Kankakee Valley Park District Kankakee, Illinois Annual Financial Report For the Year Ended May 31, 2017

Transcription

1 Kankakee, Illinois Annual Financial Report

2 Table of Contents Page(s) INDEPENDENT AUDITORS' REPORT 1-2 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position - Modified Cash Basis 3 Statement of Activities - Modified Cash Basis 4 Fund Financial Statements Governmental Funds Statement of Assets, Deferred Outflows, Liabilities, Deferred Inflows and Fund Balances (Deficits) - Modified Cash Basis 5 Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances (Deficits) - Modified Cash Basis 6 Reconciliation of the Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances (Deficits) to the Statement of Activities - Modified Cash Basis 7 Notes To The Financial Statements 8-29 OTHER INFORMATION IMRF Pension Disclosures MAJOR FUNDS General Fund Budgetary Comparison Schedule 33 Recreation Fund Budgetary Comparison Schedule 34 Special Recreation Fund Budgetary Comparison Schedule 35 Liability Insurance Fund Budgetary Comparison Schedule 36 MAJOR FUNDS SUPPLEMENTAL SCHEDULES Debt Service Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance (Deficit) - Budget and Actual 37 Capital Projects Fund Schedule of Revenues Received, Expenditures Disbursed, and Changes in Fund Balance - Budget and Actual 38 NON-MAJOR FUNDS SUPPLEMENTAL INFORMATION COMBINING AND INDIVIDUAL FUND SCHEDULES Combining Schedule of Assets, Liabilities and Fund Balances (Deficit) - Modified Cash Basis 39 Combining Schedule of Revenues Received, Expenditures Disbursed and Changes in Fund Balances (Deficit) - Modified Cash Basis 40 - i -

3 Table of Contents (Continued) Page(s) NON-MAJOR FUNDS (CONTINUED) SUPPLEMENTAL INFORMATION (CONTINUED) COMBINING AND INDIVIDUAL FUND SCHEDULES (CONTINUED) Special Revenue Funds Museum Fund Schedule of Revenues Received, Expenditures Disbursed and Changes in Fund Balance - Budget and Actual 41 Audit Fund Schedule of Revenues Received, Expenditures Disbursed and Changes in Fund Deficit - Budget and Actual 42 Social Security Fund Schedule of Revenues Received, Expenditures Disbursed and Changes in Fund Balance - Budget and Actual 43 IMRF Fund Schedule of Revenues Received, Expenditures Disbursed and Changes in Fund Balance - Budget and Actual 44 Police Fund Schedule of Revenues Received, Expenditures Disbursed and Changes in Fund Balance - Budget and Actual 45 Paving and Lighting Fund Schedule of Revenues Received, Expenditures Disbursed and Changes in Fund Balance - Budget and Actual 46 Schedule of Debt Service Requirements Series 2014B General Obligation Limited Tax Park Bond 47 Series 2015 General Obligation Limited Tax Park Bond 48 Series 2017A General Obligation Limited Tax Park Bond 49 Series 2017B General Obligation Limited Tax Park Bond 50 STATISTICAL INFORMATION Statistical Comparison of Property Taxes Levied to Property Taxes Collected 51 Computation of Legal Debt Margin 52 - ii -

4 To the Board of Commissioners Kankakee Valley Park District Kankakee, Illinois Report on the Financial Statements INDEPENDENT AUDITORS' REPORT We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the Kankakee Valley Park District as of and for the year ended May 31, 2017, and the related notes to the financial statements, which collectively comprise the District'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 inaccordance 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. Management has chosen to present the financial statements on the modified cash basis of accounting. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of 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. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position - modified cash basis of the governmental activities, each major fund, and the aggregate remaining fund information of the Kankakee Valley Park District, as of May 31, 2017, and the respective changes in financial position and cash flows, where applicable, thereof for the year ended in accordance with the basis of accounting as described in Note

5 Basis of Accounting We draw attention to Note 1 of the financial statements, which describes the basis of accounting. The financial statements are prepared on the modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinion is not modified with respect to that matter. Other Matters Other Information Accounting principles generally accepted in the United States of America require that certain pension disclosures be presented to supplement the basic financial statements. Such information, although not 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 other 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 inquires, 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. The management's discussion and analysis (MD&A) is not a required part of the financial statements but is other information required by the Governmental Accounting Standards Board. The management of the Kankakee Valley Park District has not prepared the MD&A for the year ending May 31, 2017, but will be prepared to include the document at a future date. The major fund budgetary comparison schedules listed on the table of contents are not a required part of the basic financial statements but are other information required by the Governmental Accounting Standards Board. This other information has been subjected to the auditing procedures applied in the audit of the basic financial statements for the year ending May 31, 2017 and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Kankakee Valley Park District's basic financial statements. The combining and individual fund financial schedules and schedules of debt service requirements for the year ended May 31, 2017 listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The combining and individual fund financial schedules and schedules of debt service requirements have been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial schedules and schedules of debt service requirements are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The statistical information listed in the accompanying table of contents has 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 it. October 26, 2017 Darien, Illinois - 2 -

