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Audit - 1989 CITY OF SALINA Salina, Kansas FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORTS December 31, 1989 KENNEDY AND COE Certified Public Accountants Salina, Kansas Exhibit A Exhibit B Schedule 1 Schedule 2 Schedule 3 CITY OF SALINA Salina, Kansas CONTENTS INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE RELATED MATTERS NOTED IN A FINANCIAL STATEMENT AUDIT CONDUCTED IN ACCORDANCE WITH GOVERÞmENT AUDITING STANDARDS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION - SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROLS (ACCOUNTING AND ADMINISTRATIVE) - BASED ON A STUDY AND EVALU- ATION MADE AS A PART OF AN AUDIT OF THE BASIC FINN~CIAL STATEMENTS AND THE ADDITIONAL TESTS REQUIRED BY THE SINGLE AUDIT ACT SCHEDULE OF INDEPENDENT AUDITORS' FINDINGS FINANCIAL STATEMENTS SUMMARY STATEMENT OF RECEIPTS, EXPENDITURES, AND BAù\NCES BY FUNDS AND COMPARISON OF CASH BALANCES WITH ENCŒ1- BRANCES STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET NOTES TO FINANCIAL STATEMENTS Supplemental Information Composition of Ending Cash Balances Comparison of Gross Cash Balances with Depository Security Schedule of Federal Financial Assistance Page 1-2 3 -4 5 6 7-9 10 11-12 13-29 30-39 40 41 42 Contents Exhibit A Exhibit B Exhibit C Exhibit D-l Exhibit D- 2 CITY OF SALINA Salina, Kansas CONTENTS (CONTD.) SEPARATE FINANCIAL STATEMENTS - WATER AND SEWERAGE DEPARTMENT INDEPENDENT AUDITORS' REPORT BALANCE SHEETS STATEMENTS OF INCOME STATEMENTS OF CONTRIBUTED CAPITAL AND RETAINED EARNINGS STATEMENT OF CASH FLOWS STATEMENT OF CHANGES IN FINANCIAL POSITION NOTES TO FINANCIAL STATEMENTS Page 43 44 45 46 47 48 49-53 Contents KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402-1100 913-825-1561 INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENTS To the Mayor and The Board of City Commissioners: We have audited the financial statements of the City of Salina, Kansas, as of and for the year ended December 31, 1989, as listed in the table of contents. Our audit included all funds and account groups except (1) Saline County-City Building Authority, Salina-Saline County Board of Health, and Salina Public Library, which we audit and report on separately. (2) Firemen's Relief Association, Salina Arts Commission, Salina Housing Authority, and the Salina Airport Authority, which are audited by other auditors who issue their separate reports. These financial statements are the responsibility of the City/s 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, Government Auditing Standards, issued by the Comptroller General of the United States, the provisions of Office of Management and Budget Circular A-128, "Audits of State and Local Governments," and the Kansas Minimum Standard Audit Program. 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 free 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. As discussed in Note 1, the City of Salina, Kansas, prepares its financial statements on a prescribed basis of accounting that demonstrates compliance with the cash basis and budget laws of the State of Kansas, which is a comprehensive basis of accounting other than generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the cash and unencumbered cash balances of the City of Salina, Kansas, as of December 31, 1989, and its receipts and expenditures for the year then ended, in accordance with the basis of accounting described in Note 1. Our audit was made for the purpose of forming an opinion on the financial state- ments taken as a whole. The accompanying supplemental information presented on pages 40 to 42 is presented for purposes of additional analysis and is not a required part of the financial statements. This information has been subjected to the auditing procedures applied in the audit of the financial statements mentioned above and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. -1- MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS This report is intended solely for the information and use of the Mayor, Board of City Commissioners and management of the City of Salina, Kansas, and for filing with the Kansas Department of Administration, Division of Accounts and Reports, the cognizant federal agency, and other applicable federal audit agencies and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which, upon acceptance by the City of Salina, Kansas, is a matter of public record. Salina, Kansas September 7, 1990 Respectfully submitted, ~~~ ~.~ C.P.A. Certified Public Accountant in charge of and actively engaged on this audit. -2- KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402-1100 913-825-1561 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL STRUCTURE RELATED MATTERS NOTED IN A FINANCIAL STATEMENT AUDIT CONDUCTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Mayor and The Board of City Commissioners: We have audited the financial statements of the City of Salina, Kansas, for the year ended December 31, 1989, and have issued our report thereon dated September 7, 1990. We conducted our audit in accordance with generally accepted auditing standards, 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 free of material misstatement. In planning and performing our audit of the financial statements of the City of Salina, Kansas, for the year ended December 31, 1989, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control structure. The management of the City of Salina, Kansas, is responsible for establishing and maintaining an internal control structure. In fulfilling this responsi- bility, estimates and judgments by management are required to assess the ex- pected 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 safe- guarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with the method of accounting described in Note 1 to the financial statements. Because of inherent limitations in any internal control structure, errors or irregularities 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 in the following categories: l. 2. 3. 4. Receipts Purchases/disbursements Cash and investment balances Financial reporting -3- MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS Our consideration of the internal control structure included all of the control categories listed above. The purpose of ou~ consideration of the internal con- trol structure was to determine the nature, timing and extent of the auditing procedures necessary for expressing an opinion on the financial statements. We noted certain matters involving the internal control structure and its oper- ation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable con- ditions involve matters coming to our attention relating to significant defi- ciencies in the design or operation of the internal control structure that, in our judgment, could adversely affect the entity/s ability to record, process, summarize, and report financial data consistent with the assertions of manage- ment in the financial statements. 1. Cash balances from the financial records of the City were not timely reconciled with bank balances. Cash accounts should be reconciled monthly to detect any errors or irregularities. 2. Encumbrances were not recorded during a portion of 1989. Recording of encumbrances is essential to the monitoring of unencumbered cash balances. 3. Journal entries were not adequately supported by documentation and/or detailed descriptions. Better documentation and descriptions would improve the operation of the internal control structure. A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration of the internal control structure would not necessarily dis- close all matters 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 none of the reportable conditions described abo've is a material weakness. We also noted other matters involving the internal control structure and its operation that we have reported to the management of the City of Salina in a separate letter dated September 7, 1990. This report is intended solely for the information and use of the Mayor, Board of City Commissioners and management of the City of Salina, Kansas, the Kansas Department of Administration, Division of Accounts and Reports, the cognizant federal agency, and other applicable federal audit agencies and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which, upon acceptance by the City of Salina, Kansas, is a matter of public record. Respectfully submitted, Salina, Kansas September 7, 1990 ~ .....<: ~ -4- HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402-1100 913-825-1561 KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Mayor and The Board of City Commissioners: We have audited the financial statements of the City of Salina, Kansas, as of and for the year ended December 31, 1989, and have issued our repor1: thereon dated September 7, 1990. We conducted our audit in accordance with generally accepted auditing standards, 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 free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the City of Salina, Kansas, is the responsibility of the City's management. As part of obtaining reasonable assurance about whether the financial statement:s are free of material misstatement, we performed tests of the City's compliance with cer- tain provisions of laws, regulations, contracts, and grants. However, our objective was not to provide an opinion on overall compliance with such provisions. The results of our tests indicate that, with respect to the items tested, the City of Salina, Kansas, complied, in all material respects, with the provisions referred to in the preceding paragraph, except as described in Note 7. With respect to items not tested, nothing came to our attention that caused us to believe that the City of Salina, Kansas, had not complied, in all material respects, with those provisions. This report is intended solely for the information and use of the Mayor, Board of City Commissioners and management of the City of Salina, Kansas, the Kansas Department of Administration, Division of Accounts and Reports, the cognizant federal agency, and other applicable federal audit agencies and should not be used for any other purpose. This restriction is not intended to limit distri- bution of this report which, upon acceptance by the City of Salina, Kansas, is a matter of public record. Respectfully submitted, Salina, Kansas September 7, 1990 ~--t~ -5- MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402-1100 913-825-1561 INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTAL INFORMATION - SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE To the Mayor and The Board of City Commissioners: We have audited the financial statements of the City of Salina, Kansas, for the year ended December 31, 1989, and have issued our report thereon dated September 7, 1990. These financial statements are the responsibility of the City's 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, 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 free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and dis- closures 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 state- ments of the City of 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 part of the financial statements. The infor- mation in that schedule has been subjected to the auditing procedures applied in the audit of the City's financial statements and, in our opinion, is fairly stated, on the basis of accounting described in Note 1 to the financial state- ments, in all material respects in relation to the financial statements taken as a whole. Respectfully submitted, Salina, Kansas September 7, 1990 ~~~ -6- MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO HOME OFFICE: P.O. BOX 1100 SALINA, KANSAS 67402-1100 913-825-1561 INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROLS (ACCOUNTING AND ADMINISTRATIVE) - BASED ON A STUDY AND EVALUATION MADE AS PART OF AN AUDIT OF THE BASIC FINANCIAL STATEMENTS AND THE ADDITIONAL TESTS REQUIRED BY THE SINGLE AUDIT ACT To the Mayor and The Board of City Commissioners: We have audited the financial statements of the City of Salina, Kansas, for the year ended December 31, 1989, and have issued our report thereon dat:ed September 7, 1990. As part of our audit, we made a study and evaluation of the internal control systems, including applicable internal administrative controls, used in administering federal financial assistance programs to the extent we considered necessary to evaluate the systems as required by generally accepted auditing standards, Government Auditing Standards, issued by the Comptroller General of the United States, the Single Audit Act of 1984, and the provisions of OMB Circular A-128, "Audits of State and Local Governments." For the purpose of this report, we have classified the significant internal accounting and ad- ministrative controls used in administering federal financial assist:ance programs in the following categories: Accounting Controls 1. Receipts 2. Purchases/disbursements 3. Cash and investment balances 4. Financial reporting Administrative Controls 1. General requirements Political activity Civil rights Cash management Federal financial reports 2. Specific requirements Types of services Reporting Special requirements -7- MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS The management of the City of Salina, Kansas, is responsible for establishing and maintaining internal control systems used in administering federal financial assistance programs. In fulfilling that responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of control procedures. The objectives of internal control systems used in ad- ministering federal financial assistance programs are to provide management with reasonable, but not absolute, assurance that, with respect to federal financial assistance programs, resource use is consistent with laws, regulatio.ns, and policies; resources are safeguarded against waste, loss, and misuse; and reliable data are obtained, maintained, and fairly disclosed in repo.rts. Because of inherent limitations in any system of internal accounting and admini- strative controls used in administering federal financial assistance programs, errors or irregularities may nevertheless occur and not be detected. Also, pro- jection of any evaluation of the systems to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. Our study included all of the applicable control categories listed above. During the year ended December 31, 1989, the City of Salina, Kansas, had no major federal financial assistance programs and expended 96% of its total federal financial assistance under the following nonmajor federal financial assistance program: U.S. Department of Housing and Urban Development - Community Development Block Grant/Small Cities Program for Housing Rehabilitation. With respect to internal control systems used in adIDinistering this nonmajor federal financial assistance program, our study and ev'aluation included considering the types of errors and irregularities that could occur, determining the internal control procedures that should prevent or detect such errors and irregularities, determining whether the necessary procedures are prescribed and are being followed satisfactorily, and evaluating any weaknesses. With respect to the internal control systems used solely in administ:ering the other nonmajor federal financial assistance programs of the City of Salina, Kansas, our study and evaluation was limited to a preliminary review' of the systems to obtain an understanding of the control environment and thee flow of transactions through the accounting system. Our study and evaluatio.n of the internal control systems used solely in administering these nonmajor federal financial assistance programs of the City of Salina, Kansas, did not extend beyond this preliminary review phase. Our study and evaluation was more limited than would be necessary to. express an opinion on the internal control systems used in administering the federal financial assistance programs of the City of Salina, Kansas. Accordingly, we do not express an opinion on the internal control systems used in administering the federal financial assistance programs of the City of Salina, Kansas. Also, our audit, made in accordance with the standards mentioned abo.ve, would not necessarily disclose material weaknesses in the internal control systems, for which our study and evaluation was limited to a preliminary review of the systems, as discussed in the fifth paragraph of this report. -8- However, our study and evaluation and our audit disclosed no condition that we believe to be a material weakness in relation to a federal financial assistance program of the City of Salina, Kansas. This report is intended solely for the information and use of the Mayor, Board of City Commissioners and management of the City of Salina, Kansas, the Kansas Department of Administration, Division of Accounts and Reports, the cognizant federal agency, and other applicable federal audit agencies and should not be used for any other purpose. This restriction is not intended to linlit the distribution of this report which, upon acceptance by the City of Salina, Kansas, is a matter of public record. Respectfully submitted, Salina, Kansas September 7, 1990 ~~~ -9- CITY OF SALINA Salina, Kansas SCHEDULE OF INDEPENDENT AUDITORS' FINDINGS Year Ended December 31, 1989 None. -10- FINANCIAL STATEMENTS CITY OF SALINA Salina, Kansas SUMMARY STATEMENT OF RECEIPTS, EXPENDITURES, AND BALANCES BY FUNDS AND COMPARISON OF CASH BALANCES WITH ENCUMBRANCES Year Ended December 31, 1989 Fund General Fund Special Revenue Funds Street Machinery Special Gasoline Tax Tourism and Convention Promotion Employee Benefit Fund Utility Fund Special Parks and Recreation Special Alcohol Programs Special Law Enforcement Special Liability Fund Special Assessment Escrow Business Improvement District Equipment Reserve Recreation Debt Service Fund Bond and Interest Capital Projects Fund Construction Fund Enterprise Funds Golf Course Sanitation Parking Meters Bicentennial Center Solid Waste Disposal Water and Sewerage Bicentennial Center Data Processing Events Fund Water and Sewerage Principal and Interest Account for Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984, and Combined Water and Sewage System Revenue Bonds, Series of 1987 and 1988 Unencumbered Cash Balance January 1, 1989 $2,899,010.53 63,380.31 130,574.70 155,038.96 128,328.76 8,465.79 9,235.41 14,936.91 20,118.65 113,661. 