AUDIT REPORT. Denning, Downey & Associates, P.C. CERTIFIED PUBLIC ACCOUNTANTS CITY OF BOULDER JEFFERSON COUNTY, MONTANA

Transcription

1 CITY OF BOULDER JEFFERSON COUNTY, MONTANA Fiscal Year Ended AUDIT REPORT Denning, Downey & Associates, P.C. CERTIFIED PUBLIC ACCOUNTANTS

2 CITY OF BOULDER JEFFERSON COUNTY, MONTANA Fiscal Year Ended TABLE OF CONTENTS Organization 1 Management Discussion and Analysis 2-6 Independent Auditor s Report 7-9 Financial Statements Government-wide Financial Statements Statement of Net Position 10 Statement of Activities 11 Fund Financial Statements Balance Sheet Governmental Funds 12 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 13 Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Funds 14 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 15 Statement of Net Position Proprietary Fund Types 16 Statement of Revenues, Expenses and Changes in Net Position Proprietary Fund Types 17 Statement of Cash Flows Proprietary Fund Types 18 Statement of Net Position Fiduciary Fund Types 19 Notes to Financial Statements Required Supplementary Information Budgetary Comparison Schedule 47 Schedule of Changes in the Entity s OPEB Liability and Related Ratios 48 Schedule of Proportionate Share of the Net Pension Liability 49 Schedule of Contributions 50 Notes to Required Pension Supplementary Information Single Audit Section Schedule of Expenditures of Federal Awards 54 Notes to the Schedule of Expenditure of Federal Awards 55 Independent Auditor s Report on Compliance and 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 Independent Auditor s Report on Compliance for Each Major Program and on Internal Control over Compliance required by the Uniform Guidance Schedule of Findings and Questioned Costs Report on Prior Audit Recommendations 62 -i-

3 CITY OF BOULDER JEFFERSON COUNTY, MONTANA ORGANIZATION Fiscal Year Ended Gary Craft Mayor CITY COUNCIL Bettie Schlueter Fritz Bieler Shane Maichel Gary Richardson Council Member Council Member Council Member Council Member CITY OFFICIALS Steven Shapiro Dennis Giulio Diana Van Haecke Dennis Wortman Attorney City Judge City Clerk Water/Sewer/Garbage -1-

4 City of Boulder, Jefferson County, Montana Management s Discussion and Analysis Fiscal Year Ending As management of the City of Boulder, Montana, we offer readers of the City of Boulder, Montana s financial statements, this narrative overview, and analysis of the financial activities of the City of Boulder for the fiscal year ending. We encourage readers to consider the information presented in conjunction with accompanying notes to those financial statements. THE FINANCIAL STATEMENTS The financial statements presented herein include all of the activities of the City of Boulder, Montana using the integrated approach as prescribed by GASB Statement No. 34. The Government-Wide Financial Statements distinguish functions of the City of Boulder 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 police and fire, cultural and recreational services, economic development and public works. The business-type activities of the City include water, wastewater, and ambulance service. FUND FINANCIAL STATEMENTS Traditional users of the City s financial statements will find the fund financial statement presentation more familiar. With the implementation of GASB 34 the focus is now on major funds rather than fund types. 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. A major fund should generally meet both of the following criteria; 1) total assets, liabilities, revenues, or expenditures/expenses are at least 10% of the corresponding total (assets, liabilities, etc.) for that fund type (i.e. governmental or enterprise funds) and 2) total assets, liabilities, revenues, or expenditures/expenses of the individual governmental or enterprise fund are at least 5% of the corresponding total for all governmental and enterprise funds combined. 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 two categories: governmental funds and proprietary funds. GOVERNMENTAL FUNDS Governmental funds. Governmental funds are used to report those same functions reported as governmental activities in the government-wide financial statements. However, unlike government-wide statements, the fund financial statements are prepared on the modified accrual basis. Under the modified accrual basis of accounting, revenues are recognized when they become measurable and available, and expenditures are recognized when the related fund liability is incurred, with the exception of long-term debt and similar long-term items which are recorded when due. Therefore, the focus of governmental fund financial statements is on near- -2-

