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Audit - 2014COMPREHENSIVE 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, 2014 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, 2014 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 Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Non-GAAP Basis) General Fund 20 -22 Tourism and Convention Fund 23 Special Gas Fund 24 Sales Tax Capital Fund 25 Statement of Net Position -Proprietary Funds 26 Statement of Revenues, Expenses,and Changes in Fund Net Position -Proprietary Funds 27 Statement of Cash Flows -Proprietary Funds 28 -29 Statement of Assets and Liabilities -Agency Funds 30 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 TABLE OF CONTENTS -CONTINUED Page FINANCIAL SECTION -CONTINUED Notes to the Basic Financial Statements 31 -58 Required Supplementary Information Schedule of Funding Progress and Schedule of Employer Contributions 59 Combining Statements and Individual Fund Schedules Combining Statements -Nonmajor Funds Fund Descriptions 60 -61 Combining Balance Sheet -Nonmajor Governmental Funds 62 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds 63 Combining Balance Sheet -Nonmajor Special Revenue Funds 64 -65 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Special Revenue Funds 66 -67 Combining Balance Sheet -Nonmajor Permanent Funds 68 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Permanent Funds 69 Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GAAP Basis): Bicentennial Center Fund 70 Business Improvement City Fund 71 Neighborhood Park Fund 72 Special Parks and Recreation Fund 73 Special Alcohol Fund 74 Sales Tax Economic Development Fund 75 Fair Housing Fund 76 Arts & Humanities Fund 77 Debt Service Fund 78 Solid W aste Disposal Fund 79 Water and Sewer Fund 80 Sanitation Fund 81 Golf Course Fund 82 Risk Management Fund 83 Workers’ Compensation Reserve Fund 84 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 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 85 Central Garage Fund 86 Information Systems Fund 87 Internal Service Fund Descriptions 88 Combining Statement of Net Position -Internal Service Funds 89 Combining Statement of Revenues, Expenses, and Changes in Net Position -Internal Service Funds 90 Combining Statement of Cash Flows -Internal Service Funds 91 -92 Fiduciary Fund Descriptions -Agency Funds 93 Combining Balance Sheet -Agency Funds 94 Combining Statement of Changes in Assets and Liabilities -Agency Funds 95 Schedule STATISTICAL SECTION Net Position by Component -Last Ten Years 1 96 Changes in Net Position -Last Ten Years 2 97 Fund Balances, Governmental Fund -Last Ten Years 3 98 Changes in Fund Balances, Governmental Funds -Last Ten Years 4 99 Tax Revenues by Source, Governmental Funds -Last Ten Years 5 100 Assessed and Estimated Actual Value of Taxable Property –Last Ten Years 6 101 Direct and Overlapping Property Tax Rates –Last Ten Years 7 102 Principal Property Tax Payers 8 103 Property Tax Levies and Distributions 9 104 Direct Sales Rate by Taxing Entity 10 105 Water Sales by Class of Customer 11 106 Ratio of Outstanding Debt by Type 12 107 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2014 TABLE OF CONTENTS -CONTINUED Schedule Page STATISTICAL SECTION -CONTINUED Ratio of Net General Bonded Debt Outstanding 13 108 Direct and Overlapping Governmental Activities Debt 14 109 Legal Debt Margin 15 110 Pledged Revenue Coverage 16 111 Demographic and Economic Statistics 17 112 Principal Employers 18 113 GOVERNMENTAL AUDIT SECTION Schedule of Expenditures of Federal Awards 114 Notes to Schedule of Expenditures of Federal Awards 115 Schedule of Findings and Questioned Costs 116-117 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”118 -119 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance required by OMB Circular A-133 120 -121 INTRODUCTORY SECTION i DEPARTMENT OF FINANCE TELEPHONE (785) 309-5735 AND ADMINISTRATION FA X (785) 309-5738 Rodney Franz, Director TDD (785) 309-5747 300 W est Ash, P.O. Box 736 E-MAIL rod.franz@salina.org Salina, Kansas 67402-0736 Website: www.salina-ks.gov October 22, 2015 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, 2014, 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. W e 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. The objective of budgetary controls is to ensure compliance with legal provisions em bodied 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, 2014 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. ii 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 its 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 47,867. 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 a joint venture with Saline County 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 2015. 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 2014 several major projects were initiated, including the reconstruction of East Iron Avenue, reconstruction of the Ohio and North Street and the 9th and Cloud Intersections, the final phase of remodeling on Fire Station #1, construction of an additional landfill cell, and continuation of water system distribution improvements and the next phase of Bicentennial Center remodeling. Solid Waste disposal is becoming a stable operation, with 90,000 to 100,000 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 recyc ling 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. iii For several years McPherson County has used the Salina solid waste facility to dispose of a portion of their solid waste stream. This provided approximately 20,000 tons per year and a concomitant revenue stream. During 2014, they opened their own disposal facility, and as a result, the Salina facility has experienced a reduction in tonnage and associated revenues. Several adjustments to operations have been made in order to accommodate these changes. 2014 saw the dissolution of the City-County Health Department. As a result, the City of Salina terminated contributions to the consolidated operation, saving $1,018,031 in expenditures (budgetary basis) and absorbed the cost of operating the Animal Control operations, including operation of the Animal Shelter. This added $505,232 in expenditures (budgetary basis) to the General Fund, as well as 6 staff positions. Addressing fiduciary pressures generated by a recessionary economy has also been a challenge. The primary approach has been to reduce staffing through attrition, after careful evaluation of each vacancy. By the end of 2014, full time staffing had been reduced from 511 to 473. The freeze on salaries was removed in 2011, with an allowance granted for an average 2% merit review. However, general adjustments to the pay plan for cost of living changes have not been resumed. Capital Improvement Planning The City's Capital Improvement Plan (CIP) consists of two components. One component consists of “routine” capital—including vehicle and equipment replacement, technology replacement, building repair and improvement, routine pavement maintenance activity, utility system enhancements and similar items. The amount of funding for these projects may fluctuate based on needs and funding availability, however, planned amounts are allocated over a multi-year period. Source of funding for routine capital is current cash resources from the fund appropriate to the nature of the purchase. The second component of the CIP includes major projects that typically require issuance of bonds or notes, although these projects may also be supplemented with available cash and grant financing. The plan is updated each year after an extensive evaluation of the demands on future financial resources. The Capital Improvement program is scheduled for a major revision as the result of the sales tax to be used for that purpose. Construction Initiated*: 2015 2016 2017 2018 2019 General Fund 550,000$ 550,000$ 550,000$ 550,000$ 550,000$ Sales Tax* 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000 Special Park Fund 150,000 150,000 150,000 150,000 150,000 Gas Tax Fund 1,300,000 1,300,000 1,300,000 1,300,000 1,300,000 Solid Waste Fund 50,000 50,000 50,000 50,000 50,000 Sanitation Fund 160,000 160,000 160,000 160,000 160,000 Water & Wastewater Fund 2,500,000 4,500,000 2,500,000 2,500,000 2,500,000 General Obligation Bonds 11,700,000 1,400,000 1,140,000 1,600,000 800,000 Revenue Bonds 11,100,000 5,600,000 4,000,000 4,000,000 4,000,000 Other Sources 50,000 50,000 50,000 50,000 50,000 Total 30,060,000$ 16,260,000$ 12,400,000$ 12,860,000$ 12,060,000$ *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 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 reconciliation. Finally, preparation of this report would not have been possible without the support of the City Commission. Sincerely, City of Salina CITIZENS CITY COMMISSION Jon Blanchard, Mayor Kaye J. Crawford Karl Ryan Trent Davis Randall Hardy 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 vacant Engineering Public Services Streets Traffic Control Flood Control Sanitation Solid Waste Central Garage Fire Administration Fire Suppression Fire Prevention EMS Water Plant Division Wastewater Plant Division Utility Division Water Distribution Wastewater Collection Administration Patrol Division Support Division Investigative Division Finance/Administration Rod Franz City Clerk Water Customer Accounting Finance Smoky Hill Museum Arts & Humanities Brad Anderson Human Resources Natalie Fischer T/Public Information/Organizational Chart-Publisher 4/20/15 Parks & Recreation Dion Louthan Utilities Martha Tasker Municipal Court Building Services Neighborhood Services Planning & Zoning Parks Division Recreation Division Golf Course Facility Maintenance Animal Services Bicentennial Center Continuous Process Improvement Bryon Johnson * Contract Position Human Relations Community Engagement vi City of Salina, Kansas List of Principal Officials City Commission Jon Blanchard, Mayor Kaye J. Crawford, Vice Mayor Trent Davis, Commissioner Randall Hardy, Commissioner Karl Ryan, 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 Nelson, Chief of Police Larry Mullikin, Fire Chief Daniel Stack, City Engineer James Teutsch, Interim Director of Public Works Martha Tasker, Director of Utilities Dion Louthan, Director of Parks and Recreation Gary Hobbie, Director of Development Services Brad Anderson, Director of Arts and Humanities Gina McDonald, Director of Human Relations FINANCIAL SECTION 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, 2014, 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 $48,066,222 as of December 31, 2014 and total revenues of $4,754,345 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $7,598,529 as of June 30, 2014 and total revenues of $2,136,062 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. 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, 2014, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General, Tourism and Convention, Special Gas and Sales Tax Capital Funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. 2 Emphasis of Matter Prior Period Restatement As discussed in Note 3 to the financial statements, certain errors resulting in amounts previously reported as expenses and capital assets as of December 31, 2013, were discovered by management of the City during the current year. Accordingly, these amounts have been restated in the December 31, 2014, financial statements now presented, and adjustments have been made to net position to correct the error. Our opinion is not modified with respect to these matters. 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 59 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 basic financial statements. 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 basic 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 October 22, 2015, 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 October 22, 2015 3 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (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, 2014. 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 $4.5 million from current operations. Governmental net position decreased by $1.0 million and Business-Type net position increased by $5.5 million. The change in net position was primarily due to spend-down of previously received funds for the abatement of groundwater contamination in the Schilling Industrial complex. At the close of 2014, the City’s governmental funds reported combined ending fund balances of $18,330,169, an increase of $702,586 over the prior year. This resulted from a combination of factors, the most notable of which were an increase in Capital Projects fund balances ($2,135,485) and a decrease in the Schilling Groundwater Abatement Capital project ($1,627,511). General Fund balances increased from $3,549,740 to $4,254,429, an increase of $704,689 (19.8%) At the close of 2014, the City’s enterprise funds reported combined ending Net Position of $82,778,234, an increase of $6,328,769 over the prior year. Positive performance was shared by all enterprise funds, with, of course, the Water and Sewer Fund providing the bulk of the change ($4,060,679). Total revenues decreased by $6,472,000, due to a change in grant revenue resulting from the Schilling groundwater contamination project. Investment revenues continue to be very minimal. The City-County Joint Health Department was dissolved at the close of 2013; with the City of Salina assuming responsibility for operations (and expenses) of the Animal Control operation. This added 6 staff positions and $505,232 (budgetary basis) in expenses for 2014. However, the additional expense was more than offset by a reduction in contractual service expenses of $1,018,031 (budgetary basis) compared to 2013. 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, 4 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) 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. 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. 5 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) 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. 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 (32%) and business-type (68%) activities. Charges for Services account for about 47% ($37,014,000) 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, 2014. Description 2013 Volume 2014 Volume Change Rate Comments Golf Course: Rounds, 18 Hole 35,926 36,352 426 Rounds, Par 3 2,500 3,144 644 Annual Golf Members 298 291 (7) Developm ent Services Inspections: Building 5,421 4,779 (642) Inspections: Minimum Housing Code 7,299 6,856 (443) Permits Issued 1,954 1,932 (22) Finance/Administration EMS Runs Billed 4,271 4,593 322 Licenses Issued 827 - (827) Water Billings Issued 236,649 241,334 4,685 Water Metered (in Billion Gallons)1.79 1.80 0.01 Parks and Recreation Kenwood Cove Attendance 75,276 81,596 6,320 No fee increase Youth Teams 172 169 (3) Adult Teams 245 268 23 Special Pops Programs 140 144 4 Trips/Tours offered 15 37 22 Youth Tournament Teams 368 410 42 Adult Tournament Teams 116 98 (18) Public W orks Sanitation Customers 14,869 14,936 67 Landfill Tonnage 105,006 99,309 (5,697) Street Cut and Excavation Permits 215 216 1 Concrete Permits 152 156 4 Water and W astewater Water Treated (Billion Gallons)2.10 2.00 (0.10) Wastewater Treated (Billion Gallons)1.36 1.30 (0.06) **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, 2014 (Unaudited) Sales taxes are the next largest component of the revenue mix, providing 22% ($17,150,033) 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 2014 was up from $16,540,435 in 2013. This 3.7%increase follows a 1.0% increase for 2013. 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 4.3%, compared to .8% in 2013. 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 2014, the City’s allocated portion of the County-wide sales tax was also decreased from 60.86% in 2012 to 60.22% in 2014. The decline in the City of Salina share of Countywide sales tax is a long term trend. As a matter of comparison, five years ago (2009) the City share was 62.47%. 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 15% ($12,143,105)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 increased by 3.8%. The overlapping levy also increased, by 3.1%. Tax delinquency decreased from 4.1%to 3.5%. 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 $13.7 million from its’peak of $39.7 million in 2007. At the 2014 tax rate, this exemption is equivalent to $701,146 in lost revenue for 2014. Motor vehicle value was stable, however, it is still well below 2010 values. Motor vehicle taxes are distributed based on a formula using prior ye ar’s tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Fiscal (Budget) Year 2013 2014 Change Real Estate and Personal Property Assessed Valuation 405,107,476$ 407,454,378$ 2,346,902$ City Mill Levy ($ per $1,000) Operating (General Fund)20.242 20.539 0.297 Debt Service 5.948 6.388 0.440 Total City Rate 26.190 26.927 0.737 Total Overlapping Levy 131.797 135.879 4.082 Percent of Total Taxes Collected 95.9%97.5%1.6% Ratio of Total Taxes (including delinquent collections) to taxes levied 98.3%102.3%4.0% Motor Vehicle Valuation 48,882,411$ 48,865,900$ (16,511)$ Comparative Property Values and Tax Levy Rates The unemployment rate in Salina increased slightly from 5.1% in 2013 to 5.3% in 2014, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force declined to 26,303, a change of .5%. In 2014, the top ten property taxpayers accounted for 7.19% of total assessed value. This is less concentrated than ten years ago (at 10.87%). 