CITY OF SALIDA, COLORADO FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2015 WITH REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

Transcription

1 FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2015 WITH REPORT OF CERTIFIED PUBLIC ACCOUNTANTS

2 Table of Contents Page Financial Section: Independent Auditors Report... 1 Management s Discussion and Analysis... 5 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet Governmental Funds Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities Statement of Net Position- Proprietary Funds Statement of Revenues, Expenses and Changes in Net Position- Proprietary Funds Statement of Cash Flows - Proprietary Funds Notes to the Financial Statements Required Supplementary Information: Schedule of the Proportionate Share of the Net Pension Liability Schedule of Changes in the Net Pension Liability and Related Ratios Schedule of Pension Contributions Notes to Pension Plan Schedules Schedule of Revenues, Expenditures, and Changes in Fund Balances General Fund - Budget-and-Actual Supplementary Information: Combining Balance Sheet Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds... 67

3 Table of Contents, Continued Supplementary Information, Continued: Page Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget-and-Actual: Conservation Trust Fund NRCDC Special Revenue Fund Schedule of Revenues, Expenses, and Changes in Net Assets Enterprise Funds - Budget-and-Actual: Water Fund Sewer Fund Steamplant Event Center Fund Loan Covenants and Requirements Local Highway Finance Report Compliance Section: Report on Internal Control over Financial Reporting and on Compliance and Other Matters... 79

4 MEMBERS: CHAD B. ATKINSON, CPA PHILLIP S. PEINE, CPA KRIS J. BRAUNBERGER, CPA STEVEN D PALMER, CPA ROBERT S. COX, CPA MICHAEL K. SPILKER, CPA TODD B. FELTNER, CPA KEVIN L. STEPHENS, CPA K. MARK FROST, CPA MARK E. TICHENOR, CPA MORRIS J PEACOCK, CPA MICHAEL J. TORGERSON, CPA Independent Auditors Report The Honorable Mayor and City Council City of Salida, Colorado Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining component unit and fund information of the City of Salida, Colorado, as of and for the year ended December 31, 2015, 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. 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 component unit and fund information of the City of Salida, Colorado, as of 1 CEDAR CITY FLAGSTAFF HURRICANE MESQUITE PHOENIX RICHFIELD ST. GEORGE

5 December 31, 2015, 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. Emphasis of Matter As described in footnote 13 to the financial statements, the City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pension, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. 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, the General Fund budgetary comparison information and the pension liability schedules as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Salida, Colorado s basic financial statements. The introductory section, nonmajor fund combining statements, nonmajor fund budgetary comparison schedules, the enterprise fund budgetary comparison schedules, the loan requirement disclosures and the statistical section are presented for additional analysis and are not a required part of the basic financial statements. The Local Highway Finance Report is presented for additional analysis as required by the State of Colorado and is not a required part of the basic financial statements. The nonmajor fund combining statements, nonmajor fund and enterprise fund budgetary comparison schedules, the loan requirement disclosures and the Local Highway Finance Report are the responsibility of management and were 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 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, the nonmajor fund and enterprise fund budgetary comparison schedules, the loan requirement disclosures and the Local Highway Finance Report are fairly stated in all material respects in relation to the financial statements as a whole. 2

6 The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 6, 2016, on our consideration of the City of Salida, Colorado 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 performed in accordance with Government Auditing Standards in considering the City of Salida, Colorado s internal control over financial reporting and compliance. HintonBurdick, PLLC St. George, Utah May 6,

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8 MANAGEMENT S DISCUSSION AND ANALYSIS For the Year Ended December 31, 2015 As management of the City of Salida (City), we offer readers of the City s financial statements this narrative overview and analysis of the financial activities of the City for the year ended December 31, Please read it in conjunction with the accompanying basic financial statements. FINANCIAL HIGHLIGHTS Governmental net position increased from $19.04 million to $24.57 million during 2015 which included a prior period adjustment of $1,985,149. The $1,985,149 prior period adjustment is a result of the implementation of GASB 68 and the addition of the NRCDC fund as a blended component unit in Business-type net position increased by $1.3 million to $21.29 million during The combined net investment in capital assets is $37.24 million. The unrestricted net position for both governmental and business-type activities that may be used to meet the City s future capital and operating expenses is $8.23 million. The General fund unassigned fund balance at the end of 2015 was $3,297,580 which is 37.6% of total General fund expenditures. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The three components of the financial statements are: (1) Government-wide financial statements which include the Statement of Net Position and the Statement of Activities. These statements provide information about the activities of the City as a whole. (2) Fund financial statements tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the City s operations in more detail than the government-wide statements by providing information about the City s most significant funds. (3) Notes to the financial statements. Reporting the City as a Whole The Statement of Net Position and the Statement of Activities (Government-wide) A frequently asked question regarding the City s financial health is whether the year s activities contributed positively to the overall financial well-being. The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets, deferred outflows, liabilities, and deferred inflows using the accrual basis of accounting, which is similar to the accounting used by most privatesector companies. All of the current year s revenues and expenses are taken into account regardless of when cash is received or paid. 5

9 These two statements report the City s net position and changes in net position. Net position, the difference between assets plus deferred outflows and liabilities plus deferred inflows, is one way to measure the City s financial health, or financial position. Over time, increases or decreases in net position is an indicator of whether the financial health is improving or deteriorating. However, it is important to consider other non-financial factors such as changes in the condition of the City s roads to accurately assess the overall health of the City. The Statement of Net Position and the Statement of Activities, present information about the following: Government activities All of the City s basic services are considered to be governmental activities, including general government, public safety, public works/streets, parks and recreation and interest on long-term debt. Sales taxes, franchise taxes, intergovernmental revenues and charges for services finance most of these activities. Proprietary activities/business type activities The City charges a fee to water, sewer and the use of the event center to cover most of the cost of the services provided. Reporting the City s Most Significant Funds Fund Financial Statements The fund financial statements provide detailed information about the most significant funds not the City as a whole. Some funds are required to be established by State law and by bond covenants. However, management establishes many other funds which aid in the management of money for particular purposes or meet legal responsibilities associated with the usage of certain taxes, grants, and other money. The City s two major kinds of funds, governmental and proprietary, use different accounting approaches as explained below. Governmental funds Most of the City s basic services are reported in governmental funds. Governmental funds focus on how resources flow in and out with the balances remaining at year-end that are available for spending. These funds are reported using an accounting method called the modified accrual accounting method, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City s general government operations and the basic services it provides. Government fund information shows whether there are more or fewer financial resources that can be spent in the near future to finance the City s programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in a reconciliation included with the Basic Financial Statements and in footnote 2. Proprietary funds When the City charges customers for the services it provides, i.e. water, sewer and event center, these services are generally reported in proprietary (aka. enterprise) funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. 6

10 GOVERNMENT-WIDE FINANCIAL ANALYSIS Net position may serve over time as a useful indicator of the City s financial position. The City s combined assets plus deferred outflows exceed liabilities plus deferred inflows by $45.86 million as of December 31, 2015 as shown in the following condensed statement of net position. Of this amount, $8.23 million is unrestricted and available to meet the City s ongoing financial obligations. By far the largest portion of net position is the investment in capital assets (net of related debt) of $37.24 million (81.2% of total net position). This amount reflects the investment in all capital assets (e.g. infrastructure, land, buildings, and equipment) less any related debt used to acquire those assets that are still outstanding. These capital assets are used to provide services to citizens; consequently, these assets are not available for future spending. Although the investment in capital assets is reported net of debt, it should be noted that the resources needed to repay this debt must be provided from other sources since capital assets themselves cannot be used to liquidate these liabilities. The City has chosen to account for its water, sewer and event center operations in a single enterprise fund which is shown as Business Activities. The following table summarizes the City s governmental and business-type net assets as of December 31, 2015 and 2014: CITY OF SALIDA, COLORADO Statement of Net Position Governmental activities Business-type activities Combined Total 12/31/ /31/ /31/ /31/ /31/ /31/2014 Current and other assets $ 6,082,711 $ 4,852,701 $ 4,610,209 $ 4,360,774 $ 10,692,920 $ 9,213,475 Capital assets 25,734,812 16,190,186 31,322,078 29,853,480 57,056,890 46,043,666 Total assets 31,817,523 21,042,887 35,932,287 34,214,254 67,749,810 55,257,141 Deferred outflows of resources 203, ,989 - Long-term liabilities outstanding 6,683,123 1,491,484 13,937,001 14,502,134 20,620,124 15,993,618 Other liabilities 764, , , ,950 1,466, ,041 Total liabilities 7,448,026 2,005,575 14,638,627 14,926,084 22,086,653 16,931,659 Deferred inflows of resources 5, ,270 - Net position: Net investment in capital assets 19,852,447 14,698,702 17,385,077 15,351,346 37,237,524 30,050,048 Restricted 394,208 2,794, , ,208 3,708,324 Unrestricted 4,321,561 1,543,801 3,908,583 3,023,309 8,230,144 4,567,110 Total net position $ 24,568,216 $ 19,037,312 $ 21,293,660 $ 19,288,170 $ 45,861,876 $ 38,325,482 An additional portion of net position, $394,208, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position, $8,230,144 (17.9% of total net position), may be used to meet the government s ongoing obligations to citizens and creditors. 7

11 Governmental Activities The cost of all Governmental activities this year was $6.57 million. As shown in the Changes in Net Position statement below. $1,174,932 of this cost was paid for by those who directly benefited from the programs. $1,810,262 was subsidized by grants received from other governmental organizations for both capital and operating activities. Overall governmental program revenues, including intergovernmental aid and fees for services were $2,985,194. General taxes, investment earnings and other revenues totaled $7,349,987. The City s programs include: General Government, Public Safety, Public Works/Streets, and Parks & Recreation. Each program s revenues and expenses are presented below. CITY OF SALIDA, COLORADO Changes in Net Position Governmental activities Business-type activities Combined Total 12/31/ /31/ /31/ /31/ /31/ /31/2014 Revenues: Program revenues: Charges for services $ 1,174,932 $ 573,556 $ 3,045,920 $ 3,025,240 $ 4,220,852 $ 3,598,796 Operating grants and contributions 73, ,577 44, , ,577 Capital grants and contributions 1,736, ,965 2,536,446 1,530,286 4,272,757 1,731,251 General revenues: Taxes 7,328,619 6,686, ,328,619 6,686,480 Investment earnings 10, ,256 - Other revenue 11,112 13,844 9,008 10,782 20,120 24,626 Total revenues 10,335,181 7,604,422 5,635,853 4,566,308 15,971,034 12,170,730 Expenses: General government 1,175,090 1,414, ,175,090 1,414,429 Public safety 2,578,402 2,529, ,578,402 2,529,710 Public works/streets 1,275,564 1,109, ,275,564 1,109,882 Parks and recreation 1,241, , ,241, ,611 Interest on long-term debt 299,103 52, , , ,241 Water - - 1,405,023 1,239,916 1,405,023 1,239,916 Sewer 2,014,136 1,891,872 Event center , , , ,950 Total expenses 6,569,323 6,055,522 3,850,466 3,963,089 8,405,653 8,126,739 Increase (Decrease) in net position before transfers 3,765,858 1,548,900 1,785, ,219 5,551,245 2,152,119 Transfers (220,103) (220,866) 220, , Net position, beginning 19,037,312 17,709,278 19,288,170 18,464,085 38,325,482 36,173,363 Prior period adjustment 1,985, ,985,149 - Net position, ending $ 24,568,216 $ 19,037,312 $ 21,293,660 $ 19,288,170 $ 45,861,876 $ 38,325,482 Total resources available during the year to finance governmental operations were $29.37 million consisting of Net position at January 1, 2015 of $19.04 million, program revenues of $2,985,194 and General Revenues of $7,349,987. Total Governmental Activity expenses, including depreciation of $1,192,560, were $6,569,323; thus Governmental Net Position was increased by $5,530,904 to $24.57 million after adjusting for the prior period adjustment of $1.99 million. 8

12 The following graph compares program expenses to program revenues (charges for services and grants): $3,000 Expenses and Program Revenues - Governmental Activities (in Thousands) $2,500 $2,000 Expenses Revenues $1,500 $1,000 $500 $- General government Public safety Public works/streets Culture, Parks and recreation Revenues reported above include charges for services and grant revenues directly related to the respective programs. As noted in the chart below, these revenues make up 11.4% and 17.5% of the City s total governmental revenues for the current year. Shortfalls are made up by taxes and other revenues. Revenue By Source - Governmental Activities Other revenues 0.2% Charges for services 11.4% Operating grants & contributions 0.7% Capital grants & contributions 16.8% Taxes 70.9% 9

13 Business Type Activities Net position of the Business Type activities at December 31, 2015, as reflected in the Statement of Net Position was $21.3 million. The cost of providing all Proprietary (Business Type) activities this year was $3,850,466. As shown in the statement of Changes in Net Position, the amounts paid by users of the system were $3,045,920 and there was $2,580,925 subsidized by capital grants and contributions. There were no investment earnings and other revenues were $9,008. The Net Position increased by $2,005,490. Expenses and Program Revenues - Business- type Activities 2,500,000 2,000,000 Expenses Program Revenues 1,500,000 1,000, ,000 - Water Sewer Event center Revenue By Source - Business-type Activities Water 27.0% Operating & Capital Grants 45.9% Event Center 3.9% Sewer 23.2% 10

14 Financial Analysis of the Government s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Governmental funds: The focus of the City s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City s governmental funds reported combined ending fund balances of $5,082,606 an increase of $436,289 in comparison with the prior year. Unassigned fund balance of $3,297,580, which is available for spending at the government s discretion is approximately 65% of the total fund balance. The remainder of fund balance is restricted, committed, or assigned to indicate that it is not available for new spending because it has already been set aside to pay for specific services including emergency reserves (TABOR) of $271,324 and committed for capital outlay of $1,096,250. The City has one major governmental fund, the General Fund, which is the primary operating fund for the City. At December 31, 2015, unassigned fund balance in the General fund was $3,297,580. As a measure of the General fund s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Total unassigned fund balance represents 37.6% and total fund balance represents 53.7% of total General fund expenditures. The fund balance of the City s General fund increased by $420,337 for the year ended December 31, Proprietary funds: The City s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Net position and changes in net position for the year-ended December 31, 2015 and 2014 for the City s enterprise funds (Water-Sewer-Event Center) are as follows: Unrestricted net position $ 3,908,583 $ 3,023,309 Total net position 21,293,660 19,288,170 Change in net position 2,005, ,085 The main reasons for the increase in net income were due to the capital contributions, capital grants and transfers in increased over Budgetary Highlights General fund revenues of $9,414,228 were less than budgeted revenues of $9,518,300 by $104,072. The most significant factor contributing to this difference is related to a shortfall of state grants of $109,228. Actual expenditures were $1,385,612 less than budgeted expenditures mainly due to capital projects which were deferred until

