HomeMy WebLinkAbout2006-06-30 Comp. Annual Fin. Report FY06CITY OF KENAI, ALASKA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
YEAR ENDED JUNE 30, 2006
INTRODUCTION 3ECTION Paqe
Table of Contents i
Letter of Transmittal 1
GFOA Certificate of Achievement 5
Organizational Chart 6
List of Principal Officials 7
FINANCIAL SECTION
Auditor Report
Report of Independent Accountants 9
ManagemenYs Discussion and Analysis 11
Basic Financial Statements
Government-wide Financial Statements
Statement of Net Assets 20
Statement of Activities 21
Fund Financial Statements
Balance Sheet, Governmental Funds 22
Statement of Revenues, Expenditures, and Changes in Fund Balance, Governmentai Funds 24
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances 26
of Govemmental Funds to the Statement of Activities
General Fund - Statement of Revenues, Expenditures, and Changes in Fund Baiance - 27
Budget and Actual
Water and Sewer Special Revenue Fund - Statement of Revenues, Expenditures, and 34
Changes in Fund Balance - Budget and Actual
Airport Land System Special Revenue Fund - Statement of Revenues, Expenditures, and 36
Changes in Fund Balance - Budget and Actual
Statement of Net Assets - Proprietary Funds 38
Statement of Revenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds 39
Statement of Cash Flows - Proprietary Funds 40
i
Footnotes
Other Governmen4al Funds
Airport Land Sales Permanent Fund- Statement of Revenues, Expenditures, and Changes in
Fund Balance - Budget and Actual
Combining Baiance Sheet - Nonmajor Govemmentai Funds
Combining Statement of Revenues, Expenditures, and Changes in Fund Balance -
Nonmajor Governmentai Funds
Kenai Borough Senior Citizens - Statement of Revenues, Expenditures, and Changes in Fund
Balance - Budget and Actual
Council on Aging - Statement of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual
General Govemment ~and sales - Statement of Revenues, Expenditures, and Changes in
Fund Balance - Budget and Actual
Statisticat Secfion
41
55
57
58
61
64
65
66
67
ii
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~ Etie c~ty af /
October 31, 2006
Honorable Mayor Pat Porter,
City Council Members and Citizens of
the City of Kenai, Alaska
"V °lfa9e witti a Past, Gc° y wit6r a Future'°
210 Fidalgo Avenue, Kenai, Alaska 99611-7794
Telephone: 907-283-7535 / FAX: 907-283-3014
www.ci.kenai.ak.us
In accordance with Section 29.35.120 of Alaska Statutes and the City Charter, we are pleased to submit the
Comprehensive Annual Financial Report for the year ended June 30, 2006. The financial statements were
prepared in conformance with generaily accepted accounting principles (GAAP) and audited in accordance
with generally accepted auditing standards by a firm of licensed certified public accountants.
This report consists of managemenYs representations conceming the finances of the City of Kenai.
Consequentiy, management assumes full responsibility for the completeness and reliability of the information
presented in this report. To provide a reasonable basis for making these representations, management of
the City has established a comprehensive intemal control framework that is designed both to protect the
government's assets from loss, theft, or misuse and to compile sufficient reliable information for the
preparation of the City's financiai statements in conformity with GAAP. Because the cost of internal controls
shouid not outweigh their benefits, the City's comprehensive framework of intemai controls has been
designed to provide reasonable rather than absolute assurance that the financial statements will be free from
materiai misstatements. As management, we assert that, to the best of our knowledge and belief, this
financial report is complete and reliable in all material respects.
The City's financial statements have been audited by Mikunda, Cottrell & Co., a firm of independent certified
pubiic accountants. The goal of the independent audit was to provide reasonable assurance that the financial
statements of the City for the fiscai year ended June 3Q 2006, are free of material misstatement. The
independent audit involved examining, on a tesS basis, evidence supporting the amounts and disclosures in
the financial statement; assessing the accounting principles used and significant estimates made by
management; and evaluating the overall financial statement presentation. The independent auditor
concluded, based upon the audif, that there was a reasonable basis for rendering an unqualified opinion that
the City's financial statements for the fiscal year ended June 30, 2006, are fairly presented in conformity with
GAAP. The independent auditor's report is presented as the first component of the financial section of this
report.
The independent audit of the financiai statements of the City was part of a broader, federally mandated
"Single AudiP' designed to meet the special needs of federal grantor agencies. The standards governing
Single Audit engagements require the independent auditor to report not only on the fair presentation of the
financial statements, but also on the audited governmenPs internai controls and compliance with certain legal
requirements, with special emphasis on intemal controls and Iegal requirements involving the administration
of federal awards. These reports are available in the City's separateiy issued Single Audit Report.
GAAP requires that management provide a narrative introduction, overview, and analysis to accompanying
the basic financial statements in the form of ManagemenYs Discussion and Analysis (MD&A). This Ietter of
transmittal is designed to complement the MD&A and should be read in conjunction with it. The City's MD&A
can be found immediately following the report of the independent auditors.
Profile of the City of Kenai
The City was incorporated in 1960 as a home rule city and its charter was adopted May 20, 1963. The City
occupies a geographic area of approximately 45 square miles located in the south central part of the state of
Alaska. Major city services indude police, fire, ambulance, airport, street maintenance, recreation, parks,
building inspection, water and sewer, dock, cemetery and library. Funding for the City General Fund, by order
of financial significance, is provided from sales tax, property tax, state revenue, interest earnings, federal
revenue, and other sources. Other funds rely on service charges, interest, grants and other sources.
The City operates under a council - manager form of government. Policy-making and legislative authority are
vested in a governing council consisting of six members and the mayoc The city manager, attorney antl clerk
are appointed by the council. The council and mayor are elected on a non-partisan basis. Council members
serve three-year staggered terms, with 2 members elected each year and are elected at large. The mayor is
elected at large and serves a three-year term. The city manager is the City's chief executive officer and is
responsible for carrying out the policies and ordinances of the City, for overseeing the day-to-day operations
of the government and for hiring the heads of the various departments.
Budgetary Control
The annual budget serves as the foundation for the City's financial planning and control. Ail departments
submit budgets to the city manager on or about the last Monday in February. The city manager uses these
requests for developing a proposed budget. The city manager submits her proposed budget to the council at
the first regular council meeting in April. The council is required to hoid public hearings on the proposed
budget and generally adopts the budget by ordinance at the first meeting in June. The city manager is
authorized to make budget transfers within a fund for amounts less than $5,000. Council action is required for
transfers between funds, for transfers exceeding $5,000 and for new appropriations. Budget-to-actuai
comparisons are provided in this report for each individuai governmentai fund for which an annual budget has
been adopted.
Factors Affecting Financial Condition
Economy
The primary private sector portions of Kenai's economy are oil and gas, commercial fishing, tourism and retail
sales. The future holds challenges for oil and gas and commercial fishing in the Cook Inlet region. Gas
supplies in quantities needed for liquefied natural gas (LNG) and fertilizer production are projected to run out
in this decade if new supplies are not made available through discovery or pipelines from other production
areas. Fertilizer production has been significantly diminished over the last coupie of years and compietely
curtailed during the winter of 2006/2007 due to limited availability of natural gas. Feasibility studies are being
conducied to assess the viability of coal gasification as an altemative to natural gas. A gas pipeline from the
North Slope to Cook Inlet would greatly enhance the viabiiity of the industrial complex. The State of Alaska is
working with the gas producers and other interested entities to develop the gas pipeline.
Commercial fishing has been in deciine for severei years due primarity to market forces which have driven
prices down to historic lows. While the catch and overall value of fish were up in both the 2004 and 2005
seasons, the 2006 season was below average. Fishing is expected to continue to be an important
component of the Kenai economy.
Tourism continues to be strong in the summer months. The unique dipnet fishery at the mouth of the Kenai
River, where thousands of Aiaskans catch a year's supply of sockeye salmon in July, makes Kenai a busy
and very popular place. Accessible beaches, beautiful scenery, fishing and abundant historic sites all
recommend Kenai as a great destination for tourists on the Kenai Peninsula.
' Sales tax is the largest revenue source for the City. Retail sales businesses generate the largest share of
sales tax revenue. This sector is vibrant and growing in Kenai and if current prospects come to fruition, the
City's retail sector will increase substantiaily in the next few years.
' Overall, the projection for the economy of Kenai is optimistic. Kenai is situated in a beautiful area with
, abundant land and natural resources, an accommodative business climate and a stable population base.
Long term financial pianning
General Fund fund balance decreased slightly in FY 2006 to nearly $9.4 million which represents almost one
year of expenditures. This healthy fund balance provides options for the City and generates interest income
that can be used for operations.
One of the larger financial challenges facing the City is our contribution to the Public Employees Retirement
System ( PERS). Our rate has increased 5% of payroll per year or over $250,000 annualiy for the lasi three
years. For fiscal year 2008 the 5% increase limit was removed and the rates were set at the actuarially
required rate, which is 45.71% of covered payroll for Kenai. The new rate will require a contribution of $2.4
million, an increase of $~.4 million or 3 mills of property tax. The rate increase is driven by the large liability
incurred by the PERS when actuariai assumptions were changed along with poor investment returns in 2000
and 2001 as well as heaith insurance cost increases. In fiscal year 2007 the State of Alaska is providing
funding for the 5% increase. Employer members of the PERS system are working with the state legislature
for a long term solution to this problem. High oil prices have produced a surplus in state revenue, however
prices have moderated recently and production problems have impacted total revenue. As long as oil prices
remain high the State of Alaska should be able to assist municipalities, but if oil prices decline the likelihood
of continued support is less certain.
The City is actively pursuing economic development opportunities and the Iong-term financiai outlook is
positive.
Cash management policies and practices
The City utilizes a central treasury to aggregate cash from all funds for cash management and investment
purposes. Interest income on investments is allocated to participating funds based on average equity
balances.
The City Code of Ordinances authorizes investment in obligations of the U. S. Treasury, its agencies and
instrumentalities, repurchase agreements, fully collateralized certificates of deposit, money market mutual
funds and the Alaska Municipal League Investment Pool, Inc. The City Code of Ordinances also places
limitations on maturity of investments.
Risk Management
The City's risk management program is designed to protect against accidental losses that would significantly
affect personnel, property, or Ciry finances. The City purchases commercial general liability and property
insurance through the Alaska Public Entities Insurance Pool. The City risk management plan includes
employee training to reduce employee injuries and claims.
Pension and Other Postemployment Benefits
The City provides pension benefits for aII eligible employees through the State of Alaska Pubiic Empioyees
Retirement System (PERS). The City has no obligations in connection with employee benefits offered though
this plan beyond its annual required payment to the pension plan.
Award
The Government Finance Officers Association of the United States and Canada {GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Kenai for its comprehensive
annuai financial report for the fiscal year ended June 30, 2005. In order to be awarded a Certificate of
Achievement, a government must publish an easily readable and efficiently organized comprehensive annual
fina~cial report. This report must satisfy both generally accepted accounting principles and applicable legal
requirements. A Certificate of Achievement is valid for a period of one year only.
Acknowledgment
The preparation of this Comprehensive Annuai Financial Report in a timely manner was accomplished with
the efficient and dedicated service of the entire staff of the Finance Department. We would like to especialiy
thank Robin Feltman, Accountant, for her contribution. Due credit should aiso be given to the City Council for
their efforts in planning and conducting the financial operations of the City in a responsible manner.
Respectfully submitted,
P I
ick Koc , City Manager
d~a~i~ar~G~~~c_O ~.r~~;5'-A ---
~awrence A. Semmens, CPA
Finance Director
Certi~cate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Kenai,
Alaska
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2005
A Certificate of Achievement for Exceltence in Financial
Reporting is presented by the Govemment Finance Officers
' Association of the United States and Canada to
govemment units and public employee retirement
systems whose comprehensive annual Cinancial
reports (CAFRs) achieve the highest
standards in government accounting
and fmancia] reporting.
~c[ oFt.~ ~~~ ~~
~~` iertu~wm ~
~~ ~ ~~ President
octue
~
Executive Director
5
City of Kenai
Organization Chart
COMMISSIONS
Airport
Harbor
Parks and Recreation
~ibrary
Pianning and Zoning
CITIZENS
CITY COUNCI~
BOARDS COUNCILS
AND COMMITTEES
Council on Aging
Beautification Comm.
Personnei Arbitration
Board
I CITY CLERK I
FINANCE
PARKS & REC.
PUBLIC WORKS
I CITY ATTORNEY ~
CITY MANAGER
~ FIRE
~ POLICE-~
~IBRARY
SENIOR CENTER
~AIRPORT
6
CITY OF KENAI, ALASKA
ORGANIZATION AND PRINCIPAL CITY OFFICIA~S
The City of Kenai was founded in 1791. It is located south of Anchorage on
Cook Inlet in the Central Kenai Peninsula. The City is 161 highway miles from
Anchorage. By air, Kenai is three hours from Seattle and thirty minufes from
Anchorage.
Kenai was the site of the first major oil strike in 1957 and has served as a center
for exploration and production since that time. Commercial fishing and
processing contribute to the economy.
Kenai adopted the Council Manager form of government in 1963 and has been
operating under this form since that time.
The City Council, together with appointed City officiais, meets the first and third
; Wednesday of each month in the City Administration Building for regular Council
sessions. In addition, numerous special meetings and work sessions are
scheduled throughout the year. The Council, which consists of the Mayor and
six council members, is selected at Iarge and on a non-partisan basis. Annual
elections are heid in October. The terms of office are three years but are
overlapping so that the City is provided with a continuity of knowledge in City
business and legislative matters.
Citv Council Term Ends
Mayor
Pat Porter
2007
Council Members
Robert Molloy
Rick Ross
Linda Swarner
Mike Boyle
Joe Moore
Barry Eidridge
Citv Administration
City Manager
Finance Director
City Clerk
City Attorney
Police Chief
Fire Chief
Public Works Manager
Public Works Manager
~ibrarian
Parks & Recreation Director
Airport Manager
Senior Center Project Director
2009
2009
2008
2008
2007
2007
Rick R. Koch
Lawrence A. Semmens
Carol L. Freas
Cary R. Graves
Charles Kopp
Mike Tilly
Keith Kornelis
Jack La Shot
Mary Jo Joiner
Robert Frates
Rebecca Cronkhite
Rachael Craig
7
Mikunda
Gottrell ~ Co.
