Loading...
Audit - 2003/2004 . . BARJLETT SETTLE & EILERJ--E A PROFESSIONAL ASSOCIATION CERTIFIED PUBLIC ACCOUNTANTS . . SALINE COUNTY-CITY BUILDING AUTHORITY Salina, Kansas . FINANCIAL STATEMENTS December 31, 2004 and 2003 . BARTLETT, SETTLE & EDGERLE A PROFESSIONAL ASSOCIATION Certified Public Accountants . . SALINE COUNTY-CITY BUILDING AUTHORITY Salina, Kansas FINANCIAL STATEMENTS For the Years Ended December 31, 2004 and 2003 Table of Contents . 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 1 2-4 5 6 7 8 - 10 . . . B~TLETI SETILE &1 EffiEI(LE A PROFESSIONAL ASSOCIATION CERTIFIED PUBLIC ACCOUNTANTS To the Governing Board Saline County-City Building Authority Salina, Kansas . 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. . 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. ~I 5.d:tL..c.J- ~ A Professional Association Hutchinson, Kansas March 30, 2005 . 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 . -2- 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. . 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. . 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. . . 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 . $1,902,029 860.705 $2.762.734 -3- 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. . . -4- 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. . 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. . . . -5- 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 . 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 . . The accompanying notes are an integral part of these financial statements. . -6- 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 . The accompanying notes are an integral part of these financial statements. . -7- 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 . The accompanying notes are an integral part of these financial statements. . -8- 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. . 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. . . -9- SALINE COUNTY-CITY BUILDING AUTHORITY NOTES TO FINANCIAL STATEMENTS - continued December 31, 2004 and 2003 . 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. . . . -10- 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. . 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 . 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 . 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.