Audit Report - 2004COMPREHENSIVE ANNUAL FINANCIAL REPORT
of the
SALINA AIRPORT AUTHORITY
A Component Unit of the
City of Salina, Kansas
For the Fiscal Year Ended December 31, 2004
Prepared by the Management
of the
Salina Airport Authority
Air ort '
SLN��rt SALINA SALINAAi ort
SALINA AIRPORT AUTHORITY
TABLE OF CONTENTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended December 31, 2004
INTRODUCTORY SECTION
Letterof Transmittal ....................................................... ............................... 1 -9
PrincipalOfficers ........................................................... ............................... 10
AuthorityStaff Members ............................................... ............................... 11
OrganizationalChart ...................................................... ............................... 12
Certificate of Achievement ............................................ ............................... 13
Salina Municipal Airport Aerial View ......................... ............................... 14
FINANCIAL SECTION
Independent Auditors' Report ......................................... ............................... 15 -16
Management's Discussion and Analysis ....................... ............................... 17 -23
Statementsof Net Assets ............................................. ............................... 24 -25
_ Statements of Revenues, Expenses and
Changesin Net Assets ............................................ ............................... 26
Statements of Cash Flows (Direct Method) ................ ............................... 27 -28
Notes to Financial Statements ..................................... ............................... 29 -41
Supplemental Information
Schedules of Revenues, Expenses and Changes in Net Assets .................. 44 -46
Capital Expenditures ................................................... ............................... 47 -48
General Obligation Bonds - Series 1998- A ................. ............................... 49
General Obligation Refunding Bonds - Series 1999 -B .............................. 50
General Obligation Improvement Bonds - Series 2001- A ......................... 51
General Obligation Improvement Bonds - Series 2002 -A ......................... 52
Leasehold Revenue Bonds - Series 1991 .................... ............................... 53
KDOCHLoan Payable ................................................ ............................... 54
Special Assessment Debt - Street and Utility Improvement ........................ 55
TemporaryNotes ......................................................... ............................... 56
Insurancein Force ....................................................... ............................... 57
STATISTICAL SECTION
Operating Revenue History ............................................ ............................... 59
Operating Expense History ............................................ ............................... 60
Federal Financial Assistance History ............................. ............................... 61
Capital Expenditure History ........................................... ............................... 62
RevenueBond Coverage ................................................ ............................... 63
PrincipalCustomers ....................................................... ............................... 64
Local Government Mill Levy Rates, Direct & Overlapping ......................... 65
MillLevy Revenue ......................................................... ............................... 66
Air Traffic, Fuel Flowage, and Enplanement Trends ..... ............................... 67
MajorEmployers ............................................................ ............................... 68
Saline County Population, Demographic and Labor Statistics ..................... 69
Saline County Employment Data ................................... ............................... 70
OTHER INDEPENDENT AUDITORS' REPORTS
Report on Compliance and on Internal Control
Over Financial Reporting Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards........
72 -73
Report on Compliance with Requirements Applicable to
Each Major Program and Internal Control Over Compliance
In Accordance with OMB Circular A -133 ........... ...............................
74 -75
Schedule of Expenditures of Federal Awards ................ ...............................
76
Notes to Schedule of Expenditures of Federal Awards . ...............................
77
Summary Schedule of Prior Audit Findings ................. ...............................
78
Schedule of Findings and Questioned Costs ................. ...............................
79
CorrectiveAction Plan .................................................. ...............................
80
INTRODUCTORY SECTION
On December 1, 2004, Virgin Atlantic Airways announced
that the Salina Municipal Airport would be the launch and
landing site for the Virgin Atlantic GlobalFlyer record attempt.
VAA also announced that Mission Control for the attempt
would be based at Kansas State University at Salina, located
adjacent to the Airport.
- AIrport
SA L iNA
Chairman Vice- Chairman Treasurer Secretary Past Chairman
Dr. Randy D. Hassler Stephen C. Ryan Donald E. Morris Eric R. Hardman Robert H. Miller
Executive Director Timothy F. Rogers, A.A.E. Mgr. of Administration and Finance Michelle R. Swanson Mgr. of Operations, Maintenance and ARFF Ryan E. Rocha
Board Attorney Greg A. Bengtson
June 15, 2005
Salina Airport Authority Board of Directors
3237 Arnold Ave.
Salina, KS 67401
To the Board of Directors of the Salina Airport Authority:
The Comprehensive Annual Financial Report (CAFR) of the Salina Airport Authority (the "Authority ")
for the fiscal year ended December 31, 2004 is hereby submitted in accordance with the Kansas Statutes
Annotated (K.S.A. 27 -324). As required by the statute, the City of Salina will be furnished copies of the
Authority's 2004 CAFR. Responsibility for both the accuracy of the data presented and the
completeness and fairness of the presentation, including all disclosures, rests with the Executive Director
of the Authority. To the best of my knowledge and belief, the data as presented is accurate in all
material aspects, that it is presented in a manner designed to fairly set forth the fiscal position and results
of the operation of the Authority as measured by its financial activity, and that all disclosures necessary
to enable the reader to gain maximum understanding are included in the report.
This CAFR is presented in accordance with generally accepted accounting principles (GAAP) and
pursuant to K.S.A. 27 -324, an audit of the books, accounts and financial statements has been completed
by the Authority's independent certified public accountants, Clubine and Rettele, Chartered. The
independent audit is in accordance with the Kansas Municipal Audit Guide, the Government Auditing
Standards issued by the Comptroller General of the United States, and the provisions of the Office of
Management and Budget Circular A -133, "Audits of States, Local Governments and Nonprofit
— Organizations ".
GAAP requires that management provide an overview an analysis to accompany the financial statements
in the form of a Management Discussion and Analysis (MD &A). It is recommended that this letter of
transmittal be read in conjunction with the MD &A, which can be found immediately following the
report of the independent auditor in the Financial Section of this report.
ORGANIZATION OF THE REPORT
The Authority applies the standards for preparation of local government financial reports recommended
by the Government Finance Officers of the United States and Canada (GFOA). The Authority's 2004
Comprehensive Annual Financial Report is presented in four sections:
SLN�`irpo rt
Introductory Section - contains this letter of transmittal, a list of the Authority's
principal officers, a listing of Authority staff members, an organizational chart, the
GFOA Certificate of Achievement for Excellence in Financial Reporting for fiscal year
2003, and an aerial photo of the Salina Municipal Airport and Airport Industrial Center.
SALINAA�i p
zJOA&I-Id ee"46 �n-
3237 Arnold / Salina, KS 67401 -8190 / 785.827.3914 / Fax: 785.827.2221
www.salinaairport.com
ItVT OD UCTOR Y
Financial Section - includes the independent auditors' report, Management's
Discussion and Analysis (MD &A), the Authority's 2004 financial statements and the
required supplemental information.
Statistical Section - includes selected financial and demographic information, which
highlights economic and demographic trends.
Other Independent Auditors' Reports Section - includes reports concerning the
Authority's compliance and internal control over financial reporting and compliance and
internal control over compliance with requirements applicable to administering federal
awards programs.
REPORTING ENTITY
The Salina Airport Authority is a body corporate and politic. The Authority was created by the City of
Salina in April 1965 (Sec. 4 -16, Salina City Code) pursuant to the authority granted by the City by the
surplus property and public airport authority act of the State of Kansas (K.S.A. 27 -315 et seq.) The
Authority was created for the purpose of accepting as surplus property portions of the former Schilling
A.F.B., which was closed by the United States Department of Defense in June 1965. By quitclaim deed
the Authority received over 2,900 acres of land and numerous buildings for the purpose of operating and
developing the Salina Municipal Airport and the Salina Airport Industrial Center. The Authority is
managed and controlled by a five- member Board of Directors appointed by the Salina City Commission.
The Board appoints the Executive Director, who is the chief executive officer of the .Authority. The
Executive Director hires the remaining employees of the Authority. The Executive Director and his staff
of eleven employees manage and operate the Salina Municipal Airport and the Salina Airport Industrial
Center.
The Salina Municipal Airport is the only commercial service airport serving Salina/Saline County and
the 22- county area, which comprises North Central Kansas. The Airport also services the corporate,
business, private aviation and flight training needs of industry, business and individuals in the area. The
Airport is also used by Kansas State University at Salina (KSUS). The campus of K.SUS is located
adjacent to the Airport. The college offers degrees in professional flight training, airframe and power
plant maintenance, and avionics technology.
The Salina Municipal Airport and Airport Industrial Center is home for 80 businesses and organizations.
Forty-five of the businesses and organizations are tenants of the Authority. One of the primary functions
of the Authority is to facilitate the continued growth of jobs and payroll at the Airport and Airport
Industrial Center. The Authority works in partnership with the City of Salina, Saline County and the
Salina Area Chamber of Commerce for the retention of existing business and industry and the
recruitment of new business and industry.
2
LNY ODCICTORY
ECONOMIC CONDITIONS AND OUTLOOK
Local Economy
The Salina/Saline County economy has continued to demonstrate economic strength, as compared to
other regions of the state. In 2004, Saline County's total employment increased nearly 1,000. The
average unemployment rate fell from 4.0 percent to 3.7 percent. Growth in the areas of manufacturing,
transportation, finance, real estate, insurance, services and retail trade, confirm Salina's position as one of
_ Kansas' strongest regional economic centers.
In recent studies by Kansas State University, Saline County ranks fourth in the state out of 105 counties
_ in "Retail Trade Pull Factory. The high trade pull factor is a reflection of retail sales activity, indicating
that a large volume of retail sales activity is coming from outside of Saline County. The county's trade
area capture increased from 68,259 to 69,060, and the percent of Saline County retail trade increased
from 94.33 percent to 94.88 percent.
According to the April 2004 Strength Index report published by K -State Research and Extension
Department of Agricultural Economics, Saline County ranked fifth out of the 105 counties in "strength
index" for 2002 -2003. The index is a measure of economic prosperity in Kansas counties, and is made
up of three components including wealth, personal income and employment indices. The strength index
is determined not only by compiling the key economic indicators in each county, but also comparing
those measures against the state's per capita economic progress. A county with a score of 1.0 for all
three indices would perfectly reflect the values for the State of Kansas and have a Strength Index of
3.00. Saline County's score of 3.07 indicates that it is prospering at a greater rate than the entire state
The Bureau of the Census, the Kansas Department of Revenue, the Kansas Department of Human
Resources, the Kansas Governor's Economic and Demographic Report, and K -State Research and
Extension comprise the source for the strength index data.
Economic Condition of the Airport and Airport Industrial Center
As of December 31, 2004, 80 businesses and organizations at the Salina Municipal Airport and Airport
Industrial Center employed nearly 4,000 employees. Total payroll was an estimated $128 million.
Future Economic Outlook
The future economic outlook for both Salina and the Authority continues to look favorable. Continued
growth in service, retail and manufacturing sectors is expected. The Salina Area Chamber of Commerce
forecasts that approximately 700 new jobs per year will be added to the economy over the next three to
five years.
Salina Municipal Airport businesses including Aerospace Systems and Technologies, Inc., Flower
Aviation of Kansas, Inc., and Kansas State University at Salina, continue work on facility expansion
plans. Salina Airport Industrial Center businesses including Schwan's Food Manufacturing, Inc., Salina
Vortex Corporation, and the Kansas Army National Guard at Salina, also continue to work on facility
expansions. Collectively, these expansions will result in additional jobs and payroll.
A major economic initiative came about in 2004 with the passage of a one - quarter cent city sales tax,
designating 12.5 percent or approximately $275,000 per year for economic development:. The funds will
INT ODUCTORY
be available to assist in the job- training portion of the Salina community's new economic development
initiatives, which are designed to help keep Salina competitive with other communities.
The Salina Airport Authority in partnership with the Salina Area Chamber of Commerce, the City of
Salina and Saline County, continue to work and expand on economic development programs that
include web based building and site directories, electronic newsletters, trade show participation and
expanding contacts through the Kansas Department of Commerce.
During 2004, the community launched the Salina Aviation Service Center campaign designed to attract
aviation service businesses to the Salina Municipal Airport. The campaign received a boost when the
Kansas legislature passed a state sales tax exemption for parts and labor used in aircraft maintenance
repair and overhaul activity.
INITIATIVES AND DEVELOPMENT
Salina Municipal Airport (SLN)
On December 1, 2004, after over one year of discussions with the Salina Airport Authority, Virgin
Atlantic Airways of London announced that the Salina Municipal Airport would be the launch and
landing site for Virgin Atlantic GlobalFlyer. Virgin Atlantic, along with adventurer pilot Steve
Fossett, determined Salina's 12,300 feet, recently rehabilitated runway, the availability of large
aircraft hangars and having Kansas State University at Salina on the airport to serve as headquarters
for mission control, would make it an ideal launch site. Early in 2005, Fossett, in the GlobalFlyer,
became the first person to fly around the world, solo, non -stop and non - refueled. This event brought
unprecedented national and international attention and publicity to the Salina Municipal Airport,
Kansas State University at Salina and the community while it placed Salina on the roll call of sites
for milestones in aviation history.
