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FY1983 Popular Annual Financial ReportALASKA� KODIAK ISLAND BOROUGH Kodiak, Alaska May, 1983 KODIAK ISLAND BOROUGH Telephones 486-5736 - 486-5737 — Box 1246 KODIAK, ALASKA 99615 TO WHOM IT MAY CONCERN The material contained in this brochure was prepared by Blyth Eastman Paine Webber Incorporated as financing consultant to and under the direction of the Kodiak Island Borough. All of the following summaries of the Annual Reports of the Borough, of the Kodiak Island Borough School District and various financial studies contained herein do not purport to be complete or authoritative, and reference is made to such documents on file at the offices of the Borough and the School District for further information. Any statements herein involving matters of opinion or estimates, whether or not expressly so designated, are to be construed as provisional rather than factual. KODIAK ISLAND BOROUGH By: Phil C. Shealy, Borough Manager Bryce S. Weeks, Finance Officer May 1983 ii TABLE OF CONTENTS TABLES AND APPENDIX TABLE 1. Population............................................................... TABLE 2. Climate for Kodiak Island Borough Area ....................................... TABLE 3. Kodiak Area Fish Harvest 1980 .............................................. TABLE 4. Kodiak Island Borough Economic Indices ....................................... TABLE 5. Kodiak Island Borough Nonagricultural Employment .............................. TABLE 6. Unemployment in the Civilian Labor Force ...................................... TABLE 7. Income Grouping for 1981 .................................................. TABLE 8. Effective Buying Income .................................................... TABLE 9. Retail Sales.............................................................. TABLE 10. Public School Enrollment.................................................... TABLE 11. General Governmental Expenditures by Function ................................. TABLE 12. General Revenues by Source ................................................. TABLE 13. Property Tax Rates and Tax Levies ........................................... TABLE 14. Average Daily Membership .................................................. TABLE 15. Authorized Positions by Category ............................................. TABLE 16. Kodiak Island Borough School District ......................................... TABLE 17. State Contribution to School District Construction ................................ TABLE 18. Tax Collection Record ...................................................... TABLE 19. Ten Largest Taxpayers...................................................... TABLE 20. Summary Statement of Revenues and Expenditures ................................ APPENDIXA........................................................................ iii 1 1 3 4 5 5 6 7 7 11 12 13 13 14 14 15 17 18 19 21 23 Page Page THE KODIAK ISLAND BOROUGH ............ 1 The Kodiak Island Borough School District 10 Geography, Population and Climate ...... 1 School Facilities and Enrollment ......... 11 Transportation ....................... 2 School Operations .................... 11 Recreation .......................... 2 School Personnel ..................... 14 ECONOMY ............................. 3 FINANCIAL AND FISCAL MATTERS .......... 16 Economic Structure .................. 3 ....................... Debt Structure16 Employment ........................ 5 State Contribution Toward School Bond Alaska Native Corporations ............ 6 Debt Service ...................... 16 Economic Characteristics of the Population 6 Revenues and Expenditures ............. 17 BOROUGH GOVERNMENT AND SCHOOLS ...... 9 Tax Collections ...................... 18 Government ......................... 9 Capital Improvement Program .......... 19 Retirement System .................... 9 Tax Limitations ...................... 20 Labor Relations ...................... 10 Financial Statements of the Borough ...... 21 TABLES AND APPENDIX TABLE 1. Population............................................................... TABLE 2. Climate for Kodiak Island Borough Area ....................................... TABLE 3. Kodiak Area Fish Harvest 1980 .............................................. TABLE 4. Kodiak Island Borough Economic Indices ....................................... TABLE 5. Kodiak Island Borough Nonagricultural Employment .............................. TABLE 6. Unemployment in the Civilian Labor Force ...................................... TABLE 7. Income Grouping for 1981 .................................................. TABLE 8. Effective Buying Income .................................................... TABLE 9. Retail Sales.............................................................. TABLE 10. Public School Enrollment.................................................... TABLE 11. General Governmental Expenditures by Function ................................. TABLE 12. General Revenues by Source ................................................. TABLE 13. Property Tax Rates and Tax Levies ........................................... TABLE 14. Average Daily Membership .................................................. TABLE 15. Authorized Positions by Category ............................................. TABLE 16. Kodiak Island Borough School District ......................................... TABLE 17. State Contribution to School District Construction ................................ TABLE 18. Tax Collection Record ...................................................... TABLE 19. Ten Largest Taxpayers...................................................... TABLE 20. Summary Statement of Revenues and Expenditures ................................ APPENDIXA........................................................................ iii 1 1 3 4 5 5 6 7 7 11 12 13 13 14 14 15 17 18 19 21 23 STATE OF ALASKA KODIAK ISLAND BOROUGH Phillip C. Andersen Scott Arndt Frances Cater Kodiak, Alaska Borough Assembly R. David Herrnsteen, Mayor James Peotter, Deputy Mayor Administration Dennis Murray David Wakefield Lorne White Phil C. Shealy, Borough Manager David Waldron, Facilities Coordinator Will Walton, Director of Planning Shirley "Mickie" Miller, Borough Clerk Bryce S. Weeks, Director of Finance School Board Jim Olson, President Stan Baltzo, Vice President Dave Thompson, Clerk Dennis Nelson Mary Jo Simmons, Treasurer Non-voting Members: Ann Hutcheson, Coast Guard Michelle Egan, Student Council School Administrative Staff Noreen E. Thompson, Superintendent John Witteveen, Assistant Superintendent Joyce Healey, Business Manager Thomas Wischer, Director of Instructional Support Marolyn Pedersen, Director of Support Services Special Services Arthur Young & Co., Anchorage, Alaska CERTIFIED PUBLIC ACCOUNTANTS Blyth Eastman Paine Webber Incorporated, San Francisco FINANCING CONSULTANTS Photographs provided for Kodiak School District (unless otherwise noted) THE KODIAK ISLAND BOROUGH Geography, Population and Climate Kodiak Island Borough (the "Borough") including the City of Kodiak, is located in the Gulf of Alaska, off the tip of the Kenai Peninsula approximately 330 miles southwest of Anchorage and 1,200 miles west of the state capital City of Juneau. Kodiak Island, encompassing an area of 3,670 square miles, is the largest island of a 4900 square -mile archipelago—an island chain nearly the size of the state of Connecticut. Other large islands in the archipelago include Afognak (700 square miles) and Sitkalidak (120 square miles). The Borough was organized as a second class borough pursuant to Title 29 of the Alaska Statutes. In 1982, the Borough's population totalled 12,714 people, a 28% increase over the 1980 census estimate of 9,939. The Borough's largest community, the City of Kodiak, accounts for nearly 67% of the Borough's population, or 8,569 people. TABLE 1 POPULATION *Results of a joint Borough/City special census in 1982, certified by State Demographer. Source: State Demographer's Office, Alaska Department of Labor and Kodiak Island Borough, Planning Department. The Kodiak Archipelago comprises a group of rugged islands which rise abruptly from the general level of the continental shelf to a height of over 4,000 feet. The chain's biggest mountains include Koniag Peak at 4,470 feet and Mt. Glottoff at 4,405 feet. The interior mountains are uninhabited and are the site of about 40 glaciers, most being remnants of the last ice age! The northwest coast of Kodiak Island is separated from the mainland of Alaska by Shelikof Straits, an extension of Cook Inlet, averaging about 50 miles wide. On the seaward side of. the Island, a continental shelf of about 75 miles in width and with a total area of approximately 20,000 square miles separates Kodiak Island from the Pacific Ocean depths and provides a rich rearing ground for the wide variety of sea life on which the fisheries economy of Kodiak is built. The Borough's climate is likened to that of Ireland, owing its mild winters and moist, cool summers to the warm waters of the Japanese Current. Winter temperatures average about 30° Fahrenheit, varying from about 0° F. to 40° F. Summer temperatures are cool and average about 55° F. during July and August, rising occasionally to the high 70's by late afternoon. The following table shows seasonal average temperatures and precipitation levels for the Borough. TABLE 2 CLIMATE FOR KODIAK ISLAND BOROUGH AREA Average Precipitation Temperature (inches) January............................. Kodiak Island Borough State of Alaska 1982 Special Census ............................... 12.714* — 1981 State Estimate ............................... 10,790 419,593 1980 United States Census .......................... 9,939 400,481 1970 United States Census .......................... 9,409 302,583 1960 United States Census .......................... 7,174 226,167 1950 United States Census .......................... 6,264 128,643 *Results of a joint Borough/City special census in 1982, certified by State Demographer. Source: State Demographer's Office, Alaska Department of Labor and Kodiak Island Borough, Planning Department. The Kodiak Archipelago comprises a group of rugged islands which rise abruptly from the general level of the continental shelf to a height of over 4,000 feet. The chain's biggest mountains include Koniag Peak at 4,470 feet and Mt. Glottoff at 4,405 feet. The interior mountains are uninhabited and are the site of about 40 glaciers, most being remnants of the last ice age! The northwest coast of Kodiak Island is separated from the mainland of Alaska by Shelikof Straits, an extension of Cook Inlet, averaging about 50 miles wide. On the seaward side of. the Island, a continental shelf of about 75 miles in width and with a total area of approximately 20,000 square miles separates Kodiak Island from the Pacific Ocean depths and provides a rich rearing ground for the wide variety of sea life on which the fisheries economy of Kodiak is built. The Borough's climate is likened to that of Ireland, owing its mild winters and moist, cool summers to the warm waters of the Japanese Current. Winter temperatures average about 30° Fahrenheit, varying from about 0° F. to 40° F. Summer temperatures are cool and average about 55° F. during July and August, rising occasionally to the high 70's by late afternoon. The following table shows seasonal average temperatures and precipitation levels for the Borough. TABLE 2 CLIMATE FOR KODIAK ISLAND BOROUGH AREA Average Precipitation Temperature (inches) January............................. 