CITY OF HASTINGS, NEBRASKA FINANCIAL REPORT SEPTEMBER 30, 2014

Transcription

1 FINANCIAL REPORT SEPTEMBER 30, 2014

2 CONTENTS Page INDEPENDENT AUDITOR'S REPORT 1-3 Management's Discussion and Analysis 4-8 FINANCIAL STATEMENTS Statement of Net Position 9 Statement of Activities Fund Balance Sheet - Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 16 Statement of Net Position - Proprietary Funds 17 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 18 Statement of Cash Flows - Proprietary Funds 19 Statement of Fiduciary Net Position - Fiduciary Funds 20 Statement of Changes in Fiduciary Net Position - Fiduciary Funds 21 Notes to Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Receipts Actual Compared to Budget (Cash Basis) - General Fund Schedule of Disbursements Actual Compared to Budget (Cash Basis) - General Fund Schedule of Receipts and Disbursements Actual Compared to Budget (Cash Basis) - Special Revenue Funds Schedule of Receipts and Disbursements Actual Compared to Budget (Cash Basis) - Debt Service Funds Schedule of Receipts and Disbursements Actual Compared to Budget (Cash Basis) - Capital Projects Funds Schedule of Receipts and Disbursements Actual Compared to Budget (Cash Basis) - Trust Funds Notes to Required Supplementary Information - Budgetary Comparison Schedules (Budget and Actual) 78 SUPPLEMENTARY INFORMATION Combining Balance Sheet - Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds Schedule of Expenditures of Federal Awards REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCEWITH OMB CIRCULAR A Schedule of Findings and Questioned Costs 89

3 (ff McDermott + Miller CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT Honorable Mayor and City Council City of Hastings Hastings, Nebraska Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Hastings, Nebraska (the City), as of and for the year ended September 30, 2014, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements The City's management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making N Burlington, Suite 401 PO Box 1317 Hastings, NE Fax McDermott and Miller, P.C.

4 those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Hastings, Nebraska, as of September 30, 2014, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 4 through 8 and budgetary comparison information on pages 52 through 78 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Hastings, Nebraska's basic financial statements. The City's "Combining Balance Sheet - Nonmajor Governmental Funds" and "Combining Statement of Revenues, Expenditures, and Changes in Fund Balances - Nonmajor Governmental Funds" are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of McDermott + Miller

5 Management and Budget Circular A-133, Audit of States and Local Governments, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 27, 2015 on our consideration of the City of Hastings, Nebraska's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Hastings, Nebraska January 27, 2015 McDermott + Miller «.,,F,,DPU.L,C!,»»

6 MANAGEMENT'S DISCUSSION AND ANALYSIS CITY OF HASTINGS, NEBRASKA As management of the City of Hastings, Nebraska ("the City") we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City's primary government for the fiscal year ended September 30, The operations of the Utilities System, a component unit of the City of Hastings, has been audited separately and its financial report and management discussion and analysis can be obtained from the Office of the Finance Director, Hastings Utilities, 1228 North Denver Avenue, Hastings, Nebraska Financial Highlights The assets of the City's primary government exceeded its liabilities at the close of the most recent fiscal year by 68,491,834 (netposition). As of the close of the current fiscal year, the City's primary government governmental funds reported combined ending fund balances of 23,711,781, an increase of 5,036,557 in comparison with the prior year. At the end of the current fiscal year, unassigned fund balance for the general fund was 12,931,713, or 77% of total general fund expenditures. The City's primary government long-term debt decreased by 922,781 during the current fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements. The City's basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City's assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). -4-

7 Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, streets, and culture and recreation. The business-type activities of the City include landfill operations. The government-wide financial statements include not only the City itself (known as the primary government), but also a separate Utility System for which the City is financially accountable. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found on pages 9-11 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the governmentwide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains twenty-two individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general, street, museum, community redevelopment, and debt service funds, all of which are considered to be major funds. Data from the other seventeen governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found on pages of this report

8 Proprietary funds. The City maintains one type of proprietary fund. Proprietary funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses a proprietary fund to account for its landfill operations. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide information for the landfill fund which is considered to be a major fund of the City. The basic proprietary fund financial statements can be found on pages of this report. Fiduciary funds. Trust funds are used to account for resources held for the benefit of parties outside the government. Trust funds are not reflected in the governmentwide financial statement because the resources of those funds are not available to support the City's own programs. The accounting used for trust funds is much like that used for proprietary funds. The basic trust fund financial statements can be found on pages of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information and supplementary information. Required supplementary information can be found on pages Supplementary information such as combining and individual fund statements and schedules can be found on pages of this report. Government-wide Financial Analysis By far the largest portion of the City's total assets (58%) reflects its net investment in capital assets (e.g., land, buildings, machinery, equipment and infrastructure). The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. City of Hastings, Nebraska's Net Position Governmental Activities Business-type Activities Total Current and other assets 28,093,993 7,011,291 35,105,284 Capital assets 42,594,531 5,467,110 48,061,641 Total Assets 70,688,524 12,478,401 83,166,925 Long-term liabilities Other liabilities 9,542,965 1,501,057 3,585,514 45,555 13,128,479 1,546,612 Total Liabilities 11,044,022 3,631,069 14,675,091 Net Position: Net investment in capital assets Restricted Unrestricted 34,380,416 25,264,086 5,097,122 2,972, ,979 39,477,538 2,972,231 26,042,065 59,644,502 8,847,332 68,491,834-6-

9 The government's net position increased by 7,325,954 during the current fiscal year. Governmental activities. Governmental activities increased the City's net position by 7,001,380 thereby accounting for 96% of the total increase in the net position of the City. Business-type activities. Business-type activities increased the City's net position by 324,574 thereby accounting for a 4% increase in the government's total net position. Financial Analysis of the Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. Expenditures and Program Revenues - Governmental Funds: Excess (Deficit) Other Revenues and Other Financing Financing Sources Revenues Expenditures Sources Over Expenditures , ,047 5,036, , ,948 (1.061,628) 2.738,100 The general fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the general fund was 12,931,713, while the total governmental fund balance reached 23,711,781. Current year expenditures include capital outlays of 5,863,596 compared to 2,355,827 for the prior year, an increase of 3,507,769. Debt service payments for the current year were 3,111,359. Other financing sources include transfers from the Landfill Fund of 100,000. Expenses and Program Revenues - Business-type Activities Proprietary funds. The City's proprietary fund provides the same type of information found in the government-wide financial statements, but in more detail. Landfill Fund Operating income 1,793,063 1,720,535 Operating expense (1,409,505) (1,863,642) Operating Income (Loss) 383,558 (143,107) - 7 -

