL FUND YEAR ENDED SEPTEMBER 30,2023 Budgeted Amounts Original Final Actual Variance Revenues- Licenses, permits and fees $ 75,000 $ 75,000 $ 82,575 $ 7,575 Charges for services 782,500 822,500 755,301 (67,199) Contributions 209,988 209,988 195,989 (13,999) Investment and other 28,122 28,122 220,183 192,061 Total revenues 1,095,610 1,135,610 1,254,048 118,438 Expenditures- Current- General government- Operations 100,000 100,000 1,695 98,305 Total general government 100,000 100,000 1,695 98,305 Culture and recreation- Personnel services 586,128 650,328 650,261 67 Operations 721,234 690,634 668,796 21,838 Capital projects 1,335,683 1,534,406 220,971 1,313,435 Total culture and recreation 2,643,045 2,875,368 1,540,028 1,335,340 Total expenditures 2,743,045 2,975,368 1,541,723 1,433,645 Excess(deficiency)of revenues over expenditures (1,647,435) (1,839,758) (287,675) 1,552,083 Other financing sources(uses)- Transfers in 675,000 675,000 675,000 - Total other financing sources(uses) 675,000 675,000 675,000 - Net change in fund balances $ (972,435) $ (1,164,758) 387,325 $ 1,552,083 Reconciliation between budgetary basis actual and GAAP Increase(decrease) in fair value of investments 66,196 Fund balance,October 1,2022 5,352,840 Fund balance,September 30,2023 $ 5,806,361 125 CITY OF ROUND ROCK,TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL PUBLIC SAFETY FUND YEAR ENDED SEPTEMBER 30,2023 Budgeted Amounts Original Final Actual Variance Revenues- Fines and forfeitures $ 76,000 $ 76,000 $ 197,977 $ 121,977 Investment and other 950 950 59,973 59,023 Total revenues 76,950 76,950 257,950 181,000 Expenditures- Current- General government- Operations 453,431 453,431 59,256 394,175 Capital projects 122,903 253,300 175,008 78,292 Total expenditures 576,334 706,731 234,264 472,467 Excess(deficiency)of revenues over expenditures (499,384) (629,781) 23,686 653,467 Other financing sources(uses)- Transfers out (52,000) (52,000) - 52,000 Total other financing sources(uses) (52,000) (52,000) - 52,000 Net change in fund balances $ (551,384) $ (681,781) 23,686 $ 705,467 Reconciliation between budgetary basis actual and GAAP Increase(decrease)in fair value of investments 7,368 Fund balance,October 1,2022 887,046 Fund balance,September 30,2023 $ 918,100 126 CITY OF ROUND ROCK,TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL PUBLIC EDUCATION &GOVERNMENT FUND YEAR ENDED SEPTEMBER 30, 2023 Budgeted Amounts Original Final Actual Variance Revenues- Taxes and franchise $ 181,400 $ 181,400 $ 166,084 $ (15,316) Investment and other 2,000 2,000 44,402 42,402 Total revenues 183,400 183,400 210,486 27,086 Expenditures- Current- General Government- Operations 115,000 115,000 58,435 56,565 Total expenditures 115,000 115,000 58,435 56,565 Net change in fund balances $ 68,400 $ 68,400 152,051 $ 83,651 Reconciliation between budgetary basis actual and GAAP Increase(decrease) in fair value of investments 13,360 Fund balance,October 1,2022 1,472,144 Fund balance,September 30,2023 $ 1,637,555 127 CITY OF ROUND ROCK,TEXAS SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES- BUDGET AND ACTUAL ROADWAY IMPACT FEES FUND YEAR ENDED SEPTEMBER 30,2023 Budgeted Amounts Original Final Actual Variance Revenues- Contributions $ 2,500,000 $ 2,500,000 $ 2,500,000 $ - Investment and other - - 191,385 191,385 Total revenues 2,500,000 2,500,000 2,691,385 191,385 Expenditures- Other financing sources(uses)- Transfers out (2,500,000) (2,500,000) (2,500,000) - Total other financing sources(uses) (2,500,000) (2,500,000) (2,500,000) - Net change in fund balances $ - $ - 191,385 $ 191,385 Reconciliation between budgetary basis actual and GAAP Increase(decrease)in fair value of investments 50,159 Fund balance,October 1,2022 5,917 Fund balance,September 30,2023 $ 247,461 128 CITY OF ROUND ROCK,TEXAS STATISTICAL SECTION (UNAUDITED) This part of the City of Round Rock's annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and supplementary information says about the City's overall financial health. This information has not been audited by the independent auditors. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the 126 City's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the City's significant 136 local revenue sources,the property and sales tax. Debt Capacity These schedules present information to help the reader assess the affordability of the 146 City's currently outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader 155 understand the environment within which the City's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand 157 how the information contained in the City's financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted,the information in these schedules is derived from the City's annual comprehensive financial reports for the relevant year. 129 CITY OF ROUND ROCK,TEXAS NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (accrual basis of accounting) 2014 2015 2016 2017 Governmental activities- Net investment in capital assets $ 303,977,353 $ 299,730,557 $ 310,185,706 $ 356,586,425 Restricted 43,974,370 48,019,726 51,813,118 48,954,352 Unrestricted 44,713,408 53,355,360 52,451,939 29,054,168 Total governmental activities net position $ 392,665,131 $ 401,105,643 $ 414,450,763 $ 434,594,945 Business-type activities- Net investment in capital assets $ 221,062,599 $ 228,866,895 $ 234,981,264 $ 245,005,044 Restricted 7,764,750 19,215,972 15,275,659 19,800,722 Unrestricted 114,901,064 110,519,279 126,490,054 126,634,362 Total business-type activities net position $ 343,728,413 $ 358,602,146 $ 376,746,977 $ 391,440,128 Primary government- Net investment in capital assets $ 525,039,952 $ 528,597,452 $ 545,166,970 $ 601,591,469 Restricted 51,739,120 67,235,698 67,088,777 68,755,074 Unrestricted 159,614,472 163,874,639 178,941,993 155,688,530 Total primary government net position $ 736,393,544 $ 759,707,789 $ 791,197,740 $ 826,035,073 Source:Annual Comprehensive Financial Reports Notes: The City implemented GASB Statement No.68 in 2015.As a result,net position for 2014 was restated. The City implemented GASB Statement No.75 in 2018.As a result,net position for 2017 was restated. The City implemented GASB Statement No.96 in 2023.As a result,net position for 2022 was restated. 130 2018 2019 2020 2021 2022 2023 $ 373,007,353 $ 400,490,136 $ 442,969,195 $ 432,348,991 $ 402,903,584 $ 461,228,728 48,357,161 44,334,128 23,471,549 92,772,878 132,351,451 186,392,436 28,585,838 28,918,565 33,581,912 13,728,700 68,809,157 25,817,240 $ 449,950,352 $ 473,742,829 $ 500,022,656 $ 538,850,569 $ 604,064,192 $ 673,438,404 $ 268,467,171 $ 283,846,141 $ 294,760,377 $ 310,014,313 $ 333,196,242 $ 361,729,550 22,628,600 24,343,881 16,315,836 11,750,401 13,866,060 10,427,716 138,980,320 146,681,470 168,868,607 179,998,306 186,396,785 201,529,190 $ 430,076,091 $ 454,871,492 $ 479,944,820 $ 501,763,020 $ 533,459,087 $ 573,686,456 $ 641,474,524 $ 684,336,277 $ 737,729,572 $ 742,363,304 $ 736,099,826 $ 822,958,278 70,985,761 68,678,009 39,787,385 104,523,279 146,217,511 196,820,152 167,566,158 175,600,035 202,450,519 193,727,006 255,205,942 227,346,430 $ 880,026,443 $ 928,614,321 $ 979,967,476 $ 1,040,613,589 $ 1,137,523,279 $ 1,247,124,860 131 CITY OF ROUND ROCK,TEXAS CHANGES IN NET POSITION LAST TEN FISCAL YEARS (accrual basis of accounting) 2014 2015 2016 2017 Expenses: Governmental activities- General government $ 28,050,936 $ 28,860,077 $ 28,434,006 $ 24,864,772 Public safety 45,283,826 45,236,987 49,439,902 52,243,460 Public works 33,537,533 33,412,841 33,448,357 34,359,785 Culture and recreation 18,024,001 19,202,557 20,885,009 24,130,067 Interest on long-term