Audit - 2003/2004
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BARJLETT SETTLE & EILERJ--E
A PROFESSIONAL ASSOCIATION
CERTIFIED PUBLIC ACCOUNTANTS
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
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FINANCIAL STATEMENTS
December 31, 2004 and 2003
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BARTLETT, SETTLE & EDGERLE
A PROFESSIONAL ASSOCIATION
Certified Public Accountants
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
FINANCIAL STATEMENTS
For the Years Ended December 31, 2004 and 2003
Table of Contents
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Independent Auditor's Report
Management's Discussion and Analysis
Comparative Statement of Net Assets
Comparative Statement of Revenues, Expenses, and Changes in Net Assets
Comparative Statement of Cash Flows
Notes to Financial Statements
Pa2e
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2-4
5
6
7
8 - 10
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B~TLETI SETILE &1 EffiEI(LE
A PROFESSIONAL ASSOCIATION
CERTIFIED PUBLIC ACCOUNTANTS
To the Governing Board
Saline County-City Building Authority
Salina, Kansas
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We have audited the accompanying financial statements of the business-type activities of the Saline
County-City Building Authority, Salina, Kansas, as of December 31, 2004, and for the year then ended
which comprises the Building Authority's basic financial statements as shown in the table of contents.
These financial statements are the responsibility of the Saline County-City Building Authority's
management. Our responsibility is to express opinions on these financial statements based on our audit.
The financial statements of the Saline County-City Building Authority as of December 31, 2003 and for
the year then ended were audited by other auditors whose report dated May 28, 2004, expressed an
unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the Kansas Municipal Audit Guide. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes 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.
In our opinion, based on our audit, the financial statements referred to above present fairly, in all material
respects, the net assets of the Saline County-City Building Authority as of December 31, 2004 and the
revenues, expenses, changes in net assets and cash flows thereof for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
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The management's discussion and analysis is not a required part of the basic financial statements but is
supplementary information required by accounting principals generally accepted in the United States of
America. We have applied certain limited procedures which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express on opinion on it.
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A Professional Association
Hutchinson, Kansas
March 30, 2005
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129 WEST SECO'lD, Sel1E A . PO. Box 2889 . HUTCHIKSON, KS 67504-2889
PHONE: 620.662.3358 . Tall-FREE: 888.414.0123 . FAX: 620.662.3350 . E~IAll: bse@cpabse.com
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MANAGEMENT'S DISCUSSION AND ANALYSIS
As management of the Saline County-City Building Authority (the "Authority"), we offer readers of our
financial statements this narrative overview and analysis ofthe financial activities of the Authority for the
fiscal year ended December 31,2004.
Financial Highlights
. The assets of the Authority exceeded its liabilities at the close of the most recent fiscal year by
$2,762,734 (net assets). Of this amount, $860,705 (unrestricted net assets) may be used to meet
the Authority's ongoing obligations to customers and creditors.
. The Authority's total net assets increased by $170,591.
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Overview of the Financial Statements
This discussion and analysis is intended to serve as an introduction to the Authority's basic financial
statements. Since the Authority is engaged only in business-type activities., its basic financial statements
are comprised of only two components: 1) enterprise fund financial statements and 2) notes to financial
statements.
Enterprise fund financial statements - The enterprise fund financial statements are designed to
provide readers with a broad overview of the Authority's finances, in a manner similar to a
private-sector business.
The statement of net assets presents information on the Authority's assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decreases in net assets
may serve as a useful indicator of whether the financial position of the Authority is improving or
deteriorating.
The statement of revenues, expenses and changes in fund net assets presents information showing
how the Authority's net assets changed during the most recent fiscal year. All changes in net
assets are reported as soon as the underlying event giving rise to the change occurs, regardless of
the timing of the cash flows. Thus, revenues and expenses are reported in this statement for some
items that will only result in cash flows in future fiscal periods (e.g., earned but unused vacation
leave).
The basic enterprise fund financial statements can be found on pages 5 through 7 of this report.
Notes to financial statements - The notes provide additional information that is essential to a full
understanding of the data provided in the financial statements. The notes to the financial
statements can be found on pages 8 through 10 of this report.
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Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's financial position.
In the case of the Authority, assets exceeded liabilities by $2,762,734 at the close ofthe most recent fiscal
year.
The largest portion of the Authority's net assets (69%) reflects its investment in capital assets, less any
related debt used to acquire those assets that is still outstanding. The Authority uses these capital assets to
provide facilities, equipment, and services to its tenants; consequently, these assets are not available for
future spending. Although the Authority's investment in its capital assets is reported net of related debt, it
should be noted that the resources needed to repay this debt must be provided from other sources, since
the capital assets themselves cannot be used to liquidate these liabilities.