10 Unrestricted net position of the Landfill Fund at the end of the year amounted to 777,979. The total increase in net position for this fund was 324,574. Other factors concerning the finances of this fund have already been addressed in the discussion of the City's business-type activities. Capital Asset and Debt Administration Capital assets. The City's investment in capital assets for its governmental and business type activities as of September 30, 2014, amounts to 48,061,641 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery, equipment, and infrastructure. Infrastructure relates to roads, bridges, streets and sidewalks. Additional information on the City's capital assets can be found in Note 9 on page 42 of this report. Long-term debt. At the end of the current fiscal year, the City had total debt outstanding of 8,584,103. City of Hastings, Nebraska's Outstanding Debt General Obligation Bonds 7,410,000 7,830,000 Notes Payable - Community Redevelopment Authority 685, ,953 Notes and Installment Contracts 488, ,931 8,584, The City's total debt decreased by 922,781 during the current fiscal year. Additional information on the City's long-term debt can be found in Note 8 on pages Next Year's Budget and Rates. The City has appropriated 20,131,963 for spending for the general fund in the fiscal year budget. The property tax assessed for is 5,257,409, an increase of 187,303 from Requests for Information This financial report is designed to provide a general overview of the City's primary government finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the City Treasurer, City of Hastings, Nebraska, 220 N. Hastings Avenue, Hastings, NE

11 STATEMENT OF NET POSITION September 30, 2014 Primary Government Governmental Business-Type Activities Activities Total Component Unit Utilities System ASSETS Cash and cash equivalents Cash with county treasurer Cash and investments with fiscal agent Investments Deposit fund Receivables Prepaid expenses Inventory Notes receivable Other charges Restricted assets: Cash and cash equivalents Investments Landfill closure costs Capital assets, net Total assets 15,546,496 1,474,751 17,021,247 25,931,650 1,092,660 3,000 5,196,316 2,300,000 1,092,660 3,000 7,496,316 42,663,580 5,000 3,222,526 2,025,852 1,002, ,309 5,000 3,486,835 2,025,852 1,002,143 12,396, ,473 6,163,560 42,594,531 2,972,231 5,467,110 2,972,231 48,061, ,439 5,583,931 7,035, ,294,793 70,688,524 12,478,401 83,166, ,531,327 DEFERRED OUTFLOWS OF RESOURCES LIABILITIES Excess of checks outstanding over bank balance Accounts payable Accrued liabilities Security deposits held Customer deposits 884, , ,420 5, ,391 18, , , ,584 5, ,642, ,450 Noncurrent liabilities: Accrued compensated absences Landfill closure payable 1,328,850-53,777 3,161,749 1,382,627 3,161,749 2,459,167 - Other ,014 Long-term debt: Due within one year 1,303, ,747 1,420,276 5,315,000 Due in more than one year 6,910, ,241 7,163,827 45,700,000 Total liabilities 11,044,022 3,631,069 14,675,091 66,276,640 DEFERRED INFLOWS OF RESOURCES 73,120 NET POSITION Net investment in capital assets Restricted Unrestricted 34,380,416 25,264,086 5,097,122 2,972, ,979 39,477,538 2,972,231 26,042,065 84,048,812 12,619, ,513,660 Total net position 59,644,502 8,847,332 68,491, ,181,567 See Notes to Financial Statements -9-

12 STATEMENT OF ACTIVITIES Year Ended September 30, 2014 Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions FUNCTIONS/PROGRAMS Primary Government Governmental activities: General government 8,963,115 1,014,012 4,681, ,206 Public safety 6,690, ,943 14,261 Culture and recreation 4,501, ,337 57,095 Streets 2,545, ,249 2,240, ,924 Interest on long-term debt 259,748 " " " Total governmental activities 22,960,302 1,999,598 7,269, ,391 Business-type activities: Landfill 1,421,692 1,786,658 Total business-type activities 1,421,692 1,786,658 Total primary government 24,381,994 3,786,256 7,269, ,391 Component units: Utilities System 61,249,454 52,217, ,444 Total component units 61,249,454 52,217, ,444 General revenue Taxes Special assessments Tax increment financing License and permits Interest income Transfers (to)/from other funds Insurance settlements Miscellaneous Total general revenues and special items Change in net position Net position - beginning Net position - ending See Notes to Financial Statements

13 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-type Activities Activities Total Component Unit (2,790,149) (6,385,070) (3,661,499) 382,113 (259,748) (2,790,149) (6,385,070) (3,661,499) 382,113 (259,748) (12,714,353) (12,714,353) 364, , , ,966 (12,714,353) 364,966 (12,349,387) (8,183,756) (8,183,756) 12,701,387 12,701,387 (154,585) 348, ,590 (154,585) 348, , , ,000 4,919,670 1,051,907 _ 53,203 (100,000) 6, ,920 4,919,670 1,058, ,444 11,117,152 19,715,733 (40,392) 19,675,341 11,805,596 7,001, ,574 7,325,954 3,621,840 52,643,122 8,522,758 61,165, ,559,727 59,644,502 8,847,332 68,491, ,181,567 See Notes to Financial Statements

14 FUND BALANCE SHEET GOVERNMENTAL FUNDS September 30, 2014 ASSETS Cash Cash with county treasurer Cash and investments with fiscal agent Deposit fund Receivables Inventories General Fund Streets Fund Museum Fund 11,936,280 1,764,091 1, ,767 30, ,863 5, ,620 11,639 16,889 35,978 20,765 TOTAL ASSETS 13,327,667 1,823, ,186 LIABILITIES Excess of checks outstanding over bank balance Accounts payable Accrued liabilities Deferred revenues Total liabilities ,650 84,064 44,932 22, ,890 58,880 27,650 5, , , ,006 FUND BALANCES/(DEFICITS) Nonspendable Restricted Committed Assigned Unassigned Total fund balances/(deficits) 16,889 20,765 1,702,417 12,931,713 (762,585) 12,931,713 1,719,306 (741,820) TOTAL LIABILITIES AND FUND BALANCES/fDEFICITS) 13,327,667 1,823, ,186 Total Fund Balances Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Notes and property tax receivables that are not available to pay for current-period expenditures are not reported in the funds. Deferred revenue is not available to pay for current-period expenditures and, therefore, is not reported as revenue in the funds. Long-term liabilities, are not due and payable in the current period and therefore are not reported in the funds. Net position of governmental activities See Notes to Financial Statements

15 Community Debt Other Redevelopment Service Governmental Fund Fund Funds Total 1,050,332 2,063,795 3,926,734 20,742, , , ,092,660 3, ,000 5, , ,312 1,893,035 1,988, ,025,852 3,156,672 2,963,670 4,298,046 25,762, ,650 66, , , , , ,521 66,285 2,050,578 1,988, ,025,852 2,414, ,414,149 3,134,800 3,134,800 1,168, ,096,961 3,967, ,169,128 3,156,672 2,414,149 4,231,761 23,711,781 3,156,672 2,963,670 4,298,046 25,762,359 23,711,781 42,594,531 2,331, ,521 (9,542,965) 59,644,502 See Notes to Financial Statements