debt 8,478,700 8,118,490 8,294,279 8,075,351 Total governmental activities expenses 133,374,996 134,830,952 140,501,553 143,673,435 Business-type activities- Water and wastewater utility 44,605,155 46,069,705 47,947,818 49,400,833 Golf course 71,090 144,993 133,270 1,857,334 Total business-type activities expenses 44,676,245 46,214,698 48,081,088 51,258,167 Total primary government expenses 178,051,241 181,045,650 188,582,641 194,931,602 Program revenues: Governmental activities- Charges for services- General government 2,559,380 2,168,842 2,258,333 19,778,439 Public safety 2,652,480 2,461,782 1,669,550 1,478,161 Public works 726,785 749,524 742,437 607,398 Culture and recreation 3,032,109 3,288,970 3,919,254 5,133,816 Operating grants and contributions 1,042,301 1,199,574 946,604 1,202,810 Capital grants and contributions 5,901,038 4,234,018 8,013,039 5,958,205 Total governmental activities program revenues 15,914,093 14,102,710 17,549,217 34,158,829 Business-type activities- Charges for services- Water and wastewater utility 43,705,878 45,898,090 48,653,788 51,980,615 Golf course 382,081 320,846 360,371 733,883 Capital grants and contributions 10,226,302 17,742,568 19,607,086 15,642,381 Total business-type activities program revenues 54,314,261 63,961,504 68,621,245 68,356,879 Total primary government program revenues 70,228,354 78,064,214 86,170,462 102,515,708 Net(expense)revenue- Governmental activities (117,460,903) (120,728,242) (122,952,336) (109,514,606) Business-type activities 9,638,016 17,746,806 20,540,157 17,098,712 Total primary government net expense (107,822,887) (102,981,436) (102,412,179) (92,415,894) 132 2018 2019 2020 2021 2022 2023 S 23,408,887 $ 27,861,595 S 27,467,722 $ 35,906,343 $ 41,210,815 $ 48,259,094 57,987,997 64,196,001 64,151,715 64,975,588 67,534,584 78,793,508 47,120,999 36,261,500 38,606,348 43,588,532 40,067,607 46,224,524 25,218,145 27,821,410 26,355,801 26,874,261 30,667,820 34,898,867 8,415,687 8,525,551 9,382,120 10,264,036 11,292,992 11,000,425 162,151,715 164,666,057 165,963,706 181,608,760 190,773,818 219,176,418 51,749,727 54,388,260 53,999,588 58,063,832 63,886,112 68,229,079 1,642,036 2,399,582 2,818,489 3,699,848 4,290,895 4,104,094 53,391,763 56,787,842 56,818,077 61,763,680 68,177,007 72,333,173 215,543,478 221,453,899 222,781,783 243,372,440 258,950,825 291,509,591 2,273,091 3,189,150 4,529,682 2,824,567 2,962,085 3,619,177 1,762,172 2,298,635 1,684,921 1,396,999 1,705,859 1,626,659 693,223 1,347,815 700,442 970,763 873,899 1,874,377 5,489,515 5,649,283 4,082,796 5,807,940 6,544,740 7,318,494 2,574,008 2,987,128 3,742,160 4,261,827 4,802,100 4,949,732 18,206,390 9,914,802 9,464,089 10,054,791 23,442,401 27,815,280 30,998,399 25,386,813 24,204,090 25,316,887 40,331,084 47,203,719 55,139,117 56,951,931 60,811,441 60,618,367 67,172,508 68,399,789 299,761 1,971,887 2,684,066 3,506,792 3,920,614 3,765,883 30,495,633 21,584,780 18,443,560 22,288,498 34,040,331 38,995,646 85,934,511 80,508,598 81,939,067 86,413,657 105,133,453 111,161,318 116,932,910 105,895,411 106,143,157 111,730,544 145,464,537 158,365,037 (131,153,316) (139,279,244) (141,759,616) (156,291,873) (150,442,734) (171,972,699) 32,542,748 23,720,756 25,120,990 24,649,977 36,956,446 38,828,145 (98,610,568) (115,558,488) (116,638,626) (131,641,896) (113,486,288) (133,144,554) (CONTINUED) 133 CITY OF ROUND ROCK,TEXAS CHANGES IN NET POSITION (CONTINUED) LAST TEN FISCAL YEARS (accrual basis of accounting) 2014 2015 2016 2017 General revenues and other changes in net position: Governmental activities- Taxes- Property $ 36,502,409 $ 39,932,573 $ 44,239,067 $ 49,107,424 Franchise 6,460,448 7,255,212 7,175,948 7,103,548 Sales 68,462,292 67,620,848 67,340,120 64,209,719 Hotel occupancy 4,646,208 5,083,556 5,407,667 5,515,163 Public service 477,606 515,778 566,712 627,164 Investment earnings and other 1,882,139 5,020,786 7,957,942 8,201,944 Transfers 1,800,895 3,740,000 3,610,000 3,492,871 Total governmental activities 120,231,997 129,168,753 136,297,456 138,257,833 Business-type activities- Investment earnings and other 1,397,321 866,927 1,214,674 2,289,777 Transfers (1,800,895) (3,740,000) (3,610,000) (3,492,871) Total business-type activities (403,574) (2,873,073) (2,395,326) (1,203,094) Total primary government 119,828,423 126,295,680 133,902,130 137,054,739 Change in net position: Governmental activities 2,771,094 8,440,511 13,345,120 28,743,227 Business-type activities 9,234,442 14,873,733 18,144,831 15,895,618 Total primary government $ 12,005,536 $ 23,314,244 $ 31,489,951 $ 44,638,845 134 2018 2019 2020 2021 2022 2023 $ 54,082,288 $ 57,396,623 $ 64,744,623 $ 68,187,362 $ 70,551,060 $ 74,006,361 7,140,940 7,407,178 7,060,026 6,808,434 7,429,827 8,017,834 72,861,565 75,690,767 78,361,955 90,406,552 104,397,185 104,713,662 5,714,235 6,000,447 4,111,858 11,003,127 15,128,191 17,048,182 647,243 697,835 620,996 867,626 1,020,842 1,157,865 9,024,223 12,180,534 9,081,735 12,650,685 11,176,195 31,393,569 (2,961,771) 3,698,337 4,058,250 5,196,000 5,355,000 5,605,000 146,508,723 163,071,721 168,039,443 195,119,786 215,058,300 241,942,473 3,131,444 4,772,982 4,010,588 2,364,223 94,621 7,004,224 2,961,771 (3,698,337) (4,058,250) (5,196,000) (5,355,000) (5,605,000) 6,093,215 1,074,645 (47,662) (2,831,777) (5,260,379) 1,399,224 152,601,938 164,146,366 167,991,781 192,288,009 209,797,921 243,341,697 15,355,407 23,792,477 26,279,827 38,827,913 64,615,566 69,969,774 38,635,963 24,795,401 25,073,328 21,818,200 31,696,067 40,227,369 $ 53,991,370 $ 48,587,878 $ 51,353,155 $ 60,646,113 $ 96,311,633 $ 110,197,143 135 CITY OF ROUND ROCK,TEXAS FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2014 2015 2016 2017 Nonspendable- Inventories,prepaids and other $ 397,271 $ 430,821 $ 372,288 $ 232,004 Restricted for- Debt service 2,278,062 2,351,780 2,749,645 3,880,982 Authorized construction 106,539,802 117,515,606 77,545,478 81,086,426 Hotel-motel tax 11,173,765 10,934,476 12,653,710 6,526,672 Public safety 1,050,349 1,274,293 676,724 585,878 General government - - - 1,269,075 Committed to- General government 684,199 856,977 1,081,159 124,703 Capital projects funds 26,570,024 24,696,122 24,865,777 28,397,665 Streets and drainage - 1,145,826 1,152,195 - Culture and recreation 12,438 322,576 293,694 - Assigned to- Culture and recreation 264,662 272,666 212,080 1,004,583 Unassigned 38,726,365 50,277,389 52,427,796 50,090,080 Total governmental funds $ 187,696,937 $ 210,078,532 $ 174,030,546 $ 173,198,068 136 2018 2019 2020 2021 2022 2023 $ 253,592 $ 226,190 $ 1,094,653 $ 1,783,208 $ 404,179 $ 930,720 4,853,517 5,019,375 5,080,091 7,901,595 7,041,411 6,492,541 62,649,029 72,690,649 58,069,777 124,312,278 171,116,800 160,664,737 7,863,705 6,807,382 7,440,558 10,222,462 15,269,909 19,061,932 750,657 1,025,501 757,284 735,896 887,046 918,100 1,268,233 1,439,377 1,401,931 1,433,730 1,472,144 1,637,555 232,243 883,883 1,030,812 881,812 1,077,519 1,198,346 21,934,876 28,971,259 23,259,722 41,256,494 63,546,738 49,633,658 - - - 1,483,055 1,483,055 1,483,055 1,274,658 1,638,534 1,834,073 2,496,916 3,852,615 4,022,080 53,558,920 49,498,684 59,547,303 58,913,029 48,267,275 63,341,210 $ 154,639,430 $ 168,200,834 $ 159,516,204 $ 251,420,475 $ 314,418,691 $ 309,383,934 137 CITY OF ROUND ROCK,TEXAS CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) 2014 2015 2016 2017 Revenues- Taxes and franchise S 111,592,909 j 115,508,506 S 119,211,433 S 121,142,245 Licenses,permits and fees 1,243,857 1,704,374 1,843,633 1,646,077 Charges for services 4,645,527 4,513,428 5,172,465 6,307,377 Fines and forfeitures 2,673,670 2,451,316 1,573,476 1,440,795 