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CAFR FY2004KODIAK ISLAND BOROUGH Comprehensive Annual Financial Report June 30, 2004 (With Summarized Financial Information for June 30, 2003) Kodiak, Alaska Nancy Galstad, 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: Independent Auditors' Report 1 -2 Management's Discussion and Analysis 3 -11 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 12 Statement of Activities 13 -14 Fund Financial Statements Balance Sheet — Governmental Funds 15 Reconciliation of Net Assets Between the Government -Wide and Fund Financial 1 Statements 16 Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds 17 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 18 Balance Sheet — Proprietary Funds — Business -Type Activities — Enterprise Funds 19 Statement of Revenues, Expenses, and Changes in Fund Equity — Proprietary Funds — Business -Type Activities — Enterprise Funds 20 Statement of Cash Flows — Proprietary Funds — Business -Type Activities — Enterprise ' Funds Notes to Financial Statements 21 -22 23 -48 Required Supplementary Information Schedule of Funding Progress — PERS 49 Budgetary Comparison Schedule — General Fund 50 -51 Budgetary Comparison Schedule — Special Revenue Fund — Facilities 52 Notes to Required Supplementary Information — Budgetary Comparison Schedules 53 Supplemental Information: Statement of Revenues, Expenditures and Changes in Fund Balance — Special Revenue Fund — Education and Health — Budget and Actual 54 t Nonmajor Governmental Funds: Combining Balance Sheet 55 ' Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 56 KODIAK ISLAND BOROUGH Table of Contents Debt Service Funds: Balance Sheet — Other 85 Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Other 86 Nonmajor Capital Projects Funds: Combining Balance Sheet 87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ' (Deficits) 88 Schedule of Capital Projects 89 -90 Enterprise Funds: ' Municipal Solid Waste Collection and Disposal Fund: Statement of Revenues. Expenses, and Changes in Fund Equity — Budget and Actual 91 Page Nonmajor Special Revenue Funds: Combining Balance Sheet 57 -60 Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Deficits) 61 -64 Statement of Revenues, Expenditures, Transfers, and Changes in Fund Balances (Deficits) — Budget and Actual: Fire and Road Service Areas: Fire: Fire Protection Area No. 1 65 Womens' Bay Fire Department 66 Kodiak Airport Fire District 67 Road: Monashka Bay Road Service Area 68 Service District No. 1 69 Womens' Bay Road Service Area 70 Bay View Road Service Area 71 Service Area No. 2 72 Coastal Management 73 Child Care Assistance Program 74 Welfare to Work Program 75 L.E.P.C. 76 Land Sales 77 Buildings and Grounds 78 Woodland Acres Street Light Service Area 79 Kodiak Arts Council 80 Tourism Development 81 Trinity Acres Lighting District 82 Mission Lake Tide Gate 83 Fern Fuller Trust 84 Debt Service Funds: Balance Sheet — Other 85 Statement of Revenues, Expenditures, and Changes in Fund Balance — Budget and Actual — Other 86 Nonmajor Capital Projects Funds: Combining Balance Sheet 87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ' (Deficits) 88 Schedule of Capital Projects 89 -90 Enterprise Funds: ' Municipal Solid Waste Collection and Disposal Fund: Statement of Revenues. Expenses, and Changes in Fund Equity — Budget and Actual 91 KODIAK ISLAND BOROUGH Table of Contents Page Hospital Facilities Fund: Statement of Revenues, Expenses, and Changes in Fund Equity — Budget and Actual 92 911 Services Fund: Statement of Revenues, Expenses, and Changes in Fund Equity — Budget and Actual 93 Kodiak Fisheries Research Center Fund: Statement of Revenues, Expenses, and Changes in Fund Equity — Budget and Actual 94 Supplementary Schedules: Summary of Bonded Debt Service Requirements to Maturity 95 General Obligation Refunding Bonds, 1998 Series A — Retirement Schedule 96 General Obligation Bonds, 2000 Series E — Retirement Schedule 97 General Obligation Bonds, 2000 Series F — Retirement Schedule 98 General Obligation Bonds, 2003 Series A — Retirement Schedule 99 Statistical Section — Fund Information: General Governmental Expenditures and Other Uses by Function — Last Ten Fiscal Years 100 General Revenues by Source — Last Ten Fiscal Years 101 Property Tax Levies and Collections — Last Ten Fiscal Years 102 Assessed and Estimated Actual Value of Taxable Property — Last Ten Fiscal Years 103 Property Tax Rates and Contributions to the School District — Last Ten Fiscal Years 104 Ten Largest Property Taxpayers 105 Ratio of Net General Bonded Debt to Assessed Value and Net General Bonded Debt per Capita — Last Ten Fiscal Years 106 Computation of Direct and Overlapping Debt 107 Computation of Legal Debt Margin 108 Ratio of Annual Debt Service Expenditures for General Bonded Debt to Total General Expenditures and Transfers — Last Ten Fiscal Years 109 Demographic Statistics — Last Ten Fiscal Years 110 Property Value, Construction and Bank Deposits — Last Ten Fiscal Years 111 Miscellaneous Statistical Data 112 -113 INTRODUCTORY SECTION Kodiak Island Borough Finance Department 710 Mill Bay Road Kodiak, Alaska 99615 Phone (907) 486 -9320 Fax(907)486-9399 February 22, 2005 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. 1 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, 2004. 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, 2004, 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 1 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, 2004, 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 1 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 13,811. 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 1 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 1 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 Borough manager uses these requests as the starting point for developing a proposed budget. The Borough Manager then presents this proposed budget to the assembly for review by April 30. The assembly is required to hold public hearings on the proposed budget and to adopt a final budget by no later than June 10. The appropriated budget is prepared by fund and department. The Assembly makes appropriation transfers between funds and /or departments only after the adoption of an ordinance. Borough staff may execute transfers between line items within a department. Amendments to the budget can occur anytime during the fiscal year through the Borough Assembly or administrative action. Expenditures may not legally exceed appropriations at the following levels: Capital 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 M t annual budget has been adopted. For the general fund and facilities special revenue fund, this comparison 1 is presented on pages 50 -53 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 fund subsection of this report, which starts on page 54. 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 91. 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 economv. 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. 1 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, 2004 was 10.6% percent compared to 9.4 percent in 2003 and 14.9 percent in 2002. Throughout fiscal year 2004, the unemployment rate has ' fluctuated from 5.9% to 17.4 %, with an average of 9.5 %. 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 1 producing instruments in accordance with the Borough's investment code. Cash forecasts are prepared to 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 post employment 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, post employment healthcare, death, and disability benefits to eligible participants. At June 30, 2003 (date of most recent actuarial analysis), the actuarial value of liabilities exceeded the actuarial value of assets by $2.5 million. ■ The Borough also administers a Section 457 deferred compensation arrangement for eligible Borough employees. Additional information on the Borough's pension arrangements and post employment benefits can be found in Note 10 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, 2003. This was the sixteenth 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, l ' Nancy Galstad Karleton G. Short Borough Manager Director of Finance IV 1 Certificate of Achievement for Excellence in Financial Reporting Presented to Kodiak Island Borough, Alaska For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2003 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. OF THE F9 5 �JN(iEa O S7AiE5�e y AN ! u dl CANADA o CORPno TION Ja President W7O� n:3 T� � O �y Executive Director U ■ M M M M M M M M M M amm. Organizational V1 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 Cecil Ranney At Large, 2006 Wayne Stevens At Large, 2006 Vii Nancy Wells At Large, 2005 KODIAK ISLAND BOROUGH KODIAK, ALASKA BOROUGH OFFICIALS YEAR ENDED JUNE 30, 2004 MAYOR Gabrielle LeDoux `04 ASSEMBLY Tom Abell `05 Patricia Branson `04 Cecil Ranney `06 Nancy Wells `05 Tuck Bonney (Deputy Mayor) `05 Robin Heinrichs `04 Wayne Stevens `06 MANAGEMENT NancyGalstad .............................................................................................................. ............................... Borough Manager Karleton G. Short ........................................................................................... ............................... Finance Director /Treasurer Bud Cassidy ................................................................... ............................... ....................Engineering and Facilities Director JudithA. Nielsen, CMC ............................................................................. ............................... ........................Borough Clerk Michelle Stearns ................................................................................ ............................... Community Development Director Vacant......................................................................................................................................... ............................... Assessor RobertA. Himes ........................................................................................................ ............................... Assistant Fire Chief Jamin, Ebell, Schmitt & Mason .............................. ............................... ........................Borough Attorney (Contracted Firm) Betty Walters .......................................................................................... ............................... Superintendent, School District WilliamKramer ................................................................................. ............................... ........................General Accountant Vacant...................................................................................................................... ............................... Revenue Accountant LaurieWhiddon ....................................................................................... ............................... .....................Purchasing Agent viii School Board ' * Jeff Stephan Elizabeth Odell Barry Still Scott Williams ' Norm Wooten CDR John Furman, USCG Rep. Sheila Roberts - Staff ' Jordan Rodgers, Student Rep. Betty Walters, KIBSD, ex- officio ' Planning and Zoning Commission Cheryl Boehland Dr. Gary A. Carver Jerrol Friend Casey Janz David King Dennis McMurry ' Reed Oswalt Michelle Stearns, KIB Staff ' Woodland Acres Street Lighting Service Area Advisory Board VACANT Citizens Board of Equalization Cheryl McNeil Jeff Sanford Michael Machulsky, Alternate Judi Nielson, KIB staff ' Parks and Recreation Committee Scott Bauby * Pam Foreman Murphy Forner ' Jeff Huntley Nicola Lesourd Michael O'Neal ' Patrick Saltonstall Mike Sirofchuck Hans Tschersich Vacant, Assembly Rep. Vacant, P &Z Rep. Wayne Biessel, State Rep., ex- officio Joe Bailor, City Rep., ex- officio Michelle Stearns, KIB Rep Elizabeth Odell, KIBSD Rep. ix Building Code Board of Appeals (Architectural Review Board) Jerrol Friend Gregg Hacker Jay Johnston Bob Tucker, KIBSD Rep., ex- officio Barry Still, School Board Rep, ex officio Bud Cassidy, KIB Rep., ex- officio Personnel Advisory Board William King Linda Moore Lauri Whiddon, KIB staff Fire Protection Area No. 1 Advisory Board * Scott Arndt Dave Billings Cliff Davidson Jeff Halcomb Greg Spalinger Robert Himes, ex- officio Sharon Lea Adinolfi, KIB staff Bav View Road Service Area Advisory Board Dawn Black Jim Schauff 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 David Sundberg Service Area No. 1 Advisory Board Kevin Arndt Scott Arndt Robert Casey • Charles Lorenson Kaye McClain Greg Spalinger 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 Dan Dorman Kenneth Holmes William King Lynda Ross Wayne Stevens Darlene Turner Robert Green, ex- officio CDR John Furman, USCG ex- officio Lt. Steve Raney, USCG ex- officio Borough Clerk's Office, KIB staff x Airport Fire Protection District Advisory Board Vacant Arts Council Advisory Committee Vacant Mission Lake Tide Gate Service Area Board Bill Hinkle Marian Johnson Trinity Islands Subdivision Street Light Service Area Board Crai Walton Jennifer Wandersee * Indicates chair _. �� M M M M r M M M M M M r r M M ARCTIC OCEAN P BARROW PRUDNOE BAY x b 6 WZINKI ODIAK IKARLUK PE HINIAK AKHIOK o" a KODIAK d` ISLAND BOROUGH Iv` KOTZEBUE AR CTIC ^ CIRCLE f. r_'VV \� NOME NORTON SOUND FAIRBANKS ALASKA ANCHORAGE VALDEZ BETHEL � KENA I . E SE WARD DILLINGHAM M1 ' GULF OF ALASKA BRISTOL BAY KODIAK ISLAND .ate .,%apcz— O .• P NORTH PACIFIC OCEAN CANADA FINANCIAL SECTION 1 U ilia 71 KPMG 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, 2004, which collectively comprise the Borough's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Kodiak Island Borough, Alaska'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, 2004, 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.. In accordance with Government Auditing Standards, we have also issued our report dated February 22, 2005 on our consideration of the Kodiak Island Borough, Alaska's internal control over financial reporting ' and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. ' KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative. The Honorable Mayor and Members of the Assembly Kodiak Island Borough The management's discussion and analysis on pages 3 through 11, the schedule of funding progress for 1 PERS on page 49 and the budgetary comparison information on pages 50 through 53 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 annlied certain limited nrecednres_ 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Kodiak Island Borough, Alaska's basic financial statements. The accompanying supplementary information, including the introductory section, supplemental information, supplementary 1 schedules and statistical tables are 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 I material respects in relation to the basic financial statements taken as a whole. The introductory section, supplementary schedules 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. KPMC, LLP ' February 22, 2005 1 1 KODIAK ISLAND BOROUGH I Management's Discussion and Analysis June 30, 2004 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, 2004. 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 - iv of this report. i Financial Highlights 1 • The assets of the Kodiak Island Borough exceeded its liabilities at the close of FY2004 by $141,052,466. Of this amount, $35,233,596 (unrestricted net assets) may be used to meet the Borough's ongoing obligations to citizens and creditors. • In FY2004 the Borough's total net assets decreased by $3,534,377. • At the end of the current fiscal year, the Borough's governmental funds reported combined fund balances of $43,153,021, an increase of $142,082 in comparison with the prior year. At the end of the FY2004, ' unreserved fund balance for the general fund was $2,109,496, 20% of total general fund expenditures. • The Borou total debt decreased by $1,308,757 during FY2004. This is due to principal payments on general obligation bonds and loans. 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 1 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, 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. 1 3 (Continued) KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2004 The government -wide financial statements can be found on pages 12 -14 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. The basic governmental financial statements can be found on pages 15 -18 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 19 -22 of this report. 4 (Continued) I I KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2004 ' 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 23 -48 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 49 -53 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 1 case of the Kodiak Island Borough assets exceeded liabilities by $141,052,466 at the close of the most recent fiscal year. ' The largest portion of the Kodiak Island Borough's net assets ($105,818,870 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. Governmental Business -type activities activities Total 2004 2003 2004 2003 2004 2003 Current and other assets $ 40,528,562 $ 39,696,430 $ 4,852,098 $ 4,126,209 $ 45,380,660 $ 43,822,639 Capital assets 78,306,477 80,398,714 43,262,618 45,256,195 121,569,095 125,654,909 Total assets $ 118,835,039 $ 120,095,144 $ 48,114,716 $ 49,382,404 $ 166,949,755 $ 169,477,548 Long -term liabilities $ 14,488,102 $ 15,748,269 $ 4,206,526 $ 4,255,116 $ 18,694,628 $ 20,003,385 Other liabilities (3,224,199) (3,200,725) 10.426.860 8.088,045 7,202,661 4,887,320 Total liabilities $ 11,263,903 $ 12,547,544 $ 14,633,386 $ 12,343,161 $ 25,897,289 $ 24,890,705 Net assets: Invested in capital assets, net of related debt $ 63,818,375 $ 64,650,445 $ 42,000,495 $ 43,512,583 $ 105,818,870 $ 108,163,028 Unrestricted 43,752,761 42,897.155 (8,519,165) (6,473,340) 35,233,596 36,423,815 Total net assets $ 107,571,136 $ 107,547,600 $ 33,481,330 $ 37,039,243 $ 141,052,466 $ 144,586,843 For more detailed information see page 12 of the statement of net assets. The remaining balance of unrestricted net assets, $35,233,596 may be used to meet the Borough's ongoing obligations to citizens and creditors. 