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Audit - 1986 TO: Ru fu s L. Nye, City Manager FROM: Don Harrison, Director of Finance DATE: Ju ly 31, 1986 SUBJECT: Kennedy & Cae Audit Comments As you requested, I have reviewed Kennedy & Coe's letter dated Ju ly 24, 1986 and fa 11 myi ng is my response. Kennedy & Coe is concerned in the first three questions about adequate internal financial controls and in the other questions they raise concerns that, although not mater'ial1y related to proper reco¡'d keeping, are desirable ðnd should be investigated. I will comment on these items in order. 1. Maintenance of control over cash disbursements - It is bur practice for the City Treasurer, Mel Abbott, to have primary responsibility -~or the key to the check si<]ning machine. However, when the City Treasurer is not available, I have provided the key. I am in agreement with Kennedy & Cae and I no longer have control or knowledege of the keys. Another employee, Jackie Shiever, Deputy City Clerk, will be the backup for the City Treasurer. 2. Review of data submitted to the Census of the Bureau - The details about the report to the Census are found on pages 35 and 36 of the audit report. After reading the instructions, it was my understanding that interest from the reserve accounts in the water and sewerage utility were not to be included in the report. After visiting with Kennedy & Coe, I believe their interpretation is accurate and the information will be included in the future. The $225,000 related to payment for the old post office. I am not in agreement with Kennedy & Coe that this item should be deducted to 1983 because the expense was made in 1984 and not in 1983, although it had been encumbered in that year after the audit was prepared. Also, I understood the instructions to relate to current expenses and not to require the full proceeds of the bond issue. such as the $425,062 spent for fire equipment, to be included in the report. Although I am not in full agreement with Kennedy & Coe, I will include these in the future reports. The cemetery and park data were entered in error on the report. I will develop, as suggested by Kennedy & Coe, a cross reference system to handle this report. The report is complicated because certain items are included under certain conditions while not included under others. My checklist should eliminate future errors. It is important to remember that none of this data has any material effect upon the City. Of course, to some minor degree it could distort the Bureau's statistical reports and, of course, should be as accurate as possible. 3. Cash handling - It is the practice of the Finance Department to segregate duties as much as possible. However, during 1985 we had several changes in personnel in the department and that segregation was not always possible. I am in full agreement with Kennedy & Coe and effective August 1, 1986, duties for totaling cash receipts and verifying of cash will be segregated between two separate employees. Kennedy & Coe's other comments are more in the form of suggestions or areas that should be investigated and do not relate to the City's internal controls. I have discussed these matters with the various department heads involved and will discuss the items in turn. 11. Sanitation terminations - Enclosed is a letter from Dean Boyer concerning this topic. We have had no problems such as those suggested by Kennedy & Coe. The City has always tried to maintain excellent relationships with our sanitation customers and we give the customer an extra amount of service which Kennedy & Cae is suggesting not be followed. I am not in agreement with their suggestion that our system be changed. The system presently works well and in my view provides adequate &nd reasonable safeguGrds. 5. EMS billing - I have discussed these with Fire Chief Robertson and he has instructed the City's collection agency to remit all checks and reports to the City Clerk's Office. We will in turn receipt them and forward the information to the Fire Department for posting to their various subsidiary accounts. Also, all EMS case reports will be cross referenced to a bill. At the present time, only those cases where a bill is rendered are cross referenced. Certainly, cross referencing all bills will provide an extra degree of protection, although I believe our present system is adequate. 6. Water and sewerage account aging - Kennedy & Coe is concerned because we do not "age" terminated util ity accounts. I am not in full agreement that such aging is necessary, although it may be desirable. Aging of accounts has far greater value in private venture firms than in public utiTities. This is because the accounts receivable are a factor in determining profit and loss, taxes and valuation. Those factors are not nearly as important in a public utility such as the water and sewerage utility. We plan to modify the util ity bi 11 i ng programs to permit agi ng of termi nated accounts. As you know, we do age active accounts. 7. Swimming pool pay policy - The Fair Labor Standards Act contains a specific exemption for recreational facilities, such as swimming pools, which receive the majority of their revenues within a brief period of time. The present practice does not violate the Fair Labor Standards Act. The City follows the practice of retaining some of the employee's salary in order to have employees finish the season. In the past, some of the employees would quit before the season was over, thus leaving the City short of personnel. The present practice works well and is legal. 8. Control the Bicentennial Center account on an imprest basis - The Bicentennial Center event account is used as a clearing account for events at the Bicentennial Center. It receives payments and makes disbursements for events held at the Center. The balance is then transferred to the Bicentennial Center Fund. Kennedy & Coe were concerned about an event sponsored by Kansas Wesleyan. Attached are expense and receipt for this event. You will note that $280 was charged for Center employees who worked the event. This amount was later transferred to the Bicentennial Center Fund. However, Kennedy & Coe suggests that it be transferred not at the end of the year, but when the event occurs. It has been our practice to clear this account once at the end of the year. These funds are kept at the First National Bank and Trust Company in a corporate cash management account. This has generated ~2,O13 interest the first six months in 1986 and $2,794 during 1985. If these funds are transferred monthly to the Bicentennial Center Fund, the interest earnings will show as a Bicentennial Center Fund revenue item rather than revenue generated by the Bicentennial Center. Bill Harris is on vacation and we should discuss this upon his return. However, from a control standpoint, in my opinion, the present system is adequate. MEMBERS OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS KENNEDY AND CaE RALPH E REITZ. CPA. IRETIRED> CERTIFIED PUBLIC AC.COU TANTS R ECEIVED JOHN woos. CPA. <RETIREDI UNITED BUILDING POBOX 1 100 E. T SHE CP A <RETIRED> ROBERT D WILBUR. CPA MANAGING PARTNER PO BOX 1100. SALINA. KS 67402-1100 OFFICES KANSAS: ANTHONY COLBY CONCORDIA GOODLAND L M MER Z. CP A. <RETIREDI SALINA. KANSAS 67402- 100 SCOTT CITY SMITH CENTER WICHITA 913 - B25-1561 JUl 25 198t) ROBERT WILBUR. CP A R. MICHA L BEATTY. CP A. NEBRASKA: CITY MANAGER'S OFFIŒ::T: ~'~~::ANR:EpA PARTNER .QOI>I..&. DERICH. CP A. PARTNER PAUL A. MOTT. CPA.. PARTNER ALLE" WEBBER. CPA.. PARTNER GERALD L. HUNTER- C.P A PARTNER KURTIS G SIEMERS. CPA PARTNER DALE A HEUSZEl. CPA. PARTNER MCCOOK GREAT BEND OKLAHOMA: COLORADO: MARYSVILLE PRATT SALINA wJ~t ? \\'~O ~H~ ALVA July 24, 198 LAMAR WESTMINSTER Mr. Rufus L. Nye, City Manager City of Salina P. O. Box 746 Salina, Kansas 67402-0746 Dear Mr. Nye: As part of our examination of the financ ial s ta te rnents of the Ci ty of Salina, Kansas for the year ended December 31, 1985, we made a limited study and evaluation of the City's system of internal control for the purpose of determining the nature, timing and extent of the auditing procedures we considered necessary for expressing an opinion on the City's financial statements. This study was more limited than would be necessary to express an opinion on the City's system of internal control and, therefore, we express no such opinion. However, our study and evaluation disclosed the following conditions that we believe result in more than a relatively low risk that errors or irregularities in amounts that would be material in relation to the financial statements of the City of Salina, Kansas may occur and not be detected within a timely period. Maintain Control Over Cash Disbursements We noted in our letter dated November 19, 1985, that the City Clerk, who audits and approves all expenditures of the City for payment, also maintains control over the check signing machine used on all checks to disburse funds. Since this practice occurred during a substantial portion of 1985, we are obligated to mention it again. It is preferable from an internal control standpoint to segregate the approval of expenditures from the disbursement of funds. Control of the check signing machine should be by an employee who neither approves expenditures nor records transactions in the accounting records nor reconciles the bank accounts. It is our understanding that the Ci ty Treasurer has control of one key which allows operation of the check signing machine, but that a second key is not adequately controlled. We recommend the City Treasurer maintain control over all keys allowing operation of the machine. Review Needed of Data Submitted to Bureau of Census We noted several differences in the data reported in Bureau of Census Form F-21A. Such data consists of selected financial information from the City's financial statements, and there is no ready means of self-checking this Mr. Rufus L. Nye, City Manager City of Salina July 24, 1986 Page 2 data. Ideally, one employee should prepare this report and it should be checked by a second knowledgeable person prior to submission of the report to the Bureau of Census. A more viable alternative might be to list all data not required to be included in the report and use this data, along with the reported data, to prove the accuracy of reported data. For example, reported revenue data plus unreported revenue data should agree with total revenue of the City for the reporting period. We recommend that the City Clerk utilize one or a combination of these methods in preparation of future reports. Improve Control over Cash Handling One employee in the Ci ty Clerk's office to tals the cash receipt documents and prepares the deposits to the bank. Internal control would be improved if these two functions were split between two employees. The employees would independently determine total cash for deposit and total cash receipts, which totals would be compared and reconciled. Thus one person is not in a position to change the cash receipts documents or total cash without detection. ~ ~ Other comments and observations follow that are not considered by us to be as critical to the City's system of internal control. Improve Control Over Sanitation Terminations Customers terminating sanitation service presently notify the Water and Sewerage Business Office of their request. The Water and Sewerage Business Office processes this request on the data processing system which generates a report of service terminations and terminates the billing of the customer for sanitation service. The Sanitation Department must update its records and pick up the customer's cart to actually terminate service. Under this system, if sanitation records were not properly updated, a customer could continue to receive service without being charged for the service. We recommend the Water and Sewerage Business Office notify the Sanitation Department of customers terminating the service with a work order prior to updating any billing records. The Sanitation Department employees would use this work order to update their route records and to determine the customer carts to pick up. The completion of these tasks would be indicated on the work order which would be routed back to the Water and Sewerage Business Office, and customer charges would be terminated at that timE!. This system should provide greater assurance that service is terminated before the customer is removed from the billing. Mr. Rufus L. Nye, City Manager Ci ty of Salina July 24, 1986 Page 3 Improve Control Over EMS Billing After the EMS billing is prepared, we recommend a copy be forwarded to the EMS captain. This copy should be matched with the medical records main tained by the EMS captain prior to filing. This