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Audit - 2012COMPREHENSIVE 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, 2012 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, 2012 TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal i - iv Organizational Chart v List of Principal Officials vi FINANCIAL SECTION Independent Auditor’s Report 1 - 2 Management's Discussion and Analysis 3 - 13 Basic Financial Statements: Government-wide Financial Statements Statement of Net Position 14 Statement of Activities 15 Fund Financial Statements Balance Sheet - Governmental Funds 16 Reconciliation of the Total Governmental Fund Balance to Net Position 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 Position - Proprietary Funds 20 Statement of Revenues, Expenses, and Changes in Fund Net Position - 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, 2012 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 Tourism and Convention Fund 56 Special Gas Fund 57 Bicentennial Center Fund 58 Sales Tax Capital Fund 59 Combining Statements and Individual Fund Schedules Combining Statements - Nonmajor Funds Fund Descriptions 60 - 61 Combining Balance Sheet - Nonmajor Governmental Funds 62 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 63 Combining Balance Sheet - Nonmajor Special Revenue Funds 64 - 65 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 66 - 67 Combining Balance Sheet - Nonmajor Permanent Funds 68 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Permanent Funds 69 Individual Fund Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual (Non-GAAP Basis): Business Improvement City Fund 70 Neighborhood Park Fund 71 Special Parks and Recreation Fund 72 Special Alcohol Fund 73 Sales Tax Economic Development Fund 74 Fair Housing Fund 75 Arts & Humanities Fund 76 Debt Service Fund 77 Solid Waste Disposal Fund 78 Water and Sewer Fund 79 Sanitation Fund 80 Golf Course Fund 81 Risk Management Fund 82 Workers’ Compensation Reserve Fund 83 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2012 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 84 Central Garage Fund 85 Information Systems Fund 86 Internal Service Fund Descriptions 87 Combining Statement of Net Position - Internal Service Funds 88 Combining Statement of Revenues, Expenses, and Changes in Net Position - Internal Service Funds 89 Combining Statement of Cash Flows - Internal Service Funds 90 - 91 Fiduciary Fund Descriptions - Agency Funds 92 Combining Balance Sheet - Agency Funds 93 Combining Statement of Changes in Assets and Liabilities - Agency Funds 94 Schedule STATISTICAL SECTION Net Position by Component - Last Ten Years 1 95 Changes in Net Position - Last Ten Years 2 96 Fund Balances, Governmental Fund - Last Ten Years 3 97 Changes in Fund Balances, Governmental Funds - Last Ten Years 4 98 Tax Revenue by Source, Governmental Funds - Last Ten Years 5 99 Assessed and Estimated Actual Value of Taxable Property – Last Ten Years 6 100 Direct and Overlapping Property Tax Rates – Last Ten Years 7 101 Principal Property Tax Payers 8 102 Property Tax Levies and Distributions 9 103 Direct Sales Rate by Taxing Entity 10 104 Water Sales by Class of Customer 11 105 Ratio of Outstanding Debt by Type 12 106 CITY OF SALINA, KANSAS Comprehensive Annual Financial Report For the year ended December 31, 2012 TABLE OF CONTENTS - CONTINUED Schedule Page STATISTICAL SECTION - CONTINUED Ratio of Net General Bonded Debt Outstanding 13 107 Direct and Overlapping Governmental Activities Debt 14 108 Legal Debt Margin 15 109 Pledged Revenue Coverage 16 110 Demographic and Economic Statistics 17 111 Principal Employers 18 112 INTRODUCTORY SECTION This page intentionally left blank. 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 November 1, 2013 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, 2012, 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 accurateinallmaterialrespects 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 statisticalsection includes selected financial and demographic information, generally presented on a multi-year basis. The reader is specificallydirected 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 Budgetaryand Financial Policies are reviewed by the City Commission and updated each year as a part of the budget process. Citystaff 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 thatthese 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 budgetarycontrol is maintainedat the Fund level, in accordance with State Statutes. However, management control is maintained at the department level. The City uses an encumbrance accounting system, inwhichestimated 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, 2012 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 maintaina 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 opinionhas been included in this report. Profile of the Community The Town of Salina was organized in 1858 under the Town and Village Act in the State of Kansas, and became a City of the First Class on July 9, 1920. The City has had a Commission-City Manager form of government since 1921. The Commission is comprised of five members elected at large. Each year the commission chooses one member to act as Mayor. The City Manager is appointed by the Commission, and acts as its primary agent in accordance with state statute. Other city officers and employees are appointed by the City Manager. The current population of the City is 47,910. 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 and account groups of the City. The City provides a full range of services including police and fire protection, development services, construction and maintenance of streets, drainage facilities and other infrastructure; recreational activities and cultural events; emergency medical services and convention facilities. In addition to general government activities, the City also provides water, wastewater, sanitation, and solid waste services; therefore, these activities are included in the reporting entity. Economic Outlook and Strength The City benefits from its location at the junction of Interstate Highways 70 and 135. This convenient location has drawn numerous national and regional companies to open manufacturing or distribution centers in or adjacent to the community. Such companies include Pepsi-cola, Exide Battery, Philips Lighting, El Dorado Bus, and Schwans. Currently manufacturing, retail trade, and service industries rank as the three primaryemployers 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 2012. 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 2013 several major projects were initiated, including rehabilitation of the downtown well field, replacement of the downtown street lighting system, initiation of major rehabilitation of the Bicentennial Center, and an affordable work force housing pilot project. In operations, the City initiated an organization-wide “Lean-six- Sigma” initiative targeted towards process improvement and more efficient operation. 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 recyclingof yardwaste as an alternative to disposal. A Pilot residential recycling program was continued in 2004. The curbside recycling program was convertedtoapermanentservicein 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 2012, full time staffing had been reduced from 511 to 465. The freeze on salaries was removed in 2011, with an allowance granted for an average 2% merit review. However, no general (or “cost of living”) adjustments have been given since 2008. 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*: 2013 2014 2015 2016 General Fund 520,000$ 550,000$ 550,000$ 550,000$ Sales Tax* 1,900,000 2,500,000 2,500,000 2,500,000 Special Park Fund 130,000 150,000 150,000 150,000 Gas Tax Fund 1,300,000 1,300,000 1,300,000 1,300,000 Solid Waste Fund 50,000 105,000 50,000 50,000 Sanitation Fund 210,000 160,000 160,000 160,000 Water & Wastewater Fund 4,000,000 2,500,000 2,500,000 4,500,000 General Obligation Bonds 11,900,000 4,194,000 2,403,000 1,170,000 Revenue Bonds 9,460,000 5,600,000 17,350,000 5,600,000 Other Sources 50,000 50,000 8,000,000 50,000 Total 29,520,000$17,109,000$ 34,963,000$ 16,030,000$ *The year a project is scheduled reflects the year that construction is initiated. Preliminary work (design, acquisition) may precede this date by one or more years, and permanent financing may not occur until one (or more years depending on project magnitude) subsequent to this date. 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, &LW\RI6DOLQD CITIZENS CITY COMMISSION Barbara Shirley, Mayor Aaron Householter Jon Blanchard Kaye J. Crawford Randall Hardy 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 *Global Spectrum Arts & Humanities Brad Anderson Parks & Recreation Dion Louthan T/Public Information/Organizational Chart-Publisher 4/16/13 * Contract Position General Services Streets Flood Control Traffic Control Central Garage Sanitation/HHW Landfill Human Resources Natalie Fischer Utilities Martha Tasker Municipal Court Building & Neighborhood Services Planning/Comm. Dev. Water Park/Aquatics Golf Course Neighborhood Centers Parks Recreation Forestry Cemetery Building Maintenance Continual Process Improvement Bryon Johnson v ǀŝ City of Salina, Kansas List of Principal Officials City Commission Norman M. Jennings, Mayor Barbara Shirley, Vice Mayor Kaye J. Crawford, Commissioner Samantha P. Angell, Commissioner Aaron Householter, Commissioner City Executive Staff Jason Gage, City Manager Michael Schrage, Deputy City Manager Rodney Franz, Director of Finance and Administration Jack Rolfs, Director of Computer Technology Natalie Fischer, Director of Human Resources Greg Bengston, City Attorney Jim Hill, Chief of Police Larry Mullikan, Fire Chief Michael Fraser, Director of Public Works Martha Tasker, Director of Utilities Dion Louthan, Director of Parks and Recreation Jack Rolfs, Director of Computer Technology Gary Hobbie, Director of Development Services Brad Anderson, Director of Arts and Humanities Gina McDonald, Director of Human Relations FINANCIAL SECTION This page intentionally left blank. www.mizehouser.com mhco@mizehouser.com 534 S Kansas Ave, Suite 700 Topeka, KS 66603-3465 785.233.0536 p 785.233.1078 f 534 S Kansas Ave, Suite 400 Topeka, KS 66603-3454 785.234.5573 p 785.234.1037 f 7101 College Blvd, Suite 900 Overland Park, KS 66210-1984 913.451.1882 p 913.451.2211 f 211 E Eighth Suite A Lawrence, KS 66044-2771 785.842.8844 p 785.842.9049 f 1 INDEPENDENT AUDITOR’S REPORT Mayor and City Commissioners City of Salina, Kansas Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of and for the year ended December 31, 2012, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the “Kansas Municipal Accounting and Audit Guide.” These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We did not audit the financial statements of the Salina Airport Authority which statements reflect total assets of $52,209,963 as of December 31, 2012 and total revenues of $5,708,833 for the year then ended, and the Housing Authority of the City of Salina which statements reflect total assets of $7,900,623 as of June 30, 2012 and total revenues of $2,076,075 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. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 2 Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business- type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Salina, Kansas, as of December 31, 2012, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s financial statements as a whole. The introductory section, combining and individual nonmajor fund financial statements and schedules, and statistical tables as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying account and other records used to prepare the 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. November 1, 2013 3 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2012 (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, 2012. 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 Position increased by $5,733,000. Governmental Net Position increased by $2,187,000, while Business Type Net Position increased by $3,546,000. !The change in net position was due primarily to a reduction in long term liabilities (reflecting, in part, refinancing of debt during the period), and an increase in non-current assets. Unrestricted net position declined slightly, reflecting primarily a decline in current assets. !Sales taxes grew modestly (3.6%), a reduction of the previous year’s growth. The reduction was focused in the last six months of the year, during which the growth rate was essentially zero. !The General Fund balance was essentially stable, falling by $9,128 on a total of $3.8 million. !Business Type Activities, overall, performed well. !The Solid Waste fund had a substantial increase in Net Position due to increases in volume and a significant reduction in operating expenses. !The Water and Sewer fund saw significant growth in Net Position despite increases in operating expenditures, due to good revenue production. !Sanitation experienced a modest increase in Net Position. !The Golf Course improved its position due to both good revenue production and control of expenses. !Tax delinquency rates have declined for the second year in a row to 1.5%. This compares to the 2011 rate of 2.7%, and the high (in recent times) of 5.6% in 2010. !Personal property taxes continued to decline as a result of the exemption of business equipment from the tax rolls. The annual cost of this change for 2012 was $393,000, or approximately 1 mill. !Investment revenues continue to be very minimal. !The unemployment rate declined from 6.3% to 5.1% for December, 2012 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 Position reports all of the City’s assets and liabilities. Net position, the difference between assets and liabilities, is an important measure of the City’s overall financial health. Net position represents the total accumulated and unused resources available to the City for the purpose of providing services. Over time, the increases and decreases in net position can be monitored to determine if the City’s financial position is improving or deteriorating. 4 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2012 (Unaudited) The Statement of Activities shows how net position has changed during the fiscal year. One unique feature of this statement is how it shows the revenues and expenses related to specific programs and how much of those programs were supported by the general taxes of the City. Since this statement is prepared on the accrual basis of accounting, all revenues and expenses are included, regardless of when cash is actually received. Both statements show the operations of the 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. 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 Collection, 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 Services 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 Citizenship Trust, Cemetery and Mausoleum Endowments, and the Tri-centennial Commission Fund. 5 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2012 (Unaudited) 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 necessaryfor 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. Tax Base and Economy The City of Salina relies on three major groups of revenues to support its operations. Each of these revenue streams has a different revenue base. In declining order of magnitude, they are charges for service, sales taxes, and property taxes. Sales taxes and property taxes apply primarily to Governmental Activities, while charges for services apply to both Governmental(35%) and Business-type (65%) activities. Charges for Services account for about 48% ($38,337,000) 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, 2012. Description 2011 Volume 2012 Volume Change Rate Comments Golf Course: Rounds, 18 Hole 26,782 35,032 8,250 No fee increase Rounds, Par 3 3,368 3,010 (358) No fee increase Annual Golf Members 18 297 279 No fee increase Development Services Inspections: Building 5,473 5,393 (80) Inspections: Minimum Hous ing Code NA 4,926 Permits Issued 2,678 2,265 (413) Finance/Administration EMS Runs Billed 4,003 4,011 8 Licenses Issued 1,358 NA Water Billings Issued 239,448 239,244 (204) Water Metered (in Billion Gallons) 2.30 2.20 - Parks and Recreation Kenwood Cove Attendance 111,063 100,888 (10,175) No fee increase Youth Teams 178 208 30 Adult Teams 308 292 (16) Special Pops Programs 114 118 4 Trips/Tours offered 54 13 (41) Youth Tournament Teams 388 366 (22) Adult Tournament Teams 164 144 (20) Public Works Sanitation Customers 14,604 14,706 102 Landfill Tonnage 96,178 103,959 7,781 No fee increase Street Cut and Excavation Permits 201 474 273 Concrete Permits 143 181 38 Water and Wastewater Water Treated (Billion Gallons) 2.30 2.33 0.03 $2.00 per month per typical user Wastewater Treated (Billion Gallons) 1.45 1.36 (0.09) $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. 6 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2012 (Unaudited) Sales taxes are the next largest component of the revenue mix, providing 21% ($16,375,000) of the total revenues. 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 2012 was $ 16,375,000, up from $ 15,867,000 in 2011. This 3.6% increase follows a 4.1% increase for 2011. 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 3.2%, compared to 5.8% in 2011. 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 decreased for 2012, the City’s allocated portion of the County-wide sales tax was also decreased from 62.06% in 2011 to 61.72% in 2012. 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, 2019. The tax was also modestly re-purposed, for Capital and Economic Development purposes only, as well as retaining a property tax stabilization component. Property Taxes are the third major component of the revenue mix, accounting for 16% ($11,864,000) 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.45%. The total City mill levy was increased slightly, by 1%, while the overlapping levy was essentially stable, increasing by only .004 mill. Tax delinquency decreased from 2.7% to 1.5%. 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 $18.6 million from its peak of $39.7 million in 2007. At the 2012 tax rate, this exemption is equivalent to $393,640 in lost revenue for 2012. Motor Vehicle value increased by .3%. It is still well below 2010 values, however. Motor vehicle taxes are distributed based on a formula using prior year’s tax effort (similar to the Countywide Sales Tax Distribution). The following table summarizes the comparative property assessed values and tax levy rates: Fiscal (Budget) Year 2011 2012 Change Real Estate and Personal Property Assessed Valuation 402,354,576$ 403,850,282$ 1,495,706$ City Mill Levy ($ per $1,000) Operating (General Fund) 19.236 20.326 1.090 Debt Service 6.786 5.946 (0.840) Total City Rate 26.022 26.272 0.250 Total Overlapping Levy 128.498 128.502 0.004 Percent of Total Taxes Collected 97.3% 98.5% 1.2% Ratio of Total Taxes (including delinquent collections) to taxes levied 99.9% 100.8% 0.9% Motor Vehicle Valuation 47,406,072$ 47,533,744$ 127,672$ Comparative Property Values and Tax Levy Rates The unemployment rate in Saline County declined slightly from 6.3% in 2011 to 5.1% in 2012, reflecting general economic conditions. This is still slightly below the statewide and significantly below the national unemployment rate. The total labor force increased to 30,206, a change of 13.7%, returning to pre-recession levels. In 2012, the top ten property taxpayers accounted for 9.99% of total assessed value. This is less concentrated than ten years ago (at 12.21%). 