Pekin Park District Pekin, IL. Annual Financial Report June 30, 2016

Transcription

1 WOLF TESAR & COMPANY, P.C. Certified Public Accountant s Pekin, IL Annual Financial Report June 30, Valle Vi sta Blvd. Pekin, Illinois America Counts on CPAs" tel (309) fax (309)

2 PEKIN PARK DISTRICT TABLE OF CONTENTS Page Independent Auditor's Report Basic Financial Statements: Government-ide Financial Statements: Statement of Net Position- Modified Cash Basis Statement of Activities- Modified Cash Basis Fund Financial Statements: Statement of Assets, Liabilities, and Fund Balances- Modified Cash Basis - Governmental Funds Reconciliation of the Statement of Assets, Liabilities, and Fund Balances - Modified Cash Basis -Governmental Funds to the Statement of Net Position - Modified Cash Basis Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances- Modified Cash Basis - Governmental Funds ? Reconciliation of the Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances- Governmental Funds to the Statement of Activities- Modified Cash Basis Statement of Net Position- Proprietary Funds Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Net Position - Modified Cash Basis - Proprietary Funds Statement of Cash Flos- Proprietary Funds..... ; Notes to Basic Financial Statements Supplementary Information Budgetary Comparison Schedules- Major Governmental Funds Budgetary Comparison Schedules - Proprietary Funds Combining Statement of Assets, Liabilities, and Fund Balances- Modified Cash Basis- Non-major Governmental Funds Combining Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances - Modified Cash Basis - Non-major Governmental Funds Budgetary Comparison Schedules - Non-major Funds Notes to Supplementary Information Other Information Defined Benefit Plan Information Long-Term Debt Requirements General Obligation Bonds of 2008A General Obligation Bonds of 201 OB General Obligation Bonds of General Obligation Bonds of Notes Payable- Golf Carts Schedule of Taxes

3 WOLF TESAR & COMPANY, P.C. Certified Public Accountants To the Board of Commissioners 1701 Court Street Pekin, IL INDEPENDENT AUDITOR'S REPORT We have audited the accompanying modified cash basis financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of, IL, as of and for the year ended June 30, 2016, and the related notes to the financial statements, hich collectively comprise 's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance ith the modified cash basis of accounting described in Note 1. This includes determining that the modified cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, hether 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 ith auditing standards generally accepted in the United States of America. Those standards require that e plan and perform the audit to obtain reasonable assurance about hether 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, hether due to fraud or error. In making 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, e 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 ell as evaluating the overall presentation of the financial statements. We believe that the audit evidence e 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 modified cash basis financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the, IL, as of June 30, 2016, and the respective changes in financial position- modified cash basis, thereof for the year then ended in accordance ith the basis of accounting as described in Note Vall e Vista Blvd. Pekin, Ill inoi s 61554,CPA) America Counls on CPAs tel (309) fax (309)

4 Basis of Accounting We dra attention to Note 1 of the financial statements that describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, hich is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinions are not modified ith respect to the matter. Other Matters Supplementary Information Our audit as conducted for the purpose of forming opinions on the financial statements as a hole that collectively comprise the 's basic financial statements. The schedule of funding progress, the major fund budgetary comparison information, the non-major fund combining statements, and the non-major fund budgetary comparison schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The major fund budgetary comparison information on pages 26-30, the propriety fund budgetary comparison schedules on pages 31-32, the non-major fund combining statements on pages 33-36, and the non-major fund budgetary comparison schedules on pages are the responsibility of management and as derived from, and relates directly to, the underlying accounting and other records used to prepare the basic financial statements. The 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 basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance ith 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 basic financial statements as a hole on the basis of accounting described in Note 1. Other Information The defined benefit plan information, the schedules of long-term debt requirements, and the schedule of taxes on pages have not been subjected to the auditing procedures applied in the audit of basis financial statements, and accordingly, e do not express an opinion or provide any assurance on such information. Pekin, IL December 20,

5 Statement of Net Position - Modified Cash Basis June 30, 2016 ASSETS Governmental Activities Business - Type Activities Total Current assets Cash and cash equivalents lnterfund balances Inventories Land Capital assets, net of depreciation Total assets $ 696, ,000 5,358,469 7,763,131 13,947,685 $ 29,375 (130,000) 49,746 3,216,560 3,165,681 $ 725,460 49,746 5,358,469 10,979,691 17,113,366 LIABILITIES Current liabilities Current portion of capital lease payable Current portion of notes payable Current portion of bond payable Non current liabilities Capital lease payable Notes payable Bonds payable Total liabilities 1, ,350 4,104 6,222,750 6,943,572 40,653 17,536 95,000 6,562 66, ,000 1,086,195 42,021 17, ,350 10,666 66,444 7,082,750 8,029,767 DEFERRED INFLOWS Deferred revenue 1,252 34,061 35,313 NET POSITION Net investment in capital assets Restricted Unrestricted Total net position $ 6,178, , ,997 7,002,861 2,130,365 (84,940) $ 2,045,425 8,308, , ,057 $ 9,048,286 3 See independent auditor's report and accompanying notes.

