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CAFR FY2003KODIAK ISLAND BOROUGH Comprehensive Annual Financial Report June 30, 2003 (With Independent Auditors' Report Thereon) Kodiak, Alaska Pat Carlson, Borough Manager Prepared by Finance Department Karleton Short, Finance Director KODIAK ISLAND BOROUGH Table of Contents Page Introductory Section: Letter of Transmittal i GFOA Certificate of Achievement v Organizational Chart vi Elected Officials (Photographs) vii Borough Officials viii Boards and Committees ix Map of Kodiak Island Borough xi Financial Section: Report of Independent Auditors 1 -2 Management's Discussion and Analysis 3 -12 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 13 Statement of Activities 14 -15 Fund Financial Statements Balance Sheet — Governmental Funds 16 Reconciliation of net assets between the government -wide and fund financial statements 17 Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds 18 Reconciliation of the statement of revenues, expenditures, and changes in fund balances of governmental funds to the statement of activities 19 Balance Sheet — Proprietary Funds - Enterprise Funds 20 Statement of Revenues, Expenses, and Changes in Fund Equity — Proprietary Funds 21 Statement of Cash Flows — Proprietary Funds 22 -23 Notes to Financial Statements 24 -49 Required Supplementary Information Schedule of Funding Progress — PERS 50 Budgetary Comparison Schedule — General Fund 51 -52 Budgetary Comparison Schedule — Special Revenue Fund — Facilities 53 Notes to Required Supplementary Information — Budgetary Comparison Schedules 54 Supplemental Information: Nonmajor Governmental Funds: Combining Balance Sheet 55 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 56 KODIAK ISLAND BOROUGH Table of Contents Nonmajor Special Revenue Funds: Combining Balance Sheet 57 -59 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) 60 -62 Statement of Revenues, Expenditures, Transfers, and Changes in Fund Balances Statement of Revenues, Expenditures, and Changes in Fund Balance — (Deficits) — Budget and Actual: Fire and Road Service Areas: 81 Fire: Fire Protection Area No. 1 63 Womens' Bay Fire Department 64 Kodiak Airport Fire District 65 Road: Monashka Bay Road Service Area 66 Service District No. 1 67 Womens' Bay Road Service Area 68 Bay View Road Service Area 69 Service Area No. 2 70 Coastal Management 71 Child Care Assistance Program 72 Welfare to Work Program 73 L.E.P.C. 74 Land Sales 75 Buildings and Grounds 76 Woodland Acres Street Light Service Area 77 Kodiak Arts Council 78 Tourism Development 79 Debt Service Funds: Balance Sheet — Other 80 Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Other 81 i Nonmajor Capital Projects Funds: Combining Balance Sheet 82 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) 83 Schedule of Capital Projects 84 -85 1 Enterprise Funds: Municipal Solid Waste Collection and Disposal Fund: Statement of Revenues, Expenses, and Changes in Fund Equity — ' Budget and Actual 86 KODIAK ISLAND BOROUGH Table of Contents Hospital Facilities Fund: Statement of Revenues, Expenses, and Changes in Fund Equity — Budget and Actual 87 911 Services Fund: Statement of Revenues, Expenses, and Changes in Fund Equity — Budget and Actual 88 Kodiak Fisheries Research Center Fund: Statement of Revenues, Expenses, and Changes in Fund Equity — Budget and Actual 89 Supplementary Schedules: Summary of Bonded Debt Service Requirements to Maturity 90 General Obligation Bonds, 1993 Series A — Retirement Schedule 91 General Obligation Refunding Bonds, 1998 Series A — Retirement Schedule 92 General Obligation Bonds, 2000 Series E - Retirement Schedule 93 General Obligation Bonds, 2000 Series F — Retirement Schedule 94 General Obligation Bonds, 2003 Series B — Retirement Schedule 95 Statistical Section — Fund Information: General Governmental Expenditures and Other Uses by Function — Last Ten Fiscal Years 96 General Revenues by Source — Last Ten Fiscal Years 97 Property Tax Levies and Collections — Last Ten Fiscal Years 98 Assessed and Estimated Actual Value of Taxable Property — Last Ten Fiscal Years 99 Property Tax Rates and Contributions to the School District — Last Ten Fiscal Years 100 Ten Largest Property Taxpayers 101 Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Bonded Debt per Capita — Last Ten Fiscal Years 102 Computation of Direct and Overlapping Debt 103 Computation of Legal Debt Margin 104 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures and Transfers — Last Ten Fiscal Years 105 Demographic Statistics — Last Ten Fiscal Years 106 Property Value, Construction and Bank Deposits — Last Ten Fiscal Years 107 Miscellaneous Statistical Data 108 -109 INTRODUCTORY SECTION Kodiak Island Borough Finance Department 710 Mill Bay Road Kodiak, Alaska 99615 Phone (907) 486 -9320 Fax (907) 486 -9399 October 3, 2003 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 accounting principles generally accepted in the United State 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, 2003. 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 KPMG LLP, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Borough for the fiscal year ended June 30, 2003, are free of material misstatement. 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 concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the Borough's financial statements for the fiscal year ended June 30, 2003, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the financial section of this report. ' The independent audit of the financial statements of the Borough was part of a 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 13,852. 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, assessment and collection of taxes for both the Borough and cities within the Borough, planning and zoning, and general administrative services. Non area -wide powers include parks and recreation, economic development, solid waste disposal, and animal control. Service districts within the Kodiak Island Borough provide fire protection, road maintenance and construction, and street lighting. A Mayor/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 and sanitation, 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 I ' 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 o departments only after the adoption p y p 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 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. Budget -to- actual comparisons are provided in this report for each individual governmental and proprietary fund for which an appropriated ii annual budget has been adopted. For the general fund and facilities special revenue fund, this comparison is presented on pages 51 -54 as part of required supplementary information. For governmental funds, other than the general fund and facilities special revenue fund, this comparison is presented in the governmental 1 fund subsection of this report, which starts on page 55 . Also included in the governmental fund subsection are project - length budget -to- actual comparisons for each of the capital projects. For proprietary funds, this comparison is presented in the proprietary funds subsection of this report, which starts on page 86. ' 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. While some segments of the commercial fishing industry have declined, others have grown. There have been large cutbacks in the logging industry, which can be attributed back to the slowdown in the Asian economy. Tourism continues to grow in Kodiak with an increased number of visitors each year. 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. There has also been an increase in the number of cruise ships visiting Kodiak in the recent years as the cruise ship companies have expanded their tours of Alaska's coastal communities. Relatively new to the Kodiak Island Borough is 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 1,400 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. 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 700 commercial vessels and consistently ranks among the top ten ports in the United States in terms of amount and value of product delivered. 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. The unemployment rate as of June 30, 2003 was 9.4% percent compared to 14.9 percent in 2002 and 9.5 percent in 2001. Throughout fiscal year 2003, the unemployment rate has fluctuated from 5.6% to 15.1%, with an average of 9.4 %. Long -term financial planning. Every year the Borough adopts a five -year strategic plan. In this plan the Borough decides what its' goals and objectives are for the next five years. 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.kib.co.kodiak.ak.us. Cash management policies and practices. Operating funds of the Borough are invested in interest producing instruments in accordance with the Borough's investment code. Cash forecasts are prepared to H enhance investment income and reduce market risk by matching investment maturities to anticipated cash flows. Investment income includes appreciation or depreciation in the fair value of investments. Risk management. The Borough maintains an adequate fund balance in the General Fund, plus certain other funds where the liability may arise, to cover potential losses that may not be covered by insurance or the deductible portion of claims that are covered by insurance. In addition, various control techniques, including employee accident prevention training, have been implemented to minimize accident - related losses. Third party coverage is currently maintained for all of the Borough's property and activities. Additional information on the Borough's risk management activity can be found in note 8 of the notes to the financial statements. Pension and other postemployment benefits. The Borough participates in the Alaska Public Employees Retirement System (PERS), a defined benefit agent, multiple employer public employee retirement system. PERS was established and is administered by the State of Alaska to provide pension, postemployment healthcare, death, and disability benefits to eligible participants. At June 30, 2002 (date of most recent actuarial analysis), the actuarial value of liabilities exceeded the actuarial value of assets by $1.9 million. The Borough also administers a Section 457 deferred compensation arrangement for eligible Borough employees. Additional information on the Borough's pension arrangements and postemployment benefits can be found in Note 11 in the notes to the financial statements. 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, 2002. This was the fifteenth 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 also 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, Umk �_ &,aaV1__ Patrick Carlson Borough Manager 1�.a, A. A,4- Karleton G. Short Director of Finance tv Certificate of Achievement for Excellence in Financial Reporting Presented to Kodiak Island Borough, 4 Alaska For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2002 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. F oFTNe `uN11FA STaIES'y w i µo N `POUT1 President ADA y coNroaatroN �� Executive Director IN r� r� r r�■i r■� r r� r� r� r � r■� r r r� r� r r r� Kodiak Island Borough ELECTORATE A Organizational Chart b pax Fiscal Year 2003 BOROUGH MAYOR ------ Kodiak Island Borough AADMINISTRATIVE ASSISTANT CLERK DEPUTY CLERK ASSISTANT ARTS COUNCIL DIRECTOR COMMUNITY ENGINEERING/ DEVELOPMENT FACILITIES ASSESSOR FINANCE/MIS DIRECTOR DIRECTOR DIRECTOR KFRC MAINTENANCE MAINTENANCE ENGINEER WORKER ASSOCIATE PLANNER ASSESSMENT REVENUE GENERAL PROGRAMMER/ KFRC CLERK] ACCOUNTANT ACOUNTANT ANALYST RECEPTIONIST SECRETARYIII ENVIRONMENTAL SPECIALIST DRAFTING ASSESSMENT ACOUNTING OPERATIONS TECHNICIAN CLERK II TECH/ACCTS. SUPERVISOR CASHIER PAYABLE BALER /LANDFILL SUPERVISOR SECRETARYIII BALER PROPERTY ACOUNTING NETWORK ADMINISTRATOR OPERATOR]] APRAISER TECH/PAYROLL BALER OPERATOR] SECRETARY III ASSOCIATE BALER OPERATORI CHILD CARE PLANNER ASSISTANCE BALER ADMIN OPERATORI BALER OPERATOR] VI MAYOR AND ASSEMBLY MEMBERS Gabrielle LeDoux Mayor, 2004 Robin Heinrichs Deputy Mayor, At Large, 2004 Tom Abell At Large, 2005 Shawn (Tuck) Bonney At Large, 2005 Pat Branson At Large, 2004 Greg Razo At Large, 2003 Wayne Stevens At Large, 2003 Vii Nancy Wells At Large, 2005 KODIAK ISLAND BOROUGH KODIAK, ALASKA BOROUGH OFFICIALS YEAR ENDED JUNE 30, 2003 MAYOR Gabrielle LeDoux `04 ASSEMBLY Tom Abell `05 Patricia Branson `04 Greg Razo `03 Nancy Wells `05 Tuck Bonney `05 Robin Heinrichs (Deputy Mayor) `04 Wayne Stevens `03 MANAGEMENT PatrickCarlson ............................................................................................................. ............................... Borough Manager Karleton G. Short ........................................................................................... ............................... Finance Director/Treasurer Bud Cassidy ................................................................... ............................... ....................Engineering and Facilities Director JudithA. Nielsen, CMC ............................................................................. ............................... ........................Borough Clerk Duane Dvorak .................................................................................... ............................... Community Development Director Vacant......................................................................................................................................... ............................... Assessor RobertA. Himes ........................................................................................................ ............................... Assistant Fire Chief Jamin, Ebell, Schmitt & Mason .............................. ............................... ........................Borough Attorney (Contracted Firm) Betty Walters .......................................................................................... ............................... Superintendent, School District Vacant................................................................................................ ............................... ........................General Accountant MarianRoyall .......................................................................................................... ............................... Revenue Accountant LaurieWhiddon ............................................................................................................ ............................... Purchasing Agent viii 1 ' School Board Roy Brown ' Elizabeth Odell Jeff Stephan Barry Still Norm Wooten CDR John Furman, USCG Rep. Sheila Roberts - Staff Jordan Rodgers, Student Rep. ' Betty Walters, KIBSD, ex- officio Planning and Zoning Commission ' John J. "Jake" Ketscher Dennis McMurry Barbara Williams Reed Oswalt Cheryl Boehland Dr. Gary A. Carver Duane Dvorak, KIB Staff ' Woodland Acres Street Lighting Service Area Advisory Board ' VACANT Citizens Board of Equalization Tim Hurley ' Cheryl McNeil Jim Nagan Jeff Sanford Michael Machulsky, Alternate Judi Nielson, KIB staff Parks and Recreation Committee Scott Bauby Pam Foreman Jeff Huntley Michael O'Neal Patrick Saltonstall Hans Tschersich Tuck Bonney, Assembly Rep. Jerrol Friend, P &Z Rep. Wayne Biessel, State Rep., ex- officio Ian Fulp, City Rep., ex- officio Erin Whipple, KIB Rep Rebecca Moore, Student Rep. Building Code Board of Appeals (Architectural Review Board) Scott Arndt Charlie Jerling Gregg Hacker Jerrol Friend Jay Johnston Nancy Wells, Assembly Rep. Bob Tucker, KIBSD Rep., ex- officio Barry Still, School Board Rep, ex officio Bud Cassidy, KIB Rep., ex- officio Personnel Advisory Board Susan Eoff Bill King Linda Moore Lauri Whiddon, KIB staff Fire Protection Area No. 1 Advisory Board * Scott Arndt Roy Aguirre Cliff Davidson Jeff Halcomb Greg Spalinger Robert Himes, ex- officio Sharon Lea Adinolfi, KIB staff Bav View Road Service Area Advisory Board Dawn Black Gale Hagemeyer Reed Oswalt Fred Roberts Service Area No. 2 Commission INACTIVE Monashka Bav Road Service Area Advisory Board * Darlene Turner Chaz Glagolich Jeff Hamer Bruce McNeil David Sundberg ' ix Service Area No. 1 Advisory Board * Kevin Arndt Robert Greene Scott Arndt Kaye McClain Greg Spalinger Jennifer Spencer Peggy Tuttle Womens Bay Service Area Advisory Board * Chris Lynch David Conrad Edward Gondek Kevin Riddle Spencer Schaeffer Russell Toms Thomas Demi Dale L. Rice, ex- officio Airport Advisory Committee • Charles Barber • Murphy Forner Bob Stanford Dan Dorman Kenneth Holmes Darlene Turner William King Lynda Ross Wayne Stevens Robert Green, ex- officio CDR John Furman, USCG ex- officio Borough Clerk's Office, KIB staff Airport Fire Protection District Advisory Board Vacant Arts Council Advisory Committee Joy Arneson Randy Busch Ginny Shank Mission Lake Tide Gate Service Area Board Bill Hinkle Marian Johnson Norman Sutliff Trinity Islands Subdivision Street Light Service Area Board Sabrina Sutton Craig Walton Jennifer Wandersee * Indicates chair x ARCTIC OCEAN N P BARROW PRUDHOE BAY x b. UZINKI ODIAK KARLUK APE HINIAK HAY N OLD HARE AKHIOK a KODIAK d` ISLAND Q BOROUGH Ic` _ KOTZEBUE AR NOME 0� NORTON SOUND FAIRBANKS WWWWW ALASKA ANCHORAGE VALDEZ BETHEL � KENA f DILLINGHAM E SE WARD Y GULF OF ALASKA BRISTOL BAY KODIAK ISLAND D j P 0. NORTH PACIFIC OCEAN CANADA IKAN FINANCIAL SECTION KPMG LLP Suite 600 701 West Eighth Avenue Anchorage, AK 99501 Independent Auditors' Report The Honorable Mayor and Members of the Assembly Kodiak Island Borough: 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, Alaska, as of and for the year ended June 30, 2003, which collectively comprise the Borough's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Borough's management. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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 aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the Kodiak Island Borough, Alaska, as of June 30, 2003, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note 1, the Borough has implemented a new financial reporting model, as required by GASB Statement No. 34, Basic Financial Statements —and Management's Discussion and Analysis for State and Local Governments, as amended, and GASB Statement No. 38, Certain Financial Statement Note Disclosures, as of July 1, 2002. son . KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative. I MG ' The management's discussion and analysis on pages 3 through 12, the schedule of funding progress for PERS on page 48 and the budgetary comparison information on pages 49 through 51 are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures. which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. In accordance with Government Auditing Standards, we have also issued our report dated October 3, 2003 on our consideration of the School District's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Borough's basic financial statements. The accompanying supplementary information is presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplemental information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. October 3, 2003 ' KODIAK ISLAND BOROUGH Management's Discussion and Analysis r June 30, 2003 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, 2003. 