30.40 5.01 April ............................... 37.20 3.81 July ................................ 53.90 3.54 October ............................. 41.20 6.21 Year ......................... 40.70 56.71 Source: Kodiak Island Borough. Transportation Aircraft and boat travel provide the primary modes of transportation for Kodiak Island Borough. Most travelers reach the Island via Wien Airlines by 737 jet, which provides twice-daily flights between Anchorage and Kodiak throughout the year, and direct flights from Seattle during the summer months. Kodiak is now served by Alaska Pacific Airlines and there are plans for Pacific Airlines service during the summer of 1983. Located approximately five miles from the city of Kodiak, the Kodiak Airport provides the bulk of air transport access to the Island, through both commercial and charter flights. Air access on a smaller scale is also provided by seaplanes and various smaller crafts using other available landing sites in the Island area. The other major means of access to the Borough is by boat or ferry. The largest passenger carrier is the Alaska State Ferry Tustumena, which arrives three times weekly from the mainland ports of Seward and Homer. The Ferry can accommodate up to 50 cars and maintains lodging facilities on -board for its pas- sengers. Sea Land Freight Services and American President Lines offer cargo transport lines for heavy freight to and from the Borough. The services caters particularly to the seafood processing industry of the Island. The road system of the Borough covers about 175 miles, winding through difficult curves and rugged terrain. Beyond the City of Kodiak area, road travel is difficult and residents travel primarily by boat or off-road vehicles, which are better -suited to the rugged environment. Recreation Kodiak Island Borough offers virtually unlimited, year-round outdoor activities for residents and visitors. The Borough is noted for its excellent sport fishing and hunting; other readily accessible outdoor activities include hiking, boating, camping, ice skating and sledding. The region is well known for its diverse wildlife, which includes five species of salmon; seals, otters, and porpoises; Roosevelt elk, Kodiak brown bear, and Sitka black -tailed deer; and birds such as the bald eagle, king fisher, teal, and ptarmigan. The Borough boasts a rich cultural heritage due to its Alaskan Native history and to the elements of European tradition brought by Russian fur hunters, who settled the area in the 19th century. The Baranof Museum, housed within the Erskine House, a National Historic Landmark, reflects this cultural tradition. The Museum maintains a collection of Koniaq (a native Eskimo tribe) tools, clothing, hand-crafted jewelry and furs, with numerous Russian and American artifacts from the Island archipelago. The Island community has established a number of cultural societies and performing arts groups, including the Kodiak-Boranoff Productions, Inc. and the Kodiak Arts Council. The Kodiak Russian Dancers, a group composed of Island residents, has toured the state of Alaska several times and has traveled to the mainland U.S. for performances, including a trip to Washington, D.C. for a performance at the 1976 Bicentennial celebrations. These organ- izations and others sponsor regular events in theatre, art, and music for the Kodiak community. The Borough sponsors an annual rodeo which is held in conjunction with the Alaska State Fair. This late -summer, annual event has been held in Bell Flats since 1968 and features bronco riding, calf roping, wild bull riding, and a variety of special exhibits. 2 ECONOMY Economic Structure Kodiak Island Borough's past and future growth is inextricably tied to growth in the community's pri- mary industry, fishing and fish processing. Other sources of economic strength include the presence of the U.S. Coast Guard in the area, the planned expansion in tourism and recreation activities, and the prospects for future growth in the wood products industry. In addition, the investment plans of the regional and vil- lage corporations established under the terms of the Alaska Native Claims Settlement Act will be important to the economic growth of the Kodiak Island area (see Alaska Native Corporations). Present fisheries' activity in the Borough area centers around the harvest and processing of several species of fish, including king, tanner and dungeness crab, shrimp, and salmon. The Island is home port for one of the largest fishing fleets in the Pacific and often ranks among the top three or four ports in the nation in terms of value of fish landed. Continued growth in the Borough's fishing and fish processing industry is anticipated. This expansion will be enhanced through planned capital improvements in the area's port and harbor facilities, which include the planned establishment of a bottomfishing industry in the Island area. Table 3 shows the approximate value of the Borough fish harvest for 1980. Species TABLE 3 KODIAK AREA FISH HARVEST 1980 Major Species Average Approximate Per Value to Pounds(l) Pound® Fishermen King Crab ........................ 20,448,654 $1.05 $21,471,087 Tanner Crab ...................... 22,830,732 .65 14,839,976 Dungeness Crab ................... 2,004,094 .45 901,842 Shrimp ........................... 27,783,437 .29 8,057,197 Salmon ........................... 70,607,142 .60 30,732,301 Halibut ........................... 1,827,389 .99 1,809,115 Bottomfish ........................ 2,910,442 .35 1,018,655 Herring ........................... 4,768,600 .41 1,955,126 All Others ........................ 327,731 1.71 1,108,455 Total .................... 153.509.221 $81,893,754 QQ This data was estimated and compiled by the Kodiak Area Management Biologist, Division of Commercial Fish, Department of Fish and Game, State of Alaska. ® Compilation from State and Borough sources. The military has been a factor in the Borough economy since 1941 when the Kodiak Naval Air Station was established. A naval operating base and submarine station were added in 1947 and Fort Greely, an Army garrison, was established in the area during the same period. Military activities in the Island area play a less dominant role in the Borough's economy today than during World War II and the Korean War. Total naval and army personnel has declined significantly in recent years, and the Coast Guard has for- mally taken over the operation of the Kodiak Naval Air Station. Since 1972, at the time of its takeover of the naval facility, the number of Coast Guard personnel stationed in the Borough area has nearly doubled. This increase has been stimulated in part by the establishment of a 200 -mile offshore U.S. Territorial Limit. The Coast Guard has a significant impact on the Borough economy as a major source of civilian employ- ment and as a provider of support for the Borough's fish and fish processing industries. Presently, the wood products industry is not a major factor in the economy of Kodiak Island. As of mid -1979, an estimated volume of 35 million board feet of timber was being harvested annually for round -log export sale; this timber is transported to a transfer site for preparation, loading, and shipment to Japan. Nearby Afognak Island, however, in the northeastern portion of the Kodiak Archipelago, is located within the Chugach 3 I TOS N a fif J'�Vigo 0 Ai ffiyf'Prr , -7-77 i II( _ 1 Fishing fleet moored at Kodiak boat harbor. Fishing is the mainstay of the Borough's economy, with the 1980 seafood harvest worth nearly $82 million. National Forest and has a sizable commercial timber resource, estimated by the U.S. Forest Service at more than 4.6 billion board feet of presently operable sawtimber. The area's timber activity is slated for further expansion, which should have a favorable impact on the economy of the Borough. The Borough's cattle industry has been a small but stable element in the area's economy for several years. Currently, there are six or seven cattle ranches in the Borough, which lease land from the Bureau of Land Management and support a total of approximately 2,000 cattle. A slaughterhouse facility at Woman's Bay, about 10 miles south of Kodiak, is cooperatively -owned by Kodiak ranchers and financed by State of Alaska revolving loan funds. Carcasses are sold locally on Kodiak Island, or are occasionally shipped to Anchorage. Table 4 shows a seven-year trend of selected economic growth statistics for the Kodiak Island Borough. TABLE 4 KODIAK ISLAND BOROUGH ECONOMIC INDICESOO Year Commercial Bank Deposits Deposits in Savings Banks and Savings and Loans Average Telephone Subscribers Postal Receipts Building Permits 1981 .................. $53,762,000 $12,159,684 3,864 $635,533 $ 9,543,627 1980 .................. 50,900,000 11,304,893 3,434 561,016 5,219,303 1979 .................. 50,540,000 7,181,883 3,315 555,097 5,317,850 1978 .................. 41,242,000 5,403,265 2,969 478,428 10,007,373 1977 .................. 34,078,000 5,901,831 2,994 — 9,158,526 1976 .................. 31,046,000 5,623,522 2,866 — — 1975 .................. 25,486,000 5,435,603 2,659 — — (D Compiled by Kodiak Island Borough. E! Employment By far the largest sector of the Kodiak Island Borough area's nonagricultural wage and salary employ- ment in 1980 was food manufacturing, most of which was associated with seafood processing. This sector averaged 1,541 employees in 1980 and accounted for 32.9% of the Borough area's total nonagricultural employment. Fishing and fish processing in the Borough area can be considered a basic industry, as only minor amounts of fish are produced for local consumption. After manufacturing, government -mainly state and local --was the largest employment sector in the Borough division for 1980. The largest single local government employer is the Kodiak Island Borough School District, although the federal government is also a significant source of employment. Historically, the Borough The trade and service sector, which provides goods and services to the transient fishing fleet and pro- cessing plant workers, is the next largest employer. This sector had an annual average of 603 employees in trade functions and 631 in service -related employment in 1980, accounting for 12.9 and 13.5%, respectively, of total nonagricultural wage and salary employment. Table 5 summarizes historical and projected civilian employment for the Kodiak labor area. TABLE 5 KODIAK ISLAND BOROUGH NONAGRICULTURAL EMPLOYMENT Percent Year Labor Force Unemployment 2000 1970 1980(D 1985 High Medium Low Food manufacturing ...................... 