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CAFR FY2015KODIAK ISLAND BOROUGH KODIAK, ALASKA __________________________ COMPREHENSIVE ANNUAL FINANCIAL REPORT __________________________ JUJULY 1, 2014 - JUNE 30, 2015 PHOTO CREDIT: CARL ROYALL KODIAK ISLAND BOROUGH Comprehensive Annual Financial Report Year Ended June 30, 2015 Official Issuing Report Karleton G. Short Finance Director KODIAK ISLAND BOROUGH TABLE OF CONTENTS June 30, 2015 Page INTRODUCTORY SECTION: Letter of Transmittal 1-4 GFOA Certificate of Achievement 5 Organizational Chart 6 Elected Officials (Photographs) 7 Borough Officials 8 Map of Kodiak Island Borough 9 FINANCIAL SECTION: Independent Auditor’s Report 10-12 Management’s Discussion and Analysis 13-22 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 23 Statement of Activities 24 Fund Financial Statements: Balance Sheet – Governmental Funds 25 Reconciliation of Net Position Between the Government-Wide and the Fund Financial Statements 26 Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficits) – Governmental Funds 27 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficits) of Governmental Funds to the Statement of Activities 28 Statement of Net Position – Proprietary Funds – Business-Type Activities – Enterprise Funds 29 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds – Business-Type Activities – Enterprise Funds 30 Statement of Cash Flows – Proprietary Funds – Business-Type Activities – Enterprise Funds 31-32 Notes to Basic Financial Statements 33-82 Required Supplementary Information: Budgetary Comparison Schedule – General Fund 83-84 Budgetary Comparison Schedule – Special Revenue Fund – Education Support 85 Budgetary Comparison Schedule – Special Revenue Fund – Facilities 86 Notes to Required Supplementary Information – Budgetary Comparison Schedules 87 Schedule of Borough’s Proportionate Share of the Net Pension Liability – Public Employees’ Retirement System 88 Schedule of Borough’s Contributions – Public Employees’ Retirement System 89 KODIAK ISLAND BOROUGH TABLE OF CONTENTS, CONTINUED Page Additional Supplementary Information: Budgetary Comparison Schedule – Debt Service Fund – Education and Health 90 Nonmajor Governmental Funds: Combining Balance Sheet 91 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 92 Nonmajor Special Revenue Funds: Combining Balance Sheet 93-94 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) 95-96 Schedule of Revenues, Expenditures, and Changes in Fund Balance (Deficit) – Budget and Actual: Fire and Road Service Areas: Fire: Fire Protection Area No. 1 97 Womens Bay Fire Department 98 Kodiak Airport Fire District 99 Road: Monashka Bay Road Service Area 100 Service Area No. 1 101 Womens Bay Road Service Area 102 Bay View Road Service Area 103 Service Area No. 2 104 L.E.P.C. 105 Land Sales 106 Buildings and Grounds 107 Woodland Acres Street Light Service Area 108 Trinity Islands Street Light Service Area 109 Tourism Development 110 Mission Lake Tide Gate 111 Fern Fuller Trust 112 Trinity Islands Paving 113 Oil Spill Disaster 114 Nonmajor Capital Project Funds: Combining Balance Sheet 115 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 116 Enterprise Funds: Schedule of Revenues, Expenses, and Changes in Net Position – Budget and Actual: Municipal Solid Waste Collection and Disposal 117 Hospital Facilities 118 Kodiak Fisheries Research Center 119 911 Services Fund 120 (continued) KODIAK ISLAND BOROUGH TABLE OF CONTENTS, CONTINUED Supplementary Bond Schedules: Summary of Bonded Debt Service Requirements to Maturity 121 General Obligation Bond, 2008 Series A – Retirement Schedule 122 General Obligation Bond, 2011 Series One – Retirement Schedule 123 General Obligation Bond, 2012 Series A – Retirement Schedule 124 General Obligation Bond, 2012 Series B – Retirement Schedule 125 General Obligation Bond, 2013 Series One – Retirement Schedule 126 General Obligation Bond, 2014 Series One – Retirement Schedule 127 STATISTICAL SECTION: Statistical Section Index Net Position by Component – Last Ten Fiscal Years 128 Changes in Net Position – Last Ten Fiscal Years 129 Fund Balances of Governmental Funds – Last Six Fiscal Years 130 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years 131 General Revenues by Source – Last Ten Fiscal Years 132 Assessed and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years 133 Direct and Overlapping Property Tax Rates and Contributions to the School District – Last Ten Fiscal Years 134 Property Tax Levies and Collections – Last Ten Fiscal Years 135 Principal Property Tax Payers – Current Year and Ten Years Ago 136 Ratios of Net Bonded Debt– Last Ten Fiscal Years 137 Computation of Direct and Overlapping Debt 138 Legal Debt Margin Information – Last Ten Fiscal Years 139 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Governmental Expenditures and Transfers – Last Ten Fiscal Years 140 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years 141 Demographic and Economic Statistics – Last Ten Fiscal Years 142 Average Monthly Employment & Earnings – Last Ten Fiscal Years 143 Miscellaneous Statistical Data – Last Ten Fiscal Years 144 Property Value, Construction and Bank Deposits – Last Ten Fiscal Years 145 Full-Time Equivalent Borough Employees by Function/Program – Last Ten Fiscal Years 146 Operating Indicators by Function – Last Ten Fiscal Years 147 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years 148 INTRODUCTORY SECTION Kodiak Island Borough Finance Department 710 Mill Bay Road Kodiak, Alaska 99615 Phone (907) 486-9323 Fax (907) 486-9392 1 January 29, 2016 Members of the Assembly Kodiak Island Borough, Alaska State of Alaska statutes and local charter provisions require that all general-purpose local governments publish a complete set of financial statements presented in conformity with generally accepted accounting principles in the United States of America (GAAP) and audited in accordance with auditing standards generally accepted in the United States of America by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the Kodiak Island Borough (Borough) for the fiscal year ended June 30, 2015. This report consists of management’s representations concerning the finances of the Borough. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the Borough has established a comprehensive internal 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 Borough’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Borough’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. 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 Borough’s financial statements have been audited by Altman, Rogers & Co., a firm of licensed certified public accountants. The goal of the independent audit was to form an opinion on whether the financial statements of the Borough, for the fiscal year ended June 30, 2015, are presented fairly, in all material respects, in accordance with generally accepted accounting principles in the United States of America. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor issued an unqualified opinion on the Borough’s financial statements for the fiscal year ended June 30, 2015. The independent auditor’s report is presented as the first component of the financial section of this report. 2 The independent audit of the financial statements of the Borough was part of broader, State and federally mandated “Single Audits” designed to meet the special needs of State and 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 government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of State and federal awards. These reports are available in the Borough’s separately issued Single Audit Report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The Borough’s MD&A can be found immediately following the report of the independent auditors. Profile of the Government The Kodiak Island Borough lies at the western border of the Gulf of Alaska, approximately 40 miles south of the Kenai Peninsula. Kodiak Island is the largest island in Alaska and the second largest in the United States. About two-thirds of the Borough lies in the Kodiak archipelago with the remaining third on the Alaska Peninsula, across the Shelikof Strait from Kodiak Island. The Shelikof Strait is only 20 miles wide in places. The Borough encompasses 7,130 square miles, making it slightly smaller than the State of Massachusetts and serves a population of 13,824. The Borough was incorporated September 30, 1963, as a Second Class Borough by Chapter 146 Sessions, Laws of Alaska 1961, as amended. The powers granted to the Borough include area-wide powers and non area-wide powers. Area-wide powers are health, education, planning and zoning, emergency services planning, and assessment and collection of taxes for both the Borough and cities within the Borough. Non area-wide powers include parks and recreation, economic development, solid waste disposal, animal control, fire protection, street lighting and road maintenance and construction. A Manager form of government governs the Borough. The Mayor is elected at large while the Borough Assembly appoints the Manager. The Assembly is composed of seven members who are elected at-large. The Borough provides a full range of services including fire protection, the construction and maintenance of roads and other infrastructure, community and economic development, health, culture and recreation and solid waste collection and disposal. The Borough also is financially accountable for a legally separate school district which is reported separately within the Borough’s financial statements. Additional information on this legally separate entity can be found in the basic financial statements. The annual budget serves as the foundation for the Borough’s financial planning and control. All departments of the Borough are required to submit requests for appropriation to the Borough Manager. The Borough Manager uses these requests as the starting point for developing a proposed budget. The Borough Manager then presents this proposed budget to the Assembly for review by April 30. The assembly is required to hold public hearings on the proposed budget and to adopt a final budget by no later than June 10. The appropriated budget is prepared by fund and department. The Assembly makes appropriation transfers between funds and/or departments only 3 after the adoption of an ordinance. Borough staff may execute transfers between line items within a department. Amendments to the budget can occur anytime during the fiscal year through the Borough Assembly or administrative action. Expenditures may not legally exceed appropriations at the following levels: Capital Project Funds – project level, all other funds – department level. All funds, except Capital Project Funds, are budgeted on an annual basis encompassing a fiscal year. Budgets of Capital Project Funds generally encompass the period from start-up to project completion, which is generally greater than one year. Budget-to-actual comparisons are provided in this report for each individual governmental and proprietary fund for which an appropriated annual budget has been adopted. For the General Fund, the Education Support Special Revenue Fund and the Facilities Special Revenue Fund, this comparison is presented on pages 83-86 as part of required supplementary information. For governmental funds, other than the General Fund, the Education Support Special Revenue Fund and the Facilities Special Revenue Fund, this comparison is presented in the additional supplementary information subsection of this report, which starts on page 90. Also included in the additional supplementary information subsection are the Education and Health Debt Service Fund budget to actual. For proprietary funds, this comparison is presented in the proprietary funds subsection of this report, which starts on page 117. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the Borough operates. Local economy. The economic condition of the Kodiak Island Borough remains healthy. The main industries of the Borough are commercial fishing, logging, and tourism. The commercial fishing industry in Kodiak has been very strong. Severance taxes on seafood increased from $1,108,742 in FY2006 to $1,550,706 in FY2015, a 40% increase. Logging has increased over the last ten years from $62,740 to $103,111 but it is not a material revenue source. Tourism continues to be strong in Kodiak. Bed tax revenues have increased from $47,645 in FY2006 to $104,074 in FY2015, an increase of 118%. Considering today’s economy this is very good. To accommodate this demand, construction of fishing lodges, bed and breakfast accommodations and recreational facilities has increased along with an increase in charter boat and guide operations. Cruise ships continue to visit Kodiak. The Kodiak Island Borough is also home to the aerospace industry, which began with construction of the Kodiak Launch Complex in 1998. Owned by the Alaska Aerospace Development Corporation (AADC), a public corporation of the State of Alaska, the Kodiak Launch complex is the first complete launch facility built in the United States since the 1960’s and the first not owned by the Federal Government. The state-of-the-art facility includes a launch control center, payload processing facility, spacecraft assembly building and launch pad. It is designed to handle small to medium sized rockets used to launch low earth orbit satellites, as well as military, scientific and research missions. Kodiak is home to the largest U.S. Coast Guard base in the country, employing nearly 1,350 people and providing vital services to the marine industries that are an integral part of Kodiak’s make-up as well as making a significant contribution to the Kodiak community. 4 The seafood industry is by far the largest industry in the Kodiak Island Borough. This industry includes commercial fishing, fisheries research, management and enforcement, seafood processing, and maintenance and support services. Kodiak is home to the largest port in the State, housing over 500 commercial vessels and consistently ranks among the top ten ports in the United States in terms of amount and value of product delivered. In 2014, 477,100,000 pounds of sea food was landed with a value of $129,619,565. Employment varies throughout the year with July, August, and September being the peak months due to the increased activity in the fisheries and related businesses, and then declines in November and December when fishing quotas are reached. At June 30, 2015, the unemployment rate for the Kodiak Island Borough was 5.3%, which is .8% lower than last year’s rate of 6.1%. The average unemployment rate for the last 10 years has been 6.67%. Long-term financial planning. Every year the Borough adopts a strategic plan. In this plan the Borough decides what its goals and objectives are for the next year. The Borough breaks these goals out based on our Mandatory and Adopted powers. To view the complete Strategic plan you can visit our web site at www.kodiakak.us. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Borough for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2014. This was the twenty-fifth consecutive year that the Borough has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial 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. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the administration and finance department. We would like to express our appreciation to all members of the department who assisted and contributed to the preparation of this report. Credit must be given to the mayor and the assembly for their unfailing support for maintaining the highest standards of professionalism in the management of the Borough‘s finances. Respectfully submitted, Charles E. Cassidy Jr. Karleton G. Short Borough Manager Director of Finance 6 Electorate Borough ManagerBorough Attorney Engineering/Facilities Director Fire Chief Finance/MIS Director Borough MayorBorough Assembly CommunityDevelopmentDirector Secretary III Maintenance Mechanic KFRCMaintenance Engineer KFRCInterpretive Spec/Rec. EnvironmentalSpecialist Baler/Landfill Supervisor Baler Operator I Baler Operator II Baler Operator I Baler Operator I Baler Operator I HR Officer/ Executive Assistant Assessor Associate Planner Assistant Planner Code Enforcement Officer Secretary III Property Appraiser Appraiser Technician Appraiser Technician Assessment Clerk I GeneralAccountant Accounting TechAccounts Payable Accounting TechPayroll RevenueAccountant Secretary III IT Supervisor Programer/Analyst GIS Analyst Cashier Borough Clerk Assistant Clerk Deputy Clerk Kodiak Island BoroughFiscal Year 2015 Project Manager /Inspector Construction Insp/Engr. Maintenance Coordinator Secretary III Projects Assistant KFRCInterpretive Spec/Rec. Grant Writer/Spec Proj Support Resource Mgt Officer PC Tech II MAYOR AND ASSEMBLY MEMBERS 7 Carol Austerman, Larry LeDoux, At Large, 2016 At Large, 2017 Jerrol Friend, Mayor, 2016 Chris Lynch, Aaron Griffin, At Large, 2015 At Large, 2015 Rebecca Skinner, Frank Peterson, Jr., At Large, 2017 At Large, 2016 Dan Rohrer, Deputy Presiding Officer (DPO), At Large, 2017 8 KODIAK ISLAND BOROUGH KODIAK, ALASKA BOROUGH OFFICIALS YEAR ENDED JUNE 30, 2015 MAYOR Jerrol Friend ‘16 ASSEMBLY Carol Austerman ‘16 Dan Rohrer ‘17 Aaron Griffin ‘15 Larry LeDoux ‘17 Chris Lynch ‘15 Rebecca Skinner ‘17 Frank R. Peterson ‘16 MANAGEMENT Charles “Bud” Cassidy ...........................................................................................Borough Manager Karleton G. Short .................................................................................... Finance Director/Treasurer Robert Tucker .............................................................................. Engineering and Facilities Director Nova Javier, CMC ....................................................................................................... Borough Clerk Bill Roberts ............................................................................................................Borough Assessor Robert A. Himes ................................................................................................................. Fire Chief Levesque Law Group, LLC ...................................................... Borough Attorney (Contracted Firm) Stuart McDonald ............................................................................... Superintendent, School District Dria Bray-Holloway ............................................................................................ General Accountant Dora Cross ......................................................................................................... Revenue Accountant Paul Van Dyke .............................................................................................................. IT Supervisor Lauri Whiddon ................................................................................. HR Officer/Executive Assistant 9 FINANCIAL SECTION 10 425 G Street Suite 800 Anchorage, Alaska 99501 Phone 907-274-2992 Fax 907-274-2993 Offices in Juneau and Soldotna A Professional Corporation Independent Auditor’s Report The Honorable Mayor and Members of the Assembly Kodiak Island Borough Kodiak, Alaska Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Kodiak Island Borough, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the Borough’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility 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 United States 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 to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. The Honorable Mayor and Members of the Assembly Kodiak Island Borough 11 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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 activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Kodiak Island Borough, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Changes in Accounting Principle As discussed in Note 15 to the financial statements, in 2015 Kodiak Island Borough adopted new accounting guidance, GASB Statement No. 68, Accounting and Financial Reporting for Pensions - an Amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transactions for Contributions Made Subsequent to the Measurement Date – an Amendment of GASB 68. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis, Budgetary Comparison Schedules and notes to RSI, and Schedules of Borough’s Share of Net Pension Liabilities and Contributions for the Public Employees’ Retirement System on pages 13-22, 83-87, and 88-89, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. The Honorable Mayor and Members of the Assembly Kodiak Island Borough 12 Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Kodiak Island Borough’s basic financial statements. The information listed in the table of contents as “Additional Supplementary Information”, which includes Budgetary Comparison Schedule – Debt Service Fund – Education and Health, Nonmajor Governmental Funds: Combining Balance Sheet and Combining Statement of Revenues, Expenditures, and Changes in Fund Balances, Nonmajor Special Revenue Funds: Combining Balance Sheet, Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits), and Schedules of Revenues, Expenditures, and Changes in Fund Balance (Deficit) – Budget and Actual, Nonmajor Capital Project Funds: Combining Balance Sheet and Combining Statement of Revenues, Expenses and Changes in Fund Balances, Enterprise Funds: Schedule of Revenues, Expenditures, and Changes in Net Position – Budget and Actual, is presented for purposes of additional analysis and is not a required part of the basic financial statements. The Additional Supplementary Information listed above is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the Additional Supplementary Information listed above are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The Introductory Section, the Supplementary Bond Schedules, and the Statistical Section, as identified in the table of contents, have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 29, 2016 on our consideration of the Kodiak Island Borough's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering Kodiak Island Borough’s internal control over financial reporting and compliance. Anchorage , Alaska January 29, 2016 KODIAK ISLAND BOROUGH Management’s Discussion and Analysis June 30, 2015 13 As management of the Kodiak Island Borough, we offer readers of these financial statements this narrative overview and analysis of the financial activities of the Kodiak Island Borough for the fiscal year ended June 30, 2015. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages 1 - 4 of this report. Financial Highlights  The assets and deferred outflows of resources of the Kodiak Island Borough exceeded its liabilities and deferred inflows of resources at the close of FY2015 by $175,213,513. Of this amount, $48,712,308 (unrestricted net position) may be used to meet the Borough’s ongoing obligations to citizens and creditors.  In FY2015 the Borough’s total net position increased by $4,433,471, before the implementation of GASB 68 and 71.  Equity in our central treasury decreased $24,629,086. This decrease was mainly due to capital expenditures.  At the end of the current fiscal year, the Borough’s governmental funds reported combined fund balances of $51,183,619. This was a decrease of $21,135,241, compared to the net change in the prior year of a decrease of $3,497,624. At the end of FY2015, unassigned fund balance for the general fund was $3,181,342. This amounts to 43% of total general fund expenditures.  The Borough’s bonds payable decreased by $3,095,990. No new bonds were issued in FY2015. Overview of the Financial Statements Government wide Financial Statements The government wide financial statements are designed to provide readers with a broad overview of the Kodiak Island Borough’s finances, in a manner similar to a private sector business. The statement of net position presents information on all of the Kodiak Island Borough’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between them reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Kodiak Island Borough is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods. Both of the government wide financial statements distinguish functions of the Kodiak Island Borough that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the Kodiak Island Borough include general government, public safety, community and economic development, emergency preparedness, health and sanitation, education, culture and recreation, parks and recreation, service district maintenance, and primary and secondary education. The business-type activities of the Kodiak Island Borough include a solid waste collection and disposal facility, a Borough owned hospital, the Kodiak Fisheries Research Center, and a 911 emergency system. KODIAK ISLAND BOROUGH Management’s Discussion and Analysis, Continued 14 The government wide financial statements include not only the Kodiak Island Borough itself (known as the primary government), but also the legally separate school district for which the Kodiak Island Borough is financially accountable. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. The government wide financial statements can be found on pages 23-24 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Kodiak Island Borough, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the funds of the Kodiak Island Borough can be divided into two categories: governmental funds and proprietary funds. Governmental Funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government wide financial statements. However, unlike the government wide statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Kodiak Island Borough maintains 30 individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, the Education Support Special Revenue Fund, the Facilities Special Revenue Fund, the Education and Health Debt Service Fund, and the Kodiak High School Renovation Capital Project Fund, and the Renewal and Replacement Projects Capital Project Fund, which are all considered to be major funds. Data from the other nonmajor funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in the supplementary information section of this report. The Kodiak Island Borough adopts an annual appropriated budget for its General Fund, Special Revenue Funds and Debt Service Fund. Budgetary comparison statements have been provided for the funds to demonstrate compliance with this budget. The basic governmental financial statements can be found on pages 23-32 of this report. Proprietary Funds – The only Proprietary Fund type that the Kodiak Island Borough uses is enterprise funds. Enterprise funds are used to report the same functions presented as business type activities in the government wide financial statements. Proprietary Funds provide the same type of information as government wide financial statements, only in more detail. The Kodiak Island Borough uses enterprise funds to account for a solid waste collection and disposal facility, a Borough owned hospital leased to the Sisters of Providence d.b.a. Providence Kodiak Island Medical Center, the Borough owned Kodiak Fisheries Research Center leased to various tenants, and 911 phone charges and expenses. KODIAK ISLAND BOROUGH Management’s Discussion and Analysis, Continued 15 The Kodiak Island Borough adopts an annual appropriated budget for its proprietary funds. Budgetary comparison statements have been provided for the funds to demonstrate compliance with the budget. The basic Proprietary Fund financial statements can be found on pages 29-32 of this report. Notes to the Basic Financial Statements – The notes provide additional information that is essential to a full understanding of the data provided in the government wide and fund financial statements. The notes to the basic financial statements can be found on pages 33-82 of this report. Other Information – In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information including budgetary comparison schedules for the General Fund, the Education Support Special Revenue Fund and the Facilities Special Revenue Fund and Schedule of Borough’s Proportionate Share of the Net Pension Liability and Schedule of Borough’s Contributions for the Public Employees’ Retirement System. Required supplementary information can be found on pages 83-89 of this report. Government wide Financial Analysis Statement of Net Position As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the Kodiak Island Borough, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $175,213,513 at the close of FY2015, the most recent fiscal year. The net position of the component unit was a deficit of $5,688,776 at the close of FY2015. The largest portion of the Kodiak Island Borough’s net position ($126,501,205 or 72%) reflects its investment in capital assets (e.g. land, buildings, equipment and infrastructure) net of related debt. The Kodiak Island Borough uses these capital assets to provide services to citizens; consequently, these capital assets are not available for future spending. Although the Borough’s investment in capital assets is reported net of debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Governmental Business-typeActivitiesActivities Total20152014201520142015 2014Current and other assets $ 66,266,832 81,695,355 10,415,212 22,131,673 76,682,044 103,827,028 Capital assets 151,779,433 131,424,119 71,777,201 65,293,662 223,556,634 196,717,781 Deferred outflows of resources 254,498 — 63,624 — 318,122 — Total assets and deferred $ 218,300,763 213,119,474 82,256,037 87,425,335 300,556,800 300,544,809 outflows of resourcesLong-term liabilities $ 72,290,176 72,178,195 31,839,440 32,003,516 104,129,616 104,181,711 Other liabilities 19,641,122 14,027,297 1,222,216 6,923,352 20,863,338 20,950,649 Deferred inflows of resources 280,266 — 70,067 — 350,333 — Total liabilities and deferred $ 92,211,564 86,205,492 33,131,723 38,926,868 125,343,287 125,132,360 inflows of resourcesNet position:Net investment in capital assets $ 82,616,865 80,159,521 43,884,340 36,383,229 126,501,205 116,542,750 Unrestricted 43,472,334 46,754,461 5,239,974 12,115,258 48,712,308 58,869,719 Total net position $126,089,199 126,913,982 49,124,314 48,498,487 175,213,513 175,412,469 For more detailed information see the Statement of Net Position on page 23. The remaining balance of unrestricted net position, $48,712,308, may be used to meet the Borough’s ongoing obligations to citizens and creditors. KODIAK ISLAND BOROUGH Management’s Discussion and Analysis, Continued 16 Statement of Activities The following condensed table of changes in net position displays the revenues and expenses for the current and prior year. 2015 2014 2015 2014 2015 2014Revenues:Program revenues:Charges for services $ 668,169 701,999 6,638,675 5,267,289 7,306,844 5,969,288 Operating grants and contributions 4,305,691 4,077,510 32,649 — 4,338,340 4,077,510 Capital grants 3,002,933 6,651,737 213,753 5,538,038 3,216,686 12,189,775 General revenues:Property taxes 14,228,505 13,741,190 — — 14,228,505 13,741,190 Grants and entitlements not restrictedto specific programs 3,990,192 4,142,583 — — 3,990,192 4,142,583 Land sales 103,143 864,584 — — 103,143 864,584 Severance taxes 1,703,257 1,843,819 — — 1,703,257 1,843,819 Other 494,287 506,546 186,328 598,162 680,615 1,104,708 Investment earnings 574,227 1,106,717 80,825 178,851 655,052 1,285,568 Total revenues 29,070,404 33,636,685 7,152,230 11,582,340 36,222,634 45,219,025 Expenses:General government 5,637,239 6,990,640 — — 5,637,239 6,990,640 Public safety 663,145 751,637 — — 663,145 751,637 Community and economic development 886,613 964,377 — — 886,613 964,377 Emergency preparedness 31,628 12,487 — — 31,628 12,487 Health and social services 406,093 326,700 — — 406,093 326,700 Education, culture and recreation 335,854 218,013 — — 335,854 218,013 Parks and recreation 161,596 37,795 — — 161,596 37,795 Service district maintenance 534,376 631,572 — — 534,376 631,572 Primary and secondary education 14,316,695 14,523,509 — — 14,316,695 14,523,509 Interest on long-term debt 3,063,649 2,109,406 — — 3,063,649 2,109,406 Municipal solid waste collection anddisposal — — 2,468,058 2,080,864 2,468,058 2,080,864 Hospital facilities — — 1,763,636 1,740,525 1,763,636 1,740,525 Kodiak Fisheries Research Center — — 1,486,620 1,681,111 1,486,620 1,681,111 911 services — — 33,961 39,817 33,961 39,817 Total expenses 26,036,888 26,566,136 5,752,275 5,542,317 31,789,163 32,108,453 Change in net position before transfers 3,033,516 7,070,549 1,399,955 6,040,023 4,433,471 13,110,572 Transfers (152,357) (80,000) 152,357 80,000 — — Change in net position 2,881,159 6,990,549 1,552,312 6,120,023 4,433,471 13,110,572 Net position, beginning of year,as previously stated 126,913,982 119,923,433 48,498,487 42,378,464 175,412,469 162,301,897 Cummulative effect of a change in accounting principle (3,705,942) — (926,485) — (4,632,427) — Net position, beginning of year, as restated 123,208,040 119,923,433 47,572,002 42,378,464 170,780,042 162,301,897 Net position, end of year $ 126,089,199 126,913,982 49,124,314 48,498,487 175,213,513 175,412,469 Governmental activities Business-type activities Total Governmental activities increased the Kodiak Island Borough’s net position by $2,881,159, excluding the cumulative effect of a change in accounting principle. The major differences in revenues were an increase of $75,790 in operating and capital grants, an increase of $487,315 in property taxes due to increased assessed values and a decrease in investment earnings of $532,490 due to poor market conditions. There were some major changes in expenses including a decrease of $1,353,401 in general government due to the implementation of GASB 68 and 71, an increase of $954,243 in interest on long term debt due to issuance of general obligation bonds, and an increase of $123,801 in parks and recreation due to maintenance on Borough owned parks, and a decrease in service district maintenance due to lower snow removal costs because of below average snow fall. Business type activities increased the Kodiak Island Borough’s net position by $1,552,312, excluding the cumulative effect of a change in accounting principle. This increase was due to an increase of $1,371,386 in charges for services. Management’s Discussion and Analysis, Continued Current Year versus Prior Year Prior Year Expenses For more detailed information see the Statement of A Financial Analysis of the Government’s Funds As noted earlier, the Kodiak Island Borough uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental Funds – The focus of the Kodiak Island Borough’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Kodiak Island Borough’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the Kodiak Island Borougending fund balances of $51,183,619, a$276,666 of this total amount constitutes $7,610,272 is assigned fund balances and $ The main reasons for this decrease were$5,772,801 spent on debt service. Nofrom state and federal sources. 