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Audit Report - 1991 SALINA AIRroRI' AUIHORITY Sal ina , Kansas TABIE OF CDNI'ENIS INrROCUCIDRY SECrION Transmittal letter Organizational cl1art FINANCIAL SECrION Irxieperrlent aucii tor I s report FINANCIAL STATEMENI'S Balance Sheets statements of Operations am Olanges in Retained Earnings statements of Cash Flows Project Length Schedule of Capital Project, KSU-Salina, College of Technology Notes to Financial statements SUPPIH1ENTAL INFORMATION D=tailed statements of Operations am C11anges in Retained Earnings Capital Expenditures Bonds of Irxiebtedness Building Revenue Bonds-Series 1984 Building Revenue Bonds-Series 1985 General Obligation Economic D=velopment Bonds-Series 1990-A General Obligation Economic Development Bonds-Series 1990-B Leasehold Revenue Bonds Insurance In Force Schedule of Federal Assistance eorrparison of Gross Cash Balances with D=positoJ:}' Security ornER INDEPENDENr AUDITOR I S REFORI'S Irxieperrlent auditor I s report on internal control structure related matters noted in a financial statement audit conducted in accordance with GOVERNMENT AUDITING STANDARDS Independent auditor's report on compliance with laws am regulations based on an audit of financial statements performed in accordance with GOVERNMENT AUDITING STANDARDS Independent auditor's report on schedule of federal financial assistance Irxiependent auditor's report on internal controls ( accounting am adrninistrati ve) -based on a study am evaluation made as a part of an audit of the general purpose financial statements am the additional tests required by the single audit act. Irxieperrlent auditor's report on compliance with the general requirements applicable to major am nonrnajor federal financial assistance programs Indeperrlent auditor's report on compliance with requirements applicable to nonrnajor federal financial assistance p~ transactions Schedule of independent auditor's findings 1-6 7 8-9 10-11 12 13-14 15 16-22 23-24 25 26 27 28 29 30 31 32 33 34 35-37 38-39 40 41-43 44 45 46 STATISTICAL SECI'ION Capital experrlitures am FAA contributions OperatÍD3' revenues am operatÍD3' experrli tures Air traffic, fuel fla..;age, enplanerænts data 47 48 49 /~ . .i...~ " Chairman CHARLES B. ROTH Vice-Chairman BOB E on Secretary GARY W RUMSEY Treasurer DOROTHY W. LYNCH Assistant SecretaryiTreasurer ROGER MORRISON Executive Director TIMOTHY F ROGERS Operations Director DONALD C KNEUBUHL Board Attorney L.O BENGTSON 3237 Arnold Avenue Salina. Kansas 67401 (913) 827-3914 OFFICE (913) 827-2221 FAX Salina Airport Authority Salina Municipal Airport and Salina Airport Industrial Center February 28, 1992 Salina Airport Authority Board of Directors 3237 Arnold Ave. Salina, KS 67401 To The Directors of the Salina Airport Authority: The Component Unit Financial Report of the Salina Airport Authority for the fiscal year ended December 31, 1991 is submitted herewith in accordance with K.S.A. 27-324. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the Salina Airport Authority. We believe the data as presented is accurate in all material aspects, that it is presented in a manner designed to fairly set forth the financial position and results of operation of the Salina Airport Authority as measured by the financial activity of its various funds, and that all disclosures necessary to enable the reader to gain the maximum understanding are inc:uded in the accom panying report. This report consists of the following three parts: ( 1 ) The letter of transmittal from the Executive Director. ( 2) Financial section, including the financial staterlents and supplemental data of the Salina Airport Authority, accompanied by our independent auditor's report. (3) Statistical section, including a number of tables of unaudited data depicting the financial history of the Salina Airport Authority for the past 10 years and other miscellaneous information. The Salina Airport Authority and Its Services The Salina Airport Authority is a body corporate and politic. The Authority was created by the City of Salina in April, 1965 (Sec. 4-16, Salina City Code) pursuant to the authority grarlted the City by the surplus property and public airport authority act of the State of Kansas (KSA 27-315 et seq.) The Page 2 Authority was created for the purpose of accepting as surplus property portions of the former Schilling AF.B. which was closed by the United States Departmert of Defense in June, 1965. By quitclaim deed the Authority received over 3,500 acres of land and numerous buildings for the purpose of operating and developing the Salina Municipal Airport and the Salina Airport Industrial Center. The Authority is managed and controlled by a five-member board of directors appointed by the Salina City Comm ission. The Salina Municipal Airport is the only commercial service airport serving Salina and North Central Kansas. The Airport also services the corporate, business, private aviation and flight training needs of industry, business and individuals in the area. The Airport is also used by the Kansas State University - Salina Aeronautical Studies Department. The cam pus of K-State Salina is located adjacent to the airport. The I-<:-State Salina Department of Aeronautical Studies offers degrees in professional flight training. The Salina Airport Industrial Center is home for sixty-six businesses and organizations. Forty-four of the businesses and organizations are tenants of the Authority. One of the primary functions of the Authority is to facilitate the continued growth of jobs and payroll at the Industrial Center. The Authority works in partnership with the City 0': Salina, Saline County and the Salina Area Chamber of Commerce for the retentiDn of existing businesses and industry and the recruitment of new business and industry, The following is a summary of the composition of Airport and Airport Industrial Center businesses and organizations: Commercial Industrial Aviation Governmental Recreation/club Total 25 22 5 11 ~ 66 Economic Condition of the Airport and Airport Industrial Center As of Decem ber 31, 1991 businesses and organizations at the Airport and Airport Industrial Center employed an estimated 3,836 employees. Over 82% of tre total number of employees live within the Salina city limits. Total payroll for 1991 was an estimated $84,748,816. In 1991 local purchases by the Airport and Airport Industrial Center businesses and organizations totaled an estimated $17,897,346. Less than 42% of total business volume was local, which means that over 50% of the goods and services produced by all businesses are exported outside of the City of Salina. A. ~-" Salina Airport Authority ~~~ \... SALINA MUNICIPAL AIRPORT INDUSTRIAL CENTER Page 3 In 1991 the Airport and Airport Industrial Center attracted an estimated 43,346 visitors whose average stay was 1.9 days. Airport and Airport Industrial Center visitors expended an estimated $3,663,881 while in Salina. Future Economic Outlook The future economic outlook for the Airport and Airport Industrial Center looks favorable. Major SAA tenants and employers such as Beechcraft, and Schwan's Sales will continue plant modifications and improvements initiated during 1991. These improvements will result in additional job and payroll growth. Another significant SAA tenant, the Kansas Army National Guard, is preparing to implement a modernization of its Nickell Barracks Training Center. This multi-year 9 million dollar construction project will solidify the Guard's presence at the Airport Industrial Center and also add jobs and payroll. The 1991 merger of the Kansas College of Technology with Kansas State University resulted in the establishment of the Kansas State University - Salina, College of Technology. The new college emphasizes and focuses on educating two-year A.A. and four year B.S. graduates in engineering technology and aeronautical studies. Following completion of the merger, enrollment of full-time equivalent students at K-State Salina increased 16% to 471 students. By 1994 FTE enrollment is projected to be 800 students. The availability of a well educated labor force for existing and future industries will greatly enhance industrial growth in the area. 1991 Projects and Accomplishments The Airport Authority Board of [¿irectors adopted a revised and updated Employee Handbook. The handbook summarizes the employment policies of the S;\A. As a result of the Board's action, the SAA's employment policies are consistent with all current local, state, and federal laws and regulations. In July, 1991, the SAA Board of Directors approved a memorandum of intent supporting the modernization of the