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Financial Analysis (Continued)
Net Assets
Current and other assets
Capital assets
Total assets
Long-term liabilities outstanding
Other liabilities
Total liabilities
Net assets:
Invested in capital assets, net of related debt
Unrestricted
Total net assets
2004
$ 934,335
1.987.741
$2.922.076
$ 43,869
115.4 73
$ 159.342
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$1,902,029
860.705
$2.762.734
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2003
$ 742,879
2.033.860
$2.776.739
$ 85,711
98.885
$ 184.596
$1,908,238
683.905
$2.592.143
At the end of the current fiscal year, the Authority is able to report positive balances in both categories of
net assets. The same situation held true for the prior fiscal year.
Changes in Net Assets
2004 2003
Operating revenues:
Charges for facilities, equipment and services $ 817.793 $ 83 1.393
Non operating revenues:
Investment income 5,070 2,384
Other nonoperating revenue 8.271 3.862
Total non operating revenues 13.341 6.246
Total revenues 83 1. 134 837.639
Operating expense:
Personnel expense 306,104 340,727
Depreciation 127,761 122,900
Operation and maintenance 184,520 231,262
Other operating 38.208 35.050
Total operating expense 656.593 729.939
Non operating expense:
Interest and fiscal charges 3.950 3.295
. Total expense 660.543 733.234
Income (loss) 170,591 104,405
Net assets - January 1 2.592.143 2.487.738
Net assets - December 31 $2.762.734 $2.592.143
The Authority's net assets increased by $170,591 during the current fiscal year. Operating revenues
decreased by $13,600, or 1.6%, and operating expenses decreased by $73,346, or 10%. Key elements of
these changes are as follows:
. Salary expenses and related costs decreased by approximately $34,643.
. Operation and maintenance expenses decreased by approximately $46,742.
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Capital Asset and Debt Administration
Capital assets - The Authority's investment in capital assets as of December 31, 2004, amounts to
$1,987,741 (net of accumulated depreciation). This investment in capital assets includes, land and land
improvements, building, motor vehicles, furniture and fixtures, and maintenance equipment. The net
decrease in the Authority's investment in capital assets for the current fiscal year was $46,119. This
decrease is a net figure resulting from capital assets additions of$78,147, less retirement of assets of
$124,266. Additional information related to capital assets is located in Note 6 of the Notes to Financial
Statements.
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Land and land improvements
Building
Office furniture, fixtures and telephone system
Maintenance equipment
Total
Major capital asset events during the current fiscal year included:
Plumbing and electrical improvements
Video and sound system enhancements
Ceiling tile replacements
Installation of door entry security system
Capital Assets
(net of depreciation)
2004
$ 309,749
1,460,665
154,015
63.312
$1.987.741
2003
$ 69,481
678,940
290,347
68.434
$1.107.202
$ 25,316
14,049
16,157
7,335
Long-Term Debt - At the end of the current fiscal year, the Authority had an outstanding principal
balance of $85,712 on a telephone system lease purchase agreement versus $125,622 last year, a decrease
of 32%. The key factor in this decrease was the principal payment on the outstanding obligations.
Requests for Information
This financial report is designed to provide a general overview of the Authority's finances for all those
with an interest in the Authority's finances. Questions concerning any of the information provided in this
report or requests for additional financial information should be addressed to the Saline County-City
Building Authority, 300 West Ash Street, Salina, KS 67401.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
COMPARATIVE STATEMENT OF NET ASSETS
December 31, 2004 and 2003
2004 2003
ASSETS
Cash and cash equivalents $ 926,635 $ 742,879
Receivables (net) 7,700
Capital assets (net of depreciation) 1,987,741 2,033,860
Total Assets 2,922,076 2,776,739
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LIABILITIES
Accounts payable 38,330 25,190
Accrued interest payable 4,150 6,282
Accrued vacation and sick leave payable 31,150 27,502
Long-term liabilities:
Due within one year 41,843 39,911
Due in more than one year 43,869 85,711
Total Liabilities 159,342 184,596
NET ASSETS
Invested in capital assets net of related debt 1,902,029 1,908,238
Unrestricted 860,705 683,905
Total Net Assets $ 2,762,734 $ 2,592,143
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The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
COMPARATIVE STATEMENT OF REVENUES, EXPENSES,
AND CHANGES IN NET ASSETS
For the Years Ended December 31,2004 and 2003
2004 2003
OPERATING REVENUES
Charges for facilities, services and equipment
Saline County $ 499,668 $ 494,940
City of Salina 310,425 328,753
. Salina Public Library 7,700 7,700
Total operating revenues 817,793 831,393
OPERATING EXPENSES
Personnel costs 306,104 340,727
Maintenance and repairs 63,097 112,737
Supplies and small tools 19,580 20,693
Depreciation 127,761 122,900
Insurance 30,162 25,839
Utilities 101,843 97,832
Contracted services 5,056 4,925
Miscellaneous expenses 2,990 4,286
