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Audit - 2018 COMPREHENSIVE ANNUAL FINANCIAL REPORT 300 West Ash Street P.O. Box 736 Salina, Kansas 67402-0736 For the Fiscal Year Ended December 31, 2018 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2018 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal i -iv Organizational Chart v List of Principal Officials vi FINANCIAL SECTION Independent Auditor’s Report 1 -3 Management's Discussion and Analysis 4 -15 Basic Financial Statements: Government-wide Financial Statements Statement of Net Position 16 Statement of Activities 17 Fund Financial Statements Balance Sheet -Governmental Funds 18 Reconciliation of the Total Governmental Fund Balance to Net Position of Governmental Activities 20 Statement of Revenues, Expenditures, and Changes in Fund Balance -Governmental Funds 21 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance with the Government-Wide Statement of Activities 23 Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Non-GAAP Basis) General Fund 24 Tourism and Convention Fund 25 Special Gas Fund 26 Sales Tax Capital Fund 27 Statement of Net Position -Proprietary Funds 28 Statement of Revenues, Expenses, and Changes in Net Position -Proprietary Funds 29 Statement of Cash Flows -Proprietary Funds 30 -31 Statement of Assets and Liabilities -Agency Funds 32 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2018 TABLE OF CONTENTS -CONTINUED Page FINANCIAL SECTION -CONTINUED Notes to the Basic Financial Statements 33 -72 Required Supplementary Information Other Postemployment Benefits Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 73 Other Postemployment Benefits -KPERS Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 74 KPERS Pension Plan Schedule of City’s Proportionate Share of the Net Pension Liability 75 Schedule of City Contributions 75 Combining Statements and Individual Fund Schedules Combining Statements -Nonmajor Funds Fund Descriptions 76 -77 Combining Balance Sheet -Nonmajor Governmental Funds 78 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Governmental Funds 79 Combining Balance Sheet -Nonmajor Special Revenue Funds 80 -83 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Special Revenue Funds 84 -87 Combining Balance Sheet -Nonmajor Permanent Funds 88 Combining Statement of Revenues, Expenditures and Changes in Fund Balances -Nonmajor Permanent Funds 89 Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance -Budget and Actual (Non-GAAP Basis): Bicentennial Center Fund 90 Business Improvement District Fund 91 Neighborhood Park Fund 92 Special Parks and Recreation Fund 93 Special Alcohol Fund 94 Sales Tax Economic Development Fund 95 Arts & Humanities Fund 96 Debt Service Fund 97 Solid Waste Disposal Fund 98 Water and Sewer Fund 99 Sanitation Fund 100 Golf Course Fund 101 Workers’ Compensation Reserve Fund 102 Health Insurance Fund 103 Central Garage Fund 104 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2018 TABLE OF CONTENTS -CONTINUED Page FINANCIAL SECTION -CONTINUED Internal Service Fund Descriptions 105 Combining Statement of Net Position -Internal Service Funds 106 Combining Statement of Revenues, Expenses, and Changes in Net Position -Internal Service Funds 107 Combining Statement of Cash Flows -Internal Service Funds 108 -109 Fiduciary Fund Descriptions -Agency Funds 110 Combining Balance Sheet -Agency Funds 11 1 Combining Statement of Changes in Assets and Liabilities -Agency Funds 112 Schedule STATISTICAL SECTION Net Position by Component -Last Ten Fiscal Years 1 113 Changes in Net Position -Last Ten Fiscal Years 2 114 Fund Balances, Governmental Fund -Last Ten Fiscal Years 3 115 Changes in Fund Balances, Governmental Funds -Last Ten Fiscal Years 4 116 Tax Revenues by Source, Governmental Funds -Last Ten Fiscal Years 5 117 Assessed and Estimated Actual Value of Taxable Property –Last Ten Fiscal Years 6 118 Direct and Overlapping Property Tax Rates –Last Ten Fiscal Years 7 119 Principal Property Taxpayers 8 120 Property Tax Levies and Distributions 9 121 Direct Sales Rate by Taxing Entity 10 122 Water Sales by Class of Customer 11 123 Ratio of Outstanding Debt by Type 12 124 Ratio of Net General Bonded Debt Outstanding 13 125 Direct and Overlapping Governmental Activities Debt 14 126 Legal Debt Margin 15 127 Pledged Revenue Coverage 16 128 Demographic and Economic Statistics 17 129 Principal Employers 18 130 INTRODUCTORY SECTION DEPARTMENT OF FINANCE TELEPHONE (785) 309-5735 AND ADMINISTRATION FA X (785) 309-5738 300 West Ash, P.O. Box 736 TDD (785) 309-5747 Salina, Kansas 67402-0736 Website: www.salina-ks.gov i September 25, 2019 To the Citizens of the City of Salina, Kansas: The Comprehensive Annual Financial Report of the City of Salina, Kansas (the "City") for the year ended December 31, 2018, is hereby submitted. The City’s Finance Department prepared the report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of all various funds and account groups of the City. We believe that all disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Report Format The Comprehensive Annual Financial Report is presented in three sections: Introductory, Financial and Statistical. The introductory section includes a description of the City, including services provided, and explanation of the City’s accounting system and budgetary controls, and a brief discussion of the City’s economic condition and outlook. The City's organizational chart is also included to assist the reader in understanding the structure of the City. The financial section includes the Independent auditor’s report, Management’s discussion & analysis, Government wide financial statements, Fund financial statements, Notes to the financial statements, and Individual and combining statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The reader is specifically directed to Management’s Discussion and Analysis (MD&A) which immediately follows the independent auditor’s report. MD&A provides a narrative explanation and overview of significant features and trends reflected by data in the financial statements. Accounting Systems and Internal Controls A critical part of the control system is the City’s comprehensive Budgetary and Financial Policies, which establish guidelines for budgetary and financial practices. The Budgetary and Financial Policies are reviewed by the City Commission and updated each year as a part of the budget process. City staff is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits require estimates and judgment by management. The objective of budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the Fund level, in accordance with State Statutes. However, management control is maintained at the department level. The City uses an encumbrance accounting system, in which estimated purchase amounts are recorded prior to the release of purchase orders to vendors. Open encumbrances are reported as reservations of fund balance at December 31, 2018 in the general fund and the special revenue funds. Various internal compliance procedures are implemented to ensure proper implementation of the budget as well as to maintain a degree of accountability for both revenues and expenditures. ii Independent Audit Kansas Statutes Annotated 75-1122 requires an annual audit of the books of account, financial records and transactions of all administrative departments of the City by independent certified public accountants selected by the City Commission.This requirement has been complied with and the auditor's opinion has been included in this report. Profile of the Community The Town of Salina was organized in 1858 under the Town and Village Act in the State of Kansas, and became a City of the First Class on July 9, 1920.The City has had a Commission-City Manager form of government since 1921.The Commission is comprised of five members elected at large.Each year the commission chooses one member to act as Mayor.The City Manager is appointed by the Commission, and acts as its primary agent in accordance with state statute.Other city officers and employees are appointed by the City Manager.The current population of the City is 46,994. The reporting entity includes the City of Salina as well as two discretely presented component units, both proprietary fund types.The Salina Airport Authority operates the Salina Municipal Airport and Airport Industrial Center, and the Salina Housing Authority administers public housing programs within the City of Salina.The entity also includes one blended component unit. Salina Field House Qualified Active Low- Income Community Business, Inc. (SFH QalicB). SFH QalicB was created for the purpose of providing an indoor sports facility in the downtown core of the city of Salina. In addition, the City of Salina participates in a joint venture with Saline County, the City-County Building Authority.This report includes all funds and account groups of the City. The City provides a full range of services including police and fire protection, development services, construction and maintenance of streets, drainage facilities and other infrastructure; recreational activities and cultural events; emergency medical services and convention facilities.In addition to general government activities, the City also provides water, wastewater, sanitation, and solid waste services; therefore, these activities are included in the reporting entity. Economic Outlook and Strength The City benefits from its location at the junction of Interstate Highways 70 and 135.This convenient location has drawn numerous national and regional companies to open manufacturing or distribution centers in or adjacent to the community.Such companies include Pepsi-Cola, Exide Technologies, Blue Philips Lighting Company, ElDorado National, and Schwan’s Global Supply Chain. Manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is dominant. The City of Salina retains its position near the top of a list of first class cities with respect to “trade pull factor.” According to the Kansas Department of Revenue’s Annual City Trade Pull Factor report, Salina had a pull of factor of 1.48 in 2017. The pull factor measures the degree to which a city or county area captures retail trade from outside the jurisdiction.A pull factor of greater than 1 indicates that a city is attracting more retail trade from outside the city/county than it is losing to other counties.It is apparent from this that Salina continues to serve as a regional economic hub in 2018. Major Initiatives In April, 2016, voters elected to replace the .40 cent capital improvement sales tax with a .75 cent capital improvement sales tax for a term of 20 years. Priorities for the sales tax are improving neighborhood streets and drainage, preserving stable property tax rates, ensuring a quality park system, constructing and maintaining community improvements, funding equipment for maintenance, repayment of future bonds for large projects and attracting quality jobs.As a result of this initiative, the City has seen a 38% increase in sales tax collections in 2018 as compared to 2016. In 2018, the Salina Field House completed its first year in business. It hosted 16 tournaments and over 91,000 attendees and continues to grow in the number of events that it is drawing to the City. iii Old Chicago Pizza opened for business in the City’s downtown corridor in late 2018. STAR Bonds were issued in December, 2018, for the Downtown Revitalization Project. As a result of this funding, several projects are now moving forward including the City’s Downtown Streetscape project, the Alley Entertainment Center, a car museum and the new downtown hotel. Other major projects that were on going included gutter and paving on North 9th Street,South Well Field improvements, continued improvements to the water distribution system and preliminary design on the Smoky Hill River Renewal and Police Training Center projects. The City continues to address fiduciary pressures generated by a recessionary economy. General adjustments to the pay plan for cost of living changes at a rate of 2.5%were implemented in 2018. The City also allowed for merit review increases up to 3%. Capital Improvement Planning The City's Capital Improvement Plan (CIP) consists of two components.One component consists of “routine” capital—including vehicle and equipment replacement, technology replacement, building repair and improvement, routine pavement maintenance activity, utility system enhancements and similar items.The amount of funding for these projects may fluctuate based on needs and funding availability, however, planned amounts are allocated over a multi-year period.Source of funding for routine capital is current cash resources from the fund appropriate to the nature of the purchase. The second component of the CIP includes major projects that typically require issuance of bonds or notes, although these projects may also be supplemented with available cash and grant financing.The plan is updated each year after an extensive evaluation of the demands on future financial resources.The Capital Improvement program is scheduled for a major revision as the result of the sales tax to be used for that purpose. Construction initiated: *2019 2020 2021 2022 2023 Sales tax $ 4,380,000 $ 4,385,000 $ 4,390,000 $ 4,395,000 $ 4,250,000 Water & wastewater fund ----2,000,000 2,000,000 2,000,000 General obligation bonds 5,225,000 19,700,000 ---- Revenue Bonds/Loans 11,255,000 6,000,000 28,000,000 -- Other sources 785,800 -------- $ 21,645,800 $ 30,085,000 $34,390,000 $6,395,000 $ 6,250,000 *The year a project is scheduled reflects the year that construction is initiated.Preliminary work (design, acquisition) may precede this date by one or more years, and permanent financing may not occur until one (or more years depending on project magnitude) subsequent to this date. Financial Policies The City has adopted a formal set of Budgetary and Financial Policies, addressing such items as fund balances, capital improvements, operating budgets, long term debt management, accounting, auditing and financial reporting, revenues, cash management and investments. Financial policies contribute to financial stability by: 1.Providing consistent guidance in decision making 2.Establishing appropriate levels of fund balances 3.Governing the use of one time or unanticipated resources 4.Providing a multi-year capital improvements process 5.Establishing responsibilities and deadlines for budget preparation 6.Providing for a balanced annual operating budget 7.Providing guidelines on the use of debt, including appropriate purposes and terms 8.Provide a linkage between capital improvement scheduling and long term debt management planning iv 9.Require annual audits and financial reporting in conformance with Generally Accepted Accounting Procedures 10.Require timely and regular interim financial reporting to the Governing body 11.Ensure the safety of cash and near cash resources (timely collection of Accounts Receivable, etc.). Acknowledgments The preparation of the Comprehensive Annual Financial Report was made possible by the dedicated Finance staff of the City of Salina and the professional advice and efforts of the Mize Houser auditing team. Finally, preparation of this report would not have been possible without the support of the City Commission. Sincerely, Michael D. Schrage City Manager v CITIZENS CITY COMMISSION Karl Ryan, Mayor Trent Davis Melissa Rose Hodges Mike Hoppock Joe Hay City Manager Michael Schrage Deputy City Manager Vacant Municipal Court Risk Management Legal Services Clark Mize & Linville Chartered* Greg Bengston Development Services Lauren Driscoll Building Services Neighborhood Services Planning & Zoning Community Relations Police Brad Nelson Parks & Recreation Chris Cotten Public Works Jim Kowach Fire Kevin Royse Finance/Administration Debbie Pack Utilities Martha Tasker Parks Division Recreation Division Golf Course Facility Maintenance Animal Services *Tony’s Pizza Event Center Engineering Public Services Streets Traffic Control Flood Control Sanitation Solid Waste Central Garage Water Plant Division Wastewater Plant Division Utility Division Water Distribution Wastewater Collection City Clerk Water Customer Accounting Finance Fire Administration Fire Suppression Fire Prevention EMS Administration Patrol Division Support Division Investigative Division Computer Technology Jack Rolfs Arts & Humanities Brad Anderson Human Resources Natalie Fischer Continuous Process Improvement Scott Gardner vi vi City of Salina, Kansas List of Principal Officials City Commission Karl Ryan, Mayor Trent Davis, Vice Mayor Mike Hoppock, Commissioner Melissa Rose Hodges, Commissioner Joe Hay, Commissioner City Executive Staff Michael Schrage, City Manager Lauren Driscoll, Director of Development Services Debbie Pack, Director of Finance and Administration Jack Rolfs, Director of Computer Technology Natalie Fischer, Director of Human Resources Greg Bengston, City Attorney Brad Nelson, Chief of Police Kevin Royse, Fire Chief Daniel Stack, City Engineer Jim Kowach, Director of Public Works Martha Tasker, Director of Utilities Chris Cotten, Director of Parks and Recreation Brad Anderson, Director of Arts and Humanities Scott Gardner, Continuous Process Improvement FINANCIAL SECTION www.mizehouser.com mhco@mizehouser.com 534 S Kansas Ave, Suite 700 Topeka, KS 66603-3465 785.233.0536 p 785.233.1078 f 534 S Kansas Ave, Suite 400 Topeka, KS 66603-3454 785.234.5573 p 785.234.1037 f 7101 College Blvd, Suite 900 Overland Park, KS 66210-1984 913.451.1882 p 913.451.2211 f 211 E Eighth Suite ALawrence, KS 66044-2771 785.842.8844 p 785.842.9049 f 1 INDEPENDENT AUDITOR’S REPORT Mayor and City Commissioners City of Salina, Kansas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the Kansas Municipal Audit and Accounting Guide. Those standards require we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. We did not audit the financial statements of the Salina Field House Qualified Active Low-Income Community Business, Inc. (SFH QalicB), which is included within the financial statements as a major governmental fund. This activity represents 4% and 1%, respectively, of the total assets and total revenues of the governmental funds. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for SFH QalicB, is based solely on the report of the other auditors. We also did not audit the financial statements of the Housing Authority of the City of Salina, which is a discretely presented component unit in the accompanying financial statements and which statements reflect total assets and deferred outflows of resources of $7,486,949 as of June 30, 2018 and total revenues of $2,507,375 for the year then ended. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Housing Authority of the City of Salina,is based solely on the reports of the other auditors. 2 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinions In our opinion, based on our audit and the reports of other auditors,the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business- type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of December 31, 2018, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General, Tourism and Convention, Special Gas and Sales Tax Capital Funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matter Change in Accounting Principle As described in Note 3 to the financial statements, the City implemented GASB 75 for other postemployment benefits during the current year. As a result of the implementation, a restatement was made to the net position at December 31, 2017. Our opinion is not modified with respect to this matter. Prior Period Restatement As discussed in Note 3 to the financial statements, certain errors in amounts previously reported as of December 31, 2017, were discovered by management of the City during the current year. Accordingly, these amounts have been restated in the December 31, 2018, financial statements now presented, and adjustments have been made to net position to correct the error. Our opinion is not modified with respect to these matters. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 4 through 15, the other postemployment benefit schedules on page 70 and 71, the schedule of the City’s proportionate share of the net pension liability on page 72, and the schedule of City contributions on page 72 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 3 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the basic financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Certified Public Accountants Lawrence, Kansas September 25, 2019 4 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) This section of the report contains an overview and analysis of the City of Salina’s financial statements for the fiscal year ended December 31, 2018. The information contained here, as well as the information contained in the letter of transmittal, are intended to provide the reader of the financial statements with a well-rounded picture of the City’s financial condition. Financial Highlights On an accrual basis, the City’s government-wide net position increased $11.1 million from current operations with net position increases of $9.8 million and $1.3 million in governmental activities and business-type activities, respectively. At the close of 2018, the City’s governmental funds reported combined ending fund balances of $19.1 million, a decrease of $2.7 million from the prior year. This primarily resulted from issuance of temporary notes in the Capital Projects Fund and the capital project expenditures in the SFH QalicB Fund. The General Fund balance decreased $140 thousand over the prior year. At the close of 2018, the City’s enterprise funds reported a combined ending Net Position of $90.4 million, an increase of $1.3 million over prior year. Positive performance was shared by the Water and Sewer Fund and the Sanitation Fund,with the Water and Sewer Fund providing the bulk of the change ($1.8 million).The Solid Waste Disposal Fund saw a negative performance as a result of additional costs related to the opening of the Drive Thru Recycling Center. Revenues from governmental activities increased by $4.2 million from the prior year and revenues from business type activities increased $.5 million from the prior year. Revenues from investments continue to be minimal. The Basic Financial Statements The basic financial statements of the City include the government-wide financial statements and the fund financial statements. The notes to the financial statements follow the basic financial statements and are essential for the reader’s understanding of the financial statements. Other supplementary information, including the combining schedules for non-major funds and the budgetary comparison reports, are at the end of this report to provide additional information for the reader. Government-wide Financial Statements The government-wide financial statements present the results of the City’s operations using the accrual basis of accounting, the same basis as is used by private sector businesses. These statements focus on the long-term financial picture of the City as a whole. The Statem ent of Net Position reports all of the City’s assets and liabilities. Net position, the difference between assets and deferred outflows of resources and liabilities, are an im portant measure of the City’s overall financial health. Net position represents the total accumulated and unused resources available to the City for the purpose of providing services. Over tim e, the increases and decreases in net position can be monitored to determine if the City’s financial position is improving or deteriorating. The Statement of Activities shows how net position has changed during the fiscal year. One unique feature of this statement is how it shows the revenues and expenses related to specific programs and how much of those programs were supported by the general taxes of the City. Since this statement is prepared on the accrual basis of accounting, all revenues and expenses are included, regardless of when cash is actually received. Both statements show the operations of the Cit y broken down between governmental and business-type activities. Governmental activities are the operations of the City generally supported by taxes, such as public safety (police, fire, and EMS), public works, 5 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) public health, and culture & recreation. Business-type activities are operations of the City that are intended to recover a significant portion of their costs through user fees and charges. These include water and sewer, refuse collection, the golf course, and operation of the City solid waste facility. The government-wide financial statements include the Salina Airport Authority and Salina Housing Authority as discretely presented component units of the City and the Salina Field House Qualified Active Low-Income Community Business, Inc. (SFH QalicB) as a blended component unit. Note 1, item A in the Notes to the Financial Statements provides a more complete explanation of the relationship between these entities and the City of Salina. Fund Financial Statements The City uses three types of funds to manage its resources: governmental funds, proprietary funds, and fiduciary funds. A fund is a fiscal entity with a set of self-balancing accounts recording financial resources together with all related liabilities and residual equities and balances, and the changes therein. These accounting entities are separated for the purpose of carrying on specific activities or attaining certain objectives in accordance with regulations, restrictions, or limitations. Governmental fund financial statements are prepared on a modified accrual basis. Under this basis, revenues are recognized when they become measurable and available, and expenditures are recognized when the related fund liability is incurred with the exception of long term debt and similar items which are recorded when due. The focus is on the short-term financial picture of the operations of the individual fund, rather than long-term citywide view provided by the government-wide statements. Major governmental funds are presented in individual columns, while non-major governmental funds are aggregated into an “Other Governmental Funds”column. A combining statement for the non-major funds is presented as supplementary information in the back of the report. The information presented in these statements can be compared to the governmental activities information in the government-wide statements. The reconciliation at the end of the fund financial statements details the relationship between the two types of financial statements. Proprietary funds fall into two categories: enterprise funds and internal service funds. All proprietary funds are prepared on the accrual basis of accounting and are used to account for business-type activities. Enterprise fund statements present the same information that is in the government-wide statements for business-type activities, but in greater detail. The City of Salina currently operates four enterprise funds: Sanitation, Solid Waste Disposal, Golf Course, and Water and Sewer. Internal service funds are used to account for the cost of operations shared by various departments of the City. The city operates three internal service funds. Two of these are for self-insurance activity: Workers Compensation Reserve, and Health Insurance. The remaining accounts for the Central Garage operation. A combining statement for these internal service funds can be found in the supplementary information following the notes to the financial statements. Fiduciary funds are used by the City to account for resources held by the City for a third party. Agency funds are a special class of fiduciary fund in which liabilities always equal assets, and thus there is no net position. The City of Salina operates twelve agency funds. Schedules for these funds may be viewed in the supplementary section of this report. Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used. Permanent funds operated by the City include the Citizenship Trust, Cemetery and Mausoleum Endowments, and the Tri-centennial Commission fund. Notes to the Financial Statements The notes to the financial statements are an integral part of the basic financial statements since they contain valuable additional information necessary for gaining a complete understanding of the City’s financial statements. 6 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Other Information In addition to the basic financial statements and the notes described above, this report also presents the general fund and major special revenue fund’s budgetary statements as required supplementary information directly following the notes to the basic financial statements. The combining statements for the non-major funds are shown after the required supplementary information. Finally, the statistical section includes selected statistical data about the City’s operations and econom y. The City as a Whole This section will identify, discuss, and analyze significant differences and trends that will enhance the reader’s understanding of the City’s financial position. Tax Base and Economy The City of Salina relies on three major groups of revenues to support its operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for services, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to governmental activities, while charges for services apply to both governmental (20%) and business-type (80%) activities. Charges for services account for about 41% ($37.5 million) of the City’s revenue stream. Charges for service depend on both the rate that is set for the activity, as well as the volume of services provided. Significant services include water and wastewater fees, sanitation and landfill fees, licenses and permits, inspection fees and golf course fees.Charges for services increased $.7 million (2%) from the prior year with the sanitation fund increasing $121K (4.2%) and water and sewer fund increasing $347K (2%). The increase in charges for services in the sanitation fund fund and the increase in the water and sewer fund are a result of an increase in user fees. Sales taxes are the next largest component of the revenue mix, providing 24.7%($22.2 million) of the total revenues. The City receives a 1.25% City-wide sales tax, and also a portion of the County-wide 1% sales tax. Forty- four percent, (a rate of .75%)of the City-wide sales tax is required to be used for special purposes. The remaining .5%,along with the City portion of the County-wide tax is available for general purposes. The Cit y is affected by the formula used to distribute the County-wide sales tax among participating jurisdictions (only Cities and the County participate, School and other special districts do not). The formula is based, in part, on the property tax efforts of each jurisdiction. As the portion of the overlapping levy attributable to the City of Salina changes so does the City’s allocated portion of the County-wide sales tax. This change is recognized bi-annually and can affect the overall allocation of the City’s portion of the County-wide sales tax. In 2018, this allocation increased slightly which did not have a significant impact on the tax revenues. In 2008, Salina voters approved an increase of the special purpose .25% tax to a .40% tax. The extended tax is to sunset March 31, 2019. The tax was also modestly re-purposed, for Capital and Economic Development purposes only, as well as retaining a property tax stabilization component.In May 2017, Salina voters approved an increase in the special purpose .40% tax to a .75% tax (thus repealing the 2008 increase). This change became effective October 1, 2017 for twenty years. Property taxes are the third major com ponent of the revenue mix, accounting for 13.9%($12.5 million) of total revenues. Property taxes consist of two components: Real estate and personal property taxes which are determined by the mill levy set by the city and the assessed value of the property; and motor vehicle taxes which are established by a countywide average tax rate and the assessed value of the vehicle. Real estate assessed value increased by 3.0%. The total City mill levy decreased 5.3%. The overlapping levy decreased in 2018 by .75%. 