Intergovernmental 3,044,095 1,679,993 990,683 2,950,833 Hotel occupancy tax 4,646,208 5,083,556 5,407,667 5,515,163 Investment and other 3,152,100 600,919 368,748 931,601 Contributions 4,783,567 7,207,478 7,963,854 8,253,614 Total revenues 135,781,933 138,749,570 142,531,959 148,187,705 Expenditures- General government 24,375,794 23,838,520 24,394,392 21,055,932 Public safety 42,306,841 43,067,272 44,388,881 47,595,884 Public works 11,291,499 12,328,284 12,062,839 12,682,503 Culture and recreation 13,775,702 14,766,040 15,078,964 17,219,700 Capital projects 38,694,239 33,476,554 65,414,999 63,268,686 Debt service- Principal retirement 14,395,697 13,919,366 13,463,922 13,287,160 Interest and fiscal charges 7,372,652 8,597,372 9,641,498 8,306,767 Payment to refunding agent - - - 10,050,443 Other charges 862,888 942,596 229,245 423,510 Total expenditures 153,075,312 150,936,004 184,674,740 193,890,585 Excess of revenues over(under)expenditures (17,293,379) (12,186,434) (42,142,781) (45,702,880) Other financing sources(uses)- Issuance of lease(1) 1,450,000 2,000,000 2,250,000 - Issuance of debt 77,350,000 70,665,000 11,450,000 38,725,000 Premium on bonds issued 6,161,887 6,369,020 1,094,690 2,652,531 Payment to refunded bond escrow agent (11,682,994) (48,205,991) (12,309,895) - Transfers in 32,984,237 27,070,865 30,552,126 31,908,470 Transfers out (31,683,342) (23,330,865) (26,942,126) (28,415,599) Total other financing sources(uses) 74,579,788 34,568,029 6,094,795 44,870,402 Net change in fund balances S 57,286,409 $ 22,381,595 S (36,047,986) $ (832,478) Capital outlay including amounts reported under departmental current expenditures $ 38,644,877 $ 35,385,140 $ 65,116,395 $ 90,020,515 Debt service as a percentage of noncapital expenditures 19.0% 19.5% 19.3% 20.8% (1) Issuance of lease refers to leases issued to debt finance equipment and vehicle replacement prior to FY 2022. GASB 87 was implemented in FY 2022 and changes the meaning of a lease.Therefore,the previous leases are referred to as Notes Payable throughout the Annual Comprehensive Financial Reporting,beginning in FY 2022. 138 2018 2019 2020 2021 2022 2023 $ 134,637,978 $ 141,150,180 $ 150,717,481 S 166,252,010 $ 183,162,281 S 188,219,454 2,037,211 2,703,240 1,834,311 2,543,143 2,959,342 4,443,231 6,563,868 6,916,463 5,274,975 7,092,585 7,929,787 8,749,122 1,616,922 2,153,309 1,623,976 1,152,990 1,380,898 1,246,354 9,511,022 3,822,463 5,540,163 11,400,907 24,816,402 20,188,481 5,714,235 6,000,447 4,111,858 11,003,127 15,128,191 17,048,182 2,335,783 4,670,671 9,165,467 7,261,313 2,778,909 21,244,232 9,260,526 12,728,177 3,336,036 2,338,936 3,285,315 7,880,970 171,677,545 180,144,950 181,604,267 209,045,011 241,441,125 269,020,026 23,744,730 22,423,018 24,841,662 31,324,914 35,377,631 39,592,677 52,839,347 56,063,867 56,494,602 59,445,458 64,353,318 71,658,737 14,748,037 15,077,947 17,290,725 16,946,664 19,056,273 19,383,569 18,513,216 20,213,897 19,022,847 19,931,144 24,017,708 26,620,493 59,809,511 90,837,258 82,350,573 47,540,721 87,575,761 85,953,520 14,325,970 17,792,363 18,296,526 20,148,502 19,650,222 24,867,905 9,244,645 8,616,675 10,243,591 10,367,705 12,133,701 12,237,746 - 13,758,972 7,010,563 - - - - 967,009 276,058 1,225,607 1,512,308 - 193,225,456 245,751,006 235,827,147 206,930,715 263,676,922 280,314,647 (21,547,911) (65,606,056) (54,222,880) 2,114,296 (22,235,797) (11,294,621) 5,981,044 2,900,000 - - - - 67,685,000 41,480,000 84,040,000 156,315,000 4,884,123 - 7,036,650 2,642,581 - - - (6,482,675) (79,078,568) - 22,678,818 42,110,430 39,495,337 75,973,539 70,036,965 43,448,957 (25,640,589) (38,412,093) (35,437,087) (70,777,539) (64,681,965) (37,189,093) 3,019,273 79,167,460 45,538,250 89,789,975 85,234,013 6,259,864 S (18,528,638) $ 13,561,404 $ (8,684,630) $ 91,904,271 $ 62,998,216 $ (5,034,757) $ 46,896,225 $ 87,242,801 S 80,820,915 $ 40,870,035 $ 86,316,796 $ 85,953,520 16.1% 16.7% 18.4% 18.4% 17.9% 19.1% 139 CITY OF ROUND ROCK,TEXAS ACTUAL AND TAXABLE ASSESSED VALUE OF PROPERTY LAST TEN FISCAL YEARS Actual Assessed Value Less: Total Taxable Total Fiscal Real Personal Tax Exempt Assessed Direct Year Property Property Total Property Valuation Tax Rate 2014 $ 8,195,046,631 $ 1,062,520,327 $ 9,257,566,958 $ 567,914,523 $ 8,689,652,435 0.4195 2015 9,193,035,124 1,030,331,518 10,223,366,642 589,210,216 9,634,156,426 0.4146 2016 10,040,964,402 1,018,628,138 11,059,592,540 567,506,618 10,492,085,922 0.4147 2017 10,935,482,664 1,031,249,775 11,966,732,439 639,556,585 11,327,175,854 0.4250 2018 12,013,959,238 1,124,094,154 13,138,053,392 686,899,632 12,451,153,760 0.4300 2019 13,176,805,756 1,160,970,549 14,337,776,305 738,356,451 13,599,419,854 0.4200 2020 14,022,511,023 1,427,644,784 15,450,155,807 802,376,438 14,647,779,369 0.4390 2021 14,769,011,872 1,302,409,762 16,071,421,634 713,462,308 15,357,959,326 0.4390 2022 17,549,969,505 1,450,591,938 19,000,561,443 1,329,837,647 17,670,723,796 0.3970 2023 24,341,708,325 1,568,031,609 25,909,739,934 4,216,713,471 21,693,026,463 0.3420 Source: Williamson Central Appraisal District/Travis Central Appraisal District Note-Property in the City is assessed each year. Property is assessed at actual value;therefore,the assessed values are equal to actual value. Tax rates are per$100 of assessed value. 140 CITY OF ROUND ROCK,TEXAS PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS PER$100 OF ASSESSED VALUE LAST TEN FISCAL YEARS City Direct Rates Overlapping Rates Round Rock Total Debt Independent Direct and Fiscal Operating Service Total School Williamson Special Overlapping Year Rate Rate Direct District County Districts Rates 2014 $ 0.2800 $ 0.1395 $ 0.4195 $ 1.3674 $ 0.4890 $ 0.1149 $ 2.3908 2015 0.2628 0.1518 0.4146 1.3375 0.4865 0.1142 2.3528 2016 0.2545 0.1602 0.4147 1.3325 0.4815 0.1205 2.3492 2017 0.2719 0.1531 0.4250 1.3325 0.4765 0.1220 2.3560 2018 0.2879 0.1421 0.4300 1.3048 0.4665 0.1208 2.3221 2019 0.2981 0.1219 0.4200 1.3048 0.4590 0.1248 2.3086 2020 0.3135 0.1255 0.4390 1.2348 0.4587 0.1249 2.2574 2021 0.2963 0.1427 0.4390 1.2212 0.4587 0.1258 2.2447 2022 0.2649 0.1321 0.3970 1.1336 0.4408 0.1223 2.0937 2023 0.2244 0.1176 0.3420 1.0626 0.3756 0.1162 1.8964 Source: Williamson County Tax Office 141 CITY OF ROUND ROCK,TEXAS PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 2023 2014 Net %of Total Net %of Total Assessed Net Assessed Assessed Net Assessed Name of Taxpayer Valuation Rank Valuation Valuation Rank Valuation Kalahari Resorts and Conventions $ 491,085,949 1 2.264% $ - -% Dell Computer Holdings, LP 442,007,514 2 2.038 153,414,617 1 1.765 CPG Round Rock, LP/ Round Rock Premium Outlets 160,947,344 3 0.742 134,200,248 2 1.544 CMF 15 Portfolio, LLC/ Colonial Grand Apartments 119,895,198 4 0.553 56,206,719 6 0.647 Dell Computer Corp. 100,663,350 5 0.464 65,445,280 4 0.753 Stanmore Warner Ranch Apts,LLC 97,444,253 6 0.449 - - 2811 LA Frontera LP/ Griffis Apartments 91,915,000 7 0.424 - - TMP Parkside Project,LLC/ Parkside at Round Rock 89,000,000 8 0.410 - - Fisher-Rosemount Systems, Inc. 86,400,000 9 0.398 38,200,000 10 0.440 Columbia/St.David Healthcare 85,561,557 10 0.394 62,152,791 5 0.715 Oncor Electric Delivery Co. - - 41,212,619 7 0.474 Baltgem Development Corp./ La Frontera Village - - 71,285,140 3 0.820 Inland American University Oaks, LP - - 38,671,693 8 0.445 Round Rock Luxury Apts,LTD - - 38,325,183 9 0.441 $ 1,764,920,165 8.136% $ 699,114,290 8.044% Source: Williamson Central Appraisal District 142 CITY OF ROUND ROCK,TEXAS PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collected within the Fiscal Year of the Levy Total Collections to Date Taxes Levied Collections