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 General government Public safety Community and economic development Emergency preparednessFY2015FY2014 KODIAK ISLAND BOROUGH Management’s Discussion and Analysis, Continued 17 Prior Year Expenses Governmental Activities e detailed information see the Statement of Activities on page 24. Financial Analysis of the Government’s Funds As noted earlier, the Kodiak Island Borough uses fund accounting to ensure and demonstrate compliance with The focus of the Kodiak Island Borough’s governmental funds is to provide information term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Borough’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the Kodiak Island Borough’s governmental funds reported combined , a decrease of $21,135,241 in comparison to the beginning of the year. of this total amount constitutes nonspendable fund balances, $42,631,561 is committed fund balancesand $665,120 is unassigned fund balances. reasons for this decrease were $21,673,656 spent on the Kodiak High School Renovation ProjectNo general obligation bonds were sold this year. $12,426,726 Emergency preparedness Health and social services Education, culture and recreation Parks and recreation Service district maintenance As noted earlier, the Kodiak Island Borough uses fund accounting to ensure and demonstrate compliance with The focus of the Kodiak Island Borough’s governmental funds is to provide information term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Borough’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. h’s governmental funds reported combined in comparison to the beginning of the year. s committed fund balances, Renovation Project and 12,426,726 was received Service district Primary and secondary education Interest on long term debt KODIAK ISLAND BOROUGH Management’s Discussion and Analysis, Continued 18 The General Fund is the main operating fund of the Kodiak Island Borough. At the end of the current fiscal year, nonspendable fund balance of the General Fund was $14,566, with an unassigned fund balance of $3,181,342 for a total fund balance of $3,195,908. As a measure of the General Fund’s liquidity, it may be useful to compare fund balance to total expenditures. Unassigned fund balance represents 43% of total General Fund expenditures. The fund balance of the Kodiak Island Borough’s General Fund decreased by $308,040 during the current fiscal year. While overall there was no significant change it is worth noting a decrease of $140,562 in severance taxes, an increase in State on-behalf PERS payment, a decrease of $140,065 in federal payments in lieu of taxes, an increase of $160,545 in assessing and an increase of $253,014 in community development. The fund balance of the Education Support Special Revenue Fund increased by $78,389 during the current fiscal year. The key factor leading to this change was increased property tax revenues. The fund balance of the Kodiak Island Borough’s Facilities Special Revenue Fund decreased by $121,231 during the current fiscal year. The key factor leading to this minimal decrease was decreased investment earnings compared to the prior year. The fund balance of the Fire Protection Area No. 1 Special Revenue Fund increased by $283,076. The key factors leading to this increase was not spending monies budgeted for personnel and capital outlay. The fund balance of the Womens Bay Fire Department Special Revenue Fund increased by $67,988. The key factors leading to this increase was not spending monies budgeted for capital outlay. The fund balance of the Monashka Bay Road Service Area Special Revenue Fund increased by $53,418. The key factors leading to this increase were lower snow removal and repair and maintenance costs. The fund balance of Service Area No. 1 Special Revenue Fund increased by $57,611. The key factor leading to this increase was lower snow removal costs. The fund balance of Womens Bay Road Service Area Special Revenue Fund increased by $23,783. The key factors leading to this increase were lower snow removal costs. The fund balance of Land Sales Special Revenue Fund increased $104,124. The key factor leading to this increase was principal payments from prior period land sales. The fund balance of Tourism Development Special Revenue Fund increased $43,730. The key factor leading to this increase was increased bed tax revenues. The fund balance of the Fern Fuller Trust Special Revenue Fund decreased $65,189. The key factor leading to this decrease was low interest earnings. The fund balance of the Kodiak Island Borough’s Renewal and Replacement Projects Capital Project Fund increased by $550,344 during the current fiscal year. The key factors leading to this were property taxes and lower construction costs. The fund balance of the Kodiak Island Borough’s Kodiak High School Renovation Capital Project Fund decreased by $21,165,301 during the current fiscal year. The key factor leading to this decrease was a budgeted use of assigned fund balance. Management’s Discussion and Analysis, Continued Proprietary Funds – The Kodiak Island Borough’s proprietary ffound in the government wide financial statements, but in more detail. Net position of the Municipal Solid Waste Collection and DHospital Facilities Enterprise Fund amounted to $Fund amounted to $10,989,098 and the The total increase in net position for the Municipal Solid Waste Collection and D$495,141. The total increase in net positionincrease in net position for the Kodiak Fisheries Research change in net position in the 911 Service four funds have already been addressed in the discussion of the Kodiak Island Borough’s business 2015 General Fund Budgetary Highlights Differences between the original budget and final amended budget can be briefly summarized as follows: The revenue budget for PERS on The expenditure budget for the Borough  The expenditure budget for the Borough clerk  The expenditure budget for the finance department increased by $ The expenditure budget for the manage The expenditure budget for the assessing department increased by $ The expenditure budget for the engineering/facilities department increased by $ The expenditure budget for the comm The expenditure budget for the economic development 0500,0001,000,0001,500,0002,000,0002,500,0003,000,000 Municipal Solid Waste Hospital Facilites KODIAK ISLAND BOROUGH Management’s Discussion and Analysis, Continued 19 The Kodiak Island Borough’s proprietary funds provide the same type of infowide financial statements, but in more detail. of the Municipal Solid Waste Collection and Disposal Enterprise fund amounted to $und amounted to $21,488,351, the Kodiak Fisheries Research Centernd the 911 Services Enterprise Fund amounted to $0. the Municipal Solid Waste Collection and Disposalposition for the Hospital Facilities Enterprise Fund was $for the Kodiak Fisheries Research Center Enterprise Fund waservice Enterprise Fund was $0. Other factors concerning the finances of these four funds have already been addressed in the discussion of the Kodiak Island Borough’s business 2015 Program Revenues versus Expenses Differences between the original budget and final amended budget can be briefly summarized as follows:on-behalf was increased $871,843. Borough manager department increased by $119,964.Borough clerk department increased by $70,637. The expenditure budget for the finance department increased by $124,792. The expenditure budget for the management information systems department increased by The expenditure budget for the assessing department increased by $113,647. The expenditure budget for the engineering/facilities department increased by $19,713community development department increased by $113,045economic development department increased by $32,587 Hospital Facilites Kodiak Fisheries Research Center 911 Service unds provide the same type of information und amounted to $16,646,865, the the Kodiak Fisheries Research Center Enterprise isposal Enterprise Fund was und was $224,638. The total was $832,533. The total Other factors concerning the finances of these four funds have already been addressed in the discussion of the Kodiak Island Borough’s business -type activities. Differences between the original budget and final amended budget can be briefly summarized as follows: 119,964. ment information systems department increased by $102,447. 19,713. 113,045. 32,587. Revenues Expenses KODIAK ISLAND BOROUGH Management’s Discussion and Analysis, Continued 20 Differences between the final amended budget and actual can be summarized as follows:  Real property taxes were $37,843 less than budgeted. This was due to a change in tax exemptions not reflected in the budget.  Severance taxes for fish were $199,294 less than budgeted. This was due to an estimation error in the harvest of wild fish.  Severance taxes for mining were $39,440 more than budgeted. This was due to an estimation error when the budget was developed.  Penalties and interest on taxes were $18,472 less than budgeted. This was due to fewer late tax payments.  Commercial passenger vessel tax was $25,000 less than budgeted. This was due to intentionally depositing the $13,925 earned the commercial passenger vehicle tax in the Tourism Development Special Revenue Fund. This amount was still $11,075 less than budgeted due to an estimation error when the budget was developed.  On-behalf PERS payment was $68,735 less than budgeted. This was due to an estimation error when the budget was amended.  Federal payments in lieu of taxes were $171,087 more than budgeted. This was due to an estimation error when the budget was developed.  Federal fish and wildlife revenue sharing were $42,376 more than budgeted. This was due to an estimation error when the budget was developed.  Building permit revenues were $12,355 over budget. This was due to an estimation error when the budget was developed.  Investment income was $68,330 less than budgeted. This was due to an overall decrease in the market in the current year.  The General Administration department came in $60,045 under budget. This was due to audit and insurance costs under budget.  The Legislative Department came in $35,118 under budget. This was due to travel and per diem costs under budget.  The Borough Manager department came in $220,376 under budget. This was due to vacant positions.  The Borough Clerk department came in $50,245 over budget. This was due to salary and retirement costs over the budget.  The Management Information Systems department came in $60,130 under budget. This was due to not purchasing all budgeted equipment.  The Community Development department came in $35,309 over budget. This was due to salary and retirement costs over the budget.  The Economic Development department came in $123,937. This was mainly due to vacant positions.  The Emergency Preparedness department was $148,033 under budget. This was due to contracted services coming in under budget.  The Parks and Recreation department came in $44,354 under budget. This was due to unviability of staff to supervise projects. KODIAK ISLAND BOROUGH Management’s Discussion and Analysis, Continued 21 Capital Assets and Debt Administration Capital Assets – The Kodiak Island Borough’s investment in capital assets for its governmental and business - type activities as of June 30, 2015, amounted to $223,556,634 (net of accumulated depreciation). This investment in capital assets includes, land, buildings and improvements, improvements other than buildings, machinery and equipment, and construction work-in-progress. The total net increase in the Kodiak Island Borough’s investments in capital assets for the current fiscal year was $26,838,893, which was mostly due to increases in construction work in process. The following table displays the capital assets (net of accumulated depreciation) for the current and prior year. Governmental Business-typeactivitiesactivities Total20152014201520142015 2014Artwork$ — — 16,091 16,091 16,091 16,091 Land 23,439,318 23,272,788 1,661,499 1,661,499 25,100,817 24,934,287 Construction work-in-progress 71,863,168 47,862,997 41,689,117 40,074,742 113,552,285 87,937,739 Buildings and improvements 42,038,730 44,588,590 24,987,023 20,387,522 67,025,753 64,976,112 Improvements other than 12,854,392 13,889,667 2,117,100 1,651,121 14,971,492 15,540,788 buildingsEquipment 862,559 978,816 381,159 535,380 1,243,718 1,514,196 Infrastructure 721,266 831,261 — — 721,266 831,261 Unclassified plant in service — — 925,212 967,267 925,212 967,267 $ 151,779,433 131,424,119 71,777,201 65,293,622 223,556,634 196,717,741 Additional information on the Kodiak Island Borough’s capital assets can be found in note 7 on pages 46-51 of this report. Long-Term Debt – At the end of the current fiscal year, the Kodiak Island Borough had total bonded debt outstanding of $66,495,000. This entire amount is backed by the full faith and credit of the Borough. The remainder of the Kodiak Island Borough’s debt represents loans and notes payable, compensated absences and landfill closure and post-closure costs. The following table displays the long-term debt for the current year. Governmental Business-typeactivitiesactivities Total20152014201520142015 2014General obligation bonds, including premium $ 73,131,566 76,227,556 — — 73,131,566 76,227,556 ADEC loans 31,002 37,042 — — 31,002 37,042 Compensated absences 272,562 328,529 — — 272,562 328,529 Landfill post closure care costs — — 3,188,507 3,968,123 3,188,507 3,968,123 Long term interfund borrowings — — 2,555,000 3,971,872 2,555,000 3,971,872 Notes payable — — 27,892,861 28,910,393 27,892,861 28,910,393 $ 73,435,130 76,593,127 33,636,368 36,850,388 107,071,498 113,443,515 The Kodiak Island Borough’s total debt decreased by $6,372,017 during the current fiscal year. This decrease was due to principal payments on bonds. Total general obligation bond principal payments during the year were $2,640,000. There is no general obligation debt limit imposed on the Kodiak Island Borough by the State Constitution, state statutes or the Borough’s charter or code. Additional information on the Kodiak Island Borough’s long-term debt can be found in note 9 on pages 55-65 of this report. KODIAK ISLAND BOROUGH Management’s Discussion and Analysis, Continued 22 Economic Factors and Next Year’s Budgets and Rates  At June 30, 2015, the unemployment rate for the Kodiak Island Borough was 5.3 %, which is .8 % lower than last year’s rate of 6.1%. The average unemployment rate for the last 10 years has been 6.75%.  Property tax revenues received are projected to increase in future years as the Kodiak Island Borough’s assessed valuation continues to increase.  The PERS (Public Employees Retirement System) rate has increased from 0% in FY2004 to 44.03% in FY2015. The State of Alaska set a ceiling of 22% on all political subdivisions and contributed the additional 22.03%. Requests for Information This financial report is designed to provide a general overview of the Kodiak Island Borough’s finances for all those with an interest. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Kodiak Island Borough, Director of Finance, 710 Mill Bay Kodiak, Alaska 99615. BASIC FINANCIAL STATEMENTS ComponentPrimary government unit Total reporting entityGovernmentalBusiness-type SchoolactivitiesactivitiesTotalDistrict 2015 2014Equity in central treasury $ 62,739,385 7,598,649 70,338,034 34,819 70,372,853 95,000,607 Due from primarygovernment — — — 11,238,882 11,238,882 8,708,251 Receivables:State of Alaska 2,037,225 5,921 2,043,146 2,907,006 4,950,152 7,793,041 Federal government 319,459 — 319,459 — 319,459 359,513 Property taxes, net of allowance of $15,828 243,038 — 243,038 — 243,038 245,933 Severance taxes 372,151 — 372,151 — 372,151 396,798 Interest 202,051 — 202,051 — 202,051 — Land sales contractsreceivable 287,564 — 287,564 — 287,564 549,230 Accounts and otherreceivables, net 51,393 993,616 1,045,009 51,182 1,096,191 395,776 Inventories — 797,932 797,932 599,202 1,397,134 1,099,667 Prepaid items 14,566 — 14,566 — 14,566 7,078 Restricted cash and equivalents — 1,019,094 1,019,094 — 1,019,094 1,649,188 Capital assets:Non-depreciable 95,302,486 43,366,707 138,669,193 — 138,669,193 112,888,117 Depreciable, net 56,476,947 28,410,494 84,887,441 974,104 85,861,545 84,574,059 Total assets 218,046,265 82,192,413 300,238,678 15,805,195 316,043,873 313,667,258 Deferred outflows of resources -Pension deferrals 254,498 63,624 318,122 1,041,395 1,359,517 — Total assets and deferredoutflows of resources $218,300,763 82,256,037 300,556,800 16,846,590 317,403,390 313,667,258 Liabilities:Accounts payable $2,891,025 1,141,209 4,032,234 1,158,189 5,190,423 6,555,736 Accrued compensationand related liabilities 429,960 99,856 529,816 3,325,235 3,855,051 4,243,032 (With summarized financial information for June 30, 2014)June 30, 2015Statement of Net PositionKODIAK ISLAND BOROUGH of Resources and Net PositionLiabilities, Deferred Inflows Outflows of ResourcesAssets and Deferred and related liabilities 429,960 99,856 529,816 3,325,235 3,855,051 4,243,032 Other accrued liabilities 940,722 84,664 1,025,386 — 1,025,386 1,041,033 Customer deposits 1,100 36,509 37,609 — 37,609 28,100 Unearned revenues 94,729 — 94,729 74,081 168,810 233,466 Due to component unit 11,238,882 — 11,238,882 — 11,238,882 8,708,251 Internal balances 140,022 (140,022) — — — — Noncurrent liabilities:Due within one year 3,904,682 900,000 4,804,682 753,044 5,557,726 5,682,028 Due in more thanone year 69,257,886 26,992,861 96,250,747 65,817 96,316,564 100,309,992 Net pension liability 3,032,290 758,072 3,790,362 15,345,742 19,136,104 — Landfill closure costs — 3,188,507 3,188,507 — 3,188,507 3,968,123 Total liabilities 91,931,298 33,061,656 124,992,954 20,722,108 145,715,062 130,769,761 Deferred inflows of resources -Pension deferrals 280,266 70,067 350,333 1,813,258 2,163,591 — Net position:Net investment in capital assets 82,616,865 43,884,340 126,501,205 877,700 127,378,905 117,161,650 Unrestricted 43,472,334 5,239,974 48,712,308 (6,566,476) 42,145,832 65,735,847 Total net position 126,089,199 49,124,314 175,213,513 (5,688,776) 169,524,737 182,897,497 Total liabilities, deferred inflowsof resources and net position $ 218,300,763 82,256,037 300,556,800 16,846,590 317,403,390 313,667,258 See accompanying notes to financial statements. 23 Program revenues Net (expense) revenue and changes in net positionOperatingPrimary government Component unitCharges for grants and Capital Governmental Business-type School Total reporting entityFunctions/Programs Expenses services contributions grants activities activities Total District 2015 2014Primary government:Governmental activities:General government $5,637,239 540,052 108,036 189,778 (4,799,373) — (4,799,373) — (4,799,373) (6,011,100) Public safety 663,145 13,601 16,632 — (632,912) — (632,912) — (632,912) (672,107) Community and economic development 886,613 — 33,768 684,077 (168,768) — (168,768) — (168,768) (732,497) Emergency preparedness 31,628 — — 1,596,596 1,564,968 — 1,564,968 — 1,564,968 (500) Health and sanitation department 406,093 — — — (406,093) — (406,093) — (406,093) (326,700) Education, culture and recreation 335,854 — — — (335,854) — (335,854) — (335,854) (218,013) Parks and recreation 161,596 — — 127,185 (34,411) — (34,411) — (34,411) (37,795) Service district maintenance 534,376 114,516 — — (419,860) — (419,860) — (419,860) (521,259) Primary and secondary education 14,316,695 — 262,175 405,297 (13,649,223) — (13,649,223) — (13,649,223) (7,853,030) Interest on long-term debt 3,063,649 — 3,885,080 — 821,431 — 821,431 — 821,431 1,238,111 Total governmental activities 26,036,888 668,169 4,305,691 3,002,933 (18,060,095) — (18,060,095) — (18,060,095) (15,134,890) Business-type activities:Municipal solid waste collection anddisposal 2,468,058 2,611,854 24,487 200,000 — 368,283 368,283 — 368,283 5,508,141 Hospital facilities 1,763,636 1,759,789 — 13,753 — 9,906 9,906 — 9,906 (375,525) Kodiak Fisheries Research Center 1,486,620 2,267,032 8,162 — — 788,574 788,574 — 788,574 170,211 911 service 33,961 — — — — (33,961) (33,961) — (33,961) (39,817) Total business-type activities 5,752,275 6,638,675 32,649 213,753 — 1,132,802 1,132,802 — 1,132,802 5,263,010 Total primary government 31,789,163 7,306,844 4,338,340 3,216,686 (18,060,095) 1,132,802 (16,927,293) — (16,927,293) (9,871,880) Component unit:School District $44,981,062 238,847 7,614,582 94,296 (37,033,337) (37,033,337) (40,263,953) KODIAK ISLAND BOROUGHStatement of ActivitiesYear ended June 30, 2015(With summarized financial information for the year ended June 30, 2014) School District $44,981,062 238,847 7,614,582 94,296 (37,033,337) (37,033,337) (40,263,953) General revenues:Property taxes 14,228,505 — 14,228,505 — 14,228,505 13,741,190 Grants and entitlements not restricted to specific programs 3,990,192 — 3,990,192 33,544,560 37,534,752 34,840,709 Land sales 103,143 — 103,143 — 103,143 864,584 Severance taxes 1,703,257 — 1,703,257 — 1,703,257 1,843,819 Support from primary government — — — 10,905,600 10,905,600 10,651,976 Other 494,287 186,328 680,615 45,586 726,201 2,228,382 Investment earnings 574,227 80,825 655,052 — 655,052 1,285,568 Transfers (152,357) 152,357 — — — — Total general revenues and transfers 20,941,254 419,510 21,360,764 44,495,746 65,856,510 65,456,228 Change in net position 2,881,159 1,552,312 4,433,471 7,462,409 11,895,880 15,320,395 Net position, at beginning of year, as previously stated 126,913,982 48,498,487 175,412,469 7,485,028 182,897,497 167,577,102 Cumulative effect of a change in accounting principle (3,705,942) (926,485) (4,632,427) (20,636,213) (25,268,640) — Net position, at beginning of year, as restated 123,208,040 47,572,002 170,780,042 (13,151,185) 157,628,857 167,577,102 Net position, at end of year $126,089,199 49,124,314 175,213,513 (5,688,776) 169,524,737 182,897,497 See accompanying notes to financial statements. 24 Educationand Health Kodiak High Renewal and OtherEducationDebt Service School Replacement GovernmentalAssetsGeneralSupportFacilitiesFundRenovationProjectsFunds 2015 2014Assets:Equity in central treasury $2,600,753 11,077,117 36,872,713 129,334 6,384,738 490,431 5,184,299 62,739,385 78,963,352 Receivables:State of Alaska 11,777 52,162 — 41,904 304,386 — 1,626,996 2,037,225 611,868 Federal government — — — — — — 319,459 319,459 359,513 Property taxes, net ofallowance of $15,828 24,096 168,195 — 22,593 — 7,661 20,493 243,038 245,933 Severance taxes 372,151 — — — — — — 372,151 396,798 Interest 202,051 — — — — — — 202,051 514,945 Land sales contracts — — — — — — 25,464 25,464 35,465 Accounts and otherreceivables, net 17,229 — — — — — 34,164 51,393 52,257 Prepaid items 14,566 — — — — — — 14,566 1,459 Due from other funds 761,311 — 44,713 — — — — 806,024 383,789 Land sales contracts, due after one year — — — — — — 262,100 262,100 513,765 Advances to other funds — — 2,555,000 — — — — 2,555,000 6,716,900 Total assets $ 4,003,934 11,297,474 39,472,426 193,831 6,689,124 498,092 7,472,975 69,627,856 88,796,044 Liabilities:Accounts payable 422,848 11,877 — 6,604 2,228,045 7,306 214,345 2,891,025 3,611,343 Accrued compensation Liabilities, Deferred Inflows of Resources,and Fund Balances (Deficit) KODIAK ISLAND BOROUGH Totals Governmental Funds Special Revenue Funds (With summarized financial information for June 30, 2014)June 30, 2015 Balance Sheet Capital Project Funds Accrued compensationand related liabilities 157,398 — — — — — — 157,398 184,241 Customer deposits — — — — — — 1,100 1,100 1,100 Due to component unit — 11,238,882 — — — — — 11,238,882 8,708,251 Due to other funds — — — — — 99,398 756,017 855,415 329,626 Advances from other funds — — — — — 2,645,631 — 2,645,631 2,745,028 Unearned revenues — — — — — — 94,729 94,729 134,815 Total liabilities 580,246 11,250,759 — 6,604 2,228,045 2,752,335 1,066,191 17,884,180 15,714,404 Deferred inflows of resources:Unavailable revenues 227,780 — 44,713 — — — 287,564 560,057 762,780 Total liabilities and deferredinflows of resources 808,026 11,250,759 44,713 6,604 2,228,045 2,752,335 1,353,755 18,444,237 16,477,184 Fund balances (deficit):Nonspendable 14,566 — — — — — 262,100 276,666 515,224 Committed — 46,715 39,427,713 187,227 — — 2,969,906 42,631,561 42,355,129 Assigned — — — — 4,461,079 — 3,149,193 7,610,272 28,875,499 Unassigned 3,181,342 — — — — (2,254,243) (261,979) 665,120 573,008 Total fund balances (deficit)3,195,908 46,715 39,427,713 187,227 4,461,079 (2,254,243) 6,119,220 51,183,619 72,318,860 Total liabilities, deferred inflowsof resources and fundbalances (deficit)$4,003,934 11,297,474 39,472,426 193,831 6,689,124 498,092 7,472,975 69,627,856 88,796,044 See accompanying notes to financial statements. 25 Amount reported as fund balances on the governmental funds balance sheet $ 51,183,619 Amounts reported for governmental activities in the statement of netposition are different because:Capital assets used in governmental activities are not financialresources and, therefore, are not reported in the funds.151,779,433 Long-term receivables, delinquent property taxes and loans arenot available to pay for current-period expenditures and,therefore, are unavailable in the funds:Property taxes $227,780 Interest receivable 44,713 Notes receivable - land sales 287,564 560,057 Long-term liabilities, including bonds payable, are not due andpayable in the current period and therefore are not reportedin the funds:General obligation bonds payable (66,495,000) Bond premium (6,636,566) ADEC loans (31,002) Accrued interest expense (940,722) Compensated absences (272,562) (74,375,852) Changes in deferred inflows and outflows of resources are the resultsof timing differences in the acturial report:Pension related assets in the current fiscal year are presented KODIAK ISLAND BOROUGHReconciliation of Net Position Between the June 30, 2015Government-Wide Financial Statements and the Fund Financial Statements Pension related assets in the current fiscal year are presentedas deferred outflows of resources 254,498 Pension related liabilities in the current fiscal year are presentedas deferred inflows of resources (280,266) Proportionate share of the collective net pension liability (3,032,290) Net position of governmental activities $ 126,089,199 See accompanying notes to financial statements. 26 Educationand Health Kodiak High Renewal and OtherEducationDebt Service School Replacement GovernmentalGeneralSupportFacilitiesFundRenovationProjectsFunds 2015 2014Revenues:Property taxes and assessments $235,029 10,721,928 — 1,158,728 — 632,035 1,343,783 14,091,503 13,656,771Transient accomodations tax — — — — — — 104,074 104,074 75,142Severance taxes 1,703,257 — — — — — — 1,703,257 1,843,819Intergovernmental:State sources 3,569,772 262,175 — 3,885,080 405,297 — 2,210,415 10,332,739 12,938,158Federal sources 1,593,528 — — — — — 500,459 2,093,987 1,933,672Charges for services 2,647 — — — — — 550,006 552,653 589,436Licenses, permits and fees 86,916 — — — — — 28,600 115,516 112,563Investment income (18,330) — 468,769 509 103,058 178 29,493 583,677 1,115,466Rental— — — — — — 20,550 20,550 — Other 16,821 — — — — — 926 17,747 50,556Total revenues 7,189,640 10,984,103 468,769 5,044,317 508,355 632,213 4,788,306 29,615,703 32,315,583Expenditures:Current:General government 5,354,059 — — 6,312 — 126,747 846,606 6,333,724 5,449,505Public safety 109,415 — — — — — 414,754 524,169 576,720Community andeconomic development 1,078,985 — — — — — 75,000 1,153,985 964,377Emergency preparedness 29,128 — — — — — — 29,128 9,987Health and social services 406,093 — — — — — — 406,093 326,700Education, cultureand recreation 24,856 — — — — — — 24,856 95,625Parks and recreation 161,596 — — — — — — 161,596 37,795Service district maintenance — — — — — — 534,376 534,376 631,572Primary and secondary education 195,000 10,905,714 — — — — — 11,100,714 10,845,220Capital outlay:Schools — — — — 21,673,656 — 310,999 21,984,655 34,872,235General— — — — — 277,122 2,629,896 2,907,018 1,521,996Debt service:Principal — — — 2,646,040 — — — 2,646,040 3,645,950Interest— — — 3,120,449 — — 1,128 3,121,577 2,109,406Debt issuance costs — — — — — — — — 89,835Total expenditures 7,359,132 10,905,714 — 5,772,801 21,673,656 403,869 4,812,759 50,927,931 61,176,923Excess (deficiency) of revenuesover (under) expenditures (169,492) 78,389 468,769 (728,484) (21,165,301) 228,344 (24,453) (21,312,228) (28,861,340)Other financing sources (uses): TotalsSpecial Revenue Funds Capital Project Funds KODIAK ISLAND BOROUGHStatement of Revenues, Expenditures and Changesin Fund Balances (Deficits)Governmental FundsYear ended June 30, 2015(With summarized financial information for the year ended June 30, 2014) Other financing sources (uses):Bond issuance — — — — — — — — 22,660,000Premium on bonds issued — — — — — — — — 2,427,432Land sale proceeds — — — — — — 329,344 329,344 356,284Transfers in — — — 250,000 — 322,000 70,691 642,691 992,365Transfers out (138,548) — (590,000) — — — (66,500) (795,048) (1,072,365)Net other financingsources (uses)(138,548) — (590,000) 250,000 — 322,000 333,535 176,987 25,363,716 Change in fund balances (308,040) 78,389 (121,231) (478,484) (21,165,301) 550,344 309,082 (21,135,241) (3,497,624) Fund balances (deficits), at beginning of year 3,503,948 (31,674) 39,548,944 665,711 25,626,380 (2,804,587) 5,810,138 72,318,860 75,816,484 Fund balances (deficit), at end of year $ 3,195,908 46,715 39,427,713 187,227 4,461,079 (2,254,243) 6,119,220 51,183,619 72,318,860 See accompanying notes to financial statements. 