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Audit - 2013COMPREHENSIVE ANNUAL FINANCIAL REPORT OF CITY OF SALINA, KANSAS 300 West Ash Street P.O. Box 736 Salina, Kansas 67402-0736 For the Fiscal Year Ended December 31, 2013 Prepared by Department of Finance and Administration of City of Salina, Kansas CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2013 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal i -iv Organizational Chart v List of Principal Officials vi FINANCIAL SECTION Independent Auditor’s Report 1 -2 Management's Discussion and Analysis 3 -13 Basic Financial Statements: Government-wide Financial Statements Statement of Net Position 14 Statement of Activities 15 Fund Financial Statements Balance Sheet -Governmental Funds 16 Reconciliation of the Total Governmental Fund Balance to Net Position of Governmental Activities 17 Statement of Revenues, Expenditures, and Changes in Fund Balance -Governmental Funds 18 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance with the Government-Wide Statement of Activities 19 Statement of Net Position -Proprietary Funds 20 Statement of Revenues, Expenses, and Changes in Fund Net Position -Proprietary Funds 21 Statement of Cash Flows -Proprietary Funds 22 -23 Statement of Assets and Liabilities -Agency Funds 24 Notes to the Basic Financial Statements 25 -51 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2013 TABLE OF CONTENTS -CONTINUED Page FINANCIAL SECTION -CONTINUED Required Supplementary Information Schedule of Funding Progress and Schedule of Employer Contributions 52 Schedules of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Non-GAAP Basis) General Fund 53 -55 Tourism and Convention Fund 56 Special Gas Fund 57 Sales Tax Capital Fund 58 Combining Statements and Individual Fund Schedules Combining Statements -Nonmajor Funds Fund Descriptions 59 -60 Combining Balance Sheet -Nonmajor Governmental Funds 61 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds 62 Combining Balance Sheet -Nonmajor Special Revenue Funds 63 -64 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Special Revenue Funds 65 -66 Combining Balance Sheet -Nonmajor Permanent Funds 67 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Permanent Funds 68 Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GAAP Basis): Bicentennial Center Fund 69 Business Improvement City Fund 70 Neighborhood Park Fund 71 Special Parks and Recreation Fund 72 Special Alcohol Fund 73 Sales Tax Economic Development Fund 74 Fair Housing Fund 75 Arts & Humanities Fund 76 Debt Service Fund 77 Solid W aste Disposal Fund 78 Water and Sewer Fund 79 Sanitation Fund 80 Golf Course Fund 81 Risk Management Fund 82 Workers’ Compensation Reserve Fund 83 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2013 TABLE OF CONTENTS -CONTINUED Page FINANCIAL SECTION -CONTINUED Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GAAP Basis) –Continued: Health Insurance Fund 84 Central Garage Fund 85 Information Systems Fund 86 Internal Service Fund Descriptions 87 Combining Statement of Net Position -Internal Service Funds 88 Combining Statement of Revenues, Expenses, and Changes in Net Position -Internal Service Funds 89 Combining Statement of Cash Flows -Internal Service Funds 90 -91 Fiduciary Fund Descriptions -Agency Funds 92 Combining Balance Sheet -Agency Funds 93 Combining Statement of Changes in Assets and Liabilities -Agency Funds 94 Schedule STATISTICAL SECTION Net Position by Component -Last Ten Years 1 95 Changes in Net Position -Last Ten Years 2 96 Fund Balances, Governmental Fund -Last Ten Years 3 97 Changes in Fund Balances, Governmental Funds -Last Ten Years 4 98 Tax Revenues by Source, Governmental Funds -Last Ten Years 5 99 Assessed and Estimated Actual Value of Taxable Property –Last Ten Years 6 100 Direct and Overlapping Property Tax Rates –Last Ten Years 7 101 Principal Property Tax Payers 8 102 Property Tax Levies and Distributions 9 103 Direct Sales Rate by Taxing Entity 10 104 Water Sales by Class of Customer 11 105 Ratio of Outstanding Debt by Type 12 106 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2013 TABLE OF CONTENTS -CONTINUED Schedule Page STATISTICAL SECTION -CONTINUED Ratio of Net General Bonded Debt Outstanding 13 107 Direct and Overlapping Governmental Activities Debt 14 108 Legal Debt Margin 15 109 Pledged Revenue Coverage 16 110 Demographic and Economic Statistics 17 111 Principal Employers 18 112 GOVERNMENTAL AUDIT SECTION Schedule of Expenditures of Federal Awards 113 Notes to Schedule of Expenditures of Federal Awards 114 Schedule of Findings and Questioned Costs 115-116 Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with “Government Auditing Standards”117 -118 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance required by OMB Circular A-133 119 -120 This page intentionally left blank. INTRODUCTORY SECTION This page intentionally left blank. i DEPARTMENT OF FINANCE TELEPHONE (785) 309-5735 AND ADMINISTRATION FAX (785) 309-5738 Rodney Franz, Director TDD (785) 309-5747 300 West Ash, P.O. Box 736 E-MAIL rod.franz@salina.org Salina, Kansas 67402-0736 Website: www.ci.salina.ks.us September 15, 2014 To the Citizens of the City of Salina, Kansas: The Comprehensive Annual Financial Report of the City of Salina, Kansas (the "City") for the year ended December 31, 2013, is hereby submitted. The City’s Finance Department prepared the report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of all various funds and account groups of the City. We believe that all disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Report Format The Comprehensive Annual Financial Report is presented in three sections: Introductory, Financial and Statistical. The introductory section includes a description of the City, including services provided, and explanation of the City’s accounting system and budgetary controls, and a brief discussion of the City’s economic condition and outlook. The City's organizational chart is also included to assist the reader in understanding the structure of the City. The financial section includes the Independent auditor’s report, Management’s discussion & analysis, Government wide financial statements, Fund financial statements, Notes to the financial statements, and Individual and combining statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The reader is specifically directed to Management’s Discussion and Analysis (MD&A) which immediately follows the independent auditor’s report. MD&A provides a narrative explanation and overview of significant features and trends reflected by data in the financial statements. Accounting Systems and Internal Controls A critical part of the control system is the City’s comprehensive Budgetary and Financial Policies, which establish guidelines for budgetary and financial practices. The Budgetary and Financial Policies are reviewed by the City Commission and updated each year as a part of the budget process. City staff is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits require estimates and judgment by management. ii The objective of budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the Fund level, in accordance with State Statutes. However, management control is maintained at the department level. The City uses an encumbrance accounting system, in which estimated purchase amounts are recorded prior to the release of purchase orders to vendors. Open encumbrances are reported as reservations of fund balance at December 31, 2013 in the general fund and the special revenue funds. Various internal compliance procedures are implemented to insure proper implementation of the budget as well as to maintain a degree of accountability for both revenues and expenditures. Independent Audit Kansas Statutes Annotated 75-1122 requires an annual audit of the books of account, financial records and transactions of all administrative departments of the City by independent certified public accountants selected by the City Commission. This requirement has been complied with and the auditor's opinion has been included in this report. Profile of the Community The Town of Salina was organized in 1858 under the Town and Village Act in the State of Kansas, and became a City of the First Class on July 9, 1920. The City has had a Commission-City Manager form of government since 1921. The Commission is comprised of five members elected at large. Each year the commission chooses one member to act as Mayor. The City Manager is appointed by the Commission, and acts as it’s primary agent in accordance with state statute. Other city officers and employees are appointed by the City Manager. The current population of the City is 48,045. The reporting entity includes the City of Salina as well as two discretely presented component units, both proprietary fund types. The Salina Airport Authority operates the Salina Municipal Airport and Airport Industrial Center, and the Salina Housing Authority administers public housing programs within the City of Salina. In addition, the City of Salina participates in two joint ventures with Saline County, the Salina -Saline County Board of Health and the City-County Building Authority. This report includes all funds and account groups of the City. The City provides a full range of services including police and fire protection, development services, construction and maintenance of streets, drainage facilities and other infrastructure; recreational activities and cultural events; emergency medical services and convention facilities. In addition to general government activities, the City also provides water, wastewater, sanitation, and solid waste services; therefore, these activities are included in the reporting entity. Economic Outlook and Strength The City benefits from its location at the junction of Interstate Highways 70 and 135. This convenient location has drawn numerous national and regional companies to open manufacturing or distribution centers in or adjacent to the community. Such companies include Pepsi-cola, Exide Battery, Philips Lighting, ElDorado Bus, and Schwans. Currently manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is dominant. The City of Salina retains its position near the top of a list of first class cities with respect to ‘trade pull factor.” The pull factor measures the degree to which a city or county area captures retail trade from outside the jurisdiction. A pull factor of greater than 1 indicates that a city is attracting more retail trade from outside the city/county than it is losing to other counties. It is apparent from this that Salina continues to serve as a regional economic hub in 2013. iii Major Initiatives In November, 2008, voters elected to increase the ¼ cent tax to .40 cent, and extend the sunset for an additional ten years. until March 31, 2019. Ninety-three percent (93%) of the tax is to be used for capital improvements and tax stabilization. The remaining tax is to be used for economic development programs. In 2013 several major projects were initiated, including rehabilitation of the downtown well field, replacement of the downtown street lighting system, initiation of major rehabilitation of the Bicentennial Center, substantial completion of Fire Station #1 rehabilitation, and an affordable work force housing pilot project. The City continues to replace water mains at a cost of approximately $4 million per year in order to upgrade water and wastewater infrastructure. In operations, the City continues to ppursue an organization-wide “Lean-six- Sigma” initiative targeted towards process improvement and more efficient operation. Solid Waste disposal is becoming a stable operation, with 80,000 to 90,000 tons being disposed of each year. The community remains committed to recycling and resource conservation, with several initiatives that began in 1997, including a yard waste recycling and composting program in addition to continuing a mulching mower rebate program. The community currently has about 4,700 yard carts placed to encourage recycling of yard waste as an alternative to disposal. A Pilot residential recycling program was continued in 2004. The curbside recycling program was converted to a permanent service in 2005, with 900 households participating. Addressing fiduciary pressures generated by a recessionary economy has also been a challenge. The primary approach has been to reduce staffing through attrition, after careful evaluation of each vacancy. By the end of 2013, full time staffing had been reduced from 511 to 465. The freeze on salaries was removed in 2011, with an allowance granted for an average 2% merit review. However, no general (or “cost of living”) adjustments have been given since 2008. Capital Improvement Planning The City's Capital Improvement Plan (CIP) consists of two components. One component consists of “routine” capital—including vehicle and equipment replacement, technology replacement, building repair and improvement, routine pavement maintenance activity, utility system enhancements and similar items. The amount of funding for these projects may fluctuate based on needs and funding availability, however, planned amounts are allocated over a multi-year period. Source of funding for routine capital is current cash resources from the fund appropriate to the nature of the purchase. The second component of the CIP includes major projects that typically require issuance of bonds or notes, although these projects may also be supplemented with available cash and grant financing. The plan is updated each year after an extensive evaluation of the demands on future financial resources. The Capital Improvement program is scheduled for a major revision as the result of the sales tax to be used for that purpose. Construction Initiated*:2014 2015 2016 2017 General Fund 550,000$ 550,000$ 550,000$ 550,000$ Sales Tax*2,500,000 2,500,000 2,500,000 2,500,000 Special Park Fund 150,000 150,000 150,000 150,000 Gas Tax Fund 1,300,000 1,300,000 1,300,000 1,300,000 Solid Waste Fund 105,000 50,000 50,000 50,000 Sanitation Fund 160,000 160,000 160,000 160,000 Water & Wastewater Fund 2,500,000 2,500,000 4,500,000 2,500,000 General Obligation Bonds 4,194,000 2,403,000 1,170,000 - Revenue Bonds 5,600,000 17,350,000 5,600,000 4,000,000 Other Sources 50,000 8,000,000 50,000 50,000 Total 17,109,000$ 34,963,000$ 16,030,000$ 11,260,000$ *The year a project is scheduled reflects the year that construction is initiated. Preliminary work (design, acquisition) may precede this date by one or more years, and permanent financing may not occur until one (or more years depending on project magnitude) subsequent to this date. iv Financial Policies The City has adopted a formal set of Budgetary and Financial Policies, addressing such items as fund balances, capital improvements, operating budgets, long term debt management, accounting, auditing and financial reporting, revenues, cash management and investments. Financial policies contribute to financial stability by: 1.Providing consistent guidance in decision making 2.Establishing appropriate levels of fund balances 3.Governing the use of one time or unanticipated resources 4.Providing a multi-year capital improvements process 5.Establishing responsibilities and deadlines for budget preparation 6.Providing for a balanced annual operating budget 7.Providing guidelines on the use of debt, including appropriate purposes and terms 8.Provide a linkage between capital improvement scheduling and long term debt management planning 9.Require annual audits and financial reporting in conformance with Generally Accepted Accounting Procedures 10.Require timely and regular interim financial reporting to the Governing body 11.Insure the safety of cash and near cash resources (timely collection of Accounts Receivable, etc.). Acknowledgments The preparation of the Comprehensive Annual Financial Report was made possible by the dedicated, professional advice and effort of the Mize Houser & Company auditing team. A special thank you needs to be given to Valerie Gebhardt, City Accountant, who is responsible for much of the data assembly, and Andrea W illems, who was instrumental in preparing parts of the report and final proofing. Finally, preparation of this report would not have been possible without the support of the City Commission. Sincerely, City of Salina CITIZENS CITY COMMISSION Aaron Householter, Mayor Jon Blanchard Kaye J. Crawford Randall Hardy Trent Davis (interim) City Manager Jason Gage Deputy City Manager Michael Schrage Development Services Gary Hobbie Risk Management Legal Services Clark Mize & Linville Chartered* Greg Bengtson Computer Technology Jack Rolfs Community Relations Gina McDonald Police Brad Nelson Fire Larry Mullikin Public Works Mike Fraser Engineering Design/Inspection/ Traffic Fire Suppression EMS Codes/Inspection Public Education Water Plant Division Wastewater Plant Division Utility Division Water Distribution Wastewater Collection Management Internal Affairs Special Enforcement Operations Patrol Investigations Traffic K-9 Administrative Records Communications Training/Community Relations Service Desk Property & Evidence Court Officers Finance/Administration Rod Franz City Clerk Accounting Utility Accounting Treasurer Museum Arts Education Arts Services River Festival Horizons Grants Program Community Art & Design Bicentennial Center *Global Spectrum Arts & Humanities Brad Anderson Parks & Recreation Dion Louthan T/Public Information/Organizational Chart-Publisher 5/07/14 * Contract Position General Services Streets Flood Control Traffic Control Central Garage Sanitation/HHW Landfill Human Resources Natalie Fischer Utilities Martha Tasker Municipal Court Building & Neighborhood Services Planning/Comm. Dev. Water Park/Aquatics Golf Course Neighborhood Centers Parks Recreation Forestry Cemetery Building Maintenance Continuous Process Improvement Bryon Johnson vi    City of Salina, Kansas List of Principal Officials City Commission Barbara V. Shirley, Mayor Aaron Householter, Vice Mayor Kaye J. Crawford, Commissioner Jon Blanchard, Commissioner Randall Hardy, Commissioner City Executive Staff Jason Gage, City Manager Michael Schrage, Deputy City Manager Rodney Franz, Director of Finance and Administration Jack Rolfs, Director of Computer Technology Natalie Fischer, Director of Human Resources Greg Bengston, City Attorney Brad L. Nelsonl, Chief of Police Larry Mullikan, Fire Chief Michael Fraser, Director of Public Works Martha Tasker, Director of Utilities Dion Louthan, Director of Parks and Recreation Jack Rolfs, Director of Computer Technology Gary Hobbie, Director of Development Services Brad Anderson, Director of Arts and Humanities Gina McDonald, Director of Human Relations FINANCIAL SECTION This page intentionally left blank. www.mizehouser.com mhco@mizehouser.com 534 S Kansas Ave, Suite 700 Topeka, KS 66603-3465 785.233.0536 p 785.233.1078 f 534 S Kansas Ave, Suite 400 Topeka, KS 66603-3454 785.234.5573 p 785.234.1037 f 7101 College Blvd, Suite 900 Overland Park, KS 66210-1984 913.451.1882 p 913.451.2211 f 211 E Eighth Suite ALawrence, KS 66044-2771 785.842.8844 p 785.842.9049 f 1 INDEPENDENT AUDITOR’S REPORT Mayor and City Commissioners City of Salina, Kansas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the City’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 an opinion on the financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States and the Kansas Municipal Audit and Accounting Guide. Those standards require we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. We did not audit the financial statements of the Salina Airport Authority which statements reflect total assets of $50,049,628 as of December 31, 2013 and total revenues of $4,531,600 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $7,732,545 as of June 30, 2013 and total revenues of $2,050,365 for the year then ended, which are discretely presented component units in the accompanying financial statements. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Salina Airport Authority and the Housing Authority of the City of Salina is based solely on the reports of the other auditors. 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 opinion. 2 Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business- type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of December 31, 2013, and the respective changes in financial position and cash flows, where applicable, thereof 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 on pages 3 through 13 and the schedules of funding progress on page 52 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 City’s financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison schedules and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the financial statements or to the 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 financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated September 15, 2014, on our consideration of the City’s internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Certified Public Accountants Lawrence, Kansas September 15, 2014 BASIC FINANCIAL STATEMENTS This page intentionally left blank. 3 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) Management Discussion and Analysis This section of the report contains an overview and analysis of the City of Salina’s financial statements for the fiscal year ended December 31, 2013. The information contained here, as well as the information contained in the letter of transmittal, are intended to provide the reader of the financial statements with a well-rounded picture of the City’s financial condition. Financial Highlights The City’s net position increased by $10.6 million from current operations and $12.5 million after prior period adjustments. Governmental net position increased by $9.9 million and Business-Type net position increased by $2.6 million. The change in net position was primarily due to U.S. Government and other funding for the abatement of groundwater contamination. At the close of 2013, the City’s governmental funds reported combined ending fund balances of $17,627,583, an increase of $6,909,946 over the prior year. The Schilling Capital Improvement Fund was added to account for funds received for groundwater abatement. Capital improvement expenditures increased due to project timing. At the close of 2013, the City’s proprietary funds reported combined ending fund balances of $76,449,465, an increase of $2,589,647 over the prior year. The Solid Waste Fund experienced a decrease in net position due to an increase in operating expenses. The Water and Sewer Fund saw significant growth in net position despite increases in operating expenditures, due to good revenue production. Program revenues decreased $2.4 million, or 5.4%, resulting in more reliance on general revenues to pay for expenses. Investment revenues continue to be very minimal. The Basic Financial Statements The basic financial statements of the City include the government-wide financial statements and the fund financial statements. The notes to the financial statements follow the basic financial statements, and are essential for the reader’s understanding of the financial statements. Other supplementary information, including the combining schedules for non-major funds and the budgetary comparison reports, are at the end of this report to provide additional information for the reader. Government-wide Financial Statements The government-wide financial statements present the results of the City’s operations using the accrual basis of accounting, the same basis as is used by private sector businesses. These statements focus on the long-term financial picture of the City as a whole The Statement of Net Position reports all of the City’s assets and liabilities. Net position, the difference between assets and deferred outflows of resources and liabilities, are an important measure of the City’s overall financial health. Net position represents the total accumulated and unused resources available to the City for the purpose of providing services. Over time, the increases and decreases in net position can be monitored to determine if the City’s financial position is improving or deteriorating. The Statement of Activities shows how net position has changed during the fiscal year. One unique feature of this statement is how it shows the revenues and expenses related to specific programs and how much of those programs were supported by the general taxes of the City. Since this statement is prepared on the accrual basis of accounting, all revenues and expenses are included, regardless of when cash is actually received. Both statements show the operations of the City broken down between governmental and business type activities. Governmental activities are the operations of the City generally supported by taxes, such as public safety (police, fire, and EMS), public works, public health, and culture & recreation. Business-type activities are operations of the City that are intended to recover a significant portion of their costs through user fees and charges. These include water and sewer, refuse collection, the golf course, and operation of the City solid waste facility. 4 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) The government-wide financial statements include the Salina Airport Authority and Salina Housing Authority as discretely presented component units of the City. Note 1, item A in the Notes to the Financial Statements provides a more complete explanation of the relationship between these entities and the City of Salina. Fund Financial Statements The City uses three types of funds to manage its resources: governmental funds, proprietary funds, and fiduciary funds. A fund is a fiscal entity with a set of self-balancing accounts recording financial resources together with all related liabilities and residual equities and balances, and the changes therein. These accounting entities are separated for the purpose of carrying on specific activities or attaining certain objectives in accordance with regulations, restrictions, or limitations. Governmental fund financial statements are prepared on a modified accrual basis. Under this basis, revenues are recognized when they become measurable and available, and expenditures are recognized when the related fund liability is incurred with the exception of long term debt and similar items which are recorded when due. The focus is on the short-term financial picture of the operations of the individual fund, rather than long-term citywide view provided by the government-wide statements. Major governmental funds are presented in individual columns, while non-major governmental funds are aggregated into an “Other Governmental Funds”column. A combining statement for the non-major funds is presented as supplementary information in the back of the report. The information presented in these statements can be compared to the governmental activities information in the government-wide statements. The reconciliation at the end of the fund financial statements details the relationship between the two types of financial statements. Proprietary funds fall into two categories: enterprise funds and internal service funds. All proprietary funds are prepared on the accrual basis of accounting, and are used to account for business-type activities. Enterprise fund statements present the same information that is in the government-wide statements for business-type activities, but in greater detail. The City of Salina currently operates four enterprise funds: Sanitation, Solid Waste Disposal, Golf Course, and Water and Sewer. Internal service funds are used to account for the cost of operations shared by various departments of the City. The city operates five internal service funds. Three of these are for self-insurance activity: Risk Management, Workers Compensation Reserve, and Health Insurance. The remaining two account for our Information Services activity and for the Central Garage operation. A combining statement for these internal service funds can be found in the supplementary information following the notes to the financial statements. Fiduciary funds are used by the City to account for resources held by the City for a third party. Agency funds are a special class of fiduciary fund in which liabilities always equal assets, and thus there is no net position. The City of Salina operates nine agency funds. Schedules for these funds may be viewed in the supplementary section of this report. Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used. Permanent funds operated by the City include the Citizenship Trust, Cemetery and Mausoleum Endowments, and the Tri-centennial Commission fund. Notes to the Financial Statements The notes to the financial statements are an integral part of the basic financial statements since they contain valuable additional information necessary for gaining a complete understanding of the City’s financial statements. Other Information In addition to the basic financial statements and the notes described above, this report also presents the general fund and major special revenue fund’s budgetary statements as required supplementary information directly following the notes to the basic financial statements. The combining statements for the non-major funds are shown after the required supplementary information. Finally, the statistical section includes selected statistical data about the City’s operations and econom y. 5 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) The City as a Whole This section will identify, discuss, and analyze significant differences and trends that will enhance the reader’s understanding of the City’s financial position. Tax Base and Economy The City of Salina relies on three major groups of revenues to support its’operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for services, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to governmental activities, while charges for services apply to both governmental (33%) and business-type (67%) activities. Charges for Services account for about 43% ($36,450,000) of the City’s revenue stream. Charges for service depend on both the rate that is set for the activity, as well as the volume of services provided. The following table illustrates service volume and rate adjustments for some of the more significant services for the year ending December 31, 2013. Description 2012 Volume 2013 Volume Change Rate Comments Golf Course: Rounds, 18 Hole 35,032 35,926 894 No fee increase Rounds, Par 3 3,010 2,500 (510) No fee increase Annual Golf Members 297 298 1 No fee increase Development Services Inspections: Building 5,393 5,421 28 Inspections: Minimum Housing Code 4,926 7,299 2,373 Perm its Issued 2,265 1,954 (311) Finance/Adm inistration EMS Runs Billed 4,098 4,271 173 Licenses Issued NA 827 - Water Billings Issued 239,244 236,649 (2,595) Water Metered (in Billion Gallons)2.20 1.79 - Parks and Recreation Kenwood Cove Attendance 100,888 75,276 (25,612) No fee increase Yo uth Teams 208 172 (36) Adult Team s 292 245 (47) Special Pops Programs 118 140 22 Trips/Tours offered 13 15 2 Yo uth Tournam ent Teams 366 368 2 Adult Tournament Teams 144 116 (28) Public W orks Sanitation Customers 14,706 14,869 163 Landfill Tonnage 103,959 105,006 1,047 No fee increase Street Cut and Excavation Permits 474 215 (259) Concrete Permits 181 152 (29) Water and W astewater Water Treated (Billion Gallons)2.33 2.10 (0.23) $2.00 per m onth per typical user Wastewater Treated (Billion Gallons)1.36 1.36 - $2.00 per m onth per typical user **In general, if not specified in the table, rates were adjusted an average of about 2% for most services. 6 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) Sales taxes are the next largest component of the revenue mix, providing 19% ($16,540,000) of the total revenues. The City receives a .90% City-wide sales tax, and also a portion of the County-wide 1% sales tax. Forty-four percent, (a rate of .4%)of the City-wide sales tax is required to be used for special purposes. The remaining .5%,along with the City portion of the County-wide tax is available for general purposes. Total revenue from the sales tax in 2013 was $16,540,000,up from $16,375,000 in 2012. This 1.0% increase follows a 3.6% increase for 2012. A number of factors affect the sales tax. First are the regional and local economic conditions and relationships. These are most directly reflected in the proceeds of the City-wide tax, which grew by .8%, compared to 3.2% in 2012. The City was unfavorably affected by the formula used to distribute the County-wide sales tax among participating jurisdictions (only Cities and the County participate, School and other special districts do not). The formula is based, in part, on the property tax efforts of each jurisdiction. Because the portion of the overlapping levy attributable to the City of Salina was decreased for 2013, the City’s allocated portion of the County-wide sales tax was also decreased from 61.72% in 2012 to 60.86% in 2013. On November 4, 2008, Salina voters approved an increase of the special purpose .25% tax to a .40% tax. The extended tax is to sunset March 31, 2019. The tax was also modestly re-purposed, for Capital and Economic Development purposes only, as well as retaining a property tax stabilization component. Property Taxes are the third major component of the revenue mix, accounting for 14% ($11,593,000)of total revenues. Property taxes consist of two components: Real estate and personal property taxes which are determined by the mill levy set by the city and the assessed value of the property; and motor vehicle taxes, which are established by a countywide average tax rate, and the assessed value of the vehicle. Real estate assessed value increased by .6%. The total City mill levy was stable,decreasing by only .3%. The overlapping levy was also essentially stable, increasing by only .016 mill. Tax delinquency increased from 1.5%to 4.1%. Personal property value continued to slide, presumably as a result of removing business equipment from the tax base. Personal property value has now dropped to $17.8 million from its’peak of $39.7 million in 2007. At the 2013 tax rate, this exemption is equivalent to $417,406 in lost revenue for 2013. Motor vehicle value increased by 2.8%, however, it is still well below 2010 values. Motor vehicle taxes are distributed based on a formula using prior year’s tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Fiscal (Budget) Year 2012 2013 Change Real Estate and Personal Property Assessed Valuation 403,850,282$ 405,107,476$ 1,257,194$ City Mill Levy ($ per $1,000) Operating (General Fund)20.326 20.242 (0.084) Debt Service 5.946 5.948 0.002 Total City Rate 26.272 26.190 (0.082) Total Overlapping Levy 128.502 131.797 3.295 Percent of Total Taxes Collected 98.5%95.9%-2.6% Ratio of Total Taxes (including delinquent collections) to taxes levied 100.8%98.3%-2.5% Motor Vehicle Valuation 47,533,744$ 48,882,411$ 1,348,667$ Comparative Property Values and Tax Levy Rates The unemployment rate in Saline County declined slightly from 5.1% in 2012 to 4.3% in 2013, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force increased to 30,620, a change of 1.4%. In 2013, the top ten property taxpayers accounted for 7.87% of total assessed value. This is less concentrated than ten years ago (at 11.24%). 7 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) Statement of Net Position Net position may, over time, provide an indicator of a government’s financial position. In the case of the City of Salina, assets and deferred outflows of resources exceeded liabilities by $205,872,000 at December 31, 2013. This represents an increase in net assets of $12,490,000 over 2012. A comparative condensed Statement of Net Position at December 31, 2012 and 2013: 2012 2013 2012 2013 2012 % of Total 2013 % of Total 2012 - 2013 Change Cash and Investments 14,512$ 23,462$ 25,459$ 24,175$ 39,971$ 14%47,637$ 15%7,666$ Other Current Assets 12,525$ 13,065$ 2,045$ 2,125$ 14,570$ 5%15,190$ 5%620$ Noncurrent (Capital) Assets 162,038$ 166,217$ 76,321$ 80,849$ 238,359$ 81%247,066$ 80%8,707$ Deferred Outflows of Resources 483$ 414$ 330$ 311$ 813$ 0%725$ 0%(88)$ Total Assets and Deferred Outflows of Resources 189,558$ 203,158$ 104,155$ 107,460$ 293,713$ 100%310,618$ 100%16,905$ Current Liabilities 20,990$ 23,922$ 4,390$ 5,636$ 25,380$ 25%29,558$ 28%4,178$ Noncurrent Liabilities 49,047$ 49,813$ 25,904$ 25,375$ 74,951$ 75%75,188$ 72%237$ Total Liabilities 70,037$ 73,735$ 30,294$ 31,011$ 100,331$ 100%104,746$ 100%4,415$ Net Position Net investment in capital assets 112,929$ 116,585$ 50,857$ 57,103$ 163,786$ 85%173,688$ 84%9,902$ Restricted for Permanent Funds 443$ 452$ -$ -$ 443$ 0%452$ 0%9$ Restricted for Debt Service 639$ 758$ 1,553$ 1,553$ 2,192$ 1%2,311$ 1%119$ Unrestricted 5,511$ 11,628$ 21,450$ 17,793$ 26,961$ 14%29,421$ 14%2,460$ Total Net Position 119,522$ 129,423$ 73,860$ 76,449$ 193,382$ 100%205,872$ 100%12,490$ Percent of Total Net Position 62%63%38%37%100%100% Cash and Investments as a percentage of current liabilities 69%98%580%429%157%161% Governmental Activities Business-Type Activities Comparative Condensed Statement of Net Position 2012 and 2013 (In $000) Total Primary Government The largest segment of the City’s net position (85%) reflects its investment in capital assets (land, buildings, streets and drainage facilities, utility plant, vehicles, equipment, etc.), less any debt used to acquire those assets that is still outstanding. These assets are used to provide services to citizens. As a result, resources required to retire related debt cannot come from liquidation of the asset. Such resources generally must be provided from other sources, such as future taxes or user charges. A small portion of net position (1%) is restricted for debt service. The remainder (unrestricted) of net position (14%) may be used to meet the City’s obligations to citizens and creditors. This is comparable to previous years. In 2013, the amount of net investment in capital assets increased by $9,902,000. Unrestricted net position increased by $2,460,000. These represent diverse changes throughout the financial statement. However, it is clear that for 2013, the City experienced an increase in current assets, including cash and investments. Total liabilities increased in governmental activities and in business-type activities. In governmental activities, the bulk of the increase was in current term liabilities, most notably in temporary notes, while the performance in business-type activities was primarily due to an increase in accounts payable. During the year ended December 31, 2013, there were several significant events that changed the balance of net position. Governmental Activities: 2013 saw an increase in cash and investments in governmental funds. This is mainly due to cash receipts for an abatement of groundwater contamination. 8 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) Business-type Activities: The water and sewer fund has a dominant influence on the increase in business-type activities net position. The increase in net assets is due to good revenue production and controlled expenses. Statement of Activities A condensed statement of activities is shown below. 2012 2013 2012 2013 2012 % 2013 %2012 - 2013 Program Revenues:Change Charges for Services 12,856$ 12,141$ 25,481$ 24,309$ 38,337$ 48% 36,450$ 43% (1,887)$ Operating Grants and Contributions 4,495$ 4,200$ -$ -$ 4,495$ 6% 4,200$ 5% (295)$ Capital Grants and Contributions -$ -$ 274$ -$ 274$ 0% -$ 0% (274)$ General Revenues: Property Taxes 11,865$ 11,593$ 11,865$ 15% 11,593$ 14% (272)$ Sales Taxes 16,375$ 16,540$ 16,375$ 21% 16,540$ 19% 165$ Other Taxes 6,486$ 6,630$ 6,486$ 8% 6,630$ 8% 144$ Investment Revenue 66$ 67$ 79$ 49$ 145$ 0% 116$ 0% (29)$ Other Miscellaneous 660$ 9,919$ 434$ 279$ 1,094$ 1%10,198$ 12%9,104$ Total Revenues: 52,803$ 61,090$ 26,268$ 24,637$ 79,071$ 100%85,727$ 100%6,656$ Expenses:-$ General Government 11,278$ 10,978$ 11,278$ 15% 10,978$ 15% (300)$ Public Safety 19,066$ 19,649$ 19,066$ 26% 19,649$ 26% 583$ Public Works 10,957$ 11,064$ 10,957$ 15% 11,064$ 15% 107$ Public Health and Sanitation 1,383$ 1,369$ 1,383$ 2% 1,369$ 2% (14)$ Culture and Recreation 5,338$ 4,809$ 5,338$ 7% 4,809$ 6% (529)$ Planning and Development 3,362$ 3,399$ 3,362$ 5% 3,399$ 5% 37$ Solid Waste Disposal 2,066$ 3,532$ 2,066$ 3% 3,532$ 5% 1,466$ Water and Sewer 14,897$ 15,418$ 14,897$ 20% 15,418$ 21% 521$ Sanitation 2,441$ 2,237$ 2,441$ 3% 2,237$ 3% (204)$ Golf Course 724$ 768$ 724$ 1% 768$ 1% 44$ Interest on Long Term Debt 1,914$ 1,953$ 1,914$ 3%1,953$ 3%39$ Total Expenses 53,298$ 53,221$ 20,128$ 21,955$ 73,426$ 100%75,176$ 100%1,750$ Increase in net position before transfers (495)$ 7,869$ 6,140$ 2,682$ 5,645$ 10,551$ 4,906$ Transfers and other extraordinary items 30$ 1,000$ (30)$ (950)$ -$ 50$ 50$ Change in Net Position (465)$ 8,869$ 6,110$ 1,732$ 5,645$ 10,601$ 4,956$ Net Position January 1 117,334$ 119,522$ 70,314$ 73,860$ 187,648$ 193,382$ 5,734$ Prior Period Adjustment 2,653$ 1,032$ (2,564)$ 857$ 89$ 1,889$ 1,800$ Net Position January 1, restated 119,987$ 120,554$ 67,750$ 74,717$ 187,737$ 195,271$ 7,534$ Net Position December 31 119,522$ 129,423$ 73,860$ 76,449$ 193,382$ 205,872$ 12,490$ Condensed Comparitive Statement of Activities, 2012 and 2013 (In $000's) Governmental Activities Business-Type Total Primary Government Governmental Activities. Total expenses for governmental activities for the year ending December 31, 2013 were $53,221,000 compared to $53,298,000 in 2012. Governmental activities represent 71% of the City’s total expenses. The largest element of governmental activity expense was public safety, accounting for 26% of the total. Charges for service attributable to governmental activities totaled $12,141,000 and operating grants for those purposes were $4,200,000, a slight decline over 2012. The balance was funded by general revenues. Sales taxes accounted for $16,540,000 of the general revenues, with property taxes providing $11,593,000, and other miscellaneous accounted for $9,919,000, which includes the funds received for the abatement of groundwater contamination. Net assets increased by $9,901,000 as a result of governmental activities. Business Type Activities. Total expenses for business-type activities for the year were $21,955,000, or 29% of the City’s total expense. The majority of this expense ($15,418,000) is attributable to water and sewer operations, with the other activities costing a combined total of $6,537,000. These activities are primarily supported by user charges, with only $328,000 coming from investment and miscellaneous revenues. Net positions increased by $2,589,000 as a result of business-type activity operations. 9 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds as of December 31, 2012 and December 31, 2013. Fund 2012 2013 Change General 3,827,110$ 3,549,740$ (277,370)$ Flood and Drainage -$ 435,734$ 435,734$ Tourism and Convention 419,505$ 1,289,302$ 869,797$ Special Gas 1,375,175$ -$ (1,375,175)$ Bicentennial Center 3,138$ 1,942,519$ 1,939,381$ Sales Tax Capital 2,010,139$ 9,223,212$ 7,213,073$ Debt Service 639,324$ 757,726$ 118,402$ Capital Projects (922,852)$ (2,416,104)$ (1,493,252)$ Other Governmental Funds 3,366,098$ 2,845,454$ (520,644)$ Total 10,717,637$ 17,627,583$ 6,909,946$ Governmental Fund Balances, 2012 and 2013 Total governmental fund balances increased by $6,909,946. The main reasons for these changes are varied. The most significant change is in the Schilling Capital Improvement Fund, which was created to account for U.S. Government and other funds received for the abatement of groundwater contamination. The Capital Projects Fund decrease was largely the result of project activities. The General Fund balances was remained stable in 2013. The largest decrease in other governmental funds was in the Sales Tax Economic Development Fund. Revenues and Expenditures: The following table shows a comparison of revenues and expenditures (including other sources and uses) for major funds for the years ending December 31, 2012 and 2013. Fund 2012 2013 Change Revenues (Including Other Financing Sources) General 35,986,064$ 36,925,292$ 939,228$ Flood and Drainage Improvement 108$ -$ (108)$ Tourism and Convention 1,429,032$ 1,366,229$ (62,803)$ Special Gas 1,544,176$ 1,540,781$ (3,395)$ Bicentennial Center 1,190,661$ -$ (1,190,661)$ Sales Tax Capital 3,888,105$ 3,954,780$ 66,675$ Schilling Capital Improvement -$ 9,370,097$ 9,370,097$ Debt Service 9,786,681$ 6,576,384$ (3,210,297)$ Capital Projects 3,575,743$ 6,986,719$ 3,410,976$ Other Governmental Funds*2,936,162$ 3,134,461$ 198,299$ Total Revenues 60,336,732$ 69,854,743$ 9,518,011$ Less Other Sources 9,698,819$ 10,782,677$ 1,083,858$ Revenues, net of other sources 50,637,913$ 59,072,066$ 8,434,153$ Expenditures (Including Other Financing Uses) General 35,995,192$ 37,328,037$ 1,332,845$ Flood and Drainage Improvement 1,015$ -$ (1,015)$ Tourism and Convention 1,350,000$ 1,350,000$ -$ Special Gas 1,586,744$ 1,626,654$ 39,910$ Bicentennial Center 1,330,404$ -$ (1,330,404)$ Sales Tax Capital 3,275,537$ 4,022,400$ 746,863$ Schilling Capital Improvement -$ 146,885$ Debt Service 10,476,427$ 6,457,982$ (4,018,445)$ Capital Projects 3,384,160$ 8,489,127$ 5,104,967$ Other Governmental Funds*2,362,610$ 3,658,243$ 1,295,633$ Total Expenditures 59,762,089$ 63,079,328$ 3,317,239$ Less Other Uses 3,458,438$ 3,907,114$ 448,676$ Expenditures, net of other uses 56,303,651$ 59,172,214$ 2,868,563$ Consolidated Statement of Revenues and Expenditures for Major Funds, 2012 and 2013 Modified Accrual Basis 10 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) Total revenues and other sources increased by $8,434,153 from 2012 to 2013. The largest components of this change were in the Schilling Capital Improvement Fund and the Capital Projects Fund.Other changes include an increase the General Fund and changes in temporary note activity. Expenditures generally increased, with the notable exception of the Bicentennial Center and Debt Service Funds. The increase in the General Fund is due largely to inflationary pressures. For 2013, the Bicentennial Center was reclassified to “Other Governmental Funds”. The Debt Service Fund was influenced by refinancing activity. Proprietary Funds The City of Salina operates four enterprise funds as well as five internal service funds. A summarized comparative Statement of Net Position follows for each enterprise fund: 2012 2013 Change 2012 2013 Change Current Assets 4,524$ 5,400$ 876$ 22,065$ 19,883$ (2,182)$ Capital Assets 2,933$ 2,495$ (438)$ 72,498$ 77,310$ 4,812$ Deferred Outflows of Resources -$ -$ -$ 330$ 311$ (19)$ Total Assets and Deferred Outflows of Resources 7,457$ 7,895$ 438$ 94,893$ 97,504$ 2,611$ Current Liabilities 510$ 630$ 120$ 3,769$ 4,895$ 1,126$ Noncurrent Liabilities 2,207$ 2,788$ 581$ 23,581$ 22,463$ (1,118)$ Total Liabilities 2,717$ 3,418$ 701$ 27,350$ 27,358$ 8$ Net investment in capital assets 2,117$ 2,083$ (34)$ 47,849$ 53,976$ 6,127$ Restricted -$ -$ -$ 1,553$ 1,553$ -$ Unrestricted 2,623$ 2,393$ (230)$ 18,141$ 14,617$ (3,524)$ Total Net Position 4,740$ 4,476$ (264)$ 67,543$ 70,146$ 2,603$ Current Assets as a percentage of current liabilities 887%857%585%406% 2012 2013 Change 2012 2013 Change Current Assets 823$ 928$ 105$ 91$ 89$ (2)$ Capital Assets 545$ 688$ 143$ 345$ 356$ 11$ Deferred Outflows of Resources -$ -$ -$ -$ -$ -$ Total Assets and Deferred Outflows of Resources 1,368$ 1,616$ 248$ 436$ 445$ 9$ Current Liabilities 64$ 62$ (2)$ 47$ 49$ 2$ Noncurrent Liabilities 49$ 50$ 1$ 68$ 73$ 5$ Total Liabilities 113$ 112$ (1)$ 115$ 122$ 7$ Net investment in capital assets 545$ 688$ 143$ 345$ 356$ 11$ Restricted -$ -$ -$ -$ -$ -$ Unrestricted 710$ 816$ 106$ (24)$ (33)$ (9)$ Total Net Position 1,255$ 1,504$ 249$ 321$ 323$ 2$ Current Assets as a percentage of current liabilities 1286%1497%194%182% Comparative Summary Statement of Net Position; 2012 - 2013 (in $000's) Solid W aste Disposal Water and Sewer Sanitation Golf Course 11 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) The Solid Waste Disposal Fund shows an increase in liabilities related to landfill post-closure.The Sanitation Fund shows improvement in total net position, due to an increase in current and capital assets.The Golf Course Fund remained stable. The water and sewer fund showed a significant increase in capital assets and an increase in payables with decrease in long-term revenue bonds payable. Revenues, Expenses, and Changes in Net Position The Water and Sewer Fund showed healthy but modest results from operations.Net position increased despite a limited revenue flow due to adverse weather conditions. The Golf Course and Sanitation Fund were stable. Net position decreased in the Solid Waste Fund. 2012 2013 Change 2012 2013 Change Operating Revenues 3,165$ 3,171$ 6$ 19,455$ 18,132$ (1,323)$ Operating Expenses 2,048$ 3,522$ 1,474$ 13,972$ 14,524$ 552$ Operating Income 1,117$ (351)$ (1,468)$ 5,483$ 3,608$ (1,875)$ Non-operating revenues (expenses)(7)$ 1$ 8$ (860)$ (858)$ 2$ Income (Loss) before Transfers 1,110$ (350)$ (1,460)$ 4,623$ 2,750$ (1,873)$ Transfers in (out)-$ -$ -$ (30)$ (950)$ (920)$ Capital Contributions 124$ -$ (124)$ 150$ -$ (150)$ Change in Net Position 1,234$ (350)$ (1,584)$ 4,743$ 1,800$ (2,943)$ Net Position, January 1 3,710$ 4,740$ 1,030$ 65,169$ 67,543$ 2,374$ Restatement (204)$ 86$ 290$ (2,369)$ 803$ 3,172$ Net Position, January 1, restated 3,506$ 4,826$ 1,320$ 62,800$ 68,346$ 5,546$ Net Position, December 31 4,740$ 4,476$ (264)$ 67,543$ 70,146$ 2,603$ 2012 2013 Change 2012 2013 Change Operating Revenues 2,462$ 2,514$ 52$ 832$ 770$ (62)$ Operating Expenses 2,441$ 2,236$ (205)$ 725$ 768$ 43$ Operating Income 21$ 278$ 257$ 107$ 2$ (105)$ Non-operating revenues (expenses)3$ 2$ (1)$ 1$ -$ (1)$ Income (Loss) before Transfers 24$ 280$ 256$ 108$ 2$ (106)$ Transfers in (out)-$ -$ -$ -$ -$ -$ Change in Net Position 24$ 280$ 256$ 108$ 2$ (106)$ Net Position, January 1 1,222$ 1,255$ 33$ 213$ 321$ 108$ Restatement 9$ (31)$ (40)$ -$ -$ -$ Net Position, January 1, restated 1,231$ 1,224$ (7)$ 213$ 321$ 108$ Net Position, December 31 1,255$ 1,504$ 249$ 321$ 323$ 2$ Enterprise Funds Summary of Revenues, Expenses and Changes in Net Position 2012 and 2013 (In $000's) Solid W aste Disposal Water and Sewer Sanitation Golf Course 12 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) Budgetary Highlights The objective of budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the fund level, in accordance with State Statutes. Management control is maintained at the departmental level. Within the departments, considerable discretion is permitted. The City uses an encumbrance accounting system, in which estimated purchase orders are recorded prior to the release of purchase orders to vendors. Open purchase orders are reported as reservations of budgetary basis fund balances at December 31, 2013. Formal budgetary amendments are limited to those circumstances in which the need is perceived to alter the total fund budget. Re- allocation among departments or line items are not typically recorded as budgetary amendments. However, in addition to formal am endments, departments within the City are allowed to transfer budget between line items within a department. Budgets may also be transferred from department to department within each fund. As a result of these transfers, the original budget and the final budgets may not be the same for departments within a fund. The City experienced a number of significant variances from budgeted items in the General Fund,however, the total fund was within budgeted expenses. Sales taxes were short of budgetary levels significantly. Several expenditure items were also significantly over or under budget. Several Departments exceeded budgeted expenditures. Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2013 was $247,066,000 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2012 and 2013: 2012 2013 2012 2013 2012 2013 Equipment, Furniture and Fixtures 1,252$ 1,219$ 1,976$ 1,768$ 3,228$ 2,987$ Vehicles 2,871$ 3,149$ 672$ 810$ 3,543$ 3,959$ Buildings and Improvements 24,475$ 23,464$ 11,475$ 11,051$ 35,950$ 34,515$ Land 22,640$ 22,640$ 1,542$ 1,542$ 24,182$ 24,182$ Infrastructure 101,610$ 104,394$ 39,694$ 43,191$ 141,304$ 147,585$ Construction in Progress 9,190$ 11,351$ 20,962$ 22,487$ 30,152$ 33,838$ Total 162,038$ 166,217$ 76,321$ 80,849$ 238,359$ 247,066$ * Net of Accumulated Depreciation Capital Asset Balances Net of Depreciation, 12/31/2012 and 12/31/2013 (In 000's) Governmental Activity Business-type Activity Total 13 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2013 (Unaudited) Changes to capital assets may be summarized as follows: Governmental Activity Business-Type Activity Total Additions 15,017$ 10,133$ 25,150$ Retirements 6,484$ 4,119$ 10,603$ Adjustments 1,004$ 1,068$ 2,072$ Net Additions 22,505$ 15,320$ 37,825$ Depreciation Expense Applied 5,463$ 2,592$ 8,055$ Changes to Capital Assets, 2013 (in 000's) Additional information on the City’s capital assets can be found in Note 4,D. of the notes to the basic financial statements. Debt Management The City’s general policy for general obligation bonds is to issue them for no more than 10 years for the City at Large portion, with some exceptions permitted for extraordinary projects. On special assessment bonds, the maturity may extend to 15 years. The outstanding general obligation bonds for governmental activities at 12/31/2013 totaled $49,631,797. In addition, there were temporary notes outstanding in the amount of $3,800,000. Business-type activities had $15,226,532 in revenue bonds outstanding, as well as $8,519,799 in general obligation bonds. Revenues generated by user fees are pledged to retire all of the bonds issued by business-type activities. The City engaged in several debt transactions during 2013. On February 15th, the City issued 2013-A,$1,360,000 of internal improvement bonds. The proceeds were used to finance public improvements to serve a commercial development. On July 15th, 2013-B was issued in the amount of $4,330,000 to refinance temporary notes of $1,485,000 and to finance infrastructure improvements. Final maturity will be reached in 2033. Also on August 1st, the City issued $3,800,000 in temporary notes to finance infrastructure improvements. This note will be refinanced into a long term bond issue in August 2014. Additional information on the City’s debt can be found in Note 4, E. of the notes to the basic financial statements. Requests for Information This financial report is intended to give the reader a general overview of the City’s finances. Questions about information in this report or requests for additional information should be directed to the Director of Finance, Room 206, 300 West Ash Street, Salina, Kansas, 67401. Total Total Total Salina Salina Governmental Business-type Primary Housing Airport Activities Activities Government Authority Authority ASSETS AND DEFERRED OUTLFOWS OF RESOURCES Current assets: Cash and investments 23,461,940$ 24,175,193$ 47,637,133$ 1,600,287$887,178$ Receivables (net of allowance for uncollectibles) Accounts 1,388,039 1,575,204 2,963,243 24,495 90,629 Taxes 11,438,597 - 11,438,597 - - Interest 17,556 16 17,572 - - Inventory 221,104 549,415 770,519 23,877 1,625 Restricted cash and investments - - - 76,717 - Prepaid expenses - - - 32,898 147,437 Total current assets 36,527,236 26,299,828 62,827,064 1,758,274 1,126,869 Noncurrent assets: Notes receivable - - - - - Capital assets, nondepreciable Construction in progress 11,350,806 22,486,696 33,837,502 178,180 928,804 Land 22,639,800 1,541,806 24,181,606 1,456,891 9,800,188 Capital assets, depreciable 229,001,149 108,160,162 337,161,311 7,893,510 69,869,841 Less: Accumulated depreciation 96,774,681 51,339,571 148,114,252 3,554,310 31,676,074 Total noncurrent assets 166,217,074 80,849,093 247,066,167 5,974,271 48,922,759 Total assets 202,744,310 107,148,921 309,893,231 7,732,545 50,049,628 Deferred outflows of resources: Deferred charge on bond issuance 413,660 311,471 725,131 - - Total deferred outflows of resources 413,660 311,471 725,131 - - Total assets and deferred outflows of resources 203,157,970$ 107,460,392$310,618,362$ 7,732,545$50,049,628$ Liabilities: Current liabilities: Accounts payable 1,312,376$ 1,225,880$ 2,538,256$ 35,429$ 125,612$ Retainage payable 95,439 1,897,341 1,992,780 - - Accrued liabilities 533,363 - 533,363 32,860 140,195 Matured bond principal and interest 143 - 143 - - Accrued interest payable 515,479 240,241 755,720 - 359,410 Deposits payable - 169,377 169,377 77,906 - Unearned revenue 10,908,147 - 10,908,147 16,116 80,091 Current portion of compensated absences 1,524,775 332,405 1,857,180 1,732 - Current portion of temporary notes payable 3,800,000 - 3,800,000 - - Current portion of revenue bonds payable - 633,696 633,696 - - Current portion of financing leases payable - - - - 48,905 Current portion of special assessment debt payable - - - - 17,797 Current portion of general obligation bonds payable 5,232,291 1,137,449 6,369,740 - 925,000 Total current liabilities 23,922,013 5,636,389 29,558,402 164,043 1,697,010 Noncurrent liabilities: Accrued liabilities 408,539 - 408,539 37,382 - Compensated absences 1,429,169 311,562 1,740,731 15,590 - Security deposits returnable - - - - 11,702 Net OPEB obligation 3,575,280 411,463 3,986,743 - - Revenue bonds payable - 14,592,836 14,592,836 - - Financing leases payable - - - - 107,886 Special assessment debt payable - - - - 48,949 General obligation bonds payable 44,399,506 7,382,350 51,781,856 - 22,955,662 Landfill post-closure care liabilities - 2,676,327 2,676,327 - - Total noncurrent liabilities 49,812,494 25,374,538 75,187,032 52,972 23,124,199 Total liabilities 73,734,507$ 31,010,927$ 104,745,434$ 217,015$ 24,821,209$ Net Position Net investment in capital assets 116,585,277$ 57,102,762$ 173,688,039$ 5,974,271$24,818,560$ Restricted for: Permanent funds: Expendable 452,524 - 452,524 39,335 - Debt service 757,726 1,553,016 2,310,742 - - Unrestricted 11,627,936 17,793,687 29,421,623 1,501,924 409,859 Total net position 129,423,463$ 76,449,465$ 205,872,928$ 7,515,530$25,228,419$ Primary Government CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December 31, 2013 Component Units The notes to the basic financial statements are an integral part of this statement. 