38 55,523.36 351,958.06 1,005,819.05 56,073.25 425,461. 02 34.60 174,047.06 510,350.26 341,532.19 14,465.47 64,773.03 409,199.50 Receipts $11,150,712.07 859,505.37 249,126.38 1,677,442.15 656,476.27 59,791. 48 59,791. 48 31,029.14 172,968.78 20,452.90 61,275.98 778,525.23 2,392,933.37 3,110,265.33 427,571. 81 811,088.25 676,304.79 515,154.51 9,799,462.78 542,674.13 142,174.57 1,025,955.70 Exhibit A Unencumbered Cash Balance Encumbrances Cash Balance Expenditures December 31, 1989 December 31, 1989 December 31, 1989 $ 9,854,825.11 $ 4,194,897.49 $ 434,110.40 $ 4,629,007.89 63,380.31 63,380.31 771,599.32 218,480.75 67,703.82 286,184.57 249,126.38 1,708,071. 11 124,410.00 65,684.59 190,094.59 642,745.89 142,059.14 62,578.24 204,637.38 53,150.00 15,107.27 15,107.27 53,920.00 15,106.89 15,106.89 29,619.97 1,409.17 1,409.17 178,144.00 9,761.69 9,761.69 20,452.90 20,452.90 80,896.54 498.09 498.09 113,661.38 779,934.24 54 , 114. 35 158,154.41 212,268.76 2,506,994.39 237,897.04 237,897.04 4,409,045.18 (292,960.80) 871,116.37 578,155.57 431,721.59 51,923.47 14,783.84 66,707.31 669,422.57 567,126.70 7,228.53 574,355.23 34.60 645,940.30 204,411.55 12,209.08 216,620.63 220,875.18 804,629.59 851. 95 805,481.54 8,239,450.01 1,901,544.96 2,618,976.92 4,520,521.88 537,259.52 19,880.08 19,880.08 159,881. 94 47,065.66 10,105.96 57,171.62 912,156.25 522,998.95 522,998.95 -11- CITY OF SALINA Salina, Kansas SUMMARY STATEMENT OF RECEIPTS, EXPENDITURES, AND BALANCES BY FUNDS AND COMPARISON OF CASH BALANCES WITH ENCUMBRANCES Year Ended December 31, 1989 Fund Unencumbered Cash Balance January 1, 1989 Water and Sewerage Reserve Accounts for Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984 Revenue Bonds, Series of 1987 Revenue Bonds, Series 1988 Depreciation and Emergency Replacement Extension and Bond Retirement $ 449,868.14 265,000.00 350,000.00 979,758.20 Intragovernmenta1 Funds Central Garage Risk Management 2,243.01 26,553.65 Trust and Agency Funds Citizenship Trust HUD Community Development Cemetery Endowment Mausoleum Endowment Fire Insurance Proceeds 13 , 911. 20 141,190.49 100,140.14 17,624.17 2,202.10 Totals (Memorandum Only) $9,300,479.35 The accompanying notes are an integral part of these financial statements. Receipts $ 34,834.87 300,000.00 584,640.16 739,279.27 725.40 223,657.35 2,631.74 375.00 133.85 $37,106,960.11 $ Expenditures 608,816.04 727,850.03 1,000.00 311,475.41 2,335.95 $34,899,952.90 Unencumbered Cash Balance December 31, 1989 $ 484,703.01 265,000.00 300,000.00 350,000.00 979,758.20 (21,932.87) 37,982.89 13,636.60 53,372.43 102,771.88 17,999.17 $11,507,486.56 Encumbrances December 31, 1989 $ 44,500.53 13 3 . 04 31,325.17 $4,399,462.85 Exhibit A (Contd.) Cash Balance December 31, 1989 $ 484,703.01 265,000.00 300,000.00 350,000.00 979,758.20 22,567.66 38,115.93 13,636.60 84,697.60 102,771.88 17,999.17 $15,906,949.41 -12- CITY OF SALINA Salina, Kansas STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 GENERAL FUND Receipts Current tangible tax Delinquent taxes Vehicle tax Local sales tax Bingo gross receipts tax City liquor tax Local ad valorem tax reduction State shared taxes Auto dealers tax stamps Franchise taxes Fees Municipal court fines Permits and inspection Interest from investments Miscellaneous Reimbursement of expenditures Transfers from other funds Total Receipts Expenditures Department City Commission City Manager Public information Finance Legal Municipal Court City Building Engineering Fire Permits and inspection Park Police Street Human Relations Emergency Medical Services Traffic Swimming Pools Planning Contingencies Arts and Humanities Cemetery Parking meter Actual $ 2,045,224.13 39,819.26 465,623.70 3,435,319.55 11,199.52 59,791. 50 301,592.00 239,922.62 1,531.86 1,379,636.52 834,485.94 304,691.15 223,617.96 837,920.90 25,827.05 609,589.21 334,919.20 11,150,712.07 486,552.87 141,068.74 24,633.49 280,359.61 83,048.93 96,944.90 202,172.04 141,446.97 1,795,894.17 136,556.50 514,254.96 1,851,140.52 601,530.21 93,708.17 593,416.40 108,339.60 51,306.37 98,714.00 117,954.75 129,035.18 63,764.41 39,013.81 Budget $ 2,068,337.00 $ 41,000.00 412,000.00 3,330,000.00 11,000.00 51,150.00 301,592.00 235,616.00 1,451,000.00 732,800.00 360,000.00 230,000.00 325,000.00 28,600.00 499,500.00 339,550.00 10,417,145.00 477 ,804.00 162,600.00 251,900.00 69,700.00 93,155.00 208,740.00 153,710.00 1,737,230.00 135,434.00 510,000.00 1,839,230.00 619,850.00 105,020.00 603,870.00 107,000.00 48,800.00 96,700.00 1,049,780.00 125,600.00 63,140.00 41,910.00 Exhibit B (Over) Under Budget 23,112.87 1,180.74 (53,623.70) (105,319.55) (199.52) (8,641.50) (4,306.62) (1,531.86) 71,363.48 (101,685.94) 55,308.85 6,382.04 (512,920.90) 2,772.95 (110,089.21) 4,630.80 (733,567.07) (8,748.87) 21,531. 26 (24,633.49) (28,459.61) (13,348.93) (3,789.90) 6,567.96 12,263.03 (58,664.17) (1,122.50) (4,254.96) (11,910.52) 18,319.79 11,311.83 10,453.60 (1,339.60) (2,506.37) (2,014.00) 931,825.25 (3,435.18) (624.41) 2,896.19 -13- Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 CITY OF SALINA Salina, Kansas Actual Budget (Over) Under Budget GENERAL FUND (CONTD.) Expenditures (Contd.) Department (Contd.) Museum Floodworks Neighborhood Centers Capital Outlay Transfers to other funds Total Expenditures $ 176,200.28 $ 170,300.00 $ (5,900.28) 63,711.79 62,920.00 (791.79) 76,518.27 71,900.00 (4,618.27) 1,042,751.17 4,115,685.00 3,072,933.83 844,787.00 290,000.00 (554,787.00) 9,854,825.11 13,211,978.00 3,357,152.89 Receipts Over (Under) Expenditures 1,295,886.96 (2,794,833.00) (4,090,719.96) Unencumbered Cash Balance, January 1 2,899,010.53 2,794,833.00 (104,177.53) Unencumbered Cash Balance, December 31 $4,194,897.49 $ ($4,194,897.49) STREET MACHINERY (NOTE 2) Receipts $ Expenditures Receipts Over Expenditures Unencumbered Cash Balance, January 1 63,380.31 Unencumbered Cash Balance, December 31 $ 63,380.31 SPECIAL GASOLINE TAX Receipts Special gasoline tax $ 859,505.37 $ 820,000.00 ($ 39,505.37) Expenditures Personal services 67,724.83 72,020.00 4,295.17 Contractual services 550,000.00 550,000.00 Materials and supplies 148,447.74 154,700.00 6,252.26 Capital outlay 555,426.75 14,600.00 (540,826.75) Reserve 116,069.00 116,069.00 Total Expenditures 771,599.32 907,389.00 135,789.68 Receipts Over (Under) Expenditures 87,906.05 (87,389.00) (175,295.05) Unencumbered Cash Balance, January 1 130,574.70 87,389.00 (43,185.70) Unencumbered Cash Balance, December 31 $ 218,480.75 $ ($ 218,480.75) -14- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 TOURISM AND CONVENTION PROMOTION Receipts Transient guest tax Expenditures Contractual services Receipts Over Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 EMPLOYEE BENEFIT FUND Receipts Current tangible taxes Delinquent taxes Vehicle tax Social security contributions Employees retirement contributions Unemployment insurance contributions Retiree insurance contributions Reimbursement of expenditures Transfers from General Fund Total Receipts Expenditures Public officials and employee liability insurance Social security Police and fire retirement Employees retirement Group insurance Unemployment insurance Workman's compensation Earned leave Reserve Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual Budget (Over) Under Budget $ $ $ 873.62 249,126.38 250,000.00 249,126.38 250,000.OC~ 873.62 $ $ $ $1,240,018.58 22,022.12 251,477.45 $1,257,725.00 21,000.00 220,000.00 14,000.00 5,500.00 700.00 40,000.00 137,000.00 40,000.00 1,735,925.00 $ 17,706.42 (1,022.12) (31,477.45) 14,000.00 5,500.00 700.00 40,000.00 (11,724.00) 24,800.00 58,482.85 148,724.00 15,200.00 1,677,442.15 $ 73,700.00 73,700.00 233,382.77 225,000.00 (8,382.77) 515,791.63 483,000.00 (32,791.63) 51,280.02 54,000.00 2,719.98 592,479.10 620,000.00 27,520.90 14,849.04 20,000.00 5,150.96 210,750.00 210,750.00 15,838.55 45,000.00 29,161. 45 180,000.00 180,000.00 1,708,071.11 1,911,450.00 203,378.89 (30,628.96) (175,525.00) (144,896.04) 155,038.96 175,525.00 20,486.04 124,410.00 $ ($ 124,410.00) -15- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 (Over) Under Actual Budget Budget UTILITY FUND Receipts Current tangible taxes $ 519,865.09 $ 527,264.00 $ 7,398.91 Delinquent taxes 9,932.97 9,500.00 (432.97) Vehicle taxes 112,678.21 100,000.00 (12,678.21) Transfers from General Fund 14,000.00 14,000 . O(~ Total Receipts 656,476.27 650,764.00 (5,712.27) Expenditures Gas service 52,569.77 43,000.00 (9,569.77) Light and power service 250,496.64 238,000.00 (12,496.64) Water service 65,243.03 57,500.00 (7,743.03) Traffic control signals 33,222.85 47,000.00 13,777.15 Street lighting 241,213.60 280,000.00 38,786.40 Reserve 130,000 . O(~ 130,000.00 Total Expenditures 642,745.89 795,500.0(~ 152,754.11 Receipts Over (Under) Expenditures 13,730.38 (144,736.00) (158,466.38) Unencumbered Cash Balance, January 1 128,328.76 144, 736.0(~ 16,407.24 Unencumbered Cash Balance, December 31 $ 142,059.14 $ ($ 142,059.14) SPECIAL PARKS AND RECREATION Receipts City liquor tax $ 59,791. 48 $ 51,150.00 ($ 8,641. 48) Expenditures Transfer to General Fund 53,150.00 53,150.00 Receipts Over (Under) Expenditures 6,641.48 (2,000.00) (8,641.48) Unencumbered Cash Balance, January 1 8,465.79 2,000.00 (6,465.79) Unencumbered Cash Balance, December 31 $ 15,107.27 $ ($ 15,107.27) SPECIAL ALCOHOL PROGRAMS Receipts City liquor tax $ 59,791. 48 $ 51,150.00 ($ 8 , 641. 48) Expenditures Contractual services 53,920.00 53,920.00 Receipts Over (Under) Expenditures 5,871.48 (2,770.00) (8,641. 48) Unencumbered Cash Balance, January 1 9,235.41 2, 770 . 00 (6,465.41) Unencumbered Cash Balance, December 31 $ 15,106.89 $ ($ 15,106.89) -16- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 Budget (Over) Under Budget Actual SPECIAL LAW ENFORCEMENT (NOTE 2) Receipts $ 31,029.14 Expenditures 29,619.97 Receipts Over Expenditures 1,409.17 Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 $ 1,409.17 SPECIAL LIABILITY FUND Receipts Current tangible taxes $ 152,864.35 $ 155,000.00 $ 2,135.65 Delinquent tangible taxes 2,301.81 1,400.00 (901.81) Vehicle taxes 17,802.62 15 , 000 . OC~ (2,802.62) Total Receipts 172,968.78 171,400.0C~ (1,568.78) Expenditures Contractual services 178,144.00 178,144.00 Reserve 8,632.0C~ 8,632.00 Total Expenditures 178,144.00 186,776.0q 8,632.00 Receipts Over (Under) Expenditures (5,175.22) (15,376.00) (10,200.78) Unencumbered Cash Balance, January 1 14,936.91 15,376.0C~ 439.09 Unencumbered Cash Balance, December 31 $ 9,761.69 $ ($ 9,761. 69) SPECIAL ASSESSMENT ESCROW (NOTE 2) Receipts Prepaid special assessments $ 20,452.90 Expenditures Receipts Over Expenditures 20,452.90 Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 $ 20,452.90 -17- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 (Over) Under Actual Budget Budget BUSINESS IMPROVEMENT DISTRICT Receipts Assessment fees $ 61,275.98 $ 104,889.0C~ $ 43 , 613 . 02 Expenditures Contractual services 17,000.00 17,000.00 Sundry expenditures 63,896.54 107,475.0C~ 43,578.46 Total Expenditures 80,896.54 124 ,475 . OC~ 43,578.46 Receipts Over (Under) Expenditures (19,620.56) (19,586.00) 34.56 Unencumbered Cash Balance, January 1 20,118.65 19,586.0C~ (532.65) Unencumbered Cash Balance, December 31 $ 498.09 $ = ($ 498.09) EQUIPMENT RESERVE Receipts $ $ $ Expenditures Capital outlay 113,661.38 121,174. OQ 7,512.62 Receipts Over (Under) Expenditures (113,661. 38) (121,174.00) (7,512.62) Unencumbered Cash Balance, January 1 113,661. 38 l21,174.0(~ 7,512.62 Unencumbered Cash Balance, December 31 $ $ $ RECREATION Receipts Current tangible taxes $ 424,717.51 $ 428,075.00 $ 3,357.49 Delinquent tangible taxes 10,684.35 12,842.00 2,157.65 Vehicle taxes 119,281.68 90,869.00 (28,412.68) Recreation activities 105,821.20 93,300.00 (12,521.20) Activity fund revenue 48,107.86 50,000.00 1,892.14 Concession revenue 35,419.99 33,500.00 (1,919.99) Interest income 18,254.00 10,000.00 (8,254.00) Reimbursement of expenditures 16,238.64 7,000.00 (9,238.64) Total Receipts 778,525.23 725,586.00 (52,939.23) -18- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 (Over) Under Actual Budget Budget RECREATION (CONTD.) Expenditures Personal services $ 317,289.92 $ 285,458.00 $ (31,831. 92) Contractual services 89,126.91 94,100.00 4,973.09 Materials and supplies 61,534.47 53,850.00 (7,684.47) Sundry expenditures 123,474.98 101,970.00 (21,504.98) Capital outlay 188,507.96 177,622.00 (10,885.96) Reverve 68,233.0C~ 68,233.00 Total Expenditures 779,934.24 781,233.0C~ 1,298.76 Receipts Over (Under) Expenditures (1,409.01) (55,647.00) (54,237.99) Unencumbered Cash Balance, January 1 55,523.36 55,647 . O(~ 123.64 Unencumbered Cash Balance, December 31 $ 54,114.35 $ ($ 54,114.35) BOND AND INTEREST Receipts Current tangible taxes $ 152,746.58 $ 154,995.00 $ 2,248.42 Delinquent tangible taxes 16,341. 56 17,000.00 658.44 Vehicle taxes 196,199.89 173,000.00 (23,199.89) Current special assessment taxes 808,415.40 850,000.00 41,584.60 Delinquent special assessment taxes 33,800.05 140,000.00 106,199.95 Interest from investments 95,091. 87 (95,091.87) Miscellaneous 39,188.54 (39,188.54) Prepaid special assessments 69,149.48 (69,149.48) Transfers from other funds 982,000.00 982,000.0(~ Total Receipts 2,392,933.37 2,316,995.00 (75,938.37) Expenditures General bond principal 465,000.00 585,000.00 120,000.00 General bond interest 171,637.50 275,200.00 103,562.50 Curb, gutter and paving principal (City share) 507,202.50 473,000.00 (34,202.50) Curb, gutter and paving principal (Property owner share) 732,797.50 702,000.00 (30,797.50) Curb, gutter and paving interest (City share) 270,937.77 250,500.00 (20,437.77) Curb, gutter and paving interest (Property owner share) 358,525.31 351,700.00 (6,825.31) Fiscal agency commission and postage 893.81 1,500.00 606.19 Reserve 100,000.00 100,000.00 Total Expenditures 2,506,994.39 2,738,900.00 231,905.61 -19- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 BONDS AND INTEREST (CONTD.) Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 CONSTRUCTION FUND (NOTE 2) Receipts Temporary notes Issuance of general obligation internal improvement bonds Transfers from other funds Reimbursements of expenditures Accrued interest collected on bonds issued Total Receipts Expenditures Payment of temporary notes, interest and issuance costs Contractual services Transfers to other funds Construction and capital outlay Total Expenditures Receipts Over (Under) Expenditures Actual (Over) Under Budget Budget ($ 114,061.02)($ 421,905.00)($ 307,843.98) 351,958.06 421,905 . OC~ 69,946.94 $ $ ($ 237,897.04 237,897.04) $1,835,000.00 1,175,000.00 69,743.34 13,860.55 16,661.44 3,110,265.33 1,228,561.35 39,306.59 867,518.05 2,273,659.19 4,409,045.18 (1,298,779.85) Unencumbered Cash Balance, January 1 1,005,819.05 Unencumbered Cash Balance, December 31 ($ 292,960.80) GOLF COURSE Receipts Membership and green fees Cart rental Cart storage Cart user fees Oil well lease Sales Reimbursement of expenditures Sales tax Total Receipts $ 206,143.00 $ 196,000.00 ($ 10,143.00) 82,604.86 86,000.00 3,395.14 4,720.00 5,000.00 280.00 5,893.00 6,000.00 107.00 3,891.16 4,000.00 108.84 106,344.65 122,000.00 15,655.35 11,594.47 2,000.00 (9,594.47) 6,380.67 (6,380.67) 427,571. 