6 Statement of Net Position - Modified Cash Basis May 31, 2017 Governmental Activities ASSETS Cash $ 500,787 Capital Assets Capital Assets Not Being Depreciated 1,646,060 Other Capital Assets, Net of Depreciation 12,941,452 Total Capital Assets 14,587,512 TOTAL ASSETS 15,088,299 TOTAL DEFERRED OUTFLOWS 0 LIABILITIES Due Within One Year Credit Card Payable 11,870 Bonds Payable 653,000 Capital Lease Obligations 7,509 Due in More Than One Year Bonds Payable 1,122,510 Capital Lease Obligations 4,404 TOTAL LIABILITIES 1,799,293 TOTAL DEFERRED INFLOWS 0 NET POSITION Net Investment in Capital Assets 14,005,336 Restricted Amounts Special Recreation 331,301 Liability Insurance 992,188 Museum 55,342 Social Security 86,475 IMRF 27,961 Police 125,305 Paving and Lighting 72,182 Unrestricted Amounts (2,407,084) TOTAL NET POSITION $ 13,289,006 See Accompanying Notes to the Financial Statements

7 Statement of Activities - Modified Cash Basis Net (Expenses) Revenues and Change in Program Revenues Net Position Operating Charges for Grants and Governmental Expenses Services Contributions Activities FUNCTIONS/PROGRAMS Governmental Activities General Government 1,980,055 $ 0 $ 0 $ (1,980,055) Recreation 1,351, ,052 0 (664,889) Interest on Long-Term Debt 34, (34,834) Total Governmental Activities $ 3,366,830 $ 687,052 $ 0 (2,679,778) GENERAL REVENUES Taxes Property taxes levied for general purposes 2,080,620 Replacement taxes for general purposes 174,458 Interest Income 101 Other Income 15,890 TOTAL GENERAL REVENUES 2,271,069 CHANGE IN NET POSITION (408,709) NET POSITION, BEGINNING OF YEAR 13,729,376 PRIOR PERIOD ADJUSTMENT (31,661) BEGINNING OF YEAR, RESTATED 13,697,715 END OF YEAR $ 13,289,006 See Accompanying Notes to the Financial Statements

8 Statement of Assets, Deferred Outflows, Liabilities, Deferred Inflows and Fund Balances (Deficits) - Governmental Funds - Modified Cash Basis May 31, 2017 Other Special Liability Debt Capital Governmental General Recreation Recreation Insurance Service Projects Funds Total ASSETS Cash $ 0 $ 0 $ 0 $ 0 $ 68,627 $ 327,102 $ 105,058 $ 500,787 Due from Other Funds 681, , , , ,207 3,145,288 TOTAL ASSETS 681, , ,188 68,627 1,205, ,265 3,646,075 TOTAL DEFERRED OUTFLOWS TOTAL ASSETS AND DEFERRED OUTFLOWS 681, , ,188 68,627 1,205, ,265 3,646,075 LIABILITIES Payroll Liabilities 0 11, ,870 Due to Other Funds 0 2,898, , ,320 3,145,288 TOTAL LIABILITIES 0 2,910, , ,320 3,157,158 TOTAL DEFERRED INFLOWS FUND BALANCES (DEFICITS) Restricted , , ,265 1,690,754 Assigned ,205, ,205,247 Unassigned 681,447 (2,910,362) 0 0 (22,849) 0 (155,320) (2,407,084) TOTAL FUND BALANCES (DEFICITS) 681,447 (2,910,362) 331, ,188 (22,849) 1,205, , ,917 TOTAL LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES (DEFICITS) $ 681,447 $ 0 $ 331,301 $ 992,188 $ 68,627 $ 1,205,247 $ 367,265 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the fund financial statements. 14,587,512 Bonds payable are not reported as liabilities in the fund financial statements. (1,775,510) Capital lease obligations are not reported as liabilities in the fund financial statements. (11,913) NET POSITION OF GOVERNMENTAL FUNDS $ 13,289,006 See Accompanying Notes to the Financial Statements