7 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Personal property value continued to slide, presumably as a result of removing business equipment from the tax base. Personal property value has now dropped to $10.1 million from its peak of $39.7 million in 2007. At the 2018 tax rate, this exemption is equivalent to over $775K in annual lost revenue. Motor vehicle value increased 4.6%. Motor vehicle taxes are distributed based on a formula using prior year’s tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Fiscal (Budget) Year 2018 2017 Change Real Estate and Pers onal Property Assessed Valuation 434,451,245$422,364,328$12,086,917$ City Mill Levy ($ per $1,000) Operat ing (General Fund)20.339 21.694 (1.355) Debt Service 5.79 5.909 (0.119) To tal City Rate 26.129 27.603 (1.474) To tal Ove rlapping Levy 133.14 134.153 (1.013) Perc ent of Total Ta xes Col lected 95.9%99.9%-4.0% Ratio of Total Taxes (including del inquent collections) to taxes levied 98.4%101.7%-3.3% Motor Vehicle Valuation 53,336,677$ 50,970,796$ 2,365,881$ Com parat ive Property Values and Tax Levy Rates The unemployment rate in Salina increased slightly from 2.7% at the end of 2017 to 3.3% at the end of 2018, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force increased to 30,174 from 27,684 in 2017. In 2018, the top ten property taxpayers accounted for 10.26%of total assessed value. This is less concentrated than ten years ago (at 15.48%). Statement of Net Position Net position may, over time, provide an indicator of a government’s financial position. In the case of the City of Salina, assets and deferred outflows of resources exceeded liabilities by $223.8 million at December 31, 2018. This represents an increase in net assets of $11.1 million over 2017. A comparative Condensed Statement of Net Position at December 31, 2018 and 2017: 8 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) 2018 2017 2018 2017 2018 % of Total 2017 % of To tal 2018-2017 change Ca sh and inv estments 34,302$ 24,491$ 32,140$ 30,336$ 66,442$ 17%54,827$ 15%11,615$ Ot her current as sets 16,774 13,836 2,630 2,338 19,404 5%16,174 4%3,230 No ncur rent (capital) assets 210,515 206,600 90,181 91,306 300,696 78%297,906 81%2,790 To tal assets 261,591 244,927 124,951 123,980 386,542 100%368,907 100%17,635 To tal def erred outf low s of resources 5,527 5,968 802 887 6,329 100%6,855 100%(526) To tal assets and def erred outf low s of r es ources 267,118 250,895 125,753 124,867 392,871 375,762 17,109 Cu rrent liabilities 28,623 12,540 3,814 3,879 32,437 21%16,419 11%16,018 No ncurrent liabilities 90,931 102,076 31,332 31,685 122,263 79%133,761 89%(11,498) To tal liabilities 119,554 114,616 35,146 35,564 154,700 100%150,180 100%4,520 To tal def erred inf low s of resources 14,113 12,578 224 220 14,337 12,798 1,539 Ne t pos ition: Ne t investment in capital assets 144,845 129,921 62,368 63,316 207,213 92%193,237 91%13,976 Re stricted f or permanent f unds 514 502 - - 514 0%502 0%12 Re stricted f or debt service 1,851 1,510 1,512 1,512 3,363 2%3,022 1%341 Un restricted (13,759) (8,232) 26,503 24,255 12,744 6%16,023 8%(3,279) Total net pos ition 133,451 123,701 90,383 89,083 223,834 100%212,784 100%11,050 Pe rcent of total net position 60%58% 40% 42%100%100% Ca sh and inv estments as a percentage of c urrent liabilitie s 120% 195% 843% 782% 205%334% Co ndensed Statement of Net Position As of December 31 (In $000) Governmental A ctiv it ies Bus ines s-Type A ctiv ities To tal Prima ry Go vernme nt The largest segment of the City’s net position reflects its investment in capital assets (land, buildings, streets and drainage facilities, utility plant, vehicles, equipment, etc.), less any debt used to acquire those assets that is still outstanding. These assets are used to provide services to citizens. As a result, resources required to retire related debt cannot come from liquidation of the asset. Such resources generally must be provided from other sources, such as future taxes or user charges. A small portion of net position is restricted for debt service and permanent funds. The remainder (unrestricted) of net position may be used to meet the City’s obligations to citizens and creditors. In 2018, the amount of net investment in capital assets increased by $14.0 million. Amount restricted for debt service increased by $341 thousand. Unrestricted decreased by $3.3 million. Outside of these changes, 2018 resulted in a $11.1 million increase to the net position. Total liabilities increased in governmental activities and slightly decreased in business-type activities.In governmental activities,current liabilities increased and non-current liabilities decreased primarily due to an increase in temporary notes and a decrease in general obligation bonds. 9 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Statement of Activities A Condensed Statement of Activities is shown below. 2018 2017 2018 2017 2018 % 2017 % 2018-2017 Change Program R ev enues: Charges f or Servic es 10 ,4 11$ 10 ,100$ 27,061$ 26,703$ 37,472$ 42% 36,803$ 43%669$ Operat ing Grants and Contribut io ns 4,300 4,541 - - 4,300 5% 4,541 5%(241) Capital Grants and Contributio ns 4,635 - - - 4,635 5%-0% 4,635 General Revenues: Property T axes 12 ,508 12 ,960 - - 12 ,5 08 14 %12 ,960 15 %(452) Sales T axes 22,209 21,738 - - 22,209 25%21,738 25%471 Ot her Taxes 7,240 6,899 - - 7,240 8%6,899 8%341 In vestment R evenue 18 3 93 233 12 9 416 0%222 0%19 4 Ot her Miscellaneo us 1,062 2,003 15 3 10 3 1,215 1%2,10 6 2%(891) To tal Revenues:62,548 58,334 27,447 26,935 89,995 10 0%85,269 10 0%4,726 Expens es : General Go vernm ent 12 ,013 9,781 - - 12 ,013 15 %9,781 13 %2,232 Public Safety 23,892 23,12 0 - - 23,892 30% 23,12 0 30%772 Public Wo rk s 10 ,458 10 ,345 - - 10 ,4 58 13 %10 ,345 14 %113 Public H ealt h and Sanitatio n 1,256 1,12 6 - - 1,256 2%1,12 6 1% 13 0 Culture and Recreat io n 7,040 6,880 - - 7,040 9%6,880 9%16 0 Planning and Develo pm ent 2,369 1,835 - - 2,369 3%1,835 2%534 So lid Waste D ispo sal - - 2,382 2,364 2,382 3%2,364 3%18 Water and Sewer - - 15 ,190 15 ,650 15 ,190 19 %15 ,650 21%(460) Sanit at io n - - 2,419 2,17 8 2,419 3% 2,17 8 3%241 Go lf C ourse - - 926 852 926 1%852 1%74 In terest on Long Term D ebt 2,117 1,724 - - 2,117 3%1,724 2%393 To tal Expenses 59,14 5 54,811 20,917 21,044 80,062 10 0%75,855 10 0%4,207 In crease in net assets before trans fers 3,403 3,523 6,530 5,891 9,933 9,414 519 Transfers and other extrao rdinary items 4,831 4,309 (4,832) (4,367) (1)(58)57 Change in Net Positio n 8,234 7,832 1,698 1,524 9,932 9,356 576 Net Positio n January 1 12 3,701 115 ,869 89,083 87,559 212,784 203,428 9,356 Prio r P erio d Adjustment 1,518 -(398)-1,12 0 - 1,12 0 Net Positio n January 1, r es tated 12 5,219 115 ,869 88,685 87,559 213,904 203,428 10 ,4 76 Net Positio n December 31 13 3,453$ 12 3,701$ 90,383$ 89,083$ 223,836$ 212,784$ 11,052$ (In $000) Condensed Statem ent o f Activities For the Year Ended December 31 Go vernm ental Activities Business-Type Activities To tal Prim ary Governm ent 10 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Governmental Activities. Charges for services attributable to governmental activities totaled $10.4 million,operating grants for those purposes were $4.3 million and capital grants for those purposes were $4.6 million. Charges for services and capital grants increased from the prior year, while operating grants decreased slightly. The balance was funded by general revenues. Sales taxes accounted for $22.2 million of general revenues, with property taxes providing $12.5 million. The net position increased by $8.2 million as a result of governmental activities. This increase was primarily related to the increase in sales and other taxes. Total expenses for governmental activities for the ye ar ending December 31, 2018 were $59.1 million compared to $54.8 million in 2017. Governmental activities represent 74%of the City’s total expenses. The largest element of governmental activity expense was public safety, accounting for 30% of the total. Business Type Activities. Business-type activities are primarily supported by user charges, with a very small amount coming from investment and miscellaneous revenues. Total expenses for business-type activities for the year were $21 million, or 26% of the City’s total expenses. The majority of this expense ($15.2 million)is attributable to water and sewer operations, with the other activities costing a combined total of $5.7 million. Net position increased by $1.7 million.This increase was primarily related to the increase in water and sewer fund revenues and a decrease in water and sewer fund expenses. Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds as of December 31, 2018 and December 31, 2017. Fund 2018 2017 Change General 6,743$ 6,883$ (140)$ To urism and Convention 458 213 245 Spec ial Gas 1,532 1,082 450 Sales Tax Capital 1,984 2,084 (100) Schilling Capital Improvement 2,136 3,024 (888) Debt Service 1,851 1,510 341 Capital Projec ts (694)895 (1,589) SFH QalicB 1,218 1,715 (497) Ot her Governmental Funds 3,861 4,353 (492) 19,089$21,759$ (2,670)$ Government al Fund Balanc es as of Dec ember 31, (in 000's) Total governmental fund balances decreased by $2.7 million. The reasons for these changes are varied. The Schilling Capital Improvement Fund, which was created to account for U.S. Government and other funds received for the abatement of groundwater contamination, continues to decrease as the City uses funds previously distributed. The Capital Projects Fund decrease was largely the result of the use of funds to fund capital outlays on projects. The SFH QalicB fund was created to account for funds for the Salina Field House. 11 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Revenues and Expenditures: The following table shows a comparison of revenues and expenditures (including other sources and uses) for major funds for the years ending December 31, 2018 and 2017. Fund 2018 2017 Change Revenues (In cluding Other Financ ing Sourc es ) General 41,532$ 41,864$ (332)$ Touri sm and Convent ion 1,795 1,685 110 Spec ial Gas 1,653 1,598 55 Sales Tax Capital 8,225 8,265 (40) Schilling Capital Improvement 15 12 3 Debt Servic e 6,602 6,659 (57) Capital Projec ts 13,555 12,125 1,430 SFH Qal icB 504 248 256 Other Governmental Funds 4,161 4,067 94 To tal Revenues 78,042 76,523 1,519 Les s Other Sourc es (21,622)(19,924)(1,698) Revenues , net of ot her sourc es 56,420$ 56,599$ (179)$ Expendit ures (In cluding Ot her Finacing Uses ) General 41,672$ 40,013$ 1,659$ Touri sm and Convent ion 1,550 1,655 (105) Spec ial Gas 1,203 1,328 (125) Sales Tax Capital 8,324 7,848 476 Schilling Capital Improvement 904 1,049 (145) Debt Servic e 6,955 6,398 557 Capital Projec ts 15,144 4,407 10,737 SFH Qal icB 1,001 5,344 (4,343) Other Governmental Funds 4,653 3,399 1,254 To tal Expenditures 81,406 71,441 9,965 Les s Other Us es (4,186) (4,160) (26) Expendit ures , net of ot her uses 77,220$ 67,281$ 9,939$ Cons olidated Statement of Revenues and Expenditures for Major Governm ent al Funds For the years ended Dec ember 31 Modifi ed Accrual Basis (i n $000's) Total revenues, including other sources, were down $179 thousand compared to 2017, with no funds showing substantial changes between the two years. Total expenditures increased $9.9 million over 2017. The majority of that increase was in the Capital Projects Fund as a result of increased spending on projects, specifically the Downtown Streetscape project. 12 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Proprietary Funds The City of Salina operates four enterprise funds as well as five internal service funds. A summarized comparative Statement of Net Position follows for each enterprise fund: 2018 2017 Ch ange 2018 2017 Ch ange Cu rrent A ssets 6,569$ 6,709$ (140)$ 26,338$ 24,014$ 2,324$ Ca pital A ssets 2,350 3,196 (846)86,535 86,888 (353) De ferred Outf low s 72 79 (7)610 676 (66) To tal A ssets and def er red outf lows 8,991$ 9,984$ (993)$ 113,483$ 111,578$ 1,905$ Cu rrent Liabilities 461$ 445$ 16$ 3,183$ 3,299$ (116)$ No ncurrent Liabilit ies 2,847 3,272 (425)27,576 27,440 136 De ferred Inf low s 30 30 -144 143 1 To tal Liabilities 3,338$ 3,747$ (409)$ 30,903$ 30,882$ 21$ Ne t inves tment in c apital as sets 1,570$ 2,041$ (471)$ 59,502$ 60,053$ (551)$ Re stricted - - - 1,512 1,512 - Un restricted 4,083 4,196 (113)21,566 19,131 2,435 To tal Net Position 5,653$ 6,237$ (584)$ 82,580$ 80,696$ 1,884$ Cu rrent A ssets as a percentage of current liabilities 1425% 1508%827% 728% 2018 2017 Ch ange 2018 2017 Ch ange Cu rrent A ssets 1,747$ 1,787$ (40)$ 116$ 164$ (48)$ Ca pital A ssets 886 826 60 410 395 15 De ferred Outf low s 92 102 (10)27 32 (5) To tal A ssets 2,725$ 2,715$ 10$ 553$ 591$ (38)$ Cu rrent Liabilities 106$ 87$ 19$ 64$ 48$ 16$ No ncurrent Liabilit ies 684 733 (49)225 240 (15) De ferred Inf low s 38 38 -11 11 - To tal Liabilities 828$ 858$ (30)$ 300$ 299$ 1$ Ne t inves tment in c apital as sets 886$ 826$ 60$ 410$ 395$ 15$ Re stricted - - - - - - Un restricted 1,011 1,031 (20)(157)(103)(54) To tal Net Position 1,897$ 1,857$ 40$ 253$ 292$(39)$ Cu rrent A ssets as a percentage of current liabilities 1648% 2054%181% 342% Co mp arativ e Summa ry Statement of Net Pos ition as of December 31 (in $000's ) So lid Was te Dis pos al Water and Sew er Sanitation Golf Cour se 13 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Revenues, Expenses, and Changes in Net Position All enterprise funds show healthy results, with all funds reflecting increases in net position. 2018 2017 Ch ange 2018 2017 Ch ange Operating Rev enues 3,116$ 3,185$ (69)$ 20,207$ 19,861$ 346$ Operating Expenses 2,353 2,320 33 14,348 14,721 (373) Operating Income 763 865 (102)5,859 5,140 719 No n-oper ating rev enues (ex pens es )17 (20)37 (667)(832)165 In come (Los s) bef or e Trans fers 780 845 (65)5,192 4,308 884 Tr ansfers in (out)(690)(540)(150)(3,650)(3,450) (200) Ch ange in Net Pos itio n 90 305 (215)1,542 858 684 Ne t Posit io n Januar y 1 6,237 5,932 305 80,697 79,838 859 Re statement (674)-(674)341 -341 Ne t Posit io n Januar y 1, res tated 5,563 5,932 (369)81,038 79,838 1,200 Ne t Posit io n December 31 5,653$ 6,237$ (584)$ 82,580$ 80,696$ 1,884$ 2018 2017 Ch ange 2018 2017 Ch ange Operating Rev enues 3,006$ 2,886$ 120$ 884$ 876$ 8$ Operating Expenses 2,419 2,178 241 926 852 74 Operating Income 587 708 (121)(42) 24 (66) No n-oper ating rev enues (ex pens es )11 6 5 661 -661 In come (Los s) bef or e Trans fers 598 714 (116)(41) 24 (65) Tr ansfers in (out)(492)(377)(115)-- - -- Ch ange in Net Pos itio n 106 337 (231)(41)24 (65) Ne t Posit io n Januar y 1 1,856 1,520 336 292 268 24 Re statement (66)-(66)2 -2 Ne t Posit io n Januar y 1, res tated 1,790 1,520 270 294 268 26 Ne t Posit io n December 31 1,896$ 1,857$ 39$ 253$ 292$ (39)$ Co mp arative Summa ry of Rev enues , Expens es and Changes in Net Position for the Y ear Ended December 31 (In $000's ) Solid Was te Dis pos al Water and Sew er Sanitation Go lf Course 14 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Budgetary Highlights The objective of budgetary controls is to ensure compliance with legal provisions em bodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the fund level, in accordance with State Statutes. Management control is maintained at the departmental level. Within the departments, considerable discretion is permitted. The City uses an encumbrance accounting system, in which estimated purchase orders are recorded prior to the release of purchase orders to vendors. Open purchase orders are reported as reservations of budgetary basis fund balances at December 31, 2018. Formal budgetary amendments are limited to those circumstances in which the need is perceived to alter the total fund budget. Re- allocation among departments or line items are not typically recorded as budgetary amendments. However, in addition to formal am endm ents, departments within the City are allowed to transfer budget between line item s within a department. Budgets may also be transferred from department to department within each fund. As a result of these transfers, the original budget and the final budgets may not be the same for departments within a fund. Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2018 was $300,696,162 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2018 and 2017: 2018 2017 2018 2017 2018 2017 Equipment , Furniture and Fixtures 2,374$ 2,040$ 1,489$ 1,484$ 3,863$ 3,524$ Vehicles 2,957 3,521 1,208 1,041 4,165 4,562 Buildings and Im provements 31,759 33,079 8,941 9,362 40,700 42,441 Land 24,094 24,093 2,060 1,542 26,154 25,635 Land Leas ed Under Capital Assets 423 - - - 423 - Infrastruc ture 116,365 114,958 72,312 75,727 188,677 190,685 Leas ehold Im provements 326 - - - 326 - Cons truc tion in Progres s 32,217 28,909 4,171 2,150 36,388 31,059 To tal 210,515$206,600$90,181$ 91,306$ 300,696$297,906$ Capital Asset Balanc es Net of Deprec iation as of Dec ember 31 (In 000's) Governmental Activity Busines s-type Activity To tal Changes to capital assets may be summarized as follows: Government al Activity Busines s-Ty pe Activi ty To tal Additions 15,859$ 3,221$ 19,080$ Ret irement s (5,898)(327)(6,225) Deprec iation (5,663)(4,113)(9,776) Net Additions 4,298$ (1,219)$ 3,079$ Changes to Capital Assets, 2018 (in 000's ) Additional information on the City’s capital assets can be found in Note 4,D. of the notes to the basic financial statements. 15 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2018 (Unaudited) Debt Management The City’s general policy for general obligation bonds is to issue them for no more than 10 years for the City at Large portion, with some exceptions permitted for extraordinary projects. On special assessment bonds, the maturity may extend to 15 years. The outstanding general obligation bonds for governmental activities at December 31, 2018 totaled $57,250,888. In addition, there were temporary notes outstanding in the amount of $18,123,505, as well as a financing operating lease in the amount of $845,338. Business-type activities had $11,898,051 in revenue bonds outstanding, as well as $5,557,686 in general obligation bonds. Revenues generated by user fees are pledged to retire all of the bonds issued by business-type activities. In addition, a loan payable is outstanding in the amount of $10,632,351. The City engaged in the following debt transactions during 2018: On July 30th, the City issued 2018-1, $6,000,000 of temporary notes. The proceeds were used to finance construction to Downtown Streetscape, Police Training Facility Design and 2 special assessment projects. On November 27th, the City issued 2018-2,$13,500,000 in temporary notes to pay off the 2018-1 notes as well as finance construction of the Downtown Streetscape and Police Training Facility.This note will be partially refinanced into a long term bond issue in 2019 and partially in 2020. On November 27th, the City issued 2018A, $2,090,000 in General Obligation Bonds to finance construction costs for the Grand Prairie II and River Trail Second Addition special assessment projects, as well as to finance the Beechcraft Road project. On December 1, 2018, the City issued $18,520,000 in Senior Special Obligation Revenue Bonds and $4,320,000 in Subordinate Special Obligation Revenue Bonds to fund STAR Bond district projects. Additional information on the City’s debt can be found in Note 4, E. of the notes to the basic financial statements. Requests for Information This financial report is intended to give the reader a general overview of the Cit y’s finances. Questions about information in this report or requests for additional information should be directed to the Director of Finance, Room 206, 300 West Ash Street, Salina, Kansas, 67401. BASIC FINANCIAL STATEMENTS Total Total Total Salina Salina Governmental Business-type Primary Housing Airport Activities Activities Government Authority Authority ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Current assets: Cash and investments 34,302,149$ 32,140,053$ 66,442,202$ 2,004,471$ 255,390$ Receivables (net of allowance for uncollectibles) Accounts 1,951,605 2,148,480 4,100,085 12,548 145,403 Taxes 12,744,529 -12,744,529 -- Interest 298,248 16 298,264 -- Inventory 263,000 481,548 744,548 36,351 - Restricted cash and investments 1,516,561 -1,516,561 136,383 - Prepaid expenses ---42,457 7,098 Total current assets 51,076,092 34,770,097 85,846,189 2,232,210 407,891 Noncurrent assets: Capital assets, nondepreciable Construction in progress 32,217,207 4,171,178 36,388,385 161,977 8,921 Land 24,516,334 2,059,834 26,576,168 1,454,559 9,965,118 Capital assets, depreciable 275,280,664 151,140,172 426,420,836 8,403,404 78,425,642 Less: Accumulated depreciation 121,498,751 67,190,476 188,689,227 4,834,319 44,538,812 Total noncurrent assets 210,515,454 90,180,708 300,696,162 5,185,621 43,860,869 Total assets 261,591,546 124,950,805 386,542,351 7,417,831 44,268,760 Deferred outflows of resources: KPERS OPEB deferred outflows of resources 98,101 42,043 140,144 -4,294 OPEB deferred outflows of resources 71,407 9,096 80,503 -- Pension deferred outflows of resources 5,260,473 533,024 5,793,497 69,118 111,199 Deferred charge on bond issuance 96,738 217,652 314,390 -1,266,357 Total deferred outflows of resources 5,526,719 801,815 6,328,534 69,118 1,381,850 Total assets and deferred outflows of resources 267,118,265$ 125,752,620$ 392,870,885$ 7,486,949$ 45,650,610$ Liabilities: Current liabilities: Accounts payable 1,491,889$ 348,222$ 1,840,111$ 48,850$ 1,086,778$ Retainage payable 846,849 226,977 1,073,826 -- Accrued liabilities 564,494 -564,494 35,803 73,104 Accrued interest payable 107,944 249,347 357,291 -218,063 Deposits payable -183,858 183,858 96,092 - Current portion of compensated absences 1,611,375 383,182 1,994,557 2,759 - Current portion of temporary notes payable 18,123,505 -18,123,505 -- Current portion of loans payable -527,499 527,499 -- Current portion of revenue bonds payable -728,696 728,696 -- Current portion of special assessment debt payable ----2,153 Current portion of general obligation bonds payable 5,877,280 1,166,063 7,043,343 -1,967,000 Total current liabilities 28,623,336 3,813,844 32,437,180 183,504 3,347,098 Noncurrent liabilities: Accrued liabilities 55,264 -55,264 23,020 - Compensated absences 1,204,110 286,335 1,490,445 24,833 - Security deposits returnable ----48,680 Net OPEB obligation 3,093,240 394,062 3,487,302 -- Net KPERS OPEB obligation 382,848 164,078 546,926 8,886 11,126 Net pension liability 27,918,983 3,114,818 31,033,801 345,226 605,630 Loans payable 12,185,053 10,104,852 22,289,905 -- Revenue bonds payable -11,169,355 11,169,355 -- Special assessment debt payable ----4,901 General obligation bonds payable 46,091,030 4,116,515 50,207,545 -19,395,792 Landfill post-closure care liabilities -1,981,498 1,981,498 -- Total noncurrent liabilities 90,930,528 31,331,513 122,262,041 401,965 20,066,129 Total liabilities 119,553,864 35,145,357 154,699,221 585,469 23,413,227 Deferred inflows of resources: Unavailable revenue - property taxes 12,267,726 -12,267,726 7,277 69,884 KPERS OPEB deferred inflows of resources 9,290 3,981 13,271 184 3,964 Pension deferred inflows of resources 1,835,545 220,027 2,055,572 21,346 64,402 Total deferred inflows of resources 14,112,561 224,008 14,336,569 28,807 138,250 Total liabilities and deferred inflows of resources 133,666,425$ 35,369,365$ 169,035,790$ 614,276$ 23,551,477$ Net Position Net investment in capital assets 144,845,530$ 62,367,728$ 207,213,258$ 5,330,745$ 22,491,023$ Restricted for: Permanent funds: Expendable 514,201 -514,201 14,718 - Debt service 1,851,358 1,512,125 3,363,483 -- Unrestricted [13,759,249] 26,503,402 12,744,153 1,527,210 [391,890] Total net position 133,451,840$ 90,383,255$ 223,835,095$ 6,872,673$ 22,099,133$ Primary Government CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December 31, 2018 Component Units The notes to the basic financial statements are an integral part of this statement. 16 Operating Capital Total Total Total Salina Salina Charges for Grants and Grants and Governmental Business-type Primary Housing Airport Expenses Services Contributions Contributions Activities Activities Government Authority Authority Governmental activities: General government 12,012,840$ 3,569,264$ 667,179$ 4,634,742$ [3,141,655]$ -$[3,141,655]$ -$-$ Public safety 23,891,543 4,815,110 1,134,717 -[17,941,716]-[17,941,716]-- Public works 10,458,094 284,724 1,872,213 -[8,301,157]-[8,301,157]-- Public health and sanitation 1,256,142 46,990 266,676 -[942,476]-[942,476]-- Culture and recreation 7,039,683 1,544,676 200,676 -[5,294,331]-[5,294,331]-- Planning and development 2,369,562 149,864 158,041 -[2,061,657]-[2,061,657]-- Interest on long-term debt 2,117,439 ---[2,117,439] -[2,117,439]-- Total governmental activities 59,145,303 10,410,628 4,299,502 4,634,742 [39,800,431] -[39,800,431]-- Business-type activities: Solid Waste Disposal 2,382,082 3,097,271 ---715,189 715,189 -- Water and Sewer 15,190,160 20,202,022 ---5,011,862 5,011,862 -- Sanitation 2,418,930 3,005,740 ---586,810 586,810 -- Golf Course 926,287 755,655 ---[170,632] [170,632] -- Total business-type activities 20,917,459 27,060,688 ---6,143,229 6,143,229 -- Total primary government 80,062,762$ 37,471,316$4,299,502$ 4,634,742$ [39,800,431] 6,143,229 [33,657,202] -- Component units: Salina Housing Authority 2,604,085$ 335,160$ 2,027,232$ 117,316$ ---[124,377] - Salina Airport Authority 6,019,332 2,499,892 - 1,474,356 ----[2,045,084] Total component units 8,623,417$ 2,835,052$ 2,027,232$ 1,591,672$ ---[124,377] [2,045,084] General Revenues: Property taxes levied for General purposes 8,623,057 -8,623,057 -2,338,967 Debt service 2,456,875 -2,456,875 -- Motor vehicle tax General purposes 1,428,001 -1,428,001 -- Sales tax General purposes 13,292,626 -13,292,626 -- Selective purposes 8,916,814 -8,916,814 -- Other taxes General purposes 7,240,099 -7,240,099 -- Investment revenues 182,895 233,355 416,250 15,124 3,745 Miscellaneous 1,061,810 152,814 1,214,624 12,543 5,375 Transfers, net 4,831,500 [4,831,500] --- Subtotal general revenues 48,033,677 [4,445,331] 43,588,346 27,667 2,348,087 Change in net position 8,233,246 1,697,898 9,931,144 [96,710] 303,003 Net position - beginning 123,700,850 89,082,816 212,783,666 6,976,479 21,808,184 Prior period adjustment 1,517,744 [397,459] 1,120,285 [7,096] [12,054] Net position - beginning, restated 125,218,594 88,685,357 213,903,951 6,969,383 21,796,130 Net position - ending 133,451,840$90,383,255$ 223,835,095$6,872,673$22,099,133$ Changes in Net Position Component UnitsPrimary GovernmentProgram Revenues CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2018 Net [Expenses] Revenue and The notes to the basic financial statements are an integral part of this statement. 17 Tourism and Special Sales Tax General Convention Gas Capital ASSETS Cash and investments 5,210,942$ 853$ 1,266,574$ 2,263,217$ Restricted cash ---- Receivables (net) Accounts 1,492,279 457,529 -- Taxes 9,749,815 -320,324 - Interest 298,248 --- Inventory 151,514 --- Due from other funds 24,544 --- Total assets 16,927,342$ 458,382$ 1,586,898$ 2,263,217$ LIABILITIES, DEFERRED INFLOW S OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable 542,039$ -$26,383$ 121,237$ Retainage payable --28,056 157,656 Temporary notes payable ---- Due to other funds ---- Total liabilities 542,039 -54,439 278,893 Deferred inflows of resources Unavailable revenue - property taxes 9,576,319 --- Unavailable revenue - other 66,407 --- Total deferred inflows of resources 9,642,726 --- Fund balance: Nonspendable 151,514 --- Restricted -458,382 1,359,237 - Committed ---1,436,972 Assigned 340,106 -173,222 547,352 Unassigned 6,250,957 --- Total fund balances 6,742,577 458,382 1,532,459 1,984,324 Total liabilities, deferred inflows of resources and fund balances 16,927,342$ 458,382$ 1,586,898$ 2,263,217$ CITY OF SALINA, KANSAS BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2018 The notes to the basic financial statements are an integral part of this statement. 18 Schilling Other Total Capital Debt Capital SFH Governmental Governmental Improvement Service Projects QalicB Funds Funds 2,151,875$ 1,801,968$ 13,270,861$ 7,663$ 4,033,111$ 30,007,064$ ---1,516,561 -1,516,561 ---494,287 1,797 2,445,892 -2,674,390 ---12,744,529 -----298,248 -----151,514 --196,939 --221,483 2,151,875$ 4,476,358$ 13,467,800$ 2,018,511$ 4,034,908$ 47,385,291$ 15,749$ -$352,630$243,131$ 149,019$ 1,450,188$ --300,662 360,475 -846,849 --13,508,505 --13,508,505 ---196,939 24,544 221,483 15,749 -14,161,797 800,545 173,563 16,027,025 -2,625,000 ---12,201,319 -----66,407 -2,625,000 ---12,267,726 -----151,514 -1,851,358 --978,694 4,647,671 1,955,918 -133,122 1,217,966 2,581,440 7,325,418 180,208 ---325,755 1,566,643 --[827,119] -[24,544]5,399,294 2,136,126 1,851,358 [693,997] 1,217,966 3,861,345 19,090,540 2,151,875$ 4,476,358$ 13,467,800$ 2,018,511$ 4,034,908$ 47,385,291$ 19 The notes to the basic financial statements are an integral part of this statement. Total Governmental Fund Balances 19,090,540$ Amounts reported for governmental activities in the statement of net position are different because Bond issuance costs are shown as current year expenditures in the funds. Bond issuance costs 96,738 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds The cost of capital assets is 331,845,971 Accumulated depreciation is 121,346,178 210,499,793 Pension contributions are reported as an expense in the funds and as a deferred outflow of resources in the governmental activities in the statement of net position.5,403,295 Pension fundings are reported as a revenue in the funds and as a deferred inflow of resources in the governmental activities in the statement of net position.[1,833,402] Certain intrafund transactions have been elimniated between the City's primary funds and the QALICB blended component unit.[494,287] An internal service fund is used by the City's management to charge the costs of the worker's compensation program. The assets and liabilities of the internal service fund are included with governmental activities.3,556,620 The following liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. These liabilities at year end consist of: Compensated absences 2,756,097 Net OPEB obligation 3,470,619 Net pension liability 27,764,434 Temporary notes payable 4,615,000 Bonds payable 51,968,310 Loans payable 12,185,053 Accrued interest on the bonds 107,944 [102,867,457] Net Position of Governmental Activities 133,451,840$ CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2018 The notes to the basic financial statements are an integral part of this statement. 