14 Operating Capital Total Total Total Salina Salina Charges for Grants and Grants and Governmental Business-type Primary Housing Airport Expenses Services Contributions Contributions Activities Activities Government Authority Authority Governmental activities: General government 10,977,555$ 5,547,853$ 917,822$ -$ [4,511,880]$ -$ [4,511,880]$ -$ -$ Public safety 19,649,097 4,655,173 1,037,353 - [13,956,571] - [13,956,571] - - Public works 11,063,881 277,168 1,540,290 - [9,246,423] - [9,246,423] - - Public health and sanitation 1,368,774 34,128 159,646 - [1,175,000] - [1,175,000] - - Culture and recreation 4,809,287 1,465,660 162,088 - [3,181,539] - [3,181,539] - - Planning and development 3,399,244 161,282 383,234 - [2,854,728] - [2,854,728] - - Interest on long-term debt 1,953,279 - - - [1,953,279] - [1,953,279] - - Total governmental activities 53,221,117 12,141,264 4,200,433 - [36,879,420] - [36,879,420] - - Business-type activities: Solid Waste Disposal 3,531,998 3,137,357 - - - [394,641] [394,641] - - Water and Sewer 15,417,630 17,938,288 - - - 2,520,658 2,520,658 - - Sanitation 2,236,722 2,514,105 - - - 277,383 277,383 - - Golf Course 768,326 719,013 - - - [49,313] [49,313] - - Total business-type activities 21,954,676 24,308,763 - - - 2,354,087 2,354,087 - - Total primary government 75,175,793$ 36,450,027$4,200,433$ -$ [36,879,420] 2,354,087 [34,525,333] - - Component units: Salina Housing Authority 2,198,706$ 350,455$ 1,523,841$ 155,157$ - - - [169,253] - Salina Airport Authority 5,814,648 2,013,856 - 623,029 - - - - [3,177,763] Total component units 8,013,354$ 2,364,311$ 1,523,841$ 778,186$ - - - [169,253] [3,177,763] General Revenues: Property taxes levied for General purposes 8,031,317 - 8,031,317 - 1,788,284 Debt service 2,362,271 - 2,362,271 - - Motor vehicle tax General purposes 1,200,034 - 1,200,034 - - Sales tax General purposes 12,259,556 - 12,259,556 - - Selective purposes 4,280,879 - 4,280,879 - - Other taxes General purposes 6,630,401 - 6,630,401 - - Investment revenues 67,395 49,444 116,839 9,954 676 Miscellaneous 9,916,557 278,548 10,195,105 10,958 105,755 Transfers, net 999,981 [949,863] 50,118 - - Subtotal general revenues 45,748,391 [621,871] 45,126,520 20,912 1,894,715 Change in net position 8,868,971 1,732,216 10,601,187 [148,341] [1,283,048] Net position - beginning 119,521,610 73,859,818 193,381,428 7,662,867 26,511,467 Prior period adjustment 1,032,882 857,431 1,890,313 1,004 - Net position - beginning, restated 120,554,492 74,717,249 195,271,741 7,663,871 26,511,467 Net position - ending 129,423,463$76,449,465$ 205,872,928$7,515,530$25,228,419$ Changes in Net Position Component UnitsPrimary GovernmentProgram Revenues CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2013 Net [Expenses] Revenue and The notes to the basic financial statements are an integral part of this statement. 15 Tourism and Special General Convention Gas ASSETS Cash and investments 2,654,485$ 86,296$ 1,192,101$ Receivables (net) Accounts 983,354 349,438 - Taxes 8,491,241 - 309,690 Interest 17,556 - - Inventory 80,963 - - Due from other funds 132,364 - - Cash with fiscal agent - - - Total assets 12,359,963$ 435,734$ 1,501,791$ LIABILITIES, DEFERRED INFLOW S OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable 489,779$ -$ 153,415$ Retainage payable - - 59,074 Due to other funds - - - Matured principal and interest - - - Temporary notes payable - - - Total liabilities 489,779 - 212,489 Deferred inflows of resources Unavailable revenue - property taxes 8,320,444 - - Total deferred inflows of resources 8,320,444 - - Fund balance: Nonspendable 80,963 - - Restricted - 435,734 1,154,147 Committed - - - Assigned 331,344 - 135,155 Unassigned 3,137,433 - - Total fund balances 3,549,740 435,734 1,289,302 Total liabilities, deferred inflows of resources and fund balances 12,359,963$ 435,734$ 1,501,791$ BALANCE SHEET CITY OF SALINA, KANSAS December 31, 2013 GOVERNMENTAL FUNDS Schilling Other Total Sales Tax Capital Debt Capital Governmental Governmental Capital Improvement Service Projects Funds Funds 2,020,623$ 9,289,600$ 707,763$ 1,792,855$ 2,973,809$ 20,717,532$ - - - - 55,247 1,388,039 - - 2,637,666 - - 11,438,597 - - - - - 17,556 - - - - - 80,963 - - - - - 132,364 - - 143 - - 143 2,020,623$ 9,289,600$ 3,345,572$ 1,792,855$ 3,029,056$ 33,775,194$ 76,411$ 66,388$ -$ 374,287$ 51,238$ 1,211,518$ 1,693 - - 34,672 - 95,439 - - - - 132,364 132,364 - - 143 - - 143 - - - 3,800,000 - 3,800,000 78,104 66,388 143 4,208,959 183,602 5,239,464 - - 2,587,703 - - 10,908,147 - - 2,587,703 - - 10,908,147 - - - - - 80,963 - - 757,726 - 1,097,998 3,445,605 1,794,469 9,223,212 - - 1,554,577 12,572,258 148,050 - - [2,416,104] 192,879 [1,608,676] - - - - - 3,137,433 1,942,519 9,223,212 757,726 [2,416,104] 2,845,454 17,627,583 2,020,623$ 9,289,600$ 3,345,572$ 1,792,855$ 3,029,056$ 33,775,194$ 16 The notes to the basic financial statements are an integral part of this statement. This page intentionally left blank. Total Governmental Fund Balances 17,627,583$ Amounts reported for governmental activities in the statement of net position are different because Bond issuance costs are shown as current year expenditures in the funds. Bond issuance costs 413,660 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds The cost of capital assets is 262,105,943 Accumulated depreciation is 95,920,137 166,185,806 An internal service fund is used by the City's management to charge the costs of the worker's compensation program. The assets and liabilities of the internal service fund are included with governmental activities.1,782,982 The following liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. These liabilities at year end consist of: Compensated absences 2,864,012 Net OPEB obligation 3,575,280 Bonds payable 49,631,797 Accrued interest on the bonds 515,479 [56,586,568] Net Position of Governmental Activities 129,423,463$ CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2013 The notes to the basic financial statements are an integral part of this statement. 17 Tourism and General Convention REVENUES: Taxes Real estate taxes 7,841,585$ -$ Delinquent taxes 189,732 - Motor vehicle taxes 927,749 - General sales taxes 12,259,556 - Selective sales taxes - - Other taxes 5,264,277 1,366,124 Intergovernmental 1,255,203 - Special assessments - - Licenses and permits - - Charges for services 7,981,078 - Investment revenue - 105 Reimbursements - - Miscellaneous 525,923 - Total revenues 36,245,103 1,366,229 EXPENDITURES: Current General government 4,268,824 - Public safety 19,155,034 - Public works 6,826,214 - Public health and sanitation 1,183,970 - Culture and recreation 2,277,146 - Planning and development 2,335,223 745,875 Miscellaneous - - Capital outlay 694,750 - Debt service Principal retirement - - Interest and other charges - - Total expenditures 36,741,161 745,875 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses][496,058] 620,354 OTHER FINANCING SOURCES [USES] Issuance of bonds - - Bond premium - - Transfers in 680,189 - Transfers [out][586,876] [604,125] Total other financing sources [uses]93,313 [604,125] Net change in fund balance [402,745] 16,229 Fund balance - Beginning of year 3,827,110 419,505 Restatement of prior year fund balance 125,375 - Fund balance - Beginning of year, as restated 3,952,485 419,505 Fund balance - End of year 3,549,740$ 435,734$ EXPENDITURES AND CHANGES IN FUND BALANCE STATEMENT OF REVENUES, CITY OF SALINA, KANSAS For the Year Ended December 31, 2013 GOVERNMENTAL FUNDS Schilling Other Total Special Sales Tax Capital Debt Capital Governmental Governmental Gas Capital Improvement Service Projects Funds Funds -$ -$ -$ 2,303,819$ -$ -$ 10,145,404$ - - - 58,452 - - 248,184 - - - 272,285 - - 1,200,034 - - - - - - 12,259,556 - 3,947,947 - - - 332,932 4,280,879 - - - - - - 6,630,401 1,531,790 - - - 411,068 993,872 4,191,933 - - - 1,706,411 - - 1,706,411 - - - - - 8,500 8,500 - - - - - 554,677 8,535,755 3,095 6,833 7,097 6,538 10,558 5,422 39,648 - - 8,426,700 - 588,708 - 9,015,408 5,896 - - 149,290 - 128,844 809,953 1,540,781 3,954,780 8,433,797 4,496,795 1,010,334 2,024,247 59,072,066 - - - - - - 4,268,824 - - - - - - 19,155,034 394,232 - - - - - 7,220,446 - - - - - 159,510 1,343,480 - - - - - 1,662,235 3,939,381 - - - - - 212,029 3,293,127 - - - - - 35 35 1,232,422 1,744,691 146,885 - 7,971,147 1,257,173 13,047,068 - - - 4,882,905 - 155,000 5,037,905 - - - 1,575,077 144,583 147,254 1,866,914 1,626,654 1,744,691 146,885 6,457,982 8,115,730 3,593,236 59,172,214 [85,873] 2,210,089 8,286,912 [1,961,187] [7,105,396] [1,568,989] [100,148] - - - 10,884 5,679,116 - 5,690,000 - - - - 185,582 - 185,582 - - 936,300 2,068,705 111,687 1,110,214 4,907,095 - [2,277,709] - - [373,397] [65,007] [3,907,114] - [2,277,709] 936,300 2,079,589 5,602,988 1,045,207 6,875,563 [85,873] [67,620] 9,223,212 118,402 [1,502,408] [523,782] 6,775,415 1,375,175 2,010,139 - 639,324 [922,852] 3,369,236 10,717,637 - - - - 9,156 - 134,531 1,375,175 2,010,139 - 639,324 [913,696] 3,369,236 10,852,168 1,289,302$ 1,942,519$ 9,223,212$ 757,726$ [2,416,104]$ 2,845,454$ 17,627,583$ 18 The notes to the basic financial statements are an integral part of this statement. Total Net Change In Fund Balances - Governmental Funds 6,775,415$ Amounts reported for governmental activities in the statement of activities are different because Capital outlays to purchase or build assets are reported in governmental funds as expenditures. However, for governmental activities those costs are shown in the statement of net position and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which capital outlays exceeds depreciation in the period. Gain on sale of assets 15,302 Proceeds from sale of assets [15,302] Capital outlays 8,959,293 Depreciation expense [5,454,269] 3,505,024 Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is the amount by which interest increased.[86,365] An internal service fund is used by the city's management to charge the costs of certain activities to the individual funds. The revenues and expenses of certain internal service fund is reported with governmental activities.[237,653] Some expenses reported in the statement of activities, such as compensated absences and other post employment benefits, do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.[280,048] Bond and temporary note proceeds are other financing sources in the governmental funds, but they increase long-term liabilities in the statement of net position and do not affect the statement of activities. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.[5,845,307] Repayment of bond principal and bond issuance costs is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net position and does not affect the statement of activities.5,037,905 Changes In Net Position of Governmental Activities 8,868,971$ CITY OF SALINA, KANSAS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE WITH THE GOVERNMENT-W IDE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2013 The notes to the basic financial statements are an integral part of this statement. 19 Total Internal Solid Waste Water and Enterprise Service Assets and deferred outflows of resources:Disposal Sewer Sanitation Golf Course Funds Funds Current assets: Cash and investments 5,150,449$18,189,299$766,119$ 69,326$ 24,175,193$ 2,744,265$ Receivables (net of allowance for uncollectibles) Accounts 249,367 1,163,271 162,566 - 1,575,204 - Interest 16 - - - 16 - Inventory and prepaid supplies - 529,946 - 19,469 549,415 140,141 Total current assets 5,399,832 19,882,516 928,685 88,795 26,299,828 2,884,406 Capital assets: Nondepreciable capital assets: Construction in progress - 22,486,696 - - 22,486,696 - Land 682,000 844,806 - 15,000 1,541,806 - Depreciable capital assets: Capital assets 8,374,353 96,833,393 1,869,059 1,083,357 108,160,162 885,812 Less: accumulated depreciation 6,561,658 42,854,530 1,181,343 742,040 51,339,571 854,544 Total capital assets 2,494,695 77,310,365 687,716 356,317 80,849,093 31,268 Deferred outflows of resources: Deferred charge on bond issuance - 311,471 - - 311,471 - Total deferred outflows of resources - 311,471 - - 311,471 - Total assets and deferred outflows of resources 7,894,527$97,504,352$1,616,401$445,112$ 107,460,392$ 2,915,674$ Liabilities: Current liabilities Accounts payable 178,402$ 1,032,776$ 9,304$ 5,398$ 1,225,880$ 100,858$ Retainage payable - 1,897,341 - - 1,897,341 - Interest payable 3,074 237,167 - - 240,241 - Meter deposits payable - 169,377 - - 169,377 - Current portion of compensated absences payable 36,933 198,738 53,247 43,487 332,405 46,422 Current portion of accrued claims payable - - - - - 533,363 Current portion of general obligation bonds payable 411,960 725,489 - - 1,137,449 - Current portion of revenue bonds payable - 633,696 - - 633,696 - Total current liabilities 630,369 4,894,584 62,551 48,885 5,636,389 680,643 Noncurrent liabilities: Compensated absences payable 34,617 186,277 49,908 40,760 311,562 43,510 Accrued claims payable - - - - - 408,539 Net OPEB Obligation 76,817 302,102 - 32,544 411,463 - Payable from restricted assets General obligation bonds payable - 7,382,350 - - 7,382,350 - Revenue bonds payable - 14,592,836 - - 14,592,836 - Landfill post-closure care liabilities 2,676,327 - - - 2,676,327 - Total noncurrent liabilities 2,787,761 22,463,565 49,908 73,304 25,374,538 452,049 Total liabilities 3,418,130$27,358,149$112,459$ 122,189$ 31,010,927$ 1,132,692$ Net position Net investment in capital assets 2,082,735$53,975,994$687,716$ 356,317$ 57,102,762$ 31,268$ Restricted Restricted for bond retirement - 1,553,016 - - 1,553,016 - Unrestricted 2,393,662 14,617,193 816,226 [33,394] 17,793,687 1,751,714 Total net position 4,476,397$70,146,203$1,503,942$322,923$ 76,449,465$ 1,782,982$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2013 The notes to the basic financial statements are an integral part of this statement. 20 Total Internal Solid W aste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Operating revenues Charges for services 3,137,357$17,938,288$2,514,105$719,013$ 24,308,763$9,710,562$ Miscellaneous 33,737 194,045 - 50,766 278,548 106,498 Total operating revenues 3,171,094 18,132,333 2,514,105 769,779 24,587,311 9,817,060 Operating expenses General government - - - - - 10,052,703 Public works 2,955,875 12,663,088 2,107,476 - 17,726,439 - Recreation - - - 732,605 732,605 - Depreciation 565,818 1,861,060 129,246 35,721 2,591,845 8,629 Total operating expenses 3,521,693 14,524,148 2,236,722 768,326 21,050,889 10,061,332 Operating income [loss][350,599] 3,608,185 277,383 1,453 3,536,422 [244,272] Nonoperating revenues [expenses] Investment revenue 11,324 35,801 2,137 182 49,444 6,619 Debt service [13,640] [886,570] - - [900,210] - Gain/[loss] on disposal of fixed assets 3,335 - - - 3,335 - Accretion of bond premium - 11,560 - - 11,560 - Amortization of bond issuance costs - [18,472] - - [18,472] - Total nonoperating revenues [expenses]1,019 [857,681] 2,137 182 [854,343] 6,619 Income [loss] before transfers [349,580] 2,750,504 279,520 1,635 2,682,079 [237,653] Transfers from [to] other funds Transfers in - 200,000 - - 200,000 - Transfers [out]- [1,149,863] - - [1,149,863] - Total transfers - [949,863] - - [949,863] - Change in net position [349,580] 1,800,641 279,520 1,635 1,732,216 [237,653] Net position, January 1 4,740,353 67,542,747 1,255,355 321,363 73,859,818 2,003,830 Restatement 85,624 802,815 [30,933] [75] 857,431 16,805 Net position, January 1, restated 4,825,977 68,345,562 1,224,422 321,288 74,717,249 2,020,635 Net position, December 31 4,476,397$70,146,203$1,503,942$322,923$ 76,449,465$1,782,982$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2013 The notes to the basic financial statements are an integral part of this statement. 21 Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Cash flows from operating activities Cash received from customers and users 3,151,934$17,839,533$2,488,783$719,012$ 24,199,262$9,791,871$ Cash paid to suppliers of goods or services [1,367,872][8,401,521] [1,437,284][372,038] [11,578,715][9,510,001] Cash paid to employees [479,846] [2,956,342] [670,428] [350,404] [4,457,020] [623,002] Other operating receipts 33,737 194,045 - 50,766 278,548 106,498 Net cash provided by [used in] operating activities 1,337,953 6,675,715 381,071 47,336 8,442,075 [234,634] Cash flows from capital and related financing activities Purchase and construction of capital assets [43,286] [5,646,022] [302,824] [46,884] [6,039,016] - Proceeds from sale of capital assets 4,875 - - - 4,875 - Principal payments - general obligation bonds [403,881] [898,214] - - [1,302,095] - Principal payments - revenue bonds - [620,000] - - [620,000] - Interest paid [16,317] [843,830] - - [860,147] - Net cash provided by [used in] capital and related financing activities [458,609] [8,008,066] [302,824] [46,884] [8,816,383] - Cash flows from investing activities Interest received 11,324 35,801 2,137 183 49,445 6,618 Cash flows from noncapital financing activities Transfers in - 200,000 - - 200,000 - Transfers [out]- [1,149,863] - - [1,149,863] - Net cash provided by [used in] noncapital financing activities - [949,863] - - [949,863] - Net increase [decrease] in cash and cash equivalents 890,668 [2,246,413] 80,384 635 [1,274,726] [228,016] Cash and cash equivalents, January 1 4,259,781 20,444,868 685,735 68,691 25,459,075 2,972,281 Restatement - [9,156] - - [9,156] - Cash and cash equivalents, January 1, restated 4,259,781 20,435,712 685,735 68,691 25,449,919 2,972,281 Cash and cash equivalents, December 31 5,150,449$18,189,299$766,119$ 69,326$ 24,175,193$2,744,265$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS For the Year Ended December 31, 2013 PROPRIETARY FUNDS The notes to the basic financial statements are an integral part of this statement. 22 Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss][350,599]$ 3,608,185$ 277,383$1,453$ 3,536,422$ [244,272]$ Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense 565,818 1,861,060 129,246 35,721 2,591,845 8,629 [Increase] decrease in accounts receivable 14,577 [106,880] [25,322] - [117,625] - [Increase] decrease in inventory - 34,168 - 2,985 37,153 [13,267] Increase [decrease] in accounts payable 111,803 703,314 [4,532] [376] 810,209 [62,764] Increase [decrease] in retainage payable - 532,472 - - 532,472 - Increase [decrease] in accrued compensated absences 5,255 3,260 4,296 4,104 16,915 [4,268] Increase [decrease] in claims payable - - - - - 81,308 Increase [decrease] in landfill postclosure liabilities 982,959 - - - 982,959 - Increase [decrease] in net OBEB obligation 8,140 32,011 - 3,449 43,600 - Increase [decrease] in meter deposits payable - 8,125 - - 8,125 - Net cash provided by [used in] operating activities 1,337,953$ 6,675,715$ 381,071$47,336$ 8,442,075$ [234,634]$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2013 The notes to the basic financial statements are an integral part of this statement. 23 ASSETS Cash and investments 258,487$ Total assets 258,487$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable 258,487$ Total liabilities 258,487$ December 31, 2013 CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS The notes to the basic financial statements are an integral part of this statement. 24 25 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Salina, Kansas (the City) is a municipal corporation governed by a mayor and a five-member commission. These financial statements present the City and its component units, entities for which the government is considered to be financially accountable. Each discretely presented component unit is reported in a separate column in the government wide statements to emphasize that it is legally separated from the government. Discretely Presented Component Units City of Salina Airport Authority - The Salina Airport Authority was created for the purpose of accepting as surplus property portions of the former Schilling A.F.B that was closed by the United States Department of Defense in June 1965. One of the primary functions of the Airport Authority is to facilitate the continued growth of jobs and payroll at the Airport Industrial Center. The Airport Authority is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. Any director may be removed by a majority vote of the Salina City Commission. The Airport Authority’s basic mill levy (up to 3 mills) requires the approval of the City Commission. The Commission must also approve the issuance of general obligation debt by the Airport Authority. The Airport Authority has a December 31 fiscal year end. Housing Authority of the City of Salina - The purpose of the Housing Authority of the City of Salina (Housing Authority) is to administer Public Housing Programs authorized by the United States Housing Act of 1937. The Mayor of the City of Salina appoints the governing board. The City Commission may remove commissioners of the Housing Authority. The City must issue revenue bonds for the Housing Authority. The financial liability of the Housing Authority is essentially supported by the operating and debt service subsidies received under contract from the Federal government. The Housing Authority has a June 30 fiscal year end. Information in the accompanying financial statements covers the fiscal year ended June 30, 2013. Complete financial statements for each of the individual component units may be obtained at the entity’s administrative offices. Salina Airport Authority Housing Authority of 3237 Arnold Ave.the City of Salina Salina, KS 469 S. 5th Salina, KS Joint Ventures The City of Salina also participates with Saline County in two joint ventures. The Salina-Saline County Board of Health was organized by the City and County to promote public health. The City and County organized the Salina County-City Building Authority to acquire, operate and maintain facilities for the administrative offices of both governments. The primary governments each have an ongoing financial responsibility for the joint ventures. Separate financial statements are available from the governing boards of each joint venture. (GAAP Basis) (Kansas Regulatory Basis) Board of Building Health Authority (Audited)(Audited) Total net position/unencumbered cash, December 31, 2013 1,577,093$ 483,349$ Total change in net position/change in unencumbered cash, year ended December 31, 2013 [50,324] [492,513] Total revenues/cash receipts, year ended December 31, 2013 3,884,146 1,069,396 Total revenues/cash receipts from City of Salina 1,018,101 1,561,909 26 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A.Reporting Entity (Continued) Joint Ventures (Continued) Complete financial statements for each of the joint ventures may be obtained at the entity’s administrative offices. Salina-Saline County Board of Health Salina County-City 125 West Elm Street Building Authority Salina, KS 300 West Ash Street Salina, KS B.Government-wide and fund financial statements The statement of net position and the statement of activities report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Exceptions to this general rule are charges between the City’s governmental and business-type activities. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational requirements of a particular program. Taxes and other items, which are not classified as program revenues,are presented as general revenues of the city. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column in the fund financial statements. C.Measurement Focus, Basis of Accounting and Basis of Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. 27 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C.Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net position. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services in connection with a proprietary fund’s ongoing operations. The principal operating revenues of the City’s proprietary funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenues and expenses. The internal service funds account for risk management, worker’s compensation, health insurance, central garage and information services that are provided to other departments or agencies of the government, or to other governments, on a cost-reimbursement basis. Agency funds are custodial in nature and do not measure results of operations or have a measurement focus. Agency funds do however use the accrual basis of accounting.Agency funds are used to account for assets held as an agent for individuals, other governmental units, private organizations and/or other funds. The City reports the following major governmental funds: General fund -To account for resources traditionally associated with government, which are not required legally,or by sound financial management to be accounted for in another fund. Tourism and convention fund -To account for transient guest tax revenues, which are specifically restricted to promotion and tourism activities. Special gas fund -To account for the City's share of motor fuel tax revenues, which are legally restricted to the maintenance,or improvement of streets within the City. Sales tax capital fund -To account for 87.5% of the 1/4 cent sales tax designated for capital, debt, and human services purposes. Schilling capital improvement fund -To account for the funding provided by U.S. Government and Public Entities and the remedial investigation, feasibility study and expenditures necessary to abate groundwater contamination beneath the property formerly identified as Schilling Air Force Base. Debt service fund -To account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the City is obligated in some manner for the payment. 