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Audit Report - 1998COMPREHENSIVE ANNUAL FINANCIAL REPORT of the SALINA AIRPORT AUTHORITY A Component Unit of the City of Salina, Kansas For the Fiscal Year Ended December 31, 1998 Prepared by the Management of the Salina Airport Authority ��A&\ Salina Airport Authority � Salina Municipal Airport/ Industrial Center SALINA AIRPORT AUTHORITY TABLE OF CONTENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended December 31, 1998 INTRODUCTORY SECTION Page Letter of Transmittal 1 Principal Officers 10 Authority Staff Members 11 Organizational Chart 12 Certificate of Achievement 13 Salina Municipal Airport Aerial View 14 FINANCIAL SECTION Independent Auditor's Report 15 Financial Statements: Comparative Balance Sheets 18 -19 Comparative Statements of Revenues, Expenses and Changes in Retained Earnings 20 Comparative Statements of Cash Flows (Direct Method) 21 Reconciliation of Operating Loss to Net Cash Flows from Operating Activities 22 Notes to Financial Statements, December 31, 1998 and 1997 23 -32 Supplemental Information: Schedules of Operations and Changes in Retained Earnings 34 -35 Capital Expenditures 36 General Obligation Economic Development Bonds - Series 1990 -A 37 General Obligation Economic Development Bonds - Series 1990 -B 38 General Obligation Bonds - Series 1993A 39 General Obligation Bonds - Series 1993B 40 General Obligation Bonds - Series 1998A 41 KDOCH Contract Payable 42 Leasehold Revenue Bonds - Series 1991 43 Schedule of Federal Assistance 44 Comparison of Gross Cash Balances with Depository Security 45 Insurance in Force 46 Data Collection Form for Reporting on Audits of States, Local Governments, and Non - Profit Organizations 47 -49 OTHER INDEPENDENT AUDITOR'S REPORTS Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 63 Independent Auditor's Report on Compliance With Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A -133 64 -65 Schedule of Findings and Questioned Costs 66 Page STATISTICAL SECTION Operating Revenue History 51 Operating Expense History 52 Federal Financial Assistance History 53 Capital Expenditure History 54 Revenue Bond Coverage 55 Principal Customers 56 Local Government Property Tax Rates, Direct & Overlapping 57 Property Tax Revenue 58 Air Traffic, Fuel Flowage, Enplanements Trends 59 Major Employers 60 Salina Population, Demographic and Labor Statistics 61 Salina /Saline County Employment Data 62 OTHER INDEPENDENT AUDITOR'S REPORTS Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 63 Independent Auditor's Report on Compliance With Requirements Applicable to Each Major Program and Internal Control over Compliance in Accordance with OMB Circular A -133 64 -65 Schedule of Findings and Questioned Costs 66 AAAL Salina Airport Authority Y /./,i/AFAA\ Salina Municipal Airport / Industrial Center Chairman Vice- Chairman Secretary Treasurer Assistant Secretary / Treasurer JAMES C. MAES R. MICHAEL BEATTY PAT BOLEN FRIEDA MAI JOHN K. VANIER II Executive Director: TIMOTHY F. ROGERS, A.A.E. Operations Director: DONALD C. KNEUBUHL Mgr. Of Administration & Finance: MICHELLE R. SWANSON Board Attorney: GREG A. BENGTSON May 19, 1999 Salina Airport Authority Board of Directors 3237 Arnold Ave. Salina, KS 67401 To the Board of Directors of the Salina Airport Authority: The Comprehensive Annual Financial Report (CAFR) of the Salina Airport Authority (the "Authority ") for the fiscal year ended December 31, 1998 is hereby submitted in accordance with the Kansas Statutes Annotated (K.S.A. 27 -324). As required by the statute, the City of Salina will be furnished copies of the Authority's 1998 CAFR. Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rests with the Executive Director of the Authority. To the best of my knowledge and belief, the data as presented is accurate in all material aspects, it is presented in a manner designed to fairly set forth the fiscal position and results of the operation of the Authority as measured by its financial activity, and that all disclosures necessary to enable the reader to gain maximum understanding are included in the report. ORGANIZATION OF THE REPORT The Authority applies the standards for preparation of local government financial reports recommended by the Government Finance Officers of the United States and Canada (GFOA). The Authority's 1998 Comprehensive Annual Financial Report is presented in four sections: Introductory Section - contains this letter of transmittal, a list of the Authority's principal officers, a listing of Authority staff members, an organizational chart, the GFOA Certificate of Achievement for Excellence in Financial Reporting for fiscal year 1997, and an aerial photo of the Salina Municipal Airport and Airport Industrial Center. Financial Section - includes the independent auditor's report, the Authority's 1998 financial statements and supplemental schedules. Statistical Section - includes selected financial and demographic information which highlights economic and demographic trends. Other Independent Auditor's Reports Section - includes reports concerning the Authority's internal control structure, compliance with Comptroller General of the United States government audit standards and compliance with audit standards due to receipt of federal financial assistance, reporting on the presentation of the schedule of federal financial assistance, reporting on the internal control structure used in administering federal financial assistance programs, compliance with general requirements applicable to federal financial assistance programs, and 3237 ARNOLD • SALINA, KS 67401- 8190.Off: (785) 827 -3914 • Fax: (785) 827 -2221 • E -mail: saa@salair.org compliance with specific requirements applicable to major federal financial assistance program transactions. REPORTING ENTITY 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 granted by the City by the surplus property and public airport authority act of the State of Kansas (KSA 27 -315 et seq.) Pursuant to GASB Statement No. 14, the Authority is a component unit of they City of Salina. The Authority was created for the purpose of accepting as surplus property portions of the former Schilling A.F.B. which was closed by the United States Department of Defense in June, 1965. By quitclaim deed the Authority received over 2,700 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 Commission. The Board appoints the Executive Director, who is the chief executive and administrative officer of the Authority. The Executive Director hires the remaining employees of the Authority. The Executive Director and his staff of twelve employees manage and operate the Salina Municipal Airport and the Salina Airport Industrial Center. The Salina Municipal Airport is the only commercial service airport serving Salina /Saline County and the 22- county area which comprises 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 Technology Department. The campus of K -State Salina is located adjacent to the airport. The K- State Salina Department of Aeronautical Technology offers degrees in professional flight training, airframe and power plant maintenance, and avionics technology. The Salina Airport Industrial Center is home for 64 businesses and organizations. Forty -nine 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 Salina Airport Industrial Center. The Authority works in partnership with the City of Salina, Saline County and the Salina Area Chamber of Commerce for the retention of existing business and industry and the recruitment of new business and industry. ECONOMIC CONDITIONS AND OUTLOOK Local Economy The Salina /Saline County economy has continued to demonstrate economic strength, as compared to other regions of the state. Growth in the areas of agriculture, manufacturing, wholesale trade, services, construction and retail trade, confirms Salina's position as one cf Kansas' strongest regional economic centers. Historically, the Salina /Saline County economy follows the trends of the Kansas economy as a whole. The Winter 1997 -98 issue of the Kansas Business Review describes the performance of the Kansas economy as follows: -2- The Kansas economy has also performed strongly over the past two years and is expected to continue to do so in 1998, although the current situation in Asia introduces a significant amount of uncertainty into the forecast. Job growth has been well above average in Kansas during the last four years and is Expected to continue to be above average in 1998. Although agriculture continues to be an important structural component in the state's economy, solid growth in some other sectors, including construction, several areas of manufacturing, and services indicates that the current strength of Kansas economy derives from many sources. Such an economy should be less vulnerable to individual shocks and have a smoother path of progress than one which depends upon a single industry for its strength. The 22 county North Central Kansas Region economy, which includes Salina /Saline County, was described as follows: North Central Kansas: Slow by Steady Growth, by Arthur J. Janssen, Emporia State University. With a 0.2 percent growth in population from 1990 -1995, a 1.1 percent growth in real personal income, and a 1.4 percent increase in employment in the same period, the north central Kansas regional economy is growing, albeit slowly, as the forecasts show. The economic pattern for the next year in north central Kansas seems to be similar to the pattern in the past. The regional economy appears to be fcllowing the same general trend as the state, but it does not seem to be growing as fast. Economic Condition of the Airport and Airport Industrial Center As of December 31, 1998 businesses and organizations at the Airport and Airport Industrial Center employed an estimated 4,900 employees. Seventy -nine percent of the total number of employees live within the Salina city limits. Total payroll for 1998 was an estimated $121,750,000. In 1998 the Airport and Airport Industrial Center attracted an estimated 42,789 visitors whose average stay was three days. Airport and Airport Industrial Center visitors expended an estimated $12,018,190 while in Salina. Future Economic Outlook The future economic outlook for both Salina and the Authority continues to look favorable. Continued growth in service, retail and manufacturing sectors is expected. The Salina Area Chamber of Commerce forecasts that approximately 700 new jobs per year will be added to the economy during the 1998 -2002 time period. Airport Industrial Center businesses such as Raytheon Aircraft Company, Tony's Pizza, Inc., Score Rite /Power Ad, Salina Vortex, Coronado Engineering and ElDorado National continue to work on expansion plans that will result in additional jobs and payroll. INITIATIVES AND DEVELOPMENT Salina Municipal Airport -3- • Completed Federal Aviation Administration (FAA) Airport Improvement Project No. 18. The $2,321,861 project is the fourth of a five -phase program to rehabilitate the aircraft parking apron at the Salina Municipal Airport. • Completed over $70,000 in airfield pavement maintenance. Salina Airport Industrial Center Completed the reconstruction of 6.5 miles of Airport Industrial Center secondary streets. The $5 million project improved access to over 280 acres of undeveloped Airport Industrial Center sites. Completed the replatting of 566 acres of property located at the Airport Industrial Center. The new platting will enable the Authority to better develop and market the Airport Industrial Center industrial sites. Financial Affairs • Issued $4,400,000 in general obligation bonds to fund secondary street engineering design and construction. Environmental The Authority continues to work with the U.S. Army Corps of Engineers, the U.S. Environmental Protection Agency and the Kansas Department of Health and Environment to investigate the environmental status of the Salina Municipal Airport and the Salina Airport Industrial Center. Pursuant to the Defense Environmental Restoration Program /Formerly USE�d Defense Sites, the U.S. Army Corps of Engineers continued work on Site Investigation and Remedial Investigation reports. The reports address previous U.S. Department of Defense use of Airport and Airport Industrial Center land during the operations of Schilling Air Force Base. The Corps of Engineers completed the Site Investigation report dated December, 1998 and the Remedial investigation report dated February, 1999. Both reports are currently under review by the Salina Airport Authority, the Environmental Protection Agency and the Kansas Department of Health and Environment. Further site investigation will occur during calendar year 1999. Due to completion of upgrades and modifications during 1996 and 1997, the Authority was in compliance with all Environmental Protection Agency regulations for underground fuel storage tanks as of the December 22, 1998 deadline. The Authority owns twelve 25,000 gallon aviation fuel underground storage tanks that are leased to the Airport's fixed based operators. INTERNAL CONTROL STRUCTURE AND BUDGETARY CONTROLS The Authority follows generally accepted accounting principles applicable to governmental unit enterprise funds. Accordingly, the financial statements are prepared on the accrual basis. Management of the Authority is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the Authority are protected from loss, theft, or misuse and to ensure 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 ME 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 requires estimates and judgments by management. An annual budget is prepared in accordance with the Authority's By -laws. The Authority is specifically exempt from the budget laws of the State of Kansas (K.S.A. 27 -322). The Authority is not required to demonstrate statutory compliance with its annual operating budget. Accordingly, budgetary data is not included in the accompanying financial statements. RESULTS OF OPERATIONS Revenues The Authority's rental revenues decreased slightly over the previous year by 1.38 %. The slight decrease can be attributed to two (2) building vacancies and one (1) unit of the Salina Developmental Center. Currently, the Authority has only one facility that is unoccupied. Within rental revenues, several categories of rentals experienced increases during 1998 including, ramp rents, hangar rents, and tank farm rents. This allowed us to stay fairly close to 1997 rentals even with our building vacancies. Other operating revenues increased by 22.79% as a result of C.P.I increases to the commissions received on car rentals and applicable tenant's gross sales, and the inclusion of commission revenue on a tenant for which we had not received commission in 1997. A summary of operating revenues follows: Operating Revenues Rental revenues Fixed base operator Landing fees Gain (loss) on sale of assets Other operating revenues Total Expenses Increase Percent (Decrease) (Decrease) 1997 1998 From 1997 Increase $1,067,236 $1,052,553 ($14,683) - 1.38% 193,501 178,814 ( 14,687) - 7.59% 8,503 8,784 281 + 3.30% 69,663 0 ( 69,663) - 29,393 36,092 6,699 + 22.79% $1,368,296 $1,276,243 ($92,053) - 6.73% Total operating expenses before depreciation decreased 1.67 %. Office and administrative expenses decreased by 4.52% due to decreases in office supplies, postage, travel and meetings, legal and accounting, medical insurance, engineering, telephone, airport promotion, property appraisals and other administrative expenses. Maintenance expenses decreased by 2.73% due to decreases in maintenance salaries, building maintenance, airfield maintenance, grounds maintenance, fire department expense and other maintenance expenses. -5- A summary of operating expenses follows: Operating Expenses 1997 Office and Administration $568,606 Maintenance 367,530 Total $936,136 DEBT ADMINISTRATION The outstanding long -term debt of the Authority was $6,598,873 at December 31, 1998. This debt consists of building revenue bonds, general obligation bonds, and leasehold revenue bonds of the Authority. Maturities range from 2003 through 2008 and interest rates range! from 2.0% to 8.5 %. Both principal and interest are payable from proceeds of direct financing leases and the general revenues of the Authority. Details are shown in Note 7: LONG -TERM DEBT. The Authority did issue $4,440,000 in general obligation bonds in July, 1998 at interest rates ranging from 4.1 % to 4.35 %. These bonds will be repaid over a ten year period from the proceeds of an annual mill levy to be assessed by the Board of Directors of the Authority. CASH MANAGEMENT All cash temporarily idle during 1998 was invested by the Executive Director of the Authority in short -term investments to attain the highest possible return consistent with the Authority's liquidity needs. All investments are in compliance with K.S.A. 12 -1675 which controls the investment of public funds by Kansas governmental units. All funds are deposited daily and all accounts are interest bearing. RISK MANAGEMENT The Authority is exposed to risks of loss associated with the operation of a public use airport and the operation of an airport industrial center. To handle the associated risks of loss, the Authority uses available tort liability legislation and purchases the appropriate types of insurance coverage. It is the policy of the Authority to eliminate or transfer risk of loss where possible. The Authority is covered by the Kansas Tort Claims Act. (K.S.A. 75 -6101, et seq.). The act provides that a governmental entity shall be liable for damages caused by the negligent or wrongful act or omission of any of its employees while acting within the scope of their employment under circumstance where the governmental entity, if a private person, would be liable under the laws of Kansas. At the same time, the act (1) provides for 22 categories of exemptions from liability for a governmental entity or an employee acting within the scope of the employee's employment and (2) limits liability for any other claims within the scope of the act to $500,000 for any number of claims arising out of a single occurrence or accident. Increase Percent (Decrease) (Decrease) 1998 From 1997 Increase $542,873 ($25,733) - 4.52% 377.551 (10,021 L - 2.73% $920.424 ($15,712) - 1.67% The outstanding long -term debt of the Authority was $6,598,873 at December 31, 1998. This debt consists of building revenue bonds, general obligation bonds, and leasehold revenue bonds of the Authority. Maturities range from 2003 through 2008 and interest rates range! from 2.0% to 8.5 %. Both principal and interest are payable from proceeds of direct financing leases and the general revenues of the Authority. Details are shown in Note 7: LONG -TERM DEBT. The Authority did issue $4,440,000 in general obligation bonds in July, 1998 at interest rates ranging from 4.1 % to 4.35 %. These bonds will be repaid over a ten year period from the proceeds of an annual mill levy to be assessed by the Board of Directors of the Authority. CASH MANAGEMENT All cash temporarily idle during 1998 was invested by the Executive Director of the Authority in short -term investments to attain the highest possible return consistent with the Authority's liquidity needs. All investments are in compliance with K.S.A. 12 -1675 which controls the investment of public funds by Kansas governmental units. All funds are deposited daily and all accounts are interest bearing. RISK MANAGEMENT The Authority is exposed to risks of loss associated with the operation of a public use airport and the operation of an airport industrial center. To handle the associated risks of loss, the Authority uses available tort liability legislation and purchases the appropriate types of insurance coverage. It is the policy of the Authority to eliminate or transfer risk of loss where possible. The Authority is covered by the Kansas Tort Claims Act. (K.S.A. 75 -6101, et seq.). The act provides that a governmental entity shall be liable for damages caused by the negligent or wrongful act or omission of any of its employees while acting within the scope of their employment under circumstance where the governmental entity, if a private person, would be liable under the laws of Kansas. At the same time, the act (1) provides for 22 categories of exemptions from liability for a governmental entity or an employee acting within the scope of the employee's employment and (2) limits liability for any other claims within the scope of the act to $500,000 for any number of claims arising out of a single occurrence or accident. The Authority carries $500,000 of comprehensive general liability insurance which matches the limit established by the Kansas Tort Claims Act. During 1998 the Authority carried $6,932,251 of insurance on airport commercial properties. The Authority's commercial property insurance included $1,515,186 in loss of rents coverage. All contractors and lessees are required to carry amounts of insurance with limits and deductibles approved by the Authority. A schedule of insurance in force at December 31, 1998 is included in this report. In addition, the Authority uses various risk management techniques. All contracts and leases are reviewed by the Authority's legal counsel. All contractors and subcontractors are required to submit evidence of insurance coverage naming the Salina Airport Authority and the City of Salina as named additional insured parties. INDEPENDENT AUDIT Pursuant to K.S.A. 27 -324, an audit of the books, accounts and financial statements has been completed by the Authority's independent certified public accountants, Harrison & Arnett, Chartered. The independent audit is in accordance with the Kansas Minimum Audit Guide, the Government Auditory Standards issued by the Comptroller General of the United States, and the provisions of the Office of Management and Budget Circular A -128, "Audits of State and Local Governments ". GFOA CERTIFICATE OF ACHIEVEMENT The Government Finance Officers Association of the United States and Canada ( 1GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Salina Airport Authority for its comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 1997. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report (CAFR), whose contents conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. The Salina Airport Authority has received a Certificate of Achievement for the last six consecutive years (fiscal years ended 1992 - 1997). We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA. YEAR 2000 COMPLIANCE The Salina Airport Authority (SAA) has prudently addressed the Year 2000 (Y2K) issue. The SAA has developed a program to ensure to the best of our capabilities the Y2K readiness of our airport systems. As part of our Y2K program, the SAA has participated in the Air Transport Association of America's Year 2000 data - gathering project. The American Association of Airport Executives, the Regional Airline Association, and the Airports Council International -NA have all endorsed this project. -7- The SAA has completed an inventory assessment identifying functional areas and the systems within those areas. This assessment included all systems that support our Part 139 certification requirements, in addition to those systems that are used to achieve compliance with Part 107/108 and those systems that are critical to the operation of the airfield. After completing the initial assessment, the SAA requested manufacturer's certification for all applicable systems. The certifications state that the system either does not contain any computers or microprocessors and /or the system is Y2K compliant and will not be affected by the year 2000. As of April 30, 1999, the SAA had received all requested manufacturer certifications. All testing of the airports systems should be completed by June 30th 1999, and the SAA is developing a written contingency plan for all applicable systems. MILL LEVY As provided for in the Authority's Enabling Statute (KSA 27 -315 et seq.), the Authority is able to use a property tax mill levy to fund matching funds for federal grants or general obligation bond debt service. During 1998, with the consent of the Salina City Commission, the Authority adopted a 2.95 mill levy in order to provide matching funds for Federal Aviation Administration Airport Improvement Program grant funds and to provide debt service funds for the Authority's Series 98A general obligation internal improvement bonds. The .127 mills for Federal Aviation Administration Airport Improvement Program matching funds will provide the Authority an estimated $31,099 in calendar year 1999. The 2.823 mills for debt service related to the Series 98A general obligation internal improvement will provide the Authority an estimated $671,172 in calendar year 1999. ACKNOWLEDGEMENTS The support of the Authority's Board of Directors has been instrumental in the preparation of this report. The Board has been actively involved in the preparation and review of this report and is committed to responsible and progressive financial reporting. Also acknowledged is the assistance of the Authority's auditor, Harrison & Arnett, Chartered, Certified Public Accountants, Shirley J. Jacques, County Clerk for Saline County, Gerald Cook, President of the Salina Area Chamber of Commerce and The University of Kansas Institute for Public Policy and Business Research in the preparation of this report. Respectfully submitted, SALINA AIRPORT AUTHORITY Timothy F. Rogers, A.A. Executive Director Salina Airport Authority Shelli Swanson Manager of Administration and Finance Salina Airport Authority cc: The City of Salina Board of Commissioners (THIS PAGE INTENTIONALLY LEFT BLANK) SALINA AIRPORT AUTHORITY PRINCIPAL OFFICERS AS OF DECEMBER 31. 1998 BOARD OF DIRECTORS Charles Stevens, Jr. Chairman James. C. Maes Vice- Chairman R. Michael Beatty Secretary Frieda Mai Treasurer Pat Bolen Asst. Secretary/Treasurer AUTHORITY'S COUNSEL Greg A. Bengtson Clark, Mize & Linville, Chartered Salina, Kansas AUTHORITY'S BOND COUNSEL Gilmore & Bell Kansas City, Missouri AUTHORITY'S FINANCIAL ADVISOR George K. Baum & Company Kansas City, Missouri AUTHORITY'S AUDITOR Thomas G. Arnett Harrison & Arnett, Chartered Salina, Kansas -10- SALINA AIRPORT AUTHORITY AUTHORITY STAFF MEMBERS as of December 31. 1998 ADMINISTRATION STAFF Timothy F. Rogers, A.A.E. Executive Director Donald C. Kneubuhl Operations Director Michelle R. Swanson Manager of Administration & Finance Cathy Lentz Administrative Assistant OPERATIONS, MAINTENANCE, AIRCRAFT RESCUE & FIRE FIGHTING STAFF Loren Carleton Operations, Maintenance & ARFF Kim Colby Operations, Maintenance & ARFF Gary Hansen Operations, Maintenance & ARFF Dale Mattison Operations, Maintenance & ARFF David Nease Operations, Maintenance & ARFF Rob Pejsha Operations, Maintenance & ARFF Jason Pinnick Operations, Maintenance & ARFF Vachel Keaton Francis Vestal TERMINAL BUILDING CUSTODIAL STAFF -11- Custodian Custodian W W O Q U Q LLJ p a W O > w L X E W N Z O h= L W O Y LL U O O c F- o U � W w O C R tU o a� U � = C � O O> O O Y 07 O m O O O O O O O O N Y N N N N N c U � O Cl) rn rn rn rn 0 co c 0 i�5 ca ;;5 c'> rn W c-a U r- w C I- Cl) Q' O i U- 0 N E0' .0 N o z0� m J N N fa U L 2E Q N U m CU cU E L co (9 4) U -, C�d�i W W O Q U Q LLJ p a W O > w L X E W N Z O h= L W O Y LL U O O c F- o U � W w O C R tU o a� U � = C � y V fC0 C Y O U O N Y c U � � c 0 a� m U J W U Z Q Z LL 0 C Z .� O Mn O y w O Q C C N d J ccn 3 h U Q � L O Q w W C7 Q Q -12- LL Q of U Q c9 IL c U> co S c Z y V fC0 C C O � N d S C a) cC c @ U' O Q W U Z Q Z LL 0 C Z .� O Mn O y w O Q C C N d J ccn 3 h U Q � L O Q w W C7 Q Q -12- LL Q of U Q c9 IL c U> co S c Z Certificate of Achievement for Excellence in Financial Reporting Presented to Salina Airport Authority, Kansas For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 1997 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. � O F ffk ON G�IANN OOA > H coerpunoN s President SEAI CHIC, zeffoee Executive Director —13— .. �. \ �rS r Am y ) ARMs S 9 S 3 2 v .. �. \ HARRISON & ARNETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON, C.P.A. 717 ROACH STREET e SALINA, KANSAS 67401 PHONE: (785) 827 -7244 THOMAS G. ARNETT, C.P.A. FAX: (785) 827 -0048 INDEPENDENT AUDITOR'S REPORT To the Board of Directors Salina Airport Authority Salina, Kansas We have audited the accompanying financial statements of Salina Airport Authority, Salina, Kansas, as of and for the years ended December 31, 1998 and 1997, as listed in the table of contents. These financial statements are the responsibility of Salina Airport Authority 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 Municipal Audit Guide, and Government Auditing Standards, issued by the Comptroller General of the United States. Those 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 supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and 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. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Salina Airport Authority as of December 31, 1998 and 1997, and the results of its operations and the cash flows of its proprietary fund types for the years then ended in conformity with generally accepted accounting principles. In accordance with Government Auditing Standards, we have also issued our report dated April 12, 1999, on our consideration of Salina Airport Authority's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grants. Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying 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 not a required part of the general purpose financial statements of Salina Airport Authority, Salina, Kansas. Such information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole. Harrison & Arnett, Chartered Salina, Kansas April 12, 1999 —15— MEMBERS OF DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS (THIS PAGE INTENTIONALLY LEFT BLANK) -16- (THIS PAGE INTENTIONALLY LEFT BLANK) -17- SALINA AIRPORT AUTHORITY COMPARATIVE BALANCE SHEETS ASSETS Decernber 31 1998 1997 CURRENT ASSETS: Cash (Note 2) $ 1,133,689 $ 3,229,898 Accounts receivable 46,728 5,911 Taxes receivable (Note 13) 750,142 322,270 Total Current Assets 1,930,559 3,558,079 RESTRICTED ASSETS: (Note 3) Cash and cash equivalents 85,000 85,000 Assets designated for deferred compensation benefits - 67,775 Total Restricted Assets 85,000 152,775 NET INVESTMENT IN FINANCING LEASES (Note 4) 1,319,491 1,374,152 NET INVESTMENT IN FIXED ASSETS (Note 5) 24,121,299 18,901,924 OTHER ASSETS: Bond issue costs, less accumulated amortization of $38,600 and $31,974 respectively 68,137 72,882 TOTAL ASSETS $27,524,486 $24,059,812 (continued) See notes to financial statements. SALINA AIRPORT AUTHORITY COMPARATIVE BALANCE SHEETS LIABILITIES AND EQUITY CURRENT LIABILITIES: Accounts payable- operations Accounts payable - capital Accrued payroll and expenses Accrued property tax Deferred tax revenue (Note 13) Deferred maintenance agreement Deferred rent Total Current Liabilities RESTRICTED LIABILITIES: Accrued interest payable Deferred interest in financing leases Current maturities of long -term debt Deferred compensation payable Total Restricted Liabilities LONG -TERM LIABILITIES: (Note 7) Bonds payable, less current maturities Total Liabilities EQUITY: Contributed capital, Federal Grants Retained earnings Total Equity TOTAL LIABILITIES AND EQUITY December 31 112,403 1998 1997 $ 12,600 $ 18,673 41,549 81,448 29,622 19,936 40,470 8,770 750,142 322,270 17,391 13,564 26,156 7,298 917,930 471,959 156,560 112,403 64,868 63,918 728,013 215,000 - 67,775 949,441 459,096 6,370,770 5,115,000 8,238,141 6,046,055 10,602,580 9,731,232 8,683,765 8,282,525 19,286,345 18,013,757 $ 27,524,486 $ 24,059,812 See notes to financial statements. —19— SALINA AIRPORT AUTHORITY COMPARATIVE STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS NON - OPERATING INCOME (EXPENSE) Mill levy 322,270 338,058 Interest on investments and financing leases 245,473 233,802 Interest expense (207,130) (257,601) Net Non - Operating Income 360,613 314,259 NET INCOME (LOSS) (175,181) (79,109) ADD DEPRECIATION ON ASSETS ACQUIRED THROUGH FEDERAL CONTRIBUTIONS 576,421 549,667 INCREASE (DECREASE) IN RETAINED EARNINGS 401,240 470,558 RETAINED EARNINGS, January 1 8,282,525 7,811,967 RETAINED EARNINGS, December 31 $ 8,683,765 $ 8,282,525 See notes to financial statements. —20— January 1 to December 31 1998 1997 OPERATING REVENUES: Rental revenues $ 1,066,517 $1,067,236 Fixed base operator fees 178,814 193,501 Landing fees 8,784 8,503 Gain (loss) on sale of assets - 69,663 Other operating revenues 22,128 29,393 Total Operating Revenues 1,276,243 1,368,296 OPERATING EXPENSES BEFORE DEPRECIATION Office and administration 542,874 568,606 Maintenance 377,551 367,530 Total Operating Expenses