9 Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances (Deficits) - Governmental Funds - Modified Cash Basis Other Special Liability Debt Capital Governmental General Recreation Recreation Insurance Service Projects Funds Total RECEIPTS Property Taxes $ 415,949 $ 308,261 $ 113,960 $ 254,985 $ 639,031 $ 0 $ 348,434 $ 2,080,620 Replacement Taxes 174, ,458 Program Fees 0 518, ,594 Rental Income 44, , ,458 Interest Other Income 7,248 8, ,890 TOTAL RECEIPTS 641, , , , , ,434 2,958,121 EXPENDITURES Current General 804, , , ,097 1,187,375 Recreation 0 1,205,952 73, ,494 1,351,941 Debt Service 0 30, , ,076 Capital Outlay , ,432 TOTAL EXPENDITURES 804,047 1,236,050 73,495 99, , , ,591 3,412,824 EXCESS (DEFICIENCY) OF RECEIPTS OVER EXPENDITURES (162,304) (276,180) 40, ,583 (22,849) (191,261) 1,843 (454,703) OTHER FINANCING SOURCES (USES) Issuance of Debt , ,000 Issuance of Premium , ,784 Issuance of Discount (11,350) 0 (11,350) TOTAL OTHER FINANCING SOURCES , ,434 NET CHANGES IN FUND BALANCES (DEFICITS) (162,304) (276,180) 40, ,583 (22,849) 717,173 1, ,731 FUND BALANCES (DEFICITS), BEGINNING OF YEAR 875,412 (2,634,182) 290, , , , ,102 66,847 PRIOR PERIOD ADJUSTMENT (31,661) (193,098) 193,098 0 (31,661) BEGINNING OF YEAR, RESTATED 843,751 (2,634,182) 290, , , ,102 35,186 END OF YEAR $ 681,447 $ (2,910,362) $ 331,301 $ 992,188 $ (22,849) $ 1,205,247 $ 211,945 $ 488,917 See Accompanying Notes to the Financial Statements

10 Reconciliation of the Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances (Deficits) to the Statement of Activities - Modified Cash Basis Net Change in Fund Balances - Total Governmental Funds (Combined Statement of Revenues Received, Expenditures Disbursed, and Changes in Fund Balances - Governmental Funds) $ 453,731 Amounts reported for governmental activities in the Statement of Activities - Modified Cash Basis are different because: Depreciation of capital assets is not considered an expenditure in the fund financial statements. (789,166) Purchases of capital assets are treated as an expenditure in the fund financial statements. 177,484 Bond proceeds are treated as an other financing source in the fund financial statements. (908,000) Payments of bond principal are treated as an expenditure in the fund financial statements. 630,000 Payments of note payable principal are treated as an expenditure in the fund financial statements. 11,729 Payments of capital lease obligation principal are treated as an expenditure in the fund financial statements. 15,513 Change in Net Position of Governmental Activities (Statement of Activities - Modified Cash Basis) $ (408,709) See Accompanying Notes to the Financial Statements - 7 -

11 Notes To The Financial Statements NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Kankakee Valley Park District (Park District) was incorporated under the laws of the State of Illinois and is located in Kankakee, Illinois. The Park District operates under a President- Commissioner form of government, providing recreation and other services to the residents of Kankakee, which include recreation programs, park management, capital development, and general administra tion. A. Reporting Entity The Park District follows the provisions of Governmental Accounting Standards Board Statement No. 39, Determining Whether Certain Organizations Are Component Units an amendment of GASB Statement 14. As defined by generally accepted accounting principles established by GASB, the financial reporting entity consists of the primary government, as well as its component units, which are legally separate, tax-exempt entities and meet all of the following criteria: 1. The economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents. 2. The primary government, or its component units, is entitled to, or has the ability to otherwise access, a majority of the economic resources received or held by the separate organization. 3. The economic resources received or held by an individual organization that the specific primary government, or its component units, is entitled to, or has the ability to otherwise access, are significant to that primary government. The Park District has concluded that no entities meet the criteria of Statement 39 for inclusion as a component unit. Likewise, the Park District is not required to be included as a component unit of any other entity. B. Basis of Presentation GOVERNMENT -WIDE FINANCIAL STATEMENTS The Statement of Net Position and the Statement of Activities display information about the reporting government as a whole. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange revenues. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. The Park District does not allocate indirect expenses to functions in the Statement of Activities. Program revenues include charges to residents who purchase, use or directly benefit from goods, services, or privileges provided by a given function, and grants and contributions that are restricted to meeting the operational and capital requirements of a particular function. Taxes and other income items that are not specifically related to a function are reported as general revenues