16 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended September 30, 2014 General Fund Streets Fund Museum Fund REVENUES Taxes Special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeitures Park and recreation fees Interest income Insurance Settlements Miscellaneous Total revenues 7,212, , , ,590 4,681,748 1,014,012 20, ,178 32,711 4,919, ,656 19,080,645 2,675,538 16, , , ,814 9,603 66,513 3,233,918 1,369,649 EXPENDITURES Current operating: General government Public safety Culture and recreation Streets Debt service: Principal Interest and other charges Capital outlay: Total expenditures 4,096,999 6,690,274 3,135,753-1,343,249 2,545,234 71,987 48,325 2,932 1,708 2,714, ,035 13,975 16,712,440 2,833,302 1,357,224 Excess (deficiency) of revenues over expenditures 2,368, ,616 12,425 OTHER FINANCING SOURCES (USES) Transfers from other funds Transfers to other funds Tax increment financing and note proceeds Tax increment related note financing Bond/BAN proceeds Bond/BAN redemptions Total other financing sources (uses) 1,405,300 1,405,300 Excess (deficiency) of revenues and other sources over expenditures and other uses 3,773, ,616 12,425 Fund balances/(deficits) at beginning of year 9,158,208 1,318,690 (754,245) FUND BALANCES/fDEFICITS) AT END OF YEAR 12,931,713 1,719,306 (741,820) See Notes to Financial Statements

17 Community Redevelopment Debt Service Other Governmental Fund Fund Funds Total 280,909 11,999 1,804, , ,082 1,970,677 56, ,275 3,414 13,111 12,564, , ,590 8,246,351 1,549,420 24, , ,717 4,919,670 52, ,108 1,027, ,637 2,266,085 3,594,238 29,890, ,969 32, ,970 4,862,088 6,690,274 22,929 4,501,931 2,545, ,000 38, , , ,507 9, , 748 2,897,091 5,863, , ,657 3,171,931 25,526,662 (215,471) 1,375, ,307 4,363, ,000-1,805,300 (400,000) (1,305,300) (1,705,300) 420, ,867 (72,820) (72,820) 1,500, ,000 2,200,000 - (1,975,000) -- (1,975,000) 348,047 (475,000) (605,300) 673, , ,428 (182,993) 5,036,557 3,024,096 1,513,721 4,414,754 18,675,224 3,156,672 2,414,149 4,231,761 23,711,781 See Notes to Financial Statements - 15-

18 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2014 Net change in fund balances - total government funds 5,036,557 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the assets. This is the amount of depreciation expense in the current period in excess of current year capital outlay. 1,51 3,202 Governmental funds report note receivable collections as revenues while governmental activities record these as reductions to assets in the Statement of Net Position (24,064) Governmental funds do not record changes in deferred revenues and property tax receivables in the Statement of Revenues, Expenditures, and Changes in Fund Balances, while the increase/fdecrease) is reflected in the Statement of Activities. (376,537) Governmental funds do not record changes in accrued compensated absences in the Statement of Revenues, Expenditures, and Changes in Fund Balances, while the (increase)/decrease is reflected in the Statement of Activities. 612 Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position 851,610 7,001,380 See Notes to Financial Statements -16-

19 CO -- CITY OF HASTINGS, NEBRASKA STATEMENT OF NET POSITION PROPRIETARY FUNDS September 30, 2014 CURRENT ASSETS Cash and cash equivalents Investments Enterprise Fund Landfill 1,474,751 2,300,000 Internal Service Fund Self-Insured Health 611,293 1,850,000 Receivables 264, ,946 Total current assets 4,039,060 2,596,239 CAPITAL ASSETS Land, buildings and improvements 6,264,198 Machinery and equipment Less accumulated depreciation Total capital assets RESTRICTED ASSETS Landfill closure costs Total restricted assets TOTAL ASSETS DEFERRED OUTFLOWS OF RESOURCES CURRENT LIABILITIES Accounts payable Accrued liabilities Landfill closure payable CO CO CO CO 2,975,944 9,240,142 (3,773,032) 5,467,110 2,972,231 2,972,231 12,478,401 27,391 18,164 3,161,749 -co CO CO - 2,596,239 22,998 Current portion of long-term debt 116,747 Total current liabilities 3,324,051 22,998 CO OTHER LIABILITIES Long-term debt, net of current portion 253,241 Accrued compensated absences 53,777 Total other liabilities 307,018 TOTAL LIABILITIES 3,631,069 22,998 DEFERRED INFLOWS OF RESOURCES NET POSITION Net investment in capital assets Restricted 5,097,122 2,972,231 Unrestricted 777,979 2,573,241 Total net position 8,847,332 2,573,241 See Notes to Financial Statements -17-

20 -- CITY OF HASTINGS, NEBRASKA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For the Year Ended September 30, 2014 OPERATING REVENUES Charges for services Other revenues Total operating revenue Enterprise Fund Landfill 1,786,658 6,405 1,793,063 Internal Service Fund Self-insured Health 2,006, ,201 2,286,125 OPERATING EXPENSES Personal services Professional services Repairs and maintenance Depreciation Fuel and oil State disposal fee Insurance claims Insurance Closure and postclosure care costs Administrative Other operating Total operating expense 528,478 25,116 39, , ,879 83,895 27, ,183 62,851 36,937 13,722 2,168, ,948 98,919 7,136 1,409,505 2,646,412 Operating income (loss) 383,558 (360,287) NONOPERATING REVENUES (EXPENSES) Interest income Interest expense 53,203 (12,187) 27,512 Total nonoperating revenues (expenses) 41,016 27,512 Income before contributions and transfers 424,574 (332,775) OTHER Transfers to other funds Change in net position (100,000) 324,574 (332,775) Net position beginning of period 8,522,758 2,906,016 NET POSITION END OF PERIOD 8,847,332 2,573,241 See Notes to Financial Statements -18-

21 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended September 30, 2014 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers Payments to employees Enterprise Fund Landfill 1,662,630 (428,966) (526,219) Internal Service Fund c Self-Insured Health 2,152,567 (2,675,702) (13,722) Net cash provided (used) by operating activities 707,445 (536,857) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers (100,000) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchase of property and equipment Loan proceeds Payments on debt: Principal (1,031,554) 42,420 (113,591) - Interest (12,187) Net cash (used) for capital and related financing activities (1,114,912) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from investments Interest income 500,000 53, ,000 27,512 Net cash provided by investing activities 553, ,512 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 45,736 (159,345) CASH AND CASH EQUIVALENTS Beginning: Restricted 2,804,274 General 1,596, ,638 Total beginning 4,401, ,638 Ending: Restricted General 2,972,231 1,474, ,293 TOTAL ENDING 4,446, ,293 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED BY) OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation Change in assets and liabilities: (Increase) decrease in trade receivables Increase (decrease) in accounts payable and accrued expenses Other prepaids, deferrals and accruals, net s 383, ,476 (130,433) (45,362) 228,206 (360,287) - (133,558) (43,012) Net cash provided (used) by operating activities 707,445 (536,857) See Notes to Financial Statements -19-

