harris county emergency services district no. 12 … · 8/4/2020 · accordance with the duly...

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HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12

NOTICE OF PUBLIC MEETING

Notice is hereby given to all interested parties that the Board of Directors of thecaptioned District will hold a public meeting by telephone conference call. Members of thepublic may access the meeting by following the instructions listed at the bottom of this notice.

The meeting will be held at 6:00 p.m. on Tuesday, August 4, 2020.

The subject of the meeting is to consider and act on the following:

1. Invocation

2. Public comments

3. Approve minutes of meeting held on July 21, 2020

4. Fire Chief’s report, including performance measures, incident responses,personnel and staffing, training, and status of buildings and apparatus

5. Sales and property tax reports

6. Disposition of surplus and salvage property

7. Bookkeeper’s report; pay bills, investment of funds

8. 2020 Tax Rate; Review Truth in Taxation calculations; establish proposedtax rate; authorize publishing and posting notices

9. Close Woodforest National Bank accounts and CDs

10. Audit Report for F.Y.E. 12/31/2019

11. Board President’s report: upcoming events, meeting announcements andreports from events attended

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02212-001 487628v1 of 2

Instructions for accessing telephone conference call:

On March 16, 2020, in accordance with section 418.016 of the Texas GovernmentCode, Governor Abbott has suspended various provisions of the Texas Open Meetings Act thatrequire government officials and members of the public to be physically present at a specifiedmeeting location (the “Proclamation”). In accordance with the Proclamation, the District hasimplemented procedures to allow members of the public to participate and address the Board ofCommissioners during the telephone conference meeting. To participate in the telephoneconference meeting:

1. Please call 1-866-773-8424 and use access Code 654925# to access the meeting and announceyour name to the meeting host.

2. The agenda packet will be available at the following web site:https://2618compliance.wordpress.com/board-meeting-packets/

3. The audio of the meeting will be recorded.

2

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12Minutes of Meeting of Board of Commissioners

July 21, 2020

The Board of Commissioners ("Board") of Harris County Emergency ServicesDistrict No. 12 ("District") met July 21, 2020 at 6:00 p.m. by telephone conference call, inaccordance with the duly posted notice of the meeting, with a quorum present, as follows:

William B. Anders, PresidentLarry Helgesen, SecretaryFrank Staley, TreasurerBryan Clements, Assistant Secretary/Assistant Treasurer

And the following absent:

David W. Proctor, Vice President

Also present was Chief Ed Russell

The meeting was called to order and declared open for such business as mightregularly come before it.

1. Commissioner Staley presented the invocation.

2. The Board opened the floor for public comment. No public comment waspresented.

3. The Board reviewed and unanimously approved the minutes of the July 7,2020 meeting.

4. Chief Russell presented the fire chief’s report and noted the departmentcontinues to maintain COVID-19 protocols while making fire suppression responses. Fouremployees have self-quarantined as a protective measure. All four employees have returned toduty. The department responded to 118 calls for assistance during the June 1, 2020 through June30, 2020 reporting period. The Battalions Chiefs completed interviews and established afirefighter eligibility list containing seven applicants. Four applicants have been selected fromthe eligibility list and scheduled for pre-physical screening and a physical/fitness assessment. Nomajor repairs were performed to Station 1 or Station 2. All Apparatus and Vehicles are currentlyin service.

5. The Board authorized the disposition of a broken ice machine.

6. The Board reviewed and unanimously approved the bookkeeper’s report.

7. Audit Report for F.Y.E. 12/31/2019 is not completed. Expected to becompleted by the next meeting.

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8. The Board authorized the Order Designating Harris county Tax Assessorto Prepare Truth-In-Taxation Calculation.

9. Board President Anders reported he attended the ECOM meeting.

There being no further business to come before the Board, the meeting wasadjourned.

______________________Secretary

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HARRIS COUNTY EMERGENCY SERVICES DISTRICT #12

CLOVERLEAF FIRE DEPARTMENT

911 Hollywood Houston, Texas 77015 713-453-1811

www.cloverleaf-fire.org

August 1, 2020

Harris County Emergency Services District 12 William Scott Smith, Attorney 2727 Allen Parkway, Suite 1100 Houston, Texas 77019

Re: Operations Performance Report to Harris County Emergency Services District 12

Commissioners:

The following information reflects the Department’s Operations Performance Briefing for the August 4, 2020 HCESD 12 meeting. 2021 BUDGET The 2021 Proposed Budget is complete. Budget Comparison Reports are near completion.

BUILDINGS AND FACILITIES All of Station 14’s HVAC units have received their annual service. Several of the 7 units required some minor repairs.

COVID-19 UPDATE

We, along with our neighboring emergency services, continue to monitor the impact of COVID-19 to our response area.

As part of the Department’s precautionary measures, employee screenings continue to be performed at the beginning of each shift, at 1800 hours, and at the end of each shift. Personnel are required to wear face coverings while in public setting and riding in fire apparatus when practical. The Department facilities will remain under lockdown until further notice. PROPERTY ACQUISITION The Department is prepared to present property acquisition requests as soon as the appraisals are completed.

Edward M. Russell Fire Chief

[email protected]

Marshall Hutton Assistant Fire Chief

[email protected]

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PERSONNEL Four firefighter candidates and one Captain candidate have been hired and will begin orientation training in August 2020. VEHICLE STATUS

As of this date, all fire apparatus and vehicles are in service.

Boats, transport trailer, and inflatable have been checked and remain in a ready to use condition.

Engine 14 has been sent to Fire Truck Repair in La Porte, Texas for an electrical repair and engine transfer case oil change

Engine 24 Reserve will be sent to Fire Truck Repair in La Porte, Texas for AC repair soon.

Rehab 14 will be set to Allied Breathing Air for cascade system repair, cylinder testing, and cascade panel updates.

Please contact me, preferably before the meeting, if you have any questions or comments concerning the content of this report.

Sincerely,

Edward M. Russell, Fire Chief

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07/01/2020 02:26:2 1192499 TAX COLLECTION SYSTEM TC168 TAX COLLECTOR MONTHLY REPORT INCLUDES AG ROLLBACK FROM 06/01/2020 TO 06/30/2020

JURISDICTION: 0668 Emergency Service Dist #12 (Fi

TAX RATE TAX LEVY PAID ACCTS -------- ----------------- -------------

YEAR 2019 00.050000 1,754,011.79 13,312

-------- ----------------- -------------

-------------------------------------------------------------------------------------------------------------------------------

YEAR TAXES DUE MONTH ADJ ADJUSTMENT YTD LEVY PAID PAID YTD BALANCE COLL % YTD UNCOLL

-------------------------------------------------------------------------------------------------------------------------------

2019 1,712,945.16 14,184.31- 41,066.63 7,656.39 1,694,556.76 59,455.03 96.61 0.002018 32,771.95 6,658.33- 16,293.80- 6,100.60- 1,963.15 14,515.00 11.91 75.64-2017 12,295.63 2,775.78- 3,022.29- 2,547.09- 1,958.46 7,314.88 21.12 65.60-2016 7,820.79 6.00- 3,358.87- 76.04 428.36- 4,890.28 9.60- 900.94-2015 3,932.77 .00 537.51- 39.03 742.67 2,652.59 21.87 533.46-2014 2,870.50 .00 435.50- 11.48 382.74 2,052.26 15.72 438.66-2013 1,742.87 .00 40.52 1.30 254.91 1,528.48 14.29 0.002012 1,491.69 .00 0.87- 0.00 119.39 1,371.43 8.01 0.002011 1,380.92 .00 0.00 0.00 38.95 1,341.97 2.82 0.002010 1,080.94 .00 0.00 0.00 31.97 1,048.97 2.96 0.002009 1,219.15 .00 348.73- 0.00 22.07 848.35 2.54 0.002008 1,015.35 .00 177.97- 0.00 10.23 827.15 1.22 0.002007 672.79 .00 0.00 0.00 4.86 667.93 .72 0.002006 1,025.90 .00 0.00 0.00 2.06 1,023.84 .20 0.002005 544.40 .00 26.48- 0.00 2.08 515.84 .40 0.002004 665.20 .00 0.00 0.00 2.08 663.12 .31 0.002003 368.43 .00 0.00 0.00 0.00 368.43 0.002002 270.64 .00 0.00 0.00 4.64 266.00 1.71 0.00

**** 1,784,115.08 23,624.42- 16,905.13 863.45- 1,699,668.66 101,351.55 2,014.30-

CURR 1,712,945.16 14,184.31- 41,066.63 7,656.39 1,694,556.76 59,455.03 0.00DELQ 71,169.92 9,440.11- 24,161.50- 8,519.84- 5,111.90 41,896.52 2,014.30-

PAGE: 17


HARRIS COUNTY, TEXAS

ANNUAL FINANCIAL REPORT

DECEMBER 31, 2019

15

T A B L E O F C O N T E N T S

PAGE

INDEPENDENT AUDITOR’S REPORT 1-2

MANAGEMENT’S DISCUSSION AND ANALYSIS 3-7

BASIC FINANCIAL STATEMENTS

STATEMENT OF NET POSITION AND GOVERNMENTAL FUNDS BALANCE

SHEET

8

RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO

THE STATEMENT OF NET POSITION

9

STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUND STATEMENT OF

REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE

10-11

RECONCILIATION OF THE GOVERNMENTAL FUND STATEMENT OF

REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE TO THE

STATEMENT OF ACTIVITIES

12

NOTES TO THE FINANCIAL STATEMENTS 13-29

REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND

BALANCE-BUDGET AND ACTUAL-GENERAL FUND

31

SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS 32

SCHEDULE OF DISTRICT CONTRIBUTIONS 33

NOTES TO SCHEDULE OF DISTRICT CONTRIBUTIONS 34

SUPPLEMENTARY INFORMATION REQUIRED BY HARRIS COUNTY

LISTING OF THE NUMBER OF EMERGENCY RESPONSES MADE WITHIN AND

OUTSIDE THE DISTRICT

36

SCHEDULE OF INSURANCE AND BONDING COVERAGE 37

STATEMENT OF ACTIVITIES –VOLUNTEER FIRE DEPARTMENT (NOT

APPLICABLE)

OTHER SUPPLEMENTARY INFORMATION

TAXES LEVIED AND RECEIVABLE 39-40

COMPARATIVE SCHEDULE OF REVENUES AND EXPENDITURES – GENERAL

FUND – FIVE YEARS

41-42

BOARD OF COMMISSIONERS AND CONSULTANTS 43-44

16

McCALL GIBSON SWEDLUND BARFOOT PLLC Certified Public Accountants

13100 Wortham Center Drive Suite 235 9600 Great Hills Trail Houston, Texas 77065-5610 Suite 150W (713) 462-0341 Austin, Texas 78759 Fax (713) 462-2708 (512) 610-2209 E-Mail: [email protected] www.mgsbpllc.com

Member of American Institute of Certified Public Accountants

Texas Society of Certified Public Accountants

INDEPENDENT AUDITOR’S REPORT

Board of Commissioners

Harris County Emergency

Services District No. 12

Harris County, Texas

We have audited the accompanying financial statements of the governmental activities and major fund of

Harris County Emergency Services District No. 12 (the “District”), as of and for the year ended December 31,

2019, and the related notes to the financial statements, which collectively comprise the District’s basic

financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance

with accounting principles generally accepted in the United States of America; this includes the design,

implementation, and maintenance of internal control relevant to the preparation and fair presentation of

financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our

audit in accordance with auditing standards generally accepted in the United States of America. Those

standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of

the risks of material misstatement of the financial statements, whether due to fraud or error. In making those

risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation

of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we

express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of significant accounting estimates made by management, as well as evaluating the

overall presentation of the financial statements.