Certified Public Aeeountants & Consultancs
Independent Auditor's Report
Honorable Mayor and
Members of the City Council
City of Kenai, Alaska
RSM McGladrey Network
M Intlependently0wnetl Mem6Er
Otiicesin Anchorage & Ke~ai
: We have audited the accompanying financial statements of the govemmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the City of Kenai, Alaska,
as of and for the year ended June 30, 2006, which collectively comprise the City's basic financial
~~ statements as listed in the table of conCents. These financial statements are the responsibility of the City
of Kenai's managemenf. Our responsibility is to express opinions on these financial statements based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted in the linited SCates of
America and the standards applicable to financial audits contained in Government Auditing Standards,
" issued by the Comptroller General of the United STates. Those standards require that we plan and
perform the audit Co obtain reasonable assurance about whether the financial statemenCS are free of
material misstatement An audit inciudes 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
, statemenc presenCation. We believe thaf our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
; respective financial position of the governmental activities, the business-type aceivities, each major fund,
and the aggregate remaining fund information of the City of Kenai, Alaska, as of June 30, 2006, and the
respective changes in 6nancial position and cash flows, where applicabie, thereof and the respective
- budgetary comparisons for the General Fund, the Water and Sewer Special Revenue Fund, and the
Airport Land System Speciai Revenue Fund, for the year then ended in conformity with aecounting
~~~ principles generally aecepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report daCed October 31,
~~ 2006 on our consideration of the City of Kenai's internal control over financial reporting and our t'ests of
its compliance with certain provisions of laws, regulations, contracts and grant _agreements and other
matters. The purpose t~f that report is to describe the scope of our testing of internal control over
~ tlnancial reporting and compliance and the results of that testing, and not to provide an opinion on the
intemal conCrol over financial reporting ox on compliance. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be considered in assessing fhe
~ results of our audit.
215 Fidalgo Avenue, Suite 206 • Kenai, Alaska ~9611 •(907) 283-3489~ • Fax (907) 283-5842
Honorabie Mayor and
Members of the Cit~y Council ~ ~~
City of Kenai, Alaska
The managemcnt's discussion and analysis, as listed in the tabie of contents, is not a required part of the
basic financial statements but is supplementary information required by accounting principles generally
accepted in the United States of America. We have applied certain limiYed procedures, which consisted
principally of inquiries of management regarding the methods of ineasurement and presentation of the
required supplemenCary information. However, we did not audiY the information and express no opinion
on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Kenai, Alaska's basic financial statemenis. The Airport Land Sales
Permanent Pund budgetary comparison, the combining and individual nonmajor fund statements, as
listed in the table of contents, are presented for purposes of additional analysis and are not a required
part of the basic financial statements. Such information has been subjected to the auditing procedures
applied in Cha audit of the basic financial statements and, in our opinion, is fair]y stated in a11 material
respects in relation to the basie finaneia] statements taken as a whole.
The introductory section and the statistical section, as listed in the Yable of contents, are presented for
purpose of' additional analysis and are not a required part of the basis financial statements. This
information has not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them.
!~~~~, ~=e~ ~{ ~--.
October 31, 2006
Kenai, Alaska
10 !
Management's Discussion and Analysis
As management of the City of Kenai, we offer readers of our financial statements this narrative
overview and analysis of the financial activities of the City of Kenai for the fiscal year ended
June 30, 2006. We encourage readers Yo consider the informaYion presented here in conjunetion
with additional information that we have furnished in our letter of transmittal.
Financial HightiQhts
The assets of the City of Kenai exceeded its liabiliYies at June 30, 2006 by $140,109,380
Of Yhis amount, unrestricCed net assets of $18,210,557 may be used to meet the
governmenYs ongoing obligations to citizens and creditors. A significant portion of this
legally unrestricted amount has been designated for specific purposes.
The City's total net assets increased by $20'1,594. Governmental Funds increased by
$353,070 and business type activities decrcased by $145,476.
As of the elose of the current fiscal year, the City's governmental funds reported
combined ending fund balances oF$30,828,730 an increase of $80,988 from the prior
year. The fund balances of the two pennanent funds, which c;annot be spent, account for
$ l 4.2 million of tota] fund balance. About ~4.9 million of the remaining fund balance is
reserved or designated. The remainin~ $ ll.7 million is available for spending.
At the end of the current fiscal year, fund balance for the General Fund was ~9,393,614.
Of this amount $7,109,535 was unreserved, undesignated and available for spending.
The City has a long-term liability for conta~ninated soils remediation of $1.4 million,
compensated absences of ~615,679 and a net pension obligation of $837,865. The net
pension obligation is due to Yhe fact that although the City paid the contriburion rate
required by the Pubiic Employee's ReYirement System, that raCe was less than the rate
that the PERS actuary recommended For the prior two years.
Overview of the Financial SCatements
This discussion and analysis is intended to serve as an introduction to the City of Kenai's basic
financial statements. The City of Kenai's basic financial statements are comprised of three
c;omponents: i) government-wide financial statements, 2) fund financiat statements, and 3) notes
to the financial sYatements. This report also contains other supplementary inforniation in addifion
to the basic financial stafements themsetves. The basic financial statemenYs include two kinds of
statements that present different views of the City's activities:
• Covernment-wide ftnancial statements provide both short-term and lon~-term
information about the City's overall financiai condiTion in a summary formaf.
• Fund financial statements focus on individual parts of the City, reporting the
CiYy's operations in more detail than the government-wide statements. Thc form
il
Financial Anatysis of the City's Funds
The City of Kenai uses fund accounting to ensure and demonstrate compliance wiYh finance-
related legal requirements.
Governmental Funds.
T`he purpose of the City's governmental funds is Yo provide informaCion on near-t~rm inflows,
outflows, and balances of spendable resources. Such infonnation is useful in assessing the city's
financing requirements. In particular, unreserved fund balance may serve as a useful measure of
a government's net resources available for spending aC the end of the fiscal year.
The total fund balance of govemmentai funds is $30,828,730 which is up $80,988 from last year.
About $ll.7 million of fund balance is unreserved, undesignated fund balance, which is
available for spending at Che City Couneil's discretion. The remainder of fund balance, $19.1
million, is reserved or designated to indicate that it is not available for new spending. The
largest portion of this, $14.2 million is in the two permanent funds which do not allow spending
of fund balance.
The General Fund is the chief operating fund of the City of Kenai. At the end of the current
fiscal year, unreserved, undesignated fund balance of the ~eneral fund was $7,109,535, total fund
balance was $9,393,614. Fund balance decreased $67,789 in the current year. As a measure of
liquidity, it may be useful to compare both unreserved fund balance and total fund balance; to
total fund expenditures. Unreserved, undesignated fund balance represents 72% of total
expenditures and transfers, while total fund balance represenYs 95% of that same amount.
general fund has a very healthy fund balance.
General Fund expenditures are up abouY $700,000 over last year. The Cify inereased payroll
expenditures primarily for a eost of livin~ adjusfinent, inereased health insurance costs and
increased contributions to the retirement system. Total general fund expenditures for personal
services were $6.5 million in the current year, up from $6 million last year.
The primary revenue sources of the general fund include property tax of $2,003,683 sales tax of
$4,404,158 and charges to other funds of $1,011,800. Sales tax is up $320,000 over last year due
to general improvement in the economy. Total revenues were up $900,000 from last year. Tax
revenues support general fund operations exclusively and represent 39% of all governmental
fund revenue. The mill rate for property tax was unchanged at 4.5 far FY 2006. Other funds
rely heavily on charges for services aird interest revenue. Interest revenue in the govemmental
funds is up from the prior year due to increasing interest rates. As rates increase, the value of the
portfolio declincs, requirin~ a rnarket value adjustment that reduced interest revenue by
$335,575. Capital projects funds and the senior services related funds are largely financed by
gants from the federal, state and borough governments.
The Water and Sewer Spc;cial Revenue Fund aceounts for the water and sewer utility. The fund
balance inereased $591,495 to $1,800,329. Primary revenue sources are charges for services and
interest revenue. The rates for water and sewer were increased over the last two years to recover
'I'he
16
funds used for capital projects and in anYicipation of future projects. Revenues were up about
13% and expendiYures were up about 10% over the prior year.
The Airport Special Revenue Fund accounts for ~he operation of the airport, excluding The
terminal. The fund balance decreased by $764,746 to $3,883,305. This is an improvement from
the priar year decline. Revenue and expenditures each increased slightly over the prior year.
This fund depends heavily on interest revenue, so it has been adversely impacted by the interest
rate environment. As interest rates stabilize and interest revenue improves, the fund balance is
expected to decline much more slowly.
Proprietary funds.
The City of Kenai maintains two different types of proprietary funds. Enterprise funds are used
to report the same functions presented as business-type activiries in the government-wide
financial staYemenCs. The Aitport Terminal and Congregate Housing Punds are enterprise funds
which are combined in a single aggregated presentaYion in the proprietary fund financial
statements. Internal service funds are used to accumulate and allocate costs among the City's
various functions. The City of Kenai has one internal service fund the purpose of which is to
account for the purchase of equipment costing more that $50,000. The Equipment Replacement
Fund charges the primary user department in Che General Pund such that the General Fund
reimburses the Equipment Replacement Fund over the useful life of the asset. Because these
services predominantly benefit govemmental rafher than business type functions, they have been
included within governmentai aetivities in the government-wide financial statements but are
presenYed in a single column in the proprietary fund financial statements.
UnresCricted net assets of the Airport Terminal at the end of the year amounted to $2,039,720
and in the Congregate Housing Fund unrestricted neT assets were $471,795. The net assets for
both of these enterprises decreased, $80,410 and $65,066 respectively. Revenues are simply
insufficient to cover expenses - especially considering depreciation. Efforts are being made to
increase revenue in both funds; however, it is anticipated thaY net assets will continue to decline.
General Fund Budgetary Highlights
~~ The Generai Fund appropriations budget was amended by the City Council during the year by
, $766,259. Appropriations assoeiated with grants and donations totaled ~198,056.
AppropriaYions of fund balance were made for capital projects totaling $461,548 and for
' miscellaneous operating items of about $100,000.
Actua] revenues were $585,935 higher than the final budget, a variance of about 6%. Sates tax
contributed $320,000 of the positive variance, and miscellaneous was about $276,000 over
budget. Major miscellaneous items and the amounts thaf revenue exceeded budget were: land
sales $175,000 and settlement of class acYion lawsuit $70,000.
The actual expenditures were $705,618 less than budgeYed. It should be noCed that
encumbrances at year-end totaled $245,994. The City typically does not spend fhe entire
17
authorized appropriation, the variance this year was about 6.98%~ of final budget, compared to '
6.24% last year. _,
Capital Assets and Debt Administration
Capital assets.
At June 30, 2006 the City's capital assets had a Yotal net book valuE of $10'J,430,447.
Governmental activities totaled $102,451,985 and business-type activities totaled $4,978,462.
Additional information on the City's capital assets can be found in the notes Yo the financial
staYements at `Section III. Detailed Notes on All Funds' C. Capital Assets.
Debt administration.
The City had no outstanding debt at year-end. There are long-term liabilities for contaminated
soils remediation of $1,400,000, compensated absences of $615,679 and net pension obligarion
of $837,365. Additional information on the City's lon~-te~n debY can be found in the nofes to
the financial statements at `SecYion III. Detailed NoCes on All Funds' E. Changes in L,ong-Term
Debt.
Requests for information.
This financial report is designed to provide a general overview of the City of Kenai's finances
for all those with an interest in the govemmenYs finances. Questions concerning any of the
infosmation provided in this report or requests for additional information should be addressed to
the Pinance Director, City of Kenai, 210 Ridalgo Avenue, Kenai, Alaska 99611.
18
CITY OF KENAI, AIASKA
STATEMENT OF NET ASSETS
June 30, 2006
Governmentai Business-type
Activities Activities ToYal
ASSETS
Equity in central treasury (cash and cash equivalents)
Receivables (net of allowances for .
