Audit Report - 12/31/2014-2015Prepared by the Management
of the
Salina Airport Authority
www.salinaairport.com
CUSIP #794760XXX
3237 Arnold | Salina, KS 67401 | 785-827-3914
www.salinaairport.com | www.flysalina.com
FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT
of the
SALINA AIRPORT AUTHORITY
A Component Unit of the
City of Salina, Kansas
For the Fiscal Years Ended December 31, 2015and 2014
P.O. BOX 2267
SALINA, KANSAS
SALINA AIRPORT AUTHORITY
TABLE OF CONTENTS
INTRODUCTORY SECTION
Title Page
Table of Contents
FINANCIAL SECTION
Independent Auditors' Report....................................................................................1-3
Report on Internal Control over Financial Reporting and on Compliance and Other
Matters Based on an Audit of Financial Statements Performed In Accordance
With Government Auditing Standards...........................................................4-5
Management’s Discussion and Analysis ..................................................................6-13
Statements of Net Position.........................................................................................14-15
Statements of Revenues, Expenses andChanges in Net Assets................................16
Statementsof Cash Flows (Direct Method)...............................................................17-18
Notes to FinancialStatements....................................................................................19-39
Supplemental Information
Schedules of Revenues, Expenses and Changes in Net Position...............................40-42
Capital Expenditures..................................................................................................43
Schedule of Employer’s Proportionate Share of the Net Pension Liability...............44
Schedule of Employer Contributions.........................................................................45
General Obligation Improvement Bonds –Series 2009-A........................................46
General Obligation Improvement Bonds –Series 2009-B........................................47
General Obligation Improvement Bonds –Series 2011-A........................................48
General Obligation Improvement Bonds –Series 2011-B........................................49
General Obligation Improvement Bonds –Series 2015-A........................................50
Special Assessment Debt-Street and Utility Improvement........................................51
Special Assessment Debt-Sanitary Sewer Extension................................................52
FinancingLease Payable............................................................................................53
Insurance in Force......................................................................................................54
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5
FY 2015
FINANCIAL
MANAGEMENT’S DISCUSSION AND ANALYSIS
The management of the Salina Airport Authority offers the readers of the Authority’s audited financial
statements this narrative overview and analysis of the financial activities of the Salina Airport Authority
for the fiscal year ended December 31, 2015.
The Salina Air TrafficControl Tower (ATCT) ended 2015 having handled 96,350aircraft operations.
This represented a 6%increasein total aircraft operations over the prior year which had saw a 1% increase
over 2013. For the fourth consecutive year, operations have exceeded the 90,000 mark.The moderate
changes in recent years signifya stabilization of operations following a significant leap of 40% growth
from 2011 to 2012. K-State Salina’s expanded professional pilot and helicopterflight trainingprograms
on the Airport has assisted inthe upward trend in air trafficas well as an overall increase in commercial
nd
business traffic. At the end of 2015, Salina Regional Airport remains ranked the 2busiest air traffic
controltower in the state. Salina ATCT’s national ranking (out of 516towers) climbed up one spot in
2014to 184th. The increase puts the Salina Regional Airport into the top 35% of all air traffic towers
in the nation.
Ofsignificance isthat 2015 marked the second highest year in airport operations for the most recent 10-
year period. Salina continues to remain strong as a mid-continent refueling stop and has earned the
recognition as “America’s Fuel Stop”. In January 2014, world-class Fixed Based Operator(FBO),
Avflight Corporation acquired the aircraft fueling divisions of the two existing FBO’son the Airport.
Avflight began the new year providing fueling and ground services to the wide mix of air traffic that
includes business jets, air carrier, military, and general aviation. Avflight is part of the Avfuel-branded
FBO network of 700 independently-owned FBOs around the globe. In addition, Salina continues to
remain strong as a base of operations for military and civilian flight training.During 2014, Avflight
increased fuel sales to nearly 2 million gallons, representing a 12% increase over the prior year following
a decrease of 32% from 2012 to 2013. During 2015, fuel flowage saw another double-digit increase with
fuel delivered increasing over 26% over 2014. Avflight’s takeover of the fueling operation at SLN and
subsequent 2014 results has fuel sales on a positive trend.
The commercial airline industry is seeing improvements despite the challenges faced bythe smaller
carriers attempting to serve rural communities such as Salina through the Department of Transportation’s
(DOT) Essential Air Service Program. In early 2012,theDOT EAS contract for Salina’s air service was
extended for four years providing SeaPort Airlines the opportunity to continuethree daily flights, six days
a week between Salina and Kansas City.
During 2015, the Salina RegionalAirport’s passenger enplanements increased320% as a result of the
airport being named an Airport of Embarkation/Debarkation (APOE/APOD) for Kansas’ army military
st
installation known at Fort Riley. Home of the Army’s 1Infantry division, Fort Riley utilizes the
infrastructure at the Airport for the deployment of service men and women and cargo to training venues
and military missions throughout the world. In addition to an increase in military aircraft activity, the
Airport has benefited from the increase in commercial airline charter operations as a result of the
APOE/APOD designation.
The changes in the Authority’s major airport activity indicators for the past three years are as follows:
6
FY 2015
FINANCIAL
201520142013
Enplanements - Scheduled Air Carrier & Charter Flights10,0792,3982,829
% increase / (decrease)320.31%-15.24%-19.77%
Aircraft Operations - All Categories96,35091,10190,131
% increase / (decrease)5.76%1.08%-7.40%
Fuel Flowage - (gallons delivered)2,487,6031,971,0611,757,980
% increase / (decrease)26.21%12.12%-32.23%
AIRPORT INDUSTRIAL CENTER ACTIVITY AND HIGHLIGHTS
The Authority owns over1 million sq. ft. of manufacturing, warehouse and office space at the Airport
Industrial Center. As further described herein, the building and land revenue generated by the Authority’s
leasing activity constitutes a significant portion of the annual operating revenue budget. During 2015,
building rents equaled $827,224or 43% of operating revenue. At the end of 2014, the Authority had an
occupancy rate of 56% in its building inventory, down significantly from the 82% in 2010. The decrease
is a result of the 2012 closure of the Hawker Beechcraft Corporation(HBC)division in Salina as
discussed further in this report’s Letter of Transmittal.From 2012-2014, the Authority made progress in
re-leasing a portion of the 484,003 sq. ft. of property vacated by HBC by leasing 140,000sq. ft. to five
new commercial businesses at the Airport Industrial Center.
SUMMARY OF OPERATIONS AND CHANGES IN NET POSITION
Even with the uncertainty in the aviation industry and the slow growth in the economy, the financial
condition of the Authority has held steady in recent years. The Authority has effectively dealt with major
cost increases in employee health benefits including medical insurance premiums, utility costs,
commercial property insurance premiums and other operating expenses. In addition, the Authority has
managed through the termination of four operating revenue leases from three principal tenants since 2012,
representing nearly $850,000 in annual operating revenue. Fortunately, since 2012, the Authority has
added approximately $100,000 per year for each of the fourprior years, in new tenant operating revenue
increasingthe tenant diversification and revenue base.
7
FY 2015
FINANCIAL
201520142013
Operating revenues$1,876,503$1,909,353$2,067,758
Operating expenses(1,951,218)(2,059,205)(2,105,710)
(Deficit) of revenues over expenses
before depreciation(74,715)(149,852)(37,952)
Depreciation(2,584,667)(2,588,599)(2,588,107)
Loss before non-operating revenues
and expenses(2,659,382)(2,738,451)(2,626,059)
Non-operating revenues and (expenses), net967,636957,790719,982
Loss before capital contributions(1,691,746)(1,780,661)(1,906,077)
Capital contributions217,112799,762623,029
Net position
Decrease in net position(1,474,634)(980,899)(1,283,048)
Net position, beginning of period as previoiusly reported24,247,52025,228,41926,511,467
Cumulative chage in accounting principle(537,619)--
Net position, beginning of year as restated 23,709,90125,228,41926,511,467
Net position, end of period$22,235,267$24,247,520$25,228,419
SUMMARY OF OPERATIONS HIGHLIGHTS
Significant items affecting the Summary of Operations andChanges in Net Position for 2015 and 2014are
as follows:
Operating revenues have decreasedin recent yearsdue to principal customer lease terminations
mentioned previously.Fortunately, revenues from aircraft storage and hangar rentals have
assisted in softening the decrease in revenue received in building rental. Also fuel flowage fees
derived from the delivery and sale of aviation fuel at the Airportis on an upward trend and
increased 26% in 2015 and 15% in 2014 over the prior year. There is acontinued trend upward
in aircraft operations afterdecrease in corporate and general aviationflyingdue to theeconomy
which will continue to assist in the upward trend of derived from fuel flowage fees. Military
trafficat the Airport continues to remainstrong.