28 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C.Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Capital projects fund -To account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. The City reports the following major proprietary funds: Sanitation fund -To account for the operations of the City's refuse collection service. Solid waste disposal fund -To account for the activities of the City's landfill. Golf course fund -To account for the operations of the municipal golf course. Water and sewer fund -To account for the activities of the City's water and sewer operations. D. Assets, Liabilities, Fund Balance, and Net Position 1. Pooled cash and investments The City maintains a cash and investment pool that is available for use by all funds managed by the city. Each fund type’s portion of this pool is displayed in the financial statements as “Cash and Investments.” The city’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments in the Kansas Municipal Pool are carried at fair value. Cash balances from all funds are invested to the extent available in certificates of deposit and other authorized investments. Investments with maturity dates greater than three months are stated separately. Earnings from these investments, unless specifically designated, are allocated monthly to the investing fund based on the percentage of funds invested to total investments. All investments are carried at fair value. 2. Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the year are referred to as either “interfund receivables/payables” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for doubtful accounts. Property taxes receivable. Collection of current year property tax by the County Treasurer is not completed, apportioned or distributed to the various subdivisions until the succeeding year, such procedure being in conformity with governing state statutes. Consequently, current year property taxes receivable are not available as a resource that can be used to finance the current year operations of the City and, therefore, are not susceptible to accrual. Accruals of uncollected current year property taxes are offset by deferred revenue and are identical to the adopted budget for 2014. It is not practicable to apportion delinquent taxes held by the County Treasurer at the end of the accounting period, and further, the amounts thereof are not material in relationship to the financial statements taken as a whole. 29 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Payables (Continued) The determination of assessed valuations and the collection of property taxes for all political subdivisions in the State of Kansas are the responsibility of the various counties. The County Appraiser annually determines assessed valuations on January 1 and the County Clerk spreads the annual assessment on the tax rolls. The County Treasurer is the tax collection agent for all taxing entities within the County. In accordance with state statutes, property taxes levied during the current year are a revenue source to be used to finance the budget of the ensuing year. Property taxes are levied and liens against property are placed on November 1 of the year prior to the fiscal year for which they are budgeted. Payments are due November 1, becoming delinquent, with penalty, December 21. Payments of 50% are accepted through December 20, with the second 50% then being due on or before May 10 of the following year. This procedure eliminates the need to issue tax anticipation notes since funds will be on hand prior to the beginning of each fiscal year. The City Treasurer draws down all available funds from the County Treasurer’s office in two-month intervals. Taxes remaining due and unpaid at February 15 and July 1 are subject to collection procedures prescribed in state statutes. 3. Inventories and Prepaid Items Inventories are valued at cost using the first-in/first-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 4.Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Capital assets used in governmental fund types of the City are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type is included in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Property, plant and equipment of the primary government, are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 50 Other equipment 5 -15 Vehicles 6 -10 Infrastructure 30 -50 30 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D.Assets, Liabilities, Fund Balance, and Net Position (Continued) 5. Compensated Absences It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All employees of the City, except temporary and part time employees, may accumulate sick leave at a rate of 8 or 11 hours per month depending on their work duty schedule. There is no limit on the amount of sick leave that can be accumulated. Employees with more than five years of service with the City are paid for one-third of their accumulated sick leave at their current wage scale upon termination of employment in good standing. In 2001, a limited buy back policy was instituted. All regular employees are entitled to paid vacation time. Such leave is granted each year of employm ent. Employees must use 50% of leave accrued each calendar year and an employee's maximum accrued vacation leave balance cannot exceed 250 hours (or 350 hours for employees working 24 hour shifts). Employees are paid for all accumulated vacation leave at their current wage scale upon termination of employm ent. Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability in the government fund financial statements that will pay it. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Vested or accumulated vacation leave of the business-type funds and government wide financial statements are recorded as an expense and liability of those funds as the benefits accrue to employees. A liability is recorded for accumulated rights to receive sick pay benefits that are payable upon termination of employment. The General Fund, Bicentennial Center Fund, Central Garage Fund, Information Systems Fund, Sanitation Fund, Solid Waste Fund, Golf Course Fund, and Water and Sewer Fund have been used in prior years to liquidate the liability for compensated absences. 6.Temporary Notes Upon authorization for the issuance of general obligation bonds for certain improvements, Kansas law permits the temporary financing of such improvements by the issuance of temporary notes. Temporary notes issued may not exceed the aggregate amount of bonds authorized, are interest bearing and have a maturity date not later than four years from the date of issuance of such temporary notes. Temporary notes outstanding are retired from the proceeds of the sale of general obligation bonds. 7. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D.Assets, Liabilities, Fund Balance, and Net Position (Continued) 8. Fund Balances In the fund financial statements, governmental funds report fund balance in the following classifications: nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance indicates that constraints have been placed on the use of resources either by being externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Committed fund balances include amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the city commission. Assigned fund balances include amounts that are constrained by the City management’s intent to be used for specific purposes, but are neither restricted nor committed. Unassigned fund balance represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available restricted amounts are considered to be spent first.When an expenditure is incurred for purposes for which committed, assigned, or unassigned fund balance is available, the following is the order in which resources will be expended: committed, assigned and unassigned. The following is the detail for fund balance classifications in the financial statements: Tourism Schilling Other Total and Special Sales Tax Capital Debt Capital Governmental Governmental General Convention Gas Capital Improvement Service Projects Funds Funds Fund Balances: Nonspendable for: Inventory 80,963$ -$ -$ -$ -$ -$ -$ -$ 80,963$ Restricted for: Public works - - 1,154,147 - - - - - 1,154,147 Public health and sanitation - - - - - - - 205 205 Culture and recreation - - - - - - - 110,578 110,578 Planning and development - 435,734 - - - - - 195,185 630,919 Debt payments - - - - - 757,726 - 792,030 1,549,756 Committed for: Public safety - - - - - - - 281,313 281,313 Culture and recreation - - - - - - - 373,638 373,638 Planning and development - - - - - - - 31,236 31,236 Cemetery - - - - - - - 446,788 446,788 Capital improvements - - - 1,794,469 9,223,212 - - 421,602 11,439,283 Assigned for: General government 34,165 - - - - - - - 34,165 Public safety - - - - - - - - - Public works 11,480 - - - - - - - 11,480 Culture and recreation - - - - - - - 8,374 8,374 Planning and development 15,337 - - - - - - - 15,337 Capital improvements 270,362 - 135,155 148,050 - - [2,416,104] 184,505 [1,678,032] Unassigned:3,137,433 - - - - - - - 3,137,433 Total Fund Balances 3,549,740$ 435,734$ 1,289,302$ 1,942,519$ 9,223,212$ 757,726$ [2,416,104]$ 2,845,454$ 17,627,583$ Major Governmental Funds 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D.Assets, Liabilities, Fund Balance, and Net Position (Continued) 9. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on bond issuance reported in the government-wide statement of net position. A deferred charge on bond issuance results from the difference in the carrying value of the debt and its reacquisition price. This amount is deferred and amortized over the life of the - debt. 10. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 11. Net Position Net position represents the difference between assets and liabilities. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A.Budgetary Information Kansas statutes require that an annual operating budget be legally adopted for the general fund, special revenue funds (unless specifically exempted by statute), debt service fund, and enterprise funds. The statutes provide for the following sequence and timetable in the adoption of the legal annual operating budget: 1.Preparation of the budget for the succeeding year on or before August 1. 2.Publication in local newspaper of the proposed budget and notice of public hearing on the budget on or before August 5. 3.Public hearing on or before August 15, but at least ten days after publication of notice of hearing. 4.Adoption of the final budget on or before August 25. The statutes allow the governing body to increase the originally adopted budget for previously unbudgeted increases in revenue other than ad valorem property taxes. To do this, a notice of public hearing to amend the budget must be published in the local newspaper. At least ten days after publication the hearing may be held and the governing body may amend the budget at that time. The 2013 budget was not amended. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A.Budgetary Information (Continued) The statutes permit management to transfer budgeted amounts between line items within an individual fund. However, such statutes prohibit expenditures in excess of the total amount of the adopted budget of expenditures of individual funds. Budget comparison statements are presented for each fund showing actual receipts and expenditures compared to legally budgeted receipts and expenditures. All legal annual operating budgets are prepared using the statutory basis of accounting, in which, revenues are recognized when cash is received, and expenditures include disbursements, accounts payable, and encumbrances. Encumbrances are commitments by the municipality for future payments and are supported by a document evidencing the commitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year end. A legal operating budget is not required for capital projects funds, non-major debt service funds, trust funds, and the following special revenue funds: Flood & Drainage Improvement, Bicentennial Center Event, HUD Community Development, Community Development Revolving, Heritage Commission, HOME 2012, KDOT Signals 9th Street, CDBG ED, Kenwood Cover Capital, Special Law Enforcement, Police Grants, DARE Donations,War Memorial Maintenance, Federal Care Grant, Police Department Federal Forfeiture and Homeowners’ Assistance Funds. A legal operating budget is not required for the following Enterprise funds: Solid W aste Disposal, W ater and Sewer, Sanitation and Golf Course funds. A legal operating budget is also not required for the Internal Service funds. Actual to budget comparisons for these funds that present budgets to the Commissioners are shown strictly for informational purposes. Spending in funds, which are not subject to the legal annual operating budget requirements are controlled by federal regulations, other statutes, or by the use of internal spending limits established by the governing body. B.Legal Debt Margin The City is subject to the municipal finance law of the state of Kansas which limits the bonded debt (exclusive of revenue bonds and special assessment bonds) the city may have outstanding to 30 percent of the assessed value of all tangible taxable property within the city, as certified to the county clerk on the proceeding August 25. At December 31, 2013, the statutory limit for the City was $136,196,966, providing a debt margin of $83,472,932. 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 3. RESTATEMENT OF EQUITY Following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or recorded incorrectly and that the allocation of general obligation bonds payable and net position/fund balance between funds had been recorded incorrectly. Additionally, it was discovered that accounts receivable had not been properly recorded. Accordingly, the beginning net position/fund balances were restated, the effects of which are as follows: Solid W aste Water and Governmental Disposal Sewer Sanitation Golf Course Activities Fund Fund Fund Fund Net Position/Fund Balance, December 31, 2012 119,521,610$ 4,740,353$ 67,542,747$ 1,255,355$ 321,363$ Accounts Receivable Adjustment 125,375 - - - - Capital Asset Adjustment 682,520 85,624 1,027,802 [30,933] [75] Fund Reclassification 9,156 - [9,156] - - General Obligation Bonds Payable Adjustment 215,831 - [215,831] - - Net Position/Fund Balance, December 31, 2012, Restated 120,554,492$ 4,825,977$ 68,345,562$ 1,224,422$ 321,288$ Note 4. DETAILED NOTES ON ALL FUNDS A.Deposits and Investments The City’s cash is considered to be active funds by management and is invested according to KSA 9-1401. The statute requires that banks eligible to hold active funds have a main or branch bank in the county in which the City is located or in a county adjacent to the City and the banks provide an acceptable rate for active funds. Various City investments are considered to be idle funds by management and are invested according to KSA 12-1675. The statute requires that the City invest its idle funds in only temporary notes of the City, bank certificates of deposit, repurchase agreements, and if eligible banks do not offer an acceptable rate for the funds: U.S. Treasury bills or notes or the Municipal Investment Pool (KMIP). Maturities of the above investments may not exceed two years by statute. Some of the City’s investments are of bond proceeds invested pursuant to KSA 10-131. This statute allows additional investment authority beyond that of KSA 12-1675. Investments of bond proceeds may follow KSA 12-1675 or include other investments such as the KMIP, direct obligations of the U.S.government or any agency thereof, investment agreements with a financial institution the obligations of which at the time of investment are rated in either of the three highest rating categories by Moody’s investors service or Standard and Poor’s corporation, and various other investments as specified in KSA 10-131. At December 31, 2013, the City has the following investments: Investment Type Fair Value Rating Kansas Municipal Investment Pool 305,275$ S&P AAAf/S1+ U.S. Government Securities 23,998,653 N/A Total fair value 24,303,928$ 35 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A.Deposits and Investments (Continued) The municipal investment pool is under the oversight of the Pooled Money Investment Board. The board is comprised of the State Treasurer and four additional members appointed by the State Governor. The board reports annually to the Kansas legislature. State pooled monies may be invested in direct obligations of, or obligations that are insured as to principal and interest by the U.S. government or any agency thereof, with maturities up to four years. No more than 10 percent of those funds may be invested in mortgage-backed securities. In addition, the State pool may invest in repurchase agreements with Kansas banks or with primary government securities dealers. The City’s investment policy provides direction on concentration risk. The City policy states that funds shall be diversified to reduce the extent of losses due to having an unbalanced portfolio in terms of maturities, instrument type, and issuers. Therefore, portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector. Liquidity, free of market risk, shall be assured through practices insuring that the next disbursement date and payroll date are covered through maturing investments, marketable U.S. Treasury Bills, the Municipal Investment Pool, or money market accounts. Default risk shall be minimized by requiring that all security purchases occur on a delivery vs. payment basis, and that all securities are adequately collateralized. Risk of market price volatility shall be controlled through the adoption of a "buy and hold" strategy whereby the City holds each investment to maturity, coupled with maintenance of an adequate liquidity position to insure the ability to meet normal anticipated cash flow needs. When advantageous, it is allowable to sell investments to realize a gain due to price fluctuations; however, such transactions shall not be a part of the normal course of business. The City recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is employed as a way to control risk due to issuer default. In the event of a default by a specific issuer, the Director of Finance and Administration shall review, and, if appropriate, proceed to liquidate securities having comparable credit risks. Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City’s deposit policy for custodial credit risk require that the depository banks will maintain 100% security in the form of FDIC coverage and pledged collateral according to KSA 9-1402. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B.Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: Tourism and Special Debt Other General Convention Gas Service Governmental Subtotal Primary Government Receivables: Accounts 4,431,887$ 349,438$ -$ -$ 55,952$ 4,837,277$ Taxes 8,491,241 - 309,690 2,637,666 - 11,438,597 Interest 17,556 - - - - 17,556 Gross receivables 12,940,684 349,438 309,690 2,637,666 55,952 16,293,430 Less: allowance for uncollectibles [3,448,533] - - - [705] [3,449,238] Total 9,492,151$ 349,438$ 309,690$ 2,637,666$ 55,247$ 12,844,192$ Solid Water Waste and Sanitation Disposal Sewer Total Primary Government Receivables: Accounts 250,665$ 249,367$ 1,793,679$ 7,130,988$ Taxes - - - 11,438,597 Interest - 16 - 17,572 Gross receivables 250,665 249,383 1,793,679 18,587,157 Less: allowance for uncollectibles [88,099] - [630,408] [4,167,745] Total 162,566$ 249,383$ 1,163,271$ 14,419,412$ Component Units Salina Airport Authority Accounts 91,613$ Less: allowance for uncollectibles [984] Total Salina Airport Authority 90,629 Salina Housing Authority Accounts 23,891 Other 604 Total Salina Housing Authority 24,495 Total 115,124$ C.Interfund Receivables and Payables The composition of interfund balances as of December 31, 2013, is as follows: Fund Types Due From Due To General Fund 132,364$ -$ Other Government Funds - 132,364 132,364$ 132,364$ The City uses interfund receivables and payables as needed when pooled cash is negative within a fund until investments mature or grant proceeds are received. All payables are cleared in less than one year. 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D.Capital Assets Capital asset activity for the year ended December 31, 2013, was as follows: Balance Adj. Bal.Balance 12/31/2012 Adjustments 12/31/2012 Additions Retirements 12/31/2013 City governmental activities: Governmental activities: Capital assets, not being depreciated Construction in progress 9,190,083$ [78,935]$ 9,111,148$ 8,288,225$ 6,048,567$ 11,350,806$ Land 22,640,475 [675] 22,639,800 - - 22,639,800 Capital assets, being depreciated Infrastructure 168,630,612 455,227 169,085,839 5,964,518 - 175,050,357 Buildings and improvements 39,201,336 25,270 39,226,606 63,909 - 39,290,515 Vehicles 8,785,466 67,709 8,853,175 494,509 407,494 8,940,190 Equipment, furniture and fixtures 5,005,610 535,785 5,541,395 206,221 27,529 5,720,087 Total capital assets 253,453,582 1,004,381 254,457,963 15,017,382 6,483,590 262,991,755 Less accumulated depreciation for: Infrastructure 67,021,494 118,370 67,139,864 3,515,914 - 70,655,778 Buildings and improvements 14,726,260 [1,294] 14,724,966 1,102,117 - 15,827,083 Vehicles 5,913,827 [364,613] 5,549,214 639,964 397,972 5,791,206 Equipment, furniture and fixtures 3,753,842 569,398 4,323,240 204,903 27,529 4,500,614 Total accumulated depreciation 91,415,423 321,861 91,737,284 5,462,898 425,501 96,774,681 Governmental activities capital assets, net 162,038,159$ 682,520$ 162,720,679$ 9,554,484$ 6,058,089$ 166,217,074$ Business-type activities: Capital assets, not being depreciated Construction in progress 20,962,212$ [27,541]$ 20,934,671$ 5,646,022$ 4,093,997$ 22,486,696$ Land 1,541,806 - 1,541,806 - - 1,541,806 Capital assets, being depreciated Infrastructure 72,039,782 1,148,103 73,187,885 4,053,788 - 77,241,673 Buildings and improvements 22,579,933 - 22,579,933 - - 22,579,933 Vehicles 2,998,320 1 2,998,321 326,670 - 3,324,991 Equipment, furniture and fixtures 4,984,408 [52,586] 4,931,822 106,534 24,791 5,013,565 Total capital assets 125,106,461 1,067,977 126,174,438 10,133,014 4,118,788 132,188,664 Less accumulated depreciation for: Infrastructure 32,345,867 28,592 32,374,459 1,676,350 - 34,050,809 Buildings and improvements 11,104,580 1,490 11,106,070 422,642 - 11,528,712 Vehicles 2,326,679 6,027 2,332,706 182,025 - 2,514,731 Equipment, furniture and fixtures 3,008,292 [50,550] 2,957,742 310,828 23,251 3,245,319 Total accumulated depreciation 48,785,418 [14,441] 48,770,977 2,591,845 23,251 51,339,571 Business-type activities capital assets, net 76,321,043$ 1,082,418$ 77,403,461$ 7,541,169$ 4,095,537$ 80,849,093$ 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets (Continued) The City’s depreciation expense was charged to governmental functions as follows: Governmental Activities: General government 16,605$ Public safety 630,308 Public works 3,810,068 Public health 25,294 Culture and recreation 874,506 Planning and development 106,117 Total depreciation 5,462,898$ Business-type Activities: Solid W aste Disposal 565,818$ Water and Sewer 1,861,060 Sanitation 129,246 Golf Course Division 35,721 Total depreciation 2,591,845$ E.Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2013: Restated Balance Balance Balance Amounts January 1, January 1, December 31,Due Within 2013 Restatements 2013 Additions Deletions 2013 One Year Governmental activities: General obligation bonds 49,109,575$ [215,831]$ 48,893,744$ 5,854,453$ 5,116,400$ 49,631,797$ 5,232,291$ Accrued compensation 3,056,999 - 3,056,999 1,421,721 1,524,776 2,953,944 1,524,775 Temporary notes 1,485,000 - 1,485,000 3,800,000 1,485,000 3,800,000 3,800,000 Total 53,651,574$ [215,831]$ 53,435,743$ 11,076,174$ 8,126,176$ 56,385,741$ 10,557,066$ Business-type activities: General obligation bonds 9,613,926$ 215,831$ 9,829,757$ -$ 1,309,958$ 8,519,799$ 1,137,449$ Revenue bonds 15,850,228 - 15,850,228 - 623,696 15,226,532 633,696 Accrued compensation 627,051 - 627,051 349,321 332,405 643,967 332,405 Total 26,091,205$ 215,831$ 26,307,036$ 349,321$ 2,266,059$ 24,390,298$ 2,103,550$ Component Units: General obligation bonds 25,080,000$ -$ 25,080,000$ -$ 895,000$ 24,185,000$ 925,000$ Less unamortized discount [323,231] - [323,231] - [18,893] [304,338] - Financing lease 202,617 - 202,617 - 45,826 156,791 48,905 Special assessment debt 103,947 - 103,947 - 37,201 66,746 17,797 Total component units 25,063,333$ -$ 25,063,333$ -$ 959,134$ 24,104,199$ 991,702$ 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E.Long-Term Debt (Continued) The following is a detailed listing of the city’s long-term debt including general obligation bonds, revenue bonds, temporary notes and loans payable: Primary Government Original Interest Bonds General Obligation Bonds Issue Rates Outstanding Refunding 2004A, due 8/1/2015 5,585,000$ 2.10% to 4.00%360,000$ Internal Improvements 2006A, due 10/1/2026 2,200,000 3.55% to 5.50%1,430,000 Internal Improvements 2006B, due 10/1/2021 885,000 4.00% to 4.50%395,000 Internal Improvements 2007A, due 10/1/2027 6,545,000 4.25% to 4.625%4,365,000 Internal Improvements 2008A, due 10/1/2023 3,720,000 3.25% to 4.00%2,500,000 Internal Improvements 2008B, due 7/1/2028 3,525,000 3.65% to 5.00%3,165,000 Internal Improvements 2009A, due 10/1/2029 23,695,000 2.00% to 5.00%18,305,488 Internal Improvements 2010A, due 10/1/2025 6,916,592 2.00% to 3.875%4,388,273 Internal Improvements 2010B, due 10/1/2023 7,973,044 0.50% to 3.00%5,671,956 Internal Improvements 2011A, due 10/1/2031 6,587,985 2.00% to 5.00%6,035,687 Internal Improvements 2012A, due 10/1/2027 2,383,903 1.00% to 2.45%2,252,643 Refunding 2012B, due 10/1/2020 3,817,108 1.00% to 1.40%3,428,095 Internal Improvements 2013A, due 10/1/28 1,369,380 3.00% to 4.00%1,369,380 Internal Improvements 2013B, due 10/1/33 4,485,073 0.60% to 3.65%4,485,074 Total general obligation bonds 58,151,596$ Revenue Bonds Revenue 2011, due 10/1/31 16,193,925$ 2.00% to 4.60%15,226,532$ Total revenue bonds 15,226,532$ Temporary Notes Series 2013-1, due 8/1/2014 3,800,000$ 1.00%3,800,000$ Total temporary notes 3,800,000$ 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Original Interest Bonds Issue Rates Outstanding Component Unit Salina Airport Authority General Obligation Bonds General Obligation 2005A, due 2020 3,635,000$ 4.75% to 5.25%2,400,000$ General Obligation 2007A, due 2022 1,005,000 4.60% to 6.00%690,000 General Obligation 2009A, due 2029 2,025,000 4.31%2,025,000 General Obligation 2009B, due 2026 6,080,000 3.00% to 5.50%5,005,000 General Obligation 2011A, due 2030 11,820,000 4.64%11,560,000 General Obligation 2011B, due 2031 2,505,000 4.28%2,505,000 Less unamortized bond discount [304,338] Total general obligation bonds 23,880,662 Special Assessment Debt Airport Industrial Center, due 2016 565,235 3.79%49,810 Hangar 600 Sanitary Sewer, due 2021 27,599 4.47%16,936 Total special assessment debt 66,746 Financing Lease, due 2016 425,000 6.609%156,791 Total 24,104,199$ Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: Bonds Interest Year Outstanding Due Total 2014 6,369,740$ 1,978,104$ 8,347,844$ 2015 5,649,739 1,752,262 7,402,001 2016 5,489,739 1,587,248 7,076,987 2017 5,269,738 1,421,658 6,691,396 2018 5,354,738 1,236,441 6,591,179 2019-2023 18,086,646 3,926,938 22,013,584 2024-2028 10,335,572 1,370,174 11,705,746 2029-2033 1,595,684 124,002 1,719,686 Total 58,151,596$ 13,396,827$ 71,548,423$ General Obligation - Primary Government 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Bonds Interest Year Outstanding Due Total 2014 925,000$ 1,067,866$ 1,992,866$ 2015 955,000 1,036,264 1,991,264 2016 990,000 1,001,531 1,991,531 2017 1,030,000 963,874 1,993,874 2018 1,070,000 923,756 1,993,756 2019-2023 6,095,000 3,872,156 9,967,156 2024-2028 7,630,000 2,343,804 9,973,804 2029-2032 5,490,000 492,331 5,982,331 Total 24,185,000$ 11,701,582$ 35,886,582$ General Obligation - Component Units Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Bonds Interest Year Outstanding Due Total 2014 633,696$ 577,791$ 1,211,487$ 2015 643,696 565,191 1,208,887 2016 663,696 549,191 1,212,887 2017 678,696 529,391 1,208,087 2018 708,696 509,141 1,217,837 2019-2023 3,878,480 2,191,826 6,070,306 2024-2028 4,688,480 1,376,895 6,065,375 2029-2031 3,331,092 308,750 3,639,842 Total 15,226,532$ 6,608,176$ 21,834,708$ Revenue Bonds - Primary Government Annual debt service requirements to maturity for temporary notes -to be paid through the issuance of general obligation bonds: Bonds Interest Year Outstanding Due Total 2014 3,800,000$ 39,689$ 3,839,689$ Temporary Notes - Primary Government 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirements to maturity for financing lease -to be paid from rental revenue: Lease Interest Year Outstanding Due Total 2014 48,905$ 9,567$ 58,472 2015 52,190 6,282 58,472 2016 55,696 2,776 58,472 Total 156,791$ 18,625$ 175,416$ Financing Lease - Component Units Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: Assessment Interest Year Outstanding Due Total 2014 17,797$ 2,645$ 20,442$ 2015 18,484 1,958 20,442 2016 19,197 1,245 20,442 2017 2,061 504 2,565 2018 2,153 412 2,565 2019-2021 7,054 640 7,694 Total 66,746$ 7,404$ 74,150$ Special Assessment Debt - Component Units Special assessments. As provided by Kansas statutes, projects financed in part by special assessments are financed through general obligation bonds of the City and are retired from the debt service fund. Special assessments paid prior to the issuance of bonds are recorded as revenue in the appropriate project. Special assessments received after the issuance of bonds are recorded as revenue in the debt service fund. The special assessments are not recorded as revenue when levied against the respective property owners as such amounts are not available to finance current year operations. The special assessment debt is a contingent obligation of the City to the extent of property owner defaults, which have historically been immaterial. Conduit debt. The City has entered into several conduit debt arrangements wherein the City issues industrial revenue bonds to finance a portion of the construction of facilities by private enterprises. In return, the private enterprises have executed mortgage notes or leases with the City. The City is not responsible for payment of the original bonds, but rather the debt is secured only by the cash payments agreed to be paid by the private enterprises under the terms of the mortgage or lease agreements. Generally, the conduit debt is arranged so that payments required by the private enterprises are equal to the mortgage payments schedule related to the original debt. At December 31, 2013, total outstanding conduit debt was $71,979,468. 