81 421 , 000 . OC~ (6,571.81) -20- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 GOLF COURSE (CONTD.) Expenditures Personal services Contractual services Materials and supplies Sundry expenditures Capital outlay Transfer to General Fund Reserve Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 SANITATION Receipts Service fees Interest from investments Miscellaneous sales and services Reimbursement of expenditures Transfer from Construction Fund Total Receipts Expenditures Personal services Contractual services Materials and supplies Transfer to General Fund Capital outlay Reserve Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 PARKING METERS Receipts Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual $ 196,522.31 20,601. 02 94,625.04 75,859.94 44,113.28 431,721. 59 (4,149.78) 56,073.25 $ 51,923.47 $ 727,505.14 31,705.00 1,878.11 50,000.00 811,088.25 399,410.57 95,830.46 97,139.26 45,000.00 32,042.28 669,422.57 141,665.68 425,461.02 $ 567,126.70 $ 34.60 (34.60) 34.60 $ Budget $ 157,000.00 85,625.00 78,000.00 50,500.00 21,000.00 16,000.00 67,891.00 476,016.0Q (55,016.00) 55,016.0Q $ $ 704,000.00 20,000.00 2,000.00 1,000.00 50,000.00 777,000.00 316,230.00 181,760.00 100,700.00 45,000.00 42,260.00 457,110.00 1,143,060.00 (366,060.00) 366,060.00 $ $ $ (Over) Under Budget $ (39,522.31) 65,023.98 (16,625.04) (25,359.94) (23,113.28) 16,000.00 67,891. 00 44,294.41 (50,866.22) (1,1057.25) ($ 51,923.47) $ (23,505.14) (11,705.00) 121. 89 1,000.00 (34,088.25) (83,180.57) 85,929.54 3,560.74 10,217.72 457,110.00 473,637.43 (507,725.68) (59,401.02) ($ 567,126.70) $ (34.60) 34.60 (34.60) $ -21- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 BICENTENNIAL CENTER Receipts Rent Concessions Reimbursement of expenditures Transfers from other funds Total Receipts Expenditures Personal services Contractual services Materials and supplies Sundry expenditures Capital outlay Reserve Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 SOLID WASTE DISPOSAL Receipts Service fees Income from leased land Interest from investments Transfer from Construction Fund Total Receipts Expenditures Personal services Contractual services Materials and supplies Capital outlay Transfer to General Fund Reserve Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual $ 150,986.30 312,111. 69 10,284.17 202,922.63 676,304.79 371,242.71 454.96 37,076.28 215,434.49 21,731. 86 645,940.30 30,364.49 174,047.06 $ 204,411.55 $ 295,629.88 2,412.12 48,948.00 168,164.51 515,154.51 106,240.52 7,262.09 67,746.91 26,225.66 13,400.00 220,875.18 294,279.33 510,350.26 $ 804,629.59 Budget $ 195,000.00 260,000.00 2,000.00 211,375.00 668,375.00 364,000.00 86,700.00 51,500.00 101,900.00 18,840.00 214,576.00 837,516.00 (169,141. 00) 169,141. 012 $ $ 285,000.00 100.00 23,000.00 193,025.012 501,125.00 87,550.00 38,465.00 76,600.00 13,400.00 713,589.00 929,604.012 {428,479.00) 428,479.00 $ (Over) Under Budget $ 44,013.70 (52,111. 69) (8 , 284.17) 8,452.37 (7,929.79) (7 , 242 . 71) 86,245.04 14,423.72 (113,534.49) (2,891.86) 214,576.00 191,575.70 (199,505.49) (4,906.06) ($ 204,411.55) $ (10,629.88) (2,312.12) (25,948.00) 24,860.49 (14,029.51) (18,690.52) 31,202.91 8,853.09 (26,225.66) 713,589.00 708,728.82 (722,758.33) (81,871.26) ($ 804,629.59) -22- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 WATER AND SEWERAGE FUND Receipts Water Sewerage Kansas Water Protection revenue Tapping and front footage service Service charge - Sanitation department Meter repair and service line revenue Interest income Miscellaneous income Sales tax collections Meter deposits Bond proceeds Rental income Total Receipts Expenditures Water supply Softening and treatment Pumping Distribution Customer accounting and collection Administrative and general Sewage treatment and collection Bond ordinance requirements Capital expenditures Sales tax remitted Meter deposits refunded Bond issue costs Transfer to Reserve for Combined Water and Sewage System Revenue Bonds Series 1988 Reserve Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual $ 4,851,563.62 1,273,605.50 19,785.64 20,134.68 14,293.66 16,365.45 346,011.15 117,789.89 99,763.19 40,150.00 3,000,000.00 9,799,462.78 116,283.55 997,067.05 205,860.03 507,011.12 321,128.55 1,062,451.04 642,272.41 972,368.86 2,973,243.86 99,763.19 37,425.00 4,575.35 300,000.00 8,239,450.01 1,560,012.77 341,532.19 $1,901,544.96 Budget (Over) Under Budget $4,737,440.00 ($ 114,123.62) 1,327,140.00 53,534.50 (19,785.64) 865.32 (1,293.66) (6,365.45) (96,011.15) (97,789.89) (3,763.19) (8,150.00) (3,000,000.00) 12,000.OQ 12,000.00 6,518,580.00 (3,280,882.78) 21,000.00 13,000.00 10,000.00 250,000.00 20,000.00 96,000.00 32,000.00 124,584.00 884,120.00 199,100.00 712,120.00 385,565.00 1,188,880.00 688,000.00 871,750.00 400,000.00 2,878,169.00 8,332,288.00 8,300.45 (112,947.05) (6,760.03) 205,108.88 64,436.45 126,428.96 45,727.59 (100,618.86) (2,573,243.86) (99,763.19) (37,425.00) (4,575.35) (300,000.00) 2,878,169.00 92,837.99 (1,813,708.00) (3,373,720.77) 1,472,175.81 1,813,708.0Q $ ($1,901,544.96) -23- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 Actual Budget (Over) Under Budget BICENTENNIAL CENTER EVENTS FUND Receipts $ 542,674.13 Expenditures Transfer of net rental fees to Bicentennial Center Fund Special events expenditures Total Expenditures 56,520.16 480,739.36 537,259.52 Receipts Over Expenditures 5,414.61 Unencumbered Cash Balance, January 1 14,465.47 Unencumbered Cash Balance, December 31 $ 19,880.08 DATA PROCESSING Receipts Sale of commodities $ 1,647.15 $ 750.00 ($ 897.15) Fees 138,497.42 135,900.00 (2,597.42) Computer programming service 2,030.00 2,000.00 (30.00) Total Receipts 142,174.57 l38,650.0Q (3,524.57) Expenditures Personal services 126,127.34 103,642.00 (22,485.34) Contractual services 28,799.20 54,270.00 25,470.80 Materials and supplies 4,699.46 5,000.00 300.54 Reserve 23,180.00 23,180.00 Capital outlay 255.94 (255.94) Total Expenditures 159,881. 94 186,092.00 26,210.06 Receipts Over (Under) Expenditures (17,707.37) (47,442.00) (29,734.63) Unencumbered Cash Balance, January 1 64,773.03 47,442.0Q (17,331.03) Unencumbered Cash Balance, December 31 $ 47,065.66 $ ($ 47,065.66) -24- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 Actual Budget (Over) Under Budget PRINCIPAL AND INTEREST ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM REFUNDING REVENUE BONDS, SERIES OF 1984, AND COMBINED WATER AND SEWAGE SYSTEM REVENUE BONDS, SERIES OF 1987 and 1988 (NOTE 2) Receipts Interest from investments Accrued interest collected on bonds issued Transfers from Water and Sewerage Fund Total Receipts $ 29,094.03 24,492.81 972,368.86 1,025,955.70 Expenditures Bond principal Bond interest Total Expenditures 390,000.00 522,156.25 912,156.25 Receipts Over Expenditures 113,799.45 Unencumbered Cash Balance, January 1 409,199.50 Unencumbered Cash Balance, December 31 $ 522,998.95 RESERVE ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM REFUNDING REVENUE BONDS, SERIES OF 1984 (NOTE 2) Receipts Interest from investments $ 34,834.87 Expenditures Receipts Over (Under) Expenditures 34,834.87 Unencumbered Cash Balance, January 1 449,868.14 Unencumbered Cash Balance, December 31 $ 484,703.01 -25- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 Actual Budget (Over) Under Budget RESERVE ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM REVENUE BONDS, SERIES OF 1987 (NOTE 2) Receipts $ Expenditures Receipts Over Expenditures Unencumbered Cash Balance, January 1 265,000.00 Unencumbered Cash Balance, December 31 $ 265,000.00 RESERVE ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM REVENUE BONDS, SERIES 1988 (NOTE 2) Receipts Transfer from Water and Sewerage Fund $ 300,000.00 Expenditures Receipts Over Expenditures 300,000.00 Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 $ 300,000.00 RESERVE ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM DEPRECIATION AND EMERGENCY REPLACEMENT (NOTE 2) Receipts $ Expenditures Receipts Over Expenditures Unencumbered Cash Balance, January 1 350,000.00 Unencumbered Cash Balance, December 31 $ 350,000.00 -26- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 Budget (Over) Under Budget Actual RESERVE ACCOUNT FOR COMBINED WATER AND SEWAGE SYSTEM EXTENSION AND BOND RETIREMENT (NOTE 2) Receipts $ Expenditures Receipts Over Expenditures Unencumbered Cash Balance, January 1 979,758.20 Unencumbered Cash Balance, December 31 $ 979,758.20 CENTRAL GARAGE (NOTE 2) Receipts Reimbursement of expenditures $ 584,640.16 Expenditures Personal services Materials and supplies Sundry expenditures Capital outlay Total Expenditures 133,994.01 458,044.68 6,459.41 10,317.94 608,816.04 Receipts Over (Under) Expenditures (24,175.88) Unencumbered Cash Balance, January 1 2,243.01 Unencumbered Cash Balance, December 31 ($ 21,932.87) RISK MANAGEMENT (NOTE 2) Receipts Reimbursement of expenditures $ 739,279.27 Expenditures Personal services Contractual services Materials and supplies Sundry expenditures Capital outlay Total Expenditures 38,844.40 684,700.37 1,360.90 2,866.42 77 .94 727,850.03 Receipts Over (Under) Expenditures 11,429.24 Unencumbered Cash Balance, January 1 26,553.65 Unencumbered Cash Balance, December 31 $ 37,982.89 -27- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 CITIZENSHIP TRUST (NOTE 2) Receipts Interest from investments Expenditures Contractual services Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 $ HUD COMMUNITY DEVELOPMENT (NOTE 2) Receipts Interest from investments Community Development Block Grants Reimbursement of expenditures Total Receipts Expenditures Personal services Contractual services Materials and supplies Return of Community Development Block Grant funds to State of Kansas Total Expenditures Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 Actual (Over) Under Budget Budget $ 725.40 1,000.00 (274.60) 13 , 911. 20 13,636.60 $ 10,181. 82 201,000.00 12,475.53 223,657.35 35,824.84 188,007.38 743.19 86,900.00 311,475.41 (87,818.06) 141,190.49 $ 53,372.43 -28- CITY OF SALINA Salina, Kansas Exhibit B (Contd.) STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET Year Ended December 31, 1989 CEMETERY ENDOWMENT (NOTE 2) Budget (Over) Under Budget Actual Receipts Perpetual care deposits $ 2,631.74 Expenditures Receipts Over Expenditures 2,631. 74 Unencumbered Cash Balance, January 1 100,140.14 Unencumbered Cash Balance, December 31 $ 102,771.88 MAUSOLEUM ENDOWMENT (NOTE 2) Receipts $ 375.00 Expenditures Receipts Over Expenditures 375.00 Unencumbered Cash Balance, January 1 17,624.17 Unencumbered Cash Balance, December 31 $ 17,999.17 FIRE INSURANCE PROCEEDS (NOTE 2) Receipts Income from investments $ 133.85 Expenditures 2,335.95 Receipts Over (Under) Expenditures Unencumbered Cash Balance, January 1 Unencumbered Cash Balance, December 31 $ (2,202.10) 2,202.10 The accompanying notes are an integral part of these financial statements. -29- CITY OF SALINA Salina, Kansas NOTES TO FINANCIAL STATEMENTS December 31, 1989 1. Summary of Significant Accounting Policies a. Reporting Entity The accompanying financial statements include all funds and account groups except Saline County-City Building Authority, Salina-Saline County Board of Health, Salina Public Library, Firemen's Relief Association, Salina Arts Commission, Salina Housing Authority, and Salina Airport Authority. Separa1~e financial statements are prepared for each of these entities. b. Basis of Statement Presentation The City maintains its accounting records in accordance with the principles of fund accounting in order to ensure observance of limitations and restric- tions placed on the use of resources available. This is the procedure by which resources are classified for accounting and reporting into funds estab- lished according to their nature and purposes. The City of Salina maintains its accounting records for all funds on the cash basis, except that expenditures incurred but not paid and purchase commitments at December 31 are recorded as encumbrances at that date. This method serves to develop information relative to compliance with the budget, cash basis, and other statutes applicable to municipalities within the State of Kansas. The method is not, however, in accordance with generally accepted accounting principles for municipalities. Generally accepted accounting principles require: a. Revenues of governmental funds to be recorded on the modified accrual basis whereby receivables are recorded for amounts available and measurable, and deferred revenues are recorded for amounts measurable but not available. The City does not record receivables and deferred revenues. b. Expenditures to be recorded generally on the accrual basis. The City records purchase commitments as encumbrances at year-end, and any loss from loss contingencies and expense for compensated absences are recorded when such amounts are payable. c. The General Fixed Assets and the General Long-Term Debt Account Groups to be maintained. The City does not maintain these account groups. d. Transfers between funds to be recorded as reductions to fund balance of the fund making the transfers and as additions to fund balance of the fund receiving the transfer. The City records such transfers as expenditures of the fund making the transfer and as receipts of the fund receiving the transfer. -30- e. The annual financial statements to include a combined balance sheet for all fund types and account groups; a combined statement of revenues, expenditures, and changes in fund balance for all governmental fund types and expendable trust funds; a combined statement of revenues, expenses, and changes in retained earnings, and changes in financial position for all proprietary fund types; and a combined statement of revenues, expenditures, and changes in fund balance and combined comparison with budget for all govern- mental fund types. These required financial statements are not included in this report. The City has, by charter ordinance, elected to exempt itself from the Kansas statutory requirement to maintain fixed asset records, and has requested the Director of Accounts and Reports to waive the requirements of K,S.A. 75-ll20a as related to the preparation of financial statements in conformity with gener- ally accepted accounting principles. 2. 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 funds, and enterprise funds. The statutes provide for the following sequence and timetable in the adoption of the legal annual operating budget: a. Preparation of the budget for the succeeding calendar year on or before August 1st. Publication in local newspaper of the proposed budget and notice of public hearing on the budget on or before August 5th. Public hearing on or before August 15th, but at least ten days after publication of notice of hearing. Adoption of the final budget on or before August 25th. b. c. d. The statutes allow for 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 following amendment to the original budget was approved by the governing body: Recreation Fund expenditures of $781,233.00. The statutes permit transferring 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 cash basis of accounting, modified by the recording of encumbrances as expenditures. Receipts are recognized when cash is received. Expenditures include disbursements, accounts payable, and encumbrances. Encumbrances are commitments by the muni- cipality for future payments and are supported by a document evidencing the com- mitment, such as a purchase order or contract. All unencumbered appropriations (legal budget expenditure authority) lapse at year-end. -31- A legal operating budget is not required for the following funds: Special Revenue Funds - Certain of the special revenue funds are not budgeted since their revenues are designated for a special purpose or the fund represents a clearing account. Capital Projects Fund - The capital projects fund is not budgeted since provision for payment of expenditure is from the issuance of bonds, temporary notes, and special assessments and charges. Bicentennial Center Event Fund - This fund is used as a clearing account for special events when the City acts as the promoter's agent. The City's rental fees from such events are transferred from the fund to the Bicentennial Center Fund. Water and Sewerage Bond Fund and Reserve Accounts - These funds are not budgeted since receipts and expenditures are in accordance with requirements of applicable bond issues. Central Garage and Risk Management - These funds are intra- governmental funds whose expenditures are reimbursable by other funds. Trust and Agency Funds - The individual trust and agency funds are not subject to the budget law since the assets do not belong to the City of Salina. 