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 i - iii of this report. ■ Financial Highlights • The assets of the Kodiak Island Borough exceeded its liabilities at the close of FY2003 by $144,586,843. Of this amount, $36,423,815 (unrestricted net assets) may be used to meet the Borough's ongoing obligations to citizens and creditors. r • The Borough's total net assets decreased by $1,314,591 for the current fiscal year. • At the end of the current fiscal year, the Borough's governmental funds reported combined fund balances of $43,010,939, an increase of $10,373,630 in comparison with the prior year. In FY1996 the Borough sold Shuyak Island to the State of Alaska for $42,000,000. The State made their final payment on the sale in FY2003 in the amount of $11,805,734. • At the end of the FY2003, unreserved fund balance for the general fund was $1,804,112, 14 percent of total general fund expenditures. • The Borough's total debt decreased by $4,074,373 during FY2003. This is due to principal payments on general obligation bonds and the payment of $2,373,389 to settle the "Jane Doe" litigation. 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 assets presents information on all of the Kodiak Island Borough's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Kodiak Island Borough is improving or deteriorating. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. 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, fire services, emergency preparedness, 3 KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2003 community and economic development, health and sanitation, culture and recreation, maintenance and operations, service district maintenance and education. The business -type activities of the Kodiak Island Borough include a solid waste disposal and treatment facility, a Borough owned hospital, a 911 emergency system and the Kodiak Island Fisheries Research Center. 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 13 -15 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 23 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the facilities special revenue fund and the education and health debt service 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 funds. Budgetary comparison statements have been provided for the funds to demonstrate compliance with this budget. 4 1 KODIAK ISLAND BOROUGH Management's Discussion and Analysis ' June 30, 2003 The basic governmental financial statements can be found on pages 16 -19 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 disposal and treatment facility, a Borough -owned hospital leased to the Sisters of Providence d.b.a. Providence Alaska Medical Center, 911 phone charges and expenses, and rents and utilities of the Borough -owned Kodiak Island Fisheries Research Center. 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 20 -23 of this report. Notes to the 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 financial statements can be found on pages 24-49 of this report. Other information - In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Kodiak Island Borough's progress in funding its obligation to provide pension benefits to its employees and budgetary comparison schedules for the general fund and facilities special revenue fund. Required supplementary information can be found on pages 50 -54 of this report. Government -wide Financial Analysis Statement of Net Assets As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the Kodiak Island Borough assets exceeded liabilities by $144,586,843 at the close of the most recent fiscal year. The largest portion of the Kodiak Island Borough's net assets ($108,163,028 or 75 %) 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. The following reflects the condensed statement of net assets. Information for comparison purposes will not be available until the FY2004 financial statements are prepared. KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2003 Governmental Business -type For more detailed information see page 13 of the statement of net assets. The remaining balance of unrestricted net assets, $36,423,815, may be used to meet the Borough's ongoing obligations to citizens and creditors. Statement of Activities The following condensed table of changes in net assets displays the revenues and expenses for the current year. Information for comparison purposes will not be available until the FY2004 financial statements are prepared. Revenues: Program revenues: Charges for services $ Operating grants and contributions Capital grants General revenues: Property taxes Investment earnings Severance taxes Grants and entitlements not restricted to specific programs Other Total revenues Governmental Business -type activities activities activities Total Einination Total Current and other assets $ 39,696,430 $ 4,126,209 $ — $ 43,822,639 Capital assets — 80,398,714 1,823,641 45,256,195 1,926,187 — 125,654,909 Total assets $ 120,095,144 $ 49,382,404 $ — $ 169,477,548 Long- termliabilities $ 14,488,102 $ 2,701,698 $ — $ 17,189,800 Other liabilities (1,940,558) 9,641,463 — 7,700,905 Total liabilities $ 12,547,544 $ 12,343,161 $ — $ 24,890,705 Net assets: Invested in capital assets, net of related debt $ 64,650,445 $ 36,382,583 $ 7,130,000 $ 108,163,028 Unrestricted 42,897,155 656,660 (7,130,000) 36,423,815 Total net assets $ 107,547,600 $ 37,039,243 $ — $ 144,586,843 For more detailed information see page 13 of the statement of net assets. The remaining balance of unrestricted net assets, $36,423,815, may be used to meet the Borough's ongoing obligations to citizens and creditors. Statement of Activities The following condensed table of changes in net assets displays the revenues and expenses for the current year. Information for comparison purposes will not be available until the FY2004 financial statements are prepared. Revenues: Program revenues: Charges for services $ Operating grants and contributions Capital grants General revenues: Property taxes Investment earnings Severance taxes Grants and entitlements not restricted to specific programs Other Total revenues Governmental Business -type activities activities Total 271,622 $ 5,264,584 $ 5,536,206 940,878 — 940,878 670,905 — 670,905 8,244,465 — 8,244,465 1,823,641 102,546 1,926,187 702,065 — 702,065 3,135,460 — 3,135,460 143,885 (2,171) 141,714 15,932.921 5,364,959 21,297,880 6 KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2003 Expenses: General government $ 2,926,643 $ — $ 2,926,643 Emergency preparedness 26,242 — 26,242 Community &economic development 465,556 — 465,556 Health and sanitation 823,906 — 823,906 Education, culture and recreation 205,866 — 205,866 Fire services 307,567 — 307,567 Maintenance and operations 793,989 — 793,989 Service district maintenance 190,058 — 190,058 Education 9,971,617 9,971,617 Interest on long -term debt 721,034 — 721,034 Municipal solid waste collection — 2,913,652 2,913,652 Hospital facilities — 1,396,104 1,396,104 911 services — 70,500 70,500 Kodiak fisheries research center — 1,799,737 1,799,737 Total expenses 16,432,478 6,179,993 22,612,471 Change in net assets before transfers (499,557) (815,034) (1,314,591) Transfers (2,252,072) 2,252,072 — Change in net assets (2,751,629) 1,437,038 (1,314,591) Net assets, beginning of year 110,299,229 35,602,205 145,901,434 Net assets, end of year $ 107,547,600 $ 37,039,243 $ 144,586,843 Governmental activities decreased the Kodiak Island Borough's net assets by $2,751,629. Key elements of this decrease are: • Expenditures exceeded revenues. • Transfer of capital assets valued at $2,476,412 to proprietary funds Business -type activities increased the Kodiak Island Borough's net assets by $1,437,038 million. This increase resulted from the transfer of $2,476,412 in capital assets from governmental funds. The proprietary funds had an operating loss of $815,034 before transfers and capital contributions. 7 KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2003 expenses ■ program revenue (in millions) F dc � 0 a % 40 - ti° °G a� Jec �. � \ o4ceye a. �o t .` o eQ ay a �.,� a a� '� ag Q� Sao � a �� \0 o e� o tir Jae °ey�� 0 G e % 4 1 e 0 o "eo e A. e � Ge,��oo' 5ec'� `ow aJ For more detailed information see pages 14 -15 of the statement of activities 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 Borough's governmental funds reported combined ending fund balances of $43,010,939, an increase of $10,373,630 in comparison to the beginning of the year. Approximately $36,135,939 of this total amount constitutes unreserved fund balance, of which $434,950 is designated for self - insurance and subsequent year expenditures; $35,700,989 is undesignated. The remaining $6,875,000 of fund balance is reserved for long -term interfund borrowings. The general fund is the main operating fund of the Kodiak Island Borough. At the end of the current fiscal year, unreserved fund balance of the general fund was $1,804,112 with no reserved fund balance. As a measure of the general fund's liquidity, it may be useful to compare fund balance to total expenditures. Unreserved fund balance represents 14 percent of total general fund expenditures. I KODIAK ISLAND BOROUGH ' Management's Discussion and Analysis June 30, 2003 The fund balance of the Kodiak Island Borough's general fund decreased by $1,034,725 during ' the current fiscal year. The key factor leading to this decrease was the "Jane Doe" lawsuit. As mentioned elsewhere this lawsuit cost the Borough $2,373,389. The facilities fund had a total fund balance of $38,115,583, $31,240,583 of which is unreserved. ' Fund balance increased $11,826,922 during the year due to the final payment from the State of Alaska on the sale of Shuyak Island. Proprietary funds - The Kodiak Island Borough's proprietary funds provide the same type of information found in the government -wide financial statements, but in more detail. Net assets of the municipal solid waste collection and disposal fund amounted to $3,179,893, ' those for the hospital facilities fund amounted to $22,173,523, those of the 911 services fund amounted to $54,093, and those of the Kodiak Fisheries Research Center fund amounted to $11,631,734. The total growth (decrease) in net assets for municipal solid waste collection and disposal was $1,595,626, hospital facilities fund was $32,803, the 911 services fund was $(2,497) and the Kodiak Fisheries Research center $(188,894). 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. 13 program revenue (in millions) ■ expenses (in millions) General Fund Budgetary Highlights Differences between the original budget and final amended budget can be briefly summarized as follows: • $650,000 was transferred in from the Land Sale Fund and $350,000 was transferred in from the Debt Service Fund. These funds were used to pay for the "Jane Doe" lawsuit. • $2,400,000 was added to the Borough Attorney's department. This was to cover costs of the "Jane Doe" lawsuit. • The budget for General Liability Insurance was reduced by $43,210. 9 Municipal Solid Hospital 911 Service Kodiak Fisheries Waste Facilities Research Center ISLAND S AND BOROUG H Management's Discussion and Analysis June 30, 2003 • $100,000 was transferred to the Building and Grounds fund to pay insurance deductibles if the need arose. Capital Asset 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, 2003, amounts to $125,654,909 (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 decrease in the Kodiak Island Borough's investments in capital assets for the current fiscal year was $4,453,454 which was mostly due to current year depreciation. The following table displays the capital assets (net of depreciation) for the current year. ' Information for comparison purposes will not be available until the FY2004 financial statements are prepared. ' Governmental Business -type activities activities Total Artwork $ — $ 16,091 $ 16,091 ' Land 23,022,184 1,661,499 24,683,683 Construction work -in- progress 3,238,544 69,074 3,307,618 Buildings and improvements 49,269,704 36,099,436 85,369,140 Improvements other than buildings 1,995,993 3,412,797 5,408,790 , Equipment 456,279 2,534,932 2,991,211 Infrastructure 2,416,010 — 2,416,010 Unclassified plant in service — 1,462,366 1,462,366 ' $ 80,398,714 $ 45,256,195 $ 125,654,909 Additional information on the Kodiak Island Borough's capital assets can be found in Note 5 on pages 34 -37 of this report. ' Long -term debt - At the end of the current fiscal year, the Kodiak Island Borough had total bonded debt outstanding of $15,620,000. This entire amount is backed by the full faith and credit of the Borough. The remainder of the Kodiak Island Borough's debt represents capital leases, ' landfill closure and post- closure costs. The following table displays the long -term debt for the current year. Information for comparison purposes will not be available until the FY2004 financial statements are prepared. ' 10 KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2003 Governmental activities General obligation bonds EPA loan ADEC loans Capital lease obligations Landfill post closure care costs Long term interfund borrowings Notes payable $ 15,620,000 $ 31,250 97,019 $ 15,748,269 $ Business -type activities 502,358 2,511,504 6,875,000 1,241,254 11,130,116 $ Total 15,620,000 31,250 97,019 502,358 2,511,504 6,875,000 1,241,254 26,878,385 11 The Kodiak Island Borough's total debt decreased $4,074,373 during the current fiscal year. The key factors in the decrease were principal payments on general obligation bonds and the payment of over two millions dollars to settle litigation in FY2003. ' Major long -term debt activity during the year included the following: • The Borough sold a refunding bond issue to defease bonds issued at higher interest rates in 1993 and 1994. See Note 7 (g) for details. The last time the Borough received a rating on a bond issue (General Obligation Refunding Bonds, 1998 Series A) the Borough received an A- rating from Fitch Investors Service. Currently, general obligation bonds are insured to a AAA rating at the time of issuance. There is no general obligation debt limit imposed on the Kodiak Island Borough by the State Constitution or statutes or the Borough's charter or code. Additional information on the Kodiak Island Borough's long -term debt can be found in note 7 on ' pages 40 -45 of this report. Economic Factors and Next Year's Budgets and Rates • At June 30, 2003, the unemployment rate for the Kodiak Island Borough was 8.1 percent, which is 6.8 percent lower than one year ago. The state's unemployment rate was 8.9 percent at June 30, 2003. Kodiak Island • Property tax revenues received are projected to increase in future years as the Borough's assessed valuation continues to increase. 11 KODIAK ISLAND BOROUGH ' Management's Discussion and Analysis June 30, 2003 ' 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 Road, Kodiak, Alaska 99615. 12 KODIAK ISLAND BOROUGH Statement of Net Assets June 30, 2003 See accompanying notes to financial statements 13 (Continued) Component Primary Government unit Governmental Business -type School Assets activities activities Eliminations Total district Equity in central treasury $ 1,490,499 $ 384,676 $ - $ 1,875,175 $ - Temporary investments 36,793,346 3,063,456 - 39,856,802 - Other cash and cash equivalents - - - - 16,175 Due from primary government - - - - 3,452,254 Receivables: Accounts and other receivables, net 403,263 256,846 - 660,109 68,752 State of Alaska 253,656 144,224 - 397,880 876,746 Federal Government 388,413 - - 388,413 232,302 Property taxes, net of allowance of $192,114 312,928 - - 312,928 - Inventories - 277,007 - 277,007 323,890 Land sales contracts receivable 54,325 - - 54,325 - Capital assets, net 80,398,714 45,256,195 - 125,654,909 120,321 Total $ 120,095,144 $ 49,382,404 $ - $ 169,477,548 $ 5,090,440 Liabilities and Net Assets Liabilities: Accounts payable $ 402,470 $ 274,763 $ - $ 677,233 $ 174,973 Retainages payable 45,860 - - 45,860 - Accrued compensation and related liabilities 194,155 26,346 - 220,501 2,456,039 Other accrued liabilities 236,580 176,963 - 413,543 - Customer deposits 678 - - 678 - Deferred revenues 22,004 55,247 - 77,251 62,193 Due to component units 3,452,254 - - 3,452,254 - Internal balances (7,554,726) 7,554,726 - - - Noncurrent liabilities: Due within one year 1,260,167 1,553,418 - 2,813,585 278,529 Due in more than one year 14,488,102 2,701,698 - 17,189,800 174,000 Total liabilities 12,547,544 12,343,161 - 24,890,705 3,145,734 Net assets: Invested in capital assets, net of related debt 64,650,445 36,382,583 7,130,000 108,163,028 92,901 Unrestricted 42,897,155 656,660 (7,130,000) 36,423,815 1,851,805 Net assets 107,547,600 37,039,243 - 144,586,843 1,944,706 Total $ 120,095,144 $ 49,382,404 $ - $ 169,477,548 $ 5,090,440 See accompanying notes to financial statements 13 (Continued) KODIAK ISLAND BOROUGH Statement of Activities Year Ended June 30, 2003 General revenues: Property taxes Severance taxes Grants and entitlements not restricted to specific programs Loss on disposal of capital assets Investment earnings Support from primary government Other Transfers Total general revenues and transfers Change in net assets Net assets, beginning of year Net assets, end of year See accompanying notes to financial statements. 14 1 Program Revenues Operating Charges for Grants and Capital Functions/Programs Expenses Services Contributions Grants Primary government: Governmental activities: General government $ 2,926,643 $ 153,727 $ - $ - Emergency preparedness 26,242 - - - Community and economic development 465,556 30,412 45,950 - Health and sanitation 823,906 - 498,636 - Education, culture and recreation 205,866 54,444 27,691 - Fire services 307,567 13,039 9,001 - Maintenance and operations 793,989 - - 560,300 Service district maintenance 190,058 20,000 11,588 - Education 9,971,617 - - 110,605 Interest on long -term debt 721,034 - 348,012 - Total governmental activities 16,432,478 271,622 940,878 670,905 Business -type activities: Municipal solid waste collection and disposal 2,913,652 2,788,101 - - Hospital facilities 1,396,104 869,512 - - 911 services 70,500 68,003 - - Kodiak fisheries research center 1,799,737 1,538,968 - - Total business -type activities 6,179,993 5,264,584 - - Total primary government $ 22,612,471 $ 5,536,206 $ 940,878 $ 670,905 Component Units: School district $ 30,846,761 $ 262,487 $ 5,256,951 $ - Totals - Component Units $ 30,846,761 $ 262,487 $ 5,256,951 $ - General revenues: Property taxes Severance taxes Grants and entitlements not restricted to specific programs Loss on disposal of capital assets Investment earnings Support from primary government Other Transfers Total general revenues and transfers Change in net assets Net assets, beginning of year Net assets, end of year See accompanying notes to financial statements. 14 1 Net (Expense) Revenue and Changes in Net Assets Primary Government Component Unit Governmental Business -Type School Activities Activities Total District — $ (2,772,916) $ — $ (2,772,916) $ — (26,242) — (26,242) — (389,194) — (389,194) — (325,270) — (325,270) — (123,731) — (123,731) — (285,527) — (285,527) — (233,689) — (233,689) — (158,470) — (158,470) — (9,861,012) — (9,861,012) — (373,022) — (373,022) — (14,549,073) — (14,549,073) — — (125,551) (125,551) - - (526,592) (526,592) - - (2,497) (2,497) - - (260,769) (260,769) - - (915,409) (915,409) — (14,549,073) (915,409) (15,464,482) $ — $ (25,327,323) (25,327,323) $ 8,244,465 — 8,244,465 — 702,065 — 702,065 — 3,135,460 — 3,135,460 16,906,853 — (2,171) (2,171) — 1,823,641 102,546 1,926,187 164 — — — 7,581,989 143,885 — 143,885 267,393 (2,252,072) 2,252,072 — — 11,797,444 2,352,447 14,149,891 24,756,399 (2,751,629) 1,437,038 (1,314,591) (570,924) 110,299,229 35,602,205 145,901,434 2,515,630 $ 107,547,600 $ 37,039,243 $ 144,586,843 $ 1,944,706 15 KODIAK ISLAND BOROUGH Balance Sheet Governmental Funds June 30, 2003 See accompanying notes to financial statements. 