5 (Continued) KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2004 ' Statement of Activities The following condensed table of changes in net assets displays the revenues and expenses for the current and prior year. 6 (Continued) Governmental Activities Business -type activities Total , 2004 2003 2004 2003 2004 2003 i Revenues: Program revenues: Charges for services $ 548,433 $ 458,680 $ 5,663,035 $ 5,264,584 $ 6,211,468 $ 5,723,264 Operating grants and contributions 1,107,826 940,878 1,305 - 2,050,009 940,878 Capital grants 389,371 670,905 - - 1,060,276 670,905 General revenues: Property taxes 8,016,323 8,244,465 - - 16,260,788 8,244,465 Investment earnings 1,004,215 1,431,213 23,977 102,546 2,561,951 1,533,759 Severance taxes 799,693 702,065 - - 1,501,758 702,065 Grants and entitlements not restricted to specific programs 2,461,527 3,135,460 - - 5,596,987 3,135,460 ' Other 227,774 143,885 - - 371,659 143,885 Total revenues 14,555,162 15,727,551 5,688.317 5,367,130 35,614,896 21,094,681 Expenses: ' General government 2,626,429 2,721,273 - - 5,347,702 2,721,273 Emergency preparedness 51,255 26,242 - - 77,497 26,242 Community and economic development 536,111 465,556 - - 1,001,667 465,556 Health and sanitation 370,434 823,906 - - 1,194,340 823,906 Education, culture, and recreation 217,759 205,866 - - 423,625 205,866 Fire services 336,389 307,567 - - 643,956 307,567 Maintenance and operations 829,046 793,989 - - 1,623,035 793,989 Service district maintenance Fern Fuller Trust 425,712 24,500 190,058 - - - - - 615,770 24,500 190,058 - Education 10,120,359 9,971,617 - - 20,091,976 9,971,617 Interest on long -term debt 638,192 721,034 - - 1,359,226 721,034 Municipal solid waste collection - - 3,051,127 2,913,652 5,964,779 2,913,652 Hospital facilities - - 2,669,144 1,398,275 4,067,419 1,398,275 911 services - - 80,427 70,500 150,927 70,500 Kodiak fisheries research center - - 1,800,972 1,799,737 3,600,709 1,799,737 Total expenses 16,176,186 16,227,108 7,601,670 6,182,164 46,187,128 22,409,272 Change in net assets before transfers (1,621,024) (499,557) (1,913,353) (815,034) (10,572,232) (1,314,591) Transfers 1,644,560 (2,252,072) (1,644,560) 2,252,072 - - Change in net assets 23,536 (2,751,629) (3,557,913) 1,437,038 (10,572,232) (1,314,591) Net assets, beginning of year 107,547,600 110,299.229 37,039 243 35,602,205 144,586,843 145,901,434 Net assets, end of year $ 107,571,136 $ 107,547,600 $ 33,481,330 $ 37,039,243 $ 134,014,611 $ 144,586,843 , Governmental activities increased the Kodiak Island Borough's net assets by $23,536. Key elements of this increase are: • Revenues exceeded expenditures. • If not for a transfer of $1,644,560 from proprietary funds, net assets would have decreased by $1,621,024. , 6 (Continued) KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2004 Business -type activities decreased the Kodiak Island Borough's net assets by $3.557,913. Part of this decrease resulted from the transfer of $1,644,560 to governmental funds. The proprietary funds had an operating loss of $1,937,330 before transfers and investment earnings. 2004 Program Revenue vs. Expense by Governmental Activities Interest on Long -Term Debt Education Fern Fuller Trust Service District Maintenance Maintenance and Operation Fire Services Education, Culture and Recreation Health and Sanitation Community Development Emergency Preparedness General Government 0 1 2 3 4 5 6 7 8 9 10 For more detailed information see pages 13 -14 of the statement of activities 7 ■ expenses (in millions) ■ program revenue (in millions) (Continued) KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2004 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 $43,153,021, an increase of $142,082 in comparison to the beginning of the year. $34,689,743 of this total amount constitutes unreserved fund balance, of which $1,025,067 is designated for subsequent year expenditures and $33,664,406 is undesignated. The remaining $8,463,548 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 $2,109,496 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 20% of total general fund expenditures. The fund balance of the Kodiak Island Borough's general fund increased by $305,384 during the current fiscal year. The key factor leading to this savings was vacant positions throughout the Borough for either part or all of the year. The facilities fund had a total fund balance of $37,544,509, $29,123,017 of which is unreserved. Fund balance decreased $571,074 during the year because more funds were transferred out to other funds than what earned on investments. 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 $3,345,656, the hospital facilities fund amounted to $18,653,348, the 911 services fund amounted to $75,101, and the Kodiak Fisheries Research Center fund amounted to $11,407,225. 8 (Continued) KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2004 I The total growth (decrease) in net assets for municipal solid waste collection and disposal was $165,763, for the hospital facilities fund was ($3,520,175), for the 911 services fund was $21,008, and for the Kodiak Fisheries Research Center was ($224,509). 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. ■ 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: • The revenue budget for raw fish tax was reduced by $226,405. This shortfall was made up by a use of fund balance. • There were no material changes in the expenditure budget. Differences between the final amended budget and actual can be summarized as follows: • Property taxes were $11 1,277 under budget • Payment in lieu of taxes by the federal government was $105,618 over budget • The Borough Attorney's department was $98.515 under budget ' • The Finance Department was S 1 11,177 under budget ` • Management Information Services was $95,271 under budget • Assessing was $95,226 under budget • Community Development was $78,899 under budget 1 • Economic Development was S70,448 under budget • School District Support was 566,266 over budget 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, 2004, amounted to S 121,569,095 (net of accumulated depreciation). This investment in capital assets includes, land, buildings and improvements, improvements other than buildings, machinery and 9 (Continued) Municipal Solid Hospital 911 Service Kodiak Fisheries Waste Facilities Research Center I I � KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2004 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 $4,085,814 which was mostly due to current year depreciation. The following table displays the capital assets (net of depreciation) for the current year. Additional information on the Kodiak Island Borough's capital assets can be found in note 5 on pages 33 -36 of this report. Governmental Business -type outstanding of $14,385,000. 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. activities 2004 2003 activities 2004 2003 2004 Total 2003 ' Governmental Business -type activities activities Total 2004 2003 2004 2003 2004 2003 , General obligation bonds $ 14,385,000 $ 15,620,000 $ — $ — $ 14,385,000 $ 15,620,000 Artwork $ — $ — $ 16,091 $ 16,091 $ 16,091 $ 16,091 Land 23,187,184 23,022,184 1,661,499 1,661,499 24,848,683 24,683,683 Construction work -in- progress 3,547,859 3,238,544 101,104 69,074 3,648,963 3,307,618 Buildings and improvements 47,103,166 49,269,704 34,599,409 36,099,436 81,702,575 8.5,369,140 Improvements other than buildings 1,695,200 1,995,993 3,238,155 3,412,797 4,933,355 5,408,790 Equipment 501,126 456,279 2,231,114 2,534,932 2,732,240 2,991,211 Infrastructure 2,271,942 2,416,010 — — 2,271,942 2,416,010 Unclassified plant in service — — 1,415,246 1,462,366 1,415,246 1,462,366 $ 78,306,477 $ 80,398,714 $ 43,262,618 $ 45,256,195 $ 121,569,095 $ 125,654,909 ' Additional information on the Kodiak Island Borough's capital assets can be found in note 5 on pages 33 -36 of this report. ' Long -term Debt — At the end of the current fiscal year, the Kodiak Island Borough had total bonded debt outstanding of $14,385,000. 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. , Governmental Business -type activities activities Total 2004 2003 2004 2003 2004 2003 , General obligation bonds $ 14,385,000 $ 15,620,000 $ — $ — $ 14,385,000 $ 15,620,000 EPA loan 10,417 31,250 — — 10,417 31,250 ADEC loans 92,685 97,019 — — 92,685 97,019 Capital lease obligations — — 185,970 502,358 185,970 502,358 Landfill post closure care costs — — 2,7.58,433 2,511,504 2,758,433 2,511,504 Long term interfund borrowings — — 8,421,492 7,130,000 8,421,492 7,130,000 Notes payable — — 1,262,123 1,241,254 1,262,123 1,241,254 , $ 14,488,102 $ 15,748,269 $ 12,628,018 $ 11,385,116 $ 27,116,120 $ 27,133,385 The Kodiak Island Borough's total debt decreased $1,308,757 during the current fiscal year. This decrease was due to principal payments on general obligation bonds and loans. No major long -term debt activity occurred during the year. 10 (Continued) I KODIAK ISLAND BOROUGH Management's Discussion and Analysis June 30, 2004 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, state statutes or the Borough's charter or code. Additional information on the Kodiak Island Borough's long -term debt can be found in note 7 on pages 39 -43 of this report. Economic Factors and Next Year's Budgets and Rates ' • At June 30, 2004, the unemployment rate for the Kodiak Island Borough was 10.6 %, which is 2.9% higher than one year ago. The state's unemployment rate was 7.0% at June 30, 2004. ' • Property tax revenues received are projected to increase in future years as the Kodiak Island Borough's assessed valuation continues to increase. 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. 11 KODIAK ISLAND BOROUGH Statement of Net Assets June 30. 2004 (With summarized financial information for June 30, 2003) See accompanying notes to financial statements, 12 (Continued) I Component Primary Government Unit Total Reporting Entity Governmental Business -type School June 30, June 30, Assets activities activities Total district 2004 2003 Equity in central treasury $ 1,123,592 $ 373,008 $ 1,496,600 $ - $ 1,496,600 $ 1,875,175 Temporary investments 37,495,147 3 41,230,895 - 41,230,895 39,856,802 Other cash and cash equivalents - - - 23,973 23,973 16,175 Due from primary government - - - 4,160,903 4,160,903 3,452.254 Receivables: Accounts and other receivables, net 1,097,588 366,335 1,463,923 178,416 1,642,339 728,861 State of Alaska 382,948 100,000 482,948 1,022,748 1,505,696 1,274,626 Federal Government 6,750 - 6,750 218,836 225,586 620,715 Property taxes, net of allowance of $15,828 372,481 - 372,481 - 372,481 312,928 Inventories - 277,007 277,007 304,012 581,019 600,897 Land sales contracts receivable 50,056 - 50,056 - 50,056 54,325 Capital assets: Not being depreciated 26,735,043 1,778,694 28,513,737 - 28,513,737 28 Being depreciated, net 51,571.434 41,483,924 93.055,358 103.969 93.159,327 97.767,838 Total $ 118,835,039 $ 48.114.716 $ 166,949,755 $ 6,012,857 $ 172,962,612 $ 174.567.988 Liabilities and Net Assets Liabilities: Accounts payable $ 639,781 $ 308,293 $ 948,074 $ 210,351 $ 1,158,425 $ 852,206 Retainages payable 22,270 - 22,270 - 22,270 45,860 Accrued compensation and related liabilities 217,521 26,345 243,866 2,445,881 2,689,747 2,676,540 Other accrued liabilities 230,726 297,554 528,280 - 528,280 413,543 Customer deposits 678 - 678 - 678 678 Deferred revenues 10,814 1,287,776 1,298,590 12,345 1,310,935 139,444 Due to component units 4,160,903 - 4,160,903 - 4,160,903 3,452,254 Internal balances (8,506,892) 81506,892 - - - - Noncurrent liabilities: Due within one year 1,294,859 185,970 1,480,829 250,878 1,731,707 3,092,114 Due in more than one year 13,193.243 4.020.556 17.213,799 119,000 17,332.799 17.363,800 Total liabilities 11,263,903 14,633,386 25,897,289 3,038.455 28,935.744 28,036.439 Net assets: Invested in capital assets, net of related debt 63,818,375 42,000,495 105,818,870 103,969 105,922,839 115,130,929 Unrestricted 43,752.761 (8,519,165) 35.233,596 2,870.433 38.104.029 31,400,620 Net assets 107.571,136 33.481,330 141.052,466 2,974,402 144.026,868 146,531,549 Total $ 118.835.039 $ 48.114,716 $ 166.949.755 $ 6.012.857 $ 172.962.612 $ 174.567,988 See accompanying notes to financial statements, 12 (Continued) I KODIAK ISLAND BOROUGH Statement of Activities Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) General revenues: Property taxes Severance taxes Grants and entitlements not restricted to specific programs 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. 13 Program revenues Operating Charges for grants and Capital Functions/Programs Expenses services contributions grants Primary government: Governmental activities: General government $ 2,626,429 $ 187,898 - Emergency preparedness 51,255 - 37,937 - Community and economic development 536,111 57,177 57,094 - Health and sanitation 370,434 - 69,517 - Education, culture and recreation 217,759 53,838 - - Fire services 336,389 13,735 3,995 - Maintenance and operations 829,046 215,785 - 371,350 Service district maintenance 425,712 20,000 - - Fem Fuller trust 24,500 - 591,967 - Education 10,120,359 - - 18,021 Interest on long -term debt 638,192 - 347,316 - Total governmental activities 16,176,186 548,433 1,107,826 389,371 Business -type activities: Municipal solid waste collection and disposal 3,051,127 3,209,776 - - Hospital facilities 2,669,144 792,224 1,305 - 911 services 80,427 101,435 - - Kodiak fisheries research center 1,800,972 1,559,600 - - Total business -type activities 7,601,670 5 ,663,035 1,305 - Total primary government $ 23,777,856 $ 6,211,468 $ 1,109,131 $ 389,371 Component units: School district $ 30,764,896 $ 262,300 $ 5,710,925 $ - Totals - component units $ 30,764,896 $ 262,300 $ 5,710,925 $ - General revenues: Property taxes Severance taxes Grants and entitlements not restricted to specific programs 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. 13 Net (expense) revenue and changes in net assets Primary Government Component Unit ' Governmental Business -type School Total Reporting Entity activities activities Total district 2004 2003 ' $ (2,438,531) $ - $ (2,438,531) $ - $ (2,438,531) $ (2,567,546) (13,318) - (13,318) - (13,318) (26,242) (421,840) (421,840) (421,840) (389,194) ' (300,917) _ (300,917) _ (300,917) (325,270) (163,921) (163,921) (163,921) (123,731) (318,659) - (318,659) - (318,659) (285,527) (241,911) (241,911) (241,911) (46,631) (405,712) _ (405,712) _ (405,712) (158,470) 567,467 567,467 567,467 (10,102,338) - (10,102,338) - (10,102,338) (9,861,012) (290,876) (290,876) (290,876) (373,022) ' (14,130,556) _ (14,130,556) _ (14,130,556) (14,156,645) ' - 158,649 158,649 - 158,649 (125,551) - (1,875,615) (1,875,615) - (1,875,615) (528,763) - 21,008 21,008 - 21,008 (2,497) (241,372) (241,372) (241,372) (260,769) ' _ (1,937,330) (1,937,330) _ (1,937,330) (917,580) (14,130,556) (1,937,330) (16,067,886) - (16,067,886) (15,074,225) (24,791,671) (24,791,671) (25,327,323) (24,791,671) (24,791,671) (25,327,323) 8,016,323 - 8,016,323 - 8,016,323 8,244,465 799,693 799,693 - 799,693 702,065 2,461,527 = 2,461,527 17,630,325 20,091,852 20,042,313 1,004,215 23,977 1,028,192 170 1,028,362 1,533,923 - - - 7,995,040 7,995,040 7,581,989 227,774 - 227,774 195,832 423,606 411,278 ' 1,644,560 (1,644,560) 14,154,092 (1,620,583) 12,533,509 25,821,367 38,354,876 38,516,033 ' 23,536 (3,557,913) (3,534,377) 1,029,696 (2,504,681) (1,885,515) 107,547,600 37,039,243 144,586,843 1,944,706 146,531,549 148,417,064 ' $ 107,571,136 $ 33,481,330 $ 141,052,466 $ 2,974,402 $ 144,026,868 $ 146,531,549 14 KODIAK ISLAND BOROUGH Balance Sheet Governmental Funds June 30, 2004 (With summarized financial infonnation for June 30, 2003) See accompanying notes to financial statements. 15 (Continued) Education Other and governmental Totals Assets General Facilities health funds _TM4 2003 Assets: Equity in central treasury $ 126,862 $ - $ 41,725 $ 955,005 $ 1,123,592 $ 1,490,499 Temporary investments 6,062,128 28,837,227 - 2,545,792 37,495,147 36,793,346 Receivables: - - Accounts and other receivables, net 207,896 270,058 - 619,634 1,097,588 403,263 State of Alaska 43,140 - - 339,308 382,948 253,656 Federal Government - - - 6,750 6,750 388,413 Property taxes, net of allowance of $15,828 354,652 - - 17,329 372,481 312,923 Land sales contracts - - - 50,056 50,056 54,325 Due from other funds 34,267 120,312 - 585,050 739,629 1,795,790 Advances to other funds 3,421.492 - 8,421,492 7,130,000 Total $ 6,828.945 $ 37,699,089 $ 41.725 $ 5,119,924 $ 49,689.683 $ 43.622,220 Liabilities and Fund Balances Liabilities: Borrowings from central treasury $ - $ - $ - $ - $ - $ - Accounts payable 230,602 - 7,810 401,369 639,731 402,470 Retainages payable - - - 22,270 22,270 45,360 Accrued compensation and related liabilities 12,904 - - 156 13,060 7,794 Customer deposits - - - 678 678 678 Deferred revenues 265,646 120,313 - 659,782 1,045,741 331,161 Due to component unit 4,160,903 - - - 4,160,903 3,452,254 Due to other funds 49,394 34,267 - 570,568 654,229 1,371,064 Total liabilities 4,719.449 154,580 7,810 1,654,323 6.536,662 5.611,281 Fund balances: Reserved: Long-term interfund borrowings - 8,421,492 - - 8,421,492 6,875,000 Unreserved: General fund: Designated for subsequent year expenditures 768,207 - - - 768,207 - Undesigtated 1,341,289 - 1,341,289 1,804,112 Special revenue funds: Designated for self- insurance - - - - - 100,000 Designated for subsequent year expenditures - - 256,860 256,860 334,950 Undesie ated - 29,123,017 2,413,629 31,536,646 33,337,379 Debt service funds: Undesignated - - 33,915 153,409 192,324 176,288 Capital projects funds: Undesignated - 636,203 636,203 383,210 Total fund balances 2,109.496 37,544,509 33,915 3.465,101 43.153,021 43,010,939 Total $ 6.828,945 $ 37,699,039 $ 41,725 $ 5.119,924 $ 49,689,683 $ 48,622,220 See accompanying notes to financial statements. 