15 The General fund unassigned balance at December 31, 2015 equals 37.6% of the annual operating expenses. The proprietary fund unrestricted balance at December 31, 2015 equals 112.7% of the annual operating expenses. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The capital assets of the City are those assets that are used in performance of City functions including infrastructure assets. Capital Assets include equipment, buildings, land, system improvements, park facilities and roads. At the end of 2015, net capital assets of the government activities totaled $25.73 million and the net capital assets of the business-type activities totaled $31.32 million. The most significant governmental capital addition was for the locker room project that is in construction in progress at the pool for $485,681. The most significant business-type capital addition was for the H Street water lines of $309,184. Depreciation on capital assets for both government activities and businesstype activities is recognized in the Government-Wide financial statements. (See note 6 to the financial statements.) Debt At year-end, the City had $6,683,123 in governmental type debt, and $13,937,001 in proprietary debt. During 2015, the City s total debt decreased by $797,243 as a result of regularly scheduled debt service payments. Debt per capita based on an estimated population of 5,400 is $3,819. NEXT YEAR S BUDGET AND ECONOMIC FACTORS In considering the City budget for fiscal year 2016, the City Council and management were cautious as to the growth of revenues and expenditures due to an uncertain economy. City officials primary goals in 2016 include employee retention, building cash reserves, finding ways to fund identified water system capital improvements, conducting an engineering analysis to repair certain local streets and keeping costs affordable for local taxpayers. Overall in 2016 the City s operating expenditures are budgeted to maintain the 2015 level of service without significant increases in taxes or fees. CONTACTING THE CITY S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City s finances and to show the City s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City Administrator or Finance Director, 448 East First Street, Suite 112, Salida, Colorado or call (719)

16 BASIC FINANCIAL STATEMENTS 13

17 Statement of Net Position December 31, 2015 Governmental Business-type Activities Activities Total Assets Cash and cash equivalents $ 3,504,194 $ 2,511,454 $ 6,015,648 Receivables (net of allowance) 2,311, ,637 3,291,492 Inventories - 2,622 2,622 Prepaids 10,846 22,369 33,215 Temporarily restricted assets: Cash and cash equivalents - 1,094,127 1,094,127 Net pension asset 255, ,816 Capital assets not being depreciated: Land and right-of-way 3,783,408 76,027 3,859,435 Water rights - 1,391,521 1,391,521 Construction in progress 538, ,659 1,120,762 Capital assets being depreciated, net of accumulated depreciation 21,413,301 29,271,871 50,685,172 Total assets 31,817,523 35,932,287 67,749,810 Deferred Outflows of Resources Deferred outlows related to pensions 203, ,989 Liabilities Accounts payable and other current liabilities 672, ,959 1,129,836 Retainage Payable - 20,242 20,242 Interest payable 20,614 82, ,976 Deposits payable 47,536-47,536 Unearned revenue 23, , ,939 Noncurrent liabilities: Due within one year 264, , ,858 Due in more than one year 6,418,481 13,408,785 19,827,266 Total liabilities 7,448,026 14,638,627 22,086,653 Deferred Inflows of Resources Deferred inflows related to pensions 5,270-5,270 Net Position Net investment in capital assets 19,852,447 17,385,077 37,237,524 Restricted for: Emergencies 271, ,324 Public safety 3,690-3,690 Parks and recreation 119, ,194 Unrestricted 4,321,561 3,908,583 8,230,144 Total Net Position $ 24,568,216 $ 21,293,660 $ 45,861,876 The accompanying notes are an integral part of the financial statements. 14

18 Statement of Activities For the Year Ended December 31, Program Revenues Net (Expense) Revenue and Changes in Net Assets Operating Capital Charges for Grants & Grants & Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental activities: General government $ 1,175,090 $ 185,753 $ - $ 197,247 $ (792,090) $ - $ (792,090) Public safety 2,578, ,168 73,951 - (2,388,283) - (2,388,283) Public works/streets 1,275,564 29,631-1,487, , ,068 Culture, Parks and recreation 1,241, ,380-52,063 (345,721) - (345,721) Interest on long-term debt 299, (299,103) - (299,103) Total governmental activities 6,569,323 1,174,932 73,951 1,736,311 (3,584,129) - (3,584,129) Business-type activities: Water 1,405,023 1,521,749-1,319,243-1,435,969 1,435,969 Sewer 2,014,136 1,304,101-1,217, , ,168 Steamplant Event Center 431, ,070 44, (166,758) (166,758) Total business-type activities 3,850,466 3,045,920 44,479 2,536,446-1,776,379 1,776,379 Total Primary Government 10,419,789 4,220, ,430 4,272,757 (3,584,129) 1,776,379 (1,807,750) General Revenues: Taxes: Sales taxes 4,859,598-4,859,598 Sales taxes - County 1,586,472-1,586,472 Franchise taxes 334, ,172 Lodging occupation taxes 205, ,150 Other taxes 343, ,227 Unrestricted investment earnings 10,256 9,008 19,264 Miscellaneous 11,112-11,112 Transfers (220,103) 220,103 - Total general revenues & transfers 7,129, ,111 7,358,995 Change in net position 3,545,755 2,005,490 5,551,245 Net position - beginning 19,037,312 19,288,170 38,325,482 Restatement adjustment 1,985,149-1,985,149 Net position - ending $ 24,568,216 $ 21,293,660 $ 45,861,876 The accompanying notes are an integral part of the financial statements.

19 Balance Sheet Governmental Funds December 31, 2015 Nonmajor Total General Governmental Governmental Fund Funds Funds Assets Cash and cash equivalents $ 3,131,723 $ 372,471 $ 3,504,194 Receivables, net: Taxes receivable 1,292,388-1,292,388 Accounts receivable 56,082-56,082 Intergovernmental 963, ,385 Prepaid items 10,846-10,846 Total assets $ 5,454,424 $ 372,471 $ 5,826,895 Liabilities Accounts payable $ 346,476 $ - $ 346,476 Retainage payable 211, ,278 Accrued wages and benefits 92,149-92,149 Accrued liabilities 22,974-22,974 Customer deposits 47,536-47,536 Unearned revenue 23,876-23,876 Total liabilities 744, ,289 Fund Balances Nonspendable: Prepaid items 10,846-10,846 Restricted for: Public safety 3,690-3,690 Parks and recreation - 119, ,194 Emergencies 271, ,324 Committed to: Capital outlay 1,096,250-1,096,250 Community & economic development 5, , ,603 Parks and recreation 16,264-16,264 Assigned to: Employees 8,855-8,855 Unassigned 3,297,580-3,297,580 Total fund balances 4,710, ,471 5,082,606 Total liabilities, deferred inflows of resources, and fund balances $ 5,454,424 $ 372,471 $ 5,826,895 The accompanying notes are an integral part of the financial statements. 16

20 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position December 31, 2015 Total fund balances - governmental funds $ 5,082,606 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds. Governmental capital assets 35,239,544 Accumulated depreciation (9,504,732) Long-term liabilities, are not due and payable in the current period and therefore are not reported in the funds. Capital leases (1,378,614) Loan payable (4,503,751) Interest payable (20,614) Net pension liability (760,158) Compensated absences (40,600) Deferred outflows and inflows of resources related to pensions and net pension assets are applicable to future reporting periods and therefore are not reported in the funds. Deferred outflows 203,989 Deferred inflows (5,270) Net pension asset 255,816 25,734,812 (6,703,737) 454,535 Total net position - governmental activities $ 24,568,216 The accompanying notes are an integral part of the financial statements. 17

21 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds For the Year Ended December 31, 2015 Nonmajor Total General Governmental Governmental REVENUES Fund Funds Funds Taxes $ 5,398,920 $ - $ 5,398,920 Licenses and permits 23,538-23,538 Intergovernmental 3,020,464 52,063 3,072,527 Charges for services 612, ,407 Fines and forfeitures 50,192-50,192 Interest revenue 10, ,256 Other revenues 298, , ,104 Total Revenues 9,414, ,716 9,868,944 EXPENDITURES Current: General government 988,892 53,015 1,041,907 Public safety 2,509,421-2,509,421 Public works/streets 737, ,210 Culture, parks and recreation 902, ,875 Capital outlay 3,473,558 50,234 3,523,792 Debt Service: Principal 112, , ,677 Interest and fiscal charges 48, , ,670 Total Expenditures 8,773, ,764 9,212,552 Excess of Revenues Over (Under) Expenditures 640,440 15, ,392 Other Financing Sources (Uses): Transfers out (220,103) - (220,103) Total Other Financing Sources (Uses) (220,103) - (220,103) Net change in fund balances 420,337 15, ,289 Fund balances, beginning of year 4,289, ,519 4,646,317 Fund balances, end of year $ 4,710,135 $ 372,471 $ 5,082,606 The accompanying notes are an integral part of the financial statements. 18

22 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds To the Statement of Activities For the Year Ended December 31, 2015 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ 436,289 Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the difference between depreciation expense and capital outlays in the current period. Capital outlay 3,523,792 Depreciation expense (1,192,560) Governmental funds do not report contributions and trade-in of capital assets as revenue, unless the assets will be held for sale. However, in the statement of activities, trade-ins and the donation of capital assets are reported as revenue. Governmental funds report the gross proceeds from the sale of capital assets as revenue. However, in the statement of activities, the gain on the sale of capital assets is reported net of its net book value. 2,331, ,236 (2,817) Repayment of long term debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 212,814 Accrued Interest for Long-term debt is not reported as an expenditure for the current period while it is recorded in the statement of activities. (18,433) Pension contributions are reported as expendituers in the governmental funds when made. However, they are reported as deferred outflows of resources in the Statement of Net Position because the net pension liability is maeasured a year before the City's report date. Pension expense, which is the change in the net pension liability adjusted for changes in deferred outflows and inflows of resources related topensions, is reported in the Statement of Activities. Pension contributions 171,902 Pension expense (77,102) Compensated absences expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. 94,800 25,634 Change in net position of governmental activities $ 3,545,755 The accompanying notes are an integral part of the financial statements. 19

23 Statement of Net Position Proprietary Funds December 31, 2015 Steamplant Combined Water Sewer Event Center Total Assets Current Assets: Cash $ 322,118 $ 2,176,328 $ 13,008 $ 2,511,454 Receivables (net of allowance) 354, ,827 12, ,326 Due from other governments 30, , ,311 Inventory - - 2,622 2,622 Prepaids 22, ,369 Total current assets 729,904 2,757,717 28,461 3,516,082 Noncurrent assets: Restricted cash 564, ,401-1,094,127 Capital assets: Land 36,364 39,663-76,027 Water rights 1,391, ,391,521 Construction in progress 23, ,577 16, ,659 Plant and equipment 14,306,480 24,795,016 1,858,264 40,959,760 Accumulated depreciation (5,465,273) (5,622,796) (599,820) (11,687,889) Total capital assets 10,292,507 19,754,460 1,275,111 31,322,078 Total noncurrent assets 10,857,233 20,283,861 1,275,111 32,416,205 Total Assets $ 11,587,137 $ 23,041,578 $ 1,303,572 $ 35,932,287 Liabilities Current Liabilities: Accounts payable $ 31,621 $ 374,635 $ 4,802 $ 411,058 Accrued Wages and Benefits 11,238 11,457 4,736 27,431 Accrued liabilities 11,716 3,016 3,738 18,470 Retainage payable 4,647 15,595-20,242 Interest payable 7,721 74,641-82,362 Loans and Bonds payable - current 337, , ,216 Unearned revenue - 116,000 26, ,063 Total current liabilities 404, ,831 39,339 1,229,842 Noncurrent liabilities: Long-term debt (net of current portion): Loans payable 60,796 11,280,614-11,341,410 Bonds payable 2,067, ,067,375 Total noncurrent liabilities 2,128,171 11,280,614-13,408,785 Total liabilities 2,532,843 12,066,445 39,339 14,638,627 Net Position Net investment in capital assets 7,826,607 8,283,359 1,275,111 17,385,077 Unrestricted 1,227,687 2,691,774 (10,878) 3,908,583 Total net position $ 9,054,294 $ 10,975,133 $ 1,264,233 $ 21,293,660 The accompanying notes are an integral part of the financial statements. 20

24 Statement Revenues, Expenses, and Changes in Net Position Proprietary Funds For the Year Ended December 31, 2015 Operating Revenues Steamplant Combined Water Sewer Event Center Total Charges for services $ 1,521,425 $ 1,304,100 $ 214,474 $ 3,039,999 Other revenues ,596 5,921 Total operating revenues 1,521,749 1,304, ,070 3,045,920 Operating Expenses Administrative 182, , ,797 Operations 435, , ,756 1,440,799 Public works 177,619 95, ,994 Depreciation 515, ,374 65,551 1,454,976 Total operating expenses 1,310,398 1,725, ,307 3,467,566 Operating income (loss) 211,351 (421,760) (211,237) (421,646) Non-Operating Revenues (Expenses) Donations ,479 44,479 Interest income 1,976 7,032-9,008 Interest expense and fiscal charges (94,625) (288,275) - (382,900) Total non-operating revenue (expense) (92,649) (281,243) 44,479 (329,413) Income (loss) before contributions and transfers 118,702 (703,003) (166,758) (751,059) Capital Contributions, Grants and Transfers: Development fees and other capital revenue 523, , ,352 Capital grants 572, ,227-1,224,891 Capital contributions 223, , ,203 Transfers in 2,939 2, , ,103 Change in net position 1,440, ,511 48,095 2,005,490 Net position, beginning of year 7,613,410 10,458,622 1,216,138 19,288,170 Net position, end of year $ 9,054,294 $ 10,975,133 $ 1,264,233 $ 21,293,660 The accompanying notes are an integral part of the financial statements. 21