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) F. Operating Leases On December 20, 2012, the City and Saline County jointly entered into a non-cancelable lease to finance a $2,750,000 heating, ventilation and air conditioning (HVAC) upgrade at the Saline County-City Building Authority. The City’s share of the lease agreement is 40% and will pay the lessor $1,100,000, plus interest, through monthly payments of $7,827 over a term of 180 months. Total costs for this lease was $98,926 for the year ended December 31, 2013. The future minimum lease payments for the lease are as follows: Year Amount 2014 93,926$ 2015 93,926 2016 93,926 2017 93,926 2018 93,926 2019-2023 469,634 2024-2027 375,706 Total 1,314,970$ G. Reconciliation of Transfers A reconciliation of interfund transfers follows: Transfer In Transfer Out Major Funds: General fund 680,189$ 586,876$ Tourism and convention fund - 604,125 Sales tax capital fund - 2,277,709 Schilling capital improvement fund 936,300 - Debt service 2,068,705 - Capital projects fund 111,687 373,397 Other governmental funds 1,110,214 65,007 Agency funds - 50,118 Water and sewer fund 200,000 1,149,863 Total Transfers 5,107,095$ 5,107,095$ The City uses interfund transfers to share administrative costs between funds. 44 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 5. OTHER INFORMATION A. Defined Benefit Pension Plan Plan description. The City participates in the Kansas Public Employees Retirement System (KPERS) and the Kansas Police and Firemen’s Retirement System (KP&F). Both are cost-sharing multiple-employer defined benefit pension plans as provided by Kansas statutes (KSA 74-4901 et seq). KPERS and KP&F provide retirement benefits, life insurance, disability income benefits and death benefits. Kansas law established and amends benefit provisions. KPERS and KP&F issue a publicly available financial report that includes financial statements and required supplementary information. Those reports may be obtained by writing to 611 South Kansas, Suite 100; Topeka, Kansas 66603 or by calling 1-888-275-5737. Funding Policy. K.S.A. 74-4919 establishes the KPERS member-employee contribution rate at up to 6% of covered salary. K.S.A. 74-4975 establishes the KP&F member-employee contribution rate at 7% of covered salary. The employer collects and remits member-employee contributions according to the provisions of section 414 (h) of the Internal Revenue Code. State law provides that the employer contribution rates be determined annually based on the results of an annual actuarial valuation. KPERS and KP&F are funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer contribution rates. The KPERS employer rate was 8.40% from January 1 to December 31, 2013.The City employer contributions to KPERS for the years ending December 31, 2013, 2012, and 2011 were $1,192,221, $1,081,438 and $987,826, respectively, equal to the required contributions for each year. The KP&F employer rate established for fiscal years beginning in 2013 is 21.03%. Employers participating in KP&F also make contributions to amortize the liability for past service costs, if any, which are determined separately for each participating employer. The City's contributions to KP&F for the years ended December 31, 2013, 2012, and 2011 were $2,338,786, $2,007,908 and $1,787,801, respectively, equal to the required contributions for each year. B. Deferred Compensation Plan The City offers its employees a deferred compensation plan ("Plan") created in accordance with Internal Revenue Code Section 457. The Plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Plan assets are transferred to a plan agent in a custodial trust and are not available to the claims of the City's general creditors. C. Flexible Benefit Plan (I.R.C. Section 125) The City Commission has adopted by resolution a salary reduction flexible benefit plan ("Plan") under Section 125 of the Internal Revenue Code. All City employees working more than 20 hours per week are eligible to participate in the Plan beginning after two full months of employment. Each participant may elect to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the Plan include various insurance and disability benefits. D. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; natural disasters and other events for which the City carries commercial insurance. No significant reductions in insurance coverage from that of the prior year have occurred. Settlements have not exceeded insurance coverage for each of the past three years. 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) The City has established a limited risk management program for workers’ compensation. The program covers all City employees. Premiums are paid into the Workers’ Compensation Reserve Fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $250,000 ($350,000 for claims involving employees classified as policemen or firemen). Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the W orkers' Compensation Reserve Fund because it is expected to be liquidated with expendable available financial resources. Of the liability, $161,216 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2013 2012 Unpaid claims, January 1 493,170$ 321,790$ Incurred claims (including IBNRs)882,663 677,862 Claim payments [806,078] [506,482] Unpaid claims, December 31 569,755$ 493,170$ The City established a limited risk management program for employee health and dental insurance in 1997. The program covers eligible City employees. Premiums are paid into the health insurance fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Health Insurance Fund because it is expected to be liquidated with expendable available financial resources. Therefore, all of the liability is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2013 2012 Unpaid claims, January 1 367,424$ 391,175$ Incurred claims (including IBNRs)4,656,961 4,014,478 Claim payments [4,652,238][4,038,229] Unpaid claims, December 31 372,147$ 367,424$ 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 5. OTHER INFORMATION (Continued) E. Capital Projects Capital projects often extend over two or more fiscal years. The following is a schedule, which compares the project authorization including allowable interest revenue to total project expenditures from project inception to December 31, 2013. Project Authorization Expenditures N Ohio Grade Separation Structure Demolition 6,617,581$ 6,530,890$ Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and W astewater Pump Station Rehabilitation 5,150,000 1,071,877 Stone Lake 1,460,979 1,358,773 East Magnolia Road Replacement 4,500,000 3,507,309 Fire Station #1 2,600,000 2,556,489 Quail Meadows Estates, IV 408,745 2,000 Downtown W ellfield Improvements 9,330,000 7,103,283 Advanced Meter Infrastructure 39,850,000 14,714,908 Downtown Lighting Replacement 4,110,000 4,111,893 Pheasant Ridge Addition #2 1,162,890 791,856 Ninth and Cloud Intersection Realignment 1,100,000 44,556 Magnolia Hills Subdivision 824,902 786 Bicentennial Center Improvements 10,200,000 992,897 F. Contingent Liabilities The City receives significant financial assistance from numerous federal and state governmental agencies in the form of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable funds. However, in the opinion of management, any such disallowed claims would not have a material effect on any of the financial statements of the City at December 31, 2013. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's legal counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. G. Municipal Solid W aste Landfill State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste, and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the City reports a portion of these closure and postclosure care costs as an operating expense of the solid waste fund in each period based on landfill capacity used as of each balance sheet date. The $2,676,327 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 28.8% of the estimated capacity of the landfill. 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 5. OTHER INFORMATION (Continued) G. Municipal Solid W aste Landfill (Continued) The City's solid waste fund will recognize the remaining estimate cost of closure and postclosure care of $6,608,766 as the remaining estimated capacity is filled over the remaining life expectancy of 128.6 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2013. Actual cost may be higher due to inflation, changes, in technology or changes in regulations. The City is required by State and Federal laws and regulations to provide assurances of financial responsibility for closure and post- closure care. The City has elected to utilize the Local Government Financial test promulgated by the U.S. Environmental Protection Agency (at 40 CFR 258.74(f)) and the Kansas Department of Health and Environment to provide these assurances. Any future closure or post-closure care costs will be provided through the normal budgeting and rate setting process, including the issuance of general obligation bonds, if necessary. H. Environmental Matters The Kansas Department of Health and Environment (KDHE) issued a report in 1994 indicating the presence of volatile organic compounds at levels requiring remediation at the Salina Public Water Supply Wells Site. The City adopted a proactive Policy and Action Plan to remediate the groundwater contamination, and on December 7, 1994, the City and KDHE entered into a Consent Order and Settlement Agreement under which the City assumed primary responsibility for the further investigation and remediation of the groundwater contamination. Field testing work has been completed. The necessary remediation work will be conducted over the next several years at a yet undetermined cost to the City's W ater and Sewer Fund. The U.S. Department of Defense transferred property located at the former Schilling Air Force Base (the Base or Site) to the City on or about September 9, 1966.The property is now known to contain areas of extensive soil and groundwater contamination, which is a result of the use and disposal of chlorinated solvents during military operations at the Base from 1942 until Base closure in 1965. The U.S. Department of Defense is responsible for the investigation and remediation of contamination caused by military activities at current and former military bases.The U.S. Army Corps of Engineers (Corps) is the lead agency for the Department at formerly used defense sites.The Corps has investigated the soil and groundwater contamination at the Site under the regulatory oversight of the U.S. Environmental Protection Agency (EPA)and the Kansas Department of Health and Environment (KDHE).The Site is not designated as a National Priority List Superfund site, but investigation and remediation are required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Potential liability for contamination under CERCLA extends broadly to parties associated with the release or presence of hazardous substances, including not only those entities involved with contaminant use and disposal, but in some cases other current and former owners and operators of contaminated sites.As a current owner of extensive amounts of property at the Site, the City is potentially liable under CERCLA, although the City believes that it has meritorious defenses to such liability. The City is considered to be a Potentially Responsible Party (PRP) for the Site, primarily due to its status as a property owner.The Salina Airport Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at Salina) (collectively Salina Public Entities) currently own over 90% of the nearly 4,000 acres of the Base property.No third party has asserted any claim for bodily injury or property damage. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Beginning in August 2007, the Salina Public Entities initiated settlement negotiations with the U.S. Federal Government.The negotiation objectives at that time included transferring the responsibility for completing the cleanup from the U.S.to the Salina Public Entities.The local objective was to reach a settlement agreement with the U.S.that provides the Salina Public Entities sufficient funds to complete cleanup operations over a 30-year period. During calendar year 2008, the Salina Public Entities, by and through its environmental consultant,prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation included consultation with the EPA and KDHE.The Salina Public Entities’ CTC was completed in June of 2008 and submitted to the Corps. Subsequently, on January 23, 2009, the Salina Public Entities delivered a demand letter to the Corps.The letter demanded that settlement negotiations begin immediately with the U.S. Department of Justice.On May 14, 2009 the City was notified that the Corp referred the Base demand letter to the U.S. Department of Justice on May 12, 2009. The Salina Public Entities delivered on or about May 10, 2010, a settlement offer and a draft of a lawsuit complaint to the attorney for the U.S. Department of Justice.The Salina Public Entities planned to file suit against the U.S.if the matter was not settled by the end of May, 2010.The Salina Public Entities did not intend to cut off settlement negotiations by the filing of suit, and this has been communicated to the U.S.No remedial action plan or record of decision has been adopted by the EPA or KDHE. On or about May 27, 2010, the Salina Public Entities filed their Complaint against the United States of America, the United States Department of Defense and Secretary of Defense, Robert M. Gates, in his official capacity (collectively, "Defendants"). On or about September 22, 2010, the Salina Public Entities filed their First Amended Complaint in four counts: Count I Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(1), Count III Claim for Recovery of Response Costs Pursuant to 42 U.S.C.§ 9607(a) and Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§ 9613(g)(2). On or about October 6, 2010, Defendants filed their motion to dismiss and to strike, primarily with respect to the citizen suit claims. On or about March 25, 2011, Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the exception of non-litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts III and IV for response costs under CERCLA 9607(a) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228 as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims brought against them and will assert, among other defenses, the third party defense under 42 U.S.C.§ 9607(b)(3). 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) The parties agreed on a mediation to discuss settlement. The mediation sessions occurred in October 2011, and the mediation discussions continued for over a year. The parties have now agreed upon a partial settlement. The partial settlement includes payment by the U.S. in exchange for performance by the Salina Public Entities of a remedial investigation/feasibility study through entry of a Corrective Action Decision by KDHE (the "W ork"). The present cost estimate of the Work is less than $10,000,000. The agreement is that the U.S. will pay 90% of the cost of the Work with the Salina Public Entities responsible for payment of the remaining 10%. It is anticipated that the agreed share of the Salina Public Entities will be paid by the City. Also,the claims and counterclaims in the lawsuit have been dismissed without prejudice with provisions tolling any and all statutes of limitation. No party is obligated under the settlement agreement to implement the Corrective Action Decision upon its entry by KDHE, and the parties will either negotiate an agreement to implement such Corrective Action Decision or refile their claims in court. The Salina Public Entities have entered into a Consent Agreement and Final Order ("CAFO") with KDHE, which is conditioned upon the U.S.'s payment to the City. On May 2, 2013, the U.S.District Court for the District of Kansas entered its Consent Decree. City of Salina, Kansas, et al. v. United States of America, et al., Case No. 1 0-CV -2298 CM/DJW . The Court's Consent Decree approved the settlement among the parties. The current status is that the U.S. wire transferred $8,426,700 to the account of the City, and the City added the share of the Salina Public Entities in the amount of $936,300 to the account. Although the claims and counterclaims in the lawsuit have been dismissed without prejudice, the City intends to vigorously pursue its claims that the U.S. should implement the Corrective Action Decision upon its entry by KDHE and its defenses against any claims brought against it. Based on presently known information, the City has determined that while a possible liability exists, at this time no reasonable estimate of the possible liability can be made. Therefore, no liability related to that matter has been recorded. I. Postemployment Health Care Plan Plan Description. The City operates a single employer defined benefit healthcare plan administered by the City. The Employee Benefit Plan (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA 12-5040 requires all local governmental entities in the state that provide a group health care plan to make participation available to all retirees and dependents until the retiree reaches the age of 65 years. No separate financial report is issued for the Plan. Funding Policy. The contribution requirements of plan participants and the City are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. Plan participants contributed approximately $124,000 to the Plan (approximately 100% of total premiums) through their required contribution of $408 per month for retiree-only coverage and $1,095 for family coverage. Annual OPEB Cost and Net OPEB Obligation. The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 5. OTHER INFORMATION (Continued) I.Postemployment Health Care Plan (Continued) The following table shows the components of the City’s annual OPEB cost for the Plan for the year, the amount actually contributed to the plan, and the changes in the City’s net OPEB obligation to the Plan: Annual required contribution 582,313$ Interest on Net OPEB Obligation 106,930 Adjustment to Annual Required Contribution [118,809] Annual OPEB cost (expense)570,434 Benefit payments [148,000] Change in net OPEB obligation 422,434 Net OPEB obligation - beginning of year 3,564,309 Net OPEB obligation - end of year 3,986,743$ The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the year ended December 31, 2013 was as follows: Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2008 910,418$ 96,672$ 813,746$ December 31, 2009 957,353 100,000 1,671,099 December 31, 2010 921,492 199,000 2,393,591 December 31, 2011 977,292 229,000 3,141,883 December 31, 2012 546,426 124,000 3,564,309 December 31, 2013 570,434 148,000 3,986,743 Funding Status and Funding Progress. As of the year ended December 31, 2013, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $5,579,912 and the actuarial value of asset was $0,resulting in an unfunded actuarial accrued liability (UAAL) of $5,579,912. The covered payroll (annual payroll of active employees covered by the plan) was $22,283,185, and the ratio of the UAAL to the covered payroll was 25.04%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employm ent, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statement, presents multiyear trend information about whether the actuarial value of plan assets (if any) are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. 51 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2013 Note 5. OTHER INFORMATION (Continued) I.Postemployment Health Care Plan (Continued) Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan participants) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan participants to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the year ended December 31, 2013, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 3.00% investment rate of return, which is the rate of the employer’s own investments as there are no plan assets and an initial annual medical and dental healthcare cost trend of 7.90%, reduced by decrements to an ultimate rate 4.50% after eighty years. The UAAL is being amortized as a level dollar over an open thirty-year period. J.Subsequent Events On January 11, 2013, the City entered into a $9,330,000 loan agreement with the Kansas Department of Health and Environment. However, the City did not make its first draw on the loan until February 14, 2014. The loan proceeds will be used to fund various capital projects related to achieving and maintaining compliance with the Safe Drinking Water Act. The City will be obligated to make semi-annual payments of $278,399 from February 1, 2015 to August 1, 2034. These payments will include a gross interest rate of 1.77% plus a .35% service fee. Effective December 31, 2013, the agreement between Saline County and the City of Salina,under which they jointly operated a combined City-County Health Department,was terminated.Saline County now operates a County Health Department under the statutory provisions governing the same.Effective December 31, 2013, the Animal Control functions previously performed by the Joint Health Department, including operation of the Animal Shelter, was transferred to the City of Salina, and has subsequently been operated as a part of the Parks and Recreation Department.As a part of the dissolution, the City of Salina has agreed to allow $500,000 of the City share of the City-County Health Department December 31 fund balance to be applied to rehabilitation of the Health Department facility.Any remaining fund balances will be allocated proportionately between the City of Salina and Saline County upon finalization of a final independent audit. REQUIRED SUPPLEMENTARY INFORMAT ION This page intentionally left blank. 52 CITY OF SALINA, KANSAS OTHER POST-EMPLOYMENT BENEFITS REQUIRED SUPPLEMENTARY INFORMATION December 31, 2013 Schedule of Employer Contributions: Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2008 910,418$ 96,672$ 813,746$ December 31, 2009 957,353 100,000 1,671,099 December 31, 2010 921,492 199,000 2,393,591 December 31, 2011 977,292 229,000 3,141,883 December 31, 2012 546,426 124,000 3,564,309 December 31, 2013 570,434 148,000 3,986,743 Schedule of Funding Progress: UAAL as Actuarial Actuarial Actuarial Unfunded Funded Covered Percent of Valuation Value of Accrued AAL Ratio Payroll Payroll Date Assets (a)Liability (b)(b) - (a)(a/b)(c)(b-a)/(c) 12/31/2008 -$ 8,917,346$ 8,917,346$ 0.0%21,874,112$ 40.77% 12/31/2009 - 8,917,346 8,917,346 0.0%22,397,996 39.81% 12/31/2010 - 9,019,806 9,019,806 0.0%22,613,236 39.89% 12/31/2011 - 9,019,806 9,019,806 0.0%21,942,428 41.11% 12/31/2012 - 5,171,261 5,171,261 0.0%21,937,142 23.57% 12/31/2013 - 5,579,912 5,579,912 0.0%22,283,185 25.04% CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 7,841,585$ 7,929,103$ 7,929,103$ [87,518]$ Delinquent taxes 189,732 292,488 292,488 [102,756] Motor vehicle taxes 918,280 891,911 891,911 26,369 General sales tax 12,259,556 12,950,103 12,950,103 [690,547] Other taxes 4,389,277 4,365,000 4,365,000 24,277 Total taxes 25,598,430 26,428,605 26,428,605 [830,175] Charges for services General charges 108,144 - - 108,144 General government 150 - - 150 Public safety 4,101,222 4,034,320 4,034,320 66,902 Public works 277,168 161,000 161,000 116,168 Health and sanitation 43,088 54,000 54,000 [10,912] Culture and recreation 1,004,551 1,119,100 1,119,100 [114,549] Community and economic development 11,219 10,500 10,500 719 Total charges for services 5,545,542 5,378,920 5,378,920 166,622 Operating grants, restricted General grants 159,646 185,000 185,000 [25,354] Public safety 1,037,353 919,759 919,759 117,594 Community and economic development 55,763 30,000 30,000 25,763 Total operating grants, restricted 1,252,762 1,134,759 1,134,759 118,003 Operating grants, unrestricted Public works 10 3,000 3,000 [2,990] Culture and recreation 16,107 10,000 10,000 6,107 Total operating grants, unrestricted 16,117 13,000 13,000 3,117 Interest income General interest 9,525 20,000 20,000 [10,475] Total interest income 9,525 20,000 20,000 [10,475] Interfund services provided General services 995,000 1,020,000 1,020,000 [25,000] General government 2,215,000 2,215,000 2,215,000 - Community and economic development 65,455 50,501 50,501 14,954 Total interfund services provided 3,275,455 3,285,501 3,285,501 [10,046] Miscellaneous revenues General miscellaneous revenues 155,063 160,000 160,000 [4,937] General government 165 - - 165 Public safety 223,983 199,000 199,000 24,983 Public works 5,374 10,000 10,000 [4,626] Culture and recreation 14,002 18,000 18,000 [3,998] Total miscellaneous revenues 398,587 387,000 387,000 11,587 Total revenues 36,096,418 36,647,785 36,647,785 [551,367] Budgeted Amounts See independent auditor's report on the financial statements. 