FY2019 Popular Annual Financial ReportPOPULAR
ANNUAL
FINANCIAL
FOR FISCAL YEAR ENDING
JUNE 30, 2019 REPORT
Kodiak Island Borough
Popular Annual Financial Report
For Fiscal Year Ending June 30, 2019
R,
Kodiak, Alaska
Government, Geographic Location & Population
The Kodiak Island Borough was incorporated in 1963 as a sec-
ond class Borough and currently operates under a manager -
form of government. The Manager is hired by the Assembly
and oversees the day-to-day business of the Borough. The
seven member Assembly, along with the Mayor, are elected
by the people. The day-to-day business of the Borough is
conducted within six departments: Manager, Clerk, Finance/
IT, Assessing, Community Development and Engineering/
Facilities.
Kodiak Island lies at the western border of the Gulf of Alaska
and is approximately 250 air miles south of Anchorage, Alas-
ka. The island is accessible only by boat or plane and is the
second largest island in the United States. In total, the Bor-
ough encompasses 7,130 square miles and currently serves a
population of 13,136.
Services
The Borough has a full range of services, including: general
government, fire protection, first -response emergency medi-
cal services, health facilities, road and other infrastructure
construction and maintenance, community and economic
development and solid waste disposal. Additionally, the
Borough supports tourism development, local parks, and
cultural and recreational activities. The Borough is financially
responsible for a legally separate school district which is
reported separately within the Borough's financial state-
ments. Additional information on this legally separate entity
can be found in the Comprehensive Annual Financial Report
(CAFR).
Economics
Seafood processing is by far the largest industry, generating
revenue in several categories. The Port of Kodiak has been
consistently ranked among the top ten ports in the United
States in terms of amount and value of product delivered. In
2017, according to the National Ocean Economics Program,
the Port of Kodiak ranked third largest in both landed weight
(530,400,000) and landed value ($152,000,000).
Tourism remains strong with stable transient accommoda-
tions tax revenues and cruise ship traffic which is expected to
increase in the coming years.
Kodiak Island is home to the largest U.S. Coast Guard Base in
the United States, employing over 1,350 people and providing
vital services to the marine industries which are integral to
the community.
The Pacific Spaceport Complex -Alaska, a launch facility, is
capable of handling small to medium sized rockets for launch-
ing low earth orbiting satellites, as well as other military, sci-
entific and research missions.
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About The Popular Annual Financial Report
The Popular Annual Financial Report (PAFR) is intended to brief the
residents of the Kodiak Island Borough on the financial standing of
their municipal government. The information in this report was
drawn from the FY 2019 Comprehensive Annual Financial Report
(CAFR). The CAFR conforms to the generally accepted accounting
principles (GAAP) and includes audited financial statements, as well
as more detailed information than presented here. Although the
financial numbers in this Popular Annual Report come from an au-
dited source, they are presented in this report in a condensed and
unaudited format. You can also find additional financial information
on our OpenGov Financial Transparency portal at:
https:Hkodiakak.opengov.com/.
For copies of the CAFR and PAFR, visit the Borough's office located
at 710 Mill Bay Road, Kodiak, Alaska, the Borough's Facebook page
or on our website at www.kodiakak.us.
We hope you find the report to be informative. We welcome your
comments, questions and suggestions.
Michael Powers Dora Cross
Borough Manager Finance Director
Kodiak Island Borough Popular Annual Financial Report For Fiscal Year Ending June 30, 201!
BOROUGH POPULATION AND STATISTICAL INFORMATION
FY 2017 FY 2018 FY 2019
Borough Population
13,563
13,287
13,136
Annual Unemployment Rate in the Borough
4.6%
4.8%
4.2%
Percentage of owner -occupied housing in the Borough
61.7%
60.7%
59.0%
Median Gross Rent within the Borough
$1,294
$1,254
$1,294
Median household income within the Borough
$74,167
$73,068
$74,167
Percent of persons living in poverty within the Borough
7.5%
7.3%
9.3%
KIBSD Student Enrollment
2,425
2,437
2,395
KIBSD Employees (Teachers and support personnel)
383
416
382
Number of Schools in the Borough
13
13
13
Number of Borough Employees
45
45
41
FINANCIAL STRUCTURE
The Borough maintains 32 separate funds to account for governmental services. They are generally established based upon their legal
basis and objectives. These funds are grouped into two separate categories: Governmental Funds and Proprietary Funds. This report
focuses on the funds which interests most residents : General, Education Support and Municipal Solid Waste Collection & Disposal.