15 (Continued) KODIAK ISLAND BOROUGH ' Reconciliation of Net Assets Between the Government -wide and Fund Financial Statements Year ended June 30, 2004 Amount reported as fund balance on the governmental funds balance sheet $ 43,153,021 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. 78,306,477 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 $ 254,832 Accrued interest income 138,072 ' Note receivable 591,967 Land sales contracts 50,056 1,034,927 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 (14,385,000) ' ADEC loans (92,685) EPA loan payable (10,417) Accrued interest expense (230,726) Compensated absences (204,461) (14,923,289) Net assets of governmental activities $ 107,571,136 ' See accompanying notes to the financial statements. Ll 1 16 KODIAK ISLAND BOROUGH Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Year ended June 30, 2004 (With sunvnarized financial infommtion for the 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 Fein Fuller trust 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. 17 Education Other and governmental Totals General Facilities health funds 2004 2003 $ 7,365,633 $ - $ - $ 650,690 $ 8,016,323 $ 7,989,633 822,585 - 798,412 500,423 2,121,420 3,514,530 1,187,846 - - 57,491 1,245,337 1,232,713 - - - 9,206 9,206 11,851,864 799,693 - - - 799,693 702,065 187,898 - - 577,015 764,913 335,239 - - 720 222,117 222,837 60,126 105,812 723.910 36,421 866,143 1,823,641 10,469,467 723,910 799.132 2,053,363 14,045.872 27,509.811 2,092,043 - 26,123 - 2,118,166 4,600,274 - - - 864,703 864,703 260,120 5,129 - - 43,626 48,755 22,369 375,391 - - 160,720 536,111 444,460 257,037 - - 74,847 331,884 784,730 163,487 - - 54,272 217,759 205,866 - - - 567,094 567,094 606,724 - - - 425,712 425,712 190,058 7,721,706 - - - 7,721,706 7,251,840 - 24,500 24,500 - - - - 131,324 131,324 372,122 - - - 656,423 656,423 656,083 - - 1,260,167 - 1,260,167 1,145,061 - - 644,046 - 644,046 783,524 43,509 10,614,793 1,930,336 3,003,221 15,548,350 17,366,740 (145,326) 723,910 (1,131304) (949,858) (1,502,478) 10,143.071 - - - - - 3,075,000 - - - - - (3,068,781) 850,000 - 1,147,240 1,608,374 3,605,614 2,915,644 (399390) (1,294,984) (266,780) (1,961,054) (2,691,304) 450.710 (1,294,984) 1,147,240 1,341,594 1,644,560 230,559 305,384 (571,074) 16,036 391,736 142,082 10,373,630 1,804,112 38,115.583 17,879 3,073,365 43,010.939 32,637,309 $ 2.109,496 $ 37,544,509 $ 33,915 $ 3,465,101 $ 43,153,021 $ 43.010,939 17 1 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, 2004 Net change in fund balance — total governmental funds $ 142,082 ' 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 $ 898,763 Depreciation expense (2,991,000) (2,092,237) Revenues in the statement of activities that do not provide current ' current financial resources and are deferred in the funds: Change in interest income accrual 138,072 Donations 591,967 730,039 Revenues in the funds that were earned in a prior year and provide current financial resources: Land sale proceeds (4,269) 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 expense accrual 5,854 Principal repayments 1,260,167 1,266,021 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 (18,100) Change in net assets of governmental activities $ 23,536 See accompanying notes to the financial statements. m See accompanying notes to financial statements. 19 1 KODIAK ISLAND BOROUGH Balance Sheet Proprietary Funds - Business -type Activities - Enterprise Funds June 30, 2004 (With summarized financial information for June 30, 2003) Municipal Kodiak Other ' solid waste fisheries Nonmajor collection and Hospital research Enterprise Totals Assets disposal facilities center Fund _004 y Current assets: Equity in central treasury $ - $ 171,304 $ 92,394 $ 109,310 $ 373,008 $ 384,676 Temporary investments 1,645,590 - 2,090,158 - 3,735,748 3,063,456 Accrued interest receivable - - 25,694 - 25,694 23,233 Customer receivables 303,423 - - 37,218 340,641 233,613 Due from other funds 321,420 96,092 8,492 - 426,004 Accounts receivable - State of Alaska 100,000 - - - 100,000 144.224 ' Total current assets 2,370,433 267,396 2,216,738 146,528 5,001,095 3,849,202 Inventories - 277,007 - - 277,007 277,007 Capital assets, net 5,535,054 21,424,343 16,303,221 - 43,262,618 45,256,195 Total $ 7,905,487 $ 21,968,746 $ 18,519,959 $ 146,528 $ 48,540,720 $ 49,382,404 ' Liabilities and Fund Equities Current liabilities: Accounts payable $ 201,449 $ 160 $ 35,257 $ 71,427 $ 308,293 $ 274,763 Deferred revenue - 1,287,776 - - 1,287,776 55,247 Accrued compensation and related liabilities 17,407 - 8,938 - 26,345 26,346 Other accrued liabilities 224,327 - 73,227 - 297,554 176,963 Current portion of capital lease obligations - 185,970 - - 185,970 312,164 Current portion of advances from other fund - 55,670 275,000 - 330,670 255,000 Due to other funds 96,092 295.000 120,312 - 511,404 424,726 Total current liabilities 539,275 1,824,576 512,734 71,427 2,948,012 1,525,209 Noncurrent liabilities: Notes payable 1,262,123 - - - 1,262,123 1,241,254 Capital lease obligations - - - - - 190,194 Advances from other fund - 1,490,822 6,600,000 - 8,090,822 6,875,000 ' Accrual for landfill closure and postclosure costs 2.758,433 - - - 2,758,433 2,511,504 Total liabilities 4,559,831 3,315,398 7,112,734 71,427 15,059,390 12,343.161 Fund equities: , Invested in capital assets, net of related debt 4,272,931 21,238,373 16,303,221 - 41,814,525 43,512,583 Unrestricted (927.275) (2,585,025) (4,895,996) 75,101 (8,333,195) (6,473.340) Total fund equities 3,345,656 18.653.348 11,407.225 75,101 33,481,330 37,039.243 Total $ 7,905,487 $ 21,968.746 $ 18,519,959 $ 146,528 $ 48,540,720 $ 49,382,404 See accompanying notes to financial statements. 19 1 I I E� 1 1 20 KODIAK ISLAND BOROUGH Statement of Revenues, Expenses, and Changes in Fund Equity Proprietary Funds - Business -type Activities - Enterprise Funds Year ended June 30, 2004 (With summarized financial information for the year ended June 30. 2003) Municipal Kodiak Other Solid Waste Fisheries Nonmajor Collection and Hospital Research Enterprise Totals Disposal Facilities Center Fund 2004 ZUO3 Operating revenues: Solid waste collection $ 2,251,245 $ $ $ $ 2,251,245 $ 1,734,541 Solid waste disposal 951,789 - - - 951,789 1,003,484 Rents & Royalties - - 1,559,600 - 1,559,600 1,538,963 State sources - revenue sharing - - - - - 39,084 Charges for services/customer charges - - 101,435 101,435 68,003 Lease income 792,224 = 792,224 720,000 Donations 1,305 1,305 56,423 Other 6.742 - 6.742 104.076 Total operating revenues 3,209,776 793,529 1,559,600 101,435 5,664,340 5,264584 ' Operating expenses: Personnel services 497,113 7,002 155,677 9,000 668,792 614,233 Employee Benefits - - 45,445 - 45,445 41,292 Solid waste collection 1,324,943 - - - 1,324,943 1,309,314 Refuse disposal 230,639 - - - 230,639 284,590 Contracted services 152,837 (7,977) 35,079 - 179,939 196,323 Repairs and maintenance 27,909 28,398 253,025 309,332 252,683 ' Landfill closure and postclosure costs 246,929 246,929 218,603 Depreciation 259,300 1,261,302 745,259 2,266,361 2,202,638 General and administration 189,442 - - - 139,442 193,233 Miscellaneous - - 80,774 - 90,774 83,133 Telephone services - - 71,427 71,427 60,000 Recycling services 68,506 _ 68,506 98,067 Contributions 5.445 5,445 4.020 Total operating expenses 3,003,563 1.233,725 1,315,259 30,427 5.637.974 5,568,734 Operating income (loss) 206.213 (495.196) 244,341 21,009 (23.634) (304.200) Noo revenues (expenses): Loss disposal of fixed assets - - (2.171) ss on on Contributions to the State of Alaska - (1.170,000) - - (1,170,000) 71 Contributions to Providence Hospital - (130,000) - - (130,000) - Investment income 7,114 - 16,363 - 23,977 102,546 Interest expense (47,564) (30.419) (435,713) - (613,696) (611,209) I Income (loss) before transfers out and capital contributions 165,763 (1,375,615) (224,509) 21,003 (1,913,353) (815.034) Transfers out (1,644,560) - - (1,644,560) (224,340) Capital contributions - - - - - 2,476,412 Change in fund equity 165,763 (3,520,175) (224,509) 21,003 (3,557,913) 1,437,038 Fund equity, at beginning of year 3,179.893 22.173,523 11,631,734 54,093 37.039,243 35,602,205 Fund equity, at end of year $ 3,345,656 $ 13,653,348 $ 11,407.225 $ 75,101 $ 33,481,330 $ 37,039,243 ' See accompanying notes to financial statements. I I E� 1 1 20 See accompanying notes to financial statements. 1 KODIAK ISLAND BOROUGH Statement of Cash Flows Proprietary Funds - Business -type Activities - Enterprise Funds Year ended June 30, 2004 (With sutmnarized financial information for the year ended June 30, 2003) Municipal Solid Waste Kodiak Fisheries Other Norimajor Collection and Hospital Research Enterprise Totals Disposal Facilities Center Fund 4 Cash flows from operating activities Cash received from customers $ 3,123,991 $ 825,529 $ 1,520,328 $ 64,217 $ 5,534,065 $ 5,224,841 Payments to suppliers (1,952,706) (117,755) (283,429) - (2,353,890) (2,304,812) Payments to employees (497,114) (7,002) (201,122) (9,000) (714,238) (655,575) Internal activity- payments to/from other funds (422.359) (104) (12.955) - (435,418) 195,751 Net cash provided by operating activities 251.812 700,668 1.022.822 55.217 2.030,519 2.460.205 Cash flows from noncapital financing activities: from treasury 96,092 - - - 96,092 - Borrowing central Subsidy from State of Alaska - - - - - - (1.644.560) (5,140) (224.340) Transfers out - (1,644.560) Net cash used for noncapital financing activies 96,092 (1,644.560) - - (1.548,468) (229,480) Cash flows from capital and related financing activities: (238,286) (34,489) (9) - (272,734) (196,304) Acquisition and construction of capital assets Interest paid on notes payable, capital leases, and interfund - (30,419) (485,713) - (566,132) (564,041) borrowing Proceeds from long -term interfund borrowing - 1,600,000 - - 1,600,000 Principal payments on long -term interfund borrowing - (53.508) (255,000) - (308,508) (240,000) Proceeds from issuance of notes payable 20,869 - - - - - 20,869 (669.967) ' Principal payments on notes payable - - - - (316.388) (294,948) Principal payments on capital lease obligation - (316.388) Net cash used for capital and related financing activities (217,417) 1,115,196 (740,722) - 157.057 (1,965.260) Cash flows from investing activities Interest and dividends on investments 11,843 - 9,668 - 21,516 93,111 Net increase (decrease) in investments (299,012) (373,280) - (672.292) (1.130.661) Net cash provided by (used for) investing activities (237,164) - (363.612) - (650,776) (1.037.550) Net change in cash and cash equivalents (156,677) 171,304 (81,512) 55,217 (11,668) (772.085) Cash and equivalents, at beginning of year 156.677 - 173,906 54.093 384.676 1,156.761 Cash and equivalents, at the end of year $ - $ 171.304 $ 92,394 $ 109.310 $ 373,008 $ 384.676 See accompanying notes to financial statements. 1 See accompanying notes to financial statements. KODIAK ISLAND BOROUGH Statement of Cash Flows Proprietary Funds - Business -type Activities - Enterprise Funds Year ended June 30. 2004 (With summarized financial information for the year ended June 30, 2003) Municipal Kodiak Other Solid Waste Fisheries Nonmajor Collection and Hospital Research Enterprise Totals Disposal Facilities Center Fund - 1 504 ZUO3 Reconciliation of operating income to net cash provided by operating activities: Operating income (loss) $ 206,213 $ (495,196) $ 244,341 $ 21,008 $ (23,634) $ (304,200) Adjustments to reconcile operating income to net cash provided by operating activities: Subsidy from State of Alaska — — — — — 5,140 Depreciation 259,800 1,261,302 745,259 — 2,266,361 2,202,638 Noncash lease income — (72,224) — — (72,224) — Changes in assets and liabilities: Customer receivables (85,785) 44,224 15,975 (37,218) (62,804) 113,150 Accounts receivable - State of Alaska — — — — — (44,224) Due to /from other funds (422,359) (104) (12,955) — (435,418) 195,751 Accounts payable 47,015 (97,334) 12,422 71,427 33,530 112,790 Deferred revenues — 60,000 (55,247) — 4,753 (43,498) Accrual for landfill closure and postclosure costs 246,929 — — — 246,929 218,603 Accrued compensation and related liabilities (1) — — — (1) — Other accrued liabilities 73,027 73,027 9.055 Net cash provided by operating activities $ 251,812 $ 700,668 $ 1,022.822 $ 55,217 $ 2.030,519 $ 2,460.205 Noncash capital and related financing activities: Interest $ 47,504 $ — $ — $ — $ 47,504 $ 47,168 Capital contributions — — — — — 2,476,412 Loss on disposal of fixed assets — — — — — (2,171) $ 47,504 $ $ $ — $ 47,504 $ 2,521,409 See accompanying notes to financial statements. KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (1) Summary of Significant Accounting Policies (a) Reporting Entity The Kodiak Island Borough (the Borough), Alaska, was organized to perform the municipal duties allowed by Alaska Statutes and as directed by its residents. As required by accounting principles generally accepted in the United States of America, these financial statements present the government and its component unit, an entity for which the government is considered to be financially accountable. The discretely presented component unit is reported in a separate column in 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 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. 23 (Continued) 1 i I E1 KODIAK ISLAND BOROUGH 1 Notes to Financial Statements June 30, 2004 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. (c) Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements ' have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon ' as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 ' days of the end of the current fiscal period except for grant revenues which are recognized when the related expenditure is incurred irrespective of when the cash is received. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. ' Property taxes and interest associated with the current fiscal period are all considered to be susceptible to accrual and 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 ficnd 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. 1 The facilities ficnd 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. 1 The debt service — education and health ficnd 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 find accounts for the collection and disposal of solid waste and recycling services for the Kodiak Island Borough. 1 24 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 The hospital facilities ficnd accounts for rents on the Borough -owned hospital; hospital related state revenue sharing; and other hospital related revenue. In turn, it purchases hospital equipment and makes debt service payments on hospital related debt. The Kodiak Fisheries Research Center fund accounts for rents and expenses on the Borough -owned Kodiak Fisheries Research Center. The three tenants: NOAA, Alaska Department of Fish & Game and University of Alaska, Fairbanks pay lease funds to participate in this multi- agency research facility committed to the preservation of the North Pacific marine ecosystem and resources. 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. 25 (Continued) u u 1 t � I iJ KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 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 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 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 interfund loans) or "advances to /from other funds" (i.e., the noncurrent 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 1 of net assets. Advances between funds, as reported in the fund financial statements, are offset by a fund balance 1 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 19), are required to be returned to the Borough at the termination of the lease in at least equal value. 26 (Continued) t KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 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 including those acquired prior to fiscal years ended after June 30, 1980), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the Borough as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the assets constructed. There was no interest capitalized during the year. Property, plant, and equipment of the primary government is depreciated using the straight line method over the following estimated useful lives: Buildings and improvements 10-40 years Improvements other than buildings 10 -15 years Equipment 5 -10 years Infrastructure 40 years 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 27 (Continued) t I u I I I t F1 ri KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 sources while discounts on debt issuances are reported as other financing uses. Issuance costs, ' whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Interest on long -term obligations is recorded as an expenditure when due. ' 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. 