should provide assurance that a billing was prepared for all ambulance runs. We understand that certain checks in payment of EMS billings are received by the billing clerk (principally payments from collection agency). Arrangements should be made so that all checks are sent directly to the City Clerk's office for deposit. We also understand that the collection agency checks are posted to the EMS records by the billing clerk. We recommend that all payments of accounts be posted by personnel in the City Clerk's office to provide better segregation of the billing function from the cash collection and posting functions. Water and Sewerage Department Accounts Receivable Aging The accounts receivable aging report incorrectly freezes inactive accounts in the aging category that they appeared in at time of service termination. These accounts should continue to flow through the various aging categories in order to provide meaningful information. This appE~ars to be an operations or a computer programming problem that needs to be corrected. Review Swimming Pool Pay Policy We noted that part-time employees at the swimming pool ~'ere paid at a reduced rate, which was below minimum wage, during 1985. We understand these employees are paid on an interim basis at a lower rate than their agreed-upon pay rate, and the difference in the two rates i~ paid at the end of the term of employment. However, if the employee does not work through the agreed term of employment he/she forfeits the difference in the two pay rates, resulting in the opportunity for the employee to be paid at a rate below minimum wage. We recommend that this arrangement, i.e. where there is the possibility that employees are paid less than minimum wage, be reviewed for legali ty. Control Bicentennial Center Events Account on an Imprest Basis The Bicentennial Center Events bank account reflected approximately $85,000 of expenditures during 1985 that were not charged in the records to any specific event. A substantial amount of these expenditures are to obtain cash for concessions stands at major events (which change funds are redeposited after the event) and expenditures which are subsequently reported to the City Clerk's office and reimbursed. . Mr. Rufus L. Nye, City Manager City of Salina July 24, 1986 Page 4 However, we noted one deposit of a payment from an event billing which does not appear to have been remitted to the City Clerk's office. We do not believe this transaction was handled in accordance with the purpose for which the account was established, which was as a clearing account. While the dollar amount of the transaction we noted was not material to total Bicentennial Center expenditures, we believe additional controls should be developed to ensure it does not recur. We recommend that the account be handled strictly on an imprest basis and that monthly reports be prepared to prove the imprest balance of the account. Management should determine the balance of the account which should be maintained, for example $10,000. At each month end a report of the balances on hand related to special events should be summarized (in the form presently used) and the unexpended imprest balance should also be reported. The difference between the $10,000 imprest balance and the unexpended balance represents expenditures unrelated to specific events to be reimbursed from the City Clerk's office. A reimbursement request, along with appropriate documentation supporting expenditures to be reimbursed, should accompany the report and must agree with the difference. The foregoing conditions were considered in our examination of the 1985 financial statements and this report does not affect our report on these statements dated June 23, 1986. Also, this report is solely for use of the City of Salina, Kansas and its Commissioners and Management and it is not to be used or relied upon by third parties. Respectfully submitted, ;t' , ¡: /1 . ',' " ", /, / ti."YV" \.. L....¿>---'<...........- ~ ..,...."n-., ~ - (/ Certified Public Accountants .. - . -. - ~ 1 T Y D F § ALl I"! A -:::;;fF~~~£;---- -.- ~~ ~ -,..c-=--c--'. ~~ ~- - ~_:;;---: --:-;:--~-~ --=-- ,:-,-:" , -- .. '- ---_.- .~.-." WA TE R AN D SEWERAG E D EP ARTMENT :;.:; .' :: ;:. .~,.~. 300 NSST~SH STREST-P.O, SOX: 307 S"_':A. :<ANSAS 67402-1307 ~PE" CODE 913-827-9525 <J.J ._..J:::.;~G:::;,,:J.'::, July 30, 1986 TO: Dean Boyer, Director of Utilities From: Hank Corcoran, Office Supervisor SUBJECT: Auditor's recommendation on Sanitation Control It is my opinion we do not make the recommended change on the Sanitation Terminations. Currently if a person terminates their service because of moving their billing is stopped effective the day they request but the Sani- tation Department gives them one (1) extra week of service at no charge to pick up any extra trash after they move out. If a person terminates thei r servi ce because they no longer desi re the Ci ty .of Sa 1 i na I s ser- vice and service is stopped immediately and their cart is picked up. If a person is terminated because of failure to pay their bill their service is stopped immediately, their cart is picked up and service is not reinstated until their bill is paid in full. If we were to make the recommended change there would be several extensive program revisions and since the CUBS programs now are packed with little room for expansion it would probably mean removing Sanitation from the current programs and writing programs to accommodate the Sanitation orders and then write another program to merge both the water and sanitation for billing purposes. . Also if we were to wait for Sanitation to return the Terminated for Move Out Orders to the Water Office for completion it could delay in the Final Billing process as it is my understanding the Sanitation Department does hold these orders for several days to see if someone new moves in. If billing depends upon completion of orders this could hamper the person who desires to pay his account in full before leaving town and also could be a detriment in collecting Final Bills from those people skipping around the country. . -2- Auditor1s recommendation on Sanitation Control (cont.) In the case of a person terminating the City of Salina's sanitation service and chosing to use a private service it could result in that per- son being billed for extra days of City service depending on when their monthly billing date is and when they desire the service stopped. As I read Kennedy and Coe's recommendation they are only asking for the change to be made on Termination Orders and we deal with three (3) types of orders for Sanitation: Initiate, Terminate, and a Service not Desired. If we were to change the process on only one (1) of these types it could result in total confusion for not only the Water Department but also for the Sanitation Department. \' ) \ Y ,2~~ \ Statement itj:: 00368 Salina Bicentennial Center P,O. Box 1727 , Salina, Kansas 67402-1727 (913) 823-2295 Date--..November 3. 1985 ¡; To Kan~as Wesleyan Universi~y 100 East Claflin S.<!.iina, KS 67401 Please detach and return upper portion with your remittance. $ 975.40 F,'" ".' - u -- ~_.- ~,~ - ~ ',- ~- ~ ,-.- ,- ,. ~ ~~._._~... ,- '~-'- ..."_..~.,.~~.~~~_.~~.~.._..:;-~.-: :; NOV 1 3 PAID o~+ eL évfP-t k UJ Salina Bicentennial Center Your Check Is Your Receipt ,.-;-"_:..!.......::.-;~¡~,-",---,~-,-,,-~...;..;...,,........~~~';'~-" ,'. .'- 280 00 v' 202 80 . .....coo Polnllno - ....- ..n... '\ '.' ,'j~ . '" z ~ w 0 '" DEPOSIT TICKET 83-62 ïõff '" "' ~ 0 0 THE BICENTENNIAL CENTER P. O. BOX 1727 913-823-2295 EVENT ACCOUNT KENWOOD PARK SALINA, KS 67402-1727 ~ 0( 0 :."" ..... .-IlUSIMII. n ---- QJ- FIRST NATIONAL BANK ;: ~ ~ P.INA~. ~..Wg' ~AND TRUST COMPANY 0 0 r- .'. 101 NOKTH SANTA Æ ~ ~ ~ -c f¡; - , NA KANSAS 67401 , , , ~ ~ . is " ~h~.,),.;. ofhe,..,... ",e ,oce;ved I", depos' .ub;ect 10IheP'0.VtSIOfIS ~:: .t=~ LI,the.unilo'm ComTe'dol Cod. °' any oppl;cable col~ oo,e«nent, >- ~ 0( S~~ D~E \"'CH ITEM IS PROPERlY, ENDO. RSED.. - ~ SII gÕ::2 \ :.;:' ~ § ~ ~ N ~ ~ ~ ~ ~ . D ~ = ~ ~ ~ : q, 4tJ NO~.~ ~ 985 , r,' ":, ~ yrV~ - W17Wf~HSfrn j'1 ' 975 - '@D~WW¡S I: ~O ~ ~OO b 2 ~I: 7 '-t '-t;lt.~~:1 '-t~. ~I1I' o. 1,100000 ~ 75 '-t01,1 O"." ,om oo'..u. .0"'-0 ," " ,~ -- ," ,~'C-"'-'-"< CITY OF SALINA Salina, Kansas FINANCIAL STATEMENTS AND AUDITORS' REPORTS December 31, 1986 KENNEDY AND COE Certified Public Accountants Salina, Kansas Exhibit A Exhibit B Schedule 1 Schedule 2 Schedule 3 Schedule 4 Schedule 5 CITY OF SALINA Salina, Kansas CONTENTS AUDITORS'REPORTS REPORT ON FINANCIAL STATEMENTS REPORT ON INTERNAL ACCOUNTING CONTROLS BASED SOLELY ON A STUDY AND EVALUATION MADE AS A PART OF AN EXAMINATION OF THE BASIC FINANCIAL STATEMENTS REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS THAT ~~Y HAVE A MATERIAL EFFECT ON THE FINANCIAL STATEMENTS REPORT ON SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE REPORT ON INTERNAL ACCOUNTING AND ADMINISTRATIVE CONTROLS USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS APPLICABLE TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS SCHEDULE OF FINDINGS FINANCIAL STATEMENTS SUMMARY STATEMENT OF RECEIPTS, EXPENDITURES, AND BALANCES BY FUNDS AND COMPARISON OF CASH BALANCES WITH ENCUM- BRANCES STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET NOTES TO FINANCIAL STATEMENTS Supplemental Information Schedule of Indebtedness Composition of Ending Cash Balances Comparison of Gross Cash Balances with Depository Security Comparison of Special Assessments Projects Expenditures to Authorizations Schedule of Federal Financial Assistance Page 1 2-3 4 5 6-8 9 10-12 13-14 15-31 32-36 37 38 39 40 41 Contents Exhibit A Exhibit B Exhibit C Exhibit D CITY OF SALINA Salina, Kansas CONTENTS (CONTD.) SEPARATE FINANCIAL STATEMENTS - WATER AND SEWERAGE DEPARTMENT AUDITORS'REPORT BALANCE SHEETS STATEMENTS OF INCOME STATEMENTS OF CONTRIBUTED CAPITAL AND RETAINED EARNINGS STATEMENTS OF CHANGES IN FINANCIAL POSITION NOTES TO FINANCIAL STATEMENTS Page 42 43 44 45 46 47-49 Contents KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402-1100 913-825-1561 AUDITORS' REPORT ON FINANCIAL STATEMENTS To the Mayor and The Board of City Commissioners: We have examined the financial statements of the year ended December 31, 1986, included herein on included all funds and account groups except (1) Saline County-City Building Authority, Salina-Saline County Board of Health, and Salina Public Library, which we examine and report on separately. (2) Firemen's Relief Association, Salina Recreation Commission, Arts Commission, Salina Housing Authority, and the Salina Authority, which are examined by other auditors who issue separate reports. Our examination was made in accordance with generally accepted auditing standards and the Minimum Standard Audit Program approved by the State Municipal Accounting Board and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. City of Salina, Kansas, for the pages 13 to 36. Our examination Salina Airport their As discussed in Note 1, the City maintains its accounting records and prepares its financial statements on the cash basis, modified by recording encumbrances. This basis of accounting and presentation differs in some respects from generally accepted accounting principles. Accordingly, the accompanying financial statements are not intended to present financial position and results of operations in conformity with generally accepted accounting principles. In our opinion, the accompanying financial statements present fairly the cash and unencumbered cash balances of the City of Salina, Kansas, at December 31, 1986, and its receipts and expenditures for the year then ended in accordance 'Nith the method of accounting described in the preceding paragraph, which method has been applied in a manner consistent with that of the preceding year. Our examination was made for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental information presented on pages 37 to 41 is presented for purposes of additional analysis and is not a required part of the financial statements. This information has been subjected to the auditing procedures applied in the examination of the financial statements mentioned above and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. Salina, Kansas June 23, 1987 Respectfully submitted, {"~ ~ L ~.