12 Notes To The Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued) GOVERNMENT -WIDE FINANCIAL STATEMENTS (CONTINUED) Major individual governmental funds are reported as separate columns in the fund financial statements. Interfund receivables and payables are eliminated in the Statement of Net Positions except for the net residual amounts due between governmental activities. These are presented as internal balances. Amounts reported as program revenues include charges to residents who purchase, use or directly benefit from goods, services, or privileges provided by a given function, and grants and contributions that are restricted to meeting the operational and capital requirements of a particular function. Likewise, general revenues include all taxes. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a fund s principal ongoing operations. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. FUND FINANCIAL STATEMENTS Fund financial statements of the reporting entity are organized into individual funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts, which constitute its assets and deferred outflows, liabilities and deferred inflows, fund equity, revenues, and expenditures/expenses. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. Funds are organized as major funds or non-major funds within the governmental fund statements. A fund is considered major if it is the primary operating fund of the entity or meets the following criteria: Total assets and deferred outflows, liabilities and deferred inflows, revenues or expenditures/expenses of that individual governmental or enterprise fund are at least ten percent of the corresponding total for all funds of that category or type and Total assets and deferred outflows, liabilities and deferred outflows, revenues or expenditures/expenses of the individual governmental fund or enterprise fund are at least five percent of the corresponding total for all governmental and enterprise funds combined

13 Notes To The Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued) FUND FINANCIAL STATEMENTS (CONTINUED) Governmental Funds (Governmental Activities) Governmental fund types are those through which most governmental functions of the Park District are financed. The Park District s expendable financial resources are accounted for through governmental funds. The measurement focus is based upon determination of changes in financial position rather than upon net income determination. A brief explanation of the Park District s governmental funds follows: General Fund The General Fund is the general operating fund of the Park District. It is used to account for and report all financial resources not accounted for or reported in another fund. Special Revenue Funds Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Funds included in this fund category are: Recreation Special Recreation Liability Insurance Museum Audit Social Security IMRF Police Paving and Lighting Debt Service Fund The Bond and Interest Fund is a debt service fund used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Capital Projects Fund The Capital Projects Fund is used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays including the acquisition or construction of capital facilities and other capital assets, excluding those types of capital related outflows financed by proprietary funds

14 Notes To The Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation (Continued) FUND FINANCIAL STATEMENTS (CONTINUED) Governmental Funds (Governmental Activities) Continued MAJOR FUNDS The Park District reports the following major governmental funds: The General Fund, which accounts for the Park District s primary operating activities. The Recreation Fund, which accounts for the operations of the recreation programs offered to residents. Financing is provided by a specific annual property tax levy to the extent user charges are not sufficient to provide such financing. The Recreation Fund also includes the operations of the Aquatic Center and the Ice Valley Center. The Special Recreation Fund, which provides recreational facilities and programs for the handicapped and is funded by a special levy. The Liability Insurance Fund, which insures the Park District against claims for unemployment, property, workers compensation, and various other liabilities. The Debt Service Fund, which accounts for the accumulation of resources for the payment of long-term debt principal, interest and related costs. The Capital Projects Fund, which accounts for the acquisition and construction of major capital facilities. NON-MAJOR FUNDS The Park District reports the following non-major funds: Museum, Audit, Social Security, IMRF, Police and Paving and Lighting. C. Basis of Accounting Basis of accounting refers to when revenues and expenditures (or expenses) and the related assets and liabilities are recognized in the accounts and reported in the financial statements. Basis of accounting also refers to the timing of the measurements made, regardless of the measurement focus applied. The government-wide Statement of Net Position and Statement of Activities were both prepared on the modified cash basis of accounting, which is a comprehensiv e basis of accounting other than Generally Accepted Accounting Principles (GAAP). The fund financial statements were prepared on the cash basis of accounting. Under the cash basis of accounting, revenues are recognized when collected and expenditures are recognized when paid. Furthermore, only assets, liabilities, and fund balances arising from cash transactions are recognized. Accordingly, recognition of receivables, payables, and other accrued or deferred items is not applicable. The difference between the modified cash basis of accounting and the cash basis of accounting is that the modified cash basis of accounting includes capital assets, credit card payables, bonds payable and capital lease obligations, which the cash basis of accounting does not