3. Cash Kansas municipalities, such as the City of Salina, are authorized by Kansas statutes to invest funds in: (1) Temporary notes or no-fund warrants issued by the investing governmental unit, Time deposit, open accounts or certificates of deposit, Time certificates of deposit, Repurchase agreements, and United States Treasury bills or notes with maturities not exceeding six months. (2) (3) (4) (5) Deposits or investments with qualifying financial institutions are to be secured by a bond or by the pledge of certain types of securities specified by statute. Cash and investments of the City of Salina deposited with financial institutions were 100% insured or collateralized by securities provided by such depository financial institutions at December 31, 1989. Cash and investments were comprised of the following as of December 31, 1989. Petty cash funds Cash in checking and temporarily invested in repurchase agreements Cash in NOW accounts Certificates of deposit Treasury bills, at cost (Market value, $993,393.06) $ 4,890.00 3,491,356.51 88,237.83 11,326,000.00 992,059.35 Total $15,902,543.69 -32- 4. Long-Term Obligations a. Changes in Long-Term Debt The following is a summary of bond transactions of the City for the year ended December 31, 1989: General Obligation Revenue Total Outstanding bonds at January 1, 1989 $11,825,000.00 $4,110,000.00 $15,935,000.00 New bonds issued: 1989 Internal improvement 1,175,000.00 1,175,000.00 1988 Water and Sewage revenue 3,000,000.00 3,000,000.00 Bonds retired 1,705,000.00 390,000.00 2,095,000.00 Outstanding Bonds at December 31, 1989 $11,295,000.00 $6,720,000.00 $18,015,000.00 Outstanding bonds at December 31, 1989, are comprised of the following indi- vidual issues: General Obligation Bonds: $8,115,000 General Obligation Refunding Bonds, Series 1985, due in semi-annual installments of $160,000 to $400,000 through April 1, 1996, interest at 7.75% to 9.00%. $ 3,500,000.00 $1,983,000 General Obligation Internal Improvement Bonds, Series 1986, due in annual installments of $180,000 to $270,000 through December 1, 1996, interest at 5.2% to 5.7%. 1,630,000.00 $5,000,000 General Obligation Internal Improvement Bonds, Series 1987, due in annual installments of $500,000 through December 1, 1997, interest at 6.10% to 6.65%. 4,000,000.00 $1,115,000 General Obligation Internal Improvement Bonds, Series 1988, due in annual installments of $90,000 to $125,000 through December 1, 1998, interest at 6.15% to 8.15%. 990,000.00 $1,175,000 General Obligation Internal Improvement Bonds, Series 1989, due in annual installments of $115,000 to $120,000 through December 1, 1999, interest at 5.800% to 7.875%. 1,175,000.00 Total $11,295,000.00 -33- Revenue Bonds: $2,770,000 Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984, due in annual install- ments of $160,000 to $345,000 through February 15, 1994, interest at 9.00% to 9.75%. $ 1,280,000.00 $2,650,000 Combined Water and Sewage System Revenue Bonds, Series of 1987, due in annual installments of $80,000 to $230,000 through October 1, 2007, interest at 7.0% to 8.5%. 2,505,000.00 $3,000,000 Combined Water and Sewage System Revenue Bonds, Series 1988, due in annual installments of $70,000 to $285,000 through October 1, 2008, interest at 6.0% to 9.5%. $ 2,935,000.00 Total $ 6,720,000.00 The annual requirements to amortize all bonds outstanding as of December 31, 1989, are as follows: Payable in Year Ended General December 31, Obligation Revenue Total Principal 1990 $ 1,710,000.00 $ 425,000.00 $ 2,135,000.00 1991 1,580,000.00 350,000.00 1,930,000.00 1992 1,485,000.00 485,000.00 1,970,000.00 1993 1,515,000.00 530,000.00 2,045,000.00 1994 1,430,000.00 355,000.00 1,785,000.00 Thereafter 3,575,000.00 4,575,000.00 8,150,000.00 Total Principal 11,295,000.00 6,720,000.00 18,015,000.00 Interest 1990 758,721.25 523,600.00 1,282,321.25 1991 639,455.00 489,035.00 1,128,490.00 1992 532,033.75 451,375.00 983,408.75 1993 432,015.00 404,970.00 836,985.00 1994 329,123.00 364,460.00 693,583.00 Thereafter 459,674.50 2,777,585.00 3,237,259.50 Total Interest 3,151,022.50 5,01l,025.00 8,162,047.50 Total Principal and Interest $14,446,022.50 $1l,73l,025.00 $26,177,047.50 The City's share and property owner's share of the general obligation bonds outstanding are $8,227,463.20 and $6,218,559.30, respectively. -34- b. Revenue Bonds The City has established certain reserve accounts pursuant to bond ordinances authorizing the issuance of Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984 and the Combined Water and Sewage System Revenue Bonds, Series of 1987 and 1988, to provide funds for the retirement of the bonds and payment of interest thereon and for making replacements to the system in the event other funds are not available. The gross revenues of the Water and Sewerage Department are pledged to secure payment of the bonds; however, the pledge is subordinate to a similar pledge to secure payment of certain defeased bonds. The amounts required to be maintained in the reserve accounts estab- lished by the bond ordinances authorizing issuance of the 1984, 1987 and 1988 bonds have been provided and the total revenues of the water and sewerage system appear sufficient to meet the requirements of the ordinance. c. Prior-Year Defeasance of Debt In prior years, the City defeased certain general obligation and revenue bonds by placing the proceeds of new bonds and cash and certain investments in irrevocable trusts to provide for all future debt service payments on the old bonds. Accordingly, the trust accounts assets and the liability for the defeased bonds are not included in the City's financial statements. On December 31, 1989, a total of $4,069,000.00 of general obligation and $6,948,000.00 of revenue bonds are considered defeased. 5. Capital Projects Fund The Capital Projects Fund is used to account for the purchase or construction of capital facilities, equipment, and public improvements. A summary of the fund's unencumbered cash balance at December 31, 1989, follows: Cash balance resulting from Capital projects completed Capital projects in process Special assessments projects $ 257.12 (17,367.48) (275,850.44) Total ($292,960.80) The deficit balance of unencumbered cash will be funded by the issuance of bonds in 1990. General funds are being used to temporarily finance the deficit cash balance as of December 31, 1989 in accordance with K.S.A. 10-1116(a)(2). 6. Financing of Deficit Cash Balance Expenditures of the Central Garage are reimbursable by other funds. Accrued revenues of the fund exceed the unencumbered cash deficit at December 31, 1989; accordingly, such deficit is not a violation of the Kansas cash basis law. -35- 7. Compliance with Kansas Statutes A summary of statutory violations related to 1989 follows. Quarterly financial statements of the City were not published for the quarters ended September 30 and December 3l, 1989, which appears to be a violation of K.S.A. 12-1608. a. b. The City did not maintain a record of encumbrances during May to September 1989, which appears to be a violation of K.S.A. 10-1117. Expenditures of the Parking Meters fund exceeded budgeted expenditures for the year ended December 31, 1989, by $34.60, which appears to be a violation of the Kansas budget law (K.S.A. 79-2935). c. 8. Fund Transfers Following is a schedule of transfers between funds for the year 1989. From Special Parks and Recreation Parking meters General Fund Bicentennial Center Events Fund Water and Sewerage - Bond Ordinance requirements General Fund - Museum General Fund General Fund General Fund Solid waste Sanitation Business Improvement District - Contractual Services Construction Construction Construction Fund Construction Fund Construction Fund Construction Fund Water and Sewerage Fund To General Fund General Fund Employee Benefit Fund Bicentennial Center - Rent Principal and Interest Account for Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984, and Com- bined Water and Sewage System Revenue Bonds, Series of 1987 and 1988 Utili ty Fund Bicentennial Center Bond and Interest Construction Fund General Fund General Fund General Fund Sanitation Solid Waste General Fund - Engineering fees General Fund Bicentennial Center Bond and interest Reserve Account for Combined Water and Sewage System Revenue Bonds, Series 1988 Amount $ 53,150.00 34.60 15,200.00 56,520.16 972,368.86 14,000.00 200,000.00 582,000.00 47,587.00 13,400.00 45,000.00 17,000.00 50,000.00 168,164.51 233,385.13 9,300.00 2,922.63 400,000.00 300,000.00 -36- 9. Defined Benefit Pension Plan Substantially all full-time employees of the City of Salina par1~icipate in the Kansas Public Employees Retirement System (the System), a multiple-employer public employee retirement system. A group of employees participate in the Kansas Police and Firemen System (KP&F), a separate program administered by the System. Following is a summary of covered payroll and contributions to 1~he System for the year ended December 31, 1989. Covered Contributions Payroll Employer Employee Total General employees $4,398,327.85 $ 87,872.40 $195,122.54 c' 282,994.94 ,? Police and firemen 3,434,791.67 515,791. 63 220,448.32 736,239.95 Totals $7,833,119.52 $603,664.03 $415,570.86 ~?1,019,234.89 The total payroll for the City of Salina was $8,686,550.50 for 1:he year ended December 31, 1989. Substantially all general employees of the City of Salina are eligible to par- ticipate in the System after one year of employment. Employees who retire at or after age 65 are entitled to a retirement benefit, payable monthly for life, equal to 1 percent of their final average salary for each year of "prior" ser- vice and 1.25 to 1.5 percent for each year of "participating" service depending upon the number of years of service. Final average salary is the employee's average salary over the highest four years of credited service. Benefits fully vest on reaching lO years of service. Vested employees may retire at age 55 to 65 with 10 years of credited service and receive redueed retirement benefits. The system also provides death and disability benefi1:s. Benefits are established by State statute. Covered general employees are required by State statute to contribute 4% of their salary to the plan; in addition, there are various options available to covered employees, where the employees may make additional contributions. The employer is required by the same statute to contribute the remaining amounts necessary to pay benefits when due. The employer's contribution was 2% of covered payroll for 1989. The retirement benefits for participants in KP&F are different from those described above for other participants in the System. Normal retirement for KP&F participants is at age 55. They can retire at age 50 \vith 20 years of service, but with reduced benefits. The contribution rate was 3% to 7% for employees and 15% for the employer for 1989. The "pension benefit obligation" is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure, which is the actuarial present value of credited projected benefits, is intended to help users assess the System's funding status on a going-concern basis and assess -37- progress made in accumulating sufficient assets to pay benefits when due. The System does not make separate measurements of assets and pension benefit obligation for individual employers. The pension benefit obligation at January 1, 1989, for the System as a whole, determined through an actuarial valuation performed as of that date, was $3.61 billion. The System's net assets available for benefits on that date were estimated to be $3.03 billion, leaving an unfunded pension benefit obligation estimated at $584 million. Other information related to the system can be found in the System's 1989 comprehensive annual financial report. 10. Construction Fund Projects Construction fund projects cumulative expenditures through December 31, 1989, are compared to project authorizations as follows: Proiect Name Street and Drainage Improvements and Water Line and Sanitary Sewer Extensions (Georgetown Addition Downtown Redevelopment Street and Drainage Improvements and Water Line and Sanitary Sewer Extensions (Country Club Heights) Sidewalk Improvements (Project 88-765) Ohio Street and Iron Avenue Inter- section and Ohio Street South Improvements Broadway Overpass Street Improvements at Crawford Street and Ninth Street Intersection Second Street Drainage Improvements Widening of Crawford Street between Ohio Street and 1-135 Water and Sanitary Sewer Extensions and Street Improvements (Country Club Estates) Sidewalk Improvements (Project 89-791) Proj ect Authorization $ 758,907.88 6,500,000.00 400,533.79 99,998.84 800,000.00 395,000.00 480,000.00 12,500.00 1,525,504.50 91,717.42 Cumulative Expenditures $ 684,494.03 5,199,506.41 353,486.56 68,895.10 816,830.29 380,599.37 49,621. 94 463,761. 98 12,500.00 1,241,763.46 64,833.00 Cumulative expenditures through December 31, 1989, exceeded the project authorization as of December 31, 1989, for (a) Ohio Street and Iron Avenue Intersection and Ohio Street South Improvements project and (b) Street Improvements at Crawford Street and Ninth Street Intersection project, which appear to be in violation of the Kansas budget law (K.S.A. 79-2935). A project authorization of $720,000.00 was subsequently approved for the latter project in April 1990. -38- 11. Temporary Notes The following is a summary of temporary note transactions of the City for the year ended December 31, 1989: Outstanding debt at January 1, 1989 Temporary notes issued Temporary notes paid $1,125,000.00 1,835,000.00 (1,125,000.00) Outstanding Debt at December 31, 1989 $1,835,000.00 Outstanding debt at December 31, 1989, is comprised of a $395,000.00 temporary note issued on April 1, 1989, at an interest rate of 7.5%; a $480,000.00 temporary note issued on November 1, 1989, at an interest rate of 6.6%; and a $960,000.00 temporary note issued on November 1, 1989, at an interest rate of 6.8%. 12. Compensated Leave 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 which 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. All regular employees with at least one year of service are entitled to paid vacation time. Such leave is granted each year of employment and unused leave may accumulate to a maximum of one year's accumulation of vacation leave. Employees are paid for all accumulated vacation leave at their eurrent wage scale upon termination of employment. As of December 31, 1989, the estimated amount of liability for ,~he vested portion of unused sick leave and accumulated vacation leave is ~?640,998.00 and $327,755.00, respectively. Substantially all the liability is not payable from currently available unencumbered cash and, accordingly, has not been recorded in the accompanying financial statements. 13. Subsequent Bond Issue The City issued $7,865,000.00 Combined Water and Sewage System Revenue Bonds dated July 1, 1990, for the purpose of refunding all outstanding revenue bond issues and to finance certain improvements to the water and sewerage system. 14. Contingencies A number of claims have been filed against the City alleging unlawful conduct by certain members of the City's police department. The claimants seek actual and punitive damages. Only one of these claims has been filed in a court of jurisdiction, and such claim is in the process of discovery. The ultimate resolution of these pending claims cannot presently be determined. -39- Supplemental Information Cash in Depositories Bank IV - Salina, N .A., Salina, Kansas National Bank of America, Salina, Kansas First National Bank and Trust, Salina, Kansas First Bank and Trus t Co., Salina, Kansas Total Cash in Depositories CITY OF SALINA Salina, Kansas COMPOSITION OF ENDING CASH BALANCES December 31, 1989 Cash in Checking Cash in NOW Accounts $ $ 3,491,356.51(1) 38,890.60 49,347.23 $3,491,356.51 $ 88,237.83 Petty Cash Funds U.S. Treasury bills, due June 21, 1990 Total Certificates of Deposit $ 1,316,000.00 1,000,000.00 7,010,000.00 2,000,000.00 $11,326,000.0(~ (1) Includes Repurchase Agreement Balance of $3,480,000.00 Schedule 1 Total $ 1,316,000.00 1,000,000.00 10,540,247.11 2,049,347.23 14,905,594.34 992,059.35 4,890.00 $15,902,543.69 -40- CITY OF SALINA Salina, Kansas Schedule 2 COMPARISON OF GROSS CASH BALANCES WITH DEPOSITORY SECURITY December 31, 1989 Gross Cash Balances Demand Deposit Cash in checking Time Deposits Cash in NOW account Certificates of deposit Total Time Deposits Repurchase agreements - Totals Less FDIC Coverage Demand deposits Time deposits Total FDIC Coverage - Balances Securable by Collateral - Security required (100%) Security provided by depositories Amount Undersecured by Statute First National First Bank Bank IV National Bank Bank and and Trust -Salina, N.A. of America Trust Co. $ $ 5,543.41 $ 775,477.26 $ 38,890.60 50,973.30 1,316,000.00 1,000,000.00 7,010,000.00 2,000,000.00 1,316,000.00 1,000,000.00 7,048,890.60 2,050,973.30 3,480,000.00 1,316,000.00 1,005,543.41 11,304,367.86 2,050,973.30 5,543.41 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 105,543.41 200,000.00 100,000.00 $1,216,000.00 $ 900,000.00 $11,104,367.86 $1,950,973.30 $1,216,000.00 $ 900,000.00 $11,104,367.86 $1,950,973.30 1,816,906.05 1,095,449.22 13,491,727.81 2,017,031.95 $ $ $ $ -41- CITY OF SALINA Salina, Kansas Schedule 3 SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE Year Ended December 31, 1989 Federal Grantor/ Unencumbered Unencumbered Pass Through Federal Cash Balance Cash Balance Grantor/ CFDA January 1, December 31, Program Title Number. 