6 Statement of Activities - Modified Cash Basis For the Year Ending June 30, 2016 Functions/Program Primary government: Governmental activities: General government Public safety Culture and recreation Pekin Park Foundation Interest Total governmental activities Expenses $ 1,637, ,204 2,805,276 21, ,148 5,056,748 $ Program Revenues Charges for Services 7,316 1,213,951 1,221,267 Operating Grants and Contributions $ 53, , ,163 Governmental Activities Net (Expenses) Revenues and Change in Net Position Primary Government $ (1,584,015) $ (171,888) (1,477,202) (21,065) (414, 148) (3,668,318) Business-Type Activities Total $ (1,584,015) (171,888) (1,477,202) (21,065) {414, 148) {3,668,318) Business-type activities: Golf Course Racquet & Health Facility Total business-type activities 1,302, ,411 2,048,423 1,328, ,627 1,950,379 26,740 {124,784) {98,044) 26,740 {124,784) {98,044) Total primary government $ 7,105,171 $ 3,171,646 $ 167,163 (3,668,318) (98,044) (3, 766,362) General revenues: Property tax Replacement tax Build America bond rebate Interest income Miscellaneous income Total general revenues 2,371, , ,219 2,926 29,198 3,241, ,371, , ,219 2,971 29,198 3,241,146 Transfers {11,140) 11 '140 Change in net position (438,357) (86,859) (525,216) Net position, beginning of year 7,441,218 2,132,284 9,573,502 Net position, end of year $ 7,002,861 $ 2,045,425 $ 9,048,286 See independent auditor's report and accompanying notes. 4

7 Statement of Assets, Liabilities, and Fund Balances Modified Cash Basis - Governmental Funds For the Year Ending June 30, 2016 ASSETS: Total Debt Pekin Park Non major Governmental General Recreation Service Insurance Foundation Funds Funds Cash and cash equivalents $ 105,997 $ 106,700 $ 5,270 $ 203,042 $ 82,671 $ 192,405 $ 696,085 Due from other funds 130, ,000 Total assets $ 235,997 $ 106,700 $ 5,270 $ 203,042 $ 82,671 $ 192,405 $ 826,085 DEFERRED INFLOWS: Deferred revenue 1,252 1,252 FUND BALANCES: Restricted for: Recreation 97,248 82,671 53, ,803 Debt Service 5,270 5,270 Capital Projects 65,289 65,289 Insurance 203,042 7, ,445 Police Protection 15,424 15,424 Audit 3,007 3,007 Retirement 47,398 47,398 Assigned for: Capital Projects 8,200 8,200 Unassigned 235, ,997 Total fund balance 235, ,448 5, ,042 82, , ,833 Total liabilities, deferred inflos, and fund balance $ 235,997 $ 106,700 $ 5,270 $ 203,042 $ 82,671 $ 192,405 $ 826,085 5 See independent auditor's report and accompanying notes.

8 Reconciliation of the Statement of Assets, Liabilities, and Fund Balances Modified Cash Basis - Governmental Funds to the Statement of Net Position - Modified Cash Basis June 30, 2016 Total Fund Balances- Governmental Funds $ 824,833 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not reported in the governmental funds balance sheet Capital assets Less accumulated depreciation Long-term liabilities are not due and payable in the current period and therefore are not reported in the governmental funds Net Position of Governmental Activities $ 19,581,669 (6,460,069) 13,121,600 (6,943,572) $ 7,002,861 6 See independent auditor's report and accompanying notes.

9 Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances Modified Cash Basis - Governmental Funds For the Year Ending June 30, 2016 REVENUES: Total Debt Pekin Park Nonmajor Governmental General Recreation Service Insurance Foundation Funds Funds Taxes $ 1,192,794 $ 434,032 $ 608,340 $ $ $ 840,592 $ 3,075,758 Charges for services 234, , ,145 1,221,267 Operating contributions 44,311 3,000 41,638 78, ,163 Interest ,926 Miscellaneous income 18, ,219 2,991 7, ,417 Total revenue 1,491,025 1,298, ,946 3,483 41,897 1,052,234 4,629,531 EXPENDITURES: Current: General government 294, , , ,009 1,620,065 Public safety 179, ,204 Culture and recreation 1,115, , ,213 2,176,870 Pekin park foundation 21,065 21,065 Capital outlay: Buildings 130, ,503 Equipment 8,000 29,829 37,829 Debt service: Principal 1, , ,168 Interest 414, ,148 Total expenditures 1,411,690 1,123,313 1,121, , ,568 1,097,255 5,288,852 Excess revenue over (under) expenditures 79, ,633 (380,002) (379,595) (1 09,671) (45,021) (659,321) OTHER FINANCING SOURCES (USES): Transfers in 83,189 14, , ,829 Transfers out (154,990) (154,250) (140,009) (69,720) (518,969) Loan/bond proceeds 520, , ,000 Bond fees (1,350) (15,640) (16,990) Total financing sources (73,151) (140,250) 380, ,640 76, ,870 Net change in fund balance 6,184 35, ,045 (109,671) 31,439 (5,451) Fund balance - beginning 229,813 70,065 5, , , , ,284 Fund balance - ending $ 235,997 $ 105,448 $ 5,270 $ 203,042 $ 82,671 $ 192,405 $ 824,833 7 See independent auditor's report and accompanying notes.