7 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (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 $210,656,000 at December 31, 2014. This represents an increase in net assets of $4,784,000 over 2013. A comparative condensed Statement of Net Position at December 31, 2013 and 2014: 2013 2014 2013 2014 2013 % of Total 2014 % of Total 2013 - 2014 Change Cash and investments 23,462$ 23,801$ 24,175$ 29,896$ 47,637$ 15%53,697$ 17%6,060$ Other current assets 13,065$ 13,599$ 2,125$ 2,024$ 15,190$ 5%15,623$ 5%433$ Noncurrent (capital) assets 166,217$ 165,623$ 80,849$ 85,901$ 247,066$ 80%251,524$ 78%4,458$ Total Assets 202,744$ 203,023$ 107,149$ 117,821$ 309,893$ 100%320,844$ 100%10,951$ Total deferred outflows of resources 414$ 344$ 311$ 293$ 725$ 100%637$ 100%88$ Current liabilities 23,922$ 24,932$ 5,636$ 4,553$ 29,558$ 28%29,485$ 27%(73)$ Noncurrent liabilities 49,813$ 50,557$ 25,375$ 30,783$ 75,188$ 72%81,340$ 73%6,152$ Total liabilities 73,735$ 75,489$ 31,011$ 35,336$ 104,746$ 100%110,825$ 100%6,079$ Net position: Net investment in capital assets 116,585$ 115,589$ 57,103$ 61,721$ 173,688$ 84%177,310$ 84%3,622$ Restricted for permanent funds 452$ 468$ -$ -$ 452$ 0%468$ 0%16$ Restricted for debt service 758$ 408$ 1,553$ 1,512$ 2,311$ 1%1,920$ 1%(391)$ Unrestricted 11,628$ 11,413$ 17,793$ 19,545$ 29,421$ 14%30,958$ 15%1,537$ Total net position 129,423$ 127,878$ 76,449$ 82,778$ 205,872$ 100%210,656$ 100%4,784$ Percent of total net position 63%61%37%39%100%100% Cash and investments as a percentage of current liabilities 98%95%429%657%161%182% Governmental Activities Business-Type Activities Condensed Statement of Net Position As of December 31 (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 and permanent funds . The remainder (unrestricted) of net position (15%) may be used to meet the City’s obligations to citizens and creditors. This represents slight growth in this component compared to 2013. In 2014, the amount of net investment in capital assets increased by $3,622,000. Unrestricted net position increased by $1,537,000.These represent diverse changes throughout the financial statement. However, it is clear that for 2014, the City experienced an increase in current assets, including cash and investments. Total liabilities increased in governmental activities and in business-type activities. In governmental activities, the increase was distributed between current and non-current liabilities. In business type activities current liabilities decreased, while non-current liabilities increased substantially. The increase in non-current liabilities is largely related to completion of projects financed by the Kansas Water Supply Loan Fund. 8 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) During the year ended December 31, 2014, there were several significant events that changed the balance of net position. Governmental Activities: Governmental were relatively stable, with only minor changes in 2014, reflecting overall balanced operations.. Business-type Activities: The water and sewer fund has a dominant influence on the increase in business-type activities net position. The increase in net assets is due to good revenue production and controlled expenses. Statement of Activities A condensed statement of activities is shown below. 2013 2014 2013 2014 2013 %2014 %2013-2014 Program Revenues:Change Charges for Services 12,141$ 11,885$ 24,309$ 25,130$ 36,450$ 43%37,015$ 47%565$ Operating Grants and Contributions 4,200$ 4,015$ -$ -$ 4,200$ 5%4,015$ 5%(185)$ Capital Grants and Contributions -$ -$ -$ 115$ -$ 0%115$ 0%115$ General Revenues: Property Taxes 11,593$ 12,143$ -$ -$ 11,593$ 14%12,143$ 15%550$ Sales Taxes 16,540$ 17,150$ -$ -$ 16,540$ 19%17,150$ 22%610$ Other Taxes 6,630$ 7,231$ -$ -$ 6,630$ 8%7,231$ 9%601$ Investment Revenue 67$ 97$ 49$ 51$ 116$ 0%148$ 0%32$ Other Miscellaneous 9,919$ 1,160$ 279$ 277$ 10,198$ 12%1,437$ 2%(8,761)$ Total Revenues:61,090$ 53,681$ 24,637$ 25,573$ 85,727$ 100%79,254$ 100%(6,473)$ Expenses:-$ General Government 10,978$ 12,550$ -$ -$ 10,978$ 15%12,550$ 17%1,572$ Public Safety 19,649$ 20,208$ -$ -$ 19,649$ 26%20,208$ 27%559$ Public Works 11,064$ 11,400$ -$ -$ 11,064$ 15%11,400$ 15%336$ Public Health and Sanitation 1,369$ 347$ -$ -$ 1,369$ 2%347$ 0%(1,022)$ Culture and Recreation 4,809$ 5,156$ -$ -$ 4,809$ 6%5,156$ 7%347$ Planning and Development 3,399$ 3,236$ -$ -$ 3,399$ 5%3,236$ 4%(163)$ Solid Waste Disposal -$ 3,532$ 1,870$ 3,532$ 5%1,870$ 3%(1,662)$ Water and Sewer -$ 15,418$ 14,903$ 15,418$ 21%14,903$ 20%(515)$ Sanitation -$ 2,237$ 2,399$ 2,237$ 3%2,399$ 3%162$ Golf Course -$ 768$ 843$ 768$ 1%843$ 1%75$ Interest on Long Term Debt 1,953$ 1,817$ -$ -$ 1,953$ 3%1,817$ 2%(136)$ Total Expenses 53,221$ 54,714$ 21,955$ 20,015$ 75,176$ 100%74,729$ 100%(447)$ Increase in net assets before transfers 7,869$ (1,033)$ 2,682$ 5,558$ 10,551$ 4,525$ (6,026)$ Transfers and other extraordinary items 1,000$ 1$ (950)$ -$ -$ 1$ 1$ Change in Net Position 8,869$ (1,032)$ 1,732$ 5,558$ 10,601$ 4,526$ (6,075)$ Net Position January 1 119,522$ 129,423$ 73,860$ 76,449$ 193,382$ 205,872$ 12,490$ Prior Period Adjustment 1,032$ (513)$ 857$ 771$ 1,889$ 258$ (1,631)$ Net Position January 1, restated 120,554$ 128,910$ 74,717$ 77,220$ 195,271$ 206,130$ 10,859$ Net Position December 31 129,423$ 127,878$ 76,449$ 82,778$ 205,872$ 210,656$ 4,784$ Governmental Activities Business-Type Activities Total Primary Government Condensed Statement of Activities For the Year Ended December 31 (In $000's) Governmental Activities. Total expenses for governmental activities for the year ending December 31, 2014 were $54,714,000 compared to $53,221,000 in 2013. Governmental activities represent 73%of the City’s total expenses. The largest element of governmental activity expense was public safety, accounting for 27% of the total. Governmental Activity expenses were also affected by the dissolution of the Joint City-County Health Department, which provided a net savings to the City of about $500,000 for the year. Charges for service attributable to governmental activities totaled $11,885,000 and operating grants for those purposes were $4,015,000. Both have declined slightly from 2013. The balance was funded by general revenues. Sales taxes accounted for $17,150,000 of the general revenues, with property taxes providing $12,143,000.Net assets decreased by $1,032,000 as a result of governmental activities. Business Type Activities. Total expenses for business-type activities for the year were $20,015,000, or 27% of the City’s total expense. The majority of this expense ($14,903,000)is attributable to water and sewer operations, with the other activities costing a combined total of $5,112,000. These activities are primarily supported by user charges, with only $328,000 coming from investment and miscellaneous revenues. Net position increased by $5,558,000 as a result of business-type activity operations. 9 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds as of December 31, 2013 and December 31, 2014. Fund 2013 2014 Change General 3,549,740$ 4,254,429$ 704,689$ Tourism and Convention 435,734$ 551,123$ 115,389$ Special Gas 1,289,302$ 929,729$ (359,573)$ Bicentennial Center 1,942,519$ 1,914,462$ (28,057)$ Sales Tax Capital 9,223,212$ 7,595,701$ (1,627,511)$ Debt Service 757,726$ 407,864$ (349,862)$ Capital Projects (2,416,104)$ (280,619)$ 2,135,485$ Other Governmental Funds 2,845,454$ 2,957,480$ 112,026$ Total 17,627,583$ 18,330,169$ 702,586$ Governmental Fund Balances as of December 31, Total governmental fund balances increased by $702,586. The main reasons for these changes are varied. The Schilling Capital Improvement Fund, which was created to account for U.S. Government and other funds received for the abatement of groundwater contamination, decreased significantly as the City uses funds previously distributed. The Capital Projects Fund increase was largely the result of Bond and Note proceeds received. The General Fund balances grew noticeably. Revenues and Expenditures: The following table shows a comparison of revenues and expenditures (including other sources and uses) for major funds for the years ending December 31, 2013 and 2014. Fund 2013 2014 Change Revenues (Including Other Financing Sources) General 36,925,292$ 37,233,769$ 308,477$ Tourism and Convention 1,366,229$ 1,595,079$ 228,850$ Special Gas 1,540,781$ 1,562,783$ 22,002$ Sales Tax Capital 3,954,780$ 4,119,653$ 164,873$ Schilling Capital Improvement 9,370,097$ 23,199$ (9,346,898)$ Debt Service 6,576,384$ 6,374,558$ (201,826)$ Capital Projects 6,986,719$ 6,107,577$ (879,142)$ Other Governmental Funds*3,134,461$ 3,055,714$ (78,747)$ Total Revenues 69,854,743$ 60,072,332$ (9,782,411)$ Less Other Sources 10,782,677$ 8,225,695$ (2,556,982)$ Revenues, net of other sources 59,072,066$ 51,846,637$ (7,225,429)$ Expenditures (Including Other Financing Uses) General 37,328,037$ 36,529,080$ (798,957)$ Tourism and Convention 1,350,000$ 1,479,690$ 129,690$ Special Gas 1,626,654$ 1,922,356$ 295,702$ Sales Tax Capital 4,022,400$ 4,147,710$ 125,310$ Schilling Capital Improvement 146,885$ 1,650,710$ 1,503,825$ Debt Service 6,457,982$ 6,724,420$ 266,438$ Capital Projects 8,489,127$ 4,047,673$ (4,441,454)$ Other Governmental Funds*3,658,243$ 3,021,553$ (636,690)$ Total Expenditures 63,079,328$ 59,523,192$ (3,556,136)$ Less Other Uses 3,907,114$ 2,557,408$ (1,349,706)$ Expenditures, net of other uses 59,172,214$ 56,965,784$ (2,206,430)$ Consolidated Statement of Revenues and Expenditures for Major Governmental Funds For the years ended December 31 Modified Accrual Basis 10 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Total revenues and other sources decreased by $9,782,411 from 2013 to 2014. The largest components of this change were in the Schilling Capital Improvement Fund (for which a large one-time grant was received in 2013)and the Capital Projects Fund.Other changes include an increase in General and Tourism Fund revenues. Expenditures generally increased, with the notable exception of the General and Capital Projects Funds. General Fund expenditures were, of course, affected by the dissolution of the Joint City-County Health Department, which provided a net savings to the Fund of about $500,000 for the year. Proprietary Funds The City of Salina operates four enterprise funds as well as five internal service funds. A summarized comparative Statement of Net Position follows for each enterprise fund: 2013 2014 Change 2013 2014 Change Current Assets 5,400$ 6,291$ 891$ 19,883$24,399$ 4,516$ Capital Assets 2,495$ 4,230$ 1,735$77,310$80,650$ 3,340$ Deferred Outflows -$ -$ -$ 311$ 293$ (18)$ Total Assets and Deferred Outflows of Resources 7,895$ 10,521$2,626$97,504$105,342$7,838$ Current Liabilities 630$ 963$ 333$ 4,895$ 3,458$ (1,437)$ Noncurrent Liabilities 2,788$ 3,764$ 976$ 22,463$26,884$ 4,421$ Total Liabilities 3,418$ 4,727$ 1,309$27,358$30,342$ 2,984$ Net investment in capital assets 2,083$ 2,025$ (58)$ 53,976$58,675$ 4,699$ Restricted -$ -$ -$ 1,553$ 1,512$ (41)$ Unrestricted 2,393$ 3,769$ 1,376$14,617$14,813$ 196$ Total Net Position 4,476$ 5,794$ 1,318$70,146$75,000$ 4,854$ Current Assets as a percentage of current liabilities 857%653%406%706% 2013 2014 Change 2013 2014 Change Current Assets 928$ 1,083$ 155$ 89$ 146$ 57$ Capital Assets 688$ 703$ 15$ 356$ 319$ (37)$ Total Assets and Deferred Outflows of Resources 1,616$ 1,786$ 170$ 445$ 465$ 20$ Current Liabilities 62$ 82$ 20$ 49$ 50$ 1$ Noncurrent Liabilities 50$ 54$ 4$ 73$ 81$ 8$ Total Liabilities 112$ 136$ 24$ 122$ 131$ 9$ Net investment in capital assets 688$ 703$ 15$ 356$ 319$ (37)$ Restricted -$ -$ -$ -$ Unrestricted 816$ 947$ 131$ (33)$ 15$ 48$ Total Net Position 1,504$ 1,650$ 146$ 323$ 334$ 11$ Current Assets as a percentage of current liabilities 1497%1321%182%292% Solid W aste Disposal Water and Sewer Sanitation Golf Course Comparative Summary Statement of Net Position as of December 31 (in $000's) The Solid W aste Disposal Fund shows an increase in liabilities related to landfill post-closure. All Enterprise funds show increases in net position, driven largely by increases in current assets. 11 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended Decem ber 31, 2014 (Unaudited) Revenues, Expenses, and Changes in Net Position All enterprise funds show healthy results, with increases in net position. The decline in expenses in the Solid Waste Fund are largely due to the deferral of some internal transfers (to capital improvement reserves) pending assessment of operational changes. Other enterprise funds experienced good revenue production and controlled expenses, resulting in positive outcomes. 2013 2014 Change 2013 2014 Change Operating Revenues 3,171$3,062$(109)$ 18,132$18,931$799$ Operating Expenses 3,522$1,853$(1,669)$14,524$14,002$(522)$ Operating Income (351)$ 1,209$1,560$ 3,608$ 4,929$ 1,321$ Non-operating revenues (expenses)1$ (1)$ (2)$ (858)$ (869)$ (11)$ Income (Loss) before Transfers (350)$ 1,208$1,558$ 2,750$ 4,061$ 1,311$ Transfers in (out)-$ -$ -$ (950)$ -$ 950$ Capital Contributions -$ 115$ -$ -$ -$ -$ Change in Net Position (350)$ 1,323$1,673$ 1,800$ 4,061$ 2,261$ Net Position January 1 4,740$4,476$(264)$ 67,543$70,146$2,603$ Restatement 86$ (5)$ (91)$ 803$ 793$ (10)$ Net Position January 1, restated 4,826$4,471$(355)$ 68,346$70,939$2,593$ Net Position December 31 4,476$5,794$1,318$ 70,146$75,000$4,854$ 2013 2014 Change 2013 2014 Change Operating Revenues 2,514$2,553$39$ 770$ 861$ 91$ Operating Expenses 2,236$2,400$164$ 768$ 845$ 77$ Operating Income 278$ 153$ (125)$ 2$ 16$ 14$ Non-operating revenues (expenses)2$ 3$ 1$ -$ 2$ 2$ Income (Loss) before Transfers 280$ 156$ (124)$ 2$ 18$ 16$ Transfers in (out)-$ -$ -$ -$ -$ -$ Change in Net Position 280$ 156$ (124)$ 2$ 18$ 16$ Net Position January 1 1,255$1,504$249$ 321$ 323$ 2$ Restatement (31)$ (10)$ 21$ -$ (7)$ (7)$ Net Position January 1, restated 1,224$1,494$270$ 321$ 316$ (5)$ Net Position December 31 1,504$1,650$146$ 323$ 334$ 11$ Solid W aste Disposal Water and Sewer Sanitation Golf Course Comparative Summary of Revenues, Expenses and Changes in Net Position 12 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (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, 2014. 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 amendments, 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. 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, 2014 was $251,524,000 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2013 and 2014: 2013 2014 2013 2014 2013 2014 Equipment, Furniture and Fixtures 1,214$ 1,123$ 1,801$ 1,584$ 3,015$ 2,707$ Vehicles 3,177$ 3,308$ 802$ 780$ 3,979$ 4,088$ Buildings and Improvements 23,434$ 22,509$ 11,051$ 10,629$ 34,485$ 33,138$ Land 22,640$ 22,640$ 1,542$ 1,542$ 24,182$ 24,182$ Infrastructure 104,768$ 106,048$ 43,191$ 43,501$ 147,959$ 149,549$ Construction in Progress 10,318$ 9,995$ 23,387$ 27,865$ 33,705$ 37,860$ Total 165,551$ 165,623$ 81,774$ 85,901$ 247,325$ 251,524$ * Net of Accumulated Depreciation Governmental Activity Business-type Total Capital Asset Balances Net of Depreciation as of December 31 (In 000's) 13 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2014 (Unaudited) Changes to capital assets may be summarized as follows: Governmental Activity Business-Type Activity Total Additions 10,385$ 8,769$ 19,154$ Retirements 5,752$ 2,115$ 7,867$ Adjustments (1,033)$ 900$ (133)$ Net Additions 15,104$ 11,784$ 26,888$ Depreciation Expense Applied 5,457$ 2,622$ 8,079$ Changes to Capital Assets, 2014 (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 12/31/2014 totaled $50,033,555. In addition, there were temporary notes outstanding in the amount of $5,000,000, as well as a financing lease in the amount of $176,235. Business-type activities had $14,592,836 in revenue bonds outstanding, as well as $9,587,351 in general obligation bonds. Revenues generated by user fees are pledged to retire all of the bonds issued by business-type activities. In addition, a loan payable is outstanding in the amount of $6,208,102. The City engaged in several debt transactions during 2014. On August 1st, the City issued 2014-A,$7,570,000 of internal im provement bonds. The proceeds were used to finance lighting in the downtown area, construction of a new landfill cell, provide public improvements to a residential subdivision, and for intersection improvements Also on August 1st, the City issued $5,000,000 in temporary notes to finance phase 2 (of 3) improvements to the City Bicentennial Center. This note will be refinanced into a long term bond issue in August 2015. Additional information on the City’s debt can be found in Note 4, E. of the notes to the basic financial statements. Requests for Information This financial report is intended to give the reader a general overview of the City’s finances. Questions about information in this report or requests for additional information should be directed to the Director of Finance, Room 206, 300 West Ash Street, Salina, Kansas, 67401. BASIC FINANCIAL STATEMENTS Total Total Total Salina Salina Governmental Business-type Primary Housing Airport Activities Activities Government Authority Authority ASSETS AND DEFERRED OUTLFOWS OF RESOURCES Current assets: Cash and investments 23,801,166$ 29,895,674$ 53,696,840$ 1,575,034$ 290,742$ Receivables (net of allowance for uncollectibles) Accounts 1,765,744 1,520,521 3,286,265 19,318 107,939 Taxes 11,519,012 - 11,519,012 - - Interest 18,717 16 18,733 - - Inventory 295,393 503,093 798,486 25,628 - Restricted cash and investments - - - 146,885 - Prepaid expenses - - - 35,786 5,067 Total current assets 37,400,032 31,919,304 69,319,336 1,802,651 403,748 Noncurrent assets: Capital assets, nondepreciable Construction in progress 9,994,512 27,865,017 37,859,529 143,475 834,733 Land 22,639,800 1,541,806 24,181,606 1,456,891 9,823,047 Capital assets, depreciable 233,957,333 110,335,963 344,293,296 7,985,895 71,203,893 Less: Accumulated depreciation 100,968,830 53,841,314 154,810,144 3,790,383 34,199,199 Total noncurrent assets 165,622,815 85,901,472 251,524,287 5,795,878 47,662,474 Total assets 203,022,847 117,820,776 320,843,623 7,598,529 48,066,222 Deferred outflows of resources: Deferred charge on bond issuance 344,313 292,999 637,312 - - Total deferred outflows of resources 344,313 292,999 637,312 - - Total assets and deferred outflows of resources 203,367,160$ 118,113,775$ 321,480,935$ 7,598,529$ 48,066,222$ Liabilities: Current liabilities: Accounts payable 1,074,116$ 1,309,786$ 2,383,902$ 37,553$ 143,803$ Retainage payable 35,147 394,597 429,744 - - Accrued liabilities 706,776 - 706,776 34,836 146,057 Matured bond principal and interest 145 - 145 - - Accrued interest payable 468,632 286,924 755,556 - 347,798 Deposits payable - 171,116 171,116 82,383 - Unearned revenue 10,982,435 - 10,982,435 11,559 28,950 Current portion of compensated absences 1,479,916 319,894 1,799,810 1,956 - Current portion of temporary notes payable 5,000,000 - 5,000,000 - - Current portion of loans payable - 379,000 379,000 - - Current portion of revenue bonds payable - 643,696 643,696 - - Current portion of financing leases payable 44,463 - 44,463 - 52,190 Current portion of special assessment debt payable - - - - 18,484 Current portion of general obligation bonds payable 5,140,611 1,047,580 6,188,191 - 955,000 Total current liabilities 24,932,241 4,552,593 29,484,834 168,287 