27 KODIAK ISLAND BOROUGHReconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) Year ended June 30, 2015 Change in fund balances – total governmental funds $ (21,135,241) Amounts reported for governmental activities in the statement ofactivities are different because:Governmental funds report capital outlays as expenditures.However, in the Statement of Activities the cost of those assetsis allocated over their estimated useful lives and reported asdepreciation expense:Capital outlay $24,365,620 Depreciation expense (3,972,336) 20,393,284 Governmental funds only report the revenue from the sale ofassets to the extent proceeds are received from the sale. Inthe Statement of Activities, a gain or loss is reported for eachsale. The net effect of transactions involving capital assetsis to decrease net position.Cost of assets sold (37,970) Accumulated depreciation of assets sold — (37,970) Certain revenues in the statement of activities do not providecurrent financial resources and are reported as unearned orunavailable revenues in the funds:Property tax 227,780 Interest income 44,713 Land sale proceeds 287,564 560,057 Certain revenues that were earned in a prior year providecurrent financial resources:Accrued property tax (194,852) Accrued interest income (54,163) of Governmental Funds to the Statement of Activities Accrued interest income (54,163) Land sale contracts (513,765) (762,780) The issuance of long-term debt provides current financialresources to governmental funds, while the repayment of theprincipal of long-term debt consumes the current financialresources of governmental funds. Neither transaction, however,has any effect on net position. Also, governmental funds do notreport the accrual of interest expense on debt when it is notpayable from currently available resources:Interest expenditures applied to accrued interest 57,928 Principal repayments 2,646,040 Bond premium amortization 455,990 3,159,958 Some expenses reported in the Statement of Activities do notrequire the use of current financial resources and, therefore,are not reported as expenditures in governmental funds:Compensated absences, net change 55,967 Decrease in the collective share of the unfunded pension liability 344,436 Amortization of deferred outflows and inflows of resources 65,843 Changes in deferred inflows and outflows of resources are the resultof timing difference in the actuarial report. Contributions to the pension plan in the current fiscal year are included in the fund financial statements and are presented as changes in deferred outflows of resources in the government-wide financial statements 237,605 Change in net position of governmental activities $2,881,159 See accompanying notes to financial statements. 28 Municipal Kodiak OtherSolid Waste Fisheries NonmajorCollection and Hospital Research Enterprise TotalsDisposalFacilitiesCenterFund2015 2014Current assets:Equity in central treasury $1,285,860 2,660,539 3,652,250 — 7,598,649 15,488,823 Restricted cash and equivalents 302,501 716,593 — — 1,019,094 1,649,188 Customer receivables 321,482 630,095 36,745 5,294 993,616 307,053 Accounts receivable -State of Alaska — 5,921 — — 5,921 938,276 Prepaids — — — — — 2,679 Due from other funds — 99,398 — — 99,398 — Total current assets 1,909,843 4,112,546 3,688,995 5,294 9,716,678 18,386,019 Inventories 520,925 277,007 — — 797,932 597,932 Capital assets:Non-depreciable 26,473,223 15,580,166 1,313,318 — 43,366,707 41,752,332 Depreciable, net 2,666,212 16,897,319 8,846,963 — 28,410,494 23,541,290 Total capital assets 29,139,435 32,477,485 10,160,281 — 71,777,201 65,293,622 Advances to other funds — 2,645,631 — — 2,645,631 — Total noncurrent assets 29,660,360 35,400,123 10,160,281 — 75,220,764 65,891,554 Pension deferrals 47,718 — 15,906 — 63,624 — Total assets and deferred outflows of resources $31,617,921 39,512,669 13,865,182 5,294 85,001,066 84,277,573 Current liabilities:Accounts payable $1,057,861 39,641 43,707 — 1,141,209 1,852,359 Customer deposits 36,509 — — — 36,509 27,000 Accrued compensation and KODIAK ISLAND BOROUGH Deferred outflows of resources - of Resources and Net Position Proprietary Funds - Business - Type Activities - Enterprise FundsStatement of Net Position (With summarized financial information for June 30, 2014)June 30, 2015 Outflows of ResourcesAssets and Deferred Liabilities, Deferred Inflows Accrued compensation andrelated liabilities 74,947 — 24,909 — 99,856 100,575 Other accrued liabilities 83,944 — 720 — 84,664 42,383 Current portion of advancesfrom other funds — — 575,000 — 575,000 622,723 Current portion of notes payable 275,000 625,000 — — 900,000 875,000 Due to other funds — — 44,713 5,294 50,007 54,163 Total current liabilities 1,528,261 664,641 689,049 5,294 2,887,245 3,574,203 Noncurrent liabilities:Notes payable 9,633,184 17,359,677 — — 26,992,861 24,887,611 Advances from other funds — — 1,980,000 — 1,980,000 3,349,149 Accrual for landfill closureand postclosure costs 3,188,507 — — — 3,188,507 3,968,123 Net pension liability 568,554 — 189,518 — 758,072 — Total noncurrent liabilities 13,390,245 17,359,677 2,169,518 — 32,919,440 32,204,883 Total liabilities 14,918,506 18,024,318 2,858,567 5,294 35,806,685 35,779,086 Deferred inflows of resources -Pension deferrals 52,550 — 17,517 — 70,067 — Net position:Net investment in capital assets 19,231,251 14,492,808 10,160,281 — 43,884,340 36,383,229 Unrestricted (deficit)(2,584,386) 6,995,543 828,817 — 5,239,974 12,115,258 Total net position 16,646,865 21,488,351 10,989,098 — 49,124,314 48,498,487 Total liabilities, deferred inflowsof resources and net position $ 31,617,921 39,512,669 13,865,182 5,294 85,001,066 84,277,573 See accompanying notes to financial statements. 29 KODIAK ISLAND BOROUGHStatement of Revenues, Expenses, and Changes in Net Position Year ended June 30, 2015(With summarized financial information for the year ended June 30, 2014) Municipal Kodiak OtherSolid Waste Fisheries NonmajorCollection and Hospital Research Enterprise TotalsDisposalFacilitiesCenterFund2015 2014Operating revenues:Charges for services:Solid waste disposal $2,611,854 — — — 2,611,854 2,265,967 Lease income — 1,759,789 2,267,032 — 4,026,821 3,001,322 Other 11,335 — — 33,961 45,296 79,659 Total operating revenues 2,623,189 1,759,789 2,267,032 33,961 6,683,971 5,346,948 Operating expenses:Personnel services 824,689 30,049 274,049 3,000 1,131,787 1,249,237 Contracted services 139,005 — — — 139,005 185,284 Maintenance and repairs 105,439 — 5,903 — 111,342 142,453 Depreciation 269,276 842,644 636,139 — 1,748,059 1,782,398 General and administration 247,857 — 338,418 — 586,275 618,343 Miscellaneous — — 43,811 92 43,903 52,979 Telephone services — — — 30,869 30,869 36,719 Recycling services 222,456 — — — 222,456 214,876 Contributions 38,909 — — — 38,909 39,106 Total operating expenses 1,847,631 872,693 1,298,320 33,961 4,052,605 4,321,395 Operating income 775,558 887,096 968,712 — 2,631,366 1,025,553 Nonoperating revenues (expense):Intergovernmental -State of Alaska on-behalf payment 24,487 — 8,162 — 32,649 — Contribution to Providence Hospital — (108,000) — — (108,000) (108,000) Investment income 23,929 34,411 22,485 — 80,825 178,851 Bond premium amortization 27,211 113,821 — — 141,032 141,032 Landfill closure and postclosure costs (422,016) — — — (422,016) 377,471 Proprietary Funds - Business - Type Activities - Enterprise Funds Interest expense (198,411) (782,943) (188,300) — (1,169,654) (1,112,922) Total nonoperating income (expense)(544,800) (742,711) (157,653) — (1,445,164) (523,568) Income before capitalcontributions and transfers 230,758 144,385 811,059 — 1,186,202 501,985 Capital contributions 200,000 13,753 — — 213,753 5,538,038 Transfers in 64,383 66,500 21,474 — 152,357 80,000 Change in net position 495,141 224,638 832,533 — 1,552,312 6,120,023 Net position, beginning, as previously stated 16,846,588 21,263,713 10,388,186 — 48,498,487 42,378,464 Cumulative effect of a change in accountingprinciple (694,864) — (231,621) — (926,485) — Net position,beginning, as restated 16,151,724 21,263,713 10,156,565 — 47,572,002 42,378,464 Net position, at end of year $16,646,865 21,488,351 10,989,098 — 49,124,314 48,498,487 See accompanying notes to financial statements. 30 Municipal Kodiak OtherSolid Waste Fisheries NonmajorCollection and Hospital Research Enterprise TotalsDisposalFacilitiesCenterFund2015 2014Cash flows from operating activities:Cash received from customers $6,619,618 1,162,326 2,270,333 34,777 10,087,054 6,671,706 Payments to suppliers (2,604,217) 33,812 (632,058) (67,680) (3,270,143) (5,021,937) Payments to employees (917,745) (30,049) (281,470) (3,000) (1,232,264) (1,243,749) Net cash provided (used) byoperating activities 3,097,656 1,166,089 1,356,805 (35,903) 5,584,647 406,020 Cash flows from noncapital financing activities:State sources - grants 200,000 13,753 — — 213,753 5,538,038 Contribution to Providence Hospital — (108,000) — — (108,000) (108,000) Internal activity - payments to/from other funds — (2,745,029) (9,450) 5,294 (2,749,185) (8,749) Transfers in 64,383 66,500 21,474 — 152,357 80,000 Net cash provided (used) by noncapitalfinancing activities 264,383 (2,772,776) 12,024 5,294 (2,491,075) 5,501,289 Cash flows from capital and relatedfinancing activities:Acquisition and construction of capital assets (7,367,591) (582,102) (281,945) — (8,231,638) (19,284,233) Interest paid on notes payable andinterfund borrowings (171,200) (555,301) (188,300) — (914,801) (1,085,711) Principal payments on long-term notes payableand interfund borrowing (298,711) (876,873) (540,000) — (1,715,584) (866,721) Proceeds from issuance of notes payable — (832,642) — — (832,642) 3,147,782 Net cash provided (used) by capital andrelated financing activities (7,837,502) (2,846,918) (1,010,245) — (11,694,665) (18,088,883) Cash flows from investing activities:Interest and dividends received 23,929 34,411 22,485 — 80,825 178,851 Net change in cash andcash equivalents (4,451,534) (4,419,194) 381,069 (30,609) (8,520,268) (12,002,723) Cash and equivalents, at beginning of year 6,039,895 7,796,326 3,271,181 30,609 17,138,011 29,140,734 Proprietary Funds - Business - Type Activities - Enterprise Funds (With summarized financial information for the year ended June 30, 2014)Year ended June 30, 2015 Statement of Cash FlowsKODIAK ISLAND BOROUGH Cash and equivalents, at end of year $ 1,588,361 3,377,132 3,652,250 — 8,617,743 17,138,011 Reconciliation of cash and cash equivalentsto the Statement of Net Position:Equity in central treasury $ 1,285,860 2,660,539 3,652,250 — 7,598,649 15,488,823 Restricted cash and equivalents 302,501 716,593 — — 1,019,094 1,649,188 $1,588,361 3,377,132 3,652,250 — 8,617,743 17,138,011 (continued) 31 KODIAK ISLAND BOROUGHStatement of Cash Flows Municipal Kodiak OtherSolid Waste Fisheries NonmajorCollection and Hospital Research Enterprise TotalsDisposalFacilitiesCenterFund2014 2013Reconciliation of operating income (loss) to netcash provided by operating activities:Operating income (loss)$775,558 887,096 968,712 — 2,631,366 1,025,553 Adjustments to reconcile operating income (loss)to net cash provided by operating activities:Depreciation 269,276 842,644 636,139 — 1,748,059 1,782,398 Pension expense (96,991) — (32,330) — (129,321) — Accrual for landfill closure and postclosure costs (1,201,632) — — — (1,201,632) (1,044,056) Changes in assets and liabilities that provided (used) cash:(Increase) decrease in assets:Customer receivables (60,585) (630,095) 3,301 816 (686,563) (58,798) Accounts receivable - State of Alaska 4,047,505 32,632 — — 4,080,137 1,370,056 Prepaids 2,679 — — — 2,679 (2,484) Inventories (200,000) — — — (200,000) (320,925) Increase (decrease) in liabilities:Accounts payable (493,159) 33,812 (215,083) (36,719) (711,149) (2,311,933) Customer deposits 9,509 — — — 9,509 — Accrued compensation 3,935 — 24,909 — 28,844 5,488 Other accrued liabilities 41,561 — (28,843) — 12,718 (52,779) Unearned revenues — — — — — 13,500 Net cash provided (used) by operating activities $3,097,656 1,166,089 1,356,805 (35,903) 5,584,647 406,020 See accompanying notes to financial statements. Proprietary Funds - Business - Type Activities - Enterprise Funds, (Continued)Year ended June 30, 2015(With summarized financial information for the year ended June 30, 2014) 32 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements Year Ended June 30, 2015 33 (1) Summary of Significant Accounting Policies (a) Reporting Entity The Kodiak Island Borough (the Borough), Alaska, was organized to perform the municipal duties allowed by Alaska Statutes and as directed by its residents. As required by accounting principles generally accepted in the United States of America, these financial statements present the government and its component unit, an entity for which the government is considered to be financially accountable. The discretely presented component unit is reported in a separate column in basic financial statements to emphasize it is legally separate from the government. The Borough reviewed its relationship with other organizations and determined that the following organization is a component unit. Discretely Presented Component Unit The Borough has delegated the operating responsibility for public education to the Kodiak Island Borough School District (School District). In accordance with statutes, the Borough retains ownership of the education related capital assets and incurs the debt, if necessary, to finance the acquisition and construction of school facilities. The Borough Assembly approves the total annual budget of the School District and may, during the year, increase the total appropriation. Complete financial statements for the component unit may be obtained at the entity’s administrative offices for the Kodiak Island Borough School District. Kodiak Island Borough School District 722 Mill Bay Road Kodiak, Alaska 99615 (b) Government-Wide and Fund Financial Statements The government wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government and its component unit. For the most part, the effect of inter-fund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from the legally separate component unit for which the primary government is financially accountable. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 34 The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds, if applicable, are reported as separate columns in the fund financial statements. Deferred inflows of resources are the acquisition of fund balance / net position by the Borough that are applicable to a future reporting period. Deferred outflows of resources are the consumption of fund balance / net position that are applicable to to a future reporting period. (c) Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period except for grant revenues which are recognized when the related expenditure is incurred irrespective of when the cash is received. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the government. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 35 The government reports the following major governmental funds: The General Fund is the government’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Education Support Special Revenue Fund accounts for property taxes and assessments dedicated to school district support activity. The Facilities Special Revenue Fund accounts for the proceeds from the sale of Shuyak Island. The single most important goal is to preserve the principal of the fund. Interest earnings, after inflation proofing, can be used for debt service, building insurance and capital projects. The Education and Health Debt Service Fund was established to finance and account for the payment of interest and principal on all general obligation debts, serial and term, other than that payable exclusively from special assessments and revenue debt issued for and serviced by a government enterprise fund. The Kodiak High School Renovation Capital Project Fund accounts for the construction and major maintenance activities for the Borough’s educational facilities funded by school bonds. The Renewal and Replacement Projects Capital Project Fund accounts for the construction and maintenance of various Borough facilities. The government reports the following major proprietary funds: The Municipal Solid Waste Collection and Disposal Fund accounts for the collection and disposal of solid waste and recycling services for the Kodiak Island Borough. The Hospital Facilities Fund accounts for rents on the Borough owned hospital; hospital related state revenue sharing; and other hospital related revenue. In turn, it purchases hospital equipment and makes debt service payments on hospital related debt. The Kodiak Fisheries Research Center Fund accounts for rents and expenses on the Borough owned Kodiak Fisheries Research Center. The three tenants: NOAA, Alaska Department of Fish & Game and University of Alaska, Fairbanks pay lease funds to participate in this multi-agency research facility committed to the preservation of the North Pacific marine ecosystem and resources. As a general rule the effect of inter-fund activity has been eliminated from the government wide financial statements. Exceptions to this general rule are charges between various functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided, (2) operating grants and contributions, and (3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 36 Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise funds are charges to customers for sales and services and lease revenues. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. (d) Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Fund Balance/Net Position Cash and Investments Cash and temporary investments of Borough funds are pooled in a central treasury. Each fund’s portion of this pool is displayed on the Balance Sheet and Statement of Net Position as “Equity in Central Treasury”. The Borough participates in the Alaska Municipal League Investment Pool (AMLIP). AMLIP is not SEC registered and is unrated. Alaska Statute 37.23 establishes regulatory oversight of the pool. The law sets forth numerous requirements regarding authorized investments and reporting. The pool is incorporated in the State of Alaska as a nonprofit corporation and reports to its Board of Directors. Alaska Statute 37.23.050 requires the retention of an investment manager. The AMLIP manager is required to produce monthly disclosure statements to the pool. The pool has also retained an investment advisor to monitor the performance of the investment manager and to ensure compliance with investment policies. All participation in the pool is voluntary. The pool must maintain a dollar weighted average maturity of 90 days or less, and only purchase instruments having remaining maturities of 397 days or less. On a monthly basis, the investments in the pool are reviewed for fair value by an independent pricing service. All highly liquid investments, excluding restricted assets, with original maturities of ninety days or less are considered to be cash equivalents. For purposes of the Statements of Cash Flows, equity in central treasury held by enterprise funds are treated as cash equivalents. Investments for the government, as well as the component unit, are reported at fair value, as determined by quoted market prices. The reported value of the pool is the same as the fair value of the pool shares. Receivables and Payables Activity between funds that are representative of lending /borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of inter-fund loans) or “advances to/from other funds” (i.e., the noncurrent portion of inter-fund loans). Any residual balances outstanding between the governmental activities and business type activities are reported in the government wide financial statements as “internal balances.” KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 37 Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Inventories and Prepaid Items/Expenses Expendable operating supplies of the Borough are accounted for using the purchases method. There are no significant amounts of such inventories on hand at year end. The entire Hospital Enterprise Fund inventory is assigned to Providence as of April 21, 1997. According to the terms of the lease agreement for the hospital facilities [see note 13(a)], those items are required to be returned to the Borough at the termination of the lease in at least equal value. Payments made to vendors for services that are applicable to future accounting periods are recorded as prepaid items. The prepaid assets do not reflect current available resources and, thus, an equivalent portion of fund balance is classified as nonspendable in the fund financial statements. Prepaid items and expenses are based on the consumption method. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, street lights, and similar items including those acquired prior to fiscal years ended after June 30, 1980), are reported in the applicable governmental or business type activities columns in the government-wide financial statements. Capital assets are defined by the Borough as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. 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 projects are constructed. Interest incurred during the construction phase of capital assets of business type activities is included as part of the capitalized value of the assets constructed. There was no interest capitalized during the year. Property, plant, and equipment of the primary government is depreciated using the straight line method over the following estimated useful lives: Buildings and improvements 10-40 years Improvements other than buildings 10-15 years Equipment 5-10 years Infrastructure 40 years KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 38 Compensated Absences It is the Borough’s policy to permit employees to accumulate earned but unused annual leave benefits. All annual leave pay is accrued when incurred in the government wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Long-term Obligations In the government wide financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business type activities, or proprietary fund Statement of Net Position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed in the year incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Interest on long-term obligations is recorded as an expenditure when due. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Public Employees’ Retirement System (PERS) and additions to/from PERS’s fiduciary net position have been determined on the same basis as they are reported by PERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms, investments are reported at fair value. Net Position In the government wide financial statements, net position is reported in three categories; net investment in capital assets, restricted net position and unrestricted net position. Net position is reported as restricted when constraints placed on net asset use are either externally imposed by creditors (such as through debt covenants), grantors, contributors provisions or laws or regulations of other governments or imposed by law through constitutional provisions or enabling legislation. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 39 Fund Balance In the Fund Financial Statements, fund balance includes five classifications as follows: Nonspendable Fund Balance – amounts that are legally or contractually required to be maintained intact (such as the corpus of an endowment fund) or amounts that are not in a spendable form (such as inventory, prepaid expenses, supplies, and long-term receivables). Such constraint is binding until the legal or contractual requirement is repealed or the amounts become spendable. Restricted Fund Balance – amounts constrained to specific purposes by their providers (such as grantors and higher levels of government), through constitutional provisions, or by enabling legislation. Such constraint is binding unless modified or rescinded by external body, laws, or regulation. Committed Fund Balance – amounts that can be used only for the specific purposes determined by a formal action of the Borough Assembly, the Borough’s highest level of decision-making authority. Commitments may be changed or lifted by the Assembly taking the same formal action that imposed the constraint originally. The formal action that is required to be taken to establish, modify or rescind a fund balance commitment is for the Assembly to pass a resolution. Assigned Fund Balance – amounts that are constrained by the Borough for specific purposes. In governmental funds other than the General Fund, assigned fund balance represents the amount that is not restricted or committed, but constrained for a specific purpose. Assignment of fund balance is made by the Borough Assembly or its designee, the Finance Director. Such constraint is binding unless modified or eliminated by the Borough Assembly or Finance Director. Assignment of fund balance is made during the budget process and reviewed at the end of the fiscal year. Assigned fund balance for FY2015 represents amounts constrained for capital project funds and was assigned by the Finance Director. Unassigned Fund Balance – amounts not contained in the other classifications and available for any purpose. Positive unassigned amounts will be reported only in the General Fund. If another governmental fund, other than the General Fund, has a fund balance deficit, then it will be reported as a negative amount in the unassigned classification in that fund. The order of spending, regarding the restricted and unrestricted fund balance when an expenditure is incurred for which both restricted and unrestricted fund balance is available should first reduce restricted fund balance and then unrestricted fund balance. The order of spending regarding unrestricted fund balance is that committed amounts should be reduced first, followed by the assigned amounts, and then the unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 40 Compliance with the provisions of the Fund Balance Classification Policy are reviewed as part of the annual budget adoption process. The Finance Director reports to the Assembly as close to the end of the year as possible the anticipated year-end fund balance or deficit. The Assembly takes appropriate action to commit or assign, or otherwise allocate prior year fund balances as a part of the budget planning process. The Borough’s Special Revenue Funds are used to account for school district support, fire and road service areas, federal and state grant programs, street lighting districts, and operations and maintenance programs that are restricted or committed. (e) Revenues, Expenditures, and Expenses Property Taxes Property taxes are based on the assessed value of taxable property as of January 1. Pursuant to Alaska Statute 29.45.240, the Borough establishes the mill rate on or before June 15th. Tax bills are then mailed on or before July 1st. Taxes are due when billed and generally become delinquent on or after October 16th. The Borough code also provides for split payments. If a taxpayer avails himself of this provision, one-half must be paid on or before August 15th and the remainder becomes due on or before November 15th (in lieu of October 15th). Borough property tax revenues are recognized in the fiscal year in which they become measurable and available, which is generally the year following the year the tax bills are mailed. All taxes are delinquent on November 16th, and a tax foreclosure process may commence as outlined in Alaska Statutes Title 29. Briefly, this entails the petition for Judgment of Foreclosure signed by the District Court Judge and the publication of all delinquent taxes in the local newspaper for four consecutive weeks. Real property tax liens are enforced by one general foreclosure proceeding against the delinquent properties. Prior to FY2012 all area wide property taxes were deposited into the General Fund and then transferred to the other area wide funds. As of FY2012 the Borough has set a separate mill rate for each area wide function that was funded by property taxes. For FY2015 the Borough set a mill rate of 0.06 mills for the General Fund, 9.16 mills for the Education Support Special Revenue Fund, 0.99 mills for the Debt Service Fund and 0.54 mills for the Renewal and Replacement Projects Capital Project Fund for a total area wide mill rate of 10.75. This was the same mill rate as FY2014. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 41 Severance Taxes Severance taxes are based on the amount and value of natural resources severed from the environment. Types of resources taxed include seafood, gravel and mineral resources, and timber. Severance tax returns are sent to appropriate companies (as determined by the Borough Assessor) and are returned to the Borough Finance Department. The returns are filed quarterly, and are due by the end of the month following the quarter’s end. Borough severance tax revenues are recognized in the fiscal year in which they become measurable and available. Intergovernmental Revenue State shared revenues, safe communities, State education related entitlement programs and State levied taxes, the proceeds of which are distributed to local governments, are recorded in the fiscal year to which they relate, including accrual at year end if final payments due are measurable and received within approximately two months after year end. State of Alaska and Federal government cost reimbursable grants and contracts are recorded to the extent of allowable expenditures in the period in which the expenditures were incurred. When both restricted and unrestricted resources are available for use for governmental activities, it is the Borough’s policy to use restricted resources first, then unrestricted resources as they are needed. Operating and Nonoperating Revenue and Expenses Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Municipal Solid Waste Collection and Disposal Fund and 911 Service Fund are charges to customers for services. The principal operating revenues of the Hospital Facilities Fund and the Kodiak Fisheries Research Center Fund are rents from customers. Operating expenses for proprietary funds include costs of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Revenue from Investments and Property Amounts earned on investment of available cash balances and the rental of building facilities are recorded in the period to which they relate, including accrual at year end of the balance due, and unrealized gains and losses on investments held at fiscal year end. Land Sales Proceeds and Other Local Revenues Amounts received pursuant to land sale contracts are recorded on the modified accrual basis in the fund financial statements and the accrual basis in the government-wide financial statements. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 42 Other local revenues are recorded on a basis consistent with their nature in relation to measurement and availability standards. (f) Cash Flows All highly liquid investments, excluding restricted assets, with original maturities of three months or less are considered cash equivalents for purposes of the statement of cash flows. (g) Use of Estimates Preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in these financial statements. Actual results may differ from the estimates. Significant estimates include the allowance for doubtful accounts, the useful lives of assets and related accumulated depreciation, and accrued landfill closure and post-closure care costs. (2) Stewardship, Compliance, and Accountability (a) Excess of Expenditures over Appropriations The following fund expenditures exceeded their budget: Fund Excess Special Revenue Funds: Education Support $ 114 L.E.P.C. 1,913 Total expenditures exceeding budgets $ 2,027 (b) Deficit Fund Equity The individual fund deficits at June 30, 2015, are as follows: Special Revenue Funds: L.E.P.C. $ 17,821 Trinity Island Paving 4,477 Oil Spill Disaster 10,566 Captial Project Funds: Renewal and Replacement Projects 2,254,243 School Bond Capital Projects 229,115 Total fund deficits $ 2,516,222 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 43 The deficit in the L.E.P.C. Fund and Trinity Islands Paving Fund will be funded by transfers in from the General Fund in FY2016. The deficit in the Renewal and Replacement Projects Capital Projects Fund will be covered by a loan from the Facilities Special Revenue Fund, which will then be repaid by a mill rate increase. (3) Cash and Investments A portion of the Borough’s investments are in the Alaska Municipal League Investment Pool (AMLIP). The investment in AMLIP represents the Borough’s share of ownership in the pool rather than ownership of specific securities. The fair values of the investments in the pool approximates amortized cost and is equal to the value of pool shares. To obtain a copy of AMLIP’s financial statements contact Key Trust of Alaska at 101 West Benson Blvd., Room 302, Anchorage, Alaska 99503. As of June 30, 2015, the Borough had the following investments: Invesment Maturities Fair Less Investment Type Value than 1 1 to 5 6 to 10 U.S. Agency Securities: Federal Home Loan Bank $ 18,811,542 3,999,600 14,811,942 - Federal Home Loan Mortgage Corporation 6,292,434 3,239,274 3,053,160 - Federal Agricultural Mortgage Corporation Discount Note 9,999,900 9,999,900 - - Federal National Mortgage Association 5,023,110 5,023,110 - - Municipal Obligations 13,245,090 853,671 3,172,383 9,219,036 Alaska Municipal League Investment Pool 15,659,570 15,659,570 - - Certificates of Deposit 953,741 - 953,741 - $ 69,985,387 38,775,125 21,991,226 9,219,036 In addition to the investments listed above, Kodiak Island Borough also had cash equivalents of $1,371,741, which includes restricted cash of $1,019,094. Interest Rate Risk The Borough’s investment policy does not limit investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 44 Credit Risk Statutes authorize the Borough to invest in obligations of the United States, the State of Alaska and its political subdivisions, savings accounts, certificates of deposit, banker’s acceptances, repurchase agreements, and such other legal security instruments. The Borough does not have a formal investment policy that restricts investments based on credit risk. At June 30, 2015, the Borough’s U.S. agencies bonds were rated AAA by Standard & Poor and Fitch Ratings, and AAA by Moody’s Investor Service. At June 30, 2015, the Borough’s investment in the Alaska Municipal League Investment Pool was unrated. Concentration of Credit Risk The Borough places no limit on the amount the Borough may invest in any one issuer. At June 30, 2015, the Borough had 57% percent of its investments in U.S. Government agency securities. Custodial Credit Risk – Deposits The Borough maintains a cash pool that is available for use by all funds. Each fund’s portion of this pool is reported on the Balance Sheet and Statements of Net Position as “Equity in Central Treasury” or amounts “due to/from other funds.” The Borough bank accounts are insured by the Federal Depository Insurance Corporation (FDIC) to a maximum of $250,000. U.S. Treasury obligations collateralize the remaining bank balance, which is held by Bank of New York in a Tri-party collateral agreement with Wells Fargo, the pledging financial institution’s agent, in the Borough’s name. Custodial Credit Risk – Investments For an investment, this is a risk that, in the event of the failure of the counterparty, the Borough will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Borough manages its custodial credit risk in investments by requiring collateralization agreements. The Borough had no debt securities exposed to custodial credit risk at June 30, 2015. (4) Annual Appropriation to the School District An annual appropriation is made to the School District. In addition to the annual appropriation, the Borough provides the School District, without charge, general liability and property insurance, data processing services, the annual independent audit, mental health services, and grounds maintenance services. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 45 (5) Receivables Education Education and Kodiak High Renewal and Other TotalGeneralSupport Special Health Debt School Replacement Governmental GovernmentalFundRevenue Fund Service Fund Renovation Projects Funds FundsReceivables:Grants $ 11,777 52,162 41,904 304,386 — 1,946,455 2,356,684 Taxes 412,075 168,195 22,593 — 7,661 20,493 631,017 Interest 202,051 — — — — — 202,051 Customers and other 17,229 — — — — 59,628 76,857 Gross receivables 643,132 220,357 64,497 304,386 7,661 2,026,576 3,266,609 Less: allowance for uncollectibles (15,828) — — — — — (15,828) Net total receivables $627,304 220,357 64,497 304,386 7,661 2,026,576 3,250,781 Municipal Kodiak OtherSolid Waste Fisheries Nonmajor Total Total TotalCollection Hospital Research Enterprise Enterprise Governmental Primaryand Disposal Facilities Center Fund Funds Funds GovernmentReceivables:Grants $— 5,921 — — 5,921 2,356,684 2,362,605 Taxes — — — — — 631,017 631,017 Interest — — — — — 202,051 202,051 Customers and other 321,482 630,095 36,745 5,294 993,616 76,857 1,070,473 Gross receivables 321,482 636,016 36,745 5,294 999,537 3,266,609 4,266,146 Less: allowance for uncollectibles — — — — — (15,828) (15,828) Net total receivables $321,482 636,016 36,745 5,294 999,537 3,250,781 4,250,318 Enterprise Funds Governmental FundsCapital Project Funds (6) Deferred Inflows of Resources and Unearned Revenues Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also report unearned revenues in connection with resources that have been received, but not yet earned. At June 30, 2015, the various components of deferred inflows of resources and unearned revenue reported in the governmental funds were as follows: Unavailable Unearned Total Unavailable property taxes receivable $ 227,780 - 227,780 Unavailable land sales receivable 287,564 - 287,564 Interest on long-term advances 44,713 - 44,713 Grant advances prior to expending all proceeds - 94,729 94,729 Total unavailable/unearned revenue for governmental funds $ 560,057 94,729 654,786 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 46 (7) Capital Assets As noted in Footnote (13), the Borough leases the Kodiak Island Hospital and Care Center to Sisters of Providence. The value of the leased assets and associated depreciation are reflected in the Hospital Facilities Fund following. Capital asset activity for the year ended June 30, 2015 was as follows: Beginning Ending Balance Increase Decrease Balance Governmental activities: Capital assets, not being depreciated Land $ 23,272,788 204,500 (37,970) 23,439,318 Construction work-in-progress 47,862,997 24,101,515 (101,344) 71,863,168 Total 71,135,785 24,306,015 (139,314) 95,302,486 Capital assets, being depreciated: Buildings and improvements 111,827,781 - - 111,827,781 Improvements other than buildings 21,217,638 116,650 - 21,334,288 Equipment 3,178,456 44,299 - 3,222,755 Infrastructure 5,762,722 - - 5,762,722 Total 141,986,597 160,949 - 142,147,546 Less accumulated depreciation for: Buildings and improvements 67,239,191 2,549,860 - 69,789,051 Improvements other than buildings 7,327,971 1,151,925 - 8,479,896 Equipment 2,199,640 160,556 - 2,360,196 Infrastructure 4,931,461 109,995 - 5,041,456 Total 81,698,263 3,972,336 - 85,670,599 Total capital assets being depreciated, net 60,288,334 (3,811,387) - 56,476,947 Total governmental activities, net $ 131,424,119 20,494,628 (139,314) 151,779,433 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 47 Beginning Ending Balance Increase Decrease Balance Business-type activities: Municipal Solid Waste Collection and Disposal Fund capital assets, not being depreciated Land $ 1,651,248 - - 1,651,248 Construction work-in-progress 18,102,407 7,367,591 (648,023) 24,821,975 Total 19,753,655 7,367,591 (648,023) 26,473,223 Capital assets, being depreciated: Unclassified utility plant in service 2,178,733 - - 2,178,733 Improvements other than buildings 2,410,717 648,023 - 3,058,740 Machinery and equipment 1,928,803 - (8,255) 1,920,548 Total 6,518,253 648,023 (8,255) 7,158,021 Less accumulated depreciation for: Unclassified utility plant in service 1,211,466 42,055 - 1,253,521 Improvements other than buildings 1,433,820 132,721 - 1,566,541 Machinery and equipment 1,585,502 94,500 (8,255) 1,671,747 Total 4,230,788 269,276 (8,255) 4,491,809 Total capital assets being depreciated, net 2,287,465 378,747 - 2,666,212 Total Municipal Solid Waste Collection and Disposal Fund, net $ 22,041,120 7,746,338 (648,023) 29,139,435 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 48 Beginning Ending Balance Increase Decrease Balance Hospital Facilities Fund: Capital assets, not being depreciated Artwork $ 16,091 - - 16,091 Land 10,251 - - 10,251 Construction work-in-progress 20,940,962 582,102 (5,969,240) 15,553,824 Total 20,967,304 582,102 (5,969,240) 15,580,166 Capital assets, being depreciated: Buildings 27,131,044 5,969,240 - 33,100,284 Improvements other than buildings 401,046 - - 401,046 Machinery and equipment 3,627,068 - - 3,627,068 Total 31,159,158 5,969,240 - 37,128,398 Less accumulated depreciation for: Buildings 15,722,056 775,059 - 16,497,115 Improvements other than buildings 211,298 13,892 - 225,190 Machinery and equipment 3,455,081 53,693 - 3,508,774 Total 19,388,435 842,644 - 20,231,079 Total capital assets being depreciated, net 11,770,723 5,126,596 - 16,897,319 Total Hospital Facilities Fund, net $ 32,738,027 5,708,698 (5,969,240) 32,477,485 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 49 Beginning Ending Balance Increase Decrease Balance Kodiak Fisheries Research Center Fund: Capital assets, not being depreciated Construction work-in-progress $ 1,031,373 281,945 - 1,313,318 Capital assets, being depreciated: Buildings 17,840,410 - - 17,840,410 Improvements other than buildings 1,058,262 - - 1,058,262 Machinery and equipment 1,187,678 - - 1,187,678 Total 20,086,350 - - 20,086,350 Less accumulated depreciation for: Buildings 8,918,444 594,680 - 9,513,124 Improvements other than buildings 517,217 35,431 - 552,648 Machinery and equipment 1,167,587 6,028 - 1,173,615 Total 10,603,248 636,139 - 11,239,387 Total capital assets being depreciated, net 9,483,102 (636,139) - 8,846,963 Total Kodiak Fisheries Research Center Fund, net $ 10,514,475 (354,194) - 10,160,281 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 50 Beginning Ending Balance Increase Decrease Balance Total business-type activities: Capital assets, not being depreciated Artwork $ 16,091 - - 16,091 Land 1,661,499 - - 1,661,499 Construction work-in-progress 40,074,742 8,231,638 (6,617,263) 41,689,117 Total 41,752,332 8,231,638 (6617,263) 43,366,707 Capital assets, being depreciated: Unclassified utility plant in service 2,178,733 - - 2,178,733 Buildings 44,971,454 5,969,240 - 50,940,694 Improvements other than buildings 3,870,024 648,023 - 4,518,047 Machinery and equipment 6,743,550 - (8,255) 6,735,295 Total 57,763,761 6,617,263 (8,255) 64,372,769 Less accumulated depreciation for: Unclassified utility plant in service 1,211,466 42,055 - 1,253,521 Buildings 24,583,932 1,369,739 - 25,953,671 Improvements other than buildings 2,218,903 182,044 - 2,400,947 Machinery and equipment 6,208,170 154,221 (8,255) 6,354,136 Total 34,222,471 1,748,059 (8,255) 35,962,275 Total capital assets being depreciated, net 23,541,290 4,869,204 - 28,410,494 Total business-type activities, net $ 65,293,622 13,100,842 (6,617,263) 71,777,201 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 51 Depreciation expense was charged to the departments and functions of the primary government as follows: Governmental activities: General government $ 578,938 Public safety 174,917 Emergency preparedness 2,500 Primary and secondary education 3,215,981 Total – governmental activities $ 3,972,336 Business-type activities: Municipal solid waste collection and disposal $ 269,276 Hospital facilities 842,644 Kodiak fisheries research center 636,139 Total – business-type activities 1,748,059 Total primary government $ 5,720,395 (8) Interfund Receivables, Payables and Transfers (a) Interfund Receivables and Payables Interfund balances at June 30, 2015 consisted of the following: (1) Due to / from other funds: Receivable Fund Payable Fund Amount Major governmental funds: General Fund Other Governmental Funds $ 756,017 General Fund Other Nonmajor Enterprise Fund 5,294 Facilities Special Revenue Fund Kodiak Fisheries Research Center Enterprise Fund 44,713 Hospital Facilities Enterprise Fund Renewal and Replacement Capital Project Fund 99,398 Total primary government $ 905,422 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 52 (2) Advances to / from other funds: Receivable Fund Payable Fund Amount Major governmental fund – Facilities Special Revenue Fund Kodiak Fisheries Research Center Enterprise Fund $ 2,555,000 Major enterprise fund – Hospital Facilities Enterprise Fund Renewal and Replacement Capital Project Fund 2,745,029 Total primary government $ 5,300,029 The balance of $2,555,000 due the Facilities Fund from the K.F.R.C. Fund resulted from a loan of $8,000,000 that was made to help pay for the construction of the building. $1,980,000 is not scheduled to be paid in FY2016 and is recorded as a noncurrent liability in advances from other funds. The balance of $2,745,029 due the Hospital Facilities Enterprise Fund from the Renewal and Replacement Capital Projects Fund resulted from a loan of $2,905,105 that was made to fund various renewal and replacement projects. $2,645,631 is not scheduled to be paid in FY2016 and is recorded as a noncurrent liability in advances from other funds. All remaining interfund balances were short term loans to cover negative cash balances at year end. The outstanding short term balances between funds result from the time lag between the dates that (1) inter-fund goods and services are provided or reimbursable expenditures or expenses occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. (b) Long-term Interfund Borrowings In October 1997 the Facilities Special Revenue Fund loaned $8,000,000 to the Kodiak Fisheries Research Center Enterprise Fund. This loan was to help finance the construction of the Kodiak Fisheries Research Center. The loan from the Facilities Special Revenue Fund is accounted for as a long-term inter-fund advance, while the liability in the Kodiak Fisheries Research Center Enterprise Fund is accounted for as a long-term inter-fund borrowing. The advance bears interest at 7%, and the scheduled payments for the next four fiscal years ended are as follows: Principal Interest Total Year ending June 30: 2016 $ 575,000 158,725 733,725 2017 615,000 117,075 732,075 2018 660,000 72,450 732,450 2019 705,000 24,675 729,675 $ 2,555,000 372,925 2,927,925 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 53 In 2015, the Hospital Facilities Enterprise Fund loaned $2,905,105 to the Renewal and Replacement Capital Projects Fund in order to help fund ongoing projects. The loan from the Hospital Facilities Enterprise Fund is accounted for as a long-term interfund advance, while the liability in the Renewal and Replacement Capital Projects Fund is accounted for as a long-term interfund borrowing. The advance bears interest at 4.45%, and the scheduled payments for the next five fiscal years and thereafter are as follows: Principal Interest Total Year ending June 30: 2016 $ 99,398 122,420 221,818 2017 103,921 117,897 221,818 2018 108,650 113,168 221,818 2019 113,595 108,223 221,818 2020 118,764 103,054 221,818 2021-2025 679,977 429,116 1,109,093 2026-2030 849,429 259,664 1,109,093 2031-2034 671,295 60,228 731,523 $ 2,745,029 1,313,770 4,058,799 (c) Transfers Interfund transfers have been made in accordance with budget ordinances. Funds are transferred from one fund to support expenditures of other funds in accordance with the authority established for the individual fund. Transfers between funds during the year ended June 30, 2015 were as follows: Enterprise FundsRenewal and MunicipalEducation Replacement Solid Waste Kodiakand Health Projects Other Hospital Collection FisheriesDebt Service Capital Project Governmental Facilities and Disposal ResearchFundFundFundsFundFund Center Fund Totals Major Governmental Funds:General Fund $— — 52,691 — 64,383 21,474 138,548 Facilities Special Revenue Fund 250,000 322,000 18,000 — — — 590,000 Other Governmental Funds — — — 66,500 — — 66,500 Total transfers $250,000 322,000 70,691 66,500 64,383 21,474 795,048 Transfers Out Transfers InGovernmental Funds KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 54 A summary of significant transfers are as follows:  The General Fund transferred $16,040 to the Fire Protection Area No. 1 Special Revenue Fund to record State retirement contributions to this fund.  The General Fund transferred $14,961 to the Land Sales Special Revenue Fund to record State retirement contributions to this fund.  The General Fund transferred $21,690 to the Building and Grounds Special Revenue Fund to record State retirement contributions to this fund.  The General Fund transferred $21,474 to the Kodiak Fisheries Research Center Enterprise Fund to record State retirement contributions to this fund.  The General Fund transferred $64,383 to the Municipal Solid Waste Collection and Disposal Enterprise Fund to pay for garbage disposal for area thrift shops and to record State retirement contributions to this fund.  The Facilities Special Revenue Fund transferred $250,000 to the Education and Health Debt Service Fund for debt service on school district bonds.  The Facilities Special Revenue Fund transferred $322,000 to the Renewal and Replacement Projects Capital Project Fund to pay for capital improvements.  The Facilities Special Revenue Fund transferred $18,000 to the Building and Grounds Special Revenue Fund to pay for building insurances.  The Fern Fuller Trust Special Revenue Fund transferred $66,500 to the Hospital Facilities Enterprise Fund for the purchase of new equipment. The remainder of this page left blank intentionally. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 55 (9) Long Term Debt (a) General Obligation Bonds and other Debt The Borough issues general obligation bonds and other debt to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the Borough. General obligation bonds and other debt currently outstanding are as follows: Interest Principal Payments Type of Debt Rates Dates Issuance Dates Maturity Date Dates Amount General obligation bonds – 2004 D Series 4.0% 5/1-11/1 12/1/2004 11/1/2014 - - - General obligation bonds – 2008 A Series 4.0-5.0% 4/1-10/1 11/1/2008 4/1/2028 04/01/16 350,000 04/01/17 370,000 04/01/18 380,000 04/01/19 400,000 04/01/20 415,000 04/01/21 430,000 04/01/22 450,000 04/01/23 470,000 04/01/24 490,000 04/01/25 515,000 04/01/26 540,000 04/01/27 565,000 04/01/28 595,000 5,970,000 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 56 Authorized Prior years Balance at Retired/ Balance at Fiscal Year Amount Issued Retired July 1, 2014 Issued Refunded June 30, 2015 2004 11,050,000 11,050,000 10,520,000 530,000 - 530,000 - 2008 8,000,000 8,000,000 1,695,000 6,305,000 - 335,000 5,970,000 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 57 Interest Principal Payments Type of Debt Rates Dates Issuance Dates Maturity Date Dates Amount General obligation bonds – 2011 Series One 2.05-5.20% 9/1-3/1 3/1/2011 3/1/2031 03/01/16 310,000 03/01/17 320,000 03/01/18 330,000 03/01/19 340,000 03/01/20 355,000 03/01/21 370,000 03/01/22 385,000 03/01/23 405,000 03/01/24 425,000 03/01/25 445,000 03/01/26 465,000 03/01/27 485,000 03/01/28 510,000 03/01/29 535,000 03/01/30 565,000 03/01/31 595,000 6,840,000 General obligation bonds – 2012 Series A 2.0-5.0% 3/1-9/1 5/24/2012 9/1/2024 09/01/15 435,000 09/01/16 455,000 09/01/17 460,000 09/01/18 480,000 09/01/19 495,000 09/01/20 525,000 09/01/21 545,000 09/01/22 570,000 09/01/23 600,000 09/01/24 630,000 5,195,000 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 58 Authorized Prior years Balance at Retired/ Balance at Fiscal Year Amount Issued Retired July 1, 2014 Issued Refunded June 30, 2015 2012 8,000,000 8,000,000 855,000 7,145,000 - 305,000 6,840,000 2012 5,230,000 5,230,000 35,000 5,195,000 - - 5,195,000 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 59 Interest Principal Payments Type of Debt Rates Dates Issuance Dates Maturity Date Dates Amount General obligation bonds – 2012 Series B 2.0-5.0% 3/1-9/1 5/24/2012 9/1/2024 09/01/15 530,000 09/01/16 550,000 09/01/17 565,000 09/01/18 585,000 09/01/19 610,000 09/01/20 640,000 09/01/21 665,000 09/01/22 695,000 09/01/23 730,000 09/01/24 770,000 6,340,000 General obligation bonds – 2013 Series One 3.8-5.0% 2/1-8/1 3/1/2013 2/1/2033 02/01/16 760,000 02/01/17 790,000 02/01/18 820,000 02/01/19 855,000 02/01/20 895,000 02/01/21 935,000 02/01/22 970,000 02/01/23 1,010,000 02/01/24 1,050,000 02/01/25 1,100,000 02/01/26 1,155,000 02/01/27 1,215,000 02/01/28 1,275,000 02/01/29 1,340,000 02/01/30 1,405,000 02/01/31 1,475,000 02/01/32 1,550,000 02/01/33 1,630,000 20,230,000 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 60 Authorized Prior years Balance at Retired/ Balance at Fiscal Year Amount Issued Retired July 1, 2014 Issued Refunded June 30, 2015 2012 6,385,000 6,385,000 45,000 6,340,000 - - 6,340,000 2013 21,595,000 21,595,000 635,000 20,960,000 - 730,000 20,230,000 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 61 Interest Principal Payments Type of Debt Rates Dates Issuance Dates Maturity Date Dates Amount General obligation bonds – 2014 Series One 2.0-5.0% 3/1-9/1 3/1/2013 3/1/2013 03/01/16 785,000 03/01/17 810,000 03/01/18 840,000 03/01/19 880,000 03/01/20 900,000 03/01/21 915,000 03/01/22 965,000 03/01/23 1,010,000 03/01/24 1,060,000 03/01/25 1,110,000 03/01/26 1,150,000 03/01/27 1,205,000 03/01/28 1,265,000 03/01/29 1,330,000 03/01/30 1,395,000 03/01/31 1,465,000 03/01/32 1,535,000 03/01/33 1,610,000 03/01/34 1,690,000 21,920,000 Clean water - Karluk 3.92-4.05% ** ** ** 06/01/16 6,130 06/01/17 6,222 06/01/18 6,315 06/01/19 6,410 06/01/20 5,925 31,002 $ 66,526,002 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 62 Authorized Prior years Balance at Retired/ Balance at Fiscal Year Amount Issued Retired July 1, 2014 Issued Refunded June 30, 2015 2014 22,660,000 22,660,000 - 22,660,000 - 740,000 21,920,000 1998 400,000 97,019 59,977 37,042 - 6,040 31,002 $ 99,360,000 99,057,019 29,884,977 69,172,042 - 2,646,040 66,526,002 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 63 The annual requirements to amortize all general obligation bonded debt and the ADEC loan payable outstanding as of June 30, 2015, are as follows: General ADEC obligation loan payable Total Interest Year ending June 30: 2016 $ 3,170,000 6,130 3,176,130 2,989,362 2017 3,295,000 6,222 3,301,222 2,869,212 2018 3,395,000 6,315 3,401,315 2,750,462 2019 3,540,000 6,410 3,546,410 2,617,362 2020 3,670,000 5,925 3,675,925 2,478,487 2021-2025 20,880,000 - 20,880,000 9,850,456 2026-2030 16,995,000 - 16,995,000 5,305,926 2031-2034 11,550,000 - 11,550,000 1,244,240 $ 66,495,000 31,002 66,526,002 30,105,507 At June 30, 2015, there was $187,227 available in the Education and Health Debt Service Fund to service general obligation bonds. There are a number of limitations and restrictions contained in the various bond indentures. The Borough is in compliance with all significant limitations and restrictions. The remainder of this page left blank intentionally. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 64 (b) Notes Payable As of June 30, 2015, the Borough had the following notes payable outstanding in the Municipal Solid Waste Collection and Disposal Enterprise Fund: Note payable (ACWF #505031) to Alaska Department of Environmental Conservation (ADEC), to be paid within 20 years. From June 2, 1999until April 28, 2005 interest accrued at 2.5%. From April 29, 2005 toJune 30, 2015 interest accrued at 1.5%. The first loan payment wasmade on April 1, 2012, with payments of $100,000 being due on April 1 in each successive year.$1,600,000 Note payable (ACWF #505041) to Alaska Department of EnvironmentalConservation (ADEC), to be paid within 20 years. Interest accrued at1.5% over the life of the loan. The first loan payment is due one yearfollowing sustantial completion and initiation of operation of the facility.$4,441,653 Note payable (ACWF #505061) to Alaska Department of EnvironmentalConservation (ADEC), to be paid within 20 years. Interest will start being accrued in November 2015 and will be accrued over the life of the loan. The first loan payment is due one year following sustantial completion and initiation of operation of the facility.$750,000 On September 15, 2011 the Borough issued a $3,275,000 revenue bond,with a premium of $384,379. The bond was marketed by the AlaskaMunicipal Bond Bank. Interest accrues at rates between 3.0 and 5.0%with payments due on September 1 and March 1 of each year. Thebond will mature on September 1, 2026.$3,116,531 As of June 30, 2015, the Borough had the following bond payable outstanding in the Hospital Facilities Enterprise Fund: On June 19, 2013 the Borough issued a $17,110,000 revenue bond,with a premium of $1,707,320. The bond was marketed by the AlaskaMunicipal Bond Bank. Interest accrues at rates between 2.0 and 5.0%with payments due on June 1 of each year. The bond will mature onJune 1, 2033.$17,984,677 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 65 (c) Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2015, was as follows: Balance BalanceJune 30,June 30,Due within2014AdditionsReductions2015one year Governmental activities:Bonds payable:General obligation bonds $69,135,000 — 2,640,000 66,495,000 3,170,000 Bond premium 7,092,556 — 455,990 6,636,566 455,990 76,227,556 — 3,095,990 73,131,566 3,625,990 ADEC loans 37,042 — 6,040 31,002 6,130 Compensated absences 328,529 276,015 331,982 272,562 272,562 Total $ 76,593,127 276,015 3,434,012 73,435,130 3,904,682 Business-type activities:Municipal Solid WasteCollection and Disposal:Landfill closure andpost-closure costs $3,968,123 422,016 1,201,632 3,188,507 — Notes payable 10,206,895 — 298,711 9,908,184 275,000 Total $ 14,175,018 422,016 1,500,343 13,096,691 275,000 Hospital Facilities:Long term interfundborrowings $876,872 — 876,872 — — Bonds payable 18,703,498 — 718,821 17,984,677 625,000 Total $ 19,580,370 — 1,595,693 17,984,677 625,000 Kodiak Fisheries ResearchCenter:Long term interfundborrowings $ 3,095,000 — 540,000 2,555,000 575,000 Total $ 3,095,000 — 540,000 2,555,000 575,000 Business-type activities:Landfill closure and post-closure costs $3,968,123 422,016 1,201,632 3,188,507 — Long term interfundborrowings 3,971,872 — 1,416,872 2,555,000 575,000 Notes/bonds payable 28,910,393 — 1,017,532 27,892,861 900,000 Total $ 36,850,388 422,016 3,636,036 33,636,368 1,475,000 For governmental activities, compensated absences are generally liquidated by the General Fund. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 66 (10) Fund Balances Detailed information related to amounts classified as nonspendable, committed and assigned fund balances in governmental funds at June 30, 2015 are as follows: KodiakEducation HighEducationand SchoolSupport Facilities Health RenovationSpecial Special Debt Capital OtherGeneral Revenue Revenue Service Project GovernmentalFund Fund Fund Fund Fund Funds TotalNonspendable:Prepaid Items $ 14,566 - - - - - 14,566 Long Term Receivables - - - - - 262,100 262,100 Total Nonspendable 14,566 - - - - 262,100 276,666 Committed:Education Support - 46,715 - - - - 46,715 Facility Upgrades - - 39,427,713 - - - 39,427,713 Debt Service - - - 187,227 - - 187,227 Fire and Road Service Areas - - - - - 1,826,679 1,826,679 Land Sales - - - - - 302,941 302,941 Buildings and Grounds - - - - - 363,967 363,967 Street LightingDistricts - - - - - 55,949 55,949 Tourism Development - - - - - 177,412 177,412 Mission Lake Tide Gate - - - - - 43,291 43,291 Fern Fuller Trust - - - - - 199,667 199,667 Total Committed $ - 46,715 39,427,713 187,227 - 2,969,906 42,631,561 Assigned:Capital Projects andUpgrades $ - - - - 4,461,079 3,149,193 7,610,272 (11) Solid Waste Landfill Closure and Post Closure Care Costs State and federal laws and regulations require that the Kodiak Island Borough place a final cover on its landfill when closed and perform certain maintenance for a number of years after closure. In addition to operating expenses related to current activities of the landfill, an expense provision and related liability are recognized based on the future closure and post closure care costs that will be incurred based on the date the landfill no longer accepts waste. The recognition of these landfill closure and post closure care costs is based on the amount of the landfill used during the year. The estimated liability of landfill closure and post closure care costs is $3,188,507 as of June 30, 2015, which is based on 95% usage (filled) of the existing landfill. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 67 The landfill is estimated to be filled and unusable by the year 2016. During the year ended June 30, 2015, a reduction of $779,616 was recorded. This reduction was due to partial closure of remaining cells of the existing landfill during the year. The Borough incurred $1,201,632 of costs related to the partial closure of the remaining cells, and recorded closure/post-closure expenses of $422,016 resulting from an increase of 2% estimated capacity used during the year. An estimated additional $211,907 will be recognized as closure expenses between the date of the Statement of Net Position and the date the landfill is expected to be filled to capacity. The estimated total current cost of the landfill closure and post closure care of $3,400,414 is based on the amount that would be paid if the landfill were closed as of June 30, 2015. However, the actual cost of closure and post closure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. The Kodiak Island Borough is required by state and federal laws and regulations to make annual contributions to finance closure and post closure care. The Kodiak Island Borough complies with these requirements by annually recording the liability based on the estimates provided by the Kodiak Island Borough’s Engineering/Facilities Director. It is anticipated that future inflation costs and additional costs that might arise from changes in post closure requirements, due to changes in technology or more rigorous environmental regulations, for example, will be financed primarily by charges to future landfill users and secondarily by taxpayers. In the fiscal year ended June 30, 1999 the Borough began initial planning for lateral expansion of the landfill (Phase 3). In May of 2012 bidding on the project was begun and work is ongoing and expected to continue through 2016. The lateral expansion has an estimated forty year capacity. Capital costs to complete is estimated at $10,000,000. (12) Insurance and Risk Retention The Kodiak Island Borough is exposed to numerous risks of loss associated with the operations of a government. These potential losses include, but are not limited to, employee relations and injuries, contracts, theft, loss or damage of property and general liability. The Borough manages its risks from these potential losses by participating in the Alaska Municipal League Joint Insurance Association, as well as purchasing commercial insurance coverage. This insurance has provided the Borough with adequate coverage in the past. There were no significant changes in insurance coverage obtained and there were no claims or settlements that exceeded insurance coverage in any of the past three fiscal years. The Borough is a member in good standing of the Alaska Municipal League Joint Insurance Association (JIA), a governmental insurance pool established by the Alaska Municipal League. Claims are covered on an occurrence basis. JIA provides risk management services, appraisal services and there is also a separate pool for policy liability. The Kodiak Island Borough Finance Director and the Kodiak Island Borough Mayor are members of the Board of Directors of the JIA. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 68 The responsibilities of both JIA and the participants are as follows: (a) Responsibilities of JIA JIA shall perform the following instructions in discharging its responsibilities:  Provide insurance coverage as necessary for property, including building and contents, automobile, mobile equipment and data processing equipment, casualty, including general liability, public officials’ and employees’ liability, auto liability and employee benefit liability; workers’ compensation, including employers’ liability; commercial blanket bond; and time element.  Assist each participant’s assigned risk manager with the implementation of that function.  Provide loss prevention and safety and consulting services to participants as required.  Provide claims adjusting and subrogation services for claims covered by the association’s joint insurance arrangement. (b) Responsibilities of the Participants The Participants shall have the following responsibilities:  The Borough Assembly or appointing official of each participant shall appoint a representative as provided in Article 5, Section 2 of the bylaws and at least one alternate representative to attend member meetings.  Each participant shall appoint an employee of the participant to be responsible for the risk management function within that entity and to serve as a liaison between the participant and JIA with respect to risk management.  Each participant shall maintain an active safety officer and/or committee, and shall comply with all recommendations of JIA concerning the development and implementation of a loss control policy to prevent unsafe practices.  Each participant shall maintain its own set of records as a loss log, in all categories of loss to insure accuracy of JIA’s loss reporting system. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 69 (13) Rental Revenues (a) Hospital Facilities Enterprise Fund The Kodiak Island Borough Assembly leases the Kodiak Island Hospital and Care Center premise and equipment to Sisters of Providence d.b.a. Providence Kodiak Island Medical Center who assumed responsibility for the hospital’s operations as of April 21, 1997. The lease agreement is effective for a term of twenty years from that date. The lease is cancelable by either party with a one year notice. The hospital capital assets, the lease income, and all other costs relating to the agreement are accounted for by the Borough in the Hospital Facilities Enterprise Fund. The agreement with Providence specifies that the Borough will contribute at least $108,000 per year for the purchase of new and replacement equipment for the hospital. The Borough is also required to fund any major maintenance and repairs projects exceeding $25,000 in cost. The Borough receives $60,000 per month in rental revenue. In August, 2003, the lease was amended and required Providence to pay an additional lease payment of $1,300,000 in 2004. In October 2005 the lease was amended to remove the requirement that Providence had to pay 50% of the net revenues of the hospital, up to $600,000, in rental revenues. Providence now has to spend 50% or more of their net profit, up to $200,000, on equipment. The lease was also amended to have the $108,000 of equipment which the Borough was required to purchase annually to become Providence property rather than Borough property. The Kodiak Island Borough Assembly leases the Kodiak Long Term Care Center to Sisters of Providence, d.b.a. Providence Kodiak Island Medical Center who assumed responsibility for the Long Term Care Center’s operations as of February 1, 2014. The lease agreement is effective for a term of twenty years from that date. The lease is cancelable by either party with a one year notice. The Center’s capital assets, the lease income, and all other costs relating to the agreement are accounted for by the Borough in the Hospital Facilities Enterprise Fund. The agreement with Providence specifies that Providence will pay monthly lease payments to the Borough in an amount no less than required to fully fund all debt service requirments plus an amount sufficient to cover the Borough’s expenses in maintaining insurance for fire and other risks (including earthquakes). Over the term of the lease it is estimated that the average monthly lease payment will be $95,000. (b) Kodiak Fisheries Research Center The Kodiak Fisheries Research Center (KFRC) leases its premise to the Alaska Department of Fish and Game (ADF&G), the General Services Administration (GSA) on behalf of National Oceanic and Atmospheric Administration (NOAA), and the University of Alaska Fairbanks (UAF). KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 70 The lease with ADF&G is from October 1, 1998 through September 30, 2018, with an option to extend for up to two additional five year periods. Annual rent is $57,680. The annual rent from 2012 through 2018 will be adjusted for the tenant’s proportionate share of building expenses and utilization of the seawater system. The lease with NOAA is from October 1, 1998 through September 30, 2018, with an option to extend for up to four additional five year periods. Annual rent is $756,000 plus operational and maintenance expenses of $754,437. Operational and maintenance expenses are adjusted every five years to actual costs. In 2015, NOAA paid an additional $640,000 to contribute towards the costs of the KFRC Energy Improvements Project. The lease with UAF was originally from October 1, 1998 through September 30, 2018, cancelable with 30 days notice, with an option to extend for up to two additional five year periods. The State of Alaska cancelled the lease for laboratory space effective September 1, 2012, but has continued leasing the dorm space. The State has not given notice to cancel this section of the lease. In 2015 UAF paid $36,745 to lease dorm space at the research facility. (14) Employee Retirement System Plans The Borough follows Governmental Accounting Standards Board (GASB) Codification P20, Accounting for Pensions by State and Local Governmental Employees and GASB Codification P50, Accounting and Financial Reporting by Employers for Post-employment Benefits Other than Pensions. GASB Codification P20 and GASB Codification P50 establish uniform standards for the measurement, recognition and display of pension and other post-employment benefits other than pensions (healthcare) expenditures/expense and related liabilities, assets, note disclosure and applicable required supplementary information in the financial reports of state and local governmental employers. All full-time employees and certain permanent part-time employees of the Borough participate in the State of Alaska Public Employees’ Retirement System (PERS). In addition to the pension plan, the system also administers post-employment benefit plan. The system is governed by the Alaska Retirement Management Board. The benefit and contribution provisions are established by State law and may be amended only by the State legislature. Summary of Significant Accounting Policies. The financial statements for PERS are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. The Borough’s contributions are recognized when due and a formal commitment to provide the contributions has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. All plan investments are reported at fair value. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 71 PERS acts as the common investment and administrative agency for the following multiple-employer plans: Plan Name Type of Plan Defined Benefit Pension Plan (DB) Cost-sharing, Defined Benefit Pension Defined Contribution Pension Plan (DC) Defined Contribution Pension Defined Benefit Other Postemployment Benefits (DB) Occupational Death and Disability Plan Cost-sharing, Defined Benefits OPEB Alaska Retiree Healthcare Trust Plan Cost-sharing, Defined Benefits OPEB Retiree Medical Plan Cost-sharing, Defined Benefits OPEB Defined Contribution Other Postemployment Benefits (DC) Healthcare Reimbursement Arrangement Plan Defined Contribution OPEB Other Postemployment Benefit Plans (OPBP) Occupational Death and Disability Plan (DB) The Occupational Death and Disability Plan provides death benefits for beneficiaries of plan participants and long-term disability benefits to all active members within the System. Alaska Retiree Healthcare Trust Plan (DB) Beginning July 1, 2007, the Alaska Retiree Healthcare Trust Plan (ARHCT), a Healthcare Trust Fund of the State, was established. The ARHCT is self-funded and provides major medical coverage to retirees of the System. The System retains the risk of loss of allowable claims for eligible members. The ARHCT began paying member healthcare claims on March 1, 2008. Prior to that, healthcare claims were paid for by the Retiree Health Fund (RHF). Healthcare Reimbursement Arrangement Plan (DC) The Healthcare Reimbursement Arrangement Plan was established to allow medical expenses to be reimbursed from individual savings accounts established for eligible participants. Alaska Public Employee Retirement System (PERS) – Defined Benefit Plan (DB) Plan Description. The Kodiak Island Borough participates in the Alaska Public Employees’ Retirement System (PERS), a cost sharing multiple employer defined benefit pension plan. PERS provides retirement benefits, disability and death benefits, and post-employment healthcare to plan members and beneficiaries. The Public Employees’ Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for PERS. This report may be obtained from the system at Pouch C, Juneau, Alaska 99811 or online at http://doa.alaska.gov/drb/pers. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 72 Pension Benefits. All tier employee benefits vest with five years of credited service. There are three tiers of employees based on entry date. Tier I employees enrolled prior to July 1, 1986 with five or more years of credited service are entitled to annual pension benefits beginning at normal retirement age 55 or early retirement age 50. For tier II and III employees enrolled after June 30, 1986, but before July 1, 2006, the normal and early retirement ages are 60 and 55, respectively. All tier employees with 30 or more years of credited service may retire at any age and receive a normal benefit. The PERS defined benefit is closed to new hires enrolled on or after July 1, 2006. New hires after this date participate in the PERS defined contribution plan (DC) described later in these notes. Currently there are 159 employers participating in PERS, including the State of Alaska and 158 political subdivisions and public organizations. Retirement benefits are calculated by multiplying the average monthly compensation (AMC) times credited PERS service times the percentage multiplier. The AMC is determined by averaging the salaries earned during the five highest (three highest for Police/Fire members or members hired prior to July 1, 1996) consecutive payroll years. Members must earn at least 115 days of credit in the last year worked to include it in the AMC calculation. The PERS pays a minimum benefit of $25 per month for each year of service when the calculated benefit is less. The percentage multipliers for police/fire personnel are 2% for the first ten years of service and 2.5% for all service over 10 years. The percentage multipliers for all other participants are 2% for the first ten years, 2.25% for the next ten years, and 2.5% for all remaining service earned on or after July 1, 1986. All service before that date is calculated at 2%. Post-employment healthcare benefits are provided without cost to all members first enrolled before July 1, 1986. Members first enrolled after June 30, 1986, but before July 1, 2006 and who have not reached age 60 may elect to pay for major medical benefits. Post Retirement Pension Adjustments. Post retirement pension adjustments (PRPAs) are granted annually to eligible benefit recipients when the consumer price index (CPI) increases during the preceding calendar year. PRPAs are calculated by multiplying the recipient’s base benefit, including past PRPAs, times: (a) 75% of the CPI increase in the preceding calendar year or 9%, whichever is less, if the recipient is at least 65 or on PERS disability; or (b) 50% of the CPI increase in the preceding calendar year or 6%, whichever is less, if the recipient is at least 60, or has been receiving benefits for at least five years. Ad hoc PRPAs, up to a maximum of 4%, may be granted to eligible recipients who first entered the PERS before July 1, 1986, if the CPI increases and the financial condition of the fund will permit an increase. In a year where an ad hoc PRPA is granted, eligible recipients will receive the higher of the two calculations. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 73 Funding Policy. In April 2008 the Alaska Legislature passed legislation which statutorily capped the employer contribution, established a state funded “on-behalf” contribution, and required that employer contributions be calculated against all PERS eligible wages, including wages paid to participants of the PERS Tier IV defined contribution plan (DC) described later in these footnotes. The state legislature capped the rate at 22%, with the State contributing an on-behalf payment for the difference between the actuarial contribution and the cap. Salary Floor. During the 25th legislation session, Senate Bill 125 passed, which established a June 30, 2008 salary floor under AS 39.35.255(a)(2). The salary floor is the total base salaries paid by an employer to active employees of the system as of the fiscal year ending June 30, 2008. The statute requires the Division of Retirement and Benefits (Division) to collect employer contributions at a minimum based on FY 2008 base salaries. Termination Costs. If the Borough decides to terminate coverage for a department, group, or other classification of members, even if that termination results from the decision to divest of a particular Borough function, all affected employees in that department, group or other classification of members become immediately vested in the plan. The Borough must pay to have a termination study completed. The purpose of the study is to calculate the Borough’s one-time termination costs. The costs represent the amount necessary to fully fund the costs of plan members who become vested through this process and for other changes in actuarial assumptions, such as, earlier than expected retirement, that arise from the act of termination of coverage. The Borough must pay a lump sum within 60 days of termination or arrange a payment plan that is acceptable to the PERS Administrator. For fiscal year 2015 the past service rate is 20.90%. Employee Contribution Rate. The Borough PERS active members are required to contribute 6.75% (3.85% pension costs and 2.90% OPEB) of their annual covered salary. Employer and Other Contribution Rates. There are several contribution rates associated with the pension and healthcare contributions and related liabilities. These amounts are calculated on an annual basis. Employer Effective Rate: This is the actual employer pay-in rate. Under current legislation, this rate is statutorily capped at 22% (12.54 pension costs and 9.46% OPEB) of eligible wages, subject to the salary floor, and other termination costs as described above. This 22% rate is calculated on all PERS participating wages, including those wages attributable to employees in the defined contribution plan. ARM Board Adopted Rate: This is the rate formally adopted by the Alaska Retirement Management Board. This rate is actuarially determined and used to calculate annual Plan funding requirements, without regard to the statutory rate cap or the GASB accounting rate. This rate is 44.03% (25.09% pension and 18.94% OPEB). Prior to July 1, 2015, there were no constraints or restrictions on the actuarial cost method or other assumptions used in the ARM Board valuation. Effective July 1, 2015, the Legislature requires the ARM Board to adopt employer contribution rates for past service liabilities using a level percent of pay method over a closed 25 year term which ends in 2039. This will result in lower ARM Board Rates in future years. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 74 On-behalf Contribution Rate: This is the rate paid in by the State as an on-behalf payment as mandated under current statute. Under state law, subject to annual appropriation, the state will contribute an on-behalf payment into the plan in an amount equal to the difference between the ARM Board Rate and the Employer Effective Rate. Note that in 2015, the State legislature appropriated a one-time contribution to the plan in the amount of $1 billion. As a result, the On-behalf Contribution Rate for 2015 is 42.41% (100% pension costs), which significantly exceeds the statutory amount. On-behalf contribution amounts have been recognized in these financial statements as both revenue and expenditures. GASB Rate: This is the rate used to determine the long-term pension and healthcare liability for plan accounting purposes. Certain actuarial methods and assumptions for this rate calculation are mandated by the Governmental Accounting Standards Board (GASB). Medicare Part D subsidies are not reflected in this rate. The rate uses an 8% pension discount rate and a 4.90% healthcare discount rate. The current rate is 88.12% (33.05% pension and 55.07% OPEB). Employer contributions for the years ended June 30, 2015, 2014 and 2013 are as follows: Pensions (DB) Other Post-Employment Benefits (DB) Total 2015 $ 297,006 224,057 521,063 2014 249,454 266,335 515,789 2013 234,168 298,582 532,750 For the year ended June 30, 2015 the State of Alaska contributed $1,573,363 or 42.41% (pension cost) on-behalf of the Borough, which has been recorded in the fund financial statements under the modified-accrual basis of accounting. In the government-wide financial statements the on-behalf contribution has been adjusted as of the measurement date of June 30, 2014 to a total of $163,247, to represent the on-behalf contribution made by the State under the full accrual basis of accounting. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions: At June 30, 2015, the Borough reported a liability that reflected a reduction for State pension support provided to the Borough. The amount recognized by the Borough as its proportionate share of net pension liability, the related State support, and the total portion of the net pension liability that was associated with the Borough were as follows: Borough’s proportionate share of the net pension liability $ 3,790,362 State’s proportionate share of the net pension liability 3,187,850 Total $ 6,978,213 $3,032,290 of the net pension liability is reported in the governmental activities, while $758,072 is reported in the business-type activities. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 75 The net pension liability was measured as of June 30, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The Borough’s proportion of the net pension liability was based on a projection of the Borough’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers and the State, actuarially determined. At June 30, 2014, the Borough’s proportion was 0.0813%, which is an increase of 0.0009% from its proportion measured as of June 30, 2013. As of measurement date June 30, 2014, the Borough recognized pension expense of $455,472. At June 30, 2015, the Borough reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience $ - - Changes of assumptions - - Net difference between projected and actual earnings on pension plan investments - (350,333) Changes in proportion and differences between Borough contributions and proportionate share of contributions 21,116 - Borough contributions subsequent to the measurement date 297,006 - Total $ 318,122 (350,333) $297,006 reported as deferred outflows of resources related to pensions resulting from Borough contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year Ended June 30, 2016 $ (82,304) 2017 (82,304) 2018 (82,304) 2019 (82,304) Total $ (329,217) For the year ended June 30, 2015, the Borough recognized $82,304 of amortization of the deferred inflows and outflows of resources. $65,843 of the amortization was recorded in the governmental activites and $16,461 was recorded in the business-type activities. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 76 Actuarial Assumptions: The total pension liability in the June 30, 2014 (latest available) actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement. The actuarial assumptions were based upon the results of an actuarial experience study performed as of June 30, 2013. Investment return / discount rate 8% per year (geometric), compounded annually, net of expenses Salary scale Inflation – 3.12% per year Productivity – 0.50% per year Payroll growth 3.62% per year (inflation + productivity) Total inflation Total inflation as measured by the Consumer Price Index for urban and clerical workers from Anchorage is assumed to increase 3.12% annually. Mortality (Pre-termination) Based upon 2010-2013 actual mortality experience. 60% of male rates and 65% of female rates of post termination mortality rates. Deaths are assumed to be occupational 70% of the time for peace officers, and firefighters, 50% of the time for others. Mortality (Post-termination) 96% of all rates of the RP-2000 combined mortality table, 2000 base year projected to 2018. Total turnover Based upon the 2010-2013 actual withdrawal experience. Disability Incidence rates based on 2010-2013 actual experience. Post-disability mortality in accordance with the RP-2000 Disabled Retiree Mortality Table. Disabilities are assumed to be occupational 70% of the time for peace officers / firefighters, 50% of the time for others. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 77 Retirement Retirement rates based upon the 2010-2013 actual experience. Deferred vested members are assumed to retire at their earliest unreduced retirement date for others. For peace officers/firefighters, Tier 1 deferred vested members are assumed to retire at age 55 and Tiers 2 and 3 deferred vested members are assumed to retire at age 60. Marriage and age difference Wives are assumed to be three years younger than husbands. For others, 75% of male members and 70% of female members are assumed to be married. For peace officers/firefighters, 85% of male members and 60% female members are assumed to be married. The long-term expected rate of return on pension plan investments was determined using the building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and adding expected inflation. The best estimates of arithmetic real rates of return for each major asset class are summarized below: Long-Term Expected Asset Class Real Rate of Return Domestic Equity 6.77% International Equity 7.50% Private Equity 10.86% Fixed Income 2.05% Real Estate 3.63% Absolute Return 4.80% Discount Rate: The discount rate used to measure the total pension liability was 8.00%. The projection of the cash flows used to determine the discount rate assumed that Employer and State contributions will continue to follow the current funding policy, which meets State statutes. Based on those assumptions, the pension plan’s fiduciary net pension was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 78 Sensitivity of the Net Pension Liability to Changes in the Discount Rate: The following presents the net pension liability of the System calculated using the discount rate of 8%, as well as what the Systems’ net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (7%) or 1-percentage-point higher (9%) than the current rate: 1% Decrease Current Rate 1% Increase (7%) (8%) (9%) Net pension liability $ 4,969,894 3,790,362 2,797,088 Alaska Public Employee Retirement System (PERS) – Defined Contribution Plan (DC) Plan Description and Funding Requirements. Boroughs and Public Employers in the State of Alaska have a defined contribution retirement plan (PERS Tier IV) for new hires first enrolled on or after July 1, 2006. Plan members make mandatory contributions of 8% of gross eligible compensation. This amount goes directly to the individual’s account. State statutes require the employer to contribute 5% of employees’ eligible compensation. Additionally, employers are required to contribute to OPEB (DB): 1.66% for the retiree medical plan (DB), 0.22% for occupational and death and disability benefits (DB) and 3% of employers average annual employee compensation to the health reimbursement arrangement (HRA DC). The effective employer contribution is 22%. Plan members are 100% vested with their contributions. Members become vested in employers’ contributions as follows: 2 years of service – 25% 3 years of service – 50% 4 years of service – 75% 5 years of service – 100% Plan provisions and contribution requirements and amendments are established by the Alaska Retirement Management Board (ARMB). Total contributions for the year ended June 30, 2015 are as follows: Employer Employee Defined contribution – pension (DC) $ 52,523 84,037 Other post-employment benefits (DB): Retiree medical plan 17,438 - Occupational death and disability benefits 2,311 - Other post-employment benefits (DC) – Health reimbursement agreement (HRA ) 30,767 - Defined benefit unfunded liability (DBUL) 128,064 - $ 231,103 84,037 KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 79 Actual contributions were equal to the annual required contributions. The Defined Benefit Unfunded Liability (DBUL) is computed as the difference between the statutory employer contribution rate less employer contributions for the defined contribution, major medical, occupational death and disability and the health reimbursement arrangement. The DBUL calculation is allocated 57% pension and 43% OPEB. Employer contributions for the years ended June 30, 2015, 2014 and 2013 are as follows: Other Post-Employment Pensions Benefits Total 2015 $ 125,519 105,584 231,103 2014 95,237 89,065 184,302 2013 71,495 88,965 160,460 Actual contributions were equal to the annual required contributions. Deferred Compensation Plan The Kodiak Island Borough has two deferred compensation plans created and amended in accordance with Internal Revenue Code Section 457. The plans are available to all regular Borough employees. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts deferred under these plans are held in trusts that were established for the exclusive benefit of plan participants. Amounts contributed to the plans by participants during the year ended June 30, 2015, were $214,875. The first plan is managed by the International Borough Managers Association Retirement Corporation. $88,149 was contributed to this plan during the year ended June 30, 2015. The Borough believes that the plan does not meet the criteria for inclusion as a fiduciary fund. The second plan is managed by the MassMutual Financial Group. $126,726 was contributed to this plan during the year ended June 30, 2015. The Borough believes that the plan does not meet the criteria for inclusion as a fiduciary fund. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 80 (15) Change in Accounting Principle As discussed in Note I-D to the financial statements, the Borough participates in the Alaska Public Employees’ Retirement System (PERS). In 2015, the Borough adopted the provisions of GASB Statement No. 68 Accounting and Financial Reporting for Pensions, and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an Amendment of GASB Statement No. 68, which, among other accounting and reporting criteria, requires the Borough to recognize its proportional share of the Net Pension Liability (and related deferred inflows and outflows of resources), as of the beginning of the Borough’s fiscal year. As a result of the implementation of these statements, the Borough has recorded an opening balance adjustment to increase liabilities and to decrease opening net position as follows: Governmental Activities: Opening net position, as originally presented $ 126,913,982 Change in accounting principle adjustment (3,705,942) Opening net position, as restated $ 123,208,040 Business-type Activities: Opening net position, as originally presented $ 48,498,487 Change in accounting principle adjustment (926,485) Opening net position, as restated $ 47,572,002 (16) Contingencies (a) General The Borough, in the normal course of its activities, is involved in various claims and pending litigation. After consultation with legal counsel, management estimates that these matters will be resolved without material adverse effect on the Borough’s future financial position or results of operations. (b) Grants Amounts received or receivable from grantor agencies are subject to audit and adjustment by the grantor agencies. Any disallowed claims, including amounts already collected, would become a liability of the General or other applicable funds. In management’s opinion, disallowances, if any, will not be material. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 81 (c) Employee Retirement System Plans The Borough treats the on-behalf funding, created by AS 39.35.280 and AS 14.25.085, as a special funding situation. AS 39.35.255 established the uniform contribution rate for PERS employers at 22%, with the State of Alaska contributing the difference between the total PERS actuarial required contributions and the amount employers contribute at 22% of covered payroll. Per GASB 68, a special funding situation is created when a non-employer entity is legally responsible for making contributions directly to the pension plan that is used to provide pensions to the employees of another entity. Under GASB 68, “legally responsible” is determined by State statute. The State of Alaska created AS 39.35.80 and AS 14.25.085, which established the required contributions for the Employer and the State. The determination of whether the on-behalf payments should be considered a special funding situation is still being debated. If through litigation a decision is made by the courts that the on-behalf payment is not considered a special funding situation, the Borough’s net pension liability for PERS would increase by $3,187,850, as of June 30, 2015. (17) Subsequent Events Management have evaluated subsequent events through January 29, 2016, the date which the financial statements were available for issue. (18) Construction Commitments The Borough has outstanding commitments for construction at year end of $15,533,220. (19) Subsequent Accounting Pronouncements The Governmental Accounting Standards Board has passed several new accounting standards with upcoming implementation dates covering several topics as follows:  GASB 72 – Fair Value Measurement and Application. Effective for periods beginning after June 15, 2015.  GASB 73 – Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB 67 and 68. Effective for fiscal years beginning after June 15, 2015.  GASB 74 – Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. Effective for fiscal years beginning after June 15, 2016.  GASB 75 – Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Effective for fiscal years beginning after June 15, 2017.  