20 Tourism and Special Sales Tax General Convention Gas Capital REVENUES: Taxes Real estate taxes 8,409,449$ -$ -$ -$ Delinquent taxes 213,608 - - - Motor vehicle taxes 1,120,440 - - - General sales taxes 13,292,626 - - - Selective sales taxes - - - 8,203,532 Other taxes 5,444,880 1,795,219 - - Intergovernmental 1,144,717 - 1,446,395 - Special assessments - - - - Licenses and permits - - - - Charges for services 6,366,094 - - - Investment revenue 45,477 5 7,234 21,363 Donations - - - - Miscellaneous 452,916 - 39,146 - Total revenues 36,490,207 1,795,224 1,492,775 8,224,895 EXPENDITURES: Current General government 5,648,579 - - - Public safety 22,952,925 - - - Public works 5,350,056 - 468,535 - Public health and sanitation 793,780 - - - Culture and recreation 4,494,713 - - - Planning and development 766,471 737,957 - - Miscellaneous - - - - Capital outlay 860,115 - 734,079 5,755,835 Debt service Principal retirement - - - - Interest and other charges - - - - Total expenditures 40,866,639 737,957 1,202,614 5,755,835 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses][4,376,432] 1,057,267 290,161 2,469,060 OTHER FINANCING SOURCES [USES] Issuance of bonds - - - - Issuance of temporary notes - - - - Bond premium - - - - Capital contribution - - - - Transfers in 5,041,500 - 160,000 - Transfers [out][805,000] [812,346] - [2,568,350] Total other financing sources [uses]4,236,500 [812,346] 160,000 [2,568,350] Net change in fund balance [139,932] 244,921 450,161 [99,290] Fund balance - Beginning of year 6,882,509 213,461 1,082,298 2,083,614 Prior period adjustment - - - - Fund balance - Beginning of year, restated 6,882,509 213,461 1,082,298 2,083,614 Fund balance - End of year 6,742,577$ 458,382$ 1,532,459$ 1,984,324$ CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31, 2018 The notes to the basic financial statements are an integral part of this statement. 21 Schilling Other Total Capital Debt Capital SFH Governmental Governmental Improvement Service Projects QalicB Funds Funds -$ 2,394,143$ -$ -$ -$ 10,803,592$ - 62,732 - - - 276,340 - 307,561 - - - 1,428,001 - - - - - 13,292,626 - - - - 713,282 8,916,814 - - - - - 7,240,099 - - 423,318 - 1,282,570 4,297,000 - 1,545,758 - - - 1,545,758 - - - - 2,500 2,500 - - - 492,917 479,229 7,338,240 15,186 21,230 - 10,707 36,190 157,392 - - - - 237,660 237,660 - - 336,904 - 55,048 884,014 15,186 4,331,424 760,222 503,624 2,806,479 56,420,036 - - - - - 5,648,579 - - - - - 22,952,925 - - - - 343,811 6,162,402 - - - - 442,359 1,236,139 - - - - 1,760,504 6,255,217 - - - 38,678 641,823 2,184,929 - - - - 35 35 903,638 - 6,759,029 761,892 569,901 16,344,489 - 5,252,865 8,180,000 - 810,000 14,242,865 - 1,702,255 204,886 200,044 84,535 2,191,720 903,638 6,955,120 15,143,915 1,000,614 4,652,968 77,219,300 [888,452] [2,623,696] [14,383,693] [496,990] [1,846,489] [20,799,264] - - 2,090,000 - - 2,090,000 - - 6,000,000 - - 6,000,000 - - 69,837 - - 69,837 - - 4,634,742 - - 4,634,742 - 2,270,782 - - 1,354,914 8,827,196 - - - - - [4,185,696] - 2,270,782 12,794,579 - 1,354,914 17,436,079 [888,452] [352,914] [1,589,114] [496,990] [491,575] [3,363,185] 3,024,578 1,509,863 895,117 1,714,956 4,352,920 21,759,316 - 694,409 - - - 694,409 3,024,578 2,204,272 895,117 1,714,956 4,352,920 22,453,725 2,136,126$ 1,851,358$ [693,997]$ 1,217,966$ 3,861,345$ 19,090,540$ The notes to the basic financial statements are an integral part of this statement. 22 Total Net Change In Fund Balances - Governmental Funds [3,363,185]$ Amounts reported for governmental activities in the statement of activities are different because Capital outlays to purchase or build assets are reported in governmental funds as expenditures. However, for governmental activities those costs are shown in the statement of net position and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which capital outlays exceeds depreciation in the period. Gain/[Loss] on sale of assets [4,493] Capital outlays 10,493,901 Depreciation expense [6,183,227] 4,306,181 Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is the amount by which interest decreased.74,281 An internal service fund is used by the city's management to charge the costs of certain activities to the individual funds. The revenues and expenses of certain internal service fund is reported with governmental activities.1,197,416 Certain intrafund transactions have been eliminated between the City's primary funds and the QALICB blended component unit.[370,373] Some expenses reported in the statement of activities, such as compensated absences and other post employment benefits, do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.[87,828] Pension payments are reported as expenditures in the governmental funds and do not affect the statement of net activities.38,061 Bond, temporary note, loan and lease proceeds are other financing sources in the governmental funds, but they increase long-term liabilities in the statement of net position and do not affect the statement of activities. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.[7,978,572] Repayment of bond principal and bond issuance costs is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net position and does not affect the statement of activities.14,417,265 Changes In Net Position of Governmental Activities 8,233,246$ CITY OF SALINA, KANSAS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE WITH THE GOVERNMENT-W IDE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2018 The notes to the basic financial statements are an integral part of this statement. 23 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 8,409,449$ 8,625,000$ 8,625,000$ [215,551]$ Delinquent taxes 213,608 180,000 180,000 33,608 Motor vehicle taxes 1,120,631 1,090,219 1,090,219 30,412 General sales tax 13,292,626 13,427,924 13,427,924 [135,298] Other taxes 5,444,880 6,980,396 6,980,396 [1,535,516] Intergovernmental 1,144,717 1,202,000 1,202,000 [57,283] Charges for services 5,585,009 5,302,753 5,302,753 282,256 Investment revenue 52,956 - - 52,956 Miscellaneous 452,920 450,175 450,175 2,745 Total revenues 35,716,796 37,258,467 37,258,467 [1,541,671] Expenditures General government 5,270,589 3,566,591 3,566,591 [1,703,998] Public safety 22,864,626 21,199,918 21,199,918 [1,664,708] Public works 5,350,076 5,656,606 5,656,606 306,530 Public health and sanitation 793,780 - - [793,780] Culture and recreation 4,612,107 5,207,030 5,207,030 594,923 Planning and development 766,471 1,960,187 1,960,187 1,193,716 Capital outlay 1,076,672 1,750,000 1,750,000 673,328 Total expenditures 40,734,321 39,340,332 39,340,332 [1,393,989] Excess [deficiency] of revenues over [under] expenditures [5,017,525] [2,081,865] [2,081,865] [2,935,660] Other financing sources [uses] Transfers in 5,041,500 3,390,000 3,390,000 1,651,500 Transfers [out][805,000] [2,892,809] [2,892,809] 2,087,809 Total other financing sources [uses]4,236,500 497,191 497,191 3,739,309 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][781,025] [1,584,674] [1,584,674] 803,649 Unreserved fund balance, January 1 5,067,124 1,584,674 1,584,674 3,482,450 Prior year cancelled encumbrances 835 - - 835 Unreserved fund balance, December 31 4,286,934 -$ -$ 4,286,934$ Reconciliation to GAAP Interest receivable 298,248 Accounts receivable 1,492,279 Taxes receivable 9,749,815 Inventory 151,514 Deferred revenue [9,576,319] Current year encumbrances 340,106 GAAP Fund Balance, December 31 6,742,577$ Budgeted Amounts See independent auditor's report on the financial statements. 24 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) TOURISM AND CONVENTION FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Other taxes 1,814,240$ 1,639,980$ 1,814,240$ -$ Investment revenue 5 180 - 5 Total revenues 1,814,245 1,640,160 1,814,240 5 Expenditures Planning and development 737,956 893,000 1,001,894 263,938 Total expenditures 737,956 893,000 1,001,894 263,938 Excess [deficiency] of revenues over [under] expenditures 1,076,289 747,160 812,346 263,943 Other financing sources [uses] Transfers [out][812,346] [685,000] [812,346] - Total other financing sources [uses][812,346] [685,000] [812,346] - Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]263,943 62,160 - 263,943 Unreserved fund balance, January 1 [263,090] 113,974 847 [263,937] Unreserved fund balance, December 31 853 176,134$ 847$ 6$ Reconciliation to GAAP Accounts receivable 457,529 GAAP Fund Balance, December 31 458,382$ Budgeted Amounts See independent auditor's report on the financial statements. 25 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL GAS FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Intergovernmental 1,448,959$ 1,406,420$ 1,406,420$ 42,539$ Miscellaneous 39,146 - - 39,146 Investment revenue 7,234 6,000 6,000 1,234 Total revenues 1,495,339 1,412,420 1,412,420 82,919 Expenditures Public works 468,535 486,959 486,959 18,424 Capital outlay 897,350 946,243 946,243 48,893 Total expenditures 1,365,885 1,433,202 1,433,202 67,317 Excess [deficiency] of revenues over [under] expenditures 129,454 [20,782] [20,782] 150,236 Other financing sources [uses] Transfers in 160,000 160,000 160,000 - Total other financing sources [uses]160,000 160,000 160,000 - Excess [deficiency] of revenues and other sources over [under]289,454 139,218 139,218 150,236 expenditures and other [uses] Unreserved fund balance, January 1 749,459 512,412 512,412 237,047 Unreserved fund balance, December 31 1,038,913 651,630$ 651,630$ 387,283$ Reconciliation to GAAP Taxes receivable 320,324 Current year encumbrances 173,222 GAAP Fund Balance, December 31 1,532,459$ Budgeted Amounts See independent auditor's report on the financial statements. 26 CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SALES TAX CAPITAL FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Selective sales taxes 8,203,531$ 8,043,656$ 8,269,993$ [66,462]$ Investment revenue 21,363 5,000 5,000 16,363 Total revenues 8,224,894 8,048,656 8,274,993 [50,099] Expenditures Capital outlay 5,934,357 4,620,500 6,470,500 536,143 Total expenditures 5,934,357 4,620,500 6,470,500 536,143 Excess [deficiency] of revenues over [under] expenditures 2,290,537 3,428,156 1,804,493 486,044 Other financing sources [uses] Transfers [out][2,568,350] [3,750,000] [2,500,000] [68,350] Total other financing sources [uses][2,568,350] [3,750,000] [2,500,000] [68,350] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][277,813] [321,844] [695,507] 417,694 Unreserved fund balance, January 1 1,658,876 785,304 1,797,359 [138,483] Prior year cancelled encumbrances 55,909 - - 55,909 Unreserved fund balance, December 31 1,436,972 463,460$ 1,101,852$ 335,120$ Reconciliation to GAAP Current year encumbrances 547,352 GAAP Fund Balance, December 31 1,984,324$ Budgeted Amounts See independent auditor's report on the financial statements. 27 Total Internal Solid Waste Water and Enterprise Service Assets and deferred outflows of resources:Disposal Sewer Sanitation Golf Course Funds Funds Current assets: Cash and investments 6,379,586$ 24,185,482$ 1,493,590$81,395$ 32,140,053$ 4,295,085$ Receivables (net of allowance for uncollectibles) Accounts 189,486 1,705,202 253,792 - 2,148,480 - Interest 16 - - - 16 - Inventory and prepaid supplies - 447,071 - 34,477 481,548 111,486 Total current assets 6,569,088 26,337,755 1,747,382 115,872 34,770,097 4,406,571 Capital assets: Nondepreciable capital assets: Construction in progress - 4,171,178 - - 4,171,178 - Land 682,000 1,362,834 - 15,000 2,059,834 - Depreciable capital assets: Capital assets 11,313,026 136,225,697 2,388,377 1,213,072 151,140,172 168,234 Less: accumulated depreciation 9,644,947 55,224,969 1,502,563 817,997 67,190,476 152,573 Total capital assets 2,350,079 86,534,740 885,814 410,075 90,180,708 15,661 Total assets 8,919,167 112,872,495 2,633,196 525,947 124,950,805 4,422,232 Deferred outflows of resources: KPERS OPEB deferred outflows of resources 4,204 28,029 7,007 2,803 42,043 1,401 OPEB deferred outflows of resources 1,113 5,744 1,723 516 9,096 - Pension deferred outflows of resources 66,559 359,237 83,106 24,122 533,024 25,285 Deferred charge on bond issuance - 217,652 - - 217,652 - Total deferred outflows of resources 71,876 610,662 91,836 27,441 801,815 26,686 Total assets and deferred outflows of resources 8,991,043$ 113,483,157$ 2,725,032$553,388$ 125,752,620$ 4,448,918$ Liabilities and deferred inflows of resources: Current liabilities Accounts payable 24,243$ 279,295$ 25,454$ 19,230$ 348,222$ 41,701$ Retainage payable - 226,977 - - 226,977 - Interest payable 5,975 243,372 - - 249,347 - Meter deposits payable - 183,858 - - 183,858 - Current portion of compensated absences payable 40,428 217,595 80,342 44,817 383,182 33,989 Current portion of accrued claims payable - - - - - 564,494 Current portion of loans payable - 527,499 - - 527,499 - Current portion of general obligation bonds payable 390,000 776,063 - - 1,166,063 - Current portion of revenue bonds payable - 728,696 - - 728,696 - Total current liabilities 460,646 3,183,355 105,796 64,047 3,813,844 640,184 Noncurrent liabilities: Compensated absences payable 30,210 162,598 60,037 33,490 286,335 25,399 Accrued claims payable - - - - - 55,264 Net OPEB obligation 48,232 248,841 74,624 22,365 394,062 - Net KPERS OPEB obligation 16,408 109,385 27,346 10,939 164,078 5,469 Net pension liability 380,308 2,054,012 522,400 158,098 3,114,818 154,549 Payable from restricted assets Loans payable - 10,104,852 - - 10,104,852 - General obligation bonds payable 390,000 3,726,515 - - 4,116,515 - Revenue bonds payable - 11,169,355 - - 11,169,355 - Landfill post-closure care liabilities 1,981,498 - - - 1,981,498 - Total noncurrent liabilities 2,846,656 27,575,558 684,407 224,892 31,331,513 240,681 Total liabilities 3,307,302 30,758,913 790,203 288,939 35,145,357 880,865 Deferred inflows of resources KPERS OPEB deferred inflows of resources 398 2,654 664 265 3,981 133 Pension deferred inflows of resources 29,965 141,462 37,524 11,076 220,027 11,300 Total deferred inflows of resources 30,363 144,116 38,188 11,341 224,008 11,433 Total liabilities and deferred inflows of resources 3,337,665$ 30,903,029$ 828,391$ 300,280$ 35,369,365$ 892,298$ Net position Net investment in capital assets 1,570,079$ 59,501,760$ 885,814$ 410,075$ 62,367,728$ 15,661$ Restricted Restricted for bond retirement - 1,512,125 - - 1,512,125 - Unrestricted 4,083,299 21,566,243 1,010,827 [156,967] 26,503,402 3,540,959 Total net position 5,653,378$ 82,580,128$ 1,896,641$253,108$ 90,383,255$ 3,556,620$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2018 The notes to the basic financial statements are an integral part of this statement. 28 Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Operating revenues Charges for services 3,097,271$ 20,202,022$3,005,740$755,655$ 27,060,688$ 8,747,300$ Miscellaneous 18,894 5,101 - 128,819 152,814 73,258 Total operating revenues 3,116,165 20,207,123 3,005,740 884,474 27,213,502 8,820,558 Operating expenses General government - - - - - 7,830,946 Public works 1,506,857 11,023,621 2,256,647 - 14,787,125 - Recreation - - - 890,552 890,552 - Depreciation 846,019 3,324,365 162,283 35,735 4,368,402 7,699 Total operating expenses 2,352,876 14,347,986 2,418,930 926,287 20,046,079 7,838,645 Operating income [loss]763,289 5,859,137 586,810 [41,813] 7,167,423 981,913 Nonoperating revenues [expenses] Investment revenue 46,505 175,346 10,882 622 233,355 25,503 Interest expense [29,206] [835,262] - - [864,468] - Accretion of bond premium - 11,560 - - 11,560 - Amortization of bond issuance costs - [18,472] - - [18,472] - Total nonoperating revenues [expenses]17,299 [666,828] 10,882 622 [638,025] 25,503 Income [loss] before transfers 780,588 5,192,309 597,692 [41,191] 6,529,398 1,007,416 Transfers from [to] other funds Transfers in - - - - - 190,000 Transfers [out][690,000] [3,650,000] [491,500] - [4,831,500] - Total transfers [690,000] [3,650,000] [491,500] - [4,831,500] 190,000 Change in net position 90,588 1,542,309 106,192 [41,191] 1,697,898 1,197,416 Net position, January 1 6,237,212 80,696,866 1,856,553 292,185 89,082,816 2,363,597 Prior period adjustment [674,422] 340,953 [66,104] 2,114 [397,459] [4,393] Net position, January 1, restated 5,562,790 81,037,819 1,790,449 294,299 88,685,357 2,359,204 Net position, December 31 5,653,378$ 82,580,128$1,896,641$253,108$ 90,383,255$ 3,556,620$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2018 The notes to the basic financial statements are an integral part of this statement. 29 Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Cash flows from operating activities Cash received from customers and users 3,101,871$19,995,276$2,970,093$755,655$ 26,822,895$8,749,455$ Cash paid to suppliers of goods or services [902,799] [7,214,728] [1,313,103][386,081] [9,816,711] [7,495,431] Cash paid to employees [606,310] [3,951,533] [939,329] [502,013] [5,999,185] [297,532] Other operating receipts 18,894 5,101 - 128,819 152,814 73,257 Net cash provided by [used in] operating activities 1,611,656 8,834,116 717,661 [3,620] 11,159,813 1,029,749 Cash flows from capital and related financing activities Purchase and construction of capital assets - [2,783,648] [312,009] [52,880] [3,148,537] - Proceeds from loans - 2,354,809 - - 2,354,809 - Principal payments - loans - [585,268] - - [585,268] - Principal payments - general obligation bonds [375,000] [752,342] - - [1,127,342] - Principal payments - revenue bonds - [705,000] - - [705,000] - Interest paid [34,168] [817,579] - - [851,747] - Net cash provided by [used in] capital and related financing activities [409,168] [3,289,028] [312,009] [52,880] [4,063,085] - Cash flows from investing activities Interest received 46,505 175,346 10,882 622 233,355 25,503 Cash flows from noncapital financing activities Transfers in - - - - - 190,000 Transfers [out][690,000] [3,650,000] [491,500] - [4,831,500] - Net cash provided by [used in] noncapital financing activities [690,000] [3,650,000] [491,500] - [4,831,500] 190,000 Net increase [decrease] in cash and cash equivalents 558,993 2,070,434 [74,966] [55,878] 2,498,583 1,245,252 Cash and cash equivalents, January 1 6,515,002 22,115,048 1,568,556 137,273 30,335,879 3,049,833 Prior period adjustment [694,409] - - - [694,409] - Cash and cash equivalents, January 1, restated 5,820,593 22,115,048 1,568,556 137,273 29,641,470 3,049,833 Cash and cash equivalents, December 31 6,379,586$24,185,482$1,493,590$81,395$ 32,140,053$4,295,085$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS For the Year Ended December 31, 2018 PROPRIETARY FUNDS The notes to the basic financial statements are an integral part of this statement. 30 Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss]763,289$ 5,859,137$ 586,810$[41,813]$ 7,167,423$ 981,913$ Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense 846,019 3,324,365 162,283 35,735 4,368,402 7,699 [Increase] decrease in accounts receivable 4,600 [214,490] [35,647] - [245,537] - [Increase] decrease in inventory - [38,509] - [7,787] [46,296] 53,639 [Increase] decrease in deferred outflows 6,593 46,400 10,214 3,995 67,202 4,554 Increase [decrease] in accounts payable [642] [255,816] 6,779 9,866 [239,813] [16,189] Increase [decrease] in retainage payable - 216,296 - - 216,296 - Increase [decrease] in accrued compensated absences 7,756 602 12,440 6,372 27,170 5,818 Increase [decrease] in claims payable - - - - - 2,154 Increase [decrease] in net pension liability [22,019] [148,227] [35,024] [13,522] [218,792] [11,010] Increase [decrease] in net KPERS OPEB obligation 3,230 21,534 5,383 2,154 32,301 1,076 Increase [decrease] in net OPEB obligation 2,507 12,934 3,879 1,162 20,482 - Increase [decrease] in meter deposits payable - 7,744 - - 7,744 - Increase [decrease] in deferred inflows 323 2,146 544 218 3,231 95 Net cash provided by [used in] operating activities 1,611,656$ 8,834,116$ 717,661$[3,620]$ 11,159,813$1,029,749$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOW S PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2018 The notes to the basic financial statements are an integral part of this statement. 31 ASSETS Cash and investments 312,065$ Total assets 312,065$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable 312,065$ Total liabilities 312,065$ December 31, 2018 CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS The notes to the basic financial statements are an integral part of this statement. 32 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A.Reporting Entity The City of Salina, Kansas (the City) is a municipal corporation governed by a mayor as part of a five- member commission. These financial statements present the City and its component units, entities for which the government is considered to be financially accountable. Each discretely presented component unit is reported in a separate column in the government wide statements (see note below for descriptions)to emphasize that it is legally separated from the government.The blended component unit is reported as a governmental fund of the City (see note below for description) to emphasize that it is a part of the city. Discretely Presented Component Units City of Salina Airport Authority -The Salina Airport Authority was created for the purpose of accepting as surplus property portions of the former Schilling A.F.B that was closed by the United States Department of Defense in June 1965. One of the primary functions of the Airport Authority is to facilitate the continued growth of jobs and payroll at the Airport Industrial Center. The Airport Authority is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. Any director may be removed by a majority vote of the Salina City Commission. The Airport Authority’s basic mill levy (up to 3 mills) requires the approval of the City Commission. The Commission must also approve the issuance of general obligation debt by the Airport Authority. The Airport Authority has a December 31 fiscal year end. Housing Authority of the City of Salina -The purpose of the Housing Authority of the City of Salina (Housing Authority) is to administer Public Housing Programs authorized by the United States Housing Act of 1937. The Mayor of the City of Salina appoints the governing board. The City Commission may remove commissioners of the Housing Authority. The City must issue revenue bonds for the Housing Authority. The financial liability of the Housing Authority is essentially supported by the operating and debt service subsidies received under contract from the Federal government. The Housing Authority has a June 30 fiscal year end. Information in the accompanying financial statements covers the fiscal year ended June 30, 2018. Blended Component Unit Salina Field House Qualified Active Low-Income Community Business, Inc.(SFH QalicB)-SFH QalicB was created to function as a qualified low-income community business, as defined in Section 45D(d)(2) of the Internal Revenue Code of 1986 for the purpose of providing an indoor sports facility in the downtown corridor of the city of Salina. The purpose of the facility is to cater to local residents as well as host regional sports tournaments with the anticipation of becoming a regional destination for youth athletics. This mix of participation is expected to provide the most consistent visitation and tourism for the downtown district. The SFH QalicB is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. The field house is staffed by City of Salina employees. SFH QalicB has a December 31 fiscal year end.SFH QalicB is a not-for-profit organization exempt from income tax under Section 50l(c)(3)of the Internal Revenue Code and is exempt from similar state and local taxes. Complete financial statements for each of the individual component units may be obtained at the entity’s administrative offices. Salina Airport Authority Housing Authority of Salina Field House 3237 Arnold Ave.the Ci ty of Salina QALICB, Inc. Salina, KS 469 S. 5th 300 W. Ast St. Salina, KS Salina, KS Joint Ventures The City of Salina also participates with Saline County in one joint venture. The City and County organized the Salina County-City Building Authority to acquire, operate and maintain facilities for the administrative offices of both governments. The primary governments each have an ongoing financial responsibility for the joint venture. Separate financial statements are available from the governing board of the joint venture. 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A.Reporting Entity (Continued) Joint Ventures (Continued) (K ans as Regulatory Basis) Building Authori ty (Audit ed) To tal unencumbered cash, Dec em ber 31, 2018 1,294,585$ To tal change in unenc umbered cash, year ended Dec ember 31, 2018 121,544 To tal cash rec eipt s, year ended Dec ember 31, 2018 2,417,371 To tal cash rec eipt s from Cit y of Salina 478,114 Complete financial statements for the joint venture may be obtained at the entity’s administrative office. Salina County-City Building Authority 300 West Ash Street Salina, KS B.Government-wide and fund financial statements The statement of net position and the statement of activities report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Exceptions to this general rule are charges between the City’s governmental and business-type activities. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational requirements of a particular program. Taxes and other items, which are not classified as program revenues,are presented as general revenues of the city. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column in the fund financial statements. C.Measurement Focus, Basis of Accounting and Basis of Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 35 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C.Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net position. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services in connection with a proprietary fund’s ongoing operations. The principal operating revenues of the City’s proprietary funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenues and expenses. The internal service funds account for risk management, worker’s compensation, health insurance, central garage and information services that are provided to other departments or agencies of the government, or to other governments, on a cost-reimbursement basis. Agency funds are custodial in nature and do not measure results of operations or have a measurement focus. Agency funds do however use the accrual basis of accounting.Agency funds are used to account for assets held as an agent for individuals, other governmental units, private organizations and/or other funds. The City reports the following major governmental funds: General fund -To account for resources traditionally associated with government, which are not required legally,or by sound financial management to be accounted for in another fund. Tourism and convention fund -To account for transient guest tax revenues, which are specifically restricted to promotion and tourism activities. Special gas fund -To account for the City's share of motor fuel tax revenues, which are legally restricted to the maintenance,or improvement of streets within the City. Sales tax capital fund -To account for 58% of the .75 cent sales tax designated for capital, debt, and human services purposes. Schilling capital improvement fund -To account for the funding provided by U.S. Government and Public Entities and the remedial investigation, feasibility study and expenditures necessary to abate groundwater contamination beneath the property formerly identified as Schilling Air Force Base. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C.Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Debt service fund -To account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the City is obligated in some manner for the payment. Capital projects fund -To account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. SFH QalicB fund -To account for the activities of Salina Field House Qualified Active Low-Income Community Business, Inc. as a component unit blended into the financial statements. The City reports the following major proprietary funds: Sanitation fund -To account for the operations of the City's refuse collection service. Solid waste disposal fund -To account for the activities of the City's landfill. Golf course fund -To account for the operations of the municipal golf course. Water and sewer fund -To account for the activities of the City's water and sewer operations. D. Assets, Liabilities, Fund Balance, and Net Position 1. Pooled cash and investments The City maintains a cash and investment pool that is available for use by all funds managed by the city. Each fund type’s portion of this pool is displayed in the financial statements as “Cash and Investments.” The city’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments in the Kansas Municipal Pool are carried at fair value. Cash balances from all funds are invested to the extent available in certificates of deposit and other authorized investments. Investments with maturity dates greater than three months are stated separately. Earnings from these investments, unless specifically designated, are allocated monthly to the investing fund based on the percentage of funds invested to total investments. All investments are carried at fair value. 2. Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the year are referred to as either “interfund receivables/payables” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for doubtful accounts. Property taxes receivable. Collection of current year property tax by the County Treasurer is not completed, apportioned or distributed to the various subdivisions until the succeeding year, such procedure being in conformity with governing state statutes. Consequently, current year property taxes receivable are not available as a resource that can be used to finance the current year operations of the City and, therefore, are not susceptible to accrual. Accruals of uncollected current year property taxes are offset by deferred revenue and are identical to the adopted budget for 2019. It is not practicable to apportion delinquent taxes held by the County Treasurer at the end of the accounting period, and further, the amounts thereof are not material in relationship to the financial statements taken as a whole. 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Payables (Continued) The determination of assessed valuations and the collection of property taxes for all political subdivisions in the State of Kansas are the responsibility of the various counties. The County Appraiser annually determines assessed valuations on January 1 and the County Clerk spreads the annual assessment on the tax rolls. The County Treasurer is the tax collection agent for all taxing entities within the County. In accordance with state statutes, property taxes levied during the current year are a revenue source to be used to finance the budget of the ensuing year. Property taxes are levied and liens against property are placed on November 1 of the year prior to the fiscal year for which they are budgeted. Payments are due November 1, becoming delinquent, with penalty, December 21. Payments of 50% are accepted through December 20, with the second 50% then being due on or before May 10 of the following year. This procedure eliminates the need to issue tax anticipation notes since funds will be on hand prior to the beginning of each fiscal year. The City Treasurer draws down all available funds from the County Treasurer’s office in two-month intervals. Taxes remaining due and unpaid at February 15 and July 1 are subject to collection procedures prescribed in state statutes. 3. Inventories and Prepaid Items Inventories are valued at cost using the first-in/first-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 4.Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Capital assets used in governmental fund types of the City are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type is included in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Property, plant and equipment of the primary government, are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 50 Other equipment 5 -15 Vehicles 6 -10 Infrastructure 30 -50 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D.Assets, Liabilities, Fund Balance, and Net Position (Continued) 5. Compensated Absences It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All employees of the City, except temporary and part time employees, may accumulate sick leave at a rate of 8 or 11 hours per month depending on their work duty schedule. There is no limit on the amount of sick leave that can be accumulated. Employees with more than five years of service with the City are paid for one-third of their accumulated sick leave at their current wage scale upon termination of employment in good standing. In 2001, a limited buy back policy was instituted. All regular employees are entitled to paid vacation time. Such leave is granted each year of employment. Employees must use 50% of leave accrued each calendar year and an employee's maximum accrued vacation leave balance cannot exceed 250 hours (or 350 hours for employees working 24 hour shifts). Employees are paid for all accumulated vacation leave at their current wage scale upon termination of employment. Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability in the government fund financial statements that will pay it. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Vested or accumulated vacation leave of the business-type funds and government wide financial statements are recorded as an expense and liability of those funds as the benefits accrue to employees. A liability is recorded for accumulated rights to receive sick pay benefits that are payable upon termination of employment. The General Fund, Bicentennial Center Fund, Central Garage Fund, Sanitation Fund, Solid Waste Fund, Golf Course Fund, and Water and Sewer Fund have been used in prior years to liquidate the liability for compensated absences. 6.Temporary Notes Upon authorization for the issuance of general obligation bonds for certain improvements, Kansas law permits the temporary financing of such improvements by the issuance of temporary notes. Temporary notes issued may not exceed the aggregate amount of bonds authorized, are interest bearing and have a maturity date not later than four years from the date of issuance of such temporary notes. Temporary notes outstanding are retired from the proceeds of the sale of general obligation bonds. 7. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 8. Fund Balances In the fund financial statements, governmental funds report fund balance in the following classifications: nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance indicates that constraints have been placed on the use of resources either by being externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Committed fund balances include amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the city commission. Assigned fund balances include amounts that are constrained by the City management’s intent to be used for specific purposes but are neither restricted nor committed. Unassigned fund balance represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available restricted amounts are considered to be spent first. When an expenditure is incurred for purposes for which committed, assigned, or unassigned fund balance is available, the following is the order in which resources will be expended: committed, assigned and unassigned. The following is the detail for fund balance classifications in the financial statements: Tourism Schilling Other Total and Special Sales Tax Capital Debt Capital SFH Governmental Governmental General Convention Gas Capital Improvement Service Projects QalicB Funds Funds Fund Balances: Nonspendable for: Inventory 151,514$ -$ -$ -$ -$ -$ -$ -$ -$ 151,514$ Restricted for: Public works - - 1,359,237 - - - - - - 1,359,237 Public health and sanitation - - - - - - - - 234 234 Culture and recreation - - - - - - - - 122,447 122,447 Planning and development - 458,382 - - - - - - 222,360 680,742 Debt payments - - - - - 1,851,358 - - 633,653 2,485,011 Committed for: Public safety - - - - - - - - 192,399 192,399 Culture and recreation - - - - - - - - 475,773 475,773 Planning and development - - - - - - - 1,217,966 147,250 1,365,216 Cemetery - - - - - - - - 508,366 508,366 Capital improvements - - - 1,436,972 1,955,918 - 133,122 - 1,257,652 4,783,664 Assigned for: General government 20,250 - - - - - - - - 20,250 Public safety 33,216 - - - - - - - 175,681 208,897 Public works 9,000 - - - - - - - - 9,000 Culture and recreation 5,404 - - - - - - - 150,074 155,478 Capital improvements 272,236 - 173,222 547,352 180,208 - - - - 1,173,018 Unassigned: 6,250,957 - - - - - [827,119] - [24,544] 5,399,294 Total Fund Balances 6,742,577$ 458,382$ 1,532,459$ 1,984,324$ 2,136,126$ 1,851,358$ [693,997]$ 1,217,966$ 3,861,345$ 19,090,540$ Major Governmental Funds 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D.Assets, Liabilities, Fund Balance, and Net Position (Continued) 9. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City reports a deferred charge on bond issuance reported in the government-wide statement of net position. A deferred charge on bond issuance results from the difference in the carrying value of the debt and its reacquisition price. This amount is deferred and amortized over the life of the debt.Additionally, changes in the pension and OPEB plan liability proportion and assumptions, net difference between projected and actual earnings on pension plan and OPEB plan investments and differences between pension and OPEB plan liability expected and actual experience are reported as deferred outflows of resources in the government activities. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. Unavailable revenue –property taxes, is reported in the governmental funds balance sheet and the governmental activities in the government-wide statement of net position. Additionally, differences between expected and actual experience, changes in assumptions, and changes in the pension liability and OPEB plan proportion are reported as deferred inflows. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. 10. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 11. Net Position Net position represents the difference between assets and liabilities. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A.Budgetary Information Kansas statutes require that an annual operating budget be legally adopted for the general fund, special revenue funds (unless specifically exempted by statute), debt service fund, and enterprise funds. The statutes provide for the following sequence and timetable in the adoption of the legal annual operating budget: 1.Preparation of the budget for the succeeding year on or before August 1. 2.Publication in local newspaper of the proposed budget and notice of public hearing on the budget on or before August 5. 3.Public hearing on or before August 15, but at least ten days after publication of notice of hearing. 4.Adoption of the final budget on or before August 25. 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A.Budgetary Information (Continued) The statutes allow the governing body to increase the originally adopted budget for previously unbudgeted increases in revenue other than ad valorem property taxes. To do this, a notice of public hearing to amend the budget must be published in the local newspaper. At least ten days after publication the hearing may be held and the governing body may amend the budget at that time. The 2018 budget was amended for the Tourism and Convention Fund, Debt Service Fund and Golf Course Fund. The statutes permit management to transfer budgeted amounts between line items within an individual fund. However, such statutes prohibit expenditures in excess of the total amount of the adopted budget of expenditures of individual funds. Budget comparison statements are presented for each fund showing actual receipts and expenditures compared to legally budgeted receipts and expenditures. All legal annual operating budgets are prepared using the statutory basis of accounting, in which, revenues are recognized when cash is received, and expenditures include disbursements, accounts payable, and encumbrances. Encumbrances are commitments by the municipality for future payments and are supported by a document evidencing the commitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year end. A legal operating budget is not required for capital projects funds, the SFH QalicB fund, non-major debt service funds,trust funds, and the following special revenue funds: Community Development Revolving, Downtown TIF District #1, South 9th CID, State Grants, 911 Communications, Kenwood Cove Capital, Special Law Enforcement, Police Grants, Federal Grants, DARE Donations,War Memorial Maintenance, Federal CARE Grant, Police Department Federal Forfeiture,Homeowners’ Assistance, Private Grants and Animal Shelter Donations Funds. A legal operating budget is not required for the following Enterprise funds: Solid Waste Disposal, Water and Sewer, Sanitation and Golf Course Funds. A legal operating budget is also not required for the Internal Service funds. Actual to budget comparisons for these funds that present budgets to the Commissioners are shown strictly for informational purposes. Spending in funds, which are not subject to the legal annual operating budget requirements are controlled by federal regulations, other statutes, or by the use of internal spending limits established by the governing body. B.Statutory Violations Actual exceeded budgeted expenditures at December 31, 2018 in the Bicentennial Fund, Business Improvement District Fund and Special Parks and Recreation Fund, which violates KSA 79-2935. C.Legal Debt Margin The City is subject to the municipal finance law of the state of Kansas which limits the bonded debt (exclusive of revenue bonds and special assessment bonds) the city may have outstanding to 30 percent of the assessed value of all tangible taxable property within the city, as certified to the county clerk on the proceeding August 25. At December 31, 2018, the statutory limit for the City was $146,336,377, providing a debt margin of $78,095,920. 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 3. RESTATEMENT OF EQUITY The City implemented GASB 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions for the KPERS and health insurance postemployment benefits for the year ended December 31, 2018. Additionally, following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or incorrectly recorded and that a portion of the City’s long-term liabilities had been misclassified between funds. According, the beginning net position/fund balances were restated, the effects of which are as follows: Debt Solid W aste Water and Central Governmental Service Disposal Sewer Sanitation Golf Course Garage Activities Fund Fund Fund Fund Fund Fund Net Position/Fund Balance, 123,700,850$ 1,509,863$ 6,237,212$ 80,696,866$ 1,856,553$ 292,185$ 10,853$ December 31, 2017 Capital Asset Adjustment [382,983] - - 187,181 [89,654] [2,514] - Adoption of GASB 75 1,308,967 - 19,987 51,123 23,550 4,628 [4,393] Long-term Liablities Adjustment 591,760 694,409 [694,409] 102,649 - - - Net Position/Fund Balance, December 31, 2017, Restated 125,218,594$ 2,204,272$ 5,562,790$ 81,037,819$ 1,790,449$ 294,299$ 6,460$ Note 4. DETAILED NOTES ON ALL FUNDS A.Deposits and Investments The City’s cash is considered to be active funds by management and is invested according to KSA 9-1401. The statute requires that banks eligible to hold active funds have a main or branch bank in the county in which the City is located or in a county adjacent to the City and the banks provide an acceptable rate for active funds. Various City investments are considered to be idle funds by management and are invested according to KSA 12-1675. The statute requires that the City invest its idle funds in only temporary notes of the City, bank certificates of deposit, repurchase agreements, and if eligible banks do not offer an acceptable rate for the funds: U.S. Treasury bills or notes or the Municipal Investment Pool (KMIP). Maturities of the above investments may not exceed two years by statute. Some of the City’s investments are of bond proceeds invested pursuant to KSA 10-131. This statute allows additional investment authority beyond that of KSA 12-1675. Investments of bond proceeds may follow KSA 12-1675 or include other investments such as the KMIP, direct obligations of the U.S.government or any agency thereof, investment agreements with a financial institution the obligations of which at the time of investment are rated in either of the three highest rating categories by Moody’s investors service or Standard and Poor’s corporation, and various other investments as specified in KSA 10-131. At December 31, 2018, the City has the following investments: In ve stment Type Fair Value Rat ing Kans as Municipal Inve stment Pool 311,705$ S&P AAAf/S1+ To tal fair va lue 311,705$ The municipal investment pool is under the oversight of the Pooled Money Investment Board. The board is comprised of the State Treasurer and four additional members appointed by the State Governor. The board reports annually to the Kansas legislature. State pooled monies may be invested in direct obligations of, or obligations that are insured as to principal and interest by the U.S. government or any agency thereof, with maturities up to four years. No more than 10 percent of those funds may be invested in mortgage-backed securities. In addition, the State pool may invest in repurchase agreements with Kansas banks or with primary government securities dealers. 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A.Deposits and Investments (Continued) The City’s investment policy provides direction on concentration risk. The City policy states that funds shall be diversified to reduce the extent of losses due to having an unbalanced portfolio in terms of maturities, instrument type, and issuers. Therefore, portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector. Liquidity, free of market risk, shall be assured through practices insuring that the next disbursement date and payroll date are covered through maturing investments, marketable U.S. Treasury Bills, the Municipal Investment Pool, or money market accounts. Default risk shall be minimized by requiring that all security purchases occur on a delivery vs. payment basis, and that all securities are adequately collateralized. Risk of market price volatility shall be controlled through the adoption of a "buy and hold" strategy whereby the City holds each investment to maturity, coupled with maintenance of an adequate liquidity position to insure the ability to meet normal anticipated cash flow needs. When advantageous, it is allowable to sell investments to realize a gain due to price fluctuations; however, such transactions shall not be a part of the normal course of business. The City recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is employed as a way to control risk due to issuer default. In the event of a default by a specific issuer, the Director of Finance and Administration shall review, and, if appropriate, proceed to liquidate securities having comparable credit risks. Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City’s deposit policy for custodial credit risk require that the depository banks will maintain 100% security in the form of FDIC coverage and pledged collateral according to KSA 9-1402. As of December 31, 2018 the City’s deposits were considered fully secured. Restricted cash is comprised of a construction account, an interest reserve account (the "Interest Reserve"), and an expense reserve account (the "Operating Reserve") related to the SFH QalicB blended component unit. The Interest Reserve and the Operating Reserve accounts are available as part of the loans payable financing (see Note 4E). As of December 31, 2018, the balance of the construction account, Interest Reserve, and Operating Reserve was $1,029,223, $361,543, and $125,795, respectively. 44 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B.Receivables Receivables as of year-end, including the applicable allowances for doubtful accounts, are as follows: Tourism and Spec ia l Debt SFH Other General Co nvention Gas Servic e Qalic B Governmental Subtotal Primary G overnment Re ceivables: A ccounts 6,847,561$ 457,529$ -$ -$ 494,287$ 2,428$ 7,801,805$ Taxes 9,749,815 - 320,324 2,674,390 - - 12 ,744,529 In terest 298,248 - - - - - 298,248 Gross re ceiva bles 16 ,895,624 457,529 320,324 2,674,390 494,287 2,428 20,844,582 Less: allo wanc e for u ncolle ctible s [5,355,282] - - - - [631] [5,355,913] Total 11,540,342$ 457,529$ 320,324$ 2,674,390$494,287$ 1,797$ 15 ,488,669$ Solid Wa ter Wa ste and Disposal Sewer Sanitation Total Primary G overnment Re ceivables: A ccounts 18 9,486$ 3,17 6,509$ 472,773$ 11,640,573$ Taxes - - - 12 ,744,529 In terest 16 - - 298,264 Gross re ceiva bles 18 9,502 3,17 6,509 472,773 24,683,366 Less: allo wanc e for u ncolle ctible s - [1,471,307] [218,981] [7,046,201] Total 18 9,502$ 1,705,202$ 253,792$ 17 ,637,165$ Co mp onent Un its Salin a Airp ort Authority A ccounts 14 5,403$ L ess: allowa nc e for u ncolle ctib le s - Total S alina Airp ort Authority 14 5,403 Salin a Ho usin g Authority A ccounts 12 ,901 L ess: allowa nc e for u ncolle ctib le s [790] In terest 437 Total S alina Ho usin g Authority 12 ,548 Total 15 7,951$ C.Interfund Receivables and Payables The composition of interfund balances as of December 31, 2018, is as follows: Fund Ty pes Due From Due To General Fund 24,544$ -$ Capit al Proj ec t Fund 196,939 - SFH Qalic B Fund - 196,939 Police Grant s Fund - 24,544 221,483$ 221,483$ The City uses interfund receivables and payables between the General Fund and Other Governmental Funds as needed when pooled cash is negative within a fund until investments mature or grant proceeds are received. All payables are cleared in less than one year. 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D.Capital Assets Capital asset activity for the year ended December 31, 2018, was as follows: Balance Ad j. Ba l.Balance 12/31/2017 Ad justm ents 12/31/2017 Ad ditions Retirem ents 12/31/2018 City governmental activities : Go ve rnm ental activities : C apital as sets , n ot being depreciated Cons truction in progress 28,909,568$ [203,661]$ 28,705,907$ 8,876,538$ 5,365,238$32,217,207$ Land 24,092,859 676 24,093,535 - - 24,093,535 Leas ed land under capital lease - - - 422,799 - 422,799 C apital as sets , b eing depreciated Infras tru cture 199,315,338 [5 0,398] 199,264,940 5,365,238 - 204,630,178 Bu ildings a nd im provements 53,009,679 5,179 53,014,858 - - 53,014,858 Vehicles 10,386,499 [105,845] 10,280,654 352,834 442,158 10,191,330 Eq uipm ent, furniture and fixt ures 6,614,011 79,349 6,693,360 515,538 90,793 7,118,105 Leas ehold improvements - - - 326,193 - 326,193 To tal capital assets 322,327,954 [274,700] 322,053,254 15,859,140 5,898,189 332,014,205 Less accum ulated depreciation fo r: In frastructure 84,357,444 10,031 84,367,475 3,897,782 - 88,265,257 Buildings and im provements 19,930,451 3,588 19,934,039 1,321,956 - 21,255,995 Vehicles 6,866,276 58,203 6,924,479 746,753 437,665 7,233,567 Equipm ent, fu rniture and fi xtures 4,573,829 36,461 4,610,290 224,435 90,793 4,743,932 To tal accum ulated depreciation 115,728,000 108,283 115,836,283 6,190,926 528,458 121,498,751 Go ve rnm ental activities capital assets , n et 206,599,954$ [382,983]$ 206,216,971$ 9,668,214$ 5,369,731$210,515,454$ Busines s-type activities : C apital as sets , n ot being depreciated Cons truction in progress 2,149,789$ -$ 2,149,789$ 2,093,612$ 72,223$ 4,171,178$ Land 1,541,806 8,858 1,550,664 509,170 - 2,059,834 C apital as sets , b eing depreciated Infras tru cture 119,457,650 [359,560] 119,098,090 72,223 - 119,170,313 Bu ildings a nd im provements 22,579,933 3 22,579,936 - - 22,579,936 Vehicles 3,690,852 [1 1,130] 3,679,722 394,676 254,752 3,819,646 Eq uipm ent, furniture and fixt ures 5,337,060 82,139 5,419,199 151,078 - 5,570,277 To tal capital assets 154,757,090 [279,690] 154,477,400 3,220,759 326,975 157,371,184 Less accum ulated depreciation fo r: In frastructure 43,729,964 [358,386] 43,371,578 3,486,539 - 46,858,117 Buildings and im provements 13,217,925 294 13,218,219 421,287 - 13,639,506 Vehicles 2,650,242 1,140 2,651,382 215,184 254,752 2,611,814 Equipm ent, fu rniture and fi xtures 3,853,399 [1 7,755] 3,835,644 245,395 - 4,081,039 To tal accum ulated depreciation 63,451,530 [374,707] 63,076,823 4,368,405 254,752 67,190,476 Busines s-type activities capital assets , n et 91,305,560$ 95,017$ 91,400,577$ [1,147,646]$72,223$ 90,180,708$ 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets (Continued) The City’s depreciation expense was charged to governmental functions as follows: Governmental Activities: General government 74,669$ Public safety 728,118 Public works 4,240,242 Public health 26,959 Culture and recreation 813,760 Planning and development 307,178 Total depreciation 6,190,926$ Business-type Activities: Solid Waste Disposal 846,019$ Water and Sewer 3,324,368 Sanitation 162,283 Golf Course Division 35,735 Total depreciation 4,368,405$ E. Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2018: Restated Balance Balance Amounts January 1, December 31, Due Within 2018 Additions Deletions 2018 One Year Governmental activities: General obligation bonds 56,096,954$ 2,159,836$ 6,288,480$ 51,968,310$ 5,877,280$ Financing lease 157,868 - 157,868 - - Loans payable 12,171,090 13,963 - 12,185,053 - Net OPEB liability 2,932,464 395,831 235,055 3,093,240 - Net KPERS OPEB liability 307,478 101,230 25,860 382,848 - Net pension liability 28,966,518 - 1,047,535 27,918,983 - Accrued compensation 2,797,958 1,628,901 1,611,374 2,815,485 1,611,375 Temporary notes 6,811,742 19,508,505 8,196,742 18,123,505 18,123,505 Total 110,242,072$ 23,808,266$ 17,562,914$ 116,487,424$ 25,612,160$ Business-type activities: General obligation bonds 6,417,784$ -$ 1,135,206$ 5,282,578$ 1,166,063$ Revenue bonds 12,606,747 - 708,696 11,898,051 728,696 Loans payable 8,862,810 2,354,809 585,268 10,632,351 527,499 Net OPEB liability 373,580 50,427 29,945 394,062 - Net KPERS OPEB liability 131,776 43,384 11,082 164,078 - Net pension liability 3,333,610 - 218,792 3,114,818 - Accrued compensation 642,347 410,353 383,183 669,517 383,182 Total 32,368,654$ 2,858,973$ 3,072,172$ 32,155,455$ 2,805,440$ Component Units: General obligation bonds 24,087,000$ -$ 2,660,000$ 21,427,000$ 1,967,000$ Less unamortized discount [79,485] - [15,277] [64,208] - Special assessment debt 9,207 - 2,153 7,054 2,153 Net KPERS OPEB obligation 12,054 - 928 11,126 - Net pension liability 603,456 2,174 - 605,630 - Total component units 24,632,232$ 2,174$ 2,647,804$ 21,986,602$ 1,969,153$ 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E.Long-Term Debt (Continued) The following is a detailed listing of the city’s long-term debt including general obligation bonds, revenue bonds, temporary notes and loans payable: Primary Government Original Interes t Bonds General Obligat ion Bonds Is sue Rat es Outstanding Internal Improvem ent s 2008B , due 7/1/2028 3,525,000$ 3.65% to 5.00%1,035,000$ Internal Improvem ent s 2009A , due 10/1/2029 23,695,000 2.00% to 5.00%2,981,936 Internal Improvem ent s 2010A , due 10/1/2025 6,916,592 2.00% to 3.875%655,545 Internal Improvem ent s 2010B , due 10/1/2023 7,973,044 0.50% to 3.00%1,763,477 Internal Improvem ent s 2011A , due 10/1/2031 6,587,985 2.00% to 5.00%1,098,449 Internal Improvem ent s 2012A , due 10/1/2027 2,383,903 1.00% to 2.45%1,506,342 Refunding 2012B, due 10/1/2020 3,817,108 1.00% to 1.40%423,027 Internal Improvem ent s 2013A , due 10/1/28 1,369,380 3.00% to 4.00%1,001,255 Internal Improvem ent s 2013B , due 10/1/33 4,485,073 0.60% to 3.65%3,286,304 Internal Improvem ent s 2014A , due 10/1/34 7,839,050 2.50% to 3.75%5,455,241 Im provement and Refunding 2015A, due 10/1/35 7,157,688 2.00% to 4.00%6,142,786 Internal Improvem ent s 2016A , due 10/1/36 6,681,766 2.00% to 3.00%6,160,590 Refunding 2016B, due 10/1/2031 15,141,004 2.00% to 5.00%14,371,647 Internal Improvem ent s 2017A , due 10/1/37 9,388,370 3.00% to 3.375%9,209,452 Internal Improvem ent s 2018A , due 10/1/33 2,090,000 3.15% to 4.00%2,159,837 To tal general obligat ion bonds 57,250,888$ Revenue Bonds Revenue 2011, due 10/1/31 16,193,925$ 2.00% to 4.60%11,898,051$ To tal revenue bonds 11,898,051$ Te mporary Notes Seri es 2016-2, due 9/1/2019 4,615,000$ 1.00%4,615,000$ Seri es 2018-2, due 11/15/2019 13,500,000 2.50%13,508,505 To tal temporary notes 18,123,505$ Loans Payable Kansas Public Water Supply, due 8/1/2034 9,330,000$ 2.12%6,771,038$ Kansas Public Water Supply, due 8/1/2035 4,250,000 2.78%3,861,313 Dak ot as & CNMC Notes , due 12/10/2050 12,640,000 1.58%12,185,053 To tal loans payable 22,817,404$ 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Original Int eres t Bonds Is sue Rat es Out standi ng Com ponent Uni t Salina Airport Authori ty General Obligat ion Bonds General Obligat ion 2009B , due 2021 6,080,000$4.78 1,185,000$ General Obligat ion 2011A , due 2023 11,820,000 3.89%2,885,000 General Obligat ion 2015A , due 2025 3,075,000 2.67%1,740,000 Temporary Not e 2016-1, due 2019 657,000 0.90%657,000 General Obligat ion 2017A , due 2030 10,255,000 3.04%10,150,000 General Obligat ion 2017B , due 2025 4,835,000 3.02%4,810,000 Les s unamort ized bond prem ium 33,023 Les s unamort ized bond dis count [97,231] To tal general obligation bonds 21,362,792 Spec ial Assessment Debt Hangar 600 Sanitary Sewer, due 2021 27,599 4.47%7,054 To tal spec ial assessment debt 7,054 To tal 21,369,846$ Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: Bonds Int eres t Year Outstanding Due To tal 2019 7,043,343$ 1,665,570$ 8,708,913$ 2020 4,893,342 1,476,903 6,370,245 2021 4,618,090 1,339,636 5,957,726 2022 4,701,939 1,186,542 5,888,481 2023 4,541,940 1,011,191 5,553,131 2024-2028 17,204,968 3,276,338 20,481,306 2029-2033 9,998,082 1,462,000 11,460,082 2034-2037 4,249,184 276,500 4,525,684 To tal 57,250,888$ 11,694,680$ 68,945,568$ General Obligat ion - Primary Government 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Bonds In teres t Year Out standing Due To tal 2019 1,310,000$ 648,278$ 1,958,278$ 2020 1,350,000 612,110 1,962,110 2021 1,400,000 565,880 1,965,880 2022 1,455,000 511,135 1,966,135 2023 1,500,000 464,310 1,964,310 2024 - 2028 8,205,000 1,616,160 9,821,160 2029 - 2031 5,550,000 348,263 5,898,263 To tal 20,770,000$ 4,766,136$ 25,536,136$ General Obligat ion - Component Units Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Bonds Int erest Year Outstanding Due To tal 2019 728,696$ 487,991$ 1,216,687$ 2020 748,696 466,242 1,214,938 2021 773,696 798,696 1,572,392 2022 798,696 414,148 1,212,844 2023 828,696 382,348 1,211,044 2024-2028 4,688,480 1,376,895 6,065,375 2029-2031 3,331,091 308,750 3,639,841 To tal 11,898,051$ 4,235,070$ 16,133,121$ Revenue Bonds - Primary Governm ent Annual debt service requirements to maturity for temporary notes -to be paid through the issuance of general obligation bonds: Not es Int eres t Year Outstanding Due To tal 2019 18,123,505$ 372,400$ 18,495,905$ To tal 18,123,505$ 372,400$ 18,495,905$ Te mporary Not es - Primary Governm ent 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Kansas Public Water Supply Loans.The City has engaged in a loan with the Kansas Public Water Supply Fund. The following displays annual debt service requirements to maturity for the loan payable to be paid from service revenues, for the full proceeds amount: Loans Int erest Year Outstanding Due To tal 2019 527,499$ 247,835$ 775,334$ 2020 539,863 235,471 775,334 2021 552,523 222,811 775,334 2022 565,483 209,851 775,334 2023 578,754 196,580 775,334 2024-2028 3,104,194 772,476 3,876,670 2029-2033 3,486,921 389,749 3,876,670 2034-2035 1,277,114 46,434 1,323,548 To tal 10,632,351$ 2,321,207$ 12,953,558$ Kans as Water Supply Loans - Primary Government Dakotas and CNMC Notes. Dakotas Note A -On July 27, 2016, a $6,016,500 promissory note with a maturity date of December 10, 2050 was provided to SFH QalicB by Dakotas XXII, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2026, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date,annual payments of principal and interest in an amount equal to $293,276 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $6,016,500. Dakotas Note B -On July 27, 2016, a $2,623,500 promissory note with a maturity date of December 10, 2050 was provided to the SFH QalicB by Dakotas XXII, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2025, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $127,883 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $2,623,500. 51 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) CNMC Note A -On July 27, 2016, a $2,674,000 promissory note with a maturity date of December 10, 2050 was provided to the SFH QalicB by CNMC Sub-COE 114, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2025, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $130,345 are due.At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $2,674,000. CNMC Note B -On July 27, 2016, a $1,326,000 promissory note with a maturity date of December 10, 2050 was provided to the SFH QalicB by CNMC Sub-COE 114, LLC. Interest accrues on the unpaid principal balance at an interest rate of 1.582625% with annual interest only payments, partially in arrears and partially in advance, commencing on December 10, 2016 and continuing on the tenth day of each December thereafter through December 10, 2025. On July 27, 2023, payment of all accrued and unpaid interest through July 27, 2023 is due. Commencing on December 10, 2023 and continuing on the tenth day of each December thereafter through December 10, 2025, accrued and unpaid interest shall be due and payable annually, partially in arrears and partially in advance for interest accruing through the end of each calendar year. Commencing on December 10, 2026 and continuing through the maturity date, annual payments of principal and interest in an amount equal to $64,636 are due. At maturity, the entire outstanding principal balance plus all accrued and unpaid interest thereon is due and payable in full. The loan may not be prepaid prior to July 27, 2023 and is secured by the Loan and Security Agreement. As of December 31, 2018, the note balance was $1,326,000. As of December 31, 2018, the principal balance of these four loans net of $454,947 of unamortized debt issuance costs was $12,185,053. Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: Assessment In teres t Year Outstanding Due To tal 2019 2,249$ 315$ 2,564$ 2020 2,350 215 2,565 2021 2,455 110 2,565 To tal 7,054$ 640$ 7,694$ Spec ial Assessment Debt - Component Units 52 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Special assessments. As provided by Kansas statutes, projects financed in part by special assessments are financed through general obligation bonds of the City and are retired from the debt service fund. Special assessments paid prior to the issuance of bonds are recorded as revenue in the appropriate project. Special assessments received after the issuance of bonds are recorded as revenue in the debt service fund. The special assessments are not recorded as revenue when levied against the respective property owners as such amounts are not available to finance current year operations. The special assessment debt is a contingent obligation of the City to the extent of property owner defaults, which have historically been immaterial. Premises lease.On July 27, 2016, SFH QalicB entered into a lease agreement with the City for the use of the Salina Field House, as defined in the Net Lease agreement (the "Property"), under a direct financing lease. The lease term is 30 years, as defined in the Net Lease agreement. Beginning on July 1, 2017 and on the first day of each December thereafter through December 1, 2046, annual payments are due, in advance, as specified in the Net Lease agreement. For the year ended December 31, 2018, SFH QalicB earned $492,917 of rental income under the terms of the Net Lease. As of December 31, 2018, rental income of $79,912 remained receivable from the City. The following is a schedule, by year, of total minimum lease payments by the City to SFH QalicB under the direct financing lease as of December 31, 2018: 2019 130,000$ 2020 130,000 2021 130,000 2022 130,000 2023 162,500 2024-2028 2,405,000 2029-2033 3,250,000 2034-2038 3,250,000 2039-2043 3,250,000 2044-2046 1,625,000 14,462,500$ Ground Lease.On October 24, 2018, SFH QalicB entered into a lease agreement with Salina Regional Medical Education, LLC for the use of property for parking of passenger vehicles and non-commercial trucks (the Parking Lot) by the public. SFH QalicB will have the option to acquire the Parking Lot for $1 upon the end of the lease term, which is 100 years, as defined in the Ground Lease. A one-time basic rent payment of $250,000 was due on the commencement date. There are no additional minimum lease payments due. Sales tax and Revenue (STAR) Bonds.STAR Bonds are authorized to be issued pursuant to K.S.A. 12-17, 160, et seq., as amended (the STAR Bond Act). The STAR Bond Act provides a form of tax increment financing that enables the issuance of bonds payable from certain State and local sales and compensating use tax revenues and transient guest tax revenues generated from STAR bond projects constructed within a STAR bond project district. To implement STAR bond financing, a local government must adopt a resolution that specifies a proposed STAR bond project district’s boundary and describes the overall district plan, hold a public hearing on the district and plan, and pass a resolution that establishes the STAR bond project district. Additionally, there may be one or more projects within a STAR bond district. In accordance with the STAR Bond Act, the City has no liability for payment of bonds in the event that revenues received from sources noted above are inadequate to pay the debt incurred with the issuance of the STAR bonds. 53 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) In connection with the issuance of STAR bonds, the City of Salina and the State of Kansas enter into a Tax Distribution Agreement. The agreement provides that the principal of, accreted value, and interest on the STAR bonds will be paid proportionally by the City of Salina and the State of Kansas, based on each entity’s respective share of sales taxes generated within the district. These proportional shares may change in the future if the sales taxes assessed by the local or state governments are modified. On June 1, 2015, the City of Salina Commission adopted Ordinance 15-10776 establishing the district known as the Salina STAR Bond Project District. On August 22, 2016, the City held a public hearing and approved Ordinance 16-10856 adopting the STAR Bond Project Plan. On December 1, 2018, the City of Salina issued $18,250,000 in Senior Special Obligation Revenue Bonds (Series 2018-A) and $4,320,000 in Subordinate Special Obligation Revenue Bonds (Series 2018-B). The City’s portion of the proceeds from these bond issuances is recorded as a capital contribution in the financial statements. F. Operating Leases On December 20, 2012, the City and Saline County jointly entered into a non-cancelable lease to finance a $2,750,000 heating, ventilation and air conditioning (HVAC) upgrade at the Saline County-City Building Authority. The City’s share of the lease agreement is 40% and will pay the lessor $1,100,000, plus interest, through monthly payments of $7,827 over a term of 180 months. The total cost for this lease was $93,926 for the year ended December 31, 2018. The future minimum lease payments for the lease are as follows: Year Amount 2019 93,926$ 2020 93,926 2021 93,926 2022 93,926 2023 93,926 2024-2027 375,708 Total 845,338$ G. Reconciliation of Transfers A reconciliation of interfund transfers follows: Tr ans fe r In Tr ans fe r Out Major Funds : General fund 5,041,500$805,000$ Touris m and convent ion fund - 812,346 Spec ial gas fund 160,000 - Sales tax capital fund - 2,568,350 Debt service 2,270,782 - Other government al funds 1,354,914 - Solid was te disposal fund - 690,000 Water and sewer fund - 3,650,000 Sanit at ion fund - 491,500 Cent ral garage fund 190,000 - Total Trans fers 9,017,196$9,017,196$ The City uses interfund transfers to share administrative costs between funds. 54 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION A. Defined Benefit Pension Plan Description of Pension Plan. The City participates in a cost-sharing multiple-employer pension plan (Pension Plan), as defined in Governmental Accounting Standards Board Statement No. 67, Financial Reporting for Pension Plans. The Pension Plan is administered by the Kansas Public Employees Retirement System (KPERS), a body corporate and an instrumentality of the State of Kansas. KPERS provides benefit provisions to the following statewide pension groups under one plan, as provided by K.S.A. 74, article 49: Public employees, which includes: State/School employees Local employees Police and Firemen Judges Substantially all public employees in Kansas are covered by the Pension Plan. Participation by local political subdivisions is optional, but irrevocable once elected. Those employees participating in the Pension Plan for the City are included in the Local employees group and the Kansas Police and Firemen group. KPERS issues a stand-alone comprehensive annual financial report, which is available on the KPERS website at www.kpers.org. Benefits. Benefits are established by statute and may only be changed by the State Legislature. Members (except Police and Firemen) with ten or more years of credited service, may retire as early as age 55 (Police and Firemen may be age 50 with 20 years of credited service), with an actuarially reduced monthly benefit. Normal retirement is at age 65, age 62 with ten years of credited service, or whenever a member’s combined age and years of service equal 85. Police and Firemen normal retirement ages are age 60 with 15 years of credited service, age 55 with 20 years, age 50 with 25 years, or any age with 36 years of service. Monthly retirement benefits are based on a statutory formula that includes final average salary and years of service. When ending employment, members may withdraw their contributions from their individual accounts, including interest. Members who withdraw their accumulated contributions lose all rights and privileges of membership. For all pension coverage groups, the accumulated contributions and interest are deposited into and disbursed from the membership accumulated reserve fund as established by K.S.A. 74- 4922. Members choose one of seven payment options for their monthly retirement benefits. At retirement a member may receive a lump-sum payment of up to 50% of the actuarial present value of the member’s lifetime benefit. His or her monthly retirement benefit is then permanently reduced based on the amount of the lump sum. Benefit increases, including ad hoc post-retirement benefit increases, must be passed into law by the Kansas Legislature. Benefit increases are under the authority of the Legislature and the Governor of the State of Kansas. The 2012 Legislature made changes affecting new hires, current members and employers. A new KPERS 3 cash balance retirement plan for new hires starting January 1, 2015, was created. Normal retirement age for KPERS 3 is 65 with five years of service or 60 with 30 years of service. Early retirement is available at age 55 with ten years of service, with a reduced benefit. Monthly benefit options are an annuity benefit based on the account balance at retirement. 55 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) For all pension coverage groups, the retirement benefits are disbursed from the retirement benefit payment reserve fund as established by K.S.A. 74-4922. Contributions. Member contributions are established by state law and are paid by the employee according to the provisions of Section 414(h) of the Internal Revenue Code. State law provides that the employer contribution rates are determined based on the results of an annual actuarial valuation. The contributions and assets of all groups are deposited in the Kansas Public Employees Retirement Fund established by K.S.A. 74-4921. All of the retirement systems are funded on an actuarial reserve basis. For fiscal years beginning in 1995, Kansas legislation established statutory limits on increases in contribution rates for KPERS employers. Annual increases in the employer contribution rates related to subsequent benefit enhancements are not subject to these limitations. The statutory cap increase over the prior year contribution rate is 1.2% of total payroll for the fiscal year ended June 30, 2018. The actuarially determined employer contribution rates (not including the 1.00% contribution rate for the Death and Disability Program) and the statutory contribution rates are as follows: Actuarial Statutory Employer Employer Rat e Capped Ra te Loc al employ ees 8.39%8.39% Polic e and Firemen 20.09%20.09% Member contribution rates as a percentage of eligible compensation for the fiscal year 2018 are 6.00% for Local employees and 7.15% for Police and Firemen. Employer Allocations. Although KPERS administers one cost-sharing multiple-employer defined benefit pension plan, separate (sub) actuarial valuations are prepared to determine the actuarial determined contribution rate by group. Following this method, the measurement of the collective net pension liability, deferred outflows of resources, deferred inflows of resources, and pension expense are determined separately for each of the following groups of the plan: State/School Local Police and Firemen Judges To facilitate the separate (sub) actuarial valuations, KPERS maintains separate accounts to identify additions, deductions, and fiduciary net position applicable to each group. The allocation percentages presented for each group in the schedule of employer and nonemployer allocations are applied to amounts presented in the schedules of pension amounts by employer and nonemployer. The allocation percentages for the City’s share of the collective pension amounts as of December 31, 2018, are based on the ratio of its contributions to the total of the employer and nonemployer contributions of the group for the fiscal years ended December 31, 2018. The contributions used exclude contributions made for prior service, excess benefits and irregular payments. At June 30, 2018, the City’s proportion for the Local employees group was 0.790%, which was a decrease of .021% from its proportion measured at June 30, 2017. At June 30, 2018, the City’s proportion for the Police and Firemen group was 2.081%, which was a decrease of .110% from its proportion measured at June 30, 2017. 56 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) Net Pension Liability. At December 31, 2018 and 2017, the City and its component units reported a liability of $31,984,657 and $33,276,991, respectively, for its total proportionate share of the net pension liability for the Local and Police and Firemen groups. Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2017, which was rolled forward to June 30, 2018, using the following actuarial assumptions: Assumptions Rat e Price inflation 2.75% Wage inflation 3.50% Salary increas es, including wage increas es 3.5% to 12.0% including inflation Long-t erm rat e of return, net of inves tment ex pens e, and including pric e infl ation 7.75% Mortality rates were based on the RP-2014 Mortality Tables, with age setbacks and age set forwards as well as other adjustments based on different membership groups. Future mortality improvements are anticipated using Scale MP-2016. The actuarial assumptions used in the December 31, 2017 valuation were based on the results of an actuarial experience study conducted for the period of January 1, 2013, through December 31, 2015. The experience study is dated November 18, 2016. The long-term expected rate of return of pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of June 30, 2018 are summarized in the following table: Long-Term Expec ted Asset Long-Term Allocation Real Rat e of Return Global Equity 47.00%6.85% Fix ed Income 13.00%1.25% Yield drive n 8.00%6.55% Real Return 11.00%1.71% Real es tate 11.00%5.05% Alternat ives 8.00%9.85% Short -t erm inves tments 2.00%-0.25% 100.00% Discount Rate. The discount rate used to measure the total pension liability was 7.75%. The projection of cash flows used to determine the discount rate assumed that contributions from plan members will be made at the contractually required rate. The State, School and Local employers do not necessarily contribute the full actuarial determined rate. Based on legislation passed in 1993, the employer contribution rates certified by the System’s Board of Trustees for these groups may not increase by more than the statutory cap. The expected KPERS employer statutory contribution was modeled for future years, assuming all actuarial assumptions are met in future years. Employers contribute the full actuarial determined rate for Police & Firemen, and Judges. Future employer contribution rates were also modeled for Police & Firemen and Judges, assuming all actuarial assumptions are met in future years. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 57 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) Sensitivity of the City’s proportionate share of the net pension liability to changes in the discount rate. The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.75%, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.75%) or 1-percentage point higher (8.75%) than the current rate: 1% Dec reas e (6.75%)Discount Rat e (7.75%)1% Inc reas e (8.75%) Loc al 16,154,118$ 11,014,328$ 6,670,741$ Police & Firemen 28,531,728 20,019,473 12,892,837 To tal 44,685,846$ 31,033,801$ 19,563,578$ Pension Expense. For the year ended December 31, 2018, the City recognized Local pension expense of $870,226 and Police and Firemen pension expense of $2,385,738, which includes the changes in the collective net pension liability, projected earnings on pension plan investments, and the amortization of deferred outflows of resources and deferred inflows of resources for the current period.The Salina Housing Authority’s and Salina Airport Authority’s portion of the Local pension expense were $31,100 and $39,859, respectively Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to pensions for Local and Police and Firemen groups from the following sources: Deferred outfl ows Deferred inflows Loc al of res ourc es of res ourc es Differenc es between ac tual and ex pec ted ex perienc e 39,766$ 312,097$ Net differences between projec ted and ac tual earnings on investments 257,660 - Changes in assumptions 476,967 53,041 Changes in proportion 446,147 435,326 To tal 1,220,540$ 800,464$ Deferred outfl ows Deferred inflows Police & Firemen of res ourc es of res ourc es Differenc es between ac tual and ex pec ted ex perienc e 1,223,246$ 92,492$ Net differences between projec ted and ac tual earnings on investments 521,008 - Changes in assumptions 1,054,212 55,255 Changes in proportion 51,284 1,107,361 To tal 2,849,750$ 1,255,108$ 58 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) A. Defined Benefit Pension Plan (Continued) At December 31, 2018, the Salina Housing Authority and Salina Airport Authority reported deferred outflows of resources and deferred inflows of resources related to pensions for Local and Police and Firemen groups from the following sources: Deferred outfl ows Deferred inflows Deferred out fl ows Deferred inflows Local of res ourc es of res ources of resourc es of res ources Di fferenc es between actual and ex pec ted experience 1,670$ 11,937$ 2,187$ 17,161$ Net differenc es between projected and ac tual earnings on inves tments 10,829 - 14,168 - Changes in assumptions 18,592 2,525 26,226 2,916 Changes in proportion 1,806 6,884 55,201 44,325 To tal 32,897$ 21,346$ 97,782$ 64,402$ Airport AuthorityHousing Authority $1,723,207 reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Loc al Police & Firemen Deferred Deferred Year ended [Inflows ] Out fl ows [Infl ows ] Out fl ows Dec ember 31,Amount Amount To tal 2019 341,010$ 985,459$ 1,326,469$ 2020 202,538 586,107 788,645 2021 [100,494] [33,058] [133,552] 2022 [7,653] 64,997 57,344 2023 [15,325] [8,863] [24,188] To tal 420,076$ 1,594,642$ 2,014,718$ $36,221 and $13,417 reported as deferred outflows of resources related to pensions resulting from Salina Housing Authority and Salina Airport Authority contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Housing Airport Authority Authori ty Deferred Deferred Year ended [Inflows ] Out fl ows [Infl ows ] Out fl ows Dec ember 31,Amount Amount To tal 2019 [2,591]$ 10,978$ 8,387$ 2020 11,125 12,657 23,782 2021 7,101 112 7,213 2022 [4,816] 8,685 3,869 2023 732 948 1,680 To tal 11,551$ 33,380$ 44,931$ 59 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) B. Deferred Compensation Plan The City offers its employees a deferred compensation plan ("Plan") created in accordance with Internal Revenue Code Section 457. The Plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Plan assets are transferred to a plan agent in a custodial trust and are not available to the claims of the City's general creditors. C. Flexible Benefit Plan (I.R.C. Section 125) The City Commission has adopted by resolution a salary reduction flexible benefit plan ("Plan") under Section 125 of the Internal Revenue Code. All City employees working more than 20 hours per week are eligible to participate in the Plan beginning after two full months of employment. Each participant may elect to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the Plan include various insurance and disability benefits. D. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; natural disasters and other events for which the City carries commercial insurance. No significant reductions in insurance coverage from that of the prior year have occurred. Settlements have not exceeded insurance coverage for each of the past three years. The City has established a limited risk management program for workers’ compensation. The program covers all City employees. Premiums are paid into the Workers’ Compensation Reserve Fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $250,000 ($350,000 for claims involving employees classified as policemen or firemen). Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Workers' Compensation Reserve Fund because it is expected to be liquidated with expendable available financial resources. Of the liability, $183,514 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2018 2017 Unpai d claims, January 1 221,913$ 255,154$ In curred claims (including IBNRs )886,086 622,556 Cl aim pay ment s [869,221] [655,797] Unpai d claims, Dec ember 31 238,778$ 221,913$ The City established a limited risk management program for employee health and dental insurance in 1997. The program covers eligible City employees. Premiums are paid into the health insurance fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Health Insurance Fund because it is expected to be liquidated with expendable available financial resources. Therefore, all of the liability is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 60 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) 2018 2017 Unpai d claims, January 1 395,691$ 294,333$ In curred claims (including IBNRs )3,670,930 4,244,648 Cl aim pay ment s [3,685,641][4,143,290] Unpai d claims, Dec ember 31 380,980$ 395,691$ E. Contingent Liabilities The City receives significant financial assistance from numerous federal and state governmental agencies in the form of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable funds. However, in the opinion of management, any such disallowed claims would not have a material effect on any of the financial statements of the City at December 31, 2018. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's legal counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. F. Municipal Solid Waste Landfill State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste, and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the City reports a portion of these closure and postclosure care costs as an operating expense of the solid waste fund in each period based on landfill capacity used as of each balance sheet date. The $1,981,498 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 28.8% of the estimated capacity of the landfill. The City's solid waste fund will recognize the remaining estimate cost of closure and postclosure care of $4,892,995 as the remaining estimated capacity is filled over the remaining life expectancy of 147 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2018. Actual cost may be higher due to inflation, changes, in technology or changes in regulations. The City is required by State and Federal laws and regulations to provide assurances of financial responsibility for closure and post- closure care. The City has elected to utilize the Local Government Financial test promulgated by the U.S. Environmental Protection Agency (at 40 CFR 258.74(f)) and the Kansas Department of Health and Environment to provide these assurances. Any future closure or post-closure care costs will be provided through the normal budgeting and rate setting process, including the issuance of general obligation bonds, if necessary. 61 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) G. Capital Projects Capital projects often extend over two or more fiscal years. The following is a schedule, which compares the project authorization including allowable interest revenue to total project expenditures from project inception to December 31, 2018. Mark ley -Magnolia VV Sewer 5,150,000$ 200,790$ Cloud from Ohio to Levee 155,014 69,242 Ninth and Cloud In ters ection Realignment 1,100,000 1,048,542 Bicent ennial Cent er Im provem ents 10,200,000 12,344,709 Lakewood Middle School Safe Route 81,375 47,509 Bicent ennial Cent er Owners Rep 96,000 84,000 Water Well 13 & 14 Maintenanc e 52,184 50,830 Pave ment Condi tion Survey 36,222 33,909 Community Fieldhouse 6,937,827 8,727,749 Community Fieldhouse 713,858 733,992 WasteWater Tr eat ment Plant Feas ibil 154,395 154,395 Channel Road Eros ion Repairs - 58,858 Rebuild High Servic e Pump P-203 24,187 13,688 Pump Stations and Force Mains 1,483,000 1,280,581 2016 Water Meters 30,000 18,128 2017 Country Club Road Im provement s 1,200,000 1,088,188 Dowtown STAR Dis trict 58,000 136,120 Downt own CID - Alley - 2,317 Downt own TIF - 2,009 2017 Mill & Inlay 1,577,502 1,574,583 2017 Major Conc ret e Rehab 469,472 465,748 Downt own Street scape 12,165,000 3,514,351 Smoky Hill River Renewal 3,200,000 2,632,848 Downt own Sant a Fe Water Main Replac em ent 1,351,100 762,367 S Well Field & W TP Phas e 1 1,964,525 1,583,269 2017 Sidewalks 69,092 73,665 Police Tr aining Facility 4,900,000 297,358 Beec hc raft Road Im provement s-Airport Authority 1,500,000 12,884 2017 Sanitary Sewer Line Cleaning 519,358 297 Indiana Ave Trail 79,262 74,992 Preliminary Design Broadway Impr 50,000 50,248 2018 Pave ment Sealing 325,000 252,778 Northbound 9t h Street Bridge 103,768 92,060 2018 Microsurfac ing 750,000 731,987 2018 UB AS 800,000 673,029 2018 Brick Street s 99,243 99,486 2018 Bridge Maintenance 86,520 82,684 2018 Chip Seal/Bituminous 175,000 169,866 2018 Mastic Surfac e Treat ment 30,000 30,305 2018 Mill & Inlay 1,550,000 1,353,589 2018 Minor Conc ret e Rehab 40,510 40,773 2018 Sidewalks 80,493 83,114 2018 Tr affi c Cont rol Main/Street Mark ings 75,000 56,371 9t h Street Kirwin to Crawford 665,752 630,458 2018 Sanitary Sewer Point Repair 50,000 18,859 Landfill Cell #20 Des ign 60,000 50,714 2018 Park Improvements 194,000 198 Manhole & Value Adj 10,000 306 Community Theat er HVAC Replac ement 46,000 207 North Lime Dry ing Lagoon Yearly Maint enance 120,000 37,260 62 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters The Kansas Department of Health and Environment (KDHE) issued a report in 1994 indicating the presence of volatile organic compounds at levels requiring remediation at the Salina Public Water Supply Wells Site. The City adopted a proactive Policy and Action Plan to remediate the groundwater contamination, and on December 7, 1994, the City and KDHE entered into a Consent Order and Settlement Agreement under which the City assumed primary responsibility for the further investigation and remediation of the groundwater contamination. Field testing work has been completed. The necessary remediation work will be conducted over the next several years at a yet undetermined cost to the City's Water and Sewer Fund. The U.S. Department of Defense transferred property located at the former Schilling Air Force Base (the Base or Site) to the Authority on or about September 9, 1966. The property is now known to contain areas of extensive soil and groundwater contamination, which is a result of the use and disposal of chlorinated solvents during military operations at the Base from 1942 until Base closure in 1965. The U.S. Department of Defense is responsible for the investigation and remediation of contamination caused by military activities at current and former military bases. The U.S. Army Corps of Engineers (Corps) is the lead agency for the Department at formerly used defense sites. The Corps has investigated the soil and groundwater contamination at the Site under the regulatory oversight of the U.S. Environmental Protection Agency (EPA) and the Kansas Department of Health and Environment (KDHE). The Site is not designated as a National Priority List Superfund site, but investigation and remediation are required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Potential liability for contamination under CERCLA extends broadly to parties associated with the release or presence of hazardous substances, including not only those entities involved with contaminant use and disposal, but in some cases other current and former owners and operators of contaminated sites. As a current owner of extensive amounts of property at the Site, the Authority is potentially liable under CERCLA, although the Authority believes that it has meritorious defenses to such liability. The Authority is considered to be a Potentially Responsible Party (PRP) for the Site, primarily due to its status as a property owner. The Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University Polytechnic Campus), (collectively Salina Public Entities) currently own over 90% of the nearly 4,000 acres of the Base property. No third party has asserted any claim for bodily injury or property damage. Beginning in August 2007, the Salina Public Entities initiated settlement negotiations with the U.S. Federal Government. The negotiation objectives at that time included transferring the responsibility for completing the cleanup from the U.S. to the Salina Public Entities. The local objective was to reach a settlement agreement with the U.S. that provides the Salina Public Entities sufficient funds to complete cleanup operations over a 30-year period. During calendar year 2008, the Salina Public Entities, by and through its environmental consultant, prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation included consultation with the EPA and KDHE. The Salina Public Entities’ CTC was completed in June of 2008 and submitted to the Corps. Subsequently, on January 23, 2009, the Salina Public Entities delivered a demand letter to the Corps. The letter demanded that settlement negotiations begin immediately with the U.S. Department of Justice. On May 14, 2009 the Authority was notified that the Corps referred the Base demand letter to the U.S. Department of Justice on May 12, 2009. The Salina Public Entities delivered on or about May 10, 2010, a settlement offer and a draft of a lawsuit complaint to the attorney for the U.S. Department of Justice. The Salina Public Entities planned to file suit against the U.S. if the matter was not settled by the end of May, 2010. The Salina Public Entities did not intend to cut off settlement negotiations by the filing of suit, and this has been communicated to the U.S. No remedial action plan or record of decision has been adopted by the EPA or KDHE. 63 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) On or about May 27, 2010, the Salina Public Entities filed their Complaint against the United States of America, the United States Department of Defense and Secretary of Defense, Robert M. Gates, in his official capacity (collectively, "Defendants"). On or about September 22, 2010, the Salina Public Entities filed their First Amended Complaint in four counts: Count I Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(1), Count III Claim for Recovery of Response Costs Pursuant to 42 U.S.C.§ 9607(a) and Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§ 9613(g)(2). On or about October 6, 2010, Defendants filed their motion to dismiss and to strike, primarily with respect to the citizen suit claims. On or about March 25, 2011, Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the exception of non-litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts III and IV for response costs under CERCLA 9607(a) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228 as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims brought against them and will assert, among other defenses, the third party defense under 42 U.S.C.§ 9607(b)(3). The parties agreed on a mediation to discuss settlement. The mediation sessions occurred in October 2011, and the mediation discussions continued for over a year. The parties have now agreed upon a partial settlement. The partial settlement includes payment by the U.S. in exchange for performance by the Salina Public Entities of a remedial investigation/feasibility study through entry of a Corrective Action Decision by KDHE (the "Work"). The present cost estimate of the Work is less than $10,000,000. The agreement is that the U.S. will pay 90% of the cost of the Work with the Salina Public Entities responsible for payment of the remaining 10%. It is anticipated that the agreed share of the Salina Public Entities will be paid by the City of Salina. Also, the claims and counterclaims in the lawsuit have been dismissed without prejudice with provisions tolling any and all statutes of limitation. No party is obligated under the settlement agreement to implement the Corrective Action Decision upon its entry by KDHE, and the parties will either negotiate an agreement to implement such Corrective Action Decision or refile their claims in court. The Salina Public Entities have entered into a Consent Agreement and Final Order ("CAFO") with KDHE, which is conditioned upon the U.S.'s payment to the City. On May 2, 2013, the U.S. District Court for the District of Kansas entered its Consent Decree. City of Salina, Kansas, et al. v. United States of America, et al., Case No. 1 0- CV -2298 CM/DJW. The Court's Consent Decree approved the settlement among the parties. The current status is that the U.S. wire transferred $8,426,700 to the account of the City, and the City added the share of the Salina Public Entities in the amount of $936,300 to the account. The Remedial Investigation (RI) portion of the CAFO scope of work was completed during Q1 2018. The Feasibility Study portion of the CAFO scope of work was also completed during Q1 2018. The Feasibility Study (FS) and Proposed Plan (PP) portions of the CAFO scope of work were completed during 2018 and submitted to KDHE. The Corrective Action Decision (CAD) document is scheduled to be issued by KDHE during 2019. 