~ C.P.A. Certified Public Accountant in charge of and actively engaged on this audit. -1- MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402-1100 913-825-1561 AUDITORS' REPORT ON INTERNAL ACCOUNTING CONTROLS BASED SOLELY ON A STUDY AND EVALUATION MADE AS PART OF AN EXAMINATION OF THE BASIC FINANCIAL STATEMENTS To the Mayor and The Board of City Commissioners: We have examined the financial statements of the City of Salina, Kansas, for the year ended December 31, 1986, and have inc 1uded our report thereon on page 1. As part of our examination, we made a study and evaluation of the system of internal accounting control of the City of Salina, Kansas, to the extent we considered necessary to evaluate the system as required by generally accepted auditing stand- ards, the Minimum Standard Audit Program approved by the State Municipal Accounting Board, and the standards for financial and compliance audits contained in the U.S. General Accounting Office Standards for Audit of Governmental Organizations, Programs, Activities, and Functions. For the purpose of this report, we have classified the significant internal accounting controls in the following categories: 1. 2. 3. 4. Receipts Purchases/disbursements Cash and investment balances Financial reporting Our study included all of the control categories listed above. The purpose of our study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for expressing an opinion on the City's financial statements. Our study and evaluation was more limited than would be necessary to express an opinion on the system of internal accounting control taken as a whole or on any of the categories of controls identified above. The management of the City of Salina, Kansas, is responsible for establishing and maintaining a system of internal accounting control. In fulfilling that responsi- bility, estimates and judgements by management are required to assess the expected benefits and related costs of control procedures. The objectives of a system are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with the method of accounting described in Note 1 to the financial statements. Because of inherent limitations in any system of internal accounting control, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaulation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of colnpliance with the procedures may deteriorate. MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS -2- Our study and evaluation made for the limited purpose described in the first para- graph would not necessarily disclose all material weaknesses in the system. Accord- ingly, we do not express an opinion on the system of internal accounting control of the City of Salina, Kansas, taken as a whole or on any of the categories of controls identified in the first paragraph. However, our study and evaluation disclosed the following condition that we believe results in more than a relatively low risk that errors or irregularities in amounts that would be material in relation to the finan- cial statements of the City of Salina, Kansas, may occur and not be detected within a timely period. One employee of the City Clerk's office totaled cash receipt documents and prepared the deposits to the bank for the period January 1, 1986 through approximately July 31, 1986. This condition was considered in determining the nature, timing, and extent of the audit tests to be applied in our examination of the 1986 financial statements, and this report does not affect our report on the financial statements on page 1. This report is intended solely for the use of management of the City of Salina, Kansas, and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which, upon acceptance by the City of Salina, Kansas, is a matter of public record. Respectfully submitted, Salina, Kansas June 23, 1987 )¡~ ~~~ -3- KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402.1100 913.825-1561 AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS THAT MAY HAVE A MATERIAL EFFECT ON THE FINANCIAL STATEMENTS To the Mayor and The Board of City Commissioners: We have examined the financial statements of the City of Salina, Kansas, for the year ended December 31, 1986, and have included our report thereon on page 1. Our examination was made in accordance with generally accepted auditing standards, the Minimum Standard Audit Program approved by the State Municipal Accounting Board, and the standards for financial and compliance audits contained in the Standards for Audit of Governmental Organizations, Programs, Activities, and Functions, issued by the U.S. General Accounting Office and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The management of the City of Salina, Kansas, is responsible for the City's com- pliance with laws and regulations. In connection with our examination referred to above, we selected and tested transactions and records to determine the City's compliance with laws and regulations noncompliance with which could have a material effect on the financial statements of the City. The results of our tests indicate that for the transactions tested the City of Salina, Kansas, complied with those laws and regulations referred to above, except as described in Note 8 to the financial statements. Those instances of noncompliance were considered by us in evaluating whether the financial state- ments are presented fairly in conformity with the method of accounting described in Note 1 to the financial statements. With respect to the transactions not tested, nothing came to our attention to indicate that the City of Salina, Kansas, had not complied with laws and regulations other than those laws and regulations for which we noted violations in our testing referred to above. Respectfully submitted, Salina, Kansas June 23, 1987 ;f~ ~ & MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS -4- KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402.1100 913-825-1561 AUDITORS' REPORT ON SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE To the Mayor and The Board of City Commissioners: We have examined the financial statements of the City of Salina, Kansas, for the year ended December 31, 1986, and have inc luded our report thereon on page l. Our examination of such financial statements was made in accordance with generally accepted auditing standards, the Minimum Standard Audit Program approved by the State Municipal Accounting Board, and the standards for financial and compliance audits contained in the Standards for Audit of Governmental Organizations, Programs, Activities, and Functions, issued by the U.S. General Accounting Office and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. Our examination was made for the purpose of forming an opinion on the financial statements taken as a whole. The included Schedule of Federal Financial Assistance, Schedule 5, is presented for purposes of additional analysis and is not a required part of the financial statements of the City of Salina, Kansas. The information in that schedule has been subjected to the auditing procedures applied in the examin- ation of the City's financial statements and, in our opinion, is fairly stated in accordance with the City's method of accounting described in Note 1 to the financial statements, in all material respects in relation to the financial statements taken as a whole. Respectfully submitted, Salina, Kansas June 23, 1987 I(~~ & MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS -5- KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402-1100 913-825-1561 AUDITORS' REPORT ON INTERNM. ACCOUNTING AND ADMINISTRATIVE CONTROLS USED IN ADMINISTERING FEDERAL FINANCIAL ASSISTANCE PROGRAMS To the Mayor and The Board of City Commissioners: We have examined the financial statements of the City of Salina, Kansas, for the year ended December 31, 1986, and have included our report thereon on page l. As part of our examination, we made a study and evaluation of the internal con- trol systems, including applicable internal administrative controls, used in admin- istering federal financial assistance programs to the extent we considered necessary to evaluate the systems as required by generally accepted auditing standards, the standards for financial and compliance audits contained in the Standards for Audit of Governmental Organizations, Programs, Activities, and Functions, issued by the U.S. General Accounting Office, the Single Audit Act of 1984, and the provisions of OMB Circular A-128, Audits of State and Local Governments. For the purpose of this report, we have classified the significant internal accounting and administrative controls used in administering federal financial assistance programs in the following categories: Accounting Controls 1. Receipts 2. Purchases/disbursements 3. Cash and investment balances 4. Financial reporting Administrative Controls 1. General requirements Political activity civil rights Cash management Relocation assistance and Federal financial reports real property acquisition 2. Specific requirements Types of services Matching level of effort Reporting Special requirements -6- MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS The management of the City of Salina, Kansas, is responsible for establishing and maintaining internal control systems used in administering federal financial assis- tance programs. In fulfilling that responsibility, estimates and judgements by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control systems used in administering federal financial assistance programs are to provide management with reasonable, but not absolute, assurance that, with respect to federal financial assistance programs, resource use is consistent with laws, regulations, and policies; resources are safeguarded against waste, loss, and misuse; and reliable data are obtained, main- tained, and fairly disclosed in reports. Because of inherent limitations in any system of internal accounting and admini- strative controls used in administering federal financial assistance programs, errors or irregularities may nevertheless occur and not be detected. Also, pro- jection of any evaluation of the systems to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. Our study included all of the applicable control categories listed above. During the year ended December 31, 1986, the City of Salina, Kansas, expended substantially all of its total federal financial assistance under major federal financial assis- tance programs. With respect to internal control systems used in administering major federal financial assistance programs, our study and evaluation included considering the types of errors and irregularities that could occur, determining the internal control procedures that should prevent or detect such errors and irregularities, determining whether the necessary procedures are prescribed and are being followed satisfactorily, and evaluating any weaknesses. With respect to the internal control systems used solely in administering the non- major federal financial assistance programs of the City of Salina, Kansas, our study and evaluation was limited to a preliminary review of the systems to obtain an understanding of the control environment and the flow of transactions through the accounting system. Our study and evaluation of the internal control systems used solely in administering the nonmajor federal financial assistance programs of the City of Salina, Kansas, did not extend beyond this preliminary review phase. Our study and evaluation was more limited than would be necessary to express an opinion on the internal control systems used in administering the federal financial assistance programs of the City of Salina, Kansas. Accordingly, we do not express an opinion on the internal control systems used in administering the federal finan- cial assistance programs of the City of Salina, Kansas. Further, we do not express an opinion on the internal control systems used in administering the major federal financial assistance programs of the City of Salina, Kansas. Also, our examination, made in accordance with the standards mentioned above, would not necessarily disclose material weaknesses in the internal control systems used solely in administering nonmajor federal financial assistance programs. -7- However, our study and evaluation and our examination disclosed the following con- ditions that we believe result in more than a relatively low risk that errors or irregularities in amounts that would be material to a federal financial assistance program may occur and not be detected within a timely period. No independent review of data submitted in Bureau of Census reports is made. One employee in the City Clerk's office totaled cash receipt documents and prepared the deposits to the bank for the period from January 1, 1986 through approximately July 31, 1986. These conditions were considered in determining the nature, timing, and extent of the audit tests to be applied in (1) our examination of the 1986 financial statements and (2) our examination and review of the City's compliance with laws and regulations noncompliance with which we believe could have a material effect on the a110wability of program expenditures for each major federal financial