Although the Airport's primary runway was shut down for 90 days over the summer for construction,
2004 was still the fifth highest year in the Airport's history in terms of fuel flowage. The 3,843,344
gallons of aviation fuel delivered is a result of the airport's two Fixed Base Operators (FBO), America
Jet and Flower Aviation continuing to provide world class service and the top selling aviation fuel
brands to the wide variety of aircraft that utilize the Salina Municipal Airport including general aviation,
business jets, air carrier, and military. Because of Salina's geographic location, the Salina Municipal
Airport is a popular mid - continent refueling stop. Fuel sales are an important component to the
operation of the Airport as the fuel flowage fee revenue generated over 16 percent of the Authority's
2004 operating revenue.
During that 90 -day primary runway closure, the Authority successfully completed one of its most
extensive airfield construction projects to date. The Airport's primary runway, still one of the longest
runways in North America, was rehabilitated and reconfigured to a width of 150 feet and a length of
12,300 feet. In addition to a new runway surface, the Authority installed new high - intensity runway
lights, pavement subdrains, new airfield guidance signs and a new standby generator for .airfield lighting.
The Authority was awarded $2.4 million in grant funds for this major reconstruction effort through the
Federal Aviation Administration's (FAA) Airport Improvement Program (AIP). Completion of this
milestone project assures the Salina Municipal Airport that it will maintain its role as "'America's Fuel
Stop" for years to come.
4
In addition, during 2004 under the FAA's AIP program, the Authority was awarded a $270,750 grant for
the rehabilitation design of the Airport's crosswind runway. Project design is scheduled for completion
during the second quarter of 2005 with construction scheduled for the summer of 2005. Completion of
the project will provide Airport users with multiple runway options.
During the fall of 2004, the Authority contracted with industry leader Jeppesen to complete an airspace
and instrument approach procedure feasibility study. Jeppesen was instructed to complete a
comprehensive review of the existing airspace and instrument approach procedures, environment
affecting air traffic safety, efficiency and capacity at the Airport. The study will be completed in 2005
and will provide the Authority guidance on priority airspace improvements that will enable growth in the
number of aircraft operations and fuel delivered at the Salina Municipal Airport.
During 2004, two of the Authority's large aircraft hangars were successfully remodeled and renovated.
Both hangars required new hangar doors, electrical improvements, heating and cooling upgrades. Each
hangar is now equipped with new digital video recording systems for improved security and risk
management.
Following the completion of the Hangar renovations, the Authority was able to host the 442 "d Fighter
_ Wing, Whiteman AFB for a two week training deployment. During the deployment, America Jet at
Salina, the Airport's government fuel contractor on the field, delivered approximately 65,000 gallons of
fuel to the 442 "d aircraft. The 442 "d was able to base seven A -10 attack aircraft and 135 people at the
Airport's Hangar 4509. The 442 "d was the first of many military aviation units that will be able to use
the hangar as a base of operations while using the Smoky Hill Air National Guard (ANG) Range. The
Authority is working with the Kansas National Guard and other branches of the military to utilize the
Salina Municipal Airport and Hangar #509 for additional aviation unit training deployments.
The second renovated hangar facility, Hangar #703, continues to house the Virgin Atlantic GlobalFlyer.
The improvements to the hangar were key to pilot Steve Fossett's and Virgin Atlantic's decision to
— select the Salina Municipal Airport as the launch site for the GlobalFlyer.
Both hangars have been used for overnight business jet storage since renovations were completed. The
availability of the two hangars meets requirements of a growing number of business jet operators that
must have the availability of overnight storage before using SLN for refueling.
— The Airport Authority coordinated with the FAA for the installation of a new Instrument Landing
System (ILS) for Runway 35. The FAA funded project replaced a decades -old ILS with new state -of-
the -art equipment. The new ILS will provide airport users an accurate and dependable system for years
— to come.
On July 21, 2004, the Authority Board of Directors approved a lease agreement with Flower Aviation of
Kansas, Inc. The agreement provided for the construction of a new 5,000 sq. ft. customer service center
to be leased to Flower. The new facility will enable Flower SLN to remain one of the top- ranked FBO's
in the nation. Construction bids were opened on November 3, 2004 and construction started on
November 29. The facility will open during 2005.
In addition to the FAA grant funds mentioned previously, during 2004, the Authority also received a
— FAA grant offer in the amount of $621,747 to fund 95% of the cost to purchase a new Aircraft
Rescue and Firefighting vehicle and a new multi- agency communications system. These
INT ODUCTORY
improvements will provide the Authority and Salina Fire Department additional capabilities when
responding to airfield emergencies.
The Authority continued to work in a cooperative manner with the Transportation Security
Administration (TSA), Saline County Sheriffs Office, Salina Police Department, Kansas Highway
Patrol and other law enforcement agencies to maintain compliance with federal airport security
requirements. Maintaining an up -to -date Airport Security Plan has become a daily task. The most
significant responsibility is keeping up with new threat assessments and adjusting the Authority's
security measures accordingly.
On December 3, 2004, the Federal Security Director of the Transportation Security Administration,
Wichita Mid - Continent Airport, recognized the Authority with the TSA's 2004 Partnership award.
In partnership with the Salina Area Chamber of Commerce, the Authority attended the annual
conference of the National Business Aviation Association (NBAA) with the specific purpose of
increasing SLN's mage as a center for aviation service businesses. The Authority's new marketing
materials and news release were well received. The SLN Aviation Service Center was featured in the
NBAA convention daily news publications.
As part of its ongoing marketing efforts, the Authority's website, http: / /www.salinaa :ln2ort.com/ was
redesigned and went online on December 1, 2004.
Salina Airport Industrial Center
In partnership with the Salina Economic Development Corporation, the Authority began facilitating
the development of a new corporate headquarters and manufacturing campus for Salina Vortex
Corporation. As a leader in the manufacturing of slide gates and diverter valves for handling dry
bulk materials, Salina Vortex has been an anchor tenant within the Airport Industrial Center for 18
years. The new worldwide corporate headquarters will be 105,000 sq. ft. of new construction on 17
acres within the Airport Industrial Center. Construction is expected to begin in June of 2005 with
completion in May of 2006.
Also during the year, Turbine Specialties, a division of Houston, TX based Cooper Energy Services,
occupied a large manufacturing/warehouse facility located in the Airport Industrial Center. Turbine
Specialties employ approximately 90 people and was a welcome addition to the industrial center.
During 2004, the Authority continued to make capital improvements to Airport Industrial Center
facilities. The Authority completed the demolition of three former U.S. Air Force buildings that no
longer had economic value. The demolitions of obsolete buildings eliminate potential liabilities and in
most cases, open up land for the construction of new structures.
The Authority funded the extension of Cox Cable TV and Internet cable to the southern portion of the
Airport Industrial Center. This improvement benefits several existing businesses and will provide cable
TV to undeveloped Authority industrial sites.
During the summer months, the Authority began working with the Kansas Army National Guard
( KSARNG) as a prospective tenant to occupy a vacant 66,000 sq. ft. manufacturing; facility within
the Airport Industrial Center. The Authority completed a facility renovation design based on the
needs of the KSARNG and a construction contract was awarded on December 15, 2004. Subsequent
Is!
[.VT ODUCTORY
— to the close of the year, a lease agreement was executed and the KSARNG will occupy the facility in
the fall of 2005 with a new Readiness Sustainment Maintenance Site involving the overhaul and
rebuild of military trailers.
Capital Financial Planning
Throughout the year, the Authority staff worked on the development of a five -year capital
improvement program. All projects included in the plan are designed to meet the objectives as set
forth in the Airport's 1991 Master Plan. A significant portion of the funding for the capital
improvement projects will come from the Authority's entitlement dollars under the Federal Aviation
Administration's (FAA) Airport Improvement Program. It is anticipated that the Federal share of the
identified projects range from 85% to 95% of the total project development cost. All projects under
this five -year capital improvement program are subject to FAA review and approval. A significant
capital planning tool is the Airport Layout Plan (ALP). During 2004, the Authority's ALP was
updated for planned and future improvements.
The effect any capital improvement program will have on future operating budgets is evaluated at the
time a specific project is authorized by the Authority and is undertaken on a cost - benefit analysis.
All current authorized capital projects scheduled for completion in 2005 have their projected
revenues and expenses incorporated into the Authority's 2005 operating budget.
FINANCIAL CONTROLS
The Authority follows generally accepted accounting principles applicable to governmental unit
enterprise funds. Accordingly, the financial statements are prepared on the accrual basis.
Management of the Authority is responsible for establishing and maintaining an internal control
structure designed to ensure that the assets of the Authority are protected from loss, theft, or misuse and
to ensure that adequate accounting data is compiled to allow for the preparation of financial statements
in conformity with generally accepted accounting principles. The internal control structure is designed
to provide reasonable, but not absolute, assurance that these objectives are met. The concept of
reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be
derived; and (2) the valuation of costs and benefits requires estimates and judgments by management.
An annual budget is prepared in accordance with the Authority's By -laws. However, the Authority is
specifically exempt from the budget laws of the State of Kansas (K.S.A. 27 -322) and the Authority is not
required to demonstrate statutory compliance with its annual operating budget. Accordingly, budgetary
data is not included in the accompanying financial statements.
CASH MANAGEMENT
All cash temporarily idle during 2004 was invested by the Executive Director of the Authority in short-
term investments to attain the highest possible return consistent with the Authority's liquidity needs. All
investments are in compliance with K.S.A. 12 -1675 which controls the investment of public funds by
Kansas governmental units.
7
INT ODUCTORY
RISK MANAGEMENT
The Authority is exposed to risks of loss associated with the operation of a public use airport and the
operation of an airport industrial center. To handle the associated risks of loss, the Authority uses
available tort liability legislation and purchases the appropriate types of insurance coverage. It is the
policy of the Authority to eliminate or transfer risk of loss where possible.
The Kansas Tort Claims Act (K.S.A. 75 -6101 et seq.) generally limits tort liability for Kansas
governmental entities. The maximum liability for claims as specified by the Act is $500,000 for any
number of claims arising out of a single occurrence or accident. For wrongful acts, Kansas
governmental entities or their employees are exempted from liability.
The Authority carries $500,000 of comprehensive general liability insurance which matches the limit
established by the Kansas Tort Claims Act. During 2004 the Authority carried $13,486,643 of insurance
on airport commercial properties. The Authority also acquires construction builders' risk policies for all
major construction projects or requires evidence of coverage from the contractor.
The Authority's commercial property insurance included $1,344,105 in loss of rents coverage. All
contractors and lessees are required to carry amounts of property insurance with limits and deductibles
approved by the Authority. A schedule of insurance in force at December 31, 2004 is included in the
Supplemental Section of this report.
In addition, the Authority uses various risk management techniques. All contracts and leases are
reviewed by the Authority's legal counsel. All contractors and subcontractors are required to submit
evidence of insurance coverage naming the Salina Airport Authority and the City of Salina as named
additional insured.
GFOA CERTIFICATE OF ACHIEVEMENT
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the Salina Airport Authority for its
comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 2003. This was
the twelfth consecutive year that the Salina Airport Authority has achieved this prestigious award. In
order to be awarded a Certificate of Achievement, a government unit must publish an easily readable
and efficiently organized comprehensive annual financial report (CAFR). This report must satisfy both
generally accepted accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current
comprehensive annual financial report continues to meet the Certificate of Achievement Program's
requirements and we are submitting it to GFOA to determine its eligibility for another certificate.
INT ODUCTOR�'
ACKNOWLEDGEMENTS
The support of the Authority's Board of Directors has been instrumental in the preparation of this report.
The Board has been actively involved in the preparation and review of this report and its committed to
responsible and progressive financial reporting.
Also acknowledged is the assistance of the Authority's auditor, Clubine and Rettele, Chartered, the
Authority's accounting advisors, Harrison & Arnett, Chartered, Saline County Clerk's Office, Gerald
Cook, President of the Salina Area Chamber of Commerce, Rod Franz, Director of Finance for the City
of Salina, the University of Kansas Institute for Public Policy and Business Research and the Kansas
— Department of Human Resources Labor Market Infonnation Services, in the preparation of this report.
Respec4Ro tted,
Timoth, A.