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

audit opinions.

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Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective

financial position of the governmental activities and major fund of the District as of December 31, 2019, and

the respective changes in financial position for the year then ended in accordance with accounting principles

generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s

Discussion and Analysis, the Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and

Actual – General Fund, the Schedule of Changes in Net Pension Liability and Related Ratios, and the Schedule

of District Contributions be presented to supplement the basic financial statements. Such information,

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.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively

comprise the District’s basic financial statements. The supplementary information required by Harris County

and the other supplementary information 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 supplementary information, excluding that portion marked “Unaudited” on which

we express no opinion or provide any assurance, 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 information is fairly

stated, in all material respects, in relation to the basic financial statements as a whole.

McCall Gibson Swedlund Barfoot PLLC

Certified Public Accountants

Houston, Texas

August 4, 2020

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HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED DECEMBER 31, 2019

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Management’s discussion and analysis of Harris County Emergency Services District No. 12’s

(the “District”) financial performance provides an overview of the District’s financial activities

for the fiscal year ended December 31, 2019. Please read it in conjunction with the District’s

financial statements.

USING THIS ANNUAL REPORT

This annual report consists of a series of financial statements. The basic financial statements

include: (1) fund financial statements and government-wide financial statements and (2) notes to

the financial statements. The fund financial statements and government-wide financial

statements combine both: (1) the Statement of Net Position and Governmental Funds Balance

Sheet and (2) the Statement of Activities and Governmental Fund Statement of Revenues,

Expenditures and Changes in Fund Balance. This report also includes required and other

supplementary information in addition to the basic financial statements.

GOVERNMENT-WIDE FINANCIAL STATEMENTS

The District’s annual report includes two financial statements combining the government-wide

financial statements and the fund financial statements. The government-wide financial

statements provide both long-term and short-term information about the District’s overall status.

Financial reporting at this level uses a perspective like that found in the private sector with its

basis in full accrual accounting and elimination or reclassification of internal activities.

The Statement of Net Position includes all the District’s assets, liabilities and, if applicable,

deferred inflows and outflows of resources, with the difference reported as net position. Over

time, increases or decreases in net position may serve as a useful indicator of whether the

financial position of the District as a whole is improving or deteriorating. Evaluation of the

overall health of the District would extend to other non-financial factors.

The Statement of Activities reports how the District’s net position changed during the current

fiscal year. All current year revenues and expenses are included regardless of when cash is

received or paid.

FUND FINANCIAL STATEMENTS

The combined statements also include 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 District has one governmental fund type. The General Fund

accounts for resources not accounted for in another fund, property tax revenues, sales tax

receipts, costs of assessing and collecting taxes and general expenditures.

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FUND FINANCIAL STATEMENTS (Continued)

Governmental funds are reported in each of the financial statements. The focus in the fund

financial statements provides a distinctive view of the District’s governmental funds. These

statements report short-term fiscal accountability focusing on the use of spendable resources and

balances of spendable resources available at the end of the year. They are useful in evaluating

annual financing requirements of the District and the commitment of spendable resources for the

near-term.

Since the government-wide focus includes the long-term view, comparisons between these two

perspectives may provide insight into the long-term impact of short-term financing decisions.

The adjustments columns, the Reconciliation of the Governmental Funds Balance Sheet to the

Statement of Net Position and the Reconciliation of the Governmental Fund Statement of

Revenues, Expenditures and Changes in Fund Balance to the Statement of Activities explain the

differences between the two presentations and assist in understanding the differences between

these two perspectives.

NOTES TO THE FINANCIAL STATEMENTS

The accompanying notes to the financial statements provide information essential to a full

understanding of the government-wide and fund financial statements.

OTHER INFORMATION

In addition to the financial statements and accompanying notes, this report also presents certain

required supplementary information (“RSI”). The budgetary comparison schedule is included as

RSI for the General Fund.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

Net position may serve over time as a useful indicator of the District’s financial position. In the

case of the District, assets and deferred outflows of resources exceeded liabilities and deferred

inflows of resources by $12,150,433 as of December 31, 2019.

A portion of the District’s net position reflects its net investment in capital assets (land,

buildings, emergency vehicles, and equipment, less any debt used to acquire those assets that is

still outstanding). The District uses these assets to provide firefighting and fire prevention

services within the District.

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GOVERNMENT-WIDE FINANCIAL ANALYSIS (Continued)

The following is a comparative analysis of government-wide changes in net position:

Change

Positive

2019 2018 (Negative)

Current and Other Assets 8,713,694$ 7,558,529$ 1,155,165$

Capital Assets (Net of Accumulated

Depreciation) 5,112,257 5,276,906 (164,649)

Total Assets 13,825,951$ 12,835,435$ 990,516$

Deferred Outflows of Resources 247,626$ 173,903$ 73,723$

Current and Other Liabilities 134,603$ 100,297$ (34,306)$

Deferred Inflows of Resources 1,788,541$ 1,592,565$ (195,976)$

Net Position:

Net Investment in Capital Assets 5,112,257$ 5,276,906$ (164,649)$

Unrestricted 7,038,176 6,039,570 998,606

Total Net Position 12,150,433$ 11,316,476$ 833,957$

Summary of Changes in the Statement of Net Position

The following table provides a summary of the District’s operations for the years ended

December 31, 2019, and December 31, 2018.

Change

Positive


Revenues:

Property Taxes 1,568,456$ 1,411,331$ 157,125$

Sales Tax Receipts 2,814,621 2,657,221 157,400 Other Revenues 259,095 181,284 77,811

Total Revenues 4,642,172$ 4,249,836$ 392,336$

Expenses for Services 3,808,215 3,856,711 48,496

Change in Net Position 833,957$ 393,125$ 440,832$

Net Position, Beginning of Year 11,316,476 10,923,351 393,125

Net Position, End of Year 12,150,433$ 11,316,476$ 833,957$

Summary of Changes in the Statement of Activities

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FINANCIAL ANALYSIS OF THE DISTRICT’S GOVERNMENTAL FUNDS

The District’s General Fund fund balance as of the fiscal year ended December 31, 2019, was

$6,780,111, an increase of $929,713 from the prior year. This increase was primarily due to

property tax and sales tax revenues exceeding service operations.

GENERAL FUND BUDGETARY HIGHLIGHTS

The Board of Commissioners did not amend the budget during the fiscal year. Actual revenues

were $364,445 more than budgeted revenues. Actual expenditures were $470,553 less than

budgeted expenditures.

CAPITAL ASSETS

Capital assets as of December 31, 2019, total $5,112,257 (net of accumulated depreciation) and

include land, buildings, fire and utility trucks and equipment. Significant capital asset events

during the current fiscal year included the following:

Purchases/Improvements:

Communication Tower and Communication Upgrades 127,132$

Station Control Unit 34,590

Communication Center True-up 44,537

Total 206,259$

Change

Positive


Capital Assets Not Being Depreciated:

Land and Land Improvements 149,426$ 149,426$ $

Construction in Progress 103,772 124,048 (20,276)

Capital Assets, Net of Accumulated

Depreciation:

Buildings 4,123,139 4,091,377 31,762

Fire and Utility Trucks 643,061 840,369 (197,308)

Equipment 92,859 71,686 21,173

Total Net Capital Assets 5,112,257$ 5,276,906$ (164,649)$

Capital Assets At Year-End, Net of Accumulated Depreciation

Additional information on the District’s capital assets can be found in Note 5 of this report.

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CONTACTING THE DISTRICT’S MANAGEMENT

This financial report is designed to provide a general overview of the District’s finances.

Questions concerning any of the information provided in this report or requests for additional

information should be addressed to Harris County Emergency Services District No. 12, c/o

Smith, Murdaugh, Little & Bonham, L.L.P., 2727 Allen Parkway, Suite 1100, Houston, Texas

77019.

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The accompanying notes to the financial

statements are an integral part of this report.

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HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 STATEMENT OF NET POSITION AND

GOVERNMENTAL FUNDS BALANCE SHEET

DECEMBER 31, 2019

Statement of

General Fund Adjustments Net Position

ASSETS

Cash 20,730$ $ 20,730$

Investments 6,563,983 6,563,983

Cash with Harris County 251,396 251,396

Receivables:

Property Taxes 1,348,832 1,348,832

Penalty and Interest on Delinquent Taxes 29,337 29,337

Sales Tax Receipts 495,423 495,423

Accrued Interest 3,993 3,993

Land 149,426 149,426

Construction in Progress 103,772 103,772

Capital Assets (Net of Accumulated

Depreciation) 4,859,059 4,859,059

TOTAL ASSETS 8,684,357$ 5,141,594$ 13,825,951$

DEFERRED OUTFLOWS OF RESOURCES

Deferred Outflows - Pension - 0 - $ 247,626$ 247,626$

TOTAL ASSETS AND DEFERRED OUTFLOWS

OR RESOURCES 8,684,357$ 5,389,220$ 14,073,577$

LIABILITIES

Accounts Payable 64,205$ $ 64,205$

Net Pension Liability 70,398 70,398

TOTAL LIABILITIES 64,205$ 70,398$ 134,603$

DEFERRED INFLOWS OF RESOURCES

Property Taxes 1,840,041$ (53,567)$ 1,786,474$

Deferred Inflows - Pension 2,067 2,067

TOTAL DEFERRED INFLOWS OF RESOURCES 1,840,041$ (51,500)$ 1,788,541$

FUND BALANCE

Unassigned 6,780,111$ (6,780,111)$ - 0 - $

TOTAL LIABILITIES, DEFERRED INFLOWS

OF RESOURCES AND FUND BALANCE 8,684,357$

NET POSITION

Net Investment in Capital Assets 5,112,257$ 5,112,257$

Unrestricted 7,038,176 7,038,176

TOTAL NET POSITION 12,150,433$ 12,150,433$

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HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET

TO THE STATEMENT OF NET POSITION

DECEMBER 31, 2019

Total Fund Balance - Governmental Funds 6,780,111$

5,112,257

245,559

82,904

Net Pension Liability (70,398)

Total Net Position - Governmental Activities 12,150,433$

Amounts reported for governmental activities in the Statement of Net Position are

different because:

Capital assets used in governmental activities are not current financial resources

and, therefore, are not reported as assets in the governmental funds.

Certain liabilities are not due and payable in the current period and, therefore, are

not reported as liabilities in the governmental funds. These liabilities at year-end

consist of:

Deferred inflows of resources related to property tax revenues and uncollected

penalty and interest on delinquent taxes for the 2018 and prior tax levies became

part of recognized revenues in the governmental activities of the District.

Deferred pension plan charges that are not immediately recognized as pension

expense are recorded as deferred outflows or inflows of resources.