Fiscal for the Percentage in Subsequent Percentage Year Fiscal Year Amount of Levy Years Amount of Levy 2014 $ 36,452,223 $ 36,281,479 99.53 % $ 970 $ 36,282,449 99.53 % 2015 39,792,302 39,697,745 99.76 1,065 39,698,810 99.77 2016 44,063,923 43,894,949 99.62 1,169 43,896,118 99.62 2017 49,113,540 48,988,540 99.75 1,372 48,989,912 99.75 2018 53,890,399 53,775,618 99.79 5,952 53,781,570 99.80 2019 57,296,592 57,106,114 99.67 4,996 57,111,110 99.68 2020 64,708,293 64,443,984 99.59 (26,539) 64,417,444 99.55 2021 68,133,164 67,922,644 99.69 (183,955) 67,738,690 99.42 2022 70,241,994 70,033,185 99.70 (37,234) 69,995,951 99.65 2023 74,262,463 74,016,437 99.67 - 74,016,437 99.67 143 CITY OF ROUND ROCK,TEXAS SALES TAX AND AD VALOREM TAX LAST TEN FISCAL YEARS Total 1% %of Equivalent 1% Fiscal Sales Tax Ad Valorem Ad Valorem of Ad Valorem Sales Tax Year Collected Tax Levy Tax Levy Tax Rate Population Per Capita 2014 $ 34,231,146 $ 36,452,223 93.91 % $ 0.3939 $ 103,107 $ 332 2015 33,810,424 39,792,302 84.97 0.3509 105,405 321 2016 33,670,060 44,063,923 76.41 0.3209 106,591 316 2017 34,970,879 49,113,540 71.20 0.3087 108,353 323 2018 40,929,405 53,890,399 75.95 0.3287 112,201 365 2019 41,348,047 57,296,592 72.16 0.3040 116,120 356 2020 42,562,498 64,708,293 65.78 0.2906 118,024 361 2021 50,217,518 68,133,164 73.70 0.3270 122,827 409 2022 58,232,363 70,241,994 82.90 0.3295 124,614 467 2023 58,549,152 74,262,463 78.84 0.2699 128,957 454 Note: The City has adopted the Municipal Sales and Use Tax Act,Texas Tax Code,Chapter 321,which grants the City the power to impose and levy a 1% Local Sales and Use Tax within the City;the proceeds are credited to the General Fund and are not pledged to the payment of the bonds. Collections and enforcements are effected through the office of the Texas Comptroller of Public Accounts who remits the proceeds of the tax, after deduction of a 2%service fee to the City monthly. The calculations above are only based on the 1%sales and use tax, not the 0.5%sales and use tax collected for reduction of ad valorem taxes or the 0.5%sales and use tax collected for transportation improvements. 144 /eorr, ►���. f 145 CITY OF ROUND ROCK,TEXAS TAXABLE SALES BY CATEGORY LAST TEN CALENDAR YEARS Calendar Retail Wholesale Year Trade Manufacturing Services Trade Utilities 2013 $ 1,399,874,606 $ 1,103,790,424 $ 402,483,896 $ 131,162,463 $ 29,351,784 2014 1,529,469,558 1,061,444,585 432,758,149 128,755,561 34,412,553 2015 1,556,013,209 951,496,554 476,798,645 123,940,513 41,822,044 2016 1,592,542,371 905,719,610 505,372,604 141,775,154 41,190,339 2017 1,582,407,350 925,729,209 521,326,342 132,124,078 38,444,682 2018 1,766,233,513 1,022,456,613 544,823,077 144,551,512 44,328,814 2019 1,806,032,459 953,019,073 570,848,600 197,736,186 42,248,207 2020 1,782,012,610 843,382,610 523,120,666 221,749,525 24,315,005 2021 2,077,784,400 1,127,507,544 896,501,602 270,878,555 32,367,651 2022 2,278,068,535 1,457,309,601 957,452,286 308,871,134 57,963,650 $ 17,370,438,611 $ 10,351,855,823 $ 5,831,485,867 $ 1,801,544,681 $ 386,444,729 Source:Texas Comptroller of Public Accounts Note: Sales information is not available on a fiscal year basis. Also, due to State of Texas confidentiality rules, names of sales taxpayers are not available. The categories presented provide alternative information indicative of sales tax revenue sources. 146 City Direct State Finance, Sales Tax Sales Tax Over- Construction Insurance Total Rate Rate lapping $ 90,125,307 $ 2,368,176 $ 3,159,156,656 2.00 % 6.25 % 8.25 % 95,799,482 2,497,918 3,285,137,806 2.00 6.25 8.25 110,293,477 2,600,258 3,262,964,700 2.00 6.25 8.25 135,370,923 2,951,985 3,324,922,986 2.00 6.25 8.25 144,818,546 2,773,206 3,347,623,413 2.00 6.25 8.25 162,271,653 2,449,613 3,687,114,795 2.00 6.25 8.25 175,871,253 2,898,780 3,748,654,558 2.00 6.25 8.25 159,456,159 3,103,437 3,557,140,012 2.00 6.25 8.25 151,326,047 3,053,232 4,559,419,031 2.00 6.25 8.25 194,741,671 3,034,913 5,257,441,790 2.00 6.25 8.25 $ 1,420,074,518 $ 27,731,518 $ 37,189,575,747 147 CITY OF ROUND ROCK,TEXAS HOTEL TAXPAYERS YEAR ENDED SEPTEMBER 30, 2023 Total Hotel Motel Hotel Motel Collections Number %of Occupancy Occupancy Year Ended of Total Taxpayer Tax Venue Tax Sept.30,2023 Rooms Collections Kalahari Resorts&Conventions $ 6,098,027 $ 1,742,293 $ 7,840,320 975 45.99% Austin Marriott North 701,776 202,533 904,309 295 5.30 Embassy Suites 565,948 163,333 729,281 180 4.28 Hyatt Place 345,678 98,765 444,443 138 2.61 Hilton Garden Inn 293,701 84,762 378,463 122 2.22 Homewood Suites 266,208 76,306 342,514 115 2.01 Element 241,106 69,583 310,689 123 1.82 La Quinta East 232,403 66,506 298,909 99 1.75 Courtyard Marriott 230,416 65,833 296,249 113 1.74 Holiday Inn Express North 224,357 64,733 289,090 109 1.70 Aloft 223,802 64,581 288,383 120 1.69 Springhill Suites 223,674 64,494 288,168 104 1.69 Towneplace Suites 216,177 61,765 277,942 102 1.63 Hampton Inn 208,106 59,504 267,610 93 1.57 Tru By Hilton 201,089 57,946 259,035 98 1.52 Holiday Inn 190,973 55,115 246,088 116 1.44 Home2 Suites South 183,658 52,474 236,132 91 1.39 La Quinta North 181,136 52,085 233,221 116 1.37 Residence Inn 179,107 51,450 230,557 96 1.35 Holiday Inn Express South 167,102 48,110 215,212 91 1.26 AVID 159,373 45,850 205,223 89 1.20 Extended Stay America#6030 150,462 42,989 193,451 138 1.13 Staybridge 140,720 40,360 181,080 81 1.06 La Quinta South 140,036 40,405 180,441 86 1.06 Ruby Hotel 138,387 39,810 178,197 39 1.05 Microtel 131,744 38,022 169,766 82 1.00 Red Roof Inn 122,857 35,102 157,959 107 0.93 Short Term Rentals 118,582 34,066 152,648 69 0.89 Sleep Inn 107,354 30,983 138,337 74 0.81 Best Western 106,248 30,663 136,911 68 0.80 Wingate Inn 103,551 29,866 133,417 100 0.78 Comfort Suites 99,484 28,711 128,195 63 0.75 Motel 89,762 25,646 115,408 60 0.68 Candlewood Suites 84,662 24,433 109,095 98 0.64 Country Inn 84,048 24,014 108,062 61 0.63 Quality Inn 81,066 23,289 104,355 49 0.61 Woodspring Suites South 74,750 21,573 96,323 122 0.57 Extended Stay America#6197 63,142 18,041 81,183 104 0.48 Woodspring Suites North 58,382 16,681 75,063 121 0.44 Home2 Suites North 20,036 5,724 25,760 119 0.15 Provident Crossings Retirement 538 155 693 2 0.01 $ 13,249,628 $ 3,798,554 $ 17,048,182 5,028 100.0% 148 CITY OF ROUND ROCK,TEXAS HOTEL OCCUPANCY TAX COLLECTION HISTORY BY QUARTER LAST TEN FISCAL YEARS Fiscal 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Oct.—Dec. Jan.—Mar. Apr.—June July—Sept. Total 2014 $ 1,071,926 $ 1,217,483 $ 1,271,649 $ 1,085,150 $ 4,646,208 2015 1,114,213 1,274,209 1,437,121 1,258,012 5,083,555 2016 1,214,093 1,354,383 1,570,064 1,269,127 5,407,667 2017 1,249,406 1,411,265 1,509,276 1,345,218 5,515,165 2018 1,365,737 1,429,006 1,637,645 1,281,847 5,714,235 2019 1,365,684 1,546,937 1,661,651 1,426,175 6,000,447 2020 1,574,968 1,289,910 483,480 763,500 4,111,858 2021 1,145,806 2,201,407 3,689,498 3,966,416 11,003,127 2022 3,235,991 3,249,855 4,400,515 4,241,830 15,128,191 2023 3,913,244 3,959,304 4,634,993 4,540,641 17,048,182 149 CITY OF ROUND ROCK,TEXAS RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Business-Type Governmental Activities Activities General Revenue Bonds Total Percentage Fiscal Obligation Certificates of Other Debt and Other Primary of Personal Per Year Bonds Obligation Obligations Obligations Government Income Capita 2014 $ 155,780,000 $ 11,135,000 $ 55,963,734 $ 90,799,894 $ 313,678,628 9.12 % $ 3,042 2015 154,925,000 29,675,000 56,701,818 87,827,948 329,129,766 10.00 3,123 2016 149,540,000 27,095,000 52,746,502 89,364,624 318,746,126 6.43 2,990 2017 170,615,000 26,315,000 49,477,613 86,027,443 332,435,056 6.87 