22 STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS September 30, 2014 Trust Funds Perpetual Police Dept. Cemetery Housing Aquatics Equipment Total Perp. Care Rehab Center Sinking ASSETS Cash 94,921 14,012 1,042, ,486 1,760,297 TOTAL ASSETS 94,921 14,012 1,042, ,486 1,760,297 DEFERRED OUTFLOWS OF RESOURCES LIABILITIES DEFERRED INFLOWS OF RESOURCES -- - NET POSITION 94,921 14,012 1,042, ,486 1,760,297 See Notes to Financial Statements -20-

23 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the Year Ended September 30, 2014 Trust Funds Perpetual Police Dept. Cemetery Housing Aquatics Equipment Perp. Care Rehab Center Sinking Fund Fund Fund Fund Total ADDITIONS Interest income ,512 11,265 25,615 Miscellaneous 1, ,843 Total additions 2, ,512 11,265 27,458 DEDUCTIONS 32,000 32,000 CHANGE IN NET POSITION 2, (18,488) 11,265 (4,542) Net position, beginning of year 92,333 13,919 1,061, ,221 1,764,839 NET POSITION AT END OF YEAR 94,921 14,012 1,042, ,486 1,760,297 See Notes to Financial Statements -21

24 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION: The City of Hastings, Nebraska, was incorporated April 21, 1874, under the provisions of chapter 53 of the Revised Statutes of the State of Nebraska. The City operates under a Mayor-Council form of government and provides the following services as authorized by its charter: public safety (police, fire and civil defense), highways and streets, health, planning and zoning, culture-recreation, parks, auditorium and general administrative services. The City, under direction of the City Council, through its Board of Public Works, also owns and operates electric, gas, water, and pollution control/waste water treatment utilities ("Utilities System"). REPORTING ENTITY: The City, for financial purposes, includes all of the funds and account groups relevant to the operation of the City of Hastings. The financial statements presented herein do not include agencies which have been formed under applicable state laws or separate and distinct units of government apart from the City of Hastings primary government and Utilities System. In determining how to define the reporting entity, management has considered all potential component units. The decision to include a component unit in the reporting entity was made by applying the criteria set forth in GASB Statement No. 61. These criteria state that the financial reporting entity consist of (a) the primary government, (b) organizations for which the primary government is financially accountable, and (c) other organizations for which the primary government is not accountable, but for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The operations of the Utilities System, a proprietary fund of the City of Hastings, are reported on separately at December 31 each year, although controlled by the City of Hastings primary government. The Utilities System's audited financial statements for the period ending December 31, 2013, for the year immediately preceding the date of these financial statements have been summarized in a separate column under "Utilities System." MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION: Government-Wide and Fund Financial Statements - The City's governmentwide financial statements include a Statement of Net Position and a Statement of Activities. These statements present summaries of Governmental and Business-Type activities for the City accompanied by a total column. Fiduciary activities of the City are not included in these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable

25 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary (trust) funds, even though the trust funds are excluded from the government-wide financial statements. Major individual funds are reported as separate columns in the fund financial statements. The government-wide financial statements are presented on an economic resources measurement focus and the accrual basis of accounting. Accordingly, all of the City's assets, deferred outflows of resources, liabilities, and deferred inflows of resources are included in the accompanying Statement of Net Position. The Statement of Activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within sixty days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other taxes. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City implemented the provisions of Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, of the Governmental Accounting Standards Board as of September 30,

26 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): In the fund financial statements, governmental fund balance is presented in five possible categories: Nonspendable - resources which cannot be spent because they are either a) not in spendable form (such as inventory) or; b) legally or contractually required to be maintained intact. Restricted - resources with constraints placed on the use of resources are either a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or b) imposed by law through constitutional provisions or enabling legislation. Committed - resources which are subject to limitations the government imposes upon itself at its highest level of decisionmaking, and that remain binding unless removed in the same manner. Assigned - resources neither restricted nor committed for which a government has a stated intended use as established by the City Council or a body or official to which the City Council has delegated the authority to assign amounts for specific purposes. Unassigned - resources which cannot be properly classified in one of the other four categories. The General Fund should be the only fund that reports a positive unassigned fund balance amount. The City has not formally adopted a minimum fund balance policy. The City reports the following major governmental funds: General Fund - This is the City's primary operating fund. It accounts for all activities of the general government, except those required to be accounted for in another fund. Street Fund - This fund accounts for the activities of the street maintenance and betterment. Museum Fund - This fund accounts for the activities of the Hastings Museum. Community Redevelopment Fund - This fund accounts for redevelopment projects and assistance. Debt Service Fund - This fund accounts for the receipt of bond issue proceeds, bond principal and interest payments, and for special assessments of the City for the betterment of property paid for by specific beneficiaries of the improvements

27 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): Proprietary funds are accounted for using the economic resources measurement focus and the accrual basis of accounting. Accordingly, all assets, deferred outflows of resources, liabilities (whether current or noncurrent), and deferred inflows of resources are included on the Statement of Net Position. The Statement of Revenues, Expenses and Changes in Fund Net Position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Operating revenues in the proprietary funds are those revenues that are generated from the primary operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses are those expenses that are essential to the primary operations of the fund. All other expenses are reported as non-operating expenses. The City reports the following major Proprietary funds: Landfill Fund - This fund accounts for all activities necessary for the provision of landfill services to City residents. Additionally, the City reports the following fund types: Internal Service Funds - These funds account for the services provided to other departments, on a cost-reimbursement basis. Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and the business-type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund transactions have been eliminated; however, those transactions between governmental and business-type activities have not been eliminated. Fiduciary Funds - These funds account for the City of Hastings Cemetery Perpetual Care Fund, Perpetual Housing Rehabilitation Fund, Aquatics Center Fund and Police Department Equipment Sinking Fund. The City applies all applicable FASB pronouncements issued on or before November 30, 1989, to the business-type activities, unless those pronouncements conflict with or contradict GASB pronouncements. Amounts reported as program revenues include 1) charges to customers for goods or services, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Reconciliation of the fund financial statements to the government-wide financial statements is provided in the financial statements to explain the differences created by the integrated approach of GASB Statement No