TheAuthority has been able to decrease operating expenses for fivestraight years and reduced
costs 5% from 2014 and 2.7% from 2013.
8
FY 2015
FINANCIAL
o During 2012-2015, the Authority made a concerted effort to hold and reduce operating
costs by reducing travel and meeting expenseas well as reducing all dues and
subscriptions and cancelling all non-essential items.
o In addition, the Authority was able to reduce building maintenance expensein recent
yearsby over 60% by utilizing in-house personnel for items that were previously
contracted out to third party vendors.
Depreciation expense increased due to new construction moving over $10 million from
construction in progress to an asset in service and very capital intensive years from 2007-2012.
Capitalcontributionsduring 2015 totaled $323,857with the significant projects including the
design of the Airport’s rehabilitation of Taxiway’s E & B, the rehabilitation of the Authority’s
largest aircraft hangar facility, Hangar 959.
Ad-valorem tax revenue (mill levy) received by the Authority as a local taxing entityincreased
1.7% from 2014 to 2015 and 11% from 2013to 2014. Interest received on investments decreased
significantlyin 2015 and 2014 as a resultof a reduction in bond proceeds on deposit as well as
historical lows in investment yields.
FINANCIAL POSITION SUMMARY
The changes in net positionmay serveover time as a useful indicator of a government’s financial position.
The Authority’s assets exceeded liabilities by $22,235,267at the close of 2015. A condensed summary of
the Authority’s total net positionat December 31, 2015is shown below.
The Authority’s net positionreflects its heavy investment in capital assets including land, buildings,
airfield infrastructure and machinery and equipment, less any related debt used to acquire those assets that
is still outstanding. The Authority uses these capital assets to provide services to citizens; consequently,
these assets are not available for future spending. Although the Authority’s investment in its capital assets
is reported net of related debt, it should be noted that the resources needed to repay this debt must be
provided from other sources, since the capital assets themselves cannot be used to liquidate these
liabilities.
9
FY 2015
FINANCIAL
201520142013
ASSETS
Current and other assets$1,004,510$403,748$1,126,869
Capital assets45,393,52447,662,47448,922,759
Total assets46,398,03448,066,22250,049,628
LIABILITIES
Long-term debt outstanding21,767,59722,105,79623,112,497
Other liabilities2,287,8581,712,9061,708,712
Total liabilities24,055,45523,818,70224,821,209
NET POSITION
Net investement in22,516,03424,510,10424,818,560
capital assets
Unrestricted(280,767)(262,584)409,859
Total net position$22,235,267$24,247,520$25,228,419
REVENUES
The following chart shows the major sources and the percentage of total operating revenues forthe year
ended December 31, 2015:
10
FY 2015
FINANCIAL
A summary of revenues for the past three years is shown below. Total revenue decreased slighting in
2015 over 2014 by .04% and increasedby1.2%or $46,012 in 2014 over 2013. The decrease in operating
revenue in 2014is a result ofthedecline in building and land rental attributable to the increased vacancy
rate due to the closure of Hawker Beechcraft facilities at the Airportand the loss of two other principal
customers. Airfield revenue has increased as a result of bringing on additional hangar rental and an
increase in fuel flowage fee revenues.
201520142013
Operating Revenue:
Airfield$719,505$722,791$539,799
Building and land rent1,068,3351,136,0631,474,057
Other revenue88,66350,49953,902
Total Operating 1,876,5031,909,3532,067,758
Non-Operating Income:
Mill Levy2,028,0741,993,8891,788,284
Interest Income286437676
Gain on sale of assets48,28950,90451,853
Total Non-Operating2,076,6492,045,2301,840,813
TOTAL REVENUE$3,953,152$3,954,583$3,908,571
EXPENSES
The following chart shows the major expense categories and the percentage of total operating expenses for
the year ended December 31, 2015:
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FY 2015
FINANCIAL
A summary of expenses for the past three years is shown below. Total operating expenses decreased 5%
in 2015 and 2.7% in 2014 over the prior year. The Authority has takensignificant steps to hold operating
expenses in recent years including completing more facility maintenance projects in-house and reducing
administrative expenses such as travel and meetings.
201520142013
Operating Expenses
Administrative$1,253,045$1,198,445$1,232,833
Maintenance698,173860,760872,877
Total Operating 1,951,2182,059,2052,105,710
Non-Operating Expense
Interest Expense(1,065,853)1,087,4401,120,831
Bond Issue Costs(43,160)--
Total Non-Operating(1,109,013)1,087,4401,120,831
TOTAL EXPENSES$842,205$3,146,645$3,226,541
CAPITAL ACQUISITIONS AND CONSTRUCTION ACTIVITIES
Capital contributions during 2015 totaled $323,857with the significant projects including the design of
the Airport’s rehabilitation of Taxiway’s E & B, the rehabilitation of the Authority’s largest aircraft
hangar facility, Hangar 959and the beginning of a remodel design of the M.J. Kennedy Air Terminal
Building.
The Authority acquired $1,344,789incapital assetsduring2014.Significant items includedthe design of
the Airport’s rehabilitation of Taxiway’s E & B, the rehabilitation of the Authority’s largest aircraft
hangar facility, Hangar959and the resurfacing of Taxiway G. The capital asset investment also included
severalbuilding improvementprojectsthatwere the continued renovation to Authority buildings and
hangars that were vacated by HBC in the first quarter of 2012 year.Additional information on the
Authority’s capital assets can be found in Note III (C) in the notes to the financial statements and within
the Supplemental Section of this report.
Capital asset acquisitions exceeding $1,000 are capitalized at cost and are depreciated over their useful
lives, with the exception of land. The Authority’s capital assets are financed using Federal and State
grants with matching Authority funds, debt issuance and Authority revenues. Additional information can
be found in Note I (C) in the notes to the financial statements.
12
FY 2015
FINANCIAL
DEBT ADMINISTRATION
The outstanding long-term debt ofthe Authority was $21,767,597net of unamortized bond discountsat
December 31, 2015. This debt consists of general obligation bonds, a financing lease and City of Salina
special assessments. Maturities range from 2016 through 2031. Both principal and interest are payable
from the general revenues of the Authority and mill levy revenue. Details of the Authority’s debt can be
found in Note III (D) in the notes to the financial statements.
REQUEST FOR INFORMATION
This Management Discussion and Analysis is designed to provide detailed information on the Authority’s
operations and the financial results of those operations to all those with an interestin the Authority’s
financial affairs. Questions concerning any of the information provided in this report or requests for
additional information should be addressed to the Manager of Administration and Finance by e-mail:
shellis@salair.orgor in writing to, Salina Airport Authority, 3237 Arnold Ave., Salina, KS 67401.
Respectfully submitted,
Timothy F. Rogers, A.A.E.Michelle R. Swanson, C.M.
Executive DirectorDirectorof Administration and Finance
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FINANCIAL FY 2015
SALINA AIRPORT AUTHORITY
STATEMENTS OF NET POSITION
As of December 31, 2015 and December 31, 2014
ASSETS AND DEFERED OUTFLOWS OF RESOURCESDecember 31
20152014
CURRENT ASSETS
Cash $719,084$290,742
Accounts receivable 127,534107,939
Prepaid expenses157,8925,067
Total Current Assets1,004,510403,748
NON-CURRENT ASSETS
Capital Assets
Land9,843,4269,823,047
Buildings, improvements and equipment,
net of depreciation34,643,74237,004,694
Construction in progress906,356834,733
Total Non-Current Assets45,393,52447,662,474
TOTAL ASSETS46,398,03448,066,222
DEFERRED OUTFLOW OF RESOURCES6,417 -
TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES$46,404,451$48,066,222
(continued)
The accompanying notes are an integral part of these financial statements.
14
FINANCIAL FY 2015
SALINA AIRPORT AUTHORITY
STATEMENTS OF NET POSITION
As of December 31, 2015 and December 31, 2014
(continued)
LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND
NET POSITION
December 31
20152014
CURRENT LIABILITIES:
Accounts payable$91,126$ 143,803
Accrued payroll and expenses51,881 60,671
Accrued property tax 77,230 75,165
Accrued special assessments10,221 10,221
Unearned rental income44,212 28,950
Accrued interest319,615 347,798
Current maturities of long-term debt1,109,894 1,025,674
Total Current Liabilities1,704,179 1,692,282
NON-CURRENT LIABILITIES
Bonds and note payable, less current maturities21,767,597 22,105,796
Net pension liability545,977 -
Security Deposits Returnable37,702 20,624
Total Non-Current Liabilities22,351,276 22,126,420
Total Liabilities24,055,455 23,818,702
DEFERRED INFLOWS OF RESOURCES113,729 -
NET POSITION
Net investment in capital assets22,516,034 24,510,104
Unrestricted (280,767) (262,584)
Net Position22,235,267 24,247,520
TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES
AND NET POSITION
$46,404,451$48,066,222
The accompanying notes are an integral part of these financial statements.