uncol Iectibles)
Otherassets
Land
Property and equipment in service
Accumulated depreciation
ConsVuction in progress
Total assets
$ 30,674,487 $ 2,559,310 $ 33,233,797
2,976,044 15,536 2,991,580
34,344 - 34,344
5,565,606 280,543 5,846,149
134,596,839 9,257,246 143,854,085
(44,308,953) (4,559,327) (48,868,280)
6,598,493 - 6,598,493
$ 136,136,860 $ 7,553,308 $ 143,690,168
LIABILITIES
Acco~nts payable
Unearned revenue
Other liabilities
Long-term liabilities:
Due within one year
Due in more than one year
Total liabilities
$ 33~,178 $ 17,232 $ 348,410
91,527 5,815 97,342
257,670 23,822 281,492
145,000 - 145,000
2,692,082 16,462 2,708,544
3,517,457 63,331 3,580,788
NET ASSETS
Invested in capital assets, net of related debt
Restncted for:
Airport Land Sale Permanent Fund
General Govemment Land Sale Permanent Fund
Unrestricted
Total net assets
102,451,985 4,978,462 107,430,447
11,945,862 - 11,945,862
2,522,514 - 2,522,514
15,699,042 2,511,515 18,210,557
$ 132,619,403 $ 7,489,977 $ 14Q109,380
See Accompanying Notes to Financial Statements
20
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2l
CITY OF KENAI, ALASKA
BALANCE SHEET
GOVERNMENTALFUNDS
June 30, 2006
ASSETS AND OTHER DEBITS
Equity in central treasury (cash and cash equivalents)
Receivabies (net of allowances for
uncoilectibles)
Other assets
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Deferred revenue
Other liabilities
Total liabilities
Fund balances:
Reserved for:
Encumbrances
Capital improvemenfs
Land sale permanent funds
Inventory
Unreserved:
Designated:
Generalfund
Special revenue funds
Capital projects funds
Undesignated:
General fund
Special revenue funds
Total fund balances
Total liabilities and fund balances
See Accompanying Notes to Financial Statements
Water and Airport Land
General Sewer Sys[em
$ 8,197,050 $ 1,715,474 $ 3,909,059
2,201,789 168,358 55A21
34,344 - -
$ 1Q433,183 $ 1,883,832 $ 3,964,080
$ 116,788 $ 28,650 $ 6,337
746,717 - 57,998
176,064 54,853 16,540
1,039,569 83,503 80,875
245,994 15,873 1,148
850,746 - -
34,344 - -
1,152,995 - -
- 33,648 t,036,107
7,109,535 - -
- 1,750,808 2,845,950
9,393,614 1,SOQ329 3,883,205
$ 10,433,183 $ 1,883,832 $ 3,964,080
22
Airport Total
Airport Improvemen[ Other Govemmental
Land Sales Capital Project Governmental Funds
$ 11,766,312 $ 106,253 $ 3,793,048 $ 29,487,196
179,550 109,463 261,863 2,976,044
- - - 34,344
$ 11,945,862 $ 215,716 $ 4,054,911 $ 32,497,584
$ - $ 36,156 $ 143,247 $ 331,178
179,550 - 95,741 1,080,006
- - 10,213 257,670
179,550 36,156 249,201 1,668,854
- - - 263,015
- - - 850,746
11,766,312 - 2,430,573 14,196,885
- - - 34,344
1,152;995
~, - - 42,711 1,112,466
- 179,560 1,288,781 1,468,341
~ - - - 7,109,535
~' - - 43,645 4,640,403
. 11,766,312 179,560 3,805,710
~ 30,828,730
~~'~~~. $ 11,945,862 $ 215,716 $ 4,054,911 ~
. Amounts reported for govemmental activities in the statement of net
' assets are different because:
~~~ Capital assets used in govemmental activities are not financial
resources and are not reported in the funds. 10~,627,074
'~, Other long-term assets are not availabie to pay for current period
.. ~ expenditures and, therefore, are deferred in the funds. 988,479
Some liabilities, including soil remediation, net pension obligation and
~~.. compensated absences are not payable in the current period so they are
~.. notreportedinthefunds. (2,837,082)
~~~~ Intemal service funds are used by management to charge the cost of
certain activities to individual funds. The assets and liabilities of the
~~~.. internal service fund are included in governmentai activities in the
'~ statement of net assets 2,012,202
Net assets of govemmental activities 132,619,403
23
CITY OF KENAI, ALASKA
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE
GOVERNMENTALFUNDS
YEAR ENDED JUNE 30, 2006
Water and Airport Land
General Sewer System
Revenues:
Taxes $ 6,423,361 $ - $ -
Intergovernmentalrevenues 631,963 - 60,990
Chargestorservices 1,663,417 1,802,639 93,498
Interest revenue 323,384 67,264 433,409
Miscellaneous revenues 72$066 47,156 370,297
Totai revenues 9,77Q191 1,917,059 958,194
Expenditures:
Current:
Generalgovemment 1,561,001 - -
Public safety 4,377,829 - -
Publicworks 2,164,213 - -
Parks, recreation, and cultural 1.300,974 - -
Water and sewer services - 1,325,564 -
Airport - - 1,643,896
Social welfare services
Capital Outlay
Total expenditures 9,404,017 1,325,564 1,643,896
Excess (Deficiency) of Revenues
OverExpenditures 366,174 591,495 (685,702)
Other financing sources and (uses):
Transfers in 7,085 - 220,956
Transfers out (441,048) - (300,000)
Totalotherfinancing sources and (uses) (433,963) - (79,044)
Netchangesinfund balance (67,789) 591,495 (764,746)
Fundbalances-July1 9,461,403 1,208,834 4,647,951
Fund balances - June 30 $ 9,393,614 $ 1,800,329 $ 3,883,205
See Accompanying Notes to Financial Sta tements
29
Airport Total
Airport Improvement Other Governmental
~and Sales ~ Capital Project Governmental Funds
$ - $ - $ - $ 6,423,361
- 1,848,788 996,822 3,538,563
- - 52,843 3,612,397
18,337 - 7.085 849,479
294,262 3,625 567,325 2,010,731
312, 599 1,852,413 1,624,075 16,434, 531
- - - 1,561,001
- - - 4,377,829
- - - 2,164,213
- - - 1,300,974
- - - 1,325,564
- - - 1,643,896
- - 461,847 461,847
- 2,179,357 1,338,862 3,518,219
- 2,179,357 1,800,709 16,353,543
312,599 (326,944) (176,63A) 80,988
- 300,000 533,003 1,061,044
(18,337) (193,119) (108,540) (1,061,044)
(18,337) 106,881 424,463 -
294,262 (220,063) 247,829 80,988
11,472,050 399,623 3,557,881 30,747,742
$ 11,766,312 $ 179,560 $ 3,805,710 $ 30,828,730
25
CITY OF KENAI, ALASKA
Reconciliation of the Statement of Revenues,
Expenditures and Changes in Fund Balance of Governmental Funds
To the Statement of Activities
For the Year Ended June 30, 2006
Amounts reported for governmental activities in the statement of activities are different
because:
Net changes in fund balances - total governmental funds $ 80,988
Governmental funds reported $249,947 of capital outlays as
expenditures, and construction work in progress increased by
$3,518,219. However, in the statement of activities the cost of those
assets is allocated over their estimated lives and reported as
depreciation expenses. Total depreciation expense was $2,705,427.
This is the amount by which capital outlays exceeded depreciation
expense in the current period. 1,062,739
Governmental funds reported the actual payment made to PERS for
pension obligation of $429,524; however, in the statement of activities
the actuarially required contribution was recorded. (413,573)
Special assessment revenues reported in the governmental funds are
not revenues of the current period using the flow of financial resources
basis. 120,563
Land sales reported as revenue in the governmental funds are not
revenues of the current period on a flow of financial resources basis. (461,636)
Compensated absences reported in the statement of activities do not
require the use of current financial resources and, therefore, are not
reported as expenditures in governmental funds. (64,847)
Internal service funds are used by management to charge the cost of
certain activities to individual funds. The net revenue of certain activities
of the internal service fund is reported with governmental activities. 28,836
Change in net assets of governmental activities
See Accompanying Notes to Financiai Statements
$ 353,070
26
CITY OF KENAI, ALASKA
GENERALFUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BA~ANCE
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
Revenues:
Taxes:
' General property
~ ~ Generai sales
Penalty and interest on taxes
~. Total taxes
~ Licenses and permits:
Bullding permits
: Animal control licenses and fees
Other
Total licenses and permits
' Intergovemmentai revenues:
. . Federal Grants
Kenai Peninsula Borough
~~ State of Aiaska shared revenues:
, Electric utility tax
Fish tax
Liquor licenses
State of Alaska grents:
~ ~ l.ibrary grants
Other
I. Total intergovernmental revenues
J Charges for services:
Ambulance fees
~~~ Multipurpose facility charges
Administretive and service fees
Other
. Total charges for services
'~~. Fines and forfeits:
Court fines
Library fines
Olher forfeitures
Tolal fines and forfeits
Variance With
FinaiBudget
Original Finai Positive
Budaet Budaet Actual Ne ative
$ 2,018,800 $ 2,018,800 $ 2,003,683 $ (15,117)
4,085,000 4,085,000 4,404,158 319,158
25,000 25,000 15,520 (9,480)
6,128,800 6,128,800 6,423,361 294,561
55,000 55,000 68,550 13,550
6,700 6,700 6,232 (468)
4,100 4,100 4,976 876
65,800 65,800 79,758 13,958
- 65,351 73,314 7,963
48,000 48,000 48,000 -
26,000 26,000 3Q307 4,307
10Q000 100,000 103,929 3,929
23,000 23,000 27,050 4,050
- 8,500 8,500 -
236,000 339,589 340,863 1,274
433,000 610,440 631,963 21,523
270,000 270,000 23Q856 (39,144)
75,000 75,000 61,617 (13,383)
1,011,800 1,011,800 1,011,800 -
117,000 117,000 170,789 53,789
1,473,800 1,473,800 1,475,062 1,262
100,000 100,000 87,869 (12,131)
15,000 15,000 14,209 (791)
1,850 6,060 6,519 459
116,850 121,060 108,597 (12,463)
See Accompanying Notes to Financiai Statements
27
CITY OF KENAI, ALASKA
GENERALFUND ~..
STATEMENT OF REVENUES, EXPENDITURES, ~
AND CHANGES IN FUND BAIANCE
BUDGET AND ACTUAL
YEAR ENDED JUNE 3Q 2006 ''
continued '
Variance With
Final Budget
Original Final Positive
Budpet Budpet Actual 1Negative)
Miscellaneous revenues:
Interestrevenue $ 375,000 $ 375,000 $ 323,384 $ (51,616)
Rents and leases 40,500 4Q500 41,234 734
Library donations 2,000 2,000 1,803 (197)
Oil and gas royalties 72,000 72,000 109,092 37,092
Special assessmenis 16,000 16,000 21,233 5,233
Other 262,450 278,856 554,704 275,848
Total miscellaneousrevenues 767,950 784,356 1,051,450 267,094
Totairevenues 8,986,200 9,184,256 9,77Q191 585,935
Expenditures ~
Generai government
Legislative:
Personalservices 44,357 44,817 44,516 1
Supplies ~ 1,820 2,940 1,366 1,574
Other services and charges 65,333 93,853 60,587 33,266
Tofei legislative 111,510 141,610 106,769 34,841
City clerk
Personaiservices 91,058 100,258 99,930 328
Supplies 7,420 7,580 5,149 2,431
Otherservices and charges 28,893 19,533 18,290 1,243
Total city clark 127,371 127,371 123,369 4,002
City attomey:
Personal services 204,295 204,295 195,388 8,907
Supplies 930 2,903 2,653 250
Otherservices and charges 17,829 27,588 26,200 1,388
Totalcityattomey 223,054 234,786 22A,241 10,545
See Accompanying Notes to Financial Statements
28 i
CITY OF KENAI, A~ASKA
GENERALFUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BAI.ANCE
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
continued
Variance With
. Pinal Budget
Original Final Positive
Budaet Budstet Actual Ne ative
Ciry manager:
Personal services $ 170,901 $ 142,228 $ 105,214 $ 37,014
Supplies 1,932 3,873 2,551 1,322
Other services and charges 12,175 39,507 38,645 862
Total city manager 185,008 185,608 146,410 39,198
Finance:
Personalservices 389,976 389,976 384,273 5,703
Supplies 13,575 13,575 9,177 4,398
Other services and charges ~ 8,320 18,320 1 ~,114 1,206
Totalfinance 421,871 421,87'I 410,564 11,307
Non-departmentaC ~
Supplies 9,736 9,736 7,614 2,122
Other services and charges 399,797 335,047 286,698 48,349
Pass-throughgrents - 91,072 91,072 -
Total non-departmental 409,533 435,855 385,384 56,471
Planning and zoning:
Personalservices 139,903 139,903 131,070 8,833
Supplies 9,126 9,344 9,096 248
Other services and charges 16.586 16,368 12,901 3,467
Total pianning and zoning 165,615 165,615 153,067 12,548
Safety:
Supplies 1,600 1,600 672 928
Other services and charges 14,510 9,511 4,238 5,273
Total Safety 16,110 11,111 4,910 6,201
Land administration:
Supplies 231 231 156 75
Other services and charges 9,022 9,022 6,131 2,891
Total land administration 9,253 9,253 6,287 2,966
Totalgeneralgovernment 1,669,325 1,733,080 1,561,001 172,079
See Accompanying Notes to Financial Statements
29
CiTY OF KENAf, ALASKA
GENERALFUND .
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES W FUND BALANCE
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
continued '
Variance With
Final Budget
Original Final Positive
Budaep Budaet Actual Ne ative
Public safety:
Police,
Personalservices $ 1,657,355 $ 1,659,928 $ 1,699,524 $ (9,596)
Supplies 52,664 68,374 62,862 5,512
Other services and charges 1'10,077 102,577 97,904 4,673
Capitai outlays 67,426 59,926 59,876 50
Totalpolice 1,887,522 1,920,505 1,920,166 639
Fire:
Personalservices 1,551,603 1,544,250 1,446,652 97,598
Suppiies 31,879 94,872 86,108 8,764
Otherservices and charges 119,118 122,366 106,290 16,076
Capital outlays 22,000 31,700 31,400 300
Total fire 1,724,600 1,793,188 1,670,450 122,738
Communications:
Personal services 55Q799 55Q799 525,535 25,264
Supplies 7,200 7,887 6,141 1,746
Other services and charges 34,105 33,418 3Q643 2,775
Totalcommunications 592,104 592,104 562,319 29,785
Animal control:
Personalservices 155,094 i66,094 149,917 5,177
Suppiies 10,850 10,850 9,566 1,284
Otherservices and charges 68,136 68,136 65,4'11 2,725
Total animal control 234,080 234,080 224,894 9,186
Total pubiic safety 4,43$306 4,540,177 4,377,829 162,348
See Accompanying Notes to Financial Statements
30
~ CITY OF KENAI, ALASKA
GENERA~FUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
~ continued
Variance With
Finai Budget
Original Final Positive
Budgat Budget Actual Ne ative
Public works:
Public works administration:
Personalservices $ 293,164 $ 293,164 $ 265,527 $ 27,637
Supplies 6,000 ~ 6,000 4,591 1,409
Otherservices and charges 11,250 11,250 5,042 6,208
inistration
d
bli
k 310
414 310,414 275,160 35,254
s a
m
c wor
Total pu ,
Shop:
Personalservices
261,740
253,740
242,799
10,941
Suppiies 210,239 262,412 255,424 6,988
Otherservices and charges 104,225 121,052 114,249 6,803
h 204
576 637,204 612,472 24,732
op
Total s ,
Streets:
Personalservices 481,674 481,674 461,649 20,025
Supplies 118,625 116,906 62,344 54,562
Otherservices and charges 156,318 159,037 t19,999 39,038
Capitai outlays 7,000 6,000 5,600 400
t 617
763 763,617 649,592 114,025
s
Totai stree ,
Dock:
Personalservices 57,841 57,841 55,149 2,692
Supplies 43,~87 63,186 50,095 13,091
Other services and charges 69,679 39,680 21,486 18,194
k
i d 17Q707 160,707 126,730 33,977
Tota
oc
Buildings:
Personal services 170,330 ~ 17Q330 159,801 10,529
Supplies 28,127 24,905 2Q098 4,807
Otherservices and charges 182,552 188,794 187,365 1,429
Capital outlays . 43,000 39,980 34,460 5,520
ildi
l b 424
009 424,009 401,724 22,285
ngs
u
Tota ,
Street lighting:
178
24
178
24
2,590
21,588
Supplies
Otherservices and charges ,
129,051 ,
129,05'I 95,945 33,106
hti
t li
t 229
153 153,229 98,535 54,694
g
ng
ree
Total s ,
Totalpublicworks 2,398,180 2,449,180 2,164,213 284,967
See Accompanying Notes to Financial Statements
31
CITY OF KENAI, A~ASKA . '~~, :
GEPJERAL FUND
STATEMENT OF REVENUES, EXPENDITURES, ,
AND CHANGES IN FUND BALANCE '
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006 i
continued ~. ~'.