28 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): CAPITAL ASSETS: Government-Wide Financial Statements Capital assets held by governmental and business-type activities funds are stated at cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are recorded at fair market value on the date received. Depreciation is provided over their estimated useful lives using the straight-line method, as follows: Buildings Years Machinery and equipment 5-10 Years Infrastructure 25 Years Expenditures which significantly extend the life of an asset are capitalized. All other repairs and maintenance expenditures are charged to expense as incurred. The City records infrastructure costs in accordance with GASB Statement No. 34. Infrastructure (public domain) capital assets of the City consists of roads, streets and sidewalks and are capitalized as a separate category. Government Fund Statements Capital assets used in governmental fund type operations are accounted for by expensing the asset in the governmental funds. No depreciation has been provided on such assets. PROPERTY, PLANT AND EQUIPMENT - PROPRIETARY FUNDS: Property, plant and equipment are stated at cost. Contributed capital assets are recorded at fair market value on the date received. Depreciation is provided over their estimated useful lives using the straight-line method. The estimated useful lives are as follows: Buildings Years Machinery and equipment 5-10 Years Expenditures which significantly extend the life of an asset are capitalized. All other repairs and maintenance expenditures are charged to expense as incurred. -26-

29 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): CAPITAL ASSETS - UTILITIES SYSTEM: The basis of the utility plant in service consists of a appraisal made by Black and Veatch, consulting engineers, for the electric and water systems, a 1954 appraisal made by Henningson, Durham and Richardson, Inc. for the pollution control/waste water treatment system and the book value of assets received in 1954, the time of consolidation for the gas system. Additions since these dates are at cost. In accordance with FERC requirements, contributions in aid of construction have been used to reduce the cost basis of capital assets of the electric and gas systems through December 31, After January 1, 2001 the contributions in aid of construction are included in the statements of revenue and expenses, as directed by Governmental Accounting Standards Board Statement No. 33. The Utilities System uses a work order system of accounting for new construction. Under this system, the cost of a project is accumulated in a Construction Work in Progress account. Upon completion of the project, the total cost is transferred to the appropriate Utility Plant in Service account. Depreciation, amortization, and maintenance: The provision for depreciation is computed at an overall straight-line composite rate of approximately 2.6% for Depreciation expense taken in 2013 was 8,456,519. The Utilities System charges maintenance and repairs, including the cost of minor renewals of property to maintenance expense. Replacements of property (except minor replacements) are charged to utility plant accounts. Upon retirement of property, the cost of property is removed from the plant accounts and charged to a reserve for depreciation, and the related salvage, net of removal costs, is credited thereto. BUDGET AND BUDGETARY ACCOUNTING: The City follows these procedures in establishing the budgetary data reflected in the financial statements: a. The City Administrator submits to the City Council a proposed operating budget for the upcoming fiscal year. The operating budget includes proposed expenditures and the means of financing them. b. Public hearings are conducted to obtain citizen and taxpayer comments. c. Prior to September 20 of the current fiscal year, the budget is legally enacted through passage of an ordinance. d. The Mayor and/or City Administrator is authorized to transfer budgeted amounts between departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the City Council

30 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued): BUDGET AND BUDGETARY ACCOUNTING (Continued): e. Formal budgetary integration is employed as a management control device during the year for all reported funds. f. City expenditures are limited to budgeted amounts by fund total. Budgeted appropriations lapse at year-end. The City must hold a public hearing to authorize expenditures in excess of budget. Said hearing was conducted prior to year-end. g. The budgetary data is prepared on the cash basis of accounting. The comparative budget versus actual financial statements are reported on this basis also. CASH AND CASH EQUIVALENTS: Cash and cash equivalents includes the summarization of demand deposit NOW accounts, money market savings accounts and each fund's share of a general securities pool account as well as short-term investments with a maturity date within three months of the date acquired by the City and Utilities System. Investments are stated at market value. Income from investments held by the individual funds is recorded in the respective fund. For purposes of reporting the statements of cash flows, the City's primary government considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The Utilities System considers all highly liquid investments and similar instruments purchased with original maturities of three months or less to be cash and cash equivalents. INVENTORY: The City's primary government values inventory at the lower of cost or market. Cost is determined using the FIFO (First-ln, First-Out) method. Inventory in the special revenue fund type consists of expendable street supplies and materials held for consumption. The Utilities System inventories are valued at cost or weighted average cost. ACCUMULATED LEAVE BENEFITS: City and Utilities System employees earn vacation and compensation time based upon the established City policy. Upon separation, employees are reimbursed for accumulated vacation and compensation time. On August 1, 1990 and November 2, 1990, the City and Utilities System respectively adopted a policy to compensate employees for 25% of accumulated sick leave upon termination, provided that the employee had been employed by the City and Utilities System for a period of not less than ten continuous years and is not terminated for cause

31 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) ACCUMULATED LEAVE BENEFITS (Continued): The City and Utilities System also adopted a policy to pay 25% of unused sick pay in excess of 120 days on an annual basis. This was effective for years beginning after January 1, Beginning with 2008, 25% of unused sick leave in excess of days, or 1,060 hours, will be paid. In governmental fund types and fiduciary fund types, the cost of accrued leave benefits are recognized when payments are made to employees. A long-term liability of accrued leave benefits at September 30, 2014 has been recorded in the Statement of Net Position, representing the City's commitment to fund such costs from future operations. Proprietary fund types accrue leave benefits in the period they are earned. BOND DISCOUNTS / ISSUANCE COSTS: In governmental fund types, bond discounts and issuance costs are recognized in the current period. USE OF ESTIMATES: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2. PROPERTY TAXES: Property taxes attach as an enforceable lien on property as of January 1. Taxes are levied on September 15, and payable in two installments on May 1 and September 1. The County bills and collects property taxes and remits to the City monthly. The 2013 levy for the fiscal year was 5,070,106 or per 100 of assessed valuation. Property taxes levied for are recorded as receivables when due or past due and when expected to be collected within 60 days after September 30, 2014, in the governmental funds. Prior year levies were recorded using these same principles, and remaining receivables are evaluated annually. An additional amount of 1,329,491 of property taxes receivable has been accrued in the Statement of Net Position to recognize the full property tax receivable at September 30,

32 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 3. DEPOSITS AND INVESTMENTS The City and Utilities System policy limits investments to those types of investments allowed by state statute. Those items include: certificates of deposits, where institutions have adequately pledged assets for any funds on deposit in excess of Federal Deposit Insurance Corporation limits; bonds and debentures issued by any of the twelve federal land banks, the twelve intermediate banks, or the thirteen banks for cooperatives under the supervision of the Farm Credit Administration, or in interest bearing bonds or the obligations of the United States. Concentration of Credit Risk: All of the funds of the City and Utilities System are invested in allowable investments and are held at various financial institutions. These institutions have pledged assets or provided insurance contracts in addition to FDIC coverage to adequately secure the investments. Interest Rates Risk: As a means of limiting its exposure to fair value losses arising from rising interest rates, the City and Utilities System investment policies includes reviewing that market conditions and investment securities are analyzed to determine the maximum yield to be obtained and to minimize the impact of rising interest rates. INVESTMENT MATURITIES (IN YEARS) < TOTAL Utilities: US Treasury Notes 1,594,000 3,459,664 5,053,664 CD's 18,178,000 25,819,429 43,997,429 GNMA , , ,651 19,772,000 29,279, , ,500 49,698,744 City: CD's 13,883,862 2,612,522-16,496,384 NOTE 4. RECEIVABLES Receivables at September 30, 2014 consist of the following: Special Fund Taxes Accounts Assessments Total Governmental Activities Proprietary Activities Component Unit 1,456,893 1,222, , ,309 12,396,737 3,222, ,309 12,396,737 1,456,893 13,883, ,443 15,883,