Nickell Barracks Training Center (NBTC). Work has proceeded in determining a new site for NBTC. The SAA will obtain the land necessary for the modernization by means of a land trade with Kansas State University Salina and the Kansas Board of Regents. During 1991 NBTC provided training for ovel" 5,500 military personnel. A modernized NBTC will be able to train more soldiers from all parts of the nation. As a result of the K-State Salina merger, the SAA finalized a lease with K-State for the design and construction of the K-State Salina Aeronautical Center laboratory Addition. The SAA issued $850,000 in leasehold Revenue Bonds to finance the project. DMA ~"..... Salina Airport Authority ~..... ~ SALINA MUNICIPAL AIRPORT INDUSTRIAL CENTER Page 4 Architects of Salina was selected to design the laboratory additicn and Harbin Construction of Salina was the successful low bidder. Originally scheduled for 14,860 sq. ft., the favorable bid submitted by Harbin Construction permitted the SAA and K-State to increase the laboratory addition by 6,000 sq. ft. to 20,860 sq. ft. This will insure the aeronautical studies department ample room for future growth. In March, 1991, the Interlocal Cooperation Agreement between the Kansas Board of Regents, K-State, the City of Salina and the Salina Airport Authority was approved. The agreement provides that the Airport Authority act as the administrator of the K-State Salina Sales Tax Fund. The Fund receives the proceeds of a two-year (1991 and 1992) one-half cent City of Salina Retail sales tax approved by the citizens of Salina for the development of the K-State Salina campus. During 1991, the SAA received $1,988,596 in K-State Salina sales tax funds from the City of Salina. The SAA disbursed $59,847 to K-State for construction of the campus main entry sign. The SAA also disbursed $4,760 to the City of Salina for the design of the K-State Salina north boundary road by Bucher, Willis and Ratliff. As of December 31, 1991, the K-State Salina sales tax fund had a balance of $1,937,958.14. During the early part of 1991 Trans States Airlines, operating as TWA Express, was replaced by Air Midwest Airlines, operating as USAir Express. As a result of the change, Salina passengers again were able to make connecting flights at Kansas City International Airport. During the latter part of 1991, Air Midwest began to replace its aging fleet of 19 seat Metroliners with new 19 seat Beechcraft 1900C airliners. During the next 3-4 years, Air Midwest and its new owner Mesa Airlines, will replace the Beechcraft 1900C aircraft with the Beechcraft 1900D airliner. The Beech 1900D Airliner has a stand up cabin for greater passenger comfort. ADM Milling Co. completed construction of its new corporate hangar at the Salina Municipal Airport. This project resulted in the retention of jobs already in Salina and the addition of a number of new employees to the company's Salina office. In September the SAA accepted a $921,585 grant from the FAA for aclditional airport improvements. The grant provides for the following airport improvements: 1. 2. 3. 4. 5. Runway and taxiway subdrains Relocate runway and taxiway guidance signs. A slurry seal to the south 6,700 feet of taxiway A Acquire AutoCad software. Computerize the airport layout plan. Purchase a Class 1 ARFF vehicle. ~,,". Salina Airport Authority ,/..~ ~ SALINA MUNICIPAL AIRPORT INDUSTRIAL CENTER Page 5 Bids were opened for the ARFF vehicle on October 24. The Board awarded a contract in the amount of $272,332 for the vehicle to Emergency One on November 13. On December 11 the Board authorized Change Order #1 for $13,584 bringin'J the total cost for the vehicle to $285,916. The budgeted amount for the purchase was $302,082. The FAA funds 90% of airport improvement projects. The remaining 1 0 c/"o is funded by the SAA from its operating revenue. Since 1975 the SAA has received over 9.4 million dollars in Airport Improvement Program grants. These grants were matched with over 1.04 million dollars in SAA funds generated from airport and airport industrial center operations. The citizens of Salina and Saline County have not contributed tax dollars to airport improvements. Since 1966, the first year of operation of the Salina Municipal Airport at the former Schilling A.F.B., the SAA has funded all airport improvements from its operating budget. 1992 Projects During 1992 the Airport Authority will continue to work toward the imprcvement of the Airport and Airport Industrial Center in order to enhance job and payroll growth. During 1992 the update of the Airport's Master Plan Study will be completed and submitted to the Federal Aviation Administration for approval. The Airport Master Plan Update will recommend necessary improvements to the Airport through the year 20'10. The Airport Industrial Center will benefit by the start of construction of a new interchange of.the intersection of Interstate 135 and Schilling Road. This project is a partnership of the City of Salina, Saline County and the Salina Airport Authority. This new interchange will enhance vehicle access to the Airport and Airport Industrial Center. Two Federal Aviation Administration Airport Improvement Program construction projects will begin in 1992. Improvements will be made to the Airport by the addition of additional security fencing. land acquisition of land needed for runway approach protection, runway drainage improvements, aircraft parking apron rehabilitation, and the purchase of a new aircraft rescue and fire fighting vehicle. Construction of the 20,860 sq. ft. addition to the K-State Salina Aeronautical Center will be completed by July 1. 1992. This improvement will enable K-State Salina to expand enrollments in its professional flight and A&P mechanic training programs. Significant increases in both areas are expected during 1992. In an attempt to improve USAir Express enplanements, the Airport Authcrity will initiate a "Fly Salina" promotional campaign. A task force comprised of local civic and business leaders will assist the Airport Authority in its efforts to make area residents aware of the advantages of their decision to "Fly Salina". A. SI' A. Aho ~-". a ma Irport ut onty ~..~ ~. SALINA ,vIUNICIPJ,L AIRPORT INDUSTRIAL CENTER Page 6 Acknowledgements I would like to thank the members of the SAA Board of Directors for their commitment and support in planning and conducting the financial affairs of the Airport Authority in a responsible and progressive manner. The Board has actively participated with staff in efforts to continually improve upon the financial management of the diverse and unique operations and responsibilities of the Salina Airport Authority. Respectfu Ily su bm itted, SALINA AIRPORT AUTHORITY Tí2~1~ Executive Director A ~-" Salina Airport Authority ¿..~ ~ SALINA MUNICIPAL AIRPORT INDUSTRIAL CENTER SALINA AIRroRI' AUIHORITY Organizational C1art 'lEE VOI'ERS SALlliA CITY COMMISSION SALINA AIRFORI' AUlliORITY OOARD OF DIRECIORS Roger Morrison Charles Roth Bob Ott Gilly Rumsey Corothy Lynch EXEaJTIVE DIRECIOR TiIrothy Rogers DIRECIDR OF OPERATIONS Conald Kneubuhl (7) em irrnan vi ce-O1a inn< ill SecretaJ:Y Treasurer Assistant Treasurer BlANK PAGE HARRISON & ARN ETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON. C.I'A. THOMAS G. ARNETT, C.P.A. ì19 EAST CRAWFCRO . SALINA. KANSAS 67401 PHONE; (913) 827.7244 FAX; (913) 827.0048 INDEPENDENr AUDITOR'S REFORI' To the Board of Directors Salina Airport Authority S a 1 ina , Kansas We have audited the accompanying financial statements of the Salina Airport Authority, a component unit of City of Salina, Kansas, as of C'ece.111ber 31, 1991 and December 31, 1990 am for the years then ended as listed in the table of contents. '!hese financial statements are the responsibility of the Salina Airport Authority, Salina, Kansas, management. OUr responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and the Kansas Minimum Standard Audit Proqram. '!hose standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supportin~ the amounts am disclosures in the financial statements. An audit also includes assessing the accounting principles used am significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a re:lSonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Salina Airport Authority, Salina, Kansas, as of Cecernber 31, 1991 am D=cember 31, 1990, am the results of its operations am its cash flows for the years then ended in conformity with generally accepted accountinq- principles. (continued) (8) ME'&,ERS ,)F JIVISICN F()R ,."p" FIRMS PRIVATE (O~¡rMIIES "~."CTICe SeCTION "ME.RICMJ iNSTITUTe OF CERfiFIEcJ PUBLIC "c"COL~c"NTS KANS,\S SCCIE~Y CF CER¡'FIED