Audit Report - 1996
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
of the
SALINA AIRPORT AUTHORITY
For the Fiscal Year Ended December 31, 1996
Prepared by the Management
of the
Salina Airport Authority
/~II~ Salina Airport Authority
4~" ~"Salina Municipal Airport I Industrial Center
SALINA AIRPORT AUTHORITY
TABLE OF CONTENTS
COMPREHENSIVE ANNUAL FINANCIAL REPORT
For the Fiscal Year Ended December 31, 1996
INTRODUCTORY SECTION
letter of Transmittal
Principal Officers
Authority Staff Members
Organizational Chart
Certificate of Achievement
Salina Municipal Airport Aerial View
Page
1
10
11
12
13
14
FINANCIAL SECTION
Independent Auditor's Report
15
Financial Statements:
Comparative Balance Sheets
Comparative Statements of Operations and Changes
in Retained Earnings
Comparative Statements of Cash Flows (Direct Method)
Reconciliation of Operating Loss to Net Cash Flows
from Operating Activities
Notes to Financial Statements, December 31 1995 and 1994
18-19
20
21
22
23
Supplemental Information:
Schedules of Operations and Changes in Retained Earnings
Capital Expenditures
General Obligation Economic Development Bonds - Series 1990-A
General Obligation Economic Development Bonds - Series 1990-B
leasehold Revenue Bonds - Series 1991
General Obligation Bonds - Series 1993A
General Obligation Bonds - Series 1993B
Insurance in Force
Schedule of Federal Assistance
Comparison of Gross Cash Balances with Depository Security
36-37
38
39
40
41
42
43
44
45
46
Page
ST A TISTICAL SECTION
Operating Revenue History
Operating Expense History
Federal Financial Assistance History
Capital Expenditure History
Revenue Bond Coverage
Principal Customers
Local Government Property Tax Rates, Direct & Overlapping
Property Tax Revenue
Air Traffic, Fuel Flowage, Enplanements Trends
Major Employers
Salina Population, Demographic and Labor Statistics
47
48
49
50
51
52
53
54
55
56
57
OTHER INDEPENDENT AUDITOR'S REPORTS
Independent Auditor's Report on Internal Control Structure
Based on an Audit of Financial Statements Performed
in Accordance with Government Auditing Standards
59
Independent Auditors's Report on Compliance Based on an Audit
of Financial Statements Performed in Accordance with
Government Auditing Standards
61
Independent Auditor's Report on Schedule of Federal
Financial Assistance
62
Independent Auditor's Report on the Internal Control Structure
Used in Administering Federal Financial Assistance Programs
63
Independent Auditor's Report on Compliance with the General
Requirements Applicable to Federal Financial Assistance Programs
66
Independent Auditor's Report on Compliance with Specific
Requirements Applicable to Major Federal Financial Assistance
Program Transactions.
67
Schedule of Independent Auditor's Findings
68
"
~ Sali na Ai rport Authol-ity
d...~ Salina Municipal Airport !Industrial Center
Chairman Vice-Chairman Secretary Treasurer Assistant Secretary I Treasurer
CHARLES STEVENS, JR. JAMES c. MAES R. MICHAEL BEATTY FRIEDA MAl PAT BOLEN
Executive Director: TIMOTHY F. ROGERS, A.A.E. Operations Director: DONALD C. KNEUBUHL Board Attorney: GREG A. BENGTSON
May21,1997
Salina Airport Authority Board of Directors
3237 Arnold Ave.
Salina, KS 67401
To the Board of Directors of the Salina Airport Authority:
The Comprehensive Annual Financial Report (CAFR) of the Salina Airport Authority (the "Authority")
for the fiscal year ended December 31, 1996 is hereby submitted in accordance with the Kansas
Statutes Annotated (K.S.A. 27-324). As required by the statute, the City of Salina will be furnished
copies of the Authority's 1996 CAFR. Responsibility for both the accuracy of the data presented
and the completeness and faimess of the presentation, including all disclosures, rests with the
Executive Director of the Authority. To the best of my knowledge and belief, the data as presented
is accurate in all material aspects, that it is presented in a manner designed to fairly set forth the
fiscal position and results of the operation of the Authority as measured by its financial activity, and
that all disclosures necessary to enable the reader to gain maximum understanding are included in
the report.
ORGANIZATION OF THE REPORT
The Authority applies the standards for preparation of local government financial reports
recommended by the Government Finance Officers of the United States and Canada (GFOA)- The
Authority's 1996 Comprehensive Annual Financial Report is presented in four sections:
Introductory Section - contains this letter of transmittal, a list of the Authority's
principal officers, a listing of Authority staff members, an organizational chart, the
GFOA Certificate of Achievement for Excellence in Financial Reporting for fiscal
year 1995, and an aerial photo of the Salina Municipal and Airport Industrial Center.
Financial Section - includes the independent auditor's report, the Authority's 1996
financial statements and supplemental schedules.
Statistical Section - includes selected financial and demographic information which
highlights economic and demographic trends.
Other Independent Auditor's Reports Section - includes reports concerning the
Authority's internal control structure, compliance with Comptroller General of the
United States government audit standards and compliance with audit standards due
to receipt of federal financial assistance, reporting on the presentation of the
schedule of federal financial assistance, reporting on the internal control structure
used in administering federal financial assistance programs, compliance with
general requirements applicable to federal financial assistance programs, and
compliance with specific requirements applicable to major federal financial
assistance program transactions.
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3237 ARNOLD. SALINA, KS 67401-8190. Off: (913) 827-3914. Fax: (913) 827-2221 . E-mail: saa@salair.org
REPORTING ENTITY
The Salina Airport Authority is a body corporate and politic. The Authority was created by the City
of Salina in April, 1965 (Sec. 4-16, Salina City Code) pursuant to the authority granted by the City
by the surplus property and public airport authority act of the State of Kansas (KSA ~?-315 et seq.)
The Authority was created for the purpose of accepting as surplus property portions of the former
Schilling AF.B. which was closed by the United States Department of Defense in June, 1965. By
quitclaim deed the Authority received over 3,500 acres of land and numerous buildings for the
purpose of operating and developing the Salina Municipal Airport and the Salina Airport Industrial
Center. The Authority is managed and controlled by a five-member Board of Directors appointed
by the Salina City Commission.
The Board appoints the Executive Director, who is the chief executive and administrative officer of
the Authority. The Executive Director hires the remaining employees of the /I.uthority. The
Executive Director and his staff of twelve employees manage and operate the Salina Municipal
Airport and the Salina Airport Industrial Center.
The Salina Municipal Airport is the only commercial service airport serving Salina/Saline County and
the 22-county area which comprises North Central Kansas. The Airport also services the corporate,
business, private aviation and flight training needs of industry, business and individuals in the area.
The Airport is also used by the Kansas State University - Salina Aeronautical Technology
Department. The campus of K-State Salina is located adjacent to the airport. The K-State Salina
Department of Aeronautical Technology offers degrees in professional flight trainin~ , airframe and
power plant maintenance, and avionics technology.
The Salina Airport Industrial Center is home for sixty-five businesses and organizations. Forty-four
of the businesses and organizations are tenants of the Authority. One of the primary functions of
the Authority is to facilitate the continued growth of jobs and payroll at the Airport Industrial Center.
The Authority works in partnership with the City of Salina, Saline County and the Salina Area
Chamber of Commerce for the retention of existing business and industry and the recruitment of
new business and industry.
ECONOMIC CONDITIONS AND OUTLOOK
Local Economy
The Salina/Saline County economy has continued to demonstrate economic strength, as compared
to other regions of the state. Growth in the areas of agriculture, manufacturing, wholesale trade,
services, construction and especially retail trade, confirm Salina's position as one of Kansas'
strongest regional economic centers.
At the November 8, 1996 Business and Economic Outlook Conference sponsored by the Salina
Area Chamber of Commerce, Kevin W. Boyd, Assistant Professor of Business and Economics at
Kansas Wesleyan University, described Salina/Saline County as follows:
Saline County's status as a dominant center for retail trade remains unchallenged
and unaltered for 1996. In virtually every measure Saline County (and the City of
Salina) outperforms and outshines not only neighboring counties but the majority of
Kansas counties. Recent research into the comparative economic strenqths of
Kansas counties; examining issues of per-capita wealth, incomes, employmønt and
retail sales show our local economy to be healthier than the state as a whole and all
but a few individual counties.
-2-
Despite trends indicating a growing relative importance of the retail and service
sectors, manufacturing appears to be creating new jobs, possibly reversinç¡ a brief
weakness in both number an proportion employed in manufacturing. Overall, Saline
county has seen additional improvements in areas of employment, the jobless rate,
and the size of the labor pool.
One has to search long and hard to find any potential negatives in Saline County's
economic outlook. Perhaps the greatest danger this economy faces in the
foreseeable future would be an end to the nations five year economic expansion.
And while the business cycle has yet to peak, any increase in the otherwise
comfortable rates of interest or a resurgence of inflation could choke-off the
economic activity so crucial to the investment and job creation that's driven this
economy in recent years.
Economic Condition of the Airport and Airport Industrial Center
As of December 31, 1996 businesses and organizations at the Airport and Airport Industrial Center
employed an estimated 4,803 employees. Seventy percent of the total number of employees live
within the Salina city limits. Fourteen percent of Airport Industrial Center employees live within
Saline County and seventeen percent live outside Saline County. Total payroll for 1996 was an
estimated $117,761,805. In 1996 local purchases by Airport and Airport Industrial Center
businesses and organizations totaled an estimated $65,938,600. In 1996 capital expenditures
equaled $24,985,673. Less than 54% of total business volume was local, which means that over
46% of the goods and services produced by all businesses are exported outside of the City of
Salina.
In 1996 the Airport and Airport Industrial Center attracted an estimated 38,646 visitors whose
average stay was three days. Airport and Airport Industrial Center visitors expended an estimated
$2,027,850 while in Salina.
Future Economic Outlook
The future economic outlook for both Salina and the Authority continues to look favorable.
Continued growth in service, retail and manufacturing sectors is expected. The Salina Area
Chamber of Commerce forecasts that approximately 500 to 600 new jobs will be added to the
economy during 1997. Airport Industrial Center businesses such as Raytheon Aircraft Company,
Tony's Pizza, Inc., Score Rite, Salina Vortex, Geocore Environmental Servicos, and FedEx
continue to work on facility expansion plans. These expansions will result in additional jobs and
payroll.
INITIATIVES AND DEVELOPMENT
Salina Municipal Airport
Completed Federal Aviation Administration (FAA) Airport Improvement Project No. 12 & 13.
The $1,482,170 project consisted of the installation of a prefabricated underdrain system
on a portion of runway 17/35, taxiway A, taxiway B and taxiway C; the construction of new
airport perimeter fencing; the acquisition of runway protection zone land; and the acquisition
of a new aircraft rescue and firefighting vehicle. A FAA Airport Improvement Program Grant
provided $1,333,953.75 in project funds.