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 the fiscal year in which they become measurable and available. Intergovernmental Revenue State - shared revenues, safe communities, State - education related entitlement programs and State- levied taxes, the proceeds of which are distributed to local governments, are recorded in the fiscal year to which they relate, including accrual at year end if final payments due are measurable and received within approximately two months after year end. 28 (Continued) t KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 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. 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. (1) 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. r� t F1 t t 29 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (2) Stewardship, Compliance, and Accountability (a) Excess of Expenditures /Expenses Over Appropriations /Budgets General Fund The following department expenditures exceeded their appropriations: Department _ School district support $ 66,266 Building official 1,744 Health and Sanitation 16,853 $ 84,863 Enterprise Funds The following fund expenses exceeded their budget: Fund Municipal Solid Waste Collection and Disposal 911 Services Hospital Facilities Special Revenue Funds The following fund expenses exceeded their budget: Fund Coastal Management L.E.P.C. Women's Bay Road Service Area Service District No. 1 Bay View Road Service Area Women's Bay Fire Department Kodiak Art Council Excess Excess $ 190,573 11,427 128,125 $ 330,125 Excess 18,999 11,369 51,458 15,477 8,249 80,630 622 $ 186,804 30 (Continued) 1 KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (b) Fund Deficits and Accumulated Deficits The fund deficits and accumulated deficits at June 30, 2004, are as follows: Capital Project Funds: School Bond Capital Projects $ 98,083 State Capital Grants 59,845 Management intends to fund the School Bond Capital Projects Fund deficit with future bond proceeds. Management intends to fund the State Capital Grants Fund deficit in fiscal year 2005 through transfers. (3) Cash and Investments (a) Deposits At June 30, 2004, the carrying amount of the Borough deposits was $1,496,600 and the corresponding bank balance was $1,752,591. 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 $1,652,591. Collateral, in the amount of $12,636,689, is held by State Street Bond & Trust Co., 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, 2004, the Borough's investment balances were categorized as follows: Carrying amount Investments — category 1: U.S. government securities $ 32,075,338 Investments — not categorized: Alaska Municipal League Investment Pool 9,155,557 Total investments $ 41,230,895 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 0 t J 31 (Continued) I KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 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 in the pool are reviewed for fair value by an independent pricing service. As of June 30, 2004 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, 2004: Equity in central treasury Temporary investments 1,496,600 41,230,895 42,727,495 Total primary government $ (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. 32 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (5) Capital Assets Capital asset activity for the year ended June 30, 2004 was as follows: Beginning Governmental activities: Capital assets, not being depreciated: Land Construction work -in- progress Total Capital assets, being depreciated: Buildings and improvements Improvements other than buildings Equipment Infrastructure Total Less accumulated depreciation for: Buildings and improvements Improvements other than buildings Equipment Infrastructure Total Total capital assets being depreciated Total governmental activities, net Ending Decrease balance $ 23,022,184 $ 165,000 $ — $ 23,187,184 3,238,544 309,315 — 3,547,859 26,260,728 474,315 — 26,735,043 90,437,816 141,785 — 90,579,601 3,964,683 — — 3,964,683 1,737,105 282,663 (17,200) 2,002,568 5,762,722 — — 5,762,722 101,902,326 424,448 (17,200) 102,309,574 41,168,112 2,308,323 — 43,476,435 1,968,690 300,793 — 2,269,483 1,280,826 237,816 (17,200) 1,501,442 3,346,712 144,068 — 3,490,780 47,764,340 2,991,000 (17,200) 50,738,140 54,137,986 (2,566,552) — 51,571,434 $ 80,398,714 $ (2,092,237) $ — $ 78,306,477 33 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 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 Ending balance Increase Decrease balance $ 1,651,248 $ - $ - $ 1,651,248 - 22,358 - 22,358 1,651,248 22,358 - 1,673,606 2,178,733 - - 2,178,733 2,288,438 - - 2,288,438 1,061,368 215,928 - 1,277,296 5,528,539 215,928 - 5,744,467 716,367 47,120 - 763,487 88,872 128,014 - 216,886 817,980 84,666 - 902,646 1,623,219 259,800 - 1,883,019 3,905,320 (43,872) - 3,861,448 $ 5,556,568 $ (21,514) $ - $ 5,535,054 $ 16,091 $ - $ - $ 16,091 10,251 - - 10,251 69,074 9,672 - 78,746 95,416 9,672 - 105,088 27,131,043 - - 27,131,043 401,046 - - 401,046 4,807,144 24,817 - 4,831,961 32,339,233 24,817 - 32,364,050 6,495,207 905,346 - 7,400,553 74,485 12,561 - 87,046 3,213,801 343,395 - 3,557,196 9,783,493 1,261,302 - 11,044,795 $ 22,651,156 $ (1,226,813) $ - $ 21,424,343 34 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 35 (Continued) Beginning Ending balance Increase Decrease balance Kodiak Fisheries Research Center Fund Capital assets, being depreciated: Buildings $ 17,840,410 $ — $ — $ 17,840,410 Improvements other than buildings 1,021,998 — — 1,021,998 Machinery and equipment 1,157,531 9 — 1,157,540 Total 20,019,939 9 — 20,019,948 Less accumulated depreciation for: Buildings 2,376,800 594,681 — 2,971,481 Improvements other than buildings 136,267 34,067 — 170,334 Machinery and equipment 458,401 116,511 — 574,912 Total 2,971,468 745,259 — 3,716,727 Total Kodiak Fisheries Research Center Fund, net $ 17,048,471 $ (745,250) $ — $ 16,303,221 Beginning Ending balance Increase Decrease balance Total business -type activities: Capital assets, not being depreciated: Artwork $ 16,091 $ — $ — $ 16,091 Land 1,661,499 — — 1,661,499 Construction work -in- process 69,074 32,030 — 101,104 Total 1,746,664 32,030 — 1,778,694 Capital assets, being depreciated: Unclassified utility plant in service 2,178,733 — — 2,178,733 Buildings 44,971,443 — — 44,971,443 Improvements other than buildings 3,712,421 — — 3,712,421 Machinery and equipment 7,025,115 240,754 — 7,265,869 Total 57,887,712 240,754 — 58,128,466 Less accumulated depreciation for: Unclassified utility plant in service 716,367 47,120 — 763,487 Buildings 8,872,007 1,500,027 — 10,372,034 Improvements other than buildings 299,624 174,642 — 474,266 Machinery and equipment 4,490,183 544,572 — 5,034,755 Total 14,378,181 2,266,361 — 16,644,542 Total capital assets being depreciated, net 43,509,531 (2,025,607) — 41,483,924 Total business -type activities, net $ 45,256,195 $ (1,993,577) $ — $ 43,262,618 35 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 Depreciation expense was charged to the departments and functions of the primary government as follows: Governmental activities: General government School district support Fire services Health and sanitation Emergency preparedness Total — governmental activities Business -type activities: Municipal solid waste collection and disposal Hospital facilities Kodiak fisheries research center Total — business -type activities Total $ 497,663 2,398,653 53,634 38,550 2,500 2,991,000 259,800 1,261,302 745,259 2,266,361 $ 5,257,361 Expenditure qualify 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. 36 (Continued) (6) Interfund Receivables, Payables and Transfers (a) Interfund Receivables and Payables Interfund receivables and payables at June 30, 2004 consisted of the balances of short -term interfund loans all of which are expected to be paid within one year. A summary of interfund receivables and payables at June 30, 2004, is as follows: ' Receivable Payable General Fund $ 34,267 $ 49,394 ' Facilities Fund 120,312 34,267 Nonmajor governmental funds 585,050 570,568 Major enterprise funds: Municipal Solid Waste Collection and Disposal Fund 321,420 96,092 ' Hospital Enterprise Fund 96,092 295,000 Kodiak Fisheries Research Center Fund 8,492 120,312 $ 1,165,633 $ 1,165,633 36 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (b) Long -Term Interfund Borrowings In October 1997 the Facilities Special Revenue Fund loaned $8,000,000 to the Kodiak Fisheries Research Center Enterprise Fund. 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 for as a long -term interfund borrowing. The advance bears interest at 7 %, and the scheduled payments for the next five fiscal years ended and thereafter are as follows: In July 2003, the Facilities Special Revenues Fund loaned $1,600,000 to the Hospital Fund in order to help fund current operations. The loan from the Facilities Special Revenue Fund is accounted for as a long -term interfund advance, while the liability in the Hospital Facilities Enterprise Fund is accounted for as a long -term interfund borrowing. The advance bears interest at 7 %, and the scheduled payments for the next five fiscal years ended and thereafter are as follows: Principal Interest Year ending June 30: 2005 2006 2007 2008 2009 2010 -2014 2015 -2019 2020 -2024 Total $ 55,670 $ Principal Interest Total Year ending June 30: 116,978 60,259 56,720 2005 $ 275,000 $ 471,625 $ 746,625 2006 290,000 451,850 741,850 2007 315,000 430,675 745,675 2008 335,000 407,925 742,925 2009 360,000 383,600 743,600 2010 -2014 2,205,000 1,489,245 3,694,245 2015 -2019 3,095,000 570,675 3,665,675 $ 6,875,000 $ 4,205,595 $ 11,080,595 In July 2003, the Facilities Special Revenues Fund loaned $1,600,000 to the Hospital Fund in order to help fund current operations. The loan from the Facilities Special Revenue Fund is accounted for as a long -term interfund advance, while the liability in the Hospital Facilities Enterprise Fund is accounted for as a long -term interfund borrowing. The advance bears interest at 7 %, and the scheduled payments for the next five fiscal years ended and thereafter are as follows: Principal Interest Year ending June 30: 2005 2006 2007 2008 2009 2010 -2014 2015 -2019 2020 -2024 Total $ 55,670 $ 61,308 $ 116,978 57,919 59,059 116,978 60,259 56,720 116,979 62,693 54,285 116,978 65,226 51,752 116,978 367,852 217,039 584,891 448,412 136,482 584,894 428,461 39,452 467,913 $ 1,546,492 $ 676,097 $ 2,222,589 (c) Transfers Interfund transfers been made in accordance with budget ordinances. I 37 (Continued) I I A summary of significant transfers are as follows: • The Hospital Enterprise Fund transferred $394,600 to the debt service fund to pay for debt service on hospital related debt. ' • The Facilities Special Revenue Fund transferred $268,540 to the Building and Grounds Special Revenue Fund to pay for building insurance. ' • The Facilities Special Revenue Fund transferred $404,060 to the Debt Service Fund for debt service on hospital bonds. • The General Fund transferred $348,620 to the debt service fund to pay for debt service on general government debt. • The Hospital Enterprise Fund transferred $650,000 to the Land Sales Fund and $600,000 to ' the General Fund to pay off what was previously borrowed to help find cost of litigation. • The Facilities Special Revenue Fund transferred $622,384 to the Capital Projects Fund for the interest earned on sale of Shuyak Island. ' • The Buildings and Grounds Special Revenue Fund transferred $200,000 to the General Fund to pay off what was previously borrowed for daily operations. 1 38 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (c) Transfers ' Interfund transfers been in accordance with budget ordinances. made 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, 2004, were as follows: Education Nonmajor Transfers General and health governmental out fund fund funds Fund Types: — General fund $ 399,290 $ $ 348,620 $ 50,670 Facility fund 1,294,984 — 404,060 890,924 Education and health fund — — — — Non -mojor governmental funds 266,780 250,000 — 16,780 Major enterprise fund: ' Hospital 1,664,560 600,000 394,560 650,000 Total transfers $ 3,625,614 $ 850,000 $ 1,147,240 $ 1,608,374 A summary of significant transfers are as follows: • The Hospital Enterprise Fund transferred $394,600 to the debt service fund to pay for debt service on hospital related debt. ' • The Facilities Special Revenue Fund transferred $268,540 to the Building and Grounds Special Revenue Fund to pay for building insurance. ' • The Facilities Special Revenue Fund transferred $404,060 to the Debt Service Fund for debt service on hospital bonds. • The General Fund transferred $348,620 to the debt service fund to pay for debt service on general government debt. • The Hospital Enterprise Fund transferred $650,000 to the Land Sales Fund and $600,000 to ' the General Fund to pay off what was previously borrowed to help find cost of litigation. • The Facilities Special Revenue Fund transferred $622,384 to the Capital Projects Fund for the interest earned on sale of Shuyak Island. ' • The Buildings and Grounds Special Revenue Fund transferred $200,000 to the General Fund to pay off what was previously borrowed for daily operations. 1 38 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (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: Type of debt Environmental protection agency asbestos abatement loan General obligation bonds - 1993 Series General obligation bonds - 1998 Series General obligation bonds - 2000 E Series General obligation bonds - 2000 F Series General Obligation bonds - 2003 A Series ADEC loans Clean water- Karluk Interest Princi al aym ents Rates aces Issue date 0.0% * 6/20/1985 3.90 -7.00% 8/15-2/15 11/15/1993 3.25-4.30% 8/15-2115 12/22/1998 4.75 -5.0% 8/1 -2/1 12/1212000 6.9 -9.0% 3/12/1 12/12/2000 2.00- 2.625% 8/15-2115 4/9/2003 3.92 -4.05% ** ** $ 14,488,102 * 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 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 are to be repaid from general fund revenues of the Borough, and therefore the debt is reported in die General Long -Term Debt Account Group. Interest begins accruing at the stated rates from the date of each individual disbursement of loan proceeds to the Borough. 39 (Continued) Princi al aym ents Maturity dates Dates mount 12/31/2004 12/31/2004 $ 10,417 2/15/2004 - 2/15/2014 2/15/2005 55,000 2/15/2006 60,000 2115/2007 60,000 2/15/2008 1,150,000 2/15/2009 1,200,000 2/15/2010 1,250,000 2/15/2011 1,305,000 2/15/2012 1,360,000 2/15/2013 1,420,000 2/150-014 1,480,000 9,340,000 2/1/2011 2/1/2005 135,000 2/1/2006 145,000 2/1/2007 150,000 2/1/2008 160,000 2/1/2009 165,000 2/1/2010 175,000 2/1/2011 180,000 1,110,000 211/2011 2/1/2005 105,000 2/1/2006 110,000 2/1/2007 120,000 2/1/2008 130,000 2/1/2009 140,000 2/1/2010 150,000 211/2011 160,000 915,000 8/15/2007 2/15/2005 985,000 2/15/2006 1,005,000 2/15/2007 1,030,000 3,020,000 ** 6/1/2005 4,442 6/1/2006 4,553 6/1/2007 4,667 6/1/2008 4,784 6/1/2009 4,903 6/1/2010 5,026 6/112011 5,152 6/1/2012 5,280 6/1/2013 5,412 6/1/2014 5,543 6/1/2015 5,686 6/1/2016 5,829 6/1/2017 5,974 6/1/2018 6.124 6/1/2019 6.277 6/1/2020 6,434 6/1/2021 6.594 $ 14,488,102 * 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 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 are to be repaid from general fund revenues of the Borough, and therefore the debt is reported in die General Long -Term Debt Account Group. Interest begins accruing at the stated rates from the date of each individual disbursement of loan proceeds to the Borough. 39 (Continued) Authorized Prior years Balance at Retired/ Balance at iscal year Amount Issued Retired July 1, 2003 Issued Refunded June 30, 2004 1985 $ 375,000 $ 375,000 $ 343,750 $ 31,250 $ — $ 20,833 $ 10,417 1994 9,215,000 9,215,000 8,315,000 900,000 — 900,000 — 1999 9,740,000 9,740,000 345,000 9,395,000 2001 1,435,000 1,485,000 245,000 1,240,000 2001 1,175,000 1,175,000 2003 3,075,000 3,075,000 175,000 1,010,000 3,075,000 55,000 9,340,000 130,000 1,110,000 95,000 915,000 55,000 3,020,000 1998 400,000 105.273 3.254 97,019 — 4,334 92.685 $ 25,465.000 $ 25.170.273 $ 9.432.004 $ 15.743,269 $ $ 1.260,167 $ 14.483,102 40 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 The annual requirements to amortize all general obligation bonded debt and the EPA and ADEC loans payable outstanding as of June 30, 2004, are as follows: The amount of $33,915 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. (b) 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, 2004, is approximately $1,449,000. Accumulated amortization on the leased equipment is approximately $751,000 at June 30, 2004. The minimum required lease payments under the capital leases for the next three fiscal years ended are as follows: Year ending June 30: 2005 $ 194,446 Less amount representing interest (8,476) $ 185,970 (c) Note Payable As of June' 0, 2004, 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 $ 1,262,123 41 (Continued) General EPA Loans ADEC obligation payable loan payable Interest Total Year ending June 30: 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 1,505,000 — 4,903 404,461 1,509,903 2010 -2014 7,480,000 — 26,418 971,519 7,506,418 2015 -2019 — — 29,890 3,907 29,890 2020 -2022 — — 13,028 491 13,028 $ 14,385,000 $ 10,417 $ 92,685 $ 3,522,126 $ 14,488,102 The amount of $33,915 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. (b) 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, 2004, is approximately $1,449,000. Accumulated amortization on the leased equipment is approximately $751,000 at June 30, 2004. The minimum required lease payments under the capital leases for the next three fiscal years ended are as follows: Year ending June 30: 2005 $ 194,446 Less amount representing interest (8,476) $ 185,970 (c) Note Payable As of June' 0, 2004, 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 $ 1,262,123 41 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (d) 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 $2,758,433 as of June 30, 2004, which is based on 77% 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, 2004, an increase of $246,929 was recorded in the current year based on current year usage and changes in estimates. An estimated additional $823,948 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 $3,582,381 is based on the amount that would be paid if the landfill were closed as of June 30, 2004. 