PUBLC\C\JUNT"~'S OUr audit was made for the purpose of forming an opinion on the financial statements taken as a whole. '!he supplemental information listed in the table of contents is presented for purpose of additional analysis am is not a required part of the financial statements of the Salina Airport Authority, Salina, Kansas. SUch information has been subj ected to the audi t~ procedures applied in the examination of the financial statements am, in our opinion, is fairly presented in. all material respects in relation to the financial statements taken as a whole. ~/~ Salina, Kansas FebruaJ:Y 28, 1992 ~~A Certified Public untant in charge of and actively engaged on this audit. (9) BrANK PAGE SALINA AIRroRI' AUIHORITY BArAN CE SHEErS ASSEI'S CURRENT ASSEI'S Cash on han::l Cash in banks (Note 2) Accounts receivable-net Prepaid expenses Notes recei vable-current portion TOrAL CIJRRENT ASSEI'S RES'IRICI'ED ASSEI'S Net investment in direct financing leases (Note 3) Certificates of deposit Bond resave (Note 2) Replacement am depreciation (Note 2) Cash in bank Economic development (Note 2) KSU-Salina, sales tax (Note 6) TOrAL RES'IRICI'ED ASSEI'S FIXED ASSEI'S (Note 1) land Buildings Airfield am other Equipment improvements Less-accumulated depreciation TOrAL FIXED ASSEI'S OI'HER ASSEI'S Bond issue costs IDng-term notes receivable-net TOrAL OTHER ASSEI'S 'IOI'AL ASSEI'S (continued) December ....1L. 1991 1990 $ $ 50 1,275,867 47,909 17,306 49,079 50 293,662 29,798 13 , 860 53,400 $ 1.390,211 ~ 390,770 $ 2,084,516 $ 2,292,526 100,000 100,000 100,000 100,000 212,723 150,111 2,002,565 $ 4,499,804 i.. 2,642,637 $ 1,148,648 $ 1,148,648 7,598,642 7,242,300 7,435,276 7,373,018 956,002 967,761 $17,138,568 $16,731,727 (5,735,658) --15,076,026) $11,402,910 ßll. 655,701 $ 70,093 $ 61,665 133 , 050 182,117 $ 203,143 ~ 243,782 $17,496,068 $14,932,890 '!he notes to financial statements are an integral part of this statement. (10) ( continued) LIABILITIES ŒJRRENT LIABILITIES Accounts payable Payroll taxes payable Bond payable-current portion D=ferred rent income Accrued bond interest Accrued interest-tempo raJ:Y f inan c ing Accrued payroll am benefits 'ICJI'AL CURRENT LIABILITIES IDNG-TERM LIABILITIES (Note 4) Bonds payable TertlpJraJ:Y financing Less-current portion 'ICJI'AL IDNG-TERM LIABILITIES KfrAL LIABILITIES EQUITY CAPITAL PROJEcr KSU-Salina, sales tax CONIRIBUIT ONS Federal Aviation Administration (Note 1) RETAINED EARNINGS Restricted for revenue bond reserves Restricted for economic development Restricted for invesbnent in direct f inane ing 1 eases Unrestricted retained earnings KfrAL RETAINED EARNINGS KfrAL EQUITY KfrAL LIABILITIES & EQUITY December 3 :lz. 1991 1990 $ $ 54,207 50,033 1,365 203,000 14,164 88,864 710,000 36,900 76,510 7,220 3,723 38,205 $ 888,560 ~395,631 $ 4,080,000 $ 3,433,000 450,000 (710 , 000) ~'203,OOO) $ 3,820,000 ~230,000 $ 4,708,560 ~625,631 $ 2,002,565 ~ $ 4,368,366 ~ 734,570 $ 200,000 $ 200,000 212,723 150,111 2,084,516 2,292,527 3,919,338 ~930,051 $ 6,416,577 ~572,689 $12,787,508 ~307,259 $17,496,068 $14,932,890 'The notes to financial statements are an integral part of this statement. (11) SALINA AIRroRI' AUIHORITY STATEMENI'S OF OPERATIONS AND CEANGES ill REI'AINED EARNINGS J anuarv 1 to December 3 1 , 1991 1990 OPERATlllG REVENUES Rental revenues Fixed base operator I.arx:lin;; fees Other operating revenues $ 762,984 89,079 4,271 11,002 $ 736,242 127,765 7,599 9,220 'K1rAL OPERATING REVENUES $ 867,336 ~ 880,826 OPERATING EXPENSES BEFORE DEPRECIATION Office am administration Maintenance 'K1rAL OPERATING EXPENSES BEFORE DEPRECIATION $ 401,155 $ 430,225 329 , 137 338,936 $ 730,292 ~ 769,161 $ 137,044 $ 111,665 $ 707,660 ~ 708,830 $ (570,616) ~ (597,165) $ 286,926 $ 255,486 (268 , 056) (261. 830) $ 18,870 ~ (6,344) $ (551,746) $ (603,509) $ 395,634 ~ 403,467 $ (156 , 112) ~ (200,042) $ 6,572,689 ~6, 772, 731 $ 6,416,577 $ 6,572,689 OPERATING EARNINGS BEFORE DEPRECIATION DEPRECIATION EXPENSE OPERATING EARNINGS (LOSS) ornER illa:ME (EXPENSE) Interest income Interest expense 'K1rAL ornER illa:ME (EXPENSE) NET' ill a:ME ( LOSS ) ADD DEPRECIATION ON ASSETS Aa;;pIRED THRCUGH FEDERAL CDNIRIBUI'IONS (Note 1) illCREASE (DECREASE) ill RErAINED EARNINGS RETAnŒD EARNINGS, J anuaJ:Y 1 RETAnŒD EARNINGS, December 3 1 'Ihe notes to financial statements are an integral part of this statement. (12) SALINA AIRroRI' AIJIHORITY STATEMENTS OF CASH FLC::MS (DIREcr MEIHOD) CASH FLC::MS FRCM OPERATlliG ACI'IVITIES Cash received from customers Interest rece i ved Interest paid Cash paid to suppliers and employees NEl' CASH PROVIDED (USED) BY OPERATING ACTIVITIES CASH FlOWS FRCM llNESI'lliG ACI'IVITIES Purchase of property, plant am equipment Proceeds from federal grants R e irnb ursemen ts Proceeds, KSU-Salina, sales tax Expenditures, KSU-Salina, sales tax NEl' CASH PROVIDED (USED) IN INVESTING ACI'IVITIES CASH FlOWS FRCM FINANCING ACI'IVITIES Proceeds from new borro;.¡ing Principal payments on debt Contributions to borrl reserves Borrl issue costs Principal received on financing leases Pricipal received on long-tenTI notes NEl' CASH PROVIDED (USED) BY FINANCING ACI'IVITIES INCREASE (DEŒEASE) IN CASH & CASH ECPIVAIEm'S CASH PAIANCE-Janua1:}' 1 CASH PAIAN CE - I::ecember 3 1 (continued) J anuarv 1 to December 3 1 , 1991 1990 $ 830,061 $ 875,528 286,926 256,910 (269,924) (196,692) (729 , 648) (777,064) $ 117.415 ~ 158,682 $ (497,773) 29,430 49,039 2,002,677 (64,719) $(1,767,779) 40,917 204,408 ~J"1. 522,454) $ 3,413,150 (3,360,150) (20,000) (57,934) 165,966 57.315 ~ 198.347 $ 1.518.654 $ 1,300,000 (203,000) (11,694) 208,011 53.389 $ 1.346.706 $ 2,982,775 443.823 $3,426,598 $(1,165,425) 1. 609 ,248 $ 443,823 The notes to financial statements are an integral part of this statement. (13) ( continued) RECDNCILIATION OF NET INa:ME TO NET CASH FI.C:::WS FRCM OPERATING ACI'IVITIES Janua1:}' 1 to December 31, 1991 1990 NET IN a:ME ( LOSS ) $ (551,746) $ (603,509) ADJUSIMENTS RECDNCILING NET INCOME TO NET CASH PROVIDED BY OPERATING ACI'IVITIES : D=preciation Increase in receivables Increase (decrease) in payables Borxi issue costs amortization Increase in prepaid expenses Increase in deferred income NET CASH PROVIDED BY OPERATING ACI'IVITIES 707,660 708,830 (18,111) (17,977) (42,942) 61,785 3,265 1,331 (3,447) (4,457) 22,736 12,679 $ 117,415 $ 158,682 a::MFOSITION OF CASH OPERATING CASH Petty cash Cash in bank-Bank IV Cash in bank-National Bank of America $ 50 1,074,111 201,756 $ 50 229,938 63,724 'ICTAL OPERATING CASH $ 1.275,917 ~ 293,712 RFSTRI CI'ED CASH Economic development-First National Bank KSU , Sal ina cash in banks am treasln:y bills $ 212,723 $ 150,111 1.937,958 'ICTAL RFSTRI CI'ED CASH $ 2,150,681 ~ 150,111 'ICTAL CASH $ 3,426,598 $ 443,823 'The notes to financial statements are an integral part of this statement. (14) SALINA AIRroRI' AUIHORITY OJstodian Urrler Interlocal Agreement (Note 6) PRCDEcr- I.ENGIH SaŒI:UIE OF CAPITAL FFOJECI', SAlES TAX FORI'ION KANSAS STATE UNIVERSITY-SALINA, CDLI.EGE OF TEæNOLCGY Beginning of Project to DeceInber 31 , 19 9 1 Revenues am other Financial Sources Sales tax Interest income $1,988,596 13 .969 $2,002,565 Expendi tures-Capi tal Proj ect Residence Hall South Boun::1al:y Road North Bourx:laxy Road Main Entrance Infrastructure Equipment College Center Technical Center Addition 4,760 59,847 Blldqet $ 400,000 60,000 250,000 75,000 615,000 2,400,000 700.000 $ $ 64,607 $4,500,000 D=tail of Investments at DeceInber 31, 1991 National Bank of America, Salina KS U.S. Treasury Bills $ 532,987 1. 404 . 971 $1,937,958 'Ihe notes to financial statements are an integral part of this statement. (15) NOI'ES 'ill FINANCIAL STATEMENrS December 31, 1991 ani 1990 NOTE 1: SUMMARY OF SIGNIFICANT ACXXXJNl'ING roLICIES 'This summary of significant accounting policies of the Salina Airport Authority (the Authority), a component unit of the city of Salina, Kansas is presented to assist in urrlerstarding the Authority's financial statements. '!he financial statements am notes are the representations of the Authority's management who is responsible for their integrity am objectivity. These account~ policies confonn to generally accepted account~ principles am have been consistently applied in the preparation of the financial statements. Fixed Assets Fixed assets are stated at cost. D=preciation is COII'puted using the straight-line method based on estimated useful lives as follows: Equipment Buildings Airfield ani Other Improvements 5 - 10 years 15 - 45 years 6 - 20 years Grants from the Federal Aviation Administration The Salina Airport Authority has received grants from the Federal Aviation Administration to make capital improvements including runway am taxiway improvements, lam acquisition, emergency facilities am equipment, snCM relIDVal equipment am ai1:port master plan studies. 