Completed Federal Aviation Administration (FAA) Airport Improvement Project No. 17. The
$1,342,628.61 project was the third of a five-phase program to rehabilitate aircraft parking
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apron at the Salina Municipal Airport. A FAA Airport Improvement Program Grant provided
$1,208,365.75 in project funds.
Supported the National Aeronautics and Space Administration (NASA) SUCCESS mission.
Four aircraft and approximately 200 researchers and scientists were based at the Salina
Municipal Airport for five weeks in April and May.
Salina Airport Industrial Center
Supported building expansions, new building construction, and expansions completed or
started by the following firms:
H & H Delivery
Coronado Engineering
New Hangar Lease
Option to purchase 9.459 acres
for construction of a new manu-
facturing facility.
land lease
Building Lease
Building lease
Warehouse Lease
Building Lease
Kansas Highway Patrol
TVCN
Kansas Wing, Civil Air Patrol
Schwan's Sales Enterprises
Exide Corporation
Completed the preliminary plat phase of a replat of the Airport Industrial Center.
In partnership with the City of Salina, completed the development of a conæptual plan for
the realignment and reconstruction of approximately five miles of Airport Industrial Center
secondary streets.
In partnership with the Salina Area Chamber of Commerce, completed plans and
specifications for a planned and approved industrial building.
Financial Affairs
Adoption of a 1.275 mill levy to match federal funds for airfield improvements ($271,112) in
1997.
Staff Accomplishments
SAA staff members completed 138.5 hours of training through the Airport Training and
Safety Institute (ATSI). ATSI recognized the staff's efforts with its 1996 Award of
Excellence.
Environmental
Assisted the U.S. Army Corps of Engineers to initiate the environmental investigation of over
forty areas of interest associated with a remedial investigation. The purpose of the
investigation is to determine whether the Corps of Engineers needs to undertake
environmental remediation due to former Department of Defense activity during the period
of time the Department operated Schilling Air Force Base which is the predecessor of the
Salina Airport Industrial Center.
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INTERNAL CONTROL STRUCTURE AND BUDGETARY CONTROLS
The Authority follows generally accepted accounting principles applicable to governmental unit
enterprise funds. Accordingly, the financial statements are prepared on the accrual basis.
Management of the Authority is responsible for establishing and maintaining an internal control
structure designed to ensure that the assets of the Authority are protected from loss, theft, or
misuse and to ensure that adequate accounting data is compiled to allow for the preparation of
financial statements in conformity with generally accepted accounting principles" The internal
control structure is designed to provide reasonable, but not absolute, assurance that these
objectives are met. The concept of reasonable assurance recognizes that: (1) the cost of a control
should not exceed the benefits likely to be derived; and (2) the valuation of cos:ts and benefits
requires estimates and judgments by management.
An annual budget is prepared in accordance with the Authority's By-laws. The Authority is
specifically exempt from the budget laws of the State of Kansas (K.S.A. 27-322). The Authority is
not required to demonstrate statutory compliance with its annual operating budget. Accordingly,
budgetary data is not included in the accompanying financial statements.
RESULTS OF OPERATIONS
Revenues
The operating revenues of the Authority decreased 0.96% from the previous year. The decrease in
rental revenues is the result of decreases in industrial building occupancy. The increase in fixed
base operator (F.B.O.) fees is due to higher fuel sales by the Authority's two F.B.O.'s and corporate
hangar tenants. The decrease in landing fees is due to decreased flights by US Air Express. Other
operating revenues increased due to increases in commissions received from car rental agencies
located in the Airport Terminal building, and $37,500 of insurance proceeds received due to the
destruction of an Authority warehouse by fire.
A summary of operating revenues follows:
Increase Percent
(Decrease) Increase
Operating Revenues 1995 1996 From 1995 (DecrealS.el
Rental revenues $1,048,563 $1,038,467 $(10,096) -0.96%
Fixed base operator 98,429 152,393 53,964 +54.83%
Landing fees 13,714 9,055 (4,659) -33.97%
Gain (loss) on sale of assets (24,024) 0
Other operating revenues 15.637 67.723 52.086 +333.09%
Total $1.152.319 $1 .265.638 $113.319 +9.8~
Excenses
Total operating expenses before depreciation increased 4.47%. Office and administrative
expenses increased 3.25% due to increases in office salaries, office supplies, legal and accounting,
FICA tax, Kansas unemployment tax, employees' retirement, telephone expense, airport promotion,
property taxes, dues and subscriptions, and other administrative expenses. Maintenance expenses
increased 6.04% due to increases in maintenance salaries, building maintenance, grounds
maintenance, fire department expense, utilities and other maintenance expenses.
-5-
A summary of operating expenses follows:
Operating Expenses
Office and Administration
Maintenance
Total
Increase Percent
(Decrease) Increase
1995 1996 From 1995 (Decrease)
$481,914 $497,561 $ 15,647 +~3.25%
375.594 398.287 22.693 +6.04%
$857.508 $895.848 $ 38.340 +4.47%
FIDUCIARY OPERATIONS
In 1991 the Authority entered into an Interlocal Cooperative Agreement with the Kansas Board of
Regents, Kansas State University, and the City of Salina. Under the agreement, the City transfers
to the Authority the proceeds from a 1/2 cent retail sales tax. The funds are designated for capital
improvements to the campus of Kansas State University--Salina, College of Technology located at
the Airport Industrial Center. In accordance with the terms of the interlocal agreement, the
Authority is responsible for assuring that the sales tax proceeds are expended in a manner
consistent with specific project budgets previously approved by the Salina City Commission. During
1996, the Authority concluded its obligations under terms of the Interlocal Cooperative Agreement
and paid out the remaining $116,838.00 of sales tax proceeds to Kansas State University.
DEBT ADMINISTRATION
The outstanding long-term debt of the Authority was $3,360,000 at December 31, 1996. This debt
consists of building revenue bonds, general obligation bonds, and leasehold revenue bonds of the
Authority. Maturities range from 2003 through 2010 and interest rates range from 3.4'}lo to 8.5%.
Both principal and interest are payable from proceeds of direct financing leases and the general
revenues of the Authority. Details are shown in Note 7: LONG-TERM DEBT.
CASH MANAGEMENT
All cash temporarily idle during 1996 was invested by the Executive Director of the Authority in
short-term investments to attain the highest possible return consistent with the Authority's liquidity
needs. All investments are in compliance with K.S.A. 12-1675 which controls the investment of
public funds by Kansas governmental units. All funds are deposited daily and all accounts are
interest bearing.
RISK MANAGEMENT
The Authority is exposed to risks of loss associated with the operation of a public use airport and
the operation of an airport industrial center. To handle the associated risks of loss, the Authority
uses available tort liability legislation and purchases the appropriate types of insurance coverage. It
is the policy of the Authority to eliminate or transfer risk of loss where possible.
The Kansas Tort Claims Act (K.S.A. 75-6101 et seq.) generally limits tort liability for Kansas
governmental entities. The maximum liability for claims as specified by the Act is $500,000 for any
number of claims arising out of a single occurrence or accident. For wrongful acts Kansas
govemmental entities or their employees are exempted from liability.
-6-
The Authority carries $500,000 of comprehensive general liability insurance which matches the limit
established by the Kansas Tort Claims Act. During 1996 the Authority carried $6,407,700 of
insurance on airport commercial properties.
The Authority's commercial property insurance included $1,724,989 in loss of rents coverage. All
contractors and lessees are required to carry amounts of insurance with limits and deductibles
approved by the Authority. A schedule of insurance in force at December 31, 1996 is included in
this report.
In addition, the Authority uses various risk management techniques. All contractors and lessees
are reviewed by the Authority's legal counsel. All contractors and subcontractors are required to
submit evidence of insurance coverage naming the Salina Airport Authority and thø City of Salina
as named additional insured.
INDEPENDENT AUDIT
Pursuant to K.S.A. 27-324, an audit of the books, accounts and financial statements has been
completed by the Authority's independent certified public accountants, Harrison & Arnett,
Chartered. The independent audit is in accordance with the Kansas Minimum Audit Guide, the
Government Auditory Standards issued by the Comptroller General of the United States, and the
provisions of the Office of Management and Budget Circular A-128, "Audits of State and Local
Governments".
GFOA CERTIFICATE OF ACHIEVEMENT
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the Salina Airport Authority for its
comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 1995. The
Certificate of Achievement is a prestigious national award recognizing conformance with the highest
standards for preparation of state and local government financial reports.
In order to be awarded a Certificate of Achievement, a government unit must publish an easily
readable and efficiently organized comprehensive annual financial report (CAFR), whose contents
conform to program standards. Such CAFR must satisfy both generally accepted accounting
principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. The Salina Airport Authority has
received a Certificate of Achievement for the last four consecutive years (fiscal years ended 1992 -
1995). We believe our current report continues to conform to the Certificate of Achievement
program requirements, and we are submitting it to GFOA.
ACKNOWLEDGEMENTS
The support of the Authority's Board of Directors has been instrumental in the preparation of this
report. The Board has been actively involved in the preparation and review of this report and is
committed to responsible and progressive financial reporting.
-7-
Also acknowledged is the assistance of the Authority's auditor, Harrison & Arnett, Chartered,
Certified Public Accountants, Shirley J. Jacques, County Clerk for Saline County, Gerald Cook,
President of the Salina Area Chamber of Commerce and Kevin Boyd, Professor of Business and
Economics at Kansas Wesleyan University in the preparation of this report.
Respectfully submitted,
~)~
Timothy F. Rogers, A.A.E.
Executive Director
Salina Airport Authority
cc:
The City of Salina Board of Commissioners
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SALINA AIRPORT AUTHORITY
PRINCIPAL OFFICERS AS OF DECEMBER 31.1996
BOARD OF DIRECTORS
Richard A. Renfro
Charles Stevens, Jr.
James. C. Maes
R. Michael Beatty
Dorothy W. Lynch
Chairman
Vice-Chairman
Secretary
Treasurer
Asst. SecretaryfTreasurer
AUTHORITY'S COUNSEL
Greg A. Bengtson
Clark, Mize & Linville, Chartered
Salina, Kansas
AUTHORITY'S BOND COUNSEL
Gilmore & Bell
Kansas City, Missouri
AUTHORITY'S FINANCIAL ADVISOR
George K. Baum & Company
Kansas City, Missouri
AUTHORITY'S AUDITOR
Thomas G. Arnett
Harrison & Arnett, Chartered
Salina, Kansas
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SALINA AIRPORT AUTHORITY
AUTHORITY STAFF MEMBERS
as of December 31. 1996
ADMINISTRATION STAFF
Timothy F. Rogers, A.A.E.