Executive Director
Salina Airport Authority
cc: The City of Salina Board of Commissioners
Michelle R. Swanson
Manager of Administration and Finance
Salina Airport Authority
E
SALINA AIRPORT AUTHORITY
PRINCIPAL OFFICERS AS OF DECEMBER 31, 2004
BOARD OF DIRECTORS
Robert H. Miller
Chairman
Dr. Randy D. Hassler
Vice - Chairman
Stephan C. Ryan
Secretary
John Vanier
Treasurer
Donald E. Morris
Past Chairman
AUTHORITY'S COUNSEL
Greg A. Bengtson
Clark, Mize & Linville, Chartered
Salina, Kansas
AUTHORITY'S BOND COUNSEL
Gilmore & Bell
Kansas City, Missouri
AUTHORITY'S FINANCIAL ADVISOR
George K. Baum & Company
Kansas City, Missouri
AUTHORITY'S AUDITOR
Leslie M. Corbett, C.P.A.
Clubine & Rettele, Chartered
Salina, Kansas
10
SALINA AIRPORT AUTHORITY
Staff Members as of December 31, 2004
ADMINISTRATIVE STAFF
Timothy F. Rogers, A.A.E. Executive Director
Ryan E. Rocha Manager of Operations, Maintenance
and ARFF
Michelle R. Swanson Manager of Administration and Finance
Donald C. Kneubuhl Manager of Special Projects
Kasey L. Fabrizius Administrative Assistant
OPERATIONS, MAINTENANCE, AIRCRAFT RESCUE & FIRE FIGHTING STAFF
Ron Boyd Dale Mattison
Loren Carleton David Nease
Roger K. Colby Rob Pejsha
Gary Hansen
11
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Certificate of
Achievement
_ for Excellence
in Financial
Reporting
Presented to
Salina Airport Authority,
Kansas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2003
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
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14
FINANCIAL SECTION
A $2.4 million grant from the Federal Aviation Administration
provided funding for a new runway surface for the Salina
Municipal Airport's (SLN) primary Runway 17135. Following
- this rehabilitation in 2004, SLN is better prepared to serve in
its role as a mid - continent fuel stop for over 7, 000 business
jets that use the airport each year.
- CLUBINE
RETT'ELE& INDEPENDENT AUDITORS' REPORT
CRARnMM
Ceni(ted Public Aavunumu To the Board of Directors
Salina Airport Authority
_
We have audited the accompanying basic financial statements of Salina Airport
Authority, a component unit of the City of Salina, Kansas, as of and for the years
—
ended December 31, 2004 and 2003, as listed in the table of contents. These
_
financial statements are the responsibility of the Authority's management. Our
responsibility is to express an opinion on these financial statements based on our
—
audit.
Robert I. Clubine, C.P.A.
dated May 3, 2005, on our consideration of Salina Airport Authority's internal
David A. Rettele, C.P.A.
We conducted our audits in accordance with auditing standards generally accepted
Jay D. Langley, C.P.A.
Jon K. Bell, C.P.A.
in the United States of America and the standards applicable to financial audits
Leslie M. Corbett, C.P.A.
Stacy J. Sokol, C.P.A.
contained in Government Auditing Standards, issued by the Comptroller General of
P.O. Box 2267
Salina, Kansas
the United States and the Kansas Municipal Audit Guide, prescribed by the
— Marci K. Fox, C.P.A.
Director of Accounts and Reports, Department of Administration of the State of
Delores K. Longenecker, C.P.A.
Kansas. Those standards require that we plan and perform the audit to obtain
John T. Millikin, C.P.A.
reasonable assurance about whether the financial statements are free of material
Linda A. Svelter, C.P.A.
—
misstatement. An audit includes examining, on a test basis, evidence supporting
— 785 / 825 -5479
the amounts and disclosures in the financial statements. An audit also includes
Salina Fax
assessing the accounting principles used and significant estimates made by
--
management, as well as evaluating the overall financial statement presentation. We
— Ellsworth
believe that our audits provide a reasonable basis for our opinion.
_
In our opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Salina Airport Authority, as of
December 31, 2004 and 2003, and the changes in financial position and cash flows
_
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report
dated May 3, 2005, on our consideration of Salina Airport Authority's internal
control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters.
-- 218 South Santa Fe
The purpose of that report is to describe the scope of our testing and internal
P.O. Box 2267
Salina, Kansas
control over financial reporting and compliance and the results of that testing and
67402 -2267
not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance
with Government Auditing Standards and should be considered in conjunction with
Salina
this report in considering the results of our audit.
— 785 / 825 -5479
Salina Fax
The management's discussion and analysis on pages 17 through 23 is not a require
785 / 825 -2446
part of the basic financial statements but is supplementary information required by
— Ellsworth
accounting principles generally accepted in the United States of America. We have
785 / 472 -3915
applied certain limited procedures, which consisted principally of inquiries of
Ellsworth Fax
785 / 472 -5478
management regarding the methods of measurement and presentation of the
—
required supplementary information. However, we did not audit the information
and express no opinion on it.
—
15
Our audit was conducted for the purpose of forming an opinion on the basic financial statements. The _
Introductory Section and the accompanying schedules and additional information listed in the supplemental
information of the Financial Section and the Statistical Section of the table of contents are presented for
purposes of additional analysis and are not a required part of the basic financial statements of Salina Airport _
Authority. The accompanying schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by U.S. Office of Management and Budget Circular A -133, Audits of States,
Local Governments, and Non - Profit Organizations, and is not a required part of the basic financial statements. _
Such information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole. The Introductory Section and the accompanying schedules and additional _
information listed in the supplemental information of the Financial Section and the Statistical Section of the
table of contents has not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them. _
CLUBINE AND RETTELE, CHARTERED
u'A, v_ RAM_q__'
May 3, 2005
16
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Management of the Salina Airport Authority offers the readers of the Authority's financial statements
this narrative overview and analysis of the financial activities of the Salina Airport Authority for the fiscal
year ended December 31, 2004. We highly encourage readers to consider the information presented here
in conjunction with the information offered in the letter of transmittal within the Introductory Section of
this report.
AIRPORT ACTIVITY AND HIGHLIGHTS
The Salina Air Traffic Control Tower (ATCT) ended 2004 having handled 81,465 aircraft operations.
The decrease in aircraft operations over prior recent years was, in large part, attributable to the closure of
the Aiport's primary runway for a three -month reconstruction period. The most significant reduction in
operations fell in the itinerant general aviation category. Local military training flights increased by 48%
from 2003, which reconciles with the fact that certain units that use Salina for training had returned from
recent deployments. The highest year for the most recent 10 -year period was 2002. Salina continues to
remain strong as a mid - continent refueling stop as is evident in the number of gallons of aviation fuel
delivered by the two tenants of the Authority specializing in the sale of aviation fuel.
The commercial airline industry continues to experience financial stress, especially for the carriers
attempting to serve rural communities such as Salina through the Department of Transportation's (DOT)
_ Essential Air Service Program. The Salina Municipal Airport continues to offer scheduled air service
provided by Air Midwest, a subsidiary of Mesa Air Group. Operating as USAirway Express, Air
Midwest continued to provide three daily flights to the Kansas City International Airport from Salina
during 2004. Since September 11, 2001, enplanements from the Salina Municipal Airport have continued
a slow, steady upward trend.
The changes in the Authority's major airport activity indicators for the past three years are as follows:
Enplanements - Scheduled Air Carrier
% increase /(decrease)
Aircraft Operations - All Categories
% increase/ (decrease)
Fuel Flowage - (gallons delivered)
% increase/ (decrease)
2004
2003
2002
2,974
2,242
2,565
28.2%
-12.6%
- 153.7%
81,465
86,214
95,801
-5.5%
-10.0%
3.1%
3,843,330
4,358,563
4,695,093
-11.8%
-7.2%
6.4%
Further airport activity data can be found in the Statistical Section of this report.
17
AIRPORT INDUSTRIAL CENTER ACTIVITY AND HIGHLIGHTS
The Authority owns 838,748 sq. ft. of leasable manufacturing, warehouse and office space at the Airport
Industrial Center. As further described herein, the building revenue generated by the Authority's leasing
activity constitutes a significant portion of the annual operating revenue budget. During 2004, building
rents equaled 43.2 % or $609,791 of operating revenue. At the end of 2004, the Authority had only two
vacant facilities, representing 4,011 sq. ft. of commercial office space and 66,926 sq. ft. of combined
office and manufacturing space, in its available leasing inventory. This constituted a 92�% occupancy rate.
Subsequent to the end of 2004, the Authority entered into a lease agreement with the State of Kansas for
the lease of the manufacturing facility.
SUMMARY OF OPERATIONS AND CHANGES IN NET ASSETS
Even with the uncertainty in the aviation industry and the slow growth in the economy, the financial
condition of the Authority has held steady in recent years. The Authority has effectively dealt with major
cost increases in employee health benefits including medical insurance premiums, utility costs,
commercial property insurance premiums and other operating expenses. Fortunately, with the diversified
revenue base, including building and land rental from the Authority's Industrial Center, total operating
revenue increased from 2003 to 2004.
2004 2003 2002 _
Operating Revenues $ 1,412,120 $ 1,387,297 $ 1,387,079
Operating Expenses (1,394,095) (1,3001268) (1,182,264)
Excess before Depreciation
and other non - operating
income and expenses 18,025 87,029 204,815
Depreciation (1,151,664) (1,022,474) (974,140)
Excess (loss) before
other non - operating
income and expenses (1,133,639) (935,445) (769,325)
Other Non - Operating Income
and (Expenses) net
814,744
772,257
646,095
Loss before
Capital Contributions
(318,895)
(163,188)
(123,230)
Capital Contributions
2,289,342
434,763
144,005
Increase in Net Assets
$ 1,970,447
$ 271,575
$ 20,77:5
SUMMARY OF OPERATIONS HIGHLIGHTS
Significant items effecting the Summary of Operations and Changes in Net Assets for 2004 are as follows:
• Operating revenues have remained steady in recent years, with 2004 bringing about a 1.8%
increase over 2003. Decreases in building rental revenue are attributable to two large aircraft
hangars being turned back to the Authority and undergoing renovations, one large industrial
building vacancy and one professional office building vacancy. Airfield revenue also decreased
during 2004 due to a decrease of 9% in fuel flowage fee revenue as a result of the Airport's
primary runway being closed for a 3 -month construction project.
• Operating expenses increased by 6% due to the following:
o Utility costs increased by 14% over the prior year due to utility price increases and the
Authority taking on the two additional aircraft hangars.
o Bad debt expense in the amount of $38,355 as a result of one uncollectible account due to
a tenant bankruptcy.
o Airport and Industrial Center property and liability insurance increased by 22% as a result
of additional properties brought on to the Authority's schedule.
• The net result of the above was operating income before depreciation decreased by $69,004 from
2003. Depreciation expense increased due to new construction moving from construction in
progress to an asset in service. The significant item being the newly rehabilitated primary
runway.
• Non - operating income and (expenses) increased by 6% as a result of the increase in ad- valorem
tax revenue (mill levy) received by the Authority as a local taxing entity. Mill levy revenue
increased by $48,609 from 2003.
• Capital contributions received in the form of grants from the Federal Aviation Administration
increased from 2003 by $1,854,579.
19
FINANCIAL POSITION SUMMARY
The changes in net assets may serve over time as a useful indicator of a government's financial position.
The Authority's assets exceeded liabilities by $22,000,495 at the close of 2004. A condensed summary of
the Authority's total net assets at December 31 is shown below.
2004 2003 2002
ASSETS
Current and other assets
Capital assets, net
Total assets
LIABILITIES
Long -term debt outstanding
Other liabilities
Total liabilities
NET ASSETS:
Invested in capital assets,
net of related debt
Restricted
Unrestricted
TOTAL NET ASSETS
$ 5,091,812
27,968,139
$ 33,059,951
$ 8,485,351
2,574,105
$ 11,059,456
$ 18,468,297
85,000
3,447,198
$ 22,000,495
$ 3,676,007
24,954,889
$ 28,630,896
$ 6,246,510
2,354,338
$ 8,600,848
$ 17,711,718
85,000
2,233,330
$ 20,030,048
$ 5,701,810
23,700,563
$ 29,402,373
$ 7,235,433
2,408,467
$ 9,643,900
$ 15,418,378
85,000
4,255,095
$ 19,758,473
By far the largest portion of the Authority's net assets (84 %) reflects its investment in capital assets
including land, buildings, airfield infrastructure and machinery and equipment, less any related debt used
to acquire those assets that is still outstanding. The Authority uses these capital assets to provide services
to citizens; consequently, these assets are not available for future spending. Although the Authority's
investment in its capital assets is reported net of related debt, it should be noted that the resources needed
to repay this debt must be provided from other sources, since the capital assets themselves cannot be used
to liquidate these liabilities.
20
REVENUES
The following chart shows the major sources and the percentage of total operating revenues for the year
ended December 31, 2004:
Gain (loss) on sale
of assets
4%
Building anu a, u
rent
63%
Other revenue
field
I%
A summary of revenues from the year ended December 31, 2004 and the amount and percentage of
change in relation to prior year amounts is as follows:
Further detail regarding the Authority's operating revenue can be found in the Supplemental Section of
this report.