16 (Continued) Education Other Total and governmental governmental Assets General Facilities health funds funds Assets: Equity in central treasury $ 650 $ 225,182 $ 17,879 $ 1,246,788 $ 1,490,499 Temporary investments 5,306,856 30,445,075 - 1,041,415 36,793,346 Receivables: - Accounts and other receivables, net 212,712 190,551 - - 403,263 State of Alaska 60,362 - - 193,294 253,656 Federal Government - - - 388,413 388,413 Property taxes, net of allowance of $192,114 295,689 - - 17,239 312,928 Land sales contracts - - - 54,325 54,325 Due from other funds 704,885 124,775 - 966,130 1,795,790 Advances to other funds - 7,130,000 - - 7,130,000 Total $ 6,581,154 $ 38,115,583 $ 17,879 $ 3,907,604 $ 48,622,220 Liabilities and Fund Balances Liabilities: Accounts payable $ 75,579 $ - $ - $ 326,891 $ 402,470 Retainages payable - - - 45,860 45,860 Accrued compensation and related liabilities 7,638 - - 156 7,794 Customer deposits - - - 678 678 Deferred revenues 276,836 - - 54,325 331,161 Due to component unit 3,452,254 - - - 3,452,254 Due to other funds 964,735 - - 406,329 1,371,064 Total liabilities 4,777,042 - - 834,239 5,611,281 Fund balances: Reserved: Long -term interfund borrowings - 6,875,000 - - 6,875,000 Unreserved: Designated for self- insurance - - - 100,000 100,000 Designated for subsequent year expenditures - - - 334,950 334,950 Undesignated 1,804,112 31,240,583 17,879 2,638,415 35,700,989 Total fund balances 1,804,112 38,115,583 17,879 3,073,365 43,010,939 Total $ 6,581,154 $ 38,115,583 $ 17,879 $ 3,907,604 $ 48,622,220 See accompanying notes to financial statements. 16 (Continued) KODIAK ISLAND BOROUGH Reconciliation of Net Assets Between the Government -wide and Fund Financial Statements Year ended June 30, 2003 Amount reported as fund balance on the governmental funds balance sheet Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Long -term receivables, delinquent property taxes and loans are not available to pay for current- period expenditures and, therefore, are deferred in the funds: Property taxes $ Land sales contracts Long -term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds: General obligation bonds payable ADEC loans EPA loan payable Accrued interest Compensated absences Net assets of governmental activities See accompanying notes to the financial statements. $ 43,010,939 80,398,714 254,832 54,325 309,157 (15,620,000) (97,019) (31,250) (236,580) (186,361) (16,171,210) $ 107,547,600 17 1 KODIAK ISLAND BOROUGH Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year ended June 30, 2003 Revenues: Property taxes Intergovernmental: State sources Federal sources Land sale proceeds Severance taxes Licenses, permits, fees, and other local revenues Other Investment income Total revenues Expenditures: Current: General government Fire services Emergency preparedness Community and economic development Health and sanitation department Education, culture and recreation Maintenance and operations Service district maintenance Primary and secondary education Capital outlay: Schools General Debt service: Principal Interest Bond issuance costs Total expenditures Excess of revenue over (under) expenditures Other financing (uses) sources: Refunding bonds issued Payment to refunded bond escrow agent Transfers in Transfers out Net other financing (uses) sources Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses Fund balances, at beginning of year Fund balances, at end of the year See accompanying notes to financial statements. 18 1 Education Other Total and governmental governmental General Facilities health funds funds $ 7,326,448 $ - $ - $ 663,185 $ 7,989,633 1,479,397 - 800,012 1,335,121 3,514,530 1,204,063 - - 28,650 1,333,713 - 11,805,734 - 46,130 11,851,864 702,065 - - - 702,065 153,727 - - 181,512 335,339 - - 58,645 1,481 60,126 171,532 1,160,335 43,514 448.360 1,823.641 11.037,232 12,966,069 902,171 2,604.339 27,509,811 4,578,042 - 22,232 - 4,600,274 - - - 360,130 260,120 2,369 - - 20,000 22,369 320,853 - - 123,607 444,460 286,095 - - 498,635 784,730 152,282 - - 53,584 205,866 - - - 606,724 606,734 - - - 190,058 190,058 7,351,840 - - - 7,251,840 - - - 372,122 372,123 - - - 656,083 656,083 - - 1,145,061 - 1,145,061 - - 783,534 - 783,524 - - 43,509 - 43,509 12.591,481 - 1.994,326 2,780.933 17,366,740 (1,554,249) 12,966.069 (1,093,155) (176.594) 10,143,071 - - 3,075,000 - 3,075,000 - - (3,068,781) - (3,068.781) 1,000,000 - 1,005,750 909,894 3,915,644 (480.476) (1,139,147) (350,000) (731,681) (2.691,304) 519.524 (1,139.147) 661,969 188,313 230.559 (1,034,725) 11,826,922 (430,186) 11,619 10,373,630 2.838,837 26.388,661 448.065 3,061,746 32,637.309 $ 1,804.112 $ 38,115,583 $ 17,879 $ 3,073,365 $ 43,010.939 18 1 1 19 KODIAK ISLAND BOROUGH Reconciliation of the Statement Of Revenues, Expenditures and Changes in Fund Balances ' of Governmental Funds to the Statement of Activities Year ended June 30, 2003 Net change in fund balance — total governmental funds $ 10,373,630 Amounts reported for governmental activities in the statement of ' activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets ' is allocated over their estimated useful lives and reported as depreciation expense: Capital outlay $ 526,301 ' Transfer of equipment to business -type activities (2,476,412) Depreciation expense (2,986,618) (4,936,729) Revenues in the statement of activities that do not provide current current financial resources and are deferred in the funds: Property taxes 254,832 I Revenues in the funds that were earned in a prior year and provide current financial resouces: Land sale proceeds (11,837,941) ' The issuance of long -term debt provides current financial resources to governmental funds, while the repayment of the principal of long -term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds do not report the accrual of interest expense on debt when it is not payable from currently available resources: Change in interest accrual 62,490 Principal repayments 1,145,061 1,207,551 Expenses reported in the funds that do require the use of current financial resources where the liability was incurred in a prior year: ' Litigation settlement 2,373,389 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Compensated absences (186,361) Change in net assets of governmental activities $ (2,751,629) See accompanying notes to the financial statements. 1 19 See accompanying notes to financial statements. 20 1 ' KODIAK ISLAND BOROUGH Balance Sheet Proprietary Funds June 30, 2003 Business -type Activities - Enterprise Funds Municipal Kodiak Other solid waste fisheries Nonmajor collection and Hospital research Enterprise Assets disposal facilities center Fund Total Current assets: Equity in central treasury $ 156,677 $ - $ 173,906 $ 54,093 $ 384,676 Temporary investments 1,346.578 - 1,716,878 - 3,063,456 Accrued interest receivable 4,734 - 18,499 - 23,233 Customer receivables 217,638 - 15,975 - 233,613 Accounts receivable - State of Alaska 100,000 44.224 - - 144,224 Total current assets 1,825,627 44,224 1,925,258 54,093 3,849,202 ' Inventories - 277,007 - - 277,007 Capital assets, net 5,556,568 22.651,156 17,048.471 - 45.256,195 Total $ 7,382,195 $ 22,972,387 $ 18,973.729 $ 54.093 $ 49,382.404 Liabilities and Fund Equities Current liabilities: Accounts payable $ 154,434 $ 97,494 $ 22,835 $ - $ 274,763 Deferred revenue - - 55,247 - 55,247 Accrued compensation and related liabilities 17,408 - 8,938 - 26,346 Other accrued liabilities 176,763 - 200 - 176,963 Current portion of capital lease obligations - 312,164 - - 312,164 Current portion of advances from other fund - - 255.000 - 255,000 Due to other funds 100.939 199,012 124.775 - 424.726 Total current liabilities 449,544 608,670 466,995 - 1,525,209 Noncurrent liabilities: Notes payable 1,241,254 - - - 1,241,254 Capital lease obligations - 190,194 - - 190,194 Advances from other fund - - 6,875.000 - 6.875,000 ' Accrual for landfill closure and postclosure costs 2.511,504 - - - 2,511,504 Total liabilities Fund equities: 4.202.302 798,864 7.341.995 - 12.343,161 Invested in capital assets, net of related debt 4,315,314 22,148,798 9,918,471 - 36,382,583 Unrestricted (1.135.421) 24.725 1.713.263 54,093 656.660 Total fund equities 3.179,893 22.173,523 11.631.734 54.093 37,039.243 Total $ 7,382.195 $ 22.972,387 $ 18.973.729 $ 54,093 $ 49.382.404 See accompanying notes to financial statements. 20 1 KODIAK ISLAND BOROUGH Statement of Revenues, Expenses, and Changes in Fund Equity Proprietary Funds Year ended June 30, 2003 I 1 21 Business -type Activities - Enterprise Funds 1 Municipal Kodiak Other Solid Waste Fisheries Nonmajor Collection and Hospital Research Enterprise Disposal Facilities Center Fund Total Operating revenues: Solid waste collection $ 1,734,541 $ - $ - $ - $ 1,734,541 Solid waste disposal 1,003,484 - - - 1,003,484 Rents & Royalties - - 1,538,968 - 1,538,968 State sources - revenue sharing - 39,084 - - 39,084 Charges for services /customer charges 68,003 68,003 Lease proceeds - 720,000 - - 720,000 Donations - 56,428 - - 56,428 Other Total operating revenues 50,076 2,788,101 54,000 869,512 - 1,538,968 - 68.003 104,076 5,264,584 Operating expenses: Personnel services 438,187 5,802 159,794 10,500 614,283 Employee Benefits - - 41,292 - 41,292 Solid waste collection 1,309,814 1,309,814 Refuse disposal 284,590 284,590 Contracted services 99,880 54,000 42,443 - 196,323 Repairs and maintenance 29,406 2,671 220,606 - 252,683 Landfill closure and postclosure costs 218,603 - - 218,603 1 Depreciation 185,634 1,272,890 744,114 2,202,638 General and administration 198,283 198,283 Miscellaneous - - 88,188 - 88,188 Telephone services - - - 60,000 60,000 Recycling services 98,067 - - - 98,067 Contributions 4,020 - - - 4,020 Total operating expenses 2,866,484 1,335,363 1,296,437 70,500 5,568,784 Operating income (loss) (78.383) (465,851) 242,531 (2.497) (304,200) Nonoperating revenues (expenses): Loss on disposal of fixed assets - (2,171) - - (2,171) Investment income 30,016 655 71,875 - 102,546 Interest expense (47,168) (60,741) (503.300) - (611,209) Income (loss) before transfers out and capital contributions (95,535) (528,108) (188,894) (2,497) (815,034) Transfers out - (224,340) - - 224,340 ) Capital contributions 1.691,161 785.251 - - 2(476,412 Change in fund equity 1,595,626 32,803 (188,894) (2,497) 1,437,038 Fund equity, at beginning of year 1,584.267 22,140,720 11.820,628 56,590 35,602,205 Fund equity, at end of year $ 3.179,893 $ 22,173,523 $ 11,631,734 $ 54,093 $ 37,039,243 t See accompanying notes to financial statements. I 1 21 1 KODIAK ISLAND BOROUGH Statement of Cash Flows Proprietary Funds Year ended June 30, 2003 See accompanying notes to financial statements. 22 1 Business -type Activities - Enterprise Funds Municipal Kodiak Other Solid Waste Fisheries Nonmajor Collection and Hospital Research Enterprise Disposal Facilities Center Fund Total Cash flows from operating activities Cash received from customers $ 2,851,915 $ 770,428 $ 1,534,495 $ 68,003 $ 5,224,841 Payments to suppliers (1,939,634) 40,823 (346,001) (60,000) (2,304,812) Payments to employees (438,187) (5.802) (201,086) (10,500) (655.575) Subsidy from State of Alaska — (5,140) — — (5,140) Internal activity - payments to /from other funds 939 199,012 (4.200) — 195.751 Net cash provided by operating activities 475,033 999.321 983.208 (2.497) 2 Cash flows from noncapital financing activites: Transfers out — (224,340) — — (224.340) Cash flows from capital and related financing activities: Acquisition and construction of capital assets (940) (172,486) (22,878) — (196,304) Interest paid on notes payable, capital leases, and interfund borrowing — (60,741) (503,300) — (564,041) Principal payments on long -term interfund borrowing — — (240,000) — (240,000) Principal payments on notes payable — (669,967) — — (669,967) Principal payments on capital lease obligation — (294.948) — — (294.948) Net cash used for capital and related financing activities (940) (1,198,142) (766,178) — (1,965.260) Cash flows from investing activities: Interest and dividends on investments 30,017 655 62,439 — 93.111 Net increase (decrease) in investments (483,009) 56,307 (703.959) — (1,130,661) Net cash provided by (used for) investing activities (452,992) 56,962 (641.520) — (1,037,550) Net change in cash and cash equivalents 21 (366,199) (424,490) (2,497) (772,085) Cash and equivalents, at beginning of year 135.576 366.199 598.396 56.590 1,156,761 Cash and equivalents, at the end of year $ 156.677 $ — $ 173,906 $ 54.093 $ 384,676 See accompanying notes to financial statements. 22 1 KODIAK ISLAND BOROUGH Statement of Cash Flows Proprietary Funds Year ended June 30, 2003 See accompanying notes to financial statements. 23 Business -type Activities - Enterprise Funds Municipal Kodiak Other Solid Waste Fisheries Nonmajor Collection and Hospital Research Enterprise Disposal Facilities Center Fund Total Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) $ (78,383) $ (465,851) $ 342,531 $ (2,497) $ (304,300) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 185,634 1,373,890 744,114 — 2,203,638 Changes in assets and liabilities: Customer receivables 129,125 — (15,975) — 113,150 Accounts receivable - State of Alaska — (44,224) — (44,324) Due to /from other funds 939 199,013 (4,200) — 195,751 Accounts payable 14,966 97,494 330 — 112,790 Deferred revenues — (60,000) 11,502 — (48,498) Accrual for landfill closure and postclosure costs 218,603 — — — 218,603 Other accrued liabilities 4,149 — 4,906 — 9,055 Net cash provided by operating activities $ 475,033 $ 999.331 $ 983,208 $ (2,497) $ 3.455,065 Noncash capital and related financing activities: Interest $ 47,168 $ — $ — $ — $ 47,168 Capital contributions 1,691,161 785,351 — — 3,476,412 Loss on disposal of fixed assets — (3,171) — — (2,171) $ 1,738,329 $ 783,080 $ — $ — $ 3,521,409 See accompanying notes to financial statements. 23 KODIAK ISLAND BOROUGH Notes to Financial Statements ' June 30, 2003 (1) Summary of Significant Accounting Policies r (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 the combined 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 fixed 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 or decrease 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 assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component unit. For the most part, the effect of interfund 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. The statement of activities demonstrates the degree to which the direct expenses of a given function i 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. ' 24 1 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 (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. 25 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 f susceptible to accrual and so 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. The government reports the following major governmental funds: The general fitnd 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 facilities fitnd 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 debt service — education and health fitnd 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 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 fitnd 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. 25 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 The Kodiak Fisheries Research Center fiend 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. Private - sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private- sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private- sector guidance. As a general rule the effect of interfund and 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. 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. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. (d) Assets, Liabilities, and Fund Equity Cash and Investments Cash balances of most Borough funds are pooled in a central treasury. Each fund type's portion of this pool is displayed on the combined balance sheet as "Equity in central treasury." In addition, investments are separately held by several of the Borough's funds. Investments are carried at fair value, as determined by quoted market prices. 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 Code requires all investments to be collateralized and /or insured. The Alaska Municipal League Investment Pool ( AMLIP) is considered to be an external investment pool as defined by GASB Statement No. 31. AMLIP is not SEC - registered. Alaska Statute 37.23 26 1 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 ' 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 I an investment manager. The manager is required to produce monthly disclosure statements to the pool. The pool has also retained an investment advisor 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, 1 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 1 interfund loans) or "advances to /from other funds" (i.e., the non - current portion of interfund loans). All other outstanding balances between funds are reported as "due to /from other funds." Any residual balances outstanding between the governmental activities and business -type activities are ' reported in the government -wide financial statements as "internal balances." Internal balances used to acquire capital assets are eliminated from the invested in capital assets, net of related debt, portion of net assets. ' 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 Expendable operating supplies of the Borough are accounted for using the purchase method. There are no significant amounts of such inventories on hand at year end. All of the hospital facilities fund inventory is assigned to Providence as of April 21, 1997 which, by the terms of the lease agreement for the hospital facilities (see note 17), are required to be returned to the Borough at the termination of the lease in at least equal value. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. Capital Assets ' Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, street lights, and similar items), are reported in the applicable governmental or business -type activities 1 27 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 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 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 type balance sheet. Bond premiums and discounts, as well as issuance costs, 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 reported as deferred charges and amortized over the term of the related debt. 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. I KODIAK ISLAND BOROUGH Notes to Financial Statements ' June 30, 2003 ' Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent tentative management plans that are subject to change. (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 1 st. Taxes are due when billed and generally become delinquent on or after October 15th. 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. 1 Real property tax liens are enforced by one general foreclosure proceeding against the delinquent properties. ' 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 i ' the fiscal year in which they become measurable and available. Intergovernmental Revenue f 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. 1 29 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 Operating and Nonoperating Revenue Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result form 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 services 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 accrual basis. 