64 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Although the claims and counterclaims in the lawsuit have been dismissed without prejudice, the Authority intends to vigorously pursue its claims that the U.S. should implement the Corrective Action Decision upon its entry by KDHE and its defenses against any claims brought against it. Based on presently known information, the Authority has determined that while a possible liability exists, at this time, no reasonable estimate of the possible liability can be made. Therefore, no liability related to that matter has been recorded. I. Other Postemployment Healthcare Benefits Plan Description. The City offers postemployment health insurance to retirement employees. The benefits are provided through a single employer defined benefit postemployment healthcare plan administered by the City. The Employee Benefit Plan (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA 12-5040 requires all local governmental entities in the state that provide a group health care plan to make participation available to all retirees and dependents until the retiree reaches the age of 65 years. No separate financial report is issued for the Plan. Funding Policy. The contribution requirements of plan participants and the City are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. In 2018, the City did not contribute to the plan. At December 31, 2018, the following employees were covered by the benefit terms: Active employ ees 441 Ret irees and cove red spous es 32 To tal 473 The total OPEB liability of $3,487,302 was measured as of December 31, 2017 and was determined by an actuarial valuation as of that date. The total OPEB liability in the December 31, 2017 actuarial valuation was determined using the following assumptions and other inputs, applied to all periods in the measurement, unless otherwise specified: Valuation date Dec ember 31, 2017 Actuarial cost met hod Entry age normal as a leve l perc ent age of pay roll Infl at ion 2.75% Salary increas es 3.50% Discount rate 3.44% Heal thcare cost trend rat es Medi cal & Pharm acy: 6.8% for 2017, dec reas ing 0.60% per year to an ultimate rat e of 5.1% for 2020 and through 2030 Dent al: 5.00% to 2020 Ret iree's share of benefit relat ed costs 100% of the premium The discount rate was based on an index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher. Mortality rates were based on the RP 2014 Mortality Tables, with age setbacks and age set forwards as well as other adjustments based on different membership groups. Future mortality improvements are anticipated using Scale MP-2017. 65 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) I.Other Postemployment Healthcare Benefits (Continued) Changes in the total OPEB liability are as follows: Balanc e 1/1/2018 3,306,044$ Service cost 226,762 Int eres t 128,578 Benefit paid [265,000] Changes in assumptions 90,918 Balanc e 12/31/2018 3,487,302$ The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.44%) or one percentage point higher (4.44%) than the current discount rate: 1% Dec reas e Di scount Rat e 1% increas e (2.44%)(3.44%)(4.44%) To tal OPEB Liabilit y 3,767,121$ 3,487,302$ 3,226,016$ The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage point lower (5.8% decreasing to 3.1%) or one percentage point higher (7.8% decreasing to 5.1%) than the current healthcare cost trend rate: Heal thcare Cost 1% Dec reas e Trend Rat es 1% increas e To tal OPEB Liabilit y 3,084,533$ 3,487,302$ 3,966,000$ For the year ended December 31, 2018, the City recognized OPEB expense of $446,258. Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2018, the City reported deferred outflows related to other postemployment benefits from the following sources: Deferred out fl ows of res ourc es Changes of as sumptions 80,503$ To tal 80,503$ Amounts reported as deferred outflows of resources will be recognized in OPEB expense as follows: Deferred Year ended [Inflows] Out fl ows June 30,Amount 2019 10,414$ 2020 10,414 2021 10,414 2022 10,414 2023 10,414 2024+28,433 Total 80,503$ CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) J.Other Postemployment Benefits (KPERS) Plan Description. The City participates in a multiple-employer defined benefit other postemployment benefit (OPEB) plan (the Plan) which is administered by the Kansas Public Employees Retirement System (KPERS). The Plan provides long-term disability benefits and a life insurance benefit for disabled members to KPERS members, as provided by K.S.A. 74-04927. The Plan is administered through a trust held by KPERS that is funded to pay annual benefit payments. However, because the trust’s assets are used to pay employee benefits other than OPEB, the trust does not meet the criteria in paragraph 4 of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Accordingly, the Plan is considered to be administered on a pay-as-you-go basis. Benefits. Benefits are established by statute and may be amended by the KPERS Board of Trustees. The Plan provides long-term disability benefits equal to 60 percent (prior to January 1, 2006, 66 2/3 percent) of annual compensation, offset by other benefits. Members receiving long-term disability benefits also receive credit towards their KPERS retirement benefits and have their group life insurance coverage continued under the waiver of premium provision. The monthly long-term disability benefit is 60 percent of the member’s monthly compensation, with a minimum of $100 and a maximum of $5,000. The monthly benefit is subject to reduction by deductible sources of income, which include Social Security primary disability or retirement benefits, workers compensation benefits, other disability benefits from any other sources by reason of employment, and earnings from any form of employment. If the disability begins before age 60, benefits are payable while the disability continues until the member’s 65th birthday or retirement date, whichever occurs first. If the disability begins after age 60, benefits are payable while the disability continues, for a period of five years or until the member retires, whichever occurs first. Benefit payments for disabilities caused or contributed to by substance abuse or non-biologically based mental illnesses are limited to the shorter of the term of the disability or 24 months per lifetime. The death benefit paid to beneficiaries of disabled members is 150% of the greater of 1) the member’s annual rate of compensation at the time of disability, or 2) the members previous 12 months of compensation at the time of the last date on payroll. If the member has been disabled for five or more years, the annual compensation or salary rate at the time of death will be indexed using the consumer price index, less one percentage point, to compute the death benefit. If a member is diagnosed as terminally ill with a life expectancy of 12 months or less, the member may be eligible to receive up to 100% of the death benefit rather than having the benefit paid to the beneficiary. If a member retires or disability benefits end, the member may convert the group life insurance coverage to an individual insurance policy. Employees covered by benefit terms.At June 30, 2018, the valuation date, the following employees were covered by the benefit terms: Active employ ees 282 Disabled members 4 To tal 286 Total OPEB Liability. The City and its component units reported a total KPERS OPEB liability of $566,938 reported as of December 31, 2018, was measured as of June 30, 2018, and was determined by an actuarial valuation as of December 31, 2017, which was rolled forward to June 30, 2018, using the following actuarial assumptions: 66 67 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) J.Other Postemployment Benefits (KPERS) (Continued) Valuation dat e Dec ember 31, 2017 Actuarial cost method Entry age normal Infl at ion 2.75% Salary increas es 3.00% Di scount rat e (bas ed on 20 year municipal bond rate with an average rat ing of AA/Aa or better, obtained through the Bond Buyer General Obligat ion 20-B ond Municipal Index )3.87% The discount rate was based on the bond buyer general obligation 20-bond municipal index. Mortality rates were based on the RP 2014 Mortality Tables, with age setbacks and age set forwards as well as other adjustments based on different membership groups. Future mortality improvements are anticipated using Scale MP-2016. The actuarial assumptions used in the December 31, 2017 valuation were based on the results of an actuarial experience study for the period of July 1, 2014 through June 30, 2016. Other demographic assumptions are set to be consistent with the actuarial assumptions reflected in the December 31, 2017 KPERS pension valuation. The changes in the total OPEB liability are as follows: Cit y Hous ing Authorit y Airport Authority To tal Balanc e 1/1/2018 439,254$ 7,096$ 12,054$ 458,404$ Service cost 52,380 1,743 2,825 56,948 Int eres t 17,061 252 533 17,846 Effe ct of ec onomic /dem ographic gains or losses 75,173 - [4,199] 70,974 Changes in assumptions [6,574] [205] [87] [6,866] Benefit pay ment s [30,368] - - [30,368] Balanc e 12/31/2018 546,926$ 8,886$ 11,126$ 566,938$ To tal KPERS OPEB Liability Sensitivity of the total KPERS OPEB liability to changes in the discount rate. The following presented the total KPERS OPEB liability of the City, as well as what the City’s total KPERS OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.87%) or 1-percentage-point higher (4.87%) than the current discount rate: 1% Dec reas e Di scount Rat e 1% increas e (2.87%)(3.87%)(4.87%) To tal OPEB Liability - City 569,284$ 546,926$ 524,594$ To tal OPEB Liability - Hous ing Authori ty 9,144$ 8,886$ 8,588$ To tal OPEB Liability - Airport Authori ty 11,395$ 11,126$ 10,800$ 68 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) J.Other Postemployment Benefits (KPERS) (Continued) Sensitivity of the total KPERS OPEB liability to changes in the healthcare cost trend rates. The following presented the total KPERS OPEB liability of the City calculated using the current healthcare cost trend rates as well as what the City’s total KPERS OPEB liability would be if it were calculated using trend rates that are 1 percentage point lower or 1 percentage point higher than the current trend rates. The reader should note that healthcare trend rates do not affect the liabilities related to the long-term disability benefits sponsored by KPERS, but this exhibit is provided as it is a required disclosure under GASB 75. Healthcare Cos t 1% Dec reas e Tr end Rat es 1% increas e To tal OPEB Liability - City 546,926$ 546,926$ 546,926$ To tal OPEB Liability - Hous ing Authori ty 8,886$ 8,886$ 8,886$ To tal OPEB Liability - Airport Authori ty 11,126$ 11,126$ 11,126$ For the year ended June 30, 2018, the City recognized OPEB expense of $75,561. Deferred Outflows of Resources and Deferred Inflows of Resources. At December 31, 2018, the City reported deferred outflows and inflows related to other postemployment benefits from the following sources: Hous ing Authority Airport Authority Deferred Deferred Deferred Deferred Outfl ows of Infl ows of Infl ows of Inflows of Res ources Res ourc es Res ourc es Res ourc es Di fferenc es bet ween ex pec ted and ac tual ex perienc e 67,415$ -$ -$ 3,766$ Changes of as sumptions - 13,271 184 198 To tal 67,415$ 13,271$ 184$ 3,964$ Ci ty $72,729 and $4,294 reported as deferred outflows of resources related to OPEB resulting from City and Airport Authority contributions subsequent to the measurement date,respectively, will be recognized as a reduction of the OPEB liability in the year ended December 31, 2019. Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in OPEB expense as follows: Year Ended Hous ing Airport June 30,City Authority Authority 2019 [6,120]$ [21]$ [458]$ 2020 [6,120] [21] [458] 2021 [6,120] [21] [458] 2022 [6,120] [21] [458] 2023 [6,120] [21] [458] Th ereafter [23,544] [79] [1,674] To tal [54,144]$[184]$ [3,964]$ K.Deficit Fund Balance The Police Grants Fund maintained a deficit fund balance of $[24,544] at December 31, 2018. 69 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) L.Tax Abatements In 2018, the City of Salina participated in real property tax abatements for five local companies. Property tax abatements are authorized under Kansas state statutes K.S.A. 12-1740 et seq. and K.S.A. 79-201a and subject to City policy. The City provides property tax abatements to encourage existing industry to expand, assist new business start-ups, recruit new companies from out-of-state or internationally, encourage high technology and research based businesses, encourage training and development of Salina area employees, and encourage location and retention of businesses which are good "corporate citizens" that will add to the quality of life in the community through leadership and support of civic and philanthropic organizations. Property tax abatements reduce ad valorem property taxes. The percentage of reduction ranges from 40.5%to 100%, but in all cases, the maximum duration is for ten years as per state statute. To receive an abatement, applicants must submit an application, which undergoes due diligence and analysis before being considered by the City Commission. If the abatement is authorized, the applicant must sign a performance agreement that specifies annual compliance measures. Each year, the applicant submits a renewal application, along with compliance information, which is reviewed by City staff for conformance with agreement provisions. If compliance is not met, appeals can be made to the City Commission to determine the amount of incentives, if any, to be received by the property owner. The City of Salina negotiates property tax abatements on an individual basis. Company Start End %2018 Tax Abated Salina Vortex Corp (facility improvements)2015 2024 75% $ 15,432 Great Plains Mfg (facility improvements)2014 2023 100%4,808 Veris Technologies (facility addition/improvements)2015 2024 40.5%1,525 Twin Oaks (facility addition/improvements)2015 2024 55%1,838 Salina Field House (facility)2017 2026 100%58,518 Total 82,120$ Ad Valorem Property Tax Abatements Abatement Tax Increment Financing (TIF).TIFs are an economic development tool established by the Kansas TIF Act (K.S.A. 12-1770 et seq.) and subject to City policy to aid in financing projects for substantial public benefit. Public benefits can include creating jobs or retaining existing employment, eliminating blight, strengthening the employment and economic base of the City, increasing property values and tax revenues, reducing poverty, creating economic stability, upgrading older neighborhoods, facilitating economic self-sufficiency, promoting projects that are of community wide importance, or implementing the economic development goals of the City. The program works by reimbursing a portion of the incremental increase in property taxes resulting from improvements and a portion of local sales tax generated within the district to the property owner. The base value, or what the property was valued at prior to improvements, is shielded from the rebate. To receive a TIF, applicants must submit a detailed, written proposal to the City, which will undergo due diligence and analysis before being considered by the City Commission. The City Commission then determines if it will commence the statutory process to create a redevelopment district. If the TIF district is authorized, the City and applicant will enter into an agreement that specifies performance, certification, and reimbursement requirements. City Staff will work with the property owner to certify eligible expenses and compliance with agreement provisions. Once the project begins to generate TIF revenues (sales tax and/or property tax), City staff works with the distributing agency and property owner to generate and track reimbursements. Because reimbursements are not paid until after improvements are put in place, agreement compliance is met, eligible expenses are certified, and sales and/or property tax distributions are made to the City, there are no provisions for recapturing taxes. The City of Salina negotiates TIFs on an individual basis. 70 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) L. Tax Abatements (Continued) District Purpose Base Year Expires Sales Tax Property Tax Lambertz Construction of 10.79 acres of shopping center, including single and multi-tenant retail space, and related public and private infrastructure 2007 2027 $ 212,624 $ 217,595 Total $ 212,624 $ 217,595 TIF Project Plans 2018 Reimbursements Community Improvement Districts (CID). CIDs are an economic development tool established by the Kansas CID Act (K.S.A. 12-6a26 et seq.) and subject to City policy to assist with the development of community improvements which can benefit a development and the public. In all CIDs, public improvements were financed initially by the developer and are reimbursed annually via a two percent (2%) transportation district sales tax on retail or taxable services occurring within the district. To establish a CID, the applicant first submits a CID petition which is signed by the owners of all of the land within the proposed district. The City Commission then considers the request to establish a CID. If the CID is authorized, the City and applicant will enter into an agreement that specifies performance, certification, and reimbursement requirements. City Staff will work with the property owner to certify eligible expenses and compliance with agreement provisions. Once the project begins to generate CID revenues, City Staff works with the distributing agency and property owner to make and track reimbursements. Because reimbursements are not paid until after improvements are put in place, agreement compliance is met, eligible expenses are certified, and CID sales tax distributions are made to the City, there are no provisions for recapturing taxes. The City of Salina negotiates CIDs on an individual basis. Name Rate Start Expires Purpose 2018 Eligible Reimbursement Amount* South 9th Street 2.00% 3/1/2016 12/31/2037 Assist with improvements to hotel and conference center $ 260,274 Total $ 260,274 Community Improvement District (CID) Neighborhood Revitalization Areas (NRA). NRAs are authorized under Kansas state statutes K.S.A. 12-117 and subject to City policy to spur investment and revitalization of properties which can benefit a neighborhood and the public. The program works by rebating a portion of the incremental increase in property taxes resulting from improvements back to the property owner. The base value, or what the property was valued at prior to improvements, is shielded from the rebate. Participation in the program and percentage of rebate and duration are determined separately by the City, County, and School District. The current City of Salina adopted plan is a 4 year plan running from 2014 – 2018. It allows for a 10 year rebate and provides rebates from 25% to 100% depending on year in plan and type of improvement. To receive an NRA, taxpayers must submit an application, which undergoes due diligence and analysis before being approved by the City. If the NRA is approved, each year, the applicant must submit proof that property taxes have been paid in full. Because the rebate is not given until after improvements are put in place and property taxes paid, there are no provisions for recapturing taxes. The City of Salina approves NRAs on an individual basis. 71 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) L.Tax Abatements (Continued) 2018 Property/Business Name Address Type Rebate Paid Serio Guzman 241 N. Front Street Res 257$ James M. Monroe 620 W . Hamilton Street Res 571 Christina Litwiller 148 N. 12th Street Res 348 Jeremy Cessna 219 N. Front Street Res 323 William & Mary Warhurst 714 Park Street Res 258 Holly Fain 204 Forest Avenue Res 474 Arlene Cox 200 Forest Avenue Res 476 Gloria W illiams 903 N. 10th Street Res 358 Michelle Rogan 240 S. Clark Street Res 478 Samuel A. Rock 1329 N. 4th Street Res 92 Jessica A. Ziegler 221 N. 2nd Street Res 478 Devin or Jessica Know 207 N. Penn Res 658 Ravey Investments LLC 157 N. Seventh, 203 W. Ash, 205 W. Ash, 207 W. Ash & 209 W. Ash Com 2,492 Lamont Outland 1206 N. 7th Street Res 408 Michelle Bunch 634 N. 8th Street Res 419 Jermaine and Tykea Polk 226 N. 2nd Street Res 518 Mary Marshall 937 N. 3rd Street Res 399 Angela Fishburn 1219 N. 8th Street Res 384 Kress Building LLC 134 S. Santa Fe Ave Com 2,592 Heritage at Hawthorne Partners, LLC 715 N. 9th Street Com 4,605 Will & Mary Warhurst 809 W . Ash Res 822 Donnie & Ramona Marrs 2035 E. Iron #300R Res 992 TJTM, Inc. 2035 E. Iron #213C/105R/302R/202R/205R/006R/301RA/301 RB/001R/002R/003R/004R/005R Res 18,739 Troy Valcil 853 Navaho Res 259 Michelle Malone 815 N. 2nd Street Res 46 Timothy & Linda Rickman 719 E. Ash Res 642 Yvette Gelinas 1115 N. 8th Street Res 621 Charles H Carroll Jr Trust 156-158 S. Santa Fe Com 12,456 Latisha Pierce 705 N. 2nd Street Res 1,158 Tanya Shiehzadeh 703 N. 2nd Street Res 924 Robert & Brenda Burns 1205 N. 4th Street Res 807 Property Partners LLC 116 & 118 N. Santa Fe (2nd Floor Loft Apartments)Com 6,055 Phill Hemmer 2035 E. Iron Avenue, Unit #203R Res 15,392 AP Property Holdings, LLC 201 E. Iron Avenue Com 46,159 Gregory Davis 156-158 N. 11th Street Res 2,455 Micheal Money 2035 E. Iron Avenue, Unit #206R Res 4,217 Traniesh Byrd 701 N. 2nd Street Res 791 Mark Martin Living Trust 2035 E. Iron #104R Com 1,730 Philip C Krug Living Trust 2035 E Iron #304R Res 3,777 Jana Endsley 1321 N. 3rd Street Res 815 Kanesha Samilton 214 W . Grand Avenue Res 978 Maria E Padilla 810 N. 5th Street Res 1,332 Kansas Property Investors, LLC, 230 S. Broadway Blvd Com 13,061 JK Webb Properties LLC 120 S. Santa Fe Avenue Com 6,074 Alan and Nancy Franzen 1413 Arapahoe Res 865 Brandon Sears 900 N. 12th Street Res 182 Santa Fe Properties, LLC 131 N. Santa Fe Avenue/128 S. Santa Fe Avenue Com 15,462 Rusty A Leister Living Trust 600 N. Santa Fe Avenue Com 11,334 Heritage at Hawthorne Partners II, LLC.715 N. 9th Street, Phase II Com 8,116 Greg Huston & Terry A Swearingen 1025 W Crawford Street Res 3,867 Total 196,714$ Neighborhood Revitalization Act (NRA) 72 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2018 Note 5. OTHER INFORMATION (Continued) M.Subsequent Events On April 16, 2019, the City was issued two Kansas Public Water Supply Loans in the amounts of $4,250,000 and $32,000,000, respectively. For both loans, the City will make the first payment on August 1, 2020 and the last payment on February 1, 2040. Both loans have interest rates of 2.33%. On April 24, 2019, the City issued Series 2019-A general obligation internal improvement bonds in the amounts of $11,090,000. The bonds will be used to partially retire Temporary Note 2018-2 that matures November 1, 2019 and to finance various capital projects. The City will make the first payment on the bonds on April 1, 2020 and the last payment on October 1, 2039. The interest rate on the bonds ranges from 3.00% to 4.00%. On April 24, 2019, the City issued Series 2019-1 temporary notes in the amounts of $6,085,000. The temporary notes will be used to finance various capital projects. The maturity date of the temporary notes is May 1, 2020 and the interest rate on the notes is 1.58%. REQUIRED SUPPLEMENTARY INFORMATION 73 CITY OF SALINA, KANSAS REQUIRED SUPPLEMENTARY INFORMATION OTHER POSTEMPLOYMENT BENEFITS Schedule of Changes in the City’s Total OPEB Liability and Related Ratios Last Ten Fiscal Years* Total OPEB liability 2018 Service cost 226,762$ Int eres t 128,578 Benefit paid [265,000] Changes in assumptions 90,918 Net change in total OPEB liability 181,258 Total OPEB liability - beginning 3,306,044 Total OPEB liability - ending 3,487,302$ Covered pay roll 24,740,225$ Total OPEB liability as a perc ent age of cove red-empl oy ee pay roll 14.10% Actuarially det erm ined cont ribut ion 265,000$ Actual cont ribut ion 265,000$ Cont ri but ions as a perc ent age of cove red pay rol l 1.07% * - Dat a bec ame avai lable wi th the incept ion of GASB 75 during fi scal year 2018, therefore 10 years of data is unavailable. 74 CITY OF SALINA, KANSAS REQUIRED SUPPLEMENTARY INFORMATION (CONTINUED) OTHER POSTEMPLOYMENT BENEFITS -KPERS Schedule of Changes in the City’s Total OPEB Liability and Related Ratios Last Ten Fiscal Years* Total OPEB liability 2018 Service cost 52,380$ Int eres t 17,061 Effect of ec onomic/demographic gains or losses 75,173 Effect of as sumptions changes or inputs [6,574] Benefit pay ments [30,368] Net change in total OPEB liability 107,672 Total OPEB liability - beginning 439,254 Total OPEB liability - ending 546,926$ Covered pay roll 13,652,194$ Total OPEB liability as a perc ent age of cove red-empl oy ee pay roll 4.01% Actuarially det erm ined cont ribut ion 109,466$ Actual cont ribut ion 109,466$ Cont ri but ions as a perc ent age of cove red pay rol l 0.80% * - Dat a bec ame avai lable wi th the incept ion of GASB 75 during fi scal year 2018, therefore 10 years of data is unavailable. 75 CITY OF SALINA, KANSAS REQUIRED SUPPLEMENTARY INFORMATION (CONTINUED) KPERS PENSION PLAN Schedule of the City’s Proportionate Share of the Net Pension Liability Last Ten Fiscal Years* Police and Police and Police and Police and Local Firemen Local Firemen Loc al Firemen Local Firemen 12/31/15 12/31/15 12/31/16 12/31/16 12/31/17 12/31/17 12/31/18 12/31/18 City's proportion of the net pension liability 0.764%2.258%0.761%2.180%0.811%2.191%0.790%2.081% City's proportionate share of the net pension liability 10,027,679$16,395,794$11,770,699$20,251,512$11,753,246$20,546,882$11,014,328$20,019,473$ City's cove red-employee payroll 12,931,197$10,161,866$13,251,236$10,730,033$13,548,056$10,593,419$13,944,989$10,441,055$ City's proportionate share of the net pension liability as a perc entage of its covered-employee pay roll 77.55%161.35%88.83%188.74%86.75%193.96%78.98%191.74% Plan fiduc iary net position as a percentage of the total pension liability 71.98%74.60%68.55%69.30%72.15%70.99%74.22%71.53% * - The amounts pres ented for eac h fiscal year were determined as of 12/31. Data became ava ilable with the inception of GASB 68 during fiscal year 2015, therefore 10 years of data is unavailable. Schedule of the City’s Contributions Last Ten Fiscal Years* Police and Police and Police and Police and Loc al Firemen Loc al Firemen Local Firemen Loc al Firemen 12/31/15 12/31/15 12/31/16 12/31/16 12/31/17 12/31/17 12/31/18 12/31/18 Cont rac tually required contribution 1,256,217$ 2,527,995$ 1,243,711$ 2,361,273$ 1,179,745$ 1,986,933$ 1,205,334$ 2,181,617$ Cont ributions in relation to the cont rac tually required contribution 1,256,217 2,527,995 1,243,711 2,361,273 1,179,745 1,986,933 1,205,334 2,181,617 Cont ribution deficiency [excess]-$ -$ -$ -$ -$ -$ -$ -$ City's cove red-employee payroll 13,251,236$10,730,033$13,548,056$10,593,419$13,944,989$10,441,055$14,366,294$10,859,219$ Cont ributions as a perc entage of cove red employee payroll 9.48%23.56%9.18%22.29%8.46%19.03%8.39%20.09% * - Data bec ame available with the inception of GASB 68 during fiscal year 2015, therefore 10 years of data is unavailable. COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 76 CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Bicentennial center fund -To account for the activities of the City's convention center. Business improvement district fund -State law allows businesses within an area to voluntarily establish an improvement City. This fund is used to account for the assessments made on the District. All revenues are to be used within the Business Improvement District. Neighborhood park fund -To account for fees collected from new residential building projects in Salina. Expenditures are for acquisition or development of neighborhood parks in the growing areas of the community. Special parks and recreation fund -To account for liquor tax revenues, which must be used for park maintenance and improvements. Special alcohol fund -To account for liquor tax revenues, which must be used for programs, which address prevention, education or intervention for drug and alcohol abuse. Community development revolving fund -To account for funds, which may be loaned for housing and economic development,purposes, to later be repaid and reused on a revolving basis. Sales tax economic development fund -To account for 2.34% of the .75 cent sales tax designated for economic Development purposes. Downtown TIF District #1 fund –To account for revenues and expenditures related to the Tax Increment Financing District that was formed as part of the Downtown Revitalization Project. South 9th CID fund -To account for incremental sales tax revenues received and disbursed back to the developer as part of the Community Improvement District formed in 2015. State Grants fund –To account for grant revenue and expenditures received from the State of Kansas. 911 communications fund -To account for transitioning the receipt and administration of 911 fees to the City from the Kansas Department of Revenue and Saline County,as the City is now the public answering point. Monies will be used to pay for 911 related services. Kenwood cove capital fund -To account for the Special Sales Tax proceeds to be used to provide for long-term capital maintenance activity at the facility. Special law enforcement fund -To account for revenues received from the sale of forfeited assets acquired during drug enforcement activities. Expenses are limited to capital items to be used for further drug enforcement activities. Police grants fund -To account for revenues from grants, which are to be used for special police activities, including the D.A.R.E. program Federal grants fund -To account for grants received from the federal government to be used to monitor and mediate fair housing complaints. D.A.R.E. donations fund -To account for donations to the D.A.R.E. program. War memorial maintenance fund -To account for monies to be used for maintenance of the local war memorial. Arts & humanities fund -To account for revenues and expenses associated with arts and humanities activities. Federal CARE grant fund -To account for revenue and expenses associated with the CARE Grant. Police Department federal forfeiture funds -To account for revenue and expenses associated with federal Equitable Sharing Program funds. 77 CITY OF SALINA, KANSAS COMBINING STATEMENTS -NONMAJOR FUNDS NONMAJOR SPECIAL REVENUE FUNDS -CONTINUED Homeowners’ assistance fund -To receive donations and/or other funds to assist low and moderate income persons in improving their homes. Private grants fund –To account for revenues and expenditures related to grants received from private entities with specific purposes. Animal shelter donations fund –To accumulate donations and account for expenses to benefit the animal shelter. NONMAJOR PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government’s programs. Cemetery endowment fund -To account for amounts expended for perpetual care of the City cemetery. Interest earnings are used for cemetery maintenance. Mausoleum endowment fund -To account for amounts charged for perpetual care of the City mausoleum. Interest earnings are used for mausoleum maintenance. Tricentennial commission fund -To account for donations to be used to celebrate the nation's tricentennial in the year 2076. Total Total Nonmajor Total Nonmajor Nonmajor Debt Nonmajor Special Revenue Permanent Service Governmental Funds Funds Fund Funds ASSETS Cash and investments 2,885,257$ 514,201$ 633,653$ 4,033,111$ Receivables Accounts 1,797 - - 1,797 Total assets 2,887,054$ 514,201$ 633,653$ 4,034,908$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 149,019$ -$ -$ 149,019$ Due to other funds 24,544 - - 24,544 Total liabilities 173,563 - - 173,563 Fund balances: Restricted 345,041 - 633,653 978,694 Committed 2,067,239 514,201 - 2,581,440 Assigned 325,755 - - 325,755 Unassigned [24,544] - - [24,544] Total fund balances 2,713,491 514,201 633,653 3,861,345 Total liabilities and fund balances 2,887,054$ 514,201$ 633,653$ 4,034,908$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2018 See independent auditor's report on the financial statements. 