10 Reconciliation of the Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances - Governmental Funds to the Statement of Activities - Modified Cash Basis June 30, 2016 Amounts reported for governmental activities in the Statement of Activities differ as follos: Net change in fund balances -total governmental funds $ (5,451) Governmental funds report capital outlays as expenditures. Hoever, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay Depreciation expense The issuance of bonds is reported as an other financing source in the governmental funds but not in the statement of activities. Bonds issued, at par $ 168,332 (628,406) (460,074) (682,000) Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. Bonds Capital leases 707,800 1,368 Change in Net Position of Governmental Funds $ (438,357) See independent auditor's report and accompanying notes. 8

11 Statement of Net Position Proprietary Funds June 30, 2016 Business-T~ee Activities- Entererise Racquet and Golf Course Health Facility Fund Fund Total ASSETS Current assets Cash and cash equivalents $ 28,890 $ 485 $ 29,375 Inventories 49, ,746 Capital assets, net of depreciation 1,272,595 1,943,965 3,216,560 Total assets $ 1,350,576 $ 1,945,105 $ 3,295,681 LIABILITIES Current liabilities lnterfund balances 120,000 10, ,000 Current portion of capital lease payable 40,653 40,653 Current portion of notes payable 17,536 17,536 Current portion of bond payable 95,000 95,000 Non current liabilities Capital lease payable 6,562 6,562 Notes payable 66,444 66,444 Bonds payable 860, ,000 Total liabilities 251 ' ,000 1,216,195 DEFERRED INFLOWS Deferred revenue 31,576 2,485 34,061 NET POSITION Net investment in capital assets 1,141, ,965 2,130,365 Unrestricted (73,595) (11,345) (84,940) Total net position $ 1,067,805 $ 977,620 $ 2,045,425 See independent auditor's report and accompanying notes. 9

12 Statement of Revenues Received, Expenses Disbursed, and Changes in Fund Net Position - Modified Cash Basis- Proprietary Funds For the Year Ending June 30, 2016 Business-T~~e Activities - Enteq~rise Racquet and Golf Course Health Facility Fund Fund Total Operating Revenues Tennis $ $ 75,144 $ 75,144 Health 531, ,941 Vending 9,229 9,229 Collection 5,313 5,313 Parkvie 591, ,600 Lick creek 737, ,152 Total operating revenue 1,328, ,627 1,950,379 Operating Expenses Salaries 569, , ,380 Contractual senices 25, , ,461 Repairs & maintenance 105,973 29, ,154 Utilities 38,996 69, ,713 Chemicals & fertilizer 134, ,098 Operating supplies 30,348 15,105 45,453 Irrigation 64,602 64,602 Fuel & lubricants 43,056 43,056 Pro shop accessories 77,111 5,787 82,898 Concession purchases 73,598 73,598 Promotions 763 5,698 6,461 Office expense 13,329 23,654 36,983 Dues & subscriptions 1,690 1,384 3,074 Vending 4,835 4,835 Automobile Miscellaneous expense 25,357 5,101 30,458 Total operating expenses 1,204, ,817 1,795,869 Operating income (loss) before depreciation 124,700 29, ,510 Depreciation 94, , ,481 Operating income (loss) 29,863 (79,834} (49,971) Non-Operating Revenue (Expenses} Interest income Interest expense (3, 123) (44,950) (48,073) Transfers in 134, ,950 Transfers out {68, 120) {55,690) (123,81 0) Total non-operating revenues (expenses) (71,243) 34,355 (36,888) Change in net position (41,380) (45,479) (86,859) Net position, beginning 1 '109, 185 1,023,099 2,132,284 Net position, ending $ 1,067,805 $ 977,620 $ 2,045,425 See independent auditor's report and accompanying notes. 10

