Notes to SEFA
Title: Note 2 - Basis of Presentation
Accounting Policies: Note 1 – Summary of Significant Accounting Policies
The City accounts for awards under federal programs in the general and special revenue governmental funds.
In the governmental funds, these programs are accounted for using a current financial resources measurement focus. With
this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating
statements of these funds present increases (i.e. revenues and other financing sources) and decreases (i.e. expenditures
and other financing uses) in net current assets. The modified accrual basis of accounting is used for these funds. This basis
of accounting recognizes revenues in the accounting period in which they become susceptible to accrual, i.e., both
measurable and available, and expenditures in the accounting period in which the liability is incurred, if measurable, except
for certain compensated absences and claims and judgments, which are recognized when the obligations are expected to
be liquidated with expendable available financial resources. Expenditures are recognized following the cost principles
contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited to
reimbursement. Pass-through entity identifying numbers are presented where available.
Federal grants are considered to be earned to the extent of expenditures made under the provisions of the grant, and,
accordingly, when such funds are received, they are recorded as unearned revenues until earned. Generally, unused
balances are returned to the grantor at the close of specified project periods.
De Minimis Rate Used: N
Rate Explanation: Note 3 – Indirect Cost Rate
The City has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal grant activity of the
City under programs of the federal government for the year ended September 30, 2024. The information in this schedule is
presented in accordance with the requirements of the Uniform Guidance. Because the schedule presents only a selected
portion of the operations of the City, it is not intended to and does not present the financial position, changes in net
position or cash flows of the City.
Title: Note 4 - Outstanding Loans
Accounting Policies: Note 1 – Summary of Significant Accounting Policies
The City accounts for awards under federal programs in the general and special revenue governmental funds.
In the governmental funds, these programs are accounted for using a current financial resources measurement focus. With
this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating
statements of these funds present increases (i.e. revenues and other financing sources) and decreases (i.e. expenditures
and other financing uses) in net current assets. The modified accrual basis of accounting is used for these funds. This basis
of accounting recognizes revenues in the accounting period in which they become susceptible to accrual, i.e., both
measurable and available, and expenditures in the accounting period in which the liability is incurred, if measurable, except
for certain compensated absences and claims and judgments, which are recognized when the obligations are expected to
be liquidated with expendable available financial resources. Expenditures are recognized following the cost principles
contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited to
reimbursement. Pass-through entity identifying numbers are presented where available.
Federal grants are considered to be earned to the extent of expenditures made under the provisions of the grant, and,
accordingly, when such funds are received, they are recorded as unearned revenues until earned. Generally, unused
balances are returned to the grantor at the close of specified project periods.
De Minimis Rate Used: N
Rate Explanation: Note 3 – Indirect Cost Rate
The City has elected not to use the 10 percent de minimis indirect cost rate allowed under the Uniform Guidance.
The City has outstanding loan commitments under the Clean Water State Revolving Loan Fund (ALN #66.458) and Drinking
Water State Revolving Loan Fund (ALN #66.468) from the Texas Water Development Board, as a pass-through agency for
the Environmental Protection Agency. As of September 30, 2024, the outstanding loan payable balances were: See Notes to SEFA for table/chart.