Total operating expenses 656,593 729,939
Net Operating Income 161,200 101,454
NONOPERATING REVENUE AND EXPENSE
Interest income 5,070 2,384
Interest expense (3,950) (3,295)
Vending income (net) 3,169 3,124
Miscellaneous revenue 5,102 738
. Total nonoperating revenue and expense 9,391 2,951
Change in Net Assets 170,591 104,405
Net assets at beginning of year 2,592,143 2,487,738
Net assets at End of year $ 2,762,734 $ 2,592,143
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The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY-CITY BUILDING AUTHORITY
Salina, Kansas
COMPARATIVE STATEMENT OF CASH FLOWS
For the Years Ended December 31, 2004 and 2003
2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received for facility & equipment use $ 810,093 $ 831,721
Cash paid to suppliers (209,588) (365,134)
Cash paid to employees (302,456) (255,830)
Net cash provided by operating activities 298,049 210,757
. CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES:
Purchase of capital assets (78,147) (76,873)
Principal paid on capital debt (39,910) (71,603)
Interest paid on capital debt (6,082) (4,938)
Other receipts 4,776 3,862
Net cash used for capital and related financing activities (119,363) (149,552)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest received 5,070 2,384
Net cash provided by investing activities 5,070 2,384
Net increase (decrease) in cash and cash equivalents 183,756 63,589
Cash and cash equivalents at beginning of year 742,879 679,290
Cash and cash equivalents at end of year $ 926,635 $ 742,879
RECONCILIATION OF OPERATING INCOME
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income $ 161,200 $ 101,454
. Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 127,761 122,900
Changes in assets and liabilities:
Receivables (7,700)
Accounts payable 13,140 10,810
Accrued expenses 3,648 (24,407)
Net cash provided by operating activities $ 298,049 $ 210,757
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The accompanying notes are an integral part of these financial statements.
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SALINE COUNTY-CITY BUILDING AUTIIORITY
Salina, Kansas
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003
Note 1 - Orl!anization and Summary of Sil!nificant Accountinl! Policies
A. Reporting Entity - The Saline County-City Building Authority (the "Authority") was formed March
22, 1965, under the Interlocal Cooperation Act of Kansas (KSA 12-2901 to 12-2907). The organizing
agreement was restated January 16, 1996. The Authority is a joint venture organized by three participating
municipalities for the purpose of acquiring facilities to house and accommodate the offices of Saline County,
the City of Salina, and the county and city courts, and such other offices as may be expedient, and to equip,
operate, and maintain the facility so acquired.
The governing board of the Authority is composed of seven members, six of whom are appointed from the
governing boards of the participating municipalities, and one of who is selected at large by the six appointed
members. The makeup of the appointed members is three from Saline County, two from the City of Salina,
. and one from the District Court.
B. Measurement Focus and Basis of Accounting - The Authority consists solely of an enterprise fund.
Enterprise funds are classified as proprietary funds by the Governmental Accounting Standards Board
(GASB) and are accounted for using a total economic resource measurement focus. The enterprise fund
is used to account for operations that are fmanced and operated in a manner 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 Authority's fmancial statements are prepared using the accrual basis of accounting. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows.
It is the Authority's policy to follow all Financial Accounting Standards Board (FASB) standards issued
after November 30, 1989 for its proprietary activities to the extent that those standards do not conflict
with or contradict GASB guidance.
The Authority distinguishes operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from the providing of services and the related upkeep and
maintenance of building, grounds and equipment owned by the Authority. The principal operating
revenues of the Authority are rents and assessments charged to the entities occupying the Authority's
facilities and for the use of equipment owned by the Authority. Operating expenses include those costs
necessary for upkeep and maintenance and related administrative expenses and depreciation on capital
assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and
expenses.
C. Cash and Cash Equivalents - The Authority's cash and cash equivalents are consider to consist of cash
on hand, demand deposits, and all higWy liquid investments (including restricted assets) with maturities of
three months or less when purchased.
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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:
Years
Buildings and Improvements 5-50
Infrastructure Items 10-40
Equipment 5-25
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 Building Authority maintains no significant inventory of office and maintenance
supplies. These items are expensed as purchased and no inventory is recorded in these fmancial
statements.
