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Audit - 2011 COMPREHENSIVE ANNUAL FINANCIAL REPORT OF CITY OF SALINA, KANSAS 300 West Ash Street P.O. Box 736 Salina, Kansas 67402-0736 For the Fiscal Year Ended December 31, 2011 Prepared by Department of Finance and Administration of City of Salina, Kansas This page intentionally left blank. CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2011 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal i - iv Organizational Chart v List of Principal Officials vi FINANCIAL SECTION Independent Auditor’s Report on the Basic Financial Statements 1 - 2 Management's Discussion and Analysis 3 - 13 Basic Financial Statements: Government-wide Financial Statements Statement of Net Assets 14 Statement of Activities 15 Fund Financial Statements Balance Sheet - Governmental Funds 16 Reconciliation of the Total Governmental Fund Balance to Net Assets of Governmental Activities 17 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds 18 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balance with the Government-Wide Statement of Activities 19 Statement of Net Assets - Proprietary Funds 20 Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 21 Statement of Cash Flows - Proprietary Funds 22 - 23 Statement of Assets and Liabilities - Agency Funds 24 Notes to the Basic Financial Statements 25 - 51 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2011 TABLE OF CONTENTS - CONTINUED Page FINANCIAL SECTION - CONTINUED Required Supplementary Information Schedule of Funding Progress and Schedule of Employer Contributions 52 Schedules of Revenues, Expenditures and Changes in Fund Balance Budget and Actual (Non-GAAP Basis) General Fund 53 - 55 Flood and Drainage Improvement Fund 56 Tourism and Convention Fund 57 Special Gas Fund 58 Bicentennial Center Fund 59 Sales Tax Capital Fund 60 Combining Statements and Individual Fund Schedules Combining Statements - Nonmajor Funds Fund Descriptions 61 - 62 Combining Balance Sheet - Nonmajor Governmental Funds 63 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 64 Combining Balance Sheet - Nonmajor Special Revenue Funds 65 - 66 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 67 - 68 Combining Balance Sheet - Nonmajor Permanent Funds 69 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Permanent Funds 70 Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Basis): Business Improvement City Fund 71 Neighborhood Park Fund 72 Special Parks and Recreation Fund 73 Special Alcohol Fund 74 Sales Tax Economic Development Fund 75 Fair Housing Fund 76 Arts & Humanities Fund 77 Debt Service Fund 78 Solid Waste Disposal Fund 79 Water and Sewer Fund 80 Sanitation Fund 81 Golf Course Fund 82 Risk Management Fund 83 Workers’ Compensation Reserve Fund 84 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2011 TABLE OF CONTENTS - CONTINUED Page FINANCIAL SECTION - CONTINUED Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Basis) – Continued: Health Insurance Fund 85 Central Garage Fund 86 Information Systems Fund 87 Internal Service Fund Descriptions 88 Combining Statement of Net Assets - Internal Service Funds 89 Combining Statement of Revenues, Expenses, and Changes in Net Assets - Internal Service Funds 90 Combining Statement of Cash Flows - Internal Service Funds 91 - 92 Fiduciary Fund Descriptions - Agency Funds 93 Combining Balance Sheet - Agency Funds 94 Combining Statement of Changes in Assets and Liabilities - Agency Funds 95 Schedule STATISTICAL SECTION Net Assets by Component - Last Nine Years 1 96 Changes in Net Assets - Last Nine Years 2 97 Fund Balances, Governmental Fund - Last Nine Years 3 98 Changes in Fund Balances, Governmental Funds - Last Nine Years 4 99 Tax Revenue by Source, Governmental Funds - Last Nine Years 5 100 Assessed and Estimated Actual Value of Taxable Property – Last Ten Years 6 101 Direct and Overlapping Property Tax Rates – Last Ten Years 7 102 Principal Property Tax Payers 8 103 Property Tax Levies and Distributions 9 104 Direct Sales Rate by Taxing Entity 10 105 Water Sales by Class of Customer 11 106 Ratio of Outstanding Debt by Type 12 107 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2011 TABLE OF CONTENTS - CONTINUED Schedule Page STATISTICAL SECTION - CONTINUED Ratio of Net General Bonded Debt Outstanding 13 108 Direct and Overlapping Governmental Activities Debt 14 109 Legal Debt Margin 15 110 Pledged Revenue Coverage 16 111 Demographic and Economic Statistics 17 112 Principal Employers 18 113 INTRODUCTORY SECTION i DEPARTMENT OF FINANCE TELEPHONE (785) 309-5735 AND ADMINISTRATION FAX (785) 309-5738 Rodney Franz, Director TDD (785) 309-5747 300 West Ash, P.O. Box 736 E-MAIL rod.franz@salina.org Salina, Kansas 67402-0736 Website: www.ci.salina.ks.us October 24, 2012 To the Citizens of the City of Salina, Kansas: The Comprehensive Annual Financial Report of the City of Salina, Kansas (the "City") for the year ended December 31, 2011, is hereby submitted. The City’s Finance Department prepared the report. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of all various funds and account groups of the City. We believe that all disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. Report Format The Comprehensive Annual Financial Report is presented in three sections: Introductory, Financial and Statistical. The introductory section includes a description of the City, including services provided, and explanation of the City’s accounting system and budgetary controls, and a brief discussion of the City’s economic condition and outlook. The City's organizational chart is also included to assist the reader in understanding the structure of the City. The financial section includes the Independent auditor’s report, Management’s discussion & analysis, Government wide financial statements, Fund financial statements, Notes to the financial statements, and Individual and combining statements and schedules. The statistical section includes selected financial and demographic information, generally presented on a multi-year basis. The reader is specifically directed to Management’s Discussion and Analysis (MD&A) which immediately follows the independent auditor’s report. MD&A provides a narrative explanation and overview of significant features and trends reflected by data in the financial statements. Accounting Systems and Internal Controls A critical part of the control system is the City’s comprehensive Budgetary and Financial Policies, which establish guidelines for budgetary and financial practices. The Budgetary and Financial Policies are reviewed by the City Commission and updated each year as a part of the budget process. City staff is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the valuation of costs and benefits require estimates and judgment by management. ii The objective of budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the Fund level, in accordance with State Statutes. However, management control is maintained at the department level. The City uses an encumbrance accounting system, in which estimated purchase amounts are recorded prior to the release of purchase orders to vendors. Open encumbrances are reported as reservations of fund balance at December 31, 2011 in the general fund and the special revenue funds. Various internal compliance procedures are implemented to insure proper implementation of the budget as well as to maintain a degree of accountability for both revenues and expenditures. Independent Audit Kansas Statutes Annotated 75-1122 requires an annual audit of the books of account, financial records and transactions of all administrative departments of the City by independent certified public accountants selected by the City Commission. This requirement has been complied with and the auditor's opinion has been included in this report. Profile of the Community The Town of Salina was organized in 1858 under the Town and Village Act in the State of Kansas, and became a City of the First Class on July 9, 1920. The City has had a Commission-City Manager form of government since 1921. The Commission is comprised of five members elected at large. Each year the commission chooses one member to act as Mayor. The City Manager is appointed by the Commission, and acts as it’s primary agent in accordance with state statute. Other city officers and employees are appointed by the City Manager. The current population of the City is 47,707. The reporting entity includes the City of Salina as well as two discretely presented component units, both proprietary fund types. The Salina Airport Authority operates the Salina Municipal Airport and Airport Industrial Center, and the Salina Housing Authority administers public housing programs within the City of Salina. In addition, the City of Salina participates in two joint ventures with Saline County, the Salina - Saline County Board of Health and the City-County Building Authority. This report includes all funds of the City. The City provides a full range of services including police and fire protection, development services, construction and maintenance of streets, drainage facilities and other infrastructure; recreational activities and cultural events; emergency medical services and convention facilities. In addition to general government activities, the City also provides water, wastewater, sanitation, and solid waste services; therefore, these activities are included in the reporting entity. Economic Outlook and Strength The City benefits from its location at the junction of Interstate Highways 70 and 135. This convenient location has drawn numerous national and regional companies to open manufacturing or distribution centers in or adjacent to the community. Such companies include Pepsi-cola, Exide Battery, Philips Lighting, El Dorado Bus, and Schwans. Currently manufacturing, retail trade, and service industries rank as the three primary employers in the City. No single industry is dominant. The City of Salina retains its position near the top of a list of first class cities with respect to ‘trade pull factor.” The pull factor measures the degree to which a city or county area captures retail trade from outside the jurisdiction. A pull factor of greater than 1 indicates that a city is attracting more retail trade from outside the city/county than it is losing to other counties. It is apparent from this that Salina continues to serve as a regional economic hub in 2011. iii Major Initiatives In November, 2008, voters elected to increase the ¼ cent tax to .40 cent, and extend the sunset for an additional ten years. until March 31, 2018. Ninety-three percent (93%) of the tax is to be used for capital improvements and tax stabilization. The remaining tax is to be used for economic development programs. In 2011 several major projects were initiated, including the reconstruction of Marymount Road, development of a Commercial Subdivision at the interchange of I-135 and Magnolia Road, installation of a Water Meter Automated Meter Infrastructure system, as well as several other smaller subdivision projects. Solid Waste disposal is becoming a stable operation, with 80,000 to 90,000 tons being disposed of each year. The community remains committed to recycling and resource conservation, with several initiatives that began in 1997, including a yard waste recycling and composting program in addition to continuing a mulching mower rebate program. The community currently has about 4,700 yard carts placed to encourage recycling of yard waste as an alternative to disposal. A Pilot residential recycling program was continued in 2004. The curbside recycling program was converted to a permanent service in 2005, with 900 households participating. Addressing fiduciary pressures generated by a recessionary economy has also been a challenge. The primary approach has been to reduce staffing through attrition, after careful evaluation of each vacancy. By the end of 2010, full time staffing had been reduced from 511 to 479. The freeze on salaries was removed in 2011, with an allowance granted for an average 2% merit review. Capital Improvement Planning The City's Capital Improvement Plan (CIP) consists of two components. One component consists of “routine” capital—including vehicle and equipment replacement, technology replacement, building repair and improvement, routine pavement maintenance activity, utility system enhancements and similar items. The amount of funding for these projects may fluctuate based on needs and funding availability, however, planned amounts are allocated over a multi-year period. Source of funding for routine capital is current cash resources from the fund appropriate to the nature of the purchase. The second component of the CIP includes major projects that typically require issuance of bonds or notes, although these projects may also be supplemented with available cash and grant financing. The plan is updated each year after an extensive evaluation of the demands on future financial resources. The Capital Improvement program is scheduled for a major revision as the result of the sales tax to be used for that purpose. Construction Initiated*: 2012 2013 2014 2015 General Fund 700,000$ 780,000$ 780,000$ 780,000$ Sales Tax* 1,720,000 1,795,000 1,730,000 1,555,000 Flood and Drainage Fund - - - - Special Park Fund 100,000 100,000 100,000 100,000 Gas Tax Fund 1,300,000 1,300,000 1,300,000 1,300,000 Solid Waste Fund 145,000 50,000 50,000 50,000 Sanitation Fund 136,300 136,300 136,300 136,300 Water & Wastewater Fund 4,500,000 4,500,000 4,500,000 4,500,000 General Obligation Bonds 4,500,000 - 1,600,000 3,400,000 Revenue Bonds 4,150,000 4,810,000 4,000,000 25,350,000 Other Sources 50,000 50,000 50,000 50,000 Total 17,301,300$ 13,521,300$ 14,246,300$ 37,221,300$ *The year a project is scheduled reflects the year that construction is initiated. Preliminary work (design, acquisition) may precede this date by one or more years, and permanent financing may not occur until one (or more years depending on project magnitude) subsequent to this date. iv Financial Policies The City has adopted a formal set of Budgetary and Financial Policies, addressing such items as fund balances, capital improvements, operating budgets, long term debt management, accounting, auditing and financial reporting, revenues, cash management and investments. Financial policies contribute to financial stability by: 1. Providing consistent guidance in decision making 2. Establishing appropriate levels of fund balances 3. Governing the use of one time or unanticipated resources 4. Providing a multi-year capital improvements process 5. Establishing responsibilities and deadlines for budget preparation 6. Providing for a balanced annual operating budget 7. Providing guidelines on the use of debt, including appropriate purposes and terms 8. Provide a linkage between capital improvement scheduling and long term debt management planning 9. Require annual audits and financial reporting in conformance with Generally Accepted Accounting Procedures 10. Require timely and regular interim financial reporting to the Governing body 11. Insure the safety of cash and near cash resources (timely collection of Accounts Receivable, etc.). Acknowledgments The preparation of the Comprehensive Annual Financial Report was made possible by the dedicated, professional advice and effort of the Mize Houser & Company auditing team. A special thank you needs to be given to Valerie Gebhardt, City Accountant, who is responsible for much of the data assembly and reconciliation. Finally, preparation of this report would not have been possible without the support of the City Commission. Sincerely, City of Salina CITIZENS CITY COMMISSION Norman Jennings, Mayor Barbara Shirley Aaron Householter Kaye J. Crawford Samantha P. Angell City Manager Jason Gage Deputy City Manager Michael Schrage Development Services Gary Hobbie Risk Management Legal Services Clark Mize & Linville Chartered* Greg Bengtson Computer Technology Jack Rolfs Human Relations Gina McDonald Police Jim Hill Fire Larry Mullikin Public Works Mike Fraser Engineering Design/Inspection/ Traffic Fire Suppression EMS Codes/Inspection Public Education Water Plant Division Wastewater Plant Division Utility Division Water Distribution Wastewater Collection Management Internal Affairs Special Enforcement Operations Patrol Investigations Traffic K-9 Administrative Records Communications Training/Community Relations Service Desk Property & Evidence Court Officers Finance/Administration Rod Franz City Clerk Accounting Utility Accounting Treasurer Museum Arts Education Arts Services River Festival Horizons Grants Program Community Art & Design Bicentennial Center Advertising & Events Food & Beverage Operations Arts & Humanities Brad Anderson Parks & Recreation Dion Louthan T/Public Information/Organizational Chart-Publisher 4/19/11 * Contract Position General Services Streets Flood Control Traffic Control Central Garage Sanitation/HHW Landfill Human Resources Natalie Fischer Utilities Martha Tasker Municipal Court Administration Municipal Court Judge Brenda Stoss Building & Neighborhood Services Planning/Comm. Dev. Water Park/Aquatics Golf Course Neighborhood Centers Parks Recreation Forestry Cemetery Building Maintenance v City of Salina, Kansas List of Principal Officials City Commission Norman Jennings, Mayor Barbara Shirley, Vice-Mayor Kaye J. Crawford, Commissioner Aaron Householter, Commissioner Samantha P. Angell, Commissioner City Executive Staff Jason Gage, City Manager Michael Schrage, Deputy City Manager Rodney Franz, Director of Finance and Administration Jim Hill, Chief of Police Larry Mullikin, Fire Chief Michael Fraser, Director of Public Works Jack Rolfs, Director of Computer Technology Gary Hobbie, Director of Development Services Dion Louthan, Director of Parks and Recreation Brad Anderson, Director of Arts and Humanities Gina McDonald, Director of Human Relations Natalie Fischer, Director of Human Resources Martha Tasker, Director of Utilities Greg Bengtson, City Attorney 1 vi FINANCIAL SECTION www.mizehouser.com „ mhco@mizehouser.com 534 S Kansas Ave, Suite 700 „ Topeka, KS 66603-3465 „785.233.0536 p „785.233.1078 f 534 S Kansas Ave, Suite 400 „ Topeka, KS 66603-3454 „785.234.5573 p „785.234.1037 f 7101 College Blvd, Suite 900 „ Overland Park, KS 66210-1984 „913.451.1882 p „913.451.2211 f 120 E Ninth „ Lawrence, KS 66044-2682 „ 785.842.8844 p „785.842.9049 f 900 Massachusetts, Suite 301„ Lawrence, KS 66044-2868 „785.749.5050 p „785.749.5061 f 1 INDEPENDENT AUDITOR’S REPORT ON THE BASIC FINANCIAL STATEMENTS Mayor and City Commissioners City of Salina, Kansas We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of and for the year ended December 31, 2011, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these basic financial statements based on our audit. We did not audit the financial statements of the Salina Airport Authority which statements reflect total assets of $55,525,038 as of December 31, 2011 and total revenues of $4,588,747 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $8,034,589 as of June 30, 2011 and total revenues of $2,442,060 for the year then ended, which are discretely presented component units in the accompanying financial statements. Those financial statements were audited by other auditors whose reports thereon have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Salina Airport Authority and the Housing Authority of the City of Salina is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the “Kansas Municipal Audit Guide.” Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business- type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, at December 31, 2011, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund, Flood & Drainage Improvement Fund, Tourism and Convention Fund, Special Gas Fund, Bicentennial Center Fund and the Sales Tax Capital Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. 2 Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 through 13 and the schedules of funding progress on page 52 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. October 24, 2012 3 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Management Discussion and Analysis This section of the report contains an overview and analysis of the City of Salina’s financial statements for the fiscal year ended December 31, 2011. The information contained here, as well as the information contained in the letter of transmittal, are intended to provide the reader of the financial statements with a well rounded picture of the City’s financial condition. Financial Highlights ♦ Net Assets increased by $5,912,298. Governmental Net Assets declined by $463,769, while Business Type Net Assets increased by $6,376,067. (After prior year adjustments) ♦ Liabilities also increased substantially due to the issuance of $16,120,000 in Revenue Bonds. ♦ Sales taxes grew modestly (4.1%), a reversal of the previous two years of decline. ♦ In Business Type Activities, the Water and Sewer fund saw asset growth, despite increases in operating expenditures, due to good revenue production. ♦ The multi-year decline in fund balance for the General Fund was halted, with a slight recovery. ♦ Tax delinquency rates have declined to a relatively normal level of 2.7%. ♦ Personal property taxes continued to decline as a result of the exemption of business equipment from the tax rolls. ♦ Investment revenues continue to be very minimal, but levels have stabilized. ♦ The unemployment rate declined from 6.4% to 6.3%. The Basic Financial Statements The basic financial statements of the City include the government-wide financial statements and the fund financial statements. The notes to the financial statements follow the basic financial statements, and are essential for the reader’s understanding of the financial statements. Other supplementary information, including the combining schedules for non-major funds and the budgetary comparison reports, are at the end of this report to provide additional information for the reader. Government-wide Financial Statements The government-wide financial statements present the results of the City’s operations using the accrual basis of accounting, the same basis as is used by private sector businesses. These statements focus on the long-term financial picture of the City as a whole The Statement of Net Assets reports all of the City’s assets and liabilities. Net assets, the difference between assets and liabilities, are an important measure of the City’s overall financial health. Net assets represent the total accumulated and unused resources available to the City for the purpose of providing services. Over time, the increases and decreases in net assets can be monitored to determine if the City’s financial position is improving or deteriorating. The Statement of Activities shows how the net assets have changed during the fiscal year. One unique feature of this statement is how it shows the revenues and expenses related to specific programs and how much of those programs were supported by the general taxes of the City. Since this statement is prepared on the accrual basis of accounting, all revenues and expenses are included, regardless of when cash is actually received. Both statements show the operations of the City broken down between governmental and business type activities. Governmental activities are the operations of the City generally supported by taxes, such as Public Safety (Police, Fire, and EMS), Public Works, Public Health, and Culture & Recreation. Business-type Activities are operations of the City that are intended to recover a significant portion of their costs through user fees and charges. These include Water and Sewer, Refuse collection, the Golf Course, and operation of the City Solid Waste Facility. The government-wide financial statements include the Salina Airport Authority and Salina Housing Authority as discretely presented component units of the City. Note 1, item A in the Notes to the Financial Statements provides a more complete explanation of the relationship between these entities and the City of Salina. 4 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Fund Financial Statements The City uses three types of funds to manage its resources: governmental funds, proprietary funds, and fiduciary funds. A fund is a fiscal entity with a set of self-balancing accounts recording financial resources together with all related liabilities and residual equities and balances, and the changes therein. These accounting entities are separated for the purpose of carrying on specific activities or attaining certain objectives in accordance with regulations, restrictions, or limitations. Governmental fund financial statements are prepared on a modified accrual basis. Under this basis, revenues are recognized when they become measurable and available, and expenditures are recognized when the related fund liability is incurred with the exception of long term debt and similar items which are recorded when due. The focus is on the short-term financial picture of the operations of the individual fund, rather than long-term citywide view provided by the government-wide statements. Major Governmental Funds are presented in individual columns, while Non-major Governmental Funds are aggregated into an “Other Governmental Funds” column. A combining statement for the Non-major funds is presented as supplementary information in the back of the report. The information presented in these statements can be compared to the governmental activities information in the government-wide statements. The reconciliation at the end of the fund financial statements details the relationship between the two types of financial statements. Proprietary funds fall into two categories: enterprise funds and internal service funds. All proprietary funds are prepared on the accrual basis of accounting, and are used to account for business-type activities. Enterprise fund statements present the same information that is in the government-wide statements for business-type activities, but in greater detail. The City of Salina currently operates four enterprise funds: Sanitation, Solid Waste Disposal, Golf Course, and Water and Sewer. Internal Service funds are used to account for the cost of operations shared by various departments of the City. The city operates five internal service funds. Three of these are for self-insurance activity: Risk Management, Workers' Compensation Reserve, and Health Insurance. The remaining two account for our Information Systems activity and for the Central Garage operation. A combining statement for these internal service funds can be found in the supplementary information following the notes to the financial statements. Fiduciary funds are used by the City to account for resources held by the City for a third party. Agency funds are a special class of Fiduciary Fund in which liabilities always equal assets, and thus there are no net assets. The City of Salina operates nine Agency funds. Schedules for these funds may be viewed in the supplementary section of this report. Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used. Permanent funds operated by the City include the Cemetery and Mausoleum Endowments and the Tri-centennial Commission fund. Notes to the Financial Statements The notes to the financial statements are an integral part of the basic financial statements since they contain valuable additional information necessary for gaining a complete understanding of the City’s financial statements. Other Information In addition to the basic financial statements and the notes described above, this report also presents the general fund and major special revenue fund’s budgetary statements as required supplementary information directly following the notes to the basic financial statements. The combining statements for the non-major funds are shown after the required supplementary information. Finally, the statistical section includes selected statistical data about the City’s operations and economy. The City as a Whole This section will identify, discuss, and analyze significant differences and trends that will enhance the reader’s understanding of the City’s financial position. 5 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Tax Base and Economy The City of Salina relies on three major groups of revenues to support it’s operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for service, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to Governmental Activities, while charges for services apply to both Governmental (36%) and Business-type (64%) activities. Charges for Services account for about 46% ($37,249,107) of the City’s revenue stream. Charges for Service depend on both the rate that is set for the activity, as well as the volume of services provided. The following table illustrates service volume and rate adjustments for some of the more significant services for the year ending December 31, 2011. Description 2010 Volume 2011 Volume Change Rate Comments Golf Course: Rounds, 18 Hole 30,420 26,782 (3,638) No fee increase Rounds, Par 3 3,707 3,368 (339) No fee increase Annual Golf Members 33 18 (15) No fee increase River Festival Gate Count 64,835 72,664 7,829 $2.00 per button increase Development Services Inspections Performed 6,391 5,473 (918) Permits Issued 3,031 2,678 (353) Finance/Administration EMS Runs Billed 3,473 4,003 530 Five percent increase Licenses Issued 1,296 1,358 62 Water Billings Issued 238,635 239,448 813 Water Metered (in Billion Gallons)1.97 NA Parks and Recreation Kenwood Cove Attendance 119,000 111,063 (7,937) No fee increase Youth Teams 164 178 14 Adult Teams 300 308 8 Special Pops Programs 109 114 5 Trips/Tours offered 31 54 23 Youth Tournament Teams 424 388 (36) Adult Tournament Teams 140 164 24 Public Works Sanitation Customers 14,520 14,604 84 3% fee increase Landfill Tonnage 94,907 96,178 1,271 No fee increase Street Cut and Excavation Permits 181 201 20 Concrete Permits 155 143 (12) Water and Wastewater Water Treated (Billion Gallons)2.30 2.30 - $2.00 per month per typical user Wastewater Treated (Billion Gallons)1.50 1.45 (0.05) $2.00 per month per typical user **In general, if not specified in the table, rates were adjusted an average of about 2% for most services. Sales taxes are the next largest component of the revenue mix, providing 20% ($15,847,742) of the total revenues. This is a slightly smaller portion than 2010 (21%). The City receives a .90% City-wide sales tax, and also a portion of the County-wide 1% sales tax. Forty-four percent, (a rate of .4%) of the City-wide sales tax is required to be used for special purposes. The remaining .5%, along with the City portion of the Countywide tax is available for general purposes. Total revenue from the sales tax in 2011 was $ 15,847,742, up from $ 15,224,888 in 2010. This 4.1% increase follows a 4.7% decline (after adjustment for a change in rate) for 2010. 6 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) A number of factors affect the sales tax. First are the regional and local economic conditions and relationships. These are most directly reflected in the proceeds of the City-wide tax, which grew by 5.8%. The City was unfavorably affected by the formula used to distribute the County-wide sales tax among participating jurisdictions (only Cities and the County participate, School and other special districts do not). The formula is based, in part, on the property tax efforts of each jurisdiction. Because the portion of the overlapping levy attributable to the City of Salina was increased for 2011, the City’s allocated portion of the County-wide sales tax was decreased from 63.3% in 2010 61.85% in 2011. Total Countywide taxes received in 2011 were approximately $6,755,629. The change in formula thus resulted in a shift of about $158,000 from the City of Salina to Saline County in 2011. On November 4, 2008, Salina voters approved an increase of the special purpose .25% tax to a .40% tax. The extended tax is to sunset March 31, 2018. The tax was also modestly re-purposed, for Capital and Economic Development purposes only. Property Taxes are the third major component of the revenue mix, accounting for 16% ($11,711,254) of total revenues. Property taxes consist of two components: Real estate and personal property taxes which are determined by the mill levy set by the city and the assessed value of the property; and motor vehicle taxes, which are established by a countywide average tax rate, and the assessed value of the vehicle. Real estate assessed value increased by 2.4%. The total City mill levy was increased slightly, by .2%, while the overlapping levy increased by .3% Tax delinquency decreased from 5.6% to 2.7%. Personal property value continued to slide, presumably as a result of removing business equipment from the tax base. Personal property value has now dropped to $19.9 million from it’s peak of $39.7 million in 2007. At the 2011 tax rate, this exemption is equivalent to $514,546 in lost revenue for 2011. Motor Vehicle value decreased by 5.8%. Motor vehicle taxes are distributed based on a formula using prior year’s tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Fiscal (Budget) Year 2010 2011 Change Real Estate and Personal Property Assessed Valuation 397,470,626$ 402,354,576$ 4,883,950$ City Mill Levy ($ per $1,000) Operating (General Fund)20.082 19.236 [0.846] Debt Service 5.773 6.786 1.013 Total City Rate 25.855 26.022 0.167 Total Overlapping Levy 124.707 128.498 3.791 Percent of Total Taxes Collected 94.4% 97.3% 2.9% Ratio of Total Taxes (including delinquent collections) to taxes le 97.1% 99.9% 2.8% Motor Vehicle Valuation 50,330,252$ 47,406,072$ [2,924,180]$ Comparative Property Values and Tax Levy Rates The unemployment rate in Saline County declined very slightly from 6.4% in 2010 to 6.3% in 2011, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force increased to 26,656, a change of 1.5%. In 2011, the top ten property taxpayers accounted for 11.22% of total assessed value. This is slightly more concentrated than ten years ago (at 11.18%) 7 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Statement of Net Assets Net assets may, over time, provide an indicator of a government’s financial position. In the case of the City of Salina, assets exceeded liabilities by $187,641,000 at December 31, 2011. This represents an increase in net assets of $6,519,000 over 2010. A comparative condensed Statement of Net Assets at December 31, 2010 and 2011: 2010 2011 2010 2011 2010 % of Total 2011 % of Total 2011 Change Cash and Investments 13,935$ 17,475$ 17,530$ 28,047$ 31,465$ 12% 45,522$ 16% 14,057$ Other Current Assets 12,309$ 12,670$ 2,025$ 2,344$ 14,334$ 5% 15,014$ 5% 680$ Noncurrent (Capital) Assets 166,122$ 164,515$ 58,273$67,639$224,395$83%232,154$ 79%7,759$ Total Assets 192,366$ 194,660$ 77,828$98,030$270,194$100%292,690$ 100%22,496$ Current Liabilities 21,918$ 21,687$ 3,352$ 2,944$ 25,270$ 29% 24,631$ 23% (639)$ Noncurrent Liabilities 52,650$ 55,639$ 10,538$24,772$63,188$ 71%80,411$ 77%17,223$ Total Liabilities 74,568$ 77,326$ 13,890$27,716$88,458$ 100%105,042$ 100%16,584$ Net Assets: Invested in capital assets, net of related debt 113,001$ 109,289$ 48,079$ 44,227$ 161,080$ 89% 153,516$ 82% (7,564)$ Restricted for Permanent Funds 417$ 427$ -$ -$ 417$ 0% 427$ 0% 10$ Restricted for Debt Service 572$ 1,285$ 1,553$ 1,553$ 2,125$ 1% 2,838$ 2% 713$ Unrestricted 3,808$ 6,333$ 14,306$24,534$18,114$ 10%30,867$ 16%12,753$ Total Net Assets 117,798$ 117,334$ 63,938$70,314$181,736$100%187,648$ 100%5,912$ Percent of Total Assets 65% 63% 35% 37% 100%100% Cash and Investments as a percentage of current liabilities 64% 81% 523% 953% 125%185% Governmental Activities Business-Type Activities Total Primary Government The largest segment of the City’s net assets (82%) reflects its investment in capital assets (land, buildings, streets and drainage facilities, utility plant, vehicles, equipment, etc.), less any debt used to acquire those assets that is still outstanding. These assets are used to provide services to citizens. As a result, resources required to retire related debt can not come from liquidation of the asset. Such resources generally must be provided from other sources, such as future taxes or user charges. A small portion of net assets (2%) is restricted for debt service. The remainder (unrestricted) of net assets (16%) may be used to meet the City’s obligations to citizens and creditors. This is comparable to previous years. In 2011, the amount invested in capital assets net of related debt decreased by $7,564,000. Unrestricted net assets increased by $12,573,000. These represent diverse changes throughout the financial statement: Increases in cash in both Governmental and Business type activities, a decrease in Capital assets in Governmental Activities and an increase in Capital Assets in Business type activities. Total liabilities remained much the same in Governmental Activities, but increased significantly in Business Type Activities, attributable to the issuance of Revenue Bonds to finance the Advanced Meter Infrastructure project. During the year ended December 31, 2011, there were several significant events that changed the balance of net assets. Governmental Activities. 2011 saw an increase in cash and investments in Governmental funds. This is due to controlled expenditures for both capital and operating requirements as well as improved revenues from the Sales Tax. 8 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Business-type Activities: The Water and Wastewater fund has a dominant influence on the Business Type Activities net assets. The increase in net assets is due to good revenue production and controlled expenses. Statement of Activities A condensed statement of activities is shown below. 2010 2011 2010 2011 2010 % 2011 %2010 - 2011 Program Revenues:Change Charges for Services 12,306$ 13,470$ 22,419$ 23,779$ 34,725$ 48% 37,249$ 47% 2,524$ Operating Grants and Contributions 3,415$ 2,907$ 202$ 3,415$ 5% 3,109$ 4% (306)$ Capital Grants and Contributions 3,804$ -$ 0% 3,804$ 5% 3,804$ General Revenues: Property Taxes 11,179$ 11,712$ 11,179$ 16% 11,712$ 15% 533$ Sales Taxes 15,225$ 15,848$ 15,225$ 21% 15,848$ 20% 623$ Other Taxes 6,298$ 6,389$ 6,298$ 9% 6,389$ 8% 91$ Investment Revenue 81$ 77$ 67$ 83$ 148$ 0% 160$ 0% 12$ Other Miscellaneous 565$ 872$ 341$ 330$ 906$ 1%1,202$ 2%296$ Total Revenues:49,069$ 51,275$ 22,827$28,198$71,896$ 100%79,473$ 100%7,577$ Expenses:-$ General Government 10,845$ 13,615$ 10,845$ 15% 13,615$ 18% 2,770$ Public Safety 18,592$ 18,579$ 18,592$ 25% 18,579$ 25% (13)$ Public Works 9,782$ 9,858$ 9,782$ 13% 9,858$ 13% 76$ Public Health and Sanitation 1,365$ 1,368$ 1,365$ 2% 1,368$ 2%3$ Culture and Recreation 6,572$ 6,693$ 6,572$ 9% 6,693$ 9% 121$ Planning and Development 3,715$ 3,450$ 3,715$ 5% 3,450$ 5% (265)$ Solid Waste Disposal 2,925$ 2,945$ 2,925$ 4% 2,945$ 4% 20$ Water and Sewer 14,050$ 13,597$ 14,050$ 19% 13,597$ 18% (453)$ Sanitation 2,261$ 2,261$ 2,261$ 3% 2,261$ 3% -$ Golf Course 817$ 825$ 817$ 1% 825$ 1%8$ Interest on Long Term Debt 2,257$ 1,650$ 2,257$ 3%1,650$ 2%(607)$ Total Expenses 53,128$ 55,213$ 20,053$19,628$73,181$ 100%74,841$ 100%1,660$ Increase in net assets before transfers (4,059)$ (3,938)$ 2,774$ 8,570$ (1,285)$ 4,632$ 5,917$ Transfers and other extraordinary items 92$ 2,362$ (92)$ (2,163)$ -$ 199$ 199$ Increase in Net Assets (3,967)$ (1,576)$ 2,682$ 6,407$ (1,285)$ 4,831$ 6,116$ Net Assets, January 1 119,854$ 117,798$ 61,270$ 63,938$ 181,124$ 181,736$ 612$ Prior Period Adjustment 1,911$ 1,112$ (14)$ (31)$ 1,897$ 1,081$ (816)$ Net Assets, January 1, restated 121,765$ 118,910$ 61,256$63,907$183,021$182,817$ (204)$ Net Assets December 31 117,798$ 117,334$ 63,938$70,314$181,736$187,648$ 5,912$ Condensed Comparitive Statement of Activities, 2010 and 2011 (In $000's) Governmental Activities Business-Type Total Primary Government Governmental Activities. Total expenses for Governmental Activities for the year ending December 31, 2011 were $55,213,000 compared to $53,128,000 in 2010. Governmental activities represent 74% of the City’s total expenses. The largest element of Governmental Activity expense was Public Safety, accounting for 34% of the total. Charges for service attributable to Governmental Activities totaled $13,470,000 and operating grants for those purposes were $2,907,000. The balance was funded by general revenues. Sales taxes accounted for $15,848,000 of the general revenues, with property taxes providing $11,712,000. Net assets decreased by $1,576,000 as a result of Governmental Activities. Business Type Activities. Total expenses for Business-type Activities for the year were $19,628,000, or 26% of the City’s total expense. The majority of this expense ($13,597,000) is attributable to Water and Sewer operations, with the other activities (Solid Waste Disposal, Sanitation, and Golf Course) costing a combined total of $6,031,000. These activities are primarily supported by user charges, with only $413,000 coming from general revenues, representing largely the interest earned on fund balances held by the City. Net assets increased by $6,407,000 as a result of Business-type Activity operations. 9 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds for the years ended December 31, 2010 and December 31, 2011. Fund 2010 2011 Change General 3,617,181$ 3,836,238$ 219,057$ Flood and Drainage 188,526$ 907$ (187,619)$ Tourism and Convention 367,197$ 340,473$ (26,724)$ Special Gas 1,484,641$ 1,417,743$ (66,898)$ Bicentennial Center 46,048$ 142,881$ 96,833$ Sales Tax Capital 2,154,367$ 1,397,571$ (756,796)$ Debt Service 571,873$ 1,285,130$ 713,257$ Capital Projects (2,610,001)$ 390,852$ 3,000,853$ Other Governmental Funds 2,981,652$ 2,792,546$ (189,106)$ Total 8,801,484$ 11,604,341$ 2,802,857$ Governmental Fund Balances, 2010 and 2011 Total Governmental Fund balances increased by $2,802,857. The reasons for these changes are varied. The most significant change is in the Capital Projects Fund, and is largely the result of Project financing activities. General Fund balances stabilized and grew slightly in 2011. The Flood and Drainage Fund was scheduled for depletion in 2011. The Special Sales Tax Capital Outlay Fund shows a significant reduction in fund balance due to an aggressive capital improvements program, most notably the reconstruction of Marymount Road. Revenues and Expenditures: The following table shows a comparison of revenues and expenditures (including other sources and uses) for major funds for the years ending December 31, 2010 and 2011. Fund 2010 2011 Change Revenues (Including Other Financing Sources) General 34,303,574$ 35,557,304$ 1,253,730$ Flood and Drainage Improvement 1,312$ 18,473$ 17,161$ Tourism and Convention 1,332,671$ 1,306,102$ (26,569)$ Special Gas 1,569,648$ 1,546,045$ (23,603)$ Bicentennial Center 1,702,066$ 1,656,762$ (45,304)$ Sales Tax Capital 3,815,966$ 3,777,286$ (38,680)$ Debt Service 7,943,865$ 6,844,521$ (1,099,344)$ Capital Projects 5,552,906$ 9,896,198$ 4,343,292$ Other Governmental Funds*2,954,257$ 2,800,508$ (153,749)$ Total Revenues 59,176,265$ 63,403,199$ 4,226,934$ Less Other Sources 12,157,284$ 14,581,655$ 2,424,371$ Revenues, net of other sources 47,018,981$ 48,821,544$ 1,802,563$ Expenditures (Including Other Financing Uses) General 35,773,774$ 35,494,671$ (279,103)$ Flood and Drainage Improvement 3,223$ 206,092$ 202,869$ Tourism and Convention 1,228,789$ 1,332,826$ 104,037$ Special Gas 2,138,057$ 1,612,943$ (525,114)$ Bicentennial Center 1,768,246$ 1,559,929$ (208,317)$ Sales Tax Capital 3,289,009$ 4,534,082$ 1,245,073$ Debt Service 8,107,283$ 6,131,264$ (1,976,019)$ Capital Projects 15,936,269$ 6,895,345$ (9,040,924)$ Other Governmental Funds*2,829,609$ 2,989,614$ 160,005$ Total Expenditures 71,074,259$ 60,756,766$ (10,317,493)$ Less Other Uses 4,983,834$ 5,692,077$ 708,243$ Expenditures, net of other uses 66,090,425$ 55,064,689$ (11,025,736)$ Consolidated Statement of Revenues and Expenditures for Major Funds, 2010 and 2011 Modified Accrual Basis 10 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Total revenues and other sources increased by $4,226,934 from 2010 to 2011. The largest component of this change was in the Capital Projects accounts, and is related to Construction activities. Other changes include an increased General supplement for the Bi-Centennial Center and changes in temporary note activity. Expenditures generally declined, with the notable exception of the Sales Tax Capital Fund, which was committed to the Marymount Road reconstruction, along with some smaller projects. Proprietary Funds The City of Salina operates four Enterprise Funds as well as five Internal Service Funds. A summarized comparative Statement of Net Assets follows for each Enterprise Fund: 2010 2011 Change 2010 2011 Change Current Assets 3,887$ 3,611$ (276)$ 14,755$ 25,988$ 11,233$ Capital Assets 4,211$ 3,495$ (716)$ 53,075$ 63,184$ 10,109$ Total Assets 8,098$ 7,106$ (992)$ 67,830$ 89,172$ 21,342$ Current Liabilities 1,010$ 528$ (482)$ 2,091$ 2,363$ 272$ Noncurrent Liabilities 3,192$ 2,868$ (324)$ 7,161$ 21,640$ 14,479$ Total Liabilities 4,202$ 3,396$ (806)$ 9,252$ 24,003$ 14,751$ Assets Invested in Capital, net of related debt 2,294$ 2,276$ (18)$ 45,567$ 40,991$ (4,576)$ Restricted Net Assets -$ -$ -$ 1,553$ 1,553$ -$ Unrestricted Net Assets 1,602$ 1,434$ (168)$ 11,458$ 22,625$ 11,167$ Total Net Assets 3,896$ 3,710$ (186)$ 58,578$ 65,169$ 6,591$ Current Assets as a percentage of current liabilities 385% 684%706% 1100% 2010 2011 Change 2010 2011 Change Current Assets 846$ 761$ (85)$ 66$ 32$ (34)$ Capital Assets 639$ 646$ 7$ 348$ 314$ (34)$ Total Assets 1,485$ 1,407$ (78)$ 414$ 346$ (68)$ Current Liabilities 203$ 29$ (174)$ 48$ 24$ (24)$ Noncurrent Liabilities 123$ 156$ 33$ 61$ 109$ 48$ Total Liabilities 326$ 185$ (141)$ 109$ 133$ 24$ Assets Invested in Capital, net of related debt 639$ 646$ 7$ 348$ 314$ (34)$ Restricted Net Assets -$ -$ -$ -$ -$ -$ Unrestricted Net Assets 520$ 576$ 56$ (43)$ (101)$ (58)$ Total Net Assets 1,159$ 1,222$ 63$ 305$ 213$ (92)$ Current Assets as a percentage of current liabilities 417% 2624%138% 133% Comparative Summary Statement of Net Assets; 2010 - 2011 (in $000's) Solid Waste Disposal Water and Sewer Sanitation Golf Course 11 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) The Golf Course Fund shows declines in total net assets, due primarily to a reduction in current assets, however, capital assets also decline. Unrestricted net assets in this fund reflect a $101,000 deficit balance, up from $43,000 a year ago. The Solid Waste fund shows decreases in assets as well as liabilities, the result of constructing an additional cell. The Water and Sewer fund shows a significant increase in long term liabilities as a result of a Revenue Bond Issue. Both Current and Capital assets increase significantly within this fund. Revenues, Expenses, and Changes in Net Assets The Water and Wastewater Funds, showed healthy results from operations, with net assets increasing significantly due to a good revenue flow (attributable to both adequate rates and favorable weather conditions) and controlled expenses. The Golf Course showed a very significant loss on the year, requiring increased transfers from the General Fund to maintain cash liquidity. The Sanitation Fund is stable. Net assets declined slightly in the Solid Waste fund. 2010 2011 Change 2010 2011 Change Operating Revenues 2,878$ 2,929$ 51$ 16,789$ 18,361$ 1,572$ Operating Expenses 2,852$ 2,829$ (23)$ 13,571$ 12,964$ (607)$ Operating Income 26$ 100$ 74$ 3,218$ 5,397$ 2,179$ Non-operating revenues (expenses) (55)$ (107)$ (52)$ (433)$ (561)$ (128)$ Income (Loss) before Transfers (29)$ (7)$ 22$ 2,785$ 4,836$ 2,051$ Transfers in (out)(139)$ (180)$ (41)$ 77$ (2,030)$ (2,107)$ Capital Contributions -$ -$ -$ -$ 3,804$ 3,804$ Change in Net Assets (168)$ (187)$ (19)$ 2,862$ 6,610$ 3,748$ Net Assets, January 1 4,121$ 3,896$ (225)$ 55,668$ 58,578$ 2,910$ Restatement (57)$ 1$ 58$ 48$ (19)$ (67)$ Net Assets, January 1, restated 4,064$ 3,897$ (167)$ 55,716$ 58,559$ 2,843$ Net Assets, December 31 3,896$ 3,710$ (186)$ 58,578$ 65,169$ 6,591$ 2010 2011 Change 2010 2011 Change Operating Revenues 2,311$ 2,335$ 24$ 783$ 687$ (96)$ Operating Expenses 2,276$ 2,292$ 16$ 817$ 825$ 8$ Operating Income 35$ 43$ 8$ (34)$ (138)$ (104)$ Non-operating revenues (expenses) 18$ 32$ 14$ -$ -$ -$ Income (Loss) before Transfers 53$ 75$ 22$ (34)$ (138)$ (104)$ Transfers in (out)(50)$ -$ 50$ 20$ 47$ 27$ Capital Contributions -$ -$ -$ -$ -$ -$ Change in Net Assets 3$ 75$ 72$ (14)$ (91)$ (77)$ Net Assets, January 1 1,166$ 1,159$ (7)$ 314$ 305$ (9)$ Restatement (10)$ (12)$ (2)$ 5$ (1)$ (6)$ Net Assets, January 1, restated 1,156$ 1,147$ (9)$ 319$ 304$ (15)$ Net Assets, December 31 1,159$ 1,222$ 63$ 305$ 213$ (92)$ Comparative Summary of Revenues, Expenses and Changes in Net Assets, 2010 and 2011 (In $000's) Solid Waste Disposal Water and Sewer Sanitation Golf Course 12 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Budgetary Highlights The objective of budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Commission. The legal level of budgetary control is maintained at the Fund level, in accordance with State Statutes. Management control is maintained at the departmental level. Within the departments, considerable discretion is permitted. The City uses an encumbrance accounting system, in which estimated purchase orders are recorded prior to the release of purchase orders to vendors. Open purchase orders are reported as reservations of budgetary basis fund balances at December 31, 2011. Formal budgetary amendments are limited to those circumstances in which the need is perceived to alter the total fund budget. Re- allocation among departments or line items are not typically recorded as budgetary amendments. However, in addition to formal amendments, departments within the City are allowed to transfer budget between line items within a department. Budgets may also be transferred from department to department within each fund. As a result of these transfers, the original budget and the final budgets may not be the same for departments within a fund. There were a number of funds in which the budgets were amended, including the Flood and Drainage Improvement Fund, Sales Tax Capital Fund, Risk Management Fund, Central Garage Fund and the Water and Sewer Fund. The City experienced a number of significant variances from budgeted items in the General Fund, however, the total fund was within budgeted expenses. Motor vehicle taxes fell short of budget due to a delayed distribution from the County. Public Safety charges for service were significantly short of budget. This includes Court Revenues and EMS fees due from Saline County. Sales taxes exceeded budgetary levels slightly. Several expenditure items were also significantly over or under budget. Several Departments exceeded budgeted expenditures. In general, retirement system contributions exceeded budget Capital Assets and Debt Administration Capital Assets The total amount invested in Capital Assets for the City at December 31, 2011 was $232,153,260 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2010 and 2011: 2010 2011 2010 2011 2010 2011 Equipment, Furniture and Fixtures 1,314$ 1,288$ 1,982$ 1,729$ 3,296$ 3,017$ Vehicles 2,445$ 2,996$ 903$ 812$ 3,348$ 3,808$ Buildings and Improvements 23,625$ 22,591$ 12,345$ 11,904$ 35,970$ 34,495$ Land 22,477$ 22,477$ 1,541$ 1,541$ 24,018$ 24,018$ Infrastructure 83,712$ 82,609$ 39,985$ 40,591$ 123,697$ 123,200$ Construction in Progress 32,549$ 32,554$ 1,517$ 11,062$ 34,066$ 43,616$ Total 166,122$ 164,515$ 58,273$ 67,639$ 224,395$ 232,154$ * Net of Accumulated Depreciation Capital Asset Balances Net of Depreciation, 12/31/2010 and 12/31/2011 (In 000's) Governmental Activity Business-type Activity Total 13 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2011 (Unaudited) Changes to capital assets may be summarized as follows: Governmental Activity Business-Type Activity Total Additions 547$ 10,633$ 11,180$ Retirements (3,110)$ (1,236)$ (4,346)$ Adjustments 956$ (31)$ 925$ Net Additions (1,607)$ 9,366$ 7,759$ Depreciation Expense Applied 4,730$ 2,653$ 7,383$ Changes to Capital Assets, 2011 (in 000's) Additional information on the City’s capital assets can be found in Note 4,D. of the notes to the basic financial statements. Debt Management The City’s general policy for General Obligation Bonds is to issue them for no more than 10 years for the City at Large portion, with some exceptions permitted for extraordinary projects. On special assessment bonds, the maturity may extend to 15 years. The outstanding General Obligation Bonds for Governmental activities at December 31, 2011 totaled $55,225,670. In addition, there were temporary notes outstanding in the amount of $3,400,000. Business-type activities had $16,193,925 in Revenue Bonds outstanding, as well as $7,217,907 in General Obligation Bonds. Revenues generated by user fees are pledged to retire all of the Bonds issued by Business-type activities. The City engaged in several debt transactions during 2011. On August 1st, the City issued $6,565,000 in internal improvement bonds. The bulk of the proceeds ($3,765,836) were used to finance an industrial fire protection system located at the Salina Airport Industrial Center. The balance of the proceeds were used to finance several residential subdivisions. Also on August 1st, the City issued $3,400,000 in temporary notes to finance public facilities to serve a commercial subdivision development. These note will be refinanced into a long term bond issue in August, 2012. Additional information on the City’s debt can be found in Note 4, E. of the notes to the basic financial statements. Requests for Information This financial report is intended to give the reader a general overview of the City’s finances. Questions about information in this report or requests for additional information should be directed to the Director of Finance, Room 206, 300 West Ash Street, Salina, Kansas, 67401. . BASIC FINANCIAL STATEMENTS Total Total Total Salina Salina Governmental Business-type Primary Housing Airport Activities Activities Government Authority Authority ASSETS Current assets: Cash and investments 17,475,299$28,047,281$45,522,580$1,549,189$5,308,083$ Receivables (net of allowance for uncollectibles) Accounts 1,122,221 1,396,659 2,518,880 39,676 106,659 Taxes 10,848,090 -10,848,090 -1,638,423 Interest 35,877 16 35,893 -- Inventory 205,410 571,702 777,112 15,828 1,722 Restricted cash and investments ---196,148 - Prepaid expenses ---33,224 945 Deferred charges 458,315 375,179 833,494 -205,317 Total current assets 30,145,212 30,390,837 60,536,049 1,834,065 7,261,149 Noncurrent assets: Notes receivable ---3,304 - Capital assets, nondepreciable Construction in progress 32,554,357 11,062,055 43,616,412 516,945 1,570,190 Land 22,477,191 1,541,002 24,018,193 1,456,891 10,818,059 Capital assets, depreciable 196,166,753 101,308,419 297,475,172 7,357,626 62,449,020 Less: Accumulated depreciation 86,683,788 46,272,729 132,956,517 3,134,242 26,573,380 Total noncurrent assets 164,514,513 67,638,747 232,153,260 6,200,524 48,263,889 Total assets 194,659,725$98,029,584$292,689,309$8,034,589$55,525,038$ Liabilities: Current liabilities: Accounts payable 788,731$294,449$1,083,180$14,447$221,039$ Retainage payable 468,309 608,219 1,076,528 -- Accrued liabilities 563,720 -563,720 46,395 169,143 Matured bond principal and interest 5,145 -5,145 -- Accrued interest payable 512,680 211,291 723,971 -404,167 Primary Government CITY OF SALINA, KANSAS STATEMENT OF NET ASSETS December 31, 2011 Component Units The notes to the basic financial statements are an integral part of this statement. 