GOVERNMENTAL FUNDS
(Reports the basic service activities provided by the Borough)
Governmental Fund Name Activity or Purpose of Fund
Operating fund for the Borough. Departments within the fund are: the Assembly, Assessing, Clerks,
Community Development, Engineering & Facilities, Finance/IT (Information Technology) and the Man -
Operating funds for specific revenue sources. These include: education, facilities, tourism, emergency
planning and neighborhood service districts such as road, fire and street lighting, as well as mainte-
Debt Service Fund Operating fund for the payment of general long-term debt principal, interest and other related costs.
Currently the fund services General Obligation Bonds for school related projects.
Capital Project Funds � Operating fund for the acquisition or construction of major capital facilities and equipment.
GOVERNMENTAL FUNDS - FUND BALANCE 6/30/19
■ General Fund ■ Special Revenue Funds ■ Debt Service Fund ■ Capital Funds
"'5,360,424.00'I $45299,402.00 $533,471.00_� 5,05:
i
Kodiak Island Borough
Popular Annual Financial Report For Fiscal Year Ending June 30, 2019
GOVERNMENTAL FUNDS, (cont'd)
(Reports the basic service activities provided by the Borough)
2019 Governmental Fund Highlights:
• General Fund - Fund balance increased by $2,171,470 (68.09%). There were three main contributors to the overall increase in the
fund. 1) Received $961,970 more in various state revenues than anticipated, 2) Received $314,393 more in Federal PILT revenues
than anticipated and 3) a $465,085 reduction in General Fund expenditures.
• Education Support (Special Revenue Fund) - Fund balance deficit decreased by $95,772 (75.64%) to $30,842. The key factor lead-
ing to this change was increased property tax revenues due to the mill rate allocation increasing from 6.80 mills in FY2018 to 7.05
mills.
• Facilities Fund (Special Revenue Fund) - Fund balance increased by $947,112 (2.41%). The largest use of allowed earning use in
this fund was a transfer of $338,982 to the Education Debt Service Fund to help cover required debt service payments and a
$338,983 transfer to the Renewal & Replacement Project Fund.
Statement of Revenue, Expenditures and Changes in Fund Balance (Deficits)
All Governmental Funds
(includes General and Education Support Funds)
FY 2017 FY 2018
Revenues
General Education
Fund Support Fund
(Special Revenue)
FY 2019 FY 2019 FY 2019
Property Taxes $15,700,272
$16,002,128
$16,794,958 $1,919,598
$9,795,956
Severance Taxes 1,414,557
1,929,409
1,206,698 1,206,698
-
Intergovernmental 8,762,875
9,042,586
10,276,215 4,403,041
220,392
Services, Fees, Investments & 3,295,653
1,875,439
$3,819,200 782,725
-
Total Revenues $29,173,357
$28,849,562
$32,097,071 $8,312,062
$10,016,348
Expenditures
General Government $5,281,999
$5,715,946
$5,308,369 $4,487,141
-
Public Safety 699,118
684,499
714,826 115,800
-
Community & Economic Devel- 1,096,928
opment
1,177,198
1,183,798 1,094,668
-
Emergency Preparedness 35,861
43,038
14,307 14,307
-
Health & Social Services 233,999
207,500
182,900 182,900
-
Parks, Culture & Recreation 47,734
81,851
77,568 77,568
-
Service District Maintenance 475,248
587,707
569,610 -
-
Primary & Secondary Education 10,373,548
9,449,500
9,970,576 50,000
9,920,576
Capital Outlay 5,022,964
3,784,485
3,083,409 -
-
Debt Service 7,162,872
7,278,310
7,688,414 -
-
Total Expenditures $30,430,271
30,327,073
$28,793,777 $6,022,384
$9,920,576
Other financing sources (uses)
Increase (decrease) in fund bal-
ance
(1,071,648) I 181,1421 591,491
(2,328,562) (1,296,369) 1 3,894,785
(118,208) -
2,171,4701 95,772
Fund Balance, beginning of year, 55,975,630) 53,647,0681 52,350,699 3,188,9541 1126,614)
as restated 1
Fund Balance, at end of year
4
Kodiak Island Borough
Proprietary Fund Name
Popular Annual Financial Report For Fiscal Year Ending June 30, 2019
PROPRIETARY FUNDS:
(Reports the business -type activities provided by the Borough)
Activity or Purpose of Fund
Accounts for the collection and disposal of solid waste and for the operation of the Leachate
Treatment plant.