701 1,541 1,791 3,443 2,517 2,054 Other manufacturing ...................... 32 293 318 490 397 348 Retail and wholesale ...................... 346 603 670 1,027 845 744 Transportation ........................... 178 360 393 611 497 422 F.I.R.13 ................................. 49 101 110 169 137 120 Services and other ........................ 190 631 700 1,614 882 777 Construction ............................ 45 109 121 200 159 130 Subtotal private sector ............... 1,541 3,638 4,103 7,015 5,434 4,595 Government ............................. 838 1,045 1,180 1,614 1,380 1,254 Total employment ................ 2,379 4,683 5,283 8,629 6,814 5,849 00 Based upon last 3 months of 1979 and first 9 months of 1980. Sources: Alaska Department of Labor (1970 and 1980), and Williams-Kuebelbech and Associates, Inc., Demand Analysis Port of Kodiak Development and Near Island Master Plan, April 1982. Table 6 presents recent trends in unemployment for the Borough labor area. Historically, the Borough has had a high unemployment rate, reflecting in part the seasonal nature of the fishing and fish processing industries. TABLE 6 KODIAK ISLAND BOROUGH Unemployment in the Civilian Labor Force Civilian Percent Year Labor Force Unemployment 1981 .......................... 4,907 9.7% 1980 .......................... 4,887 9.7% 1979 ........................... 4,573 8.0% 1978 .......................... 4,662 8.2% 1977 .......................... 5,022 8.1% 1976 .......................... 5,449 6.8% 1975 .......................... 4,445 8.7% Sources: Alaska Department of Labor. 5 L'] •Suinil;o lsoo xaq!tj s,e3lselV of onp Sl[e>;aed si sig; `uleSF> 'mopq umogs se 'saSgaane IeUoileU papaaaxa osle 1861 ao; owooui plogosnoq lad pug ul?deo .lad s,gSnoiog aqy •uo!IuN pug a1e18 aqi g;oq aol oseaaoui to salea aqi papaaaxa goigm `%Zi I L[alewixoldds sem gSnoaog puelsl AUTPON a03 1861 01 LL61 woa; (awooui olq,sodsip) awooui SUi,inq aniloal;a Ui oseaaoui aSeluooaad aqy 'alelS aqi inog8noiLp SuI^i1 3o lsoo aagSiq aqi Sq iasgo Slleaaua$ si aSelUenpe silty •aSeaane I,uorieu agl uegl sdnoa$ awooui aaddn aqi ui splogasnoq ;o oftluaoaad aaSa,l a angq ulsuIV to aieiS aqi pug LISnoaog puelsl xeipo?I pasuooil lou uoilonpoadaa aaglani aamod SuisnEl io 63nanS 'luawa8eneyg 8uila3[aew pue sales 'ig8uddoD :aaanoS b'9 ITT 6'9I .................................. aaAO pue 000`05 9'Z£ £'Ob 5'Sb """..... 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Source: Copyright, Sales and Marketing Management, Survey of Buying Power; further reproduction not licensed. The significance of Kodiak Island Borough as a retail center is shown in the following table. As there is no sales tax in the Borough, this table serves as an index of retail sales activity. TABLE 9 RETAIL SALES (000 omitted) Kodiak Island State of United Year Borough Alaska States 1977 ....................................... $38,698 $1,859,761 $ 724,139,211 1978 ....................................... 39,690 2,018,801 817,461,457 1979 ....................................... 46,653 2,117,826 887,518,635 1980 ....................................... 52,990 2,295,107 965,745,665 1981 ....................................... 61,415 2,590,348 1,056,106,658 Per Household (000 included) .............. $19,192 $18,076 $12,630 Per Capita (000 included)© ............... $ 6,021 $ 6,109 $ 4,572 Percent of Retail 1981 Sales to Effective Buying Income r0 ............................. 51.5% 54.5% 52.5% QQ Derived by calculation using Survey of Buying Power figures. Source: Copyright, Sales and Marketing Management, Survey of Buying Power; further reproduction not licensed. The U.S. Coast Guard Base in Kodiak is a significant factor in the Borough's economy, providing both civilian employment and support for the fishing industry. +a...#CiR.4..... The abundant sea life in tidal pools provides an interesting study for Kodiak students. Long-time Kodiak resident shares her knowledge of basket weaving with students. Alaskan King Crab ranks among Kodiak's most important fish products, accounting for nearly $21.5 million in revenues in 1981. New climbing equipment provided by the Kodiak P.T.A. is used extensively by local schoolchildren. %y Ix .N - _y y rr x BOROUGH GOVERNMENT AND SCHOOLS Government The Kodiak Island Borough was created as a borough of the second class effective September 24, 1963. The Borough government, which includes the entire island group and has responsibility for administration of the school system, has an elected Borough Assembly and is itself administered by a Borough Manager. The Borough Mayor and Deputy Mayor are elected through at -large borough elections and serve a 3 -year term. R. David Herrnstein, a commercial fisherman, and James Peotter, a teacher -principal, were elected to the posts of Mayor and Deputy Mayor, respectively, in 1980. Their terms will run through the year 1983. Other Assembly members (together with the expiration of their terms of office) are: Phillip C. Andersen (1984), jewelry shop owner; Scott L. Arndt (1983), building contractor; Dennis Murray (1984), senior citizen director; Frances Cater (1985), teacher—community college; David Wakefield (1985), City Clerk— Port Lions, and Lorne White (1984), nursery owner and biologist—Alaskan Department Fish & Game. The Borough Manager for the Kodiak Island Borough is Philip C. Shealy, who was appointed to that post effective June 22, 1981 by the Borough Assembly. As Borough Manager, Mr. Shealy is the chief administrative officer of the Borough and is responsible for the proper administration of all Borough affairs placed in his charge by law and ordinance. As such, he is responsible for Borough employees and adminis- trative officers, prepares the annual budget and capital improvement program for the Assembly, executes the budget and capital improvement program as adopted, and reports on Borough operations and finances at the regular Assembly meetings. Prior to this appointment, Mr. Shealy served as the assistant city manager in Mankato, Minnesota for nine and one-half years where he was directly responsible for the administration of the Department of Community Development which included industrial development and economic revital- ization of the central business district. Mr. Shealy has had experience in the private sector by interfacing with private developers as part of the revitalization and economic development activities in Mankato. Mr. Shealy holds a degree in urban and regional planning from the University of Wisconsin, Madison. He is also a mem- ber of the board of directors of the Kodiak Chamber of Commerce, serves on the steering committee for the Senior Citizen's Advisory Board and is a member of the International City Manager's Association. Mr. Bryce S. Weeks has been the Director of Finance for the Kodiak Island Borough since January 1981. He serves the dual role of the Borough Treasurer and Director of Finance. Mr. Weeks received his bachelors degree in Accounting from Regis College, Denver, Colorado, and has done some graduate work at the University of Denver and the University of Michigan. Prior to this appointment, Mr. Weeks has served in various capacities, of increasing responsibility in finance and accounting in Federal, local and private not-for- profit entities. Most recently, he was the Director of Finance for Benton Harbor, Michigan. Mr. Weeks is an active member of the Municipal Finance Officers Association (MFOA) and lists other professional member- ships in the Association of Governmental Accountants (AGA), the National Society of Public Accountants (NSPA), and the Alaska Municipal Finance Officers Association. Mr. Weeks retired from the U.S. Army Finance Corps on June 30, 1968 following 22 years of service. The Borough has 28 permanent employees excluding School District personnel. Recently the Mental Health Center is paid by and serviced by the Borough finance and accounting services. The Mental Health Center has 26 employees. Retirement System Permanent employees of the Borough participate in one of the following retirement plans, all of which are subject to regular actuarial review: Participants in the Alaska Public Employees Retirement System (PERS), which was created by the State Legislature in 1960, contribute 4.25% of their salaries to the System, and the current Borough contribution rate is 12.54%, which includes the 25 -year amortization of a 1979 unfunded liability of $12,241. In PERS, the assets and liabilities attributable to each participating group remain separately identified as to employer. C9 Labor Relations Employees of the Borough have no representation by labor unions. Management of the Borough believes its relations with employees are good. No strikes or work stoppages have occurred in recent past years. The Kodiak Island Borough School District The Kodiak Island Borough School District operates under a five member School Board elected at large to three-year terms plus a non-voting Coast Guard representative and a student representative. The School Board is responsible for the formulation of policy for the operation of the schools and the general supervision. of School District fiscal affairs, including the preparation of the annual budget and six-year program for capital improvements. The budget and the six-year program are subject to approval by the Borough Assembly. The Assembly has the authority to alter only the total amount of the budget. The Assembly shall approve the budget as amended and appropriate the necessary funds for the local share of school support within 30 days after receipt of the budget from the District. Since the School District does not have the authority to levy taxes, the taxes to provide local support of the School District are levied and collected by the Borough, which then transmits funds to the School District during the fiscal year of the School District to fund the appropriation. The School District also does not have the authority to issue bonds. The School Board appoints school personnel including the Superintendent, who serves as the chief admin- istrative officer of the School District. Other administrative officers include one Assistant Superintendent and two Directors, one for Instructional Support and one for Support Services, and a Business Manager who directs a staff of eight. The School District employs a professional staff of 163.77 (full-time equivalent) plus an additional 145.81 (full-time equivalent) classified employees. The present Superintendent of the School District is Noreen E. Thompson, who was appointed to that post effective July 1, 1980 by the School Board. As Superintendent, Mrs. Thompson is experienced in directing the long-range planning process which includes capital improvements, instructional program develop- ment, maintenance and operations, and communication systems. The planning document directs budget development and expenditure of resources throughout the District. Elementary school students compete in a fall track meet. Prior to this appointment, Noreen Thompson served as a building principal and most recently as Director of Instructional Support responsible for program and staff development, supervision