13 Statement of Cash Flos Proprietary Funds For the Year Ending June 30, 2016 Business-Tx:~e Activities- Enterprise Racquet and Golf Course Health Facility Fund Fund Total Cash flos from operating activities: Cash received from customers and users $ 1,331,499 $ 620,537 $ 1,952,036 Payments to suppliers for goods and services (620,435) {261,447) (881,882) Payments to employees (569,349) {330,031) {899,380) Net cash provided by (used in) operating activities 141,715 29, ,774 Cash flos from non-capital financing activities: Advances (repayments) from/to other funds (2,325) 10,000 7,675 Operating transfers in 134, ,950 Operating transfers (out) {68,120) {55,690) {123,81 0) Net cash provided (used in) non-capital financing activities {70,445) 89,260 18,815 Cash flos from capital and related financing activities: Purchase of capital assets {118,299) {118,299) Issuance of debt 105, ,739 Principal paid on debt {41,711) (90,000) {131,711) Interest paid on debt {3,123) {44,950) {48,073) Net cash provided by (used in) capital and related financing activities {57,394) {134,950) {192,344) Cash flos from investing activities: Interest received on cash accounts Net cash provided (used in) investing activities Net increase {decrease) in cash and cash equivalents 13,876 (16,586) {2,71 0) Cash and cash equivalents at the beginning of the year 15,014 17,071 32,085 Cash and cash equivalents at the end of the year $ 28,890 $ 485 $ 29,375 Reconciliation of operating income to net cash provided by (used in) operating activities Operating income $ 29,863 $ {79,834) $ {49,971) Adjustments to reconcile operating income to net cash provided by (used in) operating activities Depreciation 94, , ,481 Change in assets and liabilities (Increase) decrease in inventory 14, ,761 Increase (decrease) in gift certificates 2,747 {1,090) 1,657 Increase {decrease) in ithholding payable {78) {76) {154) Total adjustments $ 111,852 $ 108,893 $ 220,745 Net cash provided by (used in) operating activities $ 141,715 $ 29,059 $ 170, See independent auditor's report and accompanying notes.

14 Notes to the Financial Statements June 30, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The folloing is a summary of the more significant accounting policies affecting the financial statement presentation. A. THE FINANCIAL REPORTING ENTITY The (the District) is an independent unit of local government founded in An elected seven-person board of commissioners establishes policy for all facets of the District and all related organizations for hich the District exercises oversight and responsibility. The accompanying financial statements present the government and its component units, entities for hich the government is considered to be financially accountable. Criteria for determining if other entities are potential component units that should be reported ithin the District's financial statements are identified and described in the Governmental Accounting Standards Board's (GASB) Codification of Governmental Accounting and Financial Reporting Standards, Sections and The application of these criteria provides for the identification of any entities for hich the Board is financially accountable and other organizations for hich the nature and significance of their relationship ith the District such that exclusion ould cause the District's financial statements to be misleading. Blended component units are, in substance, part of the primary government's operations, even though they are legally separate entities. Thus, blended component units are appropriately presented as funds of the primary government. The District includes Pekin Park Foundation (the Foundation) as a blended component unit. While a legally separate entity, the Foundation is included as part of the primary government, due to its governance structure and the significance of its operation and financial relationship ith the District. It has been determined that there are no discretely presented component units to report. The Foundation is a nonprofit corporation organized under the las of the State of Illinois for the purpose of serving as a means by hich park supporters can help improve and beautify the parks and expand participation in its activities through a ell-defined Gifting Program and a long-term sustaining Endoment Program, in an effort to alays further the spirit, culture and tradition of the. The Foundation is exempt from any income taxes under Section 501 (c)(3} of the Internal Revenue Code. The Foundation is included in the District's governmental funds, and a copy of the Form 990 filed ith the Internal Revenue Service can be obtained at the District's main office. B. BASIS OF PRESENTATION Government-ide Financial Statements The basic financial statements include both government-ide (based on the District as a hole} and fund financial statements. The government-ide financial statements (i.e., the Statement of Net Position and Statement of Activities) report information on all of the non-fiduciary activities of the primary government. The Park District does not have fiduciary funds. The Statement of Activities demonstrates the degree to hich the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable ith a specific function. Program revenues include 1) charges to customers or applicants ho purchase, use, or directly benefit from goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meet the operation or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. 12

15 Notes to the Financial Statements- Continued June 30, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continued B. BASIS OF PRESENTATION - Continued In the government-ide financial statements, net position is reported in three categories: net investment in capital assets; restricted net assets; and unrestricted net assets. Net investment in capital assets represents capital assets less accumulated depreciation less outstanding principal of related debt. It does not include the unspent proceeds of capital debt. Restricted net position represents net position restricted by parties outside of the District. All other net positions are considered unrestricted. When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first and then unrestricted resources as they are needed. Fund Financial Statements The accounts of the District are organized on the basis of funds. The operations of each fund are accounted for ith a separate set of self-balancing accounts that comprise its assets and liabilities arising from cash transactions, reserves, fund equity, revenues and expenditures/expenses. District resources are allocated to and accounted for in individual funds based upon the purposes for hich they are to be spent and the means by hich spending activities are controlled. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds are reported as separate columns in the fund financial statements. A fund is considered major if it is the primary operating fund of the District or meets the folloing criteria: a) Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the corresponding total for all funds of that category or type, and b) Total assets, liabilities, revenues or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5% of the corresponding total for all governmental and enterprise funds combined. Governmental Funds The accounts of the District are organized on the basis of funds, each of hich is considered a separate accounting entity. The operations of each fund are accounted for ith a separate set of self-balancing accounts that comprise its assets and liabilities arising from cash transactions, fund equity, cash receipts and disbursements. The District's resources are allocated to and accounted for in individual funds based upon the purposes for hich they are to be spent and the means by hich spending activities are controlled. The focus of the fund financial statements is on major funds. All major individual governmental funds are reported as separate columns in the fund financial statements. The District reports the folloing major governmental funds: The General Fund accounts for the resources traditionally associated ith general government, except those required to be accounted for in another fund. Revenues in the General Fund are primarily property and other taxes plus interest. Expenditures relate primarily to general administration and maintenance activities. The Recreation Fund is a special revenue fund that accounts for the planning, establishing and maintaining of recreational programs and facilities. 13