7 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2012 (Unaudited) Statement of Net Position Net Position may, over time, provide an indicator of a government’s financial position. In the case of the City of Salina, assets exceeded liabilities by $193,381,000 at December 31, 2012. This represents an increase in net position of $5,733,000 over 2011. A comparative condensed Statement of Net Position at December 31, 2011 and 2012: 2011 2012 2011 2012 2011 % of Total 2012 % of Total 2011 - 2012 Change Cash and Investments 17,475$ 14,512$ 28,047$ 25,459$ 45,522$ 16% 39,971$ 14% (5,551)$ Other Current Assets 12,670$ 12,525$ 2,344$ 2,045$ 15,014$ 5% 14,570$ 5% (444)$ Noncurrent (Capital) Assets 164,515$ 162,038$ 67,639$ 76,321$ 232,154$ 79% 238,359$ 81% 6,205$ Deferred Outflows of Resources -$ 483$ -$ 330$ -$ 0%813$ 0%813$ Total Assets and Deferred Outflows of Resources 194,660$ 189,558$ 98,030$ 104,155$ 292,690$ 100%293,713$ 100%1,023$ Current Liabilities 21,687$ 20,990$ 2,944$ 4,390$ 24,631$ 23% 25,380$ 25% 749$ Noncurrent Liabilities 55,639$ 49,047$ 24,772$ 25,904$ 80,411$ 77%74,951$ 75%(5,460)$ Total Liabilities 77,326$ 70,037$ 27,716$ 30,294$ 105,042$ 100%100,331$ 100%(4,711)$ Net Position Invested in capital assets, net of related debt 109,289$ 112,929$ 44,227$ 50,857$ 153,516$ 82% 163,786$ 85% 10,270$ Restricted for Permanent Funds 427$ 443$ -$ -$ 427$ 0% 443$ 0% 16$ Restricted for Debt Service 1,285$ 639$ 1,553$ 1,553$ 2,838$ 2% 2,192$ 1% (646)$ Unrestricted 6,333$ 5,511$ 24,534$ 21,450$ 30,867$ 16%26,961$ 14%(3,906)$ Total Net Position 117,334$ 119,522$ 70,314$ 73,860$ 187,648$ 100%193,382$ 100%5,734$ Percent of Total Assets 63% 62%37% 38% 100% 100% Cash and Investments as a percentage of current liabilities 81% 69% 953% 580% 185% 157% Governmental Activities Business-Type Activities Comparative Condensed Statement of Net Position 2011 and 2012 (In $000) Total Primary Government The largest segment of the City’s net postion (85%) reflects its investment in capital assets (land, buildings, streets and drainage facilities, utility plant, vehicles, equipment, etc.), less any debt used to acquire those assets that is still outstanding. These assets are used to provide services to citizens. As a result, resources required to retire related debt cannot come from liquidation of the asset. Such resources generally must be provided from other sources, such as future taxes or user charges. A small portion of net position (1%) is restricted for debt service. The remainder (unrestricted) of net position (14%) may be used to meet the City’s obligations to citizens and creditors. This is comparable to previous years. In 2012, the amount invested in capital assets net of related debt increased by $10,270,000. Unrestricted net position declined by $4,262,000. These represent diverse changes throughout the financial statement. However, it is clear that for 2012, the City experienced a decline in current assets, including cash and investments. Total liabilities decreased in Governmental Activities, but increased in Business Type Activities. In Governmental Activities, the bulk of the decrease was in long term liabilities, while the performance in Business Activities represented a mixed bag. During the year ended December 31, 2012, there were several significant events that changed the balance of net position. Governmental Activities. 2012 saw a decrease in cash and investments in Governmental funds. This is due to flat revenues coupled with continuing upward pressure on expenditures. 8 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2012 (Unaudited) Business-type Activities: The Water and Wastewater fund has a dominant influence on the Business Type Activities net position. The increase in net position is due to good revenue production and controlled expenses. Statement of Activities A condensed statement of activities is shown below. 2011 2012 2011 2012 2011 % 2012 %2011 - 2012 Program Revenues:Change Charges for Services 13,470$ 12,856$ 23,779$ 25,481$ 37,249$ 47% 38,337$ 48% 1,088$ Operating Grants and Contributions 2,907$ 4,495$ 202$ -$ 3,109$ 4% 4,495$ 6% 1,386$ Capital Grants and Contributions -$ -$ 3,804$274$ 3,804$ 5% 274$ 0% (3,530)$ General Revenues: Property Taxes 11,712$ 11,865$ 11,712$ 15% 11,865$ 15% 153$ Sales Taxes 15,848$ 16,375$ 15,848$ 20% 16,375$ 21% 527$ Other Taxes 6,389$ 6,486$ 6,389$ 8% 6,486$ 8% 97$ Investment Revenue 77$ 66$ 83$ 79$ 160$ 0% 145$ 0% (15)$ Other Miscellaneous 872$ 660$ 330$ 434$ 1,202$ 2%1,094$ 1%(108)$ Total Revenues: 51,275$ 52,803$ 28,198$ 26,268$ 79,473$ 100%79,071$ 100%(402)$ Expenses: General Government 13,615$ 11,278$ 13,615$ 18% 11,278$ 15% (2,337)$ Public Safety 18,579$ 19,066$ 18,579$ 25% 19,066$ 26% 487$ Public Works 9,858$ 10,957$ 9,858$ 13% 10,957$ 15% 1,099$ Public Health and Sanitation 1,368$ 1,383$ 1,368$ 2% 1,383$ 2% 15$ Culture and Recreation 6,693$ 5,338$ 6,693$ 9% 5,338$ 7% (1,355)$ Planning and Development 3,450$ 3,362$ 3,450$ 5% 3,362$ 5% (88)$ Solid Waste Disposal 2,945$ 2,066$ 2,945$ 4% 2,066$ 3% (879)$ Water and Sewer 13,597$14,897$ 13,597$ 18% 14,897$ 20% 1,300$ Sanitation 2,261$2,441$ 2,261$ 3% 2,441$ 3% 180$ Golf Course 825$ 724$ 825$ 1% 724$ 1% (101)$ Interest on Long Term Debt 1,650$ 1,914$ 1,650$ 2%1,914$ 3%264$ Total Expenses 55,213$ 53,298$ 19,628$ 20,128$ 74,841$ 100%73,426$ 100%(1,415)$ Increase in net position before transfers (3,938)$ (495)$ 8,570$ 6,140$ 4,632$ 5,645$ 1,013$ Transfers and other extraordinary items 2,362$ 30$ (2,163)$ (30)$ -$ -$ -$ Change in Net Position (1,576)$ (465)$ 6,407$ 6,110$ 4,831$ 5,645$ 814$ Net Position January 1 117,798$ 117,334$ 63,938$ 70,314$ 181,736$ 187,648$5,912$ Prior Period Adjustment 1,112$ 2,653$ (31)$ (2,564)$ 1,081$ 89$ (992)$ Net Position January 1, restated 118,910$ 119,987$ 63,907$ 67,750$ 182,817$ 187,737$ 4,920$ Net Position December 31 117,334$ 119,522$ 70,314$ 73,860$ 187,648$ 193,382$ 5,734$ Condensed Comparitive Statement of Activities, 2011 and 2012 (In $000's) Governmental Activities Business-Type Total Primary Government Governmental Activities. Total expenses for Governmental Activities for the year ending December 31, 2012 were $53,298,000 compared to $55,212,000 in 2011. Governmental activities represent 73% 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 $12,856,000 and operating grants for those purposes were $4,494,000, up substantially compared to 2011. The balance was funded by general revenues. Sales taxes accounted for $16,375,000 of the general revenues, with property taxes providing $11,864,000. Net postion decreased by $498,000 as a result of Governmental Activities. Business Type Activities. Total expenses for Business-type Activities for the year were $20,130,000, or 27% of the City’s total expense. The majority of this expense ($14,898,000) is attributable to Water and Sewer operations, with the other activities (Solid Waste Disposal, Sanitation, and Golf Course) costing a combined total of $5,273,000. These activities are primarily supported by user charges, with only $787,000 coming from general revenues, representing some capital grants and the interest earned on fund balances held by the City. Net position increased 9 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2012 (Unaudited) Fund Financial Analysis Governmental Funds Fund Balances: The table below shows the Governmental Fund balances for major funds for the years ended December 31, 2011 and December 31, 2012. Fund 2011 2012 Change General 3,836,238$ 3,827,110$ (9,128)$ Flood and Drainage 907$ -$ (907)$ Tourism and Convention 340,473$ 419,505$ 79,032$ Special Gas 1,417,743$ 1,375,175$ (42,568)$ Bicentennial Center 142,881$ 3,138$ (139,743)$ Sales Tax Capital 1,397,571$ 2,010,139$ 612,568$ Debt Service 1,285,830$ 639,324$ (646,506)$ Capital Projects 390,852$ (922,852)$ (1,313,704)$ Other Governmental Funds 2,792,546$ 3,366,098$ 573,552$ Total 11,604,341$ 10,717,637$(886,704)$ Governmental Fund Balances, 2011 and 2012 Total Governmental Fund balances decreased by $886,704. 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 in 2012. The Flood and Drainage Fund was scheduled for depletion. The Special Sales Tax fund increase is due to, first, deferral of one of the planned projects, and, second, the scheduled transfer ($400,000) to the Debt Service fund was not made in 2012. This is apparent from the decline in the debt service fund balances. Revenues and Expenditures: The following table shows a comparison of revenues and expenditures (including other sources and uses) for major funds for the years ending December 31, 2011 and 2012. Fund 2011 2012 Change Revenues (Including Other Financing Sources) General 35,557,304$ 35,986,064$ 428,760$ Flood and Drainage Improvement 18,473$ 108$ (18,365)$ Tourism and Convention 1,306,102$ 1,429,032$ 122,930$ Special Gas 1,546,045$ 1,544,176$ (1,869)$ Bicentennial Center 1,656,762$ 1,190,661$ (466,101)$ Sales Tax Capital 3,777,286$ 3,888,105$ 110,819$ Debt Service 6,844,521$ 9,786,681$ 2,942,160$ Capital Projects 9,896,198$ 3,575,743$ (6,320,455)$ Other Governmental Funds* 2,800,508$ 2,936,162$ 135,654$ Total Revenues 63,403,199$ 60,336,732$ (3,066,467)$ Less Other Sources 14,581,655$ 9,698,819$ (4,882,836)$ Revenues, net of other sources 48,821,544$ 50,637,913$ 1,816,369$ Expenditures (Including Other Financing Uses) General 35,494,671$ 35,995,192$ 500,521$ Flood and Drainage Improvement 206,092$ 1,015$ (205,077)$ Tourism and Convention 1,332,826$ 1,350,000$ 17,174$ Special Gas 1,612,943$ 1,586,744$ (26,199)$ Bicentennial Center 1,559,929$ 1,330,404$ (229,525)$ Sales Tax Capital 4,534,082$ 3,275,537$ (1,258,545)$ Debt Service 6,131,264$ 10,476,427$ 4,345,163$ Capital Projects 6,895,345$ 3,384,160$ (3,511,185)$ Other Governmental Funds* 2,989,614$ 2,362,610$ (627,004)$ Total Expenditures 60,756,766$ 59,762,089$ (994,677)$ Less Other Uses 5,692,077$ 3,458,438$ (2,233,639)$ Expendit ures, net of other uses 55,064,689$ 56,303,651$ 1,238,962$ Consolidated Statement of Revenues and Expenditures for Major Funds, 2011 and 2012 Modified Accrual Basis 10 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2012 (Unaudited) Total revenues and other sources declined by $2,161,834 from 2011 to 2012. The largest component of this change was in the Capital Projects accounts, and is related to Construction activities. Other changes include decreased General Fund supplements for the Bi-Centennial Center and changes in temporary note activity. Expenditures generally declined, with the notable exception of the General and Debt Service funds. The increase in the General Fund is due largely to inflationary pressures. The Debt Service Fund was influenced by refinancing activity. Proprietary Funds The City of Salina operates four Enterprise Funds as well as five Internal Service Funds. A summarized comparative Statement of Net Position follows for each Enterprise Fund: 2011 2012 Change 2011 2012 Change Current Assets 3,611$ 4,524$ 913$ 25,988$ 22,065$ (3,923)$ Capital Assets 3,495$ 2,933$ (562)$ 63,184$ 72,498$ 9,314$ Deferred Outflows of Resources -$ -$ -$ -$ 330$ 330$ Total Assets and Deferred Outflows of Resources 7,106$ 7,457$ 351$ 89,172$ 94,893$ 5,721$ Current Liabilities 528$ 510$ (18)$ 2,363$ 3,769$ 1,406$ Noncurrent Liabilities 2,868$ 2,207$ (661)$ 21,640$ 23,581$ 1,941$ Total Liabilities 3,396$ 2,717$ (679)$ 24,003$ 27,350$ 3,347$ Invested in Capital, net of related debt 2,276$ 2,117$ (159)$ 40,991$ 47,849$ 6,858$ Restricted -$ -$ -$ 1,553$ 1,553$ -$ Unrestricted 1,434$ 2,623$ 1,189$ 22,625$ 18,141$ (4,484)$ Total Net Position 3,710$ 4,740$ 1,030$ 65,169$ 67,543$ 2,374$ Current Assets as a percentage of current liabilities 684% 887% 1100% 585% 2011 2012 Change 2011 2012 Change Current Assets 761$ 823$ 62$ 32$ 91$ 59$ Capital Assets 646$ 545$ (101)$ 314$ 345$ 31$ Deferred Outflows of Resources -$ -$ -$ -$ -$ -$ Total Assets and Deferred Outflows of Resources 1,407$ 1,368$ (39)$ 346$ 436$ 90$ Current Liabilities 29$ 64$ 35$ 24$ 47$ 23$ Noncurrent Liabilities 156$ 49$ (107)$ 109$ 68$ (41)$ Total Liabilities 185$ 113$ (72)$ 133$ 115$ (18)$ Invested in Capital, net of related debt 646$ 545$ (101)$ 314$ 345$ 31$ Restricted -$ -$ -$ -$ -$ -$ Unrestricted 576$ 710$ 134$ (101)$ (24)$ 77$ Total Net Position 1,222$ 1,255$ 33$ 213$ 321$ 108$ Current Assets as a percentage of current liabilities 2624% 1286% 133% 194% Comparative Summary Statement of Net Position; 2011 - 2012 (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, 2012 (Unaudited) The Golf Course Fund shows improvement in total net position, due to an increase in current and capital assets, as well as a decrease in total liabilities. Unrestricted net position in this fund reflects a $21,000 deficit balance, a substantial improvement over 2011. The Solid Waste fund shows increases in assets and a decline in liabilities. Revenues, Expenses, and Changes in Net Position The Water and Wastewater Funds, showed healthy results from operations, with net position increasing significantly due to good revenue flow (attributable to both adequate rates and favorable weather conditions) and controlled expenses. The Golf Course showed a significant gain on the year, reflecting increased levels of play and participation. The Sanitation Fund is stable. Net position increased in the Solid Waste fund. 2011 2012 Change 2011 2012 Change Operating Revenues 2,929$ 3,165$ 236$ 18,361$ 19,455$ 1,094$ Operating Expenses 2,829$ 2,048$ (781)$ 12,964$ 13,972$ 1,008$ Operating Income 100$ 1,117$ 1,017$ 5,397$ 5,483$ 86$ Non-operating revenues (expenses) (107)$ (7)$ 100$ (561)$ (860)$ (299)$ Income (Loss) before Transfers (7)$ 1,110$ 1,117$ 4,836$ 4,623$ (213)$ Transfers in (out) (180)$ -$ 180$ (2,030)$ (30)$ 2,000$ Capital Contributions -$ 124$ 124$ 3,804$ 150$ (3,654)$ Change in Net Position (187)$ 1,234$ 1,421$ 6,610$ 4,743$ (1,867)$ Net Position, January 1 3,896$ 3,710$ (186)$ 58,578$ 65,169$ 6,591$ Restatement 1$ (204)$ (205)$ (19)$ (2,369)$ (2,350)$ Net Position, January 1, restated 3,897$ 3,506$ (391)$ 58,559$ 62,800$ 4,241$ Net Position, December 31 3,710$ 4,740$ 1,030$ 65,169$ 67,543$ 2,374$ 2011 2012 Change 2011 2012 Change Operating Revenues 2,335$ 2,462$ 127$ 687$ 832$ 145$ Operating Expenses 2,292$ 2,441$ 149$ 825$ 725$ (100)$ Operating Income 43$ 21$ (22)$ (138)$ 107$ 245$ Non-operating revenues (expenses) 32$ 3$ (29)$ -$ 1$ 1$ Income (Loss) before Transfers 75$ 24$ (51)$ (138)$ 108$ 246$ Transfers in (out) -$ -$ -$ 47$ -$ (47)$ Change in Net Position 75$ 24$ (51)$ (91)$ 108$ 199$ Net Position, January 1 1,159$ 1,222$ 63$ 305$ 213$ (92)$ Restatement (12)$ 9$ 21$ (1)$ -$ 1$ Net Position, January 1, restated 1,147$ 1,231$ 84$ 304$ 213$ (91)$ Net Position, December 31 1,222$ 1,255$ 33$ 213$ 321$ 108$ Enterprise Funds Summary of Revenues, Expenses and Changes in Net Position 2011 and 2012 (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, 2012 (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, 2012. 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 Risk Management, Solid Waste, Tourism, and the Water and Wastewater Funds. The City experienced a number of significant variances from budgeted items in the General Fund. However, the total fund was within budgeted expenses. Sales taxes were short of budgetary levels significantly. 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, 2012 was $238,359,000 net of accumulated depreciation. The following table illustrates the Capital Asset balance by various classes of assets at December 31, 2011 and 2012: 2011 2012 2011 2012 2011 2012 Equipment, Furniture and Fixtures 1,288$ 1,252$ 1,729$ 1,976$ 3,017$ 3,228$ Vehicles 2,996$ 2,871$ 812$ 672$ 3,808$ 3,543$ Buildings and Improvements 22,591$ 24,475$ 11,904$ 11,475$ 34,495$ 35,950$ Land 22,477$ 22,640$ 1,541$ 1,542$ 24,018$ 24,182$ Infrastructure 82,609$ 101,610$ 40,591$ 39,694$ 123,200$ 141,304$ Construction in Progress 32,554$ 9,190$ 11,062$ 20,962$ 43,616$ 30,152$ Total 164,515$ 162,038$ 67,639$ 76,321$ 232,154$ 238,359$ * Net of Accumulated Depreciation Capital Asset Balances Net of Depreciation, 12/31/2011 and 12/31/2012 (In 000's) Governmental Activity Business-type Total 13 CITY OF SALINA, KANSAS Management Discussion and Analysis Year Ended December 31, 2012 (Unaudited) Changes to capital assets may be summarized as follows: Governmental Activity Business-Type Activity Total Additions 29,692$ 11,995$ 41,687$ Retirements (27,599)$ (806)$ (28,405)$ Adjustments 162$ 5$ 167$ Net Additions 2,255$ 11,194$ 13,449$ Depreciation Expense Applied 5,289$ 2,483$ 7,772$ Changes to Capital Assets, 2012 (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 12/31/2012 totaled $49,109,575. In addition, there were temporary notes outstanding in the amount of $1,485,000. Business-type activities had $15,850,228 in Revenue Bonds outstanding, as well as $9,613,926 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 2012. On August 1st, the City issued $2,365,000 in internal improvement bonds. The proceeds were used to finance public improvements to serve a commercial development. Costs will be recovered through special assessments against the benefiting properties over a 15 year period. Also in August, the City refinanced a number of outstanding issues to achieve future debt service savings. Series 2012-B was issued in the amount of $3,785,000. Final maturity will be reached in 2020. Also on August 1st, the City issued $1,485,000 in temporary notes to finance street improvements to a major arterial. This note will be refinanced into a long term bond issue in August, 2013. Additional information on the City’s debt can be found in Note 4, E. of the notes to the basic financial statements. Requests for Information This financial report is intended to give the reader a general overview of the City’s finances. Questions about information in this report or requests for additional information should be directed to the Director of Finance, Room 206, 300 West Ash Street, Salina, Kansas, 67401. This page intentionally left blank. BASIC FINANCIAL STATEMENTS Total Total Total Salina Salina Governmental Business-type Primary Housing Airport Activities Activities Government Authority Authority ASSETS AND DEFERRED OUTLFOWS OF RESOURCES Current assets: Cash and investments 14,512,406$ 25,459,075$ 39,971,481$ 1,618,067$ 1,660,132$ Receivables (net of allowance for uncollectibles) Accounts 1,155,058 1,457,579 2,612,637 15,248 134,386 Taxes 11,093,639 - 11,093,639 - - Interest 33,497 16 33,513 - - Inventory 242,774 586,568 829,342 17,474 3,260 Restricted cash and investments - - - 162,930 - Prepaid expenses - - - 32,620 8,936 Total current assets 27,037,374 27,503,238 54,540,612 1,846,339 1,806,714 Noncurrent assets: Notes receivable - - - 2,138 - Capital assets, nondepreciable Construction in progress 9,190,083 20,962,212 30,152,295 482,494 734,309 Land 22,640,475 1,541,806 24,182,281 1,456,891 9,872,183 Capital assets, depreciable 221,623,024 102,602,443 324,225,467 7,452,363 68,884,724 Less: Accumulated depreciation 91,415,423 48,785,418 140,200,841 3,339,602 29,087,967 Total noncurrent assets 162,038,159 76,321,043 238,359,202 6,054,284 50,403,249 Total assets 189,075,533 103,824,281 292,899,814 7,900,623 52,209,963 Deferred outflows of resources: Deferred charge on bond issuance 483,008 329,943 812,951 - - Total deferred outflows of resources 483,008 329,943 812,951 - - Total assets and deferred outflows of resources 189,558,541$ 104,154,224$293,712,765$ 7,900,623$52,209,963$ Liabilities: Current liabilities: At bl 993 800$415 671$1 409 471$41 427$76 611$ Primary Government CITY OF SALINA, KANSAS STATEMENT OF NET POSITION December 31, 2012 Component Units The notes to the basic financial statements are an integral part of this statement. 