5 City of Boulder, Jefferson County, Montana Management s Discussion and Analysis Fiscal Year Ending term inflows and outflows of spendable resources as well as on the balance of spendable resources available at the end of the fiscal year. Since the focus of the governmental funds is on near-term resources, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. To facilitate this comparison, reconciliations are provided for both the governmental fund balance sheet and the governmental statement of revenues, expenditures, and changes the fund balances. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund (i.e. public safety, parks and recreation, roads and streets, etc.) and Gas Tax. These funds are considered to be major funds. Data from the other governmental funds is combined into single, aggregated presentation. Individual fund data for each of these non-major funds is provided in the form combining statements located within the supplementary information following the notes to the financial statements. The City adopts an annual appropriated budget for all of its governmental funds. Budgetary comparison statements have been provided to demonstrate compliance with this budget. The basic governmental fund financial statements can be found in this report as well as in the supplemental sheets provided. Proprietary Funds. The City maintains three types of proprietary funds or enterprise funds. The proprietary fund financial statements are prepared on the accrual basis of accounting. Enterprise funds are used to report the same functions presented as business-type activities in the governmental-wide financial statements. The City uses enterprise funds to account for its water, wastewater (sewer) and ambulance. These funds are considered to be major funds. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net position over time may serve useful as an indicator of a government s financial position. The City s largest portion of net position reflects land, buildings, improvements other than buildings (main assets-water and sanitary sewer lines), equipment and vehicles, and infrastructure. These assets are used to provide services to the citizens of Boulder and are not available for future spending. The City s investment in capital assets is reported net of related debt. Resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. REPORTING THE CITY OF BOULDER AS A WHOLE This report includes the City of Boulder reported as a whole. These statements measure inputs and outflows using an economic resources measurement focus, and use the accrual basis of accounting. Activities that are fiduciary in nature are not included in these statements. -3-

6 City of Boulder, Jefferson County, Montana Management s Discussion and Analysis Fiscal Year Ending A. The Statement of Net Position shows the assets (what is owned), liabilities (what is owed) and the net position (the resources that would remain if all obligations were settled) of the City of Boulder. The statement categorizes assets to show that some assets are very liquid, such as cash and cash equivalents. Some assets are restricted for certain purposes or reserved for emergencies and cash flow purposes. Some assets are invested in fixed or capital assets, such as buildings, equipment, and other long-lived property; and some assets are available to fund budgets of the following year. B. The Statement of Activities, A supplement sheet is attached to this report and shows the amounts of activity-specific and general City of Boulder revenues used to support the City of Boulders various functions. The Statement of Net Position and the Statement of Activities are shown in one category (governmental) show the City of Boulder functions, including Public Safety, Public Health, Culture and Recreation, and Debt service. Reporting the City of Boulders Most Significant Funds The fund statements report balances and activities of the most significant or major funds separately and combine activities of less significant funds under a single category. Significance of funds is determined based on the proportional size of the funds, the relative importance of the activities of the funds to the City of Boulders operations, and the existence of legal budget requirements. The Balance Sheet and Statement of Revenues, Expenditures, and Changes in Fund Balance show governmental funds, such as the general fund, special revenue funds (if any), and department service and capital outlay funds. These funds use the modified accrual basis of accounting and represent the majority of the City of Boulders activities. Fund statements include a reconciliation of governmental fund statements to the City of Boulder statements. Most significant differences result from the use of different presentation bases. The City of Boulder statements are presented using the accrual basis of accounting and the fund statements for governmental funds use the modified accrual basis. In addition, general capital assets and general long-term debt are reported in the City of Boulder statements but not in the fund statements. Current-year results in comparison with the prior year The City of Boulder total net position increased $2,258,176. Total net position was $5,478,567. An analysis of the overall financial position The City s government activities experienced an overall increase in net position of $82,187. The business-type activities experienced an overall increase in net position of $2,175,989. The Boulder Sewer Fund had activity with the funding approved for the Wastewater Treatment Facility (WWTF) Project to include loans and grants and construction in progress. -4-

7 City of Boulder, Jefferson County, Montana Management s Discussion and Analysis Fiscal Year Ending An analysis of significant variations between original and final budget General Government anticipated expenditures based on history and expenses did not occur as expected. Staffing with Public Safety was difficult throughout the fiscal year. Three Police Officers were budgeted for FY 16. A second Police Officer was hired in September, 2015 and attended the academy from April-June A third Police Officer was hired in February, Though on call and overtime was reduced, call out was increased with the demand of the Police Chief due to the newly hired officer and training for the officers. Tax Collection revenue received was higher than anticipated as tax collections increased. FY 16 the Public Works Department focused on the construction of the Wastewater Treatment Plant and the operation of the Treatment Plant. The Sewer Fund expenditure balance was rolled over to FY 17 to complete the project through the funding agencies. The Ambulance Fund expenditures and revenue were lower than expected due to availability of volunteers to respond to calls. A description of significant capital asset and long-term activity Long-term debt additions for the year include two USDA loans for $3.8 million related to the wastewater treatment project and an Intercap loan for $30,000 for a new police vehicle. Reductions in debt principal for the year were $3,696,982. The City also added $78,483 to their recognized Net Pension Liability. Additions to governmental capital assets totaled $39,912. Depreciation expense of $33,605 was recognized on these assets. Additions to business capital assets were $2,187,507, mostly attributable to the construction of the wastewater treatment facility project. Depreciation expense of $119,604 was recognized on these assets. Currently The current wastewater treatment system was constructed in 1960 with additional lagoon cell construction in The current system posed a threat to the public health and the environment along with deficiencies to include lagoons leaking; the leakage created an unpermitted discharge situation; the lagoons had a significant amount of settled sludge which reduced the treatment capacity of each cell; and, the lagoon treatment performance was not consistently met resulting in four permit violations since June, In addition, the lagoons are located within the Boulder River floodplain. The proposed wastewater treatment facility project began with the goal to preserve renewable resources. As a requirement of the USDA Rural Development Program, which was the majority of grant and loan funding resources, water meters needed to be installed at all existing City residence and business locations. Grant money was available for the installation of the meter which was completed in October, The Wastewater treatment plant went into operation in November, 2015 with discharge to the river in February,