16 Notes to the Financial Statements - Continued June 30, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued B. BASIS OF PRESENTATION- Continued The Debt Service Fund accounts for the accumulation of resources for, and the payment of, general obligation debt principal, interest and related fiscal charges of governmental funds. The Insurance Fund accounts for the health insurance benefits provided to District employees. The Pekin Park Foundation is a blended component unit of the. The Pekin Park Foundation receives donations hich are then used to fund park maintenance and capital projects. The District also reports other governmental funds, hich are individually non-major in total. They are the Miller Center Improvements Fund, Liability Insurance Fund, IMRF Fund, Audit Fund, Police Fund, Paving & Lighting Fund, Special Populations Fund, and Capital Improvements Fund. Proprietary Funds Proprietary Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises- here the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or here the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The District complies ith all Financial Accounting Standards Board statements currently in effect for proprietary fund activities. The Park District includes the folloing enterprise funds and both are reported as major funds: The Golf Course fund accounts for the administration, operation, maintenance, and related debt service of the District's golf facilities. The Racquet and Health Facility accounts for the administration, operation, maintenance, and related debt service of Parkside Athletics Racquet & Health Facility. C. MEASUREMENT FOCUS/BASIS OF ACCOUNTING The government-ide financial statements are reported using the modified cash basis of accounting. Their revenues are recorded hen received and expenses are recorded hen paid. Basis of accounting refers to hen revenues and expenditures are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of their recognition. Only assets representing a right to receive cash arising from a previous payment of cash are recorded as assets of a fund. In the same manner, only liabilities resulting from previous cash are recorded as liabilities of a particular fund. Governmental fund financial statements are also reported using the modified cash basis of accounting. The focus of the proprietary funds' measurement (in the proprietary fund statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. Proprietary fund financial statements are reported using modified cash basis accounting, hich is a comprehensive basis of accounting other than accounting principles generally accepted in the United States of America. Under this basis, revenues are recognized in the accounting period in hich they are received. Expenditures are recognized in the accounting period in hich the fund liability is paid. 14

17 Notes to the Financial Statements- Continued June 30, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued C. MEASUREMENT FOCUS/BASIS OF ACCOUNTING- Continued Proprietary funds distinguish operation revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connections ith a proprietary fund's principal ongoing operations. The principal operating revenues of the proprietary funds are charges to customers for sales and services. Operating expenses for the enterprise fund include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. CASH AND CASH EQUIVALENTS Cash and Cash equivalents- For purposes of the statement of cash flos for proprietary and similar fundtypes, the Park District considers highly liquid investments to be cash equivalents if they have a maturity of three months or less hen purchased. Investments - Investments are stated at cost, hich approximates fair value. Gains or losses on the sale of investments are recognized upon realization. The Park District has adopted a formal ritten investment and cash management policy. The institutions in hich investments are made must be approved by the Park District's Board of Commissioners. Assets of the different funds may be commingled for investment purposes and interest earnings prorated back to the various funds hen recognized as revenue. E. INTERFUND RECEIVABLES AND PAYABLES Activity beteen funds that are representative of lending/borroing arrangements outstanding at the end of the fiscal year are referred to as either "due to/due from other funds" (i.e., the current portion of interfund loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other outstanding balances beteen funds are reported as "due to/from other funds." In the process of aggregating the financial information for the government-ide statements, the interfund balances and activity in the fund statements has been combined and el iminated or reclassified. F. INVENTORIES Inventory consists of merchandise, small equipment and vending items and is valued at cost. These inventories are stated at cost using the first-in, first-out method. G. CAPITAL ASSETS The District defines capital assets as assets ith an initial useful life of one year or greater and a cost value of $3,000 or greater. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Capital assets are depreciated using the straight-line method over the estimated useful life as follos: Category of Asset Land Improvements Building and Improvements Equipment Estimated Life 15 years years 10 years 15