53 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Expenditures General Government City commission 81,066$ 99,383$ 99,383$ 18,317$ City manager 669,087 642,403 642,403 [26,684] Legal 561,224 305,300 305,300 [255,924] Finance 654,177 644,991 644,991 [9,186] Human resources 399,313 574,423 574,423 175,110 Total general government 2,364,867 2,266,500 2,266,500 [98,367] Public Safety Police 8,894,226 8,935,367 8,935,367 41,141 Municipal court 1,573,984 1,536,599 1,536,599 [37,385] Fire 8,685,795 8,288,316 8,288,316 [397,479] Total public safety 19,154,005 18,760,282 18,760,282 [393,723] Public W orks Buildings and general improvements 1,149,565 1,112,618 1,112,618 [36,947] Engineering 1,046,061 1,089,050 1,089,050 42,989 Streets 1,877,702 1,894,536 1,894,536 16,834 Flood works 236,940 226,092 226,092 [10,848] Traffic control 833,079 850,159 850,159 17,080 Total public works 5,143,347 5,172,455 5,172,455 29,108 Public Health and Sanitation Cemetery 165,869 160,866 160,866 [5,003] Health department 1,018,101 1,018,101 1,018,101 - Total public health and sanitation 1,183,970 1,178,967 1,178,967 [5,003] Culture and Recreation Parks 1,642,081 1,718,375 1,718,375 76,294 Swimming pools 370,597 455,868 455,868 85,271 Neighborhood centers 41,181 46,477 46,477 5,296 Recreation 1,361,551 1,406,234 1,406,234 44,683 Smoky Hill museum 490,756 462,571 462,571 [28,185] Total culture and recreation 3,906,166 4,089,525 4,089,525 183,359 Community Development Human relations 313,940 353,067 353,067 39,127 Development services 1,289,682 1,313,036 1,313,036 23,354 Total community development 1,603,622 1,666,103 1,666,103 62,481 Capital Outlay Capital outlay 584,541 600,000 600,000 15,459 Cash Reserve 2,191,960 5,605,849 5,605,849 3,413,889 Total expenditures 36,132,478 39,339,681 39,339,681 3,207,203 Excess [deficiency] of revenues over [under] expenditures [36,060] [2,691,896] [2,691,896] 2,655,836 Budgeted Amounts See independent auditor's report on the financial statements. 54 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Other financing sources [uses] Transfer in 300,000$ -$ -$ 300,000$ Transfer [out][586,876] [580,000] [580,000] [6,876] Total other financing sources [uses][286,876] [580,000] [580,000] 293,124 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][322,936] [3,271,896] [3,271,896] 2,948,960 Unreserved fund balance, January 1 2,267,492 3,271,896 3,271,896 [1,004,404] Prior year cancelled encumbrances 21,170 - - 21,170 Unreserved fund balance, December 31 1,965,726 -$ -$ 1,965,726$ Reconciliation to GAAP Interest receivable 17,556 Accounts receivable 983,354 Taxes receivable 8,491,241 Inventory 80,963 Deferred revenue [8,320,444] Current year encumbrances 331,344 GAAP Fund Balance, December 31 3,549,740$ Budgeted Amounts See independent auditor's report on the financial statements. 55 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) TOURISM AND CONVENTION FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Other taxes 1,407,406$ 1,350,000$ 1,350,000$ 57,406$ Interest income General interest 105 - - 105 Total revenues 1,407,511 1,350,000 1,350,000 57,511 Expenditures Community Development Tourism 745,875 750,000 750,000 4,125 Total expenditures 745,875 750,000 750,000 4,125 Excess [deficiency] of revenues over [under] expenditures 661,636 600,000 600,000 61,636 Other financing sources [uses] Transfer [out][604,125] [600,000] [600,000] [4,125] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]57,511 - - 57,511 Unreserved fund balance, January 1 28,785 2,377 2,377 26,408 Unreserved fund balance, December 31 86,296 2,377$ 2,377$ 83,919$ Reconciliation to GAAP Accounts receivable 349,438 GAAP Fund Balance, December 31 435,734$ Budgeted Amounts See independent auditor's report on the financial statements. 56 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL GAS FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Public works 1,341,051$ 1,369,370$ 1,369,370$ [28,319]$ Interest income General interest 3,097 6,000 6,000 [2,903] Miscellaneous revenues Public works 5,896 - - 5,896 Total revenues 1,350,044 1,375,370 1,375,370 [31,222] Expenditures Public W orks Streets 1,528,756 1,823,301 1,823,301 294,545 Cash Reserve - 500,000 500,000 500,000 Total expenditures 1,528,756 2,323,301 2,323,301 794,545 Excess [deficiency] of revenues over [under] expenditures [178,712] [947,931] [947,931] 763,323 Other financing sources [uses] Transfer in 180,000 180,000 180,000 - Total other financing sources [uses]180,000 180,000 180,000 - Excess [deficiency] of revenues and other sources over [under]1,288 [767,931] [767,931] 763,323 expenditures and other [uses] Unreserved fund balance, January 1 863,373 767,931 767,931 95,442 Prior year cancelled encumbrances 38,870 - - 38,870 Unreserved fund balance, December 31 903,531 -$ -$ 897,635$ Reconciliation to GAAP Taxes receivable 309,690 Retainage payable [59,074] Current year encumbrances 135,155 GAAP Fund Balance, December 31 1,289,302$ Budgeted Amounts See independent auditor's report on the financial statements. 57 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SALES TAX CAPITAL FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Selective sales tax 3,947,947$ 3,948,880$ 3,948,880$ [933]$ Interest income General interest 6,833 20,000 20,000 [13,167] Total revenues 3,954,780 3,968,880 3,968,880 [14,100] Expenditures Capital Outlay 1,706,775 1,870,000 1,870,000 163,225 Cash Reserve 77,709 - - [77,709] Total expenditures 1,784,484 1,870,000 1,870,000 85,516 Excess [deficiency] of revenues over [under] expenditures 2,170,296 2,098,880 2,098,880 71,416 Other financing sources [uses] Transfer [out][2,175,000] [2,150,000] [2,150,000] [25,000] Total other financing sources [uses][2,175,000] [2,150,000] [2,150,000] [25,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][4,704] [51,120] [51,120] 46,416 Unreserved fund balance, January 1 1,772,385 944,461 944,461 827,924 Prior year cancelled encumbrances 28,481 - - 28,481 Unreserved fund balance, December 31 1,796,162 893,341$ 893,341$ 902,821$ Reconciliation to GAAP Retainage payable [1,693] Current year encumbrances 148,050 GAAP Fund Balance, December 31 1,942,519$ Budgeted Amounts See independent auditor's report on the financial statements. 58 This page intentionally left blank. COMBINING AN D INDIVIDUAL FUND ST AT EMENTS AND SCHEDULES This page intentionally left blank. 59 CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR FUNDS NONMAJOR SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Bicentennial center fund -To account for the activities of the City's convention center. Business improvement district fund -State law allows businesses within an area to voluntarily establish an improvement City. This fund is used to account for the assessments made on the District. All revenues are to be used within the Business Improvement District. Neighborhood park fund -To account for fees collected from new residential building projects in Salina. Expenditures are for acquisition or development of neighborhood parks in the growing areas of the community. Special parks and recreation fund -To account for liquor tax revenues, which must be used for park maintenance and improvements. Special alcohol fund -To account for liquor tax revenues, which must be used for programs, which address prevention, education or intervention for drug and alcohol abuse. Bicentennial center event fund -To account for the revenues and expenses associated with special events (concerts, shows, etc.) at the City's convention center. HUD community development fund -To account for grants received from the state to be used for housing or economic development purposes. Community development revolving fund -To account for funds, which may be loaned for housing and economic development,purposes, to later be repaid and reused on a revolving basis. Heritage commission fund -To account for revenues and expenses associated with heritage preservation activities. Sales tax economic development fund -To account for 12.5% of the 1/4 cent sales tax designated for economic Development purposes. HOME 2012 -To account for grants received from the federal government to be used for housing rehabilitation. KDOT Signals 9th Street -To account for funds received from the Kansas Department of Transportation for 9th Street signal replacement. Fair housing fund -To account for grants received from the federal government to be used to monitor and mediate fair housing complaints. Flood and drainage improvement fund -To account for property tax revenues to be used for capital improvements to the flood control and stormwater drainage sys tems. CDBG ED fund -To account for grants received from the federal government to be used for economic development loans to qualifying businesses. Kenwood cover capital fund -To account for the Special Sales Tax proceeds to be used to provide for long-term capital maintenance activity at the facility. Special law enforcement fund -To account for revenues received from the sale of forfeited assets acquired during drug enforcement activities. Expenses are limited to capital items to be used for further drug enforcement activities. Police grants fund -To account for revenues from grants, which are to be used for special police activities, including the D.A.R.E. program D.A.R.E. donations fund -To account for donations to the D.A.R.E. program. War memorial maintenance fund -To account for monies to be used for maintenance of the local war memorial. Arts & humanities fund -To account for revenues and expenses associated with arts and humanities activities. Federal CARE Grant -To account for revenue and expenses associated with the CARE Grant. Police Department Federal Forfeiture funds -To account for revenue and expenses associated with federal Equitable Sharing Program funds. Homeowners’ Assistance fund -To receive donations and/or other funds to assist low and moderate income persons in improving their homes. 60 CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR FUNDS NONMAJOR PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government’s programs. Cemetery endowment fund -To account for amounts expended for perpetual care of the City cemetery. Interest earnings are used for cemetery maintenance. Mausoleum endowment fund -To account for am ounts charged for perpetual care of the City mausoleum. Interest earnings are used for mausoleum maintenance. Tricentennial commission fund -To account for donations to be used to celebrate the nation's tricentennial in the year 2076. Total Total Nonmajor Total Nonmajor Nonmajor Debt Nonmajor Special Revenue Permanent Service Governmental Funds Funds Fund Funds ASSETS Cash and investments 1,729,255$ 452,524$ 792,030$ 2,973,809$ Receivables Accounts 55,247 - - 55,247 Total assets 1,784,502$ 452,524$ 792,030$ 3,029,056$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 51,238$ -$ -$ 51,238$ Due to other funds 132,364 - - 132,364 Total liabilities 183,602 - - 183,602 Fund balances: Restricted 305,968 - 792,030 1,097,998 Committed 1,102,053 452,524 - 1,554,577 Assigned 192,879 - - 192,879 Total fund balances 1,600,900 452,524 792,030 2,845,454 Total liabilities and fund balances 1,784,502$ 452,524$ 792,030$ 3,029,056$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2013 See independent auditor's report on the financial statements. 61 This page intentionally left blank. Total Total Nonmajor Total Nonmajor Nonmajor Debt Nonmajor Special Revenue Permanent Service Governmental Funds Funds Fund Funds REVENUES Taxes 332,932$ -$ -$ 332,932$ Intergovernmental 646,763 - 347,109 993,872 Charges for services 545,717 8,960 - 554,677 Licenses and permits 8,500 - - 8,500 Investment revenue 4,267 1,090 65 5,422 Miscellaneous 128,844 - - 128,844 Total revenues 1,667,023 10,050 347,174 2,024,247 EXPENDITURES Current Culture and recreation 1,662,235 - - 1,662,235 Public health and sanitation 159,510 - - 159,510 Planning and development 212,029 - - 212,029 Miscellaneous - 35 - 35 Debt service Principal retirement 25,000 - 130,000 155,000 Interest and other charges 419 - 146,835 147,254 Capital outlay 1,257,173 - - 1,257,173 Total expenditures 3,316,366 35 276,835 3,593,236 Excess [deficiency] of revenues over [under] expenditures [1,649,343] 10,015 70,339 [1,568,989] Other financing sources [uses] Transfers in 1,110,214 - - 1,110,214 Transfers [out][65,007] - - [65,007] Total other financing sources [uses]1,045,207 - - 1,045,207 Net change in fund balance [604,136] 10,015 70,339 [523,782] Fund balance - Beginning of year 2,205,036 442,509 721,691 3,369,236 Fund balance - End of year 1,600,900$ 452,524$ 792,030$ 2,845,454$ For the Year Ended December 31, 2013 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS See independent auditor's report on the financial statements. 62 Business Special Bicentennial Improvement Neighborhood Parks &Special Center District Park Recreation Alcohol ASSETS Cash and investments 8,780$ 2,038$ 150,350$ 129,106$ 40,666$ Receivables Accounts - 55,247 - - - Total assets 8,780$ 57,285$ 150,350$ 129,106$ 40,666$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 406$ 2,174$ -$ 528$ 40,461$ Due to other funds - - - - - Total liabilities 406 2,174 - 528 40,461 Fund balance: Restricted - 55,111 - 110,578 205 Committed - - 110,260 - - Assigned 8,374 - 40,090 18,000 - Total fund balance [deficit]8,374 55,111 150,350 128,578 205 Total liabilities and fund balances 8,780$ 57,285$ 150,350$ 129,106$ 40,666$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2013 Bicentennial HUD Community Sales Tax KDOT Center Community Development Heritage Economic HOME Signals Event Dev.Revolving Commission Development 2012 9th Street 500$ 72,286$ 108,965$ 4$ 607,889$ -$ -$ - - - - - - - 500$ 72,286$ 108,965$ 4$ 607,889$ -$ -$ -$ -$ -$ -$ -$ -$ -$ - - - - - 10,850 77,865 - - - - - 10,850 77,865 - 72,286 108,965 - - - - 500 - - 4 607,889 [137,265] [77,865] - - - - - 126,415 - 500 72,286 108,965 4 607,889 [10,850] [77,865] 500$ 72,286$ 108,965$ 4$ 607,889$ -$ -$ See independent auditor's report on the financial statements. 63 Flood &Kenwood Special Fair Drainage CDBG Cover Law Housing Improvement ED Capital Enforcement ASSETS Cash and investments 28,505$ 12$ 2,472$ 28,567$ 2,871$ Receivables Accounts - - - - - Total assets 28,505$ 12$ 2,472$ 28,567$ 2,871$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable -$ -$ -$ -$ -$ Due to other funds - - - - - Total liabilities - - - - - Fund balance: Restricted - - 2,472 - - Committed 28,505 12 - 28,567 2,871 Assigned - - - - - Total fund balance [deficit]28,505 12 2,472 28,567 2,871 Total liabilities and fund balances 28,505$ 12$ 2,472$ 28,567$ 2,871$ CITY OF SALINA, KANSAS December 31, 2013 COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) Police War Federal Department Homeowners' Police DARE Memorial Arts &CARE Federal Assistance Grants Donations Maintenance Humanities Grant Forfeiture Funds Fund Totals -$ 2,872$ 35,045$ 229,621$ -$ 278,442$ 264$ 1,729,255$ - - - - - - - 55,247 -$ 2,872$ 35,045$ 229,621$ -$ 278,442$ 264$ 1,784,502$ -$ 145$ -$ 7,524$ -$ -$ -$ 51,238$ - - - - 43,649 - - 132,364 - 145 - 7,524 43,649 - - 183,602 - - - - [43,649]- - 305,968 - 2,727 35,045 222,097 - 278,442 264 1,102,053 - - - - - - - 192,879 - 2,727 35,045 222,097 [43,649]278,442 264 1,600,900 -$ 2,872$ 35,045$ 229,621$ -$ 278,442$ 264$ 1,784,502$ 64 See independent auditor's report on the financial statements. Bicentennial Business Special Center Improvement Neighborhood Parks &Special District Park Recreation Alcohol Revenues Taxes -$ -$ -$ -$ -$ Intergovernmental - - - 159,646 159,646 Charges for services 116,238 84,608 - - - Licenses and permits - - 8,500 - - Investment revenue 60 24 530 223 48 Miscellaneous - - - - - Total Revenues 116,298 84,632 9,030 159,869 159,694 Expenditures Current Culture and recreation 581,561 - - - - Public health and sanitation - - - - 159,510 Planning and development - 84,623 - - - Debt service Principal retirement - - - 25,000 - Interest and other charges - - - 419 - Capital outlay 19,352 - 78,138 94,017 - Total Expenditures 600,913 84,623 78,138 119,436 159,510 Excess [deficiency] of revenues over [under] expenditures [484,615] 9 [69,108] 40,433 184 Other financing sources [uses] Transfers in 489,851 - - - - Transfers [out]- - - - - Total other financing sources [uses]489,851 - - - - Net change in fund balance 5,236 9 [69,108] 40,433 184 Fund balance, beginning of year 3,138 55,102 219,458 88,145 21 Fund balance, end of year 8,374$ 55,111$ 150,350$ 128,578$205$ CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, For the Year Ended December 31, 2013 AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS Bicentennial HUD Community Sales Tax KDOT Center Community Development Heritage Economic HOME Signals Event Development Revolving Commission Development 2012 9th Street -$ -$ -$ -$ 332,920$ -$ -$ - - - - - 233,793 - - - - - - - - - - - - - - - - 177 317 - 1,488 - - - - - - - - - - 177 317 - 334,408 233,793 - 126,395 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 561,900 299,048 76,215 126,395 - - - 561,900 299,048 76,215 [126,395] 177 317 - [227,492] [65,255] [76,215] - - - - - 65,007 - - - [65,007] - - - - - - [65,007] - - 65,007 - [126,395] 177 [64,690] - [227,492] [248] [76,215] 126,895 72,109 173,655 4 835,381 [10,602] [1,650] 500$ 72,286$ 108,965$ 4$ 607,889$ [10,850]$ [77,865]$ See independent auditor's report on the financial statements. 65 Flood &Kenwood Special Fair Drainage CDBG Cover Law Housing Improvement ED Capital Enforcement Revenues Taxes -$ 12$ -$ -$ -$ Intergovernmental 62,740 - - - - Charges for services - - - - - Licenses and permits - - - - - Investment revenue 121 - - - 7 Miscellaneous - 907 - - - Total Revenues 62,861 919 - - 7 Expenditures Current Culture and recreation - - - - - Public health and sanitation - - - - - Planning and development 66,260 - - - - Debt service Principal retirement - - - - - Interest and other charges - - - - - Capital outlay - 907 - 21,433 - Total Expenditures 66,260 907 - 21,433 - Excess [deficiency] of revenues over [under] expenditures [3,399] 12 - [21,433]7 Other financing sources [uses] Transfers in - - - 50,000 - Transfers [out]- - - - - Total other financing sources [uses]- - - 50,000 - Net change in fund balance [3,399] 12 - 28,567 7 Fund balance, beginning of year 31,904 - 2,472 - 2,864 Fund balance, end of year 28,505$ 12$ 2,472$ 28,567$2,871$ CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2013 AND CHANGES IN FUND BALANCES Police War Federal Department Homeowners' Police DARE Memorial Arts &Care Federal Assistance Grants Donations Maintenance Humanities Grant Forfeiture Funds Fund Totals -$ -$ -$ -$ -$ -$ -$ 332,932$ - - - - 30,938 - - 646,763 - - - 344,871 - - - 545,717 - - - - - - - 8,500 - 5 86 534 - 647 - 4,267 - 975 - 126,698 - - 264 128,844 - 980 86 472,103 30,938 647 264 1,667,023 - - 76 954,203 - - - 1,662,235 - - - - - - - 159,510 - - - - 61,146 - - 212,029 - - - - - - - 25,000 - - - - - - - 419 - - - - - 106,163 - 1,257,173 - - 76 954,203 61,146 106,163 - 3,316,366 - 980 10 [482,100] [30,208] [105,516] 264 [1,649,343] 5,356 - - 500,000 - - - 1,110,214 - - - - - - - [65,007] 5,356 - - 500,000 - - - 1,045,207 5,356 980 10 17,900 [30,208] [105,516] 264 [604,136] [5,356] 1,747 35,035 204,197 [13,441] 383,958 - 2,205,036 -$ 2,727$ 35,045$ 222,097$ [43,649]$ 278,442$ 264$ 1,600,900$ See independent auditor's report on the financial statements. 66 Cemetery Mausoleum Tricentennial ASSETS Endowment Endowment Commission Total Cash and investments 444,780$ 2,008$ 5,736$ 452,524$ Total assets 444,780$ 2,008$ 5,736$ 452,524$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable -$ -$ -$ -$ Total liabilities - - - - Fund balances Committed 444,780 2,008 5,736 452,524 Total liabilities and fund balances 444,780$ 2,008$ 5,736$ 452,524$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET December 31, 2013 NONMAJOR PERMANENT FUNDS See independent auditor's report on the financial statements. 67 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total Revenues Charges for services 8,960$ -$ -$ 8,960$ Investment revenue 1,071 5 14 1,090 Total revenues 10,031 5 14 10,050 Expenditures Miscellaneous 35 - - 35 Total expenditures 35 - - 35 Net change in fund balance 9,996 5 14 10,015 Fund balances - beginning of year 434,784 2,003 5,722 442,509 Fund balances - end of year 444,780$ 2,008$ 5,736$ 452,524$ NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2013 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES See independent auditor's report on the financial statements. 68 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) BICENTENNIAL CENTER FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Culture and recreation 116,237$ -$ -$ 116,237$ Interest income General interest 60 - - 60 Total revenues 116,297 - - 116,297 Expenditures Culture and Recreation Bicentennial Center 608,306 550,000 550,000 [58,306] Cash Reserve - 152,780 152,780 152,780 Total expenditures 608,306 702,780 702,780 94,474 Excess [deficiency] of revenues over [under] expenditures [492,009] [702,780] [702,780] 210,771 Other financing sources [uses] Transfer in 489,851 450,000 450,000 39,851 Total other financing sources [uses]489,851 450,000 450,000 39,851 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][2,158] [252,780] [252,780] 250,622 Unreserved fund balance, January 1 2,158 252,780 252,780 [250,622] Unreserved fund balance, December 31 - -$ -$ -$ Reconciliation to GAAP Current year encumbrances 8,374 GAAP Fund Balance, December 31 8,374$ Budgeted Amounts See independent auditor's report on the financial statements. 69 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) BUSINESS IMPROVEMENT CITY FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Community and economic development 84,462$ 90,000$ 90,000$ [5,538]$ Interest income General interest 24 500 500 [476] Total revenues 84,486 90,500 90,500 [6,014] Expenditures Community Development Business Improvement District 84,624 90,500 90,500 5,876 Total expenditures 84,624 90,500 90,500 5,876 Excess [deficiency] of revenues over [under] expenditures [138] - - [138] Unreserved fund balance, January 1 2 30 30 [28] Unreserved fund balance, December 31 [136] 30$ 30$ [166]$ Reconciliation to GAAP Accounts receivable 55,247 GAAP Fund Balance, December 31 55,111$ Budgeted Amounts See independent auditor's report on the financial statements. 70 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) NEIGHBORHOOD PARK FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Public works 8,500$ 20,000$ 20,000$ [11,500]$ Interest income General interest 530 4,001 4,001 [3,471] Total revenues 9,030 24,001 24,001 [14,971] Expenditures Public W orks Parks 118,228 277,134 277,134 158,906 Total expenditures 118,228 277,134 277,134 158,906 Excess [deficiency] of revenues over [under] expenditures [109,198] [253,133] [253,133] 143,935 Unreserved fund balance, January 1 219,458 253,133 253,133 [33,675] Unreserved fund balance, December 31 110,260 -$ -$ 110,260$ Reconciliation to GAAP Current year encumbrances 40,090 GAAP Fund Balance, December 31 150,350$ Budgeted Amounts See independent auditor's report on the financial statements. 71 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL PARKS AND RECREATION FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Culture and recreation 159,646$ 160,000$ 160,000$ [354]$ Interest income General interest 222 4,000 4,000 [3,778] Total revenues 159,868 164,000 164,000 [4,132] Expenditures Public Works Parks 137,435 100,000 100,000 [37,435] Cash Reserve - 133,236 133,236 133,236 Total expenditures 137,435 233,236 233,236 95,801 Excess [deficiency] of revenues over [under] expenditures 22,433 [69,236] [69,236] 91,669 Unreserved fund balance, January 1 88,145 77,863 77,863 10,282 Unreserved fund balance, December 31 110,578 8,627$ 8,627$ 101,951$ Reconciliation to GAAP Current year encumbrances 18,000 GAAP Fund Balance, December 31 128,578$ Budgeted Amounts See independent auditor's report on the financial statements. 72 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL ALCOHOL FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Health and sanitation 159,646$ 160,000$ 160,000$ [354]$ Interest income General interest 48 - - 48 Total revenues 159,694 160,000 160,000 [306] Expenditures Public Health and Sanitation Special alcohol 159,510 160,000 160,000 490 Total expenditures 159,510 160,000 160,000 490 Excess [deficiency] of revenues over [under] expenditures 184 - - 184 Unreserved fund balance, January 1 21 - - 21 Unreserved fund balance/GAAP fund balance December 31 205$ -$ -$ 205$ Budgeted Amounts See independent auditor's report on the financial statements. 73 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SALES TAX ECONOMIC DEVELOPMENT FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Selective sales tax 332,920$ 321,422$ 321,422$ 11,498$ Interest income General interest 1,489 10,000 10,000 [8,511] Total revenues 334,409 331,422 331,422 2,987 Expenditures Community Development Economic development 561,900 1,207,725 1,207,725 645,825 Total expenditures 561,900 1,207,725 1,207,725 645,825 Excess [deficiency] of revenues over [under] expenditures [227,491] [876,303] [876,303] 648,812 Unreserved fund balance, January 1 835,380 927,232 927,232 [91,852] Unreserved fund balance/GAAP fund balance December 31 607,889$ 50,929$ 50,929$ 556,960$ Budgeted Amounts See independent auditor's report on the financial statements. 74 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) FAIR HOUSING FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Community and economic development 62,740$ 65,000$ 65,000$ [2,260]$ Interest income General interest 121 1,000 1,000 [879] Total revenues 62,861 66,000 66,000 [3,139] Expenditures Community Development Human relations 66,260 66,260 66,260 - Total expenditures 66,260 66,260 66,260 - Excess [deficiency] of revenues over [under] expenditures [3,399] [260] [260] [3,139] Unreserved fund balance, January 1 31,904 30,440 30,440 1,464 Unreserved fund balance/GAAP fund balance December 31 28,505$ 30,180$ 30,180$ [1,675]$ Budgeted Amounts See independent auditor's report on the financial statements. 75 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) ARTS & HUMANITIES FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Culture and recreation 471,569$ 448,400$ 448,400$ 23,169$ Interest income General interest 534 2,000 2,000 [1,466] Miscellaneous revenues Culture and recreation - 502 502 [502] Total revenues 472,103 450,902 450,902 21,201 Expenditures Culture and Recreation Arts and humanities 603,281 629,463 629,463 26,182 Smoky Hill River Festival 350,922 350,825 350,825 [97] Cash Reserve - 74,723 74,723 74,723 Total expenditures 954,203 1,055,011 1,055,011 100,808 Excess [deficiency] of revenues over [under] expenditures [482,100] [604,109] [604,109] 122,009 Other financing sources [uses] Transfer in 500,000 500,000 500,000 - Total other financing sources [uses]500,000 500,000 500,000 - Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]17,900 [104,109] [104,109] 122,009 Unreserved fund balance, January 1 204,197 104,109 104,109 100,088 Unreserved fund balance/GAAP fund balance December 31 222,097$ -$ -$ 222,097$ Budgeted Amounts See independent auditor's report on the financial statements. 