Before Depreciation 920,425 936,136 OPERATING INCOME BEFORE DEPRECIATION 355,818 432,160 DEPRECIATION 891,612 825,528 OPERATING LOSS (535,794) (393,368) NON - OPERATING INCOME (EXPENSE) Mill levy 322,270 338,058 Interest on investments and financing leases 245,473 233,802 Interest expense (207,130) (257,601) Net Non - Operating Income 360,613 314,259 NET INCOME (LOSS) (175,181) (79,109) ADD DEPRECIATION ON ASSETS ACQUIRED THROUGH FEDERAL CONTRIBUTIONS 576,421 549,667 INCREASE (DECREASE) IN RETAINED EARNINGS 401,240 470,558 RETAINED EARNINGS, January 1 8,282,525 7,811,967 RETAINED EARNINGS, December 31 $ 8,683,765 $ 8,282,525 See notes to financial statements. —20— SALINA AIRPORT AUTHORITY COMPARATIVE STATEMENTS OF CASH FLOWS (DIRECT METHOD) January 1 to December 31 CASH FLOWS FROM OPERATING ACTIVITIES 1998 Cash received from sales, commissions, fees and rents $1,285,986 Cash paid employees for services (351,206) Cash paid to suppliers for goods and services (565,606) Net Cash Provided (Used) in Operating Activities 369,174 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchase of property, plant and equipment (6,150,886) Proceeds from capital grants 1,447,768 Proceeds from property tax 322,270 Principal payments on debt (3,092,067) Principal received on financing leases 54,661 Interest received on financing leases 137,104 Principal received on long -term note 4,860,850 Bond issue costs paid (1,255) Interest paid on long -term bonds (156,973) Net Cash Provided (Used) in Capital and Related Financing Activities CASH FLOWS FROM INVESTING ACTIVITIES: Interest received on investments INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS CASH BALANCE - January 1 CASH BALANCE - December 31 CASH AND CASH EQUIVALENTS AT END OF YEAR CONSISTS OF: Unrestricted cash Restricted cash and cash equivalent See notes to financial statements. —21— (2,578,528) 113,145 (2,096,209) 3,314,898 $1,218,689 $1,133,689 85,000 $1,218,689 1997 $ 1,476,264 (351,848) (571,752) 552,664 (2,744,209) 1,640,967 338,058 (860,000) 618,793 129,541 2,830,000 (3,271) (210,830) 1,739,049 93,123 2,384,836 930,062 $ 3,314,898 $ 3,229,898 85,000 $ 3,314,898 RECONCILIATION OF OPERATING LOSS TO NET CASH FLOWS FROM OPERATING ACTIVITIES December 31 1998 1997 OPERATING LOSS $ (535,794) $ (393,368) ADJUSTMENTS RECONCILING OPERATING LOSS - TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation 891,612 825,528 Basis of asset sold - 100,521 CHANGES IN ASSETS AND LIABILITIES Decrease (increase) in accounts receivable (40,817) (1,486) Increase (decrease) in accounts payable (6,073) (4,447) Increase (decrease) in accrued expenses 9,686 14,170 Decrease (increase) in prepaid expense - 2,813 Increase (decrease) accrued property tax 31,700 - Increase (decrease) *in deferred rent 18,860 8,933 NET CASH PROVIDED BY OPERATING ACTIVITIES $ 369,174 $ 552,664 NONCASH CAPITAL TRANSACTIONS None See notes to financial statements. —22— SALINA AIRPORT AUTHORITY NOTES TO FINANCIAL STATEMENTS December 31, 1998 and 1997 NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. ORGANIZATION — The Salina Airport Authority (the "Authority") is an authority established by the City of Salina, pursuant to Chapter 27, Article 3, of the Kansas Statutes Annotated. The Authority was established for the purpose of acquiring surplus federal government property specifically the Schilling Air Force Base located near the City of Salina. The Authority administers the airport commercial development and rental of associated real estate. In accordance with GASB Statement No. 14, the Authority is considered as a component unit of the City of Salina. The Authority is discreetly presented in the City's annual financial reports. B. BASIS OF ACCOUNTING — The Authority consists of an enterprise fund. Enterprise funds are classified as proprietary funds by the GASB and are accounted for using a total economic resource measurement focus. The enterprise fund is used to account for operations that are financed and operated in a matter similar to private business enterprises. The intent of the Board is that the costs of providing services on a continuing basis be recovered through user fees and rents. The financial statements are prepared on the accrual basis of accounting. Under the accrual basis, revenues are recognized as earned and expenses as incurred. It is the Authority's policy to follow all FASB standards issued after November 30, 1989, for its proprietary activities unless those new FASB pronouncements conflict with GASB guidance. C. CASH AND CASH EQUIVALENTS — For the purpose of the comparative statement of cash flows, the Authority considers all highly liquid investments (including restricted assets) with maturities of three months or less when purchased to be cash equivalents. D. PROPERTY AND EQUIPMENT — On September 9, 1966, the United States of America pursuant to section 13(g) of the Surplus Property Act of 1944, transferred certain portions of the Schilling Air Force Base to the Authority. Property and equipment assumed by the Authority on September 9, 1966 is carried at fair market value at that date of $529,872. Subsequent additions to property and equipment are recorded at cost. Maintenance and repairs are expensed as incurred. When properties are disposed of, the related cost and accumulated depreciation are removed from the respective accounts and any gain or loss on disposition is credited or charged to operations. Runways, taxiways, parking areas, sewers and other similar items are written off when fully depreciated unless clearly identified as still being in use. Assets are depreciated using the straight -line method over the estimated useful lives of the assets as follows: Years Buildings and Improvements 5 -50 Infrastructure Items 10 -40 Equipment 5 -25 —23— Depreciation applicable to certain property and equipment which have been funded by or contributed to the Authority by the federal government is charged against the respective capital grant equity balance. This charge is effected by transferring the applicable; depreciation from retained earnings and has no effect on income. In accordance with Financial Accounting Standard Board Statement No. 62, interest during construction periods, when significant, is capitalized and included in the cost of property and net investment in financing leases. In 1998 and 1997 $127,885 and zero interest was capitalized respectively. E. BONDS ISSUE COSTS — Bond issue costs are deferred and amortized using the straight -line method over the life of the bonds to which it relates. F. COMPENSATED ABSENCES — Substantially all full -time employees receive compensation for vacations, holidays, illness and certain other qualifying absences. The number of days compensated for various categories of absence is generally based on length of service. Liabilities relating to these absences are recognized as incurred and included in accrued expenses. The amount of accrued vacation pay at December 31, 1998 and 1997 was $11,221 and $11,453 respectively. G. CAPITAL GRANT FUNDS — Certain expenditures for capital improvements receive significant federal funding through the Airport Improvement Program (AIP) of the Federal Aviation Administration and in 1998 from the Small City Development Block Grant administered by the Kansas Department of Commerce and Housing. The Authority funds the remaining balance of such expenditures. Capital funding provided under government grants is considered earned as the related approved capital improvement expenditures are disbursed. H. INVENTORY — The Authority maintains no significant inventory of office and maintenance supplies. These items are expensed as purchased and no inventory is recorded in these financial statements. ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS — The Authority calculates its allowance for specific accounts using specific account analysis. LEASES — The Authority is a lessor under numerous lease agreements. The leases are classified as operating leases, except for certain special facility leases which are accounted for as direct financing leases. K. TAXES — The Authority is exempt from payment of federal and state income, property and certain other taxes. The Authority is subject to property tax on non - airport use property acquired after 1990. L. BUDGETS — The Authority is specifically exempt from Kansas Budget Law. The Authority is not required to demonstrate statutory compliance with its annual operating budget. Accordingly budgetary data is not included in the financial statements. —24— NOTE 2: CASH, CASH EQUIVALENTS AND INVESTMENT SECURITIES Cash , cash equivalents and investment securities included in the comparative balance sheets con- sist of the following: December 31 1998 1997 Cash and cash equivalents Current $ 1,133,689 $ 3,229,898 Restricted 85,000 85,000 Total Cash and Cash Equivalents $ 1,218,689 $ 3,314,898 Kansas statues authorize the Authority to invest in United States Obligations, secured repurchase agree- ments, certificates of deposit, time deposits and open accounts. The carrying account of deposits and investments securities by type of investment are as follows: Carrying Value December 31 1998 1997 Cash deposits $ 1,218,689 $ 3,294,898 Certificates of deposit - 20,000 Total Deposits $ 1,218,689 $ 3,314,898 The Authority's deposits are categorized to give an indication of the level of risk assumed by the entity at year end. Category 1 includes investments that are insured or registered, or for which the securities are held by the Authority or its agent in the Authority's name. Category 2 includes uninsured and unreg- istered investments for which the securities are held by the dealer bank's trust department or agent in the Authority's name. Category 3 includes uninsured and unregistered invenstments for which the securities are held by the dealer's bank. All of the authority's deposits are Category 1 as follows: Cash on deposit insured by federal deposit insurance corporation Collateralized with securities held by pledging financial institution in Authority's name Cash on hand (petty cash) December 31 1998 1997 Carrying Bank Balance Carrying Bank Balance $ 200,000 $ 200,000 $ 300,000 1,018,639 1,056,606 3,014,848 1,218,639 1,256,606 50 - 3,314,848 50 $ 300,000 3,058,264 3,358,264 $ 1,218,689 $ 1,256,606 $ 3,314,898 $ 3,358,264 —25— NOTE 3: RESTRICTED ASSETS Restricted assets consist of the following: RESTRICTED BY BOND AGREEMENT: Bond reserves: Leasehold bonds -91 All restricted amounts are held by the Authority. December 31 1998 1997 Cash Investments Total Total $ 85,000 $ - $ 85,000 $ 85,000 Leasehold Revenue Bonds -1991: The proceeds of the 1991 leasehold revenue bonds were used to construct a building that was leased to a state university. The lease is a financing lease that transfers ownership at the end of the lease. The bond agreement established certain reserve requirements which the Authority has met. NOTE 4: NET INVESTMENT IN