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HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUND STATEMENT OF



Statement of

General Fund Adjustments Activities

REVENUES

Property Taxes 1,564,182$ 4,274$ 1,568,456$

Sales Tax Receipts 2,814,621 2,814,621

Penalty and Interest 27,938 1,438 29,376

Investment Revenues 143,807 143,807

Miscellaneous Revenues 85,912 85,912

TOTAL REVENUES 4,636,460$ 5,712$ 4,642,172$

EXPENDITURES/EXPENSES

Service Operations:

Accounting and Auditing 43,196$ $ 43,196$

Appraisal District Fees 12,054 12,054

Building Maintenance and Supplies 8,005 8,005

Commissioner Fees 12,150 12,150

Communications 276,664 276,664

Depreciation 370,908 370,908

Dues and Fees 7,026 7,026

Equipment and Supplies 64,034 64,034

Fire Vehicle Maintenance 47,649 47,649

Fuel 25,189 25,189

Human Resources 36,089 36,089

Insurance 61,461 61,461

Legal Fees - General 95,326 95,326

Legal Fees - Delinquent Tax Collections 6,885 6,885

Office Equipment and Supplies 5,239 5,239

Salaries and Benefits 2,678,519 (63,181) 2,615,338

Sales Tax Consultant 9,102 9,102

Tax Assessor/Collector Fees 17,582 17,582

Training 28,213 28,213

Uniforms 14,603 14,603

Utilities 26,970 26,970

Other 24,532 24,532

Capital Outlay 206,259 (206,259)

TOTAL EXPENDITURES/EXPENSES 3,706,747$ 101,468$ 3,808,215$

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HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 STATEMENT OF ACTIVITIES AND GOVERNMENTAL FUND STATEMENT OF



Statement of

General Fund Adjustments Activities

NET CHANGE IN FUND BALANCE 929,713$ (929,713)$ $

CHANGE IN NET POSITION 833,957 833,957

FUND BALANCE/NET POSITION - JANUARY 1, 2019 5,850,398 5,466,078 11,316,476

FUND BALANCE/NET POSITION -

DECEMBER 31, 2019 6,780,111$ 5,370,322$ 12,150,433$

28



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HARRIS COUNTY EMERGENCY SERIVCES DISTRICT NO. 12 RECONCILIATION OF THE GOVERNMENTAL FUND STATEMENT OF


TO THE STATEMENT OF ACTIVITIES


Net Change in Fund Balance - Governmental Funds 929,713$

Amounts reported for governmental activities in the Statement of Activities are

different because:

Governmental funds report tax revenues when collected. However, in the

government-wide financial statements, revenues are recorded in the accounting

period for which the taxes are levied. 4,274

Governmental funds report penalty and interest revenues on delinquent property

taxes when collected. However, in the government-wide financial statements,

revenues are recorded when penalty and interest are assessed. 1,438

Governmental funds do not account for depreciation. However, in the government-

wide financial statements, capital assets are depreciated and depreciation expense is

recorded in the Statement of Activities. (370,908)

The changes in the deferred outflows of resources are recorded as pension expense

in the government-wide financial statements. 63,181

Governmental funds report capital asset costs as expenditures in the period

purchased. However, in the government-wide financial statements, capital assets

are increased by new purchases that meet the District's threshold for capitalization,

and are owned and maintained by the District. All other capital asset purchases are

expensed in the Statement of Activities. 206,259

Change in Net Position - Governmental Activities 833,957$

29

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 NOTES TO THE FINANCIAL STATEMENTS

DECEMBER 31, 2019

-13-

NOTE 1. CREATION OF DISTRICT

Harris County Rural Fire Prevention District No. 12 was created by the Commissioners’ Court of

the County of Harris on May 4, 2002, in accordance with Article III, Section 48-d, of the Texas

Constitution. This action was taken by the Commissioners as a result of voter approval by

residents of the District on February 2, 2002. Effective September 1, 2003, Texas Legislature

Senate Bill 1021 converted all rural fire prevention districts to emergency services districts and

mandated a name change to Harris County Emergency Services District No. 12 (the “District”).

The District operates under Chapter 775 of the Health and Safety Code. The District was

established to provide operating funds for the contracting of fire prevention within the

boundaries of the District.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The accompanying financial statements have been prepared in accordance with accounting

principles generally accepted in the United States of America as promulgated by the

Governmental Accounting Standards Board (“GASB”).

The District is a political subdivision of the State of Texas governed by an elected board. The

GASB has established the criteria for determining whether an entity is a primary government or

a component unit of a primary government. The primary criteria are that it has a separately

elected governing body, it is legally separate, and it is fiscally independent of other state and

local governments. Under these criteria, the District is considered a primary government and is

not a component unit of any other government. Additionally, no other entities meet the criteria

for inclusion in the District’s financial statement as component units.

Financial Statement Presentation

These financial statements have been prepared in accordance with GASB Codification of

Governmental Accounting and Financial Reporting Standards Part II, Financial Reporting

(“GASB Codification”).

The GASB Codification sets forth standards for external financial reporting for all state and local

government entities, which include a requirement for a Statement of Net Position and a

Statement of Activities. It requires the classification of net position into three components: Net

Investment in Capital Assets; Restricted; and Unrestricted. These classifications are defined as

follows:

• Net Investment in Capital Assets – This component of net position consists of capital

assets, including restricted capital assets, net of accumulated depreciation and reduced by

the outstanding balances of any bonds, mortgages, notes, or other borrowings that are

attributable to the acquisition, construction, or improvements of those assets.

30


DECEMBER 31, 2019

-14-

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial Statement Presentation (Continued)

• Restricted Net Position – This component of net position consists of external constraints

placed on the use of assets imposed by creditors (such as through debt covenants),

grantors, contributors, or laws or regulation of other governments or constraints imposed

by law through constitutional provisions or enabling legislation.

• Unrestricted Net Position – This component of net position consists of assets that do not

meet the definition of Restricted or Net Investment in Capital Assets.

When both restricted and unrestricted resources are available for use, generally it is the District’s

policy to use restricted resources first.

Government-Wide Financial Statements

The Statement of Net Position and the Statement of Activities display information about the

District as a whole. The District’s Statement of Net Position and Statement of Activities are

combined with the governmental fund financial statements. The District is viewed as a special-

purpose government and has the option of combining these financial statements.

The Statement of Net Position is reported by adjusting the governmental fund types to report on

the full accrual basis, economic resource basis, which recognizes all long-term assets and

receivables as well as long-term debt and obligations. Any amounts recorded due to and due

from other funds are eliminated in the Statement of Net Position.

The Statement of Activities is reported by adjusting the governmental fund types to report only

items related to current year revenues and expenditures. Items such as capital outlay are

allocated over their estimated useful lives as depreciation expense. Internal activities between

governmental funds, if any, are eliminated by adjustment to obtain net total revenues and

expenses in the government-wide Statement of Activities.

Fund Financial Statements

As discussed above, the District’s fund financial statements are combined with the government-

wide financial statements. The fund financial statements include a Governmental Funds Balance

Sheet and a Government Fund Statement of Revenues, Expenditures and Changes in Fund

Balance.

31


DECEMBER 31, 2019

-15-


Financial Statement Presentation (Continued)

Fund Financial Statements (Continued)

Governmental Funds

The District has one governmental fund; therefore, it is a major fund.

General Fund - To account for resources not required to be accounted for in another fund,

property tax revenues, sales tax receipts, costs of assessing and collecting taxes and general

expenditures.

Basis of Accounting

The District uses the modified accrual basis of accounting for governmental fund types. The

modified accrual basis of accounting recognizes revenues when both “measurable and available.”

Measurable means the amount can be determined. Available means collectable within the

current period or soon enough thereafter to pay current liabilities. The District considers

revenues reported in governmental funds to be available if they are collectable within 60 days

after year-end. Also, under the modified accrual basis of accounting, expenditures are recorded

when the related fund liability is incurred, except for principal and interest on long-term debt,

which are recognized as expenditures when payment is due.

Property taxes considered available by the District and included in revenue include 2018 tax levy

collections during the period October 1, 2018, to December 31, 2019, and taxes collected from

January 1, 2019, to December 31, 2019, for all prior tax levies. The 2019 tax levy has been fully

deferred to meet the District’s planned expenditures in the 2020 fiscal year.

Capital Assets

Capital assets, which include land, buildings and equipment, are reported in the government-

wide Statement of Net Position. All capital assets are valued at historical cost or estimated

historical cost if actual historical cost is not available. Donated assets are valued at their fair

market value on the date donated. Repairs and maintenance are recorded as an expenditure in

the governmental fund incurred and as an expense in the government-wide Statement of

Activities. Capital asset additions, improvements and preservation costs that extend the life of an

asset are capitalized and depreciated over the estimated useful life of the asset after completion.

Capital assets with a useful life of two years or more and a total cost of $5,000 or more

(including installation costs and professional fees) are capitalized and depreciated using no

salvage value and the straight-line method of depreciation. Estimated useful lives are as follows:

32


DECEMBER 31, 2019

-16-


Capital Assets (Continued)

Years

Buildings 40

Fire and Utility Trucks 10

Equipment 2-15

Budgeting

An annual unappropriated budget is adopted for the General Fund by the District’s Board of

Directors. The budget is prepared using the same method of accounting as for financial

reporting. The original General Fund budget for the current year was not amended. The

Schedule of Revenues, Expenditures and Changes in Fund Balance – Budgetary and Actual –

General Fund presents the original budget amounts compared to the actual amounts of revenues

and expenditures for the current year.

Pensions

The District makes payments into the social security system for its employees. In August 2014,

the District established a 457(b) retirement plan for its employees, and on December 15, 2015,

the District approved the participation in a pension plan, effective January 1, 2016. Additional

disclosure is provided in Note 9 and Note 10. The Internal Revenue Service has determined that

fees of office received by Commissioners are wages subject to federal income tax withholding

for payroll tax purposes only.

Measurement Focus

Measurement focus is a term used to describe which transactions are recognized within the

various financial statements. In the government-wide Statement of Net Position and Statement

of Activities, the governmental activities are presented using the economic resources

measurement focus. The accounting objectives of this measurement focus are the determination

of operating income, changes in net position, financial position, and cash flows. All assets,

liabilities, and deferred inflows and outflows of resources associated with the activities are

reported. Fund equity is classified as net position.

Governmental fund types are accounted for on a spending or financial flow measurement focus.

Accordingly, only current assets and current liabilities are included on the Governmental Funds

Balance Sheet, and the reported fund balances provide an indication of available spendable or

appropriable resources. Operating statements of governmental fund types report increases and

decreases in available spendable resources. Fund balances in governmental funds are classified

using the following hierarchy:

Nonspendable: amounts that cannot be spent either because they are in nonspendable form or

because they are legally or contractually required to be maintained intact. The District does not

have any nonspendable fund balances.

33


DECEMBER 31, 2019

-17-


Measurement Focus (Continued)

Restricted: amounts that can be spent only for specific purposes because of constitutional

provisions, or enabling legislation, or because of constraints that are imposed externally. The

District does not have any restricted fund balances.