1989 Receipts Expenditures 1989 - U.S. Department of Housing and Urban Development - Emergency Shelter Grants Program (Passed through De- partment of Social and Rehabilitation Services) 14.231 $ $ 4,008.00 $ 4,008.00 $ U.S. Department of Housing and Urban Development - Community Development Block Grant/Small Cities Program (Passed Through Kansas Department of Commerce) Housing, Grant No. 87-HR-088 Housing, Grant No. 88-HR-027 14.219 8,000.00 8,000.00(1) 193,000.00 193,000.00 201,000.00 201,000.00 205,008.00 205,008.00 Total U.S. Department of Housing and Urban Development U.S. Department of Justice - Bureau of Justice Assistance/ Criminal Justice Block Grant Program (Passed Through Kansas Bureau of Investigation) 16.573 1,626.00 3,961.14 (2,335.14) Total Federal Financial Assistance $ $206,634.00 $208,969.14 ($2,335.14) (1) Expenditures included $101.00 of funds returned to the Kansas Depart:ment of Commerce. The above information does not include $86,900.00 of U.S. Department of Housing and Urban Development Community Development Block Grant/Small Cities Program - Xetec, Grant No. 85- BF-280 funds received from the subrecipient and returned to the Kansas Department of Commerce during the year ended December 3l, 1989. -42- SEPARATE FINANCIAL STATEMENTS WATER AND SEWERAGE DEPARTMENT CITY OF SALINA Salina, Kansas WATER AND SEWERAGE DEPARTMENT FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT December 31, 1989 and 1988 KENNEDY AND COE Certified Public Accountants Salina, Kansas KENNEDY AND CaE CERTIFIED PUBLIC ACCOUNTANTS HOME OFFICE: P.O, BOX 1100 SALINA, KANSAS 67402.1100 913-825-1561 INDEPENDENT AUDITORS' REPORT OFFICES IN KANSAS NEBRASKA OKLAHOMA COLORADO To the Mayor and The Board of City Commissioners: We have audited the balance sheets of the Water and Sewerage Department of the City of Salina, Kansas, as of December 31, 1989 and 1988, and the related state- ments of income and contributed capital and retained earnings for the years then ended, the statement of cash flows for the year ended December 31, 1989, and the statement of changes in financial position for the year ended December 31, 1988. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 audits provide a reasonable basis for our opinion. As discussed in Note 1, the financial statements present only the w"ater and Sewerage Department and are not intended to present fairly the financial position of City of Salina, Kansas, and the results of its operations, cash flows and changes in financial position of its proprietary and similar trust fund types in conformity with generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Water and Sewerage Department of the City of Salina, Kansas, as of December 31, 1989 and 1988, and the results of its operations for the years then ended, its cash flows for the year ended December 31, 1989, and the changes in its financial position for the year ended December 31, 1988, in conformity with generally accepted accounting principles applied on a con- sistent basis, except for the change, with which we concur, in the presentation of a statement of cash flows in place of a statement of changes in financial position for the year ended December 31, 1989, as described in Note 8 to the financial statements. Respectfully submitted, Salina, Kansas September 7, 1990 ~-L~ ~,~ C.P.A. Certified Public Accountant in charge of and actively engaged on this audit. -43- MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS CITY OF SALINA Salina, Kansas WATER AND SEWERAGE DEPARTMENT BALANCE SHEETS ASSETS Current Assets Cash and cash equivalents Accounts receivable, net of doubtful accounts - 1989, Accrued interest receivable Total Current Assets allowance for $61,003; 1988, $46,632 Restricted Assets Cash and cash equivalents - Revenue bonds accounts Construction Current debt service Reserves for future debt service Depreciation and emergency replacement Extension and bond retirement Total Restricted Assets Property, Plant, and Equipment Land Water plant and equipment Sewerage plant and equipment Furniture and office equipment Construction in progress (Notes 4 and 6) Less accumulated depreciation Total Property, Plant, and Equipment Other Assets Prepaid supplies Deferred bond issuance costs, net accumulated amortization - 1989, 1988, $80,668 Total Other Assets of $101,632; Totals December 31, 1989 1988 $ 3,205,959 $ 1,650,617 441,763 32,592 3,680,314 382,459 22,807 2,055,883 1,314,563 493,615 522,999 409,200 1,049,703 714,868 350,000 350,000 979,758 979,758 4,217,023 2,947,441 323,322 291,939 17,421,979 17,003,660 10,641,741 10,605,126 360,088 315,816 2,775,494 1,030,510 31,522,624 29,247,051 15,163,127 14,575,944 16,359,497 14,671,107 269,204 213,453 138,004 154,393 407,208 367,846 $24,664,042 $20,042,277 The accompanying notes are an integral part of these financial statements. LIABILITIES Current Liabilities Accounts payable Customers' meter deposits Accrued interest payable Accrued liability for compensated absences Revenue bonds payable due within one year (Note 3) Total Current Liabilities Long-Term Obligations Accounts payable, construction Revenue bonds due after one year (Note 3) Total Liabilities Contributed Capital and Retained Earnings (Exhibit C) Reserved retained earnings Current debt service Future debt service Depreciation and emergency replacement Extension and bond retirement Total Reserved Retained Earnings Contributed capital and unreserved retained earnings Total Contributed Capital and Retained Earnings Totals Exhibit A December 31, 1989 1988 $ 117,374 $ 50,442 66,335 63,610 149,005 103,917 146,476 146,517 425,000 325,000 904,190 689,486 271,950 6,295,000 7,471,140 153,996 3,785,000 4,628,482 522,999 409,200 1,049,703 714,868 350,000 350,000 979,758 979,758 2,902,460 2,453,826 14,290,442 12,959,969 17,192,902 15,413,795 $24,664,042 $20,042,277 -44- CITY OF SALINA Salina, Kansas Exhibit B WATER AND SEWERAGE DEPARTMENT STATEMENTS OF INCOME Operating Revenues Water revenue Sewerage revenue Tapping, repair and other service revenue Total Operating Revenues Year Ended December 31, 1989 1988 $4,929,583 $4,130,483 1,294,645 1,230,075 76,036 127,607 6,300,264 5,488,165 115,737 97,441 966,673 978,339 205,860 195,329 439,858 466,097 320,910 347,412 1,068,559 717,534 641,937 618,647 790,128 792,601 4,549,662 4,213,400 1,750,602 1,274,765 233,334 155,932 93,864 93,864 327,198 249, 796 256,582 188,402 18,290 17,675 23,821 26,078 298,693 232,155 $1,779,107 $1,292,406 Operating Expenses Water supply Softening and treatment Pumping Distribution Customers' accounting and collection Administrative and general Sewage treatment and collection Depreciation Total Operating Expenses Operating Income Other Income Interest on invested cash Miscellaneous Total Other Income Other Expenses Interest on revenue bonds (Note 4) Amortization of deferred bond issuance costs Loss on retirement of assets Total Other Expenses Net Income The accompanying notes are an integral part of these financial statements. -45- CITY OF SALINA Salina, Kansas Exhibit C WATER AND SEWERAGE DEPARTMENT STATEMENTS OF CONTRIBUTED CAPITAL AND RETAINED EARNINGS Balance, Beginning of Year Year Ended December 31, 1989 1988 $15,413,795 $13,969,023 1,779,107 1,292,406 152,366 $17,192,902 $15,413,795 Additions Net income for the year (Exhibit B) Contributions of property, plant and equipment Balance, End of Year The accompanying notes are an integral part of these financial statements. -46- CITY OF SALINA Salina, Kansas Exhibit D-l WATER AND SEWERAGE DEPARTMENT STATEMENT OF CASH FLOWS Year Ended December 31, 1989 Cash Flows from Operating Activities Operating income (Exhibit B) Adjustments to reconcile operating income to net cash provided by operating activities Depreciation Provision for uncollectible accounts receivable Change in assets and liabilities Accounts receivable Prepaid supplies Accounts payable Customers' meter deposits Accrued liability for compensated absences Total Adjustments Net Cash Provided by Operating Activities $1,750,602 790,128 24,218 (83,522) (55,751) 66,932 2,725 (41) 744,689 2,495,291 Cash Flows from Capital and Related Financing Activities Proceeds from issuance of revenue bonds (including interest) Acquisition and construction of capital assets Principal paid on maturing revenue bonds Interest paid on revenue bonds Bond issuance costs paid Miscellaneous income Net Cash Used for Capital and Related Financing Activities 3,024,493 (2,281,933) (390,000) (522,156) (4,575) 93,864 (80,307) Cash Flows from Investing Activities Interest on invested cash 409,940 Net Increase in Cash and Cash Equivalents 2,824,924 Cash and Cash Equivalents at Beginning of Year 4,598,058 Cash and Cash Equivalents at End of Year $7,422,982 End of Year Cash and Cash Equivalents comprised of Current Restricted $3,205,959 4,217,023 Total $7,422,982 Noncash Capital and Financing Activities Property, plant and equipment with a net book value of $23,821 was disposed of during the year. Deferred bond costs were amortized during the year as follows: Capitalized as interest Charged to other expenses $ 2,674 18,290 Total $ 20,964 The accompanying notes are an integral part of these financial statements. -47- CITY OF SALINA Salina, Kansas WATER AND SEWERAGE DEPARTMENT STATEMENT OF CHANGES IN FINANCIAL POSITION Year Ended December 31, 1988 Sources of Working Capital From Operations Net income (Exhibit B) Charges against net income not affecting working capital Depreciation Amortization of deferred bond issuance costs Loss on dispositions of property, plant, and equipment Working capital provided by operations Decrease in prepaid supplies Decrease in restricted assets Proceeds from sale of property, plant, and equipment Total Sources of Working Capital Applications of Working Capital Decrease in long-term obligations Increase in bond issuance costs Additions to property, plant, and equipment Contributions Increase in long-term construction accounts Net Additions Total Applications of Working Capital $2,835,501 (152,366) payable (153,996) Increase in Working Capital Changes in Components of Working Capital Increase (Decrease) in Current Assets Cash and investments Accounts receivable Accrued interest Total Increase in Current Assets Increase (Decrease) in Current Liabilities Accounts payable Customers' meter deposits Accrued expenses Long-term obligations due within one year Total Increase (Decrease) in Current Liabilities Increase in Working Capital The accompanying notes are an integral part of these financial statements. Exhibit D-2 $1,292,406 792,601 17,675 26,078 2,128,760 21,720 1,769,929 6,649 3,927,058 325,000 38,753 2,529,139 2,892,892 $1,034,166 951,836 61,342 (46,959) 966,219 (98,173) 770 4,456 25,000 (67,947) $1,034,166 -48- 1. CITY OF SALINA Salina, Kansas WATER AND SEWERAGE DEPARTMENT NOTES TO FINANCIAL STATEMENTS December 31, 1989 and 1988 Summary of Significant Accounting Policies a. Fund Accounting: The City maintains its accounting records in accordance with the principles of fund accounting in order to ensure observance of limitations and restrictions placed on the use of resources available. Resources are classified for accounting and reporting into funds established according to their nature and purposes. The Water and Sewerage Department of the City of Salina is a separate fund of the City which is supported by user charges from its customers rather than by tax monies. The Department uses the accrual method of accounting in the preparation of its financial statements. Revenue is recorded as earned and expenses as incurred. b. Deferred Issuance Costs: Deferred issuance costs are amortized to expense over the term of the related revenue bonds. c. Property, Plant, and Equipment and Depreciation: Property, plant, and equipment are stated at cost. Assets acquired prior to 1981 have been adjusted to reflect cost as determined by a firm of professional appraisers. Interest is capitalized on property, plant and equipment acquired with revenue bonds proceeds. The amount of interest capitalized is calculated by offsetting interest expense incurred from the date of the borrowing until completion of the project with interest earned on invested proceeds over the same period. Depreciation is determined using the straight-line method o,rer the estimated useful life of each asset. d. Cash Equivalents: For purposes of the statement of cash flows, the City considers all highly liquid investments (including rest:ricted assets) with a maturity of six months or less when purchased to be cash equivalents. e. Restricted Assets: Certain proceeds of revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by terms of applicable bond ordinances. The "construction" account includes proceeds of revenue bond issuances that are restricted for use in construction. The "current debt service" account is used to segregate -49- resources accumulated for debt service payments over the next twelve months. The "reserves for future debt service" account is used to report resources set aside to make up potential future deficiencies in the revenue bond current debt service account. The "depreciation and emergency replacement" account and the "extension and bond retirement" account are resources set aside for operation, maintenance, repair, inprovement and debt service purposes, as specified by certain bond ordinances. 2. Cash and Cash Equivalents The City of Salina invests funds in time certificates of deposit, repurchase agreements, and United States Treasury bills or notes with maturities not exceeding six months, all of which are authorized investments under Kansas statutes. Deposits or investments with qualifying financial institutions are to be secured by a bond or by the pledge of certain types of securities specified by statute. Cash deposits of the City of Salina with financial institutions were 100% insured or collateralized by securities provided by such depository financial institutions at December 31, 1989. Cash and investments of the Water and Sewerage Department are other funds of the City for deposit and investment purposes. equivalents of the City included petty cash, cash in checking accounts, repurchase agreements, certificates of deposit, and bills as of December 31, 1989 and 1988. pooled with Cash and cash and savings U.S. Treasury 3. Revenue Bonds Payable Revenue bonds payable are comprised of the following: December 31, 1989 1988 Combined Water and Sewage System Refunding Revenue Bonds, Series of 1984 (the 1984 Bonds), matures serially each February 15 through 1994, remaining maturities bear interest at rates varying from 9% to 9 3/4% per annum. $1,280,000 $1,530,000 Combined Water and Sewage System Revenue Bonds, Series of 1987 (the 1987 Bonds), mature serially each October 1 through 2007, maturities bear interest at rates varying from 7% to 8 1/2% per annum. 2,505,000 2,580,000 Combined Water and Sewage System Revenue Bonds, Series 1988 (the 1988 Bonds), mature serially each October 1 through 2008, maturities bear interest at rates varying from 6% to 9 1/2% per annum 2,935,000 6,720,000 425,000 Less amounts due within one year 4,110,000 325,000 Amounts Due After One Year $6,295,000 $3,785,000 -50- Aggregate maturities of the above obligations in subsequent years are as follows: Year Amount 1990 1991 1992 1993 1994 Thereafter $ 425,000 350,000 485,000 530,000 355,000 4,575,000 Total Bonds Outstanding, December 31, 1989 $6,720,000 The City has established certain reserve accounts pursuant to the 1984, 1987, and 1988 bond ordinances to provide funds for the retirement of the bonds and payment of interest thereon and for making replacements to the system in the event other funds are not available. The gross revenues of the Department are pledged to secure payment of the bonds; however, the pledge is subordinate to a similar pledge to secure payment of certain defeased bonds. The amounts required to be maintained in the reserve accounts established by the 1984, 1987 and 1988 bond ordinances have been provided and the total revenues of the system for 1989 appear sufficient to meet the requirements of the ordinances. In prior years, the City defeased certain revenue bond issues by placing the proceeds of new bonds and cash and certain investments in irrevocable trusts to provide for all future debt service payments on the old bonds. Ac- cordingly, the trust accounts assets and the liability for the defeased bonds are not included in the Department's financial statements. On December 31, 1989, a total of $6,948,000 of revenue bonds outstanding are considered defeased. 