1,692,282 Noncurrent liabilities: Accrued liabilities 164,801 - 164,801 39,568 - Compensated absences 1,416,234 306,128 1,722,362 17,606 - Security deposits returnable - - - - 20,624 Net OPEB obligation 3,950,840 385,780 4,336,620 - - Loans payable - 5,829,102 5,829,102 - Revenue bonds payable - 13,949,140 13,949,140 - - Financing leases payable 131,772 - 131,772 - 55,776 Special assessment debt payable - - - - 30,465 General obligation bonds payable 44,892,944 8,539,771 53,432,715 - 22,019,555 Landfill post-closure care liabilities - 1,773,027 1,773,027 - - Total noncurrent liabilities 50,556,591 30,782,948 81,339,539 57,174 22,126,420 Total liabilities 75,488,832$ 35,335,541$ 110,824,373$ 225,461$ 23,818,702$ Net Position Net investment in capital assets 115,589,260$ 61,721,285$ 177,310,545$ 5,795,878$ 24,510,104$ Restricted for: Permanent funds: Expendable 467,597 - 467,597 24,934 - Debt service 407,864 1,511,793 1,919,657 - - Unrestricted 11,413,607 19,545,156 30,958,763 1,552,256 [262,584] Total net position 127,878,328$ 82,778,234$ 210,656,562$ 7,373,068$ 24,247,520$ Primary Government CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December 31, 2014 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 12,550,394$ 5,661,659$ 936,443$ -$ [5,952,292]$ -$ [5,952,292]$ -$ -$ Public safety 20,207,952 4,222,006 877,163 - [15,108,783] - [15,108,783] - - Public works 11,400,085 254,784 1,566,992 - [9,578,309] - [9,578,309] - - Public health and sanitation 347,342 46,153 172,643 - [128,546] - [128,546] - - Culture and recreation 5,155,551 1,532,506 172,893 - [3,450,152] - [3,450,152] - - Planning and development 3,235,999 167,776 288,809 - [2,779,414] - [2,779,414] - - Interest on long-term debt 1,817,424 - - - [1,817,424] - [1,817,424] - - Total governmental activities 54,714,747 11,884,884 4,014,943 - [38,814,920] - [38,814,920] - - Business-type activities: Solid Waste Disposal 1,869,884 3,024,048 - 115,000 - 1,269,164 1,269,164 - - Water and Sewer 14,903,485 18,742,029 - - - 3,838,544 3,838,544 - - Sanitation 2,399,092 2,552,723 - - - 153,631 153,631 - - Golf Course 843,296 811,049 - - - [32,247] [32,247] - - Total business-type activities 20,015,757 25,129,849 - 115,000 - 5,229,092 5,229,092 - - Total primary government 74,730,504$ 37,014,733$4,014,943$ 115,000$ [38,814,920] 5,229,092 [33,585,828] - - Component units: Salina Housing Authority 2,278,524$ 331,628$ 1,675,140$ 77,315$ - - - [194,441] - Salina Airport Authority 5,735,244 1,858,854 - 799,762 - - - - [3,076,628] Total component units 8,013,768$ 2,190,482$ 1,675,140$ 877,077$ - - - [194,441] [3,076,628] General Revenues: Property taxes levied for General purposes 8,314,920 - 8,314,920 - 1,993,889 Debt service 2,578,095 - 2,578,095 - - Motor vehicle tax General purposes 1,250,090 - 1,250,090 - - Sales tax General purposes 12,688,980 - 12,688,980 - - Selective purposes 4,461,053 - 4,461,053 - - Other taxes General purposes 7,231,112 - 7,231,112 - - Investment revenues 97,805 51,330 149,135 8,428 437 Reimbursements - 179,900 179,900 - - Miscellaneous 1,160,019 97,165 1,257,184 43,551 101,403 Transfers, net 787 - 787 - - Subtotal general revenues 37,782,861 328,395 38,111,256 51,979 2,095,729 Change in net position [1,032,059] 5,557,487 4,525,428 [142,462] [980,899] Net position - beginning 129,423,463 76,449,465 205,872,928 7,515,530 25,228,419 Prior period adjustment [513,076] 771,282 258,206 - - Net position - beginning, restated 128,910,387 77,220,747 206,131,134 7,515,530 25,228,419 Net position - ending 127,878,328$ 82,778,234$ 210,656,562$ 7,373,068$24,247,520$ Changes in Net Position Component UnitsPrimary GovernmentProgram Revenues CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2014 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 3,472,829$ 24,394$ 713,047$ Receivables (net) Accounts 906,050 526,729 - Taxes 8,394,651 - 310,745 Interest 18,717 - - Inventory 107,033 - - Due from other funds 44,751 - - Cash with fiscal agent - - - Total assets 12,944,031$ 551,123$ 1,023,792$ LIABILITIES, DEFERRED INFLOW S OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable 467,208$ -$ 85,777$ Retainage payable - - 8,286 Due to other funds - - - Matured principal and interest - - - Temporary notes payable - - - Total liabilities 467,208 - 94,063 Deferred inflows of resources Unavailable revenue - property taxes 8,222,394 - - Total deferred inflows of resources 8,222,394 - - Fund balance: Nonspendable 107,033 - - Restricted - 551,123 686,804 Committed - - - Assigned 239,311 - 242,925 Unassigned 3,908,085 - - Total fund balances 4,254,429 551,123 929,729 Total liabilities, deferred inflows of resources and fund balances 12,944,031$ 551,123$ 1,023,792$ BALANCE SHEET CITY OF SALINA, KANSAS December 31, 2014 GOVERNMENTAL FUNDS Schilling Other Total Sales Tax Capital Debt Capital Governmental Governmental Capital Improvement Service Projects Funds Funds 1,941,353$ 7,826,005$ 354,289$ 4,530,042$ 3,040,313$ 21,902,272$ - - - 278,219 54,746 1,765,744 - - 2,813,616 - - 11,519,012 - - - - - 18,717 - - - - - 107,033 - - - - - 44,751 - - 145 - - 145 1,941,353$ 7,826,005$ 3,168,050$ 4,808,261$ 3,095,059$ 35,357,674$ 17,130$ 230,304$ -$ 71,780$ 92,828$ 965,027$ 9,761 - - 17,100 - 35,147 - - - - 44,751 44,751 - - 145 - - 145 - - - 5,000,000 - 5,000,000 26,891 230,304 145 5,088,880 137,579 6,045,070 - - 2,760,041 - - 10,982,435 - - 2,760,041 - - 10,982,435 - - - - - 107,033 - - 407,864 - 1,264,489 2,910,280 1,023,469 7,327,347 - - 1,534,716 9,885,532 890,993 268,354 - [280,619] 158,275 1,519,239 - - - - - 3,908,085 1,914,462 7,595,701 407,864 [280,619] 2,957,480 18,330,169 1,941,353$ 7,826,005$ 3,168,050$ 4,808,261$ 3,095,059$ 35,357,674$ 16 The notes to the basic financial statements are an integral part of this statement. Total Governmental Fund Balances 18,330,169$ 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 344,313 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds The cost of capital assets is 265,740,284 Accumulated depreciation is 100,135,940 165,604,344 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.1,030,288 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 2,801,524 Net OPEB obligation 3,950,840 Bonds payable 50,033,555 Financing leases payable 176,235 Accrued interest on the bonds 468,632 [57,430,786] Net Position of Governmental Activities 127,878,328$ CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2014 The notes to the basic financial statements are an integral part of this statement. 17 Tourism and Special General Convention Gas REVENUES: Taxes Real estate taxes 8,135,091$ -$ -$ Delinquent taxes 179,829 - - Motor vehicle taxes 963,912 - - General sales taxes 12,688,980 - - Selective sales taxes - - - Other taxes 5,636,239 1,594,873 - Intergovernmental 1,162,634 - 1,559,693 Special assessments - - - Licenses and permits - - - Charges for services 7,826,289 - - Investment revenue 11,536 206 3,090 Reimbursements - - - Donations - - - Miscellaneous 629,259 - - Total revenues 37,233,769 1,595,079 1,562,783 EXPENDITURES: Current General government 3,986,212 - - Public safety 19,558,487 - - Public works 6,949,477 - 493,527 Public health and sanitation 146,178 - - Culture and recreation 2,697,564 - - Planning and development 2,209,836 819,633 - Miscellaneous - - - Capital outlay 843,975 - 1,428,829 Debt service Principal retirement - - - Interest and other charges - - - Total expenditures 36,391,729 819,633 1,922,356 Excess [deficiency] of revenue and other sources 36,529,080 1,479,690 over [under] expenditures and other [uses]842,040 775,446 [359,573] OTHER FINANCING SOURCES [USES] Issuance of bonds 53,469 - - Bond premium - - - Transfers in 370,765 - - Transfers [out][561,585] [660,057] - Total other financing sources [uses][137,351] [660,057] - Net change in fund balance 704,689 115,389 [359,573] Fund balance - Beginning of year 3,549,740 435,734 1,289,302 Restatement of prior year fund balance - - - Fund balance - Beginning of year, as restated 3,549,740 435,734 1,289,302 Fund balance - End of year 4,254,429$ 551,123$ 929,729$ EXPENDITURES AND CHANGES IN FUND BALANCE STATEMENT OF REVENUES, CITY OF SALINA, KANSAS For the Year Ended December 31, 2014 GOVERNMENTAL FUNDS Schilling Other Total Sales Tax Capital Debt Capital Governmental Governmental Capital Improvement Service Projects Funds Funds -$ -$ 2,522,111$ -$ -$ 10,657,202$ - - 55,984 - - 235,813 - - 286,178 - - 1,250,090 - - - - - 12,688,980 4,113,828 - - - 347,225 4,461,053 - - - - - 7,231,112 - - - 466,448 818,868 4,007,643 - - 1,809,992 - - 1,809,992 - - - - 7,300 7,300 - - - - 450,005 8,276,294 5,825 23,199 244 8,971 5,526 58,597 - - - 123,302 - 123,302 - - - - 240,699 240,699 - - 9,061 25,000 135,240 798,560 4,119,653 23,199 4,683,570 623,721 2,004,863 51,846,637 - - - - - 3,986,212 - - - - - 19,558,487 - - - - - 7,443,004 - - - - 173,259 319,437 - - - - 1,594,764 4,292,328 - - - - 203,037 3,232,506 - - - - 35 35 2,387,710 1,650,710 - 3,929,485 768,378 11,009,087 - - 5,120,417 - 140,000 5,260,417 - - 1,604,003 118,188 142,080 1,864,271 2,387,710 1,650,710 6,724,420 4,047,673 3,021,553 56,965,784 4,147,710 1,731,943 [1,627,511] [2,040,850] [3,423,952] [1,016,690] [5,119,147] - - 115,000 5,196,531 - 5,365,000 - - - 302,500 - 302,500 - - 1,575,988 - 1,053,969 3,000,722 [1,760,000] - - [15,175] [3,118] [2,999,935] [1,760,000] - 1,690,988 5,483,856 1,050,851 5,668,287 [28,057] [1,627,511] [349,862] 2,059,904 34,161 549,140 1,942,519 9,223,212 757,726 [2,416,104] 2,845,454 17,627,583 - - - 75,581 77,865 153,446 1,942,519 9,223,212 757,726 [2,340,523] 2,923,319 17,781,029 1,914,462$ 7,595,701$ 407,864$ [280,619]$ 2,957,480$ 18,330,169$ 18 The notes to the basic financial statements are an integral part of this statement. Total Net Change In Fund Balances - Governmental Funds 549,140$ 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 66,032 Proceeds from sale of assets [89,492] Capital outlays 5,553,033 Depreciation expense [5,452,848] 76,725 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 decreased.46,847 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.[744,359] 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.[313,072] Bond, temporary note and lease 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.[5,907,757] 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.5,260,417 Changes In Net Position of Governmental Activities [1,032,059]$ 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, 2014 The notes to the basic financial statements are an integral part of this statement. 19 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 8,135,093$ 8,260,367$ 8,260,367$ [125,274]$ Delinquent taxes 179,829 177,337 177,337 2,492 Motor vehicle taxes 962,452 876,743 876,743 85,709 General sales tax 12,688,980 12,406,661 12,406,661 282,319 Other taxes 4,686,239 4,996,000 4,996,000 [309,761] Total taxes 26,652,593 26,717,108 26,717,108 [64,515] Charges for services General charges 82,871 - - 82,871 General government 390 - - 390 Public safety 4,006,989 4,190,907 4,190,907 [183,918] Public works 254,784 301,000 301,000 [46,216] Health and sanitation 60,043 54,000 54,000 6,043 Culture and recreation 1,178,512 1,291,745 1,291,745 [113,233] Community and economic development 19,648 10,500 10,500 9,148 Total charges for services 5,603,237 5,848,152 5,848,152 [244,915] Operating grants, restricted General grants 172,643 190,000 190,000 [17,357] Public safety 877,163 919,759 919,759 [42,596] Community and economic development 112,578 30,000 30,000 82,578 Total operating grants, restricted 1,162,384 1,139,759 1,139,759 22,625 Operating grants, unrestricted General grants 1,000 - - 1,000 Public works 500 3,000 3,000 [2,500] Culture and recreation 4,017 5,000 5,000 [983] Total operating grants, unrestricted 5,517 8,000 8,000 [2,483] Interest income General interest 10,375 20,000 20,000 [9,625] Total interest income 10,375 20,000 20,000 [9,625] Interfund services provided General services 1,281,752 1,070,000 1,070,000 211,752 General government 2,075,000 2,175,000 2,175,000 [100,000] Community and economic development 66,000 66,000 66,000 - Total interfund services provided 3,422,752 3,311,000 3,311,000 111,752 Miscellaneous revenues General miscellaneous revenues 402,938 115,130 115,130 287,808 General government 260 - - 260 Public safety 129,572 199,000 199,000 [69,428] Public works - 10,000 10,000 [10,000] Culture and recreation 17,665 17,600 17,600 65 Total miscellaneous revenues 550,435 341,730 341,730 208,705 Total revenues 37,407,293 37,385,749 37,385,749 21,544 Budgeted Amounts See independent auditor's report on the financial statements. 20 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Expenditures General Government City commission 76,081$ 81,383$ 81,383$ 5,302$ City manager 697,271 705,238 705,238 7,967 Legal 669,048 405,250 405,250 [263,798] Finance 665,027 668,083 668,083 3,056 Human resources 390,737 364,503 364,503 [26,234] Other general government 968,157 1,040,000 1,040,000 71,843 Contingencies 28,849 50,000 50,000 21,151 Total general government 3,495,170 3,314,457 3,314,457 [180,713] Public Safety Police 8,758,428 9,264,109 9,264,109 505,681 Municipal court 1,623,008 1,505,209 1,505,209 [117,799] Fire 9,187,800 9,038,624 9,038,624 [149,176] Total public safety 19,569,236 19,807,942 19,807,942 238,706 Public W orks Buildings and general improvements 1,134,298 1,138,333 1,138,333 4,035 Engineering 1,099,895 1,120,320 1,120,320 20,425 Streets 1,878,585 1,934,559 1,934,559 55,974 Flood works 261,501 248,211 248,211 [13,290] Traffic control 911,735 870,759 870,759 [40,976] ADA compliance 17,520 15,000 15,000 [2,520] Total public works 5,303,534 5,327,182 5,327,182 23,648 Public Health and Sanitation Cemetery 146,178 165,303 165,303 19,125 Total public health and sanitation 146,178 165,303 165,303 19,125 Culture and Recreation Parks 1,727,690 1,782,284 1,782,284 54,594 Swimming pools 383,190 453,768 453,768 70,578 Neighborhood centers 56,196 45,954 45,954 [10,242] Recreation 1,276,720 1,410,182 1,410,182 133,462 Animal shelter 505,233 595,765 595,765 90,532 Smoky Hill museum 494,041 512,766 512,766 18,725 Total culture and recreation 4,443,070 4,800,719 4,800,719 357,649 Community Development Community relations 287,304 334,045 334,045 46,741 Development services 1,322,120 1,363,757 1,363,757 41,637 Agency contracts 628,304 748,995 748,995 120,691 Total community development 2,237,728 2,446,797 2,446,797 209,069 Capital Outlay Capital outlay 608,763 600,000 600,000 [8,763] Cash Reserve 200,000 3,473,848 3,473,848 3,273,848 Total expenditures 36,003,679 39,936,248 39,936,248 3,932,569 Excess [deficiency] of revenues over [under] expenditures 1,403,614 [2,550,499] [2,550,499] 3,954,113 Budgeted Amounts See independent auditor's report on the financial statements. 21 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Other financing sources [uses] Transfer in 1,017$ -$ -$ 1,017$ Transfer [out][561,585] [580,000] [580,000] 18,415 Total other financing sources [uses][560,568] [580,000] [580,000] 19,432 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]843,046 [3,130,499] [3,130,499] 3,973,545 Unreserved fund balance, January 1 1,965,726 3,130,499 3,130,499 [1,164,773] Prior year cancelled encumbrances 2,289 - - 2,289 Unreserved fund balance, December 31 2,811,061 -$ -$ 2,811,061$ Reconciliation to GAAP Interest receivable 18,717 Accounts receivable 906,050 Taxes receivable 8,394,651 Inventory 107,033 Deferred revenue [8,222,394] Current year encumbrances 239,311 GAAP Fund Balance, December 31 4,254,429$ Budgeted Amounts See independent auditor's report on the financial statements. 22 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) TOURISM AND CONVENTION FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Other taxes 1,417,582$ 1,420,000$ 1,420,000$ [2,418]$ Interest income General interest 206 - - 206 Total revenues 1,417,788 1,420,000 1,420,000 [2,212] Expenditures Community Development Tourism 819,633 788,810 788,810 [30,823] Total expenditures 819,633 788,810 788,810 [30,823] Excess [deficiency] of revenues over [under] expenditures 598,155 631,190 631,190 [33,035] Other financing sources [uses] Transfer [out][660,057] [631,190] [631,190] [28,867] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][61,902] - - [61,902] Unreserved fund balance, January 1 86,296 2 2 86,294 Unreserved fund balance, December 31 24,394 2$ 2$ 24,392$ Reconciliation to GAAP Accounts receivable 526,729 GAAP Fund Balance, December 31 551,123$ Budgeted Amounts See independent auditor's report on the financial statements. 23 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL GAS FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Public works 1,388,638$ 1,377,030$ 1,377,030$ 11,608$ Interest income General interest 3,090 6,000 6,000 [2,910] Total revenues 1,391,728 1,383,030 1,383,030 8,698 Expenditures Public W orks Streets 2,093,837 1,658,472 1,658,472 [435,365] Cash Reserve - 500,000 500,000 500,000 Total expenditures 2,093,837 2,158,472 2,158,472 64,635 Excess [deficiency] of revenues over [under] expenditures [702,109] [775,442] [775,442] 73,333 Other financing sources [uses] Transfer in 170,000 180,000 180,000 [10,000] Total other financing sources [uses]170,000 180,000 180,000 [10,000] Excess [deficiency] of revenues and other sources over [under][532,109] [595,442] [595,442] 63,333 expenditures and other [uses] Unreserved fund balance, January 1 903,531 595,442 595,442 308,089 Prior year cancelled encumbrances 4,637 - - 4,637 Unreserved fund balance, December 31 376,059 -$ -$ 376,059$ Reconciliation to GAAP Taxes receivable 310,745 Current year encumbrances 242,925 GAAP Fund Balance, December 31 929,729$ Budgeted Amounts See independent auditor's report on the financial statements. 24 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SALES TAX CAPITAL FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Selective sales tax 4,113,828$ 3,697,576$ 3,697,576$ 416,252$ Interest income General interest 5,826 5,000 5,000 826 Total revenues 4,119,654 3,702,576 3,702,576 417,078 Expenditures Capital Outlay 3,159,043 2,345,000 2,345,000 [814,043] Cash Reserve - 149,422 149,422 149,422 Total expenditures 3,159,043 2,494,422 2,494,422 [664,621] Excess [deficiency] of revenues over [under] expenditures 960,611 1,208,154 1,208,154 [247,543] Other financing sources [uses] Transfer [out][1,760,000] [1,735,000] [1,735,000] [25,000] Total other financing sources [uses][1,760,000] [1,735,000] [1,735,000] [25,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][799,389] [526,846] [526,846] [272,543] Unreserved fund balance, January 1 1,796,162 1,760,770 1,760,770 35,392 Prior year cancelled encumbrances 26,696 - - 26,696 Unreserved fund balance, December 31 1,023,469 1,233,924$ 1,233,924$ [210,455]$ Reconciliation to GAAP Current year encumbrances 890,993 GAAP Fund Balance, December 31 1,914,462$ Budgeted Amounts See independent auditor's report on the financial statements. 