3,068 2018 162,820,000 25,520,000 48,520,464 82,997,070 319,857,534 5.93 2,851 2019 151,405,000 58,870,000 68,930,433 79,510,797 358,716,230 6.08 3,089 2020 141,220,000 88,025,000 64,350,491 75,999,389 369,594,880 5.89 3,132 2021 131,555,000 140,250,000 84,871,892 72,342,981 429,019,873 6.16 3,493 2022 162,165,000 148,300,000 104,303,592 68,669,982 483,438,574 6.16 3,879 2023 149,840,000 143,025,000 103,002,121 64,728,235 460,595,356 5.32 3,572 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. See the Schedule of Demographic and Economic Statistics for personal income and population data. 150 CITY OF ROUND ROCK,TEXAS RATIOS OF NET GENERAL BONDED DEBT OUTSTANDING TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS Amount Ratio Available of Net Net in Bonded Net Assessed Gross Debt Net Debt to Bonded Fiscal Value(in Bonded Service Bonded Assessed Debt Per Year Population* thousands) Debt Fund Debt Value Capita 2014 103,107 $ 8,689,652 $ 172,890,871 $ 2,278,062 $ 170,612,809 1.96 % $ 1,655 2015 105,405 9,634,156 203,112,523 2,351,780 200,760,743 2.08 1,905 2016 106,591 10,492,086 195,911,354 2,749,645 193,161,709 1.84 1,812 2017 108,353 11,327,176 216,797,444 3,880,982 212,916,462 1.88 1,965 2018 112,201 12,451,154 211,532,890 4,853,517 206,679,373 1.66 1,842 2019 116,120 13,599,420 236,945,452 5,019,375 231,926,077 1.71 1,997 2020 118,024 14,647,779 255,778,105 5,080,091 250,698,014 1.71 2,124 2021 122,827 15,357,959 298,467,896 5,519,166 292,948,730 1.91 2,385 2022 124,614 17,670,723 336,822,235 4,658,982 332,163,253 1.88 2,666 2023 128,957 21,693,026 321,916,918 4,110,112 317,806,806 1.47 2,464 *Source: Planning Department,City of Round Rock Note:Includes Certificates of Obligation,General Obligation Bonds, Limited Tax Notes, Notes Payable,Leases,and subscriptions net of related premiums and discounts. 151 CITY OF ROUND ROCK,TEXAS COMPUTATION OF DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT YEAR ENDED SEPTEMBER 30,2023 Total Estimated General Estimated Share of Debt Percentage Overlapping Name of Governmental Unit Outstanding* Applicable** Debt Debt repaid with property taxes- Williamson County $ 1,122,900,000 18.97% $ 213,014,130 Round Rock Independent School District 741,145,000 36.55 270,888,498 Round Rock MUD#1 3,935,000 100.00 3,935,000 Round Rock MUD#2 10,000,000 100.00 10,000,000 Travis County 900,550,000 0.25 2,251,375 Austin Community College 562,445,000 6.06 34,084,167 Georgetown ISD 660,575,000 0.64 4,227,680 Pflugerville ISD 780,930,000 0.28 2,186,604 Travis County Healthcare District 173,145,000 0.25 432,863 Upper Brushy Creek WICD 51,320,000 27.66 14,195,112 Subtotal,overlapping debt 555,215,429 City direct debt 395,867,121 Total direct and overlapping debt $ 951,082,550 *Gross Debt as of September 30,2023 **The percentage of overlapping debt applicable is estimated using taxable assessed property values. Source: City of Round Rock Finance Department and Municipal Advisory of Texas(Texas MAC) Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Round Rock,Texas. This process recognizes that,when considering the government's ability to issue and repay long-term debt,the entire debt borne by the residents and businesses should be taken into account. However,this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. 152 153 CITY OF ROUND ROCK,TEXAS LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS 2014 2015 2016 2017 Debt limit $ 1,557,670,054 $ 1,640,628,922 $ 1,786,728,268 $ 1,928,938,196 Total net debt applicable to limit 161,006,938 178,893,220 170,530,355 193,049,018 Legal debt margin $ 1,396,663,116 $ 1,461,735,702 $ 1,616,197,913 $ 1,735,889,178 Total net debt applicable to the limit as a percentage of debt limit 10.34% 10.90% 9.54% 10.01% Legal Debt Margin Calculation for Fiscal Year 2023 Total assessed value $ 21,693,026,463 Debt limit-maximum serviceable at permitted allocation of$1.50 per$100 of assessed value $ 3,694,169,480 Amount of debt applicable to debt limit: Total General Obligation Debt $ 305,910,904 Less: Amount available in Debt Service Fund (4,110,112) Total net debt applicable to debt limit 301,800,792 Legal debt margin $ 3,392,368,688 There is no direct debt limitation in the City Charter or under state law. The City operates under a Home Rule Charter (Article XI, Section 5,Texas Constitution),approved by voters in August 1977,that limits the maximum tax rate,for all City purposes, to $2.50 per $100 assessed valuation. Administratively, the Attorney General of the State of Texas will permit allocation of$1.50 of the$2.50 maximum tax rate for general obligation debt service. Assuming the maximum tax rate for debt service of $1.50 on January 1, 2022, assessed valuation of $21,693,026,463 at 100%collection,tax revenue of$325,395,397 would be produced. This revenue could service the debt on $3,694,169,480 issued as 20-year serial bonds at 5.50%(with level debt service payment). Interest and Sinking Fund Budget Projection General Obligation Debt Service Requirements, Fiscal Year 2024 $ 29,100,436 Tax Year 2022 Interest and Sinking Fund Tax Levy @ 99%Collection $ 24,889,100 Interest and Sinking Fund Balance as of September 30,2023 4,110,112 Self-Supporting Debt 1,874,550 30,873,762 Estimated Balance,September 30,2024 $ 1,773,326 154 2018 2019 2020 2021 2022 2023 $ 2,120,343,710 $ 2,315,885,331 $ 2,494,413,566 $ 2,615,352,206 $ 3,009,199,691 $ 3,694,169,480 183,486,483 205,255,625 224,164,909 266,285,834 315,255,537 301,800,792 $ 1,936,857,227 $ 2,110,629,706 $ 2,270,248,657 $ 2,349,066,372 $ 2,693,944,154 $ 3,392,368,688 8.65% 8.86% 8.99% 10.18% 10.48% 8.17% 155 CITY OF ROUND ROCK, TEXAS CONDENSED UTILITY STATEMENT OF OPERATIONS LAST TEN FISCAL YEARS 2014 2015 2016 2017 Gross Revenue (1) Charges for services $ 40,762,523 $ 41,880,906 $ 44,406,721 $ 47,769,478 Licenses, permits and fees 2,943,355 4,017,184 4,247,067 4,211,137 Investment and other income 1,397,259 863,900 1,211,532 2,284,171 Total 45,103,137 46,761,990 49,865,320 54,264,786 Direct Operating Expense (2) Personnel services 8,939,263 9,228,272 9,742,128 11,871,681 Contracted services 14,200,624 14,500,269 15,222,355 14,854,212 Materials and supplies 2,163,731 1,837,026 2,091,331 2,504,640 Heat, light and power 1,829,036 1,783,408 1,662,779 1,618,297 Total 27,132,654 27,348,975 28,718,593 30,848,830 Net available for Debt Service $ 17,970,483 $ 19,413,015 $ 21,146,727 $ 23,415,956 Debt Service Requirements(P&I) $ 6,347,632 $ 6,894,788 $ 5,994,842 $ 6,352,459 Revenue Bond Coverage 2.83 2.82 3.53 3.67 Metered Water Customers 32,012 32,447 32,930 33,602 Metered Wastewater Customers 31,133 31,531 31,984 32,614 Average Annual Principal and Interest Requirements, FY 2024-2039 $ 4,685,649 Coverage of Average Requirements by FY 2023 Net Revenue 7.18 Estimated Maximum Principal and Interest Requirements, FY 2024 $ 5,948,181 Estimated Coverage of Maximum Requirements by FY 2023 Net Revenue 5.66 Parity Debt Outstanding at FY 2023 $ 59,860,000 (1) Water and Wastewater Fund operating and non-operating revenues (2) Water and Wastewater Fund operating expenses, excluding depreciation/amortization 156 2018 2019 2020 2021 2022 2023 $ 50,715,034 $ 51,973,150 $ 55,695,939 $ 55,106,110 $ 60,923,212 $ 61,870,880 4,226,721 4,828,792 4,693,720 5,472,368 6,302,178 6,394,076 3,122,041 4,772,982 4,010,185 2,363,247 90,182 7,289,303 58,063,796 61,574,924 64,399,844 62,941,725 67,315,572 75,554,259 10,940,702 12,809,236 12,751,829 12,896,946 13,633,693 16,702,089 16,695,290 14,844,774 13,759,401 16,476,180 18,392,887 17,758,878 2,392,415 3,385,739 2,747,862 3,051,250 4,234,393 4,319,533 1,578,540 2,188,155 2,452,847 2,404,405 