25 Statement of Cash Flows Proprietary Funds For the Year Ended December 31, 2015 Steamplant Combined Water Sewer Event Center Total Cash Flows From Operating Activities: Cash received from customers, service fees $ 1,585,340 $ 1,408,472 $ 223,806 $ 3,217,618 Cash received from customers, other ,596 5,921 Cash paid to suppliers (404,738) (37,526) (124,308) (566,572) Cash paid to employees (471,912) (448,398) (238,905) (1,159,215) Net cash flows from operating activities 709, ,549 (133,811) 1,497,752 Cash Flows From Noncapital Financing Activities: Transfers from/(to) other funds 2,939 2, , ,103 Net cash flows from noncapital financing activities 2,939 2, , ,103 Cash Flows From Capital and Related Financing Activities: Purchase of capital assets (1,560,725) (882,093) (113,646) (2,556,464) Principal paid on long-term debt (312,230) (252,903) - (565,133) Interest paid (95,694) (291,061) - (386,755) Debt proceeds Development fees and other capital revenue 523, ,931 44,479 Capital grants 755, ,858-1,071,903 Net cash flows from capital and related financing activities (690,183) (690,268) (69,167) (2,436,449) Cash Flows From Investing Activities: Interest on investments 1,976 7,032-9,008 Net change in cash and cash equivalents 23, ,624 11,875 (709,586) Cash and cash equivalents, beginning of year 863,098 2,464,105 1,133 3,328,336 Cash and Cash Equivalents, End of Year $ 886,844 $ 2,705,729 $ 13,008 $ 2,618,750 Reconciliation of operating income to net cash provided by operating activities: Net operating income/(loss) $ 211,351 $ (421,760) $ (211,237) $ (421,646) Adjustments to reconcile net income/(loss) to net cash provided by operating activities: Depreciation/amortization 515, ,374 65,551 1,454,976 Changes in operating assets and liabilities: (Increase)/decrease in receivables 63, ,372 (5,820) 180,467 (Increase)/decrease in inventory - - 1,582 1,582 (Increase)/decrease in prepaids (1,250) - - (1,250) Increase/(decrease) in payables (73,823) 362,845 (3,155) 285,867 Increase/(decrease) in accrued liabilities (6,230) 2,718 4, Increase/(decrease) in unearned revenue - (18,000) 15,152 (2,848) Net cash flows from operating activities $ 709,014 $ 922,549 $ (133,811) $ 1,497,752 Supplemental Schedule of Non-cash Financing and Investing Activities: Capital contributions - system improvements $ 223,158 $ 146,045 $ - $ 369,203 The accompanying notes are an integral part of the financial statements. 22

26 Notes to the Financial Statements December 31, 2015 Note 1. Summary of Significant Accounting Policies Description of Government-Wide Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. All fiduciary activities are reported only in the fund financial statements. Governmental activities, which normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are reported separately from business-type activities, which rely to a significant extent on fees and charges to external customers for support. Likewise, when applicable, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. History and Function of the Organization The City of Salida, Colorado (the City) is organized as a statutory city under the constitution of the State of Colorado. The City operates under a council-mayor form of government and provides the following services: public safety (fire and police), municipal court, public works, recreation, public improvements, Community Development (planning and zoning), culture, water and sewer, and general administrative services. Reporting Entity The City is organized under Colorado statutes for Cities. Management of the City is independent of other state or local governments. Except for the lodging occupation tax, the State of Colorado and the County Treasurer collect all taxes for the City, but exercise no control over its expense/expenditure. The membership of the Council consists of six members and a mayor elected by the public. The Council has broad control responsibilities including the approval of the annual budget, establishment of a system of accounting and budgetary control, acquisition and disposition of property, and the establishment, organization and operation of City utilities. The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. 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 following is a brief review of the component units included in defining the City s reporting entity. There are no discretely presented component units and one blended component unit. 23

27 Notes to the Financial Statements December 31, 2015 Note 1. Summary of Significant Accounting Policies, Continued The following blended component unit is included within the reporting entity and reported as special revenue fund with the governmental fund financial statements: The City formed the Natural Resource Center (NRC) Development Corporation, a Colorado not-for-profit corporation in 2009 for the sole purpose of developing and operating a single, multi-agency campus of resource management agencies in the City of Salida. All monies realized by the NRC are to be used exclusively for the acquisition, construction, operation and maintenance of public improvements, including payment of obligations of the NRC in connection therewith. The board of directors are appointed by the City Council and any director may be removed at any time by the City Council with or without cause. The City donated land worth $2.2 million to the NRC in Basis of Presentation Government-Wide Financial Statements While separate government-wide and fund financial statements are presented, they are interrelated. The governmental activities column incorporates data from governmental funds while business-type activities incorporate data from the government s enterprise funds. Separate financial statements are provided for governmental funds and proprietary funds. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Basis of Presentation Fund Financial Statements The fund financial statements provide information about the government s funds. Separate statements for each fund category governmental and proprietary are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. The City reports the following major governmental fund: The General Fund is the City s primary operating fund. It accounts for all financial resources of the general government, except for those required to be accounted for in another fund. The City reports the following major enterprise funds: The Water Fund accounts for the activities related to the City s water wells, treatment facilities and distribution operations. The Sewer Fund accounts for the activities related to the City s wastewater collection and treatment operations. 24

28 Notes to the Financial Statements December 31, 2015 Note 1. Summary of Significant Accounting Policies, Continued During the course of operations the government has activity between funds for various purposes. Any residual balances outstanding at year end are reported as due from/to other funds and advances to/from other funds. While these balances are reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Balances between the funds included in governmental activities (i.e., the governmental funds) are eliminated so that only the net amount is included as internal balances in the governmental activities column. Similarly, balances between the funds included in business-type activities (i.e., the enterprise funds) are eliminated so that only the net amount is included as internal balances in the business-type activities column. Further, certain activity occurs during the year involving transfers of resources between funds. In fund financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund financial statements, certain eliminations are made in the preparation of the government-wide financial statements. Transfers between the funds included in governmental activities are eliminated so that only the net amount is included as transfers in the governmental activities column. Similarly, balances between the funds included in business-type activities are eliminated so that only the net amount is included as internal balances in the business-type activities column. Measurement Focus and Basis of Accounting The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. Measurement focus indicates the type of resources being measured such as current financial resources or economic resources. The basis of accounting indicates the timing of transactions or events for recognition in the financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related 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 governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources. Sales taxes, franchise taxes, other taxes, 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. 25

29 Notes to the Financial Statements December 31, 2015 Note 1. Summary of Significant Accounting Policies, Continued Entitlements are recorded as revenues when all eligibility requirements are met, including any time requirements, and the amount is received during the period or within the availability period for this revenue source (within 60 days of yearend). Expenditure-driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the amount is received during the period or within the availability period for this revenue source (within 60 days of yearend). All other revenue items are considered to be measurable and available only when cash is received by the government. The proprietary funds are reported using the economic resources measurement focus and the accrual basis of accounting. Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance Cash and cash equivalents The City pools cash resources of its various funds in order to facilitate the management of cash. The City s cash and cash equivalents are considered to be cash-on-hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition for purposes of this note and the statement of cash flows. Receivables and Payables Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as due to or due from other funds. All trade accounts receivable in the enterprise funds are normally shown net of an allowance for uncollectible accounts. However, due to the nature of the accounts receivable in both the enterprise funds and governmental funds, management does not consider an allowance for uncollectible accounts receivable necessary or material. Therefore, no allowance for uncollectible accounts receivable is presented. Inventories The costs of governmental fund-type inventories are recorded as expenditures when purchased rather than when consumed. Inventories for business type activities consist of various parts and supplies and are valued at cost using the first-in/first-out (FIFO) method. However, the total cost of inventory on hand for the Water and Sewer fund is deemed immaterial and has not been recorded in the financial statements. Capital Assets Capital assets, which include; property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activity columns in the government-wide financial statements. Capital assets are defined by the City as assets with an individual cost of $5,000 or more and an estimated useful life of three years or more. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. 26

30 Notes to the Financial Statements December 31, 2015 Note 1. Summary of Significant Accounting Policies, Continued Donated capital assets are recorded at estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Property, plant and equipment are depreciated using the straight-line method over the following estimated useful lives: Building and improvements 20 to 50 years Utility systems and improvements 10 to 100 years Furniture, equipment and vehicles 3 to 30 years Infrastructure - Streets and sidewalks 15 to 30 years The City began recording and depreciating infrastructure in The City has not retroactively added infrastructure acquired prior to January 1, Deferred outflows/inflows of resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City has one type of item that qualifies for reporting in this category. It is pension related items reported on the government-wide financial statement. See Note 9 for more information. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has one type of item that qualifies for reporting in this category. It is pension related items reported on the government-wide financial statement. See Note 9 for more information. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan s fiduciary net position of the Fire and Police Pension Association of Colorado (FPPA) and additions to/deductions from the plan s fiduciary net position have been determined on the same basis as they are reported by FPPA. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. 27

31 Notes to the Financial Statements December 31, 2015 Note 1. Summary of Significant Accounting Policies, Continued Net position flow assumption Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City s policy to consider restricted net position to have been depleted before unrestricted net position is applied. Fund balance flow assumptions Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a flow assumption must be made about the order in which the resources are considered to be applied. It is the City s policy to consider restricted fund balance to have been depleted before using any of the components of unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund balance is applied last. Fund balance policies Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The government itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). The committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the government s highest level of decision-making authority. The City Council is the highest level of decision-making authority for the City that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes but do not meet the criteria to be classified as committed. The City Manager is authorized to assign amounts to a specific purpose in accordance with the City s budget policy. The City Council may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. 28

32 Notes to the Financial Statements December 31, 2015 Note 1. Summary of Significant Accounting Policies, Continued Revenues and expenditures/expenses Program revenues Amounts 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 segment and 2) grants and contributions (including special assessments) that are restricted to meeting the operational or capital requirements of a particular function or segment. All taxes, including those dedicated for specific purposes, and other internally dedicated resources are reported as general revenues rather than as program revenues. Compensated Absences City employees are entitled to certain vacation, sick leave and other compensated absences based on their length of employment. Employees are allowed to accumulate benefits up to predetermined maximums and may be compensated for these accumulated benefits either through paid time off or, in the case of vacation, are paid at termination or retirement. For governmental funds, amounts of vested or accumulated vacation and sick leave that are not expected to be liquidated with expendable available financial resources are reported as liabilities in the government-wide statement of net position and as expenses in the government-wide statement of activities. No expenditures are reported for these amounts in the fund financial statements. Vested or accumulated vacation and sick leave in the proprietary fund are recorded as an expense and a liability of that fund as the benefits accrue to the employees and are thus recorded in both the government-wide financial statements and the individual fund financial statements, if deemed material. Proprietary funds operating and nonoperating revenues and expenses Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principal ongoing operations. The principal operating revenues of the water-sewer-refuse fund 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 nonoperating revenues and expenses. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. 29

33 Notes to the Financial Statements December 31, 2015 Note 1. Summary of Significant Accounting Policies, Continued New pronouncements For the year ended June 30, 2015, the City implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. GASB Statement Nos. 68 and 71 establish standards for measuring and recognizing net pension assets and liabilities, deferred outflows of resources, deferred inflows of resources, and expenses/expenditures related to pension benefits provided through defined benefit pension plans. In addition, Statement No. 68 requires disclosure of information related to pension benefits. Implementation of these new Statements resulted in a restatement of beginning net position in the City s government-wide and proprietary fund financial statements (see Note 13). Note 2. Reconciliation of Government-Wide and Fund Financial Statements The governmental fund balance sheet includes a reconciliation between total governmental fund balances and the net position of governmental activities as reported in the government-wide statement of nets position. These differences primarily result from the long-term economic focus of the statement of net position versus the current financial resources focus of the governmental fund balance sheets. The details of these differences are reported in the reconciliation on page 23. The governmental fund statement of revenues, expenditures, and changes in fund balance includes a reconciliation between net changes in fund balances-total governmental funds and changes in net position of governmental activities as reported in the government-wide statement of activities. These differences are the result of converting from the current resources measurement focus and modified accrual basis for governmental fund statements to the economic resources measurement focus and full accrual basis used for government-wide statements. The details of these differences are reported in the reconciliation on page 25. Note 3. Stewardship, Compliance, and Accountability Stewardship, compliance, and accountability are key concepts in defining the responsibilities of the City. The use of budgets and monitoring of equity status facilitate the City s compliance with legal requirements. Budgets and Budgetary Accounting Annual budgets are adopted on a basis consistent with US GAAP for all governmental funds. The enterprise fund adopts a budget on a non-us GAAP basis wherein depreciation is not budgeted; capital expenditures and principal payments on capital debt are budgeted and recorded as expenditures. Annual appropriated budgets are adopted for all funds. 30

34 Notes to the Financial Statements December 31, 2015 Note 3. Stewardship, Compliance, and Accountability, Continued The City confirms to the following procedures, in compliance with CRS, Title 29, Article 1, in establishing the budgetary data reflected in the financial statements: Budgets are required by state law for all funds. By October 15, the City Administrator submits to the City Council a proposed budget for the fiscal year commencing the following January 1. The budget includes proposed expenditures and the means of financing them. The budget provides a complete financial plan of all City funds and activities for the ensuing fiscal year indicating anticipated revenues, proposed operating and capital expenditures, a provision for contingencies, and anticipated net surplus or deficit for the ensuing fiscal year. A public hearing on the proposed budget is held by the Council to obtain taxpayer comments. Prior to December 31, the budget is adopted by formal resolution. Expenditures may not legally exceed appropriations at the fund level. The City Administrator is authorized to transfer budgeted amounts between departments of any budgeted fund; however, any revisions that alter the total expenditures of any budgeted fund must be approved by the City Council. Budgetary appropriations lapse at the end of each year. Budget amounts included in the financial statements report both the original and final amended budget. The City adopted various supplemental appropriations during the year and therefore there were various revisions made to the original budget during the year. Expenditures over Appropriations Per C.R.S (2), appropriations are made by fund or spending agency (e.g. department) within a fund at the discretion of the City Council. The Council by Resolution has made appropriations at the fund level and thus, expenditures may not legally exceed budgeted appropriations at the fund level. The individual Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual reports as listed in the table of contents are reported on pages 66 to 69 and 73 to 79. There were two nonmajor funds which incurred an excess of expenditures/expenses over appropriations for the year ended December 31, Both funds excess expenditures were less than $5,500. Tax, Spending and Debt Limitations Colorado voters passed an amendment to the State Constitution, Article X, Section 20, which has several limitations, including revenue raising, spending abilities, and other specific requirements of state and local governments, excluding enterprises. The TABOR Amendment requires, with certain exceptions, advance voter approval for any new tax, tax rate increase, mil levy above that for the prior year, extension of any expiring tax, or tax policy change directly causing a net tax revenue gain to any local government. 31