25 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 6,041,010$ 22,799,833$ 928,960$ 125,871$ 29,895,674$ 1,898,749$ Receivables (net of allowance for uncollectibles) Accounts 250,156 1,116,065 154,300 - 1,520,521 - Interest 16 - - - 16 - Inventory and prepaid supplies - 482,960 - 20,133 503,093 188,360 Total current assets 6,291,182 24,398,858 1,083,260 146,004 31,919,304 2,087,109 Capital assets: Nondepreciable capital assets: Construction in progress 2,296,324 25,568,693 - - 27,865,017 - Land 682,000 844,806 - 15,000 1,541,806 - Depreciable capital assets: Capital assets 8,376,543 98,884,658 2,018,705 1,056,057 110,335,963 851,361 Less: accumulated depreciation 7,125,439 44,647,897 1,316,346 751,632 53,841,314 832,890 Total capital assets 4,229,428 80,650,260 702,359 319,425 85,901,472 18,471 Deferred outflows of resources: Deferred charge on bond issuance - 292,999 - - 292,999 - Total deferred outflows of resources - 292,999 - - 292,999 - Total assets and deferred outflows of resources 10,520,610$105,342,117$ 1,785,619$465,429$ 118,113,775$ 2,105,580$ Liabilities: Current liabilities Accounts payable 565,447$ 712,359$ 26,421$ 5,559$ 1,309,786$ 109,089$ Retainage payable 15,000 379,597 - - 394,597 - Interest payable 14,445 272,479 - - 286,924 - Meter deposits payable - 171,116 - - 171,116 - Current portion of compensated absences payable 38,109 181,811 55,956 44,018 319,894 48,353 Current portion of accrued claims payable - - - - - 706,776 Current portion of loans payable - 379,000 - - 379,000 - Current portion of general obligation bonds payable 330,000 717,580 - - 1,047,580 - Current portion of revenue bonds payable - 643,696 - - 643,696 - Total current liabilities 963,001 3,457,638 82,377 49,577 4,552,593 864,218 Noncurrent liabilities: Compensated absences payable 36,469 173,988 53,547 42,124 306,128 46,273 Accrued claims payable - - - - - 164,801 Net OPEB Obligation 79,270 267,468 - 39,042 385,780 - Payable from restricted assets Loans payable - 5,829,102 - - 5,829,102 - General obligation bonds payable 1,875,000 6,664,771 - - 8,539,771 - Revenue bonds payable - 13,949,140 - - 13,949,140 - Landfill post-closure care liabilities 1,773,027 - - - 1,773,027 - Total noncurrent liabilities 3,763,766 26,884,469 53,547 81,166 30,782,948 211,074 Total liabilities 4,726,767$ 30,342,107$ 135,924$ 130,743$ 35,335,541$ 1,075,292$ Net position Net investment in capital assets 2,024,428$ 58,675,073$ 702,359$ 319,425$ 61,721,285$ 18,471$ Restricted Restricted for bond retirement - 1,511,793 - - 1,511,793 - Unrestricted 3,769,415 14,813,144 947,336 15,261 19,545,156 1,011,817 Total net position 5,793,843$ 75,000,010$ 1,649,695$334,686$ 82,778,234$ 1,030,288$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2014 The notes to the basic financial statements are an integral part of this statement. 26 Total Internal Solid W aste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Operating revenues Charges for services 3,024,048$ 18,742,029$ 2,552,723$ 811,049$ 25,129,849$ 9,517,634$ Reimbursements - 179,900 - - 179,900 - Miscellaneous 37,540 9,395 - 50,230 97,165 86,950 Total operating revenues 3,061,588 18,931,324 2,552,723 861,279 25,406,914 9,604,584 Operating expenses General government - - - - - 10,350,238 Public works 1,286,770 12,112,288 2,265,204 - 15,664,262 - Recreation - - - 814,511 814,511 - Depreciation 566,554 1,889,800 134,807 30,410 2,621,571 4,462 Total operating expenses 1,853,324 14,002,088 2,400,011 844,921 19,100,344 10,354,700 Operating income [loss]1,208,264 4,929,236 152,712 16,358 6,306,570 [750,116] Nonoperating revenues [expenses] Investment revenue 15,679 32,840 2,549 262 51,330 5,757 Debt service [19,610] [901,130] - - [920,740] - Gain/[loss] on disposal of fixed assets 3,050 6,645 919 1,625 12,239 - Accretion of bond premium - 11,560 - - 11,560 - Amortization of bond issuance costs - [18,472] - - [18,472] - Total nonoperating revenues [expenses][881] [868,557] 3,468 1,887 [864,083] 5,757 Income [loss] before transfers 1,207,383 4,060,679 156,180 18,245 5,442,487 [744,359] Capital contributions 115,000 - - - 115,000 - Change in net position 1,322,383 4,060,679 156,180 18,245 5,557,487 [744,359] Net position, January 1 4,476,397 70,146,203 1,503,942 322,923 76,449,465 1,782,982 Restatement [4,937] 793,128 [10,427] [6,482] 771,282 [8,335] Net position, January 1, restated 4,471,460 70,939,331 1,493,515 316,441 77,220,747 1,774,647 Net position, December 31 5,793,843$ 75,000,010$ 1,649,695$ 334,686$ 82,778,234$ 1,030,288$ 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, 2014 The notes to the basic financial statements are an integral part of this statement. 27 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 3,023,259$18,970,874$2,560,989$811,048$ 25,366,170$9,447,310$ Cash paid to suppliers of goods or services [1,307,878] [11,245,985] [1,549,850] [455,951] [14,559,664] [9,771,335] Cash paid to employees [474,666] [2,721,328] [691,889] [350,670] [4,238,553] [614,197] Other operating receipts 37,540 9,395 - 50,230 97,165 86,950 Net cash provided by [used in] operating activities 1,278,255 5,012,956 319,250 54,657 6,665,118 [851,272] Cash flows from capital and related financing activities Purchase and construction of capital assets [2,306,224] [4,283,121] [159,877] - [6,749,222] - Capital contributions 115,000 - - - 115,000 - Proceeds from sale of capital assets 3,050 6,645 919 1,625 12,239 - Proceeds from loans - 6,208,102 - - 6,208,102 - Proceeds from issuance of general obligation bonds 2,205,000 - - - 2,205,000 - Principal payments - general obligation bonds [411,960] [717,624] - - [1,129,584] - Principal payments - revenue bonds - [630,000] - - [630,000] - Interest paid [8,239] [865,818] - - [874,057] - Net cash provided by [used in] capital and related financing activities [403,373] [281,816] [158,958] 1,625 [842,522] - Cash flows from investing activities Interest received 15,679 32,840 2,549 263 51,331 5,756 Net increase [decrease] in cash and cash equivalents 890,561 4,763,980 162,841 56,545 5,873,927 [845,516] Cash and cash equivalents, January 1 5,150,449 18,189,299 766,119 69,326 24,175,193 2,744,265 Restatement - [153,446] - - [153,446] - Cash and cash equivalents, January 1, restated 5,150,449 18,035,853 766,119 69,326 24,021,747 2,744,265 Cash and cash equivalents, December 31 6,041,010$22,799,833$928,960$ 125,871$ 29,895,674$1,898,749$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS For the Year Ended December 31, 2014 PROPRIETARY FUNDS The notes to the basic financial statements are an integral part of this statement. 28 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]1,208,264$ 4,929,236$ 152,712$16,358$ 6,306,570$ [750,116]$ Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense 566,554 1,889,800 134,807 30,410 2,621,571 4,462 [Increase] decrease in accounts receivable [789] 47,206 8,266 - 54,683 - [Increase] decrease in inventory - 46,986 - [664] 46,322 [48,219] Increase [decrease] in accounts payable 387,045 [320,417] 17,117 161 83,906 8,231 Increase [decrease] in retainage payable 15,000 [1,517,744] - - [1,502,744] - Increase [decrease] in accrued compensated absences 3,028 [29,216] 6,348 1,894 [17,946] 4,695 Increase [decrease] in claims payable - - - - - [70,325] Increase [decrease] in landfill postclosure liabilities [903,300] - - - [903,300] - Increase [decrease] in net OBEB obligation 2,453 [34,634] - 6,498 [25,683] - Increase [decrease] in meter deposits payable - 1,739 - - 1,739 - Net cash provided by [used in] operating activities 1,278,255$ 5,012,956$ 319,250$54,657$ 6,665,118$ [851,272]$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2014 The notes to the basic financial statements are an integral part of this statement. 29 ASSETS Cash and investments 208,084$ Total assets 208,084$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable 208,084$ Total liabilities 208,084$ December 31, 2014 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. 30 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, 2014. 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 one joint venture. 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 venture. Separate financial statements are available from the governing board of the joint venture. (Kansas Regulatory Basis) Building Authority (Audited) Total unencumbered cash, December 31, 2014 594,514$ Total change in unencum bered cash, year ended December 31, 2014 111,165 Total cash receipts, year ended December 31, 2014 1,196,343 Total cash receipts from City of Salina 400,492 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A.Reporting Entity (Continued) Joint Ventures (Continued) Complete financial statements for the joint venture may be obtained at the entity’s administrative office. Salina County-City Building Authority 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. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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. Capital projects fund -To account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C.Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) 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 2015. 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. 35 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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. 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 107,033$ -$ -$ -$ -$ -$ -$ -$ 107,033$ Restricted for: Public works - - 686,804 - - - - - 686,804 Public health and sanitation - - - - - - - 42,456 42,456 Culture and recreation - - - - - - - 182,600 182,600 Planning and development - 551,123 - - - - - 232,059 783,182 Debt payments - - - - - 407,864 - 807,374 1,215,238 Committed for: Public safety - - - - - - - 21,541 21,541 Culture and recreation - - - - - - - 433,626 433,626 Planning and development - - - - - - - 50,191 50,191 Cemetery - - - - - - - 461,846 461,846 Capital improvements - - - 1,023,469 7,327,347 - - 567,512 8,918,328 Assigned for: General government 43,535 - - - - - - - 43,535 Public safety 10,749 - - - - - - 9,283 20,032 Public works 49,636 - - - - - - - 49,636 Culture and recreation 17,816 - - - - - - 22,577 40,393 Planning and development 58,837 - - - - - - - 58,837 Capital improvements 58,738 - 242,925 890,993 268,354 - [280,619] 126,415 1,306,806 Unassigned:3,908,085 - - - - - - - 3,908,085 Total Fund Balances 4,254,429$ 551,123$ 929,729$ 1,914,462$ 7,595,701$ 407,864$ [280,619]$ 2,957,480$ 18,330,169$ Major Governmental Funds 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 2014 budget was not amended. 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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: Bicentennial Center Event, HUD Community Development, Community Development Revolving, Heritage Commission, HOME 2012,KDOT Signals 9th Street, Flood & Drainage Improvement, CDBG ED, Kenwood Cover Capital, Special Law Enforcement, Police Grants, DARE Donations,War Memorial Maintenance, Federal CARE Grant, Police Department Federal Forfeiture, Homeowners’ Assistance and Animal Shelter Donations Funds. A legal operating budget is not required for the following Enterprise funds: Solid Waste Disposal, Water 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.Statutory Violations Actual exceeded budgeted expenditures at December 31, 2014 in the Tourism and Convention Fund, Sales Tax Capital Fund, Bicentennial Center Fund, Sales Tax Economic Development Fund and Fair Housing Fund, which violates KSA 79-2935. C.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, 2014, the statutory limit for the City was $136,896,083, providing a debt margin of $82,270,392. 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31,2014 Note 3. RESTATEMENT OF EQUITY Following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or recorded incorrectly and that the allocation of net position/fund balance between funds had been recorded incorrectly. Accordingly, the beginning net position/fund balances were restated, the effects of which are as follows: KDOT Capital Signals Solid W aste Water and Governmental Projects 9th Street Disposal Sewer Sanitation Golf Course Activities Fund Fund Fund Fund Fund Fund Net Position/Fund Balance, December 31, 2013 129,423,463$ [2,416,104]$ [77,865]$ 4,476,397$ 70,146,203$ 1,503,942$ 322,923$ Capital Asset Adjustment [666,522] [4,937] 946,574 [10,427] [6,482] Fund Reclassification 153,446 75,581 77,865 - [153,446] - - Net Position/Fund Balance, December 31, 2013, Restated 128,910,387$ [2,340,523]$ -$ 4,471,460$ 70,939,331$ 1,493,515$ 316,441$ 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, 2014, the City has the following investments: Investment Type Fair Value Rating Kansas Municipal Investment Pool 305,300$ S&P AAAf/S1+ U.S. Government Securities 20,001,182 N/A Total fair value 20,306,482$ 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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. 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 Capital Other General Convention Gas Service Projects Governmental Subtotal Primary Government Receivables: Accounts 4,383,246$ 526,729$ -$ -$ 278,219$ 55,562$ 5,243,756$ Taxes 8,394,651 - 310,745 2,813,616 - - 11,519,012 Interest 18,717 - - - - - 18,717 Gross receivables 12,796,614 526,729 310,745 2,813,616 55,562 16,781,485 Less: allowance for uncollectibles [3,477,196] - - - - [816] [3,478,012] Total 9,319,418$ 526,729$ 310,745$ 2,813,616$ -$ 54,746$ 13,303,473$ Solid Water Waste and Sanitation Disposal Sewer Total Primary Government Receivables: Accounts 267,512$ 250,156$ 1,934,932$ 7,696,356$ Taxes - - - 11,519,012 Interest - 16 - 18,733 Gross receivables 267,512 250,172 1,934,932 19,234,101 Less: allowance for uncollectibles [113,212] - [818,867] [4,410,091] Total 154,300$ 250,172$ 1,116,065$ 14,824,010$ Component Units Salina Airport Authority Accounts 109,439$ Less: allowance for uncollectibles [1,500] Total Salina Airport Authority 107,939 Salina Housing Authority Accounts 19,758 Less: allowance for uncollectibles [950] Interest 510 Total Salina Housing Authority 19,318 Total 127,257$ C.Interfund Receivables and Payables The composition of interfund balances as of December 31, 2014, is as follows: Fund Types Due From Due To General Fund 44,751$ -$ Other Government Funds - 44,751 44,751$ 44,751$ 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. 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D.Capital Assets Capital asset activity for the year ended December 31, 2014, was as follows: Balance Adj. Bal.Balance 12/31/2013 Adjustments 12/31/2013 Additions Retirements 12/31/2014 City governmental activities: Governmental activities: Capital assets, not being depreciated Construction in progress 11,350,806$ [1,033,264]$ 10,317,542$ 4,509,119$ 4,832,149$ 9,994,512$ Land 22,639,800 - 22,639,800 - - 22,639,800 Capital assets, being depreciated Infrastructure 175,050,357 - 175,050,357 4,826,175 - 179,876,532 Buildings and improvements 39,290,515 - 39,290,515 60,527 - 39,351,042 Vehicles 8,940,190 - 8,940,190 874,939 783,514 9,031,615 Equipment, furniture and fixtures 5,720,087 - 5,720,087 114,422 136,365 5,698,144 Total capital assets 262,991,755 [1,033,264] 261,958,491 10,385,182 5,752,028 266,591,645 Less accumulated depreciation for: Infrastructure 70,655,778 [373,957] 70,281,821 3,546,869 - 73,828,690 Buildings and improvements 15,827,083 29,450 15,856,533 985,698 - 16,842,231 Vehicles 5,791,206 [27,558] 5,763,648 727,314 767,951 5,723,011 Equipment, furniture and fixtures 4,500,614 5,323 4,505,937 197,428 128,467 4,574,898 Total accumulated depreciation 96,774,681 [366,742] 96,407,939 5,457,309 896,418 100,968,830 Governmental activities capital assets, net 166,217,074$ [666,522]$ 165,550,552$ 4,927,873$ 4,855,610$ 165,622,815$ Business-type activities: Capital assets, not being depreciated Construction in progress 22,486,696$ 900,264$ 23,386,960$ 6,497,482$ 2,019,425$ 27,865,017$ Land 1,541,806 - 1,541,806 - - 1,541,806 Capital assets, being depreciated Infrastructure 77,241,673 - 77,241,673 2,019,425 - 79,261,098 Buildings and improvements 22,579,933 - 22,579,933 - - 22,579,933 Vehicles 3,324,991 - 3,324,991 159,877 52,264 3,432,604 Equipment, furniture and fixtures 5,013,565 - 5,013,565 91,862 43,099 5,062,328 Total capital assets 132,188,664 900,264 133,088,928 8,768,646 2,114,788 139,742,786 Less accumulated depreciation for: Infrastructure 34,050,809 185 34,050,994 1,708,717 - 35,759,711 Buildings and improvements 11,528,712 - 11,528,712 422,642 - 11,951,354 Vehicles 2,514,731 8,052 2,522,783 181,958 52,264 2,652,477 Equipment, furniture and fixtures 3,245,319 [32,701] 3,212,618 308,254 43,100 3,477,772 Total accumulated depreciation 51,339,571 [24,464] 51,315,107 2,621,571 95,364 53,841,314 Business-type activities capital assets, net 80,849,093$ 924,728$ 81,773,821$ 6,147,075$ 2,019,424$ 85,901,472$ 44 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 6,702$ Public safety 703,049 Public works 3,835,917 Public health 27,905 Culture and recreation 880,243 Planning and development 3,493 Total depreciation 5,457,309$ Business-type Activities: Solid W aste Disposal 566,554$ Water and Sewer 1,889,800 Sanitation 134,807 Golf Course Division 30,410 Total depreciation 2,621,571$ E.Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2014: Balance Balance Amounts January 1, December 31,Due Within 2014 Additions Deletions 2014 One Year Governmental activities: General obligation bonds 49,631,795$ 5,634,050$ 5,232,290$ 50,033,555$ 5,140,611$ Financing lease - 176,235 - 176,235 44,463 Accrued compensation 2,953,944 1,422,122 1,479,916 2,896,150 1,479,916 Temporary notes 3,800,000 5,000,000 3,800,000 5,000,000 5,000,000 Total 56,385,739$ 12,232,407$ 10,512,206$ 58,105,940$ 11,664,990$ Business-type activities: General obligation bonds 8,519,799$ 2,205,000$ 1,137,448$ 9,587,351$ 1,047,580$ Revenue bonds 15,226,532 - 633,696 14,592,836 643,696 Loans payable - 6,208,102 - 6,208,102 379,000 Accrued compensation 643,967 301,949 319,894 626,022 319,894 Total 24,390,298$ 8,715,051$ 2,091,038$ 31,014,311$ 2,390,170$ Component Units: General obligation bonds 24,185,000$ -$ 925,000$ 23,260,000$ 955,000$ Less unamortized discount [304,339] - [18,894] [285,445] - Financing lease 156,791 - 48,825 107,966 52,190 Special assessment debt 66,746 - 17,797 48,949 18,484 Total component units 24,104,198$ -$ 972,728$ 23,131,470$ 1,025,674$ 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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%115,000$ Internal Improvements 2006A, due 10/1/2026 2,200,000 3.55% to 5.50%1,320,000 Internal Improvements 2006B, due 10/1/2021 885,000 4.00% to 4.50%325,000 Internal Improvements 2007A, due 10/1/2027 6,545,000 4.25% to 4.625%4,005,000 Internal Improvements 2008A, due 10/1/2023 3,720,000 3.25% to 4.00%2,250,000 Internal Improvements 2008B, due 7/1/2028 3,525,000 3.65% to 5.00%3,025,000 Internal Improvements 2009A, due 10/1/2029 23,695,000 2.00% to 5.00%16,397,020 Internal Improvements 2010A, due 10/1/2025 6,916,592 2.00% to 3.875%3,690,500 Internal Improvements 2010B, due 10/1/2023 7,973,044 0.50% to 3.00%4,738,260 Internal Improvements 2011A, due 10/1/2031 6,587,985 2.00% to 5.00%5,724,539 Internal Improvements 2012A, due 10/1/2027 2,383,903 1.00% to 2.45%2,111,383 Refunding 2012B, due 10/1/2020 3,817,108 1.00% to 1.40%2,484,080 Internal Improvements 2013A, due 10/1/28 1,369,380 3.00% to 4.00%1,323,755 Internal Improvements 2013B, due 10/1/33 4,485,073 0.60% to 3.65%4,272,319 Internal Improvements 2014A, due 10/1/34 7,570,000 2.50% to 3.75%7,839,050 Total general obligation bonds 59,620,906$ Revenue Bonds Revenue 2011, due 10/1/31 16,193,925$ 2.00% to 4.60%14,592,836$ Total revenue bonds 14,592,836$ Temporary Notes Series 2014-1, due 8/1/2015 5,000,000$ 1.00%5,000,000$ Total temporary notes 5,000,000$ Loans Payable Kansas Public W ater Supply, due 8/1/2034 9,330,000$ 2.12%6,208,102$ Total loans payable 6,208,102$ Financing Lease, due 2/10/2017 Equipment, due 2/10/17 30,000$ 3.54%30,000$ Equipment, due 5/8/18 146,235 3.28%146,235 176,235$ 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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%2,110,000$ General Obligation 2007A, due 2022 1,005,000 4.60% to 6.00%630,000 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%4,690,000 General Obligation 2011A, due 2030 11,820,000 4.64%11,300,000 General Obligation 2011B, due 2031 2,505,000 4.28%2,505,000 Less unamortized bond discount [285,445] Total general obligation bonds 22,974,555 Special Assessment Debt Airport Industrial Center, due 2016 565,235 3.79%33,820 Hangar 600 Sanitary Sewer, due 2021 27,599 4.47%15,129 Total special assessment debt 48,949 Financing Lease, due 2016 425,000 6.609%107,966 Total 23,131,470$ Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: Bonds Interest Year Outstanding Due Total 2015 6,188,191$ 2,021,775$ 8,209,966$ 2016 6,088,191 1,801,960 7,890,151 2017 5,883,190 1,618,821 7,502,011 2018 5,988,190 1,415,603 7,403,793 2019 5,893,190 1,200,606 7,093,796 2020-2024 17,176,196 3,958,932 21,135,128 2025-2029 10,238,168 1,373,514 11,611,682 2030-2034 2,165,590 201,763 2,367,353 Total 59,620,906$ 13,592,974$ 73,213,880$ General Obligation - Primary Government 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Bonds Interest Year Outstanding Due Total 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 1,115,000 878,519 1,993,519 2020-2024 6,370,000 3,600,036 9,970,036 2025-2029 7,985,000 1,985,411 9,970,411 2030-2031 3,745,000 244,325 3,989,325 Total 23,260,000$ 10,633,716$ 33,893,716$ 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 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 728,696 487,991 1,216,687 2020-2024 4,013,480 2,053,183 6,066,663 2025-2029 4,888,480 1,179,207 6,067,687 2030-2031 2,267,396 157,090 2,424,486 Total 14,592,836$ 6,030,385$ 20,623,221$ 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 2015 5,000,000$ 50,139$ 5,050,139$ Temporary Notes - Primary Government 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirements to maturity for financing leases -to be paid from revenues: Lease Interest Year Outstanding Due Total 2015 44,463$ 5,858$ 50,321$ 2016 45,946 4,375 50,321 2017 47,479 2,842 50,321 2018 38,347 1,258 39,605 Total 176,235$ 14,333$ 190,568$ Capital Lease - Primary Government Lease Interest Year Outstanding Due Total 2015 52,190$ 6,282$ 58,472 2016 55,776 2,696 58,472 Total 107,966$ 8,978$ 116,944$ Financing Lease - Component Units The City has engaged in a loan with the Kansas Public Water Supply Fund. The following displays annual debt service requirements to maturity for the loan payable to be paid from service revenues, for the full proceeds amount: Loans Interest Year Outstanding Due Total 2015 379,000$ 195,797$ 309,572$ 2016 387,077 187,720 620,187 2017 395,326 179,471 621,622 2018 403,752 171,045 623,119 2019 412,357 162,440 624,682 2020-2024 2,197,416 676,569 3,149,263 2025-2029 2,441,771 432,214 3,149,263 2030-2034 2,713,301 160,696 1,415,883 Total 9,330,000$ 2,165,952$ 10,513,591$ Loans - Primary Government . 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: Assessment Interest Year Outstanding Due Total 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 2,249 315 2,564 2020-2021 4,805 325 5,130 Total 48,949$ 4,759$ 53,708$ 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, 2014, total outstanding conduit debt was $60,442,007. 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 $93,926 for the year ended December 31, 2014. The future minimum lease payments for the lease are as follows: Year Amount 2015 93,926$ 2016 93,926 2017 93,926 2018 93,926 2019 93,926 2020-2024 469,633 2025-2027 281,780 Total 1,221,043$ G. Reconciliation of Transfers A reconciliation of interfund transfers follows: Transfer In Transfer Out Major Funds: General fund 370,765$ 561,585$ Tourism and convention fund - 660,057 Sales tax capital fund - 1,760,000 Debt service 1,575,988 - Capital projects fund - 15,175 Other governmental funds 1,053,969 3,118 Agency funds - 787 Total Transfers 3,000,722$ 3,000,722$ The City uses interfund transfers to share administrative costs between funds. 51 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 establishes 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 KPERS (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 5% of covered salary for all employees hired prior to July 1, 2009. K.S.A. 74-49,210 establishes the KPERS rate at 6% of covered salary for all employees hired after July 1, 2009. 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 9.32% from January 1 to December 31, 2014.The City employer contributions to KPERS for the years ending December 31, 2014, 2013, and 2012 were $1,357,291, $1,192,221 and $1,081,438, respectively, equal to the required contributions for each year. The KP&F employer rate established for fiscal years beginning in 2014 is 24.75%. 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, 2014, 2013, and 2012 were $2,611,038, $2,338,786 and $2,007,908, 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. 52 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, $177,561 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2014 2013 Unpaid claim s, January 1 569,755$ 493,170$ Incurred claim s (including IBNRs)660,413 882,663 Claim payments [887,806] [806,078] Unpaid claim s, December 31 342,362$ 569,755$ 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 $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Health Insurance Fund because it is expected to be liquidated with expendable available financial resources. Therefore, all of the liability is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2014 2013 Unpaid claim s, January 1 372,147$ 367,424$ Incurred claim s (including IBNRs)5,447,940 4,656,961 Claim payments [5,290,872][4,652,238] Unpaid claim s, December 31 529,215$ 372,147$ 53 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, 2014. Project Authorization Expenditures Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and W astewater Pump Station Rehabilitation 5,150,000$ 1,072,377$ East Magnolia Road Replacement 4,500,000 3,513,900 Fire Station #1 2,600,000 2,556,489 Quail Meadows Estates, IV 408,745 2,000 Downtown W ellfield Improvements 9,330,000 7,650,454 Advanced Meter Infrastructure 39,850,000 17,734,029 Downtown Lighting Replacement 4,110,000 4,210,492 Pheasant Ridge Addition #2 1,162,890 835,583 Ninth and Cloud Intersection Realignment 1,100,000 1,053,776 Magnolia Hills Subdivision 824,902 786 Bicentennial Center Improvements 10,200,000 1,605,107 Fire Department Apparatus Bay Addition 2,096,654 182,258 Landfill Cell 19 and Leachate Pond 2,300,000 2,330,240 Ohio Street Improvements 1,700,000 206,492 Iron Avenue Reconstruction 2,250,000 149,753 Magnolia Hills Subdivision Phase III 1,460,979 266,921 KPW SLF 2841 W ater Line Replacement 4,250,000 1,907,925 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, 2014. 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 $1,773,027 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. 54 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 $4,378,208 as the remaining estimated capacity is filled over the remaining life expectancy of 145 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2014. 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. 55 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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). 56 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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 $185,000 to the Plan (approximately 100% of total premiums) through their required contribution of $507 per month for retiree-only coverage and $1,360 for family coverage. Annual OPEB Cost and Net OPEB Obligation. The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. 57 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 Note 5. OTHER INFORMATION (Continued) I.Postemployment Health Care Plan (Continued) The following table shows the components of the City’s annual OPEB cost for the Plan for the year, the amount actually contributed to the plan, and the changes in the City’s net OPEB obligation to the Plan: Annual required contribution 548,166$ Interest on Net OPEB Obligation 119,602 Adjustment to Annual Required Contribution [132,891] Annual OPEB cost (expense)534,877 Benefit payments [185,000] Change in net OPEB obligation 349,877 Net OPEB obligation - beginning of year 3,986,743 Net OPEB obligation - end of year 4,336,620$ 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, 2014 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 December 31, 2014 534,877 185,000 4,336,620 Funding Status and Funding Progress. As of the year ended December 31, 2014, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $5,538,770 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $5,538,770. The covered payroll (annual payroll of active employees covered by the plan) was $22,156,127, and the ratio of the UAAL to the covered payroll was 25.00%. 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. 58 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2014 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, 2014, 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 6.60%, 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.Deficit Fund Balance The following nonmajor funds maintained deficit fund balances at December 31, 2014: HOME 2012 Fund - $[10,850], Police Grants Fund -$[27,819], Federal CARE Grant Fund -$[6,082] K.Subsequent Events On January 9, 2014, the City entered into a $4,250,000 loan agreement with the Kansas Department of Health and Environment. However, the City did not make its first draw on the loan until 2015. 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 $139,229 from February 1, 2016 to August 1, 2035. These payments will include a gross interest rate of 2.43% plus a .35% service fee. On July 17, 2015, the City issued Series 2015-A general obligation refunding and internal improvement bonds in the amounts of $6,825,000. The bonds will be used to retire the Series 2014-1 temporary note and to finance a portion of the improvements to the Bicentennial Center. The City will make the first payment on the bonds on April 1, 2016 and the last payment on October 1, 2035. The interest rate on the bonds ranges from 2.00% to 4.00%. On August 1, 2015, the City issued Series 2015-1 temporary notes in the amounts of $5,995,000. The temporary notes will be used to partially finance improvements to Iron Avenue and North Ohio Street and to complete the renovation of Fire Station #1. The maturity date of the temporary notes is August 1, 2016 and the interest rate on the notes is 1.25%. REQUIRED SUPPLEMENTARY INFORMAT ION 59 CITY OF SALINA, KANSAS OTHER POST-EMPLOYMENT BENEFITS REQUIRED SUPPLEMENTARY INFORMATION December 31, 2014 Schedule of Employer Contributions: Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2008 910,418$ 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 December 31, 2014 534,877 185,000 4,336,620 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% 12/31/2014 - 5,538,770 5,538,770 0.0%22,156,127 25.00% COMBINING AN D INDIVIDUAL FUND ST AT EMENTS AND SCHEDULES 60 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. Animal shelter donations fund –To accumulate donations and account for expenses to benefit the animal shelter. 61 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 1,704,634$ 467,597$ 868,082$ 3,040,313$ Receivables Accounts 54,746 - - 54,746 Total assets 1,759,380$ 467,597$ 868,082$ 3,095,059$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 32,120$ -$ 60,708$ 92,828$ Due to other funds 44,751 - - 44,751 Total liabilities 76,871 - 60,708 137,579 Fund balances: Restricted 457,115 - 807,374 1,264,489 Committed 1,067,119 467,597 - 1,534,716 Assigned 158,275 - - 158,275 Total fund balances 1,682,509 467,597 807,374 2,957,480 Total liabilities and fund balances 1,759,380$ 467,597$ 868,082$ 3,095,059$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2014 See independent auditor's report on the financial statements. 62 Total Total Nonmajor Total Nonmajor Nonmajor Debt Nonmajor Special Revenue Permanent Service Governmental Funds Funds Fund Funds REVENUES Taxes 347,225$ -$ -$ 347,225$ Intergovernmental 521,518 - 297,350 818,868 Charges for services 436,115 13,890 - 450,005 Licenses and permits 7,300 - - 7,300 Investment revenue 4,234 1,218 74 5,526 Donations 240,699 - - 240,699 Miscellaneous 135,240 - - 135,240 Total revenues 1,692,331 15,108 297,424 2,004,863 EXPENDITURES Current Culture and recreation 1,594,764 - - 1,594,764 Public health and sanitation 173,259 - - 173,259 Planning and development 203,037 - - 203,037 Miscellaneous - 35 - 35 Debt service Principal retirement - - 140,000 140,000 Interest and other charges - - 142,080 142,080 Capital outlay 768,378 - - 768,378 Total expenditures 2,739,438 35 282,080 3,021,553 Excess [deficiency] of revenues over [under] expenditures [1,047,107] 15,073 15,344 [1,016,690] Other financing sources [uses] Transfers in 1,053,969 - - 1,053,969 Transfers [out][3,118] - - [3,118] Total other financing sources [uses]1,050,851 - - 1,050,851 Net change in fund balance 3,744 15,073 15,344 34,161 Fund balance - Beginning of year 1,600,900 452,524 792,030 2,845,454 Restatement of prior year fund balance 77,865 - - 77,865 Fund balance - Beginning of year, as restated 1,678,765 452,524 792,030 2,923,319 Fund balance - End of year 1,682,509$ 467,597$ 807,374$2,957,480$ For the Year Ended December 31, 2014 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. 63 Business Special Bicentennial Improvement Neighborhood Parks &Special Center District Park Recreation Alcohol ASSETS Cash and investments 25,916$ 1,524$ 117,959$ 182,834$ 42,456$ Receivables Accounts - 54,746 - - - Total assets 25,916$ 56,270$ 117,959$ 182,834$ 42,456$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 25,916$ 1,961$ -$ 234$ -$ Due to other funds - - - - - Total liabilities 25,916 1,961 - 234 - Fund balance: Restricted - 54,309 - 182,600 42,456 Committed - - 95,382 - - Assigned - - 22,577 - - Total fund balance [deficit]- 54,309 117,959 182,600 42,456 Total liabilities and fund balances 25,916$ 56,270$ 117,959$ 182,834$ 42,456$ COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS CITY OF SALINA, KANSAS December 31, 2014 Bicentennial HUD Community Sales Tax KDOT Center Community Development Heritage Economic HOME Signals Event Dev.Revolving Commission Development 2012 9th Street 500$ 74,578$ 109,254$ 4$ 675,154$ -$ -$ - - - - - - - 500$ 74,578$ 109,254$ 4$ 675,154$ -$ -$ -$ -$ -$ -$ -$ -$ -$ - - - - - 10,850 - - - - - - 10,850 - - 74,578 109,254 - - - - 500 - - 4 675,154 [137,265] - - - - - - 126,415 - 500 74,578 109,254 4 675,154 [10,850] - 500$ 74,578$ 109,254$ 4$ 675,154$ -$ -$ See independent auditor's report on the financial statements. 