FINANCING LEASES Net investment in financing leases consist of the following: Total lease payments Less: Unearned income Net investment in financing leases Activity in net investment in financing leases was as follows: Beginning Balance Collected principal Ending Balance NOTE 5: NET INVESTMENT IN FIXED ASSETS Net investment in fixed assets consist of the following: FIXED ASSETS: Land Buildings and improvements Airfield and infrastructure Equipment Less - accumulated depreciation Net Fixed Assets December 31 1998 1'.97 $ 2,462,854 $ 2,652,300 1,143,363 1,278,148 $ 1,319,491 $__I 374 152 Year Ended December 31 1998 1997 $ 1,374,152 $ 1,992,945 (54,661) (618,793) $ 1,319,491 $ 1,374,152 December 31 1998 1997 $ 7,526,173 $ 2,903,932 7,038,281 6,771,387 17,290,397 16,122,516 1,129,697 1,075,725 32,984,548 26,873,560 (8,863,249) (7,971,636) $ 24,121,299 $ 1819011924 Construction in progress included in land costs was $4,622,241 and $324,802 in 1998 and 1997 respectively. —26— Note 5 (continued) Activity in the fixed assets accounts for 1998 was as follows: Building and $ 743,198 Improve- Airfield and Land ments Infrastructure Equipment Beginning Balance $ 2,903,932 $6,771,387 $ 16,122,516 $ 1,075,725 Additions 4,622,241 266,894 1,167,881 53,972 Disposals Ending Balance $ 7,526,173 $ 7,038,281 $ 17,290,397 $ 1,129,697 NOTE 6: RENTAL INCOME UNDER OPERATING LEASES A significant portion of the operating revenue of the Authority is generated through the leasing of airport and building space to airport fixed base operators and others on a fixed fee as well as a con- tingent rental basis. Ownership risks are retained by the Authority and, accordingly, such leases are treated as operating leases. The following is a schedule of minimum future rentals on noncancellable operating leases to be re- ceived in each of the next five years and thereafter: Years Ended December 31 1999 $ 743,198 2000 490,873 2001 409,969 2002 161,155 2003 58,496 Later years 334,619 Total $ 2,198,310 NOTE 7: LONG TERM DEBT General obligation economic development bonds series 1990A, orginally issued July 1, 1990 due in annual in- stallments increasing from $45,000 in 1992 to $175,000 in 2010 plus interest ranging from 6.4% to 8.37% General obligation economic development bonds series 1990B, 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% —27— December 31 1998 1997 $ 785,000 $ 860,000 580,000 610,000 Note 7. (continued) December 31 1998 1997 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% 555,000 605,000 General obligation bonds series 1993A, originally issued December 1, 1993, due in annual installments increasing from $35,000 in 1994 to $45,000 in 2003 plus interest at 3.4% to 5% 210,000 245,000 General obligation bonds series 1993B, originally issued December 1, 1993 due in annual installments increasing from $25,000 in 1994 to $35,000 in 2003 plus interest at 3.85% to 4.75% 155,000 180,000 General obligation bonds series 1998 -A, issued July 17, 1998, due in annual installments decreasing from $445,000 in 1999 to $440,000 in 2007 plus interest at rates varying from 4.1 %to 4.35% 4,440,000 2,830,000 Note payable to the Kansas Department of Commerce and Housing issued October 1, 1998, due in semi - annual installments of $28,572.66 until 2007 plus interest at 2 %. 373,783 - Total 7,098,783 5,330,000 Less current maturities (728,013) (215,000) Long -term debt, less current maturities $ 6,370,770 $ 5,115,000 The proceeds of 1990A, 1990B and 1991 leasehold revenue bonds were used to purchase or construct com- mercial real property transferred under direct financing leases. (See Note 4). The bonds are expected to be repaid from proceeds of the financing leases. The proceeds of the series 1993A bonds were used to finance improvements to the Airport and the proceeds of the series 1993B bonds were used to finance matching funds for a Federal Aviation Administration grant. The 1993A and 1993B series bonds are to be repaid from the general revenue of the Authority. Note 7 (continued) The annual bond payments for all bonds outstanding as of December 31, 1998 are as follows: Payable in General Leasehold Year Ended Obligation Year Ended Obligation Revenue Other Interest Bonds December 31 Bonds Bonds Bonds Payments Total 1999 $ 625,000 $ 55,000 $ 48,013 $ 395;119 $1,123,132 2000 635,000 60,000 48,978 314,647 1,058,625 2001 640,000 60,000 49,963 276,727 1,026,690 2002 655,000 65,000 50,967 240,343 1,011,310 Thereafter 3,615,000 315,000 175,862 699,519 4,805,381 Total $ 6,170,000 $ 555,000 $ 373,783 $1,926,355 $ 9,025,138 The annual bond interest for all bonds outstanding as of December 31, 1998, are as follows Payable in General Leasehold Year Ended Obligation Revenue Other Total Interest December 31 Bonds Bonds Bonds Payments 1999 $ 347,435 $ 38,552 $ 9,132 $ 395,119 2000 271,475 35,005 8,167 314,647 2001 238,500 31,045 7,182 276,727 2002 207,170 26,995 6,178 240,343 Thereafter 625,483 58,930 15,106 699,519 Total $ 1,690,063 $ 190,527 $ 45,765 $1,926,355 Activity in long term debts for 1998 was as follows: Beginning Bonds Principal Ending Balance Issued Paid Balance General Obligation Economic Development Bonds Series 1990A $ 860,000 $ - $ 75,000 $ 785,000 General Obligation Economic Development Bonds Series 1990B 610,000 - 30,000 580,000 Leasehold Revenue Bonds Series 1991 605,000 - 50,000 555,000 General Obligation Bonds Series 1993A 245,000 - 35,000 210,000 -29- Note 7. (continued) General Obligation Bonds Series 1993B General Obligation Temporary Notes Series 1997 General Obligation Internal Improvement Bonds Series 1998 -A KDOCH Contract Payable Totals Beginning Balance Bonds Issued $ 180,000 $ - 2,830,000 - - 4,440,000 - 421,796 Principal Ending Paid Balance $ 25,000 $ 155,000 2,830,000 - - 4,440,000 48.,013 373,783 $ 5,330,000 $ 4,861,796 $ 3,0931,013 $ 7,098,783 NOTE 8: DEFINED BENEFIT PENSION PLAN Plan description. The Authority as a non - school municipality participates in the Kansas Public Employees Retirement System (KPERS), a cost - sharing multiple- employer defined benefit pension plan as provided by K.S.A. 74 -4901, et seq. KPERS provides retirement benefits, life insurance, disability income benefits, and death benefits. Kansas law establishes and amends benefit provisions. KPERS issues a publicly avail- able financial report that includes fmancial statements and required supplementary information. That report may be obtained by writing to KPERS ( 611 S. Kansas, Topeka, Kansas 66603 -3803 or by calling 1- 800 - 228 - 0366.) Funding Policy. K.S.A. 74 -4919 establishes the KPERS member - employee contribution rate at 4% of covered salary. The employer collects and remits member - employee contributions according to the provi- sions of section 414(h) of the Internal Revenue Code. State law provides that the employer contribution rate be determined annually based on the results of an annual actuarial valuation. KPERS is funded on an actuarial reserve basis. State law sets a limitation on annual increases in the contribution rates for KPERS employers. The employer rate established by statute for calendar year 1998 is 2.78 %. The non - school municipality employer contributions to KPERS for the years ending December 31, 1998, 1997, and 1996 were $9,909, $8,128, and $9,073, respectively, equal to the statutory required contributions for each year. NOTE 9: DEFERRED COMPENSATION PLAN The Authority offers its employees a deferred compensation plan ( "Plan ") created in accordance with Intern- al Revenue Code Section 457. The Plan, available to all Authority employees, permits them to defer a por- tion of their salary until future years. The deferred compensation is not available to employees until termina- tion, 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 Authority's general creditors. —30— NOTE 10: RETAINED EARNINGS AND CAPITAL CONTRIBUTIONS Under the provision of various bond agreements, certain assets are restricted for specific uses (Note 3). Retained earnings which have been reserved relating to these restricted assets consist of the following: Reserved retained earnings: Land sale proceeds Leasehold bonds - 91 Reserved retained earnings Unreserved retained earnings Total retained earnings December 31 1998 1997 $ 258,500 $ 258,500 85,000 85,000 343,500 343,500 8,340,265 7,939,025 $ 8,683,765 $ 8,282,525 Board designated restricted assets are not reported as reserved retained earnings. Changes in grants and contributions are summarized as follows: Federal Grants Balance January 1, 1997 $ 8,674 538 1997 additions, AIP grants 1,606,361 Depreciation on property and equipment acquired by government grants (549,667) Balance December 31, 1997 9,731,232 1998 additions, AIP grants & HUD grants 1,447,768 Depreciation on property and equipment acquired by government grants (576,420) Balance December 31, 1998 $10,602,580 NOTE 11: MAJOR CUSTOMERS The Authority receives significant operating and financing lease revenue from Raytheon Aircraft Company (formerly Beech Aircraft Corporation), Kansas State University - Salina, Exide Corporation, Moore's Mid- way Aviation, Schwan's Sales, and Flower Aviation. Rentals from these six tenants equals 64% of operat- ing and capital lease revenue for the year ended December 31, 1998. —31— NOTE 12: NON - OPERATING INCOME Net non- operating income consisted of the following for the years ended December 31, 1998 and 1997: Interest expense Revenue bonds 40,651 31,243 General obligation bonds 148,058 219,732 Other bonds 12,421 - Amortization of bond issue costs 6,000 6,626 Total 207,130 257,601 Net non - operating income $ 360,613 $ 314,259 NOTE 13: TAXES RECEIVABLE In accordance with Government Auditory Standards, property taxes have been recorded as taxes receivable when the taxes were levied. The Authority's property taxes are levied November 1st to find the budget of the ensuing year. Taxes are collected December 20 and June 20. In accordance with government accounting standards, the Authority has recorded the full amount of taxes levied to fund the 1997 and 1998 years, by re- cording taxes receivable for both years with an offsetting entry to the deferred revenue. The 1997 balance sheet was restated to comply with GASB Code Sec. P70.103. This change had no effect: on the net equity for 1997. NOTE 14: RISK MANAGEMENT The Airport Authority is exposed to various risks of loss related to torts: theft of, damage to and destruction of assets, errors and omissions; and natural disasters for which the Authority carries commercial insurance. Settlements of claims did not exceed coverage for the years ended December 31, 1998, 1997 or 1996. —32— 1998 1997 Mill levy $ 322,270 $ 338,058 Interest and investment income Financing leases 132,327 140,679 Other interest 113,146 93,123 Total 567,743 571,860 Interest expense Revenue bonds 40,651 31,243 General obligation bonds 148,058 219,732 Other bonds 12,421 - Amortization of bond issue costs 6,000 6,626 Total 207,130 257,601 Net non - operating income $ 360,613 $ 314,259 NOTE 13: TAXES RECEIVABLE In accordance with Government Auditory Standards, property taxes have been recorded as taxes receivable when the taxes were levied. The Authority's property taxes are levied November 1st to find the budget of the ensuing year. Taxes are collected December 20 and June 20. In accordance with government accounting standards, the Authority has recorded the full amount of taxes levied to fund the 1997 and 1998 years, by re- cording taxes receivable for both years with an offsetting entry to the deferred revenue. The 1997 balance sheet was restated to comply with GASB Code Sec. P70.103. This change had no effect: on the net equity for 1997. NOTE 14: RISK MANAGEMENT The Airport Authority is exposed to various risks of loss related to torts: theft of, damage to and destruction of assets, errors and omissions; and natural disasters for which the Authority carries commercial insurance. Settlements of claims did not exceed coverage for the years ended December 31, 1998, 1997 or 1996. —32— (THIS PAGE INTENTIONALLY LEFT BLANK) -33- SALINA AIRPORT AUTHORITY SCHEDULES OF OPERATIONS AND CHANGES IN RETAINED EARNINGS -34- January 1 to December 31 1998 1997 OPERATING REVENUES Building rents $ 813,854 $ 863,564 Ramp rents 58,333 40,966 Land rents 64,363 65,786 Agri land rents 53,337 62,456 Hangar rents 56,117 30,248 Tank farm rent 6,550 4,215 Fixed base operator 178,814 193,501 Landing fees 8,7134 8,503 Commission -car rentals 13,963 9,348 Gain (loss) on disposition of assets - 69,663 Other income 22,128 20,046 TOTAL OPERATING REVENUES 11276,243 1,368,296 OPERATING EXPENSES BEFORE DEPRECIATION ADMINISTRATIVE EXPENSES Office salaries 191,304 168,734 Office supplies 11,7:33 11,263 Postage 5,151 5,741 Travel and meetings 22,461 18,542 Legal and accounting 33,528 40,096 Insurance - property /liability 52,700 51,153 Insurance - medical 63,448 57,558 Engineering - 11,768 FICA tax 31,707 27,331 Kansas unemployment tax 475 370 Employees retirement 11,482 8,128 Telephone 13,184 12,760 Industrial development 20,000 20,000 Airport promotion 33,479 56,042 Property taxes 25,885 38,350 Dues and subscriptions 10,985 14,133 Property appraisals 4,500 6,327 Other administrative 10,852 20,310 TOTAL ADMINISTRATIVE EXPENSES 542,874 568,606 -34- MAINTENANCE EXPENSES Maintenance salaries Building maintenance Airfield maintenance Grounds maintenance Equipment gas, oil & repairs Utilities Fire department expense Agri land expense Other maintenance expenses TOTAL MAINTENANCE EXPENSES TOTAL OPERATING EXPENSES BEFORE DEPRECIATION OPERATING EARNINGS BEFORE DEPRECIATION DEPRECIATION EXPENSE OPERATING LOSS NON - OPERATING INCOME (EXPENSE) Mill levy Interest income - capital leases Interest income Bond interest - expense Amortization of bond costs NET NON - OPERATING INCOME NET INCOME (LOSS) ADD DEPRECIATION ON ASSETS ACQUIRED THROUGH FEDERAL CONTRIBUTIONS (Note 1) INCREASE (DECREASE) IN RETAINED EARNINGS RETAINED EARNINGS, January 1 RETAINED EARNINGS, December 31 -35- January 1 to December 31 1998 1997 209,588 197,284 30,300 21,858 13,594 16,269 12,815 1,378 18,904 29,967 71,647 80,778 5,949 2,760 - 2,007 14,754 15,229 377,551 367,530 920,425 936,136 355,818 432,160 891,612 825,528 (535,794) (393,368) 322,270 338,058 132,327 140,679 113,146 93,123 (201,130) (250,975) (6,000) (6,626) (175,181) (79,109) 576,421 549,667 401,240 470,558 8,282,525 7,811,967 $ 8,683,765 $ 8,282,525 SALINA AIRPORT AUTHORITY CAPITAL EXPENDITURES January 1 to December 31 1998 LAND Design & construction 4,622,241 TOTAL LAND 4,622,241 EQUIPMENT Shop equipment 30,131 Computer equipment 11,063 Communication equipment 4,532 Other equipment 8,246 TOTAL EQUIPMENT 53,972 BUILDINGS AND IMPROVEMENTS Terminal building remodel 37,668 Terminal building security room 25,176 Terminal & terminal hanger improvements 66,859 Building improvements 124,691 FTZ application 12,500 TOTAL BUILDINGS 266,894 AIRFIELD AND INFRASTRUCTURE AIP 1 365,741 AIP 19 791,594 TARDIS 10,546 TOTAL OTHER IMPROVEMENTS 1,167,881 TOTAL CAPITAL EXPENDITURES $ 6,110,988 —36— SALINA AIRPORT AUTHORITY GENERAL OBLIGATION ECONOMIC DEVELOPMENT BONDS Ir SERIES 1990A December 31, 1998 Date of Issue: July 1, 1990 Amount of Issue: $ 1,900,000 Interest Rate: Maturity Date: Sept. 1, 2010 Principal Paid: $ 1,115,000 Outstanding Balance: $ 785,000 Schedule of Bond Principal Payments Due in Bond Year Principal 1999 $ 80,000 2000 85,000 2001 90,000 2002 95,000 Thereafter 435,000 $ 785,000 *The interest rate varies from 8.37% to 6.4% over the life of the bond issue. —37— Date of issue: Amount of Issue: Interest Rate: Maturity Date: Principal Paid: Outstanding Balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGATION ECONOMIC DEVELOPMENT BONDS SERIES 1990B December 31, 1998 Oct. 1, 1990 $773,000 * Sept. 1, 2010 $193,000 $580,000 Schedule of Bond Principal Payments Due in Year 1999 2000 2001 2002 Thereafter Bond Principal $ 30,000 35,000 35,000 40,000 440.000 $ 580,000 *The interest rate varies from 8.5% to 6.5% over the life of the bond issue. Date of Issue: Amount of Issue: Interest Rate: Maturity Date: Principal Paid: Outstanding Balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGATION BONDS SERIES 1993A December 31, 1998 Schedule of Bond Principal Payments Due in Year 1999 2000 2001 2002 Thereafter Qc0910 Dec. 1, 1993 $375,000 3.4% to 5% Sept. 1, 2003 $165,000 $210,000 Bond Principal $ 40,000 40,000 40,000 45,000 45,000 $ 210,000 Date of Issue: Amount of Issue: Interest Rate: Maurity Date: Principal Paid: Outstanding Balance: SALINA AIRPORT AUTHORITY GENERAL OBLIGATION BONDS SERIES 1993B December 31, 1998 Schedule of Bond Principal Payments Due in Year 1999 2000 2001 2002 Thereafter -40- Dec. 1, 1993 $ 275,000 3.85% to 4.75% Sept. 1, 2003 $ 120,000 $ 155,000 Bond Principal $ 30,000 30,000 30,000 30,000 35,000 $ 155,000 Date of Issue: Amount of Issue: Interest Rate: Maurity Date: Principal Paid: Outstanding Balance: GENERAL OBLIGATION BONDS Series 1998A December 31, 1998 Schedule of Bond Principal Payments Due in Year 1999 2000 2001 2002 Thereafter —41— July 17, 1998 $ 4,440,000 4.1 %to 4.35% Sept. 1, 2008 $ 4,440,000 Bond Principal $ 445,000 445,000 445,000 445,000 2,660,000 $ 4,440,000 SALINA AIRPORT AUTHORITY KDOCH CONTRACT PAYABLE December 31, 1998 Date of Issue: Oct. 1, 1998 Amount of Issue: $ 421,797 Interest Rate: 2% Maurity Date: Oct. 1, 2007 Principal Paid: $ 48,104 Outstanding Balance: $ 373,783 Schedule of Bond Principal Pa ents Due in Bond Year Principal 1999 $ 48,104 2000 48,978 2001 49,963 2002 50,967 Thereafter 175,861 $ 373,873 —42— SALINA AIRPORT AUTHORITY LEASEHOLD REVENUE BONDS SERIES 1991 December 31, 1998 Date of Issue: Nov. 1, 1990 Amount of Issue: $850,000 Interest Rate: 60,000 Maturity Date: Sept. 1, 2006 Principal Paid: $295,000 Outstanding Balance: $555,000 Schedule of Bond Principal Payments Due in Bond Year Principal 1999 $ 55,000 2000 60,000 2001 60,000 2002 65,000 Thereafter 315,000 $ 555,000 *The interest rate varies from 7.25% to 5% over the life of the bond issue. —43— SALINA AIRPORT AUTHORITY SCHEDULE OF FEDERAL ASSISTANCE For The Year Ended December 31, 1998 Federal ID Expenditures Amount Program Title Number During Year of Awards DEPARTMENT OF TRANSPORTATION, CFDA 420.106 Federal Aviation Administration 3 -20- 0072 -18 Terminal Apron Overlay 365,741 296,673 Federal Aviation Administration 3 -20- 0072 -19 South General Aviation Apron Overlay 791,594 730,245 Subtotal 1,157,335 1,026,918 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, CFDA #14.219 Pass through Kansas Department of Commerce and Housing Grant Agreement No. 96 -CP -005 (1) Grant (2) Loan —44— 4,622,235 420,850 (1) 420,850 (2) $ 5,779,570 $ 1,868,618 SALINA AIRPORT AUTHORITY COMPARISON OF GROSS CASH BALANCES WITH DEPOSITORY SECURITY December 31, 1998 UMB- National Bank Sunflower GROSS CASH BALANCES Demand deposit Cash in checking $ 567,635 $ 688,971 Time depositis Certificates of deposit - - TOTALS 567,635 688,971 LESS FDIC COVERAGE 100,000 100,000 BALANCESSECURABLE BY COLLATERAL $ 467,635 $ 588,971 SECURITY REQUIRED 100 %) $ 467,635 $ 588,971 SECURITY PROVIDED BY DEPOSITORIES 1,800,000 931,656 AMOUNT UNDERSECURED BY STATUTE —45— INSURANCE POLICY Commercial Union Ins. Co. Pol. #711900070135 National Union Fire Ins. Co. of Pittsburgh, PA Pol. #AP3229456 -05 Commercial Union Ins. Co. Pol. #CTR446926 Commercial Union Ins. Co. Pol. 4CTR399483 Commercial Union Ins. Co. Pol. 4PTAR00079 -3 ITT Hartford Pol. #PEB DB 1019 Coregis Insurance Co. Pol. #POI- 000227 -3 American Alliance Ins. Co. Pol. #KST 788- 29 -33 -05 SALINA AIRPORT AUTHORITY INSURANCE IN FORCE December 31, 1998 TYPE OF COVERAGE Workmen's Compensation and Employer's Liability Bodily Injury & Liability Hangar Keepers Fire & Lightning, extended coverage, vandalism & malicious mischief Business Personal Prop. Loss of Rents Boiler & Machinery Office and stores Vehicles & Equipment Liability Medical payments Uninsured motorists Public Employees Blanket Bond Honesty blanket position bond coverage Public Officials & Empl. Liability Errors & ommissions excluding asbestos, excluding pollution coverage on a claims made basis, 5,000 deductible Kansas UST Liability Environmental Incident Annual aggregate Limit of Defense 5,000 deductible —46— AMOUNT OF COVERAGE $ 500,000 $ 500,000 $ 500,000 $ 6,932,251 $ 487,400 $ 1,634,631 $ 1,000,000 $ 500,000 $ 500,000 $ 2,000 $ 500,000 $ 100,000 $ 500,000 $ 1,000,000 $ 1,000,000 $ 100,000 OMB No. 0348 -0057 FORM SF -SAC U.S. DEPARTMENT OF COMMERCE . BUREAU OF THE CENSUS (8 -97) ACTING AS COLLECTING AGENT FOR Data Collection Form for Reporting on OFFICE of MANAGEMENT AND BUDGET AUDITS OF STATES, LOCAL GOVERNMENTS, AND NON - PROFIT ORGANIZATIONS ® Complete this form, as required by OMB Circular A -133, "Audits 1Lj=tVJ!j0kf6Z Single Audit Clearinghouse._ of States, Local Governments, and Non- Profit Organizations." 1201 E. 1Otlh Street Jeffersonville, IN 47132 GENERAL INFORMATION (To be completed by auditee, except for Item 7) 1. Fiscal year ending date for this submission 2. Type of Circular A -133 audit Month Day Year 12 / 31 /98 1 X Single audit 2 ❑ Program -- specific audit r Audit period covered FEDERAL 4. Date received by Federal 1 X Annual 3 ❑ Other - Months GOVERNMENT clearinghouse 2 ❑ Biennial USE ONLY 5. Employer Identification Number (EIN) a. Auditee EIN 6. AUDITEE INFORMATION a. Auditee name SALINA AIRPC b. Auditee address 3237 ARNOLD City SALINA State KANSAS RT AUTHORITY (Number and street) c. Auditee contact Name TIM ROGERS Title EXECUTIVE DIRECTOR d. Auditee contact telephone ( 785) 827 —3914 e. Auditee contact FAX (Optional) ( 785) 827 —2221 f. Auditee contact E -mail (Optional) b. Are multiple EINs covered in this report? 