18 Notes to the Financial Statements- Continued June 30, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continued H. DEFERRED OUTFLOWS/INFLOWS OF RESOURCES In addition to assets, the statement of financial position ill sometimes report a separate section for deferred outflos of resources. This separate financial statement element, deferred outflos of resources, represents a consumption of net position that applies to a future period(s) and so ill not be recognized as an outflo of resources (expense/expenditure) until then. In addition to liabilities, the statement of financial position ill sometimes report a separate section for deferred inflos of resources. This separate financial statement element represents an acquisition of net position that applies to a future period(s) and so ill not be recognized as an inflo of resources (revenue) until that time. Gift Certificates The District administers gift certificates for several of the Park District's programs. The District recognizes a deferred inflo upon the sale of gift certificates. When those certificates are redeemed, the District removes the deferred inflo and records revenue. I. FUND EQUITY In the governmental fund financial statements, fund balances are classified as: Nonspendable- amounts that cannot be spent because they are either (a) not in spendable form or {b) are legally or contractually required to be maintained intact. The Park District has classified inventory as a nonspenable fund balance. Restricted - amounts for hich constraints have been placed on the use of the resources either (a) externally imposed by creditors {hich as through debt covenants), grantors, contributors, or las or regulations of other governments, or {b) imposed by la through constitutional provisions or enabling legislation. The Park District has classified state and federal grants as being restricted because their use is restricted by granting agencies. The Park District also classified property, replacement, and motor fuel taxes as restricted because their use is restricted by state las and regulations. Committed- amounts that can be used only for specific purposes pursuant to constraints imposed by formal action of the Park District Board of Commissioners. These amounts cannot be used for any other purpose unless the Park District Board of Commissioners removes or changes the specified use by taking the same type of action {ordinance or resolution) that as employed hen the funds ere initially committed. Assigned- amounts that are constrained by the Park District's intent to be used for a specific purpose but are neither restricted nor committed. This intent can be expressed by the Park District Board of Commissioners or through the Park District Board delegating this responsibility to a Board Councilman through the budgetary process. This classification also includes the remaining positive fund balance for all governmental funds except for the General Fund. Unassigned -the residual funds balance of the General Fund and any negative residual fund balance of any other governmental fund that cannot be eliminated by offsetting of assigned fund balance amounts. When both restricted and unrestricted fund balances are available for use, it is the Park District's policy to use restricted fund balance first, then unrestricted fund balance. Furthermore, committed fund balances are reduced first, folloed by assigned amounts, and then unassigned amounts hen the expenditures are incurred for purposes for hich amounts in any of the unrestricted fund balance classifications can be used. 16

19 Notes to the Financial Statements - Continued June 30, 2016 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- Continued J. RESTRICTED NET POSITION For government-ide financial statements, net position is reported as restricted hen constraints placed on net assets are either: (1) externally imposed by creditors (such as debt covenants), grantors, contributors, or las or regulations of other governments or (2) imposed by la through constitutional provisions or enabling legislation. At the end of the fiscal year, the balance in restricted net position as from property taxes levied for specific purposes hich had not yet been fully expended. K. PROPERTY TAXES It is the District's intention that property taxes generated from the 2014 property tax levy be used to finance the operating budget for the fiscal year ending June 30, Therefore, property tax receipts represent the receipts primarily generated by the 2014 property tax levy. The District's property tax is levied each year on all taxable real property located in the Park District on or before the last Tuesday in December. Property taxes attach as an enforceable lien on property as of January 1 and are payable in to installments on June 1 and September 1. The Park District receives significant distributions of tax receipts approximately one month after these due dates. Taxes recorded in these financial statements are from the 2014 and prior tax levies. The folloing are the tax rates applicable to the various levies for $100 of assessed valuation: Maximum Percent Actual Percent 2014 Levy 2014 Levy General Bond and Interest As Needed IMRF As Needed Police Protection Audit Liability Insurance As Needed Recreation Pa~Ang and Lighting Special Population Total L. USE OF EST I MATES The preparation of financial statements in conformity ith the other comprehensive basis of accounting used by the District requires management to make estimates and assumptions that affect certain reported amounts and disclosures of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. NOTE 2 - DEPOSITS AND INVESTMENTS The District is alloed to invest in securities as authorized by the District's investment policy, and Sections 2 and 6 of the Public Funds Investment Act (30 ILCS 235). These include the folloing items: 1. Bonds, notes, certificates of indebtedness, treasury bills, or other securities no or hereafter issued, hich are guaranteed by the full faith and credit of the United States of America as to principal and interest; 17