and evaluation of staff, District testing and program evaluation and management of the District -wide special education program. She has experience in the private sector as a self-employed speech pathologist, employee of a private rehabilitation clinic, telephone company and pharmacy. Mrs. Thompson holds a graduate degree in administration. She is a member of the Chamber of Com- merce in Kodiak, Alaska Association of School Administrators, Alaska Association of University Women, Association of Supervision and Curriculum Development, and Council on Exceptional Children. Mrs. Joyce Healey has been the Business Manager of the School District for the past four years, having previously served as Accounting Supervisor for one year. Mrs. Healey attended the New York State University at Buffalo, New York (formerly the University of Buffalo), and has completed continuing education courses in business management at the University of Alaska and Northern Arizona University. She is actively involved in national and state professional organizations, including the Municipal Finance Officers Assocation (MFOA), and Association of School Business Officials. She presently serves on the Board of Directors of the Alaska Association of School Business Officials and is a member of the Alaska Department of Education Talent Bank serving as a consultant to other school districts in the areas of business management and audit review and compliance. School Facilities and Enrollment The Kodiak Island Borough School District operates 12 elementary schools (including one serving the Coast Guard Support Center) and six secondary schools with extensive special education and vocational education programs. The School District maintains approximately 350,000 square feet in buildings. Enrollment in grades kindergarten through 12 as of the end of September of each of the past eight years was as follows: TABLE 10 KODIAK ISLAND BOROUGH SCHOOL DISTRICT PUBLIC SCHOOL ENROLLMENT Period Ending Total Septem- Grades Grades Grades Public School her 30 K-6 7-8 9-12 EnrollmentC! 1983 ........................... 1,259 316 614 2,189 1982 .......................... 1,234 314 616 2,164 1981 .......................... 1,203 308 581 2,092 1980 .......................... 1,212 296 571 2,079 1979 .......................... 1,251 305 627 2,183 1978 .......................... 1,186 282 670 2,138 1977 .......................... 1,186 298 609 2,093 1976 .......................... 1,196 341 552 2,089 Or Pre -elementary students have not been included. Source: Kodiak Island Borough School District. School Operations The School District's 1982/83 expenditure budget is $13,755,071. Salaries of $8,851,232 comprise the major cost item followed by employee benefits of $1,766,547, utilities, rentals and insurance of $1,059,771, purchased services of $739,187, supplies of $688,956, other costs of $455,008, and capital outlay for equipment of $194,370. The State is to contribute $11,868,248, the bulk of the revenues. The local share of revenues is expected to provide $1,386,823 with the Federal government and other sources accounting for $500,000. The 1982/83 mill levy is expected to provide the local share. Audited financial statements for the year ended June 30, 1982 are shown in Appendix A. 11 Two recently completed facilities, Kodiak main elementary school (left) and Akhiok elementary school (right), both financed from the July 1980 sale of $12,100,000 in bonds to the Alaska Municipal Bond Bank. General governmental expenditures of the School District for the last ten completed fiscal years are shown in Table 11 below. The average rate of increase during the period was approximately 12.2% each year. Debt service has accounted for approximately 4.5% of total expenditures for the ten-year period, although during the latest five years, debt service has accounted for 4.6%. TABLE 11 KODIAK ISLAND BOROUGH SCHOOL DISTRICT GENERAL GOVERNMENTAL EXPENDITURES BY FUNCTIONOO Last Ten Fiscal Years Fiscal Year Adminis- tration Instruction Auxiliary Services Operation and Maintenance of Plant Fixed Charges Debt Service Total® 1972/73 ........... $ 97,643 $2,775,575 $ 279,980 $ 500,966 $ 221,008 $ 89,622 $ 3,964,794 1973/74 ........... 122,894 3,109,083 201,675 579,867 287,017 87,460 4,387,996 1974/75 ........... 176,910 3,380,982 224,246 675,091 294,085 330,601 5,081,915 1975/7600 • • • • . . . . 236,975 4,060,798 239.109 803,284 459,818 388,525 6,188,509 1976/77 ........... 268,678 4,229,959 307,177 930,830 833,53100 230,9320s 6,801,107 1977/78 ........... 280,940 4,574,501 277,533 1,052,255 711,115 235,670© 7,132,014 1978/79 ........... 396,466 5,478,687 3079702 1,347,915 845,450 343,8600 8,720,080 1979/80 ........... 473,566 6,316,323 385,344 1,619,981 973,383 379,6880 10,142,285 1980/81 ........... 535,826 6,687,727 989,317® 2,043,458 1,369,690 681,892® 12,307,910 1981/82 ........... 603,627 7,388,285 1,053,3490 2,020,323 1,578,058 713,8170 13,357,459 (D Includes general, special revenue, and debt service funds. •0 For comparative analysis interfund transfers have not been included. Oa Commencing July 1, 1975, Alaska Department of Education mandated charge in accounting classification by function. (D Includes transfer of $262,822 fund balance to Kodiak Island Borough Central Treasury. © Commencing July 1, 1976, the Kodiak Island Borough assumed responsibility for debt service payments of principal, interest and agent fees. Oe Includes food services and student activities not previously recorded in special revenue funds. Source: Kodiak Island Borough School District 1980/81 Comprehensive Annual Financial Report. 12 General revenues of the School District are derived from local, state and federal sources, as shown in Table 12 below. During the past ten completed fiscal years, the State has contributed between 70% and 87% of the total general revenues. The local sources have provided an average of 11.7% of general revenues and in 1981/82 accounted for a low of 7.3%. TABLE 12 KODIAK ISLAND BOROUGH SCHOOL DISTRICT GENERAL REVENUES BY SOURCED Last Ten Fiscal Years Fiscal Local State Federal Year Sources Sources Sources Total(g) 1972/73 ...................... $ 330,618 $ 3,729,317 $ 211,749 $ 4,271,684 1973/74 ...................... 379,622 3,862,499 415,954 4,658,075 1974/75 ...................... 457,449 • 4,156,727 366,991 4,981,167 1975/76 ...................... 701,962 5,070,694 349,187 6,121,843 1976/77 ...................... 707,570 5,811,645 242,736 6,761,951 1977/78 ...................... 639,579 6,219,958 393,462 7,252,999 1978/79 ...................... 877,353 7,400,514 510,382 8,788,249 1979/80 ...................... 1,117,359 8,340,910 588,702 10,046,971 1980/81 ...................... 1,422,288 9,401,524 1,026,620 11,850,432 1981/82 ...................... 984,864 11,355,152 1,062,411 13,402,427 Q Includes general, special revenue, and debt service funds. Q For comparative analysis interfund transfers and lapsing prior year encumbrances have not been included. Source: Kodiak Island Borough School District 1980/81 Comprehensive Annual Financial Report. The amount of tax levied for School District purposes has varied during the past five years as shown in Table 13 below. Last year's comparatively lower tax levy of $672,789, was due- mainly to the increase in State aid. TABLE 13 KODIAK ISLAND BOROUGH SCHOOL DISTRICT PROPERTY TAX RATES AND TAX LEVIES Last Ten Fiscal Years Fiscal Tax Rates Tax Year (mills) Levies 1972/73 ........................................ 4.88 $ 310,000 1973/74 ........................................5.86 310,000 1974/75 ........................................5.80 375,000 1975/76 ........................................7.23 436,985 1976/77 ........................................7.23 611,000 1977/78 ........................................7.00 416,525 1978/79 ........................................6.18 735,460 1979/80 ........................................6.98 1,023,435 1980/81 ........................................5.50 1,066,927 1981/82 ........................................ 5.00 672,789 Source: Kodiak Island Borough School District Comprehensive Annual Financial Report. 13 Assessed valuation has increased an average of 20% per year over the past 10 years as shown in Table 14. The estimated current assessed valuation of $438,045,500 should provide in excess of $207,000 support per student. TABLE 14 KODIAK ISLAND BOROUGH SCHOOL DISTRICT AVERAGE DAILY MEMBERSHIP AS COMPARED TO ASSESSED VALUATION SHOWING ASSESSED VALUATION SUPPORT PER STUDENT Last Ten Fiscal Years Fiscal Year Total Average Daily Membership Grades K-12 Percentage Average Daily Membership Increase (Decrease) Over Prior Year Assessed Valuation Assessed Valuation Percentage Increase Over Prior Year Assessed Valuation Support Per Student 1972/73 .............. 2,239 (4.97)% $ — _% $ 1973/74 .............. 2,179 (2.68) — — — 1974/75 .............. 2,131 (2.20) 112,324,150 — 52,710 1975/76 .............. 2,095 (1.69) 145,763,615 29.8 69,577 1976/77 .............. 2,089 (.29) 174,701,540 .19.9 83,629 1977/78 .............. 2,093 .19 182,722,540 4.6 87,302 1978/79 .............. 2,143 2.39 309,925,500 69.6 144,622 1979/80 .............. 2,189 2.15 357,662,900 15.4 163,391 1980/81 .............. 2,086 (4.71) 337,372,197 (5.7) 161,732 1981/82 .............. 2,106 .96 438,045,500 29.8 207,999 Sources: Kodiak Island Borough and Kodiak Island Borough School District. School Personnel The School District has been experiencing little change in authorized positions during the past three years as shown in Table 15 below. The trend changed during 1981/82 as enrollment increased. Currently, there are 332 authorized positions, maintenance getting the largest net gain to 19 in 1981/82. TABLE 15 KODIAK ISLAND BOROUGH SCHOOL DISTRICT AUTHORIZED POSITIONS BY CATEGORY—GENERAL OPERATIONS Last Ten Fiscal Years Employee Category Administration ...................................... Principals .......................................... Teachers ........................................... Technical .......................................... Clerical and teacher aides ............................. Maintenance/warehouse .............................. Custodial.......................................... Drivers/ attendants .................................. Noonattendants .................................... Food service .............................. _ — _ Total authorized positions Source: Kodiak Island Borough School District. 