Donald C. Kneubuhl
Cathy Lentz
B. J. Owens
Executive Director
Operations Director
Administrative Assistant
Secretary /Receptio nist
OPERATIONS, MAINTENANCE, AIRCRAFT RESCUE & FIRE FIGHTING STAFF
Loren Carleton
Kim Colby
Gary Hansen
Dale Mattison
David Nease
Rob Pejsha
Jason Pinnick
Operations, Maintenance & ARFF
Operations, Maintenance & ARFF
Operations, Maintenance & ARFF
Operations, Maintenance & ARFF
Operations, Maintenance & ARFF
Operations, Maintenance & ARFF
Operations, Maintenance & ARFF
TERMINAL BUILDING CUSTODIAL STAFF
Vachel Keaton
Francis Vestal
Custodian
Custodian
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SALINA AIRPORT AUTHORITY
Organizational Chart
As of December 31, 1996
SAA BOARD OF DIRECTORS
Dorothy W. Lynch 3/91 - 2/28/97
Richard A. Renfro 7/92 - 2/28/97
Charles E. Stevens, Jr. 3/93 - 2/28/99
James C. Maes 3/95 - 2/28/98
R. Michael Beatty 3/96 - 2/28/99
I
>--'
N
I
EXECUTIVE DIRECTOR
Timothy F. RoQers. A.A.E.
DIRECTOR OF OPERATIONS
Donald C. Kneubuhl
Maintenance & Operations Supervisor
Vacant
I GHaLen I
D. Nease
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
Salina Airport Authority,
Kansas
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 1995
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
¿2I¿~r
fJ#7/.~
Executive Director
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HARRISON & ARNETT
CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
EUGENE O. HARRISON, C.P.A.
THOMAS G. ARNETT, C.P.A.
719 EAST CRAWFORD. SALINA, KANSAS 67401
PHONE: (913) 827.7244
FAX: (913) 827.0048
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Salina Airport Authority
Salina, Kansas
We have audited the accompanying financial statements of the Salina Airport Authority, a
component unit of the City of Salina, Salina, Kansas, as of December 31, 1996 and December 31,
1995 and for the years then ended as listed in the table of contents. These financial statements are
the responsibility of the Salina Airport Authority, Salina, Kansas management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards, and the
Kansas Municipal Audit Guide, Government Auditing Standards, issued by the Comptroller
General of the United States, and the provisions of Office of Management and Budget Circular A-
128, "Audits of State and Local Governments". Those standards and OMB Circular A-128 require
that we plan and perfonn the audit to obtain reasonable assurance about wheth~r the financial
statements are ftee of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reas()n~blè basis for
- - I
our OpInIOn.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of the Salina Airport Authority, Salina, Kansas, as of December 31, 1996 and
December 31, 1995, and the results of its operations and its cash flows for the years then ended in
confonnity with generally accepted accounting principles.
-15-
MEMBERS OF
DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
Page 2 of 2
Salina, Kansas
Our audit was conducted for the purpose of forming an opinion on the financial statements taken
as a whole. The supplemental information listed in the table of contents is presented for purpose of
additional analysis and is not a required part of its financial statements of the Salina Airport Authority,
Salina, Kansas. Such information has been subjected to the auditing procedures applied in the
examination of the financial statements and, in our opinion, is fairly presented in all material respects
in relation to the financial statements taken as a whole.
~ .1~. ~.
Harrison & Arnett, Chartered
Salina, Kansas
April 30, 1997
~ t?~PA
Certified Public Accountant in charge of
and actively engaged on this audit.
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-17-
SALINA AIRPORT AUTHORITY
COMPARATIVE BALANCE SHEETS
ASSETS
December 3 1,
1996 1995
CURRENT ASSETS:
Cash (Note 2)
Accounts receivable-net of allowance for
uncollectible accounts of $500 and $500
respectively
Prepaid expenses
Other receivables
$
586,562
$ 472,008
4,425
2,813
34.606
4,375
14,864
Total Current Assets
628.406
491.247
RESTRICTED ASSETS: (Note 3)
Cash and cash equivalents
Assets designated for deferred
compensation benefits
343,500 526,385
60.945 48.925
404.445 575.310
1.992.945 2.100.651
17.040.767 15.265.488
Total Restricted Assets
NET INVESTMENT IN FINANCING LEASES (Note 4)
NET INVESTMENT IN FIXED ASSETS (Note 5)
OTHER ASSETS:
Bond issue costs, less accumulated amortization
of $31 ,974 and $25,112 respectively
76.237
83.099
TOTAL ASSETS
$20.142.800
$18.515.795.
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( continued)
See notes to financial statements.
SALINA AIRPORT AUTHORITY
COMPARATIVE BALANCE SHEETS
LIABILITIES AND EQillTY
Total Current Liabilities
December 3 1,
1996 1995
$ 23,120 $ 81,865
38,451
14,536 15,460
11,418 8,193
511 5.526
88.036 11 L 044
CURRENT LIABILITIES:
Accounts payable-operations
Accounts payable-capital
Accrued payroll and expenses
Deferred maintenance
Deferred rent
RESTRICTED LIABILITIES:
Salina-KSU sales tax liability (Note 3)
Accrued interest payable
Deferred interest financing leases
Current maturities oflong-term debt
Deferred compensation payable
72,258
75,056
205,000
60,945
182,885
76,576
76,942
190,000
48.925
Total Restricted Liabilities
413.259
575.328
LONG-TERM LIABILITIES: (Note 7)
Bonds payable, less current maturities
3.155.000
3.360.000
Total Liabilities
3.656.295
4.046.372
EQillTY:
Contributed capital, Federal
Aviation Administration
Retained earnings
Total Equity
8,674,538 7,121,009
7.81 L967 7.348.414
16.486.505 14.469.423
$20 142,800 $18.515795
TOTAL LIABILITIES AND EQillTY
-19-
See notes to financial statements.
SALINA AIRPORT AUTHORITY
COMP ARATIVE STATEMENTS OF REVENUES, EXPENSES
AND CHANGES IN RETAINED EARNINGS
OPERATING REVENUES:
Rental revenues
Fixed base operator fees
Landing fees
Gain (loss) on sale of assets
Other operating revenues
January 1 to December 31.
1996 1995
$1,038,467 $1,048,563
152,393 98,429
9,055 13,714
(24,024)
15.637
65.723
Total Operating Revenues
1.265.638
1. 152.319
OPERATING EXPENSES BEFORE DEPRECIATION
Office and administration
Maintenance
497,561 481,914
398.287 375.594
895.848 857.508
369,790 294,811
749.778 636.897
(379.988) (342.086)
Total Operating Expenses Before Depreciation
OPERATING INCOME BEFORE DEPRECIATION
DEPRECIATION
OPERATING LOSS
NON-OPERATING INCOME (EXPENSE):
Mill levy
Interest on investments and financing leases
Interest expense
Net Non-Operating Income
357,887 406,232
230,092 260,261
(232.301) (256.737)
355.678 " 409.756
(24,310) 67,670
NET INCOME (LOSS)
ADD DEPRECIATION ON ASSETS ACQUIRED THROUGH
FEDERAL CONTRIBUTIONS
487.863 391.749
463,553 459,419
7.348.414 6.888.995
$7.811.967 $7.348.414
INCREASE (DECREASE) IN RETAINED EARNINGS
RETAINED EARNINGS, January 1
RETAINED EARNINGS, December 31
-20-
See notes to financial statements.
SALINA AIRPORT AUTHORITY
COMPARATIVE STATEMENTS OF CASH FLOWS
(DIRECT METHOD)
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received trom sales, commissions, fees and rents
Cash paid employees for services
Cash paid to suppliers for goods and services
Cash paid to KSU-Salina and project contractors
January 1 to December 31.
1996 1995
$1,260,574 $1,487,769
(391,156) (364,130)
(552,310) (472,317)
(187.833) (1.078.588)
60,000
36.515 45.670
36.515 . 105.670
(68,331) (1.,012,859) .
998.393 2.01 1.252
$ 930.062 $ 998 393
Net Cash Provided (Used) in Operating Activities
129.275
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Purchase of property, plant and equipment (2,486,606)
Proceeds trom capital grants (FAA) 2,006,786
Proceeds from property tax 357,887
Principal payments on debt (190,000)
Principal received on financing leases 107,706
Interest received on financing leases 199,863
Principal received on long-term note
Interest paid on long-term bonds
(229.757)
Net Cash Provided (Used) in Capital and Related
Financing Activities
(234.121)
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of investments
Interest received on investments
Net Cash Provided (Used) in Investing Activities
INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
CASH BALANCE-January 1
CASH BALANCE-December 31
CASH AND CASH EQUIV ALENTS AT END OF YEAR
CONSISTS OF:
Unrestricted cash
Restricted cash and cash equivalent
$ 586,562
343.500
$ 930062
-21-
See notes to financial statements.
(427.266)
(4,179,123)
3,210,933
406,232
(305,000)
191,920
232,199
3,893
(252.317)
(691.263)
$ 472,008
526.385
$ 998.393
RECONCILIATION OF OPERATING LOSS TO NET
CASH FLOWS FROM OPERATING ACTIVITIES
December 3 1.
1996 1995
OPERATING LOSS
$ (379,988)
$ (342,086)
ADJUSTMENTS RECONCILING OPERATING LOSS
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Depreciation
Payments to KSU-Salina and project contractors
Basis of asset sold
Basis of asset received
749,778
(187,833)
636,897
(1,078,588)
422,606
(113,055)
CHANGES IN ASSETS AND LIABILITIES:
Decrease (increase) in accounts receivable
Increase ( decrease) in accounts payable
Increase (decrease) in accrued expenses
Decrease (increase) in prepaid expense
Increase (decrease) in deferred rent
(50)
(58,745)
(924)
12,051
(5.014)
(3,893)
72,470
848
(2,257)
(20.208)
NET CASH PROVIDED BY OPERATING ACTIVITIES
$ 129275
$ (427.266)
NONCASH CAPITAL TRANSACTIONS
During 1995 the Authority received in a land exchange land having a value of$113,055.
-22-
See notes to financial statements.
SALINA AIRPORT AUTHORITY
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
NOTE 1:
ORGANIZA TION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. ORGANIZATION - The Salina Airport Authority (the "Authority") is an authority established by
the City of Salina, pursuant to Chapter 27, Article 3, of the Kansas Statutes Annotated. The
Authority was established for the purpose of acquiring surplus federal government property
specifically the Schilling Air Force Base located near the City of Salina. The Authority administers
the airport, commercial development and rental of associated real estate.
B. BASIS OF ACCOUNTING - The Authority consists of an enterprise fund. Enterprise funds are
classified as proprietary funds by the GASB and are accounted for using a total economic resource
measurement focus. The enterprise fund is used to account for operations that are financed and
operated in a manner similar to private business enterprises. The intent of the Board is that the
costs of providing services on a continuing basis be recovered through user fees and rents. The
financial statements are prepared on the accrual basis of accounting. Under the accrual basis,
revenues are recognized as earned and expenses as incurred.