assistance program and nonmajor federal financial assistance programs. This report does not affect our accompanying report included on page Ion the finan- cial statements and our report included on page 4 on the City's compliance with laws and regulations that may have a material effect on the financial statements. This report is intended solely for the use of management of the City of Salina, Kansas, the cognizant federal agency, and other applicable federal audit agencies and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report, which, upon acceptance by the City of Salina, Kansas, is a matter of public record. Respectfully submitted, Salina, Kansas June 23, 1987 J;~ ~ {J~ -8- KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA. KANSAS 67402.1100 913-825.1561 AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS RELATED TO FEDERAL FINANCIAL ASSISTANCE PROGRAMS To the Mayor and The Board of City Commissioners: We have examined the financial statements of the City of Salina, Kansas, for the year ended December 31, 1986, and have included our report thereon on page 1. Our examination was made in accordance with generally accepted auditing standards; the Minimum Standard Audit Program approved by the State Municipal Accounting Board; the standards for financial and compliance audits contained in the Stand- ards for Audit of Governmental Organizations, Programs, Activities, and Functions, issued by the U.S. General Accounting Office; the Single Audit Act of 1984; and the provisions of OMB Circular A-128, Audits of State and Local Governments and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. The management of the City of Salina, Kansas, is responsible for the City's com- pliance with laws and regulations. In connection with the examination referred to above, we selected and tested transactions and records from each major federal financial assistance program. The purpose of our testing of transactions and records from those federal financial assistance programs was to obt8:in reasonable assurance that the City of Salina, Kansas, had, in all material respects, admini- stered major programs in compliance with laws and regulations, including those pertaining to financial reports and claims for advances and reimbursements, non- compliance with which we believe could have a material effect on the allowability of program expenditures. Our testing of transactions and records selected from major federal financial assistance programs disclosed instances of noncompliance with those laws and regulations. All instances of noncompliance that we found and the programs to which they relate are identified in the accompanying schedule of findings. In our opinion, subject to the effect, if any, of the ultimate resolution of those instances of noncompliance referred to in the preceding paragraph, for the year ended December 31, 1986, the City of Salina, Kansas, administered each of its major federal financial assistance programs in compliance, in all material respects, with laws and regulations, including those pertaining to financial reports and claims for advances and reimbursements, noncompliance with which we believe could have a material effect on the allowability of program expendi- tures. Respectfully submitted, Salina, Kansas June 23, 1987 ;f~ ~& -9- MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS CITY OF SALINA Salina, Kansas SCHEDULE OF AUDITORS' FINDINGS Year Ended December 31, 1986 Federal Revenue Sharing Compliance Requirement - The government is required to provide certain finan- cial data to the Bureau of Census. These data are to be verified by the auditor. Information reported on Bureau of Census forms did not agree witlh the City's annual financial statements. Material differences for the City's fiscal year ended December 31, 1985, are shown below. Form RS-9 (1985) Part II - Intergovernmental Revenue Line 8 - All Other - Community Development Block Grant, as reported Eliminate duplication of Federal Revenue Sharing From Federal Government (Directly) $404,819 (404,819) As Adjusted L Form F-21A (1986) Part I - Revenues Line 7.e. - Miscellaneous Other Revenue - Administrative services and miscellaneous, as reported Add: Alarm Monitoring Fees Impounding Fees Plats and Rezoning Fees $234,509 32,785 10,339 12,406 As Adjusted ~}Q,039 Part IIA Direct Expenditures by Purpose and Type Line 3 - General municipal buildings, as reported Add construction expendi- tures - Bicentennial Center Reserve Fund Current Operation Direct Expenditure Including Salaries & Wages Capital Outlay Purchase of Land, Equip- ment, Etc. Construction $ 22,684 As Adjusted $22,684 -See Auditors' Report on Compliance with Laws and Regulations Applicable to Federal Financial Assistance Programs- -10- CITY OF SALINA Salina, Kansas SCHEDULE OF AUDITORS' FINDINGS (CONTD.) Year Ended December 31, 1986 Federal Revenue Sharing (Contd.) Line 4 - Central admini- stration, as reported Eliminate museum expendi- tures Reclassify capital outlay expenditures Add central administration equipment expenditures Current Operation Direct Expenditure Including Salaries & Wages Capital Outlay Construction Purchase of Land, Equip- ment, Etc. $853,337 $ 76,410 (93,208) (6,637) (474) 474 7,686 As Adjusted Line 10 - Health (Other than hospital), as reported Add expenditures for landfill $759.65~ $ 77.933 $ 65,908 As Adjusted $ 65.908 Line 11 - Highways, as reported Add: Additional street construction expenditures Street machinery capital outlay expenditures Special highway improvements capital outlay expenditures Eliminate tranfer of funds $1,569,267 $ 7,879 399,913 24,998 As Adjusted $1,969.180 43,933 (7,500) $ 69.310 $ 84,319 Line 16 - Fire, as reported Add expenditures for ambulance and emergency equipment 7,316 As Adjusted $ 91.635 Line 20 - Parks and other recreation, as reported Add museum expenditures $ 746,684 93,208 $192,237 6,637 As Adjusted $ 839,892 $198,874 -See Auditors' Report on Compliance with Laws and Regulations Applicable to Federal Financial Assistance Programs- -11- CITY OF SALINA Salina, Kansas SCHEDULE OF AUDITORS' FINDINGS (CONTD.) Year Ended December 31, 1986 Federal Revenue Sharing (Contd.) Line 23.e. - Other in- terest, as reported Audit adjustments to re- flect issuance of General Obligation Refunding Bonds, Series 1985 Current Operation Direct Expenditure Including Salaries & Wages Capital Outlay Construction Purchase of Land, Equip- ment, Etc. $ 372,887 (46,996) As Adjusted $ 325,891 Line 24.a. - Utilities - Water supply system, as reported Eliminate depreciation expense Other adjustments $3,679,402 (596,481) 06,282) As Adjusted $3,066,639 Compliance Requirement - Government is to publish a notice that the use report is available for public inspection no later than 10 days following its completion and filing by the government. Audit findings indicate that the notice of availability of the use report filed with the Office of Revenue Sharing was not published. Cowmunity Development Block Grant/Small Cities Program Compliance Requirement - The government is to submit a Performance Assessment Report no later than 90 days after the project's completion date. Auditors' findings indicate that the project was completed September 30, 1986, and the report had been prepared but had not been submitted as of June 12, 1987. Compliance Requirement - The government is to submit certain financial reports periodically for this program. Auditors' findings indicate that the Status of Funds report (HUD 4950.3) for the period ended September 30, 1986, was due no later than October 10, 1986, but was not submitted until October 28, 1986. -See Auditors' Report on Compliance with Laws and Regulations Applicable to Federal Financial Assistance Programs- -12- FINANCIAL STATEMENTS CITY OF SALINA Salina, Kansas SUMMARY STATEMENT OF RECEIPTS, EXPENDITURES, AND BALANCES BY FUNDS AND COMPARISON OF CASH BALANCES WITH ENCUMBRANCES Year Ended December 31, 1986 Fund Unencumbered Cash Balance January 1, 1986 General Fund $2,610,467.14 Special Revenue Funds Emergency Preparedness Street Machinery Special Gasoline Tax Federal Revenue Sharing Tourism and Convention Promotion Employee Benefit Fund Utility Fund Special Parks and Recreation Special Alcohol Programs ~ Special Liability Fund Fair Housing Assistance Program Heritage Conservation Business Improvement District 760.83 69,171.91 102,689.76 33,012.68 63,161.33 355,727.66 133,850.14 451.31 382. 13 190,052.68 2,430.05 9,355.63 7,642.07 Debt Service Fund ! Bond and Interest 366,244.61 Capital Projects Fund Construction Fund 495,882.55 Enterprise Funds Golf Course Sanitation Parking Meters Bicentennial Center Solid Waste Disposal Water and Sewerage Bicentennial Center Data Processing Events Fund (Note 5) 33,189.57 320,648.14 3,402.30 78,100.74 234,230.50 495,773.21 39,375.50 68,062.12 Water and Sewerage Principal and Interest Account for Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984 334,601.43 Receipts $ 8,903,508.65 110,767.34 40,554.06 720,071.69 432,966.00 132,983.24 1,543,775.47 526,645.26 44,495.53 44,495.53 89,000.06 12,300.00 32,988.80 1,914,885.94 5,241,597.95 338,416.07 696,077.35 37,273.00 706,937.97 279,270.53 4,649,978.38 726,765.24 246,210.00 523,995.70 Exhibit A Unencumbered Cash Balance Encumbrances Cash Balance Expenditures December 31, 1986 December 31, 1986 December 31, 1986 $ 9,745,709.60 $1,768,266.19 $ 472,502.52 $2,240,768.71 110,720.87 807.30 1,161.30 1,968.60 3,139.00 106,586.97 3,139.00 109,725.97 752,989.70 69,771.75 164,582.05 234,353.80 465,978.68 131,499.96 64,644.61 64,644.61 1,523,585.86 375,917.27 375,917.27 480,403.36 180,092.04 40,073.84 220,165.88 44,946.84 44,877.66 147,444.41 131,608.33 2,911.81 134,520.14 20,730.14 (6,000.09) (6,000.09) 9,355.63 33,218.83 7,412.04 69.24 7,481. 28 1,954,690.56 326,439.99 326,439.99 4,501,158.56 1,236,321.94 156,256.86 1,392,578.80 365,729.16 5,876.48 16,337.19 22,213.67 717,579.14 299,146.35 3,426.49 302,572.84 39,534.76 1,140.54 90.87 1,231. 41 668,862.84 116,175.87 37,455.93 153,631.80 197,784.17 315,716.86 5,565.26 321,282.12 4,961,333.01 184,418.58 210,709.20 395,127.78 752,731. 74 13,409.00 13,409.00 276,033.57 38,238.55 40, 105 . 77 78,344.32 500,852.50 357,744.63 357,744.63 -13- CITY OF SALINA Salina, Kansas SUMMARY STATEMENT OF RECEIPTS, EXPENDITURES, AND BALANCES BY FUNDS AND COMPARISON OF CASH BALANCES WITH ENCUMBRANCES Year Ended December 31, 1986 Fund Unencumbered Cash Balance January 1, 1986 Water and Sewerage Reserve Accounts for Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984 Depreciation and Emergency Replacement Extension and Bond Retirement $ 568,965.78 693,698.25 713,781. 96 Intragovernmental Fund Central Garage (6,681.62) Trust and Agency Funds Citizenship Trust HUD Community Development Cemetery Endowment Mausoleum Endowment 13,687.81 24,316.78 82,896.75 17,624.17 Totals (Memorandum Only) $8,156,955.87 The accompanying notes are an integral part of this financial statement. Receipts $ 46,348.82 48,768.47 46,850.07 566,434.05 998.00 418,076.50 6,914.99 ;$29,130,350.66 Expenditures $ 114,114.00 565,999.22 1,000.00 423,045.84 $29,555,049.61 Unencumbered Cash Balance December 31, 1986 $ 615,314.60 628,352.72 760,632.03 (6,246.79) 13,685.81 19,347.44 89,811. 74 17,624.17 $7,732,256.92 Encumbrances December 31, 1986 $ 33,792.27 260.19 $1,188,439.79 Exhibit A (Contd.) Cash Balance December 31, 1986 $ 615,314.60 628,352.72 760,632.03 27,545.48 13,685.81 19,607.63 89,811.74 17,624.17 ß8, 920, 696.71 -14- CITY OF SALINA Salina, Kansas Exhibit B STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 GENERAL FUND Receipts Current tangible tax Vehicle tax Delinquent taxes Local sales tax Bingo gross receipts tax City liquor tax Local ad valorem tax reduction State shared taxes Auto dealers tax stamps Highway maintenance Licenses, fees and permits Municipal court fines Franchise taxes Rents and concessions Interest from investments Services and sales Ambulance fees Fire protection - Outside city Reimbursement of expenditures Transfers from other funds Total Receipts Expenditures Department City Commission City Manager City Clerk City Attorney Municipal Court City Building Engineering Fire Inspection Park Police Street Human Relations Emergency Medical Services Traffic Swimming Pools Administration and Planning Insurance and Contingencies Arts Commission (Over) Under Actual Budget Budget $1,490,635.21 $1,504.243.00 $ 13,607.79 284,766.52 323,300.00 38,533.48 33,227.26 25,000.00 (8,227.26) b 3,274,757.35 3,100,000.00 074,757.35) 11,042.41 15,000.00 3,957.59 44,495.54 45,000.00 504.46 238,030.68 245,280.00 7,249.32 173,585.19 176,480.00 2,894.81 14,517.86 12,000.00 (2,517.86) 3,090.00 3,100.00 10.00 241,369.57 206,200.00 05,169.57) 379,578.04 340,000.00 09,578.04) 1,190,765.28 1,170,000.00 (20,765.28) 6,706.25 7,000.00 293.75 455,370.58 530,460.00 75,089.42 238,808.38 207,300.00 01,508.38) 143,563.60 140,000.00 0,563.60) limits I 130,433.23 165,000.00 34,566.77 353,818.86 312,990.00 (40,828.86) 194,946.84 195,000.00 53.16 8,903,508.65 8,723,353.00 080,155.65) 320,467.61 75,259.36 198,243.90 55,578.57 72,345.76 136,505.89 141,428.03 1,627,021. 