14 Fiscal Year 1979/80 1980/81 1981/82 14 13 12 9 9 9 150 150 150 7 8 8 97 93 92 17 18 19 29 36 35 8 10 7 331 337 332 The School District has experienced no work stoppages in recent years. The employees are represented by four groups that negotiate with the School District Board for salaries and employee benefits. The four groups are as follows: TABLE 16 KODIAK ISLAND BOROUGH SCHOOL DISTRICT Union Affiliation Employees Current Period Negotiations to Begin KBEA Kodiak Borough Education Assn....... Certificated Teachers 7/1/80 6/30/83 November 1982 KSDCAO Kodiak School District Classified Assn.. Classified Employees 7/1/80 6/30/83 After January 1983 KAA© Kodiak Administrators' Assn.......... Certificated Administrators 7/1/82 6/30/83 After January 1983 KCAAD Kodiak Classified Administrators' Assn.. Classified Administrators 7/1/80 6/30/83 After January 1983 QQ Meet and confer basis. Source: Kodiak Island Borough School District. The City of Kodiak as viewed from nearby Pillar Mountain. FINANCIAL AND FISCAL MATTERS Debt Structure Neither state law nor the Kodiak Island Borough Code imposes any debt limit on Alaskan municipalities. The Borough Code does, however, require general obligation bond issues, except refunding bonds, to be authorized by a majority vote of the electorate voting on the question. The following statement of direct and overlapping bonded debt relates to the outstanding general obliga- tion bonds of the Borough, including the $7,400,000 of general obligation bonds sold in May 1983. Outstanding General Obligation Bonds: - School Bonds .............................................. $ 22,000,000 Other Bonds ............................................... 300,000 Gross Debt .................................................. $ — $ 22,300,000 Less: Self -Supporting Bonds ................................... — — Special Assessments ..................................... — — Total Net Direct Debt ............................... $ 22,300,000 Assessed Valuation, 198200 Real Property .............................................. $370,439,377 Personal Property ........................................... 67,606,123 $438,045,500 Ratios to 1982 Assessed Valuation© Per Capita® Net Direct Debt ..................... 5.1% Net Direct Debt ................... $ 1,754 Total Debt ......................... 5.1% Total Debt ........................ 1,754 1982 Assessed ValuationOO ........... 34,454 (D Valuations are at 100% of estimated full value. ® Population of 12,714 as of August 1, 1982 per Special Census and accepted by the State Demographer. Including the recent sale of the $7,400,000 general obligation bonds, the Borough will have a total of general obligation bonds authorized but unissued of $9,500,000, all for school purposes. The Borough presently has no other types of bonds authorized. State Contribution Toward School Bond Debt Service The State of Alaska contributes to local school construction and debt retirement primarily through two programs. The first involves a share of State tobacco tax revenues, which share the District has dedi- cated to debt service on school bonds and the amounts of which are included in Table 3 below. The second program was created by the State Legislature in 1970 and provides a system under which the State, subject to annual appropriation by the Legislature, will reimburse local school districts part of the cost of debt service on school construction bonds and a share of the cost of construction of school plant not financed by bonds. About 90% of the State's revenue comes from oil and gas production in the form of royal- ties and taxes. A decrease in the world market price of crude oil has had an adverse impact on the State's ability to fund this program. Under the statute (AS 43.18.100), which created the second program, the amount of the tobacco tax allocation received by a school district is offset against the amount of the reimbursement. The reimbursement each year is based upon the amount of debt service on school debt and/or the amount paid for school construction from funds other than bond proceeds during the fiscal year two years prior to the year of the reimbursement. The allocations pursuant to this program received by the School District are shown below and are available for debt service on school bonds, although such allocations are unrestricted revenue and can be used to fund general education expenditures as well. 16 len!lsaj geio lenuue aql 6ulmp pueg 6ulg3Teyy aql '6£1`£68`£$ pal[enbo ponad aql no; sannl!puodxo [elod• •saxel Apadoad pool ,Sq poluosandoi sem GALE , Iuo go!gm 30 880`1796`9$ 3o Ie1o1 a 01 I9Z`EOL`Z$ �q sonuaean paseaiam sluawunae08 lenapa3 pue a1e1S won; s1dlaaag -soxel Spodond won; sem-89C9EZ`Z$ no—%69 galgm 7o LZ8`09Z`£$ Paiielol ,f[leaol palenaua8 sanuaean puna [eaauaq `Z861 `0£ aunt papua nag leasg ul '880`1796`5$ 3o Z8/1861 ul pae!aaan sanuaean 01 paiedwoa 09L`OEO`S$ 3o sannl!puodxo no3 pallea laSpnq £8/Z86i 1e101 aq,L -sapua8e pue sluawlnedap g1lm mollo; suoissas la8pnq lenp!elpu! pue l!ndV pue lg3lLw ;o sgluow aql 8uunp play an, s8ulneaq 1a2png •aaueulpio .Seal xei a pue laSpnq a anoidde lsnw g8noiog aq1 nog gaeg s3in1Tpu3dx3 pussanuaeag •saaud po apnea ul amlaap e 01 anp sanuanai alels UT aseaaoop a Kq palaedwt i[asnaepe oq pinoo pue suopeudoidde [enuue of laafgns si luawasnngwlan slgl `X[sno!eaad palou sV -p!ed nea,f leasg aql ui omnnas lgap OZ06 osnngw!an ale1S aql aeeq pfnom (,f[dde pfnom spuog oql) 1861 `I£ nagwaoaQ nal;e pans! lgaQ •bel nea,f-oral a gpm slsoo lenuue ;o O/O06 asnngwlan 31e1S aql aeeq pfnom 1861 `I£ nagwaaaQ ano3aq PM LL61 `OE aunt nip ponnnaw lgaQ bel mX-oml e ql!m lnq 'slsoo lenuue 3o O/v001 le gSnonog oql asangw!an Ipm 31eIS aql `LL61 0l noud pansi lgop no; wq1 S[[enauaS sap!eond uolle[s!931 ganS 786I ul palaeua sem „(aoulml 6LZ 'ON Il!g osnog nql olnillsgnS aall!wwoD no; alnl!lsgnS aall!wwoD anew „ pall!u o uolle[s!8a-1 •g8noiog puelsi >felpog :aoinos 688`5L Z917`8 LZ17`L9 """""""""""""""' £L61 LEVI EZ 8L5`891 659`Z9 ... """""""""""""' 17L61 5£8`982 000`EZZ 5£8`£9 """""""""""'"""" 5L61 TZ£`SLZ £69`51Z 8Z9`65 " " " " . " " " " " " " " " " ' 9L61 Z£6`OEZ 17Z17`L51 80S`£L """"""'."....""".'... LL61 OL9`SEZ IOL`£LI 696`19 """"."'•.••'•""'••••••'• 8L61 098`£17£ 696`E8Z 168`65 " " " " " " " " " " " " " " " ' 6L61 889`6L£ Z09`LIE 980`29 " " " " " " " " " " " " " " " ' 0861 Z68`189 801,919 178L`59 " " " " " " " " " ' " " " ' " " ' 1861 LI8`£1L$ 1617`17£9$ 9Z£`6L$ " " " " " " " " " " " " " " " ' Z861 lelol uo!leoollV uolleoollV of aunt P!V alelS xel 000egol papua yeaA NOIlonuis 00 imislO IOOHOS HunouoB ONVISI Mtl10OH oL NOunsIUM00 3MS LL 3I8VI Tax Collections Under Alaska law, first class and home rule municipalities may levy property taxes of up to 30 mills, although this millage rate may be exceeded if it is applied to debt service. In addition, both first and second class municipalities may levy a sales tax of up to 5 percent, while there is no limitation placed on sales tax levies by home rule municipalities. Cities of any class within organized boroughs may also have higher sales tax rates if overlapping units of government both levy sales taxes. The Borough has a property tax rate of 5.00 mills for real and personal property based upon 100% market value. Its total 1982 assessed valuation for real property is $370,439,377 and $67,606,123 for personal property. The property tax rate for the City of Kodiak is 4.00 mills on real property, with a 1982 assessed valuation on real property of $146,345,244. Table 18 below provides a year summary of Borough property tax collections. TABLE 18 TAX COLLECTION RECORD KODIAK ISLAND BOROUGH Year Assessed Valuation Highest Tax Millaqe RateO Tax Levy Amount Collected Yearof Levy Current and Delinquent — Amount Percent Collected Collected 1982(1) ............. $438,045,500 11.50 $2,118,431 $2,095,431 $2,150,894 101.5% 1981(2) ............. 337,372,197 9.50 2,257,590 2,217,413 3,258,451 144.33 1980 ................ 357,662,900 12.98 3,117,406 2,232,492 2,302,287 73.86 1979 ................ 309,925,500 12.18 2,715,126 2,457,815 2,467,601 90.52 1978 ................ 182,722,540 16.10 1,169,580 1,137,142 1,147, 831 98.14 1977 ................ 174,701,540 16.33 1,019,727 995,989 1,011,079 99.15 1976 ................ 145,763,615 16.33 718,352 701,453 715,679 99,63 1975 ................ 112,324,150 14.40 603,630 582,450 600,343 99.46 Source: Kodiak Island Borough. (D All taxes have been collected and/or a lien has been recorded with the Court. Q Intensive collection procedures were instituted to include foreclosure proceedings, where necessary, under Alaska Statute Title 29. A dispute was settled between the Borough and the City and amounts due were remitted to the respective governments. O The tax millage levy has continued to decrease or remain steady for the past six years. Generally deviations are as a result of change by the City of Kodiak or a service area, i.e., Kodiak City 1980 was 6 mills, 1981 was 2 mills and 1982 was 4 mills. The decrease is generally as a result of increased state revenue sharing. The Borough does not levy a sales tax, though a 5 percent sales tax is levied and collected by the City of Kodiak. A portion of these revenues is remitted by the City in lieu of personal property taxes, which are levied throughout the Borough except within the City's corporate boundaries. The first half of the tax levy on real property is due August 15 and the second half is due October 15 each year. Personal property assessed valuations and taxes are handled on supplemental rolls subsequent to the establishment of the real property roll. The first half of the first supplement roll tax levy on personal prop- erty for 1982 is due August 31, and the second half is due October 31. The final personal property roll levy for 1982 is due in one installment on November 15. Delinquent taxes are subject to a penalty charge of 10% on the amount of the tax plus interest at the rate of 8% per annum. Property is also subject to fore- closure and sale for delinquent taxes. The ten largest taxpayers within the Borough account for approximately 11% of the $438,045,500 total assessed value for 1982. No single taxpayer accounted for as much as 2% of the total. 18 TABLE 19 TEN LARGEST TAXPAYERS KODIAK ISLAND BOROUGH Taxpayer 1982 Assessed Valuation ✓Glacier State Telephone (Utilities) ............................... $ 7,853,474 //.w A&V e I" O. Kraft & Son, Inc. (Retailer, Shopping Center) ................... 7,037,669 /401 pacific Pearl Seafood, Inc ........................................ 6,288,722 y/,//!. Kodiak King Crab, Inc .......................................... 5,685,075��- )/9—Western Alaska Fisheries, Inc 5,477,667 Zr Sge ..................................... Alaska Pacific Seafood ......................................... 4,817,354 14—The Kazim Company (Seafood Processor) ........................ 3,281,058 ge"'%pr, /n Sea-Land Services, Inc. (Marine and Land Freight) 3,150,940 Columbia Ward Commercial Fisheries, Inc ......................... 2,993,552 )/Alascom, Inc. (Communications) ................................ 