2,891,204 3,109,243 31,606,947 33,227,904 31,711,939 34,828,781 39,152,177 41,889,743 $ 26,456,849 $ 28,347,020 $ 32,687,905 $ 28,112,944 $ 28,163,395 $ 33,664,516 $ 5,444,927 $ 6,102,631 $ 6,082,481 $ 6,073,581 $ 6,062,631 $ 5,956,631 4.86 4.65 5.37 4.63 4.65 5.65 34,581 35,397 35,998 36,593 37,324 37,659 33,277 34,085 35,299 35,879 36,581 36,883 157 1 a o — rt � 158 CITY OF ROUND ROCK,TEXAS DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (2) Per (3) (4) (5) Fiscal (1) Personal Capita Median School Unemployment Year Population Income Income Age Enrollment Rate 2014 103,107 $ 3,282,514,452 $ 31,836 31.7 45,924 4.2% 2015 105,405 4,104,259,890 38,938 33.5 47,093 3.2 2016 106,591 4,636,495,318 43,498 33.9 47,580 3.3 2017 108,353 4,841,103,687 44,679 34.4 48,121 3.0 2018 112,201 5,395,858,291 48,091 34.2 48,888 2.9 2019 116,120 5,896,109,120 50,776 33.7 50,345 2.6 2020 118,024 6,272,385,480 53,145 33.7 50,966 5.4 2021 122,827 6,963,431,111 56,693 33.7 48,366 3.3 2022 124,614 7,842,083,634 62,931 33.7 47,184 2.6 2023 128,957 8,650,822,431 67,083 35.2 46,385 3.2 Sources: (1) Planning Department,City of Round Rock (2)U.S. Dept.of Commerce/Bureau of Economic Development;data is for Williamson County,which is representative of the City;data for City not available. (3)U.S.Census Bureau (4) Round Rock Independent School District (5) U.S. Bureau of Labor Statistics 159 CITY OF ROUND ROCK,TEXAS PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO 2023 2014 %of Total %of Total City City Name of Employer Employees Rank Employment Employees Rank Employment Dell Technologies 12,000 1 14.51 % 13,000 1 22.93% Round Rock Independent School District 6,604 2 7.99 5,800 2 10.23 St.David's Round Rock Medical Center 1,200 3 1.45 690 8 1.22 City of Round Rock,Texas 1,132 4 1.37 830 4 1.46 Baylor Scott&White Healthcare 911 5 1.10 750 5 1.32 Ascension Seton Medical Center Williamson 750 6 0.91 450 9 0.79 Kalahari Resorts&Conventions 700 7 0.85 - - Amazon Round Rock Delivery Station 650 8 0.79 - - Emerson Automation Solutions 600 9 0.73 750 5 1.32 Airco Mechanical 550 10 0.67 - - Shop LC 550 10 0.67 Sears TeleServe - - 1,500 3 2.65 Texas Guaranteed Student Loan - - 700 7 1.23 Dresser Wayne,Inc - - 450 9 0.79 Total 25,647 31.04% 24,920 43.94% Source: City of Round Rock Finance Department/Round Rock Chamber of Commerce 160 CITY OF ROUND ROCK,TEXAS FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Function: General government 157 159 163 179 194 202 205 206 216 223 Public safety- Police- Officers 159 167 168 174 176 176 180 180 186 200 Civilians 64 67 72 74 75 78 78 78 82 82 Fire- Firefighters&officers 129 129 132 134 149 152 153 155 159 163 Civilians 8 8 8 8 9 10 10 8 22 24 Public works- Street&Stormwater 70 69 76 73 77 81 82 82 90 96 Shop 16 18 19 18 18 19 19 19 19 22 Culture&Recreation- Library 31 31 31 31 31 32 33 34 40 40 Parks&Recreation 91 91 106 102 105 107 108 108 110 129 Water&Wastewater Utility 128 129 128 128 131 151 151 151 151 153 Total 853 868 903 921 965 1,008 1,019 1,021 1,075 1,132 Source:City of Round Rock Finance Department 161 CITY OF ROUND ROCK,TEXAS OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS 2014 2015 2016 2017 Function: Police- Arrests 5,773 4,600 4,476 4,600 Accident reports 6,383 2,249 2,370 2,370 Index crimes reported** 2,338 2,329 2,383 2,383 Crimes per thousand residents** 21.70 22.00 22.50 22.50 Officers per thousand of population 1.42 1.53 1.43 1.48 Fire- Incident volume*** 9,027 9,928 9,346 10,777 Priority calls answered*** 3,713 2,780 3,735 2,548 Non-emergency calls answered*** 5,314 7,148 5,611 8,229 Priority calls-response less than 6 minutes 63% 56% 61% 58% Public Works- Street- Street resurfacing(lane miles) 80 40 60 60 Potholes repaired annually 4,000 1,500 400 300 Signals maintained 83 84 83 89 Shop- Work orders 4,178 4,399 4,761 4,620 Number of departments served 12 12 12 12 Culture and Recreation- Library- Number of items circulated 975,291 972,094 1,080,312 1,188,757 Number of card holders 74,192 99,822 77,818 79,415 Number of library visits 309,167 388,625 391,256 389,930 Parks&Recreation- Total park acres maintained 2,045 2,045 2,045 2,270 Number of athletic fields maintained 49 49 49 49 Number of trees planted 165 110 195 408 Number of recreation enrollees* 490,704 - - - Number of recreation participants - 832,184 988,337 1,080,853 Water- New connections 360 402 480 665 Line maintenance work orders 6,734 3,317 3,512 3,346 Average monthly consumption 491,936,100 505,251,158 536,082,308 571,062,558 Wastewater- Average monthly treatment 394,000,000 385,611,068 416,357,161 425,631,471 Line feet reviewed for infiltration&inflow 459,128 187,464 189,418 206,675 Source: City of Round Rock Finance Department *Note:Parks and Recreation started recording all participants in all programs in Fiscal Year 2015. **Note:The Police Department started using the NIBRS System in FY 2020 to report to the State. ***Note: The Fire Department started using a new program to record incidents starting in FY 2021. 162 2018 2019 2020 2021 2022 2023 4,152 4,272 3,592 3,049 4,243 4,275 2,762 2,698 2,636 2,236 3,109 3,408 2,870 2,648 2,400 6,960 8,522 8,365 26.50 23.40 21.00 56.10 67.80 57.70 1.56 1.53 1.53 1.49 1.48 1.52 11,328 11,813 12,189 13,193 14,876 15,781 5,083 4,078 3,248 2,590 6,288 3,715 6,245 7,735 6,905 4,770 8,588 12,066 53% 79% 73% 72% 67% 58% 60 121 183 190 140 80 300 280 250 220 260 285 90 93 100 100 100 101 4,733 4,936 4,980 2,972 4,492 4,763 12 12 12 12 12 14 1,229,141 1,315,186 986,686 1,105,973 1,171,561 1,290,953 81,181 83,507 80,656 65,159 65,788 74,490 388,732 416,391 219,736 156,742 275,851 449,234 2,270 2,285 2,285 2,295 2,301 2,305 49 49 51 51 51 51 43 74 98 73 21 56 1,140,094 892,870 332,895 513,322 518,194 548,195 911 789 534 486 710 347 3,013 1,778 2,366 2,383 2,513 2,508 612,026,451 543,547,232 620,080,709 622,781,309 773,701,493 802,575,698 426,330,521 410,300,487 440,156,307 498,103,453 537,916,079 601,949,688 169,579 133,098 109,080 102,296 194,727 204,657 163 CITY OF ROUND ROCK,TEXAS CAPITAL ASSET STATISTICS BY FUNCTION LAST TEN FISCAL YEARS 2014 2015 2016 2017 Function: Police- Number of stations 1 1 1 1 Number of units 229 240 259 256 Fire- Number of stations 7 7 7 9 Number of fire trucks 14 16 15 16 Public Works- Street- Lane miles 1,250 1,250 1,200 1,200 Drainage miles 150 150 150 151 Number of street lights* 6,800 5,400 5,433 5,604 Number of traffic signals 83 84 83 89 Shop- Repair facilities 1 1 1 1 Number of bays 19 19 13 18 Culture and Recreation- Library- Number of library books 154,278 156,277 257,667 213,381 Number of library facilities 1 1 1 1 Parks&Recreation- Total park acres 2,035 2,035 2,035 2,270 Number of athletic fields 49 49 49 59 Number of parks 62 62 62 61 Number of tennis courts 25 25 25 22 Number of pools 4 4 4 4 Water- Number of miles of water lines** 601 608 615 614 Pumping stations 10 10 10 10 Tanks 19 19 19 19 Treatment capacity(millions of gallons/day) 52 52 52 52 Wastewater- Number of miles of wastewater mains 432 424 427 428 Wastewater lift stations 12 12 12 12 Source: City of Round Rock Finance Department *Count per third-party inventory of street lights performed at the end of FY 2021.Count not done on an annual basis. **Includes MUDS and private owned lines 164 2018 2019 2020 2021 2022 2023 1 1 1 1 1 1 261 241 252 258 270 268 9 9 9 9 9 9 16 17 17 17 20 11 1,300 1,350 1,450 1,500 1,500 1,500 200 200 333 352 368 395 5,674 5,733 5,771 5,749 5,787 5,787 90 93 100 100 100 101 1 1 2 2 2 2 18 18 21 21 21 21 225,903 230,094 227,880 228,866 230,577 218,927 1 1 1 1 1 1 2,270 2,285 2,285 2,295 2,301 2,305 59 61 61 61 61 61 61 61 61 61 61 61 21 