21
Percent
Increase
Percent
of
(Decrease)
Increase
2004
Total
from 2003
(Decrease)
Operating Revenue:
Airfield
$
439,672
17.1%
$ (8,170)
-1.8%
— Building and land rent
890,631
34.6%
(25,954)
-2.8%
Gain (loss) on sale of assets
59,943
2.3%
66,574
1000.4%
Other revenue
21,874
0.8%
(7,627)
-25.9%
_
Total Operating
$
1,412,120
54.8%
$ 24,823
1.8%
— Non - Operating Income:
Mill Levy
$
1,036,579
40.2%
$ 48,609
4.9%
Interest Income
126,949
4.9%
(1,691)
-1.3%
Total Non - Operating
1,163,528
45.2%
46,918
4.2%
_ TOTAL REVENUE
$
2,575,648
100.0%
$ 71,741
2.9%
Further detail regarding the Authority's operating revenue can be found in the Supplemental Section of
this report.
21
EXPENSES
The following chart shows the major expense categories and the percentage of total operating expenses for
the year ended December 31, 2004:
Maintenai
33%
inistrative
67%
A summary of expenses for the year ended December 31, 2004 and the amount and percentage of change
in relation to prior year amounts is as follows:
22
Increase
Percent
Percent
(Decrease)
Increase
2004
of Total
from 2003
Decrease
Operating Expenses
Administrative
$
928,679
53.3%
$ 103,615
12.6%
Maintenance
465,416
26.7%
9,788
-2.1%
Total Operating
$
1,394,095
80.0%
$ 93,827
7.2%
Non - Operating Expense
Interest Expense
$
331,505
19.0%
$ 7,005
2.2%
Amortization of bond costs
17,279
1.0%
(2,574)
-13.0%
Total Non - Operating
$
348,784
20.0%
$ 4,431
1.3%
TOTAL EXPENSES
$
1,742,879
100.0%
$ 98,258
6.0%
22
Further detail regarding the Authority's operating expenses can be found in the Supplemental Section of
this report.
CAPITAL ACQUISITIONS AND CONSTRUCTION ACTIVITIES
The Authority expended $4,218,144 on capital activities during 2004. The most significant item was the
reconstruction of the Airport's primary runway at a cost of $2,612,539. The next major item was the
rehabilitation of two large aircraft hangars at a total cost of $894,840.
Capital asset acquisitions exceeding $1,000 are capitalized at cost and are depreciated over their useful
lives, with the exception of land. The Authority's capital assets are financed using Federal and State
grants with matching Authority funds, debt issuance and Authority revenues. Additional information on
the Authority's capital assets can be found in Note III (F) in the notes to the financial statements and
within the Supplemental Section of this report.
DEBT ADMINISTRATION
The outstanding long -term debt of the Authority was $8,485,351 at December 31, 2004. This debt
consists of general obligation bonds, leasehold revenue bonds, a HUD Community Development Block
Grant loan and City of Salina special assessments. Maturities range from 2006 through 2016. Both
principal and interest are payable from proceeds of a direct financing lease, the general revenues of the
Authority and mill levy revenue. The Authority issued $3,255,000 in general obligation temporary notes
during 2004. Details of the Authority's debt can be found in Note III (E) in the notes to the financial
statements and within the Supplemental Section.
REQUEST FOR INFORMATION
This comprehensive annual financial report is designed to provide detailed information on the Authority's
operations and the financial results of those operations to all those with an interest in the Authority's
_ financial affairs. Questions concerning any of the information provided in this report or request for
additional information should be addressed to the Manager of Administration and Finance by e-mail:
shellis(&salair.org or in writing to, Salina Airport Authority, 3237 Arnold Ave., Salina, KS 67401.
Respectfully su nutted,
T' o y . Ro , A. Michelle R. Swanson
Executive Director Manager of Administration and Finance
23
SALINA AIRPORT AUTHORITY
STATEMENTS OF NET ASSETS
ASSETS
CURRENT ASSETS:
Cash
Accounts receivable
Prepaid expenses
Taxes receivable
Total Current Assets
CAPITAL ASSETS
Land
Buildings, improvements and equipment,
net of depreciation
Construction in progress
Total Capital Assets
OTHER ASSETS:
Net investment in finance lease
Bond issue costs, less accumulated amortization
of $161,581 and $144,302 respectively
Total Other Assets
TOTAL ASSETS
Decembf ,-r 31
2004 2003
$ 2,962,020
$ 1,468,276
107,053
109,996
4,055
8,332
1,052,591
1,023,355
4, 125,719
2,609,959
9,156,560
9,107,226
18,385,174
15,389,523
426,405
458,140
27,968,139 24,954,889
880,030
968,853
86,063
97,195
28,934,232
26,020,937
$33,059,951
$28,630,896
(continued)
See notes to financial statements.
24
_ SALINA AIRPORT AUTHORITY
STATEMENTS OF NET ASSETS
(continued)
LIABILITIES AND NET ASSETS
December 31
2004
2003
CURRENT LIABILITIES:
Accounts payable- operations
$ 24,865
$ 14,120
Accounts payable - capital purchases
116,465
33,649
Accrued payroll and expenses
17,741
22,939
Accrued property tax
58,878
56,929
_
Accrued special assesments
25,047
25,047
Deferred tax revenue
1,052,591
1,023,355
— Deferred maintenance agreement
3,222
2,995
Unearned rental income
71,176
41,064
Accrued interest
137,649
91,550
— Unearned interest - financing lease
50,312
53,767
Current maturities of long -term debt
1,016,159
988,923
— Total Current Liabilities
2,574,105
2,354,338
LONG -TERM LIABILITIES:
Bonds and note payable, less current maturities
8,485,351
6,246,510
Total Liabilities
11,059,456
8,600,848
— NET ASSETS:
Invested in capital assets, net of related debt
18,468,297
17,711,718
Restricted, bond reserve funds
85,000
85,000
— Unrestricted
3,447,198
2,233,330
Total Net Assets
22,000,495
20,030,048
TOTAL LIABILITIES AND NET ASSETS
$33,059,951
$28,630,896
See notes to financial statements.
25
SALINA AIRPORT AUTHORITY
STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN NET ASSETS
OPERATING REVENUES:
Airfield
Building and land rent
Gain (loss) on sale of assets
Other revenue
Total Operating Revenues
OPERATING EXPENSES
Administrative
Maintenance
Total Operating Expenses
OPERATING INCOME BEFORE DEPRECIATION
DEPRECIATION
OPERATING LOSS
NON - OPERATING INCOME AND (EXPENSES)
Mill levy
Interest on investments and financing lease
Interest expense
Total Non- Operating Income and (Expenses)
LOSS BEFORE CAPITAL CONTRIBUTIONS
CAPITAL CONTRIBUTIONS
NET ASSETS
January I to December 31
2004
2003
$ 439,672
$ 447,842
890,631
916,585
59,943
(6,631)
21,874
29,501
1,412,120
1,387,297
928,769
465,326
1,394,095
18,025
1,151,664
(1,133,639)
1,036,579
126,949
(348,784)
814,744
(318,895)
2,289,342
Increase in Net Assets 1,970,447
TOTAL NET ASSETS, beginning of year 20,030,048
TOTAL NET ASSETS, end of year $22,000,495
See notes to financial statements.
825,064
475,204
1,300,268
87,029
1,022,474
(935,445)
987,970
128,640
(344,353)
(163,188)
434,763
271,575
19,758,473
$20,030,048
26
SALINA AIRPORT AUTHORITY
— STATEMENTS OF CASH FLOWS
(DIRECT METHOD)
—
January 1 to ]December 31
2004
2003
CASH FLOWS FROM OPERATING ACTIVITIES:
— Cash received from providing services
$ 1,459,696
$ 1,374,310
Cash paid to employees for services
(472,178)
(462,822)
Cash paid to suppliers for goods and services
(871,435)
(837,530)
Net Cash Provided in Operating Activities
116,083
73,958
— CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition and construction of property, plant and equipment
(4,126,043)
(2,319,249)
Purchases in satisfaction of maintenance agreement
(5,863)
(9,736)
— Proceeds from capital grants
2,289,342
434,763
Proceeds from property tax
1,036,579
987,970
Principal payments on debt
(988,922)
(1,046,750)
— Proceeds of new borrowing
3,255,000
-
Principal received on financing lease
88,823
81,911
Interest received on financing lease
100,623
107,535
— Bond issue costs paid
(6,147)
-
Interest paid on long -term debt
(294,691)
(338,703)
_ Net Cash Provided (Used) in Capital and Related
Financing Activities
1,348,701
(2,102,259)
CASH FLOWS FROM INVESTING ACTIVITIES:
_
Interest received on deposits
28,960
25,475
INCREASE (DECREASE) IN CASH
1,493,744
(2,002,826)
CASH BALANCE - January 1
1,468,276
3,471,102
CASH BALANCE - December 31
$ 2,962,020
$ 1,468,276
(continued)
See notes to financial statements.
27
SALINA AIRPORT AUTHORITY
STATEMENTS OF CASH FLOWS
(DIRECT METHOD)
(continued)
RECONCILIATION OF OPERATING LOSS TO NET
CASH FLOWS FROM OPERATING ACTIVITIES
OPERATING LOSS
ADJUSTMENTS RECONCILING OPERATING LOSS
TO NET CASH FROM OPERATING ACTIVITIES:
Depreciation
Basis of assets sold
CHANGES IN ASSETS AND LIABILITIES:
Decrease (increase) in accounts receivable
Decrease (increase) in accounts payable - operations
Increase (decrease) in accrued payroll and expenses
Decrease (increase) in prepaid expense
Increase (decrease) in accrued property tax and special assessments
Increase in unearned rental income
NET CASH PROVIDED BY OPERATING ACTIVITIES
January I to L)ecember 31
2004 2003
$(1,133,639) $(935,445)
1,151,664
53,230
2,943
10,745
(5,198)
4,277
1,949
30,112
$ 116,083
During 2004, the Authority incurred bad debt expense in the amount of $38,700 and
capitalized interest in the amount of $9,292.
See notes to financial statements.
1,022,474
6,631
(29,405)
(3,048)
1,239
(4,017)
5,742
$ 73,958
C
Salina Airport Authority
NOTES TO FINANCIAL STATEMENTS
December 31, 2004
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Reporting Entity
The Salina Airport Authority was established by the City of Salina, pursuant to Chapter 27, Article 3, of
_ the Kansas Statutes Annotated for the purpose of acquiring surplus federal government property,
specifically the Schilling Air Force Base, located near the City of Salina. The Authority administers the
airport commercial development and rental of associated real estate. The Authority is controlled by a
_ five- member Board of Directors appointed by the Salina City Commission and, in accordance with
Governmental Accounting Standards Board (GASB) Statement No. 14, the Authority is considered to be
a component unit of the City of Salina. The Authority is discreetly presented in the City's
comprehensive annual financial reports.
B. Measurement Focus, Basis of Accounting and Basis of Presentation
The Authority consists of an enterprise fund. Enterprise funds are classified as proprietary funds by the
GASB and are accounted for using a total economic resource measurement focus. The enterprise fund
is used to account for operations that are financed and operated in a matter similar to private business
enterprises. The intent of the Authority is that the costs of providing services on a continuing basis be
recovered through user fees and rents. The financial statements are prepared on the accrual basis of
accounting. Under the accrual basis, revenues are recognized as earned and expenses as incurred. It is
the Authority's policy to follow all Financial Accounting Standards Board (FASB) standards issued
after November 30, 1989, for its proprietary activities unless those new FASB pronouncements conflict
with GASB guidance.
The Authority has implemented a new financial reporting model as required by the provisions of GASB
Statement No. 34, Basic Financial Statements and Management's Discussion and Analysis for State and
Local Governments, as of December 31, 2003.
Revenues from airlines, fuel flowage fees, building and land rents, rental car commissions and the sale
of assets are reported as operating revenues. Transactions, which are capital, financing or investing
related, are reported as non - operating revenues. All expenses related to operating the Airport and
Industrial Center are reported as operating expenses. Interest expense and financing costs are reported
as non - operating expenses.
29
C. Assets, Liabilities and Equity
1. Cash and Investments
The Authority's cash and cash equivalents are considered to be cash on hand, demand deposits and
short-term investments with original maturities of three months or less from date of acquisition. The
Authority held no investments during these years.
2. Receivables
Accounts Receivable. The Authority records revenues when services are provided. All receivables are
shown net of an allowance for uncollectibles.
Property taxes receivable. The determination of assessed valuations and the collections of property
taxes for all political subdivisions in the State of Kansas is the responsibility of the various counties.
The office of the County Appraiser annually determines assessed valuations 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 are levied November
1 of the current year and are a revenue source to be used to finance the budget of the ensuing year. One -
half of the property taxes are due December 20, prior to the fiscal year for which they are budgeted, and
the second half is due the following May 10.