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 I 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. 42 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (e) Changes in Long -Term Liabilities Long -term liability activity for the year ended June 30, 2004, was as follows: $ 3,752,758 $ 267,798 Balance $ 4,020,556 Balance - Hospital facilities June 30, June 30, Due within 2003 Additions Reductions 2004 one year Governmental activities: General Obligation Bonds $ 15,620,000 $ - $ 1,235,000 $ 14,385,000 $ 1,280,000 ADEC loans 97,019 - 4,334 92,685 4,442 EPA loan payable 31,250 - 20,833 10,417 10,417 Total 185,970 Total hospital governmental activities $ 15,748,269 $ - $ 1,260,167 $ 14,488,102 $ 1,294,859 Business -type activities: Municipal solid waste collection and disposal Landfill closure and post - closure care costs $ Notes payable Total municipal solid waste collection and 2,511,504 $ 246,929 $ - $ 2,758,433 $ - 1,241,254 20,869 - 1,262,123 - disposal $ 3,752,758 $ 267,798 $ - $ 4,020,556 $ - Hospital facilities Long term interfund borrowings $ - $ 1,600,000 $ 53,508 $ 1,546,492 $ 55,670 Capital leases 502,358 - 316,388 185,970 185,970 Total hospital facilities $ 502,358 $ 1,600,000 $ 369,896 $ 1,732,462 $ 241,640 Kodiak Fisheries Research Center Long term interfund borrowings $ 7,130,000 $ - $ 255,000 $ 6,875,000 $ 275,000 Business -type activities: Capital leases $ 502,358 $ - $ 316,388 $ 185,970 $ 185,970 Landfill closure and post - closure care costs 2,511,504 246,929 - 2,758,433 - Long term interfund borrowings 7,130,000 1,600,000 308,508 8,421,492 330,670 Notes payable 1,241,254 20,869 - 1,262,123 - Total business - type activities $ 11,385,116 $ 1,867,798 $ 624,896 $ 12,628,018 $ 516,640 43 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 (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: 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 Borou 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. 4 4 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 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) Rental Revenues (a) Hospital Facilities Enterprise Fund The Kodiak Island Borough Assembly leases the Kodiak Island Hospital and Care Center premise and equipment to Sisters of Providence d.b.a. Providence 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 from that date and contains provisions for an additional ten -year option. The lease is cancelable by either party with a one year notice. 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 $60,000 per month and 50% of the net revenues of the hospital, up to $600,000, in rental revenues. In August 2003, the lease was amended that required Providence to pay an additional lease payment of $1,300,000 in 2004. Prior to the commencement of each subsequent lease year, both parties will negotiate the additional lease payment for the following year. The negotiated lease payment is equal to the payment that the Borough makes as a contribution to the State of Alaska Medicaid program. 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. (b) Kodiak Fisheries Research Center The Kodiak Fisheries Research Center (KFRC) leases its premise to the General Services Administration (GSA), the GSA on behalf of Department of Commerce, National Oceanic and Atmospheric Administration (NOAA), and the University of Alaska Fairbanks (UAF). The lease with the GSA is from March 1, 2003, through September 30, 2018, cancelable with 120 days notice. Annual rent varies from $30,000 in 2005 to $$41,000 in 2018. The lease with NOAA is from October 1, 1998 through September 30, 2018, with an option to extend for up to four additional five year periods. Annual rent is $744,054 plus operational and maintenance expenses of $699,076. Operational and maintenance expenses are adjusted every five years to actual costs. The lease with UAF is from October 1, 1998 through September 30, 2018, cancelable with 30 days notice, with an option to extend for up to two additional five year periods. Annual rent varies form $90,000 in 2006 to $143,601 in 2018. 45 (Continued) 1 (10) Retirement Commitments I (a) PERS KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 ' 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 obtained from the State of Alaska, Department of Administration, Division of Retirement Benefits, 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 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% (7.5% for firefighters) of their annual covered salary and the Borough is required to contribute an actuarially determined rate — the current rate is 0% of annual covered payroll. ' Annual Pension Cost: For the years ended June 30, 2004, the Borough's annual pension cost was $58 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 5.5% a year for the first ten years of employment (first 5 years of employment for firefighters) and 4% per year thereafter, with distinction made between amounts for inflation 3.5 %, merit for the first ten years 1 (first five years for firefighters) 1.5 %, and productivity .5 %. The 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. 46 (Continued) KODIAK ISLAND BOROUGH Notes to Financial Statements June 30, 2004 Three -year trend information for PERS Year ended Annual pension cost (APC) $ 61,962 1,748 58 Percentage of APC contributed 100% $ 100% 100% Net pension obligation 6/30/2002 6/30/2003 6/30/2004 Postemployment Healthcare Benefits: Postemployment medical and dental 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 acti,10(contributions for postemployment healthcare benefits for the year ended June 30, 2004 was $39. The amount of net assets available for postemployment healthcare benefits, the actuarial accrued liability, and unfunded actuarial accrued liability are $5,816,000, $7,466,000 and $1,650,000, 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 regular 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, 2004, was $111,449. 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. (11) 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. 47 (Continued) KODIAK ISLAND BOROUGH 1 Notes to Financial Statements June 30, 2004 (b) Grants 1 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 1 The Borough is a member of a mandatory class action lawsuit which resulted in a verdict against Exxon Corporation in August 1994 in the amount of $5 billion for punitive damages and was later reduced to $4.5 billion. The matter is now on appeal to the Ninth Circuit Court of Appeals. The share of the settlement, if any, has not been recognized in the financial statements as the settlement is in the appeals process. The ultimate outcome of the matter and the amount to be realized by the Borough upon final settlement is indeterminable at this time. (12) Subsequent Events Sale of General Obligation Bonds In July 2004, the Borough issued $9,300,000 of general obligation bonds to finance various school capital improvements and to develop an earthquake evacuation plan. The bonds have an optional redemption for those maturing after July 1, 2014. In December 2004, the Borough issued $11,050,000 of general obligation bonds to finance various school capital improvements. The bonds have an optional redemption for those maturing after November 1, 2014. These bonds mature as follows: M. Series 2004A Series 2004A Principal Interest Principal Interest amount rate amount rate Year ending June 30: 2006 $ 490,000 5.00% $ 180,000 3.00% 2007 310,000 5.00% 410,000 3.00% 2008 325,000 4.25% 420,000 3.00% 2009 340,000 4.25% 435,000 3.00% 2010 350,000 4.25 % 445,000 3.00% 2011 365,000 4.25% 460,000 3.50% 2012 385,000 4.25% 475,000 3.50% 2013 400,000 4.25% 490,000 3.50% 2014 415,000 4.00% 510,000 4.00% 2015 435,000 4.00% 530,000 4.00% 2016 450,000 4.00% 550,000 4.00% 2017 470,000 4.10% 570,000 4.00% 2018 485,000 4.25% 595,000 4.00% 2019 510,000 4.30% 620,000 4.50% 2020 530,000 4.40% 650,000 4.50% 2021 555,000 4.50% 675,000 4.50% 2022 580,000 4.50% 705,000 4.50% 2023 605,000 4.63% 740,000 5.00 %a 2024 635,000 4.75% 775,000 5.00% 2025 665.000 4.80 815,000 5.00% $ 9.300 $ 11,050,000 M. 1 REQUIRED SUPPLEMENTARY INFORMATION 1 t KODIAK ISLAND BOROUGH Required Supplementary Information Schedule of Funding Progress — PERS June 30, 2004 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): 49 Unfunded AAL UAAL/FE Actuarial (UAAL) as a Actuarial accrued Funding percentage Actuarial value of liability excess Funded Covered of covered valuation assets (AAL) (FE) ratio payroll payroll date (a) (b) (a -b) (alb) (c) ((a -b) /c) 6/30/2001 $ 11,377 $ 9,967 $ 1,410 114% $ 1,692 83% 6/30/2002 9,032 10,981 (1.949) 82% 2,011 (97 %) 6/30/2003 8.701 11,170 (2,469) 78% 1,712 (144 %) 49 KODIAK ISLAND BOROUGH Budgetary Comparison Schedule General Fund Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 50 Variance with final budget - Budget positive 2003 Original Final Actual (negative) Actual Revenues: Property taxes: Real $ 6,102,180 $ 6,102,180 $ 6,076,102 $ (26,078) $ 5,929,999 Personal 1,026,210 1,026,210 981,285 (44,925) 1,063,617 Motor vehicle 190,000 190,000 165,148 (24,852) 193,799 Boat 8,520 8,520 7,275 (1,245) 7,979 Penalty and interest 150,000 150,000 135,823 (14,177) 131,054 Total property taxes 7,476,910 7,476,910 7,365,633 (111,277) 7,326,448 Severance taxes: Fish 780,000 780,000 746,118 (33,882) 639,487 Mining 6,000 6,000 6,822 822 4,988 Logging 50,000 50,000 46,753 (3,247) 57,590 Total severance taxes 836,000 836,000 799,693 (36,307) 702,065 Intergovernmental: State sources: State shared revenue 55,850 - - - 111,700 Municipal assistance 64,260 - - - 128,514 Tax Payer Relief - 146,320 146,321 1 - Raw fish tax 850,000 623,595 649,927 26,332 840,768 Fish revitalization - - - - 362,963 Liquor license - - - - 9,250 Electric Co -op tax 14,000 14,000 26,337 12,337 26,202 Total state sources 984,110 783,915 822.585 38,670 1,479,397 Federal sources: Payments in lieu of taxes 703,121 703,121 808,739 105,618 809,932 Miscellaneous 420,000 420,000 379,107 (40,893) 394,131 Total federal sources 1,123,121 1,123,121 1,187,846 64,725 1.204.063 Total intergovernmental revenue 2,107,231 1,907,036 2,010,431 103,395 2.683,460 Licenses, permits, fees, and other local revenues: Building and trailer permits 68,000 68,000 91,227 23,227 88,646 Subdivision and zoning fees 8,500 8,500 13,565 5,065 9,140 Sale of copies 26,600 26,600 18,298 (8,302) 18,636 Miscellaneous 38,000 38,000 64,808 26,808 37,305 Total licenses, permits, fees, and other local revenues 141,100 141,100 187,898 46,798 153,727 Investment income 127,570 127,570 105,812 (21,758) 171,532 Total revenues 10,688,811 10,488,616 10,469,467 (19,149) 11,037,232 50 KODIAK ISLAND BOROUGH Budgetary Comparison Schedule General Fund Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) See accompanying notes to the financial statements. 51 Variance with final budget - Budget positive 2003 Original Final Actual (negative) Actual Expenditures: Borough assembly $ 158,210 $ 158,210 S 137,850 S 20,360 $ 150,045 Borough manager 218,870 218,870 194,938 23,932 187,473 Borough clerk 292,968 292,968 292,203 765 279,181 Borough attorney 188,200 188,200 89,685 98,515 2,519,766 Finance department 520,700 520,700 409,523 111,177 419,077 Assessing department 304,360 304,360 209,134 95,226 219,789 Engineering/facilities department 72,080 72,080 63,755 8,325 86,790 Community development department 431,910 454,290 375,391 78,899 320,853 Building official 131,730 131,730 133,474 (1,744) 140,252 Economic development 124,100 124,100 53,652 70,448 58,245 General and administration 279,272 279,272 250,590 28,682 217,121 Emergency preparedness 5,500 5,500 5,129 371 2,369 School District support 7,655,440 7,655,440 7,721,706 (66,266) 7,251,840 Health and sanitation department 268,389 240,184 257,037 (16,853) 286,095 Education, culture, and recreation 135,282 163,487 163,487 - 152,282 Management information systems 352,510 352,510 257,239 95,271 300,303 Total expenditures 11,139,521 11,161,901 10,614,793 547,108 12,591,481 Excess of revenues over expenditures (450,710) (673,285) (145,326) 527,959 (1,554,249) Other financing sources (uses): Transfers in from other funds 850,000 850,000 850,000 - 1,000,000 Transfers to other funds (399,290) (399,290) (399,290) - (480,476) Total financing uses 450,710 450,710 450,710 - 519,524 Excess of revenues and transfers in over expenditures and transfers out $ - $ (222,575) 305,384 $ 527,959 (1,034,725) Fund balances, at beginning of year 1,804,112 2.838,837 Fund balances, at end of the year $ 2,109,496 $ 1,804,112 See accompanying notes to the financial statements. 51 KODIAK ISLAND BOROUGH Budgetary Comparison Schedule Special Revenue Fund — Facilities Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: Land sale proceeds: Proceeds from the sale of Shuyak Island Investment income Total revenues Expenditures: Support goods and services Total expenditures Excess of revenues over expenses Other financing sources (uses): Transfers from (to) other funds: Capital projects — state grants Buildings and grounds Debt service funds Net other financing uses Excess (deficiency) of revenues over expenditures and other financing uses Fund balances, at beginning of year Fund balances, at end of year See accompanying notes to required supplementary information Variance with final budget — Budget positive 2003 Original Final Actual (negative) Actual $ — $ — $ — $ — $ 11,805,734 1,100,000 1,294,984 723,910 (571,074) 1,160,335 1,100,000 1,294,984 723,910 (571,074) 12,966,069 195,940 — — — — 195,940 — — — — 904,060 1,294,984 723,910 (571,074) 12,966,069 (622,384) (622,384) — (53,917) (500,000) (268,540) (268,540) — (622,560) (404,060) (404,060) (404,060) — (462,670) (904,060) (1,294,984) (1,294,984) — (1,139,147) $ — $ — (571,074) $ (571,074) 11,826,922 38,115,583 26,288,661 $ 37,544,509 $ 38,115,583 52 I I I KODIAK ISLAND BOROUGH Notes to Required Supplementary Information — Budgetary Comparison Schedules June 30, 2004 ri 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 Assembly action. If the Borough Assembly fails to pass an ordinance, the budget submitted by ' the Borough Manager becomes the adopted budget. • Amendments to the budget can occur anytime during the fiscal year through the Borough Assembly or administrative action. Generally, the following actions are required at the level of the particular change: All new appropriations are authorized by an appropriation ordinance that amends the annual budget ordinance. A resolution of the Borough Assembly is required to move (appropriate) amounts between departments and projects. The administration is authorized and directed by the Borough Assembly to effect the necessary line item changes within the limits established by Items (1) and (2) above by project or department to properly monitor, account, and report receipts and expenditures. • Expenditures may not legally exceed appropriations at the following levels: Capital Projects Funds — project level, all other funds — department level. • All funds, except Capital Projects Funds, are budgeted on an annual basis encompassing a fiscal year. Budgets of Capital Projects Funds generally encompass the period from start -up to project completion, which is generally greater than one year. • Appropriations lapse at year end to the extent that they have not been expended for all funds, except Capital Projects Funds, which lapse at project completion. • Budgets adopted by the Borough Assembly are in accordance with accounting principles generally accepted in the United States of America. • The Borough publishes a separate 2004 budget document. That document may may be obtained from the Kodiak Island Borough, Director of Finance, 710 Mill Bay Road, Kodiak, Alaska 99615. 