20 Notes to the Financial Statements - Continued June 30, 2016 NOTE 2- DEPOSITS AND INVESTMENTS- Continued 2. Interest-bearing savings accounts, interest-bearing certificates of deposits or interest-bearing time deposits or any other investments constituting direct obligations of any banks as defined by the Illinois Banking Act; 3. Illinois Funds. Any public agency may also invest any public funds in a fund managed, operated, and administered by a bank, subsidiary of a bank, or subsidiary of a bank holding company or use the services of such an entity to hold and invest or advise regarding the investment of any public funds; 4. Investments as authorized by the Public Funds Investments Act, and Acts amendatory thereto. Custodial Credit Risk Related to Deposits ith Financial Institutions Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The District's general investment policy requires all amounts deposited or invested ith financial institutions in excess of any insurance limit shall be collateralized by securities eligible for District investment or any other highquality, interest-bearing security rated at least AA/Aa by one or more standard rating services to include Standard & Poor's, Moody's, or Fitch. The market value of the pledged securities shall equal or exceed the portion of the deposit requiring collateralization. At June 30, 2016, the carrying amount of the District's deposits ith financial institutions, hich includes demand deposits and savings accounts as $725,460. The bank balance as $792,798. As of June 30, 2016, $375,982 of deposits ere covered by federal depository insurance, the remaining balance as covered by collateral held by the District's agent in the District's name. Custodial Credit Risk of Investments Custodial credit risk is the risk that, in the event of the failure of the counterparty, the District ill not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The District does not have a policy for custodial credit risk. At year end, none of the District's investments ere subject to custodial credit risk due to one of the folloing: 1. Investments ere part of an insured pool. 2. Investments ere book-entry only in the name of the District and ere fully insured. 3. Investments ere part of a mutual fund. 4. Investments ere held by an agent in the District's name. Interest Rate Risk Interest rate risk is the risk that the value of investments ill decrease as a result of a rise in interest rates. The District's investment policy does not limit investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. Disclosures are required for any issuer that represents 5% or more of total investments, exclusive of mutual funds, external investment pools and investments issued or guaranteed by the U.S. government. The District's investment policy places no limit on the amount the District may invest in any one issuer. 18

21 Notes to the Financial Statements - Continued June 30, 2016 NOTE 2- DEPOSITS AND INVESTMENTS- Continued Foreign Currency Risk Foreign currency risk is the risk that an investment denominated in the currency of a foreign country could reduce its U.S. dollar value, as a result of changes in foreign currency exchange rates. The District had no foreign currency risk as of June 30, NOTE 3 - COMMON BANK ACCOUNT Separate bank accounts are not maintained for all District funds: instead, certain funds maintain their un-invested cash balances in a common checking account, ith accounting records being maintained to sho the portion of the common bank balance attributable to each participating fund. Occasionally, certain funds participating in the common bank account ill overdra its share of the pooled cash account. The overdrafts result from expenditures hich have been approved by the Park Board. In the event of such an overdra, that fund ill report an interfund liability in the fund financial statements to the fund that management has deemed to have loaned the cash to the overdran fund. NOTE 4 -INTERFUND RECEIVABLES, PAY ABLES AND TRANSFERS lnterfund loans outstanding as of June 30, 2016 are as follos: Date Loan from: To: June 30, 2016 No~mber 3, 2007 General Fund Golf Course Fund $ 7,395 June 30, 2008 General Fund Golf Course Fund 86,385 December 31, 2008 General Fund Golf Course Fund 26,220 June 30, 2016 General Fund Raquet & Health Fund 10,000 $ 130,000 The folloing interfund transfers are reflected in the fund financial statement at June 30, Transfers In Transfers Out Gornmental funds: General Fund $ 83,189 $ (154,990) Recreation Fund 14,000 (154,250) Debt Sei"Vice Fund (140,009) Insurance Fund 410,640 Nonmajor Funds (69,720) Total Gornmental funds 507,829 (518,969) Enterprise funds: Golf Course Fund (68, 120) Racquet & Health Fund 134,950 (55,690) Total Enterprise funds 134,950 (123,81 0) Total Transfers $ 642,779 $ (642,779) 19

22 Notes to the Financial Statements- Continued June 30, 2016 NOTE 4- INTERFUND RECEIVABLES, PAY ABLES AND TRANSFERS- Continued The purposes for the above transfers are as follos: 1. Annual reimbursement for shared expenditures 2. Annual transfer of interest earned 3. Reimbursement for Park Foundation expenditures paid by the Park District 4. Reimbursement for recreation expenditures paid from the Debt Service Fund 5. Annual transfer of debt service payments 6. Transfer social security expenditures to the proper funds 7. Transfer insurance payments to the proper funds 8. Transfer of bond proceeds NOTE 5 - CAPITAL ASSETS The folloing is a summary of changes in capital assets for the year ended June 30, Beginning Governmental Activities Balances Additions Diseosals Capital assets, not being depreciated: Land $ 5,358,469 $ $ Capital assets, being depreciated: Land improvements 1,693,750 Buildings and improvements 11,208, ,291 Equipment 1,153,047 13,041 Subtotal 14,054, ,332 Less: accumulated depreciation for: Land improvements (1 '1 01,486) (88,516) Buildings and improvements (3,933,447) (462,349) Equipment {796, 729~ {77,541 ~ Subtotal {5,831,662~ {628,406~ Total depreciable capital assets, net 8,223,205 {460,074~ Governmental activities capital assets, net $ 13,581,674 $ (460,074) $ Less: related long-term debt outstanding Net investment in capital assets Ending Balances $ 5,358,469 1,693,750 11,363,361 1,166,088 14,223,199 (1 '190,002) (4,395,796) {874,270~ {6,460,068~ 7,763,131 13,121,600 {6,943,572~ $ 6,178,028 20