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. (h) Newly Adopted Accounting and Reporting Standards During the year ended June 30, 2003, the Borough adopted the following new accounting and reporting standards: Governmental Accounting Standards Board Statement No. 34, Basic Financial Statenients— and Management's Discussion and Analysis for State and Local Governments, as amended. This statement requires government -wide financial statements to be prepared using the accrual basis of accounting and the economic resources measurement focus. Government -wide financial statements do not provide information by fund or account group, but distinguish between the Borough's governmental activities and activities of its discretely presented component units on the statements of net assets and activities. The Borough's statement of net 30 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 assets will include both noncurrent assets and noncurrent liabilities of the Borough, which were previously recorded in the General Fixed Asset Account Group and the General Long- term Debt Account Group. In addition to the capital assets previously recorded in the General Fixed Asset Account Group, the Borough retroactively capitalized infrastructure assets. The government -wide statement of activities reflects depreciation expense on the Borough's capital assets, including infrastructure. Statement No. 34 also requires the presentation of fund financial statements, which continue to use the modified accrual basis of accounting and the current financial resources measurement focus. Accordingly, the accounting and financial reporting for the Borough's General Fund, Special Revenue, and Capital Projects funds is similar to that previously presented in the Borough's financial statements, although the format of the financial statements has been modified. This statement also requires as required supplementary information Management's Discussion and Analysis which includes an analytical overview of the Borough's financial activities. In addition, a budgetary comparison statement is presented that compares the adopted and modified General Fund budget with actual results. Governmental Accounting Standards Board Statement No. 38, Certain Financial Statement Note Disclosures. This statement modifies, establishes, and rescinds certain financial statements disclosure requirements in the area of long term obligations, receivable and payable balances and interfund activity, as well as within the summary of significant accounting policies. (2) Stewardship, Compliance, and Accountability (a) Excess of ExpenditureslExpenses Over AppropriationslBudgets General Fund The following department expenditures exceeded their appropriations: Department School district Support Building official Enterprise Funds The following fund expenses exceeded their budget: Fu nd Municipal Solid Waste 911 Services Fund Excess $ 2,930 10,252 $ 13,182 Excess $ 94,662 1,500 $ 96,162 31 KODIAK ISLAND BOROUGH ' Notes to Financial Statements ' June 30, 2003 (3) (b) Fund Deficits and Accumulated Deficits , The fund deficits and accumulated deficits at June 30, 2003, are as follows: Capital Project Fund: , State Capital Grants $ 40,490 Management intends to fund the Capital Project Funds deficits in fiscal year 2003 through transfers. g P J Y g Cash and Investments (a) Deposits At June 30, 2003, the carrying amount of the Borough deposits was $1,875,175 and the corresponding bank balance was $1,752,752. The Federal Deposit Insurance Corporation insures $100,000 of the Borough's bank balance. Government and Agency Obligations and General Obligation Bonds of a Municipality collateralize the remaining $1,652,752. Collateral, in the amount of $8,139,396, is held by Deutsche Bank, the pledging financial institution's agent, in the Borough's name. (b) Investments , Investments are categorized as follows to give an indication of the level of custodial credit risk assumed: Category 1 includes investments that are insured, or registered or for which the securities are held by the Borough or its agent in the Borough's name; category 2 includes uninsured and unregistered investments , for which the securities are held by the counter party's trust department or agent in the Borough's name; category 3 includes uninsured and unregistered investments for which the securities are held by the counter party, or by its trust department or agent but not in the Borough's name. The carrying amount of investments approximates fair value. At June 30, 2003, the Borough's investment balances were categorized as follows: Carrying I amount Investments — category 1: U.S. government securities Investments — not categorized: Alaska Municipal League Investment Pool Total investments $ 30,781,285 9,075,517 $ 39,856,802 F� 32 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 i The Alaska Municipal League Investment Pool (AMLIP) is considered to be an external investment pool ■ as defined by GASB Statement No. 31. AMLIP is not SEC - registered. 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 manager is required to produce monthly disclosure statements to the pool. The pool has also retained an investment advisor 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 I in the pool are reviewed for fair value by an independent pricing service. As of June 30, 2003 the fair value of the investment in the pool approximates the fair value of the pool shares. ' (c) Total Deposits and Investments Deposits and investments are reported as follows on the statement of net assets, as of June 30, 2003: Equity in central treasury cash $ 1,875,175 Temporary investments 39,856,802 Total primary government $ 41,731,977 (4) Annual Appropriation to the School District ' An annual appropriation is made to the School District in order to provide the School District with total resources in a fiscal year equal in amount to budgeted expenditures. 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. fl 1 33 L KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 (5) Capital Assets Capital asset activity for the year ended June 30, 2003 was as follows: Beginning Ending balance Increase Decrease balance Governmental activities: Capital assets, not being depreciated: Land $ 24,683,684 $ — $ (1,661,500) $ 23,022,184 Construction work -in- progress 2,836,714 526,301 (124,471) 3,238,544 Total 27,520,398 526,301 (1,785,971) 26,260,728 Capital assets, being depreciated: Buildings and improvements 91,338,915 124,471 (1,025,570) 90,437,816 Improvements other than buildings 3,964,683 — — 3,964,683 Equipment 1,780,354 15,372 (58,621) 1,737,105 Infrastructure 5,762,722 — — 5,762,722 Total 102,846,674 139,843 (1,084,191) 101,902,326 Less accumulated depreciation for: Buildings and improvements 39,094,200 2,306,927 (233,015) 41,168,112 Improvements other than buildings 1,664,166 304,524 — 1,968,690 Equipment 1,085,987 231,099 (36,260) 1,280,826 Infrastructure 3,202,644 144,068 — 3,346,712 Total 45,046,997 2,986,618 (269,275) 47,764,340 Total capital assets being depreciated 57,799,677 (2,846,775) (814,916) 54,137,986 Total governmental activities, net $ 85,320,075 $ (2,320,474) $ (2,600,887) $ 80,398,714 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 Business -type activities: Municipal solid waste collection and disposal fund Capital assets, not being depreciated: Land Construction work -in- process Total Capital assets, being depreciated: Unclassified utility plant in service Improvements other than buildings Machinery and equipment Total Less accumulated depreciation for: Unclassified utility plant in service Improvements other than buildings Machinery and equipment Total Total capital assets being depreciated, net Total municipal solid waste collection and disposal fund, net Hospital facilities fund Capital assets, not being depreciated: Artwork Land Construction work -in- process Total Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total Total hospital facilities fund, net Beginning 16,091 $ Ending balance Increase Decrease balance — $ — $ 1,651,248 $ — $ 1,651,248 2,241,254 — (2,241,254) — 2,241,254 1,651,248 (2,241,254) 1,651,248 2,178,733 — — 2,178,733 21,614 2,266,824 — 2,288,438 1,001,811 59,557 — 1,061,368 3,202,158 2,326,381 — 5,528,539 31,292,170 669,248 47,119 — 716,367 15,100 73,772 — 88,872 708,963 109,017 — 817,980 1,393,311 229,908 — 1,623,219 1,808,847 2,096,473 — 3,905,320 $ 4,050,101 $ 3,747,721 $ (2.241,254) $ 5,556,568 $ — $ 16,091 $ — $ 16,091 — 10,251 — 10,251 — 69,074 — 69,074 — 95,416 — 95,416 26,131,043 1,000,000 — 27,131,043 401,046 — — 401,046 4,760,081 103,414 (56,351) 4,807,144 31,292,170 1,103,414 (56,351) 32.339,233 5,364,318 1,130,889 — 6,495,207 61,925 12,560 — 74,485 2,897,447 354,441 (38.087) 3,213,801 8,323,690 1,497,890 (38,087) 9,783,493 $ 22,968,480 $ (299,060) $ (18.264) $ 22,651,156 35 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 Kodiak Fisheries Research Center Fund Capital assets, being depreciated: Buildings Improvements other than buildings Machinery and equipment Total Less accumulated depreciation for: Buildings Improvements other than buildings Machinery and equipment Total Total Kodiak Fisheries Research Center Fund, net $ 17,840,400 $ 10 $ 1,021,998 — 1,134,663 22,868 1,782,120 594,680 102,200 34,067 Ending balance $ 17,840,410 1,021,998 1,157,531 20,019,939 — 2,376,800 136,267 2,227,354 744,114 — 2,971,468 $ 17,769,707 $ (721,236) $ — $ 17,048,471 36 Beginning Ending balance Increase Decrease balance Business -type activities: Capital assets, not being depreciated: Artwork $ — $ 16,091 $ — $ 16,091 Land — 1,661,499 — 1,661,499 Construction work -in- process 2,241,254 69,074 (2,241,254) 69,074 Total 2,241,254 1,746,664 (2,241,254) 1,746,664 Capital assets, being depreciated: Unclassified utility plant in service 2,178,733 — — 2,178,733 Buildings 43,971,443 1,000,000 — 44,971,443 Improvements other than buildings 1,444,658 2,267,763 — 3,712,421 Machinery and equipment 6,896,555 184,911 (56,351) 7,025,115 Total 54,491,389 3,452,674 (56.351) 57,887,712 Less accumulated depreciation for: Unclassified utility plant in service 669,248 47,119 — 716,367 Buildings 7,146,438 1,725,569 — 8,872,007 Improvements other than buildings 179,225 120,399 — 299,624 Machinery and equipment 3,949,444 578,826 (38.087) 4,490.183 Total 11,944,355 2,471,913 (38.087) 14,378,181 Total capital assets being depreciated, net 42,547,034 980,761 (18,264) 43,509,531 Total business -type activities, net $ 44,788,288 $ 2,727,425 $ (2,259,518) $ 45,256,195 36 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 Depreciation expense was charged to the departments and functions of the primary government as follows: i 1 1 � l 11 fl t An expenditure qualifies for capitalization as a capital asset if the total cost is $5,000 or more, the asset will last longer than one year, and the asset is not consumable. Improvements to an existing asset that increase the life or value of that asset also qualify for capitalization, and are added to the carrying amount of the original asset. All capital assets are depreciated over the estimated remaining useful life of the asset on a straight -line basis. (6) Interfund Receivables, Payables and Transfers (a) Interfund Receivables and Payables A summary of interfund receivables and payables at June 30, 2003, is as follows: General Fund Facilities Fund Non -major governmental funds Major Enterprise funds: Municipal Solid Waste Collection and Disposal Fund Hospital Enterprise Fund Kodiak Fisheries Research Center Fund (b) Long -Term Interfund Borrowings Receivable Governmental activities: $ 704,885 $ 964,735 General government $ 508,654 966,130 School district support 2,400,801 100,939 Fire services 34,114 1 Health and sanitation 39,176 2,050,790 Emergency preparedness 3,873 Total – Governmental activities Business 2,986,618 -type activities: Municipal Solid Waste Collection and Disposal 185,634 Hospital Facilities 1,272,890 ' Kodiak Fisheries Research Center 744,114 Total – Business -type activities 2,202,638 Total $ 5,189,256 i 1 1 � l 11 fl t An expenditure qualifies for capitalization as a capital asset if the total cost is $5,000 or more, the asset will last longer than one year, and the asset is not consumable. Improvements to an existing asset that increase the life or value of that asset also qualify for capitalization, and are added to the carrying amount of the original asset. All capital assets are depreciated over the estimated remaining useful life of the asset on a straight -line basis. (6) Interfund Receivables, Payables and Transfers (a) Interfund Receivables and Payables A summary of interfund receivables and payables at June 30, 2003, is as follows: General Fund Facilities Fund Non -major governmental funds Major Enterprise funds: Municipal Solid Waste Collection and Disposal Fund Hospital Enterprise Fund Kodiak Fisheries Research Center Fund (b) Long -Term Interfund Borrowings Receivable Payable $ 704,885 $ 964,735 379,775 — 966,130 406,329 — 100,939 — 199,012 — 379,775 $ 2,050,790 $ 2,050,790 In October 1997 the Facilities Special Revenue Fund loaned $8,000,000 to the Kodiak Fisheries Research Center Enterprise Fund. The loan from the Facilities Special Revenue Fund is accounted for as a long -term interfund advance, while the liability in the Kodiak Fisheries Research Center Enterprise Fund is accounted 37 (c) Transfers Interfund transfers 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 fund types during the year ended June 30, 2003, were as follows: Transfers in ' KODIAK ISLAND BOROUGH Education Nonmajor Notes to Financial Statements 30, 2003 General and health governmental June fund fund ; for as a long -term interfund borrowing. The interest revenue and interest expense on the debt are reported ' as operating transfers in/out. The advance bears interest at 7 %, and the scheduled payments for the next five fiscal years ended and thereafter are as follows: (480,476) $ — , 161,736 Principal Interest Total 462,670 Year ending June 30: Education and health fund (350,000) 350,000 — — 2004 $ 255,000 $ 490,175 $ 745,175 71,681 t 2005 275,000 471,625 746,625 Hospital 2006 290,000 451,850 741,850 Total transfers $ 2007 315,000 430,675 745,675 2008 335,000 407,925 742,925 2009 -2013 2,065,000 1,638,875 3,703,875 2014 -2018 2,890,000 780,150 3,670,150 2019 705,000 24,675 729,675 ' $ 7,130,000 $ 4,695,950 $ 11,825,950 (c) Transfers Interfund transfers 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 fund types during the year ended June 30, 2003, were as follows: A summary of significant transfers are as follows: • The Hospital Enterprise Fund transferred $224,340 to the debt service fund to pay for debt service on hospital related debt. • The Land Sales Special Revenue Fund transferred $650,000 to the General Fund to help fund cost of litigation. 38 1 Transfers in Education Nonmajor Transfers General and health governmental out fund fund funds Fund Types: General fund $ (480,476) $ — $ 318,740 $ 161,736 Facility fund (1,139,147) — 462,670 676,477 Education and health fund (350,000) 350,000 — — Non- mojor governmental funds (721,681) 650,000 — 71,681 Major enterprise fund: Hospital (224,340) — 224,340 — Total transfers $ (2,915,644) $ 1,000,000 $ 1,005,750 $ 909,894 A summary of significant transfers are as follows: • The Hospital Enterprise Fund transferred $224,340 to the debt service fund to pay for debt service on hospital related debt. • The Land Sales Special Revenue Fund transferred $650,000 to the General Fund to help fund cost of litigation. 38 1 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 • The Education and Health Debt Service Fund transferred $350,000 to the General Fund to help fund cost of litigation. • The Facilities Special Revenue Fund transferred $622,560 to the Building and Grounds Special Revenue Fund to pay for building insurance. • The Facilities Special Revenue Fund transferred $462,670 to the Debt Service Fund for debt service on hospital bonds. • The General Fund transferred $318,740 to the debt service fund to pay for debt service on general government debt. • The General Fund transferred $100,000 to the Building and Grounds Special Revenue Fund for Insurance. 39 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 (7) 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 Authorized Type of debt Rates Dates Issue date Maturity dates Dates Amount Fiscal year Amount Environmental protection agency asbestos abatement loan 0.0% * 620/1985 12/312004 12/31/2003 $ 10,417 $ 06/30 and 12/31 2004 20,833 31,250 1985 375,000 General obligation bonds - 1993 Series 3.90 -7.00% 8/15 -2/15 11/ 15/1993 2/152006 2 /15/2004 900.000 900,000 1994 9,215,000 General obligation bonds -1994 Series 5.40- 5.50% 2/15/2007 11/15/1993 2/152014 1994 9,985,000 General obligation bonds - 1998 Series 3.25 -4.30% 8/15 -2/15 1222/1998 2/152014 2/1511904 55,000 21152005 55,000 2/152006 60,000 2/152007 60,000 2/152008 1,150,000 2/152009 1,200,000 2/152010 1,250,000 2/152011 1,305,000 2/152012 1,360,000 2/152013 1,420,000 2/152014 1,480,000 9395.000 1999 9,740,000 General obligation bonds - 2000ESeries 4.75 -5.0% 8/1 -2/1 12/12/2000 2/12011 2/12004 130,000 2112005 135,000 2/1/2006 145,000 2/1/2007 150,000 2112008 160,000 2112009 165,000 211/2-010 175,000 2/12011 180.000 1,240,000 2001 1,485,000 General obligation bonds - 2000FSeries 6.9 -9.0% 8 /1 -2/1 12/122000 2/12011 2/12004 95,000 2112005 105,000 2/l/2006 110,000 2112007 120,000 2/12008 130,000 211/2009 140,000 2/12010 150,000 2/1 12011 160,000 1,010,000 2001 1,175,000 General Obligation bonds - 2003 B Series 2.00 - 2.625% 8/15-2/15 4/92003 8/152007 2/15/2004 55,000 2/15/2005 985,000 2/152006 1,005,000 2/15/2007 1,030,000 3,075.000 2003 3,075,000 ADEC loans Clean water- Karluk 3.92 -4.05% ** ** ** 6/1/2004 4,334 6/12005 4,442 6/12006 4,553 6/12007 4,667 611/2008 4,784 6112009 4,903 6/12010 5,026 6/1/2011 5.152 6/1/2012 5.280 6/1/2013 5,412 6/1/2014 5,548 6/1 12015 5.686 6/1/2016 5.829 6/1/2017 5,971 6/1/20I8 6,121 6/1/2019 6,277 6/1/2020 6,434 6/112021 6,594 97,019 1998 400.000 15,718269 $ 35.450,000 * Interest free unless delinquent, the 7% plus fees and penalties. ** These loans represent State of Alaska financial assistance programs, for which no payment schedules will be finalized, or principal payments made, until the plans and specifications for the projects funded have been completed. The loans are in the amount of $350,000 and $50,000, and arc to be repaid from general fund revenues of the Borough, and therefore the debt is reported in the General Long -Term Debt Account Group. Interest begins accruing at the stated rues from the date of each individual disbursement of loan proceeds to the Borough. 