1 ❑ Yes 2M No 7. AUDITOR INFORMATION (To be completed by auditor) a. Auditor name b. Auditor address (Number and street) 717 ROACH City SALINA ZIP Code State ZIP Code 67401 KANSAS 67401 c. Auditor contact Name g. AUDITEE CERTIFICATION STATEMENT -This is to certify that, to the best of my knowledge and belief, the auditee has: (1) Engaged an auditor to perform an audit in accordance with the provisions of OMB Circular A -133 for the period described in Part I, Items 1 and 3; (2) the auditor has completed such audit and presented a signed audit report which states that the audit was conducted in accordance with the provisions of the Circular; and, (3) the information included in Parts I, 11, and III of this data collection form is accurate and complete. I declare that the foregoing is true and correct. Sign ture of certfy ing official Date Month Qay Y W Name/Title of cerfiiyinVooff icial z Timothy F. Rogers, A.A.E. Executive Director Title MEMBER d. Auditor contact telephone ( 785) 827 — 7244 e. Auditor contact FAX (Optional) ( 785) 827 — 0048 f. Auditor contact E -mail (Optional) 9- AUDITOR STATEMENT -The data elements and information included in this forrn are limited to those prescribed by OMB Circular A -133. The information included in Parts II and III of the: form, except for Part ►II, Items 5 and 6, was transferred from the auditor's report(s) for the period described in Part I, Items 1 and 3, and is not a substitute for such reports. The auditor has not performed any auditing procedures since the date of the auditor's report(s). A copy of the reporting package required by (DMB Circular A -133, which includes the complete auditor's report(s), is available in its entirety from the: auditee at the address provided in Part I of this form. As required by OMB Circular A -133, the information in _Parts If and 111 of this form was entered in this form by the auditor based on information included in the reporting package. The auditor has not performed any additional auditing procedures in connection with the completion of this form. Signature of a r Date �� Month Day Year /24 /99- —47— EIN: =T77 2 7 4 4 8 8. Indicate whether the auditee has either a Federal cognizant or oversight agency for audit. (Mark (X) one box) i ❑ Cognizant agency 2 ❑ Oversight agency 9. Name of Federal cognizant or oversight agency for audit (Mark (X) one box) of ❑ African Development 83 ❑ Federal Emergency 16 ❑ Justice o8 ❑ Peace Corps Foundation Management Agency i7 ❑ Labor - 59 ❑ Small Business 02 ❑ Agency for 3a ❑ Federal Mediation and International Conciliation Service 43 ❑ National Aeronautics Administration Development 39 ❑ General Services and Space Administration 96 ❑ Social Security Administration io ❑ Agriculture Administration 1i ❑ Commerce 93 ❑ Health and Human 89 ❑ National Archives and Records Administraton i9 ❑ State 20 In Transportation 94 ❑ Corporation for Services 05 ❑ National Endowment 21 ❑ Treasury National and is ❑ Housing and Urban Community Service Development for the Arts ❑ 82 ❑ United States 12 ❑ Defense 03 ❑ Institute for Museum os National Endowment for the Humanities Information Agency 8a ❑ Education Services 47 National Science sa ❑Veterans Affairs ❑ Other 8i ❑ Energy oa ❑ Inter - American Foundation — Specify. ss ❑ Environmental Foundation 07 ❑ Office of National Drug Protection Agency 15 ❑ Interior Control Policy i=d I i FINANCIAL STATEMENTS (To be completed by auditor) 1. Type of audit report (Mark (X) one box) i 1 Unqualified opinion z ❑ Qualified opinion 3 ❑ Adverse opinion a ❑ Disclaimer of opinion 2. Is a "going concern" explanatory paragraph included in the audit report? i ❑ Yes 2X No 3. Is a reportable condition disclosed? i ❑ Yes 2 1�1 No — SKIP to Item 5 4. Is any reportable condition reported as a material weakness? i ❑ Yes 2 ❑ No 5. Is a material noncompliance disclosed? 1 ❑ Yes 2 ® No T111111t FEDERAL PROGRAMS (To be completed by auditor) 1. Type of audit report on major program compliance i ® Unqualified opinion z ❑ Qualified opinion 3 ❑ Adverse opinion a❑ Disclaimer of opinion 2. What is the dollar threshold to distinguish Type A and Type B programs §_ .520(b)? $ 300,000 3. Did the auditee qualify as a low -risk auditee ( §_ .530)? 1[K Yes 2 ❑ No 4. Are there any audit findings required to be reported under §_ .510(a)? i ❑ Yes 2 ® No 5. Which Federal Agencies are required to receive the reporting package? (Mark (X) all that apply) of ❑ African Development 83 ❑ Federal Emergency is ❑ Justice o8 ❑ Peace Corps Foundation Management Agency 02 ❑ Agency for ❑ Federal i7 ❑ Labor 59 ❑ Small Business 3a Mediation and International Conciliation Service a3 ❑ National Aeronautics Administration Development 39 ❑ General Services and Space Administration 96 ❑ Social Security Administration io ❑ ,Agriculture _ Administration ii ❑ Commerce ❑ 89 ❑ National Archives and i9 ❑ State 93 Health and Human 9a ❑ Corporation for Services Records Administraton ❑ 20 ❑ Transportation 'National and is ❑ Housing and Urban o5 National Endowment for the Arts 21E] Treasury 82 ❑United States Community Service Development i2 ❑ Defense o3 ❑ Institute for Museum os ❑ National Endowment for the Humanities Information Agency 8a ❑ Education Services 47 1:1 National Science sa ❑Veterans Affairs X1 None 8i ❑ Energy oa ❑ Inter - American Foundation oo ss ❑ Environmental Foundation 07 ❑ Office of National Druci ❑ Other — Specify: Page 2 rrotection Agency - 15 u interior Control Folicy I • FORM SF -SAC (8 -97) C Q C7 O a J W in W LL FORM SF -SAC 18 -971 ' U.S.GPO' 1 997. 549. 078/801 1 4 0 O CL U c O z U W c O C O U a O a V) V)I c0 6� 3 co m m Q M I Page 3 WZ nU C 0 0 0 0 E Q U O Q \ �� I-- fz �Z O' M a U �' U U ❑ U ❑ U ❑ '" U ❑ U ❑ U ❑ U ❑ U ❑ L C M M M M m M M M M m U W C: Qm Qm Qm Qm Qm Qm Qm Qm Qm Qm OW co �- 1111 D 1111 1111 El ❑❑ El [:1 1111 ❑❑ ❑❑ -. O U W � � c O O p 0 a> Q� s1 �'•� w Y C C O _ W O J LL L O O O OOOv ¢ z Q O= W~ a> 0-0 Eto w Qc z OQ� d EA ER b4 Eft ER Eft 64 EA 64 Ef? Zuj N y n 0)'— N c,aY z Q N �� cc Q Q CL a p U CL -0 a o � O c Q) V) - cc cn cn Z Z ma C E > c o J O Jti co — _Z 0 CT U O Z Q > h > O :D V y ` E `- Co (n O O w 0 0 to O O N U O cn U O to O O cn O O N U O cn 0 0 Cn O O Q � � } Z } Z } Z } Z } Z } Z } Z } Z } Z } Z Q � E 0 Z � 0 v ® ❑ ® ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ ❑ Q O c a N e-- N N N r N C 3 C C Z 0 O �O Q cn `� >� •(n O LL U a� a c O o Lo Lo co �p •cn c ai — E Q U ('') N ,� LC'^ C > C L) O' Qx ^ Ln N a �,� •C a C DEoo _-q cf LC') Q o O > o O O 69 69 69- ER 69 Ef} 69 64 ffT 64 ER c> O O a�CL IL M � Q E E F- o � o Q w W E m c 4 � n3 (n C'n m W °' ti O c c L.L k c ; c zE CL z m Q) CG LL cm .n Z L FLU N C•) a o w ci c :3 0. ` E c a m p a) E CL w > JO w �o c c W c.` o � Z W a O O 3 m . a a a C a@i W CL �.�NQ 'v= WQ F•— E 7 p O 0 c 7 U m — O to d L u. O) O O cC m> O C ` o C C A E o s.y__ ya LL }, w> m m c U— co m_ or ` E Q Q U 0 w w _ Q J Q a QmU6 LL; Li c Q w L rn O L O O "p m w D V= •---+ N F� O N LL N -i FORM SF -SAC 18 -971 ' U.S.GPO' 1 997. 549. 078/801 1 4 0 O CL U c O z U W c O C O U a O a V) V)I c0 6� 3 co m m Q M I Page 3 (THIS PAGE INTENTIONALLY LEFT BLANK) -50- O� LLJ Cl) D Z� T W U O Ls Q � � Z w d Q i C W a C cn O f- a� _ LO CD CD O � M O M CD M 4- M 41 = N C14 cli co 00 M O m d M CO N N F- > N 00 CD a) OM O - N CD M N Q 0 O 00 00 N O O r r r r T � L V N m m O O G) C) O O O) a) LL r T T T r r r r r r —51— O U tY .O .0 O O_ CO C cn N U C Ca cn N = ++ L tl- O N CD c1 V ti M M N V O M It Cl) N CA D) C) V N O CO r- M O O O CL N r CD N M O N N O O y cn 4-5 J N CD c4 N o o O o 0 C o cj:� o N N CD O N M m T Lo CD � �_ � M _= O �O O r- CT LOC) N LOfl O u„ UC) Il- V' LO �2 O CO O J O N L O LC) N r N Cl) O m M cc f� m 07 r N :I- � O M co t1') V M Ln CO N 0) N 00 O 00 CL 00 of r` o rn T K O T .M� ii m N U) O) LO O O0 00 t` N Cfl N O Uf) � O C) O O O O T T � L V N m m O O G) C) O O O) a) LL r T T T r r r r r r —51— O U tY .O .0 O O_ CO C cn N U C Ca Salina Airport Authority OPERATING EXPENSE HISTORY Ten Years Ended December 31, 1998 Source: Salina Airport Authority Records —52— Totall Operating Expense 820,024 769,161 737,715 763,317 820,330 838,069 857,508 895,848 936,136 920,424 Office & Administrative Maintenance Fiscal Year Expense Expense 1989 483,907 336,117 1990 430,225 338,936 1991 408,578 329,137 1992 415,819 347,498 1993 458,918 361,412 1994 467,803 370,266 1995 481,914 375,594 1996 497,561 398,287 1997 568,606 367,530 1998 542,873 377,551 Source: Salina Airport Authority Records —52— Totall Operating Expense 820,024 769,161 737,715 763,317 820,330 838,069 857,508 895,848 936,136 920,424 Salina Airport Authority FEDERAL FINANCIAL ASSISTANCE HISTORY Ten Years Ended December 31, 1998 Federal Aviation Administration Airport Fiscal Year Improvement Grant 1989 613,642 1990 40,917 1991 29,430 1992 335,349 1993 30,162 1994 270,191 1995 3,210,933 1996 2,006,786 1997 1,640,967 1998 1,026,918 NOTE: The use of Federal Aviation Administration Airport Improvement Program Grant Funds are limited to use for funding specific airfield capital improvements. Airfield capital improvements are detailed in program grant agreements entered into by the Salina Airport Authority and the Federal Aviation Administration The grant funds finance 90% of total project costs. Source: Salina Airport Authority Records —53— -54- 0 L U (ll T 0 7 Q L 0 Q L_ Q c^^ V/ U 0 U) CD O c0 O O .a M M ti O N LO M O V M i +�+ LO N N CO M co LC) CO m co N Cl) CO O CO O N I-- M _ O Q. O M O) C't LO N N ti O F- oo O 00 OZ) O C) N O M O N LO N 00 COO U N �- L d' EfT Cfl C� C, 5 x M O .- Q w N = p N ti O O 00 r N O r— N O O LO N O O -54- 0 L U (ll T 0 7 Q L 0 Q L_ Q c^^ V/ U 0 U) CD O c0 O O .a M M ti O N LO M O V M of N 00 .4 Lo m O N M L() 00 M O M O) N O r CO f— M M O I� y.� 00 N N M O O O Il— Cfl L d' M Cfl LO co O CO M O .- Q Ui N = p N ti O O 00 r N O r— N O O LO N O O v O) Oq GO. Gpk 6q -54- 0 L U (ll T 0 7 Q L 0 Q L_ Q c^^ V/ U 0 U) CD LO O O O O LO O O ' Lf) of N cc O i� r- J O M M O LO O r N O f— CO M p N G9 09 N r f G9 oa 64 Gq 06 N Ui N = p N ti O O 00 r N O r— N O O LO N O O v O) M o O j. 'T cc a) rn co CD �' CV d' CO M V N N } � C Q Ef-? EF? E!? H) 64 Cam? Efl m � U O bj 0) c N M M 00 cD O co ti co co - N ti w Lf) N I� N O CO LC) O CO •� d � I� co Cl) O � � M Ln NEF?