Audit - 1998
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SALINE COUNTY -CITY BUilDING AUTHORITY
Salina, Kansas
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FINANCIAL STATEMENTS AND INDEPENDENT AUDITORS' REPORT
December 31, 1998
HARRIS ON & ARNETT, CHARTERED
Certified Public Accountants
Salina, Kansas
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SALINE COUNTY -CITY BUILDING AUTHORITY
Salina, Kansas
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MEMBERS
(1) Mr. Michael White
(1) Mr. Deane Allen
(1) Mr. Doug Forsberg
(2) Dr. Peter Brungardt
(2) Mr. Monte Shadwick
(3) Mr. Douglas Smith
(4) Mrs. Jean McArthur
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OFFICERS
Mr. Douglas Smith
Mr. Michael White
Ms. Sherri Barragree
Dr. Peter Brungardt
Chairman
Vice-Chairman
Secretary
Treasurer
Representative from:
(1) Board of County Commissioners
(2) Board of Commissioners of the City of Salina, Kansas
(3) District Court Representative
(4) Member at Large
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
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CONTENTS
Page
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INDEPENDENT AUDITORS' REPORT
I
COMPARATIVE BALANCE SHEETS
2
COMPARATIVE STATEMENTS OF REVENUES, EXPENSES, AND
CHANGES IN RETAINED EARNINGS
3
COMPARATIVE STATEMENTS OF CASH FLOWS (DIRECT METHOD)
and
RECONCILIATION OF OPERATING GAIN, (LOSS) TO NET CASH
FLOWS FROM OPERATING ACTIVITIES
4
NOTES TO FINANCIAL STATEMENTS
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HARRISON & ARNETT
CHARTERED
CERTIFIED PUBLIC ACCOUNTANTS
EUGENE O. HARRISON, C.P.A.
THOMAS G. ARNETT, C.P.A.
717 ROACH STREET. SALINA, KANSAS 67401
PHONE: (785) 827-7244
FAX: (785) 827-0048
INDEPENDENT AUDITORS' REPORT
To the Governing Board
Saline County-City Building Authority
Salina, Kansas:
We have audited the accompanying general purpose financial statements of the Saline County-City
Building Authority, Salina, Kansas, as of December 31, 1998, and December 31, 1997, and for the years
then ended as listed in the table of contents. These general purpose financial statements are the
responsibility of the Building Authority's management. Our responsibility is to express an opinion on
these general purpose financial statements based on our audits.
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We conducted our audits in accordance with generally accepted auditing standards and the Kansas
Municipal Audit Guide. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the general purpose financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general
purpose financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall general purpose financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the general purpose financial statements referred to above present fairly, in all material
respects, the financial position of the Saline County-City Building Authority as of December 31, 1998,
and December 31, 1997, and the results of its operations and changes in its retained earnings for the years
then ended in conformity with generally accepted accounting principles.
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Harrison & Arnett, Chartered
Salina, Kansas
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Certified Public Accountant in charge
of and actively engaged on this audit.
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MEMBERS OF
DIVISION FOR CPA FIRMS PRIVATE COMPANIES PRACTICE SECTION
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
KANSAS SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
COMPARATIVE BALANCE SHEETS
December 31
1998 1997
ASSETS
CURRENT ASSETS
Cash in bank
Total current assets
$ 308,842 $ 255,070
308,842 255,070 <'
1,692,325 1,655,151
$ 2,001,167 $1,910,221
NET INVESTMENT IN FIXED ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Accounts payable
Accrued leaves and vacation pay
Current portion long-term lease payable
LIABILITIES AND EQUTIY
Total current liabilities
$ 16,435 $ 19,497
42,843 22,963
35,597 33,562
94,875 76,022
148,345 183,942
243,220 259,964
LONG-TERM LEASE PAYMENT NET
TOTAL LIABILITIES
EQUTIY
Retained earnings
1,757,947
1,650,257
TOTALLIAB~ITIESANDEQUITY
$ 2,001,167
$1,910,221
The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
COMPARATIVE STATEMENTS OF REVENUES, EXPENSES, AND CHANGES
IN RETAINED EARNINGS
January 1 to December 31
1998 1997
OPERATING REVENUES
Regular appropriations
Maintenance charges
Snack bar commissions
Miscellaneous
$ 585,963
9,686
3,265
7,833
$ 574,616
7,864
2,656
4,244
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Total operating revenues
606,747
589,380
OPERATING EXPENSES
Salaries and benefits
Maintenance & repairs
Utilities
Other expenses
Total operating expenses
279,505 247,107
57,449 71,739
86,731 89,553
18,236 19,468
441,921 427,867
164,826 161,513
55,765 54,307
109,061 107,206
OPERATING INCOME BEFORE DEPRECIATION
DEPRECIATION EXPENSE
NET OPERATING GAIN (LOSS)
NON-OPERATING EXPENSES
Interest net
(1,372) (3,007)
107,689 104,199
1,650,257 1,546,058
$1,757,946 $1,650,257
NET INCOME (LOSS)
RETAINED EARNINGS, January 1
RETAINED EARNINGS, December 31
The accompanying notes are an intergral part of these financial statements.