4. Interest Cost A summary of interest cost follows: Interest Expense Year Ended December 31, 1989 1988 $542,751 $352,119 (286,169) (163,717) $256,582 $188,402 $286,169 $163,717 (186,391) (91,866) $ 99,778 $ 71,851 Total interest cost Capitalized interest cost Capitalized interest cost Related interest earned on unexpended bond proceeds whose use is limited Net Interest Cost Capitalized -51- 5. Defined Benefit Pension Plan Substantially all full-time employees of the City of Salina participate in the Kansas Public Employees Retirement System ("System"), a multiple-employer public employees retirement system. The payroll for employees of the Water and Sewerage Department covered by the System for the years ended December 31, 1989 and 1988, respectively, was $1,154,727 and $1,125,203; the total payroll for the Department was $1,253,597 and $1,211,510. Substantially all employees of the City of Salina are eligible to participate in the System after one year of employment. Employees who retire at or after age 65 are entitled to a retirement benefit, payable monthly for life, equal to 1 percent of their final average salary for each year of "prior" service and 1.25 to 1.5 percent for each year of "participating" service depending upon the number of years of service. Final average salary is the employee's average salary over the highest four years of credited service. Benefits fully vest on reaching 10 years of service. Vested employees may retire at age 55 to 65 with 10 years of credited service and receive reduced retire- ment benefits. The system also provides death and disability benefits. Benefits are established by State statute. Covered employees are required by State statute to contribute 4% of their salary to the plan; in addition, there are various options available to covered employees, where the employees may make additional contributions. The employer is required by the same statute to contribute the remaining amounts necessary to pay benefits when due. The Water and Sewerage Department's contribution requirement for the year ended December 31, 1989 was $77,218, which consisted of $22,805 from the employer and $54,413 from employees; these contributions represented 2.0% and 4.7% of covered payroll, respectively. The Water and Sewerage Department's contribution requirement for the year ended December 31, 1988, was $84,968, which consisted of $34,514 from the employer and $50,454 from employees; these contributions represented 3.04% and 4.5% of covered payroll, respectively. The "penson benefit obligation" is a standardized disclosure measure of the present value of pension benefits, adjusted for the effects of projected salary increases and step-rate benefits, estimated to be payable in the future as a result of employee service to date. The measure, ~hich is the actuarial present value of credited projected benefits, is intended to help users assess the System's funding status on a going-concern basis and assess progress made in accumulating sufficient assets to pay benefits when due. The System does not make separate measurements of assets and pe~asion benefit obligation for individual employers. The pension benefit obligation at January 1, 1989, for the System as a whole, determined through an actuarial valuation performed as of that date, was $3.61 billion. The System's net assets available for benefits on that date were estimated to be $3.03 billion, leaving an unfunded pension benefit obligation estimated at $584 million. Other information related to the system can be found in the System's 1989 comprehensive annual financial report. -52- 6. Commitments The Department has entered into contractual commitments totaling $2,183,022 to complete certain projects included in construction in process at December 31, 1989. 7. Related Party Transactions Transactions with other funds and departments of the City included in the Statements of Income are summarized below. Year Ended December 31, 1989 1988 Administrative and General Expense Franchise fees Overhead $240,000 197,000 $110,000 Customers' Accounting and Collection Data processing 53,500 54,500 The Department also paid $90,000 as its share of data processing equipment purchased by the City of Salina, Data Processing Fund in 1988. 8. Statement of Cash Flows In accordance with Statement No.9 of the Governmental Accounting Standards Board, issued in September, 1989, a Statement of Cash Flows is presented in place of a Statement of Changes in Financial Position for the year ended December 31, 1989. As permitted by the Statement, the City has elected not to present a Statement of Cash Flows for the year ended December 31, 1988. 9. Subsequent Bond Issue The City issued $7,865,000 Combined Water and Sewage System Revenue Bonds dated July 1, 1990, for the purpose of refunding the 1984, 1987 and 1988 bond issues and to finance certain improvements to the water and sewerage system. 10. Reclassification Accounts payable related to construction of improvements to the water and sewerage system have been reclassified from the prior presentation at December 31, 1988, to non-current since this amount is payable from re- stricted cash. Such reclassification had the effect of increasing working capital by $153,996. -53- STATE OF KANSAS DEPARTMENT OF ADMINISTRATION DIVISION OF ACCOUNTS AND REPORTS August 30, 1989 CITY OF SALINA - CITY HALL F.O. BOX 736 SALINA, KS 67401 In regard to the audit of : CITY OF SALINA, fiscal year ending December 31 , 1989. As provided by K.S.A. 75-1120a(c ) , I hereby waive the following requirements of K.S.A. 75-1120a to the extent requested by the governing body: X GAAP-PRESCRIBED FINANCIAL STATEMENTS GENERAL FIXED ASSETS ACCOUNTING ONLY A waiver from generally accepted accounting principles-prescribed (GAAP-prescribed ) financial statements permits a municipality to prepare its financial statements on a basis of accounting which demonstrates compliance with the cash basis and budget laws of Kansas. Such a waiver automatically includes a waiver from general fixed assets accounting because fixed assets accounting is a part GAAF'. Because of the importance of public disclosure of -the municipality' s financial condition , as well as the need for additional information by users of the financial reports , such as bond rating companies, we believe every municipality should work toward the goal of presenting its financial statements in conformity with generally accepted accounting principles. For many municipalities, this would require only minor changes to the accounting system. We urge you to work toward GAAF' compliance with your auditor. If we can be of any further assistance please don ' t hesitate to contact the Municipal Accounting Section at 913-296-3436 . Very truly yours, James R. Cobler, Director Division of Accounts and Reports b VV '�• Y Chief , Municipal Accounting Section < J C I T Y • O F 1 sfLIna Office of City Clerk Room 206 300 West Ash Street PO.Box 736 Salina.KS 67402-0736 August 25, 1989 Telephone 1913)827-9653 James R. Cobler, Director Division of Accounts and Reports Municipal Accounting Section Room 253 - Landon State Office Building Topeka, KS 66612-1248 Dear Mr. Cobler: Pursuant to Resolution Number 89-4114, adopted on August 21 , 1989, the governing body found that financial statements and financial reports prepared in conformity with generally accepted accounting principles are not relevant to the requirements of the cash basis law and budget laws of Kansas and are of no significant value to the governing body or members of the general public of this municipality. The governing body hereby requests a waiver from the following components of generally accepted accounting principles for the fiscal year ended December December 31 , 1989 in accordance with the provisions of K.S.A. 75-1120a. GAAP - prescribed financial statements General fixed assets accounting Very truly yours, °�`•�„a.. CtSt.:wa1_ Jacqueftine Shiever City Clerk • JS/js Enclosure: Resolution Number 89-4114 cc: Dave Mills, CPA Kennedy and Coe, Certified Public Accountants CITY CLERK P. O. Box 1 100 DIRECTOR OF FINANCE Salina, KS 67402-1100 ROBERT K.BILES.CPA PERSONNEL DIRECTOR M.E.ABBOTT MEMBER...LEAGUE OF KANSAS MUNICIPALITIES • NATIONAL LEAGUE OF CfES RESOLUTION NUMBER 89-4114 A RESOLUTION REQUESTING THAT THE DIRECTOR OF ACCOUNTS AND REPORTS WAIVE THE REQUIREMENTS OF LAW RELATING TO THE PREPARATION OF FINANCIAL STATEMENTS AND FINANCIAL REPORTS PURSUANT TO K .S.A. 75-1120a, FOR THE YEAR 1989. BE IT RESOLVED by the Governing Body of the City of Salina, Kansas: Section 1 . That the Board of Commissioners hereby finds that financial statements ana financial reports prepared in conformity with generally accepted accounting principles are not relevant to requirements of the cash basis and budget laws of Kansas and are of no significance and value to the governing body or the general public of the City of Salina. Section 2. That the Director of Accounts and Reports is hereby requested to waive the requirements of law relating to the preparation of financial statements and financial reports that conform to generally accepted accounting principles pursuant to K.S.A. 75-1120a. Section 3. That this Resolution shall be in full force and effect from and after its adoption. Adopted by the Board of Commissioners and signed by the Mayor this 21st day of August, 1969. eI Warner, Mayor [SEAL] ATTEST: Jacqueline Shiever, City Clerk .. RESOLUTION NUMBER 89-4114 A RESOLUTION REQUESTING THAT THE DIRECTOR OF ACCOUNTS AND REPORTS WAIVE THE REQUIREMENTS OF LAW RELATING TO THE PREPARATION OF FINANCIAL STATEMENTS AND FINANCIAL REPORTS PURSUANT TO K.S.A. 75-1120a, FOR THE YEAR 1989. BE IT RESOLVED by the Governing Body of the City of Salina, Kansas: Section 1 . That the Board of Commissioners hereby finds that financial statements and financial reports prepared in conformity with generally accepted accounting principles are not relevant to requirements of the cash basis and budget laws of Kansas and are of no significance and value to the governing body or the general public of the City of Salina. Section 2. That the Director of Accounts and Reports is hereby requested to waive the requirements of law relating to the preparation of financial statements and financial reports that conform to generally accepted accounting principles pursuant to K.S.A. 75-1120a. Section 3. That this Resolution shall be in full force and effect from and after its adoption. Adopted by the Board of Commissioners and signed by the Mayor this 21st day of August, 1969. co .. `. Or Warner, Mayor I [SEAL] ATTEST: Jacqueline Shiever, City Clerk KENNEDY AND COE • R.MICHAEL BEATTY.c v.A. CERTIFIED PUBLIC ACCOUNTANTS R.MICHAEL BEATTY.C.I.A. MANAGING PARTNER PARTNEP4N.CHARGE P.O.BOX 1100.SAUNA.RS 074024100 UNITED BUILDING P.0.BOX 1100 SALINA. KANSAS 67402-1100 ROBERT D.WILBUR.C.P.A.PARTNER OFFICES ADLET E.JOHNSON.C V.A..PARTNER 913•825.1581 DON P.DIEDERICH.C.P.A..PARTNER KANSAS: SCOTT CITY ANTHONY SMITH CENTER FAX 913-B2S-5371 ALLEN WEBBER.C.P.A PARTNER COLEY WICHITA GERALD L.HUNTER.C P.A.PARTNER cONC On DIA NEBRASKA: RURTIS G.EIEMERS.C.P.A..PARTNER GARDEN CITY MCCOOK DALE A.MEUSZEL.C.P.•..PARTNER 0000.AND OKLAHOMA: C SHANNON L.BUCHANAN.C.P.•.PARTNER GREAT BEND ALVA August 1J, 19 89 SHARON K.SMITH.C.P.A..PARTNER - MARYSVRLE COLORADO: PRATT LAMAR R.BARTON FARMER.PRINCIPAL SALINA WESTMINSTER RALPH E.REITZ.C.P A.IRETIREDI JOHN W.PO05.C.P.A.IRETIREDI The Honorable Mayor L.M.MERT.CA.(RETIRDI L.M.HERTZ.C.P.A.NETIREp and The City Commissioners PAUL A.MOTT.C.P.A.WETIREDI City of Salina Salina, Kansas 67401 We propose to audit the financial statements of the City of Salina, Kansas, for the year 1989 listed on Appendix A. Our audits will be made in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accountants, the Minimum Standard Audit Program approved by the State Municipal Accounting Board, and the requirements of Office of Management and Budget Circular A-128 and will include our examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In addition, supplemental information (as listed in Appendix A) , presented for the purpose of additional analysis and not a required part of the basic financial statements, will be subjected to the audit procedures applied in the audit of the basic financial statements. It is our understanding that the funds subject to OMB Circular A-128 requirements for 1989 are (1) Community Development Block Grants - Small Cities Program - Housing Rehabilitation Grants and (2) Fair Housing Assistance Program. The scope of our audit will include all funds of the City except: Salina Arts Commission Salina Housing Authority Salina - Saline County Board of Health Saline County - City Building Authority Salina Airport Authority Firemen's Relief Association It is our understanding that the above organizations have contracted for separate audits of their operations. The objective of our engagement is the completion of the foregoing audits and, upon their completion and subject to their findings, the rendering of our reports. As you know, the financial statements are the responsibility of the management of the City who are primarily responsible for the data and information set forth therein, as well as for the maintenance of an appropriate internal control structure (which includes adequate accounting records and MEMBERS OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS The Honorable Mayor and The City Commissioners City of Salina August 15, 1989 Page 2 procedures to safeguard the City's assets) . Accordingly, as required by generally accepted auditing standards, our procedures will include obtaining written confirmation from management concerning important representations which we will rely upon. As also required by generally accepted auditing standards, we will plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the financial statements are free of material misstatement. Accordingly, any such audit is not a guarantee of the accuracy of the financial statements and is subject to the risk that errors, irregularities, or illegal acts, if they exist, might not be detected. If we become aware of any such matters during the course of our audit, we will bring them to your attention. Should you then wish us to expand our normal auditing procedures, we would be pleased to work with you to develop a separate engagement for that purpose. Our fee for services rendered for the engagement described in the preceding paragraphs will be computed at our standard billing rates for municipalities. However, our fee for this engagement will not exceed $25,000. If our charges at standard rates are less than this maximum fee, you will be charged the lesser amount. Billings will be rendered for payment on a monthly basis so that you may readily relate our charges to the work performed. The maximum fee is based on the assumption that the City will obtain the appropriate waiver from financial statements and reports prepared in accordance with generally accepted accounting principles for the year ending December 31, 1989. In the event laws are enacted or the State Municipal Accounting Board makes changes in the audit requirements for Kansas municipalities, which in our judgment materially increases the time required to perform the services set forth in this contract, we reserve the right to renegotiate the maximum fee with the City Commissioners. In order to facilitate the efficient conduct of our work, we will provide the Director of Finance our requirements for audit documentation, schedules and analyses, and develop a schedule for when such information is to be available. We will be happy to discuss any aspects of this proposal with you at your convenience. If you are in agreement with the terms of this letter, please sign the original and return it for our files. The copy is for your files. We appreciate the opportunity to continue to work with you. Very truly yours, Certified Public Accountants The Honorable Mayor and The City Commissioners City of Salina August 15, 1989 Page 3 Accepted this 11 day of ,, 1989. ditI . - • ist,_ t _ - tff y of Salina, Kansas w w City CAerk - City of Salina, Kansas CITY OF SALINA SALINA, KANSAS Appendix A FINANCIAL STATEMENTS TO BE AUDITED BY KENNEDY AND COE FOR THE YEAR ENDED DECEMBER 31, 1989 I. THE FOLLOWING FINANCIAL STATEMENTS ARE PRESENTED ON THE CASH BASIS, MODIFIED BY RECORDING ENCUMBRANCES SUMMARY STATEMENT OF RECEIPTS, EXPENDITURES, AND BALANCES BY FUNDS AND COMPARISON OF CASH BALANCES WITH ENCUMBRANCES STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET NOTES TO FINANCIAL STATEMENTS II. SUPPLEMENTAL INFORMATION TO THE BASIC FINANCIAL STATEMENTS LISTED ABOVE COMPOSITION OF ENDING CASH BALANCES COMPARISON OF GROSS CASH BALANCES WITH DEPOSITORY SECURITY SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE III. THE FOLLOWING FINANCIAL STATEMENTS ARE PRESENTED IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES SEPARATE FINANCIAL STATEMENTS - WATER AND SEWERAGE DEPARTMENT BALANCE SHEET STATEMENT OF INCOME STATEMENT OF CONTRIBUTED CAPITAL AND RETAINED EARNINGS STATEMENT OF CHANGES IN FINANCIAL POSITION OR STATEMENT OF CASH FLOWS, AS APPLICABLE NOTES TO FINANCIAL STATEMENTS KENNEDY AND COE P MICHAEL BEni:v.c P♦ CERTIFIED PUBLIC ACCOUNTANTS °-MICN•EL aunv.c.P• MANAGING PARTNER ART NEPiN L»•aGE e O BO. I LOD.s•LUl•.RS 67•02-1100 UNITED BUILDING P.O.BOX 1100 OFFICES SALINA. KANSAS 67402-1100 RoBERTD.WILBUR.C P•.PARTNER •DLEY E.JOHNSON.C P•.PARTNER 913 6251561 CON P DIEOERIC N.CP•,PARTNER KANSAS: SCOTT CITY ANTHONY SHOW CENTER FAX 913.925-5371 ALLEN WEBBER.C.P•..PARTNER COLBY WICHITA GERALD L.HUNTER.C P•.PARTNER . concoaaA NEBRASKA: URTIS G.SIEMEPS,C P•.PARTNER GARDEN CITY MCCOOR TALE A.HEV SZEL.C.P.