Variance With
Final Budget
Original Final Positive
Budpet Budstet Ac4ual Ne ative
Parks, recreation, and cultural:
Library:
Personal services $ 378,760 $ 378,760 $ 359,296 $ 19,464
Supplies 30,550 36,929 31,370 5,559
Otherservices and charges 136,687 143,808 127,400 16,408
Totai librery 545,997 559,497 518,066 41,431
Visitors center:
Supplies 1,800 1,800 1,360 440
Other services and charges 112,550 117,444 115,397 2,047
Total visitors center 114,350 119,244 116,757 2,487
Recreation: ~
Personai services 72,704 72,704 67,667 5,037
Supplies 4,000 9,827 9,475 352
Other services and charges 276,530 282,037 28$243 (6,206)
Totalrecreation 353,234 364,568 365,355 (817)
Parks:
Personal services 135,304 135,304 123,740 11,564
Supplies 20,500 19,400 18,775 625
Otherservices and charges 70,984 73,451 61,422 12,029
Capital outlays 25,000 25,000 22,365 2,635
Totai parks 251,788 253,155 226,302 26,853
Beautification:
Personal services 36,938 36,938 36,769 169
Supplies 23,581 21,831 19,502 2,329
Otherservices and charges 18,225 7,274 3,106 4,168
Capital outlays - 24,691 15,087 9,604
Total beautification 78,744 90,734 74,464 16,270
Total parks, recreation, and cultural 1,344,113 1,387,198 1,300,974 86,224
Totalexpenditures 9,849,924 10,109,635 9,404,017 705,618
See Accompanying Notes to Financial Statements
32 '
CITY OF KENAI, ALASKA
GENERALFUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BAIANCE
BUDGET AND~ ACTUAL
YEAR ENDED JUNE 30, 2006
continued
Excess of revenues over (under)
expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Nef changes in fund balance
Fund balance - July 1
Fund balance - June 30
Original Final
Budaet Budaet Actual
Variance With
Final Budget
Positive
INeaative!
$ (863,724) $ (925,379) $ 366,174 $ 1,291,553
46,000 46,000 ~,085 (38,915)
(34,500) (541,048) (441,048) 100,000
11,500 (495,048) (433,963) 61,086-
$ (852,224) $ (1,420,427 (67,789) $ 1,352,638
9,461,403
$ 9.393,614
See Accompanying Notes to Financial Statements
33
CITY OF KENAI, ALASKA
WATER AND SEWER SPECIAL REVENUE FUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
Revenues:
Charges for services:
Residential water $ 315,700
Commercial water 157,300
Residential sewer 921,760
Commercial sewer 424,480
Hook-up fees 1,500
Other 18, 000
Total charges for services 1,83$740
Miscellaneous revenues:
Interest 33,000
Special assessments 22,000
Other 2,500
Total miscei~aneous revenues 57,500
Original
Budaet
Final
Budsaet
Actual
$ 315,917
140,977
917,517
390, 016
10, 475
27J37
Totairevenues 1,896,240
Expenditures - water and sewer services:
Water.
Personal services 13Q668
Su ppl ies 207, 790
Other services and charges 221,273
Capital outlays 17,500
Expenditures chargeable from
other funds
Total water
Sewer:
Personal services
Suppiies
Other services and charges
Capital outlays
Expenditures chargeable from
otherfunds
Total sewer
586,231
67,100
653,331
139,668
21,849
83, 530
17,500
262, 547
50,700
313,247
See Accompanying Notes to Financial Statements
$ 315,700
157,300
921,760
424, 480
1, 500
18, 000
1,838,740
33,000
22,000
2,500
57,500
1,896,240
139,668
208, 840
213, 334
24,390
586,232
67,100
653, 332
139,668
22,649
75,841
24,390
262,548
50,700
313,248
34
1,802,639
67,264
23,174
23,982
T 14, 420
1,917,059
133,473
47,118
165,151
24,390
370,132
67,100
437,232
132,856
11,417
22,389
24,390
191, 052
5Q 700
241,752
Variance With
Final Budget
Positive
Ne ative
$ 217
(16, 323)
(4,243)
(34,464)
8, 975
9, 737
(36,101)
34,264
1,174
21,482
56, 920
20,819
6,195
161,722
4$183
216,100
216,100
6,812 I...:
11,232
53,452 ~~~ ~~..
71,496 ....
71,496
WATER AND SEWER SPECIA~ REVENUE FUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
continued
Sewer treatment plant:
Personal services
Supplies
Other services and charges
Expenditures charageable from
otherfunds
Total sewer treatment piant
Total expenditures
Excess of revenues over (under)
expenditures
Net changes in fund balance
Fund ba~ance, July 1
Fund balance, June 30
Original Final
Budaet Budaet Actual
$ 261,5A7 $ 261,547 $ 25Q446
75,650 87,650 76,957
287,030 275,030 223,877
624,227 624,227 551,280
95,300 95,300 95,300
719,527 719,527 646,550
1, 686,106 1,686,107 1, 326,564
210,135 210,133 591,495
$ 210.135 $ 210.133 591,495
1,208,834
$ 1.800.329
See Accompa~ying Notes to Financial Statements
Variance With
Final Budget
Positive
Ne ative
$ 11,101
10, 693
51,153
72,947
72,947
360,543
381,362
$ 381.362
35
CITY OF KENAI, ALASKA '
AIRPORT LAND SYSTEM SPECIAL REVENUE FUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE '
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
Variance With
Final Budget
Original Final Positive
Budqet Budaet Actual Ne ative
Revenues:
Intergovemmental revenue -
Federal grant $ - $ 55,701 $ 34,756 $ (20,945)
State grent 5,OQ0 5,000 26,234 21,234
Total intergovernmental 5,000 60,701 60,990 289
Miscellaneous revenues:
Rents andieases,inciuding
penaity and interest 309,000 309,000 324,830 15,830 ~
Landing fees 85,000 85,000 93,498 8,498
Fish hauling rents 1,200 1,200 6,600 5,400
Interestrevenue 550,000 550,000 433,409 (116,591) ~ ~~~~..
Other 19,800 19,800 38,867 19,067 '~..
Totai miscellaneous revenues 965,000 965,000 897,204 (67,796)
Totairevenues 970,000 1,025,701 958,194 (67,507)
ExpendiWres - airport:
Maintenance and Operation:
Personalservices 227,605 227,605 221,679 5,926 ~~~~
Supplies 138,256 12$956 108,439 20,517
Otherservices and charges 251,826 280,335 258,947 21,388 '~, '
Capitaloutlays 25,000 33,791 32,382 1,409 ~~..;
642,687 670,687 621,447 49,240
Expenditures chargeable from ~ ~~..
other funds 688,600 688,600 688,600 - . i
Total maintenance and operation 1,331,287 1,359,287 1,310,047 49,240
See Accompanying Notes to Financial Statements
36 '
CITY OF KENAI, ALASKA
AIRPORT LAND SYSTEM SPECIAL REVENUE FUND
STATEMENT OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BA~ANCE
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
continued
Administration:
Personal services
Supplies
Other services and charges
Expenditures chargeabie from
otherfunds
Totai land administration
Land:
Personal services
Supplies
Other services and charges
Capitai outlays
Totai expenditures
Excess ofrevenues over(under)
expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net changes in fund balance
Fund balance - July 1
Fund balance - June 30
Original
Budqet
$ 146,267
5,546
40,417
192,230
37,500
229,730
38,467
3, 750
102,643
144,860
1, 705,877
{735,877)
28,500
28,500
$ 7t 07,377)
Final
Budpet
$ 146,267
5, 546
40,417
192,230
37,500
229,730
38,467
3, 560
139,204
181,231
1, 770, 248
(744,547)
28,500
(300,000)
(271,500)
$ (1,016,047)
Actual
$ 144,531
3,062
19,250
166,843
37,500
204,343
37,304
1,099
91,103
129, 506
1,643,896
See Accompanying Notes to Financial Statements
37
(685,702)
220,956
(300,000)
(79,044)
(764,746)
4,647,951
$ 3,883,205
Variance With
Final Budget
Positive
(Neqative)
$ 1,736
2,484
21,167
25,387
1,163
2,461
48,101
51,725
126,352
58,845
192,456
192,456
$ 251,301
CITY OF KENAI, ALASKA
STATEMENT OF NET ASSETS
PROPR~ETARY FUNDS
JUNE 30, 2006
Govemmental
Activities -
Internai Service
Business-type activities - Enterprise Funds Fund
Airport Congregate Equipment
Terminai Housinq Total Replacement
ASSETS
Current assets:
Equity in central treasury $ 2,058,~49 $ 501,261 $ 2,559,310 $ 1,187,291
Accounts receivable 15,536 15,536
Total current assets 2,073,585 501,261 2,574,846 1,187,291
Noncurrent Assets:
Property and equipment in service, at cost:
Land 6,043 274,500 280,543 -
Buildings 3,425,007 4,915,806 8,340,813 -
EGuipment 227,504 - 221,504 1,088,467
Improvements other than buildings 694,929 694,929 =
Total property and equipment in service 4,347,483 5,190,306 9,537,789 7,688,467
Less accumulated depreciaCion (2,831,820) (1,727,507) (4,559.327) (263,558)
Net property and equipment in service 1,515,663 3,462,799 4,978 462 824,911
Totalassets $ 3,589,248 $ 3,964,060 $ 7.553,308 $ 2,012,202
LIABILITIES
Current liabifties:
Accountspayable $ 14,756 $ 3,076 $ ~ 17,232 3 -
Other liabilities 744 23,078 23,822 -
Deferred revenues 5,815 5,815
Total current liabilities 20,715 26,154 46,869
Noncurrent liabilities:
Compensated absences 5,097 816 5,913
Net pension obligation 8,053 2,496 1Q549 -
Total noncurrenf iiabilities 13,150 3,312 16 462
Total liabilites 33 865 29,466 63,331
NET ASSETS
invested in capital assets 7,515,663 3,462,799 4,978,462 824,911
UnresUicted 2,039,720 471,795 2,511,515 1,187,291
Total Net Assets $ 3,555,383 $ 3,934,594 $ ~,489.977 $ 2,012,202
See Accompanying Notes to Financial Statements
38
CITY OF KENAI, A~ASKA
STATEMENT OF REVENUES, EXPENSES
AND CHANGES IN FUND NET ASSETS
' PROPRIETARY FUNOS
YEAR ENDED JUNE 30, 2006
Governmental
Activities -
Internal Service
Business-type activities - Enterprise Funds Fund
Airport Congregate Equipment
~ Terminal Housina Totai Replacement
Operating revenues:
Rents andleases $ 94,174 $ 275,185 $ 369,359 $ -
Commissions 182,810 - 182,810 -
Vehicie parking fees 89,492 - 89,492 -
Otherrevenue 1,435 - 1,435 50,817
Total operating revenues 367,911 275,185 643,096 5Q817
Operating expenses
Personalservices 83,057 22,399 105,456 -
Suppiies 14,154 8,046 22,200 -
Utilities 83,923 58,268 142,191 -
Repairand maintenance 159,257 79,367 238,624 -
Insurance 11,049 14,698 25,747 -
Depreciation 92,527 125,299 217,826 52,809
Manager's fee - 19,800 19,800 -
Miscellaneous 14,139 1,937 16,076 -
Expenses chargeablefrom otherfunds 47,900 24,700 72,600 -
Totaloperating expenses 506,006 354,514 860,520 52,809
Operating Income (loss) (138,095) (79,329) (217,424) (1,992)
Nonoperating Revenues:
Intergovernmental Grants 2,737 800 3,537 -
Interestrevenue 54,948 13,463 68,411 3Q828
Totalnonoperating revenues 57,685 14,263 71,948 30,828
Change in Net Assets (80,410) (65,066) (145,476) 28,836
Net Assets, beginning 3,635,793 3,999,660 7,635,453 1,983,366
Net Assets, ending $ 3,555,383 $ 3,934,594 ~ 7,489,977 $ 2,012,202
See Accompanying Notes to Financial Statements
39
CITY OF KENAI, AIASKA
STATEMENT OFLASH FIOWS
PROPRIETARY FUNDS
YEAR ENDED JUNE 30, 2006
Governmental
Activities - Internal
Business-type activities - Enterprise Funds Service Fund
Airport Congregate Equipment
Terminal Housina Total Reolacement
Cash flows from operating activities:
Receipts from Customers $ 365,5'12 S 272,350 $ 637,862 $ -
Payments to Suppliers (274,297) (181,835) (456,132) -
Payments to Employees (84,435) (22,615) (107,050) -
Payments for Intertuntl Services (47,900) (24,700) (72,600) 50,818
Nei cash provitletl (used) by operating
activities (41,120) 43,200 2,080 50,878
Cash fiows from noncapital financing
activities:
State Grent 2,73~ 800 3,537
Cash flows from investing activities:
Interest on investments 54,948 13,463 68,411 30,828
Net increase (decrease) in cash and cash
equivalents 16,565 57,463 74,028 81,646
Cash and cash equivalents, beginning 2,041,484 443.798 2.485 282 1.105.645
Cash and cash equivaients, ending $ 2,058,049 $ 501,261 $ 2,559,310 $ 1,187,291
Reconciliation of operating income to net
cash provided (used) by operating activities:
Operatingincome $ (138,095) $ (79,329) $ (217,424) $ (1,991)
Adjustments To Reconcile Operating Income
(LOSS) To Net Cash Provide by (used in)
Operating Activities:
Depreciation g2,527 125,299 217,826 52,809
Accounts receivable (2,399) - (2,399) -
Accounts payable 4,077 (2,054) 2A23 -
Other liabilities and deferred revenues g,770 (716) 2,054
Net Cash Provided by (used in)
OperetingActivities: $ (41,120) $ 43,200 5 2,080 $ 50,8'IS
See Accompanying Notes to Financial Statemenis
40
CITY OF KENAI
NOTES'I'O FINANCIAL STATEMSNTS
JL7NE 30, 2006
I. SUMVIARY OF SIGiVIFICA~'VT ACCOUNTING POLICIES
A. Reporting Entity
The City of Kenai (City) was formed by a Home Rule Charter on May 20, 1963 under the provisions of
Alaska Statute, Title 29, as amended. The Ciry operates under a council-manager form of government and
provides the following services: public safety (police and fire), pubiic impcovements, airport, dock faciliry,
water and sewer, ]ibrary, senior citizen, recreatioq parki, planning and general administrative services.