8 City of Boulder, Jefferson County, Montana Management s Discussion and Analysis Fiscal Year Ending Table 1 - Net Position Governmental Business-type Activities Activities Change Change FY16 FY15 Inc (Dec) FY16 FY15 Inc (Dec) Current and other assets $ 556,880 $ 486,396 $ 70,484 $ 1,168,041 $ 1,039,443 $ 128,598 Capital assets 475, ,388 6,307 7,980,403 5,852,698 2,127,705 Total assets $ 1,032,575 $ 955,784 $ 76,791 $ 9,148,444 $ 6,892,141 $ 2,256,303 Long-term debt outstanding $ 100,623 $ 159,415 $ (58,792) $ 4,166,980 $ 3,470,837 $ 696,143 Other liabilities 236, ,118 53, , ,164 (615,829) Total liabilities $ 337,137 $ 342,533 $ (5,396) $ 4,365,315 $ 4,285,001 $ 80,314 Net investment in capital assets $ 388,139 $ 378,376 $ 9,763 $ 3,842,612 $ 2,472,153 $ 1,370,459 Restricted 171, ,879 (11,037) 209, ,010 69,028 Unrestricted (deficit) 135,457 51,996 83, ,479 (5,023) 736,502 Total net position $ 695,438 $ 613,251 $ 82,187 $ 4,783,129 $ 2,607,140 $ 2,175,989 Table 2 - Changes in Net Position Governmental Business-type Activities Activities Change Change FY16 FY15 Inc (Dec) FY16 FY15 Inc (Dec) Revenues Program revenues (by major source): Charges for services $ 66,507 $ 58,731 $ 7,776 $ 759,738 $ 729,046 $ 30,692 Operating grants and contributions 45,540 33,172 12,368-56,740 (56,740) Capital grants and contributions ,902, ,710 1,641,353 General revenues (by major source): Property taxes for general purposes 201, ,341 33, Licenses and permits 6,750 5, Miscellaneous 39,909 2,725 37,184 5,193 2,482 2,711 Interest/investment earnings 1,228 1,237 (9) 2,322 2, Local option taxes 72,159 68,786 3, State entitlement 161, ,286 4, State contributions to retirement - 3,881 (3,881) - 4,625 (4,625) Contributions & donations 1,728 2,230 (502) 28, ,800 Total revenues $ 596,648 $ 502,174 $ 94,474 $ 2,698,016 $ 1,056,656 $ 1,641,360 Program expenses General government $ 163,863 $ 136,415 $ 27,448 Public safety 203, ,436 35,737 Public works 115, ,422 14,380 Public health Culture and recreation 58,516 55,420 3,096 Debt service - principal - 6,291 (6,291) Debt service - interest 3,154-3,154 Miscellaneous 7,149 6, Water Utility $ 213,768 $ 207,025 $ 6,743 Sewer Utility 308, ,587 91,064 Ambulance 64,970 96,658 (31,688) Total expenses $ 552,340 $ 474,127 $ 78,213 $ 587,389 $ 521,270 $ 66,119 Excess (deficiency) before special items and transfers 44,308 28,047 16,261 2,110, ,386 1,575,241 Increase (decrease) in net position $ 44,308 $ 28,047 $ 16,261 $ 2,110,627 $ 535,386 $ 1,575,241-6-

9 Denning, Downey & Associates, P.C. CERTIFIED PUBLIC ACCOUNTANTS 1740 U.S. Hwy 93 South, P.O. Box 1957, Kalispell, MT Mayor and City Council City of Boulder Jefferson County Boulder, Montana INDEPENDENT AUDITOR S REPORT Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, businesstype activities, each major fund, and the aggregate remaining fund information of City of Boulder, Jefferson County, Montana, as of and for the year ended, 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 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 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. -7-