Committed: amounts that can be spent only for purposes determined by a formal action of the

Board of Commissioners. The Board is the highest level of decision-making authority for the

District. This action must be made no later than the end of the fiscal year. Commitments may

be established, modified, or rescinded only through ordinances or resolutions approved by the

Board. The District does not have any committed fund balances.

Assigned: amounts that do not meet the criteria to be classified as restricted or committed, but

that are intended to be used for specific purposes. The District does not have any assigned fund

balances.

Unassigned: all other spendable amounts in the General Fund.

When expenditures are incurred for which restricted, committed, assigned or unassigned fund

balances are available, the District considers amounts to have been spent first out of restricted

funds, then committed funds, then assigned funds, and finally unassigned funds.

Accounting 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 the reported amount of assets and liabilities and disclosure of contingent

assets and liabilities at the date of the financial statements and the reported amounts of revenues

and expenditures during the reporting period. Actual results could differ from those estimates.

NOTE 3. TAX LEVY

Voters of the District have approved a maximum tax rate of $0.05 per $100 of assessed

valuation. During the year ended December 31, 2019, the District levied an ad valorem tax at the

rate of $0.05 per $100 of assessed valuation, which resulted in a tax levy of $1,786,474 on the

adjusted taxable valuation of $3,571,712,396 for the 2019 tax year.

34


DECEMBER 31, 2019

-18-

NOTE 3. TAX LEVY (Continued)

All property values and exempt status, if any, are determined by the appraisal district. Assessed

values are determined as of January 1 of each year, at which time a tax lien attaches to the related

property. Taxes are levied around October/November, are due upon receipt and are delinquent

the following February 1. Penalty and interest attach thereafter.

NOTE 4. DEPOSITS AND INVESTMENTS

Deposits

Custodial credit risk is the risk that, in the event of the failure of a depository financial

institution, a government will not be able to recover deposits or will not be able to recover

collateral securities that are in the possession of an outside party. The District’s deposit policy

for custodial credit risk requires compliance with the provisions of Texas statutes.

Texas statutes require that any cash balance in any fund shall, to the extent not insured by the

Federal Deposit Insurance Corporation or its successor, be continuously secured by a valid

pledge to the District of securities eligible under the laws of Texas to secure the funds of the

District, having an aggregate market value, including accrued interest, at all times equal to the

uninsured cash balance in the fund to which such securities are pledged. At fiscal year-end, the

carrying amount of the District’s deposits was $394,540 and the bank balance was $430,372.

The District was not exposed to custodial credit risk at year-end.

The carrying values of the deposits are included in the Governmental Funds Balance Sheet and

the Statement of Net Position at December 31, 2019, as listed below:

Certificates

Cash of Deposit Total

GENERAL FUND 20,730$ 373,810$ 394,540$

Investments

Under Texas law, the District is required to invest its funds under written investment policies that

primarily emphasize safety of principal and liquidity and that address investment diversification,

yield, maturity, and the quality and capability of investment management, and all District funds

must be invested in accordance with the following investment objectives: understanding the

suitability of the investment to the District’s financial requirements, first; preservation and safety

of principal, second; liquidity, third; marketability of the investments if the need arises to

liquidate the investment before maturity, fourth; diversification of the investment portfolio, fifth;

35


DECEMBER 31, 2019

-19-

NOTE 4. DEPOSITS AND INVESTMENTS (Continued)

Investments (Continued)

and yield, sixth. The District’s investments must be made “with judgment and care, under

prevailing circumstances, that a person of prudence, discretion, and intelligence would exercise

in the management of the person’s own affairs, not for speculation, but for investment,

considering the probable safety of capital and the probable income to be derived.” No person

may invest District funds without express written authority from the Board of Commissioners.

Texas statutes include specifications for and limitations applicable to the District and its

authority to purchase investments as defined in the Public Funds Investment Act. The District

has adopted a written investment policy to establish the guidelines by which it may invest. This

policy is reviewed annually. The District’s investment policy may be more restrictive than the

Public Funds Investment Act.

The District invests in TexPool, an external investment pool that is not SEC-registered. The

Texas Comptroller of Public Accounts has oversight of the pool. Federated Investors, Inc.

manages the daily operations of the pool under a contract with the Comptroller. TexPool

measures all its portfolio assets at amortized cost. As a result, the District also measures its

investments in TexPool at amortized cost for financial reporting purposes. There are no

limitations or restrictions on withdrawals from TexPool.

As of December 31, 2019, the District had the following investments and maturities:

Fund and Less Than

Investment Type Fair Value 1 1-5 6-10

GENERAL FUND

Certificates of Deposit 373,810$ 373,810$ $ $

TexPool 6,190,173 6,190,173

TOTAL INVESTMENTS 6,563,983$ 6,563,983$ - 0 - $ - 0 - $

Maturities in Years

Credit risk is the risk that the issuer or other counterparty to an investment will not fulfill its

obligations. At December 31, 2019, the District’s investment in TexPool was rated “AAAm” by

Standard and Poor’s. The District also manages credit risk by investing in certificates of deposit

with balances below FDIC coverage.

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an

investment. The District considers the investment in TexPool to have a maturity of less than one

year due to the fact the share position can usually be redeemed each day at the discretion of the

District, unless there has been a significant change in value. The District also manages interest

rate risk by investing in certificates of deposit with maturities of approximately one year or less.

36


DECEMBER 31, 2019

-20-

NOTE 5. CAPITAL ASSETS

January 1, December 31,

2019 Increases Decreases 2019Capital Assets Not Being Depreciated

Land and Land Improvements 149,426$ $ $ 149,426$

Construction in Progress 124,048 206,259 226,535 103,772

Total Capital Assets Not Being

Depreciated 273,474$ 206,259$ 226,535$ 253,198$

Capital Assets Subject toDepreciation

Buildings 4,764,625$ 191,945$ $ 4,956,570$

Fire and Utility Trucks 2,393,536 2,393,536

Equipment 92,374 34,590 126,964

Total Capital Assets Subject to

Depreciation 7,250,535$ 226,535$ - 0 - $ 7,477,070$

Less Accumulated Depreciation

Buildings 673,248$ 160,183$ $ 833,431$

Fire and Utility Trucks 1,553,167 197,308 1,750,475

Equipment 20,688 13,417 34,105

Total Accumulated Depreciation 2,247,103$ 370,908$ - 0 - $ 2,618,011$

Total Depreciable Capital Assets, Net ofAccumulated Depreciation 5,003,432$ (144,373)$ - 0 - $ 4,859,059$

Total Capital Assets, Net ofAccumulated Depreciation 5,276,906$ 61,886$ 226,535$ 5,112,257$

NOTE 6. RISK MANAGEMENT

The District is exposed to various risks of loss related to torts; theft of, damage to and destruction

of assets; and error and omissions for which the District carries commercial insurance. The

District carries commercial insurance for its property, general liability, automobile liability,

excess liability, accident and sickness, management liability and fidelity bonds. The District

participates in the Texas Municipal League Intergovernmental Risk Pool (“TML”) to provide

workers compensation coverage. The District, along with other participating entities, contributes

annual amounts determined by TML’s management. As claims arise, they are submitted and

paid by TML. The District has not significantly reduced insurance coverage or had settlements

which exceeded coverage amounts for the past three fiscal years.

NOTE 7. SALES AND USE TAX

At an election held on May 10, 2008, voters within the District authorized the District to adopt,

assess, levy and collect a sales and use tax at the rate of one half of one percent. On June 3,

2008, the Board set a local sales and use tax of one-half percent on all applicable sales and uses

within the boundaries of the District, effective October 1, 2008. During the current fiscal year,

the District collected $2,814,621 in sales tax receipts; of this amount $495,423 is reported as

receivable at December 31, 2019.

37


DECEMBER 31, 2019

-21-

NOTE 8. LEASES

Land Lease

On January 1, 1984, Cloverleaf VFD entered into and most recently renewed on October 22,

2013, an agreement with Harris County to use certain county-owned fire protection or fire-

fighting equipment, as well as the use of a county-owned 0.9183-acre tract of land to store and

maintain the equipment for Fire Station No. 2. On April 28, 2014, Cloverleaf VFD assigned all

its benefits and obligations under the agreement to the District. The agreement provides for

automatic annual renewal options. No encumbrance or obligation of funds will be required under

the terms of this agreement.

Tower Lease Agreement

On June 24, 2014, the District entered into an agreement with Harris County for the use of Harris

County’s communications tower located on Wallisville Road. Cloverleaf VFD previously

installed communications equipment on the tower, which the District now owns and will

continue to operate to provide firefighting and the fire protection services for the area. The

agreement is for one year and will automatically renew for one-year terms, at no cost to the

District.

NOTE 9. RETIREMENT PLAN

In August 2014, the District established a 457(b)-retirement plan for its employees. The plan is a

qualified prototype plan approved by the Internal Revenue Service and administered by

International City/County Management Association Retirement Corporation which also serves as

custodian of assets of the plan. The plan became effective as of January 1, 2015.

The 457(b)-retirement plan is a defined contribution plan open to regular full-time employees

only and is funded entirely by the employees. Each employee participant directs the investment

in his/her respective account. All participants are immediately fully vested in all contributions.

During the current fiscal year, the employees contributed $22,840 to the plan.

38


DECEMBER 31, 2019

-22-

NOTE 10. PENSION PLAN

Plan Description

The District provides retirement, disability, and survivor benefits for all its full-time employees

through a nontraditional defined benefit pension plan in the statewide Texas County and District

Retirement System (“TCDRS”). The Board of Trustees of TCDRS is responsible for the

administration of the statewide, agent multiple-employer, public employee retirement system.

TCDRS issues a publicly available comprehensive annual financial report (CAFR) which

includes financial statements, notes and required supplementary information which can be

obtained at TCDRS, Finance Division, Barton Oaks Plaza IV Suite 500, 901 S. MoPac

Expressway, Austin, Texas 78746 or at www.TCDRS.org.

The plan provisions are adopted by the governing body of the employer, within the options

available in the Texas state statutes governing TCDRS (TCDRS Act). Members can retire at

ages 60 and above with 5 or more years of service, with 20 years of service regardless of age, or

when the sum of their age and years of service equals 80 or more. Members are vested after 5

years of service but must leave their accumulated contributions in the plan to receive any

employer-financed benefit. Members who withdraw their personal contributions in a lump sum

are not entitled to any amounts contributed by the District.

Benefit amounts are determined by the sum of the employee’s contributions to the plan, with

interest, and employer-financed monetary credits. The level of these monetary credits is adopted

by the governing body of the employer within the actuarial constraints imposed by the TCDRS

Act so that the resulting benefits can be expected to be adequately financed by the employer’s

commitment to contribute. At retirement, death, or disability, the benefit is calculated by con-

verting the sum of the employee’s accumulated contributions and the employer-financed

monetary credits to a monthly annuity using annuity purchase rates prescribed by the TCDRS

Act. At December 31, 2018, the valuation and measurement date, the following employees were

covered by the benefit terms:

Inactive employees or beneficiaries currently receiving benefits 0

Inactive employees entitled but not yet receiving benefits 10

Active employees 39

Contributions

The employer has elected the annually determined contribution rate (ADCR) plan provisions of

the TCDRS Act. The plan is funded by monthly contributions from both employee members and

the employer based on the covered payroll of employee members. Under the TCDRS Act, the

contribution rate of the employer is actuarially determined annually.

The employer contributed using the actuarially determined rate of 8.10% for accounting year

2019. The contribution rate payable by the employee members for calendar year 2018 is 7.00%

as adopted by the governing body of the employer. The employee contribution rate and the

employer contribution rate may be changed by the governing body of the District within the

options available in the TCDRS Act.

39

http://www.tcdrs.org/


DECEMBER 31, 2019

-23-

NOTE 10. PENSION PLAN (Continued)

For the District’s accounting year ended December 31, 2019, the annual pension cost for the

TCDRS plan for its employees was $215,058; the actual contributions were $215,058. The

employees contributed $107,529 to the plan for the 2019 fiscal year. The total liability in the

December 31, 2019 actuarial valuation was determined using the following actuarial

assumption:.

Actuarial Valuation Information

Actuarial valuation date 12/31/16 12/31/17 12/31/18

Actuarial cost method Entry age Entry age Entry age

Amortization method

Level

percentage,

closed

Level

percentage,

closed

Level

percentage,

closed

Amortization period 20 years 15.9 years 16.0 years

Remaining Asset valuation method 5 Year

Smoothed

Value

5 Year

Smoothed

Value

5 Year

Smoothed

Value

Actuarial Assumptions:

Investment return, net 1 8.00% 8.00% 8.00%

Projected salary increases 1 4.90% 4.90% 4.90%

Inflation 3.00% 2.75% 2.75%

Cost-of-living adjustments 0.00% 0.00% 0.00% 1

Includes inflation at the stated rate.

The actuarial assumptions that determined the total pension liability as of December 31, 2017

were based on the results of an actuarial experience study for the period January 1, 2013 –

December 31, 2016, except where required to be different by GASB 68.

40


DECEMBER 31, 2019

-24-


Mortality rates were based on the following:

Depositing members – 90% of the RP-2014 Active Employee Mortality Table for males and the

RP-2014 Active Employee Mortality Table for the females projected with 110% of the MP-2014

ultimate scale after 2014.

Service retirees, beneficiaries and non-depositing members – 130% of the RP-2014 Healthy

Annuitant Mortality Table for males and 110% of the RP-2014 Healthy Annuitant Mortality

Table for females, both projected with 110% of the MP-2014 ultimate scale after 2014.

Disabled retirees – 130% of the RP-2014 Disability Annuitant Mortality Table for males and

115% of the RP-2014 Disability Annuitant Mortality Table for females, both projected with

110% of the MP-2014 ultimate scale after 2014.

Discount Rate

The discount rate used to measure the total pension liability was 8.1%. There was no change in

the discount rate since the previous year.

In order to determine the discount rate to be used, the actuary used an alternative method

to determine the sufficiency of the fiduciary net position in all future years. This alternative

method reflects the funding requirements under the funding policy and the legal requirements

under the TCDRS Act:

1) TCDRS has a funding policy where the Unfunded Actuarial Accrued Liability

(UAAL) shall be amortized as a level percent of pay over 20-year closed layered

periods.

2) Under the TCDRS Act, the employer is legally required to make the contribution

specified in the funding policy.

3) The employer's assets are projected to exceed its accrued liabilities in 20 years or less. When this point is reached, the employer is still required to contribute at least the normal cost.

4) Any increased cost due to the adoption of a cost-of-living adjustment is required to be funded over a period of 15 years, if applicable.

Based on the above, the projected fiduciary net position is determined to be sufficient

compared to projected benefit payments. Based on the expected level of cash flows and

investment returns to the system, the fiduciary net position as a percentage of total pension

liability is projected to increase from its current level in future years.

41


DECEMBER 31, 2019

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Discount Rate (Continued)

Since the projected fiduciary net position is projected to be sufficient to pay projected benefit

payments in all future years, the discount rate for purposes of calculating the total pension

liability and net pension liability is equal to the long-term assumed rate of return on

investments. This long-term assumed rate of return should be net of investment expenses, but

gross of administrative expenses. Therefore, the actuary has used a discount rate of 8.10%.

This rate reflects the long-term assumed rate of return on assets for funding purposes of 8.0%,

net of all expenses, increased by 0.10% to be gross of administrative expenses.

Long-Term Expected Rate of Return

The long-term expected rate of return on TCDRS assets is determined by adding expected

inflation to expected long-term real returns and reflecting expected volatility and correlation.

The capital market assumptions and information shown below are provided by TCDRS'

investment consultant, Cliffwater LLC. The numbers shown are based on January 2019

information for a 10-year time horizon.

Note that the valuation assumption for long-term expected return is re-assessed at a minimum of

every four years and is based on a 30-year time horizon; the most recent analysis was

performed in 2017 based on the period January 1, 2013-December 31, 2016. Best estimates of

geometric real rates of return for each major asset class included in the target asset allocation are

summarized below:

Asset Class

Target Allocation

Geometric Real Rate of Return

(Expected minus Inflation)

US Equities 10.50% 5.40%

Private Equity 18.00% 8.40%

Global Equities 2.50% 5.70%

International Equities-Developed Markets 10.00% 5.40%

International Equities-Emerging Markets 7.00% 5.90%

Investment-Grade Bonds 3.00% 1.60%

Strategic Credit 12.00% 4.39%

Direct Lending 11.00% 7.95%

Distressed Debt 2.00% 7.20%

REIT Equities 2.00% 4.15%

Master Limited Partnerships (MLPs) 3.00% 5.35%

Private Real Estate Partnerships 6.00% 6.30%

Hedge Funds 13.00% 3.90%

42


DECEMBER 31, 2019

-26-


Net Pension Liability (Continued)

Changes in Net Pension Liability:

Increase (Decrease)

Total Pension

Liability

(a)

Fiduciary

Net position

(b)

Net Position

Liability

(a)-(b)

Balances of December 31, 2017 $ 370,223 $ 310,597 $ 19,172

Changes for the year:

Service cost 249,532 140,766

Interest on total pension liability 49,331 19,212

Effect of economic/demographic

(gains) or losses

39,594

84,100

Refund of contributions (21,875) (21,875)

Administrative expenses (495) 207

Member contributions 126,272 (95,615)

Net investment income (2,438) (14,914)

Employer contributions 195,384 (121,501)

Other 8,963 (2,872)

Balances of December 31, 2018 $ 686,806 $ 616,408 $ 70,397

Sensitivity Analysis - The following presents the net pension liability of the District, calculated

using the discount rate of 8.10%, as well as what the District net pension liability would be if it

were calculated using a discount rate that is 1 percentage point lower (7.10%) or 1 percentage

point higher (9.10%) than the current rate.

1%

Decrease

Current

Discount Rate

1%

Increase

7.10% 8.10% 9.10%

Total pension liability $ 853,739 $ 686,806 $ 557,532

Fiduciary net position 616,408 616,408 616,408

Net pension liability $ 237,331 $ 70,397 $ (58,876)

43


DECEMBER 31, 2019

-27-


As of December 31, 2019, the deferred inflows and outflows of resources are as follows:

Deferred Inflows

of Resources

Deferred Outflows of

Resources

Differences between expected and actual experience $ -0- $ 106,938

Changes of assumptions 2,067 -0-

Net difference between projected and actual earnings -0- 33,159

Contributions made subsequent to measurement date -0- 107,529

Total 2,067 173,903

Amounts currently reported as deferred outflows of resources and deferred inflows of resources

related to pensions, excluding contributions made subsequent to the measurement date, will be

recognized in pension expense as follows:

Year ended December 31:

2019 $ 19,887

2020 19,886

2021 19,263

2022 19,247

2023 11,281

Thereafter 48,466

NOTE 11. EAST HARRIS COUNTY EMERGENCY SERVICES JOINT POWERS

BOARD

On May 1, 2015, the District entered into an agreement with Harris County Emergency Services

District Nos. 2, 6, 50, and 60 (the “Participants”), to provide for the construction and operation

of a joint integrated, emergency communications system to serve the Participants and potentially

other emergency service providers. The Participants reaffirm the creation of the East Harris

County Emergency Services Joint Powers Board (the “Joint Powers Board”) which will have the

functions, powers, authority, rights and duties authorized by law of the State of Texas and this

agreement. The provisions of this Agreement with respect to the Joint Powers Board supersede

any prior contract. The purpose of the Joint Powers Board is to (1) supervise the performance of

this agreement, (2) provide fire suppression, emergency response, and emergency medical

services dispatch services to the Participants, and (3) provide, acquire, construct, improve,

enlarge, extend, modify, maintain, repair, and operate the Dispatch Center. The Participants are

tenants in common of the Center and retain legal title, including the land, buildings, equipment,

related appurtenances, right-of-ways, and easements.

44


DECEMBER 31, 2019

-28-

NOTE 11. EAST HARRIS COUNTY EMERGENCY SERVICES JOINT POWERS

BOARD (Continued)

Each Participant agrees to provide its share of costs related to construction and operation of the

Center. Each Participant agrees to deposit into the Joint Powers Board’s capital account, funds

in the amounts of $150,000 on May 15, 2015, and $400,000 on January 15, 2016 and January 15,

2017, to pay costs related to the design and construction of the Center. These amounts are

estimates and dependent upon the actual costs of design and construction of the Center.

Each party shall deposit its ownership share of the estimated design and construction costs of the

Center per the Cash Call dates outlined in the contract. Each Party’s respective ownership is 20

percent. The Parties agree that by November 15, 2017, the Parties shall remit to ECOM an

amount establishing an operating account equal to 3 month’s operating expense based upon the

operating budget of the upcoming fiscal year. This amount will be used to pay for the initial

operation and maintenance expenses. Upon completion of the Center, operating expenses for the

first partial and first full fiscal year, fixed and variable operating expenses of the Center shall be

allocated according to ownership interest. Thereafter, all fixed expenses shall be allocated based

on ownership interest. Variable expenses will be allocated based on call volume. On October 3,

2018, ECOM amended this agreement. The agreement states that each Party will make operating

advances on a semi-annual basis in January and July. At the end of the fiscal year, ECOM will

prepare a “True-Up” reconciliation of the operating account to reflect actual expenses paid. Any

remaining funds in the operating account will be transferred into a reserve account which will be

used for future operating and capital expenditures.

The Center is located on property previously owned by ESD No. 50. The Joint Powers Board

obtained an independent appraisal of the value of the site and based on that appraisal the cost of

the site was divided between the participants in proportion to the ownership interest. The total

appraised value of the site was credited to ESD No. 50 as part of its share of the cost to construct

the Center.

The Joint Powers Board will operate and maintain the Center in accordance with the regulations,

guidelines and standards of the National Emergency Number Association and the Association of

Public-Safety Communications Officials.

The term of the agreement is 30 years from the date of the Agreement and from year to year

thereafter unless terminated by at least six months written notice to all parties. A party may

withdraw from this contract through a vote of its governing body, provided that it has notified

the Joint Powers Board of such action in writing at least 180 days before the Participants

intended withdrawal date.

45


DECEMBER 31, 2019

-29-

NOTE 11. UNCERTAINTIES

On March 11, 2020, the World Health Organization declared the COVID-19 virus a global

pandemic. As a result, economic uncertainties have arisen which could have an impact on the

operations of the District. The District is carefully monitoring the situation and evaluating its

options during this time. No adjustments have been made to these financial statements as a

result of this uncertainty, as the potential financial impact of this pandemic is unknown at this

time.

46


REQUIRED SUPPLEMENTARY INFORMATION

DECEMBER 31, 2019

47

See accompanying independent auditor’s report.

- 31 -

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 SCHEDULE OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCE - BUDGET AND ACTUAL

GENERAL FUND


Variance

Original and Positive

Final Budget Actual (Negative)

REVENUES

Property Taxes 1,557,015$ 1,564,182$ 7,167$

Sales Tax Receipts 2,715,000 2,814,621 99,621

Penalty and Interest 27,938 27,938

Investment Revenues 143,807 143,807

Miscellaneous Revenues 85,912 85,912

TOTAL REVENUES 4,272,015$ 4,636,460$ 364,445$

EXPENDITURES

Service Operations:

Accounting and Auditing 46,000$ 43,196$ 2,804$

Appraisal District Fees 11,000 12,054 (1,054)

Building Maintenance and Supplies 40,000 8,005 31,995

Commissioner Fees 15,600 12,150 3,450

Communications 299,000 276,664 22,336

Dues and Fees 12,000 7,026 4,974

Equipment and Supplies 197,000 64,034 132,966

Fire Vehicle Maintenance 45,000 47,649 (2,649)

Fuel 28,000 25,189 2,811

Human Resources 40,000 36,089 3,911

Insurance 60,000 61,461 (1,461)

Legal Fees - General 75,000 95,326 (20,326)

Legal Fees - Delinquent Tax Collections 6,885 (6,885)

Office Equipment and Supplies 12,000 5,239 6,761

Salaries and Benefits 3,070,000 2,678,519 391,481

Sales Tax Consultant 30,000 9,102 20,898

Tax Assessor/Collector Fees 17,582 (17,582)

Training 31,000 28,213 2,787

Uniforms 30,000 14,603 15,397

Utilities 49,500 26,970 22,530

Other 26,200 24,532 1,668

Capital Outlay 60,000 206,259 (146,259)

TOTAL EXPENDITURES 4,177,300$ 3,706,747$ 470,553$

NET CHANGE IN FUND BALANCE 94,715$ 929,713$ 834,998$

FUND BALANCE - JANUARY 1, 2019 5,850,398 5,850,398

FUND BALANCE - DECEMBER 31, 2019 5,945,113$ 6,780,111$ 834,998$

48


- 32 -

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 SCHEDULE OF CHANGES IN NET

PENSION LIABILITY AND RELATED RATIOS

DECEMBER 31, 2019

Year Ended

December 31,

Year Ended

December 31,

Year Ended

December 31,

2016 2017 2018

Total Pension Liability

Service cost $ 93,906 $ 140,766 $ 249,532

Interest on total pension liability 3,620 19,212 49,331

Effect of plan changes 33,599

Effect of assumptions changes or inputs (2,527)

Effect of economic/demographic (gains) or losses 2,934 84,100 39,594

Refund of contributions/benefit payments (2,744) (2,643) (21,875)

Net change in total pension liability $ 97,716 $ 272,507 $ 316,583

Total pension liability, beginning -0- 97,716 370,223

Total pension liability, ending (a) $ 97,716 $ 370,223 $ 686,806

Fiduciary Net Position

Employer contributions $ 32,183 $ 121,501 $ 195,384

Member contributions 47,933 95,615 126,272

Investment income net of investment expenses 14,914 (2,438)

Benefit payments/refunds of contributions (2,744) (2,643) (21,875)

Administrative expenses (2,643) (207) (495)

Other (1,172) 2,872 8,963

Net change in fiduciary net position $ 78,544 $ 232,053 $ 305,811

Fiduciary net position, beginning -0- 78,544 310,597

Fiduciary net position, ending (b) $ 78,544 $ 310,597 $ 616,408

Net pension liability, ending = (a) – (b) $ 19,172 $ 59,626 $ 70,397

Fiduciary net position as a % of total pension

liability

80.38% 83.89% 89.75%

Pensionable covered payroll $ 684,757 $ 1,365,824 $ 1,803,889

Net pension liability as a % of covered payroll 2.80% 4.37% 3.90%

49


- 33 -

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 SCHEDULE OF DISTRICT CONTRIBUTIONS

DECEMBER 31, 2019

Year

Ending

December 31

Actuarially

Determined

Contribution

Actual

Employer

Contribution

Contribution

Deficiency

(Excess)

Pensionable

Covered

Payroll(1)

Actual Contribution

as a % of

Covered Payroll

2016 $ 32,183 $ 32,183 $ -0- $ 684,757 4.7%

2017 $ 121,431 $ 121,501 $ (71) $ 1,365,924 8.9%

2018 $ 195,384 $ 195,384 $ -0- $ 1,803,889 10.8%

(1) Payroll is calculated based on contributions as reported to TCDRS.

50


- 34 -

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 NOTES TO REQUIRED SUPPLEMENTARTY INFORMATION

DECEMBER 31, 2019

Valuation Date Actuarially determined contribution rates are calculated each

December 31, two years prior to the end of the fiscal year in

which the contributions are reported.

Methods and assumptions were used to determine contribution rates:

Actuarial Cost Method Entry Age

Amortization Method Level percentage of payroll, closed

Remaining Amortization Period 16.0 years (based on contribution rate calculated in 12/31/18

valuation)

Asset Valuation Method 5-year, smoothed market

Inflation 2.75%

Salary Increases Varies by age and service, 4.9% average over career including

inflation.

Investment Rate of Return 8.00%, net of investment expenses, including inflation

Retirement Age Members who are eligible for service retirement are assumed to

commence receiving benefit payments based on age. The

average age at service retirement for recent retirees is 61.

Mortality 130% of the MP-2014 Healthy Annuitant Mortality Table for

males and 110% of the RP -2014 Healthy Annuitant Mortality

Table for females both projected with 110% of MP-2014

Ultimate scale after 2014.

Changes in Assumptions and

Methods Reflected in the Schedule

of Employer Contributions

2015: New inflation, mortality and other assumptions were

reflected.

2017: New mortality assumptions were reflected

Changes in Plan Provisions

Reflected in the Schedule of

Employer Contributions

2015: No changes in plan previsions were reflected in the

Schedule.

2016: No changes in plan provisions were reflected in the

Schedule.

2017: New Annuity Purchase Rates were reflected for benefits

earned after 2017.

2018: Employer contributions reflect that the current service

matching rate was increased to 250%.

51


SUPPLEMENTARY INFORMATION

REQUIRED BY HARRIS COUNTY

DECEMBER 31, 2019

52


-36-

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 LISTING OF THE NUMBER OF EMERGENCY

RESPONSES MADE WITHIN AND OUTSIDE THE DISTRICT


(UNAUDITED)

Number of Emergency Responses made Within the District 1,221

Number of Emergency Responses made Outside of the District 50

Total Emergency Responses 1,271

53


-37-

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 SCHEDULE OF INSURANCE AND BONDING COVERAGE

DECEMBER 31, 2019

Type of Coverage

From

To

Amount

of Coverage

Insurer/Name

CRIME AND FIDELITY

Employee Theft - Treasurer

10/06/19

10/06/20

$ 100,000

Arch Insurance

Company

GENERAL LIABILITY

General Aggregate

Products/Completed Operations

Each Occurrence

Personal/Advertising Injury

10/06/19

10/06/20

$ 10,000,000

10,000,000

1,000,000

1,000,000

Arch Insurance

Company

UMBRELLA LIABILITY

General Aggregate

Each Occurrence

Personal/Advertising Injury

10/06/19

10/06/20

$ 1,000,000

1,000,000

1,000,000

Arch Insurance

Company

AUTOMOBILE

Liability – Combined Single Limit

Loss or Damage to Scheduled Vehicles

10/06/19

10/06/20

$ 1,000,000

2,636,450

Arch Insurance

Company

POLLUTION

Corrective Action Costs

10/06/19

10/06/20

$ 1,000,000

Arch Insurance

Company

PROPERTY

Buildings

Personal Property

10/06/19

10/06/20

$ 4,446,882

244,726

Arch Insurance

Company

WORKERS COMPENSATION

Each Accident

Each Employee

Policy Limit

01/01/19

01/01/20

$ 100,000

100,000

500,000

Texas Municipal League

Intergovernmental Risk

Pool

EMERGENCY SERVICES LIABILITY

Annual Aggregate

Each Wrongful Act

10/06/19

10/06/20

$ 10,000,000

1,000,000

Arch Insurance

Company

PORTABLE EQUIPMENT

10/06/19

10/06/20

Guaranteed

Replacement

Cost

Arch Insurance

Company

GROUP LIFE INCLUDING ACCIDENTAL,

DEATH & DISMEMBERMENT

Full Time

Part Time

10/01/19

10/01/20

$ 40,000

30,000

Principal Life Insurance

Company

54


OTHER SUPPLEMENTARY INFORMATION

DECEMBER 31, 2019

55

See accompanying independent auditor’s reports.

- 39 -

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 TAXES LEVIED AND RECEIVABLE


TAXES RECEIVABLE - JANUARY 1, 2019 1,201,914$

Adjustments to Beginning Balance (21,811) 1,180,103$

Original 2019 Tax Levy 1,712,945$

Adjustment to 2019 Tax Levy 73,529 1,786,474

TOTAL TO BE ACCOUNTED FOR 2,966,577$

TAX COLLECTIONS:

Prior Years 1,126,536$

Current Year 491,209 1,617,745

TAXES RECEIVABLE - DECEMBER 31, 2019 1,348,832$

TAXES RECEIVABLE BY YEAR:

2019 1,295,265$

2018 21,244

2017 9,859

2016 5,831

2015 2,993

2014 2,291

2013 1,710

2012 1,452

2011 1,370

2010 1,066

2009 1,210

2008 1,005

2007 668

2006 1,024

2005 542

2004 663

2003 368

2002 271

TOTAL 1,348,832$

Maintenance Taxes

56


- 40 -

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 TAXES LEVIED AND RECEIVABLE


PROPERTY

VALUATIONS

TAX RATES PER $100

VALUATION

ADJUSTED TAX LEVY*

PERCENTAGE OF TAXES

COLLECTED TO

TAXES LEVIED 27.50 % 98.66 % 99.31 % 99.59 %

1,786,474$

2019

0.05000$

3,571,712,396$ 3,179,931,060$

0.05000$

2018

1,421,030$

0.05000$ 0.04770$

2016

2,841,995,254$

1,590,268$

2017

2,997,609,006$

1,430,177$

* Based upon the adjusted tax levy at the time of the audit for the fiscal year in which the tax

was levied.

57

THIS PAGE INTENTIONALLY LEFT BLANK

58


- 41 -

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 COMPARATIVE SCHEDULE OF REVENUES AND EXPENDITURES

GENERAL FUND – FIVE YEARS

2019 2018 2017

REVENUES

Property Taxes 1,564,182$ 1,409,842$ 1,387,476$

Sales Tax Receipts 2,814,621 2,657,221 2,596,937

Penalty and Interest 27,938 24,955 24,633

Investment Revenues 143,807 100,755 41,875

Sale of Assets

Miscellaneous Revenues 85,912 54,820 500

TOTAL REVENUES 4,636,460$ 4,247,593$ 4,051,421$

EXPENDITURES

Accounting and Auditing 43,196$ 41,956$ 40,449$

Appraisal District Fees 12,054 10,529 11,559

Building Maintenance and Supplies 8,005 110,867 160,922

Commissioner Fees 12,150 14,100 6,400

Communications 276,664 277,027 114,839

Dues and Fees 7,026 8,297 5,289

Equipment and Supplies 64,034 334,671 93,572

Fire Vehicle Maintenance 47,649 71,939 91,664

Fuel 25,189 14,851 23,174

Human Resources 36,089 23,546 11,304

Insurance 61,461 52,299 49,679

Legal Fees - General 95,326 75,509 86,566

Legal Fees - Delinquent Tax Collections 6,885 7,486 7,712

Office Equipment and Supplies 5,239 3,582 10,866

Salaries and Benefits 2,678,519 2,378,916 2,133,369

Sales Tax Consultant 9,102 30,734 31,181

Tax Assessor/Collector Fees 17,582 17,425 15,556

Training 28,213 16,059 16,600

Uniforms 14,603 14,483 14,721

Utilities 26,970 28,406 31,169

Other 24,532 21,643 24,599

Capital Outlay 206,259 186,641 614,965

TOTAL EXPENDITURES 3,706,747$ 3,740,966$ 3,596,155$

NET CHANGE IN FUND BALANCE 929,713$ 506,627$ 455,266$

BEGINNING FUND BALANCE 5,850,398 5,343,771 4,888,505

ENDING FUND BALANCE 6,780,111$ 5,850,398$ 5,343,771$

Amounts

59


- 42 -

2016 2015 2019 2018 2017 2016 2015

815,748$ 643,241$ 33.7 % 33.1 % 34.3 % 22.8 % 20.2 %

2,633,975 2,494,908 60.7 62.6 64.1 73.6 78.4

21,132 15,698 0.6 0.6 0.6 0.6 0.5

16,071 5,991 3.1 2.4 1.0 0.4 0.2

94,069 2.6

21,676 1.9 1.3 0.7

3,580,995$ 3,181,514$ 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

39,942$ 39,287$ 0.9 % 1.0 % 1.0 % 1.1 % 1.2 %

6,544 4,988 0.3 0.2 0.3 0.2 0.2

31,956 57,846 0.2 2.6 4.0 0.9 1.8

3,850 3,650 0.3 0.3 0.2 0.1 0.1

91,552 83,789 6.0 6.5 2.8 2.6 2.6

5,000 5,211 0.2 0.2 0.1 0.1 0.2

74,219 77,918 1.4 7.9 2.3 2.1 2.4

51,061 21,505 1.0 1.7 2.3 1.4 0.7

18,328 18,272 0.5 0.3 0.6 0.5 0.6

10,200 8,315 0.8 0.6 0.3 0.3 0.3

39,487 48,751 1.3 1.2 1.2 1.1 1.5

69,681 69,973 2.1 1.8 2.1 1.9 2.2

6,700 4,640 0.1 0.2 0.2 0.2 0.1

6,206 7,042 0.1 0.1 0.3 0.2 0.2

1,782,960 1,726,445 57.8 56.0 52.7 49.8 54.3

51,621 0.2 0.7 0.8 1.4

20,892 14,590 0.4 0.4 0.4 0.6 0.5

20,067 15,106 0.6 0.4 0.4 0.6 0.5

12,021 8,411 0.3 0.3 0.4 0.4 0.4

40,403 37,122 0.6 0.7 0.8 1.1 1.2

26,261 28,330 0.5 0.5 0.6 0.7 0.9

400,000 676,684 4.4 4.4 15.2 11.2 21.3

2,808,951$ 2,957,875$ 80.0 % 88.0 % 89.0 % 78.5 % 93.2 %

772,044$ 223,639$ 20.0 % 12.0 % 11.0 % 21.5 % 6.8 %

4,116,461 3,892,822

4,888,505$ 4,116,461$

Percentage of Total Revenues

60


-43-

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 BOARD OF COMMISSIONERS AND CONSULTANTS

DECEMBER 31, 2019

District Mailing Address - Harris County Emergency Services District No. 12

c/o Smith, Murdaugh, Little & Bonham LLP

2727 Allen Parkway, Suite 1100

Houston, Texas 77019

District Telephone Number - (713) 652-6500

Commissioners

Term of

Office

(Elected or

Appointed)

Fees of Office

for the

year ended

December 31, 2019

Expense

Reimbursement

for the

year ended

December 31, 2019

Title

William B. Anders

06/01/16

05/31/20

(Elected)

$ 5,700 $ 363 President

David Proctor

06/01/16

05/31/20

(Elected)

$ 2,700 $ 374 Vice President

Larry Helgesen

06/01/16

05/31/20

(Elected)

$ -0- $ 430 Secretary

Frank M. Staley

06/01/18

05/31/22

(Elected)

$ 3,750 $ -0- Treasurer

Bryan Clements

06/01/18

05/31/22

(Elected)

$ -0- $ 124 Assistant

Secretary/

Assistant

Treasurer

The limit on fees of office that a Commissioner may receive during a year is set by the Health

and Safety Code-Chapter 775. Effective September 1, 2017, a Commissioner is entitled to

receive compensation in the same manner and amount as are provided by Section 49.060 of the

Texas Water Code, currently $7,200 per fiscal year. The above fees of office and expense

reimbursements are the amounts paid to a Commissioner during the District’s current fiscal year.

61


-44-

HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 BOARD OF COMMISSIONERS AND CONSULTANTS

DECEMBER 31, 2019

Consultants:

Date Hired

Fees for the

year ended

December 31, 2019*

Title

Smith, Murdaugh, Little & Bonham, L.L.P. 09/26/02 $ 84,826 Attorney

McCall Gibson Swedlund Barfoot PLLC 01/06/04 $ 18,300 Auditor

Municipal Business Services, Inc. 12/09/02 $ 24,896 Bookkeeper

Linebarger Goggan Blair & Sampson, LLP 03/04/03 $ 6,885 Delinquent Tax

Attorney

Bob Ideus 12/09/02 $ -0- Investment

Officer

Sales Tax Assurance, LLC 06/07/16 $ 7,950 Sales Tax

Consultant

Harris County Tax Assessor/Collector Legislative

Action

$ 17,582 Tax Assessor/

Collector

* Accrual basis

62


13100 Wortham Center Drive Suite 235 9600 Great Hills Trail Houston, Texas 77065-5610 Suite 150W (713) 462-0341 Austin, Texas 78759 Fax (713) 462-2708 (512) 610-2209

E-Mail: [email protected] www.mgsbpllc.com

Member of American Institute of Certified Public Accountants

Texas Society of Certified Public Accountants

August 4, 2020




Harris County, Texas

In planning and performing our audit of the financial statements of Harris County Emergency Services District

No. 12 (the “District”) as of and for the year ended December 31, 2019, in accordance with auditing standards

generally accepted in the United States of America, we considered the District’s internal control over financial

reporting (“internal control”) as a basis for designing our auditing procedures for the purpose of expressing our

opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the

District’s internal control. Accordingly, we do not express an opinion on the effectiveness of the District’s

internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was

not designed to identify all deficiencies in internal control that might be significant deficiencies or material

weaknesses and therefore, there can be no assurance that all deficiencies, significant deficiencies, or material

weaknesses have been identified.

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 of the District’s financial statements 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 entity’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.

Material Weaknesses

Last year, and again this year, we observed the following matters that we consider to be material weaknesses.

The District’s management consists of an elected Board of Commissioners (“Commissioners”). Day-to-day

operations are performed by private entities (“Consultants”) under contract with the District and the Fire Chief.

The Commissioners supervise the performance of the Consultants and the Fire Chief. The Consultants and the

Fire Chief can be part of the District’s system of internal control; however, they are not members of

management. Ultimately, the Commissioners are responsible for the design and implementation of the system

of internal control.

As is common within the system of internal control of most small organizations, the accounting function of the

District does not include the preparation of financial statements complete with footnotes in accordance with

generally accepted accounting principles. Accordingly, the District has not established internal controls over

the preparation of its financial statements. This condition is considered to be a material weakness of the

District’s system of internal control.

63



Board of Commissioners August 4, 2020

Harris County Emergency Page 2


Material Weaknesses (Continued)

While performing the audit, we prepared various calculations needed to present the financial statements on the

government-wide basis of accounting. Management’s reliance upon the auditor to detect and make these

necessary adjustments is considered to be a material weakness in internal control.

Management relies on the auditor to prepare the capital asset and depreciation schedules and post adjustments

related to the presentation of the capital assets in the government-wide financial statements. Management’s

reliance on the auditor to perform this function is considered to be a material weakness in the system of

internal control.

Auditing standards do not make exceptions for reporting deficiencies that are adequately mitigated with

nonaudit services rendered by the auditor or deficiencies for which the remedy would be cost prohibitive.

We agree with the objective of auditing standards to inform an organization of all the conditions in its internal

control that interfere with its ability to record financial data reliably and issue financial statements free of

material misstatement. Communication of the material weaknesses above helps to emphasize that the

responsibility for financial reporting rests entirely with the organization and not the auditor.

Management’s Response to Material Weakness

The Commissioners are elected by the general population and are not required to have governmental

accounting expertise. The Board engages consultants who possess industry knowledge and expertise to

provide financial and legal services. Based on the auditor’s unmodified opinion and after reading the financial

statements, the Commissioners believe the financial statements to be materially correct. The Commissioners

do not feel that the addition of an employee or another consultant to oversee the annual financial reporting

process is necessary nor would it be cost effective.

Conclusion

Management’s written response to the material weaknesses identified in our audit has not been subjected to the

auditing procedures applied in the audit of the financial statements, and accordingly, we express no opinion on

it.

This communication is intended solely for the information and use of the Board of Commissioners and is not

intended to be and should not be used by anyone other than these specified parties.

Sincerely,



Houston, Texas

64


13100 Wortham Center Drive Suite 235 9600 Great Hills Trail Houston, Texas 77065-5610 Suite 150W (713) 462-0341 Austin, Texas 78759 Fax (713) 462-2708 (512) 610-2209

E-Mail: [email protected] www.mgsbpllc.com

August 4, 2020

Board of Directors

Harris County Emergency Services

District No. 12

We have audited the financial statements of the governmental activities and each major fund of Harris County

Emergency Services District No. 12 (the “District”) for the year ended December 31, 2019. Professional standards

require that we provide you with information about our responsibilities under generally accepted auditing

standards, as well as certain information related to the planned scope and timing of our audit. We have

communicated such information in our engagement letter to you dated December 6, 2016. Professional standards

also require that we communicate to you the following information related to our audit. For the purposes of this

letter, the term “management” refers to the Board of Directors and/or District consultants.

Significant Audit Findings

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. Significant accounting

policies used by the District, including new accounting policies, if any, that have been adopted and implemented

during the current fiscal year, are discussed in Note 2. We noted no transactions entered into by the District

during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have

been recognized in the financial statements in the proper period. The financial statement disclosures are neutral,

consistent, and clear.

Accounting estimates are an integral part of the financial statements and are based on management’s knowledge

and experience about past and current events and assumptions about future events. Certain accounting estimates

are particularly sensitive because of their significance to the financial statements and because of the possibility

that future events affecting them may differ significantly from those expected. The most sensitive estimates

affecting the District’s financial statements were management’s estimate of depreciable lives of capital assets.

Depreciation of infrastructure assets is based on industry wide accepted estimated useful lives taken on a straight-

line basis. We evaluated the key factors and assumptions used to develop these estimates in determining that they

are reasonable in relation to the financial statements taken as a whole.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the audit,

other than those that are clearly trivial, and communicate them to the appropriate level of management. The

District’s bookkeeper will be provided with all such adjustments.

Management Representations

We have requested certain representations from management that are included in the management representation

letter dated August 4, 2020.

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Board of Directors August 4, 2020

Harris County Emergency Services Page 2

District No.12

Disagreements with Management

For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing

matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the

auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters,

similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an

accounting principle to the District’s financial statements or a determination of the type of auditor’s opinion that

may be expressed on those statements, our professional standards require the consulting accountant to check

with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such

consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing

standards, with management each year prior to retention as the District’s auditors. However, these discussions

occurred in the normal course of our professional relationship and our responses were not a condition to our

retention.

Other Matters

We were engaged to perform the following non-attest services for the District: (1) preparation of financial

statements and related notes and schedules in conformity with accounting principles generally accepted in the

United States of America and (2) preparation of capital assets. These services were performed based on

information provided by you. We performed these services in accordance with applicable professional standards.

The non-attest services we performed are limited to those specifically defined and did not result in assuming

management responsibilities.

We applied certain limited procedures to the Management’s Discussion and Analysis and the budgetary

comparison schedule for the General Fund, which are required supplementary information (“RSI”) that

supplements the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance

on the RSI.

We were engaged to report on supplementary information required by Harris County, which accompany the

financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries

of management and evaluated the form, content, and methods of preparing the information to determine that the

information complies with accounting principles generally accepted in the United States of America, the method

of preparing it has not changed from the prior period, and the information is appropriate and complete in relation

to our audit of the financial statements. We compared and reconciled the supplementary information to the

underlying accounting records used to prepare the financial statements or to the financial statements themselves.

Restriction on Use

This information is intended solely for the use of the Board of Directors of the District and is not intended to be,

and should not be, used by anyone other than these specified parties.

Sincerely,


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HARRIS COUNTY EMERGENCY SERVICES DISTRICT NO. 12 HARRIS COUNTY, TEXAS

AUGUST 4, 2020



13100 Wortham Center Drive, Suite 235

Houston, Texas 77065-5610

Ladies and Gentlemen:

This representation letter is provided in connection with your audit of the financial statements of Harris

Emergency Services District No. 12 (the “District”), which comprise the respective financial position of

the governmental activities and major fund as of December 31, 2019, and the respective changes in

financial position for the year then ended, and the related notes to the financial statements, for the purpose

of expressing opinions as to whether the financial statements are presented fairly, in all material respects,

in accordance with accounting principles generally accepted in the United States of America (U.S.

GAAP).

Certain representations in this letter are described as being limited to matters that are material. Items are

considered material, regardless of size, if they involve an omission or misstatement of accounting

information that, in light of surrounding circumstances, makes it probable that the judgment of a

reasonable person relying on the information would be changed or influenced by the omission or

misstatement. An omission or misstatement that is monetarily small in amount could be considered

material as a result of qualitative factors.

We confirm, to the best of our knowledge and belief, as of August 4, 2020, the following representations

made to you during your audit.

Financial Statements

1) We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated

December 6, 2016, including our responsibility for the preparation and fair presentation of the

financial statements and for preparation of the supplementary information in accordance with the

applicable criteria.

2) The financial statements referred to above are fairly presented in conformity with U.S. GAAP and

include all properly classified funds and other financial information of the primary government and

all component units required by generally accepted accounting principles to be included in the

financial reporting entity.

3) We acknowledge our responsibility 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.

4) We acknowledge our responsibility for the design, implementation, and maintenance of internal

control to prevent and detect fraud.

5) Significant assumptions we used in making accounting estimates are reasonable.

6) Related party relationships and transactions, if any, including revenues, expenditures/expenses, loans,

transfers, leasing arrangements, and guarantees, and amounts receivable from or payable to related

parties have been appropriately accounted for and disclosed in accordance with the requirements of

U.S. GAAP.

7) Adjustments or disclosures have been made for all events, including instances of noncompliance,

subsequent to the date of the financial statements that would require adjustment to or disclosure in the


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McCall Gibson Swedlund Barfoot PLLC August 4, 2020

Certified Public Accountants Page 2

8) We are in agreement with the adjusting journal entries you have proposed, and they have been posted

to the accounts.

9) The effects of all known actual or possible litigation, claims, and assessments have been accounted

for and disclosed in accordance with U.S. GAAP.

10) Guarantees, whether written or oral, under which the District is contingently liable, if any, have been

properly recorded or disclosed.

Information Provided

11) We have provided you with:

a) Access to all information, of which we are aware, that is relevant to the preparation and fair

presentation of the financial statements, such as records, documentation, and other matters.

b) Additional information that you have requested from us for the purpose of the audit.

c) Unrestricted access to persons within the District from whom you determined it necessary to

obtain audit evidence.

d) Minutes of the meetings of the District or summaries of actions of recent meetings for which

minutes have not yet been prepared.

12) All material transactions have been recorded in the accounting records and are reflected in the


13) We have disclosed to you the results of our assessment of the risk that the financial statements may be

materially misstated as a result of fraud.

14) We have no knowledge of any fraud or suspected fraud that affects the District and involves:

a) Management,

b) Employees who have significant roles in internal control, or

c) Others where the fraud could have a material effect on the financial statements.

15) We have no knowledge of any allegations of fraud or suspected fraud affecting the District’s financial

statements communicated by employees, former employees, regulators, or others.

16) We have no knowledge of instances of noncompliance or suspected noncompliance with provisions

of laws, regulations, contracts, or grant agreements, or abuse, whose effects should be considered

when preparing financial statements.

17) We have disclosed to you all known actual or possible litigation, claims, and assessments whose

effects should be considered when preparing the financial statements.

18) We have disclosed to you the identity of the District’s related parties and all the related party

relationships and transactions of which we are aware.

Government—specific

19) There have been no communications from regulatory agencies concerning noncompliance with, or

deficiencies in, financial reporting practices.

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20) We have identified to you any previous audits, attestation engagements, and other studies related to

the audit objectives and whether related recommendations have been implemented.

21) The District has no plans or intentions that may materially affect the carrying value or classification

of assets, liabilities, or equity.

22) We are responsible for compliance with the laws, regulations, and provisions of contracts and grant

agreements applicable to us, including tax or debt limits and debt contracts; and we have identified

and disclosed to you all laws, regulations and provisions of contracts and grant agreements that we

believe have a direct and material effect on the determination of financial statement amounts or other

financial data significant to the audit objectives, including legal and contractual provisions for

reporting specific activities in separate funds.

23) There are no violations or possible violations of laws and regulations, provisions of contracts and

grant agreements, tax or debt limits, and any related debt covenants whose effects should be

considered for disclosure in the financial statements, or as a basis for recording a loss contingency, or

for reporting on noncompliance.

24) As part of your audit, you assisted with preparation of the financial statements and related notes. We

acknowledge our responsibility as it relates to those nonaudit services, including that we assume all

management responsibilities; oversee the services by designating an individual who possesses

suitable skill, knowledge, or experience; evaluate the adequacy and results of the services performed;

and accept responsibility for the results of the services. We have reviewed, approved and accepted

responsibility for those financial statements and related notes.

25) The District has satisfactory title to all owned assets, and there are no liens or encumbrances on such

assets nor has any asset been pledged as collateral, except as disclosed in the basic financial

statements.

26) The District has complied with all aspects of contractual agreements that would have a material effect

on the financial statements in the event of noncompliance.

27) We have followed all applicable laws and regulations in adopting, approving, and amending budgets.

28) The financial statements include all component units as well as joint ventures with an equity interest,

and properly disclose all other joint ventures and other related organizations, if applicable.

29) The financial statements properly classify all funds and activities, in accordance with GASB

Statement No. 34.

30) All funds that meet the quantitative criteria for presentation as major are identified and presented as

such. The District has one fund which is a major fund.

31) Components of net position (net investment in capital assets; restricted; and unrestricted), and

components of fund balance (nonspendable, restricted, committed, assigned, and unassigned) are

properly classified and, if applicable, approved.

32) Expenses have been appropriately classified in or allocated to functions and programs in the

statement of activities, and allocations have been made on a reasonable basis.

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33) Revenues are appropriately classified in the statement of activities within program revenues, general

revenues, contributions to term or permanent endowments, or contributions to permanent fund

principal.

34) Interfund, internal, and intra-entity activity and balances have been appropriately classified and

reported.

35) Deposits and investment securities are properly classified as to risk and are properly disclosed.

36) Capital assets, including infrastructure and intangible assets, are properly capitalized, reported, and, if

applicable, depreciated.

37) We have appropriately disclosed the District’s policy regarding whether to first apply restricted or

unrestricted resources when an expense is incurred for purposes for which both restricted and

unrestricted net position is available and have determined that net position is properly recognized

under the policy.

38) We are following our established accounting policy regarding which resources (that is, restricted,

committed, assigned, or unassigned) are considered to be spent first for expenditures for which more

than one resource classification is available. That policy determines the fund balance classifications

for financial reporting purposes.

39) We acknowledge our responsibility for the required supplementary information (RSI). The RSI is

measured and presented within prescribed guidelines and the methods of measurement and

presentation have not changed from those used in the prior period. We have disclosed to you any

significant assumptions and interpretations underlying the measurement and presentation of the RSI.

40) With respect to the supplementary information required by Harris County and other supplementary

information presented by the District:

a) We acknowledge our responsibility for presenting the supplementary information required by

Harris County in accordance with the County’s requirements, and we believe this supplementary

information, including its form and content, is fairly presented in accordance with the County’s

requirements.

b) We acknowledge our responsibility for presenting the other supplementary information and we

believe this supplementary information, including its form and content, is fairly presented in

accordance with our criteria.

c) The methods of measurement and presentation of this information have not changed from those

used in the prior period, and we have disclosed to you any significant assumptions or

interpretations underlying the measurement or presentation of the supplementary information.

d) If this supplementary information is not presented with the audited financial statements, we will

make the audited financial statements readily available to the intended users of the supplementary

information no later than the date we issue the supplementary information and the auditor’s report

thereon.

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HARRIS COUNTY EMERGENCY

SERVICES DISTRICT NO. 12

Signatures of the Board of Commissioners

_____________________________________________________ _____________________________________________________

_____________________________________________________ _____________________________________________________

_____________________________________________________

D-007

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