15 Notes to the Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Basis of Accounting (Continued) Standards established by Generally Accepted Auditing Standards (GAAS) require GAAP for governmental units. Conformance with GAAP would require the financial statements to be prepared on the accrual or modified accrual basis of accounting. Accordingly, these financial statements are not intended to present the financial position and results of operations in conformity with GAAP. D. Measurement Focus On the government-wide Statement of Net Position and Statement of Activities, governmental activities are presented using the flow of economic resources measurement focus, within the limitations of the modified cash basis of accounting, as defined below. In the fund financial statements, the current financial resources measurement focus or the economic resources measurement focus, as applied to the modified cash basis of accounting, is used as appropriate. All governmental funds utilize a current financial resources measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. E. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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. F. Budgetary Data The Board of Commissioners followed these procedures in establishing the budgetary data reflected in the financial statements. The Director submits to the Board of Commissioners a proposed operating budget for the upcoming fiscal year commencing June 1. The operating budget includes proposed expenditures and the means for financing. The budgetary operations of the Park are governed by appropriation laws detailed in the Illinois Park District Code. Notice is given, and public meetings are conducted to obtain taxpayer comments. The Board may add to, subtract from, or change appropriations, but may not change the form of the budget. Prior to the end of the first quarter of each fiscal year, the budget is legally enacted through the passage of an annual combined budget and appropriation ordinance. Budgets are legally adopted on a basis consistent with the modified cash basis of accounting. Expenditures may not legally exceed appropriations at the fund level. Any expenditures in excess of the legally adopted appropriation must be approved by the Park District Board through a supplemental appropriation. No supplemental appropriations were required during fiscal year

16 Notes to the Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Budgetary Data (Continued) After the first six months of any fiscal year, the Park District Board may, by a two-thirds vote, amend the initially approved appropriation ordinance. Unused appropriations lapse at the end of the fiscal year. Expenditures legally may not exceed the total of appropriations and beginning fund balance at the fund level. Management can make transfers between individual expenditure categories of a fund (i.e., services, utilities, etc.) for up to 10% of the budgeted amount. However, Board of Commissioners approval is required in order for management to make transfers between different funds. G. Budget Basis of Accounting Budgetary information for individual funds is prepared on the same basis as the general purpose financial statements. The budget is prepared in accordance with the Illinois Park District Code and is derived from the combined annual budget and appropriation ordinance of the Park District. Working budgets are prepared for all governmental fund types. All budgets are prepared based on the annual fiscal year of the Park District. Budgetary funds are controlled by an integrated budgetary accounting system in accordance, where applicable, with various legal requirements which govern the Park District. H. Cash and Cash Equivalents The Park District considers all highly liquid investments with an initial maturity date within three months of the date acquired by the Park District and investment pools to be cash equivalents. I. Capital Assets The accounting treatment over property, plant and equipment (capital assets) depends on whether the assets are reported in the government-wide or fund financial statements. The Park District has adopted a capitalization threshold of $5,000. GOVERNMENT -WIDE FINANCIAL STATEMENTS Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is provided over the assets estimated useful lives using the straight-line method of depreciation. The range of estimated useful lives by type of asset is as follows: Buildings and Building Improvements Land Improvements Equipment and Furniture 10 to 50 Years 10 to 50 Years 5 to 20 Years FUND FINANCIAL STATEMENTS In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlays in the fund from which the expenditure was made. Public domain (infrastructure) capital assets consisting of roads, curbs and gutters, sidewalks, drainage systems, and lighting systems are not capitalized in the fund financial statements

17 Notes to the Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. Long-Term Liabilities In the government-wide financial statements, debt principal payments of both governmental activities are reported as decreases in the balance of the liability on the Statement of Net Position. In the fund financial statements, however, debt principal payments of governmental funds are recognized as expenditures when paid. K. Property Taxes Property taxes attach as an enforceable lien on January 1. They are levied in December (by passage of a Tax Levy Ordinance). Tax bills are prepared by the County and issued on or about February 1 and July 1 of the following year. They are payable in two installments on or about March 1 and August 1 of the following year. The County collects such taxes and remits them periodically. Property tax revenues are recognized when they are received. Current year revenues in the fund financial statements consist entirely of the 2015 tax levy. L. Equity Classifications GOVERNMENT -WIDE FINANCIAL STATEMENTS Equity is classified as net position and displayed in three components: Net Investment in capital assets consists of capital assets, net of accumulated depreciation and related debt, if applicable. Restricted Amounts consists of amounts with constraints placed on the use either by external groups such as creditors, grantors, contributors, or laws or regulations of other governments, or law through constitutional provisions or enabling legislation. Unrestricted Amounts consists of all other amounts that do not meet the definition of restricted or invested in capital assets. FUND FINANCIAL STATEMENTS Governmental fund equity is classified as fund balance. The components of fund balance are: Non-spendable consists of resources that cannot be spent because they are either: a) not in a spendable form; or b) legally or contractually required to be maintained intact. Restricted consists of resources that are restricted to specific purposes, that is, when constraints placed on the use of resources are either; a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or b) imposed by law through constitutional provisions or enabling legislation. Committed consists of resources constrained (issuance of an ordinance) to specific purposes by a government itself, using its highest level of decision-making authority, the Board of Commissioners ; to be reported as committed, amounts cannot be used for any other purpose unless the government takes the same highest-level action to remove or change the constraint