78 Total Total Nonmajor Total Nonmajor Nonmajor Debt Nonmajor Special Revenue Permanent Service Governmental Funds Funds Fund Funds REVENUES Taxes 713,282$ -$ -$ 713,282$ Intergovernmental 807,067 - 475,503 1,282,570 Charges for services 469,969 9,260 - 479,229 Licenses and permits 2,500 - - 2,500 Investment revenue 18,110 3,283 14,797 36,190 Donations 237,660 - - 237,660 Miscellaneous 55,048 - - 55,048 Total revenues 2,303,636 12,543 490,300 2,806,479 EXPENDITURES Current Culture and recreation 1,760,504 - - 1,760,504 Public safety 343,811 - - 343,811 Public health and sanitation 442,359 - - 442,359 Planning and development 641,823 - - 641,823 Miscellaneous - 35 - 35 Debt service Principal retirement - - 810,000 810,000 Interest and other charges - - 84,535 84,535 Capital outlay 569,901 - - 569,901 Total expenditures 3,758,398 35 894,535 4,652,968 Excess [deficiency] of revenues over [under] expenditures [1,454,762] 12,508 [404,235] [1,846,489] Other financing sources [uses] Transfers in 1,354,914 - - 1,354,914 Total other financing sources [uses]1,354,914 - - 1,354,914 Net change in fund balance [99,848] 12,508 [404,235] [491,575] Fund balance - Beginning of year 2,813,339 501,693 1,037,888 4,352,920 Fund balance - End of year 2,713,491$ 514,201$ 633,653$ 3,861,345$ For the Year Ended December 31, 2018 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS See independent auditor's report on the financial statements. 79 Business Special Bicentennial Improvement Neighborhood Parks &Special Center District Park Recreation Alcohol ASSETS Cash and investments 154,748$ 24,964$ 24,251$ 272,521$ 234$ Receivables Accounts - 1,797 - - - Total assets 154,748$ 26,761$ 24,251$ 272,521$ 234$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 57,067$ 18,803$ -$ -$ -$ Due to other funds - - - - - Total liabilities 57,067 18,803 - - - Fund balance: Restricted - 7,958 - 122,447 234 Committed 97,681 - 24,251 - - Assigned - - - 150,074 - Unassigned - - - - - Total fund balance [deficit]97,681 7,958 24,251 272,521 234 Total liabilities and fund balances 154,748$ 26,761$ 24,251$ 272,521$ 234$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2018 See independent auditor's report on the financial statements. 80 Community Sales Tax Downtown Development Economic TIF South State 911 Revolving Development District #1 9th CID Grants Communications 186,307$ 902,997$ 237,956$ 46,548$ 8,013$ 372,254$ - - - - - - 186,307$ 902,997$ 237,956$ 46,548$ 8,013$ 372,254$ -$ 5,512$ -$ 45,301$ -$ 15,693$ - - - - - - - 5,512 - 45,301 - 15,693 186,307 - - - - - - 897,485 237,956 1,247 8,013 180,880 - - - - - 175,681 - - - - - - 186,307 897,485 237,956 1,247 8,013 356,561 186,307$ 902,997$ 237,956$ 46,548$ 8,013$ 372,254$ See independent auditor's report on the financial statements. 81 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2018 Kenwood Special Cove Law Police Federal DARE Capital Enforcement Grants Grants Donations ASSETS Cash and investments 108,313$ 82$ -$ 3,325$ 26,616$ Receivables Accounts - - - - - Total assets 108,313$ 82$ -$ 3,325$ 26,616$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 1,564$ -$ -$ -$ 1,298$ Due to other funds - - 24,544 - - Total liabilities 1,564 - 24,544 - 1,298 Fund balance: Restricted - - - - - Committed 106,749 82 - 3,325 25,318 Assigned - - - - - Unassigned - - [24,544] - - Total fund balance [deficit]106,749 82 [24,544] 3,325 25,318 Total liabilities and fund balances 108,313$ 82$ -$ 3,325$ 26,616$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2018 See independent auditor's report on the financial statements. 82 Police War Federal Department Animal Memorial Arts &CARE Federal Homeowners'Private Shelter Maintenance Humanities Grant Forfeiture Funds Assistance Grants Donations Totals 31,959$ 3,108$ 26,141$ 99$ 14,215$ 1,954$ 438,652$ 2,885,257$ - - - - - - - 1,797 31,959$ 3,108$ 26,141$ 99$ 14,215$ 1,954$ 438,652$ 2,887,054$ 1,542$ 1,402$ -$ -$ -$ -$ 837$ 149,019$ - - - - - - - 24,544 1,542 1,402 - - - - 837 173,563 - - 26,141 - - 1,954 - 345,041 30,417 1,706 - 99 14,215 - 437,815 2,067,239 - - - - - - - 325,755 - - - - - - - [24,544] 30,417 1,706 26,141 99 14,215 1,954 437,815 2,713,491 31,959$ 3,108$ 26,141$ 99$ 14,215$ 1,954$ 438,652$ 2,887,054$ See independent auditor's report on the financial statements. 83 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2018 Business Special Bicentennial Improvement Neighborhood Parks &Special Center District Park Recreation Alcohol Revenues Taxes -$ -$ -$ -$ -$ Intergovernmental - - - 191,676 191,676 Charges for services - 84,870 - - - Licenses and permits - - 2,500 - - Investment revenue 1,105 145 152 1,533 70 Donations - - - - - Miscellaneous - - - - - Total Revenues 1,105 85,015 2,652 193,209 191,746 Expenditures Current Culture and recreation 762,968 - - - - Public safety - - - - - Public health and sanitation - - - - 191,676 Planning and development - 93,225 - - - Capital outlay - - - 44,909 - Total Expenditures 762,968 93,225 - 44,909 191,676 Excess [deficiency] of revenues over [under] expenditures [761,863] [8,210] 2,652 148,300 70 Other financing sources [uses] Transfers in 801,564 - - - - Total other financing sources [uses]801,564 - - - - Net change in fund balance 39,701 [8,210] 2,652 148,300 70 Fund balance, beginning of year 57,980 16,168 21,599 124,221 164 Fund balance, end of year 97,681$ 7,958$ 24,251$ 272,521$234$ For the Year Ended December 31, 2018 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS See independent auditor's report on the financial statements. 84 Community Sales Tax Downtown Development Economic TIF South State 911 Revolving Development District #1 9th CID Grants Communications -$ 347,167$ 134,867$ 231,248$ -$ -$ - - - - 9,000 332,898 - - - - - - - - - - - - 1,195 5,800 1,458 248 57 2,246 - - - - - - - - - 14,953 - - 1,195 352,967 136,325 246,449 9,057 335,144 - - - - - - - - - - - 343,811 - - - - - - - - - 536,053 - - - 457,585 - - 7,480 - - 457,585 - 536,053 7,480 343,811 1,195 [104,618] 136,325 [289,604] 1,577 [8,667] - - - - - - - - - - - - 1,195 [104,618] 136,325 [289,604] 1,577 [8,667] 185,112 1,002,103 101,631 290,851 6,436 365,228 186,307$ 897,485$ 237,956$ 1,247$ 8,013$ 356,561$ See independent auditor's report on the financial statements. 85 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2018 Kenwood Special Cove Law Police Federal DARE Capital Enforcement Grants Grants Donations Revenues Taxes -$ -$ -$ -$ -$ Intergovernmental - - 6,817 - - Charges for services - - - - - Licenses and permits - - - - - Investment revenue 656 1 - 21 132 Donations - - - - - Miscellaneous - - - - 19,142 Total Revenues 656 1 6,817 21 19,274 Expenditures Current Culture and recreation - - - - - Public safety - - - - - Public health and sanitation - - - - - Planning and development - - - - 12,545 Capital outlay 56,420 - 3,507 - - Total Expenditures 56,420 - 3,507 - 12,545 Excess [deficiency] of revenues over [under] expenditures [55,764] 1 3,310 21 6,729 Other financing sources [uses] Transfers in 68,350 - - - - Total other financing sources [uses]68,350 - - - - Net change in fund balance 12,586 1 3,310 21 6,729 Fund balance, beginning of year 94,163 81 [27,854] 3,304 18,589 Fund balance, end of year 106,749$82$ [24,544]$ 3,325$ 25,318$ CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2018 See independent auditor's report on the financial statements. 86 Police War Federal Department Animal Memorial Arts &CARE Federal Homeowners'Private Shelter Maintenance Humanities Grant Forfeiture Funds Assistance Grants Donations Totals -$ -$ -$ -$ -$ -$ -$ 713,282$ - - - - - - 75,000 807,067 - 385,099 - - - - - 469,969 - - - - - - - 2,500 206 127 168 1 86 13 2,690 18,110 - - - - - - 237,660 237,660 - 21,848 - - 2,689 [3,584] - 55,048 206 407,074 168 1 2,775 [3,571] 315,350 2,303,636 1,855 995,681 - - - - - 1,760,504 - - - - - - - 343,811 - - - - - - 250,683 442,359 - - - - - - - 641,823 - - - - - - - 569,901 1,855 995,681 - - - - 250,683 3,758,398 [1,649] [588,607] 168 1 2,775 [3,571] 64,667 [1,454,762] - 485,000 - - - - - 1,354,914 - 485,000 - - - - - 1,354,914 [1,649] [103,607] 168 1 2,775 [3,571] 64,667 [99,848] 32,066 105,313 25,973 98 11,440 5,525 373,148 2,813,339 30,417$ 1,706$ 26,141$ 99$ 14,215$ 1,954$ 437,815$2,713,491$ See independent auditor's report on the financial statements. 87 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2018 Cemetery Mausoleum Tricentennial ASSETS Endowment Endowment Commission Total Cash and investments 506,324$ 2,042$ 5,835$ 514,201$ Total assets 506,324$ 2,042$ 5,835$ 514,201$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable -$ -$ -$ -$ Total liabilities - - - - Fund balances Committed 506,324 2,042 5,835 514,201 Total liabilities and fund balances 506,324$ 2,042$ 5,835$ 514,201$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET December 31, 2018 NONMAJOR PERMANENT FUNDS See independent auditor's report on the financial statements. 88 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total Revenues Charges for services 9,260$ -$ -$ 9,260$ Investment revenue 3,233 13 37 3,283 Total revenues 12,493 13 37 12,543 Expenditures Miscellaneous 35 - - 35 Total expenditures 35 - - 35 Net change in fund balance 12,458 13 37 12,508 Fund balances - beginning of year 493,866 2,029 5,798 501,693 Fund balances - end of year 506,324$ 2,042$ 5,835$ 514,201$ NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2018 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES See independent auditor's report on the financial statements. 89 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) BICENTENNIAL CENTER FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Investment revenue 1,105$ -$ -$ 1,105$ Total revenues 1,105 - - 1,105 Expenditures Culture and recreation 762,968 762,332 762,332 [636] Total expenditures 762,968 762,332 762,332 [636] Excess [deficiency] of revenues over [under] expenditures [761,863] [762,332] [762,332] 469 Other financing sources [uses] Transfers in 801,564 700,000 700,000 101,564 Total other financing sources [uses]801,564 700,000 700,000 101,564 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]39,701 [62,332] [62,332] 102,033 Unreserved fund balance, January 1 57,980 74,481 74,481 [16,501] Unreserved fund balance/GAAP fund balance December 31 97,681$ 12,149$ 12,149$ 85,532$ Budgeted Amounts See independent auditor's report on the financial statements. 90 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) BUSINESS IMPROVEMENT DISTRICT FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services 85,937$ 89,175$ 89,175$ [3,238]$ Investment revenue 145 15 15 130 Total revenues 86,082 89,190 89,190 [3,108] Expenditures Planning and development 93,225 89,190 89,190 [4,035] Total expenditures 93,225 89,190 89,190 [4,035] Excess [deficiency] of revenues over [under] expenditures [7,143] - - [7,143] Unreserved fund balance, January 1 13,304 18,182 18,182 [4,878] Unreserved fund balance, December 31 6,161 18,182$ 18,182$ [12,021]$ Reconciliation to GAAP Accounts receivable 1,797 GAAP Fund Balance, December 31 7,958$ Budgeted Amounts See independent auditor's report on the financial statements. 91 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) NEIGHBORHOOD PARK FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Licenses and permits 2,500$ 10,000$ 10,000$ [7,500]$ Investment revenue 152 500 500 [348] Total revenues 2,652 10,500 10,500 [7,848] Expenditures Capital outlay - - - - Total expenditures - - - - Excess [deficiency] of revenues over [under] expenditures 2,652 10,500 10,500 [7,848] Unreserved fund balance, January 1 21,599 4,873 4,873 16,726 Unreserved fund balance/GAAP fund balance December 31 24,251$ 15,373$ 15,373$ 8,878$ Budgeted Amounts See independent auditor's report on the financial statements. 92 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL PARKS AND RECREATION FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Intergovernmental 191,676$ 189,192$ 189,192$ 2,484$ Investment revenue 1,533 1,000 1,000 533 Total revenues 193,209 190,192 190,192 3,017 Expenditures Capital outlay 194,983 194,000 194,000 [983] Total expenditures 194,983 194,000 194,000 [983] Excess [deficiency] of revenues over [under] expenditures [1,774] [3,808] [3,808] 2,034 Unreserved fund balance, January 1 124,221 115,137 115,137 9,084 Unreserved fund balance, December 31 122,447 111,329$ 111,329$ 11,118$ Reconciliation to GAAP Current year encumbrances 150,074 GAAP Fund Balance, December 31 272,521$ Budgeted Amounts See independent auditor's report on the financial statements. 93 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL ALCOHOL FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Intergovernmental 191,676$ 216,086$ 216,086$ [24,410]$ Investment revenue 70 - - 70 Total revenues 191,746 216,086 216,086 [24,340] Expenditures Public health and sanitation 191,676 216,086 216,086 24,410 Total expenditures 191,676 216,086 216,086 24,410 Excess [deficiency] of revenues over [under] expenditures 70 - - 70 Unreserved fund balance, January 1 164 34,899 34,899 [34,735] Unreserved fund balance/GAAP fund balance December 31 234$ 34,899$ 34,899$ [34,665]$ Budgeted Amounts See independent auditor's report on the financial statements. 94 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SALES TAX ECONOMIC DEVELOPMENT FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes 347,167$ 332,818$ 332,818$ 14,349$ Investment revenue 5,800 2,000 2,000 3,800 Total revenues 352,967 334,818 334,818 18,149 Expenditures Capital outlay 457,585 458,840 458,840 1,255 Total expenditures 457,585 458,840 458,840 1,255 Excess [deficiency] of revenues over [under] expenditures [104,618] [124,022] [124,022] 19,404 Unreserved fund balance, January 1 1,002,103 667,262 667,262 334,841 Unreserved fund balance/GAAP fund balance December 31 897,485$ 543,240$ 543,240$ 354,245$ Budgeted Amounts See independent auditor's report on the financial statements. 95 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) ARTS & HUMANITIES FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services 385,099$ 347,200$ 347,200$ 37,899$ Investment revenue 127 2,000 2,000 [1,873] Miscellaneous 21,848 133,650 133,650 [111,802] Total revenues 407,074 482,850 482,850 [75,776] Expenditures Culture and recreation 995,681 1,048,635 1,048,635 52,954 Total expenditures 995,681 1,048,635 1,048,635 52,954 Excess [deficiency] of revenues over [under] expenditures [588,607] [565,785] [565,785] [22,822] Other financing sources [uses] Transfers in 485,000 525,000 525,000 [40,000] Total other financing sources [uses]485,000 525,000 525,000 [40,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][103,607] [40,785] [40,785] [62,822] Unreserved fund balance, January 1 105,313 190,338 190,338 [85,025] Unreserved fund balance/GAAP fund balance December 31 1,706$ 149,553$ 149,553$ [147,847]$ Budgeted Amounts See independent auditor's report on the financial statements. 96 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) DEBT SERVICE FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 2,394,142$ 2,674,498$ 2,744,775$ [350,633]$ Delinquent taxes 62,732 55,000 62,732 - Motor vehicle taxes 305,481 296,922 305,480 1 Special assessments 1,545,758 1,620,000 1,546,859 [1,101] Investment revenue 21,230 - - 21,230 Miscellaneous - 58,932 - - Total revenues 4,329,343 4,705,352 4,659,846 [330,503] Expenditures Debt Service Principal retirement 5,252,865 5,057,920 5,494,365 241,500 Interest and other charges 1,702,255 2,086,687 1,688,616 [13,639] Total expenditures 6,955,120 7,144,607 7,182,981 227,861 Excess [deficiency] of revenues over [under] expenditures [2,625,777] [2,439,255] [2,523,135] [102,642] Other financing sources [uses] Transfers in 2,270,782 2,000,000 2,000,000 270,782 Total other financing sources [uses]2,270,782 2,000,000 2,000,000 270,782 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][354,995] [439,255] [523,135] 168,140 Unreserved fund balance, January 1 1,462,554 814,255 1,195,141 267,413 Prior period adjustment 694,409 - - 694,409 Unreserved fund balance, January 1, restated 2,156,963 814,255 1,195,141 961,822 Unreserved fund balance, December 31 1,801,968 375,000$ 672,006$ 1,129,962$ Reconciliation to GAAP Taxes receivable 2,674,390 Deferred revenue [2,625,000] GAAP Fund Balance, December 31 1,851,358$ Budgeted Amounts See independent auditor's report on the financial statements. 97 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) SOLID W ASTE DISPOSAL FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services 3,101,872$ 2,844,000$ 2,844,000$ 257,872$ Investment revenue 31,711 4,000 4,000 27,711 Miscellaneous 18,894 49,310 49,310 [30,416] Total revenues 3,152,477 2,897,310 2,897,310 255,167 Expenditures Public works 1,893,824 1,698,164 1,698,164 [195,660] Total expenditures 1,893,824 1,698,164 1,698,164 [195,660] Excess [deficiency] of revenues over [under] expenditures 1,258,653 1,199,146 1,199,146 59,507 Other financing sources [uses] Transfers [out][690,000] [1,175,000] [1,175,000] 485,000 Total other financing sources [uses][690,000] [1,175,000] [1,175,000] 485,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]568,653 24,146 24,146 544,507 Unreserved fund balances, January 1 3,880,930 3,107,520 3,107,520 773,410 Prior period adjustment [694,409] - - [694,409] Prior year cancelled encumbrances 249,242 - - 249,242 Unreserved fund balances, December 31 4,004,416$ 3,131,666$ 3,131,666$ 872,750$ Budgeted Amounts See independent auditor's report on the financial statements. 98 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) WATER AND SEWER FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services 20,205,846$ 20,469,600$ 20,469,600$ [263,754]$ Investment revenue 97,347 25,000 25,000 72,347 Miscellaneous 5,101 10,000 10,000 [4,899] Total revenues 20,308,294 20,504,600 20,504,600 [196,306] Expenditures Public works 10,965,681 14,491,199 14,491,199 3,525,518 Total expenditures 10,965,681 14,491,199 14,491,199 3,525,518 Excess [deficiency] of revenues over [under] expenditures 9,342,613 6,013,401 6,013,401 3,329,212 Other financing sources [uses] Transfers in - 122,200 122,200 [122,200] Transfers [out][6,266,000] [6,850,000] [6,850,000] 584,000 Total other financing sources [uses][6,266,000] [6,727,800] [6,727,800] 461,800 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]3,076,613 [714,399] [714,399] 3,791,012 Unreserved fund balances, January 1 11,301,601 12,691,809 12,691,809 [1,390,208] Prior period adjustment [2,116,375] - - [2,116,375] Prior year cancelled encumbrances 21,352 - - 21,352 Unreserved fund balances, December 31 12,283,191$ 11,977,410$ 11,977,410$ 305,781$ Budgeted Amounts See independent auditor's report on the financial statements. 99 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) SANITATION FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services 2,941,279$ 3,048,426$ 3,048,426$ [107,147]$ Investment revenue 10,882 2,500 2,500 8,382 Total revenues 2,952,161 3,050,926 3,050,926 [98,765] Expenditures Public works 2,542,409 2,472,097 2,472,097 [70,312] Total expenditures 2,542,409 2,472,097 2,472,097 [70,312] Excess [deficiency] of revenues over [under] expenditures 409,752 578,829 578,829 [169,077] Other financing sources [uses] Transfers [out][491,500] [411,500] [411,500] [80,000] Total other financing sources [uses][491,500] [411,500] [411,500] [80,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][81,748] 167,329 167,329 [249,077] Unreserved fund balance, January 1 1,544,357 1,191,230 1,191,230 353,127 Prior year cancelled encumbrances 5,525 - - 5,525 Unreserved fund balances, December 31 1,468,134$ 1,358,559$ 1,358,559$ 109,575$ Budgeted Amounts See independent auditor's report on the financial statements. 100 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) GOLF COURSE FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services 755,270$ 825,900$ 761,000$ [5,730]$ Investment revenue 545 - - 545 Miscellaneous 129,204 50,000 79,840 49,364 Total revenues 885,019 875,900 840,840 44,179 Expenditures Recreation 950,840 838,456 954,700 3,860 Total expenditures 950,840 838,456 954,700 3,860 Excess [deficiency] of revenues over [under] expenditures [65,821] 37,444 [113,860] 48,039 Other financing sources [uses] Transfers [out]- [25,000] - - Total other financing sources [uses]- [25,000] - - Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][65,821] 12,444 [113,860] 48,039 Unreserved fund balance, January 1 116,032 133,136 116,032 - Unreserved fund balances, December 31 50,211$ 145,580$ 2,172$ 48,039$ Budgeted Amounts See independent auditor's report on the financial statements. 101 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) WORKERS' COMPENSATION RESERVE FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services 408,974$ 250,000$ 250,000$ 158,974$ Investment revenue 6,315 2,500 2,500 3,815 Miscellaneous 6,854 - - 6,854 Total revenues 422,143 252,500 252,500 169,643 Expenditures General government 254,669 281,306 281,306 26,637 Total expenditures 254,669 281,306 281,306 26,637 Excess [deficiency] of revenues over [under] expenditures 167,474 [28,806] [28,806] 196,280 Unreserved fund balance, January 1 919,375 862,316 862,316 57,059 Unreserved fund balances, December 31 1,086,849$ 833,510$ 833,510$ 253,339$ Budgeted Amounts See independent auditor's report on the financial statements. 102 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) HEALTH INSURANCE FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services 7,010,936$ 7,044,200$ 7,044,200$ [33,264]$ Investment revenue 18,520 5,000 5,000 13,520 Miscellaneous 60,258 5,000 5,000 55,258 Total revenues 7,089,714 7,054,200 7,054,200 35,514 Expenditures General government 6,028,279 6,402,432 6,402,432 374,153 Total expenditures 6,028,279 6,402,432 6,402,432 374,153 Excess [deficiency] of revenues over [under] expenditures 1,061,435 651,768 651,768 409,667 Unreserved fund balance, January 1 2,050,972 3,086,108 3,086,108 [1,035,136] Unreserved fund balances, December 31 3,112,407$ 3,737,876$ 3,737,876$ [625,469]$ Budgeted Amounts See independent auditor's report on the financial statements. 103 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) CENTRAL GARAGE FUND For the Year Ended December 31, 2018 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services 1,327,390$ -$ -$ 1,327,390$ Investment revenue 668 40 40 628 Miscellaneous 6,146 17,500 17,500 [11,354] Total revenues 1,334,204 17,540 17,540 1,316,664 Expenditures General government 1,491,671 1,435,015 1,435,015 [56,656] Total expenditures 1,491,671 1,435,015 1,435,015 [56,656] Excess [deficiency] of revenues over [under] expenditures [157,467] [1,417,475] [1,417,475] 1,260,008 Other financing sources [uses] Transfers in 190,000 1,416,850 1,416,850 [1,226,850] Total other financing sources [uses]190,000 1,416,850 1,416,850 [1,226,850] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]32,533 [625] [625] 33,158 Unreserved fund balance, January 1 21,595 734 734 20,861 Unreserved fund balance, December 31 54,128$ 109$ 109$ 54,019$ Budgeted Amounts See independent auditor's report on the financial statements. 104 105 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one agency to other departments or agencies of the government and to other governmental units on a cost reimbursement basis. Workers' compensation reserve fund -To account for the costs of providing a partially self-insured workers' compensation plan and for accumulating the necessary reserve amounts. Health insurance fund -To account for the costs of providing a partially self-insured health insurance and for accumulating the necessary reserve amounts. Central garage fund -To account for the accumulation and allocation for costs associated with the City's centralized vehicle repair shop. Total Workers'Internal Compensation Health Central Service ASSETS Reserve Insurance Garage Funds Current assets: Cash and investments 1,087,616$ 3,112,407$95,062$ 4,295,085$ Inventory and prepaid supplies - - 111,486 111,486 Total current assets 1,087,616 3,112,407 206,548 4,406,571 Capital assets: Capital assets - - 168,234 168,234 Less: accumulated depreciation - - 152,573 152,573 Total capital assets - - 15,661 15,661 Total assets 1,087,616 3,112,407 222,209 4,422,232 Deferred outflows of resources: KPERS OPEB deferred outflows of resources - - 1,401 1,401 Pension deferred outflows of resources - - 25,285 25,285 Total deferred outflows of resources - - 26,686 26,686 Total assets and deferred outflows of resources 1,087,616$ 3,112,407$248,895$4,448,918$ Liabilities: Current liabilities (payable from current assets): Accounts payable 767$ -$ 40,934$ 41,701$ Current portion of compensated absences payable - - 33,989 33,989 Current portion of accrued claims payable 183,514 380,980 - 564,494 Total current liabilities (payable from current assets)184,281 380,980 74,923 640,184 Noncurrent liabilities: Compensated absences payable - - 25,399 25,399 Accrued claims payable 55,264 - - 55,264 Net KPERS OPEB obligation - - 5,469 5,469 Net pension liability - - 154,549 154,549 Total noncurrent liabilities 55,264 - 185,417 240,681 Total liabilities 239,545 380,980 260,340 880,865 Deferred inflows of resources KPERS OPEB deferred inflows of resources - - 133 133 Pension deferred inflows of resources - - 11,300 11,300 Total deferred inflows of resources - - 11,433 11,433 Total liabilities and deferred inflows of resources 239,545$ 380,980$ 271,773$892,298$ Net Position Invested in capital assets, net of related debt -$ -$ 15,661$ 15,661$ Unrestricted 848,071 2,731,427 [38,539] 3,540,959 Total net position 848,071$ 2,731,427$[22,878]$ 3,556,620$ CITY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2018 See independent auditor's report on the financial statements. 106 Total Workers'Internal Compensation Health Central Service Reserve Insurance Garage Funds Operating revenues Charges for services 408,974$ 7,010,936$ 1,327,390$ 8,747,300$ Miscellaneous 6,855 60,258 6,145 73,258 Total operating revenues 415,829 7,071,194 1,333,535 8,820,558 Operating expenses General government 271,535 6,013,569 1,545,842 7,830,946 Depreciation - - 7,699 7,699 Total operating expenses 271,535 6,013,569 1,553,541 7,838,645 Operating income [loss]144,294 1,057,625 [220,006] 981,913 Nonoperating revenues [expenses] Investment revenue 6,315 18,520 668 25,503 Total other operating revenues [expenses] 6,315 18,520 668 25,503 Income [loss] before transfers 150,609 1,076,145 [219,338] 1,007,416 Transfers from [to] other funds Transfers in - - 190,000 190,000 Total transfers - - 190,000 190,000 Change in net position 150,609 1,076,145 [29,338] 1,197,416 Net position, January 1 697,462 1,655,282 10,853 2,363,597 Prior period adjustment - - [4,393] [4,393] Net position, January 1, restated 697,462 1,655,282 6,460 2,359,204 Net position, December 31 848,071$ 2,731,427$ [22,878]$ 3,556,620$ COMBINING STATEMENT OF REVENUES, EXPENSES INTERNAL SERVICE FUND CITY OF SALINA, KANSAS For the Year Ended December 31, 2018 AND CHANGES IN NET POSITION See independent auditor's report on the financial statements. 107 Total Workers'Internal Compensation Health Central Service Reserve Insurance Garage Funds Cash flows from operating activities Cash received from customers and users 425,839$ 6,996,225$1,327,391$8,749,455$ Cash paid to suppliers of goods or services [270,848] [6,047,211] [1,177,372] [7,495,431] Cash paid to employees - - [297,532] [297,532] Other operating receipts 6,855 60,258 6,144 73,257 Net cash provided by [used in] operating activities 161,846 1,009,272 [141,369] 1,029,749 Cash flows from investing activities Interest received 6,315 18,520 668 25,503 Cash flows from noncapital financing activities Transfers in - - 190,000 190,000 Net cash provided by [used in] noncapital financing activities - - 190,000 190,000 Net increase [decrease] in cash and cash equivalents 168,161 1,027,792 49,299 1,245,252 Cash and cash equivalents, January 1 919,455 2,084,615 45,763 3,049,833 Cash and cash equivalents, December 31 1,087,616$ 3,112,407$95,062$ 4,295,085$ For the Year Ended December 31, 2018 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOW S See independent auditor's report on the financial statements. 108 Total Workers'Internal Compensation Health Central Service Reserve Insurance Garage Funds Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss]144,294$ 1,057,625$[220,006]$ 981,913$ Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense - - 7,699 7,699 [Increase] decrease in inventory - - 53,639 53,639 [Increase] decrease in deferred outflows - - 4,554 4,554 Increase [decrease] in accounts payable 687 [33,642] 16,766 [16,189] Increase [decrease] in accrued compensated absences - - 5,818 5,818 Increase [decrease] in net pension liability - - [11,010] [11,010] Increase [decrease] in KPERS OPEB liability - - 1,076 1,076 Increase [decrease] in claims payable 16,865 [14,711] - 2,154 Increase [decrease] in deferred inflows - - 95 95 Net cash provided by [used in] operating activities 161,846$ 1,009,272$[141,369]$ 1,029,749$ For the Year Ended December 31, 2018 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS (Continued) COMBINING STATEMENT OF CASH FLOW S See independent auditor's report on the financial statements. 109 110 CITY OF SALINA, KANSAS AGENCY FUNDS Agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. Special assessment escrow agency fund -To account for property owners' prepayment on outstanding special assessments. Fire insurance proceeds agency fund -To account for insurance proceeds received for severely damaged buildings the insurance proceeds, plus interest, are returned to the property owners when the buildings are repaired or demolished. Payroll clearing agency fund -To account for interfund payroll receivables and payables for all City funds. Court bond and restitution agency fund -To account for bonds and restitution remitted to the court and awaiting court orders for distribution. Police investigation account agency fund -To account for monies held by the police department for use in investigations. Citizenship agency fund -To account for donations received and used for the citizenship fund. Section 125 plan agency fund -To account for monies held for the Section 125 plan. DTF federal forfeiture fund –To account for revenues and expenditures related to the sale of assets acquired during drug enforcement activities as they related to federal cases. Expenses are limited to equipment and training for the Drug Task Force. DTF local fund –To account for revenues and expenditures related to the sale of assets acquired during drug enforcement activities as they relate to local cases. Expenses are limited to equipment and training for the Drug Task Force. DTF reserve fund –To account for revenues and expenditures related to State of Kansas Drug Tax Distributions. Expenses are limited to equipment and training for the Drug Task Force. Beechcraft remediation settlement fund -To account for revenues and expenditures related to the bankruptcy of Beechcraft and the former Schilling Airforce Base remediation case. Bail bond escrow fund –To account for funds being held in escrow for bonds issued by Municipal Court. Special Fire Court Police Section DTF Beechcraft Bail Assessment Insurance Payroll Bond and Investigation 125 Federal DTF DTF Remedition Bond Escrow Proceeds Clearing Restitution Account Citizenship Plan Forfeiture Local Reserve Settlement Escrow Totals ASSETS: Cash and investments 108,806$ 18,967$ [339,790]$ 18,811$ 3,381$ 30,797$ 215,856$-$ 41,241$33,475$179,386$ 1,135$312,065$ Total assets 108,806$ 18,967$ [339,790]$ 18,811$ 3,381$ 30,797$ 215,856$-$ 41,241$33,475$179,386$ 1,135$312,065$ LIABILITIES: Accounts payable 108,806$ 18,967$ [339,790]$ 18,811$ 3,381$ 30,797$ 215,856$-$ 41,241$33,475$179,386$ 1,135$312,065$ Total liabilities 108,806$ 18,967$ [339,790]$ 18,811$ 3,381$ 30,797$ 215,856$-$ 41,241$33,475$179,386$ 1,135$312,065$ December 31, 2018 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS See independent auditor's report on the financial statements. 