14 Accounts payable 993,800$ 415,671$ 1,409,471$ 41,427$ 76,611$ Retainage payable 328,811 1,364,869 1,693,680 - - Accrued liabilities 499,216 - 499,216 38,532 147,323 Matured bond principal and interest 145 - 145 - - Accrued interest payable 429,113 200,178 629,291 - 370,102 Deposits payable - 161,252 161,252 83,935 - Unearned revenue 10,576,448 - 10,576,448 8,530 41,127 Current portion of compensated absences 1,555,549 319,073 1,874,622 13,352 - Current portion of temporary notes payable 1,485,000 - 1,485,000 - - Current portion of revenue bonds payable - 623,696 623,696 - - Current portion of financing leases payable - - - - 45,826 Current portion of special assessment debt payable - - - - 21,876 Current portion of general obligation bonds payable 5,121,431 1,304,929 6,426,360 - 895,000 Total current liabilities 20,989,513 4,389,668 25,379,181 185,776 1,597,865 Noncurrent liabilities: Accrued liabilities 361,378 - 361,378 48,642 - Compensated absences 1,501,450 307,978 1,809,428 3,338 - Net OPEB obligation 3,196,446 367,863 3,564,309 - - Revenue bonds payable - 15,226,532 15,226,532 - - Financing leases payable - - - - 156,791 Special assessment debt payable - - - - 82,071 General obligation bonds payable 43,988,144 8,308,997 52,297,141 - 23,861,769 Landfill post-closure care liabilities - 1,693,368 1,693,368 - - Total noncurrent liabilities 49,047,418 25,904,738 74,952,156 51,980 24,100,631 Total liabilities 70,036,931$ 30,294,406$ 100,331,337$ 237,756$ 25,698,496$ Net Position Invested in capital assets, net of related debt 112,928,584$ 50,856,889$ 163,785,473$ 6,052,146$ 25,339,916$ Restricted for: Permanent funds: Expendable 442,509 - 442,509 114,288 - Debt service 639,324 1,553,016 2,192,340 - - Unrestricted 5,511,193 21,449,913 26,961,106 1,496,433 1,171,551 Total net position 119,521,610$ 73,859,818$ 193,381,428$ 7,662,867$26,511,467$ 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 11,278,267$ 6,327,712$ 1,091,708$ -$ [3,858,847]$ -$ [3,858,847]$ -$ -$ Public safety 19,065,686 4,290,288 1,284,505 - [13,490,893] - [13,490,893] - - Public works 10,956,931 305,965 1,548,322 - [9,102,644] - [9,102,644] - - Public health and sanitation 1,382,595 46,250 154,001 - [1,182,344] - [1,182,344] - - Culture and recreation 5,338,344 1,728,259 155,343 - [3,454,742] - [3,454,742] - - Planning and development 3,362,142 158,010 260,538 - [2,943,594] - [2,943,594] - - Interest on long-term debt 1,914,286 - - - [1,914,286] - [1,914,286] - - Total governmental activities 53,298,251 12,856,484 4,494,417 - [35,947,350] - [35,947,350] - - Business-type activities: Solid Waste Disposal 2,066,642 3,137,035 - 124,000 - 1,194,393 1,194,393 - - Water and Sewer 14,897,279 19,098,626 - 150,194 - 4,351,541 4,351,541 - - Sanitation 2,440,654 2,461,965 - - - 21,311 21,311 - - Golf Course 723,548 783,169 - - - 59,621 59,621 - - Total business-type activities 20,128,123 25,480,795 - 274,194 - 5,626,866 5,626,866 - - Total primary government 73,426,374$ 38,337,279$4,494,417$ 274,194$ [35,947,350] 5,626,866 [30,320,484] - - Component units: Salina Housing Authority 2,177,417$ 375,357$ 1,572,748$ 87,759$ - - - [141,553] - Salina Airport Authority 5,804,008 2,103,416 - 1,779,827 - - - - [1,920,765] Total component units 7,981,425$ 2,478,773$ 1,572,748$ 1,867,586$ - - - [141,553] [1,920,765] General Revenues: Property taxes levied for Gl 8 272 455 8 272 455 1 767 338 Changes in Net Position Component UnitsPrimary GovernmentProgram Revenues CITY OF SALINA, KANSAS STATEMENT OF ACTIVITIES For the Year Ended December 31, 2012 Net [Expenses] Revenue and The notes to the basic financial statements are an integral part of this statement. 15 General purposes 8,272,455 - 8,272,455 - 1,767,338 Debt service 2,438,787 - 2,438,787 - - Motor vehicle tax General purposes 1,152,767 - 1,152,767 - - Sales tax General purposes 12,165,281 - 12,165,281 - - Selective purposes 4,209,889 - 4,209,889 - - Other taxes General purposes 6,485,860 - 6,485,860 - - Investment revenues 66,375 79,491 145,866 15,275 1,500 Miscellaneous 660,161 433,942 1,094,103 24,936 56,752 Transfers, net 30,000 [30,000] - - - Subtotal general revenues 35,481,575 483,433 35,965,008 40,211 1,825,590 Change in net position [465,775] 6,110,299 5,644,524 [101,342] [95,175] Net position - beginning 117,334,142 70,313,686 187,647,828 7,764,209 26,606,642 Prior period adjustment 2,653,243 [2,564,167] 89,076 - - Net position - beginning, restated 119,987,385 67,749,519 187,736,904 7,764,209 26,606,642 Net position - ending 119,521,610$73,859,818$ 193,381,428$7,662,867$26,511,467$ 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 3,120,342$ -$ 28,785$ 1,197,049$ Receivables (net) Accounts 709,238 - 390,720 - Taxes 8,335,679 - - 298,952 Interest 33,497 - - - Inventory 115,900 - - - Due from other funds 31,049 - - - Cash with fiscal agent - - - - Total assets 12,345,705$ -$ 419,505$ 1,496,001$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Accounts payable 344,243$ -$ -$ 118,806$ Retainage payable - - - 2,020 Due to other funds - - - - Matured principal and interest - - - - Temporary notes payable - - - - Total liabilities 344,243 - - 120,826 Deferred inflows of resources Unavailable revenue - property taxes 8,174,352 - - - Total deferred inflows of resources 8,174,352 - - - Fund balance: Nonspendable 115,900 - - - Restricted - - 419,505 1,160,305 Committed - - - - Assigned 539,656 - - 214,870 Unassigned 3,171,554 - - - Total fund balances 3,827,110 - 419,505 1,375,175 Total liabilities, deferred inflows of resources and fund balances 12,345,705$ -$ 419,505$ 1,496,001$ BALANCE SHEET CITY OF SALINA, KANSAS December 31, 2012 GOVERNMENTAL FUNDS Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Projects Funds Funds 14,057$ 2,043,802$ 582,412$ 1,163,487$ 3,390,046$ 11,539,980$ - - - - 55,100 1,155,058 - - 2,459,008 - - 11,093,639 - - - - - 33,497 - - - - - 115,900 - - - - - 31,049 - - 145 - - 145 14,057$ 2,043,802$ 3,041,565$ 1,163,487$ 3,445,146$ 23,969,268$ 10,919$ 27,634$ -$ 280,577$ 47,999$ 830,178$ - 6,029 - 320,762 - 328,811 - - - - 31,049 31,049 - - 145 - - 145 - - - 1,485,000 - 1,485,000 10,919 33,663 145 2,086,339 79,048 2,675,183 - - 2,402,096 - - 10,576,448 - - 2,402,096 - - 10,576,448 - - - - - 115,900 - - 639,324 - 1,099,754 3,318,888 2,158 1,766,357 - [4,474,792] 2,190,129 [516,148] 980 243,782 - 3,551,940 76,215 4,627,443 - - - - - 3,171,554 3,138 2,010,139 639,324 [922,852] 3,366,098 10,717,637 14,057$ 2,043,802$ 3,041,565$ 1,163,487$ 3,445,146$ 23,969,268$ 16 The notes to the basic financial statements are an integral part of this statement. This page intentionally left blank. Total Governmental Fund Balances 10,717,637$ Amounts reported for governmental activities in the statement of net position are different because Bond issuance costs are shown as current year expenditures in the funds. Bond issuance costs 483,008 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds The cost of capital assets is 252,592,284 Accumulated depreciation is 90,577,217 162,015,067 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. 2,003,830 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 2,962,798 Net OPEB obligation 3,196,446 Bonds payable 49,109,575 Accrued interest on the bonds 429,113 [55,697,932] Net Position of Governmental Activities 119,521,610$ CITY OF SALINA, KANSAS RECONCILIATION OF THE TOTAL GOVERNMENTAL FUND BALANCE TO NET POSITION OF GOVERNMENTAL ACTIVITIES December 31, 2012 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 8,104,969$ -$ -$ -$ Delinquent taxes 167,378 108 - - Motor vehicle taxes 852,832 - - - General sales taxes 12,165,281 - - - Selective sales taxes - - - - Other taxes 5,057,100 - 1,428,760 - Intergovernmental 1,080,291 - - 1,540,622 Special assessments - - - - Licenses and permits - - - - Charges for services 7,678,288 - - - Investment revenue 9,000 - 272 3,554 Reimbursements - - - - Miscellaneous 425,970 - - - Total revenues 35,541,109 108 1,429,032 1,544,176 EXPENDITURES: Current General government 3,574,626 - - - Public safety 18,564,988 - - - Public works 6 541 848 --461 936 EXPENDITURES AND CHANGES IN FUND BALANCE STATEMENT OF REVENUES, CITY OF SALINA, KANSAS For the Year Ended December 31, 2012 GOVERNMENTAL FUNDS Public works 6,541,848 - - 461,936 Public health and sanitation 1,188,836 - - - Culture and recreation 2,157,195 - - - Planning and development 2,267,262 - 745,875 - Miscellaneous - - - - Capital outlay 721,079 - - 1,124,808 Debt service Principal retirement - - - - Interest and other charges - - - - Deposit to escrow account - - - - Total expenditures 35,015,834 - 745,875 1,586,744 Excess [deficiency] of revenue and other sources over [under] expenditures and other [uses]525,275 108 683,157 [42,568] OTHER FINANCING SOURCES [USES] Issuance of bonds - - - - Bond premium - - - - Transfers in 444,955 - - - Transfers [out][979,358] [1,015] [604,125] - Total other financing sources [uses][534,403] [1,015] [604,125] - Net change in fund balance [9,128] [907] 79,032 [42,568] Fund balance - Beginning of year 3,836,238 907 340,473 1,417,743 Restatement of prior year fund balance - - - - FUND BALANCE - Beginning of year, as restated 3,836,238 907 340,473 1,417,743 Fund balance - End of year 3,827,110$ -$ 419,505$ 1,375,175$ Other Total Bicentennial Sales Tax Debt Capital Governmental Governmental Center Capital Service Projects Funds Funds -$ -$ 2,361,078$ -$ -$ 10,466,047$ - - 77,709 - - 245,195 - - 299,935 - - 1,152,767 - - - - - 12,165,281 - 3,882,314 - - 327,575 4,209,889 - - - - - 6,485,860 - - - 492,219 1,373,584 4,486,716 - - 1,650,053 664,452 - 2,314,505 - - - - 7,700 7,700 186,418 - - - 619,782 8,484,488 618 5,791 10,740 9,202 7,706 46,883 - - - 35,500 - 35,500 650 - 5 - 110,457 537,082 187,686 3,888,105 4,399,520 1,201,373 2,446,804 50,637,913 - - - - - 3,574,626 - - - - - 18,564,988 -----7 003 784- - - - - 7,003,784 - - - - 154,012 1,342,848 1,250,404 - - - 1,041,098 4,448,697 - - - - 242,888 3,256,025 - - - - 35 35 - 1,525,537 - 3,330,021 625,126 7,326,571 - - 8,446,802 - 145,000 8,591,802 - - 1,894,098 54,139 154,451 2,102,688 - - 91,587 - - 91,587 1,250,404 1,525,537 10,432,487 3,384,160 2,362,610 56,303,651 [1,062,718] 2,362,568 [6,032,967] [2,182,787] 84,194 [5,665,738] - - 3,785,000 2,365,000 - 6,150,000 - - 51,011 9,370 - 60,381 1,002,975 - 1,551,150 - 489,358 3,488,438 [80,000] [1,750,000] - [43,940] - [3,458,438] 922,975 [1,750,000] 5,387,161 2,330,430 489,358 6,240,381 [139,743] 612,568 [645,806] 147,643 573,552 574,643 142,881 1,397,571 1,285,130 390,852 2,792,546 11,604,341 - - - [1,461,347] - [1,461,347] 142,881 1,397,571 1,285,130 [1,070,495] 2,792,546 10,142,994 3,138$ 2,010,139$ 639,324$ [922,852]$ 3,366,098$ 10,717,637$ 18 The notes to the basic financial statements are an integral part of this statement. Total Net Change In Fund Balances - Governmental Funds 574,643$ Amounts reported for governmental activities in the statement of activities are different because Capital outlays to purchase or build assets are reported in governmental funds as expenditures. However, for governmental activities those costs are shown in the statement of net position and allocated over their estimated useful lives as annual depreciation expenses in the statement of activities. This is the amount by which capital outlays exceeds depreciation in the period. Gain on sale of assets 33,756 Proceeds from sale of assets [52,503] Capital outlays 2,642,629 Depreciation expense [5,283,853] [2,659,971] 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. 83,567 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, 2012 The notes to the basic financial statements are an integral part of this statement. 19 the amount by which interest decreased.83,567 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. [323,518] 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.[355,008] Bond and temporary note proceeds are other financing sources in the governmental funds, but they increase long-term liabilities in the statement of net position and do not affect the statement of activities. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items. [6,482,126] Repayment of bond principal and bond issuance costs is an expenditure in the governmental funds, but it reduces long-term liabilities in the statement of net position and does not affect the statement of activities.8,696,638 Changes In Net Position of Governmental Activities [465,775]$ The notes to the basic financial statements are an integral part of this statement. 19 Total Internal Solid Waste Water and Enterprise Service Assets and deferred outflows of resources:Disposal Sewer Sanitation Golf Course Funds Funds Current assets: Cash and investments 4,259,781$ 20,444,868$ 685,735$ 68,691$ 25,459,075$ 2,972,281$ Receivables (net of allowance for uncollectibles) Accounts 263,944 1,056,391 137,244 - 1,457,579 - Interest 16 - - - 16 - Inventory and prepaid supplies - 564,114 - 22,454 586,568 126,874 Total current assets 4,523,741 22,065,373 822,979 91,145 27,503,238 3,099,155 Capital assets: Nondepreciable capital assets: Construction in progress - 20,962,212 - - 20,962,212 - Land 682,000 844,806 - 15,000 1,541,806 - Depreciable capital assets: Capital assets 8,344,630 91,663,027 1,558,313 1,036,473 102,602,443 861,298 Less: accumulated depreciation 6,093,488 40,972,444 1,013,242 706,244 48,785,418 838,206 Total capital assets 2,933,142 72,497,601 545,071 345,229 76,321,043 23,092 Deferred outflows of resources: Deferred charge on bond issuance - 329,943 - - 329,943 - Total deferred outflows of resources - 329,943 - - 329,943 - Total assets and deferred outflows of resources 7,456,883$94,892,917$1,368,050$436,374$ 104,154,224$ 3,122,247$ Li bili i Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31, 2012 The notes to the basic financial statements are an integral part of this statement. 20 Liabilities: Current liabilities Accounts payable 66,599$ 329,462$ 13,836$ 5,774$ 415,671$ 163,622$ Retainage payable - 1,364,869 - - 1,364,869 - Interest payable 5,751 194,427 - - 200,178 - Meter deposits payable - 161,252 - - 161,252 - Current portion of compensated absences payable 33,734 194,255 50,304 40,780 319,073 47,934 Current portion of accrued claims payable - - - - - 499,216 Current portion of general obligation bonds payable 403,881 901,048 - - 1,304,929 - Current portion of revenue bonds payable - 623,696 - - 623,696 - Total current liabilities 509,965 3,769,009 64,140 46,554 4,389,668 710,772 Noncurrent liabilities: Compensated absences payable 32,561 187,500 48,555 39,362 307,978 46,267 Accrued claims payable - - - - - 361,378 Net OPEB Obligation 68,677 270,091 - 29,095 367,863 - Payable from restricted assets General obligation bonds payable 411,959 7,897,038 - - 8,308,997 - Revenue bonds payable - 15,226,532 - - 15,226,532 - Landfill post-closure care liabilities 1,693,368 - - - 1,693,368 - Total noncurrent liabilities 2,206,565 23,581,161 48,555 68,457 25,904,738 407,645 Total liabilities 2,716,530$27,350,170$112,695$ 115,011$ 30,294,406$ 1,118,417$ Net position Invested in capital assets, net of related debt 2,117,302$ 47,849,287$ 545,071$ 345,229$ 50,856,889$ 23,092$ Restricted Restricted for bond retirement - 1,553,016 - - 1,553,016 - Unrestricted 2,623,051 18,140,444 710,284 [23,866] 21,449,913 1,980,738 Total net position 4,740,353$67,542,747$1,255,355$321,363$ 73,859,818$ 2,003,830$ 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 3,137,035$ 19,098,626$ 2,461,965$ 783,169$ 25,480,795$ 9,049,963$ Miscellaneous 28,303 356,848 69 48,722 433,942 140,082 Total operating revenues 3,165,338 19,455,474 2,462,034 831,891 25,914,737 9,190,045 Operating expenses General government - - - - - 9,518,987 Public works 1,487,731 12,192,431 2,330,752 - 16,010,914 - Recreation - - - 691,839 691,839 - Depreciation 560,092 1,779,746 110,357 32,596 2,482,791 4,698 Total operating expenses 2,047,823 13,972,177 2,441,109 724,435 19,185,544 9,523,685 Operating income [loss]1,117,515 5,483,297 20,925 107,456 6,729,193 [333,640] Nonoperating revenues [expenses] Investment revenue 12,302 64,800 2,293 96 79,491 10,122 Debt service [21,472] [892,911] - - [914,383] - Gain/[loss] on disposal of fixed assets 2,653 1,485 455 887 5,480 - Accretion of bond premium - 11,560 - - 11,560 - Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2012 The notes to the basic financial statements are an integral part of this statement. 21 Amortization of bond issuance costs - [45,236] - - [45,236] - Total nonoperating revenues [expenses][6,517] [860,302] 2,748 983 [863,088] 10,122 Income [loss] before transfers 1,110,998 4,622,995 23,673 108,439 5,866,105 [323,518] Transfers from [to] other funds Transfers [out]- [30,000] - - [30,000] - Total transfers - [30,000] - - [30,000] - Capital contributions 124,000 150,194 - - 274,194 - Change in net position 1,234,998 4,743,189 23,673 108,439 6,110,299 [323,518] Net position, January 1 3,709,743 65,168,435 1,222,584 212,924 70,313,686 2,327,348 Restatement [204,388] [2,368,877] 9,098 - [2,564,167] - Net position, January 1, restated 3,505,355 62,799,558 1,231,682 212,924 67,749,519 2,327,348 Net position, December 31 4,740,353$67,542,747$1,255,355$321,363$ 73,859,818$2,003,830$ 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 3,104,214$ 19,065,947$ 2,463,893$ 783,168$ 25,417,222$ 9,197,593$ Cash paid to suppliers of goods or services [1,288,458] [8,393,905] [1,744,666] [378,901] [11,805,930] [8,832,087] Cash paid to employees [472,279] [2,916,093] [657,992] [325,374] [4,371,738] [632,635] Other operating receipts 28,303 356,848 69 48,722 433,942 140,082 Net cash provided by [used in] operating activities 1,371,780 8,112,797 61,304 127,615 9,673,496 [127,047] Cash flows from capital and related financing activities Purchase and construction of capital assets [91,429] [11,114,179] - [63,863] [11,269,471] - Capital contributions 124,000 150,194 - - 274,194 - Proceeds from sale of capital assets 7,800 1,485 455 887 10,627 - Principal payments - general obligation bonds [519,963] [1,002,432] - - [1,522,395] - Principal payments - revenue bonds - [340,000] - - [340,000] - Interest paid [24,235] [901,261] - - [925,496] - Net cash provided by [used in] capital and related financing activities [503,827] [13,206,193]455 [62,976] [13,772,541]- Cash flows from investing activities Interest received 12,302 64,800 2,293 97 79,492 10,121 Cash flows from noncapital financing activities Transfers [out]- [30,000] - - [30,000] - Net cash provided by [used in] noncapital financing activities - [30,000] - - [30,000] - Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS For the Year Ended December 31, 2012 PROPRIETARY FUNDS The notes to the basic financial statements are an integral part of this statement. 22 Net cash provided by [used in] noncapital financing activities [, ][, ] Net increase [decrease] in cash and cash equivalents 880,255 [5,058,596] 64,052 64,736 [4,049,553] [116,926] Cash and cash equivalents, January 1 3,379,526 24,042,117 621,683 3,955 28,047,281 3,089,207 Restatement - 1,461,347 - - 1,461,347 - Cash and cash equivalents, January 1, restated 3,379,526 25,503,464 621,683 3,955 29,508,628 3,089,207 Cash and cash equivalents, December 31 4,259,781$20,444,868$685,735$ 68,691$ 25,459,075$2,972,281$ 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] 1,117,515$ 5,483,297$ 20,925$ 107,456$ 6,729,193$ [333,640]$ Adjustments to reconcile operating income [loss] to net cash provided by [used in] operating activities Depreciation expense 560,092 1,779,746 110,357 32,596 2,482,791 4,698 [Increase] decrease in accounts receivable [32,821] [30,027] 1,928 - [60,920] - [Increase] decrease in inventory - [20,062] - 5,196 [14,866] [11,180] Increase [decrease] in accounts payable 44,407 67,018 6,977 2,820 121,222 63,568 Increase [decrease] in retainage payable - 756,650 - - 756,650 - Increase [decrease] in accrued compensated absences 6,740 18,608 [19,053] [28,736] [22,441] 1,878 Increase [decrease] in claims payable - - - - - 147,629 Increase [decrease] in landfill postclosure liabilities [348,886] - - - [348,886] - Increase [decrease] in net OBEB obligation 24,733 60,219 [59,830] 8,283 33,405 - Increase [decrease] in meter deposits payable - [2,652] - - [2,652] - Net cash provided by [used in] operating activities 1,371,780$ 8,112,797$ 61,304$ 127,615$ 9,673,496$ [127,047]$ Business-Type Activities: Enterprise Funds CITY OF SALINA, KANSAS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (Continued) For the Year Ended December 31, 2012 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 322,790$ Total assets 322,790$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable 322,790$ Total liabilities 322,790$ December 31, 2012 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, 2012 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, 2012. 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 Regulatory Basis) Board of Building Health Authority (Audited)(Audited) Total net position/unencumbered cash, December 31, 2012 1,627,417$ 975,862$ Total change in net position/change in unencumbered cash, year ended December 31, 2012 [70,219] 44,822 Total revenues/cash receipts, year ended December 31, 2012 3,887,627 865,855 Total revenues/cash receipts from City of Salina 1,018,101 821,033 26 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 position and the statement of activities report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Exceptions to this general rule are charges between the City’s governmental and business-type activities. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are specifically associated with a service, program or department and therefore clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational requirements of a particular program. Taxes and other items, which are not classified as program revenues, are presented as general revenues of the city. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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, 2012 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. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net position. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services in connection with a proprietary fund’s ongoing operations. The principal operating revenues of the City’s proprietary funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenues and expenses. The internal service funds account for risk management, worker’s compensation, health insurance, central garage and information services that are provided to other departments or agencies of the government, or to other governments, on a cost-reimbursement basis. Agency funds are custodial in nature and do not measure results of operations or have a measurement focus. Agency funds do however use the accrual basis of accounting. Agency funds are used to account for assets held as an agent for individuals, other governmental units, private organizations and/or other funds. The City reports the following major governmental funds: General fund - To account for resources traditionally associated with government, which are not required legally, or by sound financial management to be accounted for in another fund. 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, 2012 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 Position 1. Pooled cash and investments The City maintains a cash and investment pool that is available for use by all funds managed by the city. Each fund type’s portion of this pool is displayed in the financial statements as “Cash and Investments.” The city’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Investments in the Kansas Municipal Pool are carried at fair value. Cash balances from all funds are invested to the extent available in certificates of deposit and other authorized investments. Investments with maturity dates greater than three months are stated separately. Earnings from these investments, unless specifically designated, are allocated monthly to the investing fund based on the percentage of funds invested to total investments. All investments are carried at fair value. 2. Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the year are referred to as either “interfund receivables/payables” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Accounts Receivable. The City records revenues when services are provided. All receivables are shown net of an allowance for doubtful accounts. Property taxes receivable. Collection of current year property tax by the County Treasurer is not completed, apportioned or distributed to the various subdivisions until the succeeding year, such procedure being in conformity with governing state statutes. Consequently, current year property taxes receivable are not available as a resource that can be used to finance the current year operations of the City and, therefore, are not susceptible to accrual. Accruals of uncollected current year property taxes are offset by deferred revenue and are identical to the adopted budget for 2013. 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, 2012 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, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 5. Compensated Absences It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All employees of the City, except temporary and part time employees, may accumulate sick leave at a rate of 8 or 11 hours per month depending on their work duty schedule. There is no limit on the amount of sick leave that can be accumulated. Employees with more than five years of service with the City are paid for one-third of their accumulated sick leave at their current wage scale upon termination of employment in good standing. In 2001, a limited buy back policy was instituted. All regular employees are entitled to paid vacation time. Such leave is granted each year of employment. Employees must use 50% of leave accrued each calendar year and an employee's maximum accrued vacation leave balance cannot exceed 250 hours (or 350 hours for employees working 24 hour shifts). Employees are paid for all accumulated vacation leave at their current wage scale upon termination of employment. Vested or accumulated vacation leave that is expected to be liquidated with expendable available financial resources is reported as an expenditure and a fund liability in the government fund financial statements that will pay it. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Vested or accumulated vacation leave of the business-type funds and government wide financial statements are recorded as an expense and liability of those funds as the benefits accrue to employees. A liability is recorded for accumulated rights to receive sick pay benefits that are payable upon termination of employment. The General Fund, Bicentennial Center Fund, Central Garage Fund, 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 position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 31 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 8. Fund Balances In the fund financial statements, governmental funds report fund balance in the following classifications: nonspendable, restricted, committed, assigned and unassigned. Nonspendable fund balance includes amounts that cannot be spent because they are either not in spendable form or legally or contractually required to be maintained intact. Restricted fund balance indicates that constraints have been placed on the use of resources either by being externally imposed by creditors, grantors, contributors, or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. Committed fund balances include amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the city commission. Assigned fund balances include amounts that are constrained by the City management’s intent to be used for specific purposes, but are neither restricted nor committed. Unassigned fund balance represents fund balance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specific purposes within the General Fund. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available restricted amounts are considered to be spent first. When an expenditure is incurred for purposes for which committed, assigned, or unassigned fund balance is available, the following is the order in which resources will be expended: committed, assigned and unassigned. The following is the detail for fund balance classifications in the financial statements: Tourism Other Total and Special Bicentennial Sales Tax Debt Capital Governmental Governmental General Convention Gas Center Capital Service Projects Funds Funds Fund Balances: Nonspendable for: Inventory 115,900$ -$ -$ -$ -$ -$ -$ -$ 115,900$ Restricted for: Public works - - 1,160,305 - - - - - 1,160,305 Public health and sanitation - - - - - - - 21 21 Culture and recreation - - - - - - - 88,145 88,145 Planning and development - 419,505 - - - - - 289,897 709,402 Debt payments - - - - - 639,324 - 721,691 1,361,015 Committed for: Public safety - - - - - - - 381,466 381,466 Culture and recreation - - - 2,158 - - - 591,307 593,465 Planning and development - - - - - - - 33,655.00 33,655 Cemetery - - - - - - - 436,787 436,787 Capital improvements - - - - 1,766,357 - [4,474,792] 746,914 [1,961,521] Assigned for: General government 24,635 - - - - - - - 24,635 Public safety 1,029 - - - - - - - 1,029 Public works 19,664 - 214,870 - - - - - 234,534 Culture and recreation 13,035 - - 980 - - - - 14,015 Planning and development 68,410 - - - - - - - 68,410 Capital improvements 412,883 - - - 243,782 - 3,551,940 76,215 4,284,820 Unassigned: 3,171,554 - - - - - - - 3,171,554 Total Fund Balances 3,827,110$ 419,505$ 1,375,175$ 3,138$ 2,010,139$ 639,324$ [922,852]$ 3,366,098$ 10,717,637$ Major Governmental Funds 32 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, Fund Balance, and Net Position (Continued) 9. Deferred Outflows/Inflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on bond issuance reported in the government-wide statement of net position. A deferred charge on bond issuance results from the difference in the carrying value of the debt and its reacquisition price. This amount is deferred and amortized over the life of the - debt. 10. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 11. Net Position Net position represents the difference between assets and liabilities. Net position 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 position is reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. Note 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information Kansas statutes require that an annual operating budget be legally adopted for the general fund, special revenue funds (unless specifically exempted by statute), debt service fund, and enterprise funds. The statutes provide for the following sequence and timetable in the adoption of the legal annual operating budget: 1. Preparation of the budget for the succeeding year on or before August 1. 2. Publication in local newspaper of the proposed budget and notice of public hearing on the budget on or before August 5. 3. Public hearing on or before August 15, but at least ten days after publication of notice of hearing. 4. Adoption of the final budget on or before August 25. 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 2012 budget was amended for the Water and Sewer Fund, Risk Management Fund, Solid Waste Disposal Fund and Tourism and Convention Fund. 33 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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: Flood & Drainage Improvement, Bicentennial Center Event, HUD Community Development, Community Development Revolving, Heritage Commission, HOME 2012, KDOT Signals 9 th Street, CDBG ED, HPRP, Special Law Enforcement, Police Grants, DARE Donations, War Memorial Maintenance, Federal Care Grant and Police Department Federal Forfeiture Funds. A legal operating budget is not required for the following Enterprise funds: Solid Waste Disposal, Water and Sewer, Sanitation and Golf Course funds. A legal operating budget is also not required for the Internal Service funds. Actual to budget comparisons for these funds that present budgets to the Commissioners are shown strictly for informational purposes. Spending in funds, which are not subject to the legal annual operating budget requirements are controlled by federal regulations, other statutes, or by the use of internal spending limits established by the governing body. B. 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, 2012, the statutory limit for the City was $135,421,208, providing a debt margin of 86,111,763. 34 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 3. RESTATEMENT OF EQUITY Following the close of the previous fiscal year, it was discovered that several capital assets were misclassified or recorded incorrectly. Additionally, it was discovered that accounts receivable had not been properly recorded. Accordingly, the beginning net position/fund balances were restated, the effects of which are as follows: Capital Solid Waste Water and Governmental Projects Disposal Sewer Sanitation Activities Fund Fund Fund Fund Net Position/Fund Balance, December 31, 2011 117,334,142$ 390,852$ 3,709,743$ 65,168,435$ 1,222,584$ Capital Asset Adjustment 188,314 - [87,693] [20,643] 9,098 Fund Reclassification [1,461,347] [1,461,347] - 1,461,347 - General Obligation Bonds Payable Adjustment 3,926,276 - [116,695] [3,809,581] - Net Position/Fund Balance, December 31, 2011, Restated 119,987,385$ [1,070,495]$ 3,505,355$ 62,799,558$ 1,231,682$ 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, 2012, the City has the following investments: Investment Type Fair Value Rating Kansas Municipal Investment Pool 305,237$ S&P AAAf/S1+ U.S. Government Securities 21,027,849 N/A Total fair value 21,333,086$ 35 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) A. Deposits and Investments (Continued) 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. 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. 36 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) B. Receivables Receivables as of year end, including the applicable allowances for doubtful accounts, are as follows: Tourism and Special Debt Other General Convention Gas Service Governmental Subtotal Primary Government Receivables: Accounts 3,299,591$ 390,720$ -$ -$ 56,973$ 3,747,284$ Taxes 8,335,679 - 298,952 2,459,008 - 11,093,639 Interest 33,497 - - - - 33,497 Gross receivables 11,668,767 390,720 298,952 2,459,008 56,973 14,874,420 Less: allowance for uncollectibles [2,590,353] - - - [1,873] [2,592,226] Total 9,078,414$ 390,720$ 298,952$ 2,459,008$ 55,100$ 12,282,194$ Solid Water Waste and Sanitation Disposal Sewer Total Primary Government Receivables: Accounts 209,309$ 263,944$ 1,611,089$ 5,831,626$ Taxes - - - 11,093,639 Interest - 16 - 33,513 Gross receivables 209,309 263,960 1,611,089 16,958,778 Less: allowance for uncollectibles [72,065] - [554,698] [3,218,989] Total 137,244$ 263,960$ 1,056,391$ 13,739,789$ Component Units Salina Airport Authority Accounts 135,370$ Less: allowance for uncollectibles [984] Total Salina Airport Authority 134,386 Salina Housing Authority Accounts 13,689 Other 1,559 Total Salina Housing Authority 15,248 Total 149,634$ C. Interfund Receivables and Payables The composition of interfund balances as of December 31, 2012, is as follows: Fund Types Due From Due To General Fund 31,049$ -$ Other Government Funds - 31,049 31,049$ 31,049$ 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. 37 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) D. Capital Assets Capital asset activity for the year ended December 31, 2012, was as follows: Balance Adj. Bal. Balance 12/31/2011 Adjustments 12/31/2011 Additions Retirements 12/31/2012 City governmental activities: Governmental activities: Capital assets, not being depreciated Construction in progress 32,554,357$ 63,285$ 32,617,642$ 3,622,135$ 27,049,694$ 9,190,083$ Land 22,477,191 163,284 22,640,475 - - 22,640,475 Capital assets, being depreciated Infrastructure 146,145,697 86,866 146,232,563 22,398,049 - 168,630,612 Buildings and improvements 36,233,800 [18,097] 36,215,703 2,985,633 - 39,201,336 Vehicles 8,330,055 384,707 8,714,762 478,676 407,972 8,785,466 Equipment, furniture and fixtures 5,457,201 [517,975] 4,939,226 207,830 141,446 5,005,610 Total capital assets 251,198,301 162,070 251,360,371 29,692,323 27,599,112 253,453,582 Less accumulated depreciation for: Infrastructure 63,537,634 86,659 63,624,293 3,397,201 - 67,021,494 Buildings and improvements 13,643,237 [16,288] 13,626,949 1,099,311 - 14,726,260 Vehicles 5,333,636 414,440 5,748,076 561,532 395,781 5,913,827 Equipment, furniture and fixtures 4,169,281 [511,055] 3,658,226 230,506 134,890 3,753,842 Total accumulated depreciation 86,683,788 [26,244] 86,657,544 5,288,550 530,671 91,415,423 Governmental activities capital assets, net 164,514,513$ 188,314$ 164,702,827$ 24,403,773$ 27,068,441$ 162,038,159$ Business-type activities: Capital assets, not being depreciated Construction in progress 11,062,055$ -$ 11,062,055$ 10,626,076$ 725,919$ 20,962,212$ Land 1,541,002 804 1,541,806 - - 1,541,806 Capital assets, being depreciated Infrastructure 71,303,594 - 71,303,594 736,188 - 72,039,782 Buildings and improvements 22,587,106 [7,173] 22,579,933 - - 22,579,933 Vehicles 2,983,160 - 2,983,160 47,037 31,877 2,998,320 Equipment, furniture and fixtures 4,434,559 11,848 4,446,407 586,090 48,089 4,984,408 Total capital assets 113,911,476 5,479 113,916,955 11,995,391 805,885 125,106,461 Less accumulated depreciation for: Infrastructure 30,713,404 54,521 30,767,925 1,577,942 - 32,345,867 Buildings and improvements 10,683,173 [2,726] 10,680,447 424,133 - 11,104,580 Vehicles 2,170,960 21,290 2,192,250 166,306 31,877 2,326,679 Equipment, furniture and fixtures 2,705,192 31,632 2,736,824 314,410 42,942 3,008,292 Total accumulated depreciation 46,272,729 104,717 46,377,446 2,482,791 74,819 48,785,418 Business-type activities capital assets, net 67,638,747$ [99,238]$ 67,539,509$ 9,512,600$ 731,066$ 76,321,043$ 38 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 7,975$ Public safety 571,333 Public works 3,686,903 Public health 39,747 Culture and recreation 876,475 Planning and development 106,117 Total depreciation 5,288,550$ Business-type Activities: Solid Waste Disposal 560,092$ Water and Sewer 1,779,746 Sanitation 110,357 Golf Course Division 32,596 Total depreciation 2,482,791$ E. Long-Term Debt Following is a summary of changes in long-term debt for fiscal year 2012: Restated Balance Balance Balance Amounts January 1, January 1, December 31, Due Within 2012 Restatements 2012 Additions Deletions 2012 One Year Governmental activities: General obligation bonds 55,225,670$ [3,926,276]$ 51,299,394$ 6,201,011$ 8,390,830$ 49,109,575$ 5,121,431$ Accrued compensation 3,089,134 - 3,089,134 1,523,414 1,555,549 3,056,999 1,555,549 Temporary notes 3,400,000 - 3,400,000 1,485,000 3,400,000 1,485,000 1,485,000 Total 61,714,804$ [3,926,276]$ 57,788,528$ 9,209,425$ 13,346,379$ 53,651,574$ 8,161,980$ Business-type activities: General obligation bonds 7,217,907$ 3,926,276$ 11,144,183$ -$ 1,530,257$ 9,613,926$ 1,304,929$ Revenue bonds 16,193,925 - 16,193,925 - 343,697 15,850,228 623,696 Accrued compensation 649,491 - 649,491 296,633 319,073 627,051 319,073 Total 24,061,323$ 3,926,276$ 27,987,599$ 296,633$ 2,193,027$ 26,091,205$ 2,247,698$ Component Units: General obligation bonds 26,170,000$ -$ 26,170,000$ -$ 1,090,000$ 25,080,000$ 895,000$ Less unamortized discount [342,123] - [342,123] - [18,892] [323,231] - Financing lease 245,558 - 245,558 - 42,941 202,617 45,826 Special assessment debt 125,013 - 125,013 - 21,066 103,947 21,876 Total component units 26,198,448$ -$ 26,198,448$ -$ 1,135,115$ 25,063,333$ 962,702$ 39 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 2003A, due 10/1/2018 4,350,000 2.13% to 3.85% 320,000$ Refunding 2004A, due 8/1/2015 5,585,000 2.10% to 4.00% 760,000 Internal Improvements 2005A, due 10/1/2020 4,210,000 2.95% to 4.25% 330,000 Internal Improvements 2006A, due 10/1/2026 2,200,000 3.55% to 5.50% 1,540,000 Internal Improvements 2006B, due 10/1/2021 885,000 4.00% to 4.50% 465,000 Internal Improvements 2007A, due 10/1/2027 6,545,000 4.25% to 4.625% 4,725,000 Internal Improvements 2008A, due 10/1/2023 3,720,000 3.25% to 4.00% 2,750,000 Internal Improvements 2008B, due 7/1/2028 3,525,000 3.65% to 5.00% 3,295,000 Internal Improvements 2009A, due 10/1/2029 23,695,000 2.00% to 5.00% 20,123,956 Internal Improvements 2010A, due 10/1/2025 6,916,592 2.00% to 3.875% 5,271,046 Internal Improvements 2010B, due 10/1/2023 7,973,044 0.50% to 3.00% 6,605,652 Internal Improvements 2011A, due 10/1/2031 6,587,985 2.00% to 5.00% 6,336,836 Internal Improvements 2012A, due 10/1/2027 2,383,903 1.00% to 2.45% 2,383,903 Refunding 2012B, due 10/1/2020 3,817,108 1.00% to 1.40% 3,817,108 Total general obligation bonds 58,723,501$ Revenue Bonds Revenue 2011, due 10/1/31 16,193,925$ 2.00% to 4.60% 15,850,228$ Total revenue bonds 15,850,228$ Temporary Notes Series 2012-1, due 8/1/2013 1,485,000$ 1.00% 1,485,000$ Total temporary notes 1,485,000$ 40 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 2005A, due 2020 3,635,000$ 4.75% to 5.25% 2,675,000$ General Obligation 2007A, due 2022 1,005,000 4.60% to 6.00% 745,000 General Obligation 2009A, due 2029 2,025,000 4.31% 2,025,000 General Obligation 2009B, due 2026 6,080,000 3.00% to 5.50% 5,310,000 General Obligation 2011A, due 2030 11,820,000 4.64% 11,820,000 General Obligation 2011B, due 2031 2,505,000 4.28% 2,505,000 Less unamortized bond discount [323,231] Total general obligation bonds 24,756,769 Special Assessment Debt Airport Industrial Center, due 2016 565,235 3.79% 85,281 Hangar 600 Sanitary Sewer, due 2021 27,599 4.47%18,666 Total special assessment debt 103,947 Financing