18 Notes to the Financial Statements (Continued) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Equity Classifications (Continued) FUND FINANCIAL STATEMENTS (CONTINUED) Assigned amounts that are constrained by the Board of Commissioners intent to be used for specific purposes but are neither restricted nor committed. Intent is expressed by (a) the Board of Commissioners itself or (b) a body or official to which the Board of Commissioners has delegated the authority to assign amounts to be used for specific purposes. The District s highest level of decision-making authority is the Board of Commissioners, which is authorized to assign amounts to a specific purpose. Unassigned consists of the residual net resources of a fund that has not been restricted, committed, or assigned within the general fund and deficit fund balances of other governmental funds. The Park District s flow of funds assumption prescribes that the funds with the highest level of constraint are expended first. If restricted or unrestricted funds are available for spending, the restricted funds are spent first. If different levels of unrestricted funds are available for spending, the Park District considers committed funds to be expended first followed by assigned and, lastly, unassigned funds. Other Fund Balance Special Liability Debt Capital Governmental Classification General Recreation Recreation Insurance Service Projects Funds Total Non-spendable $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Restricted Special Recreation , ,301 Liability Insurance , ,188 Debt Service Museum ,342 55,342 Social Security ,475 86,475 IMRF ,961 27,961 Police , ,305 Paving and Lighting ,182 72,182 Committed Assigned Capital Projects ,205, ,205,247 Unassigned 681,447 (2,910,362) 0 0 (22,849) 0 (155,320) (2,407,084) $ 681,447 $ (2,910,362) $ 331,301 $ 992,188 $ (22,849) $ 1,205,247 $ 211,945 $ 488,917 M. GASB Pronouncements In June 1999, the GASB issued Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments. This Statement establishes new financial reporting requirements for state and local governments throughout the United States. The requirements of this Statement are effective in three phases based on a government s total revenues in the first year ending after June 15, The Park District has adopted this Statement for the period beginning June 1, Governmental Accounting Standards Board Statement No. 61, The Financial Reporting Entity, is an amendment of GASB Statements No. 14 and No. 39, which does not have impact on the current year financial statements

19 Notes to the Financial Statements (Continued) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. GASB Pronouncements (Continued) As of June 1, 2016, the District has implemented GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position. The objective of this Statement is to improve financial reporting by standardizing the presentation of deferred outflows of resources and deferred inflows of resources and their effect on a government s net position. As of June 1, 2016, the District has implemented GASB Statement No. 65 Items previously reported as Assets and Liabilities. The objective of this statement is to establish accounting and financial reporting standards that reclassify as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities. The Statement also recognizes as outflows of resources or inflows of resources certain items that were previously reported as assets and liabilities. As of June 1, 2015, the Association has implemented GASB Statement No. 68 Accounting and Financial Reporting for Pensions which is an amendment of GASB Statement No. 27. The objective of this statement is to improve accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. Upon implementation of GASB 68, the Association has also implemented GASB Statement No. 71 Pension Transition for Contributions Made Subsequent to the Measurement Date an amendment of GASB Statement No. 68. NOTE 2 CASH AND INVESTMENTS A. Bank Deposits Cash, cash equivalents, and investments are held separately and in pools by several of the Park District's funds. At May 31, 2017, the carrying amount of the Park District's deposits was $497,324, which excludes a $3,463 petty cash fund and the bank balance was $558,654. The deposits are categorized in accordance with risk factors created by governmental reporting standards. Carrying Bank Amount Balances Category 1 $ 258,758 $ 320,088 Category Category 3 203, ,208 The Illinois Funds 35,358 35,358 Total Bank Deposits $ 497,324 $ 558,