15
FINANCIAL FY 2015
SALINA AIRPORT AUTHORITY
STATEMENTS OF REVENUES, EXPENSES and CHANGES IN NET POSITION
As of December 31, 2015 and December 31, 2014
January 1 to December 31
20152014
Operating Revenues
Airfield$719,505$ 722,791
Building and land rent1,068,335 1,136,063
Other revenue88,663 50,499
Total Operating Revenues1,876,503 1,909,353
Operating Expenses
Administrative1,253,045 1,198,445
Maintenance698,173 860,760
Total Operating Expenses1,951,218 2,059,205
(Deficit) of Revenues over Expenses before Depreciation(74,715) (149,852)
Depreciation2,584,667 2,588,599
Operating Loss Before Non-Operating Revenues and Expenses(2,659,382) (2,738,451)
Non-Operating Revenues and (Expenses)
Mill levy2,028,074 1,993,889
Interest on investments 286 437
Interest expense(1,109,013) (1,087,440)
Gain on sale of assets48,289 50,904
Total Non-Operating Revenues and (Expenses)967,636 957,790
Loss before Capital Contributions(1,691,746) (1,780,661)
Capital Contributions217,112 799,762
Net Position
(Decrease) in Net Position(1,474,634) (980,899)
Net Position, beginning of period as previously reported24,247,520 25,228,419
Cumulative change in accounting principle(537,619) -
Net Position, beginning of year, as restated23,709,901 25,228,419
Net position, end of period$22,235,267$24,247,520
The accompanying notes are an integral part of these financial statements.
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FINANCIAL FY 2015
SALINA AIRPORT AUTHORITY
STATEMENTS OF CASH FLOWS
(DIRECT METHOD)
As of December 31, 2015 and December 31, 2014
January 1 to December 31
20152014
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from providing services$ 1,922,061$ 1,849,824
Cash paid to employees for services(698,148) (731,571)
Cash paid to suppliers for goods and services(1,292,263) (1,170,505)
Net Cash (Used) in Operating Activities(68,350) (52,252)
CASH FLOW FROM CAPITAL AND RELATED FINANCING ACTIVITIES
Acquisition and construction of property, plant and equipment(301,636) (1,348,143)
Proceeds from capital grants 92,414 799,762
Proceeds from property tax 2,028,074 1,993,889
Proceeds from sale of capital assets 48,289 81,652
Principal payments on debt(1,007,271) (972,729)
Proceeds of new borrowing 722,161 -
Bond issuance costs(43,159)
Interest paid on long-term debt(1,042,465) (1,099,052)
Net Cash Provided (Used) in Capital and Related
Financing Activities 496,407 (544,621)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest received on deposits 286 4 37
INCREASE (DECREASE) IN CASH 428,343 (596,436)
CASH BALANCE - January 1 290,742 887,178
CASH BALANCE - December 31$ 719,085$ 290,742
The Authority received capital equipment having a fair value of $124,698 in 2015 and $0 in 2014. This non-cash
transaction is included in CAPITAL CONTRIBUTIONS on the STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION and in Equipment acquisitions in Note III C but it is not included in this STATEMENT
OF CASH FLOWS.
(continued)
The accompanying notes are an integral part of these financial statements
17
FINANCIAL FY 2015
SALINA AIRPORT AUTHORITY
STATEMENTS OF CASH FLOWS
(DIRECT METHOD)
(continued)
As of December 31, 2015 and December 31, 2014
RECONCILIATION OF OPERATING LOSS TO NET
CASH PROVIDED BY OPERATING ACTIVITIES
January 1 to December 31
20152014
OPERATING LOSS$ (2,659,382)$ (2,738,451)
ADJUSTMENTS RECONCILING OPERATING LOSS
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation2,584,6672,588,599
CHANGES IN ASSETS AND LIABILITIES:
(Increase) in accounts receivable(19,595)(17,310)
Decrease (Increase) in prepaid expense(142,548)142,370
Increase in Pension Expens115,670
Decrease in inventory -1,625
Increase in accounts payable - operations10,1277,272
Increase in accrued payroll expenses8,3435,035
Increase in accrued property tax and special assessments2,065827
Increase (Decrease) in unearned rental income15,225(51,141)
Increase in security deposits17,0788,922
NET CASH (USED) BY OPERATING ACTIVITIES$ (68,350)$ (52,252)
The accompanying notes are an integral part of these financial statements
18
FINANCIAL FY 2015
Salina Airport Authority
NOTES TO FINANCIAL STATEMENTS
December 31, 2015
I.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A.Reporting Entity
The Salina Airport Authority (Authority) was established by the City of Salina, pursuant to
Chapter 27, Article 3, of the Kansas Statutes Annotated for the purpose of acquiring surplus
federal government property, specifically the former Schilling Air Force Base, located near the
City of Salina. The Authority operates, maintains, and develops the Salina Regional Airport and
the Salina Airport Industrial Center. The Authority is controlled by a five-member Board of
Directors appointed by the Salina City Commission and, in accordance with Governmental
Accounting Standards Board (GASB) Statement No. 61, the Authority is considered to be a
component unit of the City of Salina. The Authority is discreetly presented in the City’s
comprehensive annual financial reports.
B.Measurement Focus, Basis of Accounting and Basis of Presentation
The accompanying financial statements have been prepared in conformity with generally
accepted accounting principles (GAAP) for state and local governments. The Governmental
Accounting Standards Board (GASB) is the accepted standard-setting body for establishing
governmental accounting and financial reporting principles for state and local governments in
the United States of America.
The Authority consists of a singleenterprise 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 manner
similar to private business enterprises. The intent of the Authority 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.
Revenues from airlines, fuel flowage fees, building and land rents, and rental car commissions
are reported as operating revenues. Transactions, which are capital, financing or investing
related, and the sale of assets, related to economic development,are reported as non-operating
revenues. All expenses related to operating the Airport and Industrial Center are reported as
operating expenses. Interest expense and financing costs are reported as non-operating
expenses.
During the fiscal year ended December 31, 2015, the Authority adopted the following new
accounting standards issued by GASB:
Effective January 1, 2015, the Authority implemented the provisions of GASB No. 68 –
Accounting and Financial Reporting for Pensions and related GASB Statement No. 71 Pension
Transition for Contributions MadeSubsequent to the Measurement Date. These statements
address accounting and financial reporting for pensions provided to Authority employees that are
19
FINANCIAL FY 2015
administered by the Kansas Public Employee’s Retirement System (KPERS). The statements
also require various note disclosures and required supplementary information. As a result,
beginning of year net position has been restated as follows:
Net position previously reported, Jan. 1, 2015$24,247,520
Recognition of net pension liability, Jan. 1, 2015(537,619)
Net position beginning of the year as restated, Jan. 1, 2015$23,709,901
For thefiscal year ended December 31, 2014, the authority did not adopt any new accounting
standards as it was not practical or required to adopt GASB Statement No. 68 and No. 71 for
2014.
C.Assets, Liabilities and Equity
1.Cash and Investments
The Authority’s cash and cash equivalents are considered to be cash on hand, demand deposits
and short-term investments with original maturities of three months or less from date of
acquisition. The Authority held no investments during these years.
2.Receivables
Accounts Receivable. The Authority records revenues when services are provided. All
receivables are shown net of an allowance for uncollectibles.
3.Inventories
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. The
Authority uses the consumption approach in valuing inventories of Avgas sold for retail. That
is, the purchase is recorded as an asset on the cost basis and theexpenditure is deferred until the
inventory is consumed under the weighted average cost method.
4.Prepaid items
Certain payments to vendors reflect costs applicable to future accounting periods and are
recorded as prepaid items.
20
FINANCIAL FY 2015
5.Capital Contributions and Net Assets
Airport Improvement Program - Certain expenditures for airport capital improvements are
significantly funded through the Federal Aviation Administration’s Airport Improvement
Program (AIP)and the Kansas Department of Transportation’s Airport Improvement Program
(KAIP), with certain matching funds of the Authority. Capital funding provided under the AIP
grant programs areconsidered earned as the related allowable expenditures are incurred. Grants
received under the AIP programs are reported in the Statement of Revenues, Expenses and
Changes in Net Position, as non-operating revenues and expenses as capital contributions.