35 Notes to the Financial Statements December 31, 2015 Note 3. Stewardship, Compliance, and Accountability, Continued Future spending and revenue limits are determined based on the prior year s fiscal year spending adjusted for allowable increases based upon inflation and local growth. Fiscal year spending is generally defined as expenditures plus reserve increases with certain exceptions. Revenue in excess of the fiscal year spending limit must be refunded unless the voters approve retention of such revenue. Except for refinancing bonded debt at a lower interest rate or adding new employees to existing pension plans, TABOR requires advance voter approval for the creation of any multiple-fiscal year debt or other financial obligation unless adequate present cash reserves are pledged irrevocably and held for payments in all future fiscal years. The Amendment requires that an emergency reserve be maintained at three percent of fiscal year spending (excluding bonded debt service). A portion of the General Fund s fund balance is classified as restricted for emergencies as required by the Amendment. The City is not allowed to use the emergency reserves to compensate for economic conditions, revenue shortfalls, or salary or benefit increases. The City has reserved $271,324 of the December 31, 2015 fund balance in the General fund for this purpose. In November 1993, an election question was put before and approved by the Citizens of Salida. The ballot question allowed the City to retain the ability to collect and retain certain revenues generated without any increase in any tax rate and expenditures and revenues on debt service, municipal operations and capital projects without the limitation of the Amendment. The City s management believes it is in compliance with the financial provisions of TABOR. However, TABOR is complex and subject to judicial interpretation. Debt Covenants See supplementary information on page 80 for compliance with debt covenants. Note 4. Deposits and Investments A summary of cash and investments as shown on the statement of net position follows: Cash on hand $ 2,000 Cash in bank 276,438 Colorado Trust 5,157,663 Investments 1,673,674 Total cash and investments $ 7,109,775 Cash and cash equivalents $ 6,015,648 Restricted cash 1,094,127 $ 7,109,775 32

36 Notes to the Financial Statements December 31, 2015 Note 4. Deposits and Investments, Continued Deposits Custodial Credit Risk For deposits this is the risk that in the event of a bank failure, the government s deposit may not be returned to it. The City does not have a formal policy for custodial credit risk; however, the Colorado Public Deposit Protection Act (PDPA) requires that all units of local government deposit cash in eligible public depositories; eligibility is determined by state regulators. Amounts on deposit in excess of federal insurance levels must be collateralized. The eligible collateral is determined by the PDPA. The PDPA allows the institution to create a single collateral pool for all public funds. The pool is to be maintained by another institution or held in trust for all the uninsured public deposits as a group. The market value of the collateral must be equal to or exceed 102% of the aggregate uninsured deposits. Collateral in the pool is considered to be equal to depository insurance pursuant to definitions listed in GASB Statement No. 40. At December 31, 2015 cash on hand was $2,000 and the carrying amount of the City s deposits was $23,161 and the carrying amount of the NRC s deposits was $253,277. As of December 31, 2015 the bank balance of the City s deposits was $543,309 of which $250,000 was insured by federal depository insurance and $293,309 was uninsured but collateralized by the PDPA as noted above. As of December 31, 2015 the bank balance of the NRC s deposits was $253,277 of which $250,000 was insured by federal depository insurance and $3,277 was uninsured. Investments Colorado statutes specify investment instruments meeting defined rating and risk criteria in which local government entities may invest. Authorized investments include obligations of the United States and certain U.S. government agency securities; certain international agency securities; general obligation and revenue bonds of U.S. local government entities; bankers acceptances of certain banks; commercial paper; local government investment pools; written repurchase agreements collateralized by certain authorized securities; certain money market funds; and, guaranteed investment contracts. The City s investment policy follows Colorado statutes. At December 31, 2015 the City s investments included certificates of deposit, money market mutual funds, U.S. Treasury securities and funds held in the Colorado Government Liquid Asset Trust (COLOTRUST). Credit Fair Ratings Weighted Average Value S&P Maturity Money market accounts $ 18,560 N/A Colorado Trust 5,157,663 AAAm less than 1 year U.S. Treasury securities 99,678 N/A less than 1 year U.S. Treasury securities 98,878 N/A 1 to 5 years U.S. Treasury securities 879,834 AA+ 1 to 5 years Certificates of deposit 576,724 N/A 1 to 5 years Total Fair Value $ 6,831,337 33

37 Notes to the Financial Statements December 31, 2015 Note 4. Deposits and Investments, Continued The COLOTRUST is an investment vehicle established for local government entities in Colorado to pool surplus funds. COLOTRUST operates similarly to a money market fund and each share is equal in value to $1.00. Investments of COLOTRUST consist of U.S. Treasury bills, notes and note strips and repurchase agreements collateralized by U.S. Treasury securities. A designated custodial bank provides safekeeping and depository services to COLOTRUST in connection with direct investment and withdrawal functions of COLOTRUST. Substantially all securities owned by COLOTRUST are held by the Federal Reserve Bank in the account maintained for the custodial bank. The custodian s internal records identify the investments owned by COLOTRUST. These pools are not required to and are not registered with the SEC. Interest rate risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The City s policy for managing its exposure to fair value loss arising from increasing interest rates is to comply with the provisions of the Colorado Public Deposit Protection Act (PDPA) which requires that the City s investment portfolio maturities do not exceed five years from the time of purchase. Credit risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City s policy for reducing its exposure to credit risk is to comply with the provisions of the Colorado Public Deposit Protection Act (PDPA) which limits investment in commercial paper and corporate bonds to the top ratings issued by at least two nationally recognized statistical rating organizations such as Standard & Poor s and Moody s Investor Services. Note 5. Restricted Assets A summary of temporarily restricted assets of the City at December 31, 2015 is as follows: Water Sewer Fund Fund Total Loan reserves $ 564,726 $ 529,401 $ 1,094,127 $ 564,726 $ 529,401 $ 1,094,127 The City has set aside funds for the Reserve Fund for the Water and Sewer Revenue Bonds, Series 2007, the USDA Loan debt service and asset management fund and the Operation and Maintenance Reserve Fund as required by the Colorado Water Resources and Power Development Authority Loan Agreements. 34

38 Notes to the Financial Statements December 31, 2015 Note 6. Capital Assets The following table summarizes the changes to capital assets for governmental activities during the year. Governmental Activities: Balance Balance 12/31/2014 Additions Deletions 12/31/2015 Capital assets, not being depreciated: Land and right-of-way $ 1,736,008 $ - $ - $ 1,736,008 Land - NRC 2,047, ,047,400 Construction in progress 381, ,223 (377,745) 538,103 Total capital assets, not being depreciated 4,165, ,223 (377,745) 4,321,511 Capital assets, being depreciated: Buildings 7,151, ,312 (5,739) 7,290,788 Buildings - NRC 3,838, ,838,997 Park land and improvements 3,372, ,360-4,054,966 Improvements - NRC 873, ,995 Vehicles 2,825,101 62,114 (47,934) 2,839,281 Equipment 1,139, ,640 (6,059) 1,359,294 Infrastructure 7,942,588 2,718,124-10,660,712 Total capital assets, being depreciated 27,144,215 3,833,550 (59,732) 30,918,033 Less accumulated depreciation for: Buildings (2,249,145) (200,555) 5,021 (2,444,679) Park land and improvements (1,359,166) (126,076) - (1,485,242) Buildings and improvements - NRC (10,417) (120,480) - (130,897) Vehicles (1,870,481) (176,527) 45,934 (2,001,074) Equipment (675,555) (115,205) 5,960 (784,800) Infrastructure (2,204,323) (453,717) - (2,658,040) Total accumulated depreciation (8,369,087) (1,192,560) 56,915 (9,504,732) Total capital assets, being depreciated, net 18,775,128 2,640,990 (2,817) 21,413,301 Governmental activities capital assets, net $ 22,940,161 $ 3,175,213 $ (380,562) $ 25,734,812 Depreciation expense was charged to the functions/programs of the City as follows: Governmental Activities: General government $ 135,510 Public safety 176,172 Public works/streets 541,994 Culture, parks and recreation 338,884 Total depreciation expense - governmental activities $ 1,192,560 35

39 Notes to the Financial Statements December 31, 2015 Note 6. Capital Assets, Continued The following table summarizes the changes to capital assets for business-type activities during the year. Business Type Activities: Balance Balance 12/31/2014 Additions Deletions 12/31/2015 Capital assets not being depreciated: Land $ 76,027 $ - $ - $ 76,027 Water rights 1,391, ,391,521 Construction in progress 813, ,735 (825,040) 582,659 Total capital assets, not being depreciated 2,281, ,735 (825,040) 2,050,207 Capital assets being depreciated: Lines 9,766,665 1,343,389-11,110,054 Structures 14,186, ,505-14,684,196 Land improvements 697, ,266 Equipment & vehicles 13,161,223 1,313,984 (6,964) 14,468,243 Total capital assets, being depreciated 37,811,845 3,154,878 (6,964) 40,959,759 Less accumulated depreciation for: Lines (3,687,621) (325,752) - (4,013,373) Structures (4,004,378) (462,269) - (4,466,647) Land improvements (48,897) (39,792) - (88,689) Equipment & vehicles (2,498,981) (627,163) 6,964 (3,119,180) Total accumulated depreciation (10,239,877) (1,454,976) 6,964 (11,687,889) Total capital assets, being depreciated, net 27,571,968 1,699,902-29,271,870 Business-type activities capital assets, net $ 29,853,480 $ 2,293,637 $ (825,040) $ 31,322,077 Depreciation expense was charged to the functions/programs of the City as follows: Business-Type Activities: Water $ 515,051 Sewer 874,374 Steamplant Event Center 65,551 Total depreciation expense - business-type activities $ 1,454,976 36

40 Notes to the Financial Statements December 31, 2015 Note 7. Long-Term Debt The following is a summary of changes in long-term obligations for the year ended December 31, 2015: Governmental Activities: Balance Balance Current 12/31/2014 Additions Retirements 12/31/2015 Portion 2008 Community Services Complex Lease Purchase $ 664,472 $ - $ (50,904) $ 613,568 $ 52, Community Services Complex Lease Purchase 827,011 - (61,965) 765,046 64,105 High Country Bank Loan - NRC ** 4,603,695 - (99,944) 4,503, ,275 Net Pension Liability ** 753,822 6, ,158 - Compensated Absences 66, ,722 (128,356) 40,600 40,600 Total Governmental activity Long-term liabilities $ 6,915,234 $ 109,058 $ (341,169) $ 6,683,123 $ 264,642 Business-Type Activities: 2001 DOLA Loan $ 81,255 $ - $ (9,980) $ 71,275 $ 10, Water & Sewer Refunding and Improvement Bonds 2,220,000 - (275,000) 1,945, , Drinking Water Revolving Loan 476,875 - (27,250) 449,625 27, Water & Sewer USDA Loans 11,724,004 - (252,902) 11,471, ,487 Total Business-type activity Long-term liabilities $ 14,502,134 $ - $ (565,132) $ 13,937,002 $ 528,216 ** See Note 12 regarding the beginning balances of the net pension liability and the NRC High Country Bank Loan. 37

41 Notes to the Financial Statements December 31, 2015 Note 7. Long-Term Debt, Continued The following is a listing of bonds and loans payable outstanding as of December 31, 2015: Bonds and Loans Payable: Governmental Activities: Loan payable to High Country Bank, secured by land, building and improvements, bearing interest at 5.125%, due in monthly installments of $27,949 with a ballon payment on September 1, Approved in 2013 with an original principal balance of $4,722,000 for the purchase of the Salida Natural Resource Center (NRC) building and improvements. $ 4,503,751 Business-Type Activities: Loan payable to the State of Colorado Department of Local Affairs, bearing interest at 5.0%, due in annual installments of $14,042, maturing September 1, This loan was approved in August 2002 with a maximum principal balance of $175,000 for water treatment plant improvements. Water and Sewer Refunding and Improvment Revenue Bonds, Series 2007, secured by net system revenue, bearing interest at 4.0%, due in semi-annual principal installments of $33,382, maturing November 1, Original principal balance of $3,940,000 to finance water system improvements and the refunding of Water and Sewer Revenue Bonds, Series $ 71,275 1,945,000 Loan payable to the State of Colorado Water Resources and Power Development Authority, bearing no interest, due in semi-annual installments of $13,625, maturing May 1, Executed in December 2011 with an original principal balance of $545,000 for various water system improvements. 449,625 Loan payable to the US Department of Agriculture, bearing interest at 2.5%, due in semi-annual installments of $480,484, maturing March 27, Approved in March 2013 with an original principal balance of $12,103,000 for the construction of wastewater facility improvements. 11,471,101 Total Business-Type Activities Bonds and Loans Payable $ 13,937,002 Total Bonds and Loans Payable $ 18,440,753 38

42 Notes to the Financial Statements December 31, 2015 Note 7. Long-Term Debt, Continued The annual requirements to amortize bonds and notes payable debt service maturities are as follows: Business-Type Activities Governmental Activities Years ending June 30: Principal Interest Principal Interest 2016 $ 528,216 $ 373,123 $ 107,275 $ 228, , , , , , , , , , , , , , , , , ,068,605 1,448, , , ,785,172 1,141, , , ,494, ,725 3,623, , ,645, , ,863, , ,110, , ,421 43, $ 13,937,002 $ 6,907,845 $ 4,503,751 $ 1,604,913 Obligations under Capital Leases The City entered into a $1,300,000 lease-purchase agreement with Alpine Bank dated September 1, The lease requires semi-annual installments of varying amounts on May 10 and November 10 including interest at 6.25% through maturity on November 19, 2028 subject to annual appropriation by the City. Proceeds of the lease were used for construction of a new police station. The lease is secured by an interest in the land on which the police station was constructed. The City also entered into a $129,561 lease-purchase agreement with Caterpillar Financial Services Corporation dated February 4, The lease requires 59 monthly payments of $2,350, including interest at 3.50%, and one payment of $1 upon maturity in January The lease was used to purchase a new wheel loader. The lease is secured by an interest in the equipment. The lease payments are reported as debt service in the General fund. 39

43 Notes to the Financial Statements December 31, 2015 Note 7. Long-Term Debt, Continued The future minimum lease obligations and the present value of the minimum lease payments as of December 31, 2015 are as follows: Governmental December 31, Activities 2016 $ 161, , , , , , ,678 Total remaining lease payments $ 1,630,089 Less: Amount representing interest 251,475 Present value of net remaining minimum lease payments $ 1,378, Lease $ 613, Lease 765,046 $ 1,378,614 Note 8. Interfund Receivables, Payables and Transfers There were no interfund receivable and payable balances in the fund financial statements for the current year. Interfund transfers for the year ended December 31, 2015 are shown in the following table: Transfers In Transfers Out: Water Sewer Steamplant Event Center Total General Fund $ - $ 220,103 $ 220,103 $ 220,103 $ - $ 220,103 $ 220,103 $ 220,103 Transfers were used to move unrestricted general fund revenues to the Water, Sewer and Steamplant Event Center funds based upon the City s adopted budgetary policies and via City Council resolutions. 40