64 Flood &Kenwood Special Fair Drainage CDBG Cover Law Police Housing Improvement ED Capital Enforcement Grants ASSETS Cash and investments 46,590$ -$ -$ 27,568$ 2,877$ -$ Receivables Accounts - - - - - - Total assets 46,590$ -$ -$ 27,568$ 2,877$ -$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable -$ -$ -$ -$ -$ -$ Due to other funds - - - - - 27,819 Total liabilities - - - - - 27,819 Fund balance: Restricted - - - - - - Committed 46,590 - - 27,568 2,877 [27,819] Assigned - - - - - - Total fund balance [deficit]46,590 - - 27,568 2,877 [27,819] Total liabilities and fund balances 46,590$ -$ -$ 27,568$ 2,877$ -$ CITY OF SALINA, KANSAS December 31, 2014 NONMAJOR SPECIAL REVENUE FUNDS (Continued) COMBINING BALANCE SHEET Police War Federal Department Homeowners'Animal DARE Memorial Arts &CARE Federal Assistance Shelter Donations Maintenance Humanities Grant Forfeiture Funds Fund Donations Totals 3,597$ 34,008$ 103,898$ -$ 55,766$ 2,055$ 198,096$ 1,704,634$ - - - - - - - 54,746 3,597$ 34,008$ 103,898$ -$ 55,766$ 2,055$ 198,096$ 1,759,380$ -$ -$ 3,877$ -$ -$ -$ 132$ 32,120$ - - - 6,082 - - - 44,751 - - 3,877 6,082 - - 132 76,871 - - - [6,082] - - - 457,115 3,597 34,008 100,021 - 46,483 2,055 197,964 1,067,119 - - - - 9,283 - - 158,275 3,597 34,008 100,021 [6,082] 55,766 2,055 197,964 1,682,509 3,597$ 34,008$ 103,898$ -$ 55,766$ 2,055$ 198,096$ 1,759,380$ 65 See independent auditor's report on the financial statements. Business Special Bicentennial Improvement Neighborhood Parks &Special Center District Park Recreation Alcohol Revenues Taxes -$ -$ -$ -$ -$ Intergovernmental - - - 172,643 172,643 Charges for services 374 82,129 - - - Licenses and permits - - 7,300 - - Investment revenue - 14 342 361 41 Donations - - - - 0 Miscellaneous - - - - - Total Revenues 374 82,143 7,642 173,004 172,684 Expenditures Current Culture and recreation 618,900 - - - - Public health and sanitation - - - - 130,433 Planning and development - 82,945 - - - Capital outlay 25,700 - 40,033 118,982 - Total Expenditures 644,600 82,945 40,033 118,982 130,433 Excess [deficiency] of revenues over [under] expenditures [644,226] [802] [32,391] 54,022 42,251 Other financing sources [uses] Transfers in 635,852 - - - - Transfers [out]- - - - - Total other financing sources [uses]635,852 - - - - Net change in fund balance [8,374] [802] [32,391] 54,022 42,251 Fund balance, beginning of year 8,374 55,111 150,350 128,578 205 Restatement of prior year fund balance - - - - - Fund balance, beginning of year, as restated 8,374 55,111 150,350 128,578 205 Fund balance, end of year -$ 54,309$ 117,959$ 182,600$ 42,456$ For the Year Ended December 31, 2014 AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, Bicentennial HUD Community Sales Tax KDOT Center Community Development Heritage Economic HOME Signals Event Development Revolving Commission Development 2012 9th Street -$ -$ -$ -$ 347,225$ -$ -$ - - - - - - - - - - - - - - - - - - - - - - 191 289 - 1,748 - - - - - - - - - - - - - - - - - 191 289 - 348,973 - - - - - - - - - - - - - - - - - - - - - - - - - - - 281,708 - - - - - - 281,708 - - - 191 289 - 67,265 - - - 2,101 - - - - - - - - - - - - - 2,101 - - - - - - 2,292 289 - 67,265 - - 500 72,286 108,965 4 607,889 [10,850] [77,865] - - - - - - 77,865 500 72,286 108,965 4 607,889 [10,850] - 500$ 74,578$ 109,254$ 4$ 675,154$ [10,850]$ -$ See independent auditor's report on the financial statements. 66 Flood &Kenwood Special Fair Drainage CDBG Cover Law Police Housing Improvement ED Capital Enforcement Grants Revenues Taxes -$ -$ -$ -$ -$ -$ Intergovernmental 84,573 - - - - - Charges for services - - - - - - Licenses and permits - - - - - - Investment revenue 158 - - - 6 - Donations - - - - - - Miscellaneous - - - - - - Total Revenues 84,731 - - - 6 - Expenditures Current Culture and recreation - - - - - - Public health and sanitation - - - - - - Planning and development 66,000 - - - - - Capital outlay - 12 - 50,999 - 27,819 Total Expenditures 66,000 12 - 50,999 - 27,819 Excess [deficiency] of revenues over [under] expenditures 18,731 [12] - [50,999]6 [27,819] Other financing sources [uses] Transfers in - - - 50,000 - - Transfers [out][646] - [2,472]- - - Total other financing sources [uses][646] - [2,472]50,000 - - Net change in fund balance 18,085 [12] [2,472][999] 6 [27,819] Fund balance, beginning of year 28,505 12 2,472 28,567 2,871 - Restatement of prior year fund balance - - - - - - Fund balance, beginning of year, as restated 28,505 12 2,472 28,567 2,871 - Fund balance, end of year 46,590$-$ -$ 27,568$2,877$ [27,819]$ For the Year Ended December 31, 2014 NONMAJOR SPECIAL REVENUE FUNDS (Continued) AND CHANGES IN FUND BALANCES COMBINING STATEMENT OF REVENUES, EXPENDITURES, CITY OF SALINA, KANSAS Police War Federal Department Homeowners'Animal DARE Memorial Arts &CARE Federal Assistance Shelter Donations Maintenance Humanities Grant Forfeiture Funds Fund Donations Totals -$ -$ -$ -$ -$ -$ -$ 347,225$ - - - 91,659 - - - 521,518 - - 353,612 - - - - 436,115 - - - - - - - 7,300 6 91 445 - 449 2 91 4,234 - - - - - - 240,699 240,699 864 - 132,587 - - 1,789 - 135,240 870 91 486,644 91,659 449 1,791 240,790 1,692,331 - 1,128 974,736 - - - - 1,594,764 - - - - - - 42,826 173,259 - - - 54,092 - - - 203,037 - - - - 223,125 - - 768,378 - 1,128 974,736 54,092 223,125 - 42,826 2,739,438 870 [1,037] [488,092] 37,567 [222,676] 1,791 197,964 [1,047,107] - - 366,016 - - - - 1,053,969 - - - - - - - [3,118] - - 366,016 - - - - 1,050,851 870 [1,037] [122,076] 37,567 [222,676] 1,791 197,964 3,744 2,727 35,045 222,097 [43,649]278,442 264 - 1,600,900 - - - - - - - 77,865 2,727 35,045 222,097 [43,649]278,442 264 - 1,678,765 3,597$ 34,008$ 100,021$ [6,082]$ 55,766$ 2,055$ 197,964$1,682,509$ 67 See independent auditor's report on the financial statements. Cemetery Mausoleum Tricentennial ASSETS Endowment Endowment Commission Total Cash and investments 459,833$ 2,013$ 5,751$ 467,597$ Total assets 459,833$ 2,013$ 5,751$ 467,597$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable -$ -$ -$ -$ Total liabilities - - - - Fund balances Committed 459,833 2,013 5,751 467,597 Total liabilities and fund balances 459,833$ 2,013$ 5,751$ 467,597$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET December 31, 2014 NONMAJOR PERMANENT FUNDS See independent auditor's report on the financial statements. 68 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total Revenues Charges for services 13,890$ -$ -$ 13,890$ Investment revenue 1,198 5 15 1,218 Total revenues 15,088 5 15 15,108 Expenditures Miscellaneous 35 - - 35 Total expenditures 35 - - 35 Net change in fund balance 15,053 5 15 15,073 Fund balances - beginning of year 444,780 2,008 5,736 452,524 Fund balances - end of year 459,833$ 2,013$ 5,751$ 467,597$ NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2014 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES 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) BICENTENNIAL CENTER FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Culture and recreation 374$ -$ -$ 374$ Total revenues 374 - - 374 Expenditures Culture and Recreation Bicentennial Center 644,600 450,000 450,000 [194,600] Cash Reserve - 18,395 18,395 18,395 Total expenditures 644,600 468,395 468,395 [176,205] Excess [deficiency] of revenues over [under] expenditures [644,226] [468,395] [468,395] [175,831] Other financing sources [uses] Transfer in 635,853 501,190 501,190 134,663 Total other financing sources [uses]635,853 501,190 501,190 134,663 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][8,373] 32,795 32,795 [41,168] Unreserved fund balance, January 1 - 35,672 35,672 [35,672] Prior year cancelled encumbrances 8,373 - - 8,373 Unreserved fund balance/GAAP fund balance December 31 -$ 68,467$ 68,467$ [68,467]$ 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) BUSINESS IMPROVEMENT CITY FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Community and economic development 82,630$ 90,000$ 90,000$ [7,370]$ Interest income General interest 14 500 500 [486] Total revenues 82,644 90,500 90,500 [7,856] Expenditures Community Development Business Improvement District 82,945 90,500 90,500 7,555 Total expenditures 82,945 90,500 90,500 7,555 Excess [deficiency] of revenues over [under] expenditures [301] - - [301] Unreserved fund balance, January 1 [136] 2 2 [138] Unreserved fund balance, December 31 [437] 2$ 2$ [439]$ Reconciliation to GAAP Accounts receivable 54,746 GAAP Fund Balance, December 31 54,309$ 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) NEIGHBORHOOD PARK FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Public works 7,300$ 20,000$ 20,000$ [12,700]$ Interest income General interest 342 4,000 4,000 [3,658] Total revenues 7,642 24,000 24,000 [16,358] Expenditures Public W orks Parks 22,948 24,000 24,000 1,052 Total expenditures 22,948 24,000 24,000 1,052 Excess [deficiency] of revenues over [under] expenditures [15,306] - - [15,306] Unreserved fund balance, January 1 110,260 - - 110,260 Prior year cancelled encumbrances 428 - - 428 Unreserved fund balance, December 31 95,382 -$ -$ 95,382$ Reconciliation to GAAP Current year encumbrances 22,577 GAAP Fund Balance, December 31 117,959$ 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 PARKS AND RECREATION FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Culture and recreation 172,642$ 160,000$ 160,000$ 12,642$ Interest income General interest 362 4,000 4,000 [3,638] Total revenues 173,004 164,000 164,000 9,004 Expenditures Public Works Parks 100,982 152,909 152,909 51,927 Cash Reserve - 131,303 131,303 131,303 Total expenditures 100,982 284,212 284,212 183,230 Excess [deficiency] of revenues over [under] expenditures 72,022 [120,212] [120,212] 192,234 Unreserved fund balance, January 1 110,578 120,212 120,212 [9,634] Unreserved fund balance/GAAP fund balance December 31 182,600$ -$ -$ 182,600$ 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) SPECIAL ALCOHOL FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Health and sanitation 172,643$ 160,000$ 160,000$ 12,643$ Interest income General interest 41 - - 41 Total revenues 172,684 160,000 160,000 12,684 Expenditures Public Health and Sanitation Special alcohol 130,433 160,000 160,000 29,567 Total expenditures 130,433 160,000 160,000 29,567 Excess [deficiency] of revenues over [under] expenditures 42,251 - - 42,251 Unreserved fund balance, January 1 205 21 21 184 Unreserved fund balance/GAAP fund balance December 31 42,456$ 21$ 21$ 42,435$ 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) SALES TAX ECONOMIC DEVELOPMENT FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Selective sales tax 347,225$ 300,966$ 300,966$ 46,259$ Interest income General interest 1,748 5,000 5,000 [3,252] Total revenues 348,973 305,966 305,966 43,007 Expenditures Community Development Economic development 281,708 218,829 218,829 [62,879] Cash Reserve - 50,000 50,000 50,000 Total expenditures 281,708 268,829 268,829 [12,879] Excess [deficiency] of revenues over [under] expenditures 67,265 37,137 37,137 30,128 Unreserved fund balance, January 1 607,889 - - 607,889 Unreserved fund balance/GAAP fund balance December 31 675,154$ 37,137$ 37,137$ 638,017$ 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) FAIR HOUSING FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Community and economic development 84,573$ 65,000$ 65,000$ 19,573$ Interest income General interest 158 1,000 1,000 [842] Total revenues 84,731 66,000 66,000 18,731 Expenditures Community Development Human relations 66,000 66,000 66,000 - Total expenditures 66,000 66,000 66,000 - Excess [deficiency] of revenues over [under] expenditures 18,731 - - 18,731 Other financing sources [uses] Transfer [out][646] - - [646] Total other financing sources [uses][646] - - [646] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]18,085 - - 18,085 Unreserved fund balance, January 1 28,505 646 646 27,859 Unreserved fund balance/GAAP fund balance December 31 46,590$ 646$ 646$ 45,944$ 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) ARTS & HUMANITIES FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Culture and recreation 486,198$ 465,350$ 465,350$ 20,848$ Interest income General interest 445 2,000 2,000 [1,555] Miscellaneous revenues Culture and recreation - 500 500 [500] Total revenues 486,643 467,850 467,850 18,793 Expenditures Culture and Recreation Arts and humanities 619,887 669,263 669,263 49,376 Smoky Hill River Festival 354,848 361,450 361,450 6,602 Cash Reserve - 108,802 108,802 108,802 Total expenditures 974,735 1,139,515 1,139,515 164,780 Excess [deficiency] of revenues over [under] expenditures [488,092] [671,665] [671,665] 183,573 Other financing sources [uses] Transfer in 366,016 508,426 508,426 [142,410] Total other financing sources [uses]366,016 508,426 508,426 [142,410] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][122,076] [163,239] [163,239] 41,163 Unreserved fund balance, January 1 222,097 163,239 163,239 58,858 Unreserved fund balance/GAAP fund balance December 31 100,021$ -$ -$ 100,021$ Budgeted Amounts See independent auditor's report on the financial statements. 77 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, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 2,522,112$ 2,563,887$ 2,563,887$ [41,775]$ Delinquent taxes 55,984 55,000 55,000 984 Motor vehicle taxes 282,567 257,626 257,626 24,941 Total taxes 2,860,663 2,876,513 2,876,513 [15,850] Charges for services Special assessments 1,809,992 1,555,000 1,555,000 254,992 Interest income General interest 244 5,000 5,000 [4,756] Miscellaneous revenues General miscellaneous revenues 9,060 126,800 126,800 [117,740] Other financing sources General sources 219,773 210,000 210,000 9,773 Total revenues 4,899,732 4,773,313 4,773,313 126,419 Expenditures Debt Service Principal 5,005,417 5,004,419 5,004,419 [998] Interest and other charges 1,604,003 1,676,659 1,676,659 72,656 Cash Reserve - 200,000 200,000 200,000 Total expenditures 6,609,420 6,881,078 6,881,078 271,658 Excess [deficiency] of revenues over [under] expenditures [1,709,688] [2,107,765] [2,107,765] 398,077 Other financing sources [uses] Transfer in 1,356,214 1,350,000 1,350,000 6,214 Total other financing sources [uses]1,356,214 1,350,000 1,350,000 6,214 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][353,474] [757,765] [757,765] 404,291 Unreserved fund balance, January 1 707,763 757,765 757,765 [50,002] Unreserved fund balance December 31 354,289 -$ -$ 354,289$ Reconciliation to GAAP Taxes receivable 2,813,616 Deferred revenue [2,760,041] GAAP Fund Balance, December 31 407,864$ 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) SOLID W ASTE DISPOSAL FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Health and sanitation 2,595,476$ 1,957,000$ 1,957,000$ 638,476$ Interest income General interest 5,991 7,000 7,000 [1,009] Interfund services provided Health and sanitation 430,834 463,989 463,989 [33,155] Miscellaneous revenues Health and sanitation 37,540 42,310 42,310 [4,770] Total revenues 3,069,841 2,470,299 2,470,299 599,542 Expenditures Public Health and Sanitation Solid waste 1,907,668 2,052,983 2,052,983 145,315 Hazardous waste disposal 106,068 114,787 114,787 8,719 Total public health and sanitation 2,013,736 2,167,770 2,167,770 154,034 Debt Service Principal 411,959 - - [411,959] Interest and other charges 8,240 - - [8,240] Total debt service 420,199 - - [420,199] Cash Reserve - 1,135,000 1,135,000 1,135,000 Total expenditures 2,433,935 3,302,770 3,302,770 868,835 Excess [deficiency] of revenues over [under] expenditures 635,906 [832,471] [832,471] 1,468,377 Unreserved fund balances, January 1 1,449,612 898,962 898,962 550,650 Unreserved fund balances, December 31 2,085,518$ 66,491$ 66,491$ 2,019,027$ 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) WATER AND SEWER FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Water and wastewater 18,169,259$ 19,095,060$ 19,095,060$ [925,801]$ Interest income General interest 29,270 25,000 25,000 4,270 Interfund services provided General services 28,654 37,570 37,570 [8,916] Water and wastewater 88,480 - - 88,480 Total interfund services 117,134 37,570 37,570 79,564 Miscellaneous revenues General miscellaneous revenues 180,185 - - 180,185 Water and wastewater 331,876 470,000 470,000 [138,124] Total miscellaneous revenues 512,061 470,000 470,000 42,061 Total revenues 18,827,724 19,627,630 19,627,630 [799,906] Expenditures Water and W astewater Water 8,986,115 13,237,394 13,237,394 4,251,279 Sewer 2,519,815 2,869,914 2,869,914 350,099 Total water and wastewater 11,505,930 16,107,308 16,107,308 4,601,378 Capital Outlay 2,286,483 2,793,000 2,793,000 506,517 Cash Reserve - 5,339,455 5,339,455 5,339,455 Total expenditures 13,792,413 24,239,763 24,239,763 10,447,350 Excess [deficiency] of revenues over [under] expenditures 5,035,311 [4,612,133] [4,612,133] 9,647,444 Other financing sources [uses] Transfers in 2,007,482 - - 2,007,482 Transfers [out][2,574,000] [2,478,000] [2,478,000] [96,000] Total other financing sources [uses][566,518] [2,478,000] [2,478,000] 1,911,482 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]4,468,793 [7,090,133] [7,090,133] 11,558,926 Unreserved fund balances, January 1 3,513,743 7,090,133 7,090,133 [3,576,390] Prior year cancelled encumbrances 8,258 - - 8,258 Residual equity transfer in 1,315,704 - - 1,315,704 Unreserved fund balances, December 31 9,306,498$ -$ -$ 9,306,498$ 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) SANITATION FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Health and sanitation 2,536,794$ 2,527,287$ 2,527,287$ 9,507$ Interest income General interest 2,549 3,500 3,500 [951] Total revenues 2,539,343 2,530,787 2,530,787 8,556 Expenditures Public Health and Sanitation Sanitation 2,399,146 2,515,608 2,515,608 116,462 Cash Reserve - 706,132 706,132 706,132 Total expenditures 2,399,146 3,221,740 3,221,740 822,594 Excess [deficiency] of revenues over [under] expenditures 140,197 [690,953] [690,953] [814,038] Unreserved fund balance, January 1 756,816 690,953 690,953 65,863 Unreserved fund balances, December 31 897,013$ -$ -$ [748,175]$ Budgeted Amounts See independent auditor's report on the financial statements. 