C. CASH AND CASH EQUIVALENTS - For the purpose of the comparative statement of cash
flows, the Authority considers all higWy liquid investments (including restricted assets) with
maturities of three months or less when purchased to be cash equivalents.
D. INVESTMENTS - Investments relating to the deferred compensation plan are reported at market
value. All other investments are reported at cost. The Authority's other investments consist of
Certificates of Deposit.
E. PROPERTY AND EQUIPMENT - On September 9, 1966, the United States of America pursuant
to section B(g) of the Surplus Property Act of 1944, transferred certain portions of the Schilling
Air Force Base to the Authority.
Property and equipment assumed by the Authority on September 9, 1966 is carried at fair market
value at that date of$529,872. Subsequent additions to property and equipment are recorded at
cost.
Maintenance and repairs are expensed as incurred. When properties are disposed of, the related
cost and accumulated depreciation are removed trom the respective accounts and any gain or loss
on disposition is credited or charged to operations. Runways, taxiways, parking areas, sewers and
other similar items are written off when fully depreciated unless clearly identified as still being in
use.
-23-
Assets are depreciated using the straight-line method over the estimated use:fullives of the assets
as follows:
Buildings and Improvements
Infrastructure Items
Equipment
Years
5-50
10-40
5-25
Depreciation applicable to certain property and equipment which have: been funded by or
contributed to the Authority by the federal government is charged against the respective capital
grant equity balance. This charge is effected by transferring the applicable depreciation fTom
retained earnings and has no effect on income.
In accordance with Financial Accounting Standard Board Statement No. 62, interest during
construction periods, when significant, is capitalized and included in the cost of property and net
investment in financing leases. In 1996 and 1995 no interest was capitalized.
F. BONDS ISSUE COSTS - Bond issue costs are deferred and amortized using the straight-line
method over the life of the bonds to which it relates.
G. COMPENSATED ABSENCES - Substantially all full-time employees receive compensation for
vacations, holidays, illness and certain other qualifYing absences. The number of days
compensated for various categories of absence is generally based on length of service. Liabilities
relating to these absences are recognized as incurred and included in acc:rued expenses. The
amount of accrued vacation pay at December 31, 1996 and 1995 was $12,841 and $12,841
respectively.
H. CAPITAL GRANT FUNDS - Certain expenditures for capital improvements receive significant
federal funding through the Airport Improvement Program (AIP) of the Federal Aviation
Administration (FAA). The Authority funds the remaining balance of such e:xpenditures. Capital
funding provided under government grants is considered earned as the related approved capital
improvement expenditures are disbursed. .
1. INVENTORY - The Authority maintains no significant inventory of oflice and maintenance
supplies. These items are expensed as purchased and no inventory is recorded in these financial
statements.
J. ALLOWANCE FOR UNCOLLECTffiLE ACCOUNTS - The Authority calculates its allowance
for specific accounts using specific account analysis.
K. LEASES - The Authority is a lessor under numerous lease agreements. The leases are classified
as operating leases, except for certain special facility leases which are accounted for as direct
financing leases.
L. TAXES - The Authority is exempt ITom payment of federal and state income, property and certain
other taxes. The Authority is subject to property tax on non-airport use property acquired after
1990.
-24-
M. BUDGETS - The Authority is specifically exempt from Kansas Budget Law. The Authority
is not required to demonstrate statutory compliance with its annual operating budget. Accordingly
budgetary data is not included in the financial statements.
NOTE 2: CASH, CASH EQUIVALENTS AND INVESTMENT SECURITJ[ES
Cash, cash equivalents and investment securities included in the comparative balance sheets consist
of the following:
December 3 1,
1996 1995
Cash and cash equivalents
Current
Restricted
$ 586,562
343,500
$ 472,008
526.385
Total Cash and Cash Equivalents
930,062
998,393
Investment securities-restricted
Deferred compensation plan assets
60,945
48,925
Total Cash, Cash Equivalents and
Investment Securities
$ 991.007
$1.047.318
Kansas statutes authorize the Authority to invest in United States Obligations, secured repurchase
agreements, certificates of deposit, time deposits and open accounts.
The carrying amount of deposits and investments securities by type of investment are as follows:
Cash deposits
Certificates of deposit
Carrving Value
December 31,
1996 1995
$ 910,062 $ 978,393
20,000 20,000
Total Deposits
930,062 998,393
60,945 48,925
$ 991.007 $1.047.318
Deferred compensation plan assets
Total Deposits and Investment Securities
-25-
Deposits of the Authority with financial institutions are categorized by credit risk as follows:
December 3 1
1996 1995
Carrying Bank Carrying Bank
Value Balance Value Balance
Cash on deposit
Insured by federal
deposit insurance
corporation $ 300,000 $ 300,000 $ 300,000 $ 300,000
Collateralized with
securities held by
pledging financial
institution in Authority's
name 639.012 784.236 695.291 771.744
939,012 1,084,236 995,291 1,071,744
Cash on hand
(petty cash) 50 50
$ 939.062 $1 084.236 $ 995.341 $1.071.744
The Authority's deposits are entirely covered by federal depository insurance or by collateral held by
pledging financial institutions in the Authority's name.
NOTE 3: RESTRICTED ASSETS
Restricted assets consist of the following:
December 3 1
1996 1995
Cash and
Cash
Equivalents Investments Total Total
RESTRICTED BY BOND
AGREEMENT:
Bond reserves:
Leasehold bonds-91 $ 85,000 $ $ 85,000 $ 85,000
INTERLOCAL AGREEMENT
KSU/SALINA SALES TAX 182,885
FEDERAL AVIATION
ADMINISTRATION
AGREEMENT LAND SALE
PROCEEDS 258,500 258,500 258,500
DEFERRED COMPENSATION
PLAN 60.945 60.945 48.925
$343 500 $ 60945 $404 445 $575.310
-26-
All restricted amounts are held by the Authority except for assets in the defern:d compensation plan
which are held by the trustee of the plan.
Leasehold Revenue Bonds-1991 :
The proceeds of the 1991 leasehold revenue bonds were used to construct a building that was leased
to a state university. The lease is a financing lease that transfers ownership at the end of the lease.
The bond agreement established certain reserve requirements which the Authority has met.
Interlocal Sales Tax Agreement:
The Authority has entered into an Interlocal Cooperation Agreement with the Kansas Board of
Regents, a state agency of Kansas; Kansas State University, a state university; and the City of Salina.
Under this agreement, the Authority received ITom the City the proceeds fi-om a Y2 cent retailers sales
tax, held and invested these receipts and in accordance with agreed procedures disburses these
proceeds for improvements to the KSU-Salina campus.
The following schedule summarizes the activity under this agreement.
Account beginning balance
Receipts
Retail sales tax
Interest
Year Ended December 3 I
1996 1995 Prior
$ 182,885 $1.244,740 $
Total
$
5,039,950
4.947 16.734 33 1.840
4.947 16.734 5,371.790
$5,039,950
353.521
Total Receipts
5.393.471
Disbursements
Residence hall
South boundary road
North boundary road
Main entrance
InfTastructure equipment
College center
Technical center
Paid to KSU-Salina
33,617
37,377
39,266
1,039,323
800,000 800,000
6,000 6,000
247,759 247,759
71,351 . 71,351
888,873: 961,756
1,427,454. 2,504,154
685,613 685,613
- 116,838
-
4,127,050 5.393.471
$1.244.740 $
116,838
Total Disbursements
187,832
1.078,589
Account Balance
$
$ 182.885
The North Boundary Road and South Boundary Road improvements and .my dedicated utility
improvements constructed with sales tax proceeds became the property of the City of Salina. All other
capital improvements or capital equipment paid for with sales tax proceeds became the property of
the state of Kansas.
-27-
NOTE 4: NET INVESTMENT IN FINANCING LEASES
Net investment in financing leases consist of the following:
December 3 1.
1996 1995
T otallease payments
Less: Unearned income
$3,613,207
1.620.262
Net investment in financing leases
$1.992945
See Note 3 for projects financed through these leases.
Activity in net investment in financing leases was as follows:
$3,904,877
1.804.226
$2.100.651
Year Ended
December 31.
1996 1995
Beginning Balance
Collected principal
Principal sold
Building additions
$2,100,651
(107,706)
Ending Balance
$1.992.945
$2,408,665
(191,920)
(116,094)
$2.100.651
NOTE 5: NET INVESTMENT IN FIXED ASSETS AND CONSTRUCTION IN PROGRESS
Net investment in fixed assets consist of the following:
December 3 1.
1996 1995
FIXED ASSETS:
Land
Buildings and improvements
Airfield and infTastructure
Equipment
$ 2,567,658 $ 2,419,909
6,541,389 ,6,493,465
14,042,676 11,739,108
1.035.153 1.009.339
Less-accumulated depreciation
24,186,876
(7.146.109)
Net Fixed Assets
21,661,821
(6.396.333)
$17040767 $15265488
No interest was capitalized in 1996 or 1995.
-28-
Activity in the fixed assets accounts for 1996 was as follows:
Beginning Balance
Additions
Disposals
Building and Airfield and
Land Improvements Infrastructure Equipment
$2,419,909 $6,493,465 $11,739,108 $1,009,339
147,749 47,924 2,303,568 25,814
Ending Balance
$2.567.658
$6.541.389
$14.042.676
$1.035.153
NOTE 6: RENTAL INCOME UNDER OPERATING LEASES
A significant portion of the operating revenue of the Authority is generated through the leasing of
airport and building space to airport fixed base operators and others on a fixed fee as well as a
contingent rental basis. Ownership risks are retained by the Authority and, ac,cordingly such leases
are treated as operating leases.
The following is a schedule of minimum future rentals on noncancellable operating leases to be
received in each of the next five years and thereafter:
Years Ended
December 3 I,
1997
1998
1999
2000
2001
Later years
$ 821,053
533,662
420,793
345,377
315,127
383.621
Total
$2.819.633
-29-
NOTE 7: LONG TERM DEBT
December 31.
1996 1995
General obligation economic development bonds series
1990A, originally issued July 1, 1990 due in annual
installments increasing fTom $45,000 in 1992 to $175,000
in 2010 plus interest ranging fTom 6.4% to 8.375%
$1,580,000
$1,645,000
General obligation economic development bonds series
1990B, originally issued October 1, 1990 due in annual
installments increasing ITom $20,000 in 1992 to $70,000
in 2010 plus interest ranging fTom 6.5% to 8.5%
640,000
665,000
Leasehold revenue bonds series 1991, originally issued
November 1, 1991, due in annual installments increasing
fTom $35,000 in 1992 to $90,000 in 2006 plus interest
ranging fTom 5% to 7.25%
655,000
700,000
General obligation bonds series 1993A, originally issued
December 1, 1993, due in annual installments increasing
fTom $35,000 in 1994 to $45,000 in 2003 plus interest
at 3.4% to 5%
280,000
310,000
General obligation bonds series 1993B, originally issued
December 1, 1993 due in annual installments increasing
fTom $25,000 in 1994 to $35,000 in 2003 plus interest
at 3.85% to 4.75%
205.000 230.000
3,360,000 3,550,000
205.000 190.000
$3.155000 . $3 360.000
Total
Less current maturities
Long-tenn debt, less current maturities
The proceeds of 1990A, 1990B and 1991 leasehold revenue bonds were used to purchase or construct
commercial real property transferred under direct financing leases. (See Note 4). The bonds are
expected to be repaid fTom proceeds of the financing leases.