38 99,195.08 424,003.69 1,836,095.85 579,980.32 51,389.94 379,672.60 80,320.12 50,564.24 107,110.48 177,870.09 99,852.42 316,270.00 74,020.00 197,770.00 53,110.00 58,310.00 135,470.00 140,670.00 1,644,430.00 107,330.00 426,900.00 1,800,880.00 582,300.00 52,200.00 406,600.00 83,430.00 44,600.00 113,430.00 189,000.00 96,370.00 (4,197.61) 0,239.36) (473.90) (2,468.57) 04,035.76) 0,035.89) 058.03) 17,408.62 8,134.92 2,896.31 05,215.85) 2,319.68 810.06 26,927.40 3,109.88 (5,964.24) 6,319.52 11,129.91 0,482.42 ) -15- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 GENERAL FUND (CONTD.) Expenditures (Contd.) Department (Contd.) Cemetery General Improvement Museum Floodworks Neighborhood Centers Capital Improvements Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 EMERGENCY PREPAREDNESS (NOTE 2) Receipts Other apportionments and grants Matching funds from the State of Kansas Reimbursement of expenditures Total Receipts Expenditures Personal services Contractual services Materials and supplies Sundry expenditures Capital outlay Total Expenditures Receipts Over Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual (Over) Under Budget Budget $ 56,093.42 $ 56,270.00 $ 176.58 58,143.06 58,580.00 436.94 118,183.26 118,500.00 316.74 58,600.25 61,630.00 3,029.75 70,463.35 75,400.00 4,936.65 2,871,320.93 3,441,250.0(~ 569,929.07 9,745,709.60 10,334,720.0(~ 589,010.40 (842,200.95) Cl,611,367.00) (769,166.05) 2,610,467.14 1,611,367.0C~ (999,100.14) $1,768,266.19 $ ($1,768,266.19) $ 73,668.48 35,606.00 1,492.86 11 0,767.34 62,435.85 36,037.46 4,836.46 135.00 7,276.10 110,720.87 46.47 760.83 $ 807.30 -16- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 (Over) Under Budget STREET MACHINERY (NOTE 2) Receipts Interest from investments Transfers from General Fund Total Receipts Actual Budget Expenditures Capital outlay $ 554.06 40,000.00 40,554.06 3,139.00 37,415.06 69,171.91 $ 106,586.97 Receipts Over Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 SPECIAL GASOLINE TAX Receipts Special gasoline tax $ 720,071.69 $ 720,000.00 ($ 71.69) Expenditures Personal services 63,962.31 70,510.00 6,547.69 Contractual services 394,900.29 400,000.00 5,099.71 Materials and supplies 132,138.93 130,350.00 (1,788.93) Transfers to General Fund 150,000.00 150,000.00 Capital outlay 11,988.17 12,000.00 11.83 Total Expenditures 752,989.70 762,860.00 9,870.30 Receipts Over (Under) Expenditures <32,918.00 (42,860.00) (9,941.99) Unencumbered Cash Balance, January 1 102,689.76 84,254.00 (18,435.76) Unencumbered Cash Balance, December 31 $ 69,771.75 $ 41,394.00 ($ 28,377.75) FEDERAL REVENUE SHARING Receipts Grants from Federal government $ 432,966.00 $ 437,000.00 $ 4,034.00 Expenditures Contractual service 23,097.00 24,400.00 1,303.00 Transfers to other funds 324,057.46 300,000.00 (24,057.46) Capital outlay 118,824.22 112,600.00 (6,224.22) Total Expenditures 465,978.68 437,000.00 (28,978.68) -17- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 (Over) Under Actual Budget Budget FEDERAL REVENUE SHARING (CONTD.) Receipts Over (Under) Expenditures ($ 33,012.68) $ $ 33,012.68 Unencumbered Cash Balance, January 1 33,012.68 03,012.68) Unencumbered Cash Balance, December 31 $ $ $ TOURISM AND CONVENTION PROMOTION Receipts Transient guest tax $ 132,983.24 $ 145,000.00 $ 12,016.76 Expenditures Contractual serV1ces 131,499.96 145,000.00 13,500.04 Receipts Over (Under) Expenditures 1,483.28 C1 ,483. 28) Unencumbered Cash Balance, January 1 63,161.33 63,907.00 745.67 Unencumbered Cash Balance, December 31 $ 64,644.61 $ 63,907.00 ($ 737.61) EMPLOYEE BENEFIT FUND Receipts Current tangible taxes Delinquent taxes Interest on investments Social security contributions Employees retirement contributions Unemployment insurance contributions Reimbursement of expenditures Vehicle tax Transfers from General Fund Total Receipts $1,125,145.96 25,826.41 18,040.05 17,604.39 9,105.38 529.54 98,309.99 209,213.75 40,000.00 1,543,775.47 $1,139,954.00 15,000.00 18,000.00 14,000.00 20,000.00 1,000.00 95,000.00 235,400.00 40,000.00 1,578,354.00 $ 14,808.04 00,826.41) (40.05) 0,604.39) 10,894.62 470.46 0,309.99) 26,186.25 34,578.53 -18- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COHPARED WITH BUDGET Year Ended December 31, 1986 EMPLOYEE BENEFIT FUND (CONTD.) Expenditures Public officials and employee liability insurance Social security Police and fire retirement Employees retirement Group insurance Unemployment insurance Workman's compensation Earned leave Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 UTILITY FUND Receipts Current tangible taxes Delinquent taxes Interest on investments Vehicle taxes Transfers from General Fund Total Receipts Expenditures Gas service Light and power serv~ce Water service Traffic control signals Street lighting Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual $ 48,194.00 202,844.93 603,914.96 104,566.01 416,335.45 17,054.34 111,437.00 19,239.17 1,523,585.86 20,189.61 355,727.66 $ 375,917.27 $ 426,496.13 8,750.79 2,275.07 75,435.25 13,688.02 526,645.26 36,693.18 118,617.86 25,698.82 34,302.60 265,090.90 480,403.36 46,241. 90 133,850.14 $ 180,092.04 Budget $ 32,900.00 ($ 220,300.00 620,400.00 160,100.00 475,000.00 20,000.00 111,300.00 40,000.00 1,680,000.00 001,646.00) 101,646.00 $ $ 432,079.00 5,000.00 2,000.00 75,700.00 15,000.00 529,779.00 67,000.00 133,000.00 42,000.00 37,000.00 290,000.00 569,000.00 09,221.00) 39,221.00 $ ($ (Over) Under Budget 15,294.00) 17,455.07 16,485.04 55,533.99 58,664.55 2,945.66 037.00) 20,760.83 156,414.14 021,835.61) (254,081.66) ($ 375,917.27) $ 5,582.87 0,750.79) (275.07) 264.75 1,311.98 3,133.74 30,306.82 14,382.14 16,301. 18 2,697.40 24,909.10 88,596.64 (85,462.90) (94,629.14) 180,092.04) -19- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 Actual SPECIAL PARKS AND RECREATION Receipts ci ty liquor tax $ 44,495.53 Expenditures Transfer to General Fund 44,946.84 Receipts Over (Under) Expenditures (451. 31) Unencumbered Cash Balance, January 1 451.31 Unencumbered Cash Balance, December 31 $ SPECIAL ALCOHOL PROGRAMS Receipts Ci ty liquor tax $ 44,495.53 Expenditures Contractual serv~ces 44,877 .66 Receipts Over (Under) Expenditures 082.13) Unencumbered Cash Balance, January 1 382.13 Unencumbered Cash Balance, December 31 $ SPECIAL LIABILITY FUND Receipts Current tangible taxes Delinquent tangible taxes Transfers from other funds Vehicle taxes Total Receipts $ 33,686.74 832.18 48,186.00 6,295.14 89,000.06 Expenditures Liability insurance Professional services Total Expenditures 142,581. 00 4,863.41 147,444.41 Receipts Over (Under) Expenditures (58,444.35) Unencumbered Cash Balance, January 1 190,052.68 Unencumbered Cash Balance, December 31 $ 131,608.33 Budget $ 44,887.00 45,000 . O(~ 013.00) 113.00 $ $ 44,955.00 45,000 . OC~ (45.00) 45.00 $ $ 34,084.00 600.00 7,000.00 7,000.00 48,684.00 30,000.00 20,000.00 50,000.00 0,316.00 ) 176,316.00 $ 175,000.00 (Over) Under Budget $ 391.47 53.16 338.31 038.31) $ $ 459.47 122.34 337. 13 037.13) $ $ 397.26 (232.18) (41,186.00) 704.86 (40,316.06) 012,581. 00) 15,136.59 (97,444.41) 57,128.35 03,736.68) $ 43,391. 67 -20- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 (Over) Under Actual Budget Budget FAIR HOUSING ASSISTANCE PROGRAM (NOTE 2) Receipts Reimbursement of expenditures $ 12,300.00 Expenditures Personal serv~ces 17,451.92 Contractual serv~ces 3,278.22 Total Expenditures 20,730.14 Receipts Over (Under) Expenditures (8,430.14) Unencumbered Cash Balance, January 1 2,430.05 Unencumbered Cash Balance (Deficit), December 31 ($ 6,000.09) HERITAGE CONSERVATION (NOTE 2) Receipts $ Expenditures Contractual serv~ces 9,355.63 Receipts Over (Under) Expenditures (9,355.63) Unencumbered Cash Balance, January 1 9,355.63 Unencumbered Cash Balance, December 31 $ BUSINESS IMPROVEMENT DISTRICT Receipts As sessment fees $ 8,988.80 $ 11 , 000.00 $ 2,011.20 Transfers from other funds 24,000.00 24,000.00 Total Receipts 32,988.80 35,000.00 2,011.20 Expenditures Personal serv~ces 20,867.37 23,570.00 2,702.63 Contractual serv~ces 9,986.53 9,700.00 (286.53) Materials and supplies 2,049.93 1,600.00 (449.93) Sundry expenditures 315.00 300.00 (15.00) Capital outlay 800.00 800.00 Total Expenditures 33,218.83 35,970.00 2,751.17 -21- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 BUSINESS IMPROVEMENT DISTRICT (CONTD.) Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 BOND AND INTEREST Receipts Current tangible taxes Delinquent tangible taxes Current special assessment taxes Delinquent special assessment taxes Interest from investments Accrued interest on bonds sold Special assessments Transfers from other funds Vehicle taxes Total Receipts Expenditures General bond principal General bond interest Curb, gutter and paving principal (City share) Curb, gutter and paving principal (Property owner share) Curb, gutter and paving interest (City share) Curb, gutter and paving interest (Property owner share) Fiscal agency commission and postage Estimated interest - Bonds to be issued Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual ($ 230.03)($ 7,642.07 $ 7,412.04 $ 830,261. 72 17,412.79 632,256.44 105,713.07 20,636.57 6,711.29 37,507.13 134,200.00 130,186.93 1,914,885.94 697,500.00 275,484.00 145,080.00 552,420.00 57,301.00 218,183.06 8,722.50 1,954,690.56 09,804.62) 366,244.61 $ 326,439.99 Budget 970.00)($ 1,410.0C~ $ 440 . OC~ ($ $ 841,169.00 20,000.00 625,000.00 30,000.00 20,000.00 2,000.00 4,000.00 134,200.00 144,700.00 1,821,069.00 672,000.00 270,400.00 127,800.00 552,300.00 121,900.00 181,100.00 500.00 40,000.00 1,966,000.00 (144,931.00) 144,931.00 $ (Over) Under Budget 739.97) (6,232.07) 6,972.04) $ 10,907.28 2,587.21 0,256.44) 05,713.07) (636.57) (4,711.29) 03,507.13) 14,513.07 (93,816.94) (25,500.00) (5,084.00) 07,280.00) 020.00) 64,599.00 07,083.06) (8,222.50) 40,000.00 11,309.44 005,126.38) ($ (221,313.61) 326,439.99) -22- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 Actual CONSTRUCTION FUND (NOTE 2) Receipts Temporary notes Issuance of general obligation internal improvement bonds Transfers from other funds Other Total Receipts $3,000,000.00 1,983,000.00 54,057.46 204,540.49 5,241,597.95 Expenditures Payment of temporary note and interest Construction and capital outlay Total Expenditures 1,119,201.54 3,381,957.02 4,501,158.56 Receipts Over Expenditures 740,439.39 Unencumbered Cash Balance, January 1 495,882.55 Unencumbered Cash Balance, December 31 $1,236,321.94 GOLF COURSE Receipts Membership and green fees Cart rental Cart storage Cart user fees Oil well lease Sales Total Receipts Budget (Over) Under Budget $ 194,964.00 $ 168,000.00 ($ 26,964.00) 67,343.66 46,400.00 (20,943.66) 5,235.00 5,000.00 (235.00) 5,579.00 5,000.00 (579.00) 2,573.42 4,800.00 2,226.58 62,720.99 49,700.00 03,020.99) '. ~ 338,416.07 278,900.00 (59,516.07) Expenditures Personal services Contractual services Materials and supplies Sundry expenditures Capital out lay Total Expenditures 114,756.99 56,173.01 72,608.11 68,939.56 53,251.49 365,729.16 (27,313.09) Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 33,189.57 Unencumbered Cash Balance, December 31 $ 5,876.48 119,160.00 40,500.00 46,100.00 51,200.00 27,500.00 284,460.00 (5,560.00) 18,141.00 $ 12,581. 00 4,403.01 05,673.01) (26,508.11) 07,739.56) (25,751.49) (81,269.16) 21,753.09 05,048.57) $ 6,704.52 -23- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 SANITATION Receipts Interest from investments Miscellaneous sales and services Service fees Reimbursement of expenditures Total Receipts Expenditures Personal services Contractual services Materials and supplies Transfer to Bond and Interest Fund Capital outlay Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 PARKING METERS Receipts Parking meter permits Reimbursement of expenditures Total Receipts Expenditures Personal services Contractual services Materials and supplies Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual $ 1,107.39 1,707.32 691,110.00 2,152.64 696,077.35 284,924.23 159,533.27 92,787.69 122,200.00 58,133.95 717,579.14 (21,501. 79) 320,648.14 $ 299,146.35 $ 8,273.00 29,000.00 37,273.00 34,432.75 5,102.01 39,534.76 (2,261. 76) 3,402.30 $ 1, 140.54 Budget $ 3,000.00 2,000.00 704,000.00 1,000.00 710,000.00 295,330.00 153,680.00 94,890.00 122,200.00 66,300.00 732,400.00 (22,400.00) 310,528.00 $ 288,128.00 ($ $ 47,500.00 47,500.00 34,300.00 7,650.00 5,800.00 47,750.00 (250.00) 367.00 $ 11 7.00 ($ (Over) Under Budget $ 1,892.61 292.68 12,890.00 0,152.64) 13,922.65 10,405.77 (5,853.27) 2,102.31 8,166.05 14,820.86 (898.21) 00,120.14) lL-°18.35) $ 39,227.00 (29,000.00) 10,227.00 (132.75) 7,650.00 697.99 8,215.24 2,011. 