10 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, each major fund, and the aggregate remaining fund information of City of Boulder, Jefferson County, Montana, as of and for the year ended, 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. Change in Accounting Principle As described in Note 1 to the financial statements, in 2016, the District adopted new accounting guidance, GASB statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, (an amendment of GASB No. 45). Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis, budgetary comparison information, schedule of changes in the entity s total OPEB liability and related ratios, schedules of proportionate share of the net pension liability, and schedules of contributions on pages 2 through 6, 47, 48, 49 and 50 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 s basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S., Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and is also not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is the responsibility of management and was derived from and relate directly to the underlying accounting and other records used to prepare the 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 financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole. -8-

11 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 30, 2017, on our consideration of the City of Boulder, Jefferson County, Montana 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 internal control over financial reporting or on compliance. That report is an integral part of an audit preformed in accordance with Government Auditing Standards in considering City of Boulder, Jefferson County, Montana s internal control over financial reporting and compliance. March 30,

12 City of Boulder, Jefferson County, Montana Statement of Net Position Governmental Business-type Activities Activities Total ASSETS Current assets: Cash and investments $ 501,668 $ 876,391 $ 1,378,059 Taxes and assessments receivable, net 27,814-27,814 Internal balances (10,085) 10,085 - Accounts receivable - net - 37,334 37,334 Due from other governments - 7,759 7,759 Inventories 5, ,678 Total current assets $ 524,675 $ 931,969 $ 1,456,644 Noncurrent assets Restricted cash and investments $ - $ 208,638 $ 208,638 Capital assets - construction in progress - 6,534,312 6,534,312 Capital assets - depreciable, net 475,695 1,446,091 1,921,786 Total noncurrent assets $ 475,695 $ 8,189,041 $ 8,664,736 Total assets $ 1,000,370 $ 9,121,010 $ 10,121,380 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - city contributions $ 32,205 $ 27,434 $ 59,639 Total deferred outflows of resources $ 32,205 $ 27,434 $ 59,639 LIABILITIES Current liabilities Accounts payable $ 441 $ 233 $ 674 Payroll payable 11,700 6,258 17,958 Current portion of long-term capital liabilities 17, , ,394 Current portion of compensated absences payable 8,019 17,442 25,461 Total current liabilities $ 37,330 $ 159,157 $ 196,487 Noncurrent liabilities Deposits payable $ - $ 709 $ 709 Noncurrent portion of long-term liabilities 2,158 2,977 5,135 Noncurrent portion of long-term capital liabilities 70,386 4,002,567 4,072,953 Noncurrent portion of compensated absences 2,890 8,770 11,660 Net pension liability 204, , ,316 Total noncurrent liabilities $ 280,265 $ 4,189,508 $ 4,469,773 Total liabilities $ 317,595 $ 4,348,665 $ 4,666,260 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources $ 19,542 $ - $ 19,542 Deferred inflows of resources - pensions - 16,650 16,650 Total Deferred Inflows of resources $ 19,542 $ 16,650 $ 36,192 NET POSITION Net investment in capital assets $ 388,139 $ 3,842,612 $ 4,230,751 Restricted for capital projects Restricted for debt service - 208, ,638 Restricted for special projects 120, ,920 Nonspendable 50, ,322 Unrestricted 135, , ,936 Total net position $ 695,438 $ 4,783,129 $ 5,478,567 See accompanying Notes to the Financial Statements -10-

13 Net (Expenses) Revenues and Changes in Net Position Program Revenues Primary Government Operating Capital Business- Charges for Grants and Grants and Governmental type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Primary government: Governmental activities: General government $ 163,863 $ 19,746 $ - $ - $ (144,117) $ - $ (144,117) Public safety 203,173 36,473 14,009 - (152,691) - (152,691) Public works 115,802 1,000 31,531 - (83,271) - (83,271) Public health (683) - (683) Culture and recreation 58,516 9, (49,228) - (49,228) Debt service - interest 3, (3,154) - (3,154) Miscellaneous 7, (7,149) - (7,149) Total governmental activities $ 552,340 $ 66,507 $ 45,540 $ - $ (440,293) $ - $ (440,293) Business-type activities: Water Utility $ 213,768 $ 300,111 $ - $ - $ - $ 86,343 $ 86,343 Sewer Utility 308, ,292-1,902,063-2,008,704 2,008,704 Ambulance 64,970 44, (20,635) (20,635) Total business-type activities $ 587,389 $ 759,738 $ - $ 1,902,063 $ - $ 2,074,412 $ 2,074,412 Total primary government $ 1,139,729 $ 826,245 $ 45,540 $ 1,902,063 $ (440,293) $ 2,074,412 $ 1,634,119 See accompanying Notes to the Financial Statements City of Boulder, Jefferson County, Montana Statement of Activities For the Fiscal Year Ended General Revenues: Property taxes for general purposes $ 201,461 $ - $ 201,461 Licenses and permits 6,750-6,750 Miscellaneous 39,909 5,193 45,102 Interest/investment earnings 1,228 2,322 3,550 Local option taxes 72,159-72,159 State entitlement 161, ,366 Contributions & donations 1,728 28,700 30,428 Total general revenues, special items and transfers $ 484,601 $ 36,215 $ 520,816 Change in net position $ 44,308 $ 2,110,627 $ 2,154,935 Net position - beginning $ 613,251 $ 2,607,140 $ 3,220,391 Restatements 37,879 65, ,241 Net position - beginning - restated $ 651,130 $ 2,672,502 $ 3,323,632 Net position - end $ 695,438 $ 4,783,129 $ 5,478,