'Ihese grants are accounted for on a reimbursement basis whereby costs are incurred prior to the actual cash receipt of the grant. Receipts are credited to thE~ Federal Aviation contribution account. Depreciation on the assets acquired with these receipts is charged to the Federal Aviation contribution account. Vacation ani Sick leave All pennanent full-tirœ employees with one year of employment are eligible for vacation benefits in vaJ:Y~ annual amJunts. Employees are required to take earned vacation within one year am no carJ:Yover is allayed. Sick leave benefits accrue to all full-tirœ employees at the rate of one working day per month. Sick leave may not be carril3d over from one year to the next . (continued) (16) (continued) Cash Flow Inforrration In 1988 the Authority adopted statement of Finarx::ial Accounting Starrlard No. 95 which requires a statement of cash flows in tb.e place of a statement of changes financial position. '!he Authority considers all short tenn invesbnents with an original maturity of three m:Jnths or less to be cash equivalents. NOI'E 2: CASH AND INVESIMENTS Kansas municipalities, such as the Authority, are authorized by Kansas statutes to invest funds in: (1) TernporaJ:Y notes or no-fund warrants issued by the investing goverrnnental unit, (2) Time deposit, open accounts or certificates of deposit, (3) Time certificates of deposit, ( 4 ) Repurchase agreements, am (5) united states Treasw::y bills or notes with maturities not exceeding six months. D=posits or investJnents with qualified financial institutions are to be secured by a borrl or by the pledge of certain types of securities specified by statute. Cash am investJnents of the Authority deposited with financial institutions were 100% insured or collateralized by securities provided by such depositoJ:}' financial institution at December 31, 1991 and 1990. Corrposition of cash in bank balances: December 3 :L. 1991 1990 Bank N, Sal ina , Kansas National Bank of America, Salina, Kansas $ 1,074,111 201.756 $ 229,938 63.724 $ 1,275,867 $ 293,662 ( continued ) (17) (continued) '!he Building Revenue Boro agreements for the Series 1984 arrl Series 1985 Building Revenue Borrls require a set-aside Boro Reserve at December 31, 1991 of $50,000 arrl $50,000 respectively. Composition of Boro Reserve certificates of deposit: Decel11ber3;L. 1991 1990 Bank IV, Sal ina , Kansas National Bank of America, Salina, Kansas $ 30,000 70,000 $ 30,000 70,000 $ 100,000 $ 100,000 '!he board of directors of the Authority resolved on May 14, 1986 to create a restricted account for economic development. Composition of economic development account: First National Bank am Trust Co., Sal ina , Kansas Repurchase Agreements First National Bank am Trust Co., Sal ina , Kansas $ December 3 :~ 1991 1990 132,723 $ 50,111 80,000 100.000 212,723 $ 150,111 $ '!he Building Revenue Boro agreements for the Series 1984 am Sexies 1985 Building Revenue Bonds require a set-aside Replacement am D=preciation Rese:rve at December 31, 1991 of $ 50,000 am $50,000 respectively. Composition of Replacement am D=preciation Reserve certificates of deposit: Bank IV, Sal ina , Kansas National Bank of America, Salina, Kansas First National Bank am Trust, Salina, KS December 3 1.L 1991 1990 $ 10,000 $ 10,000 70,000 70,000 20.000 20.000 $ 100,000 $ 100, 000 (continued) (18) ( continued) NOI'E 3: LEASES Buildings Constructed by Tenants 'The Authority has authorized the construction of five buildings on the Authority-owned lam by three tenants. '!he Authority has assisted in the financing of these buildings through the issuance of Building Revenue Bonds am General Obligation Economic Development Borris for thes;~ buildings. '!he Revenue bonds are payable solely from the rentals of the leased buildings am other leased buildings designated by the Aut:hori ty . 'The tenants make payments directly to the Authority am the Authority makes payment to a trustee. '!he financing of these facilities by the Authority represents a direct financing lease am accordingly, the net invesbœnt in such leases is recorded in the Authority's balance sheet as a restricted asset. 'The following lists the carrponents of the net: investment in direct financing leases as of December 31, 1991 and 1990: D=cernber 3 ]:.L 1991 1990 Total rninimtnn lease payments to be received less unearned incaræ Net investment in direct financing leases $3,998,829 1. 914.313 $3,371,476 ~078.950 $2,084,516 $2,292,526 'The future rninimtnn lease rentals to be received urrler direct leases are as follows: Year ending December 3 1 1992 1993 1994 1995 1996 '!hereafter ( continued ) (19) financing $ 428,296 354,814 337,597 420,324 246,659 2.211.139 $3,998,829 ( continued) Rentals Urrler Operating leases The authority leases facilities am lam to various concessionaires and others. 'Ihese leases are for vaJ:Ying periods of tilDe from one tel twelve years am require the payment of minimum annual rentals. 'Ihe following is a schedule, by year, of future rental of noncancellable operating leases as of December 31, 1991: Year ending December 3 1 1992 1993 1994 1995 1996 Therea fter $ 450,420 116,493 88,548 76,388 50,513 262.966 $1,045,328 NOI'E 4 IDNG-TERM OEm' Bonds Building revenue bonds series 1984, originally issued May 1, 1984, due in annual installments increasing from $50,000 in 1992 and 1993 to $60,000 in 1994, plus interest at 80% of the base lending rate of The National Bank of America, Salina, Kansas. $ 160,000 Building revenue bonds series 1985, originally issued December 1, 1985, due in annual installments increasing from $110,000 for 1992 am 1993 to $130,000 in 1995, plus interest at 80% of the base lending rate of The National Bank of America, Salina, Kansas . 460,000 General obligation economic development bonds series 1990A, originally issued July 1, 1990 due in annual installments increasing from $45,000 in 1992 to $175,000 in 2010 plus interest ranging from 6.4% to 8.375% 1,855,000 General obligation economic development bonds series 1990-B, originally issued October 1, 1990 due in annual installments increasing from $20,000 in 1992 to $70,000 in 2010 plus interest ranging from 6.5% to 8.5% 755,000 Leasehold revenue bonds series 1991, originally issued November 1, 1991, due in annual installments increasing from $35,000 in 1992 to $90,000 in 2006 plus interest ranging from 5% to 7.25% 850.000 Total Bonds $4,080,000 (continued) (20) ( continued) 'The annual bond principal for all bonis outstarrling as of December 31, 1991, are as follows: Payable in Year Errled General Cecernber 3 1 Obliqation Revenue Total 1992 $ 65,000 $ 195,000 $ 260,000 1993 70,000 195,000 265,000 1994 80,000 210,000 290,000 1995 85,000 170,000 255,000 1996 90,000 45,000 135,000 'Thereafter 2,220,000 655,000 2,875,000 Total Principal $2,610,000 $1,470,000 $4,080,000 NarE 5 DEFINED BENEFIT PENSION PIAN Substantially all employees of the Salina Airport Authority participate in the Kansas Public Employees Retirement System ("System"), a multiple employer public employee retirement system. 'Ihe payroll for employees covered by the System for the years en:ied Cecernber 31, 1991 am 1990 was $333,207 and $306,113. '!he total payroll was $345,249 am $318,752 respectively. Substantially all employees of the Salina Airport Authority arl= eligible to participate in the System after one year of employment. Employees who retire at or after age 65 are entitled to a retirement benefit, payable monthly for life, equal to 1 percent of their final average salary for each year of "prior" service am 1.25 to 1.5 percent for each year of "participating" service depending up::>n the number of years of se:rvice. Final average salaJ:Y is the employee's average salaJ:Y over the highest four years of credited service. Benefits fully vest on reaching 10 years of service. Vested employees may retire at age 55 to 65 with 10 years of credited service am receive reduced retirement benefits. '!he System also provides death and disability benefits. Benefits are established by State statute. Covered employees are required by state statute to contribute 4 percent of their salaJ:Y to the plan. '!he employer is required by the same statute to contribute the remaining am:>unts necessaJ:}' to pay benefits WÌlEm due. 