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SALINE COUNTY -CIlY BUILDING AUTHORITY
Salina, Kansas
COMPARATIVE STATEMENTS OF CASHFLOW~ (DIRECT METHOD)
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from operating revenue
Cash paid to or for employees for services
Cash paid to suppliers for goods and services
January 1 to December 31
1998 1997
$ 606,747
(259,625)
(165,477)
$ 589,380
(248,698)
(184,922)
Net cash provided (used) in operating activities
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181,645
155,760
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Purchase of property and equipment
Interest paid on debt
Principal payment on debt
Net cash provided (used) from capital and related
financing activities
(92,938) (116,098)
(12,257) (13,863)
(33,562) (31,956)
(138,757) (161,917)
10,884 10,856
53,772 4,699
255,070 250,371
$ 308,842 $ 255,070
CASH FLOWS FROM INVESTING ACTIVITES
Net interest received
INCREASE (DECREASE) IN CASH
CASH BALANCE - January 1
CASH BALANCE - December 31
RECONCILIATION
OPERATING GAIN
$ 109,061 $ 107,206
55,765 54,307
(3,061) (4,162)
19,880 (1,591)
$ 181,645 $ 155,760
ADJUSTMENT RECONCILING OPERATIONS GAIN
Add depreciation expense
CHANGE IN LIABILITIES
Increase (decrease) accounts payable
Increase ( decrease) accrued vacations and base
NET CASH PROVIDED BY OPERATING ACTIVITIES
The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY -CITY BUILDING AUTHORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 1998 and 1997
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
A. ORGANIZATION - The Saline County-City Building authority was formed on March 22,
1965, and restated January 16, 1996, under the interlocal Cooperation Act of Kansas (K.S.A. 12-
2901 to 12-2907). The Building Authority is a joint venture organized by the three participating
municipalities for the purpose of acquiring facilities to house and accommodate the county, city,
the county and city courts, and such other offices as may be expedient, and to equip, operate, and
maintain the facility so acquired.
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The Governing Board of the Building Authority is composed of seven members, six of whom are
appointed from the governing boards of the participating municipalities in the ratios listed below,
and one of whòm is selected at large by the six members.
Name of Agency
Number of
Members on
Authoritv Board
Saline County
City of Salina
District Court
Member at large
3
2
1
1
Total
7
B. BASIS OF ACCOUNTING - The Authority consists of an enterprise fund. Enterprise funds
are classified as proprietary funds by the GASB and are accounted for using a total economic
resource measurement focus. The enterprise fund is used to account for operations that are
financed and operated in a matter similar to private business enterprises. The intent of the Board
is that the cost of providing services on a continuing basis be recovered through user fees and
rents. The financial statements are prepared on the accrual basis of accounting. Under the
accrual basis, revenues are recognized as earned and expenses as incurred. It is the Authority's
policy to follow all FASB standards issued after November 30, 1989, for its proprietary activities
unless those new F ASB pronouncements conflict with GASB guidance.
C. CASH AND CASH EQUIVALENTS - For the purpose of the comparative statement of cash
flows, the Authority considers all highly liquid investments (including restricted assets) with
maturities of three months or less when purchased to be cash equivalents. .
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D. PROPERTY AND EQUIPMENT - Additions to property and equipment are recorded at
cost Maintenance and repairs are expensed as incurred. When properties are disposed of, the
related cost and accumulated depreciation are removed from the respective accounts and any gain
or loss on disposition is credited or charged to operations.
Assets are depreciated using the straight-line method over the estimated useful lives of the assets
as follows:
Buildings and Improvements
Infrastructure Items
Equipment
,Years
5-50
10-40
5-25
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In accordance with Financial Accounting Standard Board Statement No. 62, interest during
construction periods, when significant, is capitalized and included in the cost of property.
E. INVENTORY - The Authority maintains no significant inventory of office and maintenance
supplies. These items are expensed as purchased and no inventory is recorded in these financial
statements.
F. TAXES - The Authority is exempt from payment of federal and state income, property and .
certain other taxes.
G. BUDGET LAW COMPLIANCE - The Saline County-City Building Authority does not have
tax levying powers and is not required to publish a budget A budget is adopted annually by the
Governing Board for the purpose of determining appropriations required from participating
municipalities to cover net operating and maintenance costs of the building. These
appropriations are borne by the participating municipalities.
H. COMPLIANCE WITH KANSAS STATUTES - In management's opinion, there were no
statutory violations.