23 Notes to the Financial Statements - Continued June 30, 2016 NOTE 5 - CAPITAL ASSETS - Continued Beginning Ending Business-Type Activities Balances Additions Disposals Balances Capital assets, not being depreciated: Land $ 724,522 $ $ $ 724,522 Capital assets, being depreciated: Land improvements 536, ,313 Buildings 3,284,171 12,560 3,296,731 Equipment 1,154, ,739 1,259,976 Subtotal 4,974, ,299 5,093,020 Less: accumulated depreciation for: Land improvements (356,482) (30,114) (386,596) Buildings (1,334,599) (62,671) (1,397,270) Equipment {705,419} {111,697} {817,116} Subtotal {2,396,500} {204,482} {2,600,982} Total depreciable capital assets, net 2,578,221 {86,183} 2,492,038 Business-type activities capital assets, net $ 3,302,743 $ {86,183) $ 3,216,560 Less: related long-term debt outstanding {1,086, 195} Net investment in capital assets $ 2,130,365 Depreciation expense for 2016 as charged to functions/programs of the primary government as follos: Governmental Activities Park and recreation Business-Type Activities Golf courses Racquet and health facilities Total depeciation expense - business-type activities $ 628,406 $ 94, ,645 $ 204,482 NOTE 6- GENERAL LONG-TERM DEBT General Obligation Bonds The District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the District. NCGA Statement No. 1 provides that liabilities arising from long-term debt that is directly related to and expected to be paid from proprietary funds, including general obligation bonds that are expected to be retired from proprietary fund revenues, should be reported in the proprietary fund and government-ide financial statements. If enterprise funds are insufficient to pay principal and interest, the payment is a contingent liability of the general government. The folloing is a summary of long-term general obligation bond debt transactions of the Park District for the year ended June 30, 2016: 21

24 Notes to the Financial Statements - Continued June 30, 2016 NOTE 6- GENERAL LONG-TERM DEBT- Continued Fund Debt Balance Debt Retired By: 7/1/2015 Issued Retired Series 2008A Racquet & Health $ 1,045,000 $ $ (90,000) Series 201 OB Debt Service 6,080,000 (11 0,000) Series 2013 Debt Service 201,900 (201,900) Series 2014 Debt Service 682,000 (395,900) Series 2015 Debt Service 682,000 $ 8,008,900 $ 682,000 $ (797,800) Balance Due ithin 6/30/2016 One Year $ 955,000 $ 95,000 5,970, , , , , ,250 $7,893,100 $ 810,350 Bonds payable during the fiscal year ending June 30, 2016, are comprised of the folloing individual issues: Series 2008A -due in annual installments of $85,000 to $145,000 through December 14, 2023; interest at 3.5%-4.75% Series 201 OB - due in annual installments of $30,000 to $555,000 through December 2035; interest at 2.25% %. These bonds are Build America Bonds that provide for a 35% federal subsidy on the total interest requirements of the bonds. The interest is paid to the District on a semi-annual basis corresponding ith the interest payment dates to the bondholders. In the current year, the federal government sequestered 6.9% of the subsidy. The revenue is reflected as a treasury rebate in the debt service fund. Series due in an annual installment of $286,100 on April 15, 2017 ith interest of.69% Series due in annual installments of $395,900 and $286,100 through April 15, 2017; interest at beteen.39% and.69% Annual debt service requirements to maturity for general obligation bonds are as follos: Fiscal Year 2008A 2010B Ending Principal Interest Principal Interest June 30, 2017 $ 95,000 $ 41,244 $ 120,000 $ 403,498 June 30, ,000 37, , ,710 June 30, ,000 32, , ,998 June 30, ,000 27, , ,292 June 30, ,000 22, , ,619 June 30, ,000 30,281 1 '135,000 1,671,081 June 30, ,680,000 1,191,262 June 30, ,425, ,906 $ 955,000 $ 191,819 $5,970,000 $5,277,366 Fiscal Year Total Ending Principal Interest Principal Interest Principal Interest June 30, 2017 $ 286,100 $ 987 $ 309,250 $ 12,042 $ 810,350 $ 457,771 June 30, ,750 2, , ,512 June 30, , ,742 June 30, , ,217 June 30, , ,144 June 30, ,550,000 1,701,362 June 30, ,680,000 1 '191,262 June 30, ,425, ,906 $ 286,100 $ 987 $ 682,000 $ 14,744 $ 7,893,100 $ 5,484, CPA)