Lease, due 2016 425,000 6.609%202,617 Total 25,063,333$ Annual debt service requirements to maturity for general obligation bonds to be paid with tax levies: Bonds Interest Year Outstanding Due Total 2013 6,426,360$ 1,988,727$ 8,415,087$ 2014 6,111,360 1,756,057 7,867,417 2015 5,331,360 1,586,570 6,917,930 2016 5,166,360 1,429,056 6,595,416 2017 4,941,359 1,271,396 6,212,755 2018-2022 18,653,766 3,985,209 22,638,975 2023-2027 9,866,399 1,459,252 11,325,651 2028-2031 2,226,537 170,205 2,396,742 Total 58,723,501$ 13,646,472$ 72,369,973$ General Obligation - Primary Government 41 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 4. DETAILED NOTES ON ALL FUNDS (Continued) E. Long-Term Debt (Continued) Bonds Interest Year Outstanding Due Total 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 1,030,000 963,874 1,993,874 2018-2022 5,840,000 4,129,521 9,969,521 2023-2027 7,290,000 2,683,322 9,973,322 2028-2031 7,155,000 819,200 7,974,200 Total 25,080,000$ 12,798,492$ 37,878,492$ 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 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 678,696 529,391 1,208,087 2018-2022 3,758,480 2,318,619 6,077,099 2023-2027 4,498,480 1,563,177 6,061,657 2028-2031 4,349,788 504,816 4,854,604 Total 15,850,228$ 7,198,367$ 23,048,595$ 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 2013 1,485,000$ 15,510$ 1,500,510$ Temporary Notes - Primary Government 42 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 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 202,617$ 31,271$ 233,888$ 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 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 2,061 504 2,565 2018-2021 9,206 1,051 10,257 Total 103,947$ 12,646$ 116,593$ Special Assessment Debt - Component Units 43 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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, 2012, total outstanding conduit debt was $72,370,000. Defeased debt. July 15, 2012, the City issued $3,785,000 of Series 2012B General Obligation Refunding and Improvement Bonds with interest ranging from 1.0% to 1.40% to current refund all $1,010,000 of the outstanding Series 2004B General Obligation Internal Improvement Bonds with interest rates ranging from of 3.40% to 4.00% and to advance refund $1,125,000 of the Series 2003A General Obligation Internal Improvement Bonds with interest rates ranging from 3.40% to 3.85% and $1,535,000 of the Series 2005A General Obligation Internal Improvement Bonds with interest rates ranging from 3.45% to 4.00%. The net proceeds were used to establish an escrow account invested in U.S. Government Securities to pay the outstanding principal of the Series 2003A General Obligation Internal Improvement Bonds, the outstanding principal of the Series 2005A General Obligation Internal Improvement Bonds and the interest due on the refunding general obligation bonds. As a result, these portions of the 2003A and 2005A bonds were considered to be defeased and the liability for the defeased bonds has been removed from the City's financial statements. The combined refunding transactions resulted in an economic gain of $236,475 and a reduction of $308,436 in future debt payments. F. Reconciliation of Transfers A reconciliation of interfund transfers follows: Transfer In Transfer Out Major Funds: General fund 444,955$ 979,358$ Flood and drainage improvement fund - 1,015 Tourism and convention fund - 604,125 Bicentennial center fund 1,002,975 80,000 Sales tax capital fund - 1,750,000 Debt service 1,551,150 - Capital projects fund - 43,940 Other governmental funds 489,358 - Water and sewer fund - 30,000 Total Transfers 3,488,438$ 3,488,438$ The City uses interfund transfers to share administrative costs between funds. 44 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 7.54% from January 1 to December 31, 2012. The City employer contributions to KPERS for the years ending December 31, 2012, 2011, and 2010 were $1,081,438, $987,826 and $1,039,728, respectively, equal to the required contributions for each year. The KP&F employer rate established for fiscal years beginning in 2012 is 19.81%. 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, 2012, 2011, and 2010 were $2,007,908, $1,787,801 and $1,664,356, 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. 45 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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, $131,792 is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2012 2011 Unpaid claims, January 1 321,790$ 425,582$ Incurred claims (including IBNRs) 677,862 126,625 Claim payments [506,482] [230,417] Unpaid claims, December 31 493,170$ 321,790$ The City established a limited risk management program for employee health and dental insurance in 1997. The program covers eligible City employees. Premiums are paid into the health insurance fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. An excess coverage insurance policy covers individual claims in excess of $50,000. Incurred claims, including incurred but not reported claims, have been accrued based primarily upon subsequent payments. Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amounts of payouts and other economic and social factors. The liability for claims and judgments is reported in the Health Insurance Fund because it is expected to be liquidated with expendable available financial resources. Therefore, all of the liability is considered to be due within one year. Changes in the balances of claims liabilities during the past two years are as follows: 2012 2011 Unpaid claims, January 1 391,175$ 382,502$ Incurred claims (including IBNRs) 4,014,478 4,229,571 Claim payments [4,038,229][4,220,898] Unpaid claims, December 31 367,424$ 391,175$ 46 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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, 2012. Project Authorization Expenditures N Ohio Grade Separation Structure Demolition 6,617,581$ 6,523,887$ Markley, Magnolia, Valleyview Sanitary Sewer Improvements and Manhole and Wastewater Pump Station Rehabilitation 5,150,000 1,071,877 South 9th Corridor, Phase IV 6,500,000 6,240,715 Stone Lake 1,460,979 10,220 East Magnolia Road Replacement 4,500,000 3,294,853 Aviation Service Center 5,500,000 4,225,450 Fire Station # 1 2,265,206 1,929,031 Quail Meadows Estates, IV 408,745 2,000 Downtown Wellfield Improvements 9,330,000 1,473,998 Advanced Meter Infrastructure 39,850,000 14,714,908 Downtown Lighting Replacement 3,110,000 3,108,534 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, 2012. 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 $1,693,368 reported as landfill closure and postclosure care liability at December 31 represents the cumulative amount reported to date based on the use of 28.8% of the estimated capacity of the landfill. 47 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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 $4,181,503 as the remaining estimated capacity is filled over the remaining life expectancy of 141.8 years. These amounts are based on what it would cost to perform all closure and postclosure care in 2012. 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 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. No third party has asserted any claim for bodily injury or property damage. 48 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 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). 49 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) H. Environmental Matters (Continued) The parties agreed on a mediation to discuss settlement. The mediation sessions occurred in October 2011, and the mediation discussions continued for over a year. The parties have now agreed upon a partial settlement. The partial settlement includes payment by the U.S. in exchange for performance by the Salina Public Entities of a remedial investigation/feasibility study through entry of a Corrective Action Decision by KDHE (the "Work"). The present cost estimate of the Work is less than $10,000,000. The agreement is that the U.S. will pay 90% of the cost of the Work with the Salina Public Entities responsible for payment of the remaining 10%. It is anticipated that the agreed share of the Salina Public Entities will be paid by the City. Also, the claims and counterclaims in the lawsuit have been dismissed without prejudice with provisions tolling any and all statutes of limitation. No party is obligated under the settlement agreement to implement the Corrective Action Decision upon its entry by KDHE, and the parties will either negotiate an agreement to implement such Corrective Action Decision or refile their claims in court. The Salina Public Entities have entered into a Consent Agreement and Final Order ("CAFO") with KDHE, which is conditioned upon the U.S.'s payment to the City. On May 2, 2013, the U.S. District Court for the District of Kansas entered its Consent Decree. City of Salina, Kansas, et al. v. United States of America, et al., Case No. 1 0-CV -2298 CM/DJW. The Court's Consent Decree approved the settlement among the parties. The current status is that the City is waiting for the U.S. to wire transfer $8,426,700 to the City before the City is required to fulfill its obligations under KDHE's CAFO. Although the claims and counterclaims in the lawsuit have been dismissed without prejudice, the City intends to vigorously pursue its claims that the U.S. should implement the Corrective Action Decision upon its entry by KDHE and its defenses against any claims brought against it. Based on presently known information, the 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 $124,000 to the Plan (approximately 100% of total premiums) through their required contribution of $408 per month for retiree-only coverage and $1,095 for family coverage. Annual OPEB Cost and Net OPEB Obligation. The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. 50 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) I. Postemployment Health Care Plan (Continued) The following table shows the components of the City’s annual OPEB cost for the Plan for the year, the amount actually contributed to the plan, and the changes in the City’s net OPEB obligation to the Plan: Annual required contribution 556,901$ Interest on Net OPEB Obligation 94,255 Adjustment to Annual Required Contribution [104,730] Annual OPEB cost (expense) 546,426 Benefit payments [124,000] Change in net OPEB obligation 422,426 Net OPEB obligation - beginning of year 3,141,883 Net OPEB obligation - end of year 3,564,309$ 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, 2012 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 December 31, 2012 546,426 124,000 3,564,309 Funding Status and Funding Progress. As of the year ended December 31, 2012, the most recent actuarial valuation date, the Plan was not funded. The actuarial accrued liability for benefits was $5,171,261 and the actuarial value of asset was $0, resulting in an unfunded actuarial accrued liability (UAAL) of $5,171,261. The covered payroll (annual payroll of active employees covered by the plan) was $21,937,142, and the ratio of the UAAL to the covered payroll was 23.57%. 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. 51 CITY OF SALINA, KANSAS NOTES TO THE BASIC FINANCIAL STATEMENTS December 31, 2012 Note 5. OTHER INFORMATION (Continued) I. Postemployment Health Care Plan (Continued) 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, 2012, actuarial valuation, the projected unit credit actuarial cost method was used. The actuarial assumptions include a 3.00% 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 7.90%, reduced by decrements to an ultimate rate 4.50% after eighty years. The UAAL is being amortized as a level dollar over an open thirty-year period. J.Subsequent Events In February, 2013, the City issued Series 2013-A general obligation internal improvement bonds in the amount of $1,360,000. The bond proceeds will be used to fund various capital projects. The City will make the first payment on bonds on April 1, 2014 and the last payment on October 1, 2028. The interest rate on the bonds ranges from 0.60% to 3.65%. REQUIRED SUPPLEMENTARY INFORMATION This page intentionally left blank. 52 CITY OF SALINA, KANSAS OTHER POST-EMPLOYMENT BENEFITS REQUIRED SUPPLEMENTARY INFORMATION December 31, 2012 Schedule of Employer Contributions: Annual Fiscal Annual OPEB Net Year OPEB Cost OPEB Ended Cost Contributed Obligation December 31, 2008 910,418$ 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 December 31, 2012 546,426 124,000 3,564,309 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% 12/31/2012 - 5,171,261 5,171,261 0.0% 21,937,142 23.57% 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, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 8,104,969$ 7,952,829$ 7,952,829$ 152,140$ Delinquent taxes 167,378 292,488 292,488 [125,110] Motor vehicle taxes 862,318 862,743 862,743 [425] General sales tax 12,165,281 12,244,244 12,244,244 [78,963] Other taxes 4,116,845 4,715,000 4,715,000 [598,155] Total taxes 25,416,791 26,067,304 26,067,304 [650,513] Charges for services General charges 31,092 - - 31,092 General government 240 7,725 7,725 [7,485] Public safety 3,880,242 3,820,506 3,820,506 59,736 Public works 305,965 161,000 161,000 144,965 Health and sanitation 60,666 54,000 54,000 6,666 Culture and recreation 1,023,862 1,171,200 1,171,200 [147,338] Community and economic development 10,785 8,652 8,652 2,133 Total charges for services 5,312,852 5,223,083 5,223,083 89,769 Operating grants, restricted General grants 154,001 185,000 185,000 [30,999] Public safety 894,492 919,759 919,759 [25,267] Budgeted Amounts See independent auditor's report on the financial statements. 53 Public safety 894,492 919,759 919,759 [25,267] Community and economic development 30,455 30,000 30,000 455 Total operating grants, restricted 1,078,948 1,134,759 1,134,759 [55,811] Operating grants, unrestricted General grants 2,350 - - 2,350 Public works 305 3,000 3,000 [2,695] Culture and recreation 52,437 15,000 15,000 37,437 Total operating grants, unrestricted 55,092 18,000 18,000 37,092 Interest income General interest 6,240 65,000 65,000 [58,760] Total interest income 6,240 65,000 65,000 [58,760] Interfund services provided General services 1,057,755 932,338 932,338 125,417 General government 2,232,316 1,755,876 1,755,876 476,440 Community and economic development 59,840 50,501 50,501 9,339 Total interfund services provided 3,349,911 2,738,715 2,738,715 611,196 Miscellaneous revenues General miscellaneous revenues 115,804 120,000 120,000 [4,196] General government 170 - - 170 Public safety 181,845 199,000 199,000 [17,155] Public works 3,422 10,000 10,000 [6,578] Culture and recreation 16,712 18,000 18,000 [1,288] Total miscellaneous revenues 317,953 347,000 347,000 [29,047] Proceeds of capital assets General sales - 30,000 30,000 [30,000] Total proceeds of capital assets - 30,000 30,000 [30,000] Total revenues 35,537,787 35,623,861 35,623,861 [86,074] 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, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Expenditures General Government City commission 90,029$ 99,383$ 99,383$ 9,354$ City manager 649,220 627,061 627,061 [22,159] Legal 550,631 305,300 305,300 [245,331] Finance 567,694 580,398 580,398 12,704 Human resources 352,288 349,756 349,756 [2,532] Total general government 2,209,862 1,961,898 1,961,898 [247,964] Public Safety Police 8,613,895 8,516,779 8,516,779 [97,116] Municipal court 1,471,362 1,514,085 1,514,085 42,723 Fire 8,480,760 8,057,954 8,057,954 [422,806] Total public safety 18,566,017 18,088,818 18,088,818 [477,199] Public Works Buildings and general improvements 1,061,879 1,114,742 1,114,742 52,863 Engineering 1,017,444 1,002,377 1,002,377 [15,067] Streets 1,791,486 1,865,808 1,865,808 74,322 Flood works 213,001 217,227 217,227 4,226 Traffic control 819,601 830,545 830,545 10,944 Budgeted Amounts See independent auditor's report on the financial statements. 54 Traffic control 819,601 830,545 830,545 10,944 Total public works 4,903,411 5,030,699 5,030,699 127,288 Public Health and Sanitation Cemetery 158,860 148,878 148,878 [9,982] Health department 1,029,976 1,018,101 1,018,101 [11,875] Total public health and sanitation 1,188,836 1,166,979 1,166,979 [21,857] Culture and Recreation Parks 1,647,530 1,463,944 1,463,944 [183,586] Swimming pools 396,943 454,188 454,188 57,245 Neighborhood centers 40,456 46,154 46,154 5,698 Recreation 1,259,199 1,599,442 1,599,442 340,243 Smoky Hill museum 473,632 454,863 454,863 [18,769] Total culture and recreation 3,817,760 4,018,591 4,018,591 200,831 Community Development Human relations 333,246 331,432 331,432 [1,814] Development services 1,272,025 1,206,796 1,206,796 [65,229] Total community development 1,605,271 1,538,228 1,538,228 [67,043] Capital Outlay Capital outlay 907,726 700,000 700,000 [207,726] Cash Reserve 1,562,824 5,659,224 5,659,224 4,096,400 Total expenditures 34,761,707 38,164,437 38,164,437 3,402,730 Excess [deficiency] of revenues over [under] expenditures 776,080 [2,540,576] [2,540,576] 3,316,656 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, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Other financing sources [uses] Transfer in 44,955$ 500,000$ 500,000$ [455,045]$ Transfer [out][1,132,822] [1,253,464] [1,253,464] 120,642 Total other financing sources [uses][1,087,867] [753,464] [753,464] [334,403] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [311,787] [3,294,040] [3,294,040] 2,982,253 Unreserved fund balance, January 1 2,574,341 3,294,040 3,294,040 [719,699] Prior year cancelled encumbrances 4,938 - - 4,938 Unreserved fund balance, December 31 2,267,492 -$ -$ 2,267,492$ Reconciliation to GAAP Interest receivable 33,497 Accounts receivable 709,238 Taxes receivable 8 335 679 Budgeted Amounts See independent auditor's report on the financial statements. 55 Taxes receivable 8,335,679 Inventory 115,900 Deferred revenue [8,174,352] Current year encumbrances 539,656 GAAP Fund Balance, December 31 3,827,110$ 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) TOURISM AND CONVENTION FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Other taxes 1,376,312$ 1,350,000$ 1,376,711$ [399]$ Interest income General interest 271 - - 271 Total revenues 1,376,583 1,350,000 1,376,711 [128] Expenditures Community Development Tourism 745,875 750,000 760,633 14,758 Total expenditures 745,875 750,000 760,633 14,758 Excess [deficiency] of revenues over [under] expenditures 630,708 600,000 616,078 14,630 Other financing sources [uses] Transfer [out][604,125] [600,000] [616,078] 11,953 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 26,583 - - 26,583 Unreserved fund balance, January 1 2,202 - - 2,202 Unreserved fund balance, December 31 28,785 -$ -$ 28,785$ Reconciliation to GAAP Accounts receivable 390,720 GAAP Fund Balance, December 31 419,505$ 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) SPECIAL GAS FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Public works 1,374,319$ 1,418,502$ 1,418,502$ [44,183]$ Interest income General interest 3,552 6,000 6,000 [2,448] Total revenues 1,377,871 1,424,502 1,424,502 [46,631] Expenditures Public Works Streets 1,543,870 1,585,999 1,585,999 42,129 Cash Reserve - 500,000 500,000 500,000 Total expenditures 1,543,870 2,085,999 2,085,999 542,129 Excess [deficiency] of revenues over [under] expenditures [165,999] [661,497] [661,497] 495,498 Other financing sources [uses] Transfer in 180,000 180,000 180,000 - Total other financing sources [uses]180,000 180,000 180,000 - Excess [deficiency] of revenues and other sources over [under] 14,001 [481,497] [481,497] 495,498 expenditures and other [uses] Unreserved fund balance, January 1 826,461 481,497 481,497 344,964 Prior year cancelled encumbrances 22,911 - - 22,911 Unreserved fund balance, December 31 863,373 -$ -$ 863,373$ Reconciliation to GAAP Taxes receivable 298,952 Retainage payable [2,020] Current year encumbrances 214,870 GAAP Fund Balance, December 31 1,375,175$ 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) BICENTENNIAL CENTER FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Culture and recreation 241,384$ 793,456$ 793,456$ [552,072]$ Interest income General interest 618 - - 618 Miscellaneous revenues General miscellaneous revenues 649 - - 649 Total revenues 242,651 793,456 793,456 [550,805] Expenditures Culture and Recreation Bicentennial Center 1,239,384 1,594,704 1,594,704 355,320 Cash Reserve - 228,948 228,948 228,948 Total expenditures 1,239,384 1,823,652 1,823,652 584,268 Excess [deficiency] of revenues over [under] expenditures [996,733] [1,030,196] [1,030,196] 33,463 Other financing sources [uses] Transfer in 1,002,975 1,000,000 1,000,000 2,975 Transfer [out][92,000] [12,000] [12,000] [80,000] Total other financing sources [uses]910,975 988,000 988,000 [77,025] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [85,758] [42,196] [42,196] [43,562] Unreserved fund balance, January 1 87,916 42,293 42,293 45,623 Unreserved fund balance, December 31 2,158 97$ 97$ 2,061$ Reconciliation to GAAP Current year encumbrances 980 GAAP Fund Balance, December 31 3,138$ Budgeted Amounts 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) SALES TAX CAPITAL FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Selective sales tax 3,882,314$ 3,760,230$ 3,760,230$ 122,084$ Interest income General interest 5,790 20,000 20,000 [14,210] Total revenues 3,888,104 3,780,230 3,780,230 107,874 Expenditures Capital Outlay 984,227 2,140,000 2,140,000 1,155,773 Cash Reserve - 501,441 501,441 501,441 Total expenditures 984,227 2,641,441 2,641,441 1,657,214 Excess [deficiency] of revenues [ d ] dit 2 903 877 1 138 789 1 138 789 1 765 088 Budgeted Amounts See independent auditor's report on the financial statements. 