14 Accrued interest payable 512,680 211,291 723,971 -404,167 Deposits payable -163,904 163,904 84,154 - Unearned revenue 10,315,524 -10,315,524 29,165 1,720,237 Due to other governments ---25,115 - Current portion of compensated absences 581,694 122,301 703,995 16,811 - Current portion of temporary notes payable 3,400,000 -3,400,000 -- Current portion of revenue bonds payable -343,696 343,696 -- Current portion of financing leases payable ----42,941 Current portion of special assessment debt payable ----21,066 Current portion of general obligation bonds payable 5,051,038 1,200,048 6,251,086 -1,090,000 Total current liabilities 21,686,841 2,943,908 24,630,749 216,087 3,668,593 Noncurrent liabilities: Accrued liabilities 149,245 -149,245 50,090 - Compensated absences 2,507,440 527,190 3,034,630 4,203 - Net OPEB obligation 2,807,425 334,458 3,141,883 -- Revenue bonds payable -15,850,229 15,850,229 -- Financing leases payable ----202,617 Temporary notes payable ----- Special assessment debt payable ----103,946 General obligation bonds payable 50,174,632 6,017,859 56,192,491 -24,718,985 Landfill post-closure care liabilities -2,042,254 2,042,254 -- Total noncurrent liabilities 55,638,742 24,771,990 80,410,732 54,293 25,025,548 Total liabilities 77,325,583$27,715,898$105,041,481$270,380$28,694,141$ Net Assets Invested in capital assets, net of related debt 109,288,843$44,226,915$153,515,758$6,197,219$22,084,333$ Restricted for: Permanent funds: Expendable 426,741 -426,741 146,058 - Debt service 1,285,130 1,553,016 2,838,146 -- Unrestricted 6,333,428 24,533,755 30,867,183 1,420,932 4,746,564 Total net assets 117,334,142$70,313,686$187,647,828$7,764,209$26,830,897$ The notes to the basic financial statements are an integral part of this statement. 14 Operating Capital Total Total Total Salina Salina Charges for Grants and Grants and Governmental Business-type Primary Housing Airport Expenses Services Contributions Contributions Activities Activities Government Authority Authority Governmental activities: General government 13,614,508$6,106,067$359,148$-$[7,149,293]$-$[7,149,293]$-$-$ Public safety 18,579,041 3,766,156 631,417 -[14,181,468]-[14,181,468]-- Public works 9,858,199 261,707 1,368,577 -[8,227,915]-[8,227,915]-- Public health and sanitation 1,367,825 42,729 153,566 -[1,171,530]-[1,171,530]-- Culture and recreation 6,693,341 3,140,025 177,048 -[3,376,268]-[3,376,268]-- Planning and development 3,450,078 153,675 217,643 -[3,078,760]-[3,078,760]-- Interest on long-term debt 1,650,426 ---[1,650,426]-[1,650,426]-- Total governmental activities 55,213,418 13,470,359 2,907,399 -[38,835,660]-[38,835,660]-- Business-type activities: Solid Waste Disposal 2,944,765 2,904,371 ---[40,394][40,394]-- Water and Sewer 13,596,918 17,904,056 201,700 3,803,565 -8,312,403 8,312,403 -- Sanitation 2,261,462 2,334,119 ---72,657 72,657 -- Golf Course 825,057 636,202 ---[188,855][188,855]-- Total business-type activities 19,628,202 23,778,748 201,700 3,803,565 -8,155,811 8,155,811 -- Total primary government 74,841,620$37,249,107$3,109,099$3,803,565$[38,835,660]8,155,811 [30,679,849]-- Component units: Salina Housing Authority 2,256,924$624,322$1,629,627$168,427$---165,452 - Salina Airport Authority 5,548,077 2,273,000 -457,227 ----[2,817,850] Total component units 7,805,001$2,897,322$1,629,627$625,654$---165,452 [2,817,850] General Revenues: Property taxes levied for Changes in Net Assets Component UnitsPrimary GovernmentProgram Revenues CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2011 Net [Expenses] Revenue and The notes to the basic financial statements are an integral part of this statement. 15 Property taxes levied for General purposes 7,782,768 -7,782,768 -1,795,660 Debt service 2,778,845 -2,778,845 -- Motor vehicle tax General purposes 1,149,641 -1,149,641 -- Sales tax General purposes 11,767,400 -11,767,400 -- Selective purposes 4,080,342 -4,080,342 -- Other taxes General purposes 6,389,878 -6,389,878 -- Investment revenues 77,095 83,399 160,494 19,684 9,856 Miscellaneous 871,904 330,351 1,202,255 -53,004 Transfers, net 2,361,593 [2,162,772]198,821 -- Subtotal general revenues 37,259,466 [1,749,022]35,510,444 19,684 1,858,520 Change in net assets [1,576,194]6,406,789 4,830,595 185,136 [959,330] Net assets - beginning 117,797,911 63,937,619 181,735,530 7,580,003 27,790,227 Prior period adjustment 1,112,425 [30,722]1,081,703 [930]- Net assets - beginning, restated 118,910,336 63,906,897 182,817,233 7,579,073 27,790,227 Net assets - ending 117,334,142$70,313,686$187,647,828$7,764,209$26,830,897$ The notes to the basic financial statements are an integral part of this statement. 15 Flood &Tourism Drainage and Special General Improvement Convention Gas ASSETS Cash and investments 3,153,960$907$2,202$1,195,840$ Receivables (net) Accounts 677,815 -338,271 - Taxes 8,094,093 --312,648 Interest 35,877 --- Inventory 89,716 --- Due from other funds 9,375 --- Cash with fiscal agent ---- Total assets 12,060,836$907$340,473$1,508,488$ LIABILITIES AND FUND BALANCE Liabilities: Accounts payable 301,319$-$-$46,356$ Retainage payable ---44,389 BALANCE SHEET CITY OF SALINA, KANSAS December 31, 2011 GOVERNMENTAL FUNDS Retainage payable ---44,389 Deferred revenue 7,923,279 --- Due to other funds ---- Matured principal and interest ---- Temporary notes payable ---- Total liabilities 8,224,598 --90,745 Fund balance: Nonspendable 89,716 --- Restricted --340,473 1,094,720 Committed ---- Assigned 292,816 907 -323,023 Unassigned 3,453,706 --- Total fund balances 3,836,238 907 340,473 1,417,743 Total liabilities and fund balance 12,060,836$907$340,473$1,508,488$ Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Projects Funds Funds 117,993$1,397,571$1,236,026$4,503,053$2,773,395$14,380,947$ 54,966 ---51,169 1,122,221 --2,441,349 --10,848,090 -----35,877 -----89,716 -----9,375 --5,145 --5,145 172,959$1,397,571$3,682,520$4,503,053$2,824,564$26,491,371$ 30,078$-$-$288,281$22,643$688,677$ ---423,920 -468,309---423,920 -468,309 --2,392,245 --10,315,524 ----9,375 9,375 --5,145 --5,145 ---3,400,000 -3,400,000 30,078 -2,397,390 4,112,201 32,018 14,887,030 -----89,716 --1,285,130 -891,254 3,611,577 142,881 610,134 -[2,477,564]1,851,292 126,743 -787,437 -2,868,416 50,000 4,322,599 -----3,453,706 142,881 1,397,571 1,285,130 390,852 2,792,546 11,604,341 172,959$1,397,571$3,682,520$4,503,053$2,824,564$26,491,371$ 16 The notes to the basic financial statements are an integral part of this statement. Total Governmental Fund Balances 11,604,341$ Amounts reported for governmental activities in the statement of net assets are different because Bond issuance costs are shown as current year expenditures in the funds. Bond issuance costs 458,315 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds The cost of capital assets is 250,331,663 Accumulated depreciation is 85,844,940 164,486,723 An internal service fund is used by the City's management to charge the costs of the worker's compensation program. The assets and liabilities of the internal service fund are included with governmental activities.2,327,348 The following liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as liabilities in the funds. These liabilities at year end consist of: Compensated absences 2,996,810 Net OPEB obligation 2,807,425 Bonds payable 55,225,670 Accrued interest on the bonds 512,680 [61,542,585] Net Assets of Governmental Activities 117,334,142$ CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET ASSETS OF GOVERNMENTAL ACTIVITIES December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 17 Flood &Tourism Drainage and Special General Improvement Convention Gas REVENUES: Taxes Real estate taxes 7,564,508$-$-$-$ Delinquent taxes 212,244 6,016 -- Motor vehicle taxes 894,671 --- General sales taxes 11,767,400 --- Selective sales taxes ---- Other taxes 5,083,919 -1,305,959 - Intergovernmental 813,185 --1,362,327 Special assessments ---- Licenses and permits ---- Charges for services 7,822,307 --- Investment revenue 28,972 -143 3,718 Reimbursements ---- Miscellaneous 501,260 11,550 -- Total revenues 34,688,466 17,566 1,306,102 1,366,045 EXPENDITURES: Current General government 3,461,488 --- Public safety 18,117,827 --- Public works 6,132,020 9,784 -427,429 EXPENDITURES AND CHANGES IN FUND BALANCE STATEMENT OF REVENUES, CITY OF SALINA, KANSAS For the Year Ended December 31, 2011 GOVERNMENTAL FUNDS Public works 6,132,020 9,784 -427,429 Public health and sanitation 1,176,082 --- Culture and recreation 2,734,957 --- Planning and development 2,319,300 -736,386 - Miscellaneous ---- Capital outlay 555,048 196,308 -1,183,678 Debt service Principal retirement ---- Interest and other charges ---- Total expenditures 34,496,722 206,092 736,386 1,611,107 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses]191,744 [188,526]569,716 [245,062] OTHER FINANCING SOURCES [USES] Issuance of bonds ---- Bond premium ---- Transfers in 868,838 907 -180,000 Transfers [out][997,949]-[596,440][1,836] Total other financing sources [uses][129,111]907 [596,440]178,164 Net change in fund balance 62,633 [187,619][26,724][66,898] Fund balance - Beginning of year 3,617,181 188,526 367,197 1,484,641 Restatement of prior year fund balance 156,424 --- FUND BALANCE - Beginning of year, as restated 3,773,605 188,526 367,197 1,484,641 Fund balance - End of year 3,836,238$907$340,473$1,417,743$ Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Projects Funds Funds -$-$2,723,262$-$-$10,287,770$ --55,583 --273,843 --254,970 --1,149,641 -----11,767,400 -3,763,045 --317,297 4,080,342 -----6,389,878 ----725,637 2,901,149 --1,535,487 --1,535,487 ----6,250 6,250 783,028 ---1,125,022 9,730,357 193 5,683 13,686 9,634 6,620 68,649 ---32,000 -32,000 692 -12,983 -72,293 598,778 783,913 3,768,728 4,595,971 41,634 2,253,119 48,821,544 -----3,461,488 -----18,117,827 -----6,569,233-----6,569,233 ----153,730 1,329,812 1,548,901 ---1,616,170 5,900,028 ----288,275 3,343,961 ----35 35 11,028 1,032,526 -6,338,741 529,401 9,846,730 - --4,276,195 -135,000 4,411,195 --1,771,581 151,055 161,744 2,084,380 1,559,929 1,032,526 6,047,776 6,489,796 2,884,355 55,064,689 [776,016]2,736,202 [1,451,805][6,448,162][631,236][6,243,145] ---6,565,000 -6,565,000 --22,985 --22,985 872,849 8,558 2,225,565 3,289,564 547,389 7,993,670 -[3,501,556][83,488][405,549][105,259][5,692,077] 872,849 [3,492,998]2,165,062 9,449,015 442,130 8,889,578 96,833 [756,796]713,257 3,000,853 [189,106]2,646,433 46,048 2,154,367 571,873 [2,610,001]2,981,652 8,801,484 -----156,424 46,048 2,154,367 571,873 [2,610,001]2,981,652 8,957,908 142,881$1,397,571$1,285,130$390,852$2,792,546$11,604,341$ 18 The notes to the basic financial statements are an integral part of this statement. Total Net Change In Fund Balances - Governmental Funds 2,646,433$ Amounts reported for governmental activities in the statement of activities are different because Capital outlays to purchase or build assets are reported in governmental funds as expenditures. However, for governmental activities those costs are shown in the statement of net assets and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which capital outlays exceeds depreciation in the period. Gain on sale of assets [77,143] Proceeds from sale of assets [10,070] Capital outlays 2,254,765 Depreciation expense [4,725,361][2,557,809] Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recorded as an expenditure in the funds when it is due, and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is the amount by which interest decreased.314,150 CITY OF SALINA, KANSAS RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE WITH THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 19 the amount by which interest decreased.314,150 An internal service fund is used by the city's management to charge the costs of certain activities to the individual funds. The revenues and expenses of certain internal service fund is reported with governmental activities.584,822 Some expenses reported in the statement of activities, such as compensated absences and other post employment benefits, do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds.[523,988] Bond and temporary note proceeds are other financing sources in the governmental funds, but they increase long-term liabilities in the statement of net assets and do not affect the statement of activities. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.[6,570,801] Repayment of bond principal and bond issuance costs is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net assets and does not affect the statement of activities.4,530,999 Changes In Net Assets of Governmental Activities [1,576,194]$ The notes to the basic financial statements are an integral part of this statement. 19 Total Internal Solid Waste Water and Enterprise Service ASSETS Disposal Sewer Sanitation Golf Course Funds Funds Current assets: Cash and investments 3,379,526$24,042,117$621,683$3,955$28,047,281$3,089,207$ Receivables (net of allowance for uncollectibles) Accounts 231,123 1,026,364 139,172 -1,396,659 - Interest 16 ---16 - Inventory and prepaid supplies -544,052 -27,650 571,702 115,694 Deferred charges -375,179 --375,179 - Total current assets 3,610,665 25,987,712 760,855 31,605 30,390,837 3,204,901 Capital assets: Nondepreciable capital assets: Construction in progress -11,062,055 --11,062,055 - Land 682,000 844,002 -15,000 1,541,002 - Depreciable capital assets: Capital assets 8,278,501 90,480,372 1,557,447 992,099 101,308,419 866,638 Less: accumulated depreciation 5,465,856 39,202,619 911,117 693,137 46,272,729 838,848 Total capital assets 3,494,645 63,183,810 646,330 313,962 67,638,747 27,790 Total assets 7,105,310$89,171,522$1,407,185$345,567$98,029,584$3,232,691$ Liabilities: Current liabilities Accounts payable 22,192$262,444$6,859$2,954$294,449$100,054$ Retainage payable -608,219 --608,219 - Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF NET ASSETS PROPRIETARY FUNDS December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 20 Retainage payable -608,219 --608,219 - Interest payable 8,514 202,777 --211,291 - Meter deposits payable -163,904 --163,904 - Current portion of compensated absences payable 11,215 68,382 22,203 20,501 122,301 17,384 Current portion of accrued claims payable -----563,720 Current portion of general obligation bonds payable 486,302 713,746 --1,200,048 - Current portion of revenue bonds payable -343,696 --343,696 - Total current liabilities 528,223 2,363,168 29,062 23,455 2,943,908 681,158 Noncurrent liabilities: Compensated absences payable 48,340 294,765 95,709 88,376 527,190 74,940 Accrued claims payable -----149,245 Net OPEB Obligation 43,944 209,872 59,830 20,812 334,458 - Payable from restricted assets General obligation bonds payable 732,806 5,285,053 --6,017,859 - Revenue bonds payable -15,850,229 --15,850,229 - Landfill post-closure care liabilities 2,042,254 ---2,042,254 - Total noncurrent liabilities 2,867,344 21,639,919 155,539 109,188 24,771,990 224,185 Total liabilities 3,395,567$24,003,087$184,601$132,643$27,715,898$905,343$ Net Assets Invested in capital assets, net of related debt 2,275,537$40,991,086$646,330$313,962$44,226,915$27,790$ Restricted Restricted for bond retirement -1,553,016 --1,553,016 - Unrestricted 1,434,206 22,624,333 576,254 [101,038]24,533,755 2,299,558 Total net assets 3,709,743$65,168,435$1,222,584$212,924$70,313,686$2,327,348$ The notes to the basic financial statements are an integral part of this statement. 20 Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Operating revenues Charges for services 2,904,371$17,904,056$2,334,119$636,202$23,778,748$9,881,156$ Federal grants -201,700 --201,700 - Miscellaneous 24,491 255,256 424 50,180 330,351 251,196 Total operating revenues 2,928,862 18,361,012 2,334,543 686,382 24,310,799 10,132,352 Operating expenses General government -----9,611,278 Public works 2,088,843 11,205,114 2,170,663 -15,464,620 - Recreation ---791,488 791,488 - Depreciation 740,047 1,758,777 120,799 33,569 2,653,192 4,698 Total operating expenses 2,828,890 12,963,891 2,291,462 825,057 18,909,300 9,615,976 Operating income [loss]99,972 5,397,121 43,081 [138,675]5,401,499 516,376 Nonoperating revenues [expenses] Investment revenue 9,072 72,452 1,839 36 83,399 8,446 Debt service [115,875][632,390]--[748,265]- Gain/[loss] on disposal of fixed assets -2,550 30,000 -32,550 1,129 Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS For the Year Ended December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 21 Gain/[loss] on disposal of fixed assets -2,550 30,000 -32,550 1,129 Accretion of bond premium -7,864 --7,864 - Amortization of bond issuance costs -[11,051]--[11,051]- Total nonoperating revenues [expenses][106,803][560,575]31,839 36 [635,503]9,575 Income [loss] before transfers [6,831]4,836,546 74,920 [138,639]4,765,996 525,951 Transfers from [to] other funds Transfers in ---47,228 47,228 60,000 Transfers [out][180,000][2,030,000]--[2,210,000]- Total transfers [180,000][2,030,000]-47,228 [2,162,772]60,000 Capital contributions -3,803,565 --3,803,565 - Change in net assets [186,831]6,610,111 74,920 [91,411]6,406,789 585,951 Net assets, January 1 3,895,812 58,578,036 1,159,149 304,622 63,937,619 1,737,815 Restatement 762 [19,712][11,485][287][30,722]3,582 Net assets, January 1, restated 3,896,574 58,558,324 1,147,664 304,335 63,906,897 1,741,397 Net assets, December 31 3,709,743$65,168,435$1,222,584$212,924$70,313,686$2,327,348$ The notes to the basic financial statements are an integral part of this statement. 21 Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Cash flows from operating activities Cash received from customers and users 2,948,382$17,850,055$2,332,281$636,201$23,766,919$9,786,038$ Cash paid to suppliers of goods or services [1,722,492][7,552,182][1,616,344][391,100][11,282,118][8,955,819] Cash paid to employees [454,426][2,945,574][696,074][386,401][4,482,475][631,488] Other operating receipts 24,491 456,956 424 50,180 532,051 251,196 Net cash provided by [used in] operating activities 795,955 7,809,255 20,287 [91,120]8,534,377 449,927 Cash flows from capital and related financing activities Purchase and construction of capital assets [23,446][11,886,827][139,452]-[12,049,725]- Capital contributions -3,803,565 --3,803,565 - Debt issuance costs incurred -[315,426]--[315,426]- Proceeds from sale of capital assets -2,550 30,000 -32,550 1,129 Principal payments - general obligation bonds [697,396][691,410]--[1,388,806]- Principal payments - revenue bonds -[1,580,000]--[1,580,000]- Proceeds from issuance of revenue bonds -16,193,925 --16,193,925 - Interest paid [136,908][496,760]--[633,668]- Net cash provided by [used in] capital and related financing activities [857,750]5,029,617 [109,452]-4,062,415 1,129 Cash flows from investing activities Interest received 9,072 72,453 1,839 37 83,401 8,445 Cash flows from noncapital financing activities Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS For the Year Ended December 31, 2011 PROPRIETARY FUNDS The notes to the basic financial statements are an integral part of this statement. 22 Cash flows from noncapital financing activities Transfers in ---47,228 47,228 60,000 Transfers [out][180,000][2,030,000]--[2,210,000]- Net cash provided by [used in] noncapital financing activities [180,000][2,030,000]-47,228 [2,162,772]60,000 Net increase [decrease] in cash and cash equivalents [232,723]10,881,325 [87,326][43,855]10,517,421 519,501 Cash and cash equivalents, January 1 3,612,249 13,160,792 709,009 47,810 17,529,860 2,569,706 Cash and cash equivalents, December 31 3,379,526$24,042,117$621,683$3,955$28,047,281$3,089,207$ The notes to the basic financial statements are an integral part of this statement. 22 Total Internal Solid Waste Water and Enterprise Service Disposal Sewer Sanitation Golf Course Funds Funds Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss]99,972$5,397,121$43,081$[138,675]$5,401,499$516,376$ Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense 740,047 1,758,777 120,799 33,569 2,653,192 4,698 [Increase] decrease in accounts receivable 44,011 [79,017][1,838]-[36,844]- [Increase] decrease in inventory -31,950 -[9,113]22,837 6,646 Increase [decrease] in accounts payable [218,286]35,620 [120,339][1,394][304,399]14,032 Increase [decrease] in retainage payable [12,979]591,610 --578,631 - Increase [decrease] in accrued compensated absences [342][1,806][35,666]19,536 [18,278]3,294 Increase [decrease] in claims payable -----[95,119] Increase [decrease] in landfill postclosure liabilities 133,066 ---133,066 - Increase [decrease] in net OBEB obligation 10,466 49,984 14,250 4,957 79,657 - Increase [decrease] in meter deposits payable -25,016 --25,016 - Net cash provided by [used in] operating activities 795,955$7,809,255$20,287$[91,120]$8,534,377$449,927$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2011 The notes to the basic financial statements are an integral part of this statement. 23 The notes to the basic financial statements are an integral part of this statement. 23 ASSETS Cash and investments 313,300$ Total assets 313,300$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable 313,300$ Total liabilities 313,300$ December 31, 2011 CITY OF SALINA, KANSAS STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS The notes to the basic financial statements are an integral part of this statement. 24 25 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity The City of Salina, Kansas (the City) is a municipal corporation governed by a mayor and a five-member commission. These financial statements present the City and its component units, entities for which the government is considered to be financially accountable. Each discretely presented component unit is reported in a separate column in the government wide statements to emphasize that it is legally separated from the government. Discretely Presented Component Units City of Salina Airport Authority - The Salina Airport Authority was created for the purpose of accepting as surplus property portions of the former Schilling A.F.B that was closed by the United States Department of Defense in June 1965. One of the primary functions of the Airport Authority is to facilitate the continued growth of jobs and payroll at the Airport Industrial Center. The Airport Authority is managed and controlled by a five-member Board of Directors appointed by the Salina City Commission. Any director may be removed by a majority vote of the Salina City Commission. The Airport Authority’s basic mill levy (up to 3 mills) requires the approval of the City Commission. The Commission must also approve the issuance of general obligation debt by the Airport Authority. The Airport Authority has a December 31 fiscal year end. Housing Authority of the City of Salina - The purpose of the Housing Authority of the City of Salina (Housing Authority) is to administer Public Housing Programs authorized by the United States Housing Act of 1937. The Mayor of the City of Salina appoints the governing board. The City Commission may remove commissioners of the Housing Authority. The City must issue revenue bonds for the Housing Authority. The financial liability of the Housing Authority is essentially supported by the operating and debt service subsidies received under contract from the Federal government. The Housing Authority has a June 30 fiscal year end. Information in the accompanying financial statements covers the fiscal year ended June 30, 2011. Complete financial statements for each of the individual component units may be obtained at the entity’s administrative offices. Salina Airport Authority Housing Authority of 3237 Arnold Ave. the City of Salina Salina, KS 469 S. 5th Salina, KS Joint Ventures The City of Salina also participates with Saline County in two joint ventures. The Salina-Saline County Board of Health was organized by the City and County to promote public health. The City and County organized the Salina County-City Building Authority to acquire, operate and maintain facilities for the administrative offices of both governments. The primary governments each have an ongoing financial responsibility for the joint ventures. Separate financial statements are available from the governing boards of each joint venture. (GAAP Basis) (Kansas Prescribed Basis) Board of Building Health Authority (Audited)(Audited) Total net assets/unencumbered cash, December 31, 2011 1,697,636$ 931,040$ Total change in net assets/change in unencumbered cash, year ended December 31, 2011 [62,456] [247,094] Total revenues/cash receipts, year ended December 31, 2011 3,856,055 748,166 Total revenues/cash receipts from City of Salina 1,018,101 278,756 26 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) A. Reporting Entity (Continued) Joint Ventures (Continued) Complete financial statements for each of the joint ventures may be obtained at the entity’s administrative offices. Salina-Saline County Board of Health Salina County-City 125 West Elm Street Building Authority Salina, KS 300 West Ash Street Salina, KS B. Government-wide and fund financial statements The statement of net assets and the statement of activities report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Exceptions to this general rule are charges between the City’s governmental and business-type activities. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational requirements of a particular program. Taxes and other items, which are not classified as program revenues, are presented as general revenues of the city. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to certain compensated absences and claims and judgments are recognized when the obligations are expected to be liquidated with expendable available financial resources. 27 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. The City applies all applicable Governmental Accounting Standards Board (GASB) pronouncements as well as the following pronouncements issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements: FASB Statements and Interpretations, APB Opinions, and ARBs. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net total assets. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services in connection with a proprietary fund’s ongoing operations. The principal operating revenues of the City’s proprietary funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenues and expenses. The internal service funds account for risk management, worker’s compensation, health insurance, central garage and information services that are provided to other departments or agencies of the government, or to other governments, on a cost-reimbursement basis. Agency funds are custodial in nature and do not measure results of operations or have a measurement focus. Agency funds do however use the accrual basis of accounting. Agency funds are used to account for assets held as an agent for individuals, other governmental units, private organizations and/or other funds. The City reports the following major governmental funds: General fund - To account for resources traditionally associated with government, which are not required legally, or by sound financial management to be accounted for in another fund. Flood and drainage improvement fund - To account for property tax revenues to be used for capital improvements to the flood control and stormwater drainage systems. Tourism and convention fund - To account for transient guest tax revenues, which are specifically restricted to promotion and tourism activities. Special gas fund - To account for the City's share of motor fuel tax revenues, which are legally restricted to the maintenance, or improvement of streets within the City. Bicentennial Center fund - To account for the activities of the City's convention center. Sales tax capital fund - To account for 87.5% of the 1/4 cent sales tax designated for capital, debt, and human services purposes. Debt service fund - To account for the accumulation of resources and payment of general obligation bond principal and interest from governmental resources and special assessment bond principal and interest from special assessment levies when the City is obligated in some manner for the payment. 28 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Capital projects fund - To account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. The City reports the following major proprietary funds: Sanitation fund - To account for the operations of the City's refuse collection service. Solid waste disposal fund - To account for the activities of the City's landfill. Golf course fund - To account for the operations of the municipal golf course. Water and sewer fund - To account for the activities of the City's water and sewer operations. D. Assets, Liabilities, Fund Balance, and Net Assets 1. Pooled cash and investments The City maintains a cash and investment pool that is available for use by all funds managed by the city. Each fund type’s portion of this pool is displayed in the financial statements as “Cash and Investments.” The city’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments in the Kansas Municipal Pool are carried at fair value. Cash balances from all funds are invested to the extent available in certificates of deposit and other authorized investments. Investments with maturity dates greater than three months are stated separately. Earnings from these investments, unless specifically designated, are allocated monthly to the investing fund based on the percentage of funds invested to total investments. All investments are carried at fair value. 2. Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the year are referred to as either “interfund receivables/payables” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for doubtful accounts. Property taxes receivable. Collection of current year property tax by the County Treasurer is not completed, apportioned or distributed to the various subdivisions until the succeeding year, such procedure being in conformity with governing state statutes. Consequently, current year property taxes receivable are not available as a resource that can be used to finance the current year operations of the City and, therefore, are not susceptible to accrual. Accruals of uncollected current year property taxes are offset by deferred revenue and are identical to the adopted budget for 2012. It is not practicable to apportion delinquent taxes held by the County Treasurer at the end of the accounting period, and further, the amounts thereof are not material in relationship to the financial statements taken as a whole. 29 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities and Equity (Continued) 2. Receivables and Payables (Continued) The determination of assessed valuations and the collection of property taxes for all political subdivisions in the State of Kansas are the responsibility of the various counties. The County Appraiser annually determines assessed valuations on January 1 and the County Clerk spreads the annual assessment on the tax rolls. The County Treasurer is the tax collection agent for all taxing entities within the County. In accordance with state statutes, property taxes levied during the current year are a revenue source to be used to finance the budget of the ensuing year. Property taxes are levied and liens against property are placed on November 1 of the year prior to the fiscal year for which they are budgeted. Payments are due November 1, becoming delinquent, with penalty, December 21. Payments of 50% are accepted through December 20, with the second 50% then being due on or before May 10 of the following year. This procedure eliminates the need to issue tax anticipation notes since funds will be on hand prior to the beginning of each fiscal year. The City Treasurer draws down all available funds from the County Treasurer’s office in two-month intervals. Taxes remaining due and unpaid at February 15 and July 1 are subject to collection procedures prescribed in state statutes. 3. Inventories and Prepaid Items Inventories are valued at cost using the first-in/first-out (FIFO) method. The costs of governmental fund-type inventories are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 4. Capital Assets Capital assets, which include property, plant, equipment and infrastructure assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the government as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. Capital assets used in governmental fund types of the City are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their estimated fair value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the assets or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type is included in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Property, plant and equipment of the primary government, are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 50 Other equipment 5 -15 Vehicles 6 -10 Infrastructure 30 -50 30 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Assets (Continued) 5. Compensated Absences It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All employees of the City, except temporary and part time employees, may accumulate sick leave at a rate of 8 or 11 hours per month depending on their work duty schedule. There is no limit on the amount of sick leave that can be accumulated. Employees with more than five years of service with the City are paid for one-third of their accumulated sick leave at their current wage scale upon termination of employment in good standing. In 2001, a limited buy back policy was instituted. All regular employees are entitled to paid vacation time. Such leave is granted each year of employment. Employees must use 50% of leave accrued each calendar year and an employee's maximum accrued vacation leave balance cannot exceed 250 hours (or 350 hours for employees working 24 hour shifts). Employees are paid for all accumulated vacation leave at their current wage scale upon termination of employment. Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability in the government fund financial statements that will pay it. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Vested or accumulated vacation leave of the business-type funds and government wide financial statements are recorded as an expense and liability of those funds as the benefits accrue to employees. A liability is recorded for accumulated rights to receive sick pay benefits that are payable upon termination of employment. The General Fund, Bicentennial Center Fund, Central Garage Fund, Information Systems Fund, Sanitation Fund, Solid Waste Fund, Golf Course Fund, and Water and Sewer Fund have been used in prior years to liquidate the liability for compensated absences. 6. Temporary Notes Upon authorization for the issuance of general obligation bonds for certain improvements, Kansas law permits the temporary financing of such improvements by the issuance of temporary notes. Temporary notes issued may not exceed the aggregate amount of bonds authorized, are interest bearing and have a maturity date not later than four years from the date of issuance of such temporary notes. Temporary notes outstanding are retired from the proceeds of the sale of general obligation bonds. 7. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Assets (Continued) 8. Fund Balances In the fund financial statements, governmental funds report fund balance in the following classifications: nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance indicates that constraints have been placed on the use of resources either by being externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Committed fund balances include amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the city commission. Assigned fund balances include amounts that are constrained by the City management’s intent to be used for specific purposes, but are neither restricted nor committed. Unassigned fund balance represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available restricted amounts are considered to be spent first. When an expenditure is incurred for purposes for which committed, assigned, or unassigned fund balance is available, the following is the order in which resources will be expended: committed, assigned and unassigned. The following is the detail for fund balance classifications in the financial statements: Flood & Tourism Other Total Drainage and Special Bicentennial Sales Tax Debt Capital Governmental Governmental General Improvement Convention Gas Center Capital Service Projects Funds Funds Fund Balances: Nonspendable for: Inventory 89,716$ -$ -$ -$ -$ -$ -$ -$ -$ 89,716$ Restricted for: Public works - - - 1,094,720 - - - - - 1,094,720 Public health and sanitation - - - - - - - - 4 4 Culture and recreation - - - - - - - - 45,236 45,236 Planning and development - - 340,473 - - - - - 298,015 638,488 Debt payments - - - - - - 1,285,130 - 547,999 1,833,129 Committed for: Public safety - - - - - - - - [7,866] [7,866] Culture and recreation - - - - 142,881 - - - 524,907 667,788 Planning and development - - - - - - - - 6,102 6,102 Cemetery - - - - - - - - 421,037 421,037 Capital improvements - - - - - 610,134 - [2,477,564] 907,112 [960,318] Assigned for: General government 18,450 - - - - - - - - 18,450 Public works 36,755 907 - 323,023 - - - - - 360,685 Planning and development 11,376 - - - - - - - - 11,376 Capital improvements 226,235 - - - - 787,437 - 2,868,416 50,000 3,932,088 Unassigned: 3,453,706 - - - - - - - - 3,453,706 Total Fund Balances 3,836,238$ 907$ 340,473$ 1,417,743$ 142,881$ 1,397,571$ 1,285,130$ 390,852$ 2,792,546$ 11,604,341$ Major Governmental Funds 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Assets (Continued) 9. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 10. Net Assets Net assets represent the difference between assets and liabilities. Net assets invested in capital assets, net of related debt consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net assets are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Kansas statutes require that an annual operating budget be legally adopted for the general fund, special revenue funds (unless specifically exempted by statute), debt service fund, and enterprise funds. The statutes provide for the following sequence and timetable in the adoption of the legal annual operating budget: 1. Preparation of the budget for the succeeding year on or before August 1. 2. Publication in local newspaper of the proposed budget and notice of public hearing on the budget on or before August 5. 3. Public hearing on or before August 15, but at least ten days after publication of notice of hearing. 4. Adoption of the final budget on or before August 25. The statutes allow the governing body to increase the originally adopted budget for previously unbudgeted increases in revenue other than ad valorem property taxes. To do this, a notice of public hearing to amend the budget must be published in the local newspaper. At least ten days after publication the hearing may be held and the governing body may amend the budget at that time. The 2011 budget was amended for the Flood & Drainage Improvement Fund, Sales Tax Capital Fund, Water and Sewer Fund, Risk Management Fund and Central Garage Fund. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) A. Budgetary Information (Continued) The statutes permit management to transfer budgeted amounts between line items within an individual fund. However, such statutes prohibit expenditures in excess of the total amount of the adopted budget of expenditures of individual funds. Budget comparison statements are presented for each fund showing actual receipts and expenditures compared to legally budgeted receipts and expenditures. All legal annual operating budgets are prepared using the statutory basis of accounting, in which, revenues are recognized when cash is received, and expenditures include disbursements, accounts payable, and encumbrances. Encumbrances are commitments by the municipality for future payments and are supported by a document evidencing the commitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year end. A legal operating budget is not required for capital projects funds, non-major debt service funds, trust funds, and the following special revenue funds: Bicentennial Center Event, HUD Community Development, Community Development Revolving, Heritage Commission, CDBG-ED, HOME V, Special Law Enforcement, Police Grants, DARE Donations, War Memorial Maintenance and Federal Care Grant. A legal operating budget is not required for the following Enterprise funds: Solid Waste Construction, Water and Sewer Principal and Interest, Water and Sewer Bond Reserve, Water and Sewer Construction and Reserve funds. A legal operating budget is also not required for the Internal Service funds. Actual to budget comparisons for these funds that present budgets to the Commissioners are shown strictly for informational purposes. Spending in funds, which are not subject to the legal annual operating budget requirements are controlled by federal regulations, other statutes, or by the use of internal spending limits established by the governing body. B. Statutory Violations Actual exceeded budgeted expenditures at December 31, 2011 in the Flood & Drainage Improvement Fund and Sales Tax Economic Development Fund, which violates KSA 79-2935. C. Legal Debt Margin The City is subject to the municipal finance law of the state of Kansas which limits the bonded debt (exclusive of revenue bonds and special assessment bonds) the city may have outstanding to 30 percent of the assessed value of all tangible taxable property within the city, as certified to the county clerk on the proceeding August 25. At December 31, 2011, the statutory limit for the City was $133,379,948, providing a debt margin of 75,990,305. 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 3. RESTATEMENT OF EQUITY The implementation of GASB 54 required the reclassification of the governmental fund balances. The following is the reclassification of fund balance as of December 31, 2010. Unreserved Reserved Total Governmental Fund: General Fund 3,517,895$ 99,286$ 3,617,181$ Flood & Drainage Improvement Fund 187,350 1,176 188,526 Tourism and Convention Fund 367,197 - 367,197 Special Gas Fund 986,224 498,417 1,484,641 Bicentennial Center Fund 46,048 - 46,048 Sales Tax Capital Fund 1,572,216 582,151 2,154,367 Debt Service Fund - 571,873 571,873 Capital Projects Fund [6,654,370] 4,044,369 [2,610,001] Other Governmental Funds 2,365,603 616,049 2,981,652 Total Governmental Funds 2,388,163$ 6,413,321$ 8,801,484$ Nonspendable Restricted Committed Assigned Unassigned Total Governmental Fund: General Fund 87,238$ -$ -$ 99,286$ 3,430,657$ 3,617,181$ Flood & Drainage Improvement Fund - - 187,350 1,176 - 188,526 Tourism and Convention Fund - 367,197 - - - 367,197 Special Gas Fund - 986,224 - 498,417 - 1,484,641 Bicentennial Center Fund - - 46,048 - - 46,048 Sales Tax Capital Fund - - 1,572,216 582,151 - 2,154,367 Debt Service Fund - 571,873 - - - 571,873 Capital Projects Fund - - [6,654,370] 4,044,369 - [2,610,001] Other Governmental Funds - 944,240 2,031,076 6,336 - 2,981,652 Total Governmental Funds 87,238$ 2,869,534$ [2,817,680]$ 5,231,735$ 3,430,657$ 8,801,484$ As of December 31, 2010, Reclassified Fund Balance Classification As of December 31, 2010 Fund Balance Classification Following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or recorded incorrectly. Additionally, it was discovered that accounts receivable had not been properly recorded. Accordingly, the beginning net assets balances were restated, the effects of which are as follows: Solid Waste Water and Golf Central Governmental General Disposal Sewer Sanitation Course Garage Activities Fund Fund Fund Fund Fund Fund Net Assets/Fund Balance, 117,797,911$ 3,617,181$ 3,895,812$ 58,578,036$ 1,159,149$ 304,622$ 205,887$ December 31, 2010 Capital Asset Adjustment 956,001 - 762 [19,712] [11,485] [287] 3,582 Accounts Receivable Adjustment 156,424 156,424 - - - - - Net Assets/Fund Balance, December 31, 2010, Restated 118,910,336$ 3,773,605$ 3,896,574$ 58,558,324$ 1,147,664$ 304,335$ 209,469$ 35 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments The City’s cash is considered to be active funds by management and is invested according to KSA 9-1401. The statute requires that banks eligible to hold active funds have a main or branch bank in the county in which the City is located or in a county adjacent to the City and the banks provide an acceptable rate for active funds. Various City investments are considered to be idle funds by management and are invested according to KSA 12-1675. The statute requires that the City invest its idle funds in only temporary notes of the City, bank certificates of deposit, repurchase agreements, and if eligible banks do not offer an acceptable rate for the funds: U.S. Treasury bills or notes or the Municipal Investment Pool (KMIP). Maturities of the above investments may not exceed two years by statute. Some of the City’s investments are of bond proceeds invested pursuant to KSA 10-131. This statute allows additional investment authority beyond that of KSA 12-1675. Investments of bond proceeds may follow KSA 12-1675 or include other investments such as the KMIP, direct obligations of the U.S. government or any agency thereof, investment agreements with a financial institution the obligations of which at the time of investment are rated in either of the three highest rating categories by Moody’s investors service or Standard and Poor’s corporation, and various other investments as specified in KSA 10-131. At December 31, 2011, the City has the following investments: Investment Type Fair Value Rating Kansas Municipal Investment Pool 305,158$ S&P AAAf/S1+ U.S. Government Securities 22,063,739 N/A Total fair value 22,368,897$ The municipal investment pool is under the oversight of the Pooled Money Investment Board. The board is comprised of the State Treasurer and four additional members appointed by the State Governor. The board reports annually to the Kansas legislature. State pooled monies may be invested in direct obligations of, or obligations that are insured as to principal and interest by the U.S. government or any agency thereof, with maturities up to four years. No more than 10 percent of those funds may be invested in mortgage-backed securities. In addition, the State pool may invest in repurchase agreements with Kansas banks or with primary government securities dealers. The City’s investment policy provides direction on concentration risk. The City policy states that funds shall be diversified to reduce the extent of losses due to having an unbalanced portfolio in terms of maturities, instrument type, and issuers. Therefore, portfolio maturities shall be staggered to avoid undue concentration of assets in a specific maturity sector. Liquidity, free of market risk, shall be assured through practices insuring that the next disbursement date and payroll date are covered through maturing investments, marketable U.S. Treasury Bills, the Municipal Investment Pool, or money market accounts. Default risk shall be minimized by requiring that all security purchases occur on a delivery vs. payment basis, and that all securities are adequately collateralized. Risk of market price volatility shall be controlled through the adoption of a "buy and hold" strategy whereby the City holds each investment to maturity, coupled with maintenance of an adequate liquidity position to insure the ability to meet normal anticipated cash flow needs. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. Deposits and Investments (Continued) When advantageous, it is allowable to sell investments to realize a gain due to price fluctuations; however, such transactions shall not be a part of the normal course of business. The City recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is employed as a way to control risk due to issuer default. In the event of a default by a specific issuer, the Director of Finance and Administration shall review, and, if appropriate, proceed to liquidate securities having comparable credit risks. Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned to it. The City’s deposit policy for custodial credit risk require that the depository banks will maintain 100% security in the form of FDIC coverage and pledged collateral according to KSA 9-1402. B. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: Tourism and Special Bicentennial Debt General Convention Gas Center Service Subtotal Primary Government Receivables: Accounts 2,889,545$ 338,271$ -$ 54,966$ -$ 3,282,782$ Taxes 8,094,093 - 312,648 - 2,441,349 10,848,090 Interest 35,877 - - - - 35,877 Gross receivables 11,019,515 338,271 312,648 54,966 2,441,349 14,166,749 Less: allowance for uncollectibles [2,211,730] - - - - [2,211,730] Total 8,807,785$ 338,271$ 312,648$ 54,966$ 2,441,349$ 11,955,019$ Solid Water Other Waste and Governmental Sanitation Disposal Sewer Total Primary Government Receivables: Accounts 52,151$ 201,973$ 231,123$ 1,489,511$ 5,257,540$ Taxes - - - - 10,848,090 Interest - - 16 - 35,893 Gross receivables 52,151 201,973 231,139 1,489,511 16,141,523 Less: allowance for uncollectibles [982] [62,801] - [463,147] [2,738,660] Total 51,169$ 139,172$ 231,139$ 1,026,364$ 13,402,863$ Component Units Salina Airport Authority Accounts 107,643$ Less: allowance for uncollectibles [984] 106,659 Taxes 1,638,423 Total Salina Airport Authority 1,745,082 Salina Housing Authority Accounts 37,957 Other 1,719 Total Salina Housing Authority 39,676 Total 1,784,758$ 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) C. Interfund Receivables and Payables The composition of interfund balances as of December 31, 2011, is as follows: Fund Types Due From Due To General Fund 9,375$ -$ Other Government Funds - 9,375 9,375$ 9,375$ The City uses interfund receivables and payables as needed when pooled cash is negative within a fund until investments mature or grant proceeds are received. All payables are cleared in less than one year. 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2011, was as follows: Balance Adj. Bal. Balance 12/31/2010 Adjustments 12/31/2010 Additions Retirements 12/31/2011 City governmental activities: Governmental activities: Capital assets, not being depreciated Construction in progress 32,549,155$ 81,670$ 32,630,825$ 2,945,099$ 3,021,567$ 32,554,357$ Land 22,477,191 - 22,477,191 - - 22,477,191 Capital assets, being depreciated Infrastructure 144,316,296 - 144,316,296 1,829,401 - 146,145,697 Buildings and improvements 36,233,800 - 36,233,800 - - 36,233,800 Vehicles 7,480,033 810,889 8,290,922 255,156 216,023 8,330,055 Equipment, furniture and fixtures 5,353,682 92,755 5,446,437 246,676 235,912 5,457,201 Total capital assets 248,410,157 985,314 249,395,471 5,276,332 3,473,502 251,198,301 Less accumulated depreciation for: Infrastructure 60,603,797 [30,296] 60,573,501 2,964,133 - 63,537,634 Buildings and improvements 12,609,132 10,741 12,619,873 1,023,364 - 13,643,237 Vehicles 5,035,374 [40,529] 4,994,845 513,718 174,927 5,333,636 Equipment, furniture and fixtures 4,039,705 89,397 4,129,102 228,844 188,665 4,169,281 Total accumulated depreciation 82,288,008 29,313 82,317,321 4,730,059 363,592 86,683,788 Governmental activities capital assets, net 166,122,149$ 956,001$ 167,078,150$ 546,273$ 3,109,910$ 164,514,513$ Business-type activities: Capital assets, not being depreciated Construction in progress 1,516,604$ -$ 1,516,604$ 10,781,482$ 1,236,031$ 11,062,055$ Land 1,541,002 - 1,541,002 - - 1,541,002 Capital assets, being depreciated Infrastructure 68,957,665 11,932 68,969,597 2,333,997 - 71,303,594 Buildings and improvements 22,587,106 - 22,587,106 - - 22,587,106 Vehicles 2,987,740 [41,385] 2,946,355 139,452 102,647 2,983,160 Equipment, furniture and fixtures 4,376,725 27,010 4,403,735 30,824 - 4,434,559 Total capital assets 101,966,842 [2,443] 101,964,399 13,285,755 1,338,678 113,911,476 Less accumulated depreciation for: Infrastructure 28,973,288 [34,750] 28,938,538 1,774,866 - 30,713,404 Buildings and improvements 10,241,870 17,027 10,258,897 424,276 - 10,683,173 Vehicles 2,084,391 9,460 2,093,851 179,756 102,647 2,170,960 Equipment, furniture and fixtures 2,394,356 36,542 2,430,898 274,294 - 2,705,192 Total accumulated depreciation 43,693,905 28,279 43,722,184 2,653,192 102,647 46,272,729 Business-type activities capital assets, net 58,272,937$ [30,722]$ 58,242,215$ 10,632,563$ 1,236,031$ 67,638,747$ 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets (Continued) The City’s depreciation expense was charged to governmental functions as follows: Governmental Activities: General government 8,990$ Public safety 507,826 Public works 3,265,341 Public health 38,013 Culture and recreation 803,772 Planning and development 106,117 Total depreciation 4,730,059$ Business-type Activities: Solid Waste Disposal 740,047$ Water and Sewer 1,758,777 Sanitation 120,799 Golf Course Division 33,569 Total depreciation 2,653,192$ E. Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2011: Balance Balance Amounts January 1, December 31, Due Within 2011 Additions Deletions 2011 One Year Governmental activities: General obligation bonds 53,120,953$ 6,587,986$ 4,483,269$ 55,225,670$ 5,051,038$ Accrued compensation 3,230,488 440,340 581,694 3,089,134 581,694 Temporary notes 2,500,000 3,400,000 2,500,000 3,400,000 3,400,000 Total 58,851,441$ 10,428,326$ 7,564,963$ 61,714,804$ 9,032,732$ Business-type activities: General obligation bonds 8,614,577$ -$ 1,396,670$ 7,217,907$ 1,200,048$ Revenue bonds 1,580,000 16,193,925 1,580,000 16,193,925 343,696 Accrued compensation 667,768 104,025 122,302 649,491 122,301 Total 10,862,345$ 16,297,950$ 3,098,972$ 24,061,323$ 1,666,045$ Component Units: General obligation bonds 12,792,154$ 14,056,831$ 1,040,000$ 25,808,985$ 1,090,000$ Financing lease 285,796 - 40,238 245,558 42,941 Temporary notes 11,652,467 - 11,652,467 - - Special assessment debt 145,299 - 20,287 125,012 21,066 Total component units 24,875,716$ 14,056,831$ 12,752,992$ 26,179,555$ 1,154,007$ 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) The following is a detailed listing of the city’s long-term debt including general obligation bonds, revenue bonds, temporary notes and loans payable: Primary Government Original Interest Bonds General Obligation Bonds Issue Rates Outstanding Internal Improvements 2002B, due 10/1/2017 1,980,000$ 2.70% to 4.50% 165,000$ Internal Improvements 2003A, due 10/1/2018 4,350,000 2.13% to 3.85% 1,765,000 Refunding 2004A, due 8/1/2015 5,585,000 2.10% to 4.00% 1,170,000 Internal Improvements 2004B, due 10/1/2019 4,053,000 3.00% to 4.00% 1,390,000 Internal Improvements 2005A, due 10/1/2020 4,210,000 2.95% to 4.25% 2,200,000 Internal Improvements 2006A, due 10/1/2026 2,200,000 3.55% to 5.50% 1,650,000 Internal Improvements 2006B, due 10/1/2021 885,000 4.00% to 4.50% 535,000 Internal Improvements 2007A, due 10/1/2027 6,545,000 4.25% to 4.625% 5,085,000 Internal Improvements 2008A, due 10/1/2023 3,720,000 3.25% to 4.00% 3,000,000 Internal Improvements 2008B, due 7/1/2028 3,525,000 3.65% to 5.00% 3,415,000 Internal Improvements 2009A, due 10/1/2029 23,695,000 2.00% to 5.00% 21,877,424 Internal Improvements 2010A, due 10/1/2025 6,916,592 2.00% to 3.875% 6,138,819 Internal Improvements 2010B, due 10/1/2023 7,973,044 0.50% to 3.00% 7,464,348 Internal Improvements 2011A, due 10/1/2031 6,587,985 2.00% to 5.00% 6,587,986 Total general obligation bonds 62,443,577$ Revenue Bonds Revenue 2011, due 10/1/31 16,193,925$ 2.00% to 4.60% 16,193,925$ Total revenue bonds 16,193,925$ Temporary Notes Series 2011-1, due 8/1/2012 3,400,000$ 0.40% 3,400,000$ Total revenue bonds 3,400,000$ 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Original Interest Bonds Issue Rates Outstanding Component Unit Salina Airport Authority General Obligation Bonds General Obligation 2001A, due 2012 1,385,000$ 4.45% to 5.60% 175,000$ General Obligation 2002A, due 2012 2,635,000 2.45% to 3.70% 305,000 General Obligation 2005A, due 2020 3,635,000 4.75% to 5.25% 2,935,000 General Obligation 2007A, due 2022 1,005,000 4.60% to 6.00% 800,000 General Obligation 2009A, due 2029 2,025,000 4.20% to 4.25% 1,932,154 General Obligation 2009B, due 2026 6,080,000 3.00% to 5.50% 5,605,000 General Obligation 2011A, due 2030 11,820,000 4.64% 11,603,309 General Obligation 2011B, due 2031 2,505,000 4.28%2,453,522 Total general obligation bonds 25,808,985 Special Assessment Debt Airport Industrial Center, due 2016 565,235 3.79% 104,691 Hangar 600 Sanitary Sewer, due 2021 27,599 4.47%20,321 Total special assessment debt 125,012 Financing Lease, due 2015 425,000 6.609%245,558 Total 26,179,555$ Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: Bonds Interest Year Outstanding Due Total 2012 6,251,086$ 2,299,881$ 8,550,967$ 2013 6,286,086 2,026,639 8,312,725 2014 5,961,086 1,802,699 7,763,785 2015 5,161,086 1,611,107 6,772,193 2016 5,001,086 1,440,080 6,441,166 2017-2021 19,865,428 4,617,544 24,482,972 2022-2026 10,541,564 1,805,185 12,346,749 2027-2031 3,376,155 307,047 3,683,202 Total 62,443,577$ 15,910,181$ 78,353,758$ General Obligation - Primary Government 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Bonds Interest Year Outstanding Due Total 2012 1,090,000$ 1,169,829$ 2,259,829$ 2013 895,000 1,096,914 1,991,914 2014 925,000 1,067,866 1,992,866 2015 955,000 1,036,264 1,991,264 2016 990,000 1,001,531 1,991,531 2017-2021 5,600,000 4,370,941 9,970,941 2022-2026 6,965,000 3,006,746 9,971,746 2027-2031 8,750,000 1,218,234 9,968,234 Total 26,170,000$ 13,968,325$ 40,138,325$ General Obligation - Component Units Annual debt service requirements to maturity for revenue bonds to be paid with utility revenues: Bonds Interest Year Outstanding Due Total 2012 343,696$ 596,991$ 940,687$ 2013 623,696 590,191 1,213,887 2014 633,696 577,791 1,211,487 2015 643,696 565,191 1,208,887 2016 663,696 549,191 1,212,887 2017-2021 3,638,480 2,433,862 6,072,342 2022-2026 4,323,480 1,738,821 6,062,301 2027-2031 5,323,485 743,320 6,066,805 Total 16,193,925$ 7,795,358$ 23,989,283$ Revenue Bonds - Primary Government Annual debt service requirements to maturity for temporary notes - to be paid through the issuance of general obligation bonds: Bonds Interest Year Outstanding Due Total 2012 3,400,000$ 14,204$ 3,414,204$ Temporary Notes - Primary Government 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Annual debt service requirements to maturity for financing lease - to be paid from rental revenue: Lease Interest Year Outstanding Due Total 2012 42,941$ 15,531$ 58,472$ 2013 45,826 12,646 58,472 2014 48,905 9,567 58,472 2015 52,190 6,282 58,472 2016 55,696 2,776 58,472 Total 245,558$ 46,802$ 292,360$ Financing Lease - Component Units Annual debt service requirement to maturity for Special Assessment Debt to be paid from rental revenue: Assessment Interest Year Outstanding Due Total 2012 21,066$ 4,876$ 25,942$ 2013 21,876 4,067 25,943 2014 22,717 3,226 25,943 2015 23,590 2,352 25,942 2016 24,497 1,446 25,943 2017-2021 11,266 1,555 12,821 Total 125,012$ 17,522$ 142,534$ Special Assessment Debt - Component Units 44 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Special assessments. As provided by Kansas statutes, projects financed in part by special assessments are financed through general obligation bonds of the City and are retired from the debt service fund. Special assessments paid prior to the issuance of bonds are recorded as revenue in the appropriate project. Special assessments received after the issuance of bonds are recorded as revenue in the debt service fund. The special assessments are not recorded as revenue when levied against the respective property owners as such amounts are not available to finance current year operations. The special assessment debt is a contingent obligation of the City to the extent of property owner defaults, which have historically been immaterial. Conduit debt. The City has entered into several conduit debt arrangements wherein the City issues industrial revenue bonds to finance a portion of the construction of facilities by private enterprises. In return, the private enterprises have executed mortgage notes or leases with the City. The City is not responsible for payment of the original bonds, but rather the debt is secured only by the cash payments agreed to be paid by the private enterprises under the terms of the mortgage or lease agreements. Generally, the conduit debt is arranged so that payments required by the private enterprises are equal to the mortgage payments schedule related to the original debt. At December 31, 2011, total outstanding conduit debt was $86,472,423. Defeased debt. In prior years, the City has defeased certain other outstanding debt obligations by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust accounts and the defeased bonds are not included in the City’s financial statements. At December 31, 2011, the City had $325,000 of outstanding defeased debt. F. Reconciliation of Transfers A reconciliation of interfund transfers follows: Transfer In Transfer Out Major Funds: General fund 868,838$ 997,949$ Flood and drainage improvement fund 907 - Tourism and convention fund - 596,440 Special gas fund 180,000 1,836 Bicentennial center fund 872,849 - Sales tax capital fund 8,558 3,501,556 Debt service 2,225,565 83,488 Capital projects fund 3,289,564 405,549 Other governmental funds 547,389 105,259 Agency funds - 198,821 Solid waste disposal fund - 180,000 Water and sewer fund - 2,030,000 Golf course fund 47,228 - Central garage fund 60,000 - Total Transfers 8,100,898$ 8,100,898$ The City uses interfund transfers to share administrative costs between funds. 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION A. Defined Benefit Pension Plan Plan description. The City participates in the Kansas Public Employees Retirement System (KPERS) and the Kansas Police and Firemen’s Retirement System (KP&F). Both are cost-sharing multiple-employer defined benefit pension plans as provided by Kansas statutes (KSA 74-4901 et seq). KPERS and KP&F provide retirement benefits, life insurance, disability income benefits and death benefits. Kansas law established and amends benefit provisions. KPERS and KP&F issue a publicly available financial report that includes financial statements and required supplementary information. Those reports may be obtained by writing to 611 South Kansas, Suite 100; Topeka, Kansas 66603 or by calling 1-888-275-5737. Funding Policy. K.S.A. 74-4919 establishes the KPERS member-employee contribution rate at up to 6% of covered salary. K.S.A. 74-4975 establishes the KP&F member-employee contribution rate at 7% of covered salary. The employer collects and remits member-employee contributions according to the provisions 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 and KP&F are funded on an actuarial reserve basis. State law sets a limitation on annual increases in the employer contribution rates. The KPERS employer rate was 6.96% from January 1 to December 31, 2011. The City employer contributions to KPERS for the years ending December 31, 2011, 2010, and 2009 were $987,826, $1,039,728 and $831,493, respectively, equal to the required contributions for each year. The KP&F employer rate established for fiscal years beginning in 2011 is 17.68%. Employers participating in KP&F also make contributions to amortize the liability for past service costs, if any, which are determined separately for each participating employer. The City's contributions to KP&F for the years ended December 31, 2011, 2010, and 2009 were $1,787,801, $1,664,356 and $1,769,379, respectively, equal to the required contributions for each year. B. Deferred Compensation Plan The City offers its employees a deferred compensation plan ("Plan") created in accordance with Internal Revenue Code Section 457. The Plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Plan assets are transferred to a plan agent in a custodial trust and are not available to the claims of the City's general creditors. C. Flexible Benefit Plan (I.R.C. Section 125) The City Commission has adopted by resolution a salary reduction flexible benefit plan ("Plan") under Section 125 of the Internal Revenue Code. All City employees working more than 20 hours per week are eligible to participate in the Plan beginning after two full months of employment. Each participant may elect to reduce his or her salary to purchase benefits offered through the Plan. Benefits offered through the Plan include various insurance and disability benefits. D. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; natural disasters and other events for which the City carries commercial insurance. No significant reductions in insurance coverage from that of the prior year have occurred. Settlements have not exceeded insurance coverage for each of the past three years. 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) D. Risk Management (Continued) The City has established a limited risk management program for workers’ compensation. The program covers all City employees. Premiums are paid into the Workers’ Compensation Reserve Fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $250,000 ($350,000 for claims involving employees classified as policemen or firemen). Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Workers' Compensation Reserve Fund because it is expected to be liquidated with expendable available financial resources. Of the liability, $172,545 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2011 2010 Unpaid claims, January 1 425,582$ 372,610$ Incurred claims (including IBNRs) 126,625 409,801 Claim payments [230,417] [356,829] Unpaid claims, December 31 321,790$ 425,582$ The City established a limited risk management program for employee health and dental insurance in 1997. The program covers eligible City employees. Premiums are paid into the health insurance fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments in the Health Insurance Fund because it is expected to be liquidated with expendable available financial resources. Therefore, all of the liability is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2011 2010 Unpaid claims, January 1 382,502$ 421,530$ Incurred claims (including IBNRs) 4,229,571 4,198,012 Claim payments [4,220,898] [4,237,040] Unpaid claims, December 31 391,175$ 382,502$ 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) E. Capital Projects Capital projects often extend over two or more fiscal years. The following is a schedule, which compares the project authorization including allowable interest revenue to total project expenditures from project inception to December 31, 2011. Project Authorization Expenditures N Ohio Grade Separation 6,617,581$ 6,523,786$ Bicentennial Improvements 2,500,000 2,505,636 Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and Wastewater Pump Station Rehabilitation 5,150,000 1,070,277 Grand Prairie Addition 1,618,096 1,479,406 Magnolia Commons 3,415,564 3,003,051 South 9th Corridor, Phase IV 6,500,000 6,201,014 Scoular Addition Waterline Imp. 75,453 48,673 Stone Creek Addition 440,193 324,404 Riffel # 2 Infrastructure 977,917 893,024 East Magnolia Road Replacement 4,500,000 432,128 Aviation Service Center 5,500,000 3,737,322 Fire Station # 1 1,787,000 226,131 Project overages in the Bicentennial Improvements project will be reimbursed by special sales tax proceeds. F. Contingent Liabilities The City receives significant financial assistance from numerous federal and state governmental agencies in the form of grants and state pass-through aid. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreements and is subject to audit. Any disallowed claims resulting from such audits could become a liability of the General Fund or other applicable funds. However, in the opinion of management, any such disallowed claims would not have a material effect on any of the financial statements of the City at December 31, 2011. The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's legal counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. G. Municipal Solid Waste Landfill State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste, and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the City reports a portion of these closure and postclosure care costs as an operating expense of the solid waste fund in each period based on landfill capacity used as of each balance sheet date. The $2,042,254 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 29.5% of the estimated capacity of the landfill. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) G. Municipal Solid Waste Landfill (Continued) The City's solid waste fund will recognize the remaining estimate cost of closure and postclosure care of $4,891,330 as the remaining estimated capacity is filled over the remaining life expectancy of 68.8 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2011. Actual cost may be higher due to inflation, changes, in technology or changes in regulations. The City is required by State and Federal laws and regulations to provide assurances of financial responsibility for closure and post- closure care. The City has elected to utilize the Local Government Financial test promulgated by the U.S. Environmental Protection Agency (at 40 CFR 258.74(f)) and the Kansas Department of Health and Environment to provide these assurances. Any future closure or post-closure care costs will be provided through the normal budgeting and rate setting process, including the issuance of general obligation bonds, if necessary. H. Environmental Matters The Kansas Department of Health and Environment (KDHE) issued a report in 1994 indicating the presence of volatile organic compounds at levels requiring remediation at the Salina Public Water Supply Wells Site. The City adopted a proactive Policy and Action Plan to remediate the groundwater contamination, and on December 7, 1994, the City and KDHE entered into a Consent Order and Settlement Agreement under which the City assumed primary responsibility for the further investigation and remediation of the groundwater contamination. Field testing work has been completed. The necessary remediation work will be conducted over the next several years at a yet undetermined cost to the City's Water and Sewer Fund. The U.S. Department of Defense transferred property located at the former Schilling Air Force Base (the Base or Site) to the City on or about September 9, 1966. The property is now known to contain areas of extensive soil and groundwater contamination, which is a result of the use and disposal of chlorinated solvents during military operations at the Base from 1942 until Base closure in 1965. The U.S. Department of Defense is responsible for the investigation and remediation of contamination caused by military activities at current and former military bases. The U.S. Army Corps of Engineers (Corps) is the lead agency for the Department at formerly used defense sites. The Corps has investigated the soil and groundwater contamination at the Site under the regulatory oversight of the U.S. Environmental Protection Agency (EPA) and the Kansas Department of Health and Environment (KDHE). The Site is not designated as a National Priority List Superfund site, but investigation and remediation are required to be in compliance with the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Potential liability for contamination under CERCLA extends broadly to parties associated with the release or presence of hazardous substances, including not only those entities involved with contaminant use and disposal, but in some cases other current and former owners and operators of contaminated sites. As a current owner of extensive amounts of property at the Site, the City is potentially liable under CERCLA, although the City believes that it has meritorious defenses to such liability. The City is under no administrative orders from the EPA or KDHE. The City is considered to be a Potentially Responsible Party (PRP) for the Site, primarily due to its status as a property owner. The Salina Airport Authority, City of Salina, Unified School District No. 305 and the Kansas Board of Regents (Kansas State University at Salina) (collectively Salina Public Entities) currently own over 90% of the nearly 4,000 acres of the Base property. 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Beginning in August 2007, the Salina Public Entities initiated settlement negotiations with the U.S. Federal Government. The negotiation objectives at that time included transferring the responsibility for completing the cleanup from the U.S. to the Salina Public Entities. The local objective was to reach a settlement agreement with the U.S. that provides the Salina Public Entities sufficient funds to complete cleanup operations over a 30-year period. During calendar year 2008, the Salina Public Entities, by and through its environmental consultant, prepared a detailed Cost to Complete Estimate (CTC). The CTC preparation included consultation with the EPA and KDHE. The Salina Public Entities’ CTC was completed in June of 2008 and submitted to the Corps. Subsequently, on January 23, 2009, the Salina Public Entities delivered a demand letter to the Corps. The letter demanded that settlement negotiations begin immediately with the U.S. Department of Justice. On May 14, 2009 the City was notified that the Corp referred the Base demand letter to the U.S. Department of Justice on May 12, 2009. The Salina Public Entities delivered on or about May 10, 2010, a settlement offer and a draft of a lawsuit complaint to the attorney for the U.S. Department of Justice. The Salina Public Entities planned to file suit against the U.S. if the matter was not settled by the end of May, 2010. The Salina Public Entities did not intend to cut off settlement negotiations by the filing of suit, and this has been communicated to the U.S. No remedial action plan or record of decision has been adopted by the EPA or KDHE. On or about May 27, 2010, the Salina Public Entities filed their Complaint against the United States of America, the United States Department of Defense and Secretary of Defense, Robert M. Gates, in his official capacity (collectively, "Defendants"). On or about September 22, 2010, the Salina Public Entities filed their First Amended Complaint in four counts: Count I Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(2), Count II Citizen Suit Claim Pursuant to 42 U.S.C.§ 9659(a)(1), Count III Claim for Recovery of Response Costs Pursuant to 42 U.S.C.§ 9607(a) and Count IV Claim for Declaratory Judgment Pursuant to 42 U.S.C.§ 9613(g)(2). On or about October 6, 2010, Defendants filed their motion to dismiss and to strike, primarily with respect to the citizen suit claims. On or about March 25, 2011, Judge Murguia entered his Memorandum and Order. The Judge granted the Defendants' motion to dismiss Counts I and II (citizen suit claims) for lack of subject matter jurisdiction. He also granted the Defendants' motion to dismiss the Salina Public Entities' requests for attorney fees, with the exception of non-litigation attorney fees. He denied the Defendants' motion to strike the Salina Public Entities' allegations of a conflict of interest. The Salina Public Entities' claims under Counts III and IV for response costs under CERCLA 9607(a) are not affected by the Judge's rulings. The Salina Public Entities disagree with most of the Judge's filings and, if necessary, plan to take an interlocutory appeal to the Tenth Circuit to contest the rulings. On or about April 22, 2011, Defendants filed their Answer to First Amended Complaint and Counterclaim against the Salina Public Entities. Count I of the Counterclaim alleges a claim for contribution under CERCLA, 42 U.S.C.§ 9613(f)(1). Count II of the Counterclaim alleges a claim for cost recovery under CERCLA, 42 U.S.C.§ 9607(a)(1). Count II alleges costs incurred by the U.S. Environmental Protection Agency of approximately $1,838,241 as of September 30, 2007, and alleges costs incurred by the Corps of approximately $14,915,228 as of April 17, 2009. The Salina Public Entities intend to vigorously contest the claims brought against them and will assert, among other defenses, the third party defense under 42 U.S.C.§ 9607(b)(3). 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) Since the lawsuit remains pending without a final settlement, the City intends to vigorously pursue its claims and contest the claims brought against it. Based on presently known information, the City has determined that while a possible liability exists, at this time no reasonable estimate of the possible liability can be made. Therefore, no liability related to that matter has been recorded. I. Postemployment Health Care Plan Plan Description. The City operates a single employer defined benefit healthcare plan administered by the City. The Employee Benefit Plan (the Plan) provides medical and dental benefits to eligible early retirees and their spouses. KSA 12-5040 requires all local governmental entities in the state that provide a group health care plan to make participation available to all retirees and dependents until the retiree reaches the age of 65 years. No separate financial report is issued for the Plan. Funding Policy. The contribution requirements of plan participants and the City are established and amended by the City. The required contribution is based on projected pay-as-you-go financing requirements. Plan participants contributed approximately $229,000 to the Plan (approximately 100% of total premiums) through their required contribution of $425 per month for retiree-only coverage and $1,141 for family coverage. Annual OPEB Cost and Net OPEB Obligation. The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the Plan for the year, the amount actually contributed to the plan, and the changes in the City’s net OPEB obligation to the Plan: Annual required contribution 961,335$ Interest on Net OPEB Obligation 95,743 Adjustment to Annual Required Contribution [79,786] Annual OPEB cost (expense) 977,292 Benefit payments 229,000 Change in net OPEB obligation 748,292 Net OPEB obligation - beginning of year 2,393,591 Net OPEB obligation - end of year 3,141,883$ 51 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2011 Note 5. OTHER INFORMATION (Continued) I. Postemployment Health Care Plan (Continued) The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the year ended December 31, 2011 was as follows: Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2008 910,418$ 96,672$ 813,746$ December 31, 2009 957,353 100,000 1,671,099 December 31, 2010 921,492 199,000 2,393,591 December 31, 2011 977,292 229,000 3,141,883 Funding Status and Funding Progress. As of the year ended December 31, 2011, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $9,019,806 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $9,019,806. The covered payroll (annual payroll of active employees covered by the plan) was $21,942,428, and the ratio of the UAAL to the covered payroll was 41.11%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statement, presents multiyear trend information about whether the actuarial value of plan assets (if any) are increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan participants) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan participants to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the year ended December 31, 2011, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 4.00% investment rate of return, which is the rate of the employer’s own investments as there are no plan assets and an initial annual medical and dental healthcare cost trend of 9.30%, reduced by decrements to an ultimate rate 4.70% after eighty-two years. The UAAL is being amortized as a level dollar over an open thirty-year period. REQUIRED SUPPLEMENTARY INFORMATION 52 CITY OF SALINA, KANSAS OTHER POST-EMPLOYMENT BENEFITS REQUIRED SUPPLEMENTARY INFORMATION December 31, 2011 Schedule of Employer Contributions: Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2008 910,418$ 96,672$ 813,746$ December 31, 2009 957,353 100,000 1,671,099 December 31, 2010 921,492 199,000 2,393,591 December 31, 2011 977,292 229,000 3,141,883 Schedule of Funding Progress: UAAL as Actuarial Actuarial Actuarial Unfunded Funded Covered Percent of Valuation Value of Accrued AAL Ratio Payroll Payroll Date Assets (a)Liability (b)(b) - (a)(a/b)(c)(b-a)/(c) 12/31/2008 -$ 8,917,346$ 8,917,346$ 0.0% 21,874,112$ 40.77% 12/31/2009 - 8,917,346 8,917,346 0.0% 22,397,996 39.81% 12/31/2010 - 9,019,806 9,019,806 0.0% 22,613,236 39.89% 12/31/2011 - 9,019,806 9,019,806 0.0% 21,942,428 41.11% CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 7,564,507$7,359,721$7,359,721$204,786$ Delinquent taxes 212,244 292,488 292,488 [80,244] Motor vehicle taxes 723,857 937,258 937,258 [213,401] General sales tax 11,767,400 11,716,000 11,716,000 51,400 Other taxes 4,221,302 4,585,000 4,585,000 [363,698] Total taxes 24,489,310 24,890,467 24,890,467 [401,157] Charges for services General charges 144,556 --144,556 General government 340 8,912 8,912 [8,572] Public safety 3,465,106 4,505,812 4,505,812 [1,040,706] Public works 261,707 156,904 156,904 104,803 Health and sanitation 51,838 62,300 62,300 [10,462] Culture and recreation 1,324,551 1,295,614 1,295,614 28,937 Community and economic development 10,368 9,982 9,982 386 Total charges for services 5,258,466 6,039,524 6,039,524 [781,058] Operating grants, restricted General grants 153,566 185,000 185,000 [31,434] Public safety 631,417 837,000 837,000 [205,583] Budgeted Amounts See independent auditor's report on the financial statements. 