53 KODIAK ISLAND BOROUGH Statement of Revenues, Expenditures and Changes in Fund Balance Special Revenue Fund — Education and Health Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: Intergovernmental: State sources Investment income Other Total revenues Expenditures: General government Debt service: Principal Interest Bond issuance costs Total expenditures Excess of revenues over expenses Other financing sources (uses): Refunding bonds issued Payment to refunded bond escrow agent Transfers in Transfers out Net other financing uses Excess (deficiency) of revenues over expenditures and other financing uses Fund balances, at beginning of year Fund balances, at end of year 54 Variance positive 2003 Budget Actual (negative) Actual $ 717,850 $ 798,412 $ 80,562 $ 800,012 4,000 — (4,000) 43,514 — 720 720 58,645 721,850 799,132 77,282 902,171 22,400 26,123 3,723 22,232 1,260,180 1,260,167 (13) 1,145,061 613,280 644,046 30,766 783,524 — — — 43,509 1,895,860 1,930,336 34,476 1,994,326 (1,174,010) (1,131,204) 42,806 (1,092,155) — — — 3,075,000 — — — (3,068,781) 1,147,240 1,147,240 — 1,005,750 — — — (350,000) 1,147,240 1,147,240 — 661,969 $ (26,770) 16,036 $ 42,806 (430,186) 17,879 448,065 $ 33,915 $ 17,879 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 DRAFT 3/8/2005 12:14 PM Assets Equity in central treasury Temporary investments Receivables: State of Alaska Federal Government Land sales contracts, due within one year Property taxes Other Due from other funds Land sale contracts, due after one year Total Liabilities and Fund Balances Liabilities: Accounts payable Retainages 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 KODIAK ISLAND BOROUGH Combining Balance Sheet Nonmajor Governmental Funds June 30, 2004 (With summarized financial information at June 30, 2003) Special Debt Capital Totals revenue service projects 2004 2003 $ 586,255 $ 158,409 $ 210,341 $ 955,005 $ 1,246,788 1,994,400 - 551,392 2,545,792 1,041,415 55,101 - 284,707 339,808 193,294 - - 6,750 6,750 388,413 8,000 - - 8,000 7,000 17,829 - - 17,829 17,239 619,634 - - 619,634 - 313,060 - 271,990 585,050 966,130 42,056 - - 42,056 47,325 $ 3,636,335 $ 158,409 $ 1,325,180 $ 5,119,924 $ 3,907,604 $ 65,430 $ - $ 335,939 $ 401,369 $ 326,891 - - 22,270 22,270 45,860 156 - - 156 156 678 - - 678 678 659,782 - - 659,782 54,325 239,800 - 330,768 570,568 406,329 965,846 - 688,977 1,654,823 834,239 - - - - 100,000 256,860 - - 256,860 334,950 2,413,629 158,409 636,203 3,208,241 2,638,415 2,670,489 158,409 636,203 3,465,101 3,073,365 $ 3,636,335 $ 158,409 $ 1,325,180 $ 5,119,924 S 3,907,604 55 DRAFT 3/8/2005 12:14 PM KODIAK ISLAND BOROUGH Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds Year Ended June 30, 2004 (With summarized financial information for year ended 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 Fern Fuller trust 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 Special Debt Capital Totals revenue service projects 2004 2003 $ 650,690 $ - $ - $ 650,690 $ 663,185 156,098 - 344,325 500,423 1,235,121 12,445 - 45,046 57,491 28,650 9,206 - - 9,206 46,130 552,850 - 24,165 577,015 386,882 31,601 - 4,820 36,421 242,890 222,117 - - 222,117 1,481 1,635,007 - 418.356 2,053,363 2,604,339 567,094 - - 567,094 606,724 74,847 - - 74,847 498,635 864,703 - - 864,703 260,120 425,712 - 425,712 190,058 160,720 - 160,720 123,607 54,272 - - 54,272 53,584 43,626 - - 43,626 20,000 24,500 - - 24,500 - - - 131,324 131,324 372,122 - - 656,423 656,423 656,083 2,215,474 - 787,747 3,003,221 2,780,933 (580,467) - (369,391) (949,858) (176,594) 985,990 - 622,384 1,608,374 909,894 (266,780) - - (266,780) (721,681) 719,210 - 622,384 1,341,594 188,213 138,743 - 252,993 391,736 11,619 2,531,746 158,409 383,210 3,073.365 3,061,746 $ 2,670,489 $ 158,409 $ 636,203 $ 3,465,101 $ 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. 'J P 1 THIS PAGE INTENTIONALLY LEFT BLANK 1 , KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Combining Balance Sheet , June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Fire and Road Service Areas Fire Road Fire Womens Kodiak Monashka Protection Bay Fire Airport Fire Bay Road Service , Assets Area No. 1 Department District Service Area District No.1 r Equity in central treasury $ 2,041 $ 51,743 $ 27,994 $ 61,379 $ 4,228 Temporary investments 994,400 - - - - Receivables: State of Alaska - 3,995 - - - Federal Government - - - - - Land sales contracts, due within one year - - - - - Property taxes 6,141 2,947 1,566 351 3,077 Other Due from other funds 3,268 87 - - 295,062 Land sale contracts, due after one year - - - - - Total $ 1,005,850 $ 58,772 $ 29,560 $ 61,730 $ 302,367 , Liabilities and Fund Balances Liabilities: Accounts payable $ 15,653 $ 4,130 $ - $ - $ 7,424 Employee benefits accrued and withheld - - - - - Customer deposits - 500 - - - Deferred revenues - - - - Due to other funds 180,000 - - - - Total liabilities 195,653 4,630 - - 7,424 ' Fund Balances: Unreserved (deficits): Designated for self- insurance Designated for subsequent year expenditures - - 147,960 10,000 - - - 21,900 - 47,900 , Undesignated 662,237 44,142 29,560 39,830 247,043 Total fund balances 810,197 54,142 29,560 61,730 294,943 Totals $ 1,005,850 $ 58,772 $ 29,560 $ 61,730 $ 302,367 ' 1 1� 1 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 $ 175,413 $ 409 $ 4,072 $ 345 $ 67 $ 79 $ 1,353 $ 15,819 - - - - - - - 700,000 - - - 29,145 11,062 1,721 9,178 - - - - - - - - 8,000 3,662 85 - - - - - - 87 - - - 3,233 - - - - - - - - - - 42,056 $ 179,162 $ 494 $ 4,072 $ 29,490 $ 14,362 $ 1,800 $ 10,531 $ 765,875 $ 10,568 $ 1,600 $ - $ 4,490 $ 24 $ - $ 1,220 $ 1,538 - - - - - - - 50,056 - 1,000 - 25,000 6,000 1,800 15,000 - 10,568 2.600 - 29,490 6,024 1.800 16,220 51,594 600 - - - - - - - 167,994 (2,106) 4.072 - 8,338 - (5,689) 714,281 168,594 (2,106) 4,072 - 8,338 - (5,689) 714,281 $ 179,162 $ 494 $ 4,072 $ 29,490 $ 14,362 $ 1,800 $ 10,531 $ 765,875 58 (Continued) KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Combining Balance Sheet June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 59 (Continued) 1 Woodland Buildings Acres Street Trinity Acres and Light Service Kodiak Arts Tourism Lighting Assets grounds Area Council Development District Equity in central treasury $ 50,613 $ 24,162 $ 257 $ 17,523 $ 561 Temporary investments 300,000 — — — — Receivables: State of Alaska — — — — — Federal Government — — — — — Land sales contracts, due within one year — — — — — Property taxes — — — — — Other — — 1,866 8,042 — Due from other funds 2,880 — 2,443 — — Land sale contracts, due after one year — — — — — Total $ 353,493 $ 24,162 $ 4,566 $ 25,565 $ 561 Liabilities and Fund Balances ' Liabilities: Accounts payable $ 18,181 $ 456 $ — $ — $ 146 Employee benefits accrued and withheld 156 — — — — ' Customer deposits — — — 178 — Deferred revenues — — — — — Due to other funds — — 5,000 — 6,000 Total liabilities 18,337 456 5,000 178 6,146 ' Fund Balances: Unreserved (deficits): Designated for self - insurance — — — — — Designated for subsequent year expenditures — 4,000 — — — Undesignated 335,156 19,706 (434) 25,387 (5,585) Total fund balances 335,156 23,706 (434) 25,387 (5,585) Totals $ 353,493 $ 24,162 $ 4,566 $ 25,565 $ 561 59 (Continued) 1 Mission Lake Fern Fuller Totals Tide Gate Trust $ 1,655 $ 146,542 $ 586,255 $ 1,088,097 - - 1,994,400 494,844 - - 55,101 68,330 - - - 14,866 - - 8,000 7,000 - - 17,829 17,239 - 609,726 619,634 - 6,000 - 313,060 966,130 - - 42,056 47,325 $ 7,655 $ 756,268 $ 3,636,335 $ 2,703,831 $ - $ - $ 65,430 $ 84,621 - - 156 156 - - 678 678 - 609,726 659,782 54,325 - - 239,800 32,305 - 609,726 965,846 172,085 - - - 100,000 - 24,500 256,860 334,950 7,655 122,042 2,413,629 2,096,796 7,655 146,542 2,670,489 2,531,746 $ 7,655 $ 756,268 $ 3,636.335 $ 2,703,831 60 (Continued) KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Combining Statement of Revenues. Expenditures. and Changes in Fund Balances (Deficits) Year ended June 30, 2004 (With summarized financial information for the 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 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 (deficits), at beginning of year Fund balances, at end of year 573,286 Fire 27 611 Road Fire Womens Kodiak Monashka 196,723 Protection Bay Fire Airport Fire Bay Road Service Area No. 1 Department District Service Area District No. 1 $ 309,435 $ 58,744 $ 15,382 $ 23,884 $ 141,320 — 3,995 — — — 4,294 9,441 — — — 21,800 1,878 283 672 4,050 995 — — — — 336.524 74.058 15.665 24.556 145.370 573,286 291,390 27 611 7,254 — — — 29.215 196,723 573,286 291,390 27 29,826 203,977 (236,762) (217,332) 15,638 (5,270) (58,607) — 16,780 — — - - — (16,780) — - - 16.780 (16,780) — — (236,762) (200,552) (1,142) (5,270) (58,607) 1.046,959 254,694 30,702 67.000 353.550 $ 810,197 $ 54,142 $ 29.560 $ 61.730 $ 294,943 61 (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 $ 90.276 $ 5,587 $ — $ — $ — $ — $ — $ - - — — 44,649 69,517 — 37,937 - - — — — — 12.445 — - - — — — — — — 9,206 20,000 — — — — — — 1,000 2.191 61 41 — — — — - - — — — — — — 40.080 112.467 5.648 41 44.649 69.517 12.445 37.937 50.286 — — — 44.649 — — — — 1,882 281 — — — 12,445 43,626 58,626 — — — — 74,847 — — — 161.676 13.438 — — — — — — 163.558 13,719 — 44.649 74.847 12.445 41626 58.626 (51,091) (8.071) 41 — (5.330) — (5.689) (8.340) — — — — — — — 650.000 — — — — — — — (50.000) — — — — — — — 600.000 (51,091) (8,071) 41 — (5,330) — (509) 591,660 219.685 5.965 4.031 — 13.668 — — 122.621 $ 168,594 $ (2.106) $ 4,072 $ — $ 8.338 $ — $ (5,689) $ 714.281 62 (Continued) KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Combining Statement of Revenues, Expenditures. and Changes in Fund Balances (Deficits) Year ended June 30, 2004 (With summarized financial information for the year ended 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: 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 t 63 (Continued) Woodland Acres Street Trinity Acres Buildings and Light Service Kodiak Arts Tourism Street Light Grounds Area Council Development Service Area $ — $ — $ — $ — $ 3.599 408,100 — 53,838 56,177 - - 270 — 355 — 408.100 270 53.838 56,532 3,599 — — — 45,000 — 562,286 5,448 54,272 — 9,184 562.286 5.448 54,272 45.000 9.184 (154.186) (5,178) (434) 11,532 (5.585) 319.210 — — — — (200,000) — — — — 119.210 — — — — (34,976) (5,178) (434) 11,532 (5,585) 370.132 28,884 — 13,855 — $ 335,156 $ 23,706 $ (434) $ 25,387 $ (5,585) t 63 (Continued) Mission Lake Fern Fuller Totals Tide Gate Trust 4 2003 $ 2.463 $ — $ 650,690 $ 663,185 — — 156,098 564,216 — — 12.445 28.650 — — 9.206 46,130 — — 552,850 384,007 — — 31,601 231,477 10.000 171,042 222,117 1.481 12.463 171.042 1.635.007 1.919.146 — — 89,649 70,802 4,808 24,500 1.649,926 1,007,229 — — 74,847 498,635 — — 401.052 176.062 4.808 24,500 2,215.474 1,752.728 7,655 146.542 (580.467) 163.418 — — 985,990 790.361 — — (266.780) (721,681) — — 719,210 68.680 7,655 146,542 138,743 232,098 — — 2.531.746 2.299.648 $ 7.655 $ 146.542 $ 2.670.489 $ 2.531.746 64 (Continued) KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas - Fire Protection Area No. 1 Statement of Revenues, Expenditures, and Chan in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 2004 Revenues: Property taxes State sources Federal Sources Licenses, permits, fees, and other local revenues Investment income Miscellaneous Total revenues Expenditures: General and administrative: Fire chief Volunteers Fringe benefits Professional services Support goods and services Capital outlay Depreciation Total expenditures Excess (deficiency) of revenues over expenditures Other financing uses: Transfers out to other funds: Debt service funds Total other financing uses Excess (deficiency) of revenues over expenditures and financing uses Fund balances, at beginning of year Fund balances, at end of year 312,000 336,524 Variance 3 27,05 8 positive 2003 Budget Actual (negative) Actual $ 301,500 $ 309,435 $ 7,935 $ 303,807 1,000 - (1,000) 1,181 500 - (500) 523 9,000 4,294 (4,706) 4,354 - 21,800 21,800 17,193 - 995 995 - 312,000 336,524 24,524 3 27,05 8 72,840 61,086 11,754 55,962 20,000 23,715 (3,715) 16,710 13,660 20,899 (7,239) 14,254 16,000 2,319 13,681 3,750 141,100 125,809 15,291 95,615 516,790 339,458 177,332 2,580 30.000 - 30,000 - 810,390 573,286 237,104 188,871 (498,390) (236,762) 261,628 138,187 - - - (3,664) - - - (3,664) $ (498,390) (236,762) $ 261,628 134,523 1,046.959 912,436 $ 810,197 $ 1,046,959 65 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas - Womens' Bay Fire Department Statement of Revenues, Expenditures, and Changes in Fund Balances Bud and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: Property taxes State sources Licenses, permits, fees, and other local revenues Investment income Total revenues Expenditures: General and administrative: Personnel services Fringe benefits Professional services Support goods and services Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources: Transfers in from other funds: Special revenue funds Excess (deficiency of revenues and other financing sources over expenditures Fund balances, at beginning of year Fund balances, at end of year 66 Variance positive 2003 Budget Actual (negative) Actual $ 55,000 $ 58,744 $ 3,744 $ 56,381 200 3,995 3,795 7,297 9,000 9,441 441 8,685 5,000 1,878 (3,122) 2,986 69,200 74,058 4,858 75,349 2,000 3,163 (1,163) 1,188 3,000 3,219 (219) - 2,500 110 2,390 6,820 57,100 40,807 16,293 38,883 146,160 244,091 (97,931) 24,305 210,760 291,390 (80,630) 71,196 (141,560) (217,332) (75,772) 4,153 16,780 16,780 - 17,131 $ (124,780) (200,552) $ (75,772) 21,284 254,694 233,410 $ 54,142 $ 254,694 66 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas — Kodiak Airport Fire District Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Variance positive 2003 Budget Actual (negative) Actual Revenues: Property taxes $ 16,780 $ 15,382 $ (1,398) $ 16,531 Investment income 100 283 183 481 Total revenues 16,880 15,665 (1,215) 17,012 Expenditures: General and administrative: Contracted services 16,780 — 16,780 — Support goods and services 100 27 73 53 Total expenditures 16,880 27 16,853 53 Excess of revenues over expenditures — 15,638 15,638 16,959 Other financing uses: Operating transfers out to other funds: Womens Bay Fire District — (16,780) (16,780) (16.531) Excess (deficiency) of revenues over expenditures and other financing uses $ — (1,142) $ (1,142) 428 Fund balances, at beginning of year 30,702 30,274 Fund balances, at end of year $ 29,560 $ 30,702 67 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 Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 68 Variance positive 2003 Budget Actual (negative) Actual Revenues: Property taxes $ 20,100 $ 23,884 $ 3,784 $ 23,490 State sources - shared revenue 1,000 - (1,000) 1,076 Investment income 1,500 672 (828) 872 Total revenues 22,600 24,556 1,956 25,438 Expenditures: General and administrative: Personnel services 500 506 (6) 424 Support goods and services 1,000 105 895 203 Service district maintenance: Snow removal/sanding 12,000 11,003 997 5,750 Road grading/ditching 5,000 3,100 1,900 4,466 Repairs and maintenance 25,000 15,112 9,888 2,722 Total expenditures 43,500 29,826 13,674 13,565 Excess (deficiency) of revenues over expenditures $ (20,900) (5,270) $ 15,630 11,873 Fund balances, at be of year 67,000 55,127 Fund balances, at end of year $ 61,730 $ 67,000 68 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas - Service District No. I Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 69 Variance positive 2003 Budget Actual (negative) Actual Revenues: Property taxes $ 134,000 $ 141,320 $ 7,320 $ 170,941 State sources 4,000 - (4,000) 4,573 Federal Sources 500 - (500) 436 Investment income 5,000 4,050 (950) 4,060 Total revenues 143,500 145,370 1,870 180,010 Expenditures: General and administrative: Personnel services 4,600 6,754 (2,154) 5,053 Support goods and services 2,400 500 1,900 1,145 Service district maintenance: Snow removal sanding 95,000 69,785 25,215 17,983 Road grading/ditching 44,500 108,219 (63,719) 32,150 Repairs and maintenance 42,000 18,719 23,281 28,577 Total expenditures 188,500 203,977 (15.477) 84,908 Excess (deficiency) of revenues over expenditures $ (45,000) (58,607) $ (13,607) 95,102 Fund balances, at beginning of year 353,550 258,448 Fund balances, at end of year $ 294,943 $ 353,550 69 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas - Womens' Bay Service Area Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 70 Variance positive 2003 Budget Actual (negative) Actual Revenues: Property taxes $ 83,500 $ 90,276 $ 6,776 $ 86,488 State sources - shared revenue 3,000 - (3,000) 5,116 Licenses, permits, fees, and other localrevenues 20,000 20,000 - 20,000 Investment income 5,000 2,191 (2,809) 3,067 Total revenues 111,500 112,467 967 114,671 Expenditures: General and administrative: Personnel services - 1,109 (1,109) 499 Support goods and services 21,700 773 20,927 990 Service district maintenance: Snow removal/sanding 30,000 71,623 (41,623) 8,116 Road grading /ditching 30,400 54,077 (23,677) 21,265 Repairs and maintenance 30,000 35,976 (5,976) 51,213 Total expenditures 112,100 163,558 (51,458) 82,083 Other financing uses: Transfers out to other funds: Womens Bay Fire Department - - - (600) Excess (deficiency) of revenues over expenditures and other financing uses $ (600) (51,091) $ (50,491) 31,988 Fund balances, at beginning of year 219,685 187,697 Fund balances, at end of year $ 168,594 $ 219,685 70 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 Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 71 Variance positive 2003 Budget Actual (negative) Actual Revenues: Property taxes $ 4,600 $ 5,587 $ 987 $ 5,547 State sources — shared revenue 670 — (670) 387 Investment income 200 61 (139) 84 Total revenues 5,470 5,648 178 6,018 Expenditures: General and administrative: Personnel services — 209 (209) 160 Support goods and services — 72 (72) 17 Service district maintenance: Snow removal/sanding 2,500 5,383 (2,883) 994 Road grading /ditching 1,970 7,755 (5,785) 426 Repairs and maintenance 1,000 300 700 2,400 Total expenditures 5,470 13,719 (8,249) 3,997 Excess (deficiency) of revenues over expenditures $ — (8,071) $ (8,071) 2,021 Fund balances, at beginning of year 5,965 3.944 Fund balances, at end of year $ (2,106) $ 5,965 71 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fire and Road Service Areas — Service Area No. 2 Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Budget Revenues: Investment income Expenditures: Support goods and services Total expenditures Excess of revenues over expenditures Fund balances, at be of year Fund balances, at end of year $ 100 $ 100 100 Variance positive Actual (negative) 41 $ (59) $ — 100 100 41 $ 41 2003 46 1 1 45 3,986 $ 4,031 72 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, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: State sources — grants Total revenues Expenditures: Community development department: Planning and zoning Total expenditures Excess (deficiency) of revenues over expenditures Fund balance (deficit), at beginning of year Fund balance (deficit), at end of year Variance positive 2003 Budget Actual (negative) Actual $ 25,650 $ 44,649 $ 18,999 $ 25,950 25,650 44,649 18,999 25,950 25,650 44,649 (18,999) 25,650 44,649 (18,999) 25,803 25,803 147 (147) 73 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Child Care Assistance Program Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 