20 Notes to the Financial Statements (Continued) NOTE 2 CASH AND INVESTMENTS (CONTINUED) A. Bank Deposits (Continued) Category 1 includes deposits covered by depositing insurance or collateral held by the Park District in the Park District s name. Category 2 includes deposits covered by collateral held by the financial institution s trust department in the Park District s name. Category 3 includes deposits which are uncollateralized or the collateral is held by the financial institution s trust department but not in the Park District s name. B. Investments The District may, upon adoption of an ordinance, elect to invest in: Its own general obligation bonds. Its own tax anticipation warrants, bearing, interest at a rate not to exceed 4% per annum. Bonds or other interest-bearing obligations of the United States or State of Illinois. Savings accounts or certificates of deposit of any state or national bank that are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC). Treasury notes and other securities issued by agencies of the United States. Bonds, notes, certificates of indebtedness, treasury bills, or other securities guaranteed by the full faith and credit of the United States. Certificates of deposit or time deposits constituting direct obligations of any bank, as defined in the Illinois Banking Act. Short-term obligations of corporations organized in the United States with assets exceeding $500 million, if: 1. such obligations are rated at the time of purchase within the highest standard rating services by at least two rating agencies and which mature not later than 270 days from the date of purchase; 2. no more than 25% of any fund is invested in such obligations at any time; and 3. such purchases do not exceed 10% of the corporation s outstanding obligations. Shares or other securities of any state or federally chartered savings and loan association, the shares of investment certificates of which are insured by the Federal Savings and Loan Insurance Corporation. The Illinois Governmental Cash Investment Fund. At May 31, 2017, investments consist of an investment in the Illinois Funds, created in 1975 by the Illinois General Assembly. The fund is subject to an annual audit by an outside audit firm and conducts an annual internal audit. This pooled investment with other municipalities is similar in nature to a money market fund and consists primarily of certificates of deposit, U.S. Government securities, commercial paper, and corporate bonds. Because individual securities are not owned by the District, amounts invested in the Illinois Funds are not categorized. The District s value in the pool is based on the average maturity of the pool s investments. Further, the fair value of the District s position in the pool is equal to the value of its pool shares

21 Notes to the Financial Statements (Continued) NOTE 2 CASH AND INVESTMENTS (CONTINUED) C. Policies for Investments It is the policy of the Park District to invest its funds in a manner which will provide the highest investment return with the maximum security while meeting the daily cash flow demands of the District and conforming to all state and local statutes governing the investment of public funds, using the prudent person standard for managing the overall portfolio. The primary objective of the policy is safety (preservation of capital and protection of investment principal), liquidity and yield. Custodial credit risk for deposits with financial institutions is the risk that in the event of a bank s failure, the District s deposits may not be returned to it. The District s investment policy requires pledging of collateral of all bank balances in excess of federal depository insurance with the collateral held by a third party in the District s name. The District limits its exposure to credit risk, the risk that the issuer of a debt security will not pay its par value upon maturity, by primarily investing in obligations guaranteed by the United States Government or securities issued by agencies of the United States Government that are explicitly or implicitly guaranteed by the United States Government. NOTE 3 - CAPITAL ASSETS A summary of the changes in capital assets for the year follows for the governmental activities. Total depreciation expense for the year charged for governmental activities was $789,166. Balance May 31, 2016 Additions Dispositions Balance May 31, 2017 Governmental Activities Assets, Not Subject to Depreciation: Land $ 1,646,060 $ 0 $ 0 $ 1,646,060 Assets Subject to Depreciation: Land Improvements 3,499, ,499,272 Buildings and Improvements 15,004,350 94, ,098,863 Equipment and Furniture 5,361,549 82, ,444,520 Total Assets Subject to Depreciation 23,865, , ,042,655 Less Accumulated Depreciation for: Land Improvements (2,749,074) (152,640) 0 (2,901,714) Buildings and Improvements (4,135,340) (365,634) 0 (4,500,974) Equipment and Furniture (3,427,623) (270,892) 0 (3,698,515) Total Accumulated Depreciation (10,312,037) (789,166) 0 (11,101,203) Net Capital Assets Subject to Depreciation 13,553,134 (611,682) 0 12,941,452 Net Capital Assets - Governmental Activities $ 15,199,194 $ (611,682) $ 0 $ 14,587,

22 Notes to the Financial Statements (Continued) NOTE 4 - DEBT COMMITMENTS A. Debt Transactions A summary of changes in the debt commitments of the District for the year ended May 31, 2017 is as follows: Balance Balance Amount Due May 31, Principal May 31, Within 2016 New Issues Paid 2017 One Year General Obligation Bonds Series 2014A Limited Tax $ 429,000 $ 0 $ 429,000 $ 0 $ 0 Series 2014B Limited Tax 854, , , ,000 Series 2015 Limited Tax 214, ,510 0 Series 2017A Taxable 0 729, ,000 0 Series 2017B Limited Tax 0 179, ,000 0 Note Payable First Trust Bank of Illinois 11, , $ 1,509,239 $ 908,000 $ 641,729 $ 1,775,510 $ 653,000 Series 2014B General Obligation Park Bond: Originally issued for $854,000 dated October 23, 2014, provides for principal payments of $201,000 to $653,000 due December, ; interest is payable on June and December 1 at rates ranging from 2.25% to 2.375%. Series 2015 General Obligation Park Bond: Originally issued for $214,510 dated November 2, 2015, provides for a principal payment of $214,510 due December, ; interest is payable on June and December 1 at 3.5%. Series 2017A General Obligation Park Bond: Originally issued for $729,000 dated January 25, 2017, provides for principal payments of $79,000 to $225,000 due December, ; interest is payable on June and December 1 at 9.5%. Series 2017B General Obligation Park Bond: Originally issued for $179,000 dated January 25, 2017, provides for principal payments of $75,000 to $104,000 due December, ; interest is payable on June and December 1 at 6.35%