NOTE 2. DEPOSITS AND INVESTMENTS
At December 31, 1998 and 1997, respectively, the carrying amount of the Building Authority's
deposits were $308,842 and $255,070, and the bank balances were $318,835 and $263,148. Of
the bank balances, $100,000 and $100,000 were covered by FDIC insurance at December 31,
1998 and 1997, respectively, and the remaining balances were collateralized by pledged
securities held under joint custody receipts issued by a third-party bank in the Building
Authority's name. The third-party bank holding the pledged securities is independent of the
pledging bank.
Building Authority money on deposit is categorized into one of three risk categories to give an
indication of the level of risk assumed by the Building Authority at year end. Category 1
includes deposits insured or collateralized with securities held by the Building Authority or by its
agent in the Building Authority's name. Category 2 includes deposits collateralized with
securities held by the pledging financial institution's trust department or agent in the Building
Authority's name. Category 3 includes deposits that are uncollateralized, including any deposits
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that are collateralized with securities held by the pledging financial institution, or by its trust
department or agent, but not in the Building Authority's name. All deposits of the Building
Authority in excess of FDIC coverage are Risk Category 2.
Kansas statutes authorize the Building Authority to invest "in u.S. Treasury bills and notes,
repurchase agreements, and the State Treasurer's investment pool. The Building Authority had
no such investments during the year ended December 31, 1998 or December 31, 1997.
NOTE 3. DEFINED BENEFIT PENSION PLAN
The non-school municipality participates in the Kansas Public Employees Retirement System
(KPERS), a cost-sharing multiple-employer defined benefit pension plan as provided by KS.A.
74-4901, et seq. KPERS provides retirement benefits, life insurance, disability income benefits,
and death benefits. Kansas law establishes and amends benefit provisions. KPERS issues a
publicly available financial statements and required supplementary information. That report
may be obtained by writing to: KPERS (400 SW 8th Avenue, Suite 200; Topeka, KS 66603-
3925) or by calling 1-800-228-0366.
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KS.A 74-4919 establishes the KPERS member-employee contribution rate at 4% of covered
salary. The employer collects and remits member-employee contributions according to the
provisions of section 414(h) of the Internal Revenue Code. State law provides that the employer.
contribution rate be determined annually based on the results of an annual actuarial valuation.
KPERS is funded on an actuarial reserve basis. State law sets a limitation on annual increases in
the contribution rates for KPERS employers. The employer rate established by statute for
calendar year 1998 is 2.78%. The non-school municipality employer contributions to KPERS
for the years ending December 31, 1998 and 1997 were $6,089 and $4,349, respectively, equal
to the statutory required contributions for each year.
NOTE 4. COMPENSATED ABSENCES
The Building Authority compensates employees for the following types of absences at their
current rate of pay.
a. Vacation: Full-time employees earn from 12 to 21 days of vacation pay per year based on
the number of years of continuous service. Vacation pay may accumulate from a minimum
of 18 days to a maximum of 24 days depending upon the employee's number of years of
continuous service. Upon termination, an employee is entitled to a lump sum payment for
all accumulated vacation earned.
b. Sick Leave: Full-time employees earn one day of sick leave for each month of full-time
service to be used for illness or death in the family. Accumulation is unlimited.
Upon termination due to retirement, an employee is entitled to a lump sum payment for one-
half of all accumulated sick leave not to exceed 90 days. Upon termination for any other
reason except dismissal for cause, an employee with at least five continuous years of service
is entitled to a lump sum payment for one-half of all accumulated sick leave, not to exceed
30 days.
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c. Personal Leave: One day of personal leave is granted to each full-time employee annually.
There is no accumulation of personal leave beyond the year it is allowed.
NOTE 5. LONG TERM DEBT
The following summarizes the leasè obligation included in the long-term account group.
Debt Issue
Date
Issued
Maturi ty
Date
Interest
Rate
Original
Amount
Equipment Lease Purchase Agreement
9/1/95
9/1/03
$291,629
5.9%
The lease purchase agreement was entered into for the purpose of financing a contract for
services in connection with upgrading the heating and cooling system in the building.
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Annual debt service requirements to maturity for the equipment lease purchase agreement -
follow:
Year Principal Due Interest Due Total Due
1999 $ 35,597 $ 10,222 $ 45,819
2000 37,755 8,064 45,819
2001 40,043 5,776 45,819
2002 42,471 3,348 45,819
2003 28.076 1.142 29.218
Totals $ 183,942 $ 28,552 $212,494
NOTE 6. GENERAL FIXED ASSET GROUP
The following summarizes the changes in the general fixed asset group of accounts for the
year ended December 31, 1998.
Beginning Ending
Balance Additions DisDositions Balance
Land $ 220,228 $ $ $ 220,228
Building & Improvements 2,564,648 85,144 2,649,792
Equipment 111,032 7,795 (8,154) II 0,673
Parking Lot 61.655 61.655
Total 2,957,563 92,939 (8,154) 3,042,348
Accumulated depreciation (1.302.412) (55.765) 8.154 (1.350.023)
Net Investment in
Fixed Assets $1,655,151 $ 37,174 $ $1,692,325
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