76 (3,035.30) 1, 023.54) -24- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 Actual BICENTENNIAL CENTER Receipts Rent Concessions Reimbursement of expenditures Transfers from Federal Revenue Sharing Fund Total Receipts $ 174,855.76 228,577.53 3,504.68 300,000.00 706,937.97 Expenditures Personal services Contractual services Materials and supplies Sundry expenditures Capital outlay Total Expenditures 318,612.82 183,239.02 46,999.51 103,675.73 16,335.76 668,862.84 Receipts Over (Under) Expenditures 38,075.13 Unencumbered Cash Balance, January 1 78,100.74 Unencumbered Cash Balance, December 31 $ 116,175.87 SOLID WASTE DISPOSAL Receipts Income from leased land Service fees Reimbursement of expenditures Total Receipts $ 1,001.90 278,203.30 65.33 279,270.53 Expenditures Personal services Contractual services Materials and supplies Sundry expenditures Total Expenditures 73,094.84 28,199.30 76,490.03 20,000.00 197,784.17 Receipts Over (Under) Expenditures 81,486.36 Unencumbered Cash Balance, January 1 234,230.50 Unencumbered Cash Balance, December 31 $ 315,716.86 Budget $ 130,000.00 ($ 215,000.00 3,000.00 300,000.00 648,000.00 314,170.00 217,000.00 44,500.00 96,300.00 9,200.00 681,170.00 03,170.00) 67,897.00 $ 34,727.00 ($ $ 100.00 ($ 265,000.00 265,100.00 76,430.00 27,820.00 79,800.00 20,000.00 204,050.00 61,050.00 160,127.00 $ 221,177.00 ($ (Over) Under Budget 44,855.76) 03,577.53) (504.68) (58,937.97) (4,442.82) 33,760.98 (2,499.51) 0,375.73) 0,135.76) 12,307.16 (71,245.13) 00,203.74) 81,448.87) 901. 90) 03,203.30) (65.33) 04,170.53) 3,335.16 079.30) 3,309.97 6,265.83 (20,436.36) 04,103.50) 94,539.86) -25- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 WATER AND SEWERAGE FUND Receipts Water Sewerage Sanitation fees Tapping and front footage serv~ce Service charge - Sanitation department Meter repair and service line revenue Interest ~ncome Miscellaneous ~ncome Sales tax collections Meter deposits Sale of assets Reserve for Extension and Bond Re- tirement Reserve for Depreciation and Emergency Total Receipts Expenditures Water supply Softening and treatment Pumping Distribution Customer accounting and collection Administrative and general Sewage treatment and collection Bond ordinance requirements Transfer to Sanitation Department - Service fees Capital expenditures Sales tax remitted Meter deposits refunded Transfer to Reserve for Extension and Bond Retirement Reserve for Depreciation and Emergency Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual $2,874,736.53 701,996.73 691,864.71 17,619.49 12,780.32 15,093.21 2,038.24 119,057.81 52,252.34 36,925.00 ll, 500. 00 114,1l4.00 4,649,978.38 99,553.02 855,124.37 190,582.32 409,453.96 320,109.55 688,779.36 606,963.77 512,865.00 691,1l0.00 501,749.32 52,252.34 32,790.00 4,961,333.01 Oll, 354. 63) 495,773.21 $ 184,418.58 Budget $3,041,760.00 732,160.00 704,000.00 10,000.00 12,000.00 25,000.00 93,900.00 10,000.00 46,000.00 38,000.00 400,000.00 200,000.00 5,312,820.00 97,400.00 859,130.00 216,1l0.00 369,980.00 321,340.00 677,570.00 640,300.00 510,400.00 704,000.00 400,000.00 40,000.00 40,000.00 400,000.00 200,000.00 5,476,230.00 063,410.00) 373 ,248.00 $ 209,838.00 (Over) Under Budget $ 167,023.47 30,163.27 12,135.29 0,619.49) 080.32) 9,906.79 91,861. 76 009,057.80 (6,252.34) 1,075.00 (11,500.00) 400,000.00 85,886.00 662,841.62 (2,153.02) 4,005.63 25,527.68 09,473.96) 1,230.45 01,209.36) 33,336.23 (2,465.00) 12,890.00 001,749.32) 02,252.34) 7,210.00 400,000.00 200,000.00 514,896.99 147,944.63 022,525.21) $ 25,419.42 -26- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 Budget (Over) Under Budget BICENTENNIAL CENTER EVENTS FUND (NOTE 5) Actual Receipts $ 726,765.24 Expenditures Transfer of net rental fees to Bicentennial Center Fund Special events expenditures Total Expenditures 83,000.00 669,731.74 752,731.74 Receipts Over Expenditures (25,966.50) Unencumbered Cash Balance, January 1 39,375.50 Unencumbered Cash Balance, December 31 $ 13,409.00 DATA PROCESSING Receipts Sale of Fees Computer Total commodities $ 68,370.00 174,265.00 3,575.00 246,210.00 $ 1,000.00 ($ 154,500.00 8,000.00 163,500.00 67,370.00) 09,765.00) 4,425.00 (82,710.00) programm~ng serv~ce Receipts Expenditures Personal services 70,607.74 71,320.00 712.26 Contractual services 105,983.98 105,200.00 (783.98) Materials and supplies 3,844.86 5,000.00 1,155.14 Capital outlay 95,596.99 (95,596.99) Total Expenditures 276,033.57 181,520.00 (94,513.57) Receipts Over (Under) Expenditures (29,823.57) 08,020.00) 11,803.57 Unencumbered Cash Balance, January 1 68,062.12 30,210.00 07,852.12) Unencumbered Cash Balance, December 31 $ 38,238.55 $ 12,190.00 ($ 26,048.55) -27- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 Budget (Over) Under Budget PRINCIPAL AND INTEREST ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM REFUNDING REVENUE BONDS, SERIES OF 1984 (NOTE 2) Actual Receipts Interest from investments Transfers from Water and Sewerage Fund Total Receipts $ 11,130.70 512,865.00 523,995.70 Expenditures Bond principal Bond interest Total Expenditures 310,000.00 190,852.50 500,852.50 Receipts Over Expenditures 23,143.20 Unencumbered Cash Balance, January 1 334,601.43 Unencumbered Cash Balance, December 31 $ 357,744.63 RESERVE ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM REFUNDING REVENUE BONDS, SERIES OF 1984 (NOTE 2) Receipts Interest from investments , $ 46,348.82 Expenditures Receipts Over Expenditures 46,348.82 Unencumbered Cash Balance, January 1 568,965.78 Unencumbered Cash Balance, December 31 $ 615,314.60 -28- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 Budget (Over) Under Budget RESERVE ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM DEPRECIATION AND EMERGENCY REPLACEMENT (NOTE 2) Actual Receipts Interest from investments $ 48,768.47 Expenditures Transfer to Water and Sewerage Fund 114,114.00 Receipts Over (Under) Expenditures (65,345.53) Unencumbered Cash Balance, January 1 693,698.25 Unencumbered Cash Balance, December 31 $ 628,352.72 RESERVE ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM EXTENSION AND BOND RETIREMENT (NOTE 2) Receipts Interest from investments $ 46,850.07 Expenditures Receipts Over Expenditures 46,850.07 Unencumbered Cash Balance, January 1 713,781. 96 Unencumbered Cash Balance, December 31 $ 760,632.03 CENTRAL GARAGE (NOTE 2) Receipts Reimbursement of expenditures $ 566,434.05 Expenditures Personal services Contractual services Materials and supplies Sundry expenditures Capital out lay Total Expenditures 102,073.65 71,511.81 357,745.08 29,207.70 5,460.98 565,999.22 -29- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 CENTRAL GARAGE (NOTE 2) (CONTD.) Receipts Over Expenditures Unencumbered Cash Balance (Deficit), January 1 Unencumbered Cash Balance (Deficit), December 31 CITIZENSHIP TRUST (NOTE 2) Receipts Interest from investments Expenditures Contractual serV1ces Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 HUD COMMUNITY DEVELOPMENT (NOTE 2) Receipts Interest from investments Collection of housing and winteri- zation loans - Principal and interest Community Development Block Grant Total Receipts Expenditures Personal services Contractual services Materials and supplies Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual $ 434.83 (6,681.62) ($ 6,246.79) (Over) Under Budget Budget $ 998.00 1,000.00 (2.00) 13,687.81 $ 13,685.81 $ 703.97 17,372.53 400,000.00 418,076.50 9,965.11 408,973.12 4,107.61 423,045.84 (4,969.34) 24,316.78 $ 19,347.44 -30- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1986 Budget (Over) Under Budget Actual CEMETERY ENDOWMENT (NOTE 2) Receipts Interest from investments Perpetual care deposits Total Receipts $ 2,400.00 4,514.99 6,914.99 Expenditures Receipts Over Expenditures 6,914.99 Unencumbered Cash Balance, January 1 82,896.75 Unencumbered Cash Balance, December 31 $ 89.811.74 MAUSOLEUM ENDOWMENT (NOTE 2) Receipts $ Expenditures Receipts Over Expenditures Unencumbered Cash Balance, January 1 17,624.17 Unencumbered Cash Balance, December 31 $ 17.624.17 The accompanying notes are an integral part of this financial statement. -31- CITY OF SALINA Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1986 1. Summary of Significant Accounting Policies The City maintains its accounting records in accordance with the principles of fund accounting in order to ensure observance of limitations and restric- tions placed on the use of resources available. This is the procedure by which resources are classified for accounting and reporting into funds estab- lished according to their nature and purposes. The City of Salina maintains its accounting records for all funds on the cash basis, except that expenditures incurred but not paid and purchase commitments at December 31 are recorded as encumbrances at that date. This method serves to develop information relative to compliance with the budget, c,~sh basis, and other statutes applicable to municipalities within the State of Kansas. The method is not, however, in accordance with generally accepted accounting principles for municipalities. Generally accepted accounting principles require: a. Certain accounts receivable to be recorded in the financial statements. The City does not record these receivables until they are collected in cash. b. Expenditures to be recorded generally on the accrual basis. The City records purchase commitments as encumbrances at year-end, and any loss from loss contingencies is not recorded until the amount of the loss is payable. c. The General Fixed Assets and the General Long-Term Debt Account Groups to be maintained. The City does not maintain these account groups. d. Transfers between funds to be recorded as reductions to fund balance of the fund making the transfers and as additions to fund balance of the fund receiving the transfer. The City records such transfers as expenditures of the fund making the transfer and as receipts of the fund receiving the transfer. e. The annual financial statements to include a combined balance sheet for all fund types and account groups; a combined statement of revenues, expenditures, and changes in fund balance for all governmental fund types and expendable trust funds; and a combined statement of revenues, expendi- tures, and changes in fund balance and combined comparison with budget for all governmental fund types. These required financial statements are not included in this report. The City has, by charter ordinance, elected to exempt itself from the Kansas statutory requirement to maintain fixed asset records, and has requested the Director of Accounts and Reports to waive the requirements of K.S.A. 75-1120a as related to the preparation of financial statements in conformity with gener- ally accepted accounting principles. -32- 2. Budgets Applicable Kansas statutes require that unless exempted by a specific statute. contain several funds for which budgets omitting certain budget comparisons are budgets be legally adopted for all funds The accompanying financial statements were not prepared. The reasons for described below. Special Revenue Funds - Certain of the special revenue funds are not budgeted since their revenues are designated for a special purpose or the fund represents a clearing account. Capital Projects Fund - The capital projects fund is not budgeted since provision for payment of expenditure is from the issuance of bonds, temporary notes, and special assessments and charges. Water and Sewerage Bond Fund and Reserve Accounts - These funds are not budgeted since receipts and expenditures are in accordance with requirements of applicable bond issues. Central Garage - The fund is an intragovernmental fund whose expenditures are reimbursable by other funds. Trust and Agency Funds - The individual trust and agency funds are not subject to the budget law since the assets do not belong to the City of Salina. 