23 Notes to the Financial Statements (Continued) NOTE 4 - DEBT COMMITMENTS (CONTINUED) B. Annual Debt Service Requirements Total debt service to maturity on outstanding debt is as follows: C. Capital Lease Obligations Fiscal Year Principal Interest Total 2018 $ 653,000 $ 91,545 $ 744, ,510 88, , ,000 61, , ,000 40, , ,000 14, ,109 $ 1,775,510 $ 295,653 $ 2,071,163 The District leases recreational equipment with a historical cost of $34,969 and office furniture with a historical cost of $24,353 through capital lease agreement s which are recorded in the Governmental funds. The change in capital lease obligations for the year ending May 31, 2017 is as follows: Governmental Funds Lease Obligation, May 31, 2016 $ 27,426 Lease Issuance 0 Payments Made (15,513) Lease Obligation, May 31, 2017 $ 11,913 NOTE 5 - EXCESS OF ACTUAL EXPENDITURES OVER BUDGET IN INDIVIDUAL FUNDS At May 31, 2017, the following funds had expenditures in excess of budgeted amounts: Budgeted Actual Fund Expenditures Expenditures Variance Recreation $ 779,337 $ 1,236,050 $ (456,713) Special Recreation 73,177 73,495 (318) Audit 78,000 99,681 (21,681) IMRF 69, ,045 (31,973) Police 0 12,262 (12,262) NOTE 6 - DEFICIT FUND BALANCES At May 31, 2017, the District s following funds had deficit fund balances: Deficit Fund Fund Balance Recreation $ (2,910,362) Debt Service (22,849) Audit (155,320)

24 Notes to the Financial Statements (Continued) NOTE 7 INTERFUND RECEIVABLES/PAYABLES During the normal course of Park operations, interfund balances are created. Amounts due to and due from other funds arise during the course of the Park District s operations because of numerous transactions between funds to finance operations, provide services, construct assets and service debt. The following interfund receivables and payables exist at May 31, 2017: Due from Due to Fund Other Funds Other Funds General $ 681,447 $ 0 Recreation 0 2,898,492 Special Recreation 331,301 0 Liability Insurance 992,188 0 Debt Service 0 91,476 Capital Projects 878,145 0 Museum 17,940 0 Audit 0 155,320 Social Security 48,723 0 IMRF 27,961 0 Police 108,507 0 Paving and Lighting 59,076 0 NOTE 8 PRIOR PERIOD ADJUSTMENT $ 3,145,288 $ 3,145,288 During the year ended May 31, 2017, the May 31, 2016 fund balance in the General Fund was restated by $(31,661) to correct errors in cash, payroll and credit card payables. During the year ended May 31, 2017, the May 31, 2016 fund balance in the Debt Service Fund was restated by $(193,098) and the fund balance in the Capital Projects Fund was restated by $193,098 to correct errors in prior year debt payment classifications. NOTE 9 MISAPPROPRIATION OF TAXPAYER FUNDS IN PRIOR YEARS Park District funds were identified as being misappropriated by the former Executive Director prior to May 31, The misappropriation of funds, which are fraudulent in nature, by the former Executive Director is currently being investigated by the Illinois State Police, the Federal Bureau of Investigation, and the Federal Deposit Insurance Corporation Office of Inspector General. As of May 31, 2017, Park District management does not expect the misappropriated assets to be recovered. NOTE 10 - RISK MANAGEMENT Park District Risk Management Agency The Kankakee Valley Park District is exposed to various risks related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and net income losses. Since December 1, 2002, the Kankakee Valley Park District has been a member of the Park District Risk Management Agency (PDRMA) Property/Casualty Program. PDRMA is a public entity risk pool consisting of park and forest preserve districts, special recreation associations, and certain non-profit organizations serving the needs of public entities formed in accordance with the terms of an intergovernmental cooperative agreement among its members.