111 Balance Balance December 31,December 31, 2017 Additions Deductions 2018 Cash and investments Special Assessment Escrow 90,849$ 17,957$ -$ 108,806$ Fire Insurance Proceeds 18,869 47,855 47,757 18,967 Payroll Clearing [365,473] 25,683 - [339,790] Court Bond and Restitution 23,818 - 5,007 18,811 Police Investigation Account 3,379 2 - 3,381 Citizenship Trust 94,580 41,498 105,281 30,797 Section 125 Plan Fund 291,014 353,619 428,777 215,856 DTF Federal Forfeiture 3,696 - 3,696 - DTF Local 47,216 23,527 29,502 41,241 DTF Reserve 26,299 13,102 5,926 33,475 Beechcraft Remediation Settlement 154,181 25,205 - 179,386 Bail Bond Escrow 1,127 8 - 1,135 Total Assets 389,555$ 548,456$ 625,946$ 312,065$ Accounts Payable Special Assessment Escrow 90,849$ 17,957$ -$ 108,806$ Fire Insurance Proceeds 18,869 47,855 47,757 18,967 Payroll Clearing [365,473] 25,683 - [339,790] Court Bond and Restitution 23,818 - 5,007 18,811 Police Investigation Account 3,379 2 - 3,381 Citizenship Trust 94,580 41,498 105,281 30,797 Section 125 Plan Fund 291,014 353,619 428,777 215,856 DTF Federal Forfeiture 3,696 - 3,696 - DTF Local 47,216 23,527 29,502 41,241 DTF Reserve 26,299 13,102 5,926 33,475 Beechcraft Remediation Settlement 154,181 25,205 - 179,386 Bail Bond Escrow 1,127 8 - 1,135 Total liabilities 389,555$ 548,456$ 625,946$ 312,065$ CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the Year Ended December 31, 2018 AGENCY FUNDS See independent auditor's report on the financial statements. 112 STATISTICAL SECTION 2010 Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount % Governmental activities Net investment in capital assets 101,974$85%113,001$96%109,289$93%112,929$94%116,585$90%115,589$ 90%130,401$ 122%124,635$108%129,921$105%144,846$ 109% Restricted 1,174 1%988 1%1,712 1%1,082 1%1,210 1%876 1%1,224 1%1,738 1%2,012 2%2,366 2% Unrestricted 16,706 14%3,808 3%6,333 5%5,511 5%11,628 9%11,413 9%(24,922) -23%(10,505) -9%(8,232) -7%(13,759) -10% Total governmental activities net position 119,854$100%117,797$100%117,334$100%119,522$100%129,423$100%127,878$ 100%106,703$ 100%115,868$100%123,701$100%133,453$ 100% Business-type activities Net investment in capital assets 48,234$ 79%48,078$ 75%44,227$ 63%50,857$ 69%57,103$ 75%61,721$ 75%68,107$ 80%62,427$ 71%63,316$ 71%62,368$ 69% Restricted 1,553 3%1,553 2%1,553 2%1,553 2%1,553 2%1,512 2%1,512 2%1,512 2%1,512 2%1,512 2% Unrestricted 11,482 19%14,306 22%24,528 35%21,450 29%17,794 23%19,545 24%15,610 18%23,621 27%24,255 27%26,503 29% Total business-type activities net position 61,269$ 100%63,937$ 100%70,308$ 100%73,860$ 100%76,450$ 100%82,778$ 100%85,229$ 100%87,560$ 100%89,083$ 100%90,383$ 100% Primary government Net investment in capital assets 150,208$83%161,080$89%153,516$82%163,786$85%173,688$84%177,311$ 84%198,508$ 103%187,062$92%193,237$91%207,213$ 93% Restricted 2,727 2%2,541 1%3,216 2%2,635 1%2,763 1%2,388 1%2,736 1%3,250 2%3,524 2%3,878 2% Unrestricted 28,188 16%18,115 10%30,867 16%26,961 14%29,422 14%30,959 15%(9,312) -5%13,116 6%16,023 8%12,744 6% Total primary government net position 181,123$100%181,736$100%187,599$100%193,382$100%205,873$100%210,658$ 100%191,932$ 100%203,428$100%212,784$100%223,835$ 100% Source: City of Salina Comprehensive Annual Financial Reports, 2009 - 2018 Schedule 1 City of Salina, Kansas Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) (in 000's) 20172009201320112016 Fiscal Year 2018201420152012 113 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Expenses Governmental activities: General government 14,664$ 10,845$ 13,614$ 11,278$ 10,978$ 12,175$ 10,743$ 9,188$ 9,780$ 12,013$ Public safety 16,539 18,592 18,579 19,066 19,649 20,208 21,084 22,232 23,120 23,892 Public works 9,781 9,782 9,858 10,957 11,064 11,401 9,049 9,773 10,345 10,458 Public health and sanitation 1,390 1,365 1,368 1,383 1,369 347 995 1,095 1,126 1,256 Culture and recreation 5,397 8,572 6,693 5,338 4,809 5,156 6,517 6,612 6,880 7,040 Planning and development 3,375 3,716 3,450 3,362 3,399 3,236 1,915 2,047 1,835 2,369 Interest on long term debt - 2,256 1,650 1,914 1,953 1,817 1,774 2,971 1,725 2,117 Total governmental activities expenses 51,146 55,128 55,212 53,298 53,221 54,340 52,077 53,918 54,811 59,145 Business-type activities: Solid waste disposal 2,287 3,010 2,945 2,067 3,532 1,867 1,766 2,335 2,365 2,382 Water and sewer 12,995 14,050 13,597 14,897 15,418 14,938 11,712 14,807 15,650 15,190 Sanitation 2,224 2,261 2,261 2,441 2,237 2,399 1,909 2,043 2,178 2,419 Golf course 897 817 825 723 768 837 821 792 852 926 Total business-type activities expenses 18,403 20,138 19,628 20,128 21,955 20,041 16,208 19,977 21,045 20,917 Total primary government expenses 69,549$ 75,266$ 74,840$ 73,426$ 75,176$ 74,381$ 68,285$ 73,895$ 75,856$ 80,062$ Program Revenues Governmental activities: Charges for services General government 4,599$ 5,143$ 6,106$ 6,328$ 5,548$ 5,662$ 3,151$ 3,134$ 3,470$ 3,569$ Public safety 2,913 3,969 3,766 4,290 4,656 4,222 4,600 4,891 4,601 4,815 Public works 164 198 262 306 277 255 193 238 348 285 Public health and sanitation 42 37 43 46 34 46 46 44 50 47 Culture and recreation 1,936 2,817 3,140 1,728 1,466 1,533 1,501 1,638 1,541 1,545 Planning and development 267 144 153 158 161 167 73 140 91 150 Operating grants and contributions 3,163 3,415 2,907 4,495 4,200 4,015 3,394 4,332 4,541 4,299 Capital grants and contributions - - - - - - - 733 - 4,635 Total governmental activities program revenues 13,084 15,723 16,377 17,351 16,342 15,900 12,958 15,150 14,642 19,345 Business-type activities: Charges for services Solid waste disposal 2,903 2,853 2,904 3,137 3,138 3,024 2,519 2,795 3,165 3,097 Water and sewer 14,980 16,520 17,904 19,099 17,938 18,742 19,059 19,322 19,855 20,202 Sanitation 2,292 2,310 2,334 2,462 2,514 2,553 2,529 2,751 2,885 3,006 Golf course 757 736 636 783 719 811 820 789 798 756 Operating grants and contributions - - 202 - - - - - - - Capital grants and contributions - - 3,804 274 - 115 - - - - Total business-type activities program revenues 20,932 22,419 27,784 25,755 24,309 25,245 24,927 25,657 26,703 27,061 Total primary government program revenues 34,016$ 38,142$ 44,161$ 43,106$ 40,651$ 41,145$ 37,885$ 40,807$ 41,345$ 46,406$ Net (Expense) Revenue Governmental activities (38,062)$ (39,405)$ (38,835)$ (35,947)$ (36,879)$ (38,440)$ (39,119)$ (38,768)$ (40,169)$ (39,800)$ Business-type activities 2,529 2,281 8,156 5,627 2,354 5,204 8,719 5,680 5,658 6,143 Total primary government net expense (35,533)$ (37,124)$ (30,679)$ (30,320)$ (34,525)$ (33,236)$ (30,400)$ (33,088)$ (34,511)$ (33,657)$ General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes, general purpose 9,019$ 7,803$ 7,783$ 8,272$ 8,031$ 8,315$ 8,242$ 8,196$ 9,101$ 8,623$ Property taxes, debt service 1,711 2,230 2,779 2,439 2,362 2,578 2,766 3,022 2,487 2,457 Motor vehicle taxes 1,135 1,145 1,150 1,153 1,200 1,250 1,312 1,370 1,372 1,428 Sales tax, general purpose 11,669 11,118 11,767 12,165 12,260 12,689 12,931 12,781 12,906 13,292 Selective sales tax 3,380 4,108 4,080 4,210 4,281 4,461 4,558 4,901 8,832 8,917 Other taxes 5,791 6,298 6,390 6,486 6,630 7,231 7,363 7,991 6,900 7,241 Investment revenues 277 81 77 66 67 98 86 148 92 183 Miscellaneous 505 565 872 660 9,918 1,160 2,371 5,842 2,003 1,062 Transfers, net 255 92 199 30 999 787 3,819 3,600 4,309 4,831 Total governmental activities 33,742 33,440 35,097 35,481 45,748 38,569 43,448 47,851 48,002 48,034 Business-type activities: Investment revenues 242 67 84 79 49 51 56 78 129 233 Miscellaneous 352 341 330 434 279 97 - - 103 153 Reimbursements 180 132 79 - Transfers, net (255) (92) (199) (30) (950) - (3,781) (3,581) (4,367) (4,831) Total business-type activities 339 316 215 483 (622) 328 (3,593) (3,424) (4,135) (4,445) Total primary government 34,081$ 33,756$ 35,312$ 35,964$ 45,126$ 38,897$ 39,855$ 44,427$ 43,867$ 43,589$ Change in Net Position Governmental activities (4,320)$ (5,965)$ (3,738)$ (466)$ 8,869$ 129$ 4,329$ 9,083$ 7,833$ 8,233 Business-type activities 2,868 2,597 8,371 6,110 1,732 5,532 5,126 2,256 1,523 1,698 Total primary government (1,452)$ (3,368)$ 4,633$ 5,644$ 10,601$ 5,661$ 9,455$ 11,339$ 9,356$ 9,931$ Source: City of Salina Comprehensive Annual Financial Reports, 2009 - 2018 Fiscal Year Schedule 2 City of Salina, Kansas Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in 000's) 114 2009 2010 2012 2013 2014 2015 2016 2017 2018 General Fund Reserved 508$ 99$ -$ -$-$-$-$-$-$-$ Nonspendable - - 90 116 81 107 111 131 153 152 Restricted - - -- -- -- -- Committed - - -- -- -- -- Assigned - - 293 540 331 239 199 136 214 340 Unreserved/unassigned 4,580 3,518 3,454 3,172 3,138 3,908 4,530 4,765 6,516 6,251 Total general fund 5,088$ 3,617 3,837$ 3,828$ 3,550$ 4,254$ 4,840$ 5,032$ 6,883$ 6,743$ Restatement 156 Restated fund balance 3,773$ All other governmental funds Reserved 11,092$ 6,413$ -$ -$-$-$-$-$-$-$ Nonspendable - - -- -- -- -- Restricted - - 3,611 3,319 3,446 2,910 2,793 3,142 4,191 4,648 Committed - - 127 (516)7,486 9,886 8,695 14,284 10,072 7,325 Assigned - - 4,323 4,087 3,146 1,280 619 1,043 641 1,227 Unreserved/unassigned 4,024 (1,130) - - - - (10,537) (6,823) (28)(852) Total all other governmental funds 15,116$ 5,283$ 8,061$ 6,890$ 14,078$ 14,076$ 1,570$ 11,646$ 14,876$ 12,348$ Note 1: Prior year amounts have not been restated for the implementation of GASB Statement 54 in fiscal year 2011. Source: City of Salina Comprehensive Annual Financial Reports, 2009 - 2018 2011 (Note 1) Schedule 3 City of Salina, Kansas Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in 000's) Fiscal Year 115 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Revenues Taxes (see Schedule 5)32,706$ 32,702$ 33,949$ 34,724$ 34,764$ 36,523$ 37,171$ 38,261$ 41,597$ 41,958$ Intergovernmental 3,153 3,404 2,901 4,487 4,192 4,008 3,385 4,325 4,536 4,297 Special assessments 1,269 1,385 1,535 2,315 1,706 1,810 1,679 1,669 1,539 1,546 Licenses and permits 10 11 6 8 9 7 10 7 6 3 Charges for services 6,767 8,934 9,730 8,484 8,536 8,276 6,416 6,953 6,880 7,338 Investment revenue 210 64 69 47 40 59 47 142 79 157 Reimbursements 140 70 32 36 9,015 123 491 1,406 - - Donations - - - - -241 83 141 111 238 Miscellaneous 438 448 599 537 810 799 1,853 4,315 1,851 884 Total revenues 44,693 47,018 48,821 50,638 59,072 51,846 51,135 57,219 56,599 56,421 Expenditures General government 3,007 3,549 3,461 3,574 4,269 3,986 5,342 5,422 5,423 5,649 Public safety 17,883 18,229 18,118 18,564 19,155 19,559 21,268 21,664 21,629 22,953 Public works 6,643 6,634 6,569 7,004 7,220 7,443 5,333 5,778 6,048 6,162 Public health and sanitation 1,353 1,332 1,330 1,343 1,344 319 982 1,078 1,097 1,236 Culture and recreation 4,947 5,777 5,900 4,449 3,939 4,292 5,659 5,817 6,143 6,255 Planning and development 3,269 3,609 3,344 3,256 3,293 3,232 1,910 2,042 1,801 2,185 Miscellaneous -32 - - - - - - - - Capital outlay 17,707 18,603 9,847 7,327 13,047 11,009 25,527 24,001 18,281 16,344 Debt service Principal 4,667 5,959 4,411 8,592 5,038 5,261 6,250 17,902 5,088 14,243 Interest 1,596 2,258 2,084 2,103 1,867 1,864 1,833 3,152 1,771 2,192 Deposit to escrow -107 -92 ------ Total expenditures 61,072 66,089 55,064 56,304 59,172 56,965 74,104 86,856 67,281 77,219 Other financing sources (uses) Bonds and notes issued 23,695 7,034 6,565 6,150 5,690 5,365 6,825 34,892 11,490 8,090 Bond and note premium 1,369 47 23 60 185 302 369 1,503 95 70 Transfers in 3,617 5,076 7,994 3,488 4,907 3,001 7,642 7,065 8,339 13,462 Transfers out (3,422) (4,984) (5,692) (3,458) (3,907) (2,999) (3,913) (3,555) (4,160) (4,186) Other - - 156 - - - - - - - Total other financing sources (uses)25,259 7,173 9,046 6,240 6,875 5,669 10,923 39,905 15,764 17,436 Net change in fund balance 8,880$ (11,898)$2,803$ 574$ 6,775$ 550$ (12,046)$ 10,268$ 5,082$ (3,362)$ Debt service as a percentage of non-capital expenditures 17% 21% 17% 28% 18% 18% 20% 50% 16% 37% Source: City of Salina Comprehensive Annual Financial Reports, 2009 - 2018 Last Ten Fiscal Years Changes in Fund Balances, Governmental Funds City of Salina, Kansas Schedule 4 Fiscal Year (in 000's) (modified accrual basis of accounting) 116 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Real estate 9,971$ 9,756$ 10,288$ 10,466$ 10,145$ 10,657$ 10,729$ 10,972$ 11,377$ 10,804$ Delinquent 760 278 274 245 248 235 279 246 210 276 Motor vehicle 1,135 1,145 1,150 1,153 1,200 1,250 1,312 1,370 1,372 1,428 General sales 11,669 11,117 11,767 12,165 12,260 12,689 12,931 12,781 12,906 13,293 Selective sales 3,380 4,108 4,080 4,210 4,281 4,461 4,558 4,901 8,832 8,917 Other taxes 5,791 6,298 6,390 6,485 6,630 7,231 7,362 7,991 6,900 7,240 Total taxes 32,706$ 32,702$ 33,949$ 34,724$ 34,764$ 36,523$ 37,171$ 38,261$ 41,597$ 41,958$ Source: City of Salina Comprehensive Annual Financial Reports, 2009 - 2018 Fiscal Year Last Ten Fiscal Years (modified accrual basis of accounting) (in 000's) Schedule 5 City of Salina, Kansas Tax Revenues by Source, Governmental Funds 117 Assessed Value Fiscal (Budget) Year Real Estate Personal Property State Assessed Total, Excluding Motor Vehicles Tax Rate Motor Vehicle (Note 1) Total, Taxable Assessed Value Estimated Total Market Value (Note 2) Ratio of Assessed Value to Est. Market Value 2009 356,678,712$ 28,373,980$ 14,929,456$ 399,982,148$ 25.886 51,351,656$ 451,333,804$ 2,914,775,730$ 15.48 2010 358,979,211$ 24,760,806$ 13,730,609$ 397,470,626$ 25.855 50,330,252$ 447,800,878$ 2,893,359,541$ 15.48 2011 367,750,803$ 19,918,188$ 14,685,585$ 402,354,576$ 26.022 47,406,062$ 449,760,638$ 2,869,531,746$ 15.67 2012 369,416,422$ 18,654,394$ 15,779,466$ 403,850,282$ 26.272 47,553,744$ 451,404,026$ 2,884,188,981$ 15.65 2013 370,390,092$ 17,769,120$ 16,948,264$ 405,107,476$ 26.927 48,882,411$ 453,989,887$ 2,889,385,914$ 15.71 2014 376,131,346$ 13,652,885$ 17,670,147$ 407,454,378$ 27.080 48,865,900$ 456,320,278$ 2,917,267,724$ 15.64 2015 381,087,426$ 12,607,815$ 18,984,453$ 412,679,694$ 27.311 50,350,566$ 463,030,260$ 2,957,531,741$ 15.66 2016 389,872,825$ 11,653,719$ 19,323,055$ 420,849,599$ 27.603 51,833,505$ 472,683,104$ 3,046,949,034$ 15.51 2017 391,895,060$ 11,146,213$ 19,323,055$ 422,364,328$ 27.311 50,970,796$ 473,335,124$ 3,097,885,103$ 15.28 2018 403,835,383$ 10,130,718$ 20,485,144$ 434,451,245$ 26.129 53,336,677$ 487,787,922$ 3,150,409,123$ 15.48 Note 1: The tax rate for motor vehicles is set based on the average countywide tax rate. The City of Salina then receives a share of that based on tax effort. Note 3: The Direct rate is expressed in dollars per thousand dollars of assessed value. Source: Saline County Clerk Note 2: The estimated market value excludes the value of the State assessed properties. Market value information is not available for those properties. However, state assessed property is generally assessed at 33% of market value, except for railroads, which are assessed at 15% of market value. Schedule 6 City of Salina, Kansas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years 118 City of Salina Saline County USD 305 (2)Other (1) Fiscal (Budget) Year Operating Millage Debt Serv ice Millage Total City Millage Operating Millage Debt Serv ice Millage Total County Millage Operating Millage Debt Serv ice Millage Total USD Millage Other 2009 21.749 4.137 25.886 29.347 29.347 46.339 12.208 58.547 10.971 124.751 2010 20.082 5.773 25.855 31.303 31.303 45.341 13.155 58.496 12.401 128.055 2011 19.236 6.786 26.022 31.432 31.432 45.818 13.095 58.913 12.131 128.498 2012 20.326 5.946 26.272 32.576 32.576 47.127 11.693 58.820 11.989 129.657 2013 20.242 5.948 26.190 34.823 34.823 47.133 11.516 58.649 12.135 131.797 2014 20.539 6.388 26.927 37.895 37.895 46.599 11.517 58.116 12.941 135.879 2015 20.692 6.388 27.080 38.047 38.047 44.088 11.517 55.605 13.305 134.037 2016 19.950 7.361 27.311 38.275 38.275 44.465 11.655 56.120 13.293 134.999 2017 21.694 5.909 27.603 37.508 37.508 44.069 11.674 55.743 13.299 134.153 2018 20.339 5.790 26.129 37.321 37.321 45.130 11.371 56.501 13.189 133.140 Source: Saline County Treasurer (2) A small portion of Salina is covered by USD 306, USD 307, or USD 400. Total Tax Rates are different in the areas covered by these jurisdictions. Schedule 7 City of Salina, Kansas Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $1,000 of assessed value) (1) The "Other" column includes the State of Kansas, the Salina Airport Authority, the Salina Public Library and Kansas State Extension District #3. Total 119 Taxpayer Type of Business Assessed Valuation % of Total Valuation Rank Assessed Valuation % of Total Valuation Rank Westar Energy (W estern Resources)Utility 7,287,074$ 2.17%3 11,856,980$ 2.73%1 SFC Global Supply Chain, Inc. (Schwan's)Pizza Manufacturing 12,382,582 3.69%1 7,508,620 1.73%2 RAF Salina, LLC Regional Shopping Center N/A 4,674,872 1.08%3 Kansas Gas Service Utility 2,633,187 0.79%7 3,784,188 0.87%4 Central Mall Realty Holding LLC Regional Shopping Center 9,003,313 2.69%2 3,696,437 0.85%5 S&B Motels Motel 2,388,908 0.71%8 3,424,974 0.79%6 Sams Real Estate Business Trust/Walmart Discount Retail Stores N/A 2,529,908 0.58%7 Menard Inc.Home Improvement N/A 2,501,856 0.58%8 Individual Residential 1,913,209 0.57%10 2,333,789 0.54%9 Wal-Mart Real Estate Business Trust Discount Retail Stores 3,627,525 1.08%6 2,282,451 0.53%10 Great Plains Manufacturing Manufacturing 2,308,375 0.69%9 Union Pacific Railroad N/A Southwestern Bell Telephone Utility 4,783,821 1.43%5 Salina Regional Health Center Hospital and Medical Offices 5,580,586 1.66%4 Combined Valuation of the Ten Largest Taxpayers 51,908,580$ 44,594,075$ City Valuation 335,262,182$ 434,451,245$ Percent of Total City Assessed Valuation 15.48%10.26% Source: Saline County Clerk's Office or recent OS Current Year and Ten Years Ago Principal Property Taxpayers City of Salina, Kansas Schedule 8 2018 (2017 Assessed Value)2008 (2007 Assessed Value) 120 Fiscal (Budget) Year Taxes Lev ied for the fiscal year Amount Percentage Delinquent Collections (1)Amount Percentage of levy 2009 10,354,161$ 9,923,959$ 95.8%759,764$ 10,683,723$ 103.2% 2010 10,276,905$ 9,704,937$ 94.4%278,656$ 9,983,593$ 97.1% 2011 10,415,491$ 10,287,770$ 98.8%273,843$ 10,561,613$ 101.4% 2012 10,570,420$ 10,411,299$ 98.5%245,086$ 10,656,385$ 100.8% 2013 10,576,448$ 10,145,404$ 95.9%248,184$ 10,393,588$ 98.3% 2014 10,908,147$ 10,776,688$ 98.8%398,820$ 11,175,508$ 102.5% 2015 11,316,065$ 10,460,246$ 92.4%617,496$ 11,077,742$ 97.9% 2016 11,740,993$ 10,972,299$ 93.5%245,577$ 11,217,876$ 95.5% 2017 11,254,398$ 11,239,051$ 99.9%209,950$ 11,449,001$ 101.7% 2018 11,260,358$ 10,803,591$ 95.9%276,340$ 11,079,931$ 98.4% Source: Saline County Treasurer's Office (1) Delinquent collections are reported in the aggregate for all previous years. Data is not currently av ailable for "collected in subsequent years" Current Year Tax Distributions Total Tax Distributions Schedule 9 City of Salina, Kansas Property Tax Levies and Distributions Last Ten Fiscal Years 121 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 City Direct Tax Rate General 0.50%0.50%0.50%0.50%0.50%0.50%0.50%0.50%0.50%0.50% Special purpose 0.25%/0.40%0.40%0.40%0.40%0.40%0.40%0.40%0.40%0.75%0.75% County-wide Tax Rate 1.00%1.00%1.00%1.00%1.00%1.00%1.00%1.00%1.00%1.00% Portion of County-wide tax allocated to City (July Percentage)62.46%61.58%63.34%61.72%60.86%60.23%60.28%60.28%60.28%59.85% Source: Kansas Department of Revenue In May, 2016, the voters approved an increase in the Special Purpose Tax rate from .40% to .75%, to be effective October 1, 2016. Schedule 10 City of Salina, Kansas Direct Sales Rate by Taxing Entity Last Ten Fiscal Years Fiscal Year In addition to the direct tax, the City receives a portion of the Countywide sales tax, based on a formula distribution. The formula is based on property tax effort and population, and is adjusted in January and July of each year. 122 2018 # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water # Accts Water Rate Class Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Residential 17,792 1,043,774 17,838 1,127,864 17,899 1,194,629 17,893 1,225,931 17,966 989,788 18,042 1,003,100 18,086 987,540 18,125 950,697 18,124 988,572 18,130 963,387 Commercial 1,589 339,507 1,568 350,633 1,574 372,499 1,565 38,547 1,579 348,968 1,599 353,675 1,600 350,767 1,603 345,232 1,606 345,250 1,614 340,960 Industrial 46 152,910 44 183,166 44 180,277 42 174,595 40 182,529 42 193,233 44 202,407 44 191,236 44 193,503 44 211,843 Government 104 41,793 85 42,714 97 55,910 99 54,618 99 46,484 97 45,346 97 41,928 99 45,136 99 41,552 98 35,932 Apartment 182 71,503 172 71,121 168 72,562 169 70,263 168 67,155 166 60,865 164 61,400 163 57,039 163 58,378 157 71,559 Schools 84 39,815 85 46,386 85 53,679 81 57,027 84 44,187 84 45,328 85 45,545 85 41,176 83 36,039 81 30,810 Industrial special 1 32,934 1 44,457 1 44,051 1 40,448 1 20,439 - - - - - - - - - - Consumed in production 18 26,223 17 32,604 13 22,728 12 19,266 12 18,665 12 19,264 12 17,338 9 9,580 8 9,652 7 6,966 Rural water 1 22,824 1 23,854 1 28,621 1 25,930 1 21,530 1 22,993 1 21,915 1 23,384 1 25,624 1 22,345 Hospitals 13 20,488 12 18,503 10 15,674 10 17,896 9 26,482 10 32,184 9 31,858 9 33,728 9 35,132 9 31,856 Religious/non profit 39 7,312 39 5,569 38 5,690 38 5,399 37 4,810 37 4,973 37 4,986 36 5,224 36 4,749 36 4,458 Other taxable deductions - -- - -699 - - - - - - - - - - - - - - Engineering studies 8 6,176 8 5,266 7 3,754 8 6,104 8 6,822 8 5,095 8 4,807 7 4,573 7 4,772 7 4,471 Providing taxable service 2 4,869 2 5,494 2 4,827 2 6,118 2 3,495 1 3,561 1 3,167 1 3,921 1 3,347 1 2,331 Sale of component parts 8 5,200 8 5,851 8 5,454 8 5,726 6 5,972 6 6,850 5 3,900 4 3,129 4 2,917 4 2,190 Fire hydrant 2 1,032 3 2,424 3 1,389 4 2,533 3 1,922 2 1,474 - - 3 1,727 3 1,790 3 2,829 Industrial consumed in production 3 2,314 3 4,083 3 3,260 3 3,543 3 4,417 3 3,588 3 2,388 3 1,930 3 1,962 3 2,107 Sales of farm equipment 1 205 1 213 1 56 1 83 1 107 1 48 1 53 1 54 1 104 1 56 19,893 1,818,879 19,887 1,970,202 19,954 2,065,759 19,937 1,754,027 20,018 1,793,771 20,111 1,801,577 20,153 1,779,999 20,193 1,717,766 20,192 1,753,343 20,196 1,734,098 Water Rate Schedule: Monthly meter charge (5/8")4.44$ 4.51$ $4.60 $4.74 $4.88 $5.03 $5.20 $5.36 $5.52 $5.74 Commodity charge (per 000 gal.): 0 - 2000 gal.2.34$ 2.55$ $3.77 $3.88 $4.04 $4.24 $4.45 $4.48 $4.77 $4.96 2001 - 10,000 gal Over 10,000 gal. Excess use charge 4.68$ 5.10$ $7.54 $7.76 $8.08 $8.48 $8.90 $9.16 $9.54 $9.92 Wastewater Rate Schedule: Monthly base charge 6.31$ 6.42$ $6.57 $6.77 $6.97 $7.11 $7.22 $7.36 $7.51 $7.81 Unit cost (per 000 gal.):2.88$ 3.08$ $4.48 $4.61 $4.79 $4.94 $5.01 $5.19 $5.29 $5.51 Water sold is expressed in thousands of gallons. Number of Accounts billed is the annual number of billings for each class divided by 12. Monthly meter charge increases with the size of the meter. Residential Wastewater is calculated based on Winter Quarter water consumption. Other accounts are based on monthly water consumption. 2008 Water Consumption Rate Structure changed from a decreasing tier structure to one rate and Excess Use Charge which is double the consumption rate Source: City of Salina Water Customer Accounting Office. 20172014 Schedule 11 2011 2012 Last Ten Fiscal Years Water Sales by Class of Customer 2016201020092013 City of Salina, Kansas 2015 123 Fiscal Year General Obligation Bonds Loans Payable Capital Lease Temporary Notes General Obligation Bonds Water Revenue Bonds Loans Payable Temporary Notes Total Primary Government Percentage of Personal Income Per Capita 2009 52,067,590$-$ -$-$2,320,000$ 2,320,000$ 5,862,516$ -$62,570,106$ 3.5%1,346.09$ 2010 53,120,952$-$ -$2,500,000$ 8,614,576$ 1,580,000$ -$ -$65,815,528$ 3.8%1,425.20$ 2011 55,225,670$-$ -$3,400,000$ 7,417,907$ 16,193,925$ -$ -$82,237,502$ 4.3%1,723.80$ 2012 49,109,575$-$ -$1,485,000$ 9,613,926$ 15,850,228$ -$ -$76,058,729$ 3.8%1,583.07$ 2013 49,631,797$-$ -$3,800,000$ 8,519,799$ 15,226,532$ -$ -$77,178,128$ 3.7%1,613.05$ 2014 50,033,555$-$ 176,235$ 5,000,000$ 9,587,351$ 14,592,836$ 6,208,102$ -$ 85,598,079$ 4.1%1,788.25$ 2015 50,840,632$-$ 479,366$ 5,995,000$ 8,539,773$ 13,949,139$ 5,753,620$ -$ 85,557,530$ 4.1%1,789.42$ 2016 51,816,399$12,157,127$321,174$ 11,505,000$ 7,640,381$ 13,285,443$ 7,432,024$ -$ 104,157,548$ 5.0%2,200.39$ 2017 55,994,305$12,171,090$157,868$ 6,811,742$ 6,520,433$ 12,606,747$ 8,862,810$ -$ 103,124,995$ 4.9%2,194.43$ 2018 51,968,310$12,185,053$-$ 18,123,505$ 5,282,578$ 11,898,051$ 10,632,351$-$ 110,089,848$ 4.9%2,342.64$ Source: City of Salina Comprehensive Annual Financial Reports, 2009 - 2018 Governmental Activities Business-Type Activities Last Ten Fiscal Years Ratio of Outstanding Debt by Type City of Salina, Kansas Schedule 12 124 Fiscal Year General Obligation Bonds Capital Lease Temporary Notes Total Less Debt Serv ice Fund Net General Bonded Debt Percentage of Actual Taxable Value of Per Capita 2009 54,387,590$ -$ -$54,387,590$735,291$ 53,652,299$11.9%1,154.23$ 2010 61,735,528$ -$ 2,500,000$ 64,235,528$571,873$ 63,663,655$14.2%1,378.60$ 2011 62,443,577$ 3,400,000$ 65,843,577$1,236,026$ 64,607,551$14.4%1,354.26$ 2012 58,723,501$ -$ 1,485,000$ 60,208,501$582,412$ 59,626,089$13.2%1,241.05$ 2013 58,151,596$ -$ 3,800,000$ 61,951,596$707,763$ 61,243,833$13.5%1,280.02$ 2014 59,620,906$ 176,235$ 5,000,000$ 64,797,141$407,864$ 64,389,277$14.1%1,345.17$ 2015 59,380,405$ 479,366$ 5,995,000$ 65,854,771$745,339$ 65,109,432$14.1%1,361.75$ 2016 59,456,780$ 321,174$ 11,505,000$71,282,954$1,248,914$ 70,034,040$14.8%1,479.51$ 2017 62,514,738$ 157,868$ 6,811,742$ 69,484,348$1,509,863$ 67,974,485$14.4%1,446.45$ 2018 57,250,888$ -$ 18,123,505$75,374,393$1,851,358$ 73,523,035$15.1%1,564.52$ Source: City of Salina Comprehensive Annual Financial Reports, 2009 - 2018 General Bonded Debt Outstanding Schedule 13 City of Salina, Kansas Ratio of Net General Bonded Debt Outstanding Last Ten Fiscal Years 125 City of Salina, Kansas Direct and Overlapping Governmental Activities Debt Jurisdiction Net General Obligation Bonded Debt Outstanding Percentage Applicable to City of Salina Amount Applicable to the City of Salina Direct: City of Salina 73,523,035$ 100.00%73,523,035$ Overlapping: Salina Airport Authority 21,427,000 100.00%21,427,000 Saline County 224,409 73.45%164,823 USD 305 117,030,000 93.11%108,969,011 Total Overlapping Debt 138,681,409 130,560,834 Total Direct and Overlapping Debt 212,204,444$ 204,083,869$ Per Capita Direct and Overlapping debt 4,268.38$ Source: Saline County Clerk Schedule 14 Percentage of debt applicable to the City of Salina is based on the proportion that the assessed valuation of the City of Salina bears to the assessed valuation of the overlapping entity. As of December 31, 2018 126 Assessed Valuation 487,787,922$ Debt Limit (30% of Assessed Value)146,336,377 Debt applicable to limit: Total Bonded Debt 110,089,848$ Less GO Debt Attributable to Exempt Purposes (5,282,578) Less Revenue Bonds (11,898,051) Less Capital Leases - Less Loans Payable (22,817,404) Less Fund Balance designated for Debt Service (1,851,358) Total Debt Applicable to Limitation 68,240,457$ Legal debt margin 78,095,920$ 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Debt Limit 135,400,141$ 134,340,263$ 134,928,191$ 135,421,208$ 136,196,966$ 136,896,083 138,909,078 141,804,931 142,000,537 146,336,377 Total net debt applicable to limit 53,652,299 58,411,185 57,747,032 49,309,445 52,724,034 54,625,691 56,090,293 62,072,485 61,296,184 68,240,457 Legal debt margin 81,747,842$ 75,929,078$ 77,181,159$ 86,111,763$ 83,472,932$ 82,270,392$ 82,818,785$ 79,732,446$ 80,704,353$78,095,920$ Total net debt applicable to the limit as a percentage of debt limit 40%43%43%36%39%40%40%44% 43% 47% Schedule 15 Fiscal Year Legal Debt Margin Calculation for 2018 Last Ten Fiscal Years Legal Debt Margin City of Salina, Kansas 127 Utility Service Less Operating Net Av ailable Debt Serv ice Fiscal Year Charges Expenses Rev enue Principal Interest Cov erage 2009 15,151,305$10,693,654$4,457,651$ 1,276,243$ 455,294$ 2.57 2010 16,565,880$11,803,594$4,762,286$ 740,000$ 91,450$ 5.73 2011 17,976,508$11,905,114$6,071,394$ 1,580,000$ 496,760$ 2.92 2012 19,163,426$12,222,431$6,940,995$ 340,000$ 596,992$ 7.41 2013 17,974,089$13,373,088$4,601,001$ 620,000$ 590,191$ 3.80 2014 18,964,164$12,112,288$6,851,876$ 630,000$ 577,791$ 5.67 2015 19,139,612$9,859,974$ 9,279,638$ 640,000$ 565,191$ 7.70 2016 19,389,348$11,800,473$7,588,875$ 660,000$ 549,191$ 6.28 2017 19,958,862$13,148,035$6,810,827$ 675,000$ 529,391$ 5.65 2018 20,382,469$12,973,621$7,408,848$ 705,000$ 509,141$ 6.10 Source: City of Salina Comprehensive Annual Financial Reports, 2009 - 2018 City of Salina Debt Service Schedules Water/Sewer Rev enue Bonds Schedule 16 City of Salina, Kansas Pledged Rev enue Cov erage Last Ten Fiscal Years Debt Serv ice 128 Fiscal Year Population Per Capita Personal Income (Saline County) Personal Income, Salina (interpolated) Unemployment Rate Labor Force, City of Salina USD 305 Headcount Percentage Free and Reduced Lunch City .5 cent sales tax Per Capita .5 cent sales Tax As a % of per capita personal income 2009 46,483 38,392$ 1,784,575,336$ 6.0%26,769 7,432 58.7%4,965,147$106.82$ 0.278% 2010 46,180 37,880$ 1,749,298,400$ 6.7%26,379 7,346 57.8%4,803,553$104.02$ 0.275% 2011 47,707 40,512$ 1,932,705,984$ 6.7%26,258 7,289 58.7%5,076,751$106.42$ 0.263% 2012 48,045 41,762$ 2,006,455,290$ 6.3%26,185 7,305 59.1%5,241,205$109.09$ 0.261% 2013 47,846 43,078$ 2,061,109,988$ 5.1%26,441 7,305 60.7%5,326,723$111.33$ 0.258% 2014 47,867 43,736$ 2,093,511,112$ 5.3%26,303 7,388 61.3%5,555,601$116.06$ 0.265% 2015 47,813 44,065$ 2,106,879,845$ 3.9%26,170 7,369 61.8%5,670,040$118.59$ 0.269% 2016 47,336 44,230$ 2,093,647,612$ 3.3%27,684 7,386 68.7%5,727,260$120.99$ 0.274% 2017 46,994 44,732$ 2,102,135,608$ 2.7%27,684 7,176 62.1%5,755,869$122.48$ 0.274% 2018 46,994 47,945$ 2,253,127,330$ 3.3%30,174 7,180 61.7%5,770,174$122.79$ 0.256% Sources:Increase in per capita Sales Tax (10 years)14.3% Population: Kansas Division of the Budget.Increase in per capita Personal Income 20.5% Personal income for Salina is derived from the population and per capita personal income for Saline County Per Capita Personal income as reported by the Bureau of Economic Analysis 2017 Per Capita Personal Income staff projection 2008 -2017 Employment City of Salina USD305 headcount and free and reduced lunch data derived from Kansas Department of Education./USD 305 Budget Document Employment: Kansas Department of Labor Schedule 17 City of Salina, Kansas Demographic and Economic Statistics Last Ten Fiscal Years Free and Reduced Lunch percentage is an average of the percentages for each building reported. School Data is reported at beginning of school year, eg 2017-2018 school year is reported as 2017. 129 Employer Type of Business Employees Rank Percentage of Labor Force Employees Rank Percentage of Labor Force Salina Regional Health Center Health Care 2,093 1 7.8%1,800 1 6.0% Schwan's Global Supply Chain Frozen Pizza Manufacturing 1,850 2 6.9%1,700 2 5.6% Unified School District No 305 Public School System 935 3 3.5%1,500 3 5.0% Great Plains Manufacturing Agricultrual & Landscaping Equipment 650 5 2.4%1,100 4 3.6% Exide Technologies Automotive Battery Manufacturer 800 4 3.0%600 5 2.0% City of Salina City Government 493 7 1.8%425 6 1.4% REV Group Manufacturing 300 7 1.0% Salina Vortex Manufacturing 250 8 0.8% Walmart Retail 250 9 0.8% Blue Philips Lighting Company Fluorescent Lamps 600 6 2.2%230 10 0.8% Raytheon Aircraft Aircraft Manufacturing 357 8 1.3% Eldorado National Busses/Recreational Vehicle 255 9 1.0% Total 8,033 30.0%8,155 27.0% Source: Salina Chamber of Commerce Schedule 18 20182009 Current Year and Nine Years Ago Principal Employers City of Salina, Kansas 130