•.PARTNER GOODLAND OKLAHOMA: AllgUS t 18, 1989 SHANNON L.BUCHANAN,C P....PARTNER GREAT BEND ALVA - SHARON A.SMITH.CP.•..PARTNER HARTSVILLE COLORADO: PRATT LAM•p _.e•RTON FARMER.P R IHaP.L S Wn• WESTMINSTER R• PH E.REITZ.CP•.,PE:IRLDI JOHN W.PO05,C P.•.IRETIREDI T.SHE•.C.•A.IRETIREDI The Honorable Mayor L.M.MERi:.EP..IP EiIREP and The City Commissioners nut•.MOTT,C P.• IRETIREDI City of Salina Salina, Kansas 67401 We propose to audit the financial statements of the City of Salina, Kansas . for the year 1989 listed on Appendix A. Our audits will be made in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accountants, the Minimum Standard Audit Program approved by the State Municipal Accounting Board, and the requirements of Office of Management and Budget Circular A-128 and will include our examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In addition, supplemental information (as listed in Appendix A) , presented for the purpose of additional analysis and not a required part of the basic financial statements, will be subjected to the audit procedures applied in the audit of the basic financial statements. It is our understanding that the funds subject to OMB Circular A-128 requirements for 1989 are (1) Community Development Block Grants - Small Cities Program - Housing Rehabilitation Grants and (2) Fair Housing Assistance Program. The scope of our audit will include all funds of the City except: Salina Arts Commission Salina Housing Authority Salina - Saline County Board of Health Saline County - City Building Authority Salina Airport Authority Firemen's Relief Association It is our understanding that the above organizations have contracted for separate audits of their operations. The objective of our engagement is the completion of the foregoing audits and, upon their completion and subject to their findings, the rendering of our reports.. As you know, the financial statements are the responsibility of the management of the City who are primarily responsible for the data and information set forth therein, as well as for the maintenance of an appropriate internal control structure (which includes adequate accounting records and MEMBERS OF:AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS The Honorable Mayor and The City Commissioners City of Salina August 15, 1989 Page 2 procedures to safeguard the City's assets) . Accordingly, as required by generally accepted auditing standards, our procedures will include obtaining written confirmation from management concerning important representations which we will rely upon. As also required by generally accepted auditing standards, we will plan and perform our audit to obtain reasonable, but not absolute, assurance about whether the financial statements are free of material misstatement. Accordingly, any such audit is not a guarantee of the accuracy of the financial statements and is subject to the risk that errors, irregularities, or illegal acts, if they exist, might not be detected. If we become aware of any such matters during the course of our audit, we will bring them to your attention. Should you then wish us to expand our normal auditing procedures, we would be pleased to work with you to develop a separate engagement for that purpose. Our fee for services rendered for the engagement described in the preceding paragraphs will be computed at our standard billing rates for municipalities. However, our fee for this engagement will not exceed $25,000. If our charges at standard rates are less than this maximum fee, you will be charged the lesser amount. Billings will be rendered for payment on a monthly basis so that you may readily relate our charges to the work performed. The maximum fee is based on the assumption that the City will obtain the appropriate waiver from financial statements and reports prepared in accordance with generally accepted accounting principles for the year ending December 31, 1989. In the event laws are enacted or the State Municipal Accounting Board makes changes in the audit requirements for Kansas municipalities, which in our judgment materially increases the time required to perform the services set forth in this contract, we reserve the right to renegotiate the maximum fee with the City Commissioners. In order to facilitate the efficient conduct of our work, we will provide the Director of Finance our requirements for audit documentation, schedules and analyses, and develop a schedule for when such information is to be available. We will be happy to discuss any aspects of this proposal with you at your convenience. If you are in agreement with the terms of this letter, please sign the original and return it for our files. The copy is for your files. We appreciate the opportunity to continue to work with you. Very truly yours, - i Certified Public Accountants The Honorable Mayor and The City Commissioners City of Salina August 15, 1989 Page 3 Accepted this I i day of S„l. w , 1989. Ai Alf. i M- 7. - ' y of Salina, Kansas _t a«, ,.a_. �..0 cv w City Clerk - City of Salina, Kansas • CITY OF SALINA SALINA, KANSAS Appendix A FINANCIAL STATEMENTS TO BE AUDITED BY KENNEDY AND COE FOR THE YEAR ENDED DECEMBER 31, 1989 I. THE FOLLOWING FINANCIAL STATEMENTS ARE PRESENTED ON THE CASH BASIS, MODIFIED BY RECORDING ENCUMBRANCES SUMMARY STATEMENT OF RECEIPTS, EXPENDITURES, AND BALANCES BY FUNDS AND COMPARISON OF CASH BALANCES WITH ENCUMBRANCES STATEMENT OF RECEIPTS, EXPENDITURES, AND CHANGES IN UNENCUMBERED CASH BALANCES COMPARED WITH BUDGET NOTES TO FINANCIAL STATEMENTS II. SUPPLEMENTAL INFORMATION TO THE BASIC FINANCIAL STATEMENTS LISTED ABOVE COMPOSITION OF ENDING CASH BALANCES COMPARISON OF GROSS CASH BALANCES WITH DEPOSITORY SECURITY SCHEDULE OF FEDERAL FINANCIAL ASSISTANCE III. THE FOLLOWING FINANCIAL STATEMENTS ARE PRESENTED IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES SEPARATE FINANCIAL STATEMENTS - WATER AND SEWERAGE DEPARTMENT BALANCE SHEET STATEMENT OF INCOME STATEMENT OF CONTRIBUTED CAPITAL AND RETAINED EARNINGS STATEMENT OF CHANGES IN FINANCIAL POSITION OR STATEMENT OF CASH FLOWS, AS APPLICABLE NOTES TO FINANCIAL STATEMENTS CITY OF SALINA REQUEST FOR COMMISSION ACTION DATE TIME 9/11 /89 4 :00 P.M. AGENDA SECTION: Administration ORIGINATING DEPARTMENT: APPROVED FOR NO. 8 Department of Finance AGENDA: ITEM ND. 5 ' BY: Robert K. Biles /J„..gt BY: • Resolution Number 89-4120, authorizing the Mayor to execute and the City Clerk to attest an agreement between the City of Salina and Kennedy and Coe, Certified Public Accountants for an audit of city records for the year ending December 31 , 1989, in an amount not to exceed $25,000. The accounting firm of Kennedy and Coe has presented the City with a proposal to audit the 1989 financial statements for an amount not to exceed $25,000. The proposal is attached. Due to the conversion of the accounting data to a new accounting system, staff believes the continuance of the relationship with Kennedy-and Coe will be of benefit to the auditor and the City in terms of time required by both parties involved. Recommended action Accept the proposal from Kennedy and Coe to audit the 1989 financial statements, and adopt Resolution Number 89-4120, authorizing the Mayor to sign the contract. • COMM ISSION ACTION MOTION BY SECOND BY TO: KENNEDY AND COE R MICHAEL BETTY.C •. u•N•GINO PARTNER CERTIFIED PUBLIC ACCOUNTANTS R mEL BEATT r,c P• •RTNTNER•IN.CHARGE O.BOr 1I GO.SAUNA,KS 69.02-1I0J UNITED BUILDING P.O. BOX 1100 OFFICES SALINA. KANSAS 67402-1100 ROBERT O.WRBUR.CPA_PARTNER 913 1325-1561 AOLEV E.JOHNSON.C P.•.PARTNER KANSAS: DON P.DIEDERICH,C P.A.PARTNER SCOTT CITY ANTHON, SMITH CENTER FAX 913-825-5371 ALLEN WEBBER.C.P• COLBY WICHITA GERALD L"HUNTER.C.P•.PARTNER CONCORDIA NEBRASKA: KURTIS G.SIEVERS,CPA_PARTNER GARDEN CITY MCCOOR DALE• HEUSZEL.C P.•.PARTNER 0000LAND OKLAHOMA: August 15, 1989 SHANNON L.BUCHANAN,C.P.A PARTNER GREAT BEND •LV• SH•PDH R.SMITH.C.P.A..PARTNER MARVSVILLE COLORADO: PR•TT LAMAR R.B•RTON FARMER,PRINCIPAL SAUNA WESTMINSTER RALPH E.REITZ.C.P.A.IRETIREOI JOHN W.P005.C.P.A.(RETIRED, The Honorable Mayor E.T.SHEA.C PA IRETIREDI L.M.MERTZ.C.P•.(RETIRED, and The City Commissioners PAL.A.MOTT.C.P•.IRETIREDI City of Salina Salina, Kansas 67401 We propose to audit the financial statements of the City of Salina, Kansas, for the year 1989 listed on Appendix A. Our audits will be made in accordance with generally accepted auditing standards adopted by the American Institute of Certified Public Accountants, the Minimum Standard Audit Program approved by the State Municipal Accounting Board, and the requirements of Office of Management and Budget Circular A-128 and will include our examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. In addition, supplemental information (as listed in Appendix A) , presented for the purpose of additional analysis and not a required part of the basic financial statements, will be subjected to the audit procedures applied in the audit of the basic financial statements . It is our understanding that the funds subject to OMB Circular A-128 requirements for 1989 are (1) Community Development Block Grants - Small Cities Program - Housing Rehabilitation Grants and (2) Fair Housing Assistance Program. The scope of our audit will include all funds of the City except: Salina Arts Commission Salina Housing Authority Salina - Saline County Board of Health Saline County - City Building Authority Salina Airport Authority Firemen's Relief Association It is our understanding that the above organizations have contracted for separate audits of their operations. The objective of our engagement is the completion of the foregoing audits and, upon their completion and subject to their findings, the rendering of our reports. As you know, the financial statements are the responsibility of the management of the City who are primarily responsible for the data and information set forth therein, as well as for the maintenance of an appropriate internal control structure (which includes adequate accounting records and MEMBERS OF:AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND SEC PRACTICE SECTION AND PRIVATE COMPANIES PRACTICE SECTION OF THE AICPA DIVISION FOR CPA FIRMS The Honorable Mayor and The City Commissioners City of Salina August 15, 1989 Page 3 Accepted this _ day of , 1989. Mayor - City of Salina, Kansas City Clerk - City of Salina, Kansas CITY OF SALINA REQUEST FOR COMMISSION ACTION DATE TIME 7/21/1989 11 :00 P.M. AGENDA SECTION: Administration ORIGINATING DEPARTMENT: APPROVED FOR NO. 8 AGENDA: Department of Finance ITEM N0. Z • BY: Robert K. Riles BY: `� Receive and review the 1989 audit report from Kennedy and Coe. Included in this week's information packet is a copy of the 1988 audit report. This report includes the auditor's opinion in seven different areas, the financial statements for the year, notes to the financial statements and supplemental information. Please note their opinion on page 1 which states the financial statements are presented fairly. This is, of course, our goal as a department. Representatives from Kennedy and Coe will be at the meeting to discuss this report. We have attached staff responses to the auditor's comments and findings. Recommended action Accept the 1988 audit report. • COMM SSION ACTION MOTION BY SECOND BY TO: r. SnLinn Office of City Clerk Room 206 300 West Ash Street P.O-Box 736 Salina,KS TO: Dennis M. Kissinger, City Manager Telephone e(913)(913)827-9653 g y g FROM: Robert K. Biles, Director of Finance SUBJECT: 1988 Audit report comments DATE: July 18, 1989 On page 36 of the 1988 audit report, in Note 8 to the financial statements, the auditors point to two apparent statutory violations. The first occurs in the Bond and Interest Fund. As you will recall, we discussed this with the Commission during the 1989 budget process. At that time, we explained the violation would occur due to the issuance of the 1987 downtown bonds on a level principal basis rather than a level debt service basis. The level principal basis was very well received by the purchasers and resulted in an extremely good (low) bid for the bonds. As shown on page 20 of the report, cash available at December 31 , 1988 exceeded $351 ,000. Thus, adequate funds were available to meet the additional expenditure. The second apparent violation is in the area of depository security on cash deposits. When investments are made, the successful bidder for our funds determines whether he meets the statutory guidelines for depository security, In those instances where the institution must acquire more depository security, the City receives a commitment letter from the financial institution to provide the necessary security. Usually, within two days, the formal depository security is given to the City Treasurer and is dated the date of its issuance rather than the date the commitment letter is dated. We are discussing this with each financial institution. CITY CLERK DIRECTOR OF FINANCE ROBERT K.BILES,CPA PERSONNEL DIRECTOR M.E.ABBOTT MEMBER...LEAGUE OF KANSAS MUNICIPALITIES • NATIONAL LEAGUE OF CRES CI T Y • O '-F i page 2 saunana The second reason a shortfall was recorded involved the cost of demolition of dilapidated structures. It was anticipated that such Department of Planning work would cost $10,000. Before the project was bid, several and Community Development property owners completed repairs and/or removal , thus reducing the Oty-County Building number of structures to be demolished by the City. Finally, an 300 West Ash Street extremely favorable bid was received from a local contractor PD.Box736 ($2,630) . The very nature of such work makes cost estimating Salina,KS 67402-0736 Telephone(913)827-8781 extremely difficult. Salina City Planning Commission Although the actual expenditures from sources comprising local Salina Board of Zoning Appeals Salina City Heritage Commission matching funds did not equal budgeted amounts, the shortfall was very slight (5.3%) and could have been reached by recording a larger match from one source - NCRPC weatherization. Please advise if you have any questions or need additional information. RD/ms MEMBER...LEAGUE OF KANSAS MUN1C7PALJI ES • NATIONAL LEAGUE OF CMES RESOLUTION NUMBER 89-4120 1 A RESOLUTION AUTHORIZING THE MAYOR TO EXECUTE AND THE II CITY CLERK TO ATTEST AN AGREEMENT BETWEEN THE CITY OF SALINA AND � KENNEDY AND COE, CERTIFIED PUBLIC ACCOUNTANTS, FOR AN AUDIT OF � CITY RECORDS FOR THE YEAR ENDING DECEMBER 31 , 1989, FOR A COST NOT 11 TO EXCEED TWENTY-FIVE THOUSAND DOLLARS ($25,000) . BE IT RESOLVED by the Governing Body of the City of Salina, I' Kansas: _ Section 1 . That the Mayor and City Clerk of the City of Salina are it hereby authorized to execute an agreement between the City of Salina and 1! Kennedy and Coe, Certified Public Accountants for an audit of city records for it ii the year ending December 31 , 1989, at a cost not to exceed Twenty-five Thousand Dollars ($25,000) . 1 Adopted by the Board of Commissioners and signed by the Mayor this 11th day of September, 1989. o .c l of ph Warner, Mayor (i [SEAL] Ii ATTEST: it iiJacque! ne Shiever, City Clerk • II STATE OF KANSAS ) ) SS COUNTY OF SALINE ) I , Jacqueline Shiever, City Clerk of the City of Salina, Kansas, do hereby certify that Resolution Number 89-4120 was adopted by the Board of Commissioners at its regular meeting on September 11 , 1989, and that the above and foregoing is a true and correct copy of the original on file in my office. WITNESS my hand and official seal this 12th day of September, 1989. I' [SEAL] • 1 wew� Jacqueline Shiever, City Clerk CITY OF SALINA REQUEST FOR COMMISSION ACTION DATE TIME 10/15/90 4:00P.M. AGENDA SECTION: Administration ORIGINATING DEPARTMENT: APPROVED FOR NO. 8 Department of Finance AGENDA: ITEM NO. 3 BY: Robert K. Giles BY: vy Receive and review the 1989 Audit report from Kennedy and Coe. Included in this week's information packet is a copy of the 1989 audited financial statements and the auditor's report on those statements (pages 1 and 2) . Several other reports required by government auditing standards and the Federal Government are included in pages 3 through 10. Following the financial statements, notes to the financial statements and the supplemental information, the auditors have presented a separate report on the Water and Sewerage accrual basis financial statements. This is required by our revenue bond covenants. Representatives from Kennedy and Coe will be in attendance to discuss their report. We have attached responses to the auditor's comments and findings. Recommended action Accept the 1989 Audit Report. COMI SSION ACTION MOTION BY SECOND BY TO: A - i re _ m:- (V #c .: . ?ii..