2,889,386 8/ 94i:r1, 6f Total ............................................. $49,474,897 Source: Kodiak Island Borough. Compared with other urban areas of Alaska, property and sales tax rates in the Borough and the City of Kodiak are relatively low. Residents of the Anchorage service area, the Juneau service area, the major Kenai Peninsula Borough communities and the City of Ketchikan generally paid higher property taxes in 1981 than did residents of the Borough. Capital Improvement Program The Borough has a five-year capital improvement program which is prepared by the Community Devel- opment Department staff and is presented annually to the Planning and Zoning Commission for its recom- mendations. The proposed program is then presented to the Borough Assembly for its approval. The most recent program approved by the Assembly is the 1983-1988 Capital Improvements Program, which contains information on Borough, Village, City of Kodiak and State of Alaska projects in the Borough area. The Capital Improvement Plan serves to coordinate for all local levels of government planning in the Kodiak Archipelago. The sum of $111.2 million has been projected for capital expenditure during 1983/84, with the five-year total of anticipated expenditures for the Capital Improvement Program approximating $364 million. The requested amount for capital improvement expenditures in 1981 was $161 million, $126.9 million of which received funding approval. The five-year Program Plan includes projects for general infrastructure such as road improvement and harbor development while also channeling funds into hospital equipment, hospital remodeling and new hos- pital construction. Numerous school related projects, such as the construction of a 750 seat student audi- torium, are also receiving funds under the five-year program. The largest recipient of funds during the five year program is the City of Kodiak, which will receive $124 million. Of this $124 million the largest allocations are to: the Pillar Mountain Project, $36 million, the Dock Expansion Project, $15 million, and the Near Island Bridge Project, $13 million. 19 Tax Limitations Taxes levied by a municipality for purposes other than debt service on general obligation bonds are limited by Alaska Statutes 29.53.050(a) to an amount equal to 3 per cent of the assessed valuation of tax- able property. Certain types of property related to oil and gas production and transmission, as defined by AS 43.56, are assessed by the State Department of Revenue and, except for taxes levied for debt service on general obligation bonds, taxes against such properties are limited to a State levy maximum rate of 20 mills (2 per cent) on the true value, and levies by municipalities against such properties are treated as credits against the State levy and are subject to certain limitations designed to restrict taxation of such properties by sparsely settled municipalities which have disproportionately large installations of oil and gas facilities within their boundaries. These statutory limitations include, under AS 29.53, provisions that a municipality may not levy taxes on such property for purposes other than debt service on general obligation bonds in amounts which, together with the tax levy on the other taxable property in the municipality, would yield in excess of $1,500 for each person residing within the municipality or which, when combined with the levy on the assessed valuation of the other taxable property within the municipality, would yield in excess of 225 per cent of the average per capita assessed valuation of all taxable property in the State of Alaska multiplied by the num- ber of residents within the municipality. These limitations appear to have no foreseeable material effect upon the financial position or resources of the Borough, the assessed valuation of such oil and gas prop- erties within the Borough being unknown at this time. The Baranof Museum, one of the major tourist attractions, boasts an extensive collection of Native Alaskan arts, crafts and clothing, as well as Russian and American artifacts. Financial Statements of the Borough The following Table 6, "Summary Statement of Revenues and Expenditures, General Fund" for the Borough, covers the fiscal years 1979 through 1982. The governmental services of the Borough are provided either areawide or within lesser service areas created to receive one or more governmental services. The Statement of Revenues and Expenditures represents the areawide General Fund and reflects the total general governmental financial activity of the Borough. In addition to the General Funds, the Borough maintains Special Revenue Funds to account for reve- nues derived from specific sources to finance special functions or activities. TABLE 20 SUMMARY STATEMENT OF REVENUES AND EXPENDITURES GENERAL FUND KODIAK ISLAND BOROUGH (For Years Ended June 30) Shown in the Appendix are the combined balance sheets of the Borough for 1982. Those statements include all funds except proprietary fund types (utility and other enterprise and internal service funds). General fixed assets and general long-term debt are also included. Also shown in the Appendix are the Combined Statement of Revenues, Expenditures and Changes in Fund Balances of the Borough for periods ending June 30, 1982. 21 1979 1980 1981 1982 Revenues: Taxes ............................. $1,706,902 $2,060,290 $2,547,896 $2,236,368 Intergovernmental Revenues .......... 378,736 709,253 1,706,477 2,703,261 Licenses and Permits ................ 24,121 7,695 24,083 22,233 Fines and Forfeitures ................ - - - - Charges for Services ................. 249,888 466,153 485,988 110,020 Other Revenues .................... 120,335 132,968 282,448 892,206 Total Revenue .............. $2,479,982 $3,376,359 $5,046,892 $5,964,088 Expenditures: General Government ................ $ 616,166 $ 775,178 $1,057,354 $1,365,805 Public Safety ....................... - - - - Roads and Drainage ................. 57,270 59,924 125,035 131,118 Cultural and Recreation .............. - - - - Planning .......................... 156,237 142,426 104,643 152,368 Health ...........:................ 163,455 189,280 342,696 710,844 Transportation ..................... - - - - Public Works ...................... - - 160,066 275,157 Transfers and Contributions ........... 327,355 718,796 931,746 581,125 School District Appropriation ......... 824,164 1,023,435 1,066,927 676,922 Total Expenditures .......... $2,144,647 $2,909,039 $3,788,467 $3,893,139 Net Revenue ......................... $ 335,335 $ 467,320 $1,258,425 $2,070,949 Beginning Fund Balance ............... 1,232,590 1,567,925 4,035,245 3,407,234 Ending Fund Balance .................. $1,567,925 $2,035,245 $3,293,670 $5,478,183 Source: Kodiak Island Borough. Shown in the Appendix are the combined balance sheets of the Borough for 1982. Those statements include all funds except proprietary fund types (utility and other enterprise and internal service funds). General fixed assets and general long-term debt are also included. Also shown in the Appendix are the Combined Statement of Revenues, Expenditures and Changes in Fund Balances of the Borough for periods ending June 30, 1982. 21 X ✓S � 4 � 4 � . El The Borough's prominent recreational activities Include fishing and hunting. This happy angler has just landed a silver salmon from one of the Island's many rivers. 22 ARTHUR YOUNG The Honorable Mayor and Members of the Borough Assembly Kodiak Island Borough Kodiak, Alaska APPENDIX A ARTHUR YOUNG & COMPANY 730 I STREET ANCHORAGE, AL.;SKA 995C1 We have examined the combined financial statements of the Kodiak Island Borough as of and for the year ended June 30, 1982, as listed in the table of contents. Our examination was made in accordance with generally accepted auditing standards and, ac- cordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances, except as stated in the following paragraph. We did not examine the statement of general fixed assets, included in the combined balance sheet - all fund types and, accordingly, we do not express an opinion on it. In our opinion, the combined financial statements referred to above present fairly the financial position of the various funds and the General Long -Term Debt group of accounts of the•Kodiak Island Borough at June 30, 1982, and the results of their oper- ations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Our examination was made for the purpose of forming an opinion on the combined financial statements taken as a whole. The com- bining and individual fund financial statements listed in the table of contents are presented for purposes of additional analy- sis and are not a required part of the combined financial state- ments of the Kodiak Island Borough. The information has been subjected to the auditing procedures applied in the examination of the combined financial statements and, in our opinion, is fairly stated in all material respects in relation to the com- bined financial statements taken as a whole. September 3, 1982 23 KODIAK ISLAND BOROUGH COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS June 30, 1982 ASSETS Cash and investments: Equity in central treasury (Note 2A) Other cash balances Temporary cash investments (Note 2B) Accounts receivable: Property taxes receivable, net of allowance for uncollectibles of $30,000 (Note 8) Due from Federal government Due from State of Alaska Land contracts due within one year Other accounts receivable Other assets: Inventories (Note 1F) Land contracts due after one year Amount available in debt service funds Amount to be provided for long-term debt Fixed assets Construction in progress Total assets Continued Governmental Fund Types Account Groups General General Total Special Debt Capital Fixed Assets Long -Term (Memorandum General Revenue Service Projects (Unaudited) Debt Only) $4,787,391 $ 327,700 $180,438 $ 2,313,338 $ 2,024 126,249 - 277 - 692,801 255,000 8,000,000 1,522,507 - - - 202,635 - 178,631 633,005 999,616 - 258,831 - 49,860 - - 80,872 88,272 - 152,622 - 189,210 - - 1,952,243 - - 17,081,115 - 11,183,980 $7,025,799 14,628,586 $435,438 $10,903,699 $28,265,095 See accompanying notes. $ - $ 7,608,867 - 128,550 - 8,947,801 - 1,522,507 - 381,266 - 1,891,452 - 49,860 - 321,766 - 189,210 - 1,952,243 435,438 435,438 14,954,562 14,954,562 - 17,081,115 - 11,183,980 $15,390,000 $66,648,617 KODIAK ISLAND BOROUGH COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS (Continued) June 30, 1982 LIABILITIES AND FUND BALANCES Amount overdrawn on central treasury (Note 2A) Accounts and contracts payable, including retainage Accrued liabilities Deferred revenue N Long-term debt payable (Note 6) n Total liabilities Fund balances: Investment in general fixed assets Reserved for encumbrances Unreserved: Designated for working capital Designated for debt service Designated for subsequent year's expenditures Undesignated Total fund balances Total liabilities and fund balances Governmental Fund Types Account Groups $ - $ 467,674 - General General Total Special Debt Capital Fixed Assets Long -Term (Memorandum General Revenue Service Projects (Unaudited) Debt Only) g - $ 196,422 $ - $ 271,252 $ - $ - $ 467,674 36,361 127,974 - 1,627,283 - - 1,791,618 63,496 970,695 - 3,913 - - 1,038,104 1,457,383 2,037,426 - 1,750,615 - - 5,245,424 - - - - - 15,390,000 15,390,000 1.557,240 3,332,517 - 3,653,063 - 15,390,000 23,932,820 - - - - 28,265,095 - 28,265,095 44,636 265,375 - 6,009,285 - - 6,319,296 900,000 - - - - - 900,000 2,511,500 - - - - - 2,511,500 482,450 206,962 435,438 1,241,351 - - 2,366,201 1,529,973 823,732 - - - - 2,353,705 5,468,559 1,296,069 435,438 7,250,636 28,265,095 - 42,715,797 $7,025,799 $4,628,586 $435,438 $10,903,699 $28,265,095 $15,390,000 $66,648,617 See accompanying notes. KODIAK ISLAND BOROUGH COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES For the year ended June 30, 1982 Continued See accompanying notes. Governmental Fund Types Total Special Debt Capital (Memorandum General Revenue Service Projects Only) Revenues (Note 1B): Property taxes $2,236,368 $ 140,093 $ - $ - $ 2,376,461 Intergovernmental: Federal 1,387 1,227,832 - 63,895 1,293,114 State of Alaska 2,701,874 12,028,496 - 1,026,187 15,756,557 Land sales proceeds received - 151,534 - - 151,534 a, Licenses, permits, fees and other local revenue 22,233 445,441 - - 467,674 Building rent 110,020 - - - 110,020 Revenue from investments and property 892,206 264,086 35,208 1,538,535 2,730,035 Total revenues 5,964,088 14,257,482 35,208 2,628,617 22,885,395 Other financing sources: Operating transfers in - 691,922 1,134,999 536,495 2,363,416 Total revenues and other financing sources 5,964,088 14,949,404 1,170,207 3,165,112 25,248,811 Continued See accompanying notes. N J EODIAE ISLAND BOROUGH COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES (Continued) For the year ended June 30, 1982 Expenditures: Borough assembly Legal department Capital improvements Manager's department Clerk's department Finance department Assessment department Planning and community development Engineering department Health and sanitation Data services Outer continental shelf Coastal zone management Buildings and grounds General administration Education Debt service Total expenditures Other financing uses: Operating transfers out Total expenditures and other financing uses Excess (deficiency) of revenues and other financing sources over (under) expenditures Governmental Fund Types Total Special Debt Capital (Memorandum - General Revenue Service Projects Only) $ 29,230 $ - $ - $ - $ 29,230 91,368 - - - 91,368 - 343,440 - 7,702,336 8,045,776 104,563 - - - 104,563 126,024 - - - 126,024 125,584 - - - 125,584 142,591 - - - 142,591 152,368 593,444 - 117,620 863,432 131,118 - - - 131,118 710,644 67,600 - - 778,244 208,451 - - - 208,451 25,968 - - - 25,968 125,102 - - - 125,102 275,157 - - - 275,157 157,399 - - - 157,399 229,525 12,663,139 - - 12,892,664 - - 1,915,587 - 1,915,587 2,635,092 13,667,623 1,915,587 7,819,956 26,038,258 1,258,047 713,817 - 391,552 2,363,416 3,893,139 14,381,440 1,915,587 8,211,508 28,401,674 and other financing uses 2,070,949 567,964 (745,380) Fund balances, July 1, 1981 3,407,234 718,481 1,180,818 Equity transfer (9,624) 9,624 - Fund balances, June 30, 1982 $5,468,559 $ 1,296,069 $ 435,438 See accompanying notes. (5,046,396) 12,297,032 (3,152,863) 17,603,565 $ 7,250,636 $14,450,702 KODIAK ISLAND BOROUGH COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL, SPECIAL REVENUE AND DEBT SERVICE FUNDS For the year ended June 30, 1982 Revenues (Note 1B): Property taxes Intergovernmental: Federal State Land sales proceeds received tJ Licenses, permits, fees and 00 other local revenue Building rent Revenue from investments and property Total revenues Other financing sources: Operating transfers in Total revenues and other financing sources Continued See accompanying notes. o � a Debt Service Funds Variance - Favorable Budget Actual (Unfavorable) 35,208 35,208 35,208 35,208 1,934,830 1,134,999 (799,831) 1,934,830 1,170,207 (764,6n3) General Fund Special Revenue Funds Variance - Variance - Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) $2,217,320 $2,236,368 $ 19,048 $ 138,850 $ 140,093 $ 1,243 2,180 1,387 (793) 1,127,424 1,227,832 100,408 1,992,550 2,701,874 709,324 12,233,019 12,028,496 (204,523) - - - 195,390 151,534 (43,856) 13,700 22,233 8,533 269,291 445,441 176,150 110,040 110,020 (20) - - - 713,210 892,206 178,996 54,000 264,086 210,086 5,049,000 5,964,088 915,088 14,017,974 14,257,482 239,508 1,380,629 691,922 (688,707) 5,049,000 5,96 tOS8 915,088 15,398,603 14,949,404 (449,199) See accompanying notes. o � a Debt Service Funds Variance - Favorable Budget Actual (Unfavorable) 35,208 35,208 35,208 35,208 1,934,830 1,134,999 (799,831) 1,934,830 1,170,207 (764,6n3) EODIAX ISLAND BOROUGH COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GENERAL, SPECIAL REVENUE AND DEBT SERVICE FUNDS (Continued) For the year ended June 30, 1982 General Fund Special Revenue Funds Debt Service Funds - Variance - Variance - Variance - Favorable Favorable Favorable Budget Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable) Expenditures: Borough assembly $ 44,000 $ 29,230 $ 14,770 $ - $ - $ - $ - $ - $ - Legal department 107,000 91,368 15,632 - - 679,500 - 343,440 - 336,060 - - - - - - Capital improvements Manager's department 158,700 104,563 54,137 - - - - - - Clerk's department 156,524 136,190 126,024 125,584 30,500 10,606 - - - - - - - - - - - - Finance department Assessment department 149,074 142,591 6,483 - - - - - - Planning and community 171,910 152,368 19,542 342,000 593,444 (251,444) - - - development Engineering department 171,794 131,118 40,676 - - - - - - Health and sanitation 687,700 710,644 (22,944) 442,741 67,600 375,141 - - - N Data services 230,610 50,000 208,451 25,968 22,159 24,032 _ _ _ _ _ Outer continental shelf Coastal zone management 115,000 125,102 (10,102) - - - - - - Buildings and grounds 566,500 275,157 291,343 _ _ _ General administration 165,803 275,505 157,399 229,525 8,404 45,980 _ 13,466,105 _ 12,663,139 _ 802,966 - - - Education - - - - - - 1,934,830 1,915,587 19,243 Debt service Total expenditures 3,186,310 2,635,092 551,218 14,930,346 13,667,623 1,262,723 1,934,830 1,915,587 19,243 Other financing uses: Operating transfers out 1,862,690 1 258,047 604,643 713,817 713,817 - - - - Total expenditures and other 5,049,000 3,893,139 1,155,881 15,644,163 14,381,440 1,262,723 1,934,830 1,915,587 19,243 financing uses Excess (deficiency) of revenues and other financing sources over expenditures and other $ - 2,070,949 $2,070,949 $ (245,560) 567,964 $ 813,524 $ - (745,380) $ (745,380) financing uses Fund balances, July 1, 1981 3,407,234 718,481 1,180,818 Equity transfer (9,624) 9,624 - Fund balances, June 30, 1982 $5,468,559 $ 1,296,069 $ 435,438 See accompanying notes. KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS June 30, 1982 Significant Accounting Policies A. Basis of Presentation The Kodiak Island Borough (Borough) is organized to perform the municipal duties allowed by Alaska Statutes and as directed by its residents. The financial results of the recur- ring activities performed directly by the Borough are accounted for in the funds of the.Borough. As discussed in the following paragraphs, the Borough delegates and contracts with various related entities to fulfill certain of its functions. The Borough has delegated the operating responsi- bility for public education to the Kodiak Island Borough School District.(School District). In accordance with statutes, the Borough retains ownership of the educationally related fixed assets and incurs the debt, if necessary, to fund the acquisi- tion and construction of the school facilities. The Borough and the School District maintain separate accounting records of financial activity. The Borough includes the consolidated financial statement of the School District as a Special Revenue Fund in this financial statement. The Borough conducts a mental health services program by terms of a contract with the State of Alaska. The operating activity of this program is subcontracted to the Kodiak Aleutian Mental Health Center. All operating activity and resultant financial position of this program is presented in a Special Revenue Fund in this financial statement. The Borough owns the Kodiak Island Borough Hospital (Hospital) and related furnishings. The Borough has contracted the Hospital's operating activities to the Lutheran Hospitals and Homes Society of America. By terms of that agreement, oper- ating losses sustained (as contractually defined), if any, are the ultimate responsibility of the Borough. Annual contribu- tions, as well as direct payment for certain insurance and equip- ment and plant repairs, are made by the Borough to subsidize the Hospital's financial operations. These contributions and direct payments are recorded as expenditures of the Borough's General Fund. The comprehensive financial position and opera- ting results of the Hospital are not included in this financial statement. 30 KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 1. Significant Accounting Policies (Continued) B. Basis of Accounting The accounts of the Borough are organized on the basis of funds, each of which is considered a separate account- ing entity. The resources of the Borough are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. All funds of the Borough are cate- gorized as "governmental funds" to which the modified accrual basis of accounting applies. Pursuant to the modified accrual basis of accounting, expenditures (including accumulated employee leave with cash value) are reflected in the year in which the liabilities for goods and services are incurred, except principal and interest on long-term debt is recognized when due. Also, pursuant to this basis of accounting, material revenues which are both measurable and available are accrued, other revenues are recorded on the cash basis. Summarized below are the major sources of revenue and the applicable recognition policies. Property taxes Real and personal property tax revenue is recog- nized in the fiscal year to which it relates and in which it becomes collectible. Intergovernmental revenue State of Alaska Shared Revenues, State of Alaska Municipal Assistance, Federal Shared Revenue and various 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 of final payments due within approximately two to three months ` after year end. State of Alaska and Federal governmental cost reimbursable grants and contracts (including grants for construction) are recorded to the extent of allowable expenditures in the period in which the expenditures were incurred. 31 1. KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 Significant Accounting Policies (Continued) B. Basis of Accounting (Continued) Revenue from investments and property Amounts earned on investment of available cash balances and the rental of building facilities are record- ed in the period to which they relate, including accrual at year end of balances due. All year end accruals at June 30, 1982 are due within approximately two to three months of year end. Land sales proceeds and other local revenue Amounts received pursuant to land sale con- tracts (long-term in nature) are recorded on the cash basis. Other local revenues are recorded on a basis consistent with their nature in relation to measurement and availa- bility standards. C. Fixed Assets and Long -Term Liabilities Annual payments of principal and interest on long- term obligations are recorded as expenditures in the Debt Service Funds in the year of payment. The long-term liabilities owed by the Borough and fixed assets owned by the Borough are presented in the Long - Term Debt Group of Accounts and General Fixed Asset Group of Accounts, respectively. These account groups are not "funds, as they reflect only the measurement of financial position and do not reflect measurement of the results of operations. Acquisition and construction of fixed assets are reflected as expenditures in the appropriate fund to which such transactions relate. 