14 Other Governmental Funds Total Governmental Funds General ASSETS Current assets: Cash and investments $ 252,068 $ 249,600 $ 501,668 Taxes and assessments receivable, net 20,338 7,476 27,814 Inventories 4,274 1,004 5,278 Total assets $ 276,680 $ 258,080 $ 534,760 Current liabilities: Accounts payable $ 441 $ - $ 441 Payroll payable 10,324 1,376 11,700 Total current liabilities $ 10,765 $ 1,376 $ 12,141 Noncurrent liabilities: Advances payable $ 10,085 $ - $ 10,085 Total noncurrent liabilities $ 10,085 $ - $ 10,085 Total liabilities $ 20,850 $ 1,376 $ 22,226 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources $ 20,338 $ 7,476 $ 27,814 Total deferred inflows of resources $ 20,338 $ 7,476 $ 27,814 FUND BALANCES Nonspendable $ 4,274 $ 51,926 $ 56,200 Restricted - 112, ,440 Committed - 84,862 84,862 Unassigned fund balance 231, ,218 Total fund balance $ 235,492 $ 249,228 $ 484,720 See accompanying Notes to the Financial Statements City of Boulder, Jefferson County, Montana Balance Sheet Governmental Funds -12-

15 City of Boulder, Jefferson County, Montana Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Total fund balances - governmental funds $ 484,720 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 475,695 Property taxes receivable will be collected this year, but are not available soon enough to pay for the current period's expenditures, and therefore are deferred in the funds. 27,814 Long-term liabilities are not due and payable in the current period and therefore are not reported as liabilities in the funds. (100,623) Proportionate share of ending collective net pension liablity (204,831) Deferred ouflows related to net pension liability 32,205 Deferred inflows related to net pension liability (19,542) Total net position - governmental activities $ 695,438 See accompanying Notes to the Financial Statements -13-

16 City of Boulder, Jefferson County, Montana Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended Other Governmental Funds Total Governmental Funds General REVENUES Taxes and assessments $ 226,796 $ 70,139 $ 296,935 Licenses and permits 6,750-6,750 Intergovernmental 162,377 33, ,381 Charges for services 44,938 13,350 58,288 Fines and forfeitures 19,745-19,745 Miscellaneous 35,221 6,417 41,638 Investment earnings ,228 Total revenues $ 496,353 $ 123,612 $ 619,965 EXPENDITURES General government $ 121,716 $ 30,184 $ 151,900 Public safety 193,108 2, ,008 Public works 41,840 52,756 94,596 Public health Culture and recreation 44,295 12,280 56,575 Debt service - principal 23,628-23,628 Debt service - interest 3,154-3,154 Miscellaneous - 7,149 7,149 Capital outlay 33,012 6,900 39,912 Total expenditures $ 461,436 $ 112,169 $ 573,605 Excess (deficiency) of revenues over expenditures $ 34,917 $ 11,443 $ 46,360 OTHER FINANCING SOURCES (USES) Proceeds of general long term debt $ 30,000 $ - $ 30,000 Total other financing sources (uses) $ 30,000 $ - $ 30,000 Net Change in Fund Balance $ 64,917 $ 11,443 $ 76,360 Fund balances - beginning $ 170,575 $ 237,785 $ 408,360 Fund balance - ending $ 235,492 $ 249,228 $ 484,720 See accompanying Notes to the Financial Statements -14-