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2004 and 2003
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Note 1 - Orunization and Summary of Sie:nificant Accountine: Policies - continued
F. Taxes - The Building 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. Estimates - The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and assumptions that affect
certain reported amounts of assets, liabilities, revenues, and expenses. Accordingly, actual results could
differ from those estimates.
I. Compensated Absences - The 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 to a maximum of 24 days
depending upon the employees' number of years of continuous service. Upon termination, an employee
is entitled to a lump sum payment for all accumulated vacation earned.
B. SICK LEA VE - Full-time employees eam 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.
C. PERSONAL LEA VE - 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.
J. Net Assets - Net assets are the difference between assets and liabilities. Net assets invested in capital
assets represents capital assets, less accumulated depreciation less any outstanding debt related to the
acquisition, construction or improvement of those assets.
Note 2 - Stewardship, Compliance. and Accountability
Cash-Basis Law (KSA 10-1113) - The Authority was in compliance with this law at all times during the
year.
Depository Security (KSA 9-1402) - The Authority's funds were adequately secured at all times during the
year.
Note 3 - Deposits and Investments
At December 31, 2004 and 2003, respectively, the bank balances of the Authority were $935,054 and
$743,105. Of the bank balances, $100,000 and $100,000 were covered by FDIC insurance at December 31,
2004 and 2003, respectively, and the remaining balances were collateralized by pledged securities held under
joint custody agreements with a third-party bank in the Authority's name. The third-party bank holding the
pledged securities is independent of the pledging bank.
The Authority's money on deposit is categorized into one of three risk categories to give an indication of
the level of risk assumed by the Authority at year-end. Category 1 includes deposits insured or
collateralized with securities held by the Authority or by its agent in the Authority's name. Category 2
includes deposits collateralized with securities held by the pledging [mancial institution's trust department
or agent in the Authority's name. Category 3 includes deposits that are uncollateralized, including any
deposits that are collateralized with securities held by the pledging [mancial institution, or by its trust
department or agent, but not in the Authority's name. All deposits of the Authority in excess of FDIC
coverage are Risk Category 1.
Kansas statutes authorized the Authority to invest in U.S. Treasury bills and notes, repurchase
agreements, and the State Treasurer's investment pool. The Authority had no investments during the
years ended December 31, 2004 or December 31, 2003.
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SALINE COUNTY-CITY BUILDING AUTHORITY
NOTES TO FINANCIAL STATEMENTS - continued
December 31, 2004 and 2003
Note 4 - Defined Benefit Pension Plan
The non-school municipality participates in the Kansas Public Employees Retirement System (KPERS), a
cost-sharing multiple-employer defmed benefit pension plan as provided by KSA 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 publicly available financial statements and
required supplementary infonnation. That report may be obtained by writing to KPERS (400 SW 8th
Avenue, Suite 200, Topeka, KS 66603-3925) or by calling 1-800-228-0366.
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KSA 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 2004 is 3.22%. The non-school municipality employer contributions
to KPERS for the years ending December 31,2004 and 2003 were 7,743 and $9,035, respectively, equal to
the statutory required contributions for each year.
Note 5 - Lone:- Term Debt
The following summarizes the lease obligations included in the long-term account group.
Debt Issue
Date
Issued
Maturity
Date
Original
Amount
Interest
Rate
Telephone Lease Purchase Agreement 2/7/01 2/7/06 $200.000 4.84%
The lease purchase agreements were entered into for the purpose of financing a contract for the telephone
system
Annual debt service requirements to maturity for the equipment lease purchase agreement follow:
Principal Interest Total
Year Due Due Due
2005 $41,843 $4,150 $45,993
2006 43.869 2.124 45.993
Totals $~ $6.274 $~
Note 6 - General Fixed Asset Group
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The following summarizes the changes in the general fixed asset group of accounts for the year ended
December 31,2004.
Beginning Ending
Balance Additions Dispositions Balance
Land $ 255,441 $ $ $ 255,441
Parking Lot 86,559 86,559
Building and Improvements 3,017,746 70,508 3,088,254
Equipment 472.032 7.638 (3.997) 475.673
Total 3,831,778 78,146 (3,997) 3,905,927
Accwnulated Depreciation 0.793.975) 027.761 ) 3.550 0.918.186)
Net Investment in Fixed Assets $ 2.037.803 $ (49.615) $~ $ 1.987.741
Note 7 - Risk Manae:ement
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The authority is exposed to various levels of loss related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters.
There has been no significant reduction in the Authority's insurance coverage from the previous year. In
addition, there have been not settlements in excess of the Authority's coverage in any of the prior three years.