53 Public safety 631,417 837,000 837,000 [205,583] Community and economic development 28,202 --28,202 Total operating grants, restricted 813,185 1,022,000 1,022,000 [208,815] Operating grants, unrestricted General grants 2,500 503 503 1,997 Public works 250 3,000 3,000 [2,750] Culture and recreation 8,241 18,000 18,000 [9,759] Total operating grants, unrestricted 10,991 21,503 21,503 [10,512] Interest income General interest 15,749 65,000 65,000 [49,251] Total interest income 15,749 65,000 65,000 [49,251] Interfund services provided General services 1,392,161 918,017 918,017 474,144 General government 2,532,316 1,755,876 1,755,876 776,440 Community and economic development 63,340 50,501 50,501 12,839 Total interfund services provided 3,987,817 2,724,394 2,724,394 1,263,423 Miscellaneous revenues General miscellaneous revenues 118,112 134,321 134,321 [16,209] General government 90 --90 Public safety 185,054 199,000 199,000 [13,946] Public works 4,134 10,000 10,000 [5,866] Culture and recreation 16,439 25,000 25,000 [8,561] Total miscellaneous revenues 323,829 368,321 368,321 [44,492] Proceeds of capital assets General sales -30,000 30,000 [30,000] Public safety 200 --200 Total proceeds of capital assets 200 30,000 30,000 [29,800] Total revenues 34,899,547 35,161,209 35,161,209 [261,662] See independent auditor's report on the financial statements. 53 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Expenditures General Government City commission 102,880$112,383$112,383$9,503$ City manager 505,962 555,736 555,736 49,774 Legal 381,704 305,300 305,300 [76,404] Finance 617,575 553,074 553,074 [64,501] Human resources 374,387 350,007 350,007 [24,380] Other general government 1,198,470 987,080 987,080 [211,390] Contingencies 20,884 50,000 50,000 29,116 Total general government 3,201,862 2,913,580 2,913,580 [288,282] Public Safety Police 8,409,519 8,307,450 8,307,450 [102,069] Municipal court 1,430,676 1,625,516 1,625,516 194,840 Fire 8,166,268 7,763,377 7,763,377 [402,891] Total public safety 18,006,463 17,696,343 17,696,343 [310,120] Public Works Buildings and general improvements 1,005,385 1,253,194 1,253,194 247,809 Engineering 997,558 980,799 980,799 [16,759] Streets 1,759,697 1,826,158 1,826,158 66,461 Flood works 203,126 221,058 221,058 17,932 Budgeted Amounts See independent auditor's report on the financial statements. 54 Flood works 203,126 221,058 221,058 17,932 Traffic control 743,165 819,062 819,062 75,897 Parks 1,409,829 1,444,930 1,444,930 35,101 ADA compliance 6,440 15,000 15,000 8,560 Total public works 6,125,200 6,560,201 6,560,201 435,001 Public Health and Sanitation Cemetery 157,981 146,827 146,827 [11,154] Health department 1,018,101 967,138 967,138 [50,963] Total public health and sanitation 1,176,082 1,113,965 1,113,965 [62,117] Culture and Recreation Swimming pools 430,322 419,838 419,838 [10,484] Neighborhood centers 41,773 46,233 46,233 4,460 Recreation 1,810,910 1,640,473 1,640,473 [170,437] Arts and humanities 1,079 --[1,079] Smoky Hill museum 448,463 435,263 435,263 [13,200] Total culture and recreation 2,732,547 2,541,807 2,541,807 [190,740] Community Development Human relations 330,092 337,809 337,809 7,717 Development services 1,215,034 1,332,930 1,332,930 117,896 Agency contracts 771,970 783,921 783,921 11,951 Total community development 2,317,096 2,454,660 2,454,660 137,564 Capital Outlay Capital outlay 867,777 876,345 876,345 8,568 Cash Reserve -4,354,391 4,354,391 4,354,391 Total expenditures 34,427,027 38,511,292 38,511,292 4,084,265 Excess [deficiency] of revenues over [under] expenditures 472,520 [3,350,083][3,350,083]3,822,603 See independent auditor's report on the financial statements. 54 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) GENERAL FUND (Continued) For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Other financing sources [uses] Transfer in 168,838$500,000$500,000$[331,162]$ Transfer [out][997,949][994,358][994,358][3,591] Total other financing sources [uses][829,111][494,358][494,358][334,753] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][356,591][3,844,441][3,844,441]3,487,850 Unreserved fund balance, January 1 2,918,651 3,978,485 3,978,485 [1,059,834] Prior year cancelled encumbrances 7,140 --7,140 Unreserved fund balance, December 31 2,569,200 134,044$134,044$2,435,156$ Reconciliation to GAAP Interest receivable 35,877 Accounts receivable 677,815 Taxes receivable 8,094,093 Inventory 89,716 Budgeted Amounts See independent auditor's report on the financial statements. 55 Inventory 89,716 Deferred revenue [7,923,279] Current year encumbrances 292,816 GAAP Fund Balance, December 31 3,836,238$ See independent auditor's report on the financial statements. 55 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) FLOOD AND DRAINAGE IMPROVEMENT FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Delinquent taxes 6,016$2,268$6,020$[4]$ Total taxes 6,016 2,268 6,020 [4] Interest income General interest -138 138 [138] Total interest income -138 138 [138] Miscellaneous revenues General miscellaneous revenues 11,550 -8,064 3,486 Total miscellaneous revenues 11,550 -8,064 3,486 Total revenues 17,566 2,406 14,222 3,344 Expenditures Capital Outlay 205,823 11,130 200,000 [5,823] Total expenditures 205,823 11,130 200,000 [5,823] Excess [deficiency] of revenues over [under] expenditures [188,257][8,724][185,778][2,479] Other financing sources [uses] Transfer in 907 --907 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][187,350][8,724][185,778][1,572] Unreserved fund balance, January 1 187,350 8,724 187,350 - Unreserved fund balance, December 31 --$1,572$[1,572]$ Reconciliation to GAAP Current year encumbrances 907 . GAAP Fund Balance, December 31 907$ Budgeted Amounts See independent auditor's report on the financial statements. 56 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) TOURISM AND CONVENTION FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Other taxes 1,332,827$1,350,000$1,350,000$[17,173]$ Interest income General interest 143 --143 Total revenues 1,332,970 1,350,000 1,350,000 [17,030] Expenditures Community Development Tourism 736,386 751,664 751,664 15,278 Total expenditures 736,386 751,664 751,664 15,278 Excess [deficiency] of revenues over [under] expenditures 596,584 598,336 598,336 [1,752] Other financing sources [uses] Transfer [out][596,440][600,000][600,000]3,560 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]144 [1,664][1,664]1,808 Unreserved fund balance, January 1 2,058 1,664 1,664 394 Unreserved fund balance, December 31 2,202 -$-$2,202$ Reconciliation to GAAP Accounts receivable 338,271 GAAP Fund Balance, December 31 340,473$ Budgeted Amounts See independent auditor's report on the financial statements. 57 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL GAS FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Public works 1,366,522$1,460,382$1,460,382$[93,860]$ Interest income General interest 3,718 6,000 6,000 [2,282] Total revenues 1,370,240 1,466,382 1,466,382 [96,142] Expenditures Public Works Streets 426,084 425,395 425,395 [689] Capital Outlay 1,401,756 1,886,116 1,886,116 484,360 Cash Reserve -500,000 500,000 500,000 Total expenditures 1,827,840 2,811,511 2,811,511 983,671 Budgeted Amounts See independent auditor's report on the financial statements. 58 Total expenditures 1,827,840 2,811,511 2,811,511 983,671 Excess [deficiency] of revenues over [under] expenditures [457,600][1,345,129][1,345,129]887,529 Other financing sources [uses] Transfer in 180,000 180,000 180,000 - Transfer [out][1,836]--[1,836] Total other financing sources [uses]178,164 180,000 180,000 [1,836] Excess [deficiency] of revenues and other sources over [under][279,436][1,165,129][1,165,129]885,693 expenditures and other [uses] Unreserved fund balance, January 1 735,009 1,165,129 1,165,129 [430,120] Prior year cancelled encumbrances 370,888 --370,888 Unreserved fund balance, December 31 826,461 -$-$826,461$ Reconciliation to GAAP Taxes receivable 312,648 Retainage payable [44,389] Current year encumbrances 323,023 GAAP Fund Balance, December 31 1,417,743$ See independent auditor's report on the financial statements. 58 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) BICENTENNIAL CENTER FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Culture and recreation 772,480$1,379,500$1,379,500$[607,020]$ Interest income General interest 193 3,500 3,500 [3,307] Miscellaneous revenues General miscellaneous revenues 692 --692 Total revenues 773,365 1,383,000 1,383,000 [609,635] Expenditures Culture and Recreation Bicentennial Center 1,548,901 1,902,262 1,902,262 353,361 Capital Outlay 11,028 532,850 532,850 521,822 Cash Reserve -329,400 329,400 329,400 Total expenditures 1,559,929 2,764,512 2,764,512 1,204,583 Excess [deficiency] of revenues over [under] expenditures [786,564][1,381,512][1,381,512]594,948 Other financing sources [uses] Transfer in 872,849 875,000 875,000 [2,151] Total other financing sources [uses]872,849 875,000 875,000 [2,151] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]86,285 [506,512][506,512]592,797 Unreserved fund balance, January 1 1,630 506,512 506,512 [504,882] Unreserved fund balance, December 31 87,915 -$-$87,915$ Reconciliation to GAAP Accounts receivable 54,966 GAAP Fund Balance, December 31 142,881$ Budgeted Amounts See independent auditor's report on the financial statements. 59 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SALES TAX CAPITAL FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Selective sales tax 3,763,045$3,686,500$3,686,500$76,545$ Interest income General interest 5,683 20,000 20,000 [14,317] Total revenues 3,768,728 3,706,500 3,706,500 62,228 Expenditures General Government Other general government --155,000 155,000 Capital Outlay 2,371,778 1,805,000 3,130,211 758,433 Cash Reserve -185,580 -- Total expenditures 2,371,778 1,990,580 3,285,211 913,433 Budgeted Amounts See independent auditor's report on the financial statements. 60 Total expenditures 2,371,778 1,990,580 3,285,211 913,433 Excess [deficiency] of revenues over [under] expenditures 1,396,950 1,715,920 421,289 975,661 Other financing sources [uses] Transfer in 8,558 --8,558 Transfer [out][2,367,590][2,000,000][2,000,000][367,590] Total other financing sources [uses][2,359,032][2,000,000][2,000,000][359,032] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][962,082][284,080][1,578,711]616,629 Unreserved fund balance, January 1 1,572,216 284,080 1,578,711 [6,495] Unreserved fund balance, December 31 610,134 -$-$610,134$ Reconciliation to GAAP Current year encumbrances 787,437 GAAP Fund Balance, December 31 1,397,571$ See independent auditor's report on the financial statements. 60 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES 61 CITY OF SALINA, KANSAS COMBINING STATEMENTS - NONMAJOR FUNDS NONMAJOR SPECIAL REVENUE FUNDS Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. Business improvement district fund - State law allows businesses within an area to voluntarily establish an improvement City. This fund is used to account for the assessments made on the District. All revenues are to be used within the Business Improvement District. Neighborhood park fund - To account for fees collected from new residential building projects in Salina. Expenditures are for acquisition or development of neighborhood parks in the growing areas of the community. Special parks and recreation fund - To account for liquor tax revenues, which must be used for park maintenance and improvements. Special alcohol fund - To account for liquor tax revenues, which must be used for programs, which address prevention, education or intervention for drug and alcohol abuse. Bicentennial center event fund - To account for the revenues and expenses associated with special events (concerts, shows, etc.) at the City's convention center. HUD community development fund - To account for grants received from the state to be used for housing or economic development purposes. Community development revolving fund - To account for funds, which may be loaned for housing and economic development, purposes, to later be repaid and reused on a revolving basis. Heritage commission fund - To account for revenues and expenses associated with heritage preservation activities. Sales tax economic development fund - To account for 12.5% of the 1/4 cent sales tax designated for economic Development purposes. Fair housing fund - To account for grants received from the federal government to be used to monitor and mediate fair housing complaints. CDBG ED fund- To account for grants received from the federal government to be used for economic development loans to qualifying businesses. HOME V fund - To account for grants received from the state government to be used for housing rehabilitation. Special law enforcement fund - To account for revenues received from the sale of forfeited assets acquired during drug enforcement activities. Expenses are limited to capital items to be used for further drug enforcement activities. Police grants fund - To account for revenues from grants, which are to be used for special police activities, including the D.A.R.E. program D.A.R.E. donations fund - To account for donations to the D.A.R.E. program. War memorial maintenance fund - To account for monies to be used for maintenance of the local war memorial. Arts & humanities fund - To account for revenues and expenses associated with arts and humanities activities. Federal CARE Grant - To account for revenue and expenses associated with the CARE Grant. 62 CITY OF SALINA, KANSAS COMBINING STATEMENTS - NONMAJOR FUNDS NONMAJOR PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government’s programs. Cemetery endowment fund - To account for amounts expended for perpetual care of the City cemetery. Interest earnings are used for cemetery maintenance. Mausoleum endowment fund - To account for amounts charged for perpetual care of the City mausoleum. Interest earnings are used for mausoleum maintenance. Tricentennial commission fund - To account for donations to be used to celebrate the nation's tricentennial in the year 2076. Total Total Nonmajor Total Nonmajor Nonmajor Debt Nonmajor Special Revenue Permanent Service Governmental Funds Funds Fund Funds ASSETS Cash and investments 1,790,051$426,741$556,603$2,773,395$ Receivables Accounts 51,169 --51,169 Total assets 1,841,220$426,741$556,603$2,824,564$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 14,039$-$8,604$22,643$ Due to other funds 9,375 --9,375 Total liabilities 23,414 -8,604 32,018 Fund balances: Restricted 343,255 -547,999 891,254 Committed 1,424,551 426,741 -1,851,292 Assigned 50,000 --50,000 Total fund balances 1,817,806 426,741 547,999 2,792,546 Total liabilities and fund balances 1,841,220$426,741$556,603$2,824,564$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2011 See independent auditor's report on the financial statements. 63 Total Total Nonmajor Total Nonmajor Nonmajor Debt Nonmajor Special Revenue Permanent Service Governmental Funds Funds Fund Funds REVENUES Taxes 317,297$-$-$317,297$ Intergovernmental 520,055 -205,582 725,637 Charges for services 1,115,913 9,109 -1,125,022 Licenses and permits 6,250 --6,250 Investment revenue 5,394 1,177 49 6,620 Miscellaneous 72,293 --72,293 Total revenues 2,037,202 10,286 205,631 2,253,119 EXPENDITURES Current Culture and recreation 1,616,170 --1,616,170 Public health and sanitation 153,730 --153,730 For the Year Ended December 31, 2011 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS See independent auditor's report on the financial statements. 64 Public health and sanitation 153,730 --153,730 Planning and development 288,275 --288,275 Miscellaneous -35 -35 Debt service Principal retirement 25,000 -110,000 135,000 Interest and other charges 4,399 -157,345 161,744 Capital outlay 529,401 --529,401 Total expenditures 2,616,975 35 267,345 2,884,355 Excess [deficiency] of revenues over [under] expenditures [579,773]10,251 [61,714][631,236] Other financing sources [uses] Transfers in 547,389 --547,389 Transfers [out][105,259]--[105,259] Total other financing sources [uses]442,130 --442,130 Net change in fund balance [137,643]10,251 [61,714][189,106] Fund balance - Beginning of year 1,955,449 416,490 609,713 2,981,652 Fund balance - End of year 1,817,806$426,741$547,999$2,792,546$ See independent auditor's report on the financial statements. 64 Business Special Improvement Neighborhood Parks &Special District Park Recreation Alcohol ASSETS Cash and investments 1,611$229,134$45,236$4$ Receivables Accounts 51,169 --- Total assets 52,780$229,134$45,236$4$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 1,611$-$-$-$ Due to other funds ---- Total liabilities 1,611 --- Fund balance: Restricted 51,169 -45,236 4 Committed -229,134 -- COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2011 CITY OF SALINA, KANSAS Committed -229,134 -- Assigned ---- Total fund balance [deficit]51,169 229,134 45,236 4 Total liabilities and fund balances 52,780$229,134$45,236$4$ Bicentennial HUD Comm.Sales Tax Center Community Development.Heritage Economic Event Dev.Revolving Commission Development 98,847$71,880$173,160$4$957,112$ ----- 98,847$71,880$173,160$4$957,112$ -$-$-$-$-$ ----- ----- -71,880 173,160 -- 98,847 --4 907,11298,847 --4 907,112 ----50,000 98,847 71,880 173,160 4 957,112 98,847$71,880$173,160$4$957,112$ See independent auditor's report on the financial statements. 65 Special Fair CDBG HOME Law Housing ED V Enforcement ASSETS Cash and investments 5,181$2,472$-$2,855$ Receivables Accounts ---- Total assets 5,181$2,472$-$2,855$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 825$-$-$-$ Due to other funds ---- Total liabilities 825 --- Fund balance: Restricted -2,472 -- Committed 4,356 --2,855 COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) CITY OF SALINA, KANSAS December 31, 2011 Committed 4,356 --2,855 Assigned ---- Total fund balance [deficit]4,356 2,472 -2,855 Total liabilities and fund balances 5,181$2,472$-$2,855$ War Federal Police DARE Memorial Arts &CARE Grants Donations Maintenance Humanities Grant Totals -$1,742$35,262$165,551$-$1,790,051$ -----51,169 -$1,742$35,262$165,551$-$1,841,220$ 2,012$-$-$9,591$-$14,039$ 8,709 ---666 9,375 10,721 --9,591 666 23,414 ----[666]343,255 [10,721]1,742 35,262 155,960 -1,424,551[10,721]1,742 35,262 155,960 -1,424,551 -----50,000 [10,721]1,742 35,262 155,960 [666]1,817,806 -$1,742$35,262$165,551$-$1,841,220$ 66 See independent auditor's report on the financial statements. Business Special Improvement Neighborhood Parks &Special District Park Recreation Alcohol Revenues Taxes -$-$-$-$ Intergovernmental --153,566 153,566 Charges for services 83,467 --- Licenses and permits -6,250 -- Investment revenue 20 629 220 24 Miscellaneous --1,373 - Total Revenues 83,487 6,879 155,159 153,590 Expenditures Current Culture and recreation ---- Public health and sanitation ---153,730 Planning and development 84,531 --- Debt service Principal retirement --25,000 - CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, For the Year Ended December 31, 2011 AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS Principal retirement --25,000 - Interest and other charges --4,399 - Capital outlay --99,817 - Total Expenditures 84,531 -129,216 153,730 Excess [deficiency] of revenues over [under] expenditures [1,044]6,879 25,943 [140] Other financing sources [uses] Transfers in ---- Transfers [out]--[47,228]- Total other financing sources [uses]--[47,228]- Net change in fund balance [1,044]6,879 [21,285][140] Fund balance, beginning of year 52,213 222,255 66,521 144 Fund balance, end of year 51,169$229,134$45,236$4$ Bicentennial HUD Community Sales Tax Center Community Development Heritage Economic Event Development Revolving Commission Development -$-$-$-$317,297$ ----- 663,839 ---- ----- -200 526 -2,485 ----- 663,839 200 526 -319,782 670,411 ---- ----- ----- ---------- ----- ----406,075 670,411 ---406,075 [6,572]200 526 -[86,293] ----- --[58,031]-- --[58,031]-- [6,572]200 [57,505]-[86,293] 105,419 71,680 230,665 4 1,043,405 98,847$71,880$173,160$4$957,112$ See independent auditor's report on the financial statements. 67 Special Fair CDBG HOME Law Housing ED V Enforcement Revenues Taxes -$-$-$-$ Intergovernmental 31,203 158,238 -- Charges for services ---- Licenses and permits ---- Investment revenue 59 --36 Miscellaneous ---- Total Revenues 31,262 158,238 -36 Expenditures Current Culture and recreation ---- Public health and sanitation ---- Planning and development 69,571 133,437 -- Debt service Principal retirement ---- CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2011 AND CHANGES IN FUND BALANCES Principal retirement ---- Interest and other charges ---- Capital outlay ---18,132 Total Expenditures 69,571 133,437 -18,132 Excess [deficiency] of revenues over [under] expenditures [38,309]24,801 -[18,096] Other financing sources [uses] Transfers in --58,031 - Transfers [out]---- Total other financing sources [uses]--58,031 - Net change in fund balance [38,309]24,801 58,031 [18,096] Fund balance, beginning of year 42,665 [22,329][58,031]20,951 Fund balance, end of year 4,356$2,472$-$2,855$ War Federal Police DARE Memorial Arts &Care Grants Donations Maintenance Humanities Grant Totals -$-$-$-$-$317,297$ ---23,482 -520,055 ---368,607 -1,115,913 -----6,250 -5 101 1,089 -5,394 -70 -70,850 -72,293 -75 101 464,028 -2,037,202 --797 944,962 -1,616,170 -----153,730 -70 --666 288,275 -----25,000-----25,000 -----4,399 5,377 ----529,401 5,377 70 797 944,962 666 2,616,975 [5,377]5 [696][480,934][666][579,773] ---489,358 -547,389 -----[105,259] ---489,358 -442,130 [5,377]5 [696]8,424 [666][137,643] [5,344]1,737 35,958 147,536 -1,955,449 [10,721]$1,742$35,262$155,960$[666]$1,817,806$ See independent auditor's report on the financial statements. 68 Cemetery Mausoleum Tricentennial ASSETS Endowment Endowment Commission Total Cash and investments 419,040$1,997$5,704$426,741$ Total assets 419,040$1,997$5,704$426,741$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable -$-$-$-$ Total liabilities ---- Fund balances Committed 419,040 1,997 5,704 426,741 Total liabilities and fund balances 419,040$1,997$5,704$426,741$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET December 31, 2011 NONMAJOR PERMANENT FUNDS See independent auditor's report on the financial statements. 69 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total Revenues Charges for services 9,109$-$-$9,109$ Investment revenue 1,155 6 16 1,177 Total revenues 10,264 6 16 10,286 Expenditures Miscellaneous 35 --35 Total expenditures 35 --35 Net change in fund balance 10,229 6 16 10,251 Fund balances - beginning of year 408,811 1,991 5,688 416,490 Fund balances - end of year 419,040$1,997$5,704$426,741$ NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2011 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES See independent auditor's report on the financial statements. 70 See independent auditor's report on the financial statements. 70 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) BUSINESS IMPROVEMENT CITY FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Community and economic development 84,511$90,000$90,000$[5,489]$ Interest income General interest 20 500 500 [480] Total revenues 84,531 90,500 90,500 [5,969] Expenditures Community Development Business Improvement District 84,531 90,578 90,578 6,047 Total expenditures 84,531 90,578 90,578 6,047 Excess [deficiency] of revenues over [under] expenditures -[78][78]78 Unreserved fund balance, January 1 -78 78 [78] Unreserved fund balance, December 31 --$-$-$ Reconciliation to GAAP Accounts receivable 51,169 GAAP Fund Balance, December 31 51,169$ Budgeted Amounts See independent auditor's report on the financial statements. 71 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) NEIGHBORHOOD PARK FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Public works 6,250$20,000$20,000$[13,750]$ Interest income General interest 629 4,000 4,000 [3,371] Total revenues 6,879 24,000 24,000 [17,121] Expenditures Cash reserve -258,146 258,146 258,146 Total expenditures -258,146 258,146 258,146 Excess [deficiency] of revenues over [under] expenditures 6,879 [234,146][234,146]241,025 Unreserved fund balance, January 1 222,255 234,146 234,146 [11,891] Unreserved fund balance/GAAP fund balance December 31 229,134$-$-$229,134$ Budgeted Amounts See independent auditor's report on the financial statements. 72 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL PARKS AND RECREATION FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Culture and recreation 154,939$160,000$160,000$[5,061]$ Interest income General interest 220 4,000 4,000 [3,780] Total revenues 155,159 164,000 164,000 [8,841] Expenditures Debt Service Principal 25,000 10,000 10,000 [15,000] Interest and other charges 4,399 --[4,399] Capital Outlay 93,481 100,000 100,000 6,519 -131,197 131,197 131,197 Budgeted Amounts See independent auditor's report on the financial statements. 73 Cash Reserve -131,197 131,197 131,197 Total expenditures 122,880 241,197 241,197 118,317 Excess [deficiency] of revenues over [under] expenditures 32,279 [77,197][77,197]109,476 Other financing sources [uses] Transfer [out][47,228][30,000][30,000][17,228] Total other financing sources [uses][47,228][30,000][30,000][17,228] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][14,949][107,197][107,197]92,248 Unreserved fund balance, January 1 60,185 107,197 107,197 [47,012] Unreserved fund balance/GAAP fund balance December 31 45,236$-$-$45,236$ See independent auditor's report on the financial statements. 73 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SPECIAL ALCOHOL FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Health and sanitation 153,566$160,000$160,000$[6,434]$ Interest income General interest 24 --24 Total revenues 153,590 160,000 160,000 [6,410] Expenditures Public Health and Sanitation Special alcohol 153,730 170,192 170,192 16,462 Total expenditures 153,730 170,192 170,192 16,462 Excess [deficiency] of revenues over [under] expenditures [140][10,192][10,192]10,052 Unreserved fund balance, January 1 144 10,192 10,192 [10,048] Unreserved fund balance/GAAP fund balance December 31 4$-$-$4$ Budgeted Amounts See independent auditor's report on the financial statements. 