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 balances, at beginning of year Fund balances, at end of year 74 Variance positive 2003 Budget Actual (negative) Actual $ 75,000 $ 69,517 $ (5,483) $ 498,636 75,000 69,517 (5,483) 498,636 59,100 63,658 (4,558) 62,944 — — — 421,863 15,900 11,189 4,711 13,828 75,000 74,847 153 498,635 $ — (5,330) $ (5,330) 1 13,668 13,667 $ 8,338 $ 13,668 74 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Welfare to Work Program Statement of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: Federal sources — grants Total revenues Expenditures: General and administrative: Personnel services Professional services Support goods and services Total expenditures Excess (deficiency) of revenues over expenditures Fund balances, at beginning of year Fund balance (deficit), at end of year 7i Variance positive 2003 Budget Actual (negative) Actual $ 25,000 $ 12,445 $ (12,555) $ 27,691 25,000 12,445 (12,555) 27,691 750 2,755 (2,005) 375 24,250 9,644 14,606 27,316 — 46 (46) — 25,000 12,445 12,555 27,691 7i KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds L.E.P.C. Statement of Revenues, Expenditures, and Changes in Fund Balance (Deficit) Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: State sources: L.E.P.C.grant Emergency operations planning grant Total revenues Expenditures: General administrative: Personnel services Support goods and services Contracted services Total expenditures Excess (deficiency ) of revenues over expenditures Fund balances, at beginning of year Fund balance (deficit), at end of year 76 Variance positive 2003 Budget Actual (negative) Actual $ 14,320 $ 20,000 $ 5,680 $ 20,000 17,937 17,937 — — 32,257 37,937 5,680 20,000 12,087 24,097 (12,010) 13,000 3,320 2,693 627 1,062 16,850 16,836 14 5,938 32,257 43,626 (11,369) 20,000 $ — (5,689) $ (5,689) — 76 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Land Sales Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 77 Variance positive 2003 Budget Actual (negative) Actual Revenues: Land sale proceeds $ 209,225 $ 9,206 $ (200,019) $ 46,130 Licenses, permits, fees, and other local revenues 1,000 1,000 - 1,000 Investment income - - - 15,183 Gravel sales 25,000 40,000 15,000 56,742 Other - 80 80 1,481 Total revenues 235,225 50,286 (184,939) 120,536 Expenditures: General and administrative: Personnel services 21,000 21,314 (314) 21,764 Contracted services 10,000 8,195 1,805 1,725 Support goods and services 854,225 29,117 825,108 1,625 Total expenditures 885,225 58,626 826,599 25,114 Excess of revenues over expenditures (650,000) (8,340) 641,660 95,422 Other financing sources /(uses): Transfers in from other funds: Hospital Enterprise Fund 650,000 650,000 - Transfers out to other funds: General fund (50,000) (50,000) - (650,000) Capital projects fund - - - (50,000) Net other financing sources(uses) 600,000 600,000 - (650,000) Deficiency of revenues and other financing sources over expenditures and other financing uses $ (50,000) 591,660 $ 641,660 (554,578) Fund balances, at beginning of year 122,621 727,199 Fund balances, at end of year $ 714,281 $ 172,621 77 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Buildings and Grounds Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficit) Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: Rental income Total revenues Expenditures: General and administrative: School buildings Borough building Mental health center Parks operation and maintenance Total expenditures Deficiency of revenues under expenditures Other financing sources (uses): Transfers in from other funds: Facilities Fund General Fund Transfers out to other funds: General Fund Debt service fund - other Net other financing sources Excess of revenues and other financing sources over expenditures Fund balance (deficit), at beginning of year Fund balances, at end of year Variance positive 2003 Budget Actual (negative) Actual $ 431,120 $ 408,100 $ (23,020) $ 392,428 431,120 408,100 (23,020) 392,428 407,560 300,291 107,269 242,040 243,313 (1,273) 5,430 5,270 160 25,300 13,412 11,888 680,330 562,286 118,044 (249,210) (154,186) 95,024 268,540 268,540 - 50,670 50,670 - (200,000) (200,000) - 119,210 119,210 - $ (130,000) (34,976) $ 95,024 W 1JV 78 330,148 232,149 12,861 606,724 622,560 150,670 (886) 558,048 (187,916) $ 370,132 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Woodland Acres Street Light Service Area Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 79 Variance positive 2003 Budget Actual (negative) Actual Revenues: Investment income $ 1,000 $ 270 $ (730) $ 408 Expenditures: General and administrative: Support goods and services 6,030 5,448 582 5,504 Capital outlay 2,970 — 2,970 — Total expenditures 9,000 5,448 3,552 5,504 Deficiency of revenues under expenditures $ (8,000) (5,178) $ (4,282) (5,096) Fund balances, at beginning of year 28,884 33,980 Fund balances, at end of year $ 23,706 $ 28,884 79 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Kodiak Arts Council Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficit) Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: Licenses, permits, 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 (deficiency) of revenues over expenditures Fund balance (deficit), at beginning of year Fund balances, at end of year Variance positive 2003 Budget Actual (negative) Actual $ 53,650 $ 53,838 $ 188 $ 54,444 53,650 53,838 188 54.444 44,410 9,240 jj,uwv 44,411 (1) 9,427 (187) 434 (434) 54,272 (622) (434) $ (434) k , +- I , +) 43,557 9,177 850 53,584 860 (860) 80 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Tourism Development Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) +�I Variance positive 2003 Budget Actual (negative) Actual Revenues: Transient accommodations tax $ 45,000 $ 56,177 $ 11,177 $ 30,412 Investment income — 355 355 39 Total revenues 45,000 56,532 11,532 30,451 Expenditures: Community development: Contributions 45,000 45,000 — 44,999 Total expenditures 45,000 45,000 — 44,999 Excess (deficiency) of revenues over expenditures $ — 11,532 $ 11,532 (14,548) Fund balances, at beginning of year 13,855 28,403 Fund balances, at end of year $ 25,387 $ 13,855 +�I KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Trinity Acres Street Lighting District Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficit) Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: Property taxes Proceeds from issuance of loans Total revenues Expenditures: General and administrative: Personnel services Support goods and services Capital outlay Total expenditures Deficiency of revenues over expenditures Fund balances, at beginning of year Fund balance (deficit), at end of year 82 Variance positive 2003 Budget Actual (negative) Actual $ 3,600 $ 3,599 $ (1) $ — 7,260 — (7,260) — 10,860 3,599 (7,261) — — 585 (585) — 1,860 1,099 761 — 9,000 7,500 1,500 — 10,860 9,184 1,676 — $ — (5,585) $ (5,585) — 82 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Mission Lake Tide Gate Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: Property taxes Proceeds from issuance of loans Other Total revenues Expenditures: General and administrative: Personnel services Support goods and services Capital outlay Total expenditures Excess of revenues over expenditures Fund balances, at beginning of year Fund balances, at end of year Budget $ 2,460 $ 29,890 20,000 1,000 Variance (3,624) positive Actual (negative) 2,463 $ 3 $ — (29,890) 10,000 (10,000) 12,463 (39,887) 1,000 4,624 (3,624) 200 184 16 51,150 — 51,150 52,350 4,808 47,542 $ — 7,655 $ 7,655 2003 Actual 83 KODIAK ISLAND BOROUGH Nonmajor Special Revenue Funds Fern Fuller Trust Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Revenues: Fuller trust proceeds Total revenues Expenditures: General and administrative: Distributions to Beneficiaries Total expenditures Excess of revenues over expenditures Fund balances, at beginning of year Fund balances, at end of year Variance positive Budget Actual (negative) $ 30,000 $ 171,042 $ 141,042 $ 30,000 171,042 141,042 30,000 24,500 5,500 30,000 24,500 5,500 $ — 146,542 $ 146,542 ID 2003 84 1 1 1 1 J DEBT SERVICE FUNDS 0 r 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. r H KODIAK ISLAND BOROUGH Debt Service Funds Other Balance Sheet June 30, 2004 (With summarized financial information for the year ended June 30, 2003) 2004 Assets Equity in central treasury Total Liabilities and Fund Balances Total liabilities Fund balance: Unreserved Total fund balance Total $ 158,409 $ 158,409 $ 158,409 $ 158,409 158,409 158,409 158,409 158,409 $ 158,409 $ 158,409 85 KODIAK ISLAND BOROUGH Debt Service Funds Other Statement of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Other financing sources: Operating transfers in from other funds Excess of revenues and other financing sources over expenditures Fund balances, at beginning of year Fund balances, at end of year 2004 Budget Variance - favorable 2003 Actual (unfavorable) Actual $ — $ 15,616 $ — 15,616 .D 1J0,'YV7 .D 1_70,YV7 86 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, 2004 (With summarized financial information at June 30, 2003) Assets Equity in central treasury Temporary investments Receivables: Due From Federal Government Due from other funds Due from State of Alaska Total Liabilities and Fund Balances Liabilities: Accounts payable Retainages payable Due to other funds Total liabilities Fund balances: Unreserved (deficits): Undesignated Total fund balance (deficit) Total Various School bond State borough capital capital Total projects projects grants 2004 2003 $ 208,502 $ 1,839 $ - $ 210,341 $ 282 551,392 - - 551,392 546,571 - - 6,750 6,750 373,547 269,232 316 2,442 271,990 - - - 284,707 284,707 124,964 $ 1,029,126 $ 2,155 $ 293,899 $ 1,325,180 $ 1,045,364 $ 234,995 $ - $ 100,944 $ 335,939 $ 242,270 - - 22,270 22,270 45,860 - 62,000 268,768 330,768 374,024 234,995 62,000 391,982 688,977 662,154 794,131 (59,845) (98,083) 636,203 383,210 794,131 (59,845) (98,083) 636,203 383,210 $ 1,029,126 $ 2,155 $ 293,899 $ 1,325,180 $ 1,045,364 I See accompanying independent auditors' report. 87 See accompanying independent auditors' report. t t 88 1 , KODIAK ISLAND BOROUGH Nonmajor Capital Project Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (Deficits) Year ended June 30, 2004 (With summarized financial information for year ended June 30, 2003) Various School bond State borough capital capital Total projects projects grants 2004 2003 Revenues: State sources $ - $ - $ 344,325 $ 344,325 $ 670,905 Federal sources - - 45,046 45,046 - Licenses, permits, fees, and other local revenues 24,165 - - 24,165 5,875 , Investment income 4,820 - - 4,820 11,413 Total revenues 28,985 - 389,371 418,356 688,193 Expenditures: , Capital improvements: Schools 39,970 59,845 31,509 131,324 372,122 General 240,968 - 415,455 656.423 656,083 3 Total expenditures 280,938 59,845 446,964 787,747 1,028,205 ' Deficiency of revenues under expenditures (251,953) (59,845) (57,593) (369,391) (340,012) Other financing sources: Transfers in from other funds 622,384 - - 622.384 103,917 ' Excess (deficiency) of revenues and other financing sources over expenditures and other financing uses 370,431 (59,845) (57,593) 252,993 (236,095) Fund balance (deficit), at beginning of year 423,700 - (40,490) 383,210 619,305 Fund balance (deficit), at end of year $ 794,131 $ (59,845) $ (98,083) $ 636,203 $ 383,210 - See accompanying independent auditors' report. t t 88 1 KODIAK ISLAND BOROUGH Nomnajor Capital Projects Funds Schedule of Capital Projects Year ended June 30, 2004 Project IM Project Encumbrances Capital projects - Education: 00100 430 -696 School Repair KHS Roof 00105 410 -484 Matching School 01100 430 -601 1 I Roof Repair 03100 410 -487 Weatherproof High School 03101 410 -488 IRMA Cricket Install 03102 410 -489 KHS Asbestos/Carpet 03103 410 -490 East and Main Paint 03104 410 -491 Refinish Gym Floors 03105 410 -492 Northstar Road /park design 03106 410 -493 KITS Emergency Generator 03107 410 -494 IRMA roof cleaning and repair 03116 430 -509 School Upgrade 03117 410 -511 Upgrade /Repair Match 01101 410 -485 Matching School 01102 420 -510 Series E Bond HS Roof Repair 01105 410 -695 Series F Bond HS Roof Repair 03119 420 -500 HS Swimming Pool 02108 430 -602 [IS Repairs Matching Grant (State) 130 410 -655 East Elementary Doorway 03118 430 -512 Chiniak Multi -Use N/A 420 -515 Old Harbor Gym Renovation 4102 420 -516 Larsen Bay School Repair 4103 420 -517 Ouzinkie Gum Renovation 02109 410 -486 HS Repairs Matching Grant (KIB) 60,000 - 60,000 Total education - Capital projects - Utilities: 00102 410 -698 Bayside Underground Electric 182 410 -692 State Fair & Rodeo Water - 22,795 Total utility projects 27,205 Capital projects - Ileafth: 03115 50,000 Hospital Assessment Needs - - Total utility projects 89 Encumbrances Appropriatiays Total Expenditures Total Unexpended Current Unencumbered Status -- r or 2004 appropriations w rr expenditures balance encumbrances balance Open $ 126,770 $ - $ 126,770 $ 80,714 $ - $ 80,714 $ 46,056 $ - $ 46,056 Complete 54,330 - 54,330 54,330 - 54,330 - - - Complete 125,398 - 125,398 125,398 - 125,398 - - - Complete 50,000 - 50,000 - - - 50,000 - 50,000 Complete 80,000 - 80,000 78,880 - 78,880 1,120 - 1,120 Complete 100,000 - 100,000 - - - 100,000 - 100,000 Open 50,000 - 50,000 969 36,890 37,859 12,141 - 12,141 Complete 60,000 - 60,000 55,691 - 55,691 4,309 - 4,309 Open 50,000 - 50,000 22,795 - 22,795 27,205 - 27,205 Open 50,000 - 50,000 - - - 50,000 - 50,000 Complete 20,000 - 20,000 20,000 - 20,000 - - - Open 125,804 - 125,804 110,762 28,684 139,446 (13,642) - (13,642) Open 53,917 - 53,917 52,423 3,080 55,503 (1,586) - (1,586) Complete 53,742 - 53,742 53,742 - 53,742 - - - Open 1,530,000 - 1,530,000 1,533,369 - 1,533,369 (3,369) - (3,369) Open 968,106 - 968,106 771,737 - 771,737 196,369 - 196,369 - - - - 58,409 58,409 (58,409) - (58,409) Complete 124,471 - 124,471 124,471 - 124,471 - - - Open 4,200 - 4,200 - - - 4,200 - 4,200 Open 20,000 - 20,000 3,895 2,826 6,721 13,279 - 13,279 Open - - - - 430 430 (430) - (430) Open - - - - 358 358 (358) - (358) Open - - - - 647 647 (647) - (647) Complete 53,345 - 53,345 53,596 - 53,596 (251) - (251) 3,700,083 - 3,700,083 3,142,772 131,324 3,274,096 425,987 - 425,987 Open 22,000 - 22,000 - - - 22,000 - 22,000 Open 25,000 25,000 24,024 - 24,024 976 - 976 47,000 47,000 24,024 - 24,024 22,976 - 22,976 Open 54,000 - 54,000 - - - 54,000 - 54,000 54,000 54,000 54,000 - 54,000 89 KODIAK ISLAND BOROUGII Nonmajor Capital Projects Funds Schedule of Capital Projects Year ended June 30, 2004 90 Encumbrances Project Appropriations Total Expenditures Total Unexpended Current Unencumbered no. Project Status riot 04 appropriations Prior 2004 expenditures balance encumbrances balance Capital projects - Other: 410 -400 Undesignated Projects Open 369,194 322,884 692,078 18,539 - 18,539 673,539 - 673,539 85 410 -471 Village Metals Removal Open 150,000 - 150,000 120,994 - 120,994 29,006 - 29,006 105 410 -482 Anton Larsen Dock Open 140,000 - 140,000 139,580 32 139,612 388 - 388 114 410 -642 State Airport Improvements Open 11,000 - 1 1,000 60 - 60 10,940 - 10,940 117 410 -645 Ileliopad Striping Open - - - - - - - - - 133 410 -658 Red Cross Building Repairs Open 12,000 - 12,000 11,153 50 11,203 797 - 797 142 430 -642 Clean Water Fund /Kauirk Complete 50,000 - 50,000 23,192 - 23,192 26,808 - 26,808 03108 410 -495 Borough Building Parking Open 50,000 - 50,000 - - - 50,000 - 50,000 03109 410 -496 Borough Air Handling Open 10,000 - 10,000 - - 10,000 - 10,000 03110 410 -497 KIB emergency Generator Open 20,000 - 20,000 2,353 - 2,353 17,647 - 17,647 03111 410 -498 KIB Security Doors Open 8,000 - 8,000 - - - 8,000 - 8.000 03114 430 -507 CIAP Grant Open 189,985 - 189,985 20,008 35,541 55,549 134,436 - 134.436 N/A N/A WBComm Plan Revision Open 33,380 - 33,380 - - - 33,380 - 33.380 146 410 -663 BMX Bike Trail Open 55,000 13,920 68,920 49,278 - 49,278 19,642 - 19,642 159 410 -675 Borough Parks Open 26,500 - 26,500 27,106 - 27,106 (606) - (606) 164 430 -645 Waste Managementbnp Open 1,741,400 - 1,741,400 379,232 285,519 664,751 1,076,649 - 1,076,649 169 430 -649 Clean Water Karluk Complete 350,000 - 350,000 89,189 - 89,189 260,811 - 260,811 173 410 -683 Bayside Classroom Add Open 75,000 - 75,000 48,199 - 48,199 26,801 - 26,801 174 410 -684 Bayside Storage /Bay Add Open 400,000 - 400,000 20 3,000 3,020 396,980 - 396,980 177 430 -687 Anton L rsen Boat Ramp Open 400,000 160,000 560,000 566,475 28,932 595,407 (35,407) - (35,407) 184 430 -694 Oil Spill Response Equip Open 400,000 - 400,000 399,411 - 399,411 589 - 589 00104 430 -699 Tide Gate Open 10,000 10,000 20,000 8,904 11,096 20,000 - - - 00106 410 -690 MIS Study Complete 30,000 - 30,000 29,983 - 29,983 17 - 17 01106 430 -625 Volunteer Fire Assistance Program Complete 3,699 - 3,699 3,699 - 3,699 - - - 02107 430 -648 ADP &G Research Study Open 200,000 - 200,000 64,990 47,260 112,250 87,750 - 87.750 N/A 410 -624 Women's Bay Community Plan Open - - - - 22,380 22,380 (22,380) - (22,380) 0308 430 -518 Homeland Security Open - - - - 7,105 7,105 (7,105) (7,105) 4104 410 -701 Trinity Paving Road Open - - - - 215,508 215,508 (215.508) - (215,508) 4106 N/A SHSGP Grant Open - 138,151 138,151 20,276 - 20,276 117,875 - 117,875 02110 410 -506 GIS Snrdy Open 20,000 - 20,000 - - 20,000 - 20,000 Total - capital projects other 4,755,158 644,955 5,400,113 2,022,641 656,423 2,679,064 2,721,049 - 2,721,049 Total all capital projects $ 8,502,241 $ 644,955 $ 9,147,196 $ 5,189,437 $ 787,747 $ 5,977,184 $ 3.170,012 $ - $ 3,170.012 90 1 [I 1 1 r� 1 ENTERPRISE FUNDS 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. t I �j 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, 2004 (With summarized financial information for the year ended June 30, 2003) See accompanying notes to financial statements. 