`' 4 C 1 T Y • O F ' sauna Office of City Clerk Suite 206 300 West Ash Street P.O. Box 736 Salina.KS 67402-0736 TO: Dennis M. Kissinger, City Manager Telephone(913)527-9653 FROM: Robert K. Biles, Director of Finance and Administration SUBJECT: 1989 Audit report comments DATE: October 10, 1990 As a part of each year's audit report, the auditors are required to comment on material internal control weaknesses or statutory violations which might have come to their attention. The 1989 audit report describes 6 areas on pages 4 and 36 which will require our attention. Page 4 The first item notes the bank statements have not been reconciled on a timely basis. We have had problems in this area; however, we have the bank statement reconciliations current for 1990 and will be allowing sufficient staff time each month to perform this reconciliation on a monthly basis. The second item notes encumbrances were not recorded for a portion of 1989. As we installed our software in 1989 , we intentionally did not record encumbrances from May 1 to September 1 to allow us to adequately train personnel in the basic software operation before adding the purchase order module. All remaining encumbrances incurred during that period were recorded in September. Recording of encumbrances has occurred since then. We also had a problem after year-end with properly applying payments to outstanding 1989 encumbrances. With the Salina auditors guidance and additional personnel training, I believe this Mari has been rectified. ALI.IMERICA CITY I I I II / The third comment relates to the clarity of explanations attached to the journal entries we make. We upgraded our explanations 1489 shortly after the auditors brought this to our attention. CITY CLERK JACQUELINE R SHIEVER.CMC DIRECTOR OF FINANCE ROBERT K.BILES.CPA PERSONNEL DIRECTOR M.E.ABBOTT MEMBER. ..LEAGUE OF KANSAS MUNICIPALITIES • NATIONAL LEAGUE OF CT7ES f1 . Dennis M. Kissinger October 10, 1990 Page 2 Page 36 The first violation relates to the statutory requirement in K .S.A. 12-1608 that the City publish a financial statement each quarter. These have not been published since the third quarter of 1989. Subsequent to our meeting with the auditors today, you directed me to prepare the financial statements for each of the quarters and publish them along with the September 1990 statement. Work has begun and we will do our best to meet the publishing date of the 20th with all five statements. You also directed me to oversee the preparation and publication of future financial statements as an addition to my current duties. I will ensure this is done. The second comment corresponds to one discussed above and has been corrected. The third violation relates to the closing of the Parking Meter Fund's balance of $34.60 to the General Fund. Rather than carry the balance for over a year until a formal budget for the transfer could be established, I made the transfer in 1989 in order to close the fund. Please let me know if you need any additional information regarding these items. CITY OF SALINA, KANSAS City Attorney 129 South 8th Greg A.Bengtson P.O.Boa 380 (913)823-6325 Salina,KS 67402-0380 August 8, 1990 Kennedy nd Coe P.O. x 1100 Salizra, Kansas 67402-1100 -- Re: Audit of City of Salina, Kansas Dear Auditors: The following is my response to your request for information on matters to which I have devoted substantive attention on behalf of the City in the form of legal consultation or representation. This response includes matters that existed at December 31, 1989,' and during the period from that date to the date above. PENDING OR THREATENED LITIGATION, CLAIMS AND ASSESSMENTS (EXCLUDING UNASSERTED CLAIMS AND ASSESSMENTS) 1. Claim by John P. Bengtson. On October 5, 1989, John P. Bengtson, through his counsel, David R. Platt of Junction City, Kansas, filed a claim under the Kansas Tort Claims Act alleging that during the early morning hours of April 17 , 1989, he was taken from his home to the Salina Police Department for questioning against his will. The claim alleged monetary damages of $20, 000 for "false arrest, false imprisonment, illegal search and seizure, violation of constitutional rights and numerous other theories in tort. " On February 6, 1990, the matter was settled by the City' s police liability carrier for $6, 000 with a $5, 000 deductible. 2 . EPA v. City of Salina. In September of 1989 the City of Salina was advised of administrative proceedings initiated by the Environmental Protection Agency seeking to assess a penalty of $55, 000 for alleged violation of the Clean Water Act regarding implementation of its pretreatment ordinance. The exchange of information regarding the status of the pretreatment program and negotiations with EPA resulted in a penalty assessment of $25, 000, which was paid by the City in January, 1990. 3 . James Peoples v. City of Salina, et al. , Case No. 88-4280-S, Federal District Court. Plaintiff, a former firefighter, alleged Kennedy and Coe Page 2 August 8 , 1990 that he was discriminated against due to his race and physical handicap in his termination from employment as a firefighter. The suit was filed November 22 , 1988, against the City of Salina, Fire Chief Tom Girard, Personnel Director Mel Abbott, and then acting City Manager Bill Harris seeking reinstatement as well as compensatory and punitive damages. On March 20, 1990, the Court entered its order upholding the City's motion for summary judgment on all counts. No appeal was taken by the plaintiff. The case is now closed. 4 . Jim Vint v. City of Salina, et al. , Case No. 90-1190-C, Federal District Court. On April 4, 1990, Plaintiff brought an action seeking damages in excess of $50, 000 and for an order enjoining the City' s allegedly "unconstitutional practice of arresting people without have probable cause to believe they have committed a crime. " The matter was referred to insurance defense -- counsel under the City' s police liability policy. The case was settled on approximately July 24 , 1990, for the monetary sum of $7, 620, to which a $5, 000 deductible applied. 5. Claims by Billy L. Walter, Douglas Chegwidden, and Barbara Wicks. On the evening of May 13 and into the morning hours of May 14 , 1989, Billy L. Walter, Douglas Chegwidden, and Barbara Wicks were involved in a matter with the Salina Police Department. In February, 1990, separate claims were filed by each through their counsel, Richard F. Waters, Junction City, Kansas. All three claims have been submitted to the City's police liability carrier, subject to a $5, 000 deductible and an exclusion from coverage for any award of punitive damages. It is my understanding that these claims are not under negotiation by the insurance carrier at this time; however, suit has not been filed. The following is an outline of each claim. A. Chegwidden. On February 27 , 1989 , the City received a claim on behalf of Douglas Chegwidden alleging that he was physically and mentally assaulted and battered by members of the Salina Police Department, both on a street and at the police station. He also claims to have been illegally arrested and unlawfully imprisoned. The claim seeks actual damages of $350, 000 and punitive damages of $1, 000, 750. 00. B. Walter. On February 28 , 1989 , the City received a claim on behalf of Billy L. Walter alleging the same theory and damages as the claim by Billy L. Walter. C. Wicks. On February 28, 1989 , the City received a claim on behalf of Barbara A. Wicks alleging the same theory as the claim by Billy L. Walter. The claim alleges actual damages of $200, 000 and punitive damages of $750, 000. 6. Claim by John and Sharon Swan, and Swans Formal Wear, Inc. , d/b/a/ J.B. Enterprises. On February 18 , 1989, the Swans were Kennedy and Coe Page 3 August 10, 1990 scheduled to have a sale of bridal merchandise at one of the local motels. At 9 : 00 a.m. that morning the sale was closed down by the Salina police department since the Swan's did not have a license for itinerant merchants. At 11: 45 a.m. that same morning the Swans were advised that their sale did not require a license and that they could resume. On June 23 , 1989 , the Swans filed a claim against the City through their counsel, Les E. Diehl of Topeka, Kansas. The claim alleged total damages of $32, 360 for additional advertising, lost profits, and damage to business reputation. The matter was referred to the City's police liability carrier, subject to a $5, 000 deductible. After lengthy negotiations the City was advised by letter from its insurance carrier dated August 13 , 1990, that the matter was settled for $11, 350. 7. Randall Leiker v. City of Salina, John Woody, Don Poore and Hector Saniurio, Case No. 90-2219-V, Federal District Court. Leiker alleges that on August 9, 1989, the City through its employee, police officer Don Poore, deprived him of his constitutional rights by the "unjustified use of excessive force" during his arrest following a high speed chase from Salina into Ottawa County. Both officer Poore and Kansas Highway Patrolman Hector Sanjurjo were involved in the arrest. Then Police Chief John Woody is also a named defendant on the basis of his responsibility for the training and supervision of Salina police officers. Leiker alleges actual damages of $250, 000 and requests punitive damages of $1, 500, 000. Defense of the suit has been assumed by the City' s police liability carrier, subject to a $5, 000 deductible and an exclusion from coverage for any award of punitive damages. The case is in the early discovery stages. The civil proceedings are somewhat complicated by criminal charges that have been brought against both Officer Poore and Patrolman Sanjurjo by the Ottawa County Attorney. Officer Poore is charged with misdemeanor battery and felony terroristic threat. Officer Poore is represented by his own private counsel in the criminal case. The City through its insurance defense counsel is contesting the case at this time. Shortly after the incident, an internal investigation by the City resulted in a determination that Officer Poore had used excessive force and a three day suspension was imposed. Since the case is in the very early stages of discovery and since the criminal proceedings are currently pending, any effort to indicate prospects for settlement or the amount of exposure at this time would be purely conjecture. Kennedy and Coe Page 4 August 10, 1990 UNASSERTED CLAIMS AND ASSESSMENTS: This will confirm my understanding that whenever, in the course of performing legal services for the City of Salina with respect to a matter recognized to involve an unasserted possible claim or assessment that may call for financial statement disclosure, if I have formed a professional conclusion that the City should disclose or consider disclosure concerning such possible claim or assessment, as a matter of professional responsibility to the City, I will so advise the City and will consult with the City concerning the question of such disclosure and the applicable requirements of Statement of Financial Accounting Standards No. 5. Please let me know if you have any questions. Very truly yours, URINAL if GREG A. 1_,..;,.,;01\1 Greg A. Bengtson City Attorney GAB cc: Robert K. Biles, Director of Finance . „t i C I T Y S O F ALina Office of June 26, 1990 City Clerk Suite 206 300 West Ash Street P.O.Box 736 Mr. Greg Bengtson Salina,KS 67402-0736 City Attorney Telephone(913)827-9653 P.O. Box 380 Salina, KS 67402-0380 Dear Mr Bengtson: In connection with an audit of our financial statements at December 31 , 1989, and for the year then ended, please furnish to our auditors, Kennedy and Coe, P.O. Box 1100, Salina, Kansas 67402-1100, the information requested below involving matters as to which you have devoted substantive attention on behalf of the City in the form of legal consultation or representation. Your response should include matters that existed at December 31 , 1989, and during the period from that date to the effective date of your response. (Please specify the effective date of your response if it is other than the date of reply) . PENDING OR THREATENED LITIGATION , CLAIMS AND ASSESSMENTS (EXCLUDING UNASSERTED CLAIMS AND ASSESSMENTS) : Please furnish a list of all litigation, claims and assessments (excluding unasserted claims and assessments) asserted against the City even though legal proceedings have not started. Information regarding each case should include but not be limited to: 1 . The nature of the litigation including identification of: a. The proceedings b. The claim(s) asserted c. The amount of monetary or other damages sought. ( If no amounts are stated in preliminary case filings, please so state. ) d. Whether or not the potential damages are covered by insurance and, if so, to what extent (policy limits, deductibles, etc. ) Salina e. The objectives sought by the plaintiff (if any) other WOW than monetary or other damages (such as performance Au4YmIGlrm or discontinued performance of certain actions. ) I I2. The progress of the case to date (in the process of II !' discovery, trial or appeal.) CITY CLERIC 3. How the City is responding or intends to respond to the JACQUELINE B SHIEVER,CMC litigation, e.g. , to contest the case vigorously or to seek out-of-court settlement. DIRECTOR OF FINANCE ROBERT K.BILES,CPA PERSONNEL DIRECTOR M.E.ABBOTT MEMBER.. .LEAGUE OF KANSAS MUNICIPALITIES • NATIONAL LEAGUE OF CITIES Mr. Greg Bengtson City Attorney June 26, 1990 Page 2 4. Your evaluation of the likelihood of an unfavorable outcome. (To avoid potential misunderstandings of your opinion, please avoid vague phrases such as or similar to "meritorious defense," "without substantial merit," or "reasonable chance of dismissal.") If no opinion can be expressed, please so state and explain the reasons. 5. An estimate as to the amount or range of potential loss. It is important that you express an upper limit on possible and probable losses. If no range or upper limits can be expressed, please so state and explain the reasons. Also, please identify any pending or threatened litigation, claims and assessments with respect to which you have been engaged, but as to which you have not yet devoted substantive attention. UNASSERTED CLAIMS AND ASSESSMENTS: We understand that whenever, in the course of performing legal services for us with respect to a matter recognized to involve an unasserted possible claim or assessment that may call for financial statement disclosure, if you have formed a professional conclusion that we should disclose or consider disclosure concerning such possible claim or assessment, as a matter of professional responsibility to us, you will so advise us and will consult with us concerning the question of such disclosure and the applicable requirements of Statement of Financial Accounting Standards No. 5. Please specifically confirm to our auditors that our understanding is correct. We have advised our auditors that we are aware of no unasserted claims and assessments which shall be disclosed. Please specifically identify the nature of and reasons for any limitation on your response. Please return your response directly to our auditors in the enclosed return envelope. Very truly yours, Robert K. Biles Director of Finance RKB/sp cc: Kennedy and Coe P.O. Box 1100 Salina, KS 67402-1100 City Attorney STATE OF KANSAS DEPARTMENT OF ADMINISTRATION DIVISION OF ACCOUNTS AND REPORTS October 17, 1990 KENNEDY & COE P.O. BOX 1100 SALINA, KS 67402-1100 In reoard to the audit of : CITY OF SALINA The following described audit report has been filed as a.- public record in the office of the Director of Accounts and Reports as required by K.S.A. 75-1124. Audit Period (Year Ended ) : 891231 Date Received in This Office: 901017 Certified Public Accountant in Charge of Audit: DAVID J . MILLS, CPA Permit No. : 2682 Very truly yours. James R. Cobler, Director Division of Accounts and Reports by e�.l6�c- Chief , Municipal Accounting Section This copy to be attached to voucher and filed with clerk of municipality. AR-102 ( 10-1-87)