- O M Ef3 G 69 �-- w L Z (� 0 LU a C Q X L w 0 W "i _j LQ. Q L ' Q I.. co a} Q V L N y co O 0) a) N rn M 0) -,f rn Lo rn CO m I-- 0) M 0) r p U) U IL >- m a� [� rn o) C" rn a) T C) [� a) r a) [� M r Z L -54- 0 L U (ll T 0 7 Q L 0 Q L_ Q c^^ V/ U 0 U) Salina Airport Authority REVENUE BOND COVERAGE Ten Years Ended December 31, 1998 Fiscal Pledged Revenue Bond Year Revenue Debt Service 1989 523,307 214,586 1990 409,915 211,780 1991 426,707 206,570 1992 531,761 286,024 1993 414,514 278,395 1994 421,554 280,578 1995 189,446 163,215 1996 189,446 163,790 1997 189,446 168,962 1998 189,446 163,938 Notes: 1. Revenues pledged to service Leasehold Revenue Bonds, Series 1990 -B and Series 1991 Source: Salina Airport Authority Records -55- (overage 2.43 1.93 2.06 1.86 1.50 1.50 1.16 1.16 1.12 1.16 Salina Airport Authority Principal Customers Year Ended December 31, 1998 Company Revenue % of Operating & Direct Finance Lease Revenue Raytheon Aircraft Corp. $244,413.58 16.68% Kansas State Univ. - Salina $194,076.00 13.24% Exide Corporation $150,782.00 10.290/'D Schwan's Sales $134,487.89 9.18% Moore's Midway Aviation $111,300.93 7.59% Flower Aviation $97,194.04 6.63% Kasa Fab, Inc. $63,696.00 4.35% Salina Vortex Corp. $27,361.91 1.87% Joe Kejr $19,370.00 1.32% FAA $18,600.00 1.27% Palleton of Kansas, Inc. $18,420.00 1.26% GeoCore Services $17,940.00 1.22% Builders Choice $17,516.29 1.20% Lanseair of Salina $16,390.00 1.12% Two Rivers Vending Co., Inc. $15,776.00 1.08% Brent Laas $14,550.00 0.99% Coronado Engineering $13,800.00 0.94% H &H Delivery Service $12,112.00 0.83% Blicks Agri -Farm Center, Inc. $12,000.00 0.82% Central Ks Auto Rental $11,919.01 0.81% ADM Milling Co. $11,824.53 0.81% Mesa Airlines /Air Midwest $11,618.89 0.79% GCC License Corporation $11,400.00 0.78% Tiger Corp /Avis Rent -A -Car $10,418.80 0.71% Palmer Trucking Co. $10,194.00 0.70% TVCN of KS $9,200.00 0.63% Salina Aircraft Sales $8,750.00 0.60% Salina Snack Sales $8,700.00 0.59% Scientific Engineering $8,700.00 0.59% Salina Auto Auction $7,200.00 0.49% Snak -Atak $7,035.36 0.48% Civil Air Patrol $6,816.00 0.47% Great Lakes Aviation, LTD $6,623.82 0.45% Land of Oz Meats $6,215.00 0.42% Blue Beacon International $6,013.44 0.41% Notes: Total of Operating Lease and Direct Finance Lease Revenue for 1998 was $1,465,688.88 Source: Salina Airport Authority Records -56- M O 00 'T LO M LO 't O _ Lf) C) ti N r C) co O I- y CD lf) O r O M LO 07 U . Q (n Q N O O 00 O O O 00 t` �- 00 cY M N O CD r O CD r It ti N O LO 00 NT N CO M Lf) M O co M O Cfl O O O O N O Q) O LO 1.0 LO L i LO Z r r r r M O 00 'T LO M LO 't O _ Lf) C) ti N r C) co O I- y CD lf) O r O M LO 07 U . Q (n Q -57- U) 0 CU 4-- (n 1 i Ln LO 1.0 LO L i LO Z r r r r r r p. Y a Q J w CU r = L- 0) > Q = Q Q 0 O O O O O C) N ti M LO � N O N O U') O QQ r r r r r (V M Z Q T Q M U � � W O M m � ti ti 00 0 - N � # Cfl V t M CD 'I: 0000 N M Lf) CO C: ` LO CD O M O N N N O CD M vi N O t- tl- 00 V d M co -0 W p 2 Q M M x M 0 CD LO C4 N M LO LO N - CD M r O O 00 CD O r- t7 r V d7 O ti N cc CD O O O O N t` 6 Lf) LO. T U N M M M N N N N N N N > W D- Q� 00 CL co Z M ++ = O V N V N Lo O Ln CO Z L _ V' O r V LO LL) co CD V U Rf 0 M N 07 r O N O N � N O (N M N N N 00 O :t-_ _ cW� (n U r N L C) > C Z U d7 T O Q C: LV - a U > Q c 0 a Q O pQ Ur c W Q c cu J c _0 C7 M cv ai V U CU O O N M � LO CD ti 00 ate+ 'N Q U) �I 00 O 6) 0) O O O m 6') O) 0 U p Z3 cn J F- LL �- O r O) 0) r O r O) r O 6) r O C) r Cn '- Z f M (n -57- Salina Airport Authority PROPERTY TAX REVENUE Ten Years Ended December 31, 1998 Fiscal Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 Source: Salina Airport Authority Records S Property Tax Revenue 0 0 0 0 0 $301,829 $406,232 $357,887 $338,058 $322,270 Salina Airport Authority AIR TRAFFIC, FUEL FLOWAGE AND ENPLANEMENT TRENDS Ten Years Ended December 31, 1998 Fiscal Air Traffic Fuel Flowage Year Operations Gallons 1989 79,068 2,890,341 1990 96,254 3,136,668 1991 83,372 2,681,605 1992 71,697 2,552,156 1993 66,144 2,126,230 1994 61,215 2,424,880 1995 68,291 2,435,656 1996 62,021 2,907,894 1997 68,822 3,577,650 1998 80,338 3,603,673 Note: One air traffic operation equals one aircraft takeoff and landing Source: Salina Airport Authority Records —59— Scheduled Air Service Enpl;anements 10,252 5,707 5,391 5,799 5,591 7,175 7,813 8,652 9,153 "2,909 Salina Airport Authority MAJOR EMPLOYERS IN THE SALINA/SALINE COUNTY AREA December 31, 1998 Major Private Employers Approx. # Type of Company Employees Business Tony's Pizza 2,300 Frozen Foods Manufacturer Salina Reg. Med. Center 1,082 Health Care Exide Corporation 825 Battery Manufacturing Raytheon Aircraft Co. 653 Aircraft Sub - assemblies Manuf. Great Plains Manufacturing 650 Farm Implements & Landscaping 1= quipment Philips Lighting 605 Fluorescent Lamp Manufacture OCCK 263 Plastic products, Subcontracting Eldorado National, Inc. 264 Medium & Small Shuttle Buses Wal -Mart 183 Retail Advance Auto /Parts America 150 Retail KASA/KASA Fab 144 Electronic Controls & Steel Fabrication Elliott Turbocharger, Inc. 138 Rebuilding of diesel engine turbochargers Exline 130 Structural steel fabrication Salina Journal 130 Newspaper Publishing Crestwood Cabinets, Inc. 123 Custom Made Cabinets Premier Pneumatics 110 Pneumatic Convey Equipment PKM Steel 103 Electric Controls Major Public Employers Approx. # Public Organizations Employees Type of Public Bocly Unified School District #305 935 School System City of Salina 471 City Government Saline County 233 County Government US Postal Service 128 Postal Service Kansas State University - Salina 126 Engineering Technology & Aviation Technology Source: Salina Area Chamber of Commerce Salina Airport Authority SALINA POPULATION, DEMOGRAPHIC AND LABOR STATISTICS Population Year City of Salina Saline County 1989 42,188 49,210 1990 42,303 49,301 1991 42,510 49,301 1992 42,841 49,301 1993 43,202 49,400 1994 43,304 50,450 1995 43,304 50,450 1996 44,167 51,434 1997 44,510 51,831 1998 44,176 51,782 Source: Saline County Clerk 1,210 1995 Demographics Measure City of Salina Median Age 35.45 Average Age 36.89 Number of Households 18,600 Average Household Income $40,600 Median Household Income $30,009 Per Capita Income $16,955 Source: Salina Area Chamber of Commerce Labor Source: Salina Area Chamber of Commerce -61- Civilian Year Labor Force Employed Unemployed 1989 27,384 26,130 1.250 1990 28,454 27,261 1,193 1991 29,321 28,073 1,248 1992 30,409 29,270 1,139 1993 28,549 27,261 1,288 1994 28,902 27,692 1,210 1995 29,312 28,117 1,195 1996 29,281 28,128 1,153 1997 29,875 28,921 954 1998 30,310 29,262 1,048 Source: Salina Area Chamber of Commerce -61- Salina Airport Authority SALINA/SALINE COUNTY EMPLOYMENT DATA Unemployment Rate - 1986 -1997 1986 6.1 1987 5.6 1988 5.1 1989 4.2 1990 4.2 1991 4.0 1992 3.7 1993 4.5 1994 4.6 1995 4.6 1996 3.9 1997 3.6 Employment by Industry - 1996 Total Employment 37,429 Farm 780 Ag. Services 327 Mining 180 Construction 2,199 Manufacturing 7,086 Transportation 1,502 Wholesale Trade 1,620 Retail Trade 7,693 Finance, Insurance, Real Estate 1,654 Services 10,246 Government & Gov't Services 4,142 Source: Institute for Public Policy and Business Research , University of Kansas, Salina /Saline County Profile Report —62— HARRISON & ARNETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON, C.P.A. 717 ROACH STREET . SALINA, KANSAS 67401 PHONE: (785) 827 -7244 THOMAS G. ARNETT, C.P.A. FAX: (785) 827 -0048 REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Board of Directors Salina Airport Authority Salina, Kansas We have audited the financial statements of Salina Airport Authority, as of and for the years ended December 31, 1998 and 1997, and have issued our report thereon dated April 12, 1999. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether Salina Airport Authority's financial. statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which would 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 that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered Salina Airport Authority's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the general purpose financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the audit committee, management, others within the organization, Board of Directors, and federal awarding agencies and pass - through entities and is not intended to be and should not be used by anyone other than these specified parties. Harrison & Arnett, Chartered Salina, Kansas April 12, 1999 —63— MEMBERS OF DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS HARRISON & ARNETT CHARTERED CERTIFIED PUBLIC ACCOUNTANTS EUGENE O. HARRISON, C.P.A. 717 ROACH STREET . SALINA, KANSAS 67401 PHONE: (785) 827 -7244 THOMAS G. ARNETT, C.P.A. FAX: (785) 827 -0048 REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A -133 To the Board of Directors Salina Airport Authority Salina, Kansas Compliance We have audited the compliance of Salina Airport Authority with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A -133 Compliance Supplement that are applicable to each of its major federal programs for the years ended December 31, 1998 and 1997. Salina Airport Authority's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of Salina Airport Authority's management. Our responsibility is to express an opinion on Salina Airport Authority's compliance based on our audit. We conducted our audit of compliance in accordance with generally accepted auditing standards, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. 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 Salina Airport Authority'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. Our audit does not provide a legal determination on Salina Airport Authority's compliance with those requirements. In our opinion, Salina Airport Authority complied in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the years ended December 31, 1998 and 1997. Internal Control Over Compliance The management of Salina Airport Authority is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered Salina Airport Authority's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A -133. —64— MEMBERS OF DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS Page 2 of 2 Salina, Kansas Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the audit committee, management, others within the organization, Board of Directors, and federal awarding agencies and pass - through entities and is not intended to be and should not be used by anyone other than these specified parties. i Harrison & Arnett, Chartered Salina, Kansas April 12, 1999 —65— SALINA AIRPORT AUTHORITY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED DECEMBER 31, 1998 A. SUMMARY OF AUDIT RESULTS 1. The auditor's report expresses an unqualified opinion on the financial statements of Salina Airport Authority. 2. No reportable conditions relating to the audit of the financial statements are reported in the report on compliance — G.A.S. 3. No instances of noncompliance material to the financial statement of Salina Airport Authority were disclosed during the audit. 4. No reportable conditions relating to the audit of the major federal award programs is reported in the report on compliance — OMB CIR A -133. 5. The auditor's report on compliance for the major federal award programs for Salina Airport Authority expresses an unqualified opinion. 6. Audit findings relative to the major federal award programs for Salina Airport Authority are reported in Part C of this Schedule. 7. The programs tested as major programs include: CFDA 20.106 Airport Improvement Program and CFDA 14.219 Community Development Block Grants /Small Cities Program. 8. The threshold for distinguishing Types A and B programs was $300,000. 9. Salina Airport Authority was determined to be a low -risk auditee. B. FINDINGS — FINANCIAL STATEMENTS AUDIT None. C. FINDINGS AND QUESTIONED COSTS — MAJOR FEDERAL AWARD PROGRAMS AUDIT None.