91 2004 Variance - favorable 2003 Budget Actual (unfavorable) Actual Operating revenues: Solid waste collection $ 1,610,900 $ 2,251,245 $ 640,345 $ 1,734,541 Solid waste disposal 1,007,000 951,789 (55,211) 1,003,484 Other 20,700 6,742 (13,958) 50,076 2,638,600 3,209,776 571,176 2,788,101 Operating expenses: Personnel services 468,660 497,113 (28,453) 438,187 Refuse collection 1,250,000 1,324,943 (74,943) 1,275,844 Refuse disposal 306,000 230,639 75,361 284,590 Professional services 180,000 152,837 27,163 99,880 Repairs and maintenance 31,000 27,909 3,091 29,406 Landfill closure and postclosure costs 145,470 246,929 (101,459) 218,603 Depreciation 115,260 259,800 (144,540) 185,634 General and administration 236,600 189,442 47,158 232,253 Contributions 5,000 5,445 (445) 4,020 Recycling services 75,000 68,506 6,494 98,067 2,812,990 3,003,563 (190,573) 2,866,484 Operating loss (174,390) 206,213 380,603 (78,383) Other income (expense): Interest income 5,000 7,114 2,114 30,016 Interest expense - (47,564) (47,564) (47,168) Loss before capital contribution (169,390) 165,763 335,153 (95,535) Capital contribution - - - 1,691,161 Change in fund equity $ (169,390) 165,763 $ 335,153 1,595,626 Fund equity, beginning of year 3,179,893 1,584,267 Fund equity, end of year $ 3,345,656 $ 3,179,893 See accompanying notes to financial statements. 91 KODIAK ISLAND BOROUGH Hospital Facilities Fund Statement of Revenues, Expenses, and Changes in Fund Equity Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) Operating revenues: State sources Revenue sharing Other Lease income Donations PKIMC gain Operating expenses: Personnel services Professional services Depreciation Maintenance and repairs Operating loss Other income (expense): Interest income Interest expense Contribution to the State of Alaska Contribution to Providence Hospital 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. 92 2004 Variance favorable 2003 Budget Actual (unfavorable) Actual $ 40,000 $ — $ (40,000) $ 39,084 — — — 54,000 720,000 792,224 72,224 720,000 50,000 1,305 (48,695) 56,428 200,000 — (200,000) — 1,010,000 793,529 (216,471) 869,512 — 7,002 (7,002) 5,802 — (7,977) 7,977 54,000 1,160,600 1,261,302 (100,702) 1,272,890 — 28,398 (28,398) 2,671 1,160,600 1,288,725 (128,125) 1,335,363 (150,600) (495,196) (344,596) (465,851) 5,000 — (5,000) 655 (80,950) (80,419) 531 (60,741) — (1,170,000) (1,170,000) - - (130,000) (130,000) - - — — (2,171) (226,550) (1,875,615) (1,649,065) (528,108) (1,994,560) (1,644,560) 350,000 (224,340) (1,994,560) (1,644,560) 350,000 (224,340) (2,221,110) (3,520,175) (1,299,065) (752,448) — — — 785,251 $ (2,221,110) (3,520,175) $ (1,299,065) 32,803 22,173,523 22,140,720 $ 18,653,348 $ 22,173,523 92 KODIAK ISLAND BOROUGH 911 Services Fund Statement of Revenues, Expenses, and Changes in Fund Equity Budget and Actual Year ended June 30, 2004 (With summarized financial information for the year ended June 30, 2003) See accompanying notes to financial statements. M, Variance - favorable 2003 Budget Actual (unfavorable) Actual Operating revenues: Customer charges $ 69,000 $ 101,435 $ 32,435 $ 68,003 Operating expenses: Personnel services 10,500 9,000 1,500 10,500 Telephone services 58,500 71,427 (12,927) 60,000 69,000 80,427 (11,427) 70,500 Change in fund equity $ — 21,008 $ 21,008 (2,497) Fund equity, beginning of year 54,093 56,590 Fund equity, end of year $ 75,101 $ 54,093 See accompanying notes to financial statements. 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, 2004 (With summarized financial information for the year ended June 30, 2003) See accompanying notes to financial statements. 94 1 2004 Variance favorable 2003 Budget Actual (unfavorable) Actual Operating revenues: Rents and royalties $ 1,553,835 $ 1,559,600 $ 5,765 $ 1,538,968 Operating expenses: Personnel services 170,110 155,677 14,433 159,794 Employee benefits 45,255 45,445 (190) 41,292 Miscellaneous 147,510 80,774 66,736 88,188 Depreciation 740,330 745,259 (4,929) 744,114 Cleaning and janitorial 47,000 35,079 11,921 42,443 Heating 82,000 80,683 1,317 54,297 Electrical 185,500 157,537 27,963 141,432 Plumbing 77,240 12,795 64,445 20,727 Air conditioning 2,000 19 1,981 1,959 Elevators 2,000 1,991 9 2,191 1,498,945 1,315,259 183,686 1,296,437 Operating income 54,890 244,341 189,451 242,531 Other income Investment income 51,060 16,863 (34,197) 71,875 Interest expense (503,300) (485,713) 17,587 (503,300) Change in fund equity $ (397,350) (224,509) $ 172,841 (188,894) Fund equity, beginning of year 11,631,734 11,820,628 Fund equity, end of year $ 11,407,225 $ 11,631,734 See accompanying notes to financial statements. 94 1 SUPPLEMENTARY SCHEDULES 1 KODIAK ISLAND BOROUGH ' Summary of Bonded Debt Service Requirements to Maturity June 30, 2004 t 95 Annual principal and interest requirements on General Obligation Refunding and Construction Bonds. Year Principal Interest Total 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 2012 1,645,000 1,360,000 259,735 183,180 1,904,735 1,543,180 2013 1,420,000 124,700 1,544,700 2014 1,480,000 63,640 1,543,640 $ 14,385,000 $ 3,499,900 $ 17,884,900 t 95 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 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Interest rate 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 $ 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 1,419,546 $ 9,340,000 $ 1,419,540 $ 12,179,086 96 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 2005 2006 2007 2008 2009 2010 2011 Interest rate 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 $ 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 $ 115,437 $ 1,110,000 $ 115,437 $ 1,340,874 97 KODIAK ISLAND BOROUGH General Obligation 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. Fiscal year 2005 2006 2007 2008 2009 2010 2011 Interest rate 8.35% 6.90% 7.00% 7.00% 7.05% 7.10% 7.15% Interest Principal Interest due due due August 01 February 01 February 01 Total $ 32,909 $ 105,000 $ 32,909 $ 170,818 28,525 110,000 28,525 167,050 24,730 120,000 24,730 169,460 20,530 130,000 20,530 171,060 15,980 140,000 15,980 171,960 11,045 150,000 11,045 172,090 5,720 160,000 5,720 171,440 $ 139,439 $ 915,000 $ 139,439 $ 1,193,878 98 I I KODIAK ISLAND BOROUGH General Obligation Bonds, 2003 Series A Retirement Schedule 2003A 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 A Bond. This issue was marketed by the Alaska Municipal Bond Bank. Legal opinion was rendered by bond council, `Vohlforth, 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 Borugh's General Obligation Bonds, 1994 Series A. • Fiscal year ' 2005 2006 due due due 2007 Ir � I Interest rate 2.00% 2.50% 2.63% Interest Principal Interest due due due August 01 February 01 February 01 Total $ 35,931 $ 985,000 $ 35,931 $ 1,056,862 26,081 1,005,000 26,081 1,057,162 13,519 1,030,000 13,519 1,057,038 $ 75,531 $ 3,020,000 $ 75,531 $ 3,171,062 99 1 1 u 1 �1 U STATISTICAL SECTION ! Statistical Tables provide report users with a better historical perspective in assessing current financial status and trends of the Borough. I f� 1 KODIAK ISLAND BOROUGH Kodiak, Alaska General Governmental Expenditures and Other Uses by Function"' Last Ten Fiscal Years Fiscal General Health and year government sanitation"' 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 2004 2,472,563 257,037 Other Education "' transfers Total 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 7,885,193 399,290 11,014,083 (a) Includes general fund only. (b) Includes operating transfers for this function Source: Borough general ledger 100 KODIAK ISLAND BOROUGH Kodiak, Alaska General Revenues by Source "' Last Ten Fiscal Years (a) Includes general fund only Source: Borough general ledger 101 Licenses, Inter - Fiscal permits governmental Investment Operating Miscellaneous year Taxes and fees revenue income transfers revenue Total 1995 $ 5,976,914 $ 928,079 $ 1,633,162 $ 659,794 $ — $ — $ 9,197,949 1996 5,693,539 285,100 2,396,704 452,196 — — 8,827,539 1997 5,582,037 108,483 2,396,272 371,414 9,672 — 8,467,878 1998 7,589,595 86,138 2,739,075 333,243 — — 10,748,051 1999 7,694,387 86,523 2,055,803 238,515 32,632 — 10,107,860 2000 8,057,781 92,609 1,770,038 358,351 129,829 — 10,408,608 2001 8,135,184 95,129 2,135,483 583,633 18,154 44,945 11,012,528 2002 8,017,344 95,857 3,397,240 294,675 200,000 140,901 12,146,017 2003 8,028,513 153,727 2,683,460 171,532 1,000,000 — 12,037,232 2004 8,165,326 187,898 2,010,431 105,812 850,000 — 11,319,467 (a) Includes general fund only Source: Borough general ledger 101 KODIAK ISLAND BOROUGH Kodiak, Alaska Property Tax Levies and Collections Last Ten Fiscal Years Outstanding delinquent taxes 232,679 289,210 192,722 381,180 234,738 316,482 364,044 292,823 312,925 386,801 Percent of delinquent taxes to tax levy 4.5 5.3 3.5 52 3.0 4.1 4.5 3.5 3.7 4.6 102 Percent of Percent of current Delinquent total tax Fiscal Total Current tax levy tax Total tax collections year tax levy collections collected collections collections to tax levv 1995 $ 5,141,728 S 4,955,108 96.4 $ 56,140 $ 5,011,248 97.5 $ 1996 5,466,066 5,249,168 96.0 56,531 5,305,699 97.1 1997 5,576,773 5,478,939 98.2 96,490 5,575,429 100.0 1998 7,384,490 7,121,678 96.4 77,576 7,199,254 97.5 1999 7,704,172 7,575,491 98.3 314,367 7,889,858 102.4 2000 7,743,649 7,507,018 96.9 175,066 7,682,084 99.2 2001 8,164,127 7,912,859 96.9 204,458 8,117,317 99.4 2002 8,411,173 8,313,881 98.8 362,377 8,676,258 103.2 2003 8,395,117 8,167,437 97.3 178,885 8,346,322 99.4 2004 8,462,404 8,125,629 96.0 69,831 8,195,459 96.8 Source: Borough general ledg �N4t� 132 Outstanding delinquent taxes 232,679 289,210 192,722 381,180 234,738 316,482 364,044 292,823 312,925 386,801 Percent of delinquent taxes to tax levy 4.5 5.3 3.5 52 3.0 4.1 4.5 3.5 3.7 4.6 102 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 $200,000,000 103 $0 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 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 2004 660,040,861 687,078,300 110,941,506 307,988,900 770,982,367 995,067,200 77.48 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 $200,000,000 103 $0 1995 1996 1997 1998 1999 2000 2001 2002 2003 KODIAK ISLtW BOROUGII Kodiak Alaska Property T.x Rates and Contributions to the School District (per SI00 of Assessed Value) Last Ten Fiscal Years Fiscal Assessed Amount of Woodland Trinity Mission Contribution Equivalent 1995 S 614,570,795 S 3,770,399 6.14 1996 640,462.576 Acres Islands Lake 654,134,651 4,839,887 7.40 1998 681,342,892 5,715,361 KIB City Street Street Tide Road Services Areas 6,678,652 Fire Areas 2001 Fiscal General of Lighting Lighting Gate Nlonashk. Service Bay vi- urtrrsrvice 7,767,661 omens rear Fund Kodiak Area Arca Arc. Bav District Road Bav Area No.I Bay 1995 675 2.00 0.75 - - 1.50 1,75 1.00 2.00 150 125 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 2.00 150 L25 1998 9.25 2.00 0.50 - - 1.50 0.75 L00 2.00 1.50 1.25 1999 9.25 2.00 - - - 1.50 0.50 1.00 100 1.50 L25 2000 9.25 2.00 - - - 1.50 0.50 1.00 2.00 1.50 1.25 2001 9.25 2.00 - - - 150 1.00 1,00 2.00 1.50 1.25 2002 9.25 2.00 - - - 150 1.25 1.00 2.00 1.50 1.25 2003 915 100 - - - 1.50 1.00 1.00 2.00 1.50 1.25 2004 9.25 2.00 - 0.50 1.00 1.50 1.00 1.00 2.00 1.50 115 Contributiotts to the School District Fiscal Assessed Amount of h(illage Year value Contribution Equivalent 1995 S 614,570,795 S 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 6,913,926 923 2002 752,049,060 7,550,506 10.04 2003 760,451,357 7,767,661 10.21 2004 770,982.367 8,498,082 11.02 Source: Borougt Source: Borougt Source Borough ordinance and assessment WE KODIAK ISLAND BOROUGH Kodiak, Alaska Ten Largest Property Taxpayers Year ended June 30, 2004 Source: Borough tax records. ON Percentage Percentage of total Net of total assessed Assessed taxes taxes value valuation levied levied Western Alaska Fisheries 1.5% $ 11,487,450 $ 121,325 1.4% Alaska Communications Systems 1.5% 11,771,192 115,149 1.4% Ocean Beauty Seafoods Inc 1.3% 9,824,538 105,962 1.3% International Seafoods of Alaska 1.3% 9,837,184 103,982 1.2% Brechan Enterprises, Inc. 1.2% 8,965,219 98,507 1.2% Wal -Mart Real Estate Bus Trust 1.0% 7,934,200 89,260 1.1% Afognak Native Corporation 1.3% 9,623,321 88,139 1.0% Mill Bay Plaza Assoc Ltd 0.9% 7,138,400 80,307 1.0% Horizon Lines of Alaska, LLC 1.0% 7,252,942 79,138 0.9% Kodiak Fishmeal Company 1.0% 7,409,320 73,241 0.9% Totals 12.0% $ 91,243,766 $ 955,010 11.4% Source: Borough tax records. ON 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 106 Ratio of net general Less Debt Net general bonded debt Net general I Fiscal Assessed Gross Service bonded to assessed bonded debt , year Population value bonded debt Fund debt value per capita 1995 15,575 $ 614,570,795 S 25,665,000 $ 2,075,768 $ 23,589,232 3.8 $ 1,515 1996 15,400 (a) 640,462,576 23,205,000 1,759,644 21,445,356 3.3 1,393 1997 14,058 (a) 654,134,651 21,660,000 549,569 21,110,431 3.2 1,502 1998 14,181 681,342,892 20,020,000 432,942 19,587,058 2.9 1,381 1999 13,848 (a) 686,856,392 18,910,000 340,159 18,569,841 2.7 1,341 2000 13,989 (a) 715,699,035 17,025,000 272,651 16,752,349 2.3 1,198 2001 13,913 (a) 748,755,533 17,690,000 344,942 17,345,058 2.3 1,247 2002 14,167 (a) 752,049,060 16,615,000 448,065 16,166,935 2.1 1,141 2003 13,874 (a) 760,451,857 15,620,000 17,879 15,602,121 2.1 1,125 2004 13,811 (a) 770,982,367 14,385,000 33,915 14,351,085 1.9 1,039 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. 106 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 $ 14,351,085 100% $ 14,351,085 City of Kodiak: Revenue bonds 1,015,000 100% Total $ 15,366,085 (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. 1,015,000 t 1 107 KODIAK ISLAND BOROUGH Kodiak, Alaska Computation of Legal Debt Margin June 30, 2003 ' Assessed value $ 770,982,367 Plus exempt property 1,736,191,891 Total $ 2,507,174,258 The State of Alaska does not mandate a debt limit to its municipalities and political subdivisions. Debt capacity is ultimately determined by the voters and the marketplace. Source: Borough assessment records. 108 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 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 2004 1,255,833 667,744 1,923,577 Total Ratio of general debt service expenditures to general and transfers expenditures 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 10,991,975 17.5 (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 109 KODIAK ISLAND BOROUGH Kodiak, Alaska Demographic Statistics Last Ten Fiscal Years Fiscal year Population (a) 1995 15,575 1996 15,400 1997 14,058 1998 14,181 1999 13,848 2000 13,989 2001 13,913 2002 14,167 2003 13,874 2004 13,811 Sources: (a) State of Alaska, DCRA certified population. (b) Kodiak Island Borough School District (c) Department of Labor, Anchorage School enrollment (b) 2,711 2,872 2,862 2,851 2,798 2,810 2,774 2,821 2,751 2,704 Percentage Unemployment rate (c) 11.5 14.5 9.1 5.0 5.1 13.4 10.9 18.2 10.3 10.6 110 KODIAK ISLAND BOROUGH Kodiak, Alaska Property Value, Construction, and Bank Deposits Last Ten Fiscal Years 'Assessed value. Source: Borough assessing records, City of Kodiak building department and local bankers. Construction Property Value" Commercial Residential Deposits Fiscal No. of No. or in local year permits Value permits Value banks Commercial Residential Nontaxable 1995 59 S 6,055.321 159 S 4,305,352 S 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 9,086,074 130,465,733 172,709,507 422,160,780 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 11,707,269 129,546,701 206,386,964 463,419,197 1,996,235,045 2004 44 2,859,775 179 14,798,679 128,062,000 207,611,182 480,581,831 1,736,191,891 'Assessed value. Source: Borough assessing records, City of Kodiak building department and local bankers. 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. 112 1995 1996 1997 Land area - square miles 7,130 7,130 7,130 Miles of improved street 21.60 21.60 24.70 Building permits: Permits issued 218 201 148 Value of buildings (thousands) 10,360 11,728 7,822 Fire protection: Number of fire stations 2 2 2 Number of employees 1 I 1 Police protection - none Recreation: Parks - number of acres 223 224 224 Facilities: Number of playgrounds 15 16 16 Number of swimming pools 1 1 1 Education: Number of schools: City of Kodiak Elementary 3 4 4 City of Kodiak Junior High 1 1 1 City of Kodiak High School 1 1 1 Village Schools (a) 9 9 9 Number of personnel: (b) Administration 5.0 6.0 6.0 Principals 11.0 12.0 11.7 Teachers 185.3 183.8 188.5 Technical 6.5 3.0 3.5 Clerical and Aides 73.3 61.7 63.7 Maintenance/Warehouse 19.7 12.0 9.0 Custodial 21.6 22.5 26.3 Food Service 8.5 3.7 4.2 Total number of personnel 330.9 304.7 312.9 Number of students 2,773 2,793 2,809 Number of municipal employees 65 63 63 Elections: Number of registered voters 7,382 8,217 9,350 Number voting in last election 2,113 1,471 2,120 Percent of registered voters 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. 112 1998 1999 2000 2001 2002 2003 2004 7,130 7,130 7,130 7,130 7,130 7,130 7,130 24.70 25.02 25.00 25.58 25.66 25.66 25.66 188 192 210 231 220 213 223 24,780 15,007 11,806 12,881 11,934 14,623 129,547 2 2 2 2 2 2 2 1 1 1 1 1 1 1 224 224 224 224 224 224 224 16 16 16 16 16 16 16 1 1 1 1 1 1 1 4 4 4 4 4 4 4 1 1 1 1 1 1 1 1 1 1 1 1 1 1 9 9 9 9 8 7 7 5.2 5.2 4.2 7.5 7.2 6.8 8.6 11.4 11.4 10.3 9.5 11.3 10.3 8.0 179.6 178.1 188.6 200.0 202.6 202.1 201.1 9.0 9.0 11.1 3.0 4.0 3.5 4.0 72.7 75.2 78.9 79.5 121.0 115.4 130.2 10.0 8.0 10.8 15.0 18.0 15.2 28.4 27.6 30.6 29.0 39.0 32.0 29.9 10.6 6.3 6.7 10.7 8.0 8.5 8.2 6.4 321.8 324.2 343.6 361.5 404.6 391.4 397.3 2,897 2,815 2,798 2,750 2,821 2,751 2,704 --j0 46 36 37 37 39 39 9,967 10,389 9,935 10,311 10,085 10,099 10,099 2,076 1,972 2,525 2,521 2,914 1,473 1,473 20.8% 19.0% 25.4% 24.4% 28.9% 14.6% 14.6% 113