17 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ 76,360 Governmental funds report capital outlays as expenditures while governmental activities report depreciation expense to allocate those expenditures over the life of the assets: - Capital assets purchased 39,912 - Depreciation expense (33,605) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds: - Long-term receivables (deferred revenue) (28,389) The change in compensated absences is shown as an expense in the Statement of Activities (1,821) Repayment of debt principal is an expenditures in the governmental funds, but the repayment reduces long-term debt in the Statement of Net Position: - Long-term debt principal payments 23,628 Long term debt proceeds provide current financial resources to the governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position: - Proceeds from the sale of long-term debt (30,000) Termination benefits are shown as an expense in the Statement of Activities and not reported on the Statement of Revenues, Expenditures and Changes in Fund Balance: - Post-employment benefits other than retirement liability (508) Pension expense related to the net pension liablity is shown as an expense on the Statement of Activities and not reported on the Statement of Revenues, Expenditures, and Changes in Fund Balance (6,341) State aid revenue related to net pension liability is shown as a revenue on the Statement of Activities and not reported on the Statement of Revenues, Expenditures, and Changes in Fund Balance 5,072 Change in net position - Statement of Activities $ 44,308 See accompanying Notes to the Financial Statements City of Boulder, Jefferson County, Montana Reconciliation of the Statement of Revenues, Expenditures. and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended -15-

18 Water Utility Sewer Utility Ambulance Totals ASSETS Current assets: Cash and investments $ 154,811 $ 674,568 $ 47,012 $ 876,391 Accounts receivable - net 3,550 13,411 20,373 37,334 Due from other governments - 7,759-7,759 Inventories Total current assets $ 158,761 $ 695,738 $ 67,385 $ 921,884 Noncurrent assets: Restricted cash and investments $ 177,938 $ 30,700 $ - $ 208,638 Advances to other funds 10, ,085 Capital assets - construction in progress - 6,534,312-6,534,312 Capital assets - depreciable, net 1,306,618 66,558 72,915 1,446,091 Total noncurrent assets $ 1,494,641 $ 6,631,570 $ 72,915 $ 8,199,126 Total assets $ 1,653,402 $ 7,327,308 $ 140,300 $ 9,121,010 DEFERRED OUTFLOWS OF RESOURCES Deferred outflows of resources - city contributions $ 12,524 $ 12,524 $ 2,386 $ 27,434 Total deferred outflows of resources $ 12,524 $ 12,524 $ 2,386 $ 27,434 LIABILITIES Current liabilities: Accounts payable $ 122 $ 41 $ 70 $ 233 Payroll payable 2,997 2, ,258 Current portion of long-term capital liabilities 81,000 54, ,224 Current portion of compensated absences payable 8,256 8, ,442 Total current liabilities $ 92,375 $ 65,515 $ 1,267 $ 159,157 Noncurrent liabilities: Deposits payable $ 709 $ - $ - $ 709 Noncurrent portion of long-term liabilities 1,437 1, ,977 Noncurrent portion of long-term capital liabilities 298,000 3,704,567-4,002,567 Noncurrent portion of compensated absences 4,039 4, ,770 Net pension liability 79,656 79,656 15, ,485 Total noncurrent liabilities $ 383,841 $ 3,789,699 $ 15,968 $ 4,189,508 Total liabilities $ 476,216 $ 3,855,214 $ 17,235 $ 4,348,665 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources - pensions $ 7,601 $ 7,601 $ 1,448 $ 16,650 Total deferred inflows of resources $ 7,601 $ 7,601 $ 1,448 $ 16,650 NET POSITION Net investment in capital assets $ 927,618 $ 2,842,079 $ 72,915 $ 3,842,612 Restricted for debt service 177,938 30, ,638 Nonspendable Unrestricted 76, ,238 51, ,479 Total net position $ 1,182,109 $ 3,477,017 $ 124,003 $ 4,783,129 Total liabilities and net position $ 1,658,325 $ 7,332,231 $ 141,238 $ 9,131,794 See accompanying Notes to the Financial Statements City of Boulder, Jefferson County, Montana Statement of Net Position Proprietary Funds Business-Type Activities - Enterprise Funds -16-