Collection of current year property tax by the County Treasurer is not completed, apportioned nor
distributed to the various subdivisions until the succeeding year, such procedure being in conformity
with governing state statutes. Consequently, current year property tax receivables are not available as a
resource that can be used to finance the current year operations of the Authority. It is the Authority's
practice to record uncollected current year property tax as an account receivable and to record the same
amount as deferred revenue. It is not practicable to apportion delinquent taxes held by the County
Treasurer and, further, the amounts thereof are not material in relationship to the financial statements
taken as a whole.
3. Inventories
The Authority maintains no significant inventory of office and maintenance supplies. These items are
expensed as purchased and no inventory is recorded in these financial statements.
4. Prepaid items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items.
5. Restricted Assets
Certain proceeds of leasehold revenue bonds are classified as restricted assets on the Statement of Net
Assets because their use is limited by applicable bond covenants.
30
6. Capital Contributions and Net Assets
Certain expenditures for airport capital improvements are significantly funded through the Federal
Aviation Administration's Airport Improvement Program (AIP), with certain matching funds of the
Authority. Capital funding provided under the AIP grant program is considered earned as the related
allowable expenditures are incurred. Grants received under the AIP program are reported in the
— Statement of Revenues, Expenses and Changes in Net Assets, as non - operating revenues and expenses
as capital contributions.
7. Capital Assets
Capital assets purchased or constructed are recorded at cost. The cost of normal maintenance and
repairs that do not add to the value of the assets or materially extend assets' lives are not included in
capital assets cost. Capital assets donated to the Authority are recorded at their estimated fair value at
the date of donation. Donated assets include property and equipment transferred to the Authority from
the United States of America, September 9, 1966 and recorded at fair value at that date.
Capital assets are depreciated using the straight -line method over the following estimated useful lives:
Assets
Years
Buildings
5-50
Equipment
5-10
Vehicles
7-10
Airfield
10-30
8. Compensated Absences
Substantially all full -time employees receive compensation for vacations, holidays, illness and certain
_ other qualifying absences. The number of days compensated for various categories of absence is
generally based on length of service. Liabilities relating to these absences are recognized as incurred
and included in accrued expenses. The amount accrued for such liabilities at December 31, 2004 and
2003 was $17,528 and $16,727 respectively.
II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY
A. Budgetary Information
The Authority is specifically exempt from Kansas Budget Law. The Authority is not required to
demonstrate statutory compliance with its annual operating budget. Accordingly, budgetary data is not
included in the financial statements.
B. Compliance With Bond Reserve Requirements
The Leasehold Revenue Bonds Series 1991 proceeds were used to construct a building that is leased to a
state university. The lease is a financing lease that transfers ownership of the building at the end of the
lease. The bond agreement established an $85,000 reserve requirement, which the Authority has met.
31
III. DETAILED NOTES
A. Deposits
The bank balance as of December 31, 2004 and 2003 were entirely insured or collateralized with
securities held by third party banks in the Authority's name.
At December 31, 2004 and 2003, the carrying amount of the deposits were $2,960,196 and $1,468,226
plus $1,824 and $50 cash and undeposited checks on hand respectively, and the bank balance was
$2,994,433 and $1,462,756 respectively. The difference between the carrying amount and the bank
balance is outstanding checks. Of the bank balance, $304,729 and $219,431 respectively was covered
by federal deposit insurance and the remaining $2,689,704 at December 31, 2004 was collateralized by
pledged securities held under joint custody receipts issued by a third -party bank in the Authority's name.
The third -party bank holding the pledged securities is independent of the pledging batik. The pledged
securities are held under a tri -party custodial agreement signed by all three parties: the Authority, the
pledging bank, and the independent third -party bank holding the pledged securities.
SALINA AIRPORT AUTHORITY
COMPARISON OF GROSS CASH BALANCES WITH DEPOSITORY SECURITY
December 31, 2004
Security Required
(100 %)
$ 2,133,305 $ - $ 556,399 $ 2,689,704
Security Provided by Depositories 3,442,360 234,358 5,089,444 8,766,162
Amount Under - secured by Statute $ - $ - $ - $ -
32
UMB-
First Bank
National Bank
Sunflower
Kansas
of America
Bank
Total
Gross Cash Balances
Cash in checking
$ 2,231,070
$ 32,698
$ 32,264
$ 2,296,032
Cash in savings
7,765
656,399
664,164
Less deposits in transit
-
-
-
-
Add uncleared checks
2,235
32,002
-
34,237
Bank Balance
2,233,305
72,465
688,663
2,994,433
Less FDIC Coverage
100,000
72,465
132,264
_304,729
Balances Securable by Collateral
$ 2,133,305
$ -
$ 556,399
$ 2,689,704
Security Required
(100 %)
$ 2,133,305 $ - $ 556,399 $ 2,689,704
Security Provided by Depositories 3,442,360 234,358 5,089,444 8,766,162
Amount Under - secured by Statute $ - $ - $ - $ -
32
B. Receivables
— Receivables as of year -end, including the applicable allowance
for uncollectible accounts, are as
follows:
_
December 31
2004
2003
_ Receivables:
Accounts
$ 108,771
5 111,714
Less: allowance for uncollectibles
(1,718)
_ (1,718)
_
107,053
109,996
Taxes
1,052,591
_ 1,023,355
_ Total
$1,152,644
;6 1.133.351
_ C. Net Investment in Financing Lease
Net investment in financing lease is as follows:
December 31
2004
2003
Total lease payments receivable
$1,326,122
$1,515,568
Less: Unearned income
446,092
546,715
Net investment in financing leases
X34
5
Activity in net investment in financing leases was as follows:
December 31
2004
2003
— Beginning Balance
$ 968,853
$1,050,764
Less: Collected principal
88,823
81.911
Ending Balance
S 8
33
D. Capital Assets
The following is a summary of the changes in capital assets during the current year.
Balance
January 1,
2004 Additions Dispositions Reclassify
Cost
Balance
December 31,
2004
Land
$ 9,107,226
$ 44,289 $
52,003 $ 57,047
$ 9,156,559
Buildings and improvements
7,937,403
917,709
54,462
8,909,574
Airfield and improvements
18,656,046
2,656,039
331,033
21,643,118
Equipment
2,085,149
189,300
23,719
2,250,730
Construction in progress
458,140
410,807
(442,542)
426,405
506,804 - _
30,887
475,917
General obligation
38,243,964
4,218,144
75,722 -
42,386,386
Accumulated depreciation
Buildings and improvements
(3,164,659)
(250,872)
(3,415,531)
Airfield and improvements
(8,946,026)
(763,135)
(9,709,161)
Equipment
(1,178,390)
(137,657) (22,492)
(1,293,555)
General obligations bonds
$6,265,000 $ -
(13,289,075)
(1,151,664) (22,492)
- (14,418,247)
245,000 -
Total Capital Assets
$ 24,954,889
$ 3,066,480 $ 53,230 $
- $ 27,968,139
E. Long -Term Liabilities
Following is a summary of changes in long -term liabilities for year 2004:
34
Balance
Balance
January 1,
December 31,
2004 Additions
Reductions
2004
General obligations bonds
$6,265,000 $ -
$ 830,000
$5,435,000
Revenue bonds
245,000 -
75,000
170,000
KDOCH loan payable
218,629 -
53,036
165,593
Special assessment debt
506,804 - _
30,887
475,917
General obligation
temporary notes
- 3,255.000
-
_3,255.000
7.235.433 $3.255.000
i�
34
The following is a detailed listing of the Authority's long -term debt including general obligation bonds
and temporary notes, revenue bonds and loan payable.
—
Original
Interest
Bonds
Issue
Rates
Outstanding
General Obligation Bonds
— General Obligation 1998, due 2008
$4,440,000
4.05% to 5.50%
$1,770,000
General Obligation 1999 -13, due 2010
555,000
3.90% to 5.20%
320,000
General Obligation 2001 -A, due 2012
1,385,000
4.45% to 5.60%
1,170,000
— General Obligation 2002 -A, due 2012
2,635,000
2.45% to 3.70%
2,175,000
5,435,000
Revenue Bonds
Leasehold revenue 1991, due 2006
$ 850,000
5.00% to 7.25%
170,000
_ Kansas Department of Commerce
and Housing Loan, due 2007
$ 468,542
2%
165,593
Special assessment debt, due 2016
$ 565,235
3.19%
475,917
General Obligation Temporary Notes,
$ 3,255,000
3.12%
3,255,000
due 2005
_
Total
V-5-0-1,5-Al
_ Interest expense in 2004 is as follows:
General obligation bonds
$ 238,054
Revenue bonds
12,286
Loan (KDOCH)
3,886
_
Special assessment debt
18,038
Temporary note
_ 59,241
331,505
Add: Amortization of bonds costs
_ 17,279
Total
:� 348.784
In prior years, the Authority defeased certain general obligation bonds by placing funds in an irrevocable
_ trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account
assets and the liability for the defeased bonds are not included in the Authority's financial statements.
On December 31, 2004, $260,000 of bonds outstanding are considered defeased.
35
Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies and
rental revenues:
Annual debt service requirements to maturity for Kansas Department of Commerce and Housing Loan
to be paid from rental revenues:
Bonds
Interest
Year
Outstanding
Due
Total
2005
$ 850,000
$ 220,434
$1,070,434
2006
850,000
186,866
1,036,866
2007
885,000
154,858
1,039,858
2008
905,000
120,041
1,025,041
2009
490,000
82,951
572,951
2010 -2012
1,455,000
124,891
1,579,891
U 2
Annual debt service requirements to
maturity for revenue
bonds to be paid with
rental revenues:
Bonds
Interest
Year
Outstanding
Due
Total
2005
$ 80,000
$ 12,285
$ 92,285
2006
90,000
6,525
_ 96,525
20
S
Annual debt service requirements to maturity for Kansas Department of Commerce and Housing Loan
to be paid from rental revenues:
36
Loan
Interest
Year
Principal
Due
Total
2005
$ 54,109
$ 3,043
$ 57,152
2006
55,184
1,955
57,139
2007
56,300
846
_ 57,146
44
1>
36
Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental
revenue:
—
Loan
Interest
Year
Principal
Due
Total
— 2005
$ 32,056
$ 18,038
$ 50,094
2006
33,271
16,824
50,095
2007
34,533
15,562
50,095
— 2008
35,841
14,254
50,095
2009
37,200
12,894
50,094
2010 -2013
163,444
36,933
200,3717
— 2014 -2016
139,572
10,711
150,283
S421
Annual debt service requirements to maturity for
temporary notes to be paid from rental revenues:
Loan
Interest
_ Year
Principal
Due
Total
2005
S3,255.M
U4
F. Capital Contributions and Net Assets
Since its inception, the Authority has received capital contributions through Federal and State grants as
follows:
Inception to
Date 2004
2003
Federal $19,063,324 $ 2,289,342 $ 434,7153
State 515,610
Total S 19,578,934 $ 2,289,3424 Z�?
Unrestricted net assets consist of the following: December 31
2004 2003
Designations of unrestricted net assets $ 65,000 $ 50,000
Undesignated unrestricted net assets 3,382,198 2,183.330
Total unrestricted net assets 4 1 12 a 3 3X4
_ The Authority designated $65,000 to be used as an insurance increase reserve or to accelerate future
debt service payments. As of December 31 2004, the reserve had been funded but not used.
37
IV. OTHER INFORMATION
A. Defined Benefit Pension Plan
Plan description — The Authority participates in the Kansas Public Employees Retirement System
( KPERS). The plan is a cost - sharing multiple - employer defined benefit pension plan as provided by
Kansas statutes (KSA 74 -4901 et seq). KPERS provides retirement benefits, life insurance, disability
income benefits and death benefits. Kansas law establishes and amends benefit provisions. KPERS
issues a publicly available financial report that includes financial statements and required supplementary
information. Those reports may be obtained by writing to KPERS (611 S. Kansas Avenue, Suite 100,
Topeka, Kansas 66603 -3803) or by calling 1- 800 - 228 -0366.
Funding policy — KSA 74 -4919 establishes the KPERS member - employee contribution rate at 4% of
covered salary. The employer collects and remits member - employee contributions according to the
provision of section 414(h) of the Internal Revenue Code. State law provides that the employer
contribution rates be determined annually based on the results of an annual actuarial valuation. KPERS
is funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer
contribution rates. The KPERS employer rate established for calendar year 2004 was 322% for January
— June and 3.82% for July through December. The Authority employer contributions to KPERS for the
years ending December 31, 2004, 2003 and 2002 were $15,236, $14,490, and $12,166 respectively
equal to the required contributions for each year.
B. Deferred Compensation Plan
The Authority offers its employees a deferred compensation plan ( "Plan ") created in accordance with
Internal Revenue Code Section 457. The Plan, available to all Authority employees, permits them to
defer a portion of their salary until future years. The deferred compensation is riot available to
employees until termination, retirement, death, or unforeseeable emergency. Plan assets are transferred
to a plan agent in a custodial trust and are not available to the claims of the Authority's general
creditors.