59 over [under] expenditures 2,903,877 1,138,789 1,138,789 1,765,088 Other financing sources [uses] Transfer [out][1,750,000] [1,350,000] [1,350,000] [400,000] Total other financing sources [uses][1,750,000] [1,350,000] [1,350,000] [400,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 1,153,877 [211,211] [211,211] 1,365,088 Unreserved fund balance, January 1 610,134 211,211 211,211 398,923 Prior year cancelled encumbrances 2,346 - - 2,346 Unreserved fund balance, December 31 1,766,357 -$ -$ 1,766,357$ Reconciliation to GAAP Current year encumbrances 243,782 GAAP Fund Balance, December 31 2,010,139$ See independent auditor's report on the financial statements. 59 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES This page intentionally left blank. 60 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. HOME 2012 - To account for grants received from the federal government to be used for housing rehabilitation. KDOT Signals 9th Street - To account for funds received from the Kansas Department of Transportation for 9 th Street signal replacement. 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. HPRP fund - To account for grants received from the federal 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. Police Department Federal Forfeiture Funds - To account for revenue and expenses associated with federal Equitable Sharing Program funds. 61 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 2,225,846$ 442,509$ 721,691$ 3,390,046$ Receivables Accounts 55,100 - - 55,100 Total assets 2,280,946$ 442,509$ 721,691$ 3,445,146$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 47,999$ -$ -$ 47,999$ Due to other funds 31,049 - - 31,049 Total liabilities 79,048 - - 79,048 Fund balances: Restricted 378,063 - 721,691 1,099,754 Committed 1,747,620 442,509 - 2,190,129 Assigned 76,215 - - 76,215 Total fund balances 2,201,898 442,509 721,691 3,366,098 Total liabilities and fund balances 2,280,946$ 442,509$ 721,691$ 3,445,146$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS December 31, 2012 See independent auditor's report on the financial statements. 62 This page intentionally left blank. Total Total Nonmajor Total Nonmajor Nonmajor Debt Nonmajor Special Revenue Permanent Service Governmental Funds Funds Fund Funds REVENUES Taxes 327,575$ -$ -$ 327,575$ Intergovernmental 928,097 - 445,487 1,373,584 Charges for services 605,364 14,418 - 619,782 Licenses and permits 7,700 - - 7,700 Investment revenue 6,271 1,385 50 7,706 Miscellaneous 110,457 - - 110,457 Total revenues 1,985,464 15,803 445,537 2,446,804 EXPENDITURES Current Culture and recreation 1,041,098 - - 1,041,098 Public health and sanitation 154,012 - - 154,012 Planning and development 242,888 - - 242,888 Miscellaneous - 35 - 35 Debt service Principal retirement 25,000 - 120,000 145,000 Interest and other charges 2,606 - 151,845 154,451 Capital outlay 625,126 - - 625,126 Total expenditures 2,090,730 35 271,845 2,362,610 Excess [deficiency] of revenues over [under] expenditures [105,266] 15,768 173,692 84,194 Other financing sources [uses] Transfers in 489,358 - - 489,358 Total other financing sources [uses]489,358 - - 489,358 Net change in fund balance 384,092 15,768 173,692 573,552 Fund balance - Beginning of year 1,817,806 426,741 547,999 2,792,546 Fund balance - End of year 2,201,898$ 442,509$ 721,691$ 3,366,098$ For the Year Ended December 31, 2012 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. 63 Business Special Improvement Neighborhood Parks & Special District Park Recreation Alcohol ASSETS Cash and investments 1,731$ 219,458$ 99,692$ 21$ Receivables Accounts 55,100 - - - Total assets 56,831$ 219,458$ 99,692$ 21$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 1,729$ -$ 11,547$ -$ Due to other funds - - - - Total liabilities 1,729 - 11,547 - Fund balance: Restricted 55 102 88 145 21 COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS December 31, 2012 CITY OF SALINA, KANSAS Restricted 55,102 - 88,145 21 Committed - 219,458 - - Assigned - - - - Total fund balance [deficit]55,102 219,458 88,145 21 Total liabilities and fund balances 56,831$ 219,458$ 99,692$ 21$ Bicentennial HUD Comm. Sales Tax KDOT Center Community Development. Heritage Economic HOME Signals Event Dev.Revolving Commission Development 2012 9th Street 126,895$ 72,109$ 173,655$ 4$ 860,381$ -$ -$ - - - - - - - 126,895$ 72,109$ 173,655$ 4$ 860,381$ -$ -$ -$ -$ -$ -$ 25,000$ -$ -$ - - - - - 10,602 1,650 - - - - 25,000 10,602 1,650 72 109 173 655- 72,109 173,655 - - - - 126,895 - - 4 835,381 [10,602] [77,865] - - - - - - 76,215 126,895 72,109 173,655 4 835,381 [10,602] [1,650] 126,895$ 72,109$ 173,655$ 4$ 860,381$ -$ -$ See independent auditor's report on the financial statements. 64 Special Fair CDBG Law Housing ED HPRP Enforcement ASSETS Cash and investments 31,969$ 2,472$ -$ 2,864$ Receivables Accounts - - - - Total assets 31,969$ 2,472$ -$ 2,864$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 65$ -$ -$ -$ Due to other funds - - - - Total liabilities 65 - - - Fund balance: Restricted 2 472 COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS (Continued) CITY OF SALINA, KANSAS December 31, 2012 Restricted - 2,472 - - Committed 31,904 - - 2,864 Assigned - - - - Total fund balance [deficit]31,904 2,472 - 2,864 Total liabilities and fund balances 31,969$ 2,472$ -$ 2,864$ Police War Federal Department Police DARE Memorial Arts & CARE Federal Grants Donations Maintenance Humanities Grant Forfeiture Funds Totals -$ 1,747$ 35,035$ 213,855$ -$ 383,958$ 2,225,846$ - - - - - - 55,100 -$ 1,747$ 35,035$ 213,855$ -$ 383,958$ 2,280,946$ -$ -$ -$ 9,658$ -$ -$ 47,999$ 5,356 - - - 13,441 - 31,049 5,356 - - 9,658 13,441 - 79,048 [13 441]378 063- - - - [13,441] - 378,063 [5,356] 1,747 35,035 204,197 - 383,958 1,747,620 - - - - - - 76,215 [5,356] 1,747 35,035 204,197 [13,441] 383,958 2,201,898 -$ 1,747$ 35,035$ 213,855$ -$ 383,958$ 2,280,946$ 65 See independent auditor's report on the financial statements. Business Special Improvement Neighborhood Parks & Special District Park Recreation Alcohol Revenues Taxes -$ -$ -$ -$ Intergovernmental - - 154,001 154,001 Charges for services 87,384 - - - Licenses and permits - 7,700 - - Investment revenue 24 720 225 28 Miscellaneous - - 1,932 - Total Revenues 87,408 8,420 156,158 154,029 Expenditures Current Culture and recreation - - - - Public health and sanitation - - - 154,012 Planning and development 83,475 - - - Debt service For the Year Ended December 31, 2012 AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, Principal retirement - - 25,000 - Interest and other charges - - 2,606 - Capital outlay - 18,096 85,643 - Total Expenditures 83,475 18,096 113,249 154,012 Excess [deficiency] of revenues over [under] expenditures 3,933 [9,676] 42,909 17 Other financing sources [uses] Transfers in - - - - Total other financing sources [uses] - - - - Net change in fund balance 3,933 [9,676] 42,909 17 Fund balance, beginning of year 51,169 229,134 45,236 4 Fund balance, end of year 55,102$ 219,458$ 88,145$ 21$ Bicentennial HUD Community Sales Tax KDOT Center Community Development Heritage Economic HOME Signals Event Development Revolving Commission Development 2012 9th Street -$ -$ -$ -$ 327,575$ -$ -$ - - - - - 56,000 - 156,243 - - - - - - - - - - - - - - 229 552 - 2,694 - - - - - - - - - 156,243 229 552 - 330,269 56,000 - 128,195 - - - - - - - - - - - - - - - 57 - - - - - - - - - - - - - - - - - - - - - - 452,000 66,602 1,650 128,195 - 57 - 452,000 66,602 1,650 28,048 229 495 - [121,731] [10,602] [1,650] - - - - - - - - - - - - - - 28,048 229 495 - [121,731] [10,602] [1,650] 98,847 71,880 173,160 4 957,112 - - 126,895$ 72,109$ 173,655$ 4$ 835,381$ [10,602]$ [1,650]$ See independent auditor's report on the financial statements. 66 Special Fair CDBG Law Housing ED HPRP Enforcement Revenues Taxes -$ -$ -$ -$ Intergovernmental 100,668 - 18,788 - Charges for services - - - - Licenses and permits - - - - Investment revenue 47 - - 9 Miscellaneous - - - - Total Revenues 100,715 - 18,788 9 Expenditures Current Culture and recreation - - - - Public health and sanitation - - - - Planning and development 73,167 - 18,788 - Debt service NONMAJOR SPECIAL REVENUE FUNDS (Continued) For the Year Ended December 31, 2012 AND CHANGES IN FUND BALANCES CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, Principal retirement - - - - Interest and other charges - - - - Capital outlay - - - - Total Expenditures 73,167 - 18,788 - Excess [deficiency] of revenues over [under] expenditures 27,548 - - 9 Other financing sources [uses] Transfers in - - - - Total other financing sources [uses]- - - - Net change in fund balance 27,548 - - 9 Fund balance, beginning of year 4,356 2,472 - 2,855 Fund balance, end of year 31,904$ 2,472$ -$ 2,864$ Police War Federal Department Police DARE Memorial Arts & Care Federal Grants Donations Maintenance Humanities Grant Forfeiture Funds Totals -$ -$ -$ -$ -$ -$ 327,575$ - - - - 54,626 390,013 928,097 - - - 361,737 - - 605,364 - - - - - - 7,700 - 5 111 1,182 - 445 6,271 - - - 108,525 - - 110,457 - 5 111 471,444 54,626 390,458 1,985,464 - - 338 912,565 - - 1,041,098 - - - - - - 154,012 - - - - 67,401 - 242,888 - - - - - - 25,000 - - - - - - 2,606 [5,365] - - - - 6,500 625,126 [5,365] - 338 912,565 67,401 6,500 2,090,730 5,365 5 [227] [441,121] [12,775] 383,958 [105,266] - - - 489,358 - - 489,358 - - - 489,358 - - 489,358 5,365 5 [227] 48,237 [12,775] 383,958 384,092 [10,721] 1,742 35,262 155,960 [666] - 1,817,806 [5,356]$ 1,747$ 35,035$ 204,197$ [13,441]$ 383,958$ 2,201,898$ See independent auditor's report on the financial statements. 67 Cemetery Mausoleum Tricentennial ASSETS Endowment Endowment Commission Total Cash and investments 434,784$ 2,003$ 5,722$ 442,509$ Total assets 434,784$ 2,003$ 5,722$ 442,509$ LIABILITIES AND FUND BALANCES Liabilities Accounts payable -$ -$ -$ -$ Total liabilities - - - - Fund balances Committed 434,784 2,003 5,722 442,509 Total liabilities and fund balances 434,784$ 2,003$ 5,722$ 442,509$ CITY OF SALINA, KANSAS COMBINING BALANCE SHEET December 31, 2012 NONMAJOR PERMANENT FUNDS See independent auditor's report on the financial statements. 68 Cemetery Mausoleum Tricentennial Endowment Endowment Commission Total Revenues Charges for services 14,418$ -$ -$ 14,418$ Investment revenue 1,361 6 18 1,385 Total revenues 15,779 6 18 15,803 Expenditures Miscellaneous 35 - - 35 Total expenditures 35 - - 35 Net change in fund balance 15,744 6 18 15,768 Fund balances - beginning of year 419,040 1,997 5,704 426,741 Fund balances - end of year 434,784$ 2,003$ 5,722$ 442,509$ NONMAJOR PERMANENT FUNDS For the Year Ended December 31, 2012 CITY OF SALINA, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES See independent auditor's report on the financial statements. 69 See independent auditor's report on the financial statements. 69 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, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Community and economic development 83,453$ 90,000$ 90,000$ [6,547]$ Interest income General interest 24 500 500 [476] Total revenues 83,477 90,500 90,500 [7,023] Expenditures Community Development Business Improvement District 83,475 90,500 90,500 7,025 Total expenditures 83,475 90,500 90,500 7,025 Excess [deficiency] of revenues over [under] expenditures 2 - - 2 Unreserved fund balance, January 1 - - - - Unreserved fund balance, December 31 2 -$ -$ 2$ Reconciliation to GAAP Accounts receivable 55,100 GAAP Fund Balance, December 31 55,102$ Budgeted Amounts 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) NEIGHBORHOOD PARK FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Public works 7,700$ 20,000$ 20,000$ [12,300]$ Interest income General interest 720 4,000 4,000 [3,280] Total revenues 8,420 24,000 24,000 [15,580] Expenditures Public Works Parks 18,096 - - [18,096] Cash reserve - 270,254 270,254 270,254 Total expenditures 18,096 270,254 270,254 252,158 Excess [deficiency] of revenues over [under] expenditures [9,676] [246,254] [246,254] 236,578 Unreserved fund balance, January 1 229,134 246,254 246,254 [17,120] Unreserved fund balance/GAAP fund balance December 31 219,458$ -$ -$ 219,458$ 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) SPECIAL PARKS AND RECREATION FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Culture and recreation 154,002$ 160,000$ 160,000$ [5,998]$ Operating grants, unrestricted Culture and recreation 1,932 - - 1,932 Interest income General interest 224 4,000 4,000 [3,776] Total revenues 156,158 164,000 164,000 [7,842] Expenditures Public Works Parks 113,249 110,000 110,000 [3,249] Cash Reserve - 108,185 108,185 108,185 Total expenditures 113,249 218,185 218,185 104,936 Excess [deficiency] of revenues over [under] expenditures 42,909 [54,185] [54,185] 97,094 Other financing sources [uses] Transfer [out]- [30,000] [30,000] 30,000 Total other financing sources [uses]- [30,000] [30,000] 30,000 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 42,909 [84,185] [84,185] 127,094 Unreserved fund balance, January 1 45,236 94,185 94,185 [48,949] Unreserved fund balance/GAAP fund balance December 31 88,145$ 10,000$ 10,000$ 78,145$ 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 ALCOHOL FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Health and sanitation 154,001$ 160,000$ 160,000$ [5,999]$ Interest income General interest 28 - - 28 Total revenues 154,029 160,000 160,000 [5,971] Expenditures Public Health and Sanitation Special alcohol 154,012 160,000 160,000 5,988 Total expenditures 154,012 160,000 160,000 5,988 Excess [deficiency] of revenues over [under] expenditures 17 - - 17 Unreserved fund balance, January 1 4 1 1 3 Unreserved fund balance/GAAP fund balance December 31 21$ 1$ 1$ 20$ Budgeted Amounts 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) SALES TAX ECONOMIC DEVELOPMENT FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Selective sales tax 327,575$ 321,422$ 321,422$ 6,153$ Interest income General interest 2,695 10,000 10,000 [7,305] Total revenues 330,270 331,422 331,422 [1,152] Expenditures Community Development Economic development 422,000 315,444 315,444 [106,556] Cash Reserve - 569,978 569,978 569,978 Total expenditures 422 000 885 422 885 422 463 422 Budgeted Amounts See independent auditor's report on the financial statements. 74 Total expenditures 422,000 885,422 885,422 463,422 Excess [deficiency] of revenues over [under] expenditures [91,730] [554,000] [554,000] 462,270 Unreserved fund balance, January 1 907,111 554,009 554,009 353,102 Prior year cancelled encumbrances 20,000 - - 20,000 Unreserved fund balance/GAAP fund balance December 31 835,381$ 9$ 9$ 835,372$ 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) FAIR HOUSING FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Operating grants, restricted Community and economic development 100,668$ 65,000$ 65,000$ 35,668$ Interest income General interest 47 1,000 1,000 [953] Total revenues 100,715 66,000 66,000 34,715 Expenditures Community Development Human relations 13,327 26,450 26,450 13,123 Cash Reserve - 11,438 11,438 11,438 Total expenditures 13,327 37,888 37,888 24,561 Excess [deficiency] of revenues over [under] expenditures 87,388 28,112 28,112 59,276 Other financing sources [uses] Transfer [out][59,840] [59,840] [59,840] - Total other financing sources [uses][59,840] [59,840] [59,840] - Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 27,548 [31,728] [31,728] 59,276 Unreserved fund balance, January 1 4,356 31,729 31,729 [27,373] Unreserved fund balance/GAAP fund balance December 31 31,904$ 1$ 1$ 31,903$ 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) ARTS & HUMANITIES FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Culture and recreation 470,238$ 437,450$ 437,450$ 32,788$ Interest income General interest 1,182 2,000 2,000 [818] Miscellaneous revenues Culture and recreation 25 500 500 [475] Total revenues 471,445 439,950 439,950 31,495 Expenditures Culture and Recreation Arts and humanities 562,953 615,107 615,107 52,154 Smoky Hill River Festival 349,613 366,050 366,050 16,437 Cash Reserve - 36,565 36,565 36,565 Total expenditures 912,566 1,017,722 1,017,722 105,156 Excess [deficiency] of revenues over [under] expenditures [441,121] [577,772] [577,772] 136,651 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] 48,237 [88,414] [88,414] 136,651 Unreserved fund balance, January 1 155,960 88,414 88,414 67,546 Unreserved fund balance/GAAP fund balance December 31 204,197$ -$ -$ 204,197$ Budgeted Amounts 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) DEBT SERVICE FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes Real estate taxes 2,361,078$ 2,331,479$ 2,331,479$ 29,599$ Delinquent taxes 77,709 40,000 40,000 37,709 Motor vehicle taxes 292,127 304,367 304,367 [12,240] Total taxes 2,730,914 2,675,846 2,675,846 55,068 Charges for services Special assessments 1,650,053 1,449,340 1,449,340 200,713 Interest income General interest 7,844 10,000 10,000 [2,156] Miscellaneous revenues General miscellaneous revenues 5 140,000 140,000 [139,995] Other financing sources General sources 203,593 100,000 100,000 103,593 Total revenues 4,592,409 4,375,186 4,375,186 217,223 Expenditures Budgeted Amounts See independent auditor's report on the financial statements. 77 Expenditures Debt Service Principal 4,776,802 4,806,122 4,806,122 29,320 Interest and other charges 1,819,221 1,761,508 1,761,508 [57,713] Cash Reserve - 398,497 398,497 398,497 Total expenditures 6,596,023 6,966,127 6,966,127 370,104 Excess [deficiency] of revenues over [under] expenditures [2,003,614] [2,590,941] [2,590,941] 587,327 Other financing sources [uses] Transfer in 1,350,000 1,800,000 1,800,000 [450,000] Total other financing sources [uses]1,350,000 1,800,000 1,800,000 [450,000] Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [653,614] [790,941] [790,941] 137,327 Unreserved fund balance, January 1 1,236,026 790,941 790,941 445,085 Unreserved fund balance December 31 582,412 -$ -$ 582,412$ Reconciliation to GAAP Taxes receivable 2,459,008 Deferred revenue [2,402,096] GAAP Fund Balance, December 31 639,324$ See independent auditor's report on the financial statements. 