3. Cash Balances Kansas municipalities, such as the City of Salina, are authorized by Kansas statutes to invest funds in: (2) (3) (4) (5) (1) Temporary notes or no-fund warrants issued by the investing governmental unit, Time deposit, open accounts or certificates of deposit, Time certificates of deposit, Repurchase agreements, and United States Treasury bills or notes with maturities not exceeding six months. Deposits or investments with qualifying financiRl institutions are to be secured by a bond or by the pledge of certain types of securities specified by statute. Cash and investments of the City of Salina were 100% insured or collateralized by securities provided by depository financial institutions at December 31, 1986. Cash and investments were comprised of the following as of December 31, 1986. Petty cash funds Cash in checking and temporarily invested in repurchase agreements Cash in savings Certificates of deposit $ 3,470.00 120,468.53 407,758.18 8,389,000.00 Total $8,920.696.71 -33- 4. Long-Term Obligations a. General Obligation and Special Assessment Bonds The City issued its General Obligation Refunding Bonds, Series 1985 (the 1985 Bonds), dated October 15, 1985, for the purpose of refunding all the City's outstanding General Obligation and Special Assessment Bonds (the Refunded Bonds). Cash and bond proceeds were transferred to a Refunding Escrow Trust Account at a local bank, pursuant to an escrow trust agreement dated as of October 15, 1985, to provide the necessary funds for refunding of the Refunded Bonds. Funds transferred to the Refunding Escrow Trust Account were invested in United States Government obligations, and the investments and interest earned on such investments will be sufficient to pay all principal and interest on the Refunded Bonds as they become due. The principal amount of $7,453,000.00 of the Refunded Bonds remains outstanding at December 31, 1986. Neither the assets deposited with the escrow agent for the retirement of the Refunded Bonds nor the outstanding Refunded Bonds are reflected in the accompanying financial statements. b. Revenue Bonds The City has outstanding an issue of Combined Water and Sewer System Revenue Bonds, Series of 1977, of which the principal amount of $2,950,000.00 remains outstanding at December 31, 1986, and an issue of Combined Water and Sewage System Refunding Revenue Bonds, Series of 1978, of which the principal amount of $4,386,000.00 remains out- standing at December 31, 1986. The City has provided for the payment of all principal and interest on the bonds by depositing United States Government obligations in escrow accounts at a local bank pursuant to certain escrow trust agreements. Neither the assets deposited with the escrow agent for retirement of the 1977 and 1978 bonds nor the outstanding 1977 and 1978 obligations, are reflected in the accompanying financial statements. The City has established certain reserve accounts pursuant to a bond ordinance authorizing the issuance of Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984, to provide funds for the retirement of the bonds and payment of interest thereon and for making replacements to the system in the event other funds are not available. The gross revenues of the Water and Sewerage Department are pledged to secure payment of the bonds; however, the pledge is subordinate to a similar pledge to secure payment of the 1977 and 1978 bonds. The amounts required to be maintained in the reserve accounts estab- lished by the bond ordinance authorizing issuance of the 1984 bonds have been provided and the total revenues of the water and sewerage system appear sufficient to meet the requirements of the ordinance. -34- 5. 6. 7. Bicentennial Center Events Fund The Bicentennial Center Events Fund is used as a clearing account for special events when the City acts as the promotor's agent. Receipts from special events are deposited in the fund and related expenses are disbursed from the fund. The City's rental fees from such events are transferred from the fund to the Bicentennial Center Fund. Capital Projects Fund The Capital Projects Fund is used to account for the purchase or construction of capital facilities, equipment, and public improvements. A summary of the fund's unencumbered cash balance at December 31, 1986 follows: Cash balance resulting from Capital projects completed Capital projects in process Special assessments projects Reserves for future capital projects $ 792,970.26 7,559.29 137,249.20 298,543.19 Total $1,236,321.94 Financing of Deficit Cash Balance Certain expenditures of the Fair Housing Assistance Program are reimburseable by Federal agencies. General funds are being used to temporarily finance the deficit cash balance of the fund as of December 31, 1986, in accordance with K.S.A. 12-1664. 8. Compliance with Kansas Statutes A summary of statutory violations related to 1986 follows. a. Encumbrances of the Central Garage exceed the cash balance of the fund by $6,246.79 as of December 31, 1986, which appears to be in violation of the Kansas cash basis law CK.S.A. 10-1113). b. Expenditures of the Golf Course exceeded budgeted expenditures for the year ended December 31, 1986, by $81,269.16, which appears to be a violation of the Kansas budget law CK.S.A. 79-2935). c. Expenditures of the Federal Revenue Sharing Fund exceeded budgeted expenditures for the year ended December 31, 1986, by S28,978.68, which appears to be a violation of the Kansas budget law CK.S.A. 79-2935). d. Expenditures of the Special Liability Fund exceeded budgeted expenditures for the year ended December 31, 1986, by $97,4/,.4.41, which appears to be a violation of the Kansas budget law CK"S.A. 79-2935). e. Expenditures of the Data Processing Fund exceeded budgeted expen- ditures for the year ended December 31, 1986, by $94,513.57 which appears to be a violation of the Kansas budget law CK.S.A. 79-2935). -35- 9. Fund Transfers Following 1S a schedule of transfers between funds for the year 1986. From Special Parks and Recreation Special Gasoline Tax General Fund - Street Federal Revenue Sharing Fund Federal Revenue Sharing Fund General Fund - Contingencies General Fund - Contingencies General Fund - Contingencies Sanitation Water and Sewerage - Administrative and general Water and Sewerage Solid Waste Disposal - Contractual Services Golf Course - Contractual Services Sanitation - Contractual Services Water and Sewerage - Admini- strative and general Bicentennial Center Events Fund Water and Sewerage - Bond Ordinance requirements General Fund - Museum General Fund - Capital Improvements Bicentennial Center - Sundry expenditures Water and Sewerage - Customer Accounting and Collection Reserve Account for Combined Water and Sewage System Depreciation and Emergency Replacement 10. Retirement Plans To General Fund General Fund Street Machinery Bicentennial Center Construction Data Processing - Fees Employee Benefit Fund Central Garage Bond and Interest Bond and Interest Sanitation - Service Fees Special Liability Fund Special Liability Fund Special Liability Fund Special Liability Fund Bicentennial Center - Rent Principal and Interest Account for Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984 Utility Fund Business Improvement District Construction Data Processing - Fees Water and Sewerage - Reserve for Deprecia- tion and Emergency Amount $ 44,946.84 150,000.00 40,000.00 300,000.00 24,057.46 50,000.00 40,000.00 7,500.00 122,200.00 12,000.00 691,110.00 1,312.00 1,817.00 6,430.00 38,627.00 83,000.00 512,865.00 13,688.02 24,000.00 30,000.00 54,500.00 114,114.00 The City participates in two separate State administered defined contribution retirement plans; Kansas Police and Fire Retirement System (KPFRS) which Covers police officers and firemen only, and Kansas Public Employee's Retirement System (KPERS) which covers substantially all remaining employees. Each department's portion of pension costs, which are funded as accrued, are determined as 19.9 and 4.3 percent of each covered employee's sala:ry for KPFRS and KPERS, respectively for 1986. Pension costs totaled $760,816.48 for the year 1986. -36- Supplemental Information Purpose Revenue Bonds Water and sewerage Temporary Note General Obligation Refunding Bonds, Series 1985 General Obligation Internal Improvement Bonds Temporary Note Temporary Notes Totals Payable in Year Ended December 31, 1987 1988 1989 1990 1991 Thereafter Totals Payable in Year Ended December 31, 1987 1988 1989 1990 1991 Thereafter Totals CITY OF SALINA Salina, Kansas SCHEDULE OF INDEBTEDNESS December 31, 1986 Date of Issue Final Maturity Date 6-15-84 2-15-94 7-08-85 7-01-87 10-15-85 4-01-96 12-01-86 12-01-96 4-16-86 4-01-89 11-24-86 3-01-88 Rate 7.25% to 9.75% 7.0% 5.75% to 9.0% 5.2% to 5.7% 6.75% 5.6% General Obligation Refunding Principal Total City Share $1,270,000.00 1,020,000.00 930,000.00 785,000.00 625,000.00 2,090,000.00 $ 767,080.00 616,080.00 561,720.00 474,140.00 377,500.00 1,262,360.00 $6,720,000.00 $4,058,880.00 Property Owner's Share $ 502,920.00 403,920.00 368,280.00 310,860.00 247,500.00 827,640.00 ~;2,661,120.00 General Obligation Internal Principal Property Owner's Total City Share Share $ 83,000.00 $ 3,054.40 $ 79,945.60 120,000.00 4,416.00 115,584.00 150,000.00 5,520.00 144,480.00 180,000.00 6,624.00 173,376.00 210,000.00 7,728.00 202,272.00 1,240,000.00 45,632.00 1,194,368.00 $1,983,000.00 $ 72,974.40 iL910,025.60 Schedule 1 Amount of Outstanding Year Ended December 31, 1986 Outstanding Original Debt Debt Debt Debt Issue January 1, 1986 Issued Retired December 31, 1986 $ 2,770,000.00 $ 2,280,000.00 $ $ 310,000.00 $ 1,970,000.00 1,017,000.00 1,017,000.00 1,017,000.00 8, U5, 000. 00 8, U5, 000. 00 1,395,000.00 6,720,000.00 1,983,000.00 1,983,000.00 1,983,000.00 1,500,000.00 1,500,000.00 1,500,000.00 1,500,000.00 1,500,000.00 1,500,000.00 $16,885,000.00 $11,412,000.00 $4,983,000.00 $2,722,000.00 il,3, 673,000.00 Bonds, Series 1985 Interest Property Owner's Revenue Bonds Total City Share Share Principal Interest $ 493,975.00 $ 298,361.00 $ 195,614.00 $ 210,000.00 $170,177.50 414,237.50 250,198.00 164,039.50 230,000.00 151,740.00 343,275.00 207,338.00 135,937.00 250,000.00 131,027.50 275,668.75 166,504.00 109,164.75 275,000.00 107,715.00 217,550.00 131,401. 00 86,149.00 190,000.00 86,600.00 426,901.25 257,851.00 169,050.25 815,000.00 103,250.00 $2,171,607.50 $1,311,653.00 $ 859,954.50 $1,970,000.00 ~750,510.00 Improvement Bonds, Series 1986 Interest Property Owner's Total City Share Share $ 109,821.00 $ 4,041.42 $ 105,779.58 105,090.00 3,867.32 101,222.68 98,250.00 3,615.60 94,634.40 89,700.00 3,300.96 86,399.04 79,440.00 2,923.40 76,516.60 213 ,800.00 7,867.84 205,932.16 $ 696,101. 00 $ 25,616.54 9 670,484.46 -37- Petty Cash Water and Sewerage Department Bicentennial Center Total Petty Cash Cash in Depositories Bank IV, Salina, Kansas National Bank of America, Salina, Kansas First National Bank and Trust Company, Salina, Kansas First Bank and Trust Co., Salina, Kansas Security Savings and Loan Association, Salina, Kansas Total Cash in Depositories Total (1) CITY OF SALINA Salina, Kansas Schedule 2 COMPOSITION OF ENDING CASH BALANCES December 31, 1986 Cash in Cash in Certificates Checking Savings of Deposit Total $106,539.75(1) $ $3,254,000.00 $3,360,539.75 408.59 1, 77 5,000.00 1,775,408.59 12,640.97(2) 377,547.18 1,710,000.00 2,100,188.15 879.22 211. 00 1,650,000.00 1,651,090.22 30,000.00 30,000.00 $120,468.53 $407,758.18 ~8,389,OOO.00 8,917,226.71 2,500.00 970.00 3,470.00 Includes Repurchase Agreement balance of $700,000.00. ,$8,920,696.71 (2) Includes Repurchase Agreement balance of $95,000.00. -38- Gross Cash Balances Cash in checking Cash in savings Certificates of deposit Federal funds Totals Less FDIC or FSLIC coverage Balances Securable by Collateral Security required 000%) Security provided by depositories Amount Undersecured by Statute CITY OF SALINA Salina, Kansas Schedule 3 COMPARISON OF GROSS CASH BALANCES WITH DEPOSITORY SECURITY December 31, 1986 Security First National First Bank Savings National Bank Bank and and Trust and Loan Bank IV of America Trust Company Co. Association 99,383.84)$ 5,201.06 $ 379,216.62 $ 1,090.22 $ 30,000.00 3,254,000.00 1,775,000.00 1,710,000.00 1,650,000.00 700,000.00 95,000.00 3,854,616.16 1,780,201.06 2,184,216.62 1,651,090.22 30,000.00 100,000.00 105,201.06 200,000.00 101,090.22 30,000.00 ($ $3.754.616.16 $1.675.000.00 $1.984.216.62 $1.550.0(~ $ $3,754,616.16 $1,675,000.00 $1,984,216.62 $1,550,000.00 $ 4,247,224.67 2,994,829.32 2,693,189.00 2,421,436.00 iì $ $ $ $ -39- CITY OF SALINA Salina, Kansas Schedule 4 COMPARISON OF SPECIAL ASSESSMENTS PROJECTS EXPENDITURES TO AUTHORIZATIONS December 31, 1986 Street and Drainage Improvements and Water Line and Sanitary Sewer Extensions Downtown Redevelopment Project Authorization Cumulative l~xpenditures Project Name $1,317,005.80 6,500,000.00 ~u, 036, 580.13 3,034,165.86 -40- CITY OF SALINA Salina, Kansas SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE Year Ended December 31, 1986 Federal Grantor/ Pass Through Grantor/ Program Title U.S. Department of the Treasury - Revenue Sharing Program U.S. Department of Housing and Urban Development - Fair Housing Assistance Program Federal Emergency Manage- ment Agency - Federal Emergency Management As sistance U.S. Department of Housing and Urban Development - Community Development Block Grant/Small Cities Program (Passed Through Kansas Department of Commerce) Total Federal Assistance Federal CFDA Number 21.300 14.219 Unencumbered Cash Balance January 1, 1986 $33,012.68 2,430.05 ß35.442.73 Receipts $432,966.00 12,300.00 35,606.00 400,000.00 $880.872.00 Schedule 5 Unencumbered Cash Balance December 31, Expenditures 1986 $465,978.68 20,730.14 35,606.00 400,000.00 $922. 