C. Flexible Benefit Plan (I.R.C. Section 125)
The Authority has adopted by resolution a salary- reduction flexible benefit plan ( "Plan ") under Section
125 of the Internal Revenue Code. All Authority employees working more than 20 hours per week are
eligible to participate in the Plan beginning after thirty days of employment. Each participant may elect
to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the
Plan include various insurance and disability benefits.
D. Risk Management
The Authority is exposed to various risks of loss related to torts; theft of, damage to and destruction of
assets; errors and omissions; and natural disasters for which the Authority carries commercial insurance.
Settlements of claims did not exceed coverage for the years ended December 31, 2004 and 2003.
38
E. Contingent Liabilities
The Authority receives significant financial assistance from numerous federal and state governmental
agencies in the form of grants and state pass - through aid. The disbursement of funds received under
these programs generally requires compliance with terms and conditions specified in the grant
agreements and are subject to audit. Any disallowed claims resulting from such audits could become a
liability of the Authority. However, in the opinion of management, any such disallowed claims would
not have a material effect on any of the financial statements of the Authority at December 31, 2004.
F. Environmental Matter
The Authority has been involved in discussions with the Corps of Engineers, Environmental Protection
Agency, and the Kansas Department of Health and Environment relative to the fortner Schilling Air
Force Base (the "Base ") in Salina, Kansas. The Base was operational from 1942 to 11965 when it was
decommissioned and became the current Salina Municipal Airport and Salina Airport Industrial Center.
During its period of operation, the Base was used for large aircraft including B -17's, B -29's, B -47's and
the refueling KC -97's and KC- 135's. The Army Corps of Engineers did a removal of 107 former
underground storage tanks at the former Base in 1995. The Army Corps of Engineers is now evaluating
any other potential environmental contamination at the former Schilling Air Force Base caused by the
Department of Defense. In addition to efforts by the Corps of Engineers, the Environmental Protection
Agency has conducted an Expanded Site Investigation (ESI) to evaluate all sources of potential
contamination at the Site. During the summer of 2003, the Corps of Engineers conducted additional
sampling and investigation work. The Corps of Engineers was scheduled to report on the results of their
work during 2004. The Corps of Engineers report is scheduled to be released during the summer of
2005.
Once the additional information gathering effort has been conducted and all parties know the nature and
_ the extent of the contamination determined to exist on the property owned by the Authority and other
public and private landowners, which make up the Airport Industrial Center, it is anticipated that there
will be a discussion with respect to cleanup options and allocation of responsibility. At this time, it is
_ not known whether the City of Salina or the Airport Authority will have cleanup obligations nor can an
estimate of loss or estimate of cleanup cost be reasonably determined.
_ The Corps of Engineers is in the process of formulating a final work plan for three operable units of the
former Schilling Air Force Base. Although the process is moving slowly, it is believed the Corps of
Engineers will take the lead on remediating contamination left behind by prior military activity.
The Authority also anticipates work in the next year or two related to lead contamination left behind by
an outdoor skeet shooting range located on the southwestern portion of the Airport Industrial Center.
This work is anticipated to be some soil removal of lead contamination caused by lead shot in the
shooting range. At this point, the Authority anticipates conducting any work necessary under the
authority of the Kansas Department of Health and Environment Voluntary Clean -up Program.
G. Rental Income Under Operating Leases
A significant portion of the operating revenue of the Authority is generated through the leasing of
airport and building space to airport fixed base operators and others on a fixed fee as well as a
39
contingent rental basis. Ownership risks are retained by the Authority, and accordingly, such leases are
treated as operating leases.
The following is a schedule of minimum future rentals on non - cancellable operating leases to be
received in each of the next five years and thereafter:
Years Ended
December 31
2005
2006
2007
2008
2009
Later Years
Total
H. Major Customers
$666,033
569,503
311,320
171,562
80,420
990,453
The Authority receives significant operating and financing lease revenue from Raytheon Aircraft
Company, Kansas State University- Salina, Flower Aviation, America Jet, the Schwan Food Company,
and Two Rivers Vending Company. Rentals from these six tenants equals 54% of operating and capital
lease revenue for the year ended December 31, 2004.
I. Non - Operating Income and (Expense)
Net non - operating income and expense consisted of the following for the years ended December 31,
2004 and 2003:
Interest expense
Revenue bond
2004
2003
Mill levy
$1,036,579
$ 987,970
Interest and investment income
(18,038)
(20,336)
Financing lease
97,989
103,165
Other interest
28.960
25,475
Total
1,163,528
1,116,610
Interest expense
Revenue bond
(12,286)
( 22,510)
General obligation bonds
(238,054)
(276,500)
Special assessment debt
(18,038)
(20,336)
Loan (KDOCH)
(3,886)
(5,154)
Temporary Note
(59,241)
-
Amortization of bond issue costs
(17,279)
(19,853)
Total
(348,784)
(344,353)
Net non - operating income
4 44
40
J. Commitment Under Operating Lease
The Authority has entered into certain non - cancellable operating lease agreements, which expire in
2008, for the rental of office equipment. Minimum rentals, on an annual basis are as follows:
Years Ended
December 31
2005
$ 6,180
2006
6,180
2007
5,578
2008
2.918
20,856
41
(THIS PAGE INTENTIONALLY LEFT BLANK)
42
SUPPLEMENTAL INFORMATION
N377SF
I
- ii II is
11 h•IP� '� I s � ^, � � 2.
The Authority completed two major aircraft hangar
rehabilitations during 2004. Both large hangars can be
used to store overnight transient aircraft or transform to
accommodate aviation events.
(THIS PAGE INTENTIONALLY LEFT BLANK)
43
SALINA AIRPORT AUTHORITY
SCHEDULES OF REVENUES, EXPENSES AND CHANGES
IN NET ASSETS
Building and land rent
Agri land rent
January 1 to December 31
59,570
2004 2003
OPERATING REVENUES
632,787
Airfield
218,980
Fuel flowage fees
$ 235,362 $ 257,475
Hangar rent
135,785 126,133
Landing fees
5,950 6,061
Ramp rent
62,575 58,173
Total Airfield
439,672 447,842
Building and land rent
Agri land rent
53,792
59,570
Building rents
609,791
632,787
Land rents
218,980
214,915
Tank rent
8,068
9,313
Total Building and Land Rents
890,631
916,585
Gain (loss) on sale of assets
59,943
(6,631)
Other revenue
ARFF training
4,400
2,450
Commissions
12,574
17,862
Other income
4,900
9,189
Total Other Revenue
21,874
29,501
Total Operating Revenue
1,412,120
1,387,297
(continued)
44
SALINA AIRPORT AUTHORITY
SCHEDULES OF REVENUES, EXPENSES AND CHANGES
IN NET ASSETS
- OPERATING EXPENSES
Administrative
A/E, consultants, brokers
27,914
16,048
_
Airport promotion
26,840
33,087
Bad debt expense
38,709
-
_ Computer network administration
5,493
4,633
Dues and subscriptions
16,700
16,267
Employee retirement
15,236
15,024
- FICA and medicare
34,018
34,189
Industrial development
20,000
20,000
Insurance, property
131,240
107,372
- Insurance, medical
108,495
104,925
Kansas unemployment tax
448
441
Legal and accounting
35,095
35,774
Office salaries
244,312
233,644
Office supplies
12,457
9,941
Other administrative
18,560
11,145
_
Postage
4,697
3,402
Property appraisals
-
4,500
_ Property taxes
144,176
140,959
Special events
12,583
-
Telephone
9,534
10,839
- Travel and meetings
22,262
22,874
Total Administrative Expenses
928,769
825,064
(continued)
45
SALINA AIRPORT AUTHORITY
SCHEDULES OF REVENUES, EXPENSES AND CHANGES
IN NET ASSETS
(continued)
NON - OPERATING INCOME (EXPENSE)
Mill levy
January 1 to 1December 31
987,970
2004
2003
MAINTENANCE EXPENSES
Interest income
28,960
Airfield maintenance
7,761
10,795
Airport security
5,731
2,905
Building maintenance
38,355
41,374
Equipment fuel and repairs
34,499
32,182
Fire services
11,455
21,111
Grounds maintenance
7,397
11,616
Maintenance salaries
222,668
230,417
Other maintenance expenses
13,554
11,184
Snow removal expense
14,102
17,379
Utilities
109,804
96,241
Total Maintenance Expenses
465,326
475,204
Total Operating Expenses
1,394,095
1,300,268
OPERATING INCOME BEFORE DEPRECIATION
18,025
87,029
DEPRECIATION EXPENSE
1,151,664
1,022,474
OPERATING PROFIT (LOSS)
(1,133,639)
(935,445)
NON - OPERATING INCOME (EXPENSE)
Mill levy
1,036,579
987,970
Interest income - capital lease
97,989
103,165
Interest income
28,960
25,475
Interest expense
(331,505)
(324,500)
Amortization of bond costs
(17,279)
(19,853)
Net Non - Operating Income
814,744
772,257
LOSS BEFORE CAPITAL CONTRIBUTION
(318,895)
(163,188)
CAPITAL CONTRIBUTIONS
2,289,342
434,763
INCREASE (DECREASE) IN RETAINED EARNINGS
1,970,447
271,575
NET ASSETS, January 1
20,030,048
19,758,473
NET ASSETS, December 31
$22,000,495
$20,030,048
46
SALINA AIRPORT AUTHORITY
CAPITAL EXPENDITURES
January 1 to December 31
2004
AIRPORT IMPROVEMENTS
Rwy 17/35 Construction AIP -22 2004
$ 2,612,539
Heaves TXW A &B joint relief Hgr 703 ramp
21,224
_
Airfield security fencing
18,776
Rwy 17/35 engineering design 2004
3,500
_ Total Airport Improvements
2,656,039
_ BUILDINGS
Gutter additions & paint exterior Bldg #122
6,700
Heat Pump Geocorem SDC Unit B
1,710
— Thermostat Civil Air Patrol Bldg. #939
3,708
Hangar #509 improvements
547,833
Hangar #703 improvements
347,007
— FBO improvements - America Jet Hgr. #409 pane
6,882
HVAC improvements at Airport Terminal bldg.
1,475
Roof repair Bldg. #1101
2,394
Total Buildings
917,709
— CONSTRUCTION IN PROGRESS
Textile break - arresting barrier design
31,128
Rwy 12/30 rehab design AIP -23
94,585
— Air Traffice Ctrl - Airspace study
26,750
Facility improvement Bldg #1021 A/E
121,503
Executive hangar design
18,476
— CSC design Flower Aviation
30,121
CSC site improvements
88,244
— Total Construction in Progress
410,807
(continued)
47
SALINA AIRPORT AUTHORITY
CAPITAL EXPENDITURES
(continued)
January 1 to December 31
:2004
EQUIPMENT
Multi - agency comm sys AIP 24
49,336
IC -A200 mobil VHF radio
1,034
Mobil radio Airport 1
902
Computer equipment
23,738
Model LX 178 mower
321
Mobil home, Model 2000 Schult
23,900
Mobil belt loader Model 660 1997
23,295
Range & refrigerator, Eagle Med.