Accounts for the Borough -owned hospital.
Accounts for the Borough -owned long-term care center.
Accounts for the Borough -owned Kodiak Fisheries Research Center.
Accounts for fees collected from all phone lines for a 911 emergency system.
PROPRIETARY FUNDS - NET POSITION 6/30/19
■ Municipal Solid Waste ■ Hospital ■ Long Term Care Center ■ KFRC ■ 911 Services
$17,079,518.00 $16,252,451.00 $11,202,627.00
�6a591�765_00 _- )_
$19.00
2019 Proprietary (Enterprise) Funds Highlights:
• Municipal Solid Waste Collection and Disposal — Net position increased by $1,511,358 (9.70%) due to an increase in charges
for services and an increase in investment income.
• Hospital Facilities— Net position increased by $283,796 (1.77%) due to lease revenues.
• Long -Term Care Center — Net position increased by $207,882 (3.26%) due to timing differences in revenues and bond pay-
ments.
• Kodiak Fisheries Research Center (Enterprise Fund) — Net position decreased by $540,478 (4.60%) due to decreasing lease
revenues and an increase in utility expenses.
• Overall, total revenues increased by $1,194,579 (15.83%) from FY2018.
Statement of Revenue, Expenses and Changes in Net Position (Deficits)
Other Financial Sources (uses) 1,134,3721 45,0001 45,000
Net Position, beginning of year,
as restated
Net Position, end of year
49,818,277 I 49,418,083 I 49,663,803 15,568,160
All Borough Proprietary Funds
Municipal Waste
(Includes Municipal
Waste Collection & Disposal)
Collection & Dis-
posal
FY 2017
FY 2018
FY 2019
FY 2019
Revenues
Total Operating Revenue
$5,789,553
$7,374,788
$8,038,190
$4,470,299
Total Non -Operating Revenue
264,784
169,594
700,771
328,761
Total Revenues
$6,054,337
$7,544,382
$8,738,961
$4,799,060
Expenses
Total Operating Expenses
$6,229,317 I
$6,551,438
$6,605,558
$2,990,874
Total Non -Operating Expenses
1,095,225
792,2241
715,826
296,828
Total Expenses
$7,324,542
$7,343,6621
$7,321,384
$3,398,702
Other Financial Sources (uses) 1,134,3721 45,0001 45,000
Net Position, beginning of year,
as restated
Net Position, end of year
49,818,277 I 49,418,083 I 49,663,803 15,568,160
Kodiak Island Borough
Popular Annual Financial Report For Fiscal Year Ending June 30, 2015
GENERAL FUND REVENUES — A Closer Look
Revenue Source Reason(s) for Increase or Decrease
Investment earnings increased $1,914,314 (679%) due to positive fluctuating market rates and steadi-
ly increased interest rates causing
teadi-
lyincreasedinterestratescausing an above average investment year for the Borough.
'Intergovernmental Intergovernmental revenue increased largely due to $961,970 more in various state revenues and
$314,393 more in Federal PILT revenues than were anticipated.
Local Severance Tax Revenues decreased by $609,225 (34%); this tax is very dependent on the fishing,
timber and gravel economy in Kodiak. While the commercial fishing industry in Kodiak has been stable
with severance taxes on seafood ranging from $1,287,693 in FY2010 to $1,163,238 in FY2019, the tim-
ber and gravel economies have decreased.
General Fund Property Tax Revenues increased. The Borough -wide mill rate has remained the same at
10.75 mills since FY2012. How the mill rate is distributed to each fund changes annually. The General
Fund's share of the mill rate increased from .62 mills in FY2018 to 1.10 mills in FY2019.