The finaneial statements of the City have been prepared in conformiry with accounting principles generally
accepted in the United States of America (GAAP) as applied to govemment units. The Govemmental
Aceounting Standards Board (GASB) is the accepted standard-seuing body for establishing govemmentai
~~ aceounting and financial reporting p~inciples. The more significant accounting principles of the
.. governmen[ are described below.
B. CiTy-Wide and Rund Financial Stafements
~ The Ciry-wide financial statements (i.e., the statement of net assets and the statement of activities) report
informafion on all activities of the City. Governmental activities, which norma[ly are supported by taxes
~~' and infergovernmental revenues along wifh user fees, are repoited separately from the business-rype
aetivities, which rely to a significant extent on fees and charges for support The effect of any interfund
.. acpvity, for the most part, has been removed from these statements. The statement of acfivities
..; demonstrafes the degree eo which the direct expenses of a given funetion or segment aie offset by program
revenues. Direct expenses are those Yhat are clearly identifiab(e with a speciGc funetion or segment.
~ Program revenues include charges to customers or applicants who use, ~wchase, or directly benefit from
'. the goods, services or privileges provided by a given segment or funetion and includes restricted grants and
~~' contributions that are restricted to meeting the operations or capital requirements of a particutar function or
segmeot. Taxes and other items not properly incloded in program revenues are repoRed as general
revenues. Major individual govemmental and proprietary funds are reported as separate columns in [he
fund financial statements.
C. MeasuremenC focus and basis of accounfing and financial statement presentation
The City-wide financial statements aze reported using the economic resources measurement focus and fhe
accrual basis of accounting as are the proprie.tary fund stateme~zts. Revenues are recorded when eamed
and expenses are recorded when a liabiliry is incurred, regardless of the timing of cash flows. Grants and
similar programs are recognized as revenue as soon as all eligibitity requirements imposed by the provider
have been met. Net assets are reported as restricted wheo constraints placed on fhe neC asset use are either
extemally impoeed by creditors, grantors, contributors, or laws or regulations of other govemments are
imposed by law through constitutional provisions or enabling legislations.
Governmental fund rype financial statements are repoRed using the current financtal resources
measurements focus and the modified accrual basis of accounling. Revenues are recognized as soon as
fhey are both measurable and available. Revenues are considered to be available when they are collectible
in the currenf period or soon enough fhereafter to pay liabili[ies of the current peripd. For this purpose, the
City considers revenues fo be available iF they are collected within 60 days of the end of the eurrent fiscal
period. Espendimres are generally recorded when a liability is incurred, as under accrnal accouoting.
However, debt service expendiNres, as well as expenditures related to claims andjudgmenfs, are recorded
only when payment is due.
41
Franchise taxes, licenses, and interest associated with the current fisca] period are alI considered to be ~,
susceptible to accmal and so have been recognized as revenues of the carrent fiscal period. Only the
portion of special assesSment receivables due within the current fisca] period is considered to be susceptible
to accrual as revenue of the current period. All other revenue items are considered to be measured and
available only when cash is received by the government. ~'
The City reports the following major governmental funds:
I'he General Fund is the Ciry's primary operating fund. It accounts for all 5nancial resources of
the general govemment, except [hose required to be accounted for in another fund.
The Water and Sewer Speeial Revenue Fund accounts for the activities of providing water and
sewer to city residenes. It relies on user fees to fmance its operations.
The Airport L.and Sysfem Special Revenue Fund accounts for activities of the airport except for
terminal activities a~d land sales. It relies on user fees and investment interest to finance
operations.
Tbe Airport Land Sales PermanenC Fund accounts for sales of airpori land. All principal proceeds
of any land sold are held in this fund and may not be spent. Inferest eamed on land sale contracts
is transferred to the Airpott Land System Special Revenue Fund. Investment interest generated by
the cash balance of this fund is recorded in the Airport L,and SysCem Special Revenue Fund.
The AirpoR Improvement Capital Project Fund accounts for capital projects that are airpoR
retated. Primary funding sources are federal ~rants and transfers from the Airport Land System
Special Revenue Fund.
Additionally the City reports Ihe following fund Cypes:
Proprietary Funds -~~ the City uses fwo enterprise funds to awoant for activities that are intended to be
supported by user fees. The Airporf Terminal Enterpnse Fund accounfs for the activiEies of the airport
tenninal. The Congregate Housing Enferprise Ilmd accounts for the activities of the senior housing
project.
Internal Service Fund ~- the Equipmenf Replacemeni Fund is an internal service fund. tt accounts for the
purchase of equipmenE costing more than $50,000 that will be used by General Fund departmenfs on a cost-
reimbursement basis.
Privafe-sector standards of accounting and financial re~7orting issued prior to December 1, 1989, generally
are followed in both ehe City-wide and proprietary fund financial sfarements to [he ex[enf that [hose
standards do noY conflict wi[h or cootradict guidance of the Govemmental Accounting standards Boa~d.
The City has the option of following subsequenf private-sector guidanee for their business-fype activities
and enterprise funds, subject to this same limitation. The ciCy has elected not to follow subsequent private-
sector gaidance.
As a general mle the effect of interfund acfivity has been eliminated &om the City-wide financial
sfetements. Exceptions to this general rule are charges between the City's enterprise Funet~ions and various
other funetions of the Cify. Elimination of these charges would distori the direct cosfs and program
revenues reported for the various functions concemed.
Amounts reported as program revenues inclnde l) charges to customers or applicants for goods, services,
or privileges provided, 2) operating grants and contribnfions, and 3) capital grants and contributions,
including special assessments. Internally dedicated resources are reported as general reve~iues rather than
as program revenues. Likewise, general revenues include all faxes.
42 '
Proprietary funds distinguish operating revenues and expenses from nono~eratin~ items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connecfion wi[h a proprietary fund's principal ongoing operations. The principal opera[ing revenues of [he
enterprise fund and of the City's internal service fund are charges to customers for sales and services.
Operating expenses for enterprise funds and intemal service fund include fhe cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenues and expenscs not meeting this
definitioo are reported as nonoperatin~ revenues and expenses.
When both restrieted and unrestrieted resources aze available for use, it is the City's policy to use restric[ed
resources firsf, then unrestricted resources as they are needed.
Use of accounting estimates: The preparation of financial statements in accordance with accounting
principles generally accepted in the United Sfates of America requires managemenf to make estimat~es and
assumptions Yhat affect the reporfed amounts of assets and liabilities and disclosure of contingent assets and
]iabilities af tl~e daie of the financiai statements and the reported revenues and expenses during the
reportin~ period. Actual results could differ from those estimates.
D. Assets, liabiLities and net assets or equity
1. Cash and cash equivalents
The City maintains a central treasury for most of its cash and cash equivalents, which is utilized by all
funds. For the purposes of these 5naocia] statements, rhe CiYy of Kenai considers highly liquid investments
that are readily convertible to cash, with an onginal maturiry of fhree months or less, to be cash equivalents.
Investment income is recorded in Cl~e general fund, except that interesf eamed on cash held in the water and
sewer special revenue fund, the airport land system special revenue fimd (inetuding eash in the airpori land
sales uust fund and airport related capital project funds), the airport terminal and congregate housing
entezprise funds and the intemal service fund is recorded in these funds.
2. Inventories
InvenYOries are valued at cost, which approximates market, using the first-in/firsFOUt method. The costs of
inventories are recorded using the consumption method.
3. Receivables and payables
Acfivities betweeo funds that are representative of lending/borrowing asangements outstanding at the end
of the fiscal year are referred to as either "due to other funds" or "due from other funds" (i.e., the current
~ortion of interfund loans).
4. Restricted assets
Monies or other resources, the use of which is restricted by legal or contractual requirements are recorded
as restricted assets.
_5. CapiCal assets
Capita] asseYS, which include properry, plant, equipment, and infrastructure assets (e.g., roads, bridges,
sidewalks, and similac items), are reported in the applicable governmental or business type activities
columns in the City-wide Snancial stataments. Capital assets are defined by the City as assets with an
initial, individual cost of more tl~an $5,000. All infrastmeture assets, inetudin~ those acquired prior to June
30, 198Q are reported Such asset~s are recorded at historical oost or estimated historical cost if purchased
or constructed. Donated capital assets are recorded at estimated fair value at the date of donation.
43
The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend
assets lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projecfs are constructed.
Property, plant, and equipment of the Ciry, is depreciated using the sfraight line method over the following
estimated useful lives:
Assets Years
Buildings costing more than $50,000 50
Buildings costing less than $50,000 25
Building improvements 25
Water and sewer infiasfructure 50
Stree[ infrastructure 30
Heavy equipmeut 20
Other equipmen[ 10
Office eqaipment 5
6. Compensated absences
It is the City's policy to pennit emptoyees to accumulaee earned but unused vacation benefi~s. The City
makes aonuat appropriations for the amount of leave expected to be used, which is available w employees
at essentially their discretion. Each employee is allowed to accumulate up to 80 days of annual leave at the
end of a calendar year, with any excess aceamulation paid in eash in the following January. All vacation
pay is accrued when incurred in [he Cify-wide and proprietary fund financial statements. A liability for
these amounts is reported in govemmental funds only if leave has been used but not yet paid. All funds
thaf have personal services expenses/expendimres will be utilized to liquidate the liability for compensated
absences.
Z L.ong-term obligations
In the Cify-wide financial statements, and proprietary fund types in the fund financial statements, lon~-term
debt and other ]ong-term obligations are reported as liabilities in the applicable governmental activities,
businesatype activities, or proprietary fund type statemen[ of net assets. In the fund S~ancial statements,
govemmental fund types recognize long-[erm debf obliga[ions only when dne.
A. Fund equity
In the fund financial stafements, governmental fund types report reservations of fund balance for amounts
that are not available for a~pro~riation or are leg~lly restricted by ouYSide parties for use for a specific
purpose. Designations of fund balance represent tentative management plans that are subject to change.
II. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY
A. Budgefary information
Annaal budgets are adopted on a basis consisfent with accounting principles generally accepted in the
United States of America for all governmental fund rypes, except the Capital Project Funds which adopt
project-leng[h budgets. All annual appropriations lapse at a fiscai year end.
Budgets for the general fund, special revenue funds, deb[ service funds, permanent funds and enterprise ~~~~
funds are annua] budgets. Capital project fund budgets are project-]ength bud~ets. All budgets are adopted
on a basis consistent with generally accepted accounting princip]es. The F.quipment Replacemenf Pund,
49
which is an intemal service fund, is not required to have a budgef. The council approves all asset
acquisitions from this fund by resolution.
Armual budgets must be submitted to the City Council by the City Manager during or prior to the sixfh
week preceding the first day of each fisca! yeac The Ciry Council must adopt an annual budget and set the
tax rates not tater than tl~e tenth day of June for the following year.
Budgefary control (the leve] at which expendi[ures may not exceed budget) is maintained at tYie object class
leve] by fhe encumbrance of estimated purchase amounts prior to the retease of purchase orders to vendors.
Purchase orders which would result in an overrun of objecf class balances are not released until additional
appropriafions are made available.
,Amendments to appropriations may be made by the city administration by uansfers within a fund in
amounts less [han $5,000. Other amendments, including supplemental appropriations, may be made by the
City Council. The City Council aufhorized supplemental appropriations during the year in capital projects
funds, specia] revenue funds and fhe general fund General fund supplementa] appropriations were
$766,259. The majority of this was to appropriate state and federal grants received during tbe year and for
Va~isfers to capital project funds.
Encumbrance accounfing is employed in ~ovemmental funds. Encumbranees (e.g., purchase orders,
contracts) oufstanding af year end are reported as reservations of fund balanc~s and do not eonsti[ute
expendifures or liabilities. Tl~ese commitments will be reappropriated and honored during the subsequent
year.
III. DETAILED NOTES ON ALL FUNDS
A. Deposits and invesfinenCs
The Ciry maintains a central treasury that is available for use by all funds. Each Fund fype's poriion of the
eentral treasury is displaye,d on the combined balance sheet as "Equity in Central Treasury".
At year-end, all of the City's bank deposits were either insured or collateralized with securities held by the
City's a~ent in the Ciry's name.
The City's inves[ment policy authorizes the City to invest in: (a) obligations of the linited States or an
agency or instrumentality of the United States, (b) certificates of deposit with banks and savings and (oan
associatio~s; (c) repurchase agreemen[s; (d) money market mutua] funds consisting primarily of
obligations of the United States or av agency or instrumentality of the United States, or r~purchase
agreements collaterelized with such obligations; and (e) the Alaska Municipal League Investment Pool
(AMLIP). Generally, investment maturities cannot exceed flve yeazs from the date of purchase.
Repurchase agreements m~st be collateralized with United States government obligatio»s. Certificates of
deposii must be insured or coliateralized with obligations of the United States or its agencies or
inswmentalities. Collatecal musf be held by a third party trustee. The City complied with its investment
policy throughout the year.
The AMLIP is an extemal investment pool whicl~ is not SEC regisfered. Alaska Stamte 3'J.23 establishes
regulaPOry oversight of the pooi. The law sets forth numerous requirements re~arding authorized
investments and reporting. On a monthly basis the i~vestments in the pool are reviewed for fair value by
an independent pricing service. The values of investments in the AML poo] are approximately equal to fair
value.
The fair value of the City's investmenfs at year-end are shown below. GASB Statement 3 establishes
categories as an indication of the Ievel of custodiai risk involved in the investments. The A.M.L. Pool is
uncategorized. All of the City's remaining investments are in the category of least risk and include
inves[menfs that are insured or registered in the City's name, or securities Ihat are held by fhe City or its
agent in the City's name. All oF the United States treasury bills, freasury notes, and United Statcs agency
45
securities are held in a custodial account in the We1Ps Fargo Trust Department, and are cecorded in its
internal records in the City's name in acc;ordance with a safekeeping agreement. WeIPs Pargo is not a
counter party to securiry transactions. .