32 KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 1. Significant Accounting Policies (Continued) D. Budgets The annual Borough budget is prepared by management in the spring, preceding the fiscal year to which it relates. The budget is submitted to the Assembly for review and approval. Legal enactment of the budget is obtained through passage of a Borough ordinance. Amendments to the budget can occur anytime during the fiscal year through Assembly action. An Assembly resolution is required as authorization to transfer budgeted amounts between line items in each fund. Revisions that alter total expendi- tures of a fund must be authorized by ordinance. The budgeting basis used by the Borough is consistent with generally accepted accounting principles. All funds are budgeted on an annual basis encompassing a fiscal year, except the budgets of Capital Project Funds generally encompass the period of project completion which is generally greater than one year. E. Encumbrances Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General Fund, Special Revenue Funds, and Capital Projects Funds. Encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities. F. Inventory Expendable operating supplies of the Borough (except as discussed in the succeeding paragraph) are recorded on the purchases method and at June 30, 1982, there was no significant amount of such items. Expendable operating supplies of the School District, consisting primarily of teaching, maintenance and food supplies, are recorded on the usage basis. These inventories are valued at the lower of average cost or market, except USDA food inven- tory (acquired at nominal price) is recorded at replacement cost. 33 KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 1. Significant Accounting Policies (Continued) G. Investment Earnings Earnings from common investments of the central treasury are credited to the General Fund. Earnings from spe- cifically identifiable investments are credited to the fund to which the investment relates. H. Retirement Plans All full-time employees of the Borough and School District participate in either the Public Employees' Retirement System (PERS) or the Teachers' Retirement System (TRS). The Borough and School District accrue pension expense which in- cludes current costs and amortization of prior service costs. The policy is to fund pension cost accrued. Total Columns on Combined Financial Statements Total columns on the Combined Financial Statements are captioned Memorandum Only to indicate that they are pre- sented only to facilitate financial analysis. Data in these columns is not comparable to a consolidation, nor does the data present financial position, results of operations, or changes in financial position in conformity with generally accepted accounting principles, because interfund eliminations and other adjustments have not been made in the aggregation of this data. 2. Cash and Temporary Investments A. Central Treasury The cash transactions of the Borough's funds are trans- acted primarily in a single checking account. Cash carried in this central account, in excess of operating needs, is invested in temporary certificates of deposit or similar short-term in- vestments. A summary of central treasury cash balances by depository at June 30, 1982 is as follows: 34 2. KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 Cash and Temporary Investments (Continued) A. Central Treasury (Continued) Bank balance $ 41,193 Repurchase agreements (11.00% annual return) 1,100,000 Time certificates of deposit (14.2% average annual return) 6,000,000 $7,141,193 B. Specific Cash Investments Investments have been made by the Borough and identi- fied by the specific source of their funding. A summary of these investments at June 30, 1982 is as follows: Time certificate of deposit (13.68% average annual return) Time certificate of deposit (14.375% annual return) Time certificates of deposit (14.66% average annual return) Totals Special Revenue Total Funds $ 692,801 $692,801 $ 255,000 - Debt Capital Service Projects Fund Fund 255,000 8,000,000 - - 8,000,000 $8,947,801 1692,801 1255,000 18,000,000 35 4. KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 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 the expenditures and encumbrances incurred (excluding the net effect of student generated financial activity). That portion (an amount of $649,643 in the year ended June 30, 1982) of the annual budgeted appropriation in excess of the amount necessary to balance the School District's total annual resources to its annual expendi- tures and encumbrances (excluding the net effect of student generated financial activity) lapses to the Borough at year end. In addition to the annual appropriation, the Borough provides the School District, without charge, general liability and property insurance and the annual independent audit. Kodiak Island Borough Hospital Appropriation By terms of the operating agreement with the Lutheran Hospitals and Homes Society of America, the Borough is ultimate- ly responsible for operating losses (as contractually defined), if any, sustained by the Kodiak Island Borough Hospital. Shared revenue received by the Borough from the State of Alaska includes $249,662, required to be passed through to the Hospital. The Borough recorded this amount as intergovern- mental revenue and the pass-through as an expenditure of health and sanitation. The operating results summarized below do not include the $124,662 of shared revenues distributed to the Hospital for the period January 1, 1982 through June 30, 1982. The unaudited financial statements of the Hospital at June 30, 1982 and for the six months then ended reflect the following: Excess of expenses over revenue, before depreciation $__24,989 Excess of expenses over revenue, after depreciation $ 163,403 Fixed assets, net $3,026,650 Total assets $4,133,679 Fund balance (including Borough equity in fixed assets) $4,013,039 36 5. KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 Retirement Plans Total pension expense under PERS and TRS, relating to employees of the Borough and School District for the year ended June 30, 1982 is as follows: Borough School District PERS $114,155 $307,007 TRS - 486,338 $114,155 $793,345 The School District's portion of the actuarially com- puted value of vested benefits over the total of pension fund assets for TRS is not available, as all employer contributions are commingled. As of June 30, 1981, the accrued benefit fund- ing ratio of TRS was 79.1%. The actuarially computed value of the Borough's and School District's unfunded liability (present value of accrued benefits over adjusted assets) for PERS was $12,241 and $405,097, respectively, at June 30, 1981. 37 Contributions to these plans are a percentage of eligible gross wages made by both the employer and employee as follows: 1981-82 1982-83 Borough School District Borough School District PERS PERS TRS PERS PERS TRS Employee 4.25% 4.25% 7.00% 4.25% 4.25% 7.00% Employer 12.54 13.78 8.42 12.54 13.78 8.45 Total 16.79% 18.03% 15.42% 16.79% 18.03% 15.45% 37 KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 6. Long -Term Debt A. Summary The following is a summary of long-term debt transac- tions for the year ended June 30, 1982: General Obligation Bonds: Term Bonds: 1967 Hospital bond, due 1987 (4.875% annual interest rate) Serial Bonds: 1965 School bond (annual interest rates of 3.625% to 3.875%), due in installments to 1985) 1967 School bond (annual interest rates of 5.00% to 5.75%) due in in- stallments to 1988 1974 School refunding bond (annual inter- est rates of 5.0% to 5.7%) due in installments to 1985 1974 School refunding bond (annual inter- est rates of 7.25%) due in installments from 1986 to 1992) 1980 School bond (annual interest rate of 7.3% to 9.0%) due in installments to 2001 Totals Bonds Balance due, (Principal) Balance due, July 1, 1981 Retired June 30, 1982 $ 300,000 $ - $ 300,000 100,000 25,000 75,000 350,000 50,000 300,000 860,000 145,000 715,000 1,900,000 - 1,900,000 12,100,000 - 12,100,000 $15,610,000 1220,000 $15,390,000 38 KODIAB ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 6. Long -Term Debt (Continued) B. Refunding Bonds During 1974 and 1975, the Borough defeased existing bonds by utilizing the proceeds of bonds then issued. The pro- ceeds from the "refunding bonds" (issued in the amounts of $4,000,000 and $2,325,000) have been invested in U.S. Govern- ment securities at an interest rate which will result in a return of proceeds that, when added to the securities' principal balances, will be sufficient to meet the interest and principal requirements of the defeased bonds. The investments in the securities and the current obligations of the defeased bonds are not reflected in the financial statements. A summary of the investments held in trust and the current obligations of the defeased bonds is summarized below. 1972 School bond (5.5% to 6.75%) due in installments to 1993 1974 "A" School bonds (5% to 5.7%) due in installments to 1990 Bond Principal Outstanding, June 30, 1982 $2,835,000 2.150.000 $4,985,000 Investments Held in Trust, June 30, 1982 $2,918,347 * 2,004,157 ** $4,922,504 * Seattle First National Bank as Trustee ** Central Bank of Denver as Trustee r C. Unissued Bonds The Borough has unissued bonds for future school im- provements in the amount of $16,900,000 authorized by the 1979 referendum. An issue of $7,400,000 of bonds for junior high school renovation is planned for the Borough's 1983 fiscal year. 39 6. 7. a KODIAK ISLAND BOROUGH NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1982 Long -Term Debt (Continued) D. Scheduled Maturit The aggregate maturities of long-term debt, excluding defeased bonds, to maturity is as follows: 1983 $ 515,000 1984 550,000 1985 610,000 1986 630,000 1987 960,000 1988 - 1992 3,925,000 1993 - 1997 4,030,000 1998 - 2001 4,170,000 $15,390,000 Contingencies The contractor for the Main Elementary School con- struction has asserted a claim for delay damages of approximate- ly $400,000. It is the opinion of management and legal counsel that this claim can be settled favorably for the Borough. No provision for loss has been recorded in these financial state- ments. Property Taxes Property taxes are levied on the assessed value of taxable property as of January 1. Pursuant to Alaska Statutes Title 29.53.170, the Borough establishes the mill rate on or before June 15. Tax bills are payable in two installments on August 15 and October 15. Borough property tax revenues are recognized in the fiscal year in which they become collectible. At June 30, 1982, the 1982 real and personal property tax levy of $1,457,383 is reflected as deferred revenue of the General Fund. Subsequent Events Effective July 1, 1982, the Borough will assume responsibility for operation, maintenance and billing of water and sewer services for residents of Roads and Utility Improve- ments Service District Number 1. 40