19 City of Boulder, Jefferson County, Montana Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Fiscal Year Ended Business-Type Activities - Enterprise Funds Water Utility Sewer Utility Ambulance Totals OPERATING REVENUES Charges for services $ 300,111 $ 415,293 $ 44,335 $ 759,739 Miscellaneous revenues 2,049 2,049 1,095 5,193 Total operating revenues $ 302,160 $ 417,342 $ 45,430 $ 764,932 OPERATING EXPENSES Personal services $ 93,338 $ 92,924 $ 18,206 $ 204,468 Supplies 27,469 16,996 4,986 49,451 Purchased services 48,985 71,662 17, ,845 Fixed charges 6,044 6,061-12,105 Loss/bad debt expense ,860 11,860 Depreciation 29,152 18,006 12,644 59,802 Total operating expenses $ 204,988 $ 205,649 $ 64,894 $ 475,531 Operating income (loss) $ 97,172 $ 211,693 $ (19,464) $ 289,401 NON-OPERATING REVENUES (EXPENSES) Intergovernmental revenue $ - $ 1,902,062 $ - $ 1,902,062 Interest revenue 637 1, ,322 Debt service interest expense (8,780) (103,002) (76) (111,858) Total non-operating revenues (expenses) $ (8,143) $ 1,800,583 $ 86 $ 1,792,526 Income (loss) before contributions and transfers $ 89,029 $ 2,012,276 $ (19,378) $ 2,081,927 Capital contributions ,700 28,700 Change in net position $ 89,029 $ 2,012,276 $ 9,322 $ 2,110,627 Net Position - Beginning of the year $ 1,079,082 $ 1,422,581 $ 105,477 $ 2,607,140 Restatements 13,998 42,160 9,204 65,362 Net Position - Beginning of the year - Restated $ 1,093,080 $ 1,464,741 $ 114,681 $ 2,672,502 Net Position - End of the year $ 1,182,109 $ 3,477,017 $ 124,003 $ 4,783,129 See accompanying Notes to the Financial Statements -17-

20 City of Boulder, Jefferson County, Montana Combined Statement of Cash Flows All Proprietary Fund Types Fiscal Year Ended Business - Type Activities Water Utility Sewer Utility Ambulance Totals Cash flows from operating activities: Cash received from providing services $ 298,636 $ 411,651 $ 29,619 $ 739,906 Cash received from miscellaneous sources Cash payments to suppliers (33,553) (23,057) (4,985) (61,595) Cash payments for professional services (48,985) (69,196) (17,198) (135,379) Cash payments to employees (93,000) (95,446) (18,191) (206,637) Net cash provided (used) by operating activities $ 123,175 $ 224,029 $ (10,035) $ 337,169 Cash flows from capital and related financing activities: Acquisition and construction of capital assets $ - $ (865,634) $ - $ (865,634) Principal paid on debt (80,000) (3,591,209) (2,145) (3,673,354) Interest paid on debt (8,780) (103,002) (76) (111,858) Proceeds from bonds, loans and advances - 4,430,600-4,430,600 Net cash provided (used) by capital and related financing activities $ (88,780) $ (129,245) $ (2,221) $ (220,246) Cash flows from non-capital financing activities: Cash received from advances $ 5,000 $ - $ - $ 5,000 Net cash provided (used) from non-capital financing activities $ 5,000 $ - $ - $ 5,000 Cash flows from investing activities: Interest on investments $ 637 $ 1,523 $ 162 $ 2,322 Net cash provided (used) by investing activities $ 637 $ 1,523 $ 162 $ 2,322 Net increase (decrease) in cash and cash equivalents $ 40,032 $ 96,307 $ (12,094) $ 124,245 Cash and cash equivalents at beginning 292, ,961 59, ,784 Cash and cash equivalents at end $ 332,749 $ 705,268 $ 47,012 $ 1,085,029 Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) $ 97,172 $ 211,693 $ (19,464) $ 289,401 Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation 29,152 18,006 12,644 59,802 Pension Expense ,083 Other post-employment benefits (24,541) (24,541) (5,750) (54,832) Changes in assets and liabilities: - Increase in accounts receivable (1,475) (3,642) (2,856) (7,973) Increase in accounts payable Increase in inventory (40) - - (40) Decrease in compensated absences 22,209 21,817 5,237 49,263 Increase in accrued payroll Net cash provided (used) by operating activities $ 123,175 $ 224,029 $ (10,035) $ 337,

21 Agency Funds ASSETS Cash and short-term investments $ 50,117 Total assets $ 50,117 LIABILITIES Warrants payable $ 50,106 Due to others 11 Total liabilities $ 50,117 NET POSITION City of Boulder, Jefferson County, Montana Statement of Net Position Fiduciary Funds See accompanying Notes to the Financial Statements -19-

