NOTES TO FINANCIAL STATEMENTS

NOTE 8. LONG-TERM DEBT (CONTINUED)

Long-term liability activity for the year ended July 31, 2012 is as follows:

For governmental activities, compensated absences are generally liquidated by the General Fund.

Defeasance of Debt. During prior years, the City defeased certain water and sewer bonds and Downtown Development Authority bonds by placing part of the proceeds of the new bonds in irrevocable trusts to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City’s financial statements. On July 31, 2012, the total outstanding amount of bonds considered defeased was $4,047,400 for the water and sewer bonds and $1,775,000 for the Downtown Development Authority bonds.