10 (Continued) 295,000 9,445,000 1,485,000 120,000 1,365,000 50,000 9,395,000 125,000 1,240,000 1,175,000 80,000 1,095,000 — 85,000 1,010,000 — — — 3,075,000 — 3,075,000 105.273 4.026 101.247 4.228 97.019 22,340.273 $ 15.311,943 S 16.768.330 S 3.075,000 $ 4.095.061 $ 15,749.269 41 (Continued) Current mr Prior years Balance at tire Balance at Issued Retired July 1, 2002 Issued Re[unded July 1, 2003 $ S S S S $ 375,000 322,917 52,083 — 20,833 31,250 9,215,000 5,535,000 3,680,000 — 2,780,000 900,000 9,985,000 8,955,000 1,030,000 — 1,030,000 — 295,000 9,445,000 1,485,000 120,000 1,365,000 50,000 9,395,000 125,000 1,240,000 1,175,000 80,000 1,095,000 — 85,000 1,010,000 — — — 3,075,000 — 3,075,000 105.273 4.026 101.247 4.228 97.019 22,340.273 $ 15.311,943 S 16.768.330 S 3.075,000 $ 4.095.061 $ 15,749.269 41 (Continued) l I KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 The annual requirements to amortize all general obligation bonded debt and the EPA and ADEC loans payable outstanding as of June 30, 2003 are as follows: The amount of $17,879 is available in the Debt Service Funds to service all 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. (c) Capital Lease Obligations The Hospital Enterprise Fund leases various equipment under a long -term lease agreement at the nominal annual interest rate of 5.86 %. The initial cost of such equipment included in fixed assets at June 30, 2003, is approximately $1,449,000. Accumulated amortization on the leased equipment is approximately $587,000 at June 30, 2003. The minimum required lease payments under the capital leases for the next three fiscal years ended are as follows: Year ending June 30: 2004 2005 Less amount representing interest $ 333,336 194,446 (25,424) $ 502,358 42 General EPA Loan ADEC obligation payable loan payable Interest Total Year ending June 30: 2004 $ 1,235,000 $ 20,833 $ 4,334 $ 644,046 $ 1,260,167 2005 1,280,000 10,417 4,442 595,705 1,294,859 2006 1,320,000 — 4,553 558,514 1,324,553 2007 1,360,000 — 4,667 516,398 1,364,667 2008 1,440,000 — 4,784 471,131 1,444,784 2009 -2013 7,505,000 — 25,774 1,311,128 7,530,774 2014 -2018 1,480,000 — 29,160 68,277 1,509,160 2019 -2022 — — 19,305 974 19,305 $ 15,620,000 $ 31,250 $ 97,019 $ 4,166,173 $ 15,748,269 The amount of $17,879 is available in the Debt Service Funds to service all 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. (c) Capital Lease Obligations The Hospital Enterprise Fund leases various equipment under a long -term lease agreement at the nominal annual interest rate of 5.86 %. The initial cost of such equipment included in fixed assets at June 30, 2003, is approximately $1,449,000. Accumulated amortization on the leased equipment is approximately $587,000 at June 30, 2003. The minimum required lease payments under the capital leases for the next three fiscal years ended are as follows: Year ending June 30: 2004 2005 Less amount representing interest $ 333,336 194,446 (25,424) $ 502,358 42 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 (d) Note Payable As of June 30, 2003, the Borough had the following note payable outstanding in the Enterprise Funds: Note payable to Alaska Department of Environmental Conservation (ADEC), to be paid within 20 years at 3.8% interest, terms to be negotiated with the first loan payment due one year following substantial completion and initiation of operation of the facility $ 1,241,254 (e) Solid Waste Landfill Closure and Postclosure 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 postclosure care costs that will be incurred based on the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. The estimated liability of landfill closure and postclosure care costs is $2,511,504 as of June 30, 2003, which is based on 72% usage (filled) of the landfill. The landfill is estimated to be filled and unusable by the year 2020. Of the total liability at June 30, 2003, an increase of $218,603 was recorded in the current year based on current year usage and changes in estimates. An estimated additional $976,696 will be recognized as closure and postclosure care expenses between the date of the balance sheet and the date the landfill is expected to be filled to capacity. The estimated total current cost of the landfill closure and postclosure care of $3,488,200 is based on the amount that would be paid if the landfill were closed as of June 30, 2003. However, the actual cost of closure and postclosure 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 postclosure 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 postclosure 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. 43 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 ( Changes in Long -Term Liabilities Long -term liability activity for the year ended June 30, 2003, was as follows: (g) Refunding Bonds , On March 26, 2003, the Kodiak Island Borough issued $3,075,000 in General Obligation Refunding Bonds with an average interest rate of 2.28 percent to advance refund $1,920,000 of $2,820,000 outstanding 1993 ' series A General Obligation Bonds with an average interest rate of 4.825 percent and $1,030,000 of the 44 1 Balance Balance June 30, June 30, Due within 2002 Additions Reductions 2003 one year Governmental activities: General Obligation Bonds $ 16,615,000 $ 3,075,000 $ 4,070,000 $ 15,620,000 $ 1,235,000 ADEC loan 101,247 — 4,228 97,019 4,334 Claims and judgments payable 2,053,000 — 2,053,000 — — EPA loan payable 52,083 — 20,833 31,250 20,833 Total govermental activities $ 18,821,330 $ 3,075,000 $ 6,148,061 $ 15,748,269 $ 1,260,167 Business -type activities: Municipal solid waste collection and disposal Landfill closure and post - closure care costs $ 2,292,901 $ 218,603 $ — $ 2,511,504 $ — Notes payable 1,911,221 — 669,967 1,241,254 — Total municipal solid waste collection and disposal $ 4,204,122 $ 218,603 $ 669,967 $ 3,752,758 $ — Hospital facilities Capital leases $ 797,306 $ — $ 294,948 $ 502,358 $ 312,164 Kodiak Fisheries Research Center Long term interfund borrowings $ 7,130,000 $ — $ 255,000 $ 6,875,000 $ — Business -type activities: Capital leases $ 797,306 $ — $ 294,948 $ 502,358 $ 312,164 Landfill closure and post - closure care costs 2,292,901 218,603 — 2,511,504 — Long term interfund borrowings 7,130,000 — 255,000 6,875,000 — Notes payable 1,911,221 — 669,967 1,241,254 — Total business - type activities $ 12,131,428 $ 218,603 $ 1,219,915 $ 11,130,116 $ 312,164 (g) Refunding Bonds , On March 26, 2003, the Kodiak Island Borough issued $3,075,000 in General Obligation Refunding Bonds with an average interest rate of 2.28 percent to advance refund $1,920,000 of $2,820,000 outstanding 1993 ' series A General Obligation Bonds with an average interest rate of 4.825 percent and $1,030,000 of the 44 1 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 remaining 1994 series A General Obligation Bonds with an average interest rate of 5.400 percent. The net proceeds of $3,068,782 (after payment of $43,509 in underwriting fees, insurance and other issuance costs) were used to purchase U.S. Government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the above mentioned 1993 and 1994 series General Obligation Bonds. As a result, the above 1993 and 1994 series General Obligation Bonds are considered defeased and the liability for that amount of those bonds has been removed from the general long -term debt account group of the Kodiak Island Borough. BankOne is trustee of the bonds. This advance refunding was undertaken to reduce total debt service payments over the next four years by $117,557 and resulted in an economic gain of $113,314. Investments in securities and current obligations of defeased bonds are not reflected in the combined financial statements. A summary of the current obligations of defeased bonds at June 30, 2003 are summarized as follows: ' Bond principal outstanding ' Series 1994 A Government Obligation bonds, 5.5% to 5.6 %, due in installments to 2014 $ 9,985,000 Series 1993 A Government Obligation bonds, 4.75% to 4.9 %, due in ' installments to 2006 1,920,000 $ 11,905,000 8 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 is a member of the Board of Directors of the JIA. The responsibilities of both JIA and the participants are as follows: 1 45 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 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. 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. (9) Sale of Shuyak Island The Borough entered into an agreement in December 1995 with the Exxon Valdez Oil Spill Trustee Council to sell all of its rights on Shuyak Island for $42 million to the State of Alaska. The Borough has received the final payment of $11,805,734 on October 1 S `, 2002, which brings the total to date of $42 million. Six million of the proceeds were used for the construction of the Kodiak Fisheries Research Center. The remainder was placed into the facility special revenue fund and will be used for future capital projects. (10) Hospital and Mental Health Facilities 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 Alaska Medical Center who assumed responsibility for the hospital's operations as of April 21, 1997. The lease agreement is effective for a term of ten years 46 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 from that date and contains provisions for an additional ten -year option. The hospital fixed assets, the lease income, and all other costs relating to the agreement are accounted for by the Borough in the Hospital Enterprise Fund. The agreement with Providence specifies that the Borough shall provide at least $150,000 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 $10,000 in cost. Additionally, the Borough receives 50% of the net revenues of the hospital, up to $600,000. Should the Borough wish to terminate the lease agreement without cause, the Borough would be required to refund a $2,000,000 down payment made on the lease in proportion to the number of years remaining on the ten -year term of the lease, at the rate of $200,000 per year for each remaining year. For accounting purposes such payment would be considered to be a penalty for the early termination of the lease. (11) Retirement Commitments (a) PERS The Alaska Public Employees' Retirement System (PERS), covers most of the employees not covered by TRS and all Borough employees. Each plan issues a publicly available financial report that includes financial statements and required supplementary information. Those reports may be i obtained from the State of Alaska, Department of Administration, Division of Retirement Benefits, f P.O. Box 11 -0203, Juneau, Alaska 99811 -0203. Plan Description: All regular employees of the Borough who work more than fifteen hours per week participate in PERS. PERS is an agent multiple - employer, statewide defined benefit plan, administered by the State of Alaska. Benefit and contribution provisions are established by Chapter 35 of Alaska Statute Title 39, and may be amended only by state legislature. Employees hired 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 employees hired after June 30, 1986, the normal and early retirement ages are 60 and 55, respectively. The normal pension benefit is equal to 2% of the member's three highest average monthly compensation for the first ten years of service, 2 -1/4% for the second ten years of service and 2 -1/2% for all remaining years of service. All service earned prior to July 1, 1986 will be calculated using the 2% multiplier. Employees with 30 or more years of credited service (20 years for peace officers and firefighters) may retire at any age and receive a normal benefit. The system also provides death and disability benefits and postemployment healthcare benefits. Funding Policy: Under State law, covered employees are required to contribute 6.75% of their annual covered salary and the Borough is required to contribute an actuarially determined rate — the current rate is 0.15% of annual covered payroll. Annual Pension Cost: For the years ended June 30, 2003, the Borough's annual pension cost was $1,748 for PERS, which was equal to the required and actual contribution. Significant actuarial assumptions used in the valuation include: (a) a rate of return on the investment of present and future assets of 8.25% per year compounded annually and (b) projected salary increases of 6% a year for the first five years of employment and 4.5% per year thereafter, with distinction made between amounts for inflation (3.5 %), merit for the first five years (1.5 %), and productivity (1 %). The 47 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 actuarial value of PERS assets was determined using techniques that smooth the effects of short-term volatility in the fair value of investments over a five year period. The contribution rate for normal cost is determined using the projected unit credit actuarial funding method. The excess of assets over the actuarial accrued liability is amortized over a rolling 25 years, which is an open amortization period. The percentage of pay method is used for amortization purposes. Three -year trend information for PERS Year ended Annual Percentage of pension cost APC Net pension (APC) contributed obligation 6/30/2001 $ 69,805 100% $ — 6/30/2002 61,962 100% — 6/30/2003 1,748 100% — Postemployment Healthcare Benefits: Postemployment healthcare benefits are provided without cost to all employees first hired before July 1, 1986, and employees who are disabled or age sixty -five or older, regardless of initial hire dates. Employees first hired after June 30, 1986, with five years of credited service (or ten years of credited service for those first hired after July 1, 1996) may receive postemployment healthcare benefits prior to age sixty by paying the full monthly premium, and by paying half of the monthly premium if they are between the ages of sixty and sixty -five. The actuarially required and actual contributions for postemployment healthcare benefits for the year ended June 30, 2003 was $1,072. The amount of net assets available for postemployment healthcare benefits, the actuarial accrued liability, and unfunded actuarial accrued liability are $5,488,000, $6,672,000 and $1,184,000, respectively. (b) Deferred Compensation Plan The Kodiak Island Borough has a deferred compensation plan created and amended in accordance with Internal Revenue Code Section 457. The plan is available to all permanent Borough employees. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. All amounts deferred under this plan are held in a trust that was established for the exclusive benefit of plan participants. Amounts contributed to the plan by participants during the year ended June 30, 2003, was $87,503. The plan is managed by the International City Managers Association Retirement Corporation. The Borough believes that the plan does not meet the criteria in NCGA Statement No. 1, Governmental Accounting and Reporting Principles, for inclusion as a fiduciary fund. U-11 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2003 (12) 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. (c) Litigation In 2003 the Borough settled litigation and paid $2,373,389 relating to a matter involving alleged misconduct of a former Borough employee. 49 KODIAK ISLAND BOROUGH Required Supplementary Information 1 Schedule of Funding Progress — PERS June 30, 2003 Three -year historical trend information presenting the Borough's progress in accumulating sufficient assets to pay pension benefits under the PERS when due is presented as follows (dollar amounts in thousands): Unfurled ' AA, UAAUFE Adumial (UAAL) as a Ach=W accrued Fwdim Pe' Adumial rAm of liability excess Fuxxled Covered of coed valuation aS9& (A&) TE) ratio Pa TOU Pqr date (a) (b) (a•b) (alb) (c) ((a•bYc) 630/1999 $ 9,886 $ 8,535 $ 1,351 116 $ 1,864 72.5 600'2001 11,377 9,967 1,410 114 1,692 83.3 % 002M 9,032 10,981 (1,949) 82% 2,011 -96.9 ID 1 J 7 L 1 50 KODIAK ISLAND BOROUGH Budgetary Comparison Schedule General Fund Year ended June 30, 2003 51 Variance with final budget - Budget positive Original Final Actual (negative) Revenues: Property taxes: Real $ 5,879,870 $ 5,895,117 $ 5,929,999 $ 34,882 Personal 1,074,090 1,074,090 1,063,617 (10,473) Motor vehicle 180,000 180,000 193,799 13,799 Boat 7,890 7,890 7,979 89 Penalty and interest 150,000 150,000 131,054 (18,946) Total property taxes 7,291,850 7,307,097 7,326,448 19,351 Severance taxes: Fish 800,000 800,000 639,487 (160,513) Mining 6,000 6,000 4,988 (1,012) Logging 30,000 30,000 57,590 27,590 Total severance taxes 836,000 836,000 702,065 (133,935) Intergovernmental: State sources: State shared revenue 110,000 110,000 111,700 1,700 Municipal assistance 120,000 120,000 128,514 8,514 Raw fish tax 740,000 778,380 840,768 62,388 Fish revitalization - - 362,963 362,963 Liquor license - - 9,250 9,250 Electric Co -op tax 13,000 13,000 26,202 13,202 Total state sources 983,000 1,021,380 1,479,397 458,017 Federal sources: Payments in lieu of taxes 538,000 538,000 809,932 271,932 Miscellaneous 420,030 420,030 394,131 (25,899) Total federal sources 958,030 958,030 1,204,063 246,033 Total intergovernmental revenue 1,941,030 1,979,410 2,683,460 704,050 Licenses, permits, fees, and other local revenues: Building and trailer permits 68,000 68,000 88,646 20,646 Subdivision and zoning fees 8,000 8,000 9,140 1,140 Sale of copies 23,160 23,160 18,636 (4,524) Miscellaneous 38,750 38,750 37,305 (1,445) Total licenses, permits, fees, and other local revenues 137,910 137,910 153,727 15,817 Investment income 250,000 250,000 171,532 (78,468) Total revenues 10,456,790 10,510,417 11,037,232 526,815 51 KODIAK ISLAND BOROUGH Budgetary Comparison Schedule General Fund Year ended June 30, 2003 Expenditures: Borough assembly Borough manager Borough clerk Borough attorney Finance department Assessing department Engineering/facilities department Community development department Building official Economic development General and administration Emergency preparedness School District support Health and sanitation department Education, culture, and recreation Management information systems Total expenditures Excess of revenues over expenditures Other financing sources (uses): Transfers in from other funds Transfers to other funds Total financing uses Excess of revenues and transfers in over expenditures and transfers out Fund balance, at beginning of year Fund balance, at end of the year See accompanying notes to the financial statements. $ (3,052,705) $ (2,052,705) (1,034,725) $ 80,278 7 010 017 $ 1,804,112 52 Variance with final budget - Budget positive Original Final Actual (negative) $ 156,250 $ 156,250 $ 150,045 $ 6,205 200,960 200,960 187,473 13,487 274,938 284,938 279,181 5,757 2,584,200 2,584,200 2,519,766 64,434 479,748 479,748 419,077 60,671 247,280 247,280 219,789 27,491 96,635 96,635 86,790 9,845 433,806 433,806 320,853 112,953 130,000 130,000 140,252 (10,252) 124,100 124,100 58,245 65,855 229,660 229,660 217,121 12,539 5,500 5,500 2,369 3,131 7,248,910 7,248,910 7,251,840 (2,930) 280,900 286,095 286,095 - 147,230 152,282 152,282 - 399,968 399,968 300,303 99,665 13,040,085 13,060, 332 12,591,481 468,851 (2,583,295) (2,549,915) (1,554,249) 57,964 - 1,000,000 1,000,000 - (469,410) (502,790) (480,476) 22,314 (469,410) 497,210 519,524 22,314 $ (3,052,705) $ (2,052,705) (1,034,725) $ 80,278 7 010 017 $ 1,804,112 52 I � KODIAK ISLAND BOROUGH Budgetary Comparison Schedule Special Revenue Fund - Facilities Year ended June 30, 2003 See accompanying notes to required supplementary information 53 1 Variance with final budget - Budget positive Original Final Actual (negative) Revenues: Land sale proceeds: Proceeds from the sale of Shuyak Island $ 11,805,734 $ 11,805,734 $ 11,805,734 $ Investment income 2,024,520 1,949,650 1,160,335 (789,315) Total revenues 13,830,254 13,755,384 12,966,069 (789,315) Expenditures: Support goods and services 12,827,714 12,948,797 — 12,948,797 Total expenditures 12,827,714 12,948,797 — 12,948,797 Excess of revenues over expenses 1,002,540 806,587 12,966,069 12,159,482 Other financing sources (uses): Transfers from (to) other funds: Capital projects – state grants — (53,917) (53,917) — Buildings and grounds (465,000) (622,560) (622,560) — Debt service funds (537,540) (387,670) (462,670) (75,000) Net other financing uses (1,002,540) (1,064,147) (1,139,147) (75,000) Excess of revenues and other financing sources over expenditures and other financing uses $ — $ (257,560) 11,826,922 $ 12,084,482 Fund balance, at beginning of year 26,288,661 Fund balance, at end of year $ 38,115,583 See accompanying notes