1,076
Passenger stair
22,816
Two EXMark mowers
16,532
Repair 1986 IHC Dump
3,324
Heaters for tunnel at terminal
504
Benches (Petoskey) for walkway
1,868
Panel & heaters in terminal walkway
3,100
Microwave and coffee bar
157
Batteries for terminal wheelchair lift
220
Air - conditioner, terminal walkway
4,346
Coffee service service cart
685
VHF /UHF portable radios 13 ea
12,146
Total Equipment 189,300
LAND
Service line repair Airport Industrial Center improvements 1,743
Building demolition #508 4,900
Building demolition Boiler House 7,750
Cox cable south industrial 4,661
Environmental 2004 6,591
Cox cable south industrial 18,644
Total Land 44,289
TOTAL CAPITAL EXPENDITURES $ 4,218,144
48
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION BONDS
SERIES 1998 - A
December 31, 2004
Date of issue: June 29, 1998
Amount of issue: $4,440,000
Interest rate: 4.05% to 5.50%
_ Maurity date: September 1, 2008
Principal paid: $2,670,000
Outstanding balance: $1,770,000
Schedule of Bond Interest and Principal Payments
Due in
Bond
Bond
Year
Interest
Principal
2005
$ 75,662
$ 445,000
2006
56,972
445,000
2007
38,060
440,000
2008
19,140
440,000
$1 89,834
$1,770,000
49
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION REFUNDING BONDS
SERIES 1999 - B
December 31, 2004
Date of isue:
June 29, 1999
Amount of issue:
$ 555,000
Interest rate:
3.900% to 5.20%
Maturity date:
September 1, 2010
Principal paid:
$ 235,000
Outstanding balance:
$ 320,000
Schedule of Bond Interest and Principal Payments
Due in
Bond
Bond
Year
Interest
Principal
2005
$ 15,872
$ 40,000
2006
14,032
30,000
2007
12,623
55,000
2008
9,955
60,000
2009
6,955
65,000
2010
3,640
70,000
$ 63,077
$ 320,000
50
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION IMPROVEMENT BONDS
SERIES 2001 - A
December 31, 2004
Date of issue: October 31, 2001
Amount of issue: $ 1,385,000
Interest rate: 4.4:5% to 5.60%
_ Maturity date: September 1, 2012
Principal paid: $ 215,000
Outstanding balance: $ 1,170,000
Schedule of Bond Interest and Princinal Payments
Due in
Bond
Bond
Year
Interest
Princinal
2005
$ 60,522
$ 120,000
2006
54,222
125,000
2007
48,660
135,000
2008
42,316
140,000
2009
35,316
150,000
2010-2012
56,181
500,000
$297,217
$ 1,170,000
51
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION IMPROVEMENT BONDS
SERIES 2002 - A
December 31, 2004
Date of issue:
August 29, 2002
Amount of issue:
$ 2,635,000
Interest rate:
2.45% to 3.70%
Maturity date:
September 1, 2012
Principal paid:
$ 460,000
Outstanding balance:
$ 2,175,000
Schedule of Bond Interest and Principal Payments
Due in
Bond
Bond
Year
Interest
Principal
2005
$ 68,378
$ 245,000
2006
61,640
250,000
2007
55,515
255,000
2008
48,630
265,000
2009
40,680
275,000
2010-2012
65,070
885,000
$339,913
$ 2,175,000
52
SALINA AIRPORT AUTHORITY
LEASEHOLD REVENUE BONDS
SERIES 1991
December 31, 2004
Date of issue: November 1, 1991
Amount of issue: $ 850,000
Interest rate: 5.00% to 7.25%
Maturity rate: September 1, 2006
Principal paid: $ 680,000
Outstanding balance: $ 170,000
Schedule of Bond Interest and Principal Payments
Due in
Bond
Bond
Year
Interest
Principal
2005
$ 12,285
$ 80,000
2006
6,525
90,000
$ 18,810
$ 170,000
53
SALINA AIRPORT AUTHORITY
KANSAS DEPARTMENT OF COMMERCE AND HOUSING, LOAN PAYABLE
December 31, 2004
Date of loan:
October 1, 1997
Amount of loan:
S 468,542
Interest rate:
2%
Maturity date:
October 1,2007
Principal paid:
S 302,949
Outstanding balance:
$ 165,593
Schedule of Loan Interest and Principal Payments
Due in
Loan
Loan
Year
Interest
Principal
2005
$ 3,043
`6 54,109
2006
1,955
55,184
2007
846
_ 56,300
$ 5,844
$ 165,593
54
_
SALINA AIRPORT AUTHORITY
SPECIAL ASSESMENT DEBT - STREET AND UTILITY IMPROVEMENT
December 31, 2004
Date of loan:
September 11, 2002
Amount of loan:
$ 565,235
Interest rate:
3.79%
Maturity date:
October 1, 2016
Principal paid:
$ 89,318
_
Outstanding balance:
$ 475,917
_
Schedule of Loan Interest and Principal
Payments
Due in
Loan
Loan
—
Year
Interest
Principal
2005
$ 18,038
$ 32,056
—
2006
16,824
33,271
2007
15,562
34,533
2008
14,254
35,841
—
2009
12,894
37,200
2010 -2014
42,223
208,249
2015 -2016
5,421
94,767
$ 125,216
$ 475,917
55
lirml
SALINA AIRPORT AUTHORITY
TEMPORARY NOTES
December 31, 2004
Date of loan: June 1, 2004
Amount of loan: :$ 3,255,000
Interest rate: 3.12%
Maturity date: December 1, 2005
Principal paid: ,�
Outstanding balance: $ 3,255,000
Schedule of Loan Interest and Principal Payments
Due in Loan Loan
Year Interest Principal
2005 S 152,334 :$ 3,255,000
56
Insurance Policy
Employers Insurance of Wausau
on behalf of USAIG
Pol. #WCC- Z91- 547496 -014
National Union Fire Ins. Co. of
Pittsburgh, PA
— Pol. #AP3229456 -10
The Travelers Insurance Co.
— Pol. #P630594X3132- TIL -04
— Pol. #BAJBM21696X7490- TIL -04
Pol. #810306K4932TIL04
St. Paul Fire & Marine
— Pol. #IM08002895
ITT Hartford
— Pol. #37BPEAG4896
Steadfast Insurance Company
Pol. #3746625 -00
Great American Alliance Ins. Co.
Pol. # KST 788- 29 -33 -10
— Gemini Insurance Company
Pol. #UGL0000015 -00
SALINA AIRPORT AUTHORITY
INSURANCE IN FORCE
December 31, 2004
Type of Coverage
Workmen's Compensation
and Employer's Liability
Bodily Injury & Liability
Hangar Keepers
Deluxe Property- Buildings
Business Income
Boiler & Machinery (Property Damage)
Business Income
Vehicles & Equipment
Liability
Medical payments
Uninsured motorists
Inland Marine - Equipment
Crime Policy
Employee theft - per employee
Public Officials & Empl. Liability
Each wrongful act
Aggregate limit
Kansas Underground Storage Tank Liability
Environmental Incident
Annual aggregate
Limit of defense
Law Enforcement Professional Liability
Each person limit
Each occurrence limit
Annual aggregate
Amount of
Coverage
$ 500,000
$ 500,000
$ 500,000
$13,486,643
$ 1,344,105
$ 4,551,745
$ 800,000
$ 1,000,000
$ 5,000
$ 1,000,000
$ 2,157,229
$ 100,000
$ 1,000,000
$ 1,000,000
$ 1,000,000
$ 1,000,000
$ 100,000
$ 1,000,000
$ 1,000,000
$ 1,000,000
57
(THIS PAGE INTENTIONALLY LEFT BLANK)
Ga-.
STATISTICAL SECTION
_ - - --
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3.... s
The two fixed base operators at the Salina Municipal Airport
continue to provide outstanding service to their customers.
In April 2004, Aviation International News ranked America
Jet at SLN as one of the top six FBOs in the country. In May
2004, Flower Aviation was ranked fourth best FBO in the
country by the Professional Pilot magazine.
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Salina Airport Authority
OPERATING EXPENSE HISTORY
Ten Years Ended December 31, 2004
.0
Office &
Total
Administrative
Maintenance
Operating
Fiscal Year
Expense
Expense
Expense
1995
$481,914
$375,594
$857,508
1996
$497,561
$398,287
$895,848
1997
$568,606
$367,530
$936,136
1998
$631,072
$377,551
$1,008,623
1999
$726,651
$377,457
$1,104,108
2000
$740,530
$386,095
$1,126,625
2001
$754,003
$448,189
$1,202,192
2002
$751,734
$430,530
$1,182,264
2003
$825,064
$475,204
$1,300,268
2004
$928,679
$465,416
$1,394,095
.0
Salina Airport Authority
FEDERAL FINANCIAL ASSISTANCE HISTORY
Ten Years Ended December 31, 2004
Federal Aviation
State Commerce &
Administration
Housing
Airport
Community Development
Fiscal Year
Improvement Grants
Block C ;rant
1995
$3,210,933
'
1996
$2,006,786
'
1997
$1,640,967
'
1998
$1,026,918
$841,700
1999
($7,920)
$189,520
2000
2001
2002
$144,005
'
2003
$434,763
2004
$2,289,342
NOTE:
1. The use of Federal Aviation Administration Airport Improvement Program
Grant Funds are limited to funding specific airfield capital improvements.
Airfield capital improvements are detailed in program grant agreements
entered into by the Salina Airport Authority and the Federal Aviation Administration
2. During 1998, the SAA was awarded a Community Development Block
Grant from the Kansas Department of Commerce and Housing in the amount of $1,031,219.
The proceeds were used to reconstruct over 6.5 miles of secondary streets within the
Salina Airport Industrial Center. 50% of the awarded amount was a true grant. The other 50%
was a loan which is recorded as a long term liability under Bonds and Note Payable on the
Statements of Net Assets.
3. During 1999, the SAA closed out two (2) Airport Improvement Projects. AIP No. 18 closeout
resulted in the SAA refunding the Federal Aviation Administation in the amount of $1 1,132.
The SAA received a final reimbursment in the amount of $3,212 to closeout AIP No. 19.
61
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STATISTICAL
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_ Salina Airport Authority
REVENUE BOND COVERAGE
Ten Years Ended December 31, 2004
Fiscal
Pledged
Revenue Bond
Year
Revenue
Debt Service
1995
$189,446
$163,215
1996
$189,446
$163,790
1997
$189,446
$168,962
1998
$189,446
$163,938
1999
$189,446
$163,841
2000
$189,446
$185,013
— 2001
$189,446
$164,420
2002
$189,446
$158,320
2003
$189,446
$151,923
2004
$189,446
$150,283
Notes:
— 1. During 1999, the Series 1990 -B Bonds were refinanced to remove IRS restrictions and
achieve an interest rate savings.
Source: Salina Airport Authority Records
Coverage
1.16
1.16
1.12
1.16
1.16
1.02
1.15
1.20
1.25
1.26
63
Salina Airport Authority
Principal Customers
Year Ended December 31, 2004
% of Operating & Direct
Company Revenue Finance Lease Revenue
Raytheon Aircraft Co.
240,595
15.151%
Kansas State University at Salina
232,802
15.10%
Flower Aviation
144,491
9.317%
JRM Enterprises, Inc, d /b /a America Jet
133,586
8.67%
The Schwan Food Company
85,182
5.53%
Two Rivers Vending Co.,Inc.
49,325
3.20%
Geocore Services
37,920
2.46%
Aerospace Systems & Technologies, Inc.
37,205
2.41%
Federal Aviation Administration
22,350
1.45%
Salina Vortex Corporation
21,588
1.40%
Kejr, Joe
18,442
1.20%
Builders Choice Concrete
17,490
1.13%
Professional Flight Training, LC
17,244
1.12%
Waddle's Manufacturing & Machine
15,875
1.03%
Laas, Brent and Mark
13,429
0.87%
Hertz Corporation
13,421
0.87%
AcuStep, Inc.
13,200
0.86%
Bostater Realty, Inc.
13,002
0.84%
WWC License LLC
12,860
0.83%
Triangle Trucking
12,540
0.81%
Palmer Trucking Co.,
12,120
0.79%
Raytheon Aircraft Parts Inven. & Distr.
12,000
0.78%
Salina Auto Auction
11,964
0.78%
Scrommel Resource Management, Inc.
11,916
0.77%
Mesa Airlines /Air Midwest
10,826
0.70%
Salina Snack Sales
9,720
0.63%
Scientific Engineering
8,700
0.56%
Land of OZ Meats
8,340
0.54%
L & R Farms
8,268
0.54%
Blue Beacon International
8,213
0.53%
Total Operating Lease and Direct Finance Lease Revenue for 2004 was $1,541,623
Source: Salina Airport Authority Records
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Salina Airport Authority
MILL LEVY REVENUE
Ten Years Ended December 31, 2004
Mill Levy
Fiscal Year
Revenue
1995
$406,232
1996
$357,887
1997
$338,058
1998
$322,270
1999
$783,363
2000
$801,237
2001
$795,404
2002
$817,499
2003
$987,970
2004
$1,036,579
Source: Salina Airport Authority Records
^,
— Salina Airport Authority
AIR TRAFFIC, FUEL FLOWAGE AND ENPLANEMENT TRENDS
Ten Years Ended December 31, 2004
Scheduled
Fiscal
Air Traffic
Fuel Flowage
Air Service
Year
Operations
Gallons
Enplanements
1995
68,291
2,435,656
7,813
1996
62,021
2,907,894
8,652
— 1997
68,822
3,577,650
9,153
1998
80,338
3,603,673
12,909
1999
90,400
3,808,886
13,436
2000
87,709
4,472,164
10,270
2001
92,870
4,396,429
6,507
— 2002
95,801
4,695,093
2,565
2003
86,214
4,358,563
2,319
2004
81,465
3,843,330
2,974
Note:
One air traffic operation equals one aircraft
takeoff and landing
Source: Salina Airport Authority Records
67
Salina Airport Authority
MAJOR EMPLOYERS IN THE SALINA /SALINE COUNTY AREA
December 31, 2004
Maior Private Employers
Approx. # Type of
Company Employees Business
Tony's Pizza
2,000
Frozen Foods Manufacturer
Salina Reg. Med. Center
1,082
Health Care
Exide Corporation
800
Battery Manufacturing
Great Plains Manufacturing
650
Farm Implements & Landscaping Equipment
Philips Lighting
600
Fluorescent Lamp Manufacture
Solomon Corp.