21 21 21 21 21 4 4 4 4 4 4 651 636 667 698 722 711 10 11 11 11 11 11 19 19 19 20 20 20 52 52 61 61 61 61 461 445 467 477 495 514 12 11 11 11 11 12 165 CITY OF ROUND ROCK,TEXAS TOP TEN WATER CUSTOMERS SEPTEMBER 30, 2023 %of Total Water Water Consumption Consumption Name of Customer Type of Business in Gallons in Gallons City of Georgetown,Texas Municipality 984,784,200 10.225% Jonah Water Special Utility District Special Utility District 449,250,100 4.665 Fern Bluff Municipal Utility District Municipal Utility District 326,386,100 3.389 Paloma Lake Municipal Utility District Municipal Utility District 263,489,500 2.736 Williamson County Municipal Utility District#11 Municipal Utility District 202,911,100 2.107 Williamson County Municipal Utility District#10 Municipal Utility District 189,979,600 1.973 Chandler Creek Municipal Utility District Municipal Utility District 154,581,100 1.605 Vista Oaks Municipal Utility District Municipal Utility District 144,626,900 1.502 Kalahari Resorts&Conventions Hotel 112,039,600 1.163 Round Rock Independent School District Public Schools 85,689,900 0.890 2,913,738,100 30.255% Source: City of Round Rock Finance Department 166 CITY OF ROUND ROCK, TEXAS WATER AND WASTEWATER RETAIL RATES SEPTEMBER 30, 2023 Water rates for retail customers inside the city limits are as follows: Volume Rate Monthly Service Charge Billing periods for residential: Meter Size Base Monthly Water Four block structure for use in excess of predetermined amounts set by meter size- Serving Customer Service Charge Block 1: $2.56 S/8 inch $ 16.52 Block 2: $3.20 3/4 inch 23.00 Block 3: $3.85 1 inch 36.32 Block 4: $5.77 1 1/2 inch 69.59 2 inch 109.51 Billing periods for commercial: 3 inch 202.68 $2.80 per 1,000 gallons of water used by all customers 4 inch 335.79 6 inch 1,046.86 Billing periods for irrigation: 8 inch 1,829.77 Four block structure for use in excess of predetermined amounts set by meter size - 10 inch 2,873.67 Block 1: $3.20 12 inch 3,526.11 Block 2: $3.85 Block 3: $5.77 Wastewater rates for retail customers inside the city limits are as follows: Volume Rate Monthly Service Charge Monthly $3.09 per 1,000 gallons of water used by all customers* Meter Size Base Wastewater Serving Customer Service Charge 5/8 inch $ 13.27 3/4 inch 17.31 1 inch 24.82 1 1/2 inch 45.26 2 inch 69.79 3 inch 127.01 4 inch 208.75 6 inch 615.27 8 inch 1,073.67 10 inch 1,684.85 12 inch 2,066.84 * Wastewater customers' volume is measured as the rate per 1,000 gallons of the lesser of a three-month winter average or actual water use. Source: City of Round Rock Chapter 44, Section 44-32, Code of Ordinances. (2018 Edition) amended with ordinance No.0-2019-0379. 167 Jf ,O'A'F�Na a�Zai y v�►i�//� 168 CITY OF ROUND ROCK, TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED SEPTEMBER 30, 2023 Pass-Through Federal Grantor/Pass-Through Grantor Grant or to Non-State Direct Total Program Title ALN` Identifying Number Entities Expenditures Expenditures National Endowment for the Humanities Pass-Through from Texas State Library and Archives Commission Grants to States 45.310 LS-252486-OLS-22 $ $ 9,577 S 9,577 Total National Endowment for the Humanities 9,577 9,577 U.S.Department of Health and Human Services Pass-Through from Substance Abuse and Mental Health Services Administration FY 2022 Congressional Directive Spending Projects 93.493 13656629 841,108 841,108 Total U.S.Department of Health and Human Services 841,108 841,108 U.S.Department of Homeland Security Pass-Through from Texas A&M Engineering Extension Service National Urban Search&Rescue Response System Hurricane Ian 97.025 Hurricane Ian 45,046 45,046 Total National Urban Search&Rescue Response System 45,046 45,046 Pass-Through from Texas Division of Emergency Management Disaster Grants-Public Assistance(Presidentially Declared Disasters) Corpus Christi Vaccination Deployments(Covid-19) 97.036 DR-4485 539,633 539,633 Total Disaster Grants-Public Assistance(Presidentially Declared Disasters) 539,633 539,633 Total U.S.Department of Homeland Security 584,679 584,679 U.S.Department of Housing&Urban Development Community Development Block Grants/Entitlement Grants Cluster Community Development Block Grants/Entitlement Grants 14.218 B16MC480514 65,269 65,269 Community Development Block Grants/Entitlement Grants 14.218 B19MC480514 30,937 30,937 Community Development Block Grants/Entitlement Grants 14.218 B20MC48OS14 53,621 53,621 Community Development Block Grants/Entitlement Grants 14.218 B21MC480514 - 311,130 311,130 Community Development Block Grants/Entitlement Grants 14.218 B22MC480514 94,342 144,863 239,205 Community Development Block Grants/Entitlement Grants(Covid-19) 14.218 B20MW48OS14 - 29,891 29,891 Total Community Development Block Grants/Entitlement Grants Cluster 94,342 635,711 730,053 Total U.S.Department of Housing&Urban Development 94,342 635,711 730,053 U.S.Department of Justice Bulletproof Vest Partnership Program 16.607 FY2022 BVP Program 12,132 12,132 Total U.S.Department oflustice 12,132 12,132 U.S.Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds(Covid-19) 21.027 SLT-4414 1,560,478 1,560,478 Total U.S.Department of the Treasury - 1,560,478 1,560,478 169 CITY OF ROUND ROCK,TEXAS SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED SEPTEMBER 30,2023 Pass-Through Federal Grantor/Pass-Through Grantor Grant or to Non-State Direct Total Program Title ALN* Identifying Number Entities Expenditures Expenditures U.S.Department of Transportation Federal Transit Cluster Federal Transit Formula Grants 20.507 TX-2019-053-00 $ $ 82,282 $ 82,282 Federal Transit Formula Grants 20.507 TX-2020-026-00 559,217 559,217 Federal Transit Formula Grants 20.507 TX-2021-003-00 372,038 372,038 Total Federal Transit Cluster 1,013,537 1,013,537 Highway Planning and Construction Cluster Pass-Through from Texas Department of Transportation University Boulevard East(AW Grimes to SH130) 20.205 0914-05-193 839,413 839,413 Kenney Fort Boulevard(Segments 2&3) 20.205 0914-05-195 4,648,056 4,648,056 Gattis School Road(Segment 6) 20.205 0914-05-196 857,147 857,147 Total Highway Planning and Construction Cluster 6,344,616 6,344,616 Total U.S.Department of Transportation 7,358,153 7,358,153 Total Expenditures of Federal Awards $ 94,342 $ 11,001,838 $ 11,096,180 'Assistance Listing Number(ALN)formerly known as Catalog of Federal Domestic Assistance(CFDA). 1. BASIS OF PRESENTATION The Schedule of Expenditures of Federal Awards (SEFA) presents the activity of all applicable federal awards of the City of Round Rock,Texas. The City's reporting entity is defined in the notes of the basic financial statements. Federal financial assistance received directly from federal agencies as well as federal financial assistance passed through other governmental agencies is included on the Schedule of Expenditures of Federal Awards. The information on this schedule is presented in accordance with the requirements of Uniform Guidance,Audits of States, Local Governments and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in or used in the preparation of the basic financial statements. 2. BASIS OF ACCOUNTING The Schedule of Expenditures of Federal Awards is prepared on the modified accrual basis of accounting. Expenditures are recognized when the related fund liability is incurred. Federal grants are considered to be earned to the extent of expenditures made under the provision of the grant and are received on a reimbursement basis. 