'The contribution requirement for the years en:ied December 31, 1991 am 1990 was $23,469 am $21,569, which consisted of $7,807 am $7,604 from the employer arrl $15,662 and $13,965 from employees respectively,; these contributions represented 7.00% am 7.00% of covered payroll respectively. ( continued ) (21) ( continued) The "pension benefit obligation" is a standardized disclosureræasure of the present value of pension benefits, adjusted for the effect of projected salaJ:Y increases am step-rate benefits, estilnated to be payable in the future as a result of employee service to date. 'The measure, which is the actuarial present value of credited projected benefits, is intended to help users assess the System I s furrling status on a going concern basis, assess progress made in accurm.ùating sufficient assets to pay benefits when due, am make comparisons among Public Employee Retirement Systems and employers. 'Ihe System does not make separate measurements of assets and pension benefit obligation for individual employers. 'Ihe pension benefit obligation at Jantia1:}' 1, 1991 for the System as a whole, determined through an actuarial valuation performed as of that date, was $3.73 billion. '!he System's net assets available for benefits on that date were $3.76 billion. Net assets available for benefits exca:ded the pension benefit obligation by $27.2 million. 'Ihe contribution 0:[ the Salina Airport Authority for the period covered by this report rE=presents .02% of contributions required of all participating entities, which totalled $106 million for the year en:1ed June 30, 1991. Other iru:orrnation related to the System can be found in the KPERS 1991 CAFR. '!his report is available from the Salina Airport Authority. Note 6 KANSAS STATE UNIVERSITY-SALTIß, CDLIEGE OF TEalNOLcx;y The Salina Airport Authority has entered into an Interlocal Cooperation Agreement with the Kansas Board of Regents, Kansas state University of Agriculture am Applied Science (KSU) am the city of Salina. 'I11e purpose of this agreement is to assure proper use am administration of the sales tax proceeds from a one-half cent retailer I s sales tax approved by the voters of the City of Salina at a refererrlum election on Septerobe!r 25, 1990. '!he sales tax is iJnposed for the period beginning January 1, 1991 and ending December 31, 1992 with proceeds to be used locally to help accomplish the merger of the Kansas College of Technology into KSU; the resul ting campus in Salina to be operated as Kansas state University-Salina, College of Technology. Under the agreement, the Salina Airport Authority acts as custcdian and paying agent for these sales tax funds. Note 7 CDMPLIANCE OF KANSAS STA'IUI'ES '!he Authority purchased a 52 week TreasuIy Bill December 19, 1991 in the amount of $400,000. '!he term of this TreasuIy Bill exceeds allowable irwestment te:rm length (K.S.A. 12-1675b(5)) am appears to be a violation of Kansas statutes. (22) BlANK PAGE SALINA AIRroRI' AUIHORITY DETAIIED STATEMENTS OF OPERATIONS AND CRANGES ill RETAINED EARNINGS OPERATING REVENUES Building rents Ra1rp rents land rents Agri lam rents Hangar rents Tank fann rent Fixed base operator I.arxiin;J fees Cormniss ions -car rentals Carnrni ss ions -other Other income 'IOI'AL OPERATING REVENUES OPERATING EXPENSES BEFORE DEPRECIATION ArMINISTRATIVE EXPENSES Office salaries Office supplies Postage Travel am meetings Aqr i 1 am expense Legal am accounting Insurance Engineering PI CA tax Kansas unemployment tax Employees retirement Telephone Industrial development Airport promotion Air show expense Property taxes rues am subscriptions Property appraisals Other administrative expenses Provision for bad debts 'IOI'AL AI:MINISTRATIVE EXPENSES (continued) (23) January 1 to December 31, 1991 1990 $ 647,617 $ 595,712 11,537 11,802 27,171 26,402 35,738 68,247 34,428 33,924 6,493 360 89,079 127,766 4,271 7,599 7,474 7,591 1,533 1,422 1,995 1 $ 867,336 .L 880,826 $ 127, 619 $ 130,954 7,699 6,206 4,297 3,740 7, 013 13 , 611 4,282 8,222 36,474 33,976 114,105 102,399 6,041 9,958 25,473 23,389 587 1,636 7,807 7,604 6,579 6,882 21,250 19,583 8,913 34,881 670 300 344 7,667 2,650 7,399 26,170 5,000 401. 155 L 430,225 $ (continued) J a.nuaIY 1 to Cecember 31, 1991 1990 MAINI'ENANCE EXPENSES Maintenance salaries $ 182,785 $ 187,552 Building maintenance 20,045 20,914 Airfield maintenance 20,639 26,866 Grourrls maintenance 15,608 10,370 Equipment gas, oil & repairs 25,706 25,583 utilities 50,178 52,078 Fire deparbœnt expense 3,846 3,069 Other maintenance expenses 10,330 12,504 '!'OrAL MAINI'ENANCE EXPENSES $ 329 , 137 ~ 338,936 '!'OrAL OPERATING EXPENSES BEFORE DEPRECIATION $ 730,292 ~ 769,161 OPERATlliG EARNINGS BEFORE DEPRECIATION $ 137,044 $ 111,665 DEPRECIATION EXPENSE 707,660 708,830 OPERATrnG EARNINGS ( lOSS) $ (570 , 616) ~ (597,165) ornER illa::ME (EXPENSE) Interest incarne-capi tal leases $ 222,135 $ 177,281 Interest income 64,790 78,205 Bond interest -expense (256,920) (144,379) Bond issue costs (650) ( 650) Amortization borrl costs (3,265) (1,331) Interest on temporaJ:Y notes (7 ,220) (115 .470) NET OIHER ill a::ME (EXPENSE) $ 18,870 .L (6,344) NET ill a::ME (lOSS) $ (551,746) $ (603,509) ADD DEPRECIATION ON ASSETS ACÇUIRED 'IHRCUGH FEDERAL CDNI'RIBUI'IONS (Note 1) 395,634 403,467 illCREASE (DECREASE) ill REI'AINED EARNINGS $ (156,112) $ (200,042) REI'AINED EARNINGS, J anuaJ:Y 1 6,572,689 6,772,731 REI'AINED EARNINGS, Cecember 3 1 $ 6,416,577 $ 6,572,689 The notes to financial statements are an integral part of this statement. (24) SALINA AIRroRI' AUIHORITY CAPITAL EXPENDI'IURES J anuarv 1 to D=cember 31, 1991 1990 EÇUIH1ENI' MMA weather system $ $ 2,160 staff vehicles 22,162 Communi cat ion equipment 2,453 Restaurant equipment 299 Office equipment 11,653 13,230 1978 Clevrolet bus 1,800 IDrAL EÇUIH1ENI' $ 36.268 .L 17.489 BUIIDlliGS Irxiustrial paving Kansas Anny National Guard AnnoJ:}' K-State lab addition ArM hanger KASA building iuprovements Soo Plastics building Inten1ational Pilot Training building 53,000 sq. ft. Mfg. Bldg. AllpJrt Irrlustrial Center Building #673 Salina development center iuprovements MMA/FM/KHP construction Building #959 roof Terminal. bldg. iuprovement Schillirq road Tank leak detector Doors S & K Auto Salina Snack Beech Aircraft proj ect IDrAL BUIIDlliGS OIHER IMPROVEMEN'rn AlP Future proj ects AlP 10 Lighting project AlP 11 ~ineering AlP 12 Runway protection zone AlP 13 FUture proj ects IDrAL OIHER IMPROVEMEN'rn IDrAL CAPITAL EXPENDI'IURES (25) $ 5,839 $ 74,065 81,167 95,341 14,968 46,060 621,738 (41,700) 792,337 11,880 10,169 203,478 36,613 1,943 15,695 4,767 330 12,401 14,947 2,090 7,450 1,400 44.104 $ 356.342 iL..700.740 $ $ 10,200 21,275 32,700 762 18,193 706 11.364 $ 62.257 L 32.943 $ 454,867 $1,751,172 SALINA AIRroRI' AUIHORITY OONœ OF INDE:BI'EI:tffiSS From Issue to December 31, 1991 Original Principal Outstanding Issue Paid Balance Building Revenue Bonds Series 1984 $ 400,000 $ 240,000 C' 160,000 ~) Building Revenue Bonds Series 1985 900,000 440,000 460,000 General Obligation Economic D=vel oprænt Bonds Series 1990-A 1,900,000 45,000 1,855,000 General Obligation Economic D=veloprænt Bonds Series 1990-B 773,000 18,000 755,000 Leasehold Revenue Bonds Series 1991 850,000 850,000 $4,823,000 $ 743,000 $4,080,000 (26) SALlliA AIRFORI' AUIHORITY BUIIDlliG REVENUE OONŒ-SERIES 1984 December 31, 1991 Date of Issue: Alrolmt of Issue: Interest Rate: Maturity Date: Principal Paid: OUtstanding Balance: May 1, 1984 $400,000 * May 1,1994 $240,000 $160,000 Scl1edule of Bond Principal Pavments D.1e in Year Bond Principal 1992 1993 1994 $ 50,000 50,000 60.000 $160,000 *'!he interest rate for each six m:::>nth payment will be eighty percent (80%) of the National Bank 0 f A1œ.r i ca , Sal ina , ¥ansas base 1 errling rate in effect on the beginning date of each six month period. (27) SALINA AIREDill' AUIHORITY EUIIDlliG REVENUE IDNŒ-SERIES 1985 D=ce.~ 31, 1991 Date of Issue Amount of Issue Interest Rate Maturity Date Principal Paid OUtstarxling Balance January 17, 1986 $900..000 * December 1, 19 9 5 $440..000 $460,,000 Schedule of Born Principal Payments D.1e in Year Born Principal 1992 1993 1994 1995 $110,000 110,000 110,000 130,000 $460,000 *'The interest rate for each six IOOnth payment will be eighty percent (80%) of the National Bank of Arærica, Salina, Kansas base len:ling rate in effect on the beginning date of each six month period. '!he rate of interest shall not be less than a rate of eight percent (8%). (28) SALINA AIRFORI' AIJIHORITY GENERAL OBLIGATION ECDNCMrC DEVEIDFMENI' IDNŒ SERIES 1990-A December 31, 1991 Date of Issue: Aroc>unt of Issue: Interest Rate Maturity Date: Principal Paid: OUtstancli.ng Balance : July 1,1990 $1,900,000 * September 1, 2 0 1 0 $45,000 $1,855,000 Schedule of Bond Principal Payments llie in Year Born Principal 1992 1993 1994 1995 1996 '!hereafter $ 45,000 50,000 55,000 60,000 65,000 1.580,000 $1,855,000 *'Ihe interest rate varies from 8.375% to 6.4% over the life of the born issue. (29) SALINA A.IRroRI' AUlliORITY GENERAL OBLIGATION ECDNC11IC DEVEI.DFMENT OONŒ> SERIFS 1990-B December 31, 1991 Date of Issue: Amount of Issue: Interest Rate: Maturity Date: Principal Paid: outstanding Balance: october 1, 1990 $773,000 * September 1, 2010 $18,000 $755,000 Schedule of Bond Principal Payments D1e in Year Bond Principal 1992 1993 1994 1995 1996 Thereafter $ 20,000 20,000 25,000 25,000 25,000 640,000 $755,000 *'The interest rate varies from 8. 