The City maintains an inferest bearing checking account, which had a bank balance of $912,846 and a
carrying value of $614,051 at year-end. The CiCy also holds a~20,000 certificate of deposiG These deposifs
are insured for the first $IOQ000 and the balance is coilaYeralized by securiYies held by a third party
custodian in the City's name.
As of June 30, 2006, the city had Che following investments and maturities.
InvesYment Fair Value Less than 1 year I to Z years Z to 5 years
U.S Agencies $32,033,911 $15,283,531 $6,921,620 $9,828,760
AMLIP 565,517 565,Sll - -
Total ~~99 42 ~ 15.849.048 6 921 620 9 82 760
beterest Kate Risk. The fair values of the city's fixed-marurity investmenYS fluctuate in response to changes
in market inCeresY rates. Increases in prevailing interest rates generally translate into decreases in fair
valnes of those i~struments. Fair values of inCeresC rate sensitive instruments may be affected by the
creditworthiness of fhe issuer, prepayment options, relative values of alCemative invesfinents, the liquidity
of Ihe instrumeot, and other ~eneral market condidons. The city manages interesf rate risk by requiring
specific percentages of the portfolio to be invested within certain time periods and policy timits the longest
maturity to five years. "1'he policy requires 20% of the portfolio to be invested for less than one year aod no
more than 30% of the portfolio can be invested longer Chan two years. The average maturity of securities in
the AMLIP poo] was 43 days.
Prepayment Risk. The City has invested in a pool of mortgages issued by the Federal Home Loan
Mortgage Corporation. This security is based on cash flows from payments on the underlying mortgages.
Therefore, it is sensitive to prepaymenYS by mortgagees, which may result from a decline in interest rates.
The particular pool is seasoned so prepayment risk is considered minimal. Prepayments are hetpfu] in
meeting the city's cash flow needs.
Option Risk. Option risk is the risk that an investment's counterparty may exercise a righf embedded in the
investment-an embedded option. The ciry invests in securities issued by U.S. Govemment Agencies fhat
confain call options. About $20 million or 61 % of the agency securities contain call optiona The exercise
of the calt option by the counterparty occurs during times of declining interest rates; therefore the ciYy is
exposed to Che risk of having to reinvest at a lower interest rate. In the table above, securities are placed in
the time period according to the fina] mamrity regardless of call option dates. If call options were exercised
at the next possible call date, many of the callable securities would mature in ]ess than one year. The
ageney seeurities maturity schedule restated to show maturities as of the earliest call dates is as follows:
Less than ] t to 2 2 to 5
Investment Fair Value year years years
U.S. Agencies $32,033,911 $29,036,9ll $990,120 $2,006,880
Concentration Risk. The Ciry investment policy places no limit on the amount that can be invesfed in any
one issuer. More than 5% of the total podfotio is invested in securities issued by tt~e Federal Home Loan
Bank -- 54%, Federal National Mortgage Association -34%, and Federal Home Loan Mortgage
Corporation - 12%. All of fhe U.S. Ageney seeurities in the pc~rtfolio at year-end are cated Aaa by
Moody's Investors Service and AAA by Standard and Poor's.
46
B. Receivables
Receivables at June 30, 2006, for the CiYy's individual major funds, the nonmajor and other govemmental
funds in the aggregate, and the proprietary funds are as follows:
Water & Airport Land Airport Land
Generat Sewer Svstem Sales
Taxes $ 1,059,952 $ - $ - $ -
Intergovernmental 174,490 - 39,651 -
Customers and other 64,210 178,35A 15,370 179,550
Special assessments 272,416 - - -
I,and cc~ntracts 362,595 - - -
Accrued interest 269,904
Total receivables 2,203,56'I 178,358 55,021 179,550
Lessallowanceforuncollectibles (1778) (]0,000)
Net receivables $ 2.201 789 ~_ 168 58 _$ ,_ ,_55.021 ~ „17<1~550
AirpOrt
Improvement Nonmajor and
Caoita] Pro~ect Other Funds Pronrietarv
Intergovernmental $ 109,463 $ 155,734 $ -
Notes - 91,941 -
' CusCOmers and other 14,188 15,536
Total reccivables ~__._.~QQ~4~ $ 261 86~ ~_ __IS 5~
47
C. Capital Asets
CapiYal assef activity for the year ended June 30, 2006 was as follows:
Beginning
Balance Increases Decreases
Governmenfal AcYivifies:
Capital assets, nof being depreciated:
Land
Conswction in progress
Total capital assets, not being
deprecreciated
Capital asseCS, being depreciated:
Buildings
Improvements other than buildings
Machinery and Equipment
Infrastructure
Total capital assets being
deprecreciated
Less accumulated depreciation for:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Totel accumulaYed depxeciation
Total capital assets, being depreciated,
net
Ending
Balance
$ 6,027,242 $ 80,000 $ (541,636) $ 5,565,606
9,455,383 3.518,220 {6,375,110) 6,598,493
15 482 625 3,598220 (6,916,746) 12,]64,099
37,302,501 5,326,884 - 42,629,385
22,155,283 569,545 - 22,924,828
13,075,048 577,662 (162,343) 13,430,367
55,799,801 12,458 55.812,259
128.272,633 6,486,549 (162,3431 134,596,839
(8,813,467) (682,625) - (9,496,092)
(9,336,741) (524,4t5) - (9,861,156)
(5,836,473} (569,612) 155,308 (6,250,997)
(17,864,883) 836,045) ~18 700,928)
(41,851,564) ~2,612,697) 155.308 (44,308.953)
86,427,069 3,873,852 (7,035) 90,287 886
Govemmental activiCies, capital assets,
net ~~903 694 ~~7 472~07_2. ~,923 781 ~02 451 98~
_ }-__ - - ~ ~--
Intemal service funds serve the governmenYal funds; cherefore, their capital assets aze included as parC of the above
totals for governmental activi[ies.
48
Beginning
Balance
Business-type Acfivities:
Capital assets, not being depreciated:
I.,and $ 28Q543 $
Capital assets, being depreciated
}3uildin~s 8,340,813
Equipment 215,504
Improvements other than buildin~s 700.929
'1'otal capital assefs being
deprecreciafed 9.257,246
Less accumulaed depreciation for
Ending
Increases Decreases Balance
- $ - $ 280,543
Buildings (3,497,603) (270,83Q)
Improvements other Chan buildings (677,648) (468) -
Machinery and equipment (166,2491 (6,529) -
Total accumulated depreciation (4,341,500) (217,827) -
Tota] capital assets, being depreciated,
net 4915,746 (217,829)
Business-type activifies, capiTal assets,
net $ _9;196~ _ 217 82~ ~_
Depreciation expense charged to each govemmental function is as follows:
General govemment $ 54,406
Public safety 1~5,695
Public works 651,031
Parks, recreation, and cultural 191,908
Water and sewer services 639,881
Airport 870,477
Social welfare services 29,299
$_ 2.612 697
3
D. Defined Benefit Pension Plan
Descripfion of Plan
8,340,813
215,504
700,929
9.257,246
(3,708,433)
(6'78, I 16)
(172.778)
(4.559,327)
4,697,919
~ 4.978 462
The Ciry pariicipates in the Pablic Emp(oyees' Retirement System (PERS), an agent multiple employer,
defined benefit plan which covers eligible State and local govemment employees. The ptan was esYablished
and is administered by the State of Alaska to provide pension, postemployment healthcare, death, and disability
benefits.
49
The plan is includeal in a comprehensive annual financial report that includes financial statements and othee
required supplementat information. The report is available at the following address:
DeparCmenC of Administration
Division of Retirement and Benefits
P.O.Box ll0203
Juneaq Alaska 9981 I-0203
Funding Policy
Employees are requved to conriibute 6.75% of their annuat covered salary (4.05% for pension and 2.70% for
healthcare). Peace officers and firefighters musY conffibute 7.5% (4.5% pension and 3.0"/o healthcare). The
funding policy provides for periodic employer conh'ibufions based on actuarially determined rates that,
expressed as a percentage of annual eoveted payroll, aze sufficient to aecumulate sufficient assets to pay both
pension and postemployment healtheaze benefits when due, subject fo an increase limitation. Under curren[
regulapons, employer rates cannot be increased by more than five peccentage points annually.
As a result of the five percen~age point limit, a significant difference exists between the actuarial rate and the
ac[ual pay-in rate during Sscal year 2006. The five pereenta~e point limit regulation has been repealed in
2005, but will not affect rates until fiscal yeac 2008, since the rates are established three years in advance of
their effecdve date.
The City's contribution rates for 2006 aze as follows:
Adjusted Actuarial
Actual Required
Rate Rate
Pension 8.19% 15.69%
Postemployment
healthcare 5.48% 10.48%
Toral contribution rate ~ 3~~ 2( ,~Z%Q
Employer conhibufion rates are a level pementage of payroll and are deterniined using the projected unit
credit acTUarial funding method. The initial unfunded accrued liability and future gainsAosses are
amortized over a 25-year fixed period level percentage of pay.
The required contribution for the plan was deterrnined as part of the June 3Q 2003 acmanal valuation. The
projection of future benefits for an ongoing plao involves estimates of the value of reported amounts and
assumptions about the probabiliry of occurrence of events far info the future. Examples inciude assumptions
about future employment, morfaliry, and the healthcare cost trend. Amounts determined regazding the funded
status of the plans and the annaal requued contributions of the employer aze subject to continual revision as
aeCUal results are com~azed with past expectaCions and new estanates are made about the future.
Projections of benefits are based on the subsfantive plan (the plan as undersfood by the employer and plan
members) and include the rypes of benefits in force at the valoatioa date and the pattem of sharing bene&ts
costs between the City and the pian members at that point Acmarial calculafions reflect a long-term
perspecfive and employ methods and assump[ions that aze designed to reduce short-term volatiliry in acNanal
accmed liabilifies and the actuarial values of assets.
The si~,mificust actuarial assnmptions used in the valua[ion of the plans follow:
I. Investment retum of 825% per annum, compounded annually, net of expenses;
50 '
2. Projected salary increases of 5.5% for the fu'st ten years and 4.0% thereafter (Police and Pire
6.0% for the first five years and 4.5% thereafter).
3. Health cost inflarion of 12.0% for 2004 through 2005, trending doumward 0.5% per year to 7.0%
in PY 15, 6.0% in FY I6, and 5.0% thereafrer;
4. Total inflation, as measwed by the Consumer Price Index for urban aod clerieal warkers for
Anchorage, is assumed to increase 3.5% annually; and
5. Asset valaation - reeognizes 20% of the investment gain or loss in each of fhe current and
preceding four years. Assets are valued at market value and ue accounted for on an acerued
basis. Valuation assefs cannot be outside the range of 80% to 120% of market value of assets.
Annual Pension and Postemplovmeot Healthcare Cost
During 2005, fhe State of Alaska Legislature approved Senate bill 46 which granted fiscai relief related to
inereased cost of the FY06 contribution rates. This relief was in the forrn of a cash payment made directty
to the PERS system on behalf of fhe participadng empioyers. The amount of the fiscal relief payment for
City of Kenai was $278,462. For financial statement purposes, this amount has been reported as grant
revenue and PERS expenditures/expenses and is included in Che amount reported as "contributions made"
as noted below.
For the year ended June 30, 2006, the City's annual pension and other post-employment benefit (OPEB)
cos~4 were as follows:
Pension OPEB Total
Annua] required contribution
Inferest on net pension obligation
Adjustment to annua( required contribution
Annual pension cost
Contributions made
Increase in net pension/OPEB obligation
Net pension/OPEB obligation, beginning of year
$839,658 $561,172 ~1,40Q830
34,564 - 34,564
f25,787~ - 25 787
845,435 561,172 1,409,607
429.524 287 065 716,589
418,911 274,107 693,018
418.954 254.497 673.451
Net pension/OPEB obligation, end of year
T(uee-year trend information for PERS follows:
~37 865 =$52~.~ $1 3_ 66.469
Year Annual Percentage Net
Ending Pension Actual of APC Pension
June 30, Cost (APC) Contributions Contributi Obli atq ion*
Pension 2004 $ 104,402 104,402 100% -
2005 $ 679,710 260,756 38% 418,954
2006 $ 848,435 429,524 51% 418,911
Year Annual Percentage Net
Ending OPES Actual of OPEB OPEB
June 30, Cost Contributions Contribufed Obli at~
Postemployment
healYhcare 2004 $ 69,778 69,778 100% -
2005 $412,896 158,399 38% 254,497
2006 $561,172 287,065 51°/a 274,107
51
*~enerall~ accepted acconnting principles (GAAP) cunently dictate tt~e recognition of a net pension
obligation when actual contributions do not equal the actuarially required contribution for pensions. The
City has recorded a nct pension obligation, not including OPEB, in the amount of $837,865.