22 CITY OF BOULDER JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City complies with generally accepted accounting principles (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. Recent Accounting Pronouncements: GASB No. 75 Accounting and Financial Report for Postemployment Benefits Other than Pension (OPEB), is effective for years beginning after June 15, 2017 with early implementation encouraged. The statement fully amends the previously issued GASB No. 45 Accounting and Financial Report for Postemployment Benefits Other than Pension. GASB 75 established standards for recognition and measurement of the liabilities, deferred outflows and inflows of resources, and expense/expenditures related to OPEB. Different distinctions are made regarding the particular requirements depending upon whether the OPEB plans are administered through a trust that meets criteria identified in the statement. The statement also identifies the methods and assumptions required in projecting benefit payments, discounting those payments to actuarial present value, and applying that present value to periods of employee service in the District. The disclosure requirements for OPEB plans is defined in this statement, that includes further detail on the District s plan and benefits provided, the assumptions used in the valuations, sensitivity analysis, and number of employees in the plan. Lastly, it increased the required supplementary information requiring 10 most recent fiscal years summarizing sources of change in OPEB liability, its components, and other related ratios. These changes are similar to pension GASB No. 68 that became effective in the prior fiscal year. Financial Reporting Entity In determining the financial reporting entity, the City complies with the provisions of GASB statement No. 14, The Financial Reporting Entity, as amended by GASB statement No. 61, The Financial Reporting Entity: Omnibus, and includes all component units of which the City appointed a voting majority of the component units board; the City is either able to impose its will on the unit or a financial benefit or burden relationship exists. In addition, the City complies with GASB statement No. 39 Determining Whether Certain Organizations Are Component Units which relates to organizations that raise and hold economic resources for the direct benefit of the City. Primary Government The City is a political subdivision of the State of Montana governed by an elected Mayor and Council duly elected by the registered voters of the City. The City utilizes the manager form of government. The City is considered a primary government because it is a general purpose local government. Further, it meets the following criteria: (a) It has a separately elected governing body (b) It is legally separate and (c) It is fiscally independent from the State and other local governments. -20-

23 CITY OF BOULDER JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS Basis of Presentation, Measurement Focus and Basis of Accounting. Government-wide Financial Statements: Basis of Presentation The Government-wide Financial Statements (the Statement of Net Position and the Statement of Activities) display information about the reporting government as a whole and its component units. They include all funds of the reporting entity except fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. Eliminations have been made in the consolidation of business-type activities The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the City s governmental activities. Direct expenses are those that are specifically associated with a program or function. The City charges indirect expenses to programs or functions. The types of transactions reported as 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 activity and 2) operating grants and contributions, and 3) capital grants and contributions. Revenues that are not classified as program revenues, including all property taxes, are presented as general revenues. Certain eliminations have been made as prescribed by GASB 34 in regards to inter-fund 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. Measurement Focus and Basis of Accounting Government-Wide Financial Statements On the government-wide Statement of Net Position and the Statement of Activities, both governmental and business-type activities are presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred regardless of the timing of the cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The City generally applies restricted resources to expenses incurred before using unrestricted resources when both restricted and unrestricted net assets are available. -21-

24 Fund Financial Statements: CITY OF BOULDER JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS Basis of Presentation Fund financial statements of the reporting City are organized into funds, each of which is considered to be separate accounting entities. Each fund is accounted for by providing a separate set of self-balancing accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. Funds are organized into three categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. Each major fund is displayed in a separate column in the governmental funds statements. All of the remaining funds are aggregated and reported in a single column as non-major funds. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets combined with deferred outflows of resources, liabilities combined with deferred inflows of resources, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type; and b. Total assets combined with deferred outflows of resources, liabilities combined with deferred inflows of resources, revenues, or expenditures/expenses of that individual governmental or enterprise funds are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. Measurement Focus and Basis of Accounting Governmental Funds Modified Accrual All governmental funds are accounted for using the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual; i.e., both measurable and available. Measurable means the amount of the transaction can be determined. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City defined the length of time used for available for purposes of revenue recognition in the governmental fund financial statements to be available upon receipt. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgments which are recognized when the obligations are expected to be liquidated with expendable available financial resources. General capital asset acquisitions are reported as expenditures in governmental funds and proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. -22-

25 CITY OF BOULDER JEFFERSON COUNTY, MONTANA NOTES TO THE FINANCIAL STATEMENTS Property taxes, franchise fees, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. 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. Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. All other revenue items are considered to be measurable and available only when cash is received by the government. Major Funds: The City reports the following major governmental funds: General Fund This is the City s primary operating fund and it accounts for all financial resources of the City except those required to be accounted for in other funds. Proprietary Funds: All proprietary funds are accounted for using the accrual basis of accounting. These funds account for operations that are primarily financed by user charges. The economic resource focus concerns determining costs as a means of maintaining the capital investment and management control. Revenues are recognized when earned and expenses are recognized when incurred. Allocations of costs, such as depreciation, are recorded in proprietary funds. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connections with a proprietary fund s principal ongoing operations. The principal operating revenues for enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City s policy to use restricted resources first, then unrestricted resources as they are needed. Major Funds: The City reports the following major proprietary funds: Water Fund An enterprise fund that accounts for the activities of the City s water distribution operations. Sewer Fund An enterprise fund that accounts for the activities of the City s sewer collection and treatment operations and includes the storm sewer system. -23-