5% to 6. 5% over the life of the bond issue. (30) SALINA AIRroRI' AIJIHORITY lEASEHOLD REVENUE OONŒ SERIES 1991 December 31, 1991 Date of Issue: Amount of Issue: Interest Rate: Maturity Date: Principal Paid: Outstarrling Balance : November 1, 1991 $850,000 * September 1, 2 0 0 6 $850,000 Schedule of Bond Principal Payments I:Ue in Year Borrl Principal 1992 1993 1994 1995 1996 '!hereafter $ 35,000 35,000 40,000 40,000 45,000 655,000 $850,000 '!he interest rate varies from 7.25% to 5% over the life of the borrl issue. (31) Workmen's Col11pensation and Employer's Liability Comprehensive General Liability Rental Buildings- Industrial Airport Terminal am Rental Buildings Vehicles and Equipment Public Employees Blanket Bond Public Officials and Employees Liability SALINA AIRFORr AUIHORITY INSURANCE IN FORCE December 31, 1991 Type of Caveraqe Bodily inj UJ:Y am property damage Fire and lightning, exterrled coverage, vandalism and malicious mischief-loss of rents Fire am lightning, exterrled coverage, vandalism and malicious mischief Liability Fhysical damage-equipment Medical payments Bodily injUJ:Y Uninsured motorists Honesty blanket position bond coverage Errors & omissions excluding asbestos, excluding pollution coverage on a claims made basis, 5,000 deductible (32) Amount of Caveraqe $ 500,000 500,000 1,651,216 4,234,000 500,000 584,747 2,000 25/50,000 500,000 100,000 500,000 SaIEI:UIE OF FEDERAL ASSISTANCE CATAI..CX; OF FEDERAL JX:MESTIC ASSISTANCE NUMBER 20.106 For the year errled December 31, 1991 Proqram Title Federal ID Number DEPARIMENT OF TRANSroRrATION Federal Aviation Administration 3-20-0072-11 Master plan u¡:date Federal Aviation Administration 3-20-0072-12 Runway protection zone Federal Aviation Administration 3-20-0072-13 Future proj ect (33) Experrli tures IÅlr ing Year Amount of Awards $ $ 32,700 29,430 18,193 11. 364 $ 62,257 c' 29,430 .? SALINA AIRFORI' AUIHORITY <XMPARISON OF GROSS CASH EAIANCES WI'IH DEFOSITORY :3EaJRITY December 31, 1991 Bank IV Salina. N.A. National Bank of America First National Bank and Trust GROSS CASH EAIANCES DerPand deposit Cash in checking $ 16.041 $ 734.743 $132 .723 Time deposits COmmercial sweep 1,066,172 Certificates of deposit 40.000 140.000 20.000 'IO1'AL TIME DEFDS ITS 1. 106 .172 140.000 20.000 REroRŒASE AGREEMENTS 80.000 TOTAIB 1.122.213 874.743 232 .723 lESS FDIC CDVERAGE Cemand deposits 16,041 100,000 100,000 Time deposits 100.000 100.000 100.000 'IO1'AL FDIC CDVERAGE 116.041 200.000 200.000 BA.I.ANCES SEaJRABIE BY CDUATERAL 1,006,172 674,743 32,723 SECURITY REÇVIRED (100%) 1,006,172 674,743 32,723 SECURITY PROVIDED BY DEFOSITORIFS 1. 031. 920 1. 022 . 188 140.712 AMJUNT UNDERSEC!JRED BY STA'IUIE $ $ $ -- -- (34) HARRISON & ARNETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENEO.HARRISON,C.PA. 719 E,i\ST CRAWFCRO . SALINA. C<ANSAS 6740, PHONE: (913)827.7244 TT C PA FAX: (913) 827.0048 THOMASG.ARNE , .. . INDEPENDENr AUDITORS' REroRI' ON INTERNAL CDNTROL SI'RUCIURE REIATED MATTERS NOI'ED rn A FINANCIAL STATEMENI' AUDIT CDNCUCI'ED rn AcmRDi\NCE WTIH GOVERNMENI' AUDITING STANDARŒ; To the Board of Directors Salina Airport Authority Sal ina , Kansas We have audited the financial statements of Salina Airport Authority, a component unit of City of Salina, Kansas, as of am for the year.s erxied December 31, 1991 am December 31, 1990, am have issued our rep:)rt thereon dated FebruaJ:Y 28, 1992. We conducted our audit in accordance with generally accepted auditing standards , the Kansas Minimum Standard Audit Proqram, Government Audi tinq Standards, issued by the Comptroller General of the united States am the provisions of Office of Management am Budget Circular A-128, "Audits of State and I..ocal Governments." 'Ihose staOOards am CMB Circular A-128 require that we plan am perform the audit to obtain reasonable assurance about ,mether the financial state.-rnents are free of material misstatement. In planning am perforrnirg our audit of the financial sta~~ts of Salina Airport Authority, Salina, Kansas, for the years errled December 31, 1991 and December 31, 1990, we considered its internal control structure in order to determine our auditing procedures for the pm:pose of expressing our opinion on the financial statements and not to provide assurance on the intEmlal control structure. The management of Salina Airport Authority, Salina, Kansas, is responsible for establishing am maintaining an internal control structure. In fulfilling this resp:>nsibility, estimates am juclgIænts by management are rE~ired to assess the ex¡;:;ected benefits am related costs of internal control structure policies am procedures. 'Ihe objectives of an internal control structure are to provide management with reasonable, rot not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, am that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent lilnitations in any internal control structure, errors or irregularities may nevertheless occur am not be detected. Also, projection of any evaluation of the structure to future periods is subj ect to the risk that procEdures may became inadequate because of changes in corrli tions or that the effectiveness of the design am operation of policies am procedures may deteriorate. ( continued) (35) W:MBE~S c)F 'JIVISION "OR CPA FIRMS PRIVATE CC)MPA,~;"S "'lACTIC" SE,;,\'N AMERICAN INSTITUTE c)F CERTIf'IED PUf3LC .A(:Cc)UNTMHS KANS,'S SOCIE'Y.'F CERTIFIED PUfil. C .\CCOUNT,\NTS (continued) For the purpose of this report, we have classified the significant internal control structure policies am procedures in the following cateçrories: 1- 2. 3. 4. Receipts Purchases / disburserœn ts Cash am investment balances Financial reporting For all of the internal control structure categories listed above, we obtained an urrlerstanding of the design of relevant policies and. procedures and whether they have been placed in operation, am we assessed control risk. We noted certain matters involving the internal control structure and its operation that we consider to be reportable corrlitions urrler standards established by the American Institute of Certified Public Accountants. Reportable corrlitions involve matters earning to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity's ability to record, process, summarize, arrl report financial data consistent with the assertions of management in the general purpose financial statements. CUe to small number of staff persons in the administrative office, the Authority is not able to provide the segregation of duties carmnon in larger organizations. A material weakness is a reportable corrli tion in which the d=sign or operation of the specific internal control structure elements do=s not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the general purpose financial statements being audited may occur am not be detected within a tirrely peri cd by employees in the norrral course of performing their assigned functions. OUr consideration of the internal control structure would nO1: necessarily disclose all matters in the internal control structure that migh1: be reportable conditions am, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses as defined above. However, we believe the reportable corrlition described above is not a material weakness. ( continued) (36) ( continued) '!his report is inten:ied for the infonnation of the management am Board of Directors. 'Ihis restriction is not inten:ied to limit the distribution of this report, which is a matter of p..1blic record. /~/~ Sal ina , Kansas February 28, 1992 (37) HARRISON & ARNETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON. C.F'A. THOMAS G. ARNETT. C.F'A. 719 EAST CRAWFORD. SALINA. KANSAS 67401 PHONE: (913) 827.7244 FAX: (913) 827.0048 INDEPENDENr AUDITOR'S REFORI' ON <XMPLIANCE WI'IH IAWS AND REGUIATIONS Bi\SED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED ill AcæRDANCE WI'IH GOVERNMENI' AUDITING STANDARDS To the Board of Directors Salina Airport Authority Salina, Kansas We have audited the financial statements of Salina Airport Authority, a component unit of City of Salina, Kansas, as of am for the years ended December 31, 1991 am December 31, 1990, am have issued our report thereon dated Februm:y 28, 1992. We conducted our audit in accordance with generally accepted auditing standards , the Kansas Minimum Standard Audit Proqram, Government Audi tinq Standards, issued by the CcIrrptroller General of the united states am the provisions of Office of Management arrl Budget Circular A-U8, "Audits of State and Local Governments." 