Defense Reutilization Marketing Office Program - The Authority is a participantin the
Defense Reutilization Marketing Office (DRMO) program. The DRMO entity disposes of
United States militarysurplus property. The property is first offered for reutilization with the
Department of Defense, transferred to other federal agencies or donated to state and local
governments.
The Authority’s policy is to record fixed assets having a cost (or by implication fair value) in
excess of $1,000 at acquisition. The Authority’s capitalization policy with respect to fixed assets
is to expense fixed assets costing $1,000 or less. Freight or other expenses necessary to put the
asset into service equal to or greater than $1,000, arecapitalized.
The Authority records United States military donated assets having an original costby the
militaryof $5,000 or less at $1 in order to meet the tracking requirement and will memo in the
asset file the original cost because the Authority believes the fair value of these is less than
$1,000 each.
The Authority estimates the donated items to have a value equal to 20% of cost. Items having an
original cost by the military of less than $5,000 will be valued at $1 with memo of original cost.
Items having an original cost of more than $5,000 will be valued at 20% of original cost rounded
to the nearest $1,000 with a memo to the file of the original cost.
If the Authority receives reliable written information indicating this procedure has produced a
value significantly different from fair value, an adjustment to that value will be made.
Donated DRMO property with a value in excess of $1,000 isreported in the Statement of
Revenues, Expenses and Changes in Net Position, as non-operating revenues and expenses as
capital contributions.
The Federal Aviation Administration, as the oversight agency, requires that the Airport track all
the contributed property and the property must be held for at least one year prior to disposition.
6.Capital Assets
Capital assets purchased or constructed are recorded at cost. The cost of normal maintenance
and repairs that do not add to the value of the assets or materially extend assets’ lives are not
included in capital assets cost. Capital assets donated to the Authority are recorded at their
estimated fair value at the date of donation. Donated assets include property and equipment
transferred to theAuthority from the United States of America, September 9, 1966 and recorded
at fair value at that date. The Authority maintains a capitalization threshold of $1,000.
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FINANCIAL FY 2015
Capital assets are depreciated using the straight-line method over the following estimated useful
lives:
Assets Years
Buildings 5 – 50
Equipment 5 – 10
Vehicles 7 – 10
Airfield 10 – 30
7.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. Per the Authority’s compensation
policy, the paid time off is not able to accrue beyond a one year period, therefore all such
liabilities are recorded as current. The amount accrued for such liabilities at December 31, 2015
and 2014 was $50,747and $59,090respectively.
Balance Balance
January 1, December 31,
2015IncreaseDecrease2015
$59,090$27,042$(35,385)$50,747
Balance Balance
January 1, December 31,
2014IncreaseDecrease2014
$54,583$10,888$(6,381)$59,090
II.STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A.Cash-Basis Law (KSA 10-1113)
The Authority was in compliance with this law at all times during the year.
B.Depository Security (KSA 9-1402)
The Authority’s funds were adequately secured at all times during the year.
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FINANCIAL FY 2015
III.DETAILED NOTES
A.Deposits
As of December 31, 2015 and 2014, the Authority had cash and cash equivalents as listed below:
December 31,
201520142013
Gross Cash Balances
Cash$719,084$290,742$887,178
Less deposits in transit and petty cash(50)(50)(12,227)
Add uncleared checks1,64059,92213,873
Bank Balance720,674350,613888,824
Less FDIC Coverage500,000500,000500,000
Balances Securable by Collateral$220,674$-$388,824
Security Provided by Depositories$ 3,302,428$ 2,132,843$ 9,293,834
The Authority did not have any activity in investment-type assets.
The Authority’s policies relating to deposits and investments are governed by various Kansas
Statutes (KSA). Those statutes specify the type of deposits and investments as well as the
securing of those deposits and investments.
Interest rate risk – In accordance with Kansas Statute 12-1675, the Authority manages its
exposure to interest rate fluctuations by limiting all time investments to maturities of less than
two years.
Credit risk – State law limits the amount of credit risk by restricting governments to specific
investment types aslisted in KSA 12-1675. The Authority’s policy is to place idle funds in
certificates of deposit, United States obligations, and the Kansas Municipal Investment Pool
(KMIP). The KMIP was rated AAAf/S1+ by Standard & Poor’s as of the date of this report.
The KMIP is permitted to invest in fully collateralized certificates of deposit, certain obligations
of the United States, certain repurchase/reverse repurchase agreements, and other types of
investments. Maturity information released by the KMIP showed that the investment pool
consisted of investment with a maturity date of 365 days or less.
Custodial credit risk – The Custodial credit risk for depositsis the risk that, in the event of the
failure of a depository financial institution, a government will not be able to recover deposits or
will not be able to recover collateral securities that are in the possession of an outside party. The
custodial credit risk for investmentsis the risk that, in the event of the failure of the counterparty
23
FINANCIAL FY 2015
to a transaction, a government will not be able to recover the value of investment or collateral
securities that are in the possession of an outside party. Kansas Statutes 9-1402 and 9-1405
require that governments obtain security for all deposits. The Authority manages its custodial
credit risk by requiring the financial institutions to grant a security interest in securities held by
third-party custodial banks. Monies in the Kansas Municipal Investment Pool are not required to
have pledged securities.
Concentration of credit risk – This is the risk of loss attributed to the magnitude of a
government’s investment in a single issuer. The Authority manages this risk by placing funds
with financial institutions only after contacting all eligible institutions in the taxing area and
monies in the Kansas Municipal Investment Pool are diverse according to the policies of the
investment pool.
B.Receivables
Receivables as of year-end, including the applicable allowance for uncollectible accounts, are as
follows:
December 31,
20152014
Receivables
Accounts$129,034$109,439
Less: allowance for uncollectibles(1,500)(1,500)
Total$127,534$107,939
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FINANCIAL FY 2015
C.Capital Assets
The following is a summary of the changes in capital assets during the current and preceding year:
Balance Balance
January 1, December 31,
2015AdditionsDispositionsReclassify2015
Capital Assets
Non-Depreciable
Land$9,823,047$20,379$-$-$9,843,426
Construction in progress834,73371,623--906,356
Total Non-Depreciable10,657,78092,002--10,749,782
Depreciable
Buildings and improvements26,632,50557,048--26,689,553
Airfield and improvements40,580,86530,131--40,610,996
Equipment3,990,523144,676(103,519)-4,031,680
Total Depreciable71,203,893231,855(103,519)-71,332,229
Total Non-Depreciable &
Depreciable$81,861,673$323,857$(103,519)$-$82,082,011
Accumulated depreciation
Buildings and improvements$(10,325,534)$(982,863)$-$(15,974)$(11,324,371)
Airfield and improvements(20,729,101)(1,387,074)-15,974(22,100,201)
Equipment(3,144,564)(214,730)95,380-(3,263,914)
Total Accumulated
Depreciation(34,199,199)(2,584,667)95,380-(36,688,486)
Total Capital Assets$47,662,474$(2,260,810)$(8,139)$-$45,393,524
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FINANCIAL FY 2015
Balance Balance
January 1, December 31,
2014AdditionsDispositionsReclassify2014
Capital Assets
Non-Depreciable
Land$9,800,189$22,694$(21,547)$21,711$9,823,047
Construction in progress928,804371,219-(465,290)834,733
Total Non-Depreciable10,728,993393,913(21,547)(443,579)10,657,780
Depreciable
Buildings and improvements26,233,641383,553-15,31126,632,505
Airfield and improvements39,661,944490,653-428,26840,580,865
Equipment3,974,25598,670(82,402)-3,990,523
Total Depreciable69,869,840972,876(82,402)443,57971,203,893
Total Non-Depreciable &
Depreciable$80,598,833$1,366,789$(103,949)$-$81,861,673
Accumulated depreciation
Buildings and improvements$(9,333,461)$(992,073)$-$-$(10,325,534)
Airfield and improvements(19,361,356)(1,367,745)--(20,729,101)
Equipment(2,981,257)(228,781)65,474-(3,144,564)
Total Accumulated
Depreciation(31,676,074)(2,588,599)65,474-(34,199,199)
Total Capital Assets$48,922,759$(1,221,810)$(38,475)$-$47,662,474
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FINANCIAL FY 2015
D. Long-Term Liabilities
Following is a summary of changes in long-term liabilities during the current and preceding years:
Current
Balance Balance Maturities
January 1, December 31, December 31,
2015AdditionsReductions20152015
Long-term Liabilities
General obligation bonds$ 23,260,000$3,075,000$955,000$25,380,000$1,035,000
Less unamortized discount(285,445)-(18,892)$(266,553)-
Financing lease payable107,96652,190$55,77655,696
Special assessment debt48,949-18,484$30,46519,197