3IlL 82 $ (6,000.09) ($6.000.09) -41- SEPARATE FINANCIAL STATEMENTS WATER AND SEWERAGE DEPARTMENT CITY OF SALINA Salina, Kansas WATER AND SEWERAGE DEPARTMENT FINANCIAL STATEMENTS AND AUDITORS' REPORT December 31, 1986 and 1985 KENNEDY AND COE Certified Public Accountants Salina, Kansas HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402-1100 913.825-1561 KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO To the Mayor and The Board of City Commissioners: We have examined the balance sheets of the Water and Sewerage Department of the City of Salina, Kansas, as of December 31, 1986 and 1985, and the related state- ments of income, contributed capital and retained earnings, and changes in financial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered nec- essary in the circumstances. In our opinion, the financial statements referred to above present fairly the finan- cial position of the Water and Sewerage Department of the City of Salina, Kansas, as of December 31, 1986 and 1985, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis. Salina, Kansas June 23, 1987 Respectfully submitted, ¡f~ ~& ~Ç/.~ C.P.A. Certified Public Accountant in charge of and actively engaged on this audit. MEMBERS OF; AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS -42- CITY OF SALINA Salina, Kansas WATER AND SEWERAGE DEPARTMENT BALANCE SHEETS ASSETS Current Assets Cash and investments Accounts receivable, net of doubtful accounts - 1986, Prepaid supplies Total Current Assets allowance for $34,361; 1985, $24,854 Restricted Assets System sinking fund Cash and investments Plant reserve fund Cash and investments System reserve fund Cash and investments Total Restricted Assets Property, Plant, and Equipment Land Water plant and equipment Sewerage plant and equipment Furniture and office equipment Construction in progress (Note 5) Less accumclated depreciation Total Property, Plant, and Equipment Other Assets Deferred bond issuance costs, net of accumulated amortization - 1986, $44,196; 1985, $26,808 Totals December 31, 1986 1985 $ $ 395,128 620,721 294,256 127,353 816,737 251,437 129,150 1,001,308 357,745 334,601 615,314 568,966 1,388,985 1,407,480 2,362,044 2,311 ,047 116,263 116,263 15,055,951 14,920,706 10,100,761 10,070,772 169,182 155,934 275,322 113,865 25,717,479 25,377 ,540 13,238,701 12,690,295 12,478,778 12,687,245 123,904 141,292 $15,781,463 $16,140,892 The accompanying notes are an integral part of these financial statements. LIABILITIES Current Liabilities Accounts payable Customers' meter deposits Accrued interest payable Long-term obligations due within Total Current Liabilities one year (Note 3) Long-Term Obligations Revenue bonds due after one year (Note 3) Reserves, Contributed Capital Reserves System sinking fund Plant reserve fund System reserve fund Total Reserves and Retained Earnings Contributed capital and retained earn~ngs (Exhibit C) Total Reserves, Contributed Capital and Retained Earnings Totals Exhibit A December 31, 1986 1985 $ 132,595 60,490 67,065 210,000 470,150 $ 124,458 56,355 76,074 310,000 566,887 1,760,000 1,970,000 357,745 615,314 1,388,985 2,362,044 334,601 568,966 1,407,0.80 2, 311, 047 II ,189,269 1l,292,958 13,551,313 13,604,005 $15,781,463 $16,140,892 -43- CITY OF SALINA Salina, Kansas Exhibit B WATER AND SEWERAGE DEPARTMENT STATEMENTS OF INCOME Other Expenses Interest on revenue bonds Amortization of deferred bond Loss on retirement of assets Total Other Expenses ~ssuance costs Year Ended December 31, 1986 1985 $2,927,062 $2,812,450 701,997 695,584 17 , 620 20,280 15,093 13,965 12,780 10,717 25,184 26,954 3,699,736 3,579,950 99,553 93,024 855,124 842,735 191,124 175,286 410,708 342,237 320,110 305,470 698,286 611,571 606,964 588,428 612,085 597,084 3,793,954 3,555,835 (94,218) 24,115 155,136 189,743 93,874 129,937 249,010 319,680 181,843 207,306 17,388 17,388 8,253 12,555 207,484 237,249 ($ 52,692) $ 106,546 Operating Revenues Water revenue Sewerage revenue Tapping service and frontage charges Meter repair and service line revenue Service charge - Sanitation department Miscellaneous income Total Operating Revenues Operating Expenses Water supply Softening and treatment Pumping Distribution Customers' accounting and collection Administrative and general Sewage treatment and collection Depreciation Total Operating Expenses Operating Income (Loss) Other Income Interest on investments Miscellaneous Total Other Income Net Income (Loss) The accompanying notes are an integral part of these financial statements. -44- CITY OF SALINA Salina, Kansas Exhibit C WATER AND SEWERAGE DEPARTMENT STATEMENTS OF CONTRIBUTED CAPITAL AND RETAINED EARNINGS Balance, Beginning of Year Year Ended December 31, 1986 1985 $11,292,958 $11 ,049 ,934 (52,692) 106,546 113,009 501,547 751,054 114,114 562,969 970,609 Additions Net income (loss) for the year (Exhibit B) Contributions of property, plant and equipment Transfers from System sinking fund reserve System reserve fund Total Additions Deductions Transfers to restricted System sinking fund Plant reserve fund System reserve fund Total Deductions reserves 524,691 46,348 95,619 666,658 544,787 43,222 139,576 727,585 Balance, End of Year $11,189,269 $11,292,958 The accompanying notes are an integral part of these financial statements. -45- CITY OF SALINA Salina, Kansas WATER AND SEWERAGE DEPARTMENT Exhibit D STATEMENTS OF CHANGES IN FINANCIAL POSITION Sources of Working Capital From Operations Net income (loss) (Exhibit B) Charges against net income not affecting working capital Depreciation Amortization of deferred bond issuance costs Loss on dispositions of property, plant, and equipment Working capital provided by operations Decrease in restricted assets Proceeds from sale of property, plant, and equipment Total Sources of Working Capital Applications of Working Capital Decrease in long-term obligations Additions to property, plant, and equipment (net of contributions - 1986, $-0-; 1985, $113,009) Increase in restricted assets Total Applications of Working Capital Increase (Decrease) in Working Capital Changes in Components of Working Capital Increase (Decrease) in Current Assets Cash and investments Accounts receivable Prepaid supplies Total Increase (Decrease) in Current Assets Increase (Decrease) in Current Liabilities Accounts payable Customers' meter deposits Accrued expenses Long-term obligations due within one year Total Increase (Decrease) in Current Liabilities Increase (Decrease) in Working Capital Year Ended December 31, 1986 1985 ($ 52,692) $106,546 612,085 597,084 17 ,388 17,388 8,253 12,555 585,034 733,573 23,469 11 ,500 596,534 757,042 210,000 310,000 423,371 268,922 50,997 684,368 578,922 ($ 87,834) $178,120 ($225,593) ($110,016) 42,819 (11,268) 0,797) 19,167 084,571) 002,117) 8,137 (42,448) 4,135 (4,735) (9,009) (53,054) 000,000) 080,000) (96,737) (280,237) ($ 87,834) $178,120 The accompanying notes are an integral part of these financial statements. -46- 1. 2. CITY OF SALINA Salina, Kansas WATER AND SEWERAGE DEPARTMENT NOTES TO FINANCIAL STATEMENTS December 31, 1986 and 1985 Summary of Significant Accounting Policies a. Fund Accounting: The City maintains its accounting records in accordance with the principles of fund accounting in order to ensure observance of limitations and restrictions placed on the use of resources available. Resources are classified for accounting and reporting into funds established according to their nature and purposes. The WateJê and Sewerage Department of the City of Salina is a separate fund of the City which is supported by user charges from its customers rather than by tax monies. The Department uses the accrual method of accounting in the preparation of its financial statements. Revenue is recorded as earned and expenses as incurred. b. Deferred Issuance Costs: Deferred issuance costs are amortized to expense over the term of the related revenue bonds. c. Property, Plant, and Equipment and Depreciation: Property, plant, and equipment are stated at cost. Assets acquired prior to 1981 have been adjusted to reflect cost as determined by a firm of professional appraisers. Depreciation is determined using the straight-line method over the estimated useful life of each asset. d. Investments: Investments are stated at cost which approximates market. Cash and Investments Kansas municipalities, such as the City of Salina, are authorized by Kansas statutes to invest funds in: (1) Temporary notes or no-fund warrants issued by the investing governmental unit, Time deposit, open accounts or certificates of deposit, Time certificates of deposit, Repurchase agreements, and United States Treasury bills or notes with maturities not exceeding six months. (2 ) (3) (4) (5 ) Deposits or investments with qualifying financial institutions are to be secured by a bond or by the pledge of certain types of securities specified by statute. Cash and investments of the City of Salina were 100% insured or collateralized by securities provided by depository financial institutions at December 31, 1986. Cash and investments of the Water and Sewerage Department are pooled with other funds of the City for deposit and investment purposes. Cash and investment balances of the City included petty cash, cash in checking and savings accounts, repurchase agreements and certificates of deposit as of December 31, 1986. -47- 3. Long-Term Obligations The City issued its Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984 (the 1984 Bonds), as of June 15, 1984, for the purpose of refunding its Combined Water and Sewage System Refunding Revenue Bonds, Series of 1978 (the 1978 Bonds). The proceeds of the 1984 Bonds, cash and certain investments were transferred to a Refunding Escrow Trust Account at a local bank, pursuant to an escrow trust agreement dated as of June 15, 1984, and were invested in United States Government obligations. The investments and interest earned on such investments will be sufficient to pay all principal and interest on the 1978 Bonds as they become due. The 1984 Bonds mature serially each February 15 through 1994, and remaining maturities bear interest at rates varying from 8 1/4 to 9 3/4 percent per annum. Maturities of the 1984 bonds in subsequent years are as follows: Year Amount 1987 1988 1989 1990 1991 Thereafter $ 210,000 230,000 250,000 275,000 190,000 815,000 Total Bonds Outstanding, December 31, 1986 $1,970,000 The City issued the 1978 Bonds for the purpose of refunding its Combined Water and Sewage System Revenue Bonds of 1961 and 1977. Proceeds of the 1978 Bonds were invested in United States Government obligations deposited with a local bank, pursuant to an escrow trust agreement dated May 1, 1978. Total funds deposited and interest earned on such funds will be sufficient to pay all principal and interest on the 1961 and 1977 bonds as they become due. The final maturity of the 1961 Bonds was retired in 1986. Neither the assets deposited with the escrow agent nor the outstanding 1977 and 1978 obligations totaling $7,336,000 are reflected in the accompanying financial statements as of December 31, 1986. The City has established certain reserve accounts pursuant to the 1984 bond ordinance to provide funds for the retirement of the bonds and payment of interest thereon and for making replacements to the system in the event other funds are not available. The gross revenues of the Department are pledged to secure payment of the bonds; however, the pledge is subordinate to a similar pledge to secure payment of the 1977 and 1978 bonds. The amounts required to be maintained in the reserve accounts established by the 1984 bond ordinance have been provided and the total revenues of the system for 1986 appear sufficient to meet the requirements of the ordinance. -48- 4. Retirement Plan The City participates in the State of Kansas Public Employees' Retirement System which is a defined contribution plan covering substantially all full- employees. The Department's portion of pension costs, which are funded as accrued, is determined as 4.3 and 4.9 percent of each covered employee's salary for the years 1986 and 1985, respectively. Pension expense totaled $41,368 and $52,291, for the years 1986 and 1985, respectively. 5. Commitments The Department has entered into contractual commitments totaling $110,000 to complete certain projects included in construction in process at December 31, 1986. 6. Related Party Transactions The Department reimbursed the City of Salina, Data Processing Fund $54,500 in both 1986 and 1985 for data processing services. -49-