81 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, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes General sales tax 25,437$ 27,000$ 27,000$ [1,563]$ Charges for services Culture and recreation 785,613 745,500 745,500 40,113 Operating grants, unrestricted General grants 656 - - 656 Interest income General interest 258 - - 258 Miscellaneous revenues General miscellaneous revenues 275 - - 275 Culture and recreation 47,774 51,045 51,045 [3,271] Total miscellaneous revenues 48,049 51,045 51,045 [2,996] Total revenues 860,013 823,545 823,545 36,468 Expenditures Culture and Recreation Golf course 806,783 768,546 768,546 [38,237] Cash Reserve - 85,000 85,000 85,000 Total expenditures 806,783 853,546 853,546 46,763 Excess [deficiency] of revenues over [under] expenditures 53,230 [30,001] [30,001] 83,231 Unreserved fund balances, January 1 63,928 63,391 63,391 537 Unreserved fund balances, December 31 117,158$ 33,390$ 33,390$ 83,768$ 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) RISK MANAGEMENT FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interfund services provided General services 453,845$ 453,844$ 453,844$ 1$ Interest income General interest 62 - - 62 Miscellaneous revenues General miscellaneous revenues 57,103 92,940 92,940 [35,837] Total revenues 511,010 546,784 546,784 [35,774] Expenditures Other Risk management 533,117 502,957 502,957 [30,160] Total expenditures 533,117 502,957 502,957 [30,160] Excess [deficiency] of revenues over [under] expenditures [22,107] 43,827 43,827 [65,934] Unreserved fund balance, January 1 47,700 32,705 32,705 14,995 Unreserved fund balance, December 31 25,593$ 76,532$ 76,532$ [50,939]$ 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) WORKERS' COMPENSATION RESERVE FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 1,941$ 2,500$ 2,500$ [559]$ Interfund services provided General services 329,336 440,330 440,330 [110,994] Miscellaneous revenues General miscellaneous revenues 4,703 - - 4,703 Total revenues 335,980 442,830 442,830 [106,850] Expenditures Other Worker's compensation 350,035 401,030 401,030 50,995 Cash Reserve - 753,275 753,275 753,275 Total expenditures 350,035 1,154,305 1,154,305 804,270 Excess [deficiency] of revenues over [under] expenditures [14,055] [711,475] [711,475] 697,420 Unreserved fund balance, January 1 635,700 717,017 717,017 [81,317] Unreserved fund balance, December 31 621,645$ 5,542$ 5,542$ 616,103$ 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) HEALTH INSURANCE FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 2,981$ 5,000$ 5,000$ [2,019]$ Interfund Services Provided General services 5,968,460 6,064,066 6,064,066 [95,606] Miscellaneous revenues General miscellaneous revenues 19,343 10,000 10,000 9,343 Total revenues 5,990,784 6,079,066 6,079,066 [88,282] Expenditures Other Health insurance 6,678,718 6,785,208 6,785,208 106,490 Cash Reserve - 750,000 750,000 750,000 Total expenditures 6,678,718 7,535,208 7,535,208 856,490 Excess [deficiency] of revenues over [under] expenditures [687,934] [1,456,142] [1,456,142] 768,208 Unreserved fund balance, January 1 1,584,790 1,874,729 1,874,729 [289,939] Unreserved fund balance, December 31 896,856$ 418,587$ 418,587$ 478,269$ 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) CENTRAL GARAGE FUND For the Year Ended December 31, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 219$ 40$ 40$ 179$ Interfund services provided General services 1,668,077 1,755,000 1,755,000 [86,923] Miscellaneous revenues General miscellaneous revenues 5,800 12,782 12,782 [6,982] Total revenues 1,674,096 1,767,822 1,767,822 [93,726] Expenditures Other Central garage 1,682,191 1,799,371 1,799,371 117,180 Cash Reserve - 89,816 89,816 89,816 Total expenditures 1,682,191 1,889,187 1,889,187 206,996 Excess [deficiency] of revenues over [under] expenditures [8,095] [121,365] [121,365] 113,270 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][8,095] [91,365] [91,365] 83,270 Unreserved fund balance, January 1 24,536 91,365 91,365 [66,829] Unreserved fund balance, December 31 16,441$ -$ -$ 16,441$ Budgeted Amounts See independent auditor's report on the financial statements. 86 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, 2014 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services General charges 34,289$ 40,000$ 40,000$ [5,711]$ Interest income General interest 554 668 668 [114] Interfund services provided General services 1,063,627 1,293,000 1,293,000 [229,373] Miscellaneous revenues General miscellaneous revenues - 2,889 2,889 [2,889] Total revenues 1,098,470 1,336,557 1,336,557 [238,087] Expenditures Other Information services 1,158,488 1,271,359 1,271,359 112,871 Cash Reserve - 100,000 100,000 100,000 Total expenditures 1,158,488 1,371,359 1,371,359 212,871 Excess [deficiency] of revenues over [under] expenditures [60,018] [34,802] [34,802] [25,216] Unreserved fund balance, January 1 160,156 173,524 173,524 [13,368] Prior year cancelled encumbrances 255 - - 255 Unreserved fund balance, December 31 100,393$ 138,722$ 138,722$ [38,329]$ Budgeted Amounts See independent auditor's report on the financial statements. 87 88 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 62,853$ 751,196$ 897,026$ 61,323$ 126,351$ 1,898,749$ Inventory and prepaid supplies - - - 188,360 - 188,360 Total current assets 62,853 751,196 897,026 249,683 126,351 2,087,109 Capital assets: Capital assets - - - 201,425 649,936 851,361 Less: accumulated depreciation - - - 186,971 645,919 832,890 Total capital assets - - - 14,454 4,017 18,471 Total assets 62,853$ 751,196$ 897,026$ 264,137$ 130,368$ 2,105,580$ Liabilities: Current liabilities (payable from current assets): Accounts payable 37,260$ 566$ 170$ 44,880$ 26,213$ 109,089$ Current portion of compensated absences payable - - - 17,311 31,042 48,353 Current portion of accrued claims payable - 177,561 529,215 - - 706,776 Total current liabilities (payable from current assets)37,260 178,127 529,385 62,191 57,255 864,218 Noncurrent liabilities: Compensated absences payable - - - 16,567 29,706 46,273 Accrued claims payable - 164,801 - - - 164,801 Total noncurrent liabilities - 164,801 - 16,567 29,706 211,074 Total liabilities 37,260$ 342,928$ 529,385$ 78,758$ 86,961$ 1,075,292$ Net Position Invested in capital assets, net of related debt -$ -$ -$ 14,454$ 4,017$ 18,471$ Unrestricted 25,593 408,268 367,641 170,925 39,390 1,011,817 Total net position 25,593$ 408,268$ 367,641$ 185,379$ 43,407$ 1,030,288$ CITY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2014 See independent auditor's report on the financial statements. 89 Total Workers'Internal Risk Compensation Health Central Information Service Management Reserve Insurance Garage Systems Funds Operating revenues Charges for services 453,844$ 329,336$ 5,968,460$ 1,668,077$ 1,097,917$ 9,517,634$ Miscellaneous 57,104 4,703 19,342 5,801 - 86,950 Total operating revenues 510,948 334,039 5,987,802 1,673,878 1,097,917 9,604,584 Operating expenses General government 533,117 122,642 6,835,786 1,636,872 1,221,821 10,350,238 Depreciation - - - 4,319 143 4,462 Total operating expenses 533,117 122,642 6,835,786 1,641,191 1,221,964 10,354,700 Operating income [loss][22,169] 211,397 [847,984] 32,687 [124,047] [750,116] Other operating revenues [expenses] Investment income 62 1,941 2,981 219 554 5,757 Total other operating revenues [expenses] 62 1,941 2,981 219 554 5,757 Change in net position [22,107] 213,338 [845,003] 32,906 [123,493] [744,359] Net position, January 1 47,700 194,930 1,212,644 160,808 166,900 1,782,982 Restatement - - - [8,335] - [8,335] Net position, January 1, restated 47,700 194,930 1,212,644 152,473 166,900 1,774,647 Net position, December 31 25,593$ 408,268$ 367,641$ 185,379$ 43,407$ 1,030,288$ COMBINING STATEMENT OF REVENUES, EXPENSES INTERNAL SERVICE FUND CITY OF SALINA, KANSAS For the Year Ended December 31, 2014 AND CHANGES IN NET POSITION 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 Cash flows from operating activities Cash received from customers and users 453,844$ 101,943$ 6,125,528$ 1,668,078$ 1,097,917$ 9,447,310$ Cash paid to suppliers of goods or services [498,704] [129,790] [6,835,716] [1,502,397] [804,728] [9,771,335] Cash paid to employees - - - [193,518] [420,679] [614,197] Other operating receipts 57,104 4,703 19,342 5,801 - 86,950 Net cash provided by [used in] operating activities 12,244 [23,144] [690,846] [22,036] [127,490] [851,272] Cash flows from investing activities Interest received 62 1,941 2,981 218 554 5,756 Net increase [decrease] in cash and cash equivalents 12,306 [21,203] [687,865] [21,818] [126,936] [845,516] Cash and cash equivalents, January 1 50,547 772,399 1,584,891 83,141 253,287 2,744,265 Cash and cash equivalents, December 31 62,853$ 751,196$ 897,026$ 61,323$ 126,351$ 1,898,749$ For the Year Ended December 31, 2014 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS See independent auditor's report on the financial statements. 91 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][22,169]$ 211,397$ [847,984]$ 32,687$ [124,047]$ [750,116]$ Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense - - - 4,319 143 4,462 [Increase] decrease in inventory - - - [48,219] - [48,219] Increase [decrease] in accounts payable 34,413 [7,148] 70 [13,725] [5,379] 8,231 Increase [decrease] in accrued compensated absences - - - 2,902 1,793 4,695 Increase [decrease] in claims payable - [227,393] 157,068 - - [70,325] Net cash provided by [used in] operating activities 12,244$ [23,144]$ [690,846]$ [22,036]$ [127,490]$ [851,272]$ For the Year Ended December 31, 2014 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS (Continued) COMBINING STATEMENT OF CASH FLOWS See independent auditor's report on the financial statements. 92 93 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 121,157$ 53$ 1$ [273,632]$ 35,899$ 4,014$ -$ 3,729$ 316,863$208,084$ Total assets 121,157$ 53$ 1$ [273,632]$ 35,899$ 4,014$ -$ 3,729$ 316,863$208,084$ LIABILITIES: Accounts payable 121,157$ 53$ 1$ [273,632]$ 35,899$ 4,014$ -$ 3,729$ 316,863$208,084$ Total liabilities 121,157$ 53$ 1$ [273,632]$ 35,899$ 4,014$ -$ 3,729$ 316,863$208,084$ December 31, 2014 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS See independent auditor's report on the financial statements. 94 Balance Balance December 31,December 31, 2013 Additions Deductions 2014 Cash and investments Special Assessment Escrow 93,278$ 27,879$ -$ 121,157$ Fire Insurance Proceeds 20,468 22,743 43,158 53 PEGS Access 5,132 223,701 228,832 1 Payroll Clearing [256,295] - 17,337 [273,632] Court Bond and Restitution 69,627 - 33,728 35,899 Police Investigation Account 4,013 1 - 4,014 Fire Cam Fund 787 - 787 - Citizenship Trust 3,722 7 - 3,729 Section 125 Plan Fund 317,755 287,555 288,447 316,863 Total Assets 258,487$ 561,886$ 612,289$ 208,084$ Accounts Payable Special Assessment Escrow 93,278$ 27,879$ -$ 121,157$ Fire Insurance Proceeds 20,468 22,743 43,158 53 PEGS Access 5,132 223,701 228,832 1 Payroll Clearing [256,295] - 17,337 [273,632] Court Bond and Restitution 69,627 - 33,728 35,899 Police Investigation Account 4,013 1 - 4,014 Fire Cam Fund 787 - 787 - Citizenship Trust 3,722 7 - 3,729 Section 125 Plan Fund 317,755 287,555 288,447 316,863 Total liabilities 258,487$ 561,886$ 612,289$ 208,084$ CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the Year Ended December 31, 2014 AGENCY FUNDS See independent auditor's report on the financial statements. 95 STAT ISTICAL SECTION Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount % Governmental activities Net investment in capital assets 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$90%115,589$ 90% Restricted 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%876$ 1% Unrestricted 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%11,413$ 9% Total governmental activities net position 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$100%127,878$ 100% Business-type activities Net investment in capital assets 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%61,721$ 75% Restricted 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%1,512$ 2% Unrestricted 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%19,545$ 24% Total business-type activities net position 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%82,778$ 100% Primary government Net investment in capital assets 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$84%177,311$ 84% Restricted 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%2,388$ 1% Unrestricted 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%30,959$ 15% Total primary government net position 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$100%210,658$ 100% Source: City of Salina Comprehensive Annual Financial Reports, 2005 - 201496 (in 000's) (accrual basis of accounting) Last Ten Fiscal Years Net Position by Component City of Salina, Kansas Schedule 1 2009 Fiscal Year 2006 20142012201320112010200820052007 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Expenses Governmental activities: General government 4,904$ 6,319$ 6,732$ 6,791$ 14,664$ 10,845$ 13,614$ 11,278$ 10,978$ 12,550$ Public safety 14,159$ 14,621$ 16,877$ 18,440$ 16,539$ 18,592$ 18,579$ 19,066$ 19,649$ 20,208$ Public works 8,420$ 8,609$ 9,258$ 9,706$ 9,781$ 9,782$ 9,858$ 10,957$ 11,064$ 11,401$ Public health and sanitation 1,102$ 1,214$ 1,281$ 1,310$ 1,390$ 1,365$ 1,368$ 1,383$ 1,369$ 347$ Culture and recreation 5,071$ 4,961$ 5,658$ 5,582$ 5,397$ 8,572$ 6,693$ 5,338$ 4,809$ 5,156$ Planning and development 2,714$ 2,697$ 2,814$ 3,481$ 3,375$ 3,716$ 3,450$ 3,362$ 3,399$ 3,236$ Interest on long term debt 742$ 972$ 1,295$ 1,454$ -$ 2,256$ 1,650$ 1,914$ 1,953$ 1,817$ Total governmental activities expenses 37,112$ 39,393$ 43,916$ 46,764$ 51,146$ 55,128$ 55,212$ 53,298$ 53,221$ 54,715$ Business-type activities: Solid waste disposal 2,608$ 2,471$ 2,088$ 2,008$ 2,287$ 3,010$ 2,945$ 2,067$ 3,532$ 1,870$ Water and sewer 11,262$ 11,676$ 12,227$ 13,284$ 12,995$ 14,050$ 13,597$ 14,897$ 15,418$ 14,904$ Sanitation 1,889$ 1,945$ 2,038$ 2,184$ 2,224$ 2,261$ 2,261$ 2,441$ 2,237$ 2,399$ Golf course 893$ 852$ 884$ 884$ 897$ 817$ 825$ 723$ 768$ 843$ Total business-type activities expenses 16,652$ 16,944$ 17,236$ 18,360$ 18,403$ 20,138$ 19,628$ 20,128$ 21,955$ 20,016$ Total primary government expenses 53,764$ 56,337$ 61,153$ 65,124$ 69,549$ 75,266$ 74,840$ 73,426$ 75,176$ 74,731$ Program Revenues Governmental activities: Charges for services General government 3,926$ 4,177$ 4,309$ 4,581$ 4,599$ 5,143$ 6,106$ 6,328$ 5,548$ 5,662$ Public safety 3,368$ 3,603$ 3,539$ 3,588$ 2,913$ 3,969$ 3,766$ 4,290$ 4,656$ 4,222$ Public works 163$ 169$ 457$ 120$ 164$ 198$ 262$ 306$ 277$ 255$ Public health and sanitation 31$ 36$ 33$ 39$ 42$ 37$ 43$ 46$ 34$ 46$ Culture and recreation 2,276$ 1,883$ 2,050$ 2,139$ 1,936$ 2,817$ 3,140$ 1,728$ 1,466$ 1,533$ Planning and development 95$ 114$ 101$ 240$ 267$ 144$ 153$ 158$ 161$ 167$ Operating grants and contibutions 2,798$ 3,145$ 3,381$ 3,752$ 3,163$ 3,415$ 2,907$ 4,495$ 4,200$ 4,015$ Capital grants and contributions 13,875$ 3,091$ -$ -$ -$ -$ -$ -$ -$ -$ Total governmental activities program revenues 26,532$ 16,216$ 13,871$ 14,458$ 13,084$ 15,723$ 16,377$ 17,351$ 16,342$ 15,900$ Business-type activities: Charges for services Solid waste disposal 2,344$ 2,674$ 2,789$ 2,749$ 2,903$ 2,853$ 2,904$ 3,137$ 3,138$ 3,024$ Water and sewer 12,704$ 12,949$ 14,054$ 14,073$ 14,980$ 16,520$ 17,904$ 19,099$ 17,938$ 18,742$ Sanitation 1,881$ 1,988$ 2,112$ 2,172$ 2,292$ 2,310$ 2,334$ 2,462$ 2,514$ 2,553$ Golf course 799$ 773$ 723$ 751$ 757$ 736$ 636$ 783$ 719$ 811$ Operating grants and contributions -$ -$ -$ -$ -$ 202$ -$ -$ Capital grants and contributions -$ -$ -$ -$ -$ -$ 3,804$ 274$ -$ 115$ Total business-type activities program revenues 17,728$ 18,385$ 19,678$ 19,744$ 20,932$ 22,419$ 27,784$ 25,755$ 24,309$ 25,245$ Total primary government program revenues 44,260$ 34,601$ 33,549$ 34,202$ 34,016$ 38,142$ 44,161$ 43,106$ 40,651$ 41,145$ Net (Expense) Revenue Governmental activities (10,580)$ (23,176)$ (30,046)$ (32,306)$ (38,062)$ (39,405)$ (38,835)$ (35,947)$ (36,879)$ (38,815)$ Business-type activities 1,076$ 1,441$ 2,442$ 1,384$ 2,529$ 2,281$ 8,156$ 5,627$ 2,354$ 5,229$ Total primary government net expense (9,504)$ (21,736)$ (27,604)$ (30,922)$ (35,533)$ (37,124)$ (30,679)$ (30,320)$ (34,525)$ (33,586)$ General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes, general purpose 6,766$ 7,144$ 7,376$ 7,818$ 9,019$ 7,803$ 7,783$ 8,272$ 8,031$ 8,315$ Property taxes, debt service 1,351$ 1,402$ 1,471$ 1,529$ 1,711$ 2,230$ 2,779$ 2,439$ 2,362$ 2,578$ Motor vehicle taxes 1,079$ 1,105$ 1,131$ 1,195$ 1,135$ 1,145$ 1,150$ 1,153$ 1,200$ 1,250$ Sales tax, general purpose 10,556$ 11,137$ 11,472$ 11,986$ 11,669$ 11,118$ 11,767$ 12,165$ 12,260$ 12,689$ Selective sales tax 2,280$ 2,417$ 2,484$ 2,589$ 3,380$ 4,108$ 4,080$ 4,210$ 4,281$ 4,461$ Other taxes 3,557$ 5,076$ 5,445$ 5,747$ 5,791$ 6,298$ 6,390$ 6,486$ 6,630$ 7,231$ Investment revenues 544$ 1,123$ 1,255$ 805$ 277$ 81$ 77$ 66$ 67$ 98$ Miscellaneous 1,209$ 1,044$ 890$ 812$ 505$ 565$ 872$ 660$ 9,918$ 1,160$ Transfers, net 114$ 330$ 672$ 60$ 255$ 92$ 199$ 30$ 999$ 1$ Total governmental activities 27,456$ 30,779$ 32,195$ 32,540$ 33,742$ 33,440$ 35,097$ 35,481$ 45,748$ 37,783$ Business-type activities: Investment revenues 328$ 453$ 641$ 300$ 242$ 67$ 84$ 79$ 49$ 51$ Miscellaneous 150$ 217$ 201$ 118$ 352$ 341$ 330$ 434$ 279$ 97$ Reimbursements -$ -$ -$ -$ -$ -$ -$ -$ -$ 180$ Transfers, net (114)$ (330)$ (672)$ (60)$ (255)$ (92)$ (199)$ (30)$ (950)$ -$ Total business-type activities 364$ 340$ 170$ 358$ 339$ 316$ 215$ 483$ (622)$ 328$ Total primary government 27,820$ 31,119$ 32,366$ 32,898$ 34,081$ 33,756$ 35,312$ 35,964$ 45,126$ 38,111$ Change in Net Position Governmental activities 16,877$ 7,602$ 2,150$ 234$ (4,320)$ (5,965)$ (3,738)$ (466)$ 8,869$ (1,032)$ Business-type activities 1,440$ 1,780$ 2,612$ 1,742$ 2,868$ 2,597$ 8,371$ 6,110$ 1,732$ 5,557$ Total primary government 18,316$ 9,383$ 4,762$ 1,976$ (1,452)$ (3,368)$ 4,633$ 5,644$ 10,601$ 4,525$ Source: City of Salina Comprehensive Annual Financial Reports, 2005 - 2014 Fiscal Year Schedule 2 City of Salina, Kansas Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in 000's) 97 2005 2006 2007 2008 2009 2010 2012 2013 2014 General Fund Reserved 421$ 242$ 396$ 274$ 508$ 99$ -$ -$ -$ -$ Nonspendable 90$ 116$ 81$ 107$ Restricted -$ -$ -$ -$ Committed -$ -$ -$ -$ Assigned 293$ 540$ 331$ 239$ Unreserved/unassigned 6,646$ 7,983$ 6,935$ 5,756$ 4,580$ 3,518$ 3,454$ 3,172$ 3,138$ 3,908$ Total general fund 7,067$ 8,225$ 7,331$ 6,030$ 5,088$ 3,617$ 3,837$ 3,828$ 3,550$ 4,254$ Restatement 156$ Restated fund balance 3,773$ All other governmental funds Reserved 2,369$ 2,469$ 2,796$ 3,951$ 11,092$ 6,413$ -$ -$ -$ -$ Nonspendable -$ -$ -$ -$ Restricted 3,611$ 3,319$ 3,446$ 2,910$ Committed 127$ (516)$ 12,572$ 9,886$ Assigned 4,323$ 4,087$ (1,940)$ 1,280$ Unreserved/unassigned 156$ 42$ 2,946$ 354$ 4,024$ (1,130)$ -$ -$ -$ -$ Total all other governmental funds 2,525$ 2,511$ 5,742$ 4,305$ 15,116$ 5,283$ 8,061$ 6,890$ 14,078$ 14,076$ 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, 2005 - 2014 Fiscal Year 2011 (Note 1) Schedule 3 City of Salina, Kansas Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in 000's) 98 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Revenues Taxes (see Schedule 5)25,590$ 28,282$ 29,379$ 30,788$ 32,706$ 32,702$ 33,949$ 34,724$ 34,764$ 36,523$ Intergovernmental 2,785$ 3,127$ 3,363$ 3,741$ 3,153$ 3,404$ 2,901$ 4,487$ 4,192$ 4,008$ Special assessments 1,143$ 1,207$ 1,444$ 1,178$ 1,269$ 1,385$ 1,535$ 2,315$ 1,706$ 1,810$ Licenses and permits 14$ 18$ 18$ 10$ 10$ 11$ 6$ 8$ 9$ 7$ Charges for services 7,225$ 7,099$ 7,131$ 7,415$ 6,767$ 8,934$ 9,730$ 8,484$ 8,536$ 8,276$ Investment revenue 486$ 1,021$ 983$ 490$ 210$ 64$ 69$ 47$ 40$ 59$ Reimbursements 650$ 406$ 153$ 39$ 140$ 70$ 32$ 36$ 9,015$ 123$ Donations 241$ Miscellaneous 501$ 488$ 650$ 597$ 438$ 448$ 599$ 537$ 810$ 799$ Total revenues 38,392$ 41,648$ 43,120$ 44,258$ 44,693$ 47,018$ 48,821$ 50,638$ 59,072$ 51,846$ Expenditures General government 2,706$ 2,721$ 2,842$ 3,600$ 3,007$ 3,549$ 3,461$ 3,574$ 4,269$ 3,986$ Public safety 13,673$ 14,309$ 16,175$ 17,945$ 17,883$ 18,229$ 18,118$ 18,564$ 19,155$ 19,559$ Public