44 Notes to the Financial Statements December 31, 2015 Note 9. Retirement and Pension Plans The City participates in the Old-Hire Fire and Police retirement plan and the New-Hire Fire and Police retirement plan which are both administered by the Colorado Fire and Police Pension Association (FPPA). The City reported in the Statement of Activities the following aggregate amounts related to pensions for all plans to which it contributes: Statement of Activities Old-Hire New-Hire Combined Total l Activities Total Net pension liability $ 760,158 $ - $ 760,158 $ 760,158 Deferred outflows of resources 81, , , ,989 Deferred inflows of resources - 5,270 5,270 5,270 Pension expense (13,103) (81,698) (94,801) (94,801) The City reported $171,902 of pension expenditures in the governmental funds related to all pension plans to which it contributes. Old Hire Fire & Police Plans Plan description The City of Salida, on behalf of its full-time, paid firefighters and police officers hired prior to April 8, 1978, contributes to the City of Salida Old Hire Fire Pension plan and Old Hire Police Pension plan which are defined benefit pension plans affiliated with the Colorado Fire and Police Pension Association (FPPA). The FPPA administers an agent multiple-employer Public Employee Retirement System (PERS). The PERS represents the assets of numerous separate plans that have been pooled for investment purposes. The plans have elected to affiliate with FPPA for plan administration and investment only. FPPA issues a publicly available annual financial report that includes the assets of the City of Salida Old Hire Fire Pension plan and Old Hire Police Pension plan. That report may be obtained by writing to FPPA of Colorado, 5290 DTC Parkway, Suite 100, Englewood, Colorado, 8011, or by calling FPPA at (303) in the Denver metro area or from outside the metro area. The report may also be obtained at: Benefits provided As outlined in Title 31, Article 30 of the Colorado Revised Statutes (CRS), as amended, the plan provides retirement benefits for members and beneficiaries according to the plan provisions as enacted and governed by the City of Salida. The Old Hire FPPA plans provide retirement, disability, and survivor benefits. State statute establishes benefit terms. Eligibility: Members included are active employees hired prior to April 8, 1978, electing to remain covered under the provisions of the City s current plan. Compensation: is based on the basic salaries for police officers and firefighters. 41

45 Notes to the Financial Statements December 31, 2015 Note 9. Retirement and Pension Plans, Continued Normal Retirement Benefit: A police officer s normal retirement date is the date on which they have attained 55 years of age and completed 20 years of service or upon completion of 25 years of service, if earlier. Any police officer who elects to retire on or after their normal retirement date shall be eligible for a monthly pension equal to one-half of their average monthly salary received one year before retirement. For each year an officer continues working past eligibility for normal retirement, an officer s benefit will increase by 4% of their average monthly salary to a maximum benefit of 74%. This benefit is applicable for active service earned after January 1, A firefighter s normal retirement date is the date on which they have attained 50 years of age and completed 20 years of service. Any firefighter who elects to retire on or after their normal retirement date shall be eligible for a monthly pension equal to one-half of their average monthly salary at the date of their retirement. Termination Benefits: There are no vested retirement benefits or severance benefits. Death and Disability Benefits: There are no pre-retirement death and disability benefits and there are no post-withdrawal death benefits. Post-Retirement Death and Disability Benefits: If a retired police officer dies, the surviving spouse shall receive, until death or remarriage, a monthly pension equal to one-half of the monthly pension the police officer was entitled to receive prior to his or her death. If a retired firefighter dies, the surviving spouse shall receive, until death or remarriage, a monthly pension equal to one-third of the salary of a first grade firefighter at the time of retirement. Cost of Living Adjustment: There are no cost of living adjustments. Deferred Retirement Option Plan (DROP): There is no deferred retirement option plan for firefighters. For any police officer who has attained age 50 with 25 years of service may elect to participate in DROP. Any member who decides to participate in the DROP plan agrees to retire within 5 years of the date of the execution of the agreement. Retirement contributions and benefits paid for that member will be deposited to and held in a separate account until the member retires from active duty. A member who elects to participate in the DROP plan may not thereafter withdraw from DROP. Once the member has elected DROP, such member s retirement benefit shall be fixed and shall not increase as a result of continued years of membership, or due to an increase in such member s average monthly salary. Supplemental Retirement Benefit: There are no supplemental retirement benefits. 42

46 Notes to the Financial Statements December 31, 2015 Note 9. Retirement and Pension Plans, Continued Employees covered by benefit terms At December 31, 2015, the following employees were covered by the agent pension plans benefit terms: Old Hire Old Hire Police Fire Inactive employees or beneficiaries currently receiving benefi 6 3 Inactive employees entitled to but not yet receiving benefits 0 0 Active employees 0 0 Total 6 3 Contributions The Old Hire Police and Fire Plans have no active members. Actuarial valuations are prepared to determine the annual required contribution. The calculated employer contribution is based on the normal cost and the amortization of the unfunded actuarial accrued liability (UAAL). Because the plan has no active members, the plan has no normal cost. Under current statutes, the UAAL must be amortized under a level dollar method in the lessor of 20 years or the average remaining life expectancy of the group, which currently is 18.6 years. However, based on the current funded status of the plan and the expected benefit payments in the next two years, the amortization period has been adjusted down to help preserve the funded status of the plan and thus, the amortization period for the 2014 valuation is 14 years. The City s contributions to the pension plan for the year ended December 31, 2015, were: Pension Old Hire Police Old Hire Fire Contributions made 66,481 9,539 Pension liability At December 31, 2015, the City reported a net pension liability of $760,158. The net pension liability was measured as of December 31, 2014, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of January 1, Pension actuarial assumptions The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date January 1, 2014 Actuarial cost method Individual Entry Age Normal Discount rate 7.5% Projected salary increases 4.0% Inflation 3.0% Mortality rates RP-2000 mortality table 43

47 Notes to the Financial Statements December 31, 2015 Note 9. Retirement and Pension Plans, Continued Discount Rate A Single Discount Rate of 7.5% was used to measure the total pension liability. This Single Discount Rate was based on the expected rate of return on pension plan investments of 7.5%. The projection of cash flows used to determine this Single Discount Rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in the Net Pension Liability Total Pension Liability (a) Balances at December 31, ,298,676 Old Hire Police Plan Fiduciary Net Position (b) Net Pension Liability (a) - (b) Total Pension Liability (a) Old Hire Fire Plan Fiduciary Net Position (b) Net Pension Liability (a) - (b) $ $ $ 629,464 $ 669,212 $ 236,670 $ 152,060 84,610 Changes for the year: Service cost Interest on total pension liability 92,650-92,650 16,742-16,742 Changes of benefit terms Difference between expected and actual - - experience in the measurement of the Changes of assumptions Contributions - employer - 56,214 (56,214) - 5,426 (5,426) Contributions - employee Net investment income - 39,097 (39,097) - 9,441 (9,441) Benefit payments, including refunds - - of employee contributions (129,025) (129,025) - (27,391) (27,391) - Pension plan administrative expense - (3,771) 3,771 - (3,351) 3,351 Net changes (36,375) (37,485) 1,110 (10,649) (15,875) 5,226 Balances at December 31, 2015 $ 1,262,301 $ 591,979 $ 670,322 $ 226,021 $ 136,185 $ 89,836 Sensitivity of the proportionate share of the net pension liability to changes in the discount rate The following table presents the City's net pension liability calculated using the discount rate noted above, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate: Current 1% Decrease Discount Rate 1% Increase 6.50% 7.50% 8.50% Old Hire Police Net pension (asset) / liability $ 774,531 $ 670,322 $ 580,079 Old Hire Fire Net pension (asset) / liability 104,876 89,836 76,473 44

48 Notes to the Financial Statements December 31, 2015 Note 9. Retirement and Pension Plans, Continued Pension plan fiduciary net position Detailed information about the pension plan's fiduciary net position is available in the separately issued FPPA financial report. Pension expense and deferred outflows/inflows of resources For the year ended December 31, 2015, the City recognized pension expense for both Old-Hire plans of $62,917. At December 31, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience $ - $ - $ - $ - Changes in assumptions Net difference between projected and actual earnings on pension plan investments 4, Contributions subsequent to the measurement date 66,481-9,539 - Total $ 70,715 $ - $ 10,364 $ - Police Fire The $66,481 for Police and $9,539 for Fire reported as deferred outflows of resources related to Old-Hire pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to Old-Hire pensions will be recognized in pension expense as follows: Deferred Outflows (Inflows) of Year Ending December 31 Police Resources Old Hire Fire 2016 $ 1,059 $ , , , Thereafter

49 Notes to the Financial Statements December 31, 2015 Note 9. Retirement and Pension Plans, Continued New Hire Fire & Police Plans - Fire & Police Pension Association Plan description The City participates in the Statewide Defined Benefit Plan (SWDB) which is a costsharing multiple-employer defined benefit pension plan. The Plan is administered by the Fire & Police Pension Association of Colorado (FPPA). FPPA issues a publicly available comprehensive annual financial report that can be obtained on the FPPA s website at Benefits provided A member is eligible for a normal retirement pension once the member has completed twenty-five years of credited service and has attained the age of 55. The annual normal retirement benefit is 2 percent of the average of the member s highest three years base salary for each year of credited service up to ten years, plus 2.5 percent for each year of service thereafter. The benefit earned prior to January 1, 2007 for members of affiliated social security employers will be reduced by that amount of social security income payable to the member annually. Effective January 1, 2007, members currently covered under social security will receive half the benefit when compared to the SWDB. Benefits paid to retired members are evaluated and may be re-determined every October 1. The amount of any increase is based on the Board s discretion and can range from 0 to the higher of 3 percent or the Consumer Price Index. A member is eligible for an early retirement at age 50 or after 30 years of service. The early retirement benefit equals the normal retirement benefit reduced on an actuarially equivalent basis. Upon termination, an employee may elect to have member contributions, along with 5 percent as interest, returned as a lump sum distribution. Alternatively, a member with at least five years of accredited service may leave contributions with the Plan and remain eligible for a retirement pension at age 55 equal to 2 percent of the member s average highest three years base salary for each year of credited service up to ten years, plus 2.5 percent for each year of service thereafter. Contributions The Plan sets contributions rates at a level that enables all benefits to be fully funded at the retirement date of tall members. Contribution rates for the SWDB plan are set by state statute. Employer contribution rates can only be amended by state statute. Member contribution rates can be amended by state statute or election of the membership. For the year ended December 31, 2015, active SWDB members were required by statute to contribute at the actuarially determined rate of 8.5 percent of the members' annual covered payroll, and the City was required by statute to contribute at the actuarially determined rate of 8 percent of the active members' annual covered payroll. Member contribution rates will increase by 0.5 percent annually through 2022 to a total of 12 percent of base salary. The City's contributions for the current and 2 preceding fiscal years, all of which were equal to the required contributions, were as follows: Year Ended Retirement December 31, Fund 2013 $ 81, , ,882 46

50 Notes to the Financial Statements December 31, 2015 Note 9. Retirement and Pension Plans, Continued Pension liability At December 31, 2015, the City reported an asset of 255,816 for its proportionate share of the SWDB net pension asset/liability. The net pension liability/asset was measured as of December 31, The total pension liability used to calculate the net pension liability was determined using an actuarial valuation as of January 1, The City's proportion of the net pension liability was based on the City's actual contributions to the plan relative to the total of all participating employers' contributions for the year ended December 31, The City's proportion measured as of December 31, 2014, was percent for fire and percent for police, which was an increase of percent for fire and a decrease of percent for police from the proportions measured as of December 31, Pension expense and deferred outflows/inflows of resources For the year ended December 31, 2015, the City recognized pension expense for SWDB of $14,184. At December 31, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Police Deferred Outflows of Resources Differences between expected and actual experience - Deferred Inflows of Resources Fire Deferred Outflows of Resources Deferred Inflows of Resources $ $ 2,720 $ - $ 2,550 Changes in assumptions Net difference between projected and actual earnings on pension plan investments 10,411-9,758 - Changes in proportion and differences between contributions and proportional share of contributions Contributions subsequent to the measurement date 50,857-45,025 - Total $ 61,268 $ 2,720 $ 54,783 $ 2,550 The $95,882 reported as deferred outflows of resources related to SWDB pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, Other amounts reported as deferred outflows of resources and deferred inflows of resources related to SWDB pensions will be recognized in pension expense as follows: Deferred Outflows (Inflows) of Year Ended Resources December 31 Police Fire 2016 $ 2,318 $ 2, ,318 2, ,318 2, ,318 2, (285) (267) Thereafter (1,295) (1,214) 47

51 Notes to the Financial Statements December 31, 2015 Note 9. Retirement and Pension Plans, Continued Actuarial Assumptions The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date January 1, 2015 Actuarial roll forward date January 1, 2014 Actuarial cost method Entry age normal Investment rate of return 7.5% Projected salary increases % Inflation 3% Mortality rates RP-2000 Combined Mortality Table Actuarial assumptions used in the January 1, 2014, valuation were based on the results of an actuarial experience study for the 5-year period ended December 31, The long-term expected rate of return on SWDB pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Target Allocation Long-Term Expected Rate of Return Global Equity 40% 8.9% Equity Long/Short 10% 7.5% Illiquid Alternatives 18% 10.5% Fixed Income 15% 4.6% Absolute Return 12% 6.5% Managed Futures 4% 5.5% Cash 1% 2.5% Total 100% Discount Rate The discount rate used to measure the SWDB total pension liability was 7.5 percent, which is less than the long-term expected rate of return. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the SWDB Board's funding policy, which establishes the contractually required rate under Colorado statute. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 48

52 Notes to the Financial Statements December 31, 2015 Note 9. Retirement and Pension Plans, Continued Sensitivity of the proportionate share of the net pension liability to changes in the discount rate The following table presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.5 percent, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.5 percent) or 1 percentage point higher (8.5 percent) than the current rate: Current 1% Decrease Discount Rate 1% Increase 6.50% 7.50% 8.50% Police Net pension (asset) / liability $ 124,497 $ (132,049) $ (346,042) Fire Net pension (asset) / liability 116,689 (123,767) (324,338) Pension plan fiduciary net position Detailed information about the pension plan's fiduciary net position is available in the separately issued ASRS financial report. Defined Contribution Plans The City contributes to a 401(a) retirment plan on behalf of all full-time employees, except full-time fire and police personnel. The plan is administered by ICMA Retirement Corporation and provides that the City contributes 3 percent for each full-time employee and then will match employee Section 457 contributions up to an additional 3 percent of each employee s compensation with the City s contribution totaling $88,470 during Note 10. Risk Management Public Entity Risk Pool The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees and natural disasters. Claims have not exceeded coverage in any of the last three fiscal years. The City is insured by Workers Compensation for potential worker related accidents. The City is a member of the Colorado Intergovernmental Risk Sharing Agency (CIRSA), a separate and independent governmental and legal entity formed by an intergovernmental agreement by member municipalities pursuant to the provision of , Colorado Revised Statutes (1982 Replacement Volume) and the Colorado Constitution, Article XIV, Section 18(2). 49