Security deposits returnable20,62419,7231,195$39,152-
Total Long-Term Liabilities$ 23,152,094$3,094,723$1,007,977$25,238,840$1,109,893
Current Maturities(1,025,674)(1,109,893)
Long Term Liability Net$ 22,126,420$24,128,947
Current
Balance Balance Maturities
January 1, December 31, December 31,
2014AdditionsReductions20142014
Long-term Liabilities
General obligation bonds$ 24,185,000$-$925,000$23,260,000$955,000
Less unamortized discount(304,339)-(18,894)(285,445)-
Financing lease payable156,791-48,825107,96652,190
Special assessment debt66,746-17,79748,94918,484
Security deposits returnable11,70216,0077,08520,624-
Total Long-Term Liabilities$ 24,115,900$16,007$979,813$23,152,094$1,025,674
Current Maturities(991,702)(1,025,674)
Long Term Liability Net$ 23,124,198$22,126,420
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FINANCIAL FY 2015
The following is a detailed listing of the Authority’s long-term debt including general obligation bonds,
financing lease and special assessment debt at December 31, 2015:
Original IssueInterest RatesBonds Outstanding
General Obligation Bonds
General Obligation 2009-A, due 20292,025,0004.31%2,025,000
General Obligation 2009-B, due 20266,080,0003.00% to 5.50%4,365,000
General Obligation 2011-A, due 203011,820,0004.64%11,040,000
General Obligation 2011-B, due 20312,505,0004.28%2,505,000
General Obligation 2015-A, due 20253,075,0002.14%3,075,000
Plus unamortized bond premium47,883
Less unamortized bond discount(266,554)
Total General Obligation Debt22,791,329
Financing Lease, due December 2016425,0006.609%55,696
Special Assessment Debt
Airport Industrial Center, due 2016565,2353.79%17,255
Hangar 600 Sanitary Sewer, due 202127,5994.47%13,241
Total Special Assessment Debt30,496
Total Long Term Debt$22,877,521
Interest Expense in 2015 is as follows:
General Obligation Bonds1,083,995
Special Assessment Debt2,645
Financing Lease5,132
Amortization of Bond Discount17,241
Total Debt Interest Expense$1,109,013
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FINANCIAL FY 2015
Annual debt service requirements to maturity for general obligation bonds to be paid with tax
levies and rental revenues:
Bonds
YearOutstandingInterest DueTotal
20161,035,000$$954,582$1,989,582
20171,065,000928,3731,993,373
20181,090,000898,9381,988,938
20191,215,000866,4252,081,425
20201,255,000827,9902,082,990
2021-20256,570,0003,346,2079,916,207
2026-20308,865,0001,609,72910,474,729
20311,915,00078,9941,993,994
$23,010,000$9,511,238$32,521,238
Annual debt service requirements for Financing Lease payable rental revenues:
YearPrincipal DueInterest DueTotal
201655,6962,77658,472
$55,696$2,776$58,472
Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental
revenue:
YearPrincipalInterest DueTotal
2016$19,198$1,245$20,443
20172,0615042,565
20182,1534122,565
20192,2493152,564
20202,3502152,565
20212,4551102,565
$30,466$2,801$33,267
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FINANCIAL FY 2015
E. Capital Contributions and Net Assets
Since its inception, the Authority has received capital contributions through Federal and State
grants as follows:
Inception to
Date 2015 2014
Federal $ 29,602,198 $ 92,414 $ 423,378
State 2,215,849 - 376,384
Total $ 31,725,633 $ 92,414 $ 799,762
The Authority has designated $90,000 to be used as an insurance increase reserve or to
accelerate future debt service payments. As of December 31, 2015, the reserve had been funded
but not used.
IV.OTHER INFORMATION
A.Defined Benefit Pension Plan
During the current year,the Authority implemented GASBStatement No. 68, Accounting and
Financial Reporting for Pensions. This Statement replaces the requirements of GASBStatement
No. 27, Accounting for Pensions by State and Local Governmental Employers, and GASB
Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions
through pension plans administered as trusts or similar arrangements that meet certain criteria.
This Statement requires governments providing defined benefit pensions to recognizetheir long-
term obligation for pension benefits as a liability for the first time, and to more comprehensively
and comparably measure the annual costs of pension benefits. In addition, the Authority also
applies GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date (GASB 71) to report additional deferred outflows.
The Statement of Net Position and Statement of Activities for the year ended December 31, 2014
has been adjusted for the addition of the net pension liability in accordance with GASBStatement
No, 68. The correction has no effect on the results of the current year's activities; however, the
cumulative effect increases general operating expenses for 2015 by $115,670.
Plan description –The Authority participates in the Kansas Public Employees Retirement
System (KPERS). The plan is a cost-sharing multiple-employer defined benefit pension plan as
provided by Kansas statutes (KSA 74-4901et seq). KPERS provides retirement benefits, life
insurance, disability income benefits and death benefits. Kansas law establishes and amends
benefit provisions. KPERS issues a publicly available financial report that includes financial
statements and required supplementary information. Those reports may be obtained by writing
to KPERS (611 S. Kansas Avenue, Suite 100, Topeka, Kansas 66603-3803) or by calling 1
(888) 275-5737. The report is also available on the KPERS website at www.kpers.org.
Financial statements provided by KPERS are prepared in accordance with accounting principles
generally accepted in the United States of America.
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FINANCIAL FY 2015
Benefits - KPERS benefits are established by statute and may only be changed by the General
Assembly. Member employees with ten or more years of credited service may retire as early as
age 55 with an actuarially reduced monthly benefit. Normal retirement is at age 65, age 62 with
ten years of credited service, or whenever an employee's combined age and years of credited
service equal 85 "points".
Monthly retirement benefits are based on a statutory formula that includes final average salary
and years of service. When ending employment, member employees may withdraw their
contributions from their individual accounts, including interest. Member employees who
withdraw their accumulated contributions lose all rights and privileges of membership. The
accumulated contributions and interest are deposited into and disbursed from the membership
accumulated reserve fund as established by K.S.A. 74-4922.
Member employees choose one of seven payment options for their monthly retirement benefits.
At retirement,a member employee may receive a lump-sum payment of up to 50% of the
actuarial present value of the member employee's lifetime benefit. His or her monthly retirement
benefit is then permanently reduced based on the amount of the lump sum. Benefit increases,
including ad hoc post-retirement benefit increases, must be passed into law by the Kansas
Legislature. Benefit increases are under the authority of the Legislature and the Governor of the
State of Kansas. The retirement benefits are disbursed from the retirement benefit payment
reserve fund as established by K.S.A. 74-4922.
Funding policy – K.S.A. 74-4919, as amended, establishes a three-tier benefit structure. Tier 1
members include active members hired before July 1, 2009. The member-employee contribution
rate for Tier 1 members increased from 4% to 6% on January 1, 2015. Tier 2 members include
active members hired between July 1, 2009 and December 31, 2014. The member-employee
contribution rate for Tier 2 members is 6%. Tier 3 members include those first employed in a
KPERS covered position after January 1, 2015. The member-employee contribution rate for Tier
3 members is 6%. Member-employees' contributions are withheld by their employer and paid to
KPERS according to the provisions of Section 414(h) of the Internal Revenue Code.
The employer rate established by statute is 9.48% for the calendar year 2015 and 8.84% for the
calendar year 2014. The Authority's employer contributions to KPERS for the years ending
December 31, 2015, 2014, and 2013 were $70,005, $68,904and $66,865respectively, equal to
the statutorily required contributions for each year. These amounts are included in general
expense as shown in the statement of activities.
Employer allocations -Although KPERS administers one cost-sharing multiple employer
defined benefit pension plan, separate actuarial valuations are prepared to determine the actuarial
determined contribution rate by group. Following this method, the measurement of the collective
net pension liability, deferred outflows of resources, deferred inflows of resources, and pension
expense are determined separately for each of the following groups of the plans: State/school,
local, police/firemen and judges. To facilitate the separate actuarial valuations, KPERS
maintains separate accounts to identify additions, deductions, and fiduciary net position
applicable to each group. The allocation percentages presented for each group in the schedule of
employer and nonemployer allocations are applied to amounts presented in the schedules of
pension amounts by employer and nonemployer.
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FINANCIAL FY 2015
The individual employer allocation percentages for the pension amounts were based on the ratio
of the employer and nonemployer contributions for the individual employer inrelationto the
total of all employer and nonemployer contributions of the group.