74 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) SALES TAX ECONOMIC DEVELOPMENT FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Selective sales tax 317,297$315,120$315,120$2,177$ Interest income General interest 2,485 10,000 10,000 [7,515] Total revenues 319,782 325,120 325,120 [5,338] Expenditures Community Development Economic development 456,075 315,444 315,444 [140,631] Cash Reserve -9,676 9,676 9,676 Total expenditures 456,075 325,120 325,120 [130,955] Excess [deficiency] of revenues over [under] expenditures [136,293]--[136,293] Unreserved fund balance, January 1 1,043,405 --1,043,405 Unreserved fund balance, December 31 907,112 -$-$907,112$ Reconciliation to GAAP Current year encumbrances 50,000 GAAP Fund Balance, December 31 957,112$ Budgeted Amounts See independent auditor's report on the financial statements. 75 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) FAIR HOUSING FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Community and economic development 31,203$65,000$65,000$[33,797]$ Interest income General interest 59 1,000 1,000 [941] Total revenues 31,262 66,000 66,000 [34,738] Expenditures Community Development Human relations 69,571 86,290 86,290 16,719 Total expenditures 69,571 86,290 86,290 16,719 Budgeted Amounts See independent auditor's report on the financial statements. 76 Excess [deficiency] of revenues over [under] expenditures [38,309][20,290][20,290][18,019] Unreserved fund balance, January 1 42,665 20,290 20,290 22,375 Unreserved fund balance/GAAP fund balance December 31 4,356$-$-$4,356$ See independent auditor's report on the financial statements. 76 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) ARTS & HUMANITIES FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Culture and recreation 439,106$371,904$371,904$67,202$ Operating grants, unrestricted Culture and recreation 23,482 18,000 18,000 5,482 Interest income General interest 1,089 2,000 2,000 [911] Miscellaneous revenues Culture and recreation 350 20,095 20,095 [19,745] Total revenues 464,027 411,999 411,999 52,028 Expenditures Culture and Recreation Arts and humanities 574,704 579,804 579,804 5,100 Smoky Hill River Festival 364,071 365,200 365,200 1,129 Capital Outlay 6,186 7,000 7,000 814 Cash Reserve -98,787 98,787 98,787 Total expenditures 944,961 1,050,791 1,050,791 105,830 Excess [deficiency] of revenues over [under] expenditures [480,934][638,792][638,792]157,858 Other financing sources [uses] Transfer in 489,358 489,358 489,358 - Total other financing sources [uses]489,358 489,358 489,358 - Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]8,424 [149,434][149,434]157,858 Unreserved fund balance, January 1 147,536 149,434 149,434 [1,898] Unreserved fund balance/GAAP fund balance December 31 155,960$-$-$155,960$ Budgeted Amounts See independent auditor's report on the financial statements. 77 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) DEBT SERVICE FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 2,723,262$2,595,524$2,595,524$127,738$ Delinquent taxes 55,583 40,000 40,000 15,583 Motor vehicle taxes 205,866 268,955 268,955 [63,089] Total taxes 2,984,711 2,904,479 2,904,479 80,232 Charges for services Special assessments 1,535,487 1,349,311 1,349,311 186,176 Interest income General interest 5,131 10,000 10,000 [4,869] Miscellaneous revenues General miscellaneous revenues 12,983 140,000 140,000 [127,017] Other financing sources General sources 230,131 --230,131 Total revenues 4,768,443 4,403,790 4,403,790 364,653 Expenditures Budgeted Amounts See independent auditor's report on the financial statements. 78 Expenditures Debt Service Principal 4,276,195 4,631,079 4,631,079 354,884 Interest and other charges 1,771,580 1,833,997 1,833,997 62,417 Cash Reserve -403,283 403,283 403,283 Total expenditures 6,047,775 6,868,359 6,868,359 820,584 Excess [deficiency] of revenues over [under] expenditures [1,279,332][2,464,569][2,464,569]1,185,237 Other financing sources [uses] Transfer in 2,026,973 1,800,000 1,800,000 226,973 Transfer [out][83,488]--[83,488] Total other financing sources [uses]1,943,485 1,800,000 1,800,000 143,485 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]664,153 [664,569][664,569]1,328,722 Unreserved fund balance, January 1 571,873 664,569 664,569 [92,696] Unreserved fund balance/GAAP fund balance December 31 1,236,026 -$-$1,236,026$ Reconciliation to GAAP Taxes receivable 2,441,349 Deferred revenue [2,392,245] GAAP Fund Balance, December 31 1,285,130$ See independent auditor's report on the financial statements. 78 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) SOLID WASTE DISPOSAL FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Health and sanitation 2,494,710$2,107,000$2,107,000$387,710$ Interest income General interest 7,000 7,000 7,000 - Interfund services provided Health and sanitation 453,672 505,300 505,300 [51,628] Miscellaneous revenues Health and sanitation 24,491 42,310 42,310 [17,819] Total revenues 2,979,873 2,661,610 2,661,610 318,263 Expenditures Public Health and Sanitation Solid waste 1,746,122 2,033,262 2,033,262 287,140 Hazardous waste disposal 80,517 94,032 94,032 13,515 Total public health and sanitation 1,826,639 2,127,294 2,127,294 300,655 Debt Service Principal 388,198 324,396 324,396 [63,802] Interest 32,000 106,975 106,975 74,975 Total debt service 420,198 431,371 431,371 11,173 Capital Outlay 359,515 467,200 467,200 107,685 Cash Reserve -1,825,201 1,825,201 1,825,201 Total expenditures 2,606,352 4,851,066 4,851,066 2,244,714 Excess [deficiency] of revenues over [under] expenditures 373,521 [2,189,456][2,189,456]2,562,977 Other financing sources [uses] Transfers [out][48,089]--[48,089] Total other financing sources [uses][48,089]--[48,089] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]325,432 [2,189,456][2,189,456]2,514,888 Unreserved fund balances, January 1 2,490,536 2,189,456 2,189,456 301,080 Prior year cancelled encumbrances 8,609 --8,609 Unreserved fund balances, December 31 2,824,577$-$-$2,824,577$ Budgeted Amounts See independent auditor's report on the financial statements. 79 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) WATER AND SEWER FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Water and wastewater 17,266,856$16,321,884$16,321,884$944,972$ Interest income General interest 26,993 25,000 25,000 1,993 Operating grants, restricted Water and wastewater 201,700 --201,700 Interfund services provided General services 28,061 30,900 30,900 [2,839] Water and wastewater 95,097 --95,097 Total interfund services 123,158 30,900 30,900 92,258 Miscellaneous revenues General miscellaneous revenues 88 --88 Water and wastewater 489,629 260,000 260,000 229,629 Total miscellaneous revenues 489,717 260,000 260,000 229,717 Total revenues 18,108,424 16,637,784 16,637,784 1,470,640 Expenditures Water and Wastewater Water 10,153,314 9,029,002 9,029,002 [1,124,312] Sewer 2,705,205 2,784,556 2,784,556 79,351 Total water and wastewater 12,858,519 11,813,558 11,813,558 [1,044,961] Capital Outlay 3,976,377 1,877,350 1,877,350 [2,099,027] Cash Reserve -6,497,105 6,497,105 6,497,105 Total expenditures 16,834,896 20,188,013 20,188,013 3,353,117 Excess [deficiency] of revenues over [under] expenditures 1,273,528 [3,550,229][3,550,229]4,823,757 Other financing sources [uses] Transfers [out][1,005,352][3,804,546][3,804,546]2,799,194 Total other financing sources [uses][1,005,352][3,804,546][3,804,546]2,799,194 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses]268,176 [7,354,775][7,354,775]7,622,951 Unreserved fund balances, January 1 9,699,890 7,354,775 9,699,890 - Prior year cancelled encumbrances 20,388 --20,388 Unreserved fund balances, December 31 9,988,454$-$2,345,115$7,643,339$ Budgeted Amounts See independent auditor's report on the financial statements. 80 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) SANITATION FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Health and sanitation 2,342,291$2,316,885$2,316,885$25,406$ Interest income General interest 1,839 3,500 3,500 [1,661] Charges for services Miscellaneous revenues 424 --424 Total revenues 2,344,554 2,320,385 2,320,385 24,169 Expenditures Public Health and Sanitation Sanitation 2,179,431 2,163,312 2,163,312 [16,119] Capital Outlay 132,110 158,000 158,000 25,890 Cash Reserve -525,425 525,425 525,425 Total expenditures 2,311,541 2,846,737 2,846,737 535,196 Excess [deficiency] of revenues over [under] expenditures 33,013 [526,352][526,352]559,365 Unreserved fund balance, January 1 581,811 526,352 526,352 55,459 Unreserved fund balances, December 31 614,824$-$-$614,824$ Budgeted Amounts See independent auditor's report on the financial statements. 81 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN NET ASSETS - BUDGET AND ACTUAL (NON - GAAP BASIS) GOLF COURSE FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Culture and recreation 636,202$777,500$777,500$[141,298]$ Interest income General interest 36 200 200 [164] Miscellaneous revenues General miscellaneous revenues 1,562 1,000 1,000 562 Culture and recreation 48,618 40,000 40,000 8,618 Total miscellaneous revenues 50,180 41,000 41,000 9,180 Total revenues 686,418 818,700 818,700 [132,282] Expenditures Culture and Recreation Golf course 760,384 752,160 752,160 [8,224] Debt Service 15,724 16,000 16,000 276 Cash Reserve -173,493 173,493 173,493 Total expenditures 776,108 941,653 941,653 165,545 Excess [deficiency] of revenues over [under] expenditures [89,690][122,953][122,953]33,263 Other financing sources [uses] Transfers in 47,228 --47,228 Total other financing sources [uses]47,228 --47,228 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses][42,462][122,953][122,953]80,491 Unreserved fund balances, January 1 43,462 122,953 122,953 [79,491] Unreserved fund balances, December 31 1,000$-$-$1,000$ Budgeted Amounts See independent auditor's report on the financial statements. 82 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) RISK MANAGEMENT FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest -$1,400$-$-$ Interfund services provided General services 374,708 374,708 374,708 - Miscellaneous revenues General miscellaneous revenues 176,298 40,200 177,500 [1,202] Total revenues 551,006 416,308 552,208 [1,202] Expenditures Other Risk management 532,771 424,651 549,000 16,229 Capital Outlay 138 1,000 1,000 862 Cash Reserve -74,037 -- Total expenditures 532,909 499,688 550,000 17,091 Excess [deficiency] of revenues over [under] expenditures 18,097 [83,380]2,208 15,889 Unreserved fund balance, January 1 49,848 83,380 49,847 1 Unreserved fund balance, December 31 67,945$-$52,055$15,890$ Budgeted Amounts See independent auditor's report on the financial statements. 83 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) WORKERS' COMPENSATION RESERVE FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 1,937$2,500$2,500$[563]$ Interfund services provided General services 229,452 229,435 229,435 17 Miscellaneous revenues General miscellaneous revenues 1,444 --1,444 Total revenues 232,833 231,935 231,935 898 Expenditures Other Worker's compensation 334,210 297,762 297,762 [36,448] Budgeted Amounts See independent auditor's report on the financial statements. 84 Worker's compensation 334,210 297,762 297,762 [36,448] Cash Reserve -638,936 638,936 638,936 Total expenditures 334,210 936,698 936,698 602,488 Excess [deficiency] of revenues over [under] expenditures [101,377][704,763][704,763]603,386 Unreserved fund balance, January 1 621,629 704,763 704,763 [83,134] Unreserved fund balance, December 31 520,252$-$-$520,252$ See independent auditor's report on the financial statements. 84 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) HEALTH INSURANCE FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 4,904$5,000$5,000$[96]$ Interfund Services Provided General services 6,304,144 6,620,000 6,620,000 [315,856] Miscellaneous revenues General miscellaneous revenues 52,285 --52,285 Total revenues 6,361,333 6,625,000 6,625,000 [263,667] Expenditures Other Health insurance 5,947,148 6,913,677 6,913,677 966,529 Cash Reserve -1,503,185 1,503,185 1,503,185 Total expenditures 5,947,148 8,416,862 8,416,862 2,469,714 Excess [deficiency] of revenues over [under] expenditures 414,185 [1,791,862][1,791,862]2,206,047 Unreserved fund balance, January 1 1,501,522 1,791,862 1,791,862 [290,340] Unreserved fund balance, December 31 1,915,707$-$-$1,915,707$ Budgeted Amounts See independent auditor's report on the financial statements. 85 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) CENTRAL GARAGE FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 423$4,000$4,000$[3,577]$ Interfund services provided General services 1,629,328 1,490,000 1,485,942 143,386 Miscellaneous revenues General miscellaneous revenues 22,298 4,000 138,058 [115,760] Total revenues 1,652,049 1,498,000 1,628,000 24,049 Expenditures Other Central garage 1,697,373 1,454,727 1,716,068 18,695 Capital Outlay 4,495 250 -[4,495] Cash Reserve -161,091 -- Total expenditures 1,701,868 1,616,068 1,716,068 14,200 Excess [deficiency] of revenues over [under] expenditures [49,819][118,068][88,068]38,249 Other financing sources [uses] Transfers in 60,000 30,000 -60,000 Excess [deficiency] of revenues and other financing sources over [under] expenditures and other financing [uses]10,181 [88,068][88,068]98,249 Unreserved fund balance, January 1 89,819 88,068 89,889 [70] Unreserved fund balance, December 31 100,000$-$1,821$98,179$ Budgeted Amounts See independent auditor's report on the financial statements. 86 CITY OF SALINA, KANSAS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON - GAAP BASIS) INFORMATION SYSTEMS FUND For the Year Ended December 31, 2011 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services General charges 106,305$106,000$106,000$305$ Interest income General interest 1,182 500 500 682 Interfund services provided General services 1,237,220 1,258,760 1,258,760 [21,540] Miscellaneous revenues General miscellaneous revenues -2,889 2,889 [2,889] Total revenues 1,344,707 1,368,149 1,368,149 [23,442] Expenditures Other Information services 1,162,756 977,978 977,978 [184,778] Capital Outlay 113,789 351,000 351,000 237,211 Cash Reserve -105,703 105,703 105,703 Total expenditures 1,276,545 1,434,681 1,434,681 158,136 Excess [deficiency] of revenues over [under] expenditures 68,162 [66,532][66,532]134,694 Unreserved fund balance, January 1 91,838 66,532 66,532 25,306 Unreserved fund balance, December 31 160,000$-$-$160,000$ Budgeted Amounts See independent auditor's report on the financial statements. 87 88 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one agency to other departments or agencies of the government and to other governmental units on a cost reimbursement basis. Risk management fund - To account for the accumulation and allocation of costs associated with risk management activities and the purchase of various forms of insurance. Workers' compensation reserve fund - To account for the costs of providing a partially self-insured workers' compensation plan and for accumulating the necessary reserve amounts. Health insurance fund - To account for the costs of providing a partially self-insured health insurance and for accumulating the necessary reserve amounts. Central garage fund - To account for the accumulation and allocation for costs associated with the City's centralized vehicle repair shop. Information services fund - To account for the accumulation and allocation of costs associated with electronic data processing. Total Workers'Internal Risk Compensation Health Central Information Service ASSETS Management Reserve Insurance Garage Systems Funds Current assets: Cash and investments 171,559$649,238$1,916,207$150,383$201,820$3,089,207$ Inventory and prepaid supplies ---115,694 -115,694 Total current assets 171,559 649,238 1,916,207 266,077 201,820 3,204,901 Capital assets: Capital assets ---189,424 677,214 866,638 Less: accumulated depreciation ---161,634 677,214 838,848 Total capital assets ---27,790 -27,790 Total assets 171,559$649,238$1,916,207$293,867$201,820$3,232,691$ Liabilities: Current liabilities (payable from current assets): Accounts payable 7,351$-$500$50,383$41,820$100,054$ Current portion of compensated absences payable ---7,075 10,309 17,384 Current portion of accrued claims payable -172,545 391,175 --563,720 Total current liabilities (payable from current assets)7,351 172,545 391,675 57,458 52,129 681,158 Noncurrent liabilities: Compensated absences payable ---30,500 44,440 74,940 Accrued claims payable -149,245 ---149,245 CITY OF SALINA, KANSAS COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS December 31, 2011 See independent auditor's report on the financial statements. 89 Accrued claims payable -149,245 ---149,245 Total noncurrent liabilities -149,245 -30,500 44,440 224,185 Total liabilities 7,351$321,790$391,675$87,958$96,569$905,343$ Net Assets Invested in capital assets, net of related debt -$-$-$27,790$-$27,790$ Unrestricted 164,208 327,448 1,524,532 178,119 105,251 2,299,558 Total net assets 164,208$327,448$1,524,532$205,909$105,251$2,327,348$ See independent auditor's report on the financial statements. 89 Total Workers'Internal Risk Compensation Health Central Information Service Management Reserve Insurance Garage Systems Funds Operating revenues Charges for services 374,708$229,451$6,304,144$1,629,328$1,343,525$9,881,156$ Miscellaneous 176,298 1,444 52,285 21,169 -251,196 Total operating revenues 551,006 230,895 6,356,429 1,650,497 1,343,525 10,132,352 Operating expenses General government 436,645 230,417 5,955,821 1,710,911 1,277,484 9,611,278 Depreciation ---4,698 -4,698 Total operating expenses 436,645 230,417 5,955,821 1,715,609 1,277,484 9,615,976 Operating income [loss]114,361 478 400,608 [65,112]66,041 516,376 Other operating revenues [expenses] Investment income -1,937 4,904 423 1,182 8,446 Total other operating revenues [expenses]-1,937 4,904 423 1,182 8,446 Nonoperating revenues [expenses] Gain/[loss] on disposal of fixed assets ---1,129 -1,129 Total nonoperating revenues [expenses]---1,129 -1,129 COMBINING STATEMENT OF REVENUES, EXPENSES INTERNAL SERVICE FUND CITY OF SALINA, KANSAS For the Year Ended December 31, 2011 AND CHANGES IN NET ASSETS See independent auditor's report on the financial statements. 90 Total nonoperating revenues [expenses]---1,129 -1,129 Income [loss] before transfers 114,361 2,415 405,512 [63,560]67,223 525,951 Transfers from [to] other funds Transfers in ---60,000 -60,000 Total transfers ---60,000 -60,000 Change in net assets 114,361 2,415 405,512 [3,560]67,223 585,951 Net assets, January 1 49,847 325,033 1,119,020 205,887 38,028 1,737,815 Restatement ---3,582 -3,582 Net assets, January 1, restated 49,847 325,033 1,119,020 209,469 38,028 1,741,397 Net assets, December 31 164,208$327,448$1,524,532$205,909$105,251$2,327,348$ See independent auditor's report on the financial statements. 90 Total Workers'Internal Risk Compensation Health Central Information Service Management Reserve Insurance Garage Services Funds Cash flows from operating activities Cash received from customers and users 374,708$125,659$6,312,817$1,629,329$1,343,525$9,786,038$ Cash paid to suppliers of goods or services [440,965][230,417][5,955,771][1,462,573][866,093][8,955,819] Cash paid to employees ---[230,042][401,446][631,488] Other operating receipts 176,298 1,444 52,285 21,169 -251,196 Net cash provided by [used in] operating activities 110,041 [103,314]409,331 [42,117]75,986 449,927 Cash flows from capital and related financing activities Proceeds from sale of capital assets ---1,129 -1,129 Cash flows from investing activities Interest received -1,937 4,904 422 1,182 8,445 Cash flows from noncapital financing activities Transfers in ---60,000 -60,000 Net increase [decrease] in cash and cash equivalents 110,041 [101,377]414,235 19,434 77,168 519,501 Cash and cash equivalents, January 1 61,518 750,615 1,501,972 130,949 124,652 2,569,706 Cash and cash equivalents, December 31 171,559$649,238$1,916,207$150,383$201,820$3,089,207$ For the Year Ended December 31, 2011 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS See independent auditor's report on the financial statements. 91 See independent auditor's report on the financial statements. 91 Total Workers'Internal Risk Compensation Health Central Information Service Management Reserve Insurance Garage Services Funds Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss]114,361$478$400,608$[65,112]$66,041$516,376$ Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense ---4,698 -4,698 [Increase] decrease in inventory ---6,646 -6,646 Increase [decrease] in accounts payable [4,320]-50 9,296 9,006 14,032 Increase [decrease] in accrued compensated absences ---2,355 939 3,294 Increase [decrease] in claims payable -[103,792]8,673 --[95,119] Net cash provided by [used in] operating activities 110,041$[103,314]$409,331$[42,117]$75,986$449,927$ For the Year Ended December 31, 2011 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS (Continued) COMBINING STATEMENT OF CASH FLOWS See independent auditor's report on the financial statements. 92 See independent auditor's report on the financial statements. 92 93 CITY OF SALINA, KANSAS AGENCY FUNDS Agency funds are used to account for assets held by the government as an agent for individuals, private organizations, other governments and/or other funds. Special assessment escrow agency fund - To account for property owners' prepayment on outstanding special assessments. Fire insurance proceeds agency fund - To account for insurance proceeds received for severely damaged buildings the insurance proceeds, plus interest, are returned to the property owners when the buildings are repaired or demolished. PEGS access agency fund - To account for revenues collected on behalf of the community access television system for public, educational and governmental programming. Payroll clearing agency fund - To account for interfund payroll receivables and payables for all City funds. Court bond and restitution agency fund - To account for bonds and restitution remitted to the court and awaiting court orders for distribution. Police investigation account agency fund - To account for monies held by the police department for use in investigations. Fire cam agency fund - To account for donations received and used for fire equipment. Citizenship agency fund – To account for donations received and used for the citizenship fund. Section 125 plan agency fund - To account for monies held for the Section 125 plan. Special Fire Court Police Section Assessment Insurance PEGS Payroll Bond and Investigation Fire 125 Escrow Proceeds Access Clearing Restitution Account Cam Citizenship Plan Totals ASSETS: Cash and investments 135,344$10,316$5,103$[251,057]$70,921$2,125$783$3,702$336,063$313,300$ Total assets 135,344$10,316$5,103$[251,057]$70,921$2,125$783$3,702$336,063$313,300$ LIABILITIES: Accounts payable 135,344$10,316$5,103$[251,057]$70,921$2,125$783$3,702$336,063$313,300$ Total liabilities 135,344$10,316$5,103$[251,057]$70,921$2,125$783$3,702$336,063$313,300$ December 31, 2011 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS See independent auditor's report on the financial statements. 94 Balance Balance December 31,December 31, 2010 Additions Deductions 2011 Cash and investments Special Assessment Escrow 328,828$5,336$198,820$135,344$ Fire Insurance Proceeds 5,062 41,952 36,698 10,316 PEGS Access 5,071 285,273 285,241 5,103 Payroll Clearing [246,521]-4,536 [251,057] Court Bond and Restitution 74,831 -3,910 70,921 Police Investigation Account 2,307 -182 2,125 Fire Cam Fund 780 3 -783 Citizenship Trust 3,692 10 -3,702 Section 125 Plan Fund 339,549 349,775 353,261 336,063 Total Assets 513,599$682,349$882,648$313,300$ Accounts Payable Special Assessment Escrow 328,828$5,336$198,820$135,344$ Fire Insurance Proceeds 5,062 41,952 36,698 10,316 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the Year Ended December 31, 2011 AGENCY FUNDS See independent auditor's report on the financial statements. 95 Fire Insurance Proceeds 5,062 41,952 36,698 10,316 PEGS Access 5,071 285,273 285,241 5,103 Payroll Clearing [246,521]-4,536 [251,057] Court Bond and Restitution 74,831 -3,910 70,921 Police Investigation Account 2,307 -182 2,125 Fire Cam Fund 780 3 -783 Citizenship Trust 3,692 10 -3,702 Section 125 Plan Fund 339,549 349,775 353,261 336,063 Total liabilities 513,599$682,349$882,648$313,300$ See independent auditor's report on the financial statements. 