53 Notes to the Financial Statements December 31, 2015 Note 10. Risk Management, Continued The purposes of CIRSA are to provide members defined liability and property coverage s and to assist members to prevent and reduce losses and injuries to municipal property and to persons or property which might result in claims being made against members of CIRSA, their employees or officers. The general objectives of the Agency are to provide member municipalities defined liability and property coverage through joint self-insurance and to assists members in loss prevention measures. Any member may withdraw from the Agency by giving written notice to the Board of Directors of the prospective effective date of its withdrawal. CIRSA is financed by annual contributions and interest earnings on the contributions. The contributions are used, in part, to establish loss funds from which member claims and associated costs are paid. Excess reinsurance coverage is also purchased. Certain surplus funds are used to the benefit of members and may include reductions in future contributions. Although none have occurred to date, additional member contributions may be required if necessary. The City s contribution to CIRSA for insurance coverage is reported as an expenditure in the General fund. The City is unaware of any excess losses which may have been incurred by CIRSA and there have been no settled claims which exceed insurance coverage in any of the last three years. The City s share of surplus contributions held by CIRSA at December 31, 2012 was $65,295. The City s share of the surplus as of December 31, 2015 was not available. CIRSA is a separate legal entity and the City does not approve budgets nor does it have the ability to significantly affect the operations of CIRSA. The Board of Directors of the Agency is composed of seven directors elected by the members at the annual meeting to be scheduled in December each year. Health Reimbursement Arrangement Plan In order to control increasing health care costs, effective January 1, 2011, the City established a Health Reimbursement Arrangement (HRA) Plan that reimburses employees for group medical health insurance plan deductible and actual eligible medical expenses incurred (as defined under Internal Revenue Code Section 213(d). The plan year is from March 1 through February 28. At the end of a plan year, any unused claim liability in an HRA Plan account is returned to the City. Note 11. Contingencies and Commitments Litigation The City is involved with various matters of litigation from year to year. It is the opinion of City officials that any potential cases will either be handled by the City s insurance coverage or that they will not have a material effect on the City s financial condition. There is one known instance of pending litigation that may result in significant losses to the City. Management does not anticipate insurance coverage for any City exposure associated with this matter; however, there is insufficient information to estimate any kind of liability for the potential loss at the date of these financial statements. 50

54 Notes to the Financial Statements December 31, 2015 Note 11. Contingencies and Commitments, Continued Grants Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the City does not anticipate any such amounts. City of Salida - Chaffee County Airport Agreement The City and the County jointly own the airport facility known as Harriet Alexander Field (the airport). The City and the County have by resolution, established an intergovernmental agreement for the operation and management of the airport. The City s current year appropriation for operating costs paid to the airport was $49,200. Note 12. General Fund Contingency Reserve The City has established a general fund contingency or reserve policy in the City code to maintain fifteen percent (15%) of the City s General Fund operating budget in a contingency fund. The contingency fund can be utilized by the City to cover unbudgeted, unforeseen reductions in revenue collections or unusual expenditures outside the scope of normal operations. As of June 30, 2015, the reserve is $1,523,910 and is included in the unassigned fund balance of the General fund. Note 13. Restatement Adjustments As mentioned in Note 1 to the financial statements, the City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date. GASB Statement Nos. 68 and 71 establish standards for measuring and recognizing net pension assets and liabilities, deferred outflows of resources, deferred inflows of resources, and expenses/expenditures related to pension benefits provided through defined benefit pension plans. This resulted in a restatement of beginning net position as follows: 51

55 Notes to the Financial Statements December 31, 2015 Note 13. Restatement Adjustments, Continued Governmental Activities Business-type Activities Old Hire Plans New Hire Plan Restatement adjustment - implementation of GASB 68: Net pension asset $ 210,211 $ - $ - $ 210,211 Net pension liability (753,822) - (753,822) - Deferred outflows - contributions made during fiscal year ,188-61,640 81,548 Total Restatement Adjustment $ (400,424) $ - $ (692,182) $ 291,758 Based on Governmental Accounting Standards, the City began reporting the Natural Resource Center (NRC) Development Corporation as a blended component unit of the City as noted in Note 1. The NRC is reported as a special revenue fund of the City and the capital assets and related debt are reported on the Government wide financial statements. A prior period adjustment was necessary to add the related NRC capital assets and long-term debt to the government wide financial statements as follows: Cash $ 239,292 Land 2,047,400 Building 3,838,997 Improvements 873,995 Accumulated depreciation (10,417) Loan payable (4,603,695) Net adjustment $2,385,572 52

56 REQUIRED SUPPLEMENTARY INFORMATION PENSION PLANS 53

57 Required Supplementary Information Schedule of the Proportionate Share of the Net Pension Liability December 31, 2015 Fire Police Reporting Fiscal Year Reporting Fiscal Year (Measurement Date) (Measurement Date) (2014) (2014) Proportion of the net pension liability (asset) % % Proportionate share of the net pension liability (asset) $ (123,767) $ (132,049) Covered employee payroll $ 565,779 $ 671,426 Proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll % % Plan fiduciary net position as a percentage of the total pension liability % % Note: The City implemented GASB 68 in Prior year information is not available. 54

58 Required Supplementary Information Schedule of the Proportionate Share of the Net Pension Liability December 31, 2015 Old Hire Police Old Hire Fire Reporting Fiscal Year Reporting Fiscal Year (Measurement Date) (Measurement Date) (2014) (2014) Total pension liability Service cost $ - $ - Interest on total pension liability 92,650 16,742 Changes of benefit terms - - Difference between expected and actual experience of the total net pension liability - - Changes of assumptions - - Benefit payments, including refunds of employee contributions (129,025) (27,391) Net change in total pension liability (36,375) (10,649) Total pension liability - beginning 1,298, ,670 Total pension liability - ending (a) $ 1,262,301 $ 226,021 Plan fiduciary net position Contributions - employer $ 56,214 $ 5,426 Contributions - employee - - Net investment income 39,097 9,441 Benefit payments, including refunds of employee contributions (129,025) (27,391) Pension plan administrative expense (3,771) (3,351) Net change in plan fiduciary net position (37,485) (15,875) Plan fiduciary net position - beginning 629, ,060 Plan fiduciary net position - ending (b) $ 591,979 $ 136,185 Net pension liability - ending (a) - (b) $ 670,322 $ 89,836 Plan fiduciary net position as a percentage of the total pension liability 46.90% 60.25% Covered employee payroll N/A N/A Net pension liability as a percentage of coveredemployee payroll N/A N/A Note: The City implemented GASB 68 in Prior year information is not available. 55

59 Required Supplementary Information Schedule of Contributions December 31, 2015 Old Hire - FPPA Old Hire Police Old Hire Fire Reporting Fiscal Year Reporting Fiscal Year (Measurement Date) (Measurement Date) (2014) (2014) Actuarially determined contribution $ 5,426 $ 56,214 Contributions in relation to the actuarially determined contribution $ (5,426) $ (56,214) Contribution deficiency (excess) $ - $ - Covered-employee payroll N/A N/A Contributions as a percentage of covered-employee payroll N/A N/A Note: The City implemented GASB 68 in fiscal year Prior year information is not available. 56

60 Required Supplementary Information Schedule of Contributions December 31, 2015 New Hire - SWDB Fire Police Reporting Fiscal Year Reporting Fiscal Year (Measurement Date) (Measurement Date) (2014) (2014) Contractually required contribution $ 39,454 $ 42,094 Contributions in relation to the contractually required contribution $ (39,454) $ (42,094) Contribution deficiency (excess) $ - $ - Covered employee payroll $ 565,779 $ 671,426 Contributions as a percentage of covered-employee payroll 6.97% 6.27% Note: The City implemented GASB 68 in Prior year information is not available. 57

61 Required Supplementary Information Notes to Pension Plan Schedules December 31, 2015 Note 1. Actuarially Determined Contribution Rates Actuarially determined contribution rates for FPPA are calculated as of January1, or two years prior to the end of the fiscal year in which contributions are made. The actuarial methods and assumptions used to establish the contribution requirements are as follows: Actuarial cost method Entry age normal Amortization method Level dollar, open Remaining amortization period 14 years Asset valuation method 5-year smoothed fair value Actuarial assumptions: o Investment rate of return: 7.5% o Projected salary increase: 4.0% o Inflation: 3.0% o COLA: 0.0% 58

62 REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULES FOR THE FOLLOWING MAJOR FUND: General Fund Detail Budget and Actual The General Fund is used to account for resources traditionally associated with government which are not required legally or by sound financial management to be accounted for in another fund. 59

63 Schedule of Revenues, Expenditures and Changes in Fund Balance General Fund - Budget and Actual For the Year Ended December 31, 2015 Budgeted Amounts Actual Variance with REVENUES: Original Final Amounts Final Budget Taxes: Sales tax $ 4,468,600 $ 4,839,700 $ 4,859,598 $ 19,898 Occupation tax 240, , ,150 (34,850) Franchise tax 313, , ,172 20,772 Total Taxes 5,022,000 5,393,100 5,398,920 5,820 Licenses, Permits and Fees: Liquor licenses 14,000 14,000 12,993 (1,007) Medical marijuana dispensary license 1,000 1,000 3,800 2,800 Business licenses 2,000 2, (1,900) Other licenses and permits 3,000 3,000 6,645 3,645 Total Licenses, Permits and Fees 20,000 20,000 23,538 3,538 Intergovernmental: Sales tax - County 1,428,000 1,575,700 1,586,472 10,772 Cigarette tax 22,000 22,000 20,263 (1,737) Other state taxes 63,000 63,000 76,446 13,446 Highway users tax 199, , ,731 11,831 Motor vehicle registration 25,000 25,000 26,619 1,619 County road and bridge 7,000 7,000 8,168 1,168 Federal grants - 607, ,093 (61,507) State grants 783, , ,672 (109,228) South Ark Fire District 70,000 70,000 70,000 - Total Intergovernmental 2,598,800 3,154,100 3,020,464 (133,636) Charges for Services: Vin inspections 5,000 5,000 6,400 1,400 Vital statistics records 18,000 18,000 20,536 2,536 Planning and zoning fees 26,000 36,000 31,718 (4,282) Police - other services - 32,300 34,639 2,339 Fire - other services - 3,400 15,725 12,325 Fire plans and inspections 5,000 5,000 6,493 1,493 Emergency response fees 10,000 17,000 9,119 (7,881) Publc works charges 38,000 38,000 29,631 (8,369) Other charges ,258 17,258 Total Charges for General Services 102, , ,519 16,819 Charges - Fees for Recreation & Event Services: Hot springs pool 340, , ,263 17,663 Soaking pool fees 20,000 20,000 19,655 (345) Recreation programs 48,000 48,000 35,424 (12,576) Other recreation revenues 11,000 11,000 10,293 (707) Park rental charges 16,000 16,000 17,253 1,253 Total Charges for recreation & events 435, , ,888 5,288 Fines and Forfeitures: Court fines 55,000 55,000 31,408 (23,592) Parking fines 20,000 20,000 9,731 (10,269) Other court costs charges and forfeitures - - 9,053 9,053 Total Fines and Forfeitures 75,000 75,000 50,192 (24,808) (continued) 60

64 Schedule of Revenues, Expenditures and Changes in Fund Balance General Fund - Budget and Actual (Continued) For the Year Ended December 31, 2015 Budgeted Amounts Actual Variance with REVENUES, CONTINUED: Original Final Amounts Final Budget Interest and investment revenue: Interest and investment revenue 10,000 10,000 10, Total Interest 10,000 10,000 10, Other Revenues: Land dedication (Fees in lieu) - - 9,000 9,000 Rents and leases 31,200 31,200 49,845 18,645 Sale of equipment - 8,500 11,112 2,612 Insurance proceeds - 160, ,936 (31,664) Donations and other 5,000 15,000 31,409 16,409 Capital revenue 132,500 60,500 68,310 7,810 Total Other Revenues 168, , ,612 22,812 TOTAL REVENUES $ 8,432,100 $ 9,518,300 $ 9,414,228 $ (104,072) EXPENDITURES: General Government: Administration: Personnel services $ 399,400 $ 406,700 $ 378,106 $ 28,594 Contracted services 179, , ,654 49,346 Supplies and materials 7,500 7,500 7,535 (35) Utilities 24,900 24,900 25,201 (301) Other operating costs 180, , ,258 7,842 Debt service 161, , , Budgetary capital expenditures (<$5,000) 5,500 5,500 6,982 (1,482) Capital purchases and improvements ($5,000+) 111, , ,688 19,412 Total Administration 1,069,900 1,087, , ,444 Community Development: Personnel services 184, , ,403 8,097 Contracted services 16,400 16,400 15, Supplies and materials 2,100 2,100 1, Utilities Other operating costs 14,700 14,700 13,146 1,554 Debt service Budgetary capital expenditures (<$5,000) - - 1,628 (1,628) Capital purchases and improvements ($5,000+) Total Community Development 217, , ,858 8,942 Other: Municipal judge and city prosecutor - 35,400 36,098 (698) Community support grants 39,000 27,800 24,200 3,600 Total General Government - Other 39,000 63,200 60,298 2,902 Total General Government 1,326,400 1,369,700 1,254, ,288 (continued) 61

65 Schedule of Revenues, Expenditures and Changes in Fund Balance General Fund - Budget and Actual (Continued) For the Year Ended December 31, 2015 Budgeted Amounts Actual Variance with EXPENDITURES, CONTINUED: Original Final Amounts Final Budget Public Safety: Police: Personnel services 1,288,200 1,303,200 1,253,365 49,835 Contracted services 196, , ,073 13,727 Supplies and materials 59,800 59,800 43,843 15,957 Utilities 28,800 28,800 34,673 (5,873) Other operating costs 31,200 31,200 42,642 (11,442) Budgetary capital expenditures (<$5,000) 5,400 10,400 9,019 1,381 Capital purchases and improvements ($5,000+) 75,200 82,700 69,765 12,935 Total Police $ 1,684,600 $ 1,724,900 $ 1,648,380 $ 76,520 Fire: Personnel services 843, , ,114 6,586 Contracted services 37,400 37,900 33,904 3,996 Supplies and materials 32,700 32,700 21,789 10,911 Utilities 3,800 3,800 4,604 (804) Other operating costs 37,900 37,900 33,916 3,984 Budgetary capital expenditures (<$5,000) 13,900 15,700 16,479 (779) Capital purchases and improvements ($5,000+) 88, , ,026 68,874 Total Fire $ 1,058,000 $ 1,125,600 $ 1,032,832 $ 92,768 Total Public Safety 2,742,600 2,850,500 2,681, ,288 Public Works: Public Works: Personnel services 472, , ,368 $ (10,768) Contracted services 16,800 16,900 2,138 14,762 Supplies and materials 54,100 52,300 25,518 26,782 Utilities 131, ,000 75,661 35,339 Other operating costs 68,000 60,600 58,228 2,372 Budgetary capital expenditures (<$5,000) 7,300 8,000 19,146 (11,146) Capital purchases and improvements ($5,000+) 1,282,700 2,201,900 1,928, ,274 Total Public Works 2,032,200 2,765,300 2,434, ,615 Facilities and Vehicle Management: Personnel services - 106, ,211 (2,811) Contracted services - 4,000 3, Supplies and materials - 1,800 5,693 (3,893) Utilities - 16,000 12,102 3,898 Other operating costs - 10,600 5,763 4,837 Budgetary capital expenditures (<$5,000) - 7,900 3,603 4,297 Capital purchases and improvements ($5,000+) - 5,000-5,000 Total Facilities and Vehicle Management - 151, ,084 11,616 Other: Airport operations 40,000 44,200 49,200 (5,000) Contracted services 40,400 40,000 23,393 16,607 Utilities 12,000 12,000 7,685 4,315 Other operating costs (900) Budgetary capital expenditures (<$5,000) - 9,000 9,889 (889) Capital purchases and improvements ($5,000+) - 77,000 32,044 44,956 Total Public Works - Other 92, , ,111 59,089 Total Public Works 2,124,600 3,099,200 2,697, ,320 (continued) 62