77 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, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Health and sanitation 2,631,069$ 2,407,000$ 2,627,000$ 4,069$ Interest income General interest 10,141 7,000 7,000 3,141 Interfund services provided Health and sanitation 480,944 463,808 480,000 944 Miscellaneous revenues Health and sanitation 28,303 42,310 42,000 [13,697] Total revenues 3,150,457 2,920,118 3,156,000 [5,543] Expenditures Public Health and Sanitation Solid waste 1,699,581 1,745,381 1,757,849 58,268 Hazardous waste disposal 85,995 94,972 94,972 8,977 Total public health and sanitation 1,785,576 1,840,353 1,852,821 67,245 Capital Outlay 103,229 145,700 145,700 42,471 Cash Reserve - 2,514,198 414,106 414,106 Total expenditures 1,888,805 4,500,251 2,412,627 523,822 Excess [deficiency] of revenues over [under] expenditures 1,261,652 [1,580,133] 743,373 518,279 Other financing sources [uses] Transfers [out][2,879,118] [577,500] [2,987,650] 108,532 Total other financing sources [uses][2,879,118] [577,500] [2,987,650] 108,532 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [1,617,466] [2,157,633] [2,244,277] 626,811 Unreserved fund balances, January 1 2,410,471 2,457,633 2,824,577 [414,106] Unreserved fund balances, December 31 793,005$ 300,000$ 580,300$ 212,705$ Budgeted Amounts 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) WATER AND SEWER FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Water and wastewater 18,558,324$ 17,120,756$ 18,532,279$ 26,045$ Interest income General interest 41,719 25,000 40,000 1,719 Interfund services provided General services 28,989 30,900 30,000 [1,011] Water and wastewater 75,135 - - 75,135 Total interfund services 104,124 30,900 30,000 74,124 Miscellaneous revenues General miscellaneous revenues 203 - - 203 Water and wastewater 609,776 470,000 562,315 47,461 Total miscellaneous revenues 609,979 470,000 562,315 47,664 Total revenues 19,314,146 17,646,656 19,164,594 149,552 Expenditures Water and Wastewater Water 7,767,373 7,669,776 8,444,955 677,582 Sewer 2,716,832 2,886,672 2,789,632 72,800 Total water and wastewater 10,484,205 10,556,448 11,234,587 750,382 Capital Outlay 1,573,781 4,533,000 2,601,300 1,027,519 Cash Reserve - 4,826,479 - - Total expenditures 12,057,986 19,915,927 13,835,887 1,777,901 Excess [deficiency] of revenues over [under] expenditures 7,256,160 [2,269,271] 5,328,707 1,927,453 Other financing sources [uses] Transfers in 845,685 - 845,685 - Transfers [out][9,293,000] [3,849,008] [9,929,048] 636,048 Total other financing sources [uses][8,447,315] [3,849,008] [9,083,363] 636,048 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [1,191,155] [6,118,279] [3,754,656] 2,563,501 Unreserved fund balances, January 1 9,988,454 6,118,279 9,988,454 - Unreserved fund balances, December 31 8,797,299$ -$ 6,233,798$ 2,563,501$ 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) SANITATION FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services Health and sanitation 2,455,085$ 2,345,000$ 2,345,000$ 110,085$ Interest income General interest 2,293 3,500 3,500 [1,207] Charges for services Miscellaneous revenues 69 - - 69 Total revenues 2,457,447 2,348,500 2,348,500 108,947 Expenditures Public Health and Sanitation Sanitation 2,104,971 2,092,745 2,092,745 [12,226] Cash Reserve - 543,348 543,348 543,348 Total expenditures 2,104,971 2,636,093 2,636,093 531,122 Excess [deficiency] of revenues over [under] expenditures 352,476 [287,593] [287,593] [422,175] Other financing sources [uses] Transfers [out][295,400] [310,000] [310,000] 14,600 Total other financing sources [uses][295,400] [310,000] [310,000] 14,600 Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] 57,076 [597,593] [597,593] [407,575] Unreserved fund balance, January 1 614,823 597,594 597,594 17,229 Unreserved fund balances, December 31 671,899$ 1$ 1$ [390,346]$ 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) GOLF COURSE FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Taxes General sales tax 26,232$ 27,500$ 27,500$ [1,268]$ Charges for services Culture and recreation 756,937 696,741 696,741 60,196 Interest income General interest 96 200 200 [104] Miscellaneous revenues General miscellaneous revenues 678 1,000 1,000 [322] Culture and recreation 48,931 45,000 45,000 3,931 Total miscellaneous revenues 49,609 46,000 46,000 3,609 Total revenues 832,874 770,441 770,441 62,433 Expenditures Culture and Recreation Golf course 770,958 763,172 763,172 [7,786] Cash Reserve - 75,470 75,470 75,470 Total expenditures 770,958 838,642 838,642 67,684 Excess [deficiency] of revenues over [under] expenditures 61,916 [68,201] [68,201] 130,117 Unreserved fund balances, January 1 1,001 122,202 122,202 [121,201] Unreserved fund balances, December 31 62,917$ 54,001$ 54,001$ 8,916$ Budgeted Amounts See independent auditor's report on the financial statements. 81 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, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest -$ 1,400$ -$ -$ Interfund services provided General services 374,708 393,547 393,547 [18,839] Miscellaneous revenues General miscellaneous revenues 89,561 40,200 70,258 19,303 Total revenues 464,269 435,147 463,805 464 Expenditures Other Risk management 598,206 425,650 527,867 [70,339] Capital Outlay - - 1,000 1,000 Cash Reserve - 50,000 - - Total expenditures 598,206 475,650 528,867 [69,339] Excess [deficiency] of revenues over [under] expenditures [133,937] [40,503] [65,062] [68,875] Unreserved fund balance, January 1 67,945 40,503 67,945 - Unreserved fund balance, December 31 [65,992]$ -$ 2,883$ [68,875]$ 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) WORKERS' COMPENSATION RESERVE FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 2,174$ 2,500$ 2,500$ [326]$ Interfund services provided General services 388,600 388,600 388,600 - Miscellaneous revenues General miscellaneous revenues 1,558 - - 1,558 Total revenues 392,332 391,100 391,100 1,232 Expenditures Other Worker's compensation 335,102 297,762 297,762 [37,340] Cash Reserve - 753,275 753,275 753,275 Total expenditures 335,102 1,051,037 1,051,037 715,935 Excess [deficiency] of revenues over [under] expenditures 57,230 [659,937] [659,937] 717,167 Unreserved fund balance, January 1 520,251 660,057 660,057 [139,806] Unreserved fund balance, December 31 577,481$ 120$ 120$ 577,361$ 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) HEALTH INSURANCE FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 6,103$ 5,000$ 5,000$ 1,103$ Interfund Services Provided General services 5,554,123 5,761,728 5,761,728 [207,605] Miscellaneous revenues General miscellaneous revenues 40,234 36,000 36,000 4,234 Total revenues 5,600,460 5,802,728 5,802,728 [202,268] Expenditures Other Health insurance 5,613,453 6,198,248 6,198,248 584,795 Cash Reserve - 1,500,000 1,500,000 1,500,000 Total expenditures 5,613,453 7,698,248 7,698,248 2,084,795 Excess [deficiency] of revenues over [under] expenditures [12,993] [1,895,520] [1,895,520] 1,882,527 Unreserved fund balance, January 1 1,915,707 1,895,520 1,895,520 20,187 Unreserved fund balance, December 31 1,902,714$ -$ -$ 1,902,714$ Budgeted Amounts 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) CENTRAL GARAGE FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Interest income General interest 541$ 40$ 40$ 501$ Interfund services provided General services 1,684,410 1,625,000 1,625,000 59,410 Miscellaneous revenues General miscellaneous revenues 8,729 8,000 8,000 729 Total revenues 1,693,680 1,633,040 1,633,040 60,640 Expenditures Other Central garage 1,678,627 1,644,464 1,644,464 [34,163] Cash Reserve - 121,482 121,482 121,482 Total expenditures 1,678,627 1,765,946 1,765,946 87,319 Excess [deficiency] of revenues over [under] expenditures 15,053 [132,906] [132,906] 147,959 Other financing sources [uses] Transfers in - 30,000 30,000 [30,000] Transfers [out][8,844] [8,844] [8,844] - Total other financing sources [uses][8,844] 21,156 21,156 [30,000] Excess [deficiency] of revenues and other financing sources over [under] expenditures and other financing [uses] 6,209 [111,750] [111,750] 117,959 Unreserved fund balance, January 1 100,000 111,750 111,750 [11,750] Unreserved fund balance, December 31 106,209$ -$ -$ 106,209$ 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) INFORMATION SYSTEMS FUND For the Year Ended December 31, 2012 Variance with Final Budget Positive Actual Original Final [Negative] Revenues Charges for services General charges 100,623$ 106,000$ 106,000$ [5,377]$ Interest income General interest 1,304 668 668 636 Interfund services provided General services 947,500 1,197,500 1,197,500 [250,000] Miscellaneous revenues General miscellaneous revenues - 2,889 2,889 [2,889] Total revenues 1,049,427 1,307,057 1,307,057 [257,630] Expenditures Other Information services 1,018,105 1,221,750 1,221,750 203,645 Cash Reserve - 100,000 100,000 100,000 Total expenditures 1,018,105 1,321,750 1,321,750 303,645 Excess [deficiency] of revenues over [under] expenditures 31,322 [14,693] [14,693] 46,015 Other financing sources [uses] Transfers [out][77,316] [77,316] [77,316] - Excess [deficiency] of revenues and other sources over [under] expenditures and other [uses] [45,994] [92,009] [92,009] 46,015 Unreserved fund balance, January 1 160,000 102,758 102,758 57,242 Unreserved fund balance, December 31 114,006$ 10,749$ 10,749$ 103,257$ Budgeted Amounts See independent auditor's report on the financial statements. 86 87 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 [63,982]$ 712,325$ 1,903,339$ 153,391$ 267,208$ 2,972,281$ Inventory and prepaid supplies - - - 126,874 - 126,874 Total current assets [63,982] 712,325 1,903,339 280,265 267,208 3,099,155 Capital assets: Capital assets - - - 184,084 677,214 861,298 Less: accumulated depreciation - - - 160,992 677,214 838,206 Total capital assets - - - 23,092 - 23,092 Total assets [63,982]$ 712,325$ 1,903,339$303,357$ 267,208$ 3,122,247$ Liabilities: Current liabilities (payable from current assets): Accounts payable 2,010$ 5,858$ 625$ 47,182$ 107,947$ 163,622$ Current portion of compensated absences payable - - - 18,592 29,342 47,934 Current portion of accrued claims payable - 131,792 367,424 - - 499,216 Total current liabilities (payable from current assets)2,010 137,650 368,049 65,774 137,289 710,772 Noncurrent liabilities: Compensated absences payable - - - 17,946 28,321 46,267 Accrued claims payable - 361,378 - - - 361,378 CITY OF SALINA, KANSAS COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31, 2012 See independent auditor's report on the financial statements. 88 Accrued claims payable ,, Total noncurrent liabilities - 361,378 - 17,946 28,321 407,645 Total liabilities 2,010$ 499,028$ 368,049$ 83,720$ 165,610$ 1,118,417$ Net Position Invested in capital assets, net of related debt -$ -$ -$ 23,092$ -$ 23,092$ Unrestricted [65,992] 213,297 1,535,290 196,545 101,598 1,980,738 Total net position [65,992]$ 213,297$ 1,535,290$219,637$ 101,598$ 2,003,830$ See independent auditor's report on the financial statements. 88 Total Workers' Internal Risk Compensation Health Central Information Service Management Reserve Insurance Garage Systems Funds Operating revenues Charges for services 374,708$ 388,599$ 5,554,123$ 1,684,410$ 1,048,123$ 9,049,963$ Miscellaneous 89,561 1,558 40,234 8,729 - 140,082 Total operating revenues 464,269 390,157 5,594,357 1,693,139 1,048,123 9,190,045 Operating expenses General government 694,469 506,482 5,589,702 1,675,254 1,053,080 9,518,987 Depreciation - - - 4,698 - 4,698 Total operating expenses 694,469 506,482 5,589,702 1,679,952 1,053,080 9,523,685 Operating income [loss][230,200] [116,325] 4,655 13,187 [4,957] [333,640] Other operating revenues [expenses] Investment income - 2,174 6,103 541 1,304 10,122 Total other operating revenues [expenses] - 2,174 6,103 541 1,304 10,122 Change in net position [230,200] [114,151] 10,758 13,728 [3,653] [323,518] Net position, January 1 164,208 327,448 1,524,532 205,909 105,251 2,327,348 COMBINING STATEMENT OF REVENUES, EXPENSES INTERNAL SERVICE FUND CITY OF SALINA, KANSAS For the Year Ended December 31, 2012 AND CHANGES IN NET POSITION See independent auditor's report on the financial statements. 89 Net position, December 31 [65,992]$ 213,297$ 1,535,290$ 219,637$ 101,598$ 2,003,830$ See independent auditor's report on the financial statements. 89 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$ 559,979$ 5,530,372$ 1,684,411$ 1,048,123$ 9,197,593$ Cash paid to suppliers of goods or services [699,810] [500,624] [5,589,577] [1,467,131] [574,945] [8,832,087] Cash paid to employees - - - [223,541] [409,094] [632,635] Other operating receipts 89,561 1,558 40,234 8,729 - 140,082 Net cash provided by [used in] operating activities [235,541] 60,913 [18,971] 2,468 64,084 [127,047] Cash flows from investing activities Interest received - 2,174 6,103 540 1,304 10,121 Net increase [decrease] in cash and cash equivalents [235,541] 63,087 [12,868] 3,008 65,388 [116,926] Cash and cash equivalents, January 1 171,559 649,238 1,916,207 150,383 201,820 3,089,207 Cash and cash equivalents, December 31 [63,982]$ 712,325$ 1,903,339$153,391$ 267,208$ 2,972,281$ For the Year Ended December 31, 2012 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS See independent auditor's report on the financial statements. 90 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 Reconciliation of operating [loss] income to net cash provided by [used in] operating activities Operating income [loss] [230,200]$ [116,325]$ 4,655$ 13,187$ [4,957]$ [333,640]$ 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 - - - [11,180] - [11,180] Increase [decrease] in accounts payable [5,341] 5,858 125 [3,201] 66,127 63,568 Increase [decrease] in accrued compensated absences - - - [1,036] 2,914 1,878 Increase [decrease] in claims payable - 171,380 [23,751] - - 147,629 Net cash provided by [used in] operating activities [235,541]$ 60,913$ [18,971]$ 2,468$ 64,084$ [127,047]$ For the Year Ended December 31, 2012 CITY OF SALINA, KANSAS INTERNAL SERVICE FUNDS (Continued) 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 92 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 137,964$ 5,957$ 5,119$[254,213]$ 80,514$ 2,414$ 785$3,713$ 340,537$322,790$ Total assets 137,964$ 5,957$ 5,119$[254,213]$ 80,514$ 2,414$ 785$3,713$ 340,537$322,790$ LIABILITIES: Accounts payable 137,964$ 5,957$ 5,119$[254,213]$ 80,514$ 2,414$ 785$3,713$ 340,537$322,790$ Total liabilities 137,964$ 5,957$ 5,119$[254,213]$ 80,514$ 2,414$ 785$3,713$ 340,537$322,790$ December 31, 2012 CITY OF SALINA, KANSAS COMBINING BALANCE SHEET AGENCY FUNDS See independent auditor's report on the financial statements. 93 Balance Balance December 31, December 31, 2011 Additions Deductions 2012 Cash and investments Special Assessment Escrow 135,344$ 2,620$ -$ 137,964$ Fire Insurance Proceeds 10,316 39,427 43,786 5,957 PEGS Access 5,103 236,526 236,510 5,119 Payroll Clearing [251,057] - 3,156 [254,213] Court Bond and Restitution 70,921 9,593 - 80,514 Police Investigation Account 2,125 289 - 2,414 Fire Cam Fund 783 2 - 785 Citizenship Trust 3,702 11 - 3,713 Section 125 Plan Fund 336,063 343,557 339,083 340,537 Total Assets 313,300$ 632,025$ 622,535$ 322,790$ Accounts Payable Special Assessment Escrow 135,344$ 2,620$ -$ 137,964$ Fire Insurance Proceeds 10 316 39 427 43 786 5 957 CITY OF SALINA, KANSAS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the Year Ended December 31, 2012 AGENCY FUNDS See independent auditor's report on the financial statements. 94 Fire Insurance Proceeds 10,316 39,427 43,786 5,957 PEGS Access 5,103 236,526 236,510 5,119 Payroll Clearing [251,057] - 3,156 [254,213] Court Bond and Restitution 70,921 9,593 - 80,514 Police Investigation Account 2,125 289 - 2,414 Fire Cam Fund 783 2 - 785 Citizenship Trust 3,702 11 - 3,713 Section 125 Plan Fund 336,063 343,557 339,083 340,537 Total liabilities 313,300$ 632,025$ 622,535$ 322,790$ See independent auditor's report on the financial statements. 94 STATISTICAL SECTION This page intentionally left blank. Fiscal Year2004Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount %Governmental ActivitiesInvested in capital assets, net of related debt82,312$ 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% 112,929$ 94%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% 1,082$ 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% 5,511$ 5%Total Governmental Net Position 95,638$ 100% 101,321$100% 119,248$ 100% 126,594$100% 127,994$100% 127,922$100% 119,854$100% 117,797$100% 117,334$100% 119,522$100%Business Type ActivitiesInvested in capital assets, net of related debt36,599$ 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% 50,857$ 69%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% 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% 24,528$ 35% 21,450$ 29%Total business type activities net position48,308$ 100% 49,803$ 100% 51,897$ 100% 53,933$ 100% 56,998$ 100% 58,339$ 100% 61,269$ 100% 63,937$ 100% 70,308$ 100% 73,860$ 100%Primary GovernmentInvested in capital assets, net of related debt118,911$ 83% 131,507$ 87% 151,152$ 88% 161,320$ 89% 160,464$ 87% 164,896$ 89% 150,208$ 83% 161,080$ 89% 153,516$ 82% 163,786$ 85%Restricted 1,584$ 1% 2,723$ 2% 2,750$ 2% 2,229$ 1% 2,761$ 1% 2,423$ 1% 2,727$ 2% 2,541$ 1% 3,216$ 2% 2,635$ 1%Unrestricted 23,451$ 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% 26,961$ 14%Total primary government net position143,947$100% 151,124$100% 171,144$ 100% 180,527$100% 184,992$100% 186,261$100% 181,123$100% 181,736$100% 187,599$100% 193,382$100%Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 201295 Note 1: All amounts are shown in thousands of dollars200820032005200620072012Schedule 1City of Salina, KansasNet Position by ComponentLast Ten Fiscal Years(accrual basis of accounting)(in 000's)201120102009 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Expenses Governmental Activities: General government 6,767$ 4,931$ 4,904$ 6,319$ 6,732$ 6,791$ 14,664$ 10,845$ 13,614$ 11,278$ Public safety 12,636$ 13,548$ 14,159$ 14,621$ 16,877$ 18,440$ 16,539$ 18,592$ 18,579$ 19,066$ Public works 7,896$ 7,958$ 8,420$ 8,609$ 9,258$ 9,706$ 9,781$ 9,782$ 9,858$ 10,957$ Public health and sanitation 906$ 1,016$ 1,102$ 1,214$ 1,281$ 1,310$ 1,390$ 1,365$ 1,368$ 1,383$ Culture and recreation 4,657$ 4,784$ 5,071$ 4,961$ 5,658$ 5,582$ 5,397$ 8,572$ 6,693$ 5,338$ Planning and development 4,507$ 4,130$ 2,714$ 2,697$ 2,814$ 3,481$ 3,375$ 3,716$ 3,450$ 3,362$ Interest on long term debt 1,085$ 786$ 742$ 972$ 1,295$ 1,454$ -$ 2,256$ 1,650$ 1,914$ Total governmental activities expenses 38,455$ 37,152$ 37,112$ 39,393$ 43,916$ 46,764$ 51,146$ 55,128$ 55,212$ 53,298$ Business-type Activities: Solid waste disposal 2,367$ 2,818$ 2,608$ 2,471$ 2,088$ 2,008$ 2,287$ 3,010$ 2,945$ 2,067$ Water and sewer 11,572$ 11,552$ 11,262$ 11,676$ 12,227$ 13,284$ 12,995$ 14,050$ 13,597$ 14,897$ Sanitation 1,682$ 1,920$ 1,889$ 1,945$ 2,038$ 2,184$ 2,224$ 2,261$ 2,261$ 2,441$ Golf course 786$ 817$ 893$ 852$ 884$ 884$ 897$ 817$ 825$ 723$ Total business-type activities expenses 16,407$ 17,107$ 16,652$ 16,944$ 17,236$ 18,360$ 18,403$ 20,138$ 19,628$ 20,128$ Total primary government expenses 54,862$ 54,260$ 53,764$ 56,337$ 61,153$ 65,124$ 69,549$ 75,266$ 74,840$ 73,426$ 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$ 6,328$ Public safety 2,672$ 2,770$ 3,368$ 3,603$ 3,539$ 3,588$ 2,913$ 3,969$ 3,766$ 4,290$ Public works 160$ 155$ 163$ 169$ 457$ 120$ 164$ 198$ 262$ 306$ Public health and sanitation -$ 35$ 31$ 36$ 33$ 39$ 42$ 37$ 43$ 46$ Culture and recreation 2,031$ 2,073$ 2,276$ 1,883$ 2,050$ 2,139$ 1,936$ 2,817$ 3,140$ 1,728$ Planning and development 93$ 198$ 95$ 114$ 101$ 240$ 267$ 144$ 153$ 158$ Operating grants and contibutions 2,751$ 3,197$ 2,798$ 3,145$ 3,381$ 3,752$ 3,163$ 3,415$ 2,907$ 4,495$ Capital grants and contributions -$ -$ 13,875$ 3,091$ -$ -$ -$ -$ -$ -$ Total governmental program revenues 11,178$ 12,140$ 26,532$ 16,216$ 13,871$ 14,458$ 13,084$ 15,723$ 16,377$ 17,351$ 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$ 3,137$ Water and sewer 12,129$ 12,362$ 12,704$ 12,949$ 14,054$ 14,073$ 14,980$ 16,520$ 17,904$ 19,099$ Sanitation 1,795$ 1,814$ 1,881$ 1,988$ 2,112$ 2,172$ 2,292$ 2,310$ 2,334$ 2,462$ Golf course 773$ 791$ 799$ 773$ 723$ 751$ 757$ 736$ 636$ 783$ Operating grants and contributions -$ 368$ -$ -$ -$ -$ -$ 202$ -$ Capital grants and contributions -$ -$ -$ -$ -$ -$ -$ -$ 3,804$ 274$ Total business type program revenues 17,058$ 17,824$ 17,728$ 18,385$ 19,678$ 19,744$ 20,932$ 22,419$ 27,784$ 25,755$ Total primary government program revenues 28,237$ 29,964$ 44,260$ 34,601$ 33,549$ 34,202$ 34,016$ 38,142$ 44,161$ 43,106$ Net (Expense) Revenue Governmental Activities (27,276)$ (25,012)$ (10,580)$ (23,176)$ (30,046)$ (32,306)$ (38,062)$ (39,405)$ (38,835)$ (35,947)$ Business-type activities: 651$ 717$ 1,076$ 1,441$ 2,442$ 1,384$ 2,529$ 2,281$ 8,156$ 5,627$ Total primary government net expense (26,625)$ (24,296)$ (9,504)$ (21,736)$ (27,604)$ (30,922)$ (35,533)$ (37,124)$ (30,679)$ (30,320)$ General Revenues and Other Changes in Net Position 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$ 8,272$ Property Taxes, Debt Service 1,732$ 1,329$ 1,351$ 1,402$ 1,471$ 1,529$ 1,711$ 2,230$ 2,779$ 2,439$ Motor Vehicle Tax 1,208$ 1,057$ 1,079$ 1,105$ 1,131$ 1,195$ 1,135$ 1,145$ 1,150$ 1,153$ Sales Tax, General Purpose 9,913$ 10,501$ 10,556$ 11,137$ 11,472$ 11,986$ 11,669$ 11,118$ 11,767$ 12,165$ Selective Sales Tax 2,114$ 2,264$ 2,280$ 2,417$ 2,484$ 2,589$ 3,380$ 4,108$ 4,080$ 4,210$ Other taxes 3,345$ 3,426$ 3,557$ 5,076$ 5,445$ 5,747$ 5,791$ 6,298$ 6,390$ 6,486$ Special Assessments 1,448$ Investment revenues 331$ 390$ 544$ 1,123$ 1,255$ 805$ 277$ 81$ 77$ 66$ Miscellaneous 1,442$ 1,084$ 1,209$ 1,044$ 890$ 812$ 505$ 565$ 872$ 660$ Transfers, net 80$ 24$ 114$ 330$ 672$ 60$ 255$ 92$ 199$ 30$ Total governmental activities 27,475$ 26,651$ 27,456$ 30,779$ 32,195$ 32,540$ 33,742$ 33,440$ 35,097$ 35,481$ Business-type activities: Investment revenues 101$ 222$ 328$ 453$ 641$ 300$ 242$ 67$ 84$ 79$ Miscellaneous 165$ 93$ 150$ 217$ 201$ 118$ 352$ 341$ 330$ 434$ Transfers, net (80)$ (24)$ (114)$ (330)$ (672)$ (60)$ (255)$ (92)$ (199)$ (30)$ Total business-type activities 186$ 291$ 364$ 340$ 170$ 358$ 339$ 316$ 215$ 483$ Total primary government 27,661$ 26,942$ 27,820$ 31,119$ 32,366$ 32,898$ 34,081$ 33,756$ 35,312$ 35,964$ Change in Net Position Governmental activities 199$ 1,638$ 16,877$ 7,602$ 2,150$ 234$ (4,320)$ (5,965)$ (3,738)$ (466)$ Business-type activities 838$ 1,008$ 1,440$ 1,780$ 2,612$ 1,742$ 2,868$ 2,597$ 8,371$ 6,110$ Total primary government 1,037$ 2,647$ 18,316$ 9,383$ 4,762$ 1,976$ (1,452)$ (3,368)$ 4,633$ 5,644$ Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2012 Fiscal Year Schedule 2 City of Salina, Kansas Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) (in 000's) 96 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 General Fund Reserved 309$ 160$ 421$ 242$ 396$ 274$ 508$ 99$ -$ -$ Nonspendable 90$ 116$ Restricted -$ -$ Committed -$ -$ Assigned 293$ 540$ Unreserved/Unassigned 6,467$ 7,151$ 6,646$ 7,983$ 6,935$ 5,756$ 4,580$ 3,518$ 3,454$ 3,172$ Total General Fund 6,776$ 7,311$ 7,067$ 8,225$ 7,331$ 6,030$ 5,088$ 3,617$ 3,837$ 3,828$ Restatement 156$ Restated Fund Balance 3,773$ All other Governmental Funds Reserved 2,096$ 2,610$ 2,369$ 2,469$ 2,796$ 3,951$ 11,092$ 6,413$ -$ -$ Nonspendable -$ -$ Restricted 3,611$ 3,319$ Committed 127$ (516)$ Assigned 4,323$ 4,087$ Unreserved/Unassigned 7,624$ (2,959)$ 156$ 42$ 2,946$ 354$ 4,024$ (1,130)$ -$ -$ Total all other governmental funds 9,720$ (349)$ 2,525$ 2,511$ 5,742$ 4,305$ 15,116$ 5,283$ 8,061$ 6,890$ Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2012 Fiscal Year Schedule 3 City of Salina, Kansas Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (in 000's) 97 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Revenues Taxes (see Schedule 5) 24,174$ 25,152$ 25,590$ 28,282$ 29,379$ 30,788$ 32,706$ 32,702$ 33,949$ 34,724$ Intergovernmental 2,731$ 5,659$ 2,785$ 3,127$ 3,363$ 3,741$ 3,153$ 3,404$ 2,901$ 4,487$ Special Assessments 1,448$ 1,340$ 1,143$ 1,207$ 1,444$ 1,178$ 1,269$ 1,385$ 1,535$ 2,315$ Licenses and permits 20$ 18$ 14$ 18$ 18$ 10$ 10$ 11$ 6$ 8$ Charges for services 6,146$ 6,364$ 7,225$ 7,099$ 7,131$ 7,415$ 6,767$ 8,934$ 9,730$ 8,484$ Investment revenue 322$ 362$ 486$ 1,021$ 983$ 490$ 210$ 64$ 69$ 47$ Reimbursements 52$ 465$ 650$ 406$ 153$ 39$ 140$ 70$ 32$ 36$ Miscellaneous 1,208$ 509$ 501$ 488$ 650$ 597$ 438$ 448$ 599$ 537$ Total revenues 36,100$ 39,870$ 38,392$ 41,648$ 43,120$ 44,258$ 44,693$ 47,018$ 48,821$ 50,638$ Expenditures General Government 2,208$ 2,685$ 2,706$ 2,721$ 2,842$ 3,600$ 3,007$ 3,549$ 3,461$ 3,574$ Public Safety 12,208$ 12,724$ 13,673$ 14,309$ 16,175$ 17,945$ 17,883$ 18,229$ 18,118$ 18,564$ Public Works 5,106$ 5,157$ 5,508$ 5,712$ 6,171$ 6,593$ 6,643$ 6,634$ 6,569$ 7,004$ Public Health and Sanitation 882$ 981$ 1,067$ 1,178$ 1,245$ 1,276$ 1,353$ 1,332$ 1,330$ 1,343$ Culture and Recreation 4,355$ 4,470$ 4,776$ 4,653$ 5,204$ 5,142$ 4,947$ 5,777$ 5,900$ 4,449$ Planning and Development 4,405$ 4,025$ 2,607$ 2,588$ 2,707$ 3,377$ 3,269$ 3,609$ 3,344$ 3,256$ Miscellaneous 20$ -$ -$ -$ -$ -$ -$ 32$ -$ -$ Capital Outlay 5,165$ 10,824$ 8,580$ 10,783$ 7,615$ 10,581$ 17,707$ 18,603$ 9,847$ 7,327$ Debt Service Principal 7,179$ 2,611$ 2,534$ 2,625$ 4,806$ 2,812$ 4,667$ 5,959$ 4,411$ 8,592$ Interest 1,063$ 866$ 755$ 1,009$ 1,266$ 1,567$ 1,596$ 2,258$ 2,084$ 2,103$ Deposit to Escrow -$ -$ -$ -$ -$ -$ -$ 107$ -$ 92$ Total Expenditures 42,591$ 44,343$ 42,208$ 45,578$ 48,031$ 52,892$ 61,072$ 66,089$ 55,064$ 56,304$ 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$ 6,150$ Bond and Note Premium 80$ 1,369$ 47$ 23$ 60$ Transfers in 600$ 1,066$ 1,399$ 2,245$ 2,349$ 2,823$ 3,617$ 5,076$ 7,994$ 3,488$ Transfers out (600)$ (1,087)$ (1,365)$ (2,055)$ (1,737)$ (2,763)$ (3,422)$ (4,984)$ (5,692)$ (3,458)$ Issuance Costs (9)$ (2)$ -$ -$ -$ -$ -$ -$ -$ -$ Other -$ (5,389)$ -$ -$ 91$ -$ -$ -$ 156$ -$ Total other financing sources (uses)8,591$ 1,296$ 4,244$ 5,075$ 7,248$ 7,385$ 25,259$ 7,173$ 9,046$ 6,240$ Net change in fund balance 2,100$ (3,177)$ 428$ 1,145$ 2,337$ (1,250)$ 8,880$ (11,898)$ 2,803$ 574$ Debt service as a percentage of non-capital expenditures 28% 12% 11% 12% 18% 12% 17% 21% 17% 28% Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2012 (modified accrual basis of accounting) (in 000's) Schedule 4 Fiscal Year City of Salina, Kansas Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years 98 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Real Estate 7,417$ 7,677$ 7,904$ 8,373$ 8,662$ 9,084$ 9,971$ 9,756$ 10,288$ 10,466$ Delinquent 177$ 228$ 213$ 173$ 185$ 263$ 760$ 278$ 274$ 245$ Motor Vehicle 1,208$ 1,057$ 1,079$ 1,105$ 1,131$ 1,120$ 1,135$ 1,145$ 1,150$ 1,153$ General Sales 9,913$ 10,501$ 10,556$ 11,137$ 11,472$ 11,986$ 11,669$ 11,117$ 11,767$ 12,165$ Selective Sales 2,114$ 2,264$ 2,280$ 2,417$ 2,484$ 2,589$ 3,380$ 4,108$ 4,080$ 4,210$ Other Taxes 3,345$ 3,426$ 3,557$ 5,076$ 5,445$ 5,747$ 5,791$ 6,298$ 6,390$ 6,485$ Total Taxes 24,174$ 25,152$ 25,590$ 28,282$ 29,379$ 30,788$ 32,706$ 32,702$ 33,949$ 34,724$ Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2012 Last Ten Fiscal Years (modified accrual basis of accounting) (in 000's) Fiscal Year Schedule 5 City of Salina, Kansas Tax Revenues by Source, Governmental Funds 99 Assessed ValueFiscal (Budget) Year Real EstatePersonal Property State AssessedVehicle Assessed ValueExcluding Motor VehiclesMotor Vehicle (Note 1)Taxable Assessed ValueEstimated Total Market Value (Note 2)Assessed Value to Est. Market Value2003 267,175,443 35,093,154 14,866,008 317,134,605 24.092 45,965,839 363,100,444 2,296,900,695 15.812004 277,456,813 35,386,133 15,750,780 328,593,726 24.013 46,679,982 375,273,018 2,368,264,683 15.852005 282,517,284 35,410,526 17,334,372 335,262,182 24.063 48,687,121 383,949,303 2,529,377,135 15.182006 296,537,399 38,662,356 17,624,030 352,823,785 23.999 49,367,870 402,191,655 2,229,131,633 18.042007 321,695,326 39,691,690 16,530,171 377,917,187 23.789 50,551,299 428,468,486 2,416,543,103 17.732008 342,045,389 35,089,042 15,594,056 392,728,487 23.959 50,548,706 443,277,193 2,612,229,468 16.972009 356,678,712 28,373,980 14,929,456 399,982,148 25.886 51,351,656 451,333,804 2,914,775,730 15.482010 358,979,211 24,760,806 13,730,609 397,470,626 25.855 50,330,252 447,800,878 2,893,359,541 15.482011367,750,803 19,918,188 14,685,585 402,354,576 26.022 47,406,062 449,760,638 2,869,531,746 15.672012369,416,422 18,654,394 15,779,466 403,850,282 26.022 47,553,744 451,404,026 2,884,188,981 15.65Note 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 relativeNote 3: The Direct rate is expressed in dollars per thousand dollars of assessed value.Source: Saline County Clerk100 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 6City of Salina, KansasAssessed and Estimated Actual Value of Taxable PropertyLast Ten Fiscal Years City of Salina Saline County USD 305 (2) Other (1) TotalFiscal (Budget) YearOperating MillageDebt Service MillageTotal City MillageOperating MillageDebt Service MillageTotal County MillageOperating MillageDebt Service MillageTotal USD Millage Other2003 18.581 5.511 24.092 25.667 25.657 38.569 18.815 57.384 9.684 116.8172004 20.017 3.996 24.013 28.081 28.081 38.288 18.344 56.632 9.848 118.5742005 20.055 4.008 24.063 28.874 28.874 42.175 17.491 59.666 10.984 123.5872006 20.001 3.989 23.990 28.579 28.579 40.136 15.046 55.182 10.960 118.7112007 19.835 3.954 23.789 27.955 27.955 41.903 13.349 55.252 10.726 117.7222008 20.047 3.912 23.959 27.435 27.435 42.761 12.229 54.990 10.775 117.1592009 21.749 4.137 25.886 29.347 29.347 46.339 12.208 58.547 10.971 124.7512010 20.082 5.773 25.855 31.303 31.303 45.341 13.155 58.496 12.401 128.0552011 19.236 6.786 26.022 31.432 31.432 45.818 13.095 58.913 12.131 128.4982012 20.326 5.946 26.272 32.576 31.432 47.127 11.693 58.820 11.978 128.502Source: 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.101 (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 7City of Salina, KansasDirect and Overlapping Property Tax RatesLast Ten Fiscal Years(rate per $1,000 of assessed value) Taxpayer Type of BusinessAssessed Valuation% of Total Valuation RankAssessed Valuation% of Total Valuation RankSchwan's Sales Pizza Manufacturing 7,383,290$ 2.12% 1 8,050,871$ 1.78% 1Western Resources Utility 6,892,106 1.98% 2 7,852,360 1.74% 2Warmack, Salina Partnership (IPFOA) (Now Garrison Salina) Retail Shopping Mall 5,922,724 1.70% 3 6,160,267 1.36% 3Salina Regional Health CenterHospital and Medical Offices 3,698,229 1.06% 6 4,317,497 0.96% 4Menard Inc. Home Improvement 3,552,360 0.79% 5Gateway Properties Shopping Mall (Midstate) 3,551,440 0.79% 6Wal-Mart Stores, Inc. Discount Retail Stores 4,066,871 1.17% 5 3,458,708 0.77% 7Kansas Gas Service Utility 2,515,059 0.72% 8 3,352,360 0.74% 8Southwestern Bell Telephone Utility 4,951,865 1.42% 4 2,464,079 0.55% 9Great Plains Manufacturing Manufacturing 2,066,176 0.59% 9 2,346,169 0.52% 10Lowe's Home CenterBuilding supply Center 3,038,352 0.87% 7Dillon's Grocery Chain 1,956,466 0.56% 10Combined Valuation of the Ten Largest Taxpayers 42,491,138$ 45,106,111$ City Valuation 348,064,983$ 451,404,026$ Percent of Total City Assessed Valuation (1) 12.21% 9.99%Source: Saline County Clerk's Office1022012 (2011 Assessed Value)2003 (2002 Assessed Value)Schedule 8City of Salina, KansasPrincipal Property Tax PayorsCurrent Year and Ten Years Ago Fiscal (Budget) Year Taxes Levied for the fiscal year Amount Percentage Delinquent Collections (1) Amount Percentage of levy 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% 2012 10,570,420 10,411,299 98.5% 245,086 10,656,385 100.8% Source: Saline County Treasurer's Office Last Ten Fiscal Years (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 City of Salina, Kansas Property Tax Levies and Distributions 103 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012City 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%/0.40% 0.40% 0.40% 0.40%County-wide Tax Rate1.00% 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)63.20% 62.20% 61.60% 61.81% 61.92% 62.31% 62.46% 61.58% 63.34% 61.72% 104Schedule 10City of Salina, KansasDirect Sales Rate by Taxing EntityLast Ten Fiscal YearsIn November 2008, the voters approved an increase in the SpecialIn 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. Fiscal YearSource: Kansas Department of RevenueIn November 2008, the voters approved an increase in the Special Purpose Tax rate from .25% to .40%, to be effective April 1, 2009. Last Ten Fiscal YearsAccts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts Water Accts WaterRate Class Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed Sold Billed SoldResidential 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 1,194,629 17,893 1,225,931 Commercial 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 1,574 372,499 1,565 38,547 Industrial 43 205,574 43 203,977 43 181,325 43 180,900 46 237,698 48 203,491 46 152,910 44 183,166 44 180,277 42 174,595 Government 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 55,910 99 54,618 Apartment 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 72,562 169 70,263 Schools 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 53,679 81 57,027 Industrial Special 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 44,051 1 40,448 Consumed in Production 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 22,728 12 19,266 Rural Water 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 28,621 1 25,930 Hospitals 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 15,674 10 17,896 Religious/Non Profit 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 5,690 38 5,399 Other Taxable Deductions 6 11,105 6 10,690 5 8,995 5 6,630 5 9,975 4 8,023 - - - - - 699 0 - Engineering Studies 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 3,754 8 6,104 Providing Taxable Service 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 4,827 2 6,118 Sale of Component Parts 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 5,454 8 5,726 Fire Hydrant 3 5,015 3 2,887 4 5,232 3 1,598 2 495 3 1,147 2 1,032 3 2,424 3 1,389 4 2,533 Industrial Consumed in Produ 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 3,260 3 3,543 Sales of Farm Equipment 1 203 1 131 1 213 1 308 1 180 1 256 1 205 1 213 1 56 1 83 19,368 2,101,921 19,531 2,010,864 19,730 2,088,534 19,789 2,024,483 19,908 1,937,333 19,971 1,854,091 19,893 1,818,879 19,887 1,970,202 19,954 2,065,759 19,9372,100,966 Water Rate Schedule:Monthly Meter Charge (5/8") 2.89$ 3.05$ 3.21$ 3.38$ $3.57 3.75$ 4.44$ 4.51$ $4.60 $4.74Commodity Charge (per 000 gal.):0 - 2000 gal. 2.09$ 2.13$ 2.16$ 2.21$ $2.42 2.54$ 2.34$ 2.55$ $3.77 $3.882001 - 10,000 gal 1.87$ 1.91$ 1.94$ 1.99$ $2.20 2.31$ Over 10,000 gal. 1.68$ 1.71$ 1.73$ 1.77$ $1.97 2.07$ Excess Use Charge4.68$ 5.10$ $7.54 $7.76Wastewater Rate Schedule:Monthly Base Charge 2.75$ 2.89$ 3.03$ 3.18$ $3.34 3.51$ 6.31$ 6.42$ $6.57 $6.77Unit cost (per 000 gal.): 1.99$ 2.11$ 2.23$ 2.36$ $2.50 2.63$ 2.88$ 3.08$ $4.48 $4.61Water sold is expressed in thousands of gallons.Number of Accounts billed is the annual number of billings for each class divided by 12.Monthly meter charge increases with the size of the meter.Residential Wastewater is calculated based on Winter Quarter water consumption. Other accounts are based on monthly water consumption.2008 Water Consumption Rate Structure changed from a decreasing tier structure to one rate and Excess Use Charge which is double the consumption rate**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.20122011201020092007105Schedule 11City of Salina, KansasWater Sales by Class of Customer20062005 20082003 2004 Fiscal YearGeneral Obligation BondsCapital LeaseTemporary NotesGeneral Obligation BondsWater Revenue BondsLoans PayableTemporary NotesTotal Primary GovernmentPercentage of Personal Income Per Capita2003 20,744,309 60,000 4,250,000 5,228,397 6,215,000 8,082,199 2,533,972 47,113,877 3.4% 1,023.702004 19,257,270 41,150 6,875,000 7,400,295 5,615,000 7,777,264 - 46,965,979 3.3% 1,024.002005 21,202,921 20,944 2,700,000 6,258,456 4,990,000 7,460,602 - 42,632,923 2.9% 927.53 2006 21,497,408 - 9,200,000 5,175,780 4,350,000 7,130,852 - 47,354,040 2.9% 1,030.422007 25,436,632 - 7,625,000 3,888,368 3,710,000 6,786,743 - 47,446,743 2.7% 1,010.802008 29,869,930 - 5,005,000 2,780,069 3,030,000 6,428,759 - 47,113,758 2.5% 1,014.122009 52,067,590 - - 2,320,000 2,320,000 5,862,516 - 62,570,106 3.5% 1,346.092010 53,120,952 - 2,500,000 8,614,576 1,580,000 - - 65,815,528 3.8% 1,425.202011 55,225,670 - 3,400,000 7,417,907 16,193,925 - - 82,237,502 4.3% 1,723.802012 49,109,575 - 1,485,000 9,613,926 15,850,228 - - 76,058,729 3.8% 1,587.53Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2012106Governmental Activities Business-Type ActivitiesSchedule 12City of Salina, KansasRatio of Outstanding Debt by TypeLast Ten Fiscal Years Fiscal YearGeneral Obligation Bonds Capital LeaseTemporary Notes TotalLess Debt Service FundNet General Bonded DebtPercentage of Actual Taxable Value of Per Capita2003 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 2012 58,723,501 - 1,485,000 60,208,501 582,412 59,626,089 13.2% 1,244.54 Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2012General Bonded Debt OutstandingSchedule 13City of Salina, KansasRatio of Net General Bonded Debt OutstandingLast Ten Fiscal Years107 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 35,739,543$ 100% 35,739,543$ Overlapping: Salina Airport Authority 25,080,000 100% 25,080,000 Saline County - 76% - USD 305 37,355,000 94% 34,971,751 Total Overlapping Debt 62,435,000 60,051,751 Total Direct and Overlapping Debt 98,174,543 95,791,294 Per Capita Direct and Overlapping debt 1,999.40$ Source: Saline County Clerk Schedule 14 Percentage of debt applicable to the City of Salina is based on the proportion that the assessed valuation of the City of Salina bears to the assessed valuation of the overlapping entity. As of December 31, 2012 108 Assessed Valuation: 451,404,026$Debt Limit (30% of Assessed Value) 135,421,208 Debt Applicable to limit:Total Bonded Debt 76,058,729 50,594,575Less GO Debt Attributable to Exempt Purposes 9,613,926 Less Revenue Bonds 15,850,228 Less Temporary Notes - Less Fund Balance designated for Debt Service 582,412 Total Debt Applicable to Limitation 50,012,163 Legal debt margin 85,409,045 2003200420052006200720082009201020112012Debt Limit 108,930,133$ 112,581,905$ 115,184,791$ 120,657,497$ 128,539,768$ 133,224,043$ 135,400,141$ 134,340,263$ 134,928,191$ 135,421,208$ Total net debt applicable to limit 31,172,348 32,485,503 28,774,79228,774,79235,739,54336,862,255 53,652,29958,411,18557,747,03250,012,163Legal debt margin 77,757,785 80,096,402 86,409,99991,882,70592,800,22596,361,788 81,747,84275,929,07877,181,15985,409,045Total net debt applicable to the limit as a percentage of debt limit29% 29% 25% 24% 28% 28% 40% 43% 43% 37% 109Fiscal YearLegal Debt Margin Calculation for 2012Schedule 15City of Salina, KansasLegal Debt MarginLast 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 17,905,056 12,963,891 4,941,165 1,580,000 496,760 238% 2012 19,098,626 13,963,941 5,134,685 340,000 596,992 548% Source: City of Salina Comprehensive Annual Financial Reports, 2003 - 2012 Water/Sewer Revenue Bonds Schedule 16 City of Salina, Kansas Pledged Revenue Coverage Last Ten Fiscal Years 110 Fiscal YearPopulationPer Capita Personal Income (Saline Personal Income, Salina (interpolated)Unemployment RateLabor Force, Saline County2003 46,023 29,755 1,369,414,365$ 4.6% 30,086 2004 45,865 31,175 1,429,841,375$ 4.8% 30,600 2005 45,964 32,387 1,488,636,068$ 4.4% 30,358 2006 45,956 35,759 1,643,340,604$ 3.7% 30,539 2007 46,940 36,781 1,726,500,140$ 3.3% 30,843 2008 46,458 40,675 1,889,679,150$ 3.9% 29,222 2009 46,483 38,204 1,775,836,532$ 5.7% 26,806 2010 46,180 37,978 1,753,824,040$ 6.4% 26,155 2011 47,707 39,910 1,903,986,370$ 6.3% 26,556 2012 47,910 41,842 2,004,650,220$ 5.1% 30,206 Sources:Population: Kansas Division of the Budget.Personal income for Salina is derived from the population and per capita personal income for Saline CountyPer Capita Personal income as reported by the Bureau of Economic analysis, as of 6/27/20132012 Per Capita Personal Income projected111Schedule 17City of Salina, KansasDemographic and Economic StatisticsLast Ten Fiscal Years 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% 1,800 1 6.2% USD # 305 Public School System 935 3 3.2% 1,659 2 5.7% Salina Regional Health Center Health Care 1,082 2 3.7% 1,300 3 4.4% Exide Battery's Automotive Battery Manufacturer 825 4 2.8% 750 4 2.6% Phiilips Lighting Co. Fluorescent Lamps 620 6 2.1% 490 5 1.7% City of Salina City Government 509 7 1.7% 465 6 1.6% Walmart Retail 421 7 1.4% Dillon Stores 343 8 1.2% Solomon Corp Electrical Equipment 324 9 1.1% Saline County County Government 277 10 0.9% Great Plains Manufacturing Agrcultural and Landscaping Equipment 497 8 1.7% El Dorado National Busses/Recreational Vehicles 264 9 0.9% Raytheon Aircraft Aircraft Manufacturing 653 5 2.2% OCCK Assembly 263 10 0.9% Total 7,685 26.3% 7,829 26.8% Source: Salina Chamber of Commerce 2003 2012 Schedule 18 City of Salina, Kansas Principal Employers Current Year and Nine Years Ago 112