The allocation percentages for the Authority's share of the collective pension amounts as of June
30, 2015 and 2014 were based on the ratio of its contributions to the totalofthe employer and
nonemployer contributions of the group for the fiscal years ended June 30, 2015 and 2014,
respectively. The contributions used exclude contributions made for prior service, excess
benefits and irregular payments. At June 30, 2015, the proportion recognized by the State of
Kansas onbehalf of the Authority was 0.041581%, which was an increase of 0.002099% from
the proportion measured at June 30, 2014.
Actuarial assumptions - The total pension liability was determined by an actuarial valuation as
of December 31, 2014, which was rolled forward to June 30, 2015.The actuarial valuation used
the following actuarial assumptions, applied to all periods included in the measurement:
Mortality rates were based on the RP 2000 Combined Mortality Table for Males or Females, as
appropriate. with adjustments for mortality improvements based on Scale AA.
The actuarial assumptions used in the December 31, 2014 valuation were based on the results of
an actuarial experience study conducted for the three-year period ending December 31, 2012.
The long term expected rate of return on pension plan investments was determined using a
building block method in which best estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense and inflation) are developed for each
major asset class. These ranges are combined to produce the long term expected rate of return by
weighting the expected future real rates of return by the target asset allocation percentage and by
adding expected inflation. Best estimates of arithmetic real rates of return for each major asset
class included in the pension plan's target asset allocations as of June 30, 2015, (see the
discussion of the pension plan's investment policy) are summarized in the table on the following
page.
Discount rate - The discount rate used to measure the total pension liability was 8.00%. The
projection of cash flows usedto determine the discount rate assumed that contributions from
plan members will be made at the current contribution rate and that contributions from the State
of Kansas on behalf of the Authority will be made at contractually required rates, actuarially
determined. Based on those assumptions, the pension plan's fiduciary net position was projected
to be avai lab le to make all projected future benefit payments of current plan members.
Therefore, the long-term expected rate of return on pension plan investments was applied to all
periods of projected benefit payments to determine the total pension liability.
32
FINANCIAL FY 2015
The following presents the Authority's proportionate share of the net position liability calculated
using the discount rate of 8.00%, as well as what the Authority 's proportionate share of the net
pension liability would be if it were calculated using a discount rate that is 1% lower or 1%
higher than the current rate.
1% Decrease (7.00%)DiscountRate (8.00%)1% Increase (9.00%)
$775,043$545,977$351,774
Pension expense - For the year ended December 31, 2015, the Authority recognized pension
expense of $185,676, which includes the changes in the collective net pension liability, projected
earnings on pension plan investments, and the amortization of deferred outflows of resources
and deferred inflows of resources for the current period. Total pension expense for the year
ended December 31, 2014 was $68,904and is made up solely of contributions to the plan for the
year. Pension expense is included in general expenses in the Statement ofActivities.
Deferred outflows of resources and deferred inflows of resources At December 31, 2015, the
Authority reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Deferred Deferred
outflows of inflows of
resourcesresources
Differences between actual and expected experience$-$15,455
Net differences between projected and actual earnings on investments
-21,253
Changes of assumptions
-7,631
Contributions made after measurement date 6,417-
Changes in proportion-69,390
Total$6,417$ 113,729
33
FINANCIAL FY 2015
The $6,417reported as deferred outflows of resources related to pensionsresulting from
Authority contributions made after the measurement date will be recognized as a reduction of
the net pension liability in the year ended December 31, 2016.
Amounts reported as deferred outflows of resources and deferred inflows of resources related
to pensions will be recognized in pension expense as follows:
Years ended December 31,
2016$(26,955.00)
2017$(33,372.00)
2018$(33,372.00)
2019$(7,843.00)
2020$(5,769.00)
B. Deferred Compensation Plan
The Authority offers its employees a deferred compensation plan (“Plan”) created in
accordance with Internal Revenue Code Section 457. The Plan, available to all Authority
employees, permits them to defer a portion of their salary until future years. The deferred
compensation is not available to employees until termination, retirement, death, or
unforeseeable emergency. Plan assets are transferred to a plan agent in a custodial trust and
are not available to the claims of the Authority’s general creditors.
C. Flexible Benefit Plan (I.R.C. Section 125)
The Authority has adopted by resolution a salary-reduction flexible benefit plan (“Plan”)
under Section 125 of the Internal Revenue Code. All Authority employees working more
than 20 hours per week are eligible to participate in the Plan beginning after thirty days of
employment. Each participant may elect to reduce his or her salary to purchase benefits
offered through the Plan. Benefits offered through the Plan include various insurance and
disability benefits.
D. Risk Management
The Authority is exposed to various levels of loss related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters.
There has been no significant reduction in the Authority’s insurance coverage from the
previous year. In addition, there have not been settlements in excess of the Authority’s
coverage in any of the prior three years.
34
FINANCIAL FY 2015
E. Contingent Liabilities
The Authority receives significant financial assistance from numerous federal and state
governmental agencies in the form of grants and state pass-through aid. The disbursement of
funds received under these programs generally requires compliance with terms and
conditions specified in the grant agreements and aresubject to audit. Any disallowed claims
resulting from such audits could become a liability of the Authority. However, in the opinion
of management, any such disallowed claims would not have a material effect on any of the
financial statements of the Authority at December 31, 2015.
F. Other Postemployment Benefits (OPEB)
As a component unit of the City of Salina, the Authority participates in the City’s defined
benefit healthcare plan that is administered by the City. The Employee Benefit Plan (the
Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA
12-5040 requires all local governmental entities in the state that provide a group health care
plan to make participation available to all retirees and dependents until the retiree reaches the
age of 65 years. No separate financial report is issued for the Plan. As a component unit of
the primary government, the Authority is not required to make contributions to the plan.
The OPEB cost, actuarial valuations of the ongoing planand net OPEB obligations for the
Authority as a sub-group of the plan, are calculated and recorded in the City’s CAFR.
G.Environmental Matter
The U.S. Department of Defense transferred property located at the former Schilling Air
Force Base (the Base or Site) to the Authority on or about September 9, 1966. The property
is now known to contain areas of extensive soil and groundwater contamination, which is a
result of the use and disposal of chlorinated solvents during military operations at the Base
from 1942 until Base closure in 1965. The U.S. Department of Defense is responsible for the
investigation and remediation of contamination caused by military activities at current and
former military bases. The U.S. Army Corps of Engineers (Corps) is the lead agency for the
Department at formerly used defense sites. The Corps has investigated the soil and
groundwater contamination at the Site under the regulatory oversight of the U.S.
Environmental Protection Agency (EPA) and the Kansas Department of Health and
Environment (KDHE). The Site is not designated as a National Priority List Superfund site,
but investigation and remediation are required to be in compliance withthe Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA).
Potential liability for contamination under CERCLA extends broadly to parties associated
with the release or presence of hazardous substances, including not only those entities
involved with contaminant use and disposal, but in some cases other current and former
owners and operators of contaminated sites. As a current owner of extensive amounts of
property at the Site, the Authority is potentially liable under CERCLA, although the
Authority believes that it has meritorious defenses to such liability.
The Authority is considered to be a Potentially Responsible Party (PRP) for the Site,
primarily due to its status as a property owner. The Authority, City of Salina, Unified School
District No. 305 and the Kansas Board of Regents (Kansas State University Polytechnic
35
FINANCIAL FY 2015
Campus), (collectively Salina Public Entities) currently own over 90% of the nearly 4,000
acres of the Base property. No third party has asserted any claim for bodily injury or
property damage.
Beginning in August 2007, the Salina Public Entities initiated settlement negotiations with
the U.S. Federal Government. The negotiation objectives at that time included transferring
the responsibility for completing the cleanup from the U.S. to the Salina Public Entities. The
local objective was to reach a settlement agreement with the U.S. that provides the Salina
Public Entities sufficient funds to complete cleanup operations over a 30-year period.
During calendar year 2008, the Salina Public Entities, by and through its environmental
consultant, prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation
included consultation with the EPA and KDHE. The Salina Public Entities’ CTC was
completed in June of 2008 and submitted to the Corps.
Subsequently, on January 23, 2009, the Salina Public Entities delivered a demand letter to the
Corps. The letter demanded that settlement negotiations begin immediately with the U.S.
Department of Justice. On May 14, 2009 the Authority was notified that the Corps referred
the Base demand letter to the U.S. Department of Justice on May 12, 2009.
The Salina Public Entities delivered on or about May 10, 2010, a settlement offer and a draft
of a lawsuit complaint tothe attorney for the U.S. Department of Justice. The Salina Public
Entities planned to file suit against the U.S. if the matter was not settled by the end of May,
2010. The Salina Public Entities did not intend to cut off settlement negotiations by the filing
of suit, and this has been communicated to the U.S. No remedial action plan or record of
decision has been adopted by the EPA or KDHE.