A schedule of fundin~ progress £or the three most rccent actuaria] valuations, which is required
supplementary information, follows (in thousands):
Unfunded Un£unded
AcNarial Actuarial AcNarial (Assets in (Assets in Excess of~
Valuation Value of Accrued Excess o~ Funded Covered Liabilify as Percentage
Date Assets Liabilitv Liabilitv Ratio Payroll Of Covered Pavroll
Junc 30, 2003
Pension 17,336 23,182 5,846 75% 4,730 l24%
Pos[ Employrcaent
Healthcare 11,587 15,494 3,907 75% 4,730 83%
June 30, 2004
Pension 18,797 25,579 6,782 73% 4,485 ]51%
Post Employment
Healtheare 13,254 18,037 4,783 93% 4,485 707%
7une30,2005 ~
Pension 17,102 26,570 9,R68 64% 4,912 193%
Post Employment
Healtheare 13,457 20,907 7,450 64% 4,912 152°/o
E. Changes in Long-Term Obligations
The City has no outstanding general obligation debt. Activiry in long-term liabilities is as follows:
Due witUin
June 30. 2005 Additions Reductions June 30, 2006 one vear
Loss eontingency for contaminated soils $ 1,400,000 - - $ 1,40Q000 -
Compensated absences 552,428 205,943 142,692 615,679 145,000
Net pension obligation 418,954 418,97I - 837,865 -
52
F. Inferfund receivables, payables and transfers
Transfers between funds were as follows:
Major Funds
Genera] Fund
Airport Land System
Airport Land Salea
Airport Imp. Capita] Project
Nonma,ior Governmenfa] Funds
Tota]
Transfers Out: Tranfers in:
Major Nonmajor
GovernmenYal Governmentdl
GeneralFund Funds Funds Total
$ 441,048 $ - $ 9,500 $ 431,548 $ 441,048
30Q000 - 30Q000 - 300,000
18,337 - 15,337 - ]8,337
193,119 - 193,119 - 193,119
108,540 7,085 - 101,455 108,540
~ 1.061.044 ~__ 7.085 ~ 520 _~ 533.003 ~_~06I 044
G. Risk management
The City is exposed to various risks of loss related to tons; thefr of, damage to, and destruction of assets;
esors and omissions; injuries to employees; environmenta] contamination; and natural disasters. Risk
financing activities are accounced for in various operating funds, with unallocated or Citywide activities
being accounted for in the general fund. The City purchases commercial insurance to transfer a substan2ial
portion of the above risks of loss. Property insurance is purchased to provide coverage for buildings and
heavy equipment, generally with deduetibles of $25,000. Various liabiliry insurance policies are purchased
to provide protection against forts, injuries, and errors and omissions. Most liability policies are written
with low or zero deductibles. In addition to the deductibles on insurance policies, the City retains risk of
toss related to certain potential liabilities and property damages. These include environmental ]iabilities,
employment discrimination, and vehicie property losses. Settled claims have not exceeded commercia]
coverage in any of the past three fiseal years. The City analyzes potential ]osses on a case-by-case basis to
determine amounts Yhat should be accrued or disclosed in the financia] staCemenfs. At June 30, 2006, the
Ciry has recorded a liability in recognition of certain losses related to contaminated soi] remediation. The
Cify has retained the risk of ]oss for such exposures.
There has been no change in the balance of claims ]iabilities during the past year as indicated by the
fo]]owing table.
Begi~ing of End of
The Fiscal Year Ctirrent Year Claim Fiscal Year
Liabilitv Claims Payments Liabilitv
FY2004 $1,400,000 - - $ 1,400,000
FY2005 $1,400,000 - - $ 1,400,000
FY2006 $1,400,000 - - $ 1,400,000
H. Contingencies
The City is involved in several lawsuits arising in the ordioary course of operations, inctuding actions
commenced and claims asserted against it. Management of the City does not believe that the uttimate
resolution of these lawsuits and claims will have any material effect upon its finaneiai position or results of
operations, and therefore, no provision has been made in the accompanying financial statements.
53
Other Government Funds
This section inciudes the Statement of Revenues, Expenditures, and Changes in Fund Balance,
Budget and Actual, for the Airport Land Sales Permanent Fund, which is a major fund, as well as
the Nonmajor Governmental Funds Combining Balance Sheet and Combining Statement of
Revenues, Expenditures, and Changes in Fund Balance. It also includes a Statement of
Revenues, Expenditures, and Changes in Fund Balance, Budget and Actual for each nonmajor
governmental fund that adopted an annual budget
Speciai Revenue Funds
Special Revenue funds are used for specific revenues that are legally restricted to expenditures
for a specific purpose.
Kenai Borough Senior Citizens Fund - This fund accounts for revenues and expenditures
related to the Senior Citizens Program. The primary source of revenue is a grant from the Kenai
Peninsula Borough.
Council On Aging Fund - This fund accounts for the activities of the Senior Citizen Program
which is substantialiy financed by a grant from the State of Alaska (from federally financed
sources). Activities include social services and a nutrition program.
Capital Project Funds
Capitai Projects Funds are established to account for the resources expended to acquire assets
of a relatively permanent nature. These funds evolved from the need for special accounting for
bond proceeds, grants and contributions for the acquisition of capitai assets.
Capital Projects Funds provide a formal mechanism which enables administrators to ensure that
revenues dedicated to a certain purpose are used only for that purpose and further enables them
to report to creditors and other grantors of capital projects fund revenue, that their requirements
regarding the use of the revenue were fully satisfied.
Parks And Recreation - to account for capital improvements to City parks and recreation
facilities. Financing is primarily from general fund transfers and State grants.
Streets - to account for capitai improvements to City streets. Financing is primarily from general
fund transfers, grants from State and Federal sources and bonds.
Water And Sewer - to account for capital improvements to City water and sewer infrastructure
and the sewer treatment facilities. Financing is from user fees via transfers from the Water and
Sewer Special Revenue Fund, State and Federal grants and bonds.
Miscellaneous - to account for capital projects which do not fit in one of the foregoing categories.
These projects are generaliy smailer projects, which may be funded through transfers from other
funds or by State or Federal grants.
55
Permanen4 Funds
Permanent Funds are used to report resources that are legally restricted to the extent that only
earnings, and not principal, may be used.
Generai Government Land Sales - to account for the proceeds of generai government land
sales, including principal and interest on long-term notes. By City Charter, the principai cannot be
spent. Interest revenue is transferred to the General Fund.
Airport Land Sales - to account for the proceeds of airport land sales, including principal and
interest on long-term notes. By ordinance, the principal cannot be spent. Interest revenue is
recorded in the Airport Land System Special Revenue Fund. Note that this is a major fund and is
therefore not included in the NonMajor Governmental Funds Combining Statements.
S6 i
CITY OF KENAI, ALASKA
AIRPORT LAND SALES PERMANENT FUND
STAYEMENT OF REVENUES, EXPENDIYURES,
AND CHANGES IN FUND BALANCE •
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
Revenues:
Interest revenue
Land sales
Total Revenues
Excess ofrevenues
over expe~ditures
Original Final
Budaet Budaet
Actual
$ 18,337
294,262
Variance With
Final Budget
Positive
Ne ative
$ (6,663)
294,262
287,599
$ 25,000 $ 25,000
25,000 25,000
25,000 25,000
Other financing sources (Uses):
Transfers out (25,000) (25,000)
Net change in fund balance $ -$
Fund balances, July 1
Fund balances, June 30
312,599
312,599
(18,337)
294,262
11,472,050
$ 11,766,312
287,599
6,663
$ 294,262
57
City of Kenai, Alaska
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2006
ASSETS
Equity in central treasury
Intergovernmental Receivable
Notes receivable
Other accounts receivable: net
Total assets
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Customer deposits
Sales tax
Deferred revenue
Totai liabilities
Fund balances:
Reserve for investment
Unreserved:
Designatedforsubsequent
year's expenditures
Designated for compensated
absences
Undesignated
Totalfund balances
Total Iiabilities and fund baiances
Capital
Special Revenue Project
Kenai
Borough Councii
Senior on Parks and
Citizens Aging Recreation
$ 84,682 $ 744 $ 180,273
- - 132,905
13,448 3,056 -
$ 98,130 $ 3,800 $ 313,178
$ 1,561 $ - $ 141,686
10,145 - -
68 - -
- 3,800 -
11,774 3,800 141,686
29,300 - 171,492
13,411 - -
43,645 - -
86,356 - 171,492
$ 9$130 $ 3,800 $ 313,178
58
City of Kenai, Alaska
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2006
continued
Capital Project
ASSETS
EquiPy in central treasury
intergovernmental Receivable
Notes receivable
Other accounts receivable; net
Tofal assets
Water
and
Streets Sewer Miscellaneous
5 36,836 $ 1,054,482 ~ 5,458
8,934 11.579 -
$ 45,770 $ 1,066,061 $ 5,458
LIABILITIES AND FUND BALANCES
Liabilities:
Accounts payable
Customer deposits
Sales tax
~eferred revenue
Total liabillties
Fund balances:
Reserve for investment
Unreserved:
Designatedforsubsequent
year's expenditures
Designated for compensated
absences
Undesignated
Total fund balances
Total liabilities and fund balances
$ - $ - $
45, 770 1, 066,061 5~,458
45,770 1,066,061 5,458
$ 45,770 $ 1,066,O6t $ 5,458
59
City of Kenai, Alaska ;
Combining Balance Sheet
Nonmajor Govemmental Funds ;
June 30, 2006 ' '
continued
Permanent
Total
General Nonmajor . ..
Govemment Governmental ~' ~~
ASSETS land Sales Funds ~ ~-
Equity in central treasury $ 2,43Q573 $ 3,793,048
Intergovemmentai Receivable - . 153,418 ~'~~ ~~~
Notes receivable 91,941 9t,941
Other accounts receivable: net - 16,504 '~~~, ~..
Totalassets $ 2,522,514 5 4,054,911 . .
LIABILITIES AND FUND BALANCES '~ ',
Liabilities: ~
Accounts payable $ - $ 143,247 ~ ~~~..
Customerdeposits - 10,145 ~~~~. '~
Sales tax - 68
Deferred revenue 91,941 95,741 ..
Totalliabilities 91,941 249,201 '~~~.. '~~
Fund balances:
Reserveforinvestment 2,430,573 2,430,573
Unreserved: '~~.. ~'~.
Designated for subsequent ~ ~ ~
year's expenditures - 1,318,081 , ,
Designated for compensated !. '~~~..
absences - 73,411 '~'
Undesignated - 43,645
Totalfund balances 2,430,573 3,805,710 '~~. ~~~..
Total liabllities and fund balan ces $ 2,522,514 $ 4,054,911 ~~~"
60
City of Kenai, Alaska
Combining Sta4ement of Revenues, Expenditures
And Changes in Fund Balance
Nonmajor Governmental Funds
For the Year Ended June 30, 2006
Revenues:
Intergovemmental Revenues
Charges for Services
Interest
Land Sales
Miscellaneous Revenues
Total Revenues .
Expenditures:
Water and Sewer Services
Social Welfare Services
Parks and Recreation
Streets
Generai Govemment
7otal Expenditures
Excess of Revenues Over(Under) Expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net changes in fund balance
Capital
Special Revenue Project
Kenai
Borough Council
Senior on Parks and
Citizens Aging Recreation
$ 222,781 $ 119,648 $ 564,641
52,843 - -
- 61,764 197,937
275,624 181,412 762,578
279,373
279,373
(3, 749)
25,000
(101,455)
(~6,455)
(80,204)
182,474 -
- 879,182
(1,062) (116,604)
1,062 286,548
- 169,944
Fund Balances - July 1 . 166,560 - 1,548
Fund Balances - June 30 $ 86,356 5 - $ 171,492
61
City of Kenai, Alaska
Combining Statement of Revenues, Expendi4ures
And Cha~ges in Fund Balance
Nonmajor Governmen4al Funds
For the Year Ended June 30, 2006 - continued
Capital Project
Water
and
Streets Sewer Miscellaneous
Revenues
Intergovemmental Revenues 5 11,749 ~ 51,295 ~ 26:708
Charges for Services - - -
Interest - - -
Land Sales - - -
Miscellaneous Revenues - - 1~50,852
Total Revenues 11,749 51,295 177,560
Expenditures:
Water and Sewer Services
Social Welfare Services
Parks and Recreation
Streets
General Government
Total Expenditures
51,453
15,732 - -
- - 392,495
15,732 51,453 392,495
Excess of Revenues Over (Under) Expenditures
Other financing sources (uses):
Transfers in
Transfers out
Total other financing sources (uses)
Net changes in fund balance
Fund Balances - July 1
Fund Balances - June 30
(3,983) (158) (214,935)
- - 220,393
- 220,393
(3,983) (158) 5,458
49,753 1,066,219 -
3 45,770 $ 1,066,061 $ 5,458
62
City of Kenai, Alaska
Combining Statement of Revenues, Expenditures
And Changes in Fund Balance
Nonmajor Governmental Funds
For the Year Ended June 30, 2006 - con4inued
Permanent
General
Government
Land Sales
Revenues:
Intergovernmental Revenues $ -
Charges for Services
Interest
Land Sales
Miscelianeous Revenues
Total Revenues
Expe~ditures:
Water and Sewer Services
Social Weifare Services
Parks and Recreation
Streets
General Govemment
Total Expenditures
Excess of Revenues Over (Under) Expenditures
Other financing sources{uses):
Transfers in
Transfers out
Total other financing sources (uses)
Netchangesinfund balance
Fund Balances - July t
Fund Balances - June 30
7,085
156,772
163,857
(7,085)
(7,085)
156,772
2,273,801
$ 2,430,573
63
Total
Nonmajor
Governmentai
Funds
$ 996,822
52,843
7,085
156,772
410,553
1,624,075
51,453
461,847
879.182
15,732
392,495
1, 800, 709
(176,634)
533,003
(108,540)
424,463
247.829
3,557,881
$ 3,805,710
CITY OF KENAI, ALASKA
KENA1 BOROUGN SENIOR CITIZENS SPECIAL REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN fUND BALANCE
BUDGET AND ACTUAI.
YEAR ENDED JUNE 30, 2006
Final
8udpet Actual
Reven~es:
Intergovemmental revenue:
Federai-ChoiceWaiver $ 702,727 $ 119,882
StateGrant - 5,131
StateGrant-MAAST 25,419 2,488
Kenai PeninsWa Borough grants 95,320 95,320
$ 223,466 $ 222,781
Misceilaneous revenues:
United Waygrants 20,112 20,112
Rents and leases 15,000 14,081
Donations 17,100 18,458
Olher - 192
Tofal miscellaneous revenues 52,212 52,843
Totairevenues 275,878 275,624
Expenditures • social welfare services:
Personai services 215,234 192,162
Supplies 37,883 38,969
Other services and charges 48,899 48,242
Tota~e~enditures 301,796 279,373
Excess of revenues over (under)
e~enditures (26,118) (3,748)
Other financing sources (uses):
Trensfers'm 25,000 25,000
Transfers out 106,041 (101,455)
Total other Bnancing sources (uses) 8",041 (76,455)
Net changes in fund balance $ 107,159 (80,204)
Fund baiance, July 1 166,560
Fund balance, June 30 $ 86,356
Variance With
Final Budget
Positive
Ne ative
$ 17,135
5,131
(22,951)
(919)
1, 358
192
631
(54)
23,072
(1,308)
657
22,423
22, 369
4, 586
4, 586
$ 26,955
64
CITY OF KENAi, ALASKA
COUNCIL ON AGING SPECIAI REVENUE FUND
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUNO BALANCE
BUDGET AND ACTUAL
YEAR ENDED JUNE 30, 2006
Variance With
Final Budget
Final Positive
Budnet Actual Ne ative
Revenues:
Iniergovernmentalrevenues:
State grants $ 108,769 $ 108,942 $ 173
Federal grants 12,000 10,706 (1,294)
Totalintergovernmentalrevenues 120,769 119,648 (1,121)
Misceilaneous revenues~.
in-kind support 10,850 10,850 -
Donations 50,000 50,914 914
Total miscellaneous revenues 60,850 61,764 914
Totalrevenues 181,619 181,412 (207)
Expenditures - social welfare services:
Social services:
Personai services 49,497 49,185 312
Other services and charges 9,225 5,425 3,800
Total social services 58,722 54,610 4,112
Congregate meais:
Personal services 26,386 26,100 286
Supplies 30,250 30,238 12
Otherservices and charges 5,425 5,423 2
Totalcongregate meals 62,061 61,761 300
Home delivered meals:
Personal services 30,390 30,224 166
Suppiies 2Q750 26,721 29
Total home delivered meals 57,140 56,945 195
Transportation - .