33 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 5. RESTRICTED AND SPECIAL FUNDS Utilities Electric System: System: Under the terms of the revenue bond ordinance, all income and revenue of the Electric System may be used only for specified purposes as provided in the bond ordinance in the priority indicated by the order of the following: 1) Electric Revenue Fund In each month there shall be reserved in the Electric Revenue Fund such an amount as may be necessary to pay the operating expenses during the ensuing month, which amounts so reserved shall be used for and applied to such payments in such month or, to the extent not so applied in succeeding months. 2) Debt Service Account Specific monthly deposits to the account are required in the amount of 1/12 of the principal of all bonds maturing on or before the following January 1, plus 1/6 of the interest becoming due on the next succeeding interest payment date on all outstanding bonds until the full amount of the net requirements have been accumulated in each fiscal year. 3) Bond Reserve Fund There shall be deposited to the Reserve Account, an amount equal to the maximum amount required to be paid into the Debt Service Account from revenues in any fiscal year. The maximum amount, as computed, of 5,049,675 was on deposit at December 31, ) Capital Improvement Fund There shall be deposited monthly into the Capital Improvement Fund an amount at least equal to 1/12 of 10% of the average annual operating revenues for the preceding three fiscal years after deducting therefrom "fuel" expense and the energy related components of "purchased power" expense. Amounts deposited in the fund shall be expended for replacements, enlargements, extensions, and betterments of the System, or if not so expended within two years of the date of deposit thereon, shall be used as soon as reasonably possible for the purchase or cancellation or redemption of bonds in advance of maturity. Capital Improvement Fund requirements for 2013 were 1,975,548. Actual capital improvements made in 2013 were 3,783,662 including the coal load out facility

34 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 5. RESTRICTED AND SPECIAL FUNDS (Continued) Utilities System (Continued): The Electric System also maintains the following special accounts: 1) Insurance Fund: A special electric insurance fund was established in 1986 in the amount of 500,000, increased to 1,000,000 in 1987, increased to 1,500,000 in 1988 and increased to 2,000,000 in 1990 and increased to 2,010,000 in 1997 for the sole and exclusive purpose of insuring property which otherwise would have been insured under lower deductible amounts in the building and contents insurance policy and boiler and machine insurance policy. This electric insurance fund can be used only in the event of a loss in the electric department which would otherwise have been paid by an insurance carrier had there been no deductible or a deductible of a lesser amount and only with the approval of the Board of Public Works of Hastings Utilities and the concurrent approval of the City Council of the City of Hastings. 2) Rate Stabilization Fund The Utilities established a rate stabilization fund in March of The funds above those needed to meet current reserve requirements as determined by the Board of Public Works will be accumulated and used to pay a portion of the costs of anticipated major capital facilities or as otherwise directed by the Board. 3) Closure/Post Closure Care Account In 2001, the Utilities entered into an agreement with the Nebraska Department of Environmental Quality to establish a Closure/Post Closure Care Account. The purpose of this account is to accumulate sufficient monies to fund all related costs of closure and post closure of the ash disposal area at the Whelan Energy Center. Monies are deposited into this account at a rate 2.50 per ton of ash put into the disposal area. The calculated amount of the Closure/Post Closure liability was 2,007,000 at December 31, The amount on deposit in the Closure/Post Closure Care Account was 810,037 at December 31, Combined System: Under the terms of the revenue bond ordinance, the revenues and earnings of the Combined Utility System are pledged for the payment of principal and interest on the Series 2003, 2006 and 2012 bonds and the following special accounts are required: 1) Bond Payment Fund Specific monthly deposits to the account are required in the amount of 1/6 of the next maturing semiannual interest payment, plus an amount equal to 1/12 of the next maturing principal payment

35 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 5. RESTRICTED AND SPECIAL FUNDS (Continued) Utilities System (Continued): Combined System (Continued): 2) Debt Service Reserve Fund The Series 2003 bonds require that 177,500 be maintained in this fund. The Series 2006 bonds require that 450,389 be maintained in this fund. The Series 2012 bonds require that 1,353,500 be maintained in this fund. At December 31, 2013 the required amounts were in this fund. The Combined System maintains other special accounts for the following purposes: 1) Customer Deposits To account for refundable customer security deposits. 2) Insurance Fund A special combined insurance fund was established in in the amount of 250,000, increased to 500,000 in 1987, increased to 750,000 in 1988 and increased to 1,000,000 in 1990 for the sole and exclusive purpose of insuring property which otherwise would have been insured under lower deductible amounts in the building and contents insurance policy fund. This special combined insurance fund can be used only in the event of a loss in the gas, water or pollution control departments which would otherwise have been paid by an insurance carrier had there been no deductible or a deductible of a lesser amount and only with the approval of the Board of Public Works of Hastings Utilities and the concurrent approval of the City Council of the City of Hastings. 3) Rate Stabilization Fund The Utilities established a rate stabilization fund in November of The funds above those needed to meet current reserve requirements as determined by the Board of Public Works will be accumulated and used to pay a portion of the costs of major capital facilities or as otherwise directed by the Board. Landfill Fund: Restricted assets of the landfill fund as of September 30, 2014 consist of the following: Closure Account - New Construction 1,791,248 Post Maintenance Closure Account - New Construction 1,152,422 Post Maintenance Closure Account - Existing Landfill 28, ,