to required supplementary information 53 1 ' KODIAK ISLAND BOROUGH Notes to Required Supplementary Information — Budgetary Comparison Schedules June 30, 2003 The Borough follows these procedures in establishing the budgetary data reflected in the combined 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 I 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 1 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, I 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. I H 1 54 NONMAJOR GOVERNMENTAL FUNDS Special Revenue See special revenue section of the report. Debt Service See debt service section of the report. Capital Projects See capital projects section of the report KODIAK ISLAND BOROUGH Combining Balance Sheet Nonmajor Governmental Funds • June 30, 2003 55 Total Nonmajor Special Debt Capital Governmental Assets Revenue Service Projects Funds Equity in central treasury $ 1,088,097 $ 158,409 $ 282 $ 1,246,788 Temporary investments 494,844 - 546,571 1,041,415 Receivables: State of Alaska 68,330 - 124,964 193,294 Federal Government 14,866 - 373,547 388,413 Land sales contracts, due within one year 7,000 - - 7,000 Property Taxes 17,239 - - 17,239 Due from other funds 966,130 - - 966,130 Land sale contracts, due after one year 47,325 - - 47,325 Total $ 2,703,831 $ 158,409 $ 1,045,364 $ 3,907,604 Liabilities and Fund Balances Liabilities: Accounts payable $ 84,621 $ - $ 242,270 $ 326,891 Retainages Payable - - 45,860 45,860 Employee benefits accrued and withheld 156 - - 156 Customer deposits 678 - - 678 Deferred revenues 54,325 - - 54,325 Due to other funds 32,305 - 374,024 406,329 Total liabilities 172,085 - 662,154 834,239 Fund Balances: Unreserved: Designated for self- insurance 100,000 - - 100,000 Designated for subsequent year expenditures 334,950 - - 334,950 Undesignated 2,096,796 158,409 383,210 2,638,415 Total fund balances 2,531,746 158,409 383,210 3,073,365 Totals $ 2,703,831 $ 158,409 $ 1,045,364 $ 3,907,604 55 KODIAK ISLAND BOROUGH Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds June 30, 2003 Revenues: Property taxes State sources Federal sources Land sale proceeds Licenses, permits, fees, and other local revenues Investment income Other Total revenues Expenditures: Maintenance and operations Health and sanitation department Fire services Service district maintenance Community and economic development Education, culture and recreation Emergency preparedness Capital and improvement Schools General Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in from other funds Transfers out to other funds Net other financing sources (uses) Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year 372,122 372,122 1,752,728 - Total 2,780,933 Nonmajor Special Debt Capital Governmental revenue Service Projects Funds $ 663,185 $ - $ - $ 663,185 564,216 - 670,905 1,235,121 28,650 - - 28,650 46,130 - - 46,130 175,637 - 5,875 181,512 436,847 - 11,413 448,260 1,481 - - 1,481 1,916,146 - 688,193 2,604,339 3,061,746 606,724 - - 606,724 498,635 - - 498,635 260,120 - - 260,120 190,058 - - 190,058 123,607 - - 123,607 53,584 - - 53,584 20,000 - - 20,000 372,122 372,122 1,752,728 - 1,028,205 2,780,933 163,418 - (340,012) (176,594) 790,361 15,616 103,917 909,894 (721,681) - - (721,681) 68,680 15,616 103,917 188,213 232,098 15,616 (236,095) 11,619 2,299,648 142,793 619,305 3,061,746 $ 2,531,746 $ 158,409 $ 383,210 $ 3,073,365 56 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 District 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 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 Coastal Management Fund accounts for State of Alaska and Federal grants related to the effects of coastal energy development impacts. Expenditures of these grants are for comprehensive plans, coastal sensitivity analysis, outer continental shelf impact analysis, ordinance update, and planning and zoning. The Childcare Assistance Fund accounts for a State of Alaska grant to finance day care for children of low- income employed families. NONMAJOR SPECIAL REVENUE FUNDS The Local Emergency Planning Committee Fund accounts for State of Alaska grants provided for regional emergency preparation, response, and mitigation planning. This fund was closed in 2002. 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 Building 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 Kodiak Arts Council Fund accounts for activities related to the facilitation of the arts in the Kodiak community. 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. KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Combining Balance Sheet June 30, 2003 Fire and Road Service Areas Assets Equity in central treasury Temporary investments Receivables: State of Alaska Federal Government Land sales contracts, due within one year Property taxes Due from other funds Land sale contracts, due after one year Total Liabilities and Fund Balances Liabilities: Accounts payable Employee benefits accrued and withheld Customer deposits Deferred revenues Due to other funds Total liabilities Fund Balances: Unreserved: Designated for self - insurance Designated for subsequent year expenditures Undesignated Total fund balances Totals $ 6,374 $ 2,102 $ - $ - $ 6,698 - 500 - - - - - - - 650 6,374 2,602 - - 7,348 191,600 124,780 - - - 855,359 129,914 30,702 67,000 353,550 1,046,959 254,694 30,702 67,000 353,550 $ 1,053,333 $ 257,296 $ 30,702 $ 67,000 $ 360,898 57 (Continued) Fire Road Fire Womens Kodiak Monashka Protection Bay Fire Airport Fire Bay Road Service Area No. 1 Department District Service Area District No. 1 $ - $ 252,229 $ 29,161 $ 66,260 $ 26,087 494,844 - - - - - 2,485 - - - 5,827 2,582 1,541 740 3,155 552,662 - - - 331,656 $ 1,053,333 $ 257,296 $ 30,702 $ 67,000 $ 360,898 $ 6,374 $ 2,102 $ - $ - $ 6,698 - 500 - - - - - - - 650 6,374 2,602 - - 7,348 191,600 124,780 - - - 855,359 129,914 30,702 67,000 353,550 1,046,959 254,694 30,702 67,000 353,550 $ 1,053,333 $ 257,296 $ 30,702 $ 67,000 $ 360,898 57 (Continued) Fire and Road Service Areas 58 (Continued) Road Federal and State grant programs Child care Womens Bay Bay View Road Service Area Coastal assistance Welfare to Service Area Service Area No. 2 management program work program L.E.P.C. Land sales $ 218,588 $ 6,032 $ 4,031 $ - $ 7,680 $ - $ - $ 123,139 - - - 15,661 40,854 - 9,330 - - - - - - 14,866 - - 7 3,352 42 - - - - - - - - - - - - 47,325 $ 221,940 $ 6,074 $ 4,031 $ 15,661 $ 48,534 $ 14,866 $ 9,330 $ 177,464 $ 2,255 $ 109 $ - $ - $ 34,866 $ 2,122 $ 6,080 $ 518 - - - - - - - 54,325 - - - 15,661 - 12,744 3,250 - 2.255 109 - 15,661 34,866 14,866 9,330 54,843 600 - - - - - - - 219,085 5,965 4,031 - 13,668 - - 122,621 219,685 5,965 4,031 - 13,668 - - 122,621 $ 221.940 $ 6.074 $ 4,031 $ 15,661 $ 48,534 $ 14,866 $ 9,330 $ 177,464 58 (Continued) KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Combining Balance Sheet June 30, 2003 59 (Continued) Woodland Buildings Acres Street and Light Service Tourism Assets grounds Area Development Total Equity in central treasury $ 311,523 $ 29,334 $ 14,033 $ 1,088,097 Temporary investments - - - 494,844 Receivables: State of Alaska - - - 68,330 Federal Government - - - 14,866 Land sales contracts, due within one year - - - 7,000 Property taxes - - - 17,239 Due from other funds 81,812 - - 966,130 Land sale contracts, due after one year - - - 47,325 Total $ 393,335 $ 29,334 $ 14,033 $ 2.703,831 Liabilities and Fund Balances Liabilities: Accounts payable $ 23,047 $ 450 $ - $ 84,621 Employee benefits accrued and withheld 156 - - 156 Customer deposits - - 178 678 Deferred revenues - - - 54,325 Due to other funds - - - 32,305 Total liabilities 23.203 450 178 172,085 Fund Balances: Unreserved: Designated for self-insurance 100,000 - - 100,000 Designated for subsequent year expenditures 9,970 8,000 - 334,950 Undesignated 260,162 20,884 13,855 2,096,796 Total fund balances 370.132 28.884 13,855 2,531,746 Totals $ 393,335 $ 29,334 $ 14,033 $ 2,703,831 59 (Continued) KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures. and Changes in Fund Balances (Deficits) Year ended June 30, 2003 Fire and Road Service Areas Revenues: Property taxes State sources Federal sources Land sale proceeds Licenses, permits, fees, and other local revenues Investment income Other Total revenues Expenditures: Community development department General and administrative Health and sanitation department Services district maintenance Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers in from other funds Transfers out to other funds Net other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances (deficits), at beginning of year Fund balances. at end of year 134,523 21,284 428 11,873 95,102 912,436 233.410 30.274 55,127 258,448 $ 1.046,959 $ 254.694 $ 30.702 $ 67.000 $ 353,550 60 (Continued) Fi re Road Fire Womens Kodiak Monashka Protection Bay Fire Airport Fire Bay Road Service Area No. 1 Department District Service Area District No. 1 $ 303,807 $ 56,381 $ 16,531 $ 23,490 $ 170,941 1,181 7,297 — 1,076 4,573 523 — — — 436 4,354 8,685 17,193 2,986 481 872 4,060 327.058 75.349 17.012 25,438 180.010 188,871 71,196 53 627 6,198 — — — 12.938 78,710 188.871 71.196 53 13.565 84.908 138.187 4,153 16.959 11,873 95,102 — 17.131 — — — (3,664) — (16,531) — — (3,664) 17,131 (16.531) — — 134,523 21,284 428 11,873 95,102 912,436 233.410 30.274 55,127 258,448 $ 1.046,959 $ 254.694 $ 30.702 $ 67.000 $ 353,550 60 (Continued) Fire and Road Service Areas Road Federal and State Grant Programs Child Care Welfare Womens Bay Bay View Road Service Area Coastal Assistance to Work Service Area Service Area No. 2 Management Program Program L.E.P.C. Land Sales $ 86.488 $ 5.547 $ — $ — $ — $ — $ — $ — 5,116 387 — 25,950 498.636 — 20,000 - - — — — — 27.691 — - - — — — — — 46.130 20,000 — — — — 57,742 3,067 84 46 — — — — 15,183 — — — — — — — 1.481 114.671 6,018 46 25.950 498.636 27.691 20.000 120.536 — — — 25,803 — — — — 1,489 177 1 — — 27,691 20,000 25,114 — — — — 498,635 — — — 80.594 3.820 — — — 82,083 3.997 1 25,803 498.635 27.691 20.000 25.114 32.588 2.021 45 147 1 — — 95,422 ( 600) — — — — — — (700.000) ( — — — — — — (700.000) 31,988 2,021 45 147 1 — — (604,578) 187.697 3,944 3.986 (147) 13.667 — — 727, 199 $ 219.685 $ 5.965 $ 4.031 $ — $ 13.668 $ — $ — $ 122.621 61 (Continued) Revenues: Property taxes State sources Federal sources land sale proceeds Licenses, permits, fees, and other local revenues Investment income Other Total revenues Expenditures: Community development department General and administrative Health and sanitation department Services district maintenance Total expenditures Excess (deficiency) of revenues over(under)expenditures Other financing sources (uses): Transfers in from other funds Transfers out to other funds Net other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances (deficits), at beginning of year Fund balances, at end of year KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Combining Statement of Revenues. Expenditures. and Changes in Fund Balances (Deficits) Year ended June 30. 2003 I � 62 (Continued) Woodland Acres Street Buildings and Light Service Kodiak Arts Tourism Grounds Area Council Development Total $ — $ — $ — $ — $ 663,185 — — — — 564.216 — — — — 28.650 — — — 46.130 — 54,444 30,412 175,637 392,428 408 — 39 436,847 — — — — 1.481 392.428 408 54,444 30.451 1,916,146 — — — 44.999 70.802 606,724 5,504 53,584 — 1,007,229 — — — — 498.635 — — — — 176.062 606.724 5.504 53.584 44.999 1,752.728 (214.296) (5,096) 860 (14.548) 163.418 773,230 — — — 790,361 (886) — — — (721,681) 772.344 — — — 68.680 558,048 (5,096) 860 (14,548) 232,098 (187 33.980 (860) 28.403 2,299.648 $ 370.132 $ 28,884 $ — $ 13.855 $ 2,531.746 I � 62 (Continued) KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas - Fire Protection Area No. 1 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 63 2003 Variance- favorable Budget Actual (unfavorable) Revenues: Property taxes $ 297,500 $ 303,807 $ 6,307 State sources 5,000 1,181 (3,819) Federal Sources 500 523 23 Licenses, permits, fees, and other local revenues 9,000 4,354 (4,646) Investment income - 17,193 17,193 Total revenues 312,000 327,058 15,058 Expenditures: General and administrative: Fire chief 65,000 55,962 9,038 Volunteers 20,000 16,710 3,290 Fringe benefits 25,500 14,254 11,246 Professional services 12,000 3,750 8,250 Support goods and services 135,430 95,615 39,815 Capital outlay 160,000 2,580 157,420 Total expenditures 417,930 188,871 229,059 Excess of revenues over expenditures (105,930) 138,187 244,117 Other financing uses: Transfers out to other funds: Debt service funds - (3,664) (3,664) Total other financing uses - (3,664) (3,664) Excess of revenues over expenditures $ (105,930) 134,523 $ 240,453 Fund balance, at beginning of year 912,436 Fund balance, at end of year $ 1,046,959 63 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas - Womens' Bay Fire Department Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Variance- favorable Budget Actual (unfavorable) Revenues: 512 General and administrative: 3,000 Property taxes $ 54,000 $ 56,381 $ 2,381 State sources 200 7,297 7,097 Licenses, permits, fees, and 19,750 Total expenditures 97,260 other local revenues 21,000 8,685 (12,315) Investment income 5,000 2,986 (2,014) Total revenues 80,200 75,349 (4,851) Expenditures: 512 General and administrative: 3,000 Personnel services 1,700 Fringe benefits 3,000 Professional services 2,000 Support goods and services 70,810 Capital outlay 19,750 Total expenditures 97,260 Excess of revenues over 71 expenditures (17,060) Other financing sources: Transfers in from other funds: Special revenue funds 17,060 Excess of revenues and other financing sources over expenditures $ - Fund balance, at beginning of year Fund balance, at end of year 1,188 512 - 3,000 6,820 (4,820) 38,883 31,927 24,305 (4,555) 71,196 26,064 4,153 21,213 17,131 71 21,284 $ 21,284 .P L 64 KODI.AK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas – Kodiak Airport Fire District Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Revenues: Property taxes Investment income Total revenues Expenditures: General and administrative: Contracted services Support goods and services Total expenditures Excess of revenues over expenditures Other financing uses: Operating transfers out to other funds: Womens Bay Fire District Excess of revenues and other financing sources over expenditures Fund balance, at beginning of year Fund balance, at end of year Variance- favorable Budget Actual (unfavorable) $ 16,700 $ 16,531 $ (169) 16,900 17,012 112 16,780 — 16,780 120 53 67 16,900 53 16,847 — 16,959 16,959 (16,531) (16,531) $ — 428 $ 428 30,274 $ 30,702 65 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas — Monashka Bay Road Service Area Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 Revenues: Property taxes State sources — shared revenue Investment income Total revenues Expenditures: General and administrative: Personnel services Support goods and services Service district maintenance: Snow removal/sanding Road grading /ditching Repairs and maintenance Total expenditures Excess of revenues over expenditures Fund balance, at beginning of year Fund balance, at end of year 2003 Budget $ 19,690 $ 1,410 GJ,YV V Variance- favorable Actual (unfavorable) 23,490 $ 3,800 1,076 (334) 872 (1,428) 25,438 2,038 500 424 76 900 203 697 12,000 5,750 6,250 8,500 4,466 4,034 1,500 2,722 (1,222) 23,400 13,565 9,835 $ — 11,873 $ 11,873 V i,VVV 66 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas - Service District No. I Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 67 2003 Variance- favorable Budget Actual (unfavorable) Revenues: Property taxes $ 167,500 $ 170,941 $ 3,441 State sources 4,000 4,573 573 Federal Sources 2,000 436 (1,564) Investment income - 4,060 4,060 Total revenues 173,500 180,010 6,510 Expenditures: General and administrative: Personnel services 4,150 5,053 (903) Support goods and services 53,400 1,145 52,255 Service district maintenance: Snow removal/sanding 95,000 17,983 77,017 Road grading /ditching 45,000 32,150 12,850 Repairs and maintenance 40,000 28,577 11,423 Total expenditures 237,550 84,908 152,642 Excess of revenues over expenditures $ (64,050) 95,102 $ 159,152 Fund balance, at beginning of year 258,448 Fund balance, at end of year $ 353,550 67 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas - Womens' Bay Service Area Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 68 2003 Variance- favorable Budget Actual (unfavorable) Revenues: Property taxes $ 82,500 $ 86,488 $ 3,988 State sources - shared revenue 3,000 5,116 2,116 Licenses, permits, fees, and other local revenues 20,000 20,000 - Investment income 5,000 3,067 (1,933) Total revenues 110,500 114,671 4,171 Expenditures: General and administrative: Personnel services - 499 (499) Support goods and services 21,600 990 20,610 Service district maintenance: Snow removal/sanding 30,000 8,116 21,884 Road grading/ditching 28,300 21,265 7,035 Repairs and maintenance 60,000 51,213 8,787 Total expenditures 139,900 82,083 57,817 Other financing uses: Transfers out to other funds: Womens Bay Fire Department (600) (600) - Excess of revenues over expenditures $ (30,000) 31,988 $ 61,988 Fund balance, at beginning of year 187,697 Fund balance, at end of year $ 219,685 68 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas – Bay View Road Service Area Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Variance- favorable Budget Actual (unfavorable) Revenues: Property taxes $ 4,600 $ 5,547 $ 947 State sources – shared revenue 670 387 (283) Investment income 200 84 (116) Total revenues 5,470 6,018 548 Expenditures: General and administrative: Personnel services — 160 (160) Support goods and services — 17 (17) Service district maintenance: Snow removal/sanding 2,500 994 1,506 Road grading /ditching 1,970 426 1,544 Repairs and maintenance 1,000 2,400 (1,400) Total expenditures 5,470 3,997 1,473 Excess of revenues over expenditures $ — 2,021 $ 2,021 Fund balance, at beginning of year 3,944 Fund balance, at end of year $ 5,965 69 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas – Service Area No. 2 Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Variance- favorable Budget Actual (unfavorable) Revenues: Investment income $ 200 $ 46 $ (154) Expenditures: Support goods and services 200 1 199 Total expenditures 200 1 199 Excess of revenues over expenditures $ — 45 $ 45 Fund balance, at beginning of year 3,986 Fund balance, at end of year $ 4,031 FFro KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Coastal Management Statement of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual Year ended June 30, 2003 2003 Budget Revenues: State sources – grants $ 25,950 Total revenues 25,950 Expenditures: Community development department: Planning and zoning 25,950 Total expenditures 25,950 Excess of revenues over expenditures $ — Fund deficit, at beginning of year Fund balance, at end of year Variance- favorable Actual (unfavorable) 25,950 $ — 25,950 — 25,803 147 25,803 147 147 $ 147 (147) 71 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Child Care Assistance Pro Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Revenues: State sources – grants Total revenues Expenditures: Health and sanitation department: Personnel Professional services Support goods and services Total expenditures Excess of revenues over expenditures Fund balance, at beginning of year Fund balance, at end of year Variance - favorable Budget Actual (unfavorable) $ 521,867 $ 498,636 $ (23,231) 521,867 498,636 (23,231) 62,603 62,944 (341) 441,079 421,863 19,216 18,185 13,828 4,357 521,867 498,635 23,232 $ — 1 $ 1 72 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Welfare to Work Program Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Revenues: Federal sources — grants Total revenues Expenditures: General and administrative: Personnel services Professional services Total expenditures Excess of revenues over expenditures Fund balance, at beginning of year Fund balance, at end of year Variance - favorable Budget Actual (unfavorable) $ 49,891 $ 27,691 $ (22,200) 49,891 27,691 (22,200) 1,501 375 1,126 48,390 27,316 21,074 49,891 27,691 22,200 73 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds L.E.P.C. Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Revenues: State sources: L.E.P.C. grant FEMA Grant Total revenues Expenditures: General administrative: Personnel services Contracted services Support goods and services FEMA Grant Total expenditures Excess of revenues over expenditures Fund balance, at beginning of year Fund balance, at end of year Variance- favorable Budget Actual (unfavorable) $ 20,000 $ 20,000 $ — 17,937 — (17,937) 37,937 20,000 (17,937) 13,000 13,000 — 5,000 5,938 (938) 2,000 1,062 938 17,937 — 17,937 37,937 20,000 17,937 74 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Land Sales Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Revenues: Land sale proceeds Licenses, permits, fees, and other local revenues Investment income Gravel sales Other Total revenues Expenditures: General and administrative: Personnel services Contracted services Support goods and services Capital outlay Total expenditures Excess of revenues over expenditures Other financing uses: Transfers out to other funds: General fund Capital projects fund Net other financing sources Deficiency of revenues and other financing sources over expenditures Fund balance, at beginning of year Fund balance, at end of year 231,000 120,536 Variance - favorable Budget Actual (unfavorable) $ 205,000 $ 46,130 $ (158,870) 1,000 1,000 - - 15,183 15,183 25,000 56,742 31,742 - 1,481 1,481 231,000 120,536 (110,464) 21,000 21,764 (764) 20,000 1,725 18,275 90,000 1,625 88,375 50,000 - 50,000 181,000 25,114 155,886 50,000 95,422 45,422 (650,000) (650,000) - (50,000) (50,000) - (700,000) (700,000) - $ (650,000) (604,578) $ 45,422 727,199 $ 122,621 75 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Buildings and Grounds Statement of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual Year ended June 30, 2003 2003 Revenues: Rental income Other Total revenues Expenditures: General and administrative: School buildings Borough building Insurance and bonding Mental health center Parks operation and maintenance Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Transfers in (out) from (to) other funds: General Fund Facilities Fund Debt service fund - other Net other financing sources Excess of revenues and other financing sources over expenditures Fund deficit, at beginning of year Fund balance, at end of year Variance- favorable Budget Actual (unfavorable) $ 388,040 $ 392,428 $ 4,388 670 — (670) 388,710 392,428 3,718 527,230 330,148 197,082 499,080 232,149 266,931 100,000 — 100,000 8,700 12,861 (4,161) 27,740 31,566 (3,826) 1,162,750 606,724 556,026 (774,040) (214,296) 559,744 150,670 150,670 — 622,560 622,560 - - (886) (886) 773,230 772,344 (886) $ (810) 558,048 $ 558,858 (187,916) $ 370,132 76 I I Budget Revenues: Investment income $ 2,000 $ Expenditures: General and administrative: Support goods and services 6,000 Capital outlay 3,000 Total expenditures 9,000 Deficiency of revenues under expenditures $ (7.000) Fund balance, at beginning of year Fund balance, at end of year Variance - favorable Actual (unfavorable) 408 $ (1,592) 5,504 KODIAK ISLAND BOROUGH — Nonmajor Special Revenue Funds 5,504 Woodland Acres Street Light Service Area 1 Statement of Revenues, Expenditures, and Changes in Fund Balance 33,980 Budget and Actual $ 28,884 Year ended June 30, 2003 2003 Budget Revenues: Investment income $ 2,000 $ Expenditures: General and administrative: Support goods and services 6,000 Capital outlay 3,000 Total expenditures 9,000 Deficiency of revenues under expenditures $ (7.000) Fund balance, at beginning of year Fund balance, at end of year Variance - favorable Actual (unfavorable) 408 $ (1,592) 5,504 496 — 3,000 5,504 3,496 (5,096) $ (5,088) 33,980 $ 28,884 77 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Kodiak Arts Council Statement of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual Year ended June 30, 2003 2003 Revenues: Licenses, pemiits, fees, and other local services: Reimbursement from Kodiak Arts Council Total revenues Expenditures: General and administrative: Personnel services Fringe benefits Support goods and services Total expenditures Excess of revenues over expenditures Fund deficit, at beginning of year Fund balance, at end of year Variance - favorable Budget Actual (unfavorable) $ 55,820 $ 54,444 $ (1,376) 55,820 54,444 (1,376) 45,970 43,557 2,413 8,950 9,177 (227) 55,820 78 JJ,J d4 L,GJV 860 $ 860 (860) KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Tourism Development Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Revenues: Transient accommodations tax Investment income Total revenues Expenditures: Community development: Contributions Total expenditures Deficiency of revenues over expenditures Fund balance, at beginning of year Fund balance, at end of year Budget $ 45,000 $ 45,000 45,000 79 Variance- favorable Actual (unfavorable) 30,412 $ (14,588) 44,999 1 44,999 1 (14,548) $ (14,548) 28,403 $ 13,855 1 J DEBT SERVICE FUNDS G u 1 1, n Debt Service Funds are used to account for the payment of principal, interest and related fees on all bonded debt except for special assessment bonded debt accounted for in proprietary funds. C KODIAK ISLAND BOROUGH Debt Service Funds Other Balance Sheet June 30, 2003 Equity in central treasury Total Assets Liabilities and Fund Balances Total liabilities Fund balance: Unreserved Total fund balance Total $ 158,409 $ 158,409 158,409 158,409 $ 158,409 Ell KODIAK ISLAND BOROUGH Debt Service Funds Other Statement of Revenues, Expenditures, and Changes in Fund Balance Budget and Actual Year ended June 30, 2003 2003 Other financing sources: Operating transfers in from other funds Excess of revenues and other financing sources over expenditures Fund balance, at beginning of year Fund balance, at end of year Budget Actual $ — $ 15,616 $ $ — 15,616 $ 142,793 $ 158,409 Variance- favorable (unfavorable) 15,616 15,616 NONMAJOR CAPITAL PROJECTS FUNDS The Various Borough Projects Fund accounts for general government construction projects not accounted for in other funds. The State Capital Grants Fund accounts for capital improvement projects relating to grants received from the State of Alaska. KODIAK ISLAND BOROUGH Nonmajor Capital Project Funds Combining Balance Sheet June 30, 2003 Assets Equity in central treasury Temporary investments Receivables: Due From Federal Government Due from State of Alaska Total Liabilities and Fund Balances Liabilities: Accounts payable Retainages payable Due to other funds Total liabilities Fund balances: Unreserved: Undesignated Total fund balance (deficit) Total Various State borough capital projects grants Total $ — $ 282 $ 282 546,571 — 546,571 — 373,547 373,547 — 124,964 124,964 $ 546,571 $ 498,793 $ 1,045,364 $ 1,652 $ 240,618 $ 242,270 — 45,860 45,860 121,221 252,803 374,024 122,873 539,281 662,154 423,700 (40,490) 383,210 423,700 (40,490) 383,210 $ 546,573 $ 498,791 $ 1,045,364 See accompanying independent auditors' report. MN KODIAK ISLAND BOROUGH Nonmajor Capital Project Funds Combining Statement of Revenues. Expenditures, and Changes in Fund Balances (Deficits) Year ended June 30, 2003 Revenues: State sources Licenses, permits, fees, and other local revenues Investment income Total revenues Expenditures: Capital improvements: Schools General Total expenditures Deficiency of revenues under expenditures Other financing sources: Transfers in from other funds Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses Fund balance (deficit), at beginning of year Fund balance (deficit), at end of year See accompanying independent auditors' report. Various State borough capital projects grants Total $ — $ 670,905 $ 670,905 5,875 — 5,875 11,413 — 11,413 17,288 670,905 688,193 261,360 110,762 372,122 46,889 609,194 656,083 308,249 719,956 1,028,205 (290,961) (49,051) (340,012) 50,000 53,917 103,917 (240,961) 4,866 (236,095) 664,661 (45,356) 619,305 $ 423,700 $ (40,490) $ 383,210 M 11 ' KODIAK ISLAND BOROUGH Nonmajor Capital Projects Funds Schedule of Capital Projects ' Year ended June 30, 2003 ' Project Appropriations Total no. Project Status Prior 2003 appropriations Capital projects - Education: 00100 430 -696 School Repair KHS Roof Open $ 126,770 $ $ 126,770 00105 410 -484 Matching School Complete 54,330 _ 54,330 01100 430 -601 HS Roof Repair Complete 125,398 125,398 03100 410 -487 Weatherproof High School Complete - 50,000 50,000 03101 410 -488 IRMA Cricket Install Complete - 80,000 80,000 03102 410 -489 KHS Asbestos /Carpet Complete - 100,000 100,000 ' 03103 410 -490 East and Main Paint Complete 50,000 50,000 03104 410 -491 Refinish Gym Floors Complete 60,000 60,000 03105 410 -492 Northstar Road/park design Open - 50,000 50,000 03106 410 -493 KHS Emergency Generator Open - 50,000 50,000 03107 410-494 IRMA roof cleaning and repair Complete 20,000 20,000 ' 03116 430 -509 School Upgrade Open = 125,804 125,804 03117 410 -511 Upgrade /Repair Match Open - 53,917 53,917 01101 410 -485 Matching School Complete 53,742 - 53,742 01102 420 -510 Series E Bond HS Roof Repair Open 1,530,000 - 1,530,000 01105 410 -695 Series F Bond HS Roof Repair Open 968,106 968,106 02108 430 -602 HS Repairs Matching Grant (State) Complete 124,471 124,471 02109 410 -486 HS Repairs Matching Grant (KIB) Complete 53,345 - 53,345 Total education 3.036.162 639,721 3,675,883 Capital projects - Utilities: 00102 410 -698 Bayside Underground Electric Open 22,000 - 22,000 182 410 -692 State Fair & Rodeo Water Open 25,000 - 25,000 ' Total utility projects Capital projects - Health: 47,000 - 47,000 03115 Hospital Assessment Needs Open 54,000 54,000 Total utility projects - 54,000 54,000 Capital projects - Other: 410 -300 Undesignated Projects Open 24,764 344,430 369,194 85 410 -471 Village Metals Removal Open 150,000 - 150,000 105 410 -482 Anton Larsen Dock Open 140,000 - 140,000 114 410 -642 State Airport Improvements Open 1 1,000 11,000 117 410 -645 Heliopad Striping Open 3,000 (3,000) = 130 410 -655 East Elementary Doorway Opern 4,200 4,200 133 410 -658 Red Cross Building Repairs Open 12,000 - 12,000 142 430 -642 Clean Water Fund/Karluk Complete 50,000 - 50,000 ' 03108 03109 410 -495 410 -496 Borough Building Parking Borough Air Handling Open Open - 50,000 10,000 50,000 10,000 03110 410 -497 KIB emergency Generator Open 20,000 20,000 03111 410 -498 KIB Security Doors Open - 8,000 8,000 03114 430 -507 CIAP Grant Open - 189,985 189,985 03118 N/A 430-512 N/A Chiniak Multi -Use WBComm Plan Revision Open Open - 20,000 33,380 20,000 33,380 146 410 -663 BMX Bike Trail Open 55,000 55,000 159 410 -675 Borough Parks Open 26,500 - 26,500 164 430 -645 Waste Management Imp Open 1,857,100 (115,700) 1,741,400 169 430 -649 Clean Water Karluk Complete 350,000 350,000 173 410 -683 Bayside Classroom Add Open 75,000 - 75,000 174 410 -684 Bayside Storage /Bay Add Open 400,000 400,000 177 430 -687 Anton Larsen Boat Ramp Open 400,000 - 400,000 184 430 -694 Oil Spill Response Equip Open 400,000 - 400.000 00104 430 -699 Tide Gate Open 10,000 - 10,000 ' 00106 410 -690 MIS Study Complete 30,000 - 30.000 01106 430 -625 Volunteer Fire Assistance Program Complete 3,699 - 3.699 02107 430 -648 ADF &G Research Study Open 200,000 - 200.000 02110 410 -506 GIS Study Open 20,000 - 20.000 Total - capital projects other 4,222.263 557.095 4,779.358 Total all capital projects $ 7,305,425 S 1.196,816 S 8.502,241 ' See accompanying independent auditors' report. 84 [A 85 fl Encumbrances Expenditures Total Unexpended Current Unencumbered Prior 2003 expenditures balance encumbrances balance $ 80,714 $ - $ 80,714 $ 46,056 $ - $ 46,056 54,330 - 54,330 - - - 125,398 - 125,398 - - - - - - 50,000 - 50,000 - 78,880 78,880 1,120 - 1,120 - - - 100,000 - 100,000 - 969 969 49,031 - 49,031 - 55,691 55,691 4,309 - 4,309 - 22,795 22,795 27,205 - 27,205 - - - 50,000 - 50,000 - 20,000 20,000 - - - - 110,762 110,762 15,042 - 15,042 - 52,423 52,423 1,494 - 1,494 53,742 - 53,742 - - - 1,533,369 - 1,533,369 (3,369) - (3,369) 741,386 30,351 771,737 196,369 - 196,369 124,471 - 124,471 - - - 53,345 251 53,596 (251) - (251) 2,766,755 372,122 3,138,877 537,006 - 537,006 - - - 22,000 - 22,000 20.624 3,400 24,024 976 - 976 20,624 3,400 24.024 22,976 - 22,976 - - - 54,000 - 54,000 - - - 54,000 - 54,000 18,929 (390) 18,539 350,655 - 350,655 120,994 - 120,994 29,006 - 29,006 139,580 - 139,580 420 - 420 60 - 60 10,940 - 10,940 - - - 4,200 - 4,200 6,778 4,375 11,153 847 - 847 23,192 - 23,192 26,808 - 26,808 - - - 50,000 - 50,000 - - - 10,000 - 10,000 - 2,353 2,353 17,647 - 17,647 - - - 8,000 - 8,000 - 20,008 20,008 169,977 - 169,977 - 3,895 3,895 16,105 - 16,105 - - - 33,380 - 33,380 49,278 - 49,278 5,722 - 5,722 10,231 16,875 27,106 (606) - (606) 271,502 107,730 379,232 1,362,168 - 1,362,168 89,189 - 89,189 260,811 - 260,811 48,199 - 48,199 26,801 - 26,801 20 - 20 399,980 - 399,980 99,073 467,402 566,475 (166,475) - (166,475) 399,411 - 399,411 589 - 589 1,304 7,600 8,904 1,096 - 1,096 29,983 - 29,983 17 - 17 3,699 - 3,699 - - - 62,431 2.559 64.990 135,010 - 135,010 - 20,276 20,276 (276) - (276) 1,373,853 652,683 2,026,536 2,752.822 - 2,752,822 5 4.161,232 $ 1,028.205 $ 5,189,437 $ 3,312,804 $ - $ 3,312,804 85 fl 1 F1 1 1 ENTERPRISE FUNDS 1 1 1 1 Enterprise Funds are used to account for Borough operations that are financed and operated in a manner similar to private business enterprises. The intent of the Borough is that the costs (expenses, including depreciation) of providing these services to the general public on a continuing basis are financed or recovered primarily through user charges. Ll 1 1 1 1 1 1 1 1 1 1 1 1 i i 1 1 1 1 KODIAK ISLAND BOROUGH Municipal Solid Waste Collection and Disposal Fund Statement of Revenues, Expenses, and Changes in Fund Equity Budget and Actual Year ended June 30, 2003 2003 Operating revenues: Solid waste collection Solid waste disposal Other Operating expenses: Personnel services Solid waste collection Refuse disposal Professional services Repairs and maintenance Landfill closure and postclosure costs Depreciation General and administration Contributions Recycling services Operating loss Other income (expense): Interest income Interest expense Other Loss before capital contribution Capital contributution Change in fund equity Fund equity, beginning of year Fund equity, end of year Budget Actual $ 1,632,900 $ 1,734,541 $ 997,000 1,003,484 13,500 50,076 2,643,400 2,788,101 490,600 438,187 1,291,730 1,309,814 306,000 284,590 180,000 99,880 31,000 29,406 123,530 218,603 115,260 185,634 200,870 198,283 5,000 4,020 75,000 98,067 2.818,990 2,866,484 (175,590) (78,383) 5,000 30,016 - (47,168) 7,200 - (163,390) (95,535) - 1,691,161 $ (163,390) 1,595,626 $ 1,584,267 $ 3,179,893 Variance - favorable (unfavorable) 101,641 6,484 36,576 144,701 52,413 (18,084) 21,410 80,120 1,594 (95,073) (70,374) 2,587 980 (23.067) (47,494) 97,207 25,016 (47,168) (7,200) 67,855 1, 691,161 1,759,016 See accompanying notes to financial statements. 86 KODIAK ISLAND BOROUGH Hospital Facilities Fund Statement of Revenues, Expenses, and Changes in Fund Equity Budget and Actual Year ended June 30, 2003 Operating loss Other income (expense): Interest income Interest expense Loss on disposal of fixed assets Loss before transfers and capital contribution Other financing uses: Transfers out to other funds Net other financing uses Net loss before capital contribution Capital contribution Change in fund equity Fund equity, beginning of year Fund equity, end of year See accompanying notes to financial statements. 1,350,910 1,335,363 (255,910) (465,851) 15,547 (209,941) — 655 2003 (118,290) (60,741) 57,549 — Variance (2,171) favorable (528,108) Budget Actual (unfavorable) Operating revenues: (224,340) (224,340) — State sources (752,448) (153,908) — Revenue sharing $ 40,000 $ 39,084 $ (916) Other 5,000 54,000 49,000 Lease proceeds 720,000 720,000 — Donations 130,000 56,428 (73,572) PKIMC gain 200,000 — (200,000) 1,095,000 869,512 (225,488) Operating expenses: Personnel services 5,000 5,802 (802) Professional services — 54,000 (54,000) Depreciation 1,179,350 1,272,890 (93,540) Maintenance and repairs 10,000 2,671 7,329 Contingencies 156,560 — 156,560 Operating loss Other income (expense): Interest income Interest expense Loss on disposal of fixed assets Loss before transfers and capital contribution Other financing uses: Transfers out to other funds Net other financing uses Net loss before capital contribution Capital contribution Change in fund equity Fund equity, beginning of year Fund equity, end of year See accompanying notes to financial statements. 