The proceeds of the series 1993A bonds were used to finance improvements to the Airport and the
proceeds of the series 1993B bonds were used to finance matching funds for a Federal Aviation
Administration grant. The 1993A and 1993B series bonds are to be repaid fTom the general revenue
of the Authority.
-30-
The annual bond payments for all bonds outstanding as of December 31,1996 are as follows:
Payable in General Leasehold
Year Ended Obligation Revenue Interest
December 3 1 Bonds Bonds Payments Total
1997 $ 155,000 $ 50,000 $ 216,772 $ 421,772
1998 165,000 50,000 205,178 420,178
1999 180,000 55,000 193,055 428,055
2000 190,000 60,000 179,643 429,643
Thereafter 2.015.000 440.000 899.372 3.354.372
Total $2 705.000 $ 655.000 $1 694 020 $5.054.020
The annual bond interest for all bonds outstanding as of December 31, 1996, are as follows:
Payable in General Leasehold Total
Year Ended Obligation Revenue Interest
December 3 1 Bonds Bonds ~ments
1997 $ 171,995 $ 44,777 $ 2 Jl6, 772
1998 163,475 41,703 205,178
1999 154,503 38,552 193,055
2000 144,638 35,005 179,643
Thereafter 782,402 116.970 ~¡9.372
Total $1.417.013 $ 277.007 $1.694.020
-31-
Activity in long term debts for 1996 was as follows:
Beginning Bonds Principal Ending
Balance Issued Paid Balance
General Obligation Economic
Development Bonds
Series 1990A $1,645,000 $ $ 65,000 $1,580,000
General Obligation Economic
Development Bonds
Series 1990B 665,000 25,000 640,000
Leasehold Revenue Bonds
Series 1991 700,000 45,000 655,000
General Obligation Bonds
Series 1993 A 310,000 30,000 280,000
General Obligation Bonds
Series 1993B 230.000 25.000 205.000
Totals $3 550 000 $ $190000 $3.360 000
NOTE 8: DEFINED BENEFIT PENSION PLAN
Plan description. The Authority as a non-school municipality participates in the Kansas Public
Employees Retirement System (KPERS), a cost-sharing multiple-employer defined benefit pension
plan as provided by KS.A. 74-4901, et seq. KPERS provides retirement benefits, life insurance,
disability income benefits, and death benefits. Kansas law establishes and amends benefit provisions.
KPERS issues a publicly available financial report that includes financial statements and required
supplementary infonnation. That report may be obtained by writing to KPERS (400 SW 8th Avenue,
Suite 200; Topeka, KS 66603-3925) or by calling 1-800-228-0366.
Funding Policy. KS.A. 74-4919 establishes the KPERS member-employee contribution rate at 4%
of covered salary. The employer collects and remits member-employee contributilons according to the
provisions of section 414(h) of the Internal Revenue Code. State law provides that the employer
contribution rate be determined annually based on the results of an annual actuarial valuation. KPERS
is funded on an actuarial reserve basis. State law sets a limitation on annual increases in the con-
tribution rates for KPERS employers. The employer rate established by statute for calendar year
1996 is 2.48%. The non-school municipality employer contributions to KPERS for the years ending
December 31, 1996, 1995, and 1994 were $9,073, $7,732, and $6,967, respectively, equal to the
statutory required contributions for each year.
-32-
NOTE 9: DEFERRED COMPENSATION PLAN
The Authority offers its employees a deferred compensation plan formed in accordance with Internal
Revenue Code Section 457. The plan, available to all employees, permits them to defer a portion of
their salary until future years. The deferred compensation assets, which are funded currently with a
third party trustee, are not available to employees until termination, retirement, death or unforeseeable
emergency.
All amounts of compensation deferred under the plan, all property and rights purchased with those
amounts, and all income attributable to those amounts, property, or rights are (until paid or made
available to the employee or other beneficiary) solely the property and rights of the Authority, subject
only to the claims of the Authority's general creditors. Participants' rights under the plan are equal
to those of general creditors of the Authority in an amount equal to the fair market value of the
deferred account for each participant.
It is the opinion of the Authority's legal counsel that the Authority has no liability for losses under
the plan but does have the duty of care that would be required of an ordinary prudent investor.
The Authority believes that it is unlikely that it will use the assets to satisfy the claims of general
creditors in the future.
Authority payroll and contributions of employees electing to participate follows.:
December 31.
1996 1995
Authority's total payroll
Electing employees payroll
Electing employees contributions
$390,231
147,271
4,160
$371,231
148,325
5,890
The Authority offers no post employment benefits other than those available through Kansas Public
Employment Retirement.
NOTE 10: RETAINED EARNINGS AND CONTRIBUTIONS IN AID
Under the provisions of various bond agreements, certain assets are restricted for speéific uses (Note
3). Retained earnings which have been reserved relating to these restricted assets consist of the
following:
December 3 1.
1996 1995
Reserved retained earnings:
Land sale proceeds
Leasehold bonds-91
$ 258,500 $ 258,500
85.000 85.000
343,500 343,500
7.468.467 7.004.914
$7 811 967 $7.348.414
Reserved retained earnings
Unreserved retained earnings
Total retained earnings
Board designated restricted assets are not reported as reserved retained earnings.
-33-
Changes in grants and contributions are summarized as follows:
Balance January 1, 1995
Federal Aviation
Administration
$4,301,825
1995 additions, AIP grants
3,210,933
Depreciation on property and equipment
acquired by government grants
(391. 749)
Balance December 31, 1995
7,121,009
1996 additions, AlP grants
2,041,392
Depreciation on property and equipment
acquired by government grants
(487.863)
Balance December 31, 1996
$8 674538
NOTE 11: MAJOR CUSTOMERS
The Authority receives significant operating and financing lease revenue fÌ'om Raytheon Aircraft
Company (fonnerly Beech Aircraft Corporation), Kansas State University-Salina, Exide Corporation and
Schwan's Sales. Rentals fÌ'om these four tenants equals 54% of operating and capital lease revenue for
the year ended December 31, 1996.
NON-OPERATING INCOME
Net non-operating income consisted of the following for the years ended December 31, 1996 and
1995:
Total
1996 1995
$357,887 $406,232
198,524 231,324
3 1.568 28.937
587.979 666.493
Mill levy
Interest and investment income
Financing leases
Other interest
Interest expense
Revenue bonds
General obligation bonds
Amortization bond issue costs
Total
47,478 58,935
177,961 188,678
6.862 9.124
232.301 256.737
$355 678 $409 756
Net non-operating income
-34-
(THIS PAGE INTENTIONALLY LEFT BLANK)
-35-
SALINA AIRPORT AUTHORITY
SCHEDULES OF OPERATIONS AND CHANGES
IN RETAINED EARNINGS
January 1 to December 3 1.
1996 1995
OPERATING REVENUES
Building rents
Ramp rents
Land rents
Agri land rents
Hangar rents
Tank farm rent
Fixed base operator
Landing fees
Commissions-car rentals
Gain (loss) on disposition of assets
Other income
$ 846,060
32,889
65,096
57,530
33,112
3,780
152,393
9,055
11,523
50,000
4.200
TOTAL OPERATING REVENUES
1.265.638
OPERATING EXPENSES BEFORE DEPRECIATION
ADMINlSTRA TIVE EXPENSES
Office salaries
Office supplies
Postage
Travel and meetings
Legal and accounting
Insu ran ce- property /liab ili ty
Insurance-medical
Engineering
FICA tax
Kansas unemployment tax
Employees retirement
Telephone
Industrial development
Airport promotion
Property taxes
Dues and subscriptions
Property appraisals
Other administrative
171,274
6,910
3,600
6,276
37,696
53,733
39,067
8,206
29,400
398 '
9,073
9,486
20,000
32,674
39,700
14,781
750
14.53~~
TOTAL ADMINlSTRA TIVE EXPENSES
$ 497.561
-36-
$ 870,701
29,605
64,953
45,663
34,324
3,015
98,429
13,714
8,316
(24,024)
7.623
1. 152.319
160,053
6,685
4,298
11,156
31,710
57,252
45,142
10,354
27,387
356
7,732
8,197
21,254
20,689
38,082
10,217
7,910
13.440
$ 481.914
MAINTENANCE EXPENSES
Maintenance salaries
Building maintenance
Airfield maintenance
Grounds maintenance
Equipment gas, oil & repairs
Utilities
Fire department expense
Agri land expense
Other maintenance expenses
TOTAL MAINTENANCE EXPENSES
TOTAL OPERATING EXPENSES BEFORE
DEPRECIATION
OPERATING EARNINGS BEFORE DEPRECIATION
DEPRECIATION EXPENSE
OPERATING LOSS
NON-OPERATING INCOME (EXPENSE)
Mill levy
Interest income-capital leases
Interest income
Bond interest-expense
Amortization bond costs
NET NON-OPERATING INCOME
NET INCOME (LOSS)
ADD DEPRECIATION ON ASSETS ACQUIRED THROUGH
FEDERAL CONTRIBUTIONS (Note 1)
INCREASE (DECREASE) IN RETAINED EARNINGS
RETAINED EARNINGS, January 1
RETAINED EARNINGS, December 31
-37-
January 1 to December 3 1.