76 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) DEBT SERVICE FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 2,303,819$ 2,330,033$ 2,330,033$ [26,214]$ Delinquent taxes 58,452 80,000 80,000 [21,548] Motor vehicle taxes 279,234 260,899 260,899 18,335 Total taxes 2,641,505 2,670,932 2,670,932 [29,427] Charges for services Special assessments 1,706,411 1,122,175 1,122,175 584,236 Interest income General interest 5,483 5,000 5,000 483 Miscellaneous revenues General miscellaneous revenues 149,290 100,000 100,000 49,290 Other financing sources General sources 213,089 200,000 200,000 13,089 Total revenues 4,715,778 4,098,107 4,098,107 617,671 Expenditures Debt Service Principal 4,882,905 4,781,244 4,781,244 [101,661] Interest and other charges 1,575,077 1,729,443 1,729,443 154,366 Cash Reserve - 200,000 200,000 200,000 Total expenditures 6,457,982 6,710,687 6,710,687 252,705 Excess [deficiency] of revenues over [under] expenditures [1,742,204] [2,612,580] [2,612,580] 870,376 Other financing sources [uses] Transfer in 1,867,555 1,750,000 1,750,000 117,555 Total other financing sources [uses]1,867,555 1,750,000 1,750,000 117,555 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]125,351 [862,580] [862,580] 987,931 Unreserved fund balance, January 1 582,412 862,580 862,580 [280,168] Unreserved fund balance December 31 707,763 -$ -$ 707,763$ Reconciliation to GAAP Taxes receivable 2,637,666 Deferred revenue [2,587,703] GAAP Fund Balance, December 31 757,726$ Budgeted Amounts See independent auditor's report on the financial statements. 77 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) SOLID W ASTE DISPOSAL FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Health and sanitation 2,689,822$ 2,329,714$ 2,329,714$ 360,108$ Interest income General interest 4,508 7,000 7,000 [2,492] Interfund services provided Health and sanitation 466,987 463,808 463,808 3,179 Miscellaneous revenues Health and sanitation 33,737 42,310 42,310 [8,573] Total revenues 3,195,054 2,842,832 2,842,832 352,222 Expenditures Public Health and Sanitation Solid waste 1,776,438 2,011,770 2,011,770 235,332 Hazardous waste disposal 101,556 113,212 113,212 11,656 Total public health and sanitation 1,877,994 2,124,982 2,124,982 246,988 Capital Outlay 52,950 63,000 63,000 10,050 Cash Reserve - 2,914,063 2,914,063 2,914,063 Total expenditures 1,930,944 5,102,045 5,102,045 3,171,101 Excess [deficiency] of revenues over [under] expenditures 1,264,110 [2,259,213] [2,259,213] 3,523,323 Other financing sources [uses] Transfers [out][607,503] [431,371] [431,371] [176,132] Total other financing sources [uses][607,503] [431,371] [431,371] [176,132] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]656,607 [2,690,584] [2,690,584] 3,347,191 Unreserved fund balances, January 1 793,005 2,690,584 2,690,584 [1,897,579] Unreserved fund balances, December 31 1,449,612$ -$ -$ 1,449,612$ Budgeted Amounts See independent auditor's report on the financial statements. 78 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) WATER AND SEWER FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Water and wastewater 17,356,755$ 17,120,756$ 17,120,756$ 235,999$ Interest income General interest 27,359 25,000 25,000 2,359 Interfund services provided General services 28,412 30,900 30,900 [2,488] Water and wastewater 84,510 - - 84,510 Total interfund services 112,922 30,900 30,900 82,022 Miscellaneous revenues General miscellaneous revenues 154 - - 154 Water and wastewater 488,034 470,000 470,000 18,034 Total miscellaneous revenues 488,188 470,000 470,000 18,188 Total revenues 17,985,224 17,646,656 17,646,656 338,568 Expenditures Water and W astewater Water 12,628,455 12,982,294 12,982,294 353,839 Sewer 2,579,668 2,879,122 2,879,122 299,454 Total water and wastewater 15,208,123 15,861,416 15,861,416 653,293 Capital Outlay 5,878,541 2,493,000 2,493,000 [3,385,541] Cash Reserve - 4,207,662 4,207,662 4,207,662 Total expenditures 21,086,664 22,562,078 22,562,078 1,475,414 Excess [deficiency] of revenues over [under] expenditures [3,101,440] [4,915,422] [4,915,422] 1,813,982 Other financing sources [uses] Transfers in 200,000 - - 200,000 Transfers [out][2,448,000] [2,478,000] [2,478,000] 30,000 Total other financing sources [uses][2,248,000] [2,478,000] [2,478,000] 230,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][5,349,440] [7,393,422] [7,393,422] 2,043,982 Unreserved fund balances, January 1 8,797,299 7,431,009 7,431,009 1,366,290 Prior year cancelled encumbrances 65,884 - - 65,884 Unreserved fund balances, December 31 3,513,743$ 37,587$ 37,587$ 3,476,156$ Budgeted Amounts See independent auditor's report on the financial statements. 79 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) SANITATION FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Health and sanitation 2,472,749$ 2,478,000$ 2,478,000$ [5,251]$ Interest income General interest 2,137 3,500 3,500 [1,363] Total revenues 2,474,886 2,481,500 2,481,500 [6,614] Expenditures Public Health and Sanitation Sanitation 2,389,969 2,519,098 2,519,098 129,129 Cash Reserve - 583,924 583,924 583,924 Total expenditures 2,389,969 3,103,022 3,103,022 713,053 Excess [deficiency] of revenues over [under] expenditures 84,917 [621,522] [621,522] [719,667] Unreserved fund balance, January 1 671,899 621,523 621,523 50,376 Unreserved fund balances, December 31 756,816$ 1$ 1$ [669,291]$ Budgeted Amounts See independent auditor's report on the financial statements. 80 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) GOLF COURSE FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes General sales tax 23,583$ 27,500$ 27,500$ [3,917]$ Charges for services Culture and recreation 695,429 700,200 700,200 [4,771] Interest income General interest 182 - - 182 Miscellaneous revenues General miscellaneous revenues 378 - - 378 Culture and recreation 50,388 45,000 45,000 5,388 Total miscellaneous revenues 50,766 45,000 45,000 5,766 Total revenues 769,960 772,700 772,700 [2,740] Expenditures Culture and Recreation Golf course 768,949 760,607 760,607 [8,342] Cash Reserve - 71,343 71,343 71,343 Total expenditures 768,949 831,950 831,950 63,001 Excess [deficiency] of revenues over [under] expenditures 1,011 [59,250] [59,250] 60,261 Unreserved fund balances, January 1 62,917 59,250 59,250 3,667 Unreserved fund balances, December 31 63,928$ -$ -$ 63,928$ Budgeted Amounts See independent auditor's report on the financial statements. 81 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) RISK MANAGEMENT FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interfund services provided General services 495,844$ 442,244$ 442,244$ 53,600$ Miscellaneous revenues General miscellaneous revenues 77,693 65,765 65,765 11,928 Total revenues 573,537 508,009 508,009 65,528 Expenditures Other Risk management 459,845 469,050 469,050 9,205 Cash Reserve - 50,000 50,000 50,000 Total expenditures 459,845 519,050 519,050 59,205 Excess [deficiency] of revenues over [under] expenditures 113,692 [11,041] [11,041] 124,733 Unreserved fund balance, January 1 [65,992] 11,041 11,041 [77,033] Unreserved fund balance, December 31 47,700$ -$ -$ 47,700$ Budgeted Amounts See independent auditor's report on the financial statements. 82 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) WORKERS' COMPENSATION RESERVE FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 1,507$ 2,500$ 2,500$ [993]$ Interfund services provided General services 423,398 420,598 420,598 2,800 Total revenues 424,905 423,098 423,098 1,807 Expenditures Other Worker's compensation 366,686 297,762 297,762 [68,924] Cash Reserve - 455,513 455,513 455,513 Total expenditures 366,686 753,275 753,275 386,589 Excess [deficiency] of revenues over [under] expenditures 58,219 [330,177] [330,177] 388,396 Unreserved fund balance, January 1 577,481 739,961 739,961 [162,480] Unreserved fund balance, December 31 635,700$ 409,784$ 409,784$ 225,916$ Budgeted Amounts See independent auditor's report on the financial statements. 83 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) HEALTH INSURANCE FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 4,581$ 5,000$ 5,000$ [419]$ Interfund Services Provided General services 5,892,481 6,038,066 6,038,066 [145,585] Miscellaneous revenues General miscellaneous revenues 20,858 36,000 36,000 [15,142] Total revenues 5,917,920 6,079,066 6,079,066 [161,146] Expenditures Other Health insurance 6,235,844 6,083,072 6,083,072 [152,772] Cash Reserve - 1,861,262 1,861,262 1,861,262 Total expenditures 6,235,844 7,944,334 7,944,334 1,708,490 Excess [deficiency] of revenues over [under] expenditures [317,924] [1,865,268] [1,865,268] 1,547,344 Unreserved fund balance, January 1 1,902,714 1,865,268 1,865,268 37,446 Unreserved fund balance, December 31 1,584,790$ -$ -$ 1,584,790$ Budgeted Amounts See independent auditor's report on the financial statements. 84 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) CENTRAL GARAGE FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 261$ 40$ 40$ 221$ Interfund services provided General services 1,631,549 1,755,000 1,755,000 [123,451] Miscellaneous revenues General miscellaneous revenues 7,947 10,400 10,400 [2,453] Total revenues 1,639,757 1,765,440 1,765,440 [125,683] Expenditures Other Central garage 1,721,430 1,791,157 1,791,157 69,727 Cash Reserve - 113,523 113,523 113,523 Total expenditures 1,721,430 1,904,680 1,904,680 183,250 Excess [deficiency] of revenues over [under] expenditures [81,673] [139,240] [139,240] 57,567 Other financing sources [uses] Transfers in - 30,000 30,000 [30,000] Total other financing sources [uses]- 30,000 30,000 [30,000] Excess [deficiency] of revenues and other financing sources over [under] expenditures and other financing [uses][81,673] [109,240] [109,240] 27,567 Unreserved fund balance, January 1 106,209 109,240 109,240 [3,031] Unreserved fund balance, December 31 24,536$ -$ -$ 24,536$ Budgeted Amounts See independent auditor's report on the financial statements. 85 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) INFORMATION SYSTEMS FUND For the Year Ended December 31, 2013 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services General charges 34,290$ 106,000$ 106,000$ [71,710]$ Interest income General interest 270 668 668 [398] Interfund services provided General services 1,233,000 1,267,439 1,267,439 [34,439] Miscellaneous revenues General miscellaneous revenues - 2,889 2,889 [2,889] Total revenues 1,267,560 1,376,996 1,376,996 [109,436] Expenditures Other Information services 1,221,665 1,436,485 1,436,485 214,820 Cash Reserve - 100,000 100,000 100,000 Total expenditures 1,221,665 1,536,485 1,536,485 314,820 Excess [deficiency] of revenues over [under] expenditures 45,895 [159,489] [159,489] 205,384 Unreserved fund balance, January 1 114,006 159,489 159,489 [45,483] Prior year cancelled encumbrances 255 - - 255 Unreserved fund balance, December 31 160,156$ -$ -$ 160,156$ Budgeted Amounts See independent auditor's report on the financial statements. 86 87 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one agency to other departments or agencies of the government and to other governmental units on a cost reimbursement basis. Risk management fund -To account for the accumulation and allocation of costs associated with risk management activities and the purchase of various forms of insurance. Workers' compensation reserve fund -To account for the costs of providing a partially self-insured workers' compensation plan and for accumulating the necessary reserve amounts. Health insurance fund -To account for the costs of providing a partially self-insured health insurance and for accumulating the necessary reserve amounts. Central garage fund -To account for the accumulation and allocation for costs associated with the City's centralized vehicle repair shop. Information services fund -To account for the accumulation and allocation of costs associated with electronic data processing. Total Workers'Internal Risk Compensation Health Central Information Service ASSETS Management Reserve Insurance Garage Systems Funds Current assets: Cash and investments 50,547$ 772,399$ 1,584,891$83,141$ 253,287$ 2,744,265$ Inventory and prepaid supplies - - - 140,141 - 140,141 Total current assets 50,547 772,399 1,584,891 223,282 253,287 2,884,406 Capital assets: Capital assets - - - 201,425 684,387 885,812 Less: accumulated depreciation - - - 174,317 680,227 854,544 Total capital assets - - - 27,108 4,160 31,268 Total assets 50,547$ 772,399$ 1,584,891$250,390$ 257,447$ 2,915,674$ Liabilities: Current liabilities (payable from current assets): Accounts payable 2,847$ 7,714$ 100$ 58,605$ 31,592$ 100,858$ Current portion of compensated absences payable - - - 15,990 30,432 46,422 Current portion of accrued claims payable - 161,216 372,147 - - 533,363 Total current liabilities (payable from current assets)2,847 168,930 372,247 74,595 62,024 680,643 Noncurrent liabilities: Compensated absences payable - - - 14,987 28,523 43,510 Accrued claims payable - 408,539 - - - 408,539 Total noncurrent liabilities - 408,539 - 14,987 28,523 452,049 Total liabilities 2,847$ 577,469$ 372,247$ 89,582$ 90,547$ 1,132,692$ Net Position Invested in capital assets, net of related debt -$ -$ -$ 27,108$ 4,160$ 31,268$ Unrestricted 47,700 194,930 1,212,644 133,700 162,740 1,751,714 Total net position 47,700$ 194,930$ 1,212,644$160,808$ 166,900$ 1,782,982$ CITY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2013 See independent auditor's report on the financial statements. 88 Total Workers'Internal Risk Compensation Health Central Information Service Management Reserve Insurance Garage Systems Funds Operating revenues Charges for services 495,844$ 423,397$ 5,892,482$ 1,631,549$ 1,267,290$9,710,562$ Miscellaneous 77,693 - 20,858 7,947 - 106,498 Total operating revenues 573,537 423,397 5,913,340 1,639,496 1,267,290 9,817,060 Operating expenses General government 459,845 443,271 6,240,567 1,702,602 1,206,418 10,052,703 Depreciation - - - 8,486 143 8,629 Total operating expenses 459,845 443,271 6,240,567 1,711,088 1,206,561 10,061,332 Operating income [loss]113,692 [19,874] [327,227] [71,592] 60,729 [244,272] Other operating revenues [expenses] Investment income - 1,507 4,581 261 270 6,619 Total other operating revenues [expenses] - 1,507 4,581 261 270 6,619 Change in net position 113,692 [18,367] [322,646] [71,331] 60,999 [237,653] Net position, January 1 [65,992] 213,297 1,535,290 219,637 101,598 2,003,830 Restatement - - - 12,502 4,303 16,805 Net position, January 1, restated [65,992] 213,297 1,535,290 232,139 105,901 2,020,635 Net position, December 31 47,700$ 194,930$ 1,212,644$ 160,808$ 166,900$ 1,782,982$ COMBINING STATEMENT OF REVENUES, EXPENSES INTERNAL SERVICE FUND CITY OF SALINA, KANSAS For the Year Ended December 31, 2013 AND CHANGES IN NET POSITION See independent auditor's report on the financial statements. 89 Total Workers'Internal Risk Compensation Health Central Information Service Management Reserve Insurance Garage Services Funds Cash flows from operating activities Cash received from customers and users 495,844$ 499,982$ 5,897,205$1,631,550$1,267,290$9,791,871$ Cash paid to suppliers of goods or services [459,008] [441,415] [6,241,092] [1,499,912] [868,574] [9,510,001] Cash paid to employees - - - [210,095] [412,907] [623,002] Other operating receipts 77,693 - 20,858 7,947 - 106,498 Net cash provided by [used in] operating activities 114,529 58,567 [323,029] [70,510] [14,191] [234,634] Cash flows from investing activities Interest received - 1,507 4,581 260 270 6,618 Net increase [decrease] in cash and cash equivalents 114,529 60,074 [318,448] [70,250] [13,921] [228,016] Cash and cash equivalents, January 1 [63,982] 712,325 1,903,339 153,391 267,208 2,972,281 Cash and cash equivalents, December 31 50,547$ 772,399$ 1,584,891$83,141$ 253,287$ 2,744,265$ For the Year Ended December 31, 2013 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS See independent auditor's report on the financial statements. 90 Total Workers'Internal Risk Compensation Health Central Information Service Management Reserve Insurance Garage Services Funds Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss]113,692$ [19,874]$ [327,227]$ [71,592]$ 60,729$ [244,272]$ Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense - - - 8,486 143 8,629 [Increase] decrease in inventory - - - [13,267] - [13,267] Increase [decrease] in accounts payable 837 1,856 [525] 11,423 [76,355] [62,764] Increase [decrease] in accrued compensated absences - - - [5,560] 1,292 [4,268] Increase [decrease] in claims payable - 76,585 4,723 - - 81,308 Net cash provided by [used in] operating activities 114,529$ 58,567$ [323,029]$ [70,510]$ [14,191]$ [234,634]$ For the Year Ended December 31, 2013 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS (Continued) COMBINING STATEMENT OF CASH FLOWS See independent auditor's report on the financial statements. 91 92 CITY OF SALINA, KANSAS AGENCY FUNDS Agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. Special assessment escrow agency fund -To account for property owners' prepayment on outstanding special assessments. Fire insurance proceeds agency fund -To account for insurance proceeds received for severely damaged buildings the insurance proceeds, plus interest, are returned to the property owners when the buildings are repaired or demolished. PEGS access agency fund -To account for revenues collected on behalf of the community access television system for public, educational and governmental programming. Payroll clearing agency fund -To account for interfund payroll receivables and payables for all City funds. Court bond and restitution agency fund -To account for bonds and restitution remitted to the court and awaiting court orders for distribution. Police investigation account agency fund -To account for monies held by the police department for use in investigations. Fire cam agency fund -To account for donations received and used for fire equipment. Citizenship agency fund -To account for donations received and used for the citizenship fund. Section 125 plan agency fund -To account for monies held for the Section 125 plan. Special Fire Court Police Section Assessment Insurance PEGS Payroll Bond and Investigation Fire 125 Escrow Proceeds Access Clearing Restitution Account Cam Citizenship Plan Totals ASSETS: Cash and investments 93,278$ 20,468$ 5,132$[256,295]$ 69,627$ 4,013$ 787$3,722$ 317,755$258,487$ Total assets 93,278$ 20,468$ 5,132$[256,295]$ 69,627$ 4,013$ 787$3,722$ 317,755$258,487$ LIABILITIES: Accounts payable 93,278$ 20,468$ 5,132$[256,295]$ 69,627$ 4,013$ 787$3,722$ 317,755$258,487$ Total liabilities 93,278$ 20,468$ 5,132$[256,295]$ 69,627$ 4,013$ 787$3,722$ 317,755$258,487$ December 31, 2013 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS See independent auditor's report on the financial statements. 93 Balance Balance December 31,December 31, 2012 Additions Deductions 2013 Cash and investments Special Assessment Escrow 137,964$ 5,433$ 50,119$ 93,278$ Fire Insurance Proceeds 5,957 22,429 7,918 20,468 PEGS Access 5,119 229,955 229,942 5,132 Payroll Clearing [254,213] - 2,082 [256,295] Court Bond and Restitution 80,514 - 10,887 69,627 Police Investigation Account 2,414 1,599 - 4,013 Fire Cam Fund 785 2 - 787 Citizenship Trust 3,713 9 - 3,722 Section 125 Plan Fund 340,537 292,189 314,971 317,755 Total Assets 322,790$ 551,616$ 615,919$ 258,487$ Accounts Payable Special Assessment Escrow 137,964$ 5,433$ 50,119$ 93,278$ Fire Insurance Proceeds 5,957 22,429 7,918 20,468 PEGS Access 5,119 229,955 229,942 5,132 Payroll Clearing [254,213] - 2,082 [256,295] Court Bond and Restitution 80,514 - 10,887 69,627 Police Investigation Account 2,414 1,599 - 4,013 Fire Cam Fund 785 2 - 787 Citizenship Trust 3,713 9 - 3,722 Section 125 Plan Fund 340,537 292,189 314,971 317,755 Total liabilities 322,790$ 551,616$ 615,919$ 258,487$ CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the Year Ended December 31, 2013 AGENCY FUNDS See independent auditor's report on the financial statements. 94 This page intentionally left blank. STAT ISTICAL SECTION This page intentionally left blank. Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount % Governmental activities Net investment in capital assets 92,948$ 92%110,184$92%117,810$93%115,029$90%118,965$93%101,974$85%113,001$96%109,289$93%112,929$94%116,585$90% Restricted 1,317$ 1%1,642$ 1%1,106$ 1%1,609$ 1%1,212$ 1%1,174$ 1%988$ 1%1,712$ 1%1,082$ 1%1,210$ 1% Unrestricted 7,057$ 7%7,422$ 6%7,678$ 6%11,356$ 9%7,745$ 6%16,706$ 14%3,808$ 3%6,333$ 5%5,511$ 5%11,628$ 9% Total governmental activities net position 101,321$100%119,248$100%126,594$100%127,994$100%127,922$100%119,854$100%117,797$100%117,334$100%119,522$100%129,423$100% Business-type activities Net investment in capital assets 38,560$ 77%40,968$ 79%43,510$ 81%45,435$ 80%45,931$ 79%48,234$ 79%48,078$ 75%44,227$ 63%50,857$ 69%57,103$ 75% Restricted 1,406$ 3%1,109$ 2%1,123$ 2%1,151$ 2%1,211$ 2%1,553$ 3%1,553$ 2%1,553$ 2%1,553$ 2%1,553$ 2% Unrestricted 9,837$ 20%9,821$ 19%9,300$ 17%10,412$ 18%11,197$ 19%11,482$ 19%14,306$ 22%24,528$ 35%21,450$ 29%17,794$ 23% Total business-type activities net position 49,803$ 100%51,897$ 100%53,933$ 100%56,998$ 100%58,339$ 100%61,269$ 100%63,937$ 100%70,308$ 100%73,860$ 100%76,450$ 100% Primary government Net investment in capital assets 131,507$87%151,152$88%161,320$89%160,464$87%164,896$89%150,208$83%161,080$89%153,516$82%163,786$85%173,688$84% Restricted 2,723$ 2%2,750$ 2%2,229$ 1%2,761$ 1%2,423$ 1%2,727$ 2%2,541$ 1%3,216$ 2%2,635$ 1%2,763$ 1% Unrestricted 16,894$ 11%17,243$ 10%16,978$ 9%21,768$ 12%18,942$ 10%28,188$ 16%18,115$ 10%30,867$ 16%26,961$ 14%29,422$ 14% Total primary government net position 151,124$100%171,144$100%180,527$100%184,992$100%186,261$100%181,123$100%181,736$100%187,599$100%193,382$100%205,873$100% Source: City of Salina Comprehensive Annual Financial Reports, 2004 - 2013 20082005 (in 000's) 2007 2013201120102009 Fiscal Year 2006 9520122004 Schedule 1 City of Salina, Kansas Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Expenses Governmental activities: General government 4,931$ 4,904$ 6,319$ 6,732$ 6,791$ 14,664$ 10,845$ 13,614$ 11,278$ 10,978$ Public safety 13,548$ 14,159$ 14,621$ 16,877$ 18,440$ 16,539$ 18,592$ 18,579$ 19,066$ 19,649$ Public works 7,958$ 8,420$ 8,609$ 9,258$ 9,706$ 9,781$ 9,782$ 9,858$ 10,957$ 11,064$ Public health and sanitation 1,016$ 1,102$ 1,214$ 1,281$ 1,310$ 1,390$ 1,365$ 1,368$ 1,383$ 1,369$ Culture and recreation 4,784$ 5,071$ 4,961$ 5,658$ 5,582$ 5,397$ 8,572$ 6,693$ 5,338$ 4,809$ Planning and development 4,130$ 2,714$ 2,697$ 2,814$ 3,481$ 3,375$ 3,716$ 3,450$ 3,362$ 3,399$ Interest on long term debt 786$ 742$ 972$ 1,295$ 1,454$ -$ 2,256$ 1,650$ 1,914$ 1,953$ Total governmental activities expenses 37,152$ 37,112$ 39,393$ 43,916$ 46,764$ 51,146$ 55,128$ 55,212$ 53,298$ 53,221$ Business-type activities: Solid waste disposal 2,818$ 2,608$ 2,471$ 2,088$ 2,008$ 2,287$ 3,010$ 2,945$ 2,067$ 3,532$ Water and sewer 11,552$ 11,262$ 11,676$ 12,227$ 13,284$ 12,995$ 14,050$ 13,597$ 14,897$ 15,418$ Sanitation 1,920$ 1,889$ 1,945$ 2,038$ 2,184$ 2,224$ 2,261$ 2,261$ 2,441$ 2,237$ Golf course 817$ 893$ 852$ 884$ 884$ 897$ 817$ 825$ 723$ 768$ Total business-type activities expenses 17,107$ 16,652$ 16,944$ 17,236$ 18,360$ 18,403$ 20,138$ 19,628$ 20,128$ 21,955$ Total primary government expenses 54,260$ 53,764$ 56,337$ 61,153$ 65,124$ 69,549$ 75,266$ 74,840$ 73,426$ 75,176$ Program Revenues Governmental activities: Charges for services General government 3,712$ 3,926$ 4,177$ 4,309$ 4,581$ 4,599$ 5,143$ 6,106$ 6,328$ 5,548$ Public safety 2,770$ 3,368$ 3,603$ 3,539$ 3,588$ 2,913$ 3,969$ 3,766$ 4,290$ 4,656$ Public works 155$ 163$ 169$ 457$ 120$ 164$ 198$ 262$ 306$ 277$ Public health and sanitation 35$ 31$ 36$ 33$ 39$ 42$ 37$ 43$ 46$ 34$ Culture and recreation 2,073$ 2,276$ 1,883$ 2,050$ 2,139$ 1,936$ 2,817$ 3,140$ 1,728$ 1,466$ Planning and development 198$ 95$ 114$ 101$ 240$ 267$ 144$ 153$ 158$ 161$ Operating grants and contibutions 3,197$ 2,798$ 3,145$ 3,381$ 3,752$ 3,163$ 3,415$ 2,907$ 4,495$ 4,200$ Capital grants and contributions -$ 13,875$ 3,091$ -$ -$ -$ -$ -$ -$ -$ Total governmental activities program revenues 12,140$ 26,532$ 16,216$ 13,871$ 14,458$ 13,084$ 15,723$ 16,377$ 17,351$ 16,342$ Business-type activities: Charges for services Solid waste disposal 2,489$ 2,344$ 2,674$ 2,789$ 2,749$ 2,903$ 2,853$ 2,904$ 3,137$ 3,138$ Water and sewer 12,362$ 12,704$ 12,949$ 14,054$ 14,073$ 14,980$ 16,520$ 17,904$ 19,099$ 17,938$ Sanitation 1,814$ 1,881$ 1,988$ 2,112$ 2,172$ 2,292$ 2,310$ 2,334$ 2,462$ 2,514$ Golf course 791$ 799$ 773$ 723$ 751$ 757$ 736$ 636$ 783$ 719$ Operating grants and contributions 368$ -$ -$ -$ -$ -$ 202$ -$ -$ Capital grants and contributions -$ -$ -$ -$ -$ -$ -$ 3,804$ 274$ -$ Total business-type activities program revenues 17,824$ 17,728$ 18,385$ 19,678$ 19,744$ 20,932$ 22,419$ 27,784$ 25,755$ 24,309$ Total primary government program revenues 29,964$ 44,260$ 34,601$ 33,549$ 34,202$ 34,016$ 38,142$ 44,161$ 43,106$ 40,651$ Net (Expense) Revenue Governmental activities (25,012)$ (10,580)$ (23,176)$ (30,046)$ (32,306)$ (38,062)$ (39,405)$(38,835)$ (35,947)$ (36,879)$ Business-type activities 717$ 1,076$ 1,441$ 2,442$ 1,384$ 2,529$ 2,281$ 8,156$ 5,627$ 2,354$ Total primary government net expense (24,296)$ (9,504)$ (21,736)$ (27,604)$ (30,922)$ (35,533)$ (37,124)$(30,679)$ (30,320)$ (34,525)$ General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes, general purpose 6,576$ 6,766$ 7,144$ 7,376$ 7,818$ 9,019$ 7,803$ 7,783$ 8,272$ 8,031$ Property taxes, debt service 1,329$ 1,351$ 1,402$ 1,471$ 1,529$ 1,711$ 2,230$ 2,779$ 2,439$ 2,362$ Motor vehicle taxes 1,057$ 1,079$ 1,105$ 1,131$ 1,195$ 1,135$ 1,145$ 1,150$ 1,153$ 1,200$ Sales tax, general purpose 10,501$ 10,556$ 11,137$ 11,472$ 11,986$ 11,669$ 11,118$ 11,767$ 12,165$ 12,260$ Selective sales tax 2,264$ 2,280$ 2,417$ 2,484$ 2,589$ 3,380$ 4,108$ 4,080$ 4,210$ 4,281$ Other taxes 3,426$ 3,557$ 5,076$ 5,445$ 5,747$ 5,791$ 6,298$ 6,390$ 6,486$ 6,630$ Investment revenues 390$ 544$ 1,123$ 1,255$ 805$ 277$ 81$ 77$ 66$ 67$ Miscellaneous 1,084$ 1,209$ 1,044$ 890$ 812$ 505$ 565$ 872$ 660$ 9,918$ Transfers, net 24$ 114$ 330$ 672$ 60$ 255$ 92$ 199$ 30$ 999$ Total governmental activities 26,651$ 27,456$ 30,779$ 32,195$ 32,540$ 33,742$ 33,440$ 35,097$ 35,481$ 45,748$ Business-type activities: Investment revenues 222$ 328$ 453$ 641$ 300$ 242$ 67$ 84$ 79$ 49$ Miscellaneous 93$ 150$ 217$ 201$ 118$ 352$ 341$ 330$ 434$ 279$ Transfers, net (24)$ (114)$ (330)$ (672)$ (60)$ (255)$ (92)$ (199)$ (30)$ (950)$ Total business-type activities 291$ 364$ 340$ 170$ 358$ 339$ 316$ 215$ 483$ (622)$ Total primary government 26,942$ 27,820$ 31,119$ 32,366$ 32,898$ 34,081$ 33,756$ 35,312$ 35,964$ 45,126$ Change in Net Position Governmental activities 1,638$ 16,877$ 7,602$ 2,150$ 234$ (4,320)$ (5,965)$ (3,738)$ (466)$ 8,869$ Business-type activities 1,008$ 1,440$ 1,780$ 2,612$ 1,742$ 2,868$ 2,597$ 8,371$ 6,110$ 1,732$ Total primary government 2,647$ 18,316$ 9,383$ 4,762$ 1,976$ (1,452)$ (3,368)$ 4,633$ 5,644$ 10,601$ Source: City of Salina Comprehensive Annual Financial Reports, 2004 - 2013 Fiscal Year Schedule 2 City of Salina, Kansas Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in 000's) 96 2004 2005 2006 2007 2008 2009 2010 2012 2013 General Fund Reserved 160$ 421$ 242$ 396$ 274$ 508$ 99$ -$ -$ -$ Nonspendable 90$ 116$ 81$ Restricted -$ -$ -$ Committed -$ -$ -$ Assigned 293$ 540$ 331$ Unreserved/unassigned 7,151$ 6,646$ 7,983$ 6,935$ 5,756$ 4,580$ 3,518$ 3,454$ 3,172$ 3,138$ Total general fund 7,311$ 7,067$ 8,225$ 7,331$ 6,030$ 5,088$ 3,617$ 3,837$ 3,828$ 3,550$ Restatement 156$ Restated fund balance 3,773$ All other governmental funds Reserved 2,610$ 2,369$ 2,469$ 2,796$ 3,951$ 11,092$ 6,413$ -$ -$ -$ Nonspendable -$ -$ -$ Restricted 3,611$ 3,319$ 3,446$ Committed 127$ (516)$ 12,572$ Assigned 4,323$ 4,087$ (1,940)$ Unreserved/unassigned (2,959)$ 156$ 42$ 2,946$ 354$ 4,024$ (1,130)$ -$ -$ -$ Total all other governmental funds (349)$ 2,525$ 2,511$ 5,742$ 4,305$ 15,116$ 5,283$ 8,061$ 6,890$ 14,078$ Note 1: Prior year amounts