works 5,508$ 5,712$ 6,171$ 6,593$ 6,643$ 6,634$ 6,569$ 7,004$ 7,220$ 7,443$ Public health and sanitation 1,067$ 1,178$ 1,245$ 1,276$ 1,353$ 1,332$ 1,330$ 1,343$ 1,344$ 319$ Culture and recreation 4,776$ 4,653$ 5,204$ 5,142$ 4,947$ 5,777$ 5,900$ 4,449$ 3,939$ 4,292$ Planning and development 2,607$ 2,588$ 2,707$ 3,377$ 3,269$ 3,609$ 3,344$ 3,256$ 3,293$ 3,233$ Miscellaneous -$ -$ -$ -$ -$ 32$ -$ -$ -$ -$ Capital outlay 8,580$ 10,783$ 7,615$ 10,581$ 17,707$ 18,603$ 9,847$ 7,327$ 13,047$ 11,009$ Debt service Principal 2,534$ 2,625$ 4,806$ 2,812$ 4,667$ 5,959$ 4,411$ 8,592$ 5,038$ 5,260$ Interest 755$ 1,009$ 1,266$ 1,567$ 1,596$ 2,258$ 2,084$ 2,103$ 1,867$ 1,864$ Deposit to escrow -$ -$ -$ -$ -$ 107$ -$ 92$ -$ -$ Total expenditures 42,208$ 45,578$ 48,031$ 52,892$ 61,072$ 66,089$ 55,064$ 56,304$ 59,172$ 56,965$ Other financing sources (uses) Bonds and notes issued 4,210$ 4,885$ 6,545$ 7,245$ 23,695$ 7,034$ 6,565$ 6,150$ 5,690$ 5,365$ Bond and note premium 80$ 1,369$ 47$ 23$ 60$ 185$ 302$ Transfers in 1,399$ 2,245$ 2,349$ 2,823$ 3,617$ 5,076$ 7,994$ 3,488$ 4,907$ 3,001$ Transfers out (1,365)$ (2,055)$ (1,737)$ (2,763)$ (3,422)$ (4,984)$ (5,692)$ (3,458)$ (3,907)$ (3,000)$ Issuance costs -$ -$ -$ -$ -$ -$ -$ -$ -$ Other -$ -$ 91$ -$ -$ -$ 156$ -$ -$ -$ Total other financing sources (uses)4,244$ 5,075$ 7,248$ 7,385$ 25,259$ 7,173$ 9,046$ 6,240$ 6,875$ 5,668$ Net change in fund balance 428$ 1,145$ 2,337$ (1,250)$ 8,880$ (11,898)$2,803$ 574$ 6,775$ 549$ Debt service as a percentage of non-capital expenditures 11%12%18%12%17%21%17%28%18%18% Source: City of Salina Comprehensive Annual Financial Reports, 2005 - 2014 Last Ten Fiscal Years (modified accrual basis of accounting) (in 000's) Fiscal Year Schedule 4 City of Salina, Kansas Changes in Fund Balances, Governmental Funds 99 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Real estate 7,904$ 8,373$ 8,662$ 9,084$ 9,971$ 9,756$ 10,288$ 10,466$ 10,145$ 10,657$ Delinquent 213$ 173$ 185$ 263$ 760$ 278$ 274$ 245$ 248$ 235$ Motor vehicle 1,079$ 1,105$ 1,131$ 1,120$ 1,135$ 1,145$ 1,150$ 1,153$ 1,200$ 1,250$ General sales 10,556$ 11,137$ 11,472$ 11,986$ 11,669$ 11,117$ 11,767$ 12,165$ 12,260$ 12,689$ Selective sales 2,280$ 2,417$ 2,484$ 2,589$ 3,380$ 4,108$ 4,080$ 4,210$ 4,281$ 4,461$ Other taxes 3,557$ 5,076$ 5,445$ 5,747$ 5,791$ 6,298$ 6,390$ 6,485$ 6,630$ 7,231$ Total taxes 25,590$ 28,282$ 29,379$ 30,788$ 32,706$ 32,702$ 33,949$ 34,724$ 34,764$ 36,523$ Source: City of Salina Comprehensive Annual Financial Reports, 2005 - 2014 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 100 Assessed Value Fiscal (Budget) Year Real Estate Personal Property State Assessed Total, Excluding Motor Vehicles Tax Rate Motor Vehicle (Note 1) Total, Taxable Assessed Value Estimated Total Market Value (Note 2) Assessed Value to Est. Market Value 2004 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 2005 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 2006 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 26.927 48,882,411 453,989,887 2,889,385,914 15.71 2014 376,131,346 13,652,885 17,670,147 407,454,378 27.080 48,865,900 456,320,278 2,917,267,724 15.64 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 tax effort. Note 3: The Direct rate is expressed in dollars per thousand dollars of assessed value. Source: Saline County Clerk Note 2: The estimated market value excludes the value of the State assessed properties. Market value information is not available for those properties. Howev er, state assessed property is generally assessed at 33% of market v alue, except for railroads, which are assessed at 15% of market v alue. Schedule 6 City of Salina, Kansas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years 101 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 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 2014 20.274 6.806 27.080 38.047 38.047 41.763 13.842 55.605 11.805 132.537 Source: Saline County Clerk102 (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. (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 $1,000 of assessed value) Taxpayer Type of Business Assessed Valuation % of Total Valuation Rank Assessed Valuation % of Total Valuation Rank Westar Energy (W estern Resources)Utility 8,036,664$ 2.09%1 9,980,609$ 2.19%1 Schwan's Logistics LLC (Sales)Pizza Manufacturing 7,938,775 2.07%2 7,980,031 1.75%2 Warmack, Salina Partnership (IPFOA) (Now Garrison Salina)Retail Shopping Mall 6,064,998 1.58%3 4,950,001 1.08%3 Gateway Properties Shopping Mall (Midstate)0.00%4,478,018 0.98%4 Kansas Gas Service Utility 3,058,959 0.80%7 3,553,735 0.78%5 Menard Inc.Home Improvement 0.00%2,629,399 0.58%6 Salina Regional Health Center Hospital and Medical Offices 4,967,556 1.29%5 2,550,905 0.56%7 Great Plains Manufacturing Manufacturing 2,415,729 0.63%8 2,357,071 0.52%8 Collier, Dennis D.Commercial and Residential 0.00%2,163,976 0.47%9 Dillon's Grocery Chain 0.00%2,160,125 0.47%10 Wal-Mart Stores, Inc.Discount Retail Stores 3,979,960 1.04%6 Southwestern Bell Telephone Utility 5,265,830 1.37%4 Lowe's Home Center Building supply Center 2,015,463 0.52%10 Western W ireless Microwave Transmission 2,218,381 0.58%9 Combined Valuation of the Ten Largest Taxpayers 45,962,315$ 42,803,870$ City Valuation 383,949,303$ 456,320,278$ Percent of Total City Assessed Valuation (1)10.87%7.19% Source: Saline County Clerk's Office103 2015 (2014 Assessed Value)2005 (2004 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 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% 2014 10,908,147 10,776,688 98.8%398,820 11,175,508 102.5% 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 104 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 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%/0.40%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)61.60%61.81%61.92%62.31%62.46%61.58%63.34%61.72%60.86%60.23% Source: Kansas Department of Revenue Schedule 10 City of Salina, Kansas 105Fiscal Year 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. 2014 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 17,576 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 18,042 1,003,100 Commercial 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 1,599 353,675 Industrial 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 42 193,233 Government 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 97 45,346 Apartment 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 67,155 166 60,865 Schools 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 84 45,328 Industrial special 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 - 0 Consumed in production 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 12 19,264 Rural water 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 1 22,993 Hospitals 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 10 32,184 Religious/non profit 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 37 4,973 Other taxable deductions 5 8,995 5 6,630 5 9,975 4 8,023 - - - - - 699 0 - - 0 - 0 Engineering studies 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 8 5,095 Providing taxable service 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 1 3,561 Sale of component parts 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 6 6,850 Fire hydrant 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 2 1,474 Industrial consumed in production 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 3 3,588 Sales of farm equipment 1 213 1 308 1 180 1 256 1 205 1 213 1 56 1 83 1 107 1 48 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 20,111 1,801,578 Water Rate Schedule: Monthly meter charge (5/8")3.21$ 3.38$ $3.57 3.75$ 4.44$ 4.51$ $4.60 $4.74 $4.88 $5.03 Commodity charge (per 000 gal.): 0 - 2000 gal.2.16$ 2.21$ $2.42 2.54$ 2.34$ 2.55$ $3.77 $3.88 $4.04 $4.24 2001 - 10,000 gal 1.94$ 1.99$ $2.20 2.31$ Over 10,000 gal.1.73$ 1.77$ $1.97 2.07$ Excess use charge 4.68$ 5.10$ $7.54 $7.76 $8.08 $8.48 Wastewater Rate Schedule: Monthly base charge 3.03$ 3.18$ $3.34 3.51$ 6.31$ 6.42$ $6.57 $6.77 $6.97 $7.11 Unit cost (per 000 gal.):2.23$ 2.36$ $2.50 2.63$ 2.88$ 3.08$ $4.48 $4.61 $4.79 $4.94 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.106200720062005 20122008 Schedule 11 City of Salina, Kansas Water Sales by Class of Customer Last Ten Fiscal Years 2013201120102009 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 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 2.8%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%1,583.07 2013 49,631,797 - 3,800,000 8,519,799 15,226,532 - 77,178,128 3.7%1,613.05 2014 50,033,555 176,235 5,000,000 9,587,351 14,592,836 6,208,102 85,598,079 4.1%1,788.25 Source: City of Salina Comprehensive Annual Financial Reports, 2005 - 2014107Governmental 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 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%1,241.05 2013 58,151,596 - 3,800,000 61,951,596 707,763 61,243,833 13.5%1,280.02 2014 59,620,906 176,235 5,000,000 64,797,141 407,864 64,389,277 14.1%1,345.17 Source: City of Salina Comprehensive Annual Financial Reports, 2005 - 2014 General Bonded Debt Outstanding Schedule 13 City of Salina, Kansas Ratio of Net General Bonded Debt Outstanding Last Ten Fiscal Years 108 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 64,389,277$ 100%64,389,277$ Overlapping: Salina Airport Authority 23,260,000 100%23,260,000 Saline County 237,740 76%179,494 USD 305 135,785,000 94%127,135,496 Total Overlapping Debt 159,282,740 150,574,989 Total Direct and Overlapping Debt 223,672,017 214,964,266 Per Capita Direct and Overlapping debt 4,492.84$ 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, 2014 109 Assessed Valuation:456,320,278$ Debt Limit (30% of Assessed Value)136,896,083 Debt Applicable to limit: Total Bonded Debt 85,598,079 Less GO Debt Attributable to Exempt Purposes 9,587,351 Less Revenue Bonds 14,592,836 Less Capital Leases 176,235 Less Loans Payable 6,208,102 Less Fund Balance designated for Debt Service 407,864 Total Debt Applicable to Limitation 54,625,691 Legal debt margin 82,270,392 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Debt Limit 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$ 136,896,083 Total net debt applicable to limit 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 54,625,691 Legal debt margin 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 82,270,392 Total net debt applicable to the limit as a percentage of debt limit 25%24%28%28%40%43%43%36%39%40%110Last Ten Fiscal Years Fiscal Year Legal Debt Margin Calculation for 2014 Schedule 15 City of Salina, Kansas Legal Debt Margin Fiscal Year Utility Service Charges Less: Operating Expenses Net Av ailable Rev enue Principal Interest Cov erage 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% 2014 18,742,029 14,002,088 4,739,941 630,000 577,791 392% Source: City of Salina Comprehensive Annual Financial Reports, 2005 - 2014 City of Salina Debt Service Schedules Water/Sewer Rev enue Bonds Schedule 16 City of Salina, Kansas Pledged Rev enue Cov erage Last Ten Fiscal Years 111 Fiscal Year Population Per Capita Personal Income (Saline County) Personal Income, Salina (interpolated) Unemployment Rate Labor Force, City of Salina USD 305 Headcount Percentage Free and Reduced Lunch City .5 cent sales tax Per Capita .5 cent sales Tax As a % of per capita personal income 2005 45,964 32,365 1,487,624,860$ 4.7%25,663 4,560,772$ 99.22$ 0.307% 2006 45,956 35,543 1,633,414,108$ 4.0%25,777 4,834,367$ 105.20$ 0.296% 2007 46,940 36,707 1,723,026,580$ 3.6%25,400 4,967,468$ 105.83$ 0.288% 2008 46,458 40,351 1,874,626,758$ 3.8%26,343 7,348 56.3%5,177,461$ 111.44$ 0.276% 2009 46,483 38,392 1,784,575,336$ 6.0%26,769 7,432 58.7%4,965,147$ 106.82$ 0.278% 2010 46,180 37,880 1,749,298,400$ 6.7%26,379 7,346 57.8%4,803,553$ 104.02$ 0.275% 2011 47,707 40,512 1,932,705,984$ 6.7%26,258 7,289 58.7%5,076,751$ 106.42$ 0.263% 2012 48,045 41,762 2,006,455,290$ 6.3%26,185 7,305 59.1%5,241,205$ 109.09$ 0.261% 2013 47,846 43,078 2,061,109,988$ 5.1%26,441 7,305 60.7%5,326,723$ 111.33$ 0.258% 2014 47,867 43,736 2,093,511,112$ 5.3%26,303 7,388 61.3%5,555,601$ 116.06$ 0.265% Sources:Increase in per capita Sales Tax (10 years)17.0% Population: Kansas Division of the Budget.Increase in per capita Personal Income 35.1% 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 09/30/2015 2014 Per Capita Personal Income staff projection 2005 -2014 Employment City of Salina USD305 headcount and free and reduced lunch data derived from Kansas Department of Education. Free and Reduced Lunch percentage is an average of the percentages for each building reported. School Data is reported at beginning of school year, eg 2014-2015 school year is reported as 2014 Employment: Kansas Department of Labor Schedule 17 City of Salina, Kansas Dem ographic and Economic Statistics Last Ten Fiscal Years 112 Employer Type of Business Employees Rank Percentage of Labor Force Employees Rank Percentage of Labor Force Schwan's Global Supply Chain Frozen Pizza Manufacturing 2,000 1 6.8%1,800 1 6.8% USD # 305 Public School System 935 3 3.2%1,659 2 6.3% Salina Regional Health Center Health Care 1,082 2 3.7%1,300 3 4.9% Exide Technologies Automotive Battery Manufacturer 800 4 2.7%750 4 2.8% Phiilips Lighting Co.Fluorescent Lamps 600 5 2.1%490 5 1.9% City of Salina City Government 482 7 1.6%465 6 1.8% Walmart Retail 421 7 1.6% Dillon Stores Retail (Grocery)343 8 1.3% Solomon Corp Electrical Equipment 324 9 1.2% El Dorado National Buses/Recreational Vehicles 0.0% Raytheon Aircraft Aircraft Manufacturing 274 8 0.9% Lock/line Cellular Phone Insurance 490 6 1.7% Total 6,663 22.8%7,552 28.7% Source: Salina Chamber of Commerce113 2005 2014 Schedule 18 City of Salina, Kansas Principal Employers Current Year and Nine Years Ago GOVERNMENTAL AUDIT SECTION Federal Federal Grantor/Pass-Through CFDA Grantor/Program Title Number Revenues Expenditures Department of Housing and Urban Development Fair Housing Assistance Program 14.401 84,573$ 66,000$ Passed through Kansas Housing Resources Corporation Emergency Solutions Grant 14.231 112,578 112,578 Total Department of Housing and Urban Development 197,151 178,578 Department of Transportation Passed Through the Kansas Department of Transportation: State and Community Highway Safety 20.600 6,266 6,266 Alcohol Traffic Safety and Drunk Driving Prevention Incentive Grant 20.601 6,482 6,482 Occupant Protection Incentive Grant 20.602 4,561 4,561 Total Department of Transportation 17,309 17,309 Environmental Protection Agency Community Action for a Renewed Environment (CARE) Program 66.035 91,658 54,092 Passed Through the Kansas Department of Health and Environment Capitalization Grants for Drinking W ater State Revolving Funds 66.468 6,208,102 3,295,170 Total Environmental Protection Agency 6,299,760 3,349,262 Total Expenditures of Federal Awards 6,514,220$ 3,545,149$ SCHEDULE OF EXPENDITURES OF FEDERAL AW ARDS CITY OF SALINA, KANSAS For the Year Ended December 31, 2014 See independent auditor's report on the financial statements and notes to the schedule of expenditures of federal awards. 114 115 CITY OF SALINA, KANSAS NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2014 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. 116 CITY OF SALINA, KANSAS SCHEDULE OF FINDINGS AND QUESTIONED COSTS For the Year Ended December 31, 2014 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?X Yes 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 66.468 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 Questioned Management Program Finding Condition Criteria Costs Recommendation Response Not applicable 2014-1 During our audit of municipal courts accounts receivable balances we noted the following: Recommended Practices Not determined Agrees a) The City was unable to produce an accounts receivable aging report or accounts receivable subledger that agreed to the municipal courts accounts receivable balance as of December 31, 2014 Municipal Court Monthly Report. b) Per a comparison of the 2014 and 2013 Municipal Court Monthly Reports, the number of municipal court cases filed and the amount of cost and fine revenues collected decreased by approximately 15% during 2014. c) Per a comparison of the 2014 and 2013 Municipal Court Monthly Reports, the number of case closed decreased by 23% during 2014 and the number of pending cases at December 31, 2014 was 68% higher than at December 31, 2013. None Noted CITY OF SALINA, KANSAS Current Year Findings Prior Year Findings We recommend that the City process and save a detailed accounts receivable aging report at the end of each month that agrees to the Municipal Court Monthly Report. Additionally, we recommend that the City designate an appropriate individual to review and approve these reports each month and to closely monitor the number of cases closed and cases pending in order to determine if sufficient progress is being made to close cases and collect related revenues. Additionally, we recommend the City evaluate its ticket issuance policies to determine if the number of tickets issued and potential revenues generated by these tickets are in line with the City's projections and budget. For the Year Ended December 31, 2014 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 117 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 118 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MAT TERS BASED ON AN AUDIT OF FINANCIAL STAT EMENTS 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, 2014, and the related notes to the financial statements, which collectively comprise the City’s financial statements, and have issued our report thereon dated October 22, 2015.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 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 and therefore, material weaknesses or significant deficiencies may exist that were not identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We did identify certain deficiencies in internal control, described in the accompanying schedule of findings and questioned costs as Finding 2014-1 that we consider to be significant deficiencies. 119 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 October 22, 2015. 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 October 22, 2015 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 120 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, 2014. 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, 2014. 121 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 October 22, 2015