3. INDIRECT COST RATE The City of Round Rock has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance. 4. EXPENDITURES INCURRED IN A PRIOR YEAR Expenditures recorded in the SEFA, associated with Hurricane Ian and Corpus Christi Vaccination Deployments (Covid-19)that were passed through the Texas A&M Engineering Extension Service and Texas Division of Emergency Management to the City of Round Rock from the U.S. Department of Homeland Security, were incurred in a prior year. Even though the expenditures were incurred in a prior year,the final invoices were not approved for payment until FY 2023. Accordingly,these expenditures are being reported on the City of Round Rock's SEFA in the year they were approved for payment,in compliance with the OMB Compliance Supplement. 170 Austin Office on 3600 N.Capital of Texas Hwy. �. Bldg.B,Suite 250 w h i t l e y p e n n Austin,Texas 78746 737.931.8200 Main whitleypenn.com INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of City Council City of Round Rock,Texas We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States,the financial statements of the governmental activities,the business-type activities, each major fund,and the aggregate remaining fund information of City of Round Rock,Texas(the "City"),as of and for the year ended September 30,2023,and the related notes to the financial statements,which collectively comprise the City's basic financial statements, and have issued our report thereon dated February S, 2024. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting(internal control)as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly,we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency,or a combination of deficiencies,in internal control,such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency,or a combination of deficiencies,in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However,providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly,we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 171 To the Honorable Mayor and Members of City Council City of Round Rock,Texas Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing,and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly,this communication is not suitable for any other purpose. Austin,Texas February 5,2024 172 Austin Office ,. 3600 N.Capital of Texas Hwy. Bldg.B,Suite 250 w h i t l e y p e n n' Austin,Texas 78746 737.931.8200 Main whitleypenn.com INDEPENDENT AUDITORS'REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE To the Honorable Mayor and Members of City Council City of Round Rock,Texas Report on Compliance for Each Major Federal Program Opinion on Each Major Program We have audited City of Round Rock,Texas'(the "City')compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of the City's major federal programs for the year ended September 30, 2023.The City's major federal programs are identified in the summary of auditors results section of the accompanying schedule of findings and questioned costs. In our opinion,the City's complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30,2023. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States(Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards,the Uniform Guidance are further described in the Auditors Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City's compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design,implementation,and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City's federal programs. 173 To the Honorable Mayor and Members of City Council City of Round Rock,Texas Auditor's Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS, Government Auditing Standards, the Uniform Guidance, will always detect material noncompliance when it exists.The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City's compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS,Government Auditing Standards,and the Uniform Guidance,we • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance,whether due to fraud or error,and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the District's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of the District's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the District's internal control over compliance.Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters,the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control Over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis.A material weakness in internal control over compliance is a deficiency,or a combination of deficiencies, in internal control over compliance,such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented,or detected and corrected,on a timely basis.Asignificant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance,yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However,material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. 174 To the Honorable Mayor and Members of City Council City of Round Rock,Texas Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly,this report is not suitableforany other purpose. C�(..�{„filer 7..' LCA Austin,Texas February 5,2024 175 CITY OF ROUND ROCK,TEXAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended September 30,2023 I.Summary of Auditors'Results Financial Statements Type of auditors'report issued: Unmodified Internal control over financial reporting: Material weakness(es)identified? No Significant deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: Material weakness(es)identified? No Significant deficiencies identified that are not considered to be material weaknesses? None reported Type of auditors'report issued on compliance with major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? No Identification of Major Federal Programs: Name of Federal Program or Cluster Assistance Listing Number(ALN) U.S.Department of Health and Human Services(HHS) FY 2022 Congressional Directive Spending Projects 93.493 U.S.Department of Homeland Security COVID-19-Corpus Christi Vaccination Deployments 97.036 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds(COVID-19) 21.027 Dollar Threshold Used to Distinguish Between Type A and Type B Programs $750,000 Auditee qualified as low-risk auditee? Yes II. Financial Statement Findings None noted. III. Federal Award Findings and Questioned Costs None noted. 176 CITY OF ROUND ROCK,TEXAS SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS For the Year Ended September 30,2023 Federal regulations,Title 2 U.S. Code of Federal Regulations§200.511 states, "The auditee is responsible for follow-up and corrective action on all audit findings. As part of this responsibility,the auditee must prepare a summary schedule of prior audit findings."The summary schedule of prior audit findings must report the status of the following: • All audit findings included in the prior audit's schedule of findings and questioned costs and • All audit findings reported in the prior audit's summary schedule of prior audit findings except audit findings listed as corrected,or no longer valid or not warranting further action. The Summary Schedule of Prior Audit Findings for the year ended September 30, 2023 has been prepared to address these requirements. I.Prior Audit Findings None noted. 177 CITY OF ROUND ROCK,TEXAS CORRECTIVE ACTION PLAN For the Year Ended September 30,2023 Federal regulations, Title 2 U.S. Code of Federal Regulations §200.511 states, "At the completion of the audit,the auditee must prepare, in a document separate from the auditor's findings described in §200.516 Audit findings, a corrective action plan to address each audit finding included in the current year auditor's reports." The Corrective Action Plan for the year ended September 30,2023 has been prepared to address these requirements. I.Corrective Action Plan Not applicable. 178