Personaiservices 5,060 4,874 786
Suppiies 4,284 4,284 -
TotalTransportation 9,344 9,158 186
Totalexpenditures 187,267 182,474 4,793
Excess of revenues over (under)
expenditures~ (5,648) (1,062) 4,586
Other financing sources (uses):
Transfersin 5,648 1,062 (4,586)
Transfers out - - -
Total otherfinancing sources(uses) 5,648 1,062 (4,586)
Net changes in fund balance $ - - $ -
Fund balance, July 1 -
Fund balance, June 30 $ -
65
CITY OF KENAI, ALASKA
GENERAL CaOVERNMENT LAND SALES PERMANENT FUND
SCHEDULE OF REVENUES, EXPENDITURES,
AND CHANGES IN FUND BALANCE
YEAR ENDED JUNE 30, 2006
Revenues:
Interest revenue
Land sales
Total Revenues
Excess of revenues
over expenditures
Other financing sources (Uses):
Exchange of Land (sale)
Exchange of~and(purchase)
Tranfers out
Totai Other financing sources (Uses):
Net change in fund balance
Fund baiances, July 1
Fund balances, June 30
Finai
Budaet Actual
$ 25,000 $ ~,085
- 156,7~2
25,000 163,857
25,000
(25,000)
(25,000)
163,857
80,000
(80,000)
(7,085)
(7,085)
$ -
156,772
2,273,801
$ 2,430,573
Variance Wi4h
Final Budget
Positive
Ne ative
$ (17.915)
156,772
138,857
138,857
80,000
(80,000)
17,915
17,915
$ 156,772
66
City of Kenai
Statistical Section
This paR of the City of Kenai's comprehensive an~ual financial report presents detailed information as a
context for understanding what the i~formation in the financial statements, note disdosures, and required
supplementary information says about the City's overail financial heaith. ~
Contents
Financial Trends
These schedules wntain trend information to help the reader understand how the City's financial
performance and well-being have changed over time.
Table I Net Assets by Component
Table II Changes in Net Assets
Table III Govemmentai Activities Tax Revenues by Source
Table (V Fund Baiances of Govemmentai Funds
Table V Changes in Fund Balances of Govemmental Funds
Table VI General Govemmental Tax Revenues by Source
Revenue Capacity
These schedules contain information to help the reader assess the City's property tax.
Table Vll Assessed Value and Estimated Actual Value of Taxable Property
Table VIII Property Tax Rates
Table IX Principai Property Taxpayers
Table X Property Tax Levies and Coliections
Debt Capacity
These sthedules present information to help the reader assess the affordability of the City's current
level of outstanding debt and the City's ability to issue additional debt in the future.
Table XI Ratios of Outstanding Debt by Type
Table XII Computatlon of Direct and Ovedapping Oebt
Table XIII ~egal Debt Margin Information
Demographic and Economic (nformation
These schedoles offer demographic and economic Indicators to help the reader understand the
environmentwithin which the Ciry's financial activities take place.
Table XIV Demogrephic and Economic Statistics -
Table XV Principal Empioyers
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the
information in the City's financial report relates to the services the government provides and the
activi4ies it performs.
Table XVI Full-time Equivalent City Government Employees by Function
Table XVII Operating indicators by Function
Tabie XVIII Capital Asset Statistics by Function
Sources: Uniess otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports for the reievant year.
Paqe
66
69
71
72
73
74
75
76
77
78
79
79
80
81
82
83
84
85
67
City of Kenai
Net Assets by Component
Last Pour Piscal Years
(accrual basis of accounting)
(amounts expressed in thousands)
TABLEI
2003 2004 2005 2006
Governmental Activities:
Invested in capitai assets, net of related debt $102,448 $101,414 $101,904 $102,452
Restricted 13,812 13,887 14,095 14,468
Unrestricted 16,857 17,060 16,681 15,699
Total govemmentai activites net amounts $133,117 $132,361 $132,680 $132,619
Business-type Activities:
invested in capital assets, net of related debt $5,587 $5,396 $5,196 $4,978
Restricted - - - -
Unrestricted 2,646 2,585 2,439 2,512
Total business-type activites net assets $8,233 $7,981 $7,635 $7,490
Primary government
invested in capitai assets, net of related debt $10$035 $106,810 $107,100 $107,430
Restricted 13,812 13,887 14,095 14,468
U nrestricted 19,503 19,645 19,120 18,211
Total primary govemment net assets $141,350 $140,342 $140,315 $140,109
68
City of Kenai
Changes in Net Assets
Last Four Fiscal Years
(accrual basis of accounting)
TABLE II
2003 2004 2005 2006
Expenses
Governmental activities:
General Govemment $1,113,592 $962,874 $1,147,616 $1,239,137
PublicSafety 3,192,795 3,116,020 3,991,072 4,365,553
PublicWorks 2,108,212 1,929,409 2,290,114 2,717,511
Parks, recreation, and cultural 1,447,484 1,247,500 1,396,794 1,463,932
Water and Sewer Services 1,945,498 1,774,176 1,840,935 1,957,032
Airport 2,084,722 2,195,047 ~ 2,403,729 2,511,021
InteresC on long-term debt 189,702 11,962 4,012 -
Social welfare services 452,778 416,885 459,641 505,230
Totai governmentai activities expenses 12,534,783 11,653,873 13,533,913 14,759,416
Business-type activities-
~ Airport Terminal
~ 503,431 453,410 477,593 506,006
Senior Housing 297,664 327,863 480,219 354,514
TotalBusiness-typeactivities 801,095 781,273 957,812 860,520
.. Totalprimarygovemmentexpenses $13,335,878 $12,435,146 $14,491,725 $15,619,936
Program Revenues
~
~. Governmental activities:
~ ~ ~ Charges for services:
GeneralGovernment 182,699 54,988 153,378 366,530
'~. Public Safety 265,210 345,632 338,981 315,570
.: Pubiic Works 418,776 242,056 312,140 592,461
Parks,recreation,and cuitural 208,771 120,408 193,296 193,186
, WaterandSewerServices 1,294,836 1,433,681 1,621,038 1,826,621
, Airport 431,159 418,927 504,503 463,795
" interest on long-term de6t 80,028 - - -
Social welfare services .191,828 187,614 11Q251 114,607
' Operating grants and contribution 792,646 802,467 794,847 1,035,382
.. Capital grants and contributions 794,157 1,010,956 2,544,629 2,442,601
Total govemmentai activiites program revenues: 4,660,110 4,616,729 6,573,063 7,350,753
Business-type activiites-
Airport Terminai 285,018 275,913 294,251 367,911
SeniorHOUSing 240,970 251,881 255,396 275,185
Operating grants and contribution - - - 800
Capital grants and coniributions - 30,720 - 2,737
Total business-type activiites program revenues: 525,988 558,514 549,647 646,633
Total primary government program revenues $5,186,098 $5,175,243 $7,122,710 $7,997,386
Net (expenses)/revenue
Governmentactivities $ (7,874,673) $ (7,037,144) $ (6,960,850) $ (7,40$663)
Business-typeactivities (275,107) (222,759) (408,165) (213,887)
Total primary govemment net expense ~ (8,149,780) $ (7,259,903) $ (7,369,015) $ (7,622,550}
69
City of Kenai
Changes in Net Assets
Last Four Fiscal Years
(accrual basis of accounting)
continued
General Revenues and Other Changes
in Net Assets
Governmental activivities:
Taxes:
Propertytaxes 1,424,644
Salestaxes 3,953,561
Sales of capitai assets -
investment eamings 988,431
Tranfers 69,946
Totai governmental activities 6,436,582
Business-type activities:
Investment earnings 84,766
Tranfers (69,946)
Total busines-type activities 14,820
Total primary government 6,451,402
Changes in Net Assets
Govemmentai activiites $ (600,562)
Busniess-type activities (207,939)
Total primary govemment S (808,501)
2004 2005
TABLE II
2006
2,026,789 1,900,788 2,024,502
3,~90,644 4,090,468 4,404,158
74,700 84,954 452,766
334,166 789,721 880,307
54,801 - -
6,281,100 6,865,931 7,761,733
25,899 62,765 68,411
(54,801) - -
(28,902) 62,765 68,411
6,252,198 6,928,696 7,830,144
$ (756,044) $ (94,919) $ 353,070
(251,661) (345,400) (145,476)
$ (1,007,705) $ (440,319) $ 207,594
70
City of Kenai
Table III
Governmental Activities Tax Revenues by Source
Last Four Fiscal Years
(accural basis of accounting)
FiscalYear Property Tax
2003 $1,424,644
2004 2,026,789
2005 1,900,788
2006 2,024,502
Sales Tax
$3,953,561
3,790,644
4,090,468
4,404,158
Total
71
$5,378,205
5,817,433
5,991,256
6,428,660
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75
City of Kenai
Property Tax Rates
Direct and Overlapping Governments (t)
Last Ten Fiscal Years
Ciry of Kenai
Fiscal Year Operating
1997 3.50
1998 3.50
1999 3.50
2000 3.50
2001 3.50
2002 3.50
2003 3.50
2004 5.00
2005 4.50
2006 4.50
Overiapping Rates
Kenai Peninsuala Borough
Operating Special District
Total
8.30 0.50 12.30
8.30 0.40 1220
8.00 0.40 11.90
8.00 0.40 11.90
7.50 0.40 11.40
7.00 0.40 10.90
6.50 0.40 10.40
6.50 0.50 12.00
6.50 1.10 12.10
fi.50 1.10 12.10
Tabie VIII
(1) Overlapping rates are those of the Kenai Peninsula Borough. The mili rates shown consist of two components:
~ the miii rate for Borough operations and for the special districts of Central Peninsula Hospital and the Coliege.
76
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~7 7
Kenai Peninsual Borough I :
Tab~e X
Property Tax Levies and Collecitons ~..
~ast Ten Fiscal Years i'.
Coliected with the Fiscal '
Year of the Levy Total Collections to Date
Fiscai Year Total Tax Collections in ;'
Ended Levyfor Percentage Subsequent Percentage '
June 30 Fiscal Year Amount of ~evy Years Amount of Levy
1997 1,113,126 1,091,$10 98.09% 21,316 1,113,126 100.00% ~~~
1998 1,143,986 1,108,289 96.88% 35,688 1,143,977 100.00% !
1999 1,194,290 1,141,018 95.54% 52,951 1,193,969 99.97%
2000 1,219,295 1,179,162 96.71% 39,431 1,218,593 99.94%
2001 1,227,127 1,197,700 97.60% 28,856 1,226,556 99.95%
2002 ~,247,375 1,215,353 97.43% 31,96~ 1,247,314 100.00°/a ~~ ~
2003 1,326,864 1,277,940 96.31% 48,757 1,326,697 99.99%
2004 1,931,200 1,905,232 98.66% 25,603 1,930,835 99.98% '
2005 1,792,988 1,771,395 98.80% 20,598 1,791,993 99.94%
2006 1,915,207 1,889,278 98.65% - 1,889,278 98.65%
78
Ci4y of Kenai
TABLE XI
Ratios of Outstanding Debt by Type
Las4 Ten Fiscal Years
Governmental
Actiivties
Estimated Percentage of
Percentage of Estimated Actual
General Personal Taxable Value of Debt Per Capita
Fiscal Year Obligation Bonds Income ` Property '"
1997 ~ 1,435,000 0.82% 0.37% 206
1998 1,155,000 0.66% 029% 164
1999 970,000 0.54% 0.23% 138
2000 795,000 0.40% 0.19% 113
2001 625,000 0.31% 0.14% 90
2002 460,000 0.22% 0.10% 64
2003 300,000 0.14% 0.06% 42
2004 150,000 0.07% 0.03% 22
2005 - 0.00% 0.00% -
2006 - 0.00% 0.00% -
Note: Detaiis regarding the City's outstanding debt can be found in the notes to the financial statements
' Personal income is estimated by using Kenai Peninsula Borough income to calculate per capita
income and total income for City of Kenai
" Population data can be found on Table 15
City of Kenai
Table XII
Computation of Direct and Overlapping Debt
June 30, 2006
Percentage
Applicable City of
to this Kenai's
Net Debt 6overnmental Share
Name of Governmental Unit Outstandinq Unit of Debt
City of Kenai, Alaska $ - 100.00% $ -
Kenai Peninsula Borough 21,874,000 9.44°/o 2,065,234
Central Peninsula Hospital 45,020,000 14.28% 6,426,621
Total Direct and Overiapping $ 66,894,000 $ 8 491 855
79
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City of Kenai
Kenai Area Principal Employers
Tabie XV
Rank
Emplo er Annual Average
Emplo ment
2004 2005 2004 2005
1 1 State of Alaska - Excludes Universit 264 272
2 2 Peak Oilfieid Services 258 250
3 3 Kenai Peninsula Borou h School District 241 235
7 4 Federal Government 157 211
4 5 A rium 221 196
5 6 Tesoro Alaska Petroleum Compan 169 171
6 7 Union Oil of Califomia - Unocal) 159 158
8 8 Home Depot 120 117
9 9 City of Kenai 114 ~ 15
10 10 Safeway 111 111
These employers are not necessarily located in the City of Kenai,
but are in close proximity to the City and are the empioyers that
have the largest economic impact on the City.
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