300
Electrical Equipment
Lock/Line
420
Cell Phone Insurance
Raytheon Aircraft Co.
234
Aircraft Sub - assemblies Manuf.
Eldorado National, Inc.
255
Medium & Small Shuttle Buses
Wal -Mart
183
Retail
Crestwood Cabinets, Inc.
160
Custom Made Cabinets
OCCK
150
Plastic products, Subcontracting
Advance Auto/Parts America
150
Warehouse Distribution
KASA/KASA Fab
140
Electronic Controls & Steel Fabrication
Lowe's Home Improvement
140
Home Improvement Retail
Exline
130
Structural steel fabrication
Salina Journal
130
Newspaper Publishing
Sunflower Bank
120
Bank
Premier Pneumatics
115
Pneumatic Convey Equipment
Blue Beacon Int'l
104
Truck Wash
PKM Steel
100
Steel Fabrication
Maior Public Employers
Approx. #
Public Orp-anizations Employees Type of Public Body
Unified School District #305 935 School System
City of Salina 471 City Government
Saline County 233 County Government
US Postal Service 128 Postal Service
Kansas State University - Salina 126 Engineering Technology & Aviation Technology
Source: Salina Area Chamber of Commerce
Salina Airport Authority
SALINE COUNTY POPULATION, DEMOGRAPHIC AND LABOR STATISTICS
Year
Population
1994
52,240
1995
52,892
1996
53,140
1997
53,168
_
1998
53,182
1999
53,485
2000*
53,597
v 2001
53,785
2002
53,902
2003
53,737
Saline County Population
54,500
54,000:,8
A 53 :00p0000
0 52;000
51,500
51,000
"tea �c6p �co �Ce � CO,
Year
Note: * Indicates decennial census 100% population counts. Other counts are population estimates.
Demographics
Median Age (2000) 36.1
_ Number of Households (2000) 21,436
Median Household Income (2000) $39,862
Per Capita Income (200 1) $28,168
Employment and Civilian Labor Force (Annual Average)
Year
Civilian Labor
Force
Employed
Unemployed
1994
27,748
26,679
1,069
1995
29,580
28,376
1,204
1996
29,966
28,800
1,166
1997
30,178
29,082
1,096
1998
30,420
29,365
1,055
1999
30,906
30,144
762
2000
30,559
29,703
856
2001
30,093
29,037
1,056
2002
30,569
29,462
1,107
2003
30,866
29,557
1,309
2004
31,897
30,532
1,365
Sources: Economagic.com - Unemployment Levels
Real Estate Center - Saline County Employment
Employment and Civilian Labor
Force
35,000
30,000
25,000
20,000
.•
Salina Airport Authority
SALINE COUNTY EMPLOYMENT DATA
Annual Averaee Unemployment - 1994 -2004
Unemployment
veo.. Unmmnlnvment Rate
1994
1,069
3.90%
1995
1,204
4.10%
1996
1,166
3.90%
1997
1,096
3.60%
1998
1,055
3.50%
1999
762
2.50%
2000
856
2.80%
2001
1,055
3.50%
2002
1,104
3.60%
2003
1,309
4.00%
2004
1,365
3.70%
Saline County Unemployment Rate
History
6.00% ,.
4
zi
.00%
2.00%
0.00%
o0 0A o0 00 00
Emolovment by Industr
2000 1990
Services
11,135
8,935
Retail Trade
7,864
6,332
Manufacturing
6,967
5,969
Government & Gov't Services
4,422
3,823
Construction
(D)
1,715
Finance, Insurance, Real Estate
2,208
1,491
Wholesale Trade
1,714
1,814
Transportation
1,939
1,222
Farm
771
851
Ag. Services
(D)
265
Mining
(D)
262
(D)= suppressed to avoid disclosure
Sources: Institute for Public Policy and Business
Research
University of Kansas, Salina /Saline County Profile Report
United States Census Bureau
70
(THIS PAGE INTENTIONALLY LEFT BLANK)
71
OTHERINDEPENDENT
AUDITORS' REPORTS SECTION
SLNA v 1 a t i o n �A��=
S"," Center
During 2004, the Authority launched the Salina Aviation
Service Center campaign. The SLN Aviation Service center
offers excellent hangar facilities and sites for new
construction. In partnership with the City of Salina and the
State of Kansas, numerous incentives are available to
qualified firms.
CLUBINESL
RETTELE
Corti /ied Public Ammutnu
Robert 1. Clubine, C.P.A.
David A. Rettele, C.P.A.
Jay D. Langley, C.P.A.
Jon K. Bell, C.P.A.
Leslie M. Corbett, C.P.A.
Stacy J. Sokol, C.P.A.
Mardi K. Fox, C.P.A.
Delores K. Longenecker, C.P.A,
John T. Millikin, C.P.A.
Linda A. Suelter, C.P.A.
218 South Santa Fe
_ P.O. Box 2267
Salina, Kansas
67402 -2267
Salina
785 / 825 -5479
Salina Fax
785 / 825 -2446
Ellsworth
785 / 472 -3915
Ellsworth Fax
785 / 472 -5478
REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH
GOVERNMENT A UDITING STANDARDS
To the Board of Directors
Salina Airport Authority
We have audited the basic financial statements of Salina Airport Authority as of
and for the years ended December 31, 2004 and 2003, and have issued our report
thereon dated May 3, 2005. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America, the standards
applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States and the Kansas Municipal Audit
Guide, prescribed by the Director of Accounts and Reports, Department of
Administration of the State of Kansas.
Internal Control Over Financial Reportin>?
In planning and performing our audit, we considered Salina Airport Authority's
internal control over financial reporting in order to determine our auditing
procedures for the purpose of expressing our opinion on the basic financial
statements and not to provide an opinion on the internal control over financial
reporting. Our consideration of the internal control over financial reporting would
not necessarily disclose all matters in the internal control over financial reporting
that might be material weaknesses. A material weakness is a reportable condition
in which the design or operation of one or more of the internal control components
does not reduce to a relatively low level the risk that misstatements caused by error
or fraud in amounts that would be material in relation to the basic financial
statements being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. We noted
no matters involving the internal control over financial reporting and its operation
that we consider to be material weaknesses.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Salina Airport Authority's
basic financial statements are free of material misstatement, we performed tests of
its compliance with certain provisions of laws, regulations, and contracts, grant
agreements noncompliance with which could have a direct and material effect on
the determination of financial statement amounts. However, providing an opinion
on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed
no instances of noncompliance that are required to be reported under Government
Auditing Standards.
72
This report is intended solely for the information and use of the audit committee, management, others within
the organization, the City Commission and federal awarding agencies and pass- through entities and is not
intended to be and should not be used by anyone other than these specified parties.
CLUBINE AND RETTELE, CHARTERED
OLJ'��� �^-��"
a(�
May 3, 2005
73
C 7 M
REPORT REPORT ON COMPLIANCE WITH REQUIREMI3NTS
RLUB
APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL
CONTROL OVER COMPLIANCE IN ACCORDANCE
WITH OMB CIRCULAR A -133
C- ni /ied Public A=mumu
_
To the Board of Directors
Salina Airport Authority
_
Compliance
We have audited the compliance of Salina Airport Authority, with the types of
_
compliance requirements described in the U. S. Office of Management and Budget
Robert I. Clubine, C.P.A.
(OMB) Circular A -133 Compliance Supplement that are applicable to each of its
David A. Rettele, C.P.A.
major federal programs for the year ended December 31, 2004. Salina Airport
Jay D. Langley, C.P.A.
— Jon K. Bell, C.P.A.
Authority's major federal programs are identified in the summary of auditors'
Leslie M. Corbett, C.P.A.
results section of the accompanying schedule of findings and questioned costs.
Stacy J. Sokol, C.P.A.
Compliance with the requirements of laws, regulations, contracts and grants
_
applicable to each of its major federal programs is the responsibility of Salina
Marci K. Fox, C.P.A.
Delores K. Longenecker, C.P.A.
Airport Authority's s management. Our responsibility is to express an opinion on
John T. Millikin, C.P.A.
Salina Airport Authority's compliance based on our audit.
Linda A. Suelter, C.P.A.
_
We conducted our audit of compliance in accordance with auditing standards
generally accepted in the United States of America; the standards applicable to
—
financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; and OMB Circular A -133, Audits of
States, Local Governments, and Non - Profit Organizations. Those standards and
—
OMB Circular A -133 require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance
requirements referred to above that could have a direct and material effect on a
--
major federal program occurred. An audit includes examining, on a test basis,
evidence about Salina Airport Authority's compliance with those requirements and
performing such other procedures as we considered necessary in the circumstances.
--
We believe that our audit provides a reasonable basis for our opinion. Our audit
does not provide a legal determination on Salina Airport Authority's compliance
with those requirements.
218 South Santa Fe
In our opinion, Salina Airport Authority complied in all material respects, with the
P.O. Box 2267
requirements referred to above that are applicable to each of its major federal
Salina, Kansas
_ 67402 -2267
ro ams for the year ended December 31, 2004.
p y
Internal Control Over Compliance
Salina
785 / 825 -5479
The management of Salina Airport Authority is responsible for establishing and
Salina Fax
maintaining effective internal control over compliance with requirements of laws,
— 785 / 825 -2446
regulations, contracts and grants applicable to federal programs. In planning and
Ellsworth
performing our audit, we considered Salina Airport Authority's :internal control
785 / 472 -3915
over compliance with requirements that could have a direct and material effect on a
— Ellsworth Fax
785 / 472 -5478
major federal program in order to determine our auditing procedures for the
purpose of expressing our opinion on compliance and to test and report on the
internal control over compliance in accordance with OMB Circular A -133.
74
Our consideration of the internal control over compliance would not necessarily disclose all matters in the —
internal control that might be material weaknesses. A material weakness is a reportable condition in which
the design or operation of one or more of the internal control components does not reduce to a relatively low
level the risk that noncompliance with applicable requirements of laws, regulations, contracts and grants
caused by error or fraud that would be material in relation to a major federal program being audited may occur
and not be detected within a timely period by employees in the normal course of performing their assigned
functions. We noted no matters involving the internal control over compliance and its operation that we —
consider to be material weaknesses.
This report is intended solely for the information and use of the audit committee, management, others within
the organization, the City Commission and federal awarding agencies and pass- through entities and is not
intended to be and should not be used by anyone other than these specified parties.
CLUBINE AND RETTELE, CHARTERED
cjj.)�� �� P&UJ_4'
May 3, 2005
75
SALINA AIRPORT AUTHORITY
— Salina, Kansas
SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended December 31, 2004
_ Federal Grantor / Pass - through Grantor /
Program or Cluster Title
— U.S. Department of Transportation
Airport Improvement Program
Schedule 1
Pass - through
Federal Entity
CFDA Identifying Federal
Number Number Expenditures
20.106 N/A $ 2,289,342
See notes to the schedule of expenditures of federal awards.
76
SALINA AIRPORT AUTHORITY
Salina, Kansas
NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the Year Ended December 31, 2004
Note 1 Basis of Presentation
The accompanying schedule of expenditures of federal awards includes the federal grant activity of
Salina Airport Authority and is presented on the accrual basis of accounting. The information in this
schedule is presented in accordance with the requirements of OMB Circular A -133, Audits of States,
Local Governments, and Non - Profit Organizations. Therefore, some amounts presented in this
schedule may differ from amounts presented in, or used in the preparation of, the basic financial
statements.
77
SALINA AIRPORT AUTHORITY
Salina, Kansas
Schedule 2
SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
For the Year Ended December 31, 2004
There are no prior audit findings.
WE:3
SALINA AIRPORT AUTHORITY
Salina, Kansas
Schedule 3
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
For the Year Ended December 31, 2004
SUMMARY OF AUDIT RESULTS
1. The auditors' report expresses an unqualified opinion on the financial statements of Salina Airport
Authority.
2. No instances of noncompliance material to the financial statements of Salina Airport Authority were
disclosed during the audit.
3. The auditors' report on compliance for the major federal award programs for Salina Airport Authority
expresses an unqualified opinion on all major federal programs.
4. There were no audit findings relative to the major federal award programs for Salina Airport Authority.
5. The programs tested as major programs included:
20.106 Airport Improvement Program
6. The threshold for distinguishing Types A and B programs was $500,000.
7. The Salina Airport Authority was determined to be a low risk auditee.
FINDINGS - FINANCIAL STATEMENTS AUDIT
None.
79
SALINA AIRPORT AUTHORITY
Salina, Kansas
Schedule 4
CORRECTIVE ACTION PLAN
For the Year Ended December 31, 2004
None required.
M
A 1r 'Otrtt
SA L INA
Ynd4az%u- d-
mom -
The Authority completed a facility renovation design during
2004 for this 66, 000 sq. ft. manufacturing building that will
_
become the Kansas Army National Guard Readiness
Sustainment Maintenance Site.