1996 1995
$ 218,957
40,692
24,390
3,529
27,650
63,802
3,802
$ 204,925
33,574
24,976
2,211
34,213
58,427
1,604
4,857
10.807
15.465
398.287
375.594
895.848 857.508
369,790 294,811
749.778 636.897
(379.988) (342.086)
357,887 406,232
198,524 231,324
31,568 28,937
(225,439) (247,613)
(6.86:n (9.124)
355.678 , 409.756
(24,310) 67,670
487.86:l 391.749
463,553 459,419
7.348.41¿~ 6.888.995
$7.81196~~ $7.348.414
SALINA AIRPORT AUTHORITY
CAPITAL EXPENDITURES
January 1 to December 3 L
1996
LAND
Storage tank removal
Secondary street replat
Perussy Rd
Pump house 305
~'
~)
7,479
91,960
35,200
13,110
TOT AL LAND
147,749
EQUIPMENT
Shop equipment
Office equipment & remodel
15,088
10,726
TOT AL EQUIPMENT
25,814
BUILDINGS AND IMPROVEMENTS
South T Hangar road
T erminaI building roof
Swppp
TerminaVT -Hangar parking
Building improvements
Smoky Hill Ed. electric
10,118
6,630
436
14,244
13,732
2,765
TOT AL BUILDINGS
47,925
AIRFIELD AND INFRASTRUCTURE
AIP 12 Runway protection zone
AIP 13 Subdrain and vehicle
AIP 15 Airfield parking-ramp
AIP 16 Airfield parking-ramp
AIP 17 Airfield parking-ramp
AIP 18 Tenninal building apron
437,383
496,413
241,671
1,067,319
60,782
TOTAL OTHER IMPROVEMENTS
2303,568
TOT AL CAPITAL EXPENDITURES
$;2.525.056
-38-
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION ECONOMIC DEVELOPMENT BONDS
SERIES 1990A
December 3 1, 1996
Date of Issue:
Amount of Issue:
Interest Rate:
Maturity Date:
Principal Paid:
Outstanding Balance:
July 1, 1990
$1,900,000
*
September 1, 2010
$320,000
$1,580,000
Schedule of Bond Principal Payments
Due in
Year
Bond
Principal
1997
1998
1999
2000
Thereafter
$ 65,000
75,000
80,000
85,000
1.275,000
$1.580.000
*The interest rate varies fTom 8.37% to 6.4% over the life
of the bond issue.
-39-
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION ECONOMIC DEVELOPMENT BONDS
SERIES 1990B
December 3 1, 1996
Date of issue:
Amount of Issue:
Interest Rate:
Maturity Date:
Principal Paid:
Outstanding Balance:
October 1, 1990
$773,000
*
September 1, 2010
$133,000
$640,000
Schedule of Bond Principal Payments
Due in
Year
Bond
Principal
1997
1998
1999
2000
Thereafter
$ 30,000
30,000
30,000
35,000
515.000
$640.000
*The interest rate varies from 8.5% to 6.5% over the
life of the bond issue.
-40-
SALINA AIRPORT AUTHORITY
LEASEHOLD REVENUE BONDS
SERIES 1991
December 3 1, 1996
Date of Issue:
Amount ofIssue:
Interest Rate:
Maturity Date:
Principal Paid:
Outstanding Balance:
November 1, 1990
$850,000
*
September 1, 2006
$195,000
$655,000
Schedule of Bond Principal Payments
Due in
Year
Bond
Principal
1997
1998
1999
2000
Thereafter
$ 50,000
50,000
55,000
60,000
440,000
$655.000
*The interest rate varies :ITom 7.25% to 5% over the
life of the bond issue.
-41-
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION BONDS
SERIES 1993 A
December 3 1, 1996
Date of Issue:
Amount of Issue:
Interest Rate:
Maturity Date:
Principal paid:
Outstanding Balance:
December 1, 1993
$375,000
3.4% to 5%
September 1, 2003
$95,000
$280,000
Schedule of Bond Principal Payments
Due in
Year
Bond
Principal
1997
1998
1999
2000
Thereafter
$ 35,000
35,000
40,000
40,000
130.000
$280.000
-42-
SALINA AIRPORT AUTHORITY
GENERAL OBLIGATION BONDS
SERIES 1993B
December 3 1, 1996
Date of Issue:
Amount ofIssue:
Interest Rate:
Maturity Date:
Principal Paid:
Outstanding Balance:
December 1, 1993
$275,000
3.85% to 4.75%
September 1, 2003
$70,000
$205,000
Schedule of Bond Principal Payments
Due in
Year
Bond
Principal
1997
1998
1999
2000
Thereafter
$ 25,000
25,000
30,000
30,000
95.000
$205 000
-43-
INSURANCE POLICY
Commercial Union Ins. Co.
Pol. #CT97H589191
National Union Fire Ins. Co.
of Pittsburgh, P A.
Pol. #AP3229456-02
Commercial Union Ins. Co.
Pol. #CTR446926
Commercial Union Ins. Co.
Pol. #CTR399483
Commercial Union Ins. Co.
Pol. #PT AB22041
The Hartford
Pol. #PEB DBI019
Coregis Insurance Co.
Pol. #524-445171-3
American Alliance Ins. Co.
Pol. #KST 788-29-33-02
SALINA AIRPORT AUTHORITY
INSURANCE IN FORCE
December 3 1, 1996
TYPE OF COVERAGE
Workmen's Compensation
and Employer's Liability
Bodily Injury and Liability
Hangar Keepers
Fire and Lightning,
extended coverage,
vandalism and malicious nñschief
Business Personal Property
Loss of Rents
Office and stores
Boiler & Machinery
Vehicles & Equipment
Liability
Medical Payments
Uninsured Motorists
Public Employees Blanket Bond
Honesty blanket
position bond coverage
$250 deductible
Public Officials & Empl. Liability
Errors & onñssions
excluding asbestos,
excluding pollution coverage
on a claims made basis,
5,000 deductible
Kansas UST Liability
Environmental incident
Annual aggregate
Limit of Defense
5,000 deductible
-44-
AMOUNT OF
COVERAGE
$ 500,000
$ 500,000
$ 500,000
$6,407,700
$1,768,780
$1,724,989
$ 500,000
$1,000,000
$ 500,000
$ 2,000
$ 500,000
,$ 100,000
$ 500,000
$1,000,000
$1,000,000
$ 100,000
SALINA AIRPORT AUTHORITY
SCHEDULE OF FEDERAL ASSISTANCE
CATALOG OF FEDERAL DOMESTIC ASSISTANCE NUMBER 20.106
For the year ended December 3 1, 1996
Expenditures
Federal ID During Amount
Program Title Number Year of Awards
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration 3-20-0072-12
Runway protection zone $ 437,383 $ 378,018
Federal Aviation Administration 3-20-0072-13 496,413 423,271
Federal Aviation Administration 3 -20-0072-16
Airfield parking 241,672 237,877
Federal Aviation Administration 3-20-0072-17 1,067,319 967,620
Federal Aviation Administration 3-20-0072-18 60.782
$2.303.569 $2.006.786
-45-
SALINA AIRPORT AUTHORITY
COMPARISON OF GROSS CASH BALANCES WITH DEPOSITORY SECURITY
December 31, 1996
UMB-
Bank IV National Bank
Salina. N.A. of America Sunflower Bank
GROSS CASH BALANCES
Demand deposit
Cash in checking $ 390,711 $ 547,690 $ 125,835
Time deposits
Certificates of deposit 20.000
TOTALS 390.711 547.690 145.835
LESS FDIC COVERAGE 100.000 100.000 100.000
BALANCES SECURABLE
BY COLLATERAL $ 290.711 $ 447.690 $ 45 835
SECURITY REQUIRED
(100%) $ 290,711 $ 447,690 $ 45,835
SECURITY PROVIDED
BY DEPOSITORIES 650.000 1.000.000 1.373.124
AMOUNT UNDERSECURED
BY STATUTE $ $ $
-46-
Salina Airport Authority
OPERATING REVENUE HISTORY
Ten Years Ended December 31, 1996
Prevo Years
Gain (Loss) Other Total
Fiscal Rental Fixed Base Landing on Sale of Operating Operating
~ Revenue Operator ~ Assets Receipts Revenue
1987 $807,511 $87,352 $5,988 $0 $19,726 $920,577
1988 783,958 96,133 28,702 83,074 19,217 928,010
1989 791,433 106,432 5,913 (414) 23,447 927,225
I
.¡:- 1990 736,242 127,765 7,599 0 9,220 880,826
--.I
I
1991 762,984 89,079 4,271 0 11,002 867,336
-
1992 791,974 82,345 5,565 0 16,136 896,020
1993 800,575 78,392 7,616 0 43,744 930,327
1994 975,011 90,511 1 0,982 0 5,914 1,082,418
1995 1,048,563 98,429 13,714 (24,024) 15,637 1,152,319
1996 1,038,467 152,393 9,û55 û 65,723 1,265,638
Source:
Salina Airport Authority Records
Salina Airport Authority
OPERA TING EXPENSE HISTORY
Ten Years Ended December 31, 1996
Office & Total
Administrative Maintenance Operating
Fiscal Year Expense Expense Expense
1987 $386,227 $364,978 $751,205
1988 456,770 326,346 783,116
1989 483,907 336,117 820,024
1990 430,225 338,936 769,161
1991 408,578 329,137 737,715
1992 415,819 347,498 763,317
1993 458,918 361 ,412 820,330
1994 467,803 370,266 838,069
1995 481,914 375,594 857,508
1996 497,561 398,287 895,848
Source: Salina Airport Authority Records
-48-
Salina Airport Authority
FEDERAL FINANCIAL ASSISTANCE HISTORY
Ten Years Ended December 31, 1996
Fiscal Year
Federal Aviation
Administration
Airport
Improvement Grarl1
1987
$2,180,711
1988
980,986
1989
613,642
1990
40,917
1991
29,430
1992
335,349
1993
30,162
1994
270,191
1995
3,210,933
1996
2,006,786
NOTE:
The use of Federal Aviation Administration Airport Improvement Program
Grant Funds are limited to use for funding specific airfield capital improvements.
Airfield capital improvements are detailed in program grant agreements
entered into by the Salina Airport Authority and the Federal Aviation Administratio
The grant funds finance 90% of total project costs.