On or about May 27, 2010, the Salina Public Entities filed their Complaint against the United
States of America, the United States Department of Defense and Secretary of Defense,
Robert M. Gates, in his official capacity (collectively, "Defendants"). On orabout September
22, 2010, the Salina Public Entities filed their First Amended Complaint in four counts:
Count I Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim
Pursuant to 42 U.S.C.§ 9659(a)(1), Count III Claim for Recovery of Response Costs Pursuant
to 42 U.S.C.§ 9607(a) and Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§
9613(g)(2).
On or about October 6, 2010, Defendants filed their motion to dismiss and to strike, primarily
with respect to the citizensuit claims. On or about March 25, 2011, Judge Murguia entered
his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I
and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the
Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the
exception of non-litigation attorney fees. He denied the Defendants' motion to strike the
Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims
under Counts III and IV for response costs under CERCLA 9607(a) are not affected by the
Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if
necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings.
36
FINANCIAL FY 2015
On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and
Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim
for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges
a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs
incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of
September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228
as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims
brought against them and will assert, among other defenses, the third party defense under 42
U.S.C.§ 9607(b)(3).
The parties agreed on a mediation to discuss settlement. The mediation sessions occurred in
October 2011, and the mediation discussions continued for over a year. The parties have now
agreed upon a partial settlement. The partial settlement includes payment by the U.S. in
exchange for performance by the Salina Public Entities of a remedial investigation/feasibility
study through entry of a Corrective Action Decision by KDHE (the "Work"). The present
cost estimate of the Work is less than $10,000,000. The agreement is that the U.S. will pay
90% of the cost of the Work with the Salina Public Entities responsible for payment of the
remaining 10%. It is anticipated that the agreed share of the Salina Public Entities will be
paid by the Cityof Salina. Also,the claims and counterclaims in the lawsuit have been
dismissed without prejudice with provisions tolling any and all statutes of limitation. No
party is obligated under the settlement agreement to implement the Corrective Action
Decision upon its entry by KDHE, and the parties will either negotiate an agreement to
implement such Corrective Action Decision or refile their claims in court. The Salina Public
Entities have entered into a Consent Agreement and Final Order ("CAFO") with KDHE,
which is conditioned upon the U.S.'s payment to the City. On May 2, 2013, the U.S. District
Court for the District of Kansas entered its Consent Decree. City of Salina, Kansas, et al. v.
United States of America, et al., Case No. 1 0-CV -2298 CM/DJW. The Court's Consent
Decree approved the settlement among the parties. The current status is that the U.S. wire
transferred $8,426,700 to the account of the City, and the City added the share of the Salina
Public Entities in the amount of $936,300 to the account.
Through May 2016, the Salina Public Entities have completed 95% of the work associated
with the Remedial Investigation (RI) portion of the CAFO scope of work. During the
remainder of 2016 and through calendar year 2017, the Salina Public Entities will complete
the Feasibility Study (FS) portion of the CAFO. The draft Corrective Action Decision
(CAD) document will be submitted to KDHE by the end of 2017.
Although the claims and counterclaims in the lawsuit have been dismissed without prejudice,
the Authorityintends to vigorously pursue its claims that the U.S. should implement the
Corrective Action Decision upon its entry by KDHE and its defenses against any claims
brought against it. Based on presently known information, the Authority has determined that
while a possible liability exists, at this time,no reasonable estimate of the possible liability
can be made. Therefore, no liability related to that matter has been recorded.
37
FINANCIAL FY 2015
H.Rental Income Under Operating Leases
A significant portion of the operating revenue of the Authority is generated through the
leasing of airport and building space to airport fixed base operators and others on a fixed fee
as well as a contingent rental basis. Ownership risks are retained by the Authority, and
accordingly, such leases are treated as operating leases.
The following is a schedule of minimum future rentals on non-cancellable operating leases to
be received in each of the next five years and thereafter:
Years Ended December 31
2016$ 1,019,865
2017884,426
2018812,385
2019755,828
2020603,593
Later Years2,538,058
$ 6,614,155
Total
I. Major Customers
The Authority receivedsignificant operating revenue from Learjet, Inc., Avflight Salina,
Kansas Erosion Products, LLC, Tischlerei-Fine Woodworking, LLC and the Kansas Military
Board. Rent from these five tenants equals 52% of operating revenue forthe year ended
December 31, 2015.
38
FINANCIAL FY 2015
J. Non-Operating Revenueand (Expense)
Net non-operating revenueand expense consisted of the following for the years ended
December 31, 2015 and 2014:
December 31,
20152014
Mill levy$2,028,074$1,993,889
Interest income286437
Gain on sale of assets48,28950,904
Total$2,076,649$2,045,230
Interest expense
General obligation bonds$(1,083,995)$(1,057,332)
Special assessment debt(2,645)(2,645)
Financing lease(5,132)(8,569)
Amortization of bond discount(17,241)(18,894)
Total(1,109,013)(1,087,440)
Net non-operating revenue$967,636$957,790
K.Commitment Under Operating Lease
The Authority has entered into acertain non-cancellable operating lease agreements which
will expire in 2018, for the rental of office equipment. During both 2015 and 2014the
Authority paid $4,559 in rentals. Minimum rentals, on an annual basis hereafter are as
follows:
Years Ended
December 31
20164,559
20174,559
20181,520
Total$10,638
L.Subsequent Events
The Salina Airport Authority’s management has evaluated events and transactions occurring
after December 31, 2015 through May 26, 2017. The aforementioned date represents the date
the financial statements were available to be issued.
39
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
SCHEDULES OF REVENUES, EXPENSES AND CHANGES
IN NET POSITION
As of December 31, 2015 and December 31, 2014
January 1 to December 31
20152014
Operating Revenues
Airfield
Fuel flowage fees$189,532$150,110
Hangar rent472,454518,465
Landing fees7,6683,312
Ramp rent49,85150,904
Total Airfield719,505722,791
Agri land rent53,67356,826
Building rents815,922827,224
Land rents189,200243,051
Tank rent9,5408,962
Total Building and Land Rents1,068,3351,136,063
Other revenue
Commissions20,71019,409
Sale of avgas-8,037
Less cost of avgas-(7,653)
Other income67,95330,706
Total Other Revenue88,66350,499
Total Operating Revenue$1,876,503$1,909,353
(continued)
40
SUPPLEMENTAL FY 2015
SALINA AIRPORT AUTHORITY
SCHEDULES OF REVENUES, EXPENSES AND CHANGES
IN NET POSITION
As of December 31, 2015 and December 31, 2014
(continued)
January 1 to December 31
20152014
Operating Expenses
Administrative
A/E, consultants, brokers$19,904$6,163
Airport promotion9,72219,982
Bad debt expense3,4229,276
Computer network administration12,09611,898
Dues and subscriptions20,78133,021
Employee retirement185,67668,461
FICA and medicare 50,46852,156
Industrial development-15,000
Insurance, property145,433144,241
Insurance, medical176,485162,328
Kansas unemployment tax68411,492
Legal and accounting41,90539,836
Office salaries389,267409,847
Office supplies6,4877,803
Other administrative4,4446,274
Postage2,0302,722
Property appraisal-7,750
Property taxes154,466157,666
Special events-516
Telephone16,56517,318
Training4,8244,053
Travel and meetings8,38610,642
Total Administrative Expenses$1,253,045$1,198,445
(continued)
41
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
SCHEDULES OF REVENUES, EXPENSES AND CHANGES
IN NET POSITION
As of December 31, 2015 and December 31, 2014
(continued)
January 1 to December 31
20152014
Maintenance Expenses