'Those staroards am CMB Circular A-128 require that we plan am perfonn the audit to obtain reasonable assurance about 'Whether the financial statements are free of material misstatement. Compliance with laws, regulations, contracts, am grants applicable to Salina Airport Authority, Salina, Kansas, is the responsibility of Salina Allport Authority, Salina, Kansas management. As part of obtaining reasonable assurance about whether the financial statements are free of maberial misstatement, we performed tests of the Authority's compliance with certain provisions of laws, regulations, contracts, am grants. However, our obj ecti ve was not to provide an opinion on overall compliance with such provisions. (continued) (38) MEMBERS DIVISION FOR c'?A FIRMS PRIVATE .:OMP<\NIES ?'NCf'CE SECTIO~J AMERICAN NSTITUTE OF CERTlclED PUBLIC ACCC'~NrANTS ~ANSAS SùC:ETY OF CERTIFiED PUBI.:C A,\':lJUNTANTS ( continued) The results of our tests indicate that, with respect to the items tested, Salina Airport Authority, Salina, Kansas, complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing carne to our attention that caused us t:o believe that the Salina Airport Authority had not complied, in all material respects, with those provisions. This report is interrled for the infonnation of management and the Board of Directors. '!his restriction is not interrled to lllnit the distribution of this report, which is a matter of public record. ~~ Salina, Kansas February 28, 1992 (39) HARRISON & ARNETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON. C.f'A. THOMAS G. ARNETT, C.P.A. 7<'? =¡òSí CR¡òVVFCRD . ':;¡:\L!N¡ò !<AìISAS 67401 PHONE: (9131827.7244 FAX: (913) 827.0048 INDEPENDENr AUDITOR'S REFORI' ON SaIEITJIE OF FEDERAL FINANCIAL ASSISTANCE To the Board of Directors Salina Airport Authority Salina, Kansas We have audited the financial statements of Salina Airport Authority, a component unit of City of Salina, Kansas, for the year errled Cece.TOber 31, 1991 and have issued our report therecn dated FebnlarY 28, 1992. 'Ihe5e financial statements are the responsibility of Salina Airport Authority, Salina, Kansas manage.ment. OUr responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards , the Kansas Minimum Standard Audit Prcaram, C.:overnment Audi tinq Standards, issued by the Comptroller General of the United states am the provisions of Office of Management am Budget Circular A-U8, "Audits of state and Lccal Governrne.!1ts." '!hose starrlards am Cl1B Circular A-128 require that we plan am perform tile audit to obtain reasonable assurance about whether the financial stateme!1ts are free of material misstatement. An audit includes examining, on a test basis, evidence SUPPOrtÍD3' the anDUnts am disclosures in the financial s--...ate.-rrents. An audit also includes assessÏD; the accounting principles used am significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. OUr audit was made for the purpose of forming an opinion on the financial statements of Salina Airport Authority, Salina, Kansas, taken as a whole. The accompanying schedule of federal financial assistance is present3d for pU1:pJses of additional analysis am is not a required part of the financial statements. 'Ihe inforrna~ion in that schedule has been subjected to the auditing procedures applied in the audit of the financial statements am, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. I 1~f~ Sal ina , Kansas FebruaJ:Y 28, 1992 (40) MEfiFEPS DIVISiCN FOR :PA C!RMS PRIVATE .\'~II'~èJ!c:; PRAC",'C SE:TIO~ ~MERICAN INSTITUTE OF IC ACC,1UNTANf,; KANSAS SOCIETv OF CEfnFf" .\c"c:c'lIN IAèJTS HARRISON & ARN ETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON. C.P.A. THOMAS G. ARNETT. C.P.A. 719 EAST CRAWFORD. SALINA, KANSAS 67401 PHONE: (913) 827.7244 FAX: (913) 827-0048 INDEPENDENr AUDITOR'S REFORI' ON INIERNAL CX>NrnOIS (AŒDUNTING AND AI:MINISffiATIV) -BASED ON A muDY AND EVAIIJATI ON MADE AS A PART OF AN AUDIT OF '!HE GENERAL FURIœE FINANCIAL S'IWl'flIIENTS AND '!HE ADDITIONAL TESTS RÐ;;PIRED BY '!HE S1NGIE AUDIT Acr To the Board of Directors Salina Airport Authority Salina, Kansas We have audited the financial statements of Salina Airport Authority, a component unit of City of Salina, Kansas, for the year errled December 31, 1991 am have issued our report thereon dated FebnIaJ:Y 28, 1992. We corrlucted our audit in accordance with generally accepbed auditing standards, the Kansas Minimum Standard Audit P:r~LctITI, Government Auditinq Standards, issued by the Corrptroller General of the united sta-tes, and Office of Management and Budget(CMB) Circular A-U8, "Audits of state am- Local Governments. " '!hose standards am CMB Circular A-U8 require that we plan and perform the audit to obtain reasonable assurance a1:x:ut whether the general purpose financial statements are free of material misstatement,. In pla.nI1in; am performing our audit for the year errled December 31, 1991, we considered the Authority's i.nt:erna1 CO1 Itrol stJ:ucture in order to deteIJnine our auditing procedures for the purpose of expressing our opinion on the Authority's general purpose financial statements and not to provide assurance on the internal control structure. '!his report addresses our consideration of internal control structure policies and procedures relevant to compliance with requirements applicable to federal financial assistance programs. We have addressed policies am procedures relevant to our audit of the financial statements in a separate report dated Feb:rtJa1:Y 28, 1992. '!he management of Salina Allport Authority, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of i.nt:erna1 control structure policies am procedures. '!he obj ecti ves of an i.nt:erna1 COI ltrol structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of general purpose financial staternents in accordance with generally aa::epted accounting ( continued) (41) MEMBERS OF DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS ( continued) principles, am that federal financial assistance pra;rams are J:nanaged in compliance with applicable laws am regulations. Because of inherent limitations in any internal control stnlcture, errors, irregularities, or instances of noncompliance may nevertheless occur am not be de"tected. Also, projection of any evaluation of the stnlcture to future periods is subject to the risk that procedures may becaræ inadequate because of chang«=s in conditions or that the effectiveness of the design am operation of polici«=s am procedures may deteriorate. For the purpose of this report, we have classified the significant internal control stnlcture policies am procedures used in administering federal financial assistance programs in the following categories: Accounting Controls 1. Receipts 2 . Purd1ase/ disbursement 3 . Claims for reimburseIœnt Administrative Controls 1 . General Requirements Political activity Davis-Bacon Act civil Rights Federal financial reports Drug-Free Workplace Act 2 . Eligibility For all the internal control structure categories listed aJ:x:ve, we obtained an understarxling of the design of relevant policies am procedures am determined whether they have been placed in operation, am we assessed control risk. Thlring the year ended December 31, 1991, Salina Ai1:port Autllority had no major federal financial assistance programs am expenied 100 percent of its total federal financial assistance under the following nonrnajor federal financial assistance programs: Federal Aviation Administration, Ai1:port D=velopment Program. We performed tests of controls, as required by CMB Circular A-128, to evaluate the effectiveness of the design am operation of internal control stnlcture policies arrl procedures that we have considered relevant to preventing or detecting material noI)COIl1pliance with specific requirements, general requirements, am requi.reIœnts governing claims for advances am reimburseIœnts am am::>unts cla.