66 Schedule of Revenues, Expenditures and Changes in Fund Balance General Fund - Budget and Actual (Continued) For the Year Ended December 31, 2015 Budgeted Amounts Actual Variance with EXPENDITURES, CONTINUED: Original Final Amounts Final Budget Culture, Parks and Recreation: Pool and Recreation: Personnel services 423, , ,303 17,197 Contracted services 22,500 22,500 27,601 (5,101) Supplies and materials 37,300 37,300 26,285 11,015 Utilities 71,900 71,900 64,603 7,297 Other operating costs 79,600 79,600 52,048 27,552 Budgetary capital expenditures (<$5,000) 23,000 23,000 13,860 9,140 Capital purchases and improvements ($5,000+) 573,400 1,158, , ,890 Total Pool and Recreation 1,231,200 1,817,100 1,090, ,990 Parks, Open Space and Trails: Personnel services 183, , ,481 (11,381) Contracted services 2,300 2,300 3,919 (1,619) Supplies and materials 19,000 19,000 21,613 (2,613) Utilities 49,500 69,500 67,652 1,848 Other operating costs 20,500 36,500 35, Budgetary capital expenditures (<$5,000) - 5,000 8,624 (3,624) Capital purchases and improvements ($5,000+) 1,018, , ,999 (13,499) Total Parks, Open Space and Trails 1,293,700 1,010,900 1,041,025 (30,125) Other City Properties: Other operating costs 2,000 2,000 2,000 - Creative district grant 10,000 10,000 7,149 2,851 Total Other City Properties 12,000 12,000 9,149 2,851 Total Culture, Parks and Recreation 2,536,900 2,840,000 2,140, ,716 TOTAL EXPENDITURES 8,730,500 10,159,400 8,773,788 1,385,612 Excess of Revenues Over (Under) Expenditures (298,400) (641,100) 640,440 1,281,540 Other Financing Sources (Uses): Transfer out (108,000) (186,750) (220,103) (33,353) Total Other Financing Sources (Uses) (108,000) (186,750) (220,103) (33,353) Net change in fund balance (406,400) (827,850) 420,337 1,248,187 Fund balance, beginning of year 4,289,798 4,289,798 4,289,798 - Fund balance, end of year $ 3,883,398 $ 3,461,948 $ 4,710,135 $ 1,248,187 63

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68 SUPPLEMENTARY INFORMATION COMBINING STATEMENTS AND BUDGETARY COMPARISON SCHEDULES FOR THE FOLLOWING FUNDS: Nonmajor Special Revenue Funds Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for a particular purpose. The Conservation Trust Fund is used to account for State of Colorado lottery funds to be used for parks and recreation services and capital improvement. The Natural Resource Center (NRC) Development Corporation is used to account for the development and operations of the multi-agency campus of resource management agencies in the City of Salida. All monies realized by the NRC are used exclusively for the acquisition, construction, operation and maintenance of public improvements, including payment of obligations of the NRC in connection therewith. Enterprise Funds Enterprise Funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The budgets for the enterprise funds have been prepared and presented on a modified accrual basis which is an accounting basis other than GAAP for enterprise funds. Under this basis debt proceeds are recognized as revenues for budget purposes. Capital outlays and debt principal payments are recognized as expenditures, while depreciation is not budgeted. The Water Fund is used to account for the City s water wells, treatment facilities and distribution system. The Sewer Fund is used to account for the City s wastewater collection and treatment services. The Steamplant Event Center Fund is used to account for room rentals, food sales, donations and other revenues and activities associated with the Steamplant Event Center. 65

69 Combining Balance Sheet Nonmajor Governmental Funds December 31, 2015 ASSETS Conservation Trust NRCDC Fund Fund Total Cash and cash equivalents $ 119,194 $ 253,277 $ 372,471 Total Assets $ 119,194 $ 253,277 $ 372,471 LIABILITIES AND FUND BALANCE Liabilities: Accounts payable $ - $ - $ - Due to other funds Total Liabilities Fund Balance: Restricted for: Parks and recreation 119, ,194 Committed to: Community development - 253, ,277 Unassigned Total fund balances 119, , ,471 Total Liabilities and Fund Balances $ 119,194 $ 253,277 $ 372,471 66

70 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended December 31, 2015 Conservation Trust NRCDC REVENUES: Fund Fund Total Intergovernmental $ 52,063 $ - $ 52,063 Interest revenue Other revenues - 402, ,492 Total Revenues 52, , ,716 EXPENDITURES: Current: General government/community development - 53,015 53,015 Capital outlay 50,234-50,234 Debt Service: Principal - 103, ,807 Interest and fiscal charges - 231, ,708 Total Expenditures 50, , ,764 Excess of Revenues Over (Under) Expenditures 1,967 13,985 15,952 Fund balances, beginning of year 117, , ,519 Fund balances, end of year $ 119,194 $ 253,277 $ 372,471 67

71 Schedule of Revenues, Expenditures and Changes in Fund Balance Conservation Trust Special Revenue Fund Budget and Actual For the Year Ended December 31, 2015 REVENUES: Budgeted Amounts Variance with Original Final Actual Final Budget Intergovernmental revenue: State lottery $ 50,000 $ 50,000 $ 52,063 $ 2,063 Interest income (62) Total revenue 50,200 50,200 52,201 2,001 EXPENDITURES: Parks and recreation: Capital outlay 50,000 50,000 50,234 (234) Total Expenditures 50,000 50,000 50,234 (234) Excess of Revenues Over (Under) Expenditures ,967 1,767 Fund balance, beginning of year 117, , ,227 - Fund balance, end of year $ 117,427 $ 117,427 $ 119,194 $ 1,767 68

72 Schedule of Revenues, Expenditures and Changes in Fund Balance NRCDC Special Revenue Fund Budget and Actual For the Year Ended December 31, 2015 REVENUES: Budgeted Amounts Variance with Original Final Actual Final Budget Interest Income $ 24 $ 24 $ 23 $ (1) Other revenues: Building lease 402, , ,679 (520) Pasture lease 1,060 1, (247) Total revenues 403, , ,515 (768) EXPENDITURES: General Government: Community Development: Contracted services 25,030 25,030 33,463 (8,433) Utilities 19,050 19,050 17,744 1,306 Other operating costs 3,560 3,560 1,808 1,752 Debt Service: Principal 102, , ,807 (1,445) Interest and fiscal charges 233, , ,708 1,431 Total Expenditures 383, , ,530 (5,389) Excess of Revenue and Other Sources Over (Under) Expenditures and Other Uses 20,142 20,142 13,985 (6,157) Fund balance, beginning of year 239, , ,292 - Fund balance, end of year $ 259,434 $ 259,434 $ 253,277 $ (6,157) 69

73 Schedule of Revenues, Expenses and Changes in Net Assets Water Fund Budget and Actual with Reconciliation to US GAAP Basis For the Year Ended December 31, 2015 Revenues Fees for General Services: Service and usage fees 1,252,400 Budgeted Amounts Variance with Original Final Actual Final Budget $ $ 1,252,400 $ 1,213,663 $ (38,737) Water line maintenance 178, , ,266 3,566 Commercial demand charges 100, ,000 92,400 (7,600) Other revenues 10,000 10,000 29,196 19,196 Water leases - 3,900 3,900 - Total Fees for General Services 1,541,100 1,545,000 1,521,425 (23,575) Intergovernmental Revenue: State grants 253, , ,664 (158,236) Total Intergovernmental Revenue 253, , ,664 (158,236) Capital Revenue: System development fees 301, , , ,785 Sale of water meters 10,000 10,000 12,636 2,636 Total Capital Revenue 311, , , ,421 Other Revenue: Interest revenue 5,000 5,000 1,976 (3,024) Miscellaneous revenue Total Other Revenue 5,000 5,000 2,300 (2,700) Total Revenues 2,110,800 2,700,900 2,619,810 (81,090) Expenses Administration: Personnel services 74,000 74,900 72,969 1,931 Contracted services 70,400 87,900 98,392 (10,492) Supplies and materials 2,000 3,100 1,559 1,541 Other operating costs 4,500 10,100 9, Total Administration - Water 150, , ,695 (6,695) Public Works - Water: Personnel services 195, , ,508 42,992 Contracted services (50) Supplies and materials 16,500 16,500 13,465 3,035 Utilities (29) Other operating costs 22,200 32,200 25,567 6,633 Financing obligations 406, , , Total Public Works - Water 641, , ,474 52,626 (continued) 70

74 Schedule of Revenues, Expenses and Changes in Net Assets Water Fund (Continued) Budget and Actual with Reconciliation to US GAAP Basis For the Year Ended December 31, 2015 Expenses, Continued Water Plant: Personnel services 250, , ,205 (1,205) Contracted services 28,200 50,600 25,802 24,798 Supplies and materials 53,200 53,200 22,925 30,275 Utilities 37,400 37,400 39,923 (2,523) Other operating costs 84,300 84,300 92,178 (7,878) Total Water Plant 453, , ,033 43,467 Capital outlay 1,461,300 1,899,800 1,547, ,743 Total Expenses 2,707,100 3,191,400 2,749, ,141 Other Financing Sources Transfers in 500,000 2,939 2,939 - Excess of Revenues Over (Under) Expenses - Budget Basis $ (96,300) $ (487,561) $ (126,510) $ 361,051 GAAP Basis Adjustments Capital outlay 1,547,057 Depreciation (515,051) Capital contributions 223,158 Debt service principal 312,230 Total GAAP Basis Adjustments 1,567,394 Net Income - GAAP Basis 1,440,884 Net Position, beginning of year 7,613,410 Net Position, end of year $ 9,054,294 71

75 Schedule of Revenues, Expenses and Changes in Net Assets Sewer Fund Budget and Actual with Reconciliation to US GAAP Basis For the Year Ended December 31, 2015 Revenues Fees for General Services: Metered service and usage fees 1,079,000 Budgeted Amounts Variance with Original Final Actual Final Budget $ $ 1,079,000 $ 1,052,718 $ (26,282) Unmetered wastewater charges 118, ,500 99,117 (19,383) Septage receiving 53, ,000 95,206 (4,794) Lab analysis fees 32,000 32,000 31,612 (388) Other 10,000 10,000 25,447 15,447 Total Fees for General Services 1,292,500 1,339,500 1,304,100 (35,400) Intergovernmental Revenue: Federal grants 430, , ,227 19,227 State grants - 10,000 10,000 - Total Intergovernmental Revenue 430, , ,227 19,227 Capital Revenue: System development fees 231, , ,931 18,931 Total Capital Revenue 231, , ,931 18,931 Other Revenue: Interest revenue 7,000 7,000 7, Miscellaneous revenue Total Other Revenue 7,000 7,000 7, Total Revenues 1,961,400 2,379,500 2,382,291 2,791 Expenses Administration: Personnel services 74,000 74,900 74, Contracted services 11,200 36,200 29,531 6,669 Supplies and materials 6,500 13,200 12, Total Administration - Water 91, , ,102 8,198 Public Works - Wastewater: Personnel services 81,300 66,200 68,209 (2,009) Contracted services 10,500 10,500 1,446 9,054 Supplies and materials 65,500 65,500 25,720 39,780 Total Public Works - Wastewater 157, ,200 95,375 46,825 (continued) 72

76 Schedule of Revenues, Expenses and Changes in Net Assets Sewer Fund (Continued) Budget and Actual with Reconciliation to US GAAP Basis For the Year Ended December 31, 2015 Expenses, Continued Wastewater Plant: Personnel services 314, , ,877 8,323 Contracted services 15,800 15,800 16,823 (1,023) Supplies and materials 49,600 49,600 51,607 (2,007) Utilities 142, , ,159 12,541 Other operating costs 96, , ,544 (10,944) Financing obligations 544, , ,177 2,823 Total Wastewater Plant 1,163,100 1,190,900 1,181,187 9,713 Capital outlay 1,043,400 1,223, , ,732 Total Expenses 2,455,500 2,680,800 2,286, ,468 Other Financing Sources Transfers in (500,000) 2,311 2,311 - Excess of Revenues Over (Under) Expenses - Budget Basis $ (994,100) $ (298,989) $ 98,270 $ 397,259 GAAP Basis Adjustments Capital outlay 893,668 Depreciation (874,374) Capital contributions 146,045 Debt service principal 252,902 Total GAAP Basis Adjustments 418,241 Net Income - GAAP Basis 516,511 Net Position, beginning of year 10,458,622 Net Position, end of year $ 10,975,133 73