Airfield maintenance$16,812$31,016
Airport security7931,016
Building maintenance34,99857,027
Equipment fuel and repairs63,79184,726
Fire services14,511500
Grounds maintenance2,1173,617
Maintenance salaries308,435326,759
Other maintenance expenses13,71620,954
Snow removal expense1,9367,295
Utilities241,064327,850
Total Maintenance Expenses698,173860,760
Total Operating Expenses1,951,2182,059,205
(Deficit) of Revenues over Expenses before Depeciation(74,715)(149,852)
Depreciation2,584,6672,588,599
Operating Loss Before Non-Operating Revenues and Expenses(2,659,382)(2,738,451)
Non-Operating Revenues and (Expenses)
Mill levy2,028,0741,993,889
Interest income 286437
Interest expense(1,109,013)(1,087,440)
Gain on sale of assets48,28950,904
Total Non-Operating Revenue (Expense)967,636957,790
Loss Before Capital Contributions(1,691,746)(1,780,661)
Capital Contributions217,112799,762
Net Position
(Decrease) in Net Position(1,474,634)(980,899)
Net Position, beginning of period as previously reported24,247,52025,228,419
Cumulative change in accounting principle(537,619)-
Net Position, beginning of year, as restated23,709,90125,228,419
Net Position, end of period$ 22,235,267$ 24,247,520
42
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
CAPITAL EXPENDITURES
January 1 to December 31
2015
AIRPORT IMPROVEMENTS
Runway 17/35 shoulder improvements$12,290
Airfield pavement heave repair
10,007
KS Army National Guard ramp heave repair7,834
Total Airport Improvements$30,131
BUILDINGS
Hangar 959 utility and hangar door improvements28,986
Hangar 509 installation of new water service line4,638
Bldg. 655 fire service main improvements5,814
Bldg. 1021 construction (39' x 52' concrete approach)12,750
Hangar 409 signage (Schilling Aviation Services)4,860
Total Building Improvements$57,048
EQUIPMENT
Lenova Think Pad 14"1,688
Lenova Think Pad 15"1,931
2 Lenova ThinkCentre desktop computers2,476
ICOM truck mount avioncs receiver1,470
VHF Radio - Airport 1 vehicle364
Rail spur improvements5,354
Canon iPf670 plotter1,895
Security camera system2,450
Airport of Embarkation Signage 2,351
DRMO surplus property equipment
124,698
Total Equipment Additions$144,677
CONSTRUCTION IN PROGRESS
MJ Kennedy Air Terminal Bldg. (B120) remodel design and construction13,050
A/E design Txy E & B rehabilitation (AIP 37)47,568
Airport/Industrial Center Economic Impact Study5,875
Public Viewing/Museum Phasing & Cost Strategy5,129
Total Construction in Progress$71,622
LAND
Former Schilling Air Force Base environmental project20,379
Total Land$20,379
TOTAL CAPITAL EXPENDITURES$323,857
43
REQUIRED SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
SCHEDULE OF EMPLOYER'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY
Kansas Public Employees Retirement System
June 30, 2015June 30, 2014
Proportion of the net pension liability 0.006081%0.006484%
Proportionate share of the collective net pension liability$545,977$537,619
Covered-employee payroll from the period July1 - June30 ^$694,613$720,682
Net pension liability asa prcentage of covered-employee payroll 78.60%74.60%
Plan fiduciary net position as a percentage of the total pension liability 64.95%66.60%
*Information reported above is as of the KPERS measurement date of June 30. GASB 68 requires a presentation of
10 years. As of June 30, 2015 only two years of information is available.
^ Covered payroll is measured as of the measurement date ending June 30.
44
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION BONDS
SERIES 2009-A
December 31, 2015
Date of issue:June 1, 2009
Amount of issue:$2,025,000
Interest rate:4.31%
Maturity date:September 1, 2029
Principal paid:$-
Outstanding balance:$2,025,000
Schedule of Bond Interest and Principal Payments
Due in Bond Bond
YearInterestPrincipal
2016$85,648$-
201785,648-
201885,648-
201985,648-
202085,648-
2021-2025428,238-
2026-2029236,6682,025,000
$1,093,146$2,025,000
46
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
TAXABLE GENERAL OBLIGATION BONDS
SERIES 2009-B
December 31, 2015
Date of issue:June 1, 2009
Amount of issue:$6,080,000
Interest rate:4.998%
Maturity date:September 1, 2026
Principal paid:$1,715,000
Outstanding balance:$4,365,000
Schedule of Bond Interest and Principal Payments
Due in Bond Bond
YearInterestPrincipal
2016$213,663$335,000
2017200,263345,000
2018186,463360,000
2019171,163375,000
2020154,288395,000
2021-2025450,8631,785,000
202614,575770,000
$1,391,275$4,365,000
47
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
TAXABLE GENERAL OBLIGATION Bonds
SERIES 2011-A
December 31, 2015
Date of issue:August 17, 2011
Amount of issue:$11,820,000
Interest rate:4.64%
Maturity date:September. 1, 2030
Principal paid:$780,000
Outstanding balance:$11,040,000
Schedule of Bond Interest and Principal Payments
Due in Bond Bond
YearInterestPrincipal
2016$481,363$265,000
2017475,665275,000
2018468,928275,000
2019460,815280,000
2020451,855280,000
2021-20251,900,7104,185,000
2026-2030841,8305,480,000
$5,081,165$11,040,000
48
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION Bonds
SERIES 2011-B
December 31, 2015
Date of issue:August 17, 2011
Amount of issue:$2,505,000
Interest rate:4.280%
Maturity date:September. 1, 2031
Principal paid:$ -
Outstanding balance:$2,505,000
Schedule of Bond Interest and Principal Payments
Due in Bond Bond
YearInterestPrincipal
2016$103,331$ -
2017103,331 -
2018103,331 -
2019103,331 -
2020103,331 -
2021-2025516,656 -
2026-2030516,656590,000
203178,9941,915,000
$1,628,961$2,505,000
49
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
TAXABLE GENERAL OBLIGATION Bonds
SERIES 2015-A
December 31, 2015
Date of issue:August 28, 2015
Amount of issue:$3,075,000
Interest rate:2.139%
Maturity date:September 1, 2025
Principal paid:$ -
Outstanding balance:$3,075,000
Schedule of Bond Interest and Principal Payments
Due in Bond Bond
YearInterestPrincipal
2016$70,577$435,000
201763,466445,000
201854,568455,000
201945,468560,000
202032,868580,000
2021-202549,740600,000
$316,685$3,075,000
50
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
SPECIAL ASSESSMENT DEBT-STREET AND UTILITY IMPROVEMENT
Airport Industrial Center Subdivisions
December 31, 2015
Date of loan:September 11, 2002
Amount of loan:$306,582
Interest rate:3.79%
Maturity date:October 1, 2016
Principal paid:$289,357
Outstanding balance:$17,225
Schedule of Loan Interest and Principal Payments
Due inLoan Loan
YearInterestPrincipal
2016$653$17,225
$653$17,225
51
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
SPECIAL ASSESSMENT DEBT-SANITARY SEWER EXTENSION
HANGAR 600
December 31, 2015
Date of loan:April 23, 2007
Amount of loan:$27,599
Interest rate:4.47%
Maturity date:December 20, 2021
Principal paid:$14,358
Outstanding balance:$13,241
Schedule of Loan Interest and Principal Payments
Due inLoan Loan
YearInterestPrincipal
2016$592$1,973
20175042,061
20184122,153
20193152,249
20202152,350
20211102,455
$2,148$13,241
52
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
FINANCING LEASE PAYABLE
December 31, 2015
Date of loan:September 28, 2006
Amount of loan:$425,000
Interest rate:6.609%
Maturity date:September 1, 2016
Principal paid:$369,304
Outstanding balance:$55,696
Schedule of Loan Interest and Principal Payments
Due inLoan Loan
YearInterestPrincipal
2016$2,776$55,696
$2,776$55,696
53
SUPPLEMENTAL INFORMATION FY 2015
SALINA AIRPORT AUTHORITY
INSURANCE IN FORCE
December 31, 2015
Amount of
Insurance Policy Type of CoverageCoverage
Liberty Mutual InsuranceWorker's compensation
Pol. #WC7-Z91-547496-015and employer's liability$500,000
Old Republic Insurance CompanyBodily Injury & liability$2,000,000
Pol. #PR00262101Hangar keepers$1,000,000
Affiliated FM
Pol. #EP137
Deluxe property-building, contents, stock,
personal property of others, EDP equipment,
business income (rents)
$ 68,353,723
Extra expense$1,000,000
Data processing media$500,000
Philadelphia Insurance Company
Pol. #PHPK1266461Vehicles & equipment
Bodily injury/property damage$1,000,000
Medical payments$5,000
Uninsured motorists$1,000,000
Underinsured motorist$1,000,000
Atlantic Specialty Insurance Company
Pol. #790-01-42-26-0001Inland marine - equipment$1,419,688
Hartford Fire Insurance CompanyCrime policy
Employee theft, forgery, alteration, computer
Pol. #37BDDGW6926
fraud, faithful performance
$250,000
Allied World Surplus Lines Ins. Co.Public officials and employment practices liability
Pol. #0202-4091Each claim$2,000,000
Aggregate limit$2,000,000
Great American Alliance Ins. Co.Underground storage tank liability
Pol. # KST7882933-21Each incident$1,000,000
Aggregate limit$1,000,000
Defense expense limit each incident$1,000,000
54