have not been restated for the implementation of GASB Statement 54 in fiscal year 2011. Source: City of Salina Comprehensive Annual Financial Reports, 2004 - 2013 2011 (Note 1) Fiscal Year Schedule 3 City of Salina, Kansas Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in 000's) 97 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Revenues Taxes (see Schedule 5)25,152$ 25,590$ 28,282$ 29,379$ 30,788$ 32,706$ 32,702$ 33,949$ 34,724$ 34,764$ Intergovernmental 5,659$ 2,785$ 3,127$ 3,363$ 3,741$ 3,153$ 3,404$ 2,901$ 4,487$ 4,192$ Special assessments 1,340$ 1,143$ 1,207$ 1,444$ 1,178$ 1,269$ 1,385$ 1,535$ 2,315$ 1,706$ Licenses and permits 18$ 14$ 18$ 18$ 10$ 10$ 11$ 6$ 8$ 9$ Charges for services 6,364$ 7,225$ 7,099$ 7,131$ 7,415$ 6,767$ 8,934$ 9,730$ 8,484$ 8,536$ Investment revenue 362$ 486$ 1,021$ 983$ 490$ 210$ 64$ 69$ 47$ 40$ Reimbursements 465$ 650$ 406$ 153$ 39$ 140$ 70$ 32$ 36$ 9,015$ Miscellaneous 509$ 501$ 488$ 650$ 597$ 438$ 448$ 599$ 537$ 810$ Total revenues 39,870$ 38,392$ 41,648$ 43,120$ 44,258$ 44,693$ 47,018$ 48,821$ 50,638$ 59,072$ Expenditures General government 2,685$ 2,706$ 2,721$ 2,842$ 3,600$ 3,007$ 3,549$ 3,461$ 3,574$ 4,269$ Public safety 12,724$ 13,673$ 14,309$ 16,175$ 17,945$ 17,883$ 18,229$ 18,118$ 18,564$ 19,155$ Public works 5,157$ 5,508$ 5,712$ 6,171$ 6,593$ 6,643$ 6,634$ 6,569$ 7,004$ 7,220$ Public health and sanitation 981$ 1,067$ 1,178$ 1,245$ 1,276$ 1,353$ 1,332$ 1,330$ 1,343$ 1,344$ Culture and recreation 4,470$ 4,776$ 4,653$ 5,204$ 5,142$ 4,947$ 5,777$ 5,900$ 4,449$ 3,939$ Planning and development 4,025$ 2,607$ 2,588$ 2,707$ 3,377$ 3,269$ 3,609$ 3,344$ 3,256$ 3,293$ Miscellaneous -$ -$ -$ -$ -$ -$ 32$ -$ -$ -$ Capital outlay 10,824$ 8,580$ 10,783$ 7,615$ 10,581$ 17,707$ 18,603$ 9,847$ 7,327$ 13,047$ Debt service Principal 2,611$ 2,534$ 2,625$ 4,806$ 2,812$ 4,667$ 5,959$ 4,411$ 8,592$ 5,038$ Interest 866$ 755$ 1,009$ 1,266$ 1,567$ 1,596$ 2,258$ 2,084$ 2,103$ 1,867$ Deposit to escrow -$ -$ -$ -$ -$ -$ 107$ -$ 92$ -$ Total expenditures 44,343$ 42,208$ 45,578$ 48,031$ 52,892$ 61,072$ 66,089$ 55,064$ 56,304$ 59,172$ Other financing sources (uses) Bonds and notes issued 6,707$ 4,210$ 4,885$ 6,545$ 7,245$ 23,695$ 7,034$ 6,565$ 6,150$ 5,690$ Bond and note premium 80$ 1,369$ 47$ 23$ 60$ 185$ Transfers in 1,066$ 1,399$ 2,245$ 2,349$ 2,823$ 3,617$ 5,076$ 7,994$ 3,488$ 4,907$ Transfers out (1,087)$ (1,365)$ (2,055)$ (1,737)$ (2,763)$ (3,422)$ (4,984)$ (5,692)$ (3,458)$ (3,907)$ Issuance costs (2)$ -$ -$ -$ -$ -$ -$ -$ -$ Other (5,389)$ -$ -$ 91$ -$ -$ -$ 156$ -$ -$ Total other financing sources (uses)1,296$ 4,244$ 5,075$ 7,248$ 7,385$ 25,259$ 7,173$ 9,046$ 6,240$ 6,875$ Net change in fund balance (3,177)$ 428$ 1,145$ 2,337$ (1,250)$ 8,880$ (11,898)$2,803$ 574$ 6,775$ Debt service as a percentage of non-capital expenditures 12%11%12%18%12%17%21%17%28%18% Source: City of Salina Comprehensive Annual Financial Reports, 2004 - 2013 Schedule 4 Fiscal Year (modified accrual basis of accounting) (in 000's) City of Salina, Kansas Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years 98 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Real estate 7,677$ 7,904$ 8,373$ 8,662$ 9,084$ 9,971$ 9,756$ 10,288$ 10,466$ 10,145$ Delinquent 228$ 213$ 173$ 185$ 263$ 760$ 278$ 274$ 245$ 248$ Motor vehicle 1,057$ 1,079$ 1,105$ 1,131$ 1,120$ 1,135$ 1,145$ 1,150$ 1,153$ 1,200$ General sales 10,501$ 10,556$ 11,137$ 11,472$ 11,986$ 11,669$ 11,117$ 11,767$ 12,165$ 12,260$ Selective sales 2,264$ 2,280$ 2,417$ 2,484$ 2,589$ 3,380$ 4,108$ 4,080$ 4,210$ 4,281$ Other taxes 3,426$ 3,557$ 5,076$ 5,445$ 5,747$ 5,791$ 6,298$ 6,390$ 6,485$ 6,630$ Total taxes 25,152$ 25,590$ 28,282$ 29,379$ 30,788$ 32,706$ 32,702$ 33,949$ 34,724$ 34,764$ Source: City of Salina Comprehensive Annual Financial Reports, 2004 - 2013 Last Ten Fiscal Years (modified accrual basis of accounting) (in 000's) Fiscal Year Schedule 5 City of Salina, Kansas Tax Revenues by Source, Governmental Funds 99 Assessed Value Fiscal (Budget) Year Real Estate Personal Property State Assessed Direct Rate, Excluding Motor Vehicles Tax Rate Motor Vehicle (Note 1) Total, Taxable Assessed Value Estimated Total Market Value (Note 2) Ratio of Assessed Value to Est. Market 1 277,456,813 35,386,133 15,750,780 328,593,726 24.013 46,679,982 375,273,018 2,368,264,683 15.85 1 282,517,284 35,410,526 17,334,372 335,262,182 24.063 48,687,121 383,949,303 2,529,377,135 15.18 1 296,537,399 38,662,356 17,624,030 352,823,785 23.999 49,367,870 402,191,655 2,229,131,633 18.04 2007 321,695,326 39,691,690 16,530,171 377,917,187 23.789 50,551,299 428,468,486 2,416,543,103 17.73 2008 342,045,389 35,089,042 15,594,056 392,728,487 23.959 50,548,706 443,277,193 2,612,229,468 16.97 2009 356,678,712 28,373,980 14,929,456 399,982,148 25.886 51,351,656 451,333,804 2,914,775,730 15.48 2010 358,979,211 24,760,806 13,730,609 397,470,626 25.855 50,330,252 447,800,878 2,893,359,541 15.48 2011 367,750,803 19,918,188 14,685,585 402,354,576 26.022 47,406,062 449,760,638 2,869,531,746 15.67 2012 369,416,422 18,654,394 15,779,466 403,850,282 26.272 47,553,744 451,404,026 2,884,188,981 15.65 2013 370,390,092 17,769,120 16,948,264 405,107,476 26.190 48,882,411 453,989,887 2,889,385,914 15.71 Note 1: The tax rate for motor vehicles is set based on the average countywide tax rate. The City of Salina then receives a share of that based on relative tax effort. Note 3: The Direct rate is expressed in dollars per thousand dollars of assessed value. Source: Saline County Clerk100Note 2: The estimated market value excludes the value of the State assessed properties. Market value information is not available for those properties. However, state assessed property is generally assessed at 33% of market value, except for railroads, which are assessed at 25% of market value. Schedule 6 City of Salina, Kansas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years City of Salina Saline County USD 305 (2)Other (1)Total Fiscal (Budget) Year Operating Millage Debt Serv ice Millage Total City Millage Operating Millage Debt Serv ice Millage Total County Millage Operating Millage Debt Serv ice Millage Total USD Millage Other 2004 20.017 3.996 24.013 28.081 28.081 38.288 18.344 56.632 9.848 118.574 2005 20.055 4.008 24.063 28.874 28.874 42.175 17.491 59.666 10.984 123.587 2006 20.001 3.989 23.990 28.579 28.579 40.136 15.046 55.182 10.960 118.711 2007 19.835 3.954 23.789 27.955 27.955 41.903 13.349 55.252 10.726 117.722 2008 20.047 3.912 23.959 27.435 27.435 42.761 12.229 54.990 10.775 117.159 2009 21.749 4.137 25.886 29.347 29.347 46.339 12.208 58.547 10.971 124.751 2010 20.082 5.773 25.855 31.303 31.303 45.341 13.155 58.496 12.401 128.055 2011 19.236 6.786 26.022 31.432 31.432 45.818 13.095 58.913 12.131 128.498 2012 20.326 5.946 26.272 32.576 32.576 47.127 11.693 58.820 11.989 129.657 2013 20.242 5.948 26.190 34.823 34.823 47.133 11.516 58.649 12.135 131.797 Source: Saline County Clerk (2) A small portion of Salina is covered by USD 306, USD 307, or USD 400. Total Tax Rates are different in the areas covered by these jurisdictions.101(1) The "Other" column includes the State of Kansas, the Salina Airport Authority, and the Salina Public Library. Beginning in 2005, this also includes Kansas State Extension District #3. Schedule 7 City of Salina, Kansas Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $1,000 of assessed value) Taxpayer Type of Business Assessed Valuation % of Total Valuation Rank Assessed Valuation % of Total Valuation Rank Westar Energy (W estern Resources)Utility 7,687,247$ 2.00%1 9,256,960$ 2.04%1 Schwan's Logistics LLC (Sales)Pizza Manufacturing 7,120,122 1.85%2 8,007,991 1.76%2 Warmack, Salina Partnership (IPFOA) (Now Garrison Salina)Retail Shopping Mall 5,912,488 1.54%3 4,950,001 1.09%3 Salina Regional Health Center Hospital and Medical Offices 3,788,081 0.99%6 4,768,349 1.05%4 Kansas Gas Service Utility 3,016,460 0.79%7 3,590,817 0.79%5 Gateway Properties Shopping Mall (Midstate)3,534,018 0.78%6 Wal-Mart Stores, Inc.Discount Retail Stores 3,978,931 1.04%5 3,458,961 0.76%7 Menard Inc.Home Improvement 2,629,399 0.58%8 Great Plains Manufacturing Manufacturing 2,163,465 0.56%10 2,404,823 0.53%9 Dillon's Grocery Chain 2,202,265 0.57%9 2,396,753 0.53%10 Southwestern Bell Telephone Utility 5,086,092 1.32%4 Lowe's Home Center Building supply Center 2,218,361 0.58%8 Combined Valuation of the Ten Largest Taxpayers 35,486,265$ 44,998,072$ City Valuation 383,949,303$ 453,989,887$ Percent of Total City Assessed Valuation (1)11.24%7.87% Source: Saline County Clerk's Office102 2013 (2012 Assessed Value)2004 (2003 Assessed Value) Schedule 8 City of Salina, Kansas Principal Property Taxpayers Current Year and Ten Years Ago Fiscal (Budget) Year Taxes Lev ied for the fiscal year Amount Percentage Delinquent Collections (1)Amount Percentage of levy 2004 7,890,387 7,677,415 97.3%227,578 7,904,993 100.2% 2005 8,067,300 7,904,231 98.0%382,236 8,286,467 102.7% 2006 8,467,343 8,373,363 98.9%173,093 8,546,456 100.9% 2007 8,990,268 8,661,700 96.3%185,488 8,847,188 98.4% 2008 9,409,338 9,083,917 96.5%262,511 9,346,428 99.3% 2009 10,354,161 9,923,959 95.8%759,764 10,683,723 103.2% 2010 10,276,905 9,704,937 94.4%278,656 9,983,593 97.1% 2011 10,415,491 10,287,770 98.8%273,843 10,561,613 101.4% 2012 10,570,420 10,411,299 98.5%245,086 10,656,385 100.8% 2013 10,576,448 10,145,404 95.9%248,184 10,393,588 98.3% Source: Saline County Treasurer's Office (1) Delinquent collections are reported in the aggregate for all previous years. Data is not currently av ailable for "collected in subsequent years" Current Year Tax Distributions Total Tax Distributions Schedule 9 City of Salina, Kansas Property Tax Levies and Distributions Last Ten Fiscal Years 103 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 City Direct Tax Rate General 0.50%0.50%0.50%0.50%0.50%0.50%0.50%0.50%0.50%0.50% Special purpose 0.25%0.25%0.25%0.25%0.25%0.25%/0.40%0.40%0.40%0.40%0.40% County-wide Tax Rate 1.00%1.00%1.00%1.00%1.00%1.00%1.00%1.00%1.00%1.00% Portion of County-wide tax allocated to City (July Percentage)62.20%61.60%61.81%61.92%62.31%62.46%61.58%63.34%61.72%60.86% Source: Kansas Department of Revenue104 Schedule 10 City of Salina, Kansas Direct Sales Rate by Taxing Entity Last Ten Fiscal Years In November 2008, the voters approved an increase in the Special Purpose Tax rate from .25% to .40%, to be effective April 1, 2009. In addition to the direct tax, the City receives a portion of the Countywide sales tax, based on a formula distribution. The formula is based on property tax effort and population, and is adjusted in January and July of each year. Fiscal Year Last Ten Fiscal Years Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Rate Class Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Residential 17,432 1,127,078 17,576 1,187,130 17,637 1,164,293 17,750 1,080,015 17,813 994,875 17,792 1,043,774 17,838 1,127,864 17,899 1,194,629 17,893 1,225,931 17,966 989,788 Commercial 1,542 346,251 1,580 358,659 1,586 357,488 1,592 331,440 1,591 333,720 1,589 339,507 1,568 350,633 1,574 372,499 1,565 38,547 1,579 348,968 Industrial 43 203,977 43 181,325 43 180,900 46 237,698 48 203,491 46 152,910 44 183,166 44 180,277 42 174,595 40 182,529 Government 126 66,623 146 102,994 150 74,768 151 58,568 152 68,366 104 41,793 85 42,714 97 55,910 99 54,618 99 46,484 Apartment 198 56,251 195 56,359 187 56,340 184 55,500 182 64,703 182 71,503 172 71,121 168 72,562 169 70,263 168 67,155 Schools 82 43,571 81 41,187 81 44,925 80 36,953 81 38,835 84 39,815 85 46,386 85 53,679 81 57,027 84 44,187 Industrial special 1 39,187 1 39,551 1 37,508 1 35,813 1 42,574 1 32,934 1 44,457 1 44,051 1 40,448 1 20,439 Consumed in production 22 32,324 21 31,570 19 28,583 18 26,070 18 28,699 18 26,223 17 32,604 13 22,728 12 19,266 12 18,665 Rural water 1 27,277 1 28,889 1 28,395 1 23,963 1 24,798 1 22,824 1 23,854 1 28,621 1 25,930 1 21,530 Hospitals 14 22,884 15 17,126 15 13,088 15 13,755 15 18,723 13 20,488 12 18,503 10 15,674 10 17,896 9 26,482 Religious/non profit 40 9,362 40 9,521 39 8,888 41 7,463 40 6,913 39 7,312 39 5,569 38 5,690 38 5,399 37 4,810 Other taxable deductions 6 10,690 5 8,995 5 6,630 5 9,975 4 8,023 - - - - - 699 0 - - 0 Engineering studies 8 9,339 8 6,283 8 6,135 8 5,805 8 5,327 8 6,176 8 5,266 7 3,754 8 6,104 8 6,822 Providing taxable service 2 5,562 2 5,677 2 5,850 2 5,010 2 4,663 2 4,869 2 5,494 2 4,827 2 6,118 2 3,495 Sale of component parts 8 5,265 8 5,473 8 5,280 8 5,040 8 5,748 8 5,200 8 5,851 8 5,454 8 5,726 6 5,972 Fire hydrant 3 2,887 4 5,232 3 1,598 2 495 3 1,147 2 1,032 3 2,424 3 1,389 4 2,533 3 1,922 Industrial consumed in production 3 2,206 3 2,350 3 3,510 3 3,593 3 3,230 3 2,314 3 4,083 3 3,260 3 3,543 3 4,417 Sales of farm equipment 1 131 1 213 1 308 1 180 1 256 1 205 1 213 1 56 1 83 1 107 19,531 2,010,864 19,730 2,088,534 19,789 2,024,483 19,908 1,937,333 19,971 1,854,091 19,893 1,818,879 19,887 1,970,202 19,954 2,065,759 19,937 2,100,966 20,018 1,793,771 Water Rate Schedule: Monthly meter charge (5/8")3.05$ 3.21$ 3.38$ $3.57 3.75$ 4.44$ 4.51$ $4.60 $4.74 $4.88 Commodity charge (per 000 gal.): 0 - 2000 gal.2.13$ 2.16$ 2.21$ $2.42 2.54$ 2.34$ 2.55$ $3.77 $3.88 $4.04 2001 - 10,000 gal 1.91$ 1.94$ 1.99$ $2.20 2.31$ Over 10,000 gal.1.71$ 1.73$ 1.77$ $1.97 2.07$ Excess use charge 4.68$ 5.10$ $7.54 $7.76 $8.08 Wastewater Rate Schedule: Monthly base charge 2.89$ 3.03$ 3.18$ $3.34 3.51$ 6.31$ 6.42$ $6.57 $6.77 $6.97 Unit cost (per 000 gal.):2.11$ 2.23$ 2.36$ $2.50 2.63$ 2.88$ 3.08$ $4.48 $4.61 $4.79 Water sold is expressed in thousands of gallons. Number of Accounts billed is the annual number of billings for each class divided by 12. Monthly meter charge increases with the size of the meter. Residential Wastewater is calculated based on Winter Quarter water consumption. Other accounts are based on monthly water consumption. 2008 Water Consumption Rate Structure changed from a decreasing tier structure to one rate and Excess Use Charge which is double the consumption rate **In 2011, basis for measurement was switched from cubic feet to gallons. The adjustments and conversions necessary for this table have not yet been completed. Source: City of Salina Water Customer Accounting Office. 2004 20132011201020092007 105Schedule 11 City of Salina, Kansas Water Sales by Class of Customer 20062005 20122008 Fiscal Year General Obligation Bonds Capital Lease Temporary Notes General Obligation Bonds Water Rev enue Bonds Loans Payable Total Primary Gov ernment Percentage of Personal Income Per Capita 2004 19,257,270 41,150 6,875,000 7,400,295 5,615,000 7,777,264 46,965,979 3.3%1,024.00 2005 21,202,921 20,944 2,700,000 6,258,456 4,990,000 7,460,602 42,632,923 2.9%927.53 2006 21,497,408 - 9,200,000 5,175,780 4,350,000 7,130,852 47,354,040 2.9%1,030.42 2007 25,436,632 - 7,625,000 3,888,368 3,710,000 6,786,743 47,446,743 2.7%1,010.80 2008 29,869,930 - 5,005,000 2,780,069 3,030,000 6,428,759 47,113,758 2.5%1,014.12 2009 52,067,590 - - 2,320,000 2,320,000 5,862,516 62,570,106 3.5%1,346.09 2010 53,120,952 - 2,500,000 8,614,576 1,580,000 - 65,815,528 3.8%1,425.20 2011 55,225,670 - 3,400,000 7,417,907 16,193,925 - 82,237,502 4.3%1,723.80 2012 49,109,575 - 1,485,000 9,613,926 15,850,228 - 76,058,729 3.8%1,587.53 2013 49,631,797 - 3,800,000 8,519,799 15,226,532 - 77,178,128 3.9%1,606.37 Source: City of Salina Comprehensive Annual Financial Reports, 2004 - 2013106Governmental Activities Business-Type Activ ities Schedule 12 City of Salina, Kansas Ratio of Outstanding Debt by Type Last Ten Fiscal Years Fiscal Year General Obligation Bonds Capital Lease Temporary Notes Total Less Debt Serv ice Fund Net General Bonded Debt Percentage of Actual Taxable Value of Per Capita 2004 26,657,565 41,150 6,875,000 33,573,715 1,317,062 32,256,653 8.6%703.30 2005 27,461,377 20,944 2,700,000 30,182,321 1,407,529 28,774,792 7.5%626.03 2006 26,673,188 - 9,200,000 35,873,188 1,494,320 34,378,868 8.5%748.08 2007 29,325,000 - 7,625,000 36,950,000 1,210,457 35,739,543 8.3%761.39 2008 32,649,999 - 5,005,000 37,654,999 792,744 36,862,255 8.3%793.45 2009 54,387,590 - - 54,387,590 735,291 53,652,299 11.9%1,154.23 2010 61,735,528 - 2,500,000 64,235,528 571,873 63,663,655 14.2%1,378.60 2011 62,443,577 3,400,000 65,843,577 1,236,026 64,607,551 14.4%1,354.26 2012 58,723,501 - 1,485,000 60,208,501 582,412 59,626,089 13.2%1,244.54 2013 58,151,596 - 3,800,000 61,951,596 707,763 61,243,833 13.5%1,274.72 Source: City of Salina Comprehensive Annual Financial Reports, 2004 - 2013 General Bonded Debt Outstanding Schedule 13 City of Salina, Kansas Ratio of Net General Bonded Debt Outstanding Last Ten Fiscal Years 107 City of Salina, Kansas Direct and Overlapping Governmental Activities Debt Jurisdiction Net General Obligation Bonded Debt Outstanding Percentage Applicable to City of Salina Amount Applicable to the City of Salina Direct: City of Salina 61,243,833$ 100%61,243,833$ Overlapping: Salina Airport Authority 24,185,000 100%24,185,000 Saline County 240,733 75%181,320 USD 305 141,885,000 94%132,671,908 Total Overlapping Debt 166,310,733 157,038,228 Total Direct and Overlapping Debt 227,554,566 218,282,061 Per Capita Direct and Overlapping debt 4,543.28$ Source: Saline County Clerk Schedule 14 Percentage of debt applicable to the City of Salina is based on the proportion that the assessed valuation of the City of Salina bears to the assessed valuation of the overlapping entity. As of December 31, 2013 108 Assessed Valuation:453,989,887$ Debt Limit (30% of Assessed Value)136,196,966 Debt Applicable to limit: Total Bonded Debt 77,178,128 Less GO Debt Attributable to Exempt Purposes 8,519,799 Less Revenue Bonds 15,226,532 Less Fund Balance designated for Debt Service 707,763 Total Debt Applicable to Limitation 52,724,034 Legal debt margin 83,472,932 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Debt Limit 112,581,905$ 115,184,791$ 120,657,497$ 128,539,768$133,224,043$ 135,400,141$ 134,340,263$ 134,928,191$ 135,421,208$ 136,196,966$ Total net debt applicable to limit 32,485,503 28,774,792 28,774,792 35,739,543 36,862,255 53,652,299 58,411,185 57,747,032 49,309,445 52,724,034 Legal debt margin 80,096,402 86,409,999 91,882,705 92,800,225 96,361,788 81,747,842 75,929,078 77,181,159 86,111,763 83,472,932 Total net debt applicable to the limit as a percentage of debt limit 29%25%24%28%28%40%43%43%36%39%109Fiscal Year Legal Debt Margin Calculation for 2013 Schedule 15 City of Salina, Kansas Legal Debt Margin Last Ten Fiscal Years Fiscal Year Utility Service Charges Less: Operating Expenses Net Av ailable Rev enue Principal Interest Cov erage 2004 12,361,877 10,654,249 1,707,628 904,935 542,722 118% 2005 12,703,953 10,468,771 2,235,182 941,662 542,722 151% 2006 12,949,169 10,894,968 2,054,201 969,748 461,470 144% 2007 14,054,466 11,545,842 2,508,624 983,479 589,288 160% 2008 14,072,513 12,754,057 1,318,456 1,038,000 515,459 85% 2009 14,980,874 12,524,390 2,456,484 1,276,243 455,294 142% 2010 16,520,055 13,571,098 2,948,957 740,000 91,450 355% 2011 17,905,056 12,963,891 4,941,165 1,580,000 496,760 238% 2012 19,098,626 13,963,941 5,134,685 340,000 596,992 548% 2013 17,938,288 14,524,148 3,414,140 620,000 590,191 282% Source: City of Salina Comprehensive Annual Financial Reports, 2004 - 2013 Water/Sewer Rev enue Bonds Schedule 16 City of Salina, Kansas Pledged Rev enue Cov erage Last Ten Fiscal Years 110 Fiscal Year Population Per Capita Personal Income (Saline County) Personal Income, Salina (interpolated) Unemployment Rate Labor Force, Saline County 2002 45,918 28,174 1,293,693,732$ 4.1%29,989 2003 46,023 29,755 1,369,414,365$ 4.6%30,086 2004 45,865 31,175 1,429,841,375$ 4.8%30,600 2005 45,964 32,387 1,488,636,068$ 4.4%30,358 2006 45,956 35,759 1,643,340,604$ 3.7%30,539 2007 46,940 36,781 1,726,500,140$ 3.3%30,843 2008 46,458 40,675 1,889,679,150$ 3.9%29,222 2009 46,483 38,204 1,775,836,532$ 5.7%26,806 2010 46,180 37,978 1,753,824,040$ 6.4%26,155 2011 47,707 39,910 1,903,986,370$ 6.3%26,556 2012 47,910 41,842 2,004,650,220$ 5.1%30,206 2013 48,045 41,070 1,973,208,150$ 4.3%30,394 Sources: Population: Kansas Division of the Budget. Personal income for Salina is derived from the population and per capita personal income for Saline County Per Capita Personal income as reported by the Bureau of Economic Analysis, as of 05/30/2014 2013 Per Capita Personal Income projected Schedule 17 City of Salina, Kansas Demographic and Economic Statistics Last Ten Fiscal Years 111 Employer Type of Business Employees Rank Percentage of Labor Force Employees Rank Percentag e of Labor Force Schwan's Global Supply Chain Frozen Pizza Manufacturing 2,000 1 6.8% 1,800 1 6.2% USD # 305 Public School System 935 3 3.2% 1,659 2 5.7% Salina Regional Health Center Health Care 1,082 2 3.7% 1,300 3 4.4% Exide Technologies Automotive Battery Manufacturer 800 4 2.7%750 4 2.6% Phiilips Lighting Co.Fluorescent Lamps 600 6 2.1%490 5 1.7% City of Salina City Government 471 7 1.6%465 6 1.6% Walmart Retail 421 7 1.4% Dillon Stores Retail (Grocery)343 8 1.2% Solomon Corp Electrical Equipment 324 9 1.1% Great Plains Manufacturing Agrcultural and Landscaping Equipment 650 5 2.2%258 10 0.9% El Dorado National Busses/Recreational Vehicles 255 11 0.9% OCCK Assembly 263 10 0.9% Raytheon Aircraft Aircraft Manufacturing 300 8 1.0% Lock/line Cellular Phone Insurance 300 8 1.0% Total 7,656 26.2% 7,810 26.7% Source: Salina Chamber of Commerce 2004 2013 Schedule 18 City of Salina, Kansas Principal Employers Current Year and Nine Years Ago 112 GOVERNMENTAL AUDIT SECTION This page intentionally left blank. Federal Federal Grantor/Pass-Through CFDA Grantor/Program Title Number Revenues Expenditures Department of Housing and Urban Development Fair Housing Assistance Program 14.401 62,740$ 66,260$ Passed through Kansas Housing Resources Corporation Emergency Solutions Grant 14.231 55,763 55,763 HOME Investment Partnerships Program 14.239 218,400 218,400 Total Department of Housing and Urban Development 336,903 340,423 Department of Justice Equitable Sharing Program 16.922 - 106,163 Total Department of Justice - 106,163 Department of Transportation Passed Through the Kansas Department of Transportation: State and Community Highway Safety 20.600 5,519 5,519 Alcohol Traffic Safety and Drunk Driving Prevention Incentive Grant 20.601 6,595 6,595 Occupant Protection Incentive Grant 20.602 7,156 7,156 Total Department of Transportation 19,270 19,270 Environmental Protection Agency Community Action for a Renewed Environment (CARE) Program 66.035 30,938 61,146 Congressionally Mandated Projects 66.202 243,000 243,000 Passed Through the Kansas Department of Health and Environment Capitalization Grants for Drinking W ater State Revolving Funds 66.468 - 3,144,283 Total Environmental Protection Agency 273,938 3,448,429 Total Expenditures of Federal Awards 630,111$ 3,914,285$ SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS CITY OF SALINA, KANSAS For the Year Ended December 31, 2013 See independent auditor's report on the financial statements and notes to the schedule of expenditures of federal awards. 113 114 CITY OF SALINA, KANSAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2013 1.General The accompanying Schedule of Expenditures of Federal Awards presents the expenditures of all federal financial assistance programs of the City of Salina, Kansas. All expenditures of federal financial assistance received directly from federal agencies as well as federal financial assistance passed through other governmental agencies are included on the schedule. 2.Basis of Accounting The accompanying Schedule of Expenditures of Federal Awards is presented in accordance with accounting principles generally accepted in the United States of America. 115 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2013 Section I -Summary of Auditor’s Results Financial Statements Type of auditor’s report issued:Unmodified Internal control over financial reporting: Material weakness(es) identified?Yes X No Significant deficiency(ies) identified that are not considered to be material weaknesses?Yes X None reported Noncompliance material to financial statements noted?Yes X No Federal Awards Internal control over major programs: Material weakness(es) identified?Yes X No Significant deficiency(ies) identified that are not considered to be material weaknesses?Yes X None reported Type of auditor’s report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133?Yes X No Identification of major programs: CFDA Number(s)Name of Federal Program or Cluster 14.239 66.202 66.468 HOME Investment Partnerships Program Congressionally Mandated Projects Capitalization Grants for Drinking W ater State Revolving Funds Dollar threshold used to distinguish between type A and type B programs:$300,000 Auditee qualified as low-risk auditee?Yes X No 116 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS (Continued) For the Year Ended December 31, 2013 Section II -Financial Statement Findings None Noted Section III -Federal Award Findings and Questioned Costs None Noted www.mizehouser.com  mhco@mizehouser.com 534 S Kansas Ave, Suite 700  Topeka, KS 66603-3465  785.233.0536 p  785.233.1078 f 534 S Kansas Ave, Suite 400  Topeka, KS 66603-3454  785.234.5573 p  785.234.1037 f 7101 College Blvd, Suite 900  Overland Park, KS 66210-1984  913.451.1882 p  913.451.2211 f 211 E Eighth Suite A Lawrence, KS 66044-2771  785.842.8844 p  785.842.9049 f 117 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH “GOVERNMENT AUDITING STANDARDS” Mayor and City Commissioners City of Salina, Kansas We have audited, in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and the Kansas Municipal Audit and Accounting, the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, (the City) as of and for the year ended December 31, 2013, and the related notes to the financial statements, which collectively comprise the City’s financial statements, and have issued our report thereon dated September 15, 2014. Our report includes a reference to other auditors who audited the financial statements of the Salina Airport Authority and the Housing Authority of the City of Salina, as described in our report on the City of Salina’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal controls exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the 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 charge with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 118 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. However, we noted certain other matters that we reported to management of the City in a separate letter dated September 15, 2014. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Certified Public Accountants Lawrence, Kansas September 15, 2014 www.mizehouser.com mhco@mizehouser.com 534 S Kansas Ave, Suite 700 Topeka, KS 66603-3465 785.233.0536 p 785.233.1078 f 534 S Kansas Ave, Suite 400 Topeka, KS 66603-3454 785.234.5573 p 785.234.1037 f 7101 College Blvd, Suite 900 Overland Park, KS 66210-1984 913.451.1882 p 913.451.2211 f 211 E Eighth Suite ALawrence, KS 66044-2771 785.842.8844 p 785.842.9049 f 119 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Mayor and City Commissioners City of Salina, Kansas Report on Compliance for Each Major Federal Program We have audited the compliance of the City of Salina, Kansas, (the City) with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended December 31, 2013. The City’s major federal financial programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and the Kansas Municipal Audit and Accounting Guide. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination on the City’s compliance. Opinion on Each Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2013. 120 Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program in order to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charge with governance. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. Certified Public Accountants Lawrence, Kansas September 15, 2014