Source: Salina Airport Authority Records
-49-
Salina Airport Authority
CAPITAL EXPENDITURE HISTORY
Ten Years Ended December 31, 1996
Buildings & Total
Fiscal Capital Lease Capital
~ Equipment Additions J.âmt Airfield Expenditures
1987 $39,427 $61,609 $0 $2,522,063 $2,623,099
1988 9,618 886,650 - 1,034,741 1,931,009
1989 94,524 2,243,128 - 648,583 2,986,235
1990 17,489 1,700,740 130,590 32,943 1,881,762
I
U1
0 1991 36,268 400,406 62,257 498,931
I -
1992 2,516 803,418 131,845 357,586 1,295,365
1993 20,773 134,602 250,279 33,692 439,346
1994 31,289 305,127 119,800 309,215 765,431
1995 13,043 403,009 262,930 3,603,339 4,282,321
1996 25,814 47,925 147,749 2,303,568 2,525,056
Note:
Federal Aviation Administration grants fund 90% of airfield improvements
Source: Salina Airport Authority Records
Salina Airport Authority
REVENUE BOND COVERAGE
Ten Years Ended December 31, 1996
Fiscal Pledged Revenue Bond
~ Revenue Debt Service Coven¡g,e,
1987 $597,978 $195,640 3.0Ei
1988 416,188 192,203 2.1 Eì
1989 523,307 214,586 2.4~\
1990 409,915 211,780 1.9~\
1991 426,707 206,570 2.06
1992 531,761 286,024 1.86
1993 414,514 278,395 1.50
1994 421,554 280,578 1.50
1995 189,446 163,215 1.16
1996 189,446 163,790 1.16
Notes:
1. Revenues pledged to service Leasehold Revenue Bonds, Series 1990-8
and Series 1991
Source: Salina Airport Authorit~ Records
-51-
Salina Airport Authority
PRINCIPAL CUSTOMERS
Year Ended December 31, 1996
%of
Operating &
Direct Finance
Company Revenue Lease Revenue
Raytheon Aircraft Company $276,531 20.5%
Kansas State University - Salina 189,446 14.1%
Exide Corporation 145,332 10.8%
Schwan's Sales Enterprises, Inc. 112,919 8.4%
Soo Plastics, Inc. 108,600 8.1%
Moore's Midway Aviation, Inc. 94,378 7.0%
Flower Aviation of Kansas, Inc. 83,060 6.2%
KASA FAB, Inc. 58,752 4.4%
GeoCore Services, Inc. 24,306 1.8%
Salina Vortex Corporation 18,995 1.4%
Federal Aviation Administration 18,600 1.4%
Haahjem NA, Inc. 18,000 1.3%
Palleton of Kansas, Inc. 18,000 1.3%
lanseair 16,644 1.2%
Builder's Choice 15,732 1.2%
Note:
Total of Operating lease and Direct Finance Lease Revenue for
1996 was $1,346,036
Source: Salina Airport Authority Records
-52-
Salina Airport Authority
LOCAL GOVERNMENT PROPERTY TAX RATES, DIRECT AND OVERLAPPING
Ten Years Ended December 31, 1996
Other
Unified Salina State Special
Fiscal Saline City of School Ai rport of Taxing
~ County Salina Dist. #305 Authority Kansas Districts I2.t&
1987 21.000 36.360 81.873 - - 5.790 145.023
1988 21 .000 36.360 88.779 - - 6.487 152.626
1989 23.460 36.360 95.639 - - 6.653 162.112
1990 19.074 30.015 76.492 - - 5.599 131 . 180
I
U1 1991 20.122 30.028 79.472 5.818 135.440
w - -
I
1992 20.464 29.828 83.372 - - 6.074 139.738
1993 24.562 29.461 40.685 1.900 1.5 5.121 103.229
1994 26.575 28.709 42.401 1.900 1.5 5.015 106.100
1995 23.370 27.145 42.287 1.372 1.5 5.393 101.067
1996 22.925 26.942 42.312 1.275 1.5 5.565 100.519
Note:
The Salina Airport Authority's 1996 mill levy will be available during calendar year 1997
and is budgeted for 1997.
Source: Saline County Clerk
Salina Airport Authority
PROPERTY TAX REVENUE
Ten Years Ended December 31, 1996
Fiscal Year
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Source: Salina Airport Authority Records
-54-
Property Tax
Revenue
$227
0
0
0
0
0
0
301,829
406,232
357,887
Salina Airport Authority
AIR TRAFFIC, FUEL FLOWAGE AND ENPLANEMENT TRENDS
Ten Years Ended December 31, 1996
Scheduled
Fiscal Air Traffic Fuel Flowage Air Service
~ Operations Gallons Enplanements~
1987 60,678 2,547,120 8,721
1988 80,411 2,872,298 9,159
1989 79,068 2,890,341 10,252
1990 96,254 3,136,668 5,707
1991 83,372 2,681,605 5,391
1992 71,697 2,552,156 5,799
1993 66,144 2,126,230 5,591
1994 61,215 2,424,880 7,175
1995 68,291 2,435,656 7,813
1996 62,021 2,907,894 8,652
Note: One air traffic operation equals one aircraft takeoff and landing
Source: Salina Airport Authority Records
-55-
Salina Airport Authority
MAJOR EMPLOYERS IN THE SALINA/SALINE COUNTY AREA
December 31, 1996
Maior Private Employers
COffioanv
I
\J1
a-
I
Tony's Pizza
Great Plains Manufacturing
Salina Reg. Med. Center
Exide Corporation
Phillips Lighting Co.
Raytheon Aircraft Co.
Western Auto
Eldorado National, Inc.
Elliott Turbocharger, Inc.
Salina Journal
Crestwood Cabinets, Inc.
KASAIKASA Fab
Premier Pneumatics
Maior Public Employers
Public OrGanizations
Unified School District #305
City of Salina
Saline County
Kansas State University - Salin
Approx. #
Emolovees
2,100
1,300
1,145
710
600
530
225
176
150
130
130
117
100
Approx. #
E m 0 lovees
1,295
626
241
128
Source: Salina Area Chamber of Commerce
Type of
Business
Frozen Foods Manufacturer
Farm Implements
Health Care
Battery Manufacturing
Fluorescent Lamp Manufacture
Aircraft Sub-assemblies Manuf.
Warehouse Distribution
Medium & Small Shuttle Buses
Rebuilding of diesel engine turbochargers
Newspaper Publishing
Custom Made Cabinets
Electronic Controls & Steel Fabrication
Pneumatic Convey Equipment
I'LOe of Public Bodv
School System
City Government
County Government
Engineering Technology & Aviation Technology
Salina Airport Authority
SALINA POPULATION, DEMOGRAPHIC AND
lABOR STATISTICS
Population
~
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
Source: Saline County Clerk
Demographics
Measure
Median Age
Average Age
Number of Households
Average Household Income
Median Household Income
Per Capita Income
Source: Salina Area Chamber of Commerce
labor
~
1989
1990
1991
1992
1993
1994
1995
1996
Civilian
Labor Force
27,384
28,454
29,321
30,409
28,549
28,902
29,312
29,281
Employed
26,130
27,261
28,073
29,270
27,261
27,692
28,117
28,128
Source: Salina Area Chamber of Commerce
-- 57 --
City of Salina
42,007
42,092
42,188
42,303
42,510
42,841
43,202
43,304
43,304
44,167
City of Salina
35.45
36.89
18,181
$40,600
$30,009
$16,955
Unemployed
1.250
1,193
1,248
1,139
1,288
1,210
1,195
1,153
Saline C<UUJ1¥
49,062
49,1:'5
49,210
49,301
49,301
49,301
49,400
50,4EiO
50,4EiQ
51 ,4::~4
J~
4.6%
4.2%
4.3%
3.7%
4.5%
4.2%
4.1%
:3.9%
(THIS PAGE INTENTIONALLY LEFT BLANK)
-58-
HARRISON & ARNETT
CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
EUGENEO. HARRISON. C.P.A.
THOMAS G. ARNETT, C.P.A.
719 EAST CRAWFORD. SALINA, KANSAS 67401
PHONE: (913) 827-7244
FAX: (913) 827.0048
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Board of Directors
Salina Airport Authority
S alina, Kansas
We have audited the financial statements of Salina Airport Authority, a component unit of the City
of Salina, Salina, Kansas, as of and for the year ended December 31, 1996 and have issued our report
thereon dated April 30, 1997.
We conducted our audit in accordance with generally accepted auditing standards, the Kansas
Municipal Audit Guide, Government Auditing Standards, issued by the Comptroller General of the
United States and those standards require that we plan and perfonn the audit to obtain reasonable
assurance about whether the financial statements are tree of material misstatement. .
The management of Salina Airport Authority, a component unit of the City of Salina, Salina, Kansas,
is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected benefits and related costs of
internal control structure policies and procedures. The objectives of an internal control structure are to
provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition, and that transactions are executed in accordanloo with management's
authorization and recorded properly to pennit the preparation of general purpose financial statements in
accordance with generally accepted accounting principles. Because of inherent limitations in any internal
control structure, errors or irregularities may nevertheless occur and not be dete:;t:ed. I :Also, projection
of any evaluation of the structure to future periods is subject to the risk that pmcedures may become
inadequate because of changes in conditions or that the effectiveness of the de:sign ånd operatwn of
policies and procedures may deteriorate.
In planning and perfonning our audit of the general purpose financial statements of Salina Airport
Authority, for the year ended December 31, 1996, we obtained an understanding of the internal control
structure. With respect to the internal control structure, we obtained an understanding of the design of
relevant policies and procedures for the purpose of expressing our opinion on the general purpose financial
statements and not to provide an opinion on the internal control structure. A(;cordingly, we do not
express such an opinion.
-59-
MEMBERS OF
DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
Our consideration of the internal control structure would not necessarily disc:iose all matters in the
internal control structure that might be material weaknesses under standards established by the American
Institute of Certified Public Accountants. A material weakness is a condition in which the design or
operation of one or more of the internal control structure elements does not reduce to a relatively low
level the risk that errors and irregularities in amounts that would be material in relation to the general
purpose financial statements being audited may occur and not be detected within a timely period by
employees in the nonnal course of perfonning their assigned functions. We noted no matters involving
the internal control structure and its operation that we consider to be material weaknesses as defined
above.
However, we noted certain matters involving the internal control structure and its operation that we
have reported to the management of Salina Airport Authority, in a separate letter dated April 30, 1997.
This report is intended for the infonnation of the Board of Directors. However, this report is a matter
of public record and its distribution is not limited.
~ fJ ~ (ljL&(.
,
Salina, Kansas
April 30, 1997
-60-
HARRISON & ARNETT
CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
EUGENE O. HARRISON, C.P.A.
THOMAS G. ARNETT, C.P.A.
719 EAST CRAWFORD. SALINA, KANSAS 67401
PHONE: (913) 827.7244
FAX: (913) 827.0048
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE BASED ON
AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENT AUDITING ST ANI)ARDS
To the Board of Directors
Salina Airport Authority
Salina, Kansas
We have audited the financial statements of Salina Airport Authority, component unit of the City of
Salina, Salina, Kansas, as of and for the year ended December 31, 1996 and have issued our report thereon
dated April 3O, 1997.
We conducted our audit in accordance with generally accepted auditing standards, the Kansas
Municipal Audit Guid~ Government Auditing Standards, issued by the Comptroller General of the
United States and those standards require that we plan and perfonn the audit to obtain reasonable
assurance about whether the financial statements are fTee of material misstatement. .
Compliance with laws, regulations, contracts, and grants applicable to Salina Airport Authority, Salina,
Kansas, is the responsibility of Salina Airport Authority, Salina, Kansas management. As part of obtaining
reasonable assurance about whether the financial statements are free of mate:rial misstatement, we
perfonned tests of the Authority's compliance with certain provisions of laws, regulations, contracts, and
grants. However, the objective of our audit of the financial statements was not to provide an opinion on
overall compliance with such provisions. Accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are required to be reported under
Government Auditing Standards. - , .
"
This report is intended for the infonnation of management and the Board of Directors. . TIús restrÍction
is not intended to limit the distribution of this report, which is a matter of public record.
~ :I~, r2b-R ,
Salina, Kansas
April 3O, 1997
-61-
MEMBERS OF
DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
HARRISON & ARNETT
CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
EUGENE O. HARRISON. C.P.A.
THOMAS G. ARNETT. C.P.A.