77 Schedule of Revenues, Expenses and Changes in Net Assets Steamplant Event Center Fund Budget and Actual with Reconciliation to US GAAP Basis For the Year Ended December 31, 2015 Budgeted Amounts Variance with Original Final Actual Final Budget Revenues Rentals: Room rental - Ballroom $ 80,000 $ 80,000 $ 41,784 $ (38,216) Room rental - Theater 25,000 25,000 34,947 9,947 Room rental - Annex 20,000 20,000 18,230 (1,770) Room rental - Plaza 1,000 1, (800) Room rental - Lobby (300) Room rental - Scout Hut 2,000 2,000 - (2,000) Other rentals 15,000 15,000 8,567 (6,433) Total Rentals 143, , ,928 (39,572) Sales: Food sales 8,000 8,000 5,354 (2,646) Beverage sales 60,000 60,000 66,802 6,802 Beverage sales - Scout Hut 5,000 5,000 - (5,000) Merchandise sales 3,000 3,000 1,067 (1,933) Total Sales 76,000 76,000 73,223 (2,777) Other Charges for Services: Ticket sales 15,000 15,000 17,312 2,312 Event sponsorship fees 7,000 7,000 15,039 8,039 Caterer Fee 10,000 10,000 4,972 (5,028) Other Revenue: Friends of Steamplant donation 3,000 54,200 44,479 (9,721) Miscellaneous services 4,500 4,500 5,596 1,096 Other miscellaneous revenues 2,000 35,400 - (35,400) Total Revenues 261, , ,549 (81,051) Expenses Cost of sales 28,500 45,500 48,913 (3,413) Personnel services 246, , ,021 5,079 Contracted services 3,600 4,600 4, Supplies and materials 10,500 12,500 11,100 1,400 Utilities 32,100 32,100 29,212 2,888 Other operating costs 27,800 30,800 29,079 1,721 Capital outlay 19, , ,646 39,854 Total Expenses 369, , ,402 47,698 Other Financing Sources Transfers in 108, , ,853 33,353 Excess of Revenues Over (Under) Expenses - Budget Basis $ - $ - $ - $ - GAAP Basis Adjustments Capital outlay 113,646 Depreciation (65,551) Total GAAP Basis Adjustments 48,095 Net Income - GAAP Basis 48,095 Net Position, beginning of year 1,216,138 Net Position, end of year $ 1,264,233 74

78 SUPPLEMENTARY INFORMATION LOAN COVENANTS AND REQUIREMENTS WATER AND SEWER REVENUE BONDS, SERIES 2007 The Water and Sewer Refunding and Improvement Revenue Bonds, Series 2007 provides for a reserve requirement to be maintained in an annual amount equal to the least of (a) the maximum annual payments of principal and interest on the 2007 Bonds and all Parity Lien bonds or (b) the maximum amount which may be credited to the Reserve Account and allow such account to qualify as a reasonably required reserve or replacement fund under Section 148(d) of the Code to prevent deficiencies in the payment of the Series 2007 Bonds. The minimum reserve requirement at December 31, 2015 has been set aside and is $343,552. COLORADO WATER RESOURCES AND POWER DEVELOPMENT AUTHORITY The Colorado Water Resources and Power Development Authority Loan Agreement sets forth certain covenants and restrictions. As of December 31, 2015, the City appears to be in compliance with all covenants and restrictions as set forth in Exhibit A and Exhibit F, Additional Covenants and Requirements. See footnote 7 for details on the loan. The following are additional disclosures required by the loan agreement. Rate Covenant: The City shall establish and collect such rates, fees, and charges for the use or the sale of the products and services of the System as, together with other moneys available therefore, are expected to produce Gross revenue for each calendar year that will be at least sufficient for such calendar year to pay the sum of estimated operation and maintenance expenses, 110% of the debt service coming due on the bond during the calendar year and other debt service requirements. Gross revenue as defined in Para (3) of Exhibit A to the Loan Agreement is all income and revenues directly or indirectly derived by the government agency for the operation and use of the system, including investment income, but excluding, property taxes and grants received for capital improvements. Total Gross Revenue requirement $ 1,269,578 Total water fund revenues, exluding capital grants $ 2,047,147 Excess (deficiency) of gross revenues $ 777,569 Operations and Maintenance Reserve Fund Covenant: The City has on hand sufficient funds to meet the Reserve Fund covenant. See footnote 5 for more details regarding the reserve fund amount. The reserve at year-end is $221,175 which is equal to three months of operation and maintenance expenses, excluding depreciation, of the system as set forth in the City s annual budget. US DEPARTMENT OF AGRICULTURE LOAN The US Department of Agriculture Rural Development Loan agreement requires the City to establish a debt service reserve in the amount of one annual installment and an asset management fund which have both been set aside in the amount of $529,

79 SUPPLEMENTARY INFORMATION LOCAL HIGHWAY FINANCE REPORT Section of the Colorado Revised Statutes requires municipalities receiving Highway User Tax Funds to include a schedule of highway receipts and expenditures with the audit report. The said report is presented on the following two pages. 76

80 Financial Planning 02/01 The public report burden for this information collection is estimated to average 380 hours annually. Form # City or County: City of Salida LOCAL HIGHWAY FINANCE REPORT YEAR ENDING : December 2015 Prepared By: Cheryl Clark Phone: I. DISPOSITION OF HIGHWAY-USER REVENUES AVAILABLE FOR LOCAL GOVERNMENT EXPENDITURE ITEM 1. Total receipts available 2. Minus amount used for collection expenses 3. Minus amount used for nonhighway purposes 4. Minus amount used for mass transit 5. Remainder used for highway purposes A. Local B. Local C. Receipts from D. Receipts from Motor-Fuel Motor-Vehicle State Highway- Federal Highway Taxes Taxes User Taxes Administration II. RECEIPTS FOR ROAD AND STREET PURPOSES III. DISBURSEMENTS FOR ROAD AND STREET PURPOSES ITEM AMOUNT ITEM AMOUNT A. Receipts from local sources: A. Local highway disbursements: 1. Local highway-user taxes 1. Capital outlay (from page 2) 1,900,785 a. Motor Fuel (from Item I.A.5.) 2. Maintenance: 284,296 b. Motor Vehicle (from Item I.B.5.) 3. Road and street services: c. Total (a.+b.) a. Traffic control operations 16, General fund appropriations b. Snow and ice removal 33, Other local imposts (from page 2) 2,036,981 c. Other 97, Miscellaneous local receipts (from page 2) 31,408 d. Total (a. through c.) 147, Transfers from toll facilities 4. General administration & miscellaneous 37, Proceeds of sale of bonds and notes: 5. Highway law enforcement and safety 414,659 a. Bonds - Original Issues 6. Total (1 through 5) 2,784,902 b. Bonds - Refunding Issues B. Debt service on local obligations: c. Notes 1. Bonds: d. Total (a. + b. + c.) 0 a. Interest 7. Total (1 through 6) 2,068,388 b. Redemption B. Private Contributions c. Total (a. + b.) 0 C. Receipts from State government 2. Notes: (from page 2) 238,350 a. Interest D. Receipts from Federal Government b. Redemption (from page 2) 478,163 c. Total (a. + b.) 0 E. Total receipts (A.7 + B + C + D) 2,784, Total (1.c + 2.c) 0 C. Payments to State for highways D. Payments to toll facilities E. Total disbursements (A.6 + B.3 + C + D) 2,784,902 IV. LOCAL HIGHWAY DEBT STATUS (Show all entries at par) Opening Debt Amount Issued Redemptions Closing Debt A. Bonds (Total) 0 1. Bonds (Refunding Portion) B. Notes (Total) 0 V. LOCAL ROAD AND STREET FUND BALANCE Notes and Comments: A. Beginning Balance B. Total Receipts C. Total Disbursements D. Ending Balance E. Reconciliation 2,784,902 2,784,902 (0) FORM FHWA-536 (Rev. 1-05) PREVIOUS EDITIONS OBSOLETE (Next Page) 1 77

81 LOCAL HIGHWAY FINANCE REPORT STATE: Colorado YEAR ENDING (mm/yy): December 2015 II. RECEIPTS FOR ROAD AND STREET PURPOSES - DETAIL ITEM AMOUNT ITEM AMOUNT A.3. Other local imposts: A.4. Miscellaneous local receipts: a. Property Taxes and Assessments a. Interest on investments b. Other local imposts: b. Traffic Fines & Penalities 31, Sales Taxes 2,036,981 c. Parking Garage Fees 2. Infrastructure & Impact Fees d. Parking Meter Fees 3. Liens e. Sale of Surplus Property 4. Licenses f. Charges for Services 5. Specific Ownership &/or Other 0 g. Other Misc. Receipts 6. Total (1. through 5.) 2,036,981 h. Other - Road and Bridge c. Total (a. + b.) 2,036,981 i. Total (a. through h.) 31,408 (Carry forward to page 1) (Carry forward to page 1) ITEM AMOUNT ITEM AMOUNT C. Receipts from State Government D. Receipts from Federal Government 1. Highway-user taxes 211, FHWA (from Item I.D.5.) 2. State general funds 2. Other Federal agencies: 3. Other State funds: a. Forest Service a. State bond proceeds b. FEMA b. Project Match c. HUD c. Motor Vehicle Registrations 26,619 d. Federal Transit Admin d. Other (Specify) - e. U.S. Corps of Engineers e. Other (Specify)- f. Other Federal - DOT passed through CDO 478,163 f. Total (a. through e.) 26,619 g. Total (a. through f.) 478, Total ( f) 238, Total ( g) (Carry forward to page 1) III. DISBURSEMENTS FOR ROAD AND STREET PURPOSES - DETAIL ON NATIONAL OFF NATIONAL HIGHWAY HIGHWAY TOTAL SYSTEM SYSTEM (a) (b) (c) A.1. Capital outlay: a. Right-Of-Way Costs 0 b. Engineering Costs 40, , ,887 c. Construction: (1). New Facilities 0 (2). Capacity Improvements 0 (3). System Preservation - 0 (4). System Enhancement & Operation 671,950 1,083,948 1,755,898 (5). Total Construction (1) + (2) + (3) + (4) 671,950 1,083,948 1,755,898 d. Total Capital Outlay (Lines 1.a. + 1.b. + 1.c.5) 712,417 1,188,368 1,900,785 (Carry forward to page 1) Notes and Comments: FORM FHWA-536 (Rev.1-05) PREVIOUS EDITIONS OBSOLETE 2 78

82 MEMBERS: CHAD B. ATKINSON, CPA PHILLIP S. PEINE, CPA KRIS J. BRAUNBERGER, CPA STEVEN D PALMER, CPA ROBERT S. COX, CPA MICHAEL K. SPILKER, CPA TODD B. FELTNER, CPA KEVIN L. STEPHENS, CPA K. MARK FROST, CPA MARK E. TICHENOR, CPA MORRIS J PEACOCK, CPA MICHAEL J. TORGERSON, CPA Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The Honorable Mayor and City Council City of Salida, Colorado We have audited, in accordance with the 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, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining component unit and fund information of the City of Salida, Colorado, as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City s basic financial statements, and have issued our report thereon dated May 6, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Salida, Colorado s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Salida, Colorado s internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Salida, Colorado s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 79 CEDAR CITY FLAGSTAFF HURRICANE MESQUITE PHOENIX RICHFIELD ST. GEORGE

83 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. HintonBurdick, PLLC St. George, Utah May 6,

84 SINGLE AUDIT ACT REPORT YEAR ENDED DECEMBER 31, 2015

85 Table of Contents PAGE Report on Compliance and on Internal Control over Financial Reporting... 1 Schedule of Expenditures of Federal Awards... 3 Notes to the Schedule of Expenditures of Federal Awards... 4 Report on Compliance with Requirements Applicable to Each Major Program and on Internal Control over Compliance with the Uniform Guidance... 5 Summary of Auditors Results... 9 Financial Statement Findings Federal Award Findings and Questioned Costs... 10

86 MEMBERS: CHAD B. ATKINSON, CPA PHILLIP S. PEINE, CPA KRIS J. BRAUNBERGER, CPA STEVEN D PALMER, CPA ROBERT S. COX, CPA MICHAEL K. SPILKER, CPA TODD B. FELTNER, CPA KEVIN L. STEPHENS, CPA K. MARK FROST, CPA MARK E. TICHENOR, CPA MORRIS J PEACOCK, CPA MICHAEL J. TORGERSON, CPA Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The Honorable Mayor and City Council City of Salida, Colorado We have audited, in accordance with the 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, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining component unit and fund information of the City of Salida, Colorado (the City), as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City s basic financial statements, and have issued our report thereon dated May 6, Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City s internal control. Accordingly, we do not express an opinion on the effectiveness of the City s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 1 CEDAR CITY FLAGSTAFF HURRICANE MESQUITE PHOENIX RICHFIELD ST. GEORGE

87 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity s internal control or on compliance. This report an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. HintonBurdick, PLLC St. George, Utah May 6,

88 Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2015 Grantor Agency Federal CFDA Number Grantor's Number Expenditures U.S. Department of Agriculture: Water and Waste Disposal Systems for Rural Communities $ 642,227 Total U.S. Department of Agriculture 642,227 U.S. Department of the Interior: Passed through Colorado Department of Parks and Wildlife: Sports Fish Restoration Program ,000 Total U.S. Department of the Interior 25,000 U.S. Department of Justice: Edward Byrne Memorial Justice Assistance Grant ,087 Total U.S. Department of Justice 2,087 U.S. Department of Transportation: Passed through Colorado Department of Transportation: Highway Planning and Construction STE M ,163 Total U.S. Department of Transportation 478,163 U.S. Department of Homeland Security: Assistance to Firefighters Grant ,843 Total U.S. Department of Homeland Security 40,843 Total expenditures of federal awards $ 1,188,320 3

89 Notes to the Schedule of Expenditures of Federal Awards For the Year Ended December 31, 2015 Reporting Entity: The accompanying schedule of expenditures of federal awards presents the activity or expenditure of all federal awards programs of the City of Salida, Colorado for the year ended December 31, The City s reporting entity is defined in Note 1 of the basic financial statements. All expenditure of federal awards received directly from federal agencies as well as federal awards passed through other government agencies are included in the schedule. Basis of Accounting: This accompanying schedule of expenditures of federal awards has been prepared on the modified accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Relationship to Basic Financial Statements: Expenditures of federal awards received from the USDA have been reported and capitalized in the Sewer Enterprise fund. All other expenditures of federal awards have been reported in the General fund. Subrecipients: There are no subrecipients. 4

90 MEMBERS: CHAD B. ATKINSON, CPA PHILLIP S. PEINE, CPA KRIS J. BRAUNBERGER, CPA STEVEN D PALMER, CPA ROBERT S. COX, CPA MICHAEL K. SPILKER, CPA TODD B. FELTNER, CPA KEVIN L. STEPHENS, CPA K. MARK FROST, CPA MARK E. TICHENOR, CPA MORRIS J PEACOCK, CPA MICHAEL J. TORGERSON, CPA Independent Auditors Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance The Honorable Mayor and City Council City of Salida, Colorado Report on Compliance for Each Major Program We have audited the City of Salida, Colorado s (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of City s major federal programs for the year ended December 31, The City s major federal programs are identified in the summary of auditor s results section of the accompanying schedule of findings and questioned costs. Management s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor s Responsibility Our responsibility is to express an opinion on compliance for each of the City s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City s compliance. Opinion on Each Major Federal Program In our opinion, the City of Salida, Colorado, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, CEDAR CITY FLAGSTAFF HURRICANE MESQUITE PHOENIX RICHFIELD ST. GEORGE