1,350,910 1,335,363 (255,910) (465,851) 15,547 (209,941) — 655 655 (118,290) (60,741) 57,549 — (2,171) (2,171) (374,200) (528,108) (153,908) (224,340) (224,340) — (224,340) (224,340) — (598,540) (752,448) (153,908) — 785,251 785,251 $ (598,540) 32,803 $ 631,343 22,140,720 $ 22,173,523 87 KODIAK ISLAND BOROUGH 911 Services Fund Statement of Revenues, Expenses, and Changes in Fund Equity Budget and Actual Year ended June 30, 2003 2003 Budget Operating revenues: Customer charges Operating expenses: Personnel services Telephone services $ 69,000 $ 10,500 58,500 69,000 Change in fund equity $ — Fund equity, beginning of year Fund equity, end of year See accompanying notes to financial statements. M Variance - favorable Actual (unfavorable) 68,003 (997) 10,500 — 60,000 (1,500) 70,500 (1,500) (2,497) $ (2,497) 56,590 54,093 M KODIAK ISLAND BOROUGH Kodiak Fisheries Research Center Fund Statement of Revenues, Expenses, and Changes in Fund Equity Budget and Actual Year ended June 30, 2003 2003 Variance favorable Operating revenues: Rents and royalties Operating expenses: Personnel services Employee benefits Miscellaneous Depreciation Cleaning and janitorial Heating Electrical Plumbing Air conditioning Elevators Support goods and services Operating income Other income Investment income Interest expense Change in fund equity Fund equity, beginning of year Fund equity, end of year See accompanying notes to financial statements. Budget $ 1,499,570 $ 163,060 32,000 134,921 740,330 47,000 82,000 185,500 77,240 11,000 2,000 5,492 1,480,543 Actual (unfavorable) 1,538,968 $ 39,398 159,794 3,266 41,292 (9,292) 88,188 46,733 744,114 (3,784) 42,443 4,557 54,297 27,703 141,432 44,068 20,727 56,513 1,959 9,041 2,191 (191) 1,296,437 19,027 242,531 5,492 184,106 223,504 51,060 71,875 20,815 (503,300) (503,300) - $ (433,213) (188,894) $ 244,319 11,820,628 $ 11,631,734 89 KODIAK ISLAND BOROUGH Summary of Bonded Debt Service Requirements to Maturity June 30, 2003 Annual principal and interest requirements on General Obligation Refunding and Construction Bonds. Year Principal Interest Total 2004 $ 1,235,000 $ 641,621 $ 1,876,621 2005 1,280,000 593,387 1,873,387 2006 1,320,000 556,307 1,876,307 2007 1,360,000 514,306 1,874,306 2008 1,440,000 469,155 1,909,155 2009 1,505,000 402,605 1,907,605 2010 1,575,000 332,885 1,907,885 2011 1,645,000 259,735 1,904,735 2012 1,360,000 183,180 1,543,180 2013 1,420,000 1 24,700 1,544,700 2014 1,480,000 63,640 1,543,640 $ 15,620,000 $ 4,141,521 $ 19,761,521 T KODIAK ISLAND BOROUGH General Obligation Bonds, 1993 Series A Retirement Schedule 1993 Bond Issue This issue, dated November 15, 1993, was issued as registered bonds 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 1993 Bonds. This issue was marketed by John Nuveen & Co. Legal opinion was rendered by bond council, Wohlforth, Argetsinger, Johnson & Brecht of Anchorage, Alaska. These bonds were issued to build the Northstar Elementary School, remodel the Ouzinkie School, and remodel and expand the Kodiak Island Hospital. Bonds are payable at First Trust N.A., St. Paul, Minnesota. Fiscal year 2004 Interest rate Interest Principal Interest due due due August 15 February 15 February 15 Total $ 20,475 $ 900,000 $ 20,475 $ 940,950 4.55% 91 KODIAK ISLAND BOROUGH General Obligation Refunding Bonds, 1998 Series A Retirement Schedule 1998 Bond Issue This issue, dated December 7, 1998, 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 1998 Bonds. The financial advisor for this issue was Kaplan Financial Consulting, Inc. Legal opinion was rendered by bond council, Birch, Horton, Bittner, and Cherot. The paying agent for this issue was Alaska USA Trust Company. These bonds were issued to refund all but $1,030,000 of the 1994 bond issue. This resulted in a total interest savings of $504,859. Fiscal year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Interest rate 4.00% 4.00% 4.00% 4.00% 4.30% 4.30% 4.30% 4.30% 4.30% 4.30% 4.30% Interest Principal Interest due due due August 15 February 15 February 15 Total $ 201,647 $ 55,000 $ 201,647 $ 458,294 200,548 55,000 200,547 456,095 199,448 60,000 199,447 458,895 198,248 60,000 198,248 456,496 197,048 1,150,000 197,047 1,544,095 172,323 1,200,000 172,322 1,544,645 146,523 1,250,000 146,522 1,543,045 119,648 1,305,000 119,647 1,544,295 91,590 1,360,000 91,590 1,543,180 62,350 1,420,000 62,350 1,544,700 31,820 1,480,000 31,820 1,543,640 $ 1,621,193 $ 9,395,000 $ 1,621,187 $ 12,637,380 92 KODIAK ISLAND BOROUGH General Obligation Bonds, 2000 Series E Retirement Schedule 2000E Bond Issue This issue, dated December 12, 2000, 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 2000 Series E 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 repair the high school roof. The high school roof repair is scheduled to be completed by the fall of 2001. Fiscal year 2004 2005 2006 2007 2008 2009 2010 2011 Interest rate 4.75% 4.75% 4.75% 4.88% 5.00% 5.00% 5.00% 5.00% Interest Principal Interest due due due August 01 February 01 February 01 Total $ 30,394 $ 130,000 $ 30,394 $ 190,788 27,306 135,000 27,306 189,612 24,100 145,000 24,100 193,200 20,656 150,000 20,656 191,312 17,000 160,000 17,000 194,000 13,000 165,000 13,000 191,000 8,875 175,000 8,875 192,750 4,500 180,000 4,500 189,000 $ 145,831 $ 1,240,000 $ 145,831 $ 1,531,662 93 1 KODIAK ISLAND BOROUGH General Obli Bonds, 2000 Series F Retirement Schedule 2000F Bond Issue This issue, dated December 12, 2000, 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 2000 Series F 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 upgrade Peterson Elementary. The Peterson Project has already been completed. 1 /b,bL3 � l,UlU,000 Total 169,368 170,818 167,050 169,460 171,060 171,960 172,090 171,440 176,623 $ 1,363,246 94 Interest Principal Interest due due due Fiscal year Interest rate August 01 February 01 February 01 2004 9.00% $ 37,184 $ 95,000 $ 37,184 $ 2005 8.35% 32,909 105,000 32,909 2006 6.90% 28,525 110,000 28,525 2007 7.00% 24,730 120,000 24,730 2008 7.00% 20,530 130,000 20,530 2009 7.05% 15,980 140,000 15,980 2010 7.10% 11,045 150,000 11,045 2011 7.15% 5,720 160,000 5,720 1 /b,bL3 � l,UlU,000 Total 169,368 170,818 167,050 169,460 171,060 171,960 172,090 171,440 176,623 $ 1,363,246 94 KODIAK ISLAND BOROUGH ' General Obligation Bonds, 2003 Series B Retirement Schedule , 2003B Bond Issue This issue, dated March 26, 2003, 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 2003 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 establish an escrow fund sufficient to refund $1,920,000 outstanding principal amount of the Borough's General Obligation Baonds, 1993 Series A, and $1,030,000 outstanding principal amount of the eneral Obligation Bonds, 1994 Series A and to pay costs of issuing its 2003 Series B Bonds. Interest Principal Interest f due due due Fiscal year Interest rate August 01 February 01 February 01 Total 2004 2.00% $ 25,740 $ 55,000 $ 36,481 $ 117,221 2005 2.00% 35,931 985,000 35,931 1,056,862 , T 2006 2.50% 26,081 1,005,000 26,081 1,057,162 a 2007 2.625% 13,519 1,030,000 13,519 1,057,038 $ 101,271 $ 3,075,000 $ 112,012 $ 3,288,283 ' 1 1 i S i i 1 i 95 1 1 1 1 1� 1 I t STATISTICAL SECTION Statistical Tables provide report users with a better historical perspective in assessing current financial status and trends of the Borough. r KODIAK ISLAND BOROUGH Kodiak, Alaska General Governmental Expenditures and Other Uses by Function a Last Ten Fiscal Years Fiscal General Health and year government sanitation"' 1994 $ 2,555,349 $ 690,430 $ 1995 2,681,472 1,442,644 1996 2,941,453 1,390,307 1997 2,664,204 1,393,016 1998 2,848,474 1,506,992 1999 2,733,502 1,179,420 2000 2,540,354 730,888 2001 2,993,718 594,072 2002 3,027,097 280,847 2003 4,901,264 286,095 Total Education"' Other transfers 3,615,695 $ 322,228 $ 7,183,702 3,861,967 164,649 8,150,732 4,678,830 267,594 9,278,184 5,083,942 250,000 9,391,162 6,466,321 571,296 11,393,083 7,044,970 — 10,957,892 6,500,341 55,905 9,827,488 6,824,276 323,299 10,735,365 7,363,880 55,034 10,726,858 7,404,122 480,476 13,071,957 (a) Includes general fund only. (b) Includes operating transfers for this function Source: Borough general ledger 96 KODIAK ISLAND BOROUGH Kodiak, Alaska General Revenues by Source"' Last Ten Fiscal Years Fiscal 1,633,162 year Taxes 1994 $ 4,674,382 $ 1995 5,976,914 1996 5,693,539 1997 5,582,037 1998 7,589,595 1999 7,694,387 2000 8,057,781 2001 8,135,184 2002 8,017,344 2003 8,028,513 (a) Includes general fund only. Source: Borough general ledger Licenses, Inter - permits governmental Investment Operating and fees revenue income transfers 457,895 $ 2,053,750 $ 928,079 1,633,162 285,100 2,396,704 108,483 2,396,272 86,138 2,739,075 86,523 2,055,803 92,609 1,770,038 95,129 2,135,483 95,857 3,397,240 153,727 2,683,460 291,046 $ 659,794 452,196 371,414 333,243 238,515 358,351 583,633 294,675 171,532 9,672 32,632 129,829 18,154 200,000 1,000,000 Miscellaneous revenue Total — $ 7,477,073 — 9,197,949 — 8,827,539 — 8,467,878 — 10,748,051 — 10,107,860 — 10,408,608 44,945 11,012,528 140,901 12,146,017 — 12,037,232 97 KODIAK ISLAND BOROUGH Kodiak. Alaska Property Tax Levies and Collections Last Ten Fiscal Years Source: Borough general ledger 9S Percent of Percent of Percent of Delinquent current Fiscal Total Current tax levy year tax levy collections collected 1994 $ 4,353,371 $ 4,176,676 95.9 S 1995 5,141,728 4,955,108 96.4 1996 5,466,066 5,249,168 96.0 1997 5,576,773 5,478,939 98.2 1998 7,384,490 7,121,678 96.4 1999 7,704,172 7,575,491 98.3 2000 7,743,649 7,507,018 96.9 2001 8,164,127 7,912,859 96.9 2002 8,411,173 8,313,881 98.8 2003 8,395,117 8,167,437 97.3 Source: Borough general ledger 9S Percent of Percent of Delinquent total tax Outstanding delinquent tax Total tax collections delinquent taxes to collections collections to tax levy taxes tax levy 21,295 $ 4,197,971 96.4 S 193,624 4.4 56,140 5,011,248 97.5 232,679 4.5 56.531 5,305,699 97.1 289,210 5.3 96,490 5,575,429 100.0 192,722 3.5 77,576 7,199,254 97.5 381,180 5.2 314,367 7,889,858 102.4 234,738 3.0 175,066 7,682,084 99.2 316,482 4.1 204,458 8,117,317 99.4 364,044 4.5 362,377 8,676,258 103.2 292,823 15 178,885 8,346,322 99.4 312,925 3.7 Source: Borough general ledger 9S KODIAK ISLAND BOROUGH Kodiak, Alaska Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Source: Borough assessment and tax records and State full value determination Last Ten Years Assessed Values $800,000,000 $600,000,000 $400,000,000 $200,000,000 $0 99 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Ratio of total assessed to Real property Personal property Total total Fiscal Assessed Full value Assessed Full value Assessed Full value full value year value determination value determination value determination determination 1994 $ 499,172,455 $ 517,754,900 $ 92,264,018 $ 325,842,100 $ 591,436,473 $ 843,597,000 70.11 1995 515,954,650 539,053,753 98,616,145 319,052,138 614,570,795 858,105,891 71.62 1996 538,627,500 560,459,900 101,835,076 318,741,600 640,462,576 879,201,500 72.85 1997 549,456,964 565,281,400 104,677,687 312,465,100 654,134,651 877,746,500 74.52 1998 573,742,998 587,145,000 107,599,894 310,049,900 681,342,892 897,194,900 75.94 1999 577,551,709 599,696,900 109,304,683 297,058,600 686,856,392 896,755,500 76.59 2000 594,870,287 613,787,700 120,828,748 322,947,400 715,699,035 936,735,100 76.40 2001 626,906,341 641,419,200 121,849,192 336,548,600 748,755,533 977,967,800 76.56 2002 635,931,458 654,299,600 116,117,602 323,479,600 752,049,060 977,779,200 76.91 2003 642,995,612 679,949,700 117,456,245 323,755,200 760,451,857 1,003,704,900 75.76 Source: Borough assessment and tax records and State full value determination Last Ten Years Assessed Values $800,000,000 $600,000,000 $400,000,000 $200,000,000 $0 99 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 KODIAK ISLAND BOROUGH Kodiak, Alaska Property Tax Rates and Contributions to the School District (per $100 of Assessed Value) Last Ten Fiscal Years Prooertv Tax Rates Contributions to the School District I ''. Fiscal Assessed Amount of Woodland Year Value Contribution Equivalent 1994 $ 591,436,473 $ 3,990,847 6.75 1995 Acres 3,770,399 6.14 1996 640,462,576 4,574,068 7.14 1997 KIB Citv Street 1998 Road Services Areas 8.39 Fire Areas 686,856,392 Fiscal General of Lighting Monashka Service Bay View omens ervice omens year Fund Kodiak Area Bav District 1 Road Bav Area No. 1 Bav 1994 550 2.00 0.75 2.00 1.75 1.00 2.50 1.50 1.25 1995 6.75 2.00 0.75 1.50 1.75 1.00 2.00 1.50 1.25 1996 6.75 2.00 0.50 1.75 1.75 1.00 2.00 1.50 1.25 1997 6.75 2.00 0.50 1.50 1.75 1.00 2.00 1.50 1.25 1998 9.25 2.00 0.50 1.50 0.75 1.00 2.00 1.50 1.25 1999 9.25 2.00 - 1.50 0.50 1.00 2.00 1.50 1.25 2000 9.25 2.00 - 1.50 0.50 1.00 2.00 1.50 1.25 2001 9.25 2.00 - 1.50 1.00 1.00 2.00 1.50 1.25 2002 9.25 2.00 - 1.50 1.25 1.00 2.00 1.50 125 2003 9.25 2.00 - L50 1.00 1.00 2.00 1.50 125 Contributions to the School District I ''. Fiscal Assessed Amount of Millage Year Value Contribution Equivalent 1994 $ 591,436,473 $ 3,990,847 6.75 1995 614,570,795 3,770,399 6.14 1996 640,462,576 4,574,068 7.14 1997 654,134,651 4,839,887 7.40 1998 681,342,892 5,715,361 8.39 1999 686,856,392 6,492,876 9.45 2000 715,699,035 6,678,652 9.33 2001 748.755,533 6,913,926 9.23 2002 752,049,060 7,550,506 10.04 2003 760,451,857 7,767,661 10.21 Source: Boroueh ordinance and assessment 100 KODIAK ISLAND BOROUGH Kodiak, Alaska Ten Largest Property Taxpayers Year ended June 30, 2003 Source: Borough tax records. 101 Percentage Percentage of total Net of total assessed Assessed taxes taxes value valuation levied levied Western Alaska Fisheries 1.7% $ 12,579,868 $ 131,918 1.6% Alaska Communications Systems 1.7% 13,130,076 128,601 1.5% International Seafoods of Alaska 1.4% 10,297,293 117,449 1.4% Ocean Beauty Seafoods Inc 1.9% 14,327,724 105,481 1.3% Alaska Pacific Seafoods 1.4% 10,387,734 104,438 1.2% Brechan Enterprises, Inc. 1.2% 9,131,003 100,663 1.2% Csx Lines Llc Total 1.2% 9,283,545 99,871 1.2% Wal -Mart Real Estate Bus Trust 1.0% 7,934,200 89,260 1.1% Mill Bay Plaza Assoc Ltd 0.9% 7,138,400 80,307 1.0% Kodiak Fishmeal Company 1.0% 7,751,105 76,402 0.9% Totals 13.4% $ 101,960,948 $ 1,034,390 12.4% Source: Borough tax records. 101 KODIAK ISLAND BOROUGH Kodiak, Alaska Ratio of Net General Bonded Debt to Assessed Value and Net General Bonded Debt per Capita "' Last Ten Fiscal Years Ratio of net general bonded debt Less Debt Net general Fiscal value per capita Assessed Gross Service bonded year Population 3.2 value bonded debt Fund debt 1994 15,245 $ 591,436,473 $ 27,915,000 $ 4,133,559 $ 23,781,441 1995 15,575 614,570,795 25,665,000 2,075,768 23,589,232 1996 15,400 640,462,576 23,205,000 1,759,644 21,445,356 1997 14,058 654,134,651 21,660,000 549,569 21,110,431 1998 14,181 ra) 681,342,892 20,020,000 432,942 19,587,058 1999 13,848 (a) 686,856,392 18,910,000 340,159 18,569,841 2000 13,989 (a) 715,699,035 17,025,000 272,651 16,752,349 2001 14,028 (a) 748,755,533 17,690,000 344,942 17,345,058 2002 13,913 (a) 752,049,060 16,615,000 448,065 16,166,935 2003 13,852 (a) 760,451,857 15,620,000 17,879 15,602,121 Ratio of net general bonded debt Net general to assessed bonded debt value per capita 4.0 $ 1,560 3.8 1,515 3.3 1,393 3.2 1,502 2.9 1,381 2.7 1,341 2.3 1,198 2.3 1,236 2.1 1,162 2.1 1,126 Sources: Information obtained from assessment records and Borough general ledger except as otherwise noted. (a) Information obtained from State of Alaska, Department of Community and Regional Affairs, Certified Population for Revenue Sharing Program. 102 KODIAK ISLAND BOROUGH Kodiak, Alaska Computation of Direct and Overlapping Debt June 30, 2003 Percentage Kodiak Island Net debt applicable to this Borough outstanding governmental share of (a) unit (b) debt (c) Kodiak Island Borough: General obligation bonds $ 15,602,121 100% $ 15,602,121 City of Kodiak: Revenue bonds 1,675,000 100% Total $ 17,277,121 $ 1 /,121 (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 to valuation of property subject to taxation in reporting unit. (c) Under Alaska Statutes Title 29, there is no limitation on municipal debt. Sources: Borough general ledger and City of Kodiak records. 1,675,000 103 KODIAK ISLAND BOROUGH Kodiak, Alaska ' Computation of Legal Debt Margin June 30, 2003 Assessed value $ 760,451,857 Plus exempt property 1,994,303,245 Total $ 2,754,755,102 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. � I Source: Borough assessment records. t 104 KODIAK ISLAND BOROUGH Kodiak, Alaska Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures and Transfers Last Ten Fiscal Years Fiscal Ratio of Interest Total debt year Principal (a) and fees service 1994 $ 1,775,833 $ 690,170 $ 2,466,003 $ 1995 2,270,833 1,760,185 4,031,018 1996 2,480,833 1,386,681 3,867,514 1997 1,565,833 1,239,996 2,805,829 1998 1,660,833 1,141,366 2,802,199 1999 1,915,833 853,652 2,769,485 2000 1,905,833 858,164 2,763,997 2001 2,015,834 746,994 2,762,828 2002 1,095,833 853,543 1,949,376 2003 1,140,833 803,224 1,944,057 Total Ratio of general debt service expenditures to general and transfers expenditures 7,162,545 34.4 8,150,732 49.5 9,278,184 41.7 9,391,162 29.9 11,393,083 24.6 10,957,892 25.3 9,827,488 28.1 10,735,365 25.7 10,726,858 18.2 13,071,957 14.9 (a) Serial maturities in the case of serial bonds; annual Debt Service Fund requirements in the case of term bonds. Source: Borough general ledger and debt documents 105 KODIAK ISLAND BOROUGH Kodiak, Alaska Demographic Statistics Last Ten Fiscal Years Fiscal School year Population (a) enrollment (b) 1994 15,245 2,802 1995 15,575 2,773 1996 15,400 2,793 1997 14,058 2,809 1998 14,181 2,897 1999 13,848 2,815 2000 13,989 2,798 2001 14,028 2,750 2002 13,913 2,828 2003 13,852 2,742 Sources: (a) State of Alaska, DCRA certified population. (b) Kodiak Island Borough School District (c) Department of Labor, Anchorage Percentage Unemployment rate (c) 9.4 11.2 13.7 7.7 8.2 6.8 7.2 9.5 8.9 9.4 106 *Assessed value. Source: Borough assessing records, City of Kodiak building department and local bankers. I 107 1 KODIAK ISLAND BOROUGH Kodiak, Alaska Property Value, Construction, and Bank Deposits Last Ten Fiscal Years , Construction Property Value* Commercial Residential Deposits , Fiscal No. of No. of in local year permits Value permits Value banks Commercial Residential Nontaxable 1994 45 $ 2,947,984 146 $ 5,037,061 $ 98,970,444 $ 148,714,050 $ 350,458,405 $ 2,271,468,957 1995 59 6,055,321 159 4,305,352 103,838,289 148,156,300 367,798,350 2,354,550,201 1996 41 3,862,599 160 7,864,907 108,116,331 155,755,000 382,872,500 2,404,513,974 ' 1997 36 1,559,938 112 6,262,439 108,926,259 157,911,064 391,545,900 2,404,872,414 1998 39 16,676,612 149 8,103,624 107,973,700 161,787,264 411,955,734 2,420,596,952 1999 51 6,784,879 141 8,222,313 123,206,000 160,921,064 416,630,645 2,420,601,099 2000 54 2,720,259 156 9,086,074 120,465,733 172,709,507 422,160,780 2,475,199,399 2001 33 1,379,673 198 11,501,804 119,637,923 193,882,996 433,023,355 2,475,199,399 2002 30 1,494,337 190 10,439,985 117,241,908 199,689,615 443,305,997 1,994,297,545 2003 47 2,915,740 166 11,707,269 129,546,301 361,476,879 585,967,545 1,994,301245 *Assessed value. Source: Borough assessing records, City of Kodiak building department and local bankers. I 107 1 KODIAK ISLAND BOROUGH Kodiak, Alaska Miscellaneous Statistical Data Last Ten Fiscal Years Date of Incorporation - September 30, 1963, Second Class Borough by Chapter 146 Sessions, Laws of Alaska 1961, as amended, Form of Government - Mayor /Assembly. (a) The majority of Village Schools are grades K -12. (b) Based on full time equivalents. (c) As of July 1, 1996 the City of Kodiak assumed ownership, maintenance, and operation of the existing water and sewer utilities in Service District. Source: Borough records. 108 1994 1995 1996 1997 Land area - square miles 7,130 7,130 7,130 7,130 Miles of improved street 21.60 21.60 21.60 24.70 Miles of sanitary sewers 16.8 16.8 16.8 - l0 Number of water taps 913 921 921 - (o) Number of sanitary sewer taps 891 899 899 - l0 Building permits: Permits issued 191 218 201 148 Value of buildings (thousands) 4,740 10,360 11,728 7,822 Fire protection: Number of fire stations 2 2 2 2 Number of employees 1 1 1 1 Police protection - none Recreation: Parks - number of acres 223 223 224 224 Facilities: Number of playgrounds 15 15 16 16 Number of swimming pools 1 1 1 1 Education: Number of schools: City of Kodiak Elementary 3 3 4 4 City of Kodiak Junior High 1 1 1 1 City of Kodiak High School I 1 1 1 Village Schools (a) 9 9 9 9 Number of personnel: (b) Administration 5.0 5.0 6.0 6.0 Principals 9.5 11.0 12.0 11.7 Teachers 180.0 185.3 183.8 188.5 Technical 6.5 6.5 3.0 3.5 Clerical and Aides 81.3 73.3 61.7 63.7 Maintenance/Warehouse 19.1 19.7 12.0 9.0 Custodial 21.7 21.6 22.5 26.3 Food Service 8.3 8.5 3.7 4.2 Total number of personnel 331.4 330.9 304.7 312.9 Number of students 2,802 2,773 2,793 2,809 Number of municipal employees 64 65 63 63 Elections: Number of registered voters 7,061 7,382 8,217 9,350 Number voting in last election 2,634 2,113 1,471 2,120 Percent of registered voters 37.0% 29.0% 17.9% 22.7% (a) The majority of Village Schools are grades K -12. (b) Based on full time equivalents. (c) As of July 1, 1996 the City of Kodiak assumed ownership, maintenance, and operation of the existing water and sewer utilities in Service District. Source: Borough records. 108 1 1 1 1 1 1 1 1 1 1 1 1 7 1 1 1 1 1 1998 1999 7,130 7,130 24.70 25.02 (C) - (C) (C) - (C) (c) - (c) 188 192 24,780 15,007 2 2 1 1 224 224 16 16 1 1 4 4 1 1 1 1 9 9 5.2 5.2 11.4 11.4 179.6 178.1 9.0 9.0 72.7 75.2 10.0 8.0 27.6 30.6 6.3 6.7 321.8 324.2 2,897 2,815 50 46 9,967 10,389 2,076 1,972 20.8% 19.0% 2000 2001 2002 2003 7,130 7,130 7,130 7,130 25.00 25.58 25.66 25.66 ( (C) (C) (C) (c) (C) (C) (a) (c) (c) (c) (c) 210 231 220 213 11,806 12,881 11,934 14,623 2 2 2 2 1 1 1 1 224 224 224 224 16 16 16 16 1 1 1 1 4 4 4 4 1 1 1 1 1 1 1 1 9 9 8 7 4.2 7.5 7.2 6.8 10.3 9.5 11.3 10.3 188.6 200.0 202.6 202.1 11.1 3.0 4.0 3.5 78.9 79.5 121.0 115.4 10.8 15.0 18.0 15.2 29.0 39.0 32.0 29.9 10.7 8.0 8.5 8.2 343.6 361.5 404.6 391.4 2,798 2,750 2,828 2,751 36 37 37 39 9,935 10,311 10,085 10, 099 2,525 2,521 2,914 1,473 25.4% 24.4% 28.9% 14.6% 109