719 EAST CRAWFORD. SALINA. KANSAS 67401
PHONE: (913) 821-7244
FAX: (913) 827.0048
INDEPENDENT AUDITORS' REPORT ON SCHEDULE OF
FEDERAL FINANCIAL ASSISTANCE
To the Board of Directors
Salina Airport Authority
Salina, Kansas
We have audited the financial statements of Salina Airport Authority, a component unit of the City
of Salina, Kansas, Kansas, for the year ended December 31, 1996 and have issued our report thereon
dated April 30, 1997. These financial statements are the responsibility of Salina Airport Authority, Salina,
Kansas management. Our responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards, the Kansas
Municipal Audit Guide, and Government Auditing Standards, issued by the Comptroller General of
the United States and the provisions of Office of Management and Budget Circular A-128, Audits of State
and Local Governments. Those standards and OMB Circular A-128 require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are fTee of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our opinion.
Our audit was made for the purpose of forming an opinion on the financial statements of Salina
Airport Authority, Salina, Kansas, taken as a whole. The accompanying schedule of .federal financial
assistance is presented for purposes of additional analysis and is not a required p~rf of the financial
statements. The information in that schedule has been subjected to the auditing procedúr~s applied in the
audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation
to the financial statements taken as a whole.
~ l' ~ (2{J:;{ -
Salina, Kansas
April 30, 1997
I
-62-
MEMBERS OF
DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBliC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBliC ACCOUNTANTS
HARRISON & ARNETT
CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
EUGENE O. HARRISON. C.P.A.
THOMAS G. ARNETT. C.P.A.
719 EAST CRAWFORD. SALINA. KANSAS 67401
PHONE: (913) 827.7244
FAX: (913) 827.0048
INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL
STRUCTURE USED IN ADMINISTERING FEDERAL FINANCIAL
ASSISTANCE PROGRAMS
To the Board of Directors
Salina Airport Authority
Salina, Kansas
We have audited the financial statements of Salina Airport Authority, a component unit of the City
of Salina, Salina, Kansas, for the year ended December 31, 1996 and have issued our report thereon dated
April 30, 1997. We have also audited the compliance of the Salina Airport Authority with the
requirements applicable to major federal financial assistance programs and have issued our report thereon
dated April 30, 1997.
We conducted our audit in accordance with generally accepted auditing standards, the Kansas
Municipal Audit Guide, Government Auditing Standards, issued by the Comptroller General of the
United States, and Office of Management and Budget (OMB) Circular A-128, Audrts of State and Local
Governments. Those standards and OMB Circular A-128 require that we plan and perfonn the audit to
obtain reasonable assurance about whether the financial statements are ftee of mate:rial misstatement and
about whether the Salina Airport Authority complied with laws and regulations, noncompliance with
which would be material to a major federal financial assistance program.
In planning and performing our audit for the year ended December 31, 1996, we considered the
Authority's internal control structure in order to determine our auditing procedures for the purpose of
expressing our opinion on the Authority's financial statements and on it so compliaI1lce .~th requirements
applicable to major programs and to report on the internal control structure in ac:cordance with QMB
Circular A-128. This report addresses our consideration of internal control struCture policies and
procedures relevant to compliance with requirements applicable to federal financial assistance programs.
We have addressed internal control policies and procedures relevant to our 2LUdit of the financial
statements in a separate report dated April 30, 1997.
The management of Salina Airport Authority is responsible for establishing and maintaining an internal
control structure. In fulfilling this responsibility, estimates and judgments by management are required
to assess the expected benefits and related costs of internal control structure policies ;and procedures. The
objectives of an internal control structure are to provide management with reasonable, but not absolute,
assurance that assets are safeguarded against loss ftom unauthorized use or disposition, that transactions
are executed in accordance with management's authorization and recorded properly to permit the
preparation of financial statements in accordance with generally accepted accounting principles, and that
federal financial assistance programs are managed in compliance with applicable laws and regulations.
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MEMBERS OF
DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
Because of inherent limitations in any internal control structure, errors, irregularities, or instances of
noncompliance may nevertheless occur and not be detected. Also, projection of any evaluation of the
structure to future periods is subject to the risk that procedures may become inadequate because of
changes in conditions or that the effectiveness of the design and operation of policies and procedures may
deteriorate.
For the purpose of this report, we have classified the significant internal control structure policies and
procedures used in administering federal financial assistance programs in the following categories:
Accounting Controls
1. Receipts
2. Purchase/disbursement
3. Claims for reimbursement
Administrative Controls
1. General Requirements
Political Activity
Davis-Bacon Act
Civil Rights
Federal financial reports
Drug-Free Workplace Act
2. Specific requirements
Types of service allowed
Matching level of effort
Special reporting requirements
Special tests
F or all the internal control structure categories listed above, we obtained an understanding of the
design of relevant policies and procedures and determined whether they have been placed in operation,
and we assessed control risk.
During the year ended December 3 1, 1996, Salina Airport Authority had 100 percent of its total
federal financial assistance under the following major federal financial assistance program: Federal
Aviation Administration, Airport Development Program.
We perfonned tests of controls, as required by OMB Circular A-128, to evaluate the effectiveness of
the design and operation of internal control structure policies and procedures that we have considered
relevant to preventing or detecting material noncompliance with specific requirements, general
requirements, and requirements governing claims for advances and reimbursements and amounts claimed
or used for matching that are applicable to the aforementioned major program. Our procedures were less
in scope than would be necessary to render an opinion on these internal control structure policies and
procedures. Accordingly, we do not express such an opinion.
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We noted certain matters involving the internal control structure and its operation that we consider
to be reportable conditions under standards established by the American Institute of Certified Public
Accountants. Reportable conditions involve matters coming to our attention rdating to significant
deficiencies in the design or operation of the internal control structure that, in our judgment, could
adversely affect the Authority's ability to administer federal assistance programs in accordance with
applicable laws and regulations.
Due to small numbers of staff persons in the administrative office, the Authority is not able to provide
the segregation of duties common to larger organizations.
A material weakness is a reportable condition in which the design or operation of one or more of the
internal control structure elements does not reduce to a relatively low level the risk that noncompliance
with laws and regulations that would be material to a federal financial assistance program may occur and
not be detected within a timely period by employees in the normal course of performing their assigned
functions.
Our consideration of the internal control structure would not necessarily disclose all matter in the
internal control structure that might be reportable conditions and, accordingly, would not necessarily
disclose all reportable conditions that are also considered to be material weaknesses as defined above.
However, we believe the reportable condition described above is not a material we:akness.
This report is intended for the information of management and the Board of Directors. This restriction
is not intended to limit the distribution of this report, which is a matter of public record.
~~~~.
I
Salina, Kansas
April 30, 1997
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HARRISON & ARNETT
CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
EUGENE O. HARRISON, C.P.A.
THOMAS G, ARNETT, C.P.A,
719 EAST CRAWFORD. SALINA. KANSAS 67401
PHONE: (913) 827.7244
FAX: (913) 827.0048
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
WITH THE GENERAL REQUIREMENTS APPLICABLE TO
FEDERAL FINANCIAL ASSISTANCE PROGRAMS
To the Board of Directors
Salina Airport Authority
Salina, Kansas
We have audited the financial statements of Salina Airport Authority, a component unit of the City
of Salina, Salina, Kansas, as of and for the year ended December 31, 1996 and have issued our report
thereon dated April 30, 1996,
We have applied procedures to test Salina Airport Authority, Salina, Kansas, compliance with the
following requirements applicable to each of its federal financial assistance programs identified in the
schedule of federal financial assistance, for the year ended December 31, 1996: political activity, Davis-
Bacon Act, civil rights, federal financial reports, and Drug-tree Workplace Act.
Our procedures were limited to the applicable procedures described in the Office of Management and
Budget's Compliance Supplement for Single Audits of State and Local Governments. Our procedures
were substantially less in scope than an audit, the objective of which is the expression of an opinion on
Salina Airport Authority, Salina, Kansas, compliance with the requirements listed in the preceding
paragraph. Accordingly, we do not express such an opinion.
With respect to the items tested, the results of those procedures disclosed no material instances of
noncompliance with the requirements listed in the second paragraph of this report. With .respect to items
not tested, nothing came to our attention that caused us to believe that Salina Airport Authority, Salina,
Kansas, had not complied, in all material respects, with those requirements.
TIús report is intended for the information of management and the Board ofDireGtors. This restriction
is not intended to limit the distribution of this report, which is a matter of public record.
~ 1~(2LL(.,
,
Salina, Kansas
April 30, 1997
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MEMBERS OF
DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
HARRISON & ARNETT
CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
EUGENE O. HARRISON. C.P.A.
THOMAS G. ARNETT, C.P.A.
719 EAST CRAWFORD. SALINA. KANSAS 67401
PHONE: (913) 827.7244
FAX: (913) 827.0048
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH
SPECIFIC REQUIREMENTS APPLICABLE TO MAJOR FEDERAL
FINANCIAL ASSISTANCE PROGRAM TRANSACTIONS
To the Board of Directors
Salina Airport Authority
Salina, Kansas
We have audited the financial statements of Salina Airport Authority, a component unit of the City
of Salina, Salina, Kansas, as of and for the year ended December 31, 1996 and have issued our report
thereon dated April 30, 1997.
We have also audited Salina Airport Authority's compliance with the requirements governing types
of services; matching and reporting; that are applicable to each of its major federal financial assistance
programs, which are identified in the accompanying Schedule of Federal Financial.A.ssistance, for the year
ended December 31, 1996. The management of Salina Airport Authority, is responsible for the Salina
Airport Authority's compliance with those requirements. Our responsibility is to express an opinion on
compliance with those requirements based on our audit.
We conducted our audit of compliance with those requirements in accordance with generally accepted
auditing standards, Kansas Municipal Audit Guide, Government Auditing Standards, issued by the
Comptroller General of the United States; and Office of Management and Budget (OMB) Circular A-128,
AudÜs of State and Local Govermnents. Those standards and OMB Circular A-128 require that we plan
and perform the audit to obtain reasonable assurance about whether material noncompliance with the
requirements referred to above occurred. An audit includes examining, on a test basis, evidence about
the Salina Airport Authority's compliance with those requirements. We believe that our audit provides
a reasonable basis for our opinion. : ;:
"
The results of our audit procedures did not disclose any immaterial instances of noncomplianc.é with
the requirements referred to above.
In our opinion, Salina Airport Authority, complied, in all material respects, 'with the requirements
governing types of services; matching and reporting; that are applicable to each of its major federal
financial assistance programs for the year ended December 31, 1996.
This report is intended for the infonnation of management and the Board of Directors. However, this
report is a matter of public record and its distribution is not limited.
~ 4~ ~.
Salina, Kansas J
April 30, 1997
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MEMBERS OF
DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
SALINA AIRPORT AUTHORITY
Salina, Kansas
SCHEDULE OF INDEPENDENT AUDITORS' FINDINGS
Year Ended December 31, 1996
NONE
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