36 -... CITY OF HASTINGS, NEBRASKA NOTE 6. NOTES RECEIVABLE NOTES TO FINANCIAL STATEMENTS September 30, 2014 Notes receivable consist of several notes made by the Community Redevelopment Authority to assist business owners with property development or new business operating costs. Most loans are due in monthly installments at interest rates from 0% to 6%. NOTE 7. SELF-INSURED HEALTH FUND The City's Self-Insurance Fund does not assume the full risk of loss related to claims filed under the insurance provided. The City has purchased insurance to cover individual claims in excess of 80,000 per claimant, as well as an aggregate stop loss at 125% of total projected paid claims during the fiscal year. The City pays the claims first up to the 80,000 per individual, and at the end of the policy year, the insurance company computes the amount due, if any, to the City in excess of the insured aggregate. At September 30, 2014 the City had not exceeded its aggregate stop loss for the year. Claims incurred prior to year end but not paid, are not covered by the fiscal year aggregate and remain the liability of the City. Known and reserved claims paid subsequent to year-end totaled 22,998, which are booked as accounts payable in the Self- Insured Health Fund at September 30, Individual claims of 134,946, incurred in excess of the 80,000 per claimant at September 30, 2014, have been booked as accounts receivable. NOTE 8. LONG-TERM DEBT Long-Term Debt: City - Primary Government General Obligation Bonds General obligation bonds payable at September of the following issues: Various Purpose Bonds 2008 Series Various Purpose Bonds 2009 Series Highway Allocation Fund Pledge Bonds, 2009 Series Various Purpose Bonds 2010 Series Various Purpose Refunding Bonds 2010 Series Various Purpose Refunding Bonds 2011 Series Various Purpose Refunding Bonds 2013 Series Various Purpose Refunding Bonds 2013b Series Highway Allocation Fund Pledge Bonds, 2013 Series Interest Rate % % % % % % % % % Final Maturity Date 12/15/23 06/15/24 09/15/14 09/15/25 10/01/16 09/01/21 06/15/18 12/15/20 9/15/19 30, 2014 are comprised Optional 9/30/14 Call Date 11/15/13 06/15/14 09/15/14 09/15/25 04/01/16 09/01/16 6/15/18 12/15/20 9/15/19 Outstanding 1,250,000 1,850, , , ,000 1,500, ,000 7,410,

37 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 8. LONG-TERM DEBT (Continued) Long-Term Debt: City - Primary Government (Continued) The various bond indentures contain a number of covenants to which the City's compliance is required. Notes Payable - Other: Notes Payable - Other consists of multiple notes on behalf of the Community Redevelopment Authority, the majority of which are held by local banking institutions. Interest rates range from 5.25% to 7.125%. Most of the notes require semi-annual payments of principal and interest, with balloon payments due at maturity. Amount outstanding at September 30, 2014 is 685,133. Installment Contracts and Judgments: Installment contracts and judgments are comprised of the following at September 30, 2014: Governmental Activities: Commercial installment loan for the purchase of telephone and mapping equipment for the Hastings/Adams County 911 Center; due April 25, 2017; payable in semi-annual installments of 20,456, including interest at 1.75& Landfill Fund: Lease purchase contract payable for the purchase of a compactor; due November 1, 2016; payable 93,281 annually, including interest at 2.7%; secured by equipment. 265,385 Lease purchase contract payable for the purchase of a loader; due January 15, 2016; payable 32,497 annually, including interest at 3.0%; secured by equipment. 62,183 Lease purchase contract payable for the purchase of a trimble cab indicator system; due May 29, 2015; payable 43,693 annually, including interest at 3.0%; secured by equipment. 42, ,

38 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 8. LONG-TERM DEBT (Continued) Long-Term Debt: City - Primary Government (Continued) Maturity requirements on City primary government long-term debt are as follows: Year Ending Sept. 30 Serial Bonds Contracts Notes Payable Other Total ,000 1,000,000 1,000,000 1,000, ,000 2,525, , , , , ,116 31,311 22,849 18, ,000 1,420,276 1,190,985 1,153,985 1,018,857 1,075,000 2,525, ,000 7,410, , ,133 8,584,103 Changes in long-term debt are as follows: Balance Balance 9/30/13 Additions Retirements 9/30/14 Serial Bonds Contracts Notes Payable - Other 7,830, , ,953 2,200,000 42,420 (2,620,000) (472,381) (72,820) 7,410, , ,133 9,506,884 2,242,420 (3,165,201) 8,584,

39 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 8. LONG-TERM DEBT (Continued) Long-Term Debt: Utilities System ELECTRIC SYSTEM 2013 Revenue bonds Issue Serial Bonds: 2.85% %, due ,485,000 Unamortized bond discount (201,062) 6,283,938 Revenue bonds Issue Serial Bonds:.7% %, due ,450,000 Unamortized bond discount (176,168) Unamortized original issue premium 445,085 Unamortized deferred amount from advanced refunding (432,548) 23,286,369 Total Electric System 29,570,307 Less current portion (3,850,000) Net long-term debt and deferred inflows of resources - Electric System 25,720,307 The 2005 bonds are subject to redemption prior to maturity after January 1, Interest on all the bonds is payable on January 1, and July 1 of each year. On March 28, 2005 the City of Hastings passed ordinance No authorizing and directing the issuance of Electric System Revenue Bonds, Series The bonds were issued for 7,600,000, with an average interest rate of 4.577%. The bonds were issued for the purpose of paying for a portion of the cost of certain capital improvements to the city's electric system. The net proceeds of 6,832,594 (7,600,000 less original issue discount in the amount of 129,326, bond insurance premium 60,000, underwriters discount 97,660, and transfer to bond reserve fund of 480,420) was transferred to the Construction fund

40 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 8. LONG-TERM DEBT (Continued) Long-Term Debt: Utilities System (Continued) On April 25, 2011, the City of Hastings passed ordinance No authorizing and providing for the issuance of Electric Utility Revenue Refunding Bonds, Series The bonds were issued for 24,960,000, with an average interest rate of 3.78% to advance refund 26,365,000 of outstanding 2001 Electric Utility Revenue Refunding Bonds with an average interest rate of 5.42%. The net proceeds of 25,663,571 (after receipt of 1,031,485 original issue premium, less 30,932 original issue discount, less 200,000 underwriting discount) plus 909,848 transferred from the Electric Debt Service Account and 340,852 transferred from the Electric Debt Reserve Fund were deposited with the 2001 bond trustee and used to pay off the bonds and accrued interest on the bonds redeemed on June 1, The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of 859,594. This difference is reported in the financial statements as a deduction from bonds payable and is being charged to operations through the year 2018 using the effective interest method. The Utilities System completed the advance refunding to reduce its total debt service payments over the next 7 years by 2,578,240 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of 3,117,

41 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 8. LONG-TERM DEBT (Continued) Long-Term Debt: Utilities System (Continued) COMBINED SYSTEM 2013 Revenue bonds Issue: Serial Bonds: 1.25%-4.15%, due ,000 Unamortized bond discount (377) Deferred amount from advance refunding (1,023) 153,600 Revenue bonds Issue: Serial Bonds: 3.55% %, due ,415,000 Term Bonds: 4.50% due ,010,000 Unamortized bond discount (91,323) 4,333,677 Revenue bonds Issue: Serial Bonds: 1.00% %, due ,730,000 Term Bonds: 3.250% due ,960, % due ,610,000 Unamortized bond discount and original issue premium 530,536 16,830,536 Total Combined System 21,317,813 Less current portion (1,265,000) 20,052,813 EPA Agreement 200,000 Less current portion (200,000) Net long-term debt Combined System 20,052,813 The Series 2003 Combined Utility Revenue Refunding Bonds are subject to redemption prior to maturing anytime on or after October 15, The Series 2006 Combined Utility Revenue Refunding Bonds are subject to redemption prior to maturing anytime on or after April 15, The Series 2012 Combined Utility Revenue Bonds maturing on or after October 1 5, 2023 are subject to redemption prior to maturing anytime on or after October 1 5,