Í1raed or used for ma~ that are applicable to the' aforementioned nonrnajor programs. OUr procedures were less in scope than would be necessary to rerrler an opinion on these internal control structure policies am procedures. Accordingly, we do not express such an opinion. ( continued) (42) (continued) We noted certain matters involving the internal control structure and its operation that we consider to be reportable corrlitions urrler stanjards established by the American Institute of Certified Public Accountants. Reportable corrli tions involve matters CCJI11irg to our attention relating to significant deficiencies in the design or operation of the internal control structure that, in our judgrœnt, could adversely affect the Authority's ability to administer federal financial assistance programs in accordano: with applicable laws am regulations. Dle to small mnnbers of staff persons in the administrative office, the Authority is not able to provide the segregation of duties cammon to larger organizations. A material weakness is a reportable con::lition in which the dE=sign or operation of one or IOC>re of the internal control structure elements does not reduce to a relatively low level the risk that noncompliance with laws and regulations that would be material to a federal financial assistance program may occur am not be detected within a timely period by employees in the nonna.l course of perfonning their assigned functions. OUr consideration of the internal control structure would not: necessarily disclose all matters in the internal control structure that might: be reportable corrlitions am, accordingly, would not necessarily disclose all reportable corrlitions that are also considered to be material weaknesses as defined above. However, we believe the reportable corrli tion described above is not a material weakness. We also noted other matters involving the internal control stJ:Ucture and its operation that we have reported to the managerœnt of Salina Þ..irport Authority, in a separate letter dated Feb:ruaIY 28, 1992. This report is interrled for the information of the audit carmnittee, management, am Board of Directors. 'Ihis restriction is not intended to limit the distribution of this report, which is a matter of public record. ~f~ Salina, Kansas FebruaJ:Y 28, 1992 (43) HARRISON & ARN ETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON. C.f>A. THOMAS G. ARNETT. C.f>A. 719 EAST CRAWFOF.D . SALINA, KANSAS 67401 PHONE: (913) 827.7244 FAX: (913) 827.0048 INDEPENDENr AUDITOR'S REroRI' ON a:MPLIANCE WITH THE GENERAL REÇUIREMENTS APPLI CABŒ TO MAJOR AND NONMAJOR FEDERAL FINANCIAL ASSISTANCE PRCGRAMS To the Board of Directors Salina Airport Authority Sal ina , Kansas We have applied procedures to test Salina Airport Authority, a COI!1pJnent unit of city of Salina, Kansas, compliance with the follaving requirements applicable to each of its federal financial assistance prcgrams, the nonrnajor program which is identified in the schedule of federal financial assistance, for the year errled December 31, 1991: political activity, Davis-Bacon Act, civil rights, cash management, federal financial reports, allowable costs, Drug-free Workplace Act, administrative requirements. OUr procedures were limited to the applicable procedures described in the Office of Management am Budget's "Compliance SUpplement for Single Audits of state am Local Governments". OUr procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on Salina Airport Authority, Salina, Kansas, compliance with the requirements listed in the preceding paragraph. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those proce::lures disclosed no material instances of noncompliance with the requirements listed in the first paragraph of this report. With respect to items not testej, nothing came to our attention that caused us to believe that Salina Airport Authority, Salina, Kansas, had not complied, in all material respects, with those requirements. Havever, the results of our procedures disclosed immaterial instances of noncompliance with those requirements, which are described in the accompanying schedule of findings am questioned costs. '!his report is intended for the inforIlEtion of the managemen.t am Board of Directors. '!his restriction is not intended to limit the distribution of this reportf which is a matter of public record. ~/a I ~ -. Sal ina , Kansas FebruaJ:Y 28, 1992 (44) MEMBERS OF DIVISION FOR CPA FIRMS PRVATE l'O~IPANIES ?RACTICE SECTll'N AMERICAN INSTITUfE OF CERTIFIED PUBLic' ACCOUNT.AN'S KANSAS SOCIETY OF CeRTIFIED ?UBLIC A,'COUNTAN HARRISON & ARNETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON, C.P.A. THOMAS G. ARN ETT, C.P.A. 719 EAST CRAWFORD. SALINA, KANSAS 67401 PHONE: (913) 827.7244 FAX: (913) 827.0048 INDEPENDENr AIJDI'IDR' S REroRI' ON cx:MPLIANCE WJ:'IH REÇUIREMENI'S APPLICABIE 'ID NONMAJOR FEDERAL FINANCIAL ASSISTANCE FR:GRAM TRANSACrIONS To the Board of Directors Salina Airport Authority Salina, Kansas In connection with our audit of the 1991 financial statements of Salina Airport Authority, a component unit of City of Salina, Kansas , am with our study am evaluation of Salina Airport Authority, Salina, Kansas, internal. control systems used to administer federal financial assistance programs, as required by Office of Management am Budget Circular A-U8, "Audits of State am Local Goven-nœnts," we selected certain transactions appli~:able to certain nonrnajor federal financial assistance programs for the year ended December 31, 1991. As required by Cl'1B Circular A-U8, we have perfonned audit:ing procedures to test compliance with the requirements goveD'1ÍD;J types of sæ:vices allCMed or unallowed am eligibility that are applicable to those transactions. OUr procedures were substantially less in scope than an audit, the objective of which is the expression of an opinion on Salina Airport Author:L ty, Salina , Kansas, compliance with these requirements. Accordingly, we do not express such an opinion. With respect to the items tested, the results of those pra::edures disclosed no material instances of noncompliance with the requirements listed in the preceding paragraph. With respect to items not tested, noi:hi.n:r came to our attention that caused us to believe that Salina Airport Authority, Salina, Kansas had not complied, in all material respects, with those requirements. Also, the results of our procedures did not disclose any ilmnatexial instances of non-campliance with these requirements, as described in the accarnpanying schedule of firrlings arrl questioned costs. 'Ihis report is interrled for the infonnation of the management arrl Board of Directors. '!his restriction is not i.rrt:en:ied to limit the distribution of this report, which is a matter of public record. ~f~ Sal ina , Kansas Februm:y 28, 1992 (45) MEMBERS OF DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION o,MERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KANSAS SOCIETY OF CERTIFIED PUBLIC o,CCOUNTANTS SALINA AIRroRI' AIJlliORI'IY sal ina , Kansas SŒŒI:UI.E OF INDEPENDENr l-lJDTIOR' S FTIIDINGS Year Dried cecenù:er 31, 1991 NONE ( 46) BLANK PAGE CEr-€...TTIi:er 3 1 SALINA AIRroRI' AIJIHORITY Last Te.!1 Years CAPITAL EXPEND TIURES Eauicme.!1t Bui 1 ciirn $ 137,496 $ 764,366 $ 41,127 196,079 46,386 1,063,231 189,397 1,101,383 48,267 443,071 39,427 61,609 9,618 886,650 94,524 2,243,U8 17,489 1,700,740 36,268 400,406 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 OJNTRIEVI'ION -FAA 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 $ 1,683 706,622 514,616 736,357 U6,055 2,180,711 980,986 613 , 642 40,917 29,430 ( 47) Land 195,000 345,058 130,590 Firf i e 1 d $ 31,655 703,854 594,191 745,345 172,157 2,522,063 1,034,741 648,583 32,943 62,257 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 SALrnA AIRroRI' AUIHORITY Last Ten Years OPERATING RECEIPI'S Fixed Other Rental Base larding Operating Revenue Operator Fees Receipts $ 658,122 $ 73,643 $ 29,879 $ 17,281 636,479 57,649 21,865 11,945 670,746 69,211 7,722 6,927 699,956 77,907 16,731 20,703 772,988 85,050 6,302 17,995 807,511 87,352 5,988 19,726 783,958 96, 133 28,702 19,217 791,433 106,432 5,913 23,447 736,242 127,765 7,599 9,220 762,984 89,079 4,271 11,002 Cecember 3 1 SALrnA AIRroRI' AUIHORITY Last Ten Years OPERATING EXPENDI'IURES 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 Office & Administrative ÐG::enses $ 190,775 206,739 193,322 277,561 294,798 386,227 456,770 483,907 430,225 401,155 Maintenance Expenses Cece..'11ber 31 $ 222,493 245,543 269,048 313,518 284,918 364,978 326,346 336,117 338,936 329,137 (48) SALINA AIRroRI' AUlliORITY Last Ten Years Dece.'11ber 31 Air Traffic Fuel Flavaae Er1P 1 an erne..11 ts 1982 74,820 1,472,854 13 , 700 1983 70,410 1,152,986 7,241 1984 62,010 1,428,491 6,272 1985 51,560 1,767,135 6,520 1986 64,846 2,190,069 6,527 1987 60,678 2,547,120 7,965 1988 80,411 2,872,298 8,916 1989 79,068 2,890,341 9,463 1990 96,254 3,136,668 5,267 1991 83,372 2,681,605 4,760 ( 49) BLANK PAGE