95 STATISTICAL SECTION 2004 Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount %Amount % Governmental Activities Invested in capital assets, net of related debt 82,312$86%92,948$92%110,184$92%117,810$93%115,029$90%118,965$93%101,974$85%113,001$96%109,289$93% Restricted 1,584$2%1,317$1%1,642$1%1,106$1%1,609$1%1,212$1%1,174$1%988$1%1,712$1% Unrestricted 11,742$12%7,057$7%7,422$6%7,678$6%11,356$9%7,745$6%16,706$14%3,808$3%6,333$5% Total Governmental Net Assets 95,638$100%101,322$100%119,248$100%126,594$100%127,994$100%127,922$100%119,854$100%117,797$100%117,334$100% Business Type Activities Invested in capital assets, net of related debt 36,599$76%38,560$77%40,968$79%43,510$81%45,435$80%45,931$79%48,234$79%48,078$75%44,227$63% Restricted 0%1,406$3%1,109$2%1,123$2%1,151$2%1,211$2%1,553$3%1,553$2%1,553$2% Unrestricted 11,710$24%9,837$20%9,821$19%9,300$17%10,412$18%11,197$19%11,482$19%14,306$22%24,534$35% Total business type activities net assets 48,309$100%49,803$100%51,898$100%53,933$100%56,998$100%58,339$100%61,269$100%63,937$100%70,314$100% Primary Government Invested in capital assets, net of related debt 118,911$83%131,508$87%151,152$88%161,320$89%160,464$87%164,896$89%150,208$83%161,080$89%153,516$82% Restricted 1,584$1%2,723$2%2,751$2%2,229$1%2,760$1%2,423$1%2,727$2%2,541$1%3,265$2% Unrestricted 23,452$16%16,894$11%17,243$10%16,978$9%21,768$12%18,942$10%28,188$16%18,115$10%30,867$16% Total primary government net assets 143,947$100%151,125$100%171,146$100%180,527$100%184,992$100%186,261$100%181,123$100%181,736$100%187,648$100% Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2011 Fiscal Year Note 2: All amounts are shown in thousands of dollars 2008 Note 1: The city began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003 2003 2005 2006 2007 962011 Schedule 1 - Unaudited City of Salina, Kansas Net Assets by Component Last Nine Fiscal Years (accrual basis of accounting) (in 000's) 20102009 2003 2004 2005 2006 2007 2008 2009 2010 2011 Expenses Governmental Activities: General government 6,767$4,931$4,904$6,319$6,732$6,791$14,664$10,845$13,615$ Public safety 12,636$13,548$14,159$14,621$16,877$18,440$16,539$18,592$18,579$ Public works 7,896$7,958$8,420$8,609$9,258$9,706$9,781$9,782$9,858$ Public health and sanitation 906$1,016$1,102$1,214$1,281$1,310$1,390$1,365$1,368$ Culture and recreation 4,657$4,784$5,071$4,961$5,658$5,582$5,397$6,572$6,693$ Planning and development 4,507$4,130$2,714$2,697$2,814$3,481$3,375$3,716$3,450$ Interest on long term debt 1,085$786$742$972$1,295$1,454$-$2,256$1,650$ Total governmental activities expenses 38,454$37,153$37,112$39,393$43,915$46,764$51,146$53,128$55,213$ Business-type Activities: Solid waste disposal 2,367$2,818$2,608$2,471$2,088$2,008$2,287$2,925$2,945$ Water and sewer 11,572$11,552$11,262$11,676$12,227$13,284$12,995$14,050$13,597$ Sanitation 1,682$1,920$1,889$1,945$2,038$2,184$2,224$2,261$2,261$ Golf course 786$817$893$852$884$884$897$817$825$ Total business-type activities expenses 16,407$17,107$16,652$16,944$17,237$18,360$18,403$20,053$19,628$ Total primary government expenses 54,861$54,260$53,764$56,337$61,152$65,124$69,549$73,181$74,841$ Program Revenues Governmental Activities Charges for services: General government 3,472$3,712$3,926$4,177$4,309$4,581$4,599$5,143$6,106$ Public safety 2,672$2,770$3,368$3,603$3,539$3,588$2,913$3,969$3,766$ Public works 160$155$163$169$457$120$164$196$262$ Public health and sanitation -$35$31$36$33$39$42$37$43$ Culture and recreation 2,031$2,073$2,276$1,883$2,050$2,139$1,936$2,817$3,140$ Planning and development 93$198$95$114$101$240$267$144$154$ Operating grants and contibutions 2,751$3,197$2,798$3,145$3,381$3,752$3,163$3,415$2,907$ Capital grants and contributions -$-$13,875$3,091$-$-$-$-$-$ Total governmental program revenues 11,179$12,140$26,532$16,218$13,870$14,459$13,084$15,721$16,378$ Business-type activities: Charges for services: Solid waste disposal 2,361$2,489$2,344$2,674$2,789$2,749$2,903$2,853$2,904$ Water and sewer 12,129$12,362$12,704$12,949$14,054$14,073$14,980$16,520$17,904$ Sanitation 1,795$1,814$1,881$1,988$2,112$2,172$2,292$2,310$2,334$ Golf course 773$791$799$773$723$751$757$736$636$ Operating grants and contributions -$368$-$-$-$-$-$-$202$ Capital grants and contributions -$-$-$-$-$-$-$-$3,804$ Total business type program revenues 17,058$17,824$17,728$18,384$19,678$19,745$20,932$22,419$27,784$ Total primary government program revenues 28,237$29,964$44,260$34,602$33,548$34,204$34,016$38,140$44,162$ Net (Expense) Revenue Governmental Activities (27,275)$(25,013)$(10,580)$(23,175)$(30,045)$(32,305)$(38,062)$(37,407)$(38,835)$ Business-type activities:651$717$1,076$1,440$2,441$1,385$2,529$2,366$8,156$ Total primary government net expense (26,624)$(24,296)$(9,504)$(21,735)$(27,604)$(30,920)$(35,533)$(35,041)$(30,679)$ General Revenues and Other Changes in Net Assets Governmental Activities: Taxes Property Taxes, General Purpose 5,862$6,576$6,766$7,144$7,376$7,818$9,019$7,803$7,783$ Property Taxes, Debt Service 1,732$1,329$1,351$1,402$1,471$1,529$1,711$2,230$2,779$ Motor Vehicle Tax 1,208$1,057$1,079$1,105$1,131$1,195$1,135$1,145$1,149$ Sales Tax, General Purpose 9,913$10,501$10,556$11,137$11,472$11,986$11,669$11,118$11,767$ Selective Sales Tax 2,114$2,264$2,280$2,417$2,484$2,589$3,380$4,108$4,080$ Other taxes 3,345$3,426$3,557$5,076$5,445$5,747$5,791$6,298$6,390$ Special Assessments 1,448$-$-$-$-$-$-$-$-$ Investment revenues 331$390$544$1,123$1,255$805$277$81$77$ Miscellaneous 1,442$1,084$1,209$1,044$890$812$505$565$872$ Transfers, net 80$24$114$330$672$60$255$92$2,362$ Total governmental activities 27,475$26,651$27,456$30,778$32,196$32,541$33,742$33,440$37,259$ Business-type activities: Investment revenues 101$222$328$453$641$300$242$67$84$ Miscellaneous 165$93$150$217$201$118$352$341$330$ Transfers, net (80)$(24)$(114)$(330)$(672)$(60)$(255)$(92)$(2,163)$ Total business-type activities 186$291$364$340$170$358$339$316$(1,749)$ Total primary government 27,661$26,942$27,820$31,118$32,366$32,899$34,081$33,756$35,510$ Change in Net Assets Governmental activities 200$1,638$16,876$7,603$2,151$236$(4,320)$(3,967)$(1,576)$ Business-type activities 837$1,008$1,440$1,780$2,611$1,743$2,868$2,682$6,407$ Total primary government 1,037$2,646$18,316$9,383$4,762$1,979$(1,452)$(1,285)$4,831$ Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2011 Note: The city began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003 (accrual basis of accounting) (in 000's) Fiscal Year Schedule 2 - Unaudited City of Salina, Kansas Changes in Net Assets Last Nine Fiscal Years 97 2003 2004 2005 2006 2007 2008 2009 2010 2011 General Fund Reserved 309$160$421$242$396$274$508$99$-$ Nonspendable 90$ Restricted -$ Committed -$ Assigned 293$ Unreserved/Unassigned 6,467$7,151$6,646$7,983$6,935$5,756$4,580$3,518$3,453$ Total General Fund 6,776$7,311$7,067$8,225$7,331$6,030$5,088$3,617$3,836$ Restatement 156$ 3,773$ All other Governmental Funds Reserved 2,096$2,610$2,369$2,469$2,796$3,951$11,092$6,314$-$ Nonspendable -$ Restricted 3,612$ Committed 126$ Assigned 4,030$ Unreserved/Unassigned 5,528$(2,958)$155$42$2,946$355$4,024$(1,130)$-$ Total all other governmental funds 7,624$(348)$2,524$2,511$5,742$4,306$15,116$5,184$7,768$ Information for years prior to 2003 is not available in comparable format. Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2011 Fiscal Year Schedule 3 - Unaudited City of Salina, Kansas Fund Balances, Governmental Funds Last Nine Fiscal Years (modified accrual basis of accounting) (in 000's) 98 2003 2004 2005 2006 2007 2008 2009 2010 2011 Revenues Taxes (see Schedule 5)24,174$25,153$25,589$28,281$29,379$30,789$32,706$32,702$33,949$ Intergovernmental 2,731$5,659$2,785$3,127$3,363$3,741$3,153$3,404$2,901$ Special Assessments 1,448$1,340$1,143$1,207$1,444$1,178$1,269$1,385$1,535$ Licenses and permits 20$18$14$18$18$10$10$11$6$ Charges for services 6,146$6,364$7,225$7,099$7,131$7,415$6,767$8,934$9,730$ Investment revenue 322$362$486$1,021$983$490$210$64$69$ Reimbursements 52$465$650$406$153$39$140$70$32$ Miscellaneous 1,208$509$501$488$650$597$438$448$599$ Total revenues 36,101$39,870$38,393$41,647$43,121$44,259$44,693$47,018$48,821$ Expenditures General Government 2,208$2,685$2,706$2,721$2,842$3,600$3,007$3,549$3,462$ Public Safety 12,208$12,724$13,673$14,309$16,175$17,945$17,883$18,229$18,118$ Public Works 5,106$5,157$5,508$5,712$6,171$6,593$6,643$6,634$6,569$ Public Health and Sanitation 882$981$1,067$1,178$1,245$1,276$1,353$1,332$1,330$ Culture and Recreation 4,355$4,470$4,776$4,653$5,204$5,142$4,947$5,777$5,900$ Planning and Development 4,405$4,025$2,607$2,588$2,707$3,377$3,269$3,609$3,344$ Miscellaneous 20$-$-$-$-$-$-$32$-$ Capital Outlay 5,165$10,824$8,580$10,783$7,615$10,581$17,707$18,603$9,847$ Debt Service Principal 7,179$2,611$2,534$2,625$4,806$2,812$4,667$5,959$4,411$ Interest 1,063$866$755$1,009$1,266$1,567$1,596$2,258$2,084$ Deposit to Escrow -$-$-$-$-$-$-$107$-$ Total Expenditures 42,591$44,343$42,206$45,578$48,031$52,893$61,072$66,089$55,065$ Other financing sources (uses) Bonds and Notes issued 8,600$6,707$4,210$4,885$6,545$7,245$23,695$7,034$6,565$ Bond and Note Premium 80$1,369$47$23$ Transfers in 600$1,066$1,399$2,245$2,349$2,823$3,617$5,076$7,994$ Transfers out (600)$(1,087)$(1,365)$(2,055)$(1,737)$(2,763)$(3,422)$(4,984)$(5,692)$ Issuance Costs (9)$(2)$-$-$-$-$-$-$-$ Other -$(5,389)$-$-$91$-$-$-$-$ Total other financing sources (uses)8,591$1,295$4,244$5,075$7,248$7,385$25,259$7,173$8,890$ Net change in fund balance 2,101$(3,178)$431$1,144$2,338$(1,249)$8,880$(11,898)$2,646$ Debt service as a percentage of non-capital expenditures 28%12%11%12%18%12%17%21%17% Information prior to 2003 is not available in comparable format. Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2011 (modified accrual basis of accounting) (in 000's) Fiscal Year Schedule 4 - Unaudited City of Salina, Kansas Changes in Fund Balances, Governmental Funds Last Nine Fiscal Years 99 2003 2004 2005 2006 2007 2008 2009 2010 2011 Real Estate 7,417$7,677$7,904$8,373$8,662$9,084$9,971$9,756$10,288$ Delinquent 177$228$213$173$185$263$760$278$274$ Motor Vehicle 1,208$1,057$1,079$1,105$1,131$1,120$1,135$1,145$1,150$ General Sales 9,913$10,501$10,556$11,137$11,472$11,986$11,669$11,117$11,767$ Selective Sales 2,114$2,264$2,280$2,417$2,484$2,589$3,380$4,108$4,080$ Other Taxes 3,345$3,426$3,557$5,076$5,445$5,747$5,791$6,298$6,390$ Total Taxes 24,174$25,153$25,589$28,281$29,379$30,789$32,706$32,702$33,949$ Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2011 Fiscal Year Schedule 5 - Unaudited City of Salina, Kansas Tax Revenues by Source, Governmental Funds Last Nine Fiscal Years (modified accrual basis of accounting) (in 000's) 100 Assessed Value Fiscal (Budget) Year Real Estate Personal Property State Assessed Total, Non- Vehicle Assessed Value Direct Rate, Excluding Motor Vehicles Motor Vehicle (Note 1) Total, Taxable Assessed Value Estimated Total Market Value (Note 2) Assessed Value to Est. Market Value 1987 69,906,890$31,405,020$10,544,260$27,447,177$139,303,347$1,105,157,648$12.60 1988 72,066,960 31,552,430 10,884,189 28,786,730 143,290,309 1,147,347,527 12.49 1989 71,441,070 35,215,115 10,765,830 30,847,364 148,269,379 1,160,411,705 12.78 1990 125,389,311 13,454,685 11,094,235 35,096,364 185,034,595$1,026,844,668$18.02 1991 134,834,179 14,314,162 11,208,262 34,515,855 194,872,458 1,075,575,019 18.12 1992 135,267,866 16,751,713 11,545,541 35,803,591 199,368,711 1,105,026,368 18.04 1993 129,632,717 22,447,713 12,849,722 37,569,816 202,499,968 1,175,493,628 17.23 1994 145,239,331 22,678,728 14,272,658 41,805,765 223,996,482$1,314,830,748$17.04 1996 166,462,923 24,890,665 12,528,204 203,881,792$27.145 42,981,776 246,863,568 1,482,502,705 16.65 1997 175,997,879 25,550,448 12,708,970 214,257,297 26.942 43,994,555 258,251,852 1,551,794,365 16.64 1998 196,360,843 26,279,996 13,954,569 236,595,408 25.705 44,924,849 281,520,257 1,716,987,425 16.40 1999 213,488,582 27,534,811 12,909,972 253,933,365 25.270 45,371,433 299,304,798 1,850,244,169 16.18 2000 226,207,727 28,786,094 14,122,529 269,116,350 24.876 45,371,433 314,487,783 1,953,641,509 16.10 2001 241,621,655 32,439,566 14,088,875 288,150,096 24.365 43,246,020 331,396,116 2,096,802,659 15.80 2002 254,343,715 31,823,431 14,847,520 301,014,666 24.218 43,248,108 344,262,744 2,182,563,473 15.77 2003 267,175,443 35,093,154 14,866,008 317,134,605 24.092 45,965,839 363,100,444 2,296,900,695 15.81 2004 277,456,813 35,386,133 15,750,780 328,593,726 24.013 46,679,982 375,273,018 2,368,264,683 15.85 2005 282,517,284 35,410,526 17,334,372 335,262,182 24.063 48,687,121 383,949,303 2,529,377,135 15.18 2006 296,537,399 38,662,356 17,624,030 352,823,785 23.999 49,367,870 402,191,655 2,229,131,633 18.04 2007 321,695,326 39,691,690 16,530,171 377,917,187 23.789 50,551,299 428,468,486 2,416,543,103 17.73 2008 342,045,389 35,089,042 15,594,056 392,728,487 23.959 50,548,706 443,277,193 2,612,229,468 16.97 2009 356,678,712 28,373,980 14,929,456 399,982,148 25.886 51,351,656 451,333,804 2,914,775,730 15.48 2010 358,979,211 24,760,806 13,730,609 397,470,626 25.855 50,330,252 447,800,878 2,893,359,541 15.48 2011 367,750,803 19,918,188 14,685,585 402,354,576 26.022 47,406,062 449,760,638 2,869,531,746 15.67 Note 1: The tax rate for motor vehicles is set based on the average countywide tax rate. The City of Salina then receives a share of that based on relative tax effort. Note 3: The Direct rate is expressed in dollars per thousand dollars of assessed value. Source: Saline County Clerk Note 2: The estimated market value excludes the value of the State assessed properties. Market value information is not available for those properties. However, state assessed property is generally assesed at 33% of market value, except for railroads, which are assessed at 25% of market value. Schedule 6 - Unaudited City of Salina, Kansas Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years 101 City of Salina Saline County USD 305 (2)Other (1)Total Fiscal (Budget) Year Operating Millage Debt Service Millage Total City Millage Operating Millage Debt Service Millage Total County Millage Operating Millage Debt Service Millage Total USD Millage Other 2001 19.097 5.268 24.365 22.337 23.837 41.198 17.326 58.524 9.109 115.835 2002 18.561 5.657 24.218 24.066 24.066 51.115 17.063 68.178 9.330 125.792 2003 18.581 5.511 24.092 25.667 25.657 38.569 18.815 57.384 9.684 116.817 2004 20.017 3.996 24.013 28.081 28.081 38.288 18.344 56.632 9.848 118.574 2005 20.055 4.008 24.063 28.874 28.874 42.175 17.491 59.666 10.984 123.587 2006 20.001 3.989 23.990 28.579 28.579 40.136 15.046 55.182 10.960 118.711 2007 19.835 3.954 23.789 27.955 27.955 41.903 13.349 55.252 10.726 117.722 2008 20.047 3.912 23.959 27.435 27.435 42.761 12.229 54.990 10.775 117.159 2009 21.749 4.137 25.886 29.347 29.347 46.339 12.208 58.547 10.971 124.751 2010 20.082 5.773 25.855 31.303 31.303 45.341 13.155 58.496 12.401 128.055 2011 19.236 6.786 26.022 31.432 31.432 45.818 13.095 58.913 12.131 128.498 Source: Saline County Clerk (2) A small portion of Salina is covered by USD 306, USD 307, or USD 400. Total Tax Rates are different in the areas covered by these jurisdictions.102(1) The "Other" column includes the State of Kansas, the Salina Airport Authority, and the Salina Public Library. Beginning in 2005, this also includes Kansas State Extension District #3. Schedule 7 - Unaudited City of Salina, Kansas Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per $1,000 of assessed value) Taxpayer Type of Business Assessed Valuation % of Total Valuation Rank Assessed Valuation % of Total Valuation Rank Schwan's Sales Pizza Manufacturing 7,595,433$2.09%1 8,589,167$2.15%1 Warmack, Salina Partnership (IPFOA) (Now Redus Salina)Retail Shopping Mall 5,681,843 1.56%3 6,254,013 1.56%2 Salina Regional Health Center Hospital and Medical Offices 3,886,576 1.07%6 5,589,420 1.40%3 Western Resources Utility 5,898,849 1.62%2 5,575,032 1.39%4 Kansas Gas Service Utility 2,540,941 0.70%7 3,622,225 0.90%5 Gateway Properties Shopping Mall (Midstate)3,587,574 0.90%6 Wal-Mart Stores, Inc.Discount Retail Stores 4,288,305 1.18%5 3,468,733 0.87%7 Southwestern Bell Telephone Utility 5,214,313 1.44%4 3,107,097 0.78%8 Great Plains Manufacturing Manufacturing 1,975,025 0.54%8 2,879,602 0.72%9 Individual Trust Office/Warehouse/Commercial 2,247,083 0.56%10 Sunset Plaza, Inc. (Bradley Operating)Retail Shopping Mall 0.00% Dillon's Grocery Chain 1,888,509 0.52%9 FCH/HHC Hotels, Inc Hotel/Convention Center 1,615,519 0.44% Combined Valuation of the Ten Largest Taxpayers 40,585,313$44,919,946$ City Valuation 363,100,444$400,248,283$ Percent of Total City Assessed Valuation (1)11.16%11.23% Source: Saline County Clerk's Office103 2011 (2010 Assessed Value)2002 (2001 Assessed Value) Schedule 8 - Unaudited City of Salina, Kansas Principal Property Tax Payors Current Year and Nine Years Ago Fiscal (Budget) Year Taxes Levied for the fiscal year Amount Percentage Delinquent Collections (1)Amount Percentage of levy 2000 6,694,612 6,490,693 97.0%105,801 6,596,494 98.5% 2001 7,020,875 6,831,220 97.3%147,819 6,979,039 99.4% 2002 7,289,916 7,108,013 97.5%174,050 7,282,063 99.9% 2003 7,640,249 7,417,427 97.1%176,906 7,594,333 99.4% 2004 7,890,387 7,677,415 97.3%227,578 7,904,993 100.2% 2005 8,067,300 7,904,231 98.0%382,236 8,286,467 102.7% 2006 8,467,343 8,373,363 98.9%173,093 8,546,456 100.9% 2007 8,990,268 8,661,700 96.3%185,488 8,847,188 98.4% 2008 9,409,338 9,083,917 96.5%262,511 9,346,428 99.3% 2009 10,354,161 9,923,959 95.8%759,764 10,683,723 103.2% 2010 10,276,905 9,704,937 94.4%278,656 9,983,593 97.1% 2011 10,570,419 10,287,770 97.3%273,843 10,561,613 99.9% Source: Saline County Treasurer's Office (1) Delinquent collections are reported in the aggregate for all previous years. Data is not currently available for "collected in subsequent years" Current Year Tax Distributions Total Tax Distributions Schedule 9 - Unaudited City of Salina, Kansas Property Tax Levies and Distributions Last Ten Fiscal Years 104 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 City Direct Tax Rate (Note 3) General 0.50%0.50%0.50%0.50%0.50%0.50%0.50%0.50%0.50%0.50% Special Purpose 0.25%0.25%0.25%0.25%0.25%0.25%0.25%0.25%/0.40%0.40%0.40% County-wide Tax Rate 1.00%1.00%1.00%1.00%1.00%1.00%1.00%1.00%1.00%1.00% Portion of County-wide tax allocated to City (July Percentage)64.00%63.20%62.20%61.60%61.81%61.92%62.31%62.46%61.58%63.34%105City of Salina, Kansas Schedule 10 - Unaudited In November 2008, the voters approved an increase in the Special Purpose Tax rate from .25% to .40%, to be effective April 1, 2009. In addition to the direct tax, the City recieves a portion of the Countywide sales tax, based on a formula distribution. The formula is based on property tax effort and population, and is adjusted in January and July of each year. As a result, totals do not match the amounts disclosed on the Statement of Activities. Fiscal Year Last Ten Fiscal Years Direct Sales Rate by Taxing Entity Source: Kansas Department of Revenue Last Ten Fiscal Years Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Rate Class Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Residential 17,234 1,300,332 17,315 1,205,142 17,432 1,127,078 17,576 1,187,130 17,637 1,164,293 17,750 1,080,015 17,813 994,875 17,792 1,043,774 17,838 1,127,864 17,899 NA** Commercial 1,516 367,440 1,503 352,025 1,542 346,251 1,580 358,659 1,586 357,488 1,592 331,440 1,591 333,720 1,589 339,507 1,568 350,633 1,574 NA** Industrial 44 245,126 43 205,574 43 203,977 43 181,325 43 180,900 46 237,698 48 203,491 46 152,910 44 183,166 44 NA** Government 115 78,457 118 66,134 126 66,623 146 102,994 150 74,768 151 58,568 152 68,366 104 41,793 85 42,714 97 NA** Apartment 202 52,778 200 56,587 198 56,251 195 56,359 187 56,340 184 55,500 182 64,703 182 71,503 172 71,121 168 NA** Schools 84 50,373 80 43,645 82 43,571 81 41,187 81 44,925 80 36,953 81 38,835 84 39,815 85 46,386 85 NA** Industrial Special 1 32,061 1 38,002 1 39,187 1 39,551 1 37,508 1 35,813 1 42,574 1 32,934 1 44,457 1 NA** Consumed in Production 27 45,395 25 36,185 22 32,324 21 31,570 19 28,583 18 26,070 18 28,699 18 26,223 17 32,604 13 NA** Rural Water 1 26,775 1 27,918 1 27,277 1 28,889 1 28,395 1 23,963 1 24,798 1 22,824 1 23,854 1 NA** Hospitals 14 28,846 14 24,721 14 22,884 15 17,126 15 13,088 15 13,755 15 18,723 13 20,488 12 18,503 10 NA** Religious/Non Profit 35 9,564 37 8,074 40 9,362 40 9,521 39 8,888 41 7,463 40 6,913 39 7,312 39 5,569 38 NA** Other Taxable Deductions 7 13,863 6 11,105 6 10,690 5 8,995 5 6,630 5 9,975 4 8,023 -----NA** Engineering Studies 8 10,078 8 9,307 8 9,339 8 6,283 8 6,135 8 5,805 8 5,327 8 6,176 8 5,266 7 NA** Providing Taxable Service 2 5,329 2 5,232 2 5,562 2 5,677 2 5,850 2 5,010 2 4,663 2 4,869 2 5,494 2 NA** Sale of Component Parts 7 5,570 8 5,428 8 5,265 8 5,473 8 5,280 8 5,040 8 5,748 8 5,200 8 5,851 8 NA** Fire Hydrant 4 3,011 3 5,015 3 2,887 4 5,232 3 1,598 2 495 3 1,147 2 1,032 3 2,424 3 NA** Industrial Consumed in Produ 3 2,370 3 1,624 3 2,206 3 2,350 3 3,510 3 3,593 3 3,230 3 2,314 3 4,083 3 NA** Sales of Farm Equipment 1 429 1 203 1 131 1 213 1 308 1 180 1 256 1 205 1 213 1 NA** 19,305 2,277,797 19,368 2,101,921 19,532 2,010,865 19,730 2,088,534 19,789 2,024,487 19,908 1,937,333 19,971 1,854,091 19,893 1,818,879 19,887 1,970,202 19,954 NA** Water Rate Schedule: Monthly Meter Charge (5/8")2.89$2.89$3.05$3.21$3.38$$3.57 3.75$4.44$4.51$$4.60 Commodity Charge (per hundred cubic ft): 0 - 2000 cf.2.09$2.09$2.13$2.16$2.21$$2.42 2.54$2.34$2.55$Per 000 gal $3.77 2001 - 10,000 cf 1.87$1.87$1.91$1.94$1.99$$2.20 2.31$ Over 10,000 cf 1.68$1.68$1.71$1.73$1.77$$1.97 2.07$ Excess Use Charge 4.68$5.10$Per 000 gal $7.54 Wastewater Rate Schedule: Monthly Base Charge 2.75$2.75$2.89$3.03$3.18$$3.34 3.51$6.31$6.42$$6.57 Unit cost (per hundred cubic ft):1.99$1.99$2.11$2.23$2.36$$2.50 2.63$2.88$3.08$per 000 gal $4.48 Water sold is expressed in thousands of gallons. Information before 2001 is not available in a consistant format. Number of Accounts billed is the annual number of billings for each class divided by 12. Monthly meter charge increases with the size of the meter. Residential Wastewater is calculated based on Winter Quarter water consumption. Other accounts are based on monthly water consumption. Wastewater fee structure in 2001 was not on a comparable basis 2008 Water Consumption Rate Structure changed from a decreasing tier structure to one rate and Excess Use Charge which is double the consumption rate **In 2011, basis for measurement was switched from cubic feet to gallons. The adjustments and conversions necessary for this table have not yet been completed. Source: City of Salina Water Customer Accounting Office.106Schedule 11 - Unaudited City of Salina, Kansas Water Sales by Class of Customer 20062005 2008200220032004 2011201020092007 Fiscal Year General Obligation Bonds Capital Lease Temporary Notes General Obligation Bonds Water Revenue Bonds Loans Payable Temporary Notes Total Primary Government Percentage of Personal Income Per Capita 2002 17,728,189$-$4,865,000$7,187,753$6,790,000$7,574,256$-$44,145,198$3.4%961.39$ 2003 20,744,309 60,000 4,250,000 5,228,397 6,215,000 8,082,199 2,533,972 47,113,877 3.6%1,023.70 2004 19,257,270 41,150 6,875,000 7,400,295 5,615,000 7,777,264 -46,965,979 3.5%1,024.00 2005 21,202,921 20,944 2,700,000 6,258,456 4,990,000 7,460,602 -42,632,923 3.1%927.53 2006 21,497,408 -9,200,000 5,175,780 4,350,000 7,130,852 -47,354,040 3.0%1,030.42 2007 25,436,632 -7,625,000 3,888,368 3,710,000 6,786,743 -47,446,743 2.9%1,010.80 2008 29,869,930 -5,005,000 2,780,069 3,030,000 6,428,759 -47,113,758 2.7%1,014.12 2009 52,067,590 --2,320,000 2,320,000 5,862,516 -62,570,106 3.5%1,346.09 2010 53,120,952 -2,500,000 8,614,576 1,580,000 --65,815,528 3.8%1,425.20 2011 55,225,670 -3,400,000 7,217,907 16,193,925 --82,037,502 N/A 1,719.61 Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2011 107Governmental Activities Business-Type Activities Schedule 12 - Unaudited City of Salina, Kansas Ratio of Outstanding Debt by Type Last Ten Fiscal Years Fiscal Year General Obligation Bonds Capital Lease Temporary Notes Total Less Debt Service Fund Net General Bonded Debt Percentage of Actual Taxable Value of Property Per Capita 2002 24,915,942$-$4,865,000$29,780,942$1,000,030$28,780,912$8.4%626.79$ 2003 25,972,706 60,000 6,783,972 32,816,678 1,584,330 31,232,348 8.6%678.62 2004 26,657,565 41,150 6,875,000 33,573,715 1,317,062 32,256,653 8.6%703.30 2005 27,461,377 20,944 2,700,000 30,182,321 1,407,529 28,774,792 7.5%626.03 2006 26,673,188 -9,200,000 35,873,188 1,494,320 34,378,868 8.5%748.08 2007 29,325,000 -7,625,000 36,950,000 1,210,457 35,739,543 8.3%761.39 2008 32,649,999 -5,005,000 37,654,999 792,744 36,862,255 8.3%793.45 2009 54,387,590 --54,387,590 735,291 53,652,299 11.9%1,154.23 2010 61,735,528 -2,500,000 64,235,528 571,873 63,663,655 14.2%1,378.60 2011 62,443,577 3,400,000 65,843,577 1,236,026 64,607,551 14.4%1,354.26 Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2011 108General Bonded Debt Outstanding Schedule 13 - Unaudited City of Salina, Kansas Ratio of Net General Bonded Debt Outstanding Last Ten Fiscal Years City of Salina, Kansas Direct and Overlapping Governmental Activities Debt Jurisdiction Net General Obligation Bonded Debt Outstanding Percentage Applicable to City of Salina Amount Applicable to the City of Salina Direct: City of Salina 64,607,551$100%64,607,551$ Overlapping: Salina Airport Authority 27,345,000 100%27,345,000 Saline County 145,000 76%110,200 USD 305 47,870,000 93%44,519,100 Total Overlapping Debt 75,360,000 71,974,300 Total Direct and Overlapping Debt 139,967,551 136,581,851 Per Capita Direct and Overlapping debt 2,957.60$ Source: Saline County Clerk Schedule 14 - Unaudited Percentage of debt applicable to the City of Salina is based on the proportion that the assessed valuation of the City of Salina bears to the assessed valuation of the overlapping entity. As of December 31, 2011 109 Assessed Valuation:449,760,638$ Debt Limit (30% of Assessed Value)134,928,191 Debt Applicable to limit: Total Bonded Debt 65,815,528 Less GO Debt Attributable to Exempt Purposes 5,252,470 Less Revenue Bonds 1,580,000 Less Loans - Less Fund Balance designated for Debt Service 1,236,026 Total Debt Applicable to Limitation 57,747,032 Legal debt margin 77,181,159 Fiscal Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Debt Limit 103,278,823$108,930,133$112,581,905$115,184,791$120,657,497$128,539,768$133,224,043$135,400,141$134,340,263$134,928,191$ Total net debt applicable to limit 28,780,912 31,172,348 32,485,503 28,774,792 28,774,792 35,739,543 36,862,255 53,652,299 58,411,185 57,747,032 Legal debt margin 74,497,911 77,757,785 80,096,402 86,409,999 91,882,705 92,800,225 96,361,788 81,747,842 75,929,078 77,181,159 Total net debt applicable to the limit as a percentage of debt limit 28%29%29%25%24%28%28%40%43%43%110Legal Debt Margin Calculation for 2011 Schedule 15 - Unaudited City of Salina, Kansas Legal Debt Margin Last Ten Fiscal Years Fiscal Year Utility Service Charges Less: Operating Expenses Net Available Revenue Principal Interest Coverage 2003 12,129,440 10,682,725 1,446,715 791,394 477,400 114% 2004 12,361,877 10,654,249 1,707,628 904,935 542,722 118% 2005 12,703,953 10,468,771 2,235,182 941,662 542,722 151% 2006 12,949,169 10,894,968 2,054,201 969,748 461,470 144% 2007 14,054,466 11,545,842 2,508,624 983,479 589,288 160% 2008 14,072,513 12,754,057 1,318,456 1,038,000 515,459 85% 2009 14,980,874 12,524,390 2,456,484 1,276,243 455,294 142% 2010 16,520,055 13,571,098 2,948,957 740,000 91,450 355% 2011 17,904,056 12,963,891 4,940,165 1,580,000 496,760 238% Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2011 Water/Sewer Revenue Bonds (Including Kansas Water Supply Loan) Schedule 16 - Unaudited City of Salina, Kansas Pledged Revenue Coverage Last Nine Fiscal Years 111 Fiscal Year Population Per Capita Personal Income (Saline County) Personal Income, Salina (interpolated) Unemployment Rate Labor Force, Saline County 2002 45,918 28,500 1,308,663,000$4.1%29,989 2003 46,023 28,200 1,297,848,600$4.6%30,086 2004 45,865 29,600 1,357,604,000$4.8%30,600 2005 45,964 30,000 1,378,920,000$4.4%30,358 2006 45,956 33,900 1,557,908,400$3.7%30,539 2007 46,940 34,500 1,619,430,000$3.3%30,843 2008 46,458 37,412 1,738,097,000$3.9%29,222 2009 46,483 38,699 1,787,119,820$5.7%26,806 2010 46,180 38,752 1,738,097,000$6.4%26,155 2011 47,707 NA NA 6.3%26,556 Sources: Population: Kansas Division of the Budget. Saline County Per Personal income for Salina is derived from the population and per capita personal income for Saline County Per Capita Personal income as reported by the Bureau of Economic analysis Schedule 17 - Unaudited City of Salina, Kansas Demographic and Economic Statistics Last Ten Fiscal Years 112 Employer Type of Business Employees Rank Percentage of Labor Force Employees Rank Percentage of Labor Force Tony's Pizza Service (Schwans)Frozen Pizza Manufacturing 2,300 1 7.9%1,850 1 6.3% Salina Regional Health Center Health Care 1,082 2 3.7%1,082 2 3.7% USD # 305 Public School System 935 3 3.2%935 3 3.2% Exide Battery's Automotive Battery Manufacturer 825 4 2.8%800 4 2.7% Great Plains Manufacturing Agrcultural and Landscaping Equipment 650 5 2.2%650 5 2.2% Phiilips Lighting Co.Fluorescent Lamps 605 7 2.1%600 6 2.1% City of Salina City Government 497 8 1.7%493 7 1.7% Saline County County Government 277 8 0.9% El Dorado National Busses/Recreational Vehicles 265 9 0.9%255 9 0.9% Raytheon Aircraft Aircraft Manufacturing 650 5 2.2%-10 0.0% OCCK Assembly 263 10 0.9% Total 7,809 26.7%6,942 23.8% Source: Salina Chamber of Commerce 2002 2011 Schedule 18 - Unaudited City of Salina, Kansas Principal Employers Current Year and Nine Years Ago 113