42 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 8. LONG-TERM DEBT (Continued) Long-Term Debt: Utilities System (Continued) On October 13, 2003, the City of Hastings passed ordinance No authorizing and providing for the issuance of Combined Utility Revenue Refunding Bonds, Series The bonds were issued for 1,775,000, with an average interest rate of 3.45% to advance refund 1,795,000 of outstanding 1998 Combined Utility Revenue Refunding Bonds with an average interest rate of 4.93%. On April 24, 2006 the City of Hastings passed ordinance No authorizing and directing the issuance of Combined Utility Revenue Bonds, Series The bonds were issued in the principal amount of 6,000,000, with an average interest rate of 4.33%. The bonds were issued for the purpose of paying for a portion of the cost of certain capital improvements to the City's combined utility system. The net proceeds of 5,834,415 (6,000,000 less original issue discount in the amount of 31,350, bond insurance premium of 62,000, underwriters discount of 75,000, plus original issue premium of 2,765) was transferred to the Construction fund. On August 13, 2012, the City of Hastings passed ordinance No authorizing and directing the issuance of Combined Utility Revenue Bonds, Series The bonds were issued in the principal amount of 16,535,000, with an average interest rate of 3.40%. The bonds were issued for the purpose of advance refunding 2,715,000 of outstanding 2001 Combined Utility Revenue Bonds and to pay for a portion of the cost of certain capital improvements to the Combined Utility System of the City. Of the net proceeds of 17,249,334 (after receipt of 965,735 Original Issue Premium, less 86,051 original issue discount, less 165,350 underwriting discount) plus 222,795 transferred from the Combined Debt Service Account and 353,000 transferred from the Combined Bond Reserve Fund, 2,768,808 was deposited with the 2001 bond trustee and used to pay off the bonds and accrued interest on the bonds redeemed on September 13, 2012, 1,353,500 was transferred to the Combined Bond Reserve Fund and 13,702,821 was transferred to the Combined Construction Fund. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of 35,200. This difference reported in the accompanying financial statements as a deduction from bonds payable, is being charged to operations through the year 2021 using the effective interest method. The Utilities System completed the advance refunding to reduce its total debt service payments over the next nine years by 332,213 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of 504,

43 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 8. LONG-TERM DEBT (Continued) Long-Term Debt: Utilities System (Continued) Maturity requirements on long-term debt are as follows: Bonds Year Ending Principal Electric Bonds Interest Total Year Ending ,850,000 3,985,000 4,145,000 4,100,000 4,335,000 5,225,000 1,510,000 1,895, , Principal 1,265,000 1,125,000 1,160,000 1,190,000 1,215,000 5,820,000 5,235,000 3,870, ,092, , , , ,085 1,224, , ,362 42,750 ~~ Combined Bonds Interest 701, ,183 -co- 648, ,685 7, ,285 2,367,125 1,234, ,425 4,942,450 4,940,913 4,971,450 4,785,412 4,850,085 6,449,713 2,352,300 2,339, , Total 1,966,515 1,801,183 1,808,012 1,808,685 1,803,285 8,187,125 6,469,550 4,215,

44 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 9. CAPITAL ASSETS - PRIMARY GOVERNMENT The following is a summary of changes in the capital assets during the fiscal year: Balance Balance September 30, September 30, 2013 Additions Retirements 2014 Governmental Funds: Land, buildings and improvements 22,619, , ,762,654 Machinery and equipment 14,250, ,653 (47,607) 14,835,401 Infrastructure 57,744,671 4,592,465 (2,081,519) 60,255,617 Total capital assets 94,614,081 5,368,717 (2,129,126) 97,853,672 Accumulated depreciation (53,532,752) (2,589,671) 863,282 (55,259,141) Net capital assets 41,081,329 2,779,046 (1,265,844) 42,594,531 Proprietary Funds: Building and improvements 5,317, ,714-6,264,198 Machinery and equipment 2,891,104 84,840-2,975,944 Total capital assets 8,208,588 1,031,554-9,240,142 Accumulated depreciation (3,501,556) (271,476) - (3,773,032) Net capital assets 4,707, ,078 5,467,110 Current year depreciation expense totaled 2,861,

45 NOTES TO FINANCIAL STATEMENTS September 30, 2014 NOTE 10. LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS PAYABLE In accordance with the State of Nebraska Title 132 Solid Waste Regulations, the City of Hastings must project the total estimated closing costs of its open landfill site as well as the estimated post-closure care costs on the existing site for a period of 30 years from date of closure. Based upon the information available at September 30, 2014, the projected closure and postclosure care costs totaled 6,128,051, which is an increase of 79,552 from earlier estimates, due largely to the revised cost estimates provided by the State of Nebraska in February The liability to be recognized at September 30, 2014 is based upon the capacity of the landfill and the amount utilized to date, which is approximately 51%, or 3,161,749. This is an increase of 227,183. This leaves a balance of 2,966,302 of costs to be recognized in future periods. Funding of the total projected costs has been computed in accordance with state regulations, and will be appropriated annually until the liability has been fully funded. Funds appropriated during the fiscal period ending September 30, 2014 equaled 81,387, which, with interest, brings the total funds reserved to finance closure and postclosure costs at 2,972,231. These funds are presented on the City's statement of net position as "restricted net position" in the Landfill Fund. Funds of 83,938 were appropriated for reserve for the fiscal year ending September 30, 2015 and deposited into the reserve account October 1, NOTE 11. EMPLOYEE RETIREMENT PLANS The employees of the City and Utilities System are covered by several retirement plans. A summary of the plans follows: Fire and Police Department: The fire and police department employees are covered by a state-imposed, City-administered retirement system, which are reported on separately. This retirement system consists of two retirement plans, the first being a defined benefit retirement plan covering employees of record before January 1, The other is a money-purchase plan covering employees of record on and after January 1, During the money purchase plan for the firemen required the City to contribute 13% of pay while the employees contributed 6.5% of pay. The money purchase plan for the police required the City to contribute 6.5% of pay while the employees contributed 6.5% of pay. The City's annual payroll contributions were 184,682 to the Firemen's plan and 143,204 to the Police plan, for the year ended September 30, The City also contributed an additional 200,000 to the Police plan to provide funding for the payment of benefits under the Plan. Employees who are covered by both the defined benefit and money purchase retirement plans will first receive benefits from the moneypurchase plan. The total plan assets for the money purchase plan as of September 30, 2014 for the fire pension and police pension were 4,821,533 and 5,670,952, respectively. -43-