9,000,000
8,000,000
■ Excise Taxes, Services,
Fees, Investments &
7,000,000
Other
■ Intergovernmental
6,000,000
5,000,000
■ Severance Taxes
4,000,000
■ Property Taxes
3,000,00"v
2,000,000
1,000,000
-
mi s mi s mi s
Category Descriptions:
Services, Fees, Investments & Other: Local revenues from penalties and interest, building permits, zoning permits, interest earnings
and changes in market value on investments, map sales and reimbursed expenses.
Intergovernmental: Federal and State revenues such as Payment in Lieu of Tax (PILT), Community Revenue Sharing, Fisheries Busi-
ness Tax Sharing, Fisheries Landing Tax, National Wildlife Refuge and PERS on Behalf Payments.
Severance Taxes: Local revenues from fish, gravel and timber.
Property Taxes: Local revenueS from residential and commercial real and personal properties and commercial aircraft.
Where Your Borough -Wide Property Tax Dollar Goes
Education Support
66 cents
Debt Service General Fund Renewal & Replacement
17 cents 10 cents 7 cents
CA
12
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Kodiak Island Borough
Popular Annual Financial Report For Fiscal Year Ending June 30, 2019
ASSEMBLY MEETINGS
Assembly meetings are held on the second and fourth Thursdays of each month at 6:30 p.m. Regular meetings can be
viewed live via internet streaming or viewed as a recording which is accessible through the Borough website. Assembly work
sessions have voice recordings which can be accessed through the Borough website. Meeting agendas can be heard by lis-
tening to a recorded message at (907) 486-9315 or can be viewed on the Borough website, http://www.kodiakak.us.
Meeting locations: Regular meetings—held in the Assembly Chambers, 710 Mill Bay Road
Call-in number to give public comment telephonically: 855-482-9202 or 907-486-3231
Work Session meetings—held in the school district conference room, 722 Mill Bay Road
SUMMARY OF ANNUAL BONDED DEBT SERVICE REQUIREMENTS
59,WBOW
58,D0o,000
$7,000,000
$6,DDD,Dtn
55,0D0,08D
$4,",00D
53,000,000
$2,000,000
51,000,000
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
• Total Bond Payments Due UPortl on of Total Payment Eligible for State Reimbursement
PROPERTY TAXES
The Assembly sets the mill rates, or the number of mills each individual taxpayer will be assessed or charged per dollar value of
property owned. A mill is one tenth of one percent of a dollar (.001). For FY 2019, the Borough -wide mill rate was 10.75 which
equates to 1.075 cents of tax to be paid for each dollar of assessed property value.
In addition to the Borough -wide mill rate, mill rates are set for taxing properties within specific boundaries for specific activities. If
the taxing area has a board or committee, they submit a budget and recommended rate to the Assembly. For those properties
within the city limits, the City of Kodiak's City Council sets the mill rate.
FY19
FY18
i FY17
Mill Rate Allocation History
0 R & R Projects 0 Debt Service 2 Education Support
7.62
0 General Fund
Kodiak Island Borough
Popular Annual Financial Report For Fiscal Year Ending June 30, 2019
CAPITAL PROJECTS
Completed in FY2019:
• East Elementary Renovation Phase II (Counters,
cabinets & flooring)
• Peterson & Kodiak Middle School Paving and
Underground Storage Tank Removal
• Chiniak Tsunami Shelter
• Bayside Fire Department Boiler Replacement
• Main Elementary, Port Lions & Old Harbor
Schools Underground Storage Tank Replacement
• Borough Building Exterior Painting
East Elementary Renovation Phase 11
Baler Building Roof & Siding
Scheduled for Completion Beyond FY2020:
• Hospital Retaining Wall
• Kodiak Fisheries Research Center Exterior Improvements
• Kodiak Fisheries Research Center Fire Alarm Upgrade
• Bayside Fire Department Exterior Improvements
• Borough Building Boiler Room Remodel
Borough Building Exterior Painting
Peterson Elementary Paving
Scheduled for Completion in FY2020:
• Baler Building Roof & Siding
• Lake Orbin Culvert Replacement
• Bayside Fire Department Paving
• Kodiak Middle School Boiler Room Remodel
• Kodiak High School & Kodiak Fisheries Research Center Electric
Boilers
• Bayside Fire Department Exhaust Extraction System
• Baler Building Fuel Tank
• Baler Building Septic System
• Hospital Fuel Tank Replacement
Lake Orbin Culvert