GASB 76 – The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. Effective for fiscal years beginning after June 15, 2015. KODIAK ISLAND BOROUGH Notes to Basic Financial Statements, Continued 82  GASB 77 – Tax Abatement Disclosures. Effective for fiscal years beginning after December 15, 2015. Statements 73, 76 and 77 are not expected to have any significant impact on the financial statements of the Borough. GASB Statement No. 72 addresses accounting and financial reporting issues related to fair value measurements. The definition of fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Statement provides guidance for determining a fair value measurement for financial reporting purposes. This Statement also provides guidance for applying fair value to certain investments and disclosure related to all fair value measurements. The objective of GASB Statements No. 74 and 75 is to improve the usefulness of information about postemployment benefits other than pensions (other postemployment benefits or OPEB) included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. For defined benefit OPEB plans that are administered through trusts that meet the specified criteria, this Statement requires two financial statements—a statement of fiduciary net position and a statement of changes in fiduciary net position. Note disclosures and required supplemental information are addressed in these statements. GASB Statement 75 establishes standards for measuring liabilities, deferred inflow and outflows of resources, and expenses/expenditures. REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison ScheduleGeneral FundYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withFinal Budget –Budget Positive 2014OriginalFinalActual(Negative)ActualRevenues:Property taxes and assessments:Real $62,820 62,820 24,977 (37,843)34,167Personal6,780 6,780 6,939 159 — Boat 25,000 25,000 22,985 (2,015)24,350Aircraft22,000 22,000 23,600 1,600 21,400Penalty and interest 175,000 175,000 156,528 (18,472)128,058Total property taxes and assessments 291,600 291,600 235,029 (56,571) 207,975Severance taxes:Fish 1,750,000 1,750,000 1,550,706 (199,294)1,715,496Mining10,000 10,000 49,440 39,440 32,309Logging100,000 100,000 103,111 3,111 96,014Total severance taxes 1,860,000 1,860,000 1,703,257 (156,743) 1,843,819Intergovernmental:State sources:State revenue sharing 730,000 730,000 724,731 (5,269)731,314Fisheries business tax 1,550,000 1,550,000 1,561,675 11,675 1,546,308Fisheries resource landing tax 100,000 100,000 92,730 (7,270)97,679Commercial passenger vessel tax 25,000 25,000 — (25,000)4,600Telephone and electric tax 25,000 25,000 17,206 (7,794)15,792On-behalf PERS payment 370,000 1,241,843 1,173,108 (68,735)463,333Liquor license — — 322 322 220Total state sources 2,800,000 3,671,843 3,569,772 (102,071)2,859,246 2015 KODIAK ISLAND BOROUGH Total state sources 2,800,000 3,671,843 3,569,772 (102,071)2,859,246Federal sources:Payments in lieu of taxes 1,230,000 1,230,000 1,401,087 171,087 1,541,152Fish and Wildlife revenue sharing 150,000 150,000 192,376 42,376 205,518Schools and Roads - Grants to States 2,400 2,400 65 (2,335)— Total federal sources 1,382,400 1,382,400 1,593,528 211,128 1,746,670Total intergovernmentalrevenue 4,182,400 5,054,243 5,163,300 109,057 4,605,916Charges for services -Sale of copies and maps 5,000 5,000 2,647 (2,353)3,136Licenses, permits and fees:Building and trailer permits 40,000 40,000 52,355 12,355 59,661Subdivision and zoning fees 18,500 18,500 21,135 2,635 16,183Other permits 8,000 8,000 13,426 5,426 6,869Total licenses, permits and fees 66,500 66,500 86,916 20,416 82,713Investment income 50,000 50,000 (18,330) (68,330) 23,804Other15,200 15,200 16,821 1,621 11,192Total revenues 6,470,700 7,342,543 7,189,640 (152,903) 6,778,555(continued) 83 Budgetary Comparison ScheduleGeneral Fund, continuedYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withActual Amounts Final Budget –Budget Budgetary Basis Positive 2014OriginalFinal(see Note A)(Negative)ActualExpenditures:General government:General and administration $246,600 247,244 187,199 60,045 180,937Borough assembly 194,260 194,260 159,142 35,118 183,790Borough manager 798,407 918,371 697,995 220,376 545,107Borough clerk 561,562 632,199 682,444 (50,245)525,436Borough attorney 169,000 216,500 203,520 12,980 136,859Finance department 975,007 1,099,799 1,087,354 12,445 921,132Management information systems 1,121,907 1,224,354 1,164,224 60,130 1,013,958Assessing department 756,046 869,693 840,703 28,990 680,158Engineering/facilities department 175,045 194,758 331,478 (136,720)307,917Total general government 4,997,834 5,597,178 5,354,059 243,119 4,495,294 Public safety - animal control 109,415 109,415 109,415 — 72,941 Community and economic development:Community development department 770,949 883,994 919,303 (35,309)666,289Building official 151,484 151,484 125,412 26,072 153,324Economic development 124,450 157,037 33,100 123,937 58,862Total community and economicdevelopment 1,046,883 1,192,515 1,077,815 114,700 878,475 Emergency preparedness 167,500 177,161 29,128 148,033 9,987Health and social services 409,500 409,500 406,093 3,407 326,700Education, culture, and recreation 20,200 20,200 24,856 (4,656)95,625Parks and recreation 195,000 205,950 161,596 44,354 37,795 2015 KODIAK ISLAND BOROUGH Parks and recreation 195,000 205,950 161,596 44,354 37,795Kodiak College and city libraries 195,000 195,000 195,000 — 195,000Total expenditures 7,141,332 7,906,919 7,357,962 548,957 6,111,817Excess of revenuesover expenditures (670,632)(564,376)(168,322)396,054 666,738Other financing (uses):Transfers out (13,500)(147,256)(167,740)(20,484) (483,500) Change in fund balance $(684,132) (711,632) (336,062)375,570 183,238Fund balance, at beginning of year 3,531,970 3,348,732Fund balance, at end of the year $ 3,195,908 3,531,970 Note A: This schedule does not include expenditures of $1,170, a transfer in from the General Fund of $29,192, and a beginning fund (deficit) of ($28,022) on a multi year community development project. These costs are accumulated in the Community Development Fund which is combined with the General Fund for the Basic Financial Statements. Note B:See accompanying notes to required supplementary information. 84 KODIAK ISLAND BOROUGHBudgetary Comparison ScheduleSpecial Revenue Fund – Education SupportYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withFinal Budget – Budget Positive 2014OriginalFinalActual(Negative)Actual Revenues:Property taxes and assessments:Real $9,590,520 9,590,520 9,707,963 117,443 9,003,276 Personal 1,035,080 1,035,080 1,013,965 (21,115) 879,491 Intergovernmental - state sourcesMotor vehicle tax 280,000 280,000 262,175 (17,825) 253,230 Total revenues 10,905,600 10,905,600 10,984,103 78,503 10,135,997 Expenditures:Primary and secondary education 10,905,600 10,905,600 10,905,714 (114) 10,650,220 Excess (deficiency) of revenues over (under) expenditures — — 78,389 78,389 (514,223) Other financing sources:Transfers in — — — — 330,000 Change in fund balance $— — 78,389 78,389 (184,223) 2015 Change in fund balance $— — 78,389 78,389 (184,223) Fund balance (deficit), at beginning of year (31,674) 152,549 Fund balance (deficit), at end of year $ 46,715 (31,674) See accompanying notes to required supplementary information. 85 KODIAK ISLAND BOROUGHBudgetary Comparison ScheduleSpecial Revenue Fund – FacilitiesYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withFinal Budget – Budget Positive 2014Original Final Actual (Negative) ActualRevenues -Investment income $700,000 700,000 468,769 (231,231) 655,470 Expenditures 110,000 110,000 — 110,000 — Excess of revenues over expenditures 590,000 590,000 468,769 (121,231) 655,470 Other financing sources (uses):Transfers out (590,000) (590,000) (590,000) — (522,365) Change in fund balance $— — (121,231) (121,231) 133,105 Fund balance, at beginning of year 39,548,944 39,415,839 Fund balance, at end of year $ 39,427,713 39,548,944 2015 See accompanying notes to required supplementary information. 86 KODIAK ISLAND BOROUGH Notes to Required Supplementary Information – Budgetary Comparison Schedules June 30, 2015 87 The Borough follows these procedures in establishing the budgetary data reflected in the fund financial statements:  The Borough Manager must submit to the Borough Assembly by April 30 a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them.  Public hearings are conducted by the Borough Assembly to obtain citizen comments.  By June 10, the budget is legally enacted through passage of an ordinance by Borough Assembly action. If the Borough Assembly fails to pass an ordinance, the budget submitted by the Borough Manager becomes the adopted budget.  Amendments to the budget can occur anytime during the fiscal year through the Borough Assembly or administrative action. Generally, the following actions are required at the level of the particular change: – All new appropriations are authorized by an appropriation ordinance that amends the annual budget ordinance. – A resolution of the Borough Assembly is required to move (appropriate) amounts between departments and projects. – The administration is authorized and directed by the Borough Assembly to effect the necessary line item changes within the limits established by Items (1) and (2) above by project or department to properly monitor, account, and report receipts and expenditures.  Expenditures may not legally exceed appropriations at the following levels: Capital Projects Funds – project level, all other funds – department level.  All funds, except Capital Projects Funds, are budgeted on an annual basis encompassing a fiscal year. Budgets of Capital Projects Funds generally encompass the period from start-up to project completion, which is generally greater than one year.  Appropriations lapse at year end to the extent that they have not been expended for all funds, except Capital Projects Funds, which lapse at project completion.  Budgets adopted by the Borough Assembly are in accordance with accounting principles generally accepted in the United States of America.  The Borough published a separate 2015 budget document. That document may be obtained from the Kodiak Island Borough, Finance Director, 710 Mill Bay Road, Kodiak, Alaska 99615. Borough's proportion of the net pensionliability 0.0813% Borough's proportionate share of net pension liability $ 3,790,362 State's proportionate share of the netpension liability associated withthe Borough 3,187,850 Total $ 6,978,212 Borough's covered employee payroll $ 2,344,052 Borough's proportionate share of the netpension liability as a percentageof its covered-employee payroll 162% Kodiak Island Borough Schedule of Borough's Proportionate Share of the Net Pension Liability Public Employees' Retirement System June 30, 2015 of its covered-employee payroll 162% Plan fiduciary net position as apercentage of the total pensionliability 62.37% Notes to schedule 1. Information presented for 2015 is based upon Plan measurement date June 30, 2014. 2. This schedule is intended to present 10 years of information. Additional years will be includedas it becomes available. 88 Contractually required contribution $ 297,006 Contributions in relation to the contractually required contribution (297,006) Contribution deficiency - Borough's covered-employee payroll $ 2,368,471 Contributions as a percentage of covered employee payroll 12.54% Notes to schedule 1. Valuation date:June 30, 2013 2. Actuarially determined contribution rates are calculated as of June 30th, two years prior to the fiscal year in whichcontributions are reported. Methods and assumptions used to determine contribution rates: 3. Actuarial cost method:Entry Age Normal. 4. Amortization method:Level dollar, closed. 5.Amortization period:25 years, layered. Kodiak Island Borough Schedule of Borough's Contributions Public Employees' Retirement System June 30, 2015 5.Amortization period:25 years, layered. 6.Equivalent single amortization period:17 years. 7. Asset valuation method:Actuarial value that smooths investment gains and losses over 5 years, constrained to a range of 80% - 120% of fair value. 8. Inflation:3.12% per annum. 9. Salary increases:Ranges from 6.36% to 4.12% based on service for Peace Officer/Firefighter. Ranges from 9.60% to 3.62% based on age and service for All Others. 10.Investment rate of return:8%, net of pension plan investment expenses. This is based on an average inflation rate of 3.12% and a real rate of return of 4.88%. 11.Retirement age:An age-related assumption is used for participants not yet receiving payments. 12.Mortality:1994 Group Annuity Mortality (GAM) Table, sex distinct, 1994 Base Year without margin projected to 2013 using projection Scale AA, 80% of the male table for males and 60% of the female table for females for pre-termination mortality for Peace Officer/Firefighter, 1994 Base Year without margin projected to 2013 using Projection Scale AA, 75% of the male table for males and 55% of the female table for females for pre-termination mortality for All Others and the 1994 GAM Table, sex-distinct, 1994 Base Year without margin projected to 2013 using Projection Scale AA for males and with a 1-year set-forward for females for post-termination mortality. 13.This schedule is intended to present 10 years of information. Additional years will be included as it becomes available. 89 ADDITIONAL SUPPLEMENTARY INFORMATION KODIAK ISLAND BOROUGHBudgetary Comparison ScheduleDebt Service Fund - Education and HealthYear ended June 30, 2015(With summarized financial information for the year ended June 30, 2014) Variance withOriginalFinal Budget – and Final Positive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $1,631,393 1,158,728 (472,665) 2,043,895 Intergovernmental:State sources 3,885,100 3,885,080 (20) 3,347,517 Investment income 40,000 509 (39,491) 3,182 Total revenues 5,556,493 5,044,317 (512,176) 5,394,594 Expenditures:General government 20,000 6,312 13,688 6,045 Debt service:Principal 2,646,039 2,646,040 (1) 3,645,950 Interest 3,120,454 3,120,449 5 2,107,198 Debt issuance 20,000 — 20,000 89,835 2015 Total expenditures 5,806,493 5,772,801 33,692 5,849,028 Excess (deficiency) of revenuesover (under) expenditures (250,000) (728,484) (478,484) (454,434) Other financing sources:Transfers in 250,000 250,000 — 482,402 Change in fund balance $— (478,484) (478,484) 27,968 Fund balance, at beginning of year 665,711 637,743 Fund balance, at end of year $ 187,227 665,711 90 NONMAJOR GOVERNMENTAL FUNDS Special Revenue See Special Revenue section of this report. Capital Projects See Capital Projects section of this report. NONMAJOR SPECIAL REVENUE FUNDS The Fire Protection Area No. 1 Fund accounts for the activities related to fire suppression and fire prevention services to the citizens of the service area. The Womens Bay Fire Department Fund accounts for the activities related to fire suppression and fire prevention services to the citizens of the service area. The Kodiak Airport Fire District Fund accounts for the activities related to fire suppression and fire prevention services to the citizens of the service area. The Monashka Bay Road Service Area Fund accounts for the activities related to road services within the service area. The Service Area No. 1 Fund accounts for the activities related to maintenance service to roads within the district, including snow removal, ditching and grading. The Womens Bay Road Service Area Fund accounts for the activities related to maintenance service to roads within the service area, including snow and ice removal, ditching and culvert work. The Bay View Road Service Area Fund accounts for the activities related to road services within the service area. The Service Area No. 2 Fund accounts for the activities related to water and sewer services in the service area. This fund is in the design stage at present. The Local Emergency Planning Committee (L.E.P.C.) Fund accounts for State of Alaska grants provided for regional emergency preparation, response, and mitigation planning. The Land Sales Fund accounts for the disposal of Borough-owned lands. The proceeds of land disposals are generally used for the management of Borough lands and the repairs and maintenance of Borough school buildings. The Buildings and Grounds Fund accounts for the operations and maintenance of certain buildings and grounds owned by the Borough which are jointly shared with the City of Kodiak, the Kodiak Island Borough School District, and certain nonprofit community organizations. The Woodland Acres Street Light Service Area Fund accounts for activities related to the provision of street lighting within the service area. The Trinity Islands Street Light Service Area Fund accounts for activities related to the provision of street lighting within the service area. The Tourism Development Fund accounts for the collection of the Borough Transient Accommodation Tax (Bed Tax) and its subsequent transfer to the Kodiak Island Convention and Visitor Bureau. The Mission Lake Tide Gate Fund accounts for activities related to maintaining the tide gate for the residents of the service area. The Fern Fuller Trust Fund accounts for the distribution of funds to the beneficiaries of the trust. The Trinity Islands Paving Fund accounts for activities related to the provision of paving within the service area. The Oil Spill Disaster Fund accounts for activities related to the grounding of the drilling vessel Kulluk. KODIAK ISLAND BOROUGHCombining Balance SheetNonmajor Governmental FundsJune 30, 2015(With summarized financial information at June 30, 2014) Special CapitalRevenueProjectAssetsFundsFunds 2015 2014Equity in central treasury $ 3,267,960 1,916,339 5,184,299 5,986,374 Receivables:State of Alaska 8,023 1,618,973 1,626,996 22,145 Federal government — 319,459 319,459 153,995 Property taxes 20,493 — 20,493 17,776 Land sales contracts, due within one year 25,464 — 25,464 35,465 Other 26,546 7,618 34,164 37,517 Land sale contracts, due after one year 262,100 — 262,100 513,765 Total assets $ 3,610,586 3,862,389 7,472,975 6,767,037 Liabilities:Accounts payable $80,893 133,452 214,345 246,977 Customer deposits 1,100 — 1,100 1,100 Due to other funds 40,887 715,130 756,017 60,242 Unearned revenues 1,000 93,729 94,729 134,815 Total liabilities 123,880 942,311 1,066,191 443,134 Totals Resources and Fund BalancesLiabilities, Deferred Inflows of 91 Total liabilities 123,880 942,311 1,066,191 443,134 Deferred inflows of resources -Unavailable revenues 287,564 — 287,564 513,765 Total liabilities and deferredinflows of resources 411,444 942,311 1,353,755 956,899 Fund balances:Nonspendable 262,100 — 262,100 513,765 Committed 2,969,906 — 2,969,906 2,140,474 Assigned — 3,149,193 3,149,193 3,249,119 Unassigned (32,864) (229,115) (261,979) (93,220) Total fund balances 3,199,142 2,920,078 6,119,220 5,810,138 Total $ 3,610,586 3,862,389 7,472,975 6,767,037 91 KODIAK ISLAND BOROUGHCombining Statement of Revenues, Expenditures,and Changes in Fund BalancesNonmajor Governmental FundsYear ended June 30, 2015(With summarized financial information for year ended June 30, 2014) Special CapitalRevenueProjectFundsFunds 2015 2014Revenues:Property taxes and assessments $1,343,783 — 1,343,783 1,341,544 Transient accommodations tax 104,074 — 104,074 75,142 Intergovernmental:State sources 113,238 2,097,177 2,210,415 60,916 Federal sources — 500,459 500,459 187,002 Charges for services 550,006 — 550,006 586,300 Licenses, permits and fees 28,600 — 28,600 29,850 Investment income 15,275 14,218 29,493 47,175 Rental 20,550 — 20,550 — Other 926 — 926 39,364 Total revenues 2,176,452 2,611,854 4,788,306 2,367,293 Expenditures:Current:General government 846,606 — 846,606 857,417 Public safety 414,754 — 414,754 503,779 Community and economic development 75,000 — 75,000 84,126 Service district maintenance 534,376 — 534,376 631,572 Capital outlay:Schools — 310,999 310,999 122,388 General — 2,629,896 2,629,896 234,858 Totals General — 2,629,896 2,629,896 234,858 Debt service - interest 1,128 — 1,128 2,208 Total expenditures 1,871,864 2,940,895 4,812,759 2,436,348 Excess (deficiency) of revenuesover (under) expenditures 304,588 (329,041) (24,453) (69,055) Other financing sources (uses):Land sales proceeds 329,344 — 329,344 356,284 Transfers in 70,691 — 70,691 18,000 Transfers out (66,500) — (66,500) (66,500) Net other financing sources (uses)333,535 — 333,535 307,784 Change in fund balances 638,123 (329,041) 309,082 238,729 Fund balances, at beginning of year 2,561,019 3,249,119 5,810,138 5,571,409 Fund balances, at end of year $ 3,199,142 2,920,078 6,119,220 5,810,138 92 Fire and Road Service Areas Fire and Road Service AreasFireRoadFireWomens Kodiak Monashka WomensProtectionBay Fire Airport Fire Bay Road Service Bay Road Bay View Road Service AreaArea No. 1 Department District Service Area Area No. 1 Service Area Service Area No. 2 L.E.P.C.Land Sales Equity in central treasury $584,330 580,019 35,385 56,494 414,988 162,202 8,266 5,823 — 561,689 Receivables:State of Alaska — — — — — — — — 8,023 — Property taxes 9,789 474 1,208 463 7,077 947 535 — — — Land sales contracts, due within one year — — — — — — — — — 25,464 Other 15 — — — — — — — — 4,557 Land sale contracts, due after one year — — — — — — — — — 262,100 Total $594,134 580,493 36,593 56,957 422,065 163,149 8,801 5,823 8,023 853,810 Liabilities:Accounts payable 18,809 5,561 — — 15,866 — — — — 205 Customer deposits — 1,100 — — — — — — — — Due to other funds — — — — — — — — 25,844 — Unearned revenues — — — — — — — — — 1,000 Total liabilities 18,809 6,661 — — 15,866 — — — 25,844 1,205 Deferred inflows of resources:Unavailable revenues — — — — — — — — — 287,564 Total liabilities and deferred Road KODIAK ISLAND BOROUGH Liabilities, Deferred Inflows of Resources,and Fund Balances (Deficits) State Grant Program Assets Combining Balance SheetNonmajor Special Revenue Funds (With summarized financial information at June 30, 2014)June 30, 2015 Total liabilities and deferredinflows of resources 18,809 6,661 — — 15,866 — — — 25,844 288,769 Fund balances (deficits):Nonspendable — — — — — — — — — 262,100 Committed 575,325 573,832 36,593 56,957 406,199 163,149 8,801 5,823 — 302,941 Unassigned — — — — — — — — (17,821) — Total fund balances (deficits)575,325 573,832 36,593 56,957 406,199 163,149 8,801 5,823 (17,821) 565,041 Total $594,134 580,493 36,593 56,957 422,065 163,149 8,801 5,823 8,023 853,810 (continued) 93 WoodlandBuildings Acres Street Trinity IslandsandLight Service Street Light Tourism Mission Lake Fern Fuller Trinity Islands Oil Spill TotalsAssetsGroundsAreaService Area Development Tide Gate Trust Paving Disaster 2015 2014 Equity in central treasury $388,869 30,085 26,414 170,438 43,291 199,667 — — 3,267,960 2,666,213 Receivables:State of Alaska — — — — — — — — 8,023 6,778 Property taxes — — — — — — — — 20,493 17,776 Land sales contracts, due within one year — — — — — — — — 25,464 35,465 Other — — — 21,974 — — — — 26,546 29,898 Land sale contracts, due after one year — — — — — — — — 262,100 513,765 Total $388,869 30,085 26,414 192,412 43,291 199,667 — — 3,610,586 3,269,895 Liabilities:Accounts payable 24,902 400 150 15,000 — — — — 80,893 97,305 Customer deposits — — — — — — — — 1,100 1,100 Due to other funds — — — — — — 4,477 10,566 40,887 60,242 Unearned revenues — — — — — — — — 1,000 36,464 Total liabilities 24,902 400 150 15,000 — — 4,477 10,566 123,880 195,111 Deferred inflows of resources:Unavailable revenues — — — — — — — — 287,564 513,765 Total liabilities and deferred June 30, 2015(With summarized financial information at June 30, 2014) Street Lighting Districts Liabilities, Deferred Inflows of Resources,and Fund Balances (Deficits) KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsCombining Balance Sheet, (continued) Total liabilities and deferredinflows of resources 24,902 400 150 15,000 — — 4,477 10,566 411,444 708,876 Fund balances (deficits):Nonspendable — — — — — — — — 262,100 513,765 Committed 363,967 29,685 26,264 177,412 43,291 199,667 — — 2,969,906 2,140,474 Unassigned — — — — — — (4,477) (10,566) (32,864) (93,220) Total fund balances (deficits)363,967 29,685 26,264 177,412 43,291 199,667 (4,477) (10,566) 3,199,142 2,561,019 Total $388,869 30,085 26,414 192,412 43,291 199,667 — — 3,610,586 3,269,895 94 State GrantFireRoadProgramFireWomens Kodiak Monashka WomensProtectionBay Fire Airport Fire Bay Road Service Bay Road Bay View Road Service Area No. 1 Department District Service Area Area No. 1 Service Area Service Area Area No. 2 L.E.P.C.Revenues:Property taxes and assessments $ 558,021 98,693 14,301 60,701 375,650 189,927 13,743 — — Transient accommodations tax — — — — — — — — — Intergovernmental:State sources 26,205 — — — — — — — 13,913 Charges for services — 13,601 — — — — — — — Licenses, permits and fees — — — — — 27,600 — — — Investment income 2,425 2,747 156 171 2,321 873 36 28 — Rental 7,350 13,200 — — — — — — — Other 380 250 — — — — — — — Total revenues 594,381 128,491 14,457 60,872 377,971 218,400 13,779 28 13,913 Expenditures:Current:General government — — — — — — — — — Public safety 326,715 60,503 13,623 — — — — — 13,913 Community and economicdevelopment — — — — — — — — — Service district maintenance — — — 7,454 320,360 194,617 11,408 — — Debt service - interest — — — — — — — — — Total expenditures 326,715 60,503 13,623 7,454 320,360 194,617 11,408 — 13,913 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances (Deficits) Year ended June 30, 2015 (With summarized financial information for the year ended June 30, 2014) Fire and Road Service Areas KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds RoadFire and Road Service Areas Total expenditures 326,715 60,503 13,623 7,454 320,360 194,617 11,408 — 13,913 Excess (deficiency) of revenuesover (under) expenditures 267,666 67,988 834 53,418 57,611 23,783 2,371 28 — Other financing sources (uses):Land sale proceeds — — — — — — — — — Transfers in 16,040 — — — — — — — — Transfers out — — — — — — — — — Net other financing sources (uses)16,040 — — — — — — — — Change in fund balances 283,706 67,988 834 53,418 57,611 23,783 2,371 28 — Fund balances (deficits), at beginning of year 291,619 505,844 35,759 3,539 348,588 139,366 6,430 5,795 (17,821) Fund balances (deficits), at end of year $575,325 573,832 36,593 56,957 406,199 163,149 8,801 5,823 (17,821) (continued) 95 Woodland Acres Trinity IslandsBuildings and Street Light Street Light Tourism Mission Lake Fern Fuller Trinity Islands Oil Spill TotalsLand Sales Grounds Service Area Service Area Development Tide Gate Trust Paving Disaster 2015 2014Revenues:Property taxes and assessments $— — 12,164 5,824 — 5,953 — 8,806 — 1,343,783 1,341,544 Transient accommodations tax — — — — 104,074 — — — — 104,074 75,142 Intergovernmental:— State sources 28,536 30,659 — — 13,925 — — — — 113,238 13,430 Charges for services 4,307 532,098 — — — — — — — 550,006 586,300 Licenses, permits and fees 1,000 — — — — — — — — 28,600 29,850 Investment income 2,365 1,558 140 125 731 201 1,311 87 — 15,275 19,579 Rental — — — — — — — — — 20,550 — Other 174 122 — — — — — — — 926 39,364 Total revenues 36,382 564,437 12,304 5,949 118,730 6,154 1,311 8,893 — 2,176,452 2,105,209 Expenditures:Current:General government 276,563 563,441 4,810 1,792 — — — — — 846,606 857,417 Public safety — — — — — — — — — 414,754 503,779 Community and economicdevelopment — — — — 75,000 — — — — 75,000 84,126 Service district maintenance — — — — — 280 — 257 — 534,376 631,572 Debt service - interest — — — — — — — 1,128 — 1,128 2,208 Total expenditures 276,563 563,441 4,810 1,792 75,000 280 — 1,385 — 1,871,864 2,079,102 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Street Lighting Districts Combining Statement of Revenues, Expenditures, Year ended June 30, 2015 and Changes in Fund Balances (Deficits), (continued) (With summarized financial information for the year ended June 30, 2014) Total expenditures 276,563 563,441 4,810 1,792 75,000 280 — 1,385 — 1,871,864 2,079,102 Excess (deficiency) of revenuesover (under) expenditures (240,181) 996 7,494 4,157 43,730 5,874 1,311 7,508 — 304,588 26,107 Other financing sources (uses):Land sales proceeds 329,344 — — — — — — — — 329,344 356,284 Transfers in 14,961 39,690 — — — — — — — 70,691 18,000 Transfers out — — — — — — (66,500) — — (66,500) (66,500) Net other financing sources (uses)344,305 39,690 — — — — (66,500) — — 333,535 307,784 Change in fund balances 104,124 40,686 7,494 4,157 43,730 5,874 (65,189) 7,508 — 638,123 333,891 Fund balances (deficits), at beginning of year 460,917 323,281 22,191 22,107 133,682 37,417 264,856 (11,985) (10,566) 2,561,019 2,227,128 Fund balances (deficits), at end of year $565,041 363,967 29,685 26,264 177,412 43,291 199,667 (4,477) (10,566) 3,199,142 2,561,019 96 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsFire and Road Service Areas – Fire Protection Area No. 1Schedule of Revenues, Expenditures,and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $ 559,500 558,021 (1,479) 552,353 Intergovernmental -State sources - PERS on behalf payment — 26,205 26,205 — Investment income — 2,425 2,425 3,470 Rental 7,700 7,350 (350) Other 1,000 380 (620) 25,543 Total revenues 568,200 594,381 26,181 581,366 Expenditures:Public safety:Personnel 115,645 85,526 30,119 108,982 Volunteers 30,000 28,980 1,020 13,545 Fringe benefits 140,475 66,238 74,237 71,691 Professional services 5,000 — 5,000 75 Support goods and services 220,847 127,886 92,961 173,665 2015 Support goods and services 220,847 127,886 92,961 173,665 Capital outlay 104,000 18,085 85,915 40,514 Total expenditures 615,967 326,715 289,252 408,472 Excess (deficiency) of revenues over (under) expenditures (47,767) 267,666 315,433 172,894 Other financing sources -Transfers in 16,040 16,040 — — Change in fund balance $(31,727) 283,706 315,433 172,894 Fund balance, at beginning of year 291,619 118,725 Fund balance, at end of year $ 575,325 291,619 97 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsFire and Road Service Areas – Womens Bay Fire DepartmentSchedule of Revenues, Expenditures,and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $ 92,000 98,693 6,693 95,537 Charges for services 13,000 13,601 601 14,336 Investment income 1,000 2,747 1,747 4,478 Rental 12,000 13,200 1,200 — Other — 250 250 13,200 Total revenues 118,000 128,491 10,491 127,551 Expenditures:Public safety:Personnel services 1,000 — 1,000 — Fringe benefits 500 — 500 — Support goods and services 90,750 42,313 48,437 38,806 Capital outlay 277,250 18,190 259,060 27,653 2015 Capital outlay 277,250 18,190 259,060 27,653 Total expenditures 369,500 60,503 308,997 66,459 Excess (deficiency) of revenuesover (under) expenditures $(251,500) 67,988 319,488 61,092 Fund balance, at beginning of year 505,844 444,752 Fund balance, at end of year $ 573,832 505,844 98 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsFire and Road Service Areas – Kodiak Airport Fire DistrictSchedule of Revenues, Expenditures,and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $ 13,800 14,301 501 13,602 Investment income 500 156 (344) 362 Total revenues 14,300 14,457 157 13,964 Expenditures:Public safety:Support goods and services 14,300 13,623 677 14,359 Excess (deficiency) of revenuesover (under) expenditures $— 834 834 (395) Fund balance, at beginning of year 35,759 36,154 Fund balance, at end of year $ 36,593 35,759 99 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsFire and Road Service Areas – Monashka Bay Road Service AreaSchedule of Revenues, Expenditures,and Changes in Fund Balance (Deficit)Budget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $ 61,000 60,701 (299) 61,032 Investment income — 171 171 145 Total revenues 61,000 60,872 (128) 61,177 Expenditures:Service district maintenance:Personnel services — 274 (274) 1,091 Fringe benefits — 202 (202) 589 Support goods and services 2,000 135 1,865 443 Snow removal/sanding 30,000 3,158 26,842 9,713 Road grading/ditching 13,000 3,099 9,901 11,131 Repairs and maintenance 16,000 586 15,414 32,326 Total expenditures 61,000 7,454 53,546 55,293 Excess of revenues overexpenditures $— 53,418 53,418 5,884 Fund balance (deficit), at beginning of year 3,539 (2,345) Fund balance, at end of year $ 56,957 3,539 100 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsFire and Road Service Areas – Service Area No. 1Schedule of Revenues, Expenditures,and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $ 390,500 375,650 (14,850) 388,416 Investment income — 2,321 2,321 4,774 Total revenues 390,500 377,971 (12,529) 393,190 Expenditures:Service district maintenance:Personnel services 8,800 5,619 3,181 6,038 Fringe benefits 2,900 971 1,929 1,464 Support goods and services 3,100 1,026 2,074 1,732 Snow removal/sanding 200,000 29,198 170,802 73,000 Road grading/ditching 60,000 45,647 14,353 35,358 Repairs and maintenance 215,700 237,899 (22,199) 307,566 Total expenditures 490,500 320,360 170,140 425,158 (With financial information for the year ended June 30, 2014) Excess (deficiency) of revenuesover (under) expenditures $(100,000) 57,611 157,611 (31,968) Fund balance, at beginning of year 348,588 380,556 Fund balance, at end of year $ 406,199 348,588 101 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsFire and Road Service Areas – Womens Bay Road Service AreaSchedule of Revenues, Expenditures, and Changes in Fund Balance Budget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $180,000 189,927 9,927 183,730 Licenses, permits and fees 25,000 27,600 2,600 27,600 Investment income 1,100 873 (227) 1,530 Total revenues 206,100 218,400 12,300 212,860 Expenditures:Service district maintenance:Personnel services 1,000 505 495 6 Fringe benefits 800 357 443 2 Support goods and services 31,300 452 30,848 337 Snow removal/sanding 60,000 18,190 41,810 48,925 Road grading/ditching 33,000 25,824 7,176 44,270 Repairs and maintenance 80,000 149,289 (69,289) 51,753 Total expenditures 206,100 194,617 11,483 145,293 Excess of revenues Excess of revenues over expenditures $— 23,783 23,783 67,567 Fund balance, at beginning of year 139,366 71,799 Fund balance, at end of year $ 163,149 139,366 102 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsFire and Road Service Areas – Bay View Road Service AreaSchedule of Revenues, Expenditures, and Changes in Fund (Deficit)Budget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $15,257 13,743 (1,514) 13,622 Investment income — 36 36 78 Total revenues 15,257 13,779 (1,478) 13,700 Expenditures:Service district maintenance:Personnel services — 215 (215) 187 Fringe benefits — 135 (135) 161 Professional services 7,257 — 7,257 — Support goods and services — 24 (24) 252 Snow removal/sanding 5,400 981 4,419 4,966 Road grading/ditching 1,100 9,539 (8,439) — Repairs and maintenance 1,500 514 986 — Total expenditures 15,257 11,408 3,849 5,566 Excess of revenues over expenditures $— 2,371 2,371 8,134 Fund balance (deficit), at beginning of year 6,430 (1,704) Fund balance, at end of year $ 8,801 6,430 103 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsFire and Road Service Areas – Service Area No. 2Schedule of Revenues, Expenditures, and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Investment income $100 28 (72) 52 Expenditures:Service district maintenance -Support services 100 — 100 — Excess of revenues overexpenditures $— 28 28 52 Fund balance, at beginning of year 5,795 5,743 Fund balance, at end of year $ 5,823 5,795 104 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsL.E.P.C.Schedule of Revenues, Expenditures, and Changes in Fund (Deficit)Budget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)Actual Revenues:Intergovernmental:State sources – grants $12,000 13,913 1,913 13,430 Expenditures:Public safety:Personnel services 11,000 6,768 4,232 9,465 Fringe benefits — 3,229 (3,229) 4,609 Support goods and services 1,000 3,916 (2,916) 415 Total expenditures 12,000 13,913 (1,913) 14,489 Excess (deficiency) of revenues over (under) expenditures $— — — (1,059) Fund (deficit), at beginning of year (17,821) (16,762) Fund (deficit), at beginning of year (17,821) (16,762) Fund (deficit), at end of year $ (17,821) (17,821) 105 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsLand SalesSchedule of Revenues, Expenditures, and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Intergovernmental:State sources - PERS on behalf payment $— 28,536 28,536 — Charges for services 50,000 4,307 (45,693) 34,765 Licenses, permits and fees 2,250 1,000 (1,250) 2,250 Investment income — 2,365 2,365 (2,647) Other 800 174 (626) 140 Total revenues 53,050 36,382 (16,668) 34,508 Expenditures:General government:Personnel services 169,311 153,602 15,709 170,861 Fringe benefits 119,931 65,037 54,894 87,350 Professional services 218,000 11,200 206,800 27,837 Support goods and services 57,700 46,724 10,976 54,429 Total expenditures 564,942 276,563 288,379 340,477 Excess (deficiency) of revenuesover (under) expenditures (511,892) (240,181) 271,711 (305,969) Other financing sources:Land sale proceeds 208,000 329,344 121,344 356,284 Transfers in 16,159 14,961 (1,198) — Net other financing sources 224,159 344,305 120,146 356,284 Change in fund balance $(287,733) 104,124 391,857 50,315 Fund balance, at beginning of year 460,917 410,602 Fund balance, at end of year $ 565,041 460,917 106 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsBuildings and GroundsSchedule of Revenues, Expenditures, and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Intergovernmental:State sources - PERS on behalf payment $24,100 30,659 6,559 — Charges for services 569,908 532,098 (37,810) 537,199 Investment income 2,500 1,558 (942) 2,937 Other — 122 122 481 Total revenues 596,508 564,437 (32,071) 540,617 Expenditures:General government:School buildings 55,000 25,011 29,989 24,655 Chiniak School — — — 1,875 Borough building 686,258 496,230 190,028 479,011 Mental health center 20,000 19,394 606 3,538 Various borough buildings 10,000 6,321 3,679 1,227 Project office 5,200 213 4,987 — Long-term care facility — 16,272 (16,272) — Total expenditures 776,458 563,441 213,017 510,306 Total expenditures 776,458 563,441 213,017 510,306 Excess (deficiency) of revenuesover (under) expenditures (179,950) 996 180,946 30,311 Other financing sources:Transfers in 39,690 39,690 — 18,000 Change in fund balance $ (140,260) 40,686 180,946 48,311 Fund balance, at beginning of year 323,281 274,970 Fund balance, at end of year $ 363,967 323,281 107 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsWoodland Acres Street Light Service AreaSchedule of Revenues, Expenditures, and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $ 11,650 12,164 514 12,067 Investment income 200 140 (60) 208 Total revenues 11,850 12,304 454 12,275 Expenditures:General government:Support goods and services 11,850 4,810 7,040 4,834 Excess of revenues overexpenditures $— 7,494 7,494 7,441 Fund balance, at beginning of year 22,191 14,750 Fund balance, at end of year $ 29,685 22,191 (With financial information for the year ended June 30, 2014) 108 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsTrinity Islands Street Light Service AreaSchedule of Revenues, Expenditures, and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $ 5,750 5,824 74 5,753 Investment income — 125 125 200 Total revenues 5,750 5,949 199 5,953 Expenditures:General government:Support goods and services 5,750 1,792 3,958 1,800 Excess of revenues overexpenditures $— 4,157 4,157 4,153 Fund balance, at beginning of year 22,107 17,954 Fund balance, at end of year $ 26,264 22,107 109 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsTourism DevelopmentSchedule of Revenues, Expenditures, and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Transient accommodations tax $ 90,000 104,074 14,074 75,142 Intergovernmental - State sources -Commerical passenger vessel tax — 13,925 13,925 — Investment income 500 731 231 1,150 Total revenues 90,500 118,730 28,230 76,292 Expenditures:Community and economic development:Contributions 80,000 75,000 5,000 84,126 Support goods and services 35,500 — 35,500 — Total expenditures 115,500 75,000 40,500 84,126 Excess (deficiency) of revenuesover (under) expenditures $(25,000) 43,730 68,730 (7,834) Fund balance, at beginning of year 133,682 141,516 Fund balance, at beginning of year 133,682 141,516 Fund balance, at end of year $ 177,412 133,682 110 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsMission Lake Tide GateSchedule of Revenues, Expenditures, and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $ 5,400 5,953 553 5,448 Investment income — 201 201 333 Total revenues 5,400 6,154 754 5,781 Expenditures:Service district maintenance:Personnel services — 195 (195) 188 Fringe benefits — 77 (77) 50 Contracted services 3,000 — 3,000 — Support goods and services 2,400 8 2,392 7 Total expenditures 5,400 280 5,120 245 Excess of revenuesover expenditures $— 5,874 5,874 5,536 over expenditures $— 5,874 5,874 5,536 Fund balance, at beginning of year 37,417 31,881 Fund balance, at end of year $ 43,291 37,417 111 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsFern Fuller TrustSchedule of Revenues, Expenditures, and Changes in Fund BalanceBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Investment income $ 3,500 1,311 (2,189) 2,293 Expenditures — — — — Excess of revenues over expenditures 3,500 1,311 (2,189) 2,293 Other financing (uses):Transfers out -Hospital Facilities Enterprise Fund (66,500) (66,500) — (66,500) Change in fund balances $ (63,000) (65,189) (2,189) (64,207) Fund balance, at beginning of year 264,856 329,063 Fund balance, at end of year $199,667 264,856 Fund balance, at end of year $199,667 264,856 112 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsTrinity Islands PavingSchedule of Revenues, Expenditures, and Changes in Fund (Deficit)Budget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)ActualRevenues:Property taxes and assessments $ 10,000 8,806 (1,194) 9,984 Investment income 500 87 (413) 216 Total revenues 10,500 8,893 (1,607) 10,200 Expenditures:Service district maintenance -Support goods and services 8,290 257 8,033 17 Debt service -Interest 2,210 1,128 1,082 2,208 Total expenditures 10,500 1,385 9,115 2,225 Excess of revenues overexpenditures $— 7,508 7,508 7,975 Fund (deficit), at beginning of year (11,985) (19,960) Fund (deficit), at end of year $ (4,477) (11,985) 113 KODIAK ISLAND BOROUGHNonmajor Special Revenue FundsOil Spill DisasterSchedule of Revenues, Expenditures, and Changes in Fund (Deficit)Budget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) 2015 Variance withFinal BudgetFinalPositive 2014BudgetActual(Negative)Actual Revenues $ — — — — Expenditures — — — — Excess of revenuesover expenditures $— — — — Fund (deficit), at beginning of year (10,566) (10,566) Fund (deficit), at end of year $ (10,566) (10,566) 114114 NONMAJOR CAPITAL PROJECT FUNDS The Borough Capital Projects Fund accounts for capital improvement projects related to various financing sources. The School Bond Capital Projects Fund accounts for educational related capital projects funded by general obligation bonds which will be paid for with property taxes and State of Alaska grants. The State Capital Grants Fund accounts for capital improvement projects relating to grants received from the State of Alaska. The Other Capital Projects Fund accounts for capital improvement projects related to various financing sources. KODIAK ISLAND BOROUGHNonmajor Capital Project FundsCombining Balance SheetJune 30, 2015 Borough School Bond State OtherCapitalCapitalCapitalCapitalAssetsProjectsProjectsGrantsProjects 2015 2014 Equity in central treasury $533,455 — — 1,382,884 1,916,339 3,320,161 Receivables:State of Alaska — — 746,568 872,405 1,618,973 15,367 Federal government — — 199,831 119,628 319,459 153,995 Accounts and other receivables, net 4,466 — 3,152 — 7,618 7,619 Total $ 537,921 — 949,551 2,374,917 3,862,389 3,497,142 Liabilities and Fund Balances Totals (With summarized financial information at June 30, 2014) Liabilities:Accounts payable 17,123 48 46,277 70,004 133,452 149,672 Due to other funds — 229,067 486,063 — 715,130 — Unearned revenues — — — 93,729 93,729 98,351 Total liabilities 17,123 229,115 532,340 163,733 942,311 248,023 Fund balances:Assigned 520,798 — 417,211 2,211,184 3,149,193 3,249,119 Unassigned — (229,115) — — (229,115) — Total fund balances (deficits) 520,798 (229,115) 417,211 2,211,184 2,920,078 3,249,119 Total $ 537,921 — 949,551 2,374,917 3,862,389 3,497,142 115 KODIAK ISLAND BOROUGHNonmajor Capital Project FundsCombining Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficit)Year ended June 30, 2015 Borough School Bond State OtherCapitalCapitalCapitalCapitalProjectsProjectsGrantsProjects 2015 2014Revenues:Intergovernmental:$State sources — — 1,056,333 1,040,844 2,097,177 47,486 Federal sources — — 275,515 224,944 500,459 187,002 Investment income 2,628 66 928 10,596 14,218 27,596 Total revenues 2,628 66 1,332,776 1,276,384 2,611,854 262,084 Expenditures:Capital outlay:Schools — 310,999 — — 310,999 122,388 General 12,323 — 1,351,785 1,265,788 2,629,896 234,858 Total expenditures 12,323 310,999 1,351,785 1,265,788 2,940,895 357,246 Totals (With summarized financial information for the year ended June 30, 2014) Total expenditures 12,323 310,999 1,351,785 1,265,788 2,940,895 357,246 Excess (deficiency) of revenuesover (under) expenditures (9,695) (310,933) (19,009) 10,596 (329,041) (95,162) Fund balances, at beginning of year 530,493 81,818 436,220 2,200,588 3,249,119 3,344,281 Fund balances (deficit), at end of year $520,798 (229,115) 417,211 2,211,184 2,920,078 3,249,119 116 ENTERPRISE FUNDS The Municipal Solid Waste Collection and Disposal Fund accounts for the collection and disposal of solid waste and recycling services for the Kodiak Island Borough. The Hospital Facilities Fund accounts for rents on the Borough-owned hospital, hospital related state revenue sharing, and other hospital related revenue. In turn, it purchases hospital equipment and makes debt service payments on hospital related debt. The Kodiak Fisheries Research Center Fund accounts for rents and expenses on the Borough-owned Kodiak Fisheries Research Center. The three tenants: NOAA, Alaska Department of Fish & Game and University of Alaska, Fairbanks pay lease funds to participate in this multi-agency research facility committed to the preservation of the North Pacific marine ecosystem and resources. The 911 Service Fund accounts for funds collected from phone charges and pays for a 911 emergency system. KODIAK ISLAND BOROUGH Municipal Solid Waste Collection and Disposal Schedule of Revenues, Expenses, andChanges in Net PositionBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withFinal Budget Final Positive 2014BudgetActual(Negative)Actual Operating revenues:Solid waste disposal $2,835,345 2,611,854 (223,491) 2,265,967 Other 2,000 11,335 9,335 39,403 Total operating revenues 2,837,345 2,623,189 (214,156) 2,305,370 Operating expenses:Personnel services 1,057,209 824,689 232,520 876,354 Contracted services 233,000 139,005 93,995 185,284 Maintenance and repairs 67,500 105,439 (37,939) 141,309 Depreciation 261,056 269,276 (8,220) 278,342 General and administration 628,800 247,857 380,943 206,793 Recycling services 200,000 222,456 (22,456) 214,876 Contributions 71,000 38,909 32,091 39,106 Total operating expenses 2,518,565 1,847,631 670,934 1,942,064 Operating income 318,780 775,558 456,778 363,306 Enterprise Funds 2015 Operating income 318,780 775,558 456,778 363,306 Other income (expense):Intergovernmental:State sources - grants — 200,000 200,000 5,323,038 State of Alaska on-behalf payment 74,520 24,487 (50,033) — Investment income 100,000 23,929 (76,071) 67,094 Bond premium amortization — 27,211 27,211 27,211 Landfill closure and postclosure costs (600,000) (422,016) 177,984 377,471 Interest expense (156,800) (198,411) (41,611) (138,800) Total other income (expense)(582,280) (344,800) 237,480 5,656,014 Income (loss) before transfers (263,500) 430,758 694,258 6,019,320 Transfers in 13,500 64,383 50,883 13,500 Change in net position $ (250,000) 495,141 745,141 6,032,820 Net position, beginning, as previously stated 16,846,588 10,813,768 Cumulative effect of a change in accountingprinciple (694,864) — Net position,beginning, as restated 16,151,724 10,813,768 Net position, at end of year $ 16,646,865 16,846,588 117 KODIAK ISLAND BOROUGH Hospital FacilitiesSchedule of Revenues, Expenses, andChanges in Net PositionBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withFinal Budget Final Positive 2014BudgetActual(Negative)ActualOperating revenues:Lease income $720,000 1,759,789 1,039,789 1,150,000 Operating expenses:Personnel services 10,000 30,049 (20,049) 10,100 Miscellaneous — — — 5,791 Depreciation 885,000 842,644 42,356 867,913 Total operating expenses 895,000 872,693 22,307 883,804 Operating income (loss)(175,000) 887,096 1,017,482 266,196 Other income (expense):Intergovernmental:State sources - grants — 13,753 13,753 215,000 Investment income 20,000 34,411 14,411 73,207 Bond premium amortization — 113,821 113,821 113,821 Contribution to Providence Hospital (108,000) (108,000) — (108,000) Interest expense (37,470) (782,943) (745,473) (748,721) Enterprise Funds 2015 118 Interest expense (37,470) (782,943) (745,473) (748,721) Total other income (expense)(125,470) (728,958) (603,488) (454,693) Income (loss) before transfers (300,470) 158,138 413,994 (188,497) Transfers in 66,500 66,500 — 66,500 Change in net position $(233,970) 224,638 413,994 (121,997) Net position, at beginning of year 21,263,713 21,385,710 Net position, at end of year $ 21,488,351 21,263,713 118 KODIAK ISLAND BOROUGH Kodiak Fisheries Research CenterSchedule of Revenues, Expenses, andChanges in Net PositionBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withFinal Budget Final Positive 2014BudgetActual(Negative)ActualOperating revenues:Lease income $ 1,602,000 2,267,032 665,032 1,851,322 Other 500 — (500) 439 Total operating revenues 1,602,500 2,267,032 664,532 1,851,761 Operating expenses:Personnel services 402,083 274,049 128,034 359,783 Maintenance and repairs 47,000 5,903 41,097 1,144 Depreciation 751,000 636,139 114,861 636,143 General and administration:Cleaning and janitorial 61,000 51,403 9,597 50,114 Heating 164,000 93,295 70,705 155,290 Electrical 150,500 151,921 (1,421) 152,984 Plumbing 157,500 34,011 123,489 50,384 Air conditioning 2,500 5,988 (3,488) 628 Enterprise Funds 2015 Air conditioning 2,500 5,988 (3,488) 628 Elevators 3,000 1,800 1,200 2,150 Miscellaneous 122,982 43,811 79,171 47,090 Total operating expenses 1,861,565 1,298,320 563,245 1,455,710 Operating income (loss)(259,065) 968,712 1,228,277 396,051 Other income (expense):State of Alaska on-behalf payment 29,990 8,162 (21,828) — Investment income 20,000 22,485 2,485 38,550 Interest expense (188,300) (188,300) — (225,401) Total other income (expense)(138,310) (157,653) (19,343) (186,851) Income (loss) before transfers (397,375) 811,059 1,208,434 — Transfers in — 21,474 21,474 — Change in net position $(397,375) 832,533 1,229,908 209,200 Net position, beginning, as previously stated 10,388,186 10,178,986 Cumulative effect of a change in accountingprinciple (231,621) — Net position, beginning, as restated 10,156,565 10,178,986 Net position, at end of year $ 10,989,098 10,388,186 119 KODIAK ISLAND BOROUGHEnterprise Funds Schedule of Revenues, Expenses, andChanges in Net PositionBudget and ActualYear ended June 30, 2015(With financial information for the year ended June 30, 2014) Variance withFinal Budget Final Positive 2014BudgetActual(Negative)ActualOperating revenues:Customer charges $50,000 33,961 (16,039) 39,817 Operating expenses:Personnel services 3,000 3,000 — 3,000 Miscellaneous 100 92 8 98 Telephone services 46,900 30,869 16,031 36,719 Total operating expenses 50,000 33,961 16,039 39,817 Operating income $— — — — Net position, at beginning of year — — Net position, at end of year $— — 2015 911 Service Fund Net position, at end of year $— — 120 SUPPLEMENTARY SCHEDULES Fiscal Year Principal Interest Total20163,170,000$ 2,989,362$ 6,159,362$ 2017 3,295,000 2,869,212 6,164,212 2018 3,395,000 2,750,462 6,145,462 2019 3,540,000 2,617,362 6,157,362 2020 3,670,000 2,478,487 6,148,487 2021 3,815,000 2,336,099 6,151,099 2022 3,980,000 2,166,550 6,146,550 2023 4,160,000 1,985,699 6,145,699 2024 4,355,000 1,789,538 6,144,538 2025 4,570,000 1,572,570 6,142,570 2026 3,310,000 1,402,026 4,712,026 2027 3,470,000 1,238,228 4,708,228 2028 3,645,000 1,064,122 4,709,122 2029 3,205,000 881,234 4,086,234 KODIAK ISLAND BOROUGH SUMMARY OF BONDED DEBT SERVICE REQUIREMENTS TO MATURITY June 30, 2015 Annual principal and interest requirements on General Obligation Refunding and Construction Bonds. 2030 3,365,000 720,316 4,085,316 2031 3,535,000 551,360 4,086,360 2032 3,085,000 381,190 3,466,190 2033 3,240,000 226,940 3,466,940 2034 1,690,000 84,750 1,774,750 66,495,000$ 30,105,507$ 96,600,507$ 121 Fiscal year Interest rate Interest due October 01 Principal due April 01 Interest due April 01 Total20165.00%136,230$ 350,000$ 136,230$ 622,460$ 2017 4.00%127,480 370,000 127,480 624,960 2018 4.00%120,080 380,000 120,080 620,160 2019 4.00%112,480 400,000 112,480 624,960 2020 4.25%104,480 415,000 104,480 623,960 2021 4.25%95,661 430,000 95,661 621,322 2022 4.38%86,524 450,000 86,524 623,048 2023 4.50%76,680 470,000 76,680 623,360 2024 4.70%66,105 490,000 66,105 622,210 KODIAK ISLAND BOROUGH GENERAL OBLIGATION BOND, 2008 SERIES A This issue, dated April 15, 2008, was issued under a book entry system registered in the name of Cede & Company, as Nominee of the Depository Trust Company, New York, New York, the securities depository for the 2008 Series A Bond. This issue was marketed by the Alaska Municipal Bond Bank. Legal opinion was rendered by bond council, Birch, Horton, Bittner and Cherot of Anchorage, Alaska. This bond was issued to fund the acquisition and construction of school capital improvements in the Borough, including a new school pool. June 30, 2015 RETIREMENT SCHEDULE 1998 Bond Issue2008 A BOND ISSUE 2024 4.70%66,105 490,000 66,105 622,210 - 2025 4.80%54,590 515,000 54,590 624,180 2026 4.90%42,230 540,000 42,230 624,460 2027 5.00%29,000 565,000 29,000 623,000 2028 5.00%14,875 595,000 14,875 624,750 1,066,415$ 5,970,000$ 1,066,415$ 8,102,830$ 122 Fiscal year Interest rate Interest due September 01 Principal due April 01 Interest due March 01 Total20162.36%155,925$ 310,000$ 155,925$ 621,850$ 2017 2.75%151,275 320,000 151,275 622,550 2018 3.12%146,475 330,000 146,475 622,950 2019 3.45%140,700 340,000 140,700 621,400 2020 3.70%133,900 355,000 133,900 622,800 2021 3.93%126,800 370,000 126,800 623,600 2022 4.80%119,400 385,000 119,400 623,800 2023 4.80%110,256 405,000 110,256 625,512 2024 4.80%100,638 425,000 100,638 626,276 This issue, dated March 1, 2011, was issued under a book entry system registered in the name of Cede & Company, as Nominee of the Depository Trust Company, New York, New York, the securities depository for the 2011 Series One Bond. This issue was marketed by the Alaska Municipal Bond Bank. Legal opinion was rendered by bond council, Birch, Horton, Bittner and Cherot of Anchorage, Alaska. This bond was issued to fund the High School Renovation and Renewal project. KODIAK ISLAND BOROUGH GENERAL OBLIGATION BOND, 2011 SERIES ONE RETIREMENT SCHEDULE June 30, 2015 1998 Bond Issue2011 SERIES ONE BOND ISSUE 2025 5.20%90,544 445,000 90,544 626,088 2026 5.20%79,975 465,000 79,975 624,950 2027 5.20%68,931 485,000 68,931 622,862 2028 5.20%56,503 510,000 56,503 623,006 2029 5.20%43,434 535,000 43,434 621,868 2030 5.20%29,725 565,000 29,725 624,450 2031 5.20%15,247 595,000 15,247 625,494 1,569,728$ 6,840,000$ 1,569,728$ 9,979,456$ 123 Fiscal year Interest rate Interest due September 1 Principal due September 1 Interest due March 1 Total20164.00%113,400$ 435,000$ 104,700$ 653,100$ 2017 4.00%104,700 455,000 95,600 655,300 2018 2.00%95,600 460,000 91,000 646,600 2019 4.00%91,000 480,000 81,400 652,400 2020 5.00%81,400 495,000 69,025 645,425 2021 5.00%69,025 525,000 55,900 649,925 2022 4.00%55,900 545,000 45,000 645,900 2023 5.00%45,000 570,000 30,750 645,750 This issue, dated May 24, 2012 was issued under a book entry system registered in the name of Cede & Company, as Nominee of the Depository Trust Company, New York, New York, the securities depository for the 2012 Series A Bond. This issue was marketed by the Alaska Municipal Bond Bank. Legal opinion was rendered by bond council, Wohlforth, Vassar, Johnson & Brecht of Anchorage, Alaska. This bond was issued to refund part of the 2004C Bond which was issued to fund planning, design, and construction of capital improvements to the Larsen Bay School, Kodiak Middle School and Kodiak High School. KODIAK ISLAND BOROUGH GENERAL OBLIGATION BOND, 2012 SERIES A RETIREMENT SCHEDULE June 30, 2015 2012 A BOND ISSUE 2023 5.00%45,000 570,000 30,750 645,750 2024 5.00%30,750 600,000 15,750 646,500 2025 5.00%15,750 630,000 - 645,750 702,525$ 5,195,000$ 589,125$ 6,486,650$ 124 Fiscal year Interest rate Interest due September 1 Principal due September 1 Interest due March 1 Total20164.00%138,375$ 530,000$ 127,775$ 796,150$ 2017 4.00%127,775 550,000 116,775 794,550 2018 2.00%116,775 565,000 111,125 792,900 2019 4.00%111,125 585,000 99,425 795,550 2020 5.00%99,425 610,000 84,175 793,600 2021 5.00%84,175 640,000 68,175 792,350 2022 4.00%68,175 665,000 54,875 788,050 2023 5.00%54,875 695,000 37,500 787,375 This issue, dated May 24, 2012 was issued under a book entry system registered in the name of Cede & Company, as Nominee of the Depository Trust Company, New York, New York, the securities depository for the 2012 Series B Bond. This issue was marketed by the Alaska Municipal Bond Bank. Legal opinion was rendered by bond council, Wohlforth, Vassar, Johnson & Brecht of Anchorage, Alaska. This bond was issued to refund part of the 2004D bond issue, which was used to fund the acquisition and construction of school capital improvements in the Borough, including a new school pool and the Kodiak High School Voc/Ed Classroom reclamation. KODIAK ISLAND BOROUGH GENERAL OBLIGATION BOND, 2012 SERIES B RETIREMENT SCHEDULE June 30, 2015 1998 Bond Issue2012 B BOND ISSUE 2023 5.00%54,875 695,000 37,500 787,375 2024 5.00%37,500 730,000 19,250 786,750 2025 5.00%19,250 770,000 - 789,250 857,450$ 6,340,000$ 719,075$ 7,916,525$ 125 Fiscal Year Interest Rate Interest Due August 01 Principal Due February 01 Interest due February 01 Total20164.00%465,070$ 760,000$ 465,070$ 1,690,140$ 2017 4.00%449,870 790,000 449,870 1,689,740 2018 4.00%434,070 820,000 434,070 1,688,140 2019 5.00%417,670 855,000 417,670 1,690,340 2020 4.00%396,295 895,000 396,295 1,687,590 2021 4.00%378,395 935,000 378,395 1,691,790 2022 4.00%359,695 970,000 359,695 1,689,390 2023 4.00%340,295 1,010,000 340,295 1,690,590 2024 5.00%320,095 1,050,000 320,095 1,690,190 KODIAK ISLAND BOROUGH GENERAL OBLIGATION BOND, 2013 SERIES ONE RETIREMENT SCHEDULE June 30, 2015 2013 SERIES ONE BOND ISSUE This issue, dated March 1, 2013, was issued under a book entry system registered in the name of Cede & Company, as Nominee of the Depository Trust Company, New York, New York, the securities depository for the 2013 Series One Bond. This issue was marketed by the Alaska Municipal Bond Bank. Legal opinion was rendered by bond council, Birch, Horton, Bittner and Cherot of Anchorage, Alaska. This bond was issued to fund the High School Renovation and Renewal project. 2024 5.00%320,095 1,050,000 320,095 1,690,190 2025 5.00%293,845 1,100,000 293,845 1,687,690 2026 5.00%266,345 1,155,000 266,345 1,687,690 2027 5.00%237,470 1,215,000 237,470 1,689,940 2028 5.00%207,095 1,275,000 207,095 1,689,190 2029 5.00%175,220 1,340,000 175,220 1,690,440 2030 5.00%141,720 1,405,000 141,720 1,688,440 2031 5.00%106,595 1,475,000 106,595 1,688,190 2032 5.00%69,720 1,550,000 69,720 1,689,440 2033 3.80%30,970 1,630,000 30,970 1,691,940 5,090,435$ 20,230,000$ 5,090,435$ 30,410,870$ 126 Fiscal Year Interest Rate Interest Due September 01 Principal Due March 01 Interest Due March 01 Total20163.00%495,331$ 785,000$ 495,331$ 1,775,662$ 2017 4.00%483,556 810,000 483,556 1,777,112 2018 5.00%467,356 840,000 467,356 1,774,712 2019 2.00%446,356 880,000 446,356 1,772,712 2020 2.00%437,556 900,000 437,556 1,775,112 2021 5.00%428,556 915,000 428,556 1,772,112 2022 5.00%405,681 965,000 405,681 1,776,362 2023 5.00%381,556 1,010,000 381,556 1,773,112 2024 5.00%356,306 1,060,000 356,306 1,772,612 KODIAK ISLAND BOROUGH GENERAL OBLIGATION BOND, 2014 SERIES ONE RETIREMENT SCHEDULE June 30, 2015 2014 SERIES ONE BOND ISSUE This issue, dated March 12, 2013, was issued under a book entry system registered in the name of Cede & Company, as Nominee of the Depository Trust Company, New York, New York, the securities depository for the 2013Series One Bond. This issue was marketed by the Alaska Municipal Bond Bank. Legal opinion was rendered by bond council, Birch, Horton, Bittner and Cherot of Anchorage, Alaska. This bond was issued to fund the High School Renovation and Renewal project. 2024 5.00%356,306 1,060,000 356,306 1,772,612 2025 3.12%329,806 1,110,000 329,806 1,769,612 2026 5.00%312,463 1,150,000 312,463 1,774,926 2027 5.00%283,713 1,205,000 283,713 1,772,426 2028 5.00%253,588 1,265,000 253,588 1,772,176 2029 5.00%221,963 1,330,000 221,963 1,773,926 2030 5.00%188,713 1,395,000 188,713 1,772,426 2031 4.50%153,838 1,465,000 153,838 1,772,676 2032 5.00%120,875 1,535,000 120,875 1,776,750 2033 5.00%82,500 1,610,000 82,500 1,775,000 2034 5.00%42,250 1,690,000 42,500 1,774,750 5,891,963$ 21,920,000$ 5,892,213$ 33,704,176$ 127 STATISTICAL SECTION 118 STATISTICAL SECTION This part of the Kodiak Island Borough’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the governments’ overall financial health. Contents Page Financial Trends These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. 128-131 Revenue Capacity These schedules contain information to help the reader assess the govern- ment’s most significant local revenue source, the property tax. 132-136 Debt Capacity These schedules present information to help the reader assess the afforda- bility of the government’s current levels of outstanding debt and the gov- ernment’s ability to issue additional debt in the future. 137-141 Demographic and Economic Information These schedules offer demographic and economc indicators to help the reader understand the environment within which the government’s finan- cial activities take place. 142-148 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the revelant year. 2006 2007 2008 2009 2010Governmental activities:Net investment in capital assets $ 62,716,326 $ 73,425,394 $ 25,127,779 $ 71,534,766 $ 77,447,045 Unrestricted 45,653,357 37,640,716 89,853,794 48,140,406 48,992,902 Total governmental activities net assets $108,369,683 $111,066,110 $114,981,573 $119,675,172 $126,439,947 Business-type activities:Net investment in capital assets $ 38,588,510 $ 38,623,762 $ 34,706,597 $ 38,135,340 $ 36,655,859 Unrestricted (6,133,853) (5,503,362) (2,862,363) (2,939,301) (598,367) Total business-type activities net assets $32,454,657 $33,120,400 $31,844,234 $35,196,039 $36,057,492 Primary government:Net investment in capital assets $ 101,304,836 $ 112,049,156 $ 59,834,376 $ 109,670,106 $ 114,102,904 Unrestricted 39,519,504 32,137,354 86,991,431 45,201,105 48,394,535 Total primary government net assets $140,824,340 $144,186,510 $146,825,807 $154,871,211 $162,497,439 2011 2012 2013 2014 2015 Fiscal Year Fiscal Year KODIAK ISLAND BOROUGHNet Position by ComponentLast Ten Fiscal Years(accrual basis of accounting) 128 2011 2012 2013 2014 2015Governmental activities:Net investment in capital assets $ 81,789,375 $ 85,285,497 $ 72,773,598 $ 80,159,521 $ 82,616,865 Unrestricted 47,094,977 48,265,320 47,149,835 46,754,461 43,472,334 Total governmental activities net assets $128,884,352 $133,550,817 $119,923,433 $126,913,982 $126,089,199 Business-type activities:Net investment in capital assets $ 35,170,143 $ 31,967,945 $ 21,628,143 $ 36,383,229 $ 43,884,340 Unrestricted 1,137,826 4,532,561 20,750,321 12,115,258 5,239,974 Total business-type activities net assets $36,307,969 $36,500,506 $42,378,464 $48,498,487 $49,124,314 Primary government:Net investment in capital assets $ 116,959,518 $ 117,253,442 $ 94,401,741 $ 116,542,750 $ 126,501,205 Unrestricted 48,232,803 52,797,881 67,900,156 58,869,719 48,712,308 Total primary government net assets $165,192,321 $170,051,323 $162,301,897 $175,412,469 $175,213,513 Source: Borough general ledger 128 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015ExpensesGovernmental activities:General government $3,984,390 $4,755,754 $4,226,759 $3,723,964 $4,479,415 $ 5,109,232 $ 4,281,383 $ 7,398,899 $ 6,990,640 $ 5,637,239 Public safety - - 509,697 579,710 612,763 664,349 622,396 644,197 751,637 663,145 Community and economic development 784,002 786,614 1,105,156 908,501 1,034,686 1,211,189 1,195,237 1,070,991 964,377 886,613 Emergency preparedness 8,598 10,384 13,841 14,988 10,511 11,705 21,423 278,480 12,487 31,628 Health and sanitation 403,866 414,144 449,792 371,673 406,087 392,011 391,996 290,800 326,700 406,093 Education, culture, and recreation 164,053 161,247 183,747 248,571 192,182 85,690 64,289 84,273 218,013 335,854 Parks and recreation - - - - - 13,625 5,825 21,100 37,795 161,596 Service district maintenance 336,385 362,189 378,661 398,219 543,897 593,388 705,665 479,264 631,572 534,376 Primary and secondary education 10,831,588 10,788,188 11,524,160 12,354,129 12,423,691 12,834,349 11,998,842 13,930,919 14,523,509 14,316,695 Interest on long-term debt 1,700,089 1,290,216 1,270,423 1,408,045 1,336,068 1,508,052 1,188,945 1,254,225 2,109,406 3,063,649 Total governmental activities expenses 18,212,971 18,568,736 19,662,236 20,007,800 21,039,300 22,423,590 20,476,001 25,453,148 26,566,136 26,036,888 Business-type activities:Municipal solid waste collection and disposal 3,446,453 2,888,821 4,628,826 3,852,158 4,283,148 2,192,132 2,345,752 2,342,006 2,080,864 2,468,058 Hospital facilities 1,304,583 1,297,419 1,124,650 1,095,535 1,035,020 1,027,615 1,016,882 1,091,035 1,740,525 1,763,636 Kodiak Fisheries Research Center 1,856,875 1,889,750 2,027,432 1,960,404 1,927,580 1,847,427 1,746,952 1,775,062 1,681,111 1,486,620 911 services 57,194 64,140 107,980 43,043 42,474 53,041 2,615 87,596 39,817 33,961 Total business-type activities expenses 6,665,105 6,140,130 7,888,888 6,951,140 7,288,222 5,120,215 5,112,201 5,295,699 5,542,317 5,752,275 Total primary government expenses $24,878,076 $24,708,866 $27,551,124 $26,958,940 $28,327,522 27,543,805 25,588,202 30,748,847 32,108,453 31,789,163 Program RevenuesGovernmental activities:Charges for services:General government $311,802 $1,058,330 $436,284 $705,166 $703,431 $ 658,463 $ 673,050 $ 549,100 $ 577,350 $ 540,052 Public safety - - - 12,361 12,762 33,755 11,646 13,849 14,336 13,601 Community and economic development - 68,867 148,682 - - - - - - - Health and sanitation - - 7,370 - - - - - - - Education, culture, and recreation 108,218 - - - - - - - - - Service district maintenance 20,000 20,015 28,345 25,000 25,000 27,600 1 94,076 110,313 114,516 Primary and secondary education 95,025 - - - - - - - - - Operating grants and contributions 1,240,547 1,935,687 1,911,246 2,543,254 2,306,394 2,295,661 2,479,263 2,917,662 4,077,510 4,305,691 Capital grants 298,852 184,922 1,926,465 2,331,253 6,518,798 3,241,219 574,439 2,212,524 6,651,737 3,002,933 Total governmental activities program revenues 2,074,444 3,267,821 4,458,392 5,617,034 9,566,385 6,256,698 3,738,399 5,787,211 11,431,246 7,976,793 Business-type activities:Charges for services:Municipal solid waste collection and disposal 3,665,289 3,932,985 3,911,771 3,603,995 4,350,369 2,397,979 2,301,757 2,504,035 2,265,967 2,611,854 Hospital facilities 1,153,333 1,081,110 720,000 3,575,835 1,867,990 720,000 720,000 720,000 1,150,000 1,759,789 Kodiak Fisheries Research Center 1,572,474 1,581,850 1,614,532 1,598,260 1,610,775 2,018,747 1,636,728 1,603,503 1,851,322 2,267,032 911 services 65,614 62,698 54,925 52,654 42,474 53,041 - - - - Operating grants and contributions - - - - - - 75,819 85,634 - 32,649 Capital grants - - - - - - 97,534 5,984,095 5,538,038 213,753 KODIAK ISLAND BOROUGHChanges in Net PositionLast Ten Fiscal Years(accrual basis of accounting) Fiscal Year Capital grants - - - - - - 97,534 5,984,095 5,538,038 213,753 Total business-type activities program revenues 6,456,710 6,658,643 6,301,228 8,830,744 7,871,608 5,189,767 4,831,838 10,897,267 10,805,327 6,885,077 Total primary government program revenues $8,531,154 $9,926,464 $10,759,620 $14,447,778 $17,437,993 $ 11,446,465 $ 8,570,237 $ 16,684,478 $ 22,236,573 $ 14,861,870 Net(expense)/revenue:Governmental activities $(16,138,527) $(15,300,915) $(15,203,844) $(14,390,766) $(11,472,915) $ (16,166,892) $ (16,737,602) $ (19,665,937) $ (15,134,890) $ (18,060,095) Business-type activities (208,395) 518,513 (1,587,660) 1,879,604 583,386 69,552 (280,363) 5,601,568 5,263,010 1,132,802 Total primary government net expense $(16,346,922) $(14,782,402) $(16,791,504) $(12,511,162) $(10,889,529) $ (16,097,340) $ (17,017,965) $ (14,064,369) $ (9,871,880) $ (16,927,293) General Revenues and Other Changes in Net AssetsGovernmental activities:Taxes:Property taxes $9,807,551 $9,754,916 $10,118,602 $10,592,258 $11,051,740 $ 11,945,103 $ 13,327,552 $ 12,910,512 $ 13,741,190 $ 14,228,505 Severance taxes 1,186,908 1,316,689 1,436,210 1,311,188 1,336,075 1,649,275 1,970,265 1,774,700 1,843,819 1,703,257 Unrestricted grants and contributions 3,482,351 3,242,740 3,144,750 4,214,617 4,089,966 3,642,009 4,199,766 4,458,203 4,142,583 3,990,192 Land sales - - - 26,369 760 2,383 4,540 - 864,584 103,143 Investment earnings 2,798,391 3,745,990 3,912,145 2,082,615 1,219,201 713,414 1,788,903 528,676 1,106,717 574,227 Other 779,328 (225,636) 380,550 226,586 619,948 739,113 327,540 383,877 506,546 494,287 Transfers 247,280 162,643 127,050 (765,490) (80,000) (80,000) (80,000) (80,000) (80,000) (152,357) Extraordinary item - - - 1,396,222 - - - - - - Total governmental activities $18,301,809 $17,997,342 $19,119,307 $19,084,365 $18,237,690 $ 18,611,297 $ 21,538,566 $ 19,975,968 $ 22,125,439 $ 20,941,254 Business-type activities:Investment earnings 161,892 274,126 434,164 273,973 198,067 100,925 282,027 117,702 178,851 80,825 Other 391,895 35,747 4,380 50 - - 110,442 78,688 598,162 186,328 Transfers (247,280) (162,643) (127,050) 765,490 80,000 80,000 80,000 80,000 80,000 152,357 Extraordinary item - - - 432,688 - - - - - - Total business-type activities 306,507 147,230 311,494 1,472,201 278,067 180,925 472,469 276,390 857,013 419,510 Total primary government $18,608,316 $18,144,572 $19,430,801 $20,556,566 $18,515,757 $ 18,792,222 $ 22,011,035 $ 20,252,358 $ 22,982,452 $ 21,360,764 Change in Net PositionGovernmental activities $2,163,282 $2,696,427 $3,915,463 $4,693,599 $6,764,775 $ 2,444,405 $ 4,800,964 $ 310,031 $ 6,990,549 $ 2,881,159 Business-type activities 98,112 665,743 (1,276,166) 3,351,805 861,453 250,477 192,106 5,877,958 6,120,023 1,552,312 Total primary government $2,261,394 $3,362,170 $2,639,297 $8,045,404 $7,626,228 $2,694,882 $4,993,070 $6,187,989 $13,110,572 $4,433,471 129 2010 2011 2012 2013 2014General Fund:Nonspendable $6,801 $6,801 $166,020 $6,324 $1,459 Unassigned 1,952,757 1,952,757 3,126,037 3,340,662 3,502,489 Total General Fund $1,959,558 $1,959,558 $3,292,057 $3,346,986 $3,503,948 All other governmental fundsNonspendable $21,704 $21,704 $5,114,902 $4,636,976 $513,765 Committed 57,633,409 57,633,409 37,288,510 37,902,356 42,355,129 Assigned - - 11,464,575 29,981,503 28,875,499 Unassigned (1,179,132) (1,179,132) (1,989,279) (51,337) (2,929,481) Total all other governmental funds $56,475,981 $56,475,981 $51,878,708 $72,469,498 $68,814,912 2015General Fund:Nonspendable $14,566 Unassigned 3,181,342 Total General Fund $3,195,908 All other governmental fundsNonspendable $262,100 Committed 42,631,561 Assigned 7,610,272 Unassigned (2,516,222) Total all other governmental funds $47,987,711 KODIAK ISLAND BOROUGHFund Balances of Governmental FundsLast Six Fiscal Years(modified accrual basis of accounting) 130 Total all other governmental funds $47,987,711 The Kodiak Island Borough implemented GASB 54 in Fiscal Year 2011. That is why there is only six years of data. 130 Fiscal Year20062007200820092010 2011 2012 2013 2014 2015Revenues:Property taxes and assessments $ 9,786,201 9,681,815 10,175,295 10,477,347 10,993,175 11,909,806 13,052,598 12,936,796 13,656,771 14,091,503Transient accommodations tax 47,645 68,867 79,182 88,338 86,003 96,384 87,400 96,640 75,142 104,074Intergovernmental:State sources 3,368,491 4,012,647 4,428,472 5,966,808 10,610,231 7,029,684 5,313,092 7,929,017 12,938,158 10,332,739Federal sources 1,766,926 1,417,403 2,553,990 3,122,316 2,338,468 2,149,205 1,940,376 1,659,372 1,933,672 2,093,987Severance taxes 1,186,908 1,316,689 1,436,210 1,311,188 1,336,075 1,649,275 1,970,265 1,774,700 1,843,819 1,703,257Licenses, permits, fees, and other local revenues 820,286 690,962 658,381 742,527 766,193 719,818 684,697 657,025 701,999 688,719Other revenues 125,040 633,925 353,850 418,741 459,412 720,659 44,304 52,516 50,556 17,747Investment earnings 2,803,466 3,751,609 3,918,008 2,088,915 1,225,938 706,677 1,857,413 536,903 1,115,466 583,677Total revenues 19,904,963 21,573,917 23,603,388 24,216,180 27,815,495 24,981,508 24,950,145 25,642,969 32,315,583 29,615,703 Expenditures:General government 3,950,927 4,504,052 3,818,544 4,067,024 4,600,601 4,818,287 4,848,805 5,307,199 5,449,505 6,333,724Public safety — — 385,529 460,826 502,491 537,623 447,479 469,280 576,720 524,169Community and economic development 784,002 786,614 923,203 908,501 1,034,686 1,211,189 1,195,237 1,070,991 964,377 1,153,985Emergency preparedness 6,098 7,884 5,713 12,488 8,011 11,705 18,923 18,342 9,987 29,128Health and sanitation department 363,520 373,132 387,053 333,747 371,321 392,011 391,996 290,800 326,700 406,093Education, culture, and recreation 161,633 158,161 183,747 248,571 192,182 85,690 64,289 84,273 95,625 24,856Parks and recreation — — — — — 13,625 5,825 21,100 37,795 161,596Service district maintenance 336,385 498,539 374,320 398,219 543,897 593,388 705,665 479,264 631,572 534,376Primary and secondary education 8,430,840 8,387,440 9,123,412 9,956,618 9,980,350 10,127,350 10,337,349 10,442,350 10,845,220 11,100,714Capital outlay:Schools 464,142 1,436,639 7,029,628 14,857,064 7,359,932 1,881,069 5,255,037 5,486,672 34,872,235 21,984,655General332,398 373,038 887,189 1,277,106 4,319,438 4,839,652 562,007 2,041,674 1,521,996 2,907,018Debt service:Principal 1,814,553 2,100,361 2,205,441 2,495,056 2,685,606 2,750,690 2,780,776 2,966,441 3,645,950 2,646,040Interest 1,584,763 1,336,349 1,263,176 1,578,408 1,356,872 1,292,645 2,695,657 1,254,225 2,109,406 3,121,577Other charges - bond issuance costs — — — 68,635 — 40,689 100,149 20,809 89,835 — Total expenditures 18,229,261 19,962,209 26,586,955 36,662,263 32,955,387 28,595,613 29,409,194 29,953,420 61,176,923 50,927,931 KODIAK ISLAND BOROUGHChanges in Fund Balances of Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting) Total expenditures 18,229,261 19,962,209 26,586,955 36,662,263 32,955,387 28,595,613 29,409,194 29,953,420 61,176,923 50,927,931 Excess of revenues over (under) expenditures 1,675,702 1,611,708 (2,983,567) (12,446,083) (5,139,892) (3,614,105) (4,459,049) (4,310,451) (28,861,340) (21,312,228) Other Financing Sources (Uses):Proceeds from sales of bonds — — 8,000,000 — — 8,049,233 — 21,595,000 22,660,000 — Bond premium — — — — — — — 3,424,819 2,427,432 — Refunding bonds issued — — — 6,740,000 — — 13,578,039 — — — Payment to refunded bond escrow agent — — — (6,865,467)— — (12,180,000)— — — Proceeds from sale of assets — — — — — — — 9,564 — — Land sale proceeds 177,164 47,087 19,458 30,561 138,867 15,021 10,735 6,787 356,284 329,344Transfers in 1,751,182 2,626,853 2,966,610 6,144,301 3,211,195 3,782,289 957,652 6,212,885 992,365 642,691Transfers out (1,503,902) (2,464,210) (2,839,560) (6,909,791) (3,291,195) (3,862,289) (1,037,652) (6,292,885) (1,072,365)(795,048) Total other financing sources(uses)424,444 209,730 8,146,508 (860,396)58,867 7,984,254 1,328,774 24,956,170 25,363,716 176,987 Net change in fund balances $ 2,100,146 1,821,438 5,162,941 (13,306,479) (5,081,025) 4,370,149 (3,130,275) 20,645,719 (3,497,624) (21,135,241) Debt service as a percentage of noncapital expenditures 19.99 % 19.20 % 19.45 % 20.91 %19.41 %18.53 %27.22 %17.62 %22.51 %21.71 % 131 KODIAK ISLAND BOROUGHGeneral Revenues by Source(a)Last Ten Fiscal Years Licenses, Inter-Fiscal Permits Governmental Investment Operating MiscellaneousYear Taxes and Fees Revenue Income Transfers Revenue Total 2006 10,257,023 171,962 2,369,185 469,913 — — 13,268,083 2007 10,218,016 78,720 3,325,899 399,149 — 82,604 14,104,388 2008 10,792,741 100,256 3,276,741 544,926 — — 14,714,664 2009 10,864,441 65,417 4,461,624 292,825 — 131,944 15,816,251 2010 11,219,182 71,319 4,123,507 178,567 — 38,352 15,630,927 2011 12,412,832 72,394 3,642,009 (21,628) — 537,235 16,642,842 2012 2,291,625 65,421 4,425,447 281,792 — 16,177 7,080,462 2013 2,035,971 66,476 4,787,308 39,078 29,335 30,733 6,988,901 2014 2,051,794 82,713 4,605,916 23,804 — 14,328 6,778,555 2015 1,938,286 86,916 5,163,300 (18,330) — 19,468 7,189,640 (a) Includes General Fund only. Source: Borough general ledger. 132132 KODIAK ISLAND BOROUGH Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Ratio ofTotal TaxableTotal Assessed toReal Property Personal Property Total Direct TotalYear Ended Net Taxable Full Value Net Taxable Full Value Net Taxable Full Value Tax Full ValueJune 30,Assessed Value Determination Assessed Value Determination Assessed Value Determination Rate Determination 2006 692,572,845 786,373,800 106,206,504 309,114,600 798,779,349 1,095,488,400 11.00 72.92 2007 710,848,299 836,778,900 94,833,515 297,380,200 805,681,814 1,134,159,100 10.50 71.04 2008 734,527,929 941,403,800 100,997,608 298,543,700 835,525,537 1,239,947,500 10.50 67.38 2009 765,152,958 817,641,308 105,320,027 233,623,664 870,472,985 1,051,264,972 10.50 82.80 2010 805,000,744 855,452,864 108,014,241 227,294,006 913,014,985 1,082,746,870 10.50 84.32 2011 875,787,940 931,330,970 113,091,185 250,671,059 988,879,125 1,182,002,029 10.50 83.66 947,611,296 1,007,199,396 91,612,537 236,610,137 1,039,223,833 1,243,809,533 10.75 83.55 984,146,580 1,049,746,680 101,821,700 237,074,800 1,085,968,280 1,286,821,480 10.75 84.39 1,029,239,311 1,100,702,180 102,237,300 286,425,000 1,131,476,611 1,387,127,180 10.75 81.57 2015 1,068,647,102 1,137,024,180 113,251,900 361,886,700 1,181,899,002 1,498,910,880 10.75 78.85 Sources: Borough assessment and tax recordsNotes: Property in Kodiak Island Borough is reassessed once every three years. Property is assessed at actual value; therefore, the assessed values are equal to actual value,Tax rates are per $1,000 of assessed value. Fiscal 2012 20142013 $800,000,000 $1,000,000,000 $1,200,000,000 Last Ten Years Assessed Values $0 $200,000,000 $400,000,000 $600,000,000 $800,000,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 133 KODIAK ISLAND BOROUGHDirect and Overlapping Property Tax Rates andContributions to the School District Last Ten Fiscal Years Overlapping RatesWoodland²Trinity²Mission²Fiscal Acres Islands Lake Fire Areas²Year Borough Education Renewal City¹Street Street Tide Road Services Areas²FireEnded Basic Support Debt and of Lighting Lighting Gate Monashka Service Bay View Womens Protection Womens June 30, Rate Fund Service Replacement Kodiak Area Area Area Bay District 1 Road Bay Area No. 1 Bay Airport 2006 11.00 — — — 2.00 — 0.50 1.00 2.50 1.25 1.00 2.00 1.50 1.25 1.25 2007 10.50 — — — 2.00 — 0.50 1.00 2.50 1.25 1.00 2.00 1.50 1.25 1.25 2008 10.50 — — — 2.00 — 0.50 1.00 2.50 1.25 1.00 2.00 1.50 1.25 1.25 2009 10.50 — — — 2.00 0.25 0.50 1.00 2.50 1.50 1.00 2.00 1.50 1.25 1.25 2010 10.50 — — — 2.00 0.25 0.50 1.00 2.50 1.50 1.00 2.00 1.50 1.25 1.25 2011 10.50 — — — 2.00 0.25 0.50 1.00 2.50 1.50 1.00 2.50 1.50 1.25 1.25 2012 0.03 9.09 1.55 0.08 2.00 0.25 0.50 1.00 2.50 1.50 1.00 2.50 1.50 1.25 1.25 2013 0.03 9.03 1.61 0.08 2.00 0.25 0.50 1.00 2.50 0.50 1.75 2.50 1.50 1.25 1.25 2014 0.03 8.75 1.81 0.16 2.00 0.25 0.50 1.00 2.50 1.50 1.50 2.50 1.50 1.25 1.25 2015 0.06 9.16 0.99 0.54 2.00 0.25 0.50 1.00 2.50 1.50 1.50 2.50 1.50 1.25 1.25 Direct Rate (per $1,000 of Assessed Value) 134 Note: With the excection of a mill rate to cover Debt Service, the maximum mill rate allowed by State code is 30 mills¹Overlapping rates are those of local governments that apply to property owners within the City of Kodiak. ²Overlapping rates are those which apply to property owners located within special taxing districts in the borough. They do not apply to every property owner in the Borough. 134 KODIAK ISLAND BOROUGHProperty Tax Levies and CollectionsLast Ten Fiscal Years Collectionsin SubsequentYears Amount 2006 $ 9,733,253 $ 9,320,203 95.8 $ 412,332 $ 9,732,535 100.0 2007 9,298,329 9,169,456 98.6 126,255 9,295,711 100.0 2008 9,979,775 9,615,784 96.4 361,432 9,977,216 100.0 2009 10,231,461 10,201,209 99.7 25,003 10,226,212 99.9 2010 10,879,276 10,487,467 96.4 383,986 10,871,453 99.9 2011 (a) 11,536,758 11,499,457 99.7 97,223 11,596,680 100.5 2012 (a) 13,255,665 13,038,077 98.4 278,623 13,316,700 100.5 2013 (a) 13,581,524 13,489,190 99.3 142,083 13,631,273 100.4 2014 14,424,260 14,250,305 98.8 113,549 14,363,854 99.6 2015 $ 15,009,704 $ 14,749,222 98.3 $ — $ 14,749,222 98.3 Source: Borough general ledger. (a) Due to personal property audits in subsequent years, tax collections exceeded original taxes levied. Total Collections to DateTaxes Leviedfor the Fiscal Year (a)Percentageof LevyAmount of Levy PercentageJune 30,EndedFiscal Year Collected within theFiscal Year of the Levy 135135 KODIAK ISLAND BOROUGHPrincipal Property Tax PayersCurrent Year and Ten Years Ago Percentage PercentageTaxableof Total Borough Taxable of Total BoroughAssessedAssessedAssessedAssessedTaxpayerValue Rank Value Value Rank Value Trident Seafoods Corp $ 32,091,700 1 2.7% $ — — Ocean Beauty Seafoods LLC 28,438,600 2 2.4% 16,730,796 1 2.1%Int'l Seafoods of Alaska 17,333,000 3 1.5% 9,442,721 4 1.2%North Pacific Seafoods (a)13,893,400 4 1.2% 7,003,916 9 0.9%Mill Bay Plaza Assoc LTD 10,921,500 5 0.9% 7,138,400 8 0.9%Wal-Mart/Sams Club 9,494,400 6 0.8% 9,258,892 6 1.2%Horizon Lines of Alaska LLC 7,809,800 7 0.7% 7,416,188 7 0.9%GCI Communications Corp 7,804,500 8 0.7% — — Leisnoi Inc 7,563,800 9 0.6% — — Island Fish Co LLC 6,445,600 10 0.5% — — Brechan Enterprises, Inc — — — 14,026,652 2 1.8%Westward Seafoods, Inc.— — — 11,474,840 3 1.4%Alaska Communications Systems — — — 9,620,360 5 1.2%Kodiak Fishmeal Company 6,582,582 10 0.8%Total $141,796,300 12.1% $98,695,347 12.4% Source: Borough tax records. (a) North Pacific Seafoods and Alaska Pacific Seafoods were combined in 2006. 2015 2006 136136 NetTotal Taxable Net Debt PerFiscalAssessed Bonded Per AssessedYear Population Value Debt Capita Value 2006 13,457 (b) 783,907,451 31,264,429 2,323 3.99%2007 13,664 (a) 805,681,814 29,163,349 2,134 3.62%2008 13,954 (a) 835,525,537 34,957,269 2,505 4.18%2009 13,860 (a) 870,472,985 32,534,424 2,347 3.74%2010 13,592 (a) 913,014,985 29,838,432 2,195 3.27%2011 13,870 (a) 988,879,125 35,124,211 2,532 3.55%14,041 (a) 1,039,223,833 33,510,913 2,387 3.22%13,824 (a) 1,085,968,280 55,236,114 3,996 5.09%13,797 (a) 1,131,476,611 76,227,556 5,525 6.74%2015 13,819 (b) 1,181,899,002 73,131,566 5,292 6.19% Sources: Information obtained from assessment records and Borough general ledger except as otherwise noted.(a) Information obtained from State of Alaska, Division of Community and Regional Affairs,Community Database, Certified Population for Revenue Sharing Program.(b) Information obtained from State of Alaska, Department of Labor, Economic Information. Note: Detail regarding the borough's outstanding debt can be found in the notes to the financial statements. KODIAK ISLAND BOROUGHRatios of Net Bonded DebtLast Ten Fiscal Years 2012 20142013 137137 KODIAK ISLAND BOROUGHComputation of Direct Debt Percentage Kodiak IslandNet Debt Applicable to this BoroughOutstanding Governmental Share of(a)Unit (b) Debt (c)Kodiak Island Borough:General obligation bonds $ 73,162,568 100% $ 73,162,568 City of Kodiak:General obligation bonds 6,890,000 100% 6,890,000 Total $80,052,568 $80,052,568 (a) Gross debt outstanding less applicable amounts in the Debt Service Funds.(b) Determined by ratio of assessed valuation of property subject to taxation in overlapping unit tovaluation of property subject to taxation in reporting unit.(c) Per Alaska Statute 29.45.090 there is a limit of 30 mills for ad valorem taxes. Per Alaska Statute 29.45.100 the limitation on maximum mill rate does not apply to taxes levied topay bonds. Sources: Borough general ledger and City of Kodiak records. June 30, 2015 138138 2006 2007 2008 2009 2010Taxable Assessed value $ 798,779,349 805,681,814 835,525,537 870,472,985 913,014,985Plus exempt property 45,783,490 49,539,000 50,194,170 45,188,050 50,452,120 Total $844,562,839 855,220,814 885,719,707 915,661,035 963,467,105 2011 2012 2013 2014 2015Taxable Assessed value 988,879,125 1,039,223,833 1,085,968,080 1,131,476,611 1,181,899,002 Plus exempt property 55,543,030 59,588,100 65,600,100 71,462,869 68,377,078 Total 1,044,422,155 1,098,811,933 1,151,568,180 1,202,939,480 1,250,276,080 The State of Alaska does not mandate a debt limit to its municipalities and political subdivisions.Debt capacity is ultimately determined by the voters and the marketplace. Source: Borough assessment records (certified tax rolls). KODIAK ISLAND BOROUGHLegal Debt Margin InformationLast Ten Fiscal Years 139139 KODIAK ISLAND BOROUGHRatio of Annual Debt Service Expendituresfor General Bonded Debt to TotalGeneral Governmental Expenditures and TransfersLast Ten Fiscal Years Total General Ratio ofFund debt serviceFiscalInterest Total debt expenditures to generalyear Principal (a) and fees service and transfers expenditures 2006 1,814,553 1,583,488 3,398,041 13,054,983 26.0 2007 2,100,361 1,329,456 3,429,817 13,337,188 25.7 2008 2,205,441 1,255,313 3,460,754 14,277,498 24.2 2009 2,495,056 1,571,295 4,066,351 15,922,441 25.5 2010 2,685,606 1,350,620 4,036,226 16,372,540 24.7 2011 2,750,690 1,287,822 4,083,335 17,065,960 23.9 2,780,776 2,691,426 5,472,202 5,747,963 95.2 2,966,441 1,244,233 4,210,674 6,933,972 60.7 3,645,950 2,107,198 5,753,148 6,621,593 86.9 2015 2,646,040 3,120,449 5,766,489 7,497,680 76.9 (a) Serial maturities in the case of serial bonds; annual Debt Service Fund requirements in the case ofterm bonds. Sources: Borough general ledger and debt documents. 2012 20142013 140140 KODIAK ISLAND BOROUGHRatios of Outstanding Debt by Type General Total Percent ofObligation Notes Revenue Notes Primary Personal PerBonds Payable Bonds Payable Government Income Capita 31,264,429 83,690 — 1,270,210 32,618,329 7.36% 2,424 29,163,349 77,470 — 1,636,924 30,877,743 6.57% 2,260 34,957,269 72,028 — 1,768,660 36,797,957 7.47% 2,637 32,534,424 66,505 — 1,864,503 34,465,432 6.29% 2,487 29,838,432 60,899 — 1,989,995 31,889,326 5.52% 2,346 35,124,211 55,209 — 2,735,778 37,915,198 6.13% 2,734 33,510,913 49,433 — 7,603,249 41,163,595 6.25% 2,932 55,236,114 42,992 18,817,320 7,346,324 81,442,750 12.07% 5,891 76,227,556 37,042 18,703,498 10,206,895 105,174,991 13.98% 7,623 73,131,566 31,002 17,984,677 9,908,184 101,055,429 * 7,313 Note: Detail regarding the Borough's outstanding debt can be found in the notes to the financial statements. * Information not available at report time. Governmental Activities Business-type Activities 2014 Last Ten Fiscal Years FiscalYear 2008 2015 2012 20062007 201120102009 2013 141141 KODIAK ISLAND BOROUGHDemographic and Economic StatisticsLast Ten Years Per Capita PercentageCalendarPersonalPersonalSchoolUnemploymentYearPopulation (a) Income (c) Income (c) Enrollment (b) Rate (c) 2006 13,457 469,512,000 35,860 2,718 7.3 2007 13,664 506,398,000 38,733 2,636 6.0 2008 13,954 548,099,000 41,617 2,671 6.6 2009 13,860 577,818,419 41,690 2,598 7.1 2010 13,592 566,433,008 41,764 2,567 7.4 2011 13,870 638,588,670 46,041 2,543 7.4 14,041 682,097,739 48,579 2,517 6.7 13,824 674,666,496 48,804 2,513 6.2 13,797 752,337,000 53,792 2,468 5.7 2015 13,819 * *2,446 * Sources:(a) State of Alaska, DCRA certified population.(b)Alaska Dept of Education, Average Daily Membership by Fiscal Year at www.eed.state.ak.us/stats(c)Bureau of Economic Analysis https://www.bea.gov* Information not available at report time. 2014 20122013 10,000 15,000 Borough Population and Student Count — 5,000 10,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Population (a)School Enrollment 142 Fiscal Year 2006 Fiscal Year 2007 Fiscal Year 2008 Fiscal Year 2009AverageAverage Average Average Average Average Average AverageMonthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Employment Earnings Employment Earnings Employment Earnings Employment EarningsTotal Industries 5,553 $ 2,926 5,616 $ 3,060 5,803 $ 3,111 5,961 $ 3,100 Private Ownership 4,191 2,803 4,160 2,979 4,340 3,006 4,485 2,956 Total Government 1,361 3,306 1,456 3,291 1,483 3,424 1,475 3,538 Private Goods-Producing 1,691 3,382 1,631 3,555 1,778 3,484 1,814 3,290 Private Service-Providing 2,500 2,412 2,529 2,608 2,562 3,006 2,671 2,730 Fiscal Year 2010 Fiscal Year 2011 Fiscal Year 2012 Fiscal Year 2013AverageAverage Average Average Average Average Average AverageMonthly Monthly Monthly Monthly Monthly Monthly Monthly Monthly Employment Earnings Employment Earnings Employment Earnings Employment EarningsTotal Industries 5,961 $ 3,100 6,416 $ 3,362 6,461 $ 3,488 6,411 $ 3,459 Private Ownership 4,485 2,956 4,898 3,263 4,952 3,412 4,928 3,358 Total Government 1,475 3,538 1,518 3,681 1,501 3,742 1,483 3,795 Private Goods-Producing 1,814 3,290 2,113 3,619 2,193 3,801 2,138 3,704 KODIAK ISLAND BOROUGHAverage Monthly Employment & EarningsLast Ten Fiscal Years 143 Private Goods-Producing 1,814 3,290 2,113 3,619 2,193 3,801 2,138 3,704 Private Service-Providing 2,671 2,730 2,785 2,993 2,760 3,101 2,790 3,092 Fiscal Year 2014 Fiscal Year 2015AverageAverage Average AverageMonthly Monthly Monthly Monthly Employment Earnings Employment EarningsTotal Industries 6,472 $ 3,575 6,524 $ 3,650 Private Ownership 5,049 3,491 5,148 3,565 Total Government 1,423 3,875 1,377 3,966 Private Goods-Producing 2,219 3,831 2,268 3,832 Private Service-Providing 2,830 3,224 2,879 3,356 143 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Land area - square miles 7,130 7,130 7,130 7,130 7,130 7,130 7,130 7,130 7,130 7,130Miles of improved street 25.6 25.6 25.6 25.6 25.6 25.6 26.1 26.1 26.1 26.1 Building permits:Permits issued 222 190 190 192 208 204 167 219 155 193Value of buildings (thousands)11,928 12,058 33,145 15,007 16,445 30,832 10,171 91,619 36,652 36,216,042 Fire Protection:Number of fire stations 2 2 2 2 2 2 2 2 2 2Number of employees 1 1 1 1 1 1 1 1 1 1 Police Protection: none(provided by the City of Kodiak within the city limits and by the State of Alaska outside the city boundaries.) Recreation:Parks (number of acres)223 223 223 223 223 224 224 224 224 224Facilities: Number of playgrounds 15 15 15 15 15 16 16 16 16 16Number of swimming pools 1 1 1 1 1 1 1 1 1 1 KODIAK ISLAND BOROUGHMISCELLANEOUS STATISTICAL DATALast Ten Fiscal Years 144 Public Education:Number of schools:Kodiak Area Elementary 4 4 4 4 4 4 4 4 4 4Kodiak Area Middle School 1 1 1 1 1 1 1 1 1 1Kodiak Area High School 1 1 1 1 1 1 1 1 1 1Village Schools (a)8 7 6 7 7 8 8 8 7 7Number of support personnel (b)151 202 205 217 217 215 215 193 181 187Number of teachers (c)206 209 218 203 218 201 201 207 162 166Number of students (d)2,718 2,636 2,671 2,598 2,567 2,543 2,543 2,513 2,468 2,446 Number of Municipal Employees 41 43 43 43 43 43 45 45 48 45 Sources: Borough Departments, Kodiak Island Borough School District and City of Kodiak(a) The majority of Village Schools are grades K-12.(c) School district personnel figures include staffing from the General Fund and Grants.(b) All non-teaching employees.(d) Alaska Dept of Education & Early Development, Average District Enrollment www.eed.state.ak.us/stats 144 KODIAK ISLAND BOROUGHProperty Value, Construction, and Bank DepositsLast Ten Fiscal Years Construction Property Value*Commercial ResidentialFiscal No. of No. ofyear permits Value permits Value Commercial Residential 2006 30 1,555,718 192 10,372,416 141,434,000 213,258,488 497,589,811 2007 42 3,277,292 148 8,780,900 140,915,000 227,514,405 507,013,524 2008 53 25,269,361 129 7,875,188 139,416,000 275,369,008 542,272,300 2009 50 34,081,887 147 7,848,428 175,141,000 312,122,205 595,391,145 2010 52 4,756,124 156 11,689,178 192,000,000 327,248,533 661,630,592 2011 46 24,165,884 158 6,666,400 194,289,000 317,950,418 721,273,415 48 5,693,295 119 4,477,641 227,392,000 345,529,161 738,505,519 59 85,969,566 160 5,649,717 230,391,000 364,353,810 767,122,801 44 33,062,171 111 3,589,833 252,999,000 386,480,100 788,418,800 2015 61 31,146,134 141 5,644,907 239,000,000 402,319,200 800,640,400 *Assessed value.Sources: Borough assessing records and City of Kodiak building department and FDIC. Deposits in local banks 2014 20122013 200,000,000 250,000,000 300,000,000 Deposits in Kodiak Banks — 50,000,000 100,000,000 150,000,000 200,000,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 145 2006 2007 2008 2009 2010Function: General Government 23 24 27 31 29 Community and Economic Development 6 5 5 5 5 Municipal Solid Waste Collection and Disposal 7 7 7 7 7 Kodiak Fisheries Research Center 2 2 2 2 2 Total 38 38 41 45 43 2011 2012 2013 2014 2015Function: General Government 29 30 30 33 30 Community and Economic Development 5 6 6 5 4 Municipal Solid Waste Collection and Disposal 7 7 7 8 9 Kodiak Fisheries Research Center 2 2 2 2 2 Total 43 45 45 48 45 Source: Borough Finance Department Full-time Equivalent Employees as of June 30: KODIAK ISLAND BOROUGHFull-Time Equivalent Borough Employees by Function/ProgramLast Ten Fiscal Years 146146 KODIAK ISLAND BOROUGHOperating Indicators by FunctionLast Ten Fiscal Years 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015FunctionGeneral GovernmentElectionsNumber of registered voters 9,300 9,417 9,587 9,599 9,649 9,619 9,479 9,585 9,209 9,100Number voting in last election 2,200 2,407 2,105 2,477 2,477 2,311 2,139 1,250 1,566 1,968Percent of registered voters 24% 26% 22% 26% 26% 24% 23% 13% 17% 22% Public SafetyNumber of fire stations 2 2 2 2 2 2 2 2 2 2 Number of employees 1 1 1 1 1 1 1 1 1 1 Community and economic developmentZoning compliance permits issued 150 212 214 203 245 149 113 160 111 183 Junk cars removed 100 58 261 83 89 218 27 22 28 37 Primary and secondary educationNumber of students 2,718 2,636 2,671 2,598 2,567 2,543 2,517 2,513 2,468 2,446 Number of General Fund certified staff 206 209 218 225 224 217 211 207 186 177 Number of General Fund classified staff 151 143 137 135 135 162 166 193 161 166 147 Solid waste disposalTotal solid waste disposal in tons 16,290 16,997 14,730 14,429 14,580 14,896 16,558 14,688 11,826 12,364 Baled waste in tons 11,444 10,831 10,843 10,212 10,527 10,846 10,153 11,535 10,005 8,900 Scrap metal in tons 416 282 360 205 282 260 147 251 172 205 Asbestos, cubic yards 73 166 112 324 218 230 116 399 390 362 Source: Borough Finance Department 147 Function program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 GOVERNMENTAL ACTIVITIESNumber of buildings (teachery housing, schools and office buildings)20 19 18 18 18 18 19 19 19 19Vehicles8910 13 13 15 15 15 14 14 Streets (miles)25.6 25.6 25.6 25.6 25.6 25.6 26.1 26.1 26.1 26.1Land area - square miles 7,130 7,130 7,130 7,130 7,130 7,130 7,130 7,130 7,130 7,130 (provided by the City of Kodiak within the city limits and by the State of Alaska outside the city boundaries) 2 2 2 2 2 2 2 2 2 2 11 11 12 11 8 15 13 13 12 12 1 1 1 1 1 1 1 1 1 1 BUSINESS-TYPE ACTIVITES Number of Baler Facilities (Landfills)1 1 1 1 1 1 1 1 1 1 Number of Emergency response vehiclesEmergency Tsunami Shelters Municipal Solid Waste KODIAK ISLAND BOROUGHCapital Asset Statistics by Function/ProgramLast Ten Fiscal Years Roads Police: none Fire and Emergency Services Number of fire stations 148 Number of Baler Facilities (Landfills)1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 11111111111 223 223 223 223 223 224 224 224 224 224 1 1 1 1 1 1 1 1 1 115 15 15 15 15 16 16 16 16 1611111111111111111111 Sources : Supplied by Kodiak Island Borough Department Heads Notes : No capital asset indicators are available for the library function A description of the Kodiak Island Borough's Capitalization and Depreciation policy is included in the Notes To The Basic Financial Statements Number of playgrounds Community Health & Public ServicesMental Health Facilities Kodiak Island Research Facilities (marine research)Dorm facility (6 apartments) Parks (number of acres)Facilities: Hospital Culture, Parks and Recreation Number of Swimming Pools 148