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<br />I <br /> <br />City of San Marcos <br /> <br />-4- <br /> <br />December 27, 1972 <br /> <br />In addition to generating enough revenues to eliminate the working <br />capital deficit that existed at the end of fiscal year 1972, and establishing <br />a positive position, the Utility Fund must restore or create all special funds <br />which are required by the revenue bond ordinances. If these special funds had <br />been at the optimum levels at September 30, 1972, as stated in the bond ordi- <br />nances, an additional $71,372 would have been required. We want to emphasize <br />that this amount is not recorded in liabilities, but it is instead a failure <br />to provide certain required cash deposits. The $71,372 is the difference <br />between actual balances in the special funds and the optimum or fully funded <br />balances shown in the following sunnnary, assuming that deposit requirements "for <br />the 1968 bonds became effective January 1, 1971. <br /> <br />Required Funds <br /> <br />Actual <br />~ <br /> <br />Fully Funded <br />Balance <br /> <br />Revenue Bonds, Series 1951 and 1951-A: <br />Monthly deposits for next-due principal <br />and interest payments <br />Reserve Fund <br /> <br />$ <br />38,463 <br />38,463 <br /> <br />$ 16,942 <br />30,000 <br />46,942 <br /> <br />I <br /> <br />Junior Lien Revenue Bonds, Series 1968: <br />Monthly deposits for next-due principal <br />and interest payments <br />Reserve account <br />Repair and Replacement Fund <br /> <br />$38,463 <br /> <br />23,518 <br />25,775 <br />13,600 <br />02,893 <br />$109,835 <br /> <br />We suggest that the City reviaw its bond o~dinances and begin making <br />monthly deposits to interest and principal accounts where required and that <br />reserve funds be established to meet the requirements as set forth in the. ordi- <br />nances. <br /> <br />Subdivider Contracts <br /> <br />The City has entered into contracts with subdividers for extension <br />of water and sewer lines in various subdivisions. Under the terms of the contractS, <br />the City is to rebate a portion of the amounts initially paid by these subdividers <br />upon connection to these water and sewer lines. No subsidiary records of the <br />contracts ar'e maintained and transactions are not recorded on a timely basis; <br />therefore, the following recommendations should be implemented in order to maintain <br />accurate records and effect adequate internal